Equity Market

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  • Equity market, also known as stock market refers to a market where company shares are traded.
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  • Equity market participants include individuals, mutual funds, FII etc.
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  • Generally, shares are traded through a stock exchange.
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  • Stock exchange is an organized market place where capital market products are traded
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  • Its main purpose is to assist, regulate and control buying and selling of securities.
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  • A stock exchange acts as a barometer of economic and business condition of a country.
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  • Stock exchanges in India are regulated by SEBI, under the SEBI Act, 1992.
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  • Two leading stock exchanges in India are Bombay Stock Exchange (BSE) and National stock Exchange (NSE).
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  • Established in 1875, BSE is the oldest exchange in India as well as Asia. NSE was incorporated in 1992.
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BSE and NSE Snap Shot

 
Phases of Stock Market
 

  • Generally stock market goes through two phases: Bull market phase and Bear market phase.
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  • Bull Market is a term used to describe the stock market which has rising prices as its main characteristics.
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  • Bear Market is a term used to describe the stock market which has falling prices as its main feature.
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  • Indian equity market has witnessed many bull and bear market. However the prominent bull market phase was during 2003 to 2007 and bear market phase was during 2008.
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  • From the bottom of 2003 towards the end of 2007 bull market, Sensex return was 7 times1.
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  • Maximum loss in the index during any bear market has been 60%.
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  • Highest PE2 of Sensex during bull market has been around 26 (April 2000) while lowest Sensex PE during bear market has been around 10 (April 2003).
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