Project-Study of Stock Exchanges

Short Project
On
Study of stock exchange in India
Presented By:
Merwin Arun Alva
*Index of content *
Study of stock exchange In India Merwin Alva
I. Introduction
II. Review of literature.
1. The Importance of Stock Exchanges
2. Stock Trading.
Stock Specialists and the Exchange loor
loor !rokers.
Institutional !rokers.
". Trading in other securities.
#onds.
$ptions.
utures.
%. Stock Exchanges in India.
&. Evolution of Stock Exchanges in India.
'. Stud( of Indian )arket.
Sensex )ilestones.
Sensex alls.
*. +,-ER..SE#I /Surve( of Indian Investors0
III. $!1ective of stud(
I2. Scope of stud(.
3I4I+TR$56,TI$+7
Stock Exchange organized market for buying and selling financial instruments, including stocks, otions,
and futures! Most stock exchanges have secific locations where commissioned, or aid, intermediaries
called brokers conduct trading that is, buying and selling! Stocks are not always traded on a stock exchange!
Some are traded over the counter, without a secific central trading location! Stocks are shares of ownershi
in comanies!
Ma"or stock exchanges in the #nited States include the $ew %ork Stock Exchange &$%SE' and the
American Stock Exchange &AME(', both in $ew %ork )ity! A ma"or stock exchange in India is *ombay
Stock Exchange &*SE' and the $ational Stock Exchange &$SE'! In addition, most of the world+s
industrialized nations have stock exchanges! Among the larger International Exchanges are those in ,ondon,
England, -aris, .rance, Milan, Italy, /ong 0ong, )hina, and 1okyo, 2aan!
)ain financial products8instruments dealt in the secondar( market
3 E9uit(7 1he ownershi interest in a comany of holders of its common and -referred stock! 1he various
kinds of e4uity shares are as follows
E9uit( Shares7
3 An e4uity share, commonly referred to as ordinary share also reresents the form of fractional ownershi in
which a shareholder, as a fractional owner, undertakes the maximum entrereneurial risk associated with a
business venture! 1he holders of such shares are members of the comany and have voting rights! A
comany may issue such shares with differential rights as to voting, ayment of dividend, etc!
3 Rights Issue8 Rights Shares7 1he issue of new securities to existing shareholders at a ratio to those
already held!
3 #onus Shares5 Shares issued by the comanies to their shareholders free of cost by caitalization of
accumulated reserves from the rofits earned in the earlier years!
3 :referred Stock8 :reference shares5 6wners of these kind of shares are entitled to a fixed dividend or
dividend calculated at a fixed rate to be aid regularly before dividend can be aid in resect of e4uity share!
1hey also en"oy riority over the e4uity shareholders in ayment of surlus! *ut in the event of li4uidation,
their claims rank below the claims of the comany+s creditors, bondholders 7 debenture holders!
3 ,umulative :reference Shares7 A tye of reference shares on which dividend accumulates if remains
unaid! All arrears of reference dividend have to be
aid out before aying dividend on e4uity shares!
3 ,umulative ,onverti!le :reference Shares7 A tye of reference shares
where the dividend ayable on the same accumulates, if not aid! After a
secified date, these shares will be converted into e4uity caital of the comany!
3 :articipating :reference Share7 1he right of certain reference shareholders to articiate in rofits after
a secified fixed dividend contracted for is aid! -articiation right is linked with the 4uantum of dividend
aid on the e4uity shares over and above a articular secified level!
3 Securit( Receipts7 Security receit means a receit or other security, issued by a securitisation comany or
reconstruction comany to any 4ualified institutional buyer ursuant to a scheme, evidencing the urchase or
ac4uisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in
securitisation!
3 ;overnment securities <;.Secs=7 1hese are sovereign &credit risk8free' couon bearing instruments which
are issued by the 9eserve *ank of India on behalf of :overnment of India, in lieu of the )entral
:overnment;s market borrowing rogramme! 1hese securities have a fixed couon that is aid on secific
dates on half8yearly basis! 1hese securities are available in wide range of maturity dates, from short dated
&less than one year' to long dated &uto twenty years'!
3 5e!entures7 *onds issued by a comany bearing a fixed rate of interest usually ayable half yearly on
secific dates and rincial amount reayable on articular date on redemtion of the debentures!
<ebentures are normally secured7 charged against the asset of the comany in favour of debenture holder!
3 #ond7 A negotiable certificate evidencing indebtedness! It is normally unsecured! A debt security is
generally issued by a comany, municiality or government agency! A bond investor lends money to the
issuer and in exchange, the issuer romises to reay the loan amount on a secified maturity date! 1he issuer
usually ays the bond holder eriodic interest ayments over the life of the loan!
1he various tyes of *onds are as follows8
3 >ero ,oupon #ond7 *ond issued at a discount and reaid at a face value! $o eriodic interest is aid! 1he
difference between the issue rice and redemtion rice reresents the return to the holder! 1he buyer of
these bonds receives only one ayment, at the maturity of the bond!
3 ,onverti!le #ond7 A bond giving the investor the otion to convert the bond into e4uity at a fixed
conversion rice!
3 ,ommercial :aper7 A short term romise to reay a fixed amount that is laced on the market either
directly or through a secialized intermediary! It is usually issued by comanies with a high credit standing
in the form of a romissory note redeemable at ar to the holder on maturity and therefore, doesn+t re4uire
any guarantee! )ommercial aer is a money market instrument issued normally for tenure of => days!
3 Treasur( #ills7 Short8term &u to =? days' bearer discount security issued by the :overnment as a means
of financing its cash re4uirements!
1he stock exchanges dealers has a great imortance while understanding the stock market they are
as follows58
1= #E-R ? A *ear is a dealer on stock exchange, currency or commodity market, who exects rices to
.A,,! A bear market is one in which a dealer is more likely to sell securities, currency or establishing a bear
osition! 1he bear hoes to close &or cover' such a short osition by buying in at a lower rice the securities,
currency or goods already sold! 1he difference between the urchase rice and the original sale rice
reresents the successful bear+s rofit! A concerted attemt to forces rices down by a owerful bear &or a
grou of them' by resorting to sustained selling is called a *EA9 9AI<!
2= #6@@ A *ull is a dealer on a stock exchange, currency or a commodity market, who exects rices to
9ISE! A bull market is one in which a dealer is more likely to be a buyer than a seller, even to the extent of
buying for his or her account and establishing a bull osition! A bull osition hoes to sell the urchases at a
higher rice after the market has risen! A bull osition or long osition occurs when the bull owns securities
"= A$##ER ?A "obber is an indeendent dealer in securities! /e urchases and sells securities in his own
name! /e is not allowed to deal with non8 members directly!
%= ,BI,CE+ )hickens are afraid to lose anything !1heir fear overrides their need to make rofits and so
they turn only to money8market securities or get out of the markets altogether! @hile it+s true that you should
never invest in something over which you lose your slee, you are also guaranteed never to see any return if
you avoid the market comletely and never take any risk!
&= :I; ?-igs are high risk investors looking for the one A*I:+ score in a short eriod of time! -igs buy on
hot tis and invest in comanies in comanies without doing their due diligence! -igs get imatient, greedy,
and emotional about their investment, and they are drawn to high8risk securities without utting roer time
or money to learn about these investment vehicles! -rofessional traders love igs, as it is often from their
losses that the bulls and bears rea their rofits!
B' ST-; ?A stag is a seculator who buys a large amount of shares in a new issue of shares &like an I-68
Initial -ublic 6ffer'if he thinks the rice is likely to rise above the offer rice when trading in the scri
begins on the stock exchange ! A stag indulges in this kind of seculation with the hoe to sell soon at rofit!
Stock ,ertificate from the 1Dth ,entur(
1his hoto shows a stock certificate issued in ?CBD by the 6ctoroon :old and Silver Mining
)omany of $evada! 1he certificate indicates that its bearer owns ?>>> shares of stock in the
comany, each valued at E?>>!
3II4 Review of literature.
314The Importance of Stock Exchanges
Stock exchanges serve imortant roles in national economies! 1hey encourage investment by roviding
laces for buyers and sellers to trade securities, stocks, bonds, and other financial instruments! )omanies
issue stocks and bonds to obtain caital to exand their business!
)ororations issue new securities in the rimary market &as oosed to the secondary market, where
securities are bought and sold', usually with the hel of investment bankers! In the rimary market,
cororations receive the roceeds of stock sales! 1hereafter, they are not involved in the trading of stocks!
6wners of stocks trade them on a stock exchange in the secondary market!
In the secondary market, investors, not comanies, earn the rofits or bear the losses resulting from
their trades! Stock exchanges encourage investment by roviding this secondary market! *y allowing
investors to sell securities, exchanges increase the safety of investing!
Stock exchanges also encourage investment in other ways! 1hey rotect investors by uholding rules
and regulations that ensure buyers will be treated fairly and receive exactly what they ay for! Exchanges
also suort state8of8the8art technology and the business of brokering, which both hel traders to buy and
sell securities 4uickly and efficiently!
!
324 Stock Trading
Stocks are shares of ownershi in comanies! -eole who buy a comany+s stock are entitled to dividends,
or shares of any rofits! A comany can list its stock on only one ma"or stock exchange, though otions on
its stock may be traded on another! Each exchange establishes re4uirements that a comany must meet to
have its stock listed! 1he different exchanges tend to attract different kinds of comanies! Smaller exchanges
tyically trade the stock of small, emerging businesses, such as high8tech comanies! In the #nited States,
the AME( lists small8 to medium8sized businesses, including many oil and gas comanies! 1he $%SE
rimarily lists large, established comanies!
