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A STUDY ON THE ROLE OF MIDCAP AND SMALL CAP IN ESTABLISHING STOCK MARKETPROJECT REPORT

Submitted to the Amrita Vishwa Vidyapeetham in partial fulfilment of the requirements for the award ofMASTER OF COMMERCE (FINANCE AND SYSTEMS) SUBMITTED BY JEFFIN GEORGE KH.AR.P2COM09008

Under the Supervision ofMr. K. R. Shabu Faculty Guide

Department of Commerce and Management Amrita School of Arts and Sciences Kochi-682 0241

CERTIFICATE

This is to certify that the project work titled A Study On The Role Of Midcap And Small Cap In Establishing Stock Market submitted to Amrita Vishwa Vidyapeetham in partial fulfillment of the requirements for the award of the Degree of Master of Commerce is a record of original work done by Jeffin George under my supervision and guidance and that this project work has not formed the basis of the award of any Degree /Diploma /Fellowship of similar title to any candidate of any University.

(Seal) Guide

Signature with Name and Designation of the

Submitted for the University Examinations held on __________________ ____

Internal Examiner

External Examiner

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DECLARATION

I hereby declare that this project titled A Study On The Role Of Midcap And Small Cap In Establishing Stock Market is a record of original work done by me under the supervision and guidance of Mr. K. R. Shabu and that this project work had not formed the basis of award of any Degree/Diploma /Fellowship or similar title to any candidate of any university

Place : Date :

Name and Signature of Student

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ACKNOWLEDGEMENT I thank almighty god for guiding me throughout this study with his boundless blessings Firstly, my sincere thanks to Mr. Francis Lewis, the Deputy General Manager of CSE for giving me an opportunity to do the project work and also his support and encouragement. I take this opportunity to place on record the whole hearted thanks to Mr. Varghese Mathew, Senior Faculty, CSE institute of Capital Market and Broker Cochin Stock Exchange Ltd. whose immense support helped me to make this project a fruitful and a successful one.

I am greatly indebted to Prof. Dr N Ajith Kumar, Department of Commerce and Management, ASAS, without whose support and co-operation, this project would have been incomplete.

I extend my sincere thanks to Mr. K. R. Shabu, Faculty Guide, Department of Commerce and Management, ASAS, my project guide who give enthusiastic support throughout my project work.

I express my profound gratitude to the faculty members especially my Head of the Department Dr. M.V. Kamalakshi for guiding me in this study I am immensely grateful to all workers, supervisors and manager of Cochin Stock Exchange Ltd I extend my sincere thanks to all my friends for their encouragement and valuable suggestions throughout this study.4

TABLE OF CONTENTS Chapter1: Introduction.1-5 1.1 Introduction 1.2 Basics about share 1.3 Basics about share price movement 1.4 Title of the project 1.5 Midcap and small cap 1.6 Statement of the problem 1.7 Objectives of the study 1.8 Research methodology 1.9Limitations of the study Chapter 2: Literature Review..6-25 2.1 Story of market capitalisation 2.2 All-cap history 2.3 What are mid cap stocks? 2.4 What are small cap stocks? 2.5 BSE midcap and BSE small cap index 2.6 Nifty midcap 50 2.7 Sensex beats midcap, small cap indices 2.8 Small/mid cap equity index fund as of September -30- 2010 Chapter 3. Profile of the Industry26-43 3.1 Evolution 3.2 Stock Exchange An Introduction 3.3 Trading in the Indian stock exchanges 3.4 Bombay stock exchange (BSE) 3.5 National Stock Exchange (NSE) 3.6 Over the Counter Exchange of India (OTCEI) 3.7 Regulatory framework 3.8 Capital market regulations 3.9 Status of Stock Exchange

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Chapter 4: Organization Profile Cochin Stock Exchange...44-60 4.1 Cochin Stock Exchange 4.2 Present Status of cochin Stock Exchange 4.3 Cochin Stock Brokers Limited (CSBL) 4.4 Products And Services 4.5 Departments 4.6 SWOT analysis Chapter 5: Data Analysis and Interpretations..61-80 5.1 Analysis and Interpretation 5.2 Portfolio Construction 5.3 Data Size 5.4 Mid cap company details 5.5 Small cap company details 5.6 Analysis of Portfolio 5.7 Portfolio Values 5.8 Return calculation of mid cap and NIFTY mid cap 5.9 Return calculation of small cap and BSE small cap Chapter 6: Findings, Suggestions and Conclusions..................... 6.1 Findings 6.2 Suggestion 6.3 Conclusion

Bibliography ..

