A

PROJECT REPORT
ON
“A STUDY ON MUTUAL FUND”

B.K JETHANI AND ASSOCIATES

Submitted in the partial fulfillment of the requirement For the

award of degree
Masters’ of Business Administration

Project Submitted To: Submitted By:

Dr.MeetaNehlani HemlataNarwani
Department of Management Studies 20MFS10036
Jai Narayan Vyas University, Jodhpur M.B.A (F.S)
Semester 3

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 PREFACE

I was really very fortunate to get the opportunity to take the practical training in “
B.KJethani and Associates” Jodhpur.

The contents of the report are based on my experience and knowledge that
I had acquired in my training period. I have taken reference from data and
Other information material available to me at the time of training. I have Written
this report to the best of my information. It includes all the important details and
specifications regarding my training.

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 DECLARATION

I here to declare that this project work done on “ A Study On Financial,

Operating And Other Services MUTUAL FUND” is my work, carried out
Under the guidance of my faculty, The result reported in the study are
Genuine, original and the script written by me.

HemlataNarwani Roll No. : 20MFS10036

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4|Page
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 ACKNOWLEDGEMENT

I express my sincere thanks to my project guide. Mr. Bharat Kumar Jethani Head Of B.K
Jethani and Associates for guiding me right from the inception till the successful
completion of the project. I sincerely acknowledge his for extending their valuable
guidance, support for literature, critical reviews of project and the report And above all the
moral support they had provided to me with all stages of this Project.

I would also like to thank the supporting staff of B.kJethani and Associates& faculty of
Management studies, Jai Narayan Vyas University, for their help and cooperation
throughout our project.

HemlataNarwani

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 TABLE OF CONTENTS

S. No. Particulars Page No.

1. Introduction 7 - 13

2. Money Market 14-17

3. Capital Market 18

4. Financial Market 19 - 24

5. Stock Market 24-34

6. Stock Exchange 35-44

7. Securities and Exchange Board of 45 - 47

India

8. Conclusion 48

9. Biibliography 49

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 Introduction:-

We offer comprehensive advisory service for direct equity investments where in we

Study the fundamental and technical analysis of stock and then recommended And
monitored.

Your dedicated investment Advisor will work with you to take full advantage of every

Investment opportunity that arises in today’s dynamic and increasingly complex Investment
environment. We also ensure that you are kept fully informed on emerging trends and factors that
can impact your investment.

How to choose a broker?

The easiest way to go broke on the stock market is to sign on a bad broker. We need to have a
good equation not just with money but with a reliable stockbroker as well.
Reliable brokers are thin on the ground, and regulatory authorities aren’t much help either. What
can an investor do? Check out the following to start with:

Registered brokers: Investors should try and transact business only with member brokers for
sub-brokers registered with Sebi, or directly with stock exchange members. However there are
very few of them. Even when dealing with a registered broker, insist on a control note.

Retail focus: Most good brokers would rather have corporate clients than retail investors, as
retail traders are smaller and the broker has to trade more often to generate the same turnover.
Despite this, there are several brokers who specialize in the retail business.

References: Check the broker’s reputation. Is he a known speculator? Can he back his advice
with substantial market information? Does he provide quick trades and settlement? Can he help
us with share transfers, usually at 0.5 per cent of the transaction value? Check his staff’s
experience in the business. Ask for specific investment advice and cross-check it with other
brokers.

Deposits: Inform our broker at the outset whether you’re interested in trading shares or in long-
term investments. Depending on how risky our investments in trading shares or in long-term
investments. Depending on how riskyour investments are, the broker could ask us to prescribe by
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Sebi, the amount varies among brokers. For high-risk speculative clients, this factor could affect
liquidity.

Brokerage charges: Brokers charge a commission for every transaction. Shop around for the
best deal on brokerage rates. Stock brokers charge up to 2.5 per cent brokerage but rates can vary
depending on the broker, the client and the deal. Brokers charge more for small trades.

Broker-client pact: A broker- client agreement has to be signed as per Sebi regulations. This is a
legal understanding between both parties to take all transactions to completion. If our broker
does not insist on this agreement, we should.

The seven deadly sins

• Recommendations based on ‘inside information’, ‘prospective merges or acquisitions’, or

‘a dynamic new product’.

• Promises of spectacular profit (“our money will double in six months”).

• ‘Guarantees’ that we will not lose money in a particular transaction.

• Excessive transactions. The broker gets several commissions, but our investment
opportunities may not improve.

• Inducements to dramatically change our investment strategy, such as moving from low-
risk investments to speculative securities.

• Pressure to trade in a manner inconsistent with our goals and the risks we can afford to
take.

• Significant differences between the market price and the price we pay.INVESTING IN

IPO What is an IPO?

IPO is an acronym for Initial Public Offering. This is the first sale of stock by a company to the
public. A company can raise money by issuing either debt (bonds) or equity. If the company has
never issued equity to the public, it’s known as an IPO.

What is book building?

Securities and Exchange Board of India (SEBI) guidelines define book building as “a process
undertaken by which a demand for the securities proposed to be issued by a body corporate is
elicited and built-up and the price for such securities is assessed for the determination of the
quantum of such securities to be issued by means of a notice, circular, advertisement, document
or information memoranda or offer document.”

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Book building is basically a process used in Public Issue for efficient price discovery. It is a
mechanism where, during the period for which the Public Issues is open, bids are collected from
investors at various prices within a Price Band. The offer price is determined after the bid closing
date.

Do all the IPOs have to be through book building process?

No, depending upon the issuer company, certain IPOs are offered at Fixed Price also.

What is the number of days for which bid remains open in book building?

Book remains open for a minimum five days in the book building process.

What are floor and ceiling prices in book building?

When a company offers shares to the public through the book building process, it fixes a price
band, which sets the minimum and maximum price limits at which the bids can be made by the
investors for acquiring the shares of the company. While the floor price symbolizes the minimum
price at which the investor can make bids.

What is ‘Cut-Off’ price?

The Cut-Off option is an option given only to the Retail Individual Bidders indicating their
agreement to bid and purchase at the final Issue Price as determined at the end of the Book
Building Process.

Is it possible to enter bids less or more than the floor rice and ceiling price respectively?

No, because the system tends to automatically reject the bids, which are lower than the floor
price and more then the ceiling price.

Futures and options:-

Futures contracts are purchased when the investor expects the price of the underlying security to
rise. This is known as going long. Because he has purchased the obligation to buy goods at the
current price, the holder will profit if the price goes up, allowing him to sell his futures contract
for a profit or take delivery of the goods on the future date at the lower price.

The opposite of going long is going short. In this case, the holder acquires the obligation to sell
the underlying commodity at the current price. He will profit if the price declines before the
future date.

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Hedgers trade futures for the purpose of keeping price risk in check. Because the price for a
future transaction can be set in the present, the fluctuations in the interim can be avoided. If the
price goes up, the holder will be buying at a discount. If the price goes down, he will miss out on
the new lower price. Hedging with futures can even be used to protect against unfavorable
interest rate adjustments.

While hedgers attempt to avoid risk, speculators seek it out in the hope of turning a profit when
prices fluctuate. Speculators trade purely for the purpose of making a profit and never intend to
take delivery on goods. Like options, futures contracts can also be used to create spread that
profit from price fluctuations.

Accounts used to trade futures must be settled with respect to the margin on a daily basis. Gains
and losses are tallied on the day that they occur. Margin accounts that fall below a certain level
must be credited with additional funds.

A Call option is an option to buy a stock at a specific price on or before a certain date. In this
way, Call options are like security deposits.

If, for example, we wanted to rent a certain property, and left a security deposit for it, the money
would be used to insure that we could, in fact, rent property at the price agreed upon when we
returned.

If we never turned, we would give up our security deposit, but we would have no other liability.
Call options usually increase in value as the value of the underlying instrument increases.

When we buy a Call option, the price we pay for it, called the option premium, secures our right
to buy that certain stock at a specified price, called the strike price. If we decide not to use the
option to buy the stock, and we are not obligated to, our only cost is the option premium.

Put options are options to sell a stock at a specific price on or before a certain date. In this way,
Put options are like insurance policies.

If we buy a new car, and then buy auto insurance on the car, we pay a premium and are, hence,
protected if the asset is damagedis an accident. If this happens, we can use our policy to regain
the insured value of the car. In this way, the put option gains in value as the value of the
underlying instrument decreases.

If all goes well and the insurance is not needed, the insurance company keeps our premium in
return for taking on the risk.

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With a Put option, we can “insure” a stock by fixing a selling price. If something happens which
causes the stock price to fall, and thus, “damages” our asset, we can exercise our option and sell it
as its “insured” price level.

If the price of our stock goes up, and there is no “damage”, then we do not need to use the
insurance, and, once again

EQUITIES:-

The Indian stock market has finally come of age. Riding each successive wave and trough is
Universal MF, one of the fastest growing domestic brokerage houses in the country today.
(Universal MF) has already managed to carve a niche for itself, and it’s easy to see why.

