A PROJECT REPORT ON

CAPITAL MARKET
(EQUITY AS AN INVESTMENT)

SUBMITTED TO PUNJAB TECHNICAL UNIVERSITY JALANDHAR

In partial fulfillment of the requirement for the award of degree of Master of Business Administration (MBA)

Submitted by: Kushagra Sharma Univ. Roll No. 609240425

Project Guide: Ms. Parul Gupta

SESSION (2006-2009)

GNA-INSTITUTE OF MANAGEMENT AND TECHNOLOGY PHAGWARA

CERTIFICATE

This is to certify that the project on CAPITAL MARKET(EQUITY AS AN INVESTMENT)carried out by kushagra Sharma under my guidance is an original research work and has not been published and conducted before. It is based on primary data and due care has been taken to ensure that all the sources of secondary data and references, either from published or unpublished literature or from internet have been duly acknowledged.

Ms. Parul Gupta GNA-INSTITUTE OF MANAGEMENT AND TECHNOLOGY. PHAGWARA

PREFACE
MBA is a stepping-stone to the management carrier and to develop good manager is necessary that the theoretical must be supplement with exposure to the real environment. Research work in management is extremely important for a real life business issue. For any management student who is striving to perform out standingly, it is of paramount importance that, apart from gaining theoretical knowledge, he/she should acquire some practical know-how. Theoretical knowledge just provides the base and its not sufficient to produce a good manager thats why the practical knowledge is needed Survey report deals especially with providing an opportunity to management students to have some exposure in the real business world. Thus practical experience acts as a Aq3supplement to the classroom studies. It offers an exposure to practical management in various organizations. It provides a treasure of experience to the student. Therefore the research project is an essential requirement for the students of MBA. Final project is an integral part of the curriculum of M.B.A. it gives one a complete exposure into the cooperate world. The person learns to understand the business from a realistic angle. Final project is also a kind of rehearsal of the actual an individual actually comes to know weather he is fit in the life which he has opted. During the period on endeavor is made to learn different skills and business practice. A set routine has to be follower the discipline way So keeping all these factors in mind and in accordance with requirements of MBA course the research project on the topic CAPITAL MARKET(EQUITY AS AN INVESTMENT) IN PHAGWARA &JALANDHAR AREA is done.

ACKNOWLEDGEM ENT

Acknowledging any one in mere words is a very difficult task. It gives me a great pleasure in acknowledging the Invaluable assistance extended to me by various formalities in the Successful Completion of their project report at CAPITAL MARKET(EQUITY AS AN INVESTMENT)

I would like to thank MS. Parul Gupta, the Lecturer of GNA-INSTITUTE OF MANAGEMENT AND TECHNOLOGY, who shared her valuable Time and guide me throughout the project.

But for the strength of their blessing and warmth of their love. I would also like to thank my family members and friends who were intimated the work possible for completion of the project

kushagra Sharma

INDEX
Chapter No. 1. Topic CERTIFICATE PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMARY INTRODUCTION

2.

Indian Capital Market

Introduction Intermediaries In Capital Market Investors In Capital Market Growth Of Capital Market In India Scenario Of Indian Capital Market Role Of Capital Market In India Classification of Indian Capital Market

3.

Equity market
Introduction Developments in Equity market Twin Towers of Equity Market

4.

Equity as an investment
Introduction Investing principles Analysis(Fundamental,Economical.Technical)

5.

Primary market
Introduction Marketing methods Intermediaries

6.

Secondary market
Introduction Reasons for transacting in Secondary market Functions Listing

Trading
Settlement Intermediaries

7. OBJECTIVES REVIEW OF LITERATURE RESEARCH METHODOLOGY DATA PRESENTATION ANALYSIS AND INTERPRETATION FINDINGS SUGGESTIONS LIMITATIONS 8. 9.. BIBLIOGRAPHY ANNEXURE

EXECUTIVE SUMMARY
The capital market in India-debt, equity, mutual funds, derivatives, commodities etc. has changed during the decade of reforms of the nineties and is continuing to change. Although many improvements have been effected, the outcome of these actions has not been as far-reaching as required. The major thrust of financial reforms commenced in 1992 coincided with the attempts of economic liberalization. The Internet also opened up a new channel of distribution of primary market issues by online trading and is likely to play an important role in the future, providing a larger reach and catering to a larger base of investors. Both from the regulatory and participatory standpoints, the changes being brought into the Indian equity market would bring a smile even on the face of a grave critique. Initiatives like the dematerialization of shares, introduction of rolling settlement; online trading and introduction of derivatives are few of the path breaking steps, which have presented the Indian markets on par with its global counterparts. These steps have assisted the market in two ways. First, it streamlined the capital market operations in a significant manner instilling the much-desired confidence in the minds of the retail segment of the bazaar. Secondly, a very strong message was transmitted to the investor across the continents, inviting them to cultivate the virgin land and share the fruits. The investor should bear in mind that while he takes an investment decision he should have some idea of the company's break-even point and the company's position in the stock exchange. It is advised to invest in growth companies and income companies and to take shares of only those companies, which are listed, on the stock exchange. Various sources of financial information are available in the country. He should attempt to make some analysis of the companies in which

he is investing every time that such information is published in these journals and financial magazines.

REVIEW OF LITERATURE

The random walk hypothesis in the emerging Indian stock market

Year:
Nov/Dec 2002

Abstract:
Outlines previous research on the characteristics and dynamics of stock returns and the special features of the Bombay Stock Exchange (India); and presents a study of 1990-1998 daily stock returns for actively traded Indian shares using a portfolio of 100 shares and 38 individual ones. Explains the methodology and presents the results in detail. Finds that the returns do not conform with a random walk but display significant non-linear dependence (mostly in the form of ARCH type conditional heteroskedasticity) which does not seem to be due to nonstationarity of the underlying economic variables. Shows that return volatility is time varying and persistent but does not explain expected returns. Briefly considers consistency with other research and calls for further research.

Risk management in Indian venture capital and private equity firms: a comparative study
Abstract: Purpose - To compare the risk management practices of venture capital and private equity firms in the UK and India to identify difference due to country of origin.

Design/methodology/approach - Describes the venture capital industry in India, only nodding at the copious previous such research on the UK scene, and from a review of the literature on risk management strategies in the industry, advances five hypotheses regarding the differences in use of prescreening, valuation methods, standard adjustments, managing risk in existing portfolio firms and managing portfolio risk between the two countries; tests these through a questionnaire study of 53 venture capital firms in the UK and India. Findings - Tabulates the results of the survey relating to each hypothesis and indicates that risk management techniques and style do differ between the two countries, and that in general they are less well-developed in India. Research limitations/implications - Sees a possible lack of sound investment and portfolio theory for the industry behind the inconsistent policies identified in both countries, and recommends further research in this area; comments on the limitations of the small size of the sample. Originality/value - Highlights the need for more work in this area, given the importance of venture capital and private equity to smaller companies, which are a vital element of the economy particularly in emerging markets.

