A COMPARATIVE STUDY OF SELECT SUB INDICES OF BSE AND NSE

Dissertation synopsis submitted in partial fulfillment of the requirements for the

award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Of
BENGALURU CITY UNIVERSITY

By

SRIVALLI GUPTHA N
Register Number: MB197748

Under the guidance of

Prof. Sreevallabhan Narayanan
Assistant Professor

RV INSTITUTE OF MANAGEMENT
2020-2021
A COMPARATIVE STUDY OF SELECT SUB INDICES OF BSE AND NSE
1.INTRODUCTION:

Stock is a term used to address a monetary expert's belonging in an organization. The people who
own stock are ordinarily called financial backers or financial backers. As a financial backer, an
examiner speculatively has a degree of everything the association asserts or owes. The association's
profit, or lack in that division, chooses if its stock is traded at a consecutive expense.

While exchanging of obligation and wares has its starting points in the Middle Ages, the cutting
edge idea of a financial exchange started in the late sixteenth century.

A financial exchange record, otherwise called stock list, is a factual measure that reflects changes
occurring on the lookout. It's made by gathering a couple of comparable stocks among the
protections recorded on the trade and the determination standards could be the size of an
organization, its market capitalization or sort of industry. Change in costs of basic protections
impacts the general worth of the record. On the off chance that costs rise, the file will rise, and in
the event that they go down, so will the file.

Stock lists are needed to know the mind-set and supposition winning on the lookout. As a financial
backer, you can recognize the market's example by taking a gander at the records, and use it to
choose which stock can end up being a triumphant wagered. Aside from assisting you with
focusing in on the stock to contribute, records additionally go about as the gauge for peer
correlation. In the event that any stock has given better yields than the list has said have exceeded
it. Then again, in the event that it has given lower returns, it's said to have failed to meet
expectations.

The Indian stock market consists of certain indices:

 Benchmark lists like BSE Sensex and NSE Nifty

 Wide based lists like Nifty 50 and BSE 100
 Market capitalization-based files like BSE Midcap and BSE Smallcap
 Sectoral files like CNX IT, Nifty FMCG, Nifty Bank Index, S&P BSE Oil and Gas, so on.
 Aside from these, topical files are different sorts of lists in Indian financial exchange, which
mirror the presentation of expansive based speculation subjects.

NSE:
The National Stock Exchange (NSE) is India's leading stock exchange covering various
cities and towns across the country. NSE was set up by leading institutions to provide a
modern, fully automated screen-based trading system with national reach. The Exchange
has brought about unparalleled transparency, speed & efficiency, safety and market
 integrity. It has set up facilities that serve as a model for the securities industry in terms of
systems, practices and procedures.

SIGNIFICANCE OF NSE:

Perceivability : The exchanging framework gives unparallel degree of exchange and post –
exchange data. The best 5 purchase and sell request are shown on the exchanging
framework and the absolute number of protections accessible for purchasing and selling is
likewise shown.

Exchange speed : The speed at which the cycles orders, bring about liquidity and best
accessible costs the most elevated number of exchange a day of 1,12,60,392 was recorded
on may19th ,2009.

BSE:
Bombay Stock Exchange Limited is the most seasoned stock trade in Asia with a rich
legacy. Prevalently known as "BSE", it was set up as "The Native Share and Stock Brokers
Association" in 1875. It is the main stock trade in the nation to get lasting acknowledgment
in 1956 from the Government of India under the Securities Contracts (Regulation) Act,
1956.The Exchange's crucial and pre-prominent job in the improvement of the Indian
capital market is generally perceived and its list, SENSEX, is followed around the world.

SIGNIFICANCE OF BSE:

Legitimate oversight: Investors can plot through organizations in the event that they decide
to put resources into association recorded with BSE.

Opportune data show: Adequate data about complete income age and re venture design
must be distributed every year by all organizations recorded under the BSE

1.1 ORIGIN OF STOCK MARKET:

Stock markets were begun when nations in the new world started exchanging with one another.
While many pioneer shippers needed to begin enormous organizations, these necessary generous
measures of capital that no single shipper could raise alone. Accordingly, gatherings of financial
backers pooled their reserve funds and became colleagues and co-proprietors with singular offers in
their organizations to structure business entities. Started by the Dutch, business entities turned into
a reasonable plan of action for some striving organizations. In 1602, the Dutch East India Co. given
the first paper shares. These interchangeable medium permitted investors to advantageously
purchase, sell and exchange their stock with different investors and financial backers.

