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PROJECT REPORT ON

A GENERAL STUDY OF INDIAN SHARE MARKET


A REPORT SUBMITTED TO RASHTRASANT TUKADOJI MAHARAJ NAGPUR UNIVERSITY NAGPUR IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF BACHELOR OF BUSINESS ADMINISTRATION (BBA )COURSE, SPECIALSATION IN FININCIAL MANAGEMENT FOR THE ACADEMIC SESSION 2009-2010

PREPARED BY :SHEKHAR Y. MAHALE

GUIDED BY :PROF. SANDESH TITRE

KAMLA NEHRU MAHAVIDYALAYA Sakkardara Chowk, Nagpur.

CERTIFICATE
This is to certify that SHEKHAR Y. MAHALE Bonafied Student of the Bachelor of Business Administration (BBA) course, Specialization in FINANCIAL MANAGEMENT, session 2009-2010, of the KAMALA NEHRU

MAHAVIDYALAYA, NAGPUR. The candidate has worked under the supervision of PROF. SANDESH TITRE and has satisfactory conducted project work for not less than one academic session. The project submitted by him is his own work and is

complete so as to warrant its presentation for examination. This project work entitled A GENERAL STUDY OF INDIAN SHARE MARKET Which is in partial fulfillment requirement for the above course, is being forwarded to

SANDESH TITRE

DR.A. K. SHENDE

(PROJECT GUIDE )

( PRINCIPAL)

DECLARATION

I SHEKHAR Y. MAHALE here by declare that with the exception of the suggestion and guidance received from my supervisor a this p roject titled A GENERAL STUDY OF INDIA SHARE MARKET is my original work. This

dissertation as one, which is substantially the same as this has not been submitted by me for any other examination of this university or any other university.

Nagpur Date: -

BBA III (2009-2010)

ACKNOWLEDGEMENT
This project is the outcome of the help and encouragement provided by all faculty members, who were a continuous source of inspiration and who guided me in all my endeavors. I take this opportunity to thank all those who were a great su pport behind this project and without their unconditional support this project on this paper would not have been completed. First of all I would like to thank my parents for giving me back -up and full support in completing this project. My heart felt gratitude to Prof Head of Department, KAMLA NEHRU

MAHAVIDYALAYA Nagpur for making available all the resources. I am indebted to PROF. SANDESH G.TITRE my chief guide without whose support and timely suggestion this report would not have been completed. I express my sincere thanks to other staff members of my institute who directly or indirectly helped me in preparation of my project. Last but not least I would like to thank all those who are not mentioned, but whose contribution has been instrumental towards completion on of this project. SHEKHAR Y. MAHALE (BBA Final year)

INDEX
Serial no. 1 Introduction 2 Research Methodology 3 Hypothesis 4 Data collection 5 Data Analysis 6 Conclusion

Chapters

Page No.

Bibliography

Chapter 1 introduction

INTRODUCTION TO INDIAN MARKETS


Of all the modern service institutions, stock exchanges are perhaps the industrial revolution, as the size of business enterprises grew, it was no longer possible for proprietors or partnerships to raise colossal amount of money required for undertaking large entrepreneurial ventures. Such huge requirement of capital could only be met by the participation of a very large number of investors; their numbers running into hundreds, thousands and even millions, depending on the size of business venture. In general, small time proprietors, or partners of a proprietary or partnership firm, are likely to find it rather difficult to get out of their business should they for some reason wish to do so. This is so because it is not always possible to find buyers for an entire business or a part of business, just when one wishes to sell it. Similarly, it is not easy for someone with savings, especially with a small amount of savings, to readily find an appropriate business opportunity, or a part thereof, for investment. These problems will be even more magnified in large proprietorships and partnerships. Nobody would like to invest in such partnerships in the first place, since once invested, their savings would be very difficult to convert into cash. And most people have lots of reasons, such as better investment opportunity, marriage, education, death, health and so on for wanting to convert their savings into cash. Clearly then, big enterprises will be able to raise capital from the public at large only if there were some mechanism by which the investors could

purchase or sell their share of business as and they wished to do so. This implies that ownership in business has to be broken up into a larger number of small units, such that each unit may be independently & easily bought and sold without hampering the business activity as such. Also, such breaking of business ownership would help mobilize small savings in the economy into entrepreneurial ventures. This end is achieved in a modern business through the mechanism of shares.

What is a share?
A share represents the smallest recognized fraction of ownership in a publicly held business. Each such fraction of ownership is represented in the form of a certificate known as a share certificate. The breaking up of total ownership of a business into small fragments, each fragment represented by a share certificate, enables them to be easily bought and sold.

What is a stock exchange?


The institution where this buying and selling of shares essentially takes place is the Stock Exchange. In the absence of stock exchanges, i.e. Institutions where small chunks of businesses could be traded, there would be no modern business in the form of publicly held companies. Today, owing to the stock exchanges, one can be part owners of one company today and another company tomorrow; one can be part owners in several companies at the same time; one can be part owner in a company hundreds or thousands of miles away; one can be all of these things. Thus by enabling the convertibility of ownership in the product market into financial assets, namely shares, stock exchanges bring together buyers and sellers (or their representatives) of fractional

ownerships of companies. And for that very reason, activities relating to stock exchanges are also appropriately enough, known as stock market or security market. Also a stock exchange is distinguished by a specific locality and characteristics of its own; mostly a stock exchange is also distinguished by a physical location and characteristics of its own. In fact, according to H.T.Parekh, the earliest location of the Bombay Stock Exchange, which for a long period was known as the native share and stock brokers association , was probably under a tree around 1870! The stock exchanges are the exclusive centers for the trading of securities. The regulatory framework encourages this by virtually banning trading of securities outside exchanges. Until recently, the area of operation/ jurisdiction of exchange were specified at the time of its recognition, which in effect precluded competition among the exchanges. These are called regional exchanges. In order to provide an opportunity to investors to invest/ trade in the securities of local companies, it is mandatory foe the companies, wishing to list their securities, to list on the regional stock exchange nearest to their registered office

THERE ARE TWO TYPES OF MARKETS IN INDIA A) MONEY MARKET


Money market is a market for debt securities that pay off in the short term usually less than one year, for example the market for 90-days treasury bills. This market encompasses the trading and issuance of short term non equity debt instruments including treasury bills, commercial papers, bankers acceptance, certificates of deposits, etc other word we can also say that the Money Market is basically concerned with the issue and trading of securities with short term maturities or quasi-money instruments. The Instruments traded in the money-market are Treasury Bills, Certificates of Deposits (CDs), Commercial Paper (CPs), Bills of

Exchange and other such instruments of short-term maturities (i.e. not exceeding 1 year with regard to the original maturity)

B) CAPITAL MARKET
Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized markets like stock exchanges.

