A

STUDY OF FINANCIAL MARKET

PROJECT REPORT SUBMITTED TO
SAVITRIBAL PHULE PUNE UNIVERSITY, FOR THE
AWARD OF
BACHELOR IN BUSINESS ADMINISTRATION
(BBA)
SUBMITTED BY
Mr. SHIVAM SHIVKUMAR KHARULE
UNDER THE GUIDANCE OF
Prof. Prerna Tulve
THROUGH
SNBP COLLEGE OF ARTS COMMERCE SCIENCE
AND MANAGEMENT STUDIES, MORWADI,
PIMPRI
 CERTIFICATE
This is to certify that Shivam Shivkumar Kharule of
the class TY BBA, . Has Satisfactorily completed
project and semester 5 . As laid down by the
Savitribai Phule Pune University Pune
for the academic year 2022-2023
 ACKNOWLEDGMENT
Firstly, I would Like to Praise and Thank Almighty to Help
Me Successfully Come till This Point of My Life. May He
Always Keep Showering His Blessings on All of Us.
I Wish to Express My Deep Sense of Gratitude to Prof.
Prema Miss for Her Valuable Advice and Guidance to
Me Throughout My Project.
I Would Like to Place on Record My Sincere Thanks to
Memorandum with Reference to Business
Communication.
I Would Like to Express My Willingness and Gratitude to
Prema Miss for Giving Me an Opportunity to do
Project on Memorandum. Lastly, But Not the Least
Express My Gratitude to My Beloved Parents and
Brothers and I Would Like to
Thank My Friends and All the Other People Who Directly
and Indirectly Help Me During This Project
SHIVAM SHIVKUMAR KHARULE
 DECLERATION:
I, the undersigned Mr. SHIVAM SHIVKUMAR
KHARULE hereby declare that the Project report
entitled "Memorandum, with
reference to Business Communication Written and
Submitted by Me to University of Pune in Partial
fulfilment of The Requirement for Award of Degree
of Bachelor of Business Administration Under the
Guidance of Prof. Prema Mam Is my original Work
the Empirical Findings and Suggestion in The Report
Are Based on The Original Information Collected By
me
Place:
Date:.

Name & Sign Of Student

 FINANCIAL MARKET

Executive Summary
Introduction:
A financial market is a market in which
people trade financial securities and derivatives
at low transaction costs. Some of the securities
include stocks and bonds, raw materials
and precious metals, which are known in the
financial markets as commodities.
The term "market" is sometimes used for what
are more strictly exchanges, organizations that
facilitate the trade in financial securities, e.g.,
a stock exchange or commodity exchange. This
may be a physical location (such as the New
York Stock Exchange (NYSE), London Stock
Exchange (LSE), JSE Limited (JSE), Bombay Stock
Exchange (BSE) or an electronic system such
as NASDAQ. Much trading of stocks takes place
on an exchange; still, corporate actions (merger,
spinoff) are outside an exchange, while any two
companies or people, for whatever reason, may
agree to sell the stock from the one to the other
without using an exchange.
Trading of currencies and bonds is largely on a
bilateral basis, although some bonds trade on a
stock exchange, and people are building
electronic systems for these as well, to stock
exchanges. There are also global initiatives such
as the United Nations Sustainable Development
Goal 10 which has a target to improve
regulation and monitoring of global financial
markets.
Financial markets refer broadly to any
marketplace 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 economies.
 Financial markets play a vital 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 of
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.
 Some financial markets are small with
little activity, and others, like the New York
Stock Exchange (NYSE), trade trillions of
dollars of securities daily. The equities (stock)
market is a financial market that enables
investors to buy and sell shares of publicly
traded companies. The primary stock market is
where new issues of stocks, called initial public
offerings (IPOs), are sold. Any subsequent
trading of stocks occurs in the secondary
market, where investors buy and sell securities
that they already own.
Financial markets refer broadly to any
marketplace 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 economies.
Financial markets play a vital 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 of
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.
Some financial markets are small with
little activity, and others, like the New York
Stock Exchange (NYSE), trade trillions of
dollars of securities daily. The equities (stock)
market is a financial market that enables
investors to buy and sell shares of publicly
traded companies. The primary stock market is
where new issues of stocks, called initial public
offerings (IPOs), are sold. Any subsequent
trading of stocks occurs in the secondary
market, where investors buy and sell securities
that they already own.

