SUMMER INTERNSHIP PROJECT REPORT ON

“Overview Study of Stock Exchange Market of India”

Submitted By
DURGESH YADAV
Roll No -252001143

Degree/ branch : B.Tech/ ECE

Section : B

Submitted to
Industrial Training Department

Internship Period: 03rdAugust'21- 09th September'21

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Sr. No Content Pg. No

1. Introduction 3

2. Online Stock Exchange 5

3 Types of Stock 7

4. Importance and Role of Stock Exchange in Indian Market 13

5. Industry Profile - Indian Stock Market,BSE and NSE 17

6. Company Profile –Brokers Forum 19

7 Overview Of The Regulatory Framework Of The Capital Market In 21

India
8 Trading With Stock Market 23

9 Capital Market Participants 25

10 Investment 26

11. Conclusion 30

12. References 31

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  INTRODUCTION

A stock exchange, share market or bourse is a corporation or mutual organization which

provides "trading" facilities for stock brokers 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 a

global market for securities.A stock exchange is simply a market that is designed for the sale and

purchase of securities of corporations and municipalities. A stock exchange sells and buys

stocks, shares, and other such securities. In addition, the stock exchange sometimes buys and

sells certificates representing commodities of trade. This article discusses:

 What is the principle behind the operation of stock exchanges?

 What are the functions and processes involved in stock exchanges?

 Know in detail about major stock exchanges

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Understanding what a stock exchange is and how an online stock exchange works, can help you

make the right decisions when it comes to your investment. Being able to follow the NY stock

exchange and being able to understand the NASDAQ stock exchange numbers that appear on

your news every evening can help you become a better investor and can help you profit more

from the stock market.

History of Stock Exchanges:

In 11th century France the courtiers de change was 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 Vander Burse, and in 1309 they institutionalized this until now

informal meeting and became the "Bruges Bourse". The idea spread quickly around Flanders and

neigh boring counties and "Bourses" soon opened in Ghent and Amsterdam.

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  Online Stock Exchange:

A stock exchange is simply a market that is designed for the sale and purchase of securities of

corporations and municipalities. A stock exchange sells and buys stocks, shares, and other such

securities. In addition, the stock exchange sometimes buys and sells certificates representing

commodities of trade. This article discusses:

 What is the principle behind the operation of stock exchanges?

 What are the functions and processes involved in stock exchanges?

 Know in detail about major stock exchanges

Understanding what a stock exchange is and how an online stock exchange works, can help you

make the right decisions when it comes to your investment. Being able to follow the NY stock

exchange and being able to understand the NASDAQ stock exchange numbers that appear on

your news every evening can help you become a better investor and can help you profit more

from the stock market.

How Does A Stock Exchange Work?

Buying and selling of stocks at the exchange is done on an area which is called the floor. All

over the floor are positions which are called posts. Each post has the names of the stocks traded

at that specific post. If a broker wants to buy shares of a specific company they will go to the

section of the post that has that stock. If the broker sees at the price of the stock is not the quite

what the broker is authorized to pay, a professional called the specialist may receive an order.

The specialist will often act as a go-between between the seller and buyer. What the specialist

does is to enter the information from the broker into a book. If the stock reaches the required

price, the specialist will sell or buy the stock according to the orders given to them by the broker

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The transaction is then reported to the investor. If a broker approaches a post and sees that the

price of the stock is what they are authorized to pay, the broker can complete the transaction

themselves. As soon as a transaction occurs, the broker makes a memorandum and reports it to

the brokerage office by telephone instantly. At the post, an exchange employee jots down on a

special card the details of the transaction including the stock symbol, the number of shares, and

the price of the stocks. The employee then puts the card into an optical reader. The reader puts

this information into a computer and transmits the information of the buy or sell of the stock to

the market. This means that information about the transaction is added to the stock market and

the transaction is counted on the many stock market tickers and information display devices that

investors rely on all over the world. Today, markets are instantly linked by the Internet, allowing

for faster exchange.

