pdf24 Merged

A
Winter Project Report

On
“A study on Impact of GST on Nifty during a Period of 2018 to 2023”
Submitted By
Abhijeet Shukla (3552)
Under The Guidance Of

Dr. Mitalee A. Pithawala
(Assistant Professor)
In Partial Fulfillment of the Requirement of the Subject in
Third Year (SEM – VI) BBA Programme
Submitted to,
D.R.PATEL & R.B.PATEL COMMERCE COLLEGE & NAVNIRMAN INSTITUTION OF
MANAGEMENT (NIM) BBA,COLLEGE,
Bharthana, Surat
Affiliated to
Veer Narmad South Gujarat University
Surat
Academic Year (2023– 24)
DECLARATION
I, Abhijeet Shukla, hereby declare that the project report titled “A study
on Impact of GST on Nifty during a Period of 2018 to 2023”, has been
done under the guidance of Assistant Professor Dr. Mitalee A. Pithawala,
submitted in partial fulfillment of the requirement for the award of the
degree of Bachelor of Business Administration to Veer Narmad South
Gujarat University, Surat is my original work – Research – study carried
out during sixth semester and not submitted for award of any
degree/diploma/fellowship of any other institution/organization of
university.
Sign: ________
Date: ________
I
ACKNOWLEDGEMENT
Project is never the accomplishment of an individual rather it is an

amalgamation of efforts, ideas and co-operation of a number of entities.
I would like to thank VEER NARMAD SOUTH GUJARAT
UNIVERSITY for giving an opportunity to work on valuable project.
We are greatly thankful to our, I/C principal Prof. Avnindra Dixit who gave
us the opportunity for training.
It is my privilege to express my deep sense of gratitude to my mentor Dr.
Mitalee Pithawala for her efforts, guidance, valuable comments and
suggestions for making this project report.
She helped me to complete my report on practical study and gave
contributions to improve and expand my practical knowledge.
Finally, I express my intense gratitude to my parents whose blessings has
helped me translate my efforts into fruitful achievement.
Sign: ________
Date: ________
II
INDEX
SR PARTICULARS PAGE
NO. NO.
o DECLARATION I
o ACKNOWLEGEMENT II
o LIST OF TABLES V
o LIST OF CHARTS VI
CHAPTER: 1 INDUSTRY PROFILE
1.1 Component of Indian Financial System 1
CHAPTER: 2 INTRODUCTION TO NIFTY
2.1 What is Nifty? 28
2.2 Role of Nifty in Investment Strategies 36
2.3 Nifty vs Sensex 38
2.4 What is NSE? 44
CHAPTER: 3 THEORETICAL FRAMEWORK

3.1 Introduction on GST 49
3.2 Paired- T Test 58
3.3 Correlation 62
CHAPTER: 4 LITERATURE REVIEW
CHAPTER: 5 RESEARCH METHODOLOGY
5.1 Introduction of Topic 70
5.2 Objective of the Study 70
5.3 Importance of the Study 70
5.4 Research Methodology 70
5.5 Limitation of Study 71
5.6 Scope of Study 71
III
CHAPTER: 6 DATA ANALYSIS
6.1 Data Analysis of GST & Nifty of the year 2020 72
6.5 Anova of GST on Nifty 80
CHAPTER: 7 CONCLUSION
BIBLOGRAPHY
ANNEXURE
IV
LIST OF TABLES:
Table No. Table Name Page No.

TABLE 3.1 The correlation Matrix 65
TABLE 6.1 GST & Nifty of the year 2020 72
TABLE 6.5 Data Analysis of GST 80
V
LIST OF CHARTS:
Table No. Table Name Page No.

CHART 1.1 Indian Financial System 1
CHART 6.1 GST & Nifty of the year 2020 72
CHART 6.5 Data Analysis of GST 81
VI
Chapter: 1
Industry Profile
(Indian Finacial System)

A study on impact of GST on Nifty during a period of 2018 to 2023
Chart: 1.1 Indian Financial System
1.1 Components of Indian Financial System
1.1.1 Financial Institution:
Financial institutions play a crucial role in the global economy by facilitating the flow of money
and capital. These entities, ranging from banks and credit unions to investment firms and
insurance companies, provide essential services such as lending, borrowing, investing, and risk
management. The financial sector acts as the backbone of economic growth, offering
individuals and businesses access to funds, promoting savings, and ensuring the efficient
allocation of resources. Understanding the functions and dynamics of financial institutions is
fundamental to comprehending the broader financial system and its impact on both local and
global economies.
 Banking Institution:
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D.R Patel & R.B Patel Commerce College & NIM BBA College, Surat
Banking institutions are financial intermediaries that play a central role in the economy by
providing a wide array of financial services.
 Core Functions:
Deposits: Banks accept deposits from individuals and businesses, providing a safe place for
people to store their money. This facilitates easy access to funds and encourages savings.
Loans and Credit: Banks lend money to individuals and businesses, supporting economic
activities such as home purchases, education, and business expansion. Interest rates on loans
contribute to the bank's revenue.
Types of Banks:
Commercial Banks: Offer a range of services to individuals and businesses, including savings
and checking accounts, loans, and investment products.
Investment Banks: Primarily engage in investment activities, such as underwriting securities

and facilitating mergers and acquisitions.
Central Banks: Responsible for monetary policy, regulating money supply, and maintaining
stability in the financial system.
 Services Offered:
Checking and Savings Accounts: Provide a place for individuals and businesses to deposit
money, earning interest on savings.
Loans and Mortgages: Offer various types of loans, including personal loans, mortgages, and
business loans, with interest rates based on creditworthiness.
Investment Services: Banks manage investment portfolios, facilitate trading of securities, and
offer financial advice.
Electronic Banking: Provide online and mobile banking services, enabling customers to
manage their accounts, transfer funds, and conduct transactions electronically.
 Risk Management:
Insurance Services: Some banks offer insurance products, such as life, health, and property
insurance, to help clients manage risks.
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Derivatives and Hedging: Banks engage in financial instruments like derivatives to manage
risks associated with interest rates, currencies, and commodities.
 Regulation and Oversight:
Banking institutions are subject to strict regulations to ensure financial stability and protect the
interests of depositors. Regulatory bodies set capital requirements, conduct audits, and monitor
compliance.
 Globalization and Technology:
Banks operate globally, facilitating international trade and finance. Technological

advancements have led to the rise of online banking, mobile payments, and digital financial
services.
 Financial Crisis and Stability:
Banking institutions are susceptible to economic downturns, and events like the 2008 financial
crisis underscore the importance of regulatory measures to maintain stability and prevent
systemic failures.
I. Commercial banks:
 Commercial banks are foundational pillars of the financial system, acting as key
intermediaries between savers and borrowers within an economy. These institutions are
instrumental in the circulation and allocation of capital, playing a critical role in
fostering economic growth and stability.
 At the core of their operations, commercial banks gather funds from the public through
various deposit products, such as savings accounts, current accounts, and fixed
deposits. These deposits serve as the primary source of the banks' funding, forming the
basis for their lending activities. Customers entrust their money to these banks with the
expectation of safety, liquidity, and potential returns.
 The funds amassed by commercial banks are utilized to provide loans and advances to
individuals, businesses, and government entities. This lending function is essential for
stimulating economic activities, as it enables individuals to purchase homes,
entrepreneurs to fund business ventures, and governments to undertake public projects.
The interest earned on these loans constitutes a significant portion of a commercial
bank's revenue.
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 In addition to traditional deposit and lending services, commercial banks offer a diverse
array of financial products. Credit cards, mortgages, personal loans, and investment
products are among the myriad options available to customers. This diversity reflects
the banks' adaptability to the changing needs and preferences of their clientele. As
technological advancements reshape the financial landscape, commercial banks are
increasingly integrating electronic banking services, further enhancing customer
convenience.
 Commercial banks also contribute to the stability of the financial system. Regulated by
central banks and financial authorities, these institutions adhere to strict guidelines to
ensure prudent financial management. Capital adequacy requirements, risk
management practices, and regulatory oversight collectively work to mitigate systemic
risks and protect the interests of depositors.
 Furthermore, commercial banks facilitate international trade and finance by offering
services such as foreign exchange and trade financing. This global connectivity
enhances economic cooperation and contributes to the integration of economies on a
global scale.
 In conclusion, commercial banks serve as the lifeblood of the economy, channeling
funds from savers to borrowers, supporting economic activities, and fostering financial
stability. Their multifaceted roles, from traditional banking services to embracing
technological innovations, underscore their adaptability in navigating the evolving
landscape of the financial sector. As key players in the economic infrastructure,
commercial banks play a pivotal role in shaping the trajectory of a nation's financial
well-being.
 Public sector:
The public sector's involvement in commercial banks can be explored through various
dimensions, including ownership, regulation, and policy objectives. In many countries,
commercial banks operate within a mixed economy, where both public and private sectors play
crucial roles. This discussion will delve into the nature of public sector involvement in
commercial banks, its historical context, and its implications.
1. Ownership and Structure:

Public sector banks are those where the government, either at the national or regional level,
owns a significant stake. This ownership can range from majority control to complete
nationalization. The rationale behind public ownership is often rooted in the desire to ensure
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financial stability, promote financial inclusion, and align the banking sector with broader
economic goals.
Nationalized banks are typically established through legislative acts, transferring ownership
from private shareholders to the government. This process can lead to changes in management,
governance structures, and strategic priorities. The extent of government ownership varies
globally, with some countries maintaining a large public banking sector, while others prefer a
predominantly private sector-led model.
2. Regulatory Framework:
The public sector's involvement in commercial banks is closely tied to regulatory frameworks
that govern the financial sector. Governments often enact laws and regulations to ensure
prudential oversight, consumer protection, and overall stability. Regulatory bodies, either
independent or government-appointed, play a crucial role in supervising the functioning of
commercial banks.
Public sector banks may be subject to additional regulatory scrutiny due to their systemic
importance and the potential impact on the overall economy. Striking the right balance between
autonomy for efficient operation and regulation for stability is a continuous challenge.
3. Policy Objectives:
Public sector involvement in commercial banks aligns with broader economic policy
objectives. Governments may use these banks as instruments for achieving social goals such
as poverty alleviation, rural development, and infrastructure financing. This involves directing
credit flows to specific sectors or regions deemed critical for national development.
Public banks may be more inclined to support sectors that might face challenges in obtaining
financing from purely profit-driven private institutions. This can be seen in the emphasis on
small and medium enterprises (SMEs), agriculture, and other priority areas.
4. Challenges and Criticisms:
Despite the intended benefits, public sector involvement in commercial banks is not without
challenges. Critics argue that political interference can lead to suboptimal decision-making,
inefficiencies, and misallocation of resources. Moreover, concerns about the fiscal burden of
supporting public banks during economic downturns may arise.
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Striking the right balance between public and private involvement is crucial. A well-regulated
private sector can foster competition, innovation, and efficiency, while public sector banks can
contribute to social goals and stability.
 Private sector:
The private sector of commerce includes commercial banks, which play a crucial role in the
financial system. Commercial banks are profit-oriented financial institutions that provide a
wide range of services to individuals, businesses, and governments. In this overview, we'll
explore the functions, structure, and significance of commercial banks in the private sector of
commerce.
I. Functions of Commercial Banks:
Commercial banks serve various functions, making them essential components of the financial
ecosystem.
 Deposit Mobilization: Commercial banks attract deposits from individuals and

businesses, offering interest on savings and current accounts. These deposits form the
base for the bank's lending activities.
 Lending: One of the primary functions of commercial banks is providing loans and
advances to individuals and businesses. These loans can be for various purposes, such
as personal expenses, home purchase, or working capital for businesses.
 Payments and Settlements: Commercial banks facilitate the transfer of funds through
various payment mechanisms, including checks, electronic transfers, and online
banking. They play a crucial role in the settlement of transactions within the financial
system.
 Investment: Commercial banks invest in various financial instruments, such as
government securities and corporate bonds, to generate additional revenue.

 Foreign Exchange Services: Many commercial banks offer foreign exchange services,
allowing clients to conduct international transactions and trade in different currencies.
II. Structure of Commercial Banks:
Commercial banks typically have a hierarchical structure with various departments and
functions.
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 Board of Directors: The highest authority in a commercial bank, the board of directors,
sets policies and oversees the bank's strategic direction.
 Top Management: This includes the Chief Executive Officer (CEO) and other top
executives responsible for day-to-day operations and decision-making.
 Departments: Commercial banks have departments for various functions, such as retail
banking, corporate banking, risk management, and finance.
 Branch Network: Banks often have a wide network of branches to reach a diverse
customer base. Some banks may also have international branches.
III. Significance of Commercial Banks:
 Economic Growth: Commercial banks play a crucial role in stimulating economic

growth by providing funds for investments and business expansion.
 Financial Intermediaries: They act as intermediaries between savers and borrowers,
facilitating the efficient allocation of capital in the economy.
 Stability of the Financial System: Commercial banks contribute to the stability of the
financial system by providing liquidity, managing risks, and participating in regulatory
frameworks.
 Job Creation: Through their support for businesses and entrepreneurship, commercial
banks contribute to job creation and overall employment.
 Regional Rural Bnaks(RRBs):
Regional Rural Banks (RRBs) are a vital component of the Indian banking system, playing a
crucial role in catering to the financial needs of rural areas. Established with the primary
objective of promoting rural development and extending banking services to the unbanked
population, RRBs operate as a unique category of financial institutions in collaboration with
the central government, state governments, and sponsor commercial banks.
 Formation and Structure:
RRBs were established under the Regional Rural Banks Act of 1976, with the aim of bridging
the gap in banking services between urban and rural areas. These banks operate at the regional
level and are jointly owned by the central government, the concerned state government, and
the sponsor commercial bank. The ownership structure typically consists of the central
government holding a 50% stake, the state government with a 15% stake, and the sponsor bank
holding the remaining 35%.Each RRB functions in a specific geographic area, catering to the
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financial needs of the rural population in that region. The structure is designed to ensure
effective governance, with a Board of Directors overseeing the bank's operations and decision-
making.
 Objectives and Functions:
The primary objectives of RRBs include providing credit and other financial services to the
rural population for agricultural and non-agricultural activities. They aim to promote
sustainable rural development by facilitating financial inclusion, generating employment
opportunities, and enhancing the overall economic well-being of rural communities.
Key functions of RRBs encompass providing credit for agriculture, allied activities, and rural
crafts; promoting savings habits among rural residents; and offering various financial products
and services, including deposit accounts, loans, and remittance facilities. RRBs also play a
pivotal role in implementing government-sponsored schemes targeted at rural development.
 Challenges and Initiatives:
Despite their essential role, RRBs face challenges such as limited capital, outdated technology,
and the need for skilled manpower in rural areas. To address these issues, various initiatives
have been undertaken. The government has infused capital into RRBs, and efforts have been
made to enhance their technology infrastructure. Training programs have been initiated to skill
the rural workforce, enabling them to manage banking operations effectively.
Moreover, RRBs collaborate with government agencies, non-governmental organizations, and

