Study on awareness of Capital Market amongst individuals

of Mumbai.

A Project Submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Commerce (Accounting and Finance)

Under the Faculty of Commerce

By

Palak Prem Aarya.

Under the Guidance of

Prof. Mamta Chhajer.

RSET’s

Ghanshyamdas Saraf College

of Arts and Commerce

Affiliated to University of Mumbai

Reaccredited by NAAC with ‘A’

Grade

S.V. Road, Malad

(W) Mumbai –

400064

MARCH 2021
Study on awareness of Capital Market amongst individuals
of Mumbai.

A Project Submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Commerce (Accounting and Finance)

Under the Faculty of Commerce

By

Palak Prem Aarya.

Under the Guidance of

Prof. Mamta Chhajer.

RSET’s

Ghanshyamdas Saraf College

of Arts and Commerce

Affiliated to University of Mumbai

Reaccredited by NAAC with ‘A’

Grade

S.V. Road, Malad (W)

Mumbai – 400064

MARCH 2021
 RSET’s

Ghanshyamdas Saraf

College of Arts and

Commerce

Affiliated to University of Mumbai

Reaccredited by NAAC with ‘A’ Grade

S.V. Road, Malad

(W) Mumbai –

400064

CERTIFICATE

This is to certify that Ms./Mr. Palak Prem Aarya has worked and duly completed her/his
Project Work for the degree of Bachelor in Commerce (Accounting & Finance) under the
Faculty of Commerce in the subject of Accounting & Finance and her/his project is entitled,
“Study on awareness of Capital market amongst individuals of Mumbai.” under my
supervision.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.

It is her/ his own work and facts reported by her/his personal findings and investigations.

Project Guide Principal

Prof.

College Seal

External Examiner
Date :
 DECLARATION

I the undersigned Miss / Mr. Palak Prem Aarya. hereby, declare that the work
embodied in this project work titled “Study on awareness of Capital Market
amongst individuals of Mumbai.”, forms my own contribution to the research work
carried out under the guidance of Prof. Mamta Chhajer. is a result of my own
research work and has not been previously submitted to any other University for any
other Degree/ Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Student
Mr./Ms
.

Certified by

Project Guide
Prof.
 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, Dr. Jayant Apte for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Course Co-ordinator, Prof. Mamta Chhajer for
her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof.
Mamta Chhajer. whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
 ABSTRACT

The Indian Capital Market deals with medium term and long term funds in. It refers to
all facilities and the institutional arrangements for borrowing and lending term funds
(medium term and long term). This market is supervised by SEBI. It ensures supply of
securities and non manipulated demands for them. The equity market is mostly
dominated by two major stock exchanges: Bombay Stock Exchange (BSE) and
National Stock Exchange (NSE). The methodology used for this survey is non
probability convenience sampling using a structured questionnaire by taking into
account the primary and secondary data.

The present study is an attempt on studying individuals awareness about Capital

market in Mumbai city. A total of 82 respondents were taken. Results revealed that
majority of the sample selected i.e 32% of population had low and 23% of population
had high level of knowledge about capital market. They had maximum awareness
regarding share, bonds and debentures and very less awareness regarding derivatives,
index futures and index options. Hence, it is seen that the capital market in India is a
little complex but yet it is fast growing. Capital markets in India contribute to a large
extend towards building up of the economic growth.
 INDEX

Chapter
Title of the Chapter Page No.
No.
CHAPTER 01
1 INTRODUCTION 1 - 40
1.1 Definition of Capital Market 3
1.2 Reforms in Capital Market in India 3-6
1.3 Factors affecting Capital Market in India 6-8
1.4 Classification of Capital Market 8 - 15
1.5 Instruments in Capital Market 15 - 18
1.6 Types of Capital Market 19 - 29
1.7 Equity market in India 29 - 34
1.8 Derivative markets in India 34 - 38
1.9 Securities Exchange Board of India 38 - 40

CHAPTER 02
2 RESEARCH METHODOLOGY 41 - 42
2.1 Title 41
2.2 Objectives of the study 41
2.3 Scope/Significance of the study 41
2.4 Methods of data collection 41
2.5 Primary data collection 41
2.6 Population 42
2.7 Sample size 42
2.8 Sampling method 42
2.9 Techniques of data analysing 42
2.10 Limitations of study 42

CHAPTER 03
3 REVIEW OF LITERATURE 43 - 49

CHAPTER 04
4 DATA ANALYSIS AND INTERPRETATION 50 - 75

CHAPTER 05
5 CONCLUSION 76 - 77

BIBLIOGRAPHY
APPENDIX (questionnaire)
 LIST OF TABLES AND GRAPHS
Table/
Graph Title Page No.
No.
01 Occupation 50
02 What is your age? 51

03 Are you aware of capital market? 52

04 Would you like to invest in capital market 53

05 Products offered through secondary market? 54

06 56
Who is the controller of capital market in India?
07 57
Capital market is the market of buying in short term funds?
08 Which of the following is the component of capital 58
market?
09 In capital market, which of the following are major 59
suppliers of trading instruments?
10 Money market where debt and stocks are traded and 60
maturity period is more than a year is classified as which
of the following?
11 How many companies comprise the Bombay stock 61
exchange SENSEX?
12 62
Which of the following is not the credit rating agency?
13 Which of the following is responsible for the fluctuations 63
in SENSEX
14 64
SENSEX is the index of?
15 65
Number of recognized stock exchanges in India
16 Are treasury bills and commercial papers a capital market 66
instruments?
17 67
What is future trading?
18 In India, NIFTY and SENSEX are calculated on the basis 68
of?
19 Which of the derivatives is not traded on Indian stock 69
market?
20 The first computerized online stock exchange in India was? 70
21 Which of the following is not available in India? 71
22 Which of the following words does not belong to stock 72
exchange?
23 Spot exchange rate is the rate of exchange between two 73
currencies
24 Break even of a Put option occurs when spot price is equal 74
to
25 Score 75
 CHAPTER 1 :

INTRODUCTION.

INTRODUCTION TO CAPITAL MARKET :

Generally, the personal savings of an entrepreneur along with contributions from

friends and relatives are the source of fund to start new or to expand existing business.
This may not be feasible in case of large projects as the required contribution from the
entrepreneur (promoter) would be very large even after availing term loan; the
promoter may not be able to bring his / her share (equity capital). Thus availability of
capital can be a major constraint in setting up or expanding business on a large scale.
However, instead of depending upon a limited pool of savings of a small circle of
friends and relatives, the promoter has the option of raising money from the public
across the country by selling (issuing) shares of the company. For this purpose, the
promoter can invite investment to his or her venture by issuing offer document which
gives full details about track record, the company, the nature of the project, the
business model, the expected profitability etc.

If you are comfortable with this proposed venture, you may invest and thus become a
shareholder of the company. Through aggregation, even small amounts available with
a very large number of individuals translate into usable capital for corporates. Your

1
small savings of, say, even ` 5,000 can contribute in setting up, say, a ` 5,000 crore
Cement or Steel plant. This mechanism by which corporates raise money from public
is called the primary markets.

Importantly, when you, as a shareholder, need your money back, you can sell these
shares to other or new investors. Such trades do not reduce or alter the company’s
capital. Stock exchanges bring such sellers and buyers together and facilitate trading.
Therefore, companies raising money from public are required to list their shares on
the stock exchange. This mechanism of buying and selling shares through stock
exchange is known as the secondary markets.

As a shareholder, you are part owner of the company and entitled to all the benefits of
ownership, including dividend (company’s profit distributed to owners). Over the
years if the company performs well, other investors would like to become owners of
this performing company by buying its shares. This increase in demand for shares
leads to increase in its price. You then have the option of selling your shares at a
higher price than at which you purchased it. You can thus increase your wealth,
provided you make the right choice.

Apart from shares, there are many other financial instruments (securities) used for
raising capital. Debentures or bonds are debt instruments that pay interest over their
life time and are used by corporates to raise medium or long-term debt capital. If you
prefer fixed income, you may invest in these instruments, which may give you higher
rate of interest than bank fixed deposit, because of the higher risk. Besides, equity and
debt, a combination of these instruments, like convertible debentures, preference
shares are also issued to raise capital.

If you have constraints like time, wherewithal, small amount etc. to invest in the
market directly, Mutual Funds (MFs), which are regulated entities, provide an
alternative avenue. They collect money from many investors and invest the aggregate
amount in the markets in a professional and transparent manner. The returns from
these investments net of management fees are available to you as a MF unit holder.

MFs offer various schemes, like those investing only in equity or debt, index funds,
gold funds, etc. to cater to risk appetite of various investors. Even with very small
amounts, you can invest in MF schemes through monthly systematic investment plans
(SIP).

The institutions, players and mechanism that bring suppliers and users of capital
together, is known as capital market. It allows people to do more with their savings
by providing variety of assets thereby enhancing the wealth of investors who make
the right choice. Simultaneously, it enables entrepreneurs to do more with their ideas
and talent, facilitating capital formation.

Thus capital market mobilizes savings and channelizes it, through securities,
into preferred entrepreneurs.

It is not that the providers of funds meet the user of and exchange funds for securities.
It is because the securities offered by the users may not match the preference of the
providers of funds. There are a large variety of intermediaries who bring the providers
and user of funds together to facilitate the transactions.

The market is supervised by SEBI. It ensures supply of quality securities and non-
manipulated demand for them. It develops best market practices and takes
enforcement actions against the miscreants. It essentially maintains discipline in the
market so that the participants can undertake transaction safely.

1.1 DEFINITION OF CAPITAL MARKET :

Capital markets are financial markets for the buying and selling of long-term debt or
equity-backed securities. The buying/selling is under taken by participants such as
individuals and institutions. These markets channel the wealth of savers to those who
can put it to long-term productive use, such as companies or governments making
long-term investments. The capital market can either be primary market or secondary
market.

1.2 REFORMS IN CAPITAL MARKET IN INDIA :

The major reform undertaken in capital market of India includes:
1. Establishment of SEBI :
The Securities and Exchange Board of India (SEBI) was established in 1988. It got a
legal status in 1992. SEBI was primarily set up to regulate the activities of the
merchant banks, to control the operations of mutual funds, to work as a promoter of
the stock exchange activities and to act as a regulatory authority of new issue
activities of companies. The SEBI was set up with the fundamental objective, “to
protect the interest of investors in securities market and for matters connected
therewith or incidental thereto.”
The main functions of SEBI are –
- To regulate the business of the stock market and other securities market.
- To promote and regulate the self regulatory organizations.
- To prohibit fraudulent and unfair trade practices in securities market.
- To promote awareness among investors and training of intermediaries about
safety of market.
- To prohibit insider trading in securities market.
- To regulate huge acquisition of shares and takeover of companies.

2. Establishment of credit rating agencies :

Three creditors rating agencies viz. The Credit Rating Information Service of India
Limited (CRISIL – 1988), the Investment Information and Credit Rating Agency of
India Limited (ICRA – 1991) and Credit Analysis and Research Limited (CARE)
were set up in order to assess the financial health of different financial institutions and
agencies related to the stock market activities. It is a for the investors also in
evaluating the risk of their investments.

3. Increasing of merchant banking activities :

Many Indian and foreign commercial banks have set up their merchant banking
divisions in the last few years. These divisions provide financial services such as
underwriting facilities, issue organizing, consultancy services, etc.

4. Rising electronic transactions :

Due to technological development in the last few years, the physical transactions with
more paper work is reduced. It saves money, time and energy of the investors. Thus it
has made investing safer and hassle free encouraging more people to join the capital
market.

5. Growing mutual fund industry :

The growing of mutual fund in India has certainly helped the capital market to grow.
Public sector banks, foreign banks, financial institutions and joint mutual funds
between the Indian and foreign firms have launched many new funds. A big
diversification in terms of schemes, maturity, etc has taken place in mutual funds in
India. It has given a wide choice for the common investors to enter the capital market.

6. Growing stock exchanges :

The numbers of various stock exchanges in India are increasing. Initially the BSE was
the main exchange, but now after the setting up of the NSE and the OTCEI, stock
exchanges have spread across the country. Recently a new inter connected stock
exchange of India has joined the existing stock exchange.

7. Investor’s protection :

Under the purview of SEBI the central government of India has set up the Investors
Education and Protection Fund (IEPF) in 2001. It works in educating and guiding
investors. It tries to protect the interest of small investors from fraud and malpractices
in the capital market.