Capital market can be divided into Primary and Secondary Markets. A) PRIMARY MARKET B) SECONDARY MARKET A) PRIMARY MARKET
In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market. In addition to the traditional sources of capital from family and friends, startup firms are created and nurtured by Venture Capital Funds and Private Equity Funds. According to the Indian Venture Capital Association Yearbook (2003), investments of $881million were injected into 80 companies in 2002, and investments of

$470 million were injected into 56 companies in 2003. The firms which received these investments wiredrawn from a wide range of industries, including finance, consumer goods and health. The growth of the venture

capital and private equity mechanisms in India is critically linked to their track record for successful exits. Investments by these funds only commenced in recent years, and we are seeing a rapid buildup in a full range of channels for exit, with a mix of profitable and unprofitable outcomes. This success with Exit suggests that investors will allocate increased resources to venture funds and private equity funds operating in India, who will (in turn) be able to fund the creation of new firms.

B) SECONDARY MARKET
Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets. For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.

OBJECTIVE OF STUDY

 To learn about Indian Stock Market

 To learn about Its various aspects

 To learn about benefits of investing in Indian Stock Market

 To learn how to invest in Indian Stock Market

 To measure market movements

 Proper understanding and analysis of share market firm

Chapter 2 RESEARCH METHODOLOGY


Research is the application of scientific method to add to the personal pool of knowledge. Financial research is a systematic design collection & analysis of data & finding relevance to specific financial aspect of the company. Data are fact figures & other relevant materials for the study and analysis

DATA IS PRIMARILY OF TWO KINDS:a) Primary data b) Secondary Data a) Primary data:
Primary collection Methods can also be classified as. a) Observation, b) Experimentation c) Simulation d) Projective technique. Secondary Data Secondary data may be defined as data that has been collected earlier for some purpose other than the purpose of the present study. Any data that is available prior to the commencement of the research project is secondary data & therefore secondary data is also called as historical data. Secondary data collection saves valuable time efforts & Money.

MEANING OF RESEARCH:Research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. It is an academic activity as such the term should be used in a technical sense. Research is, thus an original contribution to the existing stock of knowledge making for its advancement .it is a per-suite of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective & systematic method of finding solution to a problem is Research .

DEFINATION:1) According to Advanced Learner s Dictionary, A research is a careful investigation or inquiry especially through search for new facts in any branch of knowledge . 2) According to Clifford Woody, Research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting and evaluating data; making deduction and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis .

TYPES OF RESEARCH:1) 2) 3) 4) 5) Descriptive vs. Analytical Applied vs. Fundamental Quantitative vs. qualitative Conceptual vs. Empirical Some other types of research.

1) Descriptive vs. Analytical:Descriptive research includes surveys and fact-finding enquiries of different kinds. The main feature of this method is that the research has no control over the variables; he can only report what has happened or what happening. For Eg: - Survey method of all kinds, including comparative and co relational methods.

2) Applied vs. Fundamental:Research can either be applied (or action) research or fundamental (to basis or pure) research. Applied research aims at finding a solution for an immediate problem facing a society or an industrial/business organization. For Eg: - Research studies, concerning human behavior carried on with a view to make generalizations about human behavior.

3) Quantitative vs. Qualitative:Quantitative research is based on the measurement of quantity or amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative research, on the other hand, is concerned with qualitative phenomenon.

4) Conceptual vs. Empirical:Conceptual research is that related to some abstract idea(s) or theory. It is generally used by philosophers and thinkers to develop new concepts. On the other hand, empirical research relies on experience or observation alone. It is data-based research.

5) Some other types of research:i. ii. iii. iv. v. One time research or long term research Field setting research or laboratory research Clinical or diagnostic research Historical research Conclusion oriented research

RESEARCH PROCESS:Following are the steps which are guideline regarding the research process:-

a) Formulating the research problem:There are two types of research problem:For e.g.: - Those which relate to state of nature and those which relate to relationships between variables. The formulation of a general topic into a specific research problem, thus constitutes the first step in a scientific enquiry, essentially two steps are involved in formulating the research problem1) Understanding the research problem thoroughly. 2) Rephrasing the same into meaningful terms from an analytical point of view.

b) Extensive literature survey:Once the problem is formulated, a brief summary of it should be written down. It is compulsory for a research worker writing a thesis for a Ph.D. degree to write a synopsis of the topic & submit it to the Research Board for approval. For this purpose, the abstracting and indexing journals,

conference proceedings, government reports, books etc. must be tapped depending on the nature of the problem. A good library will be a great help to the researcher at this stage.

c) Development of working hypotheses:Working hypothesis is tentative assumption made in order to draw out and test its logical or empirical consequences. As such manner in which research hypotheses are developed is particularly important since they provide the focal point for research. Hypothesis should be very specific and limited to the piece of research in hand because it has to be tested. It sharpens his thinking and focuses attention on the more important facets of the problem. It also indicates the type of data required and the type of methods of data analysis to be used.

d) Preparing the research design:The research problem having been formulated in clear cut terms, the researcher will be required to prepare a research design, i.e. he will have to state the conceptual structure within which research would be conducted. The preparation of such a design facilitates research to be as efficient as possible yielding maximal information. In other words, the function of research design is to provide for the collection of relevant evidence with minimal expenditure of efforts, time and money.

e) Determining sample design:The researcher must decide the way of selecting a sample or what is popularly known as the sample design. In other words, a sample is a definite plan determined before any data are actually collected for obtaining a sample from a given population. Probability samples are

those based on simple random sampling, systematic sampling, stratified sampling, cluster/areas sampling whereas non-probability samples are those based on convenience sampling, judgment sampling and quota sampling techniques.

