A Project Report on

―ANALYSIS OF SECONDARY CAPITAL MARKETS WITH

REFERENCE TO SELECT COMPANIES AT SHAREKHAN LIMITED”

HYDERABAD, TELANGANA

BY
NAME: B. PREETI

ROLL NO: 121419672034

Project Submitted in partial fulfilment for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF BUSINESS MANAGEMENT

ST. JOSEPH’S DEGREE & PG COLLEGE (AUTONOMOUS)

(AFFILIATED TO OSMANIA UNIVERSITY)

HYDERABAD

BATCH 2019-2021

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 DECLARATION

I hereby declare that this Project Report titled ―ANALYSIS OF SECONDARY

CAPITAL MARKETS WITH REFERENCE TO SELECT COMPANIES AT
SHAREKHAN LIMITED‖, HYDERABAD, TS. Submitted by me to the
Department of Business Management, St. Joseph‘s Degree & PG
College,Autonomous, Affiliated to Osmania University, Hyderabad, is a bonafide
work undertaken by me and it is not submitted to any other University or
Institution for the award of any degree diploma / certificate or published any time
before.

B. PREETI

Name and Address of the student Signature of the student

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COMPANY CERTIFICATE

3
COLLEGE CERTIFICATE

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 ABSTRACT

The capital market consists of two types of markets that is primary market and
secondary market. The primary market is the market which deals with the issue of
new instruments by the corporate sector. The secondary market is the market which
is for trading and security settlements that have already been issued.The project
idea is to capital market instruments as better avenue for investment on a long-
term basis.

From the investor point of view, they always will to buy the shares in a company
unless they could know that they could sell them later, if they needed those funds
for some other purposes. The stock market and other capital markets will allow the
investors to buy and sell the stocks continuously.

Now a day‘s investors become wealthier when there is rise in value of financial
assets or stocks.They often spend for some other additional wealth like promotions
or sales which can be used for economic growth. Investors judge their performance
on how investors buy and sell the shares on daily basis.Stock values also reflects
investor reactions to government policy as well.

Through this study of capital market delays in settlement cycle and bad deliveries
knowing the which shares is better to the investor choosing risk less securities are
provided.The topic is selected to analyze the factors that affect the future earnings
per share (EPS) of a company which is based on fundamentals of the company.

The present study involves a variety of work in accounting, finance and economics.
Valuation of stocks and functions of the stock markets, market debt and convertible
debentures, valuation of bonds, issue market and market efficiency, merchant
banking, bonus, dividends and right issues rates of return and regulations.

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 ACKNOWLEDGEMENT

I would like to acknowledge the contribution of all the people and organization that
have directly or indirectly helped in the conceptualization and compilation of
theProject.

It is my privilege and pleasure to thank all the people associated with my college
ST. JOSEPH‘S DEGREE & PG COLLEGE (AUTONOMOUS), Hyderabad for
providing an opportunity to undertake a project report and completing it.

I am very thankful to my guide PROF. VANDANA SAMBA,Director Research &

Training, for helping in completing my project in time by sparing her valuable time
and for her immense co-operation, consent and encouragement through the
endeavor .

I extend my sincere thanks to Fr. Dr. D Sunder Reddy, Principal, Vice- Principals
and
faculty of college for their contribution and assistance in completing the project
report.

I extend my thanks to MRS. DUDAM JYOTSNA DEVI, associate manager,

SHAREKHAN LIMITED, Ramagundam branch.

I specially thanks to all employeesof organization for guidingand helping me

throughout theproject.

I extend my thanks to librarians and computer lab technicians for being there as a
support for completion of tasks.

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 TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO.

I INTRODUCTION 1-7

1.1 Introduction 2
1.2 Need and Importance Of the Study
3
1.3 Objectives of the Study
1.4 Research Methodology 4
1.4.1 Research Design
4-6
1.4.2 Scope of the Study
1.4.3 Data Sources
1.4.4 Tools & Techniques used for Data Analysis
1.5 Chapterization
7

II LITERATURE REVIEW 8-34

2.1 Meaning and Definition of Portfolio Management 9

2.2 Objectives of Portfolio Management 10

2.3 Functions of Portfolio Manager 11

2.4 Types of Portfolio Management 12

2.5 Process of Portfolio Management 13

2.6 Portfolio Theories 15

2.7 Risk 19

2.8 Risk and return on Portfolio 26

2.9 Portfolio Selection 28

2.10Literature Surveys 30

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III 3 COMPANY PROFILE 35-44

3.1 History of the Company 36

3.2 Core Values and Mission 37

3.3 Organization Structure 37

3.4 Products and Services 40

3.5 SWOT analysis 45

3.6Achievements and Awards 46

IV DATA ANALYSIS & INTERPRETATION 47-76

V FINDINGS, SUGGESTION & CONCLUSION 77-79

BIBLIOGRAPHY 80

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 CHAPTER-I
INTRODUCTION

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1.1 INTRODUCTION
Analysisof Capital markets in the United States provide the lifeblood of capitalism.
Companies turn them to raise funds which are needed tofinancethe building of factories,
office buildings, airplanes, trains, ships, etc., and other assets; to conduct the research and
development; and to support the host of other essentials of the corporate activities. Much of
the money comes from major institutions such as pension funds, banks, insurance companies,
foundations, and universities. Increasingly, it comes from individuals as well. As noted in the
chapter 3, more than 40% of U.S. families are owned by the common stock in the mid-
1990s.
Few investors always will to buy the shares in a company unless they could know that they
could sell them later, if they needed those funds for some other purposes. The stock market
and other capital markets will allow the investors to buy and sell the stocks continuously.
The markets play other roles in the American economy too. They are the sources of income
for investors. Investors become wealthier when there is rise in value of financial assets or
stocks. They often spend for some other additional wealth like promotions or sales which can
be used for economic growth. Investors judge their performance on how investors buy and
sell the shares on daily basis.
Stock values also reflects investor reactions to government policy as well. The company
declines when the policies adopted by the government hurts the economy and profits of the
company. Sometimes the critics suggest that American investors focus very much on short
term profits and often the analysts also say that the policy makers or the companies are
discouraged due the steps followed by them which will prove beneficial in the future period
because there may be requirement of short- term adjustments by them which would depress
the price of the stocks.
The markets require the information in free flow to work effectively. Without it, the investors
cannot keep beside the best of their ability, developments or gauge, the true value of stocks.
To follow the future of market, the investor must enable the information daily, weekly,
hourly or for every minute. Companies are required by law to issue quarterly earnings
reports, annual reports and proxy statements to tell the stockholders how they are doing.
Investors can go through the newspapers to the price of the particular stock which are being
traded the previous session of trading. They can view the variety of indexes which measure
the overall market activity, the Dow Jones Industrial Average (DJIA) is the most notable
thing which tracks the 30 prominent stocks.

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Investors go through the newspapers and magazines to analyze the particular market or a
particular stock. There are few television channels which provide the information regarding
the flow of movements in the price of the stock and also the investors check the internet
every minute to minute to track the information related to the individual stocks and even
track the arrangement of transactions related to stocks.

1.2 NEED FOR THE STUDY

The project idea is to capital market instruments as better avenue for investment on a long-
term basis. The capital market consists of two types of markets that is primary market and
secondary market. The primary market is the market which deals with the issue of new
instruments by the corporate sector. The secondary market is the market which is for trading
and security settlements that have already been issued. Capital market is the intermediary that
provides the important infrastructure service for both primary and secondary markets. Thus,
through the study of capital market delays in settlement cycle and bad deliveries knowing the
which shares is better to the investor choosing risk less securities are provided.
Capital market deals with long term funds. These funds are subject to risk and uncertainty. It
supplies the long term and medium- term funds to the corporate sector.It provides the
mechanism for facilitating the capital fund transactions. It deals with debentures, ordinary
shares and stocks and securities of the government. In this market the flow of funds will
come from savers. Here financial assets are converted into physical assets. It provides
incentives to the savers in the form of dividend or interests to the investors.
The following are the factors which plays an important role in the growth of capital market:
 A strong and powerful government
 Financial dynamics
 Speedy industrialization
 Attracting origin investments
 Investments from NRI‘S
 Speedy implementation of policies
 Globalization
 Development of financial theories
 Sophisticated technological advices

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1.3 OBJECTIVE OF THE STUDY
This study is done to know about Secondary capital market activities.
1. To study about the Capital Market Instruments.

2. To study about Dematerialization in the stock exchange for easy transfer and error
prone system.

3. To know about the latest and future developments in the stock exchange system.

4. To study how the capital market, bring together the businesses and the governments in
need of the financial capital- money along with investors hoping to earn profits.

1.4 RESEARCH METHODOLOGY

Research is a systematic investigation process to establish the facts or principles or to collect
the information on a subject basis. Research methodology is the systematic way which is easy
to solve the problem.
1.4.1 RESEARCH DESIGN
The data approach can be described as the primary and the secondary data collection. The
medium used is internet to which make the data more effective.

1.4.2 DATA SOURCES

The data collection methods include both the primary and secondary methods.
1. Primary Methods:

This is the method which includes the data collected from the personal
discussions with the authorized clerks and members of the Exchange.
2. Secondary Methods:
The Secondary Collection Methods includes the lectures of the superintend of
the EDP, department of market operations etc, and also the data collected from the news
and the magazines of the National Stock Exchange and different books where the issues
are related to this study.

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1.5 SCOPE OF THE STUDY
The present study of capital market involves various analysis of market instruments that are
available in the market and also analyze the dematerialization and limited lists of securities
that are available for trading in the corporate world.

Investor can also assess the company‘s financial strength and factors that would affect the
company. Scope of the study is limited. We can say that 70% of the analysis is proved to be
good to the investor, but the 30% depends upon the market sentiment.
The topic is selected to analyze the factors that affect the future earnings per share (EPS) of a
company which is based on fundamentals of the company.

The present study involves a variety of work in accounting, finance and economics.
Valuation of stocks and functions of the stock markets, market debt and convertible
debentures, valuation of bonds, issue market and market efficiency, merchant banking, bonus,
dividends and right issues rates of return and regulations.

1.6 LIMITATIONS OF STUDY

1) Time constraint was one of the major limiting factors. 45 days were not sufficient to
even take the theoretical concepts.
2) Several other strategies that could have been studied were not done properly.
3) There was lack of knowledge with the brokers.
4) There was difference of the theory from practice.
5) The absence of required knowledge and the technology.
6) 45 days were not sufficient to go on with the study. Since the time constraint was not
enough at all.
7) Most of the implementation and strategies which are studied were not properly used.
8) There was improper communication channel with the speculators.
9) A small difference makes it feel difficult about the theory and the practices.
10) An improper absence of the information about technology.

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1.7 CHAPTERISATION
The study is arranged in a logical pattern.
 First chapter consists of INTRODUCTION to the study includes the need for study,
importance of study, objectives, research methodology, research design, sources of
data, tools and techniques od analysis, scope for the study and limitations of the study
with sound explanation.
 Second chapter consists of REVIEW OF LITERATURE which reflects the relevant
 theoretical and empirical background of the study on PORTFOLIO MANAGEMENT.
 Third chapter consists of the COMPANY PROFILE which consists of a brief
historical retrospect about the entire of the study.
 Fourth chapter consists of DATA PRESENTATION, ANALYSIS AND
 INTERPRETATIONS based on the collected data from various primary and
secondary sources.
 Fifth chapter consists of FINDINGS, CONCLUSION along with SUGGESTIONS
and LIMITATIONS and is concluded with BIBLIOGRAPH.

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 CHAPTER – II
REVIEW OF LITERATURE

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2.1 MEANING AND DEFINITIONS

THE CAPITAL MARKET IN 1NDIA

Since independence, a number of steps have been taken by the Government of lndia to ensure
the organized growth of capital market. The Capital Issues (control) Act 1948, The
Companies Act 1956 and, The Securities Contracts (Regulation) Act 1956 are prominent
among them. The Capital Issues (control) act 1948 was initiated to prevent, regulate and
control investment by companies to protect the interests of the investors by examining the
terms of capital issues, capital reorganization plans including mergers and amalgamations and
foreign investment. The Companies Act 1956 envisaged an integrated pattern of relationship
between the various components of corporate business. The main object of the Securities
Contracts (Regulation) Act 1956 was to have a strong and healthy investment market and
ensure investor confidence. The Monopolies and Restrictive Trade Practices Act (MRTP)
which came into existence with effect from June 1, 1970 was to prevent concentration of
economic power in private hands and to control restrictive trade practices. Moreover, a
number of specialized financial and development corporations were established to finance
large scale industrial development. Finally, the Reserve Bank of lndia and the government
have been taken steps for the integration of organized and unorganized sectors of the capital
market, development of rural credit, financial inclusion and the diversification of the
functions of the commercial banks.

CAPITAL MARKET
A capital commercial center is a business opportunity for securities (obligation or value),
wherein endeavor (organizations) and governments can enhance long haul spending plan. It is
portrayed as a market wherein cash is accommodated periods longer than an a year, in light of
the fact that the raising of brief day and age reserves happens on various markets (e.G., the
currency advertise). The capital market incorporates the stock market (value securities) and
the security commercial center (obligation). Budgetary controllers, together with the UK's
Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC),
administer the capital markets of their particular purviews to verify that speculators are
ensured against misrepresentation, among different commitments.
Capital markets might be arranged as number one markets and optional markets. In number
one markets, new stock or security issues are offered to brokers through an instrument

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alluded to as guaranteeing. In the optional markets, display securities are purchased and
purchased among purchasers or speculators, ordinarily on a securities trade, over-the-counter,
or some other place.
INDIAN CAPITAL MARKET
The Indian Capital Market is one of the most established capital markets in Asia which best
in class around 2 hundred years before.
Order of the Indian capital markets:
1830s: Trading of corporate offers and stocks in Bank and cotton Presses in Bombay.
1850s: Sharp development in the capital commercial center representatives attributable to the
fast advancement of business endeavor.
1860- Sixty one: Outbreak of the American Civil War and ' Share Mania ' in India.
1894: Formation of the Ahmadabad Shares and Stock Brokers Association.
1908: Formation of the Calcutta Stock Exchange Association.
A commercial center is any individual of a development of different frameworks,
foundations, strategies, social relatives and foundations whereby people exchange, and things
and administrations are traded, shaping a piece of the money related framework. It is an
affiliation that licenses customers and merchants to change matters. Markets run long, run,
geographic scale, locale, sorts and sort of human groups, notwithstanding the assortments of
products and offerings exchanged. A few cases comprise of neighborhood ranchers' business
sectors held around the local area squares or parking garages, shopping offices and acquiring
retail chains, global cash and ware markets, legitimately made markets including for toxins
permits, and unlawful markets which incorporates the commercial center for illegal
containers.
In standard financial matters, the possibility of a commercial center is any structure that
licenses customers and merchants to trade any sort of merchandise, offerings and actualities.
The trading of merchandise or administrations for cash is an exchange. Market people
incorporate every one of the purchasers and merchants of a stunning who impact its charge.
This affect is an essential inspect of financial aspects and has offered ascend to a few
speculations and models with respect to the major market powers of convey and request.
There are two parts in business sectors, customers and merchants. The market permits
substitute and permits the appropriation and allotment of advantages in a general public.
Markets allow any tradable protest be assessed and evaluated. A market rises additional or
less immediately or is assembled deliberately by utilizing human interchange with an end

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goal to allow the other of rights (cf. Possession) of administrations and merchandise.

