Acknowledgement I express my heartfelt thanks to my supervisor Dr.C.Krishnan, Selection Grade Lecturer, Government College, Kodencherry, Calicut, for invaluable advice, kind help, and constant and whole-hearted encouragement at each stage of my work. My profound gratitude is also due to Dr. K.P. Mani, Professor, John Mathai Centre, Thrissur, who has been inspiring and motivating throughout. I am thoroughly obliged to him for his constant encouragement, critical comments and valuable suggestions. I am grateful to Dr.U.T. Damayanthi, Professor and Head of the Department, Dr. Laxmidevi and Dr. Kutttykrisnan Nambiar, former Heads of the Department, for their encouragement and support. I am extremely thankful to Mr.D.Shyjan, Lecturer in the Department, for his timely help at various stages of the study. My sincere thanks to Dr.K.X.Joseph, Dr.D. Retnaraj and Dr.P. Kareem, Faculty members of the Department, for their constant encouragement. My profound gratitude to all the faculty members of the Department, for their timely assistance and encouragement throughout my research work. I duly acknowledge the encouragement and support by the research scholars in the department, and all my colleagues and friends. I thank my friends in stock market and the management of broking firms who helped me with valuable data in time. My thanks and gratitude to Dr. Susan Thomas and Dr.R. Nagaraj, Faculty members of IGDR, Mumbai, J.R Varma, Ajay pandey and Ramesh Gupta, Professors of IIM, Ahemedabad, Mr.Hariharan, Manager of SEBI, Bombay, Dr. Suresh Babu, Assistant Professor, IIT, Madras, and Mr.Saji Cheriyan, Manager, Bombay Stock Exchange, for their valuable suggestions and all the help. I extent my thanks to the librarians of John Mathai Centre, Trichur, CDS, Trivandrum, IIM in Calicut, Bangalore and Ahemadabad, BSE, NSE, SEBI and UTI Capital Markets in
Bombay, JNU, IPFP and IEG in Delhi, IFMR and IIT in Madras, IISc and ISEC in Bangalore and University of Cochin. My thanks to the Chairmen of Geojit Securities,Cochin, JRG Securities,Cochin Share Wealth Securities, Thrissur, and Equity Intelligence, Cochin for sparing their time and giving valuable inputs. I am thankful to Dr.Jeromy, Research Officer, RBI, Cochin, for his valuable help. I acknowledge with thanks the University Grants Commission for the award of Teacher Fellowship during the tenure of this work. LIST OF TABLES Sl Table 1. 4.1 Title Flow of funds based indicators of financial development in India Page 2. 4.2 Trends in gross domestic saving 120 3. 4.3 Saving and investment 121 4. 4.4 Disbursement of financial institutions 125 5. 4.5 Resource mobilised by mutual funds as a percentage of GDP 6. 4.6 Assistance sanctioned by all financial institutions 138 7. 4.7 Capital issues by public limited companies 139 8. 4.8 Resource mobilisation through private placement 141 9. 4.9 Sector- wise domestic savings 144 10. 4.10 Sector -wise gross capital formation 146 11. 4.11 Market design in Indian securities market 1992 and 2002 12. 5.1 Resource mobilisation from the primary market 160 13. 5.2 New capital issues by non-government public limited companies (1993-94 to 2004-05) 14. 5.3 Resource mobilisation by mutual funds 165 15. 5.4 Pattern of growth of stock exchanges 167 115 125 148 162
