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“Capital Market in India with respect to BSE &

NSE”
SIP project report to be submitted in partial fulfillment of the
requirements for the PGDM

By Nishant Seth
20142032
Company Guide: Mr. B. Sanjeev
Post Graduate Diploma in Management
Programme
Under the guidance of
Gaurav Sarin

DELHI SCHOOL OF BUSINESS
NEW DELHI

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ACKNOWLEDGEMENT
I wish to express my sincere gratitude to Mr. B. Sanjeev 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. Gaurav Sarin, Delhi School of
Business 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.

(NISHANT SETH)

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DECLARATION
I hereby declare that this report on “ Capital Market in India with respect

to BSE’’.
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.

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CONTENTS
S. NO.
CHAPTER 1.

CONTENTS

PAGE NO.

CAPITAL MARKET
FACTORS AFFECTING CAPITAL MARKET

5-13
14-16

1.1
INVESTMENT

17-20

1.2
1.3
1.4

SECURITIES AND EXCHANGE BOARD OF INDIA

21-23
24-26

STOCK EXCHANGE
BOMBAY STOCK EXCHANGE

27-28

NATIONAL STOCK MARKET

29

LUDHIANA STOCK EXCHANGE

30-35

1.7
CHAPTER 2.

OBJECTIVE OF THE RESEARCH

CHAPTER 3.

RESEARCH METHODOLOGY

36
37
37

1.5
1.6

RESEARCH DESIGN

3.1
SAMPLIING SIZE AND GESIGN

37

DATA COLLECTION

37

AREA OF STUDY

37

ANALYSIS THE DATA

38-51

LIMITATIONS

52

RESULT AND DISCUSSION

53

3.2
3.3
3.4
3.5
3.6
CHAPTER 4.

4

CHAPTER 5.

SUGGESTIONS

CHAPTER 6.

PREFERENCE

CHAPTER 7.

QUESTIONNAIRE

54
55
56-57

CAPITAL MARKET
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.
The Indian capital market is more than a century old. Its history goes
back to 1875, when 22 brokers formed the Bombay Stock Exchange
(BSE). Over the period, the Indian securities market has evolved
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It provides norms for disclosures in the public issues. and c) the Securities and Exchange Board of India (SEBI) Act. Today. and the issues pertaining to use of premium and discount on various issues. b) SCRA provides regulations for direct and indirect control of stock exchanges with an aim to prevent undesirable transactions in securities. A brief background of these above regulations are given below a) The Companies Act 1956 deals with issue. regulations for underwriting. allotment and transfer of securities and various aspects relating to company management. and efficient securities markets in Asia. It provides regulatory jurisdiction to Central Government over stock exchanges. 6 . 1992. Indian market confirms to best international practices and standards both in terms of structure and in terms of operating efficiency .continuously to become one o the most dynamic. modern. contracts in securities and listing of securities on stock exchanges. c) The SEBI Act empowers SEBI to protect the interest of investors in the securities market. to promote the development of securities market and to regulate the security market. b) the Securities Contracts (Regulation) Act 1956 (SCRA Act).Indian securities markets are mainly governed by a) The Company’s Act1956.

and with the inauguration of the Tata Iron and Steel Company Limited in 1907. They do so either through public issues or private placement. Two exchanges.). the industrial revolution was on the way in India with the Swadeshi Movement. an 7 . debentures. The futures and options can be on individual stocks or basket of stocks like index. while the secondary market deals in trading of securities previously issued. Derivatives trading commenced in India in June 2000 In the beginning of the twentieth century. A variant of secondary market is the forward market. The issuers of securities issue (create and sell) new securities in the primary market to raise funds for investment. The primary market provides the channel for sale of new securities. namely National Stock Exchange (NSE) and the Stock Exchange. etc. treasury bills).The Indian securities market consists of primary (new issues) as well as secondary (stock) market in both equity and debt. while the governments (central and state governments) issue debt securities (dated securities. There are two major types of issuers who issue securities. The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risk and return. single stock options and index options. Mumbai (BSE) provide trading of derivatives in single stock futures. where securities are traded for future delivery and payment in the form of futures and options. The corporate entities issue mainly debt and equity instruments (shares. index futures.

