Truba College of Engineering

8/6/2019 Truba College of Engineering

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TRUBA COLLEGE OF

ENGINEERING &TECHNOLOGY, INDORE

DEPARTMENT OF MANAGEMENT STUDIES

(DEVI AHILYA VISHWAVIDYALAYA INDORE)

A MAJOR RESEARCH PROJECT ON:

A ANALYTICAL STUDY OF STOCK MARKET &

THEIR SEGMENTS

(For the partial fulfillment of the requirement for award of the degree of Masters of Business

Administration [Full Time] 2years Programme 2009-11

GUIDED BY: PREPARED BY:VIKAS JAIN PRASHANT GOLESenior lecturer (Finance) & Head Academic MBA (FT) 4Th SemesterTruba College of Engg. & Tech. Roll No. - 09170010


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DECLARATION

I, the undersigned Mr. PRASHANT GOLE declare that this Research

Project A Analytical Study of Stock Market and Their

Segments Is based on my original work and my indebtness to otherwork, publications has been duly acknowledged at relevant places.

SUBMITTED BY: GUIDED BY:

PRASHANT GOLE VIKAS JAIN

MBA 4th Sem Senior lecturer (Finance)

Roll No.09170010 & Head Academic

Department of Management Studies

TRUBA College of Engineering & Technology, Indore


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CERTIFICATE

This is to certify that Mr. PRASHANT GOLE a student of MBA (FT)

2 years semester 4 from Truba College of Engineering and Technology,Indore (M.P.) has completed his Research Project on the topic A

Analytical Study Stock Market and Their Segment under my guidance

and supervision and his work is original and genuine.

Prof: VIKAS JAIN

Senior lecturer (finance)

Head Academic

TRUBA College of Engineering & Technology

Indore [MP]


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ACKNOWLEDGEMENT

The duration of the project report was the one etched in my memory for the long

time to come. I do have certain people to thank for it being a memorable

experience.

Dr. Ritu Joshi (Head of the Department) has been a source of inspiration and I

would like to thank her in all my humbleness.

Mr. Vikas Jain my guide during the project period has been the ever present pillar

of support and guidance throughout. I am indeed indebted to him for the

experience and information he shared with me. His suggestions and comments

have made the report more valuable.

I would like to thank my family members, my friends and entire staff of Truba

College of Engineering and Technology for making the atmosphere amicable and

makes me feel at ease at the time of stress.

At last I am thankful to all those persons who help me directly and indirectly to

cover the wide aspect of Research Project.

With Sincere Thanks

Prashant Gole


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CHAPTER-1

Introduction of

Study

INTRODUCTION

Stock exchanges to some extent play an important role as indicators, reflecting the


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Performance of the country's economic state of health. Stock market is a place

where securities are bought and sold. It is exposed to a high degree of volatility;

prices fluctuate within minutes and are determined by the demand and supply ofstocks at a given time. Stockbrokers are the ones who buy and sell securities on

behalf of individuals and institutions for some commission.

T HERE ARE TWO TYPES OF MARKETS IN INDIA

Money market

Capital Market

MONEY MARKET

Money market is a market for debt securities that pay off in the short term usually less

than one year, for example the market for 90-days treasury bills. This market

Encompasses the trading and issuance of short term non equity debt instruments

Including treasury bills, commercial papers, bankers acceptance, certificates of Deposits,

etc. In other word we can also say that the Money Market is basically concerned with the

Issue and trading of securities with short term maturities or quasi-money instruments. The

Instruments traded in the money-market are Treasury Bills, Certificates of Deposits

(CDs), Commercial Paper (CPs), Bills of Exchange and other such instruments of

short-term maturities (i.e. not exceeding 1 year with regard to the

original maturity)

CAPITAL MARKET


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Capital market is a market for long-term debt and equity shares. In this market, the

Capital funds comprising of both equity and debt are issued and traded. This also

Includes private placement sources of debt and equity as well as organized markets like

stock exchanges.

