1. 2. 3.

List of Tables List of Figures Introduction i. Need for the Study ii. Objective of the Study iii. Research methodology iv. Scope of the study v. Limitations of the study

Page-NO

4. 5. 6. 7. 8. 9.

Review of Literature Company Profile Data Analysis and Interpretation Summary and Conclusions Bibliography Appendices

Introduction

NEED OF THE STUDY The significant transformation of the Capital Market in India is clearly evident from the changes that have occurred in the Stock market. The developments have facilitated greater choice for investors, who have become more discerning and demanding. Currently, the most important factor shaping the world is globalization. The benefits of globalization have been well documented and are being increasingly recognized. Integration of domestic markets with international financial markets has been facilitated by tremendous advancement in information and communications technology. But, such an environment has also meant that a problem in one country can sometimes adversely impact one or more countries instantaneously, even if they are fundamentally strong. There is a growing realization that the ability of countries to conduct business across national borders and the ability to cope with the possible downside risks would depend on the soundness of the Capital market. This has consequently meant the adoption of a strong and transparent, prudential, regulatory, supervisory, technological and institutional framework in the sector on par with international best practices is necessary. All this necessitates a transformation: a transformation in the mindset, a transformation in the business processes and finally, a transformation in knowledge management. This process is not a one shot affair; it needs to be appropriately phased in the least disruptive manner. Scope Of The Study Dealings in securities by their very nature are susceptible to fraud and undesirable practices on the part of the operators on a stock exchange. The general investing publics interest ties to be safeguarded. Listing only implies that the securities admitted to the official trading list of the stock exchange satisfy the prescribed standard of legality, security and workmanship. It further implies that the company, whose securities are so listed, has to comply with certain conditions and requirements with regard to submission of certain documents and disclosure of certain information whenever the stock exchange so wants. Through listing, a recognized stock exchange tries to ensure that all significant information relating to the listed company is a available to all the investors and traders on the stock exchange.

OBJECTIVE OF THE STUDY Objectives of a project tell us why project has been taken under study. It helps us to know more about the topic that is being undertaken and helps us to explore future prospects of that topic. Basically it tells what all have been studied while making the project. To learn about the Reforms in the Indian Capital Market. To analyze the respondents view about the Capital Market and related concepts. To analyze the recent initiatives in Capital Market To analyze the history of RELIGARE CAPITAL MARKET and its business & strategy.

RESEARCH METHODOLOGY RESEARCH DESGIN Research is a process through which we attempt to achieve systematically and with the support of data the answer to a question, the resolution of a problem, or a greater understanding of a phenomenon. This process, which is frequently called research methodology, has eight distinct characteristics: 1. Research originates with a question or problem. 2. Research requires a clear articulation of a goal. 3. Research follows a specific plan of procedure. 4. Research usually divides the principal problem into more manageable sub problems. 5. Research is guided by the specific research problem, question, or hypothesis. 6. Research accepts certain critical assumptions. 7. Research requires the collection and interpretation of data in attempting to resolve the problem that initiated the research. 8. Research is, by its nature, cyclical; or more exactly, helical.

RESEARCH INSTRUMENT SAMPLE SIZE SAMPLE TECNIQUIES SAMPLE SIZE Duration of Study: 45-days

Place of Study: RELIGARE CAPITAL MARKET Broking Firm,Brokerage Houses

Research Design: Descriptive research is used in this project report in order to know about the responses to various views related to Indian Capital Market. This is the most popular type of research technique, generally used in survey research design and most useful in describing the characteristics of respondents. The methods used were following: Questionnaire method Direct Interaction with the respondents.

Mode Of Data Collection: Primary Data: - The sources of Primary data were questionnaires and personal interviews. Secondary data: - the sources of secondary data were internet, books and newspaper articles.

Sample size: 50

Review of Literature

The only stock exchanges operating in the 19th century were those of Bombay set up in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non profit-making association of brokers to regulate and protect their interests. Before the control on securities trading became central subject under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under this act, the Bombay stock exchange was recognized in 1927 and Ahmedbad in 1937.

During the war boom, a number of stock exchanges were organized in Bombay, Ahmedbad and other centers, but they were not recognized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D. Gorwala went into the bill for securities regulation. On the basis of the committees recommendations and public discussion, the securities contracts (regulation) Act became law in 1956.

DEFINITION OF STOCK EXCHANGE

Stock exchange means any body or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.

It is an association of member brokers for the purpose of self-regulation and protecting the interests of its members. It can operate only if it is recognized by the Government under the securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act by the central government, Ministry of Finance. BYLAWS

Besides the above act, the securities contracts (regulation) rules were also made in 1975 to regulative certain matters of trading on the stock exchanges. There are also bylaws of the exchanges, which are concerned with the following subjects.

Opening / closing of the stock exchanges, timing of trading, regulation of blank transfers, regulation of Badla or carryover business, control of the settlement and other activities of the stock exchange, fixating of margin, fixation of market prices or making up prices, regulation of taravani business (jobbing), etc., regulation of brokers trading, brokerage chargers, trading rules on the exchange, arbitrage and settlement of disputes, settlement and clearing of the trading etc.

REGULATION OF STOCK EXCHANGES

The securities contracts (regulation) act is the basis for operations of the stock exchanges in India. No exchange can operate legally without the government permission or recognition. Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure that the control and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. Recognition can also be withdrawn, if necessary. Where there are no stock exchanges, the government licenses some of the brokers to perform the functions of a stock exchange in its absence.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI).

SEBI was set up as an autonomous regulatory authority by the government of India in 1988 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matter connected therewith or incidental thereto. It is empowered

by two acts namely the SEBI Act, 1992 and the securities contract (regulation) Act, 1956 to perform the function of protecting investors rights and regulating the capital markets.

BOMBAY STOCK EXCHANGE

This stock exchange, Mumbai, popularly known as BSE was established in 1875 as The Native share and stock brokers association, as a voluntary non-profit making association. It has an evolved over the years into its present status as the premiere stock exchange in the country. It may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo stock exchange, which was founded in 1878.

The exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures redressed of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programs.

A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides is the apex body, which decides the policies and regulates the affairs of the exchange.

The Exchange director as the chief executive offices is responsible for the daily today administration of the exchange.

BSE INDICES :

In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index called BSE-SENSEX that subsequently became the barometer of the moments of the share prices in the Indian stock market. It is a Market capitalization weighted index of 30 component stocks representing a sample of large, well-established and leading companies. The base year of sensex 1978-79. The Sensex is widely reported in both domestic and international markets through print as well as electronic media. Sensex is calculated using a market capitalization weighted method. As per this methodology the level of the index reflects the total market value of all 30-component stocks from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the nu7mber of shared outstanding. Statisticians call index of a set of combined variables (such as price and number of shares) a composite Index. An indexed number is used to represent the results of this calcution in order to make the value easier to go work with and track over a time. It is much easier to graph a chart based on Indexed values than on based on actual valued world over majority of the well-known Indices are constructed using Market capitalization weighted method.

In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the index by a number called the Index Divisor. The divisor is the only link to the original base period value of the SENSEX. The Devisor keeps the Index comparable over a period value of time and if the references point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian stock markets. Base year average is changed as per the formula new base year average = old base year average*(new market value / old market value).

NATIONAL STOCK EXCHANGE The NSE was incorporated in Nov, 1992 with an equity capital of Rs.25 crs. The international securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared the detailed business plans and initialization of hardware and software systems. The promotions for NSE were financial institutions, insurances, companies, banks and SEBI capital market ltd, Infrastructure leasing and financial services ltd and stock holding corporations ltd.

It has been set up to strengthen the move towards professionalisation of the capital market as well as provide nation wide securities trading facilities to investors. NSE is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged.

NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided.

