A

Summer internship Project report

ON
“COMPARATIVE STUDY OF BSE AND NSE WITH SPECIAL REFERENCE OF RISK
AND RETURN”

SUBMITTED TO :-

NORTH ODISHA UNIVERSITY ODISHA IN PARTIAL FULFILLMENTOF THE

REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF
BUSINESS ADMINISTRATION- FINANCIAL MANAGEMENT (MBA-FM)
SESSION 2020-22

SUBMITTED BY:-

NITESH KUMAR TRIPATHY

MBA-FM 2ND YEAR
ROLL NO – 39420D016
REGISTRATION NO-

UNDER THE GUIDANCE OF:-

MR SUITT KUMAR SAHOO

ASSISTANT PROESSOR IN FINANCE
DEPT. OF PROFESSIONAL STUDIES
D.D (AUTO) COLLEGE, KEONJHAR

DEPARTMENT OF PROFESSIONAL STUDIES

D.D (AUTO) COLLEGE, KEONJHAR

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 DECLARATION
I NITESH KUMAR TRIPATHY pursuing MBA-FM 2ND YEAR from D.D. (Auto.)

College, Keonjhar do hereby declare that the SIP report entitled

“COMPARATIVE STUDY OF BSE AND NSE WITH SPECIAL REFERENCE OF RISK AND

RETURN, KEONJHAR” being submitted by me in the partial fulfilment of the

requirements for the award of degree of MBA-FM is a record of my original

own work.

It has not been presented earlier in this manner to any other

University or Institution. This information is purely of academic interest.

This information submitted is true & original to the best

of my knowledge.

DATE : NITESH KUMAR TRIPATHY

PLACE : KEONJHAR ROLL NO.39420D016

MBA-FM 2ND YEAR

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 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my

dissertation guide Sujit kumar Sahoo .Prof. in Finance for his exemplary
guidance, monitoring and constant encouragement throughout the course
of the Dissertation. The blessing, help and guidance given by him time to
time shall carry me a long way in the journey of life on which I am about to
embark.

I express my sincere obligation and thanks to all the faculties of the Dept.

of Professional studies, D.D (Auto) College, Keonjhar , for their valuable

advice in guiding me at every stage in bringing out this report into reality.

In the end, let me thank my parent, family members, my friends & all my
well-wisher who always stand by me & extend moral support in accomplishing my
work.

DATE : NITESH KUMAR TRIPATHY

PLACE : ROLL NO.39420D016

MBA-FM 2ND YEAR

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 TABLE OF CONTENT

Chapter No. Contents Page No.

1 Introduction 1

2 Conceptual background 4

3 Review of literature 10

4 Research Methodology 19

5 Data Analysis & Interpretation 22

6 Findings 45

7 Suggestion 46

8 Conclusion 47

9 Bibliography 48

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 LIST OF TABLES

Sr. No Contents Page No.

1. Countries and Indices: 03

2 Exchange and Indices 09

3 Market Cap 22

4 Indices 27

5 Eligible Criteria for IPO 25

6 Distribution and size Criteria 27

7 Financial Criteria 27

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 CHAPTER-I

INTRODUCTION

Financial markets played a vital role in raising funds from public for the
companies and it helped the investors to get profits from the trading on the shares
and other financial assets of these companies. For this purpose there, a special
part of the financial market called ‘Stock Exchange’ was evolved. The comparison
between two most prominent Stock Exchanges of India on the basis of financial
performances is presented in the present paper. Financial statement analysis is a
subjective measure of how well a firm can use assets from its primary mode of business
and generate revenues. This can be used to compare similar firms across the same
industry or to compare industries or Sectors in aggregation. The origin of the New
York Stock Exchange (NYSE) is dated back to May 17, 1792.When the Buttonwood
Agreement was signed by twenty-four stock brokers outside of 68 Wall Street in New
York under a buttonwood tree. Also called the "Big Board", it is the largest stock
exchange in the world in terms of dollar volume and second largest in terms of number
of companies listed. The Tokyo stock exchange was established on May 15, 1878 and
trading began on June 1, 1878. In 1943, the exchange was combined with ten other stock
exchanges in major Japanese cities to form a single Japanese Stock Exchange. It is the
second largest stock exchange market in terms of monetary volume and currently has
2302 listed companies. The Hong Kong stock exchange is the 8th largest stock exchange
in the world in terms of Market capitalization. The Hang Sang Index (HIS), was started
on November 24, 1969. The Russian stock exchange was established in 1995 by
consolidating the separate regional stock exchanges into one uniformly regulated trading
floor. The Korea stock exchange was created by the integration of the three existing of
the Korean Spots and Futures exchanges (Korean stock exchange, Korean futures
exchange & KOSDAQ) under the Korea Stock and Futures Exchange Act.3.5. In this
paper, the names of the countries and the names of the indices of those countries have
been used interchangeably. Thus, the names of the countries represent the indices for the
purpose of analysis and they need to be interpreted that way. Again, all the analyses
have been done with the closing prices. The following table gives the country and the
exchange with the name of its indices.

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 The stock market is witnessing heightened activities and is increasingly gaining
importance. In the current context of globalization and the subsequent integration of the
global markets this dissertation captures the trends, similarities and patterns in the
activities and movements of the Indian Stock Market in comparison to US Stock Market.
NSE (India), NYSE (USA), Hang Seng (South East Asia), Russian Stock Exchange
(Russia), Korea (Asia).

The Indian stock exchanges hold a place a place of prominence not only in Asia but also
at the global stage. The Bombay stock exchange (BSE) is one of the oldest stock
exchanges the world, while the National Stock Exchange (NSE) is among the best term of
sophistication and advancement of technology.

Investors always consider risk and return while making any investment decisions. The
amount of risk assumed and the amount of expected return have positive relationship.
Greater the risk, Greater the return, lower the risk, lower the return. Rational investors
would have some degree the risk only if he is adequately compensated for it. The risk can
be broadly classified into systematic and unsystematic risk. The systematic risk is related
to economic trend which affect the whole market and cannot be eliminated by
diversification of portfolio, while the
unsystematic risk can be controlled of proper measures

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 Country Stock exchange name Indices name

India National Stock Exchange S & P Nifty

India Bombay Stock Exchange Sensex

Hong Kong Hong Kong Stock Exchange Hang Seng

USA New York Stock Exchange NYSE

Korea Korean Stock Exchange KRX 100

Russian Russian Stock Exchange RTS Index

Countries and Indices:

Table No.1
The Indian stock market scene really picked up after the opening up of the economy in
the early nineties. The whole of nineties were used to experiment and fine tune an
efficient and effective system. The 'badla' system was stopped to control unnecessary
volatility while the derivatives segment started as late as 2000. The corporate governance
rules were gradually put in place which initiated the process of bringing the listed
companies at a uniform level. On the global scale, the economic environment started
taking paradigm shift with the 'dot com bubble burst', 9/11, and soaring oil prices. The
slowdown in the US economy and interest rate tightening made the equation more
complex. However after 2000 riding on a robust growth and a maturing economy and
relaxed regulations, outside investors-institutional and others got more scope to operate.
This opening up of the system led to increased integration with heightened cross-border
flow of capital, with India emerging as an investment 'hot spot' resulting in our stock
exchanges being impacted by global cues like never before.

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The study pertains to comparative analysis of the Indian Stock Market with respect to
various international counterparts. Exchanges are now crossing national boundaries to
extend their service areas and this has led to cross-border integration. Also, exchanges
have begun to offer cross-border trading to facilitate overseas investment options for
investors. This not only increased the appeal of the exchange for investors but also
attracts more volume. Exchanges regularly solicit companies outside their home territory
and encourage them to list on their exchange and global competition has put pressure on
corporations to seek capital outside their home country. The Indian stock market is the
world third largest stock market on the basis of investor base and has a collective pool of
about 20 million investors. There are over 12,800 companies listed on the stock
exchanges of the country. The Bombay Stock Exchange, established in 1875, is the oldest
in Asia. National Stock Exchange, a more recent establishment which came into
existence in 1992, is the largest and most advanced stock market in India is also the third
biggest stock exchange in Asia in terms of transactions. It is among the 5 biggest stock
exchanges in the world in terms of transactions volume.

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 CHAPTER-II

CONCEPTUAL BACKGROUND

2.1 BSE- Bombay Stock Exchange

Established in 1875, BSE Ltd. (formerly known as Bombay Stock Exchange Ltd.), is
Asia's first Stock Exchange and one of India's leading exchange groups. Over the past
143 years, BSE has facilitated the growth of the Indian corporate sector by providing it
an efficient capital-raising platform. BSE's popular equity index-the S&P BSE SENSEX
is India's most widely tracked stock market benchmark index. More than 5400 companies
are listed on BSE making it world's No. 1 exchange in terms of listed members. The
companies listed on BSE Lid command a total market capitalization of USD 3.7 Trillion
as of January 2022. It is also one of the world's leading exchanges (9 th largest in January
2022) for Index options trading (source: world federation of exchange). BSE also
provides a host of other services to capital market participants including risk
management, clearing, settlement, market data services and education. It has a global
reach with customers around the world and a nation-wide presence. BSE systems and
processes are designed to safeguard market integrity, drive the growth of the Indian
capital market and stimulate innovation and competition across all market segments. BSE
is the first exchange in India and second in the world to obtain an ISO 9001:2000
certifications.  It is also the first Exchange in the country and second in the world to
receive Information Security Management System Standard BS 7799-2-2002 certification
for its On-Line trading System (BOLT).

