HISTORY OF INDIAN STOCK MARKET

The working of stock exchanges in India started in 1875. BSE is the oldest stock
market in India. The history of Indian stock trading starts with 318 persons taking
membership in Native Share and Stock Brokers Association, which we now know by the
name Bombay Stock Exchange or BSE in short. In 1965, BSE got permanent recognition
from the Government of India. National Stock Exchange comes second to BSE in terms of
popularity. BSE and NSE represent themselves as synonyms of Indian stock market. The
history of Indian stock market is almost the same as the history of BSE.

The 30 stock sensitive index or Sensex was first compiled in 1986. The Sensex is
compiled based on the performance of the stocks of 30 financially sound benchmark
companies. In 1990 the BSE crossed the 1000 mark for the first time. It crossed 2000, 3000
and 4000 figures in 1992. The reason for such huge surge in the stock market was the liberal
financial policies announced by the then financial minister Dr. Man Mohan Singh.

The up-beat mood of the market was suddenly lost with Harshad Mehta scam. It came
to public knowledge that Mr. Mehta, also known as the big-bull of Indian stock market
diverted huge funds from banks through fraudulent means. He played with 270 million shares
of about 90 companies. Millions of small-scale investors became victims to the fraud as the
Sensex fell flat shedding 570 points.

To prevent such frauds, the Government formed The Securities and Exchange Board
of India, through an Act in 1992. SEBI is the statutory body that controls and regulates the
functioning of stock exchanges, brokers, sub-brokers, portfolio manager’s investment
advisors etc. SEBI oblige several rigid measures to protect the interest of investors. Now with
the inception of online trading and daily settlements the chances for a fraud is nil, says top
officials of SEBI.

Sensex crossed the 5000 mark in 1999 and the 6000 mark in 2000. The 7000 mark
was crossed in June and the 8000 mark on September 8 in 2005. Many foreign institutional
investors (FII) are investing in Indian stock markets on a very large scale. The liberal
economic policies pursued by successive Governments attracted foreign institutional
investors to a large scale. Experts now believe the sensex can soar past 14000 mark before
2010.
 The unpredictable behavior of the market gave it a tag – ‘a volatile market.’ The
factors that affected the market in the past were good monsoon, Bharatiya Janatha Party’s rise
to power etc. The result of a cricket match between India and Pakistan also affected the
movements in Indian stock market. The National Democratic Alliance led by BJP, during
2004 public elections unsuccessfully tried to ride on the market sentiments to power. NDA
was voted out of power and the sensex recorded the biggest fall in a day amidst fears that the
Congress-Communist coalition would stall economic reforms. Later prime minister Man
Mohan Singh’s assurance of ‘reforms with a human face’ cast off the fears and market
reacted sharply to touch the highest ever mark of 8500.

India, after United States hosts the largest number of listed companies. Global
investors now ardently seek India as their preferred location for investment. Once viewed
with skepticism, stock market now appeals to middle class Indians also. Many Indians
working in foreign countries now divert their savings to stocks. This recent phenomenon is
the result of opening up of online trading and diminished interest rates from banks. The
stockbrokers based in India are opening offices in different countries mainly to cater the
needs of Non Resident Indians. The time factor also works for the NRIs. They can buy or sell
stock online after returning from their work places.

The recent incidents that led to growing interest among Indian middle class are the
initial public offers announced by Tata Consultancy Services, Maruti Udyog Limited, ONGC
and big names like that. Good monsoons always raise the market sentiments. A good
monsoon means improved agricultural produce and more spending capacity among rural folk.
 DEVELOPMENT
An important early event in the development of the stock market in India was the
formation of the Native Share and Stock Brokers’ Association at Bombay in 1875, the
precursor of the present-day Bombay Stock Exchange. This was followed by the formation of
associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN
addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to
recede into oblivion during depressing times subsequently.

In order to check such aberrations and promote a more orderly development of the
stock market, the central government introduced a legislation called the Securities Contracts
(Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock exchange
to seek government recognition. As of January 2002 there were 23 stock exchanges
recognized by the central Government. They are located at Ahmedabad, Bangalore, Baroda,
Bhuvaneshwar, Calcutta, Chennai,(the Madras stock Exchanges ), Cochin, Coimbatore,
Delhi, Guwahati, Hyderabad, Indore, Jaipur, Kanpur, Ludhiana, Mangalore, Mumbai(the
National Stock Exchange or NSE), Mumbai (The Stock Exchange), popularly called the
Bombay Stock Exchange, Mumbai (OTC Exchange of India), Mumbai (The Inter-connected
Stock Exchange of India), Patna, Pune, and Rajkot. Of course, the principle bourses are the
National Stock Exchange and The Bombay Stock Exchange, accounting for the bulk of the
business done on the Indian stock market.

