It was a great honor to assign “Stock Market Volatility in India-

A study of Bombay Stock Exchange. I express my sincere

thanks to Dr. Sir for giving me the opportunity to do training
and to do training and to learn and upgrade my skills for this
topic throughout the course of this project, all of my teachers
have provided continuous support.
I would like to thanks my friends. Their help in the final stages
and in the submissions of this work was instrumental in helping
me achieve deadlines which would otherwise have lapsed. Their
encouragement and assistance cannot be underestimated.

Aman Gupta
It is certified that the work contained in the
project report titled “Stock Market Volatility in
India- A study of Bombay Stock Exchange, by
Aman Gupta, has been carried out under my
clasupervision and this work has not been
submitted elsewhere for a degree.

Signature of Supervisor

Dr.
Department of Commerce
Dr. Vibhuti Narayan Singh Campus Gangapur
Mahatma Gandhi Kashi Vidyapith Varanasi.
I hereby declare that this project report entitled “Stock Market
Volatility in India- A study of Bombay Stock Exchange, was
carried out by me for the degree of B.COM under the guidance
and supervisions of Dr. ,Assistant Professor, Department of
Commerce, Dr. Vibhuti Narayan Singh Campus, Mahatma
Gandhi Kashi Vidyapith Varanasi. The interpretations pur forth
are based on my reading and understanding of the original tests
and they are and published anywhere in any form. The other
books, articles and websites, which I have made use of are
acknowledgement of the respective place in the text. This
research report is not submitted for any other degree or diploma
is any other University.

Place- VARANASI
Name of the Student- AMAN GUPTA
Class- B.COM. VI SEMESTER
Date-
• INTRODUCTION
• OBJECTIVE
• FEATURE
• IMPORTANCE
• FUNCTIONS
• ADVANTAGES
• MAJOR INDICE IN BSE
• MARKET CAPITALIZATIONS
• BENEFIT OF BSE
• FACTORS AFFECTING BSE
• FEATURES OF SENSEX
 INDEX
CHAPTER TITLES PAGE NO.
INTRODUCTION
Established in 1875, BSE (formerly known as Bombay Stock Exchange), is Asia's
first & the Fastest Stock Exchange in world with the speed of 6 micro seconds and
one of India's leading exchange groups. Over the past 143 years, BSE has
facilitated the growth of the Indian corporate sector by providing it an efficient
capital-raising platform. Popularly known as BSE, the bourse was established as
‘The Native Share & Stock Brokers' Association ’in 1875. In 2017 BSE become the
1st listed stock exchange of India. Today BSE provides an efficient and transparent
market for trading in equity, currencies, debt instruments, derivatives, mutual
funds. BSE SME is India’s largest SME platform which has listed over 250
companies and continues to grow at a steady pace. BSE StAR MF is India’s largest
online mutual fund platform which process over 27 lakh transactions per month
and adds almost 2 lakh new SIPs ever month. BSE Bond, the transparent and
efficient electronic book mechanism process for private placement of debt
securities, is the market leader with more than Rs 2.09 lakh crore of fund raising
from 530 issuances. (F.Y. 2017-2018). Keeping in line with the vision of Shri
Narendra Modi, Hon’be Prime Minister of India, BSE has launched India INX,
India's 1st international exchange, located at GIFT CITY IFSC in Ahmedabad. Indian
Clearing Corporation Limited, a wholly owned subsidiary of BSE, acts as the
central counterparty to all trades executed on the BSE trading platform and
provides full novation, guaranteeing the settlement of all bonafide trades
executed. BSE Institute Ltd, another fully owned subsidiary of BSE runs one of the
most respected capital market educational institutes in the country. BSE has also
launched BSE Sammaan, the CSR exchange, is a 1st of its kind initiative which aims
to connect corporate with verified NGOs
COMPANY PROFILE:-

