Chapter-1

Introduction

1.1 Prelude
A stock Market is place where stocks (shares) can be bought and sold. Stock markets are
the complex of institutions and whereby intermediate term funds and long-term funds are
pooled and made available to business, the government & individuals. In a wider sense,
stock markets includes all organized market and institutions such as commercial banks,
discount houses, stock exchanges, investment corporations etc dealing in long-term loans,
mortgages and time and savings deposits.
Stock exchange is an independent company formed by shareholders members. It can take
various decisions. But decision is taken by executive body. The objectives of stock
exchange are to provide a market place along with facilities for together the buyers and
sellers of securities promote just and equitable principles of trade protect the interest of
the investors.

1.2 Importance of the Study:

The internship program is very much conducive for the internee students on account of
achieving practical experience, which leads to build up their career and ambition. The
program intends to integrate the information about the performances of Chittagong Stock
Exchange and the price behavior of the listed company. It is expected that the integration
of knowledge in theories and practices will enable us to become effective. The Program
helps us to acquire the organizational behavioral patterns necessary in discharging
responsibility as an executive. Through this program, we can gather practical knowledge
on the systems, procedures and techniques used in performing different jobs.

A student after completion of his MBA examination, he is to complete internship

program. During the internship program, the students get an opportunity to gather
experiences as on test before involving themselves in any profession. Moreover by dint of

1
internship program we are getting chance to know the policy and strategy adopted by
executives and top level management. At last it can say that the internship program gives
the MBA syllabus more maturity.

1.3 Objectives of the Study:

The objectives of the study are:

1. To know the information about the Stock Market of Bangladesh.
2. To study the activities & performance of stock market (CSE) . .
3. To know the problems faced by stock market and to suggest remedial
4. To study the price behavior NCCBL in the stock market.
5. To know the reasons for increasing or decreasing share prices of NCCBL.

1.4 Methodology of the Study:

The report has been prepared on the basis of the experience gained during the period of
the internship. To prepare the report of internship, I have collect all kinds if related data
from the primary and secondary data.

Primary data has been collected from interview with SEC members & brokerage firm.
The main source of secondary data has been annual report, annual statements, various
books, articles related with the capital market, financial papers, Internet, different
publication.
I have selected National credit & commerce bank LTD. (NCCBL) as Sample Company
for my study purpose i.e. listed in CSE & DSE. I will highlight the behavior of CSE with
respect to NCCBL. The data collected from different sources will be analyzed manually
by using financial, statistical and other tools.

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1.5 Scope of the Study

Chittagong stock exchange provides various scope for the internee students to know

different areas of the stock exchange, its managing procedures, working systems and
environments which are very helpful to know & to increase our knowledge & to get more
information and data regarding the topic "Stock Market information and market Reaction
The information section of Chittagong stock exchange is very rich that's why I was easy
to collect the required books, magazines, periodicals, journals, brochures, portfolio and
the Internet facilities.

1.6 Limitations of the study

The collected data and information have been tabulated, processed and analyzed
carefully and report has been prepared in present to make the study more
informative and useful. Despite my sincerest endeavor in preparing a perfect
report some of the limitation is inescapable. They are as follows:

1. A self-finance study.
2. Study was confined to CSE.
3. Primary and secondary data were not available in organized form.
4. Due to short time, I could not collect enough necessary data about the
study to prepare the report.

3
In spite of the limitation I had tried with all of my efforts to know and find out the
response pattern of the subjects and consultation of relevant record and document. Data
have reached a fairly acceptable degree of accuracy.

