MATUSHRI PUSHPABEN VINUBHAI VALIA DEGREE

COLLEGE OF COMMERCE

BORIVALI (WEST), MUMBAI-400092

PROJECT REPORT ON
AUDITING

SUBMITTED BY:TWINKLE RAJANI

ROLL NO.- 615

PROJECT GUIDE: PROF. SANDIP RAWOOL

UNIVERSITY OF MUMBAI

TYBMS (FINANCE)

SEMESTER VI

ACADEMIC YEAR: 2018-2019

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 Declaration by learner

I the undersigned TWINKLE RAJANI here by, declare that the work embodied in
this project work titled “AUDITING” forms my own contribution to the research
work carried out under the guidance of Sandip Rawool is a result of my own
research work and has not been previously submitted to any other University for any
other Degree/ Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included innthe bibliography.

I, here by further declare that all information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by

Name and Signature of the Guiding Teacher

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 Acknowledgment

To list who all have helped me is difficult because they are so numerous and depth is
so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to
do this project.

I would like to thank my Principal, V. Manikandan for providing the necessary

facilities required for completion of this project.

I take this opportunity to thank our Coordinator Prof. Manoj Upadhay for her
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Sandip
Rawool whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines relate to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and peers who supported
me through my project.

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 TO WHOM IT MAY CONCERN

This is to certify that Mr. Kashish Wadhwana, student of Bachelor of Management studies has
successfully completed the internship in the field of Finance from 10 November 2016 to 15 January
2017.

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During the period of his internship program, he was found punctual, hardworking and inquisitive.

We would like to thank you for your service with the company and wish him every success in his life
and career.

FOR BMA WEALTH PRIVATE LIMITED

_____________________
JAYESH GOHIL

(AUTHORISED SIGNATORY)

EXECUTIVE SUMMARY

In the presents situation where STOCK MARKET is going up and down. It is necessary to invest
consciously in the market whatever it is; this is the study about the functions in stock market, which
enables the investor in taking decision regarding investment. This study tells the factor, which
directly or indirectly affects the market and some basic information on stock market for the new
investors or the student, who have some interest in the stock market. The objective of selecting the
topic is to know about the market trends and the information related to the investment for future
investors. The study of fluctuations of the stock market makes the investor acquainted with the factor
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affecting, the investment and the stock prices can be vol atile, and some analysts argue that the volatile
is excessive. This is not easy to prove since it is difficult to assess certainly about that earnings and
dividend. Companies tend to smooth dividends, so they will be less volatile than stock prices. Volati le
stock prices do not have a major impact on consumption and capital spending since there is a good
chance that price moments in one direction may be resolved.

INDEX
Sr.No TOPICS Pg. No
1. Introduction 7
2. Origin 8
3. Objectives of the Study 10
4. Company Profile 11
5. Industry Profile 12
 Primary Market

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  Secondary Market
6. Role of STOCK EXCHANGE 16
7. STOCK EXCHANGE and the Year of Commencement 17
8. Investors Preference in Stock Market 19
9. Investment Alternative 20
10. Mechanism and Functions of BSE and NSE 22
11. Common Techniques 26
12. Bombay Stock Exchange 29
13. National Stock Exchange 33
14. Difference Between NSE and BSE 39
15. TOP TEN STOCK Gainers (last one year) 41
16. TOP TEN STOCK LOSERS (last one year) 42
17. Multi Commodity Exchange 43
18. OTC Exchange of India 45
19. Inter Connected Stock Exchange of India 46
20. Regulators 48
21. Scam in Stock Market 49
22. Retail Research 52
23. Conclusion 62
24. Work Experience 63

INTRODUCTION ABOUT THE TOPIC

The market for long term securities like bonds, equity stocks and preferred stocks is divided into
primary market and secondary market. Primary market deals with the new issues of securities.
Outstanding securities are traded in the secondary market, whic h is commonly known as stock market
or stock exchange. In the secondary market, the investors can sell or buy securities. Stock markets
predominantly deal in the equity shares. Well regulated and active stock market promotes capital
formation. The health of the economy is reflected by the growth of the stock market. Stock broking
is a growing industry in India. The main reason is that Indian economy is one of the strongest in the

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world. As a result of that both foreign and domestic investors are interested in investing in Indian
stock market.

The topic selected for the study is “Stock Exchange” with reference to BMA Wealth

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 a higher 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

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fall down. 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 in vestors don’t have to gather at the Exchanges, and can
trade freely from their home or office over the phone or through Internet.

THE ORIGIN :

One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old history.18th
Century East India Company was the dominant institution and by end of the century, business in its
loan securities gained full momentum1830's Business on corporate stocks and shares in Bank and
Cotton presses started in Bombay. Trading list by the end of 1839 got broader 1840's Recognition
from banks and merchants to about half a dozen brokers 1850's Rapid development of commercial
enterprise saw brokerage business attracting more people into the business 1860's. The number of
brokers increased to 601860-61The American Civil War broke out which caused a stoppage of cotton
supply from United States of America; marking the beginning of the "Share Mania" in India 1862 -63.
The number of brokers increased to about 200 to 250.1865 a disastrous slump began at the end of t he
American Civil War (as an example, Bank of Bombay Share which had touched Rs. 2850 could only
be sold at Rs. 87). The Indian Stock markets have played a significant role in the early attempts at
industrialization in India in the late nineteenth and earl y twentieth centuries. The early textile mills
and the first steel plants were funded in the stock market. Some of these capitals raising exercises
were large in relation to the size of the financial sector in those days. Beginning in the late fifties,
the country embarked on an inward looking socialistic model of development that sought to put the
commanding heights of the economy in the hands of the public sector. The state took control of the
allocation of resources in the economy as the banks and insura nce companies were nationalized and
development financial institutions grew in importance. A regime of financial repression came into
being and the stock market stagnated. The period from 1984 to 1992 was in some ways the high water
mark of the Indian capital markets. As the markets responded enthusiastically to the first whiff of
reforms in the mid 1980s and to the major reform initiative of 1991, the stock market soared through
the roof. From October 1984 to September 1992, the stock market index went up more than ten times
representing an annual compound return of 34per cent. The Sensex crossed the 1,000 mark on July
25, 1990; the 4,000 mark on March 30, 1992; the 5,000 mark on October 11, 1999; the 6,000 mark on
January 2, 2004; the 7, the 9,000 mark on December 09, 2005; and finally the historic 10,000 mark
on February 7, 2006. It created another landmark when it touched 11,000 on March 27, 2006. The
Sensex reached an all time high of 12,671 in May 2006. To reach from the 11,000 mark to the 12,000
mark only took 19 working days, the shortest time interval for a 1000 points climb in BSE Sensex
history, surpassing the just set record of 29 days that it took to reach 11,000 from 10,000.
Graphical view (1990 - 2006)

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Graphical view (2012 - 2017)

OBJECTIVES OF THE STUDY

Every study based on some clearly defined objectives. Objectives decide the all over framework of
any study. The main objective of this study is to capture the trends, activities and movements of the
Indian Stock Market. The present study based on following objectives: - To Study the various aspect

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of Indian Stock Market in detail. To know the different exchanges in Indian stock markets  To
know the mechanism of Indian Stock Market.  To know the future prospects of Indian stock ma rket.
 To help the investors (current and potential) to understand the impact of important happenings on
the Indian Stock exchange.

Company Profile (BMA Wealth)

BMA Wealth Creators, a decade and a half year old company in the business of Financial Services is
a part of the BMA Group, a conglomerate with a net worth over Rs 2000 crores that has been playing
a pivotal role in shaping the society in various capacities for nearly a century.

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With over 40 branches and 7000 plus business partners across all the cities in India, BMA Wealth
Creators Limited is in the process of expansion globally as well. BMA Wealth Creators offers a range
of customized financial services to our clients, which currently stands at 10,00,000 and counting. Our
services include Equity, Commodity, Mutual Funds & Insurance. Our operations across the country
are backed by a state-of-the-art Research Team that is lead by industry stalwarts and experts who
contribute massively to the day to day trends of the marke t both in fundamental and technical spheres.
BMA Wealth Creators, realize the dreams, needs, aspirations and concerns of our clients as closely
as they do. This is reflected in every move we make with and for them because our relationship with
our Clients is of superior importance to us. The company’s Competitive Strength lies in its people
who put in an unfaltering track of growth and profit.

Product offers
 Equity
 Mutual Fund
 Commodities
 Derivatives

INDUSTRY PROFILE

Capital Market
The market where investment funds like bonds, equities and mortgages are traded is known as the
capital market. The primal role of the capital market is to channelize investments from investors who
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have surplus funds to the ones who are running a deficit. The capital market offers both long term
and overnight funds. The financial instruments that have short or medium term maturity periods are
dealt in the money market whereas the financial instruments that have long maturity periods are dealt
in the capital market. The different types of financial instruments that are traded in the capital markets
are equity instruments, credit market instruments, insurance instruments, foreign exchange
instruments, hybrid instruments and derivative instruments.
A capital market is a market for securities (both debt and equity), where business enterprises
(companies) and governments can raise long-term funds. It is defined as a market in which money is
lent for periods longer than a year, as th e raising of short-term funds takes place on other markets
(e.g., the money market). The capital market includes the stock market (equity securities) and the
bond market (debt).

Capital markets consist of

1 Primary market

2 Secondary markets

Primary market

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The primary market is that part of the capital markets that deals with the issuance of new securities.
Companies, governments or public sector institutions can obtain funding 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 the prospectus.

The primary markets are where new stock and bonds is sues are sold (via underwriting) to investors.
The secondary markets are where existing securities are sold and bought from one investor or trader
to another, usually on a securities exchange, over the counter, or elsewhere.

Features of primary markets are:

 This is the market for new long term equity capital. The primary market is the market where
the securities are sold for the first time. Therefore it is also called the new issue market
(NIM).
 In a primary issue, the securities are issued by the company direct ly to investors.
 The company receives the money and issues new security certificates to the investors.
 Primary issues are used by companies for the purpose of setting up new business or for
expanding or modernizing the existing business.
 The primary market performs the crucial function of facilitating capital formation in the
economy.
 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 issue market may be
raising capital for converting private capital into public capital; this is known as "going
public."
 The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:

1 Initial public offering;

2 Rights issue (for existing companies);

An initial public stock offering (IPO) referred to simply as an "offering" or "flotation," is when a
company issues common stock or shares to the public for the first time. They are often issued by
smaller, younger companies seeking capital to expand, but can also be done by large privately-owned
companies looking to become publicly traded.

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 A rights issue is offered to all existing shareholders individually and may be rejected, accepted
in full or accepted in part. Rights are often transferable, allowing the holder to sell them on the open
market. A right to a share is generally issued on a ratio basis (e.g. one -for-three rights issue). Because
the company receives shareholders' money in exchange for shares, a rights issue is a source of capital.

Secondary market

The secondary market, also known as the aftermarket, is the financial market where previously issued
securities and financial instruments such as stock, bonds, options, and futures are bought and sold.
The term "secondary market" is also used to refer to the market for any used goods or assets, or an
alternative use for an existing product or asset where the customer base is the second market (for
example, corn has been traditionally used primarily for food production and feedstock, but a second -
or third- market has developed for use in ethanol production).
Under a secondary market offering or seasoned equity offering of shares to raise money, a company
can opt for a rights issue to raise capital. The rights issue is a special form of shelf offering or shelf
registration. With the issued rights, existing shareholders have the privilege to buy a specified number
of new shares from the firm at a specified price within a specified time. A rights issue is in contrast
to an initial public offering (primary market offering), where shares are issued to the general public
through market exchanges. With primary issuances of securities or financial instruments, or the
primary market, investors purchase these securities directly from issuers such as corporations issuing
shares in an IPO or private placement, or directly from the federal government in the case of
treasuries.
After the initial issuance, investors can purchase from other investors in the secondary market.The
secondary market for a variety of assets can vary from fragmented to centralized, and from illiquid
to very liquid. The major stock exchanges are the most visible example of liquid secondary markets
- in this case, for stocks of publicly traded companies. . Exchanges provide a centralized, liquid
secondary market for the investors who own stocks that trade on those exchang es. Most bonds and
structured products trade “over the counter,” or by phoning the bond desk of one’s broker -dealer.

