MARATHWADA MITRA MANDAL’S COLLEGE OF

COMMERCE
202/A, Deccan Gymkhana, Pune, Maharashtra 411004
(Academic Year 2022-2023)

PROJCET REPORT ON

A STUDY OF INDIAN STOCK MARKET

UNDER THE SUBJECT:

“Principle and Practices of Banking & Finance”
SUBMITTED BY:

JAYANTI RAGHUNATH MANDAL

SUBMITTED TO:

SAVITRIBAI PHULE PUNE UNIVERSITY

“In the partial fulfilment of Post-graduation Diploma in

Banking,
Finance & Insurance “
Under the guidance

PROF. JYOTI BHOSALE &

PROF. SHILPA KABRA
2
 DECLARATION

We hereby declare that this project work entitled “A Study of Indian

Stock Market” submitted at Marathwada Mitra mandal’s College of
Commerce is partial fulfilment of the requirement for the Post
Graduation Diploma in Banking, Finance &
Insurance is a record of original work done by use for Department PGDBFI, it
has not beensubmitted to the award of any Degree.

Place: Pune

Signature of the Candidate

Date

3
 ACKNOWLEDGEMENT

As the outset I am grateful to Team Work Financial Solutions for

having given me the opportunity to do my internship with them.

I take this opportunity to thank Mr. Kamal Rawat [Cluster Manager] who
not only served as my guide at Team Work Financial Solutions, but also
encouraged and challenged me throughout my internship program. He gave
me his valuable time and guided me at each step with his experience and
provided me all the required information.

A sense of gratitude is not enough to express my sincere thanks towards a

wonderful team who guided me with their insights and knowledge. They
took active interest in my project and was always there to give me their
word of guidance.

My sincere thanks to Jyoti Bhosale mam, my faculty guide who took active
interest in my project and was always there to give her word of valuable
guidance.

I duly acknowledge with gratitude the help and cooperation received from
the Team Work Financial Solutions entire team.

Jayanti Raghunath Mandal

Roll no.: 520

4
 COMPANY PROFILE
TEAMWORK FIANANCIAL SOLUTIONS

Teamwork Finance Solutions provide the best

consulting financial & professional business solution
and strategy for increasing your business growth.
They strive to provide financial peace of mind by
delivering tailored objective advice designed to give
clients the confidence to pursue their own passion,
dreams and talents.
Teamwork Financial Solutions firmly believe that it all starts with having a
clear vision of your unique goals. With this clarity, they combine objective
advice and experience-led execution to bring the collective vision to life.
With their excellent strategies for acquisition of merchants from various
segments, they promote acquisition of high value merchant relationships.
Full Time or Temporary they Find remarkable candidates for any
positions; they can help others to fulfil all their recruitment needs.
They have tied up with many renowned securities brokers like Upstox,
Angel Broking, ICICI Securities, HDFC, SMC and Choice broking.
They build genuine and lasting relationships with consumers through their
unique branding strategies.
The planning process begins by asking thoughtful questions and listening
attentively; Since their goal is to provide guidance over a lifetime, we also
assist with implementation and proactively monitor each plan to help
clients move toward their objectives.

5
 EXECUTIVE SUMMARY

In this project we learn about the role of Team Work Financial Solutions
as BFSI. There is growing competition between brokerage firms in post reform
India. For investor it is always difficult to decide which brokerage firm to
Choose. Research was carried out to find which brokerage house people prefer
and to figure out what people prefer while investing in stock market. This study
suggests that people are
reluctant while investing in stock and Commodity market due to lack of
knowledge. Main purpose of investment is returns and liquidity, commodity
market is less preferred by investors due to lack of awareness. The major
findings of this study are that people are interested to invest in stock market
but them Lack knowledge. Throughthis report we were also able to understand,
what our Company’s positive and strong points are, on the basis of which we
come to know what can be the basis of pitching to a potential Client. At the end
of the report limitations, SWOT analysis, conclusion of the research and
Appendix which includes questionnaire and the list of the city where the Argent
capital are running. Last there is Bibliography, FAQ, and Glossary that has the
technical terms of the report.

6
 TABLE OF CONTENT

S.NO. DESCRIPTION PAGE NO.