With over 125 Locations in more than 45 cities, It offers us ease and convenience in opening
Equities account with us. State-of-the-art dealing infrastructure geared to rigorous compliance
and audit checks, integrity aligned with professionalism, a complete understanding of each
client’s psyche to ensure the most suitable advice, insightful and in-depth research. These are
only some of the key drivers that have fuelled our fast-paced growth.

We have provided facility of Online Back Office for your access. You can view your ledgers,
contract notes and other financial information through our website. Known for its Ethical
Business Practices, We at Suresh R keep an edge with the technology. To enhance investor
knowledge, we keep sending Daily Notes and Weekly Notes to our clientele.
We also offer online internet trading facility.

DERIVATIVES:-

Derivatives instrument provide good leverage opportunity, it is a great tool for speculation.
Leverage is a double edge sword for which one requires an equity advisor .Our equity advisor
will help to maximize our gains from our existing corpus. Our advisors will also help us with
various strategies like Bull Spread, Bear Spread, Cover call writing, hedging strategies etc. This
is to help us to make better trading returns. This allows us to give us a convenient single window
service and our advisor becomes the single point contact for all our equity related matters.

Through Universal MF, we can now trade in index and stock futures on the NSE. In futures trading,
we take buy/sell positions in index or stock contracts having a longer contract period of up to 3 months.
Presently only selected stocks, which meet the criteria on liquidity and volume, have been enabled for
futures trading.

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Investors often use them as a risk management tool to protect the value of their portfolio from adverse
market movements. Derivatives can be an important tool, even for the most conservative investor. For
the mature investor, who is aware of risks in the market, the strategies are many.

Derivatives trading solutions, including options and futures, offer the potential to profit from our view
of future price fluctuations (both rises and falls) without holding actual shares or assets. Derivatives
lets us trade in a large quantity of stocks or Indices, for a small margin.

COMMODITIES:-

Just like Equities - Commodities may also offer good returns in Trading. Indian markets have
recently thrown open a new avenue for retail investors and traders to participate: commodity
derivatives. For those who want to diversify their portfolios beyond shares, bonds and real estate,
a commodity is one of the best options.

Commodities actually offer immense potential to become a separate asset class for market-savvy
investors, arbitrageurs and speculators. Commodities are easy to understand and are based on the
fundamentals of demand and supply. Historically, prices in commodities futures have been less
volatile compared with equity and bonds, thus providing an efficient portfolio diversification
option the commodities asset class has experienced strong growth in recent years. The low
correlation to financial assets, equity-type returns and risk characteristics offered by commodities
offer investors a means to diversify their portfolios.

Our endeavor is to reach to the producers, end-users, and even the retail investors, at a grassroots
level. Education and awareness has a key role to play in achieving this vision.

Universal MF offers futures trading through "Universal MF”. We have membership with two of
the major Commodity exchanges of the country.

·Multi Commodity Exchange of India Ltd, Mumbai (MCX)

· National Commodity and Derivative Exchange, Mumbai (NCDEX)

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DEPOSITORY

Registered with Central Depository Service (India) Ltd (CDSL), the depository arm of Universal
MF offers various Depository Services to its clients. State of the art technology ensures that our
Depository is always convenient, dependable, and secure for any entity involved with the depository.

Our customer-centric account schemes have been designed keeping in mind the investment psyche of our
clients. Our DP account with us takes care of our Depository needs like dematerialization,
rematerialization and pledging of shares.

Clients are also offered with ‘easi’ which allows them to access the demat account through internet.
Information regarding recent transactions, holdings (with current value) is also available through ‘easi’.

SMS alert facility ‘SMART’ is also available wherein the client can received the SMS for IPO shares
credit and other debit entries in his demat account.

MUTUAL FUND

Universal MF offers personalized mutual fund investment advice tailored to our investment needs
through a disciplined investment process. It provides in-depth research to help us to meet our financial
goals. It takes care of the most important task of selecting the best options out of whole bunch of
mutual fund schemes for the safety and growth of our hard earned money.

We not only get unbiased investment advice, but we also make sure that we receive our We have a
dedicated team looking into the Mutual Fund product analysis and we use sophisticated tools to provide
reports to clients.

Mutual Fund Desk offers following services to the clients.

1. NFO Reports and Recommendation
2. Investment Planning
3. Existing Portfolio Restructuring
4. Investment Monitoring
5. Weekly Statement on Portfolio Performance

dividends and account statements on time, give an update on our portfolio and advise us if.

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MONEY MARKET:-

In finance, the money market is the global financial market for short-term borrowing and
lending. It provides short-term liquidity funding for the global financial system. The money
market is where short-term obligations such as Treasury bills, commercial paper and bankers'
acceptances are bought and sold.

The money market consists of financial institutions and dealers in money or credit who wish to
either borrow or lend. Participants borrow and lend for short periods of time, typically up to
thirteen months. Money market trades in short-term financial instruments commonly called
"paper." This contrasts with the capital market for longer-term funding, which is supplied by
bonds and equity.

The core of the money market consists of banks borrowing and lending to each other, using
commercial paper, repurchase agreements and similar instruments. These instruments are often
benchmarked (to i.e. priced by reference to) the London Interbank Offered Rate (LIBOR) for the
appropriate term and currency.

Finance companies, such as GMAC, typically fund themselves by issuing large amounts of asset-
backed commercial paper (ABCP) which is secured by the pledge of eligible assets into an
ABCP conduit. Examples of eligible assets include auto loans, credit card receivables,
residential/commercial mortgage loans, mortgage-backed securities and similar financial assets.
Certain large corporations with strong credit ratings, such as General Electric, issue commercial
paper on their own credit. Other large corporations arrange for banks to issue commercial paper
on their behalf via commercial paper lines.

In the United States, federal, state and local governments all issue paper to meet funding needs.
States and local governments issue municipal paper, while the US Treasury issues Treasury bills
to fund the US public debt.

Trading companies often purchase bankers' acceptances to be tendered for payment to overseas
suppliers.

Arbitrage ABCP conduits, which seek to buy higher yielding paper, while themselves selling
cheaper paper.

Common money market instruments:-

• Bankers' acceptance - A draft issued by a bank that will be accepted for payment,
effectively the same as a cashier's check.

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 • Certificate of deposit - A time deposit at a bank with a specific maturity date; large-
denomination certificates of deposits can be sold before maturity.

• Repurchase agreements - Short-term loans—normally for less than two weeks and
frequently for one day—arranged by selling securities to an investor with an agreement to
repurchase them at a fixed price on a fixed date.

• Commercial paper - Unsecured promissory notes with a fixed maturity of one to 270
days; usually sold at a discount from face value.

• Eurodollar deposit - Deposits made in U.S. dollars at a bank or bank branch located
outside the United States.

• Federal Agency Short-Term Securities - (in the U.S.). Short-term securities issued by
government sponsored enterprises such as the Farm Credit System, the Federal Home
Loan Banks and the Federal National Mortgage Association.

• Federal funds - (in the U.S.). Interest-bearing deposits held by banks and other depository
institutions at the Federal Reserve; these are immediately available funds that institutions
borrow or lend, usually on an overnight basis. They are lent for the federal funds rate.

• Municipal notes - (in the U.S.). Short-term notes issued by municipalities in anticipation
of tax receipts or other revenues.

• Treasury bills - Short-term debt obligations of a national government that are issued to
mature in three to twelve months. For the U.S., see Treasury bills.

• Money market mutual funds - Pooled short maturity, high quality investments which buy
money market securities on behalf of retail or institutional investors.

• Foreign Exchange Swaps - Exchanging a set of currencies in spot date and the reversal of
the exchange of currencies at a predetermined time in the future.

India Money Market:-

The money market is a mechanism that deals with the lending and borrowing of short term funds.
The India Money Market has come of age in the past two decades. In order to study the money
market of India in detail, we at first need to understand the parameters around which the money
market in India revolves.

The performance of the Indian Money Market is heavily dependent on real interest rate that is the
interest rate that is inflation adjusted. Though the money market is free from interest rate
ceilings, structural barriers and other institutional factors can be held responsible for creating

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distortions in India Money Market. Apart from the call market rates, the other interestrates in the
Indian Money Market usually do not change in the short run.

It is due to this disparity between the opposite forces that is prevalent in the money market in
India that a well defined income path cannot be traced.

Owing to the deregulation of the interest rate in the early nineties following the economic
reforms laid down by the then finance minister Dr. Manmohan Singh, studies concerning the
behavior of interest rate were restricted. However the liquidity of the market makes it’s a good
subject for empirical research.

The Indian Money Market involves a wide range of instruments. Here, maturities range from one
day to a year, issued by banks and corporate of various sizes. The money market is also closely
linked with the Foreign Exchange Market through the process of covered interestarbitrage in
which the forward premium acts as a bridge between domestic and foreign interest rates.

