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A SPECIALISATION PROJECT REPORT ON

“UNDERSTANDING THE STOCK MARKET


MOVEMENT”

SUBMITTED BY
ASHWANI KUMAR SINGH
ROLL NO:B3-05

UNDER THE ESTEEMED GUIDANCE OF


DR. V.G.CHARI
SSIM

SIVA SIVANI INSTITUTE OF MANAGEMENT


AUTHORISATION

This specialisation project “UNDERSTANDING THE STOCK MARKET


MOVEMENT” is submitted as a partial fulfillment of the requirement of
PGDM program of Siva Sivani Institute of Management, Secunderabad.

APHIDALIN SYIEMLIEH
DATE: 10.01.2011
PLACE: SECUNDERABAD
ACKNOWLEDGEMENT

I would like to thank my faculty guide, DR. V.G.CHARI, for all his
valuable inputs and constant support towards me throughout my
specialisation project and providing me an opportunity to learn outside the
class room. It was a truly wonderful learning experience.

Finally I would like to dedicate this project to my family members for their
blessings, and my friends/classmates for their help and wishes for the
successful completion of this project.

APHIDALIN SYIEMLIEH

Contents
EXECUTIVE SUMMARY.........................................................................................................6
INTRODUCTION....................................................................................................................7
OBJECTIVE OF STUDY...........................................................................................................8
SCOPE OF STUDY..................................................................................................................9
RESEARCH METHODOLOGY................................................................................................10
AN OVERVIEW OF STOCK MARKET......................................................................................11
HISTORY OF STOCK MARKET.............................................................................................13
PRESENT SCENARIO OF STOCK MARKET.............................................................................14
CAPITAL MARKET..............................................................................................................17
1. PRIMARY MARKET....................................................................................................17
2. SECONDARY MARKET..............................................................................................19
NATIONAL STOCK EXCHANGE (NSE) OF INDIA.....................................................................21
BOMBAY STOCK EXCHANGE (BSE) OF INDIA.......................................................................24
REGIONAL STOCK EXCHANGE (RSE) OF INDIA.....................................................................25
OVER THE COUNTER EXCHANGE (OTCEI) OF INDIA..............................................................27
FACTORS INFLUENCING STOCK MARKET............................................................................31
Demand and Supply......................................................................................................31
Market Capital...............................................................................................................31
Earning Per Share..........................................................................................................31
IMPACT OF NEWS...............................................................................................................32
Secular Market Trends...................................................................................................32
Primary Market Trends...................................................................................................33
Secondary Market Trends..............................................................................................34
MARKET TRENDS IN YEAR 2009...........................................................................................35
RELATIONSHIP BETWEEN DOLLAR AND RUPEE MOVEMENT................................................37
INTERPRETING RECENT MOVEMENTS OF THE RUPEE-DOLLAR RATE....................................39
RECENT DEVELOPMENT IN STOCK MARKET........................................................................40
Key Features Of The Depository System In India...........................................................40
Benefits..........................................................................................................................42
Advantages of the Depository System...........................................................................42
Disadvantage of the Depository System........................................................................43
Depositiory Participant..................................................................................................45
NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL)..........................................................46
CENTRAL DEPOSITORY SERVICES LIMITED (CDSL)..............................................................48
FOREIGN STOCK EXCHANGE...............................................................................................52
NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATIONS (NASDAQ)....54
NEW YORK STOCK EXCHANGE (NYSE)................................................................................55
LONDON STOCK EXCHANGE (LSE).......................................................................................56
MOVEMENT OF STOCK MARKET (NSE) WITH $ & RS..............................................................57
DATA FINDINGS..............................................................................................................57
DATA ANALYSIS..............................................................................................................58
MOVEMENT OF STOCK MARKET (BSE) WITH $ & RS..............................................................60
DATA FINDINGS..............................................................................................................60
DATA ANALYSIS..............................................................................................................61
LIMITATIONS.....................................................................................................................63
ANALYSIS OF TWO STOCKS OF A COMPANY........................................................................64
INFOSYS TECHNOLOGY LIMITED....................................................................................64
WIPRO LIMITED..............................................................................................................65
CONCLUSION.....................................................................................................................66
RECOMMENDATIONS..........................................................................................................67
BIBLIOGRAPHY..................................................................................................................68
BIBLIOGRAPHY

EXECUTIVE SUMMARY

The project on Stock market movement is an attempt to study the relationship between dollar
and rupee movement versus stock market indices with an overall primary market and
secondary market of India. It helped to know and study the parameters opted by the Stock
market and the companies who are operating themselves under the rules and regulation of
SEBI.

The market for long-term securities like bonds, equity stocks and preferred stocks is divided
into primary market and secondary market. The primary market deals with the new issues of
securities. Outstanding securities are traded in the secondary market, which is commonly
known as stock market or stock exchange. In the secondary market, the investors can sell and
buy securities. Stock markets predominantly deal in the equity shares. Debt instruments like
bonds and debentures are also traded in the stock market. Well-regulated and active stock
market promotes capital formation. Growth of the primary market depends on the secondary
market. The health of the economy is reflected by the growth of the stock market.

Companies raise funds to finance their projects through various methods. The promoters can
bring their own money or borrow from the financial institutions or mobilize capital by issuing
securities. The funds may be raised through issue of fresh shares at par or premium, preference
shares, debentures or global depository receipts. The main objectives of a capital issue are
given below:

• To promote a new company


• To expand an existing company
• To diversify the production
• To meet the regular working capital requirements
• To capitalize the reverses
Once a company's public offering is complete, it gets listed in a stock exchange. After
listing it would be available for trading to all investors in the stock exchanges.

INTRODUCTION
The Stock Exchange provides companies with the facility to raise capital for expansion through
selling shares to the investing public. The "stock market" is just that- a huge "market" where
stocks are traded by many different vendors. This project emphasis on the movement of stock
market in order to study the relationship between dollar and rupee, how and what makes the
price of a stock change?, when to invest in stock market?, what is the right time for FDI? And
many others factors related to stock movement will be included in this project.

Companies are expected to earn profit. If profits increase, the stock price will likely increase.
Even if investors think the earnings will increase, the stock price may go up. If good news
comes out on a company, the price, and demand for the stock may go up. With bad news, the
price and demand may go down. The price of a stock is even more dramatically affected when
supply is very high or very low. It is not so uncommon for certain unscrupulous individuals to
"create" news or other financial information, for the purpose of duping unsaved investors into
creating a demand situation, into which, the unscrupulous-one "sells into" and makes an unfair
profit. The project will also focus on investors protection.

The problem one seem to study market trends and therefore find difficulty in interpreting it
can be solve after studying the NSE an d BSE which will help to gather information regarding
all listed company till date, to build information about the share market, to identify the good
stocks to invest trade understanding the market strategy.

The NSE and BSE index with movement of Dollar ($) and Rupee(Rs.) indices helps investors
to analysis the relation of currencies, will make easy to study the seasonal variation of stock
market as this project has graphing data, trend analysis which will be easy to interpret market
trends.

OBJECTIVE OF STUDY
The working of stock exchanges in India started in1875. BSE is the oldest stock market
in India. Indian stock trading starts with 318 persons taking membership in Native Share
and Stock Brokers Association, which we now know by the name Bombay Stock
Exchange or BSE. BSE and NSE represent themselves as synonyms of Indian stock
market. It helps in raising capital for businesses, mobilizing savings for investment,
facilitating company growth, profit sharing corporate governance.

In many areas, the housing market has also suffered, resulting in numerous evictions,
foreclosures and prolonged vacancies. Issues regarding bank solvency, declines in credit
availability and damaged investor confidence had an impact on global stock markets,
where securities suffered large losses during late 2008 and early 2009. Economies
worldwide slowed during this period as credit tightened and international trade declined.
Critics argued that credit rating agencies and investors failed to accurately price the risk
involved with mortgage-related financial products, and that governments did not adjust
their regulatory practices to address 21st century financial markets

In 2009 there has been a lot of focus on the appreciation of the rupee against the dollar.
The US dollar has fluctuated considerably in the period after September 2008, and
interpret the recent events on the Indian currency market. However this project will
bring out the circumstances at how and when these fluctuation has contributed to Indian
rupee as well as US dollar. The other areas which will be highlighted are:-

• To know reasons for investing in Indian share market.


• To know the relation between dollar and rupee investment
• To know recent developments in stock market
• To know the factors affecting stock market
Therefore, these are the objectives that have been focus to clearly understand the stock
market scenario and for the welfare of investors.

SCOPE OF STUDY
A stock market or equity market is a public market for the trading of company stock and
derivatives at an agreed price, these are securities listed on a stock exchange. Indian Shares
listed in National Stock Exchange and Bombay Stock Exchange is closely monitored by the
prospective investors and business analysts after the end of every trading session for the
assessment of best performing stocks.

The movements of the prices in a market or section of a market are captured in price indices
called stock market indices, for e.g., the S&P, the FTSE. Organizations that facilitate the trade
in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical
location (like the NYSE) or an electronic system (like NASDAQ). Much trading of stocks
takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange,
while any two companies or people, for whatever reason, may agree to sell stock from the one
to the other without using an exchange. Without financial markets, borrowers would have
difficulty finding lenders themselves. Intermediaries such as banks help in this process. Banks
take deposits from those who have money to save. They can then lend money from this pool of
deposited money to those who seek to borrow.

Stock Indices helps to represents the performance of stock market and by proxy, reflects
investors sentiment on the state of the economy. This also helps one to analysis the updated
stock movement fluctuation with the BSE and NSE indices along with index from NYSE
Composite, NASDAQ Composite and other leading stock markets of the world. The study of
stock movement helps to know about:-

• The market news for companies about joint ventures or mergers is important, as they
help in predicting the movement of stocks.
• Trading indicators are available, for investors who do not understand performance
charts, having one of these indicators could be beneficial.
• Investors must be willing to learn from any mistakes that they make, as experience is
the foremost guide to an investor in the stock market.
• Thus, the study will help investors to invest their money after briefly understanding the
market scenario, investment strategy, factors affecting stock market with NSE and BSE
indices.