Stock brokers must be registered with the exchange in which they trade! Most brokers belong to
brokerage firms! *rokerage firms maintain staffs of many brokers, each of whom has exerience in the
trading of securities of certain comanies or those of articular economic sectors, high tech, utilities, or
transortation businesses, for instance! *rokerage firms also tend to trade in the stocks of secific
comanies, and therefore kee inventories of the stocks of those comanies! 1o become a member of an
exchange, a firm must register its brokers by buying seats for them! A seat is simly a right to trade on an
exchange! Member firms have the right to vote on exchange olicy and must also arbitrate in disutes among
customers! In larger exchanges, seats may sell for several hundreds of thousands of dollars! Exchanges
attract larger or smaller brokerage firms deending on how high or low their fees are!
*rokerage firms that ay high membershi fees to exchanges like the $%SE have the oortunity to
make large rofits trading in the stock of very successful businesses! 1hey also risk losing large amounts,
and therefore charge their clients higher rices than do smaller firms! In art, large comanies use large
brokerage firms and list on large exchanges because of the otential losses ossible to those trading their
securities!
3-4Stock Specialists and the Exchange loor
At a stock exchange, certain brokers secialize in trading certain stocks! 1hese secialists oerate on the
floor of the exchange, the area where all trading takes lace! 1he floor of the $%SE, for examle, is an
enormous room that measures about D> by FB by GH m high &about ?>> by ?CD by I= ft high'! *rokers ack
the floor during trading! 1hey often use bargaining and negotiation to execute larger trades, and they take
bids for the highest rices! 1he rocess is noisy and frantic, and brokers use hand signals to communicate
above the chaos! In #!S! exchanges, only trades over ?G>> shares are negotiated on the floor! In smaller
trades, orders commonly go to secialist brokers directly via comuter!
1he rocess is noisy and frantic, and brokers use hand signals to communicate above the chaos!
Secialists sometimes act as dealersJinstead of as intermediaries, or brokersJtrading directly in the stocks
of their firms+ accounts! .or this reason, they are also known as broker8dealers! 1hey do this when market
trends favour the trading of certain stocks and investors have not ordered enough trades to clear the market,
or balance suly and demand! .loor traders always trade only in stocks owned by their brokerage firms and
never act as intermediaries!
3#4 loor #rokers
6ther brokers, called floor brokers &not the same as floor traders', do not act as secialists! 1hey instead
handle large orders to buy or sell stocks of secific comanies! )lients lace such orders with brokerage
firms, who then contact their floor brokers! After receiving orders, floor brokers take them to secialists to
arrange the trades! .loor and secialist brokers negotiate trades as reresentatives of clients and comanies!
In smaller trades, orders commonly go directly to secialist brokers via comuter!
3,4 Institutional #rokers
Institutional brokers secialize in bulk urchases of securities, including bonds, for institutional investors!
Institutional brokers generally charge their clients a lower fee er unit than do brokers who trade for
individual investors!
3"4 TR-5I+; I+ $TBER SE,6RITIES
3-4 #onds
*onds rovide a way for comanies to borrow money! -eole who invest in bonds are lending money to a
comany in return for yearly interest ayments! *onds are traded searately from stocks on exchanges! Most
bonds are bought in large 4uantities by institutional investorsJlarge investors such as banks, ension funds,
or mutual funds!
3#4 $ptions
6tions are traded on many #!S! stock exchanges, as well as over the counter! 6tions writers offer
investors the rights to buy or sellJat fixed rices and over fixed time eriodsJsecified numbers of shares
or amounts of financial or real assets! @riters give call otions to eole who want otions to buy! A call
otion is the right to buy shares or amounts at a fixed rice, within a fixed time san! )onversely, writers
give ut otions to eole who want otions to sell! A ut otion is the right to sell shares or amounts at a
fixed rice, within a fixed time san! *uyers may or may not ot to buy, or sellers to sell and they may rofit
or lose on their transactions, deending on how the market moves! In any case, otions traders must ay
remiums to writers for making contracts! 1raders must also ay commissions to brokers for buying and
selling stocks on exchanges! 6tions trading are also handled by otions clearing cororations, which are
owned by exchanges! 6tion &finance'!
3,4 utures
.utures contracts are also traded on certain #!S! exchanges, most of which deal in commodities such as
foods or textiles! .utures trading works somewhat like otions trading, but buyers and sellers instead agree
to sales or urchases at fixed rices on fixed dates! After contracts are made, the choice to buy or sell is not
otional! .utures contracts are then traded on the exchanges! )ommodities brokers handle this trading!
.utures and otions traders often "udge markets trends by monitoring comiled indexes and averages of
stocks, usually organized by industry or market ranking! Among the most closely watched #!S! indexes are
the <ow 2ones Averages and Standard K -oor+s .uture!
-merican Stock Exchange7 1he American Stock Exchange is one of the rincial exchange houses in the
#nited States! .ounded in ?=>C, it was originally called the $ew %ork )urb Agency because of its origins on
the streets of $ew %ork )ity! It was renamed in ?=FD!
3%4TBE ST$,C EE,B-+;ES I+ I+5I-
1. Ahmedabad Stock Exchange Association ,td A/ME<A*A<, :#29A15 8 1he Stock Exchange 8
Ahmedabad is the second oldest exchange of India! It was constituted in the year ?C=H as a -ublic )haritable
1rust! Ahmedabad Stock Exchange &ASE' started under a banyan tree and there from rogressed year after
year! It holds a uni4ue lace in India! Ahmedabad Stock Exchange got the ermanent recognition from the
:overnment of India in ?=CG! 1he era of C>s and =>s saw some ma"or focus in the exchange! A roer
infrastructure was build u and the exchange was comletely comuterised! 1he exchange went live on
screen based trading on <ecember ?G, ?==B!
)urrently there are DDD trading members in the exchange to serve the
investors with one of the best transarent trading system in India! 1he trading of aroximately G>>>
nationally listed e4uities is done in the exchange! 6ver G>> high growth comanies listed in the ASE or with
other exchanges are also traded here!
2. *angalore Stock Exchange *A$:A,69E, 0A9$A1A0A5 8 *angalore Stock Exchange &*gSE' started
functioning from ?=BD and it is currently the largest stock exchange in South India! 1here are F=F listed
comanies with more than D>> non8regional comanies in it! 6ver F>>> comanies from listed and
ermitted category can be traded at the exchange at resent!
*angalore Stock Exchange is managed by the )ouncil of Management which consists of
members being nominated by SE*I, ublic reresentatives, elected members and Executive <irector! At
resent the exchange has about GD= members! GFL of the total is cororate members!
3. *hubaneswar Stock Exchange Association8 */#*A$ES@A9, 699ISA58 *hubaneshwar Stock Exchange
Association ,td! &*hSE' came into existence in the year ?=C=! It has been registered under the )omanies
Act, ?=FB as a comany limited by guarantee! *y ?===8G>>>, the exchange had a total of GDH brokers, out
of which ?F were cororate brokers! Among GDH brokers, it was further classified as G>= rorietors and ?F
cororate brokers! 1hen, there were only ?I sub8brokers registered!
6n ?Fth Setember, G>>F, SE*I aroved the cororatisation and demutualisation schemes of
the *hubaneshwar Stock Exchange which were re4uired in accordance with the rovisions of the Securities
)ontracts &9egulation' Act, ?=FB!
4. )alcutta Stock Exchange 06,0A1A, @ES1 *E$:A,58 )alcutta Stock Exchange &)SE' started way
back in ?CD> under a M$eem 1ree!M 1oday )SE has emerged as the second largest bourse in India! In May
?=>C, the grou formed an association and named it as we know it today at G, )hina *azaar Street! 1he
Association was registered as a limited liability concern on 2une I, ?=GD with an authorized caital of 9s! D
lakhs duly divided into D>> shares of 9s! ?,>>> each! 1he shares were further subdivided into H shares of 9s!
GF> each in the year ?=F=!
)SE was incororated in the year ?=>C with ?F> members! At resent, the membershi has
reached above =>> with several cororate and institutional members! More than D,F>> comanies have been
listed to the exchange! @ith effect from Aril ?H, ?=C>, )SE was granted ermanent recognition by the
)entral :overnment under the relevant rovisions of the Securities )ontracts &9egulation' Act, ?=FB!
5. )ochin Stock Exchange ,td8 06)/I, 0E9A,A5 8 )ochin Stock Exchange &)SE' is counted among one of
the remier Stock Exchanges in India! It was established in ?=IC and had undergone tremendous
transformation over the years! In ?=IC, it had only F comanies listed and had only ?H members! )urrently,
it has F>C members and GH> listed comanies! )ochin Stock Exchange went for comuterization of its
offices in ?=C=! 1o kee ace with the market, it took various initiativesN one such initiative was trading
dematerialised shares! It introduced the facility of comuterised trading known as M)ochin 6nline 1radingM
&)6,1' on March ?I, ?==I! It also became one of the romoters of the Interconnected Stock Exchange of
India &ISE'! 1he basic idea of ISE was to consolidate the smaller and fragmented markets which are less
li4uid into a national level integrated li4uid market!
6. )oimbatore Stock Exchange )6IM*A169E, 1AMI, $A<#58 )oimbatore Stock Exchange ,imited
&)S(' is the youngest stock exchange in India! It was founded by 0!:! *alakrishnan! It is now governed by
the :overning *ody which consists of the member brokers! )urrently the staff strength is fifty!
1he exchanges also have Screen *ased 1rading &S*1' system which commenced oerations on
=th of 6ctober, ?==B! 1he system is e4uied to handle GF,>>> traders er day and H>> members! Each
member has been given a comuter terminal which is connected in a ,ocal Area $etwork &,A$'!
