...in the stock market of India -Abhinav Barik Abstract This research paper focuses on the impact the derivative trading has had on the stock market of India. The impact is judged by the change in the volatility after the introduction of the derivative trading. In this paper 5 stocks are taken on which derivative trading was introduced and 4 stocks on which derivative trading was not introduced. The daily closing price of those stocks was taken for two periodspre derivative period and the post derivative period. These were analyzed using GARCH model to find the variance equation and then the GARCH coefficients from this equation were compared using the Wald test to check if the volatility has actually changed. The study suggests that the volatility has decreased for 4 companies, increased for 2 and two other companies did not show any significant change in the volatility. * Keywords: volatility, derivative, correlogram diagram, unit root, GARCH, Wald test *MBA student (2010-12), ICFAI BUSINESS SCHOOL, Hyderabad barik.abhinav@rediffmail.com 1. Introduction Derivative trading was introduced on the individual stocks of the Indian market in the year 2001 by SEBI. This was with a view to decrease the risk taken by the investors and to increase the investment opportunities. Since the derivative market and the spot market are linked so that the risk can be transferred, therefore the investors if want to transfer their risk need to be informed about both the market. Hence...
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..., named “Past and Present of Capital Market” it has been mentioned that the Indian stock markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only few brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States to Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as “The Stock Exchange“). Trading was at that time limited to a dozen brokers. These stock brokers organized an informal association...
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...STOCK EXCHANGES IN INDIA Module Objectives The main objective of this module is to explain the structure of organized exchanges for trading in stocks, commodities and derivatives. The features of derivative instruments like forwards, futures, options and swaps are also described. Module Contents 5.1. Stock Exchanges 5.2. Commodity Exchanges 5.3. Derivatives 5.4. Currency Futures in India 5.1 Stock Exchanges in India 5.1.1 History and Development Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meagre and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for...
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...Chapter 1 INTRODUCTION 1. INTRODUCTION TO THE STUDY Equity market is often considered as the main engine driving the economy. Equity markets allow savers to acquire stake in a firm, and sell it, if they need access to their savings or if they want to alter their portfolio. At the same time, it allows firms to raise permanent capital for asset creation. By incorporating information about future earnings potential in current stock prices, the equity market also serves as a barometer to the state of the economy. This makes the equity market an important constituent of financial markets. In emerging countries, equity market plays an even more important role in economic development. In many emerging markets, firms would need large quantum of fund to expand and be able to pursue the prevalent high growth rates. Equity market is the only liquid financial market in many emerging countries and hence its role in economic development can not be overemphasized. In addition, world over, financial markets are getting less insular. The investors in developed countries are seeking investment opportunities beyond the confines of their domestic economy to enhance return and diversify risks. The investment in stock involves many risks. The investor has to know the exact time to buy and sell a security. The investors have to carry analysis before investing in any stocks. Most of the investors are unaware about the analysis to be carried out before investing...
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...INDIAN DERIVATIVES MARKETS 1 Asani Sarkar 1 I gratefully acknowledge the assistance of Arkadev Chatterjea, Neel Krishnan, Golaka C. Nath and V. Soundararajan in the preparation of this article. The views expressed in this article are mine alone, and do not necessarily reflect those of the Federal Reserve Bank of New York, or the Federal Reserve System. Derivatives OUP 1 1. Rise of Derivatives The global economic order that emerged after World War II was a system where many less developed countries administered prices and centrally allocated resources. Even the developed economies operated under the Bretton Woods system of fixed exchange rates. The system of fixed prices came under stress from the 1970s onwards. High inflation and unemployment rates made interest rates more volatile. The Bretton Woods system was dismantled in 1971, freeing exchange rates to fluctuate. Less developed countries like India began opening up their economies and allowing prices to vary with market conditions. Price fluctuations make it hard for businesses to estimate their future production costs and revenues. 2 Derivative securities provide them a valuable set of tools for managing this risk. This article describes the evolution of Indian derivatives markets, the popular derivatives instruments, and the main users of derivatives in India. I conclude by assessing the outlook for Indian derivatives markets in the near and medium term. 2. Definition and Uses of Derivatives A derivative...