other stakeholders to implement rural development initiatives successfully. The Pradhan
Mantri Jan Dhan Yojana (PMJDY) and other financial inclusion programs have further boosted
the reach of RRBs in providing basic banking services to the rural population.
 Foreign Banks:
Foreign banks operating in a host country, particularly within the context of commercial
banking, play a significant role in the global financial landscape. This phenomenon is
characterized by the establishment of branches or subsidiaries of foreign-based banks in a
different country. The entry of foreign banks into a domestic market can have various
implications for the host country's financial system, economic development, and regulatory
framework.
 Introduction:
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Foreign banks entering the commercial banking sector of a host country bring with them
diverse expertise, capital, and financial products. These entities contribute to the globalization
of financial services, fostering cross-border investment and trade. The presence of foreign
banks can enhance competition within the host country's banking industry, potentially leading
to improved efficiency, innovation, and better services for consumers.
Moreover, foreign banks often introduce a wider array of financial products and services,
including sophisticated investment and wealth management products, which may not have been
prevalent in the local market. This diversification can benefit both consumers and businesses
by providing access to a broader range of financial instruments and solutions.
 Economic Impacts and Challenges:
The entry of foreign banks into the commercial banking sector can positively impact the host
country's economy. These banks often bring in additional capital, technology, and best
practices, contributing to the development of the local financial infrastructure. Foreign banks
may also facilitate the flow of capital across borders, fostering economic growth and
development.
However, challenges may arise, such as concerns about the potential dominance of foreign
banks in the domestic market. This could lead to issues related to financial stability and the
concentration of economic power. Regulatory authorities in the host country need to strike a
balance between encouraging foreign investment and safeguarding the stability of the local
financial system.
 Regulatory Framework and Risk Management:
The regulatory framework governing foreign banks in commercial banking is crucial for
maintaining a stable and secure financial environment. Host countries typically impose
regulations to ensure that foreign banks adhere to local standards and contribute positively to
the domestic economy. These regulations may involve prudential measures, capital
requirements, and risk management guidelines.
Foreign banks must navigate regulatory compliance in both their home and host countries,
requiring a comprehensive understanding of the regulatory landscape. Effective risk
management practices are essential to address potential challenges associated with cross-border
operations, currency fluctuations, and varying economic conditions.
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II. Cooperative Banks:
Cooperative banks are financial institutions that operate on a cooperative basis, meaning they
are owned and controlled by their members who are also their customers. These banks play a
crucial role in fostering financial inclusion and supporting local communities.
 Introduction and Historical Background:
Cooperative banks are a unique category of financial institutions with a distinct organizational
structure. Originating in the 19th century, the cooperative banking model was developed as a
response to the economic challenges faced by small farmers and local communities. The
primary objective was to create a self-help mechanism where individuals pooled their resources
to form a cooperative, providing mutual financial assistance.
One of the defining features of cooperative banks is their member-centric approach. Members,
who are also customers, have voting rights and actively participate in decision-making
processes. This democratic structure ensures that the bank operates in the best interest of its
members and the community it serves.
 Types of Cooperative Banks and Operations:
There are two main types of cooperative banks: urban cooperative banks (UCBs) and rural
cooperative banks (RCBs). UCBs primarily operate in urban and semi-urban areas, catering to
the financial needs of individuals and small businesses. RCBs, on the other hand, focus on the
rural and agricultural sectors, providing financial services to farmers and local communities.
Cooperative banks offer a range of services, including savings and current accounts, loans, and
other financial products. They often specialize in catering to specific sectors, such as
agriculture, housing, or small-scale industries. These banks promote financial inclusion by
reaching out to underserved populations who may face challenges accessing traditional banking
services.
 Challenges and Future Prospects:
While cooperative banks have played a crucial role in promoting financial inclusion, they also
face challenges. Governance issues, inadequate capitalization, and regulatory constraints can
impact their stability. Striking a balance between maintaining their cooperative principles and
adapting to a rapidly changing financial landscape is a constant challenge.
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However, cooperative banks have the potential to evolve and thrive. With advancements in
technology, they can leverage digital solutions to enhance efficiency and expand their reach.
Collaborations with larger financial institutions and adherence to sound governance practices
are essential for their sustainability.
In conclusion, cooperative banks represent a unique model that aligns financial services with
community interests. By fostering a sense of ownership and participation among members,
these banks contribute to the overall well-being of local economies and promote inclusive
financial growth.
 Non-Banking Institution:
Non-banking institutions, also known as non-bank financial institutions (NBFI), refer to

entities that provide financial services but do not hold a banking license. They play a crucial
role in the financial system and include various types of organizations. Here are some key
examples and explanations:
 Insurance Companies:
These institutions provide insurance products, such as life insurance, health insurance, and
property insurance, to individuals and businesses.
Insurance companies collect premiums from policyholders and, in return, offer financial
protection against specified risks.
 Mutual Funds:
Mutual funds pool money fr3om multiple investors and invest it in a diversified portfolio of
stocks, bonds, or other securities.
Investors own shares in the mutual fund, and their returns are based on the performance of the
underlying investments.
 Pension Funds:
Pension funds manage and invest funds on behalf of individuals or organizations to ensure
there are adequate resources for retirement benefits.
These funds may invest in various asset classes, such as stocks, bonds, and real estate, to
generate returns.
 Finance Companies:
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Finance companies provide various financial services, including loans and credit, but do not
accept deposits like traditional banks.
They often specialize in specific types of lending, such as auto loans or consumer financing.
 Credit Unions:
Similar to banks, credit unions provide financial services to members, who are typically part
of a specific community or organization.
Credit unions are member-owned, and profits are returned to members in the form of lower
fees and better interest rates.
 Brokerage Firms:
Brokerages facilitate the buying and selling of financial securities, such as stocks, bonds, and
derivatives, on behalf of clients.
They earn revenue through commissions or fees charged for executing trades and providing
financial advice.
 Hedge Funds:
Hedge funds are investment funds that pool capital from accredited investors and employ
various strategies to generate high returns.
They often use leverage and invest in a wide range of assets, including stocks, bonds,
derivatives, and currencies.
 Venture Capital and Private Equity Firms:
These firms invest in private companies at various stages of development, providing capital to
help them grow.
Venture capital focuses on startups and early-stage companies, while private equity typically
invests in more established businesses.
 Microfinance Institutions:
Microfinance institutions provide financial services, including small loans, to individuals or

businesses in underserved or low-income communities.Their goal is to promote financial
inclusion and support entrepreneurship at a grassroots level.Non-banking institutions
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contribute diversity and specialization to the financial landscape, offering a range of services
that complement traditional banking activities.
I. Organised Financial institutions:
Organized financial institutions refer to entities that provide financial services but are not
traditional banks. These institutions play a crucial role in the financial system by offering
various financial products and services. Here are some types of organized financial institutions:
 Credit Unions:
Structure: Member-owned cooperatives.
Services: Provide savings, loans, and other financial services to their members.
Regulation: Governed by regulatory bodies specific to each country.
 Insurance Companies:
Function: Offer insurance products to individuals and businesses.
Types: Life insurance, health insurance, property and casualty insurance, etc.
Regulation: Subject to insurance regulations in their respective jurisdictions.
 Pension Funds:
Purpose: Manage funds contributed by employees and employers for retirement benefits.
Investments: Invest in a diversified portfolio to generate returns for pension payouts.
Regulation: Governed by pension regulations to ensure fund security.
 Mutual Funds:
Structure: Pooled funds from various investors invested in diversified portfolios.
Objective: Provide investors with professional management and diversification.
Regulation: Regulated by financial authorities to protect investors.
 Hedge Funds:
Investment Strategy: Actively manage funds with strategies to maximize returns.
Investor Base: Typically for accredited or institutional investors.
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Regulation: Subject to less stringent regulations compared to mutual funds.
 Venture Capital and Private Equity Firms:
Focus: Invest in private companies or startups.
Purpose: Provide capital for growth or restructuring in exchange for equity.
Regulation: Subject to securities laws and regulations.
 Microfinance Institutions:
Target Market: Provide financial services to low-income individuals and small businesses.
Services: Small loans, savings, and other basic financial services.
Social Impact: Focus on financial inclusion and poverty alleviation.
 Development Banks:
Objective: Support economic development through loans and financial assistance.
Focus: Fund projects that promote infrastructure, agriculture, and other key sectors.
Regulation: Governed by specific regulations and may have a developmental mandate.
Each of these organized financial institutions serves specific financial needs, contributes to
economic stability, and operates within a regulatory framework to ensure transparency and
protect the interests of stakeholders.
II. Unorganised Financial Institution:
Unorganized financial institutions, often referred to as non-banking financial institutions

(NBFI), are entities that provide financial services outside the traditional banking sector.
Unlike banks, these institutions are not regulated by central banking authorities and may
operate without a formal banking license. Here are some key aspects to understand:
 Diverse Services:
NBFIs encompass a wide range of entities, including money lenders, pawnshops, microfinance
institutions, credit unions, and more.
They may offer services like lending, investment management, insurance, and other financial
activities.
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 Regulatory Oversight:
Unlike traditional banks, unorganized financial institutions may lack strict regulatory
oversight, leading to variations in their practices and risk management.
 Credit Access:
NBFIs often cater to individuals and businesses that may face challenges accessing credit from
conventional banks, serving as an alternative source of financing.
 Informal Nature:
Many unorganized financial institutions operate in an informal manner, relying on personal

relationships and trust rather than formal documentation.
This informality can sometimes lead to higher risks for both the institution and the customers.
 Risk and Interest Rates:
Due to the lack of regulatory control, interest rates charged by unorganized financial
institutions can be higher, reflecting the increased risk they undertake in lending to borrowers
with limited creditworthiness.
 Microfinance:
Microfinance institutions, a subset of NBFIs, specifically target providing financial services to

low-income individuals and small businesses, contributing to financial inclusion.
 Challenges:
Unorganized financial institutions may face challenges in terms of financial stability,

governance, and transparency.
Lack of standardized practices can result in potential risks to both the institution and its clients.
 Role in Economic Development:
Despite challenges, NBFIs play a crucial role in certain economies by providing financial
services to segments often overlooked by traditional banks, contributing to economic
development and poverty alleviation.
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It's essential to note that the level of organization and regulation can vary widely among
unorganized financial institutions, making them a diverse group with both positive and negative
impacts on financial ecosystems.
1.1.2 Financial Market:

 Financial markets are platforms where buyers and sellers trade financial instruments like
stocks, bonds, commodities, and currencies. These markets facilitate the flow of capital
and help determine the prices of assets. Major types include stock markets (for equities),
bond markets (for debt securities), commodity markets (for physical goods), and foreign
exchange markets (for currencies).
 Market participants include individual investors, institutional investors, corporations, and
governments. Prices are influenced by factors like supply and demand, economic
indicators, geopolitical events, and investor sentiment. Efficient markets theory posits that
prices reflect all available information.
 Market structures vary, with some centralized exchanges like the New York Stock
Exchange and others operating over-the-counter. Electronic trading platforms have
become increasingly common.
 Financial markets play a crucial role in allocating resources, managing risk, and providing
liquidity. However, they can also experience volatility and pose risks, leading to
regulatory oversight to maintain stability and protect investors.
I. Money Market:
The money market is a crucial segment of the financial market where short-term borrowing
and lending take place. It provides a platform for the trading of various financial instruments
with maturities typically ranging from overnight to one year. Participants in the money market
include financial institutions, corporations, governments, and other entities seeking short-term
funding or investment opportunities.
 Instruments Traded in the Money Market:

 Treasury Bills (T-Bills):
T-Bills are short-term debt instruments issued by governments to raise funds.
They have maturities ranging from a few days to one year and are considered one of the safest
investments due to the backing of the government.
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Investors purchase T-Bills at a discount and receive the face value upon maturity, earning the
difference as interest.
 Commercial Paper (CP):
CP is an unsecured, short-term debt issued by corporations to meet short-term funding needs.
Typically, large, creditworthy corporations issue commercial paper to institutional investors.
Maturities for commercial paper can range from a few days to 270 days.
 Repurchase Agreements (Repos):
Repos involve the sale of securities with an agreement to repurchase them at a later date at a
slightly higher price.
Financial institutions use repos for short-term borrowing, providing liquidity to the market.
Repos are collateralized transactions, usually involving government securities.
 Certificates of Deposit (CDs):
CDs are time deposits offered by banks with fixed maturities and interest rates.
Investors lock in their funds for a specified period, and in return, they receive higher interest
rates than regular savings accounts.
 Functions of the Money Market:

 Liquidity Provision:
The money market enhances overall liquidity in the financial system.
Short-term instruments allow participants to quickly convert assets into cash, meeting
immediate funding requirements.
 Interest Rate Discovery:
Money market interest rates are often considered benchmarks for short-term interest rates in
the broader financial markets.
Central banks use money market rates as indicators and tools for monetary policy
implementation.
 Short-Term Financing:
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Businesses and governments utilize the money market for short-term financing needs.
This can include managing cash flow, funding working capital, or addressing temporary budget
deficits.
 Participants in the Money Market:

 Banks and Financial Institutions:
Banks actively participate in the money market for short-term funding and investment
opportunities.
Central banks may also engage in money market operations to implement monetary policy.
 Corporations:
Large corporations issue commercial paper to meet short-term funding requirements.
They also invest surplus funds in money market instruments for safety and liquidity.
 Government Entities:
Governments issue Treasury Bills to raise short-term funds.
Central governments, as well as local and regional authorities, may actively participate in the
money market.
 Risks Associated with the Money Market:

 Interest Rate Risk:
Fluctuations in interest rates can impact the value of money market instruments.
Rising interest rates can lead to capital losses for holders of fixed-rate instruments.
 Credit Risk:
While money market instruments are generally considered low-risk, there is still a level of
credit risk.
This risk is more pronounced for instruments like commercial paper issued by corporations.
 Liquidity Risk:
Despite being a market focused on liquidity, certain circumstances can lead to liquidity
shortages, making it challenging to sell or buy certain instruments.
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In conclusion, the money market plays a vital role in the overall functioning of the financial
system by providing short-term funding and investment opportunities. Its instruments,
participants, and functions collectively contribute to the efficiency and stability of the broader
financial markets.
II. Capital Market:
Capital markets are integral components of the broader financial market, playing a crucial role
in facilitating the transfer of funds between savers and entities in need of capital. These markets
encompass various financial instruments, such as stocks and bonds, where long-term securities
are bought and sold. Understanding capital markets requires exploring their key components,
functions, and their significance within the broader financial landscape.
 Components of Capital Markets:

 Capital markets consist of primary and secondary markets. The primary market is where
new securities are issued for the first time, enabling companies to raise capital directly
from investors. This process often involves initial public offerings (IPOs) for stocks or
bond issuance. The secondary market, on the other hand, is where existing securities
are traded among investors, without the involvement of the issuing company. Stock
exchanges and over-the-counter markets serve as platforms for these transactions.
 Within the secondary market, equity and debt markets are distinctive. Equity markets,
represented by stock exchanges, allow for the buying and selling of ownership shares
in companies. Debt markets, on the other hand, involve the trading of debt instruments
such as bonds, where investors lend money to issuers in exchange for periodic interest
payments and the return of the principal amount at maturity.
 Functions of Capital Markets:
Capital markets perform several critical functions that contribute to the efficiency and liquidity
of the financial system:
 Capital Allocation: Capital markets facilitate the efficient allocation of capital by

directing funds from savers to entities with investment opportunities. This process
supports economic growth and development.
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 Price Discovery: The continuous trading of securities in secondary markets helps

establish their market prices. This price discovery mechanism reflects the perceived
value of the underlying assets and incorporates relevant information.
 Risk Management: Investors can diversify their portfolios in capital markets, spreading
risk across different assets. Derivative instruments, like futures and options, provide
additional tools for managing and hedging risks.
 Liquidity Provision: Secondary markets enhance liquidity by allowing investors to buy
and sell securities easily. This liquidity is crucial for maintaining confidence in financial
markets.
 Significance within the Financial Market:
Capital markets are a vital component of the broader financial market, complementing other
segments like money markets and forex markets. They provide a long-term funding source for
corporations and governments, supporting their growth and development initiatives. Investors,
seeking returns, actively participate in capital markets, influencing asset prices and contributing
to market dynamics.
The interconnectedness of capital markets with the overall financial system underscores their
impact on economic stability. Efficient capital markets contribute to economic growth by
efficiently allocating resources, while any disruptions in these markets can have cascading
effects on the broader financial landscape. In conclusion, capital markets are instrumental in
fostering economic growth and development by facilitating the flow of funds between savers
and users of capital. Understanding their components and functions is essential for
comprehending the dynamics of the financial market and its role in supporting a robust and
dynamic economy.
 Primary Market:
 The primary market is a crucial component of the capital market where companies,
governments, or other entities raise funds by issuing new securities to investors for the first
time.
 Issuer and Securities: The process begins with a company or entity, known as the issuer,
deciding to raise capital by issuing securities. These securities can take the form of
stocks (equity) or bonds (debt).
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 IPOs and New Offerings: For stocks, the most common way to enter the primary market
is through an Initial Public Offering (IPO). In an IPO, a private company becomes
public by offering its shares to the public for the first time. For bonds, it could involve
a bond issuance where the issuer borrows money from investors by selling bonds.
 Underwriting: Before securities are offered to the public, they often go through
underwriting. Investment banks or financial institutions help the issuer in determining
the type and pricing of the securities, assuming the risk of ensuring the securities are
sold.
 Pricing: The issuer, with the help of underwriters, determines the initial price at which
the securities will be offered to the public. This is often based on various factors,
including the company's financial health, market conditions, and demand for the
securities.
 Subscription Period: Once the securities are priced, there is a subscription period during
which investors can express their interest in buying these new securities. Investors
submit their orders through the underwriters.
 Allotment: After the subscription period ends, the underwriters allocate the securities
to investors based on the demand. Not all investors may receive the amount they applied
for, depending on the oversubscription or undersubscription of the securities.
 Listing on Exchanges: For stocks, after the allotment, the company's shares are listed
on a stock exchange, allowing them to be traded among investors in the secondary
market.
 Use of Proceeds: The funds raised from the primary market are used by the issuer for
various purposes, such as expanding operations, repaying debt, or funding new projects.
 Secondary Market:
The secondary market, also known as the aftermarket, is where previously issued financial
instruments such as stocks, bonds, and other securities are bought and sold among investors.
Unlike the primary market, where these instruments are initially issued, the secondary market
involves the trading of existing securities between buyers and sellers.
 Key features of the secondary market include:

 Liquidity: It provides liquidity to investors by allowing them to buy or sell securities
easily. Investors can convert their investments into cash quickly as there is a continuous
market for trading.
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 Price Discovery: The secondary market facilitates the determination of market prices
for securities. Prices are influenced by supply and demand dynamics, investor
perceptions, economic conditions, and other factors.
 Accessibility: It provides a platform for a wide range of investors, including
individuals, institutional investors, and traders, to participate in the buying and selling
of securities.
 Regulation: Secondary markets are typically regulated to ensure fair and transparent
trading practices. Regulatory bodies set rules and monitor activities to maintain market
integrity.
 Exchanges and Over-the-Counter (OTC) Markets: Securities can be traded on
organized exchanges like the New York Stock Exchange (NYSE) or NASDAQ.
Alternatively, they can be traded over-the-counter (OTC), where transactions occur
directly between parties without a centralized exchange.
 Types of Securities: The secondary market deals with various financial instruments,
such as stocks, bonds, mutual funds, and derivatives. Each type of security may have
different trading mechanisms.
 Brokers and Market Makers: Investors typically engage brokers to facilitate trades.
Market makers play a role in maintaining liquidity by continuously quoting buy and
sell prices for securities.
 Risk Management: Investors often use the secondary market for risk management
purposes, including hedging strategies, portfolio adjustments, and diversification.
 Derivative Market:
In the context of the capital market, the derivative market is a segment where financial
instruments, known as derivatives, are traded. Derivatives derive their value from an
underlying asset, which can include stocks, bonds, commodities, currencies, interest rates, or
market indices.
There are several types of derivatives, with the most common being futures and options. Here's
a brief explanation of each:
 Futures Contracts:
These are agreements between two parties to buy or sell an asset at a specified future date for
a price agreed upon today.
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Traded on organized exchanges, futures contracts help participants hedge against price
fluctuations or speculate on future market movements.
 Options Contracts:
Options provide the buyer with the right, but not the obligation, to buy (call option) or sell (put
option) an underlying asset at a predetermined price before or at expiration.
Option contracts offer flexibility and are widely used for risk management and trading
strategies.
 Forwards Contracts:
Similar to futures, forwards are agreements to buy or sell an asset at a future date, but they are
customized contracts traded over-the-counter (OTC) rather than on exchanges.
 Swaps:
Swaps involve the exchange of cash flows between parties based on predetermined terms.
Common types include interest rate swaps, currency swaps, and commodity swaps, providing
a way to manage risks or alter cash flow .
 The derivative market serves various purposes:

 Risk Management: Participants use derivatives to hedge against price volatility,
protecting themselves from adverse market movements.
 Speculation: Traders engage in derivative markets to profit from anticipated price
changes, assuming market risk for potential returns.
 Price Discovery: Derivatives contribute to the overall price discovery process by
reflecting market expectations and sentiments.
 Leverage: Derivatives allow investors to control a larger position with a smaller upfront
investment, magnifying both potential gains and losses.
 Arbitrage: Traders exploit price differences between related assets or markets to make
a profit without assuming market risk.
The derivative market plays a crucial role in enhancing market efficiency and liquidity,
enabling market participants to manage risk exposure and pursue diverse investment strategies.
It's important to note that while derivatives offer opportunities, they also involve complexities
and risk, requiring a good understanding of the market dynamics and careful risk management.
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1.1.3 Financial Instruments:

 Financial instruments are tradable assets that represent a legal agreement or a
contractual right to receive or deliver cash or another type of financial asset. These
instruments play a crucial role in financial markets by facilitating the flow of capital
and risk management. Common examples include stocks, bonds, derivatives, and
money market instruments. Each financial instrument serves specific purposes, such as
investment, speculation, or hedging against market fluctuations. The diversity of
financial instruments allows investors and institutions to tailor their portfolios
according to their risk tolerance, financial goals, and market outlook.
 Short-term investments typically have a duration of one year or less.
Characteristics: Investors often choose short-term instruments for quick returns and liquidity.
Examples include Treasury bills, certificates of deposit, and money market funds.
 Long-term:
Long-term investments are held for an extended period, usually more than a year, with the
goal of capital appreciation.
Characteristics: Common long-term instruments include stocks, bonds, real estate, and
retirement accounts. These investments require patience and can be subject to market
fluctuations over time.
 Medium-term:
Medium-term investments fall between short and long-term, typically with a duration of one
to five years.
Characteristics: Investors might choose medium-term instruments to balance risk and return.
Examples include certain bonds, debt funds, and savings bonds.
Choosing between short, medium, and long-term investments depends on an individual's

financial goals, risk tolerance, and time horizon. Short-term investments offer quick liquidity
but may have lower returns, while long-term investments have the potential for higher returns
but involve more market volatility. Medium-term investments strike a balance between these
two approaches.
 Primary Securities:
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Definition: Primary securities are financial instruments that are issued and sold directly by the
issuer to investors in the primary market.
Purpose: The primary market is where companies, governments, or other entities raise capital
by issuing new securities to investors. This initial issuance is often done through processes like
Initial Public Offerings (IPOs) for stocks or bond offerings.
Characteristics:
Issuer-Investor Interaction: In the primary market, issuers directly sell securities to investors.
 Capital Formation: Primary markets facilitate the raising of capital, allowing companies
to fund new projects or operations.
 Newly Issued: Securities in the primary market are freshly issued and not previously
traded.
i. Secondary Securities:
 Definition: Secondary securities are financial instruments that are bought and sold
among investors in the secondary market.
 Purpose: The secondary market provides a platform for investors to trade previously
issued securities without involving the issuing company. It allows for liquidity and price
discovery.
 Characteristics:
 Investor-Investor Interaction: In the secondary market, investors buy and sell securities
among themselves.
 Liquidity: Secondary markets provide liquidity by allowing investors to easily buy or
sell existing securities.
 Price Determination: Prices in the secondary market are determined by market forces
based on supply and demand.
 Continuous Trading: Unlike the primary market, the secondary market operates
continuously during market hours.
1.1.4 Financial Services:
Financial services encompass a wide range of offerings, including banking, investment

management, insurance, and more. These services help individuals and businesses manage
their money, achieve financial goals, and mitigate risks. Key players in the financial services
sector include banks, investment firms, insurance companies, and credit unions. They play
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crucial roles in facilitating economic activities and providing essential tools for wealth
management and financial planning.
Financial services refer to a broad spectrum of economic activities that facilitate the
management, investment, and protection of money. This sector is crucial for individuals,
businesses, and governments to navigate the complexities of financial transactions, risk
management, and wealth accumulation.
In the context of financial services with a fund-based approach, activities such as leasing, hire
purchase, and factoring play significant roles. Let's explore these services in more detail:
 Leasing:
Definition: Leasing involves the transfer of the right to use an asset from the lessor (owner) to
the lessee (user) for a specified period, usually in exchange for periodic payments.
Funds Utilization: Lessors use funds to acquire assets (e.g., machinery, equipment, vehicles)
and lease them to businesses. The funds received from lease payments contribute to the lessor's
revenue.
 Hire Purchase:
Definition: Hire purchase is a financial arrangement where the buyer obtains the right
to use an asset immediately by making a down payment, followed by regular
installment payments.
Funds Utilization: The funds obtained from the down payment and subsequent
installments are used by the finance company to purchase the asset on behalf of the
buyer. The finance company earns interest on the outstanding balance.
 Factoring:
Definition: Factoring involves a company selling its accounts receivable (invoices) to
a third party, called a factor, at a discount. The factor then collects payments from the
debtor.
 Funds Utilization: Companies engaging in factoring receive immediate cash for their
receivables, allowing them to meet immediate financial needs. Factors earn fees and
discounts from the receivables they purchase.
 Merchant Banks:
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Merchant banks are financial institutions that primarily engage in investment banking
activities. They offer a range of services, including mergers and acquisitions (M&A)
advisory, capital raising, underwriting, and corporate finance.
 Fee-Based Structure: Merchant banks earn fees for their services rather than relying
solely on interest income. Fees may be based on the value of the transactions they
facilitate, such as a percentage of the total amount raised in a capital market offering or
a merger and acquisition deal.
 Credit Banking:
Credit banking involves institutions that provide various credit services, including
loans, mortgages, and credit cards. These institutions make money through interest
charged on loans and sometimes through fees associated with these credit products.
Fee-Based Structure: In addition to interest income, credit banks often charge fees for
specific services, such as loan origination fees, late payment fees, or annual fees for
credit cards. This fee-based structure diversifies their revenue streams.
 Mergers and Acquisitions (M&A):
Mergers and acquisitions refer to corporate activities where two companies combine
through various transactions like mergers, acquisitions, or divestitures.
 Fee-Based Structure: Financial institutions, especially investment banks, play a crucial
role in M&A transactions. They provide advisory services to companies involved in
these deals. Fees in M&A transactions are typically structured as a percentage of the
deal value or a flat fee. This fee compensates the financial advisors for their expertise
in facilitating complex transactions.
 Fee-Based Financial Services:
Fee-based financial services represent a shift from traditional revenue models that rely heavily
on interest income. Instead, these services generate income by charging clients fees for specific
financial products or advisory services.
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Chapter: 2
Company Profile
(NIFTY)
A study on impact of GST during a period of 2018 to 2023
2.1 What is Nifty?

 NIFTY is a market index introduced by the National Stock Exchange. It is a blended
word – National Stock Exchange and Fifty coined by NSE on 21st April 1996. NIFTY
50 is a benchmark based index and also the flagship of NSE, which showcases the top
50 equity stocks traded in the stock exchange out of a total of 1600 stocks.
 These stocks span across 12 sectors of the Indian economy which include – information
technology, financial services, consumer goods, entertainment and media, financial
services, metals, pharmaceuticals, telecommunications, cement and its products,
automobiles, pesticides and fertilizers, energy, and other services.
 NIFTY is one of the two national indices, the other being SENSEX, a product of the
Bombay Stock Exchange. It is owned by the India Index Services and Products (IISL),
which is a fully-owned subsidiary of the National Stock Exchange Strategic Investment
Corporation Limited.
 NIFTY 50 follows the trends and patterns of blue-chip companies, i.e. the most liquid
and largest Indian securities.
 NIFTY contains a host of indices – NIFTY 50, NIFTY IT, NIFTY Bank, and NIFTY
Next 50; and is a part of the Futures and Options (F&O) segment of NSE which deals
in derivatives.
i. Eligibility Criteria for NIFTY Index Listing?

The NIFTY Index, or NIFTY 50, is comprised of 50 actively traded Indian stocks from
various sectors. To be eligible for inclusion in the NIFTY Index, stocks must meet
certain criteria set by the National Stock Exchange of India (NSE). The eligibility
criteria typically include factors like market capitalization, liquidity, and trading
frequency.
 Market Capitalization: Stocks considered for the NIFTY Index should have a minimum
market capitalization. This criterion ensures that the stocks represent significant market
value and are actively traded.
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 Liquidity: The liquidity of a stock is crucial for inclusion in the index. Stocks should
have a certain level of trading activity to ensure ease of buying and selling for investors.
 Trading Frequency: Stocks in the NIFTY Index are expected to have a regular trading
frequency. This ensures that there is sufficient market interest and participation in the
stocks.
 Listed on NSE: Stocks eligible for the NIFTY Index must be listed on the National
Stock Exchange of India (NSE). This is a fundamental requirement, as the index is
maintained by NSE.
 Sector Representation: The NIFTY 50 aims to represent diverse sectors of the Indian
economy. Therefore, stocks from different industries are included to provide a balanced
representation.
 Free Float: The index may consider the free float market capitalization of a stock. Free
float refers to the portion of shares available for trading in the market, excluding locked-
in shares or shares held by insiders.
The NSE periodically reviews and revises the index composition based on changes in
market conditions, corporate actions, and other relevant factors. It's essential to note
that these criteria may be subject to updates by the exchange to ensure the index remains
reflective of the overall market.
ii. Historical Background of Nifty

 The Nifty 50, or simply Nifty, is the flagship stock market index of the National Stock
Exchange of India (NSE). It was introduced on April 22, 1996, and comprises the 50
largest and most liquid Indian stocks across various sectors. Nifty is designed to
represent the overall performance of the Indian equity market.
 The selection of Nifty 50 stocks is based on various factors, including market
capitalization, liquidity, and historical trading data. The index is calculated using the
free-float market capitalization methodology, which takes into account only the
tradable shares of a company.
 Over the years, Nifty has become a key benchmark for Indian equity investors,
providing a snapshot of the overall market sentiment. It serves as a reference point for
portfolio managers, analysts, and traders to assess market trends and make investment
decisions.
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 Nifty has undergone changes and periodic reviews to ensure its relevance and accuracy
in reflecting the Indian stock market's dynamics. It plays a crucial role in the functioning
of the Indian financial system, serving as a barometer for economic performance and
investor confidence.
iii. Compostion of stock

The composition of a stock index like Nifty is based on the market capitalization of its
constituent companies. Nifty, short for National Stock Exchange Fifty, is a benchmark
index of the National Stock Exchange (NSE) in India.
 Selection Criteria:
Nifty comprises 50 stocks chosen from various sectors.
Stocks are selected based on liquidity, trading frequency, and other market-related
criteria.
 Weightage:
Stocks in Nifty are weighted based on their free-float market capitalization.
Free-float market cap considers only the shares available for trading, excluding locked-
in shares.
 Rebalancing:
Nifty is periodically rebalanced to reflect changes in market dynamics.
Rebalancing ensures that the index remains representative of the overall market.
 Sector Representation:
Nifty aims for sectoral representation to diversify risk.
Different sectors like banking, IT, healthcare, etc., are represented in the index.
 Market Capitalization Tiers:
Nifty stocks are often categorized into large-cap, mid-cap, and small-cap segments.
This diversification provides a broad view of the market's performance.
 Influence of Larger Companies:
Companies with higher market capitalization have a more significant impact on the
index's movement.
Movements in these larger stocks can heavily influence the overall Nifty performance.
 Performance Measurement:
Nifty's movement is often considered a barometer for the Indian stock market's health.
It serves as a benchmark for portfolio performance and investment strategies.
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 Market Trends and Economic Indicators:

Changes in Nifty are closely watched for indications of market trends and broader
economic conditions.
iv. How is Nifty for share Market Calculated?