1. CHAPTER 1: MARKET
1.1 FINANCIAL MARKET
1.2 TYPES 8-15
1.3 CHECK VALUE
1.4 STOCK MARKET INDEX

2. CHAPTER 2: INTRODUCTION TO STOCK MARKET

2.1 WHAT IS INVESTMENT?
2.2 SAVINGS OR INVESTMENTS?
2.3 INSIGHTS OF SOCK MARKET 16-24
2.4 ADVANTAGES OF STOCK MARKET
2.5 DISADVANTAGES OF STOCK MARKET
2.6 WHY TO INVEST IN STOCK MARKET?
2.7 HISTORY OF STOCK MARKET IN INDIA

3. CHAPTER 3: RESEARCH DESIGN AND METHEDOLOGY

3.1 RELEVANCE OF STUDY 25-26
3.2 OBJECTIVES

4. CHAPTER 4: ANALYSIS AND INTERPRETATION

4.1 CLASSIFICATION OF STOCK MARKET
4.2 HOW IT WORKS 27-39
4.3 ANALYSIS QUESTIONNARIE
4.4 ROLE AND FUNCTIONS OF STOCK MARKET

5. CHAPTER 5: FINDINGS AND RECOMMENDATION

5.1 CONCLUSION 40-41
5.2 BIBLOGRAPHY

7
 CHAPTER 1
MARKET

1.1: FINANCIAL MARKET:

Company or Corporation

Capital Shares

8
WHAT ARE FINANCIAL MARKETS?
Financial markets refer broadly to nay market place where the trading of
securities occurs, including the stock market, bond market, forex market,
and derivatives market, among others. Financial markets are vital to the
smooth operation of capitalist economics.
Financial markets play a Vitol role in facilitating the smooth operation of
capitalist economies by allocating resources and creating liquidity for
businesses and entrepreneurs. The markets make it easy for buyers and
sellers to trade their financial holdings. Financial markets create securities
products that provide a return for those who have excess funds
(Investors/Lenders) and make these funds available to those who need
additional money (borrowers).
The stock market is just one type of financial market. Financial markets are
made by buying and selling numerous types pf financial instruments
including equities, bonds, currencies, and derivatives. Financial markets
rely heavily on informational transparency to ensure that the markets set
prices that are efficient and appropriate. The market prices of securities
may not be indicative of their intrinsic value because of macroeconomic
forces like taxes.

1.2: TYPES OF FINANCIAL MARKET:

There are 8 different types of financial markets:
1. Stock Markets.
2. Over-the-Counter Markets.
3. Bond Markets.
4. Money Markets.
5. Derivatives Markets.
6. Forex Markets.
7. Commodities Markets.
8. Cryptocurrency Markets.

9
MARKET INSTRUMENTS:
1. CAPITAL MARKET INSTRUMENTS:

BONDS

CAPITAL
PREFERENCE
DEBENTURES MARKET
SHARES
INSTRUMENTS

ORDINARY
SHARES

10
2. DEBT INSTRUMENTS:

MATURITY

COUPON DEBT CALL

RATE INSTRUMENTS OPTION

PAR
VALUE

11
1.3: CHECK VALUE:
HOW TO CHECK THE VALUE OF SHARES IN STOCK EXCHANGE:

SENSEX is an indicator to checkout in BSE.

SOURCE: SENSEX 61,112.44 (▲0.76%) BSE SENSEX | Google Finance

NIFTY is an indicator to checkout in NSE.

SOURCE: NIFTY_50 18,065.00 (▲0.84%) NIFTY 50 | Google Finance

12
Indicator for observing a chart

Candlestick representation.

13
Head and Shoulders.

14
1.4: STOCK MARKET INDEX:
Index is a tool which measures changes it helps investors compare current
price level with past prices to calculate market performance.
Value of the grouped stocks= Collective value of Index any change in the
value of these group of stocks changes the value of the index.

Understanding the Index

15
 CHAPTER 2
INTRODUCTION TO STOCKMARKET

2.1: WHAT IS INVESTMENT?

An investment can be defined as an asset that is created with the
intention of helping your wealth to grow with time and secure your
future financial requirements. The wealth created through
investment plans can be used for a variety of objectives such as
meeting shortages in income, saving up for retirement, or fulfilling
certain specific obligations such as repayment of loans, funding
children’s higher education, purchase of other assets, etc. Read on to
get a clearer idea about what an investment is so that you can
choose investment options that suit your unique requirements.

2.2: SAVINGS OR INVESTMENTS?

S.NO. SAVINGS INVESTMENTS

1. For the short term: Usually used for long-
Typically for smaller, term goals: Investing
shorter-term goals in the may help you reach long-
near future like saving for a term goals, such as
large purchase or for an paying for a child’s
emergency. education or planning
for retirement.
2. Ready access to cash. A Longer wait to access
savings account gives you invested funds: When
access to cash when you you invest your money, it
need it. can take a few more days
to access your money
compared to a savings
account.
3. Involves minimal risk. Your Always involves risk:
funds are insured by the Investing does not
16
 Federal Deposit Insurance
Corporation (FDIC) up to
$250,000 per depositor, per
FDIC-insured bank, per
ownership category.
4. Earn interest. You can earn
interest by putting money in
a savings account, but
savings accounts generally
earn a lower return than
investments.
guarantee a return, and
it is possible to lose some
or all of the funds
invested.
Earnings potential:
Investments typically
have the potential for
higher return than a
savings account.
17
 2.3: INSIGHTS OF STOCK MARKET

STOCK EXCAHNGE:
1) What is the role of Stock Exchange in buying and selling of shares?