The Bombay Stock Exchange is the oldest exchange in India. It traces its history to 1855,
when four Gujarati and one Parsi stockbroker would gather under banyan trees in front of
Mumbai's Town Hall. The location of these meetings changed many times, as the number
of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and
in 1875 became an official organization known as "The Native Share & Stock Brokers
Association. In 1958, the BSB became the first stock exchange to be recognized by the
Indian Government under the Securities Contracts Regulation Act. In 1980 the exchange
moved to the Phiroze Jeejeebhoy Towers at Dalal Street, Fort area. In 1986 it developed
the BSE SENSEX index, giving the BSE a means to measure overall Performance of the
exchange. In 2000 the BSE used this index to open its derivatives market, trading
SENSEX futures contracts. The development of SENSEX options along with equity

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derivatives followed in 2001 and 2002, expanding the BSE's trading platform.
Historically an open outery floor trading exchange, the Bombay Stock Exchange
switched to an electronic trading system in 1995. It took the exchange only fifty days to
make this transition. This automated, screen-based trading platform called BSB On-line
trading (BOLT) had a capacity of 8 million orders per day. Now BSE has raised capital
by issuing shares and as on 3 May 2017 the BSE share which is traded in NSE only
closed with Rs.999.

2.2 NSE-National Stock Exchange

The National Stock Exchange (NSE) is the leading stock exchange in India and the fourth
largest in the world in cash equity trading volume in 2021, according to World
Federation of Exchanges (WFE). It began operations in 1994 and is ranked as the largest
stock exchange in India in terms of total and average daily turnover for equity shares
every year since 1995, based on annual reports of SEBI.

NSE launched electronic screen-based trading in 1994, derivatives trading (in the form of
index futures) and internet trading in 2000, which were each the first of its kind in India.

NSE has a fully-integrated business model comprising our exchange listings, trading
services, clearing and settlement services, indices, market data feeds, technology
solutions and financial education offerings, NSB also oversees compliance by trading and
Clearing members and listed companies with the rules and regulations of the exchange.

NSE is a pioneer in technology and ensures the reliability and performance of its systems
through a culture of innovation and investment in technology NSE believes that the scale
and breadth of its products and services, sustained leadership positions across multiple
asset classes in India and globally enable it to be highly reactive to market demands and
changes and deliver innovation in both trading and non-trading businesses to provide
high-quality data and services to market participants and clients.

Mr. Girish Chandra Chaturvedi is the Chairman of the Board of Directors of NSE and
Mr. Vikram Limaye is the Managing Director and CEO of NSE.

2.3 Hong Kong Stock Exchange

Hang Seng Indices Company Limited (Hang Seng Index), a wholly-owned subsidiary of
Hang Seng Bank, was established in 1984 and is Hong Kong's leading index compiler
covering Hong Kong and mainlad China markets. Hang Seng Indexes calculates and
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manages the Hang Seng Family of Indexes. Starting in 1969 with the creation of the
Hang Seng Index, now widely recognized as the barometer of the Hong Kong stock
market, Hang Seng Index has been at the forefront of the market developing numerous
market measures to help investors make their investment decisions. Indexes in the Hang
Seng Family of Indexes are grouped into five categories Flagship Indexes, Benchmark
Indexes, thematic Indexes, Strategy Indexes and Bond Indexes then classified as Hong
Kong-listed. Cross-market or Mainland-listed according to where their constituents are
listed. Currently, the Hang Seng Family of Indexes comprises over 300 real-time and
daily indexes. Going forward, Hang Seng Indexes will continue to broaden its index
series to meet the widening spectrum of investor demand for index investment solutions.

The Hong Kong stock exchange is the 7th largest stock exchange in the world in terms of
Market capitalization. The Hang Sang Index (HIS), was started on November 24, 1969
The Russian stock exchange was established in 1995 by consolidating the separate
regional stock exchanges into one uniformly regulated trading floor.

The trading day consists of:

 Pre-opening auction session from 9:00 am to 9:30 am. The openingSecurity is

reported shortly after 9:20 am.
 A morning continuous trading session from 09:30 am to 12:00 pm.
 An extended morning session from 12:00 noon to 1:00 pm, also referred to as the
lunch break. Continuous trading proceeds in specifically-designated securities
(currently two ETFs, 4362 and 4363). Trading in other securities is not possible.
However, previously-placed orders in any securities can be cancelled from 1:00
pm onwards.
 An afternoon continuous trading session from 1:00 pm to 4:00 pm.

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The history of the securities exchange began formally in the late 19th century with the
first establishment in 1891, though informal securities exchanges are known to have been
in existence since 1861. The exchange has predominantly been the main exchange for
Hong Kong despite co-existing with other exchanges at different points in time. After a
series of complex mergers and acquisitions, in the twenty first century, HKSE remains
the core. From 1947 to 1969 the exchange 7monopolized the Hong Kong market.

2.4 New York Stock Exchange- NYSE

The origin of the New York Stock Exchange (NYSE) is dated back to May 17, 1792,
when the Buttonwood Agreement was signed by twenty-four stock brokers outside of 68
Wall Street in New York under a buttonwood tree. Also called the "Big Board", it is the
largest stock exchange in the world in terms of dollar volume and second largest in terms
of number of companies listed.

The New York Stock Exchange (NYSE), sometimes known as the "Big Board" is a stock
exchange located at 11 Wall Street, Lower Manhattan, New York City, New York,
United States. It is by far the world's largest stock exchange by market capitalization of
its listed companies at US$26.2 trillion as of Dec 2021. Average daily trading value was
approximately US$169 billion in 2018. The NYSE trading floor is located at 11 Wall
Street and is composed of four rooms used for the facilitation of trading. A fifth trading
mom, located at 30 Broad Street, was closed in February 2007. The main building,
located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was
designated a National Historic Landmark in 1978, as was the 11 Wall Street building.
The NYSE is operated by NYSE Euro next (NYSE: NYX), which was formed by the
NYSE's 2007 merger with the fully electronic stock exchange Euro next. In December
2012, it was announced that the company would be sold to Intercontinental Exchange
(ICE), a futures exchange headquartered in Atlanta, Georgia, The United States, for $8
billion, a figure that is significantly less than the $11 billion bid for the company tendered
in 2011.

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2.5 Tokyo Stock Exchange

The TSE is incorporated as a kabushiki gaisha with nine directors, four auditors and eight
executive officers. Its headquarters are located at 2-1 Nihonbashi-Kabutocho Chuo,
Tokyo, or "Kabuto-cho, which is the largest financial district in Japan. Its operating hours
are from 8:00 to 11:30 a.m. and from 12:30 to 5:00 p.m. From April 24, 2006, the
aftemoon trading session started at its usual time of 12:30 p.m....

Stocks listed on the TSE are separated into the First Section for large companies, the
Second Section for mid-sized companies, and the Mothers (Market of the high growth
and emerging stocks) section for high-growth start-up companies. As of October 31,
2010, there are 1,675 First Section companies, 437 Second Section companies and 182
Mothers companies.

The main indices tracking the TSE are the Nikkei 225 index of companies selected by the
Nihon Keizai Shimbun (Japan's largest business newspaper), the TOPIX index based on
the share prices of First Section companies, and the J30 index of large industrial
companies maintained by Japan's major broadsheet newspapers.

Ninety-four domestic and 10 foreign securities companies participate in TSE trading.

Other TSE-related institutions include:

The exchange's press club, called the Kabuto Club which meets on the third floor of the
TSE building. Most Kabuto Club members are affiliated with the Nihon Keizai Shimbun,
Kyodo News, Jiji Press, or business television broadcasters such as Bloomberg LP and
CNBC. The Kabuto Club is generally busiest during April and May, when public
companies release their annual accounts.

On 15 June 2007, the TSE paid $303 million to acquire a 4.99% stake in Singapore

Exchange Ltd.

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2.6 Korea stock exchange

It was created by the integration of the three existing of the Korean Spots and Futures
exchanges (Korean stock exchange, Korean futures exchange & KOSDAQ) under the
Korea Stock and Futures Exchange Act.3.5.

The Korea Exchange was created through the integration of Korea Stock Exchange,
Korea Futures Exchange and KOSDAQ Stock Market under the Korea Stock & Futures
Exchange Act. The securities and derivatives markets of former exchanges are now
business divisions of Korea Exchange: the Stock Market Division, KOSDAQ Market
Division and Derivatives Market Division. As of January 2015, Korea Exchange had
2,030 listed companies with a combined market capitalization of $1.2 trillion Sustainable
Stock Exchanges The exchange has normal trading sessions from 09:00 am to 03:30 pm
on all days of the week except Saturdays, Sundays and holidays declared by the
Exchange in advance.