7. <elhi Stock Exchange Association $E@ <E,/I5 8 1he <elhi stock Exchange Association ,imited &<SE'
was incororated on 2une GF, ?=HI! 1he exchange is an amalgamation of <elhi Stock and Share *rokers;
Association ,imited and the <elhi Stocks and Shares Exchange ,imited! It is India;s fifth exchange! 1he
exchange is one of the remiers Stock Exchange in India! 1he <elhi Stock Exchange is well connected to F>
cities with terminals in $orth India!
1he exchange is having over D,>>> listed comanies! It has received the market regulator;s
ermission from *SE and has become its member! $ow it facilitates the <SE members to trade on the *SE
terminals! 1he exchange is also considering the same from $SE!
8. :uwahati Stock Exchange ,td8 :#@A/A1I, ASSAM5 8 1he :uwahati &:auhati' Stock Exchange &:SE'
was incororated on G=th of $ovember, ?=CD and it was recognised by the :overnment of India on ?st of
May, ?=CH! 1he :SE is limited by guarantee by the member8brokers!
*y ?===8G>>>, the exchange had a total of G>B brokers, out of which F were cororate brokers! Among G>B
brokers, it was further classified as G>> rorietor brokers, ? artnershi broker and F cororate brokers!
1hen, there was only H sub8brokers registered! )urrently there are G=> comanies listed in the :SE.
9. /yderabad Stock Exchange ,td /%<E9A<A*, A$<9A -9A<ES/58 1he /yderabad Stock Exchange
,imited &/SE,' was established on the year ?=HH! It was registered under the )omanies Act, ?=FB as a
comany limited by guarantee! *y ?===8G>>>, the exchange had a total of D?> brokers, out of which ?>G
were cororate brokers! Among D?> brokers, it was further classified as G>G rorietor brokers, B artnershi
brokers and ?>G cororate brokers! 1hen, there was only ?=C sub8brokers registered! According to the
rovision of the Securities )ontracts &9egulation' Act, it is now cororatized and de8mutualised! SE*I has
aroved the scheme in Setember, G>>F!
Among other things, the scheme rovides for the re8registration of the exchange as a comany limited by,
the segregation of ownershi and management from the trading rights of members, restrictions on voting
right of shareholders who are also trading member, comosition of the :overning *oard, etc
10. 2aiur Stock Exchange ,td8 2AI-#9, 9A2AS1/A$5 82aiur Stock Exchange is the third largest exchange in
India in terms of membershi! It was established in the year ?=C=! In the same year, the exchange was
granted recognition in the month of 2anuary and the commencement of business took lace from the month
August, ?=C=! @ithin seven years of its incororation, i!e! by 2anuary;=B, the exchange managed to attract
IF> comanies who were listed on the exchange! 1hen the volume of the daily turnover rose to an average of
9s!C> million!
2aiur Stock Exchange was one of the ?F regional Stock Exchanges which romoted the Inter8connected
Stock Exchange of India ,td! by aying the Initial )aital of 9s!?crore &9s!Flakhs as admission fee and
9s!=Flakhs as infrastructure fee'!
11. ,udhiana Stock Exchange Association ,td ,#</IA$, -#$2A*5 8,udhiana Stock Exchange Association
,imited &,SE' was established in the year ?=CD! *y ?===8G>>>, the exchange had a total of GCH brokers, out
of which I= were cororate brokers! Among GCH brokers, it was further classified as G?G rorietor brokers,
G artnershi brokers and I> cororate brokers! 1hen, there were only GD sub8brokers registered! ,udhiana
Stock Exchange became the second bourse in India to introduce modified carry forward system after *SE on
Aril B, ?==C! 6n the same date, ,SE also introduced a settlement guarantee fund &S:.'! 1he S:.
guarantees settlement of transactions and the carry forward facility rovides li4uidity to the market!
,SE became the first in India to start ,SE Securities ,td!, a ?>>L owned subsidiary of the
exchange! 1he ,SE Securities got the ticket as sub8broker of the $SE! In ?==C, the exchange also got
ermission to start derivative trading! .or the settlement of dematerialised securities, the ,udhiana Stock
Exchange has also been linked u with $ational Securities <eository ,td! &$S<,'!
12. Madras Stock Exchange MA<9AS, )/E$$AI5 81he Madras Stock Exchange &MSE' has a history from
?=G> when the exchange had ?>> members! 1he boom eriod of the exchange faded out and the membershi
was reduced to only D by ?=GD! :ood days returned back in Setember, ?=DI and the exchange was once
again organised as Madras Stock Exchange Association &-vt!' ,imited catered to mills and lantations in the
area! In ?=FI, the name was again changed to Madras Stock Exchange ,imited!
6n August G?, ?==C, the exchange was aroved with S:. Schemes by SE*I! @ith a ale shadow
in the ast! Madras Stock Exchange managed to have a turnover of 9s!?>= crores in the year G>>?.
13. Madhya -radesh Stock Exchange ,td8I$<69E, MA<%A -9A<ES/5 8Madhya -radesh Stock Exchange,
set u as ;association of ersons;, is on the verge to get incororated as a ;for8rofit comany limited; by the
shares and demutualisation! @ith this, the ownershi and management will be segregated from their trading
rights! 1hen, there will only exist one class of trading members who will be en"oying similar rights and
rivileges! A uniform standard will be maintained in terms of the caital ade4uacy, deosits and fees for
admitting any one as a trading member or for acceting his surrender! Ooting rights of the shareholders, also
trading members, will be limited to FL and eole who are not shareholders but having trading rights will
hold minimum of F?L of e4uity stake of the cororatized and demutualised stock exchange!
In ?===8G>>>, Madhya -radesh Stock Exchange ,td! &M-SE' had a total of ?CI brokers, out of which GC
were cororate brokers! Among ?CI brokers, it was further classified as ?FF rorietor brokers, H artnershi
brokers and GC cororate brokers then, there were only F sub8brokers registered!
14. Mangalore Stock Exchange ,imited MA$A,69E, 0A9$A1A0A58 1he Mangalore Stock Exchange
&MgSE' was incororated on D?st of 2uly, ?=CH as a ublic limited comany! 1he comany was granted
recognition as a stock exchange on Setember =, ?=CF under section H of the Securities )ontracts
&9egulation' Act, ?=FB! 6n GCth Setember, G>>?, )hief Minister S!M! 0rishna laid the foundation stone of
a new building of Mangalore Stock Exchange at 0ulur! MgSE was granted three acres of land by the state
government! 1he recognition of the Mangalore Stock Exchange was granted renewal from time to time since
?=CF! 1he last recognition was valid u to Setember C, G>>D! 6n August D?, G>>H, SE*I decided to
derecognise the Mangalore Stock Exchange!
In case of de8recognition, the comanies listed in the MgSE can consider seeking listing at other stock
exchanges or can ot for exit otion to the shareholders as er the <elisting :uidelines of SE*I!
#on de8recognition, the members or the shareholders of MgSE will cease to be members of any
recognised stock exchange and therefore will be liable to be de8registered! /ence, their certificate of
registration will stand automatically cancelled!
15. Meerut Stock Exchange ,td8 MEE9#1, #11A9 -9A<ES/5 8Meerut Stock Exchange is one of the well
known 9egional Stock Exchange in India! It has been registered under the )omanies Act, ?=FB! 1he
exchange is modelled to rovide a high level li4uidity to its investors, to sread e4uity cult in the region, to
imart caital market knowledge to all its intermediaries and to develo a winning team of rofessionals!
16. $ational Stock Exchange India M#M*AI, MA/A9AS/19A5 81he $ational Stock Exchange of India
&$SE' was incororated in $ovember ?==G as a tax8aying comany! It is recognised under Securities
)ontracts &9egulation' Act, ?=FB in ?==D as a stock exchange! In 2une ?==H, it commenced oerations in the
@holesale <ebt Market &@<M'! In $ovember, the same year, the )aital Market &E4uities' segment
commenced oerations and the <erivatives segment in 2une G>>>.
17. 61) Exchange of India M#M*AI, MA/A9AS/19A5 8 6ver8the8)ountry Exchange of India &61)EI'
was incororated in the year ?==> as a Section GF comany under the )omanies Act ?=FB! It is recognised
by the Securities )ontracts 9egulation Act, ?=FB as a stock exchange! 1he urose of the formation of
61)EI was to aid enterrising romoters in raising finance for new ro"ects in a cost effective manner and
to rovide transarent and efficient mode of trading to the investors!
It is modelled along the lines of the $AS<AP market and has introduced several novel concets to the
Indian caital markets, like screen8based nationwide trading, sonsorshi of comanies, market making and
scri less trading! -resently the exchange has ??F listings and has heled in roviding caital for enterrises
which have walked on to build successful brands for themselves! 1hey are OI-, Advent, Sonora 1iles K
*rilliant mineral water, etc!
18. -une Stock Exchange ,td8 -#$E, MA/AS/19A5 8-une Stock Exchange &-SE' was established on Gnd
Setember, ?=CG with only DF members! It is a comany limited by guarantee! Initially, the exchange had
only a few lakh ruees business but now it is having 9s!?F8G> crores of business daily with a member+s
strength extended to ?CF! More than D?> comanies are listed with -une Stock Exchange!
*ased on OE)169 &Oersatile Engine for )entralised 1rading and 6n8line 9eorting', the exchange is
successfully using a screen based 1rading System! At resent it covers, ?CD broker members and =
workstations for the administration, Market 6erations and Surveillance activities of the exchange!
-une Stock Exchange is looking for the ossibilities of widening its activities to several arts of -une city
and other cities like Satara, Sangli, Solaur, 0olhaur, Ahmednagar, Aurangabad, $asik and Mumbai.
