A PROJECT REPORT ON STUDY OF FACTORS AFFECTING MOVEMENT OF STOCK PRICES

At

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION (BBA) University of Rajasthan, Jaipur.

(SESSION 2010-11)

Submitted to; Dr. Meenakshi bindal H.O.D (BBA)

Submitted by; Vishnu kumar gupta BBA IIIrdyear

LORDS INTERNATIONAL COLLEGE CHIKAANI,ALWAR

DECLARATION

I am VISHNU KUMAR GUPTA, student of BBA at Lords international college, hereby declare that the survey report entitled on the topic of, STUDY OF FACTORS AFFECTING MOVEMENT OF STOCK PRICES is the result of my own efforts & is based on the guidance given by the company guide & faculty guide from time to time.

PREFACE
An ounce of practical is equal to a ton of theory It is good to have good knowledge . It is good to have good will but it is essential to have a good training. (Pandit Jawahar Lal Nehru) To excel in any field practical training is integral part to imply theoretical studies to a practical approach. It makes the individual to the actual practical condition, which could have been impossible to be tought in classroom. In addition technological changes we are witnessing power shift from old hectic and weird ways of doing business. These technological development have brought revolutionary changes in the market and also in the mindset of the people which might be positive and encouraging for a section of society and adverse for the others. Introduction of paper less working in stock market and any where trading has given a fresh impetus to the market and has secure a distinct image in the minds of the potential clients. Sharekhan is today a key player in the online share trading market with a market share of 20%. Unlike other big player it has scaled the new heights of success in a short span of 5 years Currently it is giving a very stiff competition to old established players by incorporating new and dynamic management tactics. It is always desirable by the management to know the perception and the new segment if any to foray to increase the consumer base and business eventually .I am thankful to the management for assigning such a challenging project to me for jaipur city.

ACKNOWLEDGEMENT
Its my privilege and pleasure to thank to all those who have extended their full cooperation individually or collectively to me and encouraged me to carry out this project as a part of my training.I take this opportunity to express my gratitude towards online division of Sharekhan ltd. as a whole. I am extremely thankful to Mr. Subhash Kumar Jha, Regional Head, Sales for permitting me to carry out the summer project in this organization. I am highly grateful to Mr. Prashant kumar Sharma, Branch Head and to Mr. Nitin Mathur, Assistant Manager for their valuable guidance to carry out this study. I cannot ignore his valuable piece of advise which helps me to get more deeper look of the market and also about the working and the perception of the people in this market. I am also very thankful to all the concerned relationship officers and staff members who are directly or indirectly involved in carrying out my project and have extended their able guidance and cooperation in this project work. Finally I thank to Miss Vibha Bhatia, lecturer Lords International College and all other faculty members and all my colleagues those who provided their guidance and enthusiastic support to carry out this project report. Vishnu kumar gupta

EXECUTIVE SUMMARY
The sharp swings in global markets recently have rocked Indian markets leaving investors nervous. To put matters in context, stock markets should continue their role as allocator of capital for most productive uses. Retail investors whose money is being invested should get a fair chance to create wealth proportionate to their risk taking appetite. Regulators should ensure fair play, control systemic risks and penalize fraud. The process of long-term wealth creation should not become hostage to the avarice of a few short-term speculators. The stock market is a barometer of the future wealth creation capacity of the industrial enterprise system. In whatsoever manner the industrial enterprise system and the stock markets are evolving, these things remain the same. Given that, why do individual stocks show volatile price movements? A stock price moves up or down depending on whether for that day or for that period supply exceeds demand or vice versa. It is this fragile balance in supply and demand, which would determine the price movements for a stock and in aggregate terms the price movement for a group of stocks or for the stock market as a whole. Individual stocks can be volatile if, there is extremely positive or negative information for that particular stock which is available to traders. Or, prices may swing if a group of traders collude, to create artificial scarcity or demand for a stock. Finally, price movements may happen, if at a macro level, there is national or international news, which has some impact on some stocks or the entire market. The current volatility is the outcome of all these factors acting together, like Newtons Laws. Stock prices move as a function of all the above -mentioned factors. Whats new now are how the process of global knowledge dissemination has expanded and the reduced cost of stock market transactions for individuals. Thanks to IT, individuals across the globe have

access to information almost simultaneously. Technology has also made transactions easier and cheaper. More information and ease of transactions mean that Mr. Sure Shot Singh in Jalandhar wants to sell or buy depending on what Mr. John Brown is doing in Manchester. Two decades ago, Indians used to stay up past midnight to hear or see what Sunil Gavaskar was doing on the cricket fields of Lords. Now they stay up to watch what the NASDAQ is doing. Information on factors affecting price movements is available to more people and they are able to act quicker, leading to steep swings in prices. While IT has accentuated short-term movements, its medium term impact is salutary. Information removes imperfections and lets people align investments with risks. Collusion becomes difficult, regulation easier and systemic risks are reduced. Despite the turbulence long-term investors have made good returns in the past, as they will in future. The recent volatility serves to prick this bubble of a fiction gaining currency recently in the Indian stock markets -- that equity stocks and mutual funds are a way to overnight riches. Let us be clear in our minds that equity stocks and equity mutual funds offer a way of long term financial life cycle planning. People who have invested in these over a long period have obtained excellent returns. People who invest in stock markets based on tabloid advice and with the greed of overnight returns are not investors but speculators. They can, and do get, burnt. For all the essays we may write and all that market regulators might try to do, no one can protect a speculator against himself. With the integration of our stock markets with international markets, the rules of the game have changed. No one influence can guide the short-term movements in the stock markets. As investors, we have to learn to live with volatility.

TABLE OF CONTENTS
CHAPTERS: I. ACKNOWLEDGEMENT II. Declaration III.Preface IV.Executive Summary V. Company profile 1.Objectives of the Study 2.Research Methodology 3.Introduction 3.1.About BSE 3.2.About NSE Opportunities available for Foreign Investors 4.Overview of the factors 5.Short Term Vs Long Term 6.Investors and Traders 7.Growth Vs Value Investing 8.Fiscal Policy and the stock markets 9.Monetary Policy and the stock markets

10.The MSCI Index 11.Auctions 12.Management Perception Conclusion SIGNIFICANCE OF THE STUDY LIMITATIONS OF THE STUDY BIBLIOGRAPHY/REFERENCES

COMPANY PROFILE
Sharekhan was launched by the Mumbai-based SSKI Group, which has over eight decades of experience in the stock broking business. Sharekhan Ltd is India's leading retail broking house with more than 679 share shops in 234 cities, and the country's premier online trading destination,

http://www.sharekhan.com/, customers enjoy multi-channel access to the stock markets. Sharekhan offers its clients trade execution facilities for cash as well as derivatives, on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), depository services, mutual funds, initial public offerings (IPOs), and commodities trading facilities on the MCX and the NCDEX. The company's online trading and investment site

http://www.sharekhan.com/ was launched on Feb 8, 2000 . The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free, investor friendly language and high quality research, the site has a registered base of over 2 lakh customers. The number of trading members currently stands at over 3.82 Lacs.

SHAREKHAN is promoter of Bullions Industry. It possesses 100% qualified professionals including MBA (Marketing, Finance, HR, and IT), M.Sc. (Physics), M.A (Statistics/Mathematics), M.A (Economics) etc. Staffs. We offer total transparency of deal and proper service to our clients. We take integrity Seriously. SHAREKHAN is a member of MCX (Multi Commodity Exchange), it's a leading Commodity exchange in India under Forward Contract (Regulation) Act 1952 by Forward Market Commission

. SHAREKHANs strives for total commitment and fair dealing with its prospects and client through its services in an unwavering and exemplary manner.

COMPETITORS

These are the competitors of our company:

Motilal oswal securities India Bulls KARVY Religare Reliance Money Anand Rathi

VISION
To be the best retail broking brand in the Indian Equities market

MISSION
To educate and empower the individual investor to make better investment decisions through quality advice and superior service.

SSKI GROUP COMPANIES

SSKI Investor Services Ltd (Share khan) S.S. Kantilal Ishwarlal Securities SSKI Corporate Finance Idream Productions

SSKI AS AN INSTITUTIONAL BROKER

Serving Institutional Investors Domestic / International

In the Indian securities business since 1922. Our institutional Research team is rated as one of the best in the industry Rated 1st by Asia Money

Research Coverage

Amongst the widest coverages among broking houses in India. Total coverage exceeds some 100 stocks spread over 20 sectors Sector wise investment strategies are in place Stock ideas are presented from time to time, in tune with overall strategy. Active coverage of political developments, economy changes

HIGHLY RATED RESEARCH

Research team ranks very high in fund-manager surveys

Best Domestic Securities House

o o

Euromoney Survey July 1995 Euromoney Survey July 1996

Top ranked Domestic Brokerage House

o

Asiamoney Survey September 1994

o o o o

Asiamoney Survey September 1995 Asiamoney Survey September 1996 Asiamoney Survey October 1998 Asiamoney Survey October 2004

LIST OF KEY FOREIGN INSTITUTIONAL CLIENTS

Alliance Capital Management

Emerging Markets Investment Management

Edinburgh Fund Management Limited

Foreign & Colonial Emerging Markets

Goldman Sachs Investment Management

Government of Singapore Investment Corporation

Grantham, Mayo, Van Otterloo & Co.

