A

PROJECT REPORT

On

Training taken at

“A Study of consumer preference for Trading and Practices in Stock

Market (BSE & NSE)”

A Report submitted in fulfillment of the requirement of MBA Programme

2009-11

Submitted by: Submitted to:

Pankaj Kukreja Mr. Parag Sharma

MBA: Semester IV

Advent Institute of Management Studies,

“Knowledge Park”,Fernio Ka Guda, Udaipur

 Preface

It’s a matter of great satisfaction and privilege for me to present this project report,
“Greshma share’s and stock Ltd.” To the esteemed Readers, this is about functioning
of Greshma security.

This project report is an attempt to comprehend the exposure. I had

of the work culture and knowledge about the Greshma Share’s as an organization,
which I acquired during the 2 weeks training. The training enabled me to understand
the security as a business process, with its work pressures to deliver the services,
priorities of customer satisfaction and opportunities of progress.

During this training, which is a part of 2 year master degree programme of

management course-MBA,I got an opportunity to relate assess my theoretical
knowledge and understanding of strategic management in the corporate world.

It was to emphasis on and exercise “learning by doing” I firmly believe that this
type of training have the path for successful entrance in the corporate world.

Based on the learning, I have made an attempt to carry out SWOT analysis
of the organisation and have tried my best to provide same fruitful suggestion that
would be of some help for the organization.

I anticipate that suggestions provide would prove useful for the organization and
would facilitate the growth of the organization.
 Acknowledgement

I express my sincere thanks to my project guide, Mr. Parag Sharma for guiding me
right from the inception till the successful completion of the project. I sincerely
acknowledge him/her/them for extending their valuable guidance, support for
literature, critical reviews of project and the report and above all the moral support
he/she/they had provided to me with all stages of this project.
I would also like to thank the supporting staff Kailash Kumawat sir Department, for
their help and cooperation throughout our project.

(Signature of Student)

Pankaj Kukreja
Name of the Students
 DECLARATION

I hereby declare that the dissertation entitled “STOCK MARKET” submitted for the
MBA Degree is my original work and the dissertation has not formed the basis for the
award of any degree, association, fellowship the basis for the award of any degree,
association, fellowship or any other similar titles.

Pankaj Kukreja
 Contents

1. Introduction to the Industry

2. Introduction to the Organization

3. Research Methodology

3.1 Title of the Study

3.2 Duration of the Project

3.3 Objective of Study

3.4 Type of Research

3.5 Sample Size and method of selecting sample

3.6 Scope of Study

3.7 Limitation of Study

4. Facts and Findings

5. Analysis and Interpretation

6. SWOT

7. Conclusion

8. Recommendation and Suggestions

9. Appendix

10. Bibliography
CHAPTER
1
 CHAPTER-1

Introduction of Industry

Title

“A Study of Trading Practices in Stock Market

(BSE & NSE)”

1. BACK GROUND OF THE STUDY

This study is conducted for Greshma Shares & Stock Ltd. at Udaipur, by ASHISH
LODHA first year of Master in Business Administration (MBA) student as requirement
for partial fulfillment for MBA.

Greshma is lead by a highly regarded management team that has invested Thousand
Lac of Rupee into a World class Infrastructure that provides their clients with real-time
service & around Clock i.e.24 Hrs. access to all information and products.

2. Objectives

 The objectives of the study include…

A) To study stock market trading & practices (BSE & NSE).

B) To know what major factors affects or influence stock market trading &
practices

3. Research Methodology

The methodology includes collection of data with the help of structured questionnaire;
the data has been collected by viewing around clients.
4. Data collection & Interpretation

It includes cross tabulation of questionnaire by classification of responses and

frequency distribution and appropriate graphical representation question with
comments.

5. Observations & Findings

Observation is related those issues only, which are not included and explored through
the questionnaire, it may not require a data support.

Findings are strictly based on the collected data, attempting to answer the objectives.

6. Limitation of the study

The study can be based to the extent of personal perception, historical nature of data
collection and of the time limit.

7. Suggestion

Based on findings, suggestions were given in order to improve the communication

strategy and widen company’s market.
CHAPTER
2
 CHAPTER – 2

Introduction of Organisation

The Greshma Group is one of the leading retail broking houses in India, providing the
investors state-of-the-art services in capital markets in the country. The Group is
headed by Jayesh N. Shah who bring with them industry expertise and strong
business acumen.
Retail as well as institutional clients have access to products such as equities,
derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance,
depository services and PMS.

GROUP MEMBERS

 Bombay Stock Exchange Limited.

 National Stock Exchange of India Limited.

 Multi Stock Exchange of India Limited.

 National Commodity and Derivatives Exchange Limited.

 Depository participant of NSDL and CDSL.

VISION

To be the most trusted business house adopting a professional approach par

excellence and heralding new standards in the quality of services.
To be one of the most preferred organizations for wealth maximization of all our stake
holders including customers, employees and channel partners.
To create management systems that adopt global standards of corporate governance
Corporate Social Responsibility.
MISSION

• We shall strive to deliver value for money to the customer in all our business
segments.

• Fostering a Customer centric approach,

• Facilitating Ease of transaction by leveraging technology,

• Providing Professional and unbiased counseling,

• Ensuring Transparent dealings and

• Maintaining Unfailing commitment to business ethics.

ANCHORS

 Jayesh N. Shah, the chief promoter of the Company is a Chartered Accountant

who has had over 23 years of exposure in Capital Market. He was a member of
the Bombay Stock Exchange in his individual capacity before he co founded
Joindre Capital Services Limited, a listed broking Company in 1995. He
became, a whole time Director in Sunidhi Securities and Finance Limited in
2001. “Greshma” is the result of his vision to create one of the most trusted and
respected business houses in the financial space. It has been his passion to
set up a professionally run one stop finance Shoppe to provide intelligent &
innovative solutions for the financial needs of the investor community.

 Easwara Narayanan, the CEO of the Group of Companies carries with him
marketing and administrative experience of 27 years in the insurance industry.
His last stint was as President at Bajaj Allianz General Insurance Company
Limited heading the South and West Zones. He is acclaimed for his high level
of professional integrity and proven ability in building organizations and
managing teams.

