INDIAN EQUITY MARKET

- KASHISH ARORA
Shivaji College
YEAR - 2013
Summer Internship Project

(1 month; 4 June-4

July)

SMC Global Securities

LTD.

ABOUT SMC
INDIAN EQUITY M ARKET BY KASHISH ARORA

Overview
Founded in 1994, SMC Group is one of Indias leading financial
services and investment solutions providers and has been rated
as Indias Best Equity & Best Currency Broker and Broking
house with the largest Distribution Network, (Source: BSE IPF
and D&B Equity Broking Awards 2012, 2011 & 2010 and
Bloomberg-UTV Financial Leadership Awards 2012 & 2011).
Over the years, SMC has expanded its operations domestically
as well as internationally. Existing network includes regional
offices at Mumbai, Kolkata, Chennai, Ahmadabad, Jaipur,
Hyderabad, Bangalore plus a growing network of 43 branches &
2500+ registered sub-brokers and authorized persons spread
across 500+ cities and towns in India.
SMC offer a diverse range of financial services which includes
institutional and retail brokerage of

equity,
derivatives,
commodities,
currency,
online trading,
depository services,
distribution of IPOs ,
mutual funds,
fixed deposits &
bonds,
dedicated desk for NRIs and institutional clients,
insurance broking(both life & general),
clearing services,
margin financing,
investment banking,
portfolio management,
Wealth advisory & research.

SMC is also amongst the first financial firms in India to expand

operations in the lucrative gulf market, by acquiring license for

INDIAN EQUITY M ARKET BY KASHISH ARORA

broking and clearing member

Commodities exchange (DGCX).

with

Dubai

Gold

and

It have a workforce of more than 2500 employees and over

20000 registered associates/ service providers serving the
financial needs of a large base of investors efficiently.

KEY DIRECTORS
Mr. S C Aggarwal
Chairman & Managing Director, SMC Group
Mr. Aggarwal is a promoter of the SMC Group. He
has rich and extensive experience of more than 23 years. He is
a fellow member of the Institute of Chartered Accountants of
India (ICAI).

Mr. Mahesh C Gupta

Vice Chairman & Managing Director, SMC Group
Mr. Mahesh C Gupta is a Promoter of the SMC Group
with more than 23 years of widespread experience
in Securities Market. He is a fellow member of the Institute of
Chartered Accountants of India.

Mr. D K Aggarwal
Chairman & Managing Director SMC Comtrade
Limited Director - SMC Capitals Limited
Chairman - SMC Investments & Advisors Ltd
Mr. DK Aggarwal is a promoter and one of the key architects of
success of the SMC Group. He has more than 20 years of wide

INDIAN EQUITY M ARKET BY KASHISH ARORA

and rich experience in Equity and Commodity Broking and

Arbitrage.
Mr. Pradeep Kumar Aggarwal
Whole Time Director- SMC Global Securities Limited
Director- SMC Comtrade Ltd.
Mr. Pradeep Aggarwal is a self motivated person
having a professional approach emphasising on ethics and
integrity. He possesses experience of more than 17 years in
equity and commodity market.

Mr. Ajay Garg

Whole Time Director- SMC Global Securities Limited
Director-SMC Insurance Brokers Pvt Ltd.
Mr. Ajay Garg is a fellow member of the Institute of
Chartered Accountants of India (ICAI). He has a wide experience
of more than 15 years in the Capital Market.

Mr Anurag Bansal
Whole Time Director SMC Global Securities Ltd.
Mr. Anurag Bansal, aged 37 years, is a rank holder
and fellow member of the Institute of Chartered
Accountants of India (ICAI) and a member of Institute of Cost
and Works Accountants of India (ICWAI). He has extensive
experience of over 15 years with SMC in Capital Markets.

Mr. Ravi Aggarwal

Director- SMC Insurance Brokers Pvt. Ltd.
Mr. Ravi Aggarwal has more than 12 years of
experience in Equity and Commodity Market.
INDIAN EQUITY M ARKET BY KASHISH ARORA

Mr. Lalit Aggarwal

Director-Moneywise Financial Services Pvt. Ltd.
Mr. Lalit Aggarwal has a rich working experience of
more than 17 years in Securities and Commodities
market. He is actively involved in the development and
functioning of SMCs Arbitrage business.

Ms. Shweta Aggarwal

Director- SMC Capitals Limited
Ms. Aggarwal joined the SMC group in 2005 and in a
short span of time; she has successfully handled
multiple critical assignments. She heads the investment
banking vertical of SMC.

Mr. Pravin Agarwal

Director- SMC Insurance Brokers Pvt. Ltd.
He is actively involved in the development of
insurance broking venture, devising strategies for insurance
broking and undertaking business development responsibilities.

INDIAN EQUITY M ARKET BY KASHISH ARORA

INDEX
Topics

Page no.