 The Nifty 50 index in India is calculated using a free-float market capitalization-
weighted methodology. Here's a detailed explanation of the calculation methodology:
 Selection of Constituent Stocks:
The Nifty 50 comprises 50 actively traded stocks listed on the National Stock Exchange
(NSE).
Stocks are selected based on criteria like liquidity, market capitalization, and sector
representation.
 Free-Float Market Capitalization:
For each stock in the index, calculate the free-float market capitalization.
Free float refers to the portion of shares available for trading, excluding locked-in
shares and promoter holdings.
The formula is
Free Float Market Cap
=
Stock Price
×
Free Float Factor
Free Float Market Cap=Stock Price×Free Float Factor
 Free Float Factor:
The free float factor is the proportion of shares in the free float to the total shares
outstanding.
It is calculated as the ratio of free-float shares to total shares outstanding.
 Weight Assignment:
Each stock's weight in the index is determined by its free-float market capitalization.
The weight of a stock is calculated as the ratio of its free-float market cap to the total
free-float market cap of all stocks in the index.
 Index Divisor:
An index divisor is used to maintain continuity in the index values over time.
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It is adjusted for changes in the market capitalization and composition of the index.
The formula for the index value is
Nifty= (∑(Stock Price * Free Float Market Cap)Index Divisor)×(Base Value Base
Capitalization)Nifty=( Index Divisor∑(Stock Price * Free Float Market Cap))×( Base
Capitalization Base Value)
 Base Value and Base Capitalization:
The Nifty was launched with a base value of 1000 on November 3, 1995.
Base Capitalization is the sum of the market capitalization of all stocks in the index on
the base date.
 Regular Recalculation:
The Nifty is regularly recalculated to account for changes in the constituent stocks and
their market values.
Adjustments are made to the index divisor to ensure that changes in the index are
proportional to changes in market values.
The Nifty 50 is a dynamic index that reflects the performance of the Indian stock market
by considering the free-float market capitalization of its constituent stocks, maintaining
continuity through the use of an index divisor, and adjusting for changes in the market
and index composition.
v. Significance in the Indian stock market

 Nifty, short for the National Stock Exchange Fifty, is a key stock market index in India.
It comprises 50 actively traded stocks listed on the National Stock Exchange (NSE).
Nifty reflects the performance of the broader equity market and is widely used by
investors, traders, and financial analysts for various reasons.
vi. Market Representation: Nifty represents a diverse set of sectors, providing a snapshot
of the overall market sentiment. Changes in Nifty values reflect shifts in the collective
performance of these 50 stocks, offering insights into the health of the Indian stock
market.
i. Benchmark for Performance: Many mutual funds, investment portfolios, and
individual stocks are compared against Nifty to assess their relative performance. If a
fund or stock consistently outperforms Nifty, it is considered a positive indicator.
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ii. Derivatives Trading: Nifty serves as the underlying asset for various financial
derivatives, including index futures and options. Traders use these instruments to
speculate on market movements and hedge their positions, making Nifty a crucial
reference point in the derivatives market.
iii. Investor Sentiment: Nifty's movement is often used to gauge investor sentiment.
Rising Nifty values may indicate optimism and confidence in the market, while a
declining Nifty might suggest caution or bearish sentiment.
iv. Economic Indication: Nifty's performance is influenced by economic factors such as
GDP growth, inflation rates, and corporate earnings. As a result, changes in Nifty can
be considered indicative of broader economic trends.
v. Global Impact: Nifty is closely monitored by international investors and institutions
interested in the Indian market. Its performance can be influenced by global economic
events and sentiments, making it part of the global financial ecosystem.
vi. Investment Strategies: Investors often use Nifty levels to formulate investment
strategies. Technical analysts study historical price patterns and trends to make
informed decisions, while fundamental analysts assess the underlying financial health
of the companies represented in Nifty.
vii. Liquidity and Market Depth: Nifty's constituent stocks are generally highly liquid
and actively traded, contributing to the overall liquidity and market depth of the Indian
stock market. This is appealing to both domestic and international investors.
 Nifty plays a pivotal role in the Indian stock market by serving as a benchmark,
influencing investment decisions, and providing a valuable indicator of market
sentiment and economic health.
viii. Major sectors represented in Nifty
 The Nifty 50 is a stock market index in India that represents the performance of 50 large
companies listed on the National Stock Exchange (NSE). These companies are selected
based on various criteria such as market capitalization, liquidity, and historical
performance. Here's a brief overview of major sectors represented in the Nifty 50:
i. Financial Services: This sector includes banks, non-banking financial companies
(NBFCs), insurance companies, and other financial institutions. Companies like
HDFC Bank, ICICI Bank, and HDFC Limited are prominent in this sector.
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ii. Information Technology (IT): Comprising software and IT services companies,

this sector includes giants like TCS, Infosys, and Wipro. These companies provide
software development, consulting, and other IT-related services.
iii. Energy: Oil and gas exploration, production, refining, and marketing companies
fall under the energy sector. Reliance Industries, Oil and Natural Gas Corporation
(ONGC), and Indian Oil Corporation are notable players.
iv. Automobile: Companies involved in the manufacturing and distribution of
automobiles, two-wheelers, and related components are part of this sector. Maruti
Suzuki, Tata Motors, and Hero MotoCorp are examples.
v. FMCG (Fast-Moving Consumer Goods): This sector encompasses companies
producing and distributing everyday consumer goods. HUL (Hindustan Unilever),
ITC, and Nestle are key players in FMCG.
vi. Pharmaceuticals: Companies involved in the research, development, and
manufacturing of pharmaceuticals and healthcare products are part of this sector.
Sun Pharma, Dr. Reddy's Laboratories, and Cipla are major contributors.
vii. Telecommunication: This sector includes telecom service providers. Bharti Airtel
and Reliance Jio are notable telecom companies represented in the Nifty.
viii. Cement: Companies engaged in the production and distribution of cement fall
under the cement sector. UltraTech Cement and ACC Limited are significant
players.
ix. Metal: This sector includes companies involved in mining, production, and
distribution of metals and minerals. Tata Steel, Hindalco, and JSW Steel are
prominent in this sector.
x. Consumer Durables: Companies manufacturing durable goods like appliances and
electronic devices are part of this sector. Havells India and Voltas are examples.
 These sectors collectively provide a diverse representation of the Indian economy,
allowing investors to gauge the overall market performance and trends. Keep in mind
that the composition of the Nifty 50 can change periodically based on market dynamics
and company performance.
i. Key factors influencing its movement
 Several key factors influence the movements of the Nifty, which is the benchmark index
of the National Stock Exchange (NSE) in India. These factors can be broadly
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categorized into economic indicators, corporate performance, global cues, and market
sentiment.
I. Economic Indicators:
i. GDP Growth: The overall economic health of the country, reflected in Gross Domestic
Product (GDP) growth, has a significant impact on the Nifty. Higher GDP growth is
generally associated with a positive market sentiment.
ii. Inflation and Interest Rates: Inflation and interest rates directly influence the cost of
capital and corporate profitability. A lower inflation rate and stable interest rates are
generally favorable for the stock market.
II. Corporate Performance:

i. Earnings Reports: The financial performance of companies listed on the Nifty is a
crucial factor. Positive earnings reports often lead to higher stock prices, while
disappointing results can result in market corrections.
ii. Corporate Governance: Investors closely monitor the governance practices of

companies. Issues related to corporate governance can affect investor confidence and
impact stock prices.
III. Global Cues:
i. Global Economic Trends: Events and trends in the global economy, such as trade
tensions, geopolitical events, and economic policies of major economies, can influence
the Nifty. Global economic slowdowns or recoveries can impact Indian markets.
ii. Foreign Institutional Investors (FIIs): The participation of FIIs in the Indian market can
lead to capital inflows or outflows, impacting market liquidity and stock prices.
IV. Market Sentiment:
i. Investor Sentiment: Perception and confidence of investors play a crucial role. Positive
sentiment can drive buying activity, while negative sentiment can lead to selling
pressure.
ii. Speculation and Rumors: Market movements can be influenced by speculative
activities and rumors. Traders often react to news and events, impacting short-term
market movements.
V. Government Policies and Reforms:
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i. Fiscal and Monetary Policies: Changes in government policies related to taxation,

spending, and monetary policies by the central bank can influence market dynamics.
ii. Reforms and Regulatory Changes: Structural reforms and regulatory changes aimed at
improving the business environment can impact investor confidence and market
performance.
VI. Technical Factors:
 Technical Analysis: Traders often use technical indicators and chart patterns to make
trading decisions. Support and resistance levels, moving averages, and other technical
factors can influence market behavior.
 Understanding these factors and staying informed about economic and corporate
developments helps investors and traders make informed decisions in the dynamic
environment of the stock market.
2.2 Role of Nifty in Investment strategies
 Nifty, short for Nifty 50, is an index of the National Stock Exchange of India (NSE)
comprising 50 actively traded stocks across various sectors. It plays a crucial role in
investment strategies as:
i. Benchmark: Nifty serves as a benchmark for performance evaluation. Investors
compare their portfolio returns against Nifty to assess the effectiveness of their
investment strategies.
ii. Diversification: Since Nifty represents diverse sectors, investing in Nifty-based
instruments provides a level of diversification, spreading risk across different
industries.
iii. Index Funds and ETFs: Many investors choose index funds or exchange-traded funds
(ETFs) based on Nifty. These funds replicate the index's performance, offering a
passive investment option with lower costs compared to actively managed funds.
iv. Sectoral Exposure: Nifty's composition reflects the broader market sentiment.
Understanding sectoral weights helps investors align their portfolios with prevailing
market trends.
v. Trading and Derivatives: Traders often use Nifty derivatives, such as futures and
options, for speculation, hedging, or to enhance returns. Nifty options, in particular, are
widely traded for their liquidity.
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vi. Market Sentiment: Nifty movements are closely monitored to gauge overall market
sentiment. Trends and reversals in Nifty can signal broader market shifts, influencing
investment decisions.
 Nifty serves as a key reference point for investors, offering diversification,
benchmarking, and various investment instruments to align with market movements
and strategies.
 Impact on the overall economy
 The Nifty, or the Nifty 50, is a stock market index in India that represents the weighted
average of 50 of the largest companies listed on the National Stock Exchange (NSE).
The performance of the Nifty is often considered a barometer of the overall health of
the Indian stock market and, to some extent, the broader economy. Here's the Nifty can
impact the overall economy:
i. Market Sentiment: The Nifty reflects investor sentiment and confidence. When the
Nifty is performing well, it generally indicates positive investor sentiment, which can
contribute to a favorable economic environment. Conversely, a declining Nifty may
signal concerns and impact investor confidence.
ii. Wealth Effect: Changes in the Nifty influence the wealth of investors, particularly
those with significant holdings in the index constituents. As stock prices rise, investors
may feel wealthier and more inclined to spend, positively impacting consumption and
economic growth.
iii. Capital Formation: A thriving stock market, as indicated by a rising Nifty, can
encourage companies to raise capital by issuing shares. This capital can be used for
expansion, research and development, and other investments, contributing to economic
growth.
iv. Corporate Performance: The Nifty comprises major companies across sectors. The
index's performance reflects the overall health and profitability of these companies. A
robust Nifty often aligns with strong corporate performance, which is vital for economic
growth.
v. Foreign Investments: International investors closely monitor the Nifty as part of their
investment decisions in Indian markets. A positive Nifty performance can attract
foreign capital, providing additional funds for businesses and contributing to economic
development.
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vi. Credit Conditions: The performance of the Nifty can influence credit conditions in the
economy. A flourishing stock market can lead to improved creditworthiness for
companies, making it easier for them to access financing for various projects.
vii. Employment Impact: Companies represented in the Nifty are often major employers.
Their financial health, reflected in the Nifty's performance, can impact job creation and
overall employment levels, influencing economic well-being.
viii. Government Policies: A strong or weak Nifty may influence government policies.
Positive market conditions may lead to policies that encourage further investment,
while a downturn might prompt regulatory adjustments to stabilize the market and the
economy.
 The Nifty's performance is intertwined with various facets of the economy, impacting
investor confidence, wealth, corporate activities, foreign investments, credit conditions,
employment, and government policies. Analyzing the Nifty can provide valuable
insights into the overall economic health and outlook.
2.3 Nifty vs Sensex
Nifty:
 The Nifty, officially known as the Nifty 50, is a stock market index in India. It
represents the performance of the National Stock Exchange of India's (NSE) equity
market. The Nifty 50 includes 50 actively traded stocks from various sectors, making
it a diversified index. It is designed to reflect the overall market conditions and is often
used as a benchmark for portfolio performance and investment strategies.
 The Nifty 50 is calculated using the free-float market capitalization weighted

methodology, where the level of the index reflects the total market value of all the
stocks in the index relative to a particular base period. The constituents of the Nifty are
reviewed semi-annually, ensuring that the index remains representative of the market.
Sensex:
The Sensex, short for the Sensitive Index, is the benchmark stock index of the Bombay Stock
Exchange (BSE). Similar to the Nifty, the Sensex comprises a select group of stocks, but in
this case, it includes 30 of the largest and most actively traded stocks listed on the BSE. The
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Sensex is considered a key indicator of the Indian stock market's overall health and
performance.
The calculation of the Sensex uses the market capitalization-weighted methodology, where the
level of the index reflects the total market value of all the stocks in the index relative to a
particular base period. The Sensex is reviewed periodically to ensure its relevance and
representation of the market.
i. Composition:
Nifty consists of 50 stocks, while Sensex includes 30 stocks.
Both indices aim to provide a broad representation of the Indian equity market.
ii. Methodology:
Both indices use market capitalization-weighted methodologies to calculate their levels.
Nifty is calculated on the NSE, while Sensex is calculated on the BSE.
iii. Diversity:
Nifty's larger number of constituents may offer a more diversified reflection of the market.
Sensex, with a smaller number of stocks, may be more influenced by the performance of
individual companies.
iv. Significance:
 Both indices are widely followed and used by investors, analysts, and fund managers
as benchmarks for performance measurement.
 while Nifty and Sensex are different indices representing the Indian stock market, they
serve similar purposes as benchmarks. Investors often use these indices to assess market
trends, make investment decisions, and gauge the overall health of the Indian equity
market.
 Regular reviews and rebalancing
 Regular review and rebalancing in the context of the Nifty, or any stock market index,
involve assessing and adjusting the composition of the index components to ensure it
accurately reflects the market's current state.
I. Review:
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Regular reviews involve evaluating the performance of the Nifty index components. This
assessment considers factors such as market capitalization, liquidity, and sector representation.
Companies that no longer meet the predefined criteria may be considered for removal during
the review process.
II. Rebalancing:
Rebalancing aims to maintain the index's representativeness and relevance. If certain stocks
have grown substantially and now constitute a larger portion of the index, rebalancing ensures
a more even distribution.
Conversely, if a stock's market value has declined significantly, it may be underrepresented,

and rebalancing may involve reducing its weight in the index.
III. Frequency:
The frequency of review and rebalancing depends on the index provider's methodology. Some
indices undergo changes quarterly, semi-annually, or annually.
Frequent reviews help capture rapid changes in the market, while less frequent ones might be
more suitable for stable markets.
IV. Methodology:
Index providers typically have predefined criteria for inclusion and exclusion. This may include
factors like market capitalization, trading volume, and financial health.
Adjustments are often made based on transparent rules to maintain the integrity of the index
and provide a reliable benchmark.
V. Impact on Investors:
Investors tracking or investing in index funds linked to the Nifty should be aware of the review
and rebalancing process. Changes in the index composition can impact the fund's performance
and holdings.
regular review and rebalancing of the Nifty, or any index, are essential to ensure that it
accurately reflects the dynamic nature of the stock market and provides a relevant benchmark
for investors.
 Nifty before GST and Nifty after GST