RESEARCH METHODOLOGY

This report is based on secondary data which can be process through paper based
sources as journals, company reports, research reports, periodicals, newspapers,
magazines and statistics.

• Technical observation had been done.


• Analysis of stock market on monthly basis
• A deductive approach had been examined through :-

○ Hypothesis based upon prior theoretical knowledge.


○ Collection of data and carrying out analysis

AN OVERVIEW OF STOCK MARKET


A stock market or equity market is a public market for the trading of company stock and
derivatives at an agreed price, these are securities listed on a stock exchange. Indian Shares
listed in National Stock Exchange and Bombay Stock Exchange is closely monitored by the
prospective investors and business analysts after the end of every trading session for the
assessment of best performing stocks. The movements of the prices in a market or section of a
market are captured in price indices called stock market indices, for e.g., the S&P, the FTSE
index.

The stock market is one of the most important sources for companies to raise money. This
allows businesses to be publicly traded, or raise additional capital for expansion by selling
shares of ownership of the company in a public market. The liquidity that an exchange
provides affords investors the ability to quickly and easily sell securities. This is an attractive
feature of investing in stocks, compared to other less liquid investments such as real estate. An
economy where the stock market is on the rise is considered to be an up-and-coming economy.
In fact, the stock market is often considered the primary indicator of a country's economic
strength and development. Rising share prices, for instance, tend to be associated with
increased business investment and vice versa. Share prices also affect the wealth of households
and their consumption. Therefore, central banks tend to keep an eye on the control and
behavior of the stock market and, in general, on the smooth operation of financial system
functions.
Statistics show that in recent decades shares have made up an increasingly large proportion of
households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts and
other very liquid assets with little risk made up almost 60 percent of households' financial
wealth, compared to less than 20 percent in the 2000s. The major part of this adjustment in
financial portfolios has gone directly to shares but a good deal now takes the form of various
kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds,
hedge funds, insurance investment of premiums, etc. The trend towards forms of saving with a
higher risk has been accentuated by new rules for most funds and insurance, permitting a
higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized
countries.

In all developed economic systems, such as the European Union, the United States, Japan and
other developed nations, the trend has been the same: saving has moved away from traditional
(government insured) bank deposits to more risky securities of one sort or another. In comprise
of all this areas stock market plays major role as:

• Raising capital for businesses


The Stock Exchange provide companies with the facility to raise capital for expansion
through selling shares to the investing public

• Mobilizing savings for investment


When people draw their savings and invest in shares, it leads to a more rational
allocation of resources because funds, which could have been consumed, or kept in
idle deposits with banks, are mobilized and redirected to promote business activity with
benefits for several economic sectors such as agriculture, commerce and industry,
resulting in stronger economic growth and higher productivity levels of firm.

• Facilitating company growth


Companies view acquisitions as an opportunity to expand product lines, increase
distribution channels, hedge against volatility, increase its market share, or acquire other
necessary business assets. A takeover bid or a merger agreement through the stock
market is one of the simplest and most common ways for a company to grow by
acquisition or fusion.
• Corporate governance
By having a wide and varied scope of owners, companies generally tend to improve on
their management standards and efficiency in order to satisfy the demands of these
shareholders and the more stringent rules for public corporations imposed by public
stock exchanges and the government. Consequently, it is alleged that public companies
(companies that are owned by shareholders who are members of the general public and
trade shares on public exchanges) tend to have better management records than
privately held companies (those companies where shares are not publicly traded).

HISTORY OF STOCK MARKET


In 12th century France the courtiers de change were concerned with managing and regulating
the debts of agricultural communities on behalf of the banks. Because these men also traded
with debts, they could be called the first brokers. A common misbelieve is that in late 13th
century Bruges commodity traders gathered inside the house of a man called Van der Beurze,
and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until then, an
informal meeting, but actually, the family Van der Beurze had a building in Antwerp where
those gatherings occurred;[6] the Van der Beurze had Antwerp, as most of the merchants of that
period, as their primary place for trading. The idea quickly spread around Flanders and
neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in government securities. In
1351 the Venetian government outlawed spreading rumors intended to lower the price of
government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in
government securities during the 14th century. This was only possible because these were
independent city states not ruled by a duke but a council of influential citizens. The Dutch later
started joint stock companies, which let shareholders invest in business ventures and get a
share of their profits - or losses. In 1602, the Dutch East India Company issued the first share
on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds.

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock
exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short
selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative
instruments, much as we know them". There are now stock markets in virtually every
developed and most developing economies, with the world's biggest markets being in the
United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea
and the Netherlands.

PRESENT SCENARIO OF STOCK MARKET


The current conditions of Indian current market have drastically improved. There is absolute
transparency and instant transactions. All Indian Stock markets are now computerized and
Internet Trading has become a common phenomenon. Indian stock markets have also
developed a dynamic nature and can change from a bullish temperament to a bearish slide. Any
small bit of information or even rumors from any part of the country can affect the market and
is a fairly accurate indicator of the prevalent atmosphere in the region or country. People from
across the country and globe get in touch with minute wise readings on the stock market and
gain a lot of trading aptitude after daily seeing BSE Stock Gainers or BSE top losers list which
does a world of good to their investment portfolio.

Share markets in India comprise primarily of NSE share and BSE share with share brokers
managing the transactions. The SEBI is the governing body in India, controlling the activities
of the stock exchanges, and stock brokers too function under SEBI guidelines. To open trading
accounts to be able to buy and sell shares like NSE share or BSE share, you will have to seek
the services of stock brokers. Many a broker functions online through the medium of brokerage
platforms. Once you get registered at such an online trading platform, you can get tips and
suggestions from expert brokers, helping you take your investing goals to the next level.

It is moving in the right direction that matters in share markets trading. Market analysts and
experts advice investors not to invest in individual NSE share or individual BSE share given
the market volatility and the high risks involved. And as aforementioned those who manage
their own portfolios including experts are at least able to decipher, take risks, and buy
individual stocks without paying heed to the brokers' advice. Their deep knowledge about the
market and their ability to select the right stocks help them experience a win-win situation.

The Indian Stock Markets can be a very rewarding avenue of investment but the constant
changes and the inherent dynamic nature of the markets can wipe out your funds or savings
within a minute. Thus, the key words for every retail investor is to be constantly alert and very
observant. Don't always rely on the daily list of BSE top gainers or BSE top losers as it only
takes a minute to get the things changed here. Keeping ones eyes and ears open can the insure
the investor against any major losses.

Share markets across the world are recuperating with traces of recession still visible in few
nations. The Indian stock market is fast recovering and the emerging opportunities have led to
the steady inflows of foreign investments. Investing in India has thus become a trend which is
likely to gain more impetus in the near future. It is the promotion oriented user friendly policies
of the Indian government that have led to this sudden surge. And owing to the increased
quantum of foreign investment inflows, India is emerging as one of the best performing
markets.

The stock market is characterized by its volatility. What exactly causes its rises and falls has
several explanations. Some of them are obvious whereas others are not so easily determined.
Most of the market movers are of economic, political and societal character. Some of the
factors that cause movement in the stock market have long-term effects while the influences of
others are felt only in the short-term. Some of the easily determined market movers include:

Inflation
Earnings
Interest Rates
Domestic Political Turmoil
Terrorism and Times of War
Oil and Energy Prices
Crime and Fraud
Uncertainty

The last mentioned factor - uncertainty - plays an extreme role in the movement of the market.
The stock market is characterized by its unpredictability. Thus, only a little surprise may
change the direction toward which the market has headed. Generally, it is claimed that every
investor has equal access to the available information. However, this is not always the case. On
the other hand, most investors expect that the stock market is efficient enough to be able to
predict events and news in a timely manner so that it can quickly and effectively respond to
conditions that has aroused.
If the Fed (the Federal Reserve Board's Open Market Committee) is about to decide on the
increase of interest rates by one-quarter, it is expected that even the decision is taken the
market will adjust the prices of the stocks to reflect the future change. As a result, after the
decision is taken by the Fed, the change in the interest will be unfelt since the market has
already done its job. Different unexpected events, such as economic news or war may take the
market out of balance, which may lead to serious financial depression.

On the other hand, events with positive light will have a reverse effect by increasing the
prices. Unfortunately, today what moves most of the time the stock prices are bad news. These
movements of the market should be of no worry to you since they are of a temporary character.
They will soon be alleviated. The knowledge of market movers is important in order to be able
to both seize the opportunities offered and avoid the problems that occur as a result of stock
market movements.

To be a successful investor you need two main things - the knowledge and the right trading
platform.

CAPITAL MARKET
Capital market is a market which provides an opportunity for the companies to raise the funds
directly from the investors, as well as, outstanding securities are bought and sold in this
market. This market functions under the supervision of Securities and Exchange Board of
India, the regulatory provisions regulating this market are derived from various laws like
Securities and Contracts Regulation Act, Companies Act, SEBI Act, FEMA, etc. this market is
divided into two segments:
1. Primary market
2. Secondary market

1. PRIMARY MARKET
It is the market which provides a platform for new as well as old companies to raise funds by
issuing securities directly to the ultimate investors. Thus, the market provides a bridge between
savings and investments. Different securities like equity shares, preference shares debentures,
bonds, etc. are issued to the investors. These can be issued through any of the following
mechanisms:

• Public issue
• Rights issue
• Private placement
• Public issue through book building
• Buyout deals
Public issue
It is the system of issuing securities by a public limited company. In this the general public is
invited to subscribe towards the capital of the company. General public includes individual
investors, institutional investors, mutual funds, NRI’s, etc. The securities issued through a
public issue must get listed on a stock exchange within 10 weeks from the closing of the issue.
The stock exchange should be the one whose name has been specified by the company in its
prospectus for the public issue. Under this, shares can be issued by the company at par, at
premium or at a discount. The issued price is decided by the company itself.
A company is required to complete all the regulatory formalities for bringing out its public
issue as specified by SEBI.

