Capital Market in India with respect to BSE & NSESIP project report to be submitted in partial fulfillment of the requirements for the PGDM

By Nishant Seth20142032

Company Guide: Mr. B. Sanjeev

Post Graduate Diploma in Management ProgrammeUnder the guidance ofGaurav Sarin

DELHI SCHOOL OF BUSINESSNEW DELHI

ACKNOWLEDGEMENT

I wish to express my sincere gratitude to Mr. B. Sanjeev for giving me the opportunity to do my summer industrial training at his highly esteemed Organization.I am extremely thankful to my Faculty Guide Prof. Gaurav Sarin, Delhi School of Business to give me suggestions during my Training.I am also thankful to all others who helped me directly or indirectly towards the completion of my works. (NISHANT SETH)

DECLARATION

I hereby declare that this report on Capital Market in India with respect to BSE. I declare that this project is the result of my own effort and has not been submitted to any other institution for the award of any Degree or diploma.

CONTENTS S. NO. CONTENTSPAGE NO.

CHAPTER 1.CAPITAL MARKET5-13

1.1FACTORS AFFECTING CAPITAL MARKET14-16

1.2INVESTMENT17-20

1.3SECURITIES AND EXCHANGE BOARD OF INDIA21-23

1.4STOCK EXCHANGE24-26

1.5BOMBAY STOCK EXCHANGE27-28

1.6NATIONAL STOCK MARKET29

1.7LUDHIANA STOCK EXCHANGE30-35

CHAPTER 2.OBJECTIVE OF THE RESEARCH36

CHAPTER 3.RESEARCH METHODOLOGY37

3.1RESEARCH DESIGN37

3.2SAMPLIING SIZE AND GESIGN37

3.3DATA COLLECTION37

3.4AREA OF STUDY37

3.5ANALYSIS THE DATA38-51

3.6LIMITATIONS52

CHAPTER 4.RESULT AND DISCUSSION53

CHAPTER 5.SUGGESTIONS 54

CHAPTER 6.PREFERENCE55

CHAPTER 7.QUESTIONNAIRE56-57

CAPITAL MARKET

The capital market is the market for securities, where Companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year. A nation's capital market includes such financial institutions as banks, insurance companies, and stockexchanges that channel long-term investment funds to commercial andindustrial borrowers. Unlike the money market, on which lending is ordinarily short term, the capital market typically finances fixed investments like those in buildings and machinery.

Nature and Constituents: The capital market consists of number of individuals and institutions (including the government) that canalize the supply and demand for longterm capital and claims on capital. The stock exchange, commercial banks, co-operative banks, saving banks, development banks, insurance companies, investment trust or companies, etc., are important constituents of the capital markets. The capital market has three important Components, namely the suppliers of loanable funds, the borrowers and the Intermediaries who deal with the leaders on the one hand and the Borrowers on the other.

The Indian capital market is more than a century old. Its history goes back to 1875, when 22 brokers formed the Bombay Stock Exchange (BSE). Over the period, the Indian securities market has evolved continuously to become one o the most dynamic, modern, and efficient securities markets in Asia. Today, Indian market confirms to best international practices and standards both in terms of structure and in terms of operating efficiency .Indian securities markets are mainly governed by a) The Companys Act1956, b) the Securities Contracts (Regulation) Act 1956 (SCRA Act), and c) the Securities and Exchange Board of India (SEBI) Act, 1992. A brief background of these above regulations are given belowa) The Companies Act 1956 deals with issue, allotment and transfer of securities and various aspects relating to company management. It provides norms for disclosures in the public issues, regulations for underwriting, and the issues pertaining to use of premium and discount on various issues.b) SCRA provides regulations for direct and indirect control of stock exchanges with an aim to prevent undesirable transactions in securities. It provides regulatory jurisdiction to Central Government over stock exchanges, contracts in securities and listing of securities on stock exchanges.c) The SEBI Act empowers SEBI to protect the interest of investors in the securities market, to promote the development of securities market and to regulate the security market.The Indian securities market consists of primary (new issues) as well as secondary (stock) market in both equity and debt. The primary market provides the channel for sale of new securities, while the secondary market deals in trading of securities previously issued. The issuers of securities issue (create and sell) new securities in the primary market to raise funds for investment. They do so either through public issues or private placement. There are two major types of issuers who issue securities. The corporate entities issue mainly debt and equity instruments (shares, debentures, etc.), while the governments (central and state governments) issue debt securities (dated securities, treasury bills). The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risk and return. A variant of secondary market is the forward market, where securities are traded for future delivery and payment in the form of futures and options. The futures and options can be on individual stocks or basket of stocks like index. Two exchanges, namely National Stock Exchange (NSE) and the Stock Exchange, Mumbai (BSE) provide trading of derivatives in single stock futures, index futures, single stock options and index options. Derivatives trading commenced in India in June 2000In the beginning of the twentieth century, the industrial revolution was on the way in India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limited in 1907, an important stage in industrial advancement under Indian enterprise was reached.

