Second Rough Draft

NAME-SANSKAR JAISINGHANI CLASS-TYBA ECONOMICS SEMESTER 6 ROLL NUMBER-19143 SUBJECT-INDIAN FINANCIAL SYSTEM PAPER NUMBER-XV COURSE CODE-ECOIFSA603 DATE OF SUBMISSION-JANUARY 8TH 2022 MOBILE NUMBER-7506017263 SIGNATURE-

MONEY MARKET AND CAPITAL MARKET The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers. Capital markets are where savings and investments are channeled between suppliers people or institutions with capital to lend or invest and those in need. Suppliers typically include banks and investors while those who seek capital are businesses, governments, and individuals. Capital markets seek to improve transactional efficiencies. These markets bring suppliers together with those seeking capital and provide a place where they can exchange securities. I chose this topic as I am keen on understanding the stock market.The market in which shares of publicly held companies are issued and traded either through exchanges or over the counter markets. ASSUMPTIONS 1. Profit is not guaranteed. 2. People should know what kind of money market instrument they want to invest in. 3. Money market gives very high returns. HYPOTHESIS • Money market is safer than and less rewarding than capital market

VARIABLES 1. CAPITAL MARKET AND MONEY MARKET INSTRUMENTS Capital markets are where savings and investments are channeled between suppliers people or institutions with capital to lend or invest and those in capital are businesses, governments, and individuals. Capital markets are composed of primary and secondary markets. The most common capital markets are the stock market and the bond market. TYPES OF CAPITAL MARKET The types of capital market – primary and secondary are essential to understand for Commerce students. Additionally, there are other divisions of capital market based on the traded security type - bond market and the stock market. 1. PRIMARY MARKET In the primary market the trading takes place for new securities. Companies go public for the first time in this market that allows entities outside the locus of an organization to purchase their shares. This phenomenon is called Initial Public Offering or IPO.

2. SECONDARY MARKET Between the types of capital markets, it deals with securities that have already been traded in the primary market. New York Stock Exchange (NYSE), Bombay Stock Exchange (BSE), National Stock Exchange (NSE), etc. are secondary markets. CAPITAL MARKET INSTRUMENTS 1. Debt Instruments A debt instrument is used by either companies or governments to generate funds for capital-intensive projects. It can obtained either through the primary or secondary market. The relationship in this form of instrument ownership is that of a borrower – creditor and thus, does not necessarily imply ownership in the business of the borrower. The contract is for a specific duration and interest is paid at specified periods as stated in the trust deed (contract agreement). The principal sum invested, is therefore repaid at the expiration of the contract period with interest either paid quarterly, semi-annually or annually. The interest stated in the trust deed may be either fixed or flexible. The tenure of this category ranges from 3 to 25 years. Investment in this instrument is, most times, risk-free and therefore yields lower returns when compared to other instruments traded in the capital market. Investors in this category get top priority in the event of liquidation of a company. When the instrument is issued by: • The Federal Government, it is called a Sovereign Bond; • A state government it is called a State Bond; • A local government, it is called a Municipal Bond; and • A corporate body (Company), it is called a Debenture, Industrial Loan or Corporate Bond

2. Equities (also called Common Stock) This instrument is issued by companies only and can also be obtained either in the primary market or the secondary market. Investment in this form of business translates to ownership of the business as the contract stands in perpetuity unless sold to another investor in the secondary market. The investor therefore possesses certain rights and privileges (such as to vote and hold position) in the company. Whereas the investor in debts may be entitled to interest which must be paid, the equity holder receives dividends which may or may not be declared. The risk factor in this instrument is high and thus yields a higher return (when successful). Holders of this instrument however rank bottom on the scale of preference in the event of liquidation of a company as they are considered owners of the company. 3. Preference Shares This instrument is issued by corporate bodies and the investors rank second (after bond holders) on the scale of preference when a company goes under. The instrument possesses the characteristics of equity in the sense that when the authorized share capital and paid up capital are being calculated, they are added to equity capital to arrive at the total. Preference shares can also be treated as a debt instrument as they do not confer voting rights on its holders and have a dividend payment that is structured like interest (coupon) paid for bonds issues. Preference shares may be: Irredeemable, convertible: in this case, upon maturity of the instrument, the principal sum being returned to the investor is converted to equities even though dividends (interest) had earlier been paid. Irredeemable, non-convertible: here, the holder can only sell his holding in the secondary market as the contract will always be rolled over upon maturity. The instrument will also not be converted to equities. Redeemable: here the principal sum is repaid at the end of a specified period. In this case it is treated strictly as a debt instrument.

Note: interest may be cumulative, flexible or fixed depending on the agreement in the Trust Deed. 4. Derivatives These are instruments that derive from other securities, which are referred to as underlying assets (as the derivative is derived from them). The price, riskiness and function of the derivative depend on the underlying assets since whatever affects the underlying asset must affect the derivative. The derivative might be an asset, index or even situation. Derivatives are mostly common in developed economies. Some examples of derivatives are: • Mortgage-Backed Securities (MBS) • Asset-Backed Securities (ABS) • Futures • Options • Swaps • Rights • Exchange Traded Funds or commodities

MONEY MARKET The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers. MONEY MARKET INSTRUMENTS • Treasury Bills (T-Bills) Treasury bills or T- Bills are issued by the Reserve Bank of India on behalf of the Central Government for raising money. They have short term maturities with highest upto one year. Currently, T- Bills are issued with 3 different maturity periods, which are, 91 days T-Bills, 182 days T- Bills, 1 year T – Bills. T-Bills are issued at a discount to the face value. At maturity, the investor gets the face value amount. This difference between the initial value and face value is the return earned by the investor. They are the safest short term fixed income investments as they are backed by the Government of India

• Commercial Papers Large companies and businesses issue promissory notes to raise capital to meet short term business needs, known as Commercial Papers (CPs). These firms have a high credit rating, owing to which commercial papers are unsecured, with company’s credibility acting as security for the financial instrument. Corporates, primary dealers (PDs) and All-India Financial Institutions (FIs) can issue CPs. • Certificates of Deposits (CD) CDs are financial assets that are issued by banks and financial institutions. They offer fixed interest rate on the invested amount. The primary difference between a CD and a Fixed Deposit is that of the value of principal amount that can be invested. The former is issued for large sums of money ( 1 lakh or in multiples of 1 lakh thereafter).Because of the restriction on minimum investment amount, CDs are more popular amongst organizations than individuals who are looking to park their surplus for short term, and earn interest on the same. The maturity period of Certificates of Deposits ranges from 7 days to 1 year, if issued by banks. Other financial institutions can issue a CD with maturity ranging from 1 year to 3 years. • Repurchase Agreements Also known as repos or buybacks, Repurchase Agreements are a formal agreement between two parties, where one party sells a security to another, with the promise of buying it back at a later date from the buyer. It is also called a Sell-Buy transaction. The seller buys the security at a predetermined time and amount which also includes the interest rate at which the buyer agreed to buy the security. The interest rate charged by the buyer for agreeing to buy the security is called Repo rate. Repos come-in handy when the seller needs funds for short-term, s/he can just sell the securities and get the funds to dispose. The buyer gets an opportunity to earn decent returns on the invested money.

