PROPOSED FINAL DRAFT

SUBMITTED TOWARDS THE FULFILMENT OF THE COURSE TITLED

INVESTMENT AND SECURITIES

LAWS

TOPIC: NASDAQ

Submitted To:

MR. ABHISHEK KUMAR

Faculty of investment laws

Submitted By:

ABHISHEK KUMAR

Roll no. 1906

5th year(9th Sem), BA. LLB

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 DECLARATION
I, hereby declare that the project entitled “NAQSAD” submitted in partial fulfilment of the
requirements for award of the degree of B.A., LL.B. at CHANAKYA NATIONAL LAW
UNIVERSITY, is an authentic work and has not been submitted to any other University/Institute for
award of any degree/diploma.

ABHISHEK KUMAR
(1906)
B.A. LL. B
FIFTH YEAR.

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TABLE OF CONTENTS
Page no:
Table of Cases……………….…………………………………………………..
Acknowledgement………..………………………………………….………….
1. Introduction…………………………...………………….…………. ………
Research methodology……………………………………………………….

Aims and objective……………………………………………………………

Hypothesis…………………………………………………………………….

Source of data……………………………………………………………….

Type of study…………………………………………………………………

2. Working of NASDAQ Stock Exchange……………………….……………

3. The impact of NASDAQ on Indian stock index………………….……......
4. Conclusion ………………..………………...……………………….....................

Bibliography………………………………………………….…………………

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 ACKNOWLEDGEMENT

It’s a fact that any research work prepared, compiled or formulated in isolation is
inexplicable to an extent. This research work, although prepared by me, is a culmination
of efforts of a lot of people.

Firstly, I would like to thank our teacher for the subject of INVESTMENT AND
SECURITIES LAW( MR. ABHISHEK KUMAR) for assisting me with his
prudence in accomplishment of this work which relates to investment law. I would
like to thank him for his valuable suggestions towards the making of this project.

Thereafter, I would also like to express my gratitude towards my classmates and friends
for the completion of this project work. And I would also like to express my gratitude
towards the library staff of my college which assisted me in acquiring the sources
necessary for the compilation of my project.

Last, but not the least, I would like to thank the Almighty for obvious reasons.

- Naveen kumar

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

The size of the worldwide 'bond market' is estimated at $45 trillion. The size of the 'stock market' is
estimated at about $51 trillion. The world derivatives market has been estimated at about $480 trillion
'face' or nominal value, 30 times the size of the U.S. economy and 12 times the size of the entire world
economy1. It must be noted though that the value of the derivatives market, because it is stated in
terms of notional values, cannot be directly compared to a stock or a fixed income security, which
traditionally refers to an actual value. (Many such relatively illiquid securities are valued as marked
to model, rather than an actual market price.)

NASDAQ, stands for National Association of Securities Dealers Automated Quotations System. It's
the place where people go to buy and sell shares of stock.

NASDAQ was founded in 1971 by National Association of Securities Dealers (NASD). It is owned
and operated by the NASDAQ OMX Group, the stock of which was listed on its own stock exchange
beginning July 2, 2002, under the ticker symbol NASDAQ. It is regulated by the Financial Industry
Regulatory Authority (FINRA), the successor to the NASD.

When the NASDAQ stock exchange began trading on February 8, 1971, it was the world's first
electronic stock market. At first, it was merely a computer bulletin board system and did not actually
connect buyers and sellers. The NASDAQ helped lower the spread (the difference between the bid
price and the ask price of the stock) but somewhat paradoxically was unpopular among brokerages
because they made much of their money on the spread.

NASDAQ was the successor to the over-the-counter (OTC) system of trading. As late as 1987, the
NASDAQ exchange was still commonly referred to as the OTC in media and also in the monthly
Stock Guides issued by Standard & Poor's Corporation.

Over the years, NASDAQ became more of a stock market by adding trade and volume reporting and
automated trading systems. NASDAQ was also the first stock market in the United States to start

1
http://risingstocks.blogspot.in/2007/10/definition-of-stock-market.html/accessed on 04/11/2017
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trading online. Nobody before them had ever done this, highlighting NASDAQ-traded companies
(usually in technology) and closing with the declaration that NASDAQ is "the stock market for the
next hundred years." Its main index is the NASDAQ Composite, which has been published since its
inception. However, its exchange-traded fund tracks the large-cap NASDAQ-100index, which was
introduced in 1985 alongside the NASDAQ 100 Financial Index.

