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Submitted in Partial Fulfillment of the Requirement for the Degree Of MASTER OF BUSINESS ADMINISTRATION (Session 2011-2013) (TRAINING AT LUDHIANA STOCK EXCHANGE)

Guided by: Mrs..Pooja M. kohli Executive Director Ludhiana Stock Exchange


Submitted by: Jatinder Singh M.B.A- 1st Batch-3rd

I wish to express my sincere gratitude to Mrs. Pooja M. Kohli (Executive Director at Ludhiana Stock Exchange ) for giving me the opportunity to do my summer industrial training at his highly esteemed Organization. I am extremely thankful to my Faculty Guide Prof. Shivani Bector, MATA GUJRI CILLEGE, FATEHGARH SAHIB to give me suggestions during my Training. I am also thankful to all others who helped me directly or indirectly towards the completion of my works.


I hereby declare that this report on Perception of Investors about stock

I declare that this project is the result of my own effort and has not been submitted to any other institution for the award of any Degree or diploma.

S. NO.
CHAPTER 1. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 CHAPTER 2. CHAPTER 3. 3.1 3.2 3.3 3.4 3.5 3.6 CHAPTER 4. CHAPTER 5. CHAPTER 6. CHAPTER 7.



5-13 14-16 17-20 21-23 24-26 27-28 29 30-35 36 37 37 37 37 37 38-51 52 53 54 55 56-57

The capital market is the market for securities, where Companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year. A nation's capital market includes such financial institutions as banks, insurance companies, and stock exchanges that channel long-term investment funds to commercial and industrial borrowers. Unlike the money market, on which lending is ordinarily short term, the capital market typically finances fixed investments like those in buildings and machinery.

Nature and Constituents: The capital market consists of number of individuals and institutions (including the government) that canalize the supply and demand for longterm capital and claims on capital. The stock exchange, commercial banks, co-operative banks, saving banks, development banks, insurance companies, investment trust or companies, etc., are important constituents of the capital markets. The capital market has three important Components, namely the suppliers of loanable funds, the borrowers and the Intermediaries who deal with the leaders on the one hand and the Borrowers on the other.

Indian Financial Market consists of the following markets:

Capital Market/ Securities Market o Primary capital market o Secondary capital market Debt Market Primary capital market- A market where new securities are bought and sold for the first time Types of issues in Primary market Initial public offer (IPO) (in case of an unlisted company), Follow-on public offer (FPO), Rights offer such that securities are offered to existing shareholders, Preferential issue/ bonus issue/ QIB placement Composite issue, that is, mixture of a rights and public offer, or offer for sale (offer of securities by existing shareholders to the public for subscription). Secondary Market: In the secondary market the investors buy / sell securities through stock exchanges. Trading of securities on stock exchange results in exchange of money and securities between the investors. Secondary market provides liquidity to the securities on the exchange(s) and this activity commences subsequent to the original issue. For example, having subscribed to the securities of a company, if one wishes to sell the same, it can be done through the secondary market. Similarly one can also buy the securities of a company from the secondary market. A stock exchange is the single most important institution in the secondary market for providing a platform to the investors for buying and selling of securities through its members. In other words, the stock exchange is the place where already issued securities of companies are bought and sold by investors. Thus, secondary market activity is different from the primary market in which the issuers issue securities directly to the investors. Traditionally, a stock exchange has been an association of its members or stock brokers,

formed for the purpose of facilitating the buying and selling of securities by the public and institutions at large and regulating its day to day operations. Of late however, stock exchanges in India now operate with due recognition from Securities and Exchange Board of India (SEBI) / the Government of India under the Securities Contracts (Regulation) Act, 1956. The stock exchanges are either association of persons or are formed as companies. There are 24 recognized stock exchanges in India out of which one has not commenced its operations. Out of the 23 remaining stock exchanges, currently only on four stock exchanges, the trading volumes are recorded. Most of regional stock exchanges have formed subsidiary companies and obtained membership of Bombay Stock Exchange, (BSE) or National Stock Exchange (NSE) or both. Members of these stock exchanges are now working as subbrokers of BSE / NSE brokers. Securities listed on the stock exchange(s) have the following advantages: The stock exchange(s) provides a fair market place. It enhances liquidity. Their price is determined fairly. There is continuous reporting of their prices. Full information is available on the companies. Rights of investors are protected.