8. Growth of derivative transactions :

Since June 2000, the NSE has introduced the derivatives trading in the equities. In
November 2001 it also introduced the future and option transactions. These
innovative products have given variety for the investment leading to the expansion of
the capital market.

9. Commodity trading :

Along with the trading of ordinary securities, the trading in commodities is also
encouraged. The Multi Commodity Exchange (MCX) is set up. The volume of such
transactions is growing at a splendid rate.
 10. Insurance sector reforms :

Indian insurance sector has also witnessed massive reforms in last few years. The
Insurance Regulatory and Development Authority (IRDA) was set up in 2000. It
paved the entry of the private insurance firm in India. As many insurance companies
invest their money in the capital market, it has expanded.

These reforms have resulted into the tremendous growth of Indian capital market.

1.3 FACTORS AFFECTING CAPITAL MARKET IN INDIA :

A range of factors affects the capital market. Some of the factors that influence capital
market are as follows: -

1) Performance of domestic Companies : -

The performance of the companies' or rather corporate earnings is one of the factors
that have direct impact or effect on capital market in a country. Weak corporate
earnings indicate that the demand for goods and services in the economy is less due to
slow growth in per capita income of people. Because of slow growth in demand there
is slow growth in employment that means slow growth in demand in the near future.
Thus weak corporate earnings indicate average or not so good prospects for the
economy as a whole in the near term. In such a scenario the investors (both domestic
as well as foreign) would be wary to invest in the capital market and thus there is bear
market like situation. The opposite case of it would be robust corporate earning and
its positive impact on the capital market.

2) Environmental Factors: -

Environmental Factor in India's context primarily means- Monsoon. In India around

60% of agricultural production is dependent on monsoon. Thus there is heavy
dependence on monsoon. The major chunk of agricultural production comes from the
states of Punjab Haryana & Uttar Pradesh. Thus deficient or delayed monsoon in this
part of the country would directly affect the agricultural output in the country. Apart
from monsoon other natural calamities like Floods, tsunami, drought, earthquake, etc.
also have an impact on the capital market of a country.

3) Macro Economic Numbers :-

The macroeconomic numbers also influence the capital market. It includes Index of
Industrial Production (IIP) which is released every month, annual Inflation number
indicated by Wholesale Price Index (WPI) which is released every week, Export -
Import numbers which are declared every month, Core Industries growth rate (It
includes Six Core infrastructure industries Coal, Crude oil, refining power, cement
and finished steel) which comes out every month, etc. This macro economic
indicators indicate the state of the economy and the direction in which the economy is
headed and therefore impacts the capital market in India.

4) Global Cues : -

In this world of globalization various economies are interdependent and

interconnected. An event in one part of the world is bound to affect other parts of the
world however the magnitude and intensity of impact would vary. Thus capital
market in India is also affected by developments in other parts of the world i.e. U.S,
Europe, Japan, etc. Global cues includes corporate earnings of MNC's, consumer
confidence index in developed countries. jobless claims in developed countries, global
growth outlook given by various agencies like IMF, economic growth of major
economies, price of crude oil, credit rating of various economies given by Moody's,
S&P, etc.

5) Political stability and government policies : -

For any economy to achieve and sustain growth it has to have political stability and
pro- growth government policies. This is because when there is political stability there
is stability and consistency in government's attitude that is communicated through
various government policies. The vice versa is the case when there is no political
stability So capital market also reacts to the nature of government, attitude of
government, and various policies of the government.

6) Growth prospects of an economy :-

When the national income of the country increases and per capita income of people
increases it is said that the economy is growing. Higher income also means higher
expenditure and higher savings. This augurs well for the economy as higher
expenditure means higher demand and higher savings means higher investment. Thus
when an economy as growing at a good pace capital market of the country attracts
more money from investors, both from within and outside the country and vice versa
So we can say that growth prospects of an economy do have an impact on capital
markets

7) Investor Sentiment and risk appetite :-

Another factor, which influences capital market, is investor sentiment and their risk
appetite. Even if the investors have the money to invest but if they are not confident
about the returns from their investment, they may stay away from investment for
some time. At the same time if the investors have low risk appetite, they may stay
away from investment and wait for the right time to come.

1.4 CLASSIFICATION OF CAPITAL MARKET :

  PRIMARY MARKET :
Companies issue securities from time to time to raise funds in order to meet their
financial requirements for modernization, expansion and diversification programs.
These securities are issued directly to the investors (both individuals as well as
institutional) through the mechanism called primary market or new issue market. The
primary market refers to the setup, which helps the industry to raise the funds by
issuing different types of securities. This setup consists of the type of securities
available, financial institutions and the regulatory framework. The primary market
discharges the important function of transfer of savings especially of the individuals
to the companies, the mutual funds, and the public sector undertakings. Individuals or
other investors with surplus money invest their savings in exchange for shares,
debentures and other securities. In the primary market the new issue of securities are
presented in the form of public issues, right issues or private placement.
Firms that seek financing. exchange their financial liabilities, such as shares and
debentures in return for the money provided by the financial intermediaries or the
investors directly. These firms then convert these funds into real capital such as plant
and machinery etc. The structure of the capital market where the firms exchange their
financial liabilities for long-term financing called the primary market. The primary
market has two distinguishing features :
- It is the segment of the capital market where capital formation occurs, and
- In order to obtain required financing, new issues of shares, debentures
securities are sold in the primary market. Subsequent trading in these
securities occurs in other segment of the capital market, known as secondary
market.
The securities that are often resorted for raising funds are equity shares, preference
shares, bonds, debentures, warrants, cumulative convertible preference shares, zero
interest convertible debentures, etc. Public issues of securities may be made through:
» Prospectus,
» Offer for sale,
» Book building process and
» Private placement
The investors directly subscribe the securities offered to public through a prospectus.
The company through different media generally makes wide publicity about the
public offer.
 Activities in the Primary Market
1. Appointment of merchant bankers
2. Collection of money
3. Pricing of securities being issued
4. Minimum subscription
5. Communication Marketing of the issue
6. Listing on the stock exchange(s)
7. Information on credit risk
8. Allotment of securities in demat/ physical mode
9. Making public issues
10. Record keeping
 Function of Primary Market :
1.Organization : Deals with the origin of the new issue. The proposal is analyzed in
terms of the nature of the security, the size of the issued timings of the issue and
flotation method of the issue.
2. Underwriting : Underwriting is a kind of guarantee undertaken by an institution or
firm of brokers ensuring the marketability of an issue. It is a method whereby the
guarantor makes a promise to the stock issuing company that he would purchase a
certain specific number of shares in the event of their not being invested by the public.
3. Distribution : The third function is that of distribution of shares. Distribution means
the function of sale of shares and debentures to the investors. This is performed by
brokers and agents. They maintain regular lists of clients and directly contact them for
purchase and sale of securities.
 Role of Primary Market :
» Capital formation - It provides attractive issue to the potential investors and with
this company can raise capital at lower costs.
» Liquidity - As the securities issued in primary market can be immediately sold in
Secondary market the rate of liquidity is higher.
» Diversification - Many financial intermediaries invest in primary market; therefore
there is less risk if there is failure in investment as the company does not depend on a
single investor. The diversification of investment reduces the overall risk.
» Reduction in cost - Prospectus containing all details about the securities are given to
the investors hence reducing the cost is searching and assessing the individual
securities.
 Features of Primary Market :
» It is the new issue market for the new long-term capital.
» Here company issues the securities directly to the investors and not through any
intermediaries.
» On receiving the money from the new issues, the company will issue the security
certificates to the investors.
» The amount obtained by the company after the new issues are utilized for expansion
of the present business or for setting up new ventures.
» External finance for longer term such as loans from financial institutions is not
included in primary market. There is an option called 'going public' in which the
borrowers in new issue market raise capital for converting private capital into public
Capital.

 Types of issues :
Primary market issues can be classified into four types :-
1. Initial Public Offer (IPO) -
When an unlisted company makes either a fresh issue of securities or an offer for sale
of its existing securities or both, for the first time to the public, the issue is called as
an Initial Public Offer.
2. Follow On Public Offer (FPO) -
When an already listed company makes either a fresh issue of securities to the public
or an offer for sale of existing shares to the public, through an offer document, it is
referred to as Follow on Offer.
3. Rights Issue –
When a listed company proposes to issue fresh securities to its existing shareholders,
as on a record date, it is called as a rights issue. The rights are normally offered in a
particular ratio to the number of securities held prior to the issue. This route is best
suited for companies who would like to raise capital without diluting stake of its
existing shareholders.
4. A Preferential issue -
A Preferential Issue is an issue of shares or of convertible securities by listed
companies to a select group of persons under Section 81 of the Companies Act, 1956,
that is neither a rights issue nor a public issue. This is a faster way for a company to
raise equity capital. The issuer company has to comply with the Companies Act and
the requirements contained in the chapter, pertaining to preferential allotment in SEBI
guidelines, which inter alia include pricing, disclosures in notice etc.

 SECONDARY MARKET :
Secondary market refers to the network / system for the subsequent sale and purchase
of securities. An investor can apply and get allotted a specified number of securities
by the Issuing company in the primary market. However, once allotted the securities
can thereafter be sold and purchased in the secondary market only. An investor who
wants to purchase the securities can buy these securities in the secondary market. The
secondary market is market for subsequent sale / purchase and trading in the
securities. A security emerges or takes birth in the primary market but its subsequent
movements take place in secondary market. The secondary market consists of that
portion of the capital market where the previously issued securities are transacted.
The firms do not obtain any new financing from secondary market. The secondary
market provides the life-blood to any financial system in general, and to the capital
market in particular.
The secondary market is represented by the stock exchanges in any capital market.
The stock exchanges provide an organized market place for the investors to trade in
the securities. This may be the most important function of stock exchanges. The stock
exchange theoretically speaking, a perfectly competitive market, as a large number of
sellers and buyers participate in it and the information regarding the securities is
publicly available to all the investors. A stock exchange permits the security prices to
be determined by the competitive forces. They are not set by negotiations off the
floor, where one party might have a bargaining advantage. The bidding process flows
from the demand and supply underlying each security. This means that the specific
price of security is determined, more or less, in the manner of an auction. The stock
exchange provide market in which the member of the stock exchange (the share
broker) and the investors participate to ensure liquidity to the latter.
In India, the secondary market, represented by the stock exchange network, is more
than 100 years old when in 1875, the first stock exchange started operating in
Mumbai. Gradually, stock exchanges at other places have also been established and at
present, there are 23 stock exchanges operating in India. The secondary market in
India got a boost when the Over The Counter Exchange of India (OTCEI) and the
National Stock Exchange (NSE) were established. Out of the 23 stock exchanges, 20
stock exchanges are operating at Mumbai (BSE), Kolkata, Chennai, Ahmadabad,
Delhi, and Indore, Bangalore, Hyderabad, Cochin, Kanpur, Pune, Ludhiana,
Guwahati, Mangalore, Patna, Jaipur, Bhubaneswar, Rajkot, Vadodara and
Coimbatore. Besides, there is one ICSE established by 14 Regional Stock Exchanges.
It may be noted that out of 23 stock exchanges, only 2 i.e the NSE and OTCEI have
been established by the All India Financial Institutions while other stock exchanges
are operating as associations or limited companies. In order to protect and safeguard
the interest of investors, the operations, functioning and working of the stock
exchange and their members (i.e, share brokers) are supervised and regulated by the
securities contracts (regulations) act, 1956 and the SEBI Act, 1992.
 Activities in the Secondary Market :
» Trading of securities
» Risk management
»Clearing and settlement of trades
» Delivery of securities and funds
 Importance of Secondary Market:
» Providing liquidity and marketability to existing securities
» Pricing of securities
» Safety of transaction
» Contribution to economic growth
» Providing scope for speculation
 Role of Secondary Market :
For the general investor, the secondary market provides an efficient platform for
trading of his securities. For the management of the company, Secondary equity
markets serve as a monitoring and control conduit by facilitating value-enhancing
control activities, enabling implementation of incentive-based management contracts,
and aggregating information (via price discovery) that guides management decisions.
 Products in secondary markets :
» Equity Shares
» Rights Issue / Rights Shares
» Bonus Shares
» Preferred Stock / Preference shares
» Cumulative Preference Shares
» Cumulative Convertible Preference Shares
» Participating Preference Share
» Bond
» Zero Coupon Bond
» Convertible Bond
» Debentures
» Commercial Paper
» Coupons
» Treasury Bills
 The OTC Market :
Sometimes you'll hear a dealer market referred to as an over-the-counter (OTC)
market. The term originally meant a relatively unorganized system where trading did
not occur at a physical place, as we described above, but rather through dealer
networks. The term was most likely derived from the off-Wall Street trading that
boomed during the great bull market of the 1920s, in which shares were sold over-the-
counter in stock shops. In other words, the stocks were not listed on a stock exchange
- they were "unlisted".
 Third and Fourth Markets :
You might also hear the terms "third" and "fourth markets". These don't concern
individual investors because they involve significant volumes of shares to be
transacted per trade. These markets deal with transactions between broker-dealers and
large institutions through over-the-counter electronic networks. The third market
comprises OTC transactions between broker-dealers and large institutions. The fourth
market is made up of transactions that take place between large institutions. The main
reason these third and fourth market transactions occur is to avoid placing these
orders through the main exchange, which could greatly affect the price of the security.
Because access to the third and fourth markets is limited, their activities have little
effect on the average investor.