Rights issue
The raising of new capital by giving existing equity shareholders the right to subscribe to new
shares or debentures in proportion to their current holdings. These stocks are normally issued at
a discount to market price. A stockholder not wishing to take up a rights issue may sell the
rights. These can be issued to the general public, only when existing shareholders decline to
accept such offer. The subsequent issue of shares can be made to the general public after a
resolution to this effect has been passed under Section 81 of the Companies Act.

Private placement
The sale of securities directly to an institutional investor, such as a bank, mutual fund,
insurance company, pension fund, or foundation. Does not require SEC registration, provided
the securities are bought for investment purposes rather than resale, as specified in the
investment letter. The sale of securities to a relatively small number of select investors as a
way of raising capital. Investors involved in private placements are usually large banks, mutual
funds, insurance companies and pension funds. Private placement is the opposite of a public
issue, in which securities are made available for sale on the open market.
Since a private placement is offered to a few, select individuals, the placement does not have to
be registered with the Securities and Exchange Commission. In many cases, detailed financial
information is not disclosed and the need for a prospectus is waived. Finally, since the
placements are private rather than public, the average investor is only made aware of the
placement after it has occurred.
Public issue through book building
The system of book building is a mechanism of issuing shares to the general public in which
the company does not decide the final issue price of the securities, instead pricing is done by
inviting ‘Bids’ from the public. Decision of final issue price, acceptance of bids and book
running is done as per SEBI rules. In case of book building, different investors/bidders are
classified as follows:
• Qualified Institutional Buyers QIBS)
• Non-individual buyers
• Individual investors
The shares are issued to the investors at the cut- off point, decided by taking weighted average
of all the bids received. The bidders who have given the bids at or above the cut-off point
qualify for allotment, rest are disqualified and their application money is refunded as per rules.
Securities issued through this mechanism should be listed on a recognized stock exchange.

Buyout deals
A company can issue the shares on OTCEI through the mechanism of buyout deals, which is as
follows:
• Company negotiates with at least one dealer of the exchange to buy the complete issue
at the specified price.
• Buyout deal is with the intention that the dealer will sell these shares in the general
market in the future.
• Dealer will have no managerial control over the company.
• Dealer has the freedom to sell through the stock exchange or directly to the public.

1. SECONDARY MARKET
A market in which outstanding securities of corporate houses and government are traded in
through the intervention of members of the stock exchange. All the transaction entered through
the members of the stock exchange become valid and legal only when these are reported to the
stock exchange. For exchange traded transactions default risk is negligible, as exchange
becomes the counter party and takes the responsibility for the settlement of transaction. Every
stock exchange is the secondary market itself. Stock exchange provides necessary facilities for
the trading of securities on the floor of the stock exchange.
A stock exchange is two-way quotation market through an open outcry system for buying and
selling the securities listed on the stock exchange, as per the bye laws of the exchange and
regulation of regulatory body. Transactions are entered through the members of the stock
exchange only in the listed securities.
Secondary marketing is vital to an efficient and modern capital market. In the secondary
market, securities are sold by and transferred from one investor or speculator to another. It is
therefore important that the secondary market be highly liquid (originally, the only way to
create this liquidity was for investors and speculators to meet at a fixed place regularly).As a
general rule, the greater the number of investors that participate in a given marketplace, and the
greater the centralization of that marketplace, the more liquid the market.
Fundamentally, secondary markets mesh the investor's preference for liquidity (i.e., the investor's
desire not to tie up his or her money for a long period of time, in case the investor needs it to deal with
unforeseen circumstances) with the capital user's preference to be able to use the capital for an
extended period of time.
Accurate share price allocates scarce capital more efficiently when new projects are financed through a
new primary market offering, but accuracy may also matter in the secondary market because:
1) Price accuracy can reduce the agency costs of management, and make hostile takeover a less risky
proposition and thus move capital into the hands of better managers, and
2) Accurate share price aids the efficient allocation of debt finance whether debt offerings or
institutional borrowing.

NETWORK OF STOCK EXCHANGES IN INDIA

Stock Exchanges are structured marketplace where affiliates of the union gather to sell
firm's shares and other securities. India Stock Exchanges can either be a conglomerate/
firm or mutual group. The affiliates act as intermediaries to their patrons or as key
players for their own accounts. Stock Exchanges in India also assist the issue and
release of securities and other monetary tools incorporating the fortification of revenues
and dividends. The book keeping of the trade is centralized but the buying and selling is
associated to a particular place as advanced marketplaces are mechanized. The buying
and selling on an exchange is only open to its affiliates and brokers.

NATIONAL STOCK EXCHANGE (NSE) OF INDIA

Integrated in November 1992, the National Stock Exchange of India (NSE) was initially a tariff
forfeiting association. In 1993, the exchange was certified under Securities Contracts
(Regulation) Act, 1956 and in June 1994 it started its business functioning in the Wholesale
Debt Market (WDM). The Equities division of NSE began its operations in 1994 while in 2000
the corporation incorporated its Derivatives division.

Innovations
NSE has remained in the forefront of modernization of India's capital and financial markets,
and its pioneering efforts include:
• Being the first national, anonymous, electronic limit order book (LOB) exchange to
trade securities in India. Since the success of the NSE, existent market and new market
structures have followed the "NSE" model.

• Setting up the first clearing corporation "National Securities Clearing Corporation Ltd."
in India. NSCCL was a landmark in providing innovation on all spot equity market (and
later, derivatives market) trades in India.

• Co-promoting and setting up of National Securities Depository Limited, first depository


in India.

• Setting up of S&P CNX Nifty.

• NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.

• Being the first exchange that, in 1996, proposed exchange traded derivatives,
particularly on an equity index, in India. After four years of policy and regulatory
debate and formulation, the NSE was permitted to start trading equity derivatives

• Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in
India.

• NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-
TV18.

• NSE.IT Limited, setup in 1999, is a 100% subsidiary of the National Stock Exchange of
India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information
Technology (IT) products, solutions and services.

Markets
Currently, NSE has the following major segments of the capital market:

• Equity

• Futures and Options

• Retail Debt Market

• Wholesale Debt Market

• Currency futures
• Mutual Fund

• Stocks Lending & Browing

August 2008 Currency derivatives were introduced in India with the launch of Currency
Futures in USD INR by NSE. Currently it has also launched currency futures in EURO,
POUND & YEN. Interest Rate Futures was introduced for the first time in India by NSE on 31
August 2009, exactly after one year of the launch of Currency Futures.

NSE became the first stock exchange to get approval for Interest rate futures as recommended
by SEBI-RBI committee, on 31 August 2009, a futures contract based on 7% 10 Year GOI
bond (NOTIONAL) was launched with quarterly maturities.

Hours
NSE's normal trading sessions are conducted from 9:00 am India Time to 3:30 pm India Time
on all days of the week except Saturdays, Sundays and Official Holidays declared by the
Exchange (or by the Government of India) in advance The exchange, in association with BSE
(Bombay Stock Exchange Ltd.), is thinking of revising its timings from 9.00 am India Time to
5.00 pm India Time. There were System Testing going on and opinions, suggestions or
feedback on the New Proposed Timings are being invited from the brokers across India. And
finally on 18 November 2009 regulator decided to drop their ambitious goal of longest Asia
Trading Hours due to strong opposition from its members.

On 16 December 2009, NSE announced that it would pre-pone the market opening at 9am
from 18 December 2009. So NSE trading hours will be from 9:00 am till 3:30 pm India Time.
However, on 17 December 2009, after strong protests from brokers, the Exchange decided to
postpone the change in trading hours till 4 Jan 2010.

NSE new market timing from 4 Jan 2010 is 9:00 am till 3:30 pm India Time.

Some NSE Figures and Facts 2009


• The equities division of NSE covers around 300 Indian cities, while its derivates section
covers 305 cities.

• The number of securities accessible for buying and selling in NSE exchange in its
equities and derivates section are 1,383 and 3,143 respectively.
• The total amount of Settlement warranty fund in NSE equities division and derivates
section are Rs 2,085.25 crores and Rs 6,018.30 crores respectively.

• The daily turnover of NSE equities division is Rs 10,336.52 crores, for derivates
segment is Rs 32,809.96 crores and for Whole sale debt division is Rs 13,911.57 crores.

• NSE uses satellite communication expertise to strengthen contribution from around 400
Indian cities.

• The exchange administers around rs 1 million of buying and selling on daily basis.

• It is one of the biggest VSAT incorporated stock exchange across the world.

• Currently more than 8,500 customers are doing online exchange business on NSE
application.

Certifications
NSE also conducts online examination and awards certification, under its programmes of
NSE's Certification in Financial Markets (NCFM). Currently, certifications are available in 19
modules, covering different sectors of financial and capital markets. Branches of the NSE are
located throughout India.

BOMBAY STOCK EXCHANGE (BSE) OF INDIA


The oldest stock market in Asia, BSE stands for Bombay Stock Exchange and was initially
known as "The Native Share & Stock Brokers Association." Incorporated in the 1875, BSE
became the first exchange in India to be certified by the administration. It attained a permanent
authorization from the Indian government in 1956 under Securities Contracts (Regulation) Act,
1956.Over the year, the exchange company has played an essential part in the expansion of
Indian investment market. At present the association is functioning as corporatized body
integrated under the stipulations of the Companies Act, 1956.

