The capital market (securities markets) is the market for securities, where companies and the government can raise long-term funds. The capital market includes the stock market and the bond market. A stock market is a market for the trading of company stock and derivatives.The aim of the project is to understand the overall equity market, to get to know the trading, clearing & settlement aspect of the equity market. As far as this project is concerned, it will help me to understand the overall working of the equity market & its importance to the economy of the India. A huge amount of money flows & millions of shares exchange hands in a single market day. This exchange of shares enables the flow of money in & out of a firm. The company whose shares are listed & the government who plays a pivotal role through the policies formed in the market, helps them to raise long term funds which can be used for the benefit & the growth of the companies & also give back some part of their profit to the investor in the form of dividends.
Multiplicity of wants and scarcity of means to satisfy these unlimited wants has continued to be the fundamental of economic problem. Money resources are required to move physical resources. Mobilization of resources for economic development was and continues to be the major problem with all developing and developed nations. The capital might be from within the country or outside the country. But one of the greatest challenges of nations today is creating conditions conducive for capital formation as also for attracting capital from various countries. A growing economy with vibrant capital and money market with rules and regulations in place is a of capital formation Prerequisite for attracting capital. Stock market plays a key role in the entire gamut of financial system.
Having broadly discussed the developments and the basic issues involved, we will now try to review the Indian Financial System. India has come a long way during the last decade of the 20th Century. With the path-breaking budget of 91-92 presented by Dr. Man Mohan Sign an era of globalization, liberalization, decontrol and de-regulation was adhered in. Since then a lot of water has flown from under the bridge and lot of Development has taken place. The focus all along has been to faster economic development.
Objectives behind this Study
The objectives of my internship are as follows:
· Understanding the various activities in an E- Broking firm.
· To get acquainted with all the workings of online trading.
· To gain practical knowledge in share trading
· To analyze the financial market & the share movements in order to study the prospects of investing in a particular stock or sector.
The scope of this project is limited to only one sector i.e. oil sector. This project is concerned with only one sector in the stock market. The project does not extend its scope to any other sector of companies.
Source of information for this project is only secondary data. The data about the oil sector, the government policies with respect to the sector, and the Information about the companies is all gathered from secondary sources, available on the websites, annual reports, business magazines.
Impact of Stock Exchanges in India
Following are the changes due to the existence of Stock Exchange:
1. Mobilization of savings
The savings of the individuals are easily mobilized in various types of industries. Therefore the amount of investments in the stock exchange increases.
2. Increase in rate of return on investment
The investors get more rate of return i.e. the market rate and not the normal bank rate, which is much lower.
3. Availability of funds for growth of industries.
The amount of funds required for the growth of the industries is easily available whereas there was always shortage of capital.
4. Diversification of industries
Due to the availability of funds the industry becomes financially strong and have scope or diversification due to which they can become more strongly in the market.
5. Increase in employment
Growth and diversification of industries leads to increase in the amount of work and thus increase job opportunities for the unemployed.
6. Increase in standard of living
The increased job opportunities and the availability of goods of higher quality have increased the standard of living of people.
7. Increase in GDP
Increase in business in overall all industries has automatically leaded to the rise in GDP of the country and thus its prosperity.
8. Decrease in Trade Deficit.
Due to growth in industries the country is becoming self-sufficient leading to decrease in trade deficit.
Fundamental Analysis on Oil Sector
Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. As with most analysis, the goal is to derive a forecast profit from future price movements. At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. At the industry level, there might be an examination of supply and demand forces for the products offered. For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy. To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's investment opportunity. Fundamental analysis is a method used to determine the value of a stock by analyzing the financial data that is 'fundamental' to the company.
Fundamental analysis does not look at the overall state of the market nor does it include behavioral variables in its methodology. It focuses exclusively on the company's business in order to determine whether or not the stock should be bought or sold. To buy a share of stock a investor is buying a proportional share in a business. As a consequence, to figure out how much the stock is worth, one should determine how much the business is worth. Investors generally need to assess the company's financials in terms of per-share values in order to calculate how much the proportional share of the business is worth. Some knows this as “fundamental” analysis, and most who use it view it as the only kind of rational stock analysis.