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  • pg 1
									                    A Project Report on

                       CAPITAL MARKET
                         At India bull

It is immense pleasure to put it on record our deep sense of
gratitude to our Guide Mr.P.Vikrant Kumar Associate Professor
for guiding us all the way through and giving us the constant

We express our hearty gratitude to HDFC Chandanagar, in a
special way for readily accepting our request for doing the project
at their esteemed organization. We also thank our external guide
Mr. Sudhakar, Manager in HDFC for his consistent motivation
and valuable help. He took special interest in supervising our
project and evaluating our work from time to time. This allowed us
to develop a feeling of being part of the organization and put in our
best efforts.
      We heart fully thank to our Head of the Department for his
constant encouragement provided to us for completing this project
in time.
      We are thankful to our

Principal, Prof. P.PADMANABAHAM for giving us the full
Cooperation in completion of the project.
      Last but not the least; we extend our sincere gratitude to our
parents for showering their blessings in completion of this project

   (Brief information about the project topic, need, objectives and work done.)

                  LIST OF FIGERS
Fig. No.                      Title                      Page No.
Fig. 3.2   TRADING      PRODUCTS       OF   INDIABULLS     62
Fig. 4.1                 Number of result                  66
Fig. 4.2                 Number of result                  67
Fig. 4.3                 Number of result                  68
Fig. 4.4                 Number of result                  69

Fig. 4.5                 Number of result                  70

Fig. 4.6                 Number of result                  71

Fig. 4.7                 Number of result                  72

Fig. 4.8                 Number of result                  73

Fig. 4.9           Number of result                          74

Fig. 4.10          Number of result                          75

                 LIST OF TABLES
      Tab. No.                         Title                      Page No.

       Tab.2.1        Stock exchanges in India                      47

      Tab. 4.1     Do you know what Demat account is and do         66
                            you have Demat account?
      Tab. 4.2       Education qualification of investors who       67
                            investing in capital market.
      Tab. 4.3     Income range of investors who investing in       68
                                  capital market
      Tab. 4.4    What kind of risk do you perceive while           69
                  investing in the stock market?
      Tab. 4.5     Why people do not invest in capital market?      70

      Tab. 4.6      What is the purpose of investing in capital     71

     Tab. 4.7              Who participate in capital market as?    72

     Tab. 4.8         From where you prefer to take advice before   73
                      investing in capital market?
     Tab. 4.9         How often do you invest in capital market?    74

     Tab. 4.10        What was the result of your investment in     75
                      India bulls?


                    C HAPTER - 1
                     CHAPTER – 2
     2.0        LITERATURE REVIEW
                    CHAPTER -3

     3.0        COMPANY PROFILE
                     CHAPTER -4
     4.0        INDUSTRY PROFILE
                     CHAPTER - 5
                     CHAPTER - 6

6.1      FINDINGS



       A mechanism that allows trade is called a market. The original form of trade was
barter, the direct exchange of goods and services. Modern traders instead, generally
negotiate through a medium of exchange, such as money. As a result, buying can be
separated from selling, or earning. The invention of money (and later credit, paper money
and non-physical money) greatly simplified and promoted trade. Trade between two
traders is called bilateral trade, while trade between more than two traders is called
multilateral trade. Trade exists for many reasons. Due to specialization and division of
labor, most people concentrate on a small aspect of production, trading for other products.
Trade exists between regions because different regions have a comparative advantage in
the production of some tradable commodity, or because different regions' size allows for
the benefits of mass production. As such, trade at market prices between locations
benefits both locations. Trading can also refer to the action performed by traders and
other market agents in the financial markets.

       The only stock exchange operating in the 19th century were those of Bombay set
up in 1875 and Ahmedabad set up in 1894 these were organized as voluntary non-profit
making organization of brokers to regulate and protect interest. Before the control
insecurities trading became a central subject under the constitution in 1950, it was a state
subject and the Bombay securities contract (CONTROL) Act of 1952 used to regulate
trade in securities. Under this act, the Bombay stock exchange in 1927 and Ahmedabad in
1937.During the war boom, a number of stock exchanges were organized in 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 A.D.
Gorwala went in to the bill for securities regulation.    On the basis of committee’s
recommendations and public discussions the securities contracts (regulations) Act became
law in 1956.


      To examine the impact of the Capital Market components.

      To know the purpose of investing in the Capital Market.

      To assess the awareness of the investor who is dealing with INDIA BULLS.

      To know the risks arise while investing in Capital Market.

      To know the reasons why people not show interest to put their investment in the
       Capital Market.

      To assess the results of investments via INDIA BULLS in the Capital Market.


     ‘Investor can assess the company financial strength and factors that effect the
      company. Scope of the study is limited. We can say that 70% of the analysis is
      proved good for the investor, but the 30% depends upon market sentiment.

     The topic is selected to analyses the factors that affect the future EPS of a
      company based on fundamentals of the company.

     The market standing of the company studied in the order to give a better scope to
      the Analysis is helpful to the investors, share holders, creditors for the rating of
      the company.


      The collection of data is of two types as follows

     Primary source

     Secondary source


            Gathered information by interacting with Associate Vice President,
             INDIABULLS SECURITIES Ltd, Hyderabad.

            Gathered information by direct interaction with the customers who is
             dealing with Indiabulls securities Ltd.

            Method of primary data collection was “Random Sampling” by taking the
             sample of 100 customers.


   Referred EQUITY related articles from various magazines, newspapers and
      journals. Material provided by INDIABULLS SECURITIES

   Browsing the concerned sites.

     The collected data was analyzed by using graphs relative rating methods.


     Time constraint was a major limiting factor.
     Forty five days were insufficient to even grasp the theoretical concepts.
     Several other strategies that could have been studied were not done.
     Lack of information from the brokers.


              REVIEW OF



     Organizations that facilitate the trade in financial products. i.e. Stock exchanges
      facilitate the trade in stocks, bonds and warrants.
     The coming together of buyers and sellers to trade financial products. i.e. stocks and
      shares are traded between buyers and sellers in a number of ways including: The use
      of stock exchanges; directly between buyers and sellers etc. In academia, students of
      finance will use both meanings but students of economics will only use the second
      meaning. Financial markets can be domestic or they can be international.


        The financial markets can be divided into different subtypes:

Capital markets which consist of:

       Stock markets, which provide financing through the issuance of shares or common
        stock, and enable the subsequent trading thereof. Bond markets, which provide
        financing through the issuance of Bonds, and enable the subsequent trading
       Commodity markets, which facilitate the trading of commodities. Money markets,
        which provide short term debt financing and investment.
       Derivatives markets, which provide instruments for the management of financial
        risk. Futures markets, which provide standardized forward contracts for trading
        products at some future date; see also forward market.
       Insurance markets, which facilitate the redistribution of various risks.

Capital market

        The capital market is the market for securities, where companies and the
government can raise long-term funds. The capital market includes the stock market and
the bond market. Financial regulators, such as the U.S. Securities and Exchange
Commission, oversee the capital markets in their designated countries to ensure that
investors are protected against fraud. The capital markets consist of the primary market,
where new issues are distributed to investors, and the secondary market, where existing
securities are traded.

        The capital markets consist of primary markets and secondary markets. Newly
formed (issued) securities are bought or sold in primary markets. Secondary markets
allow investors to sell securities that they hold or buy existing securities.


What is share?

       In finance a share is a unit of account for various financial instruments
including stocks, mutual funds, limited partnerships, and REIT’s. In British English, the
usage of the word share alone to refer solely to stocks is so common that it almost
replaces the word stock itself .In simple Words, a share or stock is a document issued by
a company, which entitles its holder to be one of the owners of the company. A share is
issued by a company or can be purchased from the stock market. By owning a share you
can earn a portion and selling shares you get capital gain. So, your return is the dividend
plus the capital gain. However, you also run a risk of making a capital loss if you have
sold the share at a price below your buying price.

       A company's stock price reflects what investors think about the stock, not
necessarily what the company is "worth." For example, companies that are growing
quickly often trade at a higher price than the company might currently be "worth." Stock
prices are also affected by all forms of company and market news. Publicly traded
companies are required to report quarterly on their financial status and earnings. Market
forces and general investor opinions can also affect share price.

Types of Shares:

1. Equity Shares: An equity share, commonly referred to as ordinary share, represents the
form of fractional ownership in a business venture.

What is an ‘Equity’/Share?
       Total equity capital of a company is divided into equal units of Small
denominations, each called a share. For example, in a company the total equity capital of
Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is
called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs 10
each. The holders of such shares are members of the company and have voting rights.

2. Rights Issue/ Rights Shares:

          The issue of new securities to existing shareholders at a ratio to those already
held, at a price. For e.g. a 2:3 rights issue at Rs. 125, would entitle a shareholder to
receive 2 shares for every 3 shares held at a price of Rs. 125 per share.

3. Bonus Shares:
          Shares issued by the companies to their shareholders free of cost based on the
number of shares the shareholder owns.

4. Preference shares:
          Owners of these kind of shares are entitled to a fixed dividend or dividend
calculated at a fixed rate to be paid regularly before dividend can be paid in respect of
equity share. They also enjoy priority over the equity shareholders in payment of surplus.
But in the event of liquidation, their claims rank below the claims of the company’s
creditors, bondholders/debenture holders. Shares of a firm that encompass preferential
rights over ordinary common shares, such as the first right to dividends and any capital
5. Cumulative Preference Shares:
          A type of preference shares on which dividend accumulates if remained unpaid.
All arrears of preference dividend have to be paid out before paying dividend on equity

6. Cumulative Convertible Preference Shares:
          A type of preference shares where the dividend payable on the same accumulates,
if not paid. After a specified date, these shares will be converted into equity capital of the

7. Bond:
   Bond is a negotiable certificate evidencing indebtedness. It is normally unsecured. A
debt security is generally issued by a company, municipality or government agency. A
bond investor lends money to the issuer and in exchange, the issuer promises to repay the
loan amount on a specified maturity date. The issuer usually pays the bond holder
periodic interest payments over the life of the loan. The various types of Bonds are as

      Zero Coupon Bond:
       Bond issued at a discount and repaid at a face value. No periodic interest is paid.
The difference between the issue price and redemption price represents the return to the
holder. The buyer of these bonds receives only one payment, at the maturity of the bond.