To analyze the interest rates that characterize the Indian Money Market, the following elements
need to be covered:

1. The term structure of interest rate.

2. The difference between domestic and international interest rates

3. The market structure differences between the auction markets that clear continuously and
the customer markets.

4. The distortion in the Indian Money Market.

Market capitalization:-

Market capitalization/capitalisation (aka market cap, mkt cap or capitalized/capitalised value) is a

measurement of corporate or economic size equal to the share price times the number of shares
outstanding of a public company. As owning stock represents owning the company, including all
its assets, capitalization could represent the public opinion of a company's net worth and is a
determining factor in stock valuation. Likewise, the capitalization of stock markets or economic
regions may be compared to other economic indicators. The total market capitalization of all
publicly traded companies in the world was US$51.2 trillion in January 2007[1] and rose as high
as US$57.5trillion in May 2008[2] before dropping below US$50 trillion in August 2008 and
slightly above US$40 trillion in September 2008.[2]

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Valuation

Stock market capitalization in 2005

Market capitalization represents the public consensus on the value of a company's equity. A
corporation, including all of its assets, may be freely bought and sold through purchases and
sales of stock, which will determine the price of the company's shares. Its market capitalization is
this share price multiplied by the number of shares in issue, providing a total value for the
company's shares and thus for the company as a whole.

Many companies have a dominant shareholder, which may be a government entity, a family, or
another corporation. Many stock market indices such as the S&P 500, Sensex, FTSE, DAX,
Nikkei, Ibovespa, and MSCI adjust for these by calculating on a "free float" basis, i.e. the market
capitalization they use is the value of the publicly tradable part of the company.

Note that market capitalization is a market estimate of a company's value, based on perceived
future prospects, economic and monetary conditions. Stock prices can also be moved by
speculation about changes in expectations about profits or about mergers and acquisitions.

It is possible for stock markets to get caught up in an economic bubble, like the steep rise in
valuation of technology stocks in the late 1990s followed by the dot-com crash in 2000.
Speculation can affect any asset class, such as gold or real estate. In such events, valuations rise
disproportionately to what many people would consider the fundamental value of the assets in
question. In the case of stocks, this pushes up market capitalization in what might be called an
"artificial" manner. Market capitalization is therefore only a rough measure of the true size of a
market.

Categorization of companies by capitalization:-

Traditionally, companies are divided into large-cap, mid-cap, and small-cap. People have rules of
thumb to determine category from market capitalization. These need to be adjusted over time due
to inflation, population change, and overall market valuation (for example, $1 billion was a large
market cap in 1950but is now not very large), and they may be different for different countries. A
common rule of thumb may look like:

Large-cap: over $5 billion

Mid-cap: from $1 billion to $5 billion

Small-cap: under $1 billion

Different numbers are used by different indexes; there is no official definition of or general
agreement about the exact cutoffs.

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Capital market:-

The capital market is the market for securities, where companies and governments can raise long-
term funds. The capital market includes the stock market and the bond market. Financial
regulators, such as the U.S. Securities and Exchange Commission, oversee the capital markets in
their designated countries to ensure that investors are protected against fraud.

The capital markets consist of the primary market and the secondary market. The primary
markets are where new stock and bonds issues are sold (underwritten) to investors. The
secondary markets are where existing securities are sold and bought from one investor or
speculator to another, usually on an exchange (e.g. - New York Stock Exchange).

Definitions of Capital market on the Web:

▪ The capital market is the market for securities, where companies and governments
can raise long-term funds. ...

▪ The market in which corporate equity and longer-term debt securities (those
maturing in more than one year) are issued and traded.

▪ Includes all financial transactions between users of funds and suppliers of funds.

▪ The market for long- and medium-term financing, i.e. more than a year.

SECTORS of Capital Market:-

The Capital Markets Committee has been set with the aim to ensure development of healthy and
vibrant Indian Capital Market. This Committee has been interacting with SEBI at regular
intervals to discuss and debate various rules and regulations introduced by SEBI from time to
time. The committee organizes an annual Convention on Capital Markets viz. "CAPAM" which
aims at analyzing the present condition of India's capital market in the Global setting and lays
down a road map to improve its depth, reach and efficiency.

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Financial market:-

In economics, a financial market is a mechanism that allows people to easily buy and sell (trade)
financial securities (such as stocks and bonds), commodities (such as precious metals or
agricultural goods), and other fungible items of value at low transaction costs and at prices that
reflect the efficient-market hypothesis.

Financial markets have evolved significantly over several hundred years and are undergoing
constant innovation to improve liquidity.

Both general markets (where many commodities are traded) and specialized markets (where only
one commodity is traded) exist. Markets work by placing many interested buyers and sellers in
one "place", thus making it easier for them to find each other. An economy which relies
primarily on interactions between buyers and sellers to allocate resources is known as a market
economy in contrast either to a command economy or to a non-market economy such as gift
economy. In finance, financial markets facilitate –

• The raising of capital (in the capital markets);

• The transfer of risk (in the derivatives markets);

• International trade (in the currency markets)

In economics, typically, the term market means the aggregate of possible buyers and sellers of a
thing and the transactions between them.

The term "market" is sometimes used for what are more strictly exchanges, organizations that
facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This
may be a physical location (like the NYSE) or an electronic system (like NASDAQ). Much
trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside
an exchange, while any two companies or people, for whatever reason, may agree to sell stock
from the one to the other without using an exchange.

Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a
stock exchange, and people are building electronic systems for these as well, similar to stock
exchanges.

The capital markets consist of primary markets and secondary markets. Newly formed (issued)
securities are bought or sold in primary markets. Secondary markets allow investors to sell
securities that they hold or buy existing securities.

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Raising capital:-

Without financial markets, borrowers would have difficulty finding lenders themselves.
Intermediaries such as banks help in this process. Banks take deposits from those who have
money to save. They can then lend money from this pool of deposited money to those who seek
to borrow. Banks popularly lend money in the form of loans and mortgages.

More complex transactions than a simple bank deposit require markets where lenders and their
agents can meet borrowers and their agents, and where existing borrowing or lending
commitments can be sold on to other parties. A good example of a financial market is a stock
exchange. A company can raise money by selling shares to investors and its existing shares can
be bought or sold.

Companies tend to be borrowers of capital. When companies have surplus cash that is not needed
for a short period of time, they may seek to make money from their cash surplus by lending it via
short term markets called money markets.

There are a few companies that have very strong cash flows. These companies tend to be lenders
rather than borrowers. Such companies may decide to return cash to lenders (e.g. via a share
buyback.) Alternatively, they may seek to make more money on their cash by lending it (e.g.
investing in bonds and stocks.)

Borrowers

Individuals borrow money via bankers' loans for short term needs or longer term mortgages to
help finance a house purchase.

Companies borrow money to aid short term or long term cash flows. They also borrow to fund
modernization or future business expansion.

Governments often find their spending requirements exceed their tax revenues. To make up this
difference, they need to borrow. Governments also borrow on behalf of nationalized industries,
municipalities, local authorities and other public sector bodies. In the UK, the totalborrowing
requirement is often referred to as the Public sector net cash requirement (PSNCR).

Governments borrow by issuing bonds. In the UK, the government also borrows from individuals
by offering bank accounts and Premium Bonds. Government debt seems to be permanent. Indeed
the debt seemingly expands rather than being paid off. One strategy used by governments to
reduce the value of the debt is to influence inflation.

Municipalities and local authorities may borrow in their own name as well as receiving funding
from national governments. In the UK, this would cover an authority like Hampshire County

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Council. Public Corporations typically include nationalized industries. These may include the
postal services, railway companies and utility companies.

Many borrowers have difficulty raising money locally. They need to borrow internationally with
the aid of Foreign exchange markets.

Derivative products

During the 1980s and 1990s, a major growth sector in financial markets is the trade in so called
derivative products, or derivatives for short.

In the financial markets, stock prices, bond prices, currency rates, interest rates and dividends go
up and down, creating risk. Derivative products are financial products, which are used to control
risk or paradoxically exploit risk. It is also called financial economics.

Currency markets

Seemingly, the most obvious buyers and sellers of foreign exchange are importers/exporters.
While this may have been true in the distant past, whereby importers/exporters created the initial
demand for currency markets, importers and exporters now represent only 1/32 of foreign
exchange dealing, according to BIS.

Analysis of financial markets

Much effort has gone into the study of financial markets and how prices vary with time. Charles
Dow, one of the founders of Dow Jones & Company and The Wall Street Journal, enunciated a
set of ideas on the subject, which are now called Dow theory. This is the basis of the so-called
technical analysis method of attempting to predict future changes. One of the tenets of "technical
analysis" is that market trends give an indicationof the future, at least in the short term. The
claims of the technical analysts are disputed by many academics, which claim that the evidence
points rather to the random walk hypothesis, which states that the next change is not, correlated
to the last change.

