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Demand and Supply - Dinesh
Demand and Supply - Dinesh
Demand and Supply - Dinesh
- AN ANALYSIS
At
The essential requirement of MBA PART II for the partial fulfillment of award of
degree of” MASTER OF BUSINESS ADMINISTRATION.”
Submitted by
DINESH BAITHARU
DEPARTMENT OF MBA
This is to certify that the summer project entitled “DEMAND AND SUPPLY
IN STOCK MARKET” carried out at BHUBANESWAR STOCK EXCHANGE has been
submitted by DINESH BAITHARU a 3RD year MBA (finance) student of the Department
of management (RIMS), ROURKELA, towards the partial fulfilment of the requirement for
the award of the Masters in business Administration (MBA) and the same has been
satisfactory carried out under the guidance of Mr. BIPIN DUTTA during the academic years
2019-2020.
I hereby declare that the project report with the title “DEMAND AND SUPPLY IN STOCK
MARKET,” being submitted to BHUBANESWAR STOCK EXCHANGE in partial
fulfilment of the requirements for award of the degree of post Graduate in management, is an
original piece of research work carried out by me. It has not been published /awarded
elsewhere, nor has it been submitted in full or part for any other degree or diploma.
ACKNOWLEDGEMENT
The research work as it stands today is the sincere contributions of a few spirited individuals.
It would be unfair to not recognize their contribution to the work. I hereby acknowledge
those:
I would like to thank Odisha Capital Market and Enterprises limited (Formerly known as
Bhubaneswar Stock Exchange) for allowing us to conduct our summer internship project
under the umbrella of the organization. I take this opportunity to express my sincere gratitude
to my company guide, Mr. Bipin Bihari Dutta, Assistant Manager, Odisha Capital
Market and Enterprises limited(Formerly known as Bhubaneswar Stock Exchange), for
his outstanding and undeniable considerations to my eagerness. Humbly, he stood by me all
the time to help, guide, and mentor me at each stage of my work. He put his best efforts to
guide us towards the path of research work and reminding me every now and then on the
issues which helped to accomplish the task with great success. Last but not the least I would
like to thank my faculties, friends, colleagues, seniors and my family members whose utmost
support and help made me prepare this project.
CONTENTS
ACKNOWLEDGEMENT ...................................................................................................................... 4
COMPANY PROFILE ........................................................................................................................... 9
LITERATURE REVIEW ..................................................................................................................... 11
1. INTRODUCTION ........................................................................................................................... 13
1.1 OBJECTIVE OF THE PROJECT............................................................................................... 14
1.2 RESEARCH METHODOLOGY:............................................................................................... 14
2. STOCK MARKET............................................................................................................................ 15
3. SUPPLY & DEMAND ..................................................................................................................... 16
4. ROLE OF STOCK MARKET .......................................................................................................... 19
4.1 Promotion of entrepreneurial growth .......................................................................................... 19
4.2 Mobilization of Funds ................................................................................................................. 19
4.3 Dividend Yield ............................................................................................................................ 20
4.4 Effective Regulation ................................................................................................................... 20
4.5 Liquidity...................................................................................................................................... 20
4.6 Risk & Return ............................................................................................................................. 20
4.7 Healthy Speculation .................................................................................................................... 20
4.8 Volatility ..................................................................................................................................... 20
5. Characteristics of Stock Market ........................................................................................................ 21
5.1 Investor’s Psychology ................................................................................................................. 21
5.2 Efficient Market Hypothesis ....................................................................................................... 21
6. Factors Affecting the Stock Prices: ................................................................................................... 23
6.1 On New Issue front ..................................................................................................................... 23
6.1.1 Secondary Market Performance ........................................................................................... 23
6.1.2 Initial Public Offering .......................................................................................................... 24
6.1.3 Economic Cycles.................................................................................................................. 25
6.1.4 Window Dressing of Prospectus .......................................................................................... 26
6.1.5 Qualified Institutional Placement ......................................................................................... 27
6.1.6 Underwriting ........................................................................................................................ 28
6.1.7 Grading Issue ....................................................................................................................... 28
6.1.8 Investment Climate .............................................................................................................. 30
6.1.9 Financial Literacy ................................................................................................................ 30
6.2 On Trading Front ........................................................................................................................ 31
6.2.1 Exit Route of Investors ........................................................................................................ 31
6.2.2 Demand & Supply for Stocks .............................................................................................. 32
6.2.3 Announcement of Corporate Benefits.................................................................................. 33
6.2.5 Sector Specific Information ................................................................................................. 35
6.2.6 Noisy Market Hypothesis..................................................................................................... 35
6.2.7 Liquidity............................................................................................................................... 36
6.2.8 Speculation ........................................................................................................................... 36
6.2.8 Margin Trading ........................................................................................................................ 37
6.2.9 Price Volatility of Stocks ......................................................................................................... 38
6.2.10 Huge Trading Volume in Derivatives Market ....................................................................... 41
6.2.11 Mergers & Acquisition .......................................................................................................... 41
Stock Price ........................................................................................................................................ 42
6.2.12 Insider Trading ....................................................................................................................... 43
6.2.13 Information Asymmetry......................................................................................................... 44
6.2.14 Scams in Stock Market .......................................................................................................... 45
Satyam Scam .................................................................................................................................... 45
6.2.15 Foreign Institutional Investors ............................................................................................... 45
6.2.17 Dollar effect on Stock Market ................................................................................................ 48
6.2.18 Budget Impact on Stock Market ............................................................................................ 49
6.2.19 Interest Rate effect ................................................................................................................. 51
Interest Rates and the Stock Market ................................................................................................. 51
6.2.20 Split Stock .............................................................................................................................. 52
6.2.21 Other Factors.......................................................................................................................... 53
7. CASE STUDY .................................................................................................................................. 55
7.1 Introduction:................................................................................................................................ 55
7.2 Primary Market: .......................................................................................................................... 55
7.2.1 Initial Public Offer: .............................................................................................................. 56
7.3 Secondary Market: ...................................................................................................................... 61
7.3.1 Dividend Declaration ........................................................................................................... 61
7.3.2 Rights Issue .......................................................................................................................... 63
7.3.3 Bonus Issue .......................................................................................................................... 66
7.3.4 Stock Split ............................................................................................................................ 69
7.3.5 Financial Results .................................................................................................................. 72
Conclusion: ............................................................................................................................................ 74
REFERENCES ..................................................................................................................................... 76
TABLE OF FIGURES
Figure 1................................................................................................................................................. 16
Figure 2................................................................................................................................................. 17
Figure 3................................................................................................................................................. 18
Figure 4................................................................................................................................................. 19
Figure 5................................................................................................................................................. 40
Figure 6................................................................................................................................................. 41
Figure 7................................................................................................................................................. 43
Figure 8................................................................................................................................................. 46
Figure 9................................................................................................................................................. 48
Figure 10............................................................................................................................................... 53
Figure 11............................................................................................................................................... 57
Figure 12............................................................................................................................................... 60
Figure 13............................................................................................................................................... 62
Figure 14............................................................................................................................................... 64
Figure 15............................................................................................................................................... 64
Figure 16............................................................................................................................................... 67
Figure 17............................................................................................................................................... 67
Figure 18............................................................................................................................................... 70
Figure 19............................................................................................................................................... 71
Figure 20............................................................................................................................................... 73
Figure 21............................................................................................................................................... 73
TABLE
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Table 7 ...................................................................................................... Error! Bookmark not defined.
Table 8 ...................................................................................................... Error! Bookmark not defined.
Table 9 ...................................................................................................... Error! Bookmark not defined.
COMPANY PROFILE
Background
Bhubaneswar Stock Exchange Ltd. (BHSE) which had been functioning as a recognized
stock exchange in the State of Odisha since the year 1989 has taken exit as a stock exchange
w.e.f. February 09, 2015 pursuant to exit policy of Securities and Exchange Board of India
(SEBI) for non-performing stock exchanges in the country. In this context, SEBI has issued
an order on February 09, 2015 for exit of BHSE as a stock exchange after ensuring
compliance of various formalities by BHSE associated with such exit process. SEBI in its
said order had directed BHSE, among other requirements, to change its name and not to use
the expression “Stock Exchange” or any variant of this expression in its name.
(A) As it was required in the exit order issued by SEBI, the name of the Company has been
changed from “Bhubaneswar Stock Exchange Ltd.” to “Odisha Capital Market &
Enterprises Ltd.”W.e.f. 9th June, 2015 with the approval of the Registrar of Companies,
Odisha in terms of provisions of the Companies Act, 2013. Now, after exit of BHSE as a
stock exchange, the Company of erstwhile BHSE functions under a new name “Odisha
Capital Market & Enterprises Ltd.” with an altered set of Memorandum and Articles of
Association in terms of provisions of the Companies Act, 2013.
Management
The affairs of the company are controlled and supervised by the Board of Directors under the
provisions of its Memorandum and Articles of Association. The duties and responsibilities of
day to day management and affairs of the company are now vested with Mr. Thomas
Mathew, Director, who is assisted by a team of managerial and other employees of the
company.
Business Operation
Odisha Capital Market & Enterprises Ltd. in terms of its altered Memorandum of Association
is now taking steps to carry on different activities in the domain of capital market. More
particularly, it is committed to carry on campaigning financial literacy for financial inclusion
in the State in addition to working for assisting financial education as were discharged by the
erstwhile BHSE as a stock exchange.
