INTRODUCTION

Stock prices are changed every day by the market. Buyers and sellers cause prices to change as they decide how valuable each stock is. Basically, share prices change because of supply and demand. If more people want to buy a stock than sell it - the price moves up. Conversely, if more people want to sell a stock, there would be more supply (sellers) than demand (buyers) - the price would start to fall. Volatility in the stock return is an integral part of stock market with the alternating bull and bear phases. In the bullish market, the share prices soar high and in the bearish market share prices fall down and these ups and downs determine the return and volatility of the stock market. Volatility is a symptom of a highly liquid stock market. Pricing of securities depends on volatility of each asset. An increase in stock market volatility brings a large stock price change of advances or declines. Investors interpret a raise in stock market volatility as an increase in the risk of equity investment and consequently they shift their funds to less risky assets. It has an impact on business investment spending and economic growth through a number of channels. Changes in local or global economic and political environment influence the share price movements and show the state of stock market to the general public. The issues of return and volatility have become increasingly important in recent times to the Indian investors, regulators, brokers, policy makers, dealers and researchers with the increase in the FIIs investment. Hence in this paper an attempt has been made to analyses: the return volatility

SCOPE OF THE STUDY

By the help of this study forecasting about stock market can be done easily & effectively.

Necessary & required improvement for FIIs .

OBJECTIVES OF STUDY

To identify the changes in stock market. To identify the possible changes in share holding pattern of sensex & nifty company. To Investigate how the withdrawn of foreign portfolio capital in Pre and post-election Phases has effect the price of different sensex & Nifty company. To take a detail looks at stock market & behavior of different investor group specially in FIIs.

LITERATURE REVIEW

VOLATILITY is an important task in financial markets, and it has held the attention of academics and practitioners over the last two decades. At the time of writing, there are at least 93 published and working papers that study forecasting performance of various volatility models, and several times that number have been written on the subject of volatility modelling without the forecasting aspect. This extensive research reflects the importance of volatility in investment, security valuation, risk management, and monetary policy making. Volatility is not the same as risk. When it is interpreted as uncertainty, it becomes a key input to many investment decisions and portfolio creations. Investors and portfolio managers have certain levels of risk which they can bear. A good forecast of the volatility of asset prices over the investment holding period is a good starting point for assessing investment risk. Volatility is the most important variable in the pricing of derivative securities, whose trading volume has quadrupled in recent years. To price an option, we need to know the volatility of the underlying asset from now until the option expires. In fact, the market convention is to list option prices in terms of volatility units. Nowadays, one can buy derivatives that are written on volatility Itself, in which case the definition and measurement of volatility will be clearly specified in the derivative contracts. In these new contracts, volatility now becomes the underlying asset. So volatility forecast and a second prediction on the volatility of volatility over the defined period is needed to price such derivative contracts.

METHODOLOGY

The methodology followed in this project involved the following Phases:

Type of the project:The project is descriptive and analytical in nature.

Collection of Data:Secondary Data: - Data were collected from BSE Sensex and NSE Nifty for calculating return and volatility & economic survey of period of 1998 to 2011. Besides for Explanation of several issues, Internet datas, books, trend analysis, technical fundamental analysis were consulted.

BIBLIOGRAPHY

Books:
Centre for Monitoring Indian Economy (CMIE): PROWESS Database. Chandrasekhar, C. P. (2004): The Markets vs. The People: A tale of two mandates Ghosh, Jayati (2004): The Stock Market and the Real Economy NSE (2001): Indian Securities Market: A Review, Volume IV, 2001, National Stock Exchange, Mumbai. Pal, Parthapratim (1998): Foreign Portfolio Investment in Indian Equity Markets: Has the Economy Benefited? Economic and Political Weekly, Vol. 33, No. 11, March 14. Pethe, Abhay and Ajit Karnik (2000): Do Indian Stock Markets Matter? Stock Market Indices and Macro-economic Variables Economic and Political Weekly, January 29.

Other Sources:
Annual Report www.myiris.com