Functions of Secondary market

Secondary marketing is vital to an efficient and modern capital market. In the secondary market,
securities are sold by and transferred from one investor or speculator to another. It is therefore
important that the secondary market be highly liquid (originally, the only way to create this liquidity
was for investors and speculators to meet at a fixed place regularly; this is how stock exchanges
originated, see History of the Stock Exchange). As a general rule, the greater the number of investors
that participate in a given marketplace, and the greater the centralization of that marketplace, the
more liquid the market.Fundamentally, secondary markets mesh the investor's preference for liquidity
(i.e., the investor's desire not to tie up his or her money for a long period of time, in case the investor

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needs it to deal with unforeseen circumstances) with the capital user's preference to be able to use
the capital for an extended period of time

Stock Exchanges

Stock exchanges are open markets that trade financial assets. Whether associated with a company or
acting as an individual, a stock exchange is the place where stocks are bought and sold. There are a
number of major stock exchanges around the world and each of these plays a part in determining the
overall financial and economic condition of any economy. Stock exchanges deal with a number of
financial instruments such as stocks, bonds and equities. Both corporate and government bonds are
traded in stock exchanges. Equities include popular investment options, rights issues, bonus issues,
and all other forms of shares and stocks. The actual trading of stocks takes place through mediators
such as financial advisors, brokerage houses, and stockbrokers A stock exchange, (formerly a
securities exchange) is a corporation or mutual organization which provides "trading" facilities for
stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities
for the issue and redemption of securities as well as other financial instruments and capital events
including the payment of income and dividends. The securities traded on a stock exchange include:
shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be
able to trade a security on a certain stock exchange, it has to be l isted there. Usually there is a central
location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern
markets are electronic networks, which gives them advantages of speed and cost of transactions.
Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by
definition done in the primary market and subsequent trading is done in the secondary market. A
stock exchange is often the most important component of a stock market. Supply and demand in stock
markets are driven by various factors which, as in all free markets, affect the price of stocks (see
stock valuation).
There is usually no compulsion to issue stock via the stock exc hange itself, nor must stock be
subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter.
This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of
a global market for securities.

The Role of Stock Exchanges

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The main role of a stock exchange is to facilitate the transactions associated with both the buying and
selling of securities. Buyers and sellers of shares and stocks can track the price changes of securities
from the stock markets in which they operate. The ups and downs of stock indexes help the investors
to speculate on the return on investment (ROI) of various investment options. Stock exchanges also
serve as a source of capital formation for listed companies. Business entities that are listed in a
particular stock exchange can issue shares to the public and sell those shares in that market. To take
part in these transactions, listed companies need to abide by the rules and requirements of that market.
The stock exchanges protect the interests of both buyers and sellers by assuring a timely transfer of
money. The participants of a stock market are required to operate within the specified transaction
limits fixed by the regulatory authority of that stock market S peed and transparency are vital for all
stock market transactions. The companies listed in a stock exchange need to provide proper guidance
regarding business performance and prospects, mergers and acquisitions, stock prices, dividends and
other information at all times. Investors make their investment decisions based on the information
obtained from these companies, and the comments of analysts who track those companies.

Stock Exchange and the Year of Commencement.

 Cochin Stock Exchange (1980)

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  Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)
 Pune Stock Exchange Limited (1982)
 Ludhiana Stock Exchange Association Limited (1983)
 Gauhati Stock Exchange Limited (1984)
 Kanara Stock Exchange Limited (at Mangalore, 1985)
 Magadh Stock Exchange Association (at Patna, 1986)
 Jaipur Stock Exchange Limited (1989)
 Bhubaneswar Stock Exchange Association Limited (1989)
 Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)
 Vadodara Stock Exchange Limited (at Baroda, 1990)

Stock Market is one of the most vibrant sectors in the financial system, marking an important
contribution to economic development. Stock Market is a place where buyers and sellers of securities
can enter into transactions to purchase and sell shares, bonds, debenture s etc. In other words, Stock
Market is a plate form for trading various securities and derivatives. Further, it performs an important
role of enabling corporate, entrepreneurs to raise resources for their companies and business ventures
through public issues. Today long-term investors are interested to invest in the Stock market rather
than invest anywhere. The Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and
the Calcutta Stock Exchange (CSE) are the three large stock exchanges of Indian S tock Market. The
main objective of present study is to present review of literature related to Indian Stock Market to
study the Indian Stock Market in depth. The study would facilitate the reader to know the past, current
and future trend or prospects of I ndian Stock market. This study would provide guidelines to investor
to maximize profit with minimize risks. High degree of volatility in the recent times in the Indian
market has led to more development in the future. KEYWORDS: Securities, Derivatives, NSE , BSE,
Public Issue, Maximize Profit, Minimize Risk.

As a part of the process of economic liberalization, the stock market has been assigned an important
place in financing the Indian corporate sector. Besides enabling mobilizing resources for investment ,
directly from the investors, providing liquidity for the investors and monitoring and disciplining
company managements are the principal functions of the stock markets. The main attraction of the
stock markets is that they provide for entrepreneurs and g overnments a means of mobilizing resources
directly from the investors, and to the investors they offer liquidity. It has also been suggested that
liquid markets improve the allocation of resources and enhance prospects of long term economic
growth. Stock markets are also expected to play a major role in disciplining company managements.
In India, Equity market development received emphasis since the very first phase of liberalization in
the early 'eighties. Additional emphasis followed the liberalization p rocess got deepened and widened
in 1991 as development of capital markets was made an integral part of the restructuring strategy.
Today, Indian markets conform to international standards both in terms of structure and in terms of

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operating efficiency. CONCEPT OF STOCK MARKET The concept of stock markets came to India
in 1875, when Bombay Stock Exchange (BSE) was established as „The Native Share and Stockbrokers
Association', a voluntary non-profit making association. We all know it, the vegetable market in our
neighborhood is a place where vegetables are bought and sold. Like Vegetable market, a stock market
as a place where stocks are bought and sold. The stock market determines the day's price for a stock
through a process of bid and offer. You bid to buy a stock and offer to sell the stock at a price. Buyers
compete with each other for the best bid, i.e. the highest price quoted to purchase a particular stock.
Similarly, sellers compete with each other for the lowest price quoted to sell the stock. When a match
is made between the best bid and the best offer a trade is executed. In automated exchanges high -
speed computers do this entire job. Stocks of various companies are listed on stock exchanges.
Presently there are 23 stock markets In India. The Bombay Stock Exchange (BSE), the National Stock
Exchange (NSE) and the Calcutta Stock Exchange (CSE) are the three large stock exchanges. There
are many small regional exchanges located in state capitals and other major cities. Presently Nifty
and Sensex are moving around to 5900 and 19600 (July 2013). All activities of Indian stock market
are regulated and controlled by SEBI.

INVESTORS PREFERENCE IN STOCK MARKET

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Though most of the investors want a safe and secure return on their investment, they also look for
maximum returns. The pure debt investment brings an average return with lesser liquidity as
compared to the equity investments. So in search of higher return (keeping the risk factor in mind)
investor are a heading towards equity investment on analysis of recent year investment trends, FII,
entrance and operations in Indian stock markets, it has been found that equity is gaining ground in
India. The main attraction of equity among investors are - 1. Higher return (especially I case of
capitalization and dividend if any) 2. Higher Liquidity 3. Option to start trading with small
investments 4. Daily trading (as it increase chances of more “buy or sell” transaction which leads to
fast profits/loss generation), With these benefits, equity has a risk factor of poor dividend payout (as
against fixed “interest” income in debt) or the negligible capitalization. Moreover, sometime the
investment in equity trading goes to bottom level and nothing is expected in return. Still, the attraction
of equity remains high in investors mind become of “return &liquidity factor. And this perception
has leaded the investment trends from debt to equity and portfolio investment.

INVESTMENT ALTERNATIVE

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There is a wide of range of investment alternative available to an investor in Indian stock market.
These may be classified as shown in

Non marketable Financial Assets Investment Alternative Equity Shares Money Market Bonds
Instruments Mutual Funds Schemes Life Insurance Policies Precious Objects Real Estate Financial
Derivatives (A) NON- MARKETABLE FINANCIAL ASSETS: A good portion of fina ncial assets is
represented by non marketable financial assets. These can be classified into the following broad. 
Bank deposits  Post office deposits  Company deposits  Provident fund deposits (B) EQUITY
SHARES: Equity shares represent ownership capit al. As an equity shareholder, you have an
ownership stake in the company. This essentially means that you have a residual interest in income
and wealth.  Blue chip shares  Growth shares.  Income shares  Cyclical shares  Speculative
shares (C) BONDS: Bonds or debentures represent long terms debt instruments.  Government
Securities  Savings bonds  Government agency securities  PSU bonds  Debentures of private
sector companies (D) MONEY MARKET INSTRUMENTS: Debt instruments which have a maturity
of less than one year at the time of issue are called money market instruments.  Treasury bills.
Commercial paper  Certificates of deposit (E) MUTUAL FUNDS: Instead of directly buying equity
shares and/or fixed income instruments, you can participate in vari ous schemes floated by mutual
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funds. Equity schemes  Debt Schemes  Balanced schemes (F) LIFE INSURANCE: In a broad
sense, life insurance may be viewed as and investment. Insurance premiums represent the sacrifice
and the assured sum, the benefits.  Money back policy  Whole back policy  Terms assurance
policy (G) REAL ESTATE: FOR the bulk of the inverters the important asset in their portfolio is a
residential house.  Agricultural land  Semi urban land  Commercial property (H) PRECIOUS
OBJECTS: Precious objects are items that are generally small in size but highly valuable in monetary
terms. Some important precious objects are:  Gold and Silver  Precious stones  Art objects (I)
FINANCIAL DERIVATIVES: The term „derivative‟ indicates that it has no independent value i.e.
its value is entirely derived from the value of underlying asset. The underlying asset can be securities,
commodities, currency etc. Some important financial derivatives:  Forward  Future  Option
warrants  swaps.

Mechanism and Functions of BSE and NSE

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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. Out of all the
listed firms on the BSE, only about 500 firms constitute more than 90% o f its market capitalization;
the rest of the crowd consists of highly illiquid shares.

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 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. (To
learn more, see The Birth Of Stock Exchanges.)

Trading Mechanism
Trading at both the exchanges takes place through an open electronic limit order book, in which order
matching is done by the trading computer. There are no market makers or specialists and the entire
process is order-driven, which means that market orders placed by investors are automatically
matched with the best limit orders. As a result, buyers and sellers remain anonymous. The advantage
of an order driven market is that it brings more transparency, by displaying all buy and sell orders in
the trading system. However, in the absence of market makers, there is no guarantee that orders will
be executed.

All orders in the trading system need to be placed through brokers, many of which provide online
trading facility to retail customers. Institutional investors can also take advantage of the direct market
access (DMA) option, in which they use trading terminals provided by brokers for placing orders
directly into the stock market trading system. (For more, read Brokers And Online Trading: Accounts
And Orders.)

Settlement Cycle and Trading Hours :

Equity spot markets follow a T+2 rolling settlement. This means that any trade taking place on
Monday, gets settled by Wednesday. All trading on stock exchanges takes place between 9:55 am and
3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday through Friday. Delivery of shares must
be made in dematerialized form, and each exchange has its own clearing house, which assumes
all settlement risk, by serving as a central counterparty.

Market Indexes

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The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest market index for
equities; it includes shares of 30 firms listed on the BSE, which represent about 45% of the index's
free-float market capitalization. It was created in 1986 and provides time series data from April 1979,
onward.

Another index is the S&P CNX Nifty; it includes 50 shares listed on the NSE, which represent about
62% of its free-float market capitalization. It was created in 1996 and provides time series data from
July 1990, onward. (To learn more about Indian stock exchanges please go
to http://www.bseindia.com/ and http://www.nse-india.com/.)

Market Regulation
The overall responsibility of development, regulation and supervision of the stock market r ests with
the Securities & Exchange Board of India (SEBI), which was formed in 1992 as an independent
authority. Since then, SEBI has consistently tried to lay down market rules in line with the best market
practices. It enjoys vast powers of imposing penalties on market participants, in case of a breach.
(For more insight, see http://www.sebi.gov.in/. )

Who Can Invest In India?

India started permitting outside investments only in the 1990s. Foreign investments are classified into
two categories: foreign direct investment (FDI) and foreign portfolio investment (FPI). All
investments in which an investor takes part in the day -to-day management and operations of the
company, are treated as FDI, whereas investments in shares without any control over management
and operations, are treated as FPI.

For making portfolio investment in India, one should be registered either as a foreign institutional
investor (FII) or as one of the sub-accounts of one of the registered FIIs. Both registrations are granted
by the market regulator, SEBI. Foreign institutional investors mainly consist of mutual funds, pension
funds, endowments, sovereign wealth funds, insurance companies, banks, asset management
companies etc. At present, India does not allow foreign individuals to invest directly into its stock
market. However, high-net-worth individuals (those with a net worth of at least $US50 million) can
be registered as sub-accounts of an FII.

Foreign institutional investors and their sub accounts can invest directly into any of the stocks listed
on any of the stock exchanges. Most portfolio investments consist of investment in securities in the
primary and secondary markets, including shares, debentures andwarrants of companies listed or to
be listed on a recognized stock exchange in India. FIIs can also invest in unlisted securities outside
stock exchanges, subject to approval of the price by the Reserve Bank of India. Finally, they can
invest in units of mutual funds and derivatives traded on any stock exchange.

