Rushabh Vora 831 Backup

8/12/2019 Rushabh Vora 831 Backup

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AN OVERVIEW OF INDIAN STOCK MARKET

RUSHABH VORA831


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INTRODUCTION

DEFINATION OF STOCK EXCHANGE :The securities regulation act of 1956 defined stock exchange as an association ,organization , or a individual which is established for the purpose of assisting,regulating, and controlling business in buying ,selling and dealing in securities.

HISTORY OF STOCK EXCHANGEThe stock exchange was established by East India company in 18th century . InIndia it was established in 1850 with 22 stock brokers opposite to town hallBombay. This stock exchange is known as oldest stock exchange of Asia.


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TYPES OF STOCK MARKET1. Primary Market:

The first group of investors to whom a new issue of a security issold. The primary market consists of the issuer and the first buyersof the issue. The primary market can be a time more volatile than thesecondary market because it is difficult to determine the underlyingvalue of new issues.

2. Secondary Market:

A market where investors purchase securities or assets from otherinvestors, rather than from issuing companies themselves. The

national exchanges - such as the New York Stock Exchange, BSE,NSE and the NASDAQ are secondary markets.


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TYPES OF STOCK EXCHANGES

Bombay Stock ExchangeType Stock Exchange

Location Mumbai, India

Founded 1875

Owner Bombay StockExchange Limited

Key people Ashish KumarChauhan (CEO & MD)

Currency Indian rupee

No. of listings 5,381

Market Cap US$ 1.51 trillion (May2014

Volume US$ 231 billion (Nov2010)

Indexes

BSE SENSEXBSE Small CapBSE Mid-CapBSE 500

Website www.bseindia.com


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TYPES OF STOCK EXCHANGES National Stock Exchange

Type Stock Exchange

Location Mumbai, India

Founded 1992

OwnerNational StockExchange of IndiaLimited

Key people ChitraRamkrishna(MD)

Currency Indian rupee

No. of listings 1,552

Market Cap US$ 1.5 trillion(June 2014

IndexesCNX NiftyCNX Nifty JuniorS&P CNX 500

Website www.nse-india.com


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REVIEW OF LITERATURE Grewal S.S and Navjot Grewall (1984) revealed some basic investment rulesand rules for selling shares. They warned the investors not to buy unlisted

shares, as Stock Exchanges do not permit trading in unlisted shares. Anotherrule that they specify is not to buy inactive shares, ie, shares in whichtransactions take place rarely. The main reason why shares are inactive isbecause there are no buyers for them. They are mostly shares of companies,which are not doing well.

Jack Clark Francis (1986) revealed the importance of the rate of return in

investments and reviewed the possibility of default and bankruptcy risk.

Preethi Singh (1986) disclosed the basic rules for selecting the company toinvest in. She opined that understanding and measuring return and risk isfundamental to the investment process. According to her, most investors are'risk averse'. To have a higher return the investor has to face greater risks.

Nabhi Kumar Jain (1992) specified certain tips for buying shares for holdingand also for selling shares. He advised the investors to buy shares of a growingcompany of a growing industry. Buy shares by diversifying in a number ofgrowth companies operating in a different but equally fast growing sector ofthe economy.


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REVIEW OF LITERATURE

Lewis Mandells (1992) reviewed the nature of market risk, which according to

him is very much 'global'. He revealed that certain risks that are so global thatthey affect the entire investment market. Even the stocks and bonds of thewell-managed companies face market risk. He concluded that market risk isinfluenced by factors that cannot be predicted accurately like economicconditions, political events, mass psychological factors, etc. Market risk isthe systemic risk that affects all securities simultaneously and it cannot bereduced through diversification.

Yasaswy N.J. (1993) disclosed how 'turnaround stocks' offer big profits tobold investors and also the risks involved in investing in such stocks.Turnaround stocks are stocks with extraordinary potential and are relativelyunder priced at a given point of time.

Sunil Damodar (1993) evaluated the 'Derivatives' especially the 'futures' as atool for short-term risk control. He opined that derivatives have become anindispensable tool for finance managers whose prime objective is to manageor reduce the risk inherent in their portfolios.


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REVIEW OF LITERATURE

Pattabhi Ram (1995) emphasised the need for doing fundamental analysis anddoing Equity Research (ER) before selecting shares for investment. He opined

that the investor should look for value with a margin of safety in relation toprice.