Current Activities other than Business Operation
Apart from business operation, the company is engaged in promotion and development of
other activities in the interest of the investing public in capital market in a big way such as –
Investors’ Awareness Programme.
The company is conducting investors’ awareness programmes by way of seminars/workshop
from time to time for education and awareness of investing public in securities. The aim of
the company is to have as many as awareness programmes in a year at different locations of
the State of Orissa.
The company is providing a Certificate Course, namely, “Basics of Capital Market. With the
expansion of capital market which includes the reach of its activities in the form of course
contents at various B-Schools and +2 Commerce level schools, practical oriented education
programme in securities market activities is in increasing demand now days as it promises
youth to make career in the field of securities market. The company aims at undertaking
practical oriented training programmes for the students of + Commerce and B-Schools in a
big way as well as for the youths who want to make their career in securities market. At
present, the company is engaged in imparting training to the students of various management
institutes.
The students of various Institutes and B-Schools require preparing project papers on different
topics including the topics related to activities in Stock Exchange and securities market. The
students of a number of Institutes and B-Schools visit the company either directly or
sponsored by their Institutes every year for assistance in preparation of their project papers.
The company assists and supports those students in their research work by providing
necessary guidance and securities market information.
LITERATURE REVIEW
It takes big demand to move supply up, and the largest source of demand for stocks is by far
the institutional buyer." -- William J. O'Neil
Investor's Business Daily's “Stocks on the Move” screen shows you the stocks with
significant increases over their average trading volume. Big increases in volume percentage
change often indicate increased demand from institutional investors. This increasing demand
could translate into an increasing share price.
Selden (1912) wrote Psychology of the Stock Market. He based the book `upon the belief
that the movements of prices on the exchanges are dependent to a very considerable degree
on the mental attitude of the investing and trading public'.
In 1985 Werner F. M. De Bondt and Richard Thaler published `Does the stock market
overreact?' in The Journal of Finance (De Bondt and Thaler 1985), effectively forming the
start of what has become known as behavioural finance. They discovered that people
systematically overreacting to unexpected and dramatic news events results in substantial
weak-form inefficiencies in the stock market. This was both surprising and profound. Mental
accounting is the set of cognitive operations used by individuals and households to organize
evaluate and keep track of financial activities.
Jones (2005) said that dividends are the only cash payment a stockholder receives directly
from firm and these are the foundation of valuation for common stocks. Stock price response
to an unexpected dividend change announcement is related to the dividend preferences of the
marginal investor in that firm where other things remaining same (Denis et al., 1994).
Higgins (1995) said that if the company will have less money to invest, or it will have to
raise more money from external sources to make the same investments stockholders claim on
future cash flow, which reduces share price appreciation. Moreover, during dividend
announcement period stock price also fluctuate due to announcement of dividend. Mulugetta
et al. (2002) examined the impact of Standard and Poor’s ranking changes on stock prices. In
addition, Affleck-Graves & Mendenhall (1992) found that stock price reacts after 8 days on
average up to 54 days of such earning announcement.
Gittman (2004, pp. 312) divided stock into two types, such as common stock and preferred
stock. He also showed that dividends are the outcome of investment. So, common stocks are
an ownership claim against primarily real or productive asset (Higgins, 1995), but he also
said that if the company prospers, stockholders are the chief beneficiaries, if it falters, they
are the chief losers.
Howard Marks on the constancy of cycles, “Cycles are inevitable. Every once in a while, an
up- or down-leg goes on for a long time and/or to a great extreme and people start to say “this
time it’s different.” They cite the changes in geopolitics, institutions, technology or behaviour
that have rendered the “old rules” obsolete. They make investment decisions that extrapolate
the recent trend. And then it turns out that the old rules do still apply, and the cycle resumes.
In the end, trees don’t grow to the sky, and few things go to zero. Rather, most phenomena
turn out to be cyclical.” (Source: ‘You Can’t Predict. You Can Prepare.’)
The existence of a relationship between stock prices and exchange rate has received
considerable attention. Early studies (Aggarwal, 1981; Soenen and Hennigar, 1988) in this
area considered only the correlation between the two variables-exchange rates and stock
returns. Theory explained that a change in the exchange rates would affect a firm’s foreign
operation and overall profits which would, in turn, affect its stock prices, depending on the
multinational characteristics of the firm.
It was Maysami-Koh (2000), who examined the impacts of the interest rate and exchange
rate on the stock returns and showed that the exchange rate and interest rate are the
determinants in the stock prices.
1. INTRODUCTION
Stock market is an imperative part of the economy of a country. The stock market plays an
essential role in the growth of the industry and commerce of the country that eventually
affects the economy of the country to an unlimited extent. That is reason that the government,
industry and even the central banks of the country keep a close watch on the happenings of
the stock market. The stock market is important from both the industry’s point of view as
well as the investor s point of view.
Stock prices are a function of supply and demand. Other influences such as earnings, the
economy and so on may affect the desirability of owning (or selling) a stock. If a company
reports surprisingly low earnings, demand for the stock may wither. As it does, the balance
between buyers and sellers is changed. Buyers will demand a discount off the existing price
and many motivated sellers will accommodate. More sellers than buyers means there is more
supply than demand, so the price falls.
Stock prices change every day as a result of market forces. By this we mean that share prices
change because of supply and demand. If more people want to buy a stock (demand) than sell
it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than
buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes
people like a particular stock and dislike another stock. This comes down to figuring out what
news is positive for a company and what news is negative. There are many answers to this
problem and just about any investor you ask has their own ideas and strategies.
The major factors that affect demand for stocks are economic data, interest rates and
corporate results. Economic data reveals more information about the state of the economy. If
the economy is doing better than expectations, it creates more demand for stocks in
anticipation of better earnings. Corporations' profits, sales, margins and outlook have massive
impact on demand for individual shares, accounting for the volatility that emerges before and
after these releases.
While demand for a stock can revolve based on market dynamics, economic conditions,
changes to central bank policy and better-than-expected (or worse-than-expected) results, the
supply of stocks tends to change at a glacial pace.
The major factors that affect supply for stocks are Initial Public Offer, need for business
expansion, mergers & acquisitions, stock split, rights issue, buy back, delisting and a positive
investment climate where people are interested to invest and businesses want to expand. Each
time a new company lists, it increases the quantity of stocks that compete for capital. Spinoffs
are similar to initial public offerings. Existing companies divest themselves of units, which
become their own stand-alone companies. Companies in financial distress or in need of
capital may issue stock. This leads to increase in supply of stocks.
Companies can decrease their own supply of shares via stock buybacks or delisting. This is
when the companies purchase their own shares at market prices, retire these stocks and
decrease the number of existing stocks. This leads to higher prices as long as demand does
not decrease.
To understand and analyse the various factors that affect the supply and demand of stocks in
the stock market. To study and make analysis whether the information on which demand and
supply normally base is always authenticate for an investor to take investment decision.
Another objective is to study and ascertain every increase and decrease in stock price is
always genuine based on accuracy of the information or it is operators driven. To study
various factors that influence the movement of stock prices both positive and negative & to
convey message how to deal with the negative information while acting upon positive
information.
To collect data relating to public issue made from 2014 to 31st March 2017.
To collect data relating to recent dividend declaration, bonus & rights issue and
analyse its positive and negative effect on stock price.
To collect data relating to quarterly financial results and analyse its effect on
stock price.
2. STOCK MARKET
When we talk about investment, the first question that comes to an investor’s mind is why
should they invest? If we keep our money idle in bank account instead of investing it, then
we’ll never have more money than the amount we save. By investing money, we are getting
more money by earning interest on what we have invested. Suppose, given an option between
choosing a plan in which an investor would receive Rs.10, 000 now or invest the Rs.10, 000
for three years and receive Rs.10, 000 plus any interest rate. Rational investor prefer to
receive the same amount of money today rather than receiving the same amount of money on
some future date because of money’s potential to grow in value over a period of time. The
time value of money is the idea that money available at the present time is worth more than
the same amount available in the future. That is why investor’s invest their money in stocks.
A stock exchange facilitates stock brokers to trade company stocks and other securities. A
stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting place
of the stock buyers and sellers. India's premier stock exchanges are the Bombay Stock
Exchange and the National Stock Exchange. Once new securities have been sold in the
primary market, they are traded in the secondary market—where one investor buys shares
from another investor at the prevailing market price or at whatever prices both the buyer and
seller agree upon. The secondary market or the stock exchanges are regulated by the
regulatory authority. In India, the secondary and primary markets are governed by the
Security and Exchange Board of India (SEBI). Stock markets are financial institutions
established to help businesses and entrepreneurs come together to buy, sell and trade shares
for the purpose of capitalizing enterprises in need of cash infusions. The role of stock
exchange is to maximize investor’s return on savings. A stock exchange can serve as a
barometer of a nation’s fiscal health, broadcasting the ups and downs and shifts that are the
benchmarks of a society’s financial infrastructure.
In reality we never know what is going to happen in the stock market, how the stocks are
going to react. We can only use as many different inputs as possible, such as current
information, factors responsible for price movement and strategy. The more and more
information an investor analyses the more complex it becomes, and the less the investor is
going to focus on the one true thing that will always give her the clearest idea of price action,
mainly price itself. At the end of the day, if an investor is going to make a decision whether
or not to buy or sell a currency pair, she will make a decision based upon the hard evidence
that is clearly in front of her. Price is the only thing that will give me that information.