INTRODUCTION OF INDIAN CAPITAL MARKET

The capital market deals with capital. Capital Market is generally understood as a market for long term funds and investments in long term instruments available in this market. However, now this market also includes short-term funds. Capital markets mean the market for all the financial instruments, short term and long term as so commercial industrial and government paper. The capital market is a market where borrowing and lending of long term funds takes place. Capital market deals in both, debt and equity. In these markets productive capital is raised and made available to the corporate. The governments both central and state raise money in the capital market through the issue of government securities. Capital market refers to all the institutes and mechanisms of raising medium and long-term funds, through various instruments available like shares, debentures, bonds etc. Thus the capital market plays a very important role in promoting economic growth through the mobilization of long-term savings and the savings get invested in the economy for productive purpose. The capital market in India is a well integrated structure and its components include stock exchanges, developed banks investment trusts, insurance corporations and provident fund organization. It caters to the varied needs for capital of agriculture, industrial and trading sectors of the economy. There are two important operations carried on in these markets. The

raising the new capital and Trading in the securities already issued by the companies. With the pace of economic reforms followed in India, the importance of capital markets has grown in the last ten years. Corporate both in the private sector as well as in the public sector raise thousands of crores of rupees in these markets. The governments, through Reserve Bank of India, as well as financial institutes also raise a lot of money from these markets. The capital market serves a very useful purpose by pooling the savings. The capital markets encourage capital formation in the country. The capital markets mobilize savings of the households and of the industrial concerns. Such savings are then invested for productive purposes. Capital markets also facilitate the growth of the industrial sector, as well as the other sectors of the economy. The capital markets provide funds for the projects in backward areas. Thus, Capital markets generate employment in the country. They also facilitate the development of stock markets. Due to capital markets, the public has alternative sources of investment. The public can invest not only in bank deposits, but also in shares and debentures issued by public companies. The commercial banks and FIs provide timely financial assistance to viable sick units to overcome their industrial sickness. The banks and FIs may also write off a part of loan, or they re-schedule the loan, so as to offer payment flexibility to the weak units, which in turn helps the weak units to overcome financial crisis.

INTERMEDIARIES IN CAPITAL MARKET

Capital market requires many intermediaries who are responsible to transfer funds from those who save to those who require these funds for investments. The efficiency of the markets is dependent on the specialization attained by these intermediaries. Some of them are as follows: 1. Stock Exchanges. 2. Banks. 3. Investment Trusts and Companies. 4. Specialized Financial Institutions or Development Banks. 5. Mutual Funds. 6. Non-Banking Financial Institutions. 7. International Financial Investors and Institutions.

INVESTORS IN CAPITAL MARKET

The supply in this market comes from savings from different sectors of the economy. These savings accrue from the following sources: 1. Individuals. 2. Corporate. 3. Governments. 4. Foreign countries. 5. Banks. 6. Provident Funds. 7. Financial Institutions. All these entities contribute to savings in the economy part of these savings naturally flow in the capital markets. Individuals invest in these markets directly by investing in shares or debentures of companies through bond issues of public sector units or through mutual funds. Corporate who have more savings than their requirement for funds also are participants in this market.

GROWTH OF CAPITAL MARKET IN INDIA

There has been considerable growth in the capital markets in India. The following are the factors responsible for the growth of capital markets in India. 1. Growth of Stock Exchanges in India 2. Growth of Financial Institutions 3. Growth of Mutual Funds 4. Growth of Merchant Banking in India 5. Growth of Multinationals Growing Public Confidence 6. Growth of Entrepreneurs 7. Development of Venture Capital Funds 8. Development of Credit Rating Agencies 9. Setting up of SEBI 10. Setting up of National Securities Clearing Corporation 11. Setting up of Corporate Governance 12. Setting up of Clearing Corporation of India Limited 13. General Awareness

SCENARIO OF INDIAN CAPITAL MARKET

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meagre and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850.The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share, which had touched Rs2850/-, could only be sold at Rs.87/-). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.

In the era of globalization and liberalization, the capital market assumes a greater importance. The smooth functioning of the capital market depends on the regulators, participants and investors. The past decade has been a golden age for capital markets in India. It is now a far more important source of finance than traditional financial intermediaries for corporate sector. It is poised to dominate the future of corporate finance in India. Over the past several years the capital market has witnessed a sea change. The market has become more in terms of infrastructure, adoption of best international practices and introduction of competition. Reforms in the capital market, particularly the establishment empowerment of SEBI, market determined allocation of resources, screen based nation-trading, dematerialization and electronic transfer of securities, rolling settlement and ban on deferral products, sophisticated risk management and derivatives trading, have greatly improved the regulatory framework and efficiency of trading and settlement. Indian market is now comparable to many developed markets in terms of a number of quantitative parameters. The process of reforms has led to a pace of growth of markets almost unparalleled in the history of any country. Capital market in India has grown exponentially as measured in terms of amounts raised from the market, number of stock exchanges and intermediaries; the number of listed stocks, market capitalization, trading volumes and turnover on stock exchanges and investors population. Along with this, the profiles of the investors, issuers and intermediaries have changed significantly. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction cost and significant improvements in efficiency, transparency and safety. Indian market is now comparable to many developed markets. There are few countries, which have higher turnover ratio than India, market capitalization as percentage of GNP compares favorably even with advanced countries and is much better than emerging market.

ROLE OF CAPITAL MARKET IN INDIA

1. CAPITAL FORMATION

2. 3. 4. 5. 6. 7. 8.

ECONOMIC GROWTH DEVELOPMENT OF BACKWARD AREAS GENERATES EMPLOYMENT LONG TERM CAPITAL TO INDUSTRIAL SECTOR GENERATION OF FOREIGN CAPITAL DEVELOPING ROLE OF FINANCIAL INSTITUTIONS INVESTMENT OPPORTUNITIES

CLASSIFICATION OF INDIAN CAPITAL MARKET

DEBT MARKET

COMMODITIES

EQUITY MARKET

INDIAN CAPITAL MARKET

DERIVATIVES

MUTUAL FUNDS

DEBT MARKET

The debt market is one of the most critical components in the financial system of any economy and act as the fulcrum of a modern financial system. The debt market in most developed countries is many times bigger than the other financial markets including the equity market. The debt markets in advanced countries are significantly larger and deeper than equity markets. But in India, the trend is just the opposite. The development of debt market in India has not been as remarkable as in the equity market. However, it has undergone considerable changes in the last few years. The debt market in India can be divided into two categories - Government securities market consisting of Central Government and State Government securities; and Bond market consisting of FI bonds, PSU bonds and corporate bonds/debentures. The government securities segment is the most dominant category in the debt market. The participants in the debt market are a small number of large players, which has resulted in the debt market evolving into a wholesale market. Most primary debt issues are privately placed or auctioned to the participants while secondary market dealings are negotiated on telephone. The debt market has become more diversified with the entry of new participants. The major participants in the debt market are as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. Central And State Government Primary Dealers Public Sector Undertakings (PSUs) Corporate Banks Mutual Funds(MF) Foreign Institutional Investors (FIIs) Provident Funds (PFs) Charitable Institutions And Trusts