24
An FII registered as a debt-only FII can invest 100% of its investment into debt instruments. Other
FIIs must invest a minimum of 70% of their investments in equity. The balance of 30% can be invested
in debt. FIIs must use special non-resident rupee bank accounts, in order to move money in and out
of India. The balances held in such an account can be fully repatriated. (For related reading, see Re-
evaluating Emerging Markets. )

Restrictions/Investment Ceilings
The government of India prescribes the FDI limit and different ceilings have been prescribed for
different sectors. Over a period of time, the government has been progressively increasing the
ceilings. FDI ceilings mostly fall in the range of 26 -100%.

By default, the maximum limit for portfolio investment in a particular listed firm, is decided by the
FDI limit prescribed for the sector to which the firm belongs. However, there are two additional
restrictions on portfolio investment. First, the aggregate limit of investment by all FIIs, inclusive of
their sub-accounts in any particular firm, has been fixed at 24% of the paid-up capital. However, the
same can be raised up to the sector cap, with the approval of the company's boards and shareholders.

Secondly, investment by any single FII in any particular firm should not exceed 10% of the paid -up
capital of the company. Regulations permit a sepa rate 10% ceiling on investment for each of the sub -
accounts of an FII, in any particular firm. However, in case of foreign corporations or individuals
investing as a sub-account, the same ceiling is only 5%. Regulations also impose limits for investment
in equity-based derivatives trading on stock exchanges. (For current restrictions and investment
ceilings go to https://rbi.org.in/)

Investment Opportunities for Retail Foreign Investors

Foreign entities and individuals can gain exposure to Indian stocks through institutional investors.
Many India-focused mutual funds are becoming popular among retail investors. Investments could
also be made through some of the offshore instruments, like participatory notes (PNs) and depositary
receipts, such as American depositary receipts (ADRs), global depositary receipts (GDRs),
and exchange traded funds (ETFs) and exchange-traded notes (ETNs). (To learn about these
investments, see 20 Investments You Should Know.)

As per Indian regulations, participatory notes representing underlying Indian stocks can be issued
offshore by FIIs, only to regulated entities. However, even small investor s can invest in American
depositary receipts representing the underlying stocks of some of the well -known Indian firms, listed
on the New York Stock Exchange and Nasdaq. ADRs are denominated in dollars and subject to the
regulations of the U.S. Securities and Exchange Commission (SEC). Likewise, global depositary
receipts are listed on European stock exchanges. However, many promising Indian firms are not yet
using ADRs or GDRs to access offshore investors.

25
Retail investors also have the option of investing in ETFs and ETNs, based on Indian stocks. India
ETFs mostly make investments in indexes made up of Indian stocks. Most of the stocks included in
the index are the ones already listed on NYSE and Nasdaq. As of 2009, the two most prominent ETFs
based on Indian stocks are the Wisdom-Tree India Earnings Fund (NYSE: EPI). Both ETFs and ETNs
provide good investment opportunity for outside investors.

26
 Common Techniques

The study is done for the purpose of conducting fundamental analysis and technical analysis of
leading securities in the stock market. In the stock market share price of companies are determined
by the demand and supply forces operating in the market. These demand and supply forces in turn are
influenced by a number of fundamental factors as well as certain psychological or emotional factors.
The combined impact of all these factors is reflected in the share price movement. The price
movements of securities follow systematic and certain consistent patterns. Past movements in the
prices of shares help to identify trends and pattern. It is useful for the prediction of future price
movements

Security analysis is conducted by analyzing both the fundamental and technical aspects. The
technical analysis includes bar chart, Moving Avera ge & RSI (Relative Strength Index).

An examination and evaluation of the various factors affecting the value of a security is known as
Security analysis. Security analysis refers to the analysis of tradable financial instruments. Financial
instruments can be classified into debt securities, equities, or some hybrid of the two, futures contracts
and tradable credit derivatives are sometimes included. Security analysis is typica lly divided into
fundamental analysis, which relies upon the examination of fundamental business factors such as
financial statements, and technical analysis, which focuses upon price trends and momentum. Two
analytical models When the objective of the analysis is to determine what stock to buy and at what
price, there are two basic methodologies
Fundamental analysis maintains that markets may misprice a security in the short run but that the
"correct" price will eventually be reached. Profits can be made by trading the mispriced security and
then waiting for the market to recognize its "mistake" and re -price the security.
Technical analysis maintains that all information is reflected already in the stock price, so
fundamental analysis is a waste of time. Trends 'are your friend' and sent iment changes predate and
predict trend changes. Investors' emotional responses to price movements lead to recognizable price
chart patterns. Technical analysis does not care what the 'value' of a stock is. Their price predictions
are only extrapolations from historical price patterns.

Investors can use both these different but somewhat complementary methods for stock picking.
Many fundamental investors use techniques for deciding entry and exit points. Many technical
investors use fundamentals to limit t heir universe of possible stock to 'good' companies

Fundamental analysis

Fundamental analysis of a business involves analyzing its financial statements and health, its
management and competitive advantages, and its competitors and markets. When applied to futures
and forex, it focuses on the overall state of the economy, interest rates, production, ear nings, and
27
management. When analyzing a stock, futures contract, or currency using fundamental analysis there
are two basic approaches one can use; bottom up analysis and top down analysis. The term is used to
distinguish such analysis from other types of investment analysis, such as quantitative analysis and
technical analysis.A method of security valuation which involves examining the company's financials
and operations, especially sales, earnings, growth potential, assets, debt, management, products, and
competition. Fundamental analysis takes into consideration only those variables that are directly
related to the company itself, rather than the overall state of the market or technical analysis data.
The end goal of performing fundamental analysis is to produce a value that an investor can
compare with the security's current price in hopes of figuring out what sort o f position to take with
that security

Fundamental analysis is performed on historical and present data, but with the goal of making
financial forecasts. There are several possible

Objectives:

 To conduct a company stock valuation and predict its probable price evolution,

 To make a projection on its business performance,

 To evaluate its management and make internal business decisions,

 To calculate its credit risk

Tools forfundamental analysis

For fundamental analysis, the following ratios are used:

EPS = PAT / No of equity shares

DPS = Amount declared as dividend / No.

of equity shares

Pay out ratio = DPS / EPS

ROE = PAT / Net worth

P/E ratio = MPS / EPS

P/E Average = Average of the P/E range

Current ratio = Current assets / Current liabilities

Debt- Equity ratio = Debt capital / Owner’s capital

28
Interest coverage ratio = EBIT / Interest

N/P Margin = PAT / Net sales

TECHNICAL ANALYSIS

Technical analysis is a study of the market data in terms of factors affecting supply and demand
schedules, namely, prices, volume of trading, etc. The technical analysis believes that share prices
are determined by the demand and supply forces operating the market. These demand and s upply
forces are in turn influenced by a number of fundamental factors as well as certain psychological and
emotional factors. The combined impact of all these factors is reflected in the share price movement.
The technical analysis therefore concentrates on the movement of share price. Technical analysis is
the name given to forecasting techniques that utilize historical share price data.

Technical analysis is a method of evaluating securities by analyzing statistics generated by market

activity, such as past prices and volume. Technical analysts do not attempt to measure a security's
intrinsic value, but instead use charts and other tools to identify patterns that can suggest future
activity. Technical analysts believe that the historical performance of st ocks and markets are
indications of future performance.

TOOLS OF TECHNICAL ANALYSIS

 Relative Strength Index

 Simple Moving Average
 Line Chart
 Bar Chart

29
 BOMBAY STOCK EXCHANGE

The Bombay Stock Exchange (BSE) (formerly, The Stock Exchange, Bombay) is a stock exchange
located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market
capitalization of the companies listed on the BSE was US$1.63 trillion as of December 2010, making
it the 4th largest stock exchange in Asia and the 8th largest in the world. The BSE has the largest
number of listed companies in the world.As of June 2011, there are over 5,085 listed Indian companies
and over 8,196 scripts on the stock exchange, the Bombay Stock Exchange has a significant trading
volume. The BSE SENSEX, also called "BSE 30", is a widely used market index in India and Asia.
Though many other exchanges exist, BSE and the National Stock Exchange of India account for the
majority of the equity trading in India. While both have similar total market capitalization (about
USD 1.6 trillion), share volume in NSE is typically two times that of BSE.

2.1 Hours of operation

SESSION TIMING:
Beginning of the Day Session 8:00 - 9:00
Pre-open trading session 9:00 - 9:15
Trading Session 9:15 - 15:30
Position Transfer Session 15:30 - 15:50
Closing Session 15:50 - 16:05
Option Exercise Session 16:05 - 16:35
Margin Session 16:35 - 16:50
Query Session 16:50 - 17:35
30
End of Day Session 17:30

The hours of operation for the BSE quoted above are stated in terms the local time (i.e. GMT +5:30)
in Mumbai,India. BSE's normal trading sessions are on all days of the week except Saturday, Sundays
and holidays declared by the Exchange in advance.

2.2 History
The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to the 1850s, when
four Gujarati and one Parsi stockbroker would gather under banyan trees in front of Mumbai's Town
Hall. The location of these meetings changed many times, as the number of brokers constantly
increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official
organization known as 'The Native Share & Stock Brokers Association'. In 1 956, the BSE became the
first stock exchange to be recognized by the Indian Government under the Securities Contracts
Regulation Act. The Bombay Stock Exchange developed the BSE SENSEX in 1986, giving the BSE
a means to measure overall performance of the e xchange. In 2000 the BSE used this index to open its
derivatives market, trading SENSEX futures contracts. The development of SENSEX options along
with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically
an open outcry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading
system in 1995. It took the exchange only fifty days to make this transition. This automated, screen -
based trading platform called BSE On-line trading (BOLT) currently has a capacity of 8 million orders
per day. The BSE has also introduced the world's first centralized exchange -based internet trading
system, BSEWEBx.co.in to enable investors anywhere in the world to trade on the BSE platform.[5]
The BSE is currently housed in PhirozeJeejeebhoy Towers at Dalal Street, Fort area.

2.3Timeline
Following is the timeline on the rise of the SENSEX through Indian stock market history.1830's
Business on corporate stocks and shares in Bank and Cotton presses started in Mumbai. 1860-1865
Cotton price bubble as a result of the American Civil War.1870 - 90's Sharp increase in share prices
of jute industries followed by a boom in tea stocks and coal1978 -79 Base year of SENSEX, defined
to be 100.
1986 SENSEX first compiled using a ma rket Capitalization-Weighted methodology for 30 component
stocks representing well-established companies across key sectors.30 October 2006 The SENSEX on
October 30, 2006 crossed the magical figure of 13,000 and closed at 13,024.26 points, up 117.45
points or 0.9percent. It took 135 days for the SENSEX to move from 12,000 to 13,000 and 123 days
to move from 12,500 to 13,000.5 December 2006 The SENSEX on December 5, 2006 crossed the
14,000-mark to touch 14,028 points. It took 36 days for the SENSEX to move f rom 13,000 to the
14,000 mark.6 July 2007 the SENSEX on July 6, 2007 crossed the magical figure of 15,000 to touch
15,005 points in afternoon trade. It took seven months for the SENSEX to move from 14,000 to 15,000
points.19 September 2007 the SENSEX scaled yet another milestone during early morning trade on
September 19, 2007. Within minutes after trading began, the SENSEX crossed 16,000, rising by 450

31
points from the previous close. The 30-share Bombay Stock Exchange's sensitive index took 53 days
to reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points. The
SENSEXfinally ended with a gain of 654 points at 16,323. The NSE Nifty gained 186 points to close
at 4,732.26 September 2007 The SENSEX scaled yet another height during early m orning trade on
September 26, 2007. Within minutes after trading began, the SENSEX crossed the 17,000 -mark. Some
profit taking towards the end saw the index slip into red to 16,887 - down 187 points from the day's
high. The SENSEX ended with a gain of 22 p oints at 16,921.9 October 2007 The BSE SENSEX
crossed the 18,000-mark on October 9, 2007. It took just 8 days to cross 18,000 points from the 17,000
mark. The index zoomed to a new all -time intra-day high of 18,327. It finally gained 789 points to
close at an all-time high of 18,280. The market set several new records including the biggest single
day gain of 789 points at close, as well as the largest intra -day gains of 993 points in absolute term
backed by frenzied buying after the news of the UPA and Left meeting on October 22 put an end to
the worries of an impending election.
15 October 2007 The SENSEX crossed the 19,000 -mark backed by revival of funds-based buying in
blue chip stocks in metal, capital goods and refinery sectors. The index gained the las t 1,000 points
in just four trading days. The index touched a fresh all -time intra-day high of 19,096, and finally
ended with a smart gain of 640 points at 19,059.The Nifty gained 242 points to close at 5,670.
29 October 2007 The SENSEX crossed the 20,000 mark on the back of aggressive buying by funds
ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain 1,000 points
after the index crossed the 19,000-mark on October 15. The major drivers of today's rally were index
heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC Bank and SBI among
others. The 30-share index spurted in the last five minutes of trade to fly -past the crucial level and
scaled a new intra-day peak at 20,024.87 points before ending at its fresh closing high of 19,977.67,
a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50 points before ending at
5,905.90, showing a hefty gain of 203.60 points.
8 January 2008 The SENSEX peaks. It crossed the 21,000 mark in intra -day trading after 49 trading
sessions. This was backed by high market confidence of increased FII investment and strong corporate
results for the third quarter. However, it later fell back due to profit booking.
13 June 2008 theSENSEX closed below 15,200 mark, Indian mark et suffer with major downfall from
January 21, 2008
25 June 2008 The SENSEX touched an intra -day low of 13,731 during the early trades, then pulled
back and ended up at 14,220 amidst a negative sentiment generated on the Reserve Bank of India
hiking CRR by 50 bps. FII outflow continued in this week.
2 July 2008 The SENSEX hit an intra -day low of 12,822.70 on July 2, 2008. This is the lowest that it
has ever been in the past year. Six months ago, on January 10, 2008, the market had hit an all -time
high of 21206.70. This is a bad time for the Indian markets, although Reliance and Infosys continue
to lead the way with mostly positive results.
6 October 2008 The SENSEX closed at 11801.70 hitting the lowest in the past 2 years.