The BSE is situated at Bombay and the NSE is situated at Delhi. the Nifty represents the top stocks of the NSE.important stage in industrial advancement under Indian enterprise was reached. There are other stock exchanges like the Calcutta Stock Exchange etc. it means that the prices of the stocks of most of the major companies on the BSE have gone up. The Nifty is an indicator of all the major companies of the NSE. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. this tells you that the stock price of most of the major stocks on the BSE have gone down. Most of the stock trading in the country is done though the BSE & the NSE . What is an index? An index is basically an indicator. is the Bombay Stock Exchange and the NSE is the National Stock Exchange. Besides Sensex and the Nifty there are many other indexes. The Sensex is an indicator of all the major companies of the BSE. These are the major stock exchanges in the country. This is called 8 .SENSEX & NIFTY: The Sensex is an "index". There is an index that gives you an idea about whether the mid-cap stocks go up and down. If the Sensex goes down. If the Sensex goes up. There are two major indicators of Indian capital market. Just in case you are confused. the BSE. but they are not as popular as the BSE and the NSE. Just like the Sensex represents the top stocks of the BSE.

Trading of securities on stock exchange results in exchange of money and securities between the investors. • Rights offer such that securities are offered to existing shareholders. small investors and foreign investors will not be interested in capital market operations. • Follow-on public offer (FPO). or offer for sale (offer of securities by existing shareholders to the public for subscription). Secondary market provides liquidity to the securities on the exchange(s) and this activity commences subsequent to the original 9 .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). In this regard NSE gains vital importance in the Indian capital market but if we see the sensex & nifty graph there is a great variation. that is. Secondary Market: In the secondary market the investors buy / sell securities through stock exchanges. And capital market being one of the major source of long-term finance for industrial projects.the “BSE Mid-cap Index”. mixture of a rights and public offer. India cannot afford to damage the capital market path. • Preferential issue/ bonus issue/ QIB placement • Composite issue. There are many other types of index.Unless stock markets provide professionalized service. 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.

There are 24 recognized stock exchanges in India out of which one has not commenced its operations. For example. In other words. Thus. having subscribed to the securities of a company. The stock exchanges are either association of persons or are formed as companies. currently only on four stock exchanges. if one wishes to sell the same. a stock exchange has been an association of its members or stock brokers. (BSE) or National Stock Exchange (NSE) or both. • Rights of investors are protected. Out of the 23 remaining stock exchanges. Securities listed on the stock exchange(s) have the following advantages: • The stock exchange(s) provides a fair market place. • It enhances liquidity. Most of regional stock exchanges have formed subsidiary companies and obtained membership of Bombay Stock Exchange. 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. • There is continuous reporting of their prices. the stock exchange is the place where already issued securities of companies are bought and sold by investors. Of late however. 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. 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. secondary market activity is different from the primary market in which the issuers issue securities directly to the investors. • Full information is available on the companies. Traditionally. the trading volumes are recorded. Members of these stock exchanges are now working as subbrokers of BSE / NSE brokers. it can be done through the secondary market.issue. • Their price is determined fairly. Similarly one can also buy the securities of a company from the secondary market. 10 .

2. Growth of savings. Efficient allocation of investment resources. Generally. These indices need to represent the return obtained by typical portfolios in the country. Significance of Capital Markets A well functioning stock market may help the development process in an economy through the following channels: 1. financial market institutions provide the avenue by which long-term savings are mobilized and channelled into investments. The Clearing House acts like an intermediary in every transaction and acts as a seller to all buyers and buyer to all sellers.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. 11 . Better utilization of the existing resources. 3. the market Indices is the barometer of its performance and reflects the prevailing sentiments of the entire economy. For any stock market. In market economy like India. (law of portfolio diversification) and reflect the overall performance of the company/equity market and the news affecting it. 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. 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. Confidence of the investors in the market is imperative for the growth and development of the market. This settlement process is carried out by Clearing Houses for the stock exchanges.

Equity shares signify ownership in a corporation and represent claim over the financial assets and earnings of the corporation. All diversified portfolios. use the common stock index as a yardstick for their returns. The holders of the shares are called share holders.000 and is divided into 50. 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 12 . Shareholders enjoy voting rights and the right to receive dividends. belonging either to retail investors or mutual funds. 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. A share may be of any face value depending upon the capital required and the number of shares into which it is divided. The shares can be purchased or sold only in integral multiples. after all the creditors of the company are settled in full. Indices are useful in modern financial application of derivatives.000 units of US $10 each. For example.00. each unit is called a share of face value US $10. if the required capital of a company is US $5.The most important use of an equity market index is as a benchmark for a portfolio of stocks. however in case of liquidation they will receive residuals.