Capital market can divided in two segment -

primary market

Secondary Market

PRIMARY MARKET

In the primary market, securities are offered to public for subscription for the purpose Of

raising capital or fund. Secondary market is an equity trading avenue in which Already

existing/pre- issued securities are traded amongst investors. Secondary Market could be

either auction or dealer market. While stock exchange is the part of an auction market,

Over-the-Counter (OTC) is a part of the dealer market. In addition to the traditional

sources of capital from family and friends, startup firms are Created and nurtured by

Venture Capital Funds and Private Equity Funds. According to the Indian Venture

Capital Association Yearbook (2003), investments of $881Million were injected into 80

companies in 2002, and investments of $470 million were injected into 56 companies in

2003. The firms which received these investments were drawn from a wide range

of industries, including finance, consumer goods and health.The growth of

the venture capital and private equity mechanisms in India is critically linked to their

track record for successful exits. Investments by these funds only Commenced in recent

years and we are seeing a rapid buildup in a full range of Channels for exit, with a mix of

profitable and unprofitable outcomes. This success with Exit suggests that investors will

allocate increased resources to venture funds and Private equity funds operating in India,

who will (in turn) be able to fund the creation of New firms.

SECONDARY MARKET


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Secondary Market refers to a market where securities are traded after being initially

Offered to the public in the primary market and/or listed on the Stock Exchange.

Majority of the trading is done in the secondary market. Secondary market comprises

of equity markets and the debt markets.For the general investor, the secondary market

provides an efficient platform for Trading of his securities. For the management of the

company, Secondary equity markets serve as a monitoring and control conduitby

facilitating value-enhancing control activities, enabling implementation of incentive-

based management contracts,And aggregating information (via price discovery)

that guides management decisions. A bit about history of stock exchange they say

it was under a tree that it all started in 1875.Bombay Stock Exchange (BSE) was the

major exchange in India till 1994.National Stock Exchange (NSE) started operations in

1994.

LITERATURE REVIEW


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Stock market is volatile market it depend on past data and fundamental research.

The research here is a type of descriptive research hence the literature used by me

will be qualitative which would deal with certain studies the literature would be

collected from the journals, newspaper, magazines and websites which would Help in

enhancing the accuracy & reliability of my research all the data sources used here

would be secondary in last year study the topic is comparative analysis of national

stock exchange with new York stock exchange it is basic of the topic is compare

the national stock exchange and what is the the different thing in Indian market and

new York market new York stock exchange it is the different of my study I am study

forA analytical study of stock market and their segment it is basically depend on

technically and fundamental research of the company share which is listed in stock

market

THE OBJECTIVE OF THIS PROJECT


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My objectives for this project are:

1) To study volatility in Indian stock market while taking SENSEX of Bombaystock

exchange as a source of secondary data which broadly representIndian stock market

along with NIFTY of National stock exchange.

2) To study the factors which are making Indian stock market volatile.

3) To furnish institutional material relevant for understanding the environment in

which stock market fluctuation are occurring.

4) TO Get information from the research to learn more about the stock market;

5) TO Investigate the effects of the trading stratagem through the process of the

trading simulation;

6)Establishing a nationwide trading facility for all types of securities;

7) Ensuring equal access to investors all over the country through an appropriate

communication network

RESEARCH METHODOLGY


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To conduct the market research first of all its necessary to create research design.

Research design is basically a blue print of how a research is to be conducted.

There are three types of approaches used during the any research-

1) Exploratory

2) Descriptive

3) Experimental

During this research descriptive and exploratory approach is taken into consideration

because of the availability of relevant information to describe the relationship

between the marketing problem and the available information.

Sources of data

Data used in this study is of secondary in nature. Sensex and Nifty is taken as

asource of information which widely describes Indian stock market. Here monthly

prices of both indexes are taken for the study purpose.

Types of data

Primary data- The primary sources of data refer to the company groth rate

&company share in the market it first data to collect by company history

Secondary data- collect by books News paper and magazines, Internet.

SCOPE


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This study can be used by investors, traders and other professionals as a supplement

to their own research. The market that deals in shares and stocks can be depicted as a

fluid that supports the probability factors of density and viscosity at any possible

time slot. So trading with such unexpected scenario can be tough and sketchy if an

individual is not at all updated with these abrupt changes of the share market. In

online share trading interface of the user with the market at maximum availability

can yield an effective result to his trading. Such a facet demands high speed

connection of the Internet for market notification so that the platform of trading can

be captured with snapshots that will keep track of every second change of the same

LIMITATION


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Generally speaking, when people think of the money that can be

made from the stock market, most think of the buying and selling of

stocks. This is a very limited view that conflates the entire of the

stock market investment field down to mere stock value. However, it

is in trading options where real money can be made from the stock

market.

