Prable Final Project on Share Market

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Transcript of Prable Final Project on Share Market

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INDIAN CAPITAL MARKET

Introduction

The market in which shares are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, it is one of the most vital areas of a market economy as it provides companies with access to capital and investors with a slice of ownership in the company and the potential of gains based on the company's future performance

Evolution

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as " The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.

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Other leading cities in stock market operations

Ahmedabad gained importance next to Bombay with respect to cotton textile industry. After 1880, many mills originated from Ahmedabad and rapidly forged ahead. As new mills were floated, the need for a Stock Exchange at Ahmedabad was realised and in 1894 the brokers formed "The Ahmedabad Share and Stock Brokers' Association".

What the cotton textile industry was to Bombay and Ahmedabad, the jute industry was to Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta. After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and 1908. On June 1908, some leading brokers formed "The Calcutta Stock Exchange Association".

In the beginning of the twentieth century, the industrial revolution was on the way in India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limited in 1907, an important stage in industrial advancement under Indian enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally enjoyed phenomenal prosperity, due to the First World War.

In 1920, the then demure city of Madras had the maiden thrill of a stock exchange functioning in its midst, under the name and style of "The Madras Stock Exchange" with 100 members. However, when boom faded, the number of members stood reduced from 100 to 3, by 1923, and so it went out of existence.

In 1935, the stock market activity improved, especially in South India where there was a rapid increase in the number of textile mills and many plantation companies were floated. In 1937, a stock exchange was once again organized in Madras - Madras Stock Exchange Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange Limited).

Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with the Punjab Stock Exchange Limited, which was incorporated in 1936.

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Post-independence Scenario

Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange was closed during partition of the country and later migrated to Delhi and merged with Delhi Stock Exchange.

Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.

Most of the other exchanges languished till 1957 when they applied to the Central Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta, Madras, Ahmedabad, Delhi, Hyderabad and Indore, the well established exchanges, were recognized under the Act. Some of the members of the other Associations were required to be admitted by the recognized stock exchanges on a concessional basis, but acting on the principle of unitary control, all these pseudo stock exchanges were refused recognition by the Government of India and they thereupon ceased to function.

Thus, during early sixties there were eight recognized stock exchanges in India (mentioned above). The number virtually remained unchanged, for nearly two decades. During eighties, however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized stock exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).

The Table given below portrays the overall growth pattern of Indian stock markets since independence. It is quite evident from the Table that Indian stock markets have not only grown just in number of exchanges, but also in number of listed companies and in capital of listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and this was due to the favouring government policies towards security market industry.

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HISTORY OF INDIAN MARKET AT A GLANCE

19 th century YEARS ACTIVITIES1800 Trading of shares of east India company in kolkata and Mumbai.1850 Join stock companies come in to existence.1860 Speculation and feverish dealing in securities.1875 Formation of stock exchange of Mumbai.1894 Formation of Ahmedabad stock exchange.

20 th century YEARS ACTIVITIES1908 Formation of Calcutta stock exchange.1939 Formation of Lahore and Madras stock exchange.1940 Formation of Delhi and U. P. stock exchange.1956 Securities contract regulation act enacted.1957 Scam of Haridas mundhra.1988 Securities and exchange board of India is set up.1991 Scam of MS shoes.1992 SEBI given power under SEBI act, 1992.1993 Formation of National Stock Exchange (NSE).1995 Harshad Mehta scam.1995 Sesa Goa scam.1997 CRB scam.1998 BPL and Videocon scam.

21 st century YEARS ACTIVITIES2000 Depositories came in to existence (electronic form of shares).2001 Ketan Parekh scam.2002 Start of rolling settlement and banning of Badla trading. 2002 Introduction of T + 3 settlement in April.2003 Introduction of T + 2 settlement in April.2005 BSE sensex touches all time high of 6954 in January.2006 BSE sensex touches all time high of 12500, the highest intra day fall is

1100 point.2007 As a result of heavy buying by investors, the bull roared to reach 19000

mark. It took around 20 months to double from 10,000 mark to 20,000.2008 It crossed 21000 mark and in July BSE Sensex went below 13000 mark

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Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges are limited to listed securities of public limited companies. They are broadly divided into two categories, namely, specified securities (forward list) and non-specified securities (cash list). Equity shares of dividend paying, growth-oriented companies with a paid-up capital of atleast Rs.50 million and a market capitalization of atleast Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified group and the balance in non-specified group.

Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery transactions "for delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 14 days following the date of the contract" : and (b) forward transactions "delivery and payment can be extended by further period of 14 days each so that the overall period does not exceed 90 days from the date of the contract". The latter is permitted only in the case of specified shares. The brokers who carry over the outstandings pay carry over charges (cantango or backwardation) which are usually determined by the rates of interest prevailing.

A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell securities on his own account and risk, in contrast with the practice prevailing on New York and London Stock Exchanges, where a member can act as a jobber or a broker only.

The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-to-face trading with bids and offers being made by open outcry. However, there is a great amount of effort to modernize the Indian stock exchanges in the very recent times

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Importance of stock market

The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'être of central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.

A Stock market brokers is none other than a commission agent who transacts business in securities on behalf of his clients who are non-members of a stock exchange. Thus, a non-member can purchase and sell securities only through a broker who is a member of the stock exchange. To deal in securities on recognized stock exchanges, the broker should register . A stock broker must possess the following qualifications to register as a broker:

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Components of the share capital

The major components of the share market are shown as follow with the help of Diagram:-

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CAPITAL MARKET

SEBI

DEPOSITORY

DEPOSITORY PARTICIPANTS

BROKERS

SUB BROKERS

INVESTORS

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SEBI (Security Exchange Board of India)

Introduction

The security exchange board of India is aboard (autonomous body) created by theGovernmentof india in 1988 and givenstatutoryform in 1992 with the SEBI1992with its headoffice at Mumbai it has off--cesinChennai, Kolkatta and Delhi. It is theregulator of Securities markets in India.It is chaired by Mr. MDamodaran a respectedturnaround civil servant credited withturning around large public sector.

companies from near death including the famous Unit Trust of India. The Board comprises whole time members and outside members (representing the finance ministry, RBI and experts). The present whole time members are Mr. G Anantharaman, Dr. TC Nair and Mr. VK Chopra. Below the Board, the staff/officers of the organization are led by Executive Directors. The present EDs are Mr. RK Nair, Ms. Usha Narayanan, Mr. Sandeep Parekh(on contract) and Mr. P. K. Nagpal. Also, Mr. MS Ray, a senior IRS officer on deputaion, is an Officer on Special Duty (equivalent to an ED). The organisational structure of SEBI can be found under the SEBI website by clicking on the RTI Act 2005 at the top.

Sebi has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts rules in its legislative capacity, it conducts enquiries 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 accountibility. There is a Securities Appeallate Tribunal which is a three member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court(where important questions of law arise

SEBI has had a mixed history in terms of its success as a regulator. Though it has pushed systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless), it lacked the legal expertise, till recently, needed to sustain prosecutions/enforcement actions. It has recently been announced that it is going to the top law campuses to recruit talent and has found reasonable success there

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Objectives Of SEBI to protect the interests of investors in securities; to promote the development of Securities Market; to regulate the securities market and For matters connected therewith or incidental thereto.

Since its inception SEBI has been working targeting the securities and is attending to the fulfillment of its objectives with commendable zeal and dexterity. The improvements in the securities markets like capitalization requirements, margining, establishment of clearing corporations etc. reduced the risk of credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk identification and risk management systems for Clearing houses of stock exchanges, surveillance system etc. which has made dealing in securities both safe and transparent to the end investorAnother significant event is the approval of trading in stock indices (like S&P CNX Nifty & Sensex) in 2000. A market Index is a convenient and effective product because of the following reasons:

It acts as a barometer for market behavior; It is used to benchmark portfolio performance; It is used in derivative instruments like index futures and index options; It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and also to diversify the trading products, so that there is an increase in number of traders including banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through the Exchanges. In this context the introduction of derivatives trading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.

SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory framework for derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the recommendations of the committee and approved the phased introduction of derivatives trading in India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committee for Regulation and Control of Trading and Settlement of Derivatives Contracts.

SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM) in the Indian Stock Index Futures Market. The report was submitted in november 1998.

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However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to include "derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The necessary amendment was then carried out by the Government in 1999. The Securities Laws (Amendment) Bill, 1999 was introduced. In December 1999 the new framework was approved.

Derivatives have been accorded the status of `Securities'. The ban imposed on trading in derivatives in 1969 under a notification issued by the Central Government was revoked. Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE started trading in the year 2001.

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DEPOSITORY

Introduction

A depository holds the securities of investors in electronic form just like a bank holds cash of its customers. As in a Bank, investors can deposit/withdraw and transfer securities. The National Securities Depository Limited (NSDL) is the first depository in India. The functions of NSDL are regulated by the Securities and Exchange Board of India (SEBI).

The depository system evolved by the National Securities Depositories Limited (NSDL) enables investors to overcome all problems related to handling physical certificates. NSDL is an organization formed to provide electronic depository facilities for securities traded. The securities of investors are held in electronic form through the medium of Depository Participants.

Functions

Dematerialisation :

One of the primary functions of depository is to eliminate or minimize the movement of physical securities in the market. This is achieved through dematerialization of securities. Dematerialisation is the process of converting securities held in physical form into holdings in book entry form.

Account Transfer :

The depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners.

Transfer and Registration:

A transfer is the legal change of ownership of a security in the records of the issuer. For affecting a transfer, certain legal steps have to be taken like endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerates the transfer process by registering the ownership of entire issue in the name of the depository. Under a depository system, transfer of security occurs merely by passing book entries in the records of the depositories, on the instructions of the beneficial owners.

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Corporate Actions :

A depository may handle corporate actions in two ways. In the first case, it merely provides information to the issuer about the persons entitled to receive corporate benefits. In the other case, depository itself takes the responsibility of distribution of corporate benefits.