How does a stock exchange operate and how a transaction is made there?

Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide

on a price. Some exchanges are physical locations where transactions are carried out on a trading

floor. You've probably seen pictures of a trading floor, in which traders are wildly throwing their

arms up, waving, yelling, and signal to each other. The other type of exchange is virtual,

composed of a network of computers where trades are made electronically.

The purpose of a stock market is to facilitate the exchange of securities between buyers and

sellers, reducing the risks of investing. Just imagine how difficult it would be to sell shares if you

had to call around the neighbourhood trying to find a buyer. Really, a stock market is nothing

more than a super-sophisticated farmers' market linking buyers and sell

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  Types Of Stock

There are different types of stocks to choose in the stock market. While you do not necessarily

have to be an expert on all the types of stocks available in stock market content, being able to

differentiate and choose stocks is crucial to stock market investing. This article helps you to

know more on:

What re the various types of stocks available?

 What are the features of preferred stocks?

 What are the characteristics of blue chip stocks?

There are different types of stocks to choose in the stock market. While you do not necessarily

have to be an expert on all the types of stocks available in stock market content, being able to

differentiate and choose stocks is crucial to stock market investing. Depending on your goals and

your investment, you may simply find that some stocks are better suited to your needs than

others. At the very least, being able to tell the difference between preferred and common stocks

can help you get started in investing.

Preferred Stocks and Common Stocks

All stocks are generally designated as preferred or common. Common stocks are stocks that offer

you a bit of ownership of a company. Each common stock you have offers you a specific amount

of ownership, entitles you to some dividends and allows you one vote for each share you own in

electing directors or making key business decisions. Common stocks in this sense are different

from debentures or bonds, which are money given to a company as a loan in return for the

promise of specific interest. Preferred stock offers you preferential treatment when it comes to

paying out of dividends. If the company goes bankrupt, stocks holders holding preferred equities

get faster access to any assets not used towards paying debts. If you have preferred cumulative

stock, your position is secure. This type of stock allows unpaid dividends to be accrued. If a

company cannot pay dividends one year, your dividends accrue until the company can pay.
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During such period all the money owed over the previous years will be paid. Those holding

preferred types of stock usually have no voting ability and these stocks only get their pre-

determined dividend and not more than that. This is to offset the other advantages of preferred

status.

Growth of Stocks

Growth stocks are stocks of companies that are experiencing rapid growth and are expected to

continue growing in the future. A company with growth stocks is generally a stable company that

is experiencing larger sales as well as incurring reasonable expenses. Such a company invests

money in new products. These stocks are attractive to investors since they allow investors to

make money from a growing and prospering company. However, these stocks can also be a risk.

These stocks are often expensive, and of course there is no guarantee that a company will

continue to grow and prosper as projected

Dividend Stocks

Dividend stocks are those stocks that pay a yearly dividend or cash amount in addition to having

an inherent buying and selling value. Having high dividend stocks means that you make money

each year that a company profits. This article takes you through: Dividend stocks are those

stocks that pay a yearly dividend or cash amount in addition to having an inherent buying and

selling value. Having high dividend stocks means that you make money each year that a

company profits. The best dividend stocks are used by wealthy people in order to create a

passive income. Thanks to the Internet, almost any investor can start investing in these stocks. It

is easy to find a list of dividend paying stocks and even get newsletters that feature monthly

dividend stocks right in your mailbox or email inbox.

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  The Importance of the Stock Exchange:

Stock exchanges perform important roles in national economies. Most importantly, they

encourage investment by providing places for buyers and sellers to trade securities. This

investment, in turn, enables corporations to obtain funds to expand their businesses.

Corporations issue new securities in what is known as the primary market, usually with the help

of investment bankers (see Investment Banking). The investment bank acquires the initial issue

of the new securities from the corporation at a negotiated price and then makes the securities

available for its clients and other investors in an initial public offering (IPO). In this primary

market, corporations receive the proceeds of security sales. After this initial offering the

securities are bought and sold in the secondary market. The corporation is not usually involved in

the trading of its stock in the secondary market.