In February, 2011, in the wake of an announced merger of NYSE Euro next with Deutsche Börse,
speculation developed that Nasdaq and Intercontinental Exchange (ICE) could mount a counter-bid
of their own for NYSE. Nasdaq could be looking to acquire the American exchange's cash equities
business, ICE the derivatives business. As of the time of the speculation, "NYSE Euronext’s market
value was $9.75 billion. Nasdaq was valued at $5.78 billion, while ICE was valued at $9.45 billion2.
Late in the month, Nasdaq was reported to be considering asking either ICE or the Chicago to join in
what would probably have to be, if it proceeded, an $11–12 billion counterbid.

EASDAQ (European Association of Securities Dealers Automatic Quotation System) founded

originally as a European equivalent to NASDAQ, it was purchased by NASDAQ in 2001 and became
NASDAQ Eur03, it shut down operations as a result of the burst of the dot-com bubble. In 2007,
NASDAQ Europe was revived as Aqueduct and is currently operating under Börse Berlin.

Today, the Nasdaq OMX Group is the largest exchange company in the world. Approximately 3700
companies from 50 countries are listed on their exchanges, with a total market value of more than
$4.1 trillion3. The Nasdaq is the world's largest exchange for the technology, biotech and paper
products industries, and also boasts a significant presence in the industrial, healthcare, financial and
consumer brands industries. World-class companies such as Starbucks, Google, JetBlue, Apple and
Costco are some of the familiar names that trade on the Nasdaq each and every day.

NASDAQ trades more shares per day than any other U.S. equities market. On NASDAQ, trades are
executed through a sophisticated computer and telecommunications network – a system which
transmits timely, critical investment information to more than 1.3 million users in 83 countries.
NASDAQ is also among the world’s best-regulated stock markets, employing sophisticated

2
https://www.scribd.com/document/97618641/Nasdaq/accessed on 04/11/2017
3
http://www.nasdaqomxnordic.com/about_us/accessed on 04/11/2017
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surveillance systems and regulatory specialists to protect investors and provide a fair and competitive
trading environment.

AIMS AND OBJECTIVE:

The researcher aims at studying the NASDAQ. He furthers aims at studying as to how NASDAQ
stock exchange works. The researcher will also make a study of the impact of NASDAQ on Indian
stock index.

Research Methodology
The project will be basically based on the doctrinal method of research as no field work is to be done
on this topic.

Hypothesis

The researcher has used the arguendo that the Indian stock index dances to the tune of NASDAQ.

Sources of Data
The whole project will be made with the use of secondary source. The following secondary sources
of data will be used in the project-
1. Books

2. Websites

Type of Study

For this topic, the researcher has opted for Descriptive and Explanatory type of study as in this topic,
the researcher will be providing the descriptions of the existing facts.

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WORKING OF NASDAQ STOCK EXCHANGE
Location
The location of an exchange refers not so much to its street address but the ``place'' where its
transactions take place. For example, on the NYSE (the New York Stock Exchanege), all trades occur
in a physical place, on the trading floor of the NYSE. So, when you see those guys waving their hands
on TV or ringing a bell before opening the exchange, you are seeing the people through whom stocks
are transacted on the NYSE.

The NASDAQ, on the other hand, is located not on a physical trading floor but on a
telecommunications network. People are not on a floor of the exchange matching buy and sell orders
on the behalf of investors. Instead, trading takes place directly between investors and their buyers or
sellers, who are the market makers, through an elaborate system of companies electronically
connected to one another.

How a stock exchange actually works

It uses remarkable and highly reliable computer systems to handle the exchange of stocks between
buyers and sellers, and to set opening and closing prices. In this project, the researcher has taken a
high-level view of the different services and techniques that the NASDAQ stock market uses for the
transactions. For starters, where do all of these stock shares come from? The shares of stocks being
bought and sold belong to the companies listed on the NASDAQ exchange. To take a step back: if a
company wants to go public, it chooses the exchange where it will be listed -- that is, where it will
sell its shares. Several thousand companies have chosen NASDAQ.

Apparently simple act of providing a stock exchange actually has three separate components4:
• The interface -- The place where broker dealers and market makers gain access to the
system.
• The matching engine -- A computer that connects buyers and sellers when their prices
match.
• Quote services -- Data feeding the buy and sell price quotes that NASDAQ provides.