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...Table of Contents 1. Brief History of The Indian Capital Market 3 2. Indices 4 3. Companies quoted 6 4. Rupee vs Dollar 7 1. Brief History of The Indian Capital Market The history of the capital market in India dates back to the eighteenth century, one of the oldest in Asia; When East India Company securities were traded in the country. Until the end of the nineteenth century securities trading was unorganized and the main trading centres were Mumbai and Calcutta. Of the two, Bombay was the chief trading centre wherein bank shares were the major trading stock During the American Civil War (1860-61). Bombay was an important source of supply for cotton. Hence, trading activities flourished during the period, resulting in a boom in share prices. This boom, the first in the history of the Indian capital market lasted for a half a decade. The bubble burst on July 1, 1865 when there was tremendous slump in share prices. Trading was at that time limited to a dozen brokers; their trading place was under a banyan tree in front of the Town hall in Mumbai. These stock brokers organized informal association in 1897 – Native Shares and Stock Brokers Association, Bombay. The Stock exchanges in Calcutta ad Ahmedabad also industrial and trading centers, came up later. The Bombay Stock Exchange was recognized in May 1927 under the Bombay Securities Contracts Control Act, 1925. The capital market was not well organized and developed during the British rule because the British...
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...Empirical Investigation of Indian Stock Market and Debt Market Post Liberalization Prepared by Group I Monika Aggarwal (1) VipulAggarwal (2) VrindaAilani (3) ParasharAnand (4) PraneetBattina (5) Rahul Balyan (6) Supervised & Mentored by Dr.Nupur Gupta Bhattacharya Faculty, K J Somaiya Institute of Management Studies & Research Contents Abstract..................................................................................................................................3 Literature Review....................................................................................................................4 Introduction............................................................................................................................6 1) Debt Market.........................................................................................................................6 2) Equity Market......................................................................................................................8 Relation between Debt and Equity Market................................................................................10 Empirical Relation.................................................................................................................12 Limitations of Study................................................................................................................15 Conclusion.....................................
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...Index Traded Derivative Instrument In India 1. Effect Of Future Trading On Spot Market Market Volatility: A Study Of CNX Bank Nifty. Mallikarjunappa And Afsal E.M. This Paper Studies The Volatility Implications Of The Introduction Of Derivatives On Stock Market Volatility In India Using The S&P Cnx Nifty Index As A Benchmark. To Account For Non-Constant Error Variance In The Return Series, A Garch Model Is Fitted By Incorporating Futures And Options Dummy Variables In The Conditional Variance Equation.The Introduction Of Derivative Trading On Spot Market Volatility Of Nifty And Concluded That Price Sensitivity To Old News Is Higher During Pre Future Period Than Post Future Period And With Introduction Of Future, Market Volatility Is Determined By Recent Innovation. They Also Explored Effect Of Future Trading On Spot Market Volatility By Using Garch Model On Cnx Bank Nifty And Found That There Is No Impact Of Future Trading On Spot Market Volatility. However, Impact Of New News Increased And Persistence Effect Of Old News Decreased In Post Future Period. 2. Impact Of Derivative Trading On Stock Market Volatility In India: A Study Of S&P CNX Nifty. Ruchika Gahlot, Saroj K. Datta, Sheeba Kapil The Purpose Of The Study Is To Examine The Impact Of Derivative Trading On Stock Market Volatility. The Sample Data Consist Of Closing Prices Of S&P Cnx Nifty As Well As Closing Prices Of Five Derivative Stocks And Five Non Derivative Stocks From April 1, 2002 To March 31, 2005...