Stock exchanges essentially function as secondary markets. By providing investors the

opportunity to trade financial instruments, the stock exchanges support the performance of the

primary markets. This arrangement makes it easier for corporations to raise the funds that they

need to build and expand their businesses.

Although corporations do not directly benefit from secondary market transactions, the

managers of a corporation closely monitor the price of the corporation's stock in secondary

markets. One reason for this concern involves the cost of raising new funds for further business

expansion. The price of a company's stock in the secondary market influences the amount of

funds that can be raised by issuing additional stock in the primary market. Corporate managers

also pay attention to the price of the company's stock in secondary markets because it affects the

financial wealth of the corporation's owners—the stockholders. If the price of the stock rises,

then the stockholders become wealthier. This is likely to make them happy with the company's

management. Typically, managers own only small amounts of a corporation's outstanding shares.

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If the price of the stock declines, the shareholders become less wealthy and are likely to be

unhappy with management. If enough shareholders become unhappy, they may move to replace

the corporation's managers. Most corporate managers also receive options to buy company stock

at a selected price, so they are motivated to increase the value of the stock in the secondary

market.Stock exchanges encourage investment by providing this secondary market. Stock

exchanges also encourage investment in other ways.

They protect investors by upholding rules and regulations that ensure buyers will be treated fairly

and receive exactly what they pay for. Exchanges also support state-of-the-art technology and the

business of brokering. This support helps traders buy and sell securities quickly and efficiently.

Of course, being able to sell a security in the secondary market increases the relative safety of

investing because investors can unload a stock that may be on the decline or that faces an

uncertain future.

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 a stronger economic growth and

higher productivity levels and firms.

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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.

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).

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.

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Government capital-raising 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.

Barometer to 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.

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  Indian Stock Market

Indian Stock Markets is one of the oldest in Asia. Its history dates back to nearly 200 years ago.

The earliest records of security dealings in India are meager and obscure. The East India

Company was the dominant institution in those days and business in its loan securities used to be

transacted towards the close of the eighteenth century. By 1830's business on corporate stocks

and shares in Bank and Cotton presses took place in Bombay. Though the trading list was

broader in 1839, there were only half a dozen brokers recognized by banks and merchants during

1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and

brokerage business attracted many men into the field and by 1860 the number of brokers

increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United

States to Europe was stopped; thus, the 'Share Mania' in India began. The number of brokers

increased to about 200 to 250.

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,

found a place in a street (now appropriately called as Dalal Street) where they would

conveniently assemble and transact business. In 1887, they formally established in Bombay,

the "Native Share and Stock Brokers' Association”, which is alternatively known as “The

Stock Exchange". In 1895, the Stock Exchange acquired a premise in the same street and it

was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. The Indian

stock market has been assigned an important place in financing the Indian corporate sector.

The principal functions of the stock markets are:

 enabling mobilizing resources for investment directly from the investors

 providing liquidity for the investors and monitoring.

 Disciplining company management.

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 The two major stock exchanges in India are:-

 National Stock Exchange (NSE)

 Bombay Stock Exchange (BSE)

National Stock Exchange

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock

market trading system on par with the international standards. On the basis of the

recommendations of high powered Pherwani Committee. The National Stock Exchange was

incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and

Investment Corporation of India, Industrial Finance Corporation of India, all Insurance

Corporations, selected commercial banks and others.

The National Stock Exchange (NSE) is India's leading stock exchange covering various cities

and towns across the country. NSE was set up by leading institutions to provide a modern, fully

automated screen-based trading system with national reach. The Exchange has brought about

unparalleled transparency, speed & efficiency, safety and market integrity. It has set up

facilities that serve as a model for the securities industry in terms of systems, practices and

procedures.