Trading optionsis far more interesting simply because an option is a

much more interesting investment mechanism. An option is a

derivative investment instrument, meaning its value is derived from

another investment, namely stock. What this means is that an

options value is somewhat related to the value of stock.

The reason why trading options are so lucrative is because they

allow a trader to reserve the right to purchase or sell the underlying

stock within a specific time frame, but without obligating him or her

to do so. For example, when you have a call option for a certain

companys stock it means that you reserve the right to purchase the

stock just before it goes up in value. However, there is a deliberate

time limit on an option, which means they are not all-powerful and

do not allow you to reserve the stock forever.
http://www.tradingtrainerblog.com/three-rules-for-option-trading/http://www.tradingtrainerblog.com/three-rules-for-option-trading/


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CHAPTER-2

An overview of

stock market

INDIAN STOCK MARKET OVERVIEW

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 meager 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.Thus, at present, there are totally twenty-one recognized stock

exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI)

and the National Stock Exchange of India Limited (NSEIL).

ORIGIN OF INDIAN STOCK MARKET


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The origin of the stock market in India goes back to the end of the eighteenth century

when long-term negotiable securities were first issued. However, for all practical

purposes, the real beginning occurred in the middle of the nineteenth century after the

enactment of the companies Act in 1850, which introduced the features of limited

liability and generated investor interest in corporate securities.

An important early event in the development of the stock market in India was the

formation of the native share and stock brokers 'Association at Bombay in 1875, the

precursor of the present day Bombay Stock Exchange. This was followed by the

formation of associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras

(1937). In addition, a large number of ephemeral exchanges emerged mainly in buoyantperiods to recede into oblivion during depressing times subsequently.

Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life.

Without a stock exchange, the saving of the community- the sinews of economic progress

and productive efficiency- would remain underutilized. The task of mobilization and

allocation of savings could be attempted in the old days by a much less specialized

institution than the stock exchanges. But as business and industry expanded and the

economy assumed more complex nature, the need for 'permanent finance' arose.

Entrepreneurs needed money for long term whereas investors demanded liquidity the

facility to convert their investment into cash at any given time. The answer was a ready

market for investments and this was how the stock exchange came into being.

Stock exchange means any body of individuals, whether incorporated or not, constituted

for the purpose of regulating or controlling the business of buying, selling or dealing in

securities. These securities include:

(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like

nature in or of any incorporated company or other body corporate;

(ii) Government securities; and


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(iii) Rights or interest in securities.

TRADING PATTERN OF THE INDIAN STOCK MARKET

Trading in Indian stock exchanges is limited to listed securities of

public limited

companies. They are broadly divided into two categories, namely,

specified securities

(forward list) and non-specified securities (cash list). Equity shares ofdividend

paying, growth-oriented companies with a paid-up capital of at least

Rs.50 million

and a market capitalization of at least Rs.100 million and having more

than 20,000

shareholders are, normally, put in the specified group and the balance

in no specified

group. Two types of transactions can be carried out on the Indian stock exchanges: (a)

spot delivery transactions "for delivery and payment within the time or on the date

stipulated when entering into the contract which shall not be more than 14 days

following the date of the contract: and (b) forward transactions "delivery and

payment can be extended by further period of 14 days each so that the overall period

does not exceed 90 days from the date of the contract". The latter is permitted only in

the case of specified shares. The brokers who carry over the outstanding pay carry

over charges (can tango or backwardation), which are usually determined by the rates

of interest prevailing. A member broker in an Indian stock exchange can act as an agent,

buy and sell securities for his clients on a commission basis and also can act as a trader or

dealer as a principal, buy and sell securities on his own account and risk, in contrast with

the practice prevailing on New York and London Stock Exchanges, where a member


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can act as a jobber or a broker only.The nature of trading on Indian Stock Exchanges are

that of age old conventional style of face-to-face trading with bids and offers being made

by open outcry. However, there is a great amount of effort to modernize the

Indian stock exchanges in the very recent times.