There are many other services provided inside the exchange, of course, including MarketSite
broadcasting, record keeping, and backup services. But the three services described above are the
most important. Let's look at each of them in detail.

4
https://money.howstuffworks.com/nasdaq.html/accessed on 05/11/2017
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Of quote services, interfaces and matching engines, quote services are perhaps the easiest to
understand. Every second of every day, the prices of stocks are fluctuating. And people around the
world want to see those prices in real time: Broker dealers want to provide quotes to their customers,
and news organizations want quotes to display in their shows. To meet this need, NASDAQ provides
up-to-the-minute price quotes through its computers, which can see what's happening inside the
matching engine and then send that data out to the rest of the world.

Buyers and sellers electronically enter their trades with their broker dealers, and those trades come
into the NASDAQ system through hundreds of computers (one computer for each broker dealer).
The trades then make their way to the matching engine, which, on the NASDAQ exchange, is a single,
highly reliable computer. It's where the actual trading takes place.

• Customer 1: sell 50 shares for $15.40

• Customer 2: sell 200 shares for $15.25
• Customer 3: sell 100 shares for $15.20

Here's a simple way to conceive of the matching engine. Let’s imagine there's a company listed on
the NASDAQ exchange -- call it the ABC company. Inside the matching engine, there's a place to
hold all of the pending trades for ABC5. Let's say three people want to sell their shares of stock in the
ABC company. They place their orders as follows:

Now imagine that there are four people who want to buy shares of the ABC company. The list looks
like this6:

• Customer A: buy 100 shares for $15.15

• Customer B: buy 200 shares for $15.10
• Customer C: buy 150 shares for $15.00
• Customer D: buy 75 shares for $14.95

Right now there are no matches. The lowest price on the sell side is $15.20, and the highest price on
the buy side is $15.15. The difference between the lowest selling price and the highest buying price
is called the spread. In a widely traded stock, it's usually only a penny or two. In a low-volume stock,
the spread can grow much larger. Because of the spread here, these trades are going to sit in these
lists waiting for a match to come along.

5
https://docuri.com/download/nasdaq_59c1e059f581710b286983ca_pdf/accessed on 05/11/2017
6
ibid
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Now let's imagine that Customer A sends in a new sell order. He wants to buy 50 shares for $15.25.
Instead, he'll get the stock for $15.20 from Customer 3, because that's the lowest price available in
the list of sellers. The 100 shares available at the $15.20 sale price will be split -- 50 shares will
remain in the list, while the other 50 will complete the transaction. Customer 3 is happy because he
got the price he wanted, and Customer A is happy because he got a small discount.

The matching engine is doing this kind of thing across thousands of listed stocks, and millions of
matches are handled by the matching engine every day. Once the match is made, information about
the completed transaction flows out of the matching engine and goes back to the broker dealers of the
buyer and seller. Information also flows to the quote servers so that anyone who's interested can see
what happened.

This is a highly simplified explanation, of course, In reality, because of the number of people trading,
the system takes thousands of computers and brokers to implement, and the process gets very
complicated very quickly.

NASDAQ Exchange Description

As the world's largest electronic stock market, Nasdaq is not limited to one central trading location.
Rather, trading is executed through Nasdaq's sophisticated computer and telecommunications
network, which transmits real-time quote and trade data to more than 1.3 million users in 83 countries.
Without size limitations or geographical boundaries, Nasdaq's "open architecture" market structure
allows a virtually unlimited number of participants to trade in a company's stock.

Today, Nasdaq lists the securities of nearly 4,100 of the world's leading companies and each year,
continues to help hundreds of companies successfully make the transition to public ownership7.

Who Trades Nasdaq Stocks8?

