Introduction: The stock market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. Such financial activities are conducted through institutionalized formal exchanges or over-th counter (OTC) marketplaces which operate under a defined set of regulations. There can be multiple stock trading venues in a country or a region which allow transactions in stocks and other forms of securities. The stock market or equity market and is primarily known for trading stocks/equities, other financial securities - like exchange traded funds (ETF), corporate bonds and derivatives based on stocks, commodities, currencies, and bonds - are also traded in the stock markets. While both terms - stock market and stock exchange - are used interchangeably, the latter term is generally a subs that she trade: of the former. Ifone says the stock market, it means that she buys and. sells shares/equities on one (or more) of the stock exchange(s) that are part of the overall stock market. The leading stock exchanges in the U.S. include the New York Stock Exchange (NYSE), Nasdaq, and the Chicago Board Options Exchange (CBOE). These leading national exchanges, along with several other exchanges operating in the country, form the stock market of the U.S. Stock market is a place where people buy/sell shares of publicly listed companies. It offers a platform to facilitate seamless exchange of shares. In imple terms, if A wants to sellshares of Reliance Industries, the stock market will help him to meet the seller who is willing to buy Reliance Industries. However, it important to note that a person ci trade in the stock market only through a registered intermediary known as a stock broker. The buying and selli ig of shares take place through electronic medium. We will discuss more about the stock brokers at a later point, There are two main stock exchanges in India where majority of the trades take place - Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Apart from these two exchanges, there are some other regional stock exchanges like Bangalore Stock Exchange, Madras Stock Exchange ete but these exchanges do not play a meaningful role anymore. National Stock Exchange (NSE) NSE is the leading stock exchange in India where one can buy/sell shares of publicly listed companies. It was established in the year 1992 and is located in Mumbai. NSE. has a flagship index named as NIFTYS0. The index comprises of the top 50 companies based on its trading volume and market capitalisation. This index is widely used by investors in India as well as globally as the barometer of the Indian capital oil markets. Bombay Stock Exchange (BSE) BSE is Asia’s first as well as the oldest stock exchange in India. It was established in 1875 and is located in Mumbai. It has a total of ~5,295 companies listed out of which ~3,972 are available for trading as on August 21, 2017. BSE Sensex is the flagship index of BSI . Tt measures the performance of the 30 largest, most liquid and financially stable companies across key sectors, Historically, stock trades likely took place in a physical marketplace. With the invent of new technologies and due to the covid-19 pandemic, the stock market works electronically, through the internet and online stockbrokers. Each wade happens on a stock-by-stock basis, but overall stock prices often move in tandem because of news, political events, economic reports and other factors.OBJECTIVES: 1. To study about the emerging stock markets in india such as NSE and BSE. 2. To study about the year effect of the Indian stock market (BSE and NSE from 2000 to 2020, 3. To examine the market capitalisation of Indian stock market (NSE and BSE) from 2000 to 2020, 4, To examine the trend of risk and return of Indian stock market (N E and BSE) from 2000 to 2020. 5. To study about the type of trading preferred by the investors in stock market. STOCK MARKET AN OVER VIEW 2.1STOCK MARKET. A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on busines these may include securities listed on a public stock exchange, as well as stock that is only traded privately, sueh as shares of private companies which are sold to investors through equity crowdfunding platforms. Investment in the stock market is most often done via stockbrokerages and electronic trading platforms. Investment is usually made with an investment strategy in mind.Stocks can be categorized by the country where the company is domiciled. For led in Switzerland and traded on the SIX example, Nestlé and Novartis are domi Swiss Exchange, so they may be considered as part of the Swiss stock market, although the stocks may also be traded on exchanges in other countries, for example, as American depositary receipts (ADRs) on U.S. stock markets. 2.2HOW THE STOCK MARKET WORKS. stock markets provide a secure and regulated environment where market participants can transact in shares and other eligible financial instruments with confidence with zero- to low-operational risk. Operating under the defined rules as stated by the regulator, the stock markets aet as primary market and as secondary markets. As a primary market, the stock market allows companies to issue and sell their shares for the first to the common publ ne through the process of init al public offerings (IPO). This activity helps companies se neces: ry capital from investors. It essentially means that a company divides itself into a number of shares (say, 20 million shares) and sells a part of those shares (say, § million shares) to common public at a price (say, $10 per share). To facilitate this process, a company needs a marketplace where these shares can be sold. This marketplace is provided by the stock market. If everything goes as per the plans, the company will successfully sell the $ million shares at a price of $10 per share and collect 50 million worth of funds. Investors will get the company shares which they can expect to hold for their preferred duration, in anticipation of rising in share price and any potential income in the form of dividend payments. The stock exchange acts as a facilitator for this capital raising process and receives a fee for its services from the company and its financial partners. Following the first-time share issuance IPO exereise called the listing process, the stock exchange also serves as the trading platform that