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. 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. but the word “stock” continues. A debenture may be viewed as a loan. 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. The word “joint stock companies” also refers to this tradition. 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. This concept is no more prevalent. • 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. 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. 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. 13 . The word “bond” may be used interchangeably with debentures. taken either from the public or a particular source. Debentures/ Bonds The term Debenture is derived from the Latin word ‘debere’ which means ‘to owe a debt’. represented as marketable security. A debenture is an acknowledgment of debt. (ii) The right to get back their capital before the equity holders in case of winding up of the company.

In the sense. DERIVATIVES PRODUCTS Some significant derivatives that are of interest to us are depicted in the accompanying graph: 14 . options or futures contracts are based on movements in prices of individual stocks or groups of stocks. whose value depends on the values of basic underlying variable. i. or contingency.• 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. • Prices of commodities are uncertain . or may engage in a trade on the derivative. transaction. 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). • Weather is uncertain . derivatives is a financial instrument that offers return based on the return of some other underlying asset.Lot of forwards. Derivatives A derivative picks a risk or volatility in a financial asset. The risk that a derivative intends to trade is called underlying. • Interest rates are uncertain . or someone may take the risk. market rate. A derivative is a financial instrument.There are forwards.There are exchange rate derivatives. based on the view that they want to execute. and so on. • Foreign exchange rates are uncertain .e the return is derived from another instrument.There are interest rate swaps and futures. • Stock prices are uncertain . The best way will be take examples of uncertainties and the derivatives that can be structured around the same.There are weather derivatives. futures and options on commodities.

The forward contracts are normally traded outside the exchange. At practical level. After this. and a standard time for such 15 .Major types of derivatives FUTURES. but unlike forward contracts. FORWARDS AND OPTIONS An option is different from futures in several ways. 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. he only has an upside. A futures contract is an agreement between two parties. price and quantity are negotiated bilaterally by the parties to the contract. but can generate huge losses. FORWARDS A forward contract is an agreement to buy or sell an asset on a specified date for a specified price. where one is free to enter. Buying put options is like buying insurance. Futures market was designed to solve the problems that exist in forward market. the futures contracts are standardized and exchange traded To facilitate liquidity in the futures contracts. FUTURES Futures contract is a standardized transaction taking place on the futures exchange. to buy or sell an asset at a certain time in the future at a certain price. who cannot put in the time to closely monitor their futures position. other contract details like delivery date. and to mutual funds creating “guaranteed return products”. the exchange specifies certain standard quantity and quality of the underlying instrument that can be delivered. This is different from futures. 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. This is attractive to traders. There is no possibility of the options position generating any further losses to him. the option buyer faces an interesting situation. He pays for the options in full at the time it is purchased. The other party assumes a short position and agrees to sell the asset on the same date for the same price. This characteristic makes options attractive to many market participants who trade occasionally.

diminishing the total number. but not the obligation. conversely. Futures’ exchange has a division or subsidiary called 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. there is no limit to the number of option contracts that can be in existence at any time. to perform a specified transaction with another party (the option issuer or option writer) according to the specified terms. For every buyer of an option there must be a seller. or a provision of a contract. if none is traded. A futures' contract can be offset prior to maturity by entering into an equal and opposite transaction. the process of closing out options positions will cause contracts to cease to exist. As with futures. There are two options which can be exercised: 􀂾 Call option.a settlement. none exists. the right to buy is referred to as a call option. options are brought into existence by being traded. As with futures. The seller is often referred to as the writer. 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. 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. that gives one party (the option holder) the right. the right to sell is referred as a put option. 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. 16 . 􀂾 Put option.