The scale of changes in price over some unit of time is called the volatility. It was discovered by
Benoît Mandelbrot that changes in prices do not follow a Gaussian distribution, but are rather
modeled better by Lévy stable distributions. The scale of change, or volatility, depends on the
length of the time unit to a power a bit more than 1/2. Large changes up or down are more likely
than what one would calculate using a Gaussian distribution with an estimated standard
deviation.

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Financial markets in popular culture

Financial markets are merely tools. Like all tools they have both beneficial and harmful uses.
Honest people use overall, financial markets. Otherwise, people would turn away from them en
masse. As in other walks of life, the financial markets have their fair share of rogue elements.

INDIAN FINANCIAL MARKETING:-

India Financial Market promotes the savings of the economy, providing an effective channel for
transmitting the financial policies. It is a well-developed, competitive, efficient and integrated
financial sector. There is large number of buyers and sellers of the financial product, the prices
are fixed by the market forces of demand and supply within the Indian Financial Market. The
other markets of the economy assist the functioning of the financial market in India.

The Financial Market in India focuses on these features:

• Real-time India Financial Indices – BSE 30 Index, Sector Indexes, Stock Quotes, Sensex
Charts, Bond prices, Foreign Exchange, Rupee&Dollar Chart

• Indian Financial Market news

• Stock News – Bombay Stock Exchange, BSE Sensex 30 closing index, S&P CNX-Nifty
NSE, stock quotes, company information, issues on market capitalization, corporate
earnings statements, Indian Business directory.

• Fixed Income – Corporate Bond Prices, Corporate Debt details, Debt trading activities,
Interest Rates, Money Market, Government Securities, Public Sector Debt, External Debt
Service

• Foreign Investment – Foreign Debt Database composed by BIS, IMF, OECD,& World
Bank, Investments in India & Abroad

• Global Equity Indexes – Dow Jones Global indexes, Morgan Stanley Equity Indexes

• Currency Indexes – FX & Gold Chart Plotter, J. P. Morgan Currency Indexes

• National and Global Market Relations

• Mutual Funds

• Insurance

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 • Loans

• Forex and Bullion

A clear insight with information’s on the Indian Financial Market will thus be the most useful tip
for the investors and the marketers of both India and the foreign countries.

FINANCIAL MARKET ANALYSIS:-

Financial Market Analysis deals with the performance of a particular financial market. The
performance of a financial market depends upon the performance of the total number of
securities that are traded in that market. On a given day when the market closes with the prices of
most of its securities on the higher side, then it could be said to have performed well. This is
reflected in a market indicator called Index which tracks the performance of some of the more
popular and steady securities that are traded in that particular financial market.

Some of the most famous securities market indexes of the world are:

Footsie – London financial market

Dow Jones – New York financial market

Hang Seng – Hong Kong financial market

BSE Sensex – Mumbai financial market

Nikkei – Tokyo financial market

Nifty – Indian national financial market

The financial market index has become particularly important in today’s market economy, which
is integrating very fast on a global scale. Traders do not confine trading in securities to just one
or two markets in the country of their origin but invest in a large number of markets across the
globe. With more and more investment companies developing global dimensions financial
markets around the world are integrating on a scale never imagined before.

As a result, analysis of the financial markets has become one of the main activities covering a
very large number of factors both within the market and outside it. For instance, when the
government of the country where the market is located, announces a new policy measure aimed
at deregulating a particularly stifling part of an industry segment, it may have a positive impact
on the financial market. Financial market analysts cannot anticipate such factors and therefore
the impact of these factors do not come under the main purview of financial market analysis.
However, most analysts do set aside some space for the impact of extraneous factors on the
market and they do so in equal measure for both positive as well as negative factors.

Financial market analysis has become a highly specialized activity confined to select groups of
experts known as technical analysts. In most cases they are professionally trained in financial
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analysis and are reasonably familiar with the tools used to analyze a particular market. In certain
other cases they are economists or veteran investors with a special interest in financial market
analysis and market economics. The numbers of factors that directly or indirectly impact the
financial markets are increasing rapidly with more analysts digging deeper into the circumstances
that influence financial market behavior. On the other hand, the integration of information
technology in market analysis is increasingly meeting the challenge posed by the complexities of
financial market analysis.

Some of the most important types of analysis affecting financial markets are:

➢ Fundamental Analysis

➢ Securities Market Analysis

➢ Securities Market Technical Analysis

➢ Index Momentum Analysis

➢ Securities Momentum Analysis

➢ Securities Chart Analysis

➢ Market Analysis

➢ Market Trend Indicators

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STOCK MARKET:-

A stock market, or equity market, is a private or public market for the trading of company stock
and derivatives of company stock at an agreed price; these are securities listed on a stock
exchange as well as those only traded privately.

The size of the world stock market is estimated at about $36.6 trillion US at the beginning of
October 2008. The world derivatives market has been estimated at about $480 trillion face or
nominal value, 12 times the size of the entire world economy. The value of the derivatives
market, because it is stated in terms of notional values, cannot be directly compared to a stock or
a fixed income security, which traditionally refers to an actual value. Many such relatively
illiquid securities are valued as marked to model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are entities a corporation or mutual
organization specialized in the business of bringing buyers and sellers of the organizations to a
listing of stocks and securities together. The stock market in the United States includes the
trading of all securities listed on the NYSE, the NASDAQ, the Amex, as well as on the many
regional exchanges, e.g. OTCBB and Pink Sheets. European examples of stock exchanges
include the London Stock Exchange, the Deutsche Börse and the Paris Bourse, now part of
Euronext.

Trading: -

Participants in the stock market range from small individual stock investors to large hedge fund
traders, who can be based anywhere. Their orders usually end up with a professional at a stock
exchange, who executes the order.

Some exchanges are physical locations where transactions are carried out on a trading floor, by a
method known as open outcry. This type of auction is used in stock exchanges and commodity
exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of
stock exchange is a virtual kind, composed of a network of computers where trades are made
electronically via traders.

Actual trades are based on an auction market paradigm where a potential buyer bids a specific
price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at
market means you will accept any ask price or bid price for the stock, respectively.) When the
bid and ask prices match, a sale takes place on a first come first served basis if there are multiple
bidders or askers at a given price.

The purpose of a stock exchange is to facilitate the exchange of securities between buyers and
sellers, thus providing a marketplace (virtual or real). The exchanges provide real-time trading
information on the listed securities, facilitating price discovery.

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New York Stock Exchange: -

The New York Stock Exchange is a physical exchange, also referred to as a listed exchange —
only stocks listed with the exchange may be traded. Orders enter by way of exchange members
and flow down to a floor broker, who goes to the floor trading post specialist for that stock to
trade the order. The specialist's job is to match buy and sell orders using open outcry. If a spread
exists, no trade immediately takes place--in this case the specialist should use his/her own
resources (money or stock) to close the difference after his/her judged time. Once a trade has
been made the details are reported on the "tape" and sent back to the brokerage firm, which then
notifies the investor who placed the order. Although there is a significant amount of human
contact in this process, computers play an important role, especially for so-called "program
trading".

The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer
network. The process is similar to the New York Stock Exchange. However, buyers and sellers
are electronically matched. One or more NASDAQ market makers will always provide a bid and
ask price at which they will always purchase or sell 'their' stock.

The Paris Bourse, now part of Euronext, is an order-driven, electronic stock exchange. It was
automated in the late 1980s. Prior to the 1980s, it consisted of an open outcry exchange.
Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading system
was introduced, and the order matching process was fully automated.

From time to time, active trading (especially in large blocks of securities) has moved away from
the 'active' exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit
Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges to their
internal systems. That share probably will increase to 18 percent by 2010 as more investment
banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves,
according to data compiled by BostonbasedAite Group LLC, a brokerage-industry consultant.

Now that computers have eliminated the need for trading floors like the Big Board's, the balance
of power in equity markets is shifting. By bringing more orders in-house, where clients can move
big blocks of stock anonymously, brokers pay the exchanges less in fees and capture a bigger
share of the $11 billion a year that institutional investors pay in trading commissions.

Market participants: -

Many years ago, worldwide, buyers and sellers were individual investors, such as wealthy
businessmen, with long family histories (and emotional ties) to particular corporations. Over
time, markets have become more "institutionalized"; buyers and sellers are largely institutions
(e.g., pension funds, insurance companies, mutual funds, index funds, exchange traded funds,
hedge funds, investor groups, banks and various other financial institutions). The rise of the

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institutional investor has brought with it some improvements in market operations. Thus, the
government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the
'small' investor, but only after the large institutions had managed to break the brokers' solid front
on fees they then went to 'negotiated' fees, but only for large institutions.

However, corporate governance (at least in the West) has been very much adversely affected by
the rise of (largely 'absentee') institutional 'owners'.