The stock prices in every stock exchange around the world fluctuate actively at every
moment throughout the trading day. But what causes the prices to change? Supply and
demand model for stocks gives us an analytic perspective on why stocks value rises and falls.
The supply and demand fluctuate all day long in response to positive and negative factors that
affects the investor’s behaviour and price of the stocks moment by moment will reflect
changes in demand and supply.
Figure 1 : Investors Intentions
Individual stocks are of course very responsive to news. The new factor can be information
about the company itself, any general economic news like any policy or law changes can
affect a major segment of a market or markets overall.
Figure 2 : Demand & supply (positive factor)
Graph 2, which are hypothetical, show the effect that might be seen due to increase in profits.
First, the demand curve will shift upward because suddenly the stock is more attractive to
potential investors because of company’s greater profitability. Second, the supply curve
might shift backward because some of the investors who currently hold the stock find it more
attractive and might be less willing to sell it. The net effect upon the price of the two shifts is-
the share price rises from P0 to P1.
Graph 3, the supply curve shifts outward – this announcement will force the individuals,
mutual funds, and hedge fund owners to sell their holdings. Demand curve will shift inward
because at this time the stocks of any particular industry will be less attractive. The net effect
is clear decline in price from P1 to P0. Again the net impact upon volume would be
uncertain, although in this example volume rises but not necessarily the volume will rise in
every case. As was the case when we looked at the impact of good news, there tends to be a
dominant curve shift, and when the news is bad it does tend to be on the supply side, so the
volume usually rises.
Because we know that entire indexes rise and fall in reaction to general economic news, then
obviously a single stock making up any index can respond to the same class of news, even
though the company is not directly affected by the news. In a particular week, stock markets
are sluggish because of poor economic news and the share price of a particular company
drifts lower.
Figure 4: Demand & Supply (General Market news)
The slight decline in price and slump in volume was not due to any internal factor like
decrease in the profits of the company or unexpected announcements from the competitors or
customers, but the figure reflects general poor atmosphere for the stocks due to global
economic problems. In Europe, a recurring debt crisis caused by the inability of some Euro
zone governments like Greece and Ireland to pay off their debts affected the markets
throughout the summer. In the United States markets witnessed the inability of our two
political parties to cooperate on a plan to curb their own budget deficits. These two negative
factors of the market in general ultimately drove retail investors away from the stock market,
which dragged stocks down in general and lowered trading volume for many industries.
Now we can understand in detail the positive and negative factors that affect the prices of the
stocks as well as the investor’s behaviour.
4.5 Liquidity
Financial Institutions like banks can invest their idle funds in the stock exchange and earn
profit even within a short period. When necessity arises, these securities can be immediately
sold for raising funds. Thus, it is the stock exchange which provides opportunities for
converting securities into cash within a short notice.
4.8 Volatility
It measures the risk of a security. It is used in option pricing formula to gauge the fluctuations
in the returns of the underlying assets. Volatility indicates the pricing behaviour of the
security and helps estimate the fluctuations that may happen in a short period of time.
Systematic Risk- The risk inherent to the entire market or an entire market segment.
Systematic risk, also known as “undiversifiable risk,” “volatility” or “market risk,” affects the
overall market, not just a particular stock or industry. This type of risk is both unpredictable
and impossible to completely avoid. It cannot be mitigated through diversification, only
through hedging or by using the right asset allocation strategy.
A market theory that evolved from a 1960's Ph.D. dissertation by Eugene Fama, the efficient
market hypothesis states that at any given time and in a liquid market, security prices fully
reflect all available information. The EMH exists in various degrees: weak, semi-strong and
strong, which addresses the inclusion of non-public information in market prices. This theory
contends that since markets are efficient and current prices reflect all information, attempts to
outperform the market are essentially a game of chance rather than one of skill.
The weak form of EMH assumes that current stock prices fully reflect all currently available
security market information. It contends that past price and volume data have no relationship
with the future direction of security prices. It concludes that excess returns cannot be
achieved using technical analysis.
The semi-strong form of EMH assumes that current stock prices adjust rapidly to the release
of all new public information. It contends that security prices have factored in available
market and non-market public information. It concludes that excess returns cannot be
achieved using fundamental analysis.
The strong form of EMH assumes that current stock prices fully reflect all public and private
information. It contends that market, non-market and inside information is all factored into
security prices and that no one has monopolistic access to relevant information. It assumes a
perfect market and concludes that excess returns are impossible to achieve consistently.
Fama identified three distinct levels (or ‘strengths’) at which a market might actually be
efficient.
1. Strong-form EMH- In its strongest form, the EMH says a market is efficient if all
information relevant to the value of a share, whether or not generally available to
existing or potential investors, is quickly and accurately reflected in the market price.
For example, if the current market price is lower than the value justified by some
piece of privately held information, the holders of that information will exploit the
pricing anomaly by buying the shares. They will continue doing so until this excess
demand for the shares has driven the price up to the level supported by their private
information. At this point they will have no incentive to continue buying, so they will
withdraw from the market and the price will stabilise at this new equilibrium level.
2. Semi-strong-form EMH- In a slightly less rigorous form, the EMH says a market is
efficient if all relevant publicly available information is quickly reflected in the
market price. This is called the semi-strong form of the EMH. If the strong form is
theoretically the most compelling, then the semi-strong form perhaps appeals most to
our common sense. It says that the market will quickly digest the publication of
relevant new information by moving the price to a new equilibrium level that reflects
the change in supply and demand caused by the emergence of that information.
What it may lack in intellectual rigour, the semi-strong form of EMH certainly gains
in empirical strength, as it is less difficult to test than the strong form.
3. Weak-form EMH- In its third and least rigorous form (known as the weak form), the
EMH confines itself to just one subset of public information, namely historical
information about the share price itself. The argument runs as follows. ‘New’
information must by definition be unrelated to previous information; otherwise it
would not be new. It follows from this that every movement in the share price in
response to new information cannot be predicted from the last movement or price, and
the development of the price assumes the characteristics of the random walk. In other
words, the future price cannot be predicted from a study of historic prices.
The secondary market commonly referred to as the "stock market." Secondary Market refers
to a market where securities are traded after being initially offered to the public in the
primary market and/or listed on the Stock Exchange. Securities issued by a company for the
first time are offered to the public in the primary market.
Here secondary market plays a crucial role in IPO. Secondary Market helps primary market
to raise capital on from public for the first time. If exchange of stocks is taking place in the
stock market in high volumes, that will give a positive signal to companies to raise capital in
the primary market. Reason being companies will be sure that their shares will be subscribed
by public, because secondary market performance is good.
Once the IPO is done and the stock is listed, they are traded in the secondary market. The
main difference between the two is that in the primary market, an investor gets securities
directly from the company through IPOs, while in the secondary market, one purchase
securities from other investors willing to sell the same. The defining characteristic of the
secondary market is that investor’s trade among themselves. That is, in the secondary market,
investor’s trade previously issued securities without the issuing companies' involvement. For
example, if you go to buy Microsoft stock, you are dealing only with another investor who
owns shares in Microsoft. Microsoft is not directly involved with the transaction. In this
market the investor’s psychology or behaviour creates demand & supply in stock market and
this supply and demand factors affect the prices of the stock.
Initial public offering is the process by which a private company can go public by sale of its
stocks to general public. It could be a new, young company or an old company which decides
to be listed on an exchange and hence goes public.
Any company going public in India should get approval from SEBI before opening its IPO.
Issuer Company’s leads managers submit the public issue prospectus to SEBI, provide
clarification, make changes to the prospectus suggested by SEBI and get it approve.
In simple words SEBI validate the IPO prospectus and make sure all the declaration made in
this document are correct and also make sure that document has enough information to help
investors to take decision before applying shares in an IPO. After the Prospectus has been
validated by SEBI, the validation will authenticate the prospectus and it will increase the
quality of prospectus thus moving up the demand for the IPO.
Another factor that will increase the demand quality of IPO is the score of Credit Rating
Agencies (CRISIL, ICRA, CARE). Investor’s faith increases on a particular stock after it is
rated by Credit Rating agencies.
When a company initiates the IPO process, a very specific set of events occurs. The chosen
underwriters facilitate all of these steps.
• The company files its prospectus with the SEBI and sets a date for the offering.
IPOs can be a risky investment. For the individual investor, it is tough to predict what the
stock will do on its initial day of trading and in the near future because there is often little
historical data to use to analyze the company. Also, most IPOs are for companies that are
going through a transitory growth period, which means that they are subject to additional
uncertainty regarding their future values. The rate of company IPOs often depends on
macroeconomic factors as well as internal needs to raise capital. Factors such as need for
expansion, lower interest rates, change in economic policies these can boost the company to
go for an IPO. Factors that can affect the movement of price of the stock can be the
investment bankers who are taking the charge of IPO, Underwriters who will buy the shares
of the company in case of non issuance by the public.
The stock market tends to be a leading indicator of the business cycle, since investors look to
other indicators and tend to exit the market at or before an economic contraction and return to
the market during recovery.
Investor Expectations: Essentially, investors move money based on where they see
future profit (or loss) potential. Such movements can then affect the overall market
itself, since more dollars entering the market tends to drive stock prices higher.
Inflation expectations are another source of business cycle impact on the stock
market.
o If it is assumed that inflation will raise in the near future (see the sections
below), interest rates tend to rise, and this has a negative impact on stock (and
bond) prices.
o Ironically, people look to stocks as an inflation hedge, but stocks actually do
poorly during periods of high inflation, demand decreases.
o Of course, over long periods of time, the return on stocks does beat the general
rate of inflation.
