mid cap and small cap

185
A STUDY ON THE ROLE OF MIDCAP AND SMALL CAP IN ESTABLISHING STOCK MARKET PROJECT REPORT Submitted to the Amrita Vishwa Vidyapeetham in partial fulfilment of the requirements for the award of MASTER OF COMMERCE (FINANCE AND SYSTEMS) SUBMITTED BY JEFFIN GEORGE KH.AR.P2COM09008 Under the Supervision of Mr. K. R. Shabu Faculty Guide 1

Upload: jeffin-george

Post on 25-Nov-2014

145 views

Category:

Documents


3 download

TRANSCRIPT

Page 1: mid cap and small cap

A STUDY ON THE ROLE OF MIDCAP AND SMALL

CAP IN ESTABLISHING STOCK MARKET

PROJECT REPORT

Submitted to the Amrita Vishwa Vidyapeetham in partial fulfilment of the requirements for the award of

MASTER OF COMMERCE (FINANCE AND SYSTEMS)

SUBMITTED BY

JEFFIN GEORGE

KH.AR.P2COM09008

Under the Supervision of

Mr. K. R. Shabu

Faculty Guide

Department of Commerce and Management

Amrita School of Arts and Sciences

Kochi-682 024

1

Page 2: mid cap and small cap

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) Signature with Name and Designation of the Guide

Submitted for the University Examinations held on ______________________

Internal Examiner External Examiner

2

Page 3: mid cap and small cap

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 : Name and Signature of Student

Date :

3

Page 4: mid cap and small cap

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

Page 5: mid cap and small cap

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 Industry……………………………………26-43

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

5

Page 6: mid cap and small cap

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 ………………………………..…………………………

6

Page 7: mid cap and small cap

LIST OF TABLES

Table No.

Data Page No.

1 PERFORMANCE 29

2 SETTLEMENT DEPARTMENT 55

3 DATA SIZE 65

4 MID CAP COMPANIES PORT FOLIO 71

5 SMALL CAP COMPANIES PORT FOLIO 72

6 PORT FOLIO AS ON 03-JAN-2011 73

7 PORT FOLIO AS ON 04-JAN-2011 74

8 PORT FOLIO AS ON 05-JAN-2011 75

9 PORT FOLIO AS ON 06-JAN-2011 76

10 PORT FOLIO AS ON 07-JAN-2011 77

11 PORT FOLIO AS ON 10-JAN-2011 78

12 PORT FOLIO AS ON 11-JAN-2011 79

13 PORT FOLIO AS ON 12-JAN-2011 80

14 PORT FOLIO AS ON 13-JAN-2011 81

15 PORT FOLIO AS ON 14-JAN-2011 82

16 PORT FOLIO AS ON 17-JAN-2011 83

17 PORT FOLIO AS ON 18-JAN-2011 84

18 PORT FOLIO AS ON 19-JAN-2011 85

19 PORT FOLIO AS ON 20-JAN-2011 86

20 PORT FOLIO AS ON 21-JAN-2011 87

21 PORT FOLIO AS ON 24-JAN-2011 88

22 PORT FOLIO AS ON 25-JAN-2011 89

7

Page 8: mid cap and small cap

23 PORT FOLIO AS ON 27-JAN-2011 90

24 PORT FOLIO AS ON 28-JAN-2011 91

25 PORT FOLIO AS ON 31-JAN-2011 92

26 PORT FOLIO AS ON 01-FEB-2011 93

27 PORT FOLIO AS ON 02-FEB-2011 94

28 PORT FOLIO AS ON 03-FEB-2011 95

29 PORT FOLIO AS ON 04-FEB-2011 96

30 PORT FOLIO AS ON 07-FEB-2011 97

31 PORT FOLIO AS ON 08-FEB-2011 98

32 PORT FOLIO AS ON 09-FEB-2011 99

33 PORT FOLIO AS ON 10-FEB-2011 100

34 PORT FOLIO AS ON 11-FEB-2011 101

35 PORT FOLIO AS ON 14-FEB-2011 102

36 PORT FOLIO AS ON 15-FEB-2011 103

37 PORT FOLIO AS ON 16-FEB-2011 104

38 PORT FOLIO AS ON 17-FEB-2011 105

39 PORT FOLIO AS ON 18-FEB-2011 106

40 PORT FOLIO AS ON 21-FEB-2011 107

41 PORT FOLIO AS ON 22-FEB-2011 108

42 PORT FOLIO AS ON 23-FEB-2011 109

43 PORT FOLIO AS ON 24-FEB-2011 110

44 PORT FOLIO AS ON 25-FEB-2011 111

45 PORT FOLIO AS ON 28-FEB-2011 112

46RETURN OF MIDCAP PORTFOLIO AND NIFTY MIDCAP INDEX

113

8

Page 9: mid cap and small cap

47RETURN OF SMALL CAP PORTFOLIO AND BSE SMALL CAP INDEX

117

LIST OF FIGURES

Figure No.

DataPage No.

1 ORGANIZATION STRUCTURE 50

2MID CAP PORTFOLIO RETURN AND NIFTY MIDCAP RETURN

116

3SMALL CAP PORTFOLIO RETURN AND BSE SMALL CAP RETURN

120

9

Page 10: mid cap and small cap

CHAPTER -1

INTRODUCTION

10

Page 11: mid cap and small cap

1.1 INTRODUCTION

An 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

11

Page 12: mid cap and small cap

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

method of investment.

1.2 BASICS ABOUT SHARE

Plain and simple, a “stock” is a share in the ownership of a company. A stock

represents a claim on the company’s assets and earnings. As you acquire more

stocks, your ownership stake in the company becomes greater. Holding a

company’s 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 MOVEMENT

Stock 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

Page 13: mid cap and small cap

1.4 TITLE OF THE PROJECT

“The role of midcap and small cap in establishing stock market”

1.5 MIDCAP AND SMALL CAP

Cap is short for capitalisation which is a measure by which we can classify a

company's size. Midcap means Medium capitalization and small cap means

small capitalization. The technical definition of Mid Cap in the Indian

context is companies with market capitalization between $ 2 billion and $ 10

billion.

Small-cap means different things to different people, the common definition in

the Indian context are companies with market capitalization is less than $ 2

billion. Study the role of midcap and small cap companies in establishing the

stock market and the changes in midcaps and small caps in market

1.5.1 FEATURES

Small-cap stocks tend to be younger companies--those with explosive growth

potential but unproven earnings capability. Most of these are speculative

companies subject to either boom or bust. Bio-tech companies, for example,

often rely on large initial capital investments to fund research and development

before they produce products and generate earnings, or are bought by a larger

company. Mid-caps are more established companies, with demonstrable

earnings and notable growth potential.

13

Page 14: mid cap and small cap

1.5.2 EFFECTS

The nature of small- and mid-cap stocks is such that they are subject to

volatility. It requires a smaller amount of capital to cause fluctuations in the

price of a small-cap, as opposed to a larger stock. Small caps are likely to be

affected primarily by company-specific news, such as financing or product

development. Mid caps are not immune from these fluctuations, but they are

also influenced by their sector of the economy and the investment climate in

general. Many mid-cap stocks have a higher "beta," or correlation to a

benchmark market index. Thus, they can be subject to larger swings in both

directions when the market moves as a whole.

1.5.3 CONSIDERATIONS

Most mutual funds or large institutional investors are unable to meaningfully

invest in small- and even some mid-cap stocks. Federal regulations require

disclosure when more than a certain minimal percentage of the outstanding

shares are held by a single entity. The dollar value of the limited number of

shares permitted without triggering these disclosures is too small to have a

notable effect on the overall performance of the fund, and, therefore, their

resources are allocated elsewhere, or in multiple mid-cap companies. If the

disclosures were made, other investors could purchase the stock and send the

price significantly higher.

1.5.4 FUNCTION

Because large institutional investors tend to avoid small and mid caps, other

investors use these to outperform the larger market players. Because mid caps

14

Page 15: mid cap and small cap

are growth-oriented companies, they excel in periods of widespread economic

growth. Small caps, too, generally need favourable economic conditions in

which to thrive. Because small caps are more likely to be domestic rather than

international companies, they tend to benefit from a rising dollar and a

relatively strong U.S. economy.

1.6STATEMENT OF THE PROBLEM

The main focus of the study is to find out the role of midcap and small cap in

stock market. As the share market is volatile i.e. changes may happen at any

time, the risk and return are equally uncertain so the investor has always fear

index in mind. Study some popular midcap and small cap shares and find out

the variations in day to day, weekly and monthly. Finally come to a conclusion

the mid cap or the small cap is good for investment and which areas share is

played more roles in stock market. The study will help to find and understand

about the concept of midcap and small cap, and the role of that in the stock

market.

1.7OBJECTIVES OF THE STUDY

1.7.1 PRIMARY OBJECTIVES

To find out the role of midcap and small cap companies shares in stock

market

To find out midcap or small cap is suitable of investment

1.7.2 SECONDARY OBJECTIVES

To suggest the short term and long term investment opportunities to

investors

15

Page 16: mid cap and small cap

To know the price trend of equity shares of selected small cap and mid

cap companies

Find the relation of Midcap & Small cap Indices with the BSE small

cap and NSE NIFTY

Find the returns of selected portfolios and make a comparison with

index.

1.8RESEARCH METHODOLOGY

Research refers to search for knowledge. One can define research as a

scientific & systematic search for pertinent information on a specific topic.

Research is an original contribution to existing stock of knowledge making for

its advancement. It is the pursuit of truth with the help of observations

1.8.1 TYPE OF RESEARCH:

The Research which will be carried out by me is descriptive, comparative &

analytical Research. The Research is on“The role of midcap and small cap in

establishing stock market” I am focusing my research on Midcap of National

Stock Exchange & Small cap of Bombay Stock Exchange. I have taken three

companies each from small cap and mid cap and make a portfolio of five laks

each. Select the closing prices of Midcap & Small cap companies & closing

value of both Indices and find out the return of all then make comparison by

using line graph.

16

Page 17: mid cap and small cap

1.8.2 DATA COLLECTION:

Secondary sources have been used for the collection of the data used in the

research.

Collecting data from Internet.

Collecting data from BSE, NSE websites etc.

Collecting Information from books.

Collecting data from Magazines

1.8.3 SAMPLE SIZE:

Two months data was collected as:

Daily data from BSE Small cap Indices and NSE NIFTY Indices

(Dec-6-2010 to Feb-4-2011)

Daily closing price data of three companies each of Midcap & Small

cap Indices

1.8.4 TOOLS FOR ANALYSIS:

Various Graphs/Charts etc.

1.9 LIMITATIONS OF THE STUDY

The area of mid cap and small cap wide so the overall study is not

possible

The detailed study of all midcap and small caps is take time

If make study on limited stock does not give accurate result

The area is not very common so the study take some difficulties in collecting

data and make analysis on it.

17

Page 18: mid cap and small cap

CHAPTER -2

LITERATURE REVIEW

18

Page 19: mid cap and small cap

2.1 STORY OF MARKET CAPITALISATION

Basically, market capitalisation (cap) is a way to classify companies in equity

market according to their size. The market cap at any given point of time

shows whether the company is either a large-cap or a mid-cap or a small-cap.

With the rise in stock price and issue of additional shares into the market, the

market capitalisation of a company goes up. As the market cap increases, the

liquidity of the stock in the market also increases.

In the late 70s, Rolf Bans and Mark Reinganum, published a study that the

companies with smaller capitalisation on an average gave more returns than the

companies having larger capitalisation, even after adjusting for risk. This

finding, also known as ‘the size effect’, has evolved into a style for managing

funds.

The Bombay Stock Exchange (BSE) introduced ‘BSE Mid-Cap’ index and

‘BSE Small-Cap’ index on 11 April 2005 to represent and keep track of

companies having size smaller than the 30 stocks listed on BSE Sensex. These

indices denote the ups and downs in the mid-cap and small-cap sector

Many financial experts recommend the inclusion of mega-cap industry-leaders'

stocks as part of your investment portfolio. Such companies tend to dominate a

portion of the market and enjoy relative security in this position.

In order to categorize companies according to their size market capitalization is

used. It also measures the total worth of a particular company.

19

Page 20: mid cap and small cap

The formula for market cap estimation is:

Market Cap = Price per Share x Number of Outstanding Shares

This formula provides you with an idea of the money you should pay if you are

willing to purchase all of the shares of stock of the company that are circulating

on the market.