Pledge and Hypothecation:

Depositories allow the securities placed with them to be used as collateral to secure loans and other credits. In a manual environment, borrowers are required to deliver pledged securities in physical form to the lender or its custodian. These securities are verified for authenticity and often need to be transferred in the name of lender. This has a time and money cost by way of transfer fees or stamp duty. If the borrower wants to substitute the pledged securities, these steps have to be repeated. Use of depository services for pledging/hypothecating the securities make the process very simple and cost effective. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of the depository.

Linkages with Clearing System:

Whether it is a separate clearing corporation attached to a stock exchange or a clearing house (department) of a stock exchange, the clearing system performs the functions of ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded on the stock exchange. Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by the depository. To achieve this, depositories and the clearing system should be electronically linked.

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There are two main depositories in India:

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DEPOSITORIES

NSDLNATIONAL SECURITY DEPOSITORY LTD

CDSLCENTRAL DEPOSITORY SERVICES LTD

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NSDL (National security depository ltd.)

Introduction

Although India had a vibrant capital market which is more than a century old, the paper-based settlement of trades caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in the Indian capital market

Using innovative and flexible technology systems, NSDL works to support the investors and brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlement solutions that increase efficiency minimizes risk and reduce costs. At NSDL, we play a quiet but central role in developing products and services that will continue to nurture the growing needs of the financial services industry.

In the depository system, securities are held in depository accounts, which is more or less similar to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfers. This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates

Promoters & Shareholders

NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of the prominent banks in the country have taken a stake in NSDL.

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NSDL

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Promoters Industrial Development Bank of India Limited Unit Trust of India National Stock Exchange of India Limited Other Shareholders State Bank of India Oriental Bank of Commerce Citibank NA Standard Chartered Bank HDFC Bank Limited The Hong Kong and Shanghai Banking Corporation Limited Deutsche Bank Dena Bank Canara Bank Union Bank of India

Legal Framework

As a part of its on-going market reforms, the Government of India promulgated the Depositories Ordinance in September 1995. Based on this ordinance, Securities and Exchange Board of India (SEBI) notified its Depositories and Participants Regulations in May 1996. The enactment of the Depositories Act the following August paved the way for the launch of National Securities Depository Ltd. (NSDL) in November 1996. The Depositories Act has provided dematerialization route to book entry based transfer of securities and settlement of securities trade.

In exercise of the rights conferred by the Depositories Act, NSDL framed its Byelaws and Rules. The Byelaws are approved by SEBI. While the Byelaws define the scope of the functioning of NSDL and its business partners; the Business Rules outline the operational procedures to be followed by NSDL and its "Business Partners."

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MANAGEMENT

Chairman and managing director

Mr. C.B.Bhave

Executive director(Business Operations)

Mr. Gagan Rai

DEPARTMENTS NAMES

Corporate communications,administration & human resources

Jayesh sule-EVP

Tin & special projects T. Koshy-EVPSurveillance cell, CC Interface, BP training &Investor grievances

Chandrashekhar Tilak-SVP

BP-Inspection Amit Sinha-SVPAccounts & Tin-FC Inspection Tejas Desai-VPLegal & Arbitration Ganesh Subbaram-VPParticipant Interface Bhushan Maideo-VPIssuer Interface Samar Banwat-VP

Executive director (IT)

Mr. RAJESH DOSHI

DEPARTMENTS NAMES

Infrastructure-office & new projects Mubesh Mistry-SVPSystems-New projects Yaten NerurkarComputer operations & Production monitoring Nityanad Phatarphod -

SVPSystem –Depository Applications Dharmesh Parekh-VPInfrastructure – depository & Special projects Milind Mungle-Vp

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CDSL (Central Depository Services Ltd.)

Introduction

CDSL was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. Some of the important milestones of CDSL system are:

CDSL received the certificate of commencement of business from SEBI in February, 1999

flagged off the operations of CDSL on July 15, 1999

Settlement of trades in the demat mode through BOI Shareholding Limited, the clearing house of BSE, started in July 1999.

All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad, etc have established connectivity with CDSL.

As at the end of Dec 2005, over 5000 issuers have admitted their securities (equities, bonds, debentures, commercial papers), units of mutual funds, certificate of deposits etc. into the CDSL system

PROMOTERS

CDSL was promoted by Bombay Stock Exchange Limited (BSE) in association with Bank of India, Bank of Baroda, State Bank of India and HDFC Bank. BSE has been involved with this venture right from the inception and has contributed overwhelmingly to the fruition of the project. The initial capital of the company is Rs.104.50 crores. The list of shareholders is as under.

Sr.No. Name of shareholder Value of holding (in rupees lacs)

% terms to total equity

1 Bombay Stock Exchange Limited te

3,825.46 36.60

2 Bank Of India 1,000.00 9.573 Bank Of Baroda 1,000.00 9.574 State Bank Of India 1,000.00 9.575 HDFC Bank Limited 750.00 7.17

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6 Standard Chartered Bank 750.00 7.177 The Centurion Bank Limited 750.00 7.178 Canara Bank 674.46 6.459 Union Bank of India 200.00 1.9110 Bank of Maharashtra 200.00 1.9111 Jammu and Kashmir Bank

Limited200.00 1.91

12 The Calcutta Stock Exchange Association Limited

100.00 0.96

13 Others 0.08 0.04TOTAL 10,450.00

Board of Directors

POSTS NAMES

Managing Director and Chief Executive Officer

Mr. V V Raut

Chief Operating Officer Mr. P S ReddyVice President.Legal & Company Secretary

Mr. Umesh P Maskeri

Vice President.Finance & Accounts

Mr. J B Ram

Chief Technology Officer Mr. PramodDeshpandeVice President.Business Development(Currently on deputation to CDSL Ventures Ltd. as CEO with effect from 7-12-2006)

Mr. Cyrus Khambata

Vice President.Operations

Mr. Dominic Fernandes

Asst. Vice President.Business Development

Mr. Sunil Alvares

Asst. Vice President.Operations & Training

Mr. L S Joshi

Asst. Vice President.Operations

Mr. Krishnamurthy Iyer

Asst. Vice President.Information Technology

Mr. T P Ganapathy

Asst. Vice President.Information Technology

Mr. Jitendra Chad

Asst. Vice President.Information Technology

Mr. Vishwas Nagle

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Asst. Vice President.Investor Services

Mr. Suhas Kulkarni

Asst. Vice President.Finance & Accounts

Mr. Bharat Sheth

Asst. Vice President.Audit, Inspection & Compliance

Ms. Nayana Ovalekar

Asst. Vice President.Operations

Mr. Ramkumar K

Asst. Vice President.Legal & Secretarial

Mr. Satish Budhakar

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Depository participants or Stock exchanges

Introduction

Depository Participants (DPs) are the link between the Shareholder, the Company and NSDL. Banks, Financial Institutions, Custodians, Stock Brokers etc. can become DPs subject to their meeting certain requirements prescribed by NSDL and SEBI. NSDL publishes from time to time the list of DPs registered with them.

You can open your accounts with one or more DPs, as you like. The procedure for opening an account with the Depository Participant is similar to opening a Savings Bank Account with the Bank. After opening the account, you can hold shares of any number of companies in your account, provided all such companies have entered the depository system. In other words we can say that DP’s are the different stock exchanges which act as intermediaries between share holders, the company and NSDL.

Functions

The Depository Participant (DP) is the link between the shareholder, the company and CDSL and provides the following services

Account opening :

To utilize the services offered by a depository, any person having investment in any security or intending to invest in securities needs to have a demat account with a CDSL-DP. This holder of such demat account is called as "Beneficial Owner (BO)". A BO can maintain a demat account with zero balance in such account. A BO can open more than one account with the same or multiple DPs, in the same name/s and order, if he/she desires so. The investor can approach any DP/s of his/her choice to open a demat account

Dematerialisation

Dematerialisation is a process by which physical certificates (of shares / debentures / other securities) are converted into electronic balances. A BO has to submit the request for dematerialization by submitting the demat request form (DRF) duly completed along with the concerned physical certificates, to his/her DP.

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Processing Delivery & Receipt Instructions :

To settle trades done on a stock exchange (on-market trades) and trades, which are directly settled between two BOs (off-market trades), BOs submit duly completed delivery instructions in the prescribed form to DP. For receipt of securities into his/her account, a BO can give one time "standing instruction" to DP. Once such a standing instruction is given to the DP, there is no need to submit separate instructions for receipt every time the investor buys securities.

Account Statement

Generally a DP sends to the BO, a statement of his account, monthly, if there is any transaction in the account or every quarter if the account is not operated during that period.

Rematerialisation

Rematerialisation is the process by which the electronic balances held in the demat account can be converted back into physical certificates.

Pledging

If the BO decides to pledge any securities in his BO account, he can avail of the same by submitting the pledge creation form duly completed, to his DP.

Nomination

BO accounts also have a facility for nomination in favor of any person.

Transmission of securities

CDSL offers a facility for transmission of balances held in BO account/s (to other BO account/s) if so required due to death, lunacy, bankruptcy, insolvency or required due to operation of any law.

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Change in Address

A BO who wishes to register his change in address submits his/her request in writing to his/her DP. The changes entered by the DP in the CDSL system will be automatically downloaded to all the companies in which the BO is holding securities. This facility offered by CDSL saves money, time and effort for the BO.

Bank Account Details :

SEBI has made it mandatory for companies to print details of bank account of the BO on dividend/interest warrants etc. to prevent possibilities of misuse of the warrants. All BOs should submit a request in writing to the DP if they wish to record / change their bank account details.

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STOCK EXCHANGE

Introduction

STOCK EXCHANGE is a platform where buyers and sellers of securities issued by government, financial institution and corporate houses etc. meet and where the trading of these corporate securities takes place. The securities which are traded in the stock exchange are shares, debentures of public limited companies, port trusts, utility undertaking and such other authorities. The securities contracts (resolution) act, 1956 defines stock exchange as

“AN ASSOCIATION, ORGANISATIION OR BODY OF INDIVIDIUAL, WHETHER INCORPORATE OR ASSISTING REGULATING AND CONTROLING IN BUYING, SELLING AND DEAKLILNG IN SECURITIES “

A stock exchange is a platform for the trade of already issued securities through primary market. It is essential pillar of the private sector and corporate economic. It is the open auction market where buyers and sellers meet and involve a competitive price for the securities.

