Project Work

Subject-Business Studies
Topic-Stock Exchange
Flow-
1. Font page.
2. Acknowledgment.
3. Certificate.
4. Index.
5. Meaning of Stock Exchange.
6. History of Stock Exchange.
7. Stock Exchange in India today.
8. How does the Stock Exchange work?
9. Who regulates the Stock market in India?
10. List of Nifty 50.
11. Web trading applications.
12. How does the actual trading occur?
13. How to evaluate Stock before investing?
14. How are Stock market returns calculated?
15. Bull and Bear market.
16. Stock market crash.
17. Conclusion.
18. Bibliography.
1) Front Page-
Name- Patel Neha Shaileshkumar.
Roll No – 07.
Class- 12-B (commerce).
Subject- Business Studies.
Subject teacher- Ms. Payal Gavli.
School- White Lotus International School.
2) Acknowledgment-
I would like to convey my sincere thanks to Ms. Payal Gavli, my business studies teacher who always
gave me valuable suggestion and guidance during the project. She has a source of inspiration and
helped me understand and remember important details of the project. She gave me an amazing
opportunity to do this wonderful project ‘Stock Exchange’.
I also thank my parents and friends for their help and support in finalizing this project within limited
time frame.
Neha Patel.
3) Certificate-
Provided by school.
4) Index-
(1) Meaning of Stock Exchange.
(2) History of Stock Exchange.
(3) How does the Stock Exchange work?
(4) Who regulates the Stock market in India?
(5) List of Nifty 50.
(6) Web trading applications.
(7) How does the actual trading occur?
(8) How to evaluate Stock before investing?
(9) How are Stock market returns calculated?
(10) Bull and Bear market.
(11) Stock market crash.
(12) Conclusion.
(13) Bibliography.
5) Meaning of Stock Exchange-
Define- Stock market is a place shares of public listed companies are traded.
The primary market is where companies float shares to the general public in an Initial Public Offering
(IPO) to raise capital.
A Stock Exchange, securities Exchange, or bourse is an Exchange where Stockbrokers and traders can
buy and sell securities, such as shares of Stocks, bonds, and other financial instruments. A Stock may
be brought or sold only if it is listed on an Exchange.
Once new securities have been sold in the primary market, they are traded in the secondary market-
where one investor buys shares from another investor at the prevailing market or at whatever price
both the buyer and seller agree upon. The secondary market or the Stock Exchanges are regulated by
the regulatory authority. In India, the secondary and primary markets are governed by the Security
and Exchange Board of India (SEBI).
A Stock Exchange facilities Stock brokers to trade company Stocks and other securities. India’s premier
Stock Exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
6) History of Stock Exchange in India-
The Dutch East India Company's founding in 1602.
The first organized Stock Exchange in India was started in 1875 at Bombay and it is stated to be the
oldest in Asia. In 1894 the Ahmedabad Stock Exchange was started to facilitate dealings in the shares
of textile mills there. The Calcutta Stock Exchange was started in 1908 to provide a market for shares
of plantations and jute mills. Then the Madras Stock Exchange started in 1920.
Two others set up in the reform era, viz., The National Stock Exchange (NSE) and Over the Counter
Exchange of India (OICEI), have mandate to have nation-wise trading.
They are located at Ahmedabad, Vadodara, Bangalore, Bhubaneswar, Mumbai, Kolkata, Kochi,
Coimbatore, Delhi, Guwahati, Hyderabad, Indore, Jaipur, Kanpur, Ludhiana, Chennai Mangalore,
Meerut, Patna, Pune, Rajkot.
The Stoc Exchange are being administrated by their governing boards and executive chiefs. Policies
relating to their regulation and control are laid down by the ministry of finance. Government also
constituted Securities and Exchange Board of India (SEBI) in April 1988cfor orderly development and
regulation of securities industry and Stock Exchanges.
7) How does the Stock Exchange work?
The share prices of the shares listed on the Stock Exchange fluctuate according to the buy & sell
transactions taking place. This stock exchange works according to the company and demand of
shares. It also works according to the market value of the company.
 8) Who regulates the Stock Market in India?
SEBI is a statutory regulatory body established on the 12th of April, 1992. It monitors and regulates the
Indian capital and securities market while ensuring to protect the interests of the investors, formulating
regulations and guidelines. The head office of SEBI is at Bandra Kurla Complex, Mumbai.
There are 3 different platform for share market:
1. NSE (National Stock Exchange).
2. BSE (Bombay Stock Exchange).
3. MCX (Multi Commodity Exchange).