g) Execution of the project:Execution of the project is very important steps in the research process. If the execution of the project proceeds on correct lines, the data to be collected would be adequate and depenable7. The researcher should see that the project is executed in a systematic manner and time. If the survey is to be conducted by a means of structured questionnaires, data can be readily machine-processed. If some of the respondents do not cooperate, some suitable methods should be designed to tackle this problem.

h) Analysis of data:After the data have been collected, the researcher turns to the task of analyzing them. The analysis of data requires a number of closely related operations such as establishment of categories, the application of these categories to raw data through coding, tabulation and them drawing statistical inferences. Thus, researcher should classify the raw data into some purposeful and usable categories. Editing is the procedure that improves the quality of the data for coding. With coding the stage is ready for tabulation. Tabulation is a part of technical procedure where in the classified data are put in the form of tables.

i) Hypothesis testing:After analyzing the data as stated above, the researcher is in a position to test hypotheses. Various tests, such as Chi square test, t-test, have been developed by the statisticians for the purpose. The hypothesis may be tested through the use of one or more of such test, depending upon the nature and object of the research inquiry. Hypothesis-testing will result in either accepting the hypothesis or in rejecting it.

j) Generalization and interpretation:If a hypothesis is tested and upheld several time, it may be possible for the researcher to arrive at a generalization, i.e. to build a theory. If the researcher had no hypothesis to start with, he might seek to explain his findings on the basis of some theory. It is known as interpretation.

K)

Preparation of the

1) Descriptive vs. Analytical:2) Applied vs. Fundamental:3) Quantitative vs. Qualitative:4) Conceptual vs. Empirical:5) Some other types of research:-

RESEARCH PROCESS:a)
b)

Formulating the research problem:Extensive literature survey:-

c) d) e) g) h) i) j) K)

Development of working hypotheses:Preparing the research design:Determining sample design:Execution of the project:Analysis of data:Hypothesis testing:Generalization and interpretation:Preparation of the report or the thesis:-

1. The Preliminary Pages:Finally, the researcher has to prepare the report of what has been done by him. Writing of report must be done with great care keeping in view the following1. The Preliminary Pages. 2. The Main Text. 3. The End Matter.

1. The Preliminary Pages:In this case the report should carry title and depth followed by acknowledgement and foreword. Then there should be a table of content followed by a list of tables and list of graphs and charts, if any, give in the report.

2. The main Text:The main text of the report should have the following partsa) Introduction It should contain a clear statement of the objective of the research and an explanation of the methodology adopted in accomplishing the research. b) Summary of findings After introduction there would appear a statement of findings and recommendation in non-technical language. c) Main Report The main body of the report should be presented in logical sequence. d) Conclusion Towards the end of the main text, researcher should again put down the results of his research clearly and precisely. In fact, it is final summing up.

Chapter 4 Topics covered

        

Bombay stock exchange National stock exchange Nse family Listings of securities Membership administration Dematerialization Investment Broker and sub-broker Auction

BOMBAY STOCK EXCHANGE OF INDIA LIMITED


Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", 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. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporative entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The day-today operations of the Exchange are managed by the Managing Director and a management team of professionals. The Exchange has a nation-

wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified. Bombay Stock Exchange Limited (BSE) which was founded in 1875 with six brokers has now grown into a giant institution with over 874 registered Broker-Members spread over 380 cities across the country. Today, BSE's Wide Area Network (WAN) connecting over 8000 BSE Online Trading (BOLT) System Trader Work Stations (TWS) is one of the largest of its kind in the country. With a view to provide efficient and integrated services to the investing public through the members and their associates in the operations pertaining to the Exchange, Bombay Stock Exchange Limited (BSE) has set up a unique Member Services and Development to attend to the problems of the Broker-Members. Member Services and Development Department is the single point interface for interacting with the Exchange Administration to address to Members' issues. The Department takes care of various problems and constraints faced by the Members in various products such as Cash, Derivatives, Internet Trading, and Processes such as Trading, Technology, Clearing and Settlement, Surveillance and Inspection, Membership, Training, Corporate Information, etc

VISION OF BSE
Emerge as the premier Indian stock exchange by Establishing global benchmarks"

OBJECTIVES OF BSE
The BSE SENSEX is the benchmark index with wide acceptance among individual investors, institutional investors, foreign investors, foreign investors and fund managers. The objectives of the index are:

To measure market movements


Given its long history and its wide acceptance, no other index matches the BSE SENESX in the reflecting market movements and sentiments. SENSEX is widely used to describe the mood in the Indian stock markets.

Benchmark for funds performance


The inclusion of blue chip companies and the wide and balanced industry Representation in the SENSEX makes it the ideal benchmark for fund managers to compare the performance of their funds.

For index based derivatives products


Institutional investors, money managers and small investors, all refer to the BSE SENSEX for their specific purposes. The BSE SENSEX is in effect the proxy for the Indian stock markets. Since SENSEX comprises of the leading companies in all the significant sectors in the economy, we believe that it will be the most liquid contract in the Indian market and will garner a predominant market share.

COMMODITY EXCHANGES
The three exchanges are: National Commodity & Derivatives Exchange Limited (NCDEX) 1. Multi Commodity Exchange of India Limited (MCX) 3. National Multi-Commodity Exchange of India Limited (NMCEIL)
All the exchanges have been set up under overall control of Forward Market Commission (FMC) of Government of India.

National Commodity & Derivatives Exchange Limited (NCDEX)


National Commodity & Derivatives Exchange Limited (NCDEX) located in Mumbai is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956 and had commenced its operations on December 15, 2003.This is the only commodity exchange in the country promoted by national level institutions. It is promoted by ICICI Bank Limited, Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). It is a professionally managed online multi commodity exchange. NCDEX is regulated by Forward Market Commission and is subjected to various laws of the land like the Companies Act, Stamp Act, Contracts Act, Forward Commission (Regulation) Act and various other legislations.