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Trading at NSE can be classified under two broad categories:

 Wholesale debt market

 Capital market

Wholesale debt market operations are similar to money market operations - institutions and

corporate bodies enter into high value transactions in financial instruments such as

government securities, treasury bills, public sector unit bonds, commercial paper, certificate of

deposit, etc.

Capital market: A market where debt or equity securities are traded.

There are two kinds of players in NSE:

 Trading members

 Participants

Recognized members of NSE are called trading members who trade on behalf of themselves

and their clients. Participants include trading members and large players like banks who take

direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading mechanism which

adopts the principle of an order-driven market. Trading members can stay at their offices and

execute the trading, since they are linked through a communication network.

The prices at which the buyer and seller are willing to transact will appear on the screen. When

the prices match the transaction will be completed and a confirmation slip will be printed at the

office of the trading member.

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

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

 Investors can trade at the same price from anywhere in the country since inter-market

operations are streamlined coupled with the countrywide access to the securities.

 Delays in communication, late payments and the malpractice’s prevailing in the traditional

trading mechanism can be done away with greater operational efficiency and informational

transparency in the stock market operations, with the support of total computerized network.

NSE Nifty

S&P CNX Nifty is a well-diversified 50 stock index accounting for 22 sectors of the

economy. It is used for a variety of purposes such as benchmarking fund portfolios, index

based derivatives and index funds.

NSE came to be owned and managed by India Index Services and Products Ltd. (IISL), which is

a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon

the index as a core product. IISL have a consulting and licensing agreement with Standard &

Poor's (S&P), who are world leaders in index services. CNX stands for CRISIL NSE Indices.

CNX ensures common branding of indices, to reflect the identities of both the promoters, i.e.

NSE and CRISIL. Thus, 'C' Stands for CRISIL, 'N' stands for NSE and X stands for Exchange or

Index. The S&P prefix belongs to the US-based Standard & Poor's Financial Information

Services.

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  Bombay Stock Exchange

The Bombay Stock Exchange is one of the oldest stock exchanges in Asia. It was established

as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange

in the country to obtain permanent recognition in 1956 from the Government of India under

the Securities Contracts (Regulation) Act, 1956. The Exchange's pivotal and pre-eminent role

in the development of the Indian capital market is widely recognized and its index, SENSEX,

is tracked worldwide.India’s economy has been one of the talks of the business world. Starting

with the information technology and moving rapidly to outsourcing, this foreign market has

truly emerged in the past two years. With globalization on the rise and a strong demand for

information technology and outsourcing, India will look attractive not only for investors but

for businesses looking to go overseas. This expansion will not only help India’s economy as

money is invested into the country, but companies will benefit due to lower operating costs

and higher revenue. India is benefiting from this shift of home front to the idea of outsourcing.

With India surging, so is the Bombay Sensex, as it reflected the state of the economy.

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to

the 1850s, when 4 Gujarati and 1 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'. Later the name changed to Bombay Stock Exchange or the BSE.

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  SENSEX

The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently

became the barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally accepted construction

and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent

stocks representing a sample of large, liquid and representative companies. The base year of

SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic

and international markets through print as well as electronic media.

Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse

of the Indian stock market. As the oldest index in the country, it provides the time series data

over a fairly long period of time. Small wonder, the SENSEX has over the years become one

of the most prominent brands in the country The SENSEX captured all these events in the

most judicial manner. One can identify the booms and busts of the Indian stock market

through SENSEX. The launch of SENSEX in 1986 was later followed up in January 1989 by

introduction of BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed

at five major stock exchanges. The values of all BSE indices are updated every 15 seconds

during the market hours and displayed through the BOLT system, BSE website and news wire

agencies.

All BSE-indices are reviewed periodically by the “index committee” of the exchange.