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MAIN FINANCIAL PRODUCTS IN THE SECONDARY MARKET

Equity: The ownership interest in a company of holders of its common and


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preferred stock. The various kinds of equity shares are as follows

Equity Shares: An equity share, commonly referred to as ordinary share alsorepresents the form of fractional ownership in which a shareholder, as a fractional owner,undertakes the maximum entrepreneurial risk associated with a businessventure. The holders of such shares are members of the company and havevoting rights. A company may issue such shares with differential rights as tovoting, payment of dividend, etc.

Rights Issue/ Rights Shares: The issue of new securities to existing shareholdersat a ratio to those already held.

.Bonus Shares: Shares issued by the companies to their shareholders free ofcost by capitalization of accumulated reserves from the profits earned in theearlier years.

Preferred Stock/ Preference shares: Owners of these kind of shares areentitled to a fixed dividend or dividend calculated at a fixed rate to be paidregularly before dividend can be paid in respect of equity share. They also enjoypriority over the equity shareholders in payment of surplus. But in the event ofliquidation, their claims rank below the claims of the companys creditors,bondholders / debenture holders.

Cumulative Preference Shares: A type of preference shares on which dividendaccumulates if remains unpaid. All arrears of preference dividend have to bepaid out before paying dividend on equity shares.

Cumulative Convertible Preference Shares: A type of preference shareswhere the dividend payable on the same accumulates, if not paid. After aspecified date, these shares will be converted into equity capital of the company.

Participating Preference Share: The right of certain preference shareholders toparticipate in profits after a specified fixed dividend contracted for is paid.

Participation right is linked with the quantum of dividend paid on the equityshares over and above a particular specified level.

Security Receipts: Security receipt means a receipt or other security, issued bya securitisation company or reconstruction company to any qualified institutionalbuyer pursuant to a scheme, evidencing the purchase or acquisition by theholder thereof, of an undivided right, title or interest in the financial asset involved


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in securitisation.

Government securities (G-Secs): These are sovereign (credit risk-free) couponbearing instruments which are issued by the Reserve Bank of India on behalf ofGovernment of India, in lieu of the Central Government's market borrowingprogramme. These securities have a fixed coupon that is paid on specific dateson half-yearly basis. These securities are available in wide range of maturitydates, from short dated (less than one year) to long dated (upto twenty years).

Debentures: Bonds issued by a company bearing a fixed rate of interest usuallypayable half yearly on specific dates and principal amount repayable onparticular date on redemption of the debentures. Debentures are normallysecured/ charged against the asset of the company in favour of debentureholder.

Bond: A negotiable certificate evidencing indebtedness. It is normally unsecured.A debt security is generally issued by a company, municipality or governmentagency. A bond investor lends money to the issuer and in exchange, the issuerpromises torepay the loan amount on a specified maturity date. The issuerusually pays the bond holder periodic interest payments over the life of the loan.The various types of Bonds are as follows-

Zero Coupon Bond: Bond issued at a discount and repaid at a face value. Noperiodic interest is paid. The difference between the issue price and redemptionprice represents the return to the holder. The buyer of these bonds receives onlyone payment, at the maturity of the bond.

Convertible Bond: A bond giving the investor the option to convert the bond intoequity at a fixed conversion price.

Commercial Paper: A short term promise to repay a fixed amount that is placedon the market either directly or through a specialized intermediary. It is usuallyissued by companies with a high credit standing in the form of a promissory noteredeemable at par to the holder on maturity and therefore, doesnt require anyguarantee. Commercial paper is a money market instrument issued normally fora tenure of 90 days. Treasury Bills: Short-term (up to 91 days) bearer discount security issued by the

Government as a means of financing its cash requirements.

THERE ARE TWO INDEX IN STOCK MARKET

NSE(NATIONAL STOCK EXCHANGE )


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BSE(BOMBAY STOCK EXCHANGE)

NSE (NATIONAL STOCK EXCHANGE)With the liberalization of the Indian economy, it was found inevitable to lift the Indianstock market trading system on par with the international standards. On the basis ofthe recommendations of high-powered Pherwani Committee, Industrial DevelopmentBank of India, Industrial Credit and Investment Corporation of India, IndustrialFinance Corporation of India, all Insurance Corporations, selected commercial banks andothers incorporated the National Stock Exchange in 1992.