Indosuez Asset Management

Jardine Fleming Investment Management Limited

LGT Asset Management

Lloyd George Investment Management

Martin Currie Investment Management Limited ETC.

SERVICES PROVIDED BY THE SHAREKHAN

1. Equities and Derivatives

Our Retail Equity Business caters to the needs of individual Indian and NonResident Indian (NRI) investors. Sharekhan offers broker assisted trade execution, automated online investing and access to all IPO's.

Through various types of brokerage accounts, Sharekhan offers the purchase and sale of securities, which includes Equity, Derivatives and Commodities Instruments listed on National Stock Exchange of India Ltd (NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX.

Sharekhan Classic account - Comprehensive services including

research and investing guidance for independent investors.

Sharekhan Fast trade

Sharekhan is dedicated to empower Active

Traders through personal service and advanced trading technology.

Sharekhan Speed trade plus - With an extensive range of investment

products, you will discover an unwavering commitment to helping you invest in India.

2. Sharekhan equity analysis

Building and maintaining your ideal portfolio demands objective, dependable information. Sharekhan Equity Analysis helps satisfy that need by rating stocks based on carefully selected, fact-based measures. And because we're not focused on investment banking, we don't have the same conflicts of interest as traditional brokerage firms. This objectivity is only one important difference in our ratings.

3. Depository Services
Sharekhan is a depository participant with the National Securities

Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialized shares. Sharekhan
performs clearing services for all securities transactions through its accounts. We offer depository services to create a seamless transaction platform execute trades through Sharekhan Securities and settle these transactions through the Sharekhan Depository Services. Sharekhan Depository Services is part of our value added services for our clients that create multiple interfaces with the client and provide for a solution that takes care of all your needs.

FUTUREPLANS

5,00,000+ retail customers being serviced through centralized call

centre / web solution.

90 branches/semi branches servicing affluent/aggressive traders

through highly skilled financial advisors.

550 independent investment managers/franchisees servicing

90000 highly valued clients.

Strong advisory role through Fundamental & technical research.

New initiatives - Portfolio Management Services & Commodities

trading

ON THE JOB TRAINING

Objective:The objective of the on the job training are

To open Demat a/c according to target given to me. To create awareness among the customers about the demat a/c & now to

open it.

To Undertake assignment/jobs along with the day-to-day functions of the

company.

To gain a deeper understanding of the work culture, deadlines, pressure

etc. of an organization.

Target: The target of the training is assigned us are: o o

To inward 6 demat a/c in 1 month (26th May to 25th June) stipend Rs.2500/To open 6 demat a/c in 2nd month (26 th June to 25th July) and stipend

received is Rs 2500/-

Strategy:The Strategies employed to achieve the proposal target are: -

Generate the leads by work in branch and talk to the target customer and

take their contact no. and address.

Call the customers on the given contact no. And take appointment and meet

them personally and convince them to open demat a/c.

o Arrange canopy and contact the customer.

Visit any corporate office and take where H.R. manager appointment and

given all detail about the schemes which is offer by the Share khan like open a/c free of cost.

Use the references of the existing customers.

Use personal contacts.

Achievements: -

In first month I have inward 3 demat a/c and earn stipend worth Rs.1475/In second month I opened 4 demat a/c, and earn stipend worth Rs.1750/-

RESEARCH METHODOLOGY
The study will be carried on in a proper planned and systematic manner. This methodology includes i. Familiarization with the Stock Exchanges ii. Observation and collection of data. iii. Analysis of data. iv. Conclusion and suggestion based on analysis.

OBJECTIVES OF THE STUDY

The objective of the project is to study the various factors that affect

the movement of stock prices in the Indian Stock markets. Analyzing the various factors would help us in understanding the stock markets in a better manner and hence ensuring the safety of our investments as well as maximizing returns on such investments

Types of Research are :1) 2) 3) Exploratory research Descriptive research Casual research

Research methodology used in this project is exploratory research. SOURCES OF DATA COLLECTION:

1) PRIMARY DATA 2) SECONDARY DATA The primary as well as the secondary sources will be used for collection of data. In primary source of data collection the interview schedule opinion survey will be used and in secondary source of data collection relevant records, books, diary and magazines were used.

INTRODUCTION
One of the major factors causing todays volatility is the unanimity in investors inclination towards new economy stocks and their shunning of old economy stocks. This has led to a huge polarization in the mar kets. Todays markets are characterized by large investment flows into companies with emerging businesses -- which typically have low floating stock -- leading to wild price swings. Volatility has gone up as actively managed funds churn their portfolios more often. Momentum investing by day traders and fund managers exacerbates this. Soon, stocks are not bought on the basis of their fundamental value but on the greater fool theory. Unrealistic investor expectations driven by the recent history of the boom in IT stocks is a cause for concern: now, the quality of the stock and fundamentals are ignored in a market characterized by daily assessment of profits and losses. Recent price history clouds the investors minds so much that they start treating that price as the real value of the stock and dont take a longer perspective of the company. The new economy stocks are a different breed. There is a lot of theme or concept investing taking place in these stocks now. It is difficult to quantify the future of the businesses and put a value to those. To discount all the future cash flows and put a value to the company is passe and PEG ratios based on

the next couple of years earnings is in. The near term high growth rate in these businesses is overshadowing the pricing of risk and technological obsolescence for a particular company. Market volatility is a sign that investors are unsure of how to value these stocks. In the minds of investors, there is a battle going on between this great new paradigm and the valuations of the stocks. In such a scenario, mood swings between hope and fear cause volatility. The volatility in new economy stocks reflects systemic changes taking place in the underlying businesses. In the boardrooms of companies, long gone are the months of planning and debate on capital allocation, mergers/acquisitions and joint ventures. In the Internet age, a three-month delay can be the difference between success and failure. Also, we are now in an age when companies can think of becoming multinationals in a short span (e.g. Yahoo, Amazon), when established age old companies see their fortunes dip very fast (e.g. Britannica) and when companies can go boom and then come tumbling down in a couple of years (e.g. Netscape). When businesses are witnessing such rapid stratospheric booms and busts, it is natural to expect their stocks to be volatile. In times of extreme volatility, investments in diversified equity funds offer a hedge against stock specific risk. The regulator should leave the pricing of the stocks to markets and its play on fear and greed, but should come down heavily on rigging induced volatility. It should clamp down on insider trading and selective information leaks. Information dissemination when done timely and uniformly to all investors would bring in transparency and should help arrest volatility to some extent.

The margin requirement in the new economy stocks should be fixed at a high level, as investors will have to learn to live with high volatility in these stocks. All said and done, short term volatility in the stock markets is the friend of long term investor who understands value as it opens up for him opportunities for both entry and exit at his price levels.

Volatility in stock markets is a global phenomenon. More and more people are

getting lured by the phenomenal, albeit unsustainable, returns (especially in the long run), which some stocks have seen in the recent past. This is especially true of tech stocks. Even as I write this, markets world over have tumbled, with the dotcom and tech stock-plunge causing some panic among investors. There are as many as 10 million day traders in the US. While no such statistic is available for India, my guesstimate is that this number should be quite high given that close to 80 to 90 per cent of trades in the two main exchanges, BSE and NSE are carried forward or squared off respectively. This is a sign of the times, that get rich quick attitude presently in existence among the younger lot in India. The extreme volatility in the stock markets is certainly of concern. When the markets are in a bullish phase, investors blindly enter, like mice following the proverbial Pied Piper. When the markets start rapidly going down, the same investors exit in a hurry. More often than not, investors get their timing totally wrong, both on entry as well as on exit.

However careful one is, volatility cannot be eliminated totally. In fact healthy corrections both upward as well as downward on a periodic basis are good for the long-term development of any market. At the same time, it is the violent movements, either up or down that are not good for either the market or the psyche of the retail investor. In the long run, the only way the volatility can be brought down to some acceptable level is by effecting certain structural changes in the market. Some of them are as follows: One, privatize pension and provident funds and allow them to begin with, invest a small portion of their corpus (say five to 10 per cent) in the stock market. In the US, 401K Plans, which are akin to our provident funds, have been one of the major sources of regular supply of funds to the stock markets. They help to stabilize markets.

Two, privatize insurance as soon as possible; allow insurance companies to invest a larger percentage of their corpus in the stock markets. Both the insurance companies as well as the pension funds are long-term players and would bring in a lot more stability in the markets. While the speculators would continue to perform their role and certainly assist in price discovery, FIIs will also continue to be important players, given the sheer size of funds at their command. Despite the growing size of the domestic mutual funds, neither those, nor FIIs can mobilize the kind of funds that can be mobilized by long term players like insurance and pension funds. Three allow institutions, banks and mutual funds to participate in badla financing. Four introduce as soon as possible index-based futures; after the initial teething period and once the index based futures market stabilizes, consider doing away with badla. Once the index and futures market is stabilized, serious thought should be given to uniform settlement across the stock exchanges. Once these reforms take hold, futures markets are stabilized, and then rolling settlement should be considered and phased in, for more and more scrips.

In the immediate future, thought should be given to reducing the eight per cent circuit filter presently in operation on a scrip wise basis. Once the index and futures markets truly develop, the circuit filter should be looked at for the market as a whole and not at a scrip level.