• Banker’s Acceptance A financial instrument produced by an individual or a corporation, in the name of the bank is known as Banker’s Acceptance. It requires the issuer to pay the instrument holder a specified amount on a predetermined date, which ranges from 30 to 180 days, starting from the date of issue of the instrument. It is a secure financial instrument as the payment is guaranteed by a commercial bank. Banker’s Acceptance is issued at a discounted price, and the actual price is paid to the holder at maturity. The difference between the two is the profit made by the investor. • Eurodollars Eurodollars are dollar-denominated deposits held in foreign banks, and are thus, not subject to Federal Reserve regulations. Very large deposits of eurodollars are held in banks in the Cayman Islands and the Bahamas. Money market funds, foreign banks, and large corporations invest in them because they pay a slightly higher interest rate than U.S. government debt. • Repos The repo, or repurchase agreement (repo), is part of the overnight lending money market. Treasury bills or other government securities are sold to another party with an agreement to repurchase them at a set price on a set date.

INVESTMENT ANALYSIS Investment analysis is a broad term for many different methods of evaluating investments, industry sectors, and economic trends. It can include charting past returns to predict future performance, selecting the type of investment that best suits an investor's needs, or evaluating individual securities such as stocks and bonds to determine their risks, yield potential, or price movements. The aim of investment analysis is to determine how an investment is likely to perform and how suitable it is for a particular investor. Key factors in investment analysis include the appropriate entry price, the expected time horizon for holding an investment, and the role the investment will play in the portfolio as a whole. In conducting an investment analysis of a mutual fund, for example, an investor looks at how the fund performed over time compared to its benchmark and to its main competitors. Peer fund comparison includes investigating the differences in performance, expense ratios, management stability, sector weighting, investment style, and asset allocation. In investing, one size does not fit all. Just as there are many different types of investors with unique goals, time horizons, and incomes, there are investment opportunities that match those individual parameters. Investment analysis can also involve evaluating an overall investment strategy in terms of the thought process that went into making it, the person's needs and financial situation at the time, how the portfolio performed, and whether it's time for a correction or adjustment. Investment analysis involves researching and evaluating a security or an industry to predict its future performance and determine its suitability to a specific investor. Investment analysis may also involve evaluating or creating an overall financial strategy. Types of Investment Analysis While there are countless ways to analyze securities, sectors, and markets, investment analysis can be divided into several basic approaches.

Top-Down vs. Bottom-Up When making investment decisions, investors can use a bottom-up investment analysis approach or a top-down approach. Bottom-up investment analysis entails analyzing individual stocks for their merits, such as their valuation, management competence, pricing power, and other unique characteristics. Bottom-up investment analysis does not focus on economic cycles or market cycles. Instead, it aims to find the best companies and stocks regardless of the overarching trends. In essence, bottom-up investing takes a microeconomic approach to investing rather than a macroeconomic or global approach. The global approach is a hallmark of top-down investment analysis. It starts with an analysis of the economic, market, and industry trends before zeroing in on the investments that will benefit from those trends. Top-Down and Bottom-Up Example In a top-down approach, an investor might evaluate various sectors and conclude that financials will likely perform better than industrials. As a result, the investor decides the investment portfolio will be overweight financials and underweight industrials. Then it's time to find the best stocks in the financial sector. In contrast, the bottom-up investor may have found that an industrial company made for a compelling investment and allocated a significant amount of capital to it even though the outlook for the broader industry was relatively negative. The investor has concluded that the stock will outperform its industry. TECHNICAL ANALYSIS Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysis, which attempts to evaluate a security's value based on business results such as sales and earnings, technical analysis focuses on the study of price and volume.

Technical analysis tools are used to scrutinize the ways supply and demand for a security will affect changes in price, volume, and implied volatility. Technical analysis is often used to generate short-term trading signals from various charting tools, but can also help improve the evaluation of a security's strength or weakness relative to the broader market or one of its sectors. This information helps analysts improve their overall valuation estimate. Technical analysis can be used on any security with historical trading data. This includes stocks, futures, commodities, fixed-income, currencies, and other securities. In this tutorial, we’ll usually analyze stocks in our examples, but keep in mind that these concepts can be applied to any type of security. In fact, technical analysis is far more prevalent in commodities and forex markets where traders focus on short-term price movements. Technical analysis attempts to forecast the price movement of virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures, and currency pairs. In fact, some view technical analysis as simply the study of supply and demand forces as reflected in the market price movements of a security. Technical analysis most commonly applies to price changes, but some analysts track numbers other than just price, such as trading volume or open interest figures. Across the industry, there are hundreds of patterns and signals that have been developed by researchers to support technical analysis trading. Technical analysts have also developed numerous types of trading systems to help them forecast and trade on price movements. Some indicators are focused primarily on identifying the current market trend, including support and resistance areas, while others are focused on determining the strength of a trend and the likelihood of its continuation. Commonly used technical indicators and charting patterns include trendlines, channels, moving averages, and momentum indicators. In general, technical analysts look at the following broad types of indicators: 1. Price trends 2. Chart patterns 3. Volume and momentum indicators

4. Oscillators 5. Moving averages 6. Support and resistance levels LIMITATIONS OF TECHNICAL ANALYSIS Some analysts and academic researchers expect that the EMH demonstrates why they shouldn't expect any actionable information to be contained in historical price and volume data. However, by the same reasoning, neither should business fundamentals provide any actionable information. These points of view are known as the weak form and semi-strong form of the EMH. Another criticism of technical analysis is that history does not repeat itself exactly, so price pattern study is of dubious importance and can be ignored. Prices seem to be better modeled by assuming a random walk. A third criticism of technical analysis is that it works in some cases but only because it constitutes a self-fulfilling prophecy. For example, many technical traders will place a stop-loss order below the 200-day moving average of a certain company. If a large number of traders have done so and the stock reaches this price, there will be a large number of sell orders, which will push the stock down, confirming the movement traders anticipated. FUNDAMENTAL ANALYSIS Fundamental analysis (FA) is a method of measuring a security's intrinsic value by examining related economic and financial factors. Fundamental analysts study anything that can affect the security's value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company's management. The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued. This method of stock analysis is considered to be in contrast to

technical analysis, which forecasts the direction of prices through an analysis of historical market data such as price and volume. All stock analysis tries to determine whether a security is correctly valued within the broader market. Fundamental analysis is usually done from a macro to micro perspective in order to identify securities that are not correctly priced by the market. Analysts typically study, in order, the overall state of the economy and then the strength of the specific industry before concentrating on individual company performance to arrive at a fair market value for the stock. Fundamental analysis uses public data to evaluate the value of a stock or any other type of security. For example, an investor can perform fundamental analysis on a bond's value by looking at economic factors such as interest rates and the overall state of the economy, then studying information about the bond issuer, such as potential changes in its credit rating. For stocks, fundamental analysis uses revenues, earnings, future growth, return on equity, profit margins, and other data to determine a company's underlying value and potential for future growth. All of this data is available in a company's financial statements. Quantitative and Qualitative Fundamental Analysis The problem with defining the word fundamentals is that it can cover anything related to the economic well-being of a company. They obviously include numbers like revenue and profit, but they can also include anything from a company's market share to the quality of its management.The various fundamental factors can be grouped into two categories: quantitative and qualitative. The financial meaning of these terms isn't much different from their standard definitions. Here is how a dictionary defines the terms: 1. Quantitative – \"related to information that can be shown in numbers and amounts.\" 2. Qualitative – \"relating to the nature or standard of something, rather than to its quantity.\"