sunami.Monsoon . Thus deficient or delayed monsoon in this part of the country would directly affect the agricultural output in the country. Thus there is heavy dependence on monsoon. drought. B) Environmental Factors :Environmental Factor in India’s context primarily means. The opposite case of it would be robust corporate earnings and it’s positive impact on the capital market.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. etc. Because of slow growth in demand there is slow growth in employment which means slow growth in demand in the near future. In India around 60 % of agricultural production is dependent on monsoon. The Indian Met Department (IMD) on 24th June stated that India would receive only 93 % rainfall of Long Period Average (LPA). Thus weak corporate earnings indicate average or not so good prospects for the economy as a whole in the near term. Apart from monsoon other natural calamities like Floods. The major chunk of agricultural production comes from the states of Punjab . 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. Haryana & Uttar Pradesh. also have an impact on the capital market of a country. This piece of 17 . 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 . earthquake.

e. refining. however the magnitude and intensity of impact would vary. E) Political stability and government policies:18 . consumer confidence index in developed countries. power. reduce the demand for everything from motorbikes to soaps and worsen a slowing economy. etc. This is because a deficient monsoon could seriously squeeze rural incomes. . An event in one part of the world is bound to affect other parts of the world . etc. Thus capital market in India is also affected by developments in other parts of the world i. 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. jobless claims in developed countries. C) Macro Economic Numbers :The macro economic numbers also influence the capital market. economic growth of major economies.news directly had an impact on Indian capital market with BSE Sensex falling by 0. global growth outlook given by various agencies like IMF. S & P. D) Global Cues :In this world of globalization various economies are interdependent and interconnected. U. price of crude –oil. etc. Core Industries growth rate ( It includes Six Core infrastructure industries – Coal. It includes Index of Industrial Production (IIP) which is released every month. Japan . A case in the point was declaration of core industries growth figure.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. Europe. Global cues includes corporate earnings of MNC’s. cement and finished steel) which comes out every month. annual Inflation number indicated by Wholesale Price Index (WPI) which is released every week. Crude oil. Export – Import numbers which are declared every month. credit rating of various economies given by Moody’s.S.

they may stay away from investment and wait for the right time to come.growth government policies. attitude of government. So we can say that growth prospects of an economy do have an impact on capital markets. 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.At the same time the investors have low risk appetite . and various policies of the government. This is because when there is political stability there is stability and consistency in government’s attitude which is communicated through various government policies. This augurs well for the economy as higher expenditure means higher demand and higher savings means higher investment. both from within and outside the country and vice -versa. Higher income also means higher expenditure and higher savings.So capital market also reacts to the nature of 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. 19 .For any economy to achieve and sustain growth it has to have political stability and pro. G) Investor Sentiment and risk appetite :Another factor which influences capital market is investor sentiment and their risk appetite . they may stay away from investment for some time.versa is the case when there is no political stability .S.Even if the investors have the money to invest but if they are not confident about the returns from their investment . The vice. Thus when an economy is growing at a good pace capital market of the country attracts more money from investors. & some parts of Europe .

plants and equipments 20 .What is Investment ? Meaning In simple terms. While Investment Goods are those goods. Investment implies the production of new capital goods. Investment refers to purchase of financial assets. which are used for further production.

Financial Assests (that can not be traded) A number of financial assets can not be traded with a third party. 1. 21 .  Bank Deposits: It’s simple and every one knows about it. Different types of bonds are. 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). A number of options are available today for a person to invest his money and make a decent return. Let’s take a skim through all those schemes.Different types of Investment available in India In this article you will find many available options to make an investment. Such schemes are listed below.  Post Office Savings  Provident Funds  Chit Funds  Company Deposits 2.

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. Government Securities  Government Agency Securities  PSU Bonds  Private Debt Securities  Preference Shares 3. Stocks Stocks represent ownership. 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.Mutual funds are usually managed by a 22 . Mutual Funds Mutual Funds are a better investment option for those who can’t find time to learn about stock market and it’s trends or those who don’t understand it’s working correctly. Different types of stocks (as classified by financial analysts)  Growth Stocks  Value Stocks  Blue Chip Stocks  Income Stocks 5.

 Stock based schemes  Fixed income schemes  Monthly income schemes  Tax saving schemes  Hybrid schemes  Balance schemes  Sector schemes  Floating rate schemes 6.Private financial company or a Bank.  Endowment assurance policy  Money back policy  Whole Life policy  Term assurance policy  Unit Linked Policy – ULIP 23 . Different types of mutual funds are. Different types of insurance investments are. Insurance Insurance is also a form of investment.