NSE-NIFTY:

The NSE on Apr22, 1996 launched a new equity Index. The NSE-50. The new Index which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the new segment of future and option.

NIFTY mean National Index for fifty stocks. The NSE-50 comprises fifty companies that represent 20 board industry groups with an aggregate market capitalization of around Rs 1, 70,000 crs. All companies included in the Index have a market capitalization in excess of Rs. 500 crs each and should have trade for 85% of trading days at an impact cost of less than 1.5%.

The base period for the index is the close of price on Nov 3 1995, which makes one year of completion of operation of NSEs capital market segment. The base value of the index has been set at 1000.

NSE-MIDCAP INDEX The NSE madcap index or the junior nifty comprises 50 stocks that represent 21st board industry groups and will provide proper representation of the midcap segment of the Indian capital market. All stocks in the Index should have market capitalization of grate than Rs.200 crs and should have traded 85% of the trading days at an impact cost of less than 2.5%.

The base period for the index is Nov 4 1996, which signifies 2 years for completion of operations of the capital market segment of the operations. The base value of the Index has been set at 1000.

Average daily turn over of the present scenario 258212 (Laces) and number of average daily trades 2160(Laces).

At present there are 24 stock exchanges recognized under the securities contract (regulation Act, 1956. They are

Ahmedbad Stock Exchange Bangalore Stock Exchange Bhubaneswar 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 Sock Exchange Madras Stock Exchange Magadh Stock Exchange Mangalore Stock Exchange Pune Stock Exchange Uttar Pradesh Exchange Assoc ltd Saurashtra Sock Exchange Vadodhara Stock Exchange NSE OTCEI Inter connected Stock Exchange

Introduction: Capital market reform enables the capital markets to embrace new ideas and techniques affecting the capital market. Capital market liberalization is one such capital market reform that is adopted by various countries to strengthen their economy.

A capital market is a place that handles the buying and selling of the securities. This is the ideal place where both the governments and companies can raise their funds. The capital markets of all the countries have undergone a number of reforms in the history.

Economic theories are made and implemented to reform the functionalities of the capital market. The prime objective behind all the policies and reforms was obviously to strengthen the capital market of a particular country as much as possible. It has been always a big question to the economists whether to allow or not to allow the foreign investments in the country. Packaged with both advantages and disadvantages, the liberalization of the capital markets has always been controversial. In the 1980s and 1990s when the US Treasury and International Monetary Fund (IMF) tried to push worldwide capital-market liberalization, there had been enormous opposition. Economists were not in the support of free and unfettered markets.

Now, when the capitalist countries, developing capitalist countries, underdeveloped countries and a large number of socialist countries have nodded their support to the

capital market reform and capital market globalization, the global capital market has evolved in a new identity. The concept of capital market is not restricted to the share and bond trading in the developed capitalist countries only but is equally influenced by the capital markets of developing and underdeveloped countries as well. Now the economic or financial change in one country can affect the capital market of other country in real time. Almost all the countries are now exposed to the inter-country trades and inter-country investments. The use of internet and electronic media has added some more feasibility to the practice. Exchange of information is fast and accurate with internet. Another advantage of this system is that it brings the entire world in a single place. The capital market is one of the industries that enjoy the maximum facility of the internet service.

MARKET STRUCTURE AND DIMENSIONS

The public-sector debt instruments mainly comprise central and state government securities, which account for about 65 percent of the countrys debt market, and publicsector bonds issued by companies in the public sector. Other debt instruments in the market are certificates of deposit and commercial paper in the short-dated sector, and corporate bonds in the medium- to long-dated sector.The debt market is an important source of funding for the corporate sector as well as the government. The borrowing rate of the government determines the risk-free rate in the market and is the benchmark against which all other paper is priced. The size of the Indian debt market is estimated at

about Rs 4,172 billion, as of 31 March 1998 The development of the debt markets in India has been constrained by the limited number and variety of instruments, lack of liquidity, and dearth of investors. New debt instruments would add depth and volume to a market that today comprises mostly government securities.The main instruments in the Indian debt market are discussed briefly below.

Government of India Securities

Government of India securities (GOI securities), also called dated securities,are mediumto long-term obligations of the government that are issued on its behalf by the central bank, the Reserve Bank of India (RBI),and are registered in the holders name at the Public Debt Office of the RBI. The RBI also acts as the depository and maintains

subsidiary general ledger accounts for banks and other select investors such as primary dealers, financial institutions, mutual funds, insurance companies, and provident funds. FIIs have recently been permitted to invest in GOI securities and to repatriate the profits from the investments. Banks, nonbank finance companies (NBFCs),1 and housing finance institutions (HFIs) are required to invest in government securities to satisfy their statutory liquidity reserve (SLR) requirements.

Dated securities usually have a maturity period of two to ten years,and the issue size varies from Rs 20 billion to Rs 50 billion. The outstanding GOI securities as of 31 March 1998, excluding securities issued by public-sector units which carried a central or state government guarantee, amounted to about Rs 2,254 billion. In 19971998, primary

auctions of GOI securities had yields ranging from 11.15 percent to 13.05 percent for securities with a maturity of three to ten years. To boost the retail sector and give greater liquidity to retail investors, the RBI in October 1997 allowed banks to buy GOI securities and thensell them at prevailing market prices immediately after. Previously, there had to be an interval of at least 30 days between the purchase and resale of the securities.

Treasury Bills

Treasury bills (T-bills) are short-term rupee-denominated obligations issued by the RBI on behalf of the GOI. They are issued for maturityperiods of 14 days, 91 days, and 364 days. In addition, the RBI plans to introduce a 28-day T-bill. The typical auction size is Rs 5 billion for the 91-day T-bill, and Rs 200 million to Rs 20 billion for the 364-day Tbill. Outstanding T-bills amounted to about Rs 181 billion as of March 1998,compared

with Rs 165 billion in March 1997.Investors in T-bills include banks, primary dealers, financial institutions, mutual funds, corporations, NBFCs, HFIs, state governments, and insurance companies. The new monetary and credit policy for the first half of 19981999 allows FIIs to invest in T-bills. Nonresident Indians (NRIs) and overseas corporate bodies (OCBs) may similarly invest in Tbills,but cannot repatriate the profits. In the second half of 19971998, the RBI announced plans to introduce a uniform price auction for 91-day T-bills, to deal with the problem of winners curse3 and to broaden market participation.

Sovereign Bonds

India has not yet issued sovereign bonds in the international market. The countrys sovereign rating is based on the ratings assigned to bond and debenture issues of publicsector Indian companies in the international market. Despite the countrys low investment or high noninvestment grade ratings, Indian corporations have generally been able to obtain funds abroad on better terms than what the sovereign ratings might signify.

Some of the advantages of issuing sovereign bonds are:

The government would have less need to borrow in the domestic market. Corporations could use the bonds as a benchmark against which they could price their issues.

 The bonds would broaden the investor base in the international market sand help mobilize long-term finance for infrastructure projects. The cost of borrowings would be reduced relative to the domestic market.

The drawbacks could, however, outweigh the advantages. For the sovereign bonds to gain credibility in the international market, the government will need to have a sizeable presence in the market and not merely undertake a token borrowing. Its external debt would therefore increase.

Moreover, sovereign bonds are classified as external commercial borrowings (ECBs), on

which India has set a ceiling. A foreign-currency bond may carry a lower nominal interest rate than a rupee-denominated government security with the same maturity, but the foreign-currency bond also entails an exchange-rate risk. Depending on the exchange rate, the sovereign bond could turn out to be much more expensive for the government than local borrowings.

