Working of Stock Market in India

7/31/2019 Working of Stock Market in India

1/67

CERTIFICATE

This is to certify that the project entitled WORKING OF STOCK MARKET IN INDIA

submitted to partial fulfillment of the requirements for the award of the degree of Master of

Business Administration of VIMT (Rohtak), is a record of research work carried out by SUNIT

GARGunder my supervision and guidance.

Mr. NITIN GOYAL

Lecturer,

VAISH INSTITUTE OF MANAGEMENT & TECHNOLOGY,

MDU, (Rohtak)


2/67

DECLARATION

I, SUNIT GARG student of M.B.A. in VIMT, Rohtak here by declare that the Project Report

entitled Working of Stock Market-In India is an original work and the same has not been

submitted to any other Institute for award of any degree.

Project In charge Signature of candidate


3/67

ACKNOWLEDGEMENT

Heart full thanks to the following people.

I express my sincere and deep sense of gratitude to my esteemed guide Mr. NITIN GOYAL

lectuere in M.B.A Deptt., VAISH INSTITUTE OF MANAGEMENT & TECHNOLOGY,

ROHTAK for his continued support and supervision. I am highly obliged to him for providing me

the opportunity to work under his guidance. It was his scholarly suggestions, immense interest and

moral support that helped in competing the work confidently and successfully.

I would also place on record my gratitude to all teachers of VAISH INSTITUTE OF

MANAGEMENT & TECHNOLOGY, ROHTAK for their constant encouragement.

(SUNIT GARG)


4/67

PREFACE

We cannot achieve any thing on the basis of theoretical knowledge only as provided by

books, in order achieve positive and successful results the classroom learnings are not sufficient

the practical knowledge is also necessary with theoretical knowledge. To develop healthy skills in

management theoretical knowledge must be supplemented with the real practical environment.

In production labors play his part one side and management plays his part on the other side.

In management the practical training gives us a great opportunity to stand in this competitive

world.

The main advantage of Project Training is to make the familiar to a student of any particular

organization environment, norms, culture, along with formal teaching. It is very different kind of

experience for any student.

I select Stock Market to analyze for my Project Training Purpose which is an integral part

of two years Master Degree in Management in M. D. University, Rohtak. This training is

undergone after the completion of the third semester of the course. After analyzing stock market, I

had the opportunity of getting practical with business world which enhanced my practical

knowledge


5/67

CONTENTS

Sr. No. Title

Declaration

Acknowledgement

Preface

------------------------------------------------------------------------------------------

1. Introduction

About Stock Exchange

Brief History of Stock Exchanges in India

The Stock Exchanges

Function of Stock Exchange

2. Stock Market Profile

Most Commonly used Stock Exchanges

Bombay Stock Exchange(BSE)

National Stock Exchange(NSE)

Invest Analysis

Fundamental Analysis

Technical Analysis

3. Objective of study

4. Scope of the Study

5. Research Methodology

Meaning of research

Research Design

Sampling Technique

Data Source

Research Instrument

6. Limitations

7. Suggestions and Conclusions

8. Annexure

9. Bibliography


6/67


7/67

ABOUT STOCK EXCHANGE

Stock Exchange is an institution evolved in industrially developed capitalist economics with free

market mechanism. In typical free market, the individual investor would ideally choose to make

money available to those new or existing enterprises which offer the best prospect of immediate

and continuing profit. And since he is entitled to withdraw money from a less profitable enterprise

by selling his shares, as long as he can find a buyer and to reinvest it, he will be continually

looking for new and more profitable outlets for his money. Therefore, in theory, stock exchange

was termed as institution allocator of resources par excellence.

The stock exchange an institution broadly fulfilling the following objectives:

Making funds available to entrepreneurs for business activity ;

Ensuring maximum return on the investment made by the investors;

Providing platform for saving, investment and reinvestment activity.

In India, however, the institution of stock exchange evolved and developed as an

organization offering place for speculative activity, which had little to do with industrial financing

and investment activity. After 1865, a number of financial failures and problems in speculative

activity led brokers to form an association in 1875. It was only the disaster that followed the

boom, which brought the brokers together in July, 1875 to form an association that is today called

the Stock Exchange, Bombay.

Stock exchange remain absolutely on the borders of industrial financing and investment

activity in pre-independence economy, the primary reason being the general distrust by the public

of private business. With the absence of any meaningful role in industrial financing and investment

activity, the functioning, organization and management of the institution of stock exchange tended

to develop as that of an organization primarily concerned with speculative activity. The

organization and management of major stock exchanges formed during this period did not prove to

be positive to the developments and desirable changes later, more particularly during the period of

1980s.


8/67

The recent reforms in stock markets were triggered by issues of surveillance and any

developments that will have a bearing on the quality and effectiveness of the surveillance and

implications on the quality of growth. This is an important aspect that should be seriously

addressed to the stock markets and the regulators. While government and regulatory authorities

will have a greater role to play in promoting competition, the stock exchanges at their individual

level have to take keen interest and initiate measures that would promote greater inter-exchange

cooperation helping each other on overcoming shortfalls and setbacks. A fair degree of cooperation

is required with in the stock exchanges in the country to avoid imprudent practices and

inducements that will be harmful to the health of the markets,

The term Stock Market' is a concept for the mechanism that enables the trading of

company stocks (collective shares), other securities and derivatives. The stock market is one of the

most important sources for companies to raise money. This allows businesses to go public, or raise

additional capital for expansion. The liquidity that an exchange provides affords investors the

ability to quickly and easily sell securities. This is an attractive feature of investing in stocks,

compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the

dynamics of economic activity, and can influence or be an indicator of social mood. Rising share

prices, for instance, tend to be associated with increased business investment and vice versa. Share

prices also affect the wealth of households and their consumption. Therefore, central banks tend to

keep an eye on the control and behavior of the stock market and, in general, on the smooth

operation of financial system functions. .

Exchanges also act as the clearinghouse for each transaction, meaning that they collect and

deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an

individual buyer or seller that the counterparty could default on the transaction.


9/67

The smooth functioning of all these activities facilitates economic growth in that lower

costs and enterprise risks promote the production of goods and services as well as employment. In

this way the financial system contributes to increased prosperity.

Despite its expansion a very small percentage of households savings is channelised into the

securities market. What worries further is the intention revealed that the majority of existing

shareholders are unlikely to invest in the securties market in the coming years. It indicates lack of

condidence by the existing investors in the securties market. The recent crises on the equity market

has highlighted the deficiencies of governance with broker-run exchanges. While there is a broad

agreement that the governance structures of the broker-run exchanges need to be transformed.