 Harshad T. Parekh, an Engineer by qualification carries with him 25 years

experience in the Capital Market in various capacities. His acknowledged
expertise in Risk Management has stood all the organizations he has worked
for in good.
  Sameer Parekh, an Engineer and Graduate in Management Studies from the
United States has had varied exposure in IT, Logistics and for the last three
years in the Capital Market.

BUSINESS SEGMENT

ADVANTAGES

PEOPLE:
Our greatest asset. Drawn from a diversity of professional backgrounds, their blend of
experience, skill and dedication is shared with all our cleints.

APPROACH:
Innovative and enthusiastic. We emphasize adequate, thorough research local and
world-wide developments, balancing these with the astute discovery of intrinsic
values, synergies and growth.

AIM:
Simply to help you maximize your returns. Your interests no matter how big or small -
come first.
PRODUCTS & SERVICES:
Comprehensive and available to meet every investment financial need.

COMMITMENT:
To provide service, par excellence and become your spirit of change.
CHAPTER
3
 CHAPTER -3

Research Methodology

Title of the Study

"A Study on significance and relevance of internal & interactive. Stock market with
special reference to Greshma Shares & Stock Ltd. "

Duration of the Project

The project is Submitted in partial fulfillment for the Award of degree of Master of
Business Administration & The duration of the project is 15 days.

Objective of study

The main objectives of the study are as follows :-

 To know more about the Company / Organization

 To find strength & weakness of the Company / Organization
 To know what major factors effects or influence internal & interactive stock
market.
 RESEARCH METHODOLOGY

“A Research is careful investigation or inquiry, especially through search for new

facts in any branch of knowledge. It is a systemized effort to gain more knowledge.”

Research methodology is a way to systematically solve the research problem. It may

be understood as a science of studying how research is done scientifically. We study
the various steps that are generally adopted by a researcher in studying his research
problem along with the logic behind them. It is necessary for the researcher to know
not only the research methods or techniques but also the methodology. Researcher
always needs to understand the assumptions underline various technique and they
need to know the criteria by which they can decide that certain technique and
procedures will be applicable to certain problems and other will not.

The predefined objective can be achieved by following ways:

o Studying the trading and practices of stock market (NSE &BSE).

o Comparing sales of different players.

TYPE OF RESEARCH:

Personal interview approach was adopted for the project. In this type of research, the
researcher has to contact the person directly to know the available information and
analyze the data was available in interviewer’s statements. This was one of the main
sources for the project.

The other approach was PERSONNEL RESEARCH. It is based on the personal

knowledge. It is applicable to phenomenon that can be expressed in terms of words.
Preparation of Reports

After analysis, the next step is in the preparation of the report. The report has been
prepared according to the report writing principles.

The Objective, clarity in presentation of ideas and the uses of charts have been
maintained throughout the report.

Once the data has been collected, the researcher has to process, analyze and
interpret the same. It was emphasized that the researcher should exercise good care
to ensure that reliable data are not properly processed and analyzed. Sufficient
attention is often not given to these aspects, with the result that the quality of the
report suffers.

Scope of study:
The scope of the study are as follows :-
CHAPTER
4

CHAPTER – 4
 Facts and Findings

What are Markets?

A stock market is a market for the trading of company stock/ shares, and derivatives. This
includes securities listed on a stock exchange as well as those only traded privately. Market
is a place where buyers and sellers of securities can enter into transactions to purchase and
sell shares, bonds, debentures etc.

Primary markets:

The primary market is that part of the capital markets that deals with the issuance of new
securities. 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).

What are the types of issues in primary market?

Primary market Issues can be classified into four types :-

1. Initial Public Offer.

2. Follow on Offer.

3. Rights Issue.

4. Preferential Issue.
Introduction to Primary Markets :

Most listed companies are usually started privately by their promoter(s). However, the
promoters’ capital and the borrowings from banks and financial institutions may not be
sufficient for setting up or running the business over a long term. So, companies invite the
public to contribute towards the equity and issue shares to individual investors. The way to
invite the public to subscribe to the share capital of the company is through a ‘Public Issue’.
Once this is done, the company allots shares to the applicants as per the prescribed
guidelines laid down by SEBI.

The Primary Market is, hence, the market that provides a channel for the sale of new
securities to issuers, which may can be the Government or corporate, to raise resources to
meet their fund raising requirements. The securities may be issued at face value, or at a
discount/premium and may take a variety of forms such as equity, debt etc. They may be
issued in the domestic and/or international market.

Capital market can be defined as a market where long-term funds can be raised. They are a
part of the broader financial markets, which include forward markets, swap markets etc.
Capital markets can be further sub-divided into equity markets and debt markets, where
equity and debt are traded respectively.

Any capital market can be either a primary market or a secondary market. Thus we have
primary and secondary markets for both debt and equity. The distinction between primary
and secondary market is that in the former, the securities are issued by the original fund-
raiser i.e. the company raising the funds, whereas in the latter, the securities are traded
among the investors/speculators.

Features of a primary market:

 The Company issuing the securities gets the funds out of the issue.

 In India, only public limited companies can issue equity through primary markets.
 The issue of securities to public through the primary market by a company is called its
Initial Public Offer (IPO).

Features of a secondary market:

 The investors/speculators trade in the securities. The company whose securities are
traded does not get any funds from the trading in a secondary market.

 In India, only the securities of listed public companies can be traded on a recognized
stock-exchange.

Secondary markets provide liquidity to the investors. The market prices in the secondary
markets reflect the investor perception of a company’s performance.

The Journey so far…

India , 125 years of experience seem to be a proud milestone. A lot has changed since 1875
when 318 persons became members of what today is called "Bombay Stock Exchange
Limited" by paying a princely amount of Re1.Since then, the stock market in the country has
passed through both good and bad periods. The journey in the 20th century has not been an
easy one. Till the decade of eighties, there was no measure or scale that could precisely
measure the various ups and downs in the Indian stock market. Bombay Stock Exchange
Limited (BSE) in 1986 came out with a Stock Index that subsequently became the barometer
of the Indian Stock Market.