Public-Sector Undertaking Bonds (PSU Bonds)

These are medium- to long-term obligations issued by public-sector corporations. The total value of outstanding PSU bonds as of March 1998 was Rs 654 billion, including Rs 203 billion in government-guaranteed bonds. Public-sector corporations issue three types of bonds: taxable bonds, tax-free bonds, and government-guaranteed bonds. To allow public-sector units in priority sectors to raise money in the markets at low rates, the government has either guaranteed their bond offerings or made the interest on the bonds

tax-free to investors. The PSU can thus raise money from the capital markets at concessional rates. PSU bonds have a maturity period of three to seven years and an issue size of Rs 100 million to Rs 15 billion. The main investors in PSU bonds are banks, cashrich corporations, financial institutions, insurance companies, trusts, FIIs, provident funds, mutual funds, NBFCs, HFIs, and a few individuals. Most PSU bonds are issued through private placement, although public issues are gradually gaining in popularity. Seven public-sector units raised Rs 29 billion through privately placed bonds in 1997 1998; the year before, ten public-sector units raised Rs 33 billion through private placement. In the second half of 19971998, the RBI announced that it would allow

repurchase agreement (repo) transactions in PSU bonds, held in dematerialized form in a depository, to take place on the recognized exchanges.

Certificates of Deposit

Certificates of deposit (CDs) are short-term, rupee-denominated instruments issued by banks and development finance institutions (DFIs). DFIs issue CDs with a maturity of one to three years. In March 1998, outstanding CDs amounted to Rs 143 billion. To attract more investors in the money market, the RBI, in October 1997, halved the minimum amount that a single investor can invest in CDs, from Rs 1 million to Rs 500,000. The main investors in CDs are DFIs, cash-rich corporations, insurance companies, mutual funds, NBFCs, HFIs, provident funds, and some individuals.FIIs are not permitted to invest in CDs. NRIs may invest in CDs, but the investments are nontransferable and nonrepatriable. Earlier, CDs had a mandatory initial holding period of 30 days during which the instrument was rendered illiquid. This lock-in period was

shortened to 15 days in April 1998.

Commercial Paper

Indian corporations finance part of their working capital requirements by issuing these short-term negotiable promissory notes, which are denominated in rupees and are unsecured. Issuers must satisfy RBI guidelines relating to creditworthiness to issue commercial paper (CP), and must have the CP rated by at least one rating agency. The maturity period of CP varies from 91 days to a year. The required minimum issue size is

Rs 2.5 million, but the actual size can vary substantially and averages between Rs 20 million and Rs 100 million. The outstanding amount of CP reached a historic high of Rs 52 billion in January 1998, but then dropped sharply to Rs 15 billion in March 1998. FIIs are not permitted to invest in CP.

Corporate Bonds and Debentures These are medium- to long-term obligations issued by private-sector companies, either through a public issue or more often through private placement, for their medium-term working capital requirements or for project financing. The debentures are usually secured with a first charge on assets of the issuing corporation. On the average, the maturity period of debentures ranges from three to seven years. Bonds and debentures with a maturity beyond 18 months must be rated. Outstanding bonds and debentures in March 1998 totaled an estimated Rs 432 billion. Banks, DFIs, insurance companies, FIIs, mutual funds,NBFCs, and individuals are the main investors. FIIs can purchase only debentures that are listed or that the issuer plans to list. A listing in the stock market can sometimes

provide liquidity to bonds and debentures, although these tend to be illiquid in actual practice and even those that are listed are hardly traded in the secondary market. Bonds and debentures that are issued through private placement are often unlisted. Besides the traditional nonconvertible debentures, corporations also issue equity-linked debentures, which are very popular with all classes of investors, especially individuals. A partly convertible equity-linked debenture, as the name implies, is convertible only in part into equity shares, while a fully convertible equity-linked debenture is convertible in its entirety into equity shares. The conversion price and period are usually specified in the

indenture. Conversion into equity is usually automatic, and call and put options are normally not provided. The coupon rate paid on the debentures depends on their convertibility. Fully convertible debentures carry the lowest coupon rate and nonconvertible debentures the highest coupon rate.

Recently, a variety of instruments such as step-up and step-down bonds, deep-discount bonds, floating-rate bonds, staggered redemption bonds, bullet redemption bonds, and other innovative instruments have been introduced to suit various investor profiles. Deepdiscount bonds, which are long-dated (20- to 25-year) bonds issued by DFIs and some large corporations, have proved to be very popular among individual investors who can expect to earn a considerable amount of money from an affordable investment of only about Rs 5,000. The bonds usually come with call and put options exercisable every five years. Interest is compounded and paid with the principal at maturity.

All corporations that issue bonds or debentures through public issue must set up a debenture redemption reserve (DRR), according to Securities and Exchange Board of

India (SEBI) guidelines, and transfer a certain amount to the reserve each year out of retained earnings. The reserve must be funded in equal amounts over the life of the debenture so that when it matures at least 50 percent of its redemption value should be covered by the balance in the DRR. The transfer to the DRR is only a book entry. Although dividend-paying capacity is reduced (the reason for the unpopularity of the measure), the corporation is not restricted in how it chooses to invest the DRR. The transfers therefore continue to be invested in thebusiness of the corporation.

ISSUANCE OF DEBT SECURITIES

GOI securities have generally been issued through auction in recent years, but have also been issued at preset interest rates from time to time. Government securities do not follow a fixed schedule of issuance; the governments large borrowing program, however, compels it to enter the market frequently. Auction details are announced a few days before the issue date. Investors in the securities must quote the yield per year, and bids up to the RBI cut-off yield are accepted. Every Friday, 91-day T-bills are auctioned for an amount announced in advance by the RBI. Primary dealers and the RBI underwrite the issue and take up whatever is left unsubscribed at the cut-off price decided at the auction. The RBI has announced its intention to move over to uniform price auctions for 91-day T-bills. An auction in 364-day T-bills is held every other Wednesday. Unlike 91day T-bills and government securities, the amounts, until recently, were not announced in advance for 364-day as well as 14-day T-bills.

In April 1998, however, the RBI decided to announce the amounts for competitive bids in all Treasury bill auctions and to keep noncompetitive bids outside the purview of those

amounts. T-bill auctions are done in competitive French-style: those who bid at less than or equal to the cut-off yield get allotments at their bid; higher bidders get pro rata allocations. Successful bidders receive their allotments at their bid price and not at the cut-off price. Corporate debentures are issued mostly through private placement and therefore do not have to be rated. The mandates are given to merchant bankers, who are in touch with potential investors. The terms and price of the bonds are fixed by agreement

among the issuer, the merchant banker, and the potential investors. The rating the issuer receives for its debt issuance affects the pricing of the issue.

Private Placement

Large quantities of PSU and corporate bonds have been issued through private placement, which is an invitation to qualified investors to invest. The maximum number of investors in a private placement used to be unlimited but has recently been set at one

hundred. Private placements have emerged in recent years as an important means by which public- and private-sector companies can raise funds. In 19971998, when the market in new issues was generally subdued, banks, financial institutions, and public- and private-sector companies raised Rs 270 billion, or 85.3 percent of total funds raised, through private placement. The comparative figure for the previous year was Rs 150 billion, or 49.3 percent of the total funds raised. Privately placed bonds have emerged as the corporate sectors fundraising instrument of choice. The popularity of private placements can be attributed largely to the lower issuance costs as well as the shorter time required to make an issue, compared with a public issue. Also, private placements

can be tailored to the specific needs of large investors. From the issuers point of view, the most important advantage of private placements is that, unlike public issues, they are not strictly regulated. For example, an issuer of a privately placed bond does not have to set up a DRR. On the other hand, movements in the volatile short-term money market can affect

investor sentiment and pricing in the bond market, particularly private placements, which take at least 15 to 20 days to complete. The book-building or price discovery mechanism has begun to be adopted to get around this problem. The increasing popularity of private placements has made it necessary to deal with the matter of investor protection. Particularly for retail private placement issues, it would be advisable to augment the disclosure requirements in the memorandum of information and ensure greater transparency in the issue documents. In developed markets, the regulatory authorities set the parameters for private placements, including the maximum number of investors who can participate and the criteria for identifying the investors who are qualified to receive the private placement offer. With proper regulations and greater transparency, the private placement market can become an integral and important part of the primary market.