19. #ttar -radesh Stock Exchange Association 0A$-#9, #11A9 -9A<ES/5 8#ttar -radesh Stock
Exchange Association ,td! was inaugurated on GIth August, ?=CG and occuies one of the rominent laces
among the Stock Exchanges in India! It lays an imortant role in the develoment of the caital market of
$orth India! Initially, it had only DF> members which have grown u to FH> at resent! 1he membershi is
oen to comanies even beyond the territories of #ttar -radesh!
)urrently, the exchange has CHD listed comanies with a total caitalisation of 9s!C??CH crores! 1he annual
turnover of the exchange for three consecutive years are as follows5
?==C8== 5 ?CHG= )rores
?===8G>>> 5 GDCIB )rores
G>>>8>? 5 GF??G )rores!
20. Oadodara Stock Exchange ,td OA<6<A9A, :#29A15 8 Oadodara Stock Exchange ,imited &OSE'
was established in ?==> at *aroda! It is the third stock exchange in the state of :u"arat after Ahmedabad and
9a"kot!
*y ?===8G>>>, the exchange had a total of DG? brokers, out of which BF were cororate
brokers! Among DG? brokers, it was further classified as GFD rorietor brokers, D artnershi brokers and BF
cororate brokers! 1hen, there were only CF sub8brokers registered!
21. *ombay stock exchange M#M*AI, MA/A9AS/19A5 81he *SE is the oldest stock exchange in Asia
and largest number of listed comanies in the world, with H=>> listed as of .eb G>?>! It is located at <alal
Street, Mumbai, India! 6n .eb, G>?>, the e4uity market caitalization of the comanies listed on the *SE
was #SE?!GC trillion, making it the Hth largest stock exchange in Asia and the ??th largest in the world! @ith
over H=>> Indian comanies listed K over II>> scrip on the stock exchange, it has a significant trading
volume! 1he *SE SE$SE(, also called the M*SE D>M, is a widely used market index in India and Asia!
1hough many other exchanges exist, *SE and the $ational Stock Exchange of India account for most of the
trading in shares in India!
3&4Evolution of Stock Exchanges in India
1he origin of the stock market relates back to the year ?H=H, when the Amsterdam Stock Exchange was set
u! In India it dates back to the ?C
th
)entury, an era when the East India )omany was a dominant
institution in India!
Q1he *ombay Stock ExchangeR&*SE' was founded in the year ?CIF! Q1he Ahmedabad Shares
and Stock AssociationR was formed in the year ?C=H! 1he )alcutta Stock Exchange Association was formed
by about ?F> brokers on ?F
th
2une ?=>C!
In the %ear ?=G>, one stock exchange was established in $orthern India and one in Madras )alled
Q1he Madras Stock ExchangeR! Q1he Madras Stock Exchange Association -vt! ,tdR was established in the
year ?=H?! 6n G=
th
Aril, ?=F=, it was reorganized as a )omany limited by guarantee under the name and
style of QMadras Stock ExchangeR &MSE'! 1he ,ahore Stock Exchange was formed in the year ?=DH!
/owever, in the year ?=DB after the -un"ab Stock Exchange ,td! )ame into existence, the ,ahore Stock
Exchange merged with it! In )alcutta, a second Stock Exchange by name Q1he *engal Share K Stock
Exchange ,tdR was established in the year ?=DI and likewise once again in the year ?=DC, *ombay also
witnessed a rival Stock Exchange formed in the name of QIndian Stock Exchange ,td!R 1he #!-!Stock
Exchange was formed in 0anur and the $agur Stock Exchange ,td! In $agur in the year ?=H>! 1he
/yderabad Stock Exchange ,td! @as incororated in the year ?=HH! 1wo stock exchanges which came into
being in <elhi by the name Q1he <elhi Stock K Share *rokers Association ,td!R And Q1he <elhi Stocks K
Shares Exchange Association ,td!R @ere amalgamated into Q1he <elhi Stock Exchange Association ,td!R In
the year ?=HI subse4uently, the *angalore Stock Exchange was registered in the year ?=FI and recognized
in the year ?=BD! 1he 1hird Stock Exchange in the state of :u"arat the QOadodara Stock Exchange ,td!R
@as incororated in ?==>! 1he 6ver the )ounter Exchange of India &61)EI' broadly based on the lines of
$AS<AP &$ational Association of Securities <ealers Automated Puotation' of the #SA was romoted and
aroved on August ?=C=!
1he $ational Stock Exchange of India ,td! @as incororated in $ovember, ?==G!1oday, there are GD
Stock Exchanges in India, including the D Stock Exchanges in Mumbai8 *ombay Stock Exchange &*SE',
$ational Stock Exchange &$SE' and 6ver the )ounter Exchange of India &61)EI'!
1he *ombay Stock Exchange is the oldest Stock Exchange in Asia located in <alal Street,
Mumbai in India! 1he *ombay Stock Exchange was established in ?CIF as 1he Q$ative Share and Stock
*rokers AssociationR earned a formal status under the
Securities and Exchange *oard of India &SE*I' in ?=FB! Market )aitalisation of *SE @as about 9s!DD!H
trillion as on G>>B, 6ctober! 1he *ombay Stock Exchange uses the *ombay Stock Exchange as the market
index in Asia and India! 1he *ombay Stock Exchange deals with trading in derivatives, e4uity and other
debt Instruments!
<erivatives Market
1he *ombay Stock Exchange introduces the first Exchange 1raded Index <erivative )ontract in G>>>, the
Index 6tion be traded from G>>? whereas the single stock futures were traded from G>>G! 1he weekly
otions were introduced! Index .utures5 Index futures are basically futures whose underlying asset is the
*SE index itself!
Index otions5
1he index otions like any other otion gives the holder, the right but not the obligation to buy or
sell the underlying asset at a secified date and rice! 1hen underlying asset in the case of the index otion
is again the *SE index itself!
Stock .utures and 6tions
Stock .utures and the stock otions have the normal characteristics as any other stock future or
otion traded by them where the underlying asset is some stock! E4uity .utures and 6tions5 1he *ombay
Stock Exchange also introduced the E4uity .utures and 6tions!
,eaving aside the *SE Sensex there are many other indices that are used by the *ombay Stock
Exchange and they are as follows5
*SE F>>
*SE ?>>
*SE G>>
*SE -S#
*SE MI<)A-
*SE SM,)A-
*SE *A$0E(
*SE 1ech
*SE Auto
*SE -harma
1he securities market has essentially three categories of articiants, viz!, the issuer of Securities, the
investors in the securities and the intermediaries! 1he issuers are the *orrowers or deficit savers, who issue
securities to raise funds! 1he investors, who are surlus savers, deloy their saving by subscribing to these
securities! 1he intermediaries+ are the agents who match the needs of users and suliers of funds for a
commission!
1hese intermediaries erform functions to hel both the issuers and investors to achieve their resective
goals! 1his rocess of mobilizations of resources is carried out under the suervision and overview of the
regulators! 1he regulators develo fair market ractices and regulate the conduct issuers of securities and the
intermediaries! 1hey are also in charge of rotecting the interests of the investors!
Market Segments
1he security has two interdeendent and insearable segments, the new issues &rimary' and the stock
&secondary' market! 1he rimary market rovides the channel for creation and sale of new securities, while
the secondary market deals in securities reviously issued! 1he securities issued in the rimary market are
issued by ublic limited comanies or by government agencies! 1he resources in this kind of market are
mobilized either through the ublic issue or through rivate lacement route! It is a ublic issue if anybody
and everybody can subscribe for it, whereas if the issue is made available to a selected grou of ersons it is
termed as rivate lacement! 1here are two ma"or tyes of issuers of securities, the cororate entities who
issue mainly debt and e4uity instruments and the government &central as well as state' who issue debt
securities &dated securities and treasury bills'!
1he secondary market enables articiants who hold securities to ad"ust their holdings in
resonse to changes in their assessment of risks and returns! 6nce the new securities are issued in the
rimary market they are traded in the stock &secondary' market! 1he secondary market oerated through two
mediums, namely, the over8the8)ounter &61)' market and the exchange8traded market! 61) markets are
informal Markets where trades are negotiated! Most of the trades in the government securities are in the
61) market! All the sot trades where securities are traded for immediate delivery and ayment take lace
in the 61) market! All the sot trades where securities are traded for immediate delivery and ayment take
lace in the 61) market! All the sot trades where securities are traded for immediate delivery and ayment
take lace in the 61) Market! 1he other otion is to trade using the infrastructure rovided by the stock
Exchanges! 1here are GD exchanges in India and all of them follow a systematic settlement eriod! All the
trades taking lace over a trading cycle &dayS1' are settled together after a certain time &1TG day'! 1he
trades executed on the $ational Stock Exchange &$SE' are cleared and settled by a clearing cororation! 1he
clearing cororation acts as a counterarty and guarantees settlement! $early ?>>L of the trades in caital
market segment are settled through demat delivery! $SE also rovides a formal trading latform for trading
of a wide range of debt securities, including government securities! A variant of the secondary market is the
forward market, where securities are traded for future delivery and ayment! A variant of the forward market
is .utures and 6tions market resently only two exchanges viz!, $SE and Stock Exchange, Mumbai &*SE'
rovides trading in the derivatives of securities!
International Scenario
.ollowing the imlementation of reforms in the securities industry during the last decade, Indian stock
markets! As may be seen out in the world ranking as well as in the <eveloed and emerging markets! India
has a turnover ratio of =H!GL, which is 4uite )omarable to the other develoed market like the #S and #0
which has turnover ratios of ?G=!?L and ?H?!=L resectively! As er Standard and -oor+s .act book India
ranked ?I
th
in terms of market caitalization &?C
th
in G>>H' and ?C
th
in terms of total value traded in stock
exchanges and G>
th
terms of turnover ratio as on <ecember G>>F! <uring the year G>>I8>C, $SE
reorted a turnover of 9s!D, FF?,>DC crores in the e4uities segment! ?== comanies have used the on8line
I-6 system of $SE by the end of March G>>I!