Settlement cycles:
Settlement is the process whereby the trader who has made purchases of scrip makes payment and the seller selling the scrip delivers the securities. This settlement process is carried out by Clearing Houses for the stock exchanges. The Clearing House acts like an intermediary in every transaction and acts as a seller to all buyers and buyer to all sellers. Significance of Capital Markets A well functioning stock market may help the development process in an economy through the following channels: 1. Growth of savings, 2. Efficient allocation of investment resources, 3. Better utilization of the existing resources. In market economy like India, financial market institutions provide the avenue by which long-term savings are mobilized and channelled into investments. Confidence of the investors in the market is imperative for the growth and development of the market. For any stock market, the market Indices is the barometer of its performance and reflects the prevailing sentiments of the entire economy. Stock index is created to provide investors with the information regarding the average share price in the stock market. The ups and downs in the index represent the movement of the equity market. These indices need to represent the return obtained by typical portfolios in the country. Generally, the stock price of any company is vulnerable to three types of news: Company specific Industry specific Economy specific An all share index includes stocks from all the sectors of the economy and thus cancels out the stock and sector specific news and events that affect stock prices, (law of portfolio diversification) and reflect the overall performance of the company/equity market and the news affecting it.

The most important use of an equity market index is as a benchmark for a portfolio of stocks. All diversified portfolios, belonging either to retail investors or mutual funds, use the common stock index as a yardstick for their returns. Indices are useful in modern financial application of derivatives. Capital Market Instruments some of the capital market instruments are: Equity Preference shares Debenture/ Bonds ADRs/ GDRs Derivatives Shares The total capital of a company may be divided into small units called shares. For example, if the required capital of a company is US $5,00,000 and is divided into 50,000 units of US $10 each, each unit is called a share of face value US $10. A share may be of any face value depending upon the capital required and the number of shares into which it is divided. The holders of the shares are called share holders. The shares can be purchased or sold only in integral multiples. Equity shares signify ownership in a corporation and represent claim over the financial assets and earnings of the corporation. Shareholders enjoy voting rights and the right to receive dividends; however in case of liquidation they will receive residuals, after all the creditors of the company are settled in full. A company may invite investors to subscribe for the shares by the way of: Public issue through prospectus Tender/ book building process Offer for sale Placement method Rights issue

Stocks The word stock refers to the old English law tradition where a share in the capital of the company was not divided into shares of fixed denomination but was issued as one chunk. This concept is no more prevalent, but the word stock continues. The word joint stock companies also refers to this tradition. Debentures/ Bonds The term Debenture is derived from the Latin word debere which means to owe a debt. A debenture is an acknowledgment of debt, taken either from the public or a particular source. A debenture may be viewed as a loan, represented as marketable security. The word bond may be used interchangeably with debentures. Debt instruments with maturity more than 5 years are called bonds Yields Most common method of calculating the yields on debt instrument is the yield to maturity method, the formula is as under: YTM = coupon rate + prorated discount / (face value + purchase price)/2 Preference shares Preference shares are different from ordinary equity shares. Preference share holders have the following preferential rights (i) The right to get a fixed rate of dividend before the payment of dividend to the equity holders. (ii) The right to get back their capital before the equity holders in case of winding up of the company. IPO Conditions for IPO: (all conditions listed below to be satisfied) Net tangible assets of 3 crore in each of the preceding 3 full years, of which not more than 50% are held in monetary assets: Track record of distributable profits for 3 out of the immediately preceding 5 years: Net worth of 1 crore in each of the preceding three full years; Issue size of proposed issue + all previous issues made in the same financial year does not exceed 5 times its pre-issue net worth as per the audited balance sheet of the preceding financial year;

In case of change of name within the last one year, 50% of the revenue for the preceding 1 full year earned by it from the activity indicated by the new name. Derivatives A derivative picks a risk or volatility in a financial asset, transaction, market rate, or contingency, and creates a product the value of which will change as per changes in the underlying risk or volatility. The idea is that someone may either try to safeguard against such risk (hedging), or someone may take the risk, or may engage in a trade on the derivative, based on the view that they want to execute. The risk that a derivative intends to trade is called underlying. A derivative is a financial instrument, whose value depends on the values of basic underlying variable. In the sense, derivatives is a financial instrument that offers return based on the return of some other underlying asset, i.e the return is derived from another instrument. The best way will be take examples of uncertainties and the derivatives that can be structured around the same. Stock prices are uncertain - Lot of forwards, options or futures contracts are based on movements in prices of individual stocks or groups of stocks. Prices of commodities are uncertain - There are forwards, futures and options on commodities. Interest rates are uncertain - There are interest rate swaps and futures. Foreign exchange rates are uncertain - There are exchange rate derivatives. Weather is uncertain - There are weather derivatives, and so on.


