A STUDY ON PRICE VOLATILITY IN THE STOCKS OF BSE

ABSTRACT
Index means the statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes measure the ups and downs of stock, bond, and some commodities markets, in terms of market prices and weighting of companies in the index. An index is a statistical measure of change in an economy or a securities market.

In the case of financial markets, an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. The main objective of this project is to understand the composition and performance of main stock index in India i.e., SENSEX. It includes: to understand the concept of stock indices; To study the major companies those are part of the indices; to study the volatility of stock prices and indices and to study the impact of different economic, industry and company specific factors that effect the stock prices and stock market indices.

30 companies from different sectors have been selected to study the market and to construct the SENSEX. The market share is taken as base for the selection of index construction i.e. companies have been selected on the basis of this market share. The process of constructing an index is tedious but very useful for a normal investor who works on his own in his investment game. The process of constructing market leader index in this present project work is given clearly and any investor can follow this process to easily construct his own index.

INTRODUCTION
Of all the modern service institutions, stock exchanges are perhaps the most crucial agents and facilitators of entrepreneurial progress. After the industrial revolution, as the size of business enterprises grew, it was no longer possible for proprietors or partnerships to raise colossal amount of money required for undertaking large entrepreneurial ventures. Such huge requirement of capital could only be met by the participation of a very large number of investors; their numbers running into hundreds, thousands and even millions, depending on the size of business venture. In the absence of stock exchanges, i.e. institutions where small chunks of businesses could be traded, there would be no modern business in the form of publicly held companies. Today, owing to the stock exchanges, one can be part owners of one company today and another company tomorrow; one can be part owners in several companies at the same time; one can be part owner in a company hundreds or thousands of miles away; one can be all of these things. Thus by enabling the convertibility of ownership in the product market into financial assets, namely shares, stock exchanges bring together buyers and sellers (or their representatives) of fractional ownerships of companies.

The stock exchanges are the exclusive centers for the trading of securities. Bombay Stock Exchange Limited (the Exchange) is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. BSE in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market. BSE- SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.

OBJECTIVES OF THE STUDY

The main objective of this project is to understand the composition and price volatility in the stocks of BSE - SENSEX. It includes To study the concept of stock indices. To study and analyze the volatility of stock prices and indices. To study the factors that effects the stock prices and stock market indices.

Need for the study

The purpose of the study is to know how the investor investing money in the shares of companies which are listed in BSE and to know how the factors effecting stock market.

Scope of the study

The scope of the study is to confined to A STUDY ON PRICE VOLATILITY IN THE STOCK OF BSE At NETWORTH STOCK BROCKING LTD.The time period for the study is from.to..

METHODOLOGY Sources of data

The sources of the data are classified in to two types Primary data Secondary data

SECONDARY DATA
The secondary data are the data, which the investigator borrows from other who have collected it for various other purposes. Therefore it may not entirely be reliable. It is less expensive and involves less expensive and involves less time and labor than the collection of primary data.

RESEARCH METHODOLOGY
Tools and techniques are Tools are charts and bar graphs

LIMITATIONS
Information is collected primarily from secondary sources and may not be accurate. Financial Information is dynamic in nature and is subject to change frequently. Index and stock prices moments are observed only for limited period with which long term analysis is not possible.