32
10 October 2008 The SENSEX today closed at 10527, 800.51 points down from the previous day
having seen an intraday fall of as large as 1063 points. Thus, this week turned out to be the week with
largest percentage fall in the SENSEX
18 May 2009 after the result of 15th Indian general election SENSEX gained 2100.79 points from the
previous close of 12173.42, a record one -day gain. In the opening trade itself the SENSEX evinced a
15percent gain over the previous close which led to a two -hour suspension in trading. After trading
resumed, the SENSEX surged again, leading to a full day suspension of trading.
19 October 2010 BSE introduced the 15-minute special pre-open trading session, a mechanism under
which investors can bid for stocks before the market opens. The mechanism, known as 'pre -open
session call auction', lasted for 15 minutes (from 9:00 -9:15 am).
5 November 2010 BSE SENSEX crossed the 21000 mark (exactly 21004.96).

Indices
The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE
National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five major stock exchanges
in India - Mumbai, Calcutta, Delhi, Ahmedabad and Madras. The BSE National Index was renamed
BSE-100 Index from October 14, 1996 and since then, it is being calculated taking into consideration
only the prices of stocks listed at BSE. BSE launched the dollar -linked version of BSE-100 index on
May 22, 2006. BSE launched two new index series on 27 May 1994: The 'BSE -200' and the 'DOLLEX-
200'. BSE-500 Index and 5 sectorial indices were launched in 1999. In 2001, BSE launched BSE -PSU
Index, DOLLEX-30 and the country's first free-float based index - the BSE TECk Index. Over the
years, BSE shifted all its indices to the free -float methodology (except BSE-PSU index). BSE
disseminates information on the Price -Earnings Ratio, the Price to Book Value Ratio and the Dividend
Yield Percentage on day-to-day basis of all its major indices. The values of all BSE indices are
updated on real time basis during market hours and displayed through the BOLT system, BSE website
and news wire agencies. All BSE Indices are reviewed periodically by the B SE Index Committee.
This Committee which comprises eminent independent finance professionals frames the broad policy
guidelines for the development and maintenance of all BSE indices. The BSE Index Cell carries out
the day-to-day maintenance of all indices and conducts research on development of new indices.
SENSEX is significantly correlated with the stock indices of other emerging markets.

33
 NATIONAL STOCK EXCHANGE OF INDIA

The National Stock Exchange (NSE) is a stock exchange located at Mumbai, Maharashtra, India. It
is the 9th largest stock exchange in the world by market capitalization and largest in India by daily
turnover and number of trades, for both equities and deri vative trading. NSE has a market
capitalization of around US$1.59 trillion and over 1,552 listings as of December 2010. Though a
number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant
stock exchanges in India and between them are responsible for the vast majority of share transactions.
The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange
Fifty), an index of fifty major stocks weighted by market capitalization.NSE is mutually -owned by a
set of leading financial institutions, banks,insurance companies and other financial intermediaries in
India but its ownership and management operate as separate entities. There are at least 2 foreign
investors NYSE Euronext and Goldman Sachs who hav e taken a stake in the NSE. As of 2006, the
NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India. NSE is the third largest
Stock Exchange in the world in terms of the number of trades in equities. It is the second fastest
growing stock exchange in the world with a recorded growth of 16.6percent.

34
Origins
The National Stock Exchange of India was promoted by leading financial institutions at the behest of
the Government of India, and was incorporated in November 1992 as a tax -paying company. In April
1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956.
NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital
market (Equities) segment of the NSE commenced operations in November 1994, while operations in
the Derivatives segment commenced in June 2000.

Innovations
Being the first national, anonymo us, electronic limit order book (LOB) exchange to trade securities
in India. Since the success of the NSE, existent market and new market structures have followed the
"NSE" model.Setting up the first clearing corporation "National Securities Clearing Corpo ration Ltd."
in India. NSCCL was a landmark in providing innovation on all spot equity market (and later,
derivatives market) trades in India.Co -promoting and setting up of National Securities Depository
Limited, first depository in India. Setting up of S& P CNX Nifty.NSE pioneered commencement of
Internet Trading in February 2000, which led to the wide popularization of the NSE in the broker
community.Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly
on an equity index, in India. After four years of policy and regulatory debate and formulation, the
NSE was permitted to start trading equity derivatives being the first and the only exchange to trade
GOLD ETFs (exchange traded funds) in India.NSE has also launched the NS E-CNBC-TV18 media
center in association with CNBC-TV18.NSE.IT Limited, setup in 1999, is a 100percent subsidiary of
the National Stock Exchange of India. A Vertical Specialist Enterprise, NSE.IT offers end -to-end
Information Technology (IT) products, solutions and services.NSE (National Stock Exchange) was
the first exchange in the world to use satellite communication technology for trading, using a client
server based system called National Exchange for Automated Trading (NEAT). For all trades entered
into NEAT system, there is uniform response time of less than one second.

Type National Stock Exchange

Location Mumbai, India
Coordinates 19°3'37N 72°51'35E
Founded 1992
Owner National Stock Exchange of India Limited
Key people Ravi Narain (MD)
Currency Indian rupee ()
No. of listings more than 1,600
Market Cap US$1.59 trillion (Dec 2010)
Indexes S&P CNX Nifty
CNX Nifty Junior
S&P CNX 500

35
Website https://www.nseindia.com/

Market.

Currently, NSE has the following major segments of the capital market:
Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
Currency futures
Mutual Fund
Stocks lending and borrowing

August 2008 Currency derivatives were introduced in India with the launch of Currency Futures in
USD INR by NSE. Currently it has also launched currency futures in EURO, POUND & YEN. Interest
Rate Futures was introduced for the first time in India by NSE on 31 August 2009, exactly after one
year of the launch of Currency Futures.
NSE became the first stock exchange to get ap proval for Interest rate futures as recommended by
SEBI-RBI committee, on 31 August 2009, a futures contract based on 7percent 10 Year GOI bond
(NOTIONAL) was launched with quarterly maturities.

Hours
NSE's normal trading sessions are conducted from 9:15 am India Time to 3:30 pm India Time on all
days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange (or by
the Government of India) in advance. The exchange, in association with BSE (Bombay Stock
Exchange Ltd.), is thinking of revising its timings from 9.00 am India Time to 5.00 pm India
Time.There were System Testing going on and opinions, suggestions or feedback on the New
Proposed Timings are being invited from the brokers across India. And finally on 18 November 2009
regulator decided to drop their ambitious goal of longest Asia Trading Hours due to strong opposition
from its members.
On 16 December 2009, NSE announced that it would advance the market opening to 9:00 am from 18
December 2009. So NSE trading hours will be from 9.00 am till 3:30 pm India Time.However, on 17
December 2009, after strong protests from brokers, the Exchange decided to postpone the change in
trading hours till 4 Jan 2010.NSE new market timing from 4 Jan 2010 is 9:00 am till 3:30 pm India
Time.

36
Indices

NSE also set up as index services firm known as India Index Services & Products Limited (IISL) and
has launched several stock indices, including:
S&P CNX Nifty(Standard & Poor'sCRISIL NSE Index)
CNX Nifty Junior
CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)
CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

37
 Group
National Securities Clearing Corporation Limited (NSCCL)

National Securities Clearing Corporation Limited, NSCCL, a wholly owned subsidiary of NSE is
responsible for clearing and settlement of all trades executed on NSE and deposit and collateral
management and risk management functions.

NSE Infotech Services Limited (NSETECH)

NSE Infotech Services Limited (NSETECH) is a wholly owned subsidiary incorporated to cater to
the needs of NSE and all its group companies exclusively.

India Index Services & Products Ltd. (IISL)

India Index Services & Products Limited (IISL), a subsidiary of NSE Strategic Investment
Corporation Limited was setup in May 1998 to provide a variety of indices and index related services
and products for the Indian capital markets.

DotEx International. Ltd. (DotEx)

DotEx International Ltd., is a 100% subsidiary of NSE. DotEx operates NSE data feed business, which
distributes real-time and proprietary market information to global data vendors, as well as to financial
institutions and individual investors. DotEx also offers NEAT -on-Web(NOW), a trading software for
web-based and mobile trading.

NSEIT Ltd.

38
NSEIT is a 100% subsidiary of National Stock Exchange of India Limited (NSE). NSEIT Limited
offers technology consultancy and development services for the financial services industry, primarily
for Indian markets.

NSE IFSC Ltd.

NSE IFSC Limited (NSE IFSC) is a fully owned subsidiary company of National Stock Exchange of
India Limited (NSE) and applied to the SEBI for in -principle approval to establish an international
exchange in Gujarat International Finance Tech City – International Financial Service Centre.
GIFT city has a special economic zone to host India’s first international financial services center.

NSE ASSOCIATE / AFFILIATE COMPANIES

National Securities Depository Ltd. (NSDL)

NSDL is a depository for securities listed on Indian exchanges that are held and settled in
dematerialized form. The enactment of Depositories Act in August 1996 paved the way for
establishment of NSDL, the first depository in India. NSE joined hands with the Industrial
Development Bank of India (IDBI) and the Unit Trust of India (UTI) to set up NSDL, the first
depository in India.

National Commodity & Derivatives Exchange Ltd. (NCDEX)

NCDEX is a professionally-managed online commodity exchange, set up through collaboration with

the Life Insurance Corporation of India, the National Bank for Agriculture and Rural Development
and ten other Indian and foreign partners.
NCDEX offers trading in agricultural commodities, bullion commodities and metals.

Power Exchange India Limited (PXIL)

Power Exchange India Limited (PXIL) is India’s first institutionally promoted Power Exchange
which began operations in 2008.
PXIL provides an electronic trading platform for India -focused electricity futures. Participants in
PXIL include electricity traders, inter-state generating stations, power distribution licensees and
independent power producers.

39
 Difference Between BSE and NSE

Comparison Chart
BASIS FOR
BSE NSE
COMPARISON

Introduction Bombay Stock Exchange is the oldest
financial market in the country, which
offers high speed trading to its
customers.
National Stock Exchange is the
biggest capital market of the
country. The exchange is a front
runner in the introduction of the
fully automated, electronic
trading system across the nation.

Founded in 1875 1992

Benchmark Sensex Nifty

index

Total listed 5650 1740

companies
(April 2015)

Market Around 1.68 trillion Around 1.5 trillion

Capitalization

Global Rank 10 th 11 th

Network Over 400 cities Over 2000 cities

40
Key Differences Between BSE and NSE

The major differences between BSE and NSE are as under:

1. BSE and NSE are the top securities exchange of India, where BSE is the oldest one while
NSE is the youngest one.
2. Globally, BSE stood in the 10th position in the list of top stock exchanges whi ch is followed
by NSE.
3. NSE was the first to introduce the modernized trading system in the country in 1992 while
BOLT was introduced by BSE in 1995.
4. BSE’s index is known by the name SENSEX (Sensitive Index) which shows 30 top trading
companies. Nifty (National Fifty) is the index of NSE, displays 50 most traded companies.
5. BSE started as an Association of persons in 1875, which was accredited as a stock exchange
in 1957. NSE was founded in 1992, as a tax paying company, but later on, in 1993 it was
recognized as a Stock Exchange.

Conclusion

Bombay Stock Exchange and National Stock Exchange both played a vital role in the reformation of
Capital Market of India. Millions of investors and brokers transact on a daily basis through these
trade exchanges. Both the stock exchanges are located in Mumbai, Maharashtra as well as recognised
by the Securities and Exchange Board of India (SEBI).
BSE is the first stock exchange of the country but the advancement of the Indian stock market is
pioneered by NSE like the replacement of paper-based settlement system, the introduction of clearing
and settlement system through National Securities Clearing Corporation Ltd. (NSCCL), the formation
of NSDL, internet trading, etc.
Top trading companies by market capitalization of the e xchanges include TCS, ONGC, HDFC Bank,
Sun Pharma, Reliance Industries Limited, SBI, ITC, Coal India, ITC Limited and much more.