      Convertible Bond:
       A bond giving the investor the option to convert the bond in to equity at a fixed
conversion price.

      Treasury Bills:
       Short-term (up to one year) bearer discount security issued by government as a
means of financing their cash requirements.

       If you've ever owned stocks or held certain other types of investments, you might
already be familiar with the concept of dividends. Even those people who have made
investments that paid dividends may still be a little confused as to exactly what dividends
are, however… after all, just because a person has received a dividend payment doesn't
mean that they fully appreciate where the payment is coming from and what its purpose
is. If you have ever found yourself wondering exactly what dividends are and why they're
issued, then the information below might just be what you've been looking for.

Defining the Dividend
       Dividends are payments made by companies to their stock holders in order to
share a portion of the profits from a particular quarter or year. The amount that any
particular stockholder receives is dependent upon how many shares of stock they own and
how much the total amount being divided up among the stockholders amounts to. This
means that after a particularly profitable quarter a company might set aside a lump sum to
be divided up amongst all of their stockholders, though each individual share might be
worth only a very small amount potentially fractions of a cent, depending upon the total
number of shares issued and the total amount being divided. Individuals who own large

amounts of stock receive much more from the dividends than those who own only a little,
but the total per-share amount is usually the same.

When Dividends Are Paid
       How often dividends are paid can vary from one company to the next, but in
general they are paid whenever the company reports a profit. Since most companies are
required to report their profits or losses quarterly, this means that most of them have the
potential to pay dividends up to four times each year. Some companies pay dividends
more often than this, however, and others may pay only once per year. The more time
there is between dividend payments can indicate financial and profit problems within a
company, but if the company simply chooses to pay all of their dividends at once it may
also lead to higher per-share payments on those dividends.


What is a ‘Debt Instrument’?
       Debt instrument represents a contract whereby one party lends money to another
on pre-determined terms with regards to rate and periodicity of interest, repayment of
principal amount by the borrower to the lender. In the Indian securities markets, the term
‘bond’ is used for debt instruments issued by the Central and State governments and
public sector organizations and the term ‘debenture’ is used for instruments issued by
private corporate

      What are the features of debt instruments?
       Each debt instrument has three features: Maturity, coupon and principal.
      Maturity:

          Maturity of a bond refers to the date, on which the Bond matures, which is the
date on which the borrower has agreed to repay the principal. Term-to-Maturity refers to
the number of years remaining for the bond to mature. The Term-to-Maturity changes
everyday, from date of issue of the bond until its maturity. The term to maturity of a bond
can be calculated on any date, as the distance between such a date and the date of
maturity. It is also called the term or the tenure of the bond.

        Coupon:
         Coupon refers to the periodic interest payments that are made by the borrower
(who is also the issuer of the bond) to the lender (the subscriber of the bond). Coupon rate
is the rate at which interest is paid, and is usually represented as a percentage of the par
value of a bond.

        Principal:
         Principal is the amount that has been borrowed, and is also called the par value or
face value of the bond. The coupon is the product of the principal and the coupon rate.
The name of the bond itself conveys the key features of a bond. For example, GS
CG2008 11.40% bond refers to a Central Government bond maturing in the year 2008
and paying a coupon of 11.40%. Since Central Government bonds have a face value of
Rs.100 and normally pay coupon semi-annually, this bond will pay Rs. 5.70 as six-
monthly coupon, until maturity.

What is meant by ‘Interest’ payable by a debenture or a bond?
         Interest is the amount paid by the borrower (the company) to the lender (the
debenture-holder) for borrowing the amount for a specific period of time. The interest
may be paid annual, semi-annually, quarterly or monthly and is paid usually on the face
value (the value printed on the bond certificate) of the bond.

What are the Segments in the Debt Market in India?
         There are three main segments in the debt markets in India,
        (1) Government Securities,

       (2) Public Sector Units (PSU) bonds, and
       (3) Corporate securities.

        The market for Government Securities comprises the Centre, State and State-
sponsored securities. In the recent past, local bodies such as municipalities have also
begun to tap the debt markets for funds. Some of the PSU bonds are tax free, while most
bonds including government securities are not tax-free. Corporate bond markets comprise
of commercial paper and bonds. These bonds typically are structured to suit the
requirements of investors and the issuing corporate, and include a variety of tailor- made
features with respect to interest payments and redemption.

       Who are the Participants in the Debt Market?
        Given the large size of the trades, Debt market is predominantly a wholesale
market, with dominant institutional investor participation. The investors in the debt
markets are mainly banks, financial institutions, mutual funds, provident funds, insurance
companies and corporate.

       How can one acquire securities in the debt market?
        Customer may subscribe to issues made by the government corporates in the
primary market. Alternatively, customer may purchase the same from the secondary
market through the stock exchanges.

       What is a Derivative?
        Derivative is a product whose value is derived from the value of one or more basic
variables, called underlying. The underlying asset can be equity, index, foreign exchange
(forex), commodity or any other asset. Derivative products initially emerged as hedging
devices against fluctuations in commodity prices and commodity-linked derivatives
remained the sole form such products for almost three hundred years. The financial

derivatives came into spotlight in post-1970 period due to growing instability in the
financial markets. However, since their emergence, these products have become very
popular and by 1990s, they accounted for about two thirds of total transactions in
derivative products.

What are Types of Derivatives?

        A forward contract is a customized contract between two entities, where
settlement takes place on a specific date in the future at today’s pre-agreed price.

        A futures contract is an agreement between two parties to buy Or sell an asset at a
certain time in the future at a certain price.

        An Option is a contract which gives the right, but not an obligation, to buy or sell
the underlying at a stated date and at a stated price.

Options are of two types - Calls and Puts options:
        ‘Calls’ give the buyer the right but not the obligations to buy a given quantity of
the underlying asset, at a given price on or before a given future date.
        ‘Puts’ give the buyer the right, but not the obligation to sell a Given quantity of
underlying asset at a given price on or before a given future date. Presently, at NSE
futures and options are traded on the Nifty, CNX IT, BANK Nifty and 116 single stocks.

        Options generally have lives of up to one year. The majority of options traded on
exchanges have maximum maturity of nine months. Longer dated options are called
Warrants and are generally traded over-the counter.

What is an ‘Option Premium’?
        At the time of buying an option contract, the buyer has to pay premium. The
premium is the price for acquiring the right to buy or sell. It is price paid by the option
buyer to the option seller for acquiring the right to buy or sell. Option premiums are
always paid upfront.

What is ‘Commodity Exchange’?
        A Commodity Exchange is an association, or a company of any other body
corporate organizing futures trading in commodities. In a wider sense, it is taken to
include any organized market place where trade is routed through one mechanism,
allowing effective competition among buyers and among sellers – this would include
auction-type exchanges, but not wholesale markets, where trade islocalized, but
effectively takes place through many non-related individual transactions between
different permutations of buyers and sellers.

What is meant by ‘Commodity’?
        FCRA Forward Contracts (Regulation) Act, 1952 defines “goods” as “every kind
of movable property other than actionable claims, money and securities”. Futures’ trading
is organized in such goods or commodities as are permitted by the Central Government.
At present, all goods and products of agricultural (including plantation), mineral and
fossil origin are allowed for futures trading under the auspices of the commodity
exchanges recognized under the FCRA.

What is Commodity derivatives market?
        Commodity derivatives market trade contracts for which the Underlying asset is
commodity. It can be an agricultural commodity like wheat, soybeans, rapeseed, cotton,
etc or precious metals like gold, silver, etc.

What is the difference between Commodity and Financial derivatives?
        The basic concept of a derivative contract remains the same whether the
underlying happens to be a commodity or a financial asset. However there are some
features which are very peculiar to commodity derivative markets. In the case of financial

derivatives, most of these contracts are cash settled. Even in the case of physical
settlement, financial assets are not bulky and do not need special facility for storage. Due
to the bulky nature of the underlying assets, physical settlement in commodity derivatives
creates the need for warehousing. Similarly, the concept of varying quality of asset does
not really exist as far as financial under lying are concerned. However in the case of
commodities, the quality of the asset underlying a contract can vary at times.

What is a Mutual Fund?
       A Mutual Fund is a body corporate registered with SEBI (Securities Exchange
Board of India) that pools money from individuals/corporate investors and invests the
same in a variety of different financial instruments or securities such as equity shares,
Government securities, Bonds, debentures etc. Mutual funds can thus be considered as
financial intermediaries in the investment business that collect funds from the public and
invest on behalf of the investors. Mutual funds issue units to the investors. The
appreciation of the portfolio or securities in which the mutual fund has invested the
money leads to an appreciation in the value of the units held by investors. The investment
objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund
scheme. The investment objectives specify the class of securities a Mutual Fund can
invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures,
commercial paper and government securities.


What is meant by ‘Securities’?
       The definition of ‘Securities’ as per the Securities Contracts Regulation Act
(SCRA), 1956, includes instruments such as shares, bonds, scrip’s, stocks or other
marketable securities of similar nature in or of any incorporate company or body
corporate, government securities, derivatives of securities, units of collective investment
scheme, interest and rights in securities, security receipt or any other instruments so
declared by the Central Government.