RATING OF DEBT INSTRUMENTS

The Securities and Exchange Board of India (SEBI), the watchdog of the Indian capital markets, has recently announced that credit rating will eventually be mandatory for all debt instruments. As of now, only publicly issued debt instruments with a maturity period of at least 18 months must be rated. The three main rating agencies in India are the Credit Rating Information Services of

India Limited (CRISIL), Investment Information and Credit Rating (ICRA), and Credit Analysis and Research Limited (CARE). These rating agencies are backed by the three DFIs in India:

CRISIL by the Industrial Credit and Information Services of India Limited (ICICI), ICRA by the Industrial Finance Corporation of India (IFCI), and CARE by the Industrial Development Bank of India (IDBI). Therefore, DFI issues must be rated by two agencies, under SEBI regulations, for the sake of impartiality. The SEBI, however, has not yet decided how conflicts in agency ratings should be resolved. SEBI guidelines issued in March 1998 allow corporations with a net capitalization of over Rs 1 billion for the last five years to set up a credit rating agency. International credit-rating agencies that propose to rate Indian debt instruments, including those that have entered into joint ventures with Indian credit-rating companies or hold an equity stake in such companies, must register with the SEBI.Credit-rating agencies are regulated more strictly to ensure that they function effectively, especially in view of the failure of some of them to warn investors of the impending financial crisis.

INVESTORS IN DEBT INSTRUMENTS

Besides the lack of variety in debt instruments, the dearth of investors has also deterred the growth of the debt market. The main investors are commercial banks, insurance companies, provident funds, specialized debt funds, NBFCs, HFIs, and some cash-rich corporations. Commercial banks,NBFCs, and HFIs invest in government securities and

other debt instruments to comply with their SLR requirements. The lack of liquidity in the market prevents individuals from participating actively.

SLR Requirements Banks, NBFCs, and HFIs are required to invest in government securities and other approved debt instruments and securities to comply with the SLR requirements of the RBI. The SLR, which is the minimum level of investment in approved securities, computed daily, is a percentage of the outstanding net demand and time liabilities (NDTL) of banks. For NBFCs and HFIs, SLR is a percentage of their outstanding public deposits.SLR ratios are announced by the RBI together with the monetary and credit policy. Typically, this is done twice a year, in April and October, although recently the guidelines have been revised more frequently.

The SLR for commercial banks peaked at 38.5 percent of their outstanding NDTL in 19921993 but was gradually reduced until October 1997, when the RBI fixed it at 25 percent. Still, most commercial banks hold SLR securities far in excess of their requirementabout 12 percent more than the current SLR of 25 percentto comply with the required capital adequacy and prudential ratios.

Investments in government securities have no risk weight unlike some other fixedincome securities which carry a risk weight of 100 percent. Commercial banks in India are required to maintain an 8 percent capital adequacy ratio.

In the case of NBFCs and HFIs, the SLR applies only to public deposits and not to other term liabilities (as is the case with commercial banks). The SLR for NBFCs was set at

12.5 percent on 1 April 1998, and will be raised to 15 percent on 1 April 1999. HFIs, on the other hand, must maintain their SLR at 10 percent, divided equally between government securities and bank deposits, versus the previous allocation of 25 percent for government securities and 75 percent for bank deposits.

MARKING TO THE MARKET

Mark-to-the-market requirements are laid down by the RBI for commercial banks and NBFCs, and by the National Housing Bank (NHB) for HFIs. In 19971998, commercial banks were permitted to invest up to 40 percent of their investible funds in a permanent portfolio of government securities, for which no provision for depreciation was required. The remaining 60 percent of their investments were classified as current portfolio which the banks had to value at market prices (mark to the market).

The RBI has, however, increased its mark-to-the-market requirements over the years. In 19981999, commercial banks have to mark to the market at least 70 percent of their investment in government securities as against the previous 60 percent. For nongovernment paper, there are no explicit mark-to-the-market requirements. NBFCs and HFIs must take a different mark-to-the-market approach than the commercial banks. They must classify their investments, both equity and debt, into a permanent portfolio and a current portfolio, but the specific percentages are not prescribed. The classification

is made at the time of investment and approved by the board of directors of the company or its authorized representative, taking into account the investment horizon planned by

the NBFC or HFI. If the institution intends to sell within the year, it should classify the investment as current portfolio, but if it intends to hold on to the investment for a longer period, it can classify the investment as permanent portfolio. All current investments must be marked to the market; investments in the permanent portfolio, on the other hand, can be carried on the balance sheet at their original cost. A substantial portion of the government securities portfolio of many commercial banks is made up of lowcoupon rate securities acquired before yields on government securities were freed to market determination. Securities reclassified from permanent to current portfolio must have provision for depreciation, since the acquisition cost of older securities significantly exceeds current market prices. Most of the older commercial banks have adopted the RBIs mark-to the- market requirements, retaining a permanent portfolio of government securities to reduce their provision for depreciation and show higher profits. But some newer private-sector banks have adopted the more transparent practice of marking to the market their entire portfolio of government securities.

TAX PROVISIONS Except for tax-free bonds, which some public-sector units have been permitted to issue, and unlike the dividend paid on equity and preference shares, which is tax-exempt to investors,9 interest on debt instruments is taxable. The Income Tax Act requires the corporation that pays interest on bonds or debentures to deduct the tax at source. The rate of the tax varies from 10 percent to 20 percent

depending on whether the interest is being paid to an individual or to a corporation.

TRADING SYSTEM Because of the limited number of players, deals in the institutional debt market are normally made directly between the parties concerned or through a broker. Banks rely on the telecommunications network to broker deals and keep track of the market. With the setting up of the whole-sale debt market under the National Stock Exchange (NSE) and the requirement to report trades, the system of trading has become more transparent and efficient. Government securities and T-bills are dematerialized insofar as deals are made and settled on a delivery-versus-payment basis through the subsidiary general ledger (SGL) account at the RBI.

REPO MARKETS A repo (short for repurchase agreement) is a contract to sell a security and to buy it back at a fixed price on an agreed future date. Market participants use repos to meet their short-term liquidity needs or reserve requirements. More importantly, the repo market enables the RBI to conduct open-market operations for monetary control. A repo transaction is for a minimum of three days and a maximum of 14days.Currently, only central government securities and all Tbills are eligible for repo, and only banks, primary dealers (PDs), and satellite dealers (SDs) may enter into repo transactions. In December 1997, 19 nonbank entities were allowed to enter into reverse repo transactions.

Repos in GOI securities were banned in mid-1992, following the discovery of a huge fraud in the securities market. Repos resumed on a limited scale between the RBI and banks in December 1992, and interbank repos in some new issues of GOI securities were later permitted to attract investors. Currently, repos are permitted in all GOI securities. In

the second half of 19971998, the RBI announced that it would allow repos in PSU bonds as soon as the regulations relating to forward contracts are amended.

CLEARING AND DEPOSITORY SYSTEM The passage of the Depositories Act by Parliament in August 1996 paved the way for the establishment of several depositories, which are expected to improve the efficiency of the capital market. The National Securities Depository Limited (NSDL), the first electronic depository for equity and debt securities in India, began operations in October 1996. It is sponsored jointly by IDBI, the Unit Trust of India (UTI), and the NSE. Dematerialization of equity shares is fairly Straight forward since the central government, which imposes stamp duty on the transfer of shares, charges a uniform rate of 0.50 percent of the market value of the shares. Stamp duty on the transfer of bonds and debentures, on the other hand, is a state government issue and is therefore subject to a variety of regimes. For this reason the NSDL has found it difficult to dematerialize these instruments. The RBI has already introduced the delivery-versus-payment system for government securities through the SGL account. There have also been suggestions to dematerialize money-market instruments such as commercial paper and certificates of deposit, as well as all T-bills and GOI securities, to improve clearing and settlement.