Established in 1875, BSE (formerly known as Bombay Stock Exchange), is Asia's

first & the Fastest Stock Exchange in world with the speed of 6 micro seconds and
one of India's leading exchange groups. Over the past 143 years, BSE has
facilitated the growth of the Indian corporate sector by providing it an efficient
capital-raising platform. Popularly known as BSE, the bourse was established as
‘The Native Share & Stock Brokers' Association ’in 1875. In 2017 BSE become the
1st listed stock exchange of India. The Bombay Stock Exchange (BSE) is the first
and largest in India and was established in 1875 as the Native Share and Stock
Brokers' Association. Based in Mumbai, India, the BSE lists close to 6,000
companies and is one of the largest exchanges in the world, along with the New
York Stock Exchange (NYSE), Nasdaq, London Stock Exchange Group, Japan
Exchange Group, and Shanghai Stock Exchange. The BSE has helped develop
India's capital markets, including the retail debt market, and has helped grow the
Indian corporate sector. The BSE is Asia's first stock exchange and also includes an
equities trading platform for small-and-medium enterprises (SME). BSE has
diversified into providing other capital market services including clearing,
settlement, and risk management. Key takeaways • Established in 1875 as the
Native Share and Stock Brokers' Association, the Bombay Stock Exchange (BSE) is
Asia's first exchange and the largest securities market in India. • The BSE has been
instrumental in developing India's capital markets by providing an efficient
platform for the Indian corporate sector to raise investment capital. • The BSE is
known for its electronic trading system that provides fast and efficient trade
execution. • The BSE enables investors to trade in equities, currencies, debt
instruments, derivatives, and mutual funds. • The BSE also provides other
important capital market trading services such as risk management, clearing,
settlement, and investor education.
Today BSE provides an efficient and transparent market for trading in equity,
currencies, debt instruments, derivatives, mutual funds. BSE SME is India’s largest
SME platform which has listed over 250 companies and continues to grow at a
steady pace. BSE StAR MF is India’s largest online mutual fund platform which
process over 27 lakh transactions per month and adds almost 2 lakh new SIPs ever
month. BSE Bond, the transparent and efficient electronic book mechanism
process for private placement of debt securities, is the market leader with more
than Rs 2.09 lakh crore of fund raising from 530 issuances. How the Bombay Stock
Exchange (BSE) Works In 1995, the BSE switched from an open-floor to an
electronic trading system. There are more than a dozen electronic exchanges in
the U.S. alone with the New York Stock Exchange (NYSE) and Nasdaq being the
most widely known. The BSE's overall performance is measured by the sensex, a
benchmark index of 30 of the BSE's largest and most actively traded stocks
covering 12 sectors. Debuting in 1986, the Sensex is India's oldest stock index.
Also called the "BSE 30," the index broadly represents the composition of India's
entire market.