What is an Index?
         An Index shows how a specified portfolio of share prices are moving in order to
give an indication of market trends. It is a basket of securities and the average price
movement of the basket of securities indicates the index movement, whether upwards or
downwards. An index is a number used to represent the changes in a set of values
between a base time period and another time period. A stock index is a number that helps
measure the levels of the market. Return on the index is expected to represent return that
an investor can get if he has the portfolio representing the entire market .various indices
are computed for use by the investors. Market indices have always been of great
important in the world of security analysis and portfolio management. People from all
walks of life are affected by market indexes. Economists, technicians and statisticians use
stock marker indexes to study long term growth patterns on the economy, to forecast
business cycle patterns Investors use the market index as a bench mark against which to
evaluate the performance of the it own or institutional portfolios. Technical analysts, base
their decision to buy and sell on tha pattern that appears in tha time series of the market
indexes. Market indexes are also used as economics indicators. The various indexes that
are complied in the Indian markets are:

 A) BSE Sensitive Index :
      The Bombay stock exchange had started its own price index since 1986. Called the
 BSE Sensitive Index. It consists of 30 scrips which actively traded. Many of which are
 in Group A (specified shares) and a few in Group B (non-specified). It represents all the
 major industries quoted on the exchange and has a base-year 1978-79.

B) BSE National index:
         The BSE National Index was started by the Bombay Stock Exchange in 1988-89
with the base year 1983-84. This series consists of 100 scrips belonging to NSE sensitive
series. These 100 scrips are chosen from all industrial group which represent the listing
on all major exchanges The method of complication is similar to that of BSE sensitive

C) BSE200 IS Dollex:
       Two other indexes are complied by BSE since 1993. With base year 1989-90.
Both include activity traded scrips. BSE 200 is in rupee terms while the Dollex is in
dollar terms.

D) S & P CNX Nifty:
       It is a well diversified 50 stock index accounting for 25 sectors of the economy. It
has 1995 as the base year. Unlike other indices, the base value is fixed at 1000.
E) RBI Index:
       The RBI complied security indices form 1949 onwards. These were classified
under the following heads:
1 Govt. and semi-Govt. securities
2 Debentures of companies.
3 Equity shares of companies
What's a Demat account?
       Demat refers to a dematerialized account. Just as you have to open an account
with a bank if you want to save your money, make cheque payments etc, you need to
open a demat account if you want to buy or sell stocks. So it is just like a bank account
where actual money is replaced by shares. You have to approach the DPs
(remember, they are like bank branches), to open your demat account. Let's say your
portfolio of shares looks like this: 40 of Infosys, 25 of Wipro, 45 of HLL and 100 of
ACC. All these will show in your demat account. So you don't have to possess any
physical certificates showing that you own these shares. They are all held electronically in
your account. As you buy and sell the shares, they are adjusted in your account.

What is Dematerialization?
       Dematerialization is the process by which physical certificates of an investor are
converted to an equivalent number of securities in electronic form and credited to the
investor’s account with his Depository Participant (DP).


What is a Depository?
       A depository is like a bank wherein the deposits are securities (viz. shares,
debentures, bonds, government securities, units etc.) in electronic form. A depository is
an organization where the securities of a shareholder are held in the electronic from
though the medium of a depository participant The function of a depository are similar to
that of a bank. If an investor desires to utilize the services of a depository the investor has
to open an account with the depository through a depository participant. A Depository
participant is the reprehensive (agent) in the depository system. The D.P will maintain the
securities account
Balances and intimate to the Holder about their holdings form time to time. SEBI has
permitted banks, financial institutions, custodies, stock brokers, etc, to become
participants in the depository. The main objective of a depository is to minimize the paper
works involved with the ownership, trading and transfer of securities. If an investor
intends to get back his securities in the physical form he can do so by requesting the
Depository participant. This is known as “Dematerialization”.

What's the difference between a depository and a depository participant?

       A depository is a place where the stocks of investors are held in electronic form.
The depository has agents who are called depository participants (DPs). Think of it like a
bank. The head office where all the technology rests and details of all accounts held is
like the depository. And the DPs are the branches that cater to individuals. There are only
two depositories in India -- the National Securities Depository Ltd (NSDL) and the
Central Depository Services Ltd (CDSL). There are over a 100 DPs.

Is a demat account a must?

       Nowadays, practically all trades have to be settled in dematerialized
form. Although the market regulator, the Securities and Exchange Board of India (SEBI),
has allowed trades of up to 500 shares to be settled in physical form, nobody wants
physical shares any more. So a demat account is a must for trading and investing. Most
banks are also DP participants, as are many brokers.

We can choose your very own DP.

To get a list, visit the NSDL and CDSL websites and see who the registered DPs are. A
broker is separate from a DP. A broker is a member of the stock exchange, who buys and
sells shares on his behalf and on behalf of his clients.

Where do I begin?

      Look for a DP to have an account with Most banks are also DP participants, as are
       many brokers. You can choose your very own DP.

To get a list, visit the NSDL and CDSL websites and see who the registered DPs are.

A broker is separate from a DP. A broker is a member of the stock exchange, who buys
and sells shares on his behalf and on behalf of his clients. A DP will just give you an
account to hold those shares. You do not have to take the same DP that your broker takes.
You can choose your own. But many brokers offer special incentives in the form of lower
charges for opening demat accounts with their DPs.

      Get your documents in place

Once you approach your DP, you will be guided through the formalities of opening an
account. You must fill up an account opening form and sign an agreement with your DP.

The DP will ask for some documents as proof of your identity and address. Check with
them what they require. For instance, some may accept a driver's license, others may not.
Here is a broad list (you won't need all of them though)

          PAN card
          Voter's ID
           Passport
          Ration card
          Driver's license
           Photo credit card
           Employee ID card
           Bank attestation
           IT returns

           Electricity/ Landline phone bill

                      while they only ask for photocopies of the documents, they will
           need the originals for verification. You will have to submit a passport size
           photograph on which you sign across.

      How many shares you need to have to open an account When opening an account
       with a bank, you need a minimum balance.

Not so with a demat account. A demat account can be opened with no balance of shares.
And there is no minimum balance to be maintained either. You can have a zero balance in
your account.

      What will it cost? The charges for account opening, annual account maintenance
       fees and transaction charges vary between DPs. To get a comparative idea, visit
       the websites of NSDL and CDSL.

      Can I nominate? Sure. You can nominate whoever you like by filling up the
       nomination details in the account opening form. This is to enable the nominee to
       receive the securities after the death of the holder of the demat account.


       A stock market is a private or public market for the trading of company stock and
derivatives of company stock at an agreed price; both of these are securities listed on a
stock exchange as well as those only traded privately.

       Stock market is also referred to as the Corporate Debt or Capital Market. While
the money market, which deals with short-term financial needs of business and industry,
is restricted to funds needed for a period of one year or less, instruments of the
debt/capital markets are raised for medium or long term needs. Indian Stock Market
consists of three distinct segments:

   1. The Public Debt Market i.e. the market for Government securities, (also called
       Gilt-edged Market). These are interest bearing and dated securities. This market is
       regulated by RBI, the Central Bank and Banker to the Government.
   2. PSU Bonds Market i.e. Bonds floated by public Sector units, Nationalized banks
       and financial Institutions for raising Tier-II capital and also debentures floated by
       Corporates. This is represented as the Corporate Debt Market.
   3. The Equity Market for rising of equity or preference share capital by all
       corporates. Money invested in company shares is not refundable, but if the shares
       are listed in a stock exchange these can be sold or purchased, thus providing
       liquidity to such investments. Shares do not carry interest, but shareholders can
       participate in sharing the profits of the corporate body declared by way of
       Dividends, bonus shares etc. While the hope of receiving attractive dividends
       motivates the public to subscribe to the share capital, declaring dividend is not a
       legal obligation on the part of the Companies, and hence not a right on the part of
       the shareholders. But shareholders enjoy various other rights as conferred by the
       Indian Companies Act, 1956. Indian Public companies generally follow the
       objective of increasing shareholders wealth as the prime goal of financial

    At this context it is relevant to mention about two categories of stock market, i.e.

      Primary Market covering new public issues of all categories of securities,
       including G-sec, bonds and equity/preference capital.
      Secondary market, which deals with already issued securities of all types.
       Transactions of the secondary market are carried out through one of the authorized
       stocks exchanges, where the traded security is listed.

   The expression 'stock market' refers to the system that enables the trading of company
stocks (collective shares), other securities, and derivatives. Bonds are still traditionally
traded in an informal, over-the-counter market known as the bond market. Commodities
are traded in commodities markets, and derivatives are traded in a variety of markets


       Participants in the stock market range from small individual stock investors to
large hedge fund traders, who can be based anywhere. Their orders usually end up with a
professional at a stock exchange, who executes the order.Some exchanges are physical
locations where transactions are carried out on a trading floor, by a method known as
open outcry. This type of auction is used in stock exchanges and commodity exchanges
where traders may enter "verbal" bids However, buyers and sellers are electronically
matched. One or more NASDAQ market makers will always provide a bid and ask price
at which they will always purchase or sell 'their' stock. The Paris Bourse, now part of
Euronext, is an order-driven, electronic stock exchange. It was automated in the late
1980s. Prior to the 1980s, it consisted of an open outcry exchange. Stockbrokers met on
the trading floor or the Palais Brongniart. In 1986, the CATS trading system was
introduced, and the order matching process was fully automated.From time to time, active
trading (especially in large blocks of securities) have moved away from the 'active'
exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit
Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges to
their internal systems. That share probably will increase to 18 percent by 2010 as more
investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of
securities themselves, according to data compiled by Boston-based Aite Group LLC, a
brokerage-industry consultant

Market participants

       Many years ago, worldwide, buyers and sellers were individual investors, such as
wealthy businessmen, with long family histories (and emotional ties) to particular
corporations. Over time, markets have become more "institutionalized"; buyers and
sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds,
hedge funds, investor groups, and banks). The rise of the institutional investor has
brought with it some improvements in market operations. Thus, the government was
responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small'

Capital Market in India

       This is the market consisting of large number of individual investors, household
savers, professionals, and agriculturists, who are able to a preserve, a part of their current
earnings to invest in securities. They form the class of capital providers. On the other side
the corporate bodies engaged in Industry, trade and other business ventures are the
productive users of very large amount of capital. It is the capital market that transforms
the savings of large number of individuals to productive channel to meet the demands of
capital for Industry, trade and business. The financial/security market intermediaries serve
as the link between capital providers and capital seekers.