Hours of operation
Session Timing
Beginning of the Day Session 8:00 - 9:00
Trading Session 9:00 - 15:30
Position Transfer Session 15:30 - 15:50
Closing Session 15:50 - 16:05
Option Exercise Session 16:05 - 16:35
Margin Session 16:35 - 16:50
Query Session 16:50 - 17:35
End of Day Session 17:30
The hours of operation for the BSE quoted above are stated in terms of the local time (i.e.
GMT +5:30) in Mumbai (Bombay), India. BSE's normal trading sessions are on all days of the
week except Saturdays, Sundays and holidays declared by the Exchange in advance.

Some BSE Figures and Facts


• BSE exchange was the first in India to launch Equity Derivatives, Free Float Index,
USD adaptation of BSE Sensex and Exchange facilitated Internet buying and selling
policy

• BSE exchange was the first in India to acquire the ISO authorization for supervision,
clearance & Settlement

• BSE exchange was the first in India to have launched private service for economic
training

• Its On-Line Trading System has been felicitated by the internationally renowned
standard of Information Security Management System.

REGIONAL STOCK EXCHANGE (RSE) OF INDIA


The Regional Stock Exchanges in India started spreading its business operation from 1894.
The first RSE to start its functioning in India was Ahmedabad Stock Exchange (ASE)
followed by Calcutta Stock Exchange (CSE) in 1908.
The stock exchange in India witnessed a flourishing phase in 1980s with the incorporation of
many exchanges under it. In early 60s, it has only few certifies RSEs under it namely
Hyderabad Stock Exchange, Indore Stock Exchange, Madras Stock Exchange, Calcutta Stock
Exchange and Delhi Stock Exchange. The recent to join the list was Meerut Stock Exchange
and Coimbatore Stock Exchange.
Catalog of Regional Stock Exchanges in India
• Ahmedabad Stock Exchange

• Bangalore Stock Exchange

• Bhubaneshwar Stock Exchange

• Calcutta Stock Exchange

• Cochin Stock Exchange

• Coimbatore Stock Exchange

• Delhi Stock Exchange

• Guwahati Stock Exchange

• Hyderabad Stock Exchange

• Jaipur Stock Exchange

• Ludhiana Stock Exchange

• Madhya Pradesh Stock Exchange

• Madras Stock Exchange

• Magadh Stock Exchange

• Mangalore Stock Exchange

• Meerut Stock Exchange

• OTC Exchange Of India

• Pune Stock Exchange

• Saurashtra Kutch Stock Exchange

• Uttar Pradesh Stock Exchange

• Vadodara Stock Exchange


OVER THE COUNTER EXCHANGE (OTCEI) OF INDIA
OTC Exchange Of India also known as Over-the-Country Exchange of India or OTCEI was
set up to access high-technology enterprising promoters in raising finance for new product
development in a cost effective manner and to provide transparent and efficient trading system
to the investors.
OTC Exchange Of India was founded in1990 under the Companies Act 1956 and got
recognized by the Securities Contracts Regulation Act, 1956 as a stock exchange. It has a
pattern along the lines of the NASDAQ market and has introduced several innovations to the
Indian capital markets like:

1. screen-based nationwide trading

2. sponsorship of companies

3. market making

4. scrip less trading

Among important listed companies under the OTC Exchange Of India are VIP, Advanta,
Sonora Tiles & Brilliant mineral water, etc.

OTC EXCHANGE OF INDIA


There are three types of intermediaries-

1. Members
2. Dealers
3. Sponsors
Services of OTC Exchange of India
OTC Exchange Of India introduced certain new concepts in the Indian trading system:

1. screen based nationwide trading known as OTCEI Automated Securities Integrated


System or OASIS
2. Market Making

3. Sponsorship of companies

4. Trading done in share certificates

5. Weekly Settlement Cycle

6. Short Selling

7. Demat trading through National Securities Depository Limited for convenient paperless
trading

8. Tie-up with National Securities Clearing Corporation Ltd for Clearing.

Promoters of the OTC Exchange of India


Some of the leading financial institutions of India that co-promote the Over-the-counter
exchange of India are like:

• Unit trust of India


• ICICI
• Industrial Development Bank of India
• SBI Capital Market limited
• Industrial Finance Corporation of India
• Life Insurance Corporation of India
• General Insurance Corporation of India & its subsidiaries.

OTC Exchange Of India introduced the opening of the Investor Grievance Cells at the four
Metro cities in India for readdressing the complaints from the investors against the brokers and
their listed companies. OTC Exchange Of India designed trading in debt instruments
commonly known as PSU bonds and also in the equity shares of unlisted companies.

Trading Documents on OTCEI


The trading documents on OTCEI are Counter Receipts (CRs) – permanent and temporary
CRs, sale confirmation slip, application acknowledge slip, and transfer deed. Initially, counter
receipts were issued instead of share certificates as share certificate was not a mercantile
document. The share certificate was kept with the registrar-cum custodian and a counter receipt
was issued against this as a tradable document to the allottee along with the allotment advice.
The counter receipt contained names of the investor and the company, number of shares, name
and address of the registrar, price, commission, date and time of the transaction, investor’s
signature, name of his bank, and signature of the issuing counter. Four copies of CR were
prepared and sent to the investor’s counter, OTCEI, registrar and investor. The counter receipt
could be exchanged for share certificate at any of the counters of OTCEI. If the investor
wanted to sell these shares on OTCEI, he had just to surrender the permanent counter receipt
and transfer deed at the exchange and get a sale confirmation slip. Later, as the trading
volumes dipped, counter receipts were replaced be share certificates from March 1999.

Advantages:
OTCEI was the first exchange in India to have on-line trading cum depository. It became quote
driven and a transparent system of trading. It provides a liquid cash market for retail investors
with a T + 3 rolling settlement system and no problem of bad or short deliveries. Despite the
unique advantages of the system, OTCEI got off to a poor start. Trading volumes were thin,
liquidity was poor, and most of the investors were not aware of its existence. This was the
result of the absence of a nationwide network, lack of an on line communication network of its
own, and the fact that in initial stages it restricted its business to Mumbai.

Steps to Improve Turnover on OTCEI:


During 1993-94, OTCEI entered a Memorandum of Understanding (MOU) with the NASDAQ
for enhanced cooperation between the two exchanges in the area of market technology,
regulations, and business development.

As part of its expansion program, OTCEI invited applications in January 1995 for dealership in
54 cities, in 19 States across the country to achieve nationwide coverage. As a result, OTCEI
could expand its dealer network from just 5 cities in 1995-96 to 23 cities during 1996-97. It has
60 national members and 145 dealers.

In order to increase the popularity of OTCEI, SEBI relaxed norms for listing on OTCEI during
March 1995. The minimum post issue capital to be offered to the public to enable listing was
lowered from 40 to 25 per cent. SEBI also permitted finance and leasing companies to get
listed on OTCEI. With the exposure of price rigging scams of finance companies, OTCEI
modified its guidelines in April 1995, making the listing of finance companies more stringent.
Companies covered under the FERA/ MRTP Act were permitted to be listed on OTCEI.
Hence, medium sized companies belonging to big industrial groups could join the OTCEI.
In 1996-97, OTCEI introduced trading of PSU bonds and launched a new segment called the
listed mutual fund segment. Despite relaxing the norms for the listing of securities, the
turnover at the exchange steadily declined from 1994-95. Hence, SEBI appointed two
committees – Malegam and Dave Committees to review OTCEI’s working and suggest
measures to improve its functioning. The recommendations of these committees suggested
relaxing the strict norms with which OTCEI had begun operating. During 1997-98, OTCEI re-
launched trading in the permitted segment by moving over a weekly settlement cycle in line
with the recommendations of the Dave Committee. The re-launched permitted segment
witnessed increased activity with a coverage of 15 cities.

OTCEI revamped its trading activity by switching from the system of Counter Receipts to
share certificates and dematerialization, with effect from March 1, 1999. Under the CR system,
it was difficult to match the buyer and seller receipts which resulted in delays. All CRs in
circulation were converted to share certificates or dematerialized.

FACTORS INFLUENCING STOCK MARKET


Stock market is something where you can never foretell what is going to happen in the market.
One can might get huge gain or incur losses when the stock market crashes. There are many
factors affecting share prices. It is very hard to say just one or two factors affect the share
prices. So, let us have a look at the factors that affect share prices.

Demand and Supply


This is the first factor that affects share prices. When you get to see that more people are
buying stocks, then there is an increase in the price of that particular stock. On the other hand
price of stock falls when more people are selling their stocks. So it is very difficult to predict
the Indian stock market. This is the main reason why one need to get in touch with a good
stock market consultant. There is consultancy for which help a lot on choosing the right stocks.
Market Capital
It is a very big mistake when you try to guess a company’s worth from the price of a stock.
You should know that the more important is the market capitalization of the particular
company. This helps to determine the worth of a company. So market cap serves as an
important use to determine share prices.

Earning Per Share


Now when it comes to the term, “earning per share”, it means the profit that a particular
company has made per share and that too on the last quarter. If you need to know the health of
the company then this is the most important factor. What’s more earning per share also
influences the buying tendency in the market that results in the increase of the particular stock
price. This is the reason why it is very important for every public company to bring out the
quarterly report. So when you wish to make a profitable investment, then the best thing for you
would be to keep a good watch on the quarterly reports of different companies. This is very
important before you wish to invest your hard earned money in the share market.

IMPACT OF NEWS
News is another factor that affects the share price. When there is positive news about a
particular stock or company, people try to invest all their money in that particular stock or
market. This leads to increase in the interest of buying the stock. But there are many
circumstances where news could also bring a negative effect where it could ruin the prospect of
the particular stock. So it is very important to know the overall news of a stock or company
where you can invest your money so that it grows within a very short period of time.

There are many things that you need to consider when you go for investing your hard earned
money in the stock market. You should never be in a haste to invest your money in the stock
market. You should always get in touch with a good stock market consultancy where it can
give you some share tips. They are the one who can give you advice where to invest your
money and where not to. They know to distinguish the good stock from the bad ones.