41
 TOP TEN STOCK GAINERS (as of August, 2018)
NSE
%
Company Name High Low Last Price Prev Close Change
Gain

Titan Company
1,050.00 1,009.05 1,025.75 991.55 34.20 3.45

Reliance
1,296.95 1,242.05 1,290.90 1,249.95 40.95 3.28

ONGC
147.45 142.45 146.25 141.80 4.45 3.14

Eicher Motors
20,431.95 19,435.00 20,128.30 19,663.40 464.90 2.36

Bajaj Auto
2,672.40 2,565.45 2,642.50 2,602.75 39.75 1.53

Kotak Mahindra
1,274.70 1,245.00 1,272.20 1,255.70 16.50 1.31

TCS
2,055.45 2,023.00 2,050.25 2,029.95 20.30 1.00

HDFC
1,981.95 1,942.00 1,978.50 1,961.25 17.25 0.88

HDFC Bank 2,113.00 2,082.65 2,104.90 2,090.45 14.45 0.69

42
 %
Company Name High Low Last Price Prev Close Change
Gain

Axis Bank
724.50 708.00 720.50 717.25 3.25 0.45

Maruti Suzuki
7,039.00 6,851.65 6,988.20 6,962.30 25.90 0.37

Tech Mahindra
752.25 736.60 749.15 746.60 2.55 0.34

Tata Steel
478.60 452.00 476.05 474.70 1.35 0.28

HUL
1,823.00 1,794.70 1,802.60 1,799.30 3.30 0.18

HCL Tech
1,057.80 1,040.30 1,044.80 1,043.85 0.95 0.09

43
 BSE
Prev %
Company Name High Low Last Price Change
Close Gain

Reliance
1,297.00 1,245.00 1,291.15 1,247.30 43.85 3.52

ONGC
147.20 142.05 146.35 142.05 4.30 3.03

Bajaj Auto
2,669.75 2,566.65 2,646.10 2,602.70 43.40 1.67

Kotak Mahindra
1,275.00 1,242.75 1,272.80 1,258.10 14.70 1.17

HDFC
1,982.70 1,942.55 1,978.00 1,961.00 17.00 0.87

TCS
2,051.00 2,018.30 2,047.15 2,030.75 16.40 0.81

HDFC Bank
2,113.00 2,083.00 2,107.00 2,091.65 15.35 0.73

Tata Steel
478.10 452.30 475.80 473.40 2.40 0.51

Axis Bank
723.50 707.40 719.20 716.40 2.80 0.39

HUL
1,822.40 1,796.25 1,803.15 1,796.25 6.90 0.38

Maruti Suzuki
7,036.70 6,852.05 6,968.05 6,956.55 11.50 0.17

ICICI Bank
356.70 346.00 354.60 354.50 0.10 0.03

44
 TOP TEN STOCK LOSERS (As of August, 2018)
NSE

Last Prev %
Company Name High Low Change Loss
Price Close

IndiabullsHsg - -
691.00 622.60 650.75 678.65
27.90 4.11

Hindalco -
209.90 201.45 204.20 211.40 -7.20
3.41

HPCL -
232.40 224.70 226.50 234.00 -7.50
3.21

Yes Bank -
184.70 175.60 179.80 185.60 -5.80
3.13

Power Grid Corp -

189.50 183.75 184.60 190.20 -5.60
2.94

Cipla - -
521.00 506.20 509.60 521.35
11.75 2.25

NTPC -
140.40 136.75 137.25 140.15 -2.90
2.07

M&M - -
688.40 670.35 674.45 688.40
13.95 2.03

Dr Reddys Labs - -
2,878.00 2,715.25 2,735.20 2,791.25
56.05 2.01

Sun Pharma -
423.00 409.20 414.80 423.25 -8.45
2.00

45
 BSE

Last Prev %
Company Name High Low Change
Price Close Loss

Power Grid Corp -

190.30 183.60 184.40 190.35 -5.95
3.13

Yes Bank -
185.60 175.45 179.90 185.65 -5.75
3.10

Sun Pharma -
423.15 409.65 414.35 423.25 -8.90
2.10

NTPC -
140.50 136.85 137.25 140.15 -2.90
2.07

M&M - -
690.00 670.55 674.30 688.10
13.80 2.01

Bharti Airtel -
311.05 302.25 306.60 311.30 -4.70
1.51

ITC -
281.70 276.20 276.90 280.80 -3.90
1.39

Larsen - -
1,326.05 1,302.00 1,307.25 1,324.60
17.35 1.31

Bajaj Finance - -
2,635.00 2,573.00 2,594.05 2,627.55
33.50 1.27

IndusInd Bank - -
1,517.65 1,471.10 1,500.55 1,517.65
17.10 1.13

Hero Motocorp - -
2,841.85 2,720.35 2,781.45 2,807.35
25.90 0.92

Tata Motors -
183.60 178.20 180.30 181.75 -1.45
0.80

Asian Paints -
1,453.00 1,430.30 1,448.40 1,456.95 -8.55
0.59

Coal India -
224.70 220.15 222.05 223.25 -1.20
0.54

Vedanta -
164.95 156.50 161.45 162.30 -0.85
0.52

46
HCL Tech -
1,058.00 1,031.25 1,039.35 1,044.00 -4.65
0.45

SBI -
284.85 278.00 283.60 284.30 -0.70
0.25

Infosys -
762.00 747.85 755.65 756.55 -0.90
0.12

47
 Multi commodity exchange

Type Private
Industry Business Services
Founded 2003
Headquarters Exchange Square, Suren Road, Chakala, Andheri (East), Mumbai, India

Key people Lamon Rutten MD and CEO, Mr. Saurabh Chandra (Chairman)

Products Futures exchange

Revenue Rs 104.39 crore (2005–2006)
Website www.mcxindia.com
Multi commodity exchange (MULTI COMMODITY EXCHANGE) is an independent commodity
exchange based in India. It was established in 2003 and is based in Mumbai. The turnover of the
exchange for the fiscal year 2009 was US$ 1.24 trillion, and in terms of contracts traded, it was in
2009 the world's sixth largest commodity exchange. Multi Commodity Exchange offers futures
trading in bullion, ferrous and non-ferrous metals, energy, and a number of agricultural commodities
(mentha oil, cardamom, potatoes, palm oil and others).
Multi Commodity Exchange has also set up in joint venture the Multi Commodity Exchange Stock
Exchange. Earlier spin-offs from the company include the National Spot Exchange, an electronic spot
exchange for bullion and agricultural com modities, and National Bulk Handling Corporation (NBHC)
India's largest collateral management company which provides bulk storage and handling of
agricultural products.
It is regulated by the Forward Markets Commission.
Multi Commodity Exchange is India's No. 1 commodity exchange with 83percent market share in
2009
The exchange's main competitor is National Commodity & Derivatives Exchange Ltd.
Globally, MULTI COMMODITY EXCHANGE ranks no. 1 in silver, no. 2 in natural gas, no. 3 in
crude oil and gold in futures trading.
The highest traded item is gold.
MULTI COMMODITY EXCHANGE has several strategic alliances with leading exchanges across
the globe.
As of early 2010, the normal daily turnover of MULTI COMMODITY EXCHANGE was about US$
6 to 8 billion.
48
MULTI COMMODITY EXCHANGE now reaches out to about 800 cities and towns in India with the
help of about 126,000 trading terminals.
MULTI COMMODITY EXCHANGE COMDEX is India's first and only composite commodity futures
price index

Key shareholders
Financial Technologies Ltd, State Bank of India and its associates, National Bank for Agriculture and
Rural Development (NABARD), National Stock Exchange of India Ltd. (NSE), Fid Fund (Mauritius)
Ltd. - an affiliate of Fidelity International, Corporation Bank, Union Bank of India, Canara Bank,
Bank of India, Bank of Baroda, HDFC Bank,, SBI Life Insurance Co. Ltd., ICICI ventures, IL & FS,
Merrill Lynch, and New York Stock Exchange.

Key Milestones

The last two decades have seen extraordinary change in the way we liv e our lives, and in the role of
technology in shaping our world. MCX has been part of this unfolding story from the start.
2017
MCX awarded the Best Commodity Exchange of India, 2017 by the PHD Chamber Of Commerce and
Industry
MCX awarded the ‘Best Commodity Exchange of the Year 2016-17’ at the India International Gold
Convention 2017- August 2017
MCX honoured with ‘Best Bullion Exchange of the Year 2017’ award by the Bullion Federation of
India – August 2017
MCX awarded the ‘Best Commodity Exchange Of the Year’ 2016-17 by CPAI
Best Promising Commodity Exchange 2017’ by IBJA – March, 2017
MCX honoured with ‘Exchange Of The Year’ award by ASSOCHAM – March, 2017

49
 OTC EXCHANGE OF INDIA

Type Stock Exchange

Location Mumbai, India
Founded 1990
Owner OTC Exchange of India
Key people Mr. Praveen Mohnot, MD
Currency Indian rupee

OTC Exchange of India (OTCEI) also known as Over -the-Counter Exchange of India based in
Mumbai, Maharashtra. It is the first exchange for small companies. It is the first screen b ased
nationwide stock exchange in India. It was set up to access high -technology enterprising promoters
in raising finance for new product development in a cost effective manner and to provide transparent
and efficient trading system to the investors. OTCE I is promoted by the Unit Trust of India, the
Industrial Credit and Investment Corporation of India, the Industrial Development Bank of India, the
Industrial Finance Corporation of India and others and is a recognized stock exchange under the SCR
Act.

5.1 History
OTC Exchange of India was founded in 1990 under the Companies Act 1956 and got recognized by
the Securities Contracts Regulation Act, 1956 as a stock exchange.

50
 INTER CONNECTED STOCK EXCHANGE OF INDIA

Type Stock Exchange

Location Mumbai, India
Founded 1998
Owner Inter-connected Stock Exchange of India Limited
Currency Indian rupee ()

Inter-connected Stock Exchange Ltd. (ISE) started its operation in 1998[1] in Vashi, Mumbai. It is a
national-level stock exchange, providing trading, clearing, settlement, risk management and
surveillance support to its trading members. It has 841 trading members, who are located in 18 cities.
These intermediaries are administratively supported through the regional offices at Delhi, Kolkata,
Patna, Ahmedabad, Coimbatore and Nagpur, besides Mumbai.

Platform Exchange Network, India

Branch Networks of Interconnected Stock Exchange of India
The ISE is promoted by 12 regional stock exchanges namely at Bangalore, Bhubaneswar, Chennai,
Cochin, Coimbatore, Guwahati, Indore, Jaipur, Kanpur, Mangalore, Magadha and Vadodara. The
participating exchanges of ISE have 4,500 members and listed securities. It is a stock exchange of
stock exchanges, members of the stock exchanges being traders on the ISE.

History

Establishment of National Stock Exchange of India Ltd., (NSE) in 1994 with an all -India spread and
expansion of operations of Bombay Stock Exchange (BSE) throughout the country, both of which
have their trader work stations at over 400 centers in the country today, have led to the virtual
extinction of all the 19 Regional Stock Exchange (RSEs) spread across the length and breadth of the
country. The share of 19 RSEs, which was as much as 45.6 per cent of the total all -India turnover of
Rs. 2.39 lakh crore in 1995-96, declined progressively year after year and in 2001 -02, it was just 8.4
per cent of the total volume of Rs. 8.96 lakh crore. At present, there is virtually no trading at any of
the RSEs. Trading in the cash segment is thus confined to NSE and BSE on ly, with the share of the
latter, which used to account for over 70 percent of the all -India volume of trading till 1995, is also
progressively declining. Currently, BSE accounts for about 30 per cent of the aggregate volume of
trading on NSE and BSE in the cash segment. In the derivatives segment, while NSE clocks in about
Rs. 2000 crore daily, the turnover on BSE has been progressively declining virtually to the zero level.
The RSEs of the country and their members had spent over Rs. 200 crore in automati ng their trading,

51
clearing and settlement systems, largely driven by regulatory compulsions, sadly to witness them
lying idle at present.

