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 stock
exchanges that channel long-term investment funds to commercial and
industrial 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.
Indian Financial Market consists of the following markets:
Capital Market/ Securities Market
o Primary capital market
o Secondary capital market
Debt Market
Primary 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
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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 Markets
A 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.
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In market economy like India, financial market institutions provide the avenue by which longterm 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 the
prevailing 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 specific
An 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
Shares
The 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

Stocks
The 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/ Bonds
The 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 bonds
Yields
Most 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)/2
Preference shares
Preference 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.
IPO
Conditions 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.
Derivatives
A 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 basic
underlying 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.
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 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 PRODUCTS
Some significant derivatives that are of interest to us are depicted in the accompanying graph:
Major types of derivatives
FUTURES, FORWARDS AND OPTIONS
An 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.
FORWARDS
A 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 for
the 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.
FUTURES
Futures contract is a standardized transaction taking place on the futures
exchange. 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
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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
OPTIONS
An 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
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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 were
automakers 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 the
government.
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 :7

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 ?

Meaning
In 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 India

In 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. Bonds
Bonds 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. Stocks
Stocks 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 Funds
Mutual 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

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Fixed income schemes

Monthly income schemes

Tax saving schemes

Hybrid schemes

Balance schemes

Sector schemes

Floating rate schemes

6. Insurance
Insurance 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 Derivatives

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These 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 INDIA

It 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.

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FUNCTIONS AND RESPONSIBILITIES

SEBI 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 quasiexecutive. 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.

POWERS
For the discharge of its functions efficiently, SEBI has been invested with the necessary powers
which are:
1. to approve bylaws of stock exchanges.
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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 Committees
1. 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 EXCHANGE
Meaning

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Stock 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 Exchange

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Characteristics 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

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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 LIMITED

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly
known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the
first stock exchange in the country to obtain permanent recognition in 1956 from the Government of
India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role
in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked
worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and
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,
17

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

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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 value

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 OBJECTIVE OF RESEARCH: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
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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 30
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:- Mumbai .

Limitations:
1
2
3
4

Time limitation
Investors did not disclose their secrets data and strategies.
Possibility of Error in data collection.
Possibility of Error in analysis of data due to small sample size.

Hypothesis :
H1
(1) The Capital Markets play a significant role in any economy from allocation
of Capital and Risk to Policy Making.
(2) Capital market is the heart of any economy through which the savings are
channelized into effective long-term investments.

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H0
Volatility is another issue - and with long-term investments.
May be high charges which reduce earnings from investment returns.
No guarantee of returns
Risk of losing your money.

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.

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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.

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 REFERENCE:Siteshttp://en.wikipedia.org/wiki/Stock_market
http://www.nse-india.com/
http://www.capitalmarket.com/
http://www.investopedia.com/terms/c/capitalmarkets.asp
http://www.moneycontrol.com/sensex/bse/sensex-live

BooksHow to Make Money in Stocks

William ONeil

Technical Analysis of the Financial Markets

The Intelligent Investor

John J. Murphy

Benjamin Graham

QUESTIONNAIRE
Name.Age.
Gender.Occupation
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Q.1 Do you invest in stock market?

(A) yes

(B) No

Q.2 If you want to invest or if you invest then In which of the following do you
(Tick more than one if applicable)
(A) Equity

(B) Derivatives

(C) Mutual funds

(D) Others

Q.3 Which sector you prefer for investment in stock market?

(A) Government

(B) Non Government

(C) Semi Government

Q. 4 How many shares do you have?
(A) 1-10

(B) 10-50

(C) 50-100

(D) More than 100

Q.5 Your returns are mostly in

(A) Profit

(B) Loss

Q. 6 Who suggest you to invest in stock market?

(A) Family member

(B) Relatives

(C) By own

(D) 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%

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

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invest?

(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 form

Q. 11 Are you satisfied with your investment?

(A) yes

(B) No

Q.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) No

Q. 14 If you did not invest in stock market then what will be the other option?
(A) Insurance

(B) Saving

(C) Property

(D) Others

Q.15 Do you want any improvement in the policies of stock market, Please give Suggestion.

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