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The Goods and Services Tax (GST) was implemented in India on July 1, 2017, replacing the
previous complex tax structure. Before GST, the Indian taxation system included various
indirect taxes such as Value Added Tax (VAT), Service Tax, Central Excise, and others, which
led to a cascading effect of taxes on goods and services.
I. Before GST:
i. Cascading Effect: Multiple taxes at different stages of the supply chain resulted in a
cascading effect, where taxes were levied on top of already taxed components, leading
to higher prices for end consumers.
ii. Complexity: The pre-GST system was intricate and challenging to navigate, with
different tax rates for different states and various goods and services.
iii. Tax on Tax: The tax structure allowed for taxes to be levied on taxes paid earlier in
the production chain, amplifying the tax burden on businesses.
II. After GST:

i. Unified Tax Structure: GST replaced multiple indirect taxes with a single,
comprehensive tax, streamlining the tax structure and making it more transparent.
ii. Input Tax Credit (ITC): Businesses can claim credit for the taxes paid on input goods
and services against the taxes they collect on their output. This eliminates the cascading
effect, making the system more efficient.
iii. Uniformity: GST brought about uniformity in tax rates across states and different
sectors, reducing complexities and making compliance easier for businesses.
iv. Digital Infrastructure: GST implementation required businesses to adopt digital
systems for invoicing and compliance, fostering a more technologically advanced
business environment.
v. Reduced Prices for Consumers: In many cases, the prices of goods and services
decreased for consumers due to the elimination of the cascading effect and more
efficient supply chains.
vi. Increased Compliance: GST introduced a system where businesses need to file regular
returns and adhere to a standardized set of rules, promoting better compliance.
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 While the transition to GST faced initial challenges, it has had a significant impact on
simplifying the tax structure, reducing the tax burden on businesses, and promoting a
more transparent and efficient tax regime in India.
 Market structure of NSE
The market structure of the National Stock Exchange (NSE) in India involves several
components that collectively facilitate the trading of various financial instruments. Here's a
detailed breakdown:
 Trading Platform:
i. NEAT (National Exchange for Automated Trading): NSE's trading platform,
NEAT, is a fully automated screen-based trading system. It enables investors to place
orders electronically from anywhere in the country.
 Market Segments:
i. Equity Market: NSE's equity market comprises the trading of stocks or shares of listed
companies.
ii. Derivatives Market: NSE is a significant player in the derivatives segment, offering
trading in futures and options contracts on indices (like Nifty) and individual stocks.
iii. Debt Market: NSE facilitates trading in debt instruments, including government and
corporate bonds.
 Clearing and Settlement:

i. NSCCL (National Securities Clearing Corporation Limited): NSE's clearing
corporation, NSCCL, ensures the settlement of trades. It acts as a counterparty to all
trades and guarantees their financial integrity. The settlement process involves the
exchange of funds and securities to fulfill contractual obligations.
 Market Participants:
i. Brokers: Intermediaries who execute trades on behalf of investors.
ii. Investors: Individuals or institutions buying and selling securities.
iii. Market Makers: Entities that provide liquidity by quoting buy and sell prices for
specific securities.
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iv. Clearing Members: Brokers who are members of the clearing corporation and ensure
settlement of trades.
 Indices:
i. Nifty 50: The flagship index, representing the top 50 companies on the NSE based on
market capitalization.
ii. Other Indices: NSE hosts various sectoral indices (like Nifty Bank, Nifty IT) providing
insights into specific industry performances.
 Regulatory Framework:
i. SEBI (Securities and Exchange Board of India): The regulatory body overseeing
NSE to ensure fair practices, market integrity, and investor protection.
 Technology Infrastructure:
i. Colocation Services: NSE offers colocation services, allowing brokers to place their
servers in proximity to the exchange's systems for faster execution.
ii. Risk Management Systems: Robust risk management systems are in place to monitor
and control market risks.
 Listing Standards:
i. Listing Requirements: Companies seeking to list on NSE must meet specific criteria
related to financial performance, corporate governance, and compliance.
 Market Surveillance:
i. Market Surveillance Systems: NSE employs advanced systems to monitor and detect
unusual trading patterns, ensuring a fair and transparent market.
 Understanding NSE's market structure is crucial for participants and investors as it

provides insights into the operational framework and mechanisms that govern the
exchange.
 Technology Infrastructure of NSE
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 The National Stock Exchange (NSE) of India relies on a robust technology

infrastructure to facilitate efficient and secure trading operations. The key components
of NSE's technology infrastructure include:
I. Trading System:
The backbone of NSE's operations is its electronic trading platform, which allows market
participants to buy and sell securities electronically. NSE uses a fully automated trading system
known as NEAT (National Exchange for Automated Trading). NEAT processes orders and
executes trades in a fair and transparent manner.
II. Hardware and Software:
NSE invests in high-performance servers and networking equipment to handle the immense
volume of transactions that occur daily. The trading platform is supported by sophisticated
software that manages order matching, trade execution, and provides real-time market data.
III. Risk Management Systems:
To ensure market integrity and participant safety, NSE incorporates advanced risk management
systems. These systems monitor trading activities in real-time, identify potential risks, and
implement measures such as circuit breakers to prevent excessive market volatility.
IV. Market Surveillance:
NSE employs comprehensive market surveillance tools to detect and prevent market
manipulation, fraud, and other irregularities. Surveillance systems continuously monitor
trading patterns and analyze large datasets to identify any anomalies or suspicious activities.
V. Clearing and Settlement System:
The clearing and settlement process is crucial for ensuring the completion of trades and the
transfer of securities and funds between buyers and sellers. NSE employs a robust clearing and
settlement system to guarantee the timely and secure settlement of transactions.
VI. Data Centers:
NSE operates state-of-the-art data centers equipped with redundant power supplies, cooling
systems, and security measures. These data centers house the servers and infrastructure
supporting the trading platform, ensuring high availability and reliability.
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VII. Information Security:
Given the sensitive nature of financial transactions, NSE places a strong emphasis on
information security. Robust cybersecurity measures are implemented to safeguard against
unauthorized access, data breaches, and other cyber threats.
VIII. Market Data Dissemination:
NSE disseminates real-time market data to market participants, investors, and the public. This
data includes stock prices, trading volumes, indices, and other relevant information. The timely
and accurate distribution of market data is crucial for informed decision-making.
NSE's technology infrastructure is a sophisticated ecosystem that integrates hardware,

software, risk management, surveillance, and clearing systems to ensure the smooth
functioning of the stock exchange while prioritizing security, efficiency, and transparency.
2.4 What is NSE?
 NSE established in 1994, began its operations at the behest of the Indian government
to bring transparency to the country’s capital market. Set up by an assembly of leading
financial institutions and at the recommendations formulated by Pherwani Committee,
this stock exchange comprised diverse shareholding assets from both global and
domestic investors.
 It was also the first stock exchange in the country to introduce electronic trading
facilities, thus facilitating the integration of investors throughout the country into a
single base.
 As of April 11, 2023, the total market capitalisation of NSE is approximately USD 3.26
trillion, putting it in 9th place on the list of the largest stock exchanges in the world.
 However, unlike the USA, where trading from the corporate sector accounts for about
70% of the country’s GDP, this sector in India accounts for only 12-14% of its total
GDP. Out of this entire corporate sector, around 7800 companies are listed, with about
4000 among those trading at Indian stock exchanges. Thus, stock exchange trading
accounts for a meagre of 4% of the country’s GDP.
 Function of NSE
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 The NSE was established with the specific objective of performing the following
functions:
 Creating a nationwide trading establishment for equities, debt, and hybrid instruments.
 Providing equitable access to investors across the country via a good communication
network.
 Using electronic trading systems provides investors with a fair, efficient, and
transparent securities market.
 Enabling faster settlement cycles, book entry settlements systems, and fulfilling the
latest international norms of securities markets.
 Features of NSE
 Like every other major stock exchange today, the NSE operates an order-driven rather
than a quote-driven market. Additionally, it serves an entirely automated screen-based
trading system called the National Exchange for Automated Trading (NEAT).
 Each order received by NEAT is assigned a unique number. If a match isn't found
instantly, it is included in an order book, where the sequence of orders to be matched is
established based on price-time priority.
 If two orders are submitted into the system, the order with the best value is more
important, and the older order precedes orders of the same price.
 Order matching is accomplished by comparing the most suitable buy order, which has
the most incredible price, with the best sell order, which has the lowest price. A seller
prefers to sell to the buyer who offers the best price and vice versa. While orders can
be partly matched until the entire order is granted, the matches always happen
depending on the order's passive value, not the active price at which the match occurs.
 Market Segments of National Stock Exchange
 NSE trades securities in Whole Sale Debt and Capital Market Segments.
1) Whole Sale Debt Market Division
The first NSE section is the Whole Sale Debt Market section, which offers traders a trading
system for diverse fixed-income instruments. Certificates of Deposit, Bonds, Commercial
Paper, Treasury Bills, Central Government Securities, and other securities fall within this
category.
2) The Capital Market Division

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The Capital Market Segment of the NSE offers traders a means of trading for securities,
including debentures, equity shares, exchange-traded funds, preference shares, and retail
government securities.
 How Does NSE Stock Exchange Work?

 Trading through this stock exchange in India is carried out through an electronic limit
order book, where order matching takes place through a trading computer. This entire
process does not have the interference of specialists or market makers and is driven
entirely by orders.
 When investors place a market order, it is automatically matched with a limit order.
Thus, sellers and buyers can remain anonymous in this market.
 Additionally, an order-driven market offers investors more transparency by displaying
every buy and sell order in the trading system. These orders in NSE are placed via
stockbrokers, who often provide customers with an online trading facility.
 Few institutional investors can use this “direct market access” facility to place their
orders directly into the trading system.
 National Stock Exchange’s flagship index is the Nifty50 which represents about 63%
of the total quantum of market capitalisation listed under it. This index covers
approximately 12 sectors of the economy under 50 variable stocks.
 Currently, the stock exchange is spearheaded by Vikram Limaye as the CEO and
Managing Director and Ashok Chawla as the Chairman of the Board of Directors.
 Benefits of Listing with the National Stock Exchange of India

 NSE offers several benefits of listing with it. Some of them are as follows –
I. Comprehensive Visibility
This trading system is efficient in providing various trade and post-trade information. Investors
can quickly look up the trading system's top buy and sell orders and the total number of
securities available for a transaction.
II. Makes for a Premier Marketplace
The volume of trading activity in this stock exchange helps to lower the impact cost on it,
which decreases the expenses of trading for investors.
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Additionally, the exchange’s automated trading system helps to maintain transparency and
consistency with an investor.
III. Biggest Exchange in the Country
Regarding trading volume, the NSE is the country’s largest exchange, with a market
capitalisation exceeding $2.25 Trillion.
IV. Fast Transactions
The pace at which orders are processed in this Exchange helps investors to avail the best prices.
For instance, on May 19th 2009, the stock exchange recorded 11,260,392 trades, its highest
number daily.
V. Trade Statistics
Listed companies can receive trade statistics each month to help track the performance of
companies listed on the exchange.
Thus, with the above benefits, NSE makes for a favourable facility to conduct market
transactions.
 Investment Segments
 NSE offers investment and trading in the segments mentioned below –
I. Equity
This comprises a volatile class of assets which helps investors to maximise the returns from
investments.
Equity investment consists of several types of assets: Mutual Funds, equities, indices,
Exchange Traded Funds, Security Lending and Borrowing schemes, Initial Public Offerings,
etc.
II. Equity Derivatives
Derivatives traded under this stock exchange include Global indices like Dow Jones, CNX 500,
commodity derivatives, currency derivatives, interest rate futures, etc. The NSE market started
derivative trading in 2002 with the launch of index futures. In 2011, it launched derivative
contracts on the world’s most-followed index – Dow Jones Industrial Average and S%P 500.
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Thus, this exchange has made remarkable headway in the trade market regarding equity
derivatives.
III. Debt
This type of investment pool consists of various Mutual Funds, Exchange Traded Funds, etc.
The core asset holdings comprise long- and short-term bonds, corporate bonds, securitised
products, etc.
NSE launched the country’s first debt platform on 13th May 2013 to provide investors with a
transparent and liquid trading platform for all debt-associated products.
I. Major Indices in this Exchange System
A stock market index is created by choosing a collection of stocks representing the whole
market or a specific segment.
Following are some of the most critical broad market indices, consisting of the liquid stocks
that are listed on this stock exchange –
 Nifty 50 index
 Nifty 100 index
 Nifty Next 50 index
 Nifty Midcap 50 index
 NSE also includes other indices like thematic, strategy, hybrid and fixed-income
indices.
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Chapter: 3
Theoretical Framework
(GST)
1.1 Introduction on GST

 Tax policies play an important role on the economy through their impact on both
efficiency and equity. A good tax system should keep in view issues of income
distribution and, at the same time, also endeavour to generate tax revenues
to support government expenditure on public services and infrastructure
development.
 The introduction of Goods and Services Tax (GST) would be a very significant step in
the field of indirect tax reforms in India. By amalgamating a large number of Central
and State taxes into a single tax, it would mitigate cascading or double taxation in a
major way and pave the way for a common national market. From the consumer point
of view, the biggest advantage would be in terms of a reduction in the overall tax
burden on goods, which is currently estimated at 25%-30%. Introduction of
GST would also make our products competitive in the domestic and
international markets.
 The idea of a nationwide GST in India was first proposed by the Kelkar Task Force on
Indirect taxes in 2000. The objective was to replace the prevailing complex and
fragmented tax structure with a unified system that would simplify compliance, reduce
tax cascading, and promote economic integration. The Empowered Committee of State
Finance Ministers prepared a design and roadmap, releasing the First Discussion Paper
in 2009. The Constitution Amendment Bill was introduced in 2011 but faced challenges
regarding compensation to States and other issues.
 After years of deliberation and negotiations between the Central and State
Governments, the Constitution (122nd Amendment) Bill, 2014, was introduced in the
Parliament. The Bill aimed to amend the Constitution to enable the implementation of
GST. The Constitution Amendment Bill was passed by the Lok Sabha in May, 2015.
The Bill with certain amendments was finally passed in the Rajya Sabha and thereafter
by the Lok Sabha in August, 2016. Further, the Bill has been ratified by the required
number of States and has since received the assent of the President on 8th September,
2016 and has been enacted as the 101st Constitution Amendment Act, 2016. The GST
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Council was notified w.e.f. 15th September, 2016. For assisting the GST Council, the
office of the GST Council Secretariat was also established.
 The GST Council, consisting of the Union Finance Minister and representatives from
all States and Union Territories, was established to make decisions on various aspects
of GST, including tax rates, exemptions, and administrative procedures. It played a
crucial role in shaping the GST framework in India. On 1st July, 2017, GST laws were
implemented, replacing a complex web of Central and State taxes. Under the Indian
GST, goods and services are categorized into different tax slabs, including 5%, 12%,
18%, and 28%. Some essential commodities are exempted from GST, Gold and job
work for diamond attract low rate of taxation. Compensation cess is being levied on
demerit goods and ceratin luxury items.
 To prepare for the implementation of GST, extensive efforts were made to build the
necessary technological infrastructure and train tax officials and businesses. GST
Network (GSTN), a not-for-profit company, was created to provide the IT backbone
for the GST system, including taxpayer registration, return filing, and tax payments.
 Since its implementation, the Indian GST has undergone various amendments and
refinements based on feedback from businesses and the evolving economic scenario.
While the GST implementation initially posed challenges for businesses in terms of
understanding the new compliance requirements and adapting to the changes, it has
gradually settled into the Indian tax landscape.
 It can be said that the history of GST in India showcases a monumental shift in the
country's tax structure, aiming to create a more unified, efficient, and transparent
indirect tax regime for the benefit of businesses and the economy as a whole.
3.1.1 GST and Centre-State Financial Relations

 The implementation of GST has brought about a fundamental shift in the financial
relations between the Central Government and the State Governments in India. GST is
a unified tax system that replaced multiple indirect taxes levied by both the Central and
State Governments. Under GST, both the Central and State Governments share the
authority to levy and collect taxes on goods and services. This has led to greater
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harmonization and uniformity in the tax structure across States, promoting economic
integration.
 The GST system follows a dual structure, comprising Central GST (CGST) and State
GST (SGST), levied concurrently by the Central and State governments, respectively.
Additionally, an Integrated GST (IGST) is levied on interstate supplies and imports,
which is collected by the Central Government but apportioned to the destination state.
 In terms of revenue distribution, the GST Council plays a crucial role. It is a joint forum
consisting of the Union Finance Minister and representatives from all States and Union
Territories. The Council makes decisions on various aspects of GST, including tax
rates, exemptions, and revenue sharing between the Central and State Governments.
Except for one decision, all decisions of the Council were taken by consensus.
 To ensure a smooth transition to the GST regime and address any revenue losses
incurred by the States, a compensation mechanism was established. The Central
Government was committed to providing compensation to the States for any revenue
shortfall during the initial years of GST implementation. This compensation was meant
to bridge the gap between the expected revenue growth and the actual revenue collected
by the States.
 It has fostered greater coordination, reduced tax barriers, and streamlined the tax
system, leading to improved efficiency and competitiveness in the Indian economy. The
successful implementation of GST relies on a cooperative and consensus-based
approach between the Central and State Governments. It has transformed financial
relations, ensuring greater coordination and efficiency in the Indian tax system.\
3.1.2 What is GST in India ?

