A REPORT ON

German Automotive Industry in India

Submitted to
CHAROTAR UNIVERSITY OF SCIENCE AND TECHNOLOGY
(CHARUSAT)
INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

Prepared by
Karsh Mukeshbhai Patel
ID No.2OBBA098
BBA Third Year

Under the Guidance of

Dr. Hardi Raval
Assistant Professor

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (IIIM) CHAROTAR

UNIVERSITY OF SCIENCE AND TECHNOLOGY (CHARUSAT) AT. & PO.
CHANGA – 388 421 TA: PETLAD DIST. ANAND, GUJARAT

DECLARATION
I, Karsh Mukeshbhai Patel, a student of Bachelor of Business Administration of
INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT hereby declare that
the report on German Automotive Industry in India and project on “Audi ,BMW
and Volkswagen” is the result of my own work carried out by me in the partial
fulfillment of BBA program

Name: Karsh Mukeshbhai Patel (20BBA098)

Date: 05/07/2022

Place: Charusat University, Changa.

 ACKNOWLEDGEMENT

I was placed at DP TradeKING Private Limited , for training purpose it has been a
pleasure and honor to work at such a great organization. I am highly thankful to the
management of DP TradeKING Private Limited and to all of them who have directly or
indirectly helped in this project. My first word of gratitude is due to Mr. Jignesh Patel my
corporate guide, for him kind help and support and him valuable guidance throughout my
project. I am thankful to him for providing me with necessary insights and helping me out
at every single step. I am also thankful to all the employees of organization of staff as
well as Operation Department who given me desirable guidance when it’s required.

I am highly thankful to Dr.Bhaskar Pandya, Dean of Institute “Indukaka Ipcowala

Institute of Management” from where I got an opportunity to buy the training from DP
TradeKING Private Limited.

I would like to thank my faculty guide Prof. Dr.Jaimin Trivedi for supplying best support
and guidance for project as well as also I would like to thanks to my professors for
providing me needed information and help during my project work.
 INDEX

Topics Page No.

PART-1
Chapter 1 :- ORGANISATIONAL PROFILE

Introduction 1
Associations of Company 2
Company Achievements 2
The Company does not charge anything for 2
Pillars of DP TradeKING 3
DP TRADEKING is ISO Certified Organization 6
ACHIEVEMENTS OF DP TRADE KING 6
The Company charge lesser in the following 7
Choice of Annual Maintenance Charge 7
Designation / Position for Permanent Employee 8
Organizational Chart 9
They are providing the 4 distinct types of Core Avenues
A. Investment service
Wealth management 11
E-Governance
B. Insurance
Trading Platforms : CTCL, IBT and STWT 12
Choice of Annual Maintenance Charge (DEMAT A/C) 14
Demat Account Opening Charges 15

Chapter 2 :- WealthEVATOR

WealthEVATOR (Powered by DP TradeKING Private Limited) 16

Invest via WealthEVATOR’s in Top Mutual Fund AMCs in India 16
Why invest via WealthEVATOR? 17
Invest via WealthEVATOR’s in Top 15 partner Mutual Fund AMCs in India 18
Invest in Top Mutual Fund AMC’s of Indian Companies 18

Chapter 3 : Investing Options in Organization

IPO 19
Equity & Derivatives 19
Mutual funds 20
Fixed Income Products 21
Sovereign Gold Bonds 21
Exchange Traded Funds 22
PMS 23
NPS 23
Depository Service 24
Unclaimed Assets Recovery 25

Chapter 4 : Online Trading Platforms

DP TradeKING Platforms 26
DP TradeKING-Trading Platform for Mobile 26
DP Trade Pro -Trading Platform for Desktop 27
WealthEVATOR -Online Mutual Fund Platform 28
e-IPO Platform 30

PART-2

Introduction on Stock Market 30

Abstract 32

Review of Literature 32

Objectives of the Study 35

Data and Method Data 37

Method 38
Analysis 39
Measurement of stock market liquidity 42
Factors influencing stock market liquidity 44

Stock market liquidity and expected returns 46

Stock market liquidity risk and expected returns 47

Analysis based on contribution of authors—Number wise 50
Analysis based on country-wise contribution of authors 51
Analysis based on appearance of research papers in journals 52

Managerial Implications 53
Analysis on response 54
Conclusion 62
Part-1
ORGANISATIONAL
PROFILE
Introduction

DP TradeKING Private Limited is an Indian Stock Brokerage firm established in 2016. We are a
Financial & Advisory service provider, who brings the best tailor-made solutions based on need
of customers. We cater our expertise to non-institutional(s) in their journey from savings to
investment. We kick-started operations on the 23rd of April 2017 with the goal of
EMPOWERING dreams of thousands of Investors to get FINANCIAL FREEDOM and
providing best of our services in terms of cost, support, and technology. Team DP TradeKING
Private Limited is providing offline and online services to their valuable customers. DP
TradeKING Private Limited is an ISO 9001:2005 Certified Company and Regulatory Compliant
Stockbroker. We provide Interoperability and Best Price Execution Facility among stock
exchanges. Thousands of investors placing order through powerful ecosystem of investment
platforms i.e., DP Trade Pro, DP Trade Touch and CTCL. We have made Mutual Fund
Investments Smooth, Simple, Rapid and Protected through WealthEVATOR. It helps to elevate
the journey of wealth and define different goal to different SIP Investments. In addition, we run a
number of popular open offline and online educational and community initiatives to empower
retail traders, investors, students and professional group of peoples.Our wide range of products
touches investors in every aspects of investing includes IPO & NFO, Equity, Derivatives,
Currency, Commodities, Securities Landing and Borrowings, Index Long Term Strategy, Mutual
Funds, Stock SIP, Fixed Income Products, Depository Services, Exchange Traded Funds,
Corporate Fixed Deposits, Unclaimed Assets and Insurance.

Awarded as BEST EMERGING DEPOSITORY PARTICIPANT, BEST PERFORMER IN

ACCOUNT GROWTH RATE (RISING DPS), TOP PERFORMER IN ACTIVE ACCOUNTS
(RISING DPS) by National Securities Depository Ltd. Mumbai.

Source:(www.dptradeking.com)

1
 Associations of Company

02 01 21
Stock Depository Mutual Fund
Exchange(s) AMCs

08 11 04
Life General Health
Insurance Insurance Insurance
Companies Companies Companies

 Company Achievements:
A. Managing Custody Valuation ofINR 500 + Crores
B. MDRT Life Insurance Advisor
C. 6,000 + satisfied active investors

 The Company Assures:

A. 100% Transparent Service
B. Real Time Trade Execution
C. Best in Class Service
D. Customized Solutions as per needs
E. No Cross Selling
F. Trustworthy Advice to Portfolio

 The Company does not charge anything for:

A. KYC Modification any time after opening an account
B. IBT and STWT Platform for Online Trading
C. Live Back Office Address to Client to access Information 24*7 *365
D. DP’s e- statement of Holding (SOH) & Ledger as customer requires
E. Annual Statement Short Term & Long-Term Report for Tax Purpose (Trade for
DPTK)

2
  Pillars of DP TradeKING :-

Mr. DEVANG R. PATEL

Chairman

Our Chairman Mr. Devang R Patel, fondly known as Devangbhai Ipcowala (Nadiad), is a
successful Industrialist and a philanthropist supporting various needs, especially in the field of
Education.

Mr. DIKUL J. PATEL

Managing Director

Mr. Dikul J. Patel, a strategist and diligent professional is the Managing Director of DP
TradeKING and a pioneer in creating JK Securities Pvt. Ltd. Having worked for more than 35
years he carries with him ample of experience in the field of financial services, business
administration and consulting with various governments and local bodies.

3
 Mr. BHAVIK D. PATEL
Executive Director

Mr. Bhavik D. Patel, an enterprising person and versatile passionate is the Executive Director.
His expertise in the compliances, crafting policies and procedures with reference to the
regulatory authorities will add a jewel in the crown of DP TradeKING.

Mr. JITENDRA R. PATEL

Director

Mr. Jitendra R. Patel, an educationist and builder by profession is an independent director of DP

TradeKING. Having extensive experience in field of Education, his focus is on to create better
Human Resource for Industries which ultimately help our country to grow manifolds. His
exceptional problem-solving techniques and approach add leverage to the organization.

4
 Mr. MOHIT H. DAVE
Director

Mohit Dave, a renowned name in the field of event management is an Independent Director of
DP TradeKING. He holds bachelor’s and master’s degree in Business Administration. He has
served a range of projects in India and abroad that demanded flawless performance under high
pressure, timeliness, complexity in composition of both social and corporate events with focused
objectives of Media Groups, Marketing and Advertisement, Management of Conferences, Sports
Events, Musical Nights and much more.

Comapany location and branchs

Address :-DP TradeKING Private Limited Private Limited: Regd. Office: 3 rd Floor, Silver Oak,
Opp. Panchal Hall, Town Hall Road, Anand - 388001., Gujarat. INDIA.

Branch Offices: Anand | Nadiad | Umreth | V.V. Nagar Borsad | Petlad | Vadodara Anand
(Sardar Gunj) | Mumbai.

