A Project Report On

ROLE OF CAPITAL MARKET IN INDIA

Submitted to
PUNJAB TECHNICAL UNIVERSITY, JALANDHAR In the partial fulfillment of the requirement for the degree of MASTER OF BUSINESS ADMINISTRATION

Project Guide

Mr. Rajdeep Singh

Lecturer, MBA Deptt. S.B.B.S.I.E.T

SUBMITTED BY Sarbjit kaur

MBA 4TH SEMESTER
UNIVERSITY.ROLL NO .

90682234705

SANT BABA BHAG SINGH INSTITUTE OF ENGINEERING & TECHNOLOGY

SESSION 2009-11
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Certificate
This is to be certified that this project report Role OF

CAPITAL MARKET IN INDIA Submitted by sarbjit kaur is a bona fied piece Of work carried out under my
supervision & guidance . This data source have been duly acknowledged. It may be considered for the evaluation in partially fulfilment of the degree of master of business administration.

( Project Guide ) Lect. RAJDEEP SINGH SBBSIET

DECLARATION
This is certifying that I Sarbjit kaur, student of MBA 4th semester has prepared the report titled ROLE OF CAPITAL MARKET IN INDIA . All the theory contained in report are from the list of websites & newspapers given in the end in bibliography. I have not copied from any report submitted earlier this or any other university. This is purely original & authentic work.

SARBJIT KAUR
MBA 4TH SEM. ROLL NO - 90682234705

ACKNOWLEDGEMENT

It gives me great satisfaction on completion of Project entitled ROLE OF CAPITAL MARKET IN INDIA The entire journey from the very idea of this project to reality would not have been possible without the guidance and support of my college . I am deeply indebted to my project guide Mr. Rajdeep singh for sharing their insights on the topics and for being a constant source of inspiration & courage during the entire project work. He was always available; correcting mistakes, intelligently directing me to proper sources of information advising to aim for simplicity, brevity, clarity and accuracy. I am extremely grateful for their guidance and support that was indispensable for the completion of this project. Finally, my special thanks to all those who have help me directly or indirectly in the completion of my project work by providing motivation, inspiration & valuable information as well.

Contents
Sr. no. 1 CERTIFICATE
2. DECLARATION 3. ACKNOWLEDGEMENT 4. INFORMATION OF CAPITAL MARKET 5. CLASSIFICATION OF ISSUES 6. PATICIPANTS IN CAPITAL MARKET 7. CAPITAL MARKET INTERMEDIATORS 8. HISTORY OF CAPITAL MARKET 9. EXECUTIVE SUMMARY 10. AFTER STUDING THIS YOU WILL BE ABLE TO KNOW 11. INTRODUCTION & MEANING OF STOCK EXCHANGE 12. LIST OF REGIONAL STOCK EXCHANGES IN THE COUNTRY 13. FUNCTION OF STOCK EXCHANGE 14 NATIONAL STOCK EXCHANGE &

POWERS THAT MAY BE EXCERCISED BY 15.. INTRODUCTION OF BSE 16. BSE or NSE WHICH IS BETTER STOCK EXCHANGE FOR DELIVERY or DERIVATIVE TRADING. 17. DIFFERENCE BETWEEN REGIONAL STOCK EXCHANGE AND BSE. 18. DIFFERENCE BETWEEN NSE AND BSE. 19. SENSEX & THE NIFTY. 20. MEANING OF STOCK MARKET. 21. PURPOSE OF STOCK MARKET. 22 Impact on The Economy.

23. FUNCTIONS OF DEPOSITORY

24 .Demat a/c, rematerialisation, dematerialisation 25. FACTORS AFFECTING CAPITAL MARKET IN INDIA 26. OBJECTIVE OF THE STUDY 27. RESEARCH METODOLOGY 28. DATA ANALYSIS 29. FINDINGS & SUGGESTIONS
30. CONCLUSION

31. BIBLIOGRAPHY 32. QUESTIONNAIRE

INDIAN CAPITAL MARKET

Introduction:The capital market is the market for securities, where companies and governments can raise long term funds. Selling stock and selling bonds are two ways to generate capital and long term funds. Thus bond markets and stock markets are considered capital markets. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded .The Indian Equity Markets and the Indian Debt markets together form the Indian Capital markets Indian Equity Market at present is a lucrative field for investors. Indian stocks are profitable not only for long and medium-term investors but also the position traders, short-term swing traders and also very short term intra-day traders. For a developing economy like India, debt markets are crucial sources of capital funds. The debt market in India is amongst the largest in Asia. It includes government securities, public sector undertakings, other government bodies, financial institutions, banks and companies. SEGMENTS OF THE CAPITAL MARKET

Primary market Secondary market

PRIMARY MARKET

The primary market provides the channel for creation of new securities through the issuance of financial instruments by public companies as well as government companies, bodies and agencies.

Features of primary markets are: This is the market for new long term 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 directly 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 primary market issuance is done either through public issue or private placement. A public issue does not limit any entity in investing while in private placement, the issuance is done to select people. In terms of Indian Companies Act, 1956 as issue becomes public if it results in allotment to more than 50 persons. This means an issue resulting in allotment to less than 50 persons is private placement. An IPO is the first sale of stock by a company to the public. In this market company can raise money by issuing equity. If the company has never issued equity to the public, it's known as an IPO. Mostly public companies go for IPO. But large privately-owned companies may also go for an IPO to become publicly traded. In an IPO the company offloads a certain percentage of its total shares to the public at a certain` price In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.. Most IPOS these days do not have a fixed offer price.

CLASSIFICATION OF ISSUES

Initial Public Offer

Initial Public Offering (IPO) is 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. A follow on public offering (Further Issue) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.
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 Book Building Process

Book Building is basically a process used in IPOs for efficient price discovery.

It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date. Rights Issue

Rights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date .The rights are normally offered in a particular ratio to the number of securities held prior to the issue and generally issued at a price lower than the currently traded market price of the share Preferential Issue A Preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons which is neither a rights issue nor a public issue.

This is a faster way for a company to raise equity capital. Private Placement

A Private Placement is the issue of securities;debt or equity, to a limited number of subscribers such as banks,financial institutions,mutual funds and high net worth individuals.

Private placement can be done with a maximum of 50 investors.

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ADVANTAGES OF GOING PUBLIC Increased Capital:-A public offering will allow a company to raise capital to use for various corporate purposes such as working capital, acquisitions, research and development, marketing, and expanding plant and equipment. Liquidity Once shares of a company are issue through an IPO & traded on a public exchange, those shares have a market value and can be resold. This allows a company to attract and retain employees by offering stock incentive packages to those employees. Moreover, it also provides investors in the company the option to trade their shares thus enhancing investor confidence. Increased Prestige Public companies often are better known and more visible than private companies, this enables them to obtain a larger market for their goods or services. Public companies are able to have access to larger pools of capital as well as different types of capital. Valuation Public trading of a company's shares sets a value for the company that is set by the public market and not through more subjective standards set by a private valuator. This is helpful for a company that is looking for a merger or acquisition. It also allows the shareholders to know the value of the shares. Increased wealth The founders of the company often have the sense of increased wealth as a result of the IPO. Prior to the IPO these shares were illiquid and had a more subjective price. These shares now have an ascertainable price and after any lockup period these shares may be sold to the public, subject to limitations of law. DISADVANTAGES OF GOING PUBLIC Time and Expense -Conducting an IPO is time consuming and expensive. A successful IPO can take up to a year or more to complete and a company can expect to spend large amount of money on attorneys, accountants, and printers. In addition, the underwriter's fees can range from 3% to 10% of the value of the offering. Due to the time and expense of preparation of the IPO, many companies simply cannot afford the time or spare the expense of preparing the IPO.
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Disclosure:-Once a company goes public it comes under the purview of SEBI. It is supposed to file quarterly results with SEBI and follow other regulations as per SEBI guidelines. Decisions based upon Stock Price Management's decisions may be affected by the market price of the shares and the feeling that they must get market recognition for the company's stock. They may give more consideration to market price of the share and as a consequence may take a decision which is not prudent & sound . Regulatory Review The Company will be open to review by the SEBI to ensure that the company is making the appropriate filings with all relevant disclosures. Falling Stock Price If the shares of the company's stock fall, the company may lose market confidence, decreased valuation of the company may affect lines of credits, secondary offering pricing, the company's ability to maintain employees, and the personal wealth of insiders and investors. Vulnerability If a large portion of the company's shares are sold to the public, the company may become a target for a takeover, causing insiders to lose control. A takeover bid may be the result of shareholders being upset with management or corporate raiders looking for an opportunity. Defending a hostile bid can be both expensive and time consuming.

PARAMETERS TO JUDGE AN IPO Good investing principles demand that you study the minutes of details prior to investing in an IPO. Here are some parameters you should evaluate:Promoters Is the company a family run business or is it professionally owned?
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Even with a family run business what are the credibility and professional qualifications of those managing the company? Do the top level managers have enough experience (of at least 5 years) in the specific type of business? Industry Outlook The products or services of the company should have a good demand and scope for profit. Business Plans Check the progress made in terms of land acquisition, clearances from various departments, purchase of machinery, letter of credits etc. A higher initial investment from the promoters will lead to a higher faith in the organization. Financials Why does the company require the money? Is the company floating more equity than required? What is the debt component? Keep a track on the profits, growth and margins of the previous years. A steady growth rate is the quality of a fundamentally sound company. Check the assumptions the promoters are making and whether these assumptions or expectations sound feasible. Risk Factors The offer documents will list our specific risk factors such as the companys liabilities, court cases or other litigations. Examine how these factors will affect the operations of the company. Key Names -Every IPO will have lead managers and merchant bankers. You can figure out the track record of the merchant banker through the SEBI website. Pricing Compare the companys PER with that of similar companies. With this you can find out the P/E Growth ratio and examine whether its earning projections seem viable.