 GST is known as the Goods and Services Tax. It is an indirect tax which has replaced
many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods
and Service Tax Act was passed in the Parliament on 29th March 2017 and came into
effect on 1st July 2017.
 In other words, Goods and Service Tax (GST) is levied on the supply of goods and
services. Goods and Services Tax Law in India is a comprehensive, multi-stage,
destination-based tax that is levied on every value addition. GST is a single domestic
indirect tax law for the entire country.
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 Under the GST regime, the tax is levied at every point of sale. In the case of intra-state
sales, Central GST and State GST are charged. All the inter-state sales are chargeable
to the Integrated GST.
 Value Addition
A manufacturer who makes biscuits buys flour, sugar and other material. The value of the
inputs increases when the sugar and flour are mixed and baked into biscuits.
The manufacturer then sells these biscuits to the warehousing agent who packs large quantities
of biscuits in cartons and labels it. This is another addition of value to the biscuits. After this,
the warehousing agent sells it to the retailer.
The retailer packages the biscuits in smaller quantities and invests in the marketing of the
biscuits, thus increasing its value. GST is levied on these value additions, i.e. the monetary
value added at each stage to achieve the final sale to the end customer.
3.1.3 Objective of GST

I. To achieve the ideology of ‘One Nation, One Tax’
GST has replaced multiple indirect taxes, which were existing under the previous tax
regime. The advantage of having one single tax means every state follows the same rate for
a particular product or service. Tax administration is easier with the Central Government
deciding the rates and policies. Common laws can be introduced, such as e-way bills for
goods transport and e-invoicing for transaction reporting. Tax compliance is also better as
taxpayers are not bogged down with multiple return forms and deadlines. Overall, it’s a
unified system of indirect tax compliance.
II. To subsume a majority of the indirect taxes in India
India had several erstwhile indirect taxes such as service tax, Value Added Tax (VAT),
Central Excise, etc., which used to be levied at multiple supply chain stages. Some taxes
were governed by the states and some by the Centre. There was no unified and centralised
tax on both goods and services. Hence, GST was introduced. Under GST, all the major
indirect taxes were subsumed into one. It has greatly reduced the compliance burden on
taxpayers and eased tax administration for the government.
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III. To eliminate the cascading effect of taxes
One of the primary objectives of GST was to remove the cascading effect of taxes.
Previously, due to different indirect tax laws, taxpayers could not set off the tax credits of
one tax against the other. For example, the excise duties paid during manufacture could not
be set off against the VAT payable during the sale. This led to a cascading effect of taxes.
Under GST, the tax levy is only on the net value added at each stage of the supply chain.
This has helped eliminate the cascading effect of taxes and contributed to the seamless flow
of input tax credits across both goods and services.
I. To curb tax evasion
GST laws in India are far more stringent compared to any of the erstwhile indirect tax
laws. Under GST, taxpayers can claim an input tax credit only on invoices uploaded by
their respective suppliers. This way, the chances of claiming input tax credits on fake
invoices are minimal. The introduction of e-invoicing has further reinforced this objective.
Also, due to GST being a nationwide tax and having a centralised surveillance system, the
clampdown on defaulters is quicker and far more efficient. Hence, GST has curbed tax
evasion and minimised tax fraud from taking place to a large extent.
II. To increase the taxpayer base
GST has helped in widening the tax base in India. Previously, each of the tax laws had a
different threshold limit for registration based on turnover. As GST is a consolidated tax
levied on both goods and services both, it has increased tax-registered businesses. Besides,
the stricter laws surrounding input tax credits have helped bring certain unorganised sectors
under the tax net. For example, the construction industry in India.
III. Online procedures for ease of doing business
Previously, taxpayers faced a lot of hardships dealing with different tax authorities under
each tax law. Besides, while return filing was online, most of the assessment and refund
procedures took place offline. Now, GST procedures are carried out almost entirely online.
Everything is done with a click of a button, from registration to return filing to refunds to
e-way bill generation. It has contributed to the overall ease of doing business in India and
simplified taxpayer compliance to a massive extent. The government also plans to introduce
a centralised portal soon for all indirect tax compliance such as e-invoicing, e-way bills and
GST return filing.
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IV. An improved logistics and distribution system
A single indirect tax system reduces the need for multiple documentation for the supply of
goods. GST minimises transportation cycle times, improves supply chain and turnaround
time, and leads to warehouse consolidation, among other benefits. With the e-way bill
system under GST, the removal of interstate checkpoints is most beneficial to the sector in
improving transit and destination efficiency. Ultimately, it helps in cutting down the high
logistics and warehousing costs.
V. To promote competitive pricing and increase consumption
Introducing GST has also led to an increase in consumption and indirect tax revenues. Due
to the cascading effect of taxes under the previous regime, the prices of goods in India were
higher than in global markets. Even between states, the lower VAT rates in certain states
led to an imbalance of purchases in these states. Having uniform GST rates have
contributed to overall competitive pricing across India and on the global front. This has
hence increased consumption and led to higher revenues, which has been another important
objective achieved.
3.1.4 Advantages of GST
 GST has mainly removed the cascading effect on the sale of goods and services.
Removal of the cascading effect has impacted the cost of goods. Since the GST regime
eliminates the tax on tax, the cost of goods decreases.
 Also, GST is mainly technologically driven. All the activities like registration, return
filing, application for refund and response to notice needs to be done online on the GST
portal, which accelerates the processes.
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3.1.5 What are the components of GST ?
There are three taxes applicable under this system: CGST, SGST & IGST.
CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a
transaction happening within Maharashtra)
SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction
happening within Maharashtra)
IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra
to Tamil Nadu)
3.1.6 What are the New Compliances Under GST?
Apart from online filing of the GST returns, the GST regime has introduced several new
systems along with it.
i. e-Way Bills
GST introduced a centralised system of waybills by the introduction of “E-way bills”. This
system was launched on 1st April 2018 for inter-state movement of goods and on 15th April
2018 for intra-state movement of goods in a staggered manner.
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Under the e-way bill system, manufacturers, traders and transporters can generate e-way bills
for the goods transported from the place of its origin to its destination on a common portal with
ease. Tax authorities are also benefited as this system has reduced time at check -posts and
helps reduce tax evasion.
ii. E-invoicing
The e-invoicing system was made applicable from 1st October 2020 for businesses with an
annual aggregate turnover of more than Rs.500 crore in any preceding financial years (from
2017-18). Further, from 1st January 2021, this system was extended to those with an annual
aggregate turnover of more than Rs.100 crore.
These businesses must obtain a unique invoice reference number for every business-to-business
invoice by uploading on the GSTN’s invoice registration portal. The portal verifies the
correctness and genuineness of the invoice. Thereafter, it authorises using the digital signature
along with a QR code.
e-Invoicing allows interoperability of invoices and helps reduce data entry errors. It is designed
to pass the invoice information directly from the IRP to the GST portal and the e-way bill
portal. It will, therefore, eliminate the requirement for manual data entry while filing GSTR-1
and helps in the generation of e-way bills too.
3.1.7 What is GST Registration ?
Under Goods And Services Tax (GST), businesses whose turnover exceeds the threshold limit
of Rs.40 lakh or Rs.20 lakh or Rs.10 lakh as the case may be, must register as a normal taxable
person. It is called GST registration.
For certain businesses, registration under GST is mandatory. If the organization carries on
business without registering under GST, it is an offence under GST and heavy penalties will
apply.
GST registration usually takes between 2-6 working days. Team Clear can help you obtain
GST registration faster in 3 easy steps.
3.1.8 Who should obtain the GST registration?
 Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)
 Businesses with turnover above the threshold limit of Rs.40 lakh or Rs.20 lakh or Rs.10
lakh as the case may be
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 Casual taxable person / Non-Resident taxable person

 Agents of a supplier & Input service distributor
 Those paying tax under the reverse charge mechanism
 A person who supplies via an e-commerce aggregator
 Every e-commerce aggregator
 Person supplying online information and database access or retrieval services from a
place outside India to a person in India, other than a registered taxable person
3.1.9 Documents Required for GST Registration
 PAN of the Applicant

 Aadhaar card
 Proof of business registration or Incorporation certificate
 Identity and Address proof of Promoters/Director with Photographs
 Address proof of the place of business
 Bank Account statement/Cancelled cheque
 Digital Signature
 Letter of Authorization/Board Resolution for Authorized Signatory
 GST Registration Fees
 The goods and services tax (GST) is a type of tax levied on most goods and services
sold for domestic consumption in many countries. It is paid by consumers and remitted
to the government by the businesses selling the goods and services. Some countries
have introduced GST exemptions or reduced GST rates on essential goods and services
or have implemented GST credits or rebates to help offset the impact of GST on lower-
income households. The GST is often a single rate tax applied throughout a country
and is preferred by governments because it simplifies the taxation system and reduces
tax avoidance. In dual GST systems, such as those in Canada and Brazil, the federal
GST is applied in addition to a state sales tax.
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3.2 Paired T-Test

 The paired sample t-test, sometimes called the dependent sample t-test, is a statistical
procedure used to determine whether the mean difference between two sets of
observations is zero. In a paired sample t-test, each subject or entity is measured twice,
resulting in pairs of observations. Common applications of the paired sample t-test
include case-control studies or repeated-measures designs. Suppose you are interested
in evaluating the effectiveness of a company training program. One approach you might
consider would be to measure the performance of a sample of employees before and
after completing the program, and analyze the differences using a paired sample t-test.
 Hypothesis
Like many statistical procedures, the paired sample t-test has two competing hypotheses,
the null hypothesis and the alternative hypothesis. The null hypothesis assumes that the true
mean difference between the paired samples is zero. Under this model, all observable
differences are explained by random variation. Conversely, the alternative hypothesis
assumes that the true mean difference between the paired samples is not equal to zero. The
alternative hypothesis can take one of several forms depending on the expected outcome.
If the direction of the difference does not matter, a two-tailed hypothesis is used. Otherwise,
an upper-tailed or lower-tailed hypothesis can be used to increase the power of the test. The
null hypothesis remains the same for each type of alternative hypothesis. The paired
sample t-test hypotheses are formally defined below:
 The null hypothesis (H0) assumes that the true mean difference (μd) is equal to zero.
 The two-tailed alternative hypothesis (H1) assumes that μd is not equal to zero.
 The upper-tailed alternative hypothesis (H1) assumes that μd is greater than zero.
 The lower-tailed alternative hypothesis (H1) assumes that μd is less than zero.
 Note. It is important to remember that hypotheses are never about data, they are about
the processes which produce the data. In the formulas above, the value of μd is
unknown. The goal of hypothesis testing is to determine the hypothesis (null or
alternative) with which the data are more consistent.
 Assumptions
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As a parametric procedure (a procedure which estimates unknown parameters), the paired

sample t-test makes several assumptions. Although t-tests are quite robust, it is good
practice to evaluate the degree of deviation from these assumptions in order to assess the
quality of the results. In a paired sample t-test, the observations are defined as the
differences between two sets of values, and each assumption refers to these differences, not
the original data values. The paired sample t-test has four main assumptions:
 The dependent variable must be continuous (interval/ratio).

 The observations are independent of one another.
 The dependent variable should be approximately normally distributed.
 The dependent variable should not contain any outliers.
 Level of Measurement
The paired sample t-test requires the sample data to be numeric and continuous, as it is
based on the normal distribution. Continuous data can take on any value within a range
(income, height, weight, etc.). The opposite of continuous data is discrete data, which can
only take on a few values (Low, Medium, High, etc.). Occasionally, discrete data can be
used to approximate a continuous scale, such as with Likert-type scales.
 Independence
Independence of observations is usually not testable, but can be reasonably assumed if the
data collection process was random without replacement. In our example, it is reasonable
to assume that the participating employees are independent of one another.
 Normality
To test the assumption of normality, a variety of methods are available, but the simplest is
to inspect the data visually using a tool like a histogram. Real-world data are almost never
perfectly normal, so this assumption can be considered reasonably met if the shape looks
approximately symmetric and bell-shaped. The data in the example figure below is
approximately normally distributed.
 Outliers
Outliers are rare values that appear far away from the majority of the data. Outliers can bias
the results and potentially lead to incorrect conclusions if not handled properly. One method
for dealing with outliers is to simply remove them. However, removing data points can
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introduce other types of bias into the results, and potentially result in losing critical information.
If outliers seem to have a lot of influence on the results, a nonparametric test such as the
Wilcoxon Signed Rank Test may be appropriate to use instead. Outliers can be identified
visually using a boxplot.
 Interpretation
There are two types of significance to consider when interpreting the results of a paired
sample t-test, statistical significance and practical significance.
 Statistical Significance
 Statistical significance is determined by looking at the p-value. The p-value gives the
probability of observing the test results under the null hypothesis. The lower the p-
value, the lower the probability of obtaining a result like the one that was observed if
the null hypothesis was true. Thus, a low p-value indicates decreased support for the
null hypothesis. However, the possibility that the null hypothesis is true and that we
simply obtained a very rare result can never be ruled out completely. The cutoff value
for determining statistical significance is ultimately decided on by the researcher, but
usually a value of .05 or less is chosen. This corresponds to a 5% (or less) chance of
obtaining a result like the one that was observed if the null hypothesis was true.
 Practical Significance
 Practical significance depends on the subject matter. It is not uncommon, especially
with large sample sizes, to observe a result that is statistically significant but not
practically significant. In most cases, both types of significance are required in order to
draw meaningful conclusions.
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3.3 Correlation
3.3.1 What is a Correlation?
 A correlation is a statistical measure of the relationship between two variables. The

measure is best used in variables that demonstrate a linear relationship between each
other. The fit of the data can be visually represented in a scatterplot. Using a scatterplot,
we can generally assess the relationship between the variables and determine whether
they are correlated or not.
 The correlation coefficient is a value that indicates the strength of the relationship
between variables. The coefficient can take any values from -1 to 1. The interpretations
of the values are:
 -1: Perfect negative correlation. The variables tend to move in opposite directions (i.e.,
when one variable increases, the other variable decreases).
 0: No correlation. The variables do not have a relationship with each other.
 1: Perfect positive correlation. The variables tend to move in the same direction (i.e.,
when one variable increases, the other variable also increases).
 One of the primary applications of the concept in finance is portfolio management. A

thorough understanding of this statistical concept is essential to successful portfolio
optimization.
3.3.2 How to Find the Correlation?
 The correlation coefficient that indicates the strength of the relationship between two
variables can be found using the following formula:
Where: rxy – the correlation coefficient of the linear relationship between the variables x and
y.
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 xi – the values of the x-variable in a sample

 x̅ – the mean of the values of the x-variable
 yi – the values of the y-variable in a sample
 ȳ – the mean of the values of the y-variable
 In order to calculate the correlation coefficient using the formula above, you must
undertake the following steps:
1. Obtain a data sample with the values of x-variable and y-variable.

2. Calculate the means (averages) x̅ for the x-variable and ȳ for the y-variable.
3. For the x-variable, subtract the mean from each value of the x-variable (let’s call this
new variable “a”). Do the same for the y-variable (let’s call this variable “b”).
4. Multiply each a-value by the corresponding b-value and find the sum of these
multiplications (the final value is the numerator in the formula).
5. Square each a-value and calculate the sum of the result
6. Find the square root of the value obtained in the previous step (this is the denominator
in the formula).
7. Divide the value obtained in step 4 by the value obtained in step 7.
 You can see that the manual calculation of the correlation coefficient is an extremely
tedious process, especially if the data sample is large. However, there are many
software tools that can help you save time when calculating the coefficient.
The CORREL function in Excel is one of the easiest ways to quickly calculate the
correlation between two variables for a large data set.
3.3.3 Testing the Significance of a Correlation
Once you’ve computed a correlation, you can determine the probability that the observed
correlation occurred by chance. That is, you can conduct a significance test. Most often you
are interested in determining the probability that the correlation is a real one and not a chance
occurrence. In this case, you are testing the mutually exclusive hypotheses:
Null Hypothesis: r = 0
Alternative Hypothesis: r ≠ 0
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The easiest way to test this hypothesis is to find a statistics book that has a table of critical
values of r. Most introductory statistics texts would have a table like this. As in all hypothesis
testing, you need to first determine the significance level. Here, he’ll use the common
significance level of alpha = .05. This means that he conducting a test where the odds that
the correlation is a chance occurrence is no more than 5 out of 100. Before he look up the
critical value in a table he also have to compute the degrees of freedom or df. The df is simply
equal to N-2 or, in this example, is 20-2 = 18. Finally, he have to decide whether he is doing
a one-tailed or two-tailed test. In this example, since he have no strong prior theory to suggest
whether the relationship between height and self- esteem would be positive or negative,
Resercher will opt for the two-tailed test. With these three pieces of information – the
significance level (alpha = .05)), degrees of freedom (df = 18), and type of test (two-tailed)
– Researcher now test the significance of the correlation found. When look up this value in
the handy little table at the back of my statistics book he find that the critical value is .4438.
This means that if my correlation is greater than .4438 or less than -.4438 (remember, this is
a two-tailed test) he can conclude that the odds are less than 5 out of 100 that this is a chance
occurrence. Since my correlation of .73 is actually quite a bit higher, he conclude that it is not
a chance finding and that the correlation is “statistically significant” (given the parameters of
the test). he can reject the null hypothesis and accept the alternative.
 What Does Correlation Measure?
In statistics, Correlation studies and measures the direction and extent of relationship among
variables, so the correlation measures co-variation, not causation. Therefore, we should never
interpret correlation as implying cause and effect relation. For example, there exists a
correlation between two variables X and Y, which means the value of one variable is found to
change in one direction, the value of the other variable is found to change either in the same
direction (i.e. positive change) or in the opposite direction (i.e. negative change). Furthermore,
if the correlation exists, it is linear, i.e. we can represent the relative movement of the two
variables by drawing a straight line on graph.
The correlation coefficient, r, is a summary measure that describes the extent of the statistical
relationship between two interval or ratio level variables. The correlation coefficient is scaled
so that it is always between -1 and +1. When r is close to 0 this means that there is little
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relationship between the variables and the farther away from 0 r is, in either the positive or
negative direction, the greater the relationship between the two variables.
The two variables are often given the symbols X and Y. In order to illustrate how the two
variables are related, the values of X and Y are pictured by drawing the scatter diagram,
graphing combinations of the two variables. The scatter diagram is given first, and then the
method of determining Pearson’s r is presented. From the following examples, relatively small
sample sizes are given. Later, data from larger samples are given.
3.3.4 The Correlation Matrix