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LIST OF TABLESTable No.1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

DataPERFORMANCE SETTLEMENT DEPARTMENT DATA SIZE MID CAP COMPANIES PORT FOLIO SMALL CAP COMPANIES PORT FOLIO PORT FOLIO AS ON 03-JAN-2011 PORT FOLIO AS ON 04-JAN-2011 PORT FOLIO AS ON 05-JAN-2011 PORT FOLIO AS ON 06-JAN-2011 PORT FOLIO AS ON 07-JAN-2011 PORT FOLIO AS ON 10-JAN-2011 PORT FOLIO AS ON 11-JAN-2011 PORT FOLIO AS ON 12-JAN-2011 PORT FOLIO AS ON 13-JAN-2011 PORT FOLIO AS ON 14-JAN-2011 PORT FOLIO AS ON 17-JAN-2011 PORT FOLIO AS ON 18-JAN-2011 PORT FOLIO AS ON 19-JAN-2011 PORT FOLIO AS ON 20-JAN-2011 PORT FOLIO AS ON 21-JAN-2011 PORT FOLIO AS ON 24-JAN-2011 PORT FOLIO AS ON 25-JAN-2011 PORT FOLIO AS ON 27-JAN-2011

Page No.29 55 65 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

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24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46

PORT FOLIO AS ON 28-JAN-2011 PORT FOLIO AS ON 31-JAN-2011 PORT FOLIO AS ON 01-FEB-2011 PORT FOLIO AS ON 02-FEB-2011 PORT FOLIO AS ON 03-FEB-2011 PORT FOLIO AS ON 04-FEB-2011 PORT FOLIO AS ON 07-FEB-2011 PORT FOLIO AS ON 08-FEB-2011 PORT FOLIO AS ON 09-FEB-2011 PORT FOLIO AS ON 10-FEB-2011 PORT FOLIO AS ON 11-FEB-2011 PORT FOLIO AS ON 14-FEB-2011 PORT FOLIO AS ON 15-FEB-2011 PORT FOLIO AS ON 16-FEB-2011 PORT FOLIO AS ON 17-FEB-2011 PORT FOLIO AS ON 18-FEB-2011 PORT FOLIO AS ON 21-FEB-2011 PORT FOLIO AS ON 22-FEB-2011 PORT FOLIO AS ON 23-FEB-2011 PORT FOLIO AS ON 24-FEB-2011 PORT FOLIO AS ON 25-FEB-2011 PORT FOLIO AS ON 28-FEB-2011 RETURN OF MIDCAP PORTFOLIO AND NIFTY MIDCAP INDEX RETURN OF SMALL CAP PORTFOLIO AND BSE SMALL CAP INDEX

91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113

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LIST OF FIGURESFigure No.1 2

DataORGANIZATION STRUCTURE MID CAP PORTFOLIO RETURN AND NIFTY MIDCAP RETURN SMALL CAP PORTFOLIO RETURN AND BSE SMALL CAP RETURN

Page No.50 116

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CHAPTER -1

INTRODUCTION

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1.1 INTRODUCTIONAn investor means people who invest their savings. Investment is an activity, which is different from savings. Savings are generated when a person obtain from present consumption for a future use. Savings kept as cash are barren and do not earn anything. Hence, the saver has to find a temporary repository for his saving until they are required for his future, this result in investment. This is an era in which the investor or public are thinking of changing their investment from bank deposit to share market. They get better return from the investment in capital market than in case of bank deposit. Today, investment has become a household word and is very popular with people of all lifestyle. It is because of increase in working population, higher family incomes and consequent savings, availability of large and attractive investment alternatives, increase in investment related publicity and so on. Investment is a word of many interpretations. A person has advanced some money to others; he may consider his loan as an investment. He expects to get back the principal along with the interest at a future date. Another person may purchase a land for the purpose of price appreciation and may consider it as an investment. In the above cases, it can be seen that investment involves the employment of money with an aim of achieving additional income or growth in the values. Thus, investment may be defined as, a commitment of funds made in the expectations of some positive rates of return The capital market is a market for long-term funds-shares, debentures and bonds. Today the Indian capital market offers a variety of financial products with varied features and

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benefits, for investors to choose from them. Investing in stock is most popular method of investment.

1.2 BASICS ABOUT SHAREPlain and simple, a stock is a share in the ownership of a company. A stock represents a claim on the companys assets and earnings. As you acquire more stocks, your ownership stake in the company becomes greater. Holding a companys stock means that you are one of the many owners (shareholders) of the company and as such you have a claim to everything the company owns. This means that technically you own a tiny little piece of all the furniture, every trademark, and every contract of the company. As an owner you are entitled to your share of the companies earning as well. These earning are called dividends and are given to the shareholders from time to time. A stock is represented by a stock certificate

1.3 BASICS ABOUT SHARE PRICE MOVEMENTStock prices change every day because of market forces. By this we mean that stock prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than to buy it, there would be greater supply than demand, and the price would fall (Basics of economics). Understanding supply and demand is easy. What is difficult to understand is what makes people like a particular stock and dislike another stock. If investor is able to understand this he can know what people are buying and what people are selling. If he knows this he can know what price goes up and what price go down.12

1.4 TITLE OF THE PROJECTThe role of midcap an