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Submitted by Submitted to

Irshad Hussain Mrs. Navleen Kaur

Enroll no . A1802009459

Sec - C

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mhe Indian stock exchanges hold a place of prominence not only in Asia but also at the global
stage. mhe Bombay Stock Exchange (BSE) is one of the oldest exchanges across the world, while
the National Stock Exchange (NSE) is among the best in terms of sophistication and
advancement of technology. mhe Indian stock market scene really picked up after the opening up
of the economy in the early nineties. mhe whole of nineties were used to experiment and fine
tune an efficient and effective system. mhe µbadla¶ system was stopped to control unnecessary
volatility while the derivatives segment started as late as 2000. mhe corporate governance rules
were gradually put in place which initiated the process of bringing the listed companies at a
uniform level. On the global scale, the economic environment started taking paradigm shift with
the µdot com bubble burst¶, 9/11, and soaring oil prices. mhe slowdown in the US economy and
interest rate tightening made the equation more complex.
However after 2000 riding on a robust growth and a maturing economy and relaxed regulations,
outside investors- institutional and others got more scope to operate. mhis opening up of the
system led to increased integration with heightened cross-border flow of capital, with India
emerging as an investment µhot spot¶ resulting in our stock exchanges being impacted by global
cues like never before.

Savings and investment are two key macro variables which play a significant role in economic
growth. Global emerging economies are experiencing record savings at a time when the
developed world has been witnessing a decline in gross domestic saving rates.

Needless to say over here, that the best way to streamline the savings is through long-term
investments in the equity markets by funding the corporate growth story. Over the past decade,

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mhis growth in the size of the country¶s economy has been more than complimented by a
dramatic 8-fold surge in the market capitalization of the Indian companies from $165 billion in
2001 to $1.3 trillion in 2010. However, it does not mean that this manifold rise in the equity
markets and its turnover has been consistent with the increase in the market development and
penetration.
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c'c!" " released by MCX Stock Exchange offers some statistical
insights on equity markets, stock exchanges, investor distribution patterns and various other
facets of the Indian equity markets. Here are some important findings:

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mhe total number of active regional stock exchanges across India has come down from 16 at the
start of the decade to 4 in 2008-09, including 2 national exchanges. Moreover, National Stock
Exchange¶s share of total turnover across stock exchanges has surged dramatically from 61.53%
in 2001-02 to 92.52% in 2008-09.

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Almost 80% of the NSE¶s turnover in India continues to come from the top 5 cities of Mumbai,
Delhi, Kolkata, Ahmedabad and Chennai as on 2008-09. In fact, the financial capital of India ±
Mumbai ± accounts for more than half the total NSE turnover at 55%; beating Delhi, the second
largest turnover roller with a market share of 14.97%, by a huge margin.

mhis is an indication as to how geographically concentrated is the investor community situated in

the major canters¶ of the country; thus providing ample scope for market penetration in rural and
town areas.

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Despite the Indian economy growing at a scorching pace of 8.5% of the GDP and the global
funds increasingly eyeing the structural story of India; 
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low financial inclusion in the huge domestic growth story.
Other emerging economies such as China and South Korea boast of a higher direct participation
to the extent of 9.4% and 7.4% from the retail public in their respective stock markets.

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Almost 29% of the exchange volumes in 2009 were concentrated in the top 10 companies of
India. In most other major economies like China, maiwan, Japan and Korea the same stood below
20% for top 10 companies in their respective countries.

mhus, there is still little room for the lagging Indian companies to grow at a higher speed and,
consequently, notch higher turnover on the bourses in a bid to facilitate higher inclusiveness in
terms of exchange turnover, away from being dominated by the top 10 companies.

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mhe origin of the New York Stock Exchange (NYSE) is dated back to May 17, 1792, when the
Buttonwood Agreement was signed by twenty-four stock brokers outside of 68 Wall Street in
New York under a buttonwood tree. Also called the ³Big Board´, it is the largest stock exchange
in the world in terms of dollar volume and second largest in terms of number of companies
listed. mhe mokyo stock exchange was established on May 15, 1878 and trading began on June 1,
1878. In 1943, the exchange was combined with ten other stock exchanges in major Japanese
cities to form a single Japanese Stock Exchange. It is the second largest stock exchange market
in terms of monetary volume and currently has 2302 listed companies. mhe Hong Kong stock
exchange is the 8th largest stock exchange in the world in terms of Market capitalization. mhe
Hang Sang Index (HIS), was started on November 24, 1969. mhe Russian stock exchange was
established in 1995 by consolidating the separate regional stock exchanges into one uniformly
regulated trading floor. mhe Korea stock exchange was created by theintegration of the three
existing of the Korean Spots and Futures exchanges (Korean stock exchange, Korean futures
exchange & KOSDAQ) under the Korea Stock and Futures Exchange Act.3.5. In this paper, the
names of the countries and the names of the indices of those countries have been used
interchangeably. mhus, the names of the countries represent theindices for the purpose of analysis
and they need to be interpreted that way. Again, all the analyses have been done with the closing
prices.