Ans: The stock exchanges in India, under the overall supervision of the
regulatory authority, the Securities and Exchange Board of India (SEBI),
provide a trading platform, where buyers and sellers can meet to transact in
securities. The trading platform provided by NSE is an electronic one and
there is no need for buyers and sellers to meet at a physical location to
trade. They can trade through the computerized trading screens available
with NSE trading members or the internet-based trading facility provided by
the trading members of NSE.
2) What is Demutualization of stock exchanges?
Ans: Demutualization refers to the legal structure of an exchange whereby the ownership,
the management and the trading rights at the exchange are segregated from one another.

3) How is a demutualized exchange different from a mutual exchange?

Ans: In a mutual exchange, the three functions of ownership, management

and trading are concentrated into a single Group. Here, the broker members
of the exchange are both the owners and the traders on the exchange and
they further manage the exchange as
well. This at times can lead to conflicts of interest in decision making. A
demutualized exchange, on the other hand, has all these three functions
clearly segregated, i.e., the ownership, management and trading are in
separate hands.

18
BOMBAY STOCK EXCHANGE SENSEX 30:
• Started on 01 January, 1986.
• Value – weighted index.
• Consists of the 30 largest and most actively traded stocks.

This stock exchanges, Mumbai, popularity known as “BSE” was established

in 1875 as “The native share and stock brokers associations”, as a
voluntary non-profit making association.

It has an evolved over the years into its status as the premiere stock
exchanges in the country. It may be noted that the stock exchanges the
oldest one in Asia, even older than the Tokyo Stock Exchanges, which was
founded in 1878.

The exchanges, while providing an efficient and transparent market for

trading in securities, upholds the interests of the investors and ensures
redressed of their grievances, whether against the companies or its
own members brokers.

It also strives to educate and enlighten the investors by making available

necessary informative inputs and conducting investor’s education
programmers.

A governing board comprises of elected directors, 2SEBI nominees, 7

public representatives and an executive director is the apex body, which
decides the policies and regulates the affairs of the exchanges.

The executive director as the chief executive officer is responsible for the
day today administration of the exchanges. The average daily turnover of the
exchange during the year2000-01 (April-March) was Rs 3984.19 crores and
average numbers of daily trades
5.69 Lakhs.

However, the averages daily turnover of the exchanges during the year
2001-2002 has declined to Rs. 1224.10 crores and number of average daily
trades 5.69 Lakhs.

The average daily turnover of the exchanges during the year 2001-2003
has declined and number of average daily trades during the period is also
decreased. The Ban on all deferral products like BLESS AND ALBM in the
19
 Indian capital markets by SEBI with effect from July 2, 2001, abolition of
account period settlements, introduction of compulsory rolling settlements
in Allscripts trades on the exchanges. With effect from dec31, 2001 etc.
have adversely impacted the liquidity and consequently there is a
considerable decline in the daily turnover at the exchanges.
The average daily turnover of the exchanges present scenario is 110363
Lakhs and no. of average daily trades 1057 lakhs.

REGISTERED INVESTORS SUMMARY AS ON 22 APR, 2023:

30000000

25000000

20000000

15000000

10000000

5000000

0
ANDAMAN AND NICOBAR
ARMY POST OFFICE
ASSAM
CHANDIGARH
DADRA AND NAGAR HAVELI
DELHI
GUJARAT
HIMACHAL PRADESH
JHARKHAND
KERALA
LAKSHADWEEP
MAHARASHTRA
MEGHALAYA
ND
ODISHA

NO. OF CLIENTS
PUNJAB
SIKKIM
TELANGANA
UTTAR PRADESH

WEST BENGAL

NO. OF CLIENTS CHANGE OVER PREVIOUS MONTH (%)

CHANGE OVER PREVIOUS QUARTER (%) CHANGE OVER PREVIOUS YEAR (%)

SOURCE: BSE Ltd-Registered Investors (bseindia.com)

20
 NSE NIFTY 50:

The 50 stocks that were most favored by institutional investors in the 1960s
and 1970s.
The NSE was incorporated is now 1992 with an equity capital of Rs 25 crores.
The international securities consultancy (ISC) of Hong Kong has helped in
setting up NSE.
ISE has prepared the details business plans and installation of hardware and
software system. The promotion for NSE were financial institutions,
insurances companies, banks and SEBI capital markets Ltd, infrastructure
leasing and financial services Ltd and stock holding corporation Ltd.
It has been set up to strengthen the move towards professionalization of the
capital market as well as provide nationwide securities trading facilities to
investors. NSE is not an exchange in the traditional sense where broker own
and manage the exchanges. A two-tier administrative set up involving a
company board and a governing aboard of the exchanges isenvisaged. NSE is a
national market for shares PSU bonds, debentures and government securities
since infrastructure and trading facilities are provided.