History: -

Historian Fernand Braudel suggests that in Cairo in the 11th century, Muslim and Jewish
merchants had already set up every form of trade association and had knowledge of many
methods of credit and payment, disproving the belief that Italians originally invented these later.
In 12th century France the courratiers de change were concerned with managing and regulating
the debts of agricultural communities on behalf of the banks. Because these men also traded with
debts, they could be called the first brokers. A common misbelieve is that in late 13th century
Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in
1309 they became the "BrugseBeurse", institutionalizing what had been, until then, an informal
meeting, but actually, the family Van der Beurze had a building in Antwerp where those
gatherings occurred [2]; the Van der Beurze had Antwerp, as most of the merchants of that
period, as their primary place for trading. The idea quickly spread around Flanders and
neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam.

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

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock
exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short
selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative
instruments, much as we know them" (Murray Sayle, "Japan Goes Dutch", London Review of
Books XXIII.7, April 5, 2001). There are now stock markets in virtually every developed and
most developing economies, with the world's biggest markets being in the United States, Canada,
China (Hongkong), India, UK, Germany, France and Japan.

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 Importance of stock market:-

Function and purpose-

The stock market is one of the most important sources for companies to raise money. This allows
businesses to be publicly traded, or raise additional capital for expansion by selling shares of
ownership of the company in a public market. The liquidity that an exchange provides affords
investors the ability to quickly and easily sell securities. This is an attractive feature of investing
in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics
of economic activity, and can influence or be an indicator of social mood. An economy where the
stock market is on the rise is considered to be an up coming economy. In fact, the stock market is
often considered the primary indicator of a country's economic strength and development. Rising
share prices, for instance, tend to be associated with increased business investment and vice
versa. Share prices also affect the wealth of households and their consumption. Therefore, central
banks tend to keep an eye on the control and behavior of the stock market and, in general, on the
smooth operation of financial system functions. Financial stability is the raison d'être of central
banks.

Exchanges also act as the clearinghouse for each transaction, meaning that they collect and
deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an
individual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in those lower costs
and enterprise risks promote the production of goods and services as well as employment. In this
way the financial system contributes to increased prosperity.

Relation of the stock market to the modern financial system:-

The financial system in most western countries has undergone a remarkable transformation. One
feature of this development is disintermediation. A portion of the funds involved in saving and
financing flows directly to the financial markets instead of being routed via the traditional bank
lending and deposit operations. The general public's heightened interest in investing in the stock
market, either directly or through mutual funds, has been an important component of this
process. Statistics show that in recent decades shares have made up an increasingly large
proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit
accounts and other very liquid assets with little risk made up almost 60 percent of households'
financial wealth, compared to less than 20 percent in the 2000s.

The major part of this adjustment in financial portfolios has gone directly to shares but a good
deal now takes the form of various kinds of institutional investment for groups of individuals,
e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. The trend
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towards forms of saving with a higher risk has been accentuated by new rules for most funds and
insurance, permitting a higher proportion of shares to bonds.

Similar tendencies are to be found in other industrialized countries. In all developed economic
systems, such as the European Union, the United States, Japan and other developed nations, the
trend has been the same: saving has moved away from traditional (government insured) bank
deposits to more risky securities of one sort or another.

The stock market, individual investors, and financial risk:-

Riskier long-term saving requires that an individual possess the ability to manage the associated
increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government
insured) bank deposits or bonds. This is something that could affect not only the individual
investor or household, but also the economy on a large scale. The following deals with some of
the risks of the financial sector in general and the stock market in particular. This is certainly
more important now that so many newcomers have entered the stock market, or have acquired
other 'risky' investments (such as 'investment' property, i.e., real estate and collectables).

With each passing year, the noise level in the stock market rises. Television commentators,
financial writers, analysts, and market strategists are all overtaking each other to get investors'
attention. At the same time, individual investors, immersed in chat rooms and message boards,
are exchanging questionable and often misleading tips. Yet, despite all this available information,
investors find it increasingly difficult to profit. Stock prices skyrocket with little reason, then
plummet just as quickly, and people who have turned to investing for there children's education
and their own retirement become frightened. Sometimes there appears to be no rhyme or reason
to the market, only folly.

This is a quote from the preface to a published biography about the long-term valueoriented stock
investor Warren Buffett. Buffett began his career with $100, and $105,000 from seven limited
partners consisting of Buffett's family and friends. Over the years he has built himself a multi-
billion-dollar fortune. The quote illustrates some of what has been happening in the stock market
during the end of the 20th century and the beginning of the 21st century.

The behavior of the stock market: -

From experience we know that investors may temporarily pull financial prices away from their
long-term trend level. Over-reactions may occur—so that excessive optimism (euphoria) may
drive prices unduly high or excessive pessimism may drive prices unduly low. New theoretical
and empirical arguments have been put forward against the notion that financial markets are
efficient.

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According to the efficient market hypothesis (EMH), only changes in fundamental factors, such
as profits or dividends, ought to affect share prices. (But this largely theoretic academic
viewpoint also predicts that little or no trading should take place— contrary to fact—since prices
are already at or near equilibrium, having priced in all public knowledge.) But the efficient-
market hypothesis is sorely tested by such events as the stock market crash in 1987, when the
Dow Jones index plummeted 22.6 percent—the largest-ever one-day fall in the United States.

This event demonstrated that share prices can fall dramatically even though, to this day, it is
impossible to fix a definite cause: a thorough search failed to detect any specific or unexpected
development that might account for the crash. It also seems to be the case more generally that
many price movements are not occasioned by new information; a study of the fifty largest one-
day share price movements in the United States in the post-war period confirms this.

Moreover, while the EMH predicts that all price movement (in the absence of change in
fundamental information) is random (i.e., non-trending), many studies have shown a marked
tendency for the stock market to trend over time periods of weeks or longer.

Various explanations for large price movements have been promulgated. For instance, some
research has shown that changes in estimated risk, and the use of certain strategies, such as stop-
loss limits and Value at Risk limits, theoretically could cause financial markets to overreact.

Other research has shown that psychological factors may result in exaggerated stock price
movements. Psychological research has demonstrated that people are
predisposed to 'seeing' patterns, and often will perceive a pattern in what is, in fact, just noise.
(Something like seeing familiar shapes in clouds or ink blots.) In the present context this means
that a succession of good news items about a company may lead investors to overreact positively
(unjustifiably driving the price up). A period of good returns also boosts the investor's self-
confidence, reducing his (psychological) risk threshold.

Another phenomenon—also from psychology—that works against an objective

assessment is group thinking. As social animals, it is not easy to stick to an opinion that differs
markedly from that of a majority of the group. An example with which one may be familiar is the
reluctance to enter a restaurant that is empty; people generally prefer to have their opinion
validated by those of others in the group.

In one paper the authors draw an analogy with gambling. In normal times the market behaves
like a game of roulette; the probabilities are known and largely independent of the investment
decisions of the different players. In times of market stress, however, the game becomes more
like poker (herding behavior takes over). The players now must give heavy weight to the
psychology of other investors and how they are likely to react psychologically.

The stock market, as any other business, is quite unforgiving of amateurs. Inexperienced
investors rarely get the assistance and support they need. In the period running up to the recent
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Nasdaq crash, less than 1 percent of the analyst's recommendations had been to sell (and even
during the 2000 - 2002 crash, the average did not rise above 5%).

The media amplified the general euphoria, with reports of rapidly rising share prices and the
notion that large sums of money could be quickly earned in the so-called new economy stock
market. (And later amplified the gloom, which descended during the 2000 - 2002 crash, so that
by summer of 2002, predictions of a DOW average below 5000, was quite common).

Irrational behavior: -

Sometimes the market tends to react irrationally to economic news, even if that news has no real
affect on the technical value of securities itself. Therefore, the stock market can be swayed
tremendously in either direction by press releases, rumors, euphoria and mass panic.

Over the short-term, stocks and other securities can be battered or buoyed by any number of fast
market-changing events, making the stock market difficult to predict. Emotions can drive prices
up and down. People may not be as rational as they think. Behaviorists argue that investors often
behave irrationally when making investment decisions thereby incorrectly pricing securities,
which causes market inefficiencies, which, in turn, are opportunities to make money.

Crashes: -

Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest
Rates, from Irrational Exuberance, 2d ed.[8] In the preface to this edition, Shiller warns, "The
stock market has not come down to historical levels: the price-earnings ratio as I define it in this
book is still, at this writing [2005], in the mid-20s, far higher than the historical average. . . .
People still place too much confidence in the markets and have too strong a belief that paying
attention to the gyrations in their investments will someday make them rich, and so they do not
make conservative preparations for possible bad outcomes."

A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock
exchanges. In parallel with various economic factors, a reason for stock market crashes is also
due to panic. Often, stock market crashes end speculative economic bubbles.

There have been famous stock market crashes that have ended in the loss of billions of dollars
and wealth destruction on a massive scale. An increasing number of people are involved in the
stock market, especially since the social security and retirement plans are being increasingly
privatized and linked to stocks and bonds and other elements of the market. There have been a

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number of famous stock market crashes like the Wall Street Crash of 1929, the stock market
crash of 1973–4, the Black Monday of 1987, the Dot-com bubble of 2000.

