Introduction:

The stock market refers to the collection of markets and exchanges where
regular activities of buying, selling, and issuance of shares of publicly-held
companies take place. Such financial activities are conducted through
institutionalized formal exchanges or over-the- counter (OTC) marketplaces
which operate under a defined set of regulations. There can be multiple stock
trading venues in a country or a region which allow transactions in stocks and
other forms of securities. The stock market or equity market and is primarily
known for trading stocks/equities, other financial securities - like exchange
traded funds (ETF), corporate bonds and derivatives based on stocks,
commodities, currencies, and bonds - are also traded in the stock markets.
While both terms - stock market and stock exchange - are used
interchangeably, the latter term is generally a subset of the former. If one says
that she trades in the stock market, it means that she buys and sells
shares/equities on one (or more) of the stock exchange(s) that are part of the
overall stock market. The leading stock exchanges in the U.S. include the
New York Stock Exchange (NYSE), Nasdaq, and the Chicago Board Options
Exchange (CBOE). These leading national exchanges, along with several
other exchanges operating in the country, form the stock market of the U.S.

Stock market is a place where people buy/sell shares of publicly listed

companies. It offers a platform to facilitate seamless exchange of shares. 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. However, it is important to note that a person can
trade in the stock market only through a registered intermediary known as a stock
broker. The buying and selling of shares take place through electronic medium. We
will discuss more about the stock brokers at a later point.

There are two main stock exchanges in India where majority of the trades take place -
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Apart from
these two exchanges, there are some other regional stock exchanges like Bangalore
Stock Exchange, Madras Stock Exchange etc but these exchanges do not play a
meaningful role anymore.

National Stock Exchange (NSE)

NSE is the leading stock exchange in India where one can buy/sell shares of publicly
listed companies. It was established in the year 1992 and is located in Mumbai. NSE
has a flagship index named as NIFTY50. The index comprises of the top 50
companies based on its trading volume and market capitalisation. This index is widely
used by investors in India as well as globally as the barometer of the Indian capital oil
markets.

Bombay Stock Exchange (BSE)

BSE is Asia’s first as well as the oldest stock exchange in India. It was established in
1875 and is located in Mumbai. It has a total of ~5,295 companies listed out of which
~3,972 are available for trading as on August 21, 2017. BSE Sensex is the flagship
index of BSE. It measures the performance of the 30 largest, most liquid and
financially stable companies across key sectors.

Historically, stock trades likely took place in a physical marketplace. With the invent
of new technologies and due to the covid-19 pandemic, the stock market works
electronically, through the internet and online stockbrokers. Each trade happens on a
stock-by-stock basis, but overall stock prices often move in tandem because of news,
political events, economic reports and other factors.
OBJECTIVES:

1. To study about the emerging stock markets in india such as NSE and BSE.
2. To study about the year effect of the Indian stock market (BSE and NSE)
from 2000 to 2020.
3. To examine the market capitalisation of Indian stock market (NSE and
BSE) from 2000 to 2020.
4. To examine the trend of risk and return of Indian stock market (NSE and
BSE) from 2000 to 2020.
5. To study about the type of trading preferred by the investors in stock market.

STOCK MARKET AN OVER VIEW

2.1 STOCK MARKET

A stock market, equity market, or share market is the aggregation of buyers and
sellers of stocks (also called shares), which represent ownership claims on businesses;
these may include securities listed on a public stock exchange, as well as stock that is
only traded privately, such as shares of private companies which are sold to investors
through equity crowdfunding platforms. Investment in the stock market is
most often done via stockbrokerages and electronic trading platforms. Investment
is usually made with an investment strategy in mind.
Stocks can be categorized by the country where the company is domiciled. For
example, Nestlé and Novartis are domiciled in Switzerland and traded on the SIX
Swiss Exchange, so they may be considered as part of the Swiss stock market,
although the stocks may also be traded on exchanges in other countries, for example,
as American depositary receipts (ADRs) on U.S. stock markets.

2.2 HOW THE STOCK MARKET WORKS

stock markets provide a secure and regulated environment where market participants
can transact in shares and other eligible financial instruments with confidence with
zero- to low-operational risk. Operating under the defined rules as stated by the
regulator, the stock markets act as primary market and as secondary markets.

As a primary market, the stock market allows companies to issue and sell their shares
to the common public for the first time through the process of initial public offerings
(IPO). This activity helps companies raise necessary capital from investors. It
essentially means that a company divides itself into a number of shares (say, 20
million shares) and sells a part of those shares (say, 5 million shares) to common
public at a price (say, $10 per share).

To facilitate this process, a company needs a marketplace where these shares can be
sold. This marketplace is provided by the stock market. If everything goes as per the
plans, the company will successfully sell the 5 million shares at a price of $10 per
share and collect
$50 million worth of funds. Investors will get the company shares which they can
expect to hold for their preferred duration, in anticipation of rising in share price and
any potential income in the form of dividend payments. The stock exchange acts as a
facilitator for this capital raising process and receives a fee for its services from the
company and its financial partners.

Following the first-time share issuance IPO exercise called the listing process, the
stock exchange also serves as the trading platform that facilitates regular buying and
selling of the listed shares. This constitutes the secondary market. The stock exchange
earns a fee for every trade that occurs on its platform during the secondary market
activity.
The stock exchange shoulders the responsibility of ensuring price
transparency, liquidity, price discovery and fair dealings in such trading activities. As
almost all major stock markets across the globe now operate electronically, the
exchange maintains trading systems that efficiently manage the buy and sell orders
from various market participants. They perform the price matching function to
facilitate trade execution at a price fair to both buyers and sellers.

A listed company may also offer new, additional shares through other offerings at a
later stage, like through rights issue or through follow-on offers. They
may even buyback or delist their shares. The stock exchange facilitates such
transactions.

The stock exchange often creates and maintains various market-level and sector-
specific indicators, like the S&P 500 index or Nasal 100 index, which provide a
measure to track the movement of the overall market. Other methods include the
Stochastic Oscillator and Stochastic Momentum Index.

The stock exchanges also maintain all company news, announcements, and financial
reporting, which can be usually accessed on their official websites. A stock exchange
also supports various other corporate-level, transaction-related activities. For instance,
profitable companies may reward investors by paying dividends which usually comes
from a part of the company’s earnings. The exchange maintains all such information
and may support its processing to a certain extent. (For related reading, see "How
Does the Stock Market Work?")

2.3 FUNCTIONS OF A STOCK MARKET

A stock market primarily serves the following functions:

Fair Dealing in Securities Transactions: Depending on the standard rules of demand

and supply, the stock exchange needs to ensure that all interested market participants
have instant access to data for all buy and sell orders thereby helping in the fair and
transparent pricing of securities. Additionally, it should also perform efficient
matching of appropriate buy and sell orders.

2
For example, there may be three buyers who have placed orders for buying Microsoft
shares at $100, $105 and $110, and there may be four sellers who are willing to sell
Microsoft shares at $110, $112, $115 and $120. The exchange (through their
computer operated automated trading systems) needs to ensure that the best buy and
best sell are matched, which in this case is at $110 for the given quantity of trade.

Efficient Price Discovery: Stock markets need to support an efficient mechanism for
price discovery, which refers to the act of deciding the proper price of a security and is
usually performed by assessing market supply and demand and other factors
associated with the transactions.

Say, a U.S.-based software company is trading at a price of $100 and has a market
capitalization of $5 billion. A news item comes in that the EU regulator has imposed a
fine of $2 billion on the company which essentially means that 40 percent of the
company’s value may be wiped out. While the stock market may have imposed a
trading price range of $90 and $110 on the company’s share price, it should efficiently
change the permissible trading price limit to accommodate for the possible changes in
the share price, else shareholders may struggle to trade at a fair price.

Liquidity Maintenance: While getting the number of buyers and sellers for a
particular financial security are out of control for the stock market, it needs to ensure
that whosoever is qualified and willing to trade gets instant access to place orders
which should get executed at the fair price.

Security and Validity of Transactions: While more participants are important for
efficient working of a market, the same market needs to ensure that all participants are
verified and remain compliant with the necessary rules and regulations, leaving no
room for default by any of the parties. Additionally, it should ensure that all associated
entities operating in the market must also adhere to the rules, and work within the
legal framework given by the regulator.
Support All Eligible Types of Participants: A marketplace is made by a variety of
participants, which include market makers, investors, traders, speculators, and
hedgers. All these participants operate in the stock market with different roles and
functions. For instance, an investor may buy stocks and hold them for long-term
spanning many years, while a trader may enter and exit a position within seconds. A
market maker provides necessary liquidity in the market, while a hedger may like to
trade in derivatives for mitigating the risk involved in investments. The stock market
should ensure that all such participants are able to operate seamlessly fulfilling their
desired roles to ensure the market continues to operate efficiently.

Investor Protection: Along with wealthy and institutional investors, a very large
number of small investors are also served by the stock market for their small number
of investments. These investors may have limited financial knowledge, and may not
be fully aware of the pitfalls of investing in stocks and other listed instruments. The
stock exchange must implement necessary measures to offer the necessary protection
to such investors to shield them from financial loss and ensure customer trust.

For instance, a stock exchange may categorize stocks in various segments depending
on their risk profiles and allow limited or no trading by common investors in high-risk
stocks. Exchanges often impose restrictions to prevent individuals with limited
income and knowledge from getting into risky bets of derivatives.

Balanced Regulation: Listed companies are largely regulated and their dealings are
monitored by market regulators, like the Securities and Exchange Commission (SEC)
of the U.S. Additionally, exchanges also mandate certain requirements – like, timely
filing of quarterly financial reports and instant reporting of any relevant developments
- to ensure all market participants become aware of corporate happenings. Failure to
adhere to the regulations can lead to suspension of trading by the exchanges and other
disciplinary measures.
Regulating the Stock Market
A local financial regulator or competent monetary authority or institute is assigned the
task of regulating the stock market of a country. The Securities and Exchange
Commission (SEC) is the regulatory body charged with overseeing the U.S. stock
markets. The SEC is a federal agency that works independently of the government and
political pressure. The mission of the SEC is stated as: "to protect investors, maintain
fair, orderly, and efficient markets, and facilitate capital formation." 1

2.4 STOCK MARKET PARTICIPANTS

Along with long-term investors and short-term traders, there are many different types
of players associated with the stock market. Each has a unique role, but many of the
roles are intertwined and depend on each other to make the market run effectively.