Multi Commodity Exchange of India Limited (MCX)


Headquartered in Mumbai Multi Commodity Exchange of India Limited (MCX), is an independent and de-metalized exchange with a permanent recognition from Government of India. Key shareholders of MCX are Financial Technologies (India) Ltd., State Bank of India, Union Bank of India, Corporation Bank, Bank of India and Canada Bank. MCX facilitates

online trading, clearing and settlement operations for commodity futures markets across the country. MCX started offering trade in November 2003 and has built strategic alliances with Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors Association of India, Pulses Importers Association and Shetkari Sanghatana.

National Multi-Commodity Exchange of India Limited (NMCEIL)


National Multi Commodity Exchange of India Limited (NMCEIL) is the first demutualized, Electronic Multi-Commodity Exchange in India. On 25th July, 2001, it was granted approval by the Government to organize trading in the edible oil complex. It has operationalised from November 26, 2002. It is being supported by Central Warehousing Corporation Ltd., Gujarat State Agricultural Marketing Board and Neptune Overseas Limited. It got its recognition in October 2000. Commodity exchange in India plays a Important role where the prices of any commodity are not fixed, in an organized way. Earlier only the buyer of produce and its seller in the market judged upon the prices. Others never had a say. Today, commodity exchanges are purely speculative in nature. Before discovering the Price, they reach to the producers, end-users, and even the retail investors, at a grassroots level. It brings a price transparency and risk management in the vital market. A big difference between a typical auction, where a single auctioneer announces the bids and the Exchange is that people are not only competing to buy but also to sell. By Exchange rules and by law, no one can bid under a higher bid, and no one can offer to sell higher than someone else s lower offer. That keeps the market a efficient as possible, and keeps the traders on their toes to make sure no one gets the purchase or sale before they do.

NSE NATIONAL STOCK EXCHANGE OF INDIA

Capital market reforms in India have outstripped the process of liberalization in most other sectors of the economy. However, the creation of an independent capital market regulator was the initiation of this reform process. After the formation of the Securities Market regulator, the Securities and Exchange Board of India (SEBI), attention were drawn towards the inefficiencies of the bourses and the need was felt for better regulation, discipline and accountability. A Committee recommended the creation of a 2nd stock exchange in Mumbai called the "National Stock Exchange". The Committee suggested the formation of an exchange which would provide investors across the country a single, screen based trading platform, operated through a VSAT network. It was on this recommendation that setting up of NSE as a technology driven exchange was conceptualized. NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has written for itself the mandate to create a world-class exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments.

OBJECTIVES OF NSE
Establishing a nationwide trading facility for all types of securities; Ensuring equal access to investors all over the country through an appropriate communication network; Providing a fair, efficient and transparent securities market using electronic trading system; Enabling shorter settlement cycles and book entry settlements; and Meeting international benchmarks and standards. NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. The standards set by the exchange in terms of market practices, products, technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form.

The Exchange provides trading in 3 different segments viz. Wholesale debt market (WDM) Capital market (CM) segment and The futures & options (F&O) segment.

1) WHOLESALE DEBT MARKET


The Wholesale Debt Market segment provides the trading platform for trading of a wide range of debt securities which includes State and Central Government securities, T-Bills, PSU Bonds, Corporate Debentures, CPs, and CDs etc. However, along with these financial instruments, NSE has also launched various products (e.g. FIMMDA-NSE MIBID/MIBOR) owing to the market need. A reference rate is said to be an accurate measure of the market price. In the fixed income market, it is the interest rate that the market respects and closely matches. In response to this, NSE started computing and disseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter- Bank Offer Rate (MIBOR). Owing to the robust methodology of computation of these rates and its extensive use, this product has become very popular among the market participants. Keeping in mind the requirements of the banking industry, FIs, MFs, insurance companies, who have substantial investments in sovereign papers, NSE also started the dissemination of its yet another product, the Zero Coupon Yield Curve . This helps in valuation of sovereign securities across all maturities irrespective of its liquidity in the market. The increased activity in the government securities market in India and simultaneous emergence of MFs (Gilt MFs) had given rise to the need for a well Defined bond index to measure the returns in the bond market. NSE constructed such an index the, NSE Government Securities Index . This index provides a benchmark for portfolio management by various investment managers and gilt funds.

2) CAPITAL MARKET SEGMENT


The Capital Market segment offers a fully automated screen based trading system, known as the National Exchange for Automated Trading (NEAT) system. This operates on a price/time priority basis and enables members from across the country to trade with enormous ease and efficiency. Various types of securities e.g. equity shares, warrants, debentures etc. are traded on this system. The average daily turnover in the CM Segment of the Exchange during 2008-09 was nearly Rs. 4,506 crs.

NSE started trading in the equities segment (Capital Market segment) on November 3, 1994 and within a short span of 1 year became the largest exchange in India in terms of volumes transacted. The Equities section provides you with an insight into the equities segment of NSE and also provides real-time quotes and statistics of the equities market. In-depth information regarding listing of securities, trading systems & processes, clearing and settlement, risk management, trading statistics etc are available here.

3) FUTURE & OPTION SEGMENT


Futures & Options segment of NSE provides trading in derivatives instruments like Index Futures, Index Options, Stock Options, Stock Futures and Futures on interstates. Though only four years into it s operations, the futures and options segment of NSE has made a mark for itself globally. In the Futures and Options segment, trading in Nifty and CNX IT index and 53 single stocks are available. futures and options would be available on 118 single stocks.

NSE FAMILY

NSCCL
National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned subsidiary of NSE, was incorporated in August 1995 and commenced clearing operations in April 1996. It was the first clearing corporation in the country to provide notation/settlement guarantee that revolutionized the entire concept of settlement system in India. It was set up to bring and 9 sustain confidence in clearing and settlement of securities; to promote and maintain short and consistent settlement cycles; to provide counter-party Risk guarantee, and to operate a tight risk containment system. It carries out the clearing and settlement of the trades executed in the equities and derivatives segments of the NSE. It operates a welldefined settlement cycle and there are no deviations or deferments from this cycle. It aggregates trades over a trading period T, nets the positions to determine the liabilities of members and ensures movement of funds and securities to meet respective liabilities. It also operates a Subsidiary General Ledger (SGL) for settling trades in government securities for its constituents. It has been managing clearing and settlement functions since its inception without a Single failure or clubbing of settlements. It assumes the counter-party risk of each member and guarantees financial settlement. It has tied up with 10 Clearing Banks viz., Canara Bank, HDFC Bank, IndusInd Bank, ICICI Bank, UTI Bank, Bank of India, IDBI Bank and Standard Chartered Bank for funds settlement while it has direct connectivity with depositories for settlement of securities. It has also initiated a working capital facility in association with the clearing banks that helps clearing members to meet their working capital requirements. Any clearing bank interested in utilizing this facility has to enter into an