Inflation refers to a general increase in the price of goods and services. This occurs when
demand for these items grows faster than the supply. The result is more money chasing fewer
goods, and therefore prices increase. Ensuring that your client's investments outpace the rate
of inflation over the long haul is one of the major challenges for an IA.
Deflation occurs during recessions, refers to a decrease in general price level of the goods and
services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate).
Inflation reduces the real value of money over time; conversely, deflation increases the real
value of money – the currency of a national or regional economy. This allows one to buy
more goods and services than before with the same amount of money. Economists generally
believe that deflation is a problem in a modern economy because it may increase the real
value of debt, especially if the deflation was unexpected. Deflation is caused by a shift in the
supply and demand curve for goods and services. This in turn can be caused by an increase in
supply, a fall in demand, or both. When prices are falling, consumers have an incentive to
delay purchases and consumption until prices fall further, which in turn reduces overall
economic activity. When purchases are delayed, productive capacity is idled and investment
falls, leading to further reductions in aggregate demand. This is the deflationary spiral. An
answer to falling aggregate demand is economic stimulus to increase demand, either from the
central bank, by expanding the money supply, or by the fiscal authority, by increasing public
spending or decreasing or deferring taxes (see fiscal multiplier). Hence, at the time of
deflation the demand falls, supply being constant so the aggregate price of share also falls.
The factors that affect fall in price of the share are- fall in interest rates, economic slowdown.
Window dressing is a strategy used by mutual fund and other portfolio managers near the
year or quarter end to improve the appearance of a fund’s performance before presenting it to
clients or shareholders. To window dress, the fund manager sells stocks with large losses and
purchases high-flying stocks near the end of the quarter. These securities are then reported as
part of the fund's holdings.
Performance reports and a list of the holdings in a mutual fund are usually sent to clients
every quarter, and clients use these reports to monitor the fund's investment returns. When
performance has been lagging, mutual fund managers may use window dressing to sell stocks
0that have reported substantial losses, replacing them with stocks expected to produce short-
term gains to improve the overall performance of the fund for the reporting period. Another
variation of window dressing is investing in stocks that do not meet the style of the mutual
fund. For example, a precious metals fund might invest in stocks in a hot sector at the time,
disguising the fund's holdings and investing outside the scope of the fund’s investment
strategy. Due to this factor the demand raises for that particular company’s stock which has
been window dressed because the stocks of that company have been hyped.
Greedy Issue Pricing refers to fancy pricing or overvaluing the asset. This can
also be another factor due to which the price of share rises. In this case also like
window dressing the share prices have been hyped. Greedy pricing is mostly done in
Pharmaceutical and Real estate sector.
A designation of a securities issue given by the Securities and Exchange Board of India
(SEBI) that allows an Indian-listed company to raise capital from its domestic markets
without the need to submit any pre-issue filings to market regulators. The SEBI instituted the
guidelines for this relatively new Indian financing avenue on May 8, 2006.
Prior to the innovation of the qualified institutional placement, there was concern from Indian
market regulators and authorities that Indian companies were accessing international funding
via issuing securities, such as American depository receipts (ADRs), in outside markets. This
was seen as an undesirable export of the domestic equity market, so the QIP guidelines were
introduced to encourage Indian companies to raise funds domestically instead of tapping
overseas markets.
There are a few rules to follow. The market regulator has stated that there should be at least
two QIBs (QIBs include mutual funds, domestic financial institutions such as banks and
insurance companies, venture capital funds, foreign institutional investors, and others.) if the
issue size is less than Rs.250 crore, and at least five investors if the size is more than Rs.250
crore. A single investor cannot be allotted more than 50% of the issue.
The QIP will be priced not less than the average of the weekly high and low of the closing
prices of the equity shares during the two weeks preceding the “relevant” date. The
“relevant” date will be the opening date of the issue, as decided by the company’s board. In a
rising market, such as now, the QIP price is set at an attractive rate.
6.1.6 Underwriting
Underwriting is the process that a lender or other financial service uses to assess the
creditworthiness or risk of a potential customer. Underwriting also refers to an investment
banker's process of packaging and selling a security on behalf of a client. Underwriting
refers to the structured process used by financial service companies, such as banks, investors,
or insurers, to determine and price the risk from a potential client. The underwriting process
is intended to determine the credit needs, the quality of the collateral assets to be used
to support the borrowing, and the borrower's ability to repay the debt. Upon completion of a
formal underwriting process and a summary presented to a credit committee within
the lender, the lender will either approve or reject the request for a loan.
Similarly, an insurance company will evaluate the risks of a potential candidate for insurance,
based on a variety of actuarial factors. The bottom line from such an underwriting process is
to price the insurance in accordance with its associated risk. In securities trading,
underwriting also includes assessing the risk and pricing the security accordingly. However,
the formal underwriting process also involves agreeing to buy the security (by
the underwriter) and then selling the security for a profit. The underwriter effectively takes a
risk by agreeing to buy the security at the established price. In most instances, underwriters
will line up buyers for the securities before they take on the security, so that it can "flip" the
security to the buyer.
Since 2007, all IPOs need to get a mandatory grading from a rating agency that indicates the
fundamentals of the company. IPO grading was introduced by the Securities and Exchange
Board of India (Sebi) in 2006, in order to provide investors with additional information on the
fundamentals of companies seeking to raise money from the public. CRISIL, ICRA, Credit
Analysis and Research Ltd (CARE), Fitch Ratings and Brickwork are among the agencies
registered with Sebi for grading.
While grading an IPO, a rating agency takes into account the financial history and outlook of
the company, its business prospects as well as the industry outlook, background of the
promoters and corporate governance issues. "When we say an assessment of fundamentals,
we basically mean an analysis of the company's operations, its financial strength, an analysis
of the industry within which the company operates and the growth prospects of that industry.
It also involves an in-depth analysis of management quality and corporate governance
practices of the company," says DR Dogra, managing director and chief executive officer,
CARE.
Post-demonetisation, things are probably getting worse. The Centre for Monitoring of
Indian Economy (CMIE), widely respected for its rigorous data collation, has said new
investment proposals/intentions have actually fallen over 50% since November 8. In the
October-December quarter of 2016, new investment proposals are valued at Rs. 1.25 lakh
crore compared with Rs.1.97 lakh crore in June-Sept quarter. The average new
investments proposed in the previous quarters are even higher. So the October-December
quarter generally indicates a 60% fall in new proposals during the weeks after
demonetisation.
In the context of trading, exit strategies are extremely important in that they assist traders
with overcoming emotion when trading. When a trade reaches its price target, many traders
experience greed and hesitate to exit for the sake of gaining more profit. Ultimately, this
leads to winning trades turning into losers. When losing trades reach their stop loss, fear
creeps in and traders hesitate to exit losing trades, causing even greater losses.
Trade Sale: The sale of your company’s shares to another company, perhaps in the
same sector. Since the dotcom crash, the majority of venture capital exits have been
achieved through trade sales. This can bring a higher valuation to the company being
sold than a full stock market quotation, if the acquirer actually needs the company to
supplement its own business area. Venture capital firms tend to favour the trade sale
exit route over IPO because they can realize their investment in cash or cash and
shares where the shares can be sold for cash.
Repurchase: The repurchase of the private equity investors’ shares by the company
and/or its management. To repurchase shares you and your advisors will need to
consult the Companies Act, which governs the conditions of this exit option. Advance
clearance from the Revenue Commissioners and professional accounting and tax
advice is essential before choosing the route.
A reduction in dividends paid is not appreciated by investors and usually the stock
price moves down as this could point towards difficult times ahead for the company.
On the other hand a stable dividend payout ratio indicates a solid dividend policy by
the company's management.
For instance Nestle India share price before dividend declaration was Rs.6230.95,
on 9th December 2016 dividend was declared and the share price went up to
Rs.6352.35, and now it is currently trading at Rs. 6628.50.
Bonus/Rights Issue & Stock split: A bonus issue, also known as a scrip issue or a
capitalization issue, is an offer of free additional shares to existing shareholders. A company
may decide to distribute further shares as an alternative to increasing the dividend payout. For
example, a company may give one bonus share for every five shares held.
Companies give away bonus shares to shareholders when companies are short of cash and
shareholders expect a regular income. Shareholders may sell the bonus shares and meet their
liquidity needs. Bonus shares may also be issued to restructure company reserves. Issuing
bonus shares does not involve cash flow. It increases the company’s share capital but not its
net assets.
Bonus shares are issued according to each shareholder’s stake in the company. For example,
a three-for-two bonus issue entitles each shareholder three shares for every two they hold
before the issue. A shareholder with 1,000 shares receives 1,500 bonus shares (1000 x 3 / 2 =
1500).
Companies low on cash may issue bonus shares rather than cash dividends as a method of
providing income to shareholders. Because issuing bonus shares increases the issued share
capital of the company, the company is perceived as being bigger than it really is, making it
more attractive to investors. In addition, increasing the number of outstanding shares
decreases the stock price, making the stock more affordable for retail investors.
Stock splits and bonus shares have many similarities and differences. When a company
declares a stock split, the number of shares increases, but the investment value remains the
same. Companies typically declare a stock split as a method of infusing additional liquidity
into shares, increasing the number of shares trading and making shares more affordable to
retail investors.
When a stock is split, there is no increase or decrease in the company's cash reserves. In
contrast, when a company issues bonus shares, the shares are paid for out of the cash
reserves, and the reserves deplete.