SECONDARY MARKET
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Secondary market is the market for buying and selling securities of the existing companies. Under this, securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange. The stock exchanges are the exclusive centres for trading of securities. It is a sensitive barometer and reflects the trends in the economy through fluctuations in the prices of various securities. It been defined as, "a body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating and controlling the business of buying, selling and dealing in securities". There are 23 stock exchanges in India. Listing on stock exchanges enables the shareholders to monitor the movement of the share prices in an effective manner. This assists those to take prudent decisions on whether to retain their holdings or sell off or even accumulate further. However, to list the securities on a stock exchange, the issuing company has to go through set norms and procedures. Various aspects of secondary/ stock market in India:(a) Corporate Securities: The stock exchanges are the exclusive centres for trading of securities. Though the area of operation/jurisdiction of an exchange is specified at the time of its recognition, they have been allowed recently to set up trading terminals anywhere in the country. The three newly set up exchanges (OTCEI, NSE and ICSE) were permitted since their inception to have nationwide trading. The trading platforms of a few exchanges are now accessible from many locations. Further, with extensive use of information technology, the trading platforms of a few exchanges are also accessible from anywhere through the Internet and mobile devices. This made a huge difference in a geographically vast country like India. (b) Exchange Management: Most of the stock exchanges in the country are organised as Mutuals which was considered beneficial in terms of tax benefits and matters of compliance. The trading members, who provide brokering services, also own,control and manage the exchanges. This is not an effective model for self -regulatory organisations as the regulatory and public interest of the exchange conflicts with private interests.

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c.

Membership :

The trading platform of an exchange is accessible only to brokers. The broker enters into trades in exchanges either on his own account or on behalf of clients. No stock broker or sub-broker is allowed to buy, sell or deal in securities, unless he or she holds a certificate of registration granted by SEBI. A broker/subbroker complies with the code of conduct prescribed by SEBI. Over time, a number of brokers proprietor firms and partnership firms - have converted themselves into corporate. The standards for admission of members stress on factors, such as corporate structure, capital adequacy, track record, education, experience, etc. and reflect a conscious endeavour to ensure quality broking services. (d) Trading Mechanism: The exchanges provide an on-line fully-automated Screen Based Trading System (SBTS) where a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching order from a counter party. SBTS electronically matches orders on a strict price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets. It enables market participants to see the full market on real-time, making the market transparent. It allows a large number of participants, irrespective of their geographical locations, to trade with one another simultaneously, improving the depth and liquidity of the market. It provides full anonymity by accepting orders, big or small, from members without revealing their identity, thus providing equal access to everybody. It also provides a perfect audit trail, which helps to resolve disputes by logging in the trade execution process in entirety. (e) Trading Rules: Regulations have been framed to prevent insider trading as well as unfair trade practices. The acquisitions and takeovers are permitted in a well- defined and orderly manner. The companies are permitted to buy back their securities to improve liquidity and enhance the shareholders' wealth. (f) Price Bands: Stock market volatility is generally a cause of concern for both policy makers as well as investors. To curb excessive volatility, SEBI has prescribed a system of price bands. The price bands or circuit breakers bring
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about a coordinated trading halt in all equity and equity derivatives markets nation-wide. An index-based market-wide circuit breaker system at three stages of the index movement either way at 10%, 15% and 20% has been prescribed. The movement of either S&P CNX Nifty or Sensex, whichever is breached earlier, triggers the breakers. As an additional measure of safety, individual scrip-wise price bands of 20% either way have been imposed for all securities except those available for stock options. (g) Demat Trading: The Depositories Act, 1996 was passed to proved for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security by :(i) Making securities of public limited companies freely transferable subject to certain exceptions; (ii) Dematerialising the securities in the depository mode; and (iii) Providing for maintenance of ownership records in a book entry form. In order to streamline both the stages of settlement process, the Act envisages transfer of ownership of securities electronically by book entry without making the securities move from person to person. Two depositories, viz. NSDL and CDSL, have come up to provide Instantaneous electronic transfer of securities. Demat settlement accounts for over 99% of turnover settled by delivery. This has almost eliminated the bad deliveries and associated problems. To prevent physical certificates from sneaking into circulation, it has been mandatory for all new IPOs to be compulsorily traded in dematerialised form. The admission to a depository for dematerialisation of securities has been made a prerequisite for making a public or rights issue or an offer for sale. It has also been made compulsory for public listed companies making IPO of any security for Rs. 10 crore or more to do the same only in dematerialised form. (h) Charges: A stock broker is required to pay a registration fee of Rs.5, 000 every financial year, if his annual turnover does not exceed Rs. 1 crore. The maximum brokerage a trading member can levy in respect of securities transactions is 2.5% of the contract price, exclusive of statutory levies like SEBI turnover fee, service tax and stamp duty. However, brokerage charges as low as 0.15% are also observed in the market.

(i) Trading Cycle:

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Rolling settlement on T+3 basis gave way to T+2 fromApril 2003. The market has moved close to spot/cash market. (j) Risk Management: To pre-empt market failures and protect investors, the regulator/exchanges have developed a comprehensive risk management system, which is constantly monitored and upgraded. It encompasses capital adequacy of members, adequate margin requirements, limits on exposure and turnover, indemnity insurance, online position monitoring and automatic disablement, etc. They also administer an efficient market surveillance system to curb excessive volatility, detect and prevent price manipulations. A clearing corporation assures the counterparty risk of each member and guarantees financial settlement in respect of trades executed on Nse.

PARTICIPANTS IN THE CAPITAL MARKET Following are the market participants in the capital market:(a) Foreign institutional Investors (b) Non- Resident Indians (c) Persons of Indian Origin (d) Retail investors (e) Venture capital funds (f) Mutual Funds (g) Private Equity (h) High Net worth Individuals (HNIs) (i)Financial Institutions (j)Insurance companies (k) Pension funds, etc.

CAPITAL MARKET INTERMEDIARIES

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 Merchant Bankers Registrar &Transfer Agents (R&T agents) Stock Brokers Custodians Mutual Funds Depositories Depository Participants

EXPLANATION OF ABOVE Merchant Bankers As per the SEBI [Merchant Bankers]Rules, 1992 merchant banker means any person who is engaged in the business of issue management either by making arrangements regarding selling,buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory services in relation to issue management

R&T Agents-Registrar to Issue The R&T agents provide services to shareholders on behalf of issuers for Maintaining Register of Members [ROM]

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 Managing corporate benefits like distribution of dividends, interest on debentures, bonus shares, rights etc. Share transfer services Stock Brokers

A stock-broker is a member of the Stock Exchange Stock-brokers are the intermediaries who are allowed to trade in securities on the exchange of which they are members Brokers buy and sell on their own behalf as well as on the behalf of their clients Any person can act as a stock-broker only after registering as such with SEBI Custodians Custodians are appointed by institutional investors, mutual funds, banks etc for physical custody of securities, settlement services, monitoring and collection of corporate benefits and maintaining of their accounts of securities HSBC Bank,SHCIL,Citibank, Deutsche bank, Standard Chartered Bank provide custodial services Mutual Funds

Mutual Funds are financial intermediaries. A mutual fund is a collective investment that allows many investors, with a common objective, to pool individual investments and give to a professional manager who in turn would invest these monies in line with the common objective.

The units of Mutual Funds are tradable securities

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Their price is determined by their Net Asset Value (NAV) which is declared periodically .

Depositories
A depository is an organisation which holds securities of investors in electronic form at request of investors through a registered depository participant. A depository holds securities like shares,debentures,bonds,government securities etc. of investors in electronic form. The Depository Act,1996 defines a depository to mean a company formed and registered under the companies act,1956 and which has been granted a certificate of registration under Sub section (IA)of section 12 of this securities &Exchange Board of India act, 1992. The term depository means a place where something is deposited for safe keeping, a bank in which other deposits, funds and other securities ,usually under the terms of specific depository agreement.

National Securities Depository Limited(NSDL) promoted by IDBI,NSE is the first depository of country. Later on Central Depository Services Limited(CDSL) was promoted by BSE,Bank of Baroda etc.

DEFINITION:IN SIMPLE TERMS A depository is an organization where the securities of a share holder held in an electronic form and the depository can legally transfer the beneficial ownership at the request of the shareholder through a medium of depository participant.

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The Depository System is concerned with conversion of securities from physical to electronic form, settlement of trade in electronic segment, electronic transfer of shares and custody of securities. In depository system ,there is no physical script and such most of the problems or fraudulent transfer, fake certificate etc.Electronic transfer is faster in comparison to paper work.

It is understood from the above two definitions that the depository is a place where securities are stored, recorded in the books on behalf of the investors. Therefore, a depository can be defined as, an institution which transfers the ownership of securities in electronic mode on behalf of its members.