One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The
Dow Jones Industrial lost 50% during this stock market crash. It was the beginning of the Great
Depression. Another famous crash took place on October 19, 1987 – Black Monday. On Black
Monday itself, the Dow Jones fell by 22.6% after completing a 5 year continuous rise in share
prices. This event not only shook the USA, but quickly spread across the world. Thus, by the end
of October, stock exchanges in Australia lost 41.8%, in Canada lost 22.5%, in Hong Kong lost
45.8%, and in Great Britain lost 26.4%. The names “Black Monday” and “Black Tuesday” are
also used for October 28-29, 1929, which followed Terrible Thursday--the starting day of the
stock market crash in 1929. The crash in 1987 raised some puzzles-–main news and events did
not predict the catastrophe and visible reasons for the collapse were not identified.

This event raised questions about many important assumptions of modern economics, namely,
the theory of rational human conduct, the theory of market equilibrium and the hypothesis of
market efficiency. For some time after the crash, trading in stock exchanges worldwide was
halted, since the exchange computers did not perform well owing to enormous quantity of trades
being received at one time. This halt in trading allowed the Federal Reserve System and central
banks of other countries to take measures to control the spreading of worldwide financial crisis.

In the United States the SEC introduced several new measures of control into the stock market in
an attempt to prevent a re-occurrence of the events of Black Monday. Computer systems were
upgraded in the stock exchanges to handle larger trading volumes in a more accurate and
controlled manner. The SEC modified the margin requirements in an attempt to lower the
volatility of common stocks, stock options and the futures market. The New York Stock
Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. The
circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed
amount of time.

Stock market index:-

The movements of the prices in a market or section of a market are captured in price indices
called stock market indices, of which there are many, e.g., the S&P, the FTSE and the Euronext
indices. Such indices are usually market capitalization weighted, with the weights reflecting the
contribution of the stock to the index. The constituents of the index are reviewed frequently to
include/exclude stocks in order to reflect the changing business environment

Derivative instruments:-

Financial innovation has brought many new financial instruments whose pay-offs or values
depend on the prices of stocks. Some examples are exchange-traded funds (ETFs), stock index
and stock options, equity swaps, single-stock futures, and stock index futures. These last two
may be traded on futures exchanges (which are distinct from stock exchanges—their history
34 | P a g e
traces back to commodities futures exchanges), or traded over-the-counter. As all of these
products are only derived from stocks, they are sometimes considered to be traded in a
(hypothetical) derivatives market, rather than the (hypothetical) stock market.

Leveraged strategies:-

Stock that a trader does not actually own may be traded using short selling; margin buying may
be used to purchase stock with borrowed funds; or, derivatives may be used to control large
blocks of stocks for a much smaller amount of money than would be required by outright
purchase or sale.

Short Selling:-

In short selling, the trader borrows stock (usually from his brokerage which holds its clients'
shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for
the price to fall. The trader eventually buys back the stock, making money if the price fell in the
meantime or losing money if it rose. Exiting a short position by buying back the stock is called
"covering a short position." This strategy may also be used by unscrupulous traders to artificially
lower the price of a stock. Hence most markets either prevent short selling or place restrictions
on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not
all) stock markets.

STOCK MARKET timing

More than any other factor, it is the primary, or underlying, direction of the stock market that will
determine the success or failure of a trading position. A stock can have a fabulous story, great
fundamentals, a good technical position, strong sponsorship and yet turn into a bad trade if you
are going long and the market is headed down. The same is true of an undistinguished stock that
just goes up because it is being carried along in a strong up market.

Stock Market Timing is a Stock Market direction system that forecasts the future shortterm
direction of the market. These direction forecasts are based upon the Weintraub Oscillator
System, a proprietary computerized methodology developed by Victor Weintraub. The
methodology is totally quantitative and no human judgment is involved in future market
direction forecasts.

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Indian Shares - Indian Stock Market Tips for BSE & NSE Stocks :-

About Today's Daily Indian Stock Market Report:-

Our India Stock Market Tips for both BSE Indian shares and NSE Indian Shares are selected by
technical analysis programme, which scans both BSE, and NSE Indian Stock markets for the top
performing Indian Shares. This daily Indian Share Market Investment Report is uploaded every
day and is free, no registration is required.

Indian Stock market tips and performance analysis creates a short list of the best performing
Indian stocks from the BSE and NSE Stock Exchanges for your information. A detailed analysis
of the BSE Sensex Indian Share Index is also provided for investors. Daily stock tips info
updates.

36 | P a g e
Stock exchange :-

A stock exchange, securities exchange or (in Europe) bourse is a corporation or mutual

organization, which provides "trading" facilities for stockbrokers and traders, to trade stocks and
other securities. Stock exchanges also provide facilities for the issue and redemption of securities
as well as other financial instruments and capital events including the payment of income and
dividends. The securities traded on a stock exchange include: shares issued by companies, unit
trusts and other pooled investment products and bonds. To be able to trade a security on a certain
stock exchange, it has to be listed there. Usually there is a central location at least for
recordkeeping, but trade is less and less linked to such a physical place, as modern markets are
electronic networks, which gives them advantages of speed and cost of transactions. Trade on an
exchange is by members only. The initial offering of stocks and bonds to investors is by
definition done in the primary market and subsequent trading is done in the secondary market. A
stock exchange is often the most important component of a stock market. Supply and demand in
stock markets are driven by various factors which, as in all free markets, affect the price of
stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be
subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter.
This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global
market for securities.

The First Stock Exchanges:-

In 11th century France the courtiers de change were concerned with managing and regulating the
debts of agricultural communities on behalf of the banks. As these men also traded in debts, they
could be called the first brokers.

Some stories suggest that the origins of the term "bourse" come from the Latin bursa meaning a
bag because, in 13th century Bruges, the sign of a purse (or perhaps three purses), hung on the
front of the house where merchants met.

However, it is more likely that in the late 13th century commodity traders in Bruges gathered
inside the house of a man called Van der Burse, and in 1309 they institutionalized this until now
informal meeting and became the "Bruges Bourse". The idea spread quickly around Flanders and
neighbouring counties and "Bourses" soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in government securities. In
1351, the Venetian Government outlawed spreading rumors intended to lower the price of
government funds. There were people in Pisa, Verona, Genoa and Florence who also began

37 | P a g e
trading in government securities during the 14th century. This was only possible because these
were independent city states ruled by a council of influential citizens, not by a duke.

The Dutch later started joint stock companies, which let shareholders invest in business ventures
and get a share of their profits—or losses. In 1602, the Dutch East India Company issued the first
shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. In
1688, the trading of stocks began on a stock exchange in London.

The role of stock exchanges:-

Stock exchanges have multiple roles in the economy, this may include the following:-

Raising capital for businesses

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

Mobilizing savings for investment

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

Facilitating company growth

Companies view acquisitions as an opportunity to expand product lines, increase distribution

channels, hedge against volatility, increase its market share, or acquire other necessary business
assets. A takeover bid or a merger agreement through the stock market is one of the simplest and
most common ways for a company to grow by acquisition or fusion.

Redistribution of wealth

Stocks exchanges do not exist to redistribute wealth. However, both casual and professional
stock investors, through dividends and stock price increases that may result in capital gains, will
share in the wealth of profitable businesses.

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Corporate governance

By having a wide and varied scope of owners, companies generally tend to improve on their
management standards and efficiency in order to satisfy the demands of these shareholders and
the more stringent rules for public corporations imposed by public stock exchanges and the
government. Consequently, it is alleged that public companies (companies that are owned by
shareholders who are members of the general public and trade shares on public exchanges) tend
to have better management records than privately-held companies (those companies where shares
are not publicly traded, often owned by the company founders and/or their families and heirs, or
otherwise by a small group of investors). However, some well-documented cases are known
where it is alleged that there has been considerable slippage in corporate governance on the part
of some public companies. The dot-com bubble in the early 2000s, and the subprime mortgage
crisis in 2007-08, are classical examples of corporate mismanagement. Companies like Pets.com
(2000), Enron Corporation (2001), One.Tel (2001), Sunbeam
(2001), Webvan (2001), Adelphia (2002), MCI WorldCom (2002), Parmalat (2003), Fannie Mae
(2008), Freddie Mac (2008), Lehman Brothers (2008), were among the most widely scrutinized
by the media.

Creating investment opportunities for small investors

As opposed to other businesses that require huge capital outlay, investing in shares is open to
both the large and small stock investors because a person buys the number of shares they can
afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares
of the same companies as large investors.

Government capital rising for development projects

Governments at various levels may decide to borrow money in order to finance infrastructure
projects such as sewage and water treatment works or housing estates by selling another category
of securities known as bonds. These bonds can be raised through the Stock Exchange whereby
members of the public buy them, thus loaning money to the government. The issuance of such
bonds can obviate the need to directly tax the citizens in order to finance development, although
by securing such bonds with the full faith and credit of the government instead of with collateral,
the result is that the government must tax the citizens or otherwise raise additional funds to make
any regular coupon payments and refund the principal when the bonds mature.