Truly, markets started in physical commercial centers which would regularly change into —
or from — little gatherings, urban areas and towns.
Sorts of business sectors
Albeit many markets exist inside the regular sense — together with a commercial center —
there are different assortments of business sectors and various authoritative structures to help
their capacities. The idea of business exchanges should layout markets.

Monetary markets
Money related markets encourage the difference in fluid property. Most purchasers select
putting resources into business sectors, the stock markets and the security markets. NYSE,
AMEX, and the NASDAQ are the most well-known stock markets inside the US. Prospects
markets, in which contracts are traded in regards to the predetermination transport of items
are frequently an outgrowth of well- known product markets.
Money markets are utilized to exchange one cash for another, and are frequently
utilized at theory on forex costs.
The currency advertise is the require the worldwide market for loaning and acquiring.

Expectation markets
Forecast markets are a kind of theoretical market wherein the products traded are prospects at
the event of positive exercises. They rehearse the commercial center flow to encourage
records accumulation.

Association of business sectors

A market can be set up as a sale, as an individual electronic commercial center, as a ware
discount showcase, as a shopping center, as an unpredictable association including a stock
commercial center, and as an easygoing dialog between people.
Markets of different sorts can unexpectedly stand up on each event a festival has enthusiasm
for a stupendous or administration that a couple of various festival can give. Consequently,
there might be a business opportunity for cigarettes in remedial focuses, some other for biting
gum in a play area, but then another for contracts for the future delivery of a ware. There can
be illicit businesses, wherein a phenomenal is traded wrongfully and advanced markets,

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which incorporates eBay, in which clients and merchants do now not physically have
communication throughout arrangement. There likewise can be markets for things beneath an
order monetary framework regardless of strain to stifle them.

Private Secondary Markets

In part because of hoisted consistence and announcing duties sanctioned inside the Sarbanes-
Oxley Act of 2002, non-open auxiliary markets initiated to rise. These business sectors are
typically best accessible to institutional or allowed purchasers and allow purchasing and
offering of unregistered and private association securities.
In individual value, the optional market (likewise oftentimes alluded to as individual
value auxiliary's or secondary's) alludes to the looking for and offering of prior financial
specialist duties regarding private value accounts. Venders of individual value speculations
advance no longer handiest the ventures inside the store however furthermore their end
unfunded responsibilities regarding the funds.

EQUITY SHARES
They likewise are referred to as regular stock. The not surprising load of an endeavor are its
real proprietors, the individual the enterprise and suspect the last risk assistant with
possession. Their legitimate duty, how ever is restricted to the sum in their subsidizing inside
the event of liquidation, these investors have a leftover proclaim on the property of the
endeavor after the cases of all loan bosses and favored stock holders,are settled in total. Basic
stock like favored stock, as no adulthood date.NSE began exchanging the values portion
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(Capital Market stage) on November 3, 1994 and inside a limited capacity to focus one yr
turned into the most vital exchange India as far as volumes transacted. Trading volumes in
the value stage have developed quickly with basic day by day turnover developing from
Rs.19 crores at some phase in 1994-ninety five to Rs.14,148 corers for the term of FY 2007-
08. Amid the year 2007-o8, NSE said a turnover of Rs. 3,551,038 crores in the values section.
The Equities portion presents you with an observation into the values fragment of NSE and
also gives genuine time charges and records of the values showcase. In-force records with
respect to posting of securities, purchasing and offering structures and strategies, clearing and
settlement, peril control, purchasing and offering certainties et cetera are accessible ideal here

APPROVED, ISSUED AND OUTSTANDING SHARES

A lawful offers is the most extreme no. Of stocks that the articles of association (AOA) of
the company allow it to issue in the commercial center. An association can however alter its
AOA to blast the range. The wide assortment of stocks that the business has genuinely issued
out these lawful offers is alluded to as issued shares. A business venture for the most part
adores to have some of offers that a lawful however un-issued. These un-issued permit
adaptability in allowing stock options, seeking after merger objectives andsplitting the stock.
Extraordinary stocks talk over with the assortment of stocks issued and in certainty held by
utilizing open. The business can purchase back a piece of its issued stock and keep it as a
treasury inventory. Par expense, book charge and selling charge: The standard cost of an offer
of stock is essentially a recorded parent inside the corporate constitution and is of minimal
money related essentialness. A company should now not, be that as it may, trouble not
surprising stock at a rate not as much as standard cost, because of the reality any markdown
from standard cost (amount through which the issuing cost is significantly less than the
standard cost) is thought about an unexpected lawful obligation of the own one of a kind
wrest to the lenders of the business. In case of liquidation, the extent holders could be
lawfully helpless against banks of any rebate from standard charge.
Illustration: believe that xyz inc. Is set up to begin venture for the essential time and sold ten
thousand offers rupees 10 each. The rate holders value bit of the accounting report may be
regular stock @ 10 each at standard value: ten thousand offers issued and breathtaking
RS100000 Total offers holders reasonableness RS100000.The book esteem per level of not
surprising stock is the investors value – add up to possessions less liabilities and wanted
stocks as recorded at the soundness sheet-isolating by the quantity of stocks huge .Think that

20
xyz is presently 1 a year antique has created RS 500000 after-charge benefits, however pays
wide assortment separating. In this way, held wage are RS 50000. The extent holders decency
is presently RS a hundred thousand+ RS 50000 =150000 and the digital book cost per rate is
Rs 1500000/10000=RS 25. Although one would potentially foresee the digital book cost by
offer of stock to compare to the selling charge (per share) of the business, most extreme much
of the time does not. Frequently assts are sold for not as much as their esteems, exceptionally
while exchanging charges are included.

Market cost
Market expense per share is the cutting the edge charge at which the stock is exchanged. For
effectively exchanged stocks, advertise accuse citations are of straightforwardness accessible.
For the numerous in vivacious offers which have thin markets, expense are difficult to
accomplish. Indeed, even while possible, the data may also reflect best the offer of a few
offers of stock of regular stock and never again exemplify the market cost of the firm on the
grounds that the whole. The commercial center cost of an offer of typical stock will usually
varies from its digital book charge and its selling expense. Market cost in venture with extent
of ordinary stock is an element of the contemporary and expected future profits of the
organization and the apparent danger of the stock on the a piece of financial specialists.
Rights of common percentage holders:
Rights of earnings:
In the event that the organization neglects to pay authoritative intrigue and statute and bills to
banks, the moneylenders are fit for make lawful move to protect that standard bills are result
of organization is exchanged. Regular extent holders, nonetheless, have legitimate plan of
action to an association for never again conveying benefits. Handiest if control, the leading
body of overseers, or both occupied with misrepresentation may furthermore extent holders
prosecute their case docket and likely weight the business undertaking to pay profits.
Vote throwing rights:
The regular offers of an association are its proprietors and they're qualified for run with a
leading group of heads. In an immense gatherings shares holders ordinarily practice most
straightforward aberrant oversee through the leading group of chairmen they select. The
board, thus, pick the administration, and the administration genuinely controls the operations
of the organization. In a sole proprietorship, association, or little boss, the proprietors usually
deal with the operation of the business quickly.

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Intermediaries and intermediary challenges:
Basic extent holders are qualified for 1 vote in favor of each extent of stock that they
individual. It is likewise troublesome, each substantial and fiscally, for the most extreme
extent holders to go to an organization's yearly gatherings. Along these lines, many extent
holders vote of way of an intermediary, a lawful offense record through which extent holders
appoint their appropriate to vote to each other person.
Voting strategies:
Contingent upon the organization sanction, the leading body of chairmen is chosen
underneath both dominant part lead balloting gadget or a combined vote throwing
contraption. Under the overall population govern gadget, investors have one for each offer of
stock that they claim, and that they need to vote in favor of each executive part that is open.
Under cumulating balloting gadget, a stock holder can gather votes and strong them for
considerably less than the entire number of chiefs being chosen. The general number of votes
of each extent holders is equivalent to the scope of offers the stock holder occurrences the
quantity of chairmen being chosen.

2.2 OBJECTIVES
Deals In Long Term Investment
Capital market is a market for trading of long term securities. It provides long term
investment avenues to the investors. Borrowers can raise fund for a long period from the
capital market. Here borrowing and lending is for a period which is more than one year.
Long term financial instruments like shares, bonds, and debentures are traded in the capital
market.

Bring Together Borrowers And Lender

It acts as mediators between the borrowers and lenders of money. It links the person having
surplus funds with the one who is the deficit of money. Capital market directs people having
savings to different productive investment avenues. This help in providing long term funds to
borrowers by attracting large investments from peoples.

Regulated By Government
Capital market works as per the regulation of government. There is a body named SEBI set
up by the government who looks and regulate the functioning of the capital market. SEBI
(Securities Exchange Board of India) controls and monitors the functioning of capital markets

22
to protect the interest of its investors. It aims at avoiding any speculative and malpractices in
the capital market.

Utilises Intermediaries
There are several intermediaries who are connected with the capital market to facilitate its
functioning. Intermediaries are termed as important work organs of capital market. Different
intermediaries involved with capital market are Broker, sub-brokers, underwriters, collection
bankers etc. These intermediaries interact with customers and communicate all important
information between the capital market and customers.

Determines Capital Formation Rate

Capital market reflect the rate of capital growth in the economy. Capital market circulates the
funds among different sectors of the economy. It provides the huge fund required for large
infrastructural developments in the economy by attracting investments from the public.
Different business corporations depend on capital markets for raising funds for their
processes. This way it accelerates the rate of capital formation in the economy.

Provides Liquidity
Capital market is a highly liquid market as the instruments traded in the capital market are
easily convertible into cash. Investors can whenever they require can converts their
investments into cash by selling their instruments over the market. It provides an all-time
market for the peoples looking for investments and one looking for borrowing money.

Variety Of Instruments
There are varieties of instruments which are traded in the Capital market. There is a lot of
options available for both investors and borrowers hence providing greater flexibility to both.
A person according to his risk-taking ability and convenience can take any of the avenues
available for investment and borrowing. High leveraged company can go for equity option for
raising funds. Whereas low leveraged company can go for debenture and bond option.

Includes Primary Market And Secondary Market

Capital market includes two markets within it: Primary market and secondary market.
Primary market is a market concerned with the issue of new securities. Here securities are
issued for the first time. Secondary market is a market for old and existing securities.
Securities already traded in the primary market are issued in the secondary market.

23
2.3 FUNCTIONS OF CAPITAL MARKETS

Capital Formation- By championing savings and making them available to companies and
public authorities that need them.

1) The capital market offers access to a variety of financial instruments that enable
economic agents to pool, price and exchange risk.

2) It encourages saving in financial form- Through assets with attractive yields, liquidity
and risk characteristics.

3) Through the stock exchange, the market gives long term leaders the opportunity to
convert their holding into cash. It also offers companies which have securities the
opportunity to obtain cash without reducing their liquidity.

4) The capital market plays an important role in mobilizing funds and resources needed
for development and offers the forum for implementing its policies relating to
stabilization, monetary controls and regulation of the banking system.

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2.4 TYPES

 Primary Market:

The primary market is a new issue market; it solely deals with the issues of new
securities. A place where trading of securities is done for the first time. The main
objective is capital formation for government, institutions, companies, etc. also known
as Initial Public Offer (IPO). Now, let us have a look at the functions of primary
market:

1. Origination: Origination is referred to as examine, evaluate, and process

new project proposals in the primary market. It begins prior to an issue is
present in the market. It is done with the help of commercial bankers.

2. Underwriting: For ensuring the success of new issue there is a need for
underwriting firms. These are the ones who guarantee minimum
subscription. In case, the issue remains unsold the underwriters have to
buy. But if the issues are completely subscribed then there will be no
liability left for them.

3. Distribution: For the success of issue, brokers and dealers are given job
distribution who directly contact with investors.

 Secondary Market:

The secondary market is a place where trading takes place for existing securities. It is
known as stock exchange or stock market. Here the securities are bought and sold by
the investors. Now, let us have a look at the functions of secondary market:

1. Regular information about the value of security

2. Offers liquidity to the investors for their assets
3. Continuous and active trading
4. Provide a Market Place

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2.5 ISSUE MECHNISM:
The achievement of an inconvenience depends upon, halfway, on the Issue Mechanism.
The procedures with the guide of, which new issues are manufactured from
1. Open trouble by means of plan.
2. Offer available to be purchased.
3. Situation.
4. Rights trouble.

Public Issue Through Prospectus

Under this strategy, the issuing associations themselves offer straightforwardly to wellknown
open a settled wide assortment of stocks at an expressed value, which on account of new
organizations is perpetually the face cost of the securities, and on account of current
associations, it would some be able to thing incorporate an endorsed to influence certain
emerging to out of inadmissible open response. Straightforwardness and wide dispersions of
stocks are its essential and advantages. The premise of people in general inconvenience
approach is an outline, the base substance of which may be endorsed by utilizing the
Companies Act 1956. It additionally gives both common and evildoer liabilityfor any error in
the plan. Extra exposure necessities likewise are ordered by means of the SEBI.
The substance of the outline, bury aria, include:
1. Name and enlisted office of the issuing manager.
2. Existing and proposed exercises.
3. Board of managers.
4. Location of the business.
5. Authorized, subscribed and proposed issued of money to open.
6. Dates of building up and last of membership posting.
7. Names of merchant, guarantor, and unique in relation to whom application organization
nearby
8. With duplicates
9. Prospectus can be gotten.
10. Minimum membership.
11. Names of guarantor, assuming any, alongside an announcement that in the assessment of
the
12. Directors.