CAPITAL MARKET
HISTORY

Securities Market Development under British Colonization 1833 1947 Indian corporate and securities law has its roots in English common law. England passed a homogenous set of company laws throughout the British Colonies to assist British entrepreneurs via a common investment framework. Managing Agency System British owners used a governing structure known as the managing agency system. This system operated as a holding company that held and controlled several companies across several industries. A managing agency house had control over promotional, financial, and managerial functions.

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 Boards of Directors performed very few decision-making functions.

This gave the shareholders in the holding company effective control over the subsidiaries even though their equity stake was often very small.

Industries and Development Regulation Act of 1951

The Act restricted investment by requiring all existing and proposed industrial units to acquire licenses from the central government. Business owners that had existing companies and political connections used the licensing regime to extract monopolistic and oligopolistic privileges in new and existing industries. The licensing requirements grew stricter over the years as the government thrust itself into an increasingly central planning role.

The Act granted the government power to prevent the transfer of 10% or more of shares if the transfer would alter the board of directors and is prejudicial to the interest of the company or the public interest. It prohibited individuals from transferring shares to foreign firms.

Securities Contracts (Regulation) Act 1956

The Securities Contracts Act heavily regulated the stock exchanges and prohibited the trading of options. The Acts preamble stated its purpose as, An Act to prevent undesirable transactions in securities by regulating the business of dealings in therein, by prohibiting options and by providing for certain other matters connected therewith. It emphasized investor protection and government control and placed little emphasis on market development.

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Maintaining Control:From the mid-1960s until the economic reforms of 1991, the government viewed the financial system as a source of public finance. During this time, the government controlled the banks and their lending decisions and used this to control competition. Commercial and cooperative banks provided companies with working capital. Indian development banks and a few government-funded financial institutions provided most of the medium- to long-term financing of companies. 1969 Monopolies and Restrictive Trade Practices Act

The Act placed additional licensing restrictions on the private sector, further limiting competition and restricting investment. The Act defined a monopoly based on asset size instead of on market share.

Policies from 1960s 1991 The government prohibited the development of an equity market through control directed by the Controller of Capital Issues.

Public financial institutions such as the Unit

Trust of India, the General Insurance Corporation, and development financial institutions such as the Industrial Finance Corporation of India and the Industrial Development Bank of India were the largest shareholders of all major Indian firms, holding approximately 40-45% of share capital.

Large state ownership resulted in an underperforming corporate structure as the state institutions failed to monitor the corporations management. This prolonged the inefficiencies of the managing agency system, as promoters often had effective control over companies with little investment. High tax rates encouraged fraudulent accounting practices and the manipulation of earnings.

Rapid Liberalization: Sri Lankan Tamil rebels assassinated Prime Minister Ghandi in May 1991. Following the assassination of the Prime Minister, India chose P.V. Narashimha
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Rao as the new Prime Minister. During this time Indias financial system faced a foreign exchange crisis and its economy was in shambles. The new administration immediately began liberalization efforts in capital and trade. Initial reforms

The first major liberalization effort occurred when the Indian government issued a new Industrial Policy Act on June 24, 1991. The act repealed most industrial licensing requirements, relaxed the restrictions on foreign investments, and replaced the Monopolies and Restrictive Trade Practices Act of 1969. The removal of licensing requirements allowed private firms to make decisions without government input and allowed private industries to compete with stateowned industries.

Controller of Capital Issues Abolition The most significant reform involving capital markets was the governments abolition of the Controller of Capital Issues in 1992. After the government abolished the Act, companies were free to set the price of their issues.

Formation of Securities and Exchange Board of India (SEBI)

The SEBI received legislative backing in 1992. The SEBIs mandate included the promotion and development of the securities markets. This was a dramatic shift from the focus of the Securities Contracts Act of 1956, which primary focused on investor protection through heavy regulation and disregarded market promotion. The Act granted the SEBI the responsibility of registering and regulating market participants.

Formation of the National Stock Exchange (NSE)

The Indian government formed the NSE in 1992. Prior to the NSEs formation, the Sensex was a monopoly and it was plagued with manipulative practices. The government created the NSE to compete with the Sensex and drive down transaction costs.

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 The NSE was set up as an automated electronic exchange allowing stock brokers from all over the country to link to the NSE computers and trade with automatic buy and sell order matching. Fraud Hits Howard Mehta Scam

The first securities market fraud struck almost immediately following economic liberalization. Between December 1991 and April 1992, the Sensex rose by nearly 150%. A fraud involving manipulating settlement practices helped fuel the rally. The fraudulent settlement practices induced large banks to unknowingly make unsecured loans to smaller banks that then made money available to brokers. This diverted substantial sums of money from the banking sector to the stock market. After the fraud was discovered, the Sensex fell nearly 40%.

Vanishing Companies 1992 1994

Vanishing companies also plagued the primary Indian securities markets, destroying investor confidence in the markets. Between July 1993 and September 1994 the Indian stock market gained 120%. Hundreds of companies took advantage of the hot IPO market and raised substantial sums of money. Several of these companies then proceeded to vanish after raising the capital.

Multinationals

In 1994, multinationals took advantage of the lack of a developed regulatory structure by issuing preferential equity allotments to controlling shareholders at steep discounts to prevent takeovers. These issuances substantially diluted minority shareholders. The capital markets went through a series of minor reforms during the mid-1990s. Several of these efforts including improving transparency and corporate governance. The SEBI did not have many enforcement or investigatory powers under the original SEBI Act. Through a series of reforms, the government significantly strengthened SEBIs enforcement and regulatory power. As the chart below shows, the number of investigation and enforcement actions increased dramatically after the reforms.
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Corporate Governance Reform and Clause 49 After the series of frauds shook investor confidence, the Confederation of Indian Industry formed a task force to improve corporate governance. In April 1997, the task force published a draft of Desirable Corporate Governance, A Code, and defined good corporate governance as maximizing long term shareholder value. The SEBI adopted Clause 49 in 1999, making many of the Codes recommendations mandatory. Clause 49 requires at least 50% of the Board to be independent when the CEO is also the chairman of the board. It works in coordination with company listing standards on exchanges. The clause requires the CEO and CFO to certify the financial statements.

EXECUTIVE SUMMARY
Stock Exchanges in the capital market of INDIA plays a very significant role at present there are 24 regional stock exchanges in the country. The first stock exchange in INDIA is BOMBAY STOCK EXCHANGE (BSE). The all others stock exchanges are regional in nature, they take place due to the local need of the industry and they grew very fastly and rapidly. But in 1994-95, when multinational companies was come to India they want the securities listed at big stock exchange so that they can have easy trading and
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easy collection of money from throughout the country and having nation wide reach. And then NATIONAL STOCK EXCHANGE come into existence and in filled all the regional stock exchanges because it was started with new technology of screen based technology and many other new inventions for the purpose of trading and it start establishing their terminals outside the city of exchange, so BSE cant compete NSE, but because of the oldest in the country it is competing with NSE, but all other REGIONAL STOCK EXCHANGES cant compete with NSE and trading at all regional stock exchanges was nil by the year ending 2001-02 and when NSE starting trading in derivatives (FUTURES). BSEs turnover also starting down very rapidly. All companies and investors and brokers prefer trading at NSE because of the reason that terminals of the NSE are easily available in every town of the country, whereas other exchanges cant provide it because of low resources. At present there is no stock exchanges except NSE and BSE where trading is going on. And all others left regional stock exchanges in order to survive make a subsidiary company and take membership of NSE/BSE and start working like their broker and brokers of exchanges were sub brokers of the regional stock exchanges According to survey conducted, the perception of the respondent is that they are not in favour of starting trading at regional stock exchanges rather they feel that regional stock exchanges infrastructure can be used by appointing them as the compliances of the SEBI or National Stock Exchange and working as compliance of these bodies or remain in the business of broker as now they are doing.

AFTER STUDYING THIS PROJECT YOU WILL BE ABLE TO KNOW:-

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o Stock Exchanges in India. o When and Why Regional Stock Exchange come into existence. o Why National Stock Exchange come into existence. o Growth of NSE,BSE and Regional Stock Exchanges. o About capital market
o

Depositories in india

o Capital market & its intermediaries o Factors affecting capital market o Demat,remat,nomination & transmission

CHAPTER 1

INTRODUCTION

MEANING OF STOCK EXCHANGE

STOCK MARKET
A Stock exchange is a key institution facilitating the issue and sale of various types of securities. It is a pivot around which every activity of the capital market revolves. In the absence of stock exchange, the people with savings would hardly invest in corporate securities for which there would be no liquidity

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(buying and selling facility). Corporate investments from the general public would have been thus lower. Stock Exchanges are an organised marketplace, either corporation or mutual organisation, where members of the organisation gather to trade company stock and other securities. The members may act either as agents for their customers, or as principals for their own accounts. Stock exchanges also facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerised. .

BRIEF HISTORY OF STOCK EXCHANGES

Do you know that the world's foremost marketplace New York Stock Exchange (NYSE), started its trading under a tree (now known as 68 Wall Street) over 200 years ago? Similarly, India's premier stock exchange Bombay Stock Exchange (BSE) can also trace back its origin to as far as 125 years when it started as a voluntary non-profit making association. News on the stock market appears in different media every day. You hear about it any time it reaches a new high or a new low, and you also hear about it daily in statements like 'The BSE Sensitive Index rose 5% today'. Obviously, stocks and stock markets are important. Stocks of public limited companies are bought and sold at a stock exchange. But what really are stock exchanges? Known also as the stock market or bourse, a stock exchange is an organized marketplace for securities (like stocks, bonds, options) featured by the centralization of supply and demand for the transaction of orders by member brokers, for institutional and individual.The exchange makes buying and selling easy. For example, you don't have to actually go to a stock exchange, say, BSE - you can contact a broker, who does business with the BSE, and he or she will buy or sell your stock on your behalf.