SENSEX, first compiled in 1986 was calculated on a "Market Capitalization-Weighted"

methodology of 30 component stocks representing a sample of large, well-established and
financially sound companies. The base year of SENSEX is 1978-79. The index is widely
reported in both domestic and international markets through print as well as electronic
media. SENSEX is not only scientifically designed but also based on globally accepted
construction and review methodology. From September 2003, the SENSEX is calculated on
a free-float market capitalization methodology. The "free-float Market Capitalization-
Weighted" methodology is a widely followed index construction methodology on which
majority of global equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decade gone by. Right
from early nineties the stock market witnessed heightened activity in terms of various bull
and bear runs. More recently, the bourses in India witnessed a similar frenzy in the 'TMT'
sectors. The SENSEX captured all these happenings in the most judicial manner. One can
identify the booms and bust of the Indian equity market through SENSEX.

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 of 100 stocks listed at five major stock
exchanges in India at Mumbai, Calcutta , Delhi, Ahmadabad and Madras. The BSE National
Index was renamed as BSE-100 Index from October 14, 1996 and since then it is calculated
taking into consideration only the prices of stocks listed at BSE.

All BSE-Indices are reviewed periodically by the "Index Committee" of the Exchange. The
Committee frames the broad policy guidelines for the development and maintenance of all
BSE indices. Department of BSE Indices of the Exchange carries out the day to day
maintenance of all indices and conducts research on development of new indices.

The Stock Exchange, Mumbai is now Bombay Stock Exchange Limited (BSE)… a new
name, and an entirely new perspective… a perspective born out of corporatization and
demutualization. As a corporate entity, our new logo reflects our new mission… smoother,
seamless, and efficient, whichever way you look at it. BSE is Asia's oldest stock exchange…
carrying the depth of knowledge of capital markets acquired since its inception in 1875.
Located in Mumbai, the financial capital of India, BSE has been the backbone of the
country's capital markets

Importance of stock market

Function and purpose :

The stock market is one of the most important sources for companies to raise money. This
allows businesses to be publicly traded, or raise additional capital for expansion by selling
shares of ownership of the company in a public market. The liquidity that an exchange
provides affords investors the ability to quickly and easily sell securities. This is an attractive
feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the
dynamics of economic activity, and can influence or be an indicator of social mood. Rising
share prices, for instance, tend to be associated with increased business investment and
vice versa. Share prices also affect the wealth of households and their consumption.
Therefore, central banks tend to keep an eye on the control and behavior of the stock market
and, in general, on the smooth operation of financial system functions. Financial stability is
the raison d'être of central banks.
Exchanges also act as the clearinghouse for each transaction, meaning that they collect and
deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk
to an individual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in that lower costs
and enterprise risks promote the production of goods and services as well as employment. In
this way the financial system contributes to increased prosperity.

Relation of the stock market to the modern financial system :

The financial system in most western countries has undergone a remarkable transformation.
One feature of this development is disintermediation. A portion of the funds involved in
saving and financing flows directly to the financial markets instead of being routed via banks'
traditional lending and deposit operations. The general public's heightened interest in
investing in the stock market, either directly or through mutual funds, has been an important
component of this process. Statistics show that in recent decades shares have made up an
increasingly large proportion of households' financial assets in many countries.

In the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made
up almost 60 per cent of households' financial wealth, compared to less than 20 per cent in
the 2000s. The major part of this adjustment in financial portfolios has gone directly to shares
but a good deal now takes the form of various kinds of institutional investment for groups of
individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of
premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by
new rules for most funds and insurance, permitting a higher proportion of shares to bonds.
 What are the Sensex & the Nifty?

The Sensex is an "index".

What is an index?

An index is basically an indicator. It gives you a general idea about whether most of the
stocks have gone up or most of the stocks have gone down.

The Sensex is an indicator of all the major companies of the BSE.

The Nifty is an indicator of all the major companies of the NSE.

If the Sensex goes up, it means that the prices of the stocks of most of the major companies
on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most
of the major stocks on the BSE have gone down.

Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks
of the NSE.

The BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock
exchanges in the country. There are other stock exchanges like the Calcutta Stock Exchange
etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the
country is done though the BSE & the NSE.
Besides Sensex and the Nifty there are many other indexes. There is an index that gives you
an idea about whether the mid-cap stocks go up and down. This is called the “BSE Mid-cap
Index”. There are many other types of indexes.

There is an index for the metal stocks. There is an index for the FMCG stocks. There is an
index for the automobile stocks and bank stocks etc.

How to calculate BSE SENSEX?

The Sensex has a very important function. The Sensex is supposed to be an indicator of the
stocks in the BSE. It is supposed to show whether the stocks are generally going up, or
generally going down

To show this accurately, the Sensex is calculated taking into consideration stock prices of 30
different BSE listed companies. It is calculated using the “free-float market
capitalization” method. This is a worldwide accepted method as one of the best methods for
calculating a stock market index.

Please note: The method used for calculating the Sensex and the 30 companies that are
taken into consideration are changed from time to time. This is done to make the Sensex an
accurate index and so that it represents the BSE stocks properly.

To really understand how the Sensex is calculated, you simply need to understand what the
term “free-float market capitalization” means. (As we said earlier, the Sensex is calculated on
basis of the “free-float market capitalization” method)
Market Capitalization

If you were to buy all the shares of a particular company, what is the amount you would
have to pay ,that amount is called the “market capitalization”. Market capitalization refers to
the total worth of the company in a market scenario where there is equal competition.
Depending on the value of the market cap, the company will either be a “mid-cap” or“large-
cap” or “small-cap” company!

Free-Float Market Capitalization

Many different types of investors hold the shares of a company! The Govt. may hold some of
the shares. Some of the shares may be held by the “founders” or “directors”of the company.
Now, only the “open market” shares that are free for trading by anyone, are called the “free-
float” shares. When we are calculating the Sensex, we are interested in these “free-
float” shares. A particular company, may have certain shares in the open market and certain
shares that are not available for trading in the open market.
According to the BSE, any shares that DO NOT fall under the following criteria, can be
considered to be open market shares: Holdings by founders/directors/ acquirers
which has control element

 Holdings by persons/ bodies with "controlling interest"

 Government holding as promoter/acquirer

 Holdings through the FDI Route

 Strategic stakes by private corporate bodies/ individuals

 Equity held by associate/group companies (cross-holdings)

 Equity held by employee welfare trusts

 Locked-in shares and shares which would not be sold in the open market in normal
course.