Objective And Scope:

Financial markets help to finance the
economy
Financial markets allows companies to finance
themselves by raising capital, either by issuing
bonds (debt securities) or shares (titles of
property). This allows them to finance business
growth and their projects, by having access to
long-term finance, rather than short term
finance such as bank loans. For investors
(whether individual savers, institutions, banks,
etc.), financial markets offer the opportunity to
invest capital in exchange for a return called a
"dividend", and the prospect of added value if
their assets appreciate. In summary, financial
markets put companies that need money in
contact with players who have funds to invest.
Financial markets are thus a real means of
financing the economy. For example, to
encourage investors to finance businesses, the
French Government, in 1992, created the plan
d'épargne en actions (PEA), which offers a more
attractive tax regime when there is long-term
capital investment in French companies.
There are two types of market: the primary
market, which is the part that deals with issuing
and listing shares. It is also referred to using the
term, initial public offering (IPO). This is where
financial markets enable companies to finance
themselves. Once these shares are in
circulation, they can be negotiated on a daily
basis on the “secondary” market. This is how
several billion euros worth of exchanges take
place daily on the London stock market, some
investors sell shares and others buy them.
Financial markets help to finance States
States tax investors on the revenues obtained
from their investments in financial markets,
either through tax on financial transactions
(FTTs) or tax on dividends and capital gains.
Although some investments offer tax benefits,
investors using simple securities accounts are
taxed at a relatively high level on their profits,
namely at their income tax rate.
Beyond this tax revenue for the State, financial
markets also enable States to finance
themselves by issuing government bonds; in
France, the Agence France Trésor (AFT) issues
and manages the debt, known as
Obligation Assimilable du Trésor (OAT). Savers
lend money to the State for fixed remuneration,
in the form of a coupon, with longer or shorter
repayment maturities.

Financial markets help to provide

liquidity
Financial markets are places where supply
meets demand, and therefore they offer a
significant level of liquidity. They are the
reference markets for international investors to
invest their capital: each day buyers and sellers
throughout the world carry out their transactions.
It is this high level of liquidity which benefits both
companies and States, because it is an
indispensable means of funding, offering
extensive output.

Financial markets, a protective

instrument
Financial markets allow all investors in the
market to protect themselves against a multitude
of risks (currency risk, interest rate risk, risk of
price reductions, etc.), in particular through
derivatives. For example, businesses use
currency SWAPs to protect themselves against
exchange risks, or interest rate SWAPs to
protect themselves against the interest rate risk.
Other derivatives such as futures, options or
forward contracts are used as part of risk
management, whether it is banks managing their
exposure or companies protecting themselves
against the price variations in the raw materials
they need for their business (oil for an airline for
example).

Financial markets, a communication tool

Multinationals now use financial markets as a
communication tool, especially through
advertising effects. Although the majority of
market players use financial markets for the
traditional function of raising funds, large global
companies such as Google and Facebook use
them to impress the competition. Indeed,
Facebook’s initial public entry offering created a
lot of talk, a story that certainly made even the
most hesitant about new communication
techniques aware of this company’s strength.
The respective takeovers of Tumblr and
Instagram by Yahoo and Facebook, for
overvalued prices, was primarily a
communication strategy to impress market
players and spread their financial power.
Financial markets may also enable medium-
sized companies to make themselves known
internationally through IPOs. In addition, a
publicly traded company is subject to a number
of tax obligations, regulations, etc. which
reassure investors and customers by making the
company more trustworthy.