mhe following table gives the country and the exchange with the name of its indices.

Country Stock exchange name Indices name

India National Stock Exchange S & P Nifty
India Bombay Stock Exchange Sensex
Hong Kong Hong Kong Stock Exchange Hang Seng
USA New York Stock Exchange NYSE
Korea Korean Stock Exchange KRX 100
Russian Russian Stock Exchange RmS Index

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Presently, the fluctuations in the Indian market are attributed heavily to cross border capital
flows in the form of FDI, FII and to reaction of Indian market to global market cues. In this
context, understanding the relationship and influence of various exchanges on each other is very
important. mhis study that compares global exchanges which are from different geopolitico-
socio-economic areas. With the cross border movements of capital like never before in the form
of FDI and FII, coupled with the easing of restrictions bringing various stock exchanges at par in
terms of system and regulations, it can be assumed reasonably that a particular stock exchange
will have some impact on other exchanges.

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mhe main objective of this study is to capture the trends, similarities and patterns in the activities
and movements of the Indian Stock Market in comparison to its international counterparts. mhe
aim is to help the investors (current and potential) understand the impact important happenings
on the Indian Stock exchange. mhis is especially relevant in the current scenario when the
financial markets across the globe are getting integrated into one big market and the impact of
one exchange on the other exchanges. In other words, the intention is to test the hypothesis,
µwhether various stock exchanges globally have any impact on each other¶ or they are correlated
in any way with regard to their movements and, if so, to what extent. Arising out of the main
hypothesis is the question - given the above context: What impact would the result have on the
understanding that international diversification of investment is desirable and profitable with
regard to both risk and return?


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mhe world is divided into four main regions, namely, the US, Euro region, India and Asian
region. Stock exchanges representing various regions used in this study include NSE (India),
NYSE (USA), Hang Seng (South East Asia), Russian Stock Exchange (Russia), Korea (Asia).
mhe number of sample units for this study is five.

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mhis is the main part of the study wherein the various stock exchanges of the sample have
been compared on certain parameters, both qualitatively and quantitatively.

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In this section the various stock exchanges have been compared on the following
parameters;
1. Market Capitalization
2. number of listed securities
3. listing agreements
4. circuit filters
5. settlement

mhese parameters are used to look at selected important aspects of any stock exchange, viz., the
market capitalization gives an idea about the size of the respective exchanges; whereas the
number of listed securities acts as an indicator for the volume and liquidity of any exchange. mhe
listing agreements take care of the governance issue, while circuit filters give an insight into the
risk management framework of the said exchange. Finally, the efficiency of a stock exchange has
been measured in terms of its settlement process.

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Market capitalization is the measure of corporate size of a country. It shows the current stock
price multiplied by the number of outstanding shares. It is commonly referred to as Market cap.
It is calculated by multiplying the number of common shares with the current price of those
shares. mhis term is often confused with capitalization, which is the total amount of funds used to
finance a firm's balance sheet and is calculated as market capitalization plus debt (book or
market value) plus preferred stock. While there are no strong definitions for market cap
categorizations, a few terms are frequently used to group companies based on its capitalization.
mhe table below shows the market capitalization of various stock markets in the world.
Based on the above study, it can be observed that India is 15th in the world ranking of
Marketcapitalization. mhis is in spite of having the third largest investor base, after Japan and
USA,and having the largest number of companies listed. United States leads the list of
countrieswith the highest market capitalization. It is interesting to note that the total
marketcapitalization of all the companies listed on the New York Stock Exchange is greater than
theamount of money in the United States. As mentioned earlier, the above data pertain to theyear
2005. mhe individual and global economy has grown since then. As on March 2006, theglobal
market capitalization for all stock markets was $43600 billion.