Steps to calculate the Sensex :

First: Find out the “free-float market cap” of all the 30 companies that make up the Sensex!
Second: Add all the “free-float market cap’s” of all the 30 companies!
Third: Make all this relative to the Sensex base. The value you get is the Sensex value!

Please Note: Every time one of the 30 companies has a “stock split” or a "bonus" etc.
appropriate changes are made in the “market cap” calculations.

Now, there is only one question left to be answered, which 30 companies, why those 30
companies, why no other companies?

The 30 companies that make up the Sensex are selected and reviewed from time to time by
an “index committee”. This “index committee” is made up of academicians, mutual fund
managers, finance journalists, independent governing board members and other participants
in the financial markets.
The main criteria for
selecting the 30 stocks is as
follows:

Market capitalization:

The company should have a market capitalization in the Top 100 market capitalization’s of
the BSE. Also the market capitalization of each company should be more than 0.5% of the
total market capitalization of the Index.

Trading frequency:

The company to be included should have been traded on each and every trading day for the
last one year. Exceptions can be made for extreme reasons like share suspension etc.

Number of trades:

The scrip should be among the top 150 companies listed by average number of trades per
day for the last one year.

Industry representation:

The companies should be leaders in their industry group.

Listed history:
The companies should have a listing history of at least one year on BSE.

Track record:

In the opinion of the index committee, the company should have an acceptable track record.
Having understood all this, you now know how the Sensex is calculated.

NIFTY
The Organisation

The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges, which recommended promotion of
a National Stock Exchange by financial institutions (FIs) to provide access to investors from
all across the country on an equal footing. Based on the recommendations, NSE 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 unlike other stock exchanges in
the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956
in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in
June 1994. The Capital Market (Equities) segment commenced operations in November
1994 and operations in Derivatives segment commenced in June.

Contract Specifications

Contract Specification for Sensex® Futures contracts

 BSX

Security Symbol
SENSEX®

25
Underlying
Contract Multiplier
Contract Period 1, 2, 3 months
Tick size 0.05 index points
Price Quotation SENSEX points
Trading Hours 9:55 a.m. to 3:30 p.m.
Last Thursday of the contract month. If it is holiday, the immediately
Last Trading/Expiration
preceding business day. Note: Business day is a day during which the
Day
underlying stock market is open for trading.
Final Settlement Cash Settlement. On the last trading day, the closing value of the
underlying index would be the final settlement price of the expiring
futures contract.

TYPES OF PRODUCTS

Index Futures :

A futures contract is a standardized contract to buy or sell a specific security at a future date
at an agreed price.
An index future is, as the name suggests, a future on the index i.e. the underlying is the
index itself. There is no underlying security or a stock, which is to be delivered to fulfill the
obligations as index futures are cash settled. As other derivatives, the contract derives its
value from the underlying index. The underlying indices in this case will be the various
eligible indices and as permitted by the Regulator from time to time.

Index Options :

Options contract give its holder the right, but not the obligation, to buy or sell something on or
before a specified date at a stated price. Generally index options are European Style.
European Style options are those option contracts that can be exercised only on the
expiration date. The underlying indices for index options are the various eligible indices and
as permitted by the Regulator from time to time.

Stock Future:

A stock futures contract is a standardized contract to buy or sell a specific stock at a future
date at an agreed price. A stock future is, as the name suggests, a future on a stock i.e. the
underlying is a stock. The contract derives its value from the underlying stock. Single stock
futures are cash settled.

Stock Options:

Options on Individual Stocks are options contracts where the underlying are individual
stocks. Based on eligibility criteria and subject to the approval from the regulator, stocks are
selected on which options are introduced. These contracts are cash settled and are
American style. American Style options are those option contracts that can be exercised on
or before the expiration date.

Weekly Options:
Equity Futures & Options were introduced in India having a maximum life of 3 months. These
options expire on the last Thursday of the expiring month. There was a need felt in the
market for options of shorter maturity. To cater to this need of the market participants BSE
launched weekly options on September 13, 2004 on 4 stocks and the BSE Sensex.

Weekly options have the same characteristics as that of the Monthly Stock Options (stocks
and indices) except that these options settle on Friday of every week. These options are
introduced on Monday of every week and have a maturity of 2 weeks, expiring on Friday of
the expiring week.

CONTRACT SPECIFICATIONS

Contract Specification for Index Futures contracts

Security Symbol
Underlying
Contract Multiplier
Contract Period 1, 2, 3 months
Tick size 0.05 index points
Price Quotation index points
Trading Hours 9:55 a.m. to 3:30 p.m.
Last Thursday of the contract month. If it is holiday, the immediately
Last Trading/Expiration
preceding business day. Note: Business day is a day during which the
Day
underlying stock market is open for trading.
Cash Settlement. On the last trading day, the closing value of the
Final Settlement underlying index would be the final settlement price of the expiring
futures contract.

Contract Specification for Index Options contracts (Monthly &

Weekly)

Security Symbol
Underlying
Contract Multiplier
Contract Period 1, 2, 3 months & 1, 2 weeks
Exercise Style European
Settlement Style Cash
Tick size 0.05 index points
Premium Quotation In index points
Shall have a minimum of 3 strikes (1 in-the-money, 1 near-the-money, 1
Strike price Intervals
out-of-the-money).
Trading Hours 9:55 a.m. to 3:30 p.m.
Last Thursday of the contract month in case of monthly & last Friday of
Last Trading/Expiration
contract maturity in case of weekly options. If it is a holiday, then the
Day immediately preceding business day. Note: Business day is a day during
which the underlying stock market is open for trading.