These rules can be amended, varied or rescinded only with the prior approval of the
government. The Securities Contracts (Regulation) Act vests the government with the power
to make enquiries into the affairs of a recognized stock exchange and its business, withdraw
the recognition the task of regulating the stock exchange to the Securities Exchanges Board
of India.

The BSE Broadcast is a large ticker on the wall of the BSE, which continuously
displays the latest stock quotes from the market. It will also display – on what is described as
India's and South Asia's largest video screen – India's leading business-news channel: NDTV
Profit.
This new system was unveiled on December 15, 2006, when Dr Prannoy Roy, the Managing
Director of New Delhi Television (NDTV) Ltd, struck the BSE's opening bell. Mr.
Damodaran, the Chairman of the Securities and Exchange Board of India (SEBI), said that
the ticker would provide information and analysis of the Company financial world.

About the company

From a decade all financial service groups are offering stock -broking and commodity -
broking through NSE, BSE, NCDEX and MCX. Marwadi also offer depository services as
DP of NSDL and CDSL. Marwadi is spread throughout Saurashtra Kutch Peninsula with
their 46 branches and manpower strength of over 300 employees. Marwadi have built up
customer trust and credibility through qualitative service and prompt redressal of queries.
Marwadi have 100,000 customers, whose various investment needs Marwadi are servicing,
vindicates their index of customer credibility. The company has always been driven by a
desire to create values for its customers by customer First approach, ethical and transparent
business practices, reverence for professionalism and implementation of cutting edge
technology. These have enabled them to flourish into one of the top-50 stock broking houses
in India. A convincing index of their customer loyalty is that nearly 75% of their customers
have been with them for period of three years. This means that a bulk of their customer has
subscribed to their services on a long term basis. MSFL strength lies in its team of young,
talented and confident individuals.
Qualified and experienced professionals to carry out different functions under the
Leadership of its promoter's viz. Mr. Ketan Marwadi, Mr.Deven Marwadi and
Mr.SandeepMarwadi.
 LETARATURE REVIEW

BSE (BOMBAY STOCK EXCHANGE)

As the first stock exchange in India, the Bombay Stock Exchange is considered to
have played a very important role in the development of the country's capital markets. The
Bombay Stock Exchange is the largest of 22 exchanges in India, with over 6,000 listed
companies. It is also the fifth largest exchange in the world, with market capitalization of
$466 billion.

The Bombay Stock Exchange uses the BSE Sensex, an index of 30 large, developed
BSE stocks. This index gives a measure of the overall performance of the Bombay Stock
Exchange, and is closely followed around the world. Based on the Sensex, the BSE equity
market has grown significantly since 1990.

In addition to individual stocks, the BSE also has a market in derivatives, which was
the first to be established in India. Listed derivatives on the exchange include stock futures
and options, index futures and options, and weekly options.

The Bombay Stock Exchange is also actively involved with the development of the
retail debt market. The debt market in India is considered extremely important, as the country
continues to develop and depends on this type of investment for growth. Until recently, the
debt market in India was limited to a wholesale market, with banks and financial institutions
as the only participants. The Bombay Stock Exchange believes that a retail market will bring
great opportunities to individual investors through better diversification.
 NSE (NATIONAL STOCK EXCHANGE)

In the fast growing Indian financial market, there are 23 stock exchanges trading
securities. The National Stock Exchange of India (NSE) situated in Mumbai - is the largest
and most advanced exchange with 1016 companies listed and 726 trading members.

The NSE is owned by the group of leading financial institutions such as Indian Bank
or Life Insurance Corporation of India. However, in the totally de-mutualised Exchange, the
ownership as well as the management does not have a right to trade on the Exchange. Only
qualified traders can be involved in the securities trading.

The NSE is one of the few exchanges in the world trading all types of securities on a
single platform, which is divided into three segments: Wholesale Debt Market (WDM),
Capital Market (CM), and Futures & Options (F&O) Market. Each segment has experienced
a significant growth throughout a few years of their launch. While the WDM segment has
accumulated the annual growth of over 36% since its opening in 1994, the CM segment has
increased by even 61% during the same period.