The major factors are:-


Market Trends that includes Bullish and Bearish trends effecting stock market where the terms
bull market and bear market describe upward and downward market trends, respectively, and
can be used to describe either the market as a whole or specific sectors and securities. These
trends are classified as

• Secular trends for long time frames,

• Primary trends for medium time frames, and

• Secondary trends lasting short times.

Secular Market Trends


A secular market trend is a long-term trend that lasts 5 to 25 years and consists of a series of
sequential primary trends. A secular bear market consists of smaller bull markets and larger
bear markets; a secular bull market consists of larger bull markets and smaller bear markets.In
a secular bull market the prevailing trend is "bullish" or upward moving. The United States
was described as being in a secular bull market from about 1983 to 2000 (or 2007), with brief
upsets including the crash of 1987 and the dot-com bust of 2000–2002.

In a secular bear market, the prevailing trend is "bearish" or downward moving. An example of
a secular bear market was seen in gold during the period between January 1980 to June 1999,
culminating with the Brown Bottom. During this period the nominal gold price fell from a high
of $850/oz ($30/g) to a low of $253/oz ($9/g), and became part of the Great Commodities
Depression.

Primary Market Trends


A primary trend has broad support throughout the entire market (most sectors) and lasts for a
year or more.

Bull market :- A bull market is associated with increasing investor confidence, and increased
investing in anticipation of future price increases (capital gains). A bullish trend in the stock
market often begins before the general economy shows clear signs of recovery. It is a win-win
situation for the investors. India's Bombay Stock Exchange Index, SENSEX, was in a bull
market trend for about five years from April 2003 to January 2008 as it increased from 2,900
points to 21,000 points, notable bull market was in the 1990s and most of the 1980s when the
U.S. and many other stock markets rose; the end of this time period sees the dot-com bubble.

Bear market-A bear market is a general decline in the stock market over a period of time. It is
a transition from high investor optimism to widespread investor fear and pessimism. According
to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one
generally accepted measure is a price decline of 20% or more over at least a two-month
period.”

A bear market followed the Wall Street Crash of 1929 and erased 89% (from 386 to 40) of the
Dow Jones Industrial Average's market capitalization by July 1932, marking the start of the
Great Depression. After regaining nearly 50% of its losses, a longer bear market from 1937 to
1942 occurred in which the market was again cut in half. Another long-term bear market
occurred from about 1973 to 1982, encompassing the 1970s energy crisis and the high
unemployment of the early 1980s. Yet another bear market occurred between March 2000 and
October 2002. The most recent example occurred between October 2007 and March 2009.

Secondary Market Trends


Secondary trends are short-term changes in price direction within a primary trend. The duration
is a few weeks or a few months. One type of secondary market trend is called a market
correction. A correction is a short term price decline of 5% to 20% or so. A correction is a
downward movement that is not large enough to be a bear market (ex post).

Another type of secondary trend is called a bear market rally (or "sucker's rally") which consist
of an market price increase of 10% to 20%. A bear market rally is an upward movement that is
not large enough to be a bull market (ex post). Bear market rallies occurred in the Dow Jones
index after the 1929 stock market crash leading down to the market bottom in 1932, and
throughout the late 1960s and early 1970s. The Japanese Nikkei 225 has been typified by a
number of bear market rallies since the late 1980s while experiencing an overall long-term
downward trend.
MARKET TRENDS IN YEAR 2009
Looking at weakening world economy, the downtrend is expected to continue in first half of
2009. Then onwards economies are expected to start reviving. So, the Financial results of last
quarter i.e. Q-4 2008-2009, and for Q1 of FY 2009-2010, they are going to reflect the weak
economical financial conditions. And so the stock markets would reflect the same. Probability
is on higher side that SENSEX effects October 2008 lows. Buying stocks once the economic
cues are in clear trends and it could be only after near end of first half of 2009.

Meanwhile new investors can learn How to buy stocks and try finding out value stocks to
accumulated. In the beginning of year 2009, the bear trend up and rise, metal, cement, auto,
coal, heavy machinery, steel, iron, infrastructure will rise while bank, telecommunication,
information Technology, aviation will decline. The overall Bear period up in mid of march,
those who want to get good return in short term investment during March and sell in April will
get good return. During the month of April market remained in the hands of bull. Investors of
previous month got minimum 10 to 20% return during the month.
During this month Electric, Electronics, Information Technology, Auto, Engineering, Cement,
fertilizer, cement, banking, infrastructure, housing, sugar, power, television and oil rose. In
May 2009, the bull market condition appeared, and this month Arvind mill, Bajaj Hindustan,
Essar Oil, Glaxo, HCL Techno, Hul, IFCI, Infosys, MRF, Orbit Corporation, Power grid, RIL,
Suraj Diamond and voltamp had given good return.

Overall August was a flat month. No heavy up-down was remarkable. Market improved in
first 15 days and decline after 17th. In net nifty will + / - only 2%. It is better that not to trade
during the month or trade only in small quantity. Dual trend in all sectors. The major trend
dates are 5th, 11th, 16th, 17th, and 21st to 23rd. New line will start for 18days from 23rd. Oil,
Housing, Infrastructure, PSU, Bank, and Information Technology had normal improved. In
September 2009 market again bear for first 10 days. Normal improvement from 11th to 15th
and from 21st to 25th, while bear from 1st to 10th. The market remained overall in bull trend
during the first two weeks of October and remain in the hands of bear from 17th onwards. The
prices of Oil, gas, metal, chemical, electric, electronic, infrastructure, aviation, housing has
increased. Now the month of November it was a Bull Month. Market shown good rise from 3rd
to 7th, from 12th to 20th and from 25th onwards. Ansal property, Atlanta, Automotive, Bajaj
Electric, Oswal Chemical, Dabur, GMR., Gulf oil, Indus Bank, Jet airways, Mundra port,
Religare, Siemens, Strelite, Sun TV and Union Bank has grown.

RELATIONSHIP BETWEEN DOLLAR AND RUPEE


MOVEMENT
The positive impact of Dollar is very effective in India, it emphasis as many day to day
business in one’s life as people traveling abroad will be able to buy more goods from the same
amount of money, students studying abroad will have to pay fewer Indian rupees for their fees
and oil importers and gold importers will have to pay less for their imports. An appreciating
Rupee makes foreign direct investment (FDI) into India attractive. Indian companies that buy
equipments from the U.S. Companies that buy components from the U.S. benefit. E.g. Indian
PC manufacturers can buy an Intel chip at lower rates.
On the other hand, some negative impacts lies as NRIs who send their money in India to their
families would not be very happy, as their dollars would convert to lesser rupees. Software
companies (already working on thin margins), textiles, leather product and apparel
manufacturers would be major losers. The Indian export industry would be the major hit if
rupee appreciates against the dollar. Also a stronger dollar would mean lower income for India
bloggers and websites which get their pay check in dollars.

Measurement Of Currency Rate


• Forex (foreign exchange) rates are dependent on demand and supply - just like stocks.
• It is the net direction of money flow that decides the rate of a particular currency.
• Currency appreciation is not always a result of economic progress.
• Every economy has a capital account and a current account.
• Capital account is the net effect of investments flowing in and out of the country.
• These investments could be in the form of:
○ NRIs investing in the country,
○ Investments by foreign agencies in Indian stock market, etc.
• Current account is the net effect of trade of a country.
• As of now, India has a capital account surplus and a current account deficit.
• This means that more investments are coming in India than going out.
• Current account deficit means India is importing more than it is exporting.
• An example would explain this in a better way:
All commodities such as gold / oil and etc are purchased with dollar in all countries.
So if I transfer 10,000 dollars to India. The rupee would go up.
But on the other hand, if a business in India wishes to buy 1000 gallons of oil in India, will buy
from distributor using rupees, but the country has bought that oil or that commodity using the
DOLLAR (converting rupees to dollars), this makes the value of rupee go down.
While focusing on the past trends of Dollar Rupee movement as for example in year 2008,
• The starting months of 2008 proved to be very critical.
• SENSEX slipped down from 20k level to 14k.
• Gold appreciated more than 20% in just few months.
• Crude Oil prices touching levels of $110 per barrel.
• Inflation rose to double figures.

Indian Rupee has fallen in recent years and is continuing so because of reasons as:-
1. Higher global crude oil prices, which widen the current account deficit
2. Slowdown in capital inflows, which decreases the supply of dollars
3. Inflation is raging at close to 12%.
4. There will be national elections in the next twelve months.

If certain things are been taken into consideration than these problems can be easily
summarized, which can mitigate Rupee weakness,

1. Globally the US$ is weakening (compare it with any of the majors like euro, yen,
Canadian$, Australian$, etc.)
2. Continuing optimism about India’s GDP growth from domestic and international
investors.
3. As the global credit crunch will recede, capital inflows into India in the form of FDI and
FII will increase

INTERPRETING RECENT MOVEMENTS OF THE RUPEE-


DOLLAR RATE

In year 2009, there has been a lot of focus on the appreciation of the rupee against the
dollar. The US dollar has fluctuated considerably in the period after September 2008,
and interpret the recent events on the Indian currency market. At first, in the `flight to
safety' into US government bonds that came about after the Lehman shock, the US
dollar gained ground. As the global financial system has gained confidence, the reversal
of this `flight to safety' has meant a concomitant decline in the US dollar. These ups and
downs of the US dollar have important implications for our intuition in India about the
rupee-dollar rate. If we think the US dollar is roughly fixed, then the pursuit of an
inflexible rupee-dollar rate can be interpreted as some kind of `stability'. But if the US
dollar itself is a fluctuating yardstick, it is hard to justify efforts at RBI to obtain
inflexibility of the rupee-dollar rate. When the dollar declines in value, an attempt at
holding on to a rigid rupee-dollar rate is tantamount to forcing a rupee depreciation, and
vice versa Greater flexibility in the rupee dollar rate will free up monetary policy to
pursue the more important goal of stabilizing the domestic business cycle. But along the
way, for firms to learn to live with greater flexibility of the rupee dollar rate, well
functioning currency derivatives markets are required. RBI needs to first step away from
the present strategy of banning most of these markets, so as to be able to move forward
to greater flexibility of the rupee.