All Researcher shown you so far is how to compute a correlation between two variables. In
most studies we have considerably more than two variables. Let’s say we have a study with 10
interval-level variables and we want to estimate the relationships among all of them (i.e.,
between all possible pairs of variables). In this instance, we have 45 unique correlations to
estimate (more later on how Researcher knew that!). We could do the above computations 45
times to obtain the correlations. Or we could use just about any statistics program to
automatically compute all 45 with a simple click of the mouse.
Researcher used a simple statistics program to generate random data for 10 variables with 20
cases (i.e., persons) for each variable. Then, Researcher told the program to compute the
correlations among these variables. Here’s the result:
This type of table is called a correlation matrix. It lists the variable names (C1-C10) down the
first column and across the first row. The diagonal of a correlation matrix (i.e., the numbers
that go from the upper left corner to the lower right) always consists of ones. That’s because
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these are the correlations between each variable and itself (and a variable is always perfectly
correlated with itself). This statistical program only shows the lower triangle of the correlation
matrix. In every correlation matrix there are two triangles that are the values below and to the
left of the diagonal (lower triangle) and above and to the right of the diagonal (upper triangle).
There is no reason to print both triangles because the two triangles of a correlation matrix are
always mirror images of each other (the correlation of variable x with variable y is always equal
to the correlation of variable y with variable x). When a matrix has this mirror-image quality
above and below the diagonal we refer to it as a symmetric matrix. A correlation matrix is
always a symmetric matrix.
To locate the correlation for any pair of variables, find the value in the table for the row and
column intersection for those two variables. For instance, to find the correlation between
variables C5 and C2, Researcher look for where row C2 and column C5 is (in this case it’s
blank because it falls in the upper triangle area) and where row C5 and column C2 is and, in
the second case, Researcher find that the correlation is -.166.
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Chapter: 4
Literature Rewiew
G.P. Girish (2019), “Impact of Implementation of Goods and Services Tax on Nifty 50
Index of National Stock Exchange of India”
In this study Researcher investigated the impact of implementation of goods and services tax
on national stock exchange of India by considering nifty 50 index of NSE and by applying
event study technique. The result of the study suggests that implementation of GST impacts
nifty 50 index of NSE in a positive way resulting in abnormal returns which is statistically
significant. The results of the study seem to suggest that the market participants in India have
embraced GST and have reacted positively to its implementation.
Abhay Singh Chauhan, Sanjeev Gupta and S.K. Singh (2018), “Impact of GST on Stock
Indices in India”
Indian economy has seen a major reform is the form of implementation of GST on 1st July
2017 which could be proved to be a major land mark in the history of an Indian economy.
Further it is also seen that there is statistically significant difference between different sectoral
indices of pre and post implementation of GST. Therefore, it can be predicted that the
implementation of the GST affected the different sectors of Indian economy. The result of the
study seems to be more effected by financial reforms taken place in the economy.
Dr. Sangeetha R (2020), “A Study on Impact of GST on the Performance of Specific

Indices of Bomboy Stock Exchange India”
The study recommends that the government should come up with strategies and policies to
protect the Auto, Banking, and Oil and Gas sectors (specifically banking) due to their immense
contribution to the economy of the country. The findings of the research indicate that there is
evidence that prices of auto index, oil and gas index, and banking index have significant effects
on the S&P BSE Sensex Index. This study is limited to find the long-term relationship between
sectoral variables and their impact on the entire index as well as the impact of GST on their
performance.
K.Riyazahmed (2018), “Impact of GST on Indian Companies – A Panel Data Analysis”
The results of the random effects model imply that GST has positively impacted the operating
profit margin. Working capital and Size hurt the operating profit margins post-GST. However,
the interaction effect of size working capital along with GST is found to be positive and
significant. Hence, the implementation of GST benefited the companies by positively
impacting their operating profit margins.
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D.R & R.B Patel Commerce College & NIM BBA College, Surat
Anamika Kumari (2020), “Capital Market in India: Has it been Impacted by GST?”
The study is conducted to find out the impact of GST on Indian capital market. It is found from
the study that none of the abnormal returns under Mahindra and Mahindra Company is non-
significant as p value is more than the significant level that is .05. Hence, the impact of GST
had no significant impact of the stock price movement. Researcher have taken five industries
that is Automobile, Cement, FMCG, IT and Paint industry data of BSE before and after
implementation of GST. The result after testing came out is that it accepts null hypothesis. It
means that there is no significant difference between pre and post GST.
Chilla Yashwanthi, Dr. M Pavani and Malla Reddy “A Study on Impact of GST on Indian
Financial Market”
In all sectors of the economy and the market and GST will affect the cost of production.
Advantages of density to cover the costs of goods and services, the prices imposed raise,
increase the company. Reduce previously appeared in the GST and GST, but later, the light
that becomes possible to increase the size of the tax in some cases, the tax rate. The committee
does not directly levy the Institute of Public Accountants of India (ICAI) has stated that tax
split products and taxes have a positive impact on the Indian tax system.
Dr. Pushpender kumar and Dr.Amit Bhati(2021), “Overview of GST and its Impact on
Indian Stock Market: An Event Study”
GST has been introduced with a motive to aid the development of the Indian economy. Overall
all the sectoral indices were affected due to the implementation of GST. NIFTY Auto and
NIFTY Media had negative expectations from GST. This can be due to the reason that both
sectors were going to fall in higher tax brackets. NIFTY PSU Bank had the highest negative
expectations in the pre-implementation period.
Subham Garg, Karam Pal Narwal and Sanjeev Kumar(2023), “Economic Impact of GST
Reforms on Indian Economy: An Empirical Analysis”
This study aims to observe the impact of the implementation of GST reform on the Indian
economy. The finding of the study illustrates that in spite of the reduction of taxation rate for
the realty, FMCG, and auto sector, the instantaneous impact of GST comes as a shock for these
sectors resulting in an adverse or negative initial impact on the Indian economy which is
covered up with a time range of near2-3 months. The service sector has also faced a negative
instantaneous effect with the announcement and implementation of GST in India. Thus, the
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results indicate that the shocks caused by one unit change in EPU negatively affect the Indian
economy as indicated by all the four sectors under the study in the initial stage.
Revathi R., Madhushree L.M., and P.S. Aithal, “Impact of Implementation of Goods and
Service Tax on Indian Banking Sector”
The banks have to register in each state they operate in. All the services are provided with the
same tax rate of 18% except deposits which is exempted from tax and services like ATM
withdrawals, input tax credit, cheque, loans, investments have a negative impact after the
implementation of GST which made all these services very expensive to the customer, but it
generates a large amount to the Indian banking sector.
S. Thowseaf and M. Ayisha Millath, “A Study on GST Implementation and its Impact on
Indian Industrial Sector and Export”
GST environment would lead to an improved disclosure of tax transactions, which may have a
positive impact on direct tax collections also. The average tax burden on companies will fall
which will reduce the costs of Indian goods and services in the international market which in
turn boost Indian industrial standard and exports; it will tone down cascading and double
taxation and enable compliance through the lowering of the overall tax burden on goods and
services. India is a rich country, whose people are poor, Overall, if GST properly implemented
with tax exemption for certain goods like agricultural commodities, it will result in increasing
revenue at the Centre as the tax collection system becomes more transparent, making tax
evasion problem vanish and leading to economic growth, helping Indian people regain the
wealth lost within country.
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Chapter: 5
Research Methodology
5.1 Introduction of the Topic: Here the researcher “study on Impact of GST on
Nifty” which gives the result of the study suggests that the implementation of GST in
India significantly influenced the Nifty index by enhancing market efficiency, easing
compliance burdens for businesses within the index, and fostering a more uniform and
transparent taxation system. This secondary data research aims to analyze the specific
correlations and effect of GST on Nifty movements, highlighting its implications for
investors and companies alike.
5.2 Objectives of the Study:
 To Examine GST implementation influenced short-term fluctuations and
long-term stability within Nifty, discerning the impact on investor sentiment
and market volatility.
 To Investigate how different sectors within the Nifty (like FMCG,
manufacturing, or services) were impacted by GST implementation.
 To Assess investor sentiment and reactions to GST-related announcements,
policy changes, and their influence on Nifty components, identifying shifts in
investor behavior and market perceptions.
5.3 Importance of the Study:
 Understanding the correlation between GST and Nifty offers invaluable
insights into how regulatory changes impact market behavior, aiding
investors, policymakers, and businesses in strategic decision-making.
 The GST-Nifty relationship serves as a barometer for economic health,
providing a lens to assess policy effectiveness, sectoral resilience, and overall
market sentiment crucial for predicting market trends and investment
opportunities.
5.4 Research Methodology:
 Research Problem: The general problem revolves around understanding the
intricate relationship between the implementation of GST and the fluctuations
observed in the Nifty index. Specific components to be studied within this problem
could include analyzing the periods. short-term and long-term effects of GST on
various sectors represented in the Nifty.
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 Type of Research Design: Researcher has used Descriptive & caused Research
Design in this Study.
 Data Collection: The data collected in this Research study are secondary data.
 Time Frame: For the business research the data taken between the year of 2018
to 2023.
 Variables under Study: Variables involve analyzing various aspects like
market volatility, sectoral performance, investor sentiment, and economic indicators
affected by the Goods and Services Tax (GST) implementation.
 Data Analysis Techniques: In this study the data Analysis Techniques used is
Tables, charts, correlation, Aova, Regression Analysis, Hypothesis testing.
5.5 Limitations of the Study:
 The study’s findings may be influenced by external factors beyond the
research scope.
 Assessing the precise impact of GST on the Nifty might require an extended
period, as market responses to policy changes can take time to manifest fully,
making short-term analysis potentially insufficient.
 Limited availability or quality of data, especially concerning specific
industry-level impacts of GST on Nifty components, can hinder the accuracy
of the analysis.
 Various other government policies and reforms beyond GST can influence
the Nifty, making it challenging to attribute changes solely to GST.
5.6 Scope of the study: The Study involves examining how the Goods and Services
Tax (GST) has influenced the stock market index. It would encompass analyzing the
correlation between GST implementation, market fluctuations, sectoral performance within
the Nifty, investor sentiment, and economic indicators. This research could provide insights
into how policy changes like GST affect the broader market and specific industries within it
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Chapter: 6
Data Analysis
6.1 Data analysis of GST & Nifty of the year 2020
GST Price(in NIFTY closing GST Nifty

Month crore) price(in rupees) return(%) return(%)
Jan 110828 11962.1
Feb 105366 11201.75 -0.04928 -0.06356
March 97597 8597.75 -0.07373 -0.23246
April 32172 9859.9 -0.67036 0.1468
May 62151 9580.3 0.931835 -0.02836
June 90917 10302.1 0.462841 0.075342
July 87422 11073.45 -0.03844 0.074873
August 86449 11387.5 -0.01113 0.028361
September 95480 11247.55 0.104466 -0.01229
October 105155 11642.4 0.10133 0.035105
November 104963 12968.95 -0.00183 0.113941
December 115174 13981.75 0.097282 0.078094
Table 6.1 GST & Nifty of the year 2020
1.2
0.8
0.6
0.4
0.2
0
1 2 3 4 5 6 7 8 9 10 11 12
-0.2
-0.4
-0.6
GST(%) Nifty(%)
-0.8
Chart 6.1 GST & Nifty of the year 2020
Page | 72
D.R Patel & R.V Patel Commerce College & NIM BBA College, Surat
Correlation Between Nifty & GST during a period of 2020
GST(%) Nifty(%)
GST(%) 1
Nifty(%) -0.19758 1
 Data Analysis
 The correlation coefficient between GST (%) and Nifty (%) is -0.19758.
 A negative correlation coefficient suggests that as one variable (GST %) tends to
increase, the other variable (Nifty %) tends to decrease slightly, and vice versa.
However, the strength of this relationship is weak, as the correlation coefficient is close
to zero.
 In this case, Researcher can interpret that changes in GST (%) are weakly associated
with changes in Nifty (%), but the association is not strong enough to make significant
predictions or conclusions about one variable based solely on the other.
 Data interpretation
 While there is a weak negative correlation between GST (%) and Nifty (%), it's
important to note that correlation does not imply causation. In other words, changes in
GST (%) are not necessarily causing changes in Nifty (%), and vice versa.
 Other factors is influencing the movement of Nifty (%) that are not captured by GST
(%), and vice versa.
 Exploring the impact of other external factors, such as government policies, global
economic trends, or industry-specific factors, is provide insights into the movements of
Nifty (%)
 A weak negative correlation between GST (%) and Nifty (%), suggesting that changes
in GST (%) are weakly associated with changes in Nifty (%), but the relationship is not
strong enough to draw significant conclusions.
Page | 73

GST Price(in NIFTY closing GST Nifty
Month crore) Price(in rupees) return(%) return(%)
Jan 119847 13634.6
Feb 113143 14529.15 -0.05594 0.065609
Mar 123902 14690.7 0.095092 0.011119
Apr 141384 14631.1 0.141095 -0.00406
May 102709 15582.8 -0.27355 0.065046
Jun 92849 15721.5 -0.096 0.008901
Jul 116393 15763.05 0.253573 0.002643
Aug 112020 17132.2 -0.03757 0.086858
Sep 117010 17618.15 0.044546 0.028365
Oct 130127 17671.65 0.112102 0.003037
Nov 131526 16983.2 0.010751 -0.03896
Dec 129780 17354.05 -0.01327 0.021836
0.3
0.2
0.1
0
1 2 3 4 5 6 7 8 9 10 11 12
-0.1
-0.2
-0.3
GST(%) Nifty(%)
Page | 74
GST(%) Nifty(%)
GST(%) 1
Nifty(%) -0.54236 1
 Data Analysis
 The correlation coefficient between GST (%) and Nifty (%) is -0.54236
 The negative correlation coefficient (-0.54236) indicates a moderate to strong negative
correlation between GST (%) and Nifty (%).
 This suggests that there is a significant tendency for the two variables to move in
opposite directions: as GST (%) increases, Nifty (%) tends to decrease, and vice versa.
 Data Analysis
 The strong negative correlation suggests that movements in GST (%) are likely to have
a noticeable impact on the performance of Nifty (%) and vice versa.
 Researcher may hypothesize that changes in GST policy or tax rates should influence
investor sentiment and market performance, as reflected in Nifty (%).
 This correlation should be indicative of how changes in government fiscal policy affect
investor behavior and market dynamics.
 In conclusion, interpreting the correlation between GST (%) and Nifty (%) for research
involves considering the magnitude of the correlation coefficient, assessing its
implications for the research question, and identifying avenues for further investigation
and practical applications in policymaking and financial markets.
Page | 75
GST Price(in Nifty closing GST Nifty