EQUITY MARKET In financial markets, stock is the capital raised by a corporation through the issuance and distribution of shares. A person or organization which holds shares of stocks is called a shareholder. The aggregate value of a corporation's issued shares is its market capitalization. When one buys a share of a company he becomes a shareholder in that company. Shares are also known as Equities. Equities have the potential to increase in value over time. It also provides the portfolio with the growth necessary to reach the long-term investment goals. Research studies have proved that the equities have outperformed than most other forms of investments in the long term. Equities are considered the most challenging and the rewarding, when compared to other investment options. Research studies have proved that investments in some shares with a longer tenure of investment have yielded far superior returns than any other investment. However, this does not mean all equity investments would guarantee similar high returns. Equities are high-risk investments. One needs to study them carefully before investing. Since 1990 till date, Indian stock market has returned about 17% to investors on an average in terms of increase in share prices or capital appreciation annually. Besides that on average stocks have paid 1.5 % dividend annually. Dividend is a percentage of the face value of a share that a company returns to its shareholders from its annual profits. Compared to most other forms of investments, investing in equity shares offers the highest rate of return, if invested over a longer duration.

DERIVATIVES

Derivatives are one of the most complex instruments. The word derivative comes from the word to derive. It indicates that it has no independent value. A derivative is a contract whose value is derived from the value of another asset, known as the underlying asset, which could be a share, a stock market index, an interest rate, a commodity, or a currency. When the price of the underlying changes, the value of the derivative also changes. Without an underlying asset, derivatives do not have any meaning. For example, the value of a gold futures contract derives from the value of the underlying asset i.e., gold. The prices in the derivatives market are driven by the spot or cash market price of the underlying asset, which is gold in this example. DEFINITION OF DERIVATIVES : Derivative is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. According to Securities Contracts (Regulation) Act, 1956 {SC(R)A}, derivatives is A security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security. The main types of derivatives:1. 2. 3. 4.

futures, forwards options swaps

MUTUAL FUNDS

The mutual fund industry in India has come into existence in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and RBI. Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. MF seems to be the most suitable vehicle of investment for the common people as it offers opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. There are number of schemes of Mutual fund and all of them have different character and objective. It is the skill of the investor to keep in view the objective and then take decision where to invest. For e.g. in the wake of boom in the software sector, the Indian Mutual fund launched various sector specific schemes that entailed investment only in software stocks for that period. 1. 2. 3. 4. 5. 6. 7. 8. 9. Debt-Oriented Schemes Equity-Oriented Schemes Open-Ended Vs Close-Ended Schemes Pure Growth Schemes Pure Income Schemes Balanced Schemes Tax Saving Scheme Sector Funds Money Market Mutual Funds

COMMODITIES

The commodities trade in the 18th and 19th centuries was largely influenced by the shifts in macro economic patterns, the changes in government regulations, the advancement in technology, and other social and political transformations around the world. The 19th century has seen the establishment of various commodity exchanges, which paved the way for effective transportation, financing and warehousing facilities in this arena. In a new era of trading environment, commodities exchanges offer innumerable economic benefits by facilitating efficient price discovery mechanisms and competent risk transfer systems. Commodity exchange is an association, or a company or any other body corporate organizing futures trading in commodities. Earlier, all the sellers and buyers of a commodity used to come to a common market place for the trade. Buyer could judge the amount of produce that year while the seller could judge the amount of demand of the commodity. Thus they could dictate their terms and hence the counter party was left with no choice. Thus, in order to hedge from this unfavorable price movement, need of the commodity exchange was felt. The National Commodity Exchanges have been recognized by the Central Government for organizing trading in all permissible commodities which include precious (gold & silver) and non-ferrous metals; cereals and pulses; ginned and unginned cotton; oilseeds, oils and oil-cakes; raw jute and jute goods; sugar and gur; potatoes and onions; coffee and tea; rubber and spices, etc. The MCX, NCDEX and NMCE are large commodity exchanges in India and MCX is the biggest among them.

EQUITY MARKET

The first company to issue shares of stock was the Dutch East India Company, in 1602. The innovation of joint ownership made a great deal of Europe's economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could only be undertaken by governments or by very wealthy individuals or families. Equity markets, the world over, grew at a great speed in the decade of the nineties. After the bear markets of the late eighties, the world markets saw one of the largest ever bull markets of more than ten years. The opening up of Indian economy in the 1990's led to a series of financial sector reforms, prominent being the capital market reforms. These reforms have led to the development of the Indian equity markets to the standards of the major global equity markets. All this started with the abolition of Controller of Capital Issues and subsequent free pricing of shares.

The introduction of dematerialization of shares, leading to faster and cheaper transactions and introduction of derivative products and compulsory rolling settlement has followed subsequently. Despite a series of stock market scams and crises beginning from 1992 Harshad Mehta's scam to the Ketan Parekh's 2001 scam, the Indian equity markets have transformed themselves from a broker dominated market to a mass market. The introduction of online trading has given a muchneeded impetus to the Indian equity markets. However, over the years, reforms in the equity markets have brought the country on par with many developed markets on several counts. Today, India boasts of a variety of products, including stock futures, an instrument launched only by select markets.

DEVELOPMENTS IN EQUITY MARKET

The Government of India has been trying to improve market efficiency, enhance transparency and bring the Indian Equity Market up to international standards. Many reform measures have been initiated in the 90s. The principal ones are the formation of Securities Exchange Board of India (SEBI), repeal of the Capital Issues (Control) Act, 1947, introduction of screen-based trading, shortening of trading cycle, demutualization of stock exchanges, establishment of depositories disappearance of physical share certificates and better risk management systems in stock exchanges. The formation of Sebi was the first attempt towards integrated regulation of the securities market. Sebi regulates all market intermediaries and has the powers to impose monetary penalties for misconduct of any intermediary. One of the major stumbling blocks in fair pricing of capital issues has been the Capital Issues (Control) Act, 1947. The issuers were denied the opportunity to economically raise money from the capital market. This is now a matter of the past thanks to the repeal of the Act itself. Sebi has also issued Disclosure and Investor Protection (DIP) guidelines to ensure fair prices for the investors, though however, many issuers in the 90s could unfairly price their capital issues at the cost of the poor common investors.