10/67

HISTORY OF STOCK EXCHANGES IN INDIA

The origin of stock exchanges in India can be traced back to the later half of 19th

century. After theAmerican Civil War (1860-61) due to the share mania of the public, the number of brokers dealing

on shares increased. The brokers organised an informal association in Mumbai named The Native

Stock And Share Brokers Association in 1875.

Increased activity in trade and commerce during the First World War and Second World

War resulted in an increase in stock trading. Stock exchanges were established in different centres

like Chennai, Delhi, Nagpur, Kanpur, Hyderabad and Banglore. The growth of stock exchanges

suffered a set back after the end of World War. Worldwide depression affected them. Most of the

stock exchanges in the early stages had a speculative nature of working without technical stregth.

Securties and Contract Regulation Act, 1956 gave powers to the central government to regulate the

stock exchanges. The stock exchanges in Mumbai, Calcutta, Chennai, Ahmedabad, Delhi,

Hyderabad and Indore were recognised by the SCR Act.

Till recent past, floor trading took places in all stock exchanges. In the flooe trading

system, the trade takes place through open outcry system during the official trading hours. Trading

posts are assigned for different securties were buy and sell activities of securties took place. This

system needs a face to face contact among the traders and restict the trading volume. The speed of

new information reflected on the prices was rather slow. The deals were also not transparent and

the system favoured the brokers rather than the investors.

The setting up of NSE and OTCEI with the screen based trading facility resulted in more

and more stock exchanges turning towards the computer based trading. Bombay stock exchange

introduced the screen based trading system in 1995.

Madras stock exchange introdued Automated Network Trading System(MANTRA) on Oct 7 th

1996. Apart from Bombay stock exchange, Vadodara, Delhi, Pune, Banglore, Calcutta abd

Ahmedabad stock exchanges have introduced screen based trading. Other exchanges are also

planning to shift to the scren based trading.


11/67

One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old history.

18th Century East India Company was the dominant institution and by end of the century,

busuness in its loan securities gained full momentum

1830's Business on corporate stocks and shares in Bank and Cotton presses started in

Bombay. Trading list by the end of 1839 got broader1840's Recognition from banks and merchants to about half a dozen brokers

1850's Rapid development of commercial enterprise saw brokerage business attracting

more people into the business

1860's The number of brokers increased to 60

1860-61 The American Civil War broke out which caused a stoppage of cotton supply from

United States of America; marking the beginning of the "Share Mania" in India

1862-63 The number of brokers increased to about 200 to 250

1865 A disastrous slump began at the end of the American Civil War (as an example,Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs. 87)

Pre-Independance Scenario - Establishment of Different Stock Exchanges

1874 With the rapidly developing share trading business, brokers used to gather at a street(now well known as "Dalal Street") for the purpose of transacting business.

1875 "The Native Share and Stock Brokers' Association" (also known as "The Bombay

Stock Exchange") was established in Bombay

1880's Development of cotton mills industry and set up of many others

1894 Establishment of "The Ahmedabad Share and Stock Brokers' Association"

1880 - 90's Sharp increase in share prices of jute industries in 1870's was followed by a boom intea stocks and coal

1908 "The Calcutta Stock Exchange Association" was formed

1920 Madras witnessed boom and business at "The Madras Stock Exchange" wastransacted with 100 brokers.

1923 When recession followed, number of brokers came down to 3 and the Exchange was

closed down

1934 Establishment of the Lahore Stock Exchange

1936 Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange

1937 Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.) Limited

led by improvement in stock market activities in South India with establishment ofnew textile mills and plantation companies

1940 Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited wasestablished

1944 Establishment of "The Hyderabad Stock Exchange Limited"

1947 "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and

Shares Exchange Limited" were established and later on merged into "The Delhi


12/67

Stock Exchange Association Limited"

Post Independance Scenario

The depression witnessed after the Independance led to closure of a lot of exchanges in the

country. Lahore Estock Exchange was closed down after the partition of India, and later on mergedwith the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was registered in 1957 and got

recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when

they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges

that were recognized under the Act were:

1. Bombay

2. Calcutta

3. Madras

4. Ahmedabad5. Delhi

6. Hyderabad7. Bangalore8. Indore

Many more stock exchanges were established during 1980's, namely:

1. Cochin Stock Exchange (1980)

2. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)3. Pune Stock Exchange Limited (1982)

4. Ludhiana Stock Exchange Association Limited (1983)

5. Gauhati Stock Exchange Limited (1984)

6. Kanara Stock Exchange Limited (at Mangalore, 1985)7. Magadh Stock Exchange Association (at Patna, 1986)

8. Jaipur Stock Exchange Limited (1989)

9. Bhubaneswar Stock Exchange Association Limited (1989)10. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)

11. Vadodara Stock Exchange Limited (at Baroda, 1990)

12. Coimbatore Stock Exchange13. Meerut Stock Exchange

At present, there are twenty one recognized stock exchanges in India which does not include theOver The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India

Limited (NSEIL).


13/67

Government policies during 1980's also played a vital role in the development of the Indian Stock

Markets. There was a sharp increase in number of Exchanges, listed companies as well as theircapital, which is visible from the following table:

S.No.

As on 31st December 1946 1961 1971 1975 1980 1985 1991 1995

1 No. of Stock Exchanges 7 7 8 8 9 14 20 22

2 No. of Listed Cos. 1125 1203 1599 1552 2265 4344 6229 8593

3No. of Stock Issues of Listed

Cos.1506 2111 2838 3230 3697 6174 8967 11784

4 Capital of Listed Cos. (Cr. Rs.) 270 753 1812 2614 3973 9723 32041 59583

5Market value of Capital of Listed

Cos. (Cr. Rs.)971 1292 2675 3273 6750 25302 110279 478121

6Capital per Listed Cos. (4/2)(Lakh Rs.)

24 63 113 168 175 224 514 693

7Market Value of Capital per

Listed Cos. (Lakh Rs.) (5/2)86 107 167 211 298 582 1770 5564

8Appreciated value of Capital per

Listed Cos. (Lak Rs.)358 170 148 126 170 260 344 803

THE STOCK EXCHANGES


14/67

The names of the stock exchanges are given below:

Ahmedabad Stock Exchange

Banglore Stock Exchange

Bhubaneswar Stock Exchange

Bombay Stock Exchange

Calcutta Stock Exchange

Cochin Stock Exchange

Coimbatore Stock Exchange

Delhi Stock Exchange

Guwahati Stock Exchange

Hyderabad Stock Exchange

Indore Stock Exchange

Jaipur Stock Exchange

Kanpur Stock Exchange

Ludhiana Stock Exchange

Madras Stock Exchange

Magadh Stock Exchange

Mangalore Stock Exchange

Pune Stock Exchange

Saurashtra Stock Exchange

NSE

OTCEI

Inter Connected Stock Exchange

Stock exchanges normally function between 10:00 a.m. and 3:30 p.m. on the working days.


