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A PROJECT REPORT ON
CAPITAL MARKET(EQUITY AS AN INVESTMENT)
SUBMITTED TO
PUNJAB TECHNICAL UNIVERSITY
JALANDHAR
In partial fulfillment of the requirement for the
award of degree of
Master of Business Administration (MBA)
Submitted by: Project Guide:
Kushagra Sharma Ms. Parul Gupta
Univ. Roll No. 609240425
SESSION (2006-2009)
GNA-INSTITUTE OF MANAGEMENTAND TECHNOLOGY
PHAGWARA
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CERTIFICATE
This is to certify that the project on CAPITAL MARKET(EQUITY AS AN
INVESTMENT)carried out by kushagra Sharma under my guidance is an original
research work and has not been published and conducted before. It is based on
primary data and due care has been taken to ensure that all the sources of secondary
data and references, either from published or unpublished literature or from internet
have been duly acknowledged.
Ms. Parul Gupta
GNA-INSTITUTE OF MANAGEMENT AND TECHNOLOGY.
PHAGWARA
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PREFACE
MBA is a stepping-stone to the management carrier and to develop good manager is
necessary that the theoretical must be supplement with exposure to the real
environment. Research work in management is extremely important for a real life
business issue. For any management student who is striving to perform out
standingly, it is of paramount importance that, apart from gaining theoretical
knowledge, he/she should acquire some practical know-how. Theoretical knowledge
just provides the base and its not sufficient to produce a good manager thats why
the practical knowledge is needed Survey report deals especially with providing an
opportunity to management students to have some exposure in the real business
world. Thus practical experience acts as a Aq3supplement to the classroom studies.
It offers an exposure to practical management in various organizations. It provides a
treasure of experience to the student. Therefore the research project is an essential
requirement for the students of MBA.
Final project is an integral part of the curriculum of M.B.A. it gives one a complete
exposure into the cooperate world. The person learns to understand the business
from a realistic angle. Final project is also a kind of rehearsal of the actual an
individual actually comes to know weather he is fit in the life which he has opted.
During the period on endeavor is made to learn different skills and business
practice. A set routine has to be follower the discipline way
So keeping all these factors in mind and in accordance with requirements of MBA
course the research project on the topic CAPITAL MARKET(EQUITY AS AN
INVESTMENT) IN PHAGWARA &JALANDHAR AREA is done.
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ACKNOWLEDGEM
ENT
Acknowledging any one in mere words is a very difficult task.
It gives me a great pleasure in acknowledging the
Invaluable assistance extended to me by various formalities in the Successful
Completion of their project report at CAPITAL MARKET(EQUITY AS AN
INVESTMENT)
I would like to thank MS. Parul Gupta, the Lecturer of
GNA-INSTITUTE OF MANAGEMENT AND TECHNOLOGY, who shared
her valuable Time and guide me throughout the project.
But for the strength of their blessing and warmth of their
love. I would also like to thank my family members and friends who were
intimated the work possible for completion of the project
kushagra Sharma
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INDEX
Chapter
No.
Topic
1.
2.
CERTIFICATE
PREFACE
ACKNOWLEDGEMENT
EXECUTIVE SUMMARY
INTRODUCTION
Indian Capital Market Introduction
Intermediaries In Capital Market
Investors In Capital Market
Growth Of Capital Market In India
Scenario Of Indian Capital Market
Role Of Capital Market In India
Classification of Indian Capital Market
3. Equity marketIntroduction
Developments in Equity market
Twin Towers of Equity Market
4. Equity as an investment Introduction
Investing principles
Analysis(Fundamental,Economical.Technical )
5. Primary marketIntroductionMarketing methods
Intermediaries
6. Secondary marketIntroduction
Reasons for transacting in Secondary market
Functions
Listing
Trading
SettlementIntermediaries
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7.OBJECTIVES
REVIEW OF LITERATURE
RESEARCH METHODOLOGY
DATA PRESENTATION
ANALYSIS AND INTERPRETATION
FINDINGSSUGGESTIONS
LIMITATIONS
8. BIBLIOGRAPHY
9.. ANNEXURE
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EXECUTIVESUMMARY
The capital market in India-debt, equity, mutual funds, derivatives, commodities
etc. has changed during the decade of reforms of the nineties and is continuing to
change. Although many improvements have been effected, the outcome of these
actions has not been as far-reaching as required. The major thrust of financial
reforms commenced in 1992 coincided with the attempts of economic
liberalization. The Internet also opened up a new channel of distribution of
primary market issues by online trading and is likely to play an important role in
the future, providing a larger reach and catering to a larger base of investors.
Both from the regulatory and participatory standpoints, the changes being
brought into the Indian equity market would bring a smile even on the face of a
grave critique. Initiatives like the dematerialization of shares, introduction of
rolling settlement; online trading and introduction of derivatives are few of the
path breaking steps, which have presented the Indian markets on par with its
global counterparts. These steps have assisted the market in two ways. First, itstreamlined the capital market operations in a significant manner instilling the
much-desired confidence in the minds of the retail segment of the bazaar.
Secondly, a very strong message was transmitted to the investor across the
continents, inviting them to cultivate the virgin land and share the fruits. The
investor should bear in mind that while he takes an investment decision he
should have some idea of the company's break-even point and the company's
position in the stock exchange. It is advised to invest in growth companies and
income companies and to take shares of only those companies, which are listed,
on the stock exchange. Various sources of financial information are available in
the country. He should attempt to make some analysis of the companies in which
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he is investing every time that such information is published in these journals
and financial magazines.
REVIEW OF LITERATURE
The random walk hypothesis in the emerging
Indian stock marketYear:
Nov/Dec 2002
Abstract:
Outlines previous research on the characteristics and dynamics of stock returns
and the special features of the Bombay Stock Exchange (India); and presents a
study of 1990-1998 daily stock returns for actively traded Indian shares using a
portfolio of 100 shares and 38 individual ones. Explains the methodology and
presents the results in detail. Finds that the returns do not conform with a random
walk but display significant non-linear dependence (mostly in the form of ARCH
type conditional heteroskedasticity) which does not seem to be due to
nonstationarity of the underlying economic variables. Shows that return volatility
is time varying and persistent but does not explain expected returns. Briefly
considers consistency with other research and calls for further research.
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Risk management in Indian venture capital and private equity
firms: a comparative study
Abstract:
Purpose - To compare the risk management practices of venture capital and private
equity firms in the UK and India to identify difference due to country of origin.
Design/methodology/approach - Describes the venture capital industry in India,
only nodding at the copious previous such research on the UK scene, and from areview of the literature on risk management strategies in the industry, advances five
hypotheses regarding the differences in use of prescreening, valuation methods,standard adjustments, managing risk in existing portfolio firms and managing
portfolio risk between the two countries; tests these through a questionnaire study of
53 venture capital firms in the UK and India.
Findings - Tabulates the results of the survey relating to each hypothesis and
indicates that risk management techniques and style do differ between the two
countries, and that in general they are less well-developed in India.
Research limitations/implications - Sees a possible lack of sound investment and
portfolio theory for the industry behind the inconsistent policies identified in bothcountries, and recommends further research in this area; comments on the
limitations of the small size of the sample.
Originality/value - Highlights the need for more work in this area, given the
importance of venture capital and private equity to smaller companies, which are a
vital element of the economy particularly in emerging markets.