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Listing in a stock exchange refers to the admission of the securities of the company for
trade dealings in a recognized stock exchange. mhe securities may be of any public limited
company, Central or State Government, quasi-governmental and other
financialinstitutions/corporations, municipalities, etc. Securities of any company are listed in a
stockexchange to provide liquidity to the securities, to mobilize savings and to protect the
interestsof the investors.India has the highest number of companies listed in the stock market.
Out of this, about 75% of the companies are listed with the Bombay Stock Exchange. After
India, United States hasthe highest number of companies listed.
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Eligibility Criteria for IPOs/FPOs: Companies have been classified as large cap companies
and small cap companies. Company with a minimum issue size of Rs. 10 crores and market
capitalization small cap company is a company other than a large cap company.

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Eligibility Criteria for New companies (IPOs)
Paid Up capital: Not less than 10 Crores
Market Capitalisation: Not less than 25 Crores
At least three years track record:

c mhe company has not been referred to the Board for Industrial and Financial
Reconstruction (BIFR).

c mhe networth of the company has not been wiped out by the accumulated losses
resulting in a negative networth.

c mhe company has not received any winding up petition accepted by a court.

c µPromoters¶ mean one or more persons with a minimum 3 years¶ experience of each of
them in the same line of business and shall be holding at least 20% of the post issue
equity share capital individually or severally

c No disciplinary action by other stock exchanges and regulatory authorities in past three
years.

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Paid up Capital: Not less than 10 Crores

Market Capitalization: Not less than 25 crores.
Minimum Listing Requirements for companies listed on other stock exchanges. mhe company
should have minimum issued and paid up equity capital of Rs. 3 crores. mhe Company should
have profit making track record for last three years.
Minimum net worth of Rs. 20 crores
Minimum market capitalization of the listed capital should be at least two times of the
paid up capital.

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Stock Markets have the dubious reputation of crashing without a warning taking with the savings
of numerous investors. A stock market crash is a sudden dramatic decline of stock prices across a
significant cross-section of a market. Crashes are driven by panic as much as by underlying
economic factors. mhey often follow speculative stock market bubbles such as the dot-com
bubble.
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mhis segment takes care of the efficiency issue of the said stock exchange. It basically looks
into the speed at which any of the numerous transactions affected in the market gets settled.
mhis is especially crucial given the volume. We see that Indian exchanges are at par with the
best in the world when it comes to efficient settlement. It can even go one up if the proposed
µm 1¶system is put in place.

Below are the various settlement cycles for the stock exchanges.

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mhis section tries to compare the various exchanges on the basis of returns and the corresponding
risks associated with it, returns being, perhaps, the single most important factor affecting the
performance of any index. While risk can be termed as the major factor underlying all activity, it
becomes imperative to compare the exchanges based on this parameter. mable 2 exhibits the
historical risk-return figures of the exchanges. From the return perspective, NYSE seems to be
most stable among all of these stock exchanges. mhere are only two years when NYSE has given
the negative returns, i.e. in the years 2001 and 2002. Russian stock exchange is the most volatile
of all these and has given returns from 108% to -194%. NSE seems to have followed or moved
in tandem with the NYSE more after year 2000. Hang Sengexchange follows long cycles. If
returns turn negative, they remain negative for two or three years. Similarly if return turns
positive, then they remain so again for two or more years.Russian stock exchange has shown the
least variation and hence appears to be least risky. But actually there is very less trading in the
Russian stock market during the period of 1999 to 2003 due to stagnation and political instability
and uncertainties about economy.

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Even with a back breaking food inflation and policy tightening from the government, the India
long term growth story is still very much on the right track.mhe International Monetary Fund
(IMF). Betting on the strong fundamentals of the Indian economy, the IMF expects Indian
economy to grow at 8% in the next financial year. mhis is considerably higher than the current
6.75% growth rate.mhe IMF also estimates the wholesale inflation to ease down to 5.5% in
FY11.

Interestingly, the IMF wants the government to act fast on the policy reforms.It suggests
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that was provided last year since the economy is back on track.
Since, the demand is picking up across the industries, they feel that the economy is good enough
to accelerate without the fiscal stimulus. mhe relaxation in taxes and the huge fiscal stimulus has
seemingly increased thec
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mhe IMF also sees the removal of economics stimulus as a measure of easing up the ever
increasing inflation.mhere is also an expectation that rupee appreciation will help manage
increase capital inflows and lead to stability in the markets.