15/67

FUNCTIONS OF STOCK EXCHANGE

The functions of Stock Exchanges are as followed:

Maintains Active Trading: Shares are traded on the stock exchanges, enabling theinvestors to buy and sell securties. The prices may vary from transaction to transaction. A

continuous trading increses the liquidity or marketability of the shares traded on the stock

exchanges.

Aids In Financing The Industry: A continuous market for shares provides a faourable

climate for raising capital. The negotiability and transferability pf the securties helps the

companies to raise long-term funds.

Fixation Of Prices: Price is determined by the transactions that flow from investors

demand and suppliers preferences. Usually the traded prices are made known to the

public. This helps the investors to make better decisions.

Ensures Safe And Fair Dealings: The rules, regulations and by-laws of the stock

exchanges provide a measure of safety to thr invesors. Transactions are conducted under

competitive conditions enabling the investors to get a fair deal.

Performance Inducer: The prices of stocks reflect the performance of the traded

companies. This makes the corporate more concerned with its public image and tries to

maintain good performance.

Dissemination Of Information: Stock exchanges provide information through their various

publications. They publish the share prices traded on daily basis along with the volume

traded. Handouts, Handbooks and Pamphlets provide information regarding the functioning

of the stock exchanges.

Self Regulating Organisation: The stock exchanges monitor the integrity of the members,

brokers, listed companies and clients. Continuous internal audit safeguards the investors

against unfair trade practices. It settles the disputes between member brokers, investors and

brokers.


16/67

Trading Pattern of the Indian Stock Market

Indian Stock Exchanges allow trading of securities of only those public limited companies that are

listed on the Exchange(s). They are divided into two categories:

Types of Transactions

The flowchart below describes the types of transactions that can be carried out on the Indian stockexchanges:


17/67

Indian stock exchange allows a member broker to perform following activities:

1. Act as an agent,

2. Buy and sell securities for his clients and charge commission for the same,3. Act as a trader or dealer as a principal,

4. Buy and sell securities on his own account and risk.


18/67

MOST COMMONLY USED STOCK EXCHANGES-IN INDIA

THE BONBAY STOCK EXCHANGE (BSE)

(Established in 1875, the Bombay Stock Exchange is Asia's first stock exchange)

The Indian stock market is one of the oldest markets in Asia. Its history dates back to

nearly two centuries. The earlier records of security dealings in India are meager and obscure. The

East India Company was the dominant institution in those days and business in its loans securities

was transacted towards the close of the eighteen century.

By the 1830s business in corporate stocks and shares in bank and cotton presses took placein Bombay. Through the trading list was broader in 1839, there were only a half a dozen brokers

recognized by the banks and merchants.

In 1860-61, the American Civil War broke out and Cotton supply from the United States of

America and Europe was stopped. This resulted in the Share Mania for cotton trading in India.

The number of brokers increased to between 200 and 250. However, at the end of the American

Civil War, 1865 a disastrous slump began- for example, a bank of Bombay share that had touched

Rs. 2850 could only be sold at Rs. 87.

At the same time, brokers found a place in Dalal Street, Bombay where they could

conveniently assemble and transact business. In 1887, they formally established the Native Share

and Stock Brokers Association. In 1895 the association acquired premises in the same street; it

was inaugurated in 1899 as the Bombay Stock Exchange.
http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchange


19/67

The Bombay Stock Exchange is governed by a board, chaired by a non-executive

chairman. The executive director is in charge of the administration of the exchange and is

supported by elected directors, Securities Exchange Board of India (SEBI) nominees, and public

representatives.


20/67

THE NATIONAL STOCK EXCHANGE(NSE)

The National Stock Exchange of India Limited was set up to provide access to investors

from across the country on an equal footing. 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 the derivatives segment commenced in June 2000. The organizational structure of

NSE is through the link between National Securities Clearing Corporation Ltd. (NSCCL), India

Index Services and Products Ltd. (IISL), National Securities Depositary Limited (NSDL), DotEx

International Limited (DotEx) and MSEIT Ltd.

Trading at NSE

1. Fully automated screen-based trading mechanism

2. Strictly follows the principle of an order-driven market

3. Trading members are linked through a communication network4. This network allows them to execute trade from their offices

5. The prices at which the buyer and seller are willing to transact will appear on the screen

6. When the prices match the transaction will be completed7. A confirmation slip will be printed at the office of the trading member


21/67

Advantages of trading at NSE

1. Integrated network for trading in stock market of India

2. Fully automated screen based system that provides higher degree of transparency3. Investors can transact from any part of the country at uniform prices

4. Greater functional efficiency supported by totally computerized network

Technical Support

NSEIT/DotEx

Depository

NSDL

NSE

Index Services

IISL

Clearing House


22/67

Over The Counter Exchange of India (OTCEI)

Traditionally, trading in Stock Exchanges in India followed a conventional style where people used

to gather at the Exchange and bids and offers were made by open outcry.

This age-old trading mechanism in the Indian stock markets used to create many functional

inefficiencies. Lack of liquidity and transparency, long settlement periods and benami transactionsare a few examples that adversely affected investors. In order to overcome these inefficiencies,

OTCEI was incorporated in 1990 under the Companies Act 1956. OTCEI is the first screen based

nationwide stock exchange in India created by Unit Trust of India, Industrial Credit andInvestment Corporation of India, Industrial Development Bank of India, SBI Capital Markets,

Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and

CanBank Financial Services.

Advantages of OTCEI

1. Greater liquidity and lesser risk of intermediary charges due to widely spread tradingmechanism across India

2. The screen-based scripless trading ensures transparency and accuracy of prices

3. Faster settlement and transfer process as compared to other exchanges

4. Shorter allotment procedure (in case of a new issue) than other exchanges


23/67

INVESTMENT ANALYSIS

This study told that when an investor decides to invest in stock market and when he decides to

leave i.e. the decisions regarding buying and selling are based on some analysis. What are that

factors, on the basis of which he decides to, make investment in stock market? Investors take

several precautions before investing. They analyze various factors in terms of fundamental analysis

as well as technical analysis. After analyzing all the factors they decided whether it is the right

time to invest in market or whether it is the right time to invest in any particular company. All of

their decisions are based on their analysis.