Components of financial market

• Primary market: A primary market is a
market for new issues or new financial
claims. Therefore, it is also called new issue
market. The primary market deals with those
 securities which are issued to the public for
the first time.
• Secondary market: A market for secondary
sale of securities. In other words, securities
which have already passed through the new
issue market are traded in this market.
Generally, such securities are quoted in the
stock exchange and it provides a continuous
and regular market for buying and selling of
securities.
Simply put, primary market is the market where
the newly started company issued shares to the
public for the first time through IPO (initial
public offering). Secondary market is the market
where the second hand securities are sold
(security Commodity Markets).

Based on security types

• Money market: Money market is a market
for dealing with the financial assets and
securities which have a maturity period of up
 to one year. In other words, it's a market for
purely short-term funds.
• Capital market: A capital market is a market
for financial assets that have a long or
indefinite maturity. Generally, it deals with
long-term securities that have a maturity
period of above one year. The capital market
may be further divided into (a) industrial
securities market (b) Govt. securities market
and (c) long-term loans market.
o Equity markets: A market where

ownership of securities are issued and

subscribed is known as equity market.
An example of a secondary equity
market for shares is the New York
(NYSE) stock exchange.
o Debt market: The market where funds

are borrowed and lent is known as debt

market. Arrangements are made in such
a way that the borrowers agree to pay
the lender the original amount of the
loan plus some specified amount of
interest.
• Derivative markets: A market where
financial instruments are derived and traded
 based on an underlying asset such as
commodities or stocks.
• Financial service market: A market that
comprises participants such as commercial
banks that provide various financial services
like ATM. Credit cards. Credit rating, stock
broking etc. is known as financial service
market. Individuals and firms use financial
services markets, to purchase services that
enhance the workings of debt and equity
markets.
• Depository markets: A depository market
consists of depository institutions (such as
banks) that accept deposits from individuals
and firms and uses these funds to participate
in the debt market, by giving loans or
purchasing other debt instruments such as
treasury bills.
• Non-depository market: Non-depository
market carry out various functions in
financial markets ranging from financial
intermediary to selling, insurance etc. The
various constituencies in non-depositary
markets are mutual funds, insurance
 companies, pension funds, brokerage firms
etc.
• Relation between Bonds and Commodity
Prices: With the increase in commodity
prices, the cost of goods for companies
increases. This increase in commodity
prМжЙч
ices level causes a rise in inflation.
• Relation between Commodities and
Equities: Due to the production cost
remaining same, and revenues rising (due to
high commodity prices), the operating profit
(revenue minus cost) increases, which in turn
drives up equity prices.

Review of Literature
An understanding of the existing literature
and identifying the prospective areas for
future research on a specific research topic is
of prime importance to a researcher. Content
analysis enables in drawing meaningful
conclusions from the existing research works
based on which a researcher can effectively
carry out further studies. Hart
(1998) mentions that the review of literature
enables a researcher to better understand
his research topic and develop his capability
to find new approaches in the existing
context. Downe-Wamboldt (1992) defines it
as a technique that broadens the
understanding of phenomena, which further
enables in making distinct and effective
conclusions. Castleberry and Nolen
(2018) state that by understanding the
reviewed ideas from the existing work, a
researcher can transform them into a unique
one by analyzing the same ideas differently.
By considering the need and benefits of
content analysis, the current study observed
that a handful of studies have been eager in
reviewing the existing literature on stock
market liquidity. Benson et al.
(2015) analyzed the literature available on
liquidity in financial markets. The study
reviewed 113 research papers on liquidity
and concluded that market liquidity was
essentially studied concerning corporate
finance, corporate announcements, stock
returns, macro policy announcements, and
investment management. Also, Amihud et al.
(2006) analyzed the studies that have
evaluated the effect of liquidity and liquidity
risk on stock returns. The study summarized
the liquidity asset pricing theories and
significant results in support of these
theories. Kumar and Misra (2015) evaluated
95 articles and presented a review of
literature on various aspects of stock market
liquidity like measurement of liquidity,
determinants of liquidity, intraday
movements, and liquidity effects on firm
value. Recently, Díaz and Escribano
(2020) reviewed 177 articles and discussed
the dimensional liquidity measures which
have been used by researchers over the
years in determining the liquidity of equity,
bond, and treasury markets.
The earlier literature review papers on stock
market liquidity have considered an
inconsistent number of studies from various
research databases while some have
examined a few studies that highlight
different perspectives of stock market
liquidity. Also, it has been observed that the
post-crisis period articles have not been
extensively reviewed. Remarkably, these
studies have proposed diverse views on the
viability of dynamics in market liquidity in the
context of different market structures and
time durations. A focused review of their
empirical contributions can significantly
enable a researcher to contribute further in
improving the quality of work in the area of
stock market liquidity that can help the
benefiting stakeholders in effective policy
and strategy formulations. In addition, the
previous literature reviews have undertaken
only a theoretical evaluation of the available
literature and do not highlight the relevant
contributing journals, authors, and countries,
and the recent trend in publishing studies on
stock market liquidity which are also
important inputs for researchers to conduct
further studies on this topic. Thus, the
current work emphasizes reducing these
gaps and provides meaningful contributions
from a large number of previous researches
in the area of stock market liquidity.
• Capital market: A capital market is a market
for financial assets that have a long or
indefinite maturity. Generally, it deals with
long-term securities that have a maturity
period of above one year. The capital market
may be further divided into (a) industrial
securities market (b) Govt. securities market
and (c) long-term loans market.
o Equity markets: A market where