Acknowledgement

Stock market

Stock exchange

Segments of security market

Regulator

Who can invest in India?

Stock market trend

10
11

What causes changes in stock market?

12

Options available for investments

14

Indian market analysis (Sensex)

16

ACKNOWLEDGEMENT
INDIAN EQUITY M ARKET BY KASHISH ARORA

I wish to express my sincere gratitude to all those who

extended their help, guidance and suggestions without which it
would not have been possible to complete the project report.
I am deeply indebted to my guide Mr. Vinay P Singh for his
valuable and enlightened guidance and who encouraged me in
compilation of my project,
Mr. Vaibhav Gulati who helped me throughout the project,
And last but not the least, www.google.com, without it, making
the project would have been impossible.

STOCK MARKET
INDIAN EQUITY M ARKET BY KASHISH ARORA

Stock market is a market where the trading of company stock,

both listed securities and unlisted takes place.
The stock market is a broad entity covering a wide range of
market activities and companies whereas the stock exchanges
are one part of the stock market system.

STOCK EXCHANGE
A stock exchange is a company or organization that promotes
the trading of stocks through listing services and requirements,
tools to bring buyers and sellers together, and systems to track
prices and sales data.

Stock exchanges in India

India has 21 recognised stock exchanges but the most active
ones are the NSE and the BSE.

The BSE and NSE

Most of the trading in the Indian
stock market takes place on its two
stock exchanges: the Bombay Stock
Exchange (BSE) and the National
Stock Exchange (NSE).
The BSE has been in existence since 1875. The NSE, on the
other hand, was founded in 1992 and started trading in 1994.
However, both exchanges follow the same trading mechanism,
trading hours, settlement process, etc. At the last count, the
BSE had about 4,700 listed firms, whereas the rival NSE had
about 1,200.
Almost all the significant firms of India are listed on both the
exchanges. NSE enjoys a dominant share in spot trading, with
about 70% of the market share, as of 2009, and almost a
INDIAN EQUITY M ARKET BY KASHISH ARORA

complete monopoly in derivatives trading, with about a 98%

share in this market, also as of 2009. Both exchanges compete
for the order flow that leads to reduced costs, market efficiency
and innovation. The presence of arbitrageurs keeps the prices
on the two stock exchanges within a very tight range.

SEGMENTS
MARKET

OF

SECURITIES

The securities market has two interdependent segments: the

primary (new issues) market and the secondary market.
The primary market provides the channel for sale of new
securities while
The secondary market deals in securities previously issued.

REGULATOR
Why does Securities Market need Regulators?
The absence of conditions of perfect competition in the
securities market makes the role of the Regulator extremely
important. The regulator ensures that the market participants
behave in a desired manner so that securities market continues
to be a major source of finance for corporate and government
and the interest of investors are protected.
Who regulates the Securities Market?
The responsibility for regulating the securities market is shared
by
Department of Economic Affairs (DEA), Department of
Company Affairs
(DCA) , Reserve Bank of India (RBI) and Securities and
Exchange Board of India (SEBI).
What is SEBI and what is its role?

INDIAN EQUITY M ARKET BY KASHISH ARORA

The Securities and Exchange Board of India

(SEBI) is the regulatory authority in India
established under Section 3 of SEBI Act,
1992.
SEBI Act, 1992 provides for establishment of
Securities and Exchange Board of India (SEBI)
with statutory powers for
(a) Protecting the interests of investors in securities
(b) Promoting the development of the securities market and
(c) Regulating the securities market.
Its regulatory jurisdiction extends over corporates in the
issuance of capital and transfer of securities, in addition to all
intermediaries and persons associated with securities market.
SEBI has been obligated to perform the aforesaid functions by
such measures as it thinks fit. In particular, it has powers for:
Regulating the business in stock exchanges and any other
securities markets
Registering and regulating the working of stock brokers,
subbrokers etc.
Promoting and regulating self-regulatory organizations
Prohibiting fraudulent and unfair trade practices
Calling for information from, undertaking inspection,
conducting inquiries and audits of the stock exchanges,
intermediaries, self regulatory organizations, mutual
funds and other persons associated with the securities
market.

WHO CAN INVEST

IN INDIA?
Any citizen of India can invest in
equity market, provided he has a
pan card and a demat account &
trading can be done online or over
the phone through the help of an
intermediary.

INDIAN EQUITY M ARKET BY KASHISH ARORA

NRI's can invest in the Indian stock market under PIS (Portfolio
Investment Scheme) which is regulated by RBI but NRI's are not
allowed day trading that is to buy and sell a stock on the same
day.