21
2.4 AND 2.5: ADVANTAGES AND DISADVANTAGES OF STOCK
MARKET:

NO. ADVANTAGES DISADVANTAGES

1. Better overtime returns Business risk
2. Dividend paying Headline danger
3. Benefits of diversification and Market danger
liquidity
4. Ownership Liquidity risk
5. Invest to prevent inflation Low margin and high
brokerage
6. Transparency Inadequate knowledge
7. Voting rights Time consuming
8. Easy to sell and buy
9. Tax advantages
10. Convenience

22
2.6: WHY TO INVEST IN STOCK MARKET?

• Stocks offer investors the greatest potential for growth (capital

appreciation) over the long haul. Investors willing to stick with stocks
over long periods of time, say 15 years, generally have been rewarded
with strong, positive returns.
• Stock Market helps with the growth in the money invested by the
investors in the money market.
• A proper investment is all what is expected by an investor for positive
profit.
• A correct investment helps the investor to become financially strong.
• Stock Market is the leading investment market which includes buying
and selling of shares of various growing industries. Which lead to
increase of money invested by the investors.
• If the buying cost of shares keep growing which shows the positive
returns once the cost of the purchased share reaches to maximum level
the investor can sell them and earn profit from it directly into their
respective bank account.

2.7: HISTORY OF STOCK MARKET IN INDIA:

Bombay stock exchange is an Indian stock market which is located on Dalal

Street in Mumbai. Bombay Stock Exchange was started by Premchand
Roychand in 1875. While Bombay Stock Exchange limited is now
synonymous with Dalal Street, it was not always so. In the 1850s, five stock
brokers gathered together under a banyan tree in front of Mumbai Town
Hall, where Horniman Circle is situated. A decade later, the brokers moved
their location to under the banyan trees at the junction of Meadows Street
and what was then called Esplanade Road, now known as Mahatma Gandhi
Road. With the rapid increase in brokers, they have to shift places
repeatedly. At last, in 1874, the brokers found a permanent location, the one
that they could call their own. The brokers group became an official
organization known as “The Native Share and Stock Brokers Association” in
1875.

23
The Bombay Stock Exchange is also a Partner Exchange of the United
Nations Sustainable Stock Exchange Initiative, joining in September 2012.
Bombay Stock Exchange established India INX on 30 December 2016. India
INX is the first international exchange of India. Bombay Stock Exchange
became the first stock exchange in the country to launch commodity
derivatives contract in gold and silver in October 2018.
Bombay Stock Exchange was demutualized and corporatized on 19 May,
2007, pursuant to the Bombay Stock Exchange Scheme, 2005 notified by
SEBI. It was listed on National Stock Exchange on 3 February 2017.

24
 CHAPTER 3
RESEARCH AND METHEDOLOGY
3.1: RELEVANCE OF STUDY:

Research design is the base on which researcher proceed towards the study of
the problem after formulating hypothesis. It refers to the methodology used to
conduct the research investigation. It is a process of making decisions before
the situation arises in which the decision has to carried out. It is the blueprint
of the detailed procedure of testing the hypothesis and analysis of the obtained
data.
A research design in simple words is a plan of cation, a plan for collecting and
analyzing data in an economic, efficient and relevant manner.
The purpose of preparing research design could be either to test the
hypothesis or to give a cause effect relationship to the given situation. A
research design is the arrangement of conditions for collection and analysis
data in a manner that aims to combine relevance to the research purpose with
economy in procedure.

RESEARCH DESIGN:

The collection of essential information to prove their hypothesis is a significant

and distinctive stage of research in any science. The sources of information are
generally classified as primary data and secondary data.

METHOD USED:

Secondary data:
Where by the analysis relies on already existing data that may be either
published or unpublished. This source of data is updated source of
information.
Researcher has collected data from internet websites.

25
3.2: OBJECTIVES:

The main objectives of studying the Indian Stock market include:

• To understand and study the process of capital raising in stock market.
• To understand the investment process and wealth creation.
• To understand various kinds of risk and risk management in stock
market.
• To understand the diversification of stock market.
• To understand the market efficiency and liquidity.
• To understand how stock market is economic indicator.
• To understand the price discovery of shares and bonds at stock
market.
• To understand the basic terminology of stock market.
• To understand the forecasting or prediction of future trend of stock
market which helps in investment.
• To understand the effect of fluctuation on the Indian economy.