Companies can be divided by size in the following way:

1. Nano Cap - less than $50 million

2. Micro Cap -$50 million to $300 million

3. Small Cap - $300 million to $2 billion

4. Mid Cap - $2 billion to $10 billion

5. Large Cap - $10 billion to $200 billion

6. Mega Cap - greater than $200 billion

2.2 ALL-CAP HISTORY

Anchor Capital has been applying its value discipline to the management of

All-Cap portfolios since the inception of the firm in 1983. Applying our value

discipline to purchases affords better potential for appreciation and helps to

reduce overall portfolio risk. The goal of the product is to achieve a superior

return to the Russell 1000 Value index, while offering lower absolute risk than

the index.

20

Page 21: mid cap and small cap

2.2.1 WHY ALL-CAP VALUE

Our All-Cap strategy is unique for the following reasons:

(a) The valuation range for our All-Cap universe is broad enough ($1 billion +)

to achieve very broad diversification.

(b) All stocks meet Anchor Capital's defined value criteria at purchase. This

not only affords better appreciation potential, but also reduces overall portfolio

risk.

(c) All stocks purchased and held are internally researched using a bottom-up

philosophy.

(d) Anchor's investment process utilizes modeling and screening of a large

universe. It is continuous and rigorous. It is also robust in the development of

new investment opportunities.

(e) Emphasis is placed on investment in growing companies which meet our

evaluation criteria. This set of valuation criteria includes an analysis of private

market values, current net asset values, and an adherence to a maximum PEG

ratio of 1.1 (at purchase).

2.3 WHAT ARE MID CAP STOCKS?

A mid-cap (mid-capitalization) stock is issued by a corporation with a market

capitalization between that of a small-cap stock and a large-cap stock. A mid-

cap stock offers a middle ground between the growth potential of a small-cap

21

Page 22: mid cap and small cap

and the reduced volatility of a large-cap. A mid-cap stock tends to offer greater

growth potential than a large-cap, and also tends to be more volatile than a

large-cap stock. Like a small-cap stock, a mid-cap stock emphasizes growth,

but a mid-cap stock tends to pay a relatively larger share of its earnings as

dividends. A mid-cap stock tends to be less volatile than a small-cap stock and

less vulnerable in economic downturns. A mid-cap stock is often defined as

having a capitalization ranging from $2 billion to $10 billion, although

capitalization ranges for what constitutes a mid-cap stock do vary over time.

2.3.1 ADVANTAGES OF MID CAP STOCKS:

Mid caps are less affected than small caps by the broader market

sentiment and daily variations in the trading volume.

They represent lower operational risk than small caps.

Unlike the saturated large cap stocks, mid cap shares have potential to

grow.

Typically mid caps yield higher returns than large caps in the long term.

Although mid cap shares can be lucrative investment options, they are riskier

than their large cap counterparts. Also, they are more expensive and less liquid

than large cap stocks.

During the financial crisis of 2008, mid cap stocks performed better than the

blue chips, which were previously very popular among investors. However,

amateur investors could consider beginning with mutual funds that specialize

in mid cap stock investing. This will save you the bother of researching

22

Page 23: mid cap and small cap

individual companies. Investing in mid cap mutual funds will minimize the risk

element, while maximizing the profit potential.

2.3.2 MID-CAP HISTORY

Anchor Capital has been using Mid-Cap stocks in its equity portfolios since the

inception of the firm in 1983. Before 1991 there was no index for Mid-Cap.

Based upon indices one could only invest in Large and Small-Cap stocks. In

1991 the Russell Mid-Cap Index was created. At that time Anchor was using

Large-Cap as well as those stocks that could be classified as Mid-Cap in its

equity portfolios. In 1992, since Anchor was already investing in Mid-Cap

stocks, we decided to offer a pure Mid-Cap portfolio based upon our value

driven disciplines. This was the beginning of our Mid-Cap discipline.

2.3.3 WHY MID-CAP VALUE

Our Mid-Cap strategy is unique for the following reasons:

(a) The valuation range for our Mid-Cap universe is broad enough ($1 billion

to $12 billion) to achieve diversification by economic sector and capitalization.

(b) We are a true Mid-Cap manager since new purchases occur within the

defined capitalization range.

(c) All stocks meet Anchor Capital's defined value criteria at purchase. This not

only affords better appreciation potential, but also reduces overall portfolio risk

(d) All stocks purchased and held are internally researched using a bottom-up

philosophy.

23

Page 24: mid cap and small cap

(e) Anchor's investment process utilizes modeling and screening of over 2,500

companies. It is continuous and rigorous. It is also robust in the development of

new investment opportunities.

(f) Emphasis is placed on investment in growing companies that meet our

evaluation criteria. This set of evaluation criteria includes an analysis of private

market values, current net asset values, and an adherence to a maximum PEG

ratio of 1.1 (at purchase).

2.4 WHAT ARE SMALL CAP STOCKS?

Companies that have small capitalization amount are considered small

companies or smaller quoted companies and are sometimes called small cap.

The stocks from these companies are known as small cap stocks.

In the stock market, company size is measured not by number of employees or

even by size of profits, but rather by a company's market capitalization. While

this seems complicated, it really gives the best idea of the size of a company.

Market capitalization is calculated by considering the number of outstanding

shares or the number of shares in issue. This number is multiplied by the

current price of each share. Basically, the numbers of shares available are

multiplied by the current price to get a value of the price of the company on the

market. Companies that have small capitalization amounts are considered small

companies or smaller quoted companies (SQCs) and are sometimes called

small caps. The stocks from these companies are known as small cap stocks.

24

Page 25: mid cap and small cap

2.4.1 SMALL-CAP HISTORY

The Small-Cap Value product was incepted on July 1, 2002. The Small-Cap

Value discipline targets stocks with market capitalizations between $50 million

and $1.5 billion. Small-Cap Value portfolios contain 60-80 holdings on

average, broadly diversified across major sectors, and expected turnover ranges

from 25% to 50%. Typically, the product has a higher yield and lower P/E ratio

than its benchmark index.

Small or Mini or Micro cap stocks are so popular in these days. They are stocks

from companies which hold very small part of their respective markets. The

term Small cap stocks are often misused with penny stocks, one of the riskier

equities to trade. According to experts, there are both advantages and

disadvantages of trading small cap stocks over trading large and mid cap

stocks.

2.4.2 ADVANTAGES OF SMALL CAP STOCK TRADING

Small cap stocks are much less priced than large and mid cap stocks. So

trader can trade more number of stocks with less money.

Small cap companies show faster growth rates than well-established

large companies.

Offers more return on investment than large companies.

Good for day trading if trading volumes are sufficient.

Good for novice traders to sharp their abilities.

Small cap companies are keener in their business areas and future

25

Page 26: mid cap and small cap

developments with minimum wastage of resources.

2.4.3 DISADVANTAGES OF SMALL CAP STOCK TRADING

Riskier than mid and large cap stocks, which have fairly stable prices.

Markets are highly volatile with news and disasters.

Small cap stock trading yields lesser dividends, as most companies

invest their earnings to grow more.

There may be lack of sufficient company information.

The trader himself has to execute the trades as there will be lesser

support from brokers and advisors.

2.4.4 SMALL CAP INVESTMENT OPPORTUNITIES

Smaller companies are simply more focused on gaining market share than

larger companies.  In fact, some large companies have difficulty finding

suitable investment opportunities, and return a larger proportion of earnings

back to shareholders in the form of stock dividends.  On the other hand, small

cap companies will often take their earnings and reinvest the money right back

into their business.

Small companies are often much leaner organizations, being thriftier with the

money they have at their disposal.  While many larger companies may be

flying their executives around the country in private jets and helicopters, this

would be an unusual expense for a small cap company.

2.5 BSE MIDCAP AND BSE SMALLCAP INDEX

BSE introduced the new index series called 'BSE Midcap' index and 'BSE

26

Page 27: mid cap and small cap

Small cap' index on April 11, 2005 with base index value 1000 to track the

performance of companies with relatively smaller market capitalization. BSE-

500 Index - represents more than 93% of the listed universe. Companies with

large market capitalization bias the movement of BSE-500 index. This

necessitated construction of a separate indicator to capture the trend in

companies with lower market capitalization. Over the years, BSE Mid-Cap and

BSE Small-Cap indices have proven to be a great utility to the investing

community.

The market capitalisation of the company represents the total dollar value of

the company's outstanding shares. This is equal to the current market price of

its stock multiplied by the number of shares of stock that it has outstanding.

That number gives you the market value of the company, which is one measure

of the company's size. Roughly speaking, there are three basic categories of

market capitalisation: large cap, midcap and small cap. The definitions for each

of these might vary somewhat depending on whom you are talking to, but

usually they are as follows:

Large cap : Market Cap valued at more than $ 10 billion

Midcap : Market cap valued between $ 2 billion and $ 10 billion

Small cap : Market cap valued at less than $ 2 billion

In general, the larger the cap size, the more established the company and the

more stable the price of its stock. Small cap and Midcap companies usually

have a higher potential for future growth than large cap companies, but their

stock tends to fluctuate more in price. Midcap stocks are more risky than large

cap stocks and less risky than small cap stocks. Then what makes a small &

27

Page 28: mid cap and small cap

midcap attractive to investors is the potential for growth that could result in a

significant return on the shares of stock. Because the company issuing the

stock is considered to be growing, there is great potential for the price per share

to increase over the short term. For investors who wish to realize quick gains

on their investments, these appear to be an ideal investment. However, the

enhanced potential for growth also carries an increased level of volatility. As

time goes on, the company could encounter unforeseen factors that inhibit the

increase in the value of the stock. When this happens, the stock may become

stagnant or even begin to fall in value.

In Small cap and Midcap indices the numbers of companies are 552 and

293 respectively.

2.5.1 INDEX SPECIFICATION:

Base Year : 2002-03

Base Index Value : 1000

Date of Launch : April 11,2005

2.5.2 BSE MID-CAP AND BSE SMALL-CAP INDEX - SCRIP

SELECTION CRITERIA:

The general guidelines for selection of constituents in BSE Mid-Cap & BSE

Small-Cap Index are as follows:

1. Trading Frequency: The scrip should have been traded on 60% of the

28

Page 29: mid cap and small cap

trading days in the last three months

2. Eligible universe shall comprise of companies aggregating 98.5% of

average market capitalization

3. This list shall be categorized under large-cap, mid-cap and small-cap

segment based on 80%-15%-5% market capitalization coverage

respectively

4. BSE Mid-Cap Index shall comprise of scraps that gives market

capitalization coverage between 80% & 95% from the list derived as

per point no.3 above

5. BSE Small-Cap Index shall comprise of scraps that gives market

capitalization coverage between 95% & 100% from the list derived as

per point no.3 above

6. Quarterly review of these indices shall be carried out as per the above

criteria subject to a buffer of 3%

2.6 NIFTY MIDCAP 50

The medium capitalized segment of the stock market is being increasingly

perceived as an attractive investment segment with high growth potential. The

primary objective of the Nifty Midcap 50 Index is to capture the movement of

the midcap segment of the market. It can also be used for index-based

derivative trading.

2.6.1 METHOD OF COMPUTATION

Nifty Midcap 50 is computed using free float market capitalisation weighted

method, wherein the level of the index reflects the total market value of all the

29

Page 30: mid cap and small cap

stocks in the index relative to a particular base period. The method also takes

into account constituent changes in the index and importantly corporate actions

such as stock splits, rights, etc without affecting the index value.

2.6.2 BASE DATE AND VALUE

The Nifty Midcap 50 Index has a base date of Jan 1, 2004 and a base value of

1000.

2.6.3 CRITERIA FOR SELECTION OF CONSTITUENT STOCKS

The constituents and the criteria for the selection judge the effectiveness of the

index. Selection of the index set is, inter alia, based on the following criteria:

Stocks with average market capitalization ranging from Rs.1000 crore

to Rs.5000 crore at the time of selection.

Stocks which are not part of the derivatives segment are excluded.

Stocks which are forming part of the S&P CNX NIFTY index are

excluded.

2.6.4 OTHER STATISTICS:

Nifty Midcap 50 stocks represent about 6 % of the free float market

capitalization as on December 31, 2010.

The traded volume for the last six months of all Nifty Midcap 50 stocks

is approximately 9% of the traded volume of all stocks on the NSE.

Nifty Midcap 50 Index was computed using market capitalization

weighted method from the launch date till February 25, 2010

30

Page 31: mid cap and small cap

2.7 SENSEX BEATS MIDCAP, SMALL CAP INDICES

The BSE small-cap index and mid-cap index have underperformed the blue-

chip companies in the year so far by witnessing an over 19 per cent fall as

compared to the broader market benchmark Sensex. According to a study of

the indices from December 31, 2010 to February 28, 2011, the small-cap index

has shed 19.16 per cent to finally settle at 7,817.32. Similarly, the mid-cap

index has saw an erosion of 18.32 per cent during the period to close at

6,373.23 in the last day of trade in the previous month.