Market Segments and Products IN NSE

NSE provides an electronic trading platform for of all types of securities for investorsunder one roof - Equity, Corporate Debt, Central and State Government Securities,TBills, Commercial Paper, Certificate of Deposits (CDs), Warrants, Mutual Funds units,Exchange Traded Funds, Derivatives like Index Futures, Index Options, StockFutures, Stock Options, Futures on Interest Rates etc., which makes it one of the fewexchanges in the world providing trading facility for all types of securities on a singleexchange.

The NSE provides trading in 3 different segments:

Wholesale debt market (WDM)

Capital market (CM) segment and

The futures & options (F&O) segment.

Wholesale debt market (WDM)

The Wholesale Debt Market segment provides the trading platform for trading of awide range of debt securities which includes State and Central Government securities,T-Bills, PSU Bonds, Corporate Debentures, CPs, CDs etc. However, along with thesefinancial instruments, NSE has also launched various products (e.g. FIMMDA-NSEMIBID/MIBOR) owing to the market need. A reference rate is said to be an accuratemeasure of the market price. In the fixed income market, it is the interest rate that themarket respects and closely matches. In response to this, NSE started computing anddisseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter-Bank Offer Rate (MIBOR). Owing to the robust methodology of computation of theserates and its extensive use, this product has become very popular among the marketparticipants.Keeping in mind the requirements of the banking industry, FIs, MFs, insurance


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companies, who have substantial investments in sovereign papers, NSE also startedthe dissemination of its yet another product, the Zero Coupon Yield Curve. This helpsin valuation of sovereign securities across all maturities irrespective of its liquidity inthe market. The increased activity in the government securities market in India and

simultaneous emergence of MFs (Gilt MFs) had given rise to the need for a welldefined bond index to measure the returns in the bond market. NSE constructed suchan index the, NSE Government Securities Index. This index provides a benchmarkforportfolio management by various investment managers and gilt funds.

Capital market (CM) segment

The Capital Market segment offers a fully automated screen based trading system,known as the National Exchange for Automated Trading (NEAT) system. Thisoperates on a price/time priority basis and enables members from across the countryto trade with enormous ease and efficiency. Various types of securities e.g. equityshares, warrants, debentures etc. are traded on this system. The average dailyturnover in the CM Segment of the Exchange during 2004-05 was nearly Rs. 4,506crs.NSE started trading in the equities segment (Capital Market segment) on November 3,1994 and within a short span of 1 year became the largest exchange in India in termsof volumes transacted.Trading volumes in the equity segment have grown rapidly with average daily turnoverincreasing from Rs.17 crores during 1994-95 to Rs.6,253 crores during 2005-06.During the year 2005-06, NSE reported a turnover of Rs.1,569,556 crores in theequities segment.The Equities section provides you with an insight into the equities segment of NSEand also provides real-time quotes and statistics of the equities market. In-depthinformation regarding listing of securities, trading systems & processes, clearing andsettlement, risk management, trading statistics etc are available here.

The futures & options (F&O) segment:

Futures & Options segment of NSE provides trading in derivatives instruments likeIndex Futures, Index Options, Stock Options, Stock Futures and Futures on interestrates. Though only four years into its operations, the futures and options segment ofNSE has made a mark for itself globally. In the Futures and Options segment, tradingin Nifty and CNX IT index and 53 single stocks are available. W.e.f. May 27 2005,futures and options would be available on 118 single stocks. The average dailyturnover in the F&O Segment of the Exchange during 2004-05 was nearly Rs. 10,067 crs.


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BOMBAY STOCK EXCHANGE OF INDIA LIMITED

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a richheritage. Popularly known as "BSE", it was established as "The Native Share & StockBrokers Association" in 1875. It is the first stock exchange in the country to obtainpermanent recognition in 1956 from the Government of India under the SecuritiesContracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capitalmarket is widely recognized and its index, SENSEX, is tracked worldwide. Earlier anAssociation of Persons (AOP), the Exchange is now a demutualised and corporativeentity incorporated under the provisions of the Companies Act, 1956, pursuant to theBSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securitiesand Exchange Board of India (SEBI). With demutualization, the trading rights and

ownership rights have been de-linked effectively addressing concerns regardingperceived and real conflicts of interest. The Exchange is professionally managed underthe overall direction of the Board ofDirectors.