1.5 INSTRUMENTS IN INDIAN CAPITAL MARKET :

1) Secured Premium Notes :

SPN is a secured debenture redeemable at premium issued along with a detachable
warrant, redeemable after a notice period, say four to seven years. The warrants
attached to SPN gives the holder the right to apply and get allotted equity shares;
provided the SPN is fully paid. There is a lock-in period for SPN during which no
internet will be paid for an invested amount.
2) Deep Discount Bonds :
A bond that sells at a significant discount from par value and has no coupon rate or
lower coupon rate than the prevailing rates of fixed-income securities with a similar
risk profile.
They are designed to meet the long term funds requirements of the issuer and
investors who are not looking for immediate return and can be sold with a long
maturity of 25-30 years at adept discount on the face value of debentures.
3) Equity Shares With Detachable Warrants :
A warrant is a security issued by a company entitling the holder to buy a given
number of shares of stock at a stipulated price during a specified period. These
warrants are separately registered with the stock exchanges and traded separately.
Warrants are frequently attached to bonds or preferred stock as a sweetener, allowing
the issuer to pay lower interest rates or dividends.
4) Fully Convertible Debentures With Interest :
This is a debt instrument that is fully converted over a specified period into equity
shares. The conversion can be in one or several phases. When the instrument is a pure
debt instrument, interest is paid to the investor. After conversion, interest payments
cease on the portion that is converted, If project finance is raised through an FCD
issue, the investor can earn interest even when the project is under implementation.
Once the project is operational, the investor can participate in the profits through
share price appreciation and dividend payments.
5) Disaster Bonds :
Also known as Catastrophe or CAT Bonds, Disaster Bond is a high-yield debt
instrument that is usually insurance linked and meant to raise money in case of a
catastrophe.
6) Mortgage Backed Securities(MBS) :
MBS is a type of asset-backed security, basically a debt obligation that represents a
claim on the cash flows from mortgage loans, most commonly on residential property.
Kinds of Mortgage Backed Securities :
- Commercial mortgage backed securities: backed by mortgages on commercial
property
- Collateralized mortgage obligation: a more complex MBS in which the
mortgages are ordered into tranches by some quality (such as repayment time),
with each tranche sold as a separate security.
- Stripped mortgage backed securities. Each mortgage payment is partly used
to pay down the loan's principal and partly used to pay the interest on it.
- Residential mortgage backed securities: backed by mortgages on residential
property
7) Indian Depository Receipts :
As per the definition given in the Companies (Issue of Indian Depository Receipts)
Rules, 2004. IDR is an instrument in the form of a Depository Receipt created by the
Indian depository in India against the underlying equity shares of the issuing
company. In an IDR, foreign companies would issue shares to an Indian Depository
(say National Security Depository Limited - NSDL), which would in turn issue
depository receipts to investors in India. The actual shares underlying the IDRs would
be held by an Overseas Custodian, which shall authorize the Indian Depository to
issue the IDRs. The IDRS would have following features :
Overseas Custodian: It is a foreign bank having branches in India and requires
approval from Finance Ministry for acting as custodian and Indian depository has to
be registered with SEBI.
Approvals for issue of IDRs: IDR issue will require approval from SEBI and
application can be made for this purpose 90 days before the issue opening date.
Listing: These IDRs would be listed on stock exchanges in India and would be freely
transferable.
Eligibility condition for overseas companies to issue IDRs :
Capital: The overseas company intending to issue IDRs should have paid up capital
and free reserve of at least $100 millions.
Sales turnover: It should have an average turnover of $ 500 millions during the last
three years.
Profits/dividend: Such company should also have earned profits in the last 5 years
and should have declared dividend of at least 10% each year during this period.
Debt equity ratio: The pre-issue debt equity ratio such company should not be more
than 2:1.
Extent of issue: The issue during a particular year should not exceed 15% of the paid
up capital plus free reserves.
Redemption: IDRs would not be redeemable into underlying equity shares before one
year from date of issue.
Denomination: IDRs would be denominated in Indian rupees, irrespective of the
denomination of the underlying shares.
Benefits: In addition to other avenues, IDR is an additional investment opportunity for
Indian investors for overseas investment.
8) Foreign currency convertible bonds (FCCBS) :
A convertible bond is a mix between a debt and equity instrument. It is a bond having
regular coupon and principal payments, but these bonds also give the bondholder the
option to convert the bond into stock. FCCB is issued in a currency different than the
issuer's domestic currency
The investors receive the safety of guaranteed payments on bond and are also able to
take advantage of any large price appreciation in the company's stock. Due to the
equity side of the bond, which adds value, the coupon payments on the bond are lower
for the company, thereby reducing its debt-financing costs.
9) Derivatives :
A derivative is a financial instrument whose characteristics and value depend upon the
characteristics and value of some underlying asset typically commodity, bond, equity,
currency, index, event etc. Advanced investors sometimes purchase or sell derivatives
to manage the risk associated with the underlying security, to protect against
fluctuations in value, or to profit from periods of inactivity or decline. Derivatives are
often leveraged, such that a small movement in the underlying value can cause a large
difference in the value of the derivative.
10) Exchange Traded Funds :
An exchange-traded fund (or ETF) is an investment vehicle traded on stock
exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades
at approximately the same price as the net asset value of its underlying assets over the
course of the trading day.
Most ETFs track an index, such as the S&P 500 or Sensex. ETFs may be attractive as
investments because of their low costs, tax efficiency, and stock-like features, and
single security can track the performance of a growing number of different index
funds (currently the NSE Nifty)
11) Gold ETF :
A Gold Exchange Traded Fund (ETF) is a financial instrument like a mutual fund
whose value depends on the price of gold. In most cases, the price of one unit of gold
ETF approximately reflects the price of 1 gram of gold. As the price of gold rises, the
price of the ETF is also expected to rise by the same amount. Gold exchange-traded
funds are traded on the major stock exchanges including Zurich, Mumbai, London,
Paris and New York. There are also closed-end funds (CEF's) and exchange-traded
notes (ETN's) that aim to track the gold price.
1.6 TYPES OF CAPITAL MARKET :

Any government or corporation requires capital (funds) to finance its operations and
to engage in its own long-term investments. To do this, a company raises money
through the sale of securities stocks and bonds in the company's name. These are
bought and sold in the capital markets.

Thus there are two types of capital market as follows:

» Debt or Bond Market

» Stock or Equity Market

1.6.A. Debt or Bond Market -

The bond market (also known as the debt, credit, or fixed income market) is a
financial market where participants buy and sell debt securities, usually in the form of
bonds.

References to the "bond market" usually refer to the government bond market,
because of its size, liquidity, lack of credit risk and, therefore, sensitivity to interest
rates. Because of the inverse relationship between bond valuation and interest rates,
the bond market is often used to indicate changes in interest rates or the shape of the
yield curve.

Besides other causes, the decentralized market structure of the corporate and
municipal bond markets, as distinguished from the stock market structure, results in
higher transaction costs and less liquidity.

Bond markets in most countries remain decentralized and lack common exchanges
like stock, future and commodity markets. This has occurred in part, because no two
bond issues are exactly alike, and the variety of bond securities outstanding greatly
exceeds that of stocks.

With a large section of population underprivileged the welfare commitments of the

Indian state have to be supported by a large government borrowing program The
outstanding marketable government debt has grown from 4.3 trillion in 2000-01 to
29.9 trillion in 2012-13. The size of the annual borrowing of the central government
through dated securities has grown from 1.0 trillion to 5.6 trillion during this period. It
is no mean achievement to manage such large issuances in a non-disruptive manner in
the post Fiscal Responsibility & Budget Management (FRBM) regime and declining
SLR.

The liquidity in the secondary market has also increased significantly from a daily
average trading volume of 9 billion in February 2002 to 344 billion in March 2013.
The development of the debt and the derivatives market in India needs to be seen
from the perspective of a central bank and a financial sector regulator which has a
mandate to facilitate development of debt markets of the country.

In many countries, debt market (both sovereign and corporate) is larger than equity
markets. In fact, in matured economies, the debt market is three times the size of the
equity market. However, in India like in emerging economies, the equity market has
been more active developed and has been the centre of attention be it in media or
otherwise Nevertheless, the Indian debt market has transformed itself into a much
more vibrant trading field for debt instruments from the elementary market about a
decade ago. Further, the corporate debt market in developed economies like US is
almost 20% of their total debt market. In contrast, the corporate bond market (i.e
private corporate sector raising debt through public issuance in capital market), is
only an insignificant part of the Indian debt market Amongst the most important
reforms is the development and deepening of the non public debt capital market
(DCM), where growth has been lack lustre in contrast to a soaring equity market.

To strengthen the Indian financial systems it is now pertinent to develop the

environment for corporate debt market in India.

The limitations of public finances as well as the systemic risk awareness of the
banking systems in developing countries have led to a growing interest in developing
bond markets. It is believed that well run and liquid corporate bond markets can play
a critical role in supporting economic development in developing countries, both at
the macroeconomic and microeconomic levels. Though the corporate debt market in
India has been in existence since the Independence in 1947. it was only after 1985-
86, following some debt market reforms that the state owned public enterprises (PSU)
began issuing PSU bonds. However, in the absence of a well functioning secondary
market such debt instruments remained highly illiquid and unpopular among the
investing population at large

1.6.A.i. Types of Bond Market in India -

 Corporate Bond Market

 Municipal Bond Market
 Government and Agency Bond Market
 Funding Bond Market
 Mortgage Backed and Collateral Debt Obligation Bond Market

1.6.A.ii. Types of Debt Instruments -

There are various types of debt instruments available that one can find in Indian debt
market

i. Government Securities:-

It is the Reserve Bank of India that issues Government Securities or G-Secs on behalf
of the Government of India. These securities have a maturity period of 1 to 30 years.
G-Secs offer fixed interest rate, where interests are payable semi-annually.

ii. Corporate Bonds:-

These bonds come from PSUs and private corporations and are offered for an
extensive range of tenures up to 15 years. Comparing to G-Secs, corporate bonds
carry higher risks, which depend upon the corporation, the industry where the
corporation is currently operating, the current market conditions, and the rating of the
corporation. However, these bonds also give higher returns than the G-Secs

iii. Certificate of Deposit:-

These are negotiable money market instruments. Certificate of Deposits (CDs), which
usually offer higher returns than Bank term deposits, are issued in Demat form and
also as a Usance Promissory Notes. There are several institutions that can issue CDs
Banks can offer CDs which have maturity between 7 days and 1 year. CDs from
financial institutions have maturity between 1 and 3 years. There are some agencies
like ICRA, FITCH, CARE, CRISIL etc that offer ratings of CDs. CDs are available in
the denominations of 1 Lac and in multiple of that

iv. Commercial Papers:-

There are short term securities with maturity of 7 to 365 days. CPs is issued by
corporate entities at a discount to face value.

v. Zero Coupon bonds (ZCBs):-

ZCBs are available at a discount to the face value. There is no interest paid on these
instruments but on maturity the face value is redeemed from the RBI. A bond of face
value 100 will be available at a discount say at Rs 80 and the date of maturity is after
two years. This implies an interest rate on the instrument. When the bonds are
redeemed Rs 100 will be paid. The securities do not carry any coupon or interest rate
i.e unlike dated securities no interest is paid out every year. When the bond matures
the face value is returned. The difference between the issue price (discounted price)
and face value is the return on this security.