Contract Specifications for Single Stock futures

Security Symbol
Underlying
Contract Multiplier
Contract Period 1, 2 & 3 months
Tick size 0.05 points i.e. 5 paisa
Price Quotation Rupees per share.
Trading Hours 9:55 a.m. to 3:30 p.m.
Last Trading/Expiration
Last Thursday of the contract month. If it is holiday, then the
Day immediately preceding business day. Note: Business day is a day
 during which the underlying stock market is open for trading.

Cash Settlement. On the last trading day, the closing value of the
Final Settlement underlying stock is the final settlement price of the expiring futures
contract.

Contract Specification for Stock Options contracts (Monthly & Weekly

Options)

Security Symbol
Underlying
Contract Multiplier
Contract Period 1, 2, 3 months & 1, 2 weeks
Exercise Style American
Settlement Style Cash
Tick size 0.05 i.e. 5 paisa
Premium Quotation Rupees per share
Shall have a minimum of 3 strikes (1 in-the-money, 1 near-the-money,
Strike price Intervals
1 out-of-the-money).
Trading Hours 9:55 a.m. to 3:30 p.m.

Last Thursday of the contract month in case of monthly & last Friday of
contract maturity in case of weekly options. If it is a holiday, then the
immediately preceding business day during which the underlying stock
market is open for trading.

Last Trading/Expiration
Day
 The final settlement of the expiring option contracts would be based on
the closing price of the underlying stock. The following algorithm is
used for calculating closing value of the individual stocks in the cash
segment of BSE including the stocks constituting Sensex:

Final Settlement -Weighted Average price of all the trades in the last thirty minutes of
the continuous trading session.

-If there are no trades during the last thirty minutes, then the last traded
price in the continuous trading session would be taken as the official
closing price.
It is a specified time (Exercise Session) everyday. All in-the-money
options would be deemed to be exercised on the day of expiry unless
Exercise Notice Time
the participant communicates otherwise in the manner specified by the
Derivatives Segment.

Order Conditions

The derivatives market is order driven i.e. the traders can place only Orders in the system.
Following are the Order types allowed for the derivative products. These order types have
characteristics similar to ones in the cash market.

Limit Order:

An order for buying or selling at a limit price or better, if possible. Any unexecuted portion of
the order remains as a pending order till it is matched or its duration expires.

Market Order:

An order for buying or selling at the best price prevailing in the market at the time of
submission of the order. There are two types of Market orders:
Partial fill rest Kill (PF): execute the available quantity and kill any unexecuted portion.

Partial fill rest Convert (PC): execute the available quantity and convert any
unexecuted portion into a limit order at the traded price.

Stop Loss: An order that becomes a limit order only when the market trades at a specified
price.

All orders shall have the following attributes:

 Order Type (Limit / Market PF/Market PC/ Stop Loss)

 The Asset Code, Product Type, Maturity, Call/Put and Strike Price.

 Buy/Sell Indicator
 Order Quantity

 Price

 Client Type (Own / Institutional / Normal)

 Client Code

 Order Retention Type (GFD / GTD / GTC)

 Good For Day (GFD) - The lifetime of the order is that trading session.

 Good Till Date (GTD) - The life of the order is till the number of days as

specified by the Order Retention Period.

 Good Till Cancelled (GTC) :The order if not traded will remain in the system till it

is cancelled or the series expires, whichever is earlier.

 Order Retention Period (in calendar days): This field is enabled only if the value

of the previous attribute is GTD. It specifies the number of days the order is to be

retained.

 Protection Points: This is a field relevant in Market Orders and Stop Loss orders.

The value enterable will be in absolute underlying points and specifies the band

from the touchline price or the trigger price within which the market order or the stop

loss order respectively can be traded.

 Risk Reducing Orders (Y/N): When the member's collateral falls below 50 lacs

then he will be allowed to put only risk reducing orders and he will not be allowed to

take any fresh positions. It is not essentially a type of order but a mode into which

the member is put into when he violates his collateral limit. A member who has

entered the risk-reducing mode will be allowed to put only one risk reducing order

at a time.

 The Bombay Stock Exchange in India.

Issue at Face Value:

The nominal value of the share, assigned to it by the issuer, is called the Face Value or Par
Value. It is the original cost shown on the share certificate and the extent to which the
shareholder is liable to the company. In case of equity shares, the value is generally quite
small; for instance Rs 1, Rs 2, Rs 5, Rs 10 etc. Hence, if shares are offered at this value then
it is said they are being offered at Face Value or at Par.

Issue at a premium or at a discount:

When shares are offered at more than the Face Value, then it is said that the issue is at a
premium. The premium is the amount charged over the Face Value. Conversely, if shares
are offered at a price lower than Face Value, then the issue is at a discount. The difference
between the Face Value and the Offer Price is the discount.

Initial Public Offer (IPO):

When an unlisted company makes either a fresh issue of securities or an offer for sale of its
existing securities or both, for the first time to the public, the issue is called as an Initial Public
Offer.

Follow On Public Offer (FPO):

When an already listed company makes either a fresh issue of securities to the public or an
offer for sale of existing shares to the public, through an offer document, it is referred to as
Follow on Offer (FPO).

Rights Issue:
When a listed company proposes to issue fresh securities to its existing shareholders, as on
a record date, it is called as a rights issue. The rights are normally offered in a particular ratio
to the number of securities held prior to the issue. This route is best suited for companies
who would like to raise capital without diluting stake of its existing shareholders.

A Preferential issue:

A Preferential Issue is an issue of shares or of convertible securities by listed companies to a

select group of persons under Section 81 of the Companies Act, 1956, that is neither a rights
issue nor a public issue. This is a faster way for a company to raise equity capital. The issuer
company has to comply with the Companies Act and the requirements contained in the
chapter,

pertaining to preferential allotment in SEBI guidelines, which inter-alia include pricing,

disclosures in notice etc.

Various Intermediaries In A Public Issue

The Issuing Company has to appoint various intermediaries for the issue process. The
various intermediaries involved are:

Book Running Lead Managers (BRLMs)

Bankers to the Issue

Underwriters

Registrars to the Issue etc.