26
13. Sources of the guarantor are adequate to fulfill the guaranteeing commitment.
14. A articulation that the venture will influence a product to stock substitute for the
15. Permission to bargain in or for a citation of its et cetera.

2.6 METHODS
Offer available
Intermediary to their own special supporter of securities which have been once in the past
purchased or subscribed". Under this system, securities are gotten by means of the issue
houses, as in offer available approach, however set up of being at last given to people in
general, they are situated with the benefactor of the issue houses, both individual and
institutional financial specialists. Every issue house has a composed to join any securities that
are issued in this way. Its way is the indistinguishable with the least complex Difference of
conclusive dealers. In this method, no formal endorsing of the issue is required as the area
itself Amount to guaranteeing since the homes consent to region the issue with their
customers. The principle Advantages of setting, as a technique issuing new securities, are its
relative efficiency. There is a charge slicing because of guaranteeing commission, rate
identifying with programs, portion of offers and the stock exchange necessities identifying
with substance of the plan and its business. This approach is ordinarily received through little
gatherings with unacceptable monetary exhibitions. Its shortcoming emerges from the
purpose of circulation of securities. As the securities are given best to a select foundation of
financial specialists, it might prompt the grouping of offers in to three hands that can make
engineered shortage of contents in occasions of aggravating dealings in such stocks inside the
commercial center.
Rights Issue
Just the present organizations can utilize this strategy. On account of associations whose
stocks are as of now ordered and comprehensively held , offers might be offered to the
current investors. This is alluded to as right inconvenience. Under this approach, the common
investors. Are offered the privilege to subscribed to new offers in rate to the amount of offers
they as of now keep up. This is made by method for roundabout to existing investors least
complex.
In India, fragment eighty one of the organizations demonstration 1956 offers that in which a
business will expand its subscribed capital through the issue of new offers, both following
quite a while of its arrangement or following a year of first issue of offers whichever is ahead

27
of time, these should be first provided to the present investors with this prerequisite by
passing an interesting determination to the equivalent effect. The pioneer value of rights
issues is that it is a more affordable approach.

Sweat Decency Stocks:

Under fragment 9Aof the organizations Act, 1956, an office would difficulty be able to sweat
value offers to its work force or chairmen at rebate or for thought beside coins for providing
skill making to be had rights inside the idea of highbrow property rights or esteem
augmentations et cetera on the accompanying.
Conditions:
1.The inconvenience of sweat reasonableness rate is permitted by an uncommon
determination surpassed with the guide of the organization in the favored meeting.
2. The determination indicates the assortment of offers, current commercial center, Price,
determination, assuming any, and the polish or classes of heads or representatives to whom
such value shares are to be issued.
3. The office is qualified for trouble sweat value stocks after conclusive touch of one year
from the date of Commencement Of business.
4. The value offers of the association should be recorded on a recognized stock exchange.
5. The issue of sweat reasonableness shares must be filed on an understanding with the
standards made by methods for the SEBI for the benefit.
6. An unlisted organization can issue sweat decency stocks as per the endorsed pointers made
for this intention.
7. Every one of the imperatives, confinements and arrangement identifying with decency
stocks will be relevant to sweat value stocks.

Inclination Shares
Inclination shares are a cross breed security as it has both standard offers and bonds.
Inclination investors have special rights in perceive of property and profits. In the event of
twisting up the decision investors have a claim on to be had possessions before the typical
investors. What's more, want investors get their expressed profit sooner than value investors
can obtain any profits.

28
Sorts of Preference Shares
1. Total and Non-aggregate decision shares:
The total inclination offers rights to request the unpaid profits of any year, amid the
accompanying ears when the salary and adequate. All inclination profits overdue debts must
be paid sooner than any profits can be paid to reasonableness investors. The non combined
decision extent pass on a legitimate to a firm profit out of the salary to any year. On the off
chance that profit aren't accessible in a year, the holders get nothing, nor would they be able
to pronounce unpaid profits in consequent years.

2. Combined convertible want stocks:

The combined convertible decision (CCP) share is a units that grasps elements of both
decency offers and stocks and want shares, yet which essentially is a decision stocks. Since
the CCP shares capital would speak to a class of offers, great from just value and in
fundamental terms alternatives share capital, the privileges of the instrument holders should
be expressed both in a well- known outline choice or in the articles or in the terms of issues
inside the give archives viz., plan/letter of give.
3. Partaking and non working together want shares:
Taking an interest decision shares are those stocks which can be qualified for a settled special
profit and. What's more, pass on a privilege to partake inside the surplus benefits in
conjunction with value shares holders after profit at a positive rate has been paid to value
extent holders. Again in case of twisting up, if in the wake of paying restored each want and
value rate holders, there's by and by any surplus left, at that point the taking an interest
inclination rate holders get additional offers in the surplus property of the business venture.
Unless explicitly provided, inclination rate holders get handiest the consistent inclination
profits and profit for capital inside the occasion of finishing out of acknowledged estimations
of property after get together all outside liabilities and nothing additional. The rights to
partake might be given either inside the reminder or articles or by methods for excellence of
expressions of inconvenience.
4. Redeemable and Irredeemable inclination shares:
Subjects to an expert inside the articles of affiliation, an open limited association may trouble
redeemable decision stocks to be reclaimed either at a set date or after a specific timeframe
sooner or later of the life time of the business venture. The organizations demonstration, 1956
denies the trouble of any decision extent that is irredeemable or is redeemable after the expiry

29
of a length of 20 years from the date issue.
Energy to Issue Redeemable Preference Shares:
Area 80 of the gatherings demonstration 1956 lets stuck in an unfortunate situation
Redeemable decision shares if:
• The venture is limited by utilizing stocks.
• Its article of affiliation approves the trouble of redeemable inclination shares.
• Those shares are redeemable at the decision of the association.
A venture is permitted to trouble redeemable want shares inside the accompanying
conditions:
• Such inclination stocks should be reclaimed best out of profit of the business endeavor,
which could somehow or another be to be had for profit.
• Such recovery likewise can be produced using the continued of new issues of offers
produced using the reason of reclamation.
• Before recovery, such offers ought to be totally paid up. The top class on reclamation might
be given out of pay of the venture or out of securities top rate account, before the offer are
reclaimed.
• Where shares are reclaimed out of income to a different record called 'capital
• The recovery of inclination stocks underneath this segment should now not be taken as
diminishing the approved capital of the venture.
• The capital recovery hold record may moreover utilized for issue of completely paid reward
shares. Companies are never again permitted to issued irredeemable inclination stocks or
inclination stocks which can be redeemable after the terminate of a length of twenty years
from the date of its difficulty. In instance of default, the undertaking and each officer of the
business who's indefault should be culpable with a great which may extend to Rs ten
thousand.
• In discounting the preparatory charges of the organization.
• In discounting the costs of, or the commission paid or markdown permitted on, any issue of
offers debentures of the organization.
• In bestowing for the top notch payable on reclamation of any decision offers or debentures.
Issued rate at a Discount:
1.The issued of stocks at a lessening ought to be of a classification of offers issued by
utilizing the Organization.
2. The trouble of offers at a diminishment should be approved by a choice gave inside the

30
famous get together and endorsed with the guide of the basic specialists.
3.The determination should indicate the greatest cost of Discount at which the stocks are to
be issued.
4. The most extreme rate of rebate should never again surpass 10% until the point that the
basic government is of the Opinion that higher percent of deal might be permitted in one of a
kind of conditions.
5. The offers should be issued inside months from the date of endorse by utilizing the or
inside such expanded time as the focal experts may likewise permit.
6. The trouble of offers at a lessening can be finished by means of an organization best a year
after the Commencement of the business undertaking with the guide of the enterprise.
7. In instance of restoration and recovery of sick industry organizations underneath chapter
11 VIA, the issue of offers at cut cost might be endorsed by utilizing the 'Tribunal' rather than
'basic government'.
8. Every outline alluding to issue of stocks should contain the points of interest of deal
permitted on the issue of offers or the unwritten off amount f cut cost at the date of trouble of
plan.
9. In instance of default, the business and each officer of the business who is in default will
be culpable with best which may extend to Rs.500. Shares issued for consideration beside
coins
10. To the guarantors of stocks and promoters through method for installment compensation
or for Expenses brought about.
11. To the seller from whom the strolling business endeavor is purchased, as purchase rate or
Consideration.
12. Issued of extra offers out of the stores to the current investors of the enterprise.

DEBENTURES:
"Recognize of obligation, given under the seal of the business venture and containing a
settlement for the pay of the essential total at a particular date and for pay of the main
aggregate at a correct date and at the cost of side interest at steady value rate till the vital total
is repaid, and it might give the charge at the effects to the association as security of the
Loan".
Sort of debentures:
1. Carrier debentures: Bearer debentures are like rate warrants in that too are debatable

31
units, transferable with the guide of transport. The enthusiasm on conveyor debentures is paid
through the way of associated coupons. On development, the overwhelming aggregate is paid
to the bearers.
2. Enrolled debentures: These are debentures which are payable to the enlisted holders i.E..
Men and ladies whose names show up inside the join of debenture holders. Such debentures
are transferable inside the equivalent way as stocks.
3. Interminable or Irredeemable debentures: A debenture which incorporates no provision
as to cost or which incorporates a condition that it should not be paid lower back is known as
a never-ending or irredeemable debenture. These debentures are redeemable just at the going
ahead of a possibility at the lapse of a period, yet long. It takes after that debentures might be
made interminable, i.e. The home loan is repayable easiest on finishing or after an extended
era.
4. Redeemable debentures: These debentures are issued for an assigned time allotment. On
the expiry of the coveted time the organization has the correct to pay bring down back the
debenture holders and have its homes propelled from the home loan or cost. For the most
part, debentures are redeemable.
5. Debentures Issued as Collateral Security for a Loan: The era guarantee security or
optional assurance way, a security which can be acknowledged with the guide of the
gathering ensuring it in case of the credit being not paid on the perfect time or in accordance
with the settlement of the occasions. Now and again, the banks of cash are given debentures
as an insurance assurance for credit. The ostensible cost of such debentures is always
additional than the home loan. On the off chance that the home loan is reimbursed, The
debentures issued as security wellbeing are mechanically recovered.
6. Stripped debentures: Normally debentures are secured through a home loan or an
expense at the organization's assets. However debentures might be issued with none rate on
the advantages of the business undertaking. Such debentures are uncovered or unsecured
debentures. They are negligible affirmation of an obligation due from the office, developing
no rights past those secured loan specialists.
7. Secured debentures: when any exact or certain benefits of the undertaking is offered as
wellbeing to the debenture holders and keeping in mind that the organization can deliver it
least complex worry to the earlier right of the debenture holders, consistent cost at the task of
the association i.e., Finish of the things of the business venture, both present and future, a
while it can address the effects inside the customary course of big business until the point

32
when the cost solidified i.e., While the association goes in to liquidation or while a get is
named, the cost is said to glide rate. At the point when the coasting rate takes shape, the
debentures holder have an ideal to be paid out of the property subjects to the best possible of
the particular loan boss however preceding making any charge to unsecured banks.
Strategies for recovery of debentures:
An association may trouble redeemable notwithstanding irredeemable debentures.
There are two basic methodologies of reclaiming the debentures reliable with the expressions
of the issue.
• Redemption of debentures on a steady date:
In this technique installment to the debenture holders is made at the expiry of the expressed
length. A ' sinking reserve account' is made with the guide of charging the profit and
misfortune allotment account'. The sum so credited in the sinking reserve account is
contributed inside the plated edged securities. The securities are sold at the date of recovery
of debentures.
• Redemption of debentures by utilizing periodical illustrations:
In this approach, charge is made yr after of a positive bit of the full debentures with the guide
of drawing. A such the business account is charged with the once per year illustrations and
the "recovery support account" are credited.

• Convertible debentures (CDs):

A business may likewise issue CDs wherein case an option is given to the debenture holders
to secretive them in to value or decision shares at said charges of exchange, after a specific
period. Such debentures when changed over in to stocks can not be reconverted in to
debentures. Compact discs can be totally or halfway convertible. If there should be an
occurrence of completely convertible debentures, the bury confront values changed over in to
shares at the expiry of extraordinary period(S). If there should arise an occurrence of mostly
convertible debenture best convertible segment is recovered toward the finish of determined
period. Non convertible debenture don't give any decision at the holder to the debenture in to
stocks and are recovered on the expiry of particular period (s).CDs, regardless of whether
completely or to some extent convertible, can be changed over in to shares at the surrender of
exceptional periods in a solitary or more ranges. The undertaking should get a FICO rating of
debenture performed through FICO assessment score endeavor. Cds are recorded on stock
trades. The somewhat convertible debenture (PCDs) give additional adaptability to the two

33
organizations and dealers. It has been guaranteed to be higher than completely convertible
debenture since it does now not routinely involve extensive value base, specifically if there
should arise an occurrence of most recent organizations. Experience proposes that adjusting
of gigantic base of capital isn't generally smooth in the event of late activities, particularly if
the organization keeps running in to troublesome climate because of advertising challenges.
All things considered, the non-convertible piece of the debenture keeps the value of an
association inside conceivable l

American Depository Receipts (ADR):

An American storehouse receipt (ADR) is a debatable receipt which speaks to at least one
Storehouse stocks held by method for a US overseer money related organization, which in
flip constitute basic loads of non-backer held by means of an overseer in the nation of origin.
ADR is an engaging subsidizing to US purchasers willing to burn through cash on securities
of non US backers for following reasons:
• ADR offer a way to US financial specialists to change the non US organization stocks in US
greenbacks ADR debatable receipt (which speaks to the non US share) issued in US capital
commercial center and is exchanged bucks. The purchasing and offering in ADR effectively
technique purchasing and offering in hidden stocks.
• ADR helps extent exchanges. ADRs are debatable and might be without issues exchanged a
large portion of the merchants like another debatable apparatus. The switch of ADRs
mechanically exchanges the hidden rate.
ADR OFFERINGS:
An open providing bears get right of section to the broadest US financial specialist base and
most fluid US securities showcase. The consistence necessities out in the open offerings are
the strictest and fuse of Registration of hidden assurance under the Act (From F1)
Registration of ADR underneath the 1993Act (From F6) Registration underneath the 1934
Act (if the partnership isn't generally effectively Regulation act under the 1934 Act).
Worldwide Depository Receipt (GDR):
With the expansion in overall reasonableness issuance, on the whole with blast inside the
fundamental Optional commercial center subsidizing, an expanding need has been felt for
higher fungibility. The purchasers request shares that exchange unreservedly on an overall
establishment without limitations. The store receipts have be utilized as a halfway technique
to this inconvenience. American safe receipts were the well- known assortments of ventures

34
by utilizing US purchasers in abroad values. An amount of overall value offers, exceptionally
a couple of Asian markets have an expanding number of utilized overall storehouse receipts
(GDR), specifically in which jail controls and shut markets have turned away the overall
circle of basic wellbeing on an openly change premise. The GDRs hold to have cost in fluid
or bound markets and are often utilized by challenge organizations to lift decency value
extend.