1.6.A.iii. Recent developments in the corporate debt market in India -

In the recent past, the corporate debt market has seen a high growth of innovative
asset-backed securities. The servicing of debt and related obligations for such
instruments is backed by some sort of financial assets and/or credit support from a
third party. Over the years greater innovation has been witnessed in the corporate
bond issuances, like floating rate instruments, zero coupon bonds, convertible bonds,
callable (put-able) bonds and step redemption bonds.

These innovative issues have provided a gamut of securities that caters to a wider
segment of investors in terms of maintaining a desirable risk-return balance. Over the
last few years, corporate issuers have shown a distinct preference for private
placements over public issues. This has further cramped the liquidity in the market.
The dominance of private placement in total issuances is attributable to a number of
factors.

 Lengthy issuance procedure for public issues, in particular, the information

disclosure requirements.
  Costs of a public issue are considerably higher than those for a private
placement.
 The quantum of money raised through private placements is typically larger
than those that can be garnered through a public issue. Also, a corporate can
expect to raise debt from the market at finer rates than the prime-lending rate
of banks and financial institutions only with an AAA rated paper. This limits
the number of entities that would find it profitable to enter the market directly.

1.6.A.iv. Advantages of debt market -

The biggest advantage of investing in Indian debt market is its assured returns. The
returns that the market offer is almost risk-free (though there is always certain amount
of risks, however the trend says that return is almost assured). Safer are the
government securities. On the other hand, there are certain amounts of risks in the
corporate, FI and PSU debt instruments. However, investors can take help from the
credit rating agencies which rate those debt instruments.

Another advantage of investing in India debt market is its high liquidity Banks offer
easy loans to the investors against government securities

1.6.A.v. Disadvantages of debt market -

As the returns here are risk free, those are not as high as the equities market at the
same time. So, at one hand we are getting assured returns, but on the other hand, we
are getting less return at the same time. Retail participation is also very less here,
though increased recently.

1.6.A.vi. Different types of risks with regard to debt securities -

 Default Risk:

This can be defined as the risk that an issuer of a bond may be unable to make timely
payment of interest or principal on a debt security or to otherwise comply with the
provisions of a bond indenture and is also referred to as credit risk.

 Interest Rate Risk:

It can be defined as the risk emerging from an adverse change in the interest rate
prevalent in the market so as to affect the yield on the existing instruments. A good
case would be an upswing in the prevailing interest rate scenario leading to a situation
where the investors' money is locked at lower rates whereas if he had waited and
invested in the changed interest rate scenario, he would have earned more.

 Reinvestment Rate Risk:

It can be defined as the probability of a fall in the interest rate resulting in a lack of
options to invest the interest received at regular intervals at higher rates at comparable
rates in the market.

 Counter Party Risk:

It is the normal risk associated with any transaction and refers to the failure or
inability of the opposite party to the contract to deliver either the promised security or
the sale value at the time of settlement

 Price Risk:

Refers to the possibility of not being able to receive the expected price on any order
due to an adverse movement in the prices.

1.6.A.vii. Bond market participants -

Bond market participants are similar to participants in most financial markets and are
essentially either buyers (debt issuer) of funds or sellers (institution) of funds and
often both

Participants include:

 Institutional investors
 Governments
 Traders
 Individuals

Because of the specificity of individual bond issues, and the lack of liquidity in many
smaller issues, the majority of outstanding bonds are held by institutions like pension
funds, banks and mutual funds. In the India, approximately 10% of the market is
currently held by private individuals. Mortgage-backed bonds accounted for around a
quarter of outstanding bonds in the US in 2009 or some $9.2 trillion. The sub-prime
portion of this market is variously estimated at between $500bn and $1.4 trillion.
Treasury bonds and corporate bonds each accounted for a fifth of US domestic bonds.
The outstanding value of international bonds increased by 13% in 2009 to $27 trillion.

1.6.A.viii. Bond investments -

Investment companies allow individual investors the ability to participate in the bond
markets through bond funds, closed-end funds and unit-investment trusts. Exchange
traded funds (ETFs) are another alternative to trading or investing directly in a bond
issue. These securities allow individual investors the ability to overcome large initial
and incremental trading sizes.

1.6.B. Equity or Stock Market -

A stock market or equity market is a public market (a loose network of economic

transactions, not a physical facility or discrete entity) for the trading of company stock
and derivatives at an agreed price; these are securities listed on a stock exchange as
well as those only traded privately.

The size of the world stock market was estimated at about 95 trillion USD at the
beginning of 2021. The total world derivatives market has been estimated at about
$791 trillion face or nominal value, 11 times the size of the entire world economy.
The value of the derivatives market, because it is stated in terms of notional values,
cannot be directly compared to a stock or a fixed income security, which traditionally
refers to an actual value Moreover, the vast majority of derivatives cancel each other
out (i.e, a derivative bet on an event occurring is offset by a comparable derivative bet
on the event not occurring) Many such relatively illiquid securities are valued as
marked to model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are entities of a corporation
or mutual organization specialized in the business of bringing buyers and sellers of
the organizations to a listing of stocks and securities together. The largest stock
market in the United States, by market cap is the New York Stock Exchange, NYSE,
while in Canada it is the Toronto Stock Exchange Major European examples of stock
exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Börse
Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange
the Shanghai Stock Exchange and the Bombay Stock Exchange. In Latin America,
there are such exchanges as the BM&F Bovespa

1.6.B.i. Trading -

Participants in the stock market range from small individual stock investors to large
hedge fund traders who can be based anywhere. Their orders usually end up with a
professional at a stock exchange, who execute the order.

Some exchanges are physical locations where transactions are carried out on a trading
floor, by a method known as open outcry. This type of auction is used in stock
exchanges and commodity exchanges where traders may enter "verbal" bids and
offers simultaneously. The other type of stock exchange is a virtual kind, composed of
a network of computers where trades are made electronically via traders.

Actual trades are based on an auction market model where a potential buyer bids a
specific price for a stock and a potential seller asks a specific price for the stock.
(Buying or selling at market means you will accept any ask price or bid price for the
stock, respectively.) When the bid and ask prices match, a sale takes place, on a first-
come-first served basis if there are multiple bidders or askers at a given price.

The purpose of a stock exchange is to facilitate the exchange of securities between

buyers and sellers, thus providing a marketplace (virtual or real). The exchanges
provide real-time trading information on the listed securities, facilitating price
discovery.

1.6.B.ii. Market participants -

A few decades ago, worldwide, buyers and sellers were individual investors, such as
wealthy businessmen with long family histories and emotional ties) to particular
corporations. Over time, markets have become more "institutionalized"; buyers and
sellers are largely institutions (eg. pension funds, insurance companies, mutual funds,
index funds, exchange-traded funds. hedge funds, investor groups, banks and various
other financial institutions). The rise of the institutional investor has brought with it
some improvements in market operations. Thus, the government was responsible for
"fixed" (and exorbitant) fees being markedly reduced for the small investor, but only
after the large institutions had managed to break the brokers' solid front on fees. They
then went to negotiated fees, but only for large institutions

However, corporate governance (at least in the West) has been very much adversely
affected by the rise of (largely 'absentee') institutional 'owners'.

1.6.B.iii. Importance or Functions of Stock Exchange -

We discuss about major functions of stock exchange under these headings

 Providing a ready market:

The organization of stock exchange provides a ready market to speculators and

investors in industrial enterprises. It thus enables the public to buy and sell securities
already in issue.

 Providing a quoting market prices:

It makes possible the determination of supply and demand on price. The very
sensitive pricing mechanism and the constant quoting of market price allows investors
to always be aware of values. This enables the production of various indexes which
indicate trends etc.

 Providing facilities for working:

It provides opportunities to Jobbers and other members to perform their activities with
all their resources in the stock exchange.

 Safeguarding activities for investors:

The stock exchange renders safeguarding activities for investors which enables them
to make a fair judgment of a securities. Therefore directors have to disclose all
material facts to their respective shareholders. Thus innocent investors may be
safeguard from the clever brokers

 Operating a compensation fund:

It also operate a compensation fund which is always available to investors suffering
loss due the speculating dealings in the stock exchange

 Creating the discipline:

Its members controlled under rigid set of rules designed to protect the general public
and its members. Thus this tendency creates the discipline among its members in
social life also.

 Checking functions:

New securities checked before being approved and admitted to listing. Thus stock
exchange exercises rigid control over the activities of its members.

 Adjustment of equilibrium:

The investors in the stock exchange promote the adjustment of equilibrium of demand
and supply of a particular stock and thus prevent the tendency of fluctuation in the
prices of shares.

 Maintenance of liquidity:

The bank and insurance companies purchase large number of securities from the stock
exchange. These securities are marketable and can be turned into cash at any time.
Therefore banks prefer to keep securities instead of cash in their reserve This it
facilities the banking system to maintain liquidity by procuring the marketable
securities.

 Promotion of the habit of saving:

Stock exchange provide a place for saving to general public Thus it creates the habit
of thrift and investment among the public. This habit leads to investment of funds
incorporate or government securities. The funds placed at the disposal of companies
are used by them for productive purposes.

 Refining and advancing the industry:

Stock exchange advances the trade commerce and industry in the country. It provides
opportunity to capital to low into the most productive channels. Thus the flow of
capital from unproductive field to productive field helps to refine the large scale
enterprises.

 Promotion of capital formation:

It plays an important part in capital formation in the country. Its publicity regarding
various industrial securities makes even disinterested people feel interested in
investment.

 Increasing Govt. Funds:

The government can undertake projects of national importance and social value by
raising funds through sale of its securities on stock exchange.

1.7 EQUITY MARKET IN INDIA :

The Indian Equity Market is more popularly known as the Indian Stock Market. The
Indian equity market has become the third biggest after China and Hong Kong in the
Asian region and seventh biggest in the world. The Indian financial markets have also
grown considerably. The market capitalization of the equity market (National Stock
Exchange) has grown from approximately 6.5 trillion in 2000-01 to approximately 60
trillion in 2009-10 and further to approximately $2.7 trillion in 2019-20. The market
was slow since early 2007 and continued till the first quarter of 2009.

1.7.A Importance of Equity Market in India -

 Raising Capital For Businesses:

The Stock Exchange provide companies with the facility to raise capital for expansion
through selling shares to the investing public.

 Facilitating Company Growth:

A takeover bid or a merger agreement through the stock market is one of the simplest
and most common ways for a company to grow by acquisition or fusion.
  Creating Investment Opportunities For Small Investors:

As opposed to other businesses that require huge capital outlay, investing in shares is
open to both the large and small stock investors because a person buys the number of
shares they can afford. Therefore the Stock Exchange provides the opportunity for
small investors to own shares of the same companies as large investors.

 Barometer of the Economy:

At the stock exchange, share prices rise and fall depending, largely, on market forces.
Share prices tend to rise or remain stable when companies and the economy in general
show signs of stability and growth. An economic recession, depression, or financial
crisis could eventually lead to a stock market crash. Therefore the movement of share
prices and in general of the stock indexes can be an indicator of the general trend in
the economy.

 Speculation:

The stock exchanges are also fashionable places for speculation. In a financial
context, the terms "speculation" and "investment" are actually quite specific. For
instance, although the word "investment" is typically used, in a general sense, to mean
any act of placing money in a financial vehicle with the intent of producing returns
over a period of time, most ventured money including funds placed in the world's
stock markets is actually not investment but speculation.

1.7.B Major Stock Exchanges of India:

1) Bombay Stock Exchange (BSE) :

BSE is the oldest stock exchange in Asia. The extensiveness of the indigenous equity
broking industry in India led to the formation of the Native Share Brokers Association
in 1875, which later became Bombay Stock Exchange Limited (BSE). BSE is widely
recognized due to its pivotal and pre-eminent role in the development of the Indian
capital market.

In 1995, the trading system transformed from open outcry system to an online screen-
based order-driven trading system.

The exchange opened up for foreign ownership (foreign institutional investment).

 Allowed Indian companies to raise capital from abroad through ADRs and
GDRs.
 Expanded the product range (equities/derivatives/debt).
 Introduced the book building process and brought in transparency in IPO
issuance.
 Depositories for share custody (dematerialization of shares).
 Internet trading (e-broking).

BSE has a nation-wide reach with a presence in more than 450 cities and towns of
India. BSE has always been at par with the international standards. It is the first
exchange in India and the second in the world to obtain an ISO 9001:2000
certifications.