ABOUT BOMBAY STOCK EXCHANGE (BSE)

INTRODUCTION
The Stock Exchange, Mumbai, which was established in 1875 as "The

Native Share and Stockbrokers Association" (a voluntary nonprofit making association), has evolved over the years into its present status as the premier Stock Exchange in the country. It may be noted that the Stock Exchange is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was founded in 1878. The Stock Exchange, Mumbai (BSE) is generally referred to as the Gateway to the capital market in India. It is a lynchpin of the Indian Capital market. Its governing board and administration are keenly aware of the future needs of the exchange to maintain its lead role. As Indian economy is opening up, the Exchange has brought its operations at par with international standards. It is poised to take advantage of changes in Indian economic deregulation to expand the market and make the security market, in India, more transparent and more liquid. However, the objectives and the role of the Stock Exchange, Mumbai has remained the same as enunciated by our founding fathers and given to us as a mandate in 1887 through the charter. These objectives are: 1. To safeguard the interest of investing public having dealings on the

Exchange and the members. 2. To establish and promote honorable and just practices in securities

transactions. 3. To promote, develop and maintain a well-regulated market for

dealing in securities.

4.

To promote industrial developments in the country through efficient

resource mobilization by way of investment in corporate securities. The Exchange while providing an efficient market also upholds the interests of the investors and ensures redressal of their grievances, whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs. A Governing Board comprising of 9 elected directors (one third of them retire every year by rotation), an Executive Director, three Government nominees, a Reserve Bank of India nominee and five public representatives, is the apex body, which regulates the Exchange and decides its policies. The Governing Board following the election of directors annually elects a President, Vice-President and an Honorary Treasurer from among the elected directors. The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange. The Exchange has obtained permission from Securities and Exchange Board of India (SEBI) for expansion of its BSE-On-Line-Trading (BOLT) network to locations outside Mumbai. In terms of the permission granted by SEBI, the members of the Exchange are free to install their trading terminals to cities where there are no Stock Exchanges. However, at centres where the other Exchanges are located, the Exchange is required to sign a Memorandum of Understanding with these Exchanges permitting it to install the BOLT terminals in their jurisdictional areas. The expansion of BOLT network was inaugurated by the then Finance Minister, Government of India, Shri P. Chidambaram on August 30, 1997. The Exchange has signed Memorandum of Understanding with eleven Stock Exchanges, viz., Calcutta, Pune, Ahmedabad, Saurashtra-Kutch (Rajkot), Madhya Pradesh, Vadodara, Bhubaneshwar and Magadh (i.e., Patna), Jaipur, Coimbatore & Chennai (Madras) to provide BOLT connections to the

members of these Exchanges after obtaining necessary clearance from SEBI. The BOLT network has been expanded to centres outside Mumbai and covers 227 centres having 672 VSATs (Very Small Aperture Terminals) and 949 TWSs (Trader Work Stations) as on August 31, 1999. Of these, 595 VSATs and 807 TWSs respectively are installed outside Mumbai. Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporative entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, the trading rights and ownership rights have been delinked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organisation structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The Managing Director and a management team of professionals manage the day-to-day operations of the Exchange. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During

the year 2005-2006, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

LISTING OF SECURITIES
Listing means admission of the securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi-governmental and other financial

institutions/corporations, municipalities, etc. The objectives of listing are mainly to:

Provide liquidity to securities; Mobilize savings for economic development; Protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of the Exchange. A company intending to have its securities listed on the Exchange has to comply with the listing requirements prescribed by the Exchange, which are as under:

[I] New Companies

(A)Minimum Capital: New companies can be listed on the Exchange, if

their Issued & Subscribed Equity Capital after the public issue, is Rs.5 crores and above.

(B)Minimum Public Offer: As per Rule 19(2) (b) of the Securities

Contracts (Regulation) Rules, 1957, securities of a company can be listed on a Stock Exchange only when at least 25% of each class or kind of securities is offered to the public for subscription. For this purpose, the term "offered to the public" means only the portion offered to the public and does not include reservations of securities on firm or competitive basis. SEBI may, however, relax this condition on the basis of recommendations of stock exchange(s), only in respect of a Government company defined under Section 617 of the Companies Act, 1956.

[II] Companies listed on other stock exchanges

The companies listed on other Stock Exchanges and seeking listing on this Exchange are required to fulfill the following criteria:

Minimum Issued Equity Capital of Rs.3 crores to Rs.10 crores; Profit track record for at least three years; Minimum Market Capitalisation of Rs.20 Crores, based on average price of

last six months;

Trading for a minimum 50% of the total trading days during the same six

months on any stock exchange;

Minimum average volume traded per day during the last three complete

months should be 500 shares and minimum 5 trades per day;

25% of the issued capital should be with public (including body corporates)

and minimum 15 shareholders per Rs. 1 lakh of capital in the public category.

[III] Companies delisted by this Exchange seeking relisting on this Exchange

The companies delisted by this Exchange and seeking relisting are required to have a minimum Issued & Subscribed Equity Capital of Rs.10 crores

"Z" Group
The Exchange has introduced a new category called "Z Group" from July 1999 for companies who have not complied with and are in breach of provisions of the Listing Agreement. The numbers of companies placed under this group as of August 31, 1999 are 293.

One Window Clearance

Since April 1997, the Exchange has introduced the concept of "One Window Clearance" for listing of public issue of securities of companies, by allocating the companies public issues alphabetically amongst the Exchange officials. A company is served by one official of the Listing Department during the entire process of listing of its securities, commencing from approval of its Memorandum and Articles of Association upto granting of trading permission for its securities and release of 1% security deposit. The number of companies listed at the Exchange as on August 31, 1999 was 5852. This is the highest number among the Stock Exchanges in the country.

TRADING
The Exchange has switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE On Line Trading) System. This system, which is both order and quote driven, was commissioned on March 14, 1995. It facilitates more efficient processing, automatic order matching and faster execution of trades. Above all, the system is more transparent. The members now enter orders/quotes on their Trader Work Stations (TWSs) in their offices instead of assembling in the trading ring.

The scrips traded on the Exchange have been classified into A, B 1, B2, C F and Z group. The number of scrips listed on the Exchange under A, B 1 and B2 groups which represent the equity segments as on August 1999 was 149, 1116 and 4740 respectively. The F group represents the debt market (fixed income securities) segment wherein 650 securities were listed as at the end of August 1999. The 'Z group comprises of 293 scrips as of August 1999. The C group covers the odd lot securities in A, B1 & B2 groups and Rights renunciations. The Stock Exchange, Mumbai, is the only Stock Exchange in the country to provide a facility of on-line trading in odd lot securities and Rights renunciations. This facility of trading in odd lots of securities and Rights renunciations not only offers an exit route to investors to dispose of their odd lot of securities but also provides them an opportunity to consolidate their securities into market lots. Trading in this segment covers all the scrips listed in the equity segment. The trading cycle for all these groups of securities is weekly. The trading cycle for A, B1, B2 and C group securities representing the physical segment is from Monday to Friday and that for F group securities is from Thursday to Wednesday. The transactions in A group scripts are allowed to be carried forward from one settlement to another settlement subject to a maximum of 75 days from the date of original transaction. The Stock Exchange, Mumbai is the first Exchange in the country to provide the facility of carry-forward of outstanding positions in A group scrips. The trading session for carry forward of transactions from one settlement to another is conducted on Saturdays, i.e., at the end of every trading cycle in the physical segment. Trading on the BOLT system is conducted from Monday to Friday between 10:00 a.m. and 3:30 p.m. while the carry-forward session for A group securities is conducted on Saturdays between 10:00 a.m. and 12:30 p.m.

The Information Systems Department of the Exchange generates the following statements, which can be downloaded by the members in their back offices on a daily basis: c. Statements giving details of the daily transactions entered into by the

members. d. Statements giving details of margins payable by the members in

respect of the trades executed by them. The members are allowed to enter into transactions on behalf of their Institutional clients, viz., Scheduled Commercial Banks, Indian Financial Institutions (IFIs) & Foreign Institutional Investors (FIIs) and Mutual Funds registered with SEBI. The settlement of the trades (money and securities) done on behalf of the Institutions may be either through the member himself or through a SEBI registered Custodian appointed by an Institution. In case the delivery/payment is to be given or taken by a Custodian on behalf of an Institution, the former has to confirm the trade done by a member. For this purpose, the Custodians have been admitted as members of the Clearing House. In case the Custodian does not confirm an institutional transaction, the liability for pay-in of funds or securities devolves on the concerned member.