       The individual savers are not organised. They can invest if they could secure the
trust and confidence that the funds invested would be prudently employed and they could
confidently expect to get a fair return/reward on their hard-earned savings. This is the
function of organised capital market to regulate market forces to ensure fair dealings, to
motivate savings on the part of the investors and to secure smooth flow of savings/capital
from investors to capital seekers for productive needs. This supervisory and regulatory
function is performed by SEBI, the market regulator and market developer

The capital market consists of the following components:

      The scattered investors, who are regular savers and the purveyors of capital
       needed by business and industry. Inter-se they are not organised.
      The Corporate and Business houses who are the users or seekers of this capital,
       who are mutually better organised.
      The Financial Intermediaries who link the investors and the capital seekers/users,
       who are professionals.
      SEBI, the market developer and market regulator (the apex organization).

The Corporate Sector draws its capital requirements from the following sources:

      Promoters Contribution;
      Equity Capital raised from the shareholders (generally referred to as equity
      Preference share capital raised from the shareholders
      Bonds/Debentures raised from the Public (generally referred to as Debt Capital);
      Term Loans from Banks & Financial Institutions;

      Short-term Working Capital from Banks;
      Unsecured Loans & Deposits; and
      Internal generation of Funds (Profits/surpluses reproached and held as Reserves).

       Stock market is also referred to as the Corporate Debt or Capital Market. While
the money market, which deals with short-term financial needs of business and industry is
restricted to funds needed for a period of one year or less, instruments of the debt/capital
markets are raised for medium or long term needs. Indian Stock Market consists of three
distinct segments:

      The Public Debt Market i.e. the market for Government securities (also called
       Gilt-edged Market). These are interest bearing and dated securities. This market is
       regulated by RBI, the Central Bank of the country and banker to the Government.
      PSU Bonds Market i.e. Bonds floated by public Sector units, nationalized banks
       and financial Institutions for raising Tier-II capital and also debentures floated by
       corporates. This is represented as the Corporate Debt Market.
      The Equity Market for raising of equity or preference share capital by all
       corporates. Money invested in company shares is not refundable, but if the shares
       are listed in a stock exchange these can be sold or purchased, thus providing
       liquidity to such investments. Shares do not carry interest, but shareholders can
       participate in sharing the profits of the corporate body declared by way of
       dividends, bonus shares etc. While the hope of receiving attractive dividends
       motivates the public to subscribe to the share capital, declaring dividend is not a
       legal obligation on the part of the companies, and hence not a right on the part of
       the shareholders. But shareholders enjoy various other rights as conferred by the
       Indian Companies Act, 1956. Indian Public companies generally follow the
       objective of increasing shareholders wealth as the prime goal of financial

At this context it is relevant to mention about two categories of stock market, i.e.

      Primary market covering new public issues of all categories of securities,
       including G-sec, bonds and equity/preference capital.

      Secondary market, which deals with already issued securities of all types.
       Transactions of the secondary market are carried out through one of the authorized
       stock exchanges, where the traded security is listed.

Functions of the Capital Market

      The organised and regulated capital market motivates individual to save and
       invest funds. The availability of safe and profitable sources of investment is an
       essential criterion to create propensity to save and invest on the part of the earning
      It provides for the investors a safe and productive channel for investment of
       savings and secures the recurring benefit of return thereon, as long as the savings
       are retained;
      It provides liquidity to the savings of the investors, by developing a secondary
       capital market, and thus makes even short term savings, consistently available for
       long-term users;
      It thus mobilizes savings of large number of individuals, families and associations
       and makes the same available for meeting the large capital needs of organised
       industry, trade and business and for progress and development of the country as a
       whole and its economy.

  To discharge these functions, the organised capital market accepts a dual responsibility

      To develop the market and to promote savings & investment;
      To regulate the players in the market vis-a-vis the investor and to enforce market
       discipline, through market regulators and registered intermediaries. Such that the
       unorganised small man is able to deal safely and conveniently through these
       regulatory bodies and the intermediaries, and need not
      Necessarily has to come into direct contact with the ultimate seekers of his

   To understand the regulatory and control systems in-built in the market, we must
study the structural framework of the capital market. The capital market consists of the
following segments.

The Primary Stock Market

       It is also called the market for public issues. This market refers to the raising of
new capital (equity or debt i.e. equity shares, preference shares, debentures or Rights
Issues) by corporates. Newly floated companies or existing companies may tap the equity
market by offering public issues. When equity shares are exclusively offered to the
existing shareholders, it is called "Rights Issue". When a Company after incorporation
initially approaches the public for the first time for subscription of its public issue it is
called Initial Public Officer (IPO). Successful floating of a new issue requires careful
planning, timing of the issue and comprehensive marketing efforts. The services of
specialized institutions, like underwriters, merchant bankers and registrars to the issue are
available for the corporate body to handle this specialized job. Underwriters are financial
institutions, which undertake to secure a committed quantum of equity/debt subscribed by
the public, failing which they accept these shares/bonds as their own investment. It is
referred to as the issue or that part of getting devolved on the underwriters. The
transactions relating to the primary market i.e. public/rights issues are not carried out
through stock exchanges. However there is effective regulation of SEBI at every stage of
a public issue. This is done through merchant bankers, underwriters and registrars to the
issue each acting at different points. Subscriptions to the new issue are collected at
specific branches of one or more collecting banks prescribed span of time, represented by
the dates of opening of the issue and closing of the issue

Initial public offering (IPO)
       Also referred to simply as a "public offering," is the first sale of stock by a private
company to the public. IPOs are often issued by smaller, younger companies seeking
capital to expand, but can also be done by large privately-owned companies looking to
become publicly traded.
       In an IPO, the issuer may obtain the assistance of an underwriting firm, which
helps it determine what type of security to issue (common or preferred), best offering
price and time to bring it to market. IPO’s can be a risky investment. For the individual
investor, it is tough to predict what the stock will do on its initial day of trading and in the
near future since there is often little historical data with which to analyze the company.
Also, most IPOs are of companies going through a transitory growth period, and they are
therefore subject to additional uncertainty regarding their future value.

Reasons for listing
        When a company lists its shares on a public exchange, it will almost invariably
look to issue additional new shares in order to raise extra capital at the same time. The
money paid by investors for the newly-issued shares goes directly to the company (in
contrast to a later trade of shares on the exchange, where the money passes between
investors). An IPO, therefore, allows a company to tap a wide pool of stock market
investors to provide it with large volumes of capital for future growth. The company is
never required to repay the capital, but instead the new shareholders have a right to future
profits distributed by the company.
        The existing shareholders will see their shareholdings diluted as a proportion of
the company's shares. However, they hope that the capital investment will make their
shareholdings more valuable in absolute terms. In addition, once a company is listed, it
will be able to issue further shares via a rights issue, thereby again providing itself with
capital for expansion without incurring any debt. This regular ability to raise large
amounts of capital from the general market, rather than having to seek and negotiate with
individual investors, is a key incentive for many companies seeking to list.

        IPO’s generally involve one or more investment banks as "underwriters." The
company offering its shares, called the "issuer," enters a contract with a lead underwriter
to sell its shares to the public. The underwriter then approaches investors with offers to
sell these shares.
The sale (that is, the allocation and pricing) of shares in an IPO may take several forms.
Common methods include:

       Dutch auction
       Firm commitment
       Best efforts
       Bought deal
       Self Distribution of Stock

    A large IPO is usually underwritten by a "syndicate" of investment banks led by one
or more major investment banks (lead underwriter). Upon selling the shares, the
underwriters keep a commission based on a percentage of the value of the shares sold.

Usually, the lead underwriters, i.e. the underwriters selling the largest proportions of the
IPO, take the highest commissions—up to 8% in some cases.
   Multinational IPO’s may have as many as three syndicates to deal with differing legal
requirements in both the issuer's domestic market and other regions. For example, an
issuer based in the E.U. may be represented by the main selling syndicate in its domestic
market, Europe, in addition to separate syndicates or selling groups for US/Canada and
for Asia. Usually, the lead underwriter in the main selling group is also the lead bank in
the other selling groups. Usually, the offering will include the issuance of new shares,
intended to raise new capital, as well the secondary sale of existing shares. However,
certain regulatory restrictions and restrictions imposed by the lead underwriter are often
placed on the sale of existing shares.
   Public offerings are primarily sold to institutional investors, but some shares are also
allocated to the underwriters' retail investors. A broker selling shares of a public offering
to his clients is paid through a sales credit instead of a commission. The client pays no
commission to purchase the shares of a public offering, the purchase price simply
includes the built-in sales credit. The issuer usually allows the underwriters an option to
increase the size of the offering by up to 15% under certain circumstance known as the
green shoe or over allotment option.