E-Mail I’D :[email protected]

Website :- www.dptradeking.com

5
  DP TRADEKING is ISO Certified Organization

 ACHIEVEMENTS OF DP TRADE KING

Figure 2: Achievements of Company

Source:(www.dptradeking.com)

6
The Company charge lesser in the following:
1. Annual Maintenance Charge Lifetime free (Only one DR Trans. Req. and Option of
one time AMC Charge Payment with no cap of 10 years)
2. DEMAT Charge (Rs. 10/- per Certificate Min. Rs. 25/- per ISIN + Rs. 25/Courier
Charge + GST)
3. DEMAT Rejection Only Courier Charge
4. Slip Issuance Charge Rs. 25/- per Slip Book (From 2nd Time Issue + GST
5. Market Sell& Off Market Sell (Within DP) Rs. 15/- per Transaction + GST
6. Market Sell (Outside DP) Rs. 25 / transaction or 0.03%value of transaction whichever
is higher + GST
7. SLBM Rollover (No D P charge)
8. Minimum Contract Charge only Rs. 25/
9. Margin Pledge Charge Only Rs. 20/- Per Script + GST

Figure 4: Annual Maintenance Charges Offered by Company

7
  Designation / Position for Permanent Employee

Designation Level Grade

Chairman Top Management A
Managing Director Top Management A
Executive Director Top Management A
Director Top Management A
Vice President Sr. Management B
Compliance Officer Sr. Management B
Operational Head Manager C
Branch Manager Manager C
Asst. Manager Manager C
Sr. Executive E–5 D
Executive E–4 E
Executive Trainee E–3 E
Jr. Executive Trainee E–2 E
Casual Employee E–1 F
Sub Staff E–0 F

 Organizational Chart

8
Source:(www.dptradeking.com)

 They are providing the 4 distinct types of Core Avenues:-

 Investment service

 Wealth management

 E-Governance

9
  Insurance

 Investment Service :-
1. Equity 6. Fixed Income Products
2. Securities Lending & 7. Equity Derivatives
Borrowings{SLB} 8. Currency Derivatives
3. Initial Public Offerings{IPO} 9. Commodity Derivatives
4. Corporate Bonds 10. Depository Services
5. Mutual Funds

 Wealth Management :
1. Portfolio Advisory
2. Insurance Planning
3. Portfolio Management Service
4. Retirement Planning
5. Asset Allocation Planning

 E-Governance:-
1. PAN Application
2. PAN Correction
3. Tax Deduction Account Number (TAN)
4. E-Returns Annual Info. Return (AIR)
5. P2F (Bank Clearing Center) - NPCI

 Insurance :-

10
 1. Life Insurance 6. Engineering Insurance
2. Investment Insurance 7. Group Insurance
3. Fire Insurance 8. Marine Insurance
4. Automobile Insurance 9. General Insurance
5. Health Insurance 10. Financial Liability Insurance

 Trading Platforms : CTCL, IBT and STWT

We provide you Online Trading Platform (CTCL/IBT) called Money Maker
where user can have multiple Tools.
1. Radar:-
Radar is a real-time price scanner. Intuitive and easy to use with inbuilt scan
conditions. Customizable user Interface to suit your needs.
2. Charting
Here user can define his own strategy based on indicators and can simulate it real
time on chart and can generate the buy/sell signals.
3. Basket orders
Integrated baskets like spread, straddle, butterfly, synthetic future etc. Traders a
place orders of three legs of butterfly with single order.
4. Option Payoff Chart
User can analyse his option position or can simulate his proposed position before
any actual trading.
5. Option Portfolio:- Real time option hedging module.
6. Smart View:- Programmable price view where user can program each and
every column and can perform mathematical calculations.
7. Real time market movement:-Real time is when a system relays
information to a user at a speed that is near-instantaneous or has a short delay
from when the event occurred.
8. Pair’s view:- Traders have hundreds of technical tools and price action
strategies to help them take advantage of price trends and ranging markets but
predicting the direction of short to intermediate moves in the market is
notoriously difficult.

11
 9. RMS failed order book:- RMS rejections happen because due to some
reason or the other, the order entered is rejected by the RMS System of SAMCO.
Thus, the order is stopped at the broker level itself and is not sent to the exchange
for trading.
10.Net obligation view (useful for dealer terminal):- The net obligation
amount is the net sum of money added or removed from your ledger on a given
day for your futures and options positions.
11.Reminders:- something that calls a memory or thought to the mind a picture
that's a reminder of happier times There were reminders of him everywhere.

 Choice of Annual Maintenance Charge (DEMAT A/C)

Demat Account Charges List

Ever since the digitalization of almost all the services across the globe, life has become more
convenient. This is applicable to the storing of shares in the Demat account as well. The safety,
accessibility, and usability have enhanced as well.

So, all these features come for a cost and those are the Demat account charges. Now these
charges are levied by your depository participants and can vary from one broker to another.

But what all charges do you have to pay?

 Demat Account Opening Charges

 Demat Account AMC Charges

Now, let us have a quick look at all the details of the charges.

12
  Demat Account Opening Charges
As discussed earlier, you need a demat account if you want to earn money from the stock
market. Now a lot of stockbrokers give you a chance for easy demat account opening online so
that you can enter the stock market world without risking your comfort.

There is some charge that you must pay to your depository participant to open and then activate
your demat account. These are the demat account opening charges.

Now, in the earlier times, most of the stockbrokers used to charge some amount to let the users
avail their services. But lately, the trend of offering a free demat account has become quite
prevalent.

And even when the demat account opening is not free, the charges levied are almost negligible.
This has given rise to a lot of competition as well. Now, most individuals look for stockbrokers
that are charging less and giving out the maximum benefits.

With Choice, you can easily open your Demat account at absolutely no cost. The procedure is
also very simple and can be completed in a few steps. So here you can get started with the best
services for free.

13
 Chapter 2 :- WealthEVATOR

 WealthEVATOR (Powered by DP TradeKING Private Limited)

Mutual Fund Investments made Smooth, Simple, Rapid and Protected. WealthEVATOR, the
online mutual fund platform of DP TradeKING Private Limited Private Limited (a leading
stockbroker in central Gujarat). At WealthEVATOR, we take pride in offering a smooth and
hassle-free investment experience to individual investors across India. We provide solutions for
Mutual Fund Investments using an online platform tailored to help you accomplish investors’
goals and create wealth for their future. WealthEVATOR is a complete tool that helps investors
to ELEVATE their WEALTH. Get elevated from Savings, get elevated from Investments, get
elevated beating inflation, and make money.

 Invest via WealthEVATOR’s in Top Mutual Fund AMCs in India

Driven by a determination of assisting our Investors with the Best Options, WealthEVATOR has
partnered with the best-in-business Asset Management Companies in India for your Mutual Fund
Investments. We enable you to search, invest, and track your Investments in these Mutual Fund
Houses in an efficient and fast-paced manner. So, elevate your journey of investing and creating
wealth in the top mutual fund schemes across these AMC’s.

14
 Why invest via WealthEVATOR?
WealthEVATOR is an Online platform tailored to help you accomplished your goals.

Open your Free Investment Account with a Paperless

Process in just 5 minutes.

Online Mutual Fund Investments platform tailored to help

you accomplish your goals.

15
 Explore & Invest through our tools of the Best Performing
Schemes.

Manage, Track and Analyse the Performance of your

Investment Portfolio.

 Invest via WealthEVATOR’s in Top 15 partner Mutual Fund AMCs in

India: -

Driven by a determination of assisting our Investors with the Best Options, WealthEVATOR
has partnered with the best-in-business Asset Management Companies in India for your
Mutual Fund Investments. We enable you to search, invest, and track your Investments in
these Mutual Fund Houses in an efficient and fast-paced manner. So, elevate your journey of
investing and creating wealth in the top mutual fund schemes across these AMC’s.

 Invest in Top Mutual Fund AMC’s of Indian Companies: -

Figure 7: mutual fund companies

16
 (Source:Referred from brochure of company)

Chapter 3 : Investing Options in Organization

 IPO

An opportunity to invest in the primary market where

IPOs are issued at attractive prices which makes it an
investment that offers reasonable returns and acceptable
risk. We offer a much simpler, online process to apply
for IPO. All you need to do is enter the bid price,
quantity and your UPI ID. Pre-printed ASBA application
forms are available for clients.

Key benefits

17
  No refund hassles under UPI (Online) OR ASBA (Offline) process
 No brokerage while applying for application
 No other hidden cost

 Equity & Derivatives

Investment in equities has many advantages. One of the best

avenues for long term wealth creation whereas derivate
helps you leverage on anticipated market movements & acts
as a hedging tool to minimize your risk.

Key benefits

 Multi segment access with key features like Radar, Charting, Basket Order, Option Payoff
Charting, Option Portfolio, Smart View, Pivot, Point, Real time market movement, Pairs
view, Net obligation view, Reminders etc. are available on your terminal.
 Use our trusted research to make an informed investment decision in Equity, F&O and
Options.
 Our systematic guidance on the stock market along with multiple trading solutions helps you
to get the bestreturns out of your investments.
 Offering a complete range of investment products enabling you to offer a ONE STOP
SOLUTION for all the stock market needs of your customers.

 Currency

Gone are the days when currency was an exclusive trading

instrument for a few financial institutions, corporates, and
hedge funds. With greater global interdependence and increase
in international trade and financial awareness, the currency
market offers a new avenue for trading. As a trader, currency
markets are a lucrative investment option wherein you can
spot opportunities and take advantage of the volatility arising in global markets.