HISTORY OF INDIAN CAPITAL MARKET AT A GLANCE

18th century 1800-Trading of shares of East India Company in Kolkata and Mumbai
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1850-Joint stock companies came into existence 1860-Speculation and feverish dealing in securities 1875-Formation of Stock Exchanges of Mumbai 1894-Formation of Ahmedabad Stock Exchange 19th century 1908-Formation of Calcutta Stock Exchange 1939-Formation of Lahore and Madras Stock Exchange

20th century 2000-Depositories came into existence (Electronic form of shares) 2001-Trading in Future Tradings 2002-Start of rolling settlement and banning of Badla Trading 2004-BSE sensex touches all time high of 6194 in January

ROLE OF STOCK EXCHANGE

Facilitate Listing of Securities Register members -Stock Brokers,sub brokers Make and enforce bye-laws
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 Provide trading platform to investors Manage risk in securities transactions Provide indices Pooling the capital resources and Developing enterprises investors Solve the problem of paucity of funds Mobilize the small and scattered savings Augment the availability of investible funds Growth of joint stock business Provide a number of profitable investment opportunities for a small savers.

List of REGIONAL STOCK EXCHANGES IN THE COUNTR

Ahmedabad Stock Exchange 2. Bangalore Stock Exchange 3. Bhubaneshwar Stock Exchange 4. Calcutta Stock Exchange 5. Cochin Stock Exchange 6. Coimbatore Stock Exchange 7. Delhi Stock Exchange 8. Guwahati Stock Exchange 9. Hyderabad Stock Exchange 10. Jaipur Stock Exchange 11. Ludhiana Stock Exchange 12. Madhya Pradesh Stock Exchange 13. Madras Stock Exchange 14. Magadh Stock Exchange 15. Mangalore Stock Exchange 16. Meerut Stock Exchange
1.

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17. Pune

Stock Exchange 18. Saurashtra Kutch Stock Exchange 19. Uttar Pradesh Stock Exchange 20. Vadodara Stock Exchange

Functions of stock exchange

1)

Liquidity and marketability of securities

2) Safety of funds 3) Supply of long term funds

4)

Flow of capital to profitable ventures

5) Motivation for improved performance

6) 7)

Promotion of investment Reflection of business cycle

8) Marketing of new issues

NATIONAL STOCK EXCHANGE OF INDIA LTD.

INTRODUCTION
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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 2000. NSEs MISSION NSE's mission is setting the agenda for change in the securities markets in India. The NSE was set-up with the main objectives of: 1. Establishing a nation-wide trading facility for equities, debt instruments and hybrids, 2. Ensuring equal access to investors all over the country through an appropriate communication network, 3. Providing a fair, efficient and transparent securities market to investors using electronic trading systems, enabling shorter settlement cycles and book entry settlements systems, and 4. Meeting the current international standards of securities markets. 5. The standards set by NSE in terms of market practices and technologies have become industry benchmarks and are being emulated by other market participants. NSE is more than a mere market

o EXISTING STRUCTURE OF THE STOCK EXCHANGES IN INDIA

o The Act recognizes stock exchanges with different legal structure.

Presently the stock exchanges which are recognised under the Securities Contracts (Regulation) Act in India, could be segregated into two broad groups 20 stock exchanges which were set up as companies, either limited by guarantees or by shares, and the 3 stock exchanges which are
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functioning as associations of persons (AOP) viz. BSE, Ahmedabad Stock Exchange and Indore Stock Exchange. The 20 stock exchanges which are companies are: the stock exchanges of Bangalore, Bhubaneswar, Calcutta, Cochin, Coimbatore, Delhi, Gauhati, Hyderabad, Interconnected SE, Jaipur, Ludhiana, Madras, Magadh, Managalore, NSE, Pune, OTCEI, Saurashtra-Kutch, Uttar Pradesh, and Vadodara. Of these, the stock exchanges of Ahmedabad, Bangalore, BSE, Calcutta, Delhi, Hyderabad, Madhya Pradesh, Madras and Gauhati were given permanent recognition by the Central Government at the time of setting up of these stock exchanges. Apart from NSE, all stock exchanges whether established as corporate bodies or Association of Persons (AOPs), are non-profit making organizations.

POWERS THAT MAY BE EXERCISED BY THE STOCK Exchange

The powers of the stock exchange are to be exercised as per provisions in its bye-law. As per SCRA Act any recognised stock exchange may, subject to the previous approval of the[Securities and Exchange Board of India make bye-laws for the regulation and control of contracts. The byelaws can provide for the exercise of following powers by the stock exchange. a. The opening and closing of markets and the regulation of the hours of trade b. Set up a clearing house for the periodical settlement of contracts and differences thereunder, the delivery of and payment for securities, the passing on of delivery orders and the regulation and maintenance of such clearing house; c. The regulation or prohibition of blank transfers; d. The regulation, or prohibition of badlas or carry-over facilities; e. The fixing, altering or postponing of days for settlements; f. The determination and declaration of market rates, including the opening, closing, highest and lowest rates for securities; g. The terms, conditions and incidents of contracts, including the prescription of margin requirements, if any, and conditions relating thereto, and the forms of contracts in writing; h. The regulation of the entering into, making, performance, rescission and termination, of contracts, including contracts between members or between a member and his constituent or between a member and a person
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who is not a member, and the consequences of default or insolvency on the part of a seller or buyer or intermediary, the consequences of a breach or omission by a seller or buyer, and the responsibility of members who are not parties to such contracts; i. The regulation of taravani business including the placing of limitations thereon; j. The listing of securities on the stock exchange, the inclusion of any security for the purpose of dealings and the suspension or withdrawal of any such securities, and the suspension or prohibition of trading in any specified securities;

ADVANTAGES OF NSE OVER RSEs

It has brought an integrated stock market trading network across the country. Investors can trade at any place sitting across the country at common trading platform. Delays in communications, late payments have been done away with. Settlement Guarantee Fund backs each and every trade. Complete transparency in trading operations. Faster settlements of trades. Imparting training and education to the trading members. Dematerialisation and Electronic transfer of securities.

State-of-the-art technology for efficient trading, settlement and clearing system

THREAT TO NSE As NSE has achieved growth since its inception as NSE failed the concept of RSEs it is equally possible that NSE may also be failed by some other exchange e.g. some foreign exchange like NYSE, DOW JONES and LONDON
35

STOCK EXCHANGE etc. As SEBI has permitted the Indian stock exchanges and they are not going for that as they know that they cant compete with foreign exchanges, so if they come in our country they may fail the NSE and Indian capital market may fail, so for competing them NSE should take some steps as it should merge all RSEs with itself and compel they to go back without any business. Mostly respondents in the study shows that they are in the favour of the foreign stock exchange, they feel that if in every other industry market foreign players are working then why not stock exchange

INTRODUCTION OF BSE

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning three centuries in its 133 years of existence. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in
36

1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, BSE has two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners. Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient access to resources. There is perhaps no major corporate in India which has not sourced BSE's services in raising resources from the capital market. Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z groups. The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly named 'BSE Broadcast' which enables information dissemination to the common man on the street. In 2006, BSE launched the Directors Database and ICERS (Indian Corporate Electronic Reporting System) to facilitate information flow and increase transparency in the Indian capital market. While the Directors Database provides a single-point access to information on the boards of directors of listed companies, the ICERS facilitates the corporates in sharing with BSE their corporate announcements.

OBJECTIVES OF BSE

To allow companies listed only with RSEs to raise fresh resources from the capital market, given higher liquidity in their shares. To create liquidity in all the scrips listed on the Exchanges. To provide an avenue for new SMEs from various regions of the country to raise fresh resources from the capital markets, which would help, achieve balanced regional growth. To harness the infrastructure at RSEs

37

 BSE or NSE WHICH IS BETTER STOCK EXCHANGE FOR DELIVERY or DERIVATIVE TRADING
BSE is 133 year old and NSE is just 14 year old stock exchange of India but NSE is now the worlds third largest stock exchange in terms of transactions and dealings. If you are day trader or trading in future and option segment heavily, better you should stick with NSE. You can trade with high volume without too much unexpected result. NSE is far better and fast to implement high technology for trading in comparison to BSE. NSE is popular with huge volumes as compared to BSE, as NSEs bid-ask price are excellent compared to BSE. FII can invest easily in NSE in comparison to BSE. BSE is more prone to scams. You should not expect any scams in future in NSE. In the cash segment, where shares change hands, BSE had the first-mover advantage and in the futures segment, both exchanges started simultaneous trading in June 2000. Today, NSE has a virtual monopoly of the market with average daily futures and options trading turnover of Rs 45,827 crore this financial year, while BSEs has slipped to around Rs20 crore. Conclusion- If you want to trade in cash segment, you should use BSE as there are more actual seller and buyer of stocks for long term. If you are interested in F&O segment you should use NSE.