Meanwhile, the broader market key index Sensex has fallen by 13.09 per cent

during the period under review to settle at 17,823.40 as on February 28. During

the review period, the mid-cap index witnessed its lowest closing level of

6,292.18 on February 10, 2011, while the small-cap index reported its poorest

close of 7,585.65 on the same day.

Mid-cap stocks and small-cap stocks are vulnerable to any movement in the

stock market, so any good or bad news may see sharp reactions from them, an

expert said. According to market players, everything was going good in the

mid-cap and small cap stocks but reports of stock price manipulations late last

year in few companies, along with a string of negative news, including rising

inflation, 2G controversy and surging crude oil prices globally, has badly jolted

31

Page 32: mid cap and small cap

the confidence of small investors.

They also added buying sentiments have been weak and there is an uncertainty

when both these sectors will make a comeback in the near future. The mid-cap

and small-cap indices track the performance of companies with market

capitalisations that are a fifth or a tenth of that of blue-chip firms.

2.8 SMALL/MID CAP EQUITY INDEX FUND AS OF

SEPTEMBER -30- 2010

INVESTMENT OBJECTIVE

The Fund seeks to track the performance of the Russell Small Cap

Completeness Index. This Index is an unmanaged index considered indicative

of the small to mid cap stock market in general. There is no assurance that the

Fund will achieve its objective. Refer to “Risks “section.

MANAGER

The Fund is a collective investment trust managed by a team of State Street

Global Advisors (SSGA) professionals.

INVESTOR PROFILE

Small/mid-cap investments may be most appropriate for someone with a longer

investment horizon. The Fund may be suitable for the investor seeking long-

term capital growth and willing to accept larger market fluctuations.

STRATEGY

The Small/Mid Cap Equity Index Fund (“Fund”) invests in SSGA’s Russell

Small/Mid Cap Index (formerly known as SSGA Russell Small Cap

Completeness Index) Index Series Class Non-Lending Fund. Effective August

18, 2010, all SSGA Lending Fund assets were transferred to the SSGA Non-

32

Page 33: mid cap and small cap

Lending Fund. The Fund is managed using a “passive” or “indexing” investing

approach, by which SSGA attempts to replicate, before expenses, the

performance of the Index. The Fund typically seeks to achieve its objective by

investing in the securities comprising the Index in the same proportions as they

are represented in the Index. In some cases, it may not be possible or

practicable to purchase all of the securities comprising the Index, or to hold

them in the same weightings as represented in the Index. In those

circumstances, SSGA may employ a sampling or optimization technique to

construct the portfolio. The Fund uses futures, may use other derivatives and

may invest in other investment options.

RISKS

There are risks involved with investing, including loss of money over short or

long periods of time. Fund risks include, but are

not limited to:

MARKET RISK: The risk that the price of securities in a fund will rise or fall

sometimes rapidly or unpredictably due to factors such as real or perceived

adverse economic conditions, political developments, and/or investor sentiment

generally. During a general downturn in the securities markets, multiple asset

classes may decline in value simultaneously. Stocks generally have greater

price volatility than bonds.

BUSINESS RISK: The risk that an investment will lose value because of a

decline in a specific company or industry.

SMALL/MID CAP RISK: Medium-sized companies may suffer more

significant losses as well as realize more substantial growth than larger more

established companies. Equity securities of companies with relatively small

33

Page 34: mid cap and small cap

market capitalization may be more volatile than securities of larger more

established companies.

MANAGER RISK: The risk that manager decisions can adversely affect the

ability of a fund to meet its investment objectives and/or cause a fund to

underperform relevant benchmarks.

PERFORMANCE

Current performance may be lower or higher than performance data shown.

Performance data shown represents past performance and is not a guarantee or

prediction of future results. For performance data current to the most recent

month-end, please visit the Web site at www.varetire.org and select a Plan

under the Defined Contribution Plans tab. Choose “Plan Investments” and then

“Investment Performance.” The investment return and principal value of an

investment will fluctuate so that, when redeemed, shares/units may be worth

more or less than their original cost.

INDEX 1 Year 3 Years 5 Years 10 Years

Small/Mid

Cap Equity

Index Fund

15.86% -3.61% 2.81% 2.09%

Russell Small

Cap

Completenes

s Index

15.83% -3.85% 2.65% 2.00%

34

Page 35: mid cap and small cap

Table no:1

CHAPTER-3

INDUSTRY PROFILE

35

Page 36: mid cap and small cap

3.1 EVOLUTION

3.1.1 BRIEF HISTORY OF STOCK MARKETS

The world's foremost market place New York Stock Exchange (NYSE), started

its trading under a tree (now known as 68 Wall Street) over 200 years ago.

Similarly, India's premier stock exchange Bombay Stock Exchange (BSE) can

also trace back its origin to as far as 125 years when it started as a voluntary

non-profit making association.

News on the stock market appears in different media every day. We hear about

it any time it reaches a new high or a new low, and we also hear about it daily

in statements like 'The BSE Sensitive Index rose 5% today'. Obviously, stocks

and stock markets are important. Stocks of public limited companies are

bought and sold at a stock exchange. But what really are stock exchanges?

Known also as the stock market or bourse, a stock exchange is an organized

marketplace for securities (like stocks, bonds, options) featured by the

centralization of supply and demand for the transaction of orders by member

brokers, for institutional and individual investors. The exchange makes buying

and selling easy.

For example, we don't have to actually go to a stock exchange, say, BSE - we

can contact a broker, who does business with the BSE, and he or she will buy

or sell their stock on their behalf.

36

Page 37: mid cap and small cap

3.1.2 ORIGIN OF INDIAN STOCK MARKET

The origin of the stock market in India goes back to the end of the 18th century

when long-term negotiable securities were first issued. However, for all

practical purposes, the real beginning occurred in the middle of the 19th

century after the enactment of the companies Act in 1850, which introduced

the features of limited liability and generated investor interest in corporate

securities.

An important early event in the development of the stock market in India was

the formation of the native share and stock brokers 'Association at Bombay in

1875, the precursor of the present day Bombay Stock Exchange. This was

followed by the formation of associations/exchanges in Ahmadabad (1894),

Calcutta (1908), and Madras (1937). In addition, a large number of ephemeral

exchanges emerged mainly in buoyant periods to recede into oblivion during

depressing times subsequently.

Many more stock exchanges were established during 1980’s, namely

Cochin Stock Exchange (1980)

Uttar Pradesh Stock Exchange Association Limited(at Kanpur, 1982)

Pune Stock Exchange Limited (1982)

Ludhiana Stock Exchange Association Limited (1983)

Guwahati Stock Exchange Limited (1984)

Kanara Stock Exchange Limited (at Mangalore, 1985)

Magadh Stock Exchange Association(at Patna, 1986)

Jaipur Stock Exchange Limited(1989)

37

Page 38: mid cap and small cap

Bhubaneswar Stock Exchange association Limited(1989)

Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)

Vadodara Stock Exchange Limited (at Baroda, 1990)

Coimbatore Stock exchange

Meerut Stock Exchange

Stock exchanges are intricacy inter-woven in the fabric of a nation's economic

life. Without a stock exchange, the saving of the community- the sinews of

economic progress and productive efficiency- would remain underutilized. The

task of mobilization and allocation of savings could be attempted in the old

days by a much less specialized institution than the stock exchanges. But as

business and industry expanded and the economy assumed more complex

nature, the need for 'permanent finance' arose. Entrepreneurs needed money for

long term whereas investors demanded liquidity – the facility to convert their

investment into cash at any given time. The answer was a ready market for

investments and this was how the stock exchange came into being.

Stock exchange means anybody of individuals, whether incorporated or not,

constituted for the purpose of regulating or controlling the business of buying,

selling or dealing in securities. These securities include:

(I) Shares, scrip, stocks, bonds, debentures stock or other marketable securities

of a like nature in or of any incorporated company or other body corporate;

(ii) Government securities; and Rights or interest in securities.

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India

Ltd (NSE) are the two primary exchanges in India. In addition, there are 22

38

Page 39: mid cap and small cap

Regional Stock Exchanges. However, the BSE and NSE have established

themselves as the two leading exchanges and account for about 80 per cent of

the equity volume traded in India. The NSE and BSE are equal in size in terms

of daily traded volume. The average daily turnover at the exchanges has

increased from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and

further to Rs 2,273 crore in 1999-2000 (April - August 1999). NSE has around

1500 shares listed with a total market capitalization of around Rs 9, 21,500

crore.

The BSE has over 6000 stocks listed and has a market capitalization of around

Rs 9, 68,000 crore. Most key stocks are traded on both the exchanges and

hence the investor could buy them on either exchange. Both exchanges have a

different settlement cycle, which allows investors to shift their positions on the

bourses. The primary index of BSE is BSE Sensex comprising 30 stocks. NSE

has the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The BSE

Sensex is the older and more widely followed index.

Both these indices are calculated on the basis of market capitalization and

contain the heavily traded shares from key sectors. The markets are closed on

Saturdays and Sundays. Both the exchanges have switched over from the open

outcry trading system to a fully automated computerized mode of trading

known as BOLT (BSE on Line Trading) and NEAT (National Exchange

Automated Trading) System.

It facilitates more efficient processing, automatic order matching, faster

execution of trades and transparency; the scrip's traded on the BSE have been

classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares

39

Page 40: mid cap and small cap

represent those, which are in the carry forward system (Badla). The 'F' group

represents the debt market (fixed income securities) segment. The 'Z' group

scrip's are the blacklisted companies. The 'C' group covers the odd lot

securities in 'A', 'B1' & 'B2' groups and Rights renunciations. The key regulator

governing Stock Exchanges, Brokers, Depositories, Depository participants,

Mutual Funds, FIIs and other participants in Indian secondary and primary

market is the Securities and Exchange Board of India (SEBI) Ltd.

3.2 STOCK EXCHANGE - AN INTRODUCTION

“Stock Exchange means anybody or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business

of buying, selling or dealing in securities”. It is an association of member

brokers’ for the purpose of self regulation and protecting the interest of its

members

3.2.1 FUNCTIONS

Providing a central trading place

Providing liquidity

Supply of long term fund

Ensuring safe and fare dealings

Facilitating Speculation

Balancing the flow of fund

Evaluating the security

Reflecting boom and depression

40

Page 41: mid cap and small cap

3.3 TRADING IN THE INDIAN STOCK EXCHANGES

Trading in Indian stock Exchanges is limited to listed securities of limited

company. They are broadly divided into two categories namely specified

securities (forward list) and non specified Securities (cash list). Equity shares

of dividend paying grow tormented companies swift a paid up capital of at

least Rs. 50 million and a market capitalization of at least Rs. 100 million and

having more than 20 shareholders are normally put in the specified group and

the balance in non- specified group.

Two types of transactions can be carried out on the Indian Stock Exchange.

Spot Delivery Transactions: “Delivery and payment within the time on

the date of stipulated when entering into the contact which shall not be

more than 14 days following the date of contract.

Forward Transactions: “Delivery and payment can be extended by

further period of 14 days each so that the overall period does not exceed

90 days from the date of contract”. The latter is permitted only in the

case of specified shares.

A member broker in an Indian stock exchange can act as as agent buy and sell

securities for its clients on a commission basis and also can act as a trader or

dealer as a principal, buy and sell securities on his own account and risk, in

contrast with the practice prevailing on New York and London stock

exchanges, where a member can act as a jobber or a broker only. The natures

of trading on Indian stock exchanges are that of age –old conventional style of

face - to - face trading with bid and offers being made by open outcry.

41

Page 42: mid cap and small cap

However there is a great amount of effort to modernize the Indian stock

exchanges in the recent times.

3.4 BOMBAY STOCK EXCHANGE (BSE)

The Stock Exchange, Mumbai popularly known as “BSE” was established in

1875 as “The Native Share and Stock Brokers association”. It is the oldest one

in Asia, even older than the Tokyo Stock Exchange, which was established in

1878. It is voluntarily nonprofit making Associations of Persons (AOP) and is

currently engaged in the process of converting itself into demutualised and

corporate entity. It has evolved over the years in to present status as the

premier Stock Exchange in the country. It is the first Stock Exchange in the

country to have obtained permanent recognition in 1956 from the Govt. of

India under the securities contracts (Regulation) Act 1956.