A comarative study of concentration of market indices and indices stocks in <ifferent world
markets are resented in the table below! It is seen that the index stocks+ Share of total market caitalization
in India is II!=L whereas #S index accounted for =G!IL!1he ten largest index stocks of total market
caitalization is DD!=L in India and ?D!=L in case of #S!
Index7
1he stock markets worldwide have grown in size as well as deth over the last one <ecade! As can be
observed from 1able ?8D, the turnover on all markets taken together though have grown from #S E G=!I>
trillion in G>>D to EHI!DG trillion in G>>F! It is significant to note that #S alone accounted for about HF!HBL
of worldwide turnover in G>>F! <esite having a large number of comanies listed on its exchanges, India
Accounted for a merger >!=HL in total world turnover in G>>F!1he market caitalization of all listed
comanies taken together on all markets stood at #S E HD!BH trillion in G>>F &EDC!=> trillion in G>>H'! 1he
share of #S in worldwide market caitalization decreased .rom H?!=BL as at end8G>>H to DC!=FL in end8
G>>F, while Indian listed comanies
Accounted for ?!GIL of total market caitalization in G>>F1here has also been an increase in market
caitalization as er cent of :<- in some of
1he ma"or country grous as is evident from 1able ?8H! 1he increase, however, has not been uniform across
countries! 1he market caitalization as ercent of :<- was the /ighest at ?>C!=L for the high income
countries as at end8G>>H and lowest for middle Income countries at HD!IL! Market caitalization as ercent
for :<- in India stood at FB!?L as at end8G>>H! 1he turnover ratio, which is a measure of li4uidity, however
was aroximately same for both the high8income countries and low8income countries ?HL and ?>I!BL
resectively! 1he total number of listed comanies stood at GC,>>? for high8Income countries, ?H,??I for
middle income countries as at end8G>>F!
3'4ST65F $ I+5I-+ )-RCET .
The #om!a( Stock Exchange is the largest of IndiaGs more than 2H stock exchanges. ounded in 1I*&J
it is the oldest stock exchange in -sia
T BERE -RE TK$ TF:ES $ )-RCETS I+ I+5I-
1= )$+EF )-RCET
Money market is a market for debt securities that ay off in the short term usually less 1han one year, for
examle the market for =>8days treasury bills! 1his market encomasses the trading and issuance of short
term non e4uity debt instruments including treasury bills, commercial aers, bankers accetance,
certificates of <eosits, etc! In other word we can also say that the Money Market is basically concerned
with the Issue and trading of securities with short term maturities or 4uasi8money instruments! 1he
Instruments traded in the money8market are 1reasury *ills, )ertificates of <eosits &)<s', )ommercial
-aer &)-s', *ills of Exchange and other such Instruments of short8term maturities &i!e! not exceeding ? year
with regard to the 6riginal maturity'
2= ,-:IT-@ )-RCET
)aital market is a market for long8term debt and e4uity shares! In this market, the )aital funds comrising
of both e4uity and debt are issued and traded! 1his also includes rivate lacement sources of debt and
e4uity as well as organized markets as stock exchanges!
,apital market can !e divided into :rimar( and Secondar( )arkets.
i= :RI)-RF )-RCET
In the rimary market, securities are offered to ublic for subscrition for the urose of raising caital or
fund! Secondary market is an e4uity trading avenue in which already existing7re8 issued securities are
traded amongst investors! Secondary market could be either auction or dealer market! @hile stock exchange
is the art of an auction market, 6ver8the8)ounter &61)' is a art of the dealer market! In addition to the
traditional sources of caital from family and friends, start8u firms are created and nurtured by Oenture
)aital .unds and -rivate E4uity .unds! According to the Indian Oenture )aital Association %earbook
&G>>D', investments of ECC? Million were in"ected into C> comanies in G>>G, and investments of EHI>
million were in"ected into FB comanies in G>>D! 1he firms which received these investments were drawn
from a wide range of industries, including finance, consumer goods and health!
-ro"ects, 1hesis, <issertation
1he growth of the venture caital and rivate e4uity mechanisms in India is critically linked to their track
record for successful exits! Investments by these funds only )ommenced in recent years and we are seeing a
raid build u in a full range of channels for exit, with a mix of rofitable and unrofitable outcomes! 1his
success with exit suggests that investors will allocate increased resources to venture funds and rivate e4uity
funds oerating in India, who will &in turn' be able to fund the creation of new firms!
ii= SE,$+5-RF )-RCET
Secondary Market refers to a market where securities are traded after being initially offered to the ublic in
the rimary market and7or listed on the Stock Exchange! Ma"ority of the trading is done in the secondary
market! Secondary market comrises of e4uity markets and the debt markets! .or the general investor, the
secondary market rovides an efficient latform for trading of his securities! .or the management of the
comany, Secondary e4uity markets serve as a monitoring and control conduitJby facilitating value8
enhancing control activities, enabling imlementation of incentive8based management contracts, And
aggregating information &via rice discovery' that guides management decisions!
5ifference !etween the primar( market and the secondar( market
In the rimary market, securities are offered to ublic for subscrition for the urose of raising caital or
fund! Secondary market is an e4uity trading avenue in which already existing7re8 issued securities are
traded amongst investors! Secondary market could be either auction or dealer market! @hile stock exchange
is the art of an auction market, 6ver8the8)ounter &61)' is a art of the dealer market!
Sensex milestones
/ere is a timeline on the rise of the Sensex through Indian stock market history!
?>>>8 2uly GF, ?==> 8 6n 2uly GF, ?==>, the Sensex touched the four8digit figure for the first time and closed
at ?,>>? in the wake of a good monsoon and excellent cororate results!
G>>>8 2anuary ?F, ?==G 8 6n 2anuary ?F, ?==G, the Sensex crossed the G,>>>8mark and closed at G,>G>
followed by the liberal economic olicy initiatives undertaken by the then finance minister and current -rime
Minister <r Manmohan Singh!
D>>>8 .ebruary G=, ?==G 8 6n .ebruary G=, ?==G, the Sensex surged ast the D>>> mark in the wake of the
market8friendly *udget announced by <r Manmohan Singh!
H>>>8 March D>, ?==G 8 6n March D>, ?==G, the Sensex crossed the H,>>>8mark and closed at H,>=? on the
exectations of a liberal exort8imort olicy! It was then that the /arshad Mehta scam hit the markets and
Sensex witnessed unabated selling!
F>>>8 6ctober ??, ?=== 8 6n 6ctober C, ?===, the Sensex crossed the F,>>>8mark as the *haratiya 2anata
-arty8led coalition won the ma"ority in the ?Dth ,ok Sabha election!
B>>>, .ebruary ??, G>>> 8 6n .ebruary ??, G>>>, the information technology boom heled the Sensex to
cross the B,>>>8mark and hit and all time high of B,>>B!
I>>>, 2une G?, G>>F 8 6n 2une G>, G>>F, the news of the settlement between the Ambani brothers boosted
investor sentiments and the scri+s of 9I,, 9eliance Energy, 9eliance )aital and I-), made huge gains!
1his heled the Sensex crossed I,>>> oints for the first time!
C>>>8 Setember C, G>>F 8 6n Setember C, G>>F, the *ombay Stock Exchange;s benchmark D>8share index
the Sensex 8 crossed the C>>> level following brisk buying by foreign and domestic funds in early trading!
=>>>8 <ecember =, G>>F 8 1he Sensex on $ovember GC, G>>F crossed =>>> to touch =>>>!DG oints during
mid8session at the *ombay Stock Exchange on the back of frantic buying sree by foreign institutional
investors and well suorted by local oerators as well as retail investors!
?>,>>>8 .ebruary I, G>>B 8 1he Sensex on .ebruary B, G>>B touched ?>,>>D oints during mid8session! 1he
Sensex finally closed above the ?>,>>>8 mark on .ebruary I, G>>B!
??,>>>8 March GI, G>>B 8 1he Sensex on March G?, G>>B crossed ??,>>> and touched a eak of ??,>>?
oints during mid8session at the *ombay Stock Exchange for the first time! /owever, it was on March GI,
G>>B that the Sensex first closed at over ??,>>> oints!
?G,>>>8 Aril G>, G>>B 8 1he Sensex on Aril G>, G>>B crossed ?G,>>> and touched a eak of ?G,>>H oints
during mid8session at the *ombay Stock Exchange for the first time!
?D,>>>8 6ctober D>, G>>B 8 1he Sensex on 6ctober D>, G>>B crossed ?D,>>> for the first time! It touched a
eak of ?D,>D=!DB and finally closed at ?D,>GH!GB!
?H>>>8 <ecember F, G>>B 8 1he Sensex on <ecember F, G>>B crossed ?H,>>>!
?F,>>>8 2uly B, G>>I 8 1he Sensex on 2uly B, G>>I crossed ?F,>>> marks!
?B,>>>8 Setember ?=, G>>I 8 1he Sensex on Setember ?=, G>>I crossed the ?B,>>> mark!
?I,>>>8 Setember GB, G>>I 8 1he Sensex on Setember GB, G>>I crossed the ?I,>>> mark for the first time!
?C,>>>8 6ctober =, G>>I 8 1he Sensex on 6ctober =, G>>I crossed the ?C,>>> mark for the first time!
?=,>>>8 6ctober ?F, G>>I 8 1he Sensex on 6ctober ?F, G>>I crossed the ?=,>>> mark for the first time!