Month crore) price(in rupees) return(%) return(%)
Jan 138394 17339.85
Feb 133026 16793.9 -0.03879 -0.03149
Mar 142095 17464.75 0.068175 0.039946
Apr 167540 17102.55 0.17907 -0.02074
May 140885 16584.55 -0.1591 -0.03029
Jun 144616 15780.25 0.026483 -0.0485
Jul 148995 17158.25 0.03028 0.087324
Aug 143612 17759.3 -0.03613 0.03503
Sep 147686 17094.35 0.028368 -0.03744
Oct 151718 18012.2 0.027301 0.053693
Nov 145867 18758.35 -0.03856 0.041425
Dec 149507 18105.3 0.024954 -0.03481
0.2
0.15
0.1
0.05
0
1 2 3 4 5 6 7 8 9 10 11 12
-0.05
-0.1
-0.15
-0.2
GST(%) Nifty(%)
Page | 76
GST(%) Nifty(%)
GST(%) 1
Nifty(%) 0.06481 1
 Data Analysis
 The correlation coefficient of 0.06481 suggests a weak positive correlation between
GST (%) and Nifty (%).
 This implies that there is a slight tendency for the two variables to move in the same
direction, but the relationship is not strong.
 The weak positive correlation prompt researcher to investigate whether changes in GST
(%) have any discernible impact on the performance of Nifty (%) and vice versa.
 It should prompt investigations into broader economic factors that influence both GST
(%) and Nifty (%) independently, such as consumer sentiment, inflation rates, or global
economic conditions.
 While the weak positive correlation not have immediate policy or market implications,
it underscores the complexity of the relationship between taxation policies and stock
market performance.
 Data interpretation involves understanding the relationship between these variables
based on the correlation coefficient provided. In this case, with a correlation coefficient
close to zero, it suggests that there is almost no linear relationship between GST (%)
and Nifty (%). This implies that changes in GST (%) do not have a strong influence on
changes in Nifty (%) and vice versa.
Page | 77
GST Price (in Nifty closing GST Nifty

Month crore) Price(in rupees) return(%) return(%)
Jan 155922 17662.15
Feb 149577 17303.95 -0.04069 -0.02028
Mar 160122 17359.75 0.070499 0.003225
Apr 187035 18065 0.168078 0.040626
May 157090 18534.4 -0.1601 0.025984
Jun 161497 19189.05 0.028054 0.035321
Jul 165105 19753.8 0.022341 0.029431
Aug 159069 19253.8 -0.03656 -0.02531
Sep 162712 19638.3 0.022902 0.01997
Oct 172003 19079.6 0.057101 -0.02845
Nov 167929 20133.15 -0.02369 0.055219
Dec 164882 21731.4 -0.01814 0.079384
0.2
0.15
0.1
0.05
0
1 2 3 4 5 6 7 8 9 10 11 12
-0.05
-0.1
-0.15
-0.2
GST(%) Nifty(%)
Page | 78
Correlation Between Nifty & GST during a Period of 2023
GST(%) Nifty(%)
GST(%) 1
Nifty(%) 0.0221011 1
 Data Analysis
 The correlation coefficient between GST (%) and Nifty (%) is 0.0221011.
 This indicates a very weak positive correlation between these two variables.
 The positive sign suggests that there is a slight tendency for changes in GST (%) to be
associated with changes in Nifty (%) in the same direction, but the relationship is very
weak.
 With a correlation coefficient close to zero, it suggests that there is almost no linear
relationship between GST (%) and Nifty (%).
 With such a low correlation coefficient, it implies that there is almost no linear
relationship between GST (%) and Nifty (%).
 Changes in GST (%) are unlikely to have a significant impact on changes in Nifty (%),
and vice versa.
 It indicates that fluctuations in GST rates are not strongly associated with movements
in the Nifty index.
 Other factors are likely driving changes in the Nifty index, while changes in GST rates
have minimal influence on it.
 Therefore, changes in GST (%) do not have a significant influence on changes in Nifty
(%) and vice versa.
Page | 79
6.5 Anova of GST on Nifty
 H0: There is no significant difference among the mean value of GST during a
period of 2020 to 2023
 H1: There is significant difference among the mean value of GST during a period
of 2020 to 2023
GST 2020 GST 2021 GST 2022 GST 2023

return(%) return(%) return(%) return(%)
-0.04928 -0.05594 -0.03879 -0.04069
-0.07373 0.09509 0.06817 0.07050
-0.67036 0.14110 0.17907 0.16808
0.93184 -0.27355 -0.15910 -0.16010
0.46284 -0.09600 0.02648 0.02805
-0.03844 0.25357 0.03028 0.02234
-0.01113 -0.03757 -0.03613 -0.03656
0.10447 0.04455 0.02837 0.02290
0.10133 0.11210 0.02730 0.05710
-0.00183 0.01075 -0.03856 -0.02369
0.09728 -0.01327 0.02495 -0.01814
Table 6.5 Data analysis of GST
Page | 80
1.20000
1.00000
0.80000
0.60000
0.40000
0.20000
0.00000
1 2 3 4 5 6 7 8 9 10 11 12
-0.20000
-0.40000
-0.60000
-0.80000
GST(%) 2020 GST(%) 2021 GST(%)2022 GST(%)2023
Chart 6.5 Data analysis of GST
Page | 81
Anova: Single Factor
Groups Count Sum Average Variance
GST 2020
return(%) 11 0.852981 0.077544 0.150589
GST 2021
return(%) 11 0.18083 0.016439 0.01937
GST 2022
return(%) 11 0.112053 0.010187 0.006897
GST 2023
return(%) 11 0.089789 0.008163 0.006707
Anova
Source of
Variation SS df MS F P-value F tab
Between
Groups 0.036289 3 0.012096 0.263592 0.851205 2.838745
Within
Groups 1.835641 40 0.045891
Total 1.871931 43
 Ftab>Fcal, Therefore the hypothesis is accepted.
 This suggests that there is insufficient evidence to conclude that there is no

significant difference among the mean value of GST during a period of 2020 to
2023
Page | 82
CHAPTER: 7
Conclusion
 The variation between the groups (years) is not statistically significant. This is evident
from the F-value of 0.263592 and the associated p-value of 0.851205, which exceeds
the typical significance level of 0.05. Therefore, there is no strong evidence to suggest
that the GST (%) values significantly differ across the years.
 The variation within the groups (within each year) is relatively higher compared to the
variation between the groups. This is inferred from the relatively larger mean square
value within groups compared to between groups.
 Based on the analysis, it appears that the GST (%) values have not shown significant
variation across the years 2020 to 2023. Therefore, it might be prudent for the project
to consider this stability in GST (%) values when forecasting or planning related
financial or operational activities. However, it's essential to continuously monitor and
analyze the GST data for any emerging trends or changes that might impact the project
in the future. Additionally, exploring other factors or variables that could influence GST
(%) values might provide deeper insights into its behavior over time.
 While the ANOVA test provides valuable insights, further analysis such as time series
analysis or examining potential correlations with other economic indicators could
enrich the understanding of GST (%) dynamics and their implications for the project.
 In summary, while the GST (%) values have remained relatively stable across the years
2020 to 2023 according to the provided data, continuous monitoring and analysis are
recommended to adapt to any potential changes or emerging trends in the future.
Page | 83
Biblography
 https://www.nseindia.com/
 https://www.nseindia.com/market-data/new-stock-exchange-listings-today
 https://www.nseindia.com/market-data/all-upcoming-issues-ipo
 https://www.nseindia.com/market-data/new-stock-exchange-listings-today
 https://services.gst.gov.in/services/gstlaw/gstlawlist
 https://www.gst.gov.in/download/gststatistic
 https://gstcouncil.gov.in/about-us
 https://gstcouncil.gov.in/overview-gst-english
 https://gstcouncil.gov.in/state-specific-gst
 https://taxinformation.cbic.gov.in/
 https://www.scirp.org/journal/paperinformation?paperid=90369#:~:text=event
%20study%20technique.-
,The%20result%20of%20the%20study%20suggests%20that%20implementatio
n%20of%20GST,returns%20which%20is%20statistically%20significant.
 https://nipfp.org.in/media/medialibrary/2022/12/PK.pdf.pdf
 https://www.researchgate.net/publication/343529222_Impact_of_GST_on_India
n_Stock_Market_An_Event_Study
 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3308711
 https://www.motilaloswal.com/blog-details/How-GST-is-likely-to-impact-the-
capital-markets/1276
 https://www.researchgate.net/publication/330756337_Impact_of_Implementatio
n_of_Goods_and_Services_Tax_on_Nifty_50_Index_of_National_Stock_Exchan
ge_of_India
 https://www.linkedin.com/pulse/impact-gst-nifty-stocks-how-trade-post-news-
ashish-kyal-cmt
 https://nipfp.org.in/media/medialibrary/2022/12/KR.pdf.pdf
 https://www.scirp.org/journal/paperabs?paperid=90369
Page | 84
 https://ijcrt.org/papers/IJCRT2003111.pdf
 https://economictimes.indiatimes.com/markets/stocks/news/how-gst-will-impact-
sectors/brokers-and-equity-investments/slideshow/59408723.cms?from=mdr
 https://www.hdfcsec.com/blog/details/impact-effect-of-gst-on-various-sectors-of-
indian-economy-hdfc-securities
 https://www.investindia.gov.in/team-india-blogs/gst-overall-impact-
transformation
 https://www.5paisa.com/blog/worried-about-gst-need-not-atleast-for-your-stock-
market-trading
 https://www.jetir.org/papers/JETIRED06049.pdf
 https://www.business-standard.com/article/economy-policy/gst-impact-pharma-
sector-supply-chain-coping-well-after-rollout-117070600934_1.html
 https://www.livemint.com/Opinion/NbSCQ2KGNEcTGf1PA7IxcM/GST-impact-
on-the-logistics-sector.html
 https://www.semanticscholar.org/paper/Effect-of-Declaration-of-GST-Rates-
and-Changes-in-Saran/8c6f098884ff7a05bf2a5791bf211643ec0f8609
 https://www.academia.edu/38654485/IMPACT_OF_GOODS_AND_SERVICES
_TAX_ON_INDIAN_ECONOMY
 https://www.quora.com/What-would-be-the-effect-of-GST-on-the-stock-market
 https://www.zeebiz.com/topics/gst-impact-on-nifty
 https://in.tradingview.com/chart/48MRn79A/?symbol=NSE%3ALT
 https://www.google.com/gasearch?q=l%26t%20bonus%20history&source=sh/x/
gs/m2/5
 https://in.tradingview.com/chart/48MRn79A/?symbol=BSE%3AITC
 https://www.jetir.org/papers/JETIRCZ06003.pdf
 https://www.researchgate.net/signup.SignUp.html
Page | 85
 https://www.researchgate.net/publication/228240617_Market_Reaction_Around
_the_Stock_Splits_and_Bonus_Issues_Some_Indian_Evidence
 https://www.google.com/gasearch?q=conclusion%20on%20stock%20split%20an
d%20bonus%20issue&source=sh/x/gs/m2/5
 https://www.adarshjournals.in/index.php/ajmr/article/download/88336/67326
 https://ijrpr.com/uploads/V3ISSUE3/IJRPR3020.pdf
Page | 86
ANNEXURE
D. R. Patel & R. B. Patel Commerce College &

Bhaniben Chhimkabhai Patel BBA College
Proposal of Secondary Data Research for Winter Project 2023-24
Name: Abhijeet Shukla

Roll No: 3552
Area of Specialisation: Finance
Title of Topic: A study on Impact of GST on Nifty between the period of
2018 to 2023
Guide Name: Dr.Mitalee Pithawala
1. Introduction of the Topic: Here the researcher “study on Impact of GST on

Nifty” which gives the result of the study suggests that the implementation of GST
in India significantly influenced the Nifty index by enhancing market efficiency,
easing compliance burdens for businesses within the index, and fostering a more
uniform and transparent taxation system. This secondary data research aims to
analyze the specific correlations and effect of GST on Nifty movements, highlighting
its implications for investors and companies alike.
2. Objectives of the Study:

 To Examine GST implementation influenced short-term fluctuations and
long-term stability within Nifty, discerning the impact on investor sentiment
and market volatility.
 To Investigate how different sectors within the Nifty (like FMCG,
manufacturing, or services) were impacted by GST implementation.
 To Assess investor sentiment and reactions to GST-related announcements,
policy changes, and their influence on Nifty components, identifying shifts in
investor behavior and market perceptions.
3. Importance of the Study:
Page | 87
 Understanding the correlation between GST and Nifty offers invaluable

insights into how regulatory changes impact market behavior, aiding
investors, policymakers, and businesses in strategic decision-making.
 The GST-Nifty relationship serves as a barometer for economic health,
providing a lens to assess policy effectiveness, sectoral resilience, and overall
market sentiment crucial for predicting market trends and investment
opportunities.
4. Research Methodology:
4.1 Research Problem: The general problem revolves around understanding the
intricate relationship between the implementation of GST and the fluctuations
observed in the Nifty index. Specific components to be studied within this problem
could include analyzing the periods. short-term and long-term effects of GST on
various sectors represented in the Nifty.
4.2 Type of Research Design: Researcher has used Descriptive & caused Research
Design in this Study.
4.3 Data Collection: The data collected in this Research study are secondary data.
4.4 Time Frame: For the business research the data taken between the year of 2018
to 2023.
4.5 Variables under Study: Variables involve analyzing various aspects like
market volatility, sectoral performance, investor sentiment, and economic indicators
affected by the Goods and Services Tax (GST) implementation.
4.6 Data Analysis Techniques: In this study the data Analysis Techniques used is
Tables, charts, correlation,Anova, Regression Analysis, Hypothesis testing.
5. Limitations of the Study:

 The study’s findings may be influenced by external factors beyond the
research scope.
 Assessing the precise impact of GST on the Nifty might require an extended
period, as market responses to policy changes can take time to manifest fully,
making short-term analysis potentially insufficient.
Page | 88
 Limited availability or quality of data, especially concerning specific

industry-level impacts of GST on Nifty components, can hinder the accuracy
of the analysis.
 Various other government policies and reforms beyond GST can influence
the Nifty, making it challenging to attribute changes solely to GST.
6. Scope of the study: The Study involves examining how the Goods and Services
Tax (GST) has influenced the stock market index. It would encompass analyzing the
correlation between GST implementation, market fluctuations, sectoral performance
within the Nifty, investor sentiment, and economic indicators. This research could
provide insights into how policy changes like GST affect the broader market and
specific industries within it.
Page | 89

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A

Winter Project Report

Under The Guidance Of

Project is never the accomplishment of an individual rather it is an

CHAPTER: 3 THEORETICAL FRAMEWORK

Table No. Table Name Page No.

Table No. Table Name Page No.

(Indian Finacial System)

Chart: 1.1 Indian Financial System

1.1 Components of Indian Financial System

1.1.1 Financial Institution:

Investment Banks: Primarily engage in investment activities, such as underwriting securities

 Regulation and Oversight:

 Globalization and Technology:

Banks operate globally, facilitating international trade and finance. Technological

 Financial Crisis and Stability:

1. Ownership and Structure:

4. Challenges and Criticisms:

I. Functions of Commercial Banks:

 Deposit Mobilization: Commercial banks attract deposits from individuals and

II. Structure of Commercial Banks:

III. Significance of Commercial Banks:

 Economic Growth: Commercial banks play a crucial role in stimulating economic

 Formation and Structure:

 Objectives and Functions:

 Challenges and Initiatives:

Moreover, RRBs collaborate with government agencies, non-governmental organizations, and

 Economic Impacts and Challenges:

 Regulatory Framework and Risk Management:

II. Cooperative Banks:

 Introduction and Historical Background:

 Types of Cooperative Banks and Operations:

 Challenges and Future Prospects:

Non-banking institutions, also known as non-bank financial institutions (NBFI), refer to

 Venture Capital and Private Equity Firms:

Microfinance institutions provide financial services, including small loans, to individuals or

I. Organised Financial institutions:

Structure: Member-owned cooperatives.

Regulation: Governed by regulatory bodies specific to each country.

Function: Offer insurance products to individuals and businesses.

Regulation: Subject to insurance regulations in their respective jurisdictions.

Investments: Invest in a diversified portfolio to generate returns for pension payouts.

Regulation: Governed by pension regulations to ensure fund security.

Structure: Pooled funds from various investors invested in diversified portfolios.

Objective: Provide investors with professional management and diversification.

Regulation: Regulated by financial authorities to protect investors.

Investment Strategy: Actively manage funds with strategies to maximize returns.

Investor Base: Typically for accredited or institutional investors.

Regulation: Subject to less stringent regulations compared to mutual funds.

 Venture Capital and Private Equity Firms:

Focus: Invest in private companies or startups.

Purpose: Provide capital for growth or restructuring in exchange for equity.

Regulation: Subject to securities laws and regulations.

Services: Small loans, savings, and other basic financial services.

Social Impact: Focus on financial inclusion and poverty alleviation.

Objective: Support economic development through loans and financial assistance.

Regulation: Governed by specific regulations and may have a developmental mandate.

II. Unorganised Financial Institution:

Unorganized financial institutions, often referred to as non-banking financial institutions

Many unorganized financial institutions operate in an informal manner, relying on personal

 Risk and Interest Rates:

Microfinance institutions, a subset of NBFIs, specifically target providing financial services to

Unorganized financial institutions may face challenges in terms of financial stability,