       A venture capitalist named Bill Hambrecht has attempted to devise a method that
can reduce the inefficient process. He devised a way to issue shares through a Dutch
auction as an attempt to minimize the extreme under pricing that underwriters were
nurturing. Underwriters, however, have not taken to this strategy very well. Though not
the first company to use Dutch auction, Google is one established company that went
public through the use of auction. Google's share price rose 17% in its first day of trading
despite the auction method. Perception of IPO’s can be controversial. For those who view
a successful IPO to be one that raises as much money as possible, the IPO was a total
failure. For those who view a successful IPO from the kind of investors that eventually
gained from the under pricing, the IPO was a complete success.

       Historically, IPOs both globally and in the US have been under priced. The effect
of under pricing an IPO is to generate additional interest in the stock when it first
becomes publicly traded. This can lead to significant gains for investors who have been
allocated shares of the IPO at the offering price. However, under pricing an IPO results in
"money left on the table"—lost capital that could have been raised for the company had
the stock been offered at a higher price. The danger of overpricing is also an important
consideration. If a stock is offered to the public at a higher price than what the market will
pay, the underwriters may have trouble meeting their commitments to sell shares. Even if
they sell all of the issued shares, if the stock falls in value on the first day of trading, it
may lose its marketability and hence even more of its value. Investment banks, therefore,
take many factors into consideration when pricing an IPO, and attempt to reach an
offering price that is low enough to stimulate interest in the stock, but high enough to
raise an adequate amount of capital for the company. The process of determining an
optimal price usually involves the underwriters ("syndicate") arranging share purchase
commitments from lead institutional investors.

How is the issue price decided on?
       A company that is planning an IPO appoints lead managers to help it decide on an
appropriate price at which the shares should be issued. There are two ways in which the
price of an IPO can be determined: either the company, with the help of its lead
managers, fixes a price or the price is arrived at through the process of book building.

Note: Not all IPO’s are eligible for delivery settlement through the DTC system, which
would then either require the physical delivery of the stock certificates to the clearing
agent bank's custodian, or a delivery versus payment ("DVP") arrangement with the
selling group brokerage firm. This information is not sufficient.

Secondary Stock Market

   The Secondary Market deals with the sale/purchase of already issued equity/debts by
the corporates and others. The sale/purchase of these securities are carried out at the
specific Stock Exchange(s), where the companies get their public issues listed for trading.
The main function of the secondary market is to provide liquidity to the listed securities

by enabling a holder to easily convert the securities into cash through the stock
exchanges. An individual or an Institution can either hold a portfolio of securities as a
permanent investment, or he can hold a basket of securities for short-periods and engage
in buying and selling them to gain from market fluctuations. The secondary market also
acts as an important indicator of the investment climate in the economy. When prices of
existing securities are rising and there is large trading in the existing shares, such a boom
in the secondary market correspondingly signifies that new issues if floated at that point
of time would be successfully subscribed.

         Investors: On the one hand are the innumerable and not organised savers.
         Capital Seekers: At the other end are those seeking capital from the capital
         Regulatory Body: SEBI (the Securities & Exchange Board of India) an
          autonomous and statutory body acts as the market regulator and market developer.
          It regulates and controls the capital users and all functionaries between the users
          and the investors.
         The Stock Exchanges: There are 23 Stock Exchanges registered with SEBI and
          under its regulation. They provide a transparent and safe (risk-free) forum of a
          market for investors to transact and invest their funds.
         The Depositories: The depositories are innovative institutions, who are able to
          render the market paperless by holdings securities electronically, providing ease
          and speed for those transacting in the market.
         The Registered Intermediaries: They consist of brokers, sub-brokers, trading
          and clearing members, portfolio managers, bankers to issue, merchant bankers,
          registrars, underwriters and credit rating agencies. They all provide a basket of
          services to the investors to lesson risk and make transacting easier and smooth.
          They are all registered with SEBI and act under the regulation of SEBI abiding by
          the Code of Conduct prescribed for each of them governing their respective roles.

   So vast and well established is the market that the daily turn over in the main Stock
Exchange in the Country National Stock Exchange of India averages Rs.10000 Crore
presently (in the equities segment alone) and bound to multiply further in the coming

The maximum brokerage that a NSE trading member/registered sub-broker can
charge as per SEBI Stipulations.

   1. As stipulated by SEBI, the maximum brokerage that can be charged is 2.5% of the
       trade value. This maximum brokerage is inclusive of the brokerage charged by the
       sub-broker (sub-brokerage cannot exceed 1.5% of the trade value). However the
       trading member can charge additionally-
   2. Service Tax @ 5% of the brokerage.
   3. Transaction Charge levied by NSE.
   4. Penalties rising on behalf of client (investor).
   5. The brokerage and service tax is indicated separately in the contract note.

Procedure for Buying & Selling

If a client desires to buy or sell shares & securities, he has to transact in the secondary
market i.e. through the stock exchange. He cannot do so directly, but has to deal through a
broker recognized by SEBI He has to enlist the service of a SEBI registered trading
member or SEBI registered sub-broker of a trading member of a registered Stock
Exchange. Different stock exchanges have different bylaws though they all exhibit
common safeguards and precautions. In our study we restrict to overview the system
adopted in National Stock Exchange (NSE) and The Stock Exchange Mumbai (BSE) the
leading stock exchanges of India, which together cover over 75% of the transactions.

After approaching the broker/sub-broker of NSC/BSE to ensure verification of bonafide
membership investor may ask the broker/sub-broker to furnish documents such as SEBI
registration certificate, Registration with NSE/BSE etc to verify the antecedents of the
person. He can also approach the exchange to counter check whether the person holds the
valid registration. When a client instructs his broker to enter into a transaction, he may
ask him to buy or sell at the best price and leave the matter to broker's judgment or he
may specify reasonable price limits. For instance, The client may specify " Buy at 110
max." In such a case, The broker may not be able to execute the order even though the
quotations of the day would be "Rs110, 111,112,113" as jobber's spread of say Rs.2
would make the share available for purchase at a price not lower than Rs. 112.

Procedure for Dealing through a Stock ExchangeWe have seen that a client
deciding to operate through an exchange, has to avail the services of a SEBI registered
broker/sub-broker. He has to enter into a broker-client agreement client, his broker is
supposed to give him a contract note having details of the transaction as directed by the
client. Since the contract note is a legally enforceable document, the client should insist
on receiving it. The client has the obligation to deliver the shares in case of sale or pay the
money in case of purchase within the time prescribed. If he has opted for transaction in
physical mode, in case of bad delivery of securities by him, he has the responsibility to
rectify them or replace them with good ones.

For Securities in Physical Mode - How Does Transfer of Securities Take Place? To
affect a transfer in the physical mode the securities should be sent to the company along
with a valid, duly executed and stamped transfer deed duly signed by or on behalf of the
transferor (seller) and transferee (buyer). It would be a good idea to retain photocopies of
the securities and the transfer deed(s) when they are sent to the company for transfer. It is
essential that the client sends them by registered post with acknowledgement due and
watches out for the receipt of the acknowledgement card. If he does not receive the
confirmation of receipt within a reasonable period, he should immediately approach the
postal authorities for confirmation. Sometimes, for his own convenience, the client (while
buying securities) may choose not to transfer the securities immediately.

                       CHAPTER - 3



       Capital market is the market for long — term funds. Just as the money market is
the market for short-term funds. It refers to all the facilities and the institutional
arrangements for borrowing and lending term funds (medium-term and long term funds).
It does not deal in capital goods but is concerned for long-term money capital comes
predominantly from private sector manufacturing industries and agriculture sector and
from the government for the purpose of economic development.


       The Indian capital market is divided into gilt-edged market and the industrial
securities market. The gilt-edged market refers to the market for government and semi-
government securities, backed by RBI, The securities traded in this market are stable in

value and are much sought after by bank and other institutions. The industrial securities
market refers to the market of shares and debentures of old and new companies. The
industrial market is further dividend into the new issue market and the old capital market
i.e., the Stock Exchange.

       The new issue market refers to rising of new capitals in the form of shares and
debentures. Where as stock exchanges deal with securities already issued by companies.
Both markets are equally important hut often the new issue market is much more
important from point of view of economic growth. However, the functioning of the new
issue market will he facilitated only when there are abundant facilities of transfer of
existing securities. The capital market is also classified into primary capital market and
secondary Capital market. The primary market refers to new issue market which relates to
the issue of shares, preferences share and debentures of non-government public limited
companies, and also the raising of fresh capital by government companies and the issue of
public sector.


       The stock market provides a market place for the purchase and sale of securities
evidencing the ownership of business debt. Stock Exchanges are the most perfect type of
market securities whether of Government or Semi-Government bodies or other public
bodies as also for shares and debentures issued by the joint stock companies.


Primary Market (New Issue Market):

       This method includes the data collected from the personal discussions with the
authorized clerks and members of the Exchange. The primary market provide channel for
sale of new securities primary market provide opportunity to issue of securities.

Secondary Market:

       The secondary collection method includes the lectures of the superintend of the
Department of Market Operations, EDP etc, and also the data collected from the News,
Magazines of the NSE, HSE and different books issue of this study.


       The origin of the stock market commences from the last quarter of 18th century
when long term securities representing property or promises to pay were first issued and
made transferable. The real beginning occurred in the middle of the 1 9th century after the
enactment of the company’s act 1850 which introduced the feature of limited liability and
generated investor’s interest in corporate sector. From 1850 to 1865 there was arise of
power of the brokers. The broking business proved to be profitable. This has lead to the
increase in number of brokers to 60. An important event in the development of stock
market in India was the formation of Native share and Stock brokers association in
Bombay in 1875. this was the followed by the formation of associations in Ahmedabad
(1894), Calcutta (1908) and Madras (1937).