The introduction of Screen Based Trading Systems (SBTS) by NSE is a major development in the capital market. This made the markets more efficient. The geographical barriers to trade were dismantled resulting in increased trading volumes. This was possible due to the great advancements in the area of information technology. SBTS electronically matches orders cutting down time, cost and errors, and minimizing the chances of fraud. Very long settlement cycle was another major hindrance in effecting deliveries in the equity market. Often the securities were delivered after 30 days or more due to weekly/fortnightly settlements and carry forward transactions. Sebi has enforced the discipline to compulsorily settle trades in T+3 days since April 2002. This is slated to reduce to T+2 days from April 2003. All scripts are now under rolling settlement since December 2001. The Equity Market is incomplete without products to manage risks in portfolio values. At long last, derivatives trading appeared on Indian exchanges in June 2000. While the product range in derivatives is still limited (futures and options on stocks and stock indices), it is certainly a major step forward in broadening the financial markets. NSE was established as a demutualized structure separating the roles of ownership, management and trading to eliminate any conflict of interest among the stakeholders to improve market efficiency and to focus on investor interest. Another notable development in the Indian equity market has been the introduction of depositories to dematerialize the share certificates. This avoids physical movement of certificates, bad deliveries and quicker transfer of ownership of shares. Presently all actively traded shares are held, traded and settled in demat form. The setting up of National Securities Clearing Corporation Ltd., (NSCCL) in April 1996 has been a major development in managing counterparty risks in the equity market.. While most of the above measures have helped in reinforcing confidence in the Indian equity market by providing more transparent and efficient buying, selling and transfer of shares.

TWIN TOWERS OF EQUITY MARKET

In India the main exchanges are the BSE and the NSE, which contribute to more than 90% of the trade in the capital market. These two exchanges are the movers and shakers of the equity market in India.

NSE-NATIONAL STOCK EXCHANGE

NSE was setup in November 1992, started its trading operation effectively from June 30, 1994. Only the debt market segment of the NSE was put into operation initially. The capital market segment of the NSE commenced its operation on November 3, 1994. It provides facility for trading of equity instruments, warrants, debentures, preference shares etc. The total turn over of capital market segment of NSE was higher at RS.2,94,504crores/- as compared with RS.1,24,284crores/- of the Mumbai Stock Exchange in 1996-97. NSE has adopted fully automated screen based trading system, which allows trading members to trade from their offices through a communication network. The exchange has opened membership to a number of cities.

BSE-BOMBAY STOCK EXCHANGE

Bombay Stock Exchange Limited (BSE) which was founded in 1875 with six

brokers has now grown into a giant institution with over 874 registered BrokerMembers spread over 380 cities across the country. Today, BSE's Wide Area Network (WAN) connecting over 8000 BSE Online Trading (BOLT) System Trader Work Stations (TWS) is one of the largest of its kind in the country. With a view to provide efficient and integrated services to the investing public through the members and their associates in the operations pertaining to the Exchange, Bombay Stock Exchange Limited (BSE) has set up a unique Member Services and Development to attend to the problems of the Broker-Members.

EQUITY AS AN INVESTMENT

Equity is: 1. Stock or any other security representing an ownership interest. 2. On the balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses), also referred to as "shareholder's equity". 3. In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage.

Equity is a term whose meaning depends very much on the context. In general, one can think of equity as ownership in any asset after all debts associated with that asset are paid off. For example, a car or house with no outstanding debt is considered the owner's equity since he or she can readily sell the items for cash. Stocks are equity because they represent ownership of a company, whereas bonds are classified as debt because they represent an obligation to pay and not ownership of assets.

The ability of equities to deliver over longer time frames and even outperform other investment avenues like gold, property and bonds is an often chronicled fact. However, over shorter time frames, equities also hold the potential to be a very risky asset class and expose the portfolio to high levels of volatility. This is the primary reason why any fund manager worth his salt always recommends a sufficiently long (at least 3 years) time frame for an equity-oriented investment. Similarly financial planners advocate pruning of the equity holdings with advancement in the investors age, when the investor is typically closer to retirement (shorter investment horizon) and has a lower risk appetite as well.

INVESTING PRINCIPLES
1. Invest for Real Returns 2. Keep an Open Mind 3. Never Follow the Crowd 4. Everything Changes 5. Avoid the Popular 6. Learn from your Mistakes 7. Buy During Times of Pessimism 8. Hunt for Value and Bargains 9. Search Worldwide 10. No-one Knows Everything If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce a superior performance unless you do something different from the majority. To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude and pays the greatest reward. Bear markets have always been temporary. And so have bull markets. Share prices usually turn upward from one to twelve months before the bottom of the business cycle and vice versa. If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, may not return for many years.

FUNDAMENTAL ANALYSIS

The investor while buying stock has the primary purpose of gain. If he invests for a short period of time it is speculative but when he holds it for a fairly long period of time the anticipation is that he would receive some return on his investment. Fundamental analysis is a method of finding out the future price of a stock, which an investor wishes to buy. The method for forecasting the future behavior of investments and the rate of return on them is clearly through an analyze of the broad economic forces in which they operate. The kind of industry to which they belong and the analysis of the company's internal working through statements like income statement, balance sheet and statement of changes of income.

ECONOMIC ANALYSIS

Investors are concerned with those forces in the economy, which affect the performance of organizations in which they wish to participate, through purchase of stock. A study of the economic forces would give an idea about future corporate earnings and the payment of dividends and interest to investors. Some of the broad forces within which the factors of investment operate are:
1. POPULATION 2. RESEARCH AND TECHNOLOGICAL DEVELOPMENTS 3. CAPITAL FORMATION 4. NATURAL RESOURCES AND RAW MATERIALS

INDUSTRIAL ANALYSIS

The industry has been defined as homogeneous groups of people doing a similar kind of activity or similar work. In India, the broad classification of industry is made according to stock exchange list, which is published. This gives a distinct classification to industry to industry in different forms such as: (A)Engineering, (B) Banking and Insurance, (C) Textiles, (D)Cement, (E) Steel Mills and Alloys, (F) Chemicals and Pharmaceuticals, (G)Retail, (H)Sugar, (I) Information Technology, (J) Automobiles and Ancillary, (K)Telecommunications, (L) FMCG, (M) Miscellaneous.