The equity market capitalization of the companies listed on the BSE, making it the 4th
largest stock exchange in Asia and the 7th largest in the world. The BSE has the
largest number of listed companies in the world. There are approximately 5,000 listed
Indian companies and over 8,196 scrips on the stock exchange, the Bombay Stock
Exchange has a significant trading volume. Though many other exchanges exist, BSE
and the National Stock Exchange of India account for the majority of the equity
trading in India.

2) National Stock Exchange (NSE):

With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On the
basis of the recommendations of high powered Pherwani Committee, the National
Stock Exchange was incorporated in 1992 by Industrial Development Bank of India
(IDBI), Industrial Credit and Investment Corporation of India (ICICI), Industrial
Finance Corporation of India (IFCI), all Insurance Corporations, selected commercial
banks and others.

Trading at NSE takes place through a fully automated screen-based trading

mechanism which adopts the principle of an order-driven market. Trading members
can stay at their offices and execute the trading, since they are linked through a
communication network. The prices at which the buyer and seller are willing to
transact will appear on the screen. When the prices match the transaction will be
completed and a confirmation slip will be printed at the office of the trading member.
NSE has several advantages over the traditional trading exchanges. They are as
follows:-

 NSE brings an integrated stock market trading network across the nation.
 Investors can trade at the same price from anywhere in the country since inter-
market operations are streamlined coupled with the countrywide access to the
securities.
 Delays in communication, late payments and the malpractice’s prevailing in
the traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with
the support of total computerized network.

3) Over The Counter Exchange of India (OTCEI) :

The traditional trading mechanism prevailed in the Indian stock markets gave way to
many functional inefficiencies, such as, absence of liquidity, lack of transparency,
unduly long settlement periods and benami transactions, which affected the small
investors to a great extent. To provide improved services to investors, the country's
first ring less, scrip less, electronic stock exchange - OTCEI - was created in 1992 by
country's premier financial institutions - Unit Trust of India (UTI), Industrial Credit
and Investment Corporation of India (ICICI), Industrial Development Bank of India
(IDBI), SBI Capital Markets, Industrial Finance Corporation of India (IFCI), General
Insurance Corporation and its subsidiaries and CanBank Financial Services.
Compared to the traditional Exchanges, OTC Exchange network has the following
advantages:

 OTCEI has widely dispersed trading mechanism across the country which
provides greater liquidity and lesser risk of intermediary charges.
 Greater transparency and accuracy of prices is obtained due to the screen-
based scrip less trading.
 Since the exact price of the transaction is shown on the computer screen, the
investor gets to know the exact price at which she/he is trading.
 Faster settlement and transfer process compared to other exchanges.

1.8 DERIVATIVE MARKETS IN INDIA :

The emergence of the market for derivative products such as futures and forwards can
be traced back to the willingness of risk-averse economic agents to guard themselves
against uncertainties arising out of price fluctuations in various asset classes. This
instrument is used by all sections of businesses, such as corporate, SMEs, banks,
financial institutions, retail investors, etc.

1.8.A. Participants Of Derivative Markets -

 Hedgers face risk associated with the price of an asset. They belong to the
business community dealing with the underlying asset to a future instrument
on a regular basis. They use futures or options markets to reduce or eliminate
this risk.
 Speculators have a particular mindset with regard to an asset and bet on future
movements in the asset’s price. Futures and options contracts can give them an
extra leverage due to margining system.
 Arbitragers are in business to take advantage of a discrepancy between prices
in two different markets. For example, when they see the futures price of an
asset getting out of line with the cash price, they will take offsetting positions
in the two markets to lock in a profit.

1.8.B. Major types of derivatives -

 I. Forwards :-

A forward contract is an agreement to buy or sell an asset on a specified date for a

specified price. One of the parties to the contract assumes a long position and agrees
to buy the underlying asset on a certain specified future date for a certain specified
price.

The other party assumes a short position and agrees to sell the asset on the same date
for the same price, other contract details like delivery date, price and quantity are
negotiated bilaterally by the parties to the contract. The forward contracts are
normally traded outside the exchange. The salient features of forward contracts are:

 They are bilateral contracts and hence exposed to counter-party risk.

 Each contract is custom designed, and hence is unique in terms of contract
size, expiration date and the asset type and quality.
 The contract price is generally not available in public domain.
 On the expiration date, the contract has to be settled by delivery of the asset,
or net settlement.
II. Futures :-

Futures contract is a standardized transaction taking place on the futures exchange.

Futures market was designed to solve the problems that exist in forward market. A
futures contract is an agreement between two parties, to buy or sell an asset at a
certain time in the future at a certain price, but unlike forward contracts, the futures
contracts are standardized and exchange traded To facilitate liquidity in the futures
contracts, the exchange specifies certain standard quantity and quality of the
underlying instrument that can be delivered, and a standard time for such a settlement.
Futures’ exchange has a division or subsidiary called a clearing house that performs
the specific responsibilities of paying and collecting daily gains and losses as well as
guaranteeing performance of one party to other. A futures' contract can be offset prior
to maturity by entering into an equal and opposite transaction. More than 99%of
futures transactions are offset this way.

Yet another feature is that in a futures contract gains and losses on each party’s
position is credited or charged on a daily basis, this process is called daily settlement
or marking to market. Any person entering into a futures contract assumes a long or
short position, by a small amount to the clearing house called the margin money

The standardized items in a futures contract are:

 Quantity of the underlying

 Quality of the underlying
 The date and month of delivery
 The units of price quotation and minimum price change
 Location of

settlement Futures

Terminology:

» Spot Price:

The price at which an asset trades in the spot market.

» Futures Price:

The price at which the futures contract trades in the futures market.

» Contract Cycle:

The period over which a contract trades. The index futures contracts on the NSE have
one month, two months and three months expiry cycles that expires on the last
Thursday of the month. Thus a contract which is to expire in January will expire on
the last Thursday of January.

» Expiry Date:

It is the date specified in the futures contract. This is the last day on which the
contract will be traded, at the end of which it will cease to exist.

» Contract Size:

It is the quantity of asset that has to be delivered under one contract. For instance, the
contract size on NSE’s futures market is 200 Nifties.

» Basis:
In the context of financial futures, basis can be defined as the futures price minus the
spot price. There will be different basis for each delivery month, for each contract. In
a normal market, basis will be positive; this reflects that the futures price exceeds the
spot prices.

» Cost Of Carry:

The relationship between futures price and spot price can be summarized in terms of
what is known as the cost of carry. This measures the storage cost plus the interest
paid to finance the asset less the income earned on the asset.

» Initial Margin:

The amount that must be deposited in the margin account at the time when a futures
contract is first entered into is known as initial margin.

» Mark to Market:

In the futures market, at the end of each trading day, the margin account is adjusted to
reflect the investor’s gain or loss depending upon the futures closing price. This is
called Marking-to-market.

» Maintenance Margin:

This is somewhat lower than the initial margin. This is set to ensure that the balance
in the margin account never becomes negative .If the balance in the margin account
falls below the maintenance margin, the invest or receives a margin call and is
expected to top up the margin account to the initial margin level before trading
commences on the next day.

Advantages Of Stock Futures Trading:

 Investing in futures is less costly as there is only initial margin money to be

deposited.
 A large array of strategies can be used to hedge and speculate; with smaller
cash outlay there is greater liquidity.
III. Options :-
An option is a contract, or a provision of a contract, that gives one party (the option
holder) the right, but not the obligation, to perform a specified transaction with
another party(the option issuer or option writer) according to the specified terms. The
owner of a property might sell another party an option to purchase the property any
time during the next three months at a specified price. For every buyer of an option
there must be a seller. The seller is often referred to as the writer. As with futures,
options are brought into existence by being traded, if none is traded, none exists;
conversely, there is no limit to the number of option contracts that can be in existence
at any time. As with futures, the process of closing out options positions will cause
contracts to cease to exist, diminishing the total number.

Thus an option is the right to buy or sell a specified amount of a financial instrument
at a pre-arranged price on or before a particular date.

There are two options which can be exercised:

 Call option, the right to buy is referred to as a call option.

 Put option, the right to sell is referred as a put option.

1.9 SECURITIES EXCHANGE BOARD OF INDIA :

1.9.A. History -
Initially SEBI was a non statutory body without any statutory power. However
in1995, the SEBI was given additional statutory power by the Government of India
through an amendment to the securities and Exchange Board of India Act 1992. In
April, 1998 the SEBI was constituted as the regulator of capital market in India under
a resolution of the Government of India.

1.9.B. Introduction -

Securities and Exchange Board of India (SEBI) has been established with the prime
mandate to protect the interest of investors in securities. The Securities and Exchange
Board of India (SEBI) is the regulatory authority established under the SEBI Act
1992, in order to protect the interests of the investors in securities as well as promote
the development of the capital market. It involves regulating the business in stock
exchanges; supervising the working of stock brokers, share transfer agents, merchant
bankers, underwriters, etc; as well as prohibiting unfair trade practices in the
securities market. An investor enjoys investing, if

 He knows how to invest;

 He has full knowledge of the market;
 The market is safe and there are no miscreants; and
 There are arrangements for redressal in case of grievances.

1.9.C. The Basic Objectives of the Board -

 To protect the interests of investors in securities;

 To promote the development of Securities Market;
 To regulate the securities market and
 For matters connected therewith or incidental thereto.

1.9.D. Responsibilities -

SEBI has to be responsive to the needs of three groups, which constitute the market:

 The issuers of securities

 The investors
 The market intermediaries.

1.9.E. Role/ Functions of SEBI -

The role or functions of SEBI are discussed below:

 To protect the interests of investors through proper education and guidance as

regards their investment in securities. For this, SEBI has made rules and
regulation to be followed by the financial intermediaries such as brokers, etc.
SEBI looks after the complaints received from investors for fair settlement. It
also issues booklets for the guidance and protection of small investors.
 To regulate and control the business on stock exchanges and other security
markets. For this, SEBI keeps supervision on brokers. Registration of brokers
and sub-brokers is made compulsory and they are expected to follow certain
rules and regulations. Effective control is also maintained by SEBI on the
working of stock exchanges.
 To provide suitable training to intermediaries.
 To register and regulate the working of mutual funds including UTI (Unit
Trust of India). SEBI has made rules and regulations to be followed by mutual
funds. The purpose is to maintain effective supervision on their operations &
avoid their unfair and anti-investor activities.
 To promote self-regulatory organization of intermediaries. SEBI is given wide
statutory powers. However, self regulation is better than external regulation.
Here, the function of SEBI is to encourage intermediaries to form their
professional associations and control undesirable activities of their members.
 To regulate and control the fraudulent & unfair practices which may harm the
investors and healthy growth of capital market.
 To issue guidelines to companies regarding capital issues. Separate guidelines
are prepared for first public issue of new companies, for public issue by
existing listed companies and for first public issue by existing private
companies. SEBI is expected to conduct research and publish information
useful to all market players (i.e. all buyers and sellers).
 To conduct inspection, inquiries & audits of stock exchanges, intermediaries
and self-regulating organizations and to take suitable remedial measures
wherever necessary. This function is undertaken for orderly working of stock
exchanges &intermediaries.
 To restrict insider trading activity through suitable measures. This function is
useful for avoiding undesirable activities of brokers and securities scams.
 CHAPTER 2 :
RESEARCH METHODOLOGY
2.1 TITLE
:

“Study on awareness of capital market amongst individual of Mumbai”

2.2 OBJECTIVES OF THE STUDY :

The main objective of research is to identify the awareness utilization patterns of the
people. About what they think about Capital Markets and are they aware or not about
it. The objective of present study can be accomplished by conducting a systematic
research.
The following are the objectives of the study :-
A) To understand the different types of capital markets.
B) To understand the position of capital markets.
C) To check the awareness among people regarding Capital Markets.

2.3 SCOPE/SIGNIFICANCE OF THE STUDY :

Scope of study is mostly to identify weather the people are aware of Capital Market or
not and how much they are willing to save and invest in the markets and what are the
different perceptions having towards Capital Markets.

2.4 METHODS OF DATA COLLECTION :

 Primary Data
 Secondary Data

2.5 PRIMARY DATA COLLECTION :

Primary data is collected by means of a structured and non-disguised questionnaire
made with the help of google forms. Data was collected by sending link of google
forms to the respondents.
2.6 POPULATION :
The population of the study comprises of all the working class staying in Mumbai
who are 18 or above 18 years of age.

2.7 SAMPLE SIZE :

From the population, sample size of 82 respondents were selected.

2.8 SAMPLING METHOD :

Convenience method of sampling was used.