There are two major indicators of Indian capital market- SENSEX & NIFTY:The Sensex is an "index". What is an index? An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE.If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE. Just in case you are confused, the BSE, is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock exchanges in the country. There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the country is done though the BSE & the NSE . Besides Sensex and the Nifty there are many other indexes. There is an index that gives you an idea about whether the mid-cap stocks go up and down. This is called the BSE Mid-cap Index. There are many other types of index.Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major source of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market but if we see the sensex & nifty graph there is a great variation.

Indian Financial Market consists of the following markets: Capital Market/ Securities Marketo Primary capital marketo Secondary capital market Debt MarketPrimary capital market- A market where new securities are bought and sold for the first time

Types of issues in Primary market Initial public offer (IPO) (in case of an unlisted company), Follow-on public offer (FPO), Rights offer such that securities are offered to existing shareholders, Preferential issue/ bonus issue/ QIB placement Composite issue, that is, mixture of a rights and public offer, or offer for sale (offer of securities by existing shareholders to the public for subscription).

Secondary Market: In the secondary market the investors buy / sell securities through stock exchanges. Trading of securities on stock exchange results in exchange of money and securities between the investors. Secondary market provides liquidity to the securities on the exchange(s) and this activity commences subsequent to the original issue. For example, having subscribed to the securities of a company, if one wishes to sell the same, it can be done through the secondary market. Similarly one can also buy the securities of a company from the secondary market. A stock exchange is the single most important institution in the secondary market for providing a platform to the investors for buying and selling of securities through its members. In other words, the stock exchange is the place where already issued securities of companies are bought and sold by investors. Thus, secondary market activity is different from the primary market in which the issuers issue securities directly to the investors. Traditionally, a stock exchange has been an association of its members or stock brokers, formed for the purpose of facilitating the buying and selling of securities by the public and institutions at large and regulating its day to day operations. Of late however, stock exchanges in India now operate with due recognition from Securities and Exchange Board of India (SEBI) / the Government of India under the Securities Contracts (Regulation) Act, 1956. The stock exchanges are either association of persons or are formed as companies. There are 24 recognized stock exchanges in India out of which one has not commenced its operations.Out of the 23 remaining stock exchanges, currently only on four stock exchanges, the trading volumes are recorded. Most of regional stock exchanges have formed subsidiary companies and obtained membership of Bombay Stock Exchange, (BSE) or National Stock Exchange (NSE) or both. Members of these stock exchanges are now working as sub-brokers of BSE / NSE brokers. Securities listed on the stock exchange(s) have the following advantages: The stock exchange(s) provides a fair market place. It enhances liquidity. Their price is determined fairly. There is continuous reporting of their prices. Full information is available on the companies. Rights of investors are protected.

Settlement cycles:Settlement is the process whereby the trader who has made purchases of scrip makes payment and the seller selling the scrip delivers the securities. This settlement process is carried out by Clearing Houses for the stock exchanges. The Clearing House acts like an intermediary in every transaction and acts as a seller to all buyers and buyer to all sellers.

Significance of Capital MarketsA well functioning stock market may help the development process in an economy through the following channels:1. Growth of savings,2. Efficient allocation of investment resources,3. Better utilization of the existing resources.In market economy like India, financial market institutions provide the avenue by which long-term savings are mobilized and channelled into investments. Confidence of the investors in the market is imperative for the growth and development of the market. For any stock market, the market Indices is the barometer of its performance and reflects theprevailing sentiments of the entire economy. Stock index is created to provide investors with the information regarding the average share price in the stock market. The ups and downs in the index represent the movement of the equity market. These indices need to represent the return obtained by typical portfolios in the country. Generally, the stock price of any company is vulnerable to three types of news: Company specific Industry specific Economy specificAn all share index includes stocks from all the sectors of the economy and thus cancels out the stock and sector specific news and events that affect stock prices, (law of portfolio diversification) and reflect the overall performance of the company/equity market and the news affecting it.The most important use of an equity market index is as a benchmark for a portfolio of stocks. All diversified portfolios, belonging either to retail investors or mutual funds, use the common stock index as a yardstick for their returns. Indices are useful in modern financial application of derivatives. Capital Market Instruments some of the capital market instruments are: Equity Preference shares Debenture/ Bonds ADRs/ GDRs Derivatives