So, looks like RBI did time it right while going ahead with the CRR hike a few days back. mhe
bond market will seemingly see some action with banks being asked to purchase more bonds.

What are your predictions for the Indian Economy Growth ? Will it continue to grow at a healthy
rate.


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mhe Indian Stock Markets seem to be headed downwards. mhe markets have corrected quite a bit
from earlier levels of 17k and hovering around 16 k levels currently. mhe NmPC FPO offering
did raise the hope of the markets yesterday but guess it was short lived. mhe Sensex lost 1.6% to
end at 16,224.95 on account of heavy selling across various counters led hugely by mechnology
stocks. mhe year 2010 has not turned out to be very good for the Stock Markets where the 
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moday¶s decline was attributed to negative global clues. mhe news of sharp rise in Sovereign
Credit Default Swaps of Greece, Portugal and Spain led the European markets into a crisis whose
after effects were also felt in the latter half of the trade in Indian Markets.All major indexes
including the Im, Metal, Realty ended in red with the OIL sector also faring badly on account of
the growing uncertainty of the oil price regulations.

mhe Indian Stock Markets have not been able to gain momentum this year with a consistent flow
of negative news from both domestic and global markets.mhe buyer interest is not visible in the
market and traders are offloading their positions in the wake of rising food inflation which
continues to rise.

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SEBI has been instrumental in its efforts to bring transparency into the capital markets and make
the markets more Investor happy.With a slew of reforms both for the primary and secondary
markets, SEBI has now turned its focus on setting things right for the Mutual Fund sector.

After pulling out the Reliance MF ad a while back on account of not following the stipulated
guidelines, SEBI seems to have revised the regulations for the Mutual Fund advertisements.SEBI
has been facing the ire of some MF participants that the existing guidelines are ambiguous and
do not give a clear direction.

Now, SEBI has standardized the risk warnings in advertising Mutual Fund products and the new
rules will be implemented from May 1

SEBI has made it mandatory for all MF advertisements to carry a complete 5 second audio-
visual disclaimer which states ³³Mutual fund investments are subject to market risks, read all
scheme-related documents carefully´

We all are subjected to those tall claims made by AMC¶s and telesales making false claims for
their product.mhe use of catch phrases like ³c c:c'
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explain the finer details of the investment product and they make merry off unaware investors.
I really hope that SEBI also actively make amends in the way certain Investment products are
marketed.It will do a heap of help and the investors will be able to make informed decisions
rather then being duped by hugely over hyped product descriptions from the marketers.

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1 New York Stock Exchange United States 11,837
2 mokyo Stock Exchange Japan 3,306
3 NASDAQ United States 3,239
Belgium, France, Holland,
4 Euronext 2,869
Portugal
 5 London Stock Exchange United Kingdom 2,796
6 Shanghai Stock Exchange China 2,704
7 Hong Kong Stock Exchange Hong Kong 2,345
8 moronto Stock Exchange Canada 1,608
9 BM&FBovespa Brazil 1,337
10 Bombay Stock Exchange India 1,306
11 BME Spanish Exchange Spain 1,297
12 Frankfurt Stock Exchange Germany 1,292
Australian Securities
13 Australia 1,261
Exchange
National Stock Exchange of
14 India 1,224
India
15 SIX Swiss Exchange Switzerland 1,064

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New York Stock
1 United States 29,910[2]
Exchange
2 NASDAQ United States 15,320[2]
3 London Stock Exchange United Kingdom 10,334[2]
4 mokyo Stock Exchange Japan 6,476[2]
Belgium, France, Holland,
5 Euronext 5,640[2]
Portugal
Frankfurt Stock
6 Germany 4,325[2]
Exchange
Shanghai Stock
7 China 4,069[2]
Exchange
BME Spanish
8 Spain 2,970[2]
Exchanges
9 Italian Stock Exchange Italy 2,313[2]
Hong Kong Stock
10 China S.A.R. 2,137[2]
Exchange
Shenzhen Stock
11 China 2,103[2]
Exchange
 12 Korea Exchange Korea 2,006[2]
13 SWX Swiss Exchange Switzerland 1,886[2]
14 OMX Nordic Exchanges Denmark, Finland, Sweden 1,865[2]
15 moronto Stock Exchange Canada 1,634[2]
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