RECENT DEVELOPMENT IN STOCK MARKET


The term depository is defined as “a central location for keeping securities on deposit”. It is
also defined as “a facility for holding securities, either in certificated or uncertificated form to
enable book entry transfer of securities”. It is understood from the above two definitions that
the depository is a place where securities are stored, recorded in the books on behalf of the
investors.

It also helps companies by:-


• The companies will be able to know the particular of beneficial owners and their
holding periodically.
• At the time of declaration of dividends, bonus etc. there will not be any rush for transfer
related activities for the companies.
India has adopted the Depository System for securities trading in which book entry is done
electronically and no paper is involved. The physical form of securities is extinguished and
shares or securities are held in an electronic form. Before the introduction of the depository
system through the Depository Act, 1996, the process of sale, purchase and transfer of
securities was a huge problem, and there was no safety at all.

Key Features Of The Depository System In India


1. Multi-Depository System: The depository model adopted in India provides for a
competitive multi-depository system. There can be various entities providing depository
services. A depository should be a company formed under the Company Act, 1956 and should
have been granted a certificate of registration under the Securities and Exchange Board of
India Act, 1992. Presently, there are two depositories registered with SEBI, namely:

• National Securities Depository Limited (NSDL), and

• Central Depository Service Limited (CDSL)

2. Depository services through depository participants: The depositories can provide their
services to investors through their agents called depository participants. These agents are
appointed subject to the conditions prescribed under Securities and Exchange Board of India
(Depositories and Participants) Regulations, 1996 and other applicable conditions.

3. Dematerialisation: The model adopted in India provides for dematerialisation of securities.


This is a significant step in the direction of achieving a completely paper-free securities
market. Dematerialization is a process by which physical certificates of an investor are
converted into electronic form and credited to the account of the depository participant.

4. Fungibility: The securities held in dematerialized form do not bear any notable feature like
distinctive number, folio number or certificate number. Once shares get dematerialized, they
lose their identity in terms of share certificate distinctive numbers and folio numbers. Thus all
securities in the same class are identical and interchangeable. For example, all equity shares in
the class of fully paid up shares are interchangeable.

5. Registered Owner/ Beneficial Owner: In the depository system, the ownership of


securities dematerialized is bifurcated between Registered Owner and Beneficial Owner.
According to the Depositories Act, ‘Registered Owner’ means a depository whose name is
entered as such in the register of the issuer. A ‘Beneficial Owner’ means a person whose name
is recorded as such with the depository. Though the securities are registered in the name of the
depository actually holding them, the rights, benefits and liabilities in respect of the securities
held by the depository remain with the beneficial owner. For the securities dematerialized,
NSDL/CDSL is the Registered Owner in the books of the issuer; but ownership rights and
liabilities rest with Beneficial Owner. All the rights, duties and liabilities underlying the
security are on the beneficial owner of the security.

6. Free Transferability of shares: Transfer of shares held in dematerialized form takes place
freely through electronic book-entry system.

Benefits:-
• This system will eliminate paper work as the book entry system does not need physical
movement of certificates for transfer process.

• The risk of bad deliveries, fraud and misplaced and lost share certificates will not exist.

• The electronic media will shorten settlement time and hence the investor can save time
and increase the velocity of security movement.

• Investor will be able to change portfolio more frequently.

• The distribution of dividend, interest and other benefits will be speedier as the
ownership can be easily identifiable.

• The cost of transfer is less as the share transfers are exempt from stamp duty.

• Faster payment in case of sale of shares.

Advantages of the Depository System are:-


• Share certificates, on dematerialization, are cancelled and the same will not be sent back
to the investor. The shares, represented by dematerialized share certificates are fungible
and, therefore, certificate numbers and distinctive numbers are cancelled and become
non-operative.
• It enables processing of share trading and transfers electronically without involving
share certificates and transfer deeds, thus eliminating the paper work involved in scrip-
based trading and share transfer system.
• Transfer of dematerialized securities is immediate and unlike in the case of physical
transfer where the change of ownership has to be informed to the company in order to
be registered as such, in case of transfer in dematerialized form, beneficial ownership
will be transferred as soon as the shares are transferred from one account to another.
• The investor is also relieved of problems like bad delivery, fake certificates, shares
under litigation, signature difference of transferor and the like.
• There is no need to fill a transfer form for transfer of shares and affix share transfer
stamps.
• There is saving in time and cost on account of elimination of posting of certificates.
• The threat of loss of certificates or fraudulent interception of certificates in transit that
causes anxiety to the investors, are eliminated.

Disadvantage of the Depository System are:-


• Lack of control: Trading in securities may become uncontrolled in case of
dematerialized securities.
• Need for greater supervision: It is incumbent upon the capital market regulator to keep
a close watch on the trading in dematerialized securities and see to it that trading does
not act as a detriment to investors. The role of key market players in case of
dematerialized securities, such as stock brokers, needs to be supervised as they have the
capability of manipulating the market.
• Complexity of the system: Multiple regulatory frameworks have to be confirmed to,
including the Depositories Act, Regulations and the various Bye Laws of various
depositories. Additionally, agreements are entered at various levels in the process of
dematerialization. These may cause anxiety to the investor desirous of simplicity in
terms of transactions in dematerialized securities.

Besides the above mentioned disadvantages, some other problems with the system have
been discovered subsequently. With new regulations people are finding more and more
loopholes in the system. Some examples of the malpractices and fraudulent activities that
take place are:

• Current regulations prohibit multiple bids or applications by a single person. But


investors open multiple demat accounts and make multiple applications to subscribe to
IPOs in the hope of getting allotment of shares.
• Some listed companies had obtained duplicate shares after the originals were pledged
with banks and then sold the duplicates in the secondary market to make a profit.

• Promoters of some companies dematerialised shares in excess of the company’s issued


capital.

• Certain investors pledged shares with banks and got the same shares reissued as
duplicates.

• There is an undue delay in the settlement of complaints by investors against depository


participants. This is because there is no single body that is in charge of ensuring full
compliance by these companies.

At present there are two depositories in India, National Securities Depository Limited
(NSDL) and Central Depository Services (CDS). NSDL is the first Indian depository, it was
inaugurated in November 1996. NSDL was set up with an initial capital of US$28mn,
promoted by Industrial Development Bank of India (IDBI), Unit Trust of India (UTI) and
National Stock Exchange of India Ltd. (NSE). Later, State Bank of India (SBI) also became a
shareholder.

The other depository is Central Depository Services (CDS). It is still in the process of linking
with the stock exchanges. It has registered around 20 DPs and has signed up with 40
companies. It had received a certificate of commencement of business from SEBI on February
8, 1999. These depositories have appointed different Depository Participants (DP) for them. An
investor can open an account with any of the depositories’ DP. But transfers arising out of
trades on the stock exchanges can take place only amongst account-holders with NSDL’s DPs.
This is because only NSDL is linked to the stock exchanges (nine of them including the main
ones-National Stock Exchange and Bombay Stock Exchange).

In order to facilitate transfers between investors having accounts in the two existing
depositories in the country the Securities and Exchange Board of India has asked all stock
exchanges to link up with the depositories. SEBI has also directed the companies’ registrar and
transfer agents to effect change of registered ownership in its books within two hours of
receiving a transfer request from the depositories. Once connected to both the depositories the
stock exchanges have also to ensure that inter-depository transfers take place smoothly. It also
involves the two depositories connecting with each other. The NSDL and CDS have signed an
agreement for inter-depository connectivity.
Depositiory Participant
NSDL carries out its activities through various functionaries called business partners who
include Depository Participants (DPs), Issuing corporates and their Registrars and Transfer
Agents, Clearing corporations/ Clearing Houses etc. NSDL is electronically linked to each of
these business partners via a satellite link through Very Small Aperture Terminals (VSATs).
The entire integrated system (including the VSAT linkups and the software at NSDL and each
business partner’s end) has been named as the “NEST” [National Electronic Settlement &
Transfer] system.

The investor interacts with the depository through a depository participant of NSDL. A DP can
be a bank, financial institution, a custodian or a broker. Just as one opens a bank account in
order to avail of the services of a bank, an investor opens a depository account with a
depository participant in order to avail of depository facilities.

NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL)


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

In India, the paper-based settlement of trades caused substantial problems like bad delivery and
delayed transfer of title till recently. The enactment of Depositories Act in August 1996 paved
the way for establishment of NSDL, the first depository in India. This depository promoted by
institutions of national stature responsible for economic development of the country has since
established a national infrastructure of international standards that handles most of the
securities held and settled in dematerialised form in the Indian capital market.

Using innovative and flexible technology systems, NSDL works to support the investors and
brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness
of Indian marketplaces by developing settlement solutions that increase efficiency, minimise
risk and reduce costs.

In the depository system, securities are held in depository accounts, which is more or less
similar to holding funds in bank accounts. Transfer of ownership of securities is done through
simple account transfers. This method does away with all the risks and hassles normally
associated with paperwork. Consequently, the cost of transacting in a depository environment
is considerably lower as compared to transacting in certificates.

The facilities offered by NSDL are:-


• Dematerialisation i.e., converting physical certificates to electronic form;

• Rematerialisation i.e., conversion of securities in demat form into physical certificates;

• Facilitating repurchase / redemption of units of mutual funds;

• Electronic settlement of trades in stock exchanges connected to NSDL;

• Pledging/hypothecation of dematerialised securities against loan;

• Electronic credit of securities allotted in public issues, rights issue;

• Receipt of non-cash corporate benefits such as bonus, in electronic form;

• Freezing of demat accounts, so that the debits from the account are not permitted;

• Nomination facility for demat accounts;

• Services related to change of address;

• Effecting transmission of securities;


• Instructions to your DP over Internet through SPEED-e facility. (Please check with your
DP for availing the facility);

• Account monitoring facility over Internet for clearing members through SPEED facility;

• Other facilities viz. holding debt instruments in the same account, availing stock
lending/borrowing facility, etc.