SharesThe total capital of a company may be divided into small units called shares. For example, if the required capital of a company is US $5,00,000 and is divided into 50,000 units of US $10 each, each unit is called a share of face value US $10. A share may be of any face value depending upon the capital required and the number of shares into which it is divided. The holders of the shares are called share holders. The shares can be purchased or sold only in integral multiples. Equity shares signify ownership in a corporation and represent claim over the financial assets and earnings of the corporation. Shareholders enjoy voting rights and the right to receive dividends; however in case of liquidation they will receive residuals, after all the creditors of the company are settled in full. A company may invite investors to subscribe for the shares by the way of: Public issue through prospectus Tender/ book building process Offer for sale Placement method Rights issue

StocksThe word stock refers to the old English law tradition where a share in the capital of the company was not divided into shares of fixed denomination but was issued as one chunk. This concept is no more prevalent, but the word stock continues. The word joint stock companies also refers to this tradition.Debentures/ BondsThe term Debenture is derived from the Latin word debere which means to owe a debt. A debenture is an acknowledgment of debt, taken either from the public or a particular source. A debenture may be viewed as a loan, represented as marketable security. The word bond may be used interchangeably with debentures. Debt instruments with maturity more than 5 years are called bondsYieldsMost common method of calculating the yields on debt instrument is the yield to maturity method, the formula is as under: YTM = coupon rate + prorated discount / (face value + purchase price)/2Preference sharesPreference shares are different from ordinary equity shares. Preference share holders have the following preferential rights(i) The right to get a fixed rate of dividend before the payment of dividend to the equity holders.(ii) The right to get back their capital before the equity holders in case of winding up of the company.IPOConditions for IPO: (all conditions listed below to be satisfied) Net tangible assets of 3 crore in each of the preceding 3 full years, of which not more than 50% are held in monetary assets: Track record of distributable profits for 3 out of the immediately preceding 5 years: Net worth of 1 crore in each of the preceding three full years; Issue size of proposed issue + all previous issues made in the same financial year does not exceed 5 times its pre-issue net worth as per the audited balance sheet of the preceding financial year; In case of change of name within the last one year, 50% of the revenue for the preceding 1 full year earned by it from the activity indicated by the new name.

DerivativesA derivative picks a risk or volatility in a financial asset, transaction, market rate, or contingency, and creates a product the value of which will change as per changes in the underlying risk or volatility. The idea is that someone may either try to safeguard against such risk (hedging), or someone may take the risk, or may engage in a trade on the derivative, based on the view that they want to execute. The risk that a derivative intends to trade is called underlying. A derivative is a financial instrument, whose value depends on the values of basicunderlying variable. In the sense, derivatives is a financial instrument that offers return based on the return of some other underlying asset, i.e the return is derived from another instrument.The best way will be take examples of uncertainties and the derivatives that can be structured around the same. Stock prices are uncertain - Lot of forwards, options or futures contracts are based on movements in prices of individual stocks or groups of stocks. Prices of commodities are uncertain - There are forwards, futures and options on commodities. Interest rates are uncertain - There are interest rate swaps and futures. Foreign exchange rates are uncertain - There are exchange rate derivatives. Weather is uncertain - There are weather derivatives, and so on.

DERIVATIVES PRODUCTSSome significant derivatives that are of interest to us are depicted in the accompanying graph:Major types of derivatives

FUTURES, FORWARDS AND OPTIONSAn option is different from futures in several ways. At practical level, the option buyer faces an interesting situation. He pays for the options in full at the time it is purchased. After this, he only has an upside. There is no possibility of the options position generating any further losses to him. This is different from futures, where one is free to enter, but can generate huge losses. This characteristic makes options attractive to many market participants who trade occasionally, who cannot put in the time to closely monitor their futures position. Buying put options is like buying insurance. To buy a put option on Nifty is to buy insurance which reimburses the full amount to which Nifty drops below the strike price of the put option. This is attractive to traders, and to mutual funds creating guaranteed return products.

FORWARDSA forward contract is an agreement to buy or sell an asset on a specified date for a specified price. One of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date forthe same price, other contract details like delivery date, price and quantity are negotiated bilaterally by the parties to the contract. The forward contracts are normally traded outside the exchange.