In this context, quantitative fundamentals are hard numbers. They are the measurable characteristics of a business. That's why the biggest source of quantitative data is financial statements. Revenue, profit, assets, and more can be measured with great precision. The qualitative fundamentals are less tangible. They might include the quality of a company's key executives, its brand-name recognition, patents, and proprietary technology. Neither qualitative nor quantitative analysis is inherently better. Many analysts consider them together. Financial statements are the medium by which a company discloses information concerning its financial performance. Followers of fundamental analysis use quantitative information gleaned from financial statements to make investment decisions. The three most important financial statements are income statements, balance sheets, and cash flow statements. TECHNICAL ANALYSIS VS FUNDAMENTAL ANALYSIS Technical analysis and fundamental analysis are two main schools of thought when it comes to analyzing the financial markets. Technical analysis looks at the price movement of a security and uses this data to attempt to predict future price movements. Fundamental analysis instead looks at economic and financial factors that influence a business. Let us take a deeper dive into the details of how these two approaches differ, the criticism against technical analysis, and how technical and fundamental analyses can be used together. Tools of the Trade Typically, technical analysts begin their analysis with charts, while fundamental analysts start with a company’s financial statements. Fundamental analysts try to determine a company’s value by looking at its income statement, balance sheet and cash flow statement. In financial terms, an investor tries to measure a company’s intrinsic value by discounting the value of future projected cash flows to a net present value. A stock price that trades below a company’s intrinsic value is typically considered a good investment opportunity and vice versa.

Technical analysts generally believe that there’s no reason to analyze a company’s financial statements since the stock price already includes all relevant information. Instead, the investor focuses on analyzing the stock chart itself for hints about where the price may be headed. Time Horizon Generally, fundamental analysis takes a long-term approach to investing compared to the short term approach taken by technical analysis. While stock charts can be shown in weeks, days or even minutes, fundamental analysis often looks at data over multiple quarters or years. Fundamentally focused investors often wait a long time before a company’s intrinsic value is reflected in the market, if at all. For example, value investors often assume that the market is mispricing a security over the short- term, but also assume that the price of the stock will correct itself over the long run. This “long run” can represent a timeframe as long as several years, in some cases. Fundamentally focused investors also rely on financial statements that are filed quarterly, as well as changes in earnings per share that do not emerge on a daily basis, like price and volume information. After all, a company cannot implement sweeping changes overnight and it takes time to create new products, marketing campaigns and other strategies to turn around or improve a business. Part of the reason that fundamental analysts use a long-term timeframe, therefore, is because the data they use to analyze a stock is generated much more slowly than the price and volume data used by technical analysts. Trading vs. Investing Technical analysis and fundamental analysis typically have different goals in mind. Technical analysts often try to identify many short- to medium-term trades where they can flip a stock, while fundamental analysts usually try to make long-term investments in a stock’s underlying business. A good way to conceptualize the difference is to compare it to someone buying a home to flip versus someone who’s buying a home to live in for years to come. Technical analysis and fundamental analysis are often seen as opposing approaches to analyzing securities, but some investors have experienced

success by combining the two techniques. For example, an investor may use fundamental analysis to identify an undervalued stock and use technical analysis to find a specific entry and exit point for the position. Often, this combination may work best when a security is severely oversold and entering the position too early could prove costly. CASE STUDY Money market is safer than and less rewarding than capital market. The money market is the trade in short-term debt. It is a constant flow of cash between governments, corporations, banks, and financial institutions, borrowing and lending for a term as short as overnight and no longer than a year. The capital market encompasses the trade in both stocks and bonds. These are long-term assets bought by financial institutions, professional brokers, and individual investors. In the money market, extremely liquid financial instruments are traded, i.e. monetary instruments of short-term nature are dealt. On the contrary, the capital market is for long-term securities. It is a market for those securities which have direct or indirect claims to capital. The instruments traded in the money market carry low risk, hence, they are safer investments, but capital market instruments carry high risk. The liquidity is high in the money market, but in the case of the capital market, liquidity is comparatively less. Hence, \"Money market instruments are safer than capital market instruments\".

1. Short-term securities are traded in Money Market. Unlike Capital Market, where long-term securities are created and traded. 2. Capital Market more formal in nature compared to Money Market. 3. Money Market securities are less risky compared to Capital Market securities because they are issued for a shorter period and involve lower volatility. 4. Money Markets are highly liquid compared to Capital Markets. 5. Money Market helps in meeting short-term credit requirements of the companies such as working capital etc. However, the Capital Market helps in meeting long-term credit requirements of the companies, like providing fixed capital to purchase land, building or machinery etc. 6. Return on Investment is high in Capital Market compared to Money Market as Capital Market securities involve higher risk compared to Money Market securities. Money Market Capital Market Definition A random course of financial institutions, bill A kind of financial market where the company or brokers, money dealers, banks, etc., wherein government securities are generated and patronized dealing on short-term financial tools are being with the intention of establishing long-term finance settled is referred to as Money Market. to coincide with the capital necessary is called Capital Market. Market Nature Money markets are informal in nature. Capital markets are formal in nature. Instruments involved Commercial Papers, Treasury Certificate of Bonds, Debentures, Shares, Asset Secularization, Deposit, Bills, Trade Credit, etc. Retained Earnings, Euro Issues, etc. Investor Types

k Stockbrokers, insurance companies, Commercial banks, underwriters, etc. Market Liquidity Money markets are highly liquid. Capital markets are comparatively less liquid. Risk Involved Money markets have low risk. Capital markets are riskier in comparison to money markets. Maturity of Instruments Instruments mature within a year. Instruments take longer time to attain maturity Purpose served To achieve short term credit requirements of the To achieve long term credit requirements of the trade. trade. LIMITATIONS 1. It was difficult to cover so many concepts about the project in a brief. 2. There were so many new terms and concepts, so I had to research a lot. 3. Framing and proving the hypothesis was a challenge. 4. Since my topic was stock market, I had to communicate with people who are involved and trading in the capital market and money market for their insights on the topic. 5. Understanding the difference between money market and capital market was an interesting and tough task.