ownership of securities are issued and

subscribed is known as equity market.
An example of a secondary equity
market for shares is the New York
(NYSE) stock exchange.
o Debt market: The market where funds

are borrowed and lent is known as debt

market. Arrangements are made in such
a way that the borrowers agree to pay
the lender the original amount of the
loan plus some specified amount of
interest.
• Derivative markets: A market where
financial instruments are derived and traded
based on an underlying asset such as
commodities or stocks.
• Financial service market: A market that
comprises participants such as commercial
banks that provide various financial services
like ATM. Credit cards. Credit rating, stock
broking etc. is known as financial service
market. Individuals and firms use financial
services markets, to purchase services that
enhance the workings of debt and equity
markets.
• Depository markets: A depository market
consists of depository institutions (such as
banks) that accept deposits from individuals
and firms and uses these funds to participate
in the debt market, by giving loans or
purchasing other debt instruments such as
treasury bills.
• Non-depository market: Non-depository
market carry out various functions in
financial markets ranging from financial
intermediary to selling, insurance etc. The
various constituencies in non-depositary
markets are mutual funds, insurance
companies, pension funds, brokerage firms
etc.
 • Relation between Bonds and Commodity
Prices: With the increase in commodity
prices, the cost of goods for companies
increases. This increase in commodity
prМжЙч
ices level causes a rise in inflation.
• Relation between Commodities and
Equities: Due to the production cost
remaining same, and revenues rising (due to
high commodity prices), the operating profit
(revenue minus cost) increases, which in turn
drives up equity prices.