agreement with NSCCL and with the clearing member. NSCCL has also introduced the facility of direct payout to clients account on both the depositories. It ascertains from each clearing member, the beneficiary account details of their respective clients who are due to receive pay out of securities. It has provided its members with a front-end for creating the file through which the information is provided to NSCCL. Based on the information received from members, it sends payout instructions to the depositories, so that the client receives the pay out of securities directly to their accounts on the pay-out day. NSCCL currently settles trades under T+2 rolling settlement. It has the credit of continuously upgrading the clearing and settlement procedures and has also brought Indian financial markets in line with international markets. It has put in place online real-time monitoring and surveillance system to keep track of the trading and clearing members outstanding positions and each member is allowed to trade/operate within the pre-set limits fixed according to the funds available with the Exchange on behalf of the member. The online surveillance mechanism also generates various alerts/reports on any price/volume movements of securities not in line with the normal trends/patterns.

IISL
India Index Services and Products Limited (IISL), a joint venture of NSE and Credit Rating Information Services of India Limited (CRISIL), was set up in May 1998 to provide indices and index services. It has a consulting and licensing agreement with Standard and Poor's (S&P), the world's leading provider of invest able equity indices, for co-branding equity indices. IISL pools the index development efforts of NSE and CRISIL into a coordinated whole. It is India's first specialized company which

focuses upon the index as a core product. It provides a broad range of products and professional index services. It maintains over 70 equity indices comprising broad based benchmark indices, sectoral indices and customized indices. Many investment and risk management products based on IISL indices have been developed in the recent past. These include index based derivatives on NSE, a number of index funds and India's first exchange traded fund.

NSDL

Prior to trading in a dematerialized environment, settlement of trades required moving the securities physically from the seller to the ultimate buyer, through the seller's broker and buyer's broker, which involved lot of time and the risk of delay somewhere along the chain. Further, the system of transfer of ownership was grossly inefficient as every transfer involved physical movement of paper to the issuer for registration, with the change of ownership being evidenced by an endorsement on the security certificate. In many cases, the process of transfer took much longer than stipulated in the then regulations. Theft, forgery, mutilation of certificates and other irregularities were rampant. All these added to the costs and delays in settlement and restricted liquidity. To obviate these problems and to promote dematerialization of securities, NSE joined hands with UTI and IDBI to set up the first depository in India called the "National Securities Depository Limited" (NSDL). The depository system gained quick acceptance and in a very short span of time it was able to achieve the objective of eradicating paper from the trading and settlement of securities, and was also able to get rid of the risks associated with fake/forged/stolen/bad paper. Dematerialized delivery today constitutes almost 100% of the total delivery based settlement.

NSE.IT
NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated in October 1999 to provide thrust to NSE s technology edge, concomitant with its overall goal of harnessing latest technology for optimum business use. It provides the securities industry with technology that ensures transparency and efficiency in the trading, clearing and risk management systems. Additionally, NSE.IT provides consultancy services in the areas of data warehousing, internet and business continuity plans. Amongst various products launched by NSE.IT are NEAT XS, a Computer-ToComputer Link (CTCL) order routing system, NEAT iXS, an internet trading system and Promos, professional broker s back office system. NSE.IT also offers an e learning oral, invarsitywww.finvarsity.com) dedicated to the finance sector. The site is powered by Enlister - a learning management system developed by NSE.IT jointly with an e-learning partner. New initiatives include payment gateways, products for derivatives segments and Enterprise Management Services (EMSs). NCDEX NSE joined hand with other financial institutions in India viz., ICICI Bank, NABARD, LIC, PNB, CRISIL, Canara Bank and IFFCO to promote the NCDEX which provide a platform for market participants to trade in wide spectrum of commodity derivatives. Currently NCDEX facilitates trading of 37 agro based commodities, 1 base metal and 2 precious metal.

LISTING OF SECURITIES
The stocks, bonds and other securities issued by issuers require listing for providing liquidity to investors. Listing means formal admission of a security to the trading platform of the Exchange. It provides liquidity to investors without compromising the need of the issuer for capital and ensures effective monitoring of conduct of the issuer and trading of the securities in the interest of investors. The issuer wishing to have trading privileges for its securities satisfies listing requirements prescribed in the relevant statutes and in the listing regulations of the Exchange. It also agrees to pay the listing fees and comply with listing requirements on a continuous basis. All the issuers who list their securities have to satisfy the corporate governance requirement framed by regulators.

Listing Criteria
The Exchange has laid down criteria for listing of new issues by companies, companies listed on other exchanges, and companies formed by amalgamation/restructuring, etc. in conformity with the Securities Contracts (Regulation) Rules, 1957 and directions of the Central Government and the Securities and Exchange Board of India (SEBI). The criteria include minimum paid-up capital and market capitalization, project appraisal, company/promoter's track record, etc. The issuers of securities are required to adhere to provisions of the Securities Contracts (Regulation) Act, 1956, the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992, and the rules, circulars, notifications, guidelines, etc. prescribed there under.