DERIVATIVES PRODUCTS Some significant derivatives that are of interest to us are depicted in the accompanying graph: Major types of derivatives FUTURES, FORWARDS AND OPTIONS An option is different from futures in several ways. At practical level, the option buyer faces an interesting situation. He pays for the options in full at the time it is purchased. After this, he only has an upside. There is no possibility of the options position generating any further losses to him. This is different from futures, where one is free to enter, but can generate huge losses. This characteristic makes options attractive to many market participants who trade occasionally, who cannot put in the time to closely monitor their futures position. Buying put options is like buying insurance. To buy a put option on Nifty is to buy insurance which reimburses the full amount to which Nifty drops below the strike price of the put option. This is attractive to traders, and to mutual funds creating guaranteed return products. FORWARDS A forward contract is an agreement to buy or sell an asset on a specified date for a specified price. One of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date for the same price, other contract details like delivery date, price and quantity are negotiated bilaterally by the parties to the contract. The forward contracts are normally traded outside the exchange. FUTURES Futures contract is a standardized transaction taking place on the futures exchange. Futures market was designed to solve the problems that exist in forward market. A futures contract is an agreement between two parties, to buy or sell an asset at a certain time in the future at a certain price, but unlike forward contracts, the futures contracts are standardized

and exchange traded To facilitate liquidity in the futures contracts, the exchange specifies certain standard quantity and quality of the underlying instrument that can be delivered, and a standard time for such a settlement. Futures exchange has a division or subsidiary c alled a clearing house that performs the specific responsibilities of paying and collecting daily gains and losses as well as guaranteeing performance of one party to other. A futures' contract can be offset prior to maturity by entering into an equal and opposite transaction. The standardized items in a futures contract are: Quantity of the underlying Quality of the underlying The date and month of delivery The units of price quotation and minimum price change OPTIONS An option is a contract, or a provision of a contract, that gives one party (the option holder) the right, but not the obligation, to perform a specified transaction with another party (the option issuer or option writer) according to the specified terms. The owner of a property might sell another party an option to purchase the property any time during the next three months at a specified price. For every buyer of an option there must be a seller. The seller is often referred to as the writer. As with futures, options are brought into existence by being traded, if none is traded, none exists; conversely, there is no limit to the number of option contracts that can be in existence at any time. As with futures, the process of closing out options positions will cause contracts to cease to exist, diminishing the total number. Thus an option is the right to buy or sell a specified amount of a financial instrument at a pre-arranged price on or before a particular date. There are two options which can be exercised: Call option, the right to buy is referred to as a call option. Put option, the right to sell is referred as a put option.



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 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, sunami, 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 by 0.5 % 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. D) Global Cues :In this world of globalization 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. 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. 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 do 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 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.


What is Investment ?

Meaning In simple terms, Investment refers to purchase of financial assets. While Investment Goods are those goods, which are used for further production.

Investment implies the production of new capital goods, plants and equipments


Different types of Investment available in India In this article you will find many available options to make an investment. A number of options are available today for a person to invest his money and make a decent return. Lets take a skim through all those schemes. 1. Financial Assests (that can not be traded) A number of financial assets can not be traded with a third party. Such schemes are listed below.

Bank Deposits: Its simple and every one knows about it. Post Office Savings Provident Funds Chit Funds Company Deposits

2. Bonds Bonds are debt securities or long term debt instruments. An authorized issuer of bond promises the person who hods the bond to pay interest on particular periods and to return the principal after a fixed period (at the time of maturity of the bond). Different types of bonds are;

Government Securities Government Agency Securities PSU Bonds Private Debt Securities Preference Shares


3. Stocks Stocks represent ownership. A person who holds stocks of a particular company is treated as one of the many owners of the company and deserves a share of the net profit that company earns after all expenses. Stocks is one of the best investment options available and at the same time it demands knowledge about many fundamentals to make a decent return. Different types of stocks (as classified by financial analysts)

Growth Stocks Value Stocks Blue Chip Stocks Income Stocks

5. Mutual Funds Mutual Funds are a better investment option for those who cant find time to learn about stock market and its trends or those who dont understand its working correctly.Mutual funds are usually managed by a Private financial company or a Bank. Different types of mutual funds are;

Stock based schemes Fixed income schemes Monthly income schemes Tax saving schemes Hybrid schemes Balance schemes Sector schemes Floating rate schemes

6. Insurance Insurance is also a form of investment. Different types of insurance investments are;

Endowment assurance policy Money back policy Whole Life policy Term assurance policy Unit Linked Policy ULIP

7. Financial Derivatives These are financial instruments that are formed from value addition of the financial assets used for investment. Two types are there;

Options Futures



It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the business district of Bandra Kurla Complex complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947. Initially SEBI was a non statutory body without any statutory power. However in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act 1992. In April, 1998 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India. The SEBI is managed by six members, i.e. by the chairman who is nominated by central government & two members, i.e. officers of central ministry, one member from the RBI & the remaining two are nominated by the central government. The office of SEBI is situated at Mumbai with its regional offices at Kolkata, Delhi & Chennai.