Chapter-2
Brief Discussion of Stock Market
&
Brief Overview of CSE

4
2.1 Introduction
Stock market is an essential part of capital market. The economy of our country largely
depends on a strong capital market. Contribution of any stock exchange generally leads to
economic growth by increasing the funds to finance industry and other enterprise.
Stock exchange is an independent company formed by shareholders members. It can take
various decisions. But decision is taken by executive body. The objectives of stock
exchange are to provide a market place along with facilities for together the buyers and
sellers of securities promote just and equitable principles of trade protect the interest of
the investors.
We can divide market in two sides: Money market & Capital market. These market
are also divide in two sides- which are shown below:

Financial Market

Money Market Capital Market

Securities segment of capital market Non-securities segment of capital

market

Primary Market Secondary Market

5
Organized Secondary Unorganized secondary market
market (CSE, DSE) (over the counter market)
2.2 Securities Market: A securities market is a mechanism for bringing
together buyers & sellers of a particular type security or financial asset. Securities can be
categorized into
four broad groups:

Bond: In Bangladesh, debenture market is quite tiny compared to the equity and
mutual fund securities. Only 8 debentures from 8 companies under three business
conglomerates are now in the market. Most of the debentures are illiquid and are
traded at undervalue. Trading of the government Treasury bond has started in the
bourses from 01 January 2005 that is expected to open a new dimension for the
capital market.

Common Stock: The countrys capital market is predominantly on equity market.

Most of the securities are equity shares (98%).
Derivative Securities: In Bangladesh, there is no derivative or future market.
Mutual fund: In 1977 the investment corporation of Bangladesh (ICB), first
introduced the institutional investment in Bangladesh with an open-end mutual fund. In
past 25 years, it has launched 8 close-ends and 1 open-end mutual fund. Bangladesh
Shilpa Rin Sangstha (BSRS), another state-owned development financing agency, came
out in 1997 as the second mutual fund operator in the country with a small close-end
mutual fund. AIMS of Bangladesh limited, the first SEC approved asset management
company in Bangladesh, emerged as the only investment manager to deal with mutual
funds. It launched the first and only mutual fund under private intuitive, the AIMS first
guaranteed mutual fund, in 2000.It has also launched its second mutual fund, Grameen
mutual fund one.

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2.3 Stock Exchange and its Role: It is an important constituent of
stock market. It provides considerable assistance to enterprise, as well as to the
government, semi government and local authorities in the matter of raising capital for
development.

The role of a well-organized stock exchange may be summed up in the upcoming words.
In the first place, it is only an organized securities market, which can provide sufficient
marketability and price continuity for shares so necessary for the needs of investors.
Secondly, it is only such a market that can provide a reasonable measure of safety and
fair dealing in the buying and selling of securities.
Thirdly, through the interplay of demand for and supply of securities, a properly
organized stock exchange assists in a reasonably correct evaluation of securities in terms
of their real worth.
Lastly, through such evaluation of securities, the stock exchange helps in the orderly
flow of distribution of savings as between different types of competitive investments.

2.4 Evolution of Stock Market: The capital market of Bangladesh owes

its origin to East Pakistan Stock Exchange Association Limited set up in 1954. The
association was later converted into Dhaka Stock Exchange in which formal trading was
started in 1956. There was no trading in the immediate post-liberation years as the
economic policies of the country during those yeas had a strong orientation towards
central planning. Trading was resumed in 1976 with the shift of development strategy in
favor of a greater role of the private sector. DSE has remained in continuous operation
since then. Chittagong Stock Exchange (CSE) was set up in 1995.

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2.5 Operational Procedures of Stock Market:

Some secondary equity markets are auction markets, involving an auction (bidding)
process in a specific physical location. Investors are represented by broker, intermediaries
who represent both buyer and sellers and attempt to obtain the best price possible for
either party in a transaction. There are two fully equipped stock exchanges, where
adequate number of brokers and dealers take active and adequate part. Some parties are
involved in capital market transaction. These parties are: stock exchange,
Brokers/Dealers, Buyers/Sellers, CDBL .The automation of transactions has been
accelerated through central depository system with the establishment of Central
Depository of Bangladesh Limited (CDBL). 78 securities have already been
dematerialized with the CDBL. Rules enacted provide that all new issues must have their
Scripps dematerialized in full.

