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Madras Stock Exchange's stock labs program - fostering entrepreneurial thinking in colleges

Murali D
2nd Sep 2013
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Madras Stock Exchange has been working with college campuses to nurture entrepreneurial thinking through stock market related programmes. To know more about this initiative, YourStory connected with V. Nagappan, Member of Advisory Committee in Madras Stock Exchange. Listen in.


V Nagappan, Member of Advisory Committee, Madras Stock Exchange

OverviewThe aim of the programme is to initiate students into risk-taking, and thus make them mentally prepared to take risks. The basic template is something like a finance club or a stock lab, where the student is actually put in to the real-life trading environment, and is guided right from the opening of the demat account to trading in the market. They will be operating in the market, buying, selling, and also noting down what went inside their minds. At the end of the week, we evaluate the performance of the students, and this helps them understand themselves. The stock exchange sees to it that the exercise does not end up as gambling; it is ensured that there is a minimum and maximum entry level for the students.

We find that the programme makes students understand the risk involved, how they handle the risk, where they go wrong, what their original idea was when they invested in a particular stock, and what changed. There are many times when what they expected has happened; at times, the results of the company must have come out very well, yet the markets go down. All that makes the students understand the market better.

Secondly, the programme makes the students employable by exposing them to the practical environment before the completion of their studies.

Response

Many of the students are aware of the NISM (National Institute of Securities Markets) exam, or the NCFM (National Stock Exchange Certification in Financial Markets) exams; and, in fact, some of them appeared for the exams and scored 80% and 90% but they are surprised when they come and sit in front of the system that, in spite of passing exams, what they have is theoretical knowledge. They are puzzled, and they don’t know how to handle it. Once they go through the MSE process of stock lab, they are more exposed to the market, and become more mature in understanding the markets.

Requisites

Students should have a laptop, or the educational institution should provide them access to the computer. Software is available at a very nominal cost, or almost free, from both BSE and NSE. The trading software is available, and the backend software and access are provided by the subsidiary of Madras Stock Exchange. So, there is not much of an infrastructure needed, except the laptop or a computer. The software will be loaded by us and then the trading can happen.

Advantages of capital market exposure

One aspect of stock market is calculated risk-taking, and the second important thing to learn is extreme volatility. Exposure to capital market develops fund management and cash flow management skills for the students. They learn to handle volatility, by bringing in margins, booking profits, and getting out at the right time. Apart from this, anybody connected with capital market at an early stage, gets exposed to macro level economics, global economics, prices of crude or gold, and how factors like GDP and IIP affect the market.


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