Qualities OF A GDR:
• Depository receipts are debatable endorsements with traded on an open market value of the
guarantor as basic security.
• An inconvenience of safe receipts may include the guarantor, issuing specialist to an outside
store.
• The store, in flip, issues GDRs proving their rights as extent holders.
• Depository receipts are designated in abroad money and are listed of universal trade
together with London or Luxembourg.
• GDRs permit dealers trade a greenback designated instrument on a worldwide stock
exchange but then have rights in remote offers.
• The statute reason for the GDR is to furnish overall speculators with neighborhood
settlement.
• The supplier issuing the stocks needs to pay profits to the storehouse inside the home forex.

Subsidiaries:
It is a settlement whose cost relies upon or cost depends upon on or gets from the cost of a
hidden resource [say an offer, forex, ware or an index]. In its broadest feel a result endeavors
to fence towards the changeability of any monetary variable. In this manner exposures or saw
dangers to an organization bouncing up from the variety in side interest expenses, exchange
costs, ware charges and value charges can be supported through the right subsidiary shape.
Such a result shape covers a wide assortment of monetary contracts viz. Prospects, advances,
alternatives, swaps and restrictive forms thereof. These agreements can be exchanged on the
various trades in an institutionalized way or by utilizing specially crafted for singular
prerequisites. The historical backdrop of subsidiaries might be followed to the medieval times
while ranchers and brokers in grains and distinctive agrarian items utilized certain specific
types of prospects and advances to support, the threats. Basically the rancher wants to ensure

35
that he gets a sensible charge for the grain that he could gather [say] three to four months
after the fact. An over convey hurt him severely. For the grain specialist co-op, the other is
credible. A fall inside the rural item will push up the expenses. It made experience thusly
them two to settle a rate for the fate. These transformed into how the future market initially
created in farming products, for example, cotton, coffee, oil, soya bean, sugar after which to
monetary stock such at loan costs, remote trade and offers. In 1995 the Chicago leading body
of exchange began exchanging subordinates. For the subsidiaries commercial center to widen
three sorts of people are vital. They are the hedgers, the examiners and the arbitrageurs. Each
of the 3 need to exist together.

36
2.7 ARTICLES REVIEWED
P. M. Deleep Kumar and G. Raju (2001) showed that the capital market is becoming more
and more risky and complex in nature so that ordinary investors are unable to keep track of
its movement and direction. The study revealed that the Indian market is probably more
volatile than developed country markets, which is probably why a much higher proportion of
savings in developed countries go into equities. More than half of individual shareowners in
India belonged to just five cities. The distribution of share ownership by States and Union
Territories show that just five States accounted for 74.7 per cent of the country‘s share
ownership population and 71.7 per cent of the aggregate value of the shareholdings of
individuals in India. Among the five States Maharashtra tops the list with Gujarat as a distant
second followed by West Bengal, Delhi and Tamil Nadu. In the midpoint of the study also
argued that introduction of derivatives is the first step to hedge the risk of unfavourable
movement in the market. This will also lower transaction cost and provides depth and
liquidity to the market.

Peter Carr and Dilip Madan (2001) disclosed that generally does not formally consider
derivatives securities as a potential investment vehicles. Derivatives are considered at all,
they are only viewed as tactical vehicles for efficiently re-allocating funds across broad asset
classes, such as cash, fixed income, equity and alternative investments. They studied that
under reasonable market conditions, derivatives comprise an important, interesting and
separate asset class, imperfectly correlated with other broad asset classes. If derivatives are
not held in our economy then the investor confines his holdings to the bond and the stock and
the optimal derivatives position is zero. Prof. Peter McKenzie (2001) in his speech at seminar
investors have a choice instead of placing their money in only one company they can pick
areas of growth and move their money, buying and selling and placing it where it is going to
be most profitable. The individual investor does not have to make an individual decision
where to place his savings. These decisions are made by an expert fund manager, which
would spread the risk by spreading the investments across different sectors of the economy.

Hong Kong Exchanges and Clearing Ltd. (2002) surveyed on derivatives retail investors, and
argued first based on empirical evidence that years of trading experience and usual deal size
have a positive correlation. Second, Male investors traded to trade more frequently than
female investors. Third, the usual deal size of investor with higher personal income traded to

37
be larger. Fourth majority of respondents are motivated by their stock trading experience to
start derivatives trading. Fifth, trading for profit is the key reason for derivatives trading other
than high rate of return, hedging, etc. Sixth, the most significant motivating factors are more
liquid market and more transparent market. Seventh, majority of traders are infrequent in
trade- 3 times or less in a month and Index futures is the most popular product to trade most
frequently. Ninth, a large proportion of the investors invest in exchange cash products than
derivatives or investment avenues. Through empirical evidence form investor‘s opinion,
study argued that the liquidity of derivatives products other than futures is low. High
transaction costs or margin requirement is the barrier for active participation in derivatives
market. But also shows that more active traders do not have much complaint towards
transaction costs and margin requirement.

S. M. Imamual Haque and Khan Ashfaq Ahmad (2002) argued that the sluggish trends in
primary equity markets need to be reverse by restoring investors‟ confidence in market.
Savings for retirement essential seek long term growth and for that investment in equity is
desirable. It is an established fact that investments in equities give higher returns than debt
and it would, therefore, be in the interest of the banks to invest in equities.

Warren Buffet (2002) argued that derivatives as time bombs, both for the parties that deal in
them and the economic system. He also argued that those who trade derivatives are usually
paid, in whole or part, on ―earnings‖ calculated by mark-to-market accounting. But often
there is no real market, and ―mark-to-model‖ is utilized. This substitution can bring on
largescale mischief. In extreme cases, mark-to-model degenerates into mark-to-myth. Many
people argue that derivatives reduce systemic problems, in that participant who can‘t bear
certain risks are able to transfer them to stronger hands. He said that the derivatives genie is
now well out of the bottle, and these instruments will almost certainly multiply in variety and
number until some event makes their toxicity clear.

Mohammed Rubani (2017) explained that in any economy capital is the important factor. In
economy, a well organized financial system provides adequate capital formation through
savings, finance and investments. An investment depends upon Savings and in turn Savings
depends upon earnings of an individual or profits of the organization. This system may be
viewed as a set of sub-systems with so many elements which are interdependent and

38
interlinking with each other to produce the purposeful result with in the boundary. Hence, the
term system in the context of finance means a set of complex and closely connected financial
institutions, instruments, agents, markets and so on which are interdependent and interlinking
with each other to produce the economic growth with in the country. Transfer process is
effectively fulfilled by the financial system to facilitate economic growth through the channel
of finance. This study aims at analysing the structure and functions of Capital Market in
India.
Source: ripublication.com/ijbamspl17/ijbamv7n2spl_17.pdf

Samir Barua, Ragunathan V, Jayanth Varma (1994) detailed about the Indian capital market
that it has been attracting considerable attention in recent years especially after the opening
up of the Indian economy. As a result, several researchers have addressed various issues
pertaining to the capital market in India. What has been the trend of research in this field over
the last 15 years? This article by Barua, Raghunathan, and Varma examines this issue and
provides a comprehensive review on the nature of research in the field of capital market in
India. In the process, it also identifies research gaps and research issues that need attention
from researchers.
Source:
researchgate.net/publication/46437407_Research_on_the_Indian_Capital_Market_A_Review

B.K. Muhammed Juman and M.K. Irshad (2015) overviewed the history of capital markets
dates back to the 18th century when East India Company securities traded the country.
Capital markets help to channelize surplus funds into productive use. Generally, this market
trades mostly in long-term securities. The important divisions of the capital market are stock
market, bond market and primary, secondary markets. We conclude that Capital markets were
not well organized and developed during the British rule. But in the present scenario, we find
that Capital markets are well developed after the introduction of SEBI. Through provision of
long term loans, the capital market brings about effective functioning of various sectors of the
economy. A sound and efficient capital market is one of the most instrumental factors in the
economic development of a nation.
Source: journal.bonfring.org/papers/iems/volume5/BIJ-8017.pdf

39
Parray Firdous Ahmad and Tiwari Anshuja (2015) detailed the present review article is an
attempt by the researchers to make a descriptive as well as analytical study of work
done in the field of Indian capital market. This study will be focusing on various loopholes in
the Indian Financial System. As capital market is wider concept, lots of note worthy
contribution have been made in this area. In this write up emphasis are given to bring to light
all the hard work done by various researches and to uncover the gap for future research. Apart
from that the researchers have also highlighted some of the important reforms in Indian
Capital Market since 1991 onwards. While studying a range of literature available
from various resources, the researchers have arrived that there is generally a constructive
assessment of the economic reforms on Indian Capital Market, but also points out some
areas of concern: the lack of a fixed term appointment for the regulators; the
persistence of non-competitive conditions in the market; and the excessive entry of
new scripts into the market, Although in recent days, some steps have been taken to address
this problem as well.
Source: researchgate.net/publication/315662083_Indian_Capital_Market_A_Review

S. P. Kothari (2001) reviewed empirical research on the relation between capital markets and
financial statements. The principal sources of demand for capital markets research in
accounting are fundamental analysis and valuation, tests of market efficiency, and the role of
accounting numbers in contracts and the political process. The capital markets research topics
of current interest to researchers include tests of market efficiency with respect to accounting
information, fundamental analysis, and value relevance of financial reporting. Evidence from
research on these topics is likely to be helpful in capital market investment decisions,
accounting standard setting, and corporate financial disclosure decisions.
Source: papers.ssrn.com/sol3/papers.cfm?abstract_id=235798

40
 CHAPTER – III
INDUSTRY & COMPANY PROFILE

41
3.1 INDUSTRY PROFILE
3.1.1 Introduction
FINANCIAL MARKETS
Finance is the pre-requisite for modern business and financial institutions play a vital role in
the economic system. It is through financial markets and institutions that the financial system
of an economy works. Financial markets refer to the institutional arrangements for dealing in
financial assets and credit instruments of different types such as currency, cheques, bank
deposits, bills, bonds, equities, etc.
Financial market is a broad term describing any marketplace where buyers and sellers
participate in the trade of assets such as equities, bonds, currencies, and derivates. They are
typically defined by having transparent pricing, basic regulations on trading, costs and fees
and market forces determining the prices of securities that trade.
Generally, there is no specific place or location to indicate a financial market. Wherever a
financial transaction takes place, it is deemed to have taken place in the financial market.
Hence financial markets are pervasive in nature since financial transactions are themselves
very pervasive throughout the economic system. For instance, issue of equity shares, granting
of loan by term lending institutions, deposit of money into a bank, purchase of debentures,
sale of shares and so on.
In a nutshell, financial markets are the credit markets catering to the various needs of the
individuals, firms and institutions by facilitating buying and selling of financial assets, claims
and services.

42
 CLASSIFICATION OF FINANCIAL MARKETS

Financial markets

Organized markets Unorganized markets

Capital Money Money lenders, indigenous

markets markets

Industrial Government
securities securities Long-term Call money
market market loan market market

Commercial bill
market
Primary Secondary
market market

Treasury bill
market

43
Stocks that respond to interest rate moves, coupled with select debt schemes, are likely to be
the winners in 2018, with the Reserve Bank of India expected to start easing its monetary
policy.
Fund managers said economic prospects have improved, but the New Year may be tougher
for equity investors to make money as valuations of many stocks are rich after the broad-
based rally in 2014. Concern over interest rate hike in the US and weak global crude oil
prices may also keep investors on.

India is among the top-performing emerging markets in 2014. So far in 2014, the Sensex has
gained 34%. Smaller companies have fared even better, with the BSE Mid Cap index surging
56% and the BSE Small Cap Index jumping 75%.
Though the falling crude prices have improved the prospects of the Indian economy, India
may not be spared if there is an emerging market sell-off. "On the global front, oil exporting
nations could face problems, and there could be a global risk aversion.
Market participants consider probable interest rate cuts by the Reserve Bank of India (RBI) as
the biggest trigger for the economy and the markets. The extent of monetary policy easing
would determine the strength of rally in shares of the so-called interest rate-sensitive sectors
such as banks, auto, real estate and bonds.
Fund managers said debt funds could offer good returns in the coming year as a fall in
interest rates could lead to an appreciation in bond prices. With wholesale price inflation
coming at nil for November, expectations of interest rate cuts as early as in the March quarter
are high. "Short-term rates can fall more than long-term rates. We expect consumer inflation
to be in the range of 5-5.5%, and expect RBI to cut interest rates by 50 basis points in 2015,"
said DhawalDalal, executive V-P and head (fixed income), DSP BlackRock Mutual Fund. If
interest rates fall by 50 basis points, investors could see a 5% capital appreciation on their
long-term gilt fund portfolio.
Measured by BSE Sensex, stock market has generated a positive return of about 9 per cent
for investors in 2013, while gold prices fell by about three per cent and its poorer cousin
silver plummeted close to 24 per cent.
After outperforming stock market for more than a decade, gold has been on back foot for two
consecutive years now vis-a-vis equities, shows an analysis of their price movements.
"Gold's under-performance was mainly due to prices falling in dollar terms amid anticipated

44
tapering over last several months combined with FII investment in Indian stocks.
"This movement has been equally true for global markets as 2013 saw gold losing its shine
and markets coming back with a bang," said Jayant Manglik, President Retail Distribution,
Religare Securities.
"As always, gold and stock prices follow opposite trends and this year was no different
except that both changed direction," he said.
Improvement in the world economy has brought the risk appetite back amongst retail
investors and this has drenched the liquidity from safe havens such as gold leading to its
under-performance, an expert said.
In 2012, the Sensex had gained over 25 per cent, which was nearly double the gain of about
12.95 per cent in gold. The appreciation in silver was at about 12.84 per last year.
According to Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio, "Markets have
particularly shown great strength post July-August 2013 when RBI took some strong
measures to control the steeply depreciating rupee."
"When the US Fed gave indications that it might taper its stimulus programme given the
economy shows improvement, a knee-jerk correction was seen in most risky assets, including
stocks in Indian markets. However, assurance by the Fed about planned and staggered
tapering in stimulus once again proved to be a catalyst for the markets."