FUMDAMENTAL ANALYSIS

The Intrinsic value of an equity share depends on multitude factors. The fundamental school of

thought appraised the intrinsic value of shares through:

1. Economic Analysis

2. Industry Analysis

3. Company Analysis

Economic Analysis

The level of economic activity has an impact on investment in many ways. If the economy

grows rapidly, the industry can also be show rapid growth and vice versa. When the level of

economic activity is low, stock prices are low, and when the level of economic activity is high,

stock prices are high reflecting the prosperous outlook for sales and profits of the firms. The

analysis of macro economic environment is essential to understand the behavior of the stock

prices. The commonly analyzed macro factors are as follows:


24/67

1. Gross Domestic Product (GDP)

2. Savings and Investments

3. Inflation

4. Interest Rates

5. Budget

6. The Tax Structure

7. The Balance of Payment (BOP)

8. Monsoon and Agriculture

9. Infrastructure Facilities

10. Demographic Factors

11. Economic Forecasting

12. Economic Indicators

13. Diffusion Index

Industry Analysis

An Industry is a group of firms that have similar technological structure of production and

produce similar products. For the convenience of investors, the broad classification of the

industry is given in financial dailies and magazines. Companies are distinctly classified to give

a clear picture about their manufacturing process and products. Factors that are consideredunder Industry Analysis are:

1. Industry Life Cycle Analysis

2. Growth of the Industry

3. Cost structure and profitability

4. Nature of the product

5. Nature of the competition

6. Government policy

7. Labour

8. Research and Development

9. Pollution standards

10. SWOT Analysis


25/67

Company Analysis

In the company analysis the investor assimilates the several bits of information related to the

company and evaluates the present and future values of the stock. The risk and return

associated with the purchase of the stock is analyzed to take better investment decisions. The

valuation process depends upon the investors ability to elicit information from the relationship

and inter- relationship among the company related variables. The present and future values are

affected a number of factors and they are as follows:

1. The competitive edge of the company

2. Earnings of the company

3. Capital Structure of the company

4. Management of the company

5. Operating efficiency of the company

6. Financial Performance of the company

7. Historical price of stock8. P/E ratio

9. Economic condition

10. Stock market condition


26/67

TECHNICAL ANALYSIS

The share price movement is analyzed broadly with two approaches. One is Fundamental

Approach and other is Technical Approach. Technical Analysis is a process of identifying

trend reversals at an earlier stage to formulate the buying and selling strategy. With the help of

several indicators they analyze the relationship between price - volume and supply demand

for the overall market and the individual stock. Volume is favorable on the upswing i.e. the

number of shares traded is greater than before and on the downside the number of shares traded

dwindles. If it is the other way round, trend reversals can be expected. Generally used technical

tools are:

1. Dow Theory

2. Volume of Trading

3. Short Selling

4. Odd Lot Trading

5. Bars and Line Charts

6. Moving Averages

7. Oscillators


27/67

The behavior of the stock market

From experience we know that investors may 'temporarily' move financial prices away from theirlong term aggregate price 'trends'. (Positive or up trends are referred to asbull markets; negative or

down trends are referred to as bear markets.) Over-reactions may occurso that excessive

optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices undulylow. Economists continue to debate whether financial markets are 'generally' efficient.

According to one interpretation of the efficient-market hypothesis (EMH), only changes in

fundamental factors, such as the outlook for margins, profits or dividends, ought to affect share

prices beyond the short term, whererandom 'noise' in the system may prevail. (But this largelytheoretic academic viewpointknown as 'hard' EMHalso predicts that little or no trading should

take place, contrary to fact, since prices are already at or near equilibrium, having priced in all

public knowledge.) The 'hard' efficient-market hypothesis is sorely tested by such events as thestock market crash in 1987, when the Dow Jones indexplummeted 22.6 percentthe largest-ever

one-day fall in the United States.[10]

This event demonstrated that share prices can fall dramatically even though, to this day, it is

impossible to fix a generally agreed upon definite cause: a thorough search failed to detect any'reasonable' development that might have accounted for the crash. (But note that such events are

predicted to occur strictly by chance, although very rarely.) It seems also to be the case more

generally that many price movements (beyond that which are predicted to occur 'randomly') arenotoccasioned by new information; a study of the fifty largest one-day share price movements in

the United States in the post-war period seems to confirm this.[10]

However, a 'soft' EMH has emerged which does not require that prices remain at or near

equilibrium, but only that market participants not be able to systematically profit from anymomentary market 'inefficiencies'. Moreover, while EMH predicts that all price movement (in the

absence of change in fundamental information) is random (i.e., non-trending), many studies have

shown a marked tendency for the stock market to trend over time periods of weeks or longer.Various explanations for such large and apparently non-random price movements have been

promulgated. For instance, some research has shown that changes in estimated risk, and the use of

certain strategies, such as stop-loss limits and Value at Risk limits, theoretically could cause

financial markets to overreact. But the best explanation seems to be that the distribution of stockmarket prices is non-Gaussian (in which case EMH, in any of its current forms, would not be

strictly applicable).[11][12]

Other research has shown that psychological factors may result in exaggerated (statistically

anomalous) stock price movements (contrary to EMH which assumes such behaviors 'cancel out').Psychological research has demonstrated that people are predisposed to 'seeing' patterns, and often

will perceive a pattern in what is, in fact, just noise. (Something like seeing familiar shapes in

clouds orink blots.) In the present context this means that a succession of good news items about acompany may lead investors to overreact positively (unjustifiably driving the price up). A period of
http://en.wikipedia.org/wiki/Bull_marketshttp://en.wikipedia.org/wiki/Bear_marketshttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Stock_market_crash_in_1987http://en.wikipedia.org/wiki/Dow_Jones_indexhttp://en.wikipedia.org/wiki/Dow_Jones_indexhttp://en.wikipedia.org/wiki/Stock_market#cite_note-Cutler.2C_D._Poterba.2C_J._.26_Summers.2C_L._1991_520.E2.80.93546-9http://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/Stock_market#cite_note-Cutler.2C_D._Poterba.2C_J._.26_Summers.2C_L._1991_520.E2.80.93546-9http://en.wikipedia.org/wiki/Market_anomalyhttp://en.wikipedia.org/wiki/Market_anomalyhttp://en.wikipedia.org/wiki/Market_anomalyhttp://en.wikipedia.org/wiki/Value_at_Riskhttp://cnx.org/content/m11318/latest/http://en.wikipedia.org/wiki/Stock_market#cite_note-10http://en.wikipedia.org/wiki/Stock_market#cite_note-11http://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Bull_marketshttp://en.wikipedia.org/wiki/Bear_marketshttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/Efficient-market_hypothesishttp://en.wikipedia.org/wiki/Stock_market_crash_in_1987http://en.wikipedia.org/wiki/Dow_Jones_indexhttp://en.wikipedia.org/wiki/Stock_market#cite_note-Cutler.2C_D._Poterba.2C_J._.26_Summers.2C_L._1991_520.E2.80.93546-9http://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/Stock_market#cite_note-Cutler.2C_D._Poterba.2C_J._.26_Summers.2C_L._1991_520.E2.80.93546-9http://en.wikipedia.org/wiki/Market_anomalyhttp://en.wikipedia.org/wiki/Value_at_Riskhttp://cnx.org/content/m11318/latest/http://en.wikipedia.org/wiki/Stock_market#cite_note-10http://en.wikipedia.org/wiki/Stock_market#cite_note-11http://en.wikipedia.org/wiki/Behavioral_economics


28/67

good returns also boosts the investor's self-confidence, reducing his (psychological) risk threshold.[13]

Another phenomenonalso from psychologythat works against an objective assessment isgroup thinking. As social animals, it is not easy to stick to an opinion that differs markedly from

that of a majority of the group. An example with which one may be familiar is the reluctance toenter a restaurant that is empty; people generally prefer to have their opinion validated by those of

others in the group.