Establishment of Inter-Connected Stock Exchange

It was the dwindling fortunes of RSEs that brought them together to establish the Inter -connected
Stock Exchange of India Ltd. (ISE). At a meeting of the Federation of Indian Stock Exchanges held
in October 1996, a Steering Committee was formed to evolve a n Inter-Connected Market System. As
a result, ISE, which was promoted by 14 regional stock exchanges of the country (excluding Calcutta,
Delhi, Ahmedabad, Ludhiana and Pune Stock Exchange, apart from NSE, BSE and OTCEI) was
incorporated on ISE by SEBI under the Securities Contracts (Regulations) Act, 1956 on November
18, 1998; ISE commenced trading on February 26, 1999. ISE was launched with an objective of
converting small, fragmented and illiquid markets into large, liquid national -level markets. This was
a unique experiment, with a highly automated trading, clearing and settlement systems backed by
state-of-the-art computers. ISE is also a professionally managed stock exchange with the Chairman
of the Exchange being also a Public Representative Director f rom its inception. Unfortunately for the
RSEs, particularly small brokers, the ISE experiment did not succeed. The daily turnover, which used
to be Rs. 1 to 2 crore in the first six months, gradually declined to virtually zero level. Failure of ISE
was, due to the bigger brokers of the participating RSEs failing to support any interest in trading on
ISE due to commercial considerations. As a result, it becomes virtually impossible for ISE to create
any worthwhile liquidity in its markets in competition with the breadth and depth of NSE and BSE.
Markers continued to be fragmented as the participating RSEs did not close down their regional
segments. All the while the small fragmented and illiquid market failed to emerge. ISE has also not
succeeded in getting companies listed on it despite the stipulation by SEBI that the State of
Maharashtra constituted the regional area for ISE due to lack of regulatory support for making it
applicable to over 3,000 already listed companies in the State of Maharashtra.

52
 Regulators

Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and
Exchange Board of India and The Reserve Bank of India.
The Ministry of Finance regulates through the Department of Economic Affairs - Capital Markets
Division. The division is responsible for formulating the policies related to the orderly growth and
development of the securities markets (i.e. share, debt and derivatives) as well as protecting the
interest of the investors. It is responsible for
 institutional reforms in the securities markets,
 building regulatory and market institutions,
 strengthening investor protection mechanism, and
 providing efficient legislative framework for securities markets.

The Division administers legislations and rules made under the

 Depositories Act, 1996,
 Securities Contracts (Regulation) Act, 1956 and
 Securities and Exchange Board of India Act, 1992.

The Regulators

Securities & Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is the regulatory authority established under the
SEBI Act 1992 and is the principal regulator for Stock Exchanges in India. SEBI’s primary functions
include protecting investor interests, promoting and regulating the Indian securities markets. All
financial intermediaries permitted by their respective regulators to participate in the Indian securities
markets are governed by SEBI regulations, whether domestic or foreign. Foreign Portfolio Investors
are required to register with DDPs in order to participat e in the Indian securities markets.
More Information on : www.sebi.gov.in

Reserve Bank of India (RBI)

The Reserve Bank of India (RBI) is governed by the Reserve Bank of India Act, 1934. The RBI is
responsible for implementing monetary and credit policies, issuing currency notes, being banker to
the government, regulator of the banking system, manager of foreign exchange, and regulator of
payment & settlement systems while continuously working towards the development of Indian
financial markets. The RBI regulates financial markets and systems through different legislations. It
regulates the foreign exchange markets through the Foreign Exchange Management Act, 1999.

53
 SCAMS IN INDIAN STOCK MARKET

Harshad Mehta Scam

Mehta gradually rose to become a stock broker on the Bombay Stock Exchange and had an expensive
lifestyle. He lived in 15,000 square feet (1,400 m2 ) apartment, which had a swimming pool as well as
a golf patch. By 1990, Mehta had risen to prominence in the stock market. He was buying shares
heavily. The shares which attracted attention were those of Associated Cement Company (ACC). The
price of ACC was bid up to Rs 10,000. When asked, Mehta used the replaceme nt cost theory as an
explanation. .
Through the second half of 1991 Mehta had earned the sobriquet of the ‘Big Bull’, because he was
said to have started the bull run. On April 23, 1992, journalist SuchetaDalal exposed Mehta's illegal
methods in a column in The Times of India. Mehta was dipping illegally into the banking system to
finance his buying. The authors explain: “The crucial mechanism through which the scam was
effected was the ready forward (RF) deal. The RF is in essence a secured short -term (typically 15-
day) loan from one bank to another. Crudely put, the ban k lends against government securities just
as a pawnbroker lends against jeweler. The borrowing bank actually sells the securities to the lending
bank and buys them back at the end of the period of the loan, typically at a slightly higher price.” It
was this ready forward deal that Mehta and his accomplices used with great success to channel money
from the banking system.
A typical ready forward deal involved two banks brought together by a broker in lieu of a commission.
The broker handles neither the cash nor the securities, though that wasn’t the case in the lead -up to
the scam. “In this settlement process, deliveries of securities and payments were made through the
broker. That is, the seller handed over the securities to the broker, who passed them to t he buyer,
while the buyer gave the cheque to the broker, who then made the payment to the seller. In this
settlement process, the buyer and the seller might not even know whom they had traded with, either
being known only to the broker.” This the brokers c ould manage primarily because by now they had
become market makers and had started trading on their account. To keep up a semblance of legality,
they pretended to be undertaking the transactions on behalf of a bank.
Another instrument used was the bank receipt (BR). In a ready forward deal, securities were not
moved back and forth in actuality. Instead, the borrower, i.e., the seller of securities, gave the buyer
of the securities a BR. As the authors write, a BR “confirms the sale of securities. It acts as a receipt
for the money received by the selling bank. Hence the name - bank receipt. It promises to deliver the
securities to the buyer. It also states that in the m eantime, the seller holds the securities in trust of
the buyer.”
Having figured out his scheme, Mehta needed banks which issued fake BRs, or BRs not backed by
any government securities. “Two small and little known banks - the Bank of Karad (BOK) and the
Metropolitan Co-operative Bank (MCB) - came in handy for this purpose. These banks were willing
to issue BRs as and when required, for a fee,” the authors point out. Once these fake BRs were issued,

54
they were passed on to other banks and the banks in turn ga ve money to Mehta, assuming that they
were lending against government securities when this was not really the case. This money was used
to drive up the prices of stocks in the stock market. When time came to return the money, the shares
were sold for a profit and the BR was retired. The money due to the bank was returned.
The game went on as long as the stock prices kept going up, and no one had a clue about Mehta’s
modus operandi. Once the scam was exposed, though, a lot of banks were left holding BRs whic h did
not have any value - the banking system had been swindled of a whopping Rs 4,000 crore. When the
scam was revealed, the Chairman of the Vijaya Bank committed suicide by jumping from the office
roof. He knew that he would be accused if people came to know about his involvement in issuing
cheques to Mehta.
Mehta made a brief comeback as a stock market guru, giving tips on his own website as well as a
weekly newspaper column. This time around, he was working with owners of a few companies and
recommended only the shares of those companies. This game, too, did not last long.
By the time he died, Mehta had been convicted in only one of the many cases filed against him.
The Mehta scandal was portrayed in a recent Hindi movie, 'Gafla.

Ketan Parekh Scam : The Stock And The Bull Story.

Ketan Parekh is a name which rings a bell in our minds as the man behind one of the biggest scams
of Indian stock exchange in 2000-2001. Through this article, I have explained the modus operandi of
the “Ketan Parekh Scam” in a simple language without any technical jargon so that even a layman
can understand. But before that, let’s get aware about an interesting fact, both Ketan Parkesh&
Harshad Mehta, another big swindler of Indian stock exchange are the “infamous” alumni of the
same school in Gujarat. God knows what is taught in that school!!!!!
Ketan Parekh-also known as the “Bombay Bull” was a known broker of Indian stock exchange. Over
the years, Ketan built a network of companies mainly concentrated in Mumbai. According to market
sources, although he was a big broker, he didn’t have enough funds to buy large stocks. He borrowed
funds from various companies and banks for this purpose. He used to raise loan from the banks by
offering shares as collateral security. The companies in which KP held stakes included Amitabh
Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and PritishNandyCommunications. He also
had stakes in HFCL, Global Telesystems (Global), Zee telefilms, Crest Communications, and
PentaMediaGraphics . Ketan selected these companies for investment with help from his research
team, which listed high growth companies with a small capital base . According to media reports, KP
took advantage of low liquidity in these stocks, which eventually came to be known as the 'K-10'
stocks.
The shares were held through KP's company, Triumph International. In July 1999, he held around 1.2
million shares in Global. KP controlled around 16% of Global's floating stock, 25% of Aftek Infosys,
and 15% each in Zee and HFCL.
He started trading of these shares within the network of his own companies at no profit no loss with
the malafide intention of creating buying pressure for shares of K -10.Continuous trading by Ketan

55
Parekh within the network of his own companies make other brokers in t he market believe that
something is happening inside K-10. Thus brokers started buying shares of K-10 for themselves and
also urge their clients to buy these shares. The buoyant stock markets from January to July 1999
helped the K-10 stocks increase in value substantially. HFCL soared by 57% while Global increased
by 200%. As a result, brokers and fund managers started investing heavily in K -10 stocks.
Mutual funds like Alliance Capital, ICICI Prudential Fund and UTI also invested in K -10 stocks, and
saw their net asset value soaring. By January 2000, K-10 stocks regularly featured in the top five
traded stocks in the exchanges. HFCL's traded volumes shot up from 80,000 to 1,047,000 shares.
Global's total traded value in the Sensex was Rs 51.8 billion.

As such huge amounts of money were being pumped into the markets, it became tough for KP to
control the movements of the scrips. Also, it was reported that the volumes got too big for him to
handle. Analysts and regulators wondered how KP had man aged to buy such large stakes. At that time
Ketan thought of selling his shares but it is said that some senior officials of Zee telefilms told him
to continue trading till the share value reach Rs 1000 mark and thus Ketan continued. He finally sold
all his shares of zee at market price of Rs 1100. Though he earned enormous profits but due to sudden
selling of huge number of shares and consequent fall in trading led to a fall in the markets and thus
share price fall drastically to around 200 again. Investors lost heavi ly and many committed suicide.
That was what Ketan. This scam created a historical impact on financial status of Bombay Stock
Exchange and also on faith of investors in its working. Securities and Exchange Board
of India (SEBI) was highly criticized as being reactive rather than proactive. The market regulator
was blamed for being lax in handling the issue of unusual price mov ement and tremendous volatility
in shares over an 18-month period prior to February 2001.
Analysts also opined that SEBI's market in telligence was very poor. Analysts co mmented that if the
regulatory authorities had been alert, the huge erosion in values could have been avoided or at least
controlled. Ketan Parekh was sent behind bars immediately though was later released on bail.
Currently he has been prohibited from trading in the Indian stock exchan ges till 2017. One would
have thought that after this scam the regulatory authorities would have becomemore strict and
effectiveand then we come across the Satyam scam!

56
 RETAIL RESEARCH
In the month of August 2017, the S&P BSE Sensex and CNX Nifty fell 2.4% and 1.6%, respectively.
Indian shares suffered their steepest monthly loss since November, weighed down by geopolitical
tensions, weaker-than-expected earnings and a surprise management reshuffles at technology
heavyweight Infosys. An escalation in tensions following firing of a missile by North Korea over
Japan had investors on knife-edge as both the Sensex and the Nifty took a sharp fall, in line with a
general weakness across the globe. Other news like the indication from mid -term Economic Survey
of likely failure in meeting the upper end of FY18 economic growth forecast of 6.5 -7.5%, Doklam
stand-off between India & China, and SEBI's order to ban trading in 331 'shell companies' also hit
market sentiments.

Key Positives during the Month

 Domestic car sales grew 8.52% to 192,773 units in Jul 2017 from 177,639 units in the year -
ago period.
 Direct tax collections jumped 19% in the first four months of the current fiscal as
demonetization of higher denomination currency brought in more number of individuals in
tax net.
 India had received $10.41 billion as Foreign Direct Investment (FDI) equity inflows during
the period from Apr to Jun of FY18, which is 37% higher than $7.59 billion rec eived during
the same period last year.
 The Nikkei India Manufacturing Purchasing Managers Index (PMI) rebounded from 101 -
month low of 47.9 in July 2017 to 51.2 in August 2017, signaling a renewed improvement in
the health of the sector.

Key Negatives during the Month

 The Nikkei India Services PMI Business Activity Index plunged from June’s eight -month
high of 53.1 to 45.9 in July, its lowest level since September 2013.
 The Index of Industrial Production (IIP) contracted 0.1% YoY in Jun 2017, as again st 8%
growth in Jun 2016. The downside reflected 0.4% dip in manufacturing activities and
marginal growth of 0.4% in mining activities.
 Retail inflation grew 2.36% in Jul 2017 from 1.46% in the previous month. Wholesale Price
Index (WPI) based inflation grew 1.88% in Jul 2017 from 0.90% in the previous month and
0.63% in the same month of the previous year.
 India’s trade deficit expanded to $11.45 billion in Jul 2017 from $7.76 billion in the same
month of the previous year. Imports grew 15.42% YoY to $33.99 billion in Jul 2017 from
$29.45 billion in the Jul 2016 while exports grew 3.94% YoY to $22.54 billion in Jul from
$21.69 billion in the same month of the previous year.

57
  India’s Gross Domestic Product (GDP) grew 5.7% YoY in the Jun quarter of 2017, slower
than 7.9% a year ago and 6.1% in the previous quarter.