Rights Issue- Cash-strapped companies can turn to rights issues to raise money when they
really need it. In these rights offerings, companies grant shareholders a chance to buy new
shares at a discount to the current trading price. Let's look at how rights issue work, and what
they mean for all shareholders.
But until the date at which the new shares can be purchased, shareholders may trade the
rights on the market the same way they would trade ordinary shares. The rights issued to a
shareholder have a value, thus compensating current shareholders for the future dilution of
their existing shares' value.
Troubled companies typically use rights issues to pay down debt, especially when they are
unable to borrow more money. But not all companies that pursue rights offerings are shaky.
Some with clean balance sheets use them to fund acquisitions and growth strategies. For
reassurance that it will raise the finances, a company will usually, but not always, have its
rights issue underwritten by an investment bank.
Sector specific information like government has increased subsidies for a sector, government
of India or any other country has made a contract with any company of a particular sector
then overall confidence of investors will increase in that particular sector because that sector
is growing. This increased confidence will lead to rise in demand and eventually the stock
prices of that sector will move up.
In finance, the noisy market hypothesis contrasts the efficient-market hypothesis in that it
claims that the prices of securities are not always the best estimate of the true underlying
value of the firm. It argues that prices can be influenced by speculators and momentum
traders, as well as by insiders and institutions that often buy and sell stocks for reasons
unrelated to fundamental value, such as for diversification, liquidity and taxes. These
temporary shocks referred to as "noise" can obscure the true value of securities and may
result in mispricing of these securities, potentially for many years. These temporary shocks
may last for days or for years, their unpredictability makes it difficult to design a trading
strategy that consistently produces superior returns.
6.2.7 Liquidity
Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity
is to get your money whenever you need it.
Liquidity might be your emergency savings account or the cash lying with you that you can
access in case of any unforeseen happening or any financial setback. Liquidity also plays an
important role as it allows you to seize opportunities.
Certificates of deposit are slightly less liquid, because there is usually a penalty for
converting them to cash before their maturity date. Savings bonds are also quite liquid, since
they can be sold at a bank fairly easily. Finally, shares of stock, bonds, options and
commodities are considered fairly liquid, because they can usually be sold readily and you
can receive the cash within a few days. Each of the above can be considered as cash or cash
equivalents because they can be converted to cash with little effort, although sometimes with
a slight penalty.
6.2.8 Speculation
Speculation is the act of trading in an asset or conducting a financial transaction that has a
significant risk of losing most or all of the initial outlay with the expectation of a substantial
gain. With speculation, the risk of loss is more than offset by the possibility of a huge gain,
otherwise there would be very little motivation to speculate. It may sometimes be difficult to
distinguish between speculation and investment, and whether an activity qualifies as
speculative or investing can depend on a number of factors, including the nature of the asset,
the expected duration of the holding period, and the amount of leverage.
Real estate is an area where the line between investment and speculation blurs. Buying
property with the intention of renting it out would qualify as investing, but buying
multiple condominiums with minimal down payments for the purpose of reselling them
quickly at a profit would undoubtedly be regarded as speculation. Speculators can provide
market liquidity and narrow the bid-ask spread, enabling producers to hedge price risk
efficiently speculative short-selling may also keep rampant bullishness in check and prevent
the formation of asset price bubbles.
Mutual funds and hedge funds often engage in speculation in the foreign exchange, bond and
stock markets. Global stock markets are valued at an estimated $64 trillion.
What is the advantage of margin trading? Just as the assumption of debt enables the equity
holders of a firm to obtain leverage, margin trading allows the investor to obtain leverage-
that is, by using borrowed capital to partly fund the transaction; investors can magnify the
returns on investment.
6.2.9 Price Volatility of Stocks
The term “price volatility” is used to describe price fluctuations of a commodity. Volatility is
measured by the day-to-day percentage difference in the price of the commodity. The degree
of variation, not the level of prices, defines a volatile market. Since price is a function of
supply and demand, it follows that volatility is a result of the underlying supply and demand
characteristics of the market. Therefore, high levels of volatility reflect extraordinary
characteristics of supply and/or demand.
Region and country economic factors, such as tax and interest rate policy, contribute to the
directional change of the market and thus volatility. For example, in many countries,
the central bank sets the short-term interest rates for overnight borrowing by banks. When
they change the overnight rate, it can cause stock markets to react, sometimes violently.
Changes in inflation trends influence the long-term stock market trends and volatility.
Expanding price-earning ratios (P/E ratio) tend to correspond to economic periods when
inflation is either falling or is low and stable. This is when markets experience low volatility
as they trend higher. On the other hand, periods of falling P/E ratios tend to relate to rising or
higher inflation periods when prices are more unstable. This tends to cause the stock markets
to decline and experience higher volatility.
Industry and sector factors can also cause increased stock market volatility. For example, in
the oil sector, a major weather storm in an important producing area can cause prices of oil to
jump up. As a result, the price of oil-related stocks will follow suit. Some benefit from the
higher price of oil, others will be hurt. This increased volatility affects overall markets as well
as individual stocks.
For example, as shown in the table below, when the average daily range in the S&P
500 Index is low (the first quartile 0 to 1%) the odds are high (about 70% monthly
and 91% annually) that investors will enjoy gains of 1.5% monthly and 14.5%
annually.
When the average daily range moves up to the fourth quartile (1.9 to 5%), there is a
loss of -0.8% for the month and a -5.1% loss for the year. The effects of volatility and
risk are consistent across the spectrum.
Table 1
Annual Data (1962 – 2011): S&P 500 Index Average Daily Range
1st 0-1.1% 91 8
2nd 1.1-1.5% 75 25
3rd 1.5-1.8% 83 17
4th 1.8-2.7% 38 62
Figure 6: Volatility
100%
90%
80%
70%
60%
50%
% Up
40%
% Down
30%
20%
10%
0%
0-1.1% 1.1-1.5% 1.5-1.8% 1.8-2.7%
1st 2nd 3rd 4th
A derivative is a security with a price that is dependent upon or derived from one or more
underlying assets. The derivative itself is a contract between two or more parties based upon
the asset or assets. Its value is determined by fluctuations in the underlying asset. The most
common underlying assets include stocks, bonds, commodities, currencies, interest
rates and market indexes.
Stock Price
The merger of two companies causes significant volatility in the stock price of the
acquiring firm and that of the target firm. Shareholders of the acquiring firm usually
experience a temporary drop in share value in the days preceding the merger, while
shareholders of the target firm see a rise in share value during the period. The stock
price of the newly merged company is expected to be higher than that of both the
acquiring and target firms, and it is usually profitable for the target firm's shareholders,
who benefit from the resulting stock price arbitrage. In the absence of
unfavourable economic conditions, shareholders of the merged company usually
experience greatly improved long-term performance and dividends.
Facing intense competition from cash-rich Reliance Jio, the Aditya Birla Group and
British telecom giant Vodafone Plc announced the merger of their Indian wireless
telephony businesses, creating the largest telecom operator in the country.
As the first step of the merger, Birla-owned Idea Cellular and Vodafone India would
merge their operations at a swap ratio of 1:1. Then, Birla’s holding companies
would buy a 4.9 per cent stake from Vodafone at Rs 110 per share, investing close to
Rs 3,900 crore. This will increase Idea’s stake to 26 per cent and bring down
Vodafone Plc’s stake to 45.1 per cent. The Birlas would have the right to acquire
another 9.5 per cent stake from Vodafone in the next four years, so that both
partners eventually hold an equal stake in the company (about 35.5 per cent each).
Figure 7: Idea & Vodafone- Merger
The merger of Idea-Vodafone affected their share prices, Vodafone and idea share prices
dipped. Graph 5 shows the price movement of Idea and Vodafone after the announcement of
merger of the two telecom companies on 21st march 2017.
300
250
200
150
Vodafone
100
Idea
50
0
13/03/2017
15/03/2017
17/03/2017
19/03/2017
21/03/2017
23/03/2017
25/03/2017
27/03/2017
29/03/2017
31/03/2017
02/04/2017
04/04/2017
06/04/2017
08/04/2017
10/04/2017
12/04/2017
The impact of illegal insider trading is considered negative for both the small investors and
for the markets. Illegal insider trading ensures that there is no fair play involved and there is
no fair demand and supply of stocks, all detrimental to the functioning of a healthy capital
market. Illegal insider trading weakens the faith of investors in the investing system and an
unchecked insider trading could keep off people from investing capital and this could
potentially harm the economy as a whole.
Rajat Gupta was found guilty in 2012 of passing illegal tips to Rajaratnam, a co-founder of
the Galleon Group LLC hedge fund. He told Rajaratnam about Berkshire Hathaway Inc.’s
$5 billion investment in Goldman Sachs and the bank’s financial results for two quarters
in 2008. He was sentenced in October 2012 to two years in prison, an additional year on
supervised release and ordered to pay $5 million in fines.
Markets frequently present consumers with products whose quality is difficult to judge in
advance. A stock, for instance, might look that it is going to give good returns, but for how
long will it work? Rates given by Credit Rating Agencies are one way of overcoming the
uncertainty. Big companies offering stable but standardised products are another; the
hipsterish coffee shop may well have the best brew, but the neighbouring Starbucks hopes
you are unwilling to take a risk finding out. Yet despite the pervasiveness of the problem, and
of solutions to it, not until the 1970s did economists begin to incorporate “asymmetric
information” into their thinking.