FUNCTIONS AND RESPONSIBILITIES SEBI has to be responsive to the needs of three groups, which constitute the market:

the issuers of securities the investors the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasijudicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal. A second appeal lies directly to the Supreme Court. SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required under law. SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco. It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. More recently, in light of the global meltdown,it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI has increased the application limit for retail investors to Rs 2 lakh, from Rs 1 lakh at present.


POWERS For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are: 1. to approve bylaws of stock exchanges. 2. to require the stock exchange to amend their bylaws. 3. inspect the books of accounts and call for periodical returns from recognized stock exchanges. 4. inspect the books of accounts of a financial intermediaries. 5. compel certain companies to list their shares in one or more stock exchanges. SEBI Committees 1. Technical Advisory Committee 2. Committee for review of structure of market infrastructure institutions 3. Members of the Advisory Committee for the SEBI Investor Protection and Education Fund 4. Takeover Regulations Advisory Committee 5. Primary Market Advisory Committee (PMAC) 6. Secondary Market Advisory Committee (SMAC) 7. Mutual Fund Advisory Committee 8. Corporate Bonds & Securitization Advisory Committee 9. Takeover Panel 10. SEBI Committee on Disclosures and Accounting Standards (SCODA) 11. High Powered Advisory Committee on consent orders and compounding of offences 12. Derivatives Market Review Committee 13. Committee on Infrastructure Funds


Meaning Stock Exchange (also called Stock Market or Share Market) is one important constituent of capital market. Stock Exchange is an organized market for the purchase and sale of industrial and financial security. It is convenient place where trading in securities is conducted in systematic manner i.e. as per certain rules and regulations. It performs various functions and offers useful services to investors and borrowing companies. It is an investment intermediary and facilitates economic and industrial development of a country. Stock exchange is an organized market for buying and selling corporate and other securities. Here, securities are purchased and sold out as per certain well-defined rules and regulations. It provides a convenient and secured mechanism or platform for transactions in different securities. Such securities include shares and debentures issued by public companies which are duly listed at the stock exchange, and bonds and debentures issued by government, public corporations and municipal and port trust bodies. Stock exchanges are indispensable for the smooth and orderly functioning of corporate sector in a free market economy. A stock exchange need not be treated as a place for speculation or a gambling den. It should act as a place for safe and profitable investment, for this, effective control on the working of stock exchange is necessary. This will avoid misuse of this platform for excessive speculation, scams and other undesirable and anti-social activities.


Definitions of Stock Exchange

"Stock exchanges are privately organized markets which are used to facilitate trading in securities." The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as, "An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities." Features of Stock Exchange Characteristics or features of stock exchange are:1. Market for securities : Stock exchange is a market, where securities of corporate bodies, government and semi-government bodies are bought and sold. 2. Deals in second hand securities : It deals with shares, debentures bonds and such securities already issued by the companies. In short it deals with existing or second hand securities and hence it is called secondary market. 3. Regulates trade in securities : Stock exchange does not buy or sell any securities on its own account. It merely provides the necessary infrastructure and facilities for trade in securities to its members and brokers who trade in securities. It regulates the trade activities so as to ensure free and fair trade 4. Allows dealings only in listed securities : In fact, stock exchanges maintain an official list of securities that could be purchased and sold on its floor. Securities which do not figure in the official list of stock exchange are called unlisted securities. Such unlisted securities cannot be traded in the stock exchange.

5. Transactions effected only through members : All the transactions in securities at the stock exchange are effected only through its authorised brokers and members. Outsiders or direct investors are not allowed to enter in the trading circles of the stock exchange. Investors have to buy or sell the securities at the stock exchange through the authorised brokers only. 6. Association of persons : A stock exchange is an association of persons or body of individuals which may be registered or unregistered. 7. Recognition from Central Government : Stock exchange is an organised market. It requires recognition from the Central Government. 8. Working as per rules : Buying and selling transactions in securities at the stock exchange are governed by the rules and regulations of stock exchange as well as SEBI Guidelines. No deviation from the rules and guidelines is allowed in any case. 9. Specific location : Stock exchange is a particular market place where authorised brokers come together daily (i.e. on working days) on the floor of market called trading circles and conduct trading activities. The prices of different securities traded are shown on electronic boards. After the working hours market is closed. All the working of stock exchanges is conducted and controlled through computers and electronic system. 10. Financial Barometers : Stock exchanges are the financial barometers and development indicators of national economy of the country. Industrial growth and stability is reflected in the index of stock exchange.



Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised 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, the trading rights and ownership rights have been delinked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors.The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from theparticipation of market intermediaries.