FUTURESFutures contract is a standardized transaction taking place on the futuresexchange. Futures market was designed to solve the problems that exist in forward market. A futures contract is an agreement between two parties, to buy or sell an asset at a certain time in the future at a certain price, but unlike forward contracts, the futures contracts are standardized and exchange traded To facilitate liquidity in the futures contracts, the exchange specifies certain standard quantity and quality of the underlying instrument that can be delivered, and a standard time for such a settlement. Futures exchange has a division or subsidiary called a clearing house that performs the specific responsibilities of paying and collecting daily gains and losses as well as guaranteeing performance of one party to other. A futures' contract can be offset prior to maturity by entering into an equal and opposite transaction. The standardized items in a futures contract are: Quantity of the underlying Quality of the underlying The date and month of delivery The units of price quotation and minimum price change

OPTIONSAn option is a contract, or a provision of a contract, that gives one party (the option holder) the right, but not the obligation, to perform a specified transaction with another party (the option issuer or option writer) according to the specified terms. The owner of a property might sell another party an option to purchase the property any time during the next three months at a specified price. For every buyer of an option there must be a seller. The seller is often referred to as the writer. As with futures, options are brought into existence by being traded, if none is traded, none exists; conversely, there is no limit to the number of option contracts that can be in existence at any time. As with futures, the process of closing out options positions will cause contracts to cease to exist, diminishing the total number. Thus an option is the right to buy or sell a specified amount of a financial instrument at a pre-arranged price on or before a particular date. There are two options which can be exercised: Call option, the right to buy is referred to as a call option. Put option, the right to sell is referred as a put option.

FACTORS AFFECTING CAPITAL MARKET IN INDIA

The capital market is affected by a range of factors . Some of the factors which influence capital market are as follows:-

A)Performance of domestic companies:-The performance of the companies or rather corporate earnings is one of the factors which has direct impact or effect on capital market in a country. Weak corporate earnings indicate that the demand for goods and services in the economy is less due to slow growth in per capita income of people . Because of slow growth in demand there is slow growth in employment which means slow growth in demand in the near future. Thus weak corporate earnings indicate average or not so good prospects for the economy as a whole in the near term. In such a scenario the investors ( both domestic as well as foreign ) would be wary to invest in the capital market and thus there is bear market like situation. The opposite case of it would be robust corporate earnings and its positive impact on the capital market.

B) Environmental Factors :-Environmental Factor in Indias context primarily means- Monsoon . In India around 60 % of agricultural production is dependent on monsoon. Thus there is heavy dependence on monsoon. The major chunk of agricultural production comes from the states of Punjab , Haryana & Uttar Pradesh. Thus deficient or delayed monsoon in this part of the country would directly affect the agricultural output in the country. Apart from monsoon other natural calamities like Floods, sunami, drought, earthquake, etc. also have an impact on the capital market of a country. The Indian Met Department (IMD) on 24th June stated that India would receive only 93 % rainfall of Long Period Average (LPA). This piece of news directly had an impact on Indian capital market with BSE Sensex falling by 0.5 % on the 25th June . The major losers wereautomakers and consumer goods firms since the below normal monsoon forecast triggered concerns that demand in the crucial rural heartland would take a hit. This is because a deficient monsoon could seriously squeeze rural incomes, reduce the demand for everything from motorbikes to soaps and worsen a slowing economy.

C) Macro Economic Numbers :-The macro economic numbers also influence the capital market. It includes Index of Industrial Production (IIP) which is released every month, annual Inflation number indicated by Wholesale Price Index (WPI) which is released every week, Export Import numbers which are declared every month, Core Industries growth rate ( It includes Six Core infrastructure industries Coal, Crude oil, refining, power, cement and finished steel) which comes out every month, etc. This macro economic indicators indicate the state of the economy and the direction in which the economy is headed and therefore impacts the capital market in India. A case in the point was declaration of core industries growth figure.

D) Global Cues :-In this world of globalization various economies are interdependent and interconnected. An event in one part of the world is bound to affect other parts of the world , however the magnitude and intensity of impact would vary. Thus capital market in India is also affected by developments in other parts of the world i.e. U.S. , Europe, Japan , etc.Global cues includes corporate earnings of MNCs, consumer confidence index in developed countries, jobless claims in developed countries, global growth outlook given by various agencies like IMF, economic growth of major economies, price of crude oil, credit rating of various economies given by Moodys, S & P, etc.

E) Political stability and government policies:-For any economy to achieve and sustain growth it has to have political stability and pro- growth government policies. This is because when there is political stability there is stability and consistency in governments attitude which is communicated through various government policies. The vice- versa is the case when there is no political stability .So capital market also reacts to the nature of government, attitude of government, and various policies of thegovernment.