The National Stock Exchange of India has stringent requirements and criteria for the
companies listed on the Exchange. Minimum capital requirements, project appraisal, and
company's track record are just a few of the criteria. In addition, listed companies pay
variable listing fees based on their corporate capital size.

The National Stock Exchange of India ltd. provides its clients with a single, fully
electronic trading platform that is operated through a VSAT network. Unlike most world
exchanges, the NSE uses the satellite communication system that connects traders from 345
Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on
the NSE trading platform.

NCDEX

NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE

NCDEX started working on 15th December, 2003. This exchange provides facilities
to their trading and clearing member at different 130 centers for contract. EMKAY has its
membership with two commodity exchanges i.e. NCDEX (National Commodity and
Derivative Exchange) & MCX (Multi Commodity Exchange).

In commodity market the main participants are speculators, hedgers and arbitrageurs.

Promoters of NCDEX are

 National Stock Exchange (NSE)

 ICICI bank

 Life Insurance Corporation (LIC)

 National Bank for Agricultural & Rural Development (NABARD)

 IFFCO

 Punjab National Bank (PNB)

 CRISIL
WHY NCDEX?

 NCDEX is nationalized screen based system which is providing transparent, private

and easy services.

 NCDEX is one of the traditional media which gives online information.

 NCDEX is one of the Indian commodity exchange, constructed on the basis of the
current national institutes the exchange has been established with the coloration of
leading institutes like NABARD, LIC, NSI etc….

FACILITIES PROVIDED BY NCDEX:

 NCDEX has developed facility for checking of commodity and also provides a ware
house facility.

 By collaborating with industrial partners, industrial companies, news agencies, banks

and developers of kiosk network NCDEX is able to provide current rates and
contracts rate.

 To prepare guidelines related to special products of securitization NCDEX works with

bank.

 To avail farmers from risk of fluctuation in prices NCDEX provides special services
for agricultural.

 NCDEX is working with tax officer to make clear different types of sales and service
taxes.

 NCDEX is providing attractive products like “weather derivatives”.

 MCX

“MULTI COMMODITY EXCHANGE”

‘MULTI COMMODITY EXCHANGE’ of India limited is a new order exchange with

a mandate for setting up a nationwide, online multi-commodity marketplace, offering
unlimited growth opportunities to commodities market participants. As a true neutral market,
MCX has taken several initiatives for users. In a new generation commodities futures market
in the process, become the country’s premier exchange.

MCX, an independent and a de-mutualized exchange since inception, is all set up to

introduce a state of the art, online digital exchange for commodities futures trading in the
country and has accordingly initiated several steps to translate this vision into reality.
 Basic of stock Market
Corporations issue official-looking sheets of paper that represent ownership
of the company. These are called stock certificates, and each certificate represents a set
number of shares. The total number of shares will vary from one company to another, as
each makes its own choice about how many pieces of ownership to divide the
corporation into. One corporation may have only 2,500 shares, while another, such as
IBM or the Ford Motor Company, may issue over a billion shares.

Companies sell stock (pieces of ownership) to raise money and provide funding for
the expansion and growth of the business. The business founders give up part of their
ownership in exchange for this needed cash. The expectation is that even though the owners
have surrendered a portion of the company to the public, their remaining share of stock will
become increasingly valuable as the business grows.

Corporations are not allowed to sell shares of stock on the open stock market without
the approval of the Securities and Exchange Commission (SEC). This transition from a
privately held corporation to a publicly traded one is called going public, and this first sale of
stock to the public is called an initial public offering, or IPO.

Why do people invest in the stock market?

When you buy stock in a corporation, you own part of that company. This gives you a
vote at annual shareholder meetings, and a right to a share of future profits.

When a company pays out profits to the shareholder, the money received is called a
"Dividend". The corporation's board of directors choose when to declare a dividend and how
much to pay. Older and larger companies pay a regular dividend; most new and smaller
companies do not.

The average investor buys stock hoping that the stock's price will rise, so the shares
can be sold at a profit. This will happen if more investors want to buy stock in a company
than wish to sell. The potential of a small dividend check is of little concern.

What is usually responsible for increased interest in a company's stock is the prospect
of the company's sales and profits going up.