Since buying and selling of different types of securities take place in stock exchange, the price of particular securities reflects their demand and supply. In fact, stock exchange is said to be barometer of economic and financial health. Just like reading on a barometer reflect the atmospheric pressure and changes, stock market quotations of securities prices give an idea about the economic and industrial conditions. It measures of all the pull and pressure of securities in the market. The trade in market is throughthe authorized members who have duly registered with concerned stock exchange and SEBI.

It reflects hopes, aspiration and fear of people regarding the performance of the economy .it exerts a powerful and significant influence as a depressant or stimulant of business activity.

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HISTORY OF THE STOCK EXCHANGE

The trading of securities in India was started in early 1973. The only stock exchange operating in the 19th century were those of Bombay set up in 1876 and in Ahmedabad, set up in 1894. These were organized as voluntary non profit making associations of brokers to regulate and protect their interests, before the control on securities trading became a central subject under the constitution in 1950. it was a state subject and Bombay securities contract act of 1925 used to regulate trading in securities. Under this act, Bombay stock exchange was recognized in 1927 and ahmedabad stock exchange were organized at Bombay, ahmedabad and other centers but they were not recognized soon after it became a central subject, central legislation was proposed and a committee headed by sh. A.D.GORWALA went in to bill for security regulation . At present there are 23 recognised stock exchanges in India. From these BSE (Bombay stock exchange) and NSE(national stock exchange) are the two major stock exchanges and rest 21 are the regional stock exchanges.

FEATURES OF STOCK EXCHANGES

Stock exchanges have been an association of individual members called member broker.

Stock exchanges are formed for the express purpose of regulating and facilitating the buying and selling of securities by and institution at large.

Stock exchange operate with due recognition from the government under securities and contract regulation act 1956.

The member brokers are middlemen who transact on behalf of public for commission.

Board of director’s limit given by SEBI.

SEBI has been set to oversee the orderly development of stock exchange.

Stock exchange lists the company who wish to raise the funds of capital from public.

Stock exchange facilitates trading in securities of the public sector companies as well as government securities.

The recognition accorded to a stock exchange is valid for period of five years subject to satisfactory performance of stock exchange during this period.

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There are mainly three participants in stock exchange i.e.

o Issuer of security (company)o Investor of security (individual.HUF)o Intermediaries and products(broker, merchant bankers and

share,bonds,warrants,derivatives products)

Functions of Stock Exchanges

The stock exchange provides appropriate conditions ,where by purchase and sale of securities takes place at reasonable and fair prices.

People having surplus funds invest in the securities and these funds are used for industerlisation and economic development of the countery that leads to capital for mation.

The stock exchange provides a ready market for the conversion of excistying securities in to cash and vice-versa.

The stock exchange acts as a center of providing business information relating top enterprise whose securities are traded as the listed companies are to present their financial and other statements to it.

Stock exchange acts as the barometer of the countery as it measure all the pulls and pressures of the securities in the market.

The stock exchange provides the linkages between the savings in the household sector and the investment in corporate economy.

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Stock exchanges in India

SR. NO.

NAMES YEAR TYPE

1 Bombay Stock Exchange 1875 Voluntary non profit organization

2 Ahmdabad Stock Exchange 1897 Voluntary non profit organization

3 Calcutta Stock Exchange 1908 Public ltd. company4 Madhya Pradesh Stock

Exchange1930 Voluntary non profit

organization5 Madras Stock Exchange 1937 Company ltd by

guarantee6 Hyderabad Stock Exchange 1943 Company ltd by

guarantee7 Delhi Stock Exchange

association ltd1947 Public ltd. company

8 Banglore Stock Exchange 1957 Pvt. Converted in ton public ltd. company

9 Cochin Stock Exchange 1978 Public ltd. company10 U.P. Stock Exchange ltd. 1982 Public ltd. company11 Pune Stock Exchange ltd. 1982 Company ltd by

guarantee12 Ludhiana Stock Exchange 1983 Public ltd. company13 Guwahati Stock Exchange 1984 Public ltd. company14 Magadh Stock Exchange

Association1986 Company ltd by

guarantee15 Jaipur Stock Exchange ltd. 1983 Public ltd. company16 Bhubaneshwar Stock

Exchange1989 Company ltd by

guarantee17 Saurashtrakuch Stock

Exchange ltd. 1989 Company ltd by

guarantee18 Vadodara Stock Exchange ltd. 1990 Company By guarantee19 National Stock Exchange of

India ltd.1994 Pure demutalise

20 Coimbatorestock exchange ltd. 1996 N.D.21 OTC Stock Exchange of India Pure demutalise

22 Mangalore Stock Exchange ltd Company By guarantee

23 Interconnected Stock Exchange

N.D.

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There are two major stock exchanges in India:

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Major Stock Exchanges

NSE(NATIONAL STOCK EXCHANGE)

BSE(BOMBAY STOCK EXCHANGE)

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NSE (NATIONAL STOCK EXCHANGE)

History of the National Stock Exchange of India:

Capital market reforms in India and the launch

Of the Securities and Exchange Board of India

(SEBI) accelerated the incorporation of the second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of operations, the NSE has become the largest stock exchange in India.

Three segments of the NSE trading platform were established one after another. The Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The Indices are owned and managed by India Index Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor's.

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NATIONAL STOCK EXCHANGE

NSE

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In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).

Trading at NSE can be classified under two broad categories:

(a) Wholesale debt market and

(b) Capital market.

Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.

There are two kinds of players in NSE:

(a) Trading members and

(b) Participants.

Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility.

In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced exchange with 1016 companies listed and 726 trading members.

The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance Corporation of India. However, in the totally de-mutualised Exchange, the ownership as well as the management does not have a right to trade on the Exchange. Only qualified traders can be involved in the securities trading.

The NSE is one of the few exchanges in the world trading all types of securities on a single platform, which is divided into three segments: Wholesale Debt Market (WDM), Capital Market (CM), and Futures & Options (F&O) Market. Each segment has experienced a significant growth throughout a few years of their launch. While the WDM segment has accumulated the annual growth of over 36% since its opening in 1994, the CM segment has increased by even 61% during the same period.

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The National Stock Exchange of India has stringent requirements and criteria for the companies listed on the Exchange. Minimum capital requirements, project appraisal, and

company's track record are just a few of the criteria. In addition, listed companies pay variable listing fees based on their corporate capital size.

The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform.

The Organization

The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.

BSE (Bombay stock exchange )

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History of the Bombay Stock Exchange :

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act.

The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform.

Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.

As the first stock exchange in India, the Bombay Stock Exchange is considered to have played a very important role in the development of the country's capital markets. The Bombay Stock Exchange is the largest of 23 exchanges in India, with over 6,000 listed companies. It is also the fifth largest exchange in the world, with market capitalization of $466 billion. The Bombay Stock Exchange uses the BSE Sensex, an index of 30 large, developed BSE stocks. This index gives a measure of the overall performance of the Bombay Stock Exchange, and is closely followed around the world. Based on the Sensex, the BSE equity market has grown significantly since 1990.

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BOMBAY STOCK EXCHANGE

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In addition to individual stocks, the BSE also has a market in derivatives, which was the first to be established in India. Listed derivatives on the exchange include stock futures and options, index futures and options, and weekly options.

The Bombay Stock Exchange is also actively involved with the development of the retail debt market. The debt market in India is considered extremely important, as the country continues to develop and depends on this type of investment for growth. Until recently, the debt market in India was limited to a wholesale market, with banks and financial institutions as the only participants. The Bombay Stock Exchange believes that a retail market will bring great opportunities to individual investors through better diversification.

Logo

The Stock Exchange, Mumbai, is now Bombay Stock Exchange Limited. The Exchange has a new name, and an entirely new perspective. A perspective born out of corporatisation and demutualisation.

Bombay Stock Exchange Limited is Asia’s oldest stock exchange. It carries within itself the depth of knowledge of capital markets acquired since its inception in 1875. Located in Mumbai, the financial capital of India, it has been the backbone of the country’s capital markets.

As a corporate entity, our new identity reflects our new perspective. Smoother, seamless, and efficient. Whichever way you look at i

BROKERS

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Introduction

A Stock broker sells or buys stock on behalf of themselves. The stock broker works as an agent matching up stock buyers and sellers. A transaction on a stock exchange must be made between two members of the exchange — a typical person may not walk into the New York Stock Exchange (for example), and ask to trade stock. Such an exchange must be done through a broker.

In addition to actually trading stocks for their clients, stock brokers may also offer advice to their clients on which stocks, mutual funds, etc. to buy.

ELGIBILITY i. He must be a citizen with 21 years of age.

ii. He should neither e a bankrupt not compounded with creditors.

iii. He should not have been convicted for any offence, fraud.

iv. He should not have engaged in any other business other than that of a broker in securities.

v. He should not be a defaulter of any stock exchange.

vi. He should have completed 12th standard examination.

Apart from individuals, corporate and institutional members can also become brokers. Brokers will be selected by the selection committee of the stock exchange on the basis of their qualifications, experience, financial status, their performance in the written test, interview etc.

FUNCTIONS OF BROKERS

The following are the important functions generally performed by all the brokers.

Client registration

First of all, a trading broker has to enter into an agreement in the specified format with his client before accepting any orders on his client s behalf. The said agreement has to be executed on non-judicial stamp paper, duly signed by both the parties on all the pages. In addition to the agreement, the broker shall seek other information about the client in the client registration form. The information may relate to :

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1. Investor’s financial profile .

2. Investors risk profile and risk taking ability.

3. Investor’s social profile.

4. Investor’s identification details.

5. Family, income age and employment details.

6. Details of investments in other assets.

Financial liabilities .