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INTRODUCTION OF
INDIAN CAPITAL MARKET
The capital market deals with capital. Capital Market is generally understood
as a market for long term funds and investments in long term instruments available
in this market. However, now this market also includes short-term funds. Capital
markets mean the market for all the financial instruments, short term and long term
as so commercial industrial and government paper.
The capital market is a market where borrowing and lending of long term
funds takes place. Capital market deals in both, debt and equity. In these markets
productive capital is raised and made available to the corporate. The governments
both central and state raise money in the capital market through the issue of
government securities. Capital market refers to all the institutes and mechanisms of
raising medium and long-term funds, through various instruments available like
shares, debentures, bonds etc.
Thus the capital market plays a very important role in promoting economic
growth through the mobilization of long-term savings and the savings get invested
in the economy for productive purpose. The capital market in India is a well
integrated structure and its components include stock exchanges, developed banks
investment trusts, insurance corporations and provident fund organization. It caters
to the varied needs for capital of agriculture, industrial and trading sectors of the
economy. There are two important operations carried on in these markets. The
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raising the new capital and Trading in the securities already issued by the
companies.
With the pace of economic reforms followed in India, the importance ofcapital markets has grown in the last ten years. Corporate both in the private sector
as well as in the public sector raise thousands of crores of rupees in these markets.
The governments, through Reserve Bank of India, as well as financial institutes also
raise a lot of money from these markets. The capital market serves a very useful
purpose by pooling the savings.
The capital markets encourage capital formation in the country. The capital
markets mobilize savings of the households and of the industrial concerns. Such
savings are then invested for productive purposes. Capital markets also facilitate the
growth of the industrial sector, as well as the other sectors of the economy. The
capital markets provide funds for the projects in backward areas. Thus, Capital
markets generate employment in the country.
They also facilitate the development of stock markets. Due to capital
markets, the public has alternative sources of investment. The public can invest not
only in bank deposits, but also in shares and debentures issued by public companies.
The commercial banks and FIs provide timely financial assistance to viable sick
units to overcome their industrial sickness. The banks and FIs may also write off a
part of loan, or they re-schedule the loan, so as to offer payment flexibility to the
weak units, which in turn helps the weak units to overcome financial crisis.
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INTERMEDIARIES IN CAPITAL MARKET
Capital market requires many intermediaries who are responsible to transfer
funds from those who save to those who require these funds for investments. The
efficiency of the markets is dependent on the specialization attained by these
intermediaries. Some of them are as follows:
1. Stock Exchanges.
2. Banks.
3. Investment Trusts and Companies.
4. Specialized Financial Institutions or Development Banks.
5. Mutual Funds.
6. Non-Banking Financial Institutions.
7. International Financial Investors and Institutions.
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INVESTORS IN CAPITAL MARKET
The supply in this market comes from savings from different sectors of the
economy. These savings accrue from the following sources:
1. Individuals.
2. Corporate.
3. Governments.
4. Foreign countries.
5. Banks.
6. Provident Funds.
7. Financial Institutions.
All these entities contribute to savings in the economy part of these savings
naturally flow in the capital markets. Individuals invest in these markets directly by
investing in shares or debentures of companies through bond issues of public sector
units or through mutual funds. Corporate who have more savings than their
requirement for funds also are participants in this market.
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GROWTH OF CAPITAL MARKET IN INDIA
There has been considerable growth in the capital markets in India. The
following are the factors responsible for the growth of capital markets in India.
1. Growth of Stock Exchanges in India
2. Growth of Financial Institutions
3. Growth of Mutual Funds
4. Growth of Merchant Banking in India
5. Growth of Multinationals Growing Public Confidence
6. Growth of Entrepreneurs
7. Development of Venture Capital Funds
8. Development of Credit Rating Agencies
9. Setting up of SEBI
10. Setting up of National Securities Clearing Corporation
11. Setting up of Corporate Governance
12. Setting up of Clearing Corporation of India Limited
13. General Awareness
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SCENARIO OF INDIAN CAPITAL MARKET
Indian Stock Markets are one of the oldest in Asia. Its history dates back to
nearly 200 years ago. The earliest records of security dealings in India are meagre
and obscure. The East India Company was the dominant institution in those days
and business in its loan securities used to be transacted towards the close of the
eighteenth century. By 1830's business on corporate stocks and shares in Bank and
Cotton presses took place in Bombay. Though the trading list was broader in 1839,
there were only half a dozen brokers recognized by banks and merchants during
1840 and 1850.The 1850's witnessed a rapid development of commercial enterprise
and brokerage business attracted many men into the field and by 1860 the number of
brokers increased into 60.
In 1860-61 the American Civil War broke out and cotton supply from United
States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of
brokers increased to about 200 to 250. However, at the end of the American Civil
War, in 1865, a disastrous slump began (for example, Bank of Bombay Share,
which had touched Rs2850/-, could only be sold at Rs.87/-).
At the end of the American Civil War, the brokers who thrived out of Civil
War in 1874, found a place in a street (now appropriately called as Dalal Street)
where they would conveniently assemble and transact business. In 1887, they
formally established in Bombay, the "Native Share and Stock Brokers' Association"
(which is alternatively known as The Stock Exchange"). In 1895, the Stock
Exchange acquired a premise in the same street and it was inaugurated in 1899.
Thus, the Stock Exchange at Bombay was consolidated.
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In the era of globalization and liberalization, the capital market assumes a
greater importance. The smooth functioning of the capital market depends on the
regulators, participants and investors. The past decade has been a golden age for
capital markets in India. It is now a far more important source of finance thantraditional financial intermediaries for corporate sector. It is poised to dominate the
future of corporate finance in India. Over the past several years the capital market
has witnessed a sea change. The market has become more in terms of infrastructure,
adoption of best international practices and introduction of competition.
Reforms in the capital market, particularly the establishment
empowerment of SEBI, market determined allocation of resources, screen based
nation-trading, dematerialization and electronic transfer of securities, rolling
settlement and ban on deferral products, sophisticated risk management and
derivatives trading, have greatly improved the regulatory framework and efficiency
of trading and settlement. Indian market is now comparable to many developed
markets in terms of a number of quantitative parameters.
The process of reforms has led to a pace of growth of
markets almost unparalleled in the history of any country. Capital market in India
has grown exponentially as measured in terms of amounts raised from the market,
number of stock exchanges and intermediaries; the number of listed stocks, market
capitalization, trading volumes and turnover on stock exchanges and investors
population. Along with this, the profiles of the investors, issuers and intermediaries
have changed significantly. The market has witnessed fundamental institutional
changes resulting in drastic reduction in transaction cost and significant
improvements in efficiency, transparency and safety. Indian market is now
comparable to many developed markets. There are few countries, which have higher
turnover ratio than India, market capitalization as percentage of GNP compares
favorably even with advanced countries and is much better than emerging market.
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ROLE OF CAPITAL MARKET IN INDIA
1. CAPITAL FORMATION
2. ECONOMIC GROWTH
3. DEVELOPMENT OF BACKWARD AREAS
4. GENERATES EMPLOYMENT
5. LONG TERM CAPITAL TO INDUSTRIAL SECTOR
6. GENERATION OF FOREIGN CAPITAL
7. DEVELOPING ROLE OF FINANCIAL INSTITUTIONS
8. INVESTMENT OPPORTUNITIES
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CLASSIFICATION OF INDIAN CAPITAL MARKET
DEBT MARKET
COMMODITIES EQUITY MARKET
INDIAN CAPITAL MARKET
DERIVATIVES MUTUAL FUNDS
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DEBT MARKET
The debt market is one of the most critical components in the financial system of
any economy and act as the fulcrum of a modern financial system. The debt market
in most developed countries is many times bigger than the other financial markets
including the equity market. The debt markets in advanced countries are
significantly larger and deeper than equity markets. But in India, the trend is just the
opposite. The development of debt market in India has not been as remarkable as in
the equity market. However, it has undergone considerable changes in the last few
years. The debt market in India can be divided into two categories - Government
securities market consisting of Central Government and State Governmentsecurities; and Bond market consisting of FI bonds, PSU bonds and corporate
bonds/debentures. The government securities segment is the most dominant
category in the debt market.