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Barometer of the economy

At the stock exchange, share prices rise and fall depending, largely, on market forces. Share
prices tend to rise or remain stable when companies and the economy in general show signs of
stability and growth. An economic recession, depression, or financial crisis could eventually lead
to a stock market crash. Therefore the movement of share prices and in general of the stock
indexes can be an indicator of the general trend in the economy.

Listing requirements:-

Listing requirements are the set of conditions imposed by a given stock exchange upon
companies that want to be listed on that exchange. Such conditions sometimes include minimum
number of shares outstanding, minimum market capitalization, and minimum annual income.

Ownership: -

Stock exchanges originated as mutual organizations, owned by its member stockbrokers. There
has been a recent trend for stock exchanges to demutualize, where the members sell their shares
in an initial public offering. In this way the mutual organization becomes a corporation, with
shares that are listed on a stock exchange. Examples are Australian Securities Exchange (1998),
Euronext (merged with New York Stock Exchange), NASDAQ (2002), the New York Stock
Exchange (2005), Bolsas y MercadosEspañoles, and the São Paulo Stock Exchange (2007). The
Shenzhen and Shanghai stock exchanges can been characterized as quasi-state institutions insofar
as they were created by government bodies in China and their leading personnel are directly
appointed by the China Securities Regulatory Commission.

Other types of exchanges: -

In the 19th century, exchanges were opened to trade forward contracts on commodities.
Exchange traded forward contracts are called futures contracts. These commodity exchanges
later started offering future contracts on other products, such as interest rates and shares, as well
as options contracts. They are now generally known as futures exchanges.

General Information - Bombay Stock Exchange:-

From the 22 stock exchanges in the country, Mumbai's (earlier known as Bombay), Bombay
Stock Exchange is the largest, with over 6,000 stocks listed. The BSE accounts for over two
thirds of the total trading volume in the country. Established in 1875, the exchange is also the
oldest in Asia. Among the twenty-two Stock Exchanges recognized by the Government of India
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under the Securities Contracts (Regulation) Act, 1956, it was the first one to be recognized and it
is the only one that had the privilege of getting permanent recognition ab-initio.

Approximately 70,000 deals are executed on a daily basis, giving it one of the highest per hour
rates of trading in the world. There are around 3,500 companies in the country, which are listed
and have a serious trading volume. The market capitalization of the BSE is Rs.5 trillion. The
BSE `Sensex' is a widely used market index for the BSE.

The main aims and objectives of the BSE is to provide a market place for the purchase and sale
of security evidencing the ownership of business property or of a public or business debt. It aims
to promote, develop and maintain a well regulated market for dealing in securities and to
safeguard the interest of members and the investing public having dealings on the Exchange. It
helps industrial development of the country through efficient resource mobilization. To establish
and promote honourable and just practices in securities transactions

BSE Sensex

The BSE Sensex is a value-weighted index composed of 30 companies with the base April 1979
= 100. It has grown by more than four times from January 1990 till date.The set of companies in
the index is essentially fixed. These companies account for around one-fifth of the market
capitalization of the BSE. We can use information from April 1979 onwards in estimating the
long-run rate of return on the BSE Sensex and that comes to 0.52% per week (continuously
compounded) with a standard deviation of 3.67%. This translates to 27% per annum, which
translates to roughly 18% per annum after compensating for inflation.

New Developments

In November, 1996, as a move to reduce the counter party risk, the Exchange set up a trade
guarantee scheme i.e. all trades carried out on the BOLT are guaranteed by the Clearing House of
the Exchange.

The Bank of India and the Exchange have set up a depository as a joint venture. However, it will
be a subsidiary of the Bank of India. The Exchange introduced trading in fixed income securities
under a separate group to give impetus to trading in debentures and other corporate debt
instruments, to increase trading in government dated securities.

23 brokers opt to exit BSE derivatives business since Oct:-

The October 2008 landslide in stock prices, which caused a nearly 90 per cent drop in India’s
equity derivatives business, has dealt a severe blow to Asia’s oldest bourse, the Bombay Stock
Exchange (BSE). In the past three months, 23 stock brokers have opted for voluntary closure of

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their derivatives business on the exchange and the daily turnover on the exchange is now as low
as Rs 85 lakh, compared to Rs 1,500 crore to Rs 2,000 crore, when the market peaked in January
this year.

The BSE benchmark index Sensex was hovering between 12,500 and 15,000 before October.
Since then, it has traded in a narrow range on wafer-thin volumes.

As a result, said a stock broker, brokers thought it logical to suspend their derivatives business on
the BSE since there was no use paying the exchange margins. “It is part of our cost-cutting
exercise. Although there is no business in the futures segment on the National Stock Exchange
(NSE), we still pay margins so that we are ready to take opportunities when there is activity. But
incurring costs for this on the BSE is useless since hardly anyone trades in derivatives there,”
said a broker.

Every broker has to deposit margin money, depending on which they are given a trading limit by
the stock exchange. Large brokerage houses mainly raise this money through debt placement at
high interest rates.

Overall, nearly 30 brokers have suspended their derivatives business on the BSE this year. There
were over 300 brokers in this segment, but not even 10 per cent are active.

On the NSE, more than 1,000 brokers trade in derivatives, but the daily turnover has declined
significantly. At the start of this year, the turnover ranged from Rs, 80,000 crore to Rs 90,000
crore, but it is now down to Rs 15,000 to Rs 20,000 crore.

The NSE is mainly able to generate volumes because most large institutional investors prefer this
exchange. On the BSE, on the other hand, a major chunk of the volumes has mainly come from
block or bulk deals in the cash segment. These deals are also thin on the ground.

Market players, however, say it may be tough for the NSE to maintain its leadership in the equity
space with new players emerging.

Financial Technologies, the promoter of the Multi Commodity Exchange, is setting up

infrastructure for an equity exchange after it successfully launched a currency derivatives
exchange, MCX SX, recently. MCX SX, which went live nearly a month after the NSE launched
currency futures trading, is already neck-and-neck with the NSE in terms of turnover and
volumes.

Second bi-annual BSE follow-up report

On 20 October 1997, the Commission submitted to the European Parliament and the Council its
"Final consolidated report to the temporary committee of the European Parliament on the follow-
up of recommendations on BSE (COM (97)509 final)". The report describes the main progress

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made since February 1997 in the field of food safety and consumer protection and gives details
of the principal developments in combating BSE.

In addition, the report sets out an ambitious work programmed and states the Commissions
intention to report every six months to the European Parliament and the Council on progress
made in programmed implementation. The Commission presented its first report in May 1998,
which gave a broad overview of practical measures taken to combat BSE and to implement the
new approach in the fields of scientific advice, risk analysis, risk management, control and
inspection. The first report already gave details of completion of certain points in the
Commissions work programmed, e.g. checks under Community law on the reporting of cases of
BSE. In other areas, the first sixmonthly report described progress made to date.

As the present report, the second in the six-monthly series, explains, a large part of the work
programmed has now been completed, and a synopsis of this is set out in Annex 1 (Table A).
There are just a few points where the desired progress has not been achieved, e.g. with the
European Union becoming a full member of the WHO and the International Office of Epizootics.
In general, the report reflects the priority that continues to be given to the BSE issue within the
Commission.

However, despite the progress, which has been made, it is clear that further effort is needed and
future work must be guided by the following considerations.

1. With regard to BSE:

Despite all the Commission’s efforts, the Council has not agreed to a common approach to
removing "specific risk material" from the food and feed chain. As a consequence,
recommendations issued by the scientific committees have not been properly taken into
consideration. In this area, risk prevention on a Community base remains inadequate.

Progress has been made in implementing Community legislation, which was adopted to prevent
the spreading of BSE, in particular the feed ban and the standards for treatment of meat-and bone
meal. Concerns do, however, remain where Member States have been slow in implementing
Community law concerning the control of BSE.

The Commission has been vigorously pushing ahead work on validating a post-mortem BSE test.
In the first half of 1999 the validation results will show whether the European Union currently
has a test that can reduce the consumer risk.

2. In relation to the Commissions new approach to consumer health protection:-

The implementation of new structures for the scientific committees and the checks carried out by
the Food and Veterinary Office of the Commission have yielded important information on
current working methods. This information will be properly evaluated to develop and optimise
the existing structures.

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Scientific recommendations and inspection visits require effective follow-up. The last year has
shown how important it is to have good follow-up: deficiencies identified during inspection visits
to third countries for fishery products and for milk products resulted in consequent Community
actions been taken, including import restrictions. Furthermore, recommendations of FVO
inspectors have contributed to improvements of the hygiene situations in third countries, which
enabled the Commission to allow imports of products from third countries under defined
conditions.

The WTO-agreement on Sanitary and Phytosanitary Measures (SPS) lays down the guiding
principles, which the European Union follows in an international context. These principles
require further development. One particularly important issue is how to implement the
precautionary principle within the context of a scientifically based consumer protection policy.
Furthermore, the judgement of equivalence is subject of an in-depth discussion on an
international level in particular in the Codex alimentarius.