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...Lets start with the Capital Market in India first. Capital Market is a market in which individuals and institutions trade financial securities. The securities are sold off and bought in capital market for raising the funds (Investopedia, 2013). Capital Market includes both primary and secondary market. Capital market helps in proper channelization of funds and helps raising long- term funds. This kind of market is a continuous market and provides variety of services. The market where new securities are bought and sold for the first time is known as Primary Market. Types of issue in Primary Market may be through public offer (where shares are offered to general public), bonus issue, Follow- on public offers, private placement (intermediaries sell shares to selected clients at higher price), right offer (shares are offered to existing shareholders) etc. It helps in providing additional capital to issuer companies. Secondary Capital Market is a market where existing securities are bought and sold. Secondary market offers liquidity, which encourages even those investors to invest who wants to invest for small period of time. Secondary market is also known as Stock Exchange, which is an organized body of individuals for purpose of controlling and regulating the buying and selling of securities (App-1). In India there are 24 recognized stock exchanges out of which National Stock Exchange of India (NSEI) and Over the Counter Exchange of India are all India...
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...Login Register | Resources | Practice Tests | Ask Experts | Question Papers | Jobs | Universities | Colleges | Courses | Schools | Training | | Gift Shop | Bookmarks | Reviews | Learn English | Social Hub | Links | New Posts | My India | Members | Polls | | | Active Members Today * R Pramod (199) * Ajay (121) * Abhinav (75)Last 7 Days * R Pramod (1735) * Sukhdev Singh (962) * Pramod (598)more... | Impact of Foreign Institutional Investors on Indian Stock Market Posted Date: Total Responses: 0 Posted By: hardeep Member Level: Silver Points/Cash: 10 | | CHAPTER I INTRODUCTION 1.1 INTRODUCTION 1.1.1 FOREIGN INSTITUTIONAL INVESTORS FII is defined as an institution organized outside of India for the purpose of making investments into the Indian securities market under the regulations prescribed by SEBI. ‘FII’ include “Overseas pension funds, mutual funds, investment trust, asset management company, nominee company, bank, institutional portfolio manager, university funds, endowments, foundations, charitable trusts, charitable societies, a trustee or power of attorney holder incorporated or established outside India proposing to make proprietary investments or investments on behalf of a broad-based fund. FIIs can invest their own funds as well as invest on behalf of their overseas clients registered as such with SEBI. These client accounts that the FII manages are known as ‘sub-accounts’...
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...CORP (ONGC) By: SUBHROJIT MALLICK (1092) SONIA KALE (1090) SNEHA ROY (1086) PALLAV HATIMURIA (1061) INTRODUCTION ONGC (Oil and Natural Gas Corporation Limited), the Indian multinational oil and gas company headquartered in Dehradun is India’s largest oil and gas exploration and production company. It is a Public Sector Undertaking (PSU) of the Government of India, under the administrative control of the Ministry of Petroleum and Natural Gas. ONGC produces around 69% of India's crude oil. On 31 March 2013, its market capitalisation was INR 2.6 trillion (US$ 48.98 billion), making it India's second largest publicly traded company. In a government survey for FY 2011-12, it was ranked as the largest profit making PSU in India. ONGC has been ranked 357th in the Fortune Global 500 list of the world's biggest corporations for the year 2012. It is ranked 22nd among the Top 250 Global Energy Companies by Platts. ONGC was founded on 14 August 1956 by Government of India, which currently holds a 69.23% equity stake. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary basins of India, and owns and operates over 11,000 kilometers of pipelines in the country. Its international subsidiary ONGC Videsh currently has projects in 15 countries. ONGC has discovered 6 of the 7 commercially-producing Indian Basins, in the last 50 years, adding over 7.1 billion tonnes of In-place Oil & Gas volume of hydrocarbons in Indian basins. During FY 2012-13, ONGC had to...