F) Growth prospectus of an economy:-When the national income of the country increases and per capita income of people increases it is said that the economy is growing. Higher income also means higher expenditure and higher savings. This augurs well for the economy as higher expenditure means higher demand and higher savings means higher investment. Thus when an economy is growing at a good pace capital market of the country attracts more money from investors, both from within and outside the country and vice -versa. So we can say that growth prospects of an economy do have an impact on capital markets.

G) Investor Sentiment and risk appetite :-Another factor which influences capital market is investor sentiment and their risk appetite .Even if the investors have the money to invest but if they are not confident about the returns from their investment , they may stay away from investment for some time.At the same time the investors have low risk appetite , which they were having in global and Indian capital market some four to five months back due to global financial meltdown and recessionary situation in U.S. & some parts of Europe , they may stay away from investment and wait for the right time to come.

What is Investment ?

MeaningIn simple terms, Investment refers to purchase of financial assets. While Investment Goods are those goods, which are used for further production.

Investment implies the production of new capital goods, plants and equipments

Different types of Investment available in IndiaIn this article you will find many available options to make an investment. A number of options are available today for a person to invest his money and make a decent return. Lets take a skim through all those schemes.1. Financial Assests (that can not be traded)A number of financial assets can not be traded with a third party. Such schemes are listed below. Bank Deposits: Its simple and every one knows about it. Post Office Savings Provident Funds Chit Funds Company Deposits 2. BondsBonds are debt securities or long term debt instruments. An authorized issuer of bond promises the person who hods the bond to pay interest on particular periods and to return the principal after a fixed period (at the time of maturity of the bond). Different types of bonds are; Government Securities Government Agency Securities PSU Bonds Private Debt Securities Preference Shares 3. StocksStocks represent ownership. A person who holds stocks of a particular company is treated as one of the many owners of the company and deserves a share of the net profit that company earns after all expenses. Stocks is one of the best investment options available and at the same time it demands knowledge about many fundamentals to make a decent return. Different types of stocks (as classified by financial analysts) Growth Stocks Value Stocks Blue Chip Stocks Income Stocks 5. Mutual FundsMutual Funds are a better investment option for those who cant find time to learn about stock market and its trends or those who dont understand its working correctly.Mutual funds are usually managed by a Private financial company or a Bank. Different types of mutual funds are; Stock based schemes Fixed income schemes Monthly income schemes Tax saving schemes Hybrid schemes Balance schemes Sector schemes Floating rate schemes 6. InsuranceInsurance is also a form of investment. Different types of insurance investments are; Endowment assurance policy Money back policy Whole Life policy Term assurance policy Unit Linked Policy ULIP

7. Financial DerivativesThese are financial instruments that are formed from value addition of the financial assets used for investment. Two types are there; Options Futures

SECURITIES AND EXCHANGE BOARD OF INDIAIt was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the business district of Bandra Kurla Complex complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947.Initially SEBI was a non statutory body without any statutory power. However in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act 1992. In April, 1998 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.The SEBI is managed by six members, i.e. by the chairman who is nominated by central government & two members, i.e. officers of central ministry, one member from the RBI & the remaining two are nominated by the central government. The office of SEBI is situated at Mumbai with its regional offices at Kolkata, Delhi & Chennai.

FUNCTIONS AND RESPONSIBILITIESSEBI has to be responsive to the needs of three groups, which constitute the market: the issuers of securities the investors the market intermediaries. SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal. A second appeal lies directly to the Supreme Court.SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required under law.SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco. It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. More recently, in light of the global meltdown,it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI has increased the application limit for retail investors to Rs 2 lakh, from Rs 1 lakh at present.

POWERSFor the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are:1. to approve bylaws of stock exchanges. 2. to require the stock exchange to amend their bylaws. 3. inspect the books of accounts and call for periodical returns from recognized stock exchanges. 4. inspect the books of accounts of a financial intermediaries. 5. compel certain companies to list their shares in one or more stock exchanges. SEBI Committees1. Technical Advisory Committee 2. Committee for review of structure of market infrastructure institutions 3. Members of the Advisory Committee for the SEBI Investor Protection and Education Fund 4. Takeover Regulations Advisory Committee 5. Primary Market Advisory Committee (PMAC) 6. Secondary Market Advisory Committee (SMAC) 7. Mutual Fund Advisory Committee 8. Corporate Bonds & Securitization Advisory Committee 9. Takeover Panel 10. SEBI Committee on Disclosures and Accounting Standards (SCODA) 11. High Powered Advisory Committee on consent orders and compounding of offences 12. Derivatives Market Review Committee 13. Committee on Infrastructure Funds