A company who is a leader in a hot industry will usually see its share price rise
dramatically.

Investors take the risk of the price falling because they hope to make more money in
the market than they can with safe investments such as bank CD's or government bonds.
How does one buy stocks?
And buying shares like you would a pair of shoes from a store. You are required to
open an account with the brokerage, like opening an account at a bank.

The firm will then hold this money in an interest earning cash account, awaiting your
orders to buy or sell stock, or other securities such as bonds Buying stocks is not as simple as
walking into a stockbroker's office or mutual funds. When you buy or sell, you pay a
commission, which is deducted, from your account. When a stock is purchased, the
ownership of the shares may be listed in one or two ways. "Listed" means how the
corporation tracks the ownership of their stock.

If you choose to have the stock listed in your name, you will receive the actual stock
certificates. Most investors choose to have the ownership listed in the broker's name, called
"held in street name", with the broker keeping track of whose trading account the stock
actually belongs to. The benefits are reduced paperwork, consolidated portfolio statements,
no concerns about storing and processing the paper certificates, and the ability to instantly
sell and transfer the shares. Either way, any dividends are credited to your account. Stocks
held in street name are insured up to $500,000 by the federal government against fraud or
financial failure of the brokerage company.
Why do people sell their stock?

The reasons people sell their stock are more complex. A person may just need the
money. He or she may have watched the price go up, and have a hunch this is a good time to
lock in their profit and sell some or all their shares.

Secondary Market Intermediaries:

Stock brokers, sub-brokers, portfolio managers, custodians, share transfer agents

constitute the important intermediaries in the Secondary Market.

A stock broker plays a very important role in the secondary market helping both the
seller and the buyer of the securities to enter into a transaction. The buyer and seller may be
either a broker or a client. The transaction entered cannot be annulled except in the case of
fraud, willful misrepresentation or upon prima-facie evidence of a material mistake in the
transaction, in the judgment of the existing authorities. If a member of the stock exchange
(broker) has orders to buy and to sell the same kind of securities, he may complete the
transaction between his clients concerned.

When executing an order the stock may on behalf of his client buy or sell securities from his
own account i.e. as principal or act as an agent. For each transaction he has to issue necessary
contract note indicating whether he as principal or as an agent for another has entered into the
transaction.
 RESEARCH METHODOLOGY
TITLE OF THE STUDY

In this fast growing world, people don’t have enough time to reach each & every place. In
present days, service sectors are growing very fast and the competition is also very healthy.
People wants very fast services from the companies and they also want better services.

This research work is totally depends on the “On line Trading in Stock Market” to the
country as whole. As this service is can be said as latest so it will take some time to develop
in the mind of investors in the stock market and also the most of the customers are also aware
about “On line trading in Stock Market”

UNIVERSE OF THE STUDY

This research study contains the awareness of the investors in the stock market through on
line trading. There are many investors in the stock market but out of whole universe of the
investors I have selected a small population from the ankleshwar city only. There are mainly
two types of universe such as finite universe & infinite universe. Finite study can be
calculated and infinite study cannot be calculated. For my research study I have selected
finite study to know about the awareness in the minds of investors in the stock market
through on line trading.
 SAMPLING DESIGN

It is very true that to do the research with the whole universe. As we know that it is feasible
to go to population survey because of the ‘n’ number of customers and their scattered
location. So for this purpose sample size has to be determined well in advance and selection
of sample also must be scientific so that it represents the whole universe.

So far as my research is concerned, we have taken sample size of 100 respondents. I have
selected Income Earners with saving to invest in Ankleshwar city.

All the respondents are stratified on the basis of their profession and savings. We have
selected the selected the samples as per random

Sample Universe Ankleshwar City

Sampling Technique Stratified and Random

Sample Size 50 Respondents

Sampling Unit: Professional = Random

Business Man = Random

Students = Random

Employees working in private firms = Random

 DATA COLLECTION METHOD

There are mainly two sources of data i.e.

(1) Primary Data

(2) Secondary Data
Primary Data:-

The data, which is collected directly from the respondents to the base of knowledge and
belief of the research, are called primary data.

The normal procedure is to interview some people individually to get a sense of how people
feel about the On line Trading in stock market.

So far as my research is concerned, primary data is the main source of information. We have
collected data through Questionnaire and information from respondent.