In his seminal 1970 paper “The Market for Lemons”, Mr George Akerlof asked what would
happen to the market if buyers could not tell between good and bad. Suppose a buyer would
pay $1,000 for a good stock (a “peach”) but only $500 for a mediocre stock (a “lemon”). But
if lemons and peaches are hard to distinguish, buyers will cut their offers accordingly. They
might be willing to pay, say, $750 for a stock they perceive as having an even chance of
being a lemon or a peach. The problem is that dealers who know for sure they have a peach
will reject such an offer. As a result, the buyers face “adverse selection”: the only sellers who
will be prepared to accept $750 will be those offloading lemons. Smart buyers can figure this
out. Knowing they will only ever be sold a lemon, they offer only $500. Sellers of lemons
end up with the same price as they would have done were there no ambiguity. But
information asymmetry means no peaches are traded at all.
Harshad Meheta was known to have fooled investors by taking advantage of loop holes in
the system. Harshad and his associates initiated a securities scam by diverting funds of
about Rs. 5000 crore from banks to stockbrokers between April 1991 to May 1992. After
the scam was exposed the stock market crashed and Mehta as arrested and banned from
trading in the stock markets.
40000
30000
20000
Jan/15
Oct/15
Oct/16
Jul/14
Jul/15
Jan/16
Jul/16
Jan/17
Apr/14
Apr/15
-10000 Apr/16
-20000
-30000
A stock market bubble is a type of economic bubble taking place in stock markets when
market participants drive stock prices above their value in relation to some system of stock
valuation.
Behavioural finance theory attributes stock market bubbles to cognitive biases that lead
to groupthink and herd behaviour. Bubbles occur not only in real-world markets, with their
inherent uncertainty and noise, but also in highly predictable experimental markets. In the
laboratory, uncertainty is eliminated and calculating the expected returns should be a simple
mathematical exercise, because participants are endowed with assets that are defined to have
a finite lifespan and a known probability distribution of dividends. Other theoretical
explanations of stock market bubbles have suggested that they are rational, intrinsic, and
contagious.
Irrational exuberance is unsustainable investor enthusiasm that drives asset prices up to levels
that aren't supported by fundamentals. The term "irrational exuberance" is believed to have
been coined by Alan Greenspan in a 1996 speech, "The Challenge of Central Banking in a
Democratic Society." He said that low inflation reduces investor uncertainty, lowers risk
premiums and implies higher stock market returns. Greenspan gave this speech near the
beginning of the 1990s dotcom bubble.
The dot-com bubble (also known as the dot-com boom, the tech bubble, the Internet
bubble, the dot-com collapse, and the information technology bubble) was a
historic economic bubble and period of excessive speculation that occurred from 1995 to
2001. During the bubble, the valuations of companies in the quaternary sector of the
economy increased extremely rapidly.[2] The value of the Nasdaq Composite, which
includes many technology companies, rose from 1,000 in 1995 to 5,000 in the year 2000. A
combination of rapidly increasing stock prices, market confidence that the companies
would turn future profits, speculation in stocks by individuals, and widely available venture
capital created an environment in which many investors were willing to overlook
traditional metrics, such as the Price–earnings ratio, in favour of basing confidence on
technological advancements.
Figure 9: NASDAQ
The NASDAQ Composite index spiked in the late 90s and then fell sharply as a
result of the dot-com bubble.
Table 2
When the Reserve Bank of India increases the interest rate, it does not directly affect the
stock market itself. The only truly direct effect is that it becomes more expensive for banks to
borrow money from the RBI.
It costs companies more to borrow money, financial institutions often increase the rates that
they charge their customers to borrow money. Individuals are affected through increases to
credit card and mortgage interest rates, especially if these loans carry a variable interest rate.
This has the effect of decreasing the amount of money consumers can spend.
Businesses too borrow money from banks to run and expand their operations. When the
banks make borrowing more expensive, companies might not borrow as much and will pay
higher rates of interest on their loans. Less business spending can slow down the growth of a
company; it might curtail expansion plans and new ventures and even induce cutbacks. There
might be a decrease in earnings as well – which, for a public company, usually means the
stock price fall.
If a company is seen as cutting back on its growth spending or is making less profit – either
through higher debt expenses or less revenue – then the estimated amount of future cash
flows will drop. All else being equal, this will lower the price of the company's stock.
If enough companies experience declines in their stock prices, the whole market, or the
key indexes (like the Dow Jones Industrial Average or the S&P 500) that many people equate
with the market, will go down. With a lowered expectation in the growth and future cash
flows of the company, investors will not get as much growth from stock price appreciation,
making stock ownership less desirable. Furthermore, investing in equities can be viewed as
too risky compared to other investments.
However, some sectors do benefit from interest rate hikes. One sector that tends to benefit the
most the financial industry. Banks, brokerages, mortgage
companies and insurance companies' earnings often increase as interest rates move higher,
because they can charge more for lending.
Rising or falling interest rates also affect investors' psychology – and the markets are nothing
if not psychological. When the RBI announces a hike, both businesses and consumers will cut
back on spending; this will cause earnings to fall and stock prices to drop, everyone thinks –
and the market tumbles in anticipation.
A corporate action in which a company divides its existing shares into multiple shares.
Although the number of shares outstanding increases by a specific multiple, the total dollar
value of the shares remains the same compared to pre-split amounts, because the split did not
add any real value.
For example, assume that XYZ Corp. has 20 million shares outstanding and the shares are
trading at $100, which would give it a $2 billion market capitalization. The
company’s board of directors decides to split the stock 2-for-1. Right after the split takes
effect, the number of shares outstanding would double to 40 million, while the share price
would be $50, leaving the market cap unchanged at $2 billion.
Why do companies go through the hassle and expense of a stock split? For a couple of very
good reasons:
First, a split is usually undertaken when the stock price is quite high, making it pricey for
investors to acquire a standard board lot of 100 shares. If XYZ Corp.'s shares were worth
$100 each, an investor would need to purchase $10,000 to own 100 shares. If each share
was worth $50, the investor would only need to pay $5,000 to own 100 shares.
Second, the higher number of shares outstanding can result in greater liquidity for the stock,
which facilitates trading and may narrow the bid-ask spread.
While a split in theory should have no effect on a stock's price, it often results in renewed
investor interest, which can have a positive impact on the stock price. While this effect can be
temporary, the fact remains that stock splits by blue chip companies are a great way for the
average investor to accumulate an increasing number of shares in these companies. Many of
the best companies routinely exceed the price level at which they had previously split their
stock, causing them to undergo a stock split yet again. Wal-Mart, for instance, has split its
shares as many as 11 times on a 2-for-1 basis from the time it went public in October 1970
to March 1999. An investor who had 100 shares at Wal-Mart’s IPO would have seen that
little stake grow to 204,800 shares over the next 30 years.
Better Monsoon--> Better Crops --> Better Agriculture --> Increase in disposable income -->
Better sales for manufacturing and services companies --> Higher Profitability -->Higher
Dividends/Higher stock prices --> Better economic performance.
Government stability- The ‘Modi Effect’ also brought in stability and provided positive
direction to the stock markets of India. During 2013, since Modi was declared BJP’s Prime
Ministerial candidate, the NSE Nifty Index recorded 7.77% of the total price return of
8.12%, and the volatility reduced to 9.1% from 17.96% for the entire year. Similarly, the
direction of the market changed from a negative 5.7% skewness for the entire year to a
positive 69.62%. The markets continued to remain bullish (positive skewness of 46.39%)
with a record gain of 13.49% in NSE Nifty, with further lower volatility of 7.75% during
2014 until the Victory Day- May 16, 2014.
Investor Service Centre- The Investor Service Centre shall provide such number of
newspapers and periodicals, as may be specified by SEBI / Exchange, with at least one in the
regional language. The Investor Service Centre shall provide a facility for dissemination of
information about companies, including annual reports, financial and other important
information through electronic media by providing view terminals with restricted access and
with a facility to take copies on payment of a reasonable fee. The Investor Service Centre
shall provide counselling service to the investors to assist the investors to know the steps they
need to take before entering into any arrangement to buy and/or sell a security through a
trading member or a sub-broker on the Exchange.
7. CASE STUDY
7.1 Introduction:
When the major investors in the market act, they exert tremendous influence over stock
prices. Apart from foreign institutional investors, domestic institutions such as mutual funds,
pension funds, banks and financial institutions buy and sell stocks in large blocks. These
large transactions tend to drive prices up or down depending on the degree of buying or
selling. Stocks are just as subject to the law of supply and demand as any other product.
When demand for a stock increases, its price usually increases. Conversely, stock prices tend
to fall when there is an ample supply of shares or decreased demand.
Stock prices change every day as a result of market forces. By this we mean that share prices
change because of supply and demand. If more people want to buy a stock (demand) than sell
it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than
buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes
people like a particular stock and dislike another stock. This comes down to figuring out what
news is positive for a company and what news is negative. There are many answers to this
problem and just about any investor you ask has their own ideas and strategies.
During the Bull market the market sentiments improve and this makes investors irrational.
The opposite is true during the bear run. Thus during bear market fear is the dominating
factor while during the bull markets investors tend to become greedy. During this time, so far,
the investors seem to have behaved rationally. However, will they continue to be reasonable
while investing in case the IPO trend catches on?