Key benefits

 Inter-connection of national economies.

18
  Low margin, high leverage.
 Hedging of potential losses in business.

 Mutual funds :-

An imminent asset class to diversify your

investments. We offer wide spectrum of
investment schemes from all top mutual
fund houses. Secure recurring investments
by investing in Systematic Investment Plan
in mutual fund of your choice. Invest wisely
with us in Lumpsum & SIP in mutual fund
from across all the fund houses. Mutual
Fund Investments made Smooth, Simple,
Rapid and Protected by investing through
DP TradeKING’s tech savvy platform i.e., WealthEVATOR.

Key benefits

 Diversification.
 Minimization of risk.
 Mutual Fund Ready reckoner to help understand funds performance in each category.
 Online & offline transaction facility.
 Disciplined investment approach.

 Fixed Income Products

19
 Fixed-income securities provide steady interest income to investors throughout the life of the
bond. Fixed-income securities can also reduce the overall risk in an investment portfolio.

Key benefits

 Regular Income Stream: Fixed-income securities provide investors with a steady stream
of income
 Low Market Volatility: Bonds carry very low volatility as compared to the prices of
equity or mutual fund
 Safety - Principal Protection: Investors benefit by preserving and increasing their
invested capital.

 Sovereign Gold Bonds

Sovereign Gold Bond Scheme was launched by Govt in

November 2015, under Gold Monetisation Scheme. Under the
scheme, the issues are made open for subscription in tranches
by RBI in consultation with GOI. RBI Notifies the terms and
conditions for the scheme from time to time. The subscription
for SGB will be open as per following calendar. The rate of
SGB will be declare by RBI before every new tranche by issuing a Press Release.

Key benefits

 Hassle free: Ownership of gold in Demat form, without any physical possession (No risks
and no cost of storage)
 Tax treatment: The capital gains tax arising on redemption of SGB to an individual has
been exempted.
 Tradability: Bonds will be tradable on stock exchanges within a fortnight of the issuance
on a date as notified by the RBI.
 Valuable collateral: Bonds can be used as collateral to obtain a loan from banks
 Transferability: Bonds shall be transferable by execution of an Instrument of transfer in
accordance with the provisions of the Government Securities Act.

 Exchange Traded Funds

20
An ETF is a basket of stocks that reflects the composition of
an Index, like the Sensex or the Nifty. ETF prices reflect the
net asset value of basket of stocks in which it is investing. In
many ways, it is similar to mutual funds. Exchange Traded
Funds (ETFs) are actually Index Funds that are listed and
traded on exchanges like stocks and are passively managed.
Mutual funds aim to generate alpha by outperforming a market benchmark, whereas ETFs
aim to track the relevant index and replicate it returns. To invest in ETFs, you need to have
demat and trading account with DP TradeKING.

Key Benefits:

 Diversification.
 Trades Like a Stock.
 Lower Fees.
 Immediately Reinvested Dividends.
 Limited Capital Gains Tax.
 Lower Discount or Premium in Price.

 PMS

Avail the benefits from our multiple portfolio

management schemes designed to meet the
growing needs of your HNI customers. The
schemes are based on the risk return appetite of
your customers. PMS is aimed at long term
investors, focusing on steady returns & PMS
focuses on absolute returns in the market.

Key benefits

 Disciplined investment decision based on through research.

 In-depth independent fundamental research.
 Best opportunities picked on the day of investment.
 Not more than 20% allocated to one sector.
 Identification of undervalued growth stocks.

21
 NPS (National Pension System)

The Government of India has initiated and incorporated

several schemes and policies for the betterment of the
future and safeguarding the interests of the citizens of
India. One such scheme issued by them is NPS. It is a
farsighted government-sponsored pension scheme
launched in 2004 for people aged between the age of 18 to
60 years. It is an intelligent financial security instrument that encourages the subscribers to
invest towards their retirement fund through systematic savings during their term of
employment. The NPS is regulated by the PFRDA and follows transparent investment norms.
This scheme offers the subscribers stable and reasonable returns on their long-term
investments.

Key benefits

 Returns/ Interest: A specific part of the amount invested in one’s NPS

is duly invested in the market in different equities, which does not
offer any guaranteed returns.
 Contribution of Investor - Despite there being no particular upper limit as such, there is
still a fixed requirement of the minimum investment amount. One is required to invest a
minimum monthly amount of Rs. 500 (Tier I account) or Rs. 250 (Tier II account) at
least, or an annual amount of Rs. 1,000 (Tier I account).
 Assessment of Risk - As of now, there is a fixed cap of 50% on equity exposure for the
national pension scheme. Owing to this, the ratio of risk and return is stabilized in the
investor’s interest. Thereafter, the corpus is somehow protected against the instability of
the equity market.

 Depository Services

Depository services are services in which the securities

of investors are kept in an electronic form just as bank
keeps all your cash in its account and provides all

22
 services related to the transaction of cash, similarly we help you out in performing the service
through a demat account.

Key benefits

 De-materialize your Shares, Mutual Funds and Commodities in electronic form.

 Minimum transaction costs.
 Multiple tariff options as per your choice.
 Monthly holding and transaction statement.
 Fast transfers of securities resulting in increased liquidity.
 SMS Alert facility for debits and credits in your demat account.

 Unclaimed Assets Recovery

To serve our valuable clients and prospects on recovery of

Unclaimed Assets, we have started Financial and Legal
Department to advise and assist shareholders to reclaim
and recovery of their unclaimed assets. We will work with
the aim to trace the rightful investors and assist them or
their legal heirs/nominees who are struggling to undertake
the long and arduous process of reclaiming their
investments in India with a ZERO ADVANCE Policy.

Key benefits

 Recovery of Unclaimed Investments.

 Reclaiming Investment transferred to IEPF.
 Discovering & Recall of Unclaimed Investments.
 Dematerialization of Physical Shares.

23
 Transmission of Physical Shares to Legal Heirs through Probate & Succession
Certificate.

24
 Chapter 4 : Online Trading Platform

 DP TradeKING Platforms

DP TradeKING brings you an extensive range of modern and intuitive products and features
that are designed to streamline your trading and investing process. A platform that supports
your financial goals, DP TradeKING has varied products that suit all your needs. Whether
you like trading at your desk or on the move, we have got you covered with our latest
technologies which are developed to provide you with a smooth experience on any device.

 DP TradeKING – Trading Platform for Mobile :-

A smart platform that allows you to trade from your Android and iOS devices at anytime,
anywhere, and without any problems. DP TRADE Touch is a simple but effective integrated
solution for mobile traders from DP TradeKING. It's for individual clients to trade on several
exchanges in multiple sectors. Our trading platform, which is fully integrated with elPO and

allows single sign-on to the back-office reports includes a real-time dashboard, index-based
and user-defined multiple Price views, live market scanners, and other advanced features.

25
  View for Top Gainer/ Looser/ Value & 52W High & Low.
 Access to Multiple Segments at Single Sign In.
 Fastest Refreshment Rate to Order punching and Trade.
 Direct Navigation to Price View.
 Integrated 24x7 Backoffice Reports.
 Apply IPO Online using UPI.

 DP Trade Pro – Trading Platform for Desktop: -

DP TRADE PRO by DP TradeRING is the best suitable trading platforms for traders and
investors as well. Our platform for trading and investing is not just order execution platform
but it gives leverage to become professional traders with full-fledged tools. It gives you the

power to execute orders in real-time, manage user portfolios, stream live market data with
multiple tools and features like charting, radar, smart view, options spread and option payoff
etc.

 Multi Segment Access: - Get multi segment access to trading platform.

 Products: - Different Products like CNC (Delivery Buy/Sell), Normal, & Intraday trades.

 Radar: - Real-time price scanner. Intuitive and easy to use with inbuild scan conditions.

26
  Charting: - State of the art technology for charting. It has historical and intraday chart
with time frame.

 Option Payoff Chart: - Analyse option position or can simulate proposed position
before trade.

 Option Portfolio: - Real time option hedging module.

 Smart View: - Programmable price view to program each and every column and perform
mathematical calculation.

 Option Spread: -Easily available global opton strategies like straddle, butterfly etc.

 WealthEVATOR – Online Mutual Fund Platform: -

App for ease of transactions and track investments in Mutual Fund

Offers mutual fund investment account with paperless onboarding, Mutual Fund Portfolio
Tracker and Invest with purpose. WealthEVATOR by DP TradeKING lets you transact
online, import mutual fund investments from different brokers, monitor and manage

family's mutual fund investments effortlessly. WealthEVATOR also offers all relevant
information about the schenes so as to make the right decision about the best mutual fund
investment option based on your goals and risk capacity in a few simple steps.

27
Browser based Mutual Fund Investment Platform with multiple tools

Be aware about your mutual fund investment with 24x7 web portal for investment done
through WealthEVATOR (Powered by DP TradeKING). WealthEVATOR Web is designed
& developed with the core mission of providing you with a gratifying

experience when it comes to accounting and mutual fund investment related activities. It
presents all the information you may need in a straightforward and easy to read format.