The participants in the debt market are a small number of large players, which has
resulted in the debt market evolving into a wholesale market. Most primary debt
issues are privately placed or auctioned to the participants while secondary market
dealings are negotiated on telephone. The debt market has become more diversified
with the entry of new participants. The major participants in the debt market are as
follows:
1. Central And State Government
2. Primary Dealers
3. Public Sector Undertakings (PSUs)
4. Corporate
5. Banks
6. Mutual Funds(MF)
7. Foreign Institutional Investors (FIIs)
8. Provident Funds (PFs)
9. Charitable Institutions And Trusts
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EQUITY MARKET
In financial markets, stock is the capital raised by a corporation through the issuance
and distribution of shares. A person or organization which holds shares of stocks is
called a shareholder. The aggregate value of a corporation's issued shares is its
market capitalization. When one buys a share of a company he becomes a
shareholder in that company. Shares are also known as Equities. Equities have the
potential to increase in value over time. It also provides the portfolio with the
growth necessary to reach the long-term investment goals. Research studies have
proved that the equities have outperformed than most other forms of investments inthe long term. Equities are considered the most challenging and the rewarding, when
compared to other investment options.
Research studies have proved that investments in some shares with a longer
tenure of investment have yielded far superior returns than any other investment.
However, this does not mean all equity investments would guarantee similar high
returns. Equities are high-risk investments. One needs to study them carefully before
investing. Since 1990 till date, Indian stock market has returned about 17% to
investors on an average in terms of increase in share prices or capital appreciation
annually. Besides that on average stocks have paid 1.5 % dividend annually.
Dividend is a percentage of the face value of a share that a company returns to its
shareholders from its annual profits. Compared to most other forms of investments,
investing in equity shares offers the highest rate of return, if invested over a longer
duration.
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DERIVATIVES
Derivatives are one of the most complex instruments. The word derivative comes
from the word to derive. It indicates that it has no independent value. A derivative
is a contract whose value is derived from the value of another asset, known as the
underlying asset, which could be a share, a stock market index, an interest rate, a
commodity, or a currency. When the price of the underlying changes, the value of
the derivative also changes. Without an underlying asset, derivatives do not have
any meaning. For example, the value of a gold futures contract derives from the
value of the underlying asset i.e., gold. The prices in the derivatives market are
driven by the spot or cash market price of the underlying asset, which is gold in this
example.
DEFINITION OF DERIVATIVES :
Derivative is a product whose value is derived from the value of one or more
basic variables, called bases (underlying asset, index, or reference rate), in a
contractual manner. The underlying asset can be equity, forex, commodity or any
other asset. According to Securities Contracts (Regulation) Act, 1956 {SC(R)A},derivatives is
A security derived from a debt instrument, share, loan, whether secured or
unsecured, risk instrument or contract for differences or any other form of security.
The main types of derivatives:-
1. futures,
2. forwards
3. options
4. swaps
http://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Swap_(finance)http://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Swap_(finance)http://en.wikipedia.org/wiki/Futures_contract7/31/2019 Capital Mkt[1].(Equity Investment)
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MUTUAL FUNDS
The mutual fund industry in India has come into existence in
1963 with the formation of Unit Trust of India, at the initiative of the Government
of India and RBI. Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus collected is then
invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital
appreciations realized are shared by its unit holders in proportion to the number of
units owned by them. MF seems to be the most suitable vehicle of investment for
the common people as it offers opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost.
There are number of schemes of Mutual fund and all of them have different
character and objective. It is the skill of the investor to keep in view the objective
and then take decision where to invest. For e.g. in the wake of boom in the software
sector, the Indian Mutual fund launched various sector specific schemes that
entailed investment only in software stocks for that period.
1. Debt-Oriented Schemes
2. Equity-Oriented Schemes
3. Open-Ended Vs Close-Ended Schemes
4. Pure Growth Schemes
5. Pure Income Schemes
6. Balanced Schemes
7. Tax Saving Scheme
8. Sector Funds
9. Money Market Mutual Funds
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COMMODITIES
The commodities trade in the 18th and 19th centuries was largely influenced
by the shifts in macro economic patterns, the changes in government regulations, the
advancement in technology, and other social and political transformations around
the world. The 19th century has seen the establishment of various commodity
exchanges, which paved the way for effective transportation, financing and
warehousing facilities in this arena. In a new era of trading environment,
commodities exchanges offer innumerable economic benefits by facilitating
efficient price discovery mechanisms and competent risk transfer systems.
Commodity exchange is an association, or a company or any other body
corporate organizing futures trading in commodities. Earlier, all the sellers and
buyers of a commodity used to come to a common market place for the trade. Buyer
could judge the amount of produce that year while the seller could judge the amount
of demand of the commodity. Thus they could dictate their terms and hence the
counter party was left with no choice. Thus, in order to hedge from this unfavorable
price movement, need of the commodity exchange was felt.
The National Commodity Exchanges have been recognized by the Central
Government for organizing trading in all permissible commodities which include
precious (gold & silver) and non-ferrous metals; cereals and pulses; ginned and un-
ginned cotton; oilseeds, oils and oil-cakes; raw jute and jute goods; sugar and gur;
potatoes and onions; coffee and tea; rubber and spices, etc. The MCX, NCDEX and
NMCE are large commodity exchanges in India and MCX is the biggest among
them.
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EQUITY MARKET
The first company to issue shares of stock was the Dutch East India
Company, in 1602. The innovation of joint ownership made a great deal of Europe's
economic growth possible following the Middle Ages. The technique of pooling
capital to finance the building of ships, for example, made the Netherlands a
maritime superpower. Before adoption of the joint-stock corporation, an expensive
venture such as the building of a merchant ship could only be undertaken by
governments or by very wealthy individuals or families.
Equity markets, the world over, grew at a great speed in the decade of the
nineties. After the bear markets of the late eighties, the world markets saw one of
the largest ever bull markets of more than ten years. The opening up of Indian
economy in the 1990's led to a series of financial sector reforms, prominent being
the capital market reforms. These reforms have led to the development of the Indian
equity markets to the standards of the major global equity markets. All this started
with the abolition of Controller of Capital Issues and subsequent free pricing of
shares.
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DEVELOPMENTS IN EQUITY MARKET
The Government of India has been trying to improve market efficiency,
enhance transparency and bring the Indian Equity Market up to international
standards. Many reform measures have been initiated in the 90s. The principal ones
are the formation of Securities Exchange Board of India (SEBI), repeal of the
Capital Issues (Control) Act, 1947, introduction of screen-based trading, shortening
of trading cycle, demutualization of stock exchanges, establishment of depositories
disappearance of physical share certificates and better risk management systems in
stock exchanges.