COMPANY ANALYSIS

Company analysis is a study of the variables that influence the future of a firm both qualitatively and quantitatively. It is a method of assessing the competitive position of a firm earning and profitability, the efficiency with which it operates its financial position and its ful1l with respect to the earning of its shareholders. The fundamental nature of this analysis is that each share of a company has an intrinsic value, which is dependent on the company's financial performance, quality of management and record of its earnings and dividend. They believe that the market price of share in a period of time will move towards its intrinsic value. If the market price of a share is lower than the intrinsic value, as evaluated by the fundamental analysis, then the share is supposed to be undervalued and it should be purchased but if the current market price shows that it is more than intrinsic value then according to the theory the share should be sold. This basic approach is analyzed through the financial statements of an organization. The basic financial statements, which are required as tools of the fundamental analyst, are the income statement, the balance sheet, and the statement of changes in financial position. These statements are useful for investors, creditors as well as internal management of a firm and on the basis these statements the future course of action may be taken by the investors of the firm. While evaluating a company, its statement must be carefully judged to find out that they are: (a) (b) (c) Correct, Complete, Consistent and

(d)

Comparable
TECHNICAL ANALYSIS

Technical analysis is simply the study of prices as reflected on price charts. Technical analysis assumes that current prices should represent all known information about the markets. Prices not only reflect intrinsic facts, they also represent human emotion and the pervasive mass psychology and mood of the moment. Prices are, in the end, a function of supply and demand. However, on a moment to moment basis, human emotionsfear, greed, panic, hysteria, elation, etc. also dramatically effect prices. Markets may move based upon peoples expectations, not necessarily facts. A market "technician" attempts to disregard the emotional component of trading by making his decisions based upon chart formations, assuming that prices reflect both facts and emotion. Analysts use their technical research to decide whether the current market is a BULL MARKET or a BEAR MARKET. It can be done through :-

STOCK CHARTS
A stock chart is a simple two-axis (X-Y) plotted graph of price and time.. Individual data plots for charts can be made using the CLOSING price for each day. The plots are connected together in a single line, creating the graph. Also, a combination of the OPENING, CLOSING, HIGH and/or LOW prices for that market session can be used for the data plots. This second type of data is called a PRICE BAR.

TRENDS

The stock chart is used to identify the current trend. A trend reflects the average rate of change in a stock's price over time. Trends exist in all time frames and all markets. Trends can be classified in three ways: UP, DOWN or RANGEBOUND. In an uptrend, a stock rallies often with intermediate periods of consolidation or movement against the trend. In doing so, it draws a series of higher highs and higher lows on the stock chart. In an uptrend, there will be a POSITIVE rate of price change over time. In a downtrend, a stock declines often with intermediate periods of consolidation or movement against the trend. In doing

VOLUME

Volume measures the participation of the crowd. Stock charts display volume through individual HISTOGRAMS below the price pane. Often these will show green bars for up days and red bars for down days. Investors and traders can measure buying and selling interest by watching how many up or down days in a row occur and how their volume compares with days in which price moves in the opposite direction.

PATTERNS AND INDICATORS

How can one organize the endless stream of stock chart data into a logical format? Charts allow investors and traders to look at past and present price action in order to make reasonable predictions and wise choices. It is a highly visual medium. This one fact separates it from the colder world of value-based analysis. The stock chart activates both left-brain and right-brain functions of logic and creativity. So it's

no surprise that over the last century two forms of analysis have developed that focus along these lines of critical examination.

MOVING AVERAGES

The most popular technical indicator for studying stock charts is the MOVING AVERAGE.. . Moving averages LAG price. In other words, if price starts to move sharply upward or downward, it will take some time for the moving average to "catch up". Plotting moving averages in stock charts reveals how well current price is behaving as compared to the past.. When it is above, conditions are "bullish". When below, conditions are "bearish". Additionally, moving averages will slope upward or downward over time. This adds another visual dimension to a stock analysis.

SUPPORT AND RESISTANCE

The

concept

of

SUPPORT

AND

RESISTANCE is essential to understanding and interpreting stock charts. Resistance defines that level where sellers are too strong to allow price to rise further. Support and resistance play different roles in uptrends and downtrends. In an uptrend, support is where a pullback from a rally should end. In a

downtrend, resistance is where a pullback from a decline should end. Support and resistance are created because price has memory. When price pushes above resistance, it becomes a new support level. When price falls below support, that level becomes resistance.

PRIMARY MARKET
The primary is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Features Of Primary Market are:1. This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM). 2. In a primary issue, the securities are issued by the company directly to investors. 3. The company receives the money and issue new security certificates to the investors. 4. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. 5. The primary market performs the crucial function of facilitating capital formation in the economy. 6. The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new

issue market may be raising capital for converting private capital into public capital; this is known as going public.

METHODS OF MARKETING IN PRIMARY MARKET

1. PUBLIC ISSUE 2. PRIVATE PLACEMENT 3. OFFER FOR SALE 4. BOUGHT OUT DEALS 5. INITIAL PUBLIC OFFER
Check Promoter Standing

Study Company Performance

Understand Future Prospects

Look At The Price

6.

RIGHT ISSUE

7. BONUS ISSUE 8. BOOK-BUILDING

INTERMEDIARIES IN PRIMARY MARKET

1. MERCHANT BANKERS 2. UNDERWRITERS 3. BANKERS TO THE ISSUE 4. REGISTRARS AND SHARES TRANSFER AGENTS

5. BROKERS TO AN ISSUE

SECONDARY MARKET
A market, which deals in securities that have been already issued by companies, is called as secondary market. It is also known as stock market. It is the base upon which the primary market is depending. For the efficient growth of the primary market a sound secondary market is an essential requirement. The secondary market offers an important facility of transfer of securities activities of securities. Secondary market essentially comprises of stock exchanges, which provide platform for purchase and sale of securities by investors. In India, apart from the Regional Stock Exchanges established in different centers, there are exchanges like the National Stock Exchange (NSE), who provide nation wide trading facilities with terminals all over the country. The trading platform of stock exchanges is accessible only through brokers and trading of securities is confined only to stock exchanges. The activities of buying and selling of securities in a market are carried out through the mechanism of stock exchange. There are at present 24 Stock Exchanges in India, recognized by the government. The first organized stock exchange was established in India at Bombay in 1887. When the Securities Contracts (Regulation) Act was passed in 1956, only 7 stock exchanges were recognized. There are three important stock exchanges in Bombay namely the Bombay Stock Exchange, National Stock Exchange and over the Counter Exchange

of India. There has been a substantial growth of capital market in India during the last 25 years.

REASONS FOR TRANSITING IN SECONDARY MARKET

There are two main reasons why individuals transact in the secondary market: 1. Information motivated reasons 2. Liquidity motivated reasons

FUNCTIONS OF THE SECONDARY MARKET

1. To facilitate liquidity and marketability of the outstanding equity and debt instruments. 2. To contribute to economic growth through allocation of funds to the most efficient channel through the process of disinvestment to reinvestment. 3. To provide instant valuation of securities caused by changes in the internal environment (that is, company-wide and industry wide factors). Such valuation facilitates the measurement of the cost of capital and the rate of return of the economic entities at the micro level. 4. To ensure a measure of safety and fair dealing to protect investors interest. 5. To induce companies to improve performance since the market price at the stock exchanges reflects the performance and this market price is readily available to investors.

