Simply define research is a process of collecting and interpreted data with a purpose, although research is a central to business and academic activities, there is no consensus on how it should be defined, but there is general agreement that 'research is a systematic and methodical process of enquiry and investigation with a view to increasing knowledge, These research report is called 'dissertation'. Here I would like to research about the "Growth of Indian Capital Market".
Research proposal
The proposed research for my dissertation is the surge the growth of Indian capital market in globally. I have done my Bachelors in Commerce and currently pursuing my Masters in Business Administration, hence I have an active interest in the market conditions, Global economy, big firms and multinationals.
Research Topic and Background
In accounting concept, capital refers to issued capital and retained earnings of the company, representing the owners' or share holders' initial contribution to the business and wealth that generates. Generally Capital is an essential factor for staring every business and non business organization. Traditionally capital contributes from its entrepreneurs and share profit on the basis of their profit sharing ratio, but today the all business firms issues their shares to public for contributing business capital. These shares are known as securities.
Capital markets are like any other markets, but differ in terms of products traded and their organization. Capital markets deal with trading of securities. Capital markets provide avenue where companies can raise funds to expand on their business or establish new ones by issuing securities owned by the companies. Like business in the privet sector, governments issue its securities to raise funds in capital markets to build electricity damn, construct new roads, bridges by issues.
Shares can be bought either from the primary or secondary market. Primary market refers to the purchase of shares in an initial public offering, whereby a company offers its shares to members of the public for the first time. During an Initial Public Offering, shares are bought through the selling agents or banks of the company issuing the shares. In the secondary market, the purchase and sale of shares is done through the stock exchange. Stock Exchange is one the institution in the capital markets. Many investment schemes are available in capital marketing such as Mutual funds or unit trusts. Capital markets play a vital role in the global economies.
Aims and objectives of the study
Capital markets are making a great impact in the global economy and they have an important role in the growth of our economy. My aim for the study is to focus on the strategies of capital marketing in Indian economy to compare other marketing and understood which one is the highest and valuable business share in India. What are the causes of growth of Indian capital marketing and why people invest their money in different securities?
Problems related to the study
Growth or boom of new businesses firms
Dissolution of existing business firms
Financial crisis
Literature review
The efficiency of stock markets is one of the most controversial and well studied propositions in the literature of capital market. Even if there have been a number of researches and journal articles, economists have not yet reached a consensus about whether capital markets are efficient or not. The wide range of studies concerning the efficient market hypothesis in the literature provides mixed evidences. The studies such as Barua (1980, 1987), Sharma (1983), Ramachandran (1985), Gupta (1985), Vaidyanathan and Gali (1994) and Prusty (2007) supports the weak form efficiency of Indian capital market. There have been some studies like Kulkarni (1978), Choudhury (1991), Poshakwale (1996), Gupta and Basu (2007), (Mishra, 2009) and (Mishra & pradhan, 2009) do not support the existence of weak form efficiency in Indian capital market. This disagreement regarding the Efficient Market Hypothesis has generated research interest in this topic. Additionally, the recent market downsizing across the globe has also contributed to it. Furthermore, this paper shall fill the gap in the capital market literature by studying the weak form market efficiency in the aftermath of global financial crisis.
Research strategy
The topic of the dissertation is "Growth Indian Capital Marketing" and I will only focus on Indian share marketing. The scope is only limited to the Indian capital marketing such as Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). In my dissertation I would like to be inductive as I will take some samples of business shares. The research strategy will be applied for the whole Indian securities. Inductive approach means from specific to general. I will be using lot of business shares if according to the study on a particular share of business under NSE and BSE and if the finding suggests that all shares have appropriate resources then I will consider as all business shares have appropriate resources and not only for the sample which I have used. Hence my research will show that I am inductive. I will be taking a sample of different company's shares and will conduct questionnaire to the public to take the insight of the strategies which they have been buying and selling throughout the years. I will try to conduct some surveys with the two stock exchanges for data collection and follow a deep research to gather the data from reliable resources to determine the current Nifty and Sensex value of the companies and I will conduct different investors with questioner for knowing the quantity and quality of business shares. In my research I would like to be more quantitative and less qualitative because my research is based on the sample different business shares. Based on the outcomes of the research and analysis, all the facts and issues will be estimated.
Methodology
Examining the efficient market hypothesis in its weak form in the context of Indian stock market being the objective, this paper selects two leading stock exchanges of India, viz., Stock Exchange, Mumbai and National Stock Exchange because of their undoubted popularity across the globe so as to represent the Indian stock market. The study uses the daily stock return data computed from daily closing stock prices as recorded in terms of Sensex and Nifty. The formula used thereof is
The study proceeds to test the null hypothesis of stock market inefficiency in India against the alternative of stock market efficiency. In this regard, the study uses the most popular unit root test. First, I performed the Phillips-Perron (PP) test and then the Kwiatkowski, Phillips, Schmidt, and Shin (KPSS) test has been conducted as the confirmatory test of unit root.