G>,>>>8 6ctober G=, G>>I 8 1he Sensex on 6ctober G=, G>>I crossed the G>,>>> mark for the first time!
G?,>>>8 2an >C, G>>C 8 1he Sensex on 2anuary C, G>>C touched all time eak of G?>IC before closing at
G>CID!
@e have seen Sensex Milestones in above case, which is also known as #er )ircuit of Stock Market! ,et+s
study what is 6pper ,ircuit in Stock ExchangeL
#er circuit is a system to curb excessive seculation in the stock market, alied by the stock exchange
authorities, when the index surts or lunges by more than a fixed limit! 1rading is then susended for some
time to let the market cool down!
1he market wide circuit breakers would be triggered by movement of either Sensex or the $SE SK- )$(
$ifty whichever is breached earlier!
In case of a ?>L movement of either of these indices, there would be a ?8hour market halt if the movement
takes lace before ? !m! In case the movement takes lace at or after ? !m! but before G!D> !m! there will
be a trading halt for ?U hour! In case the movement takes lace at or after G!D> !m! there will be no trading
halt at the ?>L level and the market will continue trading!
In case of a ?FL movement of either index, there will be a G8hour market halt if the movement takes lace
before ? !m! If the ?FL trigger is reached on or after ? !m! but before G !m!, there will be a ? hour halt! If
the ?FL trigger is reached on or after G !m! the trading will halt for the remainder of the day!
In case of a G>L movement of the index, the trading will be halted for the remainder of the day!
Sensex falls
Some ma"or single8day falls of the Sensex have occurred on the following datesN
2anuary G?, G>>C 888 ?,H>C!DF oints!
6ct GH, G>>C888?>I>!BD oints
March ?I, G>>C 888 =F?!>D oints
2uly B, G>>= 888 CI> oints
2anuary GG, G>>C 888 CFI oints
.ebruary ??, G>>C 888 CDD!=C oints
May ?C, G>>B 888 CGB oints
6ctober ?>, G>>C 888 C>>!?> oints
March ?D, G>>C 888 II>!BD oints
<ecember ?I, G>>I 888 IB=!HC oints
2anuary I, G>>= 888 IH=!>F oints
March D?, G>>I 888 IGB!CF oints
6ctober B, G>>C 888 IGH!BG oints
6ctober ?I, G>>I 888 I?I!HD oints
Setember ?F, G>>C 888 I?>!>> oints
2anuary ?C, G>>I 888 BCI!CG oints
$ovember G?, G>>I 888 BIC!?C oints
August ?B, G>>I 888 BHG!I> oints
August ?I, G>>= 888 BGB!I? oints
2une GI, G>>C 888 B>>!>> oints!
,et+s also study what is lower circuitV
1he market8wide circuit breakers are triggered by movement of either the *SE Sensex or the $SE SK-
)$( $ifty, whichever is breached earlier!
In case of a ?>L movement of either of these indices, there would be a one8hour market halt if the
movement takes lace before ?5>> !m! In case the movement takes lace at or after ?5>> !m! but before
G5D> !m! there would be trading halt for WU hour! In case movement takes lace at or after G5D> !m! there
will be no trading halt at the ?>L level and market shall continue trading!
In case of a ?FL movement of either index, there shall be a two8hour halt if the movement takes lace before
? !m! If the ?FL trigger is reached on or after ?5>>!m! but before G5>> !m!, there shall be a one8hour halt!
If the ?FL trigger is reached on or after G5>> !m! the trading shall halt for remainder of the day!
In case of a G>L movement of the index, trading shall be halted for the remainder of the day!
1hese ercentages are translated into absolute oints of index variations on a 4uarterly basis! At the end of
each 4uarter, these absolute oints of index variations are revised for the alicability for the next 4uarter!
1he absolute oints are calculated based on closing level of index on the last day of the trading in a 4uarter
and rounded off to the nearest ?> oints in case of SK- )$( $ifty!
Although introduced in $ovember ?==G, it was used for the first time in the *ombay Stock Exchange on
1uesday, = March ?==D when the Sensex declined by more than FL from the oening level, i!e! from
GHF?!G> to GD?C!GB! At that time, the circuit was FL!
1he both the ratio of uer circuit K lower )ircuit are the same!
+,-ER..SE#I MSurve( of Indian InvestorsM
An $)AE988SE*I MSurvey of Indian InvestorsM of 2une G>>> reorted that only I!H er cent of
Indian households invested in e4uity or debenture securities, either directly or through mutual funds!
1he comarable number for the #0 was GD er cent, )anada HB er cent, :ermany ?C er cent,
.rance HC er cent, South 0orea C er cent, Australia F> er cent, and the #S about HC er cent!
1he survey also revealed that excluding investments erceived as risk8free &e!g! $S), ,I) olicies' Indian
households rank the following four categories in a descending order of risk reference5
&?' *ank deosits,
&G' :old,
&D' #1I and other mutual funds,
&H' Stocks, comany deosits, debentures, and chit funds!
Indian brokerages, cororate, market analysts and others have been known to use the media to sread
misinformation! In most cases, even if wrongdoing is established, it is almost imossible to make good the
losses incurred by investors! As such, given the information asymmetries and recurring eisodes of market
maniulation, it is understandable that retail investors refer to invest in ublic sector debt instruments! 1his
lack of investor confidence results in significant oortunity costs! .or examle, stock market investment
alternatives can romote savings incentives! In efficient markets, investors are able to readily convert their
e4uity holdings into cash without affecting stock rices! 1his ease of exit attracts investors &both domestic
and foreign' and enhances caital allocation efficiency &reducing the deendence on ure bank financing'
and growth! .urther, well8functioning e4uity markets can lead to a better monitoring of management
erformance and thereby imrove cororate governance! @hat else can SE*I do to increase e4uity market
deth and boost investor confidenceV In most caital market regulators around the world, including the SE)
in the #S, more than half the staff is engaged in surveillance and legal functions! )omaratively, SE*I is
inade4uately staffed both in the number and strength of its surveillance and legal ersonnel! 1o use a military
term, SE*I does not have an ade4uate ;teeth to tail; ratio!
1he 2-) and SE*I reorts on stock market, mutual fund and other MscamsM of the last ten years
clearly indicate the comlexity of linkages across brokerages, banks, finance comanies, and domestic,
overseas cororate bodies!
)onse4uently, surveillance staff needs to have an ade4uate MmarketM background and strong
motivation! .urther, SE*I;s technical caabilities lag those of entities it is meant to regulate, e!g! stock
exchanges and brokerages! SE*I also needs to anticiate market anomalies, romote innovation, and
relentlessly ursue ugrading technology!
It is difficult for SE*I to attract the talent and doggedness re4uired for its surveillance and market
develoment resonsibilities! 1oday, it is unlikely that graduates from rominent law or business schools
would consider starting their careers in SE*I! /owever, motivated and talented rofessionals would "oin if
they sense that they would ac4uire marketable skills by working in SE*I! 2unior ositions could be filled
through a cometitive entrance examination to build a rofessional cadre much in the same way as the 9*I!
*y definition, the art8time SE*I board members from the ministry of finance, <)A and 9*I cannot attend
to SE*I;s everyday resonsibilities! It is in recognition of the ressures for SE*I to act in a timely and
deterrent manner that the G>>G amendment of the SE*I Act increased the number of full8time board
members, the regulator;s investigative owers, and the enalties that can be imosed! SE*I badly needs its
comlement of three full8time board members who are knowledgeable about caital markets, as rescribed
in the amended Act!
It bears mentioning though that even in develoed markets only a small fraction of infringements are
successfully rosecuted! In out8of8court settlements, fines are usually aid without admission of guilt!
/ence, even with better surveillance and effective legal follow8u it would be unrealistic to exect an
immediately higher success rate in the rosecution of comarable infringements in India! <omestic and
international rivate e4uity flows in India could be augmented by simlifying exit value calculations! In
recent years annual rivate e4uity flows have been about >!B er cent of :<- for the #0 and between ? and
G er cent for the #S! If we are able to raise additional rivate e4uity caital of about >!F er cent of :<-,
that would amount to aroximately 9s ?>,>>> crores er annum!
Stock markets are oised to benefit from two factors5
&A' A relatively young oulation!
&*' -ension reforms!
Most studies indicate that returns on long8term investments in a well8diversified stock ortfolio usually
exceed those on fixed8income securities!
1herefore, long8term investments in e4uity should be attractive for the increasing number of young
retail investors in middle8income grous! SE*I needs to ensure that the risk8return trade8offs of longer8term
e4uity investments are well understood by younger investors! Similarly, as funded ension schemes become
more accessible, this could boost investor interest in e4uity! 1o summarise, Indian e4uity markets have a
considerable amount of catching u to do with the deeer and more li4uid markets! 6ur efforts need to be
focused on5
&a' @idening the base of the stock market, increasing li4uidity and reducing transaction costs for an
increasing number of stocks!
&b' Exanding the universe of traded instruments and ugrading technology!
&c' 9aising retail investor )onfidence by increasing the effectiveness of surveillance and increasing investor
sohistication!
&d' -romoting greater self8regulation, transarency, disclosure and cometition amongst broker8dealers and
stock exchanges!
NCAER SURVEY ESTIMATES
Estimates of investor households and individual investors &direct ownershi'5 An estimated ?G!C
million, or nearly C ercent, of all Indian households reresenting ?= million individuals had directly
invested in e4uity shares or debentures or both as at the end of the financial year ?==C8==!
Estimates of unit owning households and individual unit holders of mutual funds &indirect
ownershi'5 An estimated ?F million or nearly = er cent of all households have invested in units of
mutual funds, many of which could be investor households! 1here is likely to be at least GD million
unit holders in mutual funds
More households own mutual funds than e4uity shares and debentures5
1he number of households owning units of mutual funds is more than the investor households which
have investments in shares and debentures! 1he existence of such large number of unit holders is a
measure of the growth of mutual funds!