In terms of organisation structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based.The day-to-dayoperations of the Exchange are managed by the Managing Director and a management team of professionals. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietory system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.



THE National Stock Exchange of India is a stock Exchange that is located in Mumbai, Maharashtra. The National Stock Exchange basically function in three market sections, that is, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) and WDM (Wholesale Debt Market Segment). It is important place where the trading of shares, debt etc takes place. It was in year 1992 that the National stock Exchange was for the first time incorporated in India. It was not regarded as a stock exchange at once. Rather, the national Stock exchange was incorporated as a tax paying company and had got the recognition of a stock exchange only in year 1993 the recognition was given under the provisions of the Securities Contracts (Regulation) Act, 1956. The National Stock exchange is highly active in the field of market capitalization and thus aiming it the ninth largest stock exchange in the said field. Similarly, the trading of the stock exchange in equities and derivatives is so high that it has resulted in high turnovers and thus making it the largest stock exchange in India. It is the stock exchange wherein there is the facility of electronic exchange offering investors. This facility is available in almost types of equitable transactions such as equities, debentures, etc. it is also the largest stock exchange if calculated in the terms of traded values.


LUDHIANA STOCK EXCHANGE INTRODUCTION OF LSE The Ludhiana Stock Exchange Limited (LSE was established in 1981, by Sh. S.P. Oswal of Vardhman Group and Sh. B.M. Munjal of Hero Group, leading industrial luminaries, to fulfill a vital need of having a Stock Exchange in the region of Punjab Himachal Pradesh Jammu & Kashmir and Union territory of Chandigarh. Since its inception, the stock exchange has grown phenomenally. The stock Exchange has played an important role in channelising savings into capital for the various industrial and commercial units of the state of Punjab and other parts of the company. The Exchange has facilitated the mobilization of funds by entrepreneurs from the public and thereby contributed in the overall, economic, industrial and social development of the state under its jurisdiction. Ludhiana Stock Exchange is one of the leading Regional Stock Exchange and has been in the forefront of other stock exchange in every spheres, whether it is formation of subsidiary for providing the platform of trading to investors, for brokers etc. in the era of Screen based trading introduced by national Stock exchange and Bombay stock Exchange, entering into the filed of Commodities trading or imparting education to the Public at large by way of starting Certificate Programmes in Capital Market. The vision and mission of stock Exchange is: Reaching small investors by providing services relating to Capital market including Trading Depository operations etc and creating Mass Awareness by way of education and training in the field of Capital market. To create educated investors and fulfilling the gap of skilled work force in the domain in Capital Market.


Further, the exchange has 295 members out of which 183 are registered with national Stock exchange as Sub- broker and 124 with Bombay Stock exchange as sub- brokers through our subsidiary.

Management The management of the Company comprises of 12 directors of which 5 are member directors and 5 Public Representatives being persons of eminent status from the field of finance, law and management, who are nominated by Ludhiana Stock Exchange after approval of their name from SEBI. Besides the Chief Executive Officer of company and Executive Director of the holding company (Ludhiana Stock Exchange) are on the Board of the company as ex-officio Directors. Operations of the company are run in a professional, transparent and fair manner keeping in view the interest of investors as well as other stake-holders. Organization

1.OBJECTIVES OF THE COMPANY LSE Securities Limited is a subsidiary of the Ludhiana Stock Exchange, which was formed with an objective to enhance business and investment opportunities for the investors and members of Ludhiana Stock Exchange at large, through innovative products by encompassing a variety of activities related to the capital market.The company has a paid-up capital of Rs 5.55 crores. 2. INTRODUCTION OF THE LSE SECURITIES LTD. LSE Securities Ltd., was incorporated in January, 2000 with a view to revive the capital market in the region and for taking full advantage of the emerging opportunities being provided by expansion of bigger stock

exchanges like NSE and BSE. The company since its inception has marched forward rapidly and achieved many milestone in a short span of existence. 3. GOVERNING COUNCIL The Council of the management of the Company comprises of 10 directors of which 3are broker members and 7non-brokers. Five non broker members are Independent Directors of eminent status from the field of finance, law and management and remaining two are Chief Executive Officer of LSE Securities Limited and Executive Director of the holding company (Ludhiana Stock Exchange), who are on the Board of the company as ex-officio Directors. Thus the council of management has representation of sub-brokers as well as professionals and subject specialists representing various fields of business activities. Operations of the company are run in a professional, transparent and fair manner keeping in view of the interest of investors as well as other stakeholders. 4. CORPORATE MEMBERSHIP OF NSE & BSE SEBI, at the initiative of LSE, permitted smaller Stock Exchanges, to trade on bigger Stock Exchanges through their subsidiary companies. The Ludhiana Stock Exchange floated its subsidiary company, the LSE Securities Limited, with the objective of obtaining trading rights on bigger Stock Exchanges. It has obtained corporate membership of both NSE and BSE in the first half of year 2000. 5. TRADING AT NSE AND BSE The LSE Securities Ltd. commenced trading operations in Capital Market Segments of BSE and NSE in September, 2000 and December 2000 respectively. The turnover of the Company at NSE and BSE is growing by leaps and bounds ever since in incorporation. There was encouraging response from the sub-brokers specially at NSE counters.During the financial year 2005-06, the Company recorded a turnover of Rs. 7975 crores and Rs.3834 crores in "Capital Market"