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  Company Profile

The Bombay Stock Exchange Brokers Forum (BBF), a not-for-profit body registered under the
Societies Act 1860, consisting of around 900 members being members of Stock Exchanges
(BSE/NSE), Commodity Exchanges (MCX, NCDEX) and Depository Participants of
Depositories (CDSL/ NSDL). The Capital Market intermediaries are a heterogeneous group,
where on one hand we have the small mom and pop shop type organisations and at the other end
of the spectrum large institutions like banks. BBF attempts to work for the benefit of the Capital
Markets in general and its members in particular.

Executive Committee Members for 2018-19:

 Uttam Bagri (Chairman)

 Anurag Bansal (Vice-Chairman)
 Purav Fozdar (Secretary)
 Harin Mehta (Joint-Secretary)
 Kamlesh D. Shroff (Treasurer)
 Lalit Mudra (Joint Treasurer)
 Dr. Vispi Rusi Bhathena (Chief Executive Officer)
 Dr. Aditya Srinivas (Chief Operating Officer and Chief Economist)

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The Brokers’ Forum offers you an opportunity to visit the Bombay Stock Exchange (BSE) Ltd.,
Asia’s oldest stock exchange.

To outsiders, the stock exchange automatically evokes images of floor trading and traders who
communicate and make deals via hand signals and shouting. The open outcry system which was
the symbol of Indian stock market has been preserved in BSE for more than 100 years. With
more than 5000 listed companies which makes BSE second largest exchange in the world in
terms of listed companies, the feel of the visit to BSE makes the experience worth.

Although today 100% percent of exchange turnover is handled via the fully electronic and
location-independent trading system BSE Online Trading (BOLT), it is still worth taking a look
at BSE International Convention Hall (the legendary trading floor)

With the country seeing and experiencing an economy so dynamic and ever changing Brokers’
Forum is acting as a facilitator in filling the gaps so that the business may shore up their
competitiveness and enhance their global reach.

Objective of these seminars is to increase the number of retail investors in the market. During
these sessions knowledge about working of the global economy, Indian economy and the stock

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  Overview Of The Regulatory Framework Of The Capital Market In

India

India has a financial system that is regulated by independent regulators in the sectors of

banking, insurance, capital markets and various service sectors. The Indian Financial system

is regulated by two governing agencies under the Ministry of Finance. They are

1. Reserve Bank of India

The RBI was set up in 1935 and is the central bank of India. It regulates the financial

and banking system. It formulates monetary policies and prescribes exchange control

norms.

2. The Securities Exchange Board of India

The Government of India constituted SEBI on April 12, 1988, as a non-statutory body

to promote orderly and healthy development of the securities market and to provide

investor protection. Department Economic Affairs : The capital markets division of

the Department of Economic Affairs regulates capital markets and securities

transactionsThe capital markets division has been entrusted with the responsibility of

assisting the Government in framing suitable policies for the orderly growth and

development of the securities markets with the SEBI, RBI and other agencies. It is also

responsible for the functioning of the Unit Trust of India (UTI) and Securities and

Exchange Board of India (SEBI).

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The Capital Market is governed by:

 Securities Contract (Regulation) Act, 1956

 Securities Contract (Regulation) Rules, 1957

 SEBI Act, 1992

 Companies Act 1956

 SEBI (Stock Brokers and Sub Brokers) Rules, 1992

 Exchange Bye-Laws Rules & Regulations

Self-regulating Role of the Exchange

The exchange functions as a Self Regulatory Organization with the parameters laid down by

the SCRA, SEBI Act, SEBI Guidelines and Rules, Bye-laws and Regulations of the Exchange.

The Governing Board discharges these functions. The Executive Director has all the powers of

the governing board except discharging a member indefinitely or declaring him a defaulter or

expelling him. The Executive Director takes decisions in the areas like surveillance,

inspection, investigation, etc. in an objective manner as per the parameters laid down by the

governing board or the statutory committees like the Disciplinary Action Committee.

