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A Project Report on

“Study of BSE and NASDAQ – A Comparision of Two Stock

Exchanges”

Submitted to RTM Nagpur University in partial fulfilment for the Award of Bachelor of
Business Administration in Financial Management for the academic year 2021-22

Submitted by

Kshitij Thakur

Guided by

Ms.poorvi Tiwari

Dept of Management

Department of Management ( BBA )

DADA RAMCHAND BAKHRU SINDHU MAHAVIDYALAYA

PANCHPAOLI, NAGPUR.
 CHAPTER 1

INTRODUCTION TO FINANCIAL MANAGEMENT

 INTRODUCTION TO FINANCIAL MANAGEMENT

Financial management is the key element that helps in running any business. But finance is a
limited resource. However, the wants will always remain unlimited. Hence, it is necessary
that we manage the finances effectively so that our wants are fulfilled as well as we do not
run out of finance. A business should utilize and invest the finances in such a manner that the
ROI is higher as compared to the amount invested. Basically, we can say financial
management is the process that involves the judicious utility of capital as well as a vigilant
selection of the capital source that helps in the accomplishment of business goals.
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CONCEPT OF FINANCIAL MANAGEMENT

Financial management entails planning for the future of a person or a business enterprise to
ensure a positive cash flow. It includes the administration and maintenance of financial
assets. Besides, financial management covers the process of identifying and managing risks.

The primary concern of financial management is the assessment rather than the techniques of
financial quantification. A financial manager looks at the available data to judge the
performance of enterprises. Managerial finance is an interdisciplinary approach that borrows
from both managerial accounting and corporate finance.

Some experts refer to financial management as the science of money management. The
primary usage of this term is in the world of financing business activities. However, financial
management is important at all levels of human existence because every entity needs to look
after its finances.  
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Definition of financial management

A different definition is explained by Joseph L. Massie, author of The Essentials of

Management. Massie said that financial management is a business activity responsible for
obtaining and using company funds to achieve effective operations.

- Joseph L. Massie.

Meanwhile, J.F. Bradley has different definitions of financial management. In a book entitled
Administrative Financial Management, Bradley revealed that financial management is an
aspect of business management to regulate company capital. Not only that, but financial
management must also consider the selection of sources of wealth to achieve the goals.

- J.F. Bradley.
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Nature of financial management

 Risk and Returns Evaluation: Nature of financial management basically

involves decision where risk and return are linked with investment. Generally high
risk investment yield high returns on investments. So, role of financial manager is to
effectively calculate the level of risk company is involve and take the appropriate
decision which can satisfy shareholders, investors or founder of the company.

 Capital Requirement Estimation: Using financial management to forecast

working capital and fixed capital requirements for conducting business operations, it
is possible to plan ahead of time for money. It is necessary to have a proper balance
between debt and equity in order to keep the cost of capital as low as possible.
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Financial management determines the appropriate allocation of various securities

(common equity, preferred equity and debt).

 Wealth Management: The finance manager keeps track of all cash movements
(both inflow and outflow) and guarantees that the company does not experience a cash
shortage or surplus.

 Valuation of Company: Primary nature of financial management focus towards

valuation of company. That is the reason where all the financial decisions is directly
linked with optimizing / maximization the value of a company. Finance functionality like
investment, distribution of profit earnings, rising of capital, etc. are the part of
management activities.

 Improve Company’s Stock: Increase the amount of return to shareholders by lowering

the cost of operations and increasing earnings, according to the company’s mission
statement. The finance manager’s primary focus should be to increase revenue by
obtaining cash from a variety of sources and investing.

 Source of Funds: In every organization, the source of funding is a critical decision to

make. There are long-term, medium-term and short-term source of funds. Every
organization should thoroughly research and evaluate various sources of money (e.g.,
stocks, bonds, debentures, and so on) before selecting the most appropriate sources of
funds with the least amount of risk.
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 Selective Investment: Before committing the funds, it is necessary to thoroughly

examine and assess the investment proposal’s risk and return characteristics. Appropriate
decision need to be made for selecting right type of investment options.

 Control Management: The implementation of financial controls assists the firm in

maintaining its real costs of operation within reasonable bounds and generating the
projected profits.
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Scope of financial management

 Planning: The financial manager projects how much money the company will need
in order to maintain positive cash flow, allocate funds to grow or add new products or
services and cope with unexpected events, and shares that information with business
colleagues

 Budgeting: The financial manager allocates the company’s available funds to meet
costs, such as mortgages or rents, salaries, raw materials, employee T&E and other
obligations. Ideally there will be some left to put aside for emergencies and to fund
new business opportunities.
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 Market risk: Affects the business’ investments as well as, for public companies,
reporting and stock performance. May also reflect financial risk particular to the
industry, such as a pandemic affecting restaurants or the shift of retail to a direct-to-
consumer model.

 Credit risk: The effects of, for example, customers not paying their invoices on
time and thus the business not having funds to meet obligations, which may adversely
affect creditworthiness and valuation, which dictates ability to borrow at favorable
rates.

 Operational risk: This is a catch-all category, and one new to some finance teams.
It may include, for example, the risk of a cyber-attack and whether to purchase
cybersecurity insurance, what disaster recovery and business continuity plans are in
place and what crisis management practices are triggered if a senior executive is
accused of fraud or misconduct.
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CHAPTER 2
COMPANY PROFILE
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Introduction to BSE

BSE (Bombay Stock Exchange) is the oldest stock exchange in Asia with a rich heritage, now
spanning three centuries in its 133 years of existence. What is now popularly known as BSE
was established as "The Native Share & Stock Brokers' Association" in 1875. BSE is the first
stock exchange in the country which obtained permanent recognition (in 1956) from the
Government of India under the Securities Contracts (Regulation) Act 1956.