segments of NSE and BSE respectively. For the year ended 2005-2006, there were 128 sub-brokers registered for NSE and 68 for BSE.

6. F&O SEGMENT OF NSE The LSE Securities Ltd. commenced trading operations in Future and Options Segment of NSE in February 2002. The Company became the first subsidiary of any Regional Stock Exchange which commenced trading in F&O Segment of NSE. Response to trading facilities in the F&O segment of NSE has been very encouraging and volumes generated in this segment soon exceeded those in Capital Market segment. 7. TRADING THROUGH ODIN The LSE Securities Limited has provided facility to its sub-brokers for trading on NSE and BSE through ODIN counters which are located outside Stock Exchange Building. During 2011-20012, sub-brokers of the company have been trading through ODIN on NSE and BSE. 8.CERTIFICATION IN FINANCIAL MARKET In order to provide professional services to the investors of LSE Securities Limited through its sub-brokers, the company motivated its sub-brokers and its staff to qualify the certification in financial markets conducted by NSE. All trading terminals for Capital Market Segment and F&O segment are being operated by the persons after having qualified the said certification 9. DEPOSITORY PARTICIPANT SERVICES NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL) The LSE Securities Ltd. commenced its operations as Depository Participant of NSDL in August 2000. The DP services provided by the Company have technology edge over other DPs, as DP of the company is the only On-line Real-Time DP in the region. As a result of efficient

services and competitive rates, the Company has been able to increase its market share in the DP business at the cost of other DPs in the region. As on date DP of NSDL and CDSL of the Company at Ludhiana is servicing over 35000 beneficiary accounts. 10. DEPOSITORY PARTICIPANT SERVICES CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED (CDSL) In order to further strengthen its services to sub-brokers and investors, the Company applied for the DP of CDSL. It started DP operations of CDSL in December 2001. With the operationalisation of DP Services of CDSL, the Company has been able to provide delivery of shares to subbrokers and investors on the day of pay-out which in turn helps the subbrokers to give timely deliveries to their clients. Introduction of CDSL operations has also enabled the sub-brokers and investors of the Company to timely meet the pay-in obligations of securities purchased by the investors on BSE and sold next day on NSE through the Company and vice-versa.

11.EXPANSION PROJECTS To increase its presence in the region further, the company plans to open its branches of Depository Services in the major cities of the region. To start with, it has already opened its branches at Jalandhar Amritsar and Chandigarh.


PRODUCT & SERVICES Capital Market: We are the leading broker of NSE and BSE and have been providing capital market and derivatives services to our clients. You can avail the following services by associating yourself to ourselves. Fundamental and Technical Research to guide you in Capital Creation. Efficient Execution through our term of experienced dealers. Transparent Dealings. Derivatives: Derivatives (Futures Options) are ideal instruments to protect your portfolio against risk. You can trade with index movements, hedge and leverage your portfolio by limiting risk but keeping your upside unlimited. IPO's: IPO is the first offer from any corporate to public for the subscription for its shares. Our clients can subscribe for IPO through us. We receive IPO applications from our customers at our office only. For this we are associated with DSPML and Enam Securities Pvt. Ltd. Depository Services: A depository can be defined as an institution where the investors can keep their financial assets such as equities in the dematerialised form and transactions could be effected on it. Besides providing custodial facilities and dematerialisation, depositories are offering various transactional services to its clients to effect buying, selling, transfer of shares etc. Our Depository Services Cell provides the following services: Convert your physical holding into electronic holding (which is called "dematerialisation" of securities). Keep custody of your holdings in electronic form. Transfer the shares in the electronic form from one account to another.

OBJECTIVE OF REAEARCH:The main objective of the study or research is to know about the perception of investors about Stock market. 1. To study the investors perception regarding stock market. 2. To identify the main reasons for investing in stock market.

3. To identify which type of groups and sector is preferred most by the investors.


RERSEARH METHODOLOGY:Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the investors. Data collection has been done through by giving structured questionnaire. This study will be based on convenience sampling.