The exchange by providing an efficient and transparent market for trading in

securities, debt and derivatives upholds the interest of the investors and ensures

reprisal of their grievances whether against the companies or its own member

brokers. It also strives to educate and enlighten the investors by conducting

investor education programs and making available to them necessary

informative inputs.

The exchange also serves to educate and enlighten the investors by conducting

investor education programs and making available to them necessary

informative inputs. A governing board having 20 directors is the apex body,

which decides the policies and regulates the affairs of the Exchange.

42

Page 43: mid cap and small cap

A Governing Board having 20 directors is the apex body, which decides the

policies and regulates the affairs of the exchange. The Governing Board

consists of 9 elected directors, who are from the broking community (one third

of them retire every year by rotation), three SEBI nominees, six public

representatives and an Executive Director and Chief Executive Officer and a

Chief Operating Officer. The Executive Director as the Chief Executive

Officer is responsible for the day -to - day administration of the Exchange and

he is assisted by the Chief Operating Officer and other Heads of Departments.

The Exchange has inserted new Rule No. 126Ain the rules Byelaws and

Regulations pertaining to constitution of the Executive Committee of the

Exchange. Accordingly, an Executive Committee consisting of the three

elected directors, three SEBI nominees or public representatives, Executive

Director and CEO and Chief Operating Officer had been constituted. The

committee considers judicial and quasi matters in which the Governing Board

has powers as an Appellate Authority, matters regarding annualent of

transactions, admission, continuance and suspension of member- brokers,

declaration of a member broker as defaulter, norms, procedures and other

matters relating to arbitrations, fees, deposits, margins and other moneys

payable by the member brokers to the Exchange etc.

3.5 NATIONAL STOCK EXCHANGE (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the

Indian Stock Market trading system on part the international standards. On the

basis of the recommendations of high powered Pherwani committee, the

National Stock Exchange was incorporated in 1992 by Industrial Development

43

Page 44: mid cap and small cap

Bank of India, industrial Credit and Investment Corporation of India, all

Insurance Corporations, selected commercial banks and others.

Trading at NSE can be classified under two board categories

Wholesale debt market and

Capital Market

Wholesale debt market operations are similar to money market operations-

institions and corporate bodies into high value transactions in financial

instruments such as Govt. securities, treasury bills, public sector unit bonds,

commercial paper, certificate of deposit etc.

There are two kinds of players in NSE

Trading members and

Participations

Recognized members of NSE are called trading members who trade on behalf

of themselves and their clients. Participants include trading members and large

players like banks who take direct settlement responsibilities. Trading at NSE

takes place through a fully automated screen based training mechanism which

adopts the principal of an order driven market. Trading members can stay at

their offices and executive the trading, since they are willing to transact will

appear on the screen. When the prices match the transaction will be completed

a confirmation slip will be printed at the office of trading member.

44

Page 45: mid cap and small cap

NSE has several advantages over the traditional trading exchanges. They are as

follows.

NSE brings an integrated stock market trading network across the

nation. Investors can trade at the same price form anywhere in the

country since inter market operations are streamlined coupled with the

country wide access to the securities.

Delays in communication, late payments and the malpractices

prevailing in the traditional trading mechanism can be done away with

greater operational efficiency and informational transparency in the

stock market operations, with the support of total computerized

network.

3.5.1 THE MAIN OBJECTIVES OF NSE ARE:

To establish the nationwide trading facility for the equities, debt

instruments and hybrids.

To ensure equal access to investors all over the country through

appropriate communication network.

To enable shorter settlement cycle and book entry settlement system.

To meet current international standards of securities market.

3.5.2 PROMOTERS OF NSE

IDBI, ICICI, IFCI, GIC, SBI, Bank of Baroda, Canara Bank, Corporation

Bank, Indian Bank, Infrastructural Leasing and financial services. Stock

Holding Corporation of India and SEBI capital market are the promoters of

NSE.

45

Page 46: mid cap and small cap

3.6 OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)

The traditional trading mechanism prevailed in the Indian Stock Markets gave

way to many functional inefficiency, such as, absence of liquidity, lack of

transparency, unduly long settlement periods and binami transactions, which

affected the small investors to a great extent. To provide improved services to

investors, the country’s first ring less, scrip less, electronic Stock Exchange

OTCEI – was created to in 1992 by country’s premier financial institutions-

Unit Trust of India, industrial credit and investment corporation of India,

Industrial Development Bank of India, SBI Capital markets, Industrial finance

corporation of india, General Insurance Corporation and its subsidiaries and

Can Bank Financial securities.

Trading at OTCEI is done over the centers spread across the country. Securities

traded on the OTCEI are classified into:

Listed Securities – The shares and debentures of the companies listed

on the OTC can be bought or sold at any OTC counter al over the

country and they should not be listed anywhere else.

Permitted Securities- Certain shares and debentures listed on other

exchanges and units of mutual funds are allowed to be traded.

Initiated Debentures- Any equity holding at least one lakh debentures of

particular scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges.

That is, certificates of listed securities and initiated debentures are not traded at

OTC. The orginal certificate will be saftely with the custodian. But a counter

46

Page 47: mid cap and small cap

receipt is generated out at the counter that substitutes the share certificate and

is used for all transactions.

3.7 REGULATORY FRAMEWORK

The four main legislations governing the security market are:

The Securities Contracts(Regulation) Act 1956

The Companies Act 1956

The SEBI Act 1992

The Depository Act 1996

3.7.1 SECONDARY MARKET AND SEBI

SEBI has introduced a wide range reforms in the Secondary market. The

important areas are given below.

Governing Board

Infrastructure

Settlement and clearing

Debt Market

Price Stabilization

Delisting

Brokers

Insider trading

3.8 CAPITAL MARKET REGULATIONS

47

Page 48: mid cap and small cap

In keeping with the board trust of the ongoing programs of economic reforms,

the mechanism of administrative control over capital issue has been dismantled

and pricing of capital issue is now essentially market/regulation of the capital

markets and protection of investors interests now primarily the responsibility of

the securities and Exchange Board of India (SEBI) which is located in

Bombay.

Accordingly a SEBI’s functions include:

Regarding the business in stock exchanges and any other securities

market.

Registering and regulating the working of collective mutual funds.

Prohibiting fraudulent and unfair trade practices relating the working f

collective mutual funds.

Prohibiting fraudulent and unfair trade practices relating to securities

market.

Promoting fraudulent and unfair trade practices relating to securities

market.

Promoting investors education and training of intermediates f securities

market.

Promoting investors education and training of intermediaries of

securities market.

Prohibiting insider trading in securities with the imposition of monetary

penalties, on market intermediaries.

Regulating substantial acquisition of share and takeover of companies.

48

Page 49: mid cap and small cap

Calling for information from carrying out inspection, conduction

inquiries and audits of the stock exchange and intermediaries and self

regulatory organization in the securities market.

3.9 STATUS OF STOCK EXCHANGE

The Indian Stock Market is a collection of various regional and national level

stock exchanges in India. It is a platform for the masses of the country to

interest their savings and also as a source of funds for various organizations

and institutions that features in business category.

3.9.1 PRESENT SCENARIO

The current conditions if Indian Market has drastically improved. There is

absolute transparency and instant transactions. All Indian stock markets are

now computerized and Internet Trading has become a common phenomenon.

Indian stock Markets have also developed a dynamic nature and can change

from a bullish temperament to a bearish slide. Any small bit of information or

even a rumor from any part of the country can affect the market and is a fairly

accurate indicator of the prevalent atmosphere in the region or country. People

from across the country and globe get in touch with minute wise readings on

the Stock market and gain a lot of trading aptitude after daily seeing BSE stock

gainers or BSE top losers list which does a world of good to their investment

portfolio.

3.9.2 FUTURE SCOPE OF STOCK EXCHANGE

The future of stock trading appears to be electronic, as competitions growing

between the reaming traditional New York Stock Exchange specialist system

49

Page 50: mid cap and small cap

against the relatively new, all Electronic Communications networks or ECNs.

ECNs point to their speedy execution of large block trades, while specialist

system proponents cite the role of specialist in maintaining orderly markets,

especially under extraordinary conditions or for special types of orders

The ECNs contend that an array of special interests profit at the expense of

investors in even the most mundane exchange directed trades. Machine- based

systems; they argue, are much more efficient, because they speed up the

execution mechanism and eliminate the need to deal with an intermediary.

Historically, the ‘market’ has been slow t respond to technological innovation,

thus allowing growing pure speculation to continue. Conversion to all

electronic trading could eliminate the trading profits of floor specialists and the

NYSE’s “Upstairs traders’ who like in September and October 2008, earned

billions of dollars selling they did not have, and days later buying the same

amount f shares, but may be 15% cheaper, s these shares could be handed to

their buyers, thereby making the market fall deeply.

50

Page 51: mid cap and small cap

CHAPTER -4

ORGANISATION PROFILE

51

Page 52: mid cap and small cap

4.1 COCHIN STOCK EXCHANGE

COCHIN STOCK EXCHANGE LTD. is one of the premier Stock Exchanges

in India, established in the year 1978.  The exchange had a humble beginning

with just 5 companies listed in 1978 -79, and had only 14 members. Today the

Exchange has more than 508 members and 240 listed companies. In 1980 the

Exchange computerized  its offices. In order to keep pace with the changing

scenario in the capital market, CSE took various steps including trading in

dematerialized shares. CSE introduced the facility for computerized trading -

"Cochin Online Trading (COLT)" on March 17, 1997. CSE was one of the

promoters of the "Interconnected Stock Exchange of India (ISE)". The

objective was to consolidate the small, fragmented and less liquid markets into

a national level integrated liquid market. With the enforcement of efficient

margin system and surveillance, CSE has successfully prevented defaults.

Introduction of fast track system made CSE the stock exchange with the

shortest settlement cycle in the country at that time. By the dawn of the new

century, the regional exchanges faced a serious challenge from the NSE &

BSE. To face this challenge CSE promoted a 100% subsidiary called the

"Cochin Stock Brokers Ltd. (CSBL)" and started trading in the National Stock

Exchange (NSE) and Bombay Stock Exchange (BSE).

CSBL is the first subsidiary of a stock exchange to get membership in both

NSE & BSE. CSBL also became a depository participant in the Central

Depository Services Ltd... The CSE has been playing a vital role in the

economic development of the country in general, and Kerala in particular and

striving hard to achieve the following goals:

52

Page 53: mid cap and small cap

• Providing investors with high level of liquidity whereby the cost and time

involved in the entry into and exit from the market are minimized.

• Bringing in high tech solutions and make all operations absolutely

transparent.

• Building infrastructure for capital market by turning CSE into a financial

super market.

• Serve the investors of the region.

• Professional stock broking and investment management.

• Imparting Capital Market knowledge to all intermediaries on a continuous

basis.

The Cochin Stock Exchange is directly under the control and supervision of

Securities & Exchange Board of India (the SEBI), and is today a demutualized

entity in accordance with the Cochin Stock Exchange  (Demutualization) 

Scheme,  2005  approved  and  notified  by SEBI on 29th of August 2005.

Demutualization essentially means de-linking and separation of ownership and

trading rights and restructuring the Board in accordance with the provisions of

the scheme. The Exchange has been demutualised and the notification thereof

published in the Gazette.

53

Page 54: mid cap and small cap

4.2 PRESENT STATUS OF COCHIN STOCK EXCHANGE

4.2.1 MANAGEMENT

The policy decisions of the CSE are taken by the Board of Directors. The

Board is constituted with 12 members of whom less than one-fourth are elected

from amongst the trading member of CSE, another one forth are Public Interest

Directors selected by SEBI from the panel submitted by the Exchange and the

remaining are the share holder Directors. The Board appoints the Executive

Director who functions as an ex-officio member of the Board and takes charge

of the administration of the Exchange.

The operation of any Stock Exchange can commence only with the recognition

of the central government under the Securities Contract Regulation Act (SCR)

1956. The various regulations concerning the listing of companies and the

trading related activities are provided under SCR rules 1957. The bye law of

the Exchange gives guidelines on opening/closing of CSE, timing of trading

regulation of bedlam or carryover business, fixation of margin prices,

arbitration, settlement of disputes etc.