These issues of importance in the international context will be taken into consideration by the
Commission in the draft negotiation mandate to be given by the Council for the forthcoming
WTO-discussions on the SPS Agreement.

The Treaty infringement procedure is relatively time consuming and therefore of limited use in
achieving immediate improvements in health standards in the Member States. The Commission
has speeded up the procedures in order to improve its effectiveness. Experience shows clearly
that in a reasonable number of cases the opening of infringement procedures has led the Member
States to take action with a view to fully implement Community legislation.

The European Parliaments and the Commissions joint conference on food safety - Lessons to be
learned from the BSE crisis - will provide an opportunity to take stock of past progress and
future challenges from a variety of angles. As such, it will make an important contribution to
future discussion.

Furthermore, the Commission will push ahead the work on its response to the debate on the
Green Paper on the General Principles of Food Law in the European Union.

In addition, the Commission intends to take up a number of points set out in its 19992001-
consumer protection action programmed. Article 152 of the future Amsterdam Treaty gives more
impact to the Community action in the field of health protection.

In this respect, lessons learnt from the BSE crisis will influence the Commissions consumer
protection policy into the next century.

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Equity Market Declines Increase Risk to Insurers' Capital Reserves

Declines in equity markets have increased the risk to the capital reserves of Canadian insurers,
which have historically been well capitalized, according to André-Philippe Hardy, at RBC
Capital Markets.

Fresh research by the analyst suggests Sun Life Financial Inc. (SLF) is likely to have “the most
capital” at this juncture, ahead of rival Manulife Financial Corp. (MFC), after both took steps
recently to top up their reserves. The research suggests Bay Street will continue to monitor
capital levels of leading insurers closely, and that future moves to strengthen reserves are
possible.

Great-West Lifeco Inc. (GWLOF.PK), Canada’s third largest insurer, is in the process of rising
about C$1-billion, amid signs that appetite may be limited after Manulife joined Toronto-
Dominion Bank (TD) and Royal Bank (RY) in tapping the market.

Bank of Montreal (BMO), which is handling the sale of about C$600-million in new shares for
Great West, said last week that it was also issuing C$450-million in debt for its own reserves by
selling bonds that will pay an unusually high interest rate of 10.2% and count towards its
regulatory capital.

Mr. Hardy noted that:

Valuations for life insurers] are as low as they have been since the companies have been public.
The combination of weak credit and equity markets, combined with low interest rates is likely to
lead to continued pressure on profitability.

He added in a research note that Canadian insurance companies continue to have “less credit risk
than their U.S. peers, and that their exposures to fixed income securities are generally
conservative.”

National Stock Exchange of India

The National Stock Exchange of India Limited or S&P CNX NIFTY (NSE), is a Mumbaibased
stock exchange. It is the largest stock exchange in India in terms of daily turnover and number of
trades, for both equities and derivative trading. Though a number of other exchanges exist, NSE
and the Bombay Stock Exchange are the two most significant stock exchanges in India and
between them are responsible for the vast majority of share transactions. The NSE's key index is
the S&P CNX Nifty, known as the Nifty, an index of fifty major stocks weighted by market
capitalization.

NSE is mutually owned by a set of leading financial institutions, banks, insurance companies and
other financial intermediaries in India but its ownership and management operate as separate

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entities. There are at least 2 foreign investors NYSE Euro next and Goldman Sachs who have
taken a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than
1500 cities across India. In October 2007, the equity market capitalization of the companies
listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South
Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in
equities. It is the second fastest growing stock exchange in the world with a recorded growth of
16.6%.

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SECURITIES AND EXCHANGE BOARD OF INDIA

Under regulation 13 (4) of Securities and Exchange Board of India (Procedure for Holding
Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 against M/s. Varun Stock
Broking, Sub-broker INS231049912, to M/s. Suresh
RathiPvt. Ltd, (Member, The National Stock Exchange, Mumbai), in the matter of M/s. Morepen
Hotels Ltd

1. In December 1995, Morepen Hotels Limited (hereinafter referred to as MHL”) came out
with a public issue at a premium of Rs.20/- per share. The scrip was listed at Jaipur Stock
Exchange, Ludhiana Stock Exchange, Delhi Stock Exchange, National Stock Exchange
(hereinafter referred to as “NSE”) and The Stock Exchange, Mumbai (hereinafter referred
to as “BSE”). There was a major spurt in the total volume in the scrip of MHL. From 29,
400 shares during January 2000 including nil volume for the entire month of July 2000,
the volume of scrip of MHL shot up to 11,34,200 shares during the period August to
November 2000. Further, the percentage of net quantity delivered to gross quantity traded
during the period 11th September 2000 to 17th November 2000 was less than 1% of the
total traded volume on the exchange. The same trend was accompanied by the price, the
price of shares of MHL touched a 52-week high at Rs.285/- on 11th September 2000 and
was followed by a fall in price of Rs.154.65 on 15 th November 2000 touching a 52-week
low.
2. Ultimate clients had acted in concert through selected members and thus were involved in
creating artificial trade in the scrip of MHL.
3. The gross quantity traded i.e. buy and sell in the scrip at BSE and NSE during the period
June 2000 to December 2000 was 77,01,773 shares. During the course of investigation, it
was observed that most of the clients trading in the scrip were In view of the above,
Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted an
investigation into the trading of the scrip of MHL for the period June 2000 to December
2000 (hereinafter referred to as “investigation period”). During the investigation it was
observed that the scrip of MHL was traded only at NSE and BSE.
4. It was observed that the P/E ratio of MHL was not in synchronization with the rest of the
hotel industry. The rise in volumes observed during the period June 2000 to December
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 2000 did not appear to be justified based on its fundamentals. SEBI’s investigation into
the matter found that 80% of the total quantity traded during the period June 2000 –
December 2000 was contributed by few brokers of BSE and NSE. It was found that the
linked to each other.
5. The gross quantity traded i.e. buy and sell in the scrip at BSE and NSE during the period
June 2000 to December 2000 was 77, 01,773 shares. During the course of investigation, it
was observed that most of the clients trading in the scrip were linked to each other.
6. It has been alleged that Sub-broker by not showing due skill, care and diligence in its
dealings with the client was alleged to be in violation of Code of Conduct as given under
Schedule II read with regulation 15 of Securities and Exchange Board
of India (Stockbrokers and sub-brokers) Regulations, 1992 (hereinafter referred to as
“Brokers Regulations”). Further, trading done by Sub-broker on behalf of the client was
alleged to be in violation of Securities and Exchange Board of India (Prohibition of
Fraudulent and Unfair trade practices relating to securities market)
Regulations, 1995 (hereinafter referred to as “PFUTP Regulations”).
7. In view of the alleged irregularities committed by Sub-broker, Chairman, SEBI, vide order
dated 18th February 2002 appointed an Enquiry Officer (hereinafter referred to as “Enquiry
Officer”) to enquire into the affairs of Sub-broker. The Enquiry Officer after conducting
the enquiry submitted a report dated 30th April 2004 finding the Sub-broker guilty of
violating Clause A (2) of Code of Conduct laid down under Schedule II of Broker
Regulations and recommended that a minor penalty of suspension of certificate of
registration of Sub-broker for a period of two months be imposed on the Sub-broker.
8. Subsequent to the submission of the said Enquiry Report, a show cause notice dated 6 th
May 2004 was issued to Sub-broker under regulation 13 (1) of Securities and Exchange
Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing penalty)
Regulations, 2002.
9. Sub-broker vide letter dated 12th July 2004 responded to the said show cause notice, which
is extracted as follows;

• At the outset we had stressed that we had closed down business with M/s. Jem Fiscal
Ltd., on our own, prior to any SEBI investigation in January 2001. (Para 5.3.6) i.e.,

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 within 3 months of Jem Fiscal becoming our client. Hence, if we had not been diligent
enough M/s. Jem Fiscal Ltd would have continued to build up artificial volumes in
Morepen Hotels Ltd., thereby trapping innocent investors also.
• Hence the contention that we had not been prudent enough to doubt the intentions of our
client M/s. Jem Fiscal Ltd is not true. We would again like to stress that we had stopped
executing orders on behalf of M/s. Jem Fiscal Ltd., on our own.

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 Conclusion

The Construction of the mutual fund scheme’s portfoli is done by taking various factors
so even after evaluating the mutual funds and ranking them we cannnot say which is the
best fund house or scheme in all.

Nothing is certain incase of Mutual Funds as they are subject to Market Risks.

Anestimatecan be madeconsidering various past performances and future outlooks

andbest money out of these schemes can be generated.

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 Bibliography

 B.K. Jethani and Associates.

 en.wikipedia.org/wiki/Wikipedia

 www.mutualfunds.india.com

 www.moneycontrol.com

 www.valueresearchonline.com

 www.stockindia.com

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