DIFFERENCE BETWEEN REGIONAL STOCK EXCHANGE AND BSE

The BSE is a national stock exchange - meaning it is common to all residents of the country. (Note: There is a separate exchange called the National Stock Exchange. The term national is used to stress on the fact that, the exchange is available nation wide) A Regional stock exchange is usually located in a particular city and is open for

38

trading only to the residents of that particular city/state which makes it inaccessible for other investors who do not reside in that region.

DIFFERENCE BETWEEN NSE AND BSE

BSE is Bombay Stock Exchange and NSE is National Stock Exchange. Apart from these n all other mentioned differences, the most important one is the difference in their respective benchmark index's i.e. SENSEX n NIFTY. While the SENSEX is an index of top 30 co's in terms of m-cap, NIFTY is of top 50 co's, hence NIFTY is more diversified n real time, closer to ground picture of the market.

BSE Bombay Stock Exchange NSE National stock Exchange. even though both entities are dealing in securities , are yet different companies. BSE started as a regional stock exchange, and later spread its wings all over India when manual trading was done away with. National Stock Exchange started with an all India base. That is the only difference between these two but otherwise, they are fish of the same water.

BSE (Bombay Stock Exchange) is an old stock exchange, while NSE (National Stock Exchange) is a very new one. Both have companies listed (associated) with them. Since BSE is old(started in 1875), it is famous throughout the world, but does not use much of technology for its operation and calculation of stock index (index is a group of highly volatile stocks that the stock exchange monitors, SENSEX by BSE and NIFTY by NSE are examples). NSE, started in 1994, and uses the latest technology. Companies consider it a pride to list their stocks in the BSE, since it is old, but companies are listing in NSE also. There are many other stock exchanges in India, but not as famous as BSE or NSE. Both are like different markets, selling the same product, so there might be very
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small difference in prices of the stock of the same company between the two market.

SENSEX & THE NIFTY

The Sensex 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. The sensex is calculated taking into consideration the top 30 companies of Bombay Stock Exchange (BSE).In case of National Stock Exchange (NSE) , top 50 companies are taken into consideration to calculating nifty. 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 sensex 30 includes the following companies (As on 24th July 2009) Name of the company 1 Reliance Industries 2 Infosys Technologies 3 L &T 4 ICICI Bank 5 HDFC 6 ITC 7 Reliance Communication
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8 Bharti Airtel 9 HDFC Bank 10 SBI 11 ONGC 12 BHEL 13 Hindustan Unilever 14 Tata Consultancy 15 Tata Steel 16 Grasim Industries 17 Maruti Suzuki 18 NTPC 19 20 21 22 23 Sterlite Industries Tata Power Reliance Infrastructures Mahindra & Mahindra Jai Prakash Associates

24 Hero Honda 25 DLF 26 Wipro 27 Hindalco 28 Tata Motors 29 Sun Pharma 30 ACC

The Nifty 50 Companies as on 24th July 2009 are as follows :S.No Name of the company S.No. Name of the company 1 Reliance Industies 2 Infosys Technologies 3 L &T 4 ICICI Bank 5 HDFC
41

6 ITC 7 Bharti Airtel 8 HDFC Bank 9 SBI 10 ONGC 11 BHEL 12 Hindustan Unilever 13 Tata Consultancy 14 Tata Steel 15 Grasim Industries 16 Reliance Communication 17 Jindal Steel 18 Axis Bank 19 Maruti Suzuki 20 NTPC 21 Sterlite Industries 22 Tata Power 23 Reliance Infrastructure 24 Mahindra & Mahindra 25 GAIL(I) 26 Hero Honda 27 DLF 28 Wipro 29 Cipla 30 Idea Celluar 31 Unitech 32 Cairn 33 Hindalco 34 Reliance capital 35 Tata Motors 36 SAIL 37 Punjab National Bank 38 Sun Pharma 39 ACC 40 Ambuja Cement 41 ABB 42 Siemens
42

43 Power Grid 44 Reliance Power 45 Suzlon Energy 46 BPCL 47 HCL Technologies 48 Ranbaxy Laboratories 49 Tata Communication 50 National Aluminium

MARKET CAPITALISATION (MARKET CAP) Market cap or market capitalization is simply the worth of a company in terms of its shares. To calculate the market cap of a particular company, simply multiply the current share price by the number of shares issued by the company. Thus, Depending on the value of the market cap, the company will either be a mid-cap or large-cap or small-cap company The criteria for selecting top 30 and 50 stocks in case of BSE & NSE respectively The following are the criteria for selecting the top 30 and 50 Stocks for BSE & NSE respectively:(a) Market capitalization: -The company should have a market capitalization in the Top 100 market capitalizations of the BSE. Also the market capitalization of each company should be more than 0.5% of the total market capitalization of the Index. (b)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. (c) 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.
43

(d)Industry representation: -The companies should be leaders in their industry group. (e)Listed history:- The companies should have a listing history of at least one year on BSE. (f)Track record:- In the opinion of the index committee, the company should have an acceptable track record.

MEANING OF STOCK MARKET

INTRODUCTION
In general, the financial market divided into two parts, Money market and capital market. Securities market is an important, organized capital market where transaction of capital is facilitated by means of direct financing using securities as a commodity. Securities market can be divided into a primary market and secondary market.

PRIMARY MARKET
The primary market is an intermittent and discrete market where the initially listed shares are traded first time, changing hands from the listed company to the investors. It refers to the process through which the companies, the issuers of stocks, acquire capital by offering their stocks to investors who supply the capital. In other words primary market is that part of the capital markets that deals with the issuance of new securities. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is called 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. SECONDARY MARKET The secondary market is an on-going market, which is equipped and organized with a place, facilities and other resources required for trading securities after their initial offering. It refers to a specific place where securities transaction among many and unspecified persons is carried out through intermediation of the securities firms, i.e., a licensed broker, and the exchanges, a specialized
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trading organization, in accordance with the rules and regulations established by the exchanges. A bit about history of stock exchange they say it was under a tree that it all started in 1875.Bombay Stock Exchange (BSE) was the major exchange in India till 1994.National Stock Exchange (NSE) started operations in 1994. NSE was floated by major banks and financial institutions. It came as a result of Harshad Mehta scam of 1992. Contrary to popular belief the scam was more of a banking scam than a stock market scam. Investors weren't allowed access and the system was opaque and misused by brokers. The shares were in physical form and prone to duplication and fraud.NSE was the first to introduce electronic screen based trading. BSE was forced to follow suit. The present day trading platform is transparent and gives investors prices on a real time basis. With the introduction of depository and mandatory dematerialization of shares chances of fraud reduced further. The trading screen gives you top 5 buy and sell quotes on every scrip. A typical trading day starts at 10 ending at 3.30. Monday to Friday. BSE has 30 stocks which make up the Sensex .NSE has 50 stocks in its index called Nifty. FII s Banks, financial institutions mutual funds are biggest players in the market. Then there are the retail investors and speculators.

ORIGIN OF INDIAN STOCK MARKET The origin of the stock market in India goes back to the end of the eighteenth century when long-term negotiable securities were first issued. However, for all practical purposes, the real beginning occurred in the middle of the nineteenth century after the enactment of the companies Act in 1850, which introduced the features of limited liability and generated investor interest in corporate securities. An important early event in the development of the stock market in India was the formation of the native share and stock brokers 'Association at Bombay in 1875, the precursor of the present day Bombay Stock Exchange. This was followed by the formation of associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). In addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life. Without a stock exchange, the saving of the community- the sinews of economic progress and productive efficiency- would remain underutilized. The task of mobilization and allocation of savings could be attempted in the old days by a much less specialized institution than the stock
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exchanges. But as business and industry expanded and the economy assumed more complex nature, the need for 'permanent finance' arose. Entrepreneurs needed money for long term whereas investors demanded liquidity the facility to convert their investment into cash at any given time. The answer was a ready market for investments and this was how the stock exchange came into being. Stock exchange means any body of individuals, whether incorporated or not, constituted for the purpose of regulating or controlling the business of buying, selling or dealing in securities. These securities include: (i) (ii) (iii) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; Government securities; Rights or interest in securities.

PURPOSE OF STOCK MARKET

Stock markets basic role is to provide a platform for the masses of the country to invest their savings and also as a source of funds for various organizations and institutions. It provides an opportunity for any person to become a part-owner of the company by buying the companies shares. These shares can be sold and exchanged as well as used as collateral in certain cases. One can deal in a variety of financial instruments in a stock market such as Equity which has already been explained, Future's, Retail Debt, Wholesale Debt, Currency Future's, Derivatives, Bonds etc. Trading can only be performed by a registered broker of the respective stock one wants to deal in or through a broker.

Impact on The Economy

The stock market has both positive and negative effects on the Indian Economy. Some of which are listed below. 1. Provides a source of funding for organizations. 2. An investment avenue.
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3. A source of income for investors. 4. A source of revenue for the government in the form of taxes.
5.

A source of employment opportunities.

6. Idle funds of common investors can be used for profitable purposes.

BANK-DEPOSITORY AN ANALOGY BANK Holds funds in an account DEPOSITORY Holds securities in an account

Transfers funds between Transfers securities between accounts on the instruction of accounts on the instruction of the account holder the BO account holder Facilitates transfer without Facilitates transfer of ownership having to handle money without having to handle securities Facilitates money safekeeping of Facilitates securities safekeeping of

BANK-DEPOSITORY DISTINCTION

BANK Either of holder can sign instruction Minimum balance to be maintained

DEPOSITORY All joint holders can sign instruction No minimum balance required

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Entitled interest Uses balances in account Nomination is kept confidential.