NSDL provides its services to investors through its agents called depository participants (DPs).
These agents are appointed by NSDL with the approval of SEBI. According to SEBI
regulations, amongst others, three categories of entities i.e. Banks, Financial Institutions and
Members of Stock Exchanges [brokers] registered with SEBI can become DPs.

Thus, NSDL enables the surrender and withdrawal of securities to and from depositories
(Dematerialisation and Rematerialisation), maintain investors holdings in the electronic forms
as well as carries out settlements of trades not done on the stock exchange (off-market trades).
It initiates stock lending and borrowing, receipts of non-cash corporate benefits like bonus
rights, etc. in electronic forms.

CENTRAL DEPOSITORY SERVICES LIMITED (CDSL)


A Depository facilitates holding of securities in the electronic form and enables securities
transactions to be processed by book entry by a Depository Participant (DP), who as an agent
of the depository, offers depository services to investors. The balances in the investors account
recorded and maintained with CDSL can be obtained through the DP. The DP is required to
provide the investor, at regular intervals, a statement of account which gives the details of the
securities holdings and transactions. The depository system has effectively eliminated paper-
based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries.
CDSL offers an efficient and instantaneous transfer of securities.

CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks
such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered
Bank and Union Bank of India.

Benefits:-
Wide DP Network: CDSL has a wide network of DPs, operating from over 6000 sites, across
the country, offering convenience for an investor to select a DP based on his location.
On-line DP Services: The DPs are directly connected to CDSL thereby providing on-line and
efficient depository service to investors.

Competitive Fees Structure: CDSL has kept its tariffs very competitive to provide affordable
depository services to investors.

Internet Access :A DP, which registers itself with CDSL for Internet access, can in turn
provide demat account holders with access to their account on the Internet.

On-line Information to Users: CDSL's system is built on a centralised database architecture


and thus enables DPs to provide on-line depository services with the latest status of the
investor's account.

Convenient to DPs: The entire database of investors is stored centrally at CDSL. If there is
any system-related issues at DPs end, the investor is not affected, as the entire data is available
at CDSL.

Contingency Arrangements: CDSL has made provisions for contingency terminals, which
enables a DP to update transactions, in case of any system related problems at the DP's office.

Audit and Inspection: CDSL conducts regular audit of its DPs to ensure compliance of
operational and regulatory requirements.

Helpdesk: DPs and investors can obtain clarifications and guidance from CDSL's prompt and
courteous helpline facility.

CDSL ensures Security as:-


Data Security: All data and communications between CDSL and its users is encrypted to
ensure its security and integrity.

Computer Systems: All data held at CDSL and is automatically mirrored at the Disaster
Recovery site and is also backed up and stored in fireproof cabinets at the main and disaster
recovery site.

Insurance Cover: CDSL has an insurance cover in the unlikely event of loss to a BO due to
the negligence of CDSL or its DPs.

Unique BO Account Number: Every BO in CDSL is allotted a unique account number,


which prevents any erroneous entry or transfer of securities. If the transferor's account number
is wrongly entered, the transaction will not go through the CDSL system, unless corrected.
Claims on DP: If any DP of CDSL goes into liquidation, the creditors of the DP will have no
access to the holdings of the BO.

Recent data of CDSL as:-


Securities available for Demat
Equity 5805
Debt instruments including debentures, bonds, Government 4763
securities, certificates of deposits, commercial paper, pass through
certificates and Others
Mutual fund units 2103
Depository Participants
Number of Depository Participants 515
Number of branches with LIVE Connectivity 264
Number of cities/ towns with LIVE connectivity 123
Number of locations with LIVE connectivity 288
Demat Custody
Number of securities in million 84,570
Value (Rs. in million) 84,85,650
Demat Settlement (August 2010)
Number of securities in million 929
Value (Rs. in million) 88,744
Investor accounts(Excluding closed accounts) 68,67,328
Courtesy: rbi.com

Promoters:-
CDSL was promoted by Bombay Stock Exchange Limited (BSE) in association with Bank of
India, Bank of Baroda, State Bank of India and HDFC Bank. BSE has been involved with this
venture right from the inception and has contributed overwhelmingly to the fruition of the
project. The initial capital of the company is Rs.104.50 crores. The list of shareholders with
effect from 5th July, 2010 is as under.

Sr. Name of shareholders Value of % terms


No. holding (in to total
Rupees Lacs) equity
1 Bombay Stock Exchange Limited 5,663.46 54.20
2 Bank of India 582.00 5.57
3 Bank of Baroda 530.00 5.07
4 State Bank of India 1,000.00 9.57
5 HDFC Bank Limited 750.00 7.18
6 Standard Chartered Bank 750.00 7.18
7 Canara Bank 674.46 6.45
8 Union Bank of India 200.00 1.91
9 Bank of Maharashtra 200.00 1.91
10 The Calcutta Stock Exchange Limited 100.00 0.96

11 Others 0.08 0.00


TOTAL 10,450.00 100.00
Courtesy: nse.com
Thus, CDSL is a system is based on centralised database architecture with on-line connectivity
with DPs. Because of this centralised architecture, the cost for setting up a DP outfit under
CDSL system is significantly lower. Similarly, the recurring costs to be incurred by a CDSL-
DP in terms of maintaining back-ups and the related data storage are minimal.

This enables a CDSL-DP to offer depository services to investors at an attractive price and at
the same time achieve break-even faster at much lower volumes. The centralised architecture
also allows CDSL-DP to make available to the investors a to-the-minute status of their account
and transactions.

CDSL-DPs can also set up branches with direct electronic connectivity with CDSL.
FOREIGN STOCK EXCHANGE
The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized
over-the-counter financial market for the trading of currencies. Financial centers around the
world function as anchors of trading between a wide range of different types of buyers and
sellers around the clock, with the exception of weekends. The foreign exchange market
determines the relative values of different currencies.

The foreign exchange market is unique because of its

• huge trading volume, leading to high liquidity

• geographical dispersion

• continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on
Sunday until 22:00 GMT Friday

• the variety of factors that affect exchange rates

• the low margins of relative profit compared with other markets of fixed income

• the use of leverage to enhance profit margins with respect to account size

An important part of this market comes from the financial activities of companies seeking
foreign exchange to pay for goods or services. Commercial companies often trade fairly small
amounts compared to those of banks or speculators, and their trades often have little short term
impact on market rates. Nevertheless, trade flows are an important factor in the long-term
direction of a currency's exchange rate. Some multinational companies can have an
unpredictable impact when very large positions are covered due to exposures that are not
widely known by other market participants. Investment management firms (who typically
manage large accounts on behalf of customers such as pension funds and endowments) use the
foreign exchange market to facilitate transactions in foreign securities. For example, an
investment manager bearing an international equity portfolio needs to purchase and sell several
pairs of foreign currencies to pay for foreign securities purchases.

Economic factors:-
• Economic policy comprises government fiscal policy (budget/spending practices) and
monetary policy (the means by which a government's central bank influences the supply
and "cost" of money, which is reflected by the level of interest rates).

• Government budget deficits or surpluses: The market usually reacts negatively to


widening government budget deficits, and positively to narrowing budget deficits. The
impact is reflected in the value of a country's currency.

• Balance of trade levels and trends: The trade flow between countries illustrates the
demand for goods and services, which in turn indicates demand for a country's currency
to conduct trade. Surpluses and deficits in trade of goods and services reflect the
competitiveness of a nation's economy. For example, trade deficits may have a negative
impact on a nation's currency.

• Inflation levels and trends: Typically a currency will lose value if there is a high level of
inflation in the country or if inflation levels are perceived to be rising. This is because
inflation erodes purchasing power, thus demand, for that particular currency. However,
a currency may sometimes strengthen when inflation rises because of expectations that
the central bank will raise short-term interest rates to combat rising inflation.

• Economic growth and health: Reports such as GDP, employment levels, retail sales,
capacity utilization and others, detail the levels of a country's economic growth and
health. Generally, the more healthy and robust a country's economy, the better its
currency will perform, and the more demand for it there will be.

• Productivity of an economy: Increasing productivity in an economy should positively


influence the value of its currency. Its effects are more prominent if the increase is in the
traded sector.

NATIONAL ASSOCIATION OF SECURITIES DEALERS


AUTOMATED QUOTATIONS (NASDAQ)
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange.
It is the largest electronic screen-based equity securities trading market in the United States and
fourth largest by market capitalization in the world. With approximately 3,700 companies and
corporations, it has more trading volume than any other stock exchange in the world. It was
founded in 1971 by the National Association of Securities Dealers (NASD), who divested
themselves of it in a series of sales in 2000 and 2001. It is owned and operated by the
NASDAQ OMX Group, the stock of which was listed on its own stock exchange beginning
July 2, 2002, under the ticker symbol NASDAQ. It is regulated by the Securities and Exchange
Commission.

NASDAQ quotes are available at three levels:

• Level 1 shows the highest bid and lowest offer — the inside quote.

• Level 2 shows all public quotes of market makers together with information of market
makers wishing to sell or buy stock and recently executed orders.

• Level 3 is used by the market makers and allows them to enter their quotes and execute
order.

NEW YORK STOCK EXCHANGE (NYSE)


The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger
with the fully electronic stock exchange Euronext. The NYSE trading floor is located at 11
Wall Street and is composed of four rooms used for the facilitation of trading. A fifth trading
room, located at 30 Broad Street, was closed in February 2007. The main building, located at
18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a
National Historic Landmark in 1978

NYSE is the holding company created by the combination of NYSE Group, Inc. and Euronext
N.V., was launched on April 4, 2007. As the world's leading and most liquid equities
exchange group, NYSE Euronext powers the exchanging world and is comprised of equities
and derivatives exchanges across the United States and Europe which trade cash equities,
futures, options, fixed-income and exchange-traded products.