On 22 May 2015. The Korea Exchange joined the United Nations Sustainable Stock
Exchanges initiative in an event with the UN-SG Ban Ki-moon in attendance, as well as
senior officials from UN Global Compact and UNCTAD,

The names of the countries and the names of the indices of those countries have been
used interchangeably. Thus, the names of the countries represent the indices for the
purpose of analysis and they need to be interpreted that way. Again, all the analyses have
been done with the closing prices. The following table gives the country and the
exchange with the name of its indices. Table No.2

Stock Exchange Name Indices name

National Stock Exchange Nifty50
Bombay Stock Exchange Sensex
Hong Kong Stock Exchange Hang Sang
New York Stock Exchange NYSE
Korean Stock Exchange KRX 100
Russian Stock Exchange RTS INDEX

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 CHAPTER-III

REVIEW OF LITERATURE

This chapter deals about review of various studies related to comparison of different
stock market studies. The research gap of this study was found out by conducting a
detailed literature review of studies in different countries during the recent years.

Debjban mukharjee, T.A. Pai Management Institute Manipal India.

He found that the popular belief that the markets in general and Indian market in
particular is more integrated with other global exchanges from 2002-03 onwards. This
can very well be seen since the South Asian crisis of the mid-late nineties barely affected
us particularly because we were insulated due to government policies and was just
making the transition. However, in the later time periods, the influence of other stock
markets increased on our BSE or NSE, but at a very low almost insignificant level.

Dr. Vijay Agarwal, Associate Professor, BIT Mesra

They found that the correlation of stock returns of India with five other Asian countries.
There exists a very weak correlation between the Indian markets and Hong Kong.
Indonesia, Malaysia and Japan. Comparatively higher correlation was found between the
Indian and the Korean markets, which seemed to have weakened in the short run. Hence
it can be said that the Indian markets offer diversification benefits to international
investors looking for investment in the Asia Pacific region. Indian markets also delivered
the highest compounded annual growth rate in stock market returns, both in the short as
well as long run.

Poshakwale, Sunil examined the random walk hypothesis in the emerging Indian stock
market by testing for the nonlinear dependence using a large disaggregated daily data
from the Indian stock market. The sample used was 38 actively traded stocks in the BSE
National Index. He found that the daily returns from the Indian market do not conform to
a random walk. Daily returns from most individual stocks and the equally weighted
portfolio exhibit significant non-lincar dependence. This is largely consistent with from
the stock market indexes and individual stocks in the US and the UK. Noor, Azuddin
Yakob, Diana Beal and Delpachitra,

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Sarath studied the stock market seasonality in terms of day-of-the-week, month-of-the
year, monthly and holiday effects in ten Asian stock markets, namely, Australia, China,
Hong Kong, Japan, India, Indonesia, Malaysia, Singapore, South Korea and Taiwan. He
concluded that the existence of seasonality in stock markets and also suggested that this
is a global phenomenon.

Pandey and Kumar found co movement of Indian markets with eight other key stock
exchanges in Asia for the period from 2000 to 2008. They found that the period was
marked with high volatility among all markets under study.

Raju and Ghosh found that skewness and kurtosis is less in Indian market stock returns as
compared to other countries. They also said that there was a need for a study on volatility
in Indian stock markets after 2000 to see whether changes in market microstructure have
resulted in changes in volatility pattern and facilitating international comparison of
volatility.

Hiard (1997) and Asimakopoulos investigated the interrelationship between daily returns
generated by major stock exchanges. Evidence found that strong interdependence exists
between the daily returns generated by United States and other selected major world
indices.

Cohen, Ness, Okuda, Schwartz and Whitcomb worked on The Determinants of Common
Stock Returns Volatility: An International Comparison" They studied the issue of
thinness is of interest for a number of reasons. They found that the most obvious re
changes in the fundamental determinants of share price and of a firms business and
financial risk. They attempted to account for this by distinguishing between random
traders included demand shifts and demand shifts induced by the receipt of new and
generally available information concerning a stock's value. They also studied the
differences in trading arrangements might explain some of the volatility differences
especially internationally.

Varma Venkiteswaran explored the relationship of the Indian stock markets as reflected
by the Bombay Stock Exchange Index, vis-a-vis other prominent international stock
markets. Twenty three international stock indices are used over the period 1983-87. He
concluded that there was practically no meaningful relationship between the BSE index
and other international stock market indices, though the British and South Korean indices
are invenely related to BSE

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Mayya made an overview of the Indian capital market. He examined various aspects of
Indian Capital Market. The study emphasized the need for modernization and
computerization for providing liquid and efficient market. His study reveals that though
Indian stock market has attained a remarkable degree of growth in last one decade, but
has still to go a long way.

Venkateshwar explored the relationships of the Indian stock markets as reflected by the
Bombay Stock Exchange Index, vis-a-vis other prominent international stock markets. 23
international Stock indices are used over the period.

Raghunathan and Varma point out that any comparison of the Indian stock market with
that elsewhere must be carried out on a common comency base. They find that in dollar
terms, the SENSEX return over the 1960-92 period is only about 0.5%, while during the
same period the returns in the U.S. (based on the S&P Index) and the Japanese (based on
the NIKEI index) are 6.1% and 11.4% per year respectively. Over the twelve year period
1980-92, the dollar returns for SENSEX S&P and NIKEI indices turn out to be 6.5%,
10.65% and 13.5% respectively. For a shorter span of seven years, namely 1985 92, the
returns for the three indices turn out to be quite comparable at 15%, 13% and 14%
respectively.

Gupta in his book concluded that an Indian stock market is highly speculative. Indian
investors are dissatisfied with the service provided to them by the brokers Margins levied
by the stock exchanges are inadequate and liquidity in a large number of stocks in Indian
markets is very low. While evidently a careful work, the conclusion except about margin
system by the stock exchanges are adequate and other two options built on wrong or
questionable arguments, concluded that, a) Indian stock market is highly speculative; b)
Indian investors are dissatisfied with the service provided to them by the brokers; c)
margins levied by the stock exchanges are inadequate and d) liquidity in a large number
of stocks in the Indian markets is very low. While evidently a painstaking work, the
conclusions except 'e' above seem to be built on wrong or questionable arguments.

Chaplinsky and Hansen suggest that the indifferent stock market reaction is partly on
account of market expectation of debt issues. They find significant negative stock price
reaction to debt issue announcement after controlling for market expectations. However,
the full in price in case of debt issue announcements has been found to be lower than that
of fall in the case of stock issue offerings:

McLaughlin, Safieddine and Vasudevan analyze the operating performance of seasoned

equity offerings of a large sample of 1,296 firms listed on the New York Stock Exchange
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(NYSE), American Stock Exchange (AMEX), and NASDAQ that raised capital through
subsequent offerings during the period 1980-1991. They also analyzed the determinants
of subsequent performance and the factors influencing the decision to issue equity. The
study revealed that the SEO firms had a significant increase in operating performance
prior to the issue and that they register a considerable decline in profitability in post-
offering period. This research is the examination of the long-run operating performance
of a large sample of straight-debtissuing firms, which complements previous large-
sample studies of fimms making seasoned equity offerings (SEOS). Moreover they
compared the information effects for debt and equity issuers after controlling for other
factors associated with changes in issuer operating performance.

Masih and Masih examined the dynamic linkage patterns among national stock exchange
prices of four Asian newly industrializing countries - Taiwan, South Korea, Singapore
and Hong Kong. The sample used comprised end-of-themonth closing share price indices
of the four NIC stock markets from January 1982 to June 1994. They concluded that the
study of these markets is not mutually exclusive of each other and significant shost run
linkages appear to run among them. The patterns of dynamic linkages are examined
among national stock prices of four Asian newly Industrialising

Countries stock markets - Taiwan, South Korea, Singapore and Hong Kong - in models
incorporating the established markets of Japan, USA, UK and Germany had been studied.

Shamsuddin and Kim researched on Integration and interdependence of stock and foreign
exchange markets an Australian perspective. They studied the integration of the
Australian stock market with its two leading trading partners, the US and Japan. In
investigating the extent of integration, the study considered the interdependence between
foreign exchange rates and stock prices, since exchange rates influence international
competitiveness of firms, and, via interest rates, the cost of capital. The results indicated
that there was a stable long-run relationship among the Australian. US and Japanese
markets prior to the Asian crisis but that this relationship disappeared in the post-Asian
crisis period.

Yakob, Beal and Delpachitra examined seasonal effects in ten Asian Pacific stock
markets, including the Indian stock market, for the period January 2000 to March 2005.
They state that this is a period of stability and is therefore ideal for examining seasonality
as it was not influenced by the Asian financial crisis of the late nineties. Yakob, et al.,
concluded that the Indian stock market exhibited a month-of-the-year effect in that
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statistically significant negative returns were found in March and April whereas
statistically significant positive returns were found in May, November and December.

Somaiya researched on Scientific Management of Small Investors Protection in the New

Millennium with Reference to India; Challenges and Opportunities (1991-2011). He has
done a tremendous work in the field of Indian stock exchanges. This doctoral thesis is
divided into two volumes. He included the study of history of stock exchanges,
fluctuations in stock market, investors risk and protection means, investors complaints
and their solutions, stock market scams, role of banks, regulatory frame work and much
more. Ex-prime minister of India Atal Bihari Bajpai and Prime Minister Manmohan
Singh have appreciated this work.

