INDIAN STOCK MARKET- A DISTINCTION BETWEEN NSE AND BSE

Abstract

Stock Market is one of the most vibrant sectors in the financial system, marking an important contribution to economic development. Stock Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc. In other words Stock Market is a plate form for trading various securities and derivatives. Further, it performs an important role of enabling corporate, entrepreneurs to raise resources for their companies and business ventures through public issues. Today long term investors are interested to invest in the Stock market rather than invest anywhere. The Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and the Calcutta Stock Exchange (CSE) are the three large stock exchanges of Indian Stock Market. The stock market is an aggregation of investor sentiment that affects daily changes in stock prices. Investor sentiment remained a mystery and challenge over time, inviting researchers to comprehend the market trends. The entry of behavioral scientists in and around the 1980s brought in the market trading's human dimensions. Shortly after that, due to the digitization of exchanges, the mix of traders changed as institutional traders started using algorithmic trading (AT) on computers. Nevertheless, the effects of investor sentiment did not disappear and continued to intrigue market researchers. Though market sentiment plays a significant role in timing investment decisions, classical finance models largely ignored the role of investor sentiment in asset pricing. It is derived from the study that although some positive steps have been taken up, which are responsible for the substantial improvement of the Indian stock market, these are perhaps not sufficient enough to become a matured one and hence not integrated with the developed stock markets so far. Keywords: unit roots test, integration, Vector Auto regression Model, Variance Decomposition, Impulse Response Function.