The formation of Sebi was the first attempt towards integrated regulation ofthe securities market. Sebi regulates all market intermediaries and has the powers to
impose monetary penalties for misconduct of any intermediary. One of the major
stumbling blocks in fair pricing of capital issues has been the Capital Issues
(Control) Act, 1947. The issuers were denied the opportunity to economically raise
money from the capital market. This is now a matter of the past thanks to the repeal
of the Act itself. Sebi has also issued Disclosure and Investor Protection (DIP)
guidelines to ensure fair prices for the investors, though however, many issuers in
the 90s could unfairly price their capital issues at the cost of the poor common
investors.
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The introduction of Screen Based Trading Systems (SBTS) by NSE is a
major development in the capital market. This made the markets more efficient. The
geographical barriers to trade were dismantled resulting in increased trading
volumes. This was possible due to the great advancements in the area of informationtechnology. SBTS electronically matches orders cutting down time, cost and errors,
and minimizing the chances of fraud. Very long settlement cycle was another major
hindrance in effecting deliveries in the equity market. Often the securities were
delivered after 30 days or more due to weekly/fortnightly settlements and carry
forward transactions. Sebi has enforced the discipline to compulsorily settle trades
in T+3 days since April 2002. This is slated to reduce to T+2 days from April 2003.
All scripts are now under rolling settlement since December 2001.
The Equity Market is incomplete without products to manage risks in
portfolio values. At long last, derivatives trading appeared on Indian exchanges in
June 2000. While the product range in derivatives is still limited (futures and
options on stocks and stock indices), it is certainly a major step forward in
broadening the financial markets. NSE was established as a demutualized structure
separating the roles of ownership, management and trading to eliminate any conflict
of interest among the stakeholders to improve market efficiency and to focus on
investor interest. Another notable development in the Indian equity market has been
the introduction of depositories to dematerialize the share certificates. This avoids
physical movement of certificates, bad deliveries and quicker transfer of ownership
of shares. Presently all actively traded shares are held, traded and settled in demat
form. The setting up of National Securities Clearing Corporation Ltd., (NSCCL) in
April 1996 has been a major development in managing counterparty risks in the
equity market.. While most of the above measures have helped in reinforcing
confidence in the Indian equity market by providing more transparent and efficient
buying, selling and transfer of shares.
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TWIN TOWERS OF EQUITY MARKET
In India the main exchanges are the BSE and the NSE, which contribute to
more than 90% of the trade in the capital market. These two exchanges are themovers and shakers of the equity market in India.
NSE-NATIONAL STOCK EXCHANGE
NSE was setup in November 1992, started its trading
operation effectively from June 30, 1994. Only the debt market
segment of the NSE was put into operation initially. The capital
market segment of the NSE commenced its operation on
November 3, 1994. It provides facility for trading of equity instruments, warrants,
debentures, preference shares etc. The total turn over of capital market segment of
NSE was higher at RS.2,94,504crores/- as compared with RS.1,24,284crores/- of the
Mumbai Stock Exchange in 1996-97. NSE has adopted fully automated screen
based trading system, which allows trading members to trade from their offices
through a communication network. The exchange has opened membership to a
number of cities.
BSE-BOMBAY STOCK EXCHANGE
Bombay Stock Exchange Limited
(BSE) which was founded in 1875 with six
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brokers has now grown into a giant institution with over 874 registered Broker-
Members spread over 380 cities across the country. Today, BSE's Wide Area
Network (WAN) connecting over 8000 BSE Online Trading (BOLT) System Trader
Work Stations (TWS) is one of the largest of its kind in the country. With a view toprovide efficient and integrated services to the investing public through the
members and their associates in the operations pertaining to the Exchange, Bombay
Stock Exchange Limited (BSE) has set up a unique Member Services and
Development to attend to the problems of the Broker-Members.
EQUITY AS AN INVESTMENT
Equity is:
1. Stock or any other security representing an ownership interest.
2. On the balance sheet, the amount of the funds contributed by the owners (the
stockholders) plus the retained earnings (or losses), also referred to as "shareholder's
equity".
3. In the context of margin trading, the value of securities in a margin account minus
what has been borrowed from the brokerage.
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Equity is a term whose meaning depends very much on the context. In general, one
can think of equity as ownership in any asset after all debts associated with that
asset are paid off. For example, a car or house with no outstanding debt is
considered the owner's equity since he or she can readily sell the items for cash.Stocks are equity because they represent ownership of a company, whereas bonds
are classified as debt because they represent an obligation to pay and not ownership
of assets.
The ability of equities to deliver over longer time frames and even
outperform other investment avenues like gold, property and bonds is an often
chronicled fact. However, over shorter time frames, equities also hold the potential
to be a very risky asset class and expose the portfolio to high levels of volatility.
This is the primary reason why any fund manager worth his salt always recommends
a sufficiently long (at least 3 years) time frame for an equity-oriented investment.
Similarly financial planners advocate pruning of the equity holdings with
advancement in the investors age, when the investor is typically closer to retirement
(shorter investment horizon) and has a lower risk appetite as well.
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INVESTING PRINCIPLES
1. Invest for Real Returns
2. Keep an Open Mind
3. Never Follow the Crowd
4. Everything Changes
5. Avoid the Popular
6. Learn from your Mistakes
7. Buy During Times of Pessimism
8. Hunt for Value and Bargains
9. Search Worldwide
10. No-one Knows Everything
If you buy the same securities as other people, you will have the same results
as other people. It is impossible to produce a superior performance unless you do
something different from the majority. To buy when others are despondently selling
and to sell when others are greedily buying requires the greatest fortitude and pays
the greatest reward. Bear markets have always been temporary. And so have bull
markets. Share prices usually turn upward from one to twelve months before the
bottom of the business cycle and vice versa. If a particular industry or type of
security becomes popular with investors, that popularity will always prove
temporary and, when lost, may not return for many years.
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FUNDAMENTAL ANALYSIS
The investor while buying stock has the primary purpose of gain. If he
invests for a short period of time it is speculative but when he holds it for a fairly
long period of time the anticipation is that he would receive some return on his
investment. Fundamental analysis is a method of finding out the future price of a
stock, which an investor wishes to buy. The method for forecasting the future
behavior of investments and the rate of return on them is clearly through an analyzeof the broad economic forces in which they operate. The kind of industry to which
they belong and the analysis of the company's internal working through statements
like income statement, balance sheet and statement of changes of income.
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ECONOMIC ANALYSIS
Investors are concerned with those forces in the
economy, which affect the performance of organizations in
which they wish to participate, through purchase of stock.
A study of the economic forces would give an idea about
future corporate earnings and the payment of dividends
and interest to investors. Some of the broad forces within
which the factors of investment operate are:
1. POPULATION
2. RESEARCH AND TECHNOLOGICAL DEVELOPMENTS
3. CAPITAL FORMATION
4. NATURAL RESOURCES AND RAW MATERIALS
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INDUSTRIAL ANALYSIS
The industry has been defined as homogeneous groups of people doing a
similar kind of activity or similar work. In India, the broad classification of industry
is made according to stock exchange list, which is published. This gives a distinct
classification to industry to industry in different forms such as:
(A)Engineering,
(B)Banking and Insurance,
(C)Textiles,
(D)Cement,
(E) Steel Mills and Alloys,
(F) Chemicals and Pharmaceuticals,
(G)Retail,
(H)Sugar,
(I) Information Technology,
(J) Automobiles and Ancillary,
(K)Telecommunications,
(L) FMCG,
(M) Miscellaneous.