 Role Of The Intermediaries

Book Running Lead Managers:

The Company issuing shares appoints the BRLM or the Lead Merchant Bankers. The role of
the BRLM can be divided into two parts, viz., Pre Issue and Post Issue. The Pre Issue role
includes compliance with the stipulated requirements of the SEBI and other regulatory
authorities, completion of formalities for listing on the Stock Exchanges, appointing of various
agencies such as advertising agencies, printers, underwriters, registrars, bankers etc.
Post Issue activities include management of escrow accounts, deciding the final issue price,
final allotment, ensuring proper dispatch of refunds, allotment letters and ensuring that each
agency is carrying out their part properly.

Bankers to the Issue:

Bankers to the issue, as the name suggests, carry out all the activities of ensuring that the
funds are collected and transferred to the Escrow accounts.

Registrars to the Issue:

The Registrar finalizes the list of eligible allottees after deleting invalid applications and
ensures that the corporate action for crediting shares to the demat accounts of the applicants
is done and the refund orders, where applicable, are sent.

Underwriters to the Issue:

An investment banking firm enters into a contract with the issuer to distribute securities to the
investing public. They get an Underwriting Commission for their services. In case of under
subscription, they have the obligation to subscribe to the left over portion.

Underwriters to the Issue:

An investment banking firm enters into a contract with the issuer to distribute securities to the
investing public. They get an Underwriting Commission for their services. In case of under
subscription, they have the obligation to subscribe to the left over portion.

Benefits of Investing in the Primary Market

1. Investing in the primary market has its own benefit and drawbacks. Some of the key
benefits are:
2. It is safer to invest in the primary markets than in the secondary markets as the scope for
manipulation of price is smaller.

3. The investor does not have to pay any kind of brokerage or transaction fees or any tax
such as service tax, stamp duty and STT.

4. No need to time the market as all investors will get the shares at the same price.

Drawbacks of Investing in the Primary Market

In case of over subscription, the shares are allotted in proportionate basis. Thus, small
investors hardly get any allotment in such a case.

Money is locked for a long time and the shares are allotted after a few days where as in case
of purchase from the secondary market the shares are credited within three working days.

Classification of Issue

Procedure of arriving at the issue price:

Fixed Price

Book Build.
Fixed Price:

Any IPO can be priced by two methods. Firstly, where the issuing company, in consultation
with the BRLM, arrives at a fixed price at which it offers the shares to the public. In the
second method, the company and the BRLM fix a floor and cap price for the issue. This
range is called the price band. Investors are free to bid at any price in this range. The final
price is determined by market forces according to the demand for the issuing company’s
shares. This is called the Book Building Process.

Book Building:

In case of a book building IPO, the offer must be open for at least three days. The BRLM
declares the issue price before the allotment, which must be completed within 15 days from
the closure of the IPO. The shares should get credited to the respective bidders’ de-mat
account within two working days from the date of allotment. The refund orders are also
dispatched within this time.

Category of investors who can invest in an IPO:

As far as the IPO is concerned, there are three categories of investors.

Qualified Institutional Bidders.

Non-Institutional Investors.

Retail Investors.

Qualified Institutional Investors:

Under this head, financial institutions such as Banks, Mutual funds, Insurance companies,
Foreign Institutional investors etc. are permitted to bid for the shares. A mMaximum of 50%
of the issue can be kept reserved for investors falling under the QIB category. Out of the 50%
shares, 5% are reserved for Mutual Funds.

Non-Institutional Investors:

Under this category, resident Indian individuals, HUFsS, companies, corporate bodies, NRIs,
societies and trusts whose application size in terms of value is more than Rs 1 lakh are
allowed to bid. At least 15% of the total issue has to be reserved for Non-Institutional
Bidders.

Retail Investors:

Under this category, only Individuals, both Resident and NRIs along with HUFs are allowed
to bid. At least 35% of the issue has to be reserved for such investors. The size in terms of
value should not exceed Rs 1 lakh if one wants to apply under this category.
How are share prices determined?

The share prices, the prices at which the shares trade are determined by supply and
demand. If there are more buyers than sellers, then the price will rise and if there are more
sellers than buyers it will fall. In turn that supply and demand is determined by a number of
other factors including:

General market sentiment

Movements on international markets.

Economic events and Government decisions.

Company news and performances.

Interest rates.

Speculation and rumors.

 Secondary Markets

The secondary market is the financial market for trading of securities that have already been
issued in an initial private or public offering. In the secondary market, securities are sold by
and transferred from one investor or speculator to another.

The secondary market is where you can purchase securities from the seller as opposed to the
issuer of such a security. Hence securities that are initially issued in the primary market by
companies are traded on the secondary market.
The secondary market comprises of broad segments such as Equity, Debt and Derivatives.
Equity shares are the most widely traded form of securities. There are various ways in which
equity shares are issued such as IPOs, rights issues and bonuses.

Who Are The Parties To The Transactions?

In the secondary market, there are basically three parties to a transaction. These are buyers,
sellers and intermediaries between them.

The first two categories consist of retail investors, high net worth individuals (HNIs), Mutual Fund
Houses, Corporate and Institutional Investors, Foreign Institutional Investors etc.
Retail investors are individual investors with limited access to funds. They park their surplus
funds in equities to earn returns. Equity investments as an investment option for retail investors
are considered to be high risk - high return proposals compared to other investment instruments
like fixed deposits and post office schemes.
The term ‘high net worth individual’ or HNI is used to refer to individuals and families that are
affluent in their wealth holding and consequently have a higher risk profile. It’s a relative term
and its comprehension differs in different financial markets and regions.

Mutual funds pool up money of several investors and invest in various asset classes including
equities. These returns are distributed among the investors in proportion of the Mutual Fund
units held by them. This investment mode has gained a lot of popularity across the world. It is
most suitable for investors who lack the skill and acumen to pick up good stocks.

Foreign Institutional Investors (FIIs) are venture capital funds, pension funds, hedge funds,
mutual funds and other institutions registered outside the country of the financial market in which
they take an investment exposure.
Mutual Funds and FIIs have gained a lot of importance as market participants as they have huge
sums of money in their kitty to manage and are often instrumental in giving direction to the stock
markets in the short term. Heavy buying or selling on their part plays a substantial part in market
rise and fall.