Interest can be earned only by participated in stock leading scheme. Does not move balance in account without account holders authorized Signature & photograph of nominee to be provide.

In case of transaction in a bank ,anyone of joint holders can sign the cheques, Minimum funds balance has to be maintained in account prescribed by bank. A bank uses funds in banks for lending purpose. And nomination is kept confidential.

SERVICES OF DEPOSITORY

A depository established under the depositories act,1996 can provide services connecting with recording of allotment of securities or transfer of ownership in the record of a depository. Any person willing to avail the services of a depository can do by entering into an agreement with the depository through any of its DPs.The depository can provide depository services only through a DP.A depository cannot directly open account and provide services to clients. Every depository in its byelaws must state which securities are eligible for demat holding. Generally the following securities are eligible for dematerialisation.

a) Shares,scripts,stocks,bonds,debenture,stock or other marketable securities of a like nature in or any incorporated or other body corporate. b) Units of mutual funds, rights under collective investment scheme and venture capital funds, commercial paper, certificate or deposit, securities debt, money market,instrument,government securities and unlisted securities.
c)

Securities admitted to NSDL depository are notified to al DPs through circulars sent by email everyday. Investors
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are informed about these securities through NSDLs website www.nsdl.co.in

FUNCTIONS OF DEPOSITORY

DEMATERIALIZATION One of the primary functions of depository is to eliminate or minimize the movement of physical securities in market. This is achieved through dematerialized of securities. Dematerialization is the process of converting securities held in physical form into holding in book entry form.

ACCOUNT TRANSFER The depository gives effect s to all transfer resulting from the settlement of trades and other transaction between various beneficial owners by recording entries in the accounts between such beneficial owners.

TRANSFER AND REGISTRATION A transfer is the legal change of ownership of a security in the records of the issuers. For affecting a transfer, certain legal steps have to be taken endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerated the transfer process by registering, the ownership of entire issue in the name of the depository. Under a depository system, transfer of security occurs merely by passing bank entries in the records of the depositories, on the instructions of the beneficial owners. PLEDGE AND HYPOTHECATION Depositories allow the securities placed with them to be used to secure loans and other credits. In a manual environment, borrowers are required to deliver pledge securities in physical form to the lender. These securities are verified for authenticity often needs to be transferred in the name of order. All this takes time, it also has a money cost by way of transfer fees or stamp duty. If the
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borrower wants to substitute the pledge securities, these steps have to be repeated of depository services for pledge I hypothecation of the securities makes the process very simple and cost effective. The securities pledged /hypothecated are transferred to a segregated or collateral account through book entries in records of the depository.

CORPORATE ACTIONS A depository may handle corporate actions in two ways, in the first case-it merely provides information to the issuers about the persons entitled to receive corporate benefits. In other case, depository itself takes the responsibility of distribution of corporate benefits.

DEPOSITORY IN INDIA

NSDL, the first depository in India, established in August 1996 and promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialised form in the Indian capital market.

Promoters
(1) (2) (3)

Industrial Development Bank of India Limited Unit Trust of India National Stock Exchange of India Limited

Other Shareholders
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(1) (2) (3) (4) (5) (6) (7) (8) (9)

State Bank of India Oriental Bank of Commerce Citibank NA Standard Chartered Bank HDFC Bank Limited The Hongkong and Shanghai Banking Corporation Limited Deutsche Bank Dena Bank Canara Bank Bank of India

(10) Union

2.. CENTRAL DEPOSITORIES SERVICES LIMITED (CDSL)

The Central Depository Services India Limited (CDSL) was established in 1999 and is second securities depository in India. Its objectives to provide conveinnent, dependable and secure depository services and facilitates holdings of Demats (securities in electronic form).Its networks covers 100 cities and offers always on connectivity to around 500 centres nationwide. The company has handled demat for over 8000 million securities settlements. The number is still growing and will continue since the government plans to phase out physical trading of shares. To open your demat account, you first need to select a Depository Participant or DP of you convenience.CDSL has a host of top-notch DPs spread across the length and breadth of the country. A depository facilitates holding of securities in electronic form and enables securities transactions to be processed by book entry by a Depository Participant, who as an agent of depository offers depository services to investors. According to SEBI guidelines, financial institutions,banks,custodians,stock brokers etc. are eligible to act as DPs.The
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investor who is known as beneficial owner(BO) has to open a demat account through any DP for dematerialization of his holdings and transferring securities. A demat with CDSL can be opened only through a CDSL registered DP.The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of securities holdings and transcations.The depository system has effectively eliminated paper-based certificates which are prone to b fake, forged and resulting in bad deliveries.CDSLofers an efficient and instantaneous transfer of securities. CDSL was promoted by Bombay Stock Exchange Limited(BSE) jointly leading with State Bank of India, Bank of India,HDFC,Bank of Baroda, Standard chartered Bank.

DEMAT ACCOUNT Demat refers to a dematerialised account. Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account.

Account opening procedure 1. Select, approach & collect DAOF (Depository Account Opening Form) 2. Fill & submit the DAOF along with all required documents 3. Verification of all the documents

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4. Agreement signed between investor and depository participant. 5. Open depository account, generates client ID & transmits all the details to depository 6. DP allots client ID number & informs the client. Demat Benefits

The benefits are enumerated below: A safe and convenient way to hold securities; Immediate transfer of securities; No stamp duty on transfer of securities; Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.; Reduction in paperwork involved in transfer of securities; Reduction in transaction cost; No odd lot problem, even one share can be sold; Nomination facility; Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately; Transmission of securities is correspondence with companies; done by DP eliminating

DELIVERY INSTRUCTION SLIP

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To give the delivery one has to fill a form called Delivery Instruction Slip (DIS). DIS may be compared to cheque book of a bank account. The following precautions are to be taken in respect of DIS: Ensure and insist with DP to issue DIS book.

Ensure that DIS numbers are pre-printed and DP takes acknowledgment for the DIS booklet issued to investor. Ensure that your account number [client id] is pre-stamped. If the account is a joint account, all the joint holders have to sign the instruction slips. Instruction cannot be executed if all joint holders have not signed.

Avoid using loose slips. Do not leave signed blank DIS with anyone viz., broker/subbroker, DPs or any other person/entity. Keep the DIS book under lock and key when not in use.

CONTENTS OF DI SLIP

Market type - The DI slip contains the market type for which securities are being transferred to Cash market.

Settlement number - The DI slip contains this number of Trading periods of market segments in which securities being transferred to Cash market.

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Clearing member - CM account is identified with a number called 'CMBP-ID'. The DI slip should contain the CM-BP-ID in which the trade was done

Demat Conversion (Dematerialisation) Converting physical holding (dematerializing securities) into electronic holding

In order to dematerialize physical securities one has to fill in a DRF (Demat Request Form) which is available with the DP and submit the same along with physical certificates one wishes to dematerialize. Separate DRF has to be filled for each ISIN Number. The complete process of dematerialization is outlined below: Surrender certificates for dematerialization to your depository participant. Depository participant intimates Depository of the request through the system. Depository participant submits the certificates to the registrar of the Issuer Company. Registrar depository. confirms the dematerialization request from

After dematerializing the certificates, Registrar updates accounts and informs depository of the completion of dematerialization. Depository updates its accounts and informs the depository participant. Depository participant updates the demat account of the investor.

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Rematerialisation

The process of converting electronic holdings (demat shares) back into Physical Certificates is called Rematerialisation. If one wishes to get back his securities in the physical form one has to fill in the RRF (Remat Request Form) and request his DP for rematerialisation of the balances in his securities account. The process of rematerialisation is outlined below; One makes a request for rematerialisation. Depository participant intimates depository of the request through the system. Depository confirms rematerialisation request to the registrar. Registrar updates accounts and prints certificates. Depository updates accounts and downloads details to depository participant. Registrar dispatches certificates to investor.

TRANSMISSION

. Transmission is the process by which securities of a deceased account holder are transferred to the account of the surviving joint holder(s)/ legal heirs / nominee of the deceased account holder. Process of transmission in case of dematerialised holdings is more convenient as the transmission formalities for all securities held in a demat account can be completed by submitting documents to your DP whereas in case of physical securities the surviving joint holder(s)/ legal heirs/ nominee has to correspond independently with each company in which shares are held.
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MUTUAL FUNDS, PENSION FUNDS AND FINANCIAL INSTITUTIONS The meaning of above terms is as follows:Pension Fund A pension fund is a pool of assets forming an independent legal entity that are bought with the contributions to a pension plan for the exclusive purpose of financing pension plan benefits. Mutual fund-Amutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually. Financial Institution A financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are highly regulated by government bodies. Broadly speaking, there are three major types of financial institution:1) Deposit -taking institutions that accept and manage deposits and make loans (this category includes banks, credit unions, trust companies, and mortgage loan companies); 2) Insurance companies and pension funds; and 3) Brokers, underwriters and investment funds.