28
  Portfolio with XIRR: - Summary of realized and unrealized gains since inception or for a
given period of time.
 Comprehensive Portfolio: - Customize a comprehensive portfolio report with sections as
require.
 Portfolio Screener: - View your current portfolio and filter by various parameters to
extract insights.
 All transaction types: - Purchase, SIP, Switch, Redemption.
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funds and Shares portfolio.
 apital Gain Detailed Report: - A comprehensive breakdown of the Taxable capital gain
for each sell transaction done in a FY.
 Redemptions Simulation: - If you had not sold your investments, what would be the value
today.

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29
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PART 2:-Research study on Basic Of Stock Market

 Introduction on Stock Market

30
Stock market liquidity is an essential market characteristic whose presence ensures smooth
functioning of the market, whereas its absence causes uneasiness in the market.  refer to stock
market liquidity as the ability of the market to absorb a huge volume of securities at a lower
execution cost within a short period without having a significant effect on security prices.
Whereas indicate that market liquidity portrays the presence of willing buyers and sellers who
agree to exchange a certain quantity of securities at the stated price without any time delay.

The presence of market liquidity is important for a trader as it determines the magnitude of
his returns and thereby helps in devising appropriate trading strategies. Many studies have
highlighted the significant relationship between market liquidity and stock returns. Besides,
studies have also addressed the crucial impact of changes in liquidity levels on investment
decisions. In addition to this, studies also state that market liquidity is an important
consideration to the business firms as it influences their cost of capital and firm value by
improving their corporate governance mechanisms.

Stock market liquidity is of prime importance even to the economy. Ellington

(2018) emphasized that during the period of crisis, lower liquidity levels adversely hamper
economic growth. Also, Apergis et al. (2015) concluded that the future
outlook for the economy depends on investor’s sentiments which in turn
are determined by liquidity conditions in the stock market.
Moreover, Nneji (2015) evidenced that market liquidity depicts the level of strength of the
market to withstand any form of economic crisis or shocks. Thereby, studies consider it as a
relevant parameter in predicting the future state of the economy.

Although stock market liquidity has been investigated in earlier literary works (Amihud &
Mendelson, 1986; Chordia et al., 2001; Grossman & Miller, 1988; Kyle, 1985), its relevance
to the investors, corporate firms, regulators, and the whole economy was virtually realized
during the financial crisis in the year 2008. To many of the world economies, rebuilding the
lost confidence in the market by ensuring adequate liquidity was a major challenge to recover
from the downturn. Therefore, the post-crisis period witnessed momentum in the studies
relating to stock market liquidity and evidenced significant implications of dynamics in

31
 market liquidity in policy formulations and investment decisions. These studies expressed
varied views and proposed refined approaches toward market liquidity across various data
sets, market structures, and periods by duly considering the significant contributions made by
previous literature and thus extended the scope of stock market liquidity.

Hence, the current study attempts to evaluate the relevant literature published during the post-
crisis period on stock market liquidity and to unfold the important aspects, which have been
studied concerning stock market liquidity by using qualitative and quantitative content
analysis. This study will be of relevance to the researchers and policymakers to attain a
coherent understanding of the concept of market liquidity, the multifaceted nature of liquidity,
and the role of liquidity in the market. It will also enable researchers in delving into
possibilities for further research in the existing explored areas and also in identifying new
avenues that can be analysed to extend the understanding and applicability of stock market
liquidity.

The entire article is formulated as follows: The “Review of Literature” section describes the
concept and relevance of conducting content analysis, summarizes the literature review
articles previously published on stock market liquidity, and identifies research gap; the
“Objectives of the Study” section highlights objectives of the
study; the “Data and Method” section describes data and
methodology used in the study; the “Analysis” section provides the qualitative and
quantitative analysis of the reviewed studies; the “Conclusion” section showcases the findings
and conclusions drawn from the analysis; the “Managerial Implications” section provides
implications of the study; and the “Limitations of the Study” section provides limitations and
scope for future research.

 Abstract

32
 The purpose of this study is to identify the key aspects that have been studied in the area of
stock market liquidity, accumulate their important findings, and also provide a quantitative
categorization of reviewed literature that will facilitate in conducting further research. The
study analyzes relevant research papers published after the global financial crisis of 2008 and
finds that measurement of liquidity, factors influencing liquidity, the relationship between
market liquidity and expected return, and market liquidity risk and its relationship with
expected returns have been explored in the context of the stock market liquidity. Among
these, the factors influencing liquidity have been prominently researched in the reviewed
studies. The study concludes that the identified areas can be potentially researched concerning
the emerging markets by considering the multidimensional quality of market liquidity. Also,
the inter-linkages between the liquidity of emerging markets with that of the global stock
markets can be further evaluated.

 Review of Literature

An understanding of the existing literature and identifying the prospective areas for future
research on a specific research topic is of prime importance to a researcher. Content analysis
enables in drawing meaningful conclusions from the existing research works based on which
a researcher can effectively carry out further studies. Hart
(1998) mentions that the review of literature enables a researcher
to better understand his research topic and develop his capability
to find new approaches in the existing context. Downe-Rambolt (1992) defines it as a
technique that broadens the understanding of phenomena, which further enables in making
distinct and effective conclusions. Castleberry and Nolen (2018) state that by understanding
the reviewed ideas from the existing work, a researcher can transform them into a unique one
by analysing the same ideas differently.

By considering the need and benefits of content analysis, the current study observed that a
handful of studies have been eager in reviewing the existing literature on stock market
liquidity. Benson et al. (2015) analysed the literature available on liquidity in financial
markets. The study reviewed 113 research papers on liquidity and concluded that market

33
liquidity was essentially studied concerning corporate finance, corporate announcements,
stock returns, macro policy announcements, and investment management. Also, Amihud et al.
(2006) analysed the studies that have evaluated the effect of liquidity and liquidity risk on
stock returns. The study summarized the liquidity asset pricing theories and significant results
in support of these theories. Kumar and Misra (2015) evaluated 95 articles and presented a
review of literature on various aspects of stock market liquidity like measurement of liquidity,
determinants of liquidity, intraday movements, and liquidity effects on firm value.
Recently, Díaz and Escribano (2020) reviewed 177 articles and discussed the dimensional
liquidity measures which have been used by researchers over the years in determining the
liquidity of equity, bond, and treasury markets.

The earlier literature review papers on stock market liquidity have considered an inconsistent
number of studies from various research databases while some have examined a few studies
that highlight different perspectives of stock market liquidity. Also, it has been observed that
the post-crisis period articles have not been extensively reviewed. Remarkably, these studies
have proposed diverse views on the viability of dynamics in market liquidity in the context of
different market structures and time durations. A focused review of their empirical
contributions can significantly enable a researcher to contribute further to improving the
quality of work in the area of stock market liquidity that can help the benefiting stakeholders
in effective policy and strategy formulations. In addition, the previous
literature reviews have undertaken only a theoretical evaluation of
the available literature and do not highlight the relevant
contributing journals, authors, and countries, and the recent trend in publishing studies on
stock market liquidity which are also important inputs for researchers to conduct further
studies on this topic. Thus, the current work emphasizes reducing these gaps and provides
meaningful contributions from a large number of previous research in the area of stock
market liquidity.

Siikanen et al. (2017) documented that in addition to scheduled announcements even non-

scheduled announcements significantly improve stock liquidity on account of information
leakages during the pre-announcement period. In terms of earnings announcements, So and

34
Wang (2014) observed a significant decrease in stock liquidity before the earnings
announcement due to increased holding costs as a result of higher uncertainty, while a similar
liquidity effect was found by Levi and Zhang (2015) after earnings announcements on
account of the heavy selling of stocks during the pre-earnings announcement. Besides, split
announcements were also found to be effective in improving stock liquidity as they signal
positive prospects of the company (Huang et al., 2009; Lin et al., 2009). Pavabutr and
Sirodom (2010) revealed that stock splits attract higher retail trading and thereby raised stock
liquidity. Moreover, Hillert et al. (2016) showed that stock liquidity improved on account of
announcements relating to share buybacks and evidenced that companies mainly formulate
the buyback policies in confirmation with the liquidity levels for its securities in the market.
Besides, disclosures relating to intangible assets and the adoption of relevant international
reporting practices also contribute to accelerating stock liquidity (Gao et al., 2019; Labidi &
Gajewski, 2019).

The previous studies have also evaluated the relevance of corporate governance in
determining stock market liquidity. Ali et al. (2017) obtained a strong effect of corporate
governance practices on boosting the liquidity of the Australian market. Lang and Maffett
(2011) stated that transparent firms consistently have higher liquidity for their stocks even
during the crisis. Alves et al. (2015) documented strong evidence that ownership structure and
regular disclosures positively contribute to stock liquidity, whereas Foo and Zain
(2010) found that predominance by independent directors on the Board
ensures transparent functioning of an enterprise and thus improves
stock liquidity.

In addition to the above, company-specific factors also have shown a significant effect on
stock liquidity. Norvaišienė and Stankevičienė (2014) explored the markets of the Baltic
countries and found that company size and return on assets improved stock liquidity, whereas
financial leverage harmed the stock liquidity. Beaupain and Joliet (2013) evidenced a
significant impact of financial performance indicators like profitability, investment intensity,
and price-to-book ratio in upgrading market liquidity. Kuo et al. (2015) found that high
selling pressure on account of credit rating downgrades of stocks lowered market liquidity.