       Same time they are under the supervision and control of government. On 26th
January 1950 the constitution o9f India came into force and under item 4 or the union list,
stock exchange became exclusively a central subject. In the following year a draft bill for
stock exchange regulation was prepared and referred to an expert committee under the
chairmanship of Sri Goranwala. The stock exchanges are regulated by securities
(contract) regulation act 1956.And securities contract rules 1957. The securities contracts
(regulation)                                      act                                 1956
permits only those stock exchanges which are recognized by the central government to
function in any notified area or state. The recognized stock exchange is thus placed in a
privileged position.


       At present there are 27 stock exchanges recognized under the securities contracts
(Regulation) act 1956. They are located at Ahmedahad, Bangalore, Bhuhhneshwar,
Mumbai, Calcutta, Cochin, Coimbatore, Delhi, Guwahati, Hyderabad, Indore, Jaipur,
Kunpur, Ludhiana, Mangalore, Meerut, Patna and Rajkot in addition to the above stock
exchanges, screen based exchanges like National Stock Exchange Of India, OTCET are
also set up. The recognized stock exchanges mobilize and direct the flow of savings of
general public into productive channels of investment. The Hyderabad Stock Exchange
(HSE) was the sixth stock exchange recognized under the securities contract (Regulation)

                                                 Table 2:1
CITY               YEAR       OF TYPE        OF YEAR    OF
                                 Voluntary   non
Bombay             1875                          1957

                                           Public        limited
Calcutta           1908                                            1980

                                           Company limited
Madras             1937                    by              1982

                                           Voluntary         non
Ahmedabad          1894                                            1982

                                            Public        limited
Delhi                1947                                           1982

                                            Company limited
Hyderabad            1943                   by              1983


        The segment of secondary market is a place where script are traded to provide
liquidity to scripts which were issued in the primary market. Thus the growth of the
secondary market is very much dependant upon the primary market. The more the
number of companies enters the primary market the greater is the volume trade at the
secondary market. The trading activities in the secondary market is done through the
recognized stock exchange i.e. ICSE (inter connected stock exchange of India) is yet to
make its beginning shortly. Mainly the secondary market operations involved in buying
and selling of securities on the stock exchange through its members the companies hitting
the primary market are mandatory including a regional stock exchange. The following
intermediaries are involved in the secondary market.

1. Members I broker of a stock exchange i.e., for buying and selling of scripts.
2. Portfolio Manager.
3. Investment Manager.
4. Transfer Agent.
        SEBI has issued several guidelines and regulations on secondary market, conduct
and registration of brokers, portfolio managers. SEBI has taken several steps to control
and regulate the secondary market in India which includes expansion of stock
exchange centers and their integration, improvement in trading system and settlement
procedures. Registration of brokers, sub-brokers prohibition of insider trading,
transparency in trading activities, eligibility norms of membership, capital adequacy
norms, margins. Further mutual funds have also been brought under the purview of the


1. SEBI has issued Capital Adequacy Norms for brokers consisting of base Minimum
Capital, Additional capital related to volume of business.
2. NSE was incorporated to compete with other stock exchanges which went fully
automated and available to a common investor by means of terminals spreading all over
the country
3. Circuit Breakers system was introduced at Mumbai stock exchange and other
exchanges to stop trading in particular scrip fluctuating beyond 8% in some
scripts for the previous days closing prices.
4. OTCEI was permitted to trade in unlisted scripts, hut listed on Mumbai stock exchange
along with debentures.
5. Apart from this, Odd Lot trading sessions was separated to ensure trading in odd lots
conveniently. Brokers were advised to keep separate accounts for clients and not to touch
the funds of clientele sale realizations.
6. Forward trading was banned from 15th march 1994.
7. Capital gain Tax Rules were liberalized.
8. Compulsory Market making concept was introduced.
9. Jumbo share concept of larger denomination share certificates was introduced with a
view to mitigate the problems of custodian of Indian and Foreign Financial Institutions.
10. The systems of corporate members were introduced in all exchanges and the
Exemption of capital gain was extended till 3l December 1998.
11. The Demit system was started i.e., trading the scripts in the dematerialized form for
the purpose of avoiding Bad deliveries, Delay in transfers, Reduction of transfer
expenses, Reducing settlement delays and reducing market lot share to 1.
12. Rolling settlement was introduced in some shares for the purpose of encouraging the
buying and selling shares only by the genuine buyers or investors and to avoid excess

        Securities and exchange Board of India was set up in 1988 and became a
statutory organization from January 1992. it was given a statutory status for healthy
regulation of capital markets. Office of Capital Issues (OCI) was abolished and the
companies were to approach market directly subject to SEBI guidelines relating to
disclosures and other measures of investors protection. This led to removal of hurdles i.e.,

getting permission from CCI, MRTP commissioner, Company Law Board, Ministry of
Finance, Industrial, Registrar of companies etc.

The Securities and Exchange Board of India Act (SEBI) empowers SEBI to:

     Regulate the business of stock exchanges.

     Register and regulate intermediaries associated with the securities market as
        well as working of mutual funds.

     Promote and regulate self Regulatory organizations.

     Prohibit fraudulent and unfair trade practices relating to securities transactions.
SEBI directed that all Stock Exchanges should computerize their operations to have better
transparency and. efficient screen based trading system and also permitted most of the
stock exchanges to have their additional trading floors at different places
through VSATS or WAN/LAN systems to suit their requirements. This has facilitated
members and investors to do their trading activities in a more and competitive way.
The system of insurance of brokers was made mandatory; the norms for bad deliveries
were standardized.


       In India first fully automated stock exchange was formed in the year 1994 with
fully automated trading system called screen based trading or Online trading basing on
computers this system has brought revolutionary changes in the secondary markets in
India. This system is mainly helpful for the purpose of protecting the investors from the
brokers in the price rigging. The NSE has used the software called NEAT (National
Exchange for Automated Trading). After NSE starting the Online trading the India’s
premier stock exchanges followed the way of NSE and BSE.

Objectives of Online Trading:

      Providing a Nation wide trading facility for all type of securities.

        Ensuring equal access to investors to all over the country through communication
        Providing a fair, efficient and transparent securities market using an electronic
         trading system.
        Enabling the use of shorter settlement cycles and book entry settlement system.


         Trading on stock exchanges used to take place through open outcry without use of
technology for immediate matching or recording of trades. This was a time consuming
and inefficient system. The practice of physical trading imposed limits on trading
volumes and hence the slow speed with which new information was incorporated into

         NSE is the first exchange in the world to use satellite communication technology
for trading. Its trading system, called National Exchange for Automated Trading (NEAT),
is a state of-the-art client server based application. At the server end all trading
information is stored in an in memory database to achieve minimum response time and
maximum system availability for users. It has uptime record of 99.7%. For all trades
entered into NEAT system, there is uniform response time of less than one second.


         The decade of Lhe9Os witnessed a revolution in the clearing and settlements
functions in he Indian securities market. Promulgation of the Depositories Ordinance in
1995 and establishment in this revolution which sought to eliminate the ills associated
with paper base securities system such as delay in transfer, bad delivery, theft, fake and
forged shares, and synchronize the settlement of trade transfer of securities irrespective of
geographical locations.

         Although in the first phase, SEB1 has made Demat trading for selected scripts,
efforts should be made to bring in all major exchanges within a well defined time frame
for acceptance of Demat Trading. With SEBI allowing Demat delivery even in the fiscal

segment more and more retail investor are likely to get in to the system which ultimately
encourage more brokers also to become to become depository participants and educate
the retail investor. The advantage of script less trading and the need for such Demat
trading compulsorily could also be explored. Apart from this the banking network in the
country could be used for this purpose by providing tow way quotes to take up this work.


       A stock exchange or bourse is a corporation or mutual organization which
provides the facilities for stock brokers to trade company stocks and other securities.
Stock exchanges instruments and capital events including the payment of income and

       The securities traded on a stock exchange include shares issued by companies,
unit trusts and other pooled investment products as well as bonds. To be able to trade a
security on a certain stock exchange, it has to be listed there.

       Usually there is a central location at lest for recordkeeping, but trade is less linked
to such a physical place, as modern markets are electronic networks, which gives the
advantages of speed and cost of transactions. Trade on an exchange is by members only; a
stock broker is said to have a seat on the exchange.

       A stock exchange is often the most important component of a stock market. There
is usually no compulsion to issue stock via the stock exchange itself, nor must .

       The initial offering of stocks and bonds to investors is by definition done in the
primary market and subsequent trading is done in the secondary market.
Increasingly all stock exchanges are part of a global market for securities, supply and
demand in stock markets is driven by various factors which, as in all free markets, affect
the price of stocks (see stock valuation).


       In 12th century France the curators de change were concerned with managing and
regulating the debts of agricultural Communities on behalf of the banks. As these men
also traded in debts. They could he called the first brokers.

       Some stories suggest that the origins of the term “bourse” come from the Latin
bursa meaning a bag because, in 13e. Bruges, the sign of a purse hung on the front of the
house where mere chats met.

       However, it is more likely that in the late 13th century commodity traders in
Bruges gathered inside the house of a man called van deer Burse, and in 1309 they
institutionalized this until now informal meeting and became the “Bruges Bourse”. The
idea spread quickly around Flanders and neighboring counties and “Bourse”.