World markets ended the month of August 2017 on a mixed note. Brazil – Bovespa was the top gainer
gaining 7.5%. Chinese - Shanghai composite, Hong Kong – Hang Seng, US - Nasdaq, UK - FTSE,
Indonesia - Jakarta Composite and US - Dow Jones were the other gainers gaining 2.7%, 2.4%, 1.3%,
0.8%, 0.4%, and 0.3%, respectively. India - Sensex, India - Nifty, Singapore - Strait Times, Japan –
Nikkei and Germany – DAX fell 2.4%, 1.6%, 1.6%, 1.4% and 0.5%, respectively. The MSCI AC
world index fell 0.07% in August.
Average daily volumes on BSE in August 2017 fell by 29.67% M -o-M. (NSE daily average volumes
rose by 1.99% M-o-M). The average daily derivatives volumes on NSE rose by 20.63% M -o-M to Rs
700388.11 cr in August.

Commodities

In August 2017, the Reuters/Jefferies CRB Index of 19 raw materials ended down by 0.98% to close
at 180.86. The Reuters/Jeffries CRB Index fell on account of a significant fall witnessed in Lean Hogs
of about 15.3%. Other commodities which were negative were Wheat (down 13.2%), Corn (down
9.6%), Live Cattle (down 9.4%), Coffee (down 6.7%), Crude Oil (down 6.5%), Soyabean (down 5.8%)
Sugar (down 3.4%), Cocoa (down 0.6%). However, Nickel, Aluminum, Copper, Silver, Orange Juice,
Gold, Cotton and Natural Gas were all up by 13.7%, 10.7%, 6.9%, 5.3%, 4.6%, 3.8%, 2.5% and 1.8%,
respectively.

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Gold rose to the highest this year after North Korea fired a ballistic missile over Japan, boosting safe
haven demand and extending a rally fueled by decline in the dollar. An index of precious -metals
mining stocks touched a four-month high. Gold prices have rallied to their highest level since US
elections in November 2016. The rally of prices was also supported after the latest monthly US jobs
report came in weaker than economists expected.
Oil prices fell in the wake of Hurricane Harvey, which has killed more than 40 people and brought
record flooding to the oil heartland of Texas, paralyzing a quarter of the US refining industry. Prices
dropped to their lowest finish in about a month, with trader s expecting refinery shutdowns in the Gulf
of Mexico region due to Hurricane Harvey to cause an excess in crude supplies.

Currencies
The US dollar declined broadly against its main peers amid worries about Hurricane Harvey’s impact
on the American economy and on rising tensions in Asia. Given below is a table that shows the
depreciation (-)/appreciation (+) of the dollar against various currencies for the month of August
2017:

The Russian Ruble rose, supported by increased foreign demand for Russian assets and as demand
for forex eased after large Russian firms finished paying out dividends in Rubles.
Argentine Peso strengthened after a mid -term legislative primary election was favoring business-
friendly President Mauricio Macri’s reform effort and also after the central bank intervened in the
foreign exchange markets to halt the peso’s rapid decline to historic lows.

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China's Yuan strengthened to a fresh 14 -month high against the US dollar after its best month on
record, buoyed by strong guidance while the dollar remained under pressure. The Chinese currency
extended gains from its late domestic close to end the month 1.95% stronger than the dollar - its best
month since 1994.

The Dollar fell across the board touching a more than two -and-a-half year low against the Euro. The
Euro rose to its highest against the dollar since January 2015 after European Central Bank President
Mario Draghi did not express concern about a strong eu ro zone currency, as some analysts had
expected during his speech at the Federal Reserve’s Jackson Hole symposium.
Turkish Lira rose against the Dollar as economic confidence in Turkey rose to its highest level in
more than five years in August, as a calmer political situation helps the economy to recover after a
series of crisis hit growth last year. Turkey's annual current account deficit shrunk to $3.7 billion in
June, a fall of $1.2 billion year -on-year.
The Rupee strengthened to hit near three -week high against the US dollar, tracking gains in its Asian
peers and in local equity markets. Heavy selling in the greenback by exporters and banks amid its
weakness against other currencies overseas and a smart rally in local equities largely supported the
rupee trade.

Outlook going forward

 Nifty after making a low of 9,685 on Aug 11, 2017 has begun to retrace the earlier fall and is
on the way to the previous high of 10,138. However, the hesitation in the latest up move
suggests that the previous high may be difficult to be breached.

 Globally the risk on sentiment is alive. There is some uncertainty on the timing, pace and
quantum of interest rate hikes to be conducted by the Central banks. Balance sheet unwinding
by them is also an unknown factor as far as the beginning and speed is concerned. The Federal
Reserve kept interest rates unchanged on Jul 26 and said it expected to start winding down
its massive holdings of bonds "relatively soon" in a sign of confidence in the US economy.
However, the subsequent data from the US suggest that the interest rate hikes may now be
postponed while balance sheet unwinding may begin.

 Liquidity withdrawal and its strong signs by US, Japan and lately UK & Eurozone could
create jitters among the equity investors who hav e entered into an arbitrage trade. We need
to watch as to how serious these central bankers are about ending easy money policies and
beginning to shrink balance sheets of the respective countries’ central banks.

 While some liquidity may be sucked out due to unwinding of balance sheets by the central
banks, the initial rundown may be slower and as interest rate hikes could be postponed, the
negative impact may be limited till interest rate hikes start or unwinding of balance sheet
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 becomes more aggressive. The re-rating of stocks in India and even globally over FY2011 -
16 has largely been driven by the decline in global bond yields. If global bond yields were to
move up from current levels on the back of global economic recovery, this process of rerating
would come under threat and reversal.

 India's maiden Goods and Services Tax (GST) revenue mop -up got off to a bumper start, with
Finance Minister Arun Jaitley saying that taxes worth Rs 92,283 crore were collected in July
from just 64.42% of the total taxpayer base. Tax collections for July, t he first month when a
unified GST was implemented across the country in place of more than a dozen central and
state levies like excise duty, service tax and VAT, are likely to further go up when all the tax
payers file returns. The collections so far are in excess of the finance ministry's internal
estimate of Rs 91,000 crore. The GST should create an upward bias to indirect taxes
(considering the effective increase in service taxes). However, this will take time. The govt
has meanwhile already raised spending in 1Q, and will have to slow spending the remainder
of FY18 – no capex catalyst near term. With frontloading of spending by both center and state
in FY18, the challenge will be to taper expenditure growth without disruption. GST
essentially remains a leap of faith and is expected to cause some disruptions initially as
businesses adapts to the new system. However the medium term benefits far outweigh the
near term disruptions.

 Post the GST related disruptions, manufacturing activity seems to be on the way up going by
the fact that India's factory activity unexpectedly expanded in August, snapping back from a
contraction the previous month, as disruptions stemming from confusion over a new national
sales tax eased, a business survey showed. The rebound suggests that India's economic growth
rate, which unexpectedly slipped to three -year low of 5.7% in the April-June quarter from a
year ago, may also improve in the current quarter. The Nikkei/Markit Manufacturing
Purchasing Managers' Index rose more than three points to 51.2 in August from 47.9 in July,
beating the median economist forecast of 49.3 in a Reuters poll. A reading above 50 indicates
expansion. That was the biggest one -month jump in 5-1/2 years.

 Locals continue to pump money into the equity/debt markets in India. Mutual funds have also
been large buyers in Aug Equities – net inflow Rs 17222 cr (till 30th) and Debt – net inflow
Rs 33376 cr (till 30th).

 Valuations globally have risen but there is still quite a divergence on the macro view on
evolution of growth across economies. Latest data is still volatile and there are a number of
challenges especially with respect to geopolitical risks. Uncertainty exists about direct ion of
policy in China, Brexit negotiations, rollback of monetary stimulus in EU and the quantum
(and time) of US fiscal policy.

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 While India is unlikely to remain insulated from ongoing adverse global developments, it will
likely outperform its EM peers. India’s macro fundamentals have improved considerably in
the past 38 months, which makes it easier for the economy to absorb the adverse impact of
potential external shocks compared to other EM peers. India’s growth model is likely to be
based on productivity growth and domestic demand driven, which is distinct from the East
Asian model of large-scale capital investments and a state -led push for manufacturing
exports.

 India remains one of the best placed domestic growth stories. Favorable demographic pr ofile,
being on the curve of developing status (and improving per capita income and productivity)
and large consumer base domestically are all known advantages. Relatively low level of
private corporate debt is an added advantage. Low dependency on exports means that India
could emerge unscathed from the much-feared potential trade protectionist policies under US
Trump administration. India has made progress on key reforms, including measures to
increase infrastructure investment, ease FDI policies, ease of doing business and simplifying
bureaucratic processes.

 The year 2014-15 has seen the return of Indian investors to the equity market after many
years. We expect the inflows to continue going forward as well. Equity ownership of Indian
households remains abysmally low – both in absolute terms as well as compared to historical
levels seen in 2007-08. As these holdings start to get normalized, they can sustain large
inflows into equities. Large domestic inflows are structurally important as they can provide
a counter-balance to FII flows. Inflows in domestic mutual funds exceeded US $10bn in 2016,
the third consecutive year of robust inflows. Inflows at domestic insurance companies are
also growing at 30% YoY. In addition, the decision by Employee Provident F und
Organization (EPFO) to invest 5% (soon to be raised to 10% and later 15%) of its incremental
inflows into equity market has been a major support to the market. On an annualized basis
these three sources total to ~US 20 -25bn.

 Farm loan waivers cause moral hazard and strain on state finances. How many more states
will go for this need is to be watched closely. At a time when Govt spending is boosting
capex, diversion of state resources towards farm loan waiver could prove damaging to capex
recovery and infra spend. Further too much equity issuance and further appreciation of the
Rupee could be some other reasons for worry locally.

 The growth turnaround is yet to come: The Indian business cycle should improve as
utilizations improve (low capex, steady d emand) and the effects of reforms kick in. GST
implementation and wider application of the Insolvency and Bankruptcy Code are two focus
areas of the government now.
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 While optically the markets may seem to be expensive going by historical standards, bulls
believe that P/E multiples are inversely correlated with the cost of capital. Further markets
typically top out at times the economy is overheated. Further index composition/changes and
index earnings composition (losses by some large companies offset prof its by others
depressing the index earnings) are other parameters to check whether the markets are really
overvalued or not. We think the truth lies somewhere in between. If the economy is close to
a bottom and corporate earnings are slates to recover soon , then the P/E ratios will look
reasonable going forward. However in case earnings recovery is delayed due to whatever
reasons, then markets may be expensive and may remain sideways for extended period if not
fall. Earnings growth over the last three years has been lackluster, with flattish Nifty EPS
over FY14-17. Earnings growth was constrained by the lack of revival in private investment
cycle, two consecutive droughts, asset quality stress at PSU banks and corporate private
sector banks, deceleration in credit growth etc.

 Even as the equity markets scale new peaks, equity market volatility is at its lowest in more
than two decades. Continued optimistic expectations on growth in the face of consistent
earnings downgrades in each of the last few years and the gradual unidirectional nature of the
market crowding in liquidity are the likely explanations for the fall in volatility. The key
question is not whether volatility will revert to its mean but whether the mean reversion will
be benign.

 Investor focus has shifted from near-term worries to longer term optimism while continued
institutional flows support equity markets.

 We think that in the backdrop of uncertainties on the speed of local growth, global emerging
policies and interest rate moves across the world, a correction or sideways move for a few
weeks/months can be expected. Whether this happens after a reasonable time and value
correction starting Sept 2017 or we go straight up after a brief fall will be known later.

 Global geo-political event is the main big risk currently. In the previous bull market the
median bull market correction has been ~14% while the median recovery time has been 66
days. Though we believe Indian equities are in a bull market phase but a combination of
different valuation methodologies such as forward P/E, Market cap to GDP, spread between
bond yield and earning yield do not indicate we are at the peak of a bull market.

 While the large caps have their own headwinds in different spheres, mid and small caps will
keep throwing up surprises in stock moves based on their small size/base, faster adjustment
to emerging changes, financial and operational restructuring, corporate announcements
including merger, demerger, hive-offs, turnaround, asset value unlocking etc.