2.9 TECHNIQUES OF DATA ANALYSIS :

The data thus collected was analysed and interpreted with relevant statistical tools for
drawing conclusions. For analyzing the data, relevant tools such as percentage
analysis, tables and graphs were used for proper understanding of the research.

2.10 LIMITATIONS OF THE STUDY :

 The sample size is small so results cannot be generalized.
 The study is limited only to the individuals of Mumbai.
 Respondents may not have furnished correct data.
 CHAPTER 3:
REVIEW OF LITERATURE
1) Gunjan Malhotra (1991) :
“Indian capital market growth, challenges, and future has conducted a survey on the
capital market in pre-reforms (1991). Before the introduction of new economic policy
– BSE was a monopoly in the market, and a variety of manipulative practices were
prevailing in the market. With the objective of developing the marker efficiency, a
package of measures like free-pricing, screen-based trading system, laundering Act
2002, and establishment of SEBI has helped to develop the capital market.
2) Subir Gokarn (1996) :
Subir Gokarn in his research paper “Indian Capital Market Reforms, 1992- 96 An
Assessment” has used a conceptual framework that draws on the theory of regulation
on the one hand and the new political economy on the other to make an assessment of
the wide-ranging reforms that have been initiated in the Indian stock market over the
past four years. Based on the framework the various reforms are classified into
categories reflecting their regulatory effectiveness and/or their impact on sources of
market failure. The researcher arrives at a generally positive assessment of the
reforms, but points out three areas of concern: the lack of a fixed term appointment
for the regulators; the persistence of non-competitive conditions in the market; and the
excessive entry of new scripts into the market, Although in recent days, some steps
have been taken to address this problem as well.
3) Nagaraj (1996) :
Nagaraj identifies that capital market growth has changed domestic financial savings
composition from bank deposits to shares and debentures, without favourably
influencing domestic savings rate. Equity capital's share in the total market
mobilization declined as bulk of such mobilization is in the form of debt securities.
4) Sakriya D (2000) :
Sakriya D presumed that the financial specialist’s have lost their certainty which is
uncovered in the expanding pattern of grievances and objections even after the
foundation of the SEBI and regulatory arrangement of securities markets.
 5) Selvam M (2008) :
Selvam M in his research paper “Efficiency of Indian Capital Market to react
adequately to the announcement of quarterly earnings: A study in Capital goods
Industry” has stated that an efficient and integrated capital market, is an important
infrastructure that facilitates capital formation. The efficiency with which the capital
formation is carried out depends on the efficiency of the capital markets and financial
institutions. A capital market is said to be efficient with respect to an information item
if the prices of securities fully impound the returns implications of that item. The
present study has empirically examined the informational efficiency of Indian capital
market with regard to quarterly earnings released by the automobile sector companies
in the semi-strong form of EMH. The study found that the Indian Capital market is
near efficient in the semi- strong form of EMH, which can be used by the investors to
make abnormal returns.
6) Jumba Shelly (2010) :
Jumba Shelly in her report “A project on Capital Market” has ascertained that the
performance of the company’s or corporate earnings is one of the factors which have
direct impact or effect on capital market in a country. Weak corporate earnings
indicate that the demand for goods and services in the economy is less due to slow
growth in per capita income of people. Because of slow growth in demand there is
slow growth in employment which means slow growth in demand in the near future.
Thus weak corporate earnings indicate average or not so good prospects for the
economy as a whole in the near term. In such a scenario the investors (both domestic
as well as foreign) would vary to invest in the capital market and thus there is
bear market like situation. The opposite case of it would be robust corporate earnings
and its positive impact on the capital market. The researcher has also added that the
macroeconomic numbers also influence the capital market. It includes Index of
Industrial Production (IIP) which is released every month, annual Inflation number
indicated by Wholesale Price Index (WPI) which is released every week, Export –
Import numbers which are declared every month, Core Industries growth rate (It
includes Six Core infrastructure industries – Coal, Crude oil, refining, power, cement
and finished steel) which comes out every month etc. This macro–economic
indicators indicate the state of the economy and the direction in which the economy
is headed and therefore impacts the capital market in India.
 7) Joseph Massey(2011) :
Joseph Massey recommended that the financial significance of a capital market lies in
its adequacy in performing effectively two essential capacities. One is to encourage
asset raising from the group for financing corporate area and government for different
development and formative exercises and another is to give a sorted out commercial
center to the speculators to unreservedly purchase and offer securities for venture and
something else.
8) Ahuja Juhi (2012) :
Ahuja Juhi in her research paper entitled “Indian Capital Market: An Overview with
Its Growth” has examined that there has been a paradigm shift in Indian capital
market. The application of many reforms & developments in Indian capital market
has made the Indian capital market comparable with the international capital markets.
Now, the market features a developed regulatory mechanism and a modern market
infrastructure with growing market capitalization, market liquidity, and mobilization
of resources. The emergence of Private Corporate Debt market is also a good
innovation replacing the banking mode of corporate finance. However, the market has
witnessed its worst time with the recent global financial crisis that originated from the
US sub-prime mortgage market and spread over to the entire world as a contagion.
The Capital Market in India delivered a sluggish performance.
9) Geetha et al (2012) :
Geetha et al in their research paper titled “Capital Market in India: A Sectorial
Analysis” had made an attempt to compare and contrast the risk return characteristics
of ten major industrial sectors which account for 88.74% of the economy’s industrial
production. A comparative analysis is done on the annual returns, total risk,
systematic risk, abnormal returns and correlation of each sectorial index. It was
observed that the sectorial indices exhibited significant difference in their risk return
characteristics and they also followed business cycles of recession, recovery and
boom in their performance. Indian economy has emerged as one of the most attractive
destinations for business and investment opportunities due to huge manpower base,
diversified natural resources and strong macro-economic fundamentals. Indian
economy in the world market is explained in terms of statistical information provided
by the various economic parameters. Such indicators include Gross Domestic Product
(GDP), Gross National Product (GNP), Per Capita Income, Whole sale Price Index
(WPI), Consumer Price Index (CPI), etc. The economic indicators as mentioned are
recently enhanced with a new indicator – the capital market index, which had for
years proved to be a measure of the investor sentiment in an economy. It had been
one of the leading indicators of economic performance in many countries and India
also views it with substantial importance as an indication of market sentiment. The
stock market indexes thus prove to be efficient tools to measure the performance of
Indian capital market and hence present an overall idea of the economy as a whole. In
this paper an attempt has been made for making an analysis of the performance of
major industrial sectors operating in the stock market. While concluding it have
been stated the Indian Capital Market is highly diversified with numerous industrial
sectors operating within it. The study provides an overview of the risk return
characteristics of ten major industrial sectors in the Indian market.
10) Sujoy Kumar Dhar (2012) :
Sujoy Kumar Dhar broke down the effect of instability in the Indian Capital Market
on the retail financial specialists. The review uncovers that the retail financial
specialists are absolutely in a confounded state to take the venture choice because of
high unpredictability in the business sectors. Chance resilience level and tolerance are
distinguished as the basic achievement components for of the retail financial
specialists in the capital markets.
11) Jawahar Babu and Damodar Naidu (2012) :
Jawahar Babu and Damodar Naidu inferred that SEBI surmounted a few deterrents
while in transit to advancement of capital market with due nurture financial
specialist’s interests and more prominent straightforwardness in the undertakings of
associations and stock trades.
12) Sandhya.C et al (2012) :
Sandhya.C et al in their research article titled “A study on Volatility Index Indian
Capital Market: An evaluation of NSE” has examined and stated that If a stock is
more volatile, it is also more risky also known as beta, risk, relative volatility, implied
volatility. Volatility is a measure of dispersion around the mean or average return of a
security. It has been ascertained that NSE indices had more volatility in the year 2007
and 2009; market was showing bullish trend and the stock market reached the peak
points. In the year 2008 market showed the down ward moment due to the American
mortgage crises it affected the other markets. In May 2006 due to foreign institutional
investment caused for volatility in May, 2006. While investing in the stock market the
investor should take into consideration factors like the performance of the market,
policy change announcement, increasing and decreasing the interest rates, regulation
of the government and encouragement of the priority sectors. All these factors
considerably affect the Capital Market and should be taken into account in order
to know about the economic condition of the nation.
13) Ansari Mohd Shamim(2012) :
Ansari Mohd Shamim entitled “Indian Capital Market Review: Issues, Dimensions
and Performance Analysis” in which the researcher has ascertained that the purpose of
an efficient capital market is to mobilize funds from those who have it and route each
them to those who can utilize it in the best possible way. The researcher has also
analyzed that India’s financial market is multi-facet but not balanced. Further it has
been stated that the Indian capital market in the recent year has undergone a lot of
innovation in term regulation and mode of operation. The researcher while concluding
has stated that India needs innovative financial instrument in its domestic capital
market. Financial Innovation must aim value addition in existing technologies, risk
management practices, credit system, process, and products. As per the analysis of the
researcher there is positive correlation between finance and economic growth. Thus,
economic development is relatively impossible without quality innovation in financial
market. The researcher has also added that the creation of a deep and robust debt
capital mechanism is the key to financing infrastructure companies by allowing them
to raise long term debt. At last the researcher has concluded with this fact that
emerging economies like India have an advantage of learning from the mistakes of
others.
14) Bhavin.S. Shah (2012) :
“Current issues in Indian capital market” 2012 have discussed the structure of the
Indian capital market concerning pre-independence and post-independence. The
contribution of the Indian capital market for the growth and sustainability of the
Indian economy is considered since the 1890s. When India was fully mobilized as a
supply base, this led to the development of stock exchanges in India. When the
government of India has adopted the principle of unitary control, many pseudo stock
exchanges were closed. The remarkable growth and reforms took place after 1985.
The establishment of OCTEI has solved the problems of traditional trading
mechanisms such as the absence of liquidity, lack of transparency, long settlement
period and other mechanisms affected the small investors to a great extent.
15) Anitha and A. Praveen (2012)
“Capital market reforms in India” 2012 have stressed on the capital market reforms
that took place to the post introduction of new economic policy 1991. The authors
have identified the major capital market reforms to the post introduction of LPG.
SEBI and the Indian government have taken various steps for the growth of Indian
stock exchanges. Establishment of Investors Protection Fund (2001), CCIL (2001),
NSDL (1998), and other institutions have resulted in a productive and transparent
capital market.
16) Parray Firdous Ahamad and Tiwari Anshiya (2015) :
Parray Firdous Ahamad and Tiwari Anshiya through their research paper titled
“Indian Capital market: A Review” 2015 identified the growth of the capital market
since the last decade. Authors have explained the growth of the mutual fund industry;
the insurance sector and the stock exchanges have resulted in the speedy growth of the
Indian economy, which has attracted foreign institution investors (FII) directly and
dimensionally.
17) Miss. Kiran Gangawani (2015) :
Miss. Kiran Gangawani in her paper titled “Emerging trends in Indian Capital
market” (2015) has explained the capital market takes an important role in the
economic development of a country. It provides financial support to the sectors of the
economy. To improve the market, the efficiency and to enhance the transparency of
the capital market where the main objective to develop the capital market.
Implementation of the repeal of capital issues contract Act, Qualified Institution
Placement (QIP), and other major reforms have strengthened the Indian capital market
that resulted in an effective regulatory framework.
18) B.K Muhammed Jumane and M.K Irshad (2015) :
“An overview of Indian capital markets” 2015 has researched factors influencing the
development of the capital market. Authors have suggested that the development of
financial institutions, entrepreneurship, expansions, and modernization in MNC’s
projects are the main reasons to boost the capital market.
19) Mohammed Rubani (2017) :
According to Mohammed Rubani “A study of structural and function of capital
market in India” 2017 examined the functions of the capital market plays a crucial
role in mobilizing and diverting of available resources into productive channels.
Through the stock exchanges, the Indian capital market is acting as a mediator
between investors and savers in channelizing their funds in a productive way. This
smoothens and accelerates the process of economic growth.
20) Jency. S (2017) :
According to Jency.S “Trends of capital market in India” (2017) observed the
primary market and secondary market for six years. Tremendous developments have
taken place in the primary market since the year 2015-2016. It has been observed that
the increase in the mobilization of corporate through private placements from 2013
onwards. The market capitalization of BSE increased to 1,07,88,709 crores during the
period 2016-2017, and NSE increased to 1,06,18,012 crores. Innovation and reforms
in the capital market have not only developed the economy but also led to the
decrease of in the cost of capital and risk associated with the instruments of the capital
market, SEBI is working to make Indian capital market as a world-class with 100% of
transparency and competency.
 CHAPTER 4 :
DATA ANALYSIS AND INTERPRETATION.
Question No: 1

