Introduction

1.1 Introduction to the Stock Market

The Stock exchanges play a very vital & sensitive role in the functioning of the Economy. Stock
Exchanges indicate and reflect the performance of the countrys economic state of health. A
Stock Exchange is a centralized market for buying & selling stocks where the price is determined
through demand-supply mechanisms. Stock Markets are exposed to a high degree of volatility
where the prices of stocks may go up in one day and then later experience a fall in prices for the
next five days and then continue a similar cycle.

In the Stock Market buyers and sellers do not meet each other directly nor do they interact before
making trades. The investor, (buyers or sellers of securities) trade through brokers who are
members of the stock exchange. The stock broker gets a paid commission for the trades he
performs on behalf of the investors.

The Securities Exchange Board of India (SEBI) is a statutory body, which regulates the
securities market and also maintains a balance between protecting the interest of the investors by
formulating rules and regulations to foster the market development.

The past performance in Capital Market especially the mental wounds inflicted due to the
Harshad Mehta and Ketan Parikh scam has led to tightening of operations by SEBI. In
addition SEBI also regulates foreign investments and makes investment exposure imperative for
better operational efficiency. SEBI undertakes a comprehensive and deep analysis of volatility
improves discipline and brings greater transparency by improving trading activities in Stock
Exchanges.

During the past years it has been observes that the Indian Capital Market has seen a paradigm
shift. Every segment of the Market such as the Primary Market, Capital Market, and Derivatives
Market has experienced changes and is now improving due to the volatility, investor response
and behaviour of Stock Market.

On the career related aspect, the sector offers a wide range of opportunities for professionals in
numerous job roles and one can expect prosperous career ahead for them.
1.2 Introduction to Nifty

NIFTY is introduced by National Stock Exchange (NSE) for equity markets and it is a
major stock index in India. It is owned and managed by Indian index services and
products (IISL).

NIFTY represents top stocks of National Stock Exchange (NSE) just like SENSEX, which
represents top stocks of BSE (Bombay stock Exchange). It is a major indicator of market
movement.
The National Stock Exchange (NSE) is Indias leading stock exchange.
NSE provides a modern, fully automated screen based trading system.
NSE network stretches to more than 1500 locations in the country and supports more than
2,30,000 terminals.
NSE and Singapore Exchange (SGX) have signed a memorandum of understanding to co-
operate in the development of the market for India-linked products and services to be listed on
SGX.
The Nifty index comprises of the following Companies

Company Name Industry

Adani Ports and Special Economic Zone Ltd. SERVICES
Ambuja Cements Ltd. CEMENT & CEMENT
PRODUCTS
Asian Paints Ltd. CONSUMER GOODS
Aurobindo Pharma Ltd. PHARMA
Axis Bank Ltd. FINANCIAL SERVICES
Bajaj Auto Ltd. AUTOMOBILE
Bajaj Finance Ltd. FINANCIAL SERVICES
Bharat Petroleum Corporation Ltd. ENERGY
Bharti Airtel Ltd. TELECOM
Bharti Infratel Ltd. TELECOM
Bosch Ltd. AUTOMOBILE
Cipla Ltd. PHARMA
Coal India Ltd. METALS
Dr. Reddy's Laboratories Ltd. PHARMA
Eicher Motors Ltd. AUTOMOBILE
GAIL (India) Ltd. ENERGY
HCL Technologies Ltd. IT
HDFC Bank Ltd. FINANCIAL SERVICES
Hero MotoCorp Ltd. AUTOMOBILE
Hindalco Industries Ltd. METALS
Hindustan Petroleum Corporation Ltd. ENERGY
Hindustan Unilever Ltd. CONSUMER GOODS
Housing Development Finance Corporation FINANCIAL SERVICES
Ltd.
I T C Ltd. CONSUMER GOODS
ICICI Bank Ltd. FINANCIAL SERVICES
Indiabulls Housing Finance Ltd. FINANCIAL SERVICES
Indian Oil Corporation Ltd. ENERGY
IndusInd Bank Ltd. FINANCIAL SERVICES
Infosys Ltd. IT
Kotak Mahindra Bank Ltd. FINANCIAL SERVICES
Larsen & Toubro Ltd. CONSTRUCTION
Lupin Ltd. PHARMA
Mahindra & Mahindra Ltd. AUTOMOBILE
Maruti Suzuki India Ltd. AUTOMOBILE
NTPC Ltd. ENERGY
Oil & Natural Gas Corporation Ltd. ENERGY
Power Grid Corporation of India Ltd. ENERGY
Reliance Industries Ltd. ENERGY
State Bank of India FINANCIAL SERVICES
Sun Pharmaceutical Industries Ltd. PHARMA
Tata Consultancy Services Ltd. IT
Tata Motors Ltd. AUTOMOBILE
Tata Steel Ltd. METALS
Tech Mahindra Ltd. IT
UPL Ltd. FERTILISERS & PESTICIDES
UltraTech Cement Ltd. CEMENT & CEMENT
PRODUCTS
Vedanta Ltd. METALS
Wipro Ltd. IT
Yes Bank Ltd. FINANCIAL SERVICES
Zee Entertainment Enterprises Ltd. MEDIA & ENTERTAINMENT
Table 1.1 50 Companies in Nifty Index

NSE plays an important role in helping Indian companys access equity capital, by providing a
liquid as well as regulated markets lists securities in its capital market (equities) segment and its
wholesale debt market segment. Daily updated list of securities and further analysis is available
on NSE website which is the official website of national stock exchange.
NSE plays an important role in helping Indian companies access equity capital, by providing a
liquid as well as regulated market. NSE lists securities in its capital market (equities) segment
and its wholesale debt market segment. Daily updated list of securities and further analysis is
available on NSE website which is the official website of national stock exchange.
1.3 Introduction to topic

The nifty index comprises of 50 stocks, the project deals with analyzing and comparing returns
of NIFTY 50 over the past 10 years. The return of the index is being analyzed by the various
factors based on Free Float Market Capitalization Weighted Index. From June 26, 2009 the
computation was changed to free float methodology. The base period for the S&P CNX Nifty
Index is Nov 3, 1995. The Base value of the index has been set at 1000 and a base capital of
Rs. 2.06 Trillian. The S&P CNX Nifty Index was developed by Ajay Shah and Susan Thomas.

1.4 Objectives of the study

To analyze the returns of Nifty for the past 10 years (Jan 2007-Jan 2017)
To find out the factors that are affect nifty for the past 10 years.
To find the benefits of nifty index to the investors and to the companies.
To analyze the performance of Nifty by using various Risk Return parameters.

1.5 Need for the study

The project report prepared gives us an opportunity to study the practical approach to the trading
done on stock exchanges. The report includes the fluctuations in Nifty 50 and the reasons behind
its fluctuations over the past 10 years. The analysis done can help investors can use the report to
analyze the returns of Nifty for the past 10 years. It helps individuals who are at the initial stage
of investment in stock market to make investment decisions.
1.6 Review of Literature