54

Page 55: mid cap and small cap

4.2.2 ORGANIZATION STRUCTURE

Fig no: 1

4.2.3 MEMBERSHIP PROFILE

Cochin Stock Exchange currently has 508 members. All the members of CSE

have a share each value of Rs.100 thus making the issued, subscribed and paid

up capital of Rs. 50,800 the authorized capital of CSE is Rs. 1,00,000 with total

membership limited to 1,000. As per the SEBI norms CSE charges an initial

deposit of Rs. 2 lakhs from each member. Based on the volume of trade each

member is to contribute additional deposits. Along with this annual

subscription fee of Rs. 200 for individual members and Rs. 500 for corporate

members will be charged by CSE. The members are appointing their assistance

is sub brokers bared on the guide lines gives by SEBI. From the 6 th to the 10th

year of membership the total amount payable is Rs. 5000 which payable at the

beginning of the 6th year.

55

Page 56: mid cap and small cap

4.3 COCHIN STOCK BROKERS LIMITED (CSBL)

The CSBL is wholly owned subsidiary f the Cochin Stock Exchange Limited.

The CSBL are a SEBI registered intermediary and corporate trading cum

clearing member of the capital market segment of the NSE and BSE. At the

BSE, CSBL also have a registration under the derivative segment.

For the individual trading through CSBL all of the investors had to register as a

client with one of the CSBL sub broker, who are also member of CSBL Ltd.,

commence trading after entiring into a tripartite agreement with ourselves as

trading member and the sub brokers. Over 138 sub brokers are presently

affiliated to CSBL, having their offices all over the kerala.

The CSBL’s trading and settlement functions are completely automated with

state of art technology, in addition to our well- experienced staff catering of

clients needs. CSBL bank with UTI Bank, The South Indian Bank and Federal

Bank ensure a smooth funds transfer arrangement during trading operation and

more importantly to reassure ourselves that client pay outs are prompt.

Rapid changes taking place in the capital market and dwindled the importance

of Regional Stock Exchanges. Taking into consideration all this developments

and considering the future, the stock exchange decided to start a 100 %

subsidiary called Cochin Stock Brokers Ltd (CSBL).

This is to enable the CSE to acquire the membership other exchange through

its subsidiary. CSBL was incorporated on 28th December 1999 and later it got

membership in NSE and BSE. The CSBL started its operation in full swing

from February 2001. At present the CSBL offers trading in BSE and NSE with

56

Page 57: mid cap and small cap

more than 50 registered brokers and this have been increasingly day by day.

Each member is given separate terminal for online trading. The staff in the

exchange provides the necessary help for various matter included in the trading

activity.

4.4 PRODUCTS AND SERVICES

Cochin stock brokers ltd (CSBL),a wholly owned subsidiary company of

cochin stock exchange is a corporate member of both NSE and BSE, and

provides trading facilities on here exchange through the brokers if exchange.

The subsidiary offers a wide range of products and services :

1. Trading on National Stock Exchange

2. Trading on Bombay Stock Exchange

3. Internet Trading

4. Depository Participant

5. IPO(Initial Public Offer)

6. Issue of new shares

4.5 DEPARTMENTS

Listing Department

Membership Department

Settlement department

Administration Department

Finance Department

Networks Department

Systems Department

57

Page 58: mid cap and small cap

Arbitration Department

Legal Department

Surveillance Departments

Arbitration committee

Fund management

4.5.1 LISTING DEPARTMENT

The listing department guides prospective company’s decision of being listed

on the exchange by providing the knowledge base and information on the

statutory requirements that have to be complied with. The major functions

undertaken by the department include post- listing monitoring and compliance

with the listing agreement, monitoring the listing agreements and receiving the

provisions of listing agreement from time to time with specific reference to

SEBI Regulations / circulars that are in force. The department also ensures

diligence in scrutinizing listing applications and adhering to the Listening

Norms.

The department also performs the processing of the documents submitted by

companies on listings/additional listing and provides them with the listing

approval/trading permission and also ensures that the listing fee/processing fee

is paid at the stipulated time

58

Page 59: mid cap and small cap

4.5.2 MEMBERSHIP DEPARTMENT

The Membership Department screens applications from prospective members

to ensure that they are eligible to be members of the Exchange as per

provisions of the Securities Contracts Regulation Act. It is also verified

whether they are ‘Fit and Proper’ persons eligible to be members as per the

SEBI (Criteria for Fit and Proper persons) Regulation 2004. The eligible

applications are processed and forwarded to SEBI for the purpose of obtaining

registration with SEBI. The department continuously follows up the status of

the applications with SEBI and provides necessary data if any required by

SEBI. The members are informed of their fee liability as and when information

in this regard is obtained from SEBI.  The Membership Department also assists

SEBI by ensuring proper delivery of notices and letters issued by SEBI to the

concerned members. The changes in status and constitution of the Brokers are

sent for approval to the Governing Board of the Exchange and thereafter to

SEBI and Members are given necessary directions wherever required. Change

in address and contact information are updated in the Finance and Accounting

System and   SEBI intimated.

4.5.3 SETTLEMENT DEPARTMENT

Settlement department is a key department of the CSE. It is dealing with cash

and securities. It helps the broker in setting the matters related to their payin

and payout of cash and securities, recovery of dues and settling the matters

related to the bad deliveries. This department is headed by a Deputy manager

and assisted by two senior officers who look into the operations involved in the

59

Page 60: mid cap and small cap

settlement activities in the BSE and NSE.  CSBL are following T+3 (T-Date of

Transaction)

Settlement system as given below:

NSE/BSE CSBL

Security Paying T + 3 T + 1

Cash Paying T + 3 T + 2

Cash Payout T + 3 T + 4

Delivery Payout T + 3 T + 4

Delivery Intimation - T + 3

Table no: 2

4.5.4 ADMINISTRATION DEPARTMENT

A legal officer with two deputy managers for administration and compliance and

management information system heads the department. Two senior officers looking

after public relations and administration form part of administration.

The major activities of this department include:-

Organizing council meeting, annual general meeting, extra ordinary general

meeting, council meetings etc.

Looking after the discharge and admission of authorized members.

Taking care of all related functions needed for the smooth functioning of the

exchange including regular payments of rent, bills, taxes etc.

Public relations.

Giving necessary guidelines and support to students and other who visit the

exchange for various activities.

Implementation of the guidelines given by council of management.

Procedures involved in the listing.

60

Page 61: mid cap and small cap

Matters associated with various committees like arbitration, grievance,

disciplinary and defaults.

4.5.5 FINANCE DEPARTMENT

This department takes care of the various financial transactions of CSE thus acting as

the life blood of the organization. The department is headed by a Finance officer and

assisted by a Deputy Manager and several senior and junior officers.

The major activities of the department include

Annual Report Generation

Fund Management

Interaction with bankers

Keeping general accounts of the CSE.

Preparation of various financial statements of the company.

Maintaining of payrolls and maintenance of petty cash register.

Coordinating accounting transactions of different branches and departments.

Taxation

Budgeting and Expense research.

Maintenance of internal control system.

Interaction with external and internal audits.

4.5.6 NETWORKS DEPARTMENT

It is the heart of the various operations of CSE. The trading software used in CSBL is

Multex, developed by CMC. The advantage of using Multex is that both BSE and NSE

scrip’s can be obtained.

CSBL has provided trading facility in equities through Multex to a large

number of their clients over the Wide Area Network.

61

Page 63: mid cap and small cap

4.5.7 LIBRARY DEPARTMENT

The Stock Exchange has emerged as a Public Service Institution catering to

increasing demands of investors in the country. Of the developmental activities

of CSE, education, training and research are dominant in these years bringing

the Stock Exchange and Public nearer and together. The Exchange gives

necessary guidelines and support to Research students and others who visit the

Exchange for various activities.

CSE’s Library has categorized into 6 which is as follows:

Capital Market

Banking & Finance

Law

Tax 

General

Management

4.5.8 SYSTEMS DEPARTMENT

It is the heart of the various operations of CSE. The department provides the

necessary technical supports for screen based trading and the computerized

functioning of all other departments.

The various activities of the department include: -

Developments of various software needed for the functioning of the

exchange.

Maintenance of Multex software, which provides online trading with NSE and

BSE.

63

Page 64: mid cap and small cap

Maintenance of an effective network of computers for the smooth

functioning of the exchange.

Provide the necessary services to the settlement and surveillance

departments.

The support of maintaining depository participants accounts with the CSBL.

The major back office system software used is NESS and BOSS for NSE and

BSE trades calculations respectively. These soft wares are developed in-house

by CSE. This software is used to maintain the entire records of all the trades

that occur each day. It also does all the required calculations for deductions and

also creates all kinds of reports needed by the brokers and their clients.

4.5.9 ARBITRATION COMMITTEE

Any dispute between a member and a remised, authorized assistant, employee or

other person sharing brokerage with him in respect of any matter shall be referred to

arbitration and decided in accordance with the Byelaws and Regulations relating to

arbitration of disputes other than between Members. All other disputes between

them shall also be referred to arbitration in the same manner but if the remise,

authorized assistant, employee or other person sharing brokerage so desire such

disputes may be with the permission of the Council of Management or the president

referred to arbitration and decided in accordance with the Bye-laws, Regulations

relating to arbitration of disputes between members.

The non-member arbitration panel consists of retired High Court and City Civil Court

judges. Chartered accountant, company secretaries, and other professionals having

in depth knowledge of the capital market.

64

Page 65: mid cap and small cap

4.5.10 FUND MANAGEMENT

For monitoring the fund balance of the brokers with the stock exchange. It facilitates

the internal fund transfer and also carries out timely funds in the paying and payout.

Provides all assistance to cost control and revenue enhancement.

4.5.11 LEGAL DEPARTMENT

CSE has a full-fledged Legal Department, headed by Manager-Legal and is primarily

engaged in advising the management in the merits and demerits of legal issues

involving the exchange. A major function carried by the department is that the

various rules, regulations and directives of SEBI with regard to trading in the Capital

Market by the brokers and sub-brokers are brought to the notice to members and

the investing public. Manager-Legal is the compliance officer as per the provisions of

SEBI regulations besides acting as secretary to the board of directors. The three main

areas of special importance being looked after by the legal department are-

Investor Grievance Service

Arbitration

Default

4.5.12 SURVEILLANCE DEPARTMENT

The Exchange has set up Surveillance Department to keep close watch on price

movements of scrip’s, detect market abuses like price rigging, monitor abnormal

prices and volumes which are not consistent with normal trading pattern etc. The

main objectives of the department are to provide a free and fair market, to arrest

unsystematic risk from entering into the system and to manage risks. The

surveillance function at the exchange has assumed greater importance in the last few

years. SEBI has directed the stock exchanges to setup a separate surveillance

department with staff exclusively assigned for this function.

65

Page 66: mid cap and small cap

It also offers services like:-

Keeping a close watch on the price movement of scrip’s.

Detect market manipulations like price rigging.

Monitor abnormal changes in prices and volumes which are not

consistent with the normal trading pattern.

Monitor the member broker’s positions to insure that defaults do not

occur.

4.5.13 INVESTIGATIONS DEPARTMENT

The department conducts in-depth investigation based on preliminary enquires

made into trading of the scrip as also at the instance of SEBI. Conducting

Investigations involves the following stages:-.

Identification of scrip’s to the investigator based on the alerts thrown by the

online system and offline reports.

Identification of Members from home the client details have to be called

for.

Preparation of company profile including Corporate News and Financial

Results.

Compilation of client details.

Preparation of reports.

In case irregularities found, necessary actions are initiated.

66

Page 67: mid cap and small cap

4.6SWOT ANALYSIS

4.6.1 STRENGTH

Good image all over India.

Strong and high quality infrastructure.

Premier stock exchange in India.

Trading in dematerialized shares.

Screen based trading.

Efficient margin system and surveillance.

Professional stock broking and investment management function.

4.6.2 WEAKNESS

CSE failed to execute awareness about stock market among people.

Turn over alone is very low.

Investor are not considering CSE index.

4.6.3 OPPORTUNITY

Promoting interconnected stock exchange of India.

Consolidation of small, fragmented and less liquid markets into a

national integrated liquid market.

Increasing participation in the central depository service ltd

Capital market development around the area, where he exchanges is

located

67

Page 68: mid cap and small cap

4.6.4 THREATS

Competition from well established stock holders who has membership

in BSE and NSE. People hesitate to invest in stock market because of

higher risk.

People hesitate to invest in stock market because of higher risk.

68

Page 69: mid cap and small cap

CHAPTER- 5

DATA ANALYSIS

AND

INTERPRETATION

69

Page 70: mid cap and small cap

5.1 ANALYSIS AND INTERPRETATION

The overall analysis of the study is subdivided into three parts:

1. Analysis of mid cap and small cap portfolios during the period.

2. Analysis of BSE small cap index and NIFTY midcap index during the

period.