● Stockbrokers, also known as registered representatives in the U.S., are the

licensed professionals who buy and sell securities on behalf of investors. The
brokers act as intermediaries between the stock exchanges and the investors by
buying and selling stocks on the investors' behalf. An account with a retail
broker is needed to gain access to the markets.
● Portfolio managers are professionals who invest portfolios, or collections of
securities, for clients. These managers get recommendations from analysts and
make the buy or sell decisions for the portfolio. Mutual fund companies, hedge
funds, and pension plans use portfolio managers to make decisions and set the
investment strategies for the money they hold.
● Investment bankers represent companies in various capacities, such as private
companies that want to go public via an IPO or companies that are involved in
pending mergers and acquisitions. They take care of the listing process in
compliance with the regulatory requirements of the stock market.

2.5 TYPES OF STOCK MARKET

1. Classification based on stock classes

There are some stocks that do not give the shareholders the power to vote at the
annual meetings where the decisions regarding the management of the company and
such issues take place. Unlike these stocks, there are some other stocks that allow
shareholders to participate in the decision making in the company matters, by casting
their votes. Another kind of stocks offer shareholders the opportunity to cast multiple
votes in matters pertaining to different aspects of the company.

2. Classification based on market capitalization

Stocks can be classified on the basis of the market capitalization of the company,
which is the total shareholding of a company. This is calculated by multiplying the
current price of the company stock with the total number of shares outstanding in the
market. Listed below are the types of stocks based on market capitalization.

i. Large Cap Stocks

These are often stocking of Blue-chip companies which are established enterprises
with large reserves of cash at their disposal. It is interesting to note that the larger size
of the large cap companies does not mean that they grow more rapidly. In fact, it is the
small stock companies that tend to outperform them over the longer time frame. But
large cap stocks do come with the benefit of allowing the investors to reap higher
dividends in comparison to the smaller and mid cap companies’ stocks, ensuring that
the capital is preserved over the long-term period.

ii. Mid Cap Stocks

These are the stocks of medium sized companies that have a market capitalization of
INR 250 Crore to about INR 4000 crore. These companies have a well recognize
name in the market which brings along the benefit of potential for growth, as well as
the stability that is usually accompanied with being a seasoned player in the market.
Mid cap companies have a good track record of steady growth and are very similar to
blue chip stocks barring their size. In the long term these stocks do and grow well.
iii. Small Cap Stocks

As is suggestive of the name, small cap stocks have the smallest value in the market as
compared to its counterparts. These are small sized companies that have a market
capitalization of up to INR 250 and have the potential to grow at a good pace in the
future. Investors who are willing to commit to a long term and are not very particular
about the current dividends, and are willing to stand their ground during price
volatility, can make significant gains in the future. As an investor you can buy these
stocks when they are available at a cheap price during the initial stage of the company.
There is no surety about the how the company will perform in the market since they
are relatively new. Because these small cap companies are new, they are highly
volatile and their growth impacts the value and revenue of the company to a huge
extent.

3. Classification based on ownership

Based on wonder ship, there are three types of stocks that investors can own which
offer them different rights and growth potential.

i. Preferred & common stocks

Preferred stocks offer investors a fixed amount of dividend every year unlike common
stocks. The price of preferred stocks is not as volatile as a common stock but it is
common stock that gets the benefit of priority when the company has surplus money
to distribute. At the time of company liquidation, it is the company’s creditors, its
bond holders, debenture holders who get priority over the preferred shareholders.
Common stockholders have voting rights, a privilege preferred shareholder do not
enjoy.

ii. Hybrid Stocks

There are companies that offer preferred shares with the option of converting them to
common shares, with conditions, at a certain point in time. These are known as hybrid
stocks or convertible preferred shares and may or may not have voting rights.
iii. Stocks with embedded derivative options

Stocks that come with the embedded derivative option means that they can be
‘callable’ or ‘potable’ and are not as commonly available. A ‘callable’ stock has the
option of being bought back by the company for a certain price at a certain point in
time. Similarly, a ‘potable’ stock offers its holder to sell it to the company at a certain
price and time.

4. Classification based on dividend payment

I. Growth Stocks

These stocks do not pay high dividends as the company prefers to reinvest the
earnings to enable it to grow faster, hence, the name growth stocks. The value of the
shares of the company rises with the fast growth rate which in turn allows investors to
profit through higher returns. It is best suited for those investors who seek long term
growth potential and not an immediate second source of income. Growth stocks carry
higher risk than their counterpart.

ii. Income Stocks

In comparison to growth stocks, income stocks hand out a higher dividend in relation
to the price of the share. Higher dividends translate to higher income; hence, the name
Income Stocks. Income stocks are indicative of a stable company that can afford
consistent dividends but these are also companies that do not promise very high
growth. This means that the stock price of such companies may not rise much. Income
stocks also includes preferred stocks. IT is a good investment for those investors who
seek a secondary source of income through relatively low risk stocks. The dividend
income in income stocks is not taxed and thus is great for investors of low risk profile
who want long term investment. You may want to use the dividend yield measure to
find such stocks that offer high dividends.
5. Classification based on fundamentals

Investors who believe that a share price must equal the intrinsic value of the
company’s share, the value investing investors, compare the share prices with
components like per share earnings, profits etc. to reach at an intrinsic value per share.

I. Overvalued Shares

These are shares with prices that exceed the intrinsic value and are considered overvalued.

ii. Undervalued Shares

These types of shares are popular amongst the value investors as they believe that the
price of the share would rise in the future.

6. Classification based on Risk

The risk level of stocks differs depending on the share price fluctuations. Stocks with
higher risk reward the investor with higher returns, while low risk stocks generate low
returns.

I. Beta Stocks

The beta or the measure of risk is derived by calculating the price volatility of the
stock. Beta can be positive or negative which denotes whether it moves in sync with
the market or against it. The higher the beta, higher is the risk quotient of the stock. If
the beta value is more than 1 it means that the stock is more volatile than the market.
A lot of investors with knowledge of this measure use it to make their investment
decisions.

ii. Blue Chip Stocks

Blue chip stocks are stocks of those companies that have lower liabilities and stable
earnings and which pay regular dividends. These very large and well-recognised
companies that have a long history of sound financial performance are a good bet for
Investors who seek safer avenues of investment.
7. Classification based on price trends

This classification is based on the movement of stock prices in tandem with or against
the company earnings.

I. Defensive Stocks

These are stocks that are somewhat unfazed by economic conditions and are preferred
when the market conditions are poor. Food and beverage companies are a common
example.

ii. Cyclical Stocks

Stocks of companies that are greatly affected by economic conditions and see high
price fluctuations with market changes are cyclical stocks. These types of stocks grow
rapidly during the boom cycle but the growth is slowed down in the slow economy.
Automobile stocks fall in this category.

2.6 OVERVIEW OF STOCK MARKET

2.6.1 STOCK MARKET AT GLOBAL LEVEL

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.

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 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
centre of Belgium and it was home to the influential Van der Buerse family. As a
result, early stock markets were typically called Beursen.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 were similar, although the actual properties being
traded were different.

The top 10 biggest stock exchanges in the world.

1) New York Stock Exchange

The New York Stock Exchange (NYSE) is additionally referred to as ‘The Big
Board’. The NYSE is the first on the list of the largest stock exchanges in the world
and is a highly esteemed stock exchange in the USA. The NYSE has remained the
largest stock exchange in the world by market capitalisation ever since the end of
World War. It is located at 11, Wall Street, Lower Manhattan, New York City. It
consists of 2,400 listed companies which span sectors such as finance, healthcare,
consumer goods and energy. The blue-chip companies which are listed under NYSE
are Berkshire Hathaway Inc, Coca-Cola, Walt Disney Company, Mc Donald’s
Corporation, etc. Date of establishment: May 17, 1792. Valuation: $19.3 Trillion

2) NASDAQ
Second on the list of the largest stock exchange in the world is NASDAQ, an
abbreviation of National Association of Securities Dealers Automated Quotations.
Nasdaq, an American stock exchange is headquartered at 151 W, 42nd Street, New
York City. Nasdaq never operated on a usual open outcry system, instead, it has
always used a computer and telephone-based system of trading, which has made the
NASDAQ the world’s first electronically traded stock market. The enlistment of the
world’s humongous tech giants such as Apple, Microsoft, Google, Facebook,
Amazon, Tesla, and Intel make NASDAQ ‘The Mecca of Technology Companies’.
Date of establishment: February 4, 1971. Valuation: $13.8 Trillion

3) Tokyo Stock Exchange

The Tokyo Stock Exchange (TSE) which is also known as TYO and Tōshō is located
in Tokyo, Japan. It is listed as the third-largest stock exchange in the world. TSE has
around 3,575 listed companies which has taken its market capitalization to a
whooping US$ 5.67 trillion. The TSE’s benchmark index is Nikkei 225 and it is home
to Japanese giants with international exposure, including Toyota, Suzuki, Honda, and
Mitsubishi and Sony. Date of establishment: January 1, 2003. Valuation: $5.7 Trillion

4) Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) is a Chinese stock exchange situated in the city
of Shanghai, China. It is one of the three stock exchanges plying autonomously in the
People’s Republic of China. Date of establishment: November 26, 1990. Valuation:
$4.9 Trillion

5) Hong Kong Stock Exchange

The Hong Kong Stock Exchange (SEHK) is located in Hong Kong and is the world’s
fifth-largest and Asia’s third-largest stock exchange on the basis of market
capitalization. It is one of the three stock exchanges in China. SEHK consists of 2,315
listed companies with a wholesome market capitalization of HK$29.9 trillion. It is
reported as the fastest-growing stock exchange in Asia. Date of establishment:
February 3, 1891. Valuation: $4.4 Trillion

6) EURONEXT
EURONEXT stands for European New Exchange Technology. With it’s registered
office in Amsterdam and corporate address at La Défense in Greater Paris,
EURONEXT was established in 2000 to represent Europe’s economy which is also
the reason why it operates in euros. It is the sixth-largest stock exchange in the world
with a market capitalization worth €4.1 trillion. Date of establishment: September 22,
2000. Valuation: $3.9 Trillion.

