This document provides an overview of the stock market in India. It discusses the history and establishment of stock exchanges in India, including the Bombay Stock Exchange (BSE) in 1875, which is the oldest stock exchange in Asia. It also discusses the establishment of the Securities and Exchange Board of India (SEBI) in 1988 to regulate the stock market and promote transparency. The National Stock Exchange (NSE) was established in 1992 to introduce electronic trading and increase competition with BSE. The document defines primary and secondary markets and provides background on stock markets and their role in providing companies access to capital and allowing individuals to invest for profit or savings.

1. A
PROJECT REPORT ON
ROLE AND WORKING PROCESS
OF STOCK MARKET IN INDIA
Directorate of Distance Education
Submitted to Lovely Professional University
In the partial fulfillment of the degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)
Submitted By: Supervisor:
PARAS KALRA RAJESH GUPTA
21000485 MANAGER IDBI BANK
Directorate of Distance Education
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA.
( 2010 – 12 )

2. INTRODUCTION
This project has been undertaken to make a descriptive study of Stock Market. Today, the
stock market is playing a vital role everywhere in the world. The main function of stock
market is to providing financing by shares or stock issuance and by share trading. The
primal role of stock market is to channelize investments from investors who have surplus
funds to the ones who are running a deficit. Stock Market offers both long term and
overnight funds. The securities like Shares, bonds, debentures etc. which are the
instruments of stock market are used by the investors to make a profit out of their
respective markets. Stock Market is responsible for generating funds for the companies,
corporations and sometime National Government.
History of Stock Market in India
The Indian securities market or stock market has become one of the most dynamic and
efficient securities market in Asia today. The Indian market now cnforms to international
standards in terms of operating efficiency.
During the latter half of 19th
Century, shares of companies used to be floated in India
occasionally. There were share brokers in Bombay who assisted in the floatation of
shares of companies. A small group of stock brokers in Bombay joined together in 1875
to form an association called Native Share and Stockbrokers Association. The
association drew up codes of conduct for brokerage business and mobilised private funds
for investment in the corporate sector. It was this association which later became the
Bombay Stock Exchange, which is the oldest stock exchange in Asia. This exchange is
now known as The Stock Exchange, Mumbai, or BSE.
Ahmedabad was a major centre of cotton textile industry. After 1880, many new cotton
textile mills were started in and around Ahmedabad. As new cotton textile enterprises
were floated, the need for a stock exchange at Ahmedabad was strongly felt.
Accordingly, in 1894, the brokers of Ahmedabad formed The Ahmedabad Share and
Stockbrokers Association, which later became the Ahmedabad Atock Exchange, rthe
second stock exchange of the country.

3. During the 1900s Kolkata became another major centre of share trading on account of the
starting of several indigenous industrial enterprises. As a result, the third stock exchange
of the country was started by the Kolkata stockbrokers at Kolkata in 1908. As industrial
activity in the country gained momentum, existing enterprises in cotton textiles, woolen
textiles, tea sugar, paper, steel, engineering goods, etc. began to undertake expansion
activities and new ventures were also floated. Yet another stock exchange was started in
1920 at Chennai. However, by 1923, it ceased to exist. Later, in 1937, the Madras Stock
Exchange was revived as many new cotton textile mills and plantation companies were
floated in South India. Three more stock exchanges were established before
independence, at Indore in Madhya Pradesh in 1930, at Hyderabad in 1943 and at Delhi
in 1947 in 1947. thus, at the time of independence, seven stock exchanges were
functioning in the major cities of the country.
The number of stock exchanges virtually, remained unchanged for nearly three decades
from 1947 to 1977, except for the establishment of the Bangalore Stock Exchange in
1957. During the 1980s, however, many stock exchanges were established. At present,
there is one National Stock Exchanges (NSE), 23 Regional Stock Exchanges and some
local exchanges are existing in India.
SEBI – The Securities and exchange Board of India is the regulator for the Securities
Market in India. SEBI was established in 1988 and was given the statutory status on
April, 1992 in accordance with the provisions of the Securities and exchange board of
India Act, 1992. The Preamble of the Securities and Exchange Board of India describes
the basic functions of the SEBI as:
”…… to protect the interests of investors in securities and to promote the development
of, and to regulate the securities market and for matters connected therewith or
incidental thereto.”