Noor, Yakob, Beal and Sarath studied the stock market seasonality in terms of day-of
the-week, month-of-the-year, and month and holiday effects in ten Asian stock markets,
namely, Australia, Hong Kong, Japan, India, Indonesia, Malaysia, Singapore South
Korea and Taiwan. He concluded that the existence of seasonality in stock markets and
also suggested that this is a global phenomenon.

Sinha and Pan have studied on The Power (Law) of Indian Markets Analyzing NSE and
BSE trading statistics. They analyzed the nature of fluctuations in the Indian financial
market. They have looked at the price retums of individual stocks, with tick-bytick data
from the National Stock Exchange (NSE) and daily closing price data from both NSE and
the Bombay Stock Exchange (BSE), the two largest exchanges in India. They found that
the distributions of trading volume and the number of trades had a different nature than
that seen in the New York Stock Exchange (NYSE). Further, the price movement of
different stocks are highly correlated in Indian markets.

Mukherjee researched on Comparative Analysis of Indian Stock Market with

International Markets. According to his findings the stock market is witnessing
heightened activities and is increasingly gaining importance. In the current context of
globalization and the subsequent integration of the global markets this paper captures the
trends, similarities and patterns in the activities and movements of the Indian Stock
Market in comparison to its international counterparts. This study covers New York
Stock Exchange (NYSE), Hong Kong Stock exchange (HSE), Tokyo Stock Exchange
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(TSE), Russian Stock exchange (RSE), Korean Stock exchange (KSE) from various
socio-politico-economic backgrounds. Both the Bombay Stock exchange (BSE) and the
National Stock Exchange of Indian Limited (NSE) have been used in the study as a part
of Indian Stock Market. The time period has been divided into various eras to test the
correlation between the various exchanges to prove that the Indian markets have become
more integrated with its global counterparts and its reaction are in tandem with that are
seen globally,

Jayen B. Patel studied on Calendar Effects in the Indian Stock Market. He found two
distinct calendar effects in returns for the Indian stock market. Specifically a November
December effect in which, they documented that mean returns for November and
December were significantly greater than those of the other ten months. They found that
the highest mean returns for each index were generated during the month of November.
December and August also generated relatively high retums. The month of March
enerated negative mean returns, the lowest for each index, and April and May also
generated substantially lower returns for each index. They seek to identify a series of
consecutive months during which the Indian stock market generates extraordinarily high.
(or low) returns. Identification of such a pattern may enable the investors to enhance
investment returns. More specifically, an investor should be invested during the
consecutive months when the Indian stock market generates high positive returns, and,
alternately, an investor should invest out of the Indian stock market in consecutive
months when stocks generate substantially negative returns.

Novak worked on the Importance of Accounting Information for Stock Market

Efficiency. This thesis contributes to the discussion on the importance of accounting
information for stock market efficiency. As any analysis of market efficiency depends on
the use of adequate risk proxies, the thesis first investigates the ability of commonly used
risk factors to explain the cross-sectional variation of Swedish stock returns. The relative
bid-ask spread is found to be the strongest of all the analyzed factors; nevertheless it does
not seem to be related to momentum in the manner predicted in the conceptual argument
presented earlier in the paper. He concluded that, contrary to this proposition, the
structure of accounting does matter for equity valuation and that changes in
representation do impact on stock prices.

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Pandian studied on Stock Market Volatility in Indian Stock Exchanges. She collected the
data from BSE Sensex and NSE Nifty for calculating return and volatility. Sensex is a
basket of 30 constituent stocks representing a sample of large, liquid and representative
companies. Due to its wide acceptance amongst the Indian investors, sensex is regarded
the pulse of the Indian stock market. Nifty is a well diversified 50 stock index accounting
for 24 sectors of the economy. Hence these two indices were taken for the study. Data
were taken from 1998 to 2008. Bank, corporate and personal balance sheets are strong.
Corporations are experiencing high profits. The stock market is at a record high.
Commodity markets are at their strongest. Lead manufacturing sectors such as software,
textiles and steel have yielded dividends. Spices exports have reached beyond the targets.
SEBI's clarification on FIls investment through Participatory Notes strengthened the
market. Rupee value appreciation flourished the Indian stock market. The bull phases
earned decent returns and the bear phases incurred loss. In the bull phases volatilities
were lower than hear phases.

Sah worked on the topic "Stock Market Seasonality: A Study of the Indian Stock
Market". In this study, he tried to examine the seasonality of stock market in India. He
considered the S&P CNX Nifty as the representative of stock market in India and tested
whether seasonality is present in Nifty and Nifty Junior retums using daily and monthly
data sets. The study found that daily and monthly seasonality are present in Nifty and
Nifty Junior returns. The analysis of stock market seasonality using daily data, be found
Friday Effect in Nifty retums while Nifty Junior returns were statistically significant on
Friday, Monday and Wednesday. In case of monthly analysis of returns, the study found
that Nifty returns were statistically significant in July, September, December and
January. In case of Nifty Junior, June and December months were statistically significant.
The results established that the Indian stock market is not efficient and investors can
improve their returns by timing their investment.

Gupta studied on Comparative Study of Distribution of In 17 earned decent returns and

the bear Asian Markets. She studied whether Indian stock market in the bull phases
volatilities were low stock market returns of other selected Asian Economies or not and
compared the distribution of the stock market returns of India with other selected Asian
economies. She included BSE(India). Heng Seng(Hong Kong), JKS(Indonesia),
KLSE(Malaysia). Nikkie (Japan), KS11(Korea) in her study. She used the descriptive
statistics of the six Asian markets for the period between 2005 and 2009. She found that
the mean of the weekly returns of India and the Indonesian markets were observed to be
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the highest around 23%. Japanese markets were flat during the study period. Volatility as
measured by standard deviation and its square, the variance was the least observed in the
Malaysian markets. The other five Asian markets generated variance in the range of
11%-15%. Indian markets showed maximum variance. Kurtosis, as referred to as the
volatility of the volatility, measures the peakedness of the distribution. The weekly
returns of Hong Kong and Malaysian markets were more near to their respective means,
as their kurtosis were nearing 3. Weekly returns of Indian stock markets indicate a low
peak with a fat mid range on either side. The kurtosis of India is platykurtic which
signifies the normal

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 CHAPTER-IV

RESEARCH METHODOLOGY

4.1 Research Design:

The main objective of this study is to capture the trends, similarities and patterns in the
activities and movements of the Indian Stock Market in comparison to U.S. The aim is
to help the investors (current and potential) understand the impact of important
happenings on the Indian Stock exchange. This is especially relevant in the current
scenario when the financial markets across the globe are getting integrated into one big
market and the impact of one exchange on the other exchanges.

4.2 Statement of the problem:

India stock exchanges are less attractive for foreign companies for the listing purpose.
The fluctuations in Indian market heavily to cross border capital flows in the form of
FDI, FII and to reaction of Indian market to global market cues.

4.3 Objective of study:

1) To understand functions of stock exchanges.

2) To compare & contrast of Indian stock exchange with selected International stock
exchanges with respect to market capitalization and number of listed securities.

3) To compare listing agreement & circuit filters applicable in selected international

stock exchange and Indian stock exchange.

4) To study of trading mechanism of Indian stock exchange and International stock

exchange.

4.4 Data collection:

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The current study is purely based on secondary data. The data for the above mentioned
stock indices is available at the corresponding stock exchanges used in the study. The
methodology of the study primarily includes analysing through quantative analysis with
certain milestones to understand functions of market

4.5 Secondary Data:

This research is fully based on available secondary data that is journal, Newspaper

Websites of Exchanges etc.

Earlier studied reports area sho considered in this study for the purpose of understand
the difference in exchanges and thereck.

The study considered on qualitative data for the analysis and comparative study is
conducted with reference to same.

4.6 Sampling design:

Stock exchanges representing various regions used in this study include major stock
exchanges as per the convenient sampling methods i.e.

1) NSE (India)

2) NYSE (USA)

3) Hang Seng (South East Asia)

4) Tokyo Stock Exchange (Japan)

5) Korea (Asia)

Sample size for this study is five.

4.7 Tools for Analysis

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Comparative Analysis

This is the main part of the study wherein the various stock exchanges of the sample
have been compared on certain parameters, both qualitatively and quantitatively.

Qualitative Analysis

In this section the various stock exchanges have been compared on the following
parameters:

1. Market Capitalization

2. number of listed securities

3. listing agreements

4. circuit filters

5. Trading Mechanism

These parameters are used to look at selected important aspects of any stock exchange
viz the market capitalization gives an idea about the size of the respective exchanges
whereas the number of listed securities acts as an indicator for the volume and liquidity
of any) exchange. The listing agreements take care of the governance issue, while
circuit filters give an insight into the risk management framework of the said exchange.
Finally, the efficiency of a stock exchange has been measured in terms of its settlement
process.

4.8 Scope and Limitation

1. Scope of the study is to understand the difference between the selected

international stock exchange and Indian stock exchange.