Trading on Nasdaq is not limited to any fixed number of participants. This allows a large number of
firms with widely different business models and trading technologies to connect to the Nasdaq
network and compete on an equal basis. Rather than forcing investors to go through a single financial
firm to buy or sell stocks, Nasdaq links up a variety of competitors and lets participants choose with
whom they are going to trade. All firms trading Nasdaq stocks must be certified with the Securities
and Exchange Commission (SEC) and registered with Nasdaq and NASD Regulation. Following are
examples of the kinds of firms trading Nasdaq stocks:

7
https://www.marketvolume.com/info/stock_market_exchanges.asp/accessed on 05/11/2017
8
www.nasdaq.com/screening/company-list.aspx/accessed on 05/11/2017
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Market Makers9
Key to Nasdaq's market structure are a core group of financial firms called market makers. More than
500 market making firms trade on Nasdaq, acting as distributors for Nasdaq-listed securities. Also
known as dealers, market makers are unique in that they commit their own capital to Nasdaq-listed
securities ” then turn around and re-distribute the stock as needed. They are required at all times to
post their bid and ask prices in the Nasdaq network where they can be viewed and accessed by all
participants. By being willing to buy or sell stock using their own funds, market makers add liquidity
to Nasdaq's market, ensure that there are always buyers and sellers for Nasdaq-listed securities, and
enable trades to be filled quickly and efficiently.

ELECTRONIC COMMUNICATION NETWORKS (ECNs)

In addition to market makers, the Nasdaq network also connects alternative trading systems into the
market, such as electronic communication networks (ECNs). ECNs provide electronic facilities that
investors can use to trade directly with each other. As Nasdaq market participants, ECNs display
either one-sided or two-sided quotes that reflect actual orders. Additionally, they provide investors
with an anonymous way to enter orders into the marketplace. Unlike market makers, ECNs operate
simply as order-matching mechanisms and do not maintain inventories of their own.

Order-Entry Firms
Order-entry firms are also Nasdaq market participants. Order-entry firms enter and execute orders
through Nasdaq on behalf of retail and institutional customers and other broker/dealers, but they do
not maintain buy or sell price quotations in Nasdaq-listed securities. Like ECNs, order-entry firms do
not commit capital to stocks, but they do increase the competition among market participants —
helping to keep stock prices competitive and adding to the market's liquidity.

Related Links:
Nasdaq MarketWatch
How Does Nasdaq's Market Structure Benefit Listed Companies?
Through its unique framework of multiple market participants, Nasdaq provides listed companies'
securities with ready access to investors, visibility in the marketplace, and market conditions that
promote immediate and continuous trading:

Liquidity

9
www.investopedia.com/ask/answers/128.aspx/accessed on 06/11/2017
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Liquidity is best defined as the ease with which stocks can be bought and sold in the market. By
encouraging trading among a virtually unlimited number of market participants, Nasdaq offers an
environment that facilitates greater liquidity.

Depth of Market
Depth of market refers to the total amount of money market makers have invested in a single security
and is related to the number of market participants trading in the security. However, even a few market
participants can provide abundant depth of market by committing to buy or sell large quantities of a
security. Knowing there is depth of market can reassure investors of a stock's marketability, especially
during periods of heavy trading volume.

Transparency
Transparency, the ability to view investors' buy and sell orders at different price levels, is crucial to
the decision-making process in securities trading. Nasdaq's open market structure offers a level of
transparency not found on other major U.S. markets. On Nasdaq, all bid and ask quotations in a given
security are broadcast over the network. All Nasdaq market participants regardless of whether they
are professional traders can see the same information.

Price Efficiency
In securities trading, as in most industries, competition is one of the most important factors in creating
price efficiencies. The aggressive competition for orders fostered among Nasdaq's market participants
helps to ensure that investors receive the best prices for the securities they trade.

nasdaq.com
nasdaq.com is one of the most popular financial sites on the Web. Averaging more than seven million
page views per day, nasdaq.com offers unprecedented visibility to listed companies. Investors can
log on to nasdaq.com and see how Nasdaq, Dow Jones, and the S&P 500 are performing, scan the
latest news and fund commentary and get quotes for stocks, mutual funds, and options on major U.S.
markets. With a wealth of investor services, users are encouraged to visit the following links for an
overview of the site or to view the services available.

Nasdaq MarketSites
Located in the heart of New York's Times Square, Nasdaq's MarketSite Tower soars seven stories
high and is the largest video screen in the world. CNBC, CNNfn, Bloomberg, CBS MarketWatch

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these and other financial news media broadcast live throughout the day from the MarketSite's
Broadcast Studio, putting Nasdaq listed companies front and center before millions of investors. Take
a peek view the action from the MarketSiteSM live webcam10.