SETTLEMENT AND CLEARING

Pay-in and Pay-out for "A, B1, B2 & C group of securities The trades done by the members during the weekly trading period from Monday to Friday are settled by payment of money and delivery of securities in the following week. All deliveries of securities are required to be routed through the Clearing House, except for certain off-market transactions, which, although are required to be reported to the Exchange, may be settled directly between the members concerned. The Information Systems Department of the Exchange nets off all deliverable trades (purchases and sales in each scrip) done by a member during a

settlement and generates delivery/receive orders and money statements which are downloaded by the members in their back offices. The delivery orders provide information like scrip, quantity and the name of the receiving member to whom the securities are to be delivered through the Clearing House. The Money Statement provides details of payments/receipts for the settlement. Earlier the members were required to submit along with the balance sheet (Form 31-A) which includes the details of Money Statement, margins payable/receivable, and other credits/debits arising out of auction for shortages, objections, bad delivery, etc., a cheque /draft depending on whether the settlement liability is a payable or receivable position on Thursday, i.e., pay-in day. However, with effect from December 22, 1997 (i.e., Sett.No.39/97-98), the bank accounts of members maintained with Bank of India, Stock Exchange Branch, the only clearing bank at that time, were directly debited through computerized posting on the pay-in day for their settlement dues. The list of clearing banks has since been expanded to include HDFC Bank Ltd., Global Trust Bank Ltd. and Standard Chartered Bank. Thus, the members are no longer required to submit physical Form 31A and cheque/draft, as was the earlier practice. The securities, as per delivery orders issued by the Exchange, are to be delivered in the Clearing House on the day designated for pay-in, i.e., on Wednesday and Thursday as per prescribed time slots upto 1:00 p.m. No late delivery of shares is permitted. Members have to deliver the securities in special closed pouches issued by the Exchange along with the relevant details (distinctive numbers, scrip code, quantity, and receiving member) on a floppy. The data submitted by the members on floppies is matched against the master file data on the Clearing House computer systems. If there are no discrepancies, then a scroll number is generated and a scroll slip is issued. The members then submit the securities at the receiving counter. The Clearing House personnel arrange and tally the securities received against the receiving member wise report generated on the Pay-in day. Once this

reconciliation is complete, the bank accounts of members having pay-in positions are debited on Thursday. This procedure is called Pay-in. The Receiving Members collect securities on Friday and the accounts of the members having payout are credited on Saturday. This is referred to as Payout. Auction is conducted for those securities which members fail to deliver/short deliver during the Pay-in. In case the securities are not received in an auction, the positions are closed out as per the closeout rate fixed by the Exchange in accordance with the prescribed rules. The close out rate is calculated as the highest rate of the scrip recorded in the settlement in which the trade was executed or in the subsequent settlement upto the day prior to the day of auction or 20% above the closing price on the day prior to the day of auction, whichever is higher. The following table summarizes the steps in the trading and settlement cycle for "A+B1, B2& C group securities:

DAY
Monday to Friday (Monday is the 1
st

ACTIVITY
Trading BOLT daily downloading of statement day on and

and Friday is the last day trading) of

showing details of

transactions and margin

statement, at the each day. Saturday Carry end of

trading

Forward Session A (for Group

Securities) and downloading of money

statement. Monday Marking mode delivery physical demat Wednesday Pay-in physical securities. Thursday Delivery securities the of in of the of or

Clearing

House as per prescribed time upto p.m. Debiting members bank accounts having payable position 5:00 p.m. at slots 1:00 only. of

Reconciliation of securities

delivered and amounts claimed. Friday Pay-out (Physical securities only) Saturday Funds out pay-

If a transaction is entered on the first day of the settlement, i.e., Monday, the same will be settled on the 8th working day excluding the day of transaction. However, if the same is done on the last day of the settlement, i.e., Friday, it will be settled on the 4th working day excluding the day of transaction. The trading and settlement cycle for "F" group, i.e., Debt Market is indicated below:

DAY
Thursday

ACTIVITY
First day of Trading

Wednesday

Last day of Trading

Thursday

Issue Delivery Orders, Money

of

statements Friday Debiting of

the members bank accounts at 10:30 a.m. Payout securities from 4.30 of

p.m. to 5.30 p.m. and

crediting the bank

accounts of members with payout.

The settlement schedules for various groups of securities have been strictly adhered to by the Exchange and there has been no case of clubbing of settlements or postponement of pay-in and pay-out during the last over three years. The Exchange is also maintaining a database of fake/forged/stolen securities with the Clearing House so that distinctive numbers submitted by members on delivery may be matched against the database to weed out bad paper from circulation.

Introduction of the Demat Segment

The Exchange has commenced trading in the Dematerialized (Demat) segment with effect from December 29, 1997 where there is no physical delivery of securities as in the physical segment. Trading in the Demat segment is on a Rolling Settlement basis (T+5) where T stands for Trade Day. The pay-in and payout for the transactions in this segment are both conducted on a single day. The Pay-in & Pay-out for transactions executed on Monday is conducted on the following Monday, i.e., corresponding day in the following week. Auction session for shortages in demat segment is conducted on BOLT on the day after pay-in/pay-out. The pay-in / pay-out (money part) takes place through computerized posting of debits and credits in the members bank accounts as in the case of physical segment. With effect from April 6, 1998, deliveries in the demat mode are permitted in the physical segment. This is so because sellers are allowed to give delivery in demat or electronic form. As of today, this is applicable to 278 scrips. As such, a break-up session is scheduled every Monday where members may mark the mode of delivery, i.e., physical or demat. They, however, have an option to change the mode of delivery till the pay-in day, i.e., Thursday. SEBI has directed the stock exchanges in January 1998 that all the trades done by institutional investors, viz., domestic financial institutions, banks, mutual funds, FIIs and overseas corporate bodies in certain select scrips should be compulsorily settled in dematerialized form. This list has been expanded by SEBI from time to time and as on -required to be compulsorily settled in dematerialized form. 29 more scripts have been specified for compulsory demat trading for institutional investors with effect from April 15, 1999 making the total scrips in demat form for institutional investors to 143. Further, under directions from SEBI, trades in 12 and 19 scrips are to be compulsorily settled by all investors in dematerialized form with effect from January 4, 1999 and February 15, 1999 respectively. Further, trades in another 33 scrips and 40 scrips are to be compulsorily settled in demat form

by all investors with effect from April 5 & May 31, 1999 respectively. Thus, as of now, trades in 104 scrips are to be compulsorily settled by all investors in dematerialized form.

ABOUT NATIONAL STOCK EXCHANGE (NSE)

THE ORGANISATION
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.

NSE Milestones

November 1992
April 1993

Incorporation

Recognition as a stock exchange

May 1993

Formulation business plan

of

June 1994

Wholesale Market goes live

Debt

segment

November 1994

Capital (Equities) segment live

Market

goes

March 1995

Establishment of Investor Grievance Cell

April 1995

Establishment of NSCCL, the first Clearing Corporation

June 1995

Introduction centralized insurance for all

of

cover trading

members July 1995 Establishment of Investor Protection Fund October 1995 Became stock largest

exchange

in the country

April 1996

Commencement of clearing and settlement NSCCL by

April 1996

Launch of S&P CNX Nifty

June 1996

Establishment of Settlement Guarantee Fund

November 1996

Setting National Securities

up

of

Depository Limited, depository India, first in co-

promoted by NSE November 1996 Best award IT Usage by

Computer Society of India December 1996 Commencement of trading/settlement in dematerialized securities December 1996 December 1996 February 1997 Dataquest award for Top IT User Launch of CNX Nifty Junior Regional clearing facility goes live

November 1997

Best award

IT

Usage by

Computer Society of India May 1998 Promotion of joint venture, India

Index Services & Products Limited (IISL) May 1998 Launch of NSE's Web-site: www.nse.co.in July 1998 Launch of NSE's Certification Programme in

Financial Market August 1998 CYBER CORPORATE OF THE YEAR 1998 award February 1999 Launch Automated Lending Borrowing Mechanism April 1999 CHIP Web Award by magazine October 1999 January 2000 Setting NSE.IT Launch of NSE Research up of CHIP and of

Initiative February 2000 Commencement of Trading June 2000 Commencement of Derivatives (Index Internet

Trading Futures) September 2000

Launch of 'Zero Coupon Curve' Yield

November 2000

Launch of Broker Plaza by Dotex International, joint a

venture

between NSE.IT Ltd. and i-flex

Solutions Ltd. December 2000 June 2001 Commencement of WAP trading Commencement of trading in Index Options July 2001 Commencement of trading in on

Options Individual Securities November 2001

Commencement of trading in on

Futures Individual

Securities December 2001 Launch of NSE VaR Government Securities January 2002 Launch of for

Exchange Traded Funds (ETFs)

May 2002

NSE

wins

the

Wharton-Infosys Business Transformation Award in the

Organizationwide Transformation category October 2002 Launch of NSE Government Securities Index January 2003 Commencement of trading in Debt

Retail Market June 2003 Launch Interest Futures August 2003 Launch

of Rate

of

Futures & options in CNXIT Index June 2004 Launch of STP Interoperability

August 2005

Launch of NSEs electronic interface for listed companies

Feb. 2006

Launch

of

Futures & options in BANK Nifty

Index

CAPITAL MARKET (EQUITIES) SEGMENT Nu mb er of VS AT s 3 0 , 2 0 0 5 Nu mb er of citi es cov ere 3 0 , S e p 3 3 3 S e p 2 , 7 7 8

2 0 0 5

Set tle me nt Gu ara nte e Fu nd

M a r 3 1 , 2 0 0 5

R s . 2 , 0 8 5 . 2 5 c r o r e s

Inv est or Pro tec tio n Fu nd (C

S e p 3 0 , 2 0

R s . 1 5 6 . 8 1

M an d F& O)

0 5

c r o r e s

Nu mb er of sec uri tie s ava ila ble for tra din g Re cor d nu mb er of tra des

A u g 3 1 , 2 0 0 5

1 , 3 9 6

S e p 2 1 , 2 0 0

3 3 , 6 4 , 1 3 9

5 Re cor d dai ly tur no ver (qu ant ity) 2 0 0 5 Re cor d dai ly tur no ver (va lue ) 2 0 0 1 2 8 , F e b R s . 1 0 , 3 6 6 . 5 2 c r o r e s 0 5 , l a k h s J a n 6 , 7 6 5