7) Shenzen Stock Exchange

The Shenzhen Stock Exchange (SZSE) is one of the three independently working
stock exchanges in China. Although it was founded in 1987, it wasn’t established until
1990. It is the 7th largest stock exchange in the world and has approximately 1,300
listed companies with a combined market capitalization of $3.92 trillion. Date of
establishment: December 1, 1990. Valuation: $3.5 Trillion

8) London Stock Exchange

The London stock exchange (LSE) is based in London and is the sixth-largest stock
market within the world. It was established in 1571 and is the oldest stock exchange in
the world. It has more than 3,000 listed companies with a combined market
capitalization of $4.59 trillion. Date of establishment: January 23, 1571. Valuation:
$3.2 Trillion

9) Toronto Stock Exchange

The Toronto Stock Exchange (TSX) is situated in Toronto, Canada. It was introduced
in 1852 and is held and wielded as a subsidiary of the TMX Group. Enlistment of
2,207 companies with a combined market capitalization of $2.3 trillion. Date of
establishment: October 25, 1861. Valuation: $2.1 Trillion

3.1 EMERGING STOCK MARKETS IN INDIA

3.1.1 NSE EMERGE

NSE EMERGE is NSE’s new initiative for Small and medium-sized enterprises
(SME) & Start-up companies in India. These companies can get listed on NSE without
an Initial public offering (IPO). This platform will help SME’s & Start-ups connect
with investors and help them with the raising of funds. On 8 July 2015, Sucheta Dalal
wrote an article on Money life alleging that some NSE employees were leaking
sensitive data related to high- frequency trading or co-location servers to a select set of
market participants so that they could trade faster than their competitors. NSE alleged
defamation in the article by Money life. On 22 July 2015, NSE filed a ₹1 billion
(US$14 million) suit against Money life. However, on 9 September 2015, the Bombay
High Court dismissed the case and fined NSE
₹5 million (US$70,000) in this defamation case against Money life (The High Court
asked NSE to pay ₹150,000 (US$2,100) to each journalist Debashis Basu and Sucheta
Dalal and the remaining ₹4.7 million (US$66,000) to two hospitals.

The Bombay High Court has stayed the order on costs for a period of two weeks,
pending the hearing of the appeal filed by NSE. In May 2019 SEBI has debarred NSE
from accessing the markets for a period of 6 months. While NSE confirmed this will
not impact their functioning, they won’t be able to list their IPO or introduce any new
trading products for that period. Additionally, the watchdog also ordered NSE to
disgorge Rs 624.9 crores (along with accrued interest for the period), an amount
equivalent to the profits it made from the unfair trade practice of co-location servers
they provided during the period from 2010–11 to 2013–14. The board also passed
orders against 16 individuals including former managing directors and CEOs Ravi
Narain and Chitra Ramakrishna ordering them to disgorge 25% of their salaries during
that period along with interest. All money is to be
paid into the Investor protection and education fund. These individuals have also been
debarred from the markets or holding any position in a listed company for a period of
five years. Crash of 1991After economic liberalisation in India in 1991, the stock
market saw a number of cycles of booms and busts, some related to scams such as
those engineered by players such as Harshad Mehta and Ketan Parekh, some due to
global events and a few due to circular trading, rigging of prices and the irrational
exuberance of investors leading to bubbles that finally burst.

Crashes of 2020

On 1 February 2020, as the FY 2020-21 Union budget was presented in the lower
house of the Indian parliament, Nifty fell by over 3% (373.95 points) while Sensex
fell by more than 2% (987.96 points). The fall was also weighed by the global
breakdown amid coronavirus pandemic cantered in China. On 28 February 2020,
Sensex lost 1448 points and Nifty fell by 432 points due to growing global tension
caused by coronavirus, which W.H.O said has a pandemic potential. Both BSE and
NSE fell for the entire five days of the week ending with the worst weekly fall since
2009.

On March 4 and 6, markets fell by around 1000 points and several crores of wealth
was wiped out. On 6 March 2020, Yes Bank was taken over by RBI under its
management for reconstruction and will be merged with SBI. This was done to ensure
smooth functioning of the bank as it was struggling for couple of years to cope up
with heavy pressure due to cleaning of bad loans. On 9 March 2020, the Sensex fell by
1,941.67 points, while Nifty- 50 broke down by 538 points. The fear of COVID-19
outbreak has created havoc all over the globe and India is no exception. Further, the
recent Yes, Bank crisis also made the markets fell. The markets ended in red with
Sensex closing on 35,634.95 and Nifty-50 on 10,451.45.

On 12 March 2020, the Sensex fell by 2919.26 points (-8.18%), the worst continuation
of the week in the history while Nifty-50 broke down by 868.25 points (-8.30%) amid
World Health Organisation (WHO) declaring Coronavirus outbreak as “pandemic”.
Sensex ended to 33-month low of 32778.14.On 16 March 2020, Sensex plunged by
2,713.41 points (around 8%), the second worst fall in its history. On the other hand,
Nifty ended below
9200–mark at 9,197.40 due to global economic recession. However, the Sensex
continued to fall straight for 4–continuous days till 19 March 2020, losing 5815 points
during the period. On 23 March 2020, Sensex lost 3,934.72 points (13.15%) and Nifty
plunges 1,135 points (12.98%) at 7610.25 as coronavirus-led lockdowns across the
world triggered fears of a recession. These are now the lowest levels since 2016. It’s
witnessing the biggest weekly loss since October 2008, as the increasing number of
coronavirus cases in India as well as globally.

3.1.2 BOMBAY STOCK EXCHANGE (BSE)

BSE Limited, formerly known as the Bombay Stock Exchange is an Indian

government owned stock exchange located on Dalal Street in Mumbai. Established in
1875, it is Asia's oldest stock exchange. The BSE is the world's 7th largest stock
exchange with an overall market capitalization of more than US$2.8 trillion on as of
February 2021. While Bombay Stock Exchange Limited is now synonymous with
Dalal Street, it was not always so. In the 1850s, five stock brokers gathered together
under Banyan tree in front of Mumbai Town Hall, where Horniman Circle is now
situated. A decade later, the brokers moved their location to another leafy setting, this
time under banyan trees at the junction of Meadows Street and what was then called
Esplanade Road, now Mahatma Gandhi Road. With a rapid increase in the number of
brokers, they had to shift places repeatedly. At last, in 1874, the brokers found a
permanent location, the one that they could call their own. The brokers group became
an official organization known as "The Native Share & Stock Brokers Association" in
1875. The Bombay Stock Exchange continued to operate out of a building near the
Town Hall until 1928. The present site near Horniman Circle was acquired by the
exchange in 1928, and a building was constructed and occupied in 1930. The street on
which the site is located came to be called Dalal Street in Hindi (meaning "Broker
Street") due to the location of the exchange.

On 31 August 1957, the BSE became the first stock exchange to be recognized by the
Indian Government under the Securities Contracts Regulation Act. Construction of the
present building, the Phiroze Jeejeebhoy Towers at Dalal Street, Fort area, began in
the late 1970s and was completed and occupied by the BSE in 1980. Initially named
the BSE
Towers, the name of the building was changed soon after occupation, in memory of
Sir Phiroze Jamshedji Jeejeebhoy, chairman of the BSE since 1966, following his
death.

BSE established India INX on 30 December 2016. India INX is the first international
exchange of India. Mr. Ashish Kumar Chauhan. Shri Ashish Kumar Chauhan is the
MD & CEO of BSE (Bombay Stock Exchange), the first stock exchange of Asia. He
is one of the founders of India's National Stock Exchange ("NSE") where he worked
from 1992 to 2000. 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. 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. 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 simisimiz.

In the third week of January 2008, the SENSEX experienced huge falls along with
other markets around the world. On 21 January 2008, the SENSEX saw its highest
ever loss of 1,408 points at the end of the session. The SENSEX recovered to close at
17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors
panicked following weak global cues amid fears of a recession in the US.
The next day, the BSE SENSEX index went into a free fall. The index hit the lower
circuit breaker in barely a minute after the markets opened at 10 am. Trading was
suspended for an hour. On reopening at 10.55 am, the market saw its biggest intra-day
fall when it hit a

low of 15,332, down 2,273 points. However, after reassurance from the market
bounced back to close at 16,730 with a loss of 875 points. Over the course of two
days, the BSE SENSEX in India dropped from 19,013 on Monday morning to 16,730
by Tuesday evening or a two-day fall of 13.9%. Less than a month later, on 11
February 2008, the SENSEX lost 833.98 points, when Reliance Power fell below its
IPO price in its debut trade after a high-profile public offer. On 2015, The index
crossed the historical mark of 30,000 after repo rate cut announcement by RBI. The
index plummeted by over 1,624.51 points on 24 August 2015, the then worst one-day
point plunge in the index's history. On 9 March 2020, Sensex tumbled down by
1941.67 points amid the fears of and crisis. This was the second worst single-day fall
in the history, where the investors lost ₹ 6.50 lakh crores.
While on 12 March 2020, the index plunged down by 2919.26 points, the second–
worst fall in the history, ending in red to a 33-month low at 32,778.14. The fall wiped
off ₹ 11.2 lakh crores wealth. On March, trading was halted for 45 minutes for the
first time in 12 years since January 2008 due to lower circuit. Sensex touched a low of
29,687.52 down by 3090.62 points (or 9.43%). However, after the 45-minute halt, the
index saw biggest intra-day recovery by 5,380 points to end up by 1325 points.
Continuing the losing streak, wealth worth ₹14.22 lakh crore was erased on 23 March
2020 as BSE SENSEX lost 3,934.72 points to end at 25,981.24. As on 21 January
2021, Sensex has recovered to 50,167.71

3.2 YEAR EFFECT OF STOCK MARKETS

3.2.1 YEAR EFFECT OF NSE

Indian benchmark indices posted their biggest daily percentage decline in 10 months
on Friday, as a North Korean threat to carry out a hydrogen bomb test in the Pacific
Ocean rattled global markets. The Indian government’s stimulus spending plan and
jitters that it
would widen the fiscal deficit also contributed to the decline, which was led by bank
stocks. The National Stock Exchange’s 50-share Nifty index dipped 1.56% to close
below the psychological 10,000-point mark at 9,964.40 points. The BSE Sensex
tumbled 1.38% to end at 31,922.44 points. North Korea struck back at US President
Donald Trump’s threats to destroy it, with Kim Jong Un warning of the “highest level
of hard-line countermeasure in history" and his foreign minister suggesting that could
include testing a hydrogen bomb in the Pacific Ocean.