Investments in Indian Securities by Qualified Foreign Investors

The government allowed qualified foreign investors (QFIs),
including overseas individuals, to invest directly in Indian stock
markets. So far, QFIs were permitted to invest only in mutual
fund schemes.
QFIs shall include individuals, groups or associations that are:
Resident in a country that is a member of the Financial
Action Task Force (FATF) or a country that is a member of a
group which is a member of FATF and
Resident in a country that is a signatory to IOSCOs MMOU
or a signatory of a bilateral MOU with Securities and
Exchange Board of India (SEBI).

STOCK MARKET
TREND
Sudden rises or drops in stock prices are
often called spikes. Spikes are extremely
difficult, if not impossible, to predict.
Stock market trends are like the behaviour of a person. After
studying how a person reacts to different situations, we can
make predictions about how that person will react to an event.
Similarly, recognizing a trend in the stock market or in an
individual stock will enable us to choose the best times to buy
and sell.

INDIAN EQUITY M ARKET BY KASHISH ARORA

Bull Markets and Bear Markets

A bull market is a rising market. In a
bull market, investors are positive. The
economy
tends
to
be
strong. Unemployment is
low.
Consumers are spending money,
which increases business profits. When
businesses profit, investors demand to
share a piece of the pie -- they buy
stocks and hang on tight to watch the
money growing. The supply of shares,
then, is low -- no one wants to give up
their share of the XYZ Co. The competition to acquire those
much-coveted shares becomes fierce, which drives the prices
up even higher. Investors take risks because they feel good
about their chances of making the big bucks.

A bear market is a declining market. It tends to begin with a

sharp drop in stock prices across the board. Very rarely stock
prices increase. But the bear market keeps falling. In a bear
market, the economy tends to be weak. Unemployment
increases. Consumers spend less, which results in lower
business profits; this devalues a given company's stock.
Investors tend to sell their stocks before the value decreases
too much. Investors don't want to take risks because they don't
feel good about their chances.

WHAT CAUSES CHANGE IN THE

STOCK MARKET?
INDIAN EQUITY M ARKET BY KASHISH ARORA

Many factors affect prices in the stock market, including

inflation, interest
rates,
energy
prices, oil
prices and
international issues such as war, crime, fraud and political
unrest.

Inflation: Inflation is a rise in prices across the board.

Inflation is the reason a car costs Rs 1, 00,000 in 1990 and Rs
4, 00,000 in 2010. Over the long term, inflation is good,
because it means consumers are spending a lot of money -- the
economy is robust. When inflation is too high, though,
consumers pull back and spend less. After all, Rs 20 is a lot of
money to spend on a toffee. When consumers spend less,
companies don't make as much money. When companies don't
make money, investors lose confidence in those companies.
Many investors sell their stock because they believe the stock
is worth less and is only going to decrease in price. As the
demand for the stock decreases, the price of the stock
decreases. When this happens to many companies in the stock
market, the stock market experiences a downward shift.

Interest Rates: To bring inflation under control, the

Federal Reserve System can raise the federal funds interest
rate, which is the interest rate banks pay on loans they take
from the Federal Reserve. Think of the Federal Reserve as
a credit card for banks. When banks have to pay a higher
interest rate, they often raise their own interest rates on loans
and credit card accounts for businesses and individuals. This
means that businesses and consumers must pay higher interest
on borrowed funds. This usually causes consumers to spend
less and businesses to borrow less. When businesses don't
borrow money to develop that new widget, they tend to grow at
a slower rate. When consumers don't buy things and
businesses don't grow, companies' profits decrease, causing a
stock price decrease. Conversely, when the Federal Reserve
cuts the interest rate, investors tend to get excited. The cut
INDIAN EQUITY M ARKET BY KASHISH ARORA

means banks will be borrowing and lending more and at better

rates. Businesses will grow and consumers will spend. Company
profits will go up. Investors tend to buy.

Earnings: When XYZ Co. reports profits, everyone wants

a piece. Profit means the company is doing well. But maybe
after a while, people grow tired of XYZ and want to buy the new
ABC instead. XYZ Co. reports lower profits. As we saw with
inflation and interest rates, when a company reports lower
profits, investors lose confidence in the company and sell their
stock, which decreases the value of the stock.

Energy
Prices: People
always
need
energy. Electricity and natural gas keep us warm, cook our food
and keep our computers happy. Therefore, the demand for
energy is pretty constant. Only major changes in energy costs
have a significant effect on the stock market.

Oil Prices: People almost always need oil, in the form of

gasoline. When gas prices are high, however, some people look
to alternative methods of transportation -- carpools, public
transportation, bikes, etc. Others keep paying the high price
but, as a result, buy fewer consumer goods. The stock market
tends to react negatively to high oil prices.

International and Domestic Issues: War tends to affect

the stock market negatively. The same goes for crime, fraud,
and domestic or political unrest. Consumers worry when CEOs
steal money, terrorists kill innocent people, or politicians are
involved in serious scandals. Who knows what will happen
next? Consumers save their money. Businesses make less
money. Investors tend to dump their stocks, causing a fall in the
market.