Dalal Street The Bombay Stock Exchange is located on Dalal street in downtown
Mumbai, India. In the 1850s, stockbrokers would conduct business under a
banyan tree in front of the Mumbai town hall. After a few decades of various
meeting locations, Dalal Street was formally selected in 1874 as the location for
the Native Share and Stock Brokers' Association, the forerunner organization that
would eventually become the BSE. Mumbai is now a major financial center in
India and Dalal Street is home to a large number of banks, investment firms, and
related financial service companies. The importance of Dalal Street to India is
similar to that of wall street in the United States. Indian investors and the press
will cite the investment activity of Dalal Street and will use it as a figure of speech
to represent the Indian financial industry.
Trading on the Bombay Stock Exchange (BSE)
In 1995, the BSE switched from an open floor to
an electronic trading system.3
The Times of India. "9. What the BSE Did in 1995,
NYSE Does Today."
In 2024, electronic trading systems dominate the
financial industry overall, offering fewer errors, faster
execution, and better efficiency than
traditional open-outcry trading systems.
Securities that the BSE lists include stocks, stock
futures, stock options, index futures, index options,
and weekly options. The BSE has helped develop
India's capital markets and provides clearing,
settlement, and risk management.
The BSE's overall performance is measured by
the Sensex, a benchmark index of 30 of the BSE's
largest and most actively traded stocks covering a
broad range of sectors. Debuting in 1986, the
Sensex is India's oldest stock index. Also called the
"BSE 30," the index broadly represents the
composition of India's entire market.
Dalal Street
BSE is located on Dalal Street in
downtown Mumbai, India. In the 1850s,
stockbrokers would conduct business
under a banyan tree in front of the
Mumbai town hall. After a few decades
of various meeting locations, Dalal
Street was formally selected in 1874 as
the location for the Native Share and
Stock Brokers' Association, and the
organization would eventually become
the BSE.7
Mumbai is a financial center in India,
and Dalal Street is home to banks,
investment firms, and related financial
service companies. The importance of
Dalal Street to India is similar to that
of Wall Street in the United States.
Features of Bombay Stock Exchange (BSE)
The Bombay Stock Exchange (BSE) provides a variety of
features and services to investors, traders, and listed
firms in the Indian market. The following are a few
prominent characteristics of the Bombay Stock Exchange
(BSE):
1. Stock Trading: The Bombay Stock Exchange (BSE)
serves as a key marketplace for the exchange of equities,
namely stocks and shares, belonging to publicly listed
corporations inside India. Investors have the ability to
engage in the purchase and sale of these securities
within the specified trading hours.
2. Listing Services: Through initial public offerings
(IPOs) and follow-on public offerings (FPOs), the BSE
helps companies get listed in the stock market.
Companies can get money by selling shares to the public
and getting listed on an exchange.
3. Commodities Trading: BSE also has a place where
buyers can buy and sell derivatives of commodities like
gold, silver, and agricultural goods.
4. Regulatory Compliance: The BSE makes sure that
listed companies follow the rules set by the Securities
and Exchange Board of India (SEBI) and other important
bodies about disclosure and other rules.
5. Corporate Governance: The exchange encourages
good corporate governance and openness among
businesses that are listed, which is important for
maintaining investor trust.
Functions of Bombay Stock Exchange (BSE)
The key functions of the Bombay Stock Exchange
are as follows:
1. Price Determination: On the secondary market,
the prices of securities are determined by demand
and supply. Therefore, the BSE assists in this
process by continuously evaluating all listed
securities. Moreover, investors can readily monitor
the prices of these securities using the SENSEX
index.
2. Contributes to the Economy: BSE provides a
trading platform for various companies’ securities.
Continuous reinvestment and disinvestment are
integral to the trading procedure. This presents an
opportunity for capital formation, funds flow, and
economic growth.
3. Facilitates Liquidity: The most essential
function of the BSE is to facilitate the sale and
purchase of securities. This enables investors to
convert existing securities into cash at any time.
Therefore, investors can purchase and sell at any
time, providing them with high liquidity.
4. Transactional Safety: After verifying the
company’s position, BSE ensures that the securities
are listed. In addition, all listed companies are
required to abide by the Securities and Exchange
Board of India (SEBI) rules and regulations.
Importance of Bombay Stock
Exchange (BSE)
The Bombay Stock Exchange (BSE) is similar to a
large marketplace where people purchase and sell
“stocks” or “shares” of businesses. It is essential
because it allows businesses to develop by raising
funds from the public. It also enables ordinary people
to invest in these enterprises and potentially profit
from ownership. The success of the nation’s
enterprises is a positive indicator for everyone. In
addition, it serves as a large scoreboard for the