Two types are there. the SEBI was given additional statutory power by the 24 . Eastern.  Options  Futures SECURITIES AND EXCHANGE BOARD OF INDIA It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chennai and Ahmedabad. Financial Derivatives These are financial instruments that are formed from value addition of the financial assets used for investment. However in 1995. Controller of Capital Issues was the regulatory authority before SEBI came into existence. Kolkata. it derived authority from the Capital Issues (Control) Act. and has Northern. Southern and Western regional offices in New Delhi. SEBI is headquartered in the business district of Bandra Kurla Complex complex in Mumbai. Initially SEBI was a non statutory body without any statutory power.7. 1947.

it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial 25 . The SEBI is managed by six members. quasijudicial and quasi-executive. by the chairman who is nominated by central government & two members. The office of SEBI is situated at Mumbai with its regional offices at Kolkata. which constitute the market:  the issuers of securities  the investors  the market intermediaries.Government of India through an amendment to the Securities and Exchange Board of India Act 1992. i. FUNCTIONS AND RESPONSIBILITIES SEBI has to be responsive to the needs of three groups. officers of central ministry. SEBI has three functions rolled into one body: quasi-legislative. 1998 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India. In April. one member from the RBI & the remaining two are nominated by the central government.e. i. Delhi & Chennai. It drafts regulations in its legislative capacity.e.

Though this makes it very powerful. 3. 4. It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. inspect the books of accounts and call for periodical returns from recognized stock exchanges. SEBI has been active in setting up the regulations as required under law. to approve by−laws of stock exchanges.g. from Rs 1 lakh at present. 2. in light of the global meltdown. SEBI has been invested with the necessary powers which are: 1. to require the stock exchange to amend their by−laws. 26 . In one such move. SEBI has increased the application limit for retail investors to Rs 2 lakh.capacity. A second appeal lies directly to the Supreme Court. inspect the books of accounts of a financial intermediaries. There is a Securities Appellate Tribunal which is a three-member tribunal. there is an appeals process to create accountability. SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.it liberalised the takeover code to facilitate investments by removing regulatory structures. SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco. More recently. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). POWERS For the discharge of its functions efficiently.

Primary Market Advisory Committee (PMAC) 6. Secondary Market Advisory Committee (SMAC) 7. High Powered Advisory Committee on consent orders and compounding of offences 12. Derivatives Market Review Committee 13. SEBI Committee on Disclosures and Accounting Standards (SCODA) 11. Technical Advisory Committee 2. Corporate Bonds & Securitization Advisory Committee 9. Committee for review of structure of market infrastructure institutions 3. Mutual Fund Advisory Committee 8. Members of the Advisory Committee for the SEBI Investor Protection and Education Fund 4. compel certain companies to list their shares in one or more stock exchanges. Takeover Panel 10.5. Takeover Regulations Advisory Committee 5. SEBI Committees 1. Committee on Infrastructure Funds 27 .

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

where securities of corporate bodies. whether incorporated or not. selling and dealing in securities. defines Stock Exchange as. In short it deals with existing or second hand securities and hence it is called secondary market. 2. established for the purpose of assisting. government and semi-government bodies are bought and sold. "An association." Features of Stock Exchange Characteristics or features of stock exchange are:1. stock exchanges maintain an official list of securities that could be purchased and sold on its floor. Regulates trade in securities : Stock exchange does not buy or sell any securities on its own account. Deals in second hand securities : It deals with shares. Securities which do not figure in the official list of stock 29 . It merely provides the necessary infrastructure and facilities for trade in securities to its members and brokers who trade in securities. debentures bonds and such securities already issued by the companies. Allows dealings only in listed securities : In fact. 3. organization or body of individuals. regulating and controlling business in buying. It regulates the trade activities so as to ensure free and fair trade 4. Market for securities : Stock exchange is a market.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.

Such unlisted securities cannot be traded in the stock exchange. on working days) on the floor of market called trading circles and conduct trading activities. Recognition from Central Government : Stock exchange is an organised market. Association of persons : A stock exchange is an association of persons or body of individuals which may be registered or unregistered. Outsiders or direct investors are not allowed to enter in the trading circles of the stock exchange. Industrial growth and stability is reflected in the index of stock exchange. It requires recognition from the Central Government.e. 9. After the working hours market is closed. 6. 10. 7. The prices of different securities traded are shown on electronic boards. No deviation from the rules and guidelines is allowed in any case. 5. Financial Barometers : Stock exchanges are the financial barometers and development indicators of national economy of the country. Investors have to buy or sell the securities at the stock exchange through the authorised brokers only. Specific location : Stock exchange is a particular market place where authorised brokers come together daily (i. 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.exchange are called unlisted securities. 8. All the working of stock exchanges is conducted and controlled through computers and electronic system. Transactions effected only through members : All the transactions in securities at the stock exchange are effected only through its authorised brokers and members. 30 .

