Page 67 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes Till then, only cash market trades were done through Bolt. The efforts of the Bombay Stock
Exchange (BSE) to infuse life into its moribund derivatives segment by shifting the trading
platform to BSE Online Trading (Bolt) terminals are not yielding any results, at least till now.
BSE, which began trading in futures on its Sensex index and 100-odd individual stocks on Bolt
terminals from June 29, is yet to attract trades from brokers.

As per the data available on the BSE website, the trading turnover in the derivatives segment was
an insignificant 4.34 lakh on July 1, compared with its rival National Stock Exchange's 65,000-
plus crores average daily turnover. BSE claims it would take some time before brokers get used to
trading on Bolt, which is designed to make derivatives trading 'easier and cost-effective'.
At present, only futures trading have been shifted to Bolt and soon trading in options will also
be transferred to Bolt, they said.

Did u know? What is short selling?

Simply put, short selling is the sale of shares that the seller does not own. That sounds
funny, right? It isn't. Short selling is the sale of stocks that seller doesn't own, but there is
a promise of delivery. It may sound a bit complicated, but it is actually a very simple
concept. When you are short selling a stock, your broker lends the stock to you. The stock
may be part of the broker's portfolio holdings, a customer's or from another broking
house. You have the obligation to close the "short" by buying the same number of shares
(covering in technical parlance) and return them to your broker.
In India, SEBI had banned short selling after heavy shorting by operators resulted in a
crash in the stock market in 2001. After plugging a few loopholes, it thought short selling
could be re-introduced, as it would add depth to the market. Consequently, short selling
was re-introduced on Dec 20, 2007 in Indian market again.

5.5 BSE Indices

For the premier stock exchange that pioneered the securities transaction business in India, over
a century of experience is a proud achievement. A lot has changed since 1875 when 318 persons
by paying a then princely amount of 1, became members of what today is called Bombay Stock
Exchange Limited (BSE).

Over the decades, the stock market in the country has passed through good and bad periods. The
journey in the 20th century has not been an easy one. Till the decade of eighties, there was no
measure or scale that could precisely measure the various ups and downs in the Indian stock
market. BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently became the
barometer of the Indian stock market.

Sensex

SENSEX, first compiled in 1986, was calculated on a "Market Capitalization-Weighted"
methodology of 30 component stocks representing large, well-established and financially sound
companies across key sectors. The base year of SENSEX was taken as 1978-79. SENSEX today is
widely reported in both domestic and international markets through print as well as electronic
media. It is scientifically designed and is based on globally accepted construction and review
methodology. Since September 1, 2003, SENSEX is being calculated on a free-float market
capitalization methodology. The "free-float market capitalization-weighted" methodology is a
widely followed index construction methodology on which majority of global equity indices

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