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COMPANY ANALYSIS
Company analysis is a study of the variables that influence the future of a
firm both qualitatively and quantitatively. It is a method of assessing the competitive
position of a firm earning and profitability, the efficiency with which it operates its
financial position and its ful1l with respect to the earning of its shareholders. The
fundamental nature of this analysis is that each share of a company has an intrinsic
value, which is dependent on the company's financial performance, quality of
management and record of its earnings and dividend. They believe that the market
price of share in a period of time will move towards its intrinsic value. If the market
price of a share is lower than the intrinsic value, as evaluated by the fundamental
analysis, then the share is supposed to be undervalued and it should be purchased
but if the current market price shows that it is more than intrinsic value then
according to the theory the share should be sold.
This basic approach is analyzed through the financial statements of an
organization. The basic financial statements, which are required as tools of the
fundamental analyst, are the income statement, the balance sheet, and the statement
of changes in financial position. These statements are useful for investors, creditors
as well as internal management of a firm and on the basis these statements the future
course of action may be taken by the investors of the firm. While evaluating acompany, its statement must be carefully judged to find out that they are:
(a) Correct,
(b) Complete,
(c) Consistent and
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(d) Comparable
TECHNICAL ANALYSIS
Technical analysis is simply the study of prices as reflected on price charts.
Technical analysis assumes that current prices should represent all known
information about the markets. Prices not only reflect intrinsic facts, they also
represent human emotion and the pervasive mass psychology and mood of the
moment. Prices are, in the end, a function of supply and demand. However, on a
moment to moment basis, human emotionsfear, greed, panic, hysteria, elation,
etc. also dramatically effect prices. Markets may move based upon peoples
expectations, not necessarily facts. A market "technician" attempts to disregard the
emotional component of trading by making his decisions based upon chart
formations, assuming that prices reflect both facts and emotion. Analysts use their
technical research to decide whether the current market is a BULL MARKET or a
BEAR MARKET.
It can be done through :-
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STOCK CHARTS
A stock chart is a simple two-axis (X-Y)
plotted graph of price and time.. Individual data plots
for charts can be made using the CLOSING price for
each day. The plots are connected together in a single
line, creating the graph. Also, a combination of the
OPENING, CLOSING, HIGH and/or LOW prices
for that market session can be used for the data plots.
This second type of data is called a PRICE BAR.
TRENDS
The stock chart is used to identify the
current trend. A trend reflects the average rateof change in a stock's price over time. Trends
exist in all time frames and all markets. Trends
can be classified in three ways: UP, DOWN or
RANGEBOUND. In an uptrend, a stock rallies
often with intermediate periods of
consolidation or movement against the trend.
In doing so, it draws a series of higher highs and higher lows on the stock chart. In
an uptrend, there will be a POSITIVE rate of price change over time. In a
downtrend, a stock declines often with intermediate periods of consolidation or
movement against the trend. In doing
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VOLUME
Volume measures the participation of
the crowd. Stock charts display volume
through individual HISTOGRAMS below the
price pane. Often these will show green bars
for up days and red bars for down days.
Investors and traders can measure buying and
selling interest by watching how many up or
down days in a row occur and how their
volume compares with days in which price moves in the opposite direction.
PATTERNS AND INDICATORS
How can one organize the endless stream of
stock chart data into a logical format?
Charts allow investors and traders to look at
past and present price action in order to
make reasonable predictions and wise
choices. It is a highly visual medium. This
one fact separates it from the colder world
of value-based analysis. The stock chart
activates both left-brain and right-brain functions of logic and creativity. So it's
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no surprise that over the last century two forms of analysis have developed that
focus along these lines of critical examination.
MOVING AVERAGES
The most popular technical indicator
for studying stock charts is the MOVING
AVERAGE.. . Moving averages LAG price.
In other words, if price starts to move sharply
upward or downward, it will take some time
for the moving average to "catch up". Plotting
moving averages in stock charts reveals how
well current price is behaving as compared to
the past.. When it is above, conditions are "bullish". When below, conditions are
"bearish". Additionally, moving averages will slope upward or downward over time.
This adds another visual dimension to a stock analysis.
SUPPORT AND RESISTANCE
The concept of SUPPORT AND
RESISTANCE is essential to understanding
and interpreting stock charts. Resistance
defines that level where sellers are too strong
to allow price to rise further. Support and
resistance play different roles in uptrends and
downtrends. In an uptrend, support is where a
pullback from a rally should end. In a
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downtrend, resistance is where a pullback from a decline should end. Support and
resistance are created because price has memory. When price pushes above
resistance, it becomes a new support level. When price falls below support, that
level becomes resistance.
PRIMARY MARKET
The primary is that part of the capital markets
that deals with the issuance of new securities.
Companies, governments or public sector institutions
can obtainfunding through the sale of a new stock or
bond issue. This is typically done through a syndicate
of securities dealers. The process of selling new issues to investors is called
underwriting. In the case of a new stock issue, this sale is an initial public offering
(IPO). Dealers earn a commission that is built into the price of the security offering,
though it can be found in theprospectus. Features Of Primary Market are:-
1. This is the market for new long term capital. The primary market is the marketwhere the securities are sold for the first time. Therefore it is also called New Issue
Market (NIM).
2. In a primary issue, the securities are issued by the company directly to investors.
3. The company receives the money and issue new security certificates to the
investors.
4. Primary issues are used by companies for the purpose of setting up new business
or for expanding or modernizing the existing business.
5. The primary market performs the crucial function of facilitating capital formation
in the economy.
6. The new issue market does not include certain other sources of new long term
external finance, such as loans from financial institutions. Borrowers in the new
http://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Fundinghttp://en.wikipedia.org/wiki/Fundinghttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/Prospectushttp://en.wikipedia.org/wiki/Prospectushttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Fundinghttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/Prospectus7/31/2019 Capital Mkt[1].(Equity Investment)
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issue market may be raising capital for converting private capital into public capital;
this is known as going public.
METHODS OF MARKETING IN PRIMARY MARKET
1. PUBLIC ISSUE
2. PRIVATE PLACEMENT
3. OFFER FOR SALE
4. BOUGHT OUT DEALS
5. INITIAL PUBLIC OFFERCheck Promoter Standing
Study Company Performance
Understand Future Prospects
Look At The Price
6. RIGHT ISSUE
7. BONUS ISSUE
8. BOOK-BUILDING
INTERMEDIARIES IN PRIMARY MARKET
1. MERCHANT BANKERS
2. UNDERWRITERS
3. BANKERS TO THE ISSUE
4. REGISTRARS AND SHARES TRANSFER AGENTS
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5. BROKERS TO AN ISSUE
SECONDARY MARKET
A market, which deals in securities that have
been already issued by companies, is called as
secondary market. It is also known as stock market. It
is the base upon which the primary market is
depending. For the efficient growth of the primary
market a sound secondary market is an essential
requirement. The secondary market offers an important facility of transfer of
securities activities of securities.
Secondary market essentially comprises of stock exchanges,
which provide platform for purchase and sale of securities by investors. In India,
apart from the Regional Stock Exchanges established in different centers, there are
exchanges like the National Stock Exchange (NSE), who provide nation wide
trading facilities with terminals all over the country. The trading platform of stock
exchanges is accessible only through brokers and trading of securities is confined
only to stock exchanges.