The PP method estimates the non- augmented DF test equation:
ΔRt = α Rt −1 + xt'δ + ε t & α = Ï - 1
Where, Rt is the monthly compounded rate of return calculated on the basis of BSE and NSE monthly stock price indices, xt are optional exogenous regressors which may consist of constant, or a constant and trend, Ï and δ are parameters to be estimated, and, ε t are assumed to be white noise. The null and alternative hypotheses of this test are
H 0 : α = 0 and H1 :α < 0
The null hypothesis that the time series is non-stationary is rejected when test statistic is more negative than the critical value at a given level of significance.
The KPSS test assumes trend-stationary time Rt under the null hypothesis. The KPSS statistic is based on the residuals from the OLS regression of Rt on the exogenous variables xt : RT = xt'δ + ut
The KPSS attempts to test the null hypothesis that series is stationarity against the alternative hypothesis of non-stationarity. And, this null hypothesis is accepted if the test statistic is less than the critical value; otherwise rejected.
At last the study regress current stock returns (Rt) on past stock returns (Rt-1) by formulating the regression model of stock returns with a constant term and a term of past returns so as to examine the mean reverting behaviour of stock prices in India. Such a regression model is: Rt = β 0 + β1 Rt −1 + ε t . This model will exhibit mean reversion of stock prices, if the slope coefficient is negative.
Empirical Analysis
The empirical testing of the efficient market hypothesis in its weak form has been performed by applying the PP and KPSS unit root tests. The results of these tests for the sample period are summarized in Table-1.
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The values within brackets refer to the bandwidth selected on the basis of Newey-West criterion using Bartlett Kernel principle. The test statistics are significant at 1% level of significance, and thus, null hypotheses of unit roots are rejected. It indicates that the unit roots do not exist, and the series are stationary. This provides the evidence that the stock markets of India do not show characteristics of random walk and thus, are not efficient in the weak form.
Another aspect of stock market inefficiency is mean reversion. Poterba and Summers (1988) concludes that the stock market is inefficient because prices are mean reverting. If stock price follows a mean reverting process, then there exists a tendency for the price level to return to its trend path over time, and investors may be able to forecast future returns by using information on past returns. This tends to make the market inefficient. In a very broad sense, stock market is mean reverting if asset prices tend to fall (rise) after hitting a maximum (minimum). Using this definition, many analysts can convince themselves that stock markets obviously mean revert. For example, (so the thinking goes), the stock market was clearly overvalued in the first quarter of 2008 in India. This overvaluation explains the subsequent falls. In other words, mean reversion explains the stock market crash.
One can test this indication of mean reversion by regressing stock returns on paststock returns (Engel and Morris, 1991). Such regression in Indian stock market overthe sample period yields:
Rt = 0.000089 + 0.074 Rt −1 for Stock Exchange, Mumbai, and
Rt = 0.00013 + 0.054 Rt −1 for the National Stock Exchange.
Here, the slope coefficient is positive for both the regressions. Thus, the stock prices are not mean reverting. The indication of mean reversion as is evident from the stock price movement in India, is therefore an illusion.
Methodology = Regression analysis on the public Investment and
questionnaires for investors.
Data collection = through questionnaires, the annual reports and the financial
statements of stock exchange.
Sample size = more than 20 valuable business shares.
Conceptual Framework
This section develops a conceptual framework in relation to the influence of corporate governance on a firm's access to finance and financial performance
And thus on capital market development. Figure shows that a firm's corporate governance quality is largely dependent on the institutional mechanisms of a country including the political economy factors, the legal and regulatory standards and the markets. The framework however, recognises that the firm's legal compliance as well as voluntary activism in corporate governance matters, can reduce the expropriation costs in the governance process and partly compensate for the inefficiency in the institutional arrangements in a developing economy.
Resources and Cost of the Research
The research focuses on the one variable of investments for Indian economy. I will be taking different business shares and investment schemes to gather investor's responses for the topic. I will then take the case study of the Indian economy for which I will buy some case study from the internet resources. May be I will buy some business shares for my research purpose. For the sampling of capital marketing I will be going to India to complete my dissertation. The cost included for this be that I will be travelling the respective stock exchanges' head offices in India to gather information. So the cost will only be pertained to the travelling and living expenses and the purchase of the case study.
Ethical Issues
In conducting interviews for research ethical issues are one of the key factors that should not be forgotten in light of research. During interview every participant would be told that interview is being recorded and their identity would not be disclosed. They will address as samples both in recording and literature writing. The Investors will not be forced to take part in the interview or share their confidential data.