economy, indicating how things are moving forward.
Therefore, it is not just a platform to trade stocks; it is
an integral element of the financial system of the
country.
1. Liquidity and Investment Opportunities: The
BSE facilitates the purchase and sale of equities and
other financial instruments, providing a liquid market
for investors to exchange their investments. This
liquidity facilitates the purchase and sale of assets by
investors.
2. Economic Indicator: The performance of the
BSE is frequently viewed as a barometer of the
Indian economy as a whole. When the stock market
performs well, it may indicate economic growth and
stability.
3. Financial Inclusion: The BSE has introduced a
number of initiatives aimed at encouraging financial
inclusion, making it possible for a broader segment
of the population to invest in the stock market and
thus participate in wealth creation and economic
development.
4. Market Benchmark: BSE’s primary index, the
S&P BSE Sensex, is widely regarded as an indicator
of the Indian stock market’s performance. Investors,
analysts, and fund managers use it to evaluate
market trends and performance.
5. Corporate Governance and Transparency:
Listed companies on the BSE are subject to stringent
regulatory and reporting requirements that
encourage transparency and corporate governance.
This is essential for establishing investor confidence.
In conclusion, the Bombay Stock Exchange is an
integral part of the Indian financial ecosystem,
fostering capital formation, investment opportunities,
transparency, and economic expansion. It plays an
important part in channelling reserves into profitable
investments and operates as an indicator of the state
of the economy.
BSE in the aggregate individual membership of all the stock
exchanges was 3.15 per cent in 2001 as compared to 3.43 per
cent in 2010. It was the least at 2.86 per cent in 2002 while the
highest at 3.45 per cent in each of 2008 and 2009. In the case of
partnership membership, the share of the BSE has varied
between 10.34 per cent and 13.19 per cent during the period.
With regard to corporate membership, the BSE has formed
12.16 per cent in 2001 vis-à-vis 19.68 per cent in 2010 with
relative fluctuations. The years 2002 and 2009, with a
proportion of 11.99 per cent and 19.74 per cent, formed the
lowest and the highest sequentially. When all the three
categories of members are considered as a whole, the proportion
of the BSE was in the range of 6.81-11.39 per cent. It may be
summed up that the relative share of the BSE in the total
membership of all the stock exchanges is the least in individual
membership followed by partnership membership and corporate
membership. Further, its proportion has never crossed 20 per
cent in any one of the years of study period. Furthermore, there
is a decline in individual membership and partnership
membership in 2010 over 2001 in the BSE as well as Indian
aggregate. A converse situation prevails in both the cases.
The state-wise distribution of clients of members in the BSE
during 2010 is shown in Table 3. During 2010, there were
206.57 lakh clients to the members of the BSE spread over
different states and union territories in the country. Of them,
49.48 lakhs or 23.96 per cent are in Maharashtra followed by
Gujarat with 32.31 lakhs or 15.64 per cent. These two states
account for 40 per cent in the aggregate of clients. The share of
each of six states such as Delhi, West Bengal, Uttar Pradesh,
Tamil Nadu and Karnataka varied between 6.04 per cent and
6.61 per cent. The proportion of each of the five states like
Rajasthan, Madhya Pradesh, Haryana, Kerala and Punjab was in
the range of 2.18-4.65 per cent. The account of Jharkhand, Bihar
and Orissa was 1.31 per cent, 1.26 per cent and 1.41 per cent
respectively. The share of each of eight states was in the level of
0.11-0.69 per cent. The account of each of nine states and union
territories differed between 0.01 per cent and 0.08 per cent. The
share of all these was 0.23 per cent. The proportion of Mizoram
and Lakshadweep is negligible. It may be said that, out of the
states and union territories, there is high uneven distribution of
clients to the members of the BSE. This is on account of many
causes such as stage of economic concerned, spread in the
density of population, distribution of income among the
investing public in financial instruments, habit of development
of the region thrift and savings, availability of online facility,
perception of risk, psychology of investors, knowledge of
finance etc.
 Table 3: State-wise Distribution of Members’ Clients in BSE during 2010
(Lakh number)
State No. of clients % to total
Maharashtra 49.49 23.96
Gujarat 32.31 15.64
Delhi 13.64 6.61
West Bengal 13.35 6.46
Uttar Pradesh 13.25 6.41
Tamil Nadu 13.05 6.32
AP 12.86 6.23
Karnataka 12.47 6.04
Rajasthan 9.61 4.65
Madhya Pradesh 6.02 2.92
Haryana 5.73 2.77
Kerala 5.59 2.71
Punjab 4.51 2.18
Jharkhand 2.71 1.31
Bihar 2.60 1.26
Orissa 2.35 1.14
Chattisgarh 1.42 0.69
Uttarakhand 1.32 0.64
Assam 1.06 0.51
Chandigarh 0.79 0.38
Jammu& Kashmir 0.67 0.32
Himachal Pradesh 0.54 0.26
Goa 0.53 0.26
Pondicherry 0.22 0.11
Tripura 0.16 0.08
Dadra Nagar Haveli 0.07 0.03
Daman& Diu 0.06 0.03
Meghalaya 0.05 0.03
Sikkim 0.04 0.02
Manipur 0.02 0.01
Nagaland 0.02 0.01
Andaman Nicobar Islands 0.02 0.01
Arunachal Pradesh 0.01 0.01
Mizoram 0.00 (neg.)
Lakshadweep 0.00 (neg.)
Total 206.57 100.00
 Trade Settlement Cycle Time and Process in the BSE during 2010