LISTING
Listing is a process involved in listing something with some one. It is a permission to quote shares and debentures officially on the trading floor of the stock exchange. The listed shares appear on the official list of securities for the purpose of trading security listing is a step that is required to register and to place on record the security of a company with the appropriate authority i.e. the recognized stock exchange. Securities are required to be listed under Section 9 of the Securities Contract (Regulation) Act, 1956. Its Characteristics Are:1. Agreement 2. Purpose 3. Investor protection 4. Restriction

TYPES OF LISTING 1. Initial Listing 2. Listing For Public Issue 3. Listing For Rights Issue 4. Listing Of Bonus Shares 5. Listing For Merger Or Amalgamation

DELISTING The securities listed can be de-listed from the Exchange as per the SEBI (Delisting of Securities) Guidelines, 2003 in the following manner:

 Voluntary de-listing of companies Compulsory de-listing of companies

TRADING

The act of buying and selling of securities on a stock exchange is known as Stock Exchange Trading. Jobbers and brokers are the two categories of dealers in the stock exchange. A jobber is a dealer in securities while a broker is an agent or seller of securities... they gets commission from his clients, that is fixed by the stock exchange. For a trading there is a need of

DEMAT
Demat is dematerialization on shares. Dematerialization is a process by which the shares, debentures etc in the physical form get converted into the electronic form and are stored in the computers by the depository. Demat helps in 1. Easy liquidity 2. Trading in demat segment benefits elimination of bad deliveries and all risks associated with physical certificate such as loss, theft, mutilation, forgery, etc 3. You can also expect a lower interest charge for loans taken against demat shares as compared to the interest for loan against physical shares. This could result in a saving of about 0.25% to 1.5%. 4. In case of transfer of electronic shares, you save 0.5% in stamp duty.

5. You also avoid the cost of courier/ notarization/ the need for further follow-up with your broker for shares returned for company objection

TRADING PROCEDURE

The following are the steps involved in the trading of securities at a stock exchange:

TYPES OF DEALINGS
1. Spot delivery contract 2. Ready delivery contract 3. Forward delivery contract 4. Margin trading

ONLINE TRADING

Online trading in shares and securities has already been started in India. It has been made possible due to

introduction of demat. ICICI Web Trade, HDFC Securities, Stock Holding Corporation of India and many other institutions have started the online trading system. The investors can carry out buying and selling of securities while sitting in the house or office. HOW TO TRADE ONLINE 1. Log on to the Broker's website. 2. Register yourself as a client. 3. Fill in the client broker agreement on stamp paper. 4. Log on the broker's site using secure user ID and password. 5. The market watch page shows real time data. 6. Trade shares directly by entering the symbol of securities. 7. The broker's server will check the limit on-line and the demat account for the number of shares execute the trade. 8. Usually the order is executive in about 20 seconds and you get the confirmation. 9. The broker will send one e-mail confirmation and printed contract by mail. 10. On the settlement day the demat and bank accounts will automatically get debited and credited.

INTERMEDARIES IN SECONDARY MARKET

1. 2. 3. 4. 5. 6. 7. 8. 9. Stock Broker Sub Brokers Custodian Jobber Taraniwala Odd Lot Dealer Arbitrageur Security Dealer Depositories

10. 11.

Portfolio Managers Stock Exchanges

.

OBJECTIVES

To understand the scenario of Equities in Indian Capital Market. To explore the functionality of Stock Exchanges. To know about the customer perception regarding investment in capital market. To gain the knowledge on Trading Aspects. To appreciate the role of Equities in India. To create enthusiasm among academicians by, offering them with some new areas of further research. To familiarize the reader of this project with various concepts Equity Market. To know the role of fundamental, technical and stock analysis.

 To apply the tools and techniques in my research in the form of charts and diagrams.

RESEARCH METHODOLOGY

The methodology of the entire research and survey work was defined at an early stage so that there was minimum wastage of energy material and money. In the process of the research and survey the entire schedule of work was decided into steps as follows: 1. Defining the objective. 2. Defining the population. 3. Frame the sampling units 4. Data to be collected 5. Research Tool 6. Summary& analysis 7. Preparation of the report

DEFINING THE OBJECTIVE:

It is the first step in the research and also is very crucial area of the research. The objective of this research is to know the working in capital market as equity as an investment & also analyze the customer perception regarding investment in capital market(equity as an investment)..

DEFINING THE POPULATION:

Population refers to the total of items about which information is deserted. The attributes that are the objective of study are referred to as characteristics and the units possessing them are called as elementary units. The aggregate of such units is generally described as population. Thus all units in any field of inquiry constitute universe and all elementary units constitute population.

FRAME THE SAMPLING UNITS:

The elementary units or cluster of such units may form the basis of sampling process in which case they are called as sampling units- a list containing all such sampling units is known as sampling frame. Thus sampling frame consists of a list of items frame, which the sample is to be drawn. It is often impossible to draw a sample directly from population. I randomly selected 100 clients of from Jalandhar and Phagwara. .

DATA TO BE COLLECTED:
It becomes necessary to collect data that are appropriate. There are several ways of collecting the appropriate data, which differ considerably in context of money cost time and other resources. The relevant data for the research project is hybrid of primary & secondary data. Primary Sources: Personal interview Survey Questionnaire& observation method Secondary Sources:The Secondary source of information consists of: Books Journals

 Periodicals Magazines Web Sites The major source in this category has been the publications of different books. The information from these publications has been searched, assembled & interpreted in the best possible manner. The report is based on the assumption that, project success is more dependent upon preventing or working with barriers as opposed to reinforce existing positive factors.

RESEARCH TOOL:
The instrument, which was used in the research, was questionnaire and it was, like the questionnaire was started with open-ended questions so that the respondents get a feel of the whole questionnaire and then questions slowly move on to the closeended questions.

SUMMARY AND ANALYSIS OF DATA:

After the data have been collected, it must analyze them to get the needed information. The analysis of data requires a number of closely related operations, which are as establishment of categories, the application of these categories to raw data through coding, tabulation and then drawing statistical inferences Analysis work is generally base on the computations of various percentages, coefficients, etc, by applying various well-defined statistical formulae. In process of analysis, relationships should be subjected to test of significance to determine with what validity data can be said to indicate any conclusions. In this research after analyzing the data we find the leading brand in air conditioners and also find the sales percentage of various brands of air conditioners in the market. The above research report was formulated as under-

Research Data Source Research Instrument Type of Questionnaire Sampling Size Sampling Procedure

: Descriptive : Primary & Secondary : Questionnaire : Open/Close both : 100 Clients : Simple Random Sampling

DATA ANALYSIS
I prepared a questionnaire, which helped me to collect the necessary data for this survey. In my survey I interviewed 100 individual belonging to diversified profession. The data I collected was in crude form, to extract the information from that data I analyzed the data and make some tables and bar charts.