       In the middle of the 13th century Venetian bankers began to trade in government
securities. In 1351 the Venetian Government outlawed spreading rumors intended to
lower the price of government funds. There were people in Pisa. Verona, Genoa and
Florence who also began trading in government securities during the 14th century. This
was only possible because these were independent city states not ruled by a duke but a
council of influential citizens. The Dutch later started joint stock companies, which let
shareholders invest in business ventures and get a share of their profits or losses. In 1602,
the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange.
It was the first company to issue stocks and bonds.

Other types of exchange

       In the 19th century, exchanges were opened to trade forward contracts on
commodities. Exchange traded forward contracts are called futures contracts. These
commodity exchanges later started offering future contracts on other products on other
products. Such as interest rates and shares, as well as options Contracts. They are now
generally known as futures exchanges.

       This is a list of stock exchanges. Those futures exchanges that also offer trading in
securities besides trading in futures contracts are listed both here and the List of futures


1. North America
2. Europe
3. Asia
4. South America
5. Oceania
6. Africa


1. Archipelago Exchange, merged with NYSE
2. Arizona Stock Exchange, closed down
3. American Stock Exchange (AMEX)
4. Boston Stock Exchange
5. Chicago Stock Exchange
6. Hedge Steel
8. National Stock Exchange
9. New York Stuck Exchange
10. Pacific Exchange (PCX)
11. Philadelphia Stock Exchange (PHLX)
1. Ahmedabad Stock Exchange
2. Bangalore Stock Exchange
3. Bhubaneswar Stock Exchange Association
4. Bombay Stock Exchange (B SE)
5. Calcutta Stock Exchange
6. Coimbatore Stock Exchange
7. Delhi Stock Exchange Association
8. Gauhati Stock Exchange
9. Hyderabad Stock Exchange
10. Inter-connected Stock Exchange of India
11. Jaipur Stock Exchange
12. Ludhiana Stock Exchange Association
13. Madhya Pradesh Stock Exchange

14. Mangalore Stock Exchange
15. Mumbai Stock Exchange
16. National Stock Exchange of India (NSE)
17. 0TC Exchange of India
18. Pune Stock Exchange
19. Saurashira -Kutch Stock Exchange


          Indian has a long history of securities markets, which is largely driven by the
Stock Exchange, Mumbai. An indigenous enterprise set up about 130 year ago amidst
the backdrop of British supremacy in international finance: BSE has been the hallmark of
India’s     initiative   into   high   street   finance   more   than   a   century   ago.
As cheque red and exciting its more than a century of existence has been, equally swift
and smooth was the transformation of BSE into one of the most modern stock exchanges
in the Asian region. It has several firsts to its credit even in the intensely competitive
environment. BSE was first to introduce concepts such as free float indexing, obtain ISO
certification for surveillance, establish huge infrastructure to enhance knowledge .know-
how, put in place a trading platform that works on a sub second response time - and
capacity of 4 million trades a day, export of trading platform technology to other stock
exchange in Middle east, report highest delivery ratio among the major exchanges, lowest
transaction costs, a record of lowest defaults, offer highest compensation for investor in
cases of valid and approved claims. The origin of the Bombay (Mumbai) Stock Exchange
dated back to 1875. it was organized under the name of “the Native Stock and Share
Brokers Association” as a voluntary and non- profit making association. It as recognized
on a permanent basis in 1957. This premier stock exchange is the oldest stock exchange
in Asia.


          This Index is built by India Services Product Ltd (IISL) and Credit Rating
Information Services of India Ltd (CRISIL). NSE-50 Index was introduced on April 22,
1996 to serve as an appropriate index for the new segment of futures and options. “Nifty”
means National Index for Fifty Stocks. The selection criteria are the market capitalization
and liquidity. The market capitalization of the companies should be Rs. 5 billion or more.

The company scrip should be traded for 85% of the trading days at an impact cost less
than 1.5%. The base period for the Nifty index is the closing prices on November
31st1995.The base period selected to commensurate the completion of one — year
operation of NSE in the stock market. The base value of index at 1000 with the base
capital of Rs.2.06 of trillion.

        The NSE Madcap Index or the Junior Nifty comprises 50 stocks that represents
21board industry groups and will provide proper representation of the madcap segment of
greater than Rs.200 crors and should have traded 85% of trading days at an impact cost of
less than 2.5%. The base period for the index is Nov 4, 1996. Which signifies two years
for completion of operations of the capital market segment of the operations? The base
value of the index has been set at 1000.

             COMPANY PROFILE


       Indiabulls is India’s leading Financial and Real Estate Company with a wide
presence throughout India. They ensure convenience and reliability in all their products
and services. Indiabulls has over 640 branches all over India. The customers of Indiabulls
are more than    4,50,000 which covers from a wide range of financial services and
products from securities, derivatives trading, depositary services, research & advisory
services, consumer secured & unsecured credit, loan against shares and mortgage &
housing finance. The company employs around 4000 Relationship managers who help the
clients to satisfy their customized financial goals. Indiabulls entered the Real Estate
business in the year 2005 with its group of companies. Large scale projects worth several
hundred million dollars are evaluated by them.

     Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE),
Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The market
capitalization of Indiabulls is around USD 2500 million (29thDecember, 2006).
Consolidated net worth of the group is around USD 700 million. Indiabulls and its group
companies have attracted USD 500 million of equity capital in Foreign Direct Investment
(FDI) since March 2000. Some of the large shareholders of Indiabulls are the largest
financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch,
Morgan Stanley and Farallon Capital.

Year 2000-01:
       One of the India’s first trading platforms was set up by Indiabulls Financial
Services Ltd. with the development of an in-house team.

Year 2001-03:
       The service offered by Indiabulls was increased to include Equity, Wholesale
Debt, Mutual fund, IPO Financing/Distribution and Equity Research.

Year 2003-04:
       In this particular year Indiabulls ventured into Distribution and Commodities
Trading business.

Year 2004-05:
   This was one of the most important years in the history of Indiabulls.
   In this year:
          Indiabulls came out with its initial public offer (IPO) in September 2004.
          Indiabulls started its Consumer Finance business.
          Indiabulls entered the Indian Real Estate market and became the first company
           to bring FDI in Indian Real Estate.
          Indiabulls won bids for landmark properties in Mumbai.

Year 2005-06:
       In this year the company acquired over 115 acres of land in Sonepat for residential
home site development. The world renowned investment banks like Merrill Lynch and
Goldman Sachs increased their shareholding in Indiabulls. It also became a market leader

in securities brokerage industry, with around 31% share in Online Trading. The world’s
largest hedge fund, Farallon Capital and its affiliates committed Rs. 2000 million for
Indiabulls subsidiaries Viz. Indiabulls Credit Services Ltd. and Indiabulls Housing
Finance Ltd. In the same year, the Steel Tycoon Mr. L N Mittal promoted LNM India
Internet venture Ltd. acquired 8.2% stake in Indiabulls Credit Services Ltd.

Year 2006-07:
       In this year, Indiabulls Financial Services Ltd. was included in the prestigious
Morgan Stanley Capital International Index (MSCI). Indiabulls Financial Services Ltd.
was benefited with the Farallon Capital agreeing to invest Rs. 6,440 million in it. The
company also received an “in principle approval” from Government of India for
development of multi product SEZ in the state of Maharashtra. Indiabulls Financial
Services Ltd acquired 100% of the equity share capital of Noble Realtors Pvt. Ltd. Noble
Realtors is a Company engaged in the business of construction and development of real
estate projects. Indiabulls Real Estate Business was demerged to become a separate entity
called Indiabulls Real Estate Ltd. The Board of Indiabulls Financial Services Ltd.,
Resolved to Amalgamate Indiabulls Credit Services Ltd and demerge Indiabulls
Securities Limited.

Year 2007-09:

       Indiabulls Power Limited was established in 2007 to capitalize on emerging
opportunities in the Indian power sector. It develops and intends to operate and maintain
power projects in India. Indiabulls is currently developing Five Thermal Power Projects
with an aggregate capacity of approximately 6600 MW. These projects include, Amravati
Phase-I (1320 MW), Amravati Phase-II (1320 MW), Nasik (1335 MW) in Maharashtra,
Bhaiyathan Thermal Power Project (1320 MW) & Chhattisgarh Power Project (1320
MW) in the State of Chhattisgarh. In addition to the above Indiabulls is also developing
four medium size Hydro Power Projects in Arunachal Pradesh aggregating to 167 MW.
Indiabulls has also entered into MoUs with the Govt. of Madhya Pradesh and Jharkhand
for setting up of 2640 MW & 1320 MW Thermal Power Projects in each of these States


     Sameer Gehlaut            Chairman and CEO
     Gagan Banga               Executive Director
     Rajiv Rattan              CEO
     Shamsher Singh            Director
     Aishwarya Katoch          Director
     Karan Singh               Director
     Prem Prakash Mirdha       Director
     Saurabh K Mittal          Director
     Amit Jain                 Company Secretary

                            Chart 3:1

                                       Senior Vice President

                                        Regional Manager

                                         Branch Manager
                                       Senior Sales Manager

          Support System                                       Sales Function

   Back Office      Local Compliance
    Executive            Officer



                                    Chart: 3:2

                                  Indiabulls Securities
                                    Trading Products

       Cash Account                      Intraday Account            Margin Trading/
                                                                     Mantra Account

Indiabulls Securities provide three products for trading. They are
      Cash Account
      Intraday Account
      Mantra Account

CASH Account: It provides the client to buy 4 times of cash balance in his trading
INTRADAY Account: It provides the client to buy 8 times of his cash balance in the
trading account.
MANTRA Account: Also called as margin trading, is a special account to buy on
leverage for a longer duration


       Indiabulls Financial Services Ltd. was incorporated in the year 2005.The Auditors
of Indiabulls Financial Services Ltd. are Deloitte, Haskins & Sells. The main activity of
this company is in relation to securities and stock brokerage. It was also responsible for
setting up one of India’s first trading platforms.