35
 Objectives of the Study

The objective of this study is to document relevant literary works undertaken on the different
aspects in the area of stock market liquidity after the financial crisis of 2008 and to
quantitatively analyze the literature available on stock market liquidity.

 To supply capital

The main function of a stock exchange is to help companies elevate money. It is established to
supply the required capital for companies of a country. To achieve this task, ownership in a
private corporation is sold to the public in the form of shares of stock. Funds received from the
sale of stock contribute to the firm’s capital formation.

 To inspire savings

This inspires people to save their income by making a profit. A stock exchange helps in
determining the prices for various securities. Continuous purchase and sale of securities on a
stock exchange lead to the evaluation of their prices. Regular dealings reduce wide fluctuations
in prices. It accumulates the individual income and yet they go to the industries to the economic
development of a country.

 To trade financial instruments

It is established to trade the financial instruments for individual investment and company collect
capital. It provides a regular meeting place where people can convert their money into
securities and securities into money. Buying and selling of securities
are confined to one particular place and the investors are saved the
trouble of going to different places to buy or sell securities.

 To develop economy

It helps economic development by supplying the capital to the industries. Unregulated markets
can have an unenthusiastic impact on capital formation. Close regulation of stock exchanges
allows strangers from all parts of the world to honour contracts executed in the daily trading of
shares. It is an important objective of the stock exchange.

 To present information

36
Another objective of the stock exchange is to present information about transactions and
financial conditions of the companies. It reflects changes taking place in the country’s economy.
Price trends on stock exchange indicate trade cycles i.e. boom, recession, depression, recovery,
etc.

 To do long-term financing

Commercial banks generally disburse the short-term loan. So, supplying long-term finance is an
objective of the stock exchange. Any company which wants to get its securities listed has to
submit to these rules and regulations.

 To raise awareness

It raises awareness among the general people by giving information than to invest and gain profit
from the market. Thus, stock exchanges exercise a healthy influence on the working and
management of companies.

 To have a fair operation

To transact the financial instruments easily and fairly stock exchange is established. A stock
exchange channelizes the investible funds in more productive industries. A company with better
performance and prospects has no difficulty in raising its capital. So, it is a duty of stock
exchange to secure both investors and borrower.

 To protect fraudulently

It is also to ensure that no fraudulence occurs in a transaction. A stock exchange functions

exactingly according to established rules and regulations. These rules and regulations provide a
check on overtrading in securities and manipulation of prices. The Government, too; exercises
supervision and control over a stock exchange. By this means the evils can deceit the tender
investors and the stock are liable for protecting that.

 Convenience

The objective of the stock exchange is to formulate policies for easy

transactions and the safety of the investors and companies. A stock exchange informs investors
which way the investment wind is blowing. By directing the flow of capital into worthwhile
projects, it gives an impetus to the economic development of the country.

 Security and Transparency

37
The lawful sale of stock on any exchange requires dependable and correct information. By
requiring a high level of transparency from all trading companies, the stock exchange creates a
more protected environment for investors, which helps them to verify the risks of investing.

 Data and Method Data

For the attainment of objectives, the study has been confined to the research articles that have
been published in the various journals during the recent years after the financial crisis, that is,
2009–April 2020, and was sourced from the “ScienceDirect” database.

For the study, a total of 439 research papers have been selected which have appeared in 64
journals, namely, Applied Economics; Applied Economics Letters; Borsa Istanbul Review;
China Economic Review; Decision Support Systems; Economic Modelling; Economic
Systems; Economics Letters; Emerging Markets Review; Energy Economics; European
Economic Review; Explorations in Economic History; Finance Research Letters; European
Research on Management and Business Economics; Global Finance Journal; Habitat
International; International Journal of Production Economics; International Business Review;
International Economics; International Journal of Forecasting; International Review of
Economics and Finance; International Review of Financial Analysis; Journal of Accountancy;
Public Policy; Journal of Financial Intermediation; Japan and the World Economy; Journal of
Accounting and Economics; Journal of Asian Economics; Journal of Banking &
Finance; Journal of Behavioral and Experimental Finance; Journal
of Business Research; Journal of Contemporary Accounting &
Economics; Journal of Corporate Finance; Journal of Development Economics; Journal of
Econometrics; Journal of Economic Behavior & Organization; Journal of Economic Theory;
Journal of Economics and Business; Journal of Empirical Finance; Journal of Financial
Economics; Journal of Financial Markets; Journal of Financial Stability; Journal of
International Financial Markets, Institutions & Money; Journal of International Money and
Finance; Journal of Multinational Financial Management; Journal of Policy Modeling.

38
 Method

The research articles on stock market liquidity were sourced from the ScienceDirect database,
which provides access to a wide range of articles undertaken in heterogeneous contexts in
comparison with other similar databases. The reason for selecting a single database for article
extraction was mainly to enable comprehensive coverage of a wide range of literary works on
the topic from a single source. The research articles were accessed from the database by using
the keyword “market liquidity” and the time filter of 2009 to 2020. Based on abstract reading,
if stock market liquidity is highlighted as the focal point, then the article was included for
review. Finally, a total of 439 articles that were exclusively based in the area of stock market
liquidity were extracted. Furthermore, the content of these articles was segregated into
different categories, namely, Year of Publication, Title of the Paper, Number of Authors,
Country of the Authors, Name of the Publishing Journal, Objectives of the Study, Liquidity
Measures Used, Findings, and Conclusions. `

Based on the objectives undertaken for study by the selected research articles, they were
categorized into below mentioned four categories:

 Measurement of stock market liquidity,

 Factors influencing stock market liquidity,
 Stock market liquidity and expected returns,
 Stock market liquidity risk and expected returns.

Furthermore, to stimulate refined studies, only 91 pertinent studies were selected based on
their key findings across these categories and were accordingly summarized. On the contrary,
the information about the significant contributions made by the different authors, countries,
and journals across 439 research articles has been depicted graphically to facilitate
quantitative analysis of the available literature.

39
 Analysis

Identification and Analysis of Key Aspects Studied Concerning Stock Market Liquidity

By analysing the literature on stock market liquidity, the following key aspects have been
identified relating to which the reviewed studies have been undertaken in the area of stock
market liquidity:

 Measurement of stock market liquidity,

 Factors influencing stock market liquidity,
 Stock market liquidity and expected returns,
 Stock market liquidity risk and expected returns.

Figure 1 exhibits the key aspects studied concerning stock market liquidity, and also gives a
quick aspect wise insight about the number of papers published and the highest count of the
contribution of authors (number-wise and country-wise) and appearance of research papers in
journals. It can be seen that the majority of the studies have been attentive toward evaluating
the factors influencing stock market liquidity (250 papers), whereas a nominal number of
studies have explored the dynamic relationship between stock market
liquidity and expected returns (116 papers). Also, a handful of
studies have been taken upon the measurement of stock market
liquidity (46 papers) and analyzed the relationship between stock market liquidity risk and
expected returns (27 papers). In addition, these aspects have been mainly studied by the
authors from the United States and have been commonly published in the Journal of Banking
& Finance.

40
Figure 1. Key aspects studied concerning stock market liquidity.

Source. Author’s findings.

Furthermore, the subthemes studied (summarized in Figure 2) and the significant results that
are drawn in the reviewed studies are highlighted below according to the above-identified key
aspects.

41
Figure 2. Subthemes studied under each aspect identified concerning stock market liquidity.

Source. Author’s findings.

 Measurement of stock market liquidity

42
A liquid market is generally referred to as the market in which a large quantity is traded
without any delay at lower transaction costs with minimum price impact. The previous
literature proposes four main characteristics of liquidity, that is, trading quantity, execution
time, transaction cost, and price impact. Thus, the reviewed studies have measured liquidity in
the stock market by using a variety of liquidity measures that can fairly capture the key
market liquidity characteristics, that is, depth (volume or quantity measure), breadth (price
impact measure), immediacy (time or speed measure), and transaction costs (spread or
transaction cost measure). Moreover, these measures were computed either based on intraday
(high-frequency) data or daily, weekly, monthly, quarterly, yearly (low-frequency) data.
Although measures based on high-frequency data have been mainly in practice, Goyenko et
al. (2009) evidenced that the low-frequency measures can be fairly used over high-frequency
ones to measure liquidity. In addition, Lee (2015) suggested that measures based on low-
frequency data enable in studying liquidity over a long period and across different market
structures.

The reviewed studies have tested and proposed the best performing measures of liquidity
under different market systems. Spread and volume-related liquidity measures were used
by Hallin et al. (2011) and evidenced that both the measures are negatively correlated and
give identical information about market liquidity and thus can be used as complementary to
the other. In the context of liquidity in developing markets, Marshall et al. (2013) found that
Gibbs, Amihud, and Amivest measures prove to be effective measures, whereas in an
emerging market, Będowska-Sójka and Echaust (2020) found that the Closing Quoted Spread
measure based on daily data was the best performing liquidity measure during the periods of
extreme liquidity. Furthermore, Będowska-Sójka (2018) made a comparison between
different liquidity measures and concluded that the Amihud Illiquidity ratio evolves as the
best transactional cost measure and Karstanje et al. (2013) proved that zero return measure is
a very strong and reliable measure for determining the timing of liquidating the trading
positions.