In one paper the authors draw an analogy with gambling.[14] In normal times the market behaves

like a game ofroulette; the probabilities are known and largely independent of the investment

decisions of the different players. In times of market stress, however, the game becomes more likepoker (herding behavior takes over). The players now must give heavy weight to the psychology of

other investors and how they are likely to react psychologically.

The stock market, as with any other business, is quite unforgiving of amateurs. Inexperienced

investors rarely get the assistance and support they need. In the period running up to the 1987crash, less than 1 percent of the analyst's recommendations had been to sell (and even during the

20002002 bear market, the average did not rise above 5 %%). In the run up to 2000, the media

amplified the general euphoria, with reports of rapidly rising share prices and the notion that large

sums of money could be quickly earned in the so-called new economy stock market. (And lateramplified the gloom which descended during the 20002002 bear market, so that by summer of

2002, predictions of a DOW average below 5000 were quite common.)

Irrational behavior

Sometimes the market seems to react irrationally to economic or financial news, even if that news

is likely to have no real effect on the fundamental value of securities itself. But this may be more

apparent than real, since often such news has been anticipated, and a counterreaction may occur ifthe news is better (or worse) than expected. Therefore, the stock market may be swayed in either

direction by press releases, rumors, euphoria and mass panic; but generally only briefly, as more

experienced investors (especially the hedge funds) quickly rally to take advantage of even the

slightest, momentary hysteria.

Over the short-term, stocks and other securities can be battered or buoyed by any number of fastmarket-changing events, making the stock market behavior difficult to predict. Emotions can drive

prices up and down, people are generally not as rational as they think, and the reasons for buying

and selling are generally obscure. Behaviorists argue that investors often behave 'irrationally' whenmaking investment decisions thereby incorrectly pricing securities, which causes market

inefficiencies, which, in turn, are opportunities to make money.[15] However, the whole notion of

EMH is that these non-rational reactions to information cancel out, leaving the prices of stocksrationally determined.
http://en.wikipedia.org/wiki/Stock_market#cite_note-12http://en.wikipedia.org/wiki/Objectivity_(philosophy)http://en.wikipedia.org/wiki/Groupthinkhttp://en.wikipedia.org/wiki/Gamblinghttp://en.wikipedia.org/wiki/Stock_market#cite_note-13http://en.wikipedia.org/wiki/Roulettehttp://en.wikipedia.org/wiki/Roulettehttp://en.wikipedia.org/wiki/New_economyhttp://en.wikipedia.org/wiki/Euphoriahttp://en.wikipedia.org/wiki/Mass_panichttp://en.wikipedia.org/wiki/Hedge_fundshttp://en.wikipedia.org/wiki/Stock_market#cite_note-14http://en.wikipedia.org/wiki/Stock_market#cite_note-14http://en.wikipedia.org/wiki/Stock_market#cite_note-12http://en.wikipedia.org/wiki/Objectivity_(philosophy)http://en.wikipedia.org/wiki/Groupthinkhttp://en.wikipedia.org/wiki/Gamblinghttp://en.wikipedia.org/wiki/Stock_market#cite_note-13http://en.wikipedia.org/wiki/Roulettehttp://en.wikipedia.org/wiki/New_economyhttp://en.wikipedia.org/wiki/Euphoriahttp://en.wikipedia.org/wiki/Mass_panichttp://en.wikipedia.org/wiki/Hedge_fundshttp://en.wikipedia.org/wiki/Stock_market#cite_note-14


29/67

The Dow Jones Industrial Average biggest gain in one day was 936.42 points or 11 percent, this

occurred on October 13, 2008.[16]

Crashes

Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest

Rates, from Irrational Exuberance, 2d ed.[17] In the preface to this edition, Shiller warns, "The

stock market has not come down to historical levels: the price-earnings ratio as I define it in this

book is still, at this writing [2005], in the mid-20s, far higher than the historical average... Peoplestill place too much confidence in the markets and have too strong a belief that paying attention to

the gyrations in their investments will someday make them rich, and so they do not make

conservative preparations for possible bad outcomes."

Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller

(Figure 10.1,[17] source). The horizontal axis shows the real price-earnings ratio of the S&PComposite Stock Price Index as computed in Irrational Exuberance (inflation adjusted price

divided by the prior ten-year mean of inflation-adjusted earnings). The vertical axis shows the
http://en.wikipedia.org/wiki/Stock_market#cite_note-15http://en.wikipedia.org/wiki/Robert_Shillerhttp://en.wikipedia.org/wiki/Irrational_Exuberance_(book)http://en.wikipedia.org/wiki/Irrational_Exuberance_(book)http://en.wikipedia.org/wiki/Stock_market#cite_note-IE2-16http://en.wikipedia.org/wiki/Robert_Shillerhttp://en.wikipedia.org/wiki/Stock_market#cite_note-IE2-16http://irrationalexuberance.com/shiller_downloads/ie_data.xlshttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Price-Earnings_Ratio,_Interest_1871-2006.pnghttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Price-Earnings_Ratio,_Interest_1871-2006.pnghttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Price-Earnings_Ratio,_Interest_1871-2006.pnghttp://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Twenty-Year_Returns_%28Shiller_Data%29.pnghttp://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Twenty-Year_Returns_%28Shiller_Data%29.pnghttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Prices,_Earnings,_and_Dividends_1871-2006.pnghttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Prices,_Earnings,_and_Dividends_1871-2006.pnghttp://en.wikipedia.org/wiki/Stock_market#cite_note-15http://en.wikipedia.org/wiki/Robert_Shillerhttp://en.wikipedia.org/wiki/Irrational_Exuberance_(book)http://en.wikipedia.org/wiki/Stock_market#cite_note-IE2-16http://en.wikipedia.org/wiki/Robert_Shillerhttp://en.wikipedia.org/wiki/Stock_market#cite_note-IE2-16http://irrationalexuberance.com/shiller_downloads/ie_data.xlshttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Price-Earnings_Ratio,_Interest_1871-2006.pnghttp://en.wikipedia.org/wiki/File:IE_Real_SandP_Price-Earnings_Ratio,_Interest_1871-2006.png