26
 CHAPTER 4
ANALYSIS AND INTERPRETATION

4.1: CLASSIFICATION OF STOCK MARKET:

TYPES OF STOCK MARKET

INCOME SPECULATIVE GROWTH CYCLICAL VALUE DEFENSIVE

PENNY
STOCKS
STOCKS STOCKS STOCKS STOCKS STOCKS STOCKS

• Income stocks: An income stock is an equity security that offer high

yield that may generate from the majority of security’s overall returns.
It is very popular type of stock among investors since it is least volatile
among all and offers higher-than-market dividend yield to its
investors. Income stocks are usually issued by large and well –
established organizations that possess impressive track record of
managing their business operations and finances. Moreover, whenever
a large organization made some profit than most of its part goes to the
investors instead of reinvested into the company. This is why many of
the income stocks are considered as “Blue Chip” stocks as it provides a
consistent, fairly reliable and handsome dividend to investors.
• Penny Stocks: Among many different types of stocks, penny stocks
are usually highly in demand and often catch the eyes of new
investors. Penny stocks are usually issued by small companies
especially start-ups to raise funds from the investors. This type of
stock is usually illiquid that are traded at very low price, and issued by
27
 companies that have very low market capitalization.

• Speculative Stocks: Stocks issued by companies that are developing

new products, want to tap unexplored territory (often foreign
markets), or have done major changes onto their management or
financial level are considered as speculative stocks. Such stocks
usually carry high risk as the company, product, and management
often untested and many do not succeed in the long run but if such
companies get succeeded then the return or investment can also be
very high. It gives a promise of high return but the risk is also high.

• Growth Stocks: In growth stocks, whenever a company earns any

profit that money gets reinvested into the company itself to boost its
innovation and business expansion. Investors do not get any dividends
in this type pf stock instead they receive capital gain whenever sell
their stocks. As the company grows the prices of shares also get
increases and the investor receives higher capital gain but when
reverse happens, customers suffer losses as well.

• Cyclical Stocks: Stocks of those companies who offer luxury and

discretionary goods and services are often considered as Cyclical
Stock. Stock of airlines, vehicle manufactures, hotels, restaurants, and
clothing among more fell into this category. Performances of such
stocks are interlinked with the health of economy. When economy
does well, prices of such stocks usually remain high and when it
performs badly, values of stocks lose a substantial value. For e.g.
When economy flourishes, people do come out of their homes and
afford to invest in buying cars, homes, shops and travel so the prices
go up. And when economic downturn starts, these discretionary
expenses are the first one which any consumer cuts from his/her
wallet.

• Value Stocks: Sometimes when a company have assets worth more

than its stock price than that stock is considered as value stock. Such
stocks are seen as undervalued stocks by the investors and believe
that value of its shares will increase over the time as company started
growing. And if the company does not do well, then losses can also
happen.
28
 • Defensive Stocks: Food, Fuel, and healthcare services among more
are something which every human needs all the time. Even if recession
starts, no one stops eating food, refilling fuel to empty tanks or avoid
going to hospitals. Stocks of such vital services are considered as
defensive stocks. These are often kept by the investors as emergency
stock and holds a great value under the classification of different types
of stocks.

4.2: HOW IT WORKS?

YOU PLACE YOUR ORDER 1

EXCHNAGE CONFIRMS TO THE
HOW ARE 4
BROKER
YOUR THE BROKER SENDS YOUR
ORDERS 2
ORDER TO THE EXHANGE
PROCESSED?
BROKER CREDITS OR DEBITS YOUR
ACCOUNT 5
EXCHANGE FINDS A
3
COUNTERPARTY

The stock market is an avenue where investors trade in shares, bonds, and
derivatives. This trading is facilitated by stock exchanges, which can be thought
of as markets that connect buyers and sellers. Four participants are involved in
the trading of shares in the Indian stock market.
1) Securities and Exchange Board of India (SEBI): SEBI is the regulator of
stock markets in India and ensures that securities markets in India work
in order. SEBI lays down regulatory frameworks were exchanges,
companies, brokerages, and other participants have to abide by to protect
investors ‘interests.

2) Stock Exchanges: The stock market is an avenue where investors trade in

shares, bonds, and derivatives. This trading is facilitated by stock
exchanges in India, there are two primary stock exchanges on which
companies are listed.
29
 3) Stock brokers/brokerages: A broker is an intermediary (person or a firm)
that executes buy and sell orders for investors in return of a fee or a
commission.

4) Investors and traders: Stocks are units of a company’s market value.

Investors are individuals who purchase stocks to become part owners in
the company. Trading involves buying or selling this equity. To
understand how to share markets works, the next thing is to learn about
primary and secondary markets.