RESEARCH DESIGN :- Research Design is Descriptive. SAMPLING SIZE AND DESIGN:Sample size for this research is 100. Sample size has been taken

by convenience sampling. This research requires the survey of different investors.

DATA COLLECTION:- Data will be collected through questionnaire.

Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the investors. Data collection has been done through by giving structured questionnaire.

AREA OF STUDY:- Ludhiana and Fatehgarh sahib.



Q.1 Do you invest in stock market? (A) yes Figure no.1 Response
Yes No

(B) No

12 03

80% 20%




20% yes no 80%


Interpretation:- Above Graph shows that 80% respondents are invested in stock market and remaining 20% are the opportunity for stock market.


Q.2 If you want to invest or if you invest then In which of the following do you invest?(Tick more than one if applicable) (A) Equity (C) Mutual funds Figure no.2 Response Equity Derivatives Mutual fund Others Total Frequency 9 4 2 0 15 Percentage 60% 27% 13% 0% 100% (B) Derivatives (D) Others

70% 60% 50% 40% 30% 20% 10% 0%


27% 13% 0% Equity derivative mutual others


Interpretation:- Above Graph shows that 60% investors are satisfied with investing in equity, 27% in Derivatives and 13% are investing in Mutual fund.


Q.3 Which sector you prefer for investment in stock market? (A) Government (C) Semi Government Figure no.3 Response Government Non Government Semi Government Total Graph:3
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 20.00% 20.00% 60.00%

(B) Non Government

Frequency 3 9 3 15

Percentage 20% 60% 20% 100%


Non Govt.

Semi Govt.

Interpretation:- Above Graph shows that 20% investors prefer to Government sector, 60% prefer to Non Government sector and 20% prefer to Semi Government sector.


Q. 4 How many shares do you have? (A) 1-10 (B) 10-50

(C) 50-100 (D) More than 100 Figure no.4 Response 1-10 10-50 50-100 More than 100 Total Graph:4
50% 0.50 0.40 0.30 0.20 0.10 0.00 8% 25% 17%

Frequency 1 6 3 2 12

Percentage 8% 50% 25% 17% 100%




Above 100

Interpretation:- Above Graph shows that 8% investors have 1-10 shares, 50% investors are those who have 10-50 shares, 25% have 50-100 Shares and only 17% investors have more than 100 shares.


Q.5 Your returns are mostly in (A) Profit Figure no.5 Response Profit Loss Total Graph:5 Frequency 7 5 12 Percentage 58% 42% 100% (B) Loss

loss 42% Profit 58%

Profit loss

Interpretation:- Above Graph shows that 58% investors said that their returns are in profit but 42% are dissatisfied with investing in stock market.


Q. 6 Who suggest you to invest in stock market? (A) Family member (C) By own Figure no.6 Response Family member Relatives By own Brokers total Graph:6
70% 60% 50% 40% 30% 20% 10% 0% 0% 17% 17% 66%

(B) Relatives (D) Brokers

Frequency 0 2 8 2 12

Percentage 0% 17% 66% 17% 100%



By own


Interpretation:- Above Graph shows that 17% investors are suggested by relatives, 66% are invested by own, 17% are forced by brokers.


Q.7 What Percentage amount of your income do you invest in Stock market (A) 10-20% (C) 30-40% Figure no.7 Response 10-20% 20-30% 30-40% Above 40% Total Graph:7
50% 41% 40% 30% 20% 10% 0% 17% 25% 17%

(B) 20-30% (D) Above 40%

Frequency 2 5 3 2 12

Percentage 17% 41% 25% 17% 100%




Above 40%

Interpretation:- Above Graph shows that 17% investors are those who invest their 10-20% income in stock market, 41% invest 20-30% income, 25% invest 30-40% income and 17% are those who invest their more than 40% parts of income in stock market.


Q.8 What do you consider the most important while investing in stock market? (A) Profit (c) Tax benefit Figure no.8 Response Profit Capital appreciation Tax benefit Other Total Graph:8
60% 50% 50% 40% 30% 20% 10% 0% 17% 8% 25%

(B) Capital appreciation (D) Other ( specify)

Frequency 6 2 3 1 12

Percentage 50% 17% 25% 8% 100%





Interpretation:- Above Graph shows that 50% investors main motive is profit to invest in stock market, 17% invest for capital appreciation, 25% invest for tax benefit and 8% are those who invest for other purpose like saving motive etc.


Q.9 For whom you did invest in stock market? (A) Self (C) Wife Figure no. 9 Response Self Child Wife Other total Graph:9
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 17% 17% 25% 41%

(B) Child (D) Other (please specify)

Frequency 5 2 3 2 12

Percentage 41% 17% 25% 17% 100%





Interpretation:- Above Graph shows that 41% are invested for themselves, 17% invested for their children, 25% invested for their wives and 17% those who invest for their parents and relatives.