Indian stocks are the most expensive among peers, prompting concerns about
valuations overshooting fundamentals amid slow economic growth and an elusive
corporate earnings recovery. “Impact of good and services tax (GST) could be more
prolonged and earnings recovery could be delayed by a quarter or two. As a result, a
market correction at this juncture should not come as a surprise," said Ravi Gopala
Krishnan, head of equities at Canara Robeco Mutual Fund. The price-to-earnings ratio
for FY19 is 18.48 and 18.18 for the Sensex and Nifty respectively, whereas that for
MSCI Emerging Markets is 12.76 and MSCI World 16.50. Analysts described the
correction in the Indian markets as healthy and long overdue.

Most stocks in the capital goods, healthcare and metals sectors were under pressure on
Friday. Among sectoral indices, the BSE Metal index fell 3.9%, reacting to China’s
credit downgrade by S&P Global Ratings, triggering concerns that demand from the
world’s second-biggest economy may decline. So far this year, FIIs have bought a net
$6.4 billion worth of stocks, but sold $761.55 million worth of Indian equities in
September.

Even as the Nifty surged to fresh record high on April 3 2019, it’s intriguing to note
that the index has grown by a whopping 11.70 times in the last 25 years. Notably, the
Nifty surged past its earlier high of 11,760.20 in the morning trade on Tuesday, on the
back of sustained FII flows ahead of the general elections due to fresh optimism that
PM Narendra Modi will return to power in 2019, say experts. Investors are convinced
that Modi will retain power in the upcoming election 2019, veteran investor Raamdeo
Agrawal said in an interview to ET Now.
Journey to 10,000: After the Narendra Modi-led government rose to power, the Nifty
scaled the 7,000-mark on 12 May 2014. On the back of a euphoria, it soon surged past
the 8000- mark on 01 September 2014. The next 1,000 took a while, as the Nifty
breached 9,000 on 14 March 2017. “In 2017, Nifty spurred too the 9,000-mark backed
by strong buying from foreign investors,” noted a Kotak report. The Nifty finally
crossed the much awaited 5- figure mark of 10,000 on 25th July 2017, amid good
monsoons, strong corporate earnings and the rollout of Goods and Services Tax
(GST).

Gain to 11,000: Nifty crossed the 11,000-mark on January 23rd 2018, on the back of
fall in US crude oil prices and the World Bank’s positive update on Indian economy.
The move was significant. as it came ahead of Union Budget 2018 presented on
February 1 later that year. Record high of 11,761, the Nifty hit a fresh record high of
11,761 on Monday. The index gained nearly 17% from record lows hit on October 26,
2018. In the near-term, the Nifty could top the crucial 12,000-mark. “We remain
positive on markets in long-term, but one can expect some profit booking from 12,000
levels, and near-term volatility from events like credit policy, election results etc.
cannot be ruled out. Any decline to around the 11,200 levels would be a good
opportunity to create long positions,” B Gopkumar, ED & CEO, Reliance Securities
said as it came ahead of Union Budget 2018 presented on February 1 later that year.

Record high of 11,761

This morning, the Nifty hit a fresh record high of 11,761 on Monday. The index
gained nearly 17% from record lows hit on October 26, 2018. In the near-term, the
Nifty could top the crucial 12,000-mark. “We remain positive on markets in long-
term, but one can expect some profit booking from 12,000 levels, and near-term
volatility from events like credit policy, election results etc. cannot be ruled out. Any
decline to around the 11,200 levels would be a good opportunity to create long
positions,” B Gopkumar, ED & CEO, Reliance Securities said. The S&P BSE Sensex
and NSE Nifty 50 indices ended on a flat note on last session of 2020 as losses in
FMCG, IT and state-run banking offset gains in metal, pharma and media shares. Both
benchmarks traded on a choppy note for the most part of the day, as derivatives
(futures and options) contracts for the month of December expired
at the end of the session. The Nifty touched a record high of 14,024.85 during the
session and the Sensex touched an all-time high of 47,896.97.

The Sensex ended 5 points higher at 47,751 and Nifty 50 index closed unchanged at
13,982. In the calendar year 2020, the Sensex rallied 15.75 per cent and the Nifty
climbed 14.90 per cent, making it the best year for the indices since 2017, news
agency Reuters reported. For the decade ended 2020, the Sensex has gained a
whopping 173 per cent and Nifty surged 169 per cent. A gush of liquidity by foreign
investors has lifted the benchmarks to new highs, according to analysts. On
Wednesday, foreign institutional investors (FIIs) had net bought Indian shares worth ₹
1,824 crore. So far this calendar year, FIIs have net purchased domestic equities worth
$22.44 billion but net sold assets worth $14 billion in the debt markets, NSDL data
showed.

Six of 11 sector gauges compiled by the National Stock Exchange ended higher, led
by the Nifty Metal and Pharma indices, which rose 0.7 per cent each. Auto, financial
services, media and realty shares also witnessed buying interest. On the other hand,
PSU banking, FMCG, IT and private banking shares witnessed mild selling pressure.
Mid- and small-cap shares witnessed buying interest, with the Nifty Midcap 100 index
rising 0.5 per cent and the Nifty Small cap 100 index gaining 0.3 per cent. HDFC was
the top Nifty gainer, rising 1 per cent to close at ₹ 2,550 apiece on the BSE. Sun
Pharma, Divi's Labs, ICICI Bank, Asian Paints, Dr Reddy's Labs, Hindalco and HCL
Technologies were also among the gainers. NSE believes that Small and Medium
Enterprises (SME) are crucial not only for economic growth, but also critical for
employment and inclusive growth. As of March 31, 2019, there are 189 SME
companies listed on NSE Emerge (SME Platform), of which 62 were listed during
2018-19 raising more than H1,048 crores. During fiscal 2019, the aggregate value of
Initial Public Offerings (IPOs) and Offer for Sale (OFS) was around H208.33 billion.
During FY2019, the number of listed companies available for trading on NSE was
1,884 compared to 1,758 at the end of March 31, 2018. The market capitalisation of
securities available for trading on the Capital Market segment has increased by 6.34%
during 2018-19.
The Milestones by NSE are:

YEAR MILESTONES

● NSE launches new brand identity for NIFTY Indices

2019 - 2020
● Proposed NSE IFSC-SGX Connect receives regulatory
dispensations
● NSE EMERGE achieves 200th SME listing milestone
● NSE Commodities Segment gets recognition from CBDT
● NSE opens Centre for Behavioral Science at IIMA
● Launch of Interest Rate Options on Government of India bonds
● NSE Indices launches Nifty BHARAT Bond Index Series
● NSE declared world’s largest derivatives exchange 2019 by WFE
● NSE launches Request for Quote (RFQ) Platform in Debt
Securities

● Launched Commodity Derivatives segment, goBidMobile app for

2018 - 2019
government securities and Tri-PartyRepo of Corporate
DebtSecurities.
● Weekly option on NIFTY 50 was launched
● E-voting for corporates
● NSE derivatives access was extended to US clients
● Signs Post-Trade Technology and StrategicPartnership
Agreement withNasdaq
● MoU with London Stock Exchange Group

● Launched currency derivatives on Non-FCYINR pairs

2017 - 2018
● Launched NIFTY SME EMERGE Index and 72 fixed income and
three hybrid indices
 ● Entered into a MOU with The Colombo Stock Exchange (CSE)

● Promoted NSE IFSC, the International Stock Exchange in India’s

2016 - 2017
first IFSC SEZ at GIFT City Gandhinagar

● Launched NIFTY 50 index futures trading onTAIFEX

2015 - 2016
● Launched platform for sovereign gold bond issuance
● Launched an electronic book-building platform for the private
placement of debt securities

● Entered into a memorandum of understanding to enhance

2014 - 2015
cooperation with the London Stock Exchange Group
● Renamed CNX NIFTY to NIFTY 50

● Launched NMF-II platform for mutual funds

2013 - 2014
● Launched NBF II segment for interest rate futures
● Launched trading on India VIX index futures
● Commenced trading onNIFTY 50 (then known asCNX NIFTY) on
the OsakaExchange

● Launched the New Debt Segment (NDS)

2012 - 2013

● Commenced trading in index futures and options contracts on

2011 - 2012
the FTSE 100 index
● Launched SME-specific EMERGE platform for the listing and
trading of securities of SMEs
 ● Commenced trading in index futures and options on global
2010 - 2011
indices, namely the S&P 500 and Dow Jones Industrial Average

Table 1 YEAR EFFECT OF NSE

Year Year effect

2000 1264
2001 1059
2002 1094
2003 1880
2004 2081
2005 2837
2006 3966
2007 6139
2008 2959
2009 5201
2010 6185
2011 4624
2012 5905
2013 6304
2014 8283
2015 7946
2016 8786
2017 10531
2018 10863
2019 12168
2020 13982
Source:www.nseindia.com
 Fig

Ariel (1987) found that, on an average, rates of return were significantly lower during
the second half of the month as compared to the first half. This research found that
month of the year effect occurred in USA as well as few other developed countries.
The research revealed that the return was higher in January month and in December
was generally lower in comparison to returns in other months. Similar results were
found by Jeffrey Jaffe and Randolph Westfield (1988) in their investigation of stock
markets of Australia, UK, Japan, and Canada. This research found that returns over
the second half of the month were lower than the returns over the first half for
Australia, UK and Canada. Wachtel (1942) was the first researcher to investigate the
January Effect. Haugen and Lakonishok (1988) studied the January Effect in detail
and has authored a book on this well-known calendar effect. Kok Kim Lian (2002)
studied the Year of Month Effect and Half Month Effect in the Asia Pacific stock
markets.