CONCLUSION Financial Markets enable money channelization between two or more parties. Money Market vs Capital Market help in channelizing funds from the lenders to the borrower depending on the timeframe of requirements and its purpose. Thus, Money Market vs Capital Market fulfills the long-term and short-term capital requirements of the individual, corporate, firms, and government. They make funds available based on tenure, risk. The money market instrument is the market where liquid and short term borrowing and lending takes place. As the short term market for money, players in the market have to be alert to changes, up to date with news. The Indian capital market has undergone many changes after the challenges and the irreparable loss faced over years. There have been massive and revolutionary changes over years, and some significant changes that have reduced the financial scam cases. There has been a reduction of malpractices of trade over the years. The capital market has made tremendous progress in terms of institution building. They have transformed and developed the lives of investors and market intermediaries. The market has been friendlier by boosting performance and eliminating the challenges with strategies and product, petite, purpose, etc.

INDENTIFICATION, SPECIFICATION AND FLOW CHART





BIBLIOGRAPHY https://www.investopedia.com/articles/investing/052313/financial-markets- capital-vs-money-markets.asp https://time.com/nextadvisor/investing/money-market-vs-capital-market/ https://www.moneycontrol.com/mutual- funds/performancetracker/returns/money-market-4.und.html https://en.wikipedia.org/wiki/Capital_market https://zerodha.com/varsity/module/technical-analysis/

NAME: - NANDITA GHOSH TITLE: -STOCK MARKET –IMPORTANCE OF INVESTMENT PAPER NO: -IX COURSE CODE: -ECOIFSA503 SUBJECT: -IFS CLASS: -TYBA ROLL NO: -19128 STOCK MARKET – IMPORTANCE OF INVESMENT IN STOCK MARKET

OBJECTIVES • To supply capital - To achieve this task, ownership in a private corporation is sold to the public in the form of shares of stock. Funds received from the sale of stock contribute to the firm’s capital formation. • To inspire savings - This inspires people to save their income by making a profit. Continuous purchase and sale of securities on a stock exchange lead to the evaluation of their prices • To develop economy - It helps economic development by supplying the capital to the industries • To protect fraudulently - It is also to ensure that no fraudulence occurs in a transaction. • To do long-term financing - Commercial banks generally disburse the short-term loan. So, supplying long-term finance is an objective of the stock exchange. REASONS • The main reason for choosing this topic is to know more about the opinion of general people and understand their perspective • To understand how many people have the knowledge relating stock market and try investing in it • To know that how many people prefer in investing in short term funds or investing in long term funds and get a profit or loss • There are many people who have a mindset that investing in stock market is close to gambling and knowing about their personal perspective was the main reason for the survey INTRODCTION

Stock market is a place where shares of publicly listed companies are traded. the primary market is well companies float shares to the general public is an initial public offering (IPO) to raise capital. The stocks, also known as equities, represent ownership in the company. Investing in equities is an important investment that someone make in order to generate inflation beating returns. Just like the way we go to the neighborhood Kirana store or a supermarket to shop for our daily needs, similarly we go to the stock market to shop for equity investments. Stock market is where everyone who want to transact in shares go to transact in simple terms means buying and selling. For all practical purposes, you cannot buy/ sell shares of a public company like Infosys without transacting through the stock markets. The main purpose of the stock market is to help you facilitate your transactions. So, if you are a buyer of a share, the stock market help you meet the seller and vice versa Now unlike a super market, the stock market does not exist in a brick and motor form. It exits in electronic form. You access the market electronically from your computer/mobile and go about conducting your transaction (buying and selling of shares). Also, it is important to note that one can access the stock market via a registered intermediary called the stop broker. We will discuss more about the stockbroker at later point. In India the stock market regulator is called the securities and exchange board of India often referred to SEBI. In case of offline stock order, an individual can ask it's broker to place an order on his / her behalf. NSE and BSE are the two major Stock Exchange in India. An individual has to mandatorily open a trading account to trade in the stock market. Stock markets are home to extensive trade in shares and other company securities, and they have a crucial role to play in the success of commerce and the overall health of an economy. In simple terms, if A wants to sell shares of Reliance Industries, the stock market will help him to meet the seller who is willing to buy Reliance Industries. HISTORICAL REVIEW Stock markets are some of the most important parts of today’s global economy. Countries around the world depend on stock markets for economic growth. However, stock markets are a relatively new phenomenon. They haven’t always played an important role in global economics. Today, I’m going to share the history of the stock market and explain why stock markets have become the driving economic force they are today. Early stock and commodity markets The first genuine stock markets didn’t arrive until the 1500s. However, there were plenty of early examples of markets which were similar to stock markets. In the 1100s, for example, France had a system where courtiers de change managed agricultural debts throughout the country on behalf of banks. This can be seen as the first major example of brokerage because the men effectively traded debts.

Later on, the merchants of Venice were credited with trading government securities as earl y as the 13th century. Soon after, bankers in the nearby Italian cities of Pisa, Verona, Genoa, and Florence also began trading government securities. The world’s first stock markets (without stocks) The world’s first stock markets are generally linked back to Belgium. Bruges, Flanders, Ghent, and Rotterdam in the Netherlands all hosted their own “stock” market systems in the 1400s and 1500s. However, it’s generally accepted that Antwerp had the world’s first stock market system. Antwerp was the commercial center of Belgium and it was home to the influential Van der Beurze family. As a result, early stock markets were typically called Beurzen. All of these early stock markets had one thing missing: stocks. Although the infrastructure and institutions resembled today’s stock markets, nobody was actually trading shares of a company. Instead, the markets dealt with the affairs of government, businesses, and individual debt. The system and organization was similar, although the actual properties being traded were different. ASSUMPTION • Demat account is required for trading but not essential • Prior knowledge of equity is suggested for investment HYPOTHESIS • Equity investment is important for fighting inflation Variables • Market trend • Stock exchange • Equity • Different duration of trade

MARKET TREND In the investing world, the terms \"bull\" and \"bear\" are frequently used to refer to market conditions. These terms describe how stock markets are doing in general that is, whether they are appreciating or depreciating in value. And as an investor, the direction of the market is a major force that has a huge impact on your portfolio. So, it's important to understand how each of these market conditions may impact your investments. BULL MARKET A bullish market trend is represented by rising stock prices of various securities in the market, especially equity instruments. Growth of at least 20% or more has to be registered by several stock exchanges in terms of trade volume and purchases to be categorized as a bull market. During this time, investors generate high expectations regarding the stock market performance, and pool their money readily into this sector. An increasing consumer confidence level, subsequently increasing the cash flow into this sector, allows companies to increase annual turnover, which leads to higher profits to be disbursed among shareholders. Some indicative bullish trends can be identified through the flowing parameters A) Market rally Any sustained movement of the stock prices in any direction is termed as a market rally. A share market bull rally for an extended period mainly occurs due to expansionary demandside policies, such as lower interest rates and extensive tax rate cuts. Governments can also undertake extensive expenditure for the development of the country, through infrastructure construction, building schools and medical centers, etc. An increased income level due to such expansionary policies ensure sufficient funding available for investment in the stock market, thereby increasing the stock prices owing to higher speculative demand. B) Volatility index A rising volatility index is a major indicator of a bull market, as price fluctuations are more significant during a bullish market trend. The volatility of the Indian stock market is indicated by the NIFTY index option prices, which reflects the sensitivity of all securities listed on the National Stock Exchange (NSE). C) Lower bond yields Zero risk securities are often associated with lower interest rates during a share market bull. This encourages investors to pool their money in equity instruments available in the stock market, at higher associated risks.