30/67

geometric average real annual return on investing in the S&P Composite Stock Price Index,

reinvesting dividends, and selling twenty years later. Data from different twenty year periods is

color-coded as shown in the key. See alsoten-year returns. Shiller states that this plot "confirmsthat long-term investorsinvestors who commit their money to an investment for ten full years

did do well when prices were low relative to earnings at the beginning of the ten years. Long-term

investors would be well advised, individually, to lower their exposure to the stock market when itis high, as it has been recently, and get into the market when it is low." [17]

Main article: Stock market crash

A stock market crash is often defined as a sharp dip inshare prices ofequities listed on the stock

exchanges. In parallel with various economic factors, a reason for stock market crashes is also dueto panic and investing public's loss of confidence. Often, stock market crashes end speculative

economic bubbles.

There have been famousstock market crashesthat have ended in the loss of billions of dollars and

wealth destruction on a massive scale. An increasing number of people are involved in the stock

market, especially since the social security and retirement plansare being increasingly privatizedand linked to stocks and bonds and other elements of the market. There have been a number of

famous stock market crashes like the Wall Street Crash of 1929, the stock market crash of 19734,the Black Monday of 1987, the Dot-com bubble of 2000, and the Stock Market Crash of 2008.

One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The

Dow Jones Industrial lost 50 % during this stock market crash. It was the beginning of the Great

Depression. Another famous crash took place on October 19, 1987 Black Monday. The crashbegan in Hong Kong and quickly spread around the world.

By the end of October, stock markets in Hong Kong had fallen 45.5 %%, Australia 41.8 %%,

Spain 31 %%, the United Kingdom 26.4 %%, the United States 22.68 %%, and Canada 22.5 %%.Black Monday itself was the largest one-day percentage decline in stock market history the DowJones fell by 22.6 %% in a day. The names Black Monday and Black Tuesday are also used

for October 2829, 1929, which followed Terrible Thursdaythe starting day of the stock market

crash in 1929.

The crash in 1987 raised some puzzles-main news and events did not predict the catastrophe andvisible reasons for the collapse were not identified. This event raised questions about many

important assumptions of modern economics, namely, the theory of rational human conduct, the

theory of market equilibrium and the hypothesis of market efficiency. For some time after thecrash, trading in stock exchanges worldwide was halted, since the exchange computers did not

perform well owing to enormous quantity of trades being received at one time. This halt in trading

allowed the Federal Reserve system and central banks of other countries to take measures tocontrol the spreading of worldwide financial crisis. In the United States the SEC introduced several

new measures of control into the stock market in an attempt to prevent a re-occurrence of the

events of Black Monday.

Computer systems were upgraded in the stock exchanges to handle larger trading volumes in amore accurate and controlled manner. The SEC modified the margin requirements in an attempt to
http://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Ten-Year_Returns_(Shiller_Data).pnghttp://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Ten-Year_Returns_(Shiller_Data).pnghttp://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Ten-Year_Returns_(Shiller_Data).pnghttp://en.wikipedia.org/wiki/Stock_market#cite_note-IE2-16http://en.wikipedia.org/wiki/Stock_market_crashhttp://en.wikipedia.org/wiki/Share_pricehttp://en.wikipedia.org/wiki/Share_pricehttp://en.wikipedia.org/wiki/Equitieshttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Stock_market_crashhttp://en.wikipedia.org/wiki/Stock_market_crashhttp://en.wikipedia.org/wiki/Stock_market_crashhttp://en.wikipedia.org/wiki/Social_securityhttp://en.wikipedia.org/wiki/Retirement_planhttp://en.wikipedia.org/wiki/Retirement_planhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929http://en.wikipedia.org/wiki/Stock_market_crash_of_1973%E2%80%934http://en.wikipedia.org/wiki/Black_Monday_(1987)http://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/Dow_Jones_Industrialhttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Theory_of_rational_conduct_of_human_beinghttp://en.wikipedia.org/wiki/Theory_of_rational_conduct_of_human_beinghttp://en.wikipedia.org/wiki/Theory_of_market_equilibriumhttp://en.wikipedia.org/wiki/Hypothesis_of_market_efficiencyhttp://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Ten-Year_Returns_(Shiller_Data).pnghttp://en.wikipedia.org/wiki/File:Price-Earnings_Ratios_as_a_Predictor_of_Ten-Year_Returns_(Shiller_Data).pnghttp://en.wikipedia.org/wiki/Stock_market#cite_note-IE2-16http://en.wikipedia.org/wiki/Stock_market_crashhttp://en.wikipedia.org/wiki/Share_pricehttp://en.wikipedia.org/wiki/Equitieshttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Stock_market_crashhttp://en.wikipedia.org/wiki/Social_securityhttp://en.wikipedia.org/wiki/Retirement_planhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929http://en.wikipedia.org/wiki/Stock_market_crash_of_1973%E2%80%934http://en.wikipedia.org/wiki/Black_Monday_(1987)http://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/Dow_Jones_Industrialhttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Theory_of_rational_conduct_of_human_beinghttp://en.wikipedia.org/wiki/Theory_of_market_equilibriumhttp://en.wikipedia.org/wiki/Hypothesis_of_market_efficiencyhttp://en.wikipedia.org/wiki/Federal_Reserve


31/67

lower the volatility of common stocks, stock options and the futures market. The New York Stock

Exchange and theChicago Mercantile Exchange introduced the concept of a circuit breaker. The

circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribedamount of time.
http://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Chicago_Mercantile_Exchangehttp://en.wikipedia.org/wiki/Chicago_Mercantile_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Chicago_Mercantile_Exchange


32/67

Objectives of Study

If one person has to do anything he has specific objective behind his working i.e. there is always an

objective behind any action or event and without that you can not know for what you are striving.

The objective of my study is related with analysis of stock market in India covers the following

areas:

1. The objective of the study is to know investors investment decisions in stock market.

2. To understand the perceptions of investors towards Indian Stock Market.

3. To know about fundamental factors like economic factors, industry analysis, company

analysis which affects investment decisions.

4. To know about technical factors like chats, trend lines, P/E ratio, moving average,

oscillators etc. which affects investment decisions.