Unparalleled Service
Companies can expect unparalleled service when they list on Nasdaq. Each Nasdaq company has a
single point of contact: their Nasdaq Director, who serves as a link to an extensive portfolio of
services. Directors provide day-to-day assistance and can offer valuable insight on investor relations,
market and industry issues.

Executive Programs
Nasdaq-listed company executives are invited to participate in a variety of programs designed to
present top managers with timely information and networking opportunities. Nasdaq programs
include a wide range of topics such as industry sector specific seminars and investor relations forums
that provide companies with the tools they need to be public.

Nasdaq Online
Designed for senior executives at Nasdaq listed companies, Nasdaq Online is a one-of-a-kind
strategic planning tool. It provides market data on all US-traded companies and real-time quotes for
Nasdaq stocks. Plus, there's key information on institutional ownership, research coverage,
performance ratios and more. All data is continually updated and available in a single, integrated
source. And Nasdaq Online is free to listed companies.

Global Vision
Nasdaq is building the world's first truly global stock market digital and Internet-accessible, open to
anyone anywhere in the world, 24 hours a day. Nasdaq has already broken new ground in Japan,
Europe, Hong Kong, and Canada , with additional plans for Asia, Latin America, and the Middle
East. By reaching out around the globe, Nasdaq is creating new links to additional capital and an even
broader pool of investors.

Today
Today, the Nasdaq OMX Group is the largest exchange company in the world. Approximately 3700
companies from 50 countries are listed on their exchanges, with a total market value of more than

10
http://www.tradersfloor.com/exchanges/nasdaq_description.asp/accessed on 06/11/2017
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$4.1 trillion.11 The Nasdaq is the world's largest exchange for the technology, biotech and paper
products industries, and also boasts a significant presence in the industrial, healthcare, financial and
consumer brands industries. World-class companies such as Starbucks, Google, JetBlue, Apple and
Costco are some of the familiar names that trade on the Nasdaq each and every day.

In order to enhance its physical presence, Nasdaq has also introduced its Nasdaq Market Site located
in the heart of Times Square in New York City. Viewers of CNBC and other financial news networks
can see daily broadcast live from the Market Site and millions of people each day walk past its brightly
lit windows.

IMPACT OF NASDAQ ON INDIAN STOCK INDEX

Given the degree of openness to trade and investment, it is a well-accepted fact that the national
markets are inter-related and increasingly global. When making decisions, traders incorporate
information pertaining to price movements and volatility in the asset they are trading including
information about related assets. The movement of markets in rhythm and chorus could nullify much
of the gain out of diversification across borders, besides being vulnerable to the caprices of global
capital. Thus, understanding how markets influence one another is important in pricing, hedging and
regulatory policy. In recent years, globalization of capital flows has led to the growing relevance of
emerging capital markets and India is one of the countries with an expanding stock market that is
increasingly attracting funds from the FIIs1 . In particular, deregulation and market liberalization
measures, rapid developments in communication technology and computerized trading systems, and
increasing activities of multinational corporations have accelerated the growth of Indian capital
market. From 1999 onwards, Indian firms are raising capital from the US market by listing themselves
in US exchanges. At present 12 Indian companies have issued ADRs and are cross-listed in US
exchanges and many more companies are planning to cross list in the near future. Moreover as per
the Economic Survey 1999-2000, 23% of Indian exports go to US and 10% of total Indian imports
are from US making US the major trading partner of India12. Thus it will be interesting to examine
the co-movement of Indian stock markets with US markets and the mechanism through which the
price changes and volatility are transmitted at the wake of lifting restrictions on capital flows and
foreign ownership. Three features of these markets motivate our interest in examination of the short
run dynamics of stock returns and volatility between NASDAQ Composite and NSE Nifty. First, the

11
https://globenewswire.com/news-release/2016/12/19/898614/0/en/Market-Cap-Segment-Review-at-Nasdaq-Nordic-
Exchanges.html/accessed on 06/11/2017
12
http://www.stockmaxim.com/blog/indian-stock-market-american-stock-market-stockmaxim-study//accessed on
06/11/2017
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exchanges do not have any overlapping trading hours and hence the case of interlinkages can be
clearly examined. Second, the economic dailies as well as official publications have been full of
stories of a newfound alliance between the NSE and the NASDAQ. Through these news reports,
market regulators, traders, and the general investing public in India have become sensitized to the US
stock market movements. Finally, a quick examination of stock market movements of these two
markets suggests that there exists a substantial degree of interdependence between the US and Indian
stock market indices.