The government had proposed to increase the surcharge levied on top of the
applicable income tax rate from 15 per cent to 25 per cent for those with taxable
incomes between Rs 2 crore and Rs 5 crore, and to 37 per cent for those earning over
Rs 5 crore, taking the effective tax rate for them to 39 per cent and 42.74 per cent,
respectively. The Sensex rallied 1,922 points, or 5.3 per cent, to end at 38,015, while
the Nifty surged 569 points, or
5.3 per cent, to close at 11,274.2.That apart, the government announced a slew of
policy reforms, which included strategic sales of select public sector enterprises
(PSEs) merger of select public sector banks (PSBs), and an alternative investment
fund of Rs 25,000 crore for the realty sector among others. US-China trade talks: At
the global level, flip-flop by the United States (US) on trade related issues, especially
with China, kept market participants on tenterhooks throughout the year.
In November, market scaled fresh peaks one after another on the optimism around
trade talks between the two largest economies. In the latest development, both the
countries have agreed on the terms of a “phase one” trade deal that reduces some US
tariffs on Chinese goods while boosting Chinese purchases of American farm, energy
and manufactured goods. Pre COVID-19, market capitalisation on each major
exchange in India was about
$2.16 trillion. The 2019 stock market rally was limited to 8-10 stocks within the large
caps. The Sensex returned around 14% (excluding dividends) for the year 2019 but
prominently featured blue-chip companies such as HDFC Bank, HDFC, TCS, Infosys,
Reliance, Hindustan Unilever, ICICI Bank and Kotak Bank, without which Sensex
returns would have been negative? However, in the start of 2020, there was overall
recovery which led to both NSE and BSE traded at their highest levels ever, hitting
peaks of 12,362 and 42,273 respectively. At the beginning of the year, there were
close to 30 companies that were expected to file IPO’s. The market conditions were
generally favourable as they witnessed record highs in mid-January.

Ever since COVID 19 strike, markets loom under fear as uncertainty prevails. lt has
sent markets around the world crashing to levels not witnessed since the Global
Financial Crisis of 2008. Following the strong correlation with the trends and indices
of the global market as BSE Sensex and Nifty 50 fell by 38 per cent. The total market
cap lost a staggering 27.31% from the start of the year. The stock market has reflected
the sentiments this pandemic unleashed upon investors, foreign and domestic alike.
Companies have scaled back; layoffs have multiplied and employee compensations
have been affected resulting in negligible growth in the last couple of months. Certain
sector such as hospitality, tourism and entertainment have been impacted adversely
and stocks of such companies have plummeted by more than 40%. While the world
has witnessed many financial crises in the past, the last one being the global recession
of 2008, the current coronavirus crisis is different from the past fallouts. In response to
current turmoil, RBI and the Government of India has come up with a slew of reforms
such as reductions of repo rate, regulatory relaxation by extending moratorium and
several measures to boost liquidity in the system howsoever the pandemic has
impacted the premise of the corporate sector. Payment’s deferrals, subdued loan
growth, rising cases of bad loans and sluggish business condition
have impaired the growth and the health of the economic activity. Deceleration of GDP
growth, demand-supply chain, cut in discretionary expenses and CAPEX has been the
observed during the lockdown, which has led to falling in household incomes, marketing
spends, reduced travel cost and hiring freeze.

Companies with innovative products, increasing distribution reach, technology-driven

processes and healthy balance sheet would revive the growth momentum post
lockdown. Lower oil prices and high capital expenditure by the government in turn
creating capital which will provide a platform to flourish when we overcome COVID
19 pandemic.

Table 2 YEAR EFFECT OF BSE

Ye Year
ar effect
20 5006
00
20 3972
01
20 3262
02
20 3377
03
20 5839
04
20 6603
05
20 7378
06
20 13787
07
20 20187
08
20 9647
09
20 17465
10
 20 20509
11
20 15455
12
20 19427
13
20 21171
14
20 27499
15
20 26118
16
20 26626
17
20 34057
18
20 36054
19
20 41306
20

FIG
3.3 MARKET CAPITALISATION OF STOCK MARKETS (2000-2020)

Market capitalisation Market capitalization is one of the most effective ways of

evaluating the value of a company. The evaluation of a company’s value is done
based on a company’s stocks. Essentially, this is defined by the total market value of
the
outstanding shares of a company. This simple fact also means that publicly owned
companies are the only ones which can be evaluated by this method of evaluation.
Fluctuating market conditions and stock prices also impact the evaluation of a company
when this method of evaluation is being used.

Large-cap: These are some of the most stable groups of companies in the market.
Consequently, investing in these companies is the least risky option.

Mid-cap: Companies which have had a certain growth and are somewhat stable; and
yet have immense potential of growth, come under this group of evaluation by market
capitalization.
Small-cap: Constituting companies which have the least market cap are the riskiest of
all stocks.

Table: 3 Top 10 Indian companies based on market cap

Company name Market capitalization (in

crore)
Reliance Industries Limited Rs.8,49,234

Tata Consultancy Services Limited Rs.7,91,772

HDFC Bank Limited Rs.6,22,521

ITC Limited Rs.3,73,950

Hindustan Unilever Limited Rs.3,72,708

Development Finance Corporation Rs.3,46,629

Infosys Limited Rs.3,16,410

State Bank of India Rs.2,81,705

Kotak Mahindra Bank Limited Rs.2,61,730

ICICI Bank Limited Rs.2,53,192

 Source: www.businessinsider.in
India's stock market is now the seventh biggest, up three spots, in the world as total
market capitalisation increased to $2.7 trillion. The BSE Sensex crossed the 51,000,
while the NSE benchmark Nifty crossed the 15,000 level for the first time on February
2021. The benchmark Nifty has gained 6.9% so far in 2021. India's stock market is
now bigger than Canada, Germany and Saudi Arabia. India's stock market is the
second-best performer among the top 15 countries in 2021 and soon it may overtake
France to become the sixth biggest in the world.
3.3.1. MARKET CAPITALISATION OF NSE (NIFTY)
NIFTY 50 is NSE's diversified index comprising stocks from top 50 Indian companies
across 14 sectors. It tracks the market performance of the largest cap companies &
hence, broadly reflects the Indian economy. The NIFTY 50 index is India’s premier
stock index. Launched on April 1, 1996, it's computed using the free float market
capitalization method.
 Table 4 Nifty 50 companies as on 18-Mar-2021