UNDERWRITING OF DEBT INSTRUMENTS

The RBI used to pay a commission to primary dealers (PDs) based on their purchases (including development) of government securities in the primary market. Since June 1997, the RBI has been paying them instead an underwriting fee based on the underwriting amount offered by the PDs on a voluntary basis through competitive bidding. Under this scheme, PDs offer to underwrite at least 50 percent of the issue amount. Satellite dealers (SDs) form the second tier in the trading and distribution of government securities. They have recently been allowed to underwrite government securities issues, up to a maximum exposure of twice their net worth in each issue. SDs and PDs are moreover allowed to sub underwrite their commitments.

YIELD CURVE DISTORTIONS The yield curve is distorted at various points. The rates are very low at the short end (91-day Tbills), then rise sharply for securities of two-year maturity, and generally flatten after the fiveyear maturity. Plotting a benchmark yield curve is therefore difficult. Several factors are responsible for the distortions. Although 91-day T-bills are auctioned in a predetermined amount, the RBI participates in the auctions and can control interest rates. Large noncompetitive bidders, such as state governments and provident funds, also contribute to the distortion in the yield curve when they make large bids without naming their price. To deal with this problem, the RBI in April 1998 said that it would announce the amounts for competitive bids in all T-bill auctions and keep noncompetitive bids beyond the purview of such amounts. Also until April 1998, the borrowings of the central government under its Ways and Means Advances (WMA) were linked to the 91-day T-bill rate. In 19971998 these borrowings were 3 percentage points below the 91-day T-bill cut-off price, exerting tremendous downward pressure on the 91-day T-bill rate. In April, the RBI announced that henceforth the WMA would be linked instead to the bank rate.

The RBI participates as well in primary auctions of GOI securities and can determine the cut-off yield. There is an implicit reluctance to allow the rate for the maximum maturity (ten years) to exceed a stipulated interest rate. Rates for short-term maturities therefore tend to be significantly

higher than market. The small number of players in the market results in lack of liquidity and pricing inefficiencies. Investors do not communicate yield expectations among themselves.

Reforms in Government securities market Institutional Measures Administered interest rates on government securities were replaced by an auction system for price discovery. Automatic monetization of fiscal deficit through the issue of ad hoc Treasury Bills was phased out. Primary Dealers (PD) were introduced as market makers in the government securities market. For ensuring transparency in the trading of government securities, Delivery versus Pay (DvP) settlement system was introduced. Repurchase agreements (repo) were introduced as a tool of short term liquidity adjustment. Subsequently, the Liquidity Adjustment Facility (LAF) was introduced. LAF operates through repo and reverse auctions to set up a corridor for short-term interest rate. LAF has emerged as the tool for both liquidity management and also signaling overnight market. Market Stabilizations Scheme (MSS) has been introduced, which has expanded the instruments available to the Reserve Bank for managing the surplus liquidity in the system. device for interest rates in the

Increase in Instruments in Government Securities Market 91-day Treasury bill was introduced for managing liquidity and benchmarking. Zero Coupon Bonds, Floating Rate Bonds, Capital Indexed Bonds were issued and exchange traded interest rate futures were introduced. OTC interest rate derivatives like IRS/FRAs were introduced. Enabling Measures

 Foreign Institutional Investors (FIIs) were allowed to invest in government securities subject to certain limits. Introduction of automated screen-based trading in government securities through Negotiated Dealing System (NDS). Setting up of risk-free payments and settlement system in Government securities through Clearing Corporation of India Limited (CCIL).Phased introduction of Real Time Gross Settlement System (RTGS). Introduction of trading of government securities on stock exchanges for promoting retailing in such securities, permitting non-banks to participate in repo market.

RECENT REFORMS The Indian regulatory and supervisory framework of securities market in India has been adequately strengthened through the legislative and administrative measures in the recent past. The regulatory framework for securities market is consistent with the best international benchmarks, such as, standards prescribed by International Organization of Securities Commissions (IOSCO). Recent capital market reforms and an agenda for reforms are given below.

 Extensive Capital Market Reforms were undertaken during the 1990s encompassing legislative regulatory and institutional reforms. Statutory market regulator, which was created in 1992, was suitably empowered to regulate the collective investment schemes and plantation schemes through an amendment in 1999. Further, the organization strengthening of SEBI and suitable empowerment through compliance and enforcement powers including search and seizure powers were given through an amendment in SEBI Act in 2002. Although dematerialization started in 1997 after the legal foundations for electronic book keeping were provided and depositories created the regulator mandated gradually that trading in most of the stocks take place only in dematerialized form. Till 2001 India was the only sophisticated market having account period settlement alongside the derivatives products. From middle of 2001 uniform rolling settlement and same settlement cycles were prescribed creating a true spot market. After the legal framework for derivatives trading was provided by the amendment of SCRA in 1999 derivatives trading started in a gradual manner with stock index futures in June 2000. Later on options and single stock futures were introduced in 2000-2001 and now Indias derivatives market turnover is more than the cash market and India is one of the largest single stock futures markets in the world.

Indias risk management systems have always been very modern and effective. The VaR based margining system was introduced in mid 2001 and the risk management systems have withstood huge volatility experienced in May 2003 and May 2004. This included real time exposure monitoring, disablement of broker terminals, VaR based margining etc. India is one of the few countries to have started the screen based trading of government securities in January 2003. In June 2003 the interest rate futures contracts on the screen based trading platform were introduced.

 India is one of the few countries to have started the Straight through Processing (STP), which will completely automate the process of order flow and clearing and settlement on the stock exchanges. RBI has introduced the Real Time Gross Settlement system (RTGS) in 2004 on experimental basis. RTGS will allow real delivery v/s. payment which is the international norm recognized by BIS and IOSCO. To improve the governance mechanism of stock exchanges by mandating demutualization and corporatization of stock exchanges and to protect the interest of investors in securities market the Securities Laws (Amendment) Ordinance was promulgated on 12th October 2004. The Ordinance has since been replaced by a Bill.

Recent initiatives

Corporation and Demutualization of Stock Exchanges

Out of the 23 erstwhile stock exchanges, 18 have since been corporatized and demutualised in 2007-08. One stock exchange, i.e. Hyderabad Stock Exchange, failed to demutualise by the due date and has therefore been de-recognized. Saurashtra Kutch Stock exchange, Mangalore Stock exchange and Magadh Stock exchange have been de-recognized for various irregularities/non compliances. As regards Coimbatore Stock Exchange which had sought voluntary withdrawal of recognition, the matter is sub-judice.

Corporate Bond Markets

The Government had set up a High-Level Expert Committee on Corporate Bonds and Securitisation (Patil Committee) to look in to legal, regulatory, tax and market design issues in the development of the corporate bond market. The Committee submitted its report to the Government in December, 2005. The Budget of 2006-07 announced that the Government has accepted the recommendations of the Report and that steps would be taken to create a single, unified exchange-traded market for corporate bonds. The measures already taken in respect of implementation of the recommendations of the Patil Committee include: - The Securities Contracts (Regulation) Act, 1956 has been amended to include securitized instruments within the ambit of "securities".

- The RBI Act has been amended to empower RBI to develop and regulate market for Repos in corporate bonds.

- The limit of FII Investment in corporate debt has been increased from US$ 0.5 billion to US$ 1.5 billion. - The trade reporting platform for corporate bonds has been operationalised since 1st January, 2007. - The trading platforms for corporate bonds at the major exchanges has been operationalized from July 1, 2007.

