Market Segments Of National Stock Exchange 6f3e23

MARKET SEGMENTS OF NATIONAL STOCK EXCHANGE

NSE consists of five segments • Wholesale Debt Market segment • Capital Market segment • Futures and Options Trading • Currency Futures Trading • Interest Rate Derivatives segment

WHOLESALE DEBT MARKET SEGMENT This segment provides trading facilities for a variety of debt instruments including: • Government Securities, • Treasury Bills and Bonds issued by Public Sector Undertakings/ Corporates/ Banks like Floating Rate Bonds, Zero Coupon Bonds • Commercial Papers, • Certificate of Deposits, • Corporate Debentures, • State Government loans, SLR and Non-SLR Bonds issued by Financial Institutions, • Units of Mutual Funds and Securitized debt by banks, financial institutions, corporate bodies, trusts and others.

CAPITAL MARKET SEGMENT NSE facilitates trading in equities and retail trade in convertible non convertible debentures and hybrids. Equities • Equities Indices • Mutual Funds • Exchange Traded Funds • Initial Public Offerings

January 16 2015 NIFTY Chart

DERIVATIVES • Derivatives are financial instruments whose value depend upon the value of some underlying asset. • Derivatives helps in  price discovery of underlying asset  It is a technique of risk management.

• Derivatives can be  Forwards  Futures  Options  swaps

CALL OPTIONS-Buyer has a right to buy securities on the due date at a predetermined strike price or exercise price • A – option buyer B- option seller Exercise price = Rs 50 per share after 1 month • Option = Rs 5 • For A :• when Actual price < (strike price + ) Loss will be option Rs 5 • When Actual price = (strike price + ) it is break even point • When Actual price >(strike price + ) Net gain will be= {Actual price- (strike price + )} • For B:• When actual price < (strike price+ )

A’s graph

B’s graph

PUT OPTIONS-Buyer has a right to sell securities on the due date at a predetermined strike price or exercise price P’s • P– option buyer Q- option seller Exercise price = Rs 50 per share after 1 month • Option = Rs 5 • For P :• when Actual price > (strike price ) Loss will be option Rs 5 • When Actual price = (strike price ) it is break even point • When Actual price <(strike price -) Net gain will be= {Actual price- (strike price - )}

graph

• For Q:• When actual price > (strike price)

Q’s graph

FUTURES AND OPTIONS TRADING In the Futures and Options segment, trading in CNX Nifty Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index Long term Options on CNX Nifty are also available

CURRENCY DERIVATIVES • A currency future, also known as FX future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date. • On NSE the price of a future contract is in of INR per unit of other currency e.g. US Dollars. • Currency future contracts allow investors to hedge against foreign exchange risk. • Currency Derivatives are available on four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY). Currency options are currently available on US Dollars.