facilitates regular buying and. selling of the listed shares. This constitutes the secondary market, The stock exchange earns a fee for every trade that occurs on its platform during the secondary market activity.The stock exchange shoulders the responsibility of ensuring price transparency, liquidity, price discovery and fair dealings in such trading activities. As almost all major stock markets across the globe now operate electronically. the exchange maintains trading systems that efficiently manage the buy and sell orders from various market participants. They perform the price matching function to facilitate trade execution at a price fair to both buyers and sellers. A listed company may also offer new, additional shares through other offerings at a later stage, like through rights issue or through follow-on offers. They may even buyback or delist their shares. The stock exchange facilitates such transactions, The stock exchange often creates and maintains various market-level and sector- specific indicators, like the S&P $00 index or Nasal 100 index, which provide a measure to track the movement of the overall market. Other methods include the Stochastic Oscillator and Stochastic Momentum Index, ‘The stock exchanges also maintain all company news, announcements, and financial reporting, which can be usually accessed on their official websites. A stock exchange also supports various other corporate-level, transaction-related activities. For instance, profitable companies may reward investors by payi jends which usually comes 2 rom a part of the company’s earnings, The exchange maintains all such information and may support its processing to a certain extent. (For related reading, see " How Does the Stock Market Work?") 2.3FUNCTIONS OF A STOCK MARKET A stock market primarily serves the following function: Fair Dealing in Securities Transactions: Depending on the standard rules of demand, and supply, the stock exchange needs to ensure that all interested market participants have instant access to data for all buy and sell orders thereby helping in the fair and transparent pricin of securities. Additionally, it should also perform efficient matching of appropriate buy and sell orders.For example, there may be three buyers who have placed orders for buying Microsoft shares at $100, $105 and $110, and there may be four sellers who are willing to sell Microsoft shares at $110, $112, $115 and $120. The exchange (through their computer operated automated trading systems) needs to ensure that the best buy and best sell are matched, which in this case is at $110 for the given quantity of trade. Efficient Price Discovery: Stock markets need to support an efficient mechanism for Price discovery, which refers to the act of deciding the proper price of a security and is usually performed by assessing market supply and demand and other factors ‘sociated with the transactions. Say, a U.S.-based software company is trading at a price of $100 and has a market capitalization of $5 billion. A news item comes in that the EU regulator has imposed a fine of $2 billion on the company which essentially means that 40 percent of the company’s value may be wiped out. While the stock market may have imposed a trading price range of $90 and $110 on the eompany’s share price, it should efficiently change the permissible trading price limit to accommodate for the possible changes in the share price, else shareholders may struggle to trade at a fair price. Liquidity Maintenance: While getting the number of buyers and sellers for a particular financial security are out of control for the stock market, it needs to ensure that whosoever is qualified and willing to trade gets instant access to place orders which should get executed at the fair price. Security and Validity of Transactions: While more participants are important for efficient working of a market, the same market needs to ensure that all part pants are verified and remain compliant with the necessary rules and regulations, leaving no room for default by any of the parties. Additionally, if should ensure that all associated entities operating in the market must also adhere to the rules, and work within the legal framework given by the regulator.Support All Eligible Types of Participants: A marketplace is made by a variety of participants, which include market makers, investors, traders, speculators, and hedgers All these participants operate in the stock market with different roles and functions. For instance, an investor may buy stocks and hold them for long-term spanning many years, while a trader may enter and exit a position within seconds. A. market maker provides necessary liquidity in the market, while a hedger may like to trade in derivatives for mitigating the risk involved in investments. The stock market should ensure that all such participants are able to operate seamlessly fulfilling their desired roles to ensure the market continues to operate efficiently. Investor Protection Along with wealthy and institutional investors, a very large number of small investors are also served by the stock market for their small number of investments. These investors may have limited financial knowledge, and may not be fully aware of the pitfalls of investing in stocks and other listed instruments. The stock exchange must nplement necessary measures to offer the neces ‘ary protection to such investors to shield them from financial loss and ensure customer trust. For instance, a stock exchange may categorize stocks in various segments depending sk on their risk profiles and allow limited or no trading by common investors in hig! stocks. Exchanges often impose restrictions to prevent individuals with limited income and knowledge from getting into risky bets of derivatives Balanced Regulation; Listed companies are largely regulated and their dealings are monitored by market regulators, like the Securities and Exchange Commission (SEC) of the U.S, Additionally, exchanges also mandate certain requirements ~ like, timely filing of quarterly financial reports and instant reporting of any relevant developments - to ensure all market participants become aware of corporate happenings. Failure to adhere to the regulations can lead to suspension of trading by the exchanges and other disciplinary measur