Re cor d ma rke t ca pit aliz ati on

O c t 0 4 , 2 0 0 5

R s . 2 1 , 4 8 , 2 8 1 c r o r e s

Re cor d val ue of S& P CN X Nif ty Ind

O c t 0 5 , 2 0 0 5

2 6 6 9 . 2 0

ex Re cor d val ue of CN X Nif ty Ju nio r Ind ex Record Pay-in/Pay-out (Rolling Settlement): Fu nd s Pa yin/ Pa yout (N2 00 51 19) 2 0 0 5 * c r o 0 2 , A u g R s . 1 , 1 7 0 . 5 4 2 0 0 0 0 5 , O c t 5 4 4 3 . 4 0

r e s Se cur itie s Pa yin/ Pa yout (Va lue ) (N2 00 51 25) 2 0 0 5 * c r o r e s Se cur itie s Pa yin/ Pa yout (Q 2 0 0 l a 0 2 , f e b 1 , 6 3 3 . 4 2 0 2 , A u g R s . 2 , 9 8 3 . 5 3

ua nti ty) *Settlement Date

6 *

k h s

DERIVATIVES (F&O) SEGMENT No. of citi es cov ere d 3 1 , 2 0 0 5 Set tle me nt Gu ara nte e Fu nd 2 0 0 5 c 3 1 , M a r R s . 6 , 0 1 8 . 3 0 J u l 3 0 5

r o r e s Re cor d dai ly tur no ver (va lue ) 2 0 0 5 2 9 , S e p R s . 2 9 , 2 9 0 . 7 6 c r o r e s Re cor d nu mb er of tra 2 9 , S e p 5 , 4 1 , 7 4 8

des

2 0 0 5

WHOLESALE DEBT SEGMENT Nu mb er of sec uri tie s ava ila ble for tra din g Re cor d dai ly tur no ver (va lue 2 0 2 5 , A u g R s . 1 3 , 9 1 1 . 2 0 0 5 3 1 , A u g 3 , 1 1 9

0 3

5 7 c r o r e s

Facts and Figures

Developments on the Exchange

NSE and NSCCL went live with the inaugural session for Automatic Lending and Borrowing

Mechanism (ALBM) for lending and borrowing of securities on February 10,1999. This is the first time an Indian agency approved by SEBI will be conducting the securities lending & borrowing transactions based on international practices.

Membership

890 trading members on the Capital Market segment, of which around 86%

account for corporates and the remaining are individuals and firms.

Out of these 890 trading members, 89 trading members are also members

of Wholesale Debt Market segment, all of which are corporates and there are 7 trading members excclusively on Wholesale Debt Market Segment.

Geographic Distribution

Over 6839 trading terminals given to the members as on November 25,

1999

Over 2342 VSAT's across the country with a 24 hour Network monitoring

system in over 291 cities as of November 01, 1999.

Future Plans Expansion

The Capital Market segment of the Exchange became operational in November 1994.The entire turnover accounted from Mumbai. After stabilizing operations in Mumbai, NSE expanded its operations to other cities. The turnover from Mumbai accounts for 43%, Delhi accounts for 19%, Calcutta accounts for 11% and 28% from other centres. NSE will add more terminals in cities where it already has presence to provide better services to investors. The satellite hub and computer equipment for the disaster recovery site at Pune has been procured, installed and tested for proper operations. A detailed Business Continuity Plan (BCP) has been worked out to put the disaster recovery site for live operations. The back-up site of the Exchange at Pune will be made operational soon. This facility is in line with international practices and the NSE will be able to commence normal business operations within a very short time frame should a disaster occur. In keeping with the fast changing scenario in the Capital Markets, NSE has chalked out plans for the various business segments, some of which are.

Initial Public Offerings

Initial Public Offerings in India have been typically fixed price offers. A major problem with such fixed price offerings has been the information asymmetries between the issuers and the investors. To revive the primary market, NSE is proposing to provide a facility for conducting primary issues for Initial Public Offers (IPOs), subsequent issues by companies, private placements as well

as book building through screen based automated trading system. The advantages of this system will be on-line issue of securities thereby reducing the cost of issue of securities and an efficient retail distribution network among others.

Retail Debt Market

Fixed income securities such as debentures are an ideal investment avenue for risk adverse investors. It provides a fixed and regular income with safety of capital. The deregulation of interest rates has led to borrowings by the Government, Corporates and Institutions at market-determined rates. This has enabled retail investors to invest in fixed income securities particularly Corporate and Institutional bonds in favourable terms vis a vis other investment opportunities. With a view to providing liquidity to these instruments, the Exchange plans to start a retail debt segment to cater to the growing demands of the investors in the debt segment. Debentures are presently traded on the Capital Market (CM) and the Wholesale Debt Market (WDM) segment of the Exchange. However, as WDM segment continues to be wholesale in nature and CM segment focuses on equity, there was a need for a separate market for debentures. A separate RDM trading system would be developed for the same. The securities traded on the Retail Debt Market segment would comprise of Corporate Debentures and Institutional Bonds. Members of the Exchange from all the NSE centres would be eligible to trade on the RDM system. The National Securities Clearing Corporation Ltd. (NSCCL) would settle the trades done on the RDM segment on a net basis. The NSCCL would also extend settlement guarantee for trades done on NSE.

Derivatives

As soon as regulatory approvals are obtained, NSE plans to launch a futures and options segment. NSE initially plans to launch trading of futures and options on Nifty, an index that is uniquely suited to the demands of index-based products. The Exchange will subsequently initiate trading in options on individual stocks and select securities. The Exchange also has plans to launch fixed income derivatives. The Clearing Corporation will guarantee settlement through a separate settlement fund. There will be an equally focussed margin and risk management system in place to monitor and manage the clearing and settlement of the derivatives segment

OPPORTUNITIES AVAILABLE FOR FOREIGN INVESTORS

Direct Investment
Foreign companies are now permitted to have a majority stake in their Indian affiliates except in a few restricted industries. In certain specific industries, foreigners can even have holding upto 100 percent.

Investment through Stock Exchanges

Foreign Institutional Investors (FII) upon registration with the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are allowed to operate in Indian stock exchanges subject to the guidelines issued for the purpose by SEBI. Important requirements under the guidelines are as under:

5.

Portfolio investment in primary or secondary markets will be subject

to a ceiling of 30 percent of issued share capital for the total holding of all registered FII's. In any one company an FII holding is subject to a ceiling of 10 percent of the total issued capital. However, in applying the ceiling of 30 percent the following are excluded:

Foreign investment under a financial collaboration, which is, permitted upto

51 percent in all priority areas.

Investment by FII's through offshore single/regional funds, GDR's and euro

convertibles. 2 Disinvestment is allowed through a broker of a Stock Exchange. 3 A registered FII is required to buy or sell only for delivery. It is not allowed to offset a deal. It is also not allowed to sell short.

Investment in Euro Issues/Mutual Funds floated overseas

Foreign investors can invest in Euro issues of Indian companies and in Indiaspecific funds floated abroad.

Broking Business
Foreign brokers upon registration with the SEBI are now allowed to route the business of registered FIIs. Guidelines for the purpose have been issued by SEBI.

Asset Management Companies / Merchant Banking

Foreign participation in Asset Management Companies and Merchant Banking Companies is permitted.

An overview of the factors

We all want to make money in the stock market. We do so by selling stock at a price higher than what we buy it for. It makes sense, then, that to make money in the stock market; we need to understand what causes prices to change. By having an appreciation for the things that motivate stock price change, we can be better at anticipating the direction and velocity of price moves.

What is Price?
To begin, we must first understand what price is. Financial theorists define stock price as the present value of all future earnings expectations for the company, divided by its number of shares outstanding. What this means is that the earning capacity of the company is what defines price. Often, companies can get significant value out of a relatively small investment in assets because the ability for those assets to make money is significant. Even companies that lose money today can have a high share price because price is based on the future earnings of the company. No enterprise is in business to lose money, so the expectation is that every business will make money some day. So long as there is the potential for future revenue streams to shareholders, there will be a price that someone is willing to pay for the shares. The earnings that a company could make in the future, the growth that the company could realize and the time to the realization of those goals are all factors, which affect the estimate that the market makes on the earnings potential of the company.

The Market Mechanism

The value of publicly traded shares is liquidity. Publicly traded companies are worth more than private ones simply because there is greater access to buyers and sellers, and market efficiency can better determine share price. The stock market provides value to any company that chooses to list its shares because the company gains liquidity. In a theoretical sense, any time someone buys the shares of a company in the market, they are effectively stating that they believe the shares of the company are undervalued. The fact that they are buying implies a belief and expectation that the shares will increase in value in the future. At the same time, the person who is selling the shares is expressing the opposite belief. By selling, they imply that the stock is overvalued and the expectation that the stock will go lower in the future. In this way, the stock market is forum for debate on what the value of the company and its shares is.

What Affects Price?

There are four main factors that cause movements in stock price:

New information Uncertainty Psychological Factors Fear Greed Supply and Demand

o o

Limitation:In On the job training when we try to open demat a/c some problem that we face it this is some limitation:

Some time customer doesnt know about demat a/c and how to the process Some customer compare Share khan brokerage rate to another companys

is done so we need to gives more explanations to customer.

brokerage.