Causes of a Bull Market • Strength of an economy A bull market is prevalent in countries having fundamentally sound policies in place, along with proper implementation regime to ensure adequate production of goods and services, and suitable market conditions facilitate sales. • Foundation of large-cap companies Large-cap companies are the primary component in the major benchmark indices, which serve as a crucial indicator of stock market bull or bear. Unsystematic fluctuations tend to affect small and mid-cap companies more, which can bear a false indicator regarding the overall market trend regarding growth. Bullish markets are mainly reflected through rising benchmark index points, as large-cap companies demonstrate significant advancement having long term effects. • Business cycle fluctuations The business cycle comprises an upward swing known as boom period of an economy, when the productive capacity and growth rates rise substantially, as indicated through rising GDP rates and bullish market trends. Also, the unemployment rates in a country are significantly low, with rising per capital income of individuals. With more money to spend, speculative demand is on the rise, indicating a bullish market trend. BEAR MARKET A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment. Bear markets are often associated with declines in an overall market but individual securities or commodities can also be considered to be in a bear market if they experience a decline of

20% or more over a sustained period of time typically two months or more. Bear markets also may accompany general economic downturns such as a recession. Bear markets may be contrasted with upward-trending bull markets. Understanding Bear Market Stock prices generally reflect future expectations of cash flows and profits from companies. As growth prospects wane, and expectations are dashed, prices of stocks can decline. Herd behavior, fear, and a rush to protect downside losses can lead to prolonged periods of depressed asset prices. One definition of a bear market says markets are in bear territory when stocks, on average, fall at least 20% off their high. But 20% is an arbitrary number, just as a 10% decline is an arbitrary benchmark for a correction. Another definition of a bear market is when investors are more risk-averse than risk-seeking. This kind of bear market can last for months or years as investors shun speculation in favor of boring, sure bets. The causes of a bear market often vary, but in general, a weak or slowing or sluggish economy will bring with it a bear market. The signs of a weak or slowing economy are typically low employment, low disposable income, weak productivity, and a drop in business profits. In addition, any intervention by the government in the economy can also trigger a bear market. For example, changes in the tax rate or in the federal funds rate can lead to a bear market. Similarly, a drop in investor confidence may also signal the onset of a bear market. When investors believe something is about to happen, they will take action—in this case, selling off shares to avoid losses. Bear markets can last for multiple years or just several weeks. A secular bear market can last anywhere from 10 to 20 years and is characterized by below-average returns on a sustained basis. There may be rallies within secular bear markets where stocks or indexes rally for a period, but the gains are not sustained, and prices revert to lower levels. A cyclical bear market, on the other hand, can last anywhere from a few weeks to several months

STOCK EXCHANGE India has 8 National Stock Exchanges and 21 Regional Stock Exchanges, of which only one (Calcutta Stock Exchange) is operative currently. The list of National exchanges also consists of the sole international exchange of India. A stock exchange is an entity authorised by the government through which a listed company’s securities are traded. Through a stock exchange, you can trade stocks, bonds and ETPs (exchange-traded products). A stock exchange or bourse or securities exchange is where investors and traders buy and sell financial securities like shares, currencies, bonds, commodities, and other financial segments. Although most traders know only about NSE and BSE as the stock exchanges, India has various exchanges for different financial securities. The stock exchanges of India can be divided into two categories: • Stock Exchanges working at the National Level • Stock Exchanges working at the Regional Level List of stock exchanges in India Bombay Stock Exchange Limited (BSE) It is the first stock exchange in Asia, located on Dalal Street, Mumbai. It has the vision to emerge as a premier Indian stock exchange with the best in class global practice in technology, customer service, and product innovation. It was founded by Premchand Roychand in 1875, then known as the “Cotton King,” “Big Bull,” or “Bullion King.” BSE was formerly known as the Native Share & Stock Brokers Association. The recognition by SEBI is permanent for this exchange. SENSEX (Stock Exchange Sensitive Index), the index of BSE, got introduced in 1986. The first equity index provided a mechanism to identify the top 30 companies trading on this stock exchange. The index’s base value is 100 and is reported by international and domestic markets regularly using electronic and print methods. Additionally, other indices by BSE are BSE 100, BSE 200, BSE 500, BSE SMLCAP, BSE MIDCAP, BSE PSU, BSE Metal, BSE Pharma, etc. The criteria to select stocks for the index are Quantitative factors like Market Capitalization, Listing History, Frequency of Trading, Average Daily Turnover, Average Daily Trades, and Qualitative factors.

Today, BSE permits trading in equity, derivatives (equity, commodity, currency), and debt. With a market capitalization of over $4.9 trillion, this exchange ranks 10th in stock exchanges worldwide. Some of the top brokers registered with BSE :- • ICICI Securities Limited • Edelweiss Securities Limited • SBICAP Securities Limited • IIFL Securities Limited • CNB Finwiz Pvt. Limited • Aditya Birla Money Limited • Nirmal Bang Equities Pvt. Limited National Stock Exchange (NSE) NSE was founded in 1992, and trading commenced in 1994. Thus, it is the youngest of all exchanges in India. It is working for the vision of becoming a leader, facilitating people’s financial well-being, and establishing a global presence. The SEBI recognition of NSE is permanent. NSE was the first exchange to introduce an advanced trading system and subsequently added facilities like trading in the wholesale debt market and cash segment. It is also the first stock exchange to launch internet trading and derivative trading. The fast executing systems installed by the exchange makes the process transparent and eases the calculation for accurate prices of the shares and other financial instruments listed on the exchange. These features have enhanced the exchanges’ ranking as it ranks 4th in terms of the trade volume in equity. NSE has an index for setting a benchmark. is called NIFTY 50, which tracks the most considerable assets of the equity segment. NIFTY 50 companies list is created on a few parameters like – Liquidity, Listing History, and Futures & Options Category. Today, NSE facilitates trading for traders in equity, derivatives (commodity, currency, equity), and debt. Some of the top brokers affiliated to NSE are :- • Zerodha • Karvy Stock Broking Limited • Angel Broking • Motilal Oswal Financial Services Limited • Kotak Securities Limited • Sharekhan