TRADING IN THE STOCK MARKET:

Once listed on the stock exchanges, the stocks issued by companies can be
traded in the secondary market to make profits or cut losses. This buying and
selling of stocks listed on the exchanges are done by stockbrokers/brokerage
firms, that act as the middleman between investors and the stock exchange.
Your broker passes on your buy order for shares to the stock exchange. The
stock exchanges searches for a sell order for the same share.
Once a seller and a buyer are found and fixed, a price is agreed to finalize the
transaction. Post that the stock exchange communicates to your broker that
your order has been confirmed.
This message is then passed on to you by the broker.

FLOW OF FUNDS

Stock exchange Broker 2 Seller

Buyer Broker 1
(NSE/BSE)

FLOW OF SHARES

30
PRICING OF SHARES IN THE STOCK MARKET:
The key to making money in the stock market is to learn how to properly value
a company and its share price in the context of the Indian economy and the
firm’s operating sector.
Let me explain to you how stocks are priced through a simple example.
Let’s say you bought a notebook for Rs. 100. The next day, a friend of yours
offered you to sell it for Rs. 150 to him.
So, what’s the price of the notebook then?
It is from Rs. 150. You can in cash Rs. 150/- by selling the notebook to him.
But you choose to reject his offer hoping that your other friends may bid more
than Rs. 150/-
The very next day 3 of your friends offers you Rs.200/-, Rs.250/- and Rs.300/-
for the notebook respectively.
Now, what’s the price of the notebook?
Its Rs.300/- as this is the highest bid for your notebook. You know that your
possession is valuable and decide to reject the current offers, hoping for a
higher bid tomorrow. However, the next day, a fellow student brings. A better-
quality notebook to school with shinier pages.
This is exactly how demand and supply affect the price of a share in the stock
market.
When the students were optimistic and ready to pay higher cash than its
current price, the price appreciated. When a lesser number of students wanted
your notebook, the price fell down.

31
4.3: ANALYSIS QUESTIONARIE:

Question 1: In the parlance of economy/commerce, what is “gilt-edged”

market?
a) Gold and Silver market.
b) Industrial securities market.
c) Market for safe (such as government) securities.
d) Market for software technology/service products.

Answer: Market for safe (such as government) securities.

Question 2: Is there any difference between currency forwards and

futures markets?
a) No, both deal with future delivery of foreign exchange.
b) No, both markets can be availed of through the internet.
c) Security and Exchange Board of India.
d) Department of industrial Policy and Promotion.

Answer: No, both markets can be availed of through the internet.

Question 3: In India, mergers and acquisition for firms are regulated by?
a) National Manufacturing Competitiveness Council.
b) Competition Commission of India.
c) Security and Exchange Board of India.
d) Department of Industrial Policy and Promotion.

Answer: Competition Commission of India.

Question 4: A rise in “Sensex” means?

a) A rise in prices of shares of all companies registered with the Bombay
Stock Exchange.
b) An overall rise in prices of shares of all companies registered with the
National Stock Exchange.
c) An overall rise in prices of shares of group of companies registered with
the Bombay Stock Exchange.
d) A rise in prices of shares of all companies belonging to a group of
companies registered with the Bombay Stock Exchange.

32
Answer: An overall rise in prices of shares of group of companies
registered with the Bombay Stock Exchange.

Question 5: Which one of the following statements is not correct?

a) The National Association of Securities Dealers Automated Quotations,
known as NASDAQ, is an American stock exchange.
b) Nikkei is the stock market of index for the Tokyo Stock Exchange.
c) S&P CNX Nifty is the index of 50 large companies on the Bombay Stock
Exchange.
d) Hang Seng Index’s record daily change of the largest companies of the
Hong Kong Stock market.

Answer: S&P CNX Nifty is the index of 50 large companies on the Bombay
Stock Exchange.

Question 6: Debenture holders of a company are its?

a) Owners.
b) Creditors.
c) Debtors.
d) Directors.

Answer: Creditors.

Question 7: Consider the following statements:

1. Sensex is based on 50 of the most important stocks available on the
Bombay Stock Exchange (BSE).
2. For calculating the Sensex, all the Sensex stocks are assigned proportional
weightage.
3. Sensex became operational in 1978-79 with the base value of 100.
Which of the statements given above is/are correct?
a) 2 only.
b) 1 and 3.
c) 2 and 3.
d) None of the above.

Answer: 2 and 3.

Question 8: Which of the following statements is/are correct?

1. Nifty is based on 50 companies in India.
2. Nifty is governed and regulated by the Reserve Bank of India.
33
 3. Nifty deals with future and options.
Select the correct answer using the codes given below:
a) 1 only.
b) 2 only.
c) 3 only.
d) 1 and 3.