The activities of buying and selling of securities in a market are
carried out through the mechanism of stock exchange. There are at present 24 Stock
Exchanges in India, recognized by the government. The first organized stock
exchange was established in India at Bombay in 1887. When the Securities
Contracts (Regulation) Act was passed in 1956, only 7 stock exchanges were
recognized. There are three important stock exchanges in Bombay namely the
Bombay Stock Exchange, National Stock Exchange and over the Counter Exchange
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of India. There has been a substantial growth of capital market in India during the
last 25 years.
REASONS FOR TRANSITING IN SECONDARY MARKET
There are two main reasons why individuals transact in the secondary
market:
1. Information motivated reasons
2. Liquidity motivated reasons
FUNCTIONS OF THE SECONDARY MARKET
1. To facilitate liquidity and marketability of the outstanding equity and debt
instruments.
2. To contribute to economic growth through allocation of funds to the most
efficient channel through the process of disinvestment to reinvestment.
3. To provide instant valuation of securities caused by changes in the internal
environment (that is, company-wide and industry wide factors). Such valuation
facilitates the measurement of the cost of capital and the rate of return of the
economic entities at the micro level.
4. To ensure a measure of safety and fair dealing to protect investors interest.
5. To induce companies to improve performance since the market price at the stock
exchanges reflects the performance and this market price is readily available to
investors.
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LISTING
Listing is a process involved in
listing something with some one. It is a
permission to quote shares and debentures
officially on the trading floor of the stock
exchange. The listed shares appear on the
official list of securities for the purpose of
trading security listing is a step that is
required to register and to place on record the security of a company with the
appropriate authority i.e. the recognized stock exchange. Securities are required to
be listed under Section 9 of the Securities Contract (Regulation) Act, 1956.
Its Characteristics Are:-
1. Agreement
2. Purpose
3. Investor protection
4. Restriction
TYPES OF LISTING
1. Initial Listing
2. Listing For Public Issue
3. Listing For Rights Issue
4. Listing Of Bonus Shares
5. Listing For Merger Or Amalgamation
DELISTING
The securities listed can be de-listed from the Exchange as per the SEBI
(Delisting of Securities) Guidelines, 2003 in the following manner:
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Voluntary de-listing of companies
Compulsory de-listing of companies
TRADING
The act of buying and selling of securities on a stock exchange is known as
Stock Exchange Trading. Jobbers and brokers are the two categories of dealers in
the stock exchange. A jobber is a dealer in securities while a broker is an agent or
seller of securities... they gets commission from his clients, that is fixed by the
stock exchange.
For a trading there is a need of
DEMAT
Demat is dematerialization on shares. Dematerialization is a process by which the
shares, debentures etc in the physical form get converted into the electronic form
and are stored in the computers by the depository. Demat helps in
1. Easy liquidity
2. Trading in demat segment benefits elimination of bad deliveries and all risks
associated with physical certificate such as loss, theft, mutilation, forgery, etc
3. You can also expect a lower interest charge for loans taken against demat shares
as compared to the interest for loan against physical shares. This could result in a
saving of about 0.25% to 1.5%.
4. In case of transfer of electronic shares, you save 0.5% in stamp duty.
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5. You also avoid the cost of courier/ notarization/ the need for further follow-up
with your broker for shares returned for company objection
TRADING PROCEDURE
The following are the steps involved in the trading of securities at a stock
exchange:
TYPES OF DEALINGS
1. Spot delivery contract
2. Ready delivery contract
3. Forward delivery contract
4. Margin trading
ONLINE TRADING
Online trading in shares and securities has already
been started in India. It has been made possible due to
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introduction of demat. ICICI Web Trade, HDFC Securities, Stock Holding
Corporation of India and many other institutions have started the online trading
system. The investors can carry out buying and selling of securities while sitting in
the house or office.HOW TO TRADE ONLINE
1. Log on to the Broker's website.
2. Register yourself as a client.
3. Fill in the client broker agreement on stamp paper.
4. Log on the broker's site using secure user ID and password.
5. The market watch page shows real time data.
6. Trade shares directly by entering the symbol of securities.
7. The broker's server will check the limit on-line and the demat account for the
number of shares execute the trade.
8. Usually the order is executive in about 20 seconds and you get the confirmation.
9. The broker will send one e-mail confirmation and printed contract by mail.
10.On the settlement day the demat and bank accounts will automatically get
debited and credited.
INTERMEDARIES IN SECONDARY MARKET
1. Stock Broker
2. Sub Brokers
3. Custodian
4. Jobber
5. Taraniwala
6. Odd Lot Dealer
7. Arbitrageur
8. Security Dealer
9. Depositories
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10. Portfolio Managers
11. Stock Exchanges
.
OBJECTIVES
To understand the scenario of Equities in Indian Capital Market.
To explore the functionality of Stock Exchanges.
To know about the customer perception regarding investment in capital
market.
To gain the knowledge on Trading Aspects.
To appreciate the role of Equities in India.
To create enthusiasm among academicians by, offering them with some new
areas of further research.
To familiarize the reader of this project with various concepts Equity Market.
To know the role of fundamental, technical and stock analysis.
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To apply the tools and techniques in my research in the form of charts and
diagrams.
RESEARCHMETHODOLOGY
The methodology of the entire research and survey work was defined at an
early stage so that there was minimum wastage of energy material and money.
In the process of the research and survey the entire schedule of work was decided
into steps as follows: -
1. Defining the objective.
2. Defining the population.
3. Frame the sampling units
4. Data to be collected
5. Research Tool
6. Summary& analysis
7. Preparation of the report
DEFINING THE OBJECTIVE:
It is the first step in the research and also is very crucial area of the research. The
objective of this research is to know the working in capital market as equity as an
investment & also analyze the customer perception regarding investment in capital
market(equity as an investment)..
DEFINING THE POPULATION:
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Population refers to the total of items about which information is deserted. The
attributes that are the objective of study are referred to as characteristics and the
units possessing them are called as elementary units. The aggregate of such units is
generally described as population. Thus all units in any field of inquiry constituteuniverse and all elementary units constitute population.
FRAME THE SAMPLING UNITS: The elementary units or cluster of such units may form the basis of sampling
process in which case they are called as sampling units- a list containing all such
sampling units is known as sampling frame. Thus sampling frame consists of a list
of items frame, which the sample is to be drawn. It is often impossible to draw a
sample directly from population. I randomly selected 100 clients of from Jalandhar
and Phagwara. .
DATA TO BE COLLECTED:It becomes necessary to collect data that are appropriate. There are several ways of
collecting the appropriate data, which differ considerably in context of money cost
time and other resources.
The relevant data for the research project is hybrid of primary & secondary data.
Primary Sources:-
Personal interview
Survey
Questionnaire& observation method
Secondary Sources:-
The Secondary source of information consists of:
Books
Journals
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Periodicals
Magazines
Web Sites
The major source in this category has been the publications of different
books. The information from these publications has been searched, assembled &
interpreted in the best possible manner. The report is based on the assumption that,
project success is more dependent upon preventing or working with barriers as
opposed to reinforce existing positive factors.
RESEARCH TOOL:
The instrument, which was used in the research, was questionnaire and it was, like
the questionnaire was started with open-ended questions so that the respondents get
a feel of the whole questionnaire and then questions slowly move on to the close-
ended questions.