3. Analysis of the returns of both portfolios and indexes.

5.2 PORTFOLIO CONSTRUCTION

The companies have been selected from different sectors. Three companies

from mid cap and three from small cap are selected for construct portfolio. The

index taken into consideration is BSE small cap and NIFTY mid cap. Each

company is investing equally in portfolios. From these three companies make a

portfolio of 5 lakhs in mid cap and small cap. And find the return of the

portfolios and make comparison with index returns.

5.3 DATA SIZE

Data’s regarding the share market of BSE small cap and NIFTY midcap from

the month of 04-JAN-2011 to 28-FEB-2011 is taken. For the purpose of the

study a portfolio has been built comprising of shares selected 3 companies

from mid cap and 3 from small caps

70

Page 71: mid cap and small cap

MID CAP COMPANIES SMALL CAP COMPANIES

MOSER-BAER (I) LIMITED ADITYA BIRLA CHEMICALS (INDIA) LTD

HINDUSTAN CONSTRUCTION COMPANY LIMITED 

 GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD

INDIAN BANK JK PAPER LTD

Table no: 3

5.4 MID CAP COMPANYS DETAILS

5.4.1 MOSER-BAER (I) LIMITED

Moser Baer, headquartered in New Delhi, is one of India's leading technology

companies. Established in 1983, Moser Baer successfully developed cutting

edge technologies to become the world's second largest manufacturer of

Optical Storage media like CDs and DVDs. The company also emerged as the

first to market the next-generation of storage formats like Blu-ray Discs and

HD DVD. Recently, the company has transformed itself from a single business

into a multi-technology organisation, diversifying into exciting areas of Solar

Energy, Home Entertainment and IT Peripherals & Consumer Electronics.

Moser Baer has a presence in over 82 countries, serviced through six marketing

offices in India, the US, Europe and Japan, and has strong tie-ups with all

major global technology players. Moser Baer has the distinction of being

preferred supplier to all top global OEM brands. Moser Baer stands committed

71

Page 72: mid cap and small cap

to supplying highest quality fully licensed media to its customers. Moser Baer's

products are manufactured at its three state-of-the-art manufacturing facilities.

It has over 6,000 full-time employees and multiple manufacturing facilities in

the suburbs of New Delhi.

5.4.2 HINDUSTAN CONSTRUCTION COMPANY LIMITED  

As a pre-eminent Indian infrastructure company, established over eight decades

ago, HCC has, over the years, strongly anchored itself to India’s development

effort. Today it is acknowledged as a company that continues to empower

India, enabling the nation to surge ahead in different core sectors. At the heart

of all our development efforts is the attempt to touch and improve the quality

of life of people across the length and breadth of the country.

In fact, HCC, as an industry leader in engineering construction, currently

nurtures projects that span across such diverse segments as transportation,

power, marine projects, oil and gas pipeline constructions, irrigation and water

supply, utilities and urban infrastructure, all of which impact the nation of

India, and the progress of its people. HCC, even as you read this, is bringing to

bear its wealth of engineering and construction expertise to develop

infrastructure aimed at further propelling the nation forward, into the 21st

century and beyond.

5.4.3 INDIAN BANK

A premier bank owned by the Government of India

• Established on 15th August 1907 as part of the Swadeshi movement

• Serving the nation with a team of over 19000 dedicated staff

• Total Business crossed Rs.1,74,934 Crores as on 31.12.2010

72

Page 73: mid cap and small cap

• Operating Profit increased to Rs. 2747.35 Crores as on 31.03.2010

• Net Profit increased to Rs.1554.99 Crores as on 31.03.2010

• Core Banking Solution (CBS) in all 1819 branches    

International Presence

Overseas branches in Singapore and Colombo including a Foreign

Currency Banking Unit at Colombo

240 Overseas Correspondent banks in 70 countries    

Diversified banking activities - 3 Subsidiary companies

Indian bank Merchant Banking Services Ltd

Indian Bank Housing Ltd.

Indian Fund Management Ltd  

A front runner in specialised banking

97 Forex Authorised branches inclusive of 1 Specialised Overseas

Branch at Chennai exclusively for handling forex transactions arising

out of Export, Import, Remittances and Non Resident Indian business

62 Special SME Branches extending finance exclusively to SSI units

5.5 SMALL CAP COMPANYS DETAILS

5.5.1 ADITYA BIRLA CHEMICALS (INDIA) LTD

The Rs2,656-crore Aditya Birla Chemicals business is spread across India,

Thailand and China. In India, the chemicals business operates through four

companies: Aditya Birla Nuvo, Grasim, Aditya Birla Chemicals (India)

(formerly known as Bihar Caustic and Chemicals Limited) and Tanfac. In

Thailand, the business operates through two companies: Aditya Birla

Chemicals (Thailand) Ltd and Thai Peroxide Company Ltd. Four separate

73

Page 74: mid cap and small cap

chemical companies namely Thai Organic Chemicals Company, Thai Epoxy

and Allied Products Company, Thai Polyphosphate & Chemicals Company and

Thai Sulphites & Chemicals Company were merged together to form Aditya

Birla Chemicals (Thailand) Ltd in 2006.

In China, the chemicals business operates through Aditya Birla Grasun

Chemicals (Fangchenggang) Ltd.The business covers six major product

segments: chlor-alkalis, epoxy, fluorine chemicals, peroxides, phosphates and

sulphites. These chemicals find application across a wide range of industries

including food, food processing, personal consumer products, coating, civil

engineering, wind energy, composites, electrical, pulp and paper, detergents,

water treatment and metal treatment.

They are exported to 58 countries across the globe. The products are

manufactured at ten units — four in India, five in Thailand and one in China.

The chemicals produced at these factories are recognised the world over for

their high quality. The chlor-alkali unit in Thailand, for example, is the only

unit in the country to achieve the hallmark of quality excellence by obtaining

FDA approval. State-of-the-art technology, stringent quality control and

continuous innovative improvements guarantee that the products are of global

standards.

Customer satisfaction is ensured through timely delivery and customisation of

products and processes according to requirements. Research and development

facilities at various locations have the latest equipment to determine the

physical and chemical parameters of newly developed products and their

applications. Different divisions have been accredited with certifications such

74

Page 75: mid cap and small cap

as ISO-9001:2000, ISO-14001, OSHAS-18001, BS-8800 and TIS-18001.

5.5.2 GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD

It all started in the year 1987 when Mr. C.J. George and Mr. Ranajit Kanjilal

founded Geojit as a partnership firm. In 1993, Mr.Ranajit Kanjilal retired from

the firm and Geojit became the proprietary concern of Mr. C .J. George. In

1994, it became a Public Limited Company named Geojit Securities Ltd. The

Kerala State Industrial Development Corporation Ltd. (KSIDC), in 1995,

became a co-promoter of Geojit by acquiring a 24 percent stake in the

company, the only instance in India of a government entity participating in the

equity of a stock broking company. The year 1995 also saw Geojit being listed

on the leading regional stock exchanges. Geojit listed at The Stock Exchange,

Mumbai (BSE) in the year 2000. Company’s wholly owned subsidiary, Geojit

Commodities Limited, launched Online Futures Trading in agri-commodities,

precious metals and energy futures on multiple commodity exchanges in 2003.

This was also the year when the company was renamed as Geojit Financial

Services Ltd. (GFSL). The Board consists of professional directors; including a

Kerala Government nominee. With effect from July 2005, the company is also

listed at The National Stock Exchange (NSE).

Company is a charter member of the Financial Planning Standards Board of

India and is one of the largest Depository Participant (DP) brokers in the

country. On 31st December 2007, the company closed its commodities

business and surrendered its membership in the various commodity exchanges

held by Geojit Commodities Ltd. Global banking major BNP Paribas took a

75

Page 76: mid cap and small cap

stake in the year 2007 to become the single largest shareholder. Consequently,

Geojit BNP Paribas has been renamed as Geojit BNP Paribas Financial

Services Ltd

Wide range of products and services

Certified financial advisors help clients to arrive at the right financial solution

to meet their individual needs. The wide range of products and services on

offer includes -

Equities | Derivatives | Currency Futures | Custody Accounts | Mutual Funds |

Life Insurance & General Insurance | IPOs | Portfolio Management Services |

Property Services | Margin Funding | Loans against Shares

5.5.3 JK PAPER LTD

JK Paper Ltd. is India’s largest producer of branded papers and a leading

player in the Fine Papers and Packaging Board segments. It operates two

integrated Mills in India, in Rayagada, Orissa and Songadh, Gujarat, with a

combined manufacturing capacity of 2, 40,000 tonnes per year, using

contemporary technology. The products include a wide range of Coated and

Uncoated Printing & Writing Papers and Packaging Boards. Both the

manufacturing units of the company are ISO 9001-2000 complaint.

It was the first Company to manufacture surface sized printing & writing

paper, followed by copier paper. The Company’s state-of-the-art Packaging

Board plant at Central Pulp Mills produces international quality virgin boards

like FBB, SBS and Cup Stock.Nearly 95% of the Company’s product mix

comprises high value products, marketed under various popular brand names

such as, ‘JK Copier’, ‘JK Bond’, ‘Cedar’, ‘JK Excel Bond’, ‘JK Cote’, ‘JK

76

Page 77: mid cap and small cap

TuffCote’, ‘JK PureFil’ and ‘JK Pristine Cote’. JK Paper is India’s quality and

price leader.

Besides the strong brands, the Company has a wide distribution network in

India consisting of nearly 150 distributors and over 3000 dealers. JK Paper is

the only company in India with large share of branded products in its portfolio.

JK Paper passionately believes in Environment and Safety and has been

introducing cleaner and environment-friendly technologies. The Company has

an export footprint for high value branded products and Packaging Boards.

77

Page 78: mid cap and small cap

5.6 ANALYSIS OF PORTFOLIO

5.6.1 MID CAP COMPANIES PORT FOLIO

COMPANY NAME SCRIP CODE NO. OF SHARES

MOSER-BAER (I) LIMITED

MOSERBAER 2758

HINDUSTAN CONSTRUCTION COMPANY LIMITED 

HCC 3491

INDIAN BANK INDIANB 638

Table no: 4

5.6.2 SMALL CAP COMPANIES PORT FOLIO

COMPANY NAME SCRIP CODE NO. OF SHARES

ADITYA BIRLA CHEMICALS (INDIA) LTD

ABCIL 1189

 GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD

GEOJITBNP 4910

JK PAPER LTD JKPPRQ 2849

Table no: 5

78

Page 79: mid cap and small cap

5.7 PORTFOLIO VALUES

PORT FOLIO AS ON 03-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 62.4 172099.2

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 48.65 169837.15

INDIAN BANK 638 247.7 158032.6

TOTAL= 499968.95

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189142.4

169313.6

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 33.35 163748.5

JK PAPER LTD 2849 58.55 166808.95

TOTAL= 499871.05

Table no: 6

79

Page 80: mid cap and small cap

PORT FOLIO AS ON 04-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 62.2171547.6

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 47.45 165647.95

INDIAN BANK 638 240.1 153183.8

TOTAL= 490379.35

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189142.6

169551.4

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 34 166940

JK PAPER LTD 2849 58.25 165954.25

TOTAL= 502445.65

Table no: 7

80

Page 81: mid cap and small cap

PORT FOLIO AS ON 05-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 62.25171685.5

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 48.15 168091.65

INDIAN BANK 638 231.65 147792.7

TOTAL= 487569.85

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189143.2

170264.8

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 33.45 164239.5

JK PAPER LTD 2849 57.85 164814.65

TOTAL= 499318.95

Table no: 8

81

Page 82: mid cap and small cap

PORT FOLIO AS ON 06-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 60.85167824.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 46.25 161458.75

INDIAN BANK 638 232.85 148558.3

TOTAL= 477841.35

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189143.35

170443.15

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 32.7 160557

JK PAPER LTD 2849 57.65 164244.85

TOTAL= 495245

Table no: 9

82

Page 83: mid cap and small cap

PORT FOLIO AS ON 07-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 58.55161480.9

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 45.3 158142.3

INDIAN BANK 638 220.7 140806.6

TOTAL= 460429.8

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189139.6

165984.4

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 32.3 158593

JK PAPER LTD 2849 55.95 159401.55

TOTAL= 483978.95

Table no: 10

83

Page 84: mid cap and small cap

PORT FOLIO AS ON 10-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 56.75156516.5