4. Types of Stock Market
1. Primary Market: The primary capital market is also called the New Issue Market or
NIM. The securities which are introduced in the market are sold for first time to the
general public in this market. This market is also known as the long-term debt market as
the funds raised from this market provides long term capital. There are three ways of
offering new issues in the primary market. These are:-
(i) Initial Public Offerings (IPO)
(ii) Preferential Issue
(iii) Rights Issue
2. Secondary Market: The secondary market deals in those securities that are already
issued in an public offering in the primary market. Typically, the secondary markets are
those where previously issued securities are purchased and sold.

5. NEED, SCOPE AND OBJECTIVE OF THE STUDY
NEED OF THE STUDY
Today in such a competitive era, it is very difficult for the concerns / companies to fix the
prices of its shares and also difficult for the investors to choose the shares of a company
which may prove profitable to them. As a stock broker working in the stock market, it
will be helpful for me and others in the following manners:-
1.) It is helpful for the stock brokers working in the stock market to see the
environment prevailing in the stock market and to know trends of increase and
decrease in the prices of the shares and to predict the changes which may
occur in the future.
2.) It is helpful also for the companies
3.) It is also helpful for the investors as by becoming aware about the stock
market, the investor may become able to know in which company’s share he
should invest his hard earned money which may prove profitable to him
instead of loss.
SCOPE OF THE STUDY
The scope of this study is very broad as this proves helpful for the all companies whose
shares are traded in stock exchange, for the investors who invest their money in the
shares of companies list on the stock exchange and also for the stock brokers or share
brokers who helps the investors to buy and sell the share of different companies.
OBJECTIVE OF THE STUDY
The main objective of the study of this topic is to describe the role of stock market on the
economy of India and working procedure of the stock market that how the companies get
listed in the stock exchange, what are the securities which are traded in the stock market,
the trends for the pricing of the shares in the stock market, how to create a profitable
portfolio of the securities for investment in the stock market through which more profit
can be earned etc.

6. REVIEW OF LITERATURE
The market in which shares of publicly held companies are issued and traded
either through exchanges or over-the-counter markets. Also known as the equity
market, the stock market is one of the most vital components of a free-market
economy, as it provides companies with access to capital in exchange for giving
investors a slice of ownership in the company. The stock market makes it possible
to grow small initial sums of money into large ones, and to become wealthy
without taking the risk of starting a business or making the sacrifices that often
accompany a high-paying career.
A stock market or equity market is the aggregation of buyers and sellers (a
loose network of economic transactions, not a physical facility or discrete entity)
of stocks (shares); these are securities listed on a stock exchange as well as those
only traded privately.
Indian Stock Market is one of the oldest Stock Market in Asia. East India Company
used to transact Loan Securities by the end of 18th
Century. In the 1830s, trading on
corporate stocks and shares in Bank and Cotton presses took place in Bombay.
Establishment of BSE (Bombay Stock Exchange)
Few informal groups of Stock Brokers organized
themselves in 1875 and were formally organized as
Bombay Stock Exchange (BSE). In 1956, the Government
of India recognized the Bombay Stock Exchange as the
first Stock Exchange in the country under the Securities
Contracts (Regulation) Act.
But still there was no means to measure the overall performance of the exchange. So, in
1986, Bombay Stock Exchange developed BSE Sensex (Sensex = Sensitive Index), an
index of top 30 companies, which gave a means to measure the overall performance of
the Exchange.
Establishment of SEBI (Securities and Exchange Board
of India)