SUMMARY AND ANALYSIS OF DATA:
After the data have been collected, it must analyze them to get the neededinformation. The analysis of data requires a number of closely related operations,
which are as establishment of categories, the application of these categories to raw
data through coding, tabulation and then drawing statistical inferences
Analysis work is generally base on the computations of various percentages,
coefficients, etc, by applying various well-defined statistical formulae. In process of
analysis, relationships should be subjected to test of significance to determine with
what validity data can be said to indicate any conclusions. In this research after
analyzing the data we find the leading brand in air conditioners and also find the
sales percentage of various brands of air conditioners in the market.
The above research report was formulated as under-
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Research : Descriptive
Data Source : Primary & Secondary
Research Instrument : Questionnaire
Type of Questionnaire : Open/Close bothSampling Size : 100 Clients
Sampling Procedure : Simple Random Sampling
DATA ANALYSIS
I prepared a questionnaire, which helped me to collect the necessary data for thissurvey. In my survey I interviewed 100 individual belonging to diversified
profession. The data I collected was in crude form, to extract the information from
that data I analyzed the data and make some tables and bar charts.
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DATA ANALYSIS ANDINTERPRETATION OF
DATA
DATA ANALYSIS AND INTERPRETATION OF DATAQUES 1. ARE YOU AN INVESTOR OR NOT ?
OPTIONS NO. OF PEOPLE (%)
YES 96
NO 4
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96%
4%
YES
NO
INTERPRETATION:-
The interpretation is that the 96% people are investing their money in
different schemes and only 4 % people are not invested due to certain
reasons.
QUES 2. IF NOT, WHAT ARE THE REASONS FOR NOT INVESTING ?
OPTIONS NO. OF PEOPLE (%)
NOT APPLICABLE KNOWLEDGE 19
BCOZ OF RISK 28
RUMORS 10
LACK OF INTEREST 20
NO SAVINGS 23
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19%
28%
10%
20%
23%
NOT
APPLICABLE
KNOWLEDGE
BCOZ OF RISK
RUMORS
LACK OF
INTEREST
INTERPRETATION:-
The interpretation is that the,, the people who are not investing because 19%
people dont have knowledge ,28% do not invest due to risk.10% due to
rumors and 20% dont have interest to invest and 23% people dont have
enough saving for investment..
QUES 3. IF YES, WHERE DO YOU PREFER TO INVEST MONEY?
OPTIONS NO. OF PEOPLE (%)
SHARE MKT 16
BANKING SCHEMES 25
LIFE INSURANCE 30
MUTUAL FUNDS 13
GOVT SECURITIES 16
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16%
25%
30%
13%
16% SHARE MKT
BANKING
SCHEMES
LIFE INSURANCE
MUTUAL FUNDS
GOVT
SECURITIES
INTERPRETATION:-
It is that the16% people invested in share market, 25% in banking schemes,
30% in life insurance, 13% in mutual funds and 16% in government
securities.
QUES 4. HAVE YOU EVER INVESTED IN CAPITAL MARKET?
OPTIONS NO. OF RESPONDENTS (%)
YES 44
NO 66
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40%
60%
YES
NO
INTERPRETATION:-
It is that the 44% people invested in capital market and 66% do not invest in
capital market.
QUES 5. WHICH SEGMENT OF CAPITAL MARKET USUALLY YOU
INVEST YOURE MONEY?
OPTIONS NO. OF RESPONDENTS (%)
DEBT MARKET 15
MUTUAL FUNDS 30
EQUITY MARKET 23
DERIVATIVES 17
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COMMODITY MARKET 15
15%
30%
23%
17%
15%DEBT MARKET
MUTUAL FUNDS
EQUITY MARKET
DERIVATIVES
COMMODITY
MARKET
INTERPRETATION:-
The interpretation is that the 15% invested in debt market, 30% in mutual
funds, 23% in equity market, 17% in derivatives and 15% in commodity
market.
QUES 6. IF YOU INVESTED IN EQUITY MARKET,, IN WHICH
SECTORS SHARES YOU WILL INVEST?
OPTIONS NO. OF RESPONDENTS(%)
IT 20
RETAIL 14
FMCG 15
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BANKING 22
MANUFACTURING 13
OIL N GAS 12
OTHERS 4
20%
14%
15%22%
13%
12%
4%
IT
RETAIL
FMCG
BANKING
MANUFACTURING
OIL N GAS
OTHERS
INTERPRETATION:-
It is that the most of the investor invested money in banking and IT sector
and 14% in retail sector and 13% in mfg sector and only 4% in other sector.
QUES 7. WHAT ARE THE REASONS BEHIND FOR INVESTING IN
PARTICULAR SECTOR?
OPTIONS NO. OF RESPONDENTS(%)
GOOD RETURN 36
APPRECIATION IN CAPITAL 20
EFFICIENCY 14
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FUTURE PROSPECTS 30
36%
20%
14%
30% GOOD RETURN
APPRECIATION IN
CAPITAL
EFFICIENCY
FUTURE PROSPECTS
INTERPRETATION:-
It is that the most of the investor invest money for earning and also growth in
future prospectus,, also want to efficiency of company.
QUES 8. ARE YOU INVESTING MONEY IN EQUTY MARKET ON THE
BASIS OF TECHNICAL AND FUNDAMENTAL ANALYSIS ?
OPTIONS NO. OF RESPONDENTS(%)
YES 55
NO 45
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43%
35%
22%
YES
NO
CANT SAY
INTERPRETATION:-
It is that the 43% say it is a good tool and 35% say no and 22% people cany
say about that,, bcoz they dont know about fundamental analysis and
technical analysis..
QUES 8. WHICH ONE WAY YOU CHOOSE FOR TRADING IN
EQUITY MARKET?
OPTIONS NO. OF RESPONDENTS(%)
ONLINE TRADING 49
OFFLINE TRADING 51
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49%51%
ONLINE TRADING
OFFLINE
TRADING
INTERPRETATION:-
It is that the 49% do online trading and 51% do offline trading as like
through brokers agents etc
QUES 9.WHAT PRECAUTION OR CARE SHOULD TAKEN
WHILE INVESTING IN EQUITY ? GIVE RANK ..
OPTIONS (RANK)
Read And Understand
Documents
3
Cost & Benefits 5
Risk & Return 2
Liquidity 4
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Safety 1
3
52
4
1
Read And
Understand
Documents
Cost & Benefits
Risk & Return
Liquidity
Safety
INTERPRETATION:-
It is that the while investing people take precaution of safety first ofinvesting amt, then see risk and return then read documents, then want quick
liquidity..
QUES 10. FROM WHERE YOU GOT INFORMATION ABOUT
INVESTMENT AVENUES ? GIVE RANK ..
OPTIONS (RANK)
PRINT MEDIA 3
FAMILY/FRIENDS 4
INTERNET 2
TV 1
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AGENTS/REPSENTATIVES 5
3
4
2
1
5
PRINT MEDIA
FAMILY/FRIENDS
INTERNET
TV
AGENTS/REPSE
NTATIVES
INTERPRETATION:-
It is that the investor get information from most of them from tv, then
internet by seeing the websites,then print media, then family and friends thenagents of company.
QUES 11. WHAT WOULD YOU SUGGEST THAT WHETHER IT IS
BENEFICIAL TO INVEST IN EQUITY MARKET OR NOT AND WHY?
OPTIONS NO. OF RESPONDENTS(%)
YES 43
NO 57
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43%
57%
YES
NO
INTERPRETATION:-
It is that the 43% said that people have to invest in equity mkt and 57 % said
no,, bcoz of risk ,etc.
WHY? Becoz.........
