1.1 INTRODUCTION ABOUT THE TOPIC
A share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market. The stock exchange were one physical market place where the agents of buyers and sellers operated through the auction process. These are being replaced with electronic exchanges where buyers and sellers are connected only by computer over a telecommunication network According to the securities contract regulation act, 1956, which is the main law governing stock exchanges in India “ stock exchange means any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities “. Every investment is characterized by return & risk. Investors intuitively understand the concept of risk. A person making an investment expects to get some return from the investment in the future. But, as future is uncertain, so is the future expected return. It is this uncertainty associated with the returns from an investment that introduces risk into an investment. Risk arises where there is a possibility of variation between expectation and realization with regard to an investment. IT stock exchange :
CNX IT is an index comprised of the most liquid and large capitalization IT stocks traded on the NSE engaged in the business of software or hardware. CNX IT index provides investors and market intermediaries with an appropriate benchmark that captures the performance of the IT segment of the market. The index is a market capitalization weighted index with base date being 1st January 1996 and base index value being 1000. Companies selected in the index have to be IT stocks which should rank high in terms of market value represented by their market capitalization and liquidity. CNX IT index is professionally managed by India Index Services and Products Limited (IISL), a joint venture between NSE and CRISIL, which is India's first specialist company dedicated to providing investors in Indian equity markets with Indexes and Index services. The CNX IT Index is calculated using the market capitalization weighted aggregate method.
Importance of stock market
Just as it important that networks of transportation, electricity and telecommunications functions properly, so is it essential that payment can be transacted, capital can be saved and channels to the most profitable investment project and both household and firm get help in handling financial uncertainty and risk as well as possibilities of spreading consumptions over time . Financial market constitutes an important part of the total infrastructure for every society that has passed the stage of largely domestic economics. Stock market which is part of the financial markets, perform the following functions in an economy. 1. Raising capital for business
2. Mobilizing saving for investment
3. Facility company growth.
4. Redistribution of wealth
5. Corporate Governance
6. Create Investment opportunities for small investor
7. Government Raise Capital for Development Project
8. Barometer of the Economy
Until 1988, stock exchanges were, more or less of self-regulatory organizations supervised organizations supervised by the Ministry of Finance under the Securities Contracts Regulation Act (SCRA). However, the stock exchanges were not discharging their self-regulatory role well as a result of which malpractices crept into trading, adversely affecting investors interests. Several committees examined and made recommendations to reform the organizations of the stock exchanges. Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces. Let us take an example for a better...