Primary method includes many types such as

(a) Observation Method

(b) Interview Method
(c) Questionnaire Method
(d) Scheduling Method
(e) Use of mechanical device

Secondary Data:-

When data are collected and compelled from the published nature or any other’s primary data
is called secondary data.

There are mainly three points which he should consider while using that data:

(a) Reliability of the data

(b) Suitability of the data
(c) Adequacy of the data
 PERIOD OF STUDY

This research study is to be prepared in certain time limit and after certain time limit I have to
submit it to the company, university and my college too. The time period is allowed for this
research study is one and half month which is not enough to receive accurate accuracy in the
study.

TOOLS & TECHNIQUES

To make this research study successful many tool & techniques are to be utilized which
includes:
(1) Gathering the relevant data from different sites and literature provided by the
company.
(2) Use of computer plays most important role in the preparation of this research study.
 LIMITATIONS OF THE STUDY

(1) Geographical Area:

The area was limited to Ankleshwar city only, so we cannot know the degree of the
literacy outside the city.

(2) Time Limit:

Due to less time duration of one and half months the research study may not cover full
information.

(3) Sample Size:

The last limitation is Sample size, taken by us is of 50 only due to which we may not
get the proper results just because less visit of the online customers so that this
research study contains the customers of the offline and some online customers.

(4) Personal Bias:

People may have personal bias towards particular investment option so they may not
give correct information and due to which correct conclusion may not be derived.
 DATA ANALYSIS
STATEMENT OF THE PROBLEM

In India, many people are investing in the stock market but many of them are least aware
about the services provided by the broker and vice versa are the case when brokers are less
effective to explain these services to the people who are new to investing in the shares.
Problem starts from here when people feel lack of knowledge in particular service provided
by the broker.

Here in this study the problem is also about the awareness of the “On line Trading” provided
by the brokers to its customers. There are many brokers who are very much efficient and
effective in providing the knowledge about any services introduced. I have taken the sample
as the investors in the stock market to know about the knowledge of on line trading in their
minds.

OBJECTIVES OF THE STUDY

The main objective of the study is to know about the awareness of “On line trading in Stock
Market”.

Other secondary objective is :-

 To know about the potentiality of investing in stock market through on line Trading.

 To know about the affordability of brokerage rate of the company.

 To know about the relative existence of the customers with the same broker.

 To know about how much returns the customers would expect from the broker’s
research based advices.
 To find out the best pattern to educate about on line Trading.
 To find out the medium which is the best suitable for trading in stock market.
 HYPOTHESIS OF THE STUDY

In Ankleshwar city 50 customers are came to be users of Online Trading in Stock Market.
Does the information supports hypothesis that majority of the respondents in Ankleshwar city
are the users of Online Trading?

Step-1 Setting of Hypothesis

H0 : P = 0.5

i.e. there are population out of whole there is 50% chance that
the respondents in Ankleshwar city are the users of Online
Trading.

HA : P > 0.5

Step-2 Level of Significance

Test the hypothesis at 5% level of significance for one tailed test and the
critical value is 1.64

Step-3 Test Statistics

p–P Pq
Z= S.E(p) =
S.E(p) n

= 0.71 - 0.5 =
(0.5) (0.5)
0.05
100
0.21
= =
0.0025
0.05

Z = 4.2 = 0.05

p= 71 =0.71
100
Step-4 Decision

From the above calculation calculated value of absolute Z is 4.2 which is

higher than the critical value 1.64 i.e. HA is accepted and the H0 is rejected.

It means that there is population out of which majority of the respondents in

Ankleshwar city are the users of Online Trading.
 FINDINGS

The findings of my research study are as follows:

1. Investors prefer to do online trading more than offline trading.

2. Respondents are satisfied with the services.

3. In online trading, they give more preference to online fund transfer facility, trading

anywhere and speed.

4. Between 20 to 25 years, 81.8% like to do short term investment.

5. Above 40 years 80.4% like to do long term investment.

6. Age between 20 to 25 years and 26 to 30 years people prefer to do online trading.

7. Age above 40 years prefers to do offline trading.

 RECOMMENDATIONS

1. In online trading, more credit exposure should be given same as given in off-line

trading.

2. In offline trading, brokers should be faithful with their clients.

3. In online trading, clients should be given proper demo.

4. Retired people should be guided as it has been seen that they are doing off-line

trading and not online trading.

5. Retired people should be made aware with the benefits of online trading so they may

be attracted towards online trading.