Listing Agreement
All companies seeking listing of their securities on the Exchange are required to enter into a listing agreement with the Exchange. The agreement specifies all the requirements to be continuously complied with by the issuer for continued listing. The Exchange monitors such compliance. Failure to comply with the requirements invites suspension of trading, or withdrawal/delisting, in addition to penalty under the Securities Contracts (Regulation) Act, 1956. The agreement is being increasingly used as a means to improve corporate governance

Benefits of Listing on NSE


NSE provides a trading platform that extends across the length and breadth of the country. Investors from approximately 345 centers can avail of trading facilities on the NSE trading network. Listing on NSE thus, enables issuers to reach and service investors across the country. NSE being the largest stock exchange in terms of trading volumes, the Securities trade at low impact cost and are highly liquidity. This in turn reduces the cost of trading to the investor. The trading system of NSE provides unparallel level of trade and posttrade information. The best 5 buy and sell orders are displayed on the trading system and the total number of securities available for buying and selling is also displayed. This helps the investor to know the depth of the market. Further, corporate announcements, results, corporate actions etc are also available on the trading system, thus reducing scope for price manipulation or misuse. The facility of making initial public offers (IPOs), using NSE's network and software, results in significant reduction in cost and time of issues. NSE's web-site www.nseindia.com provides a link to the web-sites of the companies that are listed on NSE, so that visitors interested in any company can visit that company's web-site from the NSE site. Listed companies are provided with monthly trade statistics for the securities of the company listed on the Exchange. The listing fee is nominal.

MEMBERSHIP ADMINISTRATION

The trading in NSE has a three tier structure-the trading platform provided by the Exchange, the broking and intermediary services and the investing community. The trading members have been provided exclusive rights to trade subject to their continuously fulfilling the obligation under the Rules, Regulations, Byelaws, Circulars, etc. of the Exchange. The trading members are subject to its regulatory discipline. Any entity can become a trading member by complying with the prescribed eligibility criteria and exit by surrendering trading membership. There are no entry/exit barriers to trading membership.

Eligibility Criteria
The Exchange stresses on factors such as corporate structure, capital adequacy, track record, education, experience, etc. while granting trading rights to its members. This reflects a conscious effort by the Exchange to ensure quality broking services which enables to build and sustain confidence in the Exchange's operations. The standards stipulated by the Exchange for trading membership are substantially in excess of the minimum statutory requirements as also in comparison to those stipulated by other exchanges in India. The exposure and volume of transactions that can be undertaken by a trading member are linked to liquid assets in the form of cash, bank guarantees, etc. deposited by the member with the Exchange as part of the membership requirements. The trading members are admitted to the different segments of the Exchange subject to the provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the rules, circulars, notifications, guidelines, etc., issued there under and the byelaws, Rules and Regulations of the Exchange. All trading members are registered with SEBI.

DEMATERIALISATION (DEMAT) MEANING


Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited into the investor's account with his/her DP.

Dematerializing securities (physical holding into electronic holding)


In order to dematerialize physical securities one has to fill in a DRF (Demat Request Form) which is available with the DP and submit the same along with physical certificates one wishes to dematerialize. Separate DRF has to be filled for each ISIN Number. The complete process of dematerialization is outlined below: Surrender certificates for dematerialization to your depository participant. Depository participant intimates Depository of the request through the system. Depository participant submits the certificates to the registrar of the Issuer Company. Registrar confirms the dematerialization request from depository. After dematerializing the certificates, Registrar updates accounts and informs depository of the completion of dematerialization. Depository updates its accounts and informs the depository participant. Depository participant updates the demat account of the investor.

Procedure for buying & selling dematerialized securities


The procedure for buying and selling dematerialized securities is similar to the procedure for buying and selling physical securities. The difference lies in the process of delivery (in case of sale) and receipt (in case of purchase) of securities.

In case of purchase:1. The broker will receive the securities in his account on the payout day 2. The broker will give instruction to its DP to debit his account and credit Investor s account

3. Investor will give Receipt Instruction to DP for receiving credit by filling Appropriate form. However one can give standing instruction for credit Into ones account that will obviate the need of giving Receipt Instruction every time.

In case of sale:The investor will give delivery instruction to DP to debit his account and credit the broker s account. Such instruction should reach the DP s office at least 24 hours before the pay-in as otherwise DP will accept the instruction only at the investor s risk.

INVESTMENT

Investment means the use of money for the purpose of making more money, to gain income or increase capital, or both. 1) Short Term Investment 2) Long Term Investment

Short Term Investment:It is more risky A successful short term trading mindset instead requires iron discipline, intense focus and steely devotion. Short term trading can be divided in 3 sections
y Day Trading y Swing Trading y Position Trading

Day Trading
Day traders buy and sell stocks throughout the day in the hope that the price of the stocks will fluctuate in value during the day, allowing them to earn quick profits. A day trader will hold a stock anywhere from a few seconds to few hours, but will always sell all of those stocks close of the day. The day trader will therefore not own any position at the close of the each day, and there is overnight risk. The objective of day trading is to quickly get in and out of any particular stock for profits anywhere from few cents to several points per share on an intra-day basis. Day trading can be further sub-divided into number of styles, including. Scalpers: This style of day trading involves the rapid and repeated buying and selling of a large volume of stocks within seconds or minutes. The objective is to earn a small per share profit on each transaction while minimizing the risk.

Momentum Traders: This style of day trading involves identifying and trading stocks that are in a moving pattern during the day, in an attempt to buy stocks at bottoms and sell at tops.

Swing Trading
The principal difference between day trading and swing trading is that swing traders will normally have a slightly longer time horizon than day traders for holding a position in a stock. As is the case with day traders, swing traders also attempt to predict the short term fluctuation in a stock s price. However swing traders are willing to hold the stocks for more than one day, if necessary, to give to stock price some time to move or to capture additional momentum in the stock s price. Swing traders will generally hold on to their stock positions anywhere from a few hours to several days. Swing trading has the capability of providing higher returns than day trading. However, unlike day traders who liquidate their positions at the end of each day, swing traders assume overnight risk. There are some significant risks in carrying positions overnight. For example news events and earnings warnings announced after the closing bell can result in large, unexpected and possibly adverse changes to a stock's price

Position Trading
Position trading is similar to swing trading, but with a longer time horizon. Position traders hold stocks for a time period anywhere from one day to several weeks or months. These traders seek to identify stocks where the technical trends suggest a possible large movement in price is likely to occur, but which may not be fully played out for several weeks or months.