Q. 10 According to you what is the better form to keep the security? (A) Physical form Figure no.10 Response Physical form Demat form Total Graph:10 Frequency 0 12 12 Percentage 0% 100% 100% (B) Demat form

100% 80% 60% 40% 20% 0% 1 2 3 Demat Physical

Interpretation:- Above Graph shows that every investor want to keep his shares in Demat form, no one is ready to prefer physical form.


Q. 11 Are you satisfied with your investment? (A) yes Figure no.11 Response Yes No Total Graph:11 Frequency 7 5 12 Percentage 58% 42% 100% (B) No

42% 58%

yes no

Interpretation:- Above Graph shows that 58% investors are satisfied with their investment and 42% are dissatisfied with their investments.


Q.12 Do you think investment in stock market is more risky than others? (A) Yes Figure no.12 Response Yes No Total Graph:12 Frequency 10 2 12 Percentage 83% 17% 100% (B) No

17% Yes no 83%

Interpretation:- Above Graph shows that mostly 83% investors thought that investment in stock market is risky than others but 17% are in the favor of stock market.


Q.13 Do you go through all the details before making a final choice? (A) yes Figure no.13 Response Yes No Total Graph:13

(B) No

Frequency 12 0 12

Percentage 100% 0% 100%

yes no


Interpretation:- Above Graph shows that 100% investors take the complete information before taking the decision of investment in stock market.


Q. 14 If you did not invest in stock market then what will be the other option? (A) Insurance (C) Property Figure no.14 Response Insurance Saving Property Others Total Graph:14
70% 60% 50% 40% 30% 20% 10% 0% Insurance Saving Property Others 8% 8% 25% Series1 Series2 59%

(B) Saving (D) Others

Frequency 3 1 7 1 12

Percentage 25% 8% 59% 8% 100%

Interpretation:- Above Graph shows that 25% investors said that if they did not invested in stock market then they prefer to insurance, 8% call for savings, 59% prefer to property and 8% said that they prefer to other options like shops etc.


1 Time limitation 2 Research has been done only in Ludhiana and Fatehgarh Sahib City. 3 Investors did not disclose their secrets data and strategies. 4 Possibility of Error in data collection. 5 Possibility of Error in analysis of data due to small sample size.


1. Mostly investors prefer to Equity share and Non Government sector for investment in stock market. 2. Majority of the investors are satisfied with their investments.

3. Investors are not forced by any other for investing in stock market, they take their decisions by own. 4. Investors invest large amount of their income in stock market for earn more profit.

5. They thought that Demat form is better than physical form. 6. Investors are thought that investment in stock market is very risky.

7. Every investor want full information about the plans before



1. More and more advertising should be used by companies to tap the investors. 2. Service of stock market should be improve. 3. Procedure to get membership should be made easily assessable. 4. More and more benefits should be given. 5. Security should be increased in investment. 6. Brokers have need to give the full information to the investors.



BooksHow to Make Money in Stocks William ONeil John J. Murphy Technical Analysis of the Financial Markets The Intelligent Investor

Benjamin Graham


Name.Age. Gender.Occupation Q.1 Do you invest in stock market? (A) yes (B) No

Q.2 If you want to invest or if you invest then In which of the following do you invest?(Tick more than one if applicable) (A) Equity (C) Mutual funds (B) Derivatives (D) Others

Q.3 Which sector you prefer for investment in stock market? (A) Government (C) Semi Government Q. 4 How many shares do you have? (A) 1-10 (B) 10-50 (B) Non Government

(C) 50-100 (D) More than 100 Q.5 Your returns are mostly in (A) Profit (B) Loss

Q. 6 Who suggest you to invest in stock market? (A) Family member (C) By own (B) Relatives (D) Brokers

Q.7 What Percentage amount of your income do you invest in Stock market (A) 10-20% (C) 30-40% (B) 20-30% (D) Above 40%

Q.8 What do you consider the most important while investing in stock market? (A) Profit (c) Tax benefit (B) Capital appriciation (D) Other ( specify)

Q.9 For whom you did invest in stock market? (A) Self (C) Wife (B) Child (D) Other (please specify)

Q. 10 According to you what is the better form to keep the security? (A) Physical form (B) Demat form

Q. 11 Are you satisfied with your investment? (A) yes (B) No

Q.12 Do you think investment in stock market is more risky than others? (A) Yes (B) No

Q.13 Do you go through all the details before making a final choice? (A) yes (B) No

Q. 14 If you did not invest in stock market then what will be the other option? (A) Insurance (C) Property (B) Saving (D) Others

Q.15 Do you want any improvement in the policies of stock market, Please give Suggestion.