NSE Meaning
NSE stands for National Stock Exchange, it is the Biggest Stock Exchange in India in terms of Market Capitalization.
It was incorporated in 1992, recognized as a stock exchange in 1993, and started off the operations in 1994. It
revolutionized the trading industry by introducing electronic or screen-based trading in India.
During the year 1995 - 1996, NSE launched Nifty 50 - the benchmark index of NSE. Nifty 50 tracks the 50 largest and
most liquid stocks out of more than 1600 stocks listed on NSE. These 50 largest companies represent different
industrial sectors which collectively represent the Indian economy.
BSE Meaning
BSE stands for Bombay Stock Exchange, it is the first-ever stock exchange in Asia incorporated in 1875. Over the
past 140 years, BSE has come a long way and provides trading in financial instruments like equity, currencies, debt
instruments, derivatives, mutual funds.
• BSE SME, India’s largest SME Platform with over 250 companies listed on it.
Sensex is also known as the Sensitive Index is the benchmark index of BSE. It tracks 30 very large and well-
established companies across different industrial sectors which represent the Indian Economic Trends and
Stock Market as a whole.
Difference between NSE and BSE

NSE BSE

Full Form NSE Full Form - National Stock BSE Full Form - Bombay Stock
Exchange Exchange

Incorporation NSE was established in 1992 BSE was established in 1875

Benchmark Index NIFTY 50 SENSEX

Headquarters NSE is located in Mumbai. BSE is also located in Mumbai.

Companies listed 1696 companies are listed on NSE. 5749 companies are listed on BSE.

Products 1. Equity 1. Equity

2. Equity, Currency, and Commodity 2. Equity, Currency, and Commodity
Derivatives Derivatives
3. Exchange-Traded Funds 3. Exchange-Traded Funds
4. Mutual Funds 4. Mutual Funds
5. Security Lending & Borrowing 5. Corporate Bonds
Scheme
6. Initial Public Offering (IPO)
6. Corporate Bonds
7. Offer for Sale
7. Initial Public Offering (IPO)
8. Institutional Placement Program
(IPP)
9. Offer for Sale

SME Platform NSE Emerge BSE SME

Market Capitalization 2.27 Trillion 2.1 Trillion

Liquidity High Liquidity Low Liquidity

Index Value (as of 23rd 12,848 43,834

November 2020)