CONCLUSION
Equity capital is a high risk-high reward, permanent source of long term
finance for corporate enterprises and short term earning for shareholders. The
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investors, who desire to share the risk, return and control associated with ownership
of companies would invest in equity capital.
Today, the Indian Equity Market is one of the most
technologically developed in the world and is on par with other developed markets
abroad. The introduction of on-line trading system, dematerialization, ban of the
badla system, and introduction of rolling settlement have facilitated quick trading
and settlements which lead to larger volumes. The setting up of the National Stock
Exchange of India Limited has revolutionized the face of the stock market. NSE is
the only stock exchange which covers majority equity investments every day.
Also equity capital market encourages capital formation in
the country. The specific factor, which influences equity market, is the investors
sentiment towards the stock market as a whole. So investor first has to analyze and
invest and not speculate in shares. The introduction of online trading has given a
much-needed impetus to the Indian equity markets. In this technological world
things are needed to move at a faster pace, and with the introduction of METHODS
OF MARKETING SECURITIES IN THE EQUITY MARKET, the stock exchange
has expanded its business at a tremendous speed.
According to economic times, the research states the major
reason behind the irregularities of market (up and down in sale and purchase, price
of share) is mainly because of FORECASTING MIND SET OF EQUITY
INVESTORS. So, the stock exchanges must disregards the emotional component of
trading by making investors decisions based upon chart formations, assuming that
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prices reflect both facts and emotion. And also by creating the awareness of
fundamental analysis (Fundamental analysis is a method of finding out the future
price of a stock, which an investor wishes to buy) among the investors to avoid the
irregularities while trading.
So to increase the volume of equity investment, the stock exchanges should
strive to increase transparency, strictly enforce corporate governance norms, provide
more value-added services to investors, and take steps to increase investor
confidence. These stock exchanges will have to plan strategic tie-ups with their
foreign counterparts to get an international platform. A developed and vibrant
secondary market can be an engine for the revival and growth of the primary
market. So, to encourage Indian investment and face international competition every
Indian stock exchange has to stress on innovation and sustained investment in
technology to remain ahead.
FINDINGS
1. Most of the people want to invest in equity market, but they dont have
enough knowledge about equity market.
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2. People dont know how to invest, when to invest, where to invest in equity
market.
3. There is a lot of risk in equity market,, therefore generally people hesitate to
invest in equity market
4. There is a greater role of technical and fundamental analysis in equity
market, so therefore due emphasis must be given to fundamental and
technical analysis
5. We find that the people want to invest in such securities who is more safe
and more liquidity
6. Some investors invest only in those securities who is in the top and whose
growth is more.
7. Middle class family people prefer to invest in banking schemes, life
insurance, and government securities.
8. There is a lot of risk in equity market,, therefore generally people hesitate to
invest in equity market
SUGGESTIONS/RECOMMENDATIONS
1. Still most of Indian population has not proper knowledge of regarding stock
markets. So focus on giving information regarding stock market.
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2. Imparting proper training to agents so that they guide their clients properly.
3. Make the system more transparent so that chances of speculation reduce.
4. Make new laws for proper functioning of market.
5. Investors should know how to make fundamental, industry and technical so
that they can better understand the position of equity market.
6. Market penetration in India is very less. If we talk about online trading than
the size of untapped market is very large. Serious efforts to bring new
investors into business should be made.
7. To increase the satisfaction level of the client more educated & well
informed Relationship Managers should be employed.
8. After sales services to the investors should be made better to retain the
existing unit holders.
LIMITATIONS
1. Time was major constraint in the study.
2. Lack of personal meetings with respondents could produce different results.
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3. Inaccessibility of respondents.
4. As it is carried out on human being who have the tendency to behave
artificially when they know that they are being analyzed.
5. Subjectivity is the main limitations of such studies. It is very difficult to
verify the research result.
6. Lack of knowledge of awareness among customers.
7. Psychology of people they think that investment in shares is not beneficial, it
is more risky.
BIBLIOGRAPHY
Books Referred
1. Investment Management-Preeti Singh
2. Indian Financial Market-T R Venkatesh
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3. Financial Market-P K Bandgar
4. Merchant Banking & Financial Services-Anil Agashe.
Magazines
1. Business Today
2. India Today
3. Business World
Websites
1. www.nseindia.com
2. www.indiainfoline.com
3. www.hdfcsec.com
4. www.equitymaster.com
5. www.bseindia.com
6. www.sify.com
7. www.sebi.gov.in
8. www.financialexpress.com
ANNEXURE
QUESTIONNAIRE
NAME:-
OCCUPATION:-
PHONE NO:-
PLZ TICK THE FOLLOWING OPTIONS
QUES 1. ARE YOU AN INVESTOR OR NOT ?
http://www.nseindia.com/http://www.hdfcsec.com/http://www.bseindia.com/http://www.sebi.gov.in/http://www.nseindia.com/http://www.hdfcsec.com/http://www.bseindia.com/http://www.sebi.gov.in/7/31/2019 Capital Mkt[1].(Equity Investment)
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Yes No
QUES 2. IF NOT, WHAT ARE THE REASONS FOR NOT INVESTING ?
Not Applicable Knowledge.. because of Risk
Rumors.. Lack Of Interest.. No Savings....
QUES 3. IF YES, WHERE DO YOU PREFER TO INVEST MONEY ?
Shares .. Banking Schemes... Life Insurance .
Mutual Funds Govt. Security..
QUES 4. HAVE YOU EVER INVESTED IN CAPITAL MARKET ?
Yes No
QUES 5. WHICH SEGMENT OF CAPITAL MARKET USUALLY YOU
INVEST YOUR MONEY ?
Debt Market Mutual Funds . Equity Market
Derivatives . Commodity Market
QUES 6. IF YOU INVESTED IN EQUITY MARKET,, IN WHICH
SECTORS SHARES YOU WILL INVEST ?
I T Retail FMCG Banking.
Manufacturing Oil and Gas Others.
QUES 7. WHAT ARE THE REASONS BEHIND FOR INVESTING IN
THIS SECTOR ?
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Good Return.. Appreciation In Capital.. Efficiency ..
Future Prospectus ...... Look at Price..
QUES 8. ARE YOU INVESTING MONEY IN EQUTY MARKET ON THE
BASIS OF TECHNICAL AND FUNDAMENTAL ANALYSIS ?
Yes . No..
QUES 9. DO YOU THINK THAT FUNDAMENTAL AND TECHNICAL
ANALYSIS IS A GOOD TOOL FOR INVESTMENT ?
Yes No. Cant say.
QUES 10. WHICH ONE WAY YOU CHOOSE FOR TRADING IN
EQUITY MARKET ?
Online Trading.. Offline Trading.
QUES 11. WHAT PRECAUTION OR CARE SHOULD TAKEN
WHILE INVESTING IN EQUITY ? GIVE RANK ..?
Read And Understand Documents .
Cost & Benefits .
Risk & Return .
Liquidity .
Safety .
QUES 12. FROM WHERE YOU GET INFORMATION ABOUT
INVESTMENT AVENUES ?
Print Media ..... Family /Friends .... Internet ..
TV .. Agents/Representatives of Company ..
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QUES 13. WHAT WOULD YOU SUGGEST THAT WHETHER IT IS
BENEFICIAL TO INVEST IN EQUITY MARKET OR NOT AND WHY ?
Yes .. No ..
WHY? Because.........
DATE --------------------------
Signature
THANK YOU FOR CO-OPERATION