STOCK EXCHANGEMeaningStock Exchange (also called Stock Market or Share Market) is one important constituent of capital market. Stock Exchange is an organized market for the purchase and sale of industrial and financial security. It is convenient place where trading in securities is conducted in systematic manner i.e. as per certain rules and regulations.It performs various functions and offers useful services to investors and borrowing companies. It is an investment intermediary and facilitates economic and industrial development of a country.Stock exchange is an organized market for buying and selling corporate and other securities. Here, securities are purchased and sold out as per certain well-defined rules and regulations. It provides a convenient and secured mechanism or platform for transactions in different securities. Such securities include shares and debentures issued by public companies which are duly listed at the stock exchange, and bonds and debentures issued by government, public corporations and municipal and port trust bodies.Stock exchanges are indispensable for the smooth and orderly functioning of corporate sector in a free market economy. A stock exchange need not be treated as a place for speculation or a gambling den. It should act as a place for safe and profitable investment, for this, effective control on the working of stock exchange is necessary. This will avoid misuse of this platform for excessive speculation, scams and other undesirable and anti-social activities.

Definitions of Stock Exchange

"Stock exchanges are privately organized markets which are used to facilitate trading in securities."The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as,"An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities."

Features of Stock ExchangeCharacteristics or features of stock exchange are:-1. Market for securities : Stock exchange is a market, where securities of corporate bodies, government and semi-government bodies are bought and sold. 2. Deals in second hand securities : It deals with shares, debentures bonds and such securities already issued by the companies. In short it deals with existing or second hand securities and hence it is called secondary market. 3. Regulates trade in securities : Stock exchange does not buy or sell any securities on its own account. It merely provides the necessary infrastructure and facilities for trade in securities to its members and brokers who trade in securities. It regulates the trade activities so as to ensure free and fair trade 4. Allows dealings only in listed securities : In fact, stock exchanges maintain an official list of securities that could be purchased and sold on its floor. Securities which do not figure in the official list of stock exchange are called unlisted securities. Such unlisted securities cannot be traded in the stock exchange. 5. Transactions effected only through members : All the transactions in securities at the stock exchange are effected only through its authorised brokers and members. Outsiders or direct investors are not allowed to enter in the trading circles of the stock exchange. Investors have to buy or sell the securities at the stock exchange through the authorised brokers only. 6. Association of persons : A stock exchange is an association of persons or body of individuals which may be registered or unregistered. 7. Recognition from Central Government : Stock exchange is an organised market. It requires recognition from the Central Government. 8. Working as per rules : Buying and selling transactions in securities at the stock exchange are governed by the rules and regulations of stock exchange as well as SEBI Guidelines. No deviation from the rules and guidelines is allowed in any case. 9. Specific location : Stock exchange is a particular market place where authorised brokers come together daily (i.e. on working days) on the floor of market called trading circles and conduct trading activities. The prices of different securities traded are shown on electronic boards. After the working hours market is closed. All the working of stock exchanges is conducted and controlled through computers and electronic system. 10. Financial Barometers : Stock exchanges are the financial barometers and development indicators of national economy of the country. Industrial growth and stability is reflected in the index of stock exchange.

BOMBAY STOCK EXCHANGE LIMITEDBombay 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 corporatised 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 de-linked 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 theparticipation 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 day-to-dayoperations of the Exchange are managed by the Managing Director and a management team of professionals. 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 2004-2005, 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 proprietory 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.

NATIONAL STOCK EXCHANGE

THE National Stock Exchange of India is a stock Exchange that is located in Mumbai, Maharashtra. The National Stock Exchange basically function in three market sections, that is, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) and WDM (Wholesale Debt Market Segment). It is important place where the trading of shares, debt etc takes place.It was in year 1992 that the National stock Exchange was for the first time incorporated in India. It was not regarded as a stock exchange at once. Rather, the national Stock exchange was incorporated as a tax paying company and had got the recognition of a stock exchange only in year 1993 the recognition was given under the provisions of the Securities Contracts (Regulation) Act, 1956.The National Stock exchange is highly active in the field of market capitalization and thus aiming it the ninth largest stock exchange in the said field. Similarly, the trading of the stock exchange in equities and derivatives is so high that it has resulted in high turnovers and thus making it the largest stock exchange in India.It is the stock exchange wherein there is the facility of electronic exchange offering investors. This facility is available in almost types of equitable transactions such as equities, debentures, etc. it is also the largest stock exchange if calculated in the terms of traded values.

OBJECTIVE OF REAEARCH:-

The main objective of the study or research is to know about the perception of investors about Stock market.1. To study the investors perception regarding stock market.