7. Until late 1980s, BSE ran with low transparency
and an unreliable clearing and settlement
systems. Towards the end of the 1980s, new
economic forces, the economic growth and
currency crisis emphasized the need for
modernization of the financial system.
Government created the Securities and
Exchange Board of India (SEBI) in 1988.
Establishment of NSE (National Stock Exchange)
In April 1992, Bombay Stock Exchange crashed due to
Harshad Mehta Scam. Finance minister Mr. Manmohan
Singh urged the need of other Stock Exchange in
competition to BSE. He tapped the Industrial Development
Bank (IDB) to take the lead of the project of creating
competition for BSE.
In November 1992, NSE (National Stock Exchange) was established as the first
electronically traded Stock Exchange in India. After a few years of operations, the NSE
has become the largest stock exchange in India.
BSE also automated the systems in 1995 but it never caught up with NSE Spot Market
turnover.
Three segments of the NSE trading platform were established one after another. The
Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital
Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options
segment began operating in 2000. Today the NSE takes the 14th position in the top 40
futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty. CNX Nifty
(Nifty = National Fifty) is a diversified index of 50 stocks from 25 different economy
sectors.
In 1998, the National Stock Exchange of India launched its web-site and was the first
exchange in India that started trading stock on the Internet in 2000. Today, NSE has
roughly 66% of equity spot turnover and roughly 100% of equity derivatives turnover.

8. 1. RESEARCH METHODOLOGY
Research methodology deals with the method of study i.e. how the study can be carried
out and what techniques can be used. It is the careful investigation and enquiry in a
systematic manner in order to find a solution to problems in research. It consists of
defining and redefining the problems, formulating the hypothesis or suggestions
solutions, collecting data and evaluating the data and at last carefully testing the
conclusions to determine whether they fit he formulated hypothesis or not.
(a) Collection of data: Both the primary and secondary data has been collected
from the market and the company respectively/. The secondary data was provided
through books, magazines and websites of the stock market / stock exchange and
the primary data was collected through the medium of face to face interactions /
interviews with the persons of stock market / stock exchange.
(b) Organization of Data: Data once collected needed to be organized for further
processing.
(c) Presentation of Data: The data collected is of no use unless and until it is given
in a presentable form. Thus after proper organization, the data is given in a
presentable form with complete details with the help of bar / graph / picture
diagram etc.
Steps of Research Methodology
COLLECTION OF DATA
ORGANIZATION OF DATA
PRESENTATION OF DATA
ANAYSIS OF DATA
INTERPRETATION OF DATA

9. (e) Analysis of the Data: The data is carefully analyzed keeping in consideration
both the pros and cons for the purpose of arriving at concrete solutions.
(f) Interpretations of Data: After carefully analyzing the data, it has been aptly
interpreted in order to give concrete solutions and proper recommendations.
RESEARCH DESIGN
Research design states the conceptual structure within which research is to be conducted.
A research design is simply a plan for a study. This is used a guide in collecting and
analyzing the data. It can be called a blue print to carryout the study. It is like a plan by
an architect to build the house, if a research is conducted without a blue print, the result is
likely to be different from what is expected at the start. The blue print includes (1)
interviews to be conducted, observations to be made, experiments to be conducted, data
analysis to be made. (2) Tools used to collect data such as questionnaire. (3) what is the
sampling method used.
A successful design stems from a collaborative process involving good planning an
communication.
Descriptive Research: This topic includes the descriptive research. The main purpose of
descriptive research is to describe the state of view as it exists at present. Simply stated, it
is a fact finding investigation.
SECONDARY DATA: Secondary data are those which have already been collected by
someone. For this study, following secondary data are used.
1.) Websites
2.) Finance Books
3.) Magazines
4.) Articles

10. REFERENCES:
WEBSITES:
 nseindia.com
 moneycontrol.com
 bseindia.com
BOOKS:
 Research Methodology by C.R. Kothari
 Security Analysis & Portfolio Management by S. Kevin
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