Answer: 1 and 3.

Question 9: Consider the following statements about India INX:

1. India INX is India’s first international exchange.
2. It will work for 22 hours in a day, working from sunrise to sunset, i.e.,
starting when Japan exchanges begin and close when the US markets end.
3. India INX is a wholly owned subsidiary of the Bombay Stock Exchange
(NSE).
Which of the statements given above is/are correct?
a) 1 and 3 only.
b) 1,2 and 3.
c) 2 and 3 only.
d) 1 only.

Answer: 1,2 and 3.

Question 10: Which of the following are the core objectives of the
Financial Stability and Development Council (FSDC):
1. Acts as an apex level forum to strengthen and institutionalize the
mechanism for maintaining financial stability.
2. Enhance inter-regulatory coordination and promoting financial sector
development in the country.
Which of the statements given above is/are correct?
a) 1 only.
b) 2 only.
c) Both 1 and 2.
d) Neither 1 nor 2.

Answer: Both 1 and 2.

34
4.4: ROLE AND FUNCTIONS OF STOCK MARKET:

ROLE OF STOCK MARKETS IN THE ECONOMIC GROWTH OF

INDIA:
The role of stock markets as a source of economic growth has been widely
debated. It is well recognized that stock markets influence economic activity
through the creation of liquidity. Liquid financial market was an important
enabling factor behind most if the early innovations that characterized the
early phases of the Industrial Revolution.
Recent advances in this area revel that stock markets remain an important
conduit for enhancing development. Many profitable investments necessitate a
long-term commitment of capital, but investors might be reluctant to
relinquish control of their savings for long periods. Liquid equity markets
make investments less risky and more attractive.
At the same time, companies enjoy permanent access to capital raised through
equity issues. By facilitating longer-term and more profitable investments,
liquid markets improve the allocation of capital and enhance the prospects for
long-term economic growth. Furthermore, by making investments relatively
less risky, stock market liquidity can also lead to more savings and
investments.
Over the years, the stock market in India has become strong. The number of
stock exchanges increased from 8 in 1971 to 9 in 1980 to 21 in 1993 and
further to 23 as at end March 2000. The number of listed companies also
moved up over the same period from 1599 to 2265 and thereafter to 5968 in
1990 and 9871 in March 2000.
The market capitalization at BSE as a percentage of GDP at current market
prices also improved considerably from around 28 per cent in the early
‘nineties to over 45 percent at the end of the ‘nineties, after witnessing a fall in
certain intervening years.
In 1998, India ranked twenty-first in the world in terms of market
capitalization, nineteenth in terms of total value traded and second in terms of
number of listed domestic companies.
Though the Indian stock market was founded more than a century ago, it
remained quite dormant from independence in 1947 up to the early ‘eighties,
with a capitalization ratio of only 4 per cent.
However, the patterns of demand for capital have undergone significant
changes during the last two decades and improved stock market activity. It
may be recalled that till the ‘nineties, institutional term-lending acted as the
primary source of industrial finance in India.
35
Financial Institutions raised money through Government- guaranteed bonds at
low rates of interest, which, in turn, lent funds at concessional rates of interest.
This system provided corporates a cushion to absorb the relatively high risk of
implementing new projects.
This, in turn, discouraged the corporates to raise risk capital from equity
markets. On this account, the debt market segment, this is sensitive to
‘economic information’, also remained underdeveloped and illiquid. With the
onset of the reforms process in the ‘nineties. Institutions had to raise resources
at market related rates.
At the same time, the market has witnessed the Introduction of several new
customised bonds at maturities tailored to suit Investor needs and with
market-driven coupons.
Along with this development, a number of measures were initiated to reform
the stock markets, which helped to improve the overall activity in the stock
market significantly.
The turnover ratio increased from a low of 6.7 per cent at the beginning of the
‘nineties, to reach 35.1 per cent in 1999-2000, excepting certain years of
relative inactivity.
The Indian capital market has experienced a significant structural
transformation over the years. It now compares well with those in developed
markets. This was deemed necessary because of the gradual opening of the
economy and the need to promote transparency in alternative sources of
financing.
The regulatory and supervisory structure has been overhauled with most of
the powers for regulating the capital market having been vested with the
Securities and Exchange Board of India (SEBI).
Apart from changes in the fundamental factors, information asymmetries and
the associated constraints to efficient price discovery remain at the heart of the
volatile movements in stock prices.

36
FUNCTIONS OF STOCK MARKET:
1. PRICE DISCOVERY:
One of the most important functions of stock exchanges is bringing buyers
and sellers together in a single place and facilitating price discovery. The
role of stock exchanges is tremendous in creating a place where the impact
of all factors that can affect businesses is incorporated into stock prices.
Since the pricing of securities incorporates all relevant factors, investors,
traders, creditors, and governments need not make repetitive assessments.

