RESEARCH METHODOLOGY

This chapter deals with the research methodology and research design. More precisely covers tests to be conducted for predictability and validity of assumptions. Data collection, editing, categorization and the rationalization of each step are explained. It also covers the analysis method. The methods of categorizing the data by moneyness, elimination of liquidity bias, price discreteness etc. are compared with the earlier published research papers in Journal PRIMARY DATA: COLLECTED FROM NSE &BSE SECONDARY DATA: analyzing the data descriptive analysis

NEED &IMPORTANCE OF THE STUDY SOURCE OF CAPITAL

Money market is an important source of financing for trade and industry. The short-term finances are made available through bills, commercial papers, etc. The happenings in the money market influence the availability of finances both for the national and international trade. Besides trade and industry, money market offers to the government an important noninflationary avenue of raising short-term funds through bills that are subscribed by commercial banks and the public.

IDEAL INVESTMENT
Money market offers an ideal source of investment for the commercial banks. The market helps them invest their short-term surplus funds so as to meet statutory reserve requirements. For instance, the requirements of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) vary every fortnight depending on banks Net Demand and Time Liability (NDTL).

EFFECTIVE MONETARY MANAGEMENT

An efficient money market being sensitive in nature allows for the effective implementation of monetary policy of the central bank and thus paves way

for the efficient monetary management of the country. In fact, the money market events serve as an important guide to the government in formulation, revising and implementing its monetary policy. This is rightly so, given the fact that the conditions prevailing in money market serve as an indicator of monetary state of an economy. The monetary authority uses the money market for diffusing the effects of its actions throughout the banking system and the economy, so as to promote economic growth with stability.

ECONOMIC DEVELOPMENT
Money market being an integral part of a countrys economy, contributes substantially to the economic development of a country. A developed money market is indispensable for the rapid development of the economy. In fact, the stage of development of the economy will be reflected in the stage of development of a money market. This is borne out by the fact that ill developed nature of a money market is responsible for the primitive nature of economic development of a country. The absence of a welldeveloped money market would constrain the economies from making available, on a continuous basis the supply of adequate funds.