Day Timings Job performed

T ( Trading 9.30 A.M to 3.30 P.M (Market Buy/sell of securities

day) timings)

T+1 by 11.00 A.M Confirmation of all trades

by 1.30 P.M Processing and downloading of
files to brokers/custodians

T+2 by 11.00 A.M Pay-in of securities and funds

by 1.30 P.M Pay-out of securities and fund
The delivery/receive order passes information about the name of the
company’s script and the quantity to be delivered /received by the
member through clearing house. The market timings on the trading
day are 9.30 AM to 3.30 PM. During this period, the securities are
bought and sold. Under T+1, all trades are confirmed by 11 AM. Files
are processed and downloaded to brokers/custodians by 1.30 PM. In the
case of T+2, pay-in of securities and funds is by 11 AM and pay-out of
securities and funds is by 1.30 PM. Settlement cycle in the BSE is
presented in:-
Advantages of Listing in the Bombay Stock Exchange

There are several benefits for companies that are

listed on the BSE:
• Capital Infusion: Companies can raise money by
issuing shares to the public through the BSE,
enabling them to extend and grow.
• Liquidity for Shareholders: Shareholders benefit
from liquidity as investors can easily buy and
sell shares on the BSE, providing flexibility in
acquiring or selling shares.
• Enhanced Profile and Reputation: Listing on the
BSE can elevate a company’s profile and
reputation, attracting new clients, collaborators,
and investors.
• Access to a Broad Investor Base: The BSE,
being a significant financial institution in India,
provides access to both domestic and foreign
investors, allowing companies to raise funds
from a wider spectrum.
• Better Valuations: Constant analysis by the
market leads to better valuations for listed
companies.
• Mergers and Acquisitions: Listed companies can
use their shares as a form of payment for
acquisitions, streamlining the process.
 • Transparency and Accountability: Listed firms
must adhere to rules set by the stock market and
regulatory bodies, ensuring transparency and
accountability to stakeholders.
Conclusion
The BSE serves as a crucial institution in the
financial landscape, providing several functions that
contribute to the efficient functioning of the Indian
capital market. Its primary functions include
facilitating the trading of equities, bonds, and other
financial instruments. As a platform for public
offerings, the BSE enables companies to raise capital
by issuing shares to the investing public. It also acts
as a barometer of market trends, reflecting the
overall health and performance of listed companies.
Additionally, the BSE plays a vital role in price
discovery and valuation of securities, ensuring
transparency and liquidity in the market. Overall, the
BSE’s multifaceted functions are integral to
fostering a dynamic and well-regulated financial
environment in India.
 The major indices in BSE?
BSE, a key player in India’s corporate sector, offers diverse
indices reflecting market health. Here are some major ones:

• SENSEX: Represents 30 top companies, serving as a market

barometer.
• SENSEX 50: Broader perspective with 50 major companies,
including SENSEX entities and 20 others.
• SENSEX Next 50: Monitors 50 emerging market leaders
following SENSEX 50.
• BSE 100: Comprehensive outlook covering the top 100
companies in BSE.
• Bharat 22 Index: Reflects government vision with 22 PSUs,
banks, and entities.
• MidCap: Evaluates mid-sized companies for growth potential
and stability.
• SmallCap: Highlights smaller companies with significant
growth potential.
• BSE 200: Expanded overview, reflecting the performance of
the top 200 companies.
• BSE 150 MidCap: Focuses on the performance of 150 mid-
tier companies.
• BSE 250 SmallCap: In-depth analysis of 250 small-cap
companies.
• BSE 250 Large & Mid Cap: Blends large-cap and mid-cap
companies, showcasing combined strength.
 FACTORS OF AFFECTING BSE
The fluctuating stock prices make equity investments risky. Risk-
averse investors usually prefer to stay away from the share market.
Whereas, the r isk-takers invest aggressively in stocks to create
wealth in the long-run. The dynamic nature of the share market
makes it an intriguing prospect to venture into. One cannot predict
the future performance of the stock market. This keeps the investor
awake with whether to invest in or not. But why does the stock
market tend to be dynamic in nature? What impacts the stock market
so much that they keep on fluctuating? This blog tends to look at
some of those factors that affect the Indian stock market. Let’s
discuss them in detail.