Impact of capital market on Indian Economy

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1. Long term finance for corporate and government:-The capital market is the market for securities, where companies and governments can raise long term funds. Selling stock and selling bonds are two ways to generate capital and long term funds. It provides a new avenue to corporate and government to raise funds for long term. 2. Helps to bridge investment savings gap:-It is seen mostly in case of developing countries that they suffer from investment savings gap . This gap means that funds available fall far short of the amount needed to stimulate economic development.Thus this gap hinders the economic growth of a developing country like India.In such a situation capital market plays an important role . Capital market expand the investment options available in the country , which attracts portfolio investments from are also facilitated abroad. Domestic savings by the availability of additional investment options. This enables to bridge the gap between investment and savings and paves the way for economic development .Indias improving macroeconomic fundamentals, a sizeable skilled labour force and greater integration with the world economy have increased.Indias global competitiveness, placing the country on the radar screens of investors the world over. The global ratings agencies Moodys and Fitch have awarded India investment grade ratings, indicating comparatively low sovereign risks. These positive dynamics have led to a sustained surge in Indias equity markets since 2003 ,attracting sizeable capital from foreign investors. The net cumulative portfolio flows from 2003-2006 ( bonds & equities) amounted to $35 billion. In current year (from Jan toJuly) the Foreign Institutional Investors have pumped in over $6 billion or around Rs . 29,940 cr. 3. Cost effective mode of raising finance :Capital market in any country provides the corporate and government to raise long term finance at a low cost as compared to other modes of raising finance .Therefore capital market is important, more so for India as it embarks on the path of becoming a developed country. 4. Provides an avenue for investors to park their surplus funds :Capital market provides the investors both domestic as well as foreign ,various instruments to invest their surplus funds. Not only it provides an avenue to park surplus funds but it also helps the investors to reap decent rewards on their investment. This realisation has resulted in increased investments in capital market both from domestic as well as foreign investors in Indian capital market. Also there is an opportunity for investors to diversify their investment portfolio, as wide range of instruments for investment are available in capital market.

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5. Conducive to implementation of Monetary Policy:-Through open Market Operation (OMO), the Reserve Bank of India controls the cost and availability of money supply in the Indian economy.Thus when RBI follows expansionary monetary policy it purchases government securities from the Bond market and when it intends to contract the money supply in the economy it sells the securities from the secondary bond market . Because of these operation there is also an impact on the interest rates , which in turn impacts the cost of the funds in the economy. Thus capital market helps the RBI to check the cost and availability of funds in the economy. 6.Indicates the state of the economy:Capital market also indicate the state of the economy. It is said to be the face of the economy. This is so because when capital market is stable , investments flow into capital market from within as well as outside the country , which indicates that the future prospects of the economy are good.

FACTORS AFFECTING CAPITAL MARKET IN INDIA The capital market is affected by a range of factors . Some of the factors which influence capital market are as follows:a)Performance of domestic companies:The performance of the companies or rather corporate earnings is one of the factors which has direct impact or effect on capital market in a country. Weak corporate earnings indicate that the demand for goods and services in the economy is less due to slow growth in per capita income of people . Because of slow growth in demand there is slow growth in employment which means slow growth in demand in the near future. Thus weak corporate earnings indicate average or not so good prospects for the economy as a whole in the near term. In such a scenario the investors ( both domestic as well as foreign ) would be wary to invest in the capital market and thus there is bear market like situation. The opposite case of it would be robust corporate earnings and its positive impact on the capital market. . b)Environmental Factors :Environmental Factor in Indias context primarily means- Monsoon .-In
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India around 60 % of agricultural production is dependent on monsoon. Thus there is heavy dependence on monsoon. The major chunk of agricultural production comes from the states of Punjab , Haryana &Uttar Pradesh. Thus deficient or delayed monsoon in this part of the country would directly affect the agricultural output in the country. Apart from monsoon other natural calamities like Floods, tsunami, drought, earthquake, etc. also have an impact on the capital market of a country. The Indian Met Department (IMD) on 24th June stated that India would receive only 93 % rainfall of Long Period Average (LPA). This piece of news directly had an impact on Indian capital market with BSE Sensex falling by0.5 % on the 25th June . The major losers were automakers and consumer goods firms since the below normal monsoon forecast triggered concerns that demand in the crucial rural heartland would take a hit. This is because a deficient monsoon could seriously squeeze rural incomes, reduce the demand for everything from motorbikes to soaps and worsen a slowing economy.

c)Macro Economic Numbers :The macro economic numbers also influence the capital market. It includes Index of Industrial Production (IIP) which is released every month, annual Inflation number indicated by Wholesale Price Index (WPI) which is released every week, Export Import numbers which are declared every month, Core Industries growth rate ( It includes Six Core infrastructure industries Coal, Crude oil, refining, power, cement and finished steel) which comes out every month, etc. This macro economic indicators indicate the state of the economy and the direction in which the economy is headed and therefore impacts the capital market in India. A case in the point was declaration of core industries growth figure. The six Core Infrastructure Industries Coal, Crude oil, refining, finished steel, power & cement grew 6.5% in June , the figure came on the 23 rd of July and had a positive impact on the capital market with the sensex and nifty rising by 388 points & 125 points respectively. d) Global Cues :In this world of globalisation various economies are interdependent and interconnected. An event in one part of the world is bound to affect other parts of the world , however the magnitude and intensity of impact would vary. Thus capital market in India is also affected by developments in other parts of the world i.e. U.S. , Europe, Japan , etc.
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Global cues includes corporate earnings of MNCs, consumer confidence index in developed countries, jobless claims in developed countries, global growth outlook given by various agencies like IMF, economic growth of major economies, price of crude oil, credit rating of various economies given by Moodys, S & P, etc. An obvious example at this point in time would be that of subprime crisis & recession. Recession started in U.S. and some parts of the Europe in early 2008 .Since then it has impacted all the countries of the worlddeveloped, developing , less- developed and even emerging economies. e)Political stability and government policies:For any economy to achieve and sustain growth it has to have political stability and pro- growth government policies. This is because when there is political stability there is stability and consistency in governments attitude which is communicated through various government policies. The vice- versa is the case when there is no political stability .So capital market also reacts to the nature of government, attitude of government, and various policies of the government. f)Growth prospectus of an economy:When the national income of the country increases and per capita income of people increases it is said that the economy is growing . Higher income also means higher expenditure and higher savings.This augurs well for the economy as higher expenditure means higher demand and higher savings means higher investment. Thus when an economy is growing at a good pace capital market of the country attracts more money from investors, both from within and outside the country and vice -versa. So we can say that growth prospects of an economy does have an impact on capital markets.

g)Investor Sentiment and risk appetite :Another factor which influences capital market is investor sentiment and their risk appetite .Even if the investors have the money to invest but if they are not confident about the returns from their investment , they may stay away from investment for some time.At the same time if the investors have low risk appetite , which they were having in global and Indian capital market some four to five months back due to global financial meltdown and recessionary situation in U.S. & some parts of Europe , they may stay away from investment and wait for the right time to come.

OBJECTIVE OF THE STUDY

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 THE ROLE OF CAPITAL MARKET.

GROWTH OF REGIONAL STOCK EXCHANGES.

TO KNOW ABOUT PARTICIPANTS IN CAPITAL MARKET

TO KNOW ABOUT IMPACT OF CAPITAL MARKET

TO KNOW ABOUT FACTORS AFFECTING CAPITAL MARKET

Chapter -2
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RESEARCH METODOLOGY RESEARCH METHODOLOGY

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.

RESEARCH DESIGN Research Design is a arrangement of the conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with the economy in procedure. The research problem having been formulated in clear cut terms helps the researcher to prepare a research design. The preparation of such a design facilities in conducting it in efficient manner as possible. As the aim of the research in this project is to find the reasons behind starting of regional stock exchanges, their growth and downfall. Diagnostic Research aims at determining the frequency with which something occurs or its association with something else.

DATA COLLECTION :- The data will be collected by both primary as well as :-secondary sources.

PRIMARY DATA-:Primary data which are collected afresh and

happens to be actual in character. So, the Structured Interviewed Method will be used for collection of primary data by visiting various brokers and professionals. SECONDARY DATA Secondary data refers to the information, which has already been collected. So, the sources of secondary information will include various newspapers, magazines, journals, books and internet etc. SAMPLING DESIGN
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A Sample Design is a definite plan for obtaining a sample from a given population. It refers to the technique or procedure, the researcher would adopt in selecting items from a sample and is determined before data are collected. SAMPLE SIZE Sample size refers to the number of items to be selected from the universe to constitute a sample. Due to constraints like time and money, the sample size selected for the research is twenty

five brokers and professional etc.

SAMPLING PLANNING Sampling plan is a technique for obtaining the sample from given population Probability sampling method is selected, under which every item in the universe has an equal chance of inclusion. The probability sampling used in the project will be Simple Random Sampling

DATA ANALYSIS
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Q.1 Are you aware of capital market?

OBJECTIVE:- The purpose of asking this question was to know that how many investors know about capital market.

Most of the persons know about capital market. Rest who dont know are uneducated or invest through brokers.

Q.2 Are you a regular investor?

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OBJECTIVE:- The purpose of asking this question was to know that how many investors are trading regularly in capital market.

Most of the persons are regular investors & they are doing intraday trade.

Q.3. What is the amount of your investment?

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OBJECTIVE:- The purpose of asking this question was to know that how much money investors are investing in trading in capital market.

RESPONSE >10000 10000-500000 500000-1000000 1000000> Total

RESPONDENT 4 5 16 1 25

Most of the investors are investing amount B/w 500000-1000000.which is in the reach of many investors & enjoy less brokerage & more return.

Q.4. How many transactions you do during a month?