2. To identify the main reasons for investing in stock market.

3. To identify which type of groups and sector is preferred most by the investors.

RERSEARH METHODOLOGY:- Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the investors. Data collection has been done through by giving structured questionnaire. This study will be based on convenience sampling.RESEARCH DESIGN :- Research Design is Descriptive.SAMPLING SIZE AND DESIGN:- Sample size has been taken by convenience sampling. This research requires the survey of different investors. Sample size for this research is 100.DATA COLLECTION:- Data will be collected through questionnaire. Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the investors. Data collection has been done through by giving structured questionnaire.AREA OF STUDY:- Ludhiana and Fatehgarh sahib.

ANALYSIS OF THE RESEARCH

Q.1 Do you invest in stock market? (A) yes (B) No Figure no.1ResponseFrequencyPercentage

Yes1280%

No0320%

Total15100%

Graph:1

Interpretation:- Above Graph shows that 80% respondents are invested in stock market and remaining 20% are the opportunity for stock market.

Q.2 If you want to invest or if you invest then In which of the following do you invest?(Tick more than one if applicable) (A) Equity (B) Derivatives (C) Mutual funds (D) OthersFigure no.2ResponseFrequencyPercentage

Equity960%

Derivatives427%

Mutual fund213%

Others00%

Total15100%

Graph:2

Interpretation:- Above Graph shows that 60% investors are satisfied with investing in equity, 27% in Derivatives and 13% are investing in Mutual fund.

Q.3 Which sector you prefer for investment in stock market? (A) Government (B) Non Government (C) Semi GovernmentFigure no.3ResponseFrequencyPercentage

Government320%

Non Government960%

Semi Government320%

Total15100%

Graph:3

Govt. Non Govt. Semi Govt.

Interpretation:- Above Graph shows that 20% investors prefer to Government sector, 60% prefer to Non Government sector and 20% prefer to Semi Government sector.

Q. 4 How many shares do you have? (A) 1-10 (B) 10-50 (C) 50-100 (D) More than 100Figure no.4ResponseFrequencyPercentage

1-1018%

10-50650%

50-100 325%

More than 100217%

Total12100%

Graph:4

1-10 10-50 50-100 Above 100

Interpretation:- Above Graph shows that 8% investors have 1-10 shares, 50% investors are those who have 10-50 shares, 25% have 50-100 Shares and only 17% investors have more than 100 shares.

Q.5 Your returns are mostly in (A) Profit (B) LossFigure no.5ResponseFrequencyPercentage

Profit758%

Loss542%

Total12100%

Graph:5

Interpretation:- Above Graph shows that 58% investors said that their returns are in profit but 42% are dissatisfied with investing in stock market.

Q. 6 Who suggest you to invest in stock market? (A) Family member (B) Relatives (C) By own (D) BrokersFigure no.6ResponseFrequencyPercentage

Family member 00%

Relatives217%

By own 866%

Brokers217%

total12100%

Graph:6

Family Relative By own Brokers

Interpretation:- Above Graph shows that 17% investors are suggested by relatives, 66% are invested by own, 17% are forced by brokers.

Q.7 What Percentage amount of your income do you invest in Stock market (A) 10-20% (B) 20-30% (C) 30-40% (D) Above 40%Figure no.7ResponseFrequencyPercentage

10-20% 217%

20-30%541%

30-40% 325%

Above 40%217%

Total12100%

Graph:7

10-20% 20-30% 30-40% Above 40%

Interpretation:- Above Graph shows that 17% investors are those who invest their 10-20% income in stock market, 41% invest 20-30% income, 25% invest 30-40% income and 17% are those who invest their more than 40% parts of income in stock market.

Q.8 What do you consider the most important while investing in stock market? (A) Profit (B) Capital appreciation (c) Tax benefit (D) Other ( specify)Figure no.8ResponseFrequencyPercentage

Profit650%

Capital appreciation 217%

Tax benefit 325%

Other18%

Total12100%

Graph:8

Profit Capital Tax Other

Interpretation:- Above Graph shows that 50% investors main motive is profit to invest in stock market, 17% invest for capital appreciation, 25% invest for tax benefit and 8% are those who invest for other purpose like saving motive etc.

Q.9 For whom you did invest in stock market? (A) Self (B) Child (C) Wife (D) Other (please specify) Figure no. 9ResponseFrequencyPercentage

Self541%

Child217%

Wife325%

Other217%

total12100%

Graph:9

Self Child Wife OtherInterpretation:- Above Graph shows that 41% are invested for themselves, 17% invested for their children, 25% invested for their wives and 17% those who invest for their parents and relatives.