Some time old or existing customer complains Share khan facilities. Unawareness about the allotted area for survey Lack of cooperation from the employees of other companies : During the

visit to the area of the project the customers were not co-operative. They were engrossed in their work and could hardly spare much time for detailed discussions.

Customers dont have trust in private companies. To get contact numbers of individual is a difficult task.

Even after getting contact numbers of individuals it is somewhat difficult to

make them interested towards different schemes and get the next appointment.

OBJECTIVE

To know the insights of stock market To analyze different services offered by Sharekhan as Depository

Participant

To understand the problem faced by the existing clients and find ways to

solve their queries

To convince them about how Sharekhan services out score their rivals

METHODOLOGY
My training includes the following stages:

In the first phase we are trained and they taught us different things about

capital market as well as share market.

After that they conduct a mock viva & asked about the real life problems

faced by the customers and our understanding with the services offered by Sharekhan.

I got practical understanding of the services by the seniors.

They provide leads and I have tried converting them into clients.

Providing them live information about stock trading.

Understanding of technical as well as fundamental research reports.

Help company in its promotional activities, as company is an expansion

mode.

ACCOUNT OPENING
The investor can open an account with any depository participant of NSDL. An investor may open an account with several DPs or he may open several accounts with a single DP. There are several DPs offering various depositoryrelated services. Each DP is free to fix its own fee structure. Investors have the freedom to choose a DP based on criteria like convenience, comfort, service levels, safety, reputation and charges . After exercising this choice, the investor has to enter into an agreement with the DP. The form and contents of this agreement are specified by the business rules of NSDL

1. TYPE OF ACCOUNT

Type of depository account depends on the operations to be performed. There are three types of Demat accounts, which can be opened with a depository participant viz.

a. b.
c.

Beneficiary Account Clearing Member Account and Intermediary Account.

2. DOCUMENT FOR VERIFICATION

For the purpose of verification, all investors have to submit the following documents along with the prescribed account opening form.

2.1 PROOF OF IDENTITY

A beneficiary account must be opened only after obtaining a proof of identity of the applicant. The applicant's signature and photograph must be authenticated by an existing account holder or by the applicant's bank or after due verification made with the original of the applicant's

Valid passport, Voter ID, driving license PAN card with photograph; And further,

2.2 PROOF OF ADDRESS

The account opening form should be supported with proof of address such as

Verified copies of ration card Passport Voter ID PAN card Driving license Bank passbook.

An authorized official of the Participant, under his signature, shall verify the original documents. In case any account holder fails to produce the original documents for verification within the aforesaid period of 30 days, it must be immediately brought to the notice of NSDL.

Failure to produce the original documents within the prescribed time would invite appropriate action against such account holders, which could even include freezing of their accounts.

THE DEMAT PROCESS

A holder of depository eligible securities may get his physical holding converted into electronic form by making a request through the DP with whom he has his beneficiary account. 1. He company/issuer should have established connectivity with NSDL. Only after such connectivity is established, the securities of that company/issuer are recognized to be "available for dematerialization". 2. The holder of securities should have a beneficiary account in the same name as it appears on the security certificates to be dematerialized. 3 The request should be made in the prescribed dematerialization request form.

STEPS
1. Client/ Investor submit the DRF (Demat Request Form) and physical certificates to DP. DP checks whether the securities are available for demat. Client defaces the certificate by stamping Surrendered for Dematerialization. DP punches two holes on the name of the company and draws two parallel lines across the face of the certificate.

2. DP enters the demat request in his system to be sent to NSDL. DP dispatches the physical certificates along with the DRF to the R&T Agent. 3. NSDL records the details of the electronic request in the system and forwards the request to the R&T Agent. 4. R&T Agent, on receiving the physical documents and the electronic request, verifies and checks them. Once the R&T Agent is satisfied, dematerialization of the concerned securities is electronically confirmed to NSDL. 5. NSDL credits the dematerialized securities to the beneficiary account of the investor and intimates the DP electronically. The DP issues a statement of transaction to the client.

SHAREKHAN DEMAT ACCOUNT & ITS FACILITIES

Types of Account
o o o o o

Classic Account Fast Trade Speed Trade PMS

Commodities

FACILITIES
o o o o o o

Dial n Trade Service Off Hour Service Live JAVA Terminal Online Money Transfer from Bank a/c to Trading a/c Online Trading Research Reports

1. 2.

Pre Market High Noon

3. 4. 5. 6. 7. 8.

Post Market Investors Eye Eagles Eye Value line Stock Ideas Daring Derivatives.

Research

1.Fundamental 2.Technical

STEPS

FOLLOWED

TO

OPEN

AN

ACCOUNT

Step: 1 Get the Leads

Step: 2 Make calls

Step: 4 Attend the Appointment

Step: 3 Fix the Appointment

Step: 5 Documentations

Step: 6 Account Opened

Step: 8 Make the client traded

Step: 7 Trading Kit

FACTS

and

FINDINGS

Sharekhan has very low brokerage charges to the extent of .05% for

intraday.

Sharekhan provides highly authentic reports. It provides maximum comfort to the customers in terms of account opening

by providing personalized services.

It has networking with ten top leading banks for funds transfer. These are as

follows : 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. HDFC Bank Oriental Bank of Commerce IDBI Bank CITI Bank UTI Bank Indusind Bank Union Bank of India ICICI Bank Yes Bank Bank of India Centurion Bank Bank of Punjab

OPPORTUNITIES AVAILABLE FOR FOREIGN INVESTORS

Direct Investment
Foreign companies are now permitted to have a majority stake in their Indian affiliates except in a few restricted industries. In certain specific industries, foreigners can even have holding upto 100 percent.

Investment through Stock Exchanges

Foreign Institutional Investors (FII) upon registration with the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are allowed to operate in Indian stock exchanges subject to the guidelines issued for the purpose by SEBI. Important requirements under the guidelines are as under: Portfolio investment in primary or secondary markets will be subject to a ceiling of 30 percent of issued share capital for the total holding of all registered FII's. In any one company an FII holding is subject to a ceiling of 10 percent of the total issued capital. However, in applying the ceiling of 30 percent the following are excluded:

Foreign investment under a financial collaboration, which is, permitted upto

51 percent in all priority areas.

Investment by FII's through offshore single/regional funds, GDR's and euro

convertibles. 7 Disinvestment is allowed through a broker of a Stock Exchange.

8 A registered FII is required to buy or sell only for delivery. It is not allowed to offset a deal. It is also not allowed to sell short.

Investment in Euro Issues/Mutual Funds floated overseas

Foreign investors can invest in Euro issues of Indian companies and in Indiaspecific funds floated abroad.

Broking Business
Foreign brokers upon registration with the SEBI are now allowed to route the business of registered FIIs. Guidelines for the purpose have been issued by SEBI.

Asset Management Companies / Merchant Banking

Foreign participation in Asset Management Companies and Merchant Banking Companies is permitted.

An overview of the factors

We all want to make money in the stock market. We do so by selling stock at a price higher than what we buy it for. It makes sense, then, that to make money in the stock market; we need to understand what causes prices to

change. By having an appreciation for the things that motivate stock price change, we can be better at anticipating the direction and velocity of price moves.

What is Price?
To begin, we must first understand what price is. Financial theorists define stock price as the present value of all future earnings expectations for the company, divided by its number of shares outstanding. What this means is that the earning capacity of the company is what defines price. Often, companies can get significant value out of a relatively small investment in assets because the ability for those assets to make money is significant. Even companies that lose money today can have a high share price because price is based on the future earnings of the company. No enterprise is in business to lose money, so the expectation is that every business will make money some day. So long as there is the potential for future revenue streams to shareholders, there will be a price that someone is willing to pay for the shares. The earnings that a company could make in the future, the growth that the company could realize and the time to the realization of those goals are all factors, which affect the estimate that the market makes on the earnings potential of the company.

The Market Mechanism

The value of publicly traded shares is liquidity. Publicly traded companies are worth more than private ones simply because there is greater access to

buyers and sellers, and market efficiency can better determine share price. The stock market provides value to any company that chooses to list its shares because the company gains liquidity. In a theoretical sense, any time someone buys the shares of a company in the market, they are effectively stating that they believe the shares of the company are undervalued. The fact that they are buying implies a belief and expectation that the shares will increase in value in the future. At the same time, the person who is selling the shares is expressing the opposite belief. By selling, they imply that the stock is overvalued and the expectation that the stock will go lower in the future. In this way, the stock market is forum for debate on what the value of the company and its shares is.

What Affects Price?

There are four main factors that cause movements in stock price:

New information Uncertainty Psychological Factors Fear Greed Supply and Demand

o o

Information

If you read a financial textbook, you may find only this factor mentioned as the determinant of share price. Information is key, as it gives the market a reason to value a stock at a particular price level. The market will price a stock based on all information that the public is aware of. As new information comes into the public realm, the market will adjust prices up or down based on how the market perceives the information will affect the future earnings capacity of the company. It is important to understand how information flows from the company to the public. The public is supposed to learn about significant new information through the issuance of news. The reality is that the information usually makes it out before the news is released. Rumor plays a big part in the flow of information, particularly today when technology allows for the rapid and wide dissemination of information. Those close to a company often have access to privileged information that they act upon by buying and selling in the market. The ramification of this is that investors who wait for news to make investment decisions often get into stocks long after the information contained in the news has already been priced in. "Buy on rumor, and sell on news", is a saying that has grown popular because it is often the case that stocks move up in anticipation of positive news and then sell off when expectations have been answered by the news release. Technical analysis is very useful because it provides tools that allow investors to identify the signs that new information is being priced into a stock before news is released. Stocks that trade abnormally often do so because of significant new information, both positive and negative. In this way, technical analysis helps to reveal fundamental changes in the company before the broader market is aware of it.