The Board comprises eminent professionals, representatives of Trading Members andthe Managing Director of the Exchange. The Board is inclusive and is designed tobenefit from the participation of market intermediaries. In terms of organization structure,the Board formulates larger policy issues and exercises over-all control. The committeesconstituted by the Board are broad-based. The day-to-day operations of the Exchange aremanaged by the Managing Director and a management team of professionals.The Exchange has a nation-wide reach with a presence in 417 cities and towns ofIndia. The systems and processes of the Exchange are designed to safeguard marketintegrity and enhance transparency in operations. During the year 2004-2005, thetrading volumes on the Exchange showed robust growth. The Exchange provides anefficient and transparent market for trading in equity, debt instruments and derivatives.The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange andis BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of theExchange are ISO 9001:2000 certified.Bombay Stock Exchange Limited (BSE) which was founded in 1875 with six brokershas now grown into a giant institution with over 874 registered Broker-Membersspread 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 to provide efficient and integrated services to the investing public throughthe members and their associates in the operations pertaining to the Exchange,Bombay Stock Exchange Limited (BSE) has set up a unique Member Services andDevelopment to attend to the problems of the Broker-Members.Member Services and Development Department is the single point interface forinteracting with the Exchange Administration to address to Members' issues. TheDepartment takes care of various problems and constraints faced by the Members in


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various products such as Cash, Derivatives, Internet Trading, and Processes such asTrading, Technology, Clearing and Settlement, Surveillance and Inspection, Membership,Training, Corporate Information, etc.

Bombay Stock Exchange Limited (BSE) which was founded in 1875 with six brokers


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CHEPTER-3

Introduction ofstock market


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INDIAN STOCK MARKET

Stock markets refer to a market place where investors can buy and sell

stocks. The price at which each buying and selling transaction takes is

determined by the market forces (i.e. demand and supply for a

particular stock).

Let us take an example for a better understanding of how market

forces determine stock prices. ABC Co. Ltd. enjoys high investor

confidence and there is an anticipation of an upward movement in its

stock price. More and more people would want to buy this stock (i.e.

high demand) and very few people will want to sell this stock at current

market price (i.e. less supply). Therefore, buyers will have to bid ahigher price for this stock to match the ask price from the seller which

will increase the stock price of ABC Co. Ltd. On the contrary, if there

are more sellers than buyers (i.e. high supply and low demand) for the

stock of ABC Co. Ltd. in the market, its price will fall down.


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In earlier times, buyers and sellers used to assemble at stock

exchanges to make a transaction but now with the dawn of IT, most of

the operations are done electronically and the stock markets have

become almost paperless. Now investors dont have to gather at the

Exchanges, and can trade freely from their home or office over the

phone or through Internet.

With over 20 million shareholders, India has the third largest investor base in the world

after the USA and Japan. Over9,000 companies are listed on the stock exchanges, which

are serviced by approximately 7,500 stockbrokers. The Indian capital market issignificant in terms of the degree of development, volume of trading and its tremendous

growth potential.

Worldwide Stock Markets

Source: ETIG, November 2010/ August 2007

Country % of world m-cap 2010 Market cap (US$ b) 2007

1 USA 29.70% 17,923

2 Japan 7.97% 4,615

3 China 6.89% 3,059

4 United Kingdom6.72% 3,722

5 Hong Kong 4.97% 2,180

6 Canada 3.74% 1,620

7 France 3.55% 2,653


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8 India 3.22% 1,090

9 Germany 2.84% 1,976

10 Brazil 2.84% -

The National Stock Exchange of India Limited has genesis in the report of theHigh Powered Study Group on Establishment of New Stock Exchanges, whichrecommended promotion of a National Stock Exchange by financialinstitutions (FIs) to provide access to investors from all across the country onan equal footing. Based on the recommendations, NSE was promoted byleading Financial Institutions at the behest of the Government of India and

was incorporated in November 1992 as a tax-paying company unlike otherstock exchanges in the country. On its recognition as a stock exchange underthe Securities Contracts (Regulation) Act, 1956 in April 1993, NSEcommenced operations in the Wholesale Debt Market (WDM) segment in June1994. The Capital Market (Equities) segment commenced operations inNovember 1994 and predations in Derivatives segment commenced in June2000 It is the largest stock exchange in India and the third largest in theworld in terms of volume of transactions. NSE is mutually-owned by a set ofleading financial institutions, banks, insurance companies and other financialintermediaries in India but its ownership and management operate asseparate entities. As of 2006, the NSE VSAT terminals, 2799 in total, covermore than 1500 cities across India. In March 2006, the NSE had a total

market capitalization of 4,380,774 crore INR making it the second-largeststock market in South Asia in terms of market-capitalization.