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2. This study is based on Historical and secondary data which leads to variation in

present and previous scenario.

3. This study is limited to selected stock exchanges.

4. This study is purely based on secondary data and the qualitative approach is used

for the study.

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 CHAPTER-V

DATA ANALYSIS AND INTERPRETATION

5.1 Market Capitalization

Market capitalization is the measure of corporate size of a country. It shows the current
stock price multiplied by the number of outstanding shares. It is commonly referred to
as Market cap. It is calculated by multiplying the number of common shares with the
current price of those shares. This term is often confused with capitalization, which is
the total amount of funds used to finance a firm's balance sheet and is calculated as
market capitalization plus debt (book or market value) plus preferred stock. While there
are no strong definitions for market cap categorizations, a few terms are frequently used
to group companies based on its capitalization. The table below shows the market
capitalization of ten stock markets in the world.

Based on the below study, it can be observed that India is 7th in the world ranking of
Market capitalization. This is in spite of having the third largest investor base, after
Japan and USA, and having the largest number of companies listed. United States leads
the list of countries with the highest market capitalization. It is interesting to note that
the total market capitalization of all the companies listed on the New York Stock
Exchange is greater than the amount of money in the United States.
Sr.No Market Market Cap Rank
(US$ trillion)
1 U.S 40.71 1
2 Japan 6.7 3
3 Hong Kong 6.1 4
4 India 2.5 7
5 Korea 2.1 11
Table No. 3

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 Market Cap

1 US
2 Japan
3 Hong Kong
4 India
5 Korea
6 others

As per the above data here it shoes that the market capitalization of US is more than
other stock exchanges in the world Japan secured 3d rank in market capitalization
where Hong Kong is on 4 rank. Indian stock exchanges and Korean are far from their
competition in Market capitalization by the ranking. India secured 7th position where
Korea is on 11th rank.

Indian stock exchange need to focus on the prospectus of increase in market

capitalization by the attraction of more people in Invest in stock market. Social
awareness program for the Indian investors as well as policies of tax relief can also
attract investor to invest in stocks.

5.2 Listed Securities

Listing in a stock exchange refers to the admission of the securities of the company for
trade dealings in a recognized stock exchange. The securities may be of any public
limited company, Central or State Government, quasi-governmental and other financial
institutions/corporations, municipalities, etc. Securities of any company are listed in a
stock exchange to provide liquidity to the securities, to mobilize savings and to protect
the interests of the investors.
Stock Exchange No of Listed Companies

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BSE 5249

Japan Exchange Group 3827

NASDAQ 3554

NYSE 2434

Korea Exchange 2318

Hong Kong Exchange 2538

NSE 1641

Table No 4

India has the highest number of companies listed in the stock market. Out of this, about
75% of the companies are listed with the Bombay Stock Exchange. After India, Japan
Exchange Group has the highest number of companies listed. Here as per no. of securities

No of Listed Companies
NSE

Hong Kong Exchange

Korea Exchange
No of Listed Companies
NYSE

NASDAQ

Japan Exchange Group

BSE

0 1000 2000 3000 4000 5000 6000

listed in stock exchanges the BSE is on top with listed securities of more than 5500 after
that Japan stock exchange with listed securities more than 3400. NASDAQ is with listing

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securities more than 2800 where NYSE have listed securities more than 2400. Korean
stock exchange have listed securities more than 1800 and Hong Kong stock exchange.
have more than 1700, NSE is with listed securities more than 1700.

Here one can say that Indian stock exchanges are more focused on listing of securities
capitalization and the number of listing securities are not respondent to each other the US
stock exchange have less securities listed but still its market capitalization is more than
Indian stock exchanges.

5.3 Listing Agreements

5.3.1 Bombay Stock Exchange

Eligibility Criteria for IPO/FPOs: Companies have been classified as large cap
companies and small cap companies. Company with a minimum issue size of Rs. 10
cores and market capitalization small cap company is a company other than a large cap
company.

Parameters Small Cap Companies Large Cap

Companies

Min post issue paid up capital 3 Crores 3 Cores

Min Issue Size 3 Crores 10 Crores
Min Market Capitalisation 5 Crores 25 Crores
Min Public shareholders 1000
Min Turnover 3 Crores in preceeding
3 years

Table No 5

5.3.2 National Stock Exchange

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Eligibility Criteria for New companies (IPO)

1. Paid Up capital: Not less than 10 Crores.

2. Market Capitalisation: Not less than 25 Cores.
3. At least three years track record:
4. The company has not been referred to the Board for Industrial and Financial
Reconstruction (BIFR).
5. The networth of the company has not been wiped out by the accumulated losses
resulting in a negative networth. The company has not received any winding
uppetition accepted by a court.
6. Promoters' mean one or more persons with a minimum 3 years experience of each of
them in the same line of business and shall be holding at least 20% of the post issue
equity share capital individually or severally.
7. No disciplinary action by other stock exchanges and regulatory authorities in past
three years.
8. Existing Companies listed on other stock exchanges Paid up Capital: Not less than 10
crores Market Capitalization: Not less than 25 crores.
9. Minimum Listing Requirements for companies listed on other stock exchanges. The
company should have minimum issued and paid up equity capital of Rs. 3 crores. The
Company should have profit making track record for last three years. 10. Minimum
net worth of Rs. 20 crores.
10.Minimum market capitalization of the listed capital should be at least two times of the
paid up capital.

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5.3.3 New York Stock Exchange

Domestic listing on NYSE requires minimum certain minimum standards to be met.

Distribution and Size criteria:

(A) The number of beneficial holders of stock held in "street name" will be
considered in addition to the holders of record. The Exchange will make any
necessary check of such holdings that are in the name of Exchange member
organizations.

(B) In connection with initial public offerings, spin-offs and carve-outs, the NYSE
will accept an undertaking from the company's underwriter to ensure that the offering
will meet or exceed the NYSE's standards.

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Round-lot Holder (A) (no of holders of a
unit of trading, generally 100shares)
OR
Total Shareholders(A)
Average Monthly trading Volume (for the
most recent six months)
OR
Total shareholders (A)
Average Monthly Trading Volume (For the
most recent 12months)
Public Shares (B)
Market Value of public shares (B,C)
Public Companies IPOS, Spin-offs, Carve-
outs & Affiliated CO.
Table No.

Round-lot Holder (A) (no of holders of a 2200

unit of trading, generally 100shares)
OR
Total Shareholders(A) 2200
Average Monthly trading Volume (for the 100000 Shares
most recent six months)
OR
Total shareholders (A) 500
Average Monthly Trading Volume (For the 10000000 shares
most recent 12months)
Public Shares (B) 11000000 Outstanding
Market Value of public shares (B,C) $ 100 Million
Public Companies IPOS, Spin-offs, Carve- $60 Million
outs & Affiliated CO.
Financial Criteria

Earnings. $ 10 Million
Aggregate pre-tax earnings (D) over the $2 Million
last 3 years Minimum in each of the 2 most
recent years
Valuation with Cash flow $ 25 Million
Aggregate Operating Cash flow(E) over
last 3 years
Pure Valuation

Revenues for the Most recent fiscal Global $ 75 Million

Market Capitalization (E) year $750 Million

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REITS (less than 3 years operating history) $ 60 Million
(B) Stockholders equity

Funds (less than 3 years operating history) $ 60 Million

(B) Net assets

(C) If a company either has a significant concentration of stock or changing market

forces have adversely impacted the public market value of a company that otherwise
would qualify for Exchange listing, such that its public market value is no more than 10
percent below the minimum, the Exchange will consider stockholders' equity of $60
million or $100 million, as applicable, as an alternate measure of size.

D) Pre-tax income is adjusted for various items as defined in Section 102.01C of the
NYSE Listed Company Manual.

(E) Represents net cash provided by operating activities excluding the changes in
working capital or in operating assets and liabilities, as adjusted for various items as
defined in Section 102.01C of the NYSE Listed Company Manual. Average global
market capitalization for already existing public companies is represented by the most
recent six months of trading history. For IPOs, spin-offs and carve-outs, it is represented
by the valuation of the company as represented by, in the case of a spin-off, the
distribution ratio as priced, or, in the case of an IPO/carve-out, the as-priced offering in
relation to the total company's capitalization.

5.3.4 Tokyo Stock Exchange:

(A) The number of shareholders:

I. In case where the number of shares to be listed is less than 10 thousand units; 800
persons.
II. In case where the number of shares to be listed is 10 thousand units or more but
less than 20 thousand units; 1,000 persons,

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III. In case where the number of shares to be listed is 20 thousand units or more; 1,200
persons.

(B) Number of years since incorporation:

3 years or more have elapsed by the last day of a business year immediately prior to the
day of listing application

(c) Amount of profit

The amount of profit for the first year of the latest 2 years was 100 million yen or more:
and 400 million yen or more for the latest year, or The amount of profit for the first year
of the latest 3 years was 100 million yen or more; 400 million yen or more for the
latestone year of the latest 3 years; and the aggregate amount of profits for all of the latest
3 years was 600 million yen or more.

one year of the latest 3 years; and the aggregate amount of profits for all of the latest 3
years was 600 million yen or more.