1.2 HISTORY OF STOCK EXCHANGE IN INDIA

Stock or security trading in India gets back to the eighteenth century when the East India Company
began trading advance assurances. Corporate offers started being traded the 1830s in Bombay (as of
now Mumbai) with the heap of Bank and Cotton presses. The clear and easygoing beginnings of
stock exchanges India return one to the 1850s when 22 stockbrokers began trading opposite the
Town Hall of Bombay under a banyan tree. The tree notwithstanding everything stays in the zone
which is right now known as Horniman Circle.

The scene by then moved to banyan trees at the Meadows Street convergence, which is by and by
known as Mahatma Gandhi Road, following 10 years. The move continued happening as the
amount of experts extended, finally getting comfortable 1874 at what is known as Dalal Street. This
so far easygoing social affair known as the Native Share and Stockbrokers Association figured out
themselves as the Bombay Stock Exchange (BSE) in 1875. The BSE is the most settled stock
exchange Asia and was quick to be permitted unchanging affirmation under the Securities Contract
Guideline Act, 1956.

The BSE was trailed by the Ahmedabad Stock Exchange in 1894 which zeroed in on exchanging
portions of material factories. The Calcutta Stock Exchange started activities in 1908 and started
exchanging portions of manors and jute plants. The Madras Stock Exchange followed, being set up
in 1920.

After the Harshad Mehta trick in 1992, there was a squeezing requirement for another stock trade
sufficiently enormous to contend with the BSE and carry straightforwardness to the securities
exchange. This brought forth the National Stock Exchange (NSE). It was joined in 1992, become
perceived as a stock trade in 1993, and exchanging started on it in 1994. It was the principal stock
trade on which exchanging occurred electronically. Because of this opposition, BSE likewise
presented an electronic exchanging framework known as BSE On-line Trading (BOLT) in 1995.

The BSE propelled its affectability list, the Sensex, presently known as the S&P BSE Sensex, in
1986 with 1978–79 as the base year. This is a file of 30 organizations and is a benchmark stock list,
estimating the general execution of the trade. The record arrived at the degree of 1,000 in July
1990, 2,000 in January 1992, 4,000 in March 1992, 5,000 in October 1999, and 6,000 in February
2000. The trade presented value subsidiaries in 2000. List alternatives were propelled in June 2001,
investment opportunities in July 2001, and stock prospects in November 2001. India's sans first
buoy record, BSE Teck, was propelled in July 2001.

Its rival, NSE, propelled its benchmark trade, the CNX Nifty, presently known as Nifty 50, in 1996.
It contains 50 stocks and capacities as the exhibition proportion of the trade. As far as electronic
screen-based exchanging and subsidiaries, it beat BSE by propelling first of its sort
items and administrations.

BSE and NSE are not the only stock exchanges in India. After the country gained independence, 23
stock exchanges were added not including the BSE. However, at present, there are only seven
recognized stock exchanges. Apart from the BSE and NSE, they are:

• Calcutta Stock Exchange Ltd.

• Magadh Stock Exchange Ltd.

• Metropolitan Stock Exchange of India Ltd.

• India International Exchange (India INX)

• NSE IFSC Ltd.

All other exchanges have been granted exit by SEBI

1.3 REGULATORY BODIES:

The Ministry of Finance (MoF), the Securities & Exchange Board of India (SEBI) and the
Reserve Bank of India (RBI) are the three regulatory authorities governing Indian capital
market.

a) Ministry of Finance (MoF)

The Department of Economic affairs directly manages the Capital Markets segment under the
directions of MoF. This segment formulates the rules for the efficient growth of the Stock
Market which includes derivatives, debt, and equity. It also formulates regulations for
safeguarding the interest of the investors.
This segment regulates the Indian Capital Markets through the following laws:

• Depositories Act, 1996

• Securities Contract (Regulation) Act, 1956

• Securities and Exchange Board of India Act, 1992

 Reserve Bank of India (RBI)

The Reserve Bank of India Act, 1934 administers strategies outlined by the Reserve Bank of
India.
The elements of RBI in such manner are as per the following:
Execution of Monetary and Credit approaches
Issuance of Currency Notes
Government's Banker
Banking System Regulator
Unfamiliar Exchange through Foreign Exchange Management Act, 1999
Overseeing instalment and settlement framework

Aside from the above capacities, RBI is additionally effectively associated with fostering the
monetary market.

Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) Act, 1992 manages the working of SEBI.
SEBI is the summit body overseeing the Indian stock trades.

The essential elements of SEBI are as per the following:

Defensive Functions:

I. It checks Price fixing

II. Disallows insider exchanging
III. disallows false and Unfair Trade Practices

Advancement Functions:

I. SEBI advances preparing of mediators of the protections market.

II. SEBI attempts to advance exercises of stock trade by embracing an adaptable and versatile
approach.

Regulatory Functions :

I. SEBI has outlined guidelines and guidelines and a set of accepted rules to manage the delegates
such as dealer financiers, agents, guarantors, and so on

II. These go-betweens have been brought under the administrative domain and private position has
been made more prohibitive.
III. SEBI enlists and manages the working of stock specialists, sub-intermediaries, share-move
specialists, trustees, vendor brokers and every one of the individuals who are related with stock
trade in any way

IV. SEBI enrols and controls the working of common assets and so on

V. SEBI directs takeover of the organizations

VI. SEBI conducts requests and review of stock trades.

The interest in the Indian Stock Market of both the homegrown or unfamiliar monetary delegates
are governed by the guidelines outlined by SEBI. Also, Foreign Portfolio ,Financial backers (FPIs)
can take part in Indian Stock Market in the wake of enlisting them with an approved Storehouse
Participant.

1.4: Importance of the Topic:

 This topic is relevant in today’s time because of the Geo Political and other agreements
between the economies which in turn leads to interdependence of the stock markets.
 This study helps to analyse the cause and effect relationship the global stock market has on
the Indian stock market.
 This research will help the day traders to be prepared for the day’s trading position as these
might be one of the reasons for the directional swing of the market.
 This study aims at helping Indian investors to plan their investments accordingly.
 The highlight and importance of the study is that we also aim to identify by how much is
the affect in terms of percentage.

2.LITERATURE REVIEW:

• Ekta Arora (2012) tried to examine the performance of NSE and BSE in India and
suggestions to improve their performance. The objective of the study was to compare the
services being provided by depositories, to analyze the financial performance of NSE and
BSE, to offer suggestions for improving performance of NSE and BSE in India. The data
 was collected from the website of NSE and India Infoline. Data for the study was collected
from secondary sources like newspapers, books, journals etc. Sample was selected through
convenient sampling method. Simple size was 100 companies from NSE indices and S&P
CNX Nifty index was selected.

• Dr. Girbal Singh Lodhi and Dr. Kaustubh Jain conducted a comparative study of Bombay
Stock Exchange and National Stock Exchange during 2001-2013. The research
methodology of the selected topic follows in these dimensions: articles, reports and surveys
published on Capital Markets, BSE and NSE etc. The broader objectives of the study are:
To make comparative analysis of financial performances of Bombay Stock Exchange and
National Stock Exchange over the period of time, To make comparative analysis of
profitability of Bombay Stock Exchange and National Stock Exchange over the period of
time.

• Bansi Rajikant Shah (2012) conducted a research to compare these two most prominent
stock exchanges of India that which one beats the other. The major objective of the study
was to make comparative analysis of financial performances of Bombay Stock Exchange
and National Stock Exchange over the period of time & to make comparative analysis of
profitability of Bombay Stock Exchange and National Stock Exchange over the period of
time. The study was done in empirical nature. As the statistical tools have been used to
analyze the financial data it was also a quantitative study. In this study all the Indian stock
exchanges were the census. This study was based on secondary data, referred the books,
newspapers, journals, articles, reports and surveys published on capital markets. In this
study it was concluded that the financial position of BSE and NSE from 2000-’01 to
2009-’10 was quite satisfactory.