"External factors affecting Indian stocks seem to be negative for the first half of 2014 due to
continued strength of the US dollar and benign in the second half. By that time, elections too
would have taken place. A combination of domestic and international factors point to a
bumper closing of Indian markets in 2014 with double-digit percentage growth," he said.
Stock market segment mid-cap and small-cap indices have fallen by about 10 per cent and 16
per cent, respectively, in 2013.
Foreign Institutional Investors have bought shares worth over Rs 1.1 lakh crore (nearly USD
20 billion) till December 19. In 2012, they had pumped in Rs 1.28 lakh crore (USD 24.37
billion).

Evolution

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years
ago. The earliest records of security dealings in India are meager and obscure. The East India
Company was the dominant institution in those days and business in its loan securities used
45
to be transacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage business
attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of
Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased
to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous
slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be
sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,
found a place in a street (now appropriately called as Dalal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in Bombay,
the "Native Share and Stock Brokers' Association" (which is alternatively known as " The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it
was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.

Other leading cities in stock market operations

Ahmadabad gained importance next to Bombay with respect to cotton textile industry. After
1880, many mills originated from Ahmadabad and rapidly forged ahead. As new mills were
floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894 the brokers
formed "The Ahmadabad Share and Stock Brokers' Association".

What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was to
Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta.
After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which
was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between
1904 and 1908. On June 1908, some leading brokers formed "The Calcutta Stock Exchange
Association".

46
In the beginning of the twentieth century, the industrial revolution was on the way in India
with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company
Limited in 1907, an important stage in industrial advancement under Indian enterprise was
reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally
enjoyed phenomenal prosperity, due to the First World War.

In 1920, the then demure city of Madras had the maiden thrill of a stock exchange
functioning in its midst, under the name and style of "The Madras Stock Exchange" with 100
members. However, when boom faded, the number of members stood reduced from 100 to 3,
by 1923, and so it went out of existence.

In 1935, the stock market activity improved, especially in South India where there was a
rapid increase in the number of textile mills and many plantation companies were floated. In
1937, a stock exchange was once again organized in Madras - Madras Stock Exchange
Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange
Limited).

Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with the
Punjab Stock Exchange Limited, which was incorporated in 1936.

Indian Stock Exchanges - An Umbrella Growth

The Second World War broke out in 1939. It gave a sharp boom which was followed by a
slump. But, in 1943, the situation changed radically, when India was fully mobilized as a
supply base.

On account of the restrictive controls on cotton, bullion, seeds and other commodities, those
dealing in them found in the stock market as the only outlet for their activities. They were
anxious to join the trade and their number was swelled by numerous others. Many new
associations were constituted for the purpose and Stock Exchanges in all parts of the country
were floated.
The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940)
and Hyderabad Stock Exchange Limited (1944) were incorporated.
In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the
47
Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947,
amalgamated into the Delhi Stock Exchnage Association Limited.
3.1.2 Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange
was closed during partition of the country and later migrated to Delhi and merged with Delhi
Stock Exchange.
Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.
Most of the other exchanges languished till 1957 when they applied to the Central
Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only
Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well-established
exchanges, were recognized under the Act. Some of the members of the other Associations
were required to be admitted by the recognized stock exchanges on a concessional basis, but
acting on the principle of unitary control, all these pseudo stock exchanges were refused
recognition by the Government of India and they thereupon ceased to function.
Thus, during early sixties there were eight recognized stock exchanges in India (mentioned
above). The number virtually remained unchanged, for nearly two decades. During eighties,
however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar
Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange
Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock
Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh
Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989),
Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange
Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently
established exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty one
recognized stock exchanges in India excluding the Over The Counter Exchange of India
Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
The Table given below portrays the overall growth pattern of Indian stock markets since
independence. It is quite evident from the Table that Indian stock markets have not only
grown just in number of exchanges, but also in number of listed companies and in capital of
listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and
this was due to the favouring government policies towards security market industry.
Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges are limited to listed securities of public limited companies.

48
They are broadly divided into two categories, namely, specified securities (forward list) and
non-specified securities (cash list). Equity shares of dividend paying, growth-oriented
companies with a paid-up capital of at least Rs.50 million and a market capitalization of at
least Rs.100 million and having more than 20,000 shareholders are, normally, put in the
specified group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery
transactions "for delivery and payment within the time or on the date stipulated when entering
into the contract which shall not be more than 14 days following the date of the contract" :
and (b) forward transactions "delivery and payment can be extended by further period of 14
days each so that the overall period does not exceed 90 days from the date of the contract".
The latter is permitted only in the case of specified shares. The brokers who carry over the
outstandings pay carry over charges (cantango or backwardation) which are usually
determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell securities for
his clients on a commission basis and also can act as a trader or dealer as a principal, buy and
sell securities on his own account and risk, in contrast with the practice prevailing on New
York and London Stock Exchanges, where a member can act as a jobber or a broker only.
The nature of trading on Indian Stock Exchanges are that of age old conventional style of
face-to-face trading with bids and offers being made by open outcry. However, there is a
great amount of effort to modernize the Indian stock exchanges in the very recent times.
Over The Counter Exchange of India (OTCEI)
The traditional trading mechanism prevailed in the Indian stock markets gave way to many
functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long
settlement periods and benami transactions, which affected the small investors to a great
extent. To provide improved services to investors, the country's first ringless, scripless,
electronic stock exchange - OTCEI - was created in 1992 by country's premier financial
institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India,
Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation
of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
Trading at OTCEI is done over the centres spread across the country. Securities traded on the
OTCEI are classified into:

49
  Listed Securities - The shares and debentures of the companies listed on the OTC can
be bought or sold at any OTC counter all over the country and they should not be
listed anywhere else

 Permitted Securities - Certain shares and debentures listed on other exchanges and
units of mutual funds are allowed to be traded

 Initiated debentures - Any equity holding at least one lakh debentures of a particular
scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges. That is,
certificates of listed securities and initiated debentures are not traded at OTC. The original
certificate will be safely with the custodian. But, a counter receipt is generated out at the
counter which substitutes the share certificate and is used for all transactions.

In the case of permitted securities, the system is similar to a traditional stock exchange. The
difference is that the delivery and payment procedure will be completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network has the following
advantages:

 OTCEI has widely dispersed trading mechanism across the country which provides
greater liquidity and lesser risk of intermediary charges.

 Greater transparency and accuracy of prices is obtained due to the screen-based

scripless trading.

 Since the exact price of the transaction is shown on the computer screen, the investor
gets to know the exact price at which s/he is trading.

 Faster settlement and transfer process compared to other exchanges.

 In the case of an OTC issue (new issue), the allotment procedure is completed in a
month and trading commences after a month of the issue closure, whereas it takes a
longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency investors
are gradually becoming aware of the manifold advantages of the OTCEI.

50
National Stock Exchange (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock
market trading system on par with the international standards. On the basis of the
recommendations of high powered Pherwani Committee, the National Stock Exchange was
incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and others.

Trading at NSE can be classified under two broad categories:

(a) Wholesale debt market and

(b) Capital market.

Wholesale debt market operations are similar to money market operations - institutions and
corporate bodies enter into high value transactions in financial instruments such as
government securities, treasury bills, public sector unit bonds, commercial paper, certificate
of deposit, etc.

There are two kinds of players in NSE:

(a) trading members and
(b) participants.
Recognized members of NSE are called trading members who trade on behalf of themselves
and their clients. Participants include trading members and large players like banks who take
direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading mechanism which
adopts the principle of an order-driven market. Trading members can stay at their offices and
execute the trading, since they are linked through a communication network. The prices at
which the buyer and seller are willing to transact will appear on the screen. When the prices
match the transaction will be completed and a confirmation slip will be printed at the office
of the trading member.

51
NSE has several advantages over the traditional trading exchanges. They are as follows:

 NSE brings an integrated stock market trading network across the nation.

 Investors can trade at the same price from anywhere in the country since inter-market
operations are streamlined coupled with the countrywide access to the securities.

 Delays in communication, late payments and the malpractice‘s prevailing in the

traditional trading mechanism can be done away with greater operational efficiency
and informational transparency in the stock market operations, with the support of
total computerized network.

Unless stock markets provide professionalized service, small investors and foreign investors
will not be interested in capital market operations. And capital market being one of the major
source of long-term finance for industrial projects, India cannot afford to damage the capital
market path. In this regard NSE gains vital importance in the Indian capital market system.
Preamble
Often, in the economic literature we find the terms ‗development‘ and ‗growth‘ are used
interchangeably. However, there is a difference. Economic growth refers to the sustained
increase in per capita or total income, while the term economic development implies
sustained structural change, including all the complex effects of economic growth. In other
words, growth is associated with free enterprise, whereas development requires some sort of
control and regulation of the forces affecting development. Thus, economic development is a
process and growth is a phenomenon.
Economic planning is very critical for a nation, especially a developing country like India to
take the country in the path of economic development to attain economic growth.
Why Economic Planning for India?
One of the major objective of planning in India is to increase the rate of economic
development, implying that increasing the rate of capital formation by raising the levels of
income, saving and investment. However, increasing the rate of capital formation in India is
beset with a number of difficulties. People are poverty ridden. Their capacity to save is
extremely low due to low levels of income and high propensity to consume. Therefore, the
rate of investment is low which leads to capital deficiency and low productivity. Low
productivity means low income and the vicious circle continues. Thus, to break this vicious
economic circle, planning is inevitable for India.
The market mechanism works imperfectly in developing nations due to the ignorance and
52
unfamiliarity with it. Therefore, to improve and strengthen market mechanism planning is
very vital. In India, a large portion of the economy is non-monetised; the product, factors of
production, money and capital markets is not organized properly. Thus the prevailing price
mechanism fails to bring about adjustments between aggregate demand and supply of goods
and services. Thus, to improve the economy, market imperfections has to be removed;
available resources has to be mobilized and utilized efficiently; and structural rigidities has to
be overcome. These can be attained only through planning.
In India, capital is scarce; and unemployment and disguised unemployment is prevalent.
Thus, where capital was being scarce and labour being abundant, providing useful
employment opportunities to an increasing labour force is a difficult exercise. Only a
centralized planning model can solve this macro problem of India.
Further, in a country like India where agricultural dependence is very high, one cannot ignore
this segment in the process of economic development. Therefore, an economic development
model has to consider a balanced approach to link both agriculture and industry and lead for a
paralleled growth. Not to mention, both agriculture and industry cannot develop without
adequate infrastructural facilities which only the state can provide and this is possible only
through a well carved out planning strategy. The government‘s role in providing
infrastructure is unavoidable due to the fact that the role of private sector in infrastructural
development of India is very minimal since these infrastructure projects are considered as
unprofitable by the private sector.
Further, India is a clear case of income disparity. Thus, it is the duty of the state to reduce the
prevailing income inequalities. This is possible only through planning.
Planning History of India
The development of planning in India began prior to the first Five Year Plan of independent
India, long before independence even. The idea of central directions of resources to overcome
persistent poverty gradually, because one of the main policies advocated by nationalists early
in the century. The Congress Party worked out a program for economic advancement during
the 1920‘s, and 1930‘s and by the 1938 they formed a National Planning Committee under
the chairmanship of future Prime Minister Nehru. The Committee had little time to do
anything but prepare programs and reports before the Second World War which put an end to
it. But it was already more than an academic exercise remote from administration.
Provisional government had been elected in 1938, and the Congress Party leaders held
positions of responsibility. After the war, the Interim government of the pre-independence

53
years appointed an Advisory Planning Board. The Board produced a number of somewhat
disconnected Plans itself. But, more important in the long run, it recommended the
appointment of a Planning Commission.
The Planning Commission did not start work properly until 1950. During the first three years
of independent India, the state and economy scarcely had a stable structure at all, while
millions of refugees crossed the newly established borders of India and Pakistan, and while
ex-princely states (over 500 of them) were being merged into India or Pakistan. The Planning
Commission as it now exists, was not set up until the new India had adopted its Constitution
in January 1950.
Objectives of Indian Planning
The Planning Commission was set up the following Directive principles:
 To make an assessment of the material, capital and human resources of the country,
including technical personnel, and investigate the possibilities of augmenting such of
these resources as are found to be deficient in relation to the nation‘s requirement.

 To formulate a plan for the most effective and balanced use of the country‘s
resources.

 Having determined the priorities, to define the stages in which the plan should be
carried out, and propose the allocation of resources for the completion of each stage.

 To indicate the factors which are tending to retard economic development, and
determine the conditions which, in view of the current social and political situation,
should be established for the successful execution of the Plan.

 To determine the nature of the machinery this will be necessary for securing the
successful implementation of each stage of Plan in all its aspects.

 To appraise from time to time the progress achieved in the execution of each stage of
the Plan and recommend the adjustments of policy and measures that such appraisals
may show to be necessary.

 To make such interim or auxiliary recommendations as appear to it to be appropriate

either for facilitating the discharge of the duties assigned to it or on a consideration of
the prevailing economic conditions, current policies, measures and development
programs; or on an examination of such specific problems as may be referred to it for
advice by Central or State Governments.

54
The long-term general objectives of Indian Planning are as follows:
 Increasing National Income

 Reducing inequalities in the distribution of income and wealth

 Elimination of poverty

 Providing additional employment; and

 Alleviating bottlenecks in the areas of : agricultural production, manufacturing

capacity for producer‘s goods and balance of payments.