5.3.5 Hong Kong Stock Exchange

Basic Listing Requirements for Equities

I. Profit attributable to shareholders: At least HKS50 million in the last three

financial years.
II. Market Capitalisation: At least HK$200 million at the time of listing.
III. Revenue: At least HK$500 million for the most recent audited financial year.
IV. Cashflow: Positive cashflow from operating activities of at least HK$100 million
in aggregate for the three preceding financial years.
V. Spread of Shareholders:
VI. 100 shareholders for issuers with 24 months of active business pursuits.

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VII. 300 shareholders for issuers with 12 months of active business pursuits. Public
float:
VIII. At least 25% of the issuer's total issued share capital must at all times be held by
the public.

5.3.6 Korea Stock Exchange

(A) Quantitative Requirement

I. No of Shares: At least Imillion shares as of application date.

II. Net Worth: At least KRW 10 billion as of application date.
III. Sales Amount: At least KRW 30 billion for the latest fiscal year and the average
for the latest three fiscal years should be at least KRW 20 billion.

(B) Financial Requirement

I. Profit: Must show operating profits, ordinary profits and net profits.
II. Profits for the latest fiscal year should be at least KRW 2.5 billion and the sum for
the latest three fiscal years should be KRW 5 billion.
III. Reserve Ratio: At least 50% (25% for large corporations) according to the balance
sheet of the latest fiscal year.
IV. Reserve ratio= [(Net worth - Paid-in Capital) / Paid-in Capital] 100.
V. No of years since establishment: Have been operating without interruption for at
least 3 years since establishment.

The Listing agreements are well defined for each exchange which helps to listing of
companies in the exchange. Indian listing criteria are well defined and that helps to
increase no. of listed companies in the exchange.

US listing criteria are more complex than Indian stock exchange so there are fewer
securities registered as compare to India. Other stock exchanges also have well defined
criteria but still that also more complex as compare to Indian stock exchange.

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5.4 Circuit filters

Stock Markets have the dubious reputation of crashing without a warning taking with the
savings of numerous investors. A stock market crash is a sudden dramatic decline of
stock prices across a significant cross-section of a market. Crashes are driven by panic as
much as by underlying economic factors. They often follow speculative stock market
bubbles such as the dot-com bubble.

The study is restricted to the performance of the Indian Stock market, Japan, Hong Kong,
Korean, Russian and the New York Stock exchanges. Hence we will be concentrating on
the Asian Financial Crisis, Dot-Com Bubble, and the Russian Financial Crisis etc.

As a counter measure to the instability of the stock market, various measures were
introduced by to avoid huge losses. One such solution is circuit breakers. Circuit
Breakers are "a point at which a stock market will stop trading for a period of time in
response to substantial drops in value." They are also referred to as trading curb is certain
stock markets like DJIA and NYSE. This was first introduced after Black Monday. Black
Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial
Average (DJIA) fell 22.6%. This was done with an aim to avert panic in the market and
to avoid panic selling. The Circuit Filters operate according to the rules and requirements
of the stock Market in question.

5.4.1 NSE

Index-based Market-wide Circuit Breakers

The index-based market-wide circuit breaker system applies at three stages of the index
movement, either way viz. at 10%, 15% and 20%. These circuit breakers, when triggered,
bring about a coordinated trading halt in all equity and equity derivative markets

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nationwide. The market-wide circuit breakers are triggered by movement of either the
BSE Sensex or the NSE S&P CNX Nifty, whichever is breached earlier.

In case of a 10% movement of either of these indices, there would be a one-hour market
halt if the movement takes place before 1:00 p.m. In case the movement takes place at or
after 1:00 p.m. but before 2:30 p.m., there would be trading halt for hour. In case
movement takes place at or after 2:30 p.m., there will be no trading halt at the 10% level
and market shall continue trading.

In case of a 15% movement of either index, there shall be a two-hour halt if the
movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00 p.m.
but before 2:00 pm, there shall be a one hour halt. If the 15% trigger is reached on or
after 2:00 p.m., the trading shall halt for the remainder of the day.

In case of a 20% movement of the index, trading shall be halted for the remainder of the
day.

These percentages are translated into absolute points of index variations on a quarterly
basis. At the end of each quarter, these absolute points of index variations are revised for
the applicability for the next quarter. The absolute points are calculated based on closing.

Level of index on the last day of the trading in a quarter and rounded off to the nearest 10
points in case of S&P CNX Nifty.

In addition to this, there are also price bands for individual securities. Daily price bands
are applicable on securities as below:

I. Daily price bands of 2% (either way) on specified securities.

II. Daily price bands of 5% (either way) on specified securities.

III. Daily price bands of 10% (either way) on specified securities.

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IV. No price bands are applicable on scrips on which derivative products are available

or scrips included in indices on which derivative products are available.

V. Price bands of 20% (either way) on all remaining scrips (including debentures.

warrants, preference shares etc). The price bands for the securities in the Limited

Physical Market are the same as those applicable for the securities in the Normal

Market. For Auction market the price bands of 20% are applicable.

VI. In order to prevent members from entering orders at non-genuine prices in such

securities, the Exchange has fixed operating range of 20% for such securities.

5.4.2 BSE

Scrip wise Price Bands

1 For scrips (53 scrips) on which derivative products are available and scrips which are
included in indices on which derivative products are available, there is no circuit filter.
However, the Exchange has imposed dummy circuit fitters on these scrips to avoid
punching error, if any.

2. Other Scrips which are not included in above-mentioned category have a circuit filter
limit of 20%.

Market Wide Circuit BreakersIn addition to the above-stated price bands on individual
scrips, SEBI has decided to implement index based market wide circuit breakers system
with effect from July 02, 2001. The circuit breakers are applicable at three stages of the
index movement either way. at 10%, 15% and 20%. These circuit breakers will bring
about a coordinated trading halt in both Equity and Derivative market.

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The market wide circuit breakers can be triggered by movement of either BSE SENSEX
or the NSE NIFTY, whichever is breached earlier. The percentage movements are
calculated on the closing index value of the quarter. These percentages are translated into
absolute points of index variation (rounded off to the nearest 25 points in case of
SENSEX). At the end of each quarter, these absolute points of index variations are
revised and made applicable for the next quarter The absolute points of SENSEX
variation triggering market wide circuit breaker for a specified time period for any day of
the quarter is informed by the Exchange through Press Release from time to time.

5.4.3 Tokyo Stock Exchange

There are two circuit breakers which last for only 15 minutes after the price limit is hit.
The first circuit breaker takes effect when the price is 5% above or below the previous
trading day's settlement price. Another 5% change in the same direction, or a total of
10%, will trigger the second circuit breaker. Limits do not apply to the last 30 minutes of
the trading day, unless the 15-minute cooling period spills into that time frame. There are
no limits for the last day of trading for the contract nearest to expiry.

Regulation on program trading

As a measure used to minimize possible impacts of futures market on cash market, thus
maintaining the stability of the cash market, when the price of the most active futures
contract continues to change 5 % or more than the base price for one minute, execution
of all program trading orders in the cash market is delayed for 5 minutes.

Trading Halt n order to protect investors, when, due to rumours or reports on the matters
(e.g., bank defaults, bankruptcy, corporate restructure, etc.) that have major implication
on corporate management, sudden and drastic change of trading value and volume is
anticipated, the trading of such issues may be halted. In such a case, the concerned
corporation is asked to make an inquiry into such rumors or reports and disclose findings.

5.4.4 NYSE
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Trading halts are applied by the New York Stock Exchange (NYSE") under conditions of
extreme market volatility. The circuit breaker trigger points are set at three levels
representing 10%, 20% and 30% of the Dow Jones Industrial Average. The levels are
calculated by the NYSE at the beginning of each calendar quarter, using the average
closing value of the DJIA for the preceding month and each trigger is rounded to the
nearest 50 points. For the third quarter 2006, the following triggers are in place.

Level I circuit breaker triggered if losses are 10% or 1,050 points

(a) Before 2:00 p.m.- halted one hour,

(b) At 2:00 p.m. or later but before 2:30 p.m. - halted 30 minutes;

(c) At 2:30 p.m. or later-trading shall continue, unless there is a Level 2 or 3 halt. Level 2
circuit breaker triggered if losses are 20% or 2,100 points

(a) Before 1:00 p.m. halted two hours;

(b) At 1:00 p.m. or later but before 2.00 p.m. halted one hour,

(c) At 2:00 p.m. or later trading shall halt and not resume for the remainder of the day.

Level 3 circuit breaker triggered if losses are 30% or 3,150 points

(a) At any time-trading shall halt and not resume for the remainder of the day.

5.4.5 Korean Stock Exchange

Daily price change limit

To avoid abnormal price fluctuations caused by imbalance in supply and demand, the
KRX-Stock Market places + 15% of limit that the prices on individual stocks can change
during a day, thus preventing fall or rise of the price of individual stock more than 15
percent of the previous day's closing price.