Intermediaries such as stockbrokers, depositories, depository participants and banks facilitate

payment of money in share transactions.

Brokerages are entities registered as members with the concerned stock exchange. In turn
you, the investor, would be required to enroll with the broker. Brokers charge commission
based fees for the services they offer. Sub brokers appointed by main brokers also offer the
same services for a fee.

Depositories hold shares for investors in electronic form. Previously shares were held in
physical form meaning that there were paper share certificates for shares held. This new
system of holding shares through depositories reduces paper work and time and also does
away with risks associated with physical certificates such as bad delivery, fake securities etc.
There are two depositories in India, the National Securities Depositories Limited (NSDL) and
the Central Depositories Services Limited (CDSL). These two depositories provide service to
investors through their agents termed as Depository Participants (DPs). As per SEBI
regulations, Banks, Financial Institutions and SEBI registered trading members can become
DPs.

Secondary Market Function

In order to understand how the secondary markets function we must first be apprised of
certain important terms:

Price: - The price of a stock is totally guided by the forces of demand and supply. The share
prices of liquid stocks with wide participation keep changing throughout the trading hours
They can be tracked continuously on trading screens.
Circuit Filters: - Share prices can swing in a volatile manner on back of news or even due to
rigging by operators. It is important to protect the interest of investors and guard them
against major losses due to such volatile price movements. So stocks are subjected to an
upper and a lower circuit. The price of the stock can move within this range only on a
particular trading day There are various slabs like 2%, 5%, 10% and 20% circuit that different
stocks are subjected to. The slabs are fixed depending on various factors like share price,
retail share holding etc.

Volume: - The term volume refers to the total number of shares traded during the day
Volumes can be calculated for a particular stock, an index or even for the entire exchange.

Derivatives (Derivatives Segment Of The Secondary Market)

A derivative is a financial instrument that derives its value from the value of an underlying
asset. The underlying asset can be equity, commodities or any other asset. For the purpose
of this chapter, we would restrict the scope to Equity derivatives only.

Derivatives were introduced in the Indian stock market to enable investors to hedge their
investments against adverse volatile price movements. However they are now commonly
being used for taking speculative positions
Broadly, Futures and Options are the derivative instruments that are traded on the two main
exchanges, BSE and the NSE.

Futures: - To understand the term better, let’s take an example. Nifty is trading at the level of
4000. You can buy or sell a lot of Nifty Futures. The lot size of Nifty futures is 100. You would
be required to pay a margin of 10% of the contract value.
The margin money would work out as follows: -

Transaction value: 4000 × 100 (lot size) = Rs. 4,00,000

Margin Amount: 10% of 4,00,000 = Rs.40,000

The lot size and margin money percentage vary for different scraps and contracts. We took
the example of Nifty, which is an index. You can take positions in various stocks which are
listed for Futures trade. On NSE, the last Thursday of every month is the expiry date. In our
example, if the Nifty is trading at 4300 on the last Thursday of the month and the position is
not squared off then the purchaser of the Nifty futures contract at 4000 would be a gainer by
Rs.20,000 (200 × lot size100). Similarly seller of Nifty futures contract would stand to lose
Rs. 20,000.

Options: Options are hedging/investment instruments, which allow the buyer the right but
not the obligation to buy/sell the underlying stock/ index. The buyer of the option incurs a
charge for this right, which is referred to as the “premium”. The option writer or seller is the
other party to such a contract who earns the premium.

Call Option - Option to buy the stock at a specific price

e.g. Mr. A buys a Nifty Call option with a strike price of 4100 at a premium of Rs.100. Mr. B,
the seller of the option earns this premium of Rs.100 taking unlimited risk whereas Mr. A’s
risk is limited to the premium amount of Rs.100. If at the expiry date, Nifty is trading at 4350,
then Mr. A would exercise his option and earn a net amount of Rs.150. The strike price of the
contract is 4100 and at the expiry, the Nifty is at 4350. So he stands gainer by Rs.250
(4350 – 4100). He however has incurred a premium of Rs.100, so his net earnings would be
Rs.150 (Rs.250 – Rs.100).
Now, had the Nifty fallen to 3950, then Mr.A would be a loser by only Rs.100, which is the
premium amount. His Call option would not exercise and Mr.B would be a gainer by Rs.100.

Put Option - Option to sell the stock at a specified price

e.g. Mr. A buys a Nifty Put option with a strike price of 4100 at a premium of Rs.100. Mr. B,
the seller/writer of the option earns this premium of Rs.100 taking unlimited risk whereas Mr.
A’s risk is limited to Rs.100. If at the expiry date, Nifty is trading at 3850, then Mr. A would
exercise his option and earn a net amount of Rs.150. The strike price of the contract is 4100
and at the expiry, the Nifty is at 3850. So he stands gainer by Rs.250 (4100 - 3850). He
however has incurred a premium of Rs.100, so his net earnings would be Rs.150
(Rs.250 – Rs.100).
Now, had the Nifty risen to 4250, then Mr.A would be a loser by only Rs.100, which is the
premium amount. His Put option would not exercise and Mr.B would be a gainer by Rs.100.

Spot Mkt Price – It is the price at which the stock is trading in the cash markets.

Strike Price - Specified Price at which the underlying may be purchased or sold when the
option is exercised.
Expiry Date - Last date for exercising the option by buyer--- Last Thursday of the relevant
month on NSE.

Bonds

The debt segment of secondary market which mainly comprises of bonds.

Bond: -

A bond is simply a form of loan borrowed by the government, the municipality or a company.
A bond purchaser who plays the role of a lender to such borrower institutions holds in return
a negotiable certificate that acknowledges indebtedness of the bond issuer. Such certificates
are also termed as bonds. Bonds normally are unsecured. The issuer pays the bond holder
periodic interest ranging over the life of the loan.

The secondary market for bonds in India is an over the counter market whereas the market
for equities is a system-automated market. The buy orders and sell orders are electronically
matched. We shall delve deeper into this in the following chapters.

What Are The Various Types Of Bonds?