Research Methodology :
Within the financial sector, the term "financial
markets" is often used to refer just to the
markets that are used to raise finances. For
long
term finance, they are usually called the capital
markets; for short term finance, they are
usually
called money markets. The money market deals
in short-term loans, generally for a period of a
year or less. Another common use of the term
is
as a catchall for all the markets in the financial
sector, as per examples in the breakdown
below.
• Capital markets which consist of:
o Stock markets, which provide financing
through the issuance of shares
or common stock, and enable the
subsequent trading thereof.
o Bond markets, which provide financing
through the issuance of bonds, and
enable the subsequent trading thereof.
• Commodity markets, The commodity market
is a market that trades in the primary
economic sector rather than manufactured
products, Soft commodities is a term
generally referred as to commodities that are
grown, rather than mined such as crops
(corn, wheat, soybean, fruit and vegetable),
livestock, cocoa, coffee and sugar and Hard
commodities is a term generally referred as
to commodities that are mined such as gold,
gemstones and other metals and generally
drilled such as oil and gas.
• Money markets, which provide short term
debt financing and investment.
• Derivatives markets, which provide
instruments for the management
of financial risk
• Futures markets, which provide
standardized forward contracts for trading
products at some future date; see
also forward market.
• Foreign exchange markets, which facilitate
the trading of foreign exchange.
• Cryptocurrency market which facilitate the
trading of digital assets and financial
technologies.
• Spot market
• Interbank lending market
The capital markets may also be divided
into primary markets and secondary
markets. Newly formed (issued) securities
are bought or sold in primary markets, such
as during initial public offerings. Secondary
markets allow investors to buy and sell existing
securities. The transactions in
primary markets exist between issuers and
investors, while secondary market
transactions exist among investors.
Liquidity is a crucial aspect of securities that
are traded in secondary
markets. Liquidity refers to the ease with
which a security can be sold without a loss
of value. Securities with an active secondary
market mean that there are many buyers
and sellers at a given point in time.
Investors benefit from liquid
securities because they can sell their assets
whenever they want; an illiquid security may
force the seller to get rid of their asset at a
large discount.

Data Analysis & Interpretation:

In recent years, technology has spurred
innovation in the field of finance.
Technology has become a major facet for
any financial institution, offering strategic
advantages as well as disadvantages. The
availability of data has caused the
processes of financial institutions to react
in real-time. The ever-increasing speed
and volume in stock trading have
demanded reinforcement of faster,
cleaner, and better-performing tools,
which brings us to using programming
languages such as R or Python.
Before moving to R or Python, let’s first
define data analysis and its role in the
financial market
Data analysis is a detailed examination of
the given set of data. It can scrutinize and
evaluate every aspect of the historical data
when fed with suitable criteria, giving
optimum results. Data analysis is reliable
because it can eliminate the scope of
human error, save time, and give an
accurate outcome. In the financial domain,
Data analysis can examine and identify
paradigms, it also points out factors that
influence customer behavior and
purchasing decisions. These decisions can
help businesses and companies make
informed and important decisions about
their product design, pricing strategy,
distribution strategy, marketing, and
promotion strategy.
When we talk about Data analysis tools,
there are many tools like age-old Excel
and the trending BI (Business
Intelligence), but the roots begin at
programming languages such as R and
Python.

Why R or Python?
Both languages can be credited for being
able to change the dynamics of the
financial markets. They have a varied
range of applications, beginning from data
CMR (cleaning, modeling, and reduction)
to hypothesis testing and modeling. While
R is specifically designed for data analysis,
it does not enjoy the same exclusivity in
the case of Python. Data Analysis is just
one of the many branches in Python.
Although Python is catching up with R in
the Data Analysis using AI (Artificial
Intelligence) and Machine learning, R still
maintains an edge in the field of statistics.
R vs Python – What to choose?
If you are a beginner, starting with Python
would be easier for you. Python replicates
many models of R. Both are easy to learn,
and challenges can be tackled with online
resources, however, choose to learn only
one language at a time because learning
both of them together can be confusing as
they share many similar aspects.
Finding & Conclusion
Financial markets have particular characteristics
that make them unique. They are considered to
have Cardinal regulations on trading, clear pricing
strategy and as well as costs and fees which are well
defined.Financial markets are institutions and
procedures that facilitate transactions in all types of
financialsecurities. If the financial markets did not
exist, the wealth of the economy would decrease
and the rate of capital formation would not be as
high. They exist in order to allocate the supply of
savings from those economic units with a surplus to
those with a deficit. The economy would suffer
without a developed financial market system
because the wealth of the economy would be less
without them. Rate of capital formation would not
be as high, followed by the slowed rate ofstock
contribution to (1) dwellings, (2) productive plant
and equipment, (3) inventory, and (4) consumer
durables. Normal business activities would be
funded slowly or not at all.

Reference & Bibliography:

http://www.google.com
http://www.wikipedia.com
http://chrome.com
http://businessmanagement.com
http://secondarymarket.com