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The KSE introduced the Circuit Breakers in December 1998. In order to pacify the over
reaction of investors, when the stock price drops suddenly below certain level (more than
10% of the closing price of the previous day and such situation continues for longer than
one minute), the circuit breakers system was introduced on December 7, 1998. The
trading, which resumes by periodic call auction where the orders submitted during the
first 10 minutes after the trading halt ended, are matched at a single price.

Regulation on program trading

As a measure used to minimize possible impacts of futures market on cash market, thus
maintaining the stability of the cash market, when the price of the most active futures
contract continues to change 5 % or more than the base price for one minute, execution
of all program trading orders in the cash market is delayed for 5 minutes.

Trading Halt

In order to protect investors, when, due to rumours or reports on the matters (eg, bank
defaults, bankruptcy, corporate restructure, etc.) that have major implication on corporate
management, sudden and drastic change of trading value and volume is anticipated, the
trading of such issues may be halted. In such a case, the concerned corporation is asked
to make an inquiry into such rumours or reports and disclose findings.

5.4.6 Hong Kong Stock Exchange

Though a circuit-breaker has not been adopted yet, a two-tier circuit-breaker is being
considered, under which trading would stop for half an hour in the event of a 15%
fluctuation over the previous day's close, and for one hour in the event of a 25%
fluctuation. Another option being considered is an individual circuit-breaker per stock,
which would cause a ten-minute open-outcry auction to be initiated every time a stock
price varied more than 10% over last day's close.

There are two circuit breakers which last for only 15 minutes after the price limit is hit
The first circuit breaker takes effect when the price is 5% above or below the previous i
trading day's settlement price. Another 5% change in the same direction, or a total of
10%, will trigger the second circuit breaker. Limits do not apply to the last 30 minutes of
the trading day, unless the 15-minute cooling period spills into that time frame. There are
no limits for the last day of trading for the contract nearest to expiry.

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Here In all the stock exchanges circuit filter criteria is well defined which helps to
prevents huge market drops in critical economical events. Circuit filters are well defined
to in every stock exchange as per their functions.

5.5 Trading Mechanism

5.5.1 NSE

NSE was the first stock exchange in the country to provide nation-wide, anonymous,
onderdriven,screen-based trading system, known as the National Exchange for
Automated Trading(NEAT) system. The member inputs, in the NEAT system, the details
of his order such as the quantities and prices of securities at which he desires to transact.
The transaction is executed as soon as it finds a matching sale or buy order from a
counter party. All the orders are electronically matched on a price/time priority basis.
This has resulted in a considerable reduction in time spent, cost and risk of error, as well
as frauds, resulting in improved operational efficiency. It allows for faster incorporation
of price sensitive information into prevailing prices, as the market participants can see the
full market on real time basis. This increases informational efficiency and makes the
market more transparent. Further, the system allows a large number of participants,
irrespective of their geographical locations, to trade with one another simultaneously,
improving the depth and liquidity of the market. A single consolidated order book for
each stock displays, on a real time basis, buy and sell orders originating from all over the
country. The book stores only limit orders, which are orders to buy or sell shares at a
stated quantity and stated price, are executed only if the price quantity conditions match.
Thus, the NEAT system provides an Open Electronic Consolidated Limit Order Book
(OECLOB), which ensures full anonymity by accepting orders, big or small, from
members without revealing their identity. Thus, provides equal access to all the investors.
A perfect Audit trail, which helps to resolve disputes by logging the trade execution
process in entirety, is also provided. The trading platform of the CM segment of NSE is
accessed not only from the computer terminals, but also from the personal computers of
the investors through the Internet and from the hand-held devices through WAP.

SEBI has allowed the use of internet as an order routing system for communicating
investors' orders to the exchanges through the registered brokers. These brokers should
obtain the permission from their respective stock exchanges. In February 2000, NSE
became the first exchange in the country to provide web-based access to investors to
trade directly on the Exchange followed by BSE in March 2001. The orders originating
from the PCs of investors are routed through the internet to the trading terminals of the

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designated brokers with whom they have relations and further to the exchange. After
these orders are matched, the transaction is executed and the investors get the
confirmation directly on their PCs. SEBI has also allowed trading through wireless
medium or Wireless Application Protocol (WAP) platform. NSE is the only exchange to
provide access to its order book through the hand held devices, which use WAP
technology. This particularly helps those retail investors, who are mobile and want to
trade from any place.

Settlement Cycle and Trading Hours

Equity spot markets follow a T+2 rolling settlement. This means that any trade taking
place on Monday gets settled by Wednesday. All trading on stock exchanges takes place
between 9:55 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday
through Friday. Delivery of shares must be made in dematerialized form, and each
exchange has its own clearing house, which assumes all settlement risk, by serving as a
central counterparty.

5.5.2 NYSE

The stock exchange is a key institution facilitating the issue and sale of various types of
securities. It is a pivot around which every activity of the capital market revolves. In the
absence of the stock exchange, the people with savings would hardly invest in corporate
securities for which there would be no liquidity (buying and selling facility). Corporate
investments from the general public would have been thus lower. Stock exchanges thus
represent the market place for buying and selling of securities and ensuring liquidity to
them in the interest of the investors. The stock exchanges are virtually the nerve centre of
the capital market and reflect the health of the country's economy as a whole. Securities
are traded in three different ways in stock exchanges ring, namely settlement basis, spot
basis and cash basis. Shares of companies which are not in the spot list are known as
'cash' shares or 'B' Category shares. They are traded on cash basis or delivery basis and
cannot be traded on settlement basis. The actual delivery of securities and payment has to
be made on or before the settlement date fixed in the case of cash basis trading. As far as
spot trading is concerned the actual delivery of securities must be made to the buying
broker within 48 hours of the contract. It is expected that the seller would be paid by the
buyer immediately on delivery of securities. All securities whether the specified list or
cash list can be traded on spot basis or cash basis.

Trading at both the exchanges takes place through an open electronic limit order book, in
which order matching is done by the trading computer. There are no market makers or

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specialists and the entire process is order-driven, which means that market orders placed
by investors are automatically matched with the best limit orders. As a result, buyers and
sellers remain anonymous. The advantage of an order driven market is that it brings more
transparency, by displaying all buy and sell orders in the trading system. However, in the
absence of market makers, there is no guarantee that orders will be executed.
All orders in the trading system need to be placed through brokers, many of which
provide online trading facility to retail customers. Institutional investors can also take
advantage of the direct market access (DMA) option, in which they use trading terminals
provided by brokers for placing orders directly into the stock market trading system.

5.5.3 Hang Seng

ORION TRADING PLATFORM SECURITIES MARKET (OTP-C) The trading system

of the Exchange is an order-driven system. During the Pre-opening Session and the
Closing Auction Session, the system accepts at-auction and at-auction limit orders only.
During the Continuous Trading Session, the system accepts limit, enhanced limit and
special limit orders only, with an option for an "All-or-Nothing Qualifier" that confines
the order to be either executed immediately in full or rejected, without being written into
the central order book. For details of the trading system and associated infrastructure,
please visit the Infrastructure section.

TRADING SESSIONS
Pre-Opening Session.

The maximum order size for auto match stocks is 3,000 board lots. The maximum
number of outstanding orders per broker ID has been removed while the number of
orders in each price queue has been increased to 20.000 effective 29 January 2007.
Orders are accumulated over a certain period of time and matched at a pre-defined order
matching period. Orders are matched in order type, price and time priority (at auction
orders carry a higher matching priority), at the final Indicative Equilibrium Price ("IEP").
The Pre-opening Session was introduced in March 2002.

Continuous Trading Session

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The maximum order size for auto match stocks is 3,000 board lots. The maximum
number of outstanding orders per broker ID has been removed while the number of
orders in each price queue has been increased to 20,000 effective 29 January 2007.
Orders are continuously executed in strict price and time priority. An order entered into
the system at an earlier time must be executed in full before an order at the same price
entered at a later time is executed.

Closing Auction Session

The Closing Auction Session (CAS) is applicable to selected securities and consists of
four periods: the Reference Price fixing period, order input period, no-cancellation period
and random closing period. During the Reference Price fixing period, a Reference Price,
which sets the allowable upper and lower price limits of the closing auction session (15
per cent from the

Reference Price), is calculated for each security that will have a Closing Auction Session.

During the order input period, at-auction orders and at-auction limit orders within the +5
per cent price limit can be entered, amended or cancelled.

During the no-cancellation period, prices of new at-auction limit orders must be between
the lowest ask and highest bid of the order book and no orders can be amended or
cancelled.

During the random closing period, the order rules from the no-cancellation period apply
and the market closes randomly within two minutes. After the random closing period,
orders for all CAS securities are matched at the final IEP. In cases where final IEP cannot
be established during the CAS, the Reference Price will be treated as the final IEP for
order matching and will become the closing price of the CAS security. Order matching is
based on order type, price and then time priority (at-auction orders carry a higher
matching priority).

For further detail of CAS, please refer to the CAS information book and micro site.
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ORDER TYPES

OTP-C currently supports the following order types for auto matching:

Pre-opening Session and Closing Auction Session

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The OTP-C only accepts at-auction and at-auction limit orders during the Pre-opening
Session and Closing Auction Session. For Pre-opening Session, the order price input into
the OTP-C cannot deviate 9 times or more from the previous closing price or the nominal
price (as the case may be), if available.