We don't know that yet. However, what we believe is that IPO investments could be one of
the riskiest classes of equity investments that a retail investor can make. This is because one
is betting on a company which is still in the testing waters. Plus we have very limited
financial information and no access to management meetings. Keeping these aspects into
consideration, we recommend investors to invest in IPOs only when a company is found
fundamentally strong and its stocks are offered at a reasonable price.
To find out details of public issues (both IPOs & FPOs) during last 3 years from 2014
to 2016 and for a period from 01.01.17 to 31.01.17.
To ascertain amount of capital mobilized for corporate investment through issue of
shares in primary market, during the period under review.
And to make comparative analysis with growth rate of the capital mobilized from
year-to-year during the period under review.
To ascertain demand & supply for the new stock offered for sale to primary market.
Note: Percentage change in IPO from 01.01.17 -31.03.17 has been compared with average
IPO of 2016 for 3 months.
Figure 11: Pattern of Capital Mobilized
Capital mobilized
250,000,000,000
200,000,000,000
150,000,000,000
Capital mobilized
100,000,000,000
50,000,000,000
0
IPO-2017 IPO-2016 IPO-2015 IPO-2014
Interpretation:
Despite a sharp rally in the stock markets, fund raising through initial public offers (IPOs) fell
to the lowest level since 2001. Companies raised just Rs 1,528 crore from all IPOs (including
that from SMEs) in 2014, a 5.6% year-on-year (y-o-y) drop. Despite a stable government
coming into power and the resultant buoyant secondary market, only six 'main-
board' IPOs hit market in 2014.
Equity fund raising was done mainly via QIPs (qualified institutional placement)
route. Funds mobilised through QIPs jumped nearly three-fold in 2014. In all, 33 QIPs
were launched that saw Rs 31,684 crore being raised from institutional investors, the
highest in five years.
The biggest disappointment for the primary market however has again been the lack
of divestments by the government.
Among the few reasons for this decline, one is SEBI's activism. One must note here
that the regulator has become more watchful and has started raising various queries
during the clearance process in order to safeguard the interest of small investors. The
regulatory check seems to be working quite well.
India's IPO market recorded strong performance in 2016 with 83 IPOs raising $3.8 billion
this year, and the activity looks set to remain strong driven by a combination of high investor
confidence and regulatory reforms, says an EY report.
India was the standout performer at the country level, recording a 38 per cent increase in deal
volume and a 79 per cent surge in proceeds raised, driven by stronger economic fundamentals
and a pro-business political regime.
Economic growth that the government expects to accelerate to almost 8% this fiscal
year (to next 31 March), from 7.6% in the past year.
Plentiful monsoon rainfall after two years of drought.
Slowing inflation and a consumption boost expected to come from hefty pay and
pension raises given to government employees and retirees.
The difference between the primary capital market and the secondary capital market is that in
the primary market, investors buy securities directly from the company issuing them, while in
the secondary market investors trade securities among themselves, and the company of which
the securities are traded, does not participate in the transaction.
At the time of IPO, investors direct their funds towards company for subscription of shares
through primary market. If the IPO would not have been there, the secondary market could
get the funds but instead the investors are putting their money in the IPOs. This leads to a
decrease in demand for investment in the secondary market. And prices of stocks in the
secondary market go down, because the funds which are supposed to be invested in
secondary market are mobilized to primary market.
Basis of Analysis-
The purpose of this table is to show a general trend that companies are taking high
premium in IPO which is leading to Greedy Price Issue (Refer to 6.1.4).
To ascertain the performance of the stock as detailed under Table 1, in the secondary
market.
In that line, to observe the price of those stocks, coated in the stock exchange during
first seven days of trading on an average basis and it is compared with the issue price.
Also to observe the performance of the stock in the stock exchange during the last 52
weeks on an average basis and to ascertain the status of stock price in the market &
compare to average issue price.
To compare individual stock price with individual 52 weeks average of the respective
stocks.
To ascertain demand for the stock in the secondary market and to make year wise
analysis on it.
Note: We cannot comment on 2016 stock performance, as we only have data of 3months 52
week average price.
Interpretation:
Market players said between 2011 and 2012, most IPOs that came to the market saw
significant erosion in their issue price after listing, forcing the regulator to intervene.
The post-listing performance for IPOs since 2014 has been decent, due to a revival in
the secondary market. This can be the reason why IPOs are charging high prices.
7.3 Secondary Market:
In secondary market, the securities issued in the primary market are bought and sold. Here,
you can buy a share directly from a seller and the stock exchange or broker acts as an
intermediary between two parties.
The secondary market is actually formed by another layer of investors who deal with primary
market investor to buy and sell financial securities such as bonds, futures and stocks. These
dealings happen in the proverbial stock exchange.
Primary market prices are often set beforehand, while prices in the secondary market are
determined by the basic forces of supply and demand. If the majority of investors believe a
stock will increase in value and rush to buy it, the stock's price will typically rise. If a
company loses favour with investors or fails to post sufficient earnings, its stock price
declines as demand for that security dwindles.
Declaration of good amount of dividend to shareholders certainly makes noise in the stock
market. For instance in this case, in the sample five companies have been taken for analysis,
which usually pay good amount of dividend.
Basis of Analysis:
The purpose of analysis here is to observe the behaviour of the stock prices of those
companies in the market on each occasion of dividend declaration. The period taken
for study is from 01.01.2017 to 31.03.2017.
Table 5: Dividend effect on Price
-2.00%
-3.00%
-4.00%
Market Price Inc/Dec (%)
-5.00%
-6.00%
-7.00%
-8.00%
-9.00%
-10.00%
Interpretation:
It is right in the sense that in theory a stock's price will go down in value by the
amount of the dividend. As the amount of dividend was adding to the value of the
company, but now has been paid out to shareholder, so now the company is worth less
by the value of the dividend.
However, in real life this may or may not happen. Sometimes post dividend stock
price appears to drop to the extent of percentage of the dividend. Sometimes this drop
appears to be more than the extent of percentage of dividend. And on some occasions
it is noticed that the price appears to go up even though the stock has gone ex-
dividend.
As the table 3 shows, out of the 5 sample companies taken 4 companies share price
went down after dividend declaration. In case of Coal India the 11.50% of dividend is
declared but the price of the stock has gone down by only 0.80%, there has been a
drop to the stockholder’s value but not much.
On the ex-dividend date, the stock price is adjusted downward by the amount of the
dividend by the exchange on which the stock trades. It becomes easily apparent,
however, on the ex-dividend dates for larger dividends, such as the $3 payment made
by Microsoft in the fall of 2004, which caused shares to fall from $29.97 to $27.34.
Despite of the fact that after dividend declaration the stock prices of Coal India went
down by 0.80%, the volume of trade increased. This is because; fluctuations in the
stock market are largely dictated by human psychology. If an investor thinks the
future is bright for a given company, she wants to invest as soon as possible to reap
the maximum profit. If enough investors feel the same way, the increase in investment
drives the stock price up, thereby fulfilling the investor's prediction. Conversely,
shareholders who think a stock is about to take a dive sell quickly to avoid losses.
Compa Rights Difference between Cum & Ex- Market Price Change
ny Issue Rights Status at company level (Rs.) in
Status Market
R Reco Equity size Paid-up Free Reserve Pre- Cum- Ex- Price
at rd Cap. (Cr.) Ann Right Righ (%)
io Date Cum Ex. Cu Ex. Cum Ex. ounc s ts (Cum-
e Ex.)
(3) (4) (6) (7) (8) Dt. (11 (13)
(2) (5) (9) (10) )
(1
)
47,
Canara 4,752 5,42 52 54,2 5,405 5,444.6 307. 302.0 290 -3.99%
Bank 1: 20.0 ,00,0 9,90 0,0 99,0 .85 6 35 7
1 2.17 00 ,000 0,0 0,00
0 00 0
4,10 41, 4,10
Mahindr 31.0 41,01 1,00 01 3,00 1,282 1,359.9 420. 439.5 386 -
.12 1
a Life 1: 3.17 0,000 ,000 3,0 ,000 90 0 12.17%
4 00
South 13,50 13,5 13,5 13,5
Indian 17.0 2,00, 03,0 02,0 03,0 138.5 20.8 20.50 20 -2.43%
8 133.62
Bank 1: 2.17 000 0,00 0,00 0,00 0
3 0 0 0
Kingfa 6,410,0 10,11 64,1 1,011,
Science& 18: 10.03. 00 0,000 00,0 00,00 1.76 109.32 910 889 810.1 -8.87%
Tech Ltd 91 17 00 0 0
12,000,000
10,000,000
8,000,000
Pre Announcement Demand
6,000,000
Ex-Bonus Demand
4,000,000
2,000,000
0
Canara Bank Mahindra South Indian Kingfa Sci &
Life Bank Tech Ltd
Interpretation:
A company may need extra capital to meet its current financial obligations, or it may
simply seek extra capital to fund expenditures designed to expand the company's
business, such as acquisitions or opening new facilities for manufacturing or sales.
A rights offering, also known as a rights issue is an issuing of rights a company makes
to its shareholders to purchase additional stock shares at a discounted trading price.
These rights are typically transferable, allowing shareholders to sell them to another
investor or to an underwriter. A rights offering spreads a company’s net profit over a
wider number of shares. Thus, the company’s earnings per share, or EPS, decreases as
the allocated earnings result in share dilution. However, if the company is using the
extra capital raised to fund expansion, it can eventually lead to increased capital gains
for shareholders.
A rights issue will need you to buy the shares. They do not come free. For
shareholders – the earnings per share will reduce since there are now more shares for
the same earnings, and so will the dividends. And that is why the prices of the shares
go down after rights issue, as shown in Graph 4.