The broker has to obtain recent passport size photos in the case of individual clients and of all partners in the case of partnership firms. In the case of corporate customers, he has to obtain the photos of dominant promoters. The broker should not forget to take proof of identification of the client. It is also mandatory to give a unique code for each client for easy identification. There is no limit on the maximum number of clients for a broker.

Obtaining margin money

It is also mandatory for the broker to collect margins from his clients in all cases where the margin in respect of the client in settlement, would work out to be more . The margins so collected must be kept separately in the clients bank account and it must be utilized for making payment or settlement in respect of that client.

Execution of orders

The important function of a broker is to execute his client s orders swiftly and carefully. Hence, he has to obtain clear cut confirmed order instructions from the clients to that the necessary orders may be placed on the system. To execute a trade order for a client, he broker must obtain specific instructions as to:

1. The name of the company whose securities have to be bought or sold.

2. The precise number of shares required. 3. The limit or market price conditions .

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Supply of necessary slips

On execution of the trade, the broker the trading member should inform his client the order number . He should also give copies of the trade confirmation slip, modification slip, cancellation slip to enable the client to take necessary follow up action.

Issue of contract note

The broker should then issue a contract note to his clients for all trades, whether for purchase or sale of securities, executed with all relevant details. This contract note should be issued within 24 hours of the execution of the contract. It should be duly signed by the broker or his authorized signatory or client attorney. Every broker is expected to maintain the duplicate copy of each contract not issued for five years.

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Review of Literature

1).An ASX Study of share investors in 2004 Investing in the share market is becoming more and more a part of life for average Australians, with 55% now owning shares in one form or another. This is the highest level of ownership ever recorded by ASX, and among the highest recorded levels in the world. 2004 was certainly an interesting time for the market. The benchmark index, the S&P/ASX 200, reached 4,000 points for the. rst time. There was also a large number of new listings and several new trading records in the equities, options and warrants markets. So perhaps it is no coincidence at such a time to see a record level of share ownership. ASX has been researching and publishing information about Australian share owners for many years. This is our ninth study in a series dating back to 1991. Retail investors are those who are investing their own wealth, either directly or via a managed fund or self-managed superannuation fund. They are an important segment of the overall Australian investment landscape, accounting for around 55% of all trades on ASX, and 22% of the value of trades. These studies help provide ASX, and the financial markets as a whole, with a detailed understanding of retail investors – why they invest, how they invest and what they think about investing. We note with pleasure that investors believe our markets are well supervised and that they are satisfied with their broker. These factors are extremely important in ensuring that investors remain confident about share investing.Page 3

2) A Study of selection Behaviour of Individual Investors towards Shares

Consumer behaviour from the marketing world and financial economics has brought together to the surface an exciting area for study and research: behavioural finance. The realization that this is a serious subject is, however, barely dawning. Analysts seem to treat financial markets as an aggregate of statistical observations, technical and fundamental analysis. A rich view of research waits this sophisticated understanding of how financial markets are also affected by the 'financial behaviour' of investors. With the reforms of industrial policy, public sector, financial sector and the many developments in the Indian money market and capital market, Shares which has become an

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important portal for the small investors, is also influenced by their financial behaviour. Hence, this study has made an attempt to examine the related aspects of the Shares selection behaviour of individual investors, in the city of Mumbai. From the researchers and academicians point of view, such a study will help in developing and expanding knowledge in this field.

3).An Analysis of Behaviour of Investors In India

The post-1991 era has witnessed some vibrant changes in the Indian business environment. The process of globalization and liberalization, which was started 15 years back, finally started producing results and one of them is SENSEX crossing 12,000 points today. The number of Initial Public Offerings (IPOs) coming in, rising market capitalization, emergence of domestic mutual funds, and foreign investment witnessed the changing outlook of the Indian investment environment. Over the period, these developments also changed the perception of retail investors towards stock markets investment. This resulted in a mounting number of retail investors in Indian stock markets over the last few years. After a series of swindles in the late 1990s, the retail investors, who were shying off from the stock market, have now started on the go participation in stock markets. This paper is a moderate attempt to measure the expectations and confidence of the retail investors in Indian stock markets. Previous research in other countries has shown that both of these attitudes manifest clear tendencies to change through time and strongly influence the behavior of the pragmatic markets. This study is based on the information obtained through a survey process in India.

4). Adopt the tried and tested approach

By Amitabh Chakraborty 4 Aug 2008, 0715 hrs IST

When the Sensex peaked at 21,000 in January, the popular belief was that the market would touch 25,000, and investors queued up for a slice of the action. Now, with the index hovering around 13,000-14,000 and valuations close to the equivalent Sensex level of 8,000, investors have lost interest altogether. By far, the best approach for an investor is to rely on his/her own judgment, common sense and due diligence (mining company information from business papers and magazines) to invest in the market. In theory, markets are efficient, but in practice, they never move efficiently. It is important to note that investors often

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ignore the role of chance, and are under an illusion of control by exaggerating both their own skill and the importance of that skill. This concept is called positive testing, which effectively means that people believe the methods they employed to achieve any positive results are inherently sound. The problem is that they then reject alternate methods that may also work well, if not better.

5). Investors who stick to quality portfolios make the most money

10 Mar 2008, 2220 hrs IST, Tushar Pradhan,

The domestic stock market has been witnessing considerable volatility and there are concerns about its future direction. However, news so far about the domestic economy and corporate sector is not really causing concern. Nevertheless, nervousness regarding the unfolding events, post sub prime crisis, continues to impinge on the minds of overseas investors. Though investors do have concerns, which make them think twice before venturing into the market, one must not forget that returns are gained only by undertaking risk. Therefore, what appears to be a bleak situation (under normal circumstances) is the cause of abnormal gains if the bet is called right. In the strictest sense of the theory of efficient markets, no one would make above normal gains otherwise. So, these fluctuations, driven by a mixture of facts and sentiment, are the quagmire that investors have to face on a regular basis. The relentless rise in the market over the past three years had desensitized investors to a large extent. Hence, the above phenomenon seems difficult to understand as of now. Most investors are also in denial at times, which generally (if the market continues to fall) gives rise to despondency and eventual capitulation

6). Current low stock prices offer high dividend yields

23 Mar 2009, 0705 hrs IST, ET Bureau

As a Spanish proverb puts it, "Habits are at first cobwebs, then cables". We have been so used to seeing the share prices go up month after month between 2003 and 2008 that investing for capital appreciation has become a habit. The days of momentum buying (buy high and sell higher without looking at the company's finances) are over. Nor is it possible to double or triple your capital in ultra short time anymore. The froth is out and the investment world is back to its normal trajectory. Does this mean the end of the road for equities? Not really.

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It just means that investors will now have to change their perception about equities. While equities were traditionally bought for capital returns, they could become excellent sources of steady income during bear phases. The lower stock price translates into higher dividend per share, thereby pushing up the dividend yield to attractive levels.

7). Factors Affecting Share Market

BY ICFAIStock market is affected by several factors – macro and micro. Macro factors can be attributed to various economic and political events. Several studies have been done in Indian as well as international context about the impact of macroeconomic and political events on the stock market. The paper “Reaction of Indian Stock Prices to Selected Economic and Political Events – A study from 1991 to 2005” is such a study based on new data in the Indian context. The authors Arindam Gupta and Debashis Kundu have considered fifty-five economic events and forty-four political events over the period from 1991 to 2005. The authors have cited several prior studies and applied event study methodology in the paper. Both economic and political events taken together were found to exert influence on the proxy market portfolios viz., Sensex and BSE 200. That is to say that the market was surprised by the events whether political or economic. Corporates have got to disclose their financial performance periodically i.e., every quarter. Such information dissemination is supposed to take care of information asymmetry, since, so far as performance related information is concerned, insiders are privy to the same. In the paper “Quarterly Results and Share Price Behaviour: Indian Evidence”, the authors T Mallikarjunappa and Iqbal have tried to test the share price around the announcement of quarterly financial results and test the semi-strong form of efficient market hypothesis in the Indian stock market. The authors have considered 150 companies out of BSE 100 and BSE 200 index. They have constituted three portfolios viz., good news portfolio, bad news portfolio and overall portfolio for the purpose. Good news or bad news is based on the increase (or decrease) in financial performance indicated by net profit and sales.

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8). Long Memory of the Indian Stock Market

BY: Ashutosh Verma September, 2008

The Icfai University Journal of Financial Economics

Efficiency of the stock markets is one of the most researched topics in financial economics. Academic studies focused on testing all the three forms of efficient market hypothesis have been carried out; while the weak form is the most researched, the strong form is the least researched due to the concept of insider trading. The random walk model has been examined using various linear models to determine whether the prices are following a random pattern on a day-to-day basis. The weak form of efficient market hypothesis proposes that the prices are not serially correlated and that using or studying the past patterns of prices will not enable the investor to exploit the opportunities and earn supernormal profits. In other words, in a weak form efficient market, technical analysis of share prices is useless. A lot of academic literature has been developed which has evidence that the prices follow a random pattern, and the use of charts and technical analysis will not enable a participant to earn excessive profits. These findings however, have not been received very well by the practitioners and the market participants who have questioned the traditional statistical methods.

Doubts have been raised regarding the suitability of the methods and models as well as the assumptions underlying the models and the statistical tests used for the analysis. Market participants have consistently argued that the market valuations differ significantly from rational valuations. One of the arguments put forth by those who question the findings supporting the efficiency of the markets is that linear models have been used in most of these studies. However, the manner in which the various market participants interact, the manner in which the information flows into the market and the behavior of the macroeconomic factors are all nonlinear. The returns generated by derivatives instruments like options, the investors' perception about risk and return, and the behavior of a number of economic variables are nonlinear and therefore, models which incorporate these aspects need to be studied before coming to any conclusion. This has raised a lot of research interest about the chaotic process of stock markets, and models incorporating the non-linearity are being developed. Examination of long memory is one such attempt to analyze the non-linear behavior of share prices.

