LITERATURE REVIEW

Gupta (1972) in his book has studied the working of stock exchanges in India and has
given a number of suggestions to improve its working. he stud! high"ights the# need
to regu"ate the vo"ume of specu"ation so as to serve the needs of "i$uidit! and price
continuit!. It suggests the en"istment of corporate securities in more than one stock
exchange at the same time to improve "i$uidit!. he stud! a"so wishes the cost of
issues to be "ow% in order to protect sma"" investors&anda (19'() has studied the ro"e
of stock exchanges in India before and after independence. he stud! revea"s that
"isted stocks covered four)fifths of the *oint stock sector companies.
Investment in securities was no "onger the monopo"! of an! particu"ar c"ass or of a
sma"" group of peop"e. It attracted the attention of a "arge number of sma"" and midd"e
c"ass individua"s. It was observed that a "arge proportion of savings went in the first
instance into purchase of securities a"read! issued.
Gupta (19'1) in an extensive stud! tit"ed +,eturn on -ew .$uit! Issues# states that the
investment performance of new issues of e$uit! shares% especia""! those of new
companies% deserves separate ana"!sis. he factor significant"! inf"uencing the rate of
return on new issues to the origina" bu!ers is the +fixed price# at which the! are issued.
he return on e$uities inc"udes dividends and capita" appreciation. his stud! presents
sound estimates of rates of return on e$uities% and examines the variabi"it! of such
returns over time./awahar 0a" (1992) presents a profi"e of Indian investors and
eva"uates their investment decisions. 1e made an effort to stud! their fami"iarit! with%
and comprehension of financia" information% and the extent to which this is put to
use. he information that the companies provide genera""! fai"s to meet the needs of a
variet! of individua" investors and there is a genera" impression that the compan!#s
2nnua" ,eport and other statements are not we"" received b! them.,2-3 2sian
,esearch /ourna"s
0.4.Gupta (1992) revea"ed the findings of his stud! that there is existence of wi"d
specu"ation in the Indian stock market. he over specu"ative character of the Indian
stock market is ref"ected in extreme"! high concentration of the market activit! in a
handfu" of shares to the neg"ect of the remaining shares and abso"ute"! high trading
ve"ocities of the specu"ative counters. 1e opined that% short) term specu"ation% if
excessive% cou"d "ead to 5artificia" price5. 2n artificia" price is one which is not
*ustified b! prospective earnings% dividends% financia" strength and assets or which is
brought about b! specu"ators through rumours% manipu"ations% etc. 1e conc"uded that
such artificia" prices are bound to crash sometime or other as histor! has repeated and
proved.
-abhi 6umar /ain (1992) specified certain tips for bu!ing shares for ho"ding and a"so
for se""ing shares. 1e advised the investors to bu! shares of a growing compan! of a
growing industr!. 7u! shares b! diversif!ing in a number of growth companies
operating in a different but e$ua""! fast growing sector of the econom!. 1e suggested
se""ing the shares the moment compan! has or a"most reached the peak of its growth.
2"so% se"" the shares the moment !ou rea"ise !ou have made a mistake in the initia"
se"ection of the shares. he on"! option to decide when to bu! and se"" high priced
shares is to identif! the individua" merit or demerit of each of the shares in the
portfo"io and arrive at a decision.
&!are 0a" 3ingh (1998) in the stud! tit"ed% Indian 4apita" 9arket ) 2 :unctiona"
2na"!sis% depicts the primar! market as a perennia" source of supp"! of funds. It
mobi"ises the savings from the different sectors of the econom! "ike househo"ds%
pub"ic and private corporate sectors. he number of investors increased from 2( "akhs
in 19'( to 1;( "akhs in 199( (7. ; times). In financing of the pro*ect costs of the
companies with different sources of financing% the contribution of the securities has
risen from 8;.(1< in 19'1 to ;2.9=< in 19'9. In the tota" vo"ume of the securities
issued% the contribution of debentures > bonds in recent !ears has
increased significant"! from 1?. 21< to 8(.1=<.
3uni" @amodar (1998) eva"uated the #@erivatives# especia""! the #futures# as a too" for
short)term risk contro". 1e opined that derivatives have become an indispensab"e too"
for finance managers whose prime ob*ective is to manage or reduce the risk inherent
in their portfo"ios. 1e disc"osed that the over)riding feature of #financia" futures# in risk
management is that these instruments tend to be most va"uab"e when risk contro" is
needed for a short) term% i.e.% for a !ear or "ess. he! tend to be cheapest and easi"!
avai"ab"e for protecting against or benefiting from short term price. heir "ow
execution costs a"so make them ver! suitab"e for fre$uent and short term trading to
manage risk% more effective"!.