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. it was established as "The Native Share & Stock Brokers Association" in 1875. With demutualisation.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index. Earlier an Association of Persons (AOP). Popularly known as "BSE". pursuant to the BSE(Corporatisation and Demutualisation) Scheme. 1956. 1956.BOMBAY STOCK EXCHANGE LIMITED Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act. SENSEX. 2005 notified by the Securities and Exchange Board of India (SEBI). is tracked worldwide. the trading rights and ownership rights have been delinked effectively addressing concerns regarding perceived and real conflicts of 31 .

In terms of organisation structure. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations.interest. The BSE's On Line Trading System (BOLT) is a proprietory system of the Exchange and is BS 7799-2-2002 certified. The Exchange is professionally managed under the overall direction of the Board of Directors. The Exchange provides an efficient and transparent market for trading in equity. representatives of Trading Members and the Managing Director of the Exchange. During the year 2004-2005. 32 . The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.The Board comprises eminent professionals.The day-to-dayoperations of the Exchange are managed by the Managing Director and a management team of professionals. debt instruments and derivatives. the trading volumes on the Exchange showed robust growth. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. the Board formulates larger policy issues and exercises over-all control. The Board is inclusive and is designed to benefit from theparticipation of market intermediaries. The committees constituted by the Board are broad-based.

It was in year 1992 that the National stock Exchange was for the first time incorporated in India. 1956. The National Stock Exchange basically function in three market sections.NATIONAL STOCK EXCHANGE THE National Stock Exchange of India is a stock Exchange that is located in Mumbai. 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. F&Q (The Future and Options Market Sections) and WDM (Wholesale Debt Market Segment). 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. Rather. It was not regarded as a stock exchange at once. This facility is available in almost types 33 . 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. that is. It is important place where the trading of shares. Maharashtra. It is the stock exchange wherein there is the facility of electronic exchange offering investors. debt etc takes place. (CM) the Capital Market Section).

34 .of equitable transactions such as equities. etc. To identify which type of groups and sector is preferred most by the investors. To identify the main reasons for investing in stock market.  OBJECTIVE OF REAEARCH:The main objective of the study or research is to know about the perception of investors about Stock market. 2. To study the investors perception regarding stock market. 3. debentures. it is also the largest stock exchange if calculated in the terms of traded values. 1.

Data collection has been done through by giving structured questionnaire. Research has been done by primary data collection. Data collection has been done through by giving structured questionnaire. 35 . and primary data has been collected by meeting with the investors. AREA OF STUDY:. SAMPLING SIZE AND DESIGN:- Sample size has been taken by convenience sampling. This research requires the survey of different investors.Data will be collected through questionnaire. Sample size for this research is 100. RERSEARH METHODOLOGY:Research is totally based on primary data. Secondary data can be used only for the reference.Ludhiana and Fatehgarh sahib. DATA COLLECTION:. RESEARCH DESIGN :. Research is totally based on primary data. and primary data has been collected by meeting with the investors.Research Design is Descriptive. Secondary data can be used only for the reference. This study will be based on convenience sampling. Research has been done by primary data collection.

1 Do you invest in stock market? (A) yes (B) No Figure no.1 Response Frequency Percentage Yes No 12 03 80% 20% Total 15 100% 20% yes no 80% 36 .ANALYSIS OF THE RESEARCH Q.

Graph:1 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 (B) Derivatives (C) Mutual funds (D) Others Figure no.2 Response Equity Derivatives Mutual fund Others Total 70% 60% Frequency 9 4 2 0 15 Percentage 60% 27% 13% 0% 100% 60% 50% 40% 27% 30% 20% 13% 10% 0% Equity derivative mutual 37 0% others .