• Indiabulls Ventures Limited India International Exchange (India INX) The first international exchange of India, India INX, was inaugurated by the then Prime Minister Narendra Modi in January 2017.It is a subsidiary wholly owned by the Bombay Stock Exchange, located at the International Financial Services Centre (IFSC) in GIFT city, Gujarat. The recognition of this international exchange is valid up to 28th December 2020. Some of the top brokers listed with India INX are :- • Edelweiss Securities (IFSC) Limited • Kotak Mahindra Bank – IBU • Gateway Financial Services (IFSC) Pvt. Limited • Excel Broking (IFSC) Private Limited • Antique Stock Broking (IFSC) Limited National Stock Exchange IFSC Limited Like India INX, NSE IFSC is a wholly-owned NSE subsidiary located in the International Financial Services Centre at GIFT City, Gujarat. The SEBI recognition is valid till May 2021. The aim behind launching this subsidiary of NSE is to expand India’s financial market and enhance the capital brought to the Indian markets. It offers to trade in all currencies other than the Indian Rupee. It has two trading sessions – 8 A.M. to 5 P.M. and the second is from 5:30 P.M. to 11:30 P.M. It conducts trading for 16 hours and is working on expanding this period. Indian Commodity Exchange Limited (ICEX) ICEX is a SEBI regulated commodity derivative exchange headquartered in Mumbai. It facilitates the appointed brokers to trade in the mentioned financial instrument across the nation. The recognition of ICEX is permanent. ICEX has been registered at the SEBI since August 2017 and is the first and the only exchange in the world to launch a Diamond derivative contract. It extends the opportunity to trade in mutual funds and commodity derivatives. Confused in choosing the right Mutual Fund, then Rank MF is the right option for you, this tool is presented by SAMCO, through which you can invest in mutual funds. The products available for trading under the commodity segment are the following:

Non-agricultural products – Diamonds, Steel Agricultural products – Spices, Plantations, Cereals, etc. Further, in the financial year 2018-19, the NCLT ordered the amalgamation of the National Multi Commodity Exchange of India Limited (NMCE). This union led to the automation of trade for commodities on ICEX. National Commodities and Derivatives Exchange Limited (NCDEX) NCDEX, as the name suggests, is a commodity trading exchange. It was established in 2003 and headquartered in Mumbai. Many significant companies are a shareholder in this exchange. It is a permanently recognized stock exchange. Trading time for NCDEX is 10 A.M. to 11:30 P.M. and is open from Monday to Friday. It is well equipped with technology to reduce errors and fasten the trading process. Multi Commodity Exchange of India Limited (MCX) MCX is a stock exchange under the regulatory body FMC (Forwards Market Commission), later merged with SEBI (Stocks and Exchanges Board of India), established in 2003. It has permanent recognition from the SEBI. With the completion of 15 years in the market, this exchange touched the heights of trading by generating a whopping $50tn turnover. This achievement helped the exchange to rank 7th among the global commodity exchanges. MCX is an independent and the largest commodity exchange in India. This exchange got publicly listed on BSE (Bombay Stock Exchange) in 2012, making it the first exchange to be listed. MCX is an exchange dominantly traded for non-agricultural products like metals, bullion, and energy. But agricultural commodities also get traded. The best thing about this exchange is the partial payment for buying a commodity For instance, a trader or investor can buy gold after paying the entire price upfront. You can pay 10% – 20% in the case of derivatives or options and pay the rest before the contract’s expiry Most Expensive Stock In India The contract can last for a month or more, depending on the buyer and seller. If the trade doesn’t get sold by the expiry date, the trade gets automatically squared off. Some of the popular stockbrokers affiliated to this exchange are :- • Edelweiss Securities • Motilal Oswal Securities • IIFL Securities • SBICAP Securities

Metropolitan Stock Exchange of India Limited (MSE) The Metropolitan Stock Exchange of India came into existence in December 2012. It facilitates a trader or investor trading in financial segments like equity derivatives, equity, debt, and currency derivatives (including Interest Rate Futures). It has an electronic platform that is hi-tech and transparent. It has more than 1500 companies to trade in and has prominent financial institutions as shareholders. This stock exchange has recognition until September 2020. How many regional stock exchange in india? There used to be 21 regional exchanges before the regulations of SEBI started tightening. These stringent regulations eventually led to regional stock exchanges getting shut down. Twenty of them have shut down, Calcutta Stock Exchange being an exception. The list of 20 regional exchanges that got shut is as follows: Sr. No. Former Stock Exchanges Closing Year 1. Ahmedabad Stock Exchange 2018 2. Delhi Stock Exchange 2017 3. Guwahati/Gauhati Stock Exchange 2015 4. Jaipur Stock Exchange 2015 5. Madhya Pradesh Stock Exchange 2015 6. Madras Stock Exchange 2015 7. Pune Stock Exchange 2015 8. Vadodara Stock Exchange 2015 9. Bangalore Stock Exchange 2014 10. Cochin Stock Exchange 2014 11. OTC Exchange of India 2015 12. Inter-connected Stock Exchange of India 2014 13. Ludhiana Stock Exchange 2014 14. Bhubaneswar Stock Exchange 2005 15. Coimbatore Stock Exchange 2009 16. Magadh Stock Exchange 2007

17. Trivandrum Stock Exchange 2010 18. Mangalore Stock Exchange 2004 19. Hyderabad Stock Exchange 2007 20. UP Stock Exchange 2015 Since Calcutta Stock Exchange remains operative, let’s discuss it briefly. Calcutta Stock Exchange (CSE) is a regional stock exchange (RSE) established in 1908. It is located at Lyons Range, Kolkata, and is the second-largest stock exchange of India. Although it is the second oldest exchange of Asia, the Government of India gave it permanent recognition in 1980.An advanced computerized system was incorporated into the daily operations in 1997. This software is called C-STAR (CSE Online Screen-based Trading And Reporting System). All regional exchanges have voluntarily shut down, and CSE is fighting a lone battle as SEBI has asked CSE to exit. The matter is sub judice in the Calcutta High Court. Some top brokers working with CSE are :- • Nation Lanka Equities Pvt Limited • S C Securities Pvt Limited • Asia Securities Pvt Limited • Asha Securities Pvt Limited • Somerville Stockbrokers Pvt Limited CONCLUSION From the above listings, we learned that India has 8 National Stock Exchanges and 21 Regional Stock Exchanges, of which only one (Calcutta Stock Exchange) is operative currently. The list of National exchanges also consists of the sole international exchange of India. Every exchange extends the facility to trade in various financial segments like equity, commodity, debt, currency, derivatives, etc. Some of them operate in a particular financial instrument. The relevant exchange gets chosen by the traders, investors, and promoters based on the guidelines set by the respective exchanges and SEBI.