1he number of e4uity investor households and e4uity investors far exceed debenture owning
households and debenture holders5 6f the ?G!C million investor households, ?G!? million, or I er
cent of all households reresenting aroximately ?C million individual investors, owned e4uity
shares and only D!I million households, or ? ercent, reresenting about F million investors owned
debentures! 1he bulk of the debenture owning households are also e4uity investor households!
/ouseholds hardly differ in their risk ercetion of e4uity shares and debentures5 It is imortant for
cororate to note that households have hardly differed in the risk ercetion of e4uity shares and
debenturesN this runs contrary to theory and exectations!
6wnershi of e4uity shares and debentures by households and individuals on the rise5 )omarison
of estimates of investor households available from the Survey of /ousehold .inancial Assets &S6.A'
conducted by $)AE9 at an all India level in <ecember ?=CB, and the households have increased at a
comounded growth rate of GG ercent, between ?=CF8CB and ?==C8==! Interestingly, the rural
investor households have increased at a comounded growth rate of D> ercent comared to ?=
ercent for urban investor households!
:rowth of investor households have been faster between ?==?8=G and ?==C8== than between ?=CF8CB
and ?==?8=G5 )omarison of the estimates of investor households available from the S6.A in ?=CB,
with those available from a survey conducted by SE*I in ?==?8=G and the resent Survey shows a
sharer rise in investor households between the eriod ?==?8=G and ?==C8== than between ?=CF8CB
and ?==?8=G!
More number of investor households became e4uity share owners after ?==? than rior to ?==?5
About DB ercent of the investor households became investors in e4uity shares rior to ?==?, while
the ma"ority of the investor households entered the market after ?==?! 1he growth of the investor
households in the ?==>+s is commensurate with the growth of the securities market in the decade!
1he growth attern of the investor households reflects the attern of exansion of the market and is
consistent with the findings of the earlier Surveys5 1he rimary market exanded raidly between
?==?8 ?==F and contracted thereafter! 1his exlains why about HI ercent of the investor households
entered the market between ?==?8=G and ?==F8=B and a fat roortion number ?I ercent entered
the market thereafter!
*ut desite this growth only a fringe of Indian households have direct investments in e4uity shares,
or debentures or both5 More than ?FB million, or =G ercent, of all Indian households were non8
investor households who did not have any investment in these instruments!
Some of the develoed markets have a larger oulation of investors5 In the #S for examle,
according to survey conducted by the Investment )omany Institute in ?===, HC!G ercent of the
households own e4uities, directly or indirectly through mutual funds, of which FD ercent, i!e! GF
ercent of all #S households directly own e4uity! 1here is therefore a long way to go for the Indian
markets! Ma"ority of the investor households in the #S owns e4uities indirectly through mutual
funds as is the case with the Indian market!
1he ercentage of households owning e4uity shares or debentures or both is substantially higher in
urban areas than in rural areas5 6f the HC million urban households, an estimated C!C million
households, or ?C er cent, reresenting aroximately ?D million urban investors owned e4uity
shares or debentures or both! 6f the ?G? million rural households, only about H million households,
or D er cent, reresenting nearly B million rural investors owned these instruments!
9eforms, regulatory framework rovided by SE*I and macroeconomic changes were resonsible for
the growth of the market! .ollowing the reforms which began in 2une ?==?, liberalization in
industry, trade, taxation and financial sector had given the imetus to the growth of caital market!
1he liberalization in rivate investments, the structural change in the market accomanied by the
regulatory environment rovided by SE*I for investor rotection and develoment of the market
enabled increasingly large number of comanies to access the caital market! 1he growing
investment exectations of the households arising from the above factors, the high growth of the
economy accomanied by increase in savings rate and greater investor confidence rovided by the
regulatory environment attracted large number of investors into the market!
$on8investor households are inhibited by several factors5 ,ow er caita income, arehension of
loss of caital and return on caital, and economic insecurity which are all inter8related factors,
significantly influence the investment attitude of the households! 1he lack of awareness about the
securities market and the absence of a deendable infrastructure and distribution network which
could have facilitated the households+ access to the market, couled with their aversion to risk,
aear to have often inhibited the non8investor households from investing in the securities market!
1hey have instead referred to rely on traditional institutions such as banks and ost offices with
which they have had long term relationshi! 1he automation of the stock exchanges began from
?==F and the trading terminals sread in a big way since ?==I! 1he findings of the Survey show that
the benefits of these measures were yet to be fully realized!
The 5emographics
<emograhics of households influence investment references of households!
Income is the key determinant of investment decision of households!
Median monthly income of the investor households is more than double the median
monthly income of all households in the country!
At the same level of income, the ercentage of urban investor households is higher
than the rural investor households!
Self8emloyed and salaried class constitute significant ma"ority of the investor
households!
1he Indian e4uity investors tend to be middle aged!
Ma"ority of all households including non8investor households fall in the low income
grou!
6wnershi of consumer durables by the investor and non8investor households shows
difference in their attitudes towards sending and investment!
The Risk :erception
Investor households diversify their investment ortfolio to balance risks! It is
the need of the investors to balance the risks in investment, with return and li4uidity that lead them to
diversify their investment ortfolio deending on the level of income of the households!
.or households, safety and li4uidity i!e! reliability, are the rimary
considerations which determine the choice of an asset5 :raded on a four oint scale of risk ercetion
namely5 very safe, reasonably safe, somewhat safe and risky, the eight financial instruments surveyed
excluding the instruments erceived as risk free, such as contractual savings, $S), ,I) -olicy etc! could be
classified into four broad categories ercetion bank fixed deosits, gold, #1I and other mutual funds and
the remaining instruments viz, comany deosits, e4uity shares, debentures, chit funds!
.rom the oint of view of safetyN bank fixed deosit stands aart from the rest
of the instruments5 About BF ercent of all households and IB ercent of the investor households have
graded bank fixed deosits as being very safe and only about ?H ercent of all households and H ercent of
the investor households did not have any oinion about the risk of bank fixed deosits! Interestingly, only
D> ercent of
all households and DI ercent of the investor households have regarded gold as very safe and D? ercent of
all households and ?F ercent of the investor households had no oinion about the risk in investment in gold!
Investor households are aware of risks in investing in e4uity shares!
Attractiveness of $*.)s on the decline5 Among other forms of fixed deosits,
fixed deosits of $*.)s have been considered risky by HC ercent of all households and DD ercent of the
investor households! *y early ?===, when the survey was being conducted, the roblems faced by the
$*.)s had become well known and this would erhas account for the high ercentage of the households
considering $*.) as being risky!
/ierarchy of risks in certain instruments5 9anked by a ascending order of risk
ercetion, bank fixed deosit were considered very safe i!e! least risky, followed by gold, #nits of #1I8
#SBH, #1I8other schemes, .ixed deosits of $on8:overnment comanies, Mutual .unds8e4uity shares and
debentures! <ebentures were erceived to be nearly as risky as e4uity!
1he distribution of the investments of all households into different financial
instruments corresonds with the risk ercetions5 /igher roortion of households has invested in
instruments with a lower risk ercetion! .or examle, IB ercent of all households have invested
in .ixed deosits and about BF ercent of all households consider .ixed deosits to be very safe investments!
1hat such a large ercentage of households have some kind of investments in fixed deosits is indeed
significant!
The Investment :references
o /ouseholds+ reference for instruments in which they commonly invest &other than e4uity shares and
debentures' match the risk ercetion5 1he ercentages of households investing in any instrument, ranked
by reference of all households show that the fixed deosits as a class, has the highest reference, followed
by recurring deosits of ost offices, ,I) olicies, small savings instruments, contractual savings, #1I
schemes, bonds of ublic sector undertakings, chit funds and ublic and rivate sector mutual funds!
5istri!ution of Bouseholds in Instruments !( Income ,lass
o -oularity of some instruments is secular to income classN while of others it is income deendent5
1his is seen in the relative oularity of bank fixed deosits which has an aeal across all income classes!
1ax has an influence articularly among the middle and higher income grous but has little relevance to the
lower income grou! 1his is seen by the higher incidence of national savings certificate and national savings
schemes among the middle and higher income grous!
o 1here is a fairly high incidence of households in ,I) olicies across all income grous5 It is
interesting to note that at least G= ercent of all households own ,I) olicies! Its oularity to with the
middle and higher income grous, could stem from the inherent need of households for safety and rotection
in the event of any contingencies! 1he wide distribution network of ,I) agents also has an imortant
role to lay in the growth of ,I)!
Investment 5istri!ution
A very small ercentage of household+s savings is channelized into the securities market! <esite the
exansion of the securities market and growth in the number of investor households and in the oulation of
investors, a very small ercentage of households savings is channelized into the securities market! 1his once
again highlights the untaed otential of the securities market to channelize household savings!
Investment attern match the risk ercetions of households5 1he urban investor households have a
higher roortion of the investments in e4uity shares, debentures and mutual funds comared to the rural
households!
1here is a correlation between the income levels and investments of the households in securities
market related instruments5 1hus not more than F ercent of the investments of the households in the low
and middle income grous are in e4uity shares, debentures and mutual funds comared to around ?G ercent
for the high income grous!
<esite their growth the mutual funds have not yet become an attractive investment avenue for the
low and middle8income grous!
+on.Investor BouseholdsG profile
A very large ercentage of the households have not articiated so far in the securities
market5 Security market exansion has still not been able to channelize significant roortions of savings
into the securities market!