Long Term Investment:


A successful long term trading mindset requires, above all, patience and perseverance. These are more difficult attributes to develop in the average trader. Too often the average short-term trader succumbs to the markets lure and develops a frantic, get-it-now mindset believing every price blip represents a trading opportunity. As this attitude is fanned by the media and brokerage industry, more and more long term traders have become aggressive swing traders and swing traders become rabid day traders - more often than not with disastrous consequences. Long term trading results in less trades with fewer mistakes and lower commission and slippage costs because overtrading is one of the biggest sources of losses facing both new and established traders. Why is this so? Obviously, more trades mean more commissions and more slippage. Few short-term traders realize, however, that their total commission and slippage costs in any year often exceed their total losses for the year. In other words, many losing short-term traders would have actually made money on an annual basis had they not incurred the exorbitant commission and slippage costs of trading throughout the year. Fewer trades mean fewer mistakes. Long term trading unlike short term requires dramatically reduced time for analysis and trading. If you are trading using weekly data, only one to two hours each weekend are required to implement a sophisticated long term trading system for 21 or more commodities. This includes the time to completely download your quotes and update your data files, verify which are the correct months to trade for each commodity, figure out if you have any positions to rollover, generate your trading signals, and write down orders to your broker. On the contrary a typical successful day trader literally becomes a slave to their quote machines during market hours.

BROKER & SUB-BROKER BROKER

A broker is a member of a recognized stock exchange, who is permitted to do trades on the screen-based trading system of different stock exchanges. He is enrolled as a member with the concerned exchange and is registered with SEBI.

Sub broker
A sub broker is a person who is registered with SEBI as such and is affiliated to a member of a recognized stock exchange.

Client Agreement Form


This form is an agreement entered between client and broker in the presence of witness where the client agrees (is desirous) to trade/invest in the securities listed on the concerned Exchange through the broker after being satisfied of brokers capabilities to deal in securities. The member, on the other hand agrees to be satisfied by the genuineness and financial soundness of the client and making client aware of his (broker s) liability for the business to be conducted.

Details of Client Registration form


The brokers have to maintain a database of their clients, for which you have to fill client registration form. In case of individual client registration, you have to broadly provide following information: Your name, date of birth, photograph, address, educational qualifications, occupation, residential status(Resident Indian/ NRI/others) Unique Identification Number (wherever applicable) Bank and depository account details Income tax No. (PAN/GIR) which also serves as unique client code. If you are registered with any other broker, then the name of broker and concerned Stock exchange and Client Code Number.

Proof of identity submitted either as MAPIN UID Card/Pan No./Passport/Voter ID/Driving license/Photo Identity card issued by Employer registered under MAPIN

For proof of address (any one of the following):


1. Passport 2. Voter ID 3. Driving license 4. Bank Passbook 5. Rent Agreement 6. Ration Card 7. Flat Maintenance Bill 8. Telephone Bill 9. Electricity Bill 10. Certificate issued by employer registered under MAPIN 11. Insurance Policy Each client has to use one registration form. In case of joint names /family members, a separate form has to be submitted for each person.

Unique Client Code


In order to facilitate maintaining database of their clients, it is mandatory for all brokers to use unique client code which will act as an exclusive identification for the client. For this purpose, PAN number/passport number/driving License/voters ID number/ ration card number coupled with the frequently used bank account number and the depository beneficiary account can be used for identification, in the given order, based on availability.

Maximum brokerage that a broker/sub broker can charge


The maximum brokerage that can be charged by a broker has been specified in the Stock Exchange Regulations and hence, it may differ from across various exchanges. As per the BSE & NSE Bye Laws, a broker cannot charge more than 2.5% brokerage from his clients. This maximum brokerage is inclusive of the brokerage charged by the sub-broker.

Further, SEBI (Stock brokers and Sub brokers) Regulations, 1992 stipulates that sub broker cannot charge from his clients, a commission which is more than 1.5% of the value mentioned in the respective purchase or sale note.

Charges that can be levied on the investor by a stock broker/sub broker


The trading member can charge: 1. Brokerage charged by member broker. 2. Penalties arising on specific default on behalf of client (investor) 3. Service tax as stipulated. 4. Securities Transaction Tax (STT) as applicable. The brokerage, service tax and STT are indicated separately in the contract note.

STT (Securities Transaction Tax)


Securities Transaction Tax (STT) is a tax being levied on all transactions done on the stock exchanges at rates prescribed by the Central Government from time to time. Pursuant to the enactment of the Finance (No.2) Act, 2004, the Government of India notified the Securities Transaction Tax Rules, 2004 and STT came into effect from October 1, 2004.

Rolling Settlement
In a Rolling Settlement trades executed during the day are settled based on the net obligations for the day. Presently the trades pertaining to the rolling settlement are settled on a T+2 day basis where T stands for the trade day. Hence, trades executed on a Monday are typically settled on the following Wednesday (considering 2 working days from the trade day). The funds and securities pay-in and pay-out are carried out on T+2 day.

AUCTION
WHAT IS AN AUCTION? The Exchange purchases the requisite quantity in the Auction Market and gives them to the buying trading member. The shortages are met through auction process and the difference in price indicated in contract note and price received through auction is paid by member to the Exchange, which is then liable to be recovered from the client.

What happens if the shares are not bought in the auction?


If the shares could not be bought in the auction i.e. if shares are not offered for sale in the auction, the transactions are closed out as per SEBI guidelines. The guidelines stipulate that the close out Price will be the highest price recorded in that scrip on the exchange in the settlement in which the concerned contract was entered into and up to the date of auction/close out OR 20% above the official closing price on the exchange on the day on which auction offers are called for (and in the event of there being no such closing price on that day, then the official closing price on the immediately preceding trading day on which there was an official closing price), whichever is higher. Since in the rolling settlement the auction and the close out takes place during trading hours, the reference price in the rolling settlement for close out procedures would be taken as the previous day s closing price.

Chapter 5 Data analysis


FUNDAMENTAL ANALYSIS
The investor while buying stock has the primary purpose of gain. If he invests for a short period of time it is speculative but when he holds it for a fairly long period of time the anticipation is that he would receive some return on his investment. Fundamental analysis is a method of finding out the future price of a stock, which an investor wishes to buy. The method for forecasting the future behavior of investments and the rate of return on them is clearly through an analyze of the broad economic forces in which they operate. The kind of industry to which they belong and the analysis of the company's internal working through statements like income statement, balance sheet and statement of changes of income.