Economic growth, as the primary objective has remained in focus in all Five Year Plans.
Approximately, economic growth has been targeted at a rate of five per cent per annum. High
priority to economic growth in Indian Plans looks very much justified in view of long period
of stagnation during the British rule

55
 3.2 COMPANY PROFILE
3.2.1 HISTORY OF THE COMPANY
SHAREKHAN LIMITED
Share khan is one of the leading share broking and retail brokerage firms in the country. It is
the retail broking arm of the Mumbai-based

SSKI Group (SHANTILAL SHEWANTILAL KANTILAL ISWARNATH LIMITED),

which has more than 88 years of experience in the business. SSKI is a veteran equities
solutions company with more than 8 decades of trust and credibility in the Indian stock
markets. It helps the customers/people to make informed decisions and simplifies investing in
stocks.

Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth of
content that will help you stalk the right shares. SSKI named its online division as a Share
khan and it is into retail broking. The business of thecompanyoverhauled10 years ago on
February 8, 2000.
It acts as a discount brokerage house to a full service investment solution provider. It has
specialized research product for the small investors and day traders.

Share khan‘s online trading and investment site ww.sharekhan.com was launched in 2000.

Though the www.sharekhan.com, have been providing investors a powerful online trading
platform, the latest news, research and other knowledge-based tools and Share khan‘s equity
related services include trade execution on BSE, NSE, Derivatives, commodities, depository
services, online trading and investment advice.
Share khan‘s ground network includes over 640 Share shops across280citiesin India.
With branches and outlets across the country, Share khan‘s ground network is one of the
biggest in India! They have talent pool of experienced professionals specially designated to
guide you when you need assistance, which is high investigating with us is bound to be a
hassle-free experience for you!
Sharekhan provides 4 in 1 account.
Demat a/c
Trading a/c: for cash calculation
56
Bank a/c: for fund transfer
Dial and Trade: for query relating trading

3.2.2 VISION AND MISSION OF THE COMPANY

VISION
Sharekhan completes 10 years in Retail Broking Business. Sharekhan Ltd, India's leading
online retail broking house with a strong online trading platform, has completed a decade in
the business offering services such as portfolio management, trade execution in equities,
futures & options, commodities and distribution of mutual funds, insurance and structured
products. In a short span of 10 years, the company has scripted a remarkable growth story.
Starting from beginnings in 2000 as an online trading portal, Sharekhan today has a pan-India
presence as well as global footprint in UAE and Oman with over 1,200 outlets serving
9,50,0000 customers across 400 cities.

Says Mr. Tarun Shah, CEO, Sharekhan "We are proud to be completing a decade of setting
new standards in the industry. This journey has been eventful. And the journey couldn't have
been such a rewarding one without the support of our patrons who infused immense faith in
our services in the last 10 years. We profusely thank our patrons for the same."

A member of Bombay Stock Exchange, the National Stock Exchange and the country's two
leading commodity exchanges NCDEX and MCX, Sharekhan in the last 10 years has also
been providing fundamental and technical research, market related news, statistical
information across equities, commodities, mutual funds and IPOs.

Apart from these services, Sharekhan in its decade-old journey has set category leadership
through pioneering initiatives like 'Trade Tiger'; a net based executable application that
emulates a broker terminal besides providing information and tools relevant to traders.
Through its 'First Step' program Sharekhan has been guiding first-time investors and helping
them make informed decisions.

57
Sharekhan practices customer centric approach to be leading broking Firm. The Company
Visionis
a) I to be the top most company for providing investment advisory and financial
planning services in India.

b) To be a leading investment intermediary for transaction through both online

and offline medium.

MISSION
To educate and empower the individual investor to make better investment decisions through
quality advice and superior service.

a) Educate and empower

i. Research backed advice, which is easy to understand, retail specific, and

discipline.

ii. Total equity solutions for the entire investment process.

iii. Relationship management

iv. a) Superior service

i. Integrity
ii. Transparency
iii. Professionalism
iv. Information – product, news, operations
v. Hassle free trading
vi. Enjoyable experience our goals is to accomplish top most position
in both online andoffline medium of trade and also to remain a
customer centric organization.
58
3.2.3 ORGANIZATION STRUCTURE
COMPANY BOARD OF DIRECTORS

S.NO DIRECTORS NAME DESIGNATION

1 Mr. Ashok Kumar Mattoo Independent Director

2 Mr. Abhishek Dalmia Independent Director

3 Mr. Lalit Kumar Chhawchharia Independent Director

4 Ms. SonalMattoo Independent Director

5 Mr. Ankur Gupta Joint Managing Director

6 Mr. Vishal Gupta Managing Director

7 Mr. Varun Gupta Whole Time Director

59
ORGANISATIONAL STRUCTURE

BRANCH MANAGER

TERRITORY MANAGER

RELATIONSHIP MANAGER

ASSITANT MANAGER

• SSKI has been voted as the Top Domestic Brokerage House in their search category, twice
by Euromoney Survey and four times by Asia money Survey.
• Sharekhan Limited won the CNBC AWARD for the year 2004.

60
3.2.4 PRODUCT & SERVICE
The different types of products and services offered by Sharekhan Ltd. are as follows:

 Equity and derivatives trading

 Depository services

 Online services

 Commodities trading

 Dial-n-trade

 Portfolio management

 Share shops

 Fundamental research

 Technical research

61
OTHER SERVICES PROVIDED BY SHAREKHAN
1] Online Services
 Online BSE and NSE executions (through BOLT &NEAT Terminals)
 Mutual Funds
 Commodity Futures
 PMS (Portfolio Management Services)
 Technical PMS

2] Offline Services
3.Depository Services: Dema t&Remat Transactions
4.Derivatives Trading (Futures and Options)
5.Commodities Trading
6.IPOs & Mutual Funds Distribution
7.Fundamental Research
8. Technical Research
9.Portfolio Management
10.Free access to investment advice from Sharekhan's Research team
11.Sharekhan Value Line (a monthly publication with reviews of recommendations,
62
 stocks to watch out for etc)
12.Daily research reports and market review (High Noon & Eagle Eye)
13.Pre-market Report (Morning Cuppa)
14.Daily trading calls based on Technical Analysis
15.Cool trading products (Daring Derivatives and Market Strategy)
16.Personalized Advice
18.Live Market Information
18.Internet-based Online Trading: SpeedTrade
SSKI a veteran equities solutions company with over 8 Decades of experience in the Indian
stock markets. If you experience our language, presentation style, content or for that matter
the online trading facility, you‘ll find a common thread; one that helps you make informed
decisions and simplifies investing in stocks. The common thread of empowerment is what
Share khan‘s all about. Sharekhan is also about focus. Sharekhan does not claim expertise in
too many things.
Share khan‘s expertise lies in stocks and that‘s what he talks about with authority.
So when he says that investing in stocks should not be confused with trading in stocks or a
portfolio-based strategy is better than betting on a single horse, it is something that is spoken
with years of focused learning and experience in the stock markets. And these beliefs are
reflected in everything Sharekhan does for you.

To sum up. Sharekhan brings to you a user- friendly online trading facility, coupled with a
wealth of content that will help you stalk the right shares.
Those of you who feel comfortable dealing with a human being and would rather visit a
brick-and-mortar outlet than to a PC, you‘d be glad to know that Sharekhan offers you the
facility to visit (or talk to) any of our share shops across the country. In factSharekhan runs
India‘s largest chain of share shops with over hundred outlets in more than 80 cities.
What is a share shop?
How we find a share shop in our city?
How we consult them? For all this quarries visit the www.sharekhan.com

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3.2.5 Sharekhan Functions:
1. Over 8 Decades of lineage in the business
Sharekhan is a part of SSKI, an organization with over 8 decades of experience which spans
institutional broking and corporate finance. The institutional broking division caters to
domestic and foreign institutional investor, while the corporate finance division focuses on
the niche areas of infrastructure, telecom and media. SSKI has been voted as the Top
Domestic Brokerage House in the research category, by the Euro money survey and by the
Asia money survey.
2. Defining a new paradigm in online trading.
Among the pioneers in India, Sharekhan launched its online trading platform in
February 2000. Since thenSharekhan has constantly monitored customer needs to be at the
forefront of bringing innovations in its products so that they are customized to the habits
traders as well as preferences of investors.
Key features
 Live streaming quotes

 Instant order execution and confirmation

 Price Alerts

 Single screen for equities and derivatives

 Multiple market watch windows

 Real time portfolio tracking.

3. Unwavering focus on the Science of Research

While traditionally the markets have been known to react to tips, speculations and rumors –
Sharekhan believes that research and in-depth knowledge of markets can provide a better
analysis. So, it has built a team of researchers and analysis who are constantly at work to
track performance and trends, to identify winners. A recent survey by The Economic Times
reported that Sharekhan reigns over equity research. Other managed impressive 50% - 70%
returns for their customers, but Share khan‘s investment calls delivered a staggering 127%
return.

64
Sharekhan Portfolio Management Services
Portfolio investing is a product where the Sharekhan team is primarily accountable. Based on
investors risk and return expectations, they can choose from
Types of products in share khan
1. PROTECH PMS

2. PROPRIME PMS

Protech PMS will be run based on Technical analysis of price movement.

Prop rime PMS will be run based on Primary analysis of Company Fundamentals
Briefly explanation about products
1. PROTECH PMS
 Investments in Protech are based on the Technical Analysis of price movements.

 Protech is ideally suited for clients who wants to make returns out of trading in stocks
but want a professional to manage the investment on their behalf.

 Protech is considered to be a high-risk, high-return product because it is based on

trading.

 It is possible to identify and limit the risk within a certain benchmark.

 Discipline is the key for a trading portfolio and this product ensures discipline

 The entry ticket size or minimum investment under Protech is Rs 10 lacks.

Why Protech
Here are the reasons why clients should go in Protech
 Profitable trading requires certain time

 Profitable trading also demands time

 Profitable trading requires flexibility to be both long and short

 Profitable trading, very importantly, requires the traders to be much disciplined

Most of the traders do not have all these characteristics. Protech provides an ideal
alternative.

65
Product offering
1) Nifty Thrifty

2) Beta Portfolio

3) Star Nifty

4) Trailing stops

5) Nifty Thrifty

 Nifty Thrifty focuses on the positional trading of only the index, that is, the Nifty

 The Trading is based on the system generated calls.

 The automated model continuously Generates buy or sell signals on the Nifty based
on daily price charts.

 The action is taken to go long on Nifty futures when a buy signal is Generated

 The long position is squared up and made to go short on Nifty futures when a sell
signal is generated.

 The long or short position on Nifty futures is taken based on the system generated
call.

 The model has been back-tested with historical date of the Sensex since the year
1978.

 The portfolio, hence, will never be out of position.

 SEBI regulations do not allow leveraging in PMS.

 The overall exposure of a client to Nifty future is limited to the extent of the portfolio
value.

 The actual exchange margin on Nifty futures is only about 10 to 15%.

Beta portfolio
 In Beta portfolio, positional trading is done in stock and index futures.

 Technical Analysis is used to identify inflection points in the momentum cycles of

stocks with a 1 to 2 months view.

66
  The risk reward pen trade is typically 1:3 with a 3 to 5% risk and 10 to 20% pay off
expected.

 The exposure pen trade is not more than 10% of the corpus.

 Stop losses are placed on daily closing praises to protect from risk.

 Long and short positions can be taken so as to benefit from both rising and falling
markets to gain absolute returns or to achieve linearity of returns.

Product approach
 Superior performance can be achieved through share market timing, by picking
stocks/nifty before the inflection points in their trading cycles.

 Linear returns possible from having sell market positions in downtrends and by using
the options market to change the portfolio beta.

 Money management rules will be in place.

Product characteristics
Using swing/momentum based index trading system with stop/reverse trend
following.
You get the best of both worlds by:
 Having positions in cash and options.

 Delivery positions enable profit maximization, while options positions offer high
beta short term profit in the same portfolio.

 Low impact cost.

Product details / features

 Minimum investment: Rs. 5 lakh

 Lock in period: 6 months.

 AMC fees : 0 %

 Portfolio holding and Transactions Reporting: Fortnightly reporting of portfolio Net

Worth, Monthly reporting of Portfolio Holdings/ Transactions.

67
  Charges: 0.05% brokerage for derivatives, 0.03% for delivery, 20% profit sharing
on booked profits quarterly basis, 5% discount for 1 crore investments or 1 year
lock in period.

2. PROPRIME PMS
Pro prime PMS is a targeted at long term investors.
 It is discretionary Pms, which are share khan‘s fund managers will have the
complete discretion of managing the client‘s money and hence, they will also be
accountable for it.

 The investments are made based on the primary analysis of company

fundamentals, that is, it is based on fundamental analysis.

 The minimum corpus that can be invested in Proprime is Rs 10 lacks.

 An investor can expect a return of 20 to 25 percent per annum when investing in

Prop rime. That is not a guaranteed return, but is based on past performance.

 It is recommended that a client who invests in Prop rime looks at a long-term

tenure, that is, a minimum period of one year, in order to achieve the return
objective.

 Investing based on company Fundamentals.

Prop rime Portfolio categories

Under Prop rime share khan offers the following schemes to suit the investors with
different return profiles.
 Blue Chip Scheme.

 Aggressive Scheme.

 Balanced Scheme.

Blue chip scheme

The blue chip scheme is ideal for long-term investors with a relatively lower risk appetite.
The blue chip scheme will invest in stocks fulfilling the following features;
68
  Amongst the leaders or the best in their industry

 A strong management track record

 Consistent performers on sales and profit parameters

 Fundamentally strong balance sheets

 Relatively larger MKT Capitalization

Aggressive scheme
The Aggressive scheme is ideal for investors expecting high returns with a relatively higher
risk appetite. The aggressive scheme will invest largely in Mid-cap and Small-cap
companies.
Typically, investment would be made in high-growth stocks fulfilling any of the following
features.
 High growth in profitability expected in the future.

 A turnaround story or a corporate restructuring story that could lead to

unlocking of value or an expected change in ownership or management
leading to change fortunes.

 Relatively low valuations

 Mid to small cap companies.