The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer network.
The process is similar to the New York Stock Exchange. However, buyers and sellers are
electronically matched. One or more NASDAQ market makers will always provide a bid and ask
price at which they will always purchase or sell 'their' stock.
With globalization, there are few companies which are listed on Nasdaq and NYSE and making
Indian companies popular globally..
Infosys was the first IT company from India to be listed on NASDAQ in 1999 followed by others.
The Indian companies listed on NASDAQ are mentioned in the table below13:
NAME SYMBOL MARKET CAP IPO YEAR
Azure power global AZRE 401.7 MILLION 2016
limited
Dr. Reddy RDY 6.09 BILLION n/a
Laboratory ltd.
HDFC bank Limited HDB 80.47 BILLION 2001
ICICI Bank limited IBN 30.65BILLION n/a
Infosys Limited INFY 33.61BILLION n/a
Make my trip MMYT 2.5 BILLION 2010
limited
Siffy technology SIFY 282.082MILLION n/a
limited
TATA motors TTM 22.97 BILLION n/a
limited
Videocon D2H VDTH 909.29MILLION n/a
limited
WIPRO limited WIT 24.97 BILLION n/a
WNS holding WNS 1.98 BILLION 2006
limited
Yatra online YTRA 277.06 MILLION

Extent of Influence of US Stock Market on Indian Stock Market

13
http://www.nasdaqomxnordic.com/about_us/accessed on 06/11/2017
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It is believed that US stock market has influence on Asian Emerging markets and any event or
happening in the US stock market affects the Asian markets returns and hence portfolio
diversification opportunities exist. Ahmad et al., (2005) revealed that no long-term relationship exist
between Indian stock market with US and Japanese stock markets14.

Majid et al. (2008) found that ASEAN (Association of South East Asian Nations) stock markets i.e.
Malaysia, Thailand, Philippine, Indonesia and Singapore are mostly influenced by the US stock
market and less by Japanese stock market.15

Mariani et al. (2008) briefed that long-range power correlation is in existence between emerging
economies i.e. India, China and Taiwan with developed country USA16.

Kim (2010) examined US stock markets impacted almost all East Asian economies irrespective of
financial crisis. Muthukumanan et al., (2011) examined the integration of Indian stock market with
the US stock market and US stock market has an influence on Indian stock market so US financial
crisis affect Indian equity market17.

Gangadharan & Yoonus (2012) considered that there is feedback effect from US stock market of
Indian stock market means any crisis in the US has its influence on Indian stock market but there is
no feedback from Indian stock market to US stock market i.e Indian stock market has no impact on
US stock market. On the other hand, there is literature supporting the view that USA stock market
influence on other emerging stock markets is decreasing and no long term correlation of US stock
market with other emerging stock markets is found18.

Gupta & Guidi (2012) examined that there was less interdependence of Indian stock market with the
US market and other developed Asian markets. It was also suggested that Indian stock market is not
much affected by the international events. In comparison with developed Asian markets, Indian stock

14
https://www.researchgate.net/publication/256513104_Stock_Market_Interlinkages_A_Study_of_Indian_and_World_
Equity_Markets/ accessed on 06/11/2017
15
https://www.researchgate.net/publication/235250433_Dynamic_linkages_among_ASEAN-
5_emerging_stock_markets/ accessed on 06/11/2017
16
ibid
17
shodhganga.inflibnet.ac.in/bitstream/10603/36930/8/08_chapter%201.pdf/accessed on 06/11/2017
18
https://www.coursehero.com/file/p1fns72/Gangadharan-Yoonus-2012-considered-that-there-is-feedback-effect-from-
US-stock/accessed on 06/11/2017
15 | P a g e
market volatility is more stable which give an opportunity to international investors for investment to
improve returns.19

Whether Indian stocks dance to the tune of NASDAQ composite index - remains one of the most
interesting research areas. Instances has been found where analysts claim that Indian stocks especially
those in TMT sector have very strong co-relation with the performance of the NASDAQ1. Newspaper
articles carry several mentions of the Sensex having significant correlation with NASDAQ. However
the researcher could not find any published formal study that has tested the relation between
performance of Indian TMT stocks and NASDAQ.