Important functions of a stock exchange Determining the fair price The stock exchanges facilitate in discovering fair prices of the publicly listed securities. Relentless trading of securities helps in determining the price of the listed securities. Facilitating industrial advancement The industrialisation of a nation is reliant on capital availability. This is ensured by the stock exchanges as the public can invest directly in the companies through stock exchanges. Protecting investors’ interest The stock exchanges lay down guidelines for the operation of the listed entities. These norms have to be strictly followed by the companies, thereby protecting investors’ interest as they would have financed the operations. Any major decision to be taken by the company will have to be brought to the stock exchange notice. Act as secondary markets Stock exchanges will help investors of certain bonds, such as sovereign gold bonds (SGBs), to sell their holdings within the lock-in period or maturity. Reduce the dependency on loan for corporates The existence of stock exchanges has helped listed companies avoid availing a loan as they could raise capital by issuing securities. This has helped them save a significant amount in the form of regular interest outgo. EQUITY In the context of stock market investments, equity refers to the shares in a company’s ownership. In simpler terms, it is the total amount of money that a shareholder is eligible to receive if all of a company’s debts are paid off and its assets liquidated. When an individual invests in a company’s equities, he/she becomes its partial owner. On investment in a company’s stocks, he/she can earn profit via capital gains or stock price appreciation. Further, investing in a company’s shares also bestows an individual with a right to vote in matters pertaining to the Board of Directors. Investing in equity shares is popular among individuals because they are high-return investment options. However, despite their potential to bear high returns, they also expose an

individual’s investment portfolio to a certain degree of risk. For this reason, it is pertinent for individuals to gauge their risk appetite before deciding to invest in equity stock. Types of Equity Equities are market-linked investments that do not come with an assurance of bearing fixed returns. Returns on equity thus depend on the underlying asset’s performance. Equity investments can be broadly divided into several categories, each bearing its own set of risks and rewards. Following is a broad categorisation of equity investments – Shares The units of partial ownership in a company are commonly known as shares. They are traded via designated stock exchanges like the Bombay Stock Exchange or National Stock Exchange (provided that they are BSE or NSE equity shares of a listed company). The potential returns from investing in shares can be quite substantial, with their risks being equally high. Equity Futures These are investment instruments where the investors have an obligation of purchasing or selling the underlying assets at a predetermined price and a predetermined rate. Equity futures generally come with an expiry period of three months and the settlement day is usually the last Thursday of the 3rd month. Equity Options Equity options are akin to the futures where parties involved are not legally obliged to follow up on their agreement. Arbitrage Schemes Arbitrage, with regards to the stock market, refers to the process of buying and selling securities in different exchanges simultaneously to profit from the difference in market price. Individuals can invest in arbitrage funds which are equity-oriented funds with primary investment in equities, debt or money market instruments and equity derivatives. Alternative Investment Funds Individuals can choose to invest in equity instruments through alternative funds which comprise different pooled in investment funds that primarily invest in hedge funds, venture capital, managed future, private equity, etc.

Features of Equity Description Features As per the Companies Act 1956, a company Maturity period as an entity is not eligible to Shareholders’ Voting Rights purchase its own shares. The equity shares can provide capital to the Income from Equity Shares Claim on Company’s Asset company, which cannot be regained for as long as the company is functional. Individuals who have invested in the company’s shares can only redeem their capital at the time of the company’s liquidation; after all other claims have been fulfilled. When an individual purchases the equity shares of a company, he/she becomes a real stakeholder of the organisation. The power to participate in the company’s meetings is bestowed upon such participants, and they have the right to voice their opinions on a company’s executive decisions. However, this right is exercised indirectly through a company’s Board of Directors, elected by the shareholders. When an individual invests in a company’s shares, he/she acquires the right to claim on a company’s income. These investors can claim on the company’s residual income which is left after a preference shareholders’ dividend has been paid. If a company has insufficient profits, equity shareholders might not earn any gains from their shares. On the other hand, they also stand a chance of earning higher dividends through capital appreciation. Every individual who has invested in a company’s equity shares gains an ownership claim on the company’s assets. For instance, if a company is liquidated, the equity assets are first used

Limited Liability to fulfil the claims of preference shareholders and creditors while whatever is left belongs to the equity shareholders. Even though shareholders are a company’s real owners, they enjoy the advantage of limited liability. It means that their liabilities are limited only to the value of shares they have invested in. If an investor has paid the price of the share in its entirety, he/she will not be affected by the losses that the company suffers, even at the time of its liquidation. What are Capital Gains and Dividends? Equity holders’ value of holdings increases when the price of the shares increases way more than what was paid for them. But that’s not the only way to gain profits by owning equities. For instance, companies pay out dividends from their own profits to their shareholders. These periodic payments are, however, not guaranteed, but can provide major benefits when available. As an investor, you can either make the decision of reinvesting your dividends or take them as income. Therefore it’s imperative to understand the difference between capital gains and dividends especially if you own equities. A capital gain is the difference between the price at the shares were purchased and the price for which they are sold. There are two types of capital gains, viz. long- and short-term capital gains and each have their own tax rate. Advantages of Equity Shares There are several benefits that an individual can enjoy by investing in equity shares. Some of them are enumerated below. High returns Investing in equity shares provides high returns to investors. Shareholders have an opportunity to enjoy wealth creation, not just through dividend earnings but also through capital appreciation. Provides a cushion against inflation When an individual invests in equity shares, he/she has the potential to earn high returns. The rate of returns earned is often higher than the rate of wearing down of the investor’s purchasing power due to inflation. Thus, investing in equity shares acts as a hedge against inflation.

Ease of investment Investing in shares is simple. Investors can avail the services of a stockbroker or financial planner to invest through various stock exchanges in a country. If an individual has set up a Demat account, he/she can buy the stocks in a few minutes. So, irrespective of whether an investor chooses to invest via NSE or BSE equity or the likes, he/she can enjoy the ease of investment. Diversification of investment portfolio Investors mostly choose to stick to debt instruments since they are low-risk investment options owing to lower volatility. However, debt instruments may not always generate high returns, which is why individuals can diversify their investment portfolio by investing in equities for higher returns. Disadvantages of Investing in Equities Even though equity investments have their fair share of advantages, they also bear a few disadvantages. Some of them are as follows. High market risk Investing in equity shares can yield returns but also exposes investors to high risk as compared to other investment options like debt instruments. An investor can risk losing his/her entire investment corpus by investing in equity shares. Performance-related risks Equity investments are market-related instruments, and as a result, might not perform according to an investor’s expectations. This is known as performance-related risk and can affect individual stocks as well as stocks across a sector or sectors. Risk of inflation A company’s worth can get diluted due to rising inflation and subsequently, its shares might not generate potential returns. Liquidity risk Due to liquidity risk, investors might have to sell their shares at a much lower price than its fair market value. Liquidity risk arises when a company is unable to meet its debt obligations in the short-term. Risks arising out of social and political changes On-going social and political issues in a country can hamper the growth of a business. For example, if a government decides to promote indigenous businesses, it might restrict the entry of foreign business in the country. If an investor has invested in home-

grown businesses, he/she in this scenario will profit from better performance of his/her investments. Who Should Consider Investing in Equities? Equities are more suitable for investors who are willing to take a risk with their investments. Those who are constrained by the limitations in time or experience in the money-market can also lean towards equity mutual fund investments for moderate to high returns. It is, however, crucial for investors to gauge their risk appetite before investing in the equity market to ensure that they make sound financial decisions. Some of the best equities to invest: - 1. Larsen & Toubro 2. Dr Reddy’s 3. Dr Lal Pathlabs 4. Vinati Organics 5. HDFC Ltd 6. SBI Life Insurance Different duration of trade INTRADAY LONG TERM Intraday trading means that you buy and sell stocks on the same trading day. Intraday trading At times, a business cycle may stretch up to 7 is also known as Day Trading. ... Intraday Trading years. So 5 to 7 years will be medium-term refers to buying and selling of stocks on the same investing in stock market. 7 years and above day before the market closes. investment plan in share market is long-term investing. However, for income tax purpose to calculate long-term capital gain for share market investments, more than one year is taken as long- term investment.

