Term Research Project On “Volatality in Indian Stock Market” Submitted To: Prof. Sampada S. Kapse In Partial Fulfillment of the subject: “Indian Financial System” Of SEM – 3 PGDM Batch: 2008-10 Submitted By: Group No. Sr. No. Name Roll No. 1. Manish Bhatia 08064 2. Savitri Fufal 08073 3. Ravi Majithiya 08085 4. Deep Pathak 08099 5. Hardik Zala 08105 6. Vivek Soni 08107 7. Pratik Tanna 08108
How volatalite the stock market and this project is not complete the only reason of volatality left in this {work in progress}
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Term Research Project
On
“Volatality in Indian Stock Market”
Submitted To: Prof. Sampada S. Kapse
In Partial Fulfillment of the subject:
“Indian Financial System”
Of SEM – 3 PGDM
Batch: 2008-10
Submitted By: Group No.
Sr. No. Name Roll No.
1. Manish Bhatia 080642. Savitri Fufal 080733. Ravi Majithiya 080854. Deep Pathak 080995. Hardik Zala 081056. Vivek Soni 081077. Pratik Tanna 08108
Table of Contents
Sr. No. Particular Pg. No.
1. Introduction
Definition
Types of Trends
1
2. Littereture review
3. Objectives
4. Methodology
5. Factors afecting the Volatality
6. Analysis
7. Findings
8. Comments
9. Suggesion
10. Bibliography
Introduction:
First we will define, What is a Stock Market ?
In the stock market world, you need a way to compare the movement of the market, up
and down, from day to day, and from year to year. An index is just a benchmark or yardstick
expressed as a number that makes it possible to do this comparison. For e.g. S&P CNX Nifty is
the index of NSE and SENSEX is the index of BSE.
Stock exchanges to some extent play an important role as indicators, reflecting the
performance of the country's economic state of health. Stock market is a place where
securities are bought and sold. It is exposed to a high degree of volatility; prices fluctuate
within minutes and are determined by the demand and supply of stocks at a given time.
Stockbrokers are the ones who buy and sell securities on behalf of individuals and institutions
for some commission.
The Securities and Exchange Board of India (SEBI) is the authorized body, which
regulates the operations of stock exchanges, banks and other financial institutions. The past
performances in the capital markets especially the securities scam by Harshad Mehta has led
to tightening of the operations by SEBI. In addition the international trading and investment
exposure has made it imperative to better operational efficiency. With the view to improve,
discipline and bring greater transparency in this sector, constant efforts are being made and to
a certain extent improvements have been made.
As the condition of capital markets are constantly improving, it has started drawing
attention of lot more people than before. On the career related aspects, professionals have
opportunities to choose from for a wide range of jobs available in a number of organizations
in this sector and one can expect to have good times ahead of him.
Securities market has essentially three categories of participants, namely the issuer of
securities, investor in securities and the intermediaries and two categories of products,
namely the services of the intermediaries, the securities including derivatives.
The security market has two interdependent and inseparable segments, the new issues
(Primary market) and the stock (secondary market). The primary market provides the
channel for sale of new securities while secondary market deals in securities previously
issued.
There are so many script or stock traded in indian stock market and all stocks are
distributes in Small cap, Mid cap, Sensex, Nifty 50, Bse 200, Bse 500 and Bse 100.
Definition:
“Volatality”, It is a very small word but its meaning was very big, it means a
fluctuation. The fluctuation is not one side movement it can be go anywhere either bullish,
bearish or flat. Here we discuss about the Volatality in the Indian Stock Market. Volatility
is the word define it self a fluctuation in the capital market.
How we decide the trend of the market or particular stock
By two way we can check the market or stock that It is bullish, bearish or flat.
Technical analysis and fundamental analysis are the two main schools of thought in
the financial markets.
Technical analysis looks at the price movement of a security and uses this
data to predict its future price movements.
Fundamental analysis, on the other hand, looks at economic factors, known
as fundamentals.
Let's get into the details of how these two approaches differ, the criticisms against
technical analysis and how technical and fundamental analysis can be used together to
analyze securities.
Types of Trends:
Bullish Trend
Bearish Trend
Flat Trend
1. Bullish Trend:
2. Bearish Trend:
3. Flat Trend:
Literature review:
This gap in the literature and examine the effects of exposure to foreign markets
on volume, volatility, liquidity of stocks in the domestic markets. Yet they are not clear how
the volume affects the Indian stock market.
There are so many evidences e.g. Aamihud (2002), Datar (1998) etc., in the
literature that there exist a positive relationship between return and liquidity. If return & risk
are positively related then risk and liquidity is expected to have a positive association.
Admati and Pfleiderer (1988), Foster & Viswanathan (1990) also predict positive relation
between illiquidity and volatility. So a negative relation between liquidity and risk is
expected.
We are describing about the supply and demand in the market that affects the
Indian stock market. As they move towards the fluctuation. As it is common the more the
purchasing in the market the more the price of the share goes up as less the price the price of
the share goes down. Our research shows that the improvement in the volume the stock prices
goes up the more the foreign capital the improvements in the liquidity of their equity traded
on the Indian stock market. We will see that the firm raising its capital by the improvements
of the liquidity in the stock market.
Raising capital allow the people to invest in a firms shares could result in positive
changes. This provides a verification affect that increase the value of the firm equity.
Moel (2000) analyzes the effect of ADR listings from emerging markets on three
aspects of development. Openness, liquidity and growth- in the home market. Accounting
disclosure standards are used to proxy for openness of the market while liquidity is measured
using the share turnover of the firms. He uses a sample of firms from 28 emerging markets
and uses annual data to measure changes in openness, liquidity and growth.
Moel that suggest the firms that raises capital do not see significant improvement to
the liquidity of their equity traded securities. They particular found of more of the foreign
investment securities invested in local market. We found of that the firms raising capital the