2. PROMOTES INVESTMENT OF SAVINGS:

For an economy to grow, the citizens’ savings must be deployed in avenues
productive to the economy. A part of this is taken care of by the banking
system that provides loans using deposits. A smooth and trustworthy stock
market would encourage citizens to invest in businesses that can use this
capital to produce more, produce better and employ more.
Thus, stock markets can play a key role in the economic development of an
economy.

3. PROMOTES BETTER ALLOCATION OF CAPITAL:

Information on companies in the stock market is easier to obtain as news
outlets are likely to cover any events that might affect their market value.
The companies themselves are required to disclose key information.
Investors also get access to information on bulk deals, insider trades, and
holdings of institutional investors and promoters.
Additionally, companies can be divided into various sectors and market cap
categories, allowing for simpler comparison.
Thus, investors are empowered to make better decisions and allocate
capital to good businesses.

4. BECOMING A MEDIUM FOR FOREIGN INVESTMENTS:

In developing countries like India, foreign investments play a crucial role in
promoting new industries and enhancing existing ones. The proceeds can
be used to adopt technological advancements, improve production
capacities, hire better talent and enrich the existing human capital.
A stock market that functions smoothly, is regulated against malpractices,
and is transparent can give foreign investors the confidence to invest in the
companies of a particular country. India’s economic growth can benefit
from foreign investments. Like most developing countries, the disposable
37
 income in India is lower compared to developed countries. This makes it
difficult to raise capital solely from domestic sources.

5. DRIVING ECONOMIC GROWTH AND BEING AN ECONOMIC

BAROMETER:
As mentioned earlier, a well-functioning stock market can help draw
investments from domestic sources. These investments can be employed to
improve production capacities and can help increase job opportunities.
Thus, stock markets can help drive the economic growth of a country.
Furthermore, a stock market can act as an economic barometer as the
effects of changes in economic growth expectations and significant events
are reflected in stock prices. When economic conditions are favourable,
stock prices tend to be rising and vice versa.

6. LIQUIDITY:
Liquidation of assets, i.e., converting them into cash, can be a tedious task.
Finding a buyer is difficult, and getting a reasonable bid is even more
difficult. But, if the asset in question is a security that can be traded in the
stock market, the situation changes dramatically. Stock markets help
connect buyers and sellers across geographical and socioeconomic
boundaries. This makes it a lot simpler to buy or sell assets.

7. SAFE TRANSACTIONS:
Companies listed on stock exchanges are regulated and required to meet
certain standards. Also, investors can expect a basic level of information to
be available on all companies in the stock market.
Additionally, regulators and stock exchanges work towards protecting the
interests of investors and limiting malpractices like price manipulation,
ensuring the safety of transactions.

38
8. PROVIDES SCOPE FOR SPECULATION:
Stock markets provide scope for speculation in a fair and regulated manner.
Healthy speculation can help smoothen changes in asset prices. As
situations develop, speculative activity affects asset prices. The change in
asset prices happens in phases instead of skyrocketing or free-falling prices.
Also, speculative trades ensure assets remain liquid (easy to trade).

39
 CHAPTER 5
FINDINGS AND RECCOMENDATION

5.1: CONCLUSION:

Stock prices change according to supply and demand. There are many factors
influencing prices, the most important being earnings. There are no
consequences as to why stock prices move the way they do. To buy stocks you
can either use a brokerage or a dividend reinvestment plan (DRIP).

40
5.2: BIBLOGRAPHY:
1. Teamwork Financial Solution Services | Social Media Marketing, Affiliate Marketing, Digital
Marketing, Advertisement, Promotion, Media Management, Merchant Onboarding, Demat
Account Opening, Lead Generation, HR Consultancy, General Insurance, Branding
(teamworkfss.com)
2. Finance work from home job/internship at Team Work Financial Solution Services | Intern
Shala

3. NSE - National Stock Exchange of India Ltd: Live Share/Stock Market News & Updates,
Quotes-Nseindia.com

4. BSE (formerly Bombay Stock Exchange) | Live Stock Market updates for S&P BSE SENSEX,
StockPrice, Company News & Results (bseindia.com)

5. Stock market - Wikipedia

6. (3) What are the main objectives of the stock market? - Quora
7. SENSEX 61,112.44 (▲0.76%) BSE SENSEX | Google Finance
8. BSE Ltd-Registered Investors (bseindia.com)
9. Book: A BEGINNER’S GUIDE TO STOCK MARKET – MATTHEW KRATTE.
10. NIFTY_50 18,065.00 (▲0.84%) NIFTY 50 | Google Finance

41