Zero Coupon Bond:

These are issued at a discount to the face value and at the time of redemption the bond
holder is reimbursed with the face value of the bond.

The difference between the issue price and redemption price represents the return to the
holder. The holder of such bonds does not enjoy periodic interest payments.

Convertible Bond:

These bonds offer the investor the option to convert the bond into equity at a fixed
conversion price

Treasury Bills: -

T-bills are short-term securities issued by the Government. They mature in one year or less
time from their issue date.
 Shares

A share is one of a finite number of equal portions in the capital of a company, entitling the
owner to a proportion of distributed, non-reinvested profits known as dividends and to a
portion of the value of the company in case of liquidation. Equity is a share in the ownership
of a company. It represents a claim on the company’s assets and earnings. As you acquire
more stock, your ownership stake in the company increases. The terms share, equity and
stock mean the same thing and can be used interchangeably.
Types of shares

Shares can be voting or non-voting, meaning they either do or do not carry the right to vote
on the board of directors and corporate policy. Whether this right exists often affects the
value of the share. Voting and Non-Voting shares are also known as Class A and B shares.
The most common form of shares is ordinary (equity) shares. One can also buy preference
shares, options and partly paid shares.

There are a number of different types of shares such as ordinary or preference shares which
have different properties.

Preference shares are those shares in a company with rights in various ways superior to
those of ordinary shares; for example, priority to a fixed dividend and priority over ordinary
shares in the event of the company being wound up.

When a share is issued, the person applying for it must pay to the company, in cash or
equivalent value, the amount of its nominal value together with any premium required by the
company. Shares are fully paid when the whole amount has been received by the company.

Shares may also be issued on the basis that only part of their price is to be paid initially, with
the remainder being required when called for by the company.
For more experienced investors, derivatives such as options and warrants provide further
diversification. However, when the majority of investors invest in shares, they buy ordinary
shares.

Stock Exchange

A stock exchange, share market or bourse is a corporation or mutual organization which

provides facilities for stock brokers and traders, to trade company 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 and other pooled investment products and bonds. To be able to trade
a security on a certain stock exchange, it has to be listed there.
The Bombay Stock Exchange Limited, or BSE has a nation-wide reach with a presence in
417 cities and towns of India. Its index, or market indicator is known as the Sensex. It gives a
general idea regarding the movement of the stocks; whether they have gone up or have
gone down

If the Sensex goes up, it means that the prices of the stocks of most of the major companies
on the BSE have gone up.

The S&P CNX Nifty, or simply Nifty, is the leading index for large companies on the
National of India. It consists of 50 companies representing 24 sectors of the economy, and
representing approximately 47% of the traded value of all stocks on the National Stock
Exchange of India.

Broker

A stockbroker is person who is licensed to trade in shares. Brokers also have direct access
to the share market and can act as your agent in share transactions. For this service they
charge a fee. They can also offer additional services like advice on shares, debentures,
government bonds and listed property trusts and non-listed investment options (cash
management trusts, property and equity trusts.

In addition a stock broker can plan, implement and monitor your investment portfolio, conduct
research and help you optimize your returns.
 CHAPTER

CHAPTER – 5

Data Collection & Analysis/ Analysis and Interpretation

1.INVESTMENT CRITERIA OF CUSTOMERS

 FIELDS EQUITIES DERIVATIVES OTHERS
NO. 40 52 8
RESPONDENTS

INTERPRETATION:

From the above graph we can analyze the priority level of the customers in
investing different markets. 52% customers gave priority to do investment in
derivatives marker, 40% liked to invest in equities, but a very low % showed their
interest to invest in others like: funding etc.

2. TYPE OF TRADING

Response Intraday Cash Margin

No. of 33 49 18
respondents
INTERPRETATION:

The above graph shows the comparison between different types of trading. The mass
% of customers shows their interest to trade in cash as it is 49%. The 33% of
customers liked to trade in intra day but very less % was seen to do trading on margin.

3. AGE FACTOER INFLUENCING INVESTMENT IN EQUITIES AND

DERIVATIVES

AGE GROUP 18-25 25-40 40-55 ABOVE 55

NO.OF 10 55 25 10
RESPODENTS
INTERPRETATION:

The above analysis shows that 55% of people invest between the age group of 25-40,
which indicates that the age is big factor which influence the customer’s trading
behavior.

4.PURPOSE OF TRADING

Response Investmen Earning Financial Professio Others

t support n
No. of 38 17 27 9 9
Responden
ts
INTERPRETATION:

From the above graph it is seen that ‘purpose’ of trading is a major factor which
influence the customer’s trading behavior.

We can see that

 38% of people do trade for the purpose of earning.

 27% people like to trade for the purpose of investment
 17% want financial support.
 Rests 9% do trade for professionalism.
 CHAPTER
6

CHAPTER – 6

SWOT Analysis

STRENGTH & OPPORTUNITY

• Inflation
• Employment
 • Disposable income
• Business cycles
• Energy availability and cost
• Others?

WEAKNESS & THREATS

• Distribution of income
• Social mobility
• Lifestyle changes
• Levels of education
• Others?
 CHAPTER
7

CHAPTER - 7

CONCLUSION

A stock market is a market for the trading of company stock/ shares, and derivatives. This
includes securities listed on a stock exchange as well as those only traded privately. Market
is a place where buyers and sellers of securities can enter into transactions to purchase and
sell shares, bonds, debentures etc.

 The investors/speculators trade in the securities. The company whose securities are
traded does not get any funds from the trading in a secondary market.

 In India, only the securities of listed public companies can be traded on a recognized
stock-exchange.

 The Company issuing the securities gets the funds out of the issue.

 In India, only public limited companies can issue equity through primary markets.

 The issue of securities to public through the primary market by a company is called its

Initial Public Offer (IPO).

 CHAPTER
8

CHAPTER - 8

RECOMMENDATION & SUGGESTION

 Exiting customers should be provided better response & services so that by

there good Word Of Mouth Company will get more customers.
 Awareness should be created among the prospective clients.
 CHAPTER
9

CHAPTER – 9

Bibliography

 www.nseindia.com.
 www.bseindia.com.
 www.equityresearch.com.