• Nitin Sethi & Sonia Gupta conducted the study with the objective of to measure the nature
of correlation of Nifty and Sensex. This research paper was an attempt to consider the
moving trend of Nifty and Sensex are correlated or not. The research design of the paper
was causal in nature. Data was collected from different journals, magazines, and internet
sites. Though the number of study conducted in the area was limited. The nature of data
collection was secondary in nature. Data was analyzed through Karl Pearson’s Correlation
Coefficient Method. In order to find out the correlation of Nifty and Sensex, data collected
was summarize averagely. Data collected was monitored on daily basis for twenty-four
months. Nifty and Sensex were taken into consideration and their day-to-day data was
collected and averaged for twenty-four months. The data analysis proves that there was
positive correlation between Nifty & Sensex. In the data analysis, the result found that both
Nifty and Sensex are moving on same direction either on bullish trend or in bearish trend. It
shows that there was positive relation between Nifty and Sensex movement
3.NEED OF THE STUDY:

The efficiency of stock markets has a direct influence on the investors in the market and hence it is
of great importance to these investors to analyse which indices of the stock market are of great
use .BSE and NSE are considered to be the benchmark market of Indian stock market. Therefore,
both the markets are of utmost importance to all the stakeholders. The present study attempts to
compare the two major markets of Indian Stock market.

4.STATEMENT OF THE PROBLEM:

Capital markets is an institution that facilitates the growth of the economic development in India. A
lot of investors find it difficult to understand the performance of the indices and their efficiency and
also find it hard to analyse where to invest their hard earned money and the fear of investing has
increased post pandemic days due to fluctuations in the market , this study focuses to understand
the comparison between nse and bse under select indices and also understand the performance of
these markets in the pandemic era and how to overcome this stage , emphasis is given to the future
outlook of sub indices such as sensex and nifty.

5.OBJECTIVES OF THE STUDY:

• To make a comparative study between NSE and BSE.

• To analyse the situation of stock markets and the fluctuation caused by the pandemic.
• To offer a better view of booth markets by performing a comparison between them in
different parameters

6.RESEARCH METHODOLOGY

In the present study, an attempt has been made to analyse the performance of NSE and BSE in
India by comparing the different variables like no. of company listed, market capitalization,
turnover, price earning ration, dividend yield, daily price movement, etc. The basic objective
behind the study is to develop comparative study between two major stock exchanges in India and
understand the relationship between them. It also serves the purpose to help the investor to
understand about the functioning of BSE and NSE.

• TYPE OF RESEARCH:
Comparative analysis has been used to conduct this study. Comparative analysis uses the annual
financial statements of the companies, compare with the help of a few calculations and help to
analyze the information in this study.

• SOURCES OF DATA SECONDARY DATA:

The secondary data is gathered from the published annual reports of company’s websites, journals
etc

7.PLAN OF ANALYSIS:

The plan of analysis is to compare the select indices of BSE and NSE which be done
by using fundamental analysis and trend analysis .

The study is conducted for a period of one-year i.e. 2020 march – 2021 march
leading to focus on the performance of sub indices during the pandemic and also
involves identifying the events that triggered reversals in the stock market. It focuses
on studying the major fluctuations caused in the market under this period as well as
focusing on the future forecast .

8.LIMITATIONS:

• The analysis is been done by using the secondary data from the internet.

• Time constraint was there for the complete study on the topic.
• I had to rely on the data available, do not know the fairness of the information.

9. CHAPTER SCHEME:

CHAPTER 1: INTRODUCTION

Introduction includes about the industry profile, theoretical background of the study, importance of
the topic, need to study the topic.
CHAPTER 2: REVIEW OF LITERATURE AND RESEARCH DESIGN

This includes the topics like review of literature and gaps, statement of the problem, scope of the
study, objectives of the study, and tools for data collection, data analysis, limitations of study.

CHAPTER 3: PROFILE OF THE SELECTED ORGANIZATION AND

RESPONDENTS

Introduction to the company, history of the company, key players in the industry, vision, mission
and objectives.

CHAPTER 4: DATA ANALYSIS AND INTERPRETATION

Data analysis and interpretation is done once the required information is collected.

CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSIONS AND

SUGGESTIONS

It includes the complete details of the whole study and the overall picture of the study in the
form of conclusions , findings and suggestions.

REFERENCES:

www.bseindia.com

www.nseindia.com

Dr. Girbal Singh Lodhi, Dr. Kausutubh Jain. A Comparative Study of BSE and NSE

Nitin Sethi, Dr. Sonia Gupta, Comparative Study of Moving Trend of Nifty & Sensex, Pezzottaite
Journals. 2015