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9). AN INVESTORS’ REQUIREMENTS IN INDIAN SECURITIES MARKET

BY K.Balana Balanaga a Gur Gurunathan

The securities market operations promote the economic growth of the country. More efficient is the securities market, the greater is the promotion effect on economic growth. It is, therefore, necessary to ensure that securities market operations are more efficient, transparent and safe. In this context, the investors need protection from the various malpractices and unfair practices made by the corporates and intermediaries. As the individual investors’ community and the investment avenues are on the rise, it is interesting to know how the investors shall be protected through various legislations. Securities market in general are to be regulated to improve the market operations in fair dealings and easy to access the market by corporate and investors. The present positive attitude of investors is heartening though investor sentiments have been shaken by the various scandals. Even though, there are various opportunities available for investment, investors are scared of investing in corporate. In this situation, the individual investors’ protection becomes necessary to sustain the economic development of all countries. To achieve the desired level of economic growth is dependent upon investors’ protection availability of the concerned country.

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Introduction to topic

Capital market is a type of market, which can make the houses and which can ruin the houses.

In India, thousands and lakhs of people invest their money in the share market and they invest on basis of two main criteria’s i.e.

On the basis of personal analysis of the market.

On the basis of the analysis being done by various analysts.

Apart from above two main criteria’s there are various other criteria’s which influence the investment decision of the investors such as advice by the brokers etc.

I am interested in knowing the ratio of the investors i.e. how many are investing on the basis of their personal analysis and how many are investing blindly on the faith of others, I also want to know the thinking of the various investors towards share market and also to analyze above ratios to achieve the objective of my

research. There fore I select the topic

” ANALYSIS OF THE KNOWLEDGE AND PERCEPTION OF THE INVESTORS TOWARDS SHARE MARKET”

In simple words we can say that this topic covers many little, but very important things under this topic like knowledge, perception, complaints, suggestions, of the investors regarding share market.

This is the topic which will provide knowledge database to the reader regarding various classes of the investors i.e. business man, serviceman, student. The reader of this topic will come to know about the perception of various classes of investors i.e. how a serviceman thinks about share market or we can say how a business man thinks about the share market.

This topic can also helps to the investors, as it contains questions regarding suggestions and complaints. In this way it is concluded that This topic is very important from investor’s point of view as well as from share market’s point of view.

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OBJECTIVES

THE AIM OR OBJECTIVE OF THE RESEARCH CAN BE DIVIDED INTO TWO CATEGORIES:-

1) SPECIFIC OBJECTIVES

A) To know about the awareness among the public about Share market.

b) To know the perception of the various investors regarding share market.

2) GENERAL OBJECTIVES

a) To know various measures to improve share market conditions from getting feed back from the investors.

b) To find out the ratio i.e. how many investors invest their money for long term and how many are invest for short term basis.

c) To find out the various loop holes of the share market.

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RESEARCH METHODOLOGY

Research methodology is search for knowledge, objective and systemic method of finding solution to a problem in a search .it may be understood as a science to study how research is done scientifically .Every research problem calls for an appropriate methodology .

RESEARCH DESIGN

In this case the research is exploratory type. Three lines have been implied here, which - study of secondary sources of information, survey of individuals who are appropriation to have ideas on general subject and analysis of data.

DATA ANALYSIS

Data collection can be of two type’s i. e. Primary and secondary data. The primary data are those, which are collected a fresh and for the first time and thus happen to be original in nature. In this project the primary data will be collected through questionnaires and personal meetings with respondent. The secondary data are those, which have already been collected by someone else .chief sources of the collection of secondary will be internet site and magazines.

SAMPLE SIZE

This refers to the number of respondents to be selected from the universe to constitute a sample. an optimum sample is one that fulfills the requirement of efficiency, reliability and flexibility. The sample size of 100 respondents is taken into consideration in this research study.

SAMPLING METHOD

A sample design is a plan for obtaining a sample from the given population. It refers to the technique or procedure the research would adopt in selecting the sample. The random sampling method will be used for carrying out the research.

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SAMPLING FRAME

It covers those areas in which the research is conducted. The sampling frame for

my study is only Jalandhar,

The total respondents are divided in to three categories i.e. business man ,

service man and students . The respondents are also divided on the bases of

age i.e. 18- 40years and above 40 years.

AGE(YEARS) TOTAL

PROFESSION

Age(years)

BUSINESSMAN

SERVICE

STUDENT

18 - 40 29 21 20 70

Above 40 14 16 0 30

Total 43 37 20 100

Data Analysis

Data will be collected, processed and analyzed in accordance with in the

framework of research plan .Technically speaking, processing implies editing ,

coding, classification and tabulation. Data obtained during the study will be

systematically tabulated and the analysis of data is done with help of pie charts

and graphs.

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Limitation of Study

1. Lack of Scientific Training: Researchers and even to their guides,

is mostly a scissor and paste job without any insight shed on the

collated materials, thus a systematic study of research

methodology is urgent necessity.

2. Insufficient interaction: There is insufficient interaction between

the university research departments on one side and business

establishments, govt departments on the side

3. Lack of Confidence: The concept of secrecy seems to be

sacrosanct to business organizations in the country so much so

that it proves an impermeable barrier to researchers.

4. Biasness: Research studies overlapping one another are

undertaken quite often for want of adequate information.

Information provided is full of biasness.

5. In adequate and Untimely secretarial: Research faces the

difficulty of adequate and timely secretarial assistance, including

computer assistance. This cause unnecessary delays in the

completion of research studies.

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Q1: TICK THE TERMS YOU ARE AWARE OF:-

A). KNOWLEDGE OF NSDL (NATIONAL SECURITY DEPOSITORY LTD.)AGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

Known 16 15 9 12 9Unknown 13 6 11 2 7Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 55% businessmen have knowledge about NSDL and 45% are unaware from this.71% servicemen are known about NSDL and 29% are unaware about it, similarly 45% students have knowledge about NSDL.

On the other hand chart on the right side shows that among the men of 18-40 years 85% businessmen have knowledge about NSDL and 15% are unaware of it.56.25% servicemen have knowledge about NSDL while 53.75% have not..

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Figure 1

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B). KNOWLEDGE OF CDSL (CENTRAL DEPOSITORY SERVICES LTD.)AGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT BUSINESSMAN

SERVICE

Known 13 14 11 10 8Unknown 16 7 9 4 8Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 44.8% businessmen have knowledge about CDSL and 55.2% are unaware from this.66.6% servicemen are known about CDSL and 33.3% are unaware about it, similarly 55% students have knowledge about CDSL.

On the other hand chart on the right side shows that among the men of 18-40 year71.4% businessmen have knowledge about CDSL and 28.5% are unaware of it. 50% servicemen have knowledge about CDSL while 50% have not.

- 52 -

Figure 2

Page 53: Prable Final Project on Share Market

C). KNOWLEDGE OF SEBI (SECURITY EXCHANGE BOARD OF INDIA)AGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

Known 25 18 15 8 16Unknown 4 3 5 6 0Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 86.2% businessmen have knowledge about SEBI and 13.7% are unaware from this.85.7% servicemen are known about SEBI and 14.2% are unaware about it, similarly 75% students have knowledge about SEBI.

On the other hand chart on the right side shows that among the men of 18-40 years 57.14% businessmen have knowledge about SEBI and 42.8% are unaware of it. All servicemen are aware about SEBI.

- 53 -

Figure 3

Page 54: Prable Final Project on Share Market

D). KNOWLEDGE OF M & A (MERGER & ACQUISITION)AGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

Known 18 14 19 12 9Unknown 11 7 1 2 7Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 62.06% businessmen have knowledge about M & A and 37.9% are unaware from this. 66.6% servicemen are known about M & A and 33.33% are unaware about it, similarly 95% students have knowledge about M & A.

On the other hand chart on the right side shows that among the men of 18-40 years 85.7% businessmen have knowledge about M & A and 14.3% are unaware of it. 56.25% of the servicemen are aware about M & A and 43.75% are not.

- 54 -

Figure 4

Page 55: Prable Final Project on Share Market

E). KNOWLEDGE OF IPO (INTIAL PUBLIC OFFER)AGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

Known 25 20 20 10 14Unknown 4 1 0 4 2Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 86.2% businessmen have knowledge about IPO and 13.8% are unaware from this. 95.2% servicemen are known about IPO and 4.7% are unaware about it, similarly 100% students have knowledge about IPO.

On the other hand chart on the right side shows that among the men of 18-40 years 71.4% businessmen have knowledge about IPO and 28.5% are unaware of it. 87.5% of the servicemen are aware about IPO and 12.5% are not.

- 55 -

Figure 5

Page 56: Prable Final Project on Share Market

Q2: From where you get knowledge about above terms?

A) Through the ACADEMICAGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

YES 0 3 6 1 1NO 29 18 14 13 15Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years not even a single businessman are able to know about above term s through the medium of Academic. Only 14.2% servicemen get information about above terms with the medium of Academic. Similarly 30% students get information with the medium of Academic.On the other hand chart on the right side shows that among the men of 18-40 years 7.14% business have knowledge about above terms by the way of Academic and.62.5% servicemen get knowledge through the Academic.

- 56 -

Figure 6

Page 57: Prable Final Project on Share Market

B) Through the GENERAL AWARENESSAGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

YES 14 14 13 7 8NO 15 7 7 7 8Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 48.7% of businessmen are able to know about above terms through the medium of General awareness. Only 66.6% servicemen get information about above terms with the medium of General awareness. Similarly 65% students get information with the medium of General awareness.On the other hand chart on the right side shows that among the men of 18-40 years 50% business have knowledge about above terms by the way of General awareness and.50% servicemen get knowledge through the General awareness

- 57 -

Figure 7

Page 58: Prable Final Project on Share Market

C) Through the BROKERSAGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

YES 10 9 10 7 5NO 19 12 10 7 11Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 34.4% of businessmen are able to know about above terms through the medium of Brokers. Only 42.8% servicemen get information about above terms with the medium of Brokers. Similarly 50% students get information with the medium of Brokers.

On the other hand chart on the right side shows that among the men of 18-40 years 50% business have knowledge about above terms by the way of Brokers and.31.25% servicemen get knowledge through the Brokers.