Uncertainty
What a company will make in the future is far from certain. For this reason, we should expect stocks to bounce around a little bit because of the nervousness of the market about the future of the company. The uncertain future of the company will bring some volatility in share prices even during a period in which there is no new information. Companies that have established a performance record will tend to show less volatility as determined by uncertainty. General Motors, which is a wellestablished company with many years of revenues, will show less volatility than an upstart technology company that has not yet had an opportunity to establish a track record of revenues and earnings. Because of uncertainty, these stocks will trade differently and will present different kinds of trading opportunities.

Psychological Factors
Humans are behind the trading activity of the stock market. That means human characteristics are also factors in how share prices move. Understanding human psychology is extremely valuable when evaluating

investment

opportunities

because

human

psychology

creates

and

accentuates many of the opportunities that investors can capitalize on. For example, greed often causes stocks to go higher than they deserve to go. By deserve, I mean that they go higher than the present value of future earnings potential can justify. New information can cause a frenzy in the market that makes investors lose sight of rational valuation and simply buy the stock for fear of being left behind. This phenomenon is the basis for some great speculative bubbles that we have see in history. At the same time, fear motivated by negative information can cause everyone to rush for the exit door at once and take a stock, or entire markets, dramatically lower very quickly. Much of the selling pressure that prevails during market crashes is out of fear, not a rational thought process based on information. Fear and greed present incorrect valuations in the market that can exist for relatively short periods of time but long enough for smart investors to capitalize on. Emotion in the market can be viewed as an amplifier for new information. It can make moves more extreme than they should be. However, often the power to this amplifier is pulled and the stock moves back to where it should reside based on the information that is known about the company.

Supply and Demand

While popular stocks like Dell Computer or General Motors trade millions of shares every day, the majority of stocks that we can choose to invest in do not have such liquidity. As a result, stocks that trade smaller volumes of shares are subject to fluctuations because of supply and demand. If a large shareholder wants to sell a large number of shares into a market with weak

liquidity, that shareholder can dramatically move share price. The flip side is also true when a large buy order comes into a market that lacks sellers. Supply and demand can take the short-term balance out of the stock market and present opportunities for investors who have the patience to see that balance restored. Investors who can anticipate abnormal supply or demand variations can also capitalize.

The MSCI Index

Who is MSCI?
Morgan Stanley Capital International Inc. (MSCI) is a leading provider of global indices, benchmark related products and services to investors worldwide. MSCI indices are the most widely used benchmarks by global portfolio managers. According to a recent survey by Merrill Lynch/Gallup, over 90% of the North American and Asian international equity assets are benchmarked to the MSCI Indices. In Europe too, over 50% of the continental fund managers peg their portfolios to the MSCI Indices. Besides this, the MSCI has 1200 customers worldwide who use its indices as a benchmark. Hence any change in these indices has a significant impact on global capital markets.

What does it mean to be a benchmark?

How does the global fund manger decide where to invest his money and in what proportion (asset allocation as they call it)? He needs a benchmark that indicates the available investment opportunities around the globe. The benchmark is typically an Index. The most popular global indices are the MSCI indices. The MSCI Indices (there are a basket of them) consist of various stocks from individual countries. The global fund managers can then benchmark their performance in two ways. Either they can mimic the entire portfolio of stocks and hence peg the return to that of the index or they can choose some other stocks that can outperform the return of this index. Hence the portfolio manager's investment patterns are determined not just by how attractive the companies in your country are but also by the weight of your country in the MSCI index.

How is the index generated?

The MSCI equity indices are constructed in a consistent manner across all countries, encompassing a total of 23 developed markets and 28 emerging markets. This consistent approach to index construction ensures proper representation of the country's underlying industry distribution and market capitalization. It allows investors to accurately compare equity performance across markets, regions and sectors. In this process, MSCI tracks developments in almost 3000 companies (both listed and unlisted) around the globe. These equities account for over 99% of the world's total market capitalization. MSCI country equity indices are constructed using the following five steps:

Define the listed securities within each country.

Sort the securities into industry groups and select securities until 60% of

each industry's market cap.

Select the securities with good liquidity and free float. Avoid cross-ownership among stocks in the index. Apply the full market capitalization weight to each stock.

This method not only ensures the inclusion of every industry into the country's index, but also that they represent 60% of the market capitalization. In other words, one can determine the performance of a particular country's market by calculating the returns of the country's MSCI index. These 51 MSCI Country Indices are used to generate regional indices such as MSCI Europe Index, MSCI Emerging Market Index. Those global managers who want to expose their fund with a certain regional risk can use these regional indices. The MSCI world index is constructed by combining the MSCI country indices under certain weight ages. This world index is revised on a quarterly basis and therefore the country's weightage keeps shifting on the basis of expected performance of different MSCI Country Indices.

Powerful enough to affect country's capital market

It is very difficult for any global fund manager to track the whole world's equity market and optimize the profit of his portfolio. MSCI Indices cover almost 99% of the entire world's market capitalization; therefore almost 90% of the global managers from North America and Asia follow these indices for their investment decisions. Here's the clincher. If MSCI revises weightage of any country in the MSCI world index then most of the global managers react to it and shift their investments correspondingly. For example, if MSCI announces any dip in the India's weightage in the world index and increases say Thailand's weightage, then global managers will

decrease there exposure to Indian stocks and the money will shift to Thai stocks. Hence, these revisions of country's weight in the index can cause huge sums of capital to either flow in or out of a country changing the fortunes of its capital market.

Stock Auctions

Of auctions and their origin The word auction, in simple terms, implies a public sale in which property or items of merchandise are sold to the highest bidder. Did you know that auctions used to take place way back during the Homeric period in Greece? It was a means of transferring the ownership of slaves from one person to the other. This same underlying concept of auction has taken a more refined form in recent times - like the auction of commodities or the belongings of famous personalities. Have you ever been to an auction house like Christie or Sotheby's, where works of art are sold to the highest bidder in auction? Now, you are probably beginning to wonder what we are doing discussing auctions of slaves and commodities or art auction houses like Christie and Sotheby's here, in the investment jungle! Allow us to clarify that our intention is not to discuss art auctions per se, but auctions conducted on the bourses. Auctions are not conducted only to sell merchandise or works of art in big auction houses; they are also a common feature on stock exchanges.

Why conduct auctions in the stock market?

Auctions are conducted on the exchanges when, for some reason, shares (physical or demat) are not delivered to the exchange on time. Exchanges conduct auctions to penalize the party for defaulting on delivering the shares on time, and thereby to protect the sanctity of settlements. It is a necessary evil - imagine the chaos if the defaulting party went scot-free and delivered shares at its own free will. This would trigger a chain reaction of defaults. If the defaulting party fails to deliver the shares on time to the exchange, the exchange in turn is unable to deliver the shares to the party who purchased them. The purchasing party in turn might have already sold those shares before receiving them from the exchange and now it would be unable to deliver those shares on time. This vicious chain could go on and on. Therefore, it becomes imperative that auctions are held so that pay-in and payout of shares take place on time, in accordance with the settlement cycle of the respective exchanges.

Reasons for shares to go on auction

Shares come under the hammer when they have been either delivered short or found to be objectionable by the exchange. Based on the reasons why shares qualify for auction, they have been categorized into two types: 8. 9. Auction due to shortages Auction due to objection

Auction due to shortages

As has been discussed above, an auction due to shortages takes place when the delivering party fails to deliver its share on time to the exchange, thereby triggering the vicious chain reaction of the exchange being unable to deliver the shares on time to the purchasing party and purchasing party in turn being

unable to deliver shares on time if it has already sold it and so on... One of the common reasons why shares come under auction due to shortages is the confusion that arises about the delivery date of the shares, if they are going into the 'no delivery' period.

Auction due to objection

Physical shares go in for auctions not only if they are delivered short, but also if they are found to be objectionable and not rectified on time by the party concerned. There are many reasons why shares could come under objection. To list a few:

Transfer deed attached to the share certificate is out of date Details like distinctive number, folio number, certificate number, transferor

names etc are not filled or filled incorrectly on the transfer form attached with the share certificate

Witness stamp or signature on transfer deed is missing Signature of the transferor is missing Delivering broker's stamp is missing on the reverse of the transfer deed Stamp of the registrar of the company is missing

When a share is returned to the broker by the exchange as objection, the broker is liable to inform the client and get the objection rectified. If the party fails to rectify the objection within a stipulated time period, then the shares go for auction. The defaulting party is then penalized by having to bear the auction price.

Does one always suffer a big loss in an auction?

The defaulting party does suffer a loss when their shares go in for auction. Imagine the rate at which the auction would take place if the market is rising

and there is a great demand for the stock. The defaulting party would be required to pay for the difference between the higher auction price and the actual sale price of the stock. Even in the case of a falling market when stocks are taking a beating, the defaulting party does not stand to gain the difference in the auction price and the actual sale price. The defaulting party instead has to forgo the entire sale proceeds it had earned. Or even worse is the case when there are no participants in an auction. In such a case, the auction price is decided by the exchange. It varies with exchanges and is called the 'close-out' price.