5. To identify the problems in the working of stock exchanges.

6. To evaluate various legal aspects pertaining to stock markets in India.

7. Identifying small investors problems with the brokers.


33/67


34/67

Scope of the Study

Along with the objective the scope of study is also plays an important role in analysis the project it

makes the study more meaningful and relevant. Seems my study is related with analyzing the

Indian stock market, therefore my scope of study is limited to Indian stock market only. In Stock

Market different types of markets are available like INDIAN STOCK MARKET, DOW JONES,

NASDAQ and others, I have selected Indian Stock Market.


35/67


36/67

Research Methodology

A research design in simply a plan or framework for a study that is used as a guide in collecting &

analyzing the data. It helps the researcher to conduct the study by ensuring that economical

procedures are employed & probing is relevant to the problem.

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. Every researcher has to

design methodology for his problem. To understand the system better and to make practical

suggestions for improvement, it is imperative to think in an innovative manner and within the

constraints imposed by the system. To affect this plan and to get deeper into the system, the

following methodology was adopted.

Research Design: - A research design is an arrangement of conditions for collection and

analysis of data in a manner that aims to combine relevance to the research purpose with economy

in procedure. The Descriptive or Diagnostic Research Design is used here it is that research which

has not been done earlier in-fact it is based on the new generalizations of the facts. It includes the

finding of new enquires. The research design implemented in this research is Descriptive and


37/67

Diagnostic. The descriptive research studies are those studies which are concerned with describing

the characteristics of a particular individual, or of a group, whereas diagnostic research studies

determine the frequency with which something occur or its association with something else.

Sampling Technique: - Every research is based on some facts and findings and these

are found or calculated through sample, so sample selection and technique used plays very

vital role in any research methodology. It is of two types:

a) Non-Probabilistic Sampling : - It is that type of sampling which is according to the

convenience of researcher therefore it is called convenience research also.

b) Probabilistic Sampling : - Probabilistic sampling is characterized by the fact thateach element of the population is known & non-zero chance of being included in

the sample.

The non probabilistic sampling technique is used here

because the findings are based on: -

1. Selected Brokers Interviews

2. Selected Investors Interviews

Data Source: - This project requires data that have already

been collected by someone else or newer one. Here the newer data has been analyzed there

for primary data source is used.

ResearchInstrument: - Research instrument is used for

collecting the data. This relates to the tools used for collection of data and other

information required for the purpose of the project. Research Instrument used in the

project is questionnaire.

Sample Size: - For the purpose of analysis the project has

been taken with 10 brokers and with 50 Investors as samples.


38/67

Sampling Unit: - It covers Brokers and Investors as measuring

unit.

Sampling Area: - Rohtak City

Research Methodology at a Glance

Research Problem: - An Analysis of Stock Market- In India

Research Design: - Descriptive or Diagnostic

Data Collection:-

Data Type: - Primary

Data Collection Tools: - Questionnaire

Sampling:-

Sampling Unit: - Brokers/ Investors

Sampling Area: - Rohtak City

Sample Size: - 10Brokers/ 50 Investors

Research Approach: - Survey


39/67


40/67

LIMITATIONS OF STUDY

Working on An analysis of stock market-In India itself is a great experience and regarding my

project I faced certain limitations during my survey for the project are as follows:

On-site observation and direct interviews was a tedious job and took a lot of time.

The sample size was small.

The results may not be very accurate, as I did not interact with each and every employee.

I could not get exact information, as I was not given the opportunity to have more exposure

of different parts of India as I was only taking care of Rohtak City.

While conducting the project, I faced time constraint problem.

Some times the brokers/investors not respond proper cooperation with my questionnaire,

they take it as formality.

The cost occurred during survey was also a problem.


41/67


42/67

SUGGESTIONS AND CONLUSIONS

There are some suggestions which may be helpful for brokers and Investors regarding analyzing

stock market which increased confidence among investors regarding stock market. These are:

1. A uniform organizational structure among all the stock exchanges having democratic

representation of different interest groups would be proposed. It would facilitate in dealing

with crises situation promptly, firmly and impartially.

2. Steps to be taken towards improvement of operational efficiency includes enhancement of

trading hours, strict vigilance on the price manipulation, advancement of computerized

trading and development of communication system in the remote areas of the country.

3. Prudent use of available mechanism like imposition of margin money, volume restrictions,and circuit breakers to control the temporal disequilibrium of the market.

4. To increase investors confidence in stock market must be regained in order to encourage

capital mobilization through primary market issues.


43/67

5. The investor forum as well other authorities should have power to dispose off the cases

summarily and to award compensation to the investors.

6. The detail information regarding investments which investors wants may include the form

of organization, management, capital adequacy, liabilities, defaults and penal actions taken

by the regulator and self regulatory organizations against the broker in the past and other

relevant information, must provides them.

7. The stock market is integrated with banking sector so that the effective and efficient

payment, settlement and clearing systems are developed.

8. Further expansion of banking activities in conjunction with further efforts to liberalize the

banking system.

9. The culprit needs to be punished in an exemplary manner so that it becomes a lesson for

others. The investors should have means to recover their loss caused by the culprit.


44/67

ANALYSIS OF DATA COLLECTED FROM BROKERS

1. Views On Stock Exchanges Management Design Mechanism

Option A: Demutualisation

Option B: Establishment of statutory committee in each stockexchange

Option C: Complete removal of brokers from the governing body

Option D: Staff selection should be through public service commission


45/67

50%

30%

10%10%

Option A

Option B

Option C

Option D

2. Views On Dominance of brokers in governing body of Indian stock exchanges

Option A: No firewall between brokers and management of stock exchanges

Option B: Staffing and Management structure of stock exchanges below the board

level

Option C: Brokers dominance in governing body

Option D: Laxity of implementation in disciplnary action of members


46/67

30%

10%40%

20%Option A

Option B

Option C

Option D

3. Views On Organizational structural changes for bringing efficiency in stock

exchanges

Option A: National Clearing System

Option B: National Depositary System

Option C: National Trade Comparison and Reporting System


47/67

60%

10%

30%

Option A

Option B

Option C

4. Do we need operational change in indian stock exchanges for the purpose of

safeguard small investors?