Occupation: Number of respondents Percentage

Business 9 11%

Housewife 4 5%

Salaried 11 13%

Student 58 71%

Grand Total 82 100%

Table No. 01

Number of respondents

Housewife 5%
Business 11%

Salaried 13%

Student 71%

INTERPRETATION:
As per the survey, Majority of the contribution was given by the students which is
71% of the total respondents, where as only 13% of the respondents were salaried
people doing jobs, after salaried people comes businessmen with 11% of total
respondents. And lastly comes housewives with 5% of respondents.
Question No: 2

What is your age? Number of respondents Percentage

20 to 30 45 55%

30 to 40 16 20%

40 to 50 9 11%

Less than 20 12 15%

Grand Total 82 100%

Table No. 02

Number of respondents

Less than 20

40 to 50

20 to 30
30 to 40

INTERPRETATION:
This survey contains all the age groups, in which maximum number of respondents
are between the age group of 20 to 30 which is 55% in total. Then comes the age
group of 30 to 40 which is 20% of respondents. Age group 40 to 50 has 11% of
respondents which followed by people below the age of 20 years with total 15 % of
total population.
Question NO: 3

Are you aware of capital market? Number of respondents Percentage

Yes 64 78%

No 18 22%

Grand Total 82 100%

Table No. 03

Number of respondents

22%

Yes
No
78%

INTERPRETATION:
After the completion of this survey, It was easy to figure out the awareness of capital
market amongst individuals. In the above graph and table it clearly shows that
majority 78% i.e 64 out of 82 respondents are aware of capital market. Whereas there
are also 22% i.e 18 out of 82 respondents who are not really very well aware of
capital market.
Question No: 4

Would you like to invest in capital market? Number of respondents Percentage

Yes 39 48%

No 18 22%

Maybe 25 30%

Grand Total 82 100%

Table No. 04

Number of respondents
YesNoMaybe

30%
48%

22%

INTERPRETATION:
With the help of this survey it is also clear that most of the individuals i.e 48% of the
respondents would definitely like to invest in capital market as shown in above graph
and table. Also there are about 22% of individuals who are not at all willing to invest
in capital market. And there are also some respondents i.e 30% of the population who
are still unclear about there thoughts whether they would like to invest in capital
market or not.
Question No: 5

Products offered through Secondary Market? Yes No

1) Mutual Funds 56 26

2) Bonds 62 20

3) Insurance 55 27

4) Equity Shares 64 18

5) Fixed Deposit 60 22

6) Commodity Market 56 26

7) Gold and Silver 61 21

8) Real Estate 53 29

9) Private Equity 30 52
Table No. 05

Number of Respondents

70
60
50
40
30
20
10
0 Yes
No
INTERPRETATION:
When considered about the products offered through secondary markets majority of
the sample population i.e out of 82, there are 56 individuals who agreed that mutual
funds is the product of secondary market on the other hand 26 individuals disagreed
with the same. When the same was asked for bonds 62 people agreed and 20 people
disagreed. The same goes with insurance, for insurance 55 people out of 82 agreed
that it is a product offered through secondary market but 27 people disagreed. For
equity shares 64 respondents agreed and 18 respondents disagreed. For fixed deposit
60 people agreed and 22 disagreed. For commodity market 56 were agreed and 26
were disagreed. Same goes for gold/silver and real estate, In gold and silver there are
61 respondents who agreed and there are 21 respondents who do not agree. And for
real estate 53 agreed and 29 disagreed.

But in case of private equity majority of the respondents disagreed i.e 52 out of total
disagreed and only 30 respondents agreed it as a product of secondary market, so it
clearly shows that private equity is not one of those products which are offered by
secondary market.

With this we can conclude that majority of the sample population is aware of general
instruments like mutual funds, bonds, insurance, equity shares, fixed deposits,
commodity market, gold and silver, real estate and last but not least private equity.
Question No: 6

Who is the controller of capital market in India? Number of respondents Percentage

AMFI 4 4%

IRDA 8 10%

RBI 8 10%

SEBI 62 76%

Grand Total 82 100%

Table No. 06

Number of respondents

70

60

50

40

30

20

10

0
AMFI IRDA RBI SEBI

INTERPRETATION:
When considering the controller of the capital market in India, 76% of the sample
population answered it correct that SEBI is the controller of the capital market. Rest
24% of population was divided as 10% for RBI, 10% for IRDA, and 4% for AMFI as
the controller of capital market in India.
Question No: 7

Capital market is the market of buying in Number of

short term funds respondents Percentage

Yes 29 35%

No 53 65%

Grand Total 82 100%

Table No: 07

Number of respondents

35%

Yes
65% No

INTERPRETATION:
When considering that capital market is the market for buying in short term funds,
then majority of the sample population i.e 65% of population answered it correctly by
saying NO. Because the capital market is the market for buying in long term funds.
But there are 35% of the population who answered yes as shown in above table.
Question No: 8

Which of the following is the component of capital Number of

market? respondents Percentage

Equity market 9 11%

Derivative market 7 9%

Debt market 11 13%

All of above 55 67%

Grand Total 82 100%

Table No. 08

60

50
No of respondents

40

30

20

10

0 Equity market Derivative market Debt market All of above

Components

INTERPRETATION:
When considering the components of capital market, majority i.e 67% of the
respondents believes that all of above, which includes equity market, derivative
market and debt market are the components of capital market. Whereas 11% of
population thinks that only equity market is the component. On the other hand 9% of
population thinks that only derivative market is the component. And 13% of the
population thinks that debt market is the only component.
Question No: 9

In capital market, which of the following are major Number of

suppliers of trading instruments? respondents Percentage

Government and corporations 39 48%

Instrumental corporations 22 27%

Liquid corporations 8 10%

Manufacturing corporations 13 16%

Grand Total 82 100%

Table No. 09

Number of respondents
45
40
35
30
25
20
15
10
5
0

Instrumental corporationsLiquid corporationsManufacturing

Government and corporations
corporations

INTERPRETATION:
When considering who are the major suppliers of trading instruments in capital
market, 48% of respondents answered it as government and corporations. 27% people
answered instrumental corporation as major supplier. 10% answered liquid
corporations followed by 16% people who answered manufacturing corporations as
major suppliers of trading instruments.
Question No: 10

Money market where debt and stocks are traded

and maturity period is more than a year is Number of
classified as which of the following? respondents Percentage

Capital markets 52 63%

Counter markets 9 11%

Long term markets 9 11%

Shorter term markets 12 15%

Grand Total 82 100%

Table No. 10

Number of respondents

60
50
40
30
20
10
0

Capital markets Counter markets Long term markets

Shorter term markets

INTERPRETATION:
According to the survey 52 out of total sample population agreed that capital market
is a place where debt and stock are traded and maturity period is more than 1 year. 12
out of 82 respondents believes that shorter term markets is a place where maturity
period is more than a year. Whereas 9 out of 82 believes counter markets and
remaining 9 respondents believes it is long term markets.
Question No: 11

How many companies comprise the Bombay Number of

stock exchange SENSEX? respondents Percentage

25 8 10%

30 61 74%

40 7 9%

50 6 7%

Grand Total 82 100%

Table no. 11

70

60
No. of Respondents

50

40

30

20

10

0 25 30 40 50
No. of Companies

INTERPRETATION:
This graph and table clearly shows that 74% of respondents agree that there are 30
companies which comprises the Bombay stock exchange SENSEX. Whereas there are
9% of sample population which believes that there are 40 companies, followed by
10% of population who believes there are 25 companies. And only 7% i.e only 6
respondents believe there are 50 companies.
Question No: 12

Which of the following is not the credit rating Number of

agency? respondents Percentage

CARE 22 27%

CRISIL 2 2%

ICRA 4 5%

NIKKEI 54 66%

Grand Total 82 100%

Table No. 12

No. of respondents

60

50

40

30

20

10

0
CARE CRISIL ICRA NIKKEI

INTERPRETATION:
As per this survey only 66 % respondents believes that NIKKEI is not the credit
rating agency. The second highest percentage i.e 27% respondents believes that
CARE is not the credit rating agency which is totally wrong. Rest 5% and 2% of
respondents believes that ICRA and CRISIL are not the credit rating agencies in
India.
Question No: 13

Which of the following is responsible for the Number of

fluctuations in SENSEX respondents Percentage

Rain 1 1%

Political instabilities 8 10%

Monetary policies 23 28%

All of above 50 61%

Grand Total 82 100%

Table No. 13

No. of respondents
60

50

40

30

20

10

Rain Political instabilities Monetary policies All of above

INTERPRETATION:
When considering that what are the factors responsible for fluctuations in SENSEX,
then 61% i.e 50 respondents out of 82 agreed that all of above i.e rain, political
instabilities and monetary policies are responsible. But there are 28% of population
that believes that only monetary policies are responsible for the change in SENSEX.
10% population believes that it is due to political instabilities. And only 1% of
population believes that rain is the only factor for the fluctuations.
Question No: 14

SENSEX is the index of? Number of respondents Percentage

Bombay stock exchange 45 55%

Cochin stock exchange 10 12%

National stock exchange 22 27%

None of these 5 6%

Grand Total 82 100%

Table No. 14

45
40
35
30
No. of Respondents

25
20
15
10
5
0

Bombay stockCochin stock National stock none of these

exchangeexchange exchange

INTERPRETATION:
After conducting the survey, it was clearly visible that only 55% of sample population
was aware that SENSEX is the index of Bombay stock exchange. Whereas 27% of
population believes that SENSEX is the index of National stock exchange which is
wrong. 6% of population believes that none of these are the correct options. Followed
by 12% respondents who believes SENSEX is the index of Cochin stock exchange.
Question No. 15

Number of recognized stock exchanges Number of

in India respondents Percentage

20 10 12%

21 35 43%

22 7 9%

23 30 37%

Grand Total 82 100%

Table No. 15

35

30
No. of respondents

25

20

15

10

0 20 21 22 23
No. of recognized stock exchange

INTERPRETATION:
When considering the number of recognized stock exchange 43% respondents
answered 21 stock exchanges. And only 37% of respondents answered it correctly i.e
23 stock exchanges. 9% respondents answered 22 stock exchanges followed by 12%
respondents who answered 20 stock exchanges. With this we can conclude that people
are not really aware about the number of stock exchanges in India.
Question No. 16

Are treasury bills and commercial papers a capital Number of

market instruments? respondents Percentage

Yes 40 49%

No 42 51%

Grand Total 82 100%

Table No. 16

Number of respondents

49%
51%
Yes No

INTERPRETATION:
When considering treasury bills and commercial papers a capital market instruments,
majority of the population i.e 51% of respondents answered correctly by saying NO.
But there are 49% of respondents who agreed with the statement by saying YES. So
with this we can conclude that individuals are less aware about what are treasury bills
and commercial papers and how they are not a capital market instruments.
Question No. 17

Number of
What is future trading? respondents Percentage

A trade between any two stock exchanges 4 5%

An agreement between stock exchanges that they will
not trade the stock of each other 21 26%
An agreement between two parties to buy or sell an
underlying asset in future 54 66%

None of the above 3 4%

Grand Total 82 100%

Table No. 17

Number of respondents
60
50
40
30
20
10
0
A trade between An agreement An agreement None of the above
any two stock between stock between two parties
exchanges exchanges that they to buy or sell an
will not trade the underlying asset in
stock of each other future

INTERPRETATION:
As per the survey only 66% of the individuals knows the meaning of future trading.
And according to 26% respondents it is an agreement between stock exchanges that
they will not trade the stock of each other. There are 4% respondents who believes that
none of the above explains future trade and 5 % respondents believe it is a trade
between any two stock exchanges.
Question No. 18

In India, NIFTY and SENSEX are calculated on the Number of

basis of? respondents Percentage

Authorized share capital 9 11%

Free float capitalization 32 39%

Market capitalizations 27 33%

Paid up capital 14 17%

Grand Total 82 100%

Table No. 18

35

30
Number of Respondents

25

20

15

10

0
Authorized Free float Market Paid up capital
share capital capitalization capitalizations

INTERPRETATION:
According to the survey 39% of the individuals correctly finds that NIFTY and
SENSEX are calculated on the basis of free float capitalization. Whereas 33%
individuals believes that it is calculated on the basis of market capitalizations. On the
other hand 11% individuals says that it can be calculated on authorized share capital.
And lastly 17% believes that it can be calculated on paid up capital.
Question No: 19