00% 38 .3 Which sector you prefer for investment in stock market? (A) Government (B) Non Government (C) Semi Government Figure no.00% 60.Above Graph shows that 60% investors are satisfied with investing in equity.Graph:2 Interpretation:.00% 20. Q. 27% in Derivatives and 13% are investing in Mutual fund.00% 50.3 Response Government Non Government Semi Government Total Frequency 3 9 3 15 Percentage 20% 60% 20% 100% Graph:3 70.00% 40.00% 20.00% 10.00% 60.00% 30.00% 0.00% 20.

Q. Non Govt.00 1 2 3 39 4 .40 25% 0.20 17% 8% 0. 4 How many shares do you have? (A) 1-10 (B) 10-50 (C) 50-100 (D) More than 100 Figure no.30 0.Govt.10 0. Interpretation:.Above Graph shows that 20% investors prefer to Government sector.50 0.4 Response 1-10 10-50 50-100 More than 100 Total Frequency 1 6 3 2 12 Percentage 8% 50% 25% 17% 100% Graph:4 50% 0. 60% prefer to Non Government sector and 20% prefer to Semi Government sector. Semi Govt.

1-10 10-50 50-100 Above 100 Interpretation:. 25% have 50-100 Shares and only 17% investors have more than 100 shares.Above Graph shows that 8% investors have 1-10 shares.5 Your returns are mostly in…… (A) Profit (B) Loss Figure no. 50% investors are those who have 10-50 shares. Q. 58% 40 . 42% Profit loss Profit.5 Response Profit Loss Total Frequency 7 5 12 Percentage 58% 42% 100% Graph:5 loss.

6 Who suggest you to invest in stock market? (A) Family member (B) Relatives (C) By own (D) Brokers Figure no.6 Response Family member Relatives By own Brokers total Frequency 0 2 8 2 12 Percentage 0% 17% 66% 17% 100% Graph:6 66% 70% 60% 50% 40% 30% 17% 20% 17% 10% 0% 0% 1 2 3 41 4 .Above Graph shows that 58% investors said that their returns are in profit but 42% are dissatisfied with investing in stock market.Interpretation:. Q.

Family Relative By own Brokers Interpretation:.7 What Percentage amount of your income do you invest in Stock market (A) 10-20% (B) 20-30% (C) 30-40% (D) Above 40% Figure no. Q.7 Response 10-20% 20-30% 30-40% Above 40% Total Frequency 2 5 3 2 12 Percentage 17% 41% 25% 17% 100% Graph:7 42 .Above Graph shows that 17% investors are suggested by relatives. 66% are invested by own. 17% are forced by brokers.

8 What do you consider the most important while investing in stock market? (A) Profit (B) Capital appreciation (c) Tax benefit (D) Other ( specify) Figure no. 25% invest 30-40% income and 17% are those who invest their more than 40% parts of income in stock market.Above Graph shows that 17% investors are those who invest their 10-20% income in stock market. Q. 41% invest 20-30% income.45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 41% 25% 17% 10-20% 17% 20-30% 30-40% Above 40% Interpretation:.8 Response Profit Capital appreciation Tax benefit Other Total Frequency 6 2 3 1 12 Percentage 50% 17% 25% 8% 100% Graph:8 43 .

9 Response Self Child Wife Other total Frequency 5 2 3 2 12 Percentage 41% 17% 25% 17% 100% 44 . 17% invest for capital appreciation. Q. 25% invest for tax benefit and 8% are those who invest for other purpose like saving motive etc.Above Graph shows that 50% investors main motive is profit to invest in stock market.9 For whom you did invest in stock market? (A) Self (B) Child (C) Wife (D) Other (please specify) Figure no.60% 50% 50% 40% 30% 25% 17% 20% 8% 10% 0% Profit Capital Tax Other Interpretation:.

17% invested for their children. 25% invested for their wives and 17% those who invest for their parents and relatives.10 Response Physical form Demat form Total Frequency 0 12 12 Percentage 0% 100% 100% Graph:10 45 . Q. 10 According to you what is the better form to keep the security? (A) Physical form (B) Demat form Figure no.Above Graph shows that 41% are invested for themselves.Graph:9 45% 41% 40% 35% 30% 25% 25% 20% 17% 17% 15% 10% 5% 0% Self Child Wife Other Interpretation:.