For Closing Auction Session, the order price input into the OTP-C is subject to the two
stages price limit. Stage 1 price limit: is applicable to the Order Input Period and is set at
+5 per cent from the Reference Price. Stage 2 price limit is applicable to the No
Cancellation Period and Random Closing Period and is set at the highest bid and the
lowest ask of the order book at the end of the Order Input Period.

At-auction order

An at-auction order is an order with no specified price and is entered into the OTP-C for
execution at the final Indicative Equilibrium Price (IEP). It enjoys a higher order
matching priority than an at-auction limit order and will be matched in time priority at
the final IEP.

Any outstanding at-auction orders after the end of the Pre-opening Session will be
cancelled before the commencement of the Continuous Trading Session.

At-auction limit order

An at-auction limit order is an order with a specified price. An at-auction limit order with
a specified price at or more competitive than the final IEP (in case of buying, the
specified price is equal to or higher than the final IEP, or in case of selling, the specified
price is equal to or lower than the final IEP) may be matched at the final IEP subject to
availability of eligible matching order on the opposite side. An at-auction limit order will
be matched in price and time priority at the final IEP. No at-auction limit order will be
matched at a price worse than the final IEP. If an IEP cannot be determined during the
Closing Auction Session, the Reference Price will serve as the price for matching. The
matching of applicable at-auction orders and at-auction limit orders will occur at the
Reference Price instead and the matching mechanism will be same as matching at the
EP.Any outstanding at-auction limit orders at the end of the Pre-opening Session will be
carried forward to the Continuous Trading Session and treated as limit orders provided

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that the specified price of that at-auction limit order does not deviate 9 times or more
from the nominal price. Such orders will be put in the price queue of the input price.

5.5.4 Tokyo Stock Exchange

In the individual auction in a regular session, a contract price is determined by the Zaraba
method. Transactions by the Zarabamethod are executed among the matching orders
according to the price and time priority rule at a price where the lowest offer and the
highest bid are matched.

. In the individual auction in an opening auction and closing auction and at the
resumption of trading after a temporarily trading halt, a contract price is determined by
the Itayose method described below.

A contract price determined by the Itayose method is the price that ximizes the traded
volume and minimizes the untraded volume according to the price and time priority rule.

Market orders also have a priority based on the order acceptance time and are matched
according to price and time priority rule. All the market orders that are not executed by
the Itayose method are invalid. Therefore, market orders are not necessarily executed.

. Regardless of whether a transaction by the Itayose method is made or not, a trading

session moves to Zaraba after the time to conduct Itayose passes (excluding at the session
end).

An order acceptance period is established like the beginning of trading and a

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Transaction is conducted by the Itayose method at the same time of closing the order
acceptance period.

In cases where the price determined by closing auction exceeds the defined price range
(Executable Price Range in Closing Auction) from the last contract price, a transaction is
not made. The Executable Price Range in Closing Auction is the same range as the
Immediately Executable Price Range.

5.5.5 Korea Stock Exchange

KRX Trading System (EXTURE) performs full range of functions required for securities
transactions which include receiving quotations, trade executions, notification of trade
results, calculation of daily settlement data, and etc. On 23 March 2009, KRX has
launched new trading system (EXTURE) which consolidated previously separated
market platforms (for KOSPI market, KOSDAQ market, and Derivatives market) into
one single platform and upgraded the system capacity by adopting cutting-edge
technologies. Market Information System generates and disseminates various market data
including prices, quotations, and market indices to be used as investment references. This
information is distributed to the public through primary vendor (KOSCOM) and
Members. There are many other electronic systems to perform everyday market
operations; including KIND (managed by KRX) to provide corporate disclosure
information, Foreign Investor Management System (managed by FSS) to assist
regulation on foreigners' shareholding limitations for certain stocks, Market Surveillance
System (managed by KRX) to monitor any illegal and irregular trading activities, and
Depository and Settlement System (managed by KSD).

Every trade in securities markets will be officially complete when settlements between
investors and respective securities companies (Clearing Members) and settlements
between Exchange and its clearing members are complete. Since very large number of
participants trade financial securities continuously and repetitively in securities markets,
it is important to ensure reliability and efficiency of daily settlement process. On this
background, KRX adopts diverse systems and infrastructures to provide robust clearing
& settlement functions. In basic, KRX listed securities are settled on T+2 (2 business)

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days after the trading day) while Government Bonds are settled on T+1 and Retail Bonds
& REPO Bonds on the trading day (T).

Clearing refers to series of processes that Central Counter Party (CCP), which assumes
rights and liabilities of Clearing Members to become legal counter parties to both sellers
and buyers (clearing members) in the market, performs to confirm daily settlement.
obligations. CCP will minimize the settlement obligations through netting process and
guarantee the necessary payment/delivery until it's complete. Accordingly, if any clearing
member fails to settle a trade, CCP would conduct settlement failure process (such as
making necessary actions on concerned clearing member or use of guarantee funds) in
accordance with relevant laws and regulations. Therefore, CCP functions to enhance
efficiency and reliability of settlement process.

Although Name and concepts are different in different in different region, functionality
and Treading mechanism same in all the stock exchange. Only the point one can note that
In US stock exchanges the ECN plays a vital role for the intermediate between exchange
and investor.

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 CHAPTER-VI

FINDINGS

1. As per Market capitalization India ranked 9th in the wodd, all other Market studied in
this project are higher market capitalization that India.

2. Listing of securities is more as compare to other exchanges. 3. Listing agreements are

well defined in Indian market as a result more listed companies are there in Indian stock
exchange.

4. Circuit Filter Criteria is well defined in Indian stock exchange which helps market to
sustain in long run.

5. The comparison showed that Indian stock exchange has the governance system and an
efficient mechanism in place to be a world class institute, specially the requirements of
Clause 49 (listing Agreement) promulgated by SEBI and the advanced trading and
settlement mechanism of NSE, respectively.

6. Listing of foreign companies still not allowed. The companies with subsidies lunched
in India can list for same. This can be due to lack of depth and breadth of the market.

7. Listing of securities in Indian market is more but the market capitalisation is low as
compared to other stock exchanges in the study.

8. There was no such a difference in trading mechanism of exchanges.

CHAPTER-VII

SUGGESTION
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1. To generate increased interest and awareness about the various other segments of the
market so that we can expect the operations to match its global counterparts in terms of
volumes, frequency and variety of instruments traded.

2. Market capitalization can increase through modification of listing agreements for

Indian stock exchange

3. Listing of foreign companies should allow without establishment of subsidies with the
consideration of increase market capitalization.

4. There should be more focus on increase in market capitalization and investment

awareness in India.

5. FII considers measure factor by government where it can be increase of market

capitalization through Indian investors.

6. Strategy to attract FIl can be more profitable if it attracts foreign players to get listed in
Indian Stock Exchange.

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 CHAPTER-VIII

CONCLUSION

The comparison showed that Indian stock exchange has the govemance system and an
efficient mechanism in place to be a world class institute, specially the requirements of
Clause 49 promulgated by SEBI and the advanced trading and settlement mechanism of
NSE, respectively. However, unfortunately our implementation of the same remains a
problem area with almost 15-20% of the listed companies yet to align their operations as
required under the law.

Moreover, there are also issues regarding the extent to which the sophisticated systems of
the stock exchanges (NSE, BSE) are utilized in terms of the volume and frequency of
transactions and the range of instruments traded.

One more reason that can be attributed for the lag between a global benchmark like
NYSE and BSE or NSE can be the fact that, in our country, listing of foreign companies
are still not allowed fully companies with subsidies lunched in India can list for same.
This can be due to lack of depth and breadth of the market., the listing criteria differ in
terms of size as well as their disclosure norms. This implies that the depth of the market
judged by the total capitalization is less for the Indian markets compared to its
counterparts. Moreover, the disclosure norms affect the governance aspect as also the
information availability.

One problem area that came out as a possible barrier in the path of Indian stock
exchanges attaining global level is the fact that India has a very low rank in terms of
market capitalization NSE 10h and BSB 12h. All other stock exchanges that we used in
our study rank above Indian stock exchange. This is in spite of the fact that Indian stock
exchanges have the highest number of companies listed and BSE accounting for almost
75%. Therefore, volume-wise, Indian market is still pretty small.

CHAPTER-VIII

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 BIBLIOGRAPHY

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2319-2828 Vol. 4, No.1, February 2015.

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Websites Referred

www.bseindia.com

www.nse-india.com

www.ebsco.com

www.tse.or.jp/english/index.shtml

www.hkex.com.hk/

www.krx.co.kr/webeng/index.jsp

www.tse.or.jp/english/index.shtml

www.nyse.com
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www.rts.ru

www.kse.or.kr

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Websites Referred

www.bseindia.com

www.nse-india.com

www.ebsco.com

www.tse.or.jp/english/index.shtml

www.hkex.com.hk/

www.krx.co.kr/webeng/index.jsp

www.tse.or.jp/english/index.shtml

www.nyse.com

www.rts.ru

www.kse.or.kr

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