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REVIEW OF LITERATURE Gupta (1972) in his book has studied the working of stock exchanges in
India and has given a number of suggestions to improve its working. Th e study highlights the' need
to regulate the volume of speculation so as to serve the needs of liquidity and price continuity. It
suggests the enlistment of corporate securities in more than one stock exchange at the same time to
improve liquidity. The study also wishes the cost of issues to be low, in order to protect small
investors Panda (1980) has studied the role of stock exchanges in India before and after independence.
The study reveals that listed stocks covered four -fifths of the joint stock sector companies. Investment
in securities was no longer the monopoly of any particular class or of a small group of people. It
attracted the attention of a large number of small and middle class individuals. It was observed that
a large proportion of savings went in the first instance into purchase of securities already issued.
Gupta (1981) in an extensive study titled `Return on New Equity Issues' states that the investment
performance of new issues of equity shares, especially those of new companies, deserves separate
analysis. The factor significantly influencing the rate of return on new issues to the original buyers
is the `fixed price' at which they are issued. The return on equities includes dividends and capital
appreciation. This study presents sound estimates of rates of return on equities, and examines the
variability of such returns over time. Jawahar Lal (1992) presents a profile of Indian investors and
evaluates their investment decisions. He made an effort to study their familiarity with, and
comprehension of financial information, and the extent to which this is put to use. The information
that the companies provide generally fails to meet the needs of a variety of individual investors and
there is a general impression that the company's Annual Repo rt and other statements are not well
received by them. L.C.Gupta (1992) revealed the findings of his study that there is existence of wild
speculation in the Indian stock market. The over speculative character of the Indian stock market is
reflected in extremely high concentration of the market activity in a handful of shares to the neglect
of the remaining shares and absolutely high trading velocities of the speculative counters. He opined
that, short- term speculation, if excessive, could lead to "artific ial price". An artificial price is one
which is not justified by prospective earnings, dividends, financial strength and assets or which is
brought about by speculators through rumours, manipulations, etc. He concluded that such artificial
prices are bound to crash sometime or other as history has repeated and proved. Nabhi Kumar Jain
(1992) specified certain tips for buying shares for holding and also for selling shares. He advised the
investors to buy shares of a growing company of a growing industry. Buy shares by diversifying in a
number of growth companies operating in a different but equally fast growing sector of the economy.
He suggested selling the shares the moment company has or almost reached the peak of its growth.
Also, sell the shares the moment you realise you have made a mistake in the initial selection of the
shares. The only option to decide when to buy and sell high priced shares is to identify the individual
merit or demerit of each of the shares in the portfolio and arrive at a decision. Pyare Lal Singh (1993)
in the study titled, Indian Capital Market - A Functional Analysis, depicts the primary market as a
perennial source of supply of funds. It mobilises the savings from the different sectors of the economy
like households, public and private corporate sectors. The number of investors increased from 20
lakhs in 1980 to 150 lakhs in 1990 (7. 5 times). In financing of the project costs of the companies
with different sources of financing, the contribution of the securities has risen from 35.01% in 1981

64
to 52.94% in 1989. In the total volume of the securities issued, the contribution of debentures / bonds
in recent years has increased significantly from 16. 21% to 30.14%. Sunil Damodar (1993) evaluated
the 'Derivatives' especially the 'futures' as a tool for short-term risk control. He opined that derivatives
have become an indispensable tool for finance managers whose prime objective is to manage or reduce
the risk inherent in their portfolios. He disclosed that the over -riding feature of 'financial futures' in
risk management is that these instruments tend to be most valuable when risk control is needed for a
short- term, i.e., for a year or less. They tend to be cheapest and easily available for protecting against
or benefiting from short term price. Their low execution costs also make them very suitable for
frequent and short term trading to manage risk, more effectively. R.Venkataramani (l994) disclosed
the uses and dangers of derivatives. The derivative products can lead us to a dangerou s position if its
full implications are not clearly understood. Being off balance sheet in nature, more and more
derivative products are traded than the cash market products and they suffer heavily due to their
sensitive nature. He brought to the notice of the investors the 'Over the counter product' (OTC) which
are traded across the counters of a bank. OTC products (e.g. Options and futures) are tailor made for
the particular need of a customer and serve as a perfect hedge. He emphasised the use of futures as
an instrument of hedge, for it is of low cost. Amanulla&Kamaiah (1995) conducted a study to examine
the Indian stock market efficiency by using Ravallion co integration and error correction market
integration approaches. The data used are the RBI month ly aggregate share indices relating five
regional stock exchanges in India, viz Bombay, Calcutta, Madras, Delhi, Ahmedabad during 1980 -
1983. According to the authors, the co integration results exhibited a long -run equilibrium relation
between the price indices of five stock exchanges and error correction models indicated short run
deviation between the five regional stock exchanges. The study found that there is no evidence in
favour of market efficiency of Bombay, Madras, and Calcutta stock exchanges whil e contrary
evidence is found in case of Delhi and Ahmedabad. PattabhiRam.V. (1995) emphasised the need for
doing fundamental analysis and doing Equity Research (ER) before selecting shares for investment.
He opined that the investor should look for value with a margin of safety in relation to price. The
margin of safety is the gap between price and value. He revealed that the Indian stock market is an
inefficient market because of the absence of good communication network, rampant price rigging,
and the absence of free and instantaneous flow of information, professional broking and so on. He
concluded that in such inefficient market, equity research will produce better results as there will be
frequent mismatch between price and value that provides opportuni ties to the long-term value oriented
investor. He added that in the Indian stock market investment returns would improve only through
quality equity research. Karajazyk (1995) investigated one measure of financial integration between
equity markets. He used a multifactor equilibrium Arbitrage pricing theory to define risk and to
measure deviations from the “Law of one price”. He applied the integration measure to equities traded
in 24 countries (four developed and 20 emerging). He found that the measure of market segmentation
tends to be much larger for emerging markets than for developed markets, which flows into or out of
the emerging markets. The measure tends to decrease over time, which is consistent with growing
levels of integration. Large values of adjusted mis-pricing occur around periods in which capital
controls change significantly. Finally, he found asymmetric integration relationship; stock markets

65
of developed nations are more integrated than those of emerging nations. Debjit Chakraborty (1997)
in his study attempts to establish a relationship between major economic indicators and stock market
behaviour. It also analyses the stock market reactions to changes in the economic climate. The factors
considered are inflation, money supply, and growth in GDP, fiscal deficit and credit deposit ratio. To
find the trend in the stock markets, the BSE National Index of Equity Prices (Natex) which comprises
100 companies was taken as the index. The study shows that stock market movements are largely
influenced by, broad money supply, inflation, C/D ratio and fiscal deficit apart from political stability.
Redel (1997) concentrated on the capital market integration in developing Asia during the period
1970 to 1994 taking into variables such as net capital flows, FDI, portfolio equity flows and bond
flows. He observed that capital market integration in Asian developing countries in the 1990‟s was a
consequence of broad-based economic reforms, especially in the trade and financial sectors, which is
the critical reason for economic crises which followed the increased capital market integration in the
1970s in many countries will not be repeated in the 1990s. concluded that deepening and
strengthening the process of economic liberalization in the Asian developing coun tries is essential
for minimizing the risks and maximizing the benefits from increased international capital market
integration. Avijit Banerjee (1998) reviewed Fundamental Analysis and Technical Analysis to analyse
the worthiness of the individual securities needed to be acquired for portfolio construction. The
Fundamental Analysis aims to compare the Intrinsic Value (I.V.) with the prevailing market price
(M.P) and to take decisions whether to buy, sell or hold the investments. The fundamentals of the
economy, industry and company determine the value of a security. If the 1.V is greater than the M.P.,
the stock is under priced and should be purchased. He observed that the Fundamental Analysis could
never forecast the M.P. of a stock at any particular point of time. Technical Analysis removes this
weakness. Technical Analysis detects the most appropriate time to buy or sell the stock. It aims to
avoid the pitfalls of wrong timing in the investment decisions. He also stated that the modern portfolio
literature suggests 'beta' value p as the most acceptable measure of risk of scrip. The securities having
low P should be selected for constructing a portfolio in order to minimise the risks. Madhusudan
(1998) found that BSE sensitivity and national indices did not follow random walk by using
correlation analysis on monthly stock returns data over the period January 1981 to December 1992.
Arun Jethmalani (1999) reviewed the existence and measurement of risk involved in investing in
corporate securities of shares and debentures. He commended that risk is usually determined, based
on the likely variance of returns. It is more difficult to compare 80 risks within the same class of
investments. He is of the opinion that the investors accept the risk measurement made by t he credit
rating agencies, but it was questioned after the Asian crisis. Historically, stocks have been considered
the most risky of financial instruments. He revealed that the stocks have always outperformed bonds
over the long term. He also commented on the 'diversification theory' concluding that holding a small
number of non-correlated stocks can provide adequate risk reduction. A debt -oriented portfolio may
reduce short term uncertainty, but will definitely reduce long -term returns. He argued that the 'safe
debt related investments' would never make an investor rich. He also revealed that too many
diversifications tend to reduce the chances of big gains, while doing little to reduce risk. Equity
investing is risky, if the money will be needed a few mont hs down the line. He concluded his article

66
by commenting that risk is not measurable or quantifiable. But risk is calculated on the basis of
historic volatility. Returns are proportional to the risks, and investments should be based on the
investors' ability to bear the risks, he advised. Suresh G Lalwani (1999) emphasized the need for risk
management in the securities market with particular emphasis on the price risk. He commented that
the securities market is a 'vicious animal' and there is more than a fa ir chance that far from improving,
the situation could deteriorate. Bhanu Pant and Dr. T.R.Bishnoy (2001) analyzed the behavior of the
daily and weekly returns of five Indian stock market indices for random walk during April 1996 to
June 2001.They found that Indian Stock Market Indices did not follow random walk. Nath and Verma
(2003) examine the interdependence of the three major stock markets in south Asia stock market
indices namely India (NSE-Nifty) Taiwan (Taiex) and Singapore (STI) by employing bivari ate and
multivariate co integration analysis to model the linkages among the stock markets, No co -integration
was found for the entire period (daily data from January 1994 to November 2002). They concluded
that there is no long run equilibrium. Debjiban M ukherjee (2007) made a comparative Analysis of
Indian stock market with International markets. His study covers New York Stock Exchange (NYSE),
Hong Kong Stock exchange (HSE), Tokyo Stock exchange (TSE), Russian Stock exchange (RSE),
Korean Stock exchange (KSE) from various socio- politico-economic backgrounds. Both the Bombay
Stock exchange (BSE) and the National Stock Exchange of Indian Limited (NSE) have been used in
the study as a part of Indian Stock Market. The main objective of this study is to captu re the trends,
similarities and patterns in the activities and movements of the Indian Stock Market in comparison to
its international counterparts. The time period has been divided into various eras to test the correlation
between the various exchanges to prove that the Indian markets have become more integrated with
its global counterparts and its reaction are in tandem with that are seen globally. The various stock
exchanges have been compared on the basis of Market Capitalization, number of listed secur ities,
listing agreements, circuit filters, and settlement. It can safely be said that the markets do react to
global cues and any happening in the global scenario be it macroeconomic or country specific (foreign
trade channel) affect the various markets. Juhi Ahuja (2012) presents a review of Indian Capital
Market & its structure. In last decade or so, it has been observed that there has been a paradigm shift
in Indian capital market. The application of many reforms & developments in Indian capital market
has made the Indian capital market comparable with the international capital markets. Now, the
market features a developed regulatory mechanism and a modern market infrastructure with growing
market capitalization, market liquidity, and mobilization of res ources. The emergence of Private
Corporate Debt market is also a good innovation replacing the banking mode of corporate finance.
However, the market has witnessed its worst time with the recent global financial crisis that originated
from the US sub-prime mortgage market and spread over to the entire world as a contagion. The
capital market of India delivered a sluggish performance.

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 CONCLUSION

Stock Market is the mitigation of risk through the spreading of investments across multiple entities,
which is achieve by the pooling of a number of small investments into a large bucket. Stock Market
is the most suitable investment for the common person as it offers an opportunity to invest in a
diversified, professionally managed portfolio at a relatively low cost. The review of literature has
brought to light that  Enlistment of corporate securities in more than one stock exchange at the same
time improves liquidity of securities and functioning of stock exchange. There is existence of wild
speculation in the Indian stock market. Risk is not measurable or quantifiable. But risk is calculated
based on historic volatility. Indian Stock Market Indices did not follow random walk. Stock market
movements are largely influenced by, broad money supply, inflation, C/D ratio and fiscal deficit apart
from political stability. There are theories like the Fundamental analysis, Technical analysis etc. to
evaluate the securities. Low execution costs make the derivatives especially futures, very suitable for
frequent and short term trading to manage risk, more effectively. Emerging markets like India, are
fast becoming engines for future growth. Currently, only a very low percentage of the household
savings of Indians are invested in the domestic stock market, but with GDP growing at 7-8% annually
and a stable financial market, we might see more money joining the race. Maybe it's the right time
for outside investors to seriously think about joining the India bandwagon.

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 Work Experience

Job period :07JUNE TO 10 OCTOBER.

Job profile : DATA ENTRY IN TALLY.
Company profile : CHARTERED ACCOUNTANTS.

Job description:

Reporting to Branch Head regarding daily sales.

Coordinating and assisting to staff on their daily work.
Stock Taking In And Out.
Tracking the transactions of each client & recording the same to update customer with
the daily dues.
MIS and REPORTING
Handling Back Office work
Forward the intraday calls, delivery calls, and research call to the clients.
Forward the mails of research report & other report to clients and back office work.

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