Global Rank 11th 10th

9) List of Nifty 50-

1. Reliance Industries Ltd.

2. HDFC Bank Ltd.

3. Infosys Ltd.

4. Housing Development Finance Corporation Ltd.

5. ICICI Bank Ltd.

6. Tata Consultancy Services Ltd.

7. Kotak Mahindra Bank Ltd.

8. Hindustan Unilever Ltd.

9. AXIS Bank Ltd.

10. Larsen & Toubro Ltd.

11. ITC Ltd.

12. State Bank of India

13. Bajaj Finance Ltd.

14. Asian Paints Ltd.

15. Bharti Airtel Ltd.

16. HCL Technologies Ltd.

17. Maruti Suzuki India Ltd.

18. Tata Steel Ltd.

19. Wipro Ltd.

20. UltraTech Cement Ltd.

21. Mahindra & Mahindra Ltd.

22. Sun Pharmaceutical Industries Ltd.

23. Bajaj Finserv Ltd.

24. Titan Company Ltd.

25. Tech Mahindra Ltd.

26. JSW Steel Ltd.

27. Dr. Reddy’s Laboratories Ltd.

28. Nestle India Ltd.

29. IndusInd Bank Ltd.

30. Tata Motors Ltd.

31. Power Grid Corporation of India Ltd.

32. Grasim Industries Ltd.

33. HDFC Life Insurance Co. Ltd.

34. Divi’s Laboratories Ltd.

35. NTPC Ltd.

36. Hindalco Industries Ltd.

37. Bajaj Auto Ltd.

38. Adani Port and Special Economic Zone

39. Cipla Ltd.

40. Tata Consumer products Ltd.

41. SBI Life Insurance Co.

42. UPL Ltd.

43. Bharat Petroleum Corp. Ltd.

44. Oil & Natural Gas Corporation Ltd.

45. Britannia Industries Ltd.

46. Hero MotoCorp Ltd.

47. Eicher Motors Ltd.

48. Shree Cement Ltd.

49. Coal India Ltd.

50. Indian Oil Corporation Ltd.

10) Web Trading Applications-
There are lot of applications for web trading in India from which analysis shows top 10 application
which are as follows:
I. Zerodha KITE online trading mobile app.
II. 5paisa online trading app.
III. Upstox pro app.
IV. Angle Broking online trading app.
V. Edelweiss online trading app.
VI. Stoxkart online trading app.
VII. Astha Trade Wave trading app.
VIII. Fyers app.
IX. ANT Mobi – Alice Blue Mobile Trading App.
X. Samco StockNote app.
11) How does the actual trading occur?
i. After providing the details of your Demat Account and Trading Account to the broker, you need
to specify the amount of stocks to be sold or purchased.
ii. The broker checks whether your account has the requisite funds.
iii. Your order is now passed for execution in the stock exchange. For instance, if you have issued
a purchase order, it will be matched with a similar sell order. You have to finalize a price,
following which the seller will confirm it.
iv. The exchange then confirms the transfer of ownership of shares. You then receive an intimation
about the settlement, and the shares will be reflected in your account in two working days.
v. Depending upon the market movement, you either make a profit or loss from the transaction.
12) How to evaluate a Stock before investing?
We can evaluate/analysis a stock in 2 different ways which are as follows:
A. Technical analysis: This involves a minute examination of the market for intraday trading. Here you
have to analyse a slew of factors like movement average, Regarding Strength Index (RSI), etc. You
can use the trends, patterns, analysis, and reports provided by stockbroking companies to analyse
the stock movements.
B. Fundamental analysis: Here, you can yourself study some key factors, like Returns on Equity,
Earnings Yield, GP Margin, Debt to Equity Ratio, Interest Cover Ratio, Market Capitalisation, etc.
This will provide you with greater clarity regarding stock prices.
 13) How are stock market returns calculated?

Typically, there are two methodologies designed to calculate market returns which are as follows:
A. Absolute Return Methodology: Here, variables, including buying price, selling price, returns and return
percentage are used to calculate returns.
B. Compounded Annual Growth Methodology: Here the returns are calculated after taking into account the
overall time period. Market experts prefer this methodology over the former.
 14) Bull and Bear market-
The two major type of markets are as follows:
• Bullish/Bull.
• Bearish/Bear.

Now let us discuss them in detail,

Bullish/Bull:
What Is a Bull?
A bull is an investor who thinks the market, a specific security, or an industry is poised to rise. Investors who
adopt a bull approach purchase securities under the assumption that they can sell them later at a higher price.

Bullish Characteristics
Characteristics of a bull market include:

• A prolonged period of rising stock prices (usually by at least 20% or more over a minimum of two months)
• A strong or strengthening economy
• High investor confidence
• High investor optimism
• A general expectation that things will be positive for an extended period.

Bull Traps
Bull investors must be mindful of what is commonly known as bull traps.

A bull trap exists when an investor believes a sudden increase in the value of a particular security is the beginning
of a trend resulting in the investor going long. This can lead to a buying frenzy where, as more investors purchase
the security, the price continues to inflate. Once those interested in purchasing the security have completed the
trades, demand may decline and lower associated security prices.

As the price declines, bull investors must choose whether to hold or sell the security.

If investors begin to sell, the price may experience further decline. This may prompt a new round of investors to sell
their holdings and drive the price down even further. In cases where a bull trap existed, the associated stock price
often does not recover.