1. Government Policies:
Economy and business are largely affected by Government policies.
The Government has to implement new policies in regard to the
economic condition of the country. Any new change in policy can
be profitable for the economy or tighten the grip around. This
creates a possibility of the stock market being affected due to any
change or introduction of the new policy by the Government. For
instance, the increase in corporate taxes impacts the industry
severely as their profits will take a hit and at the same time the stock
price will fall.

2. Monetary Policy of RBI and Regulatory Policies of SEBI:

Reserve Bank of India (RBI) is the apex body which regulates the
monetary policy in India. RBI keeps on reviewing its monitory
policy. Any increase or decrease in Repo and Reverse Repo rates
impacts the stock prices. If RBI raises the key rates it reduces the
liquidity in the banks. This makes borrowing costlier for them and
 in turn, they increase the lending rates. Ultimately, this makes
borrowing highly expensive for the business community and may
find it difficult to service their debt obligations.
Investors see it as a barrier in the expansion of business activities
and start selling the shares of the company which reduces its stock
price. A reverse of this happens when RBI follows a dovish
monetary policy. Banks reduces the lending rates which leads to
credit expansion. Investors consider it as a positive step and stock
price starts improving.
Similarly, any changes in trading and investment policies done by
the Securities Exchange Board of India (SEBI) who keeps an eye on
the entire stock market activities impacts the performance of the
shares of the listed companies on the stock exchanges (NSE, BSE).
Nifty50 and Sensex are two major benchmark indices in India.

3. Exchange Rates:
The exchange rates of Indian Rupee keep fluctuating vis-à-vis other
currencies. When the rupee hardens in respect to other currencies it
causes Indian goods to become expensive in foreign markets,
Companies that are highly affected are the ones involved in overseas
operations. Companies dependent on exports experience a drop in
demand for their goods abroad. Thus, revenue from exports decline
and stock prices of such companies in the home country fall.
On the other hand, softening of rupee vis-à-vis other currencies
results in opposite effect, in this, the stock price of exporters rises
whereas, that of importer drops.

4. Interest Rate and Inflation:

Whenever the interest rates go up, banks raise the lending rates
 which increases the cost for corporates and individuals alike. The
rising cost will tend to create an impact on the profit levels of the
business affecting the stock prices of the company.
Inflation is a surge in the pricing of goods and services over a period
of time. High inflation discourages investment and long-term
economic growth. The listed companies in the stock market may
postpone their investment and halt production, leading to negative
economic growth. The fall in the value of money could also lead to
a fall in the value of savings. The stocks of luxurious companies
also tend to suffer as nobody will want to invest in them. This not
only adversely affects one's purchasing power but also the investing
power.

5. Foreign Institutional Investors (FIIs) and Domestic Institutional

Investors (DIIs):
FIIs and DIIs activities highly impact the stock market. As they
have a prominent role in the stocks of the company, their entry or
exit will create a huge impact on the equity market and will
influence the stock prices.
 Hypothesis

The efficient market hypothesis (EMH),

alternatively known as the efficient market
theory, is a hypothesis that states that share
prices reflect all available information and
consistent alpha generation is impossible.
According to the EMH, stocks always trade at
their fair value on exchanges, making it
impossible for investors to purchase
undervalued stocks or sell stocks for inflated
prices.1 Therefore, it should be impossible to
outperform the overall market through expert
stock selection or market timing, and the only
way an investor can obtain higher returns is by
purchasing riskier investments.
 CONCLUSION

The Bombay Stock Exchange stands as a

testament to India’s financial progress
and economic growth, with its rich
history, pivotal role in capital formation,
and commitment ot transparency and
investor protection, the BSE continues to
shape India’s financial landscape. As the
nation’s premier stock exchange, the
BSE will likely remain a cornerstone of
India’s economic development, serving
as a dynamic platform for companies,
investors, and regulators to collaborate
and thrive.
 BIBLIOGRAPHY
For successfully completing my project file. I
have taken help from the following website
links.
• www.google .com
• www.bajajfin.com
• www.wikipedia.com
For finalizing this Project.