DATA ANALYSIS AND INTERPRETATION OF DATA

DATA ANALYSIS AND INTERPRETATION OF DATA

QUES 1. ARE YOU AN INVESTOR OR NOT ? OPTIONS YES NO NO. OF PEOPLE (%) 96 4

4%

YES NO 96%

INTERPRETATION:The interpretation is that the 96% people are investing their money in different schemes and only 4 % people are not invested due to certain reasons.

QUES 2. IF NOT, WHAT ARE THE REASONS FOR NOT INVESTING ? OPTIONS NOT APPLICABLE KNOWLEDGE BCOZ OF RISK RUMORS LACK OF INTEREST NO SAVINGS NO. OF PEOPLE (%) 19 28 10 20 23

23%

19%

NOT APPLICABLE KNOWLEDGE BCOZ OF RISK

RUMORS 20% 10% 28% LACK OF INTEREST NO SAVINGS

INTERPRETATION:The interpretation is that the,, the people who are not investing because 19% people dont have knowledge ,28% do not invest due to risk.10% due to rumors and 20% dont have interest to invest and 23% people dont have enough saving for investment..

QUES 3. IF YES, WHERE DO YOU PREFER TO INVEST MONEY? OPTIONS SHARE MKT BANKING SCHEMES LIFE INSURANCE MUTUAL FUNDS GOVT SECURITIES NO. OF PEOPLE (%) 16 25 30 13 16

16%

16%

SH ARE MKT BANKING SC HEMES

13% 25%

LIFE INSURANCE MUT UAL FUNDS GOVT SECUR IES IT

30%

INTERPRETATION:It is that the16% people invested in share market, 25% in banking schemes, 30% in life insurance, 13% in mutual funds and 16% in government securities.

QUES 4. HAVE YOU EVER INVESTED IN CAPITAL MARKET? OPTIONS YES NO NO. OF RESPONDENTS (%) 44 66

40% YES N O 60%

INTERPRETATION:It is that the 44% people invested in capital market and 66% do not invest in capital market.

QUES 5. WHICH SEGMENT OF CAPITAL MARKET USUALLY YOU INVEST YOURE MONEY? OPTIONS DEBT MARKET MUTUAL FUNDS EQUITY MARKET DERIVATIVES NO. OF RESPONDENTS (%) 15 30 23 17

COMMODITY MARKET

15

15%

15%

DEBT MARKET MUTUAL FUNDS

17% 30%

EQUITY MARKET DERIVATIVES COMMODITY MARKET

23%

INTERPRETATION:The interpretation is that the 15% invested in debt market, 30% in mutual funds, 23% in equity market, 17% in derivatives and 15% in commodity market.

QUES 6. IF YOU INVESTED IN EQUITY MARKET,, IN WHICH SECTORS SHARES YOU WILL INVEST? OPTIONS IT RETAIL FMCG NO. OF RESPONDENTS(%) 20 14 15

BANKING MANUFACTURING OIL N GAS OTHERS

22 13 12 4

4% 12% 20% IT RETAIL 13% 14% FMCG BANKING MANUFACTURING OIL N GAS OTHERS 22% 15%

INTERPRETATION:It is that the most of the investor invested money in banking and IT sector and 14% in retail sector and 13% in mfg sector and only 4% in other sector.

QUES 7. WHAT ARE THE REASONS BEHIND FOR INVESTING IN PARTICULAR SECTOR? OPTIONS GOOD RETURN APPRECIATION IN CAPITAL EFFICIENCY NO. OF RESPONDENTS(%) 36 20 14

FUTURE PROSPECTS

30

30% 36%

GOOD RETURN APPRECIATION IN CAPITAL EFFICIENCY FUTURE PROSPECTS

14% 20%

INTERPRETATION:It is that the most of the investor invest money for earning and also growth in future prospectus,, also want to efficiency of company.

QUES 8. ARE YOU INVESTING MONEY IN EQUTY MARKET ON THE BASIS OF TECHNICAL AND FUNDAMENTAL ANALYSIS ? OPTIONS YES NO NO. OF RESPONDENTS(%) 55 45

45% 55%

YES NO

INTERPRETATION:It is that the 55% of the investors keep in mind and analyse the fundamental and technical analysis while investing and 45% does not analyse the fundamental and technical analyse..

QUES 9. DO YOU THINK THAT FUNDAMENTAL AND TECHNICAL ANALYSIS IS A GOOD TOOL FOR INVESTMENT ?

OPTIONS YES NO CANT SAY

NO OF RESPONDENTS(%) 43 35 22

22%

43%

YES NO CANT SAY

35%

INTERPRETATION:It is that the 43% say it is a good tool and 35% say no and 22% people cany say about that,, bcoz they dont know about fundamental analysis and technical analysis..

QUES 8. WHICH ONE WAY YOU CHOOSE FOR TRADING IN EQUITY MARKET? OPTIONS ONLINE TRADING OFFLINE TRADING NO. OF RESPONDENTS(%) 49 51

ONLINE TRADING 51% 49% OFFLINE TRADING

INTERPRETATION:It is that the 49% do online trading and 51% do offline trading as like through brokers agents etc

QUES 9.WHAT PRECAUTION OR CARE SHOULD WHILE INVESTING IN EQUITY ? GIVE RANK .. OPTIONS Read And Understand Documents Cost & Benefits Risk & Return Liquidity
(RANK)

TAKEN

3 5 2 4

 Safety

1 3

Ra A d ed n U d rsta d ne n D cu e ts o mn C st & B n fits o ee

R isk & R tu e rn

L u ity iq id 2 5 S fe a ty

INTERPRETATION:It is that the while investing people take precaution of safety first of investing amt, then see risk and return then read documents, then want quick liquidity..

QUES 10. FROM WHERE YOU GOT INFORMATION INVESTMENT AVENUES ? GIVE RANK .. OPTIONS PRINT MEDIA FAMILY/FRIENDS INTERNET TV (RANK) 3 4 2 1

ABOUT

AGENTS/REPSENTATIVES

3 5

PRINT MEDIA FAMILY/FRIENDS INTERNET TV 4

1 2

AGENTS/REPSE NTATIVES

INTERPRETATION:It is that the investor get information from most of them from tv, then internet by seeing the websites,then print media, then family and friends then agents of company.

QUES 11. WHAT WOULD YOU SUGGEST THAT WHETHER IT IS BENEFICIAL TO INVEST IN EQUITY MARKET OR NOT AND WHY? OPTIONS YES NO NO. OF RESPONDENTS(%) 43 57

43%

YES NO

57%

INTERPRETATION:It is that the 43% said that people have to invest in equity mkt and 57 % said no,, bcoz of risk ,etc.

WHY? Becoz.........