Compa P E
Price Mark 52 52 R
ny CMP P/E / V
Change et W W O
Name /
% Cap Hig Lo
(M. B E
(Cr) h w E
Cap) BI
V T
D
A
Shree
26,65 -0.59 96,759 29,0 15,5 13.6 45.3 6. 26.3
Cement
9 98 00 0 8 99 1
(L)
55
Nestle(L) 16,20 -1.55 1,58,68 18,8 12,5 70.2 76.2 54.6
.3
3 2 21 89 6 0 2
7
Bajaj
9,460 -0.89 1,51,89 10,5 3,98 21.7 41.2 4. -
Finserv
4 86 6 8 1 51
(L)
Maru
7,114 0.72 2,13,36 8,40 4,00 7.1 47.7 4. 28.8
ti
4 0 2 3 2 36 6
Suzuki
(L)
Ultrate
6,514 -0.09 1,88,16 6,94 2,91 15.6 27.4 4. 22.2
ch
7 6 3 4 3 62 2
Cement
(L)
Bajaj
5,372 0.24 3,22,90 5,92 1,78 19.1 87.6 9. -
Finance
8 2 3 3 0 61
(L)
Dr.
4,211 -3.34 72,455 5,51 2,49 13.4 33.3 4. 29.1
Redd
5 8 1 1 35 0
ys
Lab(L)
Bajaj 3,663 2.46 1,03,46 4,36 1,79 23.0 22.2 4. 19.6
Auto(L) 2 1 3 5 0 36 7
Britan 31
3,439 -0.84 83,525 4,01 2,10 31.1 44.5 45.5
nia .2
5 1 3 6 4
Inds( 3
L)
10
Divis Lab(L) 3,270 -3.19 89,682 3,91 1,63 17.9 47.9 48.5
.7
3 3 4 5 2
8
Hero
3,108 -2.62 63,770 3,62 1,47 21.3 23.4 4. 14.8
MotoCorp
9 5 2 5 36 3
(L)
12
TCS(L) 3,037 -2.44 11,68,0 3,34 1,54 36.4 37.4 26.8
.3
05 5 7 7 0 9
8
 Eiche
2,6 0.67 72,342 3,03 1,24 19.4 64.3 7. 30.4
r
64 6 6 9 0 01 5
Motors
(L)
HDFC(L) 2,5 0.11 4,53,37 2,89 1,47 22.0 40.9 4. -
17 8 5 3 2 2 52
Asia 21
2,4 -0.76 2,32,38 2,87 1,43 27.5 84.5 55.5
n .0
04 0 1 2 1 3 7
Paints 7
(L)
Hindust 11
2,2 -0.63 5,23,76 2,61 1,75 84.3 71.5 52.5
an .1
15 5 4 6 5 1 0
Unilever 9
(L)
Relianc
2,0 -2.22 13,89,7 2,36 867. 9.8 32.8 2. 18.2
e
10 07 9 5 5 9 26 8
Industries
(L)
Kotak
Mahin 1,8 -1.96 3,70,15 2,04 1,00 13.0 56.5 6. -
dra 31 7 9 0 8 2 22
Bank(L
)
HDFC 1,4 -0.35 8,24,22 1,65 738. 16.5 26.8 4. -
Bank(L) 90 6 0 9 4 7 29
185 19
Titan Co(L) 1,4 -0.33 1,30,74 1,62 720. 23.0 54.7
.5 .9
68 0 1 0 0 8
0 3
Larsen
1,4 -0.68 2,01,99 1,59 661. 11.3 86.5 3. 29.3
&
28 3 3 0 2 6 45 3
Toubro
(L)
Grasim
1,3 1.79 90,106 1,40 380. 7.4 22.2 1. 8.93
Industries
94 9 0 9 5 50
(L)
Infosys(L) 1,3 -3.67 5,91,03 1,40 511. 24.9 31.7 8. 25.5
36 9 6 1 0 8 32 0
Indusi
1,0 -0.63 78,037 1,11 235. 14.7 34.4 1. -
nd
03 9 6 1 9 98
Bank(
L)
Tech
996 -2.36 98,772 1,08 470. 16.7 23.8 4. 16.1
Mahindra
.1 1 2 0 0 16 5
(L)
HCL Tech. 948 -3.97 2,67,97 1,07 375. 23.7 20.2 4. 15.0
 (L) .3 4 4 5 3 8 73 7
SBI
890 0.15 88,886 984. 520. 0.0 61.1 9. -
Life
.1 0 0 0 3 20
Insuran
(L)
Mahindra
845 1.03 1,04,02 952. 245. 1.0 0.0 3. 17.3
&
.4 4 1 8 8 0 02 6
Mahindra
(L)
Cipla(L) 754 -2.32 62,327 878. 363. 13.0 23.4 3. 22.6
.9 5 9 5 4 31 8
Axis 717 -1.37 2,22,96 800. 285. 2.1 88.3 2. -
Bank(L) .9 8 0 0 5 5 28
Tata 705 0.08 84,818 782. 250. 9.4 12.9 1. 8.17
Steel(L) .0 0 9 0 0 07
HDFC 102 17
680 -1.26 1,39,26 746. 339. 0.0 -
Life .8 .8
.5 5 0 1 0
Insurance 6 0
(L)
Adani
679 -1.31 1,39,96 768. 203. 19.7 34.6 5. 22.7
Ports
.9 7 4 4 4 4 04 8
&Special
(L)
UPL(L) 602 -0.85 46,419 639. 240. 12.4 19.1 2. 10.0
.4 2 3 8 4 44 4
ICICI 578 -1.85 4,07,46 679. 269. 7.2 31.3 3. -
Bank(L) .4 3 3 0 5 2 02
Sun
574 -1.83 1,40,40 653. 315. 8.9 58.2 3. 19.6
Pharm
.5 9 7 2 3 7 12 7
a Inds.
(L)
Bhar
526 0.60 2,85,24 623. 381. - 0.0 3. 17.6
ti
.0 4 0 1 7.3 0 44 6
Airtel 3
(L)
BPCL(L) 426 -1.16 93,690 482. 252. 13.2 16.3 2. 16.3
.9 4 0 4 2 47 2
JSW 423 0.04 1,02,24 435. 132. 18.2 22.1 2. 11.1
Steel(L) .1 8 0 5 9 5 57 0
Wipro(L) 410 -2.09 2,29,87 467. 159. 16.7 22.6 3. 16.5
.8 6 2 6 6 5 94 5
SBI(L) 366 -0.39 3,28,47 426. 149. 7.1 18.7 1. -
.6 0 4 6 6 3 48
Hindalco(L) 331 1.47 73,343 361. 85.0 6.1 32.9 1. 7.93
.2 2 5 9 8 23
Tata -
306 0.34 1,01,55 357. 63.6 0.0 1. 8.74
Motors 16.
.9 2 0 0 0 87
(L) 69
Power
221 0.23 1,15,40 239. 129. 15.8 11.7 2. 8.15
Grid
Corpn. .1 9 0 8 0 0 22
(L)
 ITC(L) 217 3.25 2,59,14 239. 139. 25.0 19.8 4. 13.0
.4 2 2 0 1 8 50 8
Coal 137 -2.04 86,217 162. 109. 57.0 6.7 2. 2.92
India(L) .1 9 5 6 6 32
GAIL 135 -2.31 62,398 157. 65.7 14.1 10.4 1. 8.22
India(L) .2 9 0 3 0 37
ONGC(L) 110 0.55 1,37,62 122. 57.5 9.1 83.2 0. 5.21
.0 8 3 5 1 2 70
NTPC(L) 104 -1.97 1,03,22 114. 74.0 9.7 15.6 0. 9.52
.3 1 8 0 9 0 92
Indian
97. -0.92 92,447 105. 71.1 12.7 11.7 0. 8.30
oil
30 0 5 7 5 90
Corp
.
Source: www.nseindia.com

Benefits of investing in NIFTY50 Index Funds:

Diversification – It deploys the investment in multiple companies and sectors thereby

reducing risk compared to investing in a single or small set of companies. Over time
Nifty 50 replaces the underperforming companies at a market level with performing
one.
Wide market presence – Nifty 50 Index funds are quite popular in India and have a
substantial market presence.
Low cost - These funds have lower operating expenses as fund managers simply need
to replicate the index.
Inflation + returns - Index funds have consistently generated inflation beating returns
over the long term. Coupled with low costs it becomes excellent value for investors.

3.3.2 MARKET CAPITALISATION OF BSE (SENSEX)

The sum of the market value of BSE-listed companies crossed Rs 200 trillion for the
first time, on February 2021. The Sensex, ended at 50,614.29, up 358.54 points. In
dollar terms, the market cap figure of BSE-listed firms is $2.75 trillion -- the seventh
highest globally. The country’s market cap-to-GDP ratio is now more than 100 per
cent. Its nominal GDP (revised estimate for FY21) at current prices is around Rs 195
trillion.
The combined market cap of BSE-listed companies had topped the Rs 100 trillion-
mark in December 2014. Back then, the market cap-to-GDP ratio was at 80 per cent.
In September 2007, when the market cap crossed Rs 50 trillion, the ratio was similar
to the current level. The markets had come off more than 50 per cent in the following
year due to the global financial crisis. In less the one year, India’s market cap (based
on BSE-listed companies) has nearly doubled. At the peak of the coronavirus-induced
sell-off in March 2020, the market cap had plunged to Rs 102 trillion.

BSE MD and CEO, Ashishkumar Chauhan said, "It is heartening to note BSE
continues to remain the primary wealth creator of the nation. It is also good to note
that no other developing country at the stage of India’s development has a thriving
capital market as compared to India. BSE has also become the world's 9th largest
exchange in terms of listed companies market capitalization, as on date." The four
recently listed companies which include Antony Waste Handling, Indian Railway
Financing Corporation, Indigo Paints, and Home First Finance Company, added
₹52562.21 crore in total m-cap. The table below is an important data on BSE 30
Companies Share prices, 52-week High and Low, PE ratio etc.

Table 5 BSE 30 companies as on Mar-2021

Compa Mar
Price 52 52 EV/
ny C ket R P/E P/
Chan W W EBIT
Name M Cap O BV
ge Hi Lo DA
(M. P (Cr) E
gh w
Cap)
Power
227. 2.89% 1,15,67 239. 129. 15.8 11. 2.22 8.16
Grid
5 0 0 8 0 73
Corpn.
(L)
NTPC(L) 105. 1.83% 1,00,60 114. 74.0 9.79 15. 0.90 9.43
7 3 8 0 20
Hindust
2,25 1.56% 5,20,46 2,61 1,75 84.3 71. 11.12 52.17
an
0 4 4 6 5 06
Unilever
(L)
ITC(L) 220. 1.36% 2,67,57 239. 139. 25.0 20. 4.65 13.55
3 3 2 0 1 53
HCL Tech. 960. 1.29% 2,57,33 1,07 375. 23.7 19. 4.55 14.45
(L) 5 7 4 5 3 47
 Table 3.5 BSE 30 companies as on Mar-2021

Compa Mar
Price 52 52 EV/
ny CMP ket R P/ P/
Chan W W EBIT
Name Cap O E BV
ge Hi Lo DA
(M. (Cr) E
gh w
Cap)
TCS(L) 3,07 1.14% 11,39,5 3,3 1,54 36.4 36.4 12.08 26.21
1 24 45 7 7 8
Nestle(L) 16,3 1.02% 1,56,21 18,8 12,5 70.2 75.0 54.51 53.76
68 9 21 89 6 2
Kotak
Mahin 1,84 0.87% 3,62,90 2,0 1,00 13.0 55.4 6.10 -
dra 7 4 49 0 8 1
Bank(L)
Bhar
529. 0.60% 2,86,96 623 381. -7.33 0.00 3.46 17.74
ti
1 2 .0 1
Airtel
(L)
Reliance
2,02 0.54% 13,58,8 2,3 867. 9.85 32.1 2.21 17.93
Industries
0 38 69 5 6
(L)
Sun
577. 0.45% 1,37,84 653 315. 8.93 57.2 3.06 19.30
Pharma
1 2 .7 2 1
Inds.(L)
SBI(L) 367. 0.11% 3,27,17 426 149. 7.16 18.6 1.47 -
0 6 .4 6 5
Infosys(L) 1,33 -0.12% 5,69,33 1,4 511. 24.9 30.6 8.02 24.52
5 1 06 1 0 2
Asian
2,40 -0.16% 2,30,61 2,8 1,43 27.5 83.8 20.91 55.14
Paints
0 5 71 2 1 9
(L)
ICICI
577. -0.23% 3,99,92 679 269. 7.25 30.7 2.97 -
Bank(L)
0 6 .3 0 4

Titan Co(L) 1,464 -0.24% 1,30,31 1,6 720. 23.0 184. 19.86 54.60
4 21 0 0 90
Axis 716. -0.26% 2,19,92 800 285. 2.15 87.1 2.25 -
Bank(L) 0 0 .0 0 4
HDFC
1,48 -0.29% 8,21,30 1,6 738. 16.5 26.7 4.28 -
Bank(L)
6 5 50 9 4 7