Aswath Damodaran (1996) reviewed the ingredients for a good risk and returnmodel. According to him a good risk and return model should-

a. Come up with a measure for risk that is universal

b. Specify what types of risks are rewarded and what types are not.

c. Standardise risk measures, to enable analysis and comparison.

d. Translate the risk measure into an expected return

Bhalla V.K." (1997) reviewed the various factors influencing the equity price and

price eamings ratio. He is of the opinion that equity prices are affected primarilyby financial risk considerations that, in turn, affect earnings and dividends. Healso stated that market risk in equity is much greater than in .bonds, and itinfluences the price also


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REVIEW OF LITERATURE Akash Josh (2000) reviewed the utility of derivatives in reducing risks. He opinedthat derivatives allow an investor to hedge or reduce risks.

Gerea.S.T. and Balsara.K.A. (2001) reviewed the risk management system at theBombay Stock Exchange. They reported that the BSE has strengthened the riskmanagement measures to maintain the market integrity. The introduction of themodified carry forward system, coupled with the BOLT (Bombay Online Trade)expansion to cities all over India has led to a significant increase in the liquidityand volumes at the exchange

The Economic Times Investors' year Book (2OOO-Ol) commented on the"Paperless World and described what makes dematerialisation the preferredchoice and how it reduces risk. The dematerialised trading was introduced inIndia in 1996 to reduce pains and risks in settlement through the loss of sharecertificates in transit, bad deliveries, delays in transfer and forged/ fake/ stoIen

certificates.


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OVERVIEW OF K R CHOKSEY

IntroductionKisan Ratilal Choksey Shares & Securities Pvt. Ltd. (KRC) is a Mumbaibased full-fledged service broking firm incorporated in the year 1979. Itsclientele comprises of high net worth individuals, corporates, NRI, mutualfunds, as well as other financial institutions.

COMPETITORSK.R. CHOKSEY faces significant competition from companies seeking toattract client financial assets, including traditional and online brokeragefirms, mutual fund companies and institutional players having widepresence and a strong brand name. They are;

ICICI Securities Ltd.Kotak Securities Ltd.IndiaInfolineMotilalOswal SecuritiesSharekhanReligare Securities


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OPERATIONS OF KRC

BROKINGKRC provide great convenience to clients with the wide range of services whichincludes broking on Cash and Derivative segments of both Bombay StockExchange of India Limited (BSE) and National Stock Exchange of India Limited(NSE).

SHARE BANKKRC Share Bank Division functions as a single window facility that enables day-to-day execution of instructions slips expediting client transactions. The division'sweb-enabled process also helps the client to check his account online.

FIXED INCOMEBasing its strategy on your requirements, the Fixed Income Division providessuitable investment opportunities with its Safety-Liquidity-Returns plans providingsafe, assured and regular levels of fixed income.


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OPERATIONS OF KRCCONTINUED..

INSURANCEThe KRC Insurance Division helps you identify the particular Insurance Productthat provides you with maximum returns and gains for a protected future. TheKRC Insurance Division carefully matches the Insurance Products available toyour personal and financial profiles and then offers you suitable solution options.

RESEARCHKRC Research Division offers a strong research-based support system to groundyour investment decisions. The Division's unique systematic approach andmethodology have been recognized as opinion drivers in world of investment withits reports and findings recorded on the country's leading financial portals

PORTFOLIO MANAGEMENTThe services are offered on a personalized basis with a highlyQualified/Experienced team backed by a solid infrastructure. KRC-PMS ensuresmargin of safety in managing portfolio funds while attempting to generate regularreturns for investors


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OPERATIONS OF KRCCONTINUED ..

FINANCIAL PLANNINGKRChoksey Financial Planning, creating a process for you to meet yourfinancial objectives considering your assets, liabilities, income, expenses &inflation & your other financial commitments.

E SERVICESKRChoksey had been one of the first brokerage firms to realize the potentialof the Internet, recognizing it as a powerful tool for investment and as theinevitable part of trading.

KRC GLOBALGrowth-oriented investment solutions and guidance based on provenmethodology and in-depth fundamental research, with dedicated customerfocus and capital growth through structured counseling have led to KisanRatilal Choksey Shares & Securities Pvt Ltd, being recognized as opiniondrivers in the global world of investment.