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  Trading With Stock Market

This section will introduce us about the process and instruments used to help a customer or a

client to trade with arcadia securities. This process is almost similar to any other trading firm

but there will be some difference in the cost of brokerage commission.

Trading: It is a process by which a customer is given facility to buy and sell share this buying

and selling can only be done through some broker and this is where Arcadia helps its customer.

A customer willing to trade with any brokerage house need to have a demat account, trading

account and saving account with a brokerage firm. Any one having following document can

open all the above mentioned account and can start trading.

Document Required

 3 photographs ( signed across)

 Photo Identification Proof - any of the following - Voter ID/Driving License/Passport.

 Address Proof any of the following - Voter ID/Driving License/ Passport/ Bank statement

or pass book sealed and attestation by bank official/ BSNL landline bill.

 A crossed Cheque favouring “Karvy Stock Broking”. Of the required amount. The amount

for Demat as well as trading will be Rs. 900/-(free Demat +900 Trading Account) the

minimum amount being Rs. 900 a cheque can be given for a larger amount.

 Copy of PAN Card is mandatory.

 Registration Kit

 CDSL Demat Kit

 Bank and address proof declaration.

 PAN name discrepancy form.

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 These documents may not be consumer friendly but it is to avoid illegal transaction and to

prevent black money this ensures that money invested is accounted.

Techniques and Instruments for Trading - The various techniques that are available in the

hands of a client are:-

1. Delivery

2. Intraday

3. Future

4. Forwards

5. Options

6. Swaps

Basic Requirement for doing Trading

Trading requires Opening a Demat account. Demat refers to a dematerialized account. You

need to open a Demat account if you want to buy or sell stocks. So it is just like a bank

account where actual money is replaced by shares. We need to approach the Depository

Participants (DP, they are like bank branches), to open Demat account. A depository is a

place where the stocks of investors are held in electronic form. The depository has agents who

are called depository participants (DPs).Think of it like a bank. The head office where all

the technology rests and details of all accounts held is like the depository. And the DPs are

the branches that cater to individuals. There are only two depositories in India –

 The National Securities Depository Ltd (NSDL) and the

 Central Depository Services Ltd (CDSL).

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  Capital Market Participants

 Banks

 Exchanges

 Clearing Corporations

 Brokers

 Custodians

 Depositories

 Investors

 Merchant Bankers

Types of Investors

 Institutional Investors- MFs / FI / FIIs / Banks

 Retail Investors

 Arbitrageurs / Speculators

 Hedgers

 Day traders/Jobbers

5Parameters Of Investment : The nature of investment differs from individual to individual

and is unique to each one because it depends on various parameters like future financial goals,

the present & the future income model, capacity to bear the risk, the present requirements and

lot more. As an investor progresses on his/her life stage and as his/her financial goals change,

so does the unique investor profile. Economic development of a country depends upon its

investment

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  INVESTMENT

The word "investment" can be defined in many ways according to different theories and

principles. It is a term that can be used in a number of contexts. However, the different meanings

of "investment" are more alike than dissimilar.

Generally, investment is the application of money for earning more money. Investment also

means savings or savings made through delayed consumption.

According to economics, investment is the utilization of resources in order to increase income or

production output in the future.An amount deposited into a bank or machinery that is purchased

in anticipation of earning income in the long run are both examples of investments. Although

there is a general broad definition to the term investment, it carries slightly different meanings to

different industrial sectors. According to economists, investment refers to any physical or

tangible asset, for example, a building or machinery and equipment. The most important feature

of financial investments is that they carry high market liquidity. The method used for evaluating

the value of a financial investment is known as valuation.

According to business theories, investment is that activity in which a manufacturer buys a

physical asset, for example, stock or production equipment, in expectation that this will help the

business to prosper in the long run.

Characteristics of an investment decision:

1. It involves the commitment of funds available with you or that you would be getting in the

future.

2. The investment leads to acquisition of a plot, house, or shares and debentures.

3. The physical or financial assets you have acquired are expected to give certain benefits in the

future periods.