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 45.55 159015.05

INDIAN BANK 638 214.85 137074.3

TOTAL= 452605.85

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189137.2

163130.8

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 31.15 152946.5

JK PAPER LTD 2849 53.45 152279.05

TOTAL= 468356.35

Table no: 11

84

Page 85: mid cap and small cap

PORT FOLIO AS ON 11-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 57.05157343.9

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 45.1 157444.1

INDIAN BANK 638 218.2 139211.6

TOTAL= 453999.6

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189135.9

161585.1

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 30.5 149755

JK PAPER LTD 2849 52.35 149145.15

TOTAL= 460485.25

Table no: 12

85

Page 86: mid cap and small cap

PORT FOLIO AS ON 12-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 59.9165204.2

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 44.4 155000.4

INDIAN BANK 638 220.5 140679

TOTAL= 460883.6

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189138.7

164914.3

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 30.85 151473.5

JK PAPER LTD 2849 52.9 150712.1

TOTAL= 467099.9

Table no: 13

86

Page 87: mid cap and small cap

PORT FOLIO AS ON 13-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 58.95162584.1

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 44.4 155000.4

INDIAN BANK 638 217.2 138573.6

TOTAL= 456158.1

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189137.45

163428.05

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 30.5 149755

JK PAPER LTD 2849 53.1 151281.9

TOTAL= 464464.95

Table no: 14

87

Page 88: mid cap and small cap

PORT FOLIO AS ON 14-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 56.85156792.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 43.95 153429.45

INDIAN BANK 638 209.7 133788.6

TOTAL= 444010.35

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189136.5

162298.5

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 29.7 145827

JK PAPER LTD 2849 52.55 149714.95

TOTAL= 457840.45

Table no: 15

88

Page 89: mid cap and small cap

PORT FOLIO AS ON 17-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 55.3152517.4

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 41.5 144876.5

INDIAN BANK 638 205.9 131364.2

TOTAL= 428758.1

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189133.3

158493.7

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 28.65 140671.5

JK PAPER LTD 2849 51.9 147863.1

TOTAL= 447028.3

Table no: 16

89

Page 90: mid cap and small cap

PORT FOLIO AS ON 18-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 54.8151138.4

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 39.8 138941.8

INDIAN BANK 638 204.4 130407.2

TOTAL= 420487.4

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189126.75

150705.75

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 28.8 141408

JK PAPER LTD 2849 51.95 148005.55

TOTAL= 440119.3

Table no: 17

90

Page 91: mid cap and small cap

PORT FOLIO AS ON 19-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 55.05151827.9

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 41.2 143829.2

INDIAN BANK 638 209 133342

TOTAL= 428999.1

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189129.25

153678.25

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 28.45 139689.5

JK PAPER LTD 2849 51.3 146153.7

TOTAL= 439521.45

Table no: 18

91

Page 92: mid cap and small cap

PORT FOLIO AS ON 20-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 55.3152517.4

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 40.8 142432.8

INDIAN BANK 638 217.65 138860.7

TOTAL= 433810.9

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189129.15

153559.35

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 27.9 136989

JK PAPER LTD 2849 51 145299

TOTAL= 435847.35

Table no: 19

92

Page 93: mid cap and small cap

PORT FOLIO AS ON 21-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 55.9154172.2

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 40.3 140687.3

INDIAN BANK 638 220.35 140583.3

TOTAL= 435442.8

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189133.85

159147.65

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 27.95 137234.5

JK PAPER LTD 2849 51.1 145583.9

TOTAL= 441966.05

Table no: 20

93

Page 94: mid cap and small cap

PORT FOLIO AS ON 24-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 58.75162032.5

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 41.9 146272.9

INDIAN BANK 638 234.05 149323.9

TOTAL= 457629.3

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189137.1

163011.9

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 28.65 140671.5

JK PAPER LTD 2849 53.3 151851.7

TOTAL= 455535.1

Table no: 21

94

Page 95: mid cap and small cap

PORT FOLIO AS ON 25-JAN-2011

INDICES COMPANYNO.OF

SHARES

SHARE

PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 57.65158998.7

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 41.9 146272.9

INDIAN BANK 638 228.4 145719.2

TOTAL= 450990.8

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189139.05

165330.45

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 28.55 140180.5

JK PAPER LTD 2849 52.9 150712.1

TOTAL= 456223.05

Table no: 22

95

Page 96: mid cap and small cap

PORT FOLIO AS ON 27-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 54148932

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 39.65 138418.15

INDIAN BANK 638 218.35 139307.3

TOTAL= 426657.45

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189135.4

160990.6

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 28.1 137971

JK PAPER LTD 2849 52.65 149999.85

TOTAL= 448961.45

Table no: 23

96

Page 97: mid cap and small cap

PORT FOLIO AS ON 28-JAN-2011

INDICES COMPANYNO.OF

SHARES

SHARE

PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 51.9143140.2

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 38.4 134054.4

INDIAN BANK 638 211.15 134713.7

TOTAL= 411908.3

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189130.45

155105.05

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 26.65 130851.5

JK PAPER LTD 2849 51 145299

TOTAL= 431255.5

Table no: 24

97

Page 98: mid cap and small cap

PORT FOLIO AS ON 31-JAN-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 51.2141209.6

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 36.65 127945.15

INDIAN BANK 638 210.45 134267.1

TOTAL= 403421.85

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189134.15

159504.35

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.9 127169

JK PAPER LTD 2849 52.5 149572.5

TOTAL= 436245.85

Table no: 25

PORT FOLIO AS ON 01-FEB-2011

98

Page 99: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 50.9140382.2

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 36.1 126025.1

INDIAN BANK 638 208.95 133310.1

TOTAL= 399717.4

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189138

164082

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 26.05 127905.5

JK PAPER LTD 2849 51.9 147863.1

TOTAL= 439850.6

Table no: 26

PORT FOLIO AS ON 02-FEB-2011

99

Page 100: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 51140658

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 35.45 123755.95

INDIAN BANK 638 211.35 134841.3

TOTAL= 399255.25

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189138

164082

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 26.35 129378.5

JK PAPER LTD 2849 51.65 147150.85

TOTAL= 440611.35

Table no: 27

PORT FOLIO AS ON 03-FEB-2011

100

Page 101: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 50.35138865.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED3491 37.05 129341.55

INDIAN BANK 638 216.65 138222.7

TOTAL=406429.55

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189139.6

165984.4

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 26.8 131588

JK PAPER LTD 2849 52 148148

TOTAL=445720.4

Table no: 28

PORT FOLIO AS ON 04-FEB-2011

101

Page 102: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 49.7137072.6

HINDUSTAN CONSTRUCTION

COMPANY LIMITED3491 36.25 126548.75

INDIAN BANK 638 217.25 138605.5

TOTAL=402226.85

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA)

LTD

1189138.4

164557.6

GEOJIT BNP PARIBAS FINANCIAL

SERVICES LTD4910 26.1 128151

JK PAPER LTD 2849 52.35 149145.15

TOTAL=441853.75

Table no: 29

PORT FOLIO AS ON 07-FEB-2011

102

Page 103: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 48.85 134728.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED3491 35.95 125501.45

INDIAN BANK 638 208.95 133310.1

TOTAL=393539.85

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA)

LTD

1189138 164082

GEOJIT BNP PARIBAS FINANCIAL

SERVICES LTD4910 26.65 130851.5

JK PAPER LTD 2849 52.3 149002.7

TOTAL=443936.2

Table no: 30

PORT FOLIO AS ON 08-FEB-2011

103

Page 104: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 46.3 127695.4

HINDUSTAN CONSTRUCTION

COMPANY LIMITED3491 34.7 121137.7

INDIAN BANK 638 203.35 129737.3

TOTAL=378570.4

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA)

LTD

1189136.05 161763.45

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.4 124714

JK PAPER LTD 2849 51.05 145441.45

TOTAL=431918.9

Table no: 31

PORT FOLIO AS ON 09-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

104

Page 105: mid cap and small cap

MID CAP

MOSER-BAER (I) LIMITED

2758 40.85 112664.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED3491 32.35 112933.85

INDIAN BANK 638 202.25 129035.5

TOTAL=354633.65

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA)

LTD

1189128.95 153321.55

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 24.4 119804

JK PAPER LTD 2849 49.2 140170.8

TOTAL=413296.35

Table no: 32

PORT FOLIO AS ON10-FEB-2011

105

Page 106: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 41.35 114043.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 31.6 110315.6

INDIAN BANK 638 206.2 131555.6

TOTAL=355914.5

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189129.45 153916.05

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 23.75 116612.5

JK PAPER LTD 2849 49.2 140170.8

TOTAL=410699.35

Table no: 33

PORT FOLIO AS ON 11-FEB-2011

106

Page 107: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 40.3 111147.4

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 33.55 117123.05

INDIAN BANK 638 210.8 134490.4

TOTAL= 362760.85

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189134.15 159504.35

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 24.1 118331

JK PAPER LTD 2849 47.05 134045.45

TOTAL= 411880.8

Table no: 34

PORT FOLIO AS ON 14-FEB-2011

107

Page 108: mid cap and small cap

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 41.95 115698.1

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 35.05 122359.55

INDIAN BANK 638 219.85 140264.3

TOTAL=378321.95

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189136 161704

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.25 123977.5

JK PAPER LTD 2849 49 139601

TOTAL= 425282.5

Table no: 35

108

Page 109: mid cap and small cap

PORT FOLIO AS ON 15-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 41.35 114043.3

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 35.25 123057.75

INDIAN BANK 638 218.45 139371.1

TOTAL= 376472.15

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189136.9 162774.1

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.45 124959.5

JK PAPER LTD 2849 48.4 137891.6

TOTAL= 425625.2

Table no: 36

109

Page 110: mid cap and small cap

PORT FOLIO AS ON 16-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 42.5 117215

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 37.2 129865.2

INDIAN BANK 638 214.2 136659.6

TOTAL= 383739.8

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189136 161704

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.2 123732

JK PAPER LTD 2849 48.95 139458.55

TOTAL=424894.55

Table no: 37

110

Page 111: mid cap and small cap

PORT FOLIO AS ON 17-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 43.6 120248.8

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 37.1 129516.1

INDIAN BANK 638 220.55 140710.9

TOTAL= 390475.8

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189135.65 161287.85

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.8 126678

JK PAPER LTD 2849 48.7 138746.3

TOTAL=426712.15

Table no: 38

111

Page 112: mid cap and small cap

PORT FOLIO AS ON 18-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 41.7 115008.6

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 35.7 124628.7

INDIAN BANK 638 220.35 140583.3

TOTAL= 380220.6

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189134.3 159682.7

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.2 123732

JK PAPER LTD 2849 47.95 136609.55

TOTAL=420024.25

Table no: 39

112

Page 113: mid cap and small cap

PORT FOLIO AS ON 21-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 41.25 113767.5

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 35.1 122534.1

INDIAN BANK 638 219.55 140072.9

TOTAL= 376374.5

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189136.2 161941.8

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 25.1 123241

JK PAPER LTD 2849 47.75 136039.75

TOTAL=421222.55

Table no: 40

113

Page 114: mid cap and small cap

PORT FOLIO AS ON 22-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 40.1 110595.8

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 35.35 123406.85

INDIAN BANK 638 216.25 137967.5

TOTAL= 371970.15

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189133.25 158434.25

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 24.8 121768

JK PAPER LTD 2849 47.8 136182.2

TOTAL= 416384.45

Table no: 41

114

Page 115: mid cap and small cap

PORT FOLIO AS ON 23-FEB-2011

INDICES COMPANY NO.OF SHARES

SHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758

39.85 109906.3HINDUSTAN

CONSTRUCTION COMPANY LIMITED

3491

35.25 123057.75INDIAN BANK 638

212.95 135862.1

TOTAL= 368826.15

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189

131.75 156650.75GEOJIT BNP

PARIBAS FINANCIAL

SERVICES LTD

4910

24.3 119313JK PAPER LTD 2849

47.95 136609.55 TOTAL= 412573.3

Table no: 42

115

Page 116: mid cap and small cap

PORT FOLIO AS ON 24-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 38.15 105217.7

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 33.45 116773.95

INDIAN BANK 638 202.95 129482.1

TOTAL= 351473.75

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189127.85 152013.65

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 23.65 116121.5

JK PAPER LTD 2849 45.35 129202.15

TOTAL= 397337.3

Table no: 43

116

Page 117: mid cap and small cap

PORT FOLIO AS ON 25-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 38.95 107424.1

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 33.65 117472.15

INDIAN BANK 638 203.6 129896.8

TOTAL= 354793.05

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189124.5 148030.5

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 23.45 115139.5

JK PAPER LTD 2849 45.3 129059.7

TOTAL= 392229.7

Table no: 44

117

Page 118: mid cap and small cap

PORT FOLIO AS ON 28-FEB-2011

INDICES COMPANYNO.OF

SHARESSHARE PRICE

AMOUNT OF INVESTMENT

MID CAP

MOSER-BAER (I) LIMITED

2758 38.55 106320.9

HINDUSTAN CONSTRUCTION

COMPANY LIMITED

3491 33.9 118344.9

INDIAN BANK 638 204.4 130407.2

TOTAL= 355073

SMALL CAP

ADITYA BIRLA CHEMICALS (INDIA) LTD

1189130.2 154807.8

GEOJIT BNP PARIBAS

FINANCIAL SERVICES LTD

4910 23.8 116858

JK PAPER LTD 2849 45.65 130056.85

TOTAL=401722.65

Table no: 45

118

Page 119: mid cap and small cap

5.8 RETURN CALCULATION OF MID CAP PORTFOLIO AND NIFTY MIDCAP

The calculation is based on the total portfolio amount of midcap and the nifty

midcap index.