Q. 10 According to you what is the better form to keep the security? (A) Physical form (B) Demat formFigure no.10ResponseFrequencyPercentage

Physical form 00%

Demat form12100%

Total12100%

Graph:10

Interpretation:- Above Graph shows that every investor want to keep his shares in Demat form, no one is ready to prefer physical form.

Q. 11 Are you satisfied with your investment? (A) yes (B) NoFigure no.11ResponseFrequencyPercentage

Yes758%

No542%

Total12100%

Graph:11

Interpretation:- Above Graph shows that 58% investors are satisfied with their investment and 42% are dissatisfied with their investments.

Q.12 Do you think investment in stock market is more risky than others? (A) Yes (B) No Figure no.12ResponseFrequencyPercentage

Yes1083%

No217%

Total12100%

Graph:12

Interpretation:- Above Graph shows that mostly 83% investors thought that investment in stock market is risky than others but 17% are in the favor of stock market.

Q.13 Do you go through all the details before making a final choice? (A) yes (B) NoFigure no.13ResponseFrequencyPercentage

Yes12100%

No00%

Total12100%

Graph:13

Interpretation:- Above Graph shows that 100% investors take the complete information before taking the decision of investment in stock market.

Q. 14 If you did not invest in stock market then what will be the other option? (A) Insurance (B) Saving (C) Property (D) OthersFigure no.14ResponseFrequencyPercentage

Insurance 325%

Saving18%

Property759%

Others18%

Total12100%

Graph:14

Interpretation:- Above Graph shows that 25% investors said that if they did not invested in stock market then they prefer to insurance, 8% call for savings, 59% prefer to property and 8% said that they prefer to other options like shops etc.

Limitations:1 Time limitation2 Research has been done only in Ludhiana and Fatehgarh Sahib City.3 Investors did not disclose their secrets data and strategies. 4 Possibility of Error in data collection.5 Possibility of Error in analysis of data due to small sample size.

RESULTS

1. Mostly investors prefer to Equity share and Non Government sector for investment in stock market.

2. Majority of the investors are satisfied with their investments.

3. Investors are not forced by any other for investing in stock market, they take their decisions by own.

4. Investors invest large amount of their income in stock market for earn more profit.

5. They thought that Demat form is better than physical form.

6. Investors are thought that investment in stock market is very risky.

7. Every investor want full information about the plans before investment

SUGGESTIONS 1. More and more advertising should be used by companies to tap the investors.

2. Service of stock market should be improve.

3. Procedure to get membership should be made easily assessable.

4. More and more benefits should be given.

5. Security should be increased in investment.

6. Brokers have need to give the full information to the investors.

REFERENCE:-

Sites-http://en.wikipedia.org/wiki/Stock_markethttp://www.nse-india.com/http://www.capitalmarket.com/http://www.investopedia.com/terms/c/capitalmarkets.asphttp://www.moneycontrol.com/sensex/bse/sensex-live

Books-How to Make Money in Stocks William ONeilTechnical Analysis of the Financial Markets John J. MurphyThe Intelligent Investor Benjamin Graham

QUESTIONNAIRE Name.Age. Gender.OccupationQ.1 Do you invest in stock market? (A) yes (B) NoQ.2 If you want to invest or if you invest then In which of the following do you invest?(Tick more than one if applicable) (A) Equity (B) Derivatives (C) Mutual funds (D) OthersQ.3 Which sector you prefer for investment in stock market? (A) Government (B) Non Government (C) Semi GovernmentQ. 4 How many shares do you have? (A) 1-10 (B) 10-50 (C) 50-100 (D) More than 100Q.5 Your returns are mostly in (A) Profit (B) LossQ. 6 Who suggest you to invest in stock market? (A) Family member (B) Relatives (C) By own (D) BrokersQ.7 What Percentage amount of your income do you invest in Stock market (A) 10-20% (B) 20-30% (C) 30-40% (D) Above 40%Q.8 What do you consider the most important while investing in stock market? (A) Profit (B) Capital appriciation (c) Tax benefit (D) Other ( specify)Q.9 For whom you did invest in stock market? (A) Self (B) Child (C) Wife (D) Other (please specify) Q. 10 According to you what is the better form to keep the security? (A) Physical form (B) Demat formQ. 11 Are you satisfied with your investment? (A) yes (B) NoQ.12 Do you think investment in stock market is more risky than others? (A) Yes (B) No Q.13 Do you go through all the details before making a final choice? (A) yes (B) NoQ. 14 If you did not invest in stock market then what will be the other option? (A) Insurance (B) Saving (C) Property (D) OthersQ.15 Do you want any improvement in the policies of stock market, Please give Suggestion.

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