Besides this, the earlier research work has also proposed new liquidity measures that have
been tested and proven as effective proxies to measure

43
liquidity. Holden (2009) developed new spread measures, namely, Holden2 and Multi-
Factor2 Model based on low-frequency data that perform better than the existing
measures. Valenzuela et al. (2015) found a strong link between depth and volatility and
proposed a relative liquidity measure that captures the size and depth in the limit orders and
thereby forecasts the level of volatility which can be certainly used in designing optimal
trading strategies. Z. Li et al. (2018) developed two bid-ask spread estimators based on daily
high and low prices and evidenced their efficiency in accurate estimation of transaction costs
across varied markets and periods. A new version of the Amihud Illiquidity measure that can
be used exclusively in emerging markets was proposed by Kang and Zhang (2014). Also, a
refined trading volume measure—namely, Mixture of Distribution Hypothesis (MDH) model
—was developed by Darolles et al. (2015) because they were of the view that trading volume
may not always provide accurate inferences about liquidity during high volatility. The MDH
model facilitates in extracting that part of the volume which is exclusively affected by
liquidity levels during high volatility.

Although, different measures of liquidity have been used and proposed in the literature, Chai
et al. (2010) concluded that there is no best measure that can be used to measure the market
liquidity because every type of measure captures different aspects of market liquidity in
different market systems and conditions. Even Goyenko et al. (2009) suggest that a researcher
should choose a liquidity measure depending on the objective of his study.

A handful of studies have even documented significant intraday behavior patterns and
relationships between liquidity measures. Krishnan and Mishra (2013) used spread, volume,
depth, and composite liquidity measures in the Indian stock market and found that demand for
liquidity is high at the beginning and end of the trading session even though spread measures
indicated higher transaction costs. Thus, study evidenced a positive relationship between
volume and spread measures which was contradictory to an order-driven market but lacked
empirical support. On the contrary, Kumar and Misra (2018) used depth and spread liquidity
measures in the Indian context and observed a strong relationship between liquidity measures
of individual stock and aggregate market which was attributed to a higher commonality
among them. Regarding the energy sector, Sklavos et al. (2013) showed a positive

44
 interrelationship between depth, volume turnover, and breadth, and suggested liquidity
persistence due to the presence of informed trading.

 Factors influencing stock market liquidity

Researchers have shown a keen interest in analysing the effect of different factors influencing
liquidity of individual stocks and of the overall market and have obtained significant results.
The studies have revealed a significant impact of regulatory policy announcements on
liquidity. Fernández-Amador et al. (2013) found that an expansionary monetary policy
announcement positively influenced stock market liquidity of small-sized stocks. Busch and
Lehnert (2014) analyzed the effect of remedial measures taken for revival of the German
economy from the 2008 crisis on stock liquidity levels and concluded that the measures in the
form of expansionary monetary policy and imposition of short-selling bans in the stock
market led to an improvement in stock liquidity, whereas the bank’s guarantees given for
firm’s liabilities deteriorated the liquidity and such effects were more pronounced in case of
low traded stocks. In addition, Hvozdyk and Rustanov (2016) found that the introduction of
financial transaction tax improved market liquidity, whereas its actual implementation
increased transaction cost and thereby lowered the liquidity levels. Concerning the emerging
market, Reddy et al. (2017) studied and found that the Indian stock market liquidity is highly
influenced by the policies announced by its government and financial institutions. On the
contrary, Sensoy (2016) and Ekinci et al. (2019) documented that emerging market is very
sensitive to the announcements made by developed economies. Their study revealed that
announcements relating to monetary policy, interest rates, and gross domestic product (GDP)
of the U.S. economy strongly determined liquidity of the Turkish stock market under study. In
terms of macroeconomic variables, money supply, government expenditure, private
borrowing, bank rate, short-term interest rate, and government borrowing were found to be
the key determinants of market liquidity across different sectors of the stock market
(Chowdhury et al., 2018). Also, Zheng and Su (2017) observed that global oil demand shocks
cause a significant negative effect on the liquidity of the Chinese stock market.

45
Besides, market volatility has been identified as a strong determinant of stock liquidity (Bai &
Qin, 2015), while Chung and Chuwonganant (2014) confirmed a similar effect even in the
presence of other determinants of liquidity. Besides, Chan et al. (2013) and Ramos and Righi
(2020) showed a positive impact of market-wide volatility on stock liquidity, whereas Beltran
et al. (2009) found an insignificant effect of volatility on market liquidity which was mainly
due to the existence of an efficient exchange trading system.

Another determining factor evaluated is trading activity by different types of investors.

Jacoby and Zheng (2010) found that higher investor diversity results in a higher improvement
in market liquidity. It is evident that the trading activity of institutional investors ensures
stabilization in the economy during major catastrophic events (Chen et al., 2019). But even
then Dang et al. (2019) found that institutional investor’s trading in shock sensitive stocks has
resulted in high illiquidity during the crisis of 2008. On the contrary, Pan et al. (2015) found
that trading by institutional investors generates more stock liquidity as compared with the
retail investors because they are well informed about the future trend of the market and use
firm-specific information while taking trading decisions. Additionally, Maher and Parikh
(2013) stressed that huge buying by both domestic and foreign institutional traders result in
higher market liquidity as compared with that of retail traders. Contrastingly, Ahn et al.
(2014) evidenced that extensive participation by retail traders on account of low price
efficiency improves market liquidity.

Studies also spell out a positive influence of foreign investor’s sentiments on the liquidity of
emerging markets. A similar result was also observed by Jacoby and Zheng (2010) who
concluded that the foreign investors foster transparency in the working of firms and thereby
positively influence liquidity. Lee and Chung (2018) evidenced that foreign investors improve
liquidity by reducing trading costs and creating more competition in the market,
whereas Rhee and Wang (2009) concluded that foreign ownership of stocks negatively
influences the future liquidity of the market.

The effects of stock exchange mergers and developments in the trading systems have been
also analyzed as an influential factor of stock market liquidity. Teplova and Rodina

46
 (2016) evidenced that the market liquidity of stocks improves over a short period after the
merger between the stock exchanges. Yang and Pangastuti (2016) documented that the stock
exchange merger affects the liquidity of small-cap stocks over the other stocks,
whereas Nielsson (2009) found that merger strongly affects stock liquidity of large stocks
over the mid and small stocks. Studies (Chung & Chuwonganant, 2009; Yılmaz et al., 2015)
have analyzed and found that technological upgradation and transparent order system at the
stock exchanges also improve stock liquidity, whereas Hendershott and Moulton
(2011) provided evidence that transparency on account of higher automation of trading floor
induced traders to frame complex trading strategies which reduce immediacy in trading and
thereby reduce market liquidity. Also, Anagnostidis and Fontaine (2020) demonstrated that
automation of trading has amplified the use of algorithmic trading that is mainly based on
complex and common strategies that were found to adversely influence trading during the
stress periods.

Studies have also evidenced that the corporate announcements and disclosures enhance
transparency about the prospects of the firm and thus contribute to improving stock liquidity.

 Stock market liquidity and expected returns

Another interesting area that has been explored is the effect of market liquidity on stock
returns. Shieh et al. (2012) found that any change in liquidity levels of stock results in a huge
impact on stock returns. Lam and Tam (2011) concluded that liquidity is the most important
factor influencing stock returns even after controlling other determinants of stock returns. A
positive effect of lower liquidity was evidenced on expected stock returns by Asparouhova et
al. (2010). Similar results were obtained by Chang et al. (2010) and Dinh (2017) while
evaluating the liquidity of stocks across different sizes and by Baradarannia and Peat
(2013) during the pre-crisis period. Furthermore, Hearn (2010, 2011) found that market
liquidity plays an important role in determining stock returns mainly in less competitive stock
markets as these markets are characterized to have a high cost of equity.

Furthermore, the effect of liquidity infused during selling stock was found to be more on
expected stock returns than the one during buying a stock (Brennan et al., 2012). Also, Loukil

47
 et al. (2010) found a positive effect of both present and past illiquidity on expected stock
returns wherein the return of small size stocks was highly affected by illiquidity over some
time. In addition, Arjoon et al. (2016) found that the presence of institutional ownership
determines positive relationship between liquidity and stock returns, whereas Bradrania et al.
(2015) proved that liquidity influences the expected returns since it crucially determines the
relationship between expected returns and expected volatility. Besides, Wang and Chen
(2012) developed and tested various asset pricing models to effectively obtain the relationship
between liquidity and stock returns.

On the contrary, studies found no empirical evidence supporting the effect of liquidity on
expected stock returns. In frontier markets, Stereńczak et al. (2020) observed that liquidity
does not affect returns because they are less globally integrated. Also, Gârleanu
(2009) suggested that liquidity does not have any impact on stock returns because different
traders employ different trading strategies according to their distinct trading objectives.

 Stock market liquidity risk and expected returns

In addition to the level of stock market liquidity, market liquidity risk is also found to be an
influencing factor of expected returns. The market liquidity risk has been favorably measured
as the co-movement between stock and market liquidity, stock liquidity and market return,
and market liquidity and stock return in related studies (Altay & Çalgıcı, 2019; Bradrania &
Peat, 2014; K. H. Lee, 2011; Vu et al., 2015).