After the right issue is offered price of that particular stock falls in the stock market. It
happens because the number of stock of that company increases in the market.
Especially if the number of the right issue is relatively higher than the paid-up capital
the price falls. Moreover the dividend yield and the PE ratio of that particular stock
also falls after the right issue is offered.
Demand for the shares has increased for South Indian Bank shares and Mahindra Life
because shareholders always find the right issue an attractive option to buy the shares
of the company. This is because the presume that the company is going to utilize the
additional fund from the right issue for further development and expansion of the
company that will eventually strengthen the financial standing of the company.
Compa Bonus Difference between Cum & Ex- Market Price Change
ny Issue Bonus Status at company level (Rs.) in
Status Market
Price
(%)
(Cum-
Ex.)
Rati Rec Equity size Paid-up Cap. Pre- Cum- Ex-
o ord Cum Ex. Cum Ex. Anno Bonu Bonu
Dat unce s s
e Dt.
(1) (3) (4) (5) (6) (7) (10)
(2) (8) (9)
V- 40,7 50,42,0 40,750, 50,420,
Guard 2:5 16. 5,02 99 200 990 28.2%
Ind 03. 0 140 138 177
17
GAIL 1268 126843 12,684, 12,684,
11. 4300 0000 30,000 30,000 356. 357. 5.76%
1:3 03. 000 00 00 25 41 378
17
Oil 60,1 2,003,8 60,114, 60,114,
India 13. 14,0 0,000 00,000 00,000 327. 321 345. 7.49%
1:3 01. 0,00 38 05
17
NBCC 12,0 6,000,0 12,000, 12,000,
21. 00,0 0,000 00,000 00,000 113. 110. 177.
1:2 02. 0,00 0 0 11 18 15 60.78%
17 0
Company Liquidity Status of shares in Stock Exchange
350
300
250
100
50
0
V-guard GAIL Oil India NBCC
6,000,000
5,000,000
4,000,000
Pre- ann Demand
3,000,000 Ex Bonus Demand
2,000,000
1,000,000
0
V-guard GAIL Oil India NBCC
Interpretation:
Companies low on cash may issue bonus shares rather than cash dividends as a
method of providing income to shareholders. Because issuing bonus shares increases
the issued share capital of the company, the company is perceived as being bigger
than it really is, making it more attractive to investors. In addition, increasing the
number of outstanding shares decreases the stock price, making the stock more
affordable for retail investors.
A bonus issue is just a book entry. Bonus shares are issued by cashing in on the free
reserves (accumulated profits) of the company. A company builds up its reserves by
retaining part of its profit over the years (the part that is not paid out as dividend).
After a while, these free reserves increase, and the company wanting to issue bonus
shares converts part of the reserves into capital. So you do not pay; and the company’s
profits are not impacted.
Bonus shares, in the long run would create enormous wealth for the investor. For
example, a Rs 10,000 invested in Wipro in 1980 would have grown into several
Crores as shown below:-
In 1980 an investor buys 100 shares @ Rs 100 per share in your name. In 1981
company declared 1:1 bonus = you have 200 shares
In 1985 company declared 1:1 bonus = you have 400 shares. In 1986 company split
the share to Rs. 10 = you have 4,000 shares
In 1987 company declared 1:1 bonus = you have 8,000 shares. In 1989 company
declared 1:1 bonus = you have 16,000 shares
In 1992 company declared 1:1 bonus = you have 32,000 shares In 1995 company
declared 1:1 bonus = you have 64,000 shares
In 1997 company declared 2:1 bonus = you have 1, 92,000 shares. In 1999 company
split the share to Rs. 2 = you have 9,60,000 shares
In 2004 company declared 2:1 bonus = you have 28, 80,000 shares. In 2005 company
declared 1:1 bonus = you have 57,60,000 shares
In 2010 company declared 2:3 bonus=you have 96, 00,000 shares.
Share price of Wipro is Rs 498.90 in 8th may 2017.
The value of 57, 60,000 shares in 2017 – 28, 736, 64,000 Crores.
As Graph 6 shows the Ex-bonus price in all the four cases is higher than the pre
announcement price, a bonus issue adds to the total number of shares in the market.
As in case of NBCC prior to bonus issue the company’s equity size was 60 crore after
bonus issue it went up to 120 crore. This is referred to as a dilution in equity. Now the
earnings of the company will have to be divided by that many more shares.(Earnings
Per Share = Net Profit/ Number of Shares)Since the profits remain the same but the
number of shares has increased, the EPS will decline. Theoretically, when EPS
declines, the stock price should also decrease proportionately. But, in reality, it may
not happen.
That’s because:
i. The stock is now more liquid. Now that there are so many more shares, it is easier to
buy and sell.
ii. A bonus issue is a signal that the company is in a position to service its larger equity.
What it means is that the management would not have given these shares if it was not
confident of being able to increase its profits and distribute dividends on all these
shares in the future.
Because liquidity of stock increases in the market after bonus issue due to increase in
number of shares, the demand for stocks also increases as shown in Graph 7.
6,000,000
5,000,000
4,000,000
Pre Annc. Demand
3,000,000
Ex- split Demand
2,000,000
1,000,000
0
Bharat Veronica JSW Steel LT Foods Sterling
Electronics Prod Food
Interpretation:
Stock splits are mainly carried out with the intention of increasing liquidity. Once
liquidity increases, more buyers and sellers trade in the stock, which, in turn, helps to
discover its true value.
The prime intention behind the stock split is to enhance liquidity in the stock and also
to make the stock more affordable. This is witnessed more when the price of a stock
moves up significantly. Thus, a stock split is usually resorted by companies that have
seen their share price increase to levels that are either too high or are beyond the price
levels of peer companies.
For instance, on August 17, 2010 the stock of Housing Development Finance Corporation
(HDFC) was trading at Rs 3,011.45. The company split the share in a ratio of 1:5 and the
share price closed at Rs 621.20 on August 18, 2010 (post-split).
A stock split is usually done by companies that have seen their share price increase to
levels that are either too high or are beyond the price levels of similar companies in
their sector. The primary motive is to make shares seem more affordable to small
investors even though the underlying value of the company has not changed.
After a split, the stock price will be reduced since the number of shares outstanding
has increased. As shown in Graph 8, all the five stocks prices went down after the
stock split.
Stock splits allowing lower prices result in increased trading/demand for stocks,
because now many more investors can trade stocks. Increased trading results in higher
volatility. As shown in graph 9 , the demand for 4 out of 5 companies has increased.
YES
Bank 702.11 731.80 801.54 882.63 3.90% 4.22% 9.52%
10.11%
138. 142.55 166.69 198.15 140.90 150.45 185.13 198.93 1.70 5.54 11.06 0.39
54
1066.90 1269.79 1160.65 1282.04 1308.13
804. 1165.40 877.1 9.02 8.78 0.96 12.24
52
467. 530.23 457.18 472.40 470.05 505.60 423.79 477.65 0.51 -4.64 -7.03 1.19
65
2314 2618.50 2943.51 2663.35 2476.48 2680.69 2823.25 2731.77 2.37% - 2.56%
.62 7% 4.08%
200.00%
150.00%
ONGC
100.00% Yes Bank
TECHM
50.00%
BAJAJ- AUTO
0.00%
1st qtr 2nd qtr 3rd qtr 4th qtr
-50.00%
Net Profit Inc/Dec
10
ONGC
5
Yes Bank
TECHM
0
BAJAJ_AUTO
1st qtr 2nd qtr 3rd qtr 4th qtr
-5 Company Mkt Price Inc/Dec
-10
Interpretation:
Conclusion:
Stock prices change moment to moment according to supply and demand. There are many
factors influencing prices, the most important of which is expectations about earnings. Still,
there is no consensus as to why stock prices move the way they do.
Investors often have differing opinions about particular stocks or about the direction of the
economy as a whole. Each trading day is analogous to a struggle between optimists and
pessimists who buy and sell at various prices given different expectations. The stock market
is said to incorporate all of the information that exists about the companies it represents, and
that manifests itself as price. When optimists dominate, prices trend upwards, and we say that
we are in a bull market. When the opposite is true, and prices trend lower, we are in a bear
market.
Shares are issued to raise finance for the issuing firm. Once issued, shares may be traded on
the stock exchange in the expectation of making a gain, or avoiding a loss. Supply of shares
for trading on stock exchange depends on the size of issued and listed shares on stock
exchange and more particularly, floating shares available for trading in stock exchange. On
the other hand, people demand shares for two main reasons:
The above analysed points are the main factors that affect any company’s share price. But
there are also many dominant factors that play a crucial role in deciding the future of the
stock. Factors like mergers & acquisitions, speculative trading, insider trading, Industry/
sector specific information, Industrial as well as economic growth vice versa, Liquidity,
Inadequate size of free float blue chip stocks, Noisy market hypothesis, Speculative trading,
Margin trading, Price volatility, Huge trading volume in derivative products, Merger &
acquisitions, Insider trading/ price rigging, Information asymmetry, Scams & irregularities,
Level of Investor protection and transparency in the transactions, Massive investment through
FIIs vice versa, Economic bubbles and irrational exuberance, Investment climate, Rupee vs.
Dollars fluctuation.
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40. Financial literacy: When, what and how
Posted On: 05 Jan 2015
Section: Columns
a. Topics: Finance , Poverty & Inequality
b. Tags: financial inclusion
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