HDFC(L) 2,50 -0.46% 4,53,86 2,8 1,47 22.0 40.9 4.52 -

5 5 95 3 2 6
 Table 3.5 BSE 30 companies as on Mar-2021

Compa Mar
Price 52 52 EV/
ny C ket R P/ P/
Chan W W EBIT
Name M Cap O E BV
ge Hi Lo DA
(M. P (Cr) E
gh w
Cap)
Indusi
997. -0.54% 77,546 1,1 235. 14.7 34.2 1.97 -
nd
2 19 6 1 8
Bank(
L)
Tech
990. -0.59% 96,444 1,0 470. 16.7 23.2 4.06 15.74
Mahindra
3 81 2 0 4
(L)
Ultratec
6,47 -0.61% 1,87,99 6,9 2,91 15.6 27.4 4.61 22.20
h
3 9 46 3 4 1
Cement
(L)
Tata
700. -0.65% 84,884 782 250. 9.40 12.9 1.07 8.17
Steel
4 .0 9 1
(L)
Bajaj
9,36 -0.68% 1,50,05 10,5 3,98 21.7 40.7 4.45 -
Finserv
5 9 86 6 8 1
(L)
Bajaj
3,63 -0.72% 1,06,00 4,3 1,79 23.0 22.7 4.47 20.17
Auto
7 8 61 3 5 5
(L)
ONGC(L) 109. -0.91% 1,38,38 122 57.5 9.11 83.6 0.70 5.24
0 3 .3 5 8
Mahindra
835. -1.16% 1,05,09 952 245. 1.08 0.00 3.05 17.55
&
5 3 .1 8
Mahindra
(L)
Maru
7,00 -1.56% 2,14,90 8,4 4,00 7.13 48.0 4.39 29.06
ti
3 4 00 2 6
Suzuki
(L)
Bajaj
5,27 -1.78% 3,23,68 5,9 1,78 19.1 87.8 9.64 -
Finance
6 6 22 3 3 1
(L)
Larsen
1,39 -2.13% 2,00,61 1,5 661. 11.3 85.9 3.43 29.14
&
8 7 93 0 2 7
Toubro
(L)
Source: www.bseindia.com
Benefits of investing in SENSEX top 30 companies include:
● 1. Better returns – A historical back test on the top indices in India viz. the Nifty 50
and BSE Sensex, reveals that investing in the Sensex can return slightly higher returns
than the Nifty 50. Keep in mind to choose a Sensex based index fund with high
liquidity.
● 2. Diversification – Investing in an index fund automatically extends you the benefit
of portfolio diversification, thereby reducing portfolio risk.
● 3. Less expensive - Being a passively managed fund you are required to pay minimal
fees. This essentially means lesser expenses to eat into your returns.

3.4 RISK AND RETURN OF INDIA STOCK MARKETS (2000-2020)

One of the major objectives of investment is to earn and maximize the return. Return
on investment may be because of income, capital appreciation or a positive hedge
against inflation. The expected return may differ from realized return. In security
analysis, we are primarily concerned with returns from the investor perspective. Our
main concern is to compute or estimate the returns for an investor on a particular
investment.

According to the dictionary, Risk means existence of volatility in the occurrence of an

expected incident. Higher the unpredictability greater is the risk. According to this
definition risk may or may not involve money. All investments involve risk of one
type or the other. Risk and return are of two sides of the investment coin. Risk is
associated with the possibility of not realizing return or realizing less return than
expected. The degree of risk varies on the basis of features of the assets, investment
instruments, the mode of investment, the issuer of the securities etc. Thus, risk of an
investment is the variance associated with its returns. The chance that an investment's
actual return will be different than expected. Risk includes the possibility of losing
some or all of the original investment. Different versions of risk are usually measured
by calculating the standard deviation of the historical returns or average returns of a
specific investment. A high standard deviation indicates a high degree of risk. We can
distinguish between expected return and realized return from an investment. The
expected return is uncertain future return that an investor expects to get from his
investment. The realized return, on contrary, is the certain return that an investor
makes the investment decision based on expected returns from the
investment. The actual return realized from an investment may not correspond to
expected return. This possibility of variation of the actual return from the expected
return is termed as risk. Where realization corresponds to expectations exactly, there
would be no risk.

The empirical evidence against the CAPM by Fama and French (1992) has generated
a lot of debate in the west and has called for major re-examination of the CAPM
model. While many studies have been conducted on CAPM in the capital markets of
the western countries, there are few studies in the Indian context. Studies by Varma
(1988), Yalwar (1988), Srinivasan (1988) have generally supported the CAPM theory.
Sudies by Basu (1977), Gupta and Sehgal (1993), Vaidyanathan (1995), Madhusudhan
(1997), Sehgal
(1997), Ansari (2000), Rao (2004), Manjunatha and Mallikarjunappa (2006,2007)
have questioned the validity of CAPM in Indian markets. But Ansari (2000) has
opined that the studies of CAPM on the Indian markets are scanty and no robust
conclusions exist on this model.

3.4.1RISK AND RETURN OF NSE

Nifty50 is a broader index compared to Sensex, consisting of 50 large companies

listed on National Stock Exchange of India (NSE). Over the years, Nifty50 has be-
come the most widely used benchmark for exchange traded products in Indian equity
market. Growth rate of India’s GDP is fairly captured in the growth story of Nifty50.
Over the years, India has been one of the fastest growing large economies of the world
which is also reflected in the rise of Nifty50 Index.

Nifty 50 returns and Nifty 50 total returns index

The dividends of the stocks in the Nifty 50 are assumed to be reinvested in the index
after the close of the ex-date. Such an index is called the Total Returns index. The
Nifty 50 has a TRI version also available and the same is used as a benchmark for
several mutual funds. The total returns index therefore has a higher return than the
Nifty 50 when considered for any period of time.
 Table 6 Annual returns of Nifty

Year Annual
return
2000 -14.65%
2001 -16.18%
2002 3.25%
2003 71.90%
2004 10.68%
2005 36.34%
2006 39.83%
2007 54.77%
2008 -51.79%
2009 75.76%
2010 17.95%
2011 -24.62%
2012 27.70%
2013 6.76%
2014 31.39%
2015 -4.06%
2016 3.01%
2017 28.65%
 2018 3.15%
2019 12.02%
2020 14.17%
Source: www.nseindia.com

Fig: 3

Nifty has a CAGR of 11.1% in the last 20 years (since 1999) and 8.87% in the last 10
years (since 2009 – this is an aberration as it came on back of monster recovery from
the lows of March 2009 to Dec 2009 and thereby depressing the returns from Dec
2009 to Dec 2019 period). s at 1205 on February 27, 2002, just before a lacklustre
budget dashed investors’ hope. The annual low came in late October with Nifty at
920. With an average value of 1056 for Nifty and a standard deviation of 68 points,
this is a very narrow range. But the returns were a lot better than in calendar year 2001
(minus 20 per cent) and 2000 (minus
23 per cent). That’s too bad years, followed by a marginal recovery. The market
pulled above it

The annual high of Nifty was own 200 DMA in the last quarter and has stayed above
that benchmark. This is a reliable signal of a new bull market. The moving average
signal is reinforced by the breach of a falling minus 40-degree trend line that
connected successively lower tops between February and November. The recovery
has come on decent volumes, which suggests that it's based on rising demand and,
hence, sustainable.

"Oil is a big question mark -- there will be volatility here but we don't know the
direction. The Iraq situation will affect global prices and the speed of divestment of
public sector units will affect domestic sentiments. If India's economy does show
strong overall recovery, there will be turnarounds in many other sectors". Devangshu
Datta, independent analyst.

Nifty has shed over 29 per cent since May 11, 2006. The mid-cap and small-cap
stocks continue to be the worst affected in this market. The CNX mid-cap index is
lighter by 35 per cent since May. The market saw the beginning of a bullish
formation, an Ascending Triangle, on the monthly chart at the beginning 2007. This
formation took seven years to complete. In 2014, the Nifty50 achieved a positive
breakout. This Ascending Triangle formation was between 3,818 on the lower side
and 6,350 on the higher side.

3.4.2RISK AND RETURN OF BSE

The 2+ decades-long journey has been a volatile one. In the last 20 years, we have had:

● 15 years with positive returns

● 5 years with negative returns

In 2002-2003, the annual index returns after that have been 3.5%, 72.9%, 13.1%,
42.3%, 46.7%, 47.1%. And this is not normal. This was unprecedented and chances
are high that such a sequence of high positive returns, might not get repeated again for
many years if not decades. So do not have such expectations of multi-year high
returns from stock markets. Infact, we should be ready to face ugly years like 2008-
2009 – when index itself fell by
more than 50% and individual stocks crashed by 80-90%. I have said countless times
that one should invest more in market crashes or when everyone else is giving your
reasons to not invest. But that is easier said than done. When a crisis like the one in
2008-2009 comes, it is not easy to combine your cash with courage.

Intense selling today brought the BSE Sensex to its lowest closing of 2006. Weak
global markets and worries over inflation and higher interest rates continued to drag
stock prices down to sharply lower levels on the major Indian bourses.

During the financial crisis of 2007–2008, the stock markets in India fell on several
occasions in 2007 as well as 2008. In 2007, there were five sharp falls in the stock
markets. On 2 April 2007, The Sensex fell by 617 points to 12,455 though during the
course of the day, it fell further. As per the analysts at rediff, "The Sensex opened with
a huge negative gap of 260 points at 12,812 following the Reserve Bank of India [Get
Quote] decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly
in auto and banking stocks, saw the index drift to lower levels as the day progressed.
The index tumbled to a low of 12,426 before finally settling with a hefty loss of 617
points (4.7%) at 12,455.

On 21 November 2007, trying to explain the fall, rediff recounted that "Mirroring
weakness in other Asian markets, the Sensex saw relentless selling." The index
tumbled to a new low of 18,515 - down 766 points from the previous day's close. It
finally ended with a loss of 678 points at 18,603. " On 21 Jan 2008, the BSE fell by
1408 points to 17,605 leading to one of the largest erosions in investor wealth. The
BSE stopped trading for a while at 2:30 pm due to a technical snag although its circuit
filter allows swings of up to 15% before stopping trading for an hour. Referred to in
the media as "Black Monday", the fall was blamed by analysts at HSBC mutual fund
and JP Morgan on a large variety of reasons including change in the global investment
climate, fears of United States' economy going into a recession, FIIs and foreign
hedge funds selling in order to reallocate their funds from risky emerging markets to
stable developed markets, a cut in US interest rates, global bourses (often referred to
as event related volatility), volatility in commodities markets, a combination of global
and local factors ("...other emerging markets were down nearly 20% so India is
playing catch-up..."), huge build-ups in derivatives positions leading to margin
calls and that many IPOs had sucked out liquidity from the primary market into the
secondary market. HSBC mutual funds analysts predicted further falls in the stock
market, and the analysts at JP Morgan were of the opinion that market would fall a
further 10-15%.