11 Response Yes No Total Frequency 7 5 12 Percentage 58% 42% 100% 46 .200% 150% Demat 100% Physical 50% 0% 1 Interpretation:. Q.Above Graph shows that every investor want to keep his shares in Demat form. 11 Are you satisfied with your investment? (A) yes (B) No Figure no. no one is ready to prefer physical form.

12 Do you think investment in stock market is more risky than others? (A) Yes (B) No Figure no.Above Graph shows that 58% investors are satisfied with their investment and 42% are dissatisfied with their investments.12 Response Yes No Total Frequency 10 2 12 Percentage 83% 17% 100% 47 . Q.Graph:11 42% yes no 58% Interpretation:.

13 Do you go through all the details before making a final choice? (A) yes (B) No Figure no.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 Response Yes No Total Frequency 12 0 12 Percentage 100% 0% 100% 48 .Graph:12 17% Yes no 83% Interpretation:.

Q. 14 If you did not invest in stock market then what will be the other option? (A) Insurance (B) Saving (C) Property (D) Others Figure no.Graph:13 yes no 100% Interpretation:.Above Graph shows that 100% investors take the complete information before taking the decision of investment in stock market.14 Response Insurance Saving Property Frequency 3 1 7 49 Percentage 25% 8% 59% .

50 . 5 Possibility of Error in analysis of data due to small sample size. 59% prefer to property and 8% said that they prefer to other options like shops etc. 4 Possibility of Error in data collection. 3 Investors did not disclose their secrets data and strategies. Limitations: 1 Time limitation 2 Research has been done only in Ludhiana and Fatehgarh Sahib City.Others Total 1 12 8% 100% Graph:14 70% 59% 60% 50% 40% 30% 25% 20% 8% 10% 8% 0% Insurance Saving Property Others 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.

Majority of the investors are satisfied with their investments. Mostly investors prefer to Equity share and Non Government sector for investment in stock market. Investors are not forced by any other for investing in stock market. 2. 3. they take their decisions by own. 51 . RESULTS 1.

4. Investors invest large amount of their income in stock market for earn more profit. They thought that Demat form is better than physical form. Every investor want full information about the plans before investment  SUGGESTIONS 1. Service of stock market should be improve. Procedure to get membership should be made easily assessable. More and more advertising should be used by companies to tap the investors. 5. 7. 2. Investors are thought that investment in stock market is very risky. 52 . 6. 3.

com/ http://www.com/ 53 . More and more benefits should be given. 5.capitalmarket.org/wiki/Stock_market http://www.4. Brokers have need to give the full information to the investors.nse-india. Security should be increased in investment.wikipedia. 6.  REFERENCE:Siteshttp://en.

moneycontrol. Gender……………. Murphy Benjamin Graham QUESTIONNAIRE Name………………………….1 Do you invest in stock market? (A) yes (B) No 54 .com/terms/c/capitalmarkets.investopedia.asp http://www.com/sensex/bse/sensex-live BooksHow to Make Money in Stocks William O’Neil Technical Analysis of the Financial Markets The Intelligent Investor John J.http://www.Age…………….Occupation…………………… Q.

3 Which sector you prefer for investment in stock market? (A) Government (B) Non Government (C) Semi Government Q. 6 Who suggest you to invest in stock market? (A) Family member (B) Relatives (C) By own (D) Brokers Q.9 For whom you did invest in stock market? (A) Self (B) Child 55 .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 (B) Derivatives (C) Mutual funds (D) Others Q.5 Your returns are mostly in…… (A) Profit (B) Loss Q.7 What Percentage amount of your income do you invest in Stock market (A) 10-20% (B) 20-30% (C) 30-40% (D) Above 40% Q.Q. 4 How many shares do you have? (A) 1-10 (B) 10-50 (C) 50-100 (D) More than 100 Q.8 What do you consider the most important while investing in stock market? (A) Profit (B) Capital appriciation (c) Tax benefit (D) Other ( specify) Q.

14 If you did not invest in stock market then what will be the other option? (A) Insurance (B) Saving (C) Property (D) Others Q. …………………………………………………………………………………… …………………………………………………………………………………… 56 .15 Do you want any improvement in the policies of stock market.13 Do you go through all the details before making a final choice? (A) yes (B) No 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.(C) Wife (D) Other (please specify) Q. Please give Suggestion.12 Do you think investment in stock market is more risky than others? (A) Yes (B) No Q.