Examples of bull market:

Dotcom Bubble
One of the best examples of a bull market was the sharp rise in US technology stocks during the late 1990s.
Between 1995 and its highest point in March 2000, the Nasdaq Index gained a whopping 400%.

Housing Bubble
Another famous example of a bull market was the extreme run-up in U.S. housing prices in the mid-2000s.

The housing bubble was directly related to and possibly the root cause of the 2007–2008 financial crisis.
 Bearish/Bear-

What Is a 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.

Phases of a Bear Market

Bear markets usually have four different phases.

1. The first phase is characterized by high prices and high investor sentiment. Towards the end of this phase,
investors begin to drop out of the markets and take in profits.
2. In the second phase, stock prices begin to fall sharply, trading activity and corporate profits begin to drop,
and economic indicators, that may have once been positive, start to become below average. Some
investors begin to panic as sentiment starts to fall. This is referred to as capitulation.
3. The third phase shows speculators start to enter the market, consequently raising some prices and trading
volume.
4. In the fourth and last phase, stock prices continue to drop, but slowly. As low prices and good news starts to
attract investors again, bear markets start to lead to bull markets.

Real-World Examples of Bear Markets

The Dow Jones Industrial Average went into a bear market on March 11, 2020, and the S&P 500 entered a bear
market on March 12, 2020.This followed the longest bull market on record for the index, which started in March
2009. Stocks were driven down by the effects of the coronavirus and falling oil prices due to the split between Saudi
Arabia and Russia. During this period, the Dow Jones fell sharply from all-time highs close to 30,000 to lows below
19,000 in a matter of weeks.
15) Stock market crash-

A stock market crash is a sudden dramatic decline of stock prices across a major cross-section of a stock
market, resulting in a significant loss of paper wealth. Crashes are driven by panic selling and underlying
economic factors. They often follow speculation and economic bubbles.
A stock market crash is a social phenomenon where external economic events combine with crowd
psychology in a positive feedback loop where selling by some market participants drives more market
participants to sell.

There is no numerically specific definition of a stock market crash but the term commonly applies to
declines of over 10% in a stock market index over a period of several days.

Crashes are often associated with bear markets; however, they do not necessarily occur
simultaneously. Crashes are generally unexpected. As Niall Ferguson stated, "Before the crash, our world
seems almost stationary, deceptively so, balanced, at a set point. So that when the crash finally hits — as
inevitably it will — everyone seems surprised. And our brains keep telling us it’s not time for a crash."

Examples

a) Tulip Mania (1634-1637)

b) Panic of 1907(stock prices fell by nearly 50% due to a variety of factors)
c) Wall Street Crash of 1929
d) October 19, 1987(Black Monday-All of the twenty-three major world markets experienced a sharp decline in
October 1987. When measured in United States dollars, eight markets declined by 20 to 29%, three by 30 to
39% (Malaysia, Mexico and New Zealand), and three by more than 40% (Hong Kong, Australia
and Singapore). The least affected was Austria (a fall of 11.4%) while the most affected was Hong Kong
with a drop of 45.8%. Out of twenty-three major industrial countries, nineteen had a decline greater than
20%. Worldwide losses were estimated at US$1.71 trillion. The severity of the crash sparked fears of
extended economic instability or even a reprise of the Great Depression.)
e) Crash of 2008–2009(The collapse of Lehman Brothers was a symbol of the Crash of 2008)
f) 2010 flash crash
g) 2015–16 Chinese stock market turbulence
h) 2020 coronavirus stock market crash(The 2020 stock market crash was a major and sudden global stock
market crash that began on 20 February 2020 and ended on 7 April.)
16) Conclusion-
Stock exchange works as a barometer for economy if the nation. It helps us to invest our money at the secure place.
SEBI is the main head or back born of stock market as it keeps a check on security of shares/stock. There are lots of
web trading sites for stock exchange. Trading and investing in stock exchange work with ease once you evaluate the
share of the company. It has 2 types of market: Bullish and Bearish market. Stock market crash creates a huge fear in
the mind of investors and traders.
17) Bibliography-