- 58 -

Figure 8

Page 59: Prable Final Project on Share Market

D) Through the MAGAZINES & NEWSPAPERSAGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

YES 14 12 8 12 10NO 15 9 12 2 6Total 29 21 20 14 16

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 48.2% of businessmen are able to know about above terms through the medium of Magazines & News papers. Only 57.1% servicemen get information about above terms with the medium of Magazines & News papers. Similarly 40% students get information with the medium of Magazines & News papers.On the other hand chart on the right side shows that among the men of 18-40 years 66.6% business have knowledge about above terms by the way of Magazines & News papers and.62.5% servicemen get knowledge through the Magazines & News papers.

- 59 -

Figure 9

Page 60: Prable Final Project on Share Market

Q3: What is your main criterion in investing money in the share market?

CRITERION NUMBERS

LONG TERM 60SHORT TERM 30BOTH 10TOTAL 100

INTERPRETATION: Above diagram shows that out of total sample of 100 investors 60 are invest in shares for long term ,30 are invest in for short term and 10 are invest for both short term as well as long term.

- 60 -

Figure 10

Page 61: Prable Final Project on Share Market

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

LONG TERM 18 11 11 12 9SHORT TERM 8 7 9 1 2BOTH 3 3 0 1 5TOTAL 29 21 20 14 16

INTERPATION: From above left side chart it is clear that among persons of age 18 – 40 out of total businessmen 62% are invest In shares on long term basis,27.5% invest on the short term basis and 10.3% invest in long term as well as in short term also. Out of total servicemen 52.3% are invest In shares on long term basis,12.5% invest on the short term basis and 14.2% invest in long term as well as in short term also. Among students 55% invest In shares on long term basis,45%% invest on the short term basis and 0% invest in long term as well as in short term also.

- 61 -

Figure 11

Page 62: Prable Final Project on Share Market

Right side chart revealed that among the persons of age of above 40 out total 40 out of total businessmen 85.7% are invest In shares on long term basis,7.14% invest on the short term basis and 7.14% invest in long term as well as in short term also. Out of total serviceman 56.25% are invest In shares on long term basis,12.5% invest on the short term basis and 31.25% invest in long term as well as in short term also.

- 62 -

Page 63: Prable Final Project on Share Market

Q4: Given below are some of the decisions taken by the individuals for investing in primary market. Please give marks out of 5 to each decision according to your perception 1 stands for least agree and 2,3,4,5 stands for agree to great extent, agree moderately , some what agree and strongly agree.

A) I invest in primary market issues of listed companies with good current market price :

MARKS NUMBERES1 152 263 244 185 17TOTAL 100

- 63 -

Figure12

Page 64: Prable Final Project on Share Market

INTERPRETATION : Above diagram states that out of 100 people 15% people least agree (1) to the 1st decision, 26% are agree to great extent(2), 24% agree moderately(3) , 18% are somewhat agree (4)and 17% are least agree (5) to the decision.

- 64 -

Page 65: Prable Final Project on Share Market

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40

TOTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 4 2 2 5 2 152 8 3 5 4 6 263 4 9 4 3 4 244 7 5 4 0 2 185 6 2 5 2 2 17

TOTAL 29 21 20 14 16 100

INTERPRETATION: The left side chart shows that among the persons of 18 – 40 years 13.7% businessmen least agree( 1 mark) with the decision, 27.5% agree to the great extent (2), 13.7% agree moderately(3) , 24.1% somewhat agree(4) and 20.6% strongly agree(5) with the statement.

- 65 -

Figure 13

Page 66: Prable Final Project on Share Market

Among servicemen 9.52% Servicemen least agree (1 mark) with the decision, 14.2% agree to the great extent (2), 42.8% agree moderately (3), 23.8% somewhat agree (4) and 9.52% strongly agree (5) with the statement.Among students 10% Students least agree (1 mark) with the decision, 25% agree to the great extent (2), 20% agree moderately (3), 20% somewhat agree (4) and 25% strongly agree (5) with the statement.

Right side chart revealed that among the persons of above 40 age 35.7% businessmen least agree( 1 mark) with the decision, 28.5% agree to the great extent (2), 21.4% agree moderately(3) , 0% somewhat agree(4) and 14.2% strongly agree(5) with the statement.12.5% Servicemen least agree (1 mark) with the decision, 42.8% agree to the great extent (2), 25% agree moderately (3), 12.5% somewhat agree (4) and 12.5% strongly agree (5) with the statement.

- 66 -

Page 67: Prable Final Project on Share Market

B) Investment decision is based on advice of broker:

MARKS NUMBERES1 272 243 174 175 15TOTAL 100

- 67 -

Page 68: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 27% people least agree (1) to the 1st decision, 24% are agree to great extent(2), 17% agree moderately(3) , 17% are somewhat agree (4)and 14% are least agree (5) to the decision.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 4 8 5 2 8 272 7 3 6 4 4 243 6 1 4 4 2 174 6 4 3 2 2 175 6 5 2 2 0 15

TOTAL 29 21 20 14 16 100

- 68 -

Figure 15

Page 69: Prable Final Project on Share Market

INTERPRETATION: The left side chart shows that among the persons of 18 – 40 years 13.7% businessmen least agree( 1 mark) with the decision, 24.1% agree to the great extent (2), 20.6% agree moderately(3) , 20.6% somewhat agree(4) and 20.6% strongly agree(5) with the statement.Among servicemen 38% Servicemen least agree (1 mark) with the decision, 14.28% agree to the great extent (2), 4.76% agree moderately (3), 19.04% somewhat agree (4) and 23.08% strongly agree (5) with the statement.Among students 25% Students least agree (1 mark) with the decision, 30% agree to the great extent (2), 20% agree moderately (3), 15% somewhat agree (4) and 10% strongly agree (5) with the statement.

Right side chart revealed that among the persons of above 40 age 14.2% businessmen least agree( 1 mark) with the decision, 14.2% agree to the great extent (2), 28.5% agree moderately(3) , 18.6% somewhat agree(4) and 14.2% strongly agree(5) with the statement.50% Servicemen least agree (1 mark) with the decision, 25% agree to the great extent (2), 12.5% agree moderately (3), 12.5% somewhat agree (4) and 0% strongly agree (5) with the statement.

- 69 -

Page 70: Prable Final Project on Share Market

C) I invest in shares based on personal analysis:

MARKS NUMBERES1 82 113 164 175 48TOTAL 100

- 70 - Figure16

Page 71: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 8% people least agree (1) to the 1st

decision, 11% are agree to great extent(2), 16% agree moderately(3) , 17% are somewhat agree (4)and 48% are least agree (5) to the decision.

DESCRIPTIO N AGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 2 2 1 1 2 82 4 1 2 3 1 113 6 3 3 2 2 164 5 7 3 2 0 175 12 8 11 6 11 48

TOTAL 29 21 20 14 16 100

- 71 -

Figure 17

Page 72: Prable Final Project on Share Market

INTERPRETATION: The left side chart shows that among the persons of 18 – 40 years 6.8% businessmen least agree( 1 mark) with the decision, 13.7% agree to the great extent (2), 20.6% agree moderately(3) , 17.2% somewhat agree(4) and 41.37% strongly agree(5) with the statement.Among servicemen 9.5% Servicemen least agree (1 mark) with the decision, 4.7% agree to the great extent (2), 14.2% agree moderately (3), 33.33% somewhat agree (4) and 38% strongly agree (5) with the statement.Among students 5% Students least agree (1 mark) with the decision, 10% agree to the great extent (2), 15% agree moderately (3), 15% somewhat agree (4) and 55% strongly agree (5) with the statement.

Right side chart revealed that among the persons of above 40 age 7.14% businessmen least agree( 1 mark) with the decision, 21.42% agree to the great extent (2), 14.28% agree moderately(3) , 14.28% somewhat agree(4) and 42.8% strongly agree(5) with the statement.12.5% Servicemen least agree (1 mark) with the decision, 6.25% agree to the great extent (2), 12.5% agree moderately (3), 0% somewhat agree (4) and 68.75% strongly agree (5) with the statement.

- 72 -

Page 73: Prable Final Project on Share Market

D) I sell shares after allotment:

MARKS NUMBERES1 372 133 244 105 16TOTAL 100

- 73 -

Figure 18

Page 74: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 37% people least agree (1) to the 1st decision, 13% are agree to great extent(2), 24% agree moderately(3) , 10% are somewhat agree (4)and 16% are least agree (5) to the decision.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 11 7 9 5 5 372 4 6 1 1 1 133 6 5 5 4 4 244 4 1 1 1 3 105 4 2 4 3 3 16

TOTAL 29 21 20 14 16 100

- 74 -

Figure 19

Page 75: Prable Final Project on Share Market

INTERPRETATION: The left side chart shows that among the persons of 18 – 40 years 37.9% businessmen least agree( 1 mark) with the decision, 13.79% agree to the great extent (2), 20.68% agree moderately(3) , 13.7% somewhat agree(4) and 13.7% strongly agree(5) with the statement.Among servicemen 33.33% Servicemen least agree (1 mark) with the decision, 28.5% agree to the great extent (2), 23.8% agree moderately (3), 23.8% somewhat agree (4) and 4.7% strongly agree (5) with the statement.Among students 45% Students least agree (1 mark) with the decision, 5% agree to the great extent (2), 25% agree moderately (3), 5% somewhat agree (4) and 25% strongly agree (5) with the statement.

Right side chart revealed that among the persons of above 40 age 35.7% businessmen least agree( 1 mark) with the decision, 7.14% agree to the great extent (2), 28.57% agree moderately(3) , 7.14% somewhat agree(4) and 21.42% strongly agree(5) with the statement.31.25% Servicemen least agree (1 mark) with the decision, 6.25% agree to the great extent (2), 25% agree moderately (3), 18.75% somewhat agree (4) and 18.75% strongly agree (5) with the statement.