Bradrania and Peat (2014) found that liquidity affects expected returns due to the presence of
market liquidity risk. The expected return showed the presence of liquidity premium which
increased during high liquidity risk and thereby showed that such risk was priced in the
assets. The study also suggested that the Liquidity-adjusted Capital Asset Pricing Model
(LCAPM) is the most appropriate approach to identify liquidity risk premium in returns.
Furthermore, Vu et al. (2015) used the LCAPM approach and found that liquidity risk is
higher in the bearish market which in turn positively affected the stock returns even after

48
controlling the other factors affecting the returns. But during the financial crisis of
2008, Dang and Nguyen (2020) evidenced a negative effect of liquidity risk on stock returns
across diverse international markets. Similarly, Nneji (2015) conducted sectoral analysis and
found that liquidity risk highly influenced stock prices and thereby any hike in liquidity risk
would increase the possibility for a stock market crash.

Chiang and Zheng (2015) found that the market illiquidity risk positively affects the excess
stock returns in G7 countries. The results of the portfolio analysis indicate that the effect of
market illiquidity risk is more pronounced on the returns of large, growth, liquid, and low-risk
stocks. Even Foran et al. (2015) found a positive cross-sectional effect of market liquidity risk
on U.K. equity stock returns, whereas stock liquidity risk had a negative effect. Using
principal components analysis, the study also obtained common market-specific liquidity risk
factors affecting the liquidity across the stocks thereby justifying a strong effect on stock
returns. K. H. Lee (2011) found that international portfolio returns are also determined by
market liquidity risks in addition to market risks and that this result varies across different
economies.

Liang and Wei (2012) found that the premium in the prices of stocks of developed countries
is due to the presence of higher market liquidity risk of their respective countries. It was also
found that this risk is higher in those countries where there are large company governing
boards and more insider trading activities. Lin et al. (2014) affirmed that when prices react
slowly to market-wide information, the investors refrain from trading in such stocks and their
returns rise on account of liquidity risk of the market, whereas Cao and Petrasek
(2014) concluded that the risk-averse investors exert a huge selling pressure during low
liquidity conditions and thereby lead to a negative relationship between liquidity risk and
returns. Also, the study suggested that concentrated ownership is beneficial in lowering
liquidity risk because such investors do not panic during the crisis. On the contrary, Sensoy
(2017) concluded that highly concentrated ownership in stocks, especially by institutional
investors, contributes to high liquidity risk.

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 Quantitative Analysis of the Literature on Stock Market Liquidity

This section presents a quantitative analysis of the 439 reviewed research articles based on

 number of research papers published—year wise,

 contribution of authors—number wise,
 country-wise contribution of authors,
 appearance of research papers in journals.

Analysis based on number of research papers published—Year wise

It was observed that in the recent past years, many research works have been carried out in
the area of stock market liquidity. In our sample, the highest number of 56 research papers
has been published in the year 2018 followed by 55 research papers in the year 2014, 45
research papers in the year 2016, 44 research papers in the year 2017, 43 research papers in
the year 2009, 37 research papers in the year 2013, 35 research papers in the year 2015, 33
research papers in the year 2019, 27 research papers each in the years 2010 and 2011, 24
research papers in the year 2012, and 13 research papers up to April 2020 (Figure 3).

Figure 3. Research papers published—Year wise.

Source. Author’s findings.

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Includes articles published up to April 2020.

 Analysis based on contribution of authors—Number wise

Figure 4 depicts that a group of two authors has published 160 research papers, whereas 155
research papers are published by a group of three authors, 67 research papers by a single
author, and 56 research papers by a group of four authors. Moreover, only five authors have
authored one paper.

Figure 4. Contribution of authors—Number wise.

Source. Author’s findings.

51
 Analysis based on country-wise contribution of authors

Figure 5 depicts the authors from different countries who have actively contributed to the
research works on stock market liquidity. A total of 136 authors from the United States have
been the strongest contributors to the studies on stock market liquidity. This is followed by 59
authors from the United Kingdom, 58 authors from Australia, 56 authors from China, and 28
authors from Canada, respectively. Also, there have been interesting contributions from
countries like France (25 authors), Germany (21 authors), Taiwan (17 authors), Hong Kong
and New Zealand (14 authors each), and the Netherlands, Korea, and India (13 authors each).
It is also seen that quite a few authors are emerging as contributors in this research area from
countries like Tunisia, Switzerland, Luxembourg, Pakistan, Belgium, Singapore, Israel, Czech
Republic, Nigeria, Indonesia, Hungary, Slovakia, Poland, Vietnam, Trinidad, Norway,
Austria, Finland, Portugal, Greece, Turkey, Lithuania, Ireland, Italy, Palestine, Colombia,
Romania, Spain, Thailand, South Africa, Russia, Saudi Arabia, Malaysia, South Korea,
Cyprus, Macau, Denmark, Japan, Chile, United Arab Emirates, Brazil, Latvia, and Egypt.

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 Analysis based on appearance of research papers in journals

By analysing the selected research papers on stock market liquidity and the different journals
in which they were published, it was found that nearly 42 papers were published in
the Journal of Banking & Finance and 40 papers in the Journal of Financial Markets. This was
followed by 34 research papers in International Review of Financial Analysis, 33 research
papers in Pacific-Basin Finance Journal, 28 research papers in Journal of Financial
Economics, 23 research papers each in Journal of International Financial Markets, Institutions
& Money and Finance Research Letters, and 20 research papers in Journal of Empirical
Finance. The other research papers were published in the journals, namely, Research on
International Business and Finance (17), International Review of Economics and
Finance (15), Emerging Markets Review (14), Journal of Corporate Finance (12), Economic
Modelling (10), North American Journal of Economics and Finance (10), and Physica A (10)
(Figure 6).

Figure 6. Appearance of research papers in journals.

Source. Author’s findings.

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 Managerial Implications

The findings of the current study are useful to market regulators, corporate firms, and
investors. Market liquidity is an integral part of the equity market as it ensures the tradability
of securities and stability of the market, and hence the consistent analysis of market liquidity
is of utmost importance. The current findings highlight multidimensional measures for
liquidity measurement which will enable the market regulators, corporate firms, and investors
to accurately measure liquidity and draw inferences. The liquidity determinants highlighted in
the findings can assist in regulatory and corporate policy decisions, especially during market
downturns. Market liquidity and market liquidity risk strongly affect security prices and thus
an investor can consider them as one of the factors while formulating their trading strategies
and use them as an important attribute for portfolio diversification.

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  Questionnaire response Analysis
 25

 Part 2:
 A Literatu

 Analysis

When I have done analysis at that time females were responded 43.1% and 56.9% were males.

55
Most of people were age of 20–30 were having 68.6% , 15.7% were having by the age group of
30-40 and at last age group of 40-50 and above 50 were having equal percentage of 7.8.

56
In the research most of them where puples with the 51%. However, 13.7% and 7.8% were having
by business and service section were same, Professional were 7.8%.

There are 35.4% of people are doing saving, 27.1% of ratio is in between 10-15%, 5-10% of
people were having 22.9%. At last, 15-20% and above 20% were
10.4% and 4.2%.

57
 mo
st of them were Under Graduation which are 52.9%. 21.6% were Graduate in there field. 17.6%
and 7.8% were ratio of Postgraduate and professional degree holders.

Out of 51 people , there are 58.8% were single and 41.2% were married couples living.

58
There are 52.9% were knowing about the stock market, there are 33.3% were not aware about
stock market and remaining 13.7% were not confirm about the stock market.

49% of people are holding, 39.2% were not aware about the investing into the market and 11..8%
were usually were holding different share that they were not aware about that.

59
In India, most of the people were preferring to invest in NSB and BSE which were 94.1% and
66.7%. NASDAQ where investing directly to United States of America which are 52.9% of
preferable.
DAX which comes into Germany and people are investing 9.8%, there are 5 persons were
investing. SGX NIFTY, which is Singapore share, which contains 23.5%. NIKKEI which comes
into Japan and contains 29.4% rating. KOSPI which comes into South Korea.
Mostly people think that it is normal with 47.1%, according to 27.5% of people who
prefer it is positive investment, 17.6% of people prefer it is very
positive way of income. Afterwards, only 5.9% and 2% were the
lowest and not preferably by people.

Most of the people prefer it is the income after retirement with rating of 51% and maximize
wealth with 27.5%. There are 15.7% of people who are preferring for there regular income.3.9%

60
of people where preferring for trade financial institutions.

The sectors which are mostly prefer by the people which are Financial, which has 66.7% of
rating, Steel which has 60.8%healthcare which has 58.8%, Industries which has 49%,
Construction materials which has 29.4%, chemical and paper which has 17.6% and 3.9%.

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The people are frequently active in stock market where are 45.1%, Rarely people are buying and
selling shares which are 41.2%. At last, only 13.7% were highly active in market.

The highest ratio is considering the moderate level of knowledge of investment and financial
markets is 47.1% of preferring, the extensive investment knowledge, follow
financial markets closely is having 33.3%. at last, little knowledge of
investment is 19.6%.

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Overall, the people are analysing through different way that through Ratio Analysis is the
highest, which contain 35.3%, through Balance sheet and Income statement 27.5% and at last
through cash flow statement 9.8%.

Most of the people are agree with the learning about investing different ways of investing and
ratio is 72.5%. Still there are 27.5% of people are deciding about learning.