On the next day on 22 January 2008, the Sensex again fell by 875 points to 16,729.
Jan 22, 2008: The Sensex saw its biggest intra-day fall on Tuesday when it hit a low
of 15,332, down 2,273 points. However, it recovered losses and closed at a loss of 875
points at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was
suspended for one hour at the Bombay Stock Exchange after the benchmark Sensex
crashed to a low of 15,576.30 within minutes of opening, crossing the circuit limit of
10 per cent.

On 24 August 2015, the BSE Sensex crashed by 1,624 points. Finally, the indices
closed at 25,741 points and the Nifty to 7,809 points. The reason given for this crash
was given as a ripple effect due to fears over a slowdown in China, as the Yuan had
been devalued two weeks ago leading to a fall in the currency rates of other currencies
and the rapid selling of stocks in China and India. The Shanghai stock exchange too
fell by 8.5%. A variety of other reasons too were given for this fall by analysts
including disappointing earnings in the first quarter for many Indian companies,
somber commentaries by their management leading to doubts regarding their recovery
and a below average monsoon for that year.

Table 7 Annual returns of Sensex

Ye Annual
ar return
20 -20.6%
00
20 -17.9%
01
20 3.5%
02
20 72.9%
03
20 13.1%
04
20 42.3%
05
20 46.7%
06
20 47.1%
07
20 -52.4%
08
20 81.0%
09
20 17.4%
10
20 -24.6%
11
20 25.7%
12
20 9.0%
13

20 29.6%
14
20 -5.0%
15
20 1.9%
16
20 27.9%
17
20 5.9%
18
20 14.38%
19
20 15.75%
20
 FIG

The stock markets in India continued to fall in 2016. By 16 February 2016, the BSE
had seen a fall of 26% over the past eleven months, losing 1607 points in four
consecutive days of February. The reasons given for this included NPAs of Indian
banks, "global weaknesses" and "global factors". In the four months from November
2015 to February 2016, FIIs were reported to have sold equities worth Rs 17,318 crore
as, in the opinion of analysts, concerns grew over growth in China and as crude oil
prices tumbled below $30 per barrel.

On 9 November 2016, crashed by 1689 points, believed by analysts to be due to the

crack down on black money by the Indian government, resulting in franctic selling.
The Sensex
nosedived by 6% to 26,902 and the Nifty dropped by 541 points to 8002. These were
said to be due to the demonetization drive by the Modi government. The Hindu was of
the opinion that the weakening rupee and the US presidential election too had some
bearing on the behavior of investors. The S&P had also fallen by 4.45%. Although not
classified as a crash, the BSE and NSE fell sharply on 2 and 5 February 2018, sparked
by the comments of the Finance minister's proposal in the budget speech to introduce
a 10% long term capital gains tax (LTCG) on equity shares sold after 12 months. The
BSE Sensex fell by 600 points in two days, and the Nifty 50 fell by about 400 points
to 10,676 on 5th. Earlier, the BSE Sensex had fallen by 570 points to 35,328 on 2
February and the NSE Nifty by 190 points to a low of 10,826.

On 1 February 2020, as the FY 2020-21 Union budget was presented in the lower
house of the Indian parliament, Nifty fell by over 3% (373.95 points) while Sensex
fell by more than 2% (987.96 points). The fall was also weighed by the global
breakdown amid coronavirus pandemic centered in China. On 28 February 2020,
Sensex lost 1448 points and Nifty fell by 432 points due to growing global tension
caused by coronavirus, which W.H.O said has a pandemic potential. Both BSE and
NSE fell for the entire five days of the week ending with the worst weekly fall since
2009.On March 4 and 6, markets fell by around 1000 points and several crores of
wealth was wiped out. On 6 March 2020, Yes Bank was taken over by RBI under its
management for reconstruction and will be merged with SBI. This was done to ensure
smooth functioning of the bank as it was struggling for couple of years to cope up
with heavy pressure due to cleaning of bad loans. On 9 March 2020, the Sensex fell by
1,941.67 points, while Nifty-50 broke down by 538 points. The fear of COVID-19
outbreak has created havoc all over the globe and India is no exception. Further, the
recent Yes Bank crisis also made the markets fell. The markets ended in red with
Sensex closing on 35,634.95 and Nifty-50 on 10,451.45.

On 12 March 2020, the Sensex fell by 2919.26 points (-8.18%), the worst continuation
of the week in the history while Nifty-50 broke down by 868.25 points (-8.30%) amid
World Health Organization (WHO) declaring Coronavirus outbreak as "pandemic”.
Sensex ended to 33-month low of 32778.14. On 16 March 2020, Sensex plunged by
2,713.41 points
(around 8%), the second worst fall in its history. On the other hand, Nifty ended
below 9200–mark at 9,197.40 due to global economic recession. However, the Sensex
continued to fall straight for 4–continuous days till 19 March 2020, losing 5815 points
during the period. On 23 March 2020, Sensex lost 3,934.72 points (13.15%) and Nifty
plunges 1,135 points (12.98%) at 7610.25 as coronavirus-led lockdowns across the
world triggered fears of a recession. These are now the lowest levels since 2016. It's
witnessing the biggest weekly loss since October 2008, as the increasing number of
coronavirus cases in India as well as globally.
 FINDINGS AND SUGGESTIONS
Stock market is the physically existing institutionalised set up where instruments of
security stock market like shares, debentures, bonds, securities are traded. Stock
market makes a floor available to the buyers and sellers of stocks and liquidity comes
to the stocks. At this scenario the importance of investing in stock market is getting
higher. The number of investors and the number of stock market out of which a
majority are online markets , are increasing day to day. Currently investing in stock
market and having an intraday trading is considered as the best way to earn money.
Considering its importance the present study concentrate on ‘ A Study on Indian
Stock Market: NSE and BSE’. The objectives of the study are to study about
the emerging stock markets in India such as NSE and BSE, to study about the trend of
year effect of the Indian stock market (BSE and NSE) from 2000 to 2020, to examine
the market capitalisation of Indian stock market (NSE and BSE) from 2000 to 2020, to
examine the trend of risk and return of Indian stock market (NSE and BSE) from 2000
to 2020 and to study about the type of trading preferred by the investors in stock
market. In order to assess the objective both primary data and secondary data were
used. The primary data were collected from 30 respondents from Thrichur district by
using google form. The secondary data was collected from various journals, articles,
publications and online websites.

4.1 Findings of the study

● Due to covid-19 pandemic, Sensex lost 3,934.72 points (13.15%) to 25, 981.24
and Nifty lost 1,135 points (12.98%) to 7610.25.
● The biggest stock market crashes in India were caused mainly due to covid19
pandemic, 2008 financial crisis, Harshad Mehta scam.

● Nifty has less risk and higher liquidity than Sensex. Nifty suffer lower market
impact cost than Sensex.

● Covid-19, strong correlation with the trends and indices of the global market as
BSE Sensex and Nifty 50 fell by 38%. The total market cap lost a staggering
27.3% from the start of the year.
● Pre covid-19, market capitalisation on each major exchange in India was about
$2.6 trillion. The Sensex returned around 14% for the year 2019 prominently
featured blue chip companies such as HDTV bank, TCS, Infosys, Reliance,
ICICI, without which Sensex return would have been negative.

● Despite a population of over 1.2 billon, there exist only 20 million active
trading accounts in India.
● The banking sector have maximum risk and return of 1.9 and 10 respectively
ICICI in automobile sector Eicher motor have maximum return of 35.9 Ashok
Leyland have maximum risk of 1.9 IT sectors have maximum return of 17.7
and maximum risk of Oracle of 6.6 and in fast moving consumer goods sector,
Godrej have maximum return of 14.8 and highest risk in ITC of 0.5.

● The stock of bank of India, HDTV bank, Mahindra bank are less volatile in
nature. The stock of federal bank, Indus land bank, Canara bank, ICICI bank,
PNB, SEBI are moderately volatile in nature. The stock of yes bank and axis
Bank have high volatile in nature.
● Among all the investment avenues in the stock market banking is considered as
the most sensitive investment avenue the fine stocks of banking sectors shows
Arch effect which means period of high vitality is followed by similar high
volatility and low is followed by low volatility.
● The S&P 500 experienced it’s fastest ever bear market, clocking in at just 33
days before it’s third fastest recovery to a break-even level in about 5 months.
● 80% of the stockholders invest/trade in stock market for higher return rather
than safety and liquidity.
● 50% of the stockholders got information regarding stock market from financial
advisors or brokers.
● 63% of the stockholders prefer to have long term trading as it involves less
risk. Intraday trading has higher risk thus only 7% preferred intraday trading.
● All the stockholders prefer to have online mode of trading. As the
advancement of technology and the pandemic scenario have made stock
market into an online node of trading.
4.2 CONCLUSUON

Indian stock market now grown into a great material with a lot of qualitative
inputs and emphasis on investor protection and disclosure norms. The market has
become automated, transparent and self-driven. It has integrated with global
markets, with Indian companies seeking listing on foreign capital markets
exchange, off shore investments coming to India and foreign funds floating their
schemes and thus bringing expertise in to our markets. India has achieved the
distinction of possessing the largest population of investors next to the U.K.,
perhaps ours is the country to have the largest number of listed companies with
around several equity fund management avenues and National Fund managers
most of them automated. India now has world class regulatory system in place.
Thus, at the dawn of the new millennium, the equity funds market has increased
the wealth of Indian companies and investors. No doubt strong economic
recovery, upturn in demand, improved market structure, and other measures have
also been the contributory driving forces. Even though Covid pandemic has fall in
India stock market, it recovered with huge hikes along with the economic
recovery of the nation.