Option A: Compulsory participation of Market maker in the trading shares whichare related to ex-company

Option B: Control on violent price swings between trading and settlement

Option C: Special 48 hours window between delivery of securties and payment


48/67

30%

20%

50%

Option A

Option B

Option C

5. Views on smooth functioning matter in stock exchanges

Option A: Through government elected members

Option B: Through eminent economic journalist representation in the governing board

Option C: Through stock exchanges brokers representation on a rotation basis


49/67

30%

10%60%

Option A

Option B

Option C

6. Views on stock market scam by brokers

Option A: Recovering the money

Option B: Reforming the system

Option C: Strict vigilence on banking operations

Option D: Stern action against the brokers


50/67

20%

10%

40%

30% Option A

Option B

Option C

Option D

7. Views on Protection of small investors from the price rigging

Option A: Concentration ratio system

Option B: Circuit breaker system

Option C: Daily and weekly transaction price limit

Option D: Margin system


51/67

20%

10%

30%

40%Option A

Option B

Option C

Option D

ANALYSIS OF DATA COLLECTED FROM CLIENTS/INVESTORS

1. Views regarding general investment period

Option A: Long Term

Option B: Medium Term

Option C: Short Term


52/67

10

22

18

0

5

10

15

20

25

Option A Option B Option C

2. Views on stock investment experience with Primary Market

Option A: Very Satisfactory and Rewarding

Option B: Reasonably Unsatisfactory

Option C: Unsatisfactory

Option D: Very Unsatisfactory


53/67

3

38

7

2

0

5

10

15

20

25

30

35

40

Option A Option B Option C Option D

3. Views on satisfaction level with brokers

Option A: Very satisfied

Option B: Somewhat satisfied

Option C: Somewhat dissatisfied

Option D: Very dissatisfied


54/67

5

36

6

3

0

5

10

15

20

25

30

35

40


4. Views on deficiencies in brokers services

Option A: Bad execution

Option B: High cost

Option C: Accounting Snaufs

Option D: Any other


55/67

10

22

14

4

0

5

10

15

20

25


5. Clients opinion regarding what should be ideal brokerage?

Option A: 0.25%

Option B: 0.35%

Option C: 0.50%

Option D: 0.65%


56/67

22

16

8

4

0

5

10

15

20

25


6. Reason behind dealing with sub-brokers

Option A: Sub-broker provide services at your doorstep

Option b: You dont know about any stock

Option C: Not the stock exchange members

Option D: Any other reason


57/67

24

18

6

2

0

5

10

15

20

25

30


7. Views on confident level of investors on the fair dealing with their brokersOption A: Very confident

Option B: Somewhat confident

Option C: Somewhat doubtful

Option D: Very doubtful


58/67

12

25

8

5

0

5

10

15

20

25

30


8. Which one of your most favourite Stock Exchange?

Option A: NSE

Option B: BSE

Option C: Any other


59/67

36

10

4

0

5

10

15

20

25

30

35

40


9. On what Basis you invests in stock market?

Option A: On Fundamental Analysis

Option B: On Technical Analysis

Option C: Both


60/67

15

13

22

0

5

10

15

20

25



61/67

QUESTIONNAIRE FOR BROKERS

1. Views On Stock Exchanges Management Design Mechanism

Option A: Demutualisation

Option B: Establishment of statutory committee in each stock

exchange


62/67

Option C: Complete removal of brokers from the governing body

Option D: Staff selection should be through public service commission

2. Views On Dominance of brokers in governing body of Indian stock exchanges

Option A: No firewall between brokers and management of stock exchanges

Option B: Staffing and Management structure of stock exchanges below the boardlevel

Option C: Brokers dominance in governing body

Option D: Laxity of implementation in disciplnary action of members

3. Views On Organizational structural changes for bringing efficiency in stock

exchanges

Option A: National Clearing System

Option B: National Depositary System

Option C: National Trade Comparison and Reporting System

4. Do we need operational change in indian stock exchanges for the purpose of

safeguard small investors?

Option A: Compulsory participation of Market maker in the trading shares which

are related to ex-company

Option B: Control on violent price swings between trading and settlement

Option C: Special 48 hours window between delivery of securties and payment

5. Views on smooth functioning matter in stock exchanges

Option A: Through government elected members


63/67

Option B: Through eminent economic journalist representation in the governing board

Option C: Through stock exchanges brokers representation on a rotation basis

6. Views on stock market scam by brokers

Option A: Recovering the money

Option B: Reforming the system

Option C: Strict vigilence on banking operations

Option D: Stern action against the brokers

7. Views on Protection of small investors from the price rigging

Option A: Concentration ratio system

Option B: Circuit breaker system

Option C: Daily and weekly transaction price limi

Option D: Margin system

QUESTIONNAIRE FOR CLIENTS/ INVESTORS

1. Views regarding general investment period

Option A: Long Term

Option B: Medium Term

Option C: Short Term


64/67

2. Views on stock investment experience with Primary Market

Option A: Very Satisfactory and Rewarding

Option B: Reasonably Unsatisfactory

Option C: Unsatisfactory

Option D: Very Unsatisfactory

3. Views on satisfaction level with brokers

Option A: Very satisfied

Option B: Somewhat satisfied

Option C: Somewhat dissatisfied

Option D: Very dissatisfied

4. Views on deficiencies in brokers services

Option A: Bad execution

Option B: High cost

Option C: Accounting Snaufs

Option D: Any other

5. Clients opinion regarding what should be ideal brokerage?

Option A: 0.25%

Option B: 0.35%

Option C: 0.50%

Option D: 0.65%

6. Reason behind dealing with sub-brokers

Option A: Sub-broker provide services at your doorstep

Option b: You dont know about any stock

Option C: Not the stock exchange members

Option D: Any other reason


65/67

7. Views on confident level of investors on the fair dealing with their brokers

Option A: Very confident

Option B: Somewhat confident

Option C: Somewhat doubtful

Option D: Very doubtful

8. Which one of your most favourite Stock Exchange?

Option A: NSE

Option B: BSE

Option C: Any other

9. On what Basis you invests in stock market?

Option A: On Fundamental Analysis

Option B: On Technical Analysis

Option C: Both


66/67


67/67

BIBLIOGRAPHY

1. Avadhani V A (1992), Investment and Securities Market in India: Investment

Management, Himalaya Publishing, Bombay.

2. Bhole L M (1982), Financial Markets and Institutions: Growth Structure and Innovations,

Tat MacGraw Hill, New Delhi 1st edition.

3. Achils, Steven B. Technical Analysis from A to Z, McGraw-Hill, 2000.

4. Engerman, M. Using Fundamental and Economic Factors to Explain Stock Returns, Barra

Newsletter, Fall 2005.

5. Greig, A.C. Fundamental Analysis and Subsequent Stock Returns, Journal of Accounting

and Economics, 15, 2004, pp.413-442.

6. M. Ranganatham and R. Madhumathi. Investment Analysis and Portfolio Management,

Pearson Education, 2005, pp. 206-410.

7. Punithavathy Pandian. Security Analysis and Portfolio Management, Vikas Publishing

House Pvt. Ltd., 2001, pp. 215-278.

8. Khan Javaid (2005), Operating of stock exchange in India, Vista International Publishing

House, Delhi.

Working of Stock Market in India

Documents