Balanced Scheme
Ideal for investors looking at steady returns with low risk appetite. This consists of a blend
of quality blue chip and growth stocks ensuring a balanced portfolio with relatively medium
risk profile.
It is a long term investment so better for who wants invest long period and expecting
healthy gains but have a moderate-risk appetite.
In the balanced scheme, there are a balanced proportion of Mid-cap and Blue chip stocks.
A balanced scheme with therefore, invest in a mix of blue chips and growth stocks.
The exact mix can depend up on the client‘s risk profile.
Product Philosophy and Approach
Investment Philosophy
Given the client‘s risk profile, maximize performance by adhering to a disciplined
investment approach backed by quality research.
69
 Basic tenets of investment philosophy
 Consistent, steady and sustainable returns

 Adequate margin of safety

 Low volatility

Approaches
 A bottom-up stock selection approach is used with an in depth fundamental research
on companies.

 A disciplined valuation approach applying multiple valuation measures is used.

 The risk is limited through selection of high quality companies with sustainable
competitive advantages.

 The investment is made with a long-term vision, resulting in a low-portfolio

turnover.

Product Characteristics
1.Bottom up stock selection

2. In-depth, independent fundamental research

3. High quality companies with sustainable competitive advantage

4. Disciplined valuation approach applying multiple valuation measures

5. Medium to long term vision, resulting in low portfolio turnover.

Product Details
 Minimum investment is Rs 5 lacks

 Locking period is 6 months

 Reporting; online access to portfolio holdings, Monthly reporting of Portfolio

Holdings/ Transactions.

 Charges; 2.5% per annum AMC fees charged every quarter, 0.5% brokerage, 20%
profit sharing after 15% hurdles is crossed-chargeable at the end of the fiscal year.

70
COMPARISON OF OTHER SECURITIES WITH RESPECT TO
SHAREKHAN

Name of Types Brokerage Minimum Ret

security investmen urn
t s
Sharekhan Protech 0.05% for Rs. 5 48
derivatives& lacks %
0.30% for
delivery
Prop 0.5% Rs. 5 36
rime lacks %
Pro- 0.035% for Rs. 5 34
arbitrage cash& lacks %
0.075% for
delivery

Motilal Value 0.25 Per Rs. 50 25

Oswal eye‘s quarter lacks %
PMS
Bulls 0.25 per Rs. 25 29
eye‘s quarter lacks %
PMS
Value 0.25 per Rs. 27
Hedging quarter 25lacks %
PMS

Kotak Select 10 -12 stocks 10-25 31

portfolio lacks %
Classic Up to 20 10-25 27
portfolio stocks lacks %
flexi

71
 Core 15 to 20 10-25 30
portfolio stocks lacks %
Dividend 20-25 stocks 10-25 34
yield lacks %
portfolio

India Growth 0.5% per 10 -25 33%

Infoline portfolio quarter lacks
Momentum 0.5% per 10 -25 27%
portfolio quarter lacks

Customized 0.5% per 10 -25 28%

portfolio quarter lacks

Anand navratna 05% per 10 -25 30%

Rathi quarter lacks

Geojit Minimum 0.75% & 10 -25 28%

portfolio 0.25% per lacks
quarter

Religare Tortoise 0.30% per Rs. 5 30%

quarter lacks

Panther 0.30% per Rs. 5 32%

quarter lacks

Elephant 0.30% per Rs. 5 29%

quarter lacks
Leo 0.30% per Rs. 5 25%
quarter lacks

caterpillar 0.30% per Rs. 5 30%

quarter lacks

72
3.2.6 ADVANTAGES &DISADVANTAGES OF SHAREKHAN
SECURITIES WITH OTHER SECURITIES
Advantages
1. Brokerage is less compared to any other securities.

2. Investment limit is also less compared to any other securities because of which
of middle class / middle income person can also afford to invest.

3. Minimum lock in period is 3 months, which is also beneficial from the point
of view of an investor.

4. AMC charges are NIL; no other securities in this industry are offering this
features / benefits.

5. Regular / Continuous reporting for every 15 days about portfolio net worth
and portfolio holdings.

6. Exposure never exceeds value of portfolio.

7. This company has very experienced fund managers.

8. Profits are shared with the customers on a quarterly basis.

9. On the whole, it is risk- free when compared to RBI bonds & GILZ funds.

Disadvantages
1. Since investments are based on price movements, during the periods of falling
prices shows returns may fall/ decrease.

2. Sharekhan has less number of schemes compared to other companies.

3. Discount percentage is very less for an investment of Rs. 1 core.

73
3.2.7 ACHIEVEMENTS

1. Rated among the top 20 wired companies along with Reliance, HUJl, Infosys, etc by
―Business Today, ‖ January 2004 edition.

2. Awarded ‗Top Domestic Brokerage House‘ four times by Euro money and
Asia money.

3. Pioneers of online trading in India amongst the top 3 online trading

websites from India. Most preferred financial destination amongst online broking
customers.

4. Winners of ―Best Financial Website‖ award.

5. Voted by CNBC Awaaz as the Most Preferred Stock broker in India in 2005.

74
 CHAPTER-IV
DATA ANALYSIS

75
4.1 DATA ANALYSIS AND INTERPRETATION
STOCK MARKET
Company :HERO MOTOCORP LTD. 500192
Period: 02-Dec-2018 to 20-Jan-2019
Table:4.1
No.
No. of Total
Date Open High Low Close WAP of
Shares Turnover
Trades
2/12/18 2,055.05 2,090.00 2,030.95 2,062.90 2,070.18 24,767 1,961 5,12,70,809
3/12/18 2,058.00 2,079.30 2,033.70 2,048.15 2,053.12 27,874 1,163 5,72,28,643
4/12/18 2,047.00 2,090.00 1,996.00 2,030.95 2,043.94 16,331 1,740 3,33,79,599
5/12/18 2,042.00 2,068.25 2,042.00 2,050.95 2,054.95 15,635 1,996 3,21,29,090
6/12/18 2,057.00 2,119.55 2,057.00 2,098.70 2,098.67 27,316 2,943 5,73,27,365
9/12/18 2,180.00 2,195.00 2,102.20 2,121.75 2,125.63 19,700 1,735 4,19,74,951
10/12/18 2,180.00 2,219.70 2,118.75 2,203.10 2,165.23 42,866 5,968 9,28,19,784
11/12/18 2,200.00 2,210.00 2,152.30 2,169.75 2,189.08 21,821 2,530 4,75,49,716
12/12/18 2,155.00 2,160.00 2,122.40 2,128.30 2,190.31 11,157 1,305 2,38,79,443
16/12/18 2,065.00 2,065.00 2,031.65 2,041.30 2,044.62 19,057 1,342 3,89,64,307
18/12/18 2,046.00 2,082.70 2,036.00 2,055.45 2,063.73 44,620 1,582 9,20,83,632
19/12/18 2,060.00 2,189.00 2,050.00 2,119.90 2,112.31 53,192 3,435 11,23,58,086
20/12/18 2,084.00 2,185.45 2,063.00 2,127.35 2,120.98 59,158 3,308 12,54,73,155
23/12/18 2,129.90 2,169.90 2,129.90 2,162.90 2,159.52 27,394 3,097 5,91,57,948
24/12/18 2,168.00 2,168.00 2,180.00 2,182.85 2,194.22 19,127 1,408 3,02,91,401
26/12/18 2,189.00 2,194.00 2,090.00 2,097.50 2,108.54 18,507 1,333 2,84,80,034
27/12/18 2,098.00 2,107.00 2,080.85 2,086.80 2,091.50 19,034 1,109 2,93,52,191
30/12/18 2,093.00 2,106.00 2,050.70 2,067.50 2,080.46 21,195 1,948 4,39,91,282
31/12/18 2,067.00 2,085.80 2,066.00 2,074.80 2,076.40 19,197 1,395 3,77,84,235
1/01/19 2,080.00 2,099.85 2,065.15 2,086.05 2,089.77 19,772 1,453 3,92,29,210
2/01/19 2,083.60 2,101.00 2,075.00 2,080.40 2,088.68 15,330 1,043 3,20,19,448
3/01/19 2,071.00 2,115.00 2,063.40 2,096.50 2,095.29 15,265 1,605 3,19,84,568

76
6/01/19 2,100.00 2,100.00 2,065.50 2,068.05 2,077.19 18,879 1,202 2,88,29,333
7/01/19 2,073.00 2,094.20 2,058.85 2,067.75 2,069.81 21,615 1,185 4,47,38,994
8/01/19 2,082.60 2,089.00 2,059.25 2,064.95 2,073.34 8,820 981 1,82,86,848
9/01/19 2,068.50 2,080.00 2,062.05 2,068.25 2,071.65 43,476 1,392 9,00,66,845
10/01/19 2,072.00 2,072.00 2,030.00 2,035.15 2,052.09 10,944 1,324 2,24,58,064
15/01/19 2,040.00 2,096.00 2,040.00 2,074.05 2,077.62 16,239 1,921 3,37,38,435
16/01/19 2,078.00 2,108.00 2,067.00 2,073.90 2,083.97 9,637 1,189 2,00,83,198
18/01/19 2,078.00 2,095.00 2,066.10 2,075.15 2,091.21 1,03,188 1,884 21,56,83,553
20/01/19 2,075.00 2,099.90 2,062.35 2,085.75 2,087.10 12,507 884 2,61,03,359

HERO MOTORCORP LTD.

30000

25000

20000

15000

10000

5000

0
2.12.2018 20.012019

open value close value WAP No.of shares

77
 TOTAL TURNOVER
60000000

50000000

40000000

30000000
Total Turnover

20000000

10000000

0
2.12.2018 20.01.2019

Fig: 4.1

INTERPRETATION:
An open value has risen from 2055.05 to 2075.00. The higher value of EPS is from
2090.00 to 2099.90. And the low price is from 2030.95 to 2062.35. The closed value from
2062.90 to 2085.75 has raised. Henceforth this session HERO MOTOCORP LTD. EPS
value is increased i.e. percentage of 20.85 %.

78
Company :Heritage Foods Limited 519552
Period: 02-Dec-2018 to 20-Jan-2019
Table: 4.2

No. of No. of Total

Date Open High Low Close WAP
Shares Trades Turnover

2/12/18 190.00 193.80 188.10 188.95 189.69 2,088 93 3,75,195

3/12/18 189.10 192.90 188.00 188.45 188.92 953 49 1,70,507

4/12/18 190.00 190.00 186.00 187.20 188.06 3,568 188 6,35,315

5/12/18 190.00 192.80 185.00 186.15 186.86 2,080 86 3,67,862

6/12/18 186.35 193.80 186.25 187.20 190.11 2,340 228 4,21,454

9/12/18 192.50 192.50 180.00 181.55 183.81 2,548 189 4,42,880

10/12/18 184.00 184.00 181.05 182.05 182.10 1,200 78 2,06,519

11/12/18 182.00 185.75 169.00 185.50 182.42 1,975 199 3,40,537

12/12/18 186.00 187.00 183.40 186.15 185.80 1,997 180 3,51,075

16/12/18 187.05 193.00 187.05 192.45 191.43 2,719 110 4,93,320

18/12/18 190.00 192.10 190.00 197.65 197.33 8,281 274 15,51,283

19/12/18 211.70 211.70 197.00 201.45 201.82 6,507 393 18,18,228

20/12/18 199.40 208.75 198.00 204.00 203.87 5,191 293 10,48,120

23/12/18 209.50 209.50 199.25 201.80 201.58 2,390 91 4,81,771

24/12/18 201.00 209.80 201.00 205.00 206.01 1,205 77 2,48,248

26/12/18 204.00 216.00 203.20 207.95 209.90 9,048 395 19,99,185

27/12/18 211.90 224.75 210.10 216.70 220.58 18,818 724 39,29,124

30/12/18 220.00 224.00 208.10 210.00 212.51 2,736 212 5,81,436

31/12/18 210.30 219.00 203.05 203.95 209.05 34,319 198 71,74,087

1/01/19 204.15 206.05 202.00 204.55 204.10 1,826 110 3,72,690

2/01/19 205.00 218.70 203.30 212.00 210.33 8,186 453 18,11,256

3/01/19 212.00 219.00 203.00 208.60 209.32 3,037 195 6,35,704

79
6/01/19 207.00 208.95 205.10 208.90 207.09 1,022 46 2,11,641

7/01/19 206.00 218.85 196.55 210.50 212.79 11,380 775 24,21,507

8/01/19 218.00 233.10 218.00 227.60 225.43 34,245 1,629 77,19,937

9/01/19 229.95 237.40 220.00 221.75 229.89 23,838 939 54,80,094

10/01/19 228.70 236.00 221.95 227.50 229.05 34,953 1,006 80,05,905

15/01/19 245.65 247.50 230.90 235.90 236.78 19,461 667 34,24,026

16/01/19 236.00 241.60 229.90 238.15 235.40 5,435 354 12,79,403

18/01/19 238.35 240.00 224.00 225.30 231.52 4,758 290 11,01,580

20/01/19 225.00 229.80 225.00 226.75 226.55 6,392 440 19,48,110

HERITAGE FOODS LIMITED

7000

6000

5000

Open value
4000
Close value
3000 WAP
No.of shares
2000

1000

0
02.12.2018 20.01.2019

80
 TOTAL TURNOVER
2500000

2000000

1500000

Total Turnover
1000000

500000

0
02.12.2018 20.01.2019

Fig: 4.2
INTERPRETATION:
An open value has risen from 190.00 to 225.00. The higher value of EPS 193.80 to
229.80. The lower price from 188.10 to 225.00. The close price is 188.95 to 226.75
raised. Therefore Heritage Foods Limited., EPS value is increased by percentage of
20.38%.