- 75 -

Page 76: Prable Final Project on Share Market

E) I use analysts recommendations either privately circulated or published:

MARKS NUMBERES1 182 273 214 245 10TOTAL 100

- 76 -

Figure 20

Page 77: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 18% people least agree (1) to the 1st decision, 27% are agree to great extent(2), 21% agree moderately(3) , 24% are somewhat agree (4)and 10% are least agree (5) to the decision.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 7 5 1 2 3 182 6 6 4 5 6 273 3 7 7 3 1 214 10 2 6 2 4 245 3 1 2 2 2 10

TOTAL 29 21 20 14 16 100

- 77 -

Figure 21

Page 78: Prable Final Project on Share Market

INTERPRETATION : The left side chart shows that among the persons of 18 – 40 years 24.1% businessmen least agree( 1 mark) with the decision, 30.68% agree to the great extent (2), 10.34% agree moderately(3) , 34.48% somewhat agree(4) and 10.34% strongly agree(5) with the statement.Among servicemen 23.8% Servicemen least agree (1 mark) with the decision, 28.5% agree to the great extent (2), 33.3% agree moderately (3), 9.52% somewhat agree (4) and 4.76% strongly agree (5) with the statement.Among students 5% Students least agree (1 mark) with the decision, 20% agree to the great extent (2), 35% agree moderately (3), 30% somewhat agree (4) and 10% strongly agree (5) with the statement.

Right side chart revealed that among the persons of above 40 age 14.2% businessmen least agree( 1 mark) with the decision, 35.7% agree to the great extent (2), 21.42% agree moderately(3) , 14.28% somewhat agree(4) and 14.28% strongly agree(5) with the statement.18.75% Servicemen least agree (1 mark) with the decision, 37.5% agree to the great extent (2), 6.25% agree moderately (3), 25% somewhat agree (4) and 12.5% strongly agree (5) with the statement.

- 78 -

Page 79: Prable Final Project on Share Market

Q6: Do you think that share market is a gamble?

CATEGORY NUMBERS

YES 41NO 59

TOTAL 100

- 79 -

Figure 22

Page 80: Prable Final Project on Share Market

INTERPRETATION:

Above diagram shows that out of total sample of 100 investors 41 investors think that share market is a gamble and remaining 59 % said that share market is an investment.

- 80 -

Page 81: Prable Final Project on Share Market

DESCIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

CATEGORY

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

YES 11 10 9 4 7 41

NO 18 11 11 10 9 59

Total 29 21 20 14 16 100

INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 37.9% of businessmen say that share market is a gamble and 62% say that it is investment. 47.36% service men say that it is a gamble and 52.3% say that it is a investment

On the other hand chart on the right side shows that among the men of 18-40 years 28.5% businessmen say that share market is a gamble while others consider it as a investment. 43.75 % of servicemen say that share market is gamble, while remaining 56.25% consider it as investment.

- 81 -

Figure 23

Page 82: Prable Final Project on Share Market

Q7: Please rank the following factors in order of decreasing importance in investing money in primary market from 1 highest to the 5 lowest.

a) Issue price

RANKS NUMBERES1 322 283 184 145 8

TOTAL 100

- 82 -

Figure24

Page 83: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 32%% people give rank (1) to the issue price, 28% investors give rank(2) to issue price,18% give rank (3),14% give rank (4) and 8% give rank (5) to the issue price.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 7 7 6 3 9 322 9 5 6 6 2 283 6 4 2 3 3 184 4 3 4 1 2 145 3 2 2 1 0 8

TOTAL 29 21 20 14 16 100

- 83 -

Figure 25

Page 84: Prable Final Project on Share Market

INTERPRETATION: Left side chart shows that among men of 18 - 40 years 24.1 businessmen ranked issue price as 1, 31% ranked no.2, 20.6% ranked as no.3, 13.7% ranked as no. 4 and 10.3% ranked issue price as no.5.Among servicemen 33.33% ranked issue price as no.1, 23.8 % ranked it as no.2,19.4% ranked as no.3, 14.2% ranked as no.4 and 9.5 % servicemen ranked as no.5.Among students 30% students ranked issue price as no.1, 30% ranked as no. 2 , 10% ranked as no. 3, 20% ranked as no. 4 and in last 140% ranked it as no. 5.

Right side chart revealed that among investors of age of above 40, 21.4% businessmen ranked issue price as 1, 42.8% ranked it as no. 2, 21.4% ranked it as no. 3, 12.5% ranked it as no. 4 and 7.14 % ranked it as no.5.

Among service men, 56.25% servicemen ranked issue price as 1, 12.5% ranked it as no. 2, 18.75% ranked it as no. 3, 12.5% ranked it as no. 4 and 0 % ranked it as no.5.

- 84 -

Page 85: Prable Final Project on Share Market

b) Information availability

RANKS NUMBERES1 312 183 214 205 10

TOTAL 100

- 85 - Figure 26

Page 86: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 31% people give rank (1) to the Information availability, 18% investors give rank(2) to Information availability,21% give rank (3),20% give rank (4) and 10% give rank (5) to the Information availability.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 11 7 6 5 2 312 4 3 6 1 4 183 5 6 2 4 4 214 6 2 5 3 4 205 3 3 1 1 2 10

TOTAL 29 21 20 14 16 100

- 86 -

Figure 27

Page 87: Prable Final Project on Share Market

INTERPRETATION: Left side chart shows that among men of 18 - 40 years 37.9% businessmen ranked Information availability as 1, 13.79% ranked no.2, 17.24% ranked as no.3, 20.68% ranked as no. 4 and 10.34% ranked Information availability as no.5.Among servicemen 33.33% ranked Information availability as no.1, 14.2 % ranked it as no.2,28.5% ranked as no.3, 9.5% ranked as no.4 and 14.2 % servicemen ranked as no.5.Among students 30% students ranked Information availability as no.1, 30% ranked as no. 2 , 10% ranked as no. 3, 25% ranked as no. 4 and in last 5% ranked it as no. 5.

Right side chart revealed that among investors of age of above 40, 35.7% businessmen ranked Information availability as 1 , 7.14% ranked it as no. 2 ,23.52% ranked it as no. 3, 21.42% ranked it as no. 4 and 7.14 % ranked it as no.5.

Among service men, 12.5% servicemen ranked Information availability as 1 , 25% ranked it as no. 2 ,25% ranked it as no. 3, 25% ranked it as no. 4 and 12.5% ranked it as no.5.

- 87 -

Page 88: Prable Final Project on Share Market

c) MARKET PRICE IMMEDIATELY AFTER LISTING :

RANKS NUMBERES1 182 263 194 205 17

TOTAL 100

- 88 -

Figure 28

Page 89: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people18% people give rank (1) to the Market price immediately after listing, 26% investors give rank(2) to Market price immediately after listing,19% give rank (3),20% give rank (4) and 17% give rank (5) to the Market price immediately after listing.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 4 3 7 2 2 182 10 6 2 5 3 263 4 4 4 3 4 194 7 7 2 1 3 205 4 1 5 3 4 17

TOTAL 29 21 20 14 16 100

- 89 -

Figure 29

Page 90: Prable Final Project on Share Market

INTERPRETATION: Left side chart shows that among men of 18 - 40 years 13.7% businessmen ranked Market price immediately after listing as 1, 34.48% ranked no.2, 13.7% ranked as no.3, 24.1% ranked as no. 4 and 13.7% ranked Market price immediately after listing as no.5.Among servicemen 14.2% ranked Market price immediately after listing as no.1, 28.5 % ranked it as no.2,19% ranked as no.3, 33.3% ranked as no.4 and 4.7 % servicemen ranked as no.5.Among students 35% students ranked Market price immediately after listing as no.1, 10% ranked as no. 2 , 20% ranked as no. 3, 10% ranked as no. 4 and in last 25% ranked it as no. 5.

Right side chart revealed that among investors of age of above 40, 14.28% businessmen ranked Market price immediately after listing as 1 , 35.71% ranked it as no. 2 ,21.42% ranked it as no. 3, 7.14% ranked it as no. 4 and 21.42 % ranked it as no.5.

Among service men, 12.5% servicemen ranked Market price immediately after listing as 1, 18.75% ranked it as no. 2, 25% ranked it as no. 3, 18.75% ranked it as no. 4 and 25% ranked it as no.5.

- 90 -

Page 91: Prable Final Project on Share Market

d) SECONDARY MARKET:

RANKS NUMBERES1 132 123 204 245 31

TOTAL 100

- 91 -

Figure30

Page 92: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 13% people give rank (1) to the Secondary market, 12% investors give rank(2) to Secondary market, 20% give rank (3),24% give rank (4) and 31% give rank (5) to the Secondary market.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 5 2 0 4 2 132 2 5 3 1 1 123 7 1 6 1 5 204 5 7 6 2 4 245 10 6 5 6 4 31

TOTAL 29 21 20 14 16 100

- 92 -

Figure 31

Page 93: Prable Final Project on Share Market

INTERPRETATION: Left side chart shows that among men of 18 - 40 years 17.24% businessmen ranked Secondary market as 1, 6.89% ranked no.2, 24.13% ranked as no.3, 17.24% ranked as no. 4 and 34.44% ranked Secondary market as no.5.Among servicemen 9.52% ranked Secondary market as no.1, 23.80 % ranked it as no.2,4.7% ranked as no.3, 33.3% ranked as no.4 and 28.57 % servicemen ranked as no.5.Among students 0% students ranked Secondary market as no.1, 15% ranked as no. 2 , 30% ranked as no. 3, 30% ranked as no. 4 and in last 25% ranked it as no. 5.

Right side chart revealed that among investors of age of above 40, 28.5% businessmen ranked Secondary market as 1 , 7.14% ranked it as no. 2 ,7.14% ranked it as no. 3, 14.28% ranked it as no. 4 and 42.8 % ranked it as no.5.

Among service men, 12.5% servicemen ranked Secondary market as 1 , 6.25% ranked it as no. 2 ,31.25% ranked it as no. 3, 25%ranked it as no. 4 and 25% ranked it as no.5.