16. 5.5 Stock market development in India 170 17. 5.6 Trends in Bombay stock exchange 178 18. 5.7 Trends in National stock exchange 181 19. 5.8 Growth and distribution of turnover on stock exchanges 20. 5.9 Capital from abroad-adrs and GDRs 196 21. 5.10 Trends in FII investment 197 22. 5.11 Stock market development-international comparison 23. 5.12 Growth of share owing population in India 201 24. 5.13 24. 6.1 Reduction in transaction cost in India - 1994 and 1999 The growth of Indian stock market - select indicators 25. 6.2 Market capitalisation ratio 215 26. 6.3 Value traded ratio 217 27. 6.4 Turnover ratio 219 28. 6.5 Volatility of sensex at BSE 221 29. 6.6 Sindex 225 30. 6.7 Behaviour of economic indicators and their suggestive impact on share market 31. 6.8 Inflation rate of whole sale price index 233 32. 6.9 Savings of house hold sector in financial assets 235 33. 6.10 Disinvestment in public sector units 240 34. 6.11 Financial depth 245 35. 6.12 Foreign exchange reserves, rupee dollar exchange rate and openness 36. 6.13 Exponential growth rate of real GDP with dummy 251 37. 6.14 Unit root test 252 38. 6.15 First difference 253 39. 6.16 Second difference 254 40. 6.17 Co-integrated regression results 255 41. 7.1 Financial highlights of Reliance Industries Ltd. 267 42. 7.2 Financial highlights of Larsen and Turbo Ltd. 271 187 199 203 213 231 248
43. 7.3 Bonus and stock split of Infosys Ltd. 273 44. 7.4 Financial highlights of Infosys Ltd. 274 45. 7.5 Financial highlights of Wipro Ltd. 277 46. 7.6 Financial highlights of Hidustan Lever Ltd. 279 47. 7.7 Financial highlights of ITC Ltd. 282 48. 7.8 Financial highlights of Ranbaxy Ltd. 284 49. 7.9 Financial highlights of Dr. Reddy Lab. Ltd. 287 50. 7.10 Financial highlights of HDFC bank Ltd. 290 51. 7.11 Financial highlights of SBI Ltd. 293 52. 9.1 Goldman Sach s report 331 LIST OF FIGURES Sl. Figur e Title 1. 3.1 Line chart 82 2. 3.2 Bullish trend 83 3. 3.3 Bearish trend 84 4. 3.4 Bar chart 85 5. 3.5 Japanese candle sticks 86 6. 3.6 Flag formation 89 7. 3.7 Pennant formation 90 8. 3.8 Representation of Elliot wave theory 91 Page 9. 3.9 The classification of market efficiency in EMH 104 10. 3.10 The Markovitz model optimal portfolio 106 11. 5.1 The share of BSE, NSE and regional stock exchanges in the total turnover 2001-02 12. 5.2 Reduction in transaction cost in India (1994 and 1999) 204 13 6.1 Market capitalisation ratio from 1979-80 to 2004-05 215 14 6.2 Value traded ratio from 1979-80 to 2004-05 218 15 6.3 Turnover ratio from 1979-80 to 2004-05 220 15 6.4 Volatility of sensex at BSE 222 189
16 6.5 Sindex for the year 1979-80 to 2004-05 226 17 6.6 Trends in bank rate 236 18 6.7 Cash reserve ratio 238 19 6.8 Financial depth from 1979-80 to 2004-05 245 LIST OF ABBREVIATIONS ADR : American Depository Receipt AMC : Asset Management Company BOLT : Bombay On Line Trading BSE : Bombay Stock Exchange CAPM : Capital Asset Pricing Model CCI : Controller of Capital Issues CDSL : Central Depository Services Limited ECBs : Euro currency Bonds ELOB : Electronic Limit Order Book EMH : Efficient Market Hypothesis FIIs : Foreign Institutional Investors FR : Finance Ratio GDCF : Gross Domestic Capital Formation GDR : Global Depository Receipt IPO : Initial Public Offering MCR : Market Capitalisation Ratio NASDAQ : National Association of Security Dealers Automated Quotations NCAER : National Council of Applied Economic Research NIR : New Issue Ratio NSCC : National Securities Clearing Corporation NSDL : National Securities Depository Limited
NSE : National Stock Exchange NYSE : New York Stock Exchange OTCEI : Over the Counter Exchange of India PSU : Public Sector Undertaking SEBI : Securities and Exchange Board of India TOR : Turnover Ratio UTI : Unit Trust of India VTR : Value Traded Ratio