Securities Contracts (Regulation) Amendment Act, 2007 include securitization

The Securities Contracts Regulation Act, 1956 has been amended to

instruments under the definition of "securities"and provide for disclosure based regulation for issue of the securitized instruments and the procedure thereof. This has been done keepingin view that there is considerable potential in the securities market for the certificates or instruments

under securitization transactions. The development of the securitized debt market is critical for meeting the humungous requirements of the infrastructure sector, particularlyhousing sector, in the country. Replication of the securities markets framework for these instruments would facilitate trading on stock exchanges and in turn help development of the market in terms of depth and liquidity.

PAN as the sole identification number

PAN has been made the sole identification number for all transactions in securities market. This is an investor friendly measure as he does not have to maintain different identification numbers for different kinds of transactions/different segments in financial markets. Further, identification through PAN would help the authorities in enforcement action.

Equity Finance for the Small and Medium Enterprises (SMEs)

SMEs in India have traditionally relied on debt financing from banks and non-bank financial institutions. In order to develop the equity market for SMEs, SEBI has decided to create a separate exchange for the SMEs. It has decided that, to begin with there should be a single exchange for the SME sector for around 2-3 years to enable successful development of the market for SMEs.

IPO grading SEBI has made it compulsory for companies coming out with IPOs of equity shares to get their IPOs graded by at least one credit rating agency registered with SEBI from May 1, 2007. This measure is intended to provide the investor with an informed and objective opinion expressed by a professional rating agency after analyzing factors like business and financial prospects, management quality and corporate governance practices etc. Till January 2008 45 IPOs have been graded by credit rating agencies.

Permitting Indian mutual funds to invest in overseas securities

SEBI has fixed the aggregate ceiling for overseas investments at US $ 5 billion. Within the overall limit of US $ 5 billion, mutual funds can make overseas investments subject to a maximum of US $300 million per mutual fund. Further different regulations that allow individuals and Indian mutual funds to invest in overseas securities by permitting individuals to invest through Indian mutual funds has been converged.

New derivative products Mini derivative contract on Index (Sensex and Nifty) having a minimum contract size of Rs. 1 lakh have been introduced. It has been found that globally overall market liquidity and participation generally increases with introduction of mini contracts. Since January 11, 2008 SEBI has also allowed trading on options contracts on indices and stocks with a longer life/tenure of upto five years. These contracts are expected to provide liquidity at the longer end of the market. Since January 15, 2008 SEBI has permitted introduction of volatility index on futures and options contracts. An openly available and quoted measure of market volatility in the form of an index will help market participants.

Short selling In pursuance to budget announcement, SEBI has issued a circular on 20th December, 2007 to permit short selling by institutional investors and securities lending and borrowing to support settlement of short sales.

1.

Investment options for Navaratna and Miniratna Public Sector Enterprises

The Navaratna and Miniratna Public Sector Enterprises have been allowed to invest in public sector mutual funds subject to the condition that they would not invest more than 30% of the available surplus funds in equity mutual funds and the Boards of PSEs would decide the

guidelines, procedures and management control systems for such investment in consultation with their administrative Ministries.

Investor Protection and Education Fund (IPEF)

SEBI has set up the Investor Protection and Education Fund (IPEF) with the purpose of investor education and related activities. SEBI hascontributed a sum of Rs.10 crore

toward the initial corpus of the IPEF from the SEBI General Fund. In addition following amounts will also be credited to the IPEF namely: (i) Grants and donations given to IPEF by the Central Government, State Governments or any institution approved by SEBI for the purpose of the IPEF; (ii) Interest or other income received out of the investments made from the IPEF; and

(iii) Such other amount that SEBI may specify in the interests of the investors.

Company Profile

COMPANY PROFILE Religare is an emerging markets financial services group with a presence across Asia, Africa, Middle East, Europe, and the Americas. In India, Religares largest market, the group offers a wide array of products and services including broking, insurance, asset management, lending solutions, investment banking and wealth management. With 10,000-plus employees across multiple geographies, Religare serves over a million clients, including corporate and institutions, high net worth families and individuals, and retail investors. RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary of RELIGARE Financial Services Ltd. (RFSL), a Company promoted by the late Dr. Parvinder Singh, Ex-CMD of Ranbaxy Laboratories Ltd. The primary focus of Religare Securities Ltd. is to cater to services in Capital Market Operations to Institutional Investors. The Company is a member of the National Stock Exchange (NSE) and OTCEI. The growing list of financial institutions with whom RSL is empanelled as approved Broker is a reflection of the high levels of services maintained by the Company.

As on date the Company is empanelled with UTI, IDBI, IFCI, SBI, BOI-MF, Punjab National Bank, PNB-MF, Oriental Insurance, GIC, UTI-Offshore, ICICI Can bank MF, Punjab & Sind Bank, Pioneer ITI, SUN F&C, IDBI Principal, Prudential ICICI, ING Baring and J M Mutual Fund.

RELIGARE was founded with the vision of providing integrated financial care driven by the relationship of trust. The bouquet of services offered by RELIGARE includes Broking (Stocks and Commodities), Depository Participant Service, Advisory on Mutual Fund Investments and Portfolio Management Services.

RELIGARE is a pioneer in the concept of partnership to reach multiple locations in order to effectively service its large base of individual clients. Besides the reach of Industry : Finance - General BSE Code : 532915 Book Closure : 11/08/2010

Group : Religare NSE Code : RELIGARE Market Cap : Rs. 6,897.44 Cr. ISIN No : INE621H01010 Market Lot : 1 Face Value : Rs. 10.00 RELIGARE, the clients of the company greatly benefit by its strong research capability, which encompasses fundamentals as well as technical knowledge.

GROUP :

RELIGARE in recent years has expanded its reach in health care and financial services wherein it has multiple specialty hospital and labs which provide health care services and multiple financial services such as secondary market equity services, portfolio management services, depository services etc.

RELIGARE financial services group comprises of Religare Securities Limited, RELIGARE Comdex Limited and RELIGARE Finvest Limited which provide services in Equity, Commodity and Financial Services business & Religare Insurance Advisory Ltd.

RELIGARE SECURITIES LIMITED

1.

Member of National Stock Exchange of India and Bombay Stock Exchange of India.

2.

Depository Participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

3.

A SEBI approved Portfolio Manager.

RSL provides platform to all segments of the investor to leverage the immense opportunity offered by equity investing in India either on their own or through managed funds in Portfolio Management.

The ARN No. of the Religare Securities Ltd. is 33764. The ARN No. is required by to be available with the broker who deals on behalf of investors or sell the mutual funds of the different companies present in the market.

Religare Enterprises Limited Religare Securities Limited

Religare Finvest Limited

Equity Broking Online Investment Portal Portfolio Management Services Depository Services Religare Commodities Limited

Lending and Distribution business Proposed Custodial business Religare Insurance Broking Limited

Life Insurance General Insurance Reinsurance Religare Arts Initiative Limited

Commodity Broking Religare Capital Markets Limited

Investment Banking

Business of Art

Proposed Institutional Broking Religare Realty Limited

Gallery launched - arts-i Religare Venture Capital Limited

In house Real Estate Management Company Religare Hichens Harrison**

Private Equity and Investment Manager Religare Asset Management*

Corporate Broking Institutional Broking

Derivatives Sales Corporate finance

DIRECTORS OF RELIGARE SECURITIES LIMITED

Chairman Managing Director : Director Director Director

Mr. Harpal Singh

Mr. Sunil Godhwani : : : Mr. Vinay Kumar Kaul Mr. Malvinder Mohan Singh Mr. Shivinder Mohan Singh

MISSION To be India's first Multinational providing complete financial services solution across the globe

VISION Providing integrated financial care driven by the relationship of trust and confidence. PRODUCTS :

Products

Subscription fees NIL

Enrolment Deposit NIL

R-ALLY

R-ALLY Lite (Browser Based)

NIL

Rs. 5,000

R-ALLY Pro (Application Based)

Rs. 1,800

NIL

Trading in Equities with Religare truly empowers you for your investment needs. We ensure you have a superlative trading experience through

A highly process driven, diligent approach Powerful Research & Analytics and One of the "best-in-class" dealing rooms

Further, Religare also has one of the largest retail networks. Now, you can walk into any of our branches and connect to our highly skilled and dedicated relationship managers to get the best services.