- 93 -

Page 94: Prable Final Project on Share Market

e) REGULATORY ENVIORMENT:

RANKS NUMBERES1 122 113 234 255 29

TOTAL 100

- 94 -

Figure32

Page 95: Prable Final Project on Share Market

INTERPRETATION:

Above diagram states that out of 100 people 12% people give rank (1) to the Regulatory environment, 11% investors give rank(2) to Regulatory environment, 23% give rank (3),25% give rank (4) and 29% give rank (5) to the Regulatory environment.

DESCRIPTIONAGE(YEARS) 18-40 ABOVE 40 T

OTAL

PROFESSION

MARKS

BUSINESSMAN

SERVICE

STUDENT

BUSINESSMAN

SERVICE

1 3 3 3 1 2 122 3 1 4 2 1 113 8 4 6 3 2 234 9 2 4 5 5 255 6 11 3 3 6 29

TOTAL 29 21 20 14 16 100

- 95 -

Figure 33

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INTERPRETATION: Left side chart shows that among men of 18 - 40 years 10.3% businessmen ranked Regulatory environment as 1, 10.3% ranked no.2, 27.5% ranked as no.3, 31.03% ranked as no. 4 and 20.6% ranked Regulatory environment as no.5.Among servicemen 14.28% ranked Regulatory environment as no.1, 4.76 % ranked it as no.2,19.04% ranked as no.3, 9.52% ranked as no.4 and 52.38 % servicemen ranked as no.5.Among students 15% students ranked Regulatory environment as no.1, 20% ranked as no. 2 , 30% ranked as no. 3, 20% ranked as no. 4 and in last 15% ranked it as no. 5.

Right side chart revealed that among investors of age of above 40, 7.14% businessmen ranked Regulatory environment as 1 , 14.2% ranked it as no. 2 ,21.4% ranked it as no. 3, 35.7% ranked it as no. 4 and 21.4 % ranked it as no.5.

Among service men, 12.5% servicemen ranked Regulatory environment as 1 , 6.5% ranked it as no. 2 ,12.5% ranked it as no. 3, 31.25%ranked it as no. 4 and 37.5% ranked it as no.5.

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FINDINGS:

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There are several new things that are produced or introduced by doing this study, all these new things are named as findings ,these findings are as follow:-

1) From my research it is found that Out of the total sample (100), 37% investors do not have any knowledge or they don’t even aware about NSDL. Among students 55% students are unaware about NSDL.

2) Out of total sample 44% investors are unaware about CDSL. Among the age of 18 – 40, 55.2% businessmen are not aware about CDSL.

3) About 82% of investors are aware about SEBI, among the age of above 40, 100% servicemen are aware this term.

4) There are 28% of investors, who do not aware about merger and acquisition. Out of 29, 11 businessmen are not having any knowledge about merger and acquisition.

5) Out of total sample there are only 11% investors, who have got knowledge by the way of academic about above terms. Among the age of 18 – 40 there is neither a single businessman out of 29, who have academic knowledge.

6) A large number of sample got knowledge about above terms from magazines and newspapers as compare to from brokers and academic.

7) Out of total sample 60% are invest in share market on long term basis , 30% on short term basis and 10% on both.

8) 26% of investors are agreeing to great extent to the statement that “I invest in primary market issues of listed companies with good current market price” and 15% investors strongly agree to the statement.

9) 26% of investors are least agreed to the statement that “Investment decision is based on advice of broker” and 15% are strongly agree with the statement.

10) 48% of investors are least agree to the statement that “I invest in shares based on personal analysis” and 8% are least agree to the statement.

11) 37% of investors are least agree to the statement that” I sell shares after allotment”

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12) It is also revealed that 41% of total sample says that share market is gamble and remaining 59% said that it is an investment. among the age of 18 - 40 37% businessmen says that it is a gamble as compare to the servicemen is 47%.

13) 32% investors out of total sample consider issue price more as compare to other factors, while investing in primary market and for 8% investors have no importance while investing money in share market. Among the age of 18- 40, 24 % consider issue price as an important factor of primary market as compare to 33.33% of serviceman.

14) 17% business up to the age of 40 says that secondary market is an important factor, while investing money in the share market as compare to the business of above 40 age is28% says that it is an important factor. Not even a single student considers secondary market as an important factor.

15) 12% of investors invest their money after study the regulatory environment, but 29% of investors invest their money without study the regulatory environment.

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LIMITATIONS

It is said “Nothing is Perfect” and if the quite is true, I am sure the there would be few shortcomings in this project also. Sincere efforts have been made to eliminate discrepancies as far as possible but few would have reminded due to limitations of study. These are as given below:-

No response of some surveyed people was the main limitation of study.

The universe of the study was limited to people of Jalandhar city only.

The time is another limitation of the project.

Subjectivity due to personal biasness cannot be ignored.

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SUGGESTIONS

1. The latest information relating to share market should be easily available to the investors.

2. There should be transparency in the share market.

3. Action against analysts and companies for providing wrong information.

4. There should be more powerful regulation or strict regulation to control scandals.

5. Brokerage should be lower, i.e. there should be a government authority that control or lower the brokerage.

6. The number of brokers is to be reduced.

7. Grievance redressal machinery should be more efficient.

8. Reduce political interference in markets.

9. Encourage more multinational companies to get listed on stock exchange.

10.There should be certain steps taken by the share market to protect small investors.

11.The tax on investment in shares should be abolished.

12. Issue of shares at par or premium should be through separate agencies.

13.The price of IPO’s should be controlled.

14.Sensitive information should be made available to every one at same time.

15.Such type of system should set so that quality companies can came toward for IPO.

16. IPO’s should issue to all applicants in the ratio of shares they apply.

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CONCLUSION

1. From the study it is concluded that mostly well educated people invest in share market. Maximum investments are for the long term period because they want capital appreciation.

2. Maximum investors do not have deep knowledge about various controlling bodies and terms related to share market. Only SEBI is known to them

3. No doubt that millions and billions of people invest in the share market, but still 35% of investors are not aware about NSDL and 44% of investors are not aware about CDSL, these are the investors which do not know that in which depository they have their Demat account, so it is the duty of the share market authorities to advertise or inform investors about this thing.

4. Only 11% investors have academic knowledge regarding share market. Most of the investors are educated about Share market through magazines and newspapers. Magazines and newspapers give only share market data, but in depth knowledge regarding share market can only be gain from academic information. 28% of the total sample of investors does not aware about merger & acquisition, then how can they able to self analyze the market. This is the one reason that the investors consider share market as a gamble, because when investors do not have full knowledge regarding shares or share market. They will invest blindly.

5. Remember that still 41% of investors consider share market as a gamble. Some investors also said that purchasing shares for long term is an investment, but when shares are purchased for short term or day trading purposes, then it is a gamble. The first thing is to improve share market situation is to educate the investor as well as common public about each and every aspect of share market.

6. It is also concluded that the servicemen’s investment decision is more based on broker’s advice as data shows among the age of 18 – 40 , 20% businessmen invest in shares on the advice of broker ,while on the other side 23% of servicemen invest on the advice of broker. From this it is service man has to depend on brokers because of his busy schedule.

7. It is concluded from my research that the most important factor that affects the primary market is issue price (33%). So issue price of companies should be such that it can be with in the reach of small investors.

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BIBLIOGRAPHY

The various sources of the information, used in study are mainly newspapers, magazines and internet sites. The descriptions of these sources are as follow:-

WEBLIOGRAPHY

http//:www.altavista.com/article/share_market_in_india

http//:www.excite/capital_market.com

http//:www.wickepedia/history_sharemarket.com

http//:www.bseindia/board_of_directors.com

http//:www.altavista.com/article/sharemarket

http//:www.lse.co.in/ history/board_of_directors.

http//:www.nseindia.com/profile/depository_participants.

MAGAZINES

Business today (March edition, Share market in boom)

India today (February edition, Investment in shares)

Business world ( March edition, Shares or mutual funds)

NEWSPAPERS

Economic times ( JAN 8, 2008 , Share market on the top)

Hindustan times (12 Feb,2008 , Is share market is a gamble )

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QUESTIONNARE

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ANALYSIS OF THE KNOWLEDGE AND PERCEPTION OF THE INVESTORS REGARDING CAPITAL MARKET

Note: Dear respondent, your valuable time and effort in filling this questionnaire are highly appreciated. Data collected will be kept confidential & will be used only for research purposes.

Personal Information

NAME………………………………………… GENDER……………………………….

ADDRESS …………………………………… OCCUPATION………………………… ……………………………………. ……………………………………. AGE……………………………………..

CONTACT NO (mob/landline)………………………………….

EMAIL ID……………………………………………………………

1) Are you aware about the CAPITAL MARKET?

YES NO

2) Tick the terms you are aware of:-

NO. TERMS TICKSa. NSDL (National security depository limited)

b. CDSL (Central depository services limited)

c. SEBI (security exchange board of India)

d. MERGER & ACQUISITIONS

e. IPO (Initial public offer)

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3) From where you get knowledge about above terms? Academic General Awareness Brokers Magazines or Newspapers

4) Have you ever invested your money in the share market?

YES NO

5) What is your main criterion in investing money in the share market?

Long term investment Short term investment

6) Given below are some of the decisions taken by the individuals for investing in primary market.

Given below are some of the decisions taken by the individuals for investing in primary market. Please give marks out of 5 to each decision according to your perception 1 stands for least agree and 2,3,4,5 stands for agree to great extent, agree moderately , some what agree and strongly agree.

NO. INVESTMENT DECISION RANKa. I invest in primary market issues of listed companies with good

current market price.

b. Investment decision is based on advice from the broker.

c. I invest in shares based on personal analysis

d. I sell shares after allotment

e. I use analysts recommendations either privately circulated or published.

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7) Do you think that share market is a gamble?

Yes No

8) If yes, specify why …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

9) Please rank the following factors in order of decreasing importance in investing money in primary market from 1 highest to the 5 lowest.

NO. FACTORS RANK

a. Issue price

b. Information availability

c. Market price immediately after listing

d. Secondary market situation

e. Regulatory environment

10) What important measures need to be undertaken to strengthen primary market situation?

a)…………………………………………………………………………………………...

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

THA NK YOU

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