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...Macro-Economic Variables on the Stock Market Impact of Macro-Economic Variables on the Stock Market Arunabha Dhar (Roll No. 008) Gaurav Bhatt (Roll No. 017) Amartya Ray (Roll No. 067) Bodhisatva Basu (Roll No. 075) Rahul Jain (Roll No. 094) Arunabha Dhar (Roll No. 008) Gaurav Bhatt (Roll No. 017) Amartya Ray (Roll No. 067) Bodhisatva Basu (Roll No. 075) Rahul Jain (Roll No. 094) Contents UNDERSTANDING ON RESEARCH PROBLEM IDENTIFICATION & DEFINITION 3 ABSTRACT 3 INTRODUCTION 3 LITERATURE REVIEW 6 GAP in Research 8 MOTIVATION 8 DATA COLLECTION/SAMPLE SELECTION 9 HYPOTHESIS 10 Research Methodology 10 FINDINGS 11 CONTRIBUTION TO LITERATURE 23 CONCLUSIONS 23 References 25 UNDERSTANDING ON RESEARCH PROBLEM IDENTIFICATION & DEFINITION Relationship between macroeconomic variables and broad market index: A causal relationship between Nifty CNX and macroeconomic variables in India ABSTRACT The relationship between macroeconomic variables and broad market index by now are well documented in the literature. However a void in the literature relates to examining the causal relationship between Nifty CNX and macroeconomic variables such as FDI, FPI, weighted average lending rate (WALR), GDP and oil import in India and correlation among the macro variables. INTRODUCTION Globalization of Indian economy post liberalization has been spurred by capital and stock investment in terms of FDI & FPI. Indian stock market both securities and commodities...
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...A Study of Monetary Policy Impact on Stock Market Returns (With Special Reference to Nifty and Bank Nifty) A PROJECT REPORT Submitted by Chintan Divetia (1011416026) Submitted to Mr. Raviraj Gohil Assistant Professor Department of Finance In partial fulfilment for the award of the degree of POST GRADUATION DIPLOMA IN MANAGEMENT in Finance Shanti Business School, Shela, Ahmedabad. ACKNOWLEDGEMENT It was a great opportunity for me to work with Sharekhan Ltd., pioneers in the field of Stock Market. I am extremely grateful to all those who have shared their expertise and knowledge with me and without whom the completion of this project would have been virtually impossible. Firstly, I would like to thank my Company Mentor Mrs. Raina Vashi who has been a constant source of inspiration for me during the completion of this project. I would also like to thank Mr. Henal Bardoliwala, Relationship Manager of Sharekhan Ltd., for supporting me to complete my project. I am thankful to all staff of Sharekhan Ltd for their valuable support and cooperation during the entire tenure of this project. I thank my faculty guide Mr. Raviraj Gohil who helped me out at every critical situation that i faced in my project and gave us his valuable advice to solve problems. EXECUTIVE SUMMARY I feel great pleasure by presenting this project. As a student of PGDM of ‘Shanti Business School Ahmedabad’, there is a subject of partial training followed...
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...A PROJECT REPORT ON “Analysis of derivative segment (Future & Options Market) of capital market” SUBMITTED BY: RAVINDER SINGH NEGI NRS/011304 In the partial fulfillment of the requirement as per THE INSTITUTE OF COST AND WORKS ACCOUTANT OF INDIA Institute of Cost and Works accountant of India Delhi Office 3, Institutional Area Lodhi Road, New Delhi - 110003 Phones: 011-24622156, 24521492 Fax: 011-43583642, 24622156, 24618645 DECLARATION I hereby declare that the Project report has been prepared by me during the year 2011. In partial fulfillment of the requirement for the award of the degree of Institute of Cost and Works Accountant of India (NIRC). Ravinder Singh Negi Place:--New Delhi Date:--...
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...64 Management Insight INDIAN FUTURES MARKET : AN ANALYSIS Agha Nuruzzaman* ABSTRACT The Indian government’s efforts are directed towards the establishment of a free, fair, transparent and fully informed market with help of the Futures market, so that futures prices are truly determined by the forces of demand and supply. In the long term, the continuing rapid growth of economy in India creates a huge potential for Futures market. This study is an effort to understand the factors under PEST Analysis. For this purpose, data from different sources were collected and later analyzed by using statistical techniques. With an improving agriculture, widening scope of education, a balanced economy, friendlier infrastructure, vividly sketched out laws unstained by any kind of corruption will create the right climate for swift growth of the futures market. The PEST analysis shows that most of the factors considered are indeed going in favour of India’s futures market. INTRODUCTION A futures contract is a legally binding agreement to buy or sell a commodity or financial instrument sometime in the future at a price agreed upon at the time of the trade. While actual physical delivery of the underlying assets seldom takes place, futures contracts are nonetheless standardized according to delivery specifications, including the quality, quantity, and time and location. The only variable is price, which is discovered through the trading process. In this study we ...
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