The subsidiaries of Indiabulls Financial Services Ltd. include:
          Indiabulls Capital Services Ltd.
          Indiabulls Commodities Pvt. Ltd.
          Indiabulls Credit Services Ltd.
          Indiabulls Finance Co. Pvt. Ltd
          Indiabulls Housing Finance Ltd.
          Indiabulls Insurance Advisors Pvt. Ltd.
          Indiabulls Resources Ltd.
          Indiabulls Securities Ltd.


          ABN-Amro Bank
          Andhra Bank
          Bank of Maharashtra
          Bank of Rajasthan Ltd.
          Canara Bank
          Centurion Bank of Punjab Ltd.
          Citibank
          Corporation Bank
          Dena Bank
          HDFC Bank Ltd
          HSBC Ltd.
          ICICI Bank Ltd.
          IDBI Ltd
          Industrial Bank Ltd.
          ING Vysya Bank Ltd

   Karnataka Bank
   LKB Ltd
   Punjab National Bank
   Standard Chartered Bank
   State Bank Of India
   Syndicate Bank
   Union Bank Of India
   UTI Bank Ltd.
   Yes Bank Ltd


Q. Do you know what Demat account is and do you have Demat

                           Table- 4:1

Option                  No. Of
Yes                     98

No                      00
       Chart- 4:1
Yes but don’t know 02
about that account

         No.of result



                                 Yes but Don't know
                                 about that account

Interpretation: The people who have Demat account and who know about that
account were 98%, and who have demat account and don’t know about that account were
2%. It clearly indicates that people who are investing in the capital market should have a
demat account and they know about that account i.e.98%.

Q. Education qualification of investors who investing in capital market.
                                      Table- 4:2

                         Education                  No. of result
                         Under graduate            12
                         Graduate                  20
                         Post graduate             46
                         Professional              22
                         Total                     100

                             Chart- 4:2

Interpretation: Education qualification of investors who investing in capital market is
Undergraduate 12%, Graduate 20%, Post graduate 46%, Professional 22%. It means
Maximum people have knowledge about capital market i.e. 66%.

Q. Income range of investors who investing in capital market.
                                     Table- 4:3
                      Income range             No. of Result
                      below 1,50,000           2
                      1,50,000-3,00,000        18
                      3,00,000-5,00,000        28
                      above 5,00,000           52
                      Total                    100

                                     Chart- 4:3

                                       No.of result

                                                                       Below 150000
                                                                       500000 above

Interpretation: Income range of the investors who investing in the capital market are
below 1,50,000 is 2%, 1,50,000-3,00,000 is 18%, 3,00,000-5,00,000 is28%, and above
5,00,000 is 52%. It clearly shows that investors who investing their income in capital
market are having morethan 5,00,000 income range.

Q. What kind of risk do you perceive while investing in the stock
                                     Table- 4:4

                     Risk in stock market              result
                     Uncertainty of returns            38
                     Slump in stock market             44
                     Fear of windup of company         12
                     Others                            6
                     Total                             100

                                     Chart- 4:4

                                        No.of result

                                                                Uncertainity of returns

                                                                slump in stock market

                                                                Fear of windup of

Interpretation: The risk in stock market that customer perceive are Uncertainty of
returns 38%, Slump in stock market 44%, Fear of windup of company 12%, others 6%. It
clearly indicates that more customers perceive the risk slump in the stock market i.e.44%.

Q. Why people do not invest in capital market?

                                   Table- 4:5

              Reasons                                 result
              Lack of knowledge & understanding       54
              Increase speculation                    4
              Risky & highly leveraged                34
              Counter party risk                      8
              Total                                   100

                                     Chart- 4:5

Interpretation: The reasons for people not investing in the capital market
are lack of knowledge 54%, increase speculation 4%, risky &highly leveraged
34%, counter party risk 8%. It clearly indicaties people does not have
knowledge and understanding in capital market i.e. 17%.

Q. What is the purpose of investing in capital market?
                                    Table- 4:6

                                                           No.        of
            Purpose of investment                          Result
            Hedge their fund                               54
            Risk control                                   18
            More stable                                    2
            Direct investment without buying & holding
            assets                                         26
            Total                                          100

                               Chart- 4:6

                                      No.of result

                                                                    Hedge their funds

                                                                    Risk control

                                                                    More stable

                                                                    Direct investment
                                                                    without buying &
                                                                    holding assets

Interpretation: The purpose of investments of people are to hedge their finds are54%,
risk comtrol is 18%, More stable is 2%, Direct investment with out buying and holding
assets is 26%. It clearly shows the purpose of investing in the capital market for the
investors to hedge their fund to maximum extent i.e., 54%

Q. Who participate in capital market as?
                                     Table- 4:7

                                                            No.       of
             Participation as                               Result
             investor                                       46
             Speculator                                     4
             Broker/Dealer                                  16
             Hedger                                         34
             Total                                          100

                                    Chart- 4:7

Interpretation: Capital market participants are investor 46%, speculator 4%,
broker/dealer 16%, hedger 34% It shows to the maximum people i.e., investors participate
their money in capital market is 46%.

Q. From where you prefer to take advice before investing in capital
                                    Table- 4:8

                                                             No.         of
             Advice From                                     Result
             Brokerage houses                                30
             Research analyst                                14
             Websites                                        4
             News Networks                                   46
             Others                                          6
             Total                                           100

                                    Chart- 4:8

                                        No.of result

                                                                      Brokerage houses
                                                                      Research analyst
                                                                      News Networks

Interpretation: The customer prefer to take advice before going to invest in the
capital market are brokerage houses 30%, research analyst 14%, websites 4%, news
networks 46%, Others 6%. Mostly from investing point of view, they take advise from
news networks i.e.,       No.of times                          23% before investing
in capital market.
                          Regularly                   44

                          More than 50 times          30

              Q.          11-50 times                 18       How     often    do
you     invest       in   1-10 times in aTable- 4:9
                                          year        8        capital market?

                                   Chart- 4:9

                                       No.of result

                                                               More than 50 times
                                                               11-50 times
                                                               1-10 times

Interpretation: The customers often invests in the capital market are regularly44%,
more than 50 times 30%, 11-50 times 18%, 1-10 times in a year 8%. From above
paragraph, it shows that investors would like to invest in regularly mode in capital

Q. What was the result of your investment in India bulls?

                                   Table- 4:10

                       Result of investment           result
                       Great results                  8
                       Moderate but acceptable        48
                       Disappointed                   44

                       Total                          100

                               Chart- 4:10

Interpretation: The result of people’s investment in the capital market via India bulls
are great results 8%, moderate but acceptable 48%, disappointed 44%. It indicates result
of the investment in capital market via India bulls is moderate but acceptable to maximum
extent i.e., 24%.

                  & conclusion


   Brokers are not aware of Market mood

   Investors are buying shares of the company that they are not frequently trading in
     the capital market.

   Investors are not showing interest in the fast growing shares.

   Investors are scared of PIE fall of the company’s shares that they owned.

   Lack of Patience of the investor as well as Brokers.


1. Before buying the share it is essential that investor must know the position of portfolio
(all ‘A’ group shares has high liquidity). The source of information about liquidity can get
from the brokers

2. Avoid buying shares of the company with an equity capital less than Rs.1 cr.

3. Avoid buying the share 9f the company with the number of share holders less than

4. Avoid buying shares of the company which are traded infrequently.

5. Avoid buying shares of the company which are not traded on your stock exchange.

6. Investor must show interest in steady and fast growth shares only.

7. Avoid buying Turn rounds (making loss continuously), Cyclical (cycles of good and
bad performance), Dog shares (very inactive or passive).

8. Avoid companies with low PIE ratio relative to the market as always.

9. If the investor is confident of EPS moving up and expects PIE to increase as well stick
to the shares and be patients.

10. Another side of the analysis is that investor must also know the factors.

      Is the market in a “good mood” or not at that time?
      How will the market feel about the share?

       Let me end by bringing in the beginning. It is globally recognized that the growth
of the economy depends to a large extent globally on the growth of the Securities Market
as it provides the vehicle for raising resources and managing risks. Today, the wheels of
the economy cannot move without the Securities Market. Indeed, it is a modern marvel
for accomplishing astonishing numbers in terms of economic growth.

       Further, today’s Securities Markets are absolutely different from what they were
10 years ago or will be in the next 10 years. They would remain in transition. There
would be ups and downs. Many would succeed and many would vanish along the
transformation journey. This would always be the reconfirmation of the point that
businesses are no more businesses; they have become battles of competency.

        To conclude, I would say that the Securities Market opportunity zone is
contracting somewhere and expanding somewhere. This may appear paradoxical. It must
be understood that leadership demands a brilliant focus on emerging opportunities,
competence building, strategies for the leadership position in the opportunity zones and
principles-centered business practices. Therefore, we need to create a culture, which
embraces change and moves ahead with an objective to lead. Let us compete for the
future global opportunities.


1. Khan.M.Y, 2006, Financial Services, 3rd Edition, Tata Mcgraw Hill, New delhi-8.
2. Rejda.G.E, 2002, Principles of Risk Management & Insurance, 7th Edition, Pearson
3. Gordon & Natarajan, 2006, Financial Market and Services, 3rd Edition, Himalaya
   Publishing House, Mumbai.
4. Learning cycle in capital market in India By R.khannan.

          www.nseindia.com.

   www.bseindia.com.
   www.capitalmarketinIndia.com.
   www.wikipedia.org/wiki/capitalmarkets.
   www.sebi.gov.in
   www.rbi.org.in


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