ECONOMIC ANALYSIS
Investors are concerned with those forces in the economy, which affect the performance of organizations in which they wish to participate, through purchase of stock. A study of the economic forces would give an idea about future corporate earnings and the payment of dividends and interest to investors. Some of the broad forces within which the factors of investment operate are:

1. POPULATION: Population gives an idea of the kind of labor force in a country. In some countries the population growth has slowed down whereas in India and some other third world countries there has been a population explosion. Population explosion will give demand for more industries like hotels, residences, service industries like health, consumer demand like refrigerators and cars. Likewise, investors should prefer to invest in

industries, which have a large amount of labor force because in the future such industries will bring better rates of return. 2. RESEARCH AND TECHNOLOGICAL DEVELOPMENTS: The economic forces relating to investments would be depending on the amount of resources spent by the government on the particular technological development affecting the future. Broadly the investor should invest in those industries which are getting a large amount of share in the funds of the development of the country. For example, in India in the present context automobile industries and spaces technology are receiving a greater attention. These may be areas, which the investor may consider for investments. 3. CAPITAL FORMATION: Another consideration of the investor should be the kind of investment that a company makes in capital goods and the capital it invests in modernization and replacement of assets. A particular industry or a particular company which an investor would like to invest can also be viewed at with the help of the economic indicators such as the place, value and property position of the industry, group to which it 110ngs and the year-to-year returns through corporate profits. 4. NATURAL RESOURCES AND RAW MATERIALS: The natural resources are to a large extent responsible for a country's economic development and overall improvement in the condition of corporate growth. In India, technological discoveries recycling of materials, nuclear and solar energy and new synthetics should give the investor an opportunity to invest in untapped or recently tapped resources which would also produce higher investment opportunity.

COMPANY ANALYSIS
Company analysis is a study of the variables that influence the future of a firm both qualitatively and quantitatively. It is a method of assessing the competitive position of a firm earning and profitability, the efficiency with which it operates its financial position and its ful1l with respect to the

earning of its shareholders. The fundamental nature of this analysis is that each share of a company has an intrinsic value, which is dependent on the company's financial performance, quality of management and record of its earnings and dividend. They believe that the market price of share in a period of time will move towards its intrinsic value. If the market price of a share is lower than the intrinsic value, as evaluated by the fundamental analysis, then the share is supposed to be undervalued and it should be purchased but if the current market price shows that it is more than intrinsic value then according to the theory the share should be sold. This basic approach is analyzed through the financial statements of an organization. The basic financial statements, which are required as tools of the fundamental analyst, are the income statement, the balance sheet, and the statement of changes in financial position. These statements are useful for investors, creditors as well as internal management of a firm and on the basis these statements the future course of action may be taken by the investors of the firm. While evaluating a company, its statement must be carefully judged to find out that they are: (a) Correct, (b) Complete,

TECHNICAL ANALYSIS
Technical analysis is simply the study of prices as reflected on price charts. Technical analysis assumes that current prices should represent all known information about the markets. Prices not only reflect intrinsic facts, they also represent human emotion and the pervasive mass psychology and mood of the moment. Prices are, in the end, a function of supply and demand. However, on a moment to moment basis, human emotions fear, greed, panic, hysteria, elation, etc. also dramatically effect prices. Markets may move based upon people s expectations, not necessarily facts. A market "technician" attempts to disregard the emotional component of trading by making his decisions based upon chart formations, assuming that prices reflect both facts and emotion.

Analysts use their technical research to decide whether the current market is a BULL MARKET or a BEAR MARKET.

TECHNICAL ANALYSIS OF INDIAN STOCK MARKET BSE SENSEX INDEX


The BSE 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. Technical Analysis of Indian stock market BSE Sensex Index The Index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S& and Dow Jones use the Free-float methodology. 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 (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country.

Technical Analysis of Indian stock market BSE Sensex Index1 Day


Technical Analysis Chart of Indian stock market BSE Sensex Index

5 Day Technical Analysis Chart of Indian stock market BSE Sensex Index

1 Year Technical Analysis Chart of Indian stock market BSE Sensex Index

Chapter 6 Conclusion
Share market is a high risk-high reward, permanent source of long term finance for corporate enterprises and short term earning for shareholders. The investors, who desire to share the risk, return and control associated with ownership of companies would invest in equity capital. Today, the Indian Equity Market is one of the most technologically developed in the world and is on par with other developed markets abroad. The introduction of on-line trading system, dematerialization, and introduction of rolling settlement have facilitated quick trading and settlements which lead to larger volumes. The setting up of the National Stock Exchange of India Limited has revolutionized the face of the stock market. NSE is the only stock exchange which covers majority equity investments every day. Also equity capital market encourages capital formation in the country. The specific factor, which influences equity market, is the investor s sentiment towards the stock market as a whole. So investor first has to analyze and invest and not speculate in shares. The introduction of online trading has given a much-needed impetus to the Indian equity markets. In this technological world things are needed to move at a faster pace, and with the introduction of methods of marketing securities in the stock exchange has expanded its business at a tremendous speed. According to economic times, the research states the major reason behind the irregularities of market (up and down in sale and purchase, price of share) is mainly because of forcasting mid set of equity investors. So, the stock exchanges must disregards the emotional component of trading by making investors decisions based upon chart formations, assuming that prices reflect both facts and emotion. And also by creating the awareness of fundamental analysis (Fundamental analysis is a method of finding out the future price of a stock, which an investor wishes to buy) among the investors to avoid the irregularities while

trading. So to increase the volume of equity investment, the stock exchanges should strive to increase transparency, strictly enforce corporate governance norms, provide more value-added services to investors, and take steps to increase investor confidence. These stock exchanges will have to plan strategic tie-ups with their foreign counterparts to get an international platform. face international competition every Indian stock exchange has to stress on innovation and sustained investment in technology to remain ahead.

BIBLIOGRAPHY
Books Referred
1. Investment Management -Preeti Singh 2. Indian Financial Market -T R Venkatesh 3. Financial Market -P K Bandgar 4. Merchant Banking & Financial Services -Anil Agashe.

Magazines
1. Business Today 2. India Today 3. Business World

Websites
1. www.nseindia.com 2. www.indiainfoline.com. 3. www.equitymaster.com 4. www.bseindia.com 5. www.sebi.gov.in 6. www.financialexpress.com