Which of the derivatives is not traded on Indian stock Number of

market? respondents Percentage
Forward rate agreement 33 40%
Index futures 29 35%
Index options 8 10%
Stock futures 12 15%
Grand Total 82 100%
Table No. 19

Number of respondent

35

30

25

20

15

10

0 Forward rate Index futures Index options Stock futures

agreement

INTERPRETATION:
When considering the derivatives which are not traded on Indian stock market, only
40% of the individuals correctly believes that forward rate agreements are not traded.
Whereas the second highest percentage i.e 35% of individuals believes it is index
futures. On the other hand only 10% and 15% of individuals believes that it can be
index options and stock futures.
Question No: 20

The first computerized online stock exchange in India Number of

was? respondents Percentage

BSE 22 27%

MCX 5 6%

NSE 45 55%

OTCEI 10 12%

Grand Total 82 100%

Table No. 20

Number of Respondents

12%
27%

BSE MCX NSE

6% OTCEI

55%

INTERPRETATION:
As per the survey, only 55% of population knows that NSE (National Stock Exchange)
was the first computerized online stock exchange in India. On the other hand 27% of
the population believes that BSE (Bombay Stock Exchange) was first online stock
exchange which is false. There are also 12% individuals who believes that OTCEI
was first online stock exchange. Also 6% of individuals believes that MCX was the
first computerized online stock exchange.
Question No: 21

Number of
Which of the following is not available in India? respondents Percentage

Commodity futures 10 12%

Commodity options 40 49%

Index futures 18 22%

Index options 14 17%

Grand Total 82 100%

Table No. 21

Number of respondents
45
40
35
30
25
20
15
10
5
0

Commodity futures Commodity options Index futures Index options

INTERPRETATION:
As per the survey only 49% respondent knows that commodity options are not
available in India. Whereas 22% respondents believes that index futures are not
available in India, which is absolutely wrong. There are 12% respondents who believe
that commodity futures are not available in India. And 17% respondents believes that
index options are not available which is again wrong. This shows that people are less
aware about derivative markets.
Question No: 22

Which of the following words does not belong to Number of

stock exchange? respondents Percentage
IPO 6 7%
KPO 53 65%
NAV 13 16%
NSE 10 12%
Grand Total 82 100%
Table No. 22

Number of Respondents

60

50

40

30

20

10

0
IPO KPO NAV NSE

INTERPRETATION:
After conducting the survey, it was easy to figure out that only 65% of sample
population is aware that KPO word does not belong to stock exchange. There are 16%
i.e 13 out of 82 respondents says that NAV word does not belong to stock exchange
which is absolutely wrong. 12% and 7% of population believes that NSE and IPO are
the words that does not belong to stock exchange.
Question No: 23

Spot exchange rate is the rate of exchange between two Number of

currencies respondents Percentage

For delivery at a particular spot in future 32 39%

For future delivery 12 15%

For immediate delivery 33 40%

None of the above 5 6%

Grand Total 82 100%

Table No. 23

Number of respondents

35
30
25
20
15
10
5
0

For delivery at a particular spot inFor

future
future For immediate None of the
delivery delivery above

INTERPRETATION:
After completing the survey, it was easily figured out that only 33 respondents out of
82 correctly knows that spot exchange rate is the rate of exchange between two
currencies for immediate delivery. Whereas 32 respondents believes that it is rate of
exchange between two currencies for delivery at a particular spot in future. On the
other hand 6% respondents believes that none of above is correct.
Question No: 24

Break even of a Put option occurs when spot price is equal Number of
to respondents Percentage

Strike price + premium 22 27%

Premium 12 15%

Strike price - premium 38 46%

None of above 10 12%

Grand Total 82 100%

Table No. 24

Number of respondents
None of the abovePremiumStrike price - premiumStrike price + premium

12%
27%
15%

46%

INTERPRETATION:
From the survey it was figured out that only 46% of total population correctly knows
that break even of a Put option occurs when spot price = strike price – premium.
Whereas 27% of total population believes that break even of a put option occurs if
spot price = strike price + premium. On the other hand 15% population believes it is
equal to premium and 12% of total population says that none of the above is correct
option.
 Number of
Score respondents Percentage Categories

Less than 12 18 22% Least aware

12 to 18 26 32% Less aware

18 to 24 19 23% Moderately aware

24 to 30 19 23% Highly aware

Table No. 25

number of respondents
Less than 1212 to 1818 to 2424 to 30

23% 22%

23%
32%

INTERPRETATION:
So, with the help of this survey, It was easy to conclude that majority of the people i.e
32% of population are less aware about the term capital market and its instruments.
Whereas there are only 23% of people who are highly aware about capital market and
would like to deal in it. There are also another 23% of the population who are
moderately aware about capital market. And the rest 22% of the population is least
aware about capital market and its terms. This shows that there is less awareness
about capital market amongst individuals.
 CHAPTER 5 :

CONCLUSION.

Reforms in the securities market, particularly establishment and empowerment of

SEBI, allocation of resources by market, screen based nation-wide trading,
dematerialization and electronic transfer of securities, availability of derivatives of
securities, etc. have greatly improved the regulatory framework and efficiency and
safety of issue, trading clearing and settlement of securities. However, efforts are on
to improve working of the securities market further. The main change which has
witnessed the Indian securities market is that earlier trading in both primary market
and secondary market was done physically and is now replaced by electronic systems
available for trading.

With an strengthening of the regulatory system and introduction of various Acts has
empowered the Indian securities market and therefore has become a better option for
investing the resources, we can also see that no of people investing in securities be it
Mutual Funds. Derivatives, in Equity Market, in Debt Market is on increase and will
also further increase with more sophistication of technology and not to forget
legislation authorities protecting rights of investors. Security exchange board of India
(SEBI) have been playing an important role in regulating the business in stock
exchanges and any other securities markets and to protect the interests of investors.

The emergence of the securities market resulted as a major source of finance for trade
and industry across India. A growing number of companies are accessing the
securities market rather than depending on loans from Fls banks. Moreover the Indian
securities market is contributing to Indian GDP growth immensely. The capital
mobilizations in both primary market and secondary market have been witnessing
phenomenal growth over the years.

Indian securities market is getting increasingly integrated with the rest of the world.
Indian companies have been permitted to raise resources from abroad through issue of
ADR, GDRS, FCCBS and ECBS. ADRS/GDRS have two-way fungibility. Indian
companies are permitted to list their securities on foreign stock exchanges by
sponsoring ADR GDR issues against block shareholding.
So, according to this study it can be concluded that 78% of sample population is
aware about capital market but only 48% of sample population will truly like to invest
in capital market and are ready to take risk. Study also shows that individuals are also
aware about the products that are offered through secondary markets like bonds,
mutual fund, equity shares, gold and silver etc. There is only 67% of population who
is aware about the components offered through capital market and on the other hand
there is 74% of population who knows 30 companies are comprise with Bombay
stock exchange SENSEX.

And as per the survey it is also figured out that majority i.e 32% of individuals have
less knowledge about derivative market, future trading, index option, index future and
commodity futures, commodity options. And 23% of sample population have high
knowledge about shares, bonds and debt, debentures etc. whereas there are also other
23% of population who are moderately aware about this products. With this it can be
concluded that the capital market in India is a little complex but yet it is fast growing.
Capital markets in India contribute to a large extend towards building up of the
economic growth.
 BIBLIOGRAPHY :
 www.moneycontrol.com
 www.sbimf.com
 www.amfiindia.com
 www.onlineresearchonline.com
 www.mutualfundsindia.com
 www.sebi.gov.in
 www.rbi.gov.in
 www.investopedia.com

Jency, S. “Trends of capital market in India.” SSRG

International Journal of Economics and Management
Studies, vol. 4, no. 3, 2017, pp. 15-19.

Rubani, M.“A Study on Structure and Functions of

Capital Market in India.” International Journal of
Business Administration and Management, vol. 7, no. 1,
2017, pp. 183-194

Muhammed Jummane, B.K. and Irshad, M.K. “An

Overview of Indian Capital Market.” Bonfring
International Engineering and Management Science, vol.
5, no. 2, 2015, pp. 17-23.

Gangawani, K. “Emerging Trends in Indian Capital

Market.” Chronicle of the Neville Wadia Institution of
Management Research, 2011, pp. 40-45.

Parray, F.A. and Anshiya, T. “Indian Capital Market: A

Review.” International Journal of Research in
Economics and Social Science, vol. 5, no. 4, 2015, pp.
100- 109.

Anitha, A. and Praveen, A.“Capital Market Reforms in

India.” International Conference on New Fronitiers of
Engineering, Management, Social Science and
Humanities, Maharashtra Chamber of Commerce,
Industries and Agriculture, India, 2018, pp. 132-139

Ansari, MS, “Indian Capital Market Review: Issues,

Dimensions and Performance Analysis.” UTMS Journal
of Economics, vol. 3, no. 2, 2012, pp. 181-191
Shah, BS.
“Current
Issues in
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Capital
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3

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Malhotra, G. “Indian Capital Market: Growth, Challenges and Future.” XVI Annual
Conference Proceedings, 2017.

Sujay Kumar Dhar (2012) , “ Risk Attitudes of Retail Investors with special reference
to Capital Market”, The Management Accountant, Volume 41, No. 6, pp. 448-454.

Joseph Massey (2011),“Indian Capital Market : Where are the Investors, Awareness
and Protection?” , FICCIs Banking and Finance, Vol.16, pp.01-04.

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Returns”, The Review of Financial Studies, Vol.15, pp.79-90.

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 APPENDIX :

QUESTIONNARIE ON CAPITAL MARKET.

1. Name
:
2. Occupation?
- Business
- Student
- Salaried
- Housewife
3. What is your age?
- 20 to 30
- 30 to 40
- 40 to 50
- Less than 20
4. Are you aware of capital market?
- Yes
- No
5. Would you like to invest in capital market?
- Yes
- No
- Maybe
6. Products offered through primary and secondary market
- mutual funds yes no
- bonds yes no
- insurance yes no
- equity shares yes no
- fixed deposits yes no
- commodity market yes no
- gold and silver yes no
- real estate yes no
- private equity yes no
7. Who is the controller of capital market in India?
- SEBI

80
 - IRDA
- AMFI
- RBI
8. Capital market is the market of buying in short term funds
- Yes
- No
9. Which of the following is component of capital market
- Equity market
- Debt market
- Derivative market
- All of above
10. In capital market, which of the following are major suppliers of trading
instruments?
- Liquid corporations
- Instrumental corporations
- Manufacturing corporations
- Government and corporations
11. Money market where debt and stocks are traded and maturity period is more
than a year is classified as which of the following?
- Shorter term markets
- Capital markets
- Counter markets
- Long term markets
12. How many companies comprise the Bombay stock exchange SENSEX
- 25
- 30
- 40
- 50
13. Which of the following is not the credit rating agency?
- CRISIL
- CARE
- NIKKEI
- ICRA

81
14. Which of the following is responsible for the fluctuations in SENSEX
- Rain
- Monetary policies
- Political instabilities
- All of above.
15. SENSEX is the index of?
- Bombay stock exchange
- National stock exchange
- Cochin stock exchange
- None of these
16. Number of recognized stock exchanges in India?
- 20
- 21
- 22
- 23
17. Are treasury bills and commercial papers a capital market instruments?
- Yes
- No
18. What is future trading
- A trade between any two stock exchanges
- An agreement between two parties to buy or sell an underlying asset in a
future
- An agreement between stock exchanges that they will not trade the stocks
of each other
- None of the above.
19. In India, NIFTY and SENSEX are calculated on the basis of
- Market capitalization
- Paid up capital
- Free float capitalization
- Authorized share capital.
20. Which of the derivatives is not traded on Indian stock market?
- Index options
- Stock futures

82
 - Index futures
- Forward rate agreement.
21. The first computerized online stock exchange in India was?
- NSE
- OTCEI
- BSE
- MCX
22. Which of the following is not available in India?
- Index options
- Index futures
- Commodity options
- Commodity futures.
23. Which of the following words does not belong to stock exchange?
- KPO
- NAV
- NSE
- IPO
24. Spot exchange rate is the rate of exchange between two currencies
- For immediate delivery
- For future delivery
- For delivery at a particular spot in future
- None of the above
25. Break even of a Put option occurs when spot price is equal to
- Strike price + premium
- Strike price – premium
- Premium
- None of the above.

83