INDIAN EQUITY M ARKET BY KASHISH ARORA

Fear: Besides being afraid of the market consequences of

war, oil prices or a federal interest rate hike, investors are
afraid of losing their money. Investors tend to dislike seeing
their money dwindle as the price of their shares decreases.
All these factors cause changes in the market.

OPTIONS AVAILABLE FOR

INVESTMENT
One may invest in:
Commodities (physical assets) like real estate, gold/jewellery,
commodities etc and/or
Financial assets such as fixed deposits with banks, small
saving
Instruments with post offices, insurance/provident/pension fund
etc.
In securities market one may invest in instruments like shares,
bonds, mutual funds etc.
Equity/Share
Total equity capital of a company is divided into equal units of
small denominations, each called a share. For example, in a
company the total equity capital of Rs 2,00,00,000 is divided
into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is
called a Share. Thus, the company then is 12 said to have 20,
00,000 equity shares of Rs 10 each.
The holders of such shares are members of the company and
have voting rights.
Debt Instrument
In the Indian securities markets, the term bond is used for
debt instruments issued by the Central and State governments
and public sector organizations and the term debenture is
used for instruments issued by private corporate sector.
Debt instrument represents a contract whereby one party lends
money to another on pre-determined terms with regards to rate
and periodicity of interest, repayment of principal amount by
the borrower to the lender.
INDIAN EQUITY M ARKET BY KASHISH ARORA

Mutual Fund
A Mutual Fund is a body corporate registered with SEBI
(Securities Exchange
Board of India) that pools money from individuals/corporate
investors and invests the same in a variety of different financial
instruments or securities such as equity shares, Government
securities, Bonds, debentures etc.
Mutual funds can thus be considered as financial intermediaries
in the investment business that collect funds from the public
and invest on behalf of the investors. Mutual funds issue units
to the investors. The appreciation of the portfolio or securities
in which the mutual fund has invested the money leads to an
appreciation in the value of the units held by investors.
Mutual Funds invest in 13 various asset classes like equity,
bonds, debentures, and commercial paper and government
securities.
The schemes offered by mutual funds vary from fund to fund.
Some are pure equity schemes; others are a mix of equity and
bonds. Investors are also given the option of getting dividends,
which are declared periodically by the mutual fund

INDIAN EQUITY M ARKET BY KASHISH ARORA

INDIAN MARKET ANALYSIS

(SENSEX)
Period: 04-Jun-2013 to 03-Jul-2013
S&P BSE SENSEX

CHART

INDIAN EQUITY M ARKET BY KASHISH ARORA

DATE

OPEN

HIGH

LOW

CLOSE

4/6/13
5/6/13
6/6/13
7/6/13
10/6/13
11/6/13
12/6/13
13/6/13
14/6/13
17/6/13
18/6/13
19/6/13
20/6/13
21/6/13
24/6/13
25/6/13
26/6/13
27/6/13
28/6/13
1/7/13
2/7/13
3/7/13

19,605.68
19,532.42
19,503.68
19,522.31
19,530.35
19,382.22
19,103.96
18,897.49
18,959.83
19,249.90
19,329.17
19,224.09
19,069.20
18,695.80
18,714.06
18,602.25
18,662.37
18,716.11
19,093.18
19,352.48
19,573.93
19,347.11

19,742.70
19,604.43
19,635.37
19,711.55
19,585.75
19,418.74
19,143.24
18,914.13
19,213.10
19,344.28
19,383.61
19,274.26
19,069.20
18,820.81
18,714.06
18,802.31
18,690.50
18,925.75
19,432.94
19,598.43
19,589.14
19,347.11

19,522.47
19,441.35
19,395.32
19,397.51
19,366.82
19,121.18
18,969.08
18,765.53
18,952.09
19,084.68
19,191.37
19,100.13
18,687.19
18,615.14
18,467.16
18,487.30
18,514.35
18,688.28
19,093.18
19,347.57
19,442.75
19,147.31

19,545.78
19,568.22
19,519.49
19,429.23
19,441.07
19,143.00
19,041.13
18,827.16
19,177.93
19,325.87
19,223.28
19,245.70
18,719.29
18,774.24
18,540.89
18,629.15
18,552.12
18,875.95
19,395.81
19,577.39
19,463.82
19,177.76

END OF PROJECT

INDIAN EQUITY M ARKET BY KASHISH ARORA

TURNOVE
R
(Rs Cr)
361.47
366.13
415.21
431.55
326.11
583.12
509.77
487.97
577.20
401.30
401.44
465.40
650.52
641.66
538.88
535.93
452.64
495.97
625.40
441.95
427.60
466.55