CONCLUSION
Equity capital is a high risk-high reward, permanent source of long term finance for corporate enterprises and short term earning for shareholders. The

investors, who desire to share the risk, return and control associated with ownership of companies would invest in equity capital. Today, the Indian Equity Market is one of the most technologically developed in the world and is on par with other developed markets abroad. The introduction of on-line trading system, dematerialization, ban of the badla system, and introduction of rolling settlement have facilitated quick trading and settlements which lead to larger volumes. The setting up of the National Stock Exchange of India Limited has revolutionized the face of the stock market. NSE is the only stock exchange which covers majority equity investments every day. Also equity capital market encourages capital formation in the country. The specific factor, which influences equity market, is the investors sentiment towards the stock market as a whole. So investor first has to analyze and invest and not speculate in shares. The introduction of online trading has given a much-needed impetus to the Indian equity markets. In this technological world things are needed to move at a faster pace, and with the introduction of METHODS OF MARKETING SECURITIES IN THE EQUITY MARKET, the stock exchange has expanded its business at a tremendous speed. According to economic times, the research states the major reason behind the irregularities of market (up and down in sale and purchase, price of share) is mainly because of FORECASTING MIND SET OF EQUITY INVESTORS. So, the stock exchanges must disregards the emotional component of trading by making investors decisions based upon chart formations, assuming that

prices reflect both facts and emotion. And also by creating the awareness of fundamental analysis (Fundamental analysis is a method of finding out the future price of a stock, which an investor wishes to buy) among the investors to avoid the irregularities while trading.

So to increase the volume of equity investment, the stock exchanges should strive to increase transparency, strictly enforce corporate governance norms, provide more value-added services to investors, and take steps to increase investor confidence. These stock exchanges will have to plan strategic tie-ups with their foreign counterparts to get an international platform. A developed and vibrant secondary market can be an engine for the revival and growth of the primary market. So, to encourage Indian investment and face international competition every Indian stock exchange has to stress on innovation and sustained investment in technology to remain ahead.

FINDINGS
Most of the people want to invest in equity market, but they dont have enough knowledge about equity market.

1.

2.

People dont know how to invest, when to invest, where to invest in equity market. There is a lot of risk in equity market,, therefore generally people hesitate to invest in equity market There is a greater role of technical and fundamental analysis in equity market, so therefore due emphasis must be given to fundamental and technical analysis

3.

4.

5. We find that the people want to invest in such securities who is more safe and more liquidity Some investors invest only in those securities who is in the top and whose growth is more. Middle class family people prefer to invest in banking schemes, life insurance, and government securities. There is a lot of risk in equity market,, therefore generally people hesitate to invest in equity market

6.

7.

8.

SUGGESTIONS/RECOMMENDATIONS

1. Still most of Indian population has not proper knowledge of regarding stock markets. So focus on giving information regarding stock market.

2.

Imparting proper training to agents so that they guide their clients properly.

3. Make the system more transparent so that chances of speculation reduce.

4. 5.

Make new laws for proper functioning of market. Investors should know how to make fundamental, industry and technical so that they can better understand the position of equity market.

6. Market penetration in India is very less. If we talk about online trading than the size of untapped market is very large. Serious efforts to bring new investors into business should be made. 7. To increase the satisfaction level of the client more educated & well informed Relationship Managers should be employed. 8. After sales services to the investors should be made better to retain the existing unit holders.

LIMITATIONS

1. Time was major constraint in the study. 2. Lack of personal meetings with respondents could produce different results.

3. Inaccessibility of respondents.
4.

As it is carried out on human being who have the tendency to behave artificially when they know that they are being analyzed.

5. Subjectivity is the main limitations of such studies. It is very difficult to verify the research result. 6. Lack of knowledge of awareness among customers. 7. Psychology of people they think that investment in shares is not beneficial, it is more risky.

BIBLIOGRAPHY

Books Referred 1. Investment Management-Preeti Singh 2. Indian Financial Market-T R Venkatesh

3. Financial Market-P K Bandgar 4. Merchant Banking & Financial Services-Anil Agashe.

Magazines 1. Business Today 2. India Today 3. Business World

Websites 1. www.nseindia.com 2. www.indiainfoline.com

3.

www.hdfcsec.com www.bseindia.com www.sebi.gov.in

4. www.equitymaster.com
5.

6. www.sify.com
7.

8. www.financialexpress.com

ANNEXURE QUESTIONNAIRE NAME:OCCUPATION:PHONE NO:PLZ TICK THE FOLLOWING OPTIONS

QUES 1. ARE YOU AN INVESTOR OR NOT ?

Yes

No

QUES 2. IF NOT, WHAT ARE THE REASONS FOR NOT INVESTING ? Not Applicable Knowledge.. because of Risk No Savings....

Rumors.. Lack Of Interest..

QUES 3. IF YES, WHERE DO YOU PREFER TO INVEST MONEY ? Shares .. Banking Schemes... Govt. Security.. Life Insurance .

Mutual Funds

QUES 4. HAVE YOU EVER INVESTED IN CAPITAL MARKET ? Yes No

QUES 5. WHICH SEGMENT OF CAPITAL MARKET USUALLY YOU INVEST YOUR MONEY ? Debt Market Derivatives . Mutual Funds . Equity Market Commodity Market

QUES 6. IF YOU INVESTED IN EQUITY MARKET,, IN WHICH SECTORS SHARES YOU WILL INVEST ? I T Retail FMCG Banking.

Manufacturing

Oil and Gas Others.

QUES 7. WHAT ARE THE REASONS BEHIND FOR INVESTING IN THIS SECTOR ?

Good Return.. Appreciation In Capital.. Efficiency .. Future Prospectus ...... Look at Price..

QUES 8. ARE YOU INVESTING MONEY IN EQUTY MARKET ON THE BASIS OF TECHNICAL AND FUNDAMENTAL ANALYSIS ? Yes . No..

QUES 9. DO YOU THINK THAT FUNDAMENTAL AND TECHNICAL ANALYSIS IS A GOOD TOOL FOR INVESTMENT ? Yes No. Cant say.

QUES 10. WHICH ONE WAY YOU CHOOSE FOR TRADING IN EQUITY MARKET ? Online Trading.. Offline Trading. TAKEN

QUES 11. WHAT PRECAUTION OR CARE SHOULD WHILE INVESTING IN EQUITY ? GIVE RANK ..? Read And Understand Documents Cost & Benefits Risk & Return Liquidity Safety YOU . . . . . INFORMATION Internet ..

QUES 12. FROM WHERE INVESTMENT AVENUES ? Print Media ..... TV ..

GET

ABOUT

Family /Friends ....

Agents/Representatives of Company ..

QUES 13. WHAT WOULD YOU SUGGEST THAT WHETHER IT IS BENEFICIAL TO INVEST IN EQUITY MARKET OR NOT AND WHY ? Yes .. No ..

WHY? Because......... DATE -------------------------Signature

THANK YOU FOR CO-OPERATION