81
Company :DR.REDDY'S LABORATORIES LTD. 500124
Period: 02-Dec-2018 to 20-Jan-2019

All Prices in
Table: 4.3

Date Open High Low Close WAP No. No. Total

of of Turnover
Share Trade
s s
2/12/18 2,484.0 2,505.0 2,468.0 2,498.8 2,492.1 10,18 1,198 2,52,60,10
0 0 0 5 2 6 5
3/12/18 2,500.0 2,500.0 2,452.0 2,464.1 2,470.0 20,99 2,392 5,19,65,02
0 0 0 0 0 8 0
4/12/18 2,463.0 2,488.0 2,444.0 2,450.3 2,463.7 7,747 934 1,90,86,47
0 0 0 5 2 4
5/12/18 2,475.0 2,475.6 2,400.0 2,418.1 2,428.4 20,02 2,524 4,86,23,19
0 0 0 5 9 2 0
6/12/18 2,420.0 2,444.4 2,415.0 2,421.9 2,429.1 9,969 1,293 2,42,15,77
0 0 0 5 1 0
9/12/18 2,452.0 2,462.0 2,427.0 2,449.5 2,450.2 11,68 1,085 2,86,19,34
0 0 0 0 0 0 6
10/12/1 2,455.0 2,466.9 2,431.0 2,450.8 2,450.5 5,182 619 1,25,76,39
8 0 0 0 0 8 6
11/12/1 2,453.0 2,453.0 2,422.0 2,443.7 2,436.8 5,322 621 1,29,68,71
8 0 0 0 0 1 6
12/12/1 2,443.0 2,443.0 2,401.0 2,403.7 2,410.9 8,642 1,268 2,08,35,04
8 0 0 0 5 1 2
16/12/1 2,406.0 2,424.7 2,400.0 2,401.4 2,409.6 5,085 549 1,22,52,83
8 0 0 0 5 0 6
18/12/1 2,405.0 2,439.0 2,405.0 2,425.9 2,427.3 8,186 896 1,98,46,01
8 0 0 0 5 5 9
19/12/1 2,426.0 2,469.7 2,426.0 2,463.5 2,459.1 15,71 1,307 3,86,47,71
8 0 5 0 0 8 6 9

82
20/12/1 2,466.0 2,512.0 2,458.0 2,508.8 2,487.4 18,26 1,739 4,29,50,83
8 0 0 0 0 5 7 6
23/12/1 2,515.0 2,543.3 2,508.0 2,515.2 2,525.7 9,492 921 2,39,74,71
8 0 0 0 5 8 1
24/12/1 2,525.0 2,545.0 2,520.7 2,540.1 2,536.5 8,545 983 2,16,74,40
8 0 0 0 5 0 8
26/12/1 2,540.0 2,554.0 2,490.0 2,511.0 2,528.0 5,759 773 1,45,58,91
8 0 0 0 0 3 9
27/12/1 2,510.0 2,528.5 2,510.0 2,519.7 2,521.1 4,247 488 1,07,07,19
8 0 5 0 0 2 6
30/12/1 2,521.0 2,549.1 2,501.0 2,522.5 2,529.2 11,32 1,090 2,86,46,11
8 0 5 0 5 3 6 0
31/12/1 2,520.0 2,548.2 2,520.0 2,533.0 2,532.9 4,670 474 1,19,28,79
8 0 0 0 5 3 3
1/01/19 2,534.0 2,545.0 2,527.3 2,536.0 2,535.8 4,601 365 1,16,67,40
0 0 5 5 4 1
2/01/19 2,533.8 2,550.0 2,515.0 2,525.7 2,533.1 5,324 528 1,34,86,66
5 0 0 5 9 2
3/01/19 2,525.0 2,525.0 2,486.2 2,497.9 2,499.7 5,304 720 1,32,58,72
0 0 0 0 6 8
6/01/19 2,497.0 2,505.0 2,460.0 2,472.4 2,480.6 18,93 1,461 3,45,62,42
0 0 0 0 2 3 1
7/01/19 2,499.0 2,510.9 2,466.0 2,491.7 2,495.2 20,53 1,527 5,12,47,03
0 0 0 0 3 8 3
8/01/19 2,490.0 2,540.0 2,473.0 2,531.9 2,522.4 15,11 1,380 3,81,16,19
0 0 0 5 1 1 4
9/01/19 2,540.0 2,596.9 2,531.0 2,587.9 2,573.9 22,64 3,742 5,82,98,21
0 5 0 5 9 9 1
15/01/1 2,648.0 2,662.9 2,642.4 2,650.3 2,653.6 9,525 1,035 2,52,75,61
9 0 0 0 5 1 2
16/01/1 2,649.0 2,649.0 2,624.1 2,643.3 2,638.2 5,183 635 1,36,47,84
9 0 0 5 5 9 9

83
 18/01/1 2,642.0 2,662.9 2,642.0 2,655.9 2,654.2 6,079 719 1,61,35,44
9 0 0 0 5 9 3
20/01/1 2,655.0 2,680.0 2,635.2 2,654.2 2,658.7 18,56 1,192 3,60,65,22
9 0 0 0 5 0 5 1

DR. REDDY'S LABORATORIES LTD.

20000
18000
16000
14000
12000 Open value

10000 Close value

8000 WAP

6000 No.of shares

4000
2000
0
02.12.2018 20.01.2019

TOTAL TURNOVER
40,000,000

35,000,000

30,000,000

25,000,000

20,000,000
TOTAL TURNOVER
15,000,000

10,000,000

5,000,000

0
02.12.2018 20.01.2019

Fig: 4.3

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INTERPRETATION:
An open value has risen from 2484.00 to 2655.00. The higher value of has risen from 2505
to 2680.00. The low price shifts from 2468.00 to 2635.20. The close price is 2498.85 to
2654.25 has been raised. On the whole this session of DR.REDDY'S LABORATORIES
LTD. EPS value has increased i.e. percentage of 25.12%.

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Company :INDIABULLS LTD. 500190
Period: 02-Dec-2018 to 20-Jan-2019
Table: 4.4

No.
No. of Total
Date Open High Low Close WAP of
Shares Turnover
Trades
2/12/18 661.00 665.00 659.00 661.05 661.15 11443 3,184 9,07,777

3/12/18 655.00 662.00 653.05 657.15 657.19 3,57,347 5,085 23,48,25,716

4/12/18 657.00 659.35 652.00 658.00 656.96 2,03,970 5,868 18,40,00,857

5/12/18 670.00 690.00 670.00 687.75 685.46 5,87,747 12,871 40,28,74,969

6/12/18 688.00 689.95 678.90 682.30 682.00 1,77,718 3,223 12,11,99,886

9/12/18 704.70 719.80 693.00 696.10 703.45 6,97,655 7,866 49,07,63,474

10/12/18 693.50 701.60 689.75 696.45 694.05 4,45,239 5,277 30,90,18,237

11/12/18 691.00 701.05 687.00 698.20 692.60 2,41,932 2,715 16,75,61,819

12/12/18 694.00 699.90 691.00 695.20 694.80 2,27,659 3,452 15,81,77,191

16/12/18 685.00 690.00 680.20 682.65 685.38 1,47,502 3,115 10,10,95,191

18/12/18 675.05 675.05 655.10 658.45 661.99 3,62,332 7,988 23,98,61,327

19/12/18 680.00 681.00 651.30 653.00 661.03 1,37,543 3,244 9,09,19,526

20/12/18 655.00 668.00 650.60 665.15 659.09 69,129 2,336 4,55,62,219

23/12/18 665.00 671.50 659.00 665.40 667.22 1,34,772 4,291 8,99,22,469

24/12/18 665.00 665.55 655.75 657.55 660.01 52,276 1,701 3,45,02,928

26/12/18 659.00 672.00 657.55 669.60 664.43 1,00,119 2,619 6,65,19,856

27/12/18 669.80 675.00 665.70 669.30 670.26 70,054 1,787 4,69,54,333

30/12/18 678.00 678.00 665.15 669.65 670.15 1,99,284 2,669 18,35,50,340

31/12/18 667.80 672.00 660.10 665.75 664.33 3,29,896 2,291 21,91,59,040

1/01/19 666.75 670.00 662.60 665.05 665.96 53,254 1,297 3,54,64,949

2/01/19 669.90 674.10 653.90 656.85 666.23 88,818 2,501 5,91,69,506

3/01/19 655.00 665.95 651.05 663.35 661.02 1,84,386 2,962 12,19,83,670

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6/01/19 664.00 664.00 657.35 662.00 660.59 5,04,829 3,376 33,34,83,465

7/01/19 670.00 670.00 654.00 664.75 660.31 2,03,763 2,661 18,45,47,406

8/01/19 664.05 667.20 661.00 664.65 664.90 2,51,642 3,983 16,73,18,870

9/01/19 665.00 665.85 657.15 663.05 662.43 1,15,332 1,690 7,39,334

10/01/19 663.05 674.85 656.80 662.15 667.06 1,23,361 7,832 2,89,569

15/01/19 674.00 682.60 670.15 680.35 677.55 61,422 2,085 1,16,295

16/01/19 685.00 685.00 671.10 673.95 677.72 1,45,224 2,568 5,84,051

18/01/19 676.50 678.40 659.20 668.30 667.90 4,18,310 6,993 2,78,719

20/01/19 665.00 676.90 665.00 669.85 671.98 10000 3,576 6,63,253

INDIABULLS LTD.
14000

12000

10000
Open value
8000
Close value
6000 WAP
No. of shares
4000

2000

0
02.12.2018 20.01.2019

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 TOTAL TURNOVER
1,000,000
900,000
800,000
700,000
600,000
500,000
TOTAL TURNOVER
400,000
300,000
200,000
100,000
0
02.12.2018 20.01.2019

Fig: 4.4
INTERPRETATION:
An open value has risen from 661.00 to 665.00. The high value of it raised from 665.00 to
676.90. The low price is from 659.00 to 665.00. The closing value is from 661.05 to 669.85
therefore this session of INDIABULLS. EPS value has increased i.e. percentage of 6.71%.

88
CHAPTER – V
FINDINGS
SUGGESTIONS
LIMITATIONS
CONCLUSION

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5.1 FINDINGS
1. Hero MotoCorp. EPS value is increased i.e. percentage of 20.85 %.
2. Heritage Foods Limited EPS value is increased i.e. percentage of 20.38%.
3. Dr. Reddy‘s Laboratories Limited EPS value is increased i.e. percentage of
25.12%.
4. Indiabulls.ltd EPS value is increased i.e. percentage of 6.71%.
5. The study examines the financial position of the company there by understanding
the performance of the company.
6. This study allows understanding the theoretical framework of capital markets and
EPS analysis.

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5.2 SUGGESTIONS
1. There must be prohibition on disposal of promoters shareholding, and also restrictions and
the expansion without prior approval of the financial institutions for declaration of higher
amount/ rate.
2. The availability of derivative products in eluding index futures, index options, individual
stock futures and individual stock options re-enforces the overall attractiveness of this market
to foreign and domestic investors.
3.Volume of paper work is small but it is very complicated to maintain data in system so tries
to reduce that by regular audit and updating data.
4.Most of the DPs do not have the necessary infrastructure to handle the high work load of
transactions leading to may error by DPs, so by giving full infrastructure information to
every DP can avoid such a problem.
5.The pool account doesn‘t know the true owner of the share and hence dividends are paid to
the broker instead of owners, by this the broker can do any manipulation or any fraud with
the owner, for this the owner can lose his dividend.
6.If the shares are fake/forged which delivery by the broker the shareholder can lose that
shares and have to receive another lot of issued shares from the broker in 21 days, this system
stands abused.
7.So minimize the waiting days and deliver the issued shares to the shareholder as soon as
possible.

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5.3 LIMITATIONS OF STUDY

1) Time constraint was one of the major limiting factors. 45 days were not sufficient to
even take the theoretical concepts.
2) Several other strategies that could have been studied were not done properly.
3) There was lack of knowledge with the brokers.
4) There was difference of the theory from practice.
5) The absence of required knowledge and the technology.
6) 45 days were not sufficient to go on with the study. Since the time constraint was not
enough at all.
7) Most of the implementation and strategies which are studied were not properly used.
8) There was improper communication channel with the speculators.
9) A small difference makes it feel difficult about the theory and the practices.
10) An improper absence of the information about technology.

92
5.4 CONCLUSION
Capital market is an innovation to cash market. Approximately, its daily turnover may reach
to the equal stage of cash market. In cash market the profit or the loss of the investor
depend on the market price of the underlying of the asset. The investor may incur the huge
profits or he may incur the huge loss. But in the derivatives segment the investor will enjoy
the huge profits with the limited downside. In the cash market, the investor has to pay the
total money, but in the derivatives the investor has to pay the premiums or the margins,
which are of the some percentage of total money. Derivatives are mostly used for hedging
purpose. In derivative segment the profit or the loss of the option writer is purely depend on
the fluctuations of the underlying of the asset.
The comprehensive study of the capital market instrument at the Inter Connected stock
exchange has been an enlightening experience which is used for stressing on the positive
aspects on Dematerialization. And the settlement of shares, the derivative market and the
capital instruments has been done in whole lot of good to the issuer, the investor companies
and the country. The depository systems has been reduced the lag in the delivery and the
settlement of the securities but also supported the cause of providing more liquidity to
security holder, the need for setting up of a the depository paper is less trading. Through the
online trading system and the settlement has became inevitable and unavoidable for the
smooth and efficient functioning of the capital markets. Now there is a proposal that the
settlement will be done within T+1days in near future which is in it an indication of a boon
in the system of demat and capital market instruments.

93
BIBILOGRAPHY
TEXT BOOKS
1. ADNAN SHAHID AND JAHANGIR AHMAD, 2016,‖Effects of Debt on Value of a
Firm‖, Indian Journal of Finance, Vol 2, 1st Edition.
2. BHAVIN S. SHAH, 2012, ―Current Issues in Indian Capital Market‖, Journal of
Financial Markets, Vol 1, Issue7, April 2012.
3. GORDON & NATARAJAN, 2000, ―Financial Markets and Services‖, Himalaya
Publishing House.
4. MALCOM BAKER & JEREMY C. STEIN, 2004, ―Market liquidity as a sentiment
indicator‖, Journal of Financial Markets, Vol 7, Issue3
5. REBECCA HENDERSON & KARTHIK RAMANNA, 2013, ―Managers and Market
Capitalism‖, Sage Journals, Vol 3, 1st Edition.
6. RUBEENA BHAJWA, 2013, ―Strengthening the Capital Market in India: A Key to
Growth‖, Sri Guru Granth Sahib World University, Vol 1, 2nd Edition.
7. VK BALLA, 2013, ―Financial Investment‖ ,1st edition, Abe books.

JOURNALS
1. AL MALKAWI, H.N ―International Journal of Business‖, vol 113, pp 177-195
2. BAKER, KETAL, 2002, ―Journal of Economics and Finance‖‘ pp 263-283
3. NORDIN, 2013, ―The impact of Capital Market on Economic Growth‖, vol 6

WEBSITES
1. www.indianinfolie.com
2. www.nseindia.com
3. www.sebi.com
4. www.angelbroking.com

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