 Conclusion

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The present study reviews the literature on stock market liquidity to identify the key aspects
studied after the financial crisis in the year 2008 and presents a quantitative and qualitative
analysis of this literature. The study uses 439 research articles published over 63 reputed
journals which were retrieved from the ScienceDirect database during the study period.

The study identifies four main aspects in which the reviewed studies on stock market liquidity
have been performed, namely, measurement of liquidity, factors influencing liquidity, the
relationship between stock market liquidity and expected return and market liquidity risk, and
its relationship with expected returns. Among these aspects, it was observed that the majority
of the research works have focused on exploring and identifying various factors influencing
stock market liquidity. These studies reveal empirical evidence that regulatory policy
announcements, trading activities by different investors, upgradation of trading systems at
stock exchanges, and corporate announcements are the most influencing factors of stock
market liquidity followed by corporate governance, market volatility, and company-specific
factors.

The reviewed studies have quantified liquidity of the stock market by using different liquidity
measures based on depth, breadth, transaction costs, and immediacy, and thereby indicate the
multidimensional quality of liquidity. The review also indicates that returns of security are
highly influenced by the level of stock market liquidity and the magnitude of stock market
liquidity risk. From the quantitative analysis, it is found that the research work on stock
market liquidity has been rising in recent years and has been mainly initiated by authors from
developed economies like the United States, the United Kingdom, and Australia, and was
popularly published in the Journal of Banking & Finance and Journal of Financial Markets.

Based on the above findings, the study concludes that although there is a wide range of
empirical works in the area of stock market liquidity, still there is ample scope for
undertaking similar studies. The four aspects highlighted by this review are vital to
comprehensively perceive the essence and constituents of market liquidity
which will further influence its effective implementation.

64
Furthermore, market liquidity is a time-varying component which makes it imperative to
persistently refine the existing contributions regarding the contexts of different market
structures and conditions. Besides, a handful of studies (Chai et al., 2010; Kang & Zhang,
2014; Krishnan & Mishra, 2013) have extensively evaluated all the dimensional liquidity
measures, and thus future studies can emphasize using these measures and also elaborate on
the interrelationships between them. Even the relationship between stock market liquidity and
expected returns can be evaluated across the liquidity dimensions in different markets at
different time intervals for facilitating accurate inferences and estimations. Besides, studies
can be also undertaken to evaluate these aspects of liquidity in emerging stock markets
because these markets have higher growth intensity and offer attractive investment
opportunities despite being susceptible to global shocks. Also, the inter-linkages between the
liquidity of emerging markets with the global stock markets can be further evaluated.

The past two decades have witnessed important policy reforms aimed at liberalization and
globalization of the Indian economy. To achieve an efficient, transparent and vibrant financial
sector in general and stock market in particular, several financial sector reforms, changes in
market microstructure and trading practices were introduced. The Capital Issues (Control) Act
1947 was repealed and pricing of financial assets was liberalized. As a part of market reforms,
new stock exchange was established, and the existing stock exchanges were demutualized and
exchanges adopted screen-based automated trading. The National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE) launched several new financial products and SEBI was set up
as the regulator of capital market. As results of these reforms, Indian stock market has
registered a notable growth in terms of listed companies, trading volume and emerged as one
of the favourite destination of investment. Against the back backdrop of these reforms and
changes, a study of behaviour of stock returns, particularly, analysis of efficiency of stock
market in a liberalized environment assumes significance. Various schools of thought have
theorized the behaviour of stock returns. The Neo-classical School of Finance proposes a
theory of efficient market or efficient market hypothesis (EMH) based on rational expectation
and no-trade argument. Eugene Fama, one of the main architects and advocates of the theory,
provided strong theoretical foundations and a framework to test the
EMH empirically. In an informationally efficient market, prices

65
quickly absorb new information and reflect all the available information instantly in such a
way that such price processing mechanism does not provide extra normal returns. In other
words, there is no possibility of predictability of returns by using the history of returns and a
simple buy and hold strategy would do well in such an informationally efficient market. The
vital functions of stock market such as optimal allocation of capital and facilitation of climate
conducive to investment would have adverse effects if market were inefficient. Therefore, the
study of efficiency assumes importance

. The large body of research conducted in the last three decades itself reflects the importance
of the informational efficiency of stock market. Various methods are G. S. Hiremath, Indian
Stock Market, SpringerBriefs in Economics, DOI: 10.1007/978-81-322-1590-5, The
Author(s) 2014 111 employed in empirical studies to test different forms of market efficiency.
Random walk hypothesis is considered one of the effective and convenient ways to test weak
form of efficiency. In an efficient market, returns are expected to respond randomly to new
information and therefore it is not possible to predict future returns based on past memory of
prices.

The early studies of 1960s and 1970s supported the view that stock returns follow a random
walk. There was a paradigm shift in post 1987 studies, which reported nonlinear dynamics in
stock returns. The conventional tests of market efficiency found to be incapable of capturing
such dynamics. Concomitant to this, long memory properties of stock returns have gained
particular attention over the last decade in finance.

In the light of the above factors, the main purpose of the present volume was to examine the
returns behaviour in Indian equity market in the changed market environment. The book
primarily focused on weak form of efficiency. In this work, the random walk hypothesis was
empirically tested and the volume addressed issues such as nonlinear serial dependence mean
reversion, and long memory in stock returns.

The data used in the study consists of daily stock index returns of NSE and BSE, the major
stock exchanges in India. Eight indices including three sectoral indices from the NSE and six
indices from the BSE were chosen. The study has made

66
improvements from previous studies in terms of the application of sophisticated tests,
updated, comprehensive and disaggregated dataset, addressing issues which have not received
due importance in previous research on Indian stock market.

This study empirically tested whether stock returns in India follow a random walk. Towards
this end, data on major indices during the period June 1997–March 2010 are analysed using
both parametric and non-parametric tests, some of which are not employed in previous studies
in India. The results from parametric tests offered mixed evidence. The parametric test results
suggest significant rejection of random walk hypothesis in case of smaller stock indices with
lower market capitalization and liquidity.

The evidence of rejection of random walk behaviour in stock returns of large cap and high
liquid indices are weaker as the investment horizon increases. Non-parametric tests, which are
considered appropriate when returns are non-normal, have shown rejection of hypothesis that
increments are independent and identically distributed for the selected index returns and these
results are not sensitive to the composition of index. The rejection of random walk at longer
horizon implies that the information in short-horizon is not instantly reflected in returns and
thus provides opportunity for excess returns to those who have access to information. Later,
as time horizon increases, trading strategies of those who had access to such information
began to reflect in prices leading the market towards efficiency.

Nonlinear dependence in returns directly contrasts the EMH since such dependence structure
provides potential opportunities for prediction. In view that there has not been much empirical
work in the case of India, the present study has applied a set of nonlinearity tests which have
different power against different classes of nonlinear process, to uncover nonlinear
dependence in stock returns of selected indices. The tests results provide strong evidence of
nonlinear serial dependence in stock returns for full sample period.

However, the windowed test 112 Summary and Conclusion procedure applied in the study
shows a nonlinear structure that is not consistent throughout the full sample period but
confined to a few sub-periods thus suggesting episodic nonlinear dependence surrounded by
long periods of pure noise.

67
Furthermore, it is found that both negative and positive events were associated with these
nonlinear dependence periods, but negative events had a significant effect. The episodic
presence of nonlinear dependence implies that certain events induce such nonlinear
dependence.

The major events identified were uncertainties in international oil prices, volatile exchange
rates, turbulent world markets, sub-prime crisis, global economic meltdown and political
uncertainties, especially border tensions. Though the nonlinear dependence found in stock
returns indicates predictability of stock returns, investors find it difficult to exploit such
dependence to forecast, because it is not present throughout the sample period but just
confined to a few periods.

The episodic dependence in returns indicates that investors take time to learn about shock
and adjust their trading strategies. The mean-reversion hypothesis is tested as an alternative
explanation for the behaviour of stock returns to random walk behaviour. The conventional
unit root tests results may mislead in the presence of structural breaks.

Therefore, multiple structural breaks tests are carried out and two significant structural breaks
in each of the index series are found. The test results have shown rejection of null of unit root,
thus clearly indicating trend-stationary process. The study identified the events associated
with significant structural break dates.

The dot.com bubble burst and consequent recession in the USA, bad monsoons, international
oil shocks, volatile exchange rates, sub-prime crisis and global economic meltdown,
fluctuations in foreign institutional investment, political uncertainties including border
tensions are the major events identified around significant trend breaks. The study found that
smaller cap indices were more vulnerable to external shocks than large cap indices. The long
memory in stock returns is important because it explains the returns behaviour. To detect long
memory in mean returns, the study has carried out multiple semi-parametric tests.

The study has largely found the presence of long memory in mean
returns. The anti-persistence evidence observed in index returns is

68
not consistent. The findings of the study did not support the relative size proposition.

In the same fashion, this study endeavoured to detect long memory in volatility. The model
estimates indicate strong evidence of long memory in volatility. In other words, this study has
found that the FIGARCH model better describes the persistence of volatility than the
conventional models of volatility. The evidence of long memory in both mean and volatility
suggests that using linear modelling would result in misleading inferences. The evidence of
long memory suggests proper factoring of long memory volatility in derivative pricing and
risk management models.

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