CONCLUSION
At the end of the work, the researcher has concluded that in the present era of liberalization,
privatization and globalization, the international investments and diversification of portfolio
internationally is an important issue, especially in the time period when stock markets are highly
volatile. Normally, people invest in the stock market with the purpose of earning returns. An investor
designs his portfolio in which he includes different stocks or group of stock on sectoral basis to
achieve his purpose of maximum returns with minimum risk. International diversification can be an
option as rationale behind this is that stock returns within a county can be highly correlated because
of similar environment but internationally conditions can be different. On account of different factors
like economic condition, political stability, tax and tariff rates and inflationary conditions, there are
chances that less correlation in stock returns across different countries is possible.

In recent years, the interest in country fund especially in emerging economies has increased.
Emerging markets are an attractive place for investment because of various reasons like open market
system, liberal guidelines towards Foreign Direct Investment and Foreign Institutional Investment.
At the time of allocation of the funds in internationally diversified portfolio, an investor would like
to compare returns and risk across different countries. The benefit of internationally diversified
portfolio can be enjoyed only when there is less correlation between international stock markets.
Further, while constructing internationally diversified portfolio of securities, the correlation in the
returns of stocks from two different countries required to be calculated. According to a report by
Morgan Stanley, Indian markets are about three times more volatile as compared to other emerging
markets and almost five times more than the volatility in developed markets. Other emerging markets
such as China, Brazil and Russia have very less volatility in comparison to Indian market.

19
shodhganga.inflibnet.ac.in/bitstream/10603/36930/8/08_chapter%201.pdf/accessed on 06/11/2017
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Indian economy is mainly driven by the domestic consumption, but post liberalization the share
of Indian trade as part of global trade is growing at a rapid pace. India's economy has grown
over USD 1 trillion and ranked as the eleventh largest economy in the world. A large number of
Indian companies are getting involved in exporting their products to global markets, raising
funds by listing on foreign stock exchange (NYSE, London Stock exchange and NASDAQ etc).
The percentage revenue of Indian companies coming from foreign markets is growing year over
year. Therefore, share price movements of these companies are more likely to be affected by
the development in world economy.

There's no straight answer to this question. Each markets react to their own fundamentals. But yes,
external factors, like big movements in other exchanges or major economic events in India or US, do
affect Nifty. From my experience, SGX Nifty is a good indicator as to how the market will open.
Thereafter, it takes its own course, unless something happens in Asian or European markets in the
latter half.

There is no specific list that which country's stocks market will have an effect on our country.
It is not that our country should affect directly due to some effect in other country. Even if it affects
passively then we will have the effect in our markets. For example, North Korea test of the explosive.
Though there is no direct impact on our country's economy we still had the effect on our market.
Stock Market is the front runner of an economy. Before anything really plunges into the real economy
the prices will get reflected in the markets. Sometimes there will also be a bounce back if the effects
are not real.

Finally, at the end of whole work it can also be said that Indian stock index and Indian economy also
dance to the tune of NASDAQ.

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BIBLIOGRAPHY

• www.nasdaq.com

• http://dynamic.nasdaq.com/reference/IndexDescriptions.stm

• http://www.bseindia.com/about/abindices/bseteck.asp

• http://www.apnic.net/mailing-lists/s-asiait/archive/2000/12/msg00052.html

• http://www.blonnet.com/iw/2000/04/23/stories/0823h012.htm

• http://www.indiainfoline.com/lyas/nevi/dive.shtml

• http://www.indiainfoline.com/trac/tr09.htmlChatterjee, Sumeet. ” India's IT industry

seensimmering down on U.S. economyslowdown”, India Abroad News Service,December 23,
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• http://dynamic.nasdaq.com/reference/IndexDescriptions.stm.pdf

• http://www.nasdaqomxnordic.com

• https://money.howstuffworks.com/nasdaq.html/

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• https://www.marketvolume.com/info/stock_market_exchanges.asp/accessed

• www.investopedia.com

• http://www.tradersfloor.com/exchanges/nasdaq_description.asp

• https://globenewswire.com/news-release/2016/12/19/898614/0/en/Market-Cap-Segment-
Review-at-Nasdaq-Nordic-Exchanges.html/

• http://www.stockmaxim.com/blog/indian-stock-market-american-stock-market-stockmaxim-
study

• http://www.nasdaqomxnordic.com/about_us

• https://www.researchgate.net/

• shodhganga.inflibnet.ac.in/

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