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OBJECTIVE:- The purpose of asking this question was to know that how many transactions a investor do in capital market in a month

RESPONSE 1-10 >20 >30 Above 50 Total

RESPONDENT 2 4 6 13 25

Most of the invsestors due to investing in intraday do more than 50 transactions in a month.

Q.5 Name any five Regional Stock Exchanges?

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OBJECTIVE:- The purpose of asking this question was to know that which exchanges are favourite among the brokers and professional (Respondents). The most popular regional stock exchanges among them are as follows:-

1. LUDHIANA 2. BOMBAY 3. KANPUR

4. CALCUTTA 5. JAIPUR 6. DELHI

7. COCHIN 8. BANGALORE 9. AHMEDABAD

The reason behind popularity of Ludhiana is because of the reason that respondents were of Punjab region only and Mumbai is more popular because of the reason being oldest in the country. And others are popular because these stock was having very huge turnover in past.

Q.6 Where will you prefer to transact?

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OBJECTIVE:-To know the persons view on which exchange he trade. Although the above said regional stock exchanges are popular but still they are not interested to transact on that they trade only at BSE and NSE they dont trade on any regional stock exchange.

RESPONSE BSE NSE BOTH TOTAL

RESPONDENT 0 5 20 25

30 25 20 15 10 5 0 respondent bse nse both total

No respondent is interested to transact to trade on any of the regional stock exchange, even on Bombay Stock Exchange, from the above table we can say that no one is interested i trading at BSE only the most persons like both BSE and NSE in the capital market. Q.7 Any reason for your preference?

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Objective:- This question was asked to know why they are moving towards NSE and BSE. The respondents answer that why they are choosing BSE or NSE only were due to the following reasons:-

1. More liquidity 2. More terminals of NSE or easy accessibility of NSE 3. More volatility at NSE among scrips

Q.8 In which segment do you wish to invest?

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OBJECTIVE:- This question was asked to know what their view that which investment give them maximum return.
25

20

RESPONSE Equity Mutual Funds Futures & Options TOTAL

RESPONDENT 16 5 4 25
5 10 equity 15 mutual funds future & options total

Most of the investors want to invest in equity due to intraday aspect & knowledge about it.

Q.9. Which form of media you select to gain information about capital market?

OBJECTIVE:- This question was asked to know what their view that which form of media will give them maximum information & they act upon it
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25

20

RESPONSE Newspaper Magazines News channel Broker TOTAL

RESPONDENT 5 0 14 6 25
5 10 15 ne wspape r magazine ne ws channel broke r total

Majority of the investors rely upon news channel & brokers

Q.10 Would you prefer any Foreign Stock Exchange in India?

OBJECTIVE:- This question was to know what is their view that whether any foreign stock exchange (NASDAQ, LONDON STOCK EXCHANGE etc.) should be brought in India or not.
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RESPONSE YES NO TOTAL

RESPONDENT 15 10 25

25

20

15 yes 10 no total

0 respondent

It is clear from the above table that the reaction is not very clear on the question of any foreign exchange in India; only 15 people i.e. 60% people are in favour of the coming foreign exchange and 40% are against this pattern.

30

25

agree strongly agree strongly disagree disagree

20

Q.11 Do you think Trading in RSEs should start again?

15

OBJECTIVE:- The peoples view on this was demanded for the purpose that should they want trading at small level or not. can't say 10 As the NSE grows small stock exchanges go down and SEBI or Central Gov.t total 5 does not take any concrete steps for their survival. From the study it was found that almost 95% persons are against the idea of starting trading at regional stock exchanges again. All the brokers and independent professionals view on this is 0
nt s re sp on de
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that if one National Level Stock Exchange is doing very good and are fulfilling the need of small towns and doing good business, then what is the need of regional level stock exchanges.

RESPONSE AGREE STRONGLY AGREE STRONGLY DISAGREE DISAGREE CANT SAY TOTAL

RESPONDENT 5 0 14 6 0 25

From the above table it is clear that 56% people are strongly against the view that regional stock exchanges should be started and no one is interested in restarting of trading at regional stock exchanges. Only few people are saying that regional stock exchanges are of the view that regional stock exchanges should be totally closed down or not they are not very clear in ideas.

Q.12 Do you think SEBI is doing satisfactory, for restarting of trading at RSEs?

OBJECTIVE:- This question was asked with a view to know whether govt should make some efforts in this regard.
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Brokers view on this was totally different from the professionals, brokers feel that govt should not do anything and the present system is very well and RSEs should work as broker of NSE or BSE. Professionals view on this is that govt should take some concrete steps for rules and regulations for NSE and take some steps that NSE alone cant create monopoly or does not like this that it take decision at its own and does not take care of small RSEs or investors and companies also.
25

RESPONSE AGREE STRONGLY AGREE STRONGLY DISAGREE DISAGREE CANT SAY TOTAL

RESPONDENT 17 2 3
10 20 Agree strongly agree 15 strongly disagree disagree can't say 5 total

2 1 25
0

Majority of the persons agree with this that SEBI is doing satisfactory work.

Q.13Do you think foreign markets affect Indian capital market?

OBJECTIVE:- This question was asked with a view to know whether foreign markets affect Indian capital market.
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RESPONSE AGREE STRONGLY AGREE STRONGLY DISAGREE DISAGREE CANT SAY TOTAL

RESPONDENT 5 14 0 6 0 25

30 25 20 15 10 5 0
de n t

agree strongly agree strongly disagree disagree can't say total

Majority of the persons strongly agree that foreign markets affect Indian capital market adversely.

Chapter-3
FINDINGS & SUGGESTIONS

es p

on

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Findings

This study can be helpful for knowing about the role of capital market in India. Capital market plays a vital role .

Role of Indian capital market.

It will also helpful in determining the various benefits of holding Demat Accounts.

It will also helpful for the investors to look for a best Depository Participants offering the various depository services..

Various functions of capital market.

Suggestions

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Some of the points which are taken in regard regarding this are:-

Legal framework should be properly upgraded.

Proper check on intermediaries should be there.

Demat account opening charges should be made free of cost to attract more and more investors.

Demat account opening procedure should be made more simple.

Knowledge providing sites for investors should be entertained.

Proper check on working of Depository should be there

Proper control on issue of securities

Softwares should be regularly upgraded

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Chapter-4

CONCLUSION

CONCLUSION The capital market of India have a dominant impact on the economy,investors,stock exchanges .Decadence of RSEs has not affected the brokers of these exchanges to the extent it has hurt the millions of shareholders of the regionally listed companies who have awoken to find that there is no market for their holdings. To add to this, there are other disturbing developments like several of the flourishing companies going abroad to raise capital, some of the thriving companies, particularly multinational companies, delisting their shares, etc. Indian stock markets do not any longer attract the rising levels of savings in the economy. We have seen how the business of regional stock exchanges across the globe have been declining and INDIA has been no exception to that, all the regional stock exchanges now have almost nil trading volumes. There have been merger/alliances at the international level and the same thing is being talked in India too. Trading volumes of the regional stock exchanges have been reduced during the last 5 years, and in bid to arrest the down fall/ closure of these organisations, SEBI permitted them to form subsidiary companies to obtain trading rights of bigger stock exchanges like NSE and BSE. Another reason for the reduction in turnover of the regional stock exchanges was because these exchanges could not match the financial resource as to NSE and BSE. So by forming subsidiary companies and subsequently trading at NSE/BSE into opportunities. Regional stock exchanges are now providing the trading opportunities to members and investors through bigger markets. But the downfall of regional stock exchanges has denied the trading opportunities to smaller companies which are not listed at bigger stock exchanges and investors have blocked their money. Steps are necessarily taken up by the regulatory bodies so as to groom the present capital market to reach at its peak & give fruitful results.
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Chapter-5
BIBLIOGRAPHY

WEBSITES:

www.nseindia.com www.bseindia.com www.moneycontrol.com www.sebi.gov.in www.capitalmarket.com

REFRENCES NEWSPAPER THE ECONOMICE TIMES

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CHAPTER-6 QUESTIONNAIRE Q.1 Are you aware of capital market? Ans Yes No Cant say

Q.2 Are you a regular investor? Ans Yes No Cant say

Q.3. What is the amount of your investment? Ans >10000 50000-500000

500000-1000000 10000000> Q.4. How many transactions you do during a month? Ans. 1-10 >30 >20 above 50

Q.5 Name any five Regional Stock Exchanges? Ans. 1. 4. 2. 5. 3.

Q.6 Where will you prefer to transact? Ans. NSE Any RSE Q.7 Any reason for your preference? Ans. Easy to approach 2. More liquidity BSE

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Q.8. In which segment do you wish to invest? Ans Equity Mutual Funds Futures & Options

Q.9 Which form of media you select to gain information about capital market? Ans Newspaper Magazines News channel Broker

Q.10 Would you prefer any Foreign Stock Exchange in India? Ans. Yes No Cant say

Q.11 Do you think Trading in RSEs should start again? Ans. Agree Strongly Agree Disagree Strongly Disagree

Q.12 Do you think SEBI is doing satisfactory, for restarting of trading at RSEs? Ans. Agree Strongly Agree Disagree Strongly Disagree Cant say

Q.13. Do you think foreign markets affect Indian capital market? Ans. Agree Strongly Agree Disagree Strongly Disagree Cant say

Suggestions if any:-

Signature Date

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