9ural areas have a larger share of non8investors5 1he significant ma"ority of the non8investor
households are in the rural areas! 1he ercentage of non8investor households in the low8income grou is CF
ercent for rural areas and BD ercent for urban areas!
A bulk of non8investor households have little or no sare money to invest in the securities
market5 1his is on account of the bulk of the non8investor households belong to the low and middle income
grous
!
6ccuation8wise, the heads of most of the non8investor households are wage earners and self
emloyed5 1hey constitute nearly II ercent of the total non8investor households! 1he education level is
low as more than C? ercent heads of non8investor households heads are non matriculate or matriculate!
9easons for not investing in the securities are several5 HD ercent of the non8investor
households have cited non8availability of time or money as the first reason for not investing in shares or
debentures! Mutual funds, which afford small investors as investment vehicle for stock market investment,
could identify this segment of non8investor households as a target for mobilization of funds!
1he class of non8investor households who lack awareness reresent otential investor class5
HD ercent of the non8investor households, e4uivalent to around B> million households, aarently lack
awareness about the stock market! Investor education could imart awareness and education about the
rocedures of investing in stock markets! 1his highlights the need for a rogram of Ainvestor education and
awareness+ and also the necessity for creating infrastructure to facilitate the channelizing of their savings into
stock markets!
Investment Intentions
*ank fixed deosits continue to aeal the most5 1he share of households investing in a secific
instrument is an index of their reference for that instrument, then fixed deosits with banks, aears to be
the most referred form of investment! *ut how long this aeal will endure in the face of declining interest
rates remains to be seen! .ixed deosits with $*.)s have been accorded low riority with only D ercent of
the households intending to invest in these fixed deosits!
Increased ma"ority of existing investor households are unlikely to invest in the securities market5 It
is significant that the ma"ority of urban investor households &FB ercent' and rural investor households &IG
ercent' are unlikely to make fresh investments in e4uity shares! 1his is indeed a matter of concern as it
would amount to an exression of a lack of confidence by the existing investors on the e4uity market!
1here is an exected diversification of investment with rise in income levels! )lassification of all
households lanning to invest in the next one year by monthly income levels clearly evidences the exected
diversification of investment with level of income! .or examle, with increasing income levels, higher
roortion of households in at that income level invests in #1I! 1his is true even for e4uity investments!
Investment in mutual funds and e4uity become oular at higher income levels, indicating an increase in the
risk taking abilities at higher income levels!
E9uit( Investor BouseholdsG :rofile
E4uity investor households have invested through rimary and secondary markets but there are more
households investing through the rimary market5 6ut of the ?G!? million e4uity investor households, CH
ercent have invested in e4uity shares through the rimary market and BD ercent have bought e4uity shares
in the secondary market!
1he aeal of the secondary market investments seem to be less than the rimary market <ifficulties
faced by households in investing through this route such as lack of easy access to the market, inade4uacy of
market infrastructure, roblem in locating the right intermediary for dealing in the secondary market, lack of
guidance and advice, are some of the factors which could have inhibited the households, from investing in
the secondary market! A comaratively small ercentage of rural investor households in the secondary
market highlighted the non8availability of infrastructure for the secondary market!
More households have become e4uity investors after ?==?5 Around C> ercent of the e4uity investor
households were the Qfirst generation investorsR!
E4uity investor households with higher income have reorted better erformance of e4uity
investment, robably due to their access to rofessional advice! -ossibly ade4uate ortfolio diversification
at higher income levels would also have heled in imroving ortfolio erformance! ,ower income grous
cannot afford ortfolio diversification and are therefore exosed to unsystematic risk!
3III4$!1ective of the Stud(
*Title of the pro1ect
1he ro"ect is titled as AS1#<% 6. S16)0 E()/A:ES I$ I$<IA +
*$!1ective of the stud(
Estimate the number of households and the oulation of individual investors who have invested in the
e4uity market directly or indirectly through mutual funds!
<raw a rofile of the households and investors, and describe their demograhic, economic, financial and
e4uity ownershi characteristics!
#nderstand their investment references for e4uity as well as other saving instruments available in the
market, their ercetions about market risks, their exectations from the market, the nature of their
grievances and difficulties!
Estimate the number of households which have refrained from investing in the e4uity market, describe their
demograhic characteristics, and analyse the reasons for their reluctance to invest in e4uity!
Imrovement in the service given by brokers7sub8brokers!
*oosting the investors+ confidence in the securities market!
1o enable $on8investors who do not invest in securities market either directly or indirectly to invest
in e4uities!
#nderstanding the needs of the investor7non8investor households and rearing tailor8made lans to
suit those needs!
3I24Scope of the stud(
9eforms of the Indian economy during the ?==>+s have heled to bring the Indian securities market
into the main stream of the Indian financial system! As a result, the growth in investment by individual
investors has become 4uite significant! 1his made it ertinent to have a first hand in deth view of the extent
of ublic articiation directly in the securities market or through mutual funds!
1he Evolution of Stock Exchanges in India 6rigin of *ombay Stock Exchange in ?CIF and GD
other Stock Exchanges throughout India! 1he securities traded were e4uity, debt, derivatives such as
otions, futures, and index!
1he securities market has essentially three categories of articiants, viz!, the issuer of securities, the
investors in the securities and the intermediaries! 1he securities have two interdeendent and insearable
segments, the new issues &rimary' and the stock &secondary' market! 1he rimary market rovides the
channel for creation and sale of new securities, while the secondary market deals in securities reviously
issued! 1he secondary market oerated through two mediums, namely, the over8the8counter &61)' market
and the exchange8traded market! All the trades taking lace over a trading cycle &dayS1' are settled together
after a certain time &1TG day'! 1he trades executed on the $ational Stock Exchange &$SE' are cleared and
settled by a clearing cororation! 1he clearing cororation acts as a counter arty and guarantees settlement!
Exchanges in the country, which offer screen based trading system! 1he trading system is connected
using the OSA1 technology from over GC? cities! 1here are =,DDF trading members registered with SE*I as
at end March G>>B! In order to rovide efficiency, li4uidity and transarency, $SE introduced a nation8wide
on8line fully automated screen based trading system &S*1S'!
-resently only two exchanges viz!, $SE and Stock Exchange, Mumbai &*SE' rovides trading in the
derivatives of securities!
<esite having a large number of comanies listed on its exchanges, India accounted for a meagre
>!=HL in total world turnover in G>>F!
Market caitalization as ercent for :<- in India stood at FB!?L as at end8G>>H! 1here are two
deositories in India, viz! $S<, and )<S,! 1hey have been set u to rovide instantaneous electronic
transfer of securities! 1he number of dematerialized securities increased to G>?!= billion at the end of March
G>>B from ?HI!I billion at the end of March, G>>F!
According to the 9*I data, household sector accounted for CF!HL of gross domestic savings during
G>>H8>F! /owever, this has decreased to CD!=L in G>>F8>B! In the last fiscal G>>F8>B, they have invested
HI!HL of financial savings in deosits, GH!GL in insurance7rovident funds, ?G!DL on small savings, and
I!GL in securities! 1hus the fixed income bearing instruments are the most referred assets of the household
sector!
It aears that more and more eole refer mutual funds &M.s' as their investment vehicle! 1his
change in investor behaviour is induced by the evolution of a regulatory framework for M.s, tax
concessions offered by government and reference of investors for assive investing! Starting with
an asset base of 9s!GF> million in ?=BH, the total assets under management at the end of March G>>B
has risen to 9s!G, D?C,BG> million! <uring the last one decade, the resources mobilized by the M.s
are increased from 9s!??G, HH> million in ?==D8=H to 9s!FGI, C>> million in G>>F8>B!
1he total exchange traded derivatives witnessed a value of 9s!HC, GHG,F=G million during G>>F8>B as
against 9s!GF, BH?,GB= million during the receding year! $SE roved itself as the market leader
contributing ==!=L of the total turnover in G>>F8>B in India!
In the interest of investors, SE*I issued the <isclosure and Investor -rotection &<I-' guidelines!
1hese guidelines contain a substantial body of re4uirements for issuers7intermediaries, with a broad intention
to ensure that all the concerned entities observe high standards of integrity and fair dealing!
<EA, <)A, the SE*I and the stock exchanges have set u investor grievance cells for redressed of
investor grievance! 1he exchanges maintain investor rotection funds to take care of investor claims!
:overnment Securities Market5 $on8cometitive bids are acceted from retail investors in order to
widen investor base! .urther, to facilitate retail investors to invest in government securities, 9*I ermitted
select entities to rovide custody &)onstituent S:,' accounts! 6ther measures include abolition of 1<S on
government securities and stam duties on transfer of demat debt securities!
1he terms of reference of the study were to estimate the number of household and the oulation of
individual investors, their economic and demograhic rofile, ortfolio size, investment references for
e4uity as well as other saving instruments! 1he study was also designed to elicit information from
households on their risk ercetions, exeriences in investing in security market, return on investment and
the like! 6ther areas to be covered included awareness of investor rights, exeriences with grievance
redressed mechanismsN indications of investors+ future lans of investment and their exectations from the
securities market were Also obtained! 1he study also rovided estimates of non8investor households and
oulation, their economic and demograhic rofile, their attern of investment in various instruments and
reasons of non8investment in the e4uity market!
1o hel gauge the imact of the growth of the securities market on the households to conduct a
comrehensive survey of Indian Investor households!
1he ro"ect also covers to study the basic investor7otential investor7non8
Investment references, intentions, attitudes, ercetion, interests, like and dislikes towards investment
in securities market!
It also focuses its attention towards the brokers+ services, the extent of attracting investors, the
oortunities and their ability to face the challenges in the global cometitive environment!
,astly, on the basis of the study, to determine the measures to be adoted to imrove the level of
confidence of investors in the securities market!

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