The Religare Edge

Pan India footprint Powerful research and analytics supported by a pool of highly skilled research analysts Ethical business practices Offline/Online delivery models Single window for all investment needs through your unique CRN

BROKERAGE :-

INTRADAY:DELIVERY :-

3 paisa (.3%) 30 paisa (.03%)

(NEGOTIABLE) (NEGOTIABLE)

SERVICES :-

Equity

Arts Initiative

Commodity

Organization Structure:

Competititors of Religare :-

There are several financial security companies playing their roles in Indian equity market. But Religare faces competitions from these few companies.

ICICI Direct.com Share Khan (SSKI)

 Kotak Securities.com India Bulls HDFC Securities 5paisa.com Motital Oswal IL&FS Karvy

Data Analysis and Interpretation

Result And Analysis of The Survey: Based on the questionnaire here is a systematic analysis of the opinions of the respondents. 1) Do you have any knowledge about capital market? Bar chart showing the number of respondents who are aware of the Capital market-According to Age:

The line graph shows that young people are more aware of the capital market. The age group of 20-30years has 20 positive answer, whereas it decrease to 06 in the age group of 30-40years,next it increases to 08 in age group of 40-50years.

Bar chart showing the number of respondents who are aware of the Capital market-According To Salary:

18

4 2

Salary group of Rs. 20,000-30,000 are more aware of the capital market, then comes the Rs. 30,000-40,000 earners who show there interest in capital market. Rs. 40,000-50,000 have less interest here might be they take help of brokers if needed. Below Rs. 20,000 people are still having average knowledge of the same.

Pie Chart showing the percentage of people aware, not aware, and partly aware of the Capital market:

Awareness about Capital Market: % of people aware Partly Aware % of people not aware

18%

16% 66%

66% of the respondents are aware of the Capital Market,18% of them are partly aware and only 185 of the respondents are not aware of it. Thus it can be said that a prominent number of population knows about Capital market.

2) Capital Market Reforms should be related to. (Disclosure, pricing or both)

Analysis for estimating the number of people responding in favor of both Disclosure and pricing-According to Salary:

The Salary group of 20,000-30,000 says the maximum number of both option that means according to them reforms took place in both Disclosure and pricing. 40,000-50,000 salary group is not seemingly in favor of the opinion. Rests two are partially in favor of the same

Graph showing number of respondents who replied reforms held in Disclosure According to Salary:

The comparatively below salary group of people have more interest and information about capital market as they are supposed to be the major part of the population. In terms of reforms they are in favor of disclosure also.

Graph showing number of respondents who replied reforms held in Disclosure According to Salary:

Pricing is also favored by 20,000-30,000 salaried people, they are the main target of the survey because large number of population is comprised of this group.

Pie Chart showing the percentage of responses of each of the three options:

Capital Market Reforms:

Disclosure % Pricing % Both %

26% 50%

24%

The survey says it should be in both the disclosure of terms and conditions and pricing of debt and equities. The respondents answer in favor of both that is 50% is maximum.

3) Market Infrastructure is one of the prerequisite for the flow of Information and Trade Number of people having a strong view on availability of Market Infrastructure According to age:

Age group of 20-30 is rational and is strongly in favor of about sound market Infrastructure for the flow of information and trade. Next in line is age group 40 -50 and the last is 30 40 age group that gives minimum favors in regards to the same.

Number of people having just agreeing view on availability of Market Infrastructure According to age:

Again 20-30 age group people agree to the fact that market infrastructure is needed,30-40 & 40-50 age groups are comparatively less in favor.

Number of people disagreeing on the view that a sound Market Infrastructure is necessary for flow of information and trade According to age:

Age group of 20 30 Years is more aware of the fact that Market Infrastructure is prerequisite for flow of information and trade or say younger generation is quite rational about the view.

Pie chart showing the three different opinions of the respondents regarding the availability of sound Market Infrastructure for flow of information and trade:

Market Infrastructure:
Strongly Agree % Agree % Disagree %

11%

35%

54%

The survey shows that market infrastructure is one of the prerequisite of flow of information and trade, as maximum number of respondent strongly agree to the fact.

4) Does India has a Nation Wide Integrated market?

Number of respondents strongly agreeing on the view of a nationwide market existence in India According to occupation:

Only 3 of the Government employees and 3 of the private employees strongly agree to the opinion on Nation Wide Market existing in India.

Number of respondents agreeing on the view of a nationwide market existence in India According to occupation:

Only private employees are in favor of the thing that India has Nation Wide Capital Market.

Pie Chart showing percentage of different opinions regarding the availability of nationwide integrated Capital market in India:

Nation Wide Integrated Market Exists:

Agree % Disagree % Strongly Agree %

12%

22%

66%

Respondent have not strongly agreed to the fact, they just agree in large number that means still there is greater need of Market integration in India or say a wide spread market is to be there.

6) Where do you prefer to invest in Stock market or in Banks? Opinions about investing excusively in stock market According to salary:

Higher income group people are more inclined to invest in stock market, as the graph

shows

Income group of Rs.30,000-40,000 invest more in stock market however opinion changes with further rise in income.

Opinions about investing excusively in stock market According to salary:

Less income groups plan to invest in banks exclusively as compared to higher income group

Pie Chart showing percentage of different opinions regarding the preference of investment either in stock market or in bank or in both of them:

Preference in Investment:
Bank % Both % Stock Market %

32%

34%

34%

Equal number of people invest in Bank and both (Stock Market & Bank),i.e.34%, some figure less that is 32% invest in Stock Market.

7) Free Pricing of Equities should be there or not?

Number of respondents agreeing on the view of Free Equity Pricing According occupation:

to

Private employees are largely in favor of free equity pricing, as compared to the government employees. Businessmen do not prefer this option.

Number of respondents agreeing on the view of Free Equity Pricing According to Salary:

16 14 12 10 8 6 4 2 0

Income group of Rs. 20,000-30,000 are preferring the idea of free equity Pricing, rest of the groups are not in favor.

Pie Chart showing percentage of different opinions regarding the free pricing of equities:

Free Equity Pricing:

Yes % No % Can't say %

22%

52% 26%

52% of the respondents voted for Free Equity pricing,22% are unknown or cant give any opinion. And 26% are not in favor of the same.

8) Should there be any kind of regulations on brokers? Number of respondents agreeing on the view of putting regulations on brokers According to occupation:

Most of the respondents are in favor of some kind of regulations on brokers. Private employees are more agreeing on the point as compared to the rest.

Number of respondents agreeing on the view of putting regulations on brokers According to salary:

Salary group of below Rs.20, 000 are showing positive response i.e. they believe in regulation on brokers, same with the next two groups, Rs.40,000-50,000 group is less interested in the same.

Pie Chart showing percentage of different opinions regarding the regulations on brokers:

Regulation on Brokers:
Strongly agree % Agree % Disagree %

22% 34%

44%

Large number of population favors regulations on brokers.

9) There should be detailed disclosure of terms and conditions on mutual funds or not?

Number of respondents strongly agreeing on the view of disclosing all the terms and conditions on Mutual funds before hand According to occupation:

All the respondents strongly agree to the point that there should be disclosure of terms and conditions of mutual funds. Since private employees are more in the population there opinion is greater.