With more than 8,000 listed issues, NYSE Euronext is home to the world's leading companies
providing access to the global liquidity they need to collaborate, compete and grow. To best
serve its investors, NYSE Euronext has created a governance structure that reflects the highest
standards of independence, oversight and transparency. NYSE Euronext actively supports
charities and organizations that help improve people's quality of life and increase public
confidence in the financial markets.

LONDON STOCK EXCHANGE (LSE)


The London School of Economics and Political Science, commonly referred to as the
London School of Economics, LSE, is a specialist constituent college of the University of
London in London, England. Founded in 1895 by Fabian Society members Sidney Webb,
Beatrice Webb and George Bernard Shaw, the School joined the federal University of London
in 1900 as the Faculty of Economics. Degrees were issued to the school's students from 1902
onwards. Today, it remains a constituent college of the University with 8,700 full-time
students.

LSE is among the world's most selective universities, with the lowest admissions rate of any
university in Britain and is consistently placed among the top higher education institutions in
the world in university rankings. It also has the most international student body in the world
and at one time, LSE had more countries represented by students than the United Nations .As a
member of the Russell Group. LSE was found to have the highest percentage of world-leading
research of any university in the 2008 Research Assessment Exercise. The school has produced
many notable alumni in the fields of economics, business, literature and politics, including
several Nobel laureates, fellows of the British Academy, Pulitzer Prize winners, and heads of
state.

MOVEMENT OF STOCK MARKET (NSE) WITH $ & RS.

DATA FINDINGS

Statistical Data for the year 2009:-

MONTHS NSE $ v/s Rs.

January 2874.8 48.8338

February 2763.65 49.2611

March 3020.95 51.52287

April 3473.95 50.0619

May 4448.95 48.533

June 4291.1 47.7714

July 4636.45 48.4783

August 4662.1 48.335


September 5083.95 48.4389

October 4711.7 46.7211

November 5032.7 46.5673

December 5201.05 46.6288

DATA ANALYSIS

Graph 1

Interpretation:-
As in the above graph, NSE rise 2874.8 to 4448.95 since from very beginning with
proportionate 48.83 to 51.52 $ Rs. movement. Analysis in mid of year 2009 there is a constant
move on these two components but with NSE growth to 5201.05 at the end of year, $ Rs.
declines to 46.62. Some of the factors that cause movement in the stock market have long-term
effects while the influences of others are felt only in the short-term The graph shows the
fluctuations in $v/s Rs. movement because of various factors as inflation, interest rates, foreign
direct investment, recession, etc. The stock market is characterized by its volatility.

Graph 2

Interpretation:-
This graph shows the movement of NSE with $ v/s Rs. flows and relationship between the two
for year 2009,investors are not ready to invest in individual NSE share or individual BSE share
given the market volatility and the high risks involved. Those investors who manage their own
portfolios including experts are at least able to decipher, take risks, and buy individual stocks
without paying heed to the brokers' advice. Their deep knowledge about the market and their
ability to select the right stocks help them experience a win-win situation.

MOVEMENT OF STOCK MARKET (BSE) WITH $ & RS.

DATA FINDINGS

Statistical Data for the year 2009:-

MONTHS BSE $ v/s Rs.

January 9424.24 48.8338

February 8891.61 49.2611

March 9708.5 51.52287

April 11403.25 50.0619

May 14625.25 48.533

June 14493.84 47.7714

July 15670.31 48.4783

August 15666.64 48.335

September 17126.84 48.4389


October 15896.28 46.7211

November 16926.22 46.5673

December 17464.81 46.6288


DATA ANALYSIS

Graph 1

Interpretation:-
As the above graph shows growth of $ Rs. movement since in the very beginning of the year
2009 from 48.83 to 51.52 and BSE goes on rising from 9424.24 to 14625.25 and with constant
increase in the third quarter of the year with 17126.75 The fluctuations in BSE movement
emphasis on factors like recession, foreign investment, seasonal variations, rupee value, etc.
When individual stocks move up or down, the stock exchange reflects that keeping in view of
these factors affecting the movement of BSE. At the end of the year BSE shows peak rise
17464.81 with $ Rs. declines at 46.62.

Graph 2

Interpretation:-
The above graph shows the movement of BSE and $ Rs. relation affecting stock market for the
year 2009. The Indian Stock Markets can be a very rewarding avenue of investment but the
constant changes and the inherent dynamic nature of the markets can wipe out your funds or
savings within a minute. The US dollar has fluctuated considerably in the period after third
quarter 2009, and interpret the recent events on the Indian currency market.
LIMITATIONS

The topic ‘stock market movement for the year 2009’ was very effecting to study as it initiated
me to know various impacts, fluctuations , factors leading to the changes of stock market in
India in the year 2009. The movement of dollar and rupee with stock market exchanges was
impressive, it emphasis on BSE and NSE which contributed various topics to analysis. Since
the topic for my project was interesting but still there are some limitations that I faced while
preparing this project.

These limitations are as follows:-


• The time limit was very short for this project as the topic was vast to study.
• There were various fluctuations in stock market, so analysis part was quite difficult.
• The indices study for various periods was comprehensive to implement.
• There are various seasonal factors which keep on changing with time period.
• The interpretation of current data was difficult to include as it can be changed.
• The topic was too vast to compile in a synchronize form.

Thus, making this project was effecting as it acknowledged me with various information about
stock market, the factors affecting stock market, knowledge about stock exchanges, foreign
investment and foreign exchanges.
ANALYSIS OF TWO STOCKS OF A COMPANY

INFOSYS TECHNOLOGY LIMITED


Moving average of 3months with respect to trend line
I

Moving average of 7months with respect to trend line


I

Analysis and Recommendation for Infosys Technology Limited


The trend line of Infosys technology limited is down word from Jan-05 to Dec-09. In May-06
the closing price of the script was highest Rs.3022.13 and continuously it was falling till Dec-
06, meanwhile it shows the down ward trend nearby the July-06 when the line of closing price
is intersect the trend line from up. After words the script is following the steady and constant
growth till May-09. In May-09 and Aug-09 script is showing the upward biasness and in Nov-
09 it reaches up to Rs.2299.25.Then By observing both the graph given here we can
recommend to the investors that they should hold this script around one year.
WIPRO LTD
Moving average of 3months with respect to trend line
i

Moving average of 7months with respect to trend line


i

Analysis and Recommendation for Wipro Limited


This script has faced many fluctuation in close price during the five year from Jan-5 to Dec-09.
In above graph we can observe that in Aug-05 with Rs.577.43 and July-08 with Rs.446.26 the
script is showing the downward trend. Where as in May-06with Rs.482.12 and Aug-09 with
Rs.369.12 with respect to trend line shows the upward biasness. In Dec-09 script’s closing
price was Rs.562.39. Here we can clearly observe that Script is overvalued so it is highly
recommended to sell the script at current prevailing price .
CONCLUSION

Share markets in India comprise primarily of NSE share and BSE share with share brokers
managing the transactions. The SEBI is the governing body in India, controlling the activities
of the stock exchanges, and stock brokers too function under SEBI guidelines. To open trading
accounts to be able to buy and sell shares like NSE share or BSE share, you will have to seek
the services of stock brokers. Many a broker functions online through the medium of brokerage
platforms. Once you get registered at such an online trading platform, you can get tips and
suggestions from expert brokers, helping you take your investing goals to the next level.

Market analysts and experts advise investors not to invest in individual NSE share or
individual BSE share given the market volatility and the high risks involved. The Indian Stock
Markets can be a very rewarding avenue of investment but the constant changes and the
inherent dynamic nature of the markets can wipe out your funds or savings within a minute.

The stock market was up in the low 20’s and the investment grade corporate bond market was
up a similar amount. The lower grade corporate bonds, so called “junk bonds” performed much
better, up nearly 58%, an all time high. The only assets that performed poorly in 2009 were
cash, with a nil return, and long term US Treasury bonds, down 13.2%. Virtually all of this loss
occurred in the first half.

The Indian stock market is fast recovering and the emerging opportunities have led to the
steady inflows of foreign investments. Investing in India has thus become a trend which is
likely to gain more impetus in the near future. It is the promotion oriented user friendly policies
of the Indian government that have led to this sudden surge. And owing to the increased
quantum of foreign investment inflows, India is emerging as one of the best performing
markets.

RECOMMENDATIONS
Good corporate governance helps to ensure that corporations take into account the interests of
a wide range of constituencies, as well as of the communities within which they operate, and
that their boards are accountable to the company and the shareholders. This, in turn, helps to
assure that corporations operate for the benefit of society as a whole. Panasonic corporation
shows very keen interest towards their stakeholders so that they can be benefited as they
ensures the long term health and prosperity of the company.

• Boards members should ensure shareholders interest since to cope up with the volatile
market
• Compensation/privatization programs that make employees shareholders, there by
empowering employees to elect the supervisory board, which, in turn holds management
responsible.
• Empowering employee shareholders through full disclosure by releasing financial and
non-financial information, the corporation improves transparency and employees are
enabled to make better voting decisions.
• The company should concerns about employee shares as pooling employee share into an
independent fund controlled by employees eliminates the fragmented voting bloc
problem.

BIBLIOGRAPHY

Books- Authors:-
1. Technical Analysis of the Financial Market John Murphy
2. Investment Management & Security Analysis Dhanesh Khatri
3. Investment Analysis & Portfolio Management Prasanna Chandra
4. Technical Analysis from A to Z Steven B. Achelis

References:-
1. www.nseindia.com
2. www.bseindia.com
3. www.infosys.com
4. www.wipro.com