1.2.9 S&P CNX NIFTY

S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors ofthe economy. ItIs used for a variety of purposes such as benchmarking fund portfolios, indexbased derivativesAnd index funds.S&P CNX Nifty is owned and managed by India IndexServices and Products Ltd. (IISL), which is a joint venture between NSE andCRISIL. IISL is India's first specialized company focused upon the index as a

core product. IISL have a consulting and licensing agreement with Standard &Poor's (S&P), who are world leaders in index services. The average totaltraded value for the last six months of all Nifty stocks is approximately45.24% of the traded value of all tocks on the NSE .Nifty stocks representabout 57.92% of the total market capitalization as on April 10, 2007. Impactcost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.08% .P CNXNifty is professionally maintained and is ideal for derivatives trading


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1.2.10 TYPES OF STOCKS

1. BLUE CHIP STOCKS

the term blue chip comes from poker, where the blue chip carry the highestvalue .large established firms with a long record of profit growth, dividendpayout and a reputation for quality management, products and service arereferred to as blue chip companies. These firms are generally leaders in theirindustries and are considered likely candidates for long term growth .becauseblue chip companies are held in such high esteem, they often set thestandard by which other companies in their field are measured .well knownblue chip companies includes IBM, Coco-Cola, general electric and McDonald

2. PENNY STOCKS

Penny stocks are low priced speculative stock, that are very risky .companieswith a short or erratic history of revenues and earnings issue them .they arethe lowest of the low in price and many stock exchanges choose not tradethem.

3. INCOME STOCKSIncome stocks are those stocks that pay higher than average dividend over asustained period.these above average dividend tends to be paid by large, establishedcompanies with stable


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CHPAPTER-4

THEORGANIZATIONAL


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SET UP OF STOCK

MARKET

SEBISECURITY AND EXCHANGE BOARD OF INDIA

The SEBI is the regulatory authority established under Section 3 of SEBI Act 1992 to

protect the interests of the investors in securities and to promote the development of, and

to regulate, the securities market and for matters connected therewith and incidental

thereto. Government of India in the Department of Economic Affairs No.1 (44)SE/86,

dated the 12th day of April, 1988;

The Board shall consist of the following members, namely:-

1. A Chairman


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2. Two members from amongst the officials of the Ministry of the Central

Government dealing with Finance (and administration of the Companies Act,

1956;) 2 of 1934

3. One member from amongst the officials of [the Reserve Bank

4. Five other members of whom at least three shall be the whole-time members

Departments of SEBI regulating trading in the secondary market

(1) Market Intermediaries Registration and Supervision department

(MIRSD)Registration, supervision, compliance monitoring and inspections of all marketintermediaries in respect of all segments of the markets viz. equity, equityderivatives,debt and debt related derivatives.

(2) Market Regulation Department (MRD)Formulating new policies and supervising the functioning and operations (exceptrelating to derivatives) of securities exchanges, their subsidiaries, and marketinstitutions such as Clearing and settlement organizations and Depositories(Collectively referred to as Market SROs).

(3)Derivatives and New Products Departments (DNPD)Supervising trading at derivatives segments of stock exchanges, introducing newproducts to be traded, and consequent policy changes

CHAPTER-5

ANALYSIS AND

INTERPRETATION


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CHAPTER-6

Findings,conclusions &

suggestions


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Bibliography


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CONTENTS

CHAPTER-1: Introduction of Study

CHAPTER-2:An overview of Stock market

CHAPTER-3:Introduction of New York Stock

Exchange

CHPAPTER-4: Analysis & Interpretation

CHAPTER-5: Performance of Both Stock exchanges

CHAPTER-6:Findings, conclusions & suggestions

Bibliography

Documents

Truba College of Engineering