Number of respondents strongly agreeing on the view of disclosing all the terms and conditions on Mutual funds before handAccording to salary:

All the income group favor the fact, Rs.20,000-30,000 supports more also this group exists more so as their opinion, other groups like below 20,000 & Rs.30,000-40,000 also vote for the disclosure.

Pie Chart showing percentage of different opinions regarding the disclosure of all the terms and conditions of Mutual funds before hand:

Disclosure:
Strongly Agree % Agree %
0%

Disagree %

38%

62%

The result shows that major number of respondents prefers the point of disclosure.

10) What can be the households share in Mutual funds

Bar chart showing the opinions regarding households share in mutual fundsAccording to occupation:

Declining-8%

Govt.employee

Business man

Private employee

Small number of government employees i.e.2 say the share is declining at employees have the same opinion but with greater percentage.

8%.Private

Bar chart showing the opinions regarding households share in mutual fundsAccording to salary:

Income group of 20,000-30,000 again have larger share of response i.e. declining at 8%.Below 20,000 comes next in line. The rest have their opinions.

Pie Chart showing percentage of different opinions regarding house holds share in Mutual funds:

House hold share in Mutual Funds:

Can't say % declining-8% % Increasing-8% %

2% 44% 54%

The survey shows that 54% of the respondents were unaware of the point, however it can be judged as declining at 8% as large number of them i.e.44% have said so and only 2% have different opinion.

10) Global effect is one of the leading factor that has greater impact on Stock market?

Bar chart showing the number of respondents strongly agreeing to the fact that global

scenario affects the stock market - According to occupation:

Govt.employee

Business man

Private employee

Private employees vent their positive response to a greater degree thus according to them they strongly agree to the fact that global scenarios affect the functioning of the Stock Market. Others have also the response but at less frequency.

Bar chart showing the number of respondents only agreeing to the fact that global scenario affects the stock market - According to occupation:

Govt.employee

Business man

Private employee

Government employees and private employees favor the point, business men are neutral of the view.

Pie Chart showing percentage of different opinions regarding the fact that globa scenario affects stock market :

Global Scenario Effects Stock Market:

Strongly agree % Agree %
0%

Disagree %

44% 56%

56% of the respondents are in strongly supporting the view and 44% of them are just agreeing with the concept, it means global scenario do effects.

Findings and recommendations: Following are some of the point that has been found out by the analysis. It can be said that a prominent number of population knows about Capital market. The survey says reforms should be in both the disclosure of terms and conditions and pricing of debt and equities. Market infrastructure is one of the prerequisite of flow of information and trade Still there is greater need of Market integration in India. Equal number of people invest in Bank and both (Stock Market & Bank), i.e.34%, some figure less that is 32% invest in Stock Market. 52% of the respondents voted for Free Equity pricing. Large number of population favors regulations on brokers. Major number of respondents prefers the point of disclosure. 56% of the respondents are in strongly supporting the view and 44% of them are just agreeing with the concept, it means global scenario do effects. Share of house hold in Mutual fund is declining at rate of 8%

Summary and Conclusions

Over a period, the Indian securities market has undergone remarkable changes and grown exponentially, particularly in terms of resource mobilisation, intermediaries, the number of listed stocks, market capitalisation, turnover and investor population. The following paragraphs list the principal reform measures undertaken since 1992. Creation of Market Regulator: Securities and Exchange Board of India (SEBI), the securities market regulator in India, was established under SEBI Act 1992, with the main objective and responsibility for (i) protecting the interests of investors in securities, (ii) promoting the development of the securities market, and (iii) regulating the securities market. Screen Based Trading: Prior to setting up of NSE, the trading on stock exchanges in India was based on an open outcry system. The system was inefficient and time consuming because of its inability to provide immediate matching or recording of trades. In order to provide efficiency, liquidity and transparency, NSE introduced a nation-wide on-line fully automated screen based trading system (SBTS) on the CM segment on November 3, 1994. Reduction of Trading Cycle: Earlier, the trading cycle for stocks, based on type of securities, used to vary between 14 days to 30 days and the settlement involved another fortnight. The Exchanges, however, continued to have different weekly trading cycles, which enabled shifting of positions from one Exchange to another. It was made mandatory for all Exchanges to follow a uniform weekly trading cycle in respect of scrips not under rolling settlement. In December 2001, all scrips were moved to rolling settlement and the settlement period was reduced progressively from T+5 to T+3 days. From April 2003 onwards, T+2 days settlement cycle is being followed. Equity Derivatives Trading: In order to assist market participants in managing risks better through hedging, speculation and arbitrage, SC(R) A was amended in 1995 to lift the ban on options in securities. Trading in derivatives, however, took off 13 in 2000 with index futures after suitable legal and regulatory framework was put in place. The market presently offers index futures, index options, single stock futures and single stock options. Demutualisation: Historically, stock exchanges were owned, controlled and managed by the brokers. In case of disputes, integrity of the stock exchange suffered. NSE, however, was set up with a pure demutualised governance structure, having ownership, management and trading with three different sets of people. Currently, all the stock exchanges in India have a demutualised set up. Dematerialization: As discussed before, the old settlement system was inefficient due to (i) the time lag for settlement and (ii) the physical movement of paper-based securities. To obviate these problems, the Depositories Act, 1996 was passed to provide for the establishment of depositories in securities with the objective of ensuring free transferability of securities with

speed and accuracy. There are two depositories in India, viz. NSDL and CDSL. They have been set up to provide instantaneous electronic transfer of securities. Demat (Dematerialized) settlement has eliminated the bad deliveries and associated problems. To prevent physical certificates from sneaking into circulation, it has been made mandatory for all newly issued securities to be compulsorily traded in dematerialized form. Now, the public listed companies making IPO of any security for Rs.10 crore or more have to make the IPO only in dematerialized form. Clearing Corporation: The anonymous electronic order book ushered in by the NSE did not permit members to assess credit risk of the counter-party and thus necessitated some innovation in this area. To address this concern, NSE had set up the first clearing corporation, viz. National Securities Clearing Corporation Ltd. (NSCCL), which commenced its operations in April 1996. Investor Protection: In order to protect the interest of the investors and promote awareness, the Central Government (Ministry of Corporate Affairs 1) established the Investor Education and Protection Fund (IEPF) in October 2001. With the similar objectives, the Exchanges and SEBI also maintain investor protection funds to take care of investor claims. SEBI and the stock exchanges have also set up investor grievance / service cells for redress of investor grievance. All these agencies and investor associations also organise investor education and awareness programmes. Globalisation: Indian companies have been permitted to raise resources overseas through issue of ADRs, GDRs, FCCBs and ECBs. Further, FIIs have been permitted to invest in all types of securities, including government securities and tap the domestic market. The investments by FIIs enjoy full capital account convertibility. They can invest in a company under portfolio investment route upto 24% of the paid up capital of the company. This can be increased up to the sectoral cap/statutory ceiling, as applicable to the Indian companies concerned, by passing a resolution of its Board of Directors followed by a special resolution to that effect by its general body. The Indian stock exchanges have been permitted to set up trading terminals abroad. The trading platform of Indian exchanges is now accessible through the Internet from anywhere in the world. RBI permitted two-way fungibility for ADRs / GDRs, which means that the investors (foreign institutional or domestic) who hold ADRs / GDRs can cancel them with the depository and sell the underlying shares in the market.

Bibliography

BIBLIOGRAPHY

Websites Referred: www.moneycontrol.com www.nseindia.com www.shriraminsights.com www.banksindia.com www.myiris.com www.indiaearnings.moneycontrol.com http://finance.yahoo.com www.wikipedia.org www.reuters.com www.hdfcbank.com www.investopedia.com

Reports Referred: CLSA Asia Pacific Markets analysis

Appendices