CASE STUDY Indian stock market is filled with the examples of amazing stocks which has created enough wealth for its loyal shareholders to live a long happy life. Wipro Assume you bought 100 shares of WIPRO in 1990. At that time, the face value of one stock of WIPRO was Rs 10. For simplicity, we are considering that you bought the stocks at the face value. Hence, your initial investment would have been Rs 1,000. Since 1990, WIPRO has given seven bonuses to its shareholders and one stock split (till 2017). Let’s also assume that you didn’t touch the stock after buying. This means that you didn’t sell any stock since the purchase and also avoided any profit booking. Lets analyze the bonuses and stock split of WIPRO for past 27 years. • 1990: 100 shares • 1992: 200 shares (1:1 bonus on 12-08-1992) • 1995: 400 shares (1:1 bonus on 24-02-1995) • 1997: 1,200 shares (2:1 bonus on 20-10-1997) • 1999: 6,000 shares (5:1 split on 27-09-1999) • 2004: 18,000 shares (2:1 bonus on 25-06-2004) • 2005: 36,000 shares (1:1 bonus on 22-08-2005) • 2010: 60,000 shares (2:3 bonus on 15-06-2010) • 2017: 1,20,000 shares (1:1 bonus on 13-06-2017) In short, 100 shares of WIPRO bought in 1990 would have turned out to be 1,20,000 shares by 2017. Capital Appreciation Let’s find out the current worth of the 100 shares that you bought in 1990. As of May 2018, the market price of one share of Wipro is Rs 273.75 Total Number of share = 1,20,000 Net Value = Rs 273.75 * 1,20,000 = Rs 3,28,50,000. The net appreciated value would be worth over 3.28 crores. Your small investment in the 100 shares of WIPRO in 1990 would have turned out to be worth over 3.28 crores in next 27 years.

Don’t forget the dividends… In the last 27 years, WIPRO has given a decent annual dividend to its shareholders. However, here we are just considering the dividends for the last four years. Annual dividend per share by WIPRO for last 4 years– • 2014: Rs 8.00 • 2015: Rs 12.00 • 2016: Rs 6.00 • 2017: Rs 4.00 Annual dividend received by the shareholders can be calculated using this formula: Annual dividend received= Dividend per share * Total Number of shares Assuming that you bought 100 shares of WIPRO in 1990, here are the annual dividends that you would have received: • Dividends (2014) = Rs 8 * 60,000 = Rs 4,80,000 • Dividends (2015) = Rs 12 * 60,000 = Rs 7,20,000 • And Dividends (2016) = Rs 6 * 60,000 = Rs 3,60,000 Moreover, for the year 2017, the total number of shares in your portfolio would have turned out to be 1,20,000. Dividends (2017) = Rs 4 * 1,20,000 = Rs 4,80,000 Overall, you would have received dividends worth Rs 4,80,000 in just an year by literally doing nothing. Verdict Time and again, the stock market has proved that the long-term investment is the real strategy to create huge wealth. WIPRO is just an example. There are a number of companies in the Indian stock market which has given even a better return compared to WIPRO. For example- Eicher Motors, MRF, Symphony, Page Industries etc. Although it’s little difficult to hold a stock for such long-term and not to book any profit. However, if you are a conservative investor with good patience level, then you can definitely receive amazing returns from your investments.

LIMITATION • Sample size/sample bias. • Access to data We will not always be able to go through all the resources. You can’t gather all the data you want for your research since it will take a lot of time. Because of it, your work might not cover each aspect. • Lack of time. • Financial resources Sometimes we need some equipment or additional software to conduct the research. This might be a problem since we don’t always have the sum we need. • Data collection There are different ways to collect data: interviews, surveys, questionnaire, etc. The way you collect data might be a real limitation since the answers and the results vary. • Method When we are finding new information, you use a specific research method and research methodology. Different methods give you various opportunities. Quality of the datum you get often depends on the method you choose. CONCULSION Investors, the Federal Reserve, and businesses continuously monitor and worry about the level of inflation Inflation—the rise in the price of goods and services—reduces the purchasing power each unit of currency can buy. Rising inflation has an insidious effect: input prices are higher, consumers can purchase fewer goods, revenues and profits decline, and the economy slows for a time until a measure of economic equilibrium is reached. Examining historical returns data during periods of high and low inflation can provide some clarity for investors. Numerous studies have looked at the impact of inflation on stock returns. Unfortunately, these studies have produced conflicting results when several factors are taken into account, namely geography and time period. Most studies conclude that expected inflation can either positively or negatively impact stocks, depending on the investor's ability to hedge and the government’s monetary policy. Unexpected inflation showed more conclusive findings, most notably being a strong positive correlation to stock returns during economic contractions, demonstrating that the timing of the economic cycle is particularly important for investors gauging the impact on stock returns. This correlation is also thought to stem from the fact that unexpected inflation contains new

information about future prices. Similarly, greater volatility of stock movements was correlated with higher inflation rates. The data has proven this in emerging countries, where the volatility of stocks is greater than in developed markets. Since the 1930s, the research suggests that almost every country suffered its worst real returns during high inflation periods. Real returns are actual returns minus inflation. When examining S&P 500 returns by decade and adjusting for inflation, the results show the highest real returns occur when inflation is 2% to 3%.

BSE SENSEX INDIAN FINANCIAL SYSTEM PROJECT (SEM - V) SUPERVISOR DR. ABLIN ALPHONSO BY. KRISH VORA T.Y.B.A ROLL NO - 19247 SUBMISSION DATE - 31/08/2021

BSE SENSEX Introduction BSE Limited is also known as the Bombay Stock Exchange. It is an Indian Stock exchange located on Dalal Street in Mumbai. It is Asia's oldest stock exchange. BSE is the 9th largest stock exchange with an overall market capitalization of more than ₹2,18,730 billion as of May 2021. BSE SENSEX is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on BSE. These 30 companies are the largest and have most actively traded stocks and are representative of various industrial sectors of the Indian economy. S&P BSE SENSEX was published on 1 January 1986, and it is regarded as the pulse of domestic stock markets in India. Stock market analyst Deepak Mohoni, in 1989 coined the term SENSEX. The full form of Sensex is the Sensitive Index. BSE Sensitive index was at 750 points in 1989. So SENSEX is the stock market index for BSE (Bombay Stock Exchange). Every stock market has a stock index or stock market index, it measures the stock market. It helps the investors to compare the current price levels with the past prices to calculate the market performance. The reason behind taking this Project: As I was always curious to learn about stock markets, I wanted to learn, how do Stock Markets work, what kind of financial instruments are traded in the BSE Stock Market. Apart from that, I wanted to understand what is the common type of Financial Instruments people like to trade.

Assumptions : 1. Certain participants 2. Important Information Hypothesis : ● Companies keep certain information hidden.