BSE's pivotal and pre-eminent role in the development of the Indian

capital market is widely recognized. It migrated from the open outcry system to an online
screen-based order driven trading system in 1995. Earlier an Association Of Persons (AOP),
BSE is now a corporatised and demutualised entity incorporated under the provisions of the
Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme,
2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation,
BSE has two of world's best exchanges, Deutsche Börse and Singapore Exchange, as its
strategic partners.
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Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by
providing it with an efficient access to resources. There is perhaps no major corporate in
India which has not sourced BSE's services in raising resources from the capital market.

History Of Bombay Stock Exchange

The history of BSE can be traced back to 1850s when a group of five stock brokers used to
conduct meetings under the banyan tree in front of Mumbai Town Hall. As the number of the
brokers increased, they started changing the venue of the meeting constantly. Almost two
decades later, this small group moved to the Dalal Street in 1874, and later, in the following
year, it was recognized as an official organization by the name
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'The Native Share & Stock Brokers Association'. As per the Securities Contracts Regulation
Act, BSE became the first stock exchange to be recognized by the Government of India in

1956. BSE Sensex was developed in 1986 which was considered a tool to measure the

overall performance of the Bombay Stock Exchange. Using this index, various equity

derivative markets were open and many future trading contracts were made in 2000 which

further led to expansion of its trading platform. BSE switched to electronic trading system in
1995 and took only fifty days for this transition. 'BOLT' or the 'BSE On Line Trading' is the
automated version of the trading platform, which is screen based and currently has a capacity
of 8 million orders per day. Also, BSE is the first stock exchange in the world to introduce
centralized internet trading system (BSEWEBx.co.in), allowing investors from all over the
world to trade on the BSE platform.
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Brokers in the old rings of BSE

Introduction to NASDAQ
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NASDAQ, (National Association of Securities Dealers Automated Quotations), an American

stock market that handles electronic securities trading around the world. It was developed by
the National Association of Securities Dealers (NASD) and is monitored by the Securities
and Exchange Commission (SEC).

Trading on the NASDAQ stock exchange began in 1971. In 1992 it joined with the
International Stock Exchange in London to form the first intercontinental linkage of securities
markets. NASDAQ’s 1998 merger with the American Stock Exchange (Amex; later called
NYSE Amex Equities) formed the NASDAQ-Amex Market Group. By the beginning of the
21st century it had become the largest electronic stock market (in terms of both dollar value
and share volume) in the United States, but the NASDAQ-Amex Market Group folded in
2005, when Amex members reacquired the exchange. NASD spun off NASDAQ in 2000 to
form a publicly traded company, the NASDAQ Stock Market, Inc.

NASDAQ lists more than 3,000 securities. To qualify for listing on the exchange, a company
must be registered with the SEC, have at least three market makers (financial firms that act as
brokers or dealers for specific securities), and meet minimum requirements for assets, capital,
public shares, and shareholders.
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History of Nasdaq

In its first humble year of operation in 1971, the Nasdaq Stock Market was broadcast to some
500 market makers across the country, trading nearly two billion shares in about 2,500 that
provided quotes securities. The index average at the close of 1971 was just over 100. Nasdaq
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desktop devices were cathode-ray terminals, market-maker identification numbers, or IDs,

and the names of stocks. But little else.

Gordon Macklin, who was president of the National Association of Securities Dealers from
1970 to 1987, recalls those early devices.

"It was an absolute miracle to be able to push a button and pull up on the screen everyone
from all over the country, and all of their current bids and offers," he said.

"It was state of the art, at the time," Macklin added, "just a huge leap forward. Coming from
over the counter to over the computer, even in its most primitive stages, was a thrilling
lifetime experience." The OTC market he referred to was, of course, the market for stocks

listed on pink sheets and traded manually.

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Achievement of BSE

 25th Jul 1990: S&P BSE SENSEX closes above 1000

 30th Mar 1992: S&P BSE SENSEX closes above 4000

 14th Mar 1995: BSE On-Line Trading (BOLT) system introduced

 11th Feb 2000: S&P BSE SENSEX crosses 6000 intra-day

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Achievement of NASDAQ

 1971 First to invent electronic trading and the modern IPO – NASDAQ; NASDAQ
Stock Exchange is created by the National Association of Securities Dealers and the
Financial Industry Regulatory Authority

 1985 Launch of NASDAQ100 Index

 1987 Separates from National Association of Securities Dealers (NASD)

 1989 First exchange to support Silicon Valley Innovators

 1991 First to sell its technology to power other exchanges

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CHAPTER 3

RESEARCH STUDY

PROBLEM DEFINITION
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OBJECTIVE OF STUDY
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HYPOTHISIS
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THEORETICAL PERSPECTIVES
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CHAPTER 4
RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
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Step in conducting research

The major step in conducting research are –

I] Identification of research problem

2] Literature review

3] Specifying the purpose of research

4] Data collection

5] Analyzing and interpreting the data

6] Reporting and evaluating research

What is research methodology ?

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Research design
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Research methods
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study
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tools used for data collection

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chapter 5
data interpretation
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chapter 6
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