How is the closeout price arrived at?

In three simple steps.

Steps one: The exchange decides upon a 'fixed' price and adds 20% to it.
Incidentally, the fixed price varies with exchanges. For the Bombay Stock Exchange the fixed price is the 'standard rate/ hawala rate' decided by the exchange. This standard rate is calculated on the last day of the settlement. It is the simple average of all the trades executed on that particular day. The National Stock Exchange, on the other hand, takes the closing price of the stock under auction as the fixed price. The closing price is arrived at by taking the weighted average of all the trades executed in the particular scrip in the last thirty minutes of the trading session.

Step two: The resulting price is then compared with the highest price for
the stock in the settlement in which the defaulting party sold the scrip.

Step three: The higher of the two prices, ie the settlement price and the
fixed price plus a 20% premium, is considered as the closeout price.

Which means if the fixed price decided by the exchange is higher than the settlement price, the settlement price is deemed as the closeout price. Alternatively, if the settlement price is higher than the fixed price, the stock is 'closed out' at the settlement price.

Understand things with Reliance

Let us understand this better with an example. Let us assume that a party has defaulted on shares of Reliance Industries (RIL). And his shares are up for auction on the BSE. The BSE 'fixes' the 'hawala' price for RIL at Rs320. And as per rule, it also adds 20% to the fixed price and arrives at the final price of Rs384. Let us make another assumption at this stage. That the highest price in the settlement in which the defaulting party had sold the stock was Rs400. Now, obviously, the closeout will take place at the settlement price of

Rs400, as it is higher than the fixed price (Rs384). Other side of the coin
What if the settlement had taken place at a price less than the fixed price of Rs384? What if it had taken place at, say, Rs305? Well, then the fixed price will be taken as the 'close-out' price as it is higher than the settlement price. And the stock will be auctioned at Rs384.

Management Perception
Revered investment analysts the world over have constantly drilled into our minds that it pays to be invested in companies whose managements are perceived to be focused and proactive. A good management always commands premium valuations for the stock. The logic is justified given the fact that the managements attitude towards the company d etermines the growth curve it takes. Lets test this reasoning and see whether the logic really holds good for Indian companies. For the study lets take some companies known for their reputed managements. The sample includes the likes of Infosys, HDFC, HDFC Bank, HLL, Hero Honda, Punjab Tractors and Dr. Reddy's.

HLL vs. contemporaries

FMCG major, Hindustan Lever (HLL) is a prime example of what management perception can do to the valuations of the stock. HLL has always commanded premium valuations not only because of its size, but its consistent good performance. Though another FMCG company, Nirma, too has put in good performance year after year, it still lags behind when it comes to valuations. Though Nirmas management is considered to be very focused on its business, it is HLLs management that is considered to be more pro -active between the two. HLLs management has continually expanded its top line by adding more products and businesses, either organically or inorganically. It spreads the companys risk.

M k t

R O E

P / e

. ( C a p . % )
( X )

( R s

m )
H L L 4 4 5 , 7 2 7 N i r m a G o d r 2 1 , 6 8 7 4 , 2 6 2 0 . 2 7 . 0 2 7 . 3 9 . 3 5 0 . 9 4 1 . 7

e j S o a p s

If you look at the valuation table, it looks as if Godrej Soaps is back with a bang. But this revival in fortunes of Godrej Soaps can also be attributed to a large extent on the right moves the companys management has been making in the last one year. The management has broken the company into two, to lend more focus to its FMCG business. The company has been repaying its debts in a bid to improve its profitability. All this has not gone unnoticed by the bourses. The valuations of the company have started to improve in the past couple of months, as the markets perceive the management to be on the right track.

Infosys vs contemporaries
Lets take a look at one company, which has now become synonymous with the Indian software revolution, Infosys. The company not only has been turning in good performances quarter on quarter, but is also at the forefront of management reporting. Infact, Infosys annual report was one of the first in its

kind in India that gave complete disclosure on the companys operations to its investors. This small act must have added tons of goodwill to its valuations. Since then, disclosures by companies in their annual reports and measures to improve relations with investors have touched new levels in Corporate India. This proactively and foresight has helped Infosys become one of the most valuable companies in the country, adding to shareholder wealth year after year.

M k t .

R O E

P / e (

( C a p . % )

X )

( R s

m )
I n f o s 4 2 8 , 2 5 3 4 . 3 1 4 9 . 8

y s S a t y a m V i s u a l s o f t S i l v e r l i n e

1 0 7 , 6 8 2 1 5 , 7 2 0

3 8 . 5

7 9 . 8

3 1 . 9

5 5 . 9

1 5 , 7 3 8

1 5 . 3

2 2 . 3

Hero Honda vs. contemporaries

In the two-wheeler segment, it is not for nothing that the Munjal family is revered. The familys motorcycle joint venture with Honda Inc, Japan , Hero Honda, redefined the shape of the two-wheeler industry in India. At a time when Bajaj Auto was the uncrowned king of this segment (read scooters), the Munjals had foresight to gauge a shift in consumer preferences towards motorcycles. For this, they were amply rewarded. Not only the company, Hero Honda, became the undisputed king of the two-wheeler segment but in the process created a lot of wealth for its investors. Till today, the companys distribution muscle coupled with its top of the line bikes, command the consumers as well the investors loyalty.

M k t .

R O E

P / e (

( C a p . % )

X )

( R s

m )
H e r o H o n d a B a j a j A u t o T V S 4 , 3 3 2 7 . 4 5 . 0 2 2 , 3 8 6 1 9 . 1 3 . 7 3 3 , 7 4 9 4 3 . 3 1 7 . 6

S u z u k i

CONCLUSION

Indian economy has been globalizes and the capital market has been linked to the international financial market. Foreign individuals and institutional investors have encouraged participating into it. So, there is a need for raising the Indian Capital market in to the international standards in terms of efficiency and transparency. One such measure is the passing out of the Depository Act during the year 1996. Dematerialization of securities and under this system is one of the major steps aimed at improving and modernizing the capital market and enhancing the levels of investors protection measures which aims at eliminating the bad deliveries and forgery of shares and expediting the transfer of shares. During this whole process of training I came to learn a lots of new thing regarding The demat-process, how it works & what is the future aspect of it. This part of the project is purely learning processes, which make me teach on the following:
o o o o o o o o

Concept of Tele-Marketing Concept of Financial Product Selling Customer Handling Day to day Fluctuation in Stock Market --- Why? Major Players in this field Potentiality of this market How to analyze the Research Report Finally, practical knowledge of Group Activity

So, to conclude I want to say that these 45 days of summer training is very much beneficial for me that enriches my knowledge at a greater level?

BIBLIOGRAPHY

Websites

http// nsdl.com http// nse.com http// bse.com http// investopedia.com http// google.com http// sharekhan.com

Magazines

Valueline, May 2007 July 2007 issues Business Standard, July 2007

Research Reports

Sharekhan research report

Book

Fundamental Statistics, by Goon, Gupta & Dasgupta, Vol. 2 Marketing Research, by Kotler

LIMITATIONS OF THE STUDY

The various limitations that will be faced while doing this project as follows:-

1. This study is limited to certain companies only. 2. As most of time the data will be collected from secondary sources, so up to a great extent accuracy of the conclusion will be depended on secondary data.

SIGNIFICANCE

OF

THE

STUDY

Investors want to get higher rate of returns at a lower risk. For this purpose he makes several investments strategies and market efficiency has an influence on the investments strategy of an investor, because if market is efficient, trying to pick up winners will be a waste of time. In efficient market there will be no undervalued securities offering than deserved expected returns, given their risk. On the other hand if markets are not efficient, excess returns can be made correctly picking the winners. For this purpose analysis will be carried out to test the efficiency level in Indian stock market using run test analysis and the auto correlation function.

FOCUS OF THE PROBLEM

An efficient market is one in which the market price of a securities is an unbiased estimate of its intrinsic value. Market efficiency does not imply that the market price equals intrinsic value at every point of time. All that it says that the errors in the market prices are unbiased. This means that the price can deviate from the intrinsic value but the deviations are random and uncorrelated with any observable variable. If the deviations of market price from intrinsic value are random. It is not possible to consistently identify over or undervalued securities. Market efficiency is defined in relation to information that is security prices. Fama suggested that it is useful to distinguished three levels of market efficiency, i.e. Weak, Semi strong and Strong. The focus of the problem will be to study of factors affecting the movements of stock prices in which prices reflect all information found in the record of past prices and volumes.

ANNXEURES
Small introduction.
I am a student bechelor of business

administration and I am doing the project on factor affecting movement of stock prices. Would you be willing to participate and answer a few question ? if YES go ahead

1, name 2, age 3,gender 4, address (office/Residential) 5, what are your educational qualifications? (please tick appropriate)
* 10 pass * graduate/ steam * post graduate ( specify)

6. what is your current occupation ? (please tick)

* salaried * self- employed * student (specify)

7 MANDATORY PARAMETER:- Telephone numbers

* office . *Residence,,,,,, *Mobile,,,,,,,,,,

8 MANDATORY PARAMETER:- Do you currently have an share of any company?

YES ,,,,,,,,,,, NO , ,,,,,,,,,,,