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UNDERSTANDING CAPITAL MARKET

An Outlook on Indian Stock Market

Capital Markets Derivative Segment

Intraday Delivery Futures Options


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INDIAN C APITAL MARKETS - C HRONOLOGY 1994- Equity Trading commences on NSE 1995- All Trading goes Electronic 1996- Depository comes in to existence 1999- FIIs Participation- Globalization

2000- over 80% trades in Demat form 2001- Major Stocks move to Rolling Settlement 2003- T+2 settlements in all stocks 2003 - Demutualization of Exchanges


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Capital Market Participants

Banks Exchanges Clearing Corporations Brokers Custodians Depositories Investors Merchant Bankers

Types of Investors Institutional Investors- MFs / FI / FIIs / Banks Retail Investors Arbitrageurs / Speculators Hedgers Day traders/Jobbers


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DERIVATIVESDefinition:-

Derivatives are instruments whose value is derived, in whole or in part, from the valueof one or more underlying assets.

Understanding Derivatives-The primary objectives of any investor are to maximize returns and minimize risks.Derivatives are contracts that originated from the need to minimize risk.

The word 'derivative' originates from mathematics and refers to a variable, which hasbeen derived from another variable. Derivatives are so called because they have novalue of their own. They derive their value from the value of some other asset, which isknown as the underlying.

Difference between Commodity Derivative & Financial Derivative

If the underlying asset of the derivative contract is coffee, wheat, pepper, cotton, gold,silver, precious stone or for that matter even weather, then the derivative is known as acommodity derivative.

If the underlying is a financial asset like debt instruments, currency, share price index,equity shares, etc., the derivative is known as a financial derivative.


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Futures and ForwardsAs the name suggests, futures are derivative contracts that give the holder the

opportunity to buy or sell the underlying at a pre-specified price sometime in the future.They come in standardized form with fixed expiry time, contract size and price.Forwards are similar contracts but customizable in terms of contract size, expiry dateand price, as per the needs of the user.

OptionsOption contracts give the holder the option to buy or sell the underlying at a pre-specified price sometime in the future.

An option to buy the underlying is known as a Call Option.

An option to sell the underlying at a specified price in the future is known as Put

Option.In the case of an option contract, the buyer of the contract is not obligated to exercisethe option contract. Options can be traded on the stock exchange or on the OTC market


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FINDINGS & SUGGESTIONS

Aggressive PromotionsK.R CHOKSEY compared to its competitors concentrates less on advertising andpromotions, especially through electronic media. Its competitors like Sharekhan,ICICI and Kotak are advertising aggressively through media. Hence K.R Chokseyshould concentrate more on advertising through print and electronic media.

Tapping Rural MarketThe Indian rural investors market is relatively untapped, with only small and privatefirms meeting the current demand. K.R Chokseycan gain the First MoverAdvantage over its competitors, especially in areas were commercial crops aregrown and the standard of living is high. These people do not have much option toinvest other than banks and post offices.

Reduce the initial account opening chargesThe charge for opening a trading and Demat account in K.R Chokseyis highcompared to its competitors. This influences the potential investors to open theiraccount with another company that provides the same at lower prices. Thus it actsas a mental barrier for potential customers, who tend to overlook all other benefitsoffered byK.R Choksey. HenceK.R Choksey should consider reducing their accountopening charges.


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FINDINGS & SUGGESTIONS

Bring in more product differentiationProduct differentiation here means that K.R Chokseyshould bring in morecustomized services and more value proposition for large investors. It canreduce the brokerage charges for large investors that will encourage them toinvest more in the company.

Invest more on R&D:K.R Choksey should concentrate on its research and development since mostof its competitors are investing on R&D. This will help the company to read themarket better and will also be in a better position to understand the needs ofthe customers. This can be extremely beneficial for in K.R Choksey the longrun.


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BIBLIOGRAPHY

Internet Website

http://www.investopedia.com http://www.investinganswers.com http://www.nseindia.com http://www.bseindia.com http://www.stockgyaan.com

BOOKS

NCFM Fundamental Analysis course BookNCFM Technical Analysis course Book

APPLICATION

Chart NEXUSShare Khan Trade TigersMS- EXCEL
http://www.investopedia.com/http://www.investinganswers.com/http://www.nseindia.com/http://www.bseindia.com/http://www.stockgyaan.com/http://www.stockgyaan.com/http://www.bseindia.com/http://www.nseindia.com/http://www.investinganswers.com/http://www.investopedia.com/

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