First step to find the return of midcap portfolio by using the formula:

Closing – Opening *100

Opening

Second step is to find out the return of nifty midcap index using this same

formula.

Third step is making a comparison with these two returns by using a line graph.

5.8.1 RETURN OF MIDCAP PORTFOLIO AND NIFTY MIDCAP

INDEX

PORTFOLIONIFTY MID

CAP INDEX

PORTFOLIO

RETURN

INDEX

RETURN

499968.95 2958.05

490379.35 2951.85 -1.91803911 -0.209597539

487569.85 2912.8 -0.572923799 -1.322899199

477841.35 2868.1 -1.995303852 -1.534605878

460429.8 2783.65 -3.643793071 -2.944458004

452605.85 2708.85 -1.699270986 -2.68711943

453999.6 2690.9 0.307939016 -0.662642819

119

Page 120: mid cap and small cap

460883.6 2747.1 1.516300895 2.088520569

456158.1 2736.7 -1.025313116 -0.378581049

444010.35 2688.2 -2.663056953 -1.772207403

428758.1 2663.6 -3.435111366 -0.915110483

420487.4 2683.9 -1.928989796 0.762126445

428999.1 2684.5 2.024246149 0.022355527

433810.9 2696.4 1.121634055 0.443285528

435442.8 2691.65 0.376177731 -0.176160807

457629.3 2725.6 5.095158308 1.26130812

450990.8 2713.55 -1.450628271 -0.442104491

426657.45 2625.95 -5.39553135 -3.228243445

411908.3 2548.45 -3.456906706 -2.951312858

403421.85 2553.65 -2.060276523 0.204045596

399717.4 2504.1 -0.918257154 -1.940359877

399255.25 2509.4 -0.115619185 0.211652889

406429.55 2532.55 1.796920642 0.922531282

402226.85 2493.85 -1.034053749 -1.528104085

393539.85 2470.7 -2.159726532 -0.928283578

378570.4 2382.95 -3.803795219 -3.551625046

354633.65 2282.3 -6.322932274 -4.223756268

355914.5 2307.65 0.36117554 1.11072164

362760.85 2369.5 1.923594009 2.680215804

120

Page 121: mid cap and small cap

378321.95 2449.5 4.289630482 3.376239713

376472.15 2459.05 -0.488948632 0.389875485

383739.8 2453.2 1.930461523 -0.237896749

390475.8 2482.7 1.755356103 1.202511006

380220.6 2421.4 -2.626334334 -2.469086076

376374.5 2461.35 -1.011544351 1.649871975

371970.15 2434.45 -1.170204145 -1.092896175

368826.15 2408.2 -0.845229113 -1.0782723

351473.75 2309.15 -4.70476402 -4.113030479

354793.05 2300.3 0.944394852 -0.383257909

355073 2311.4 0.078905153 0.482545755

Table no: 46

5.8.2 TOTAL RETURNS

The total return of midcap portfolio = -28.98098972

The total return of nifty index = -21.86068525

121

Page 122: mid cap and small cap

5.8.3MID CAP PORTFOLIO RETURN AND NIFTY MIDCAP RETURN

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39

-8

-6

-4

-2

0

2

4

6

PORTFOLIO RETURN

INDEX RETURN

Fig no: 2

Interpretation

The graph shows the return of portfolio and the return of index fluctuation for

two month. The fluctuation never goes in a constant mode. In the above graph

it is seen that the portfolio started on a negative note, but shows a positive

growth by the 3rd day. Simultaneously when we study the market return we can

see that it started on a positive note but then declines suddenly. The market and

the portfolio return show a increasing and decreasing trend. It is also seen that

by the end of the first month the market and portfolio returns move in line with

each other, almost coin siding with each other.

122

Page 123: mid cap and small cap

5.9 RETURN CALCULATION OF SMALL CAP PORTFOLIO AND BSE SMALL CAP

The calculation is based on the total portfolio amount of small cap and the BSE

small cap index.

First step to find the return of small cap portfolio by using the formula:

Closing – Opening *100

Opening

Second step is to find out the return of BSE small cap index using this same

formula.

Third step is making a comparison with these two returns by using a line graph.

5.9.1 RETURN OF SMALL CAP PORTFOLIO AND BSE SMALL CAP INDEX

PORTFOLI

O

BSE SMALL

CAP

INDEX

PORTFOLIO

RETURN

INDEX

RETURN

499871.05 9845.05

502445.65 9841.17 0.515052832 -0.039410668

499318.95 9740.38 -0.622296163 -1.024166842

495245 9639.15 -0.815901339 -1.039281835

483978.95 9363.19 -2.274843764 -2.862908036

468356.35 9098.66 -3.227950307 -2.825212348

460485.25 9019.13 -1.680579328 -0.874084755

467099.9 9147.63 1.43645209 1.424749394

123

Page 124: mid cap and small cap

464464.95 9088.24 -0.564108449 -0.649239202

457840.45 8993.84 -1.426264781 -1.038704964

447028.3 8868.15 -2.361554118 -1.397512075

440119.3 8893.27 -1.545539734 0.283260883

439521.45 8901.67 -0.135838169 0.094453446

435847.35 8905.18 -0.835931898 0.039430803

441966.05 8946.17 1.403863073 0.460293896

455535.1 9016.54 3.070156633 0.786593593

456223.05 8985.14 0.151020196 -0.348248885

448961.45 8864.23 -1.59167758 -1.345666289

431255.55 8546.29 -3.943746172 -3.586775163

436245.85 8477.82 1.157156122 -0.801166354

439850.6 8355.75 0.826311586 -1.439874873

440611.35 8362.41 0.172956454 0.079705592

445720.4 8464 1.15953663 1.214841176

441853.75 8331.2 -0.867505728 -1.56899811

443936.2 8261.72 0.471298478 -0.833973497

431918.9 7995.27 -2.706988076 -3.225115351

413296.35 7651.82 -4.311584883 -4.295664812

410699.35 7585.65 -0.628362675 -0.864761586

411880.8 7808.79 0.287667852 2.94160685

425282.5 8116.62 3.253781191 3.942096023

425625.2 8164.86 0.080581731 0.594336066

424894.55 8247.42 -0.171665118 1.011162469

426712.15 8324.56 0.427776727 0.935322804

420024.25 8128.91 -1.567309485 -2.350274369

124

Page 125: mid cap and small cap

421222.55 8121.26 0.285293052 -0.094108558

416384.45 8061.75 -1.148585231 -0.732768068

412573.3 8036.41 -0.915295948 -0.314323813

397337.3 7814.04 -3.692919537 -2.767031548

392229.7 7789.47 -1.285456966 -0.314434019

401722.65 7817.32 2.420252724 0.357533953

Table no: 47

5.9.2 TOTAL RETURNS

The total return of small cap portfolio = -19.6347438

The total return of BSE index = -20.59644187

5.9.3 SMALL CAP PORTFOLIO RETURN AND BSE SMALL CAP RETURN

125

Page 126: mid cap and small cap

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39

-5

-4

-3

-2

-1

0

1

2

3

4

5

PORTFOLIO RETURN

INDEX RETURN

Fig no: 3

Interpretation

The graph shows the return of portfolio and the return of index fluctuation for

two month. The fluctuation never goes in a constant mode. In the above graph

it is seen that the portfolio started on a positive note, but shows a negative

growth by the next day. The data of two month gives the picture that the

portfolio and index return in most of the days show negative returns. The small

changes in the market also affect the portfolios. Simultaneously when we study

the market return we can see that it started on a positive note but then declines

suddenly. Sometimes the return of the two is almost equal but sometimes

portfolio returns more than the index return. The market and the portfolio

return show an increasing and decreasing trend in this two month. It is also

seen that by the end of the second month the market and portfolio returns move

up.

126

Page 127: mid cap and small cap

CHAPTER- 6

FINDINGS, SUGGESTIONS

AND

CONCLUSION

127

Page 128: mid cap and small cap

6.1 FINDINGS

1. Market capitalization has been divided into four. They are small cap,

mid cap, large cap, and mega cap. Earlier the capitalization was just one

ie the large cap. But with the number of companies on the increase it

was necessary for further divisions. Thus came the small cap, mid cap,

and mega cap.

2. The advantage of classification of companies is as follows:

Companies that are classified as small cap have a capitalization of

below $2 billion. The advantage of such division is that the capable

investor who wishes to invest can study the performance of

companies under the small cap. As the result they are able to analyze

which companies have stable performance.

Once the company reaches above $2 billion they come to the

capitalization of medium caps. An investor now can, after studying

the small caps can decide in which companies to invest. Thus helping

them to make a proper investment.

With the help of this classification an investor can study the

performance of the company in stage wise.

3. From the recent survey conducted by the India’s foremost and largest

finance magazine “capital market” they found that 120 small cap

companies waiting to break free for transforming to mid caps.

4. Compared to small cap stocks mid cap stocks are less risky

128

Page 129: mid cap and small cap

5. A study conducted by ROXBURY capital management LLC. About

“the case for mid cap stocks in today’s volatile markets” find the

historical performance of last 25 years shows good performance than

small cap and large cap.

6. Mid cap stocks give higher return than small cap and large cap in future.

7. The price of small cap shares is less so the small investors can invest in

good small cap securities.

8. Compared to large cap companies the small cap shows faster growth.

9. Mid cap companies generally have much greater growth potential than

comparable large cap, with more seasoned management, liquidity, and

operating histories than small caps.

10. Investing in a group of securities can reduce the risk involved in

individual securities

129

Page 130: mid cap and small cap

6.2 SUGGESTIONS

1. Create awareness about mid cap and small caps among the investors.

2. Investor should always be aware about the current situation in the stock

market.

3. The stock exchange should function like a financial institution offering

investment opportunities having highest return potential rather than a

facilitator.

4. The investor should consider the past record before investing.

5. The investor should not stick to one strategy in the whole time. He

should change his strategies according to the market situation.

6. The investor must need news papers, business journals or websites to

get an awareness about the market situation and factors that will affect

the stock market. Must have a clean eye on the activities of major

players of the market.

7. The investors consult the stock brokers to collect information about the

market and particular stocks which give good return then make

investment in that with the help of that broker.

130

Page 131: mid cap and small cap

6.3 CONCLUSION

Today Indian capital market offers a variety of financial product with varied

features and benefit for investors to choose from them. However the

knowledge about the particular investment alternative is an essential for the

investor

It can be concluded that the role and the performance of MID CAP and

SMALL CAP help the investor to choose the better fund and asses its

performance with the market. In the changing market situations an individual

investor expecting an optimum risk and return. Result of study shows that the

mid cap and small cap play a very significant role in today’s capital market.

But the problem is most of the investors are not aware about the small caps and

mid caps. So give more priority and encourage to these companies.

The researcher concludes that, if a person who is investing in shares for his

future needs, he can invest in small cap or mid cap companies. That company

will once become a success in its future. From the study of two month the

market of small cap and mid cap shows lots of up and downs and based on that

the small cap shows good return than mid cap in these months. And also the

overall fact should consider the researcher concludes that investing in mid cap

is better than small cap. Because the mid cap companies is less risky than small

cap and large cap.

131

Page 132: mid cap and small cap

BIBLIOGRAPHY

1. Security Analysis and Portfolio Management - S Kevin

2. DALAL STREET Investment journal

3. CAPITAL MARKET magazine

WEBSITES

1. www.capitalmarket.com

2. www.bseindia.com

3. www.cochinstockexchange.com

4. www.dsij.in

5. www.nseindia.com

6. www.moneycontrol.com

132