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Essentials of Investment

Essentials of investment refer to why investment, or the need for investment, is required. The

investment strategy is a plan, which is created to guide an investor to choose the most

appropriate investment portfolio that will help him achieve his financial goals within a particular

period of time.

An investment strategy usually involves a set of methods, rules, and regulations, and is designed

according to the exchange or compromise of the investor's risks and returns.

A number of investors like to increase their earnings through high-risk investments, whilst others

prefer investing in assets with minimum risk involved. However, the majority of investors

choose an investment strategy that lies in the middle.

Investment strategies can be broadly categorized into the following types:

 Active strategies: One of the principal active strategies is market timing (an investor

is able to move into the market when it is on the low and sell the stocks when the

market is on the high), which is applied for maximizing yields.

 Passive strategies: Frequently implemented for reducing transaction costs.

The idea behind this is that stock markets yield a commendable rate of return in spite

of stages of fluctuation or downfall. Indexing is a strictly passive variable of the buy

and hold strategy and, in this case, an investor purchases a limited number of every

share existing in the stock market index, for example the Standard and Poor 500

Index, or more probably in an index fund, which is a form of a mutual fund.

Additionally, as the market timing strategy is not applicable for small-scale investors,

it is advisable to apply the buy and hold strategy, because the holding period is

normally equal to the total span of the mortgage loan.

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Principles Of Investment

Five basic principles serve as the foundation for the investment approach. They are as follows:

 Focus on the long term

There is substantive empirical evidence to suggest that equities provide the maximum risk

adjusted returns over the long term. In an attempt to take full advantage of this phenomenon,

investments would be made with a long term perspective.

 Investments confer proportionate ownership

The approach to valuing a company is similar to making an investment in a business.

Therefore, there is a need to have a comprehensive understanding of how the business

operates.

 Maintain a margin of safety

The benchmark for determining relative attractiveness of stocks would be the intrinsic value

of the business. The Investment Manager would endeavor to purchase stocks that represent a

discount to this value, in an effort to preserve capital and generate superior growth.

 Maintain a balanced outlook on the market

The investment portfolio would be regularly monitored to understand the impact of changes

in business and economic trend as well as investor sentiment. While short-term market

volatility would affect valuations of the portfolio, this is not expected to influence the

decision to own fundamentally strong companies.

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 Investment Process

Figure no. 5.3. Investment Process

Framing of
investment policy

Investment
Analysis

Valuation

Portfolio
construction

Portfolio evaluation

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  Conclusion

Indian Stock Markets is one of the oldest in Asia. Its history dates back to nearly 200 years ago.

The earliest records of security dealings in India are meager and obscure. The East India

Company was the dominant institution in those days and business in its loan securities used to

be transacted towards the close of the eighteenth century. The nature of investment differs from

individual to individual and is unique to each one because it depends on various parameters like

future financial goals, the present & the future income model, capacity to bear the risk, the

present requirements and lot more. As an investor progresses on his/her life stage and as his/her

financial goals change, so does the unique investor profile. Maximum investors are aware of all

the investment options. Investors do not invest in a single avenue. They prefer different avenues

and maximum investors prefer to invest in shares, mutual funds & debentures. The investment

decision of investors is influenced by their own decision and through friends & relatives.

Majority of investors invest 15-20% of their annual income.. The most important factor is Return

which influenced the decision regarding investment.

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  References

 Economic Policy, The Size Effect in Equity Returns. :

http://papers.ssrn.com/sol3/results.cfm

 Performance Corporate Governance as a Determinant of External Finance in Transition

Economies: http://papers.ssrn.com/sol3/results.cfm

 Introduction on Indian Stock Market : http://www.banknetindia.com/

 Introduction on Online Investors & Traders : http://www.traderji.com/

 Introduction on Types of investment : http://finance.mapsofworld.com/investment/types/

 Misc. Findings : www.wikipedia.org

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