2.6 Buying in the Primary Market:

In order to buy shares issued by a company in the primary market, you will have to fill

out a special form, which is obtained from the brokers, the issuing company, or any

branch of a commercial bank involved in the particular issue of shares. In the case of the

issue of new shares, which have a high demand, it is possible that the amount of money

the company is seeking from the issue would be found or subscribed fully, before the

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closing date. Therefore, it is usually advisable to apply for shares in a primary issue

within the stipulated times of the prospectus

2.7 Historical Background of the CSE

The Chittagong Stock Exchange (CSE) is a nonprofit making organization. It was
incorporated on 1st April 1995 as a limited company by guarantee. After six month, on
10th October 1995 floor trading was started with open cry- out auction system. In the
backdrop of a strong need to institute a dynamic automated and transparent stock
exchange in the country, seventy reputed business personalities under the leadership of
Mr. Amir Khosru Mahmud Chowdhury MP, the founder president established this bourse
in the commercial capital Chittagong. Only 30 securities were listed on the first day trade
when market capitalization stood at US$ 0.2 Billion. Now CSE is a completely
automated exchange with screen based trading facility on countrywide communication
network.
The Chittagong stock exchange will create an effective, efficient and transparent market
of international standard to save and invest in Bangladesh in order to facilitate the
entrepreneurs to raise capital and accelerate industrial growth for overall benefit of the
economy.

2.8 Mission of CSE

The Chittagong Stock Exchange believes that a dynamic, automated, transparent stock
exchange is needed in Bangladesh. It works towards an effective, efficient
and transparent market of international standard to serve and invest in Bangladesh in
order to facilitate the competent entrepreneurs to raise capital and accelerate
industrial growth for overall benefit of the economy and keep pace with the global
advancements.

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2.9 Objectives of Chittagong Stock Exchange:

The Stock Exchange works with the following objectives:

To develop a strong platform for entrepreneurs to raise their capital.
To provide an investment opportunity for small and large investors.
To develop a transparent market thereby ensuring investors interest.
To provide a fully automated trading system with most modern amenities to
ensure: quick, easy, accurate transactions and easily accessible to all.
To attract non-resident Bangladeshis to invest in Bangladesh.
To attract foreign institutional investors to invest in Bangladesh.
To collect, preserve and disseminate data and information on stock exchange.
To develop a professional service culture through mandatory corporate
membership
To develop a research cell for analyzing status of the market and economy.

2.10 Functions of Stock Exchange:

Chittagong Stock

Exchange

Each Stock Exchange:

establishes listing requirements
approves, suspends or removes listing privileges of companies
monitors listed companies in compliance with legal regulatory provisions

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 permits dual listing.

2.11 Regulation of Stock Market:

INDEX

Ordinance:

Securities and Exchange Ordinance, 1969

Securities and Exchange Rules, 1987

Credit Rating Companies Rules, 1996

Public Issue Rules, 1998

Rights Issue Rules, 1998

Margin Rules, 1999

Securities and Exchange Commission (Issue of Capital) Rules, 2001

Securities and Exchange Commission (Over the Counter) Rules, 2001

Notifications and Orders Issued under Securities and Exchange Ordinance, 1969

Securities and Exchange Commission Act:

1. Securities and exchange commission Act, 1993

2. Securities and exchange commission rules, 1994

3. Securities and exchange commission (appeal) regulation, 1995

4. Securities and exchange commission (merchant banker & portfolio

manager) rules, 1996

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 5. Securities and Exchange Commission (mutual fund) rules, 2001.

Depository Act:
o Depository act, 1999
o Depository regulation, 2000
o Depository regulation, 2002.

Chapter-3

Information, Performance
&
Roles & contributions of Stock Market

12
3.1 A Rationale of the Study:
Our study is designed to justify the behavior of stock market with respect to some factor.
The various factors are: trading volume, EPS, dividend, ROE, ROI, dividend yield,
inflation rate. If earning per share increases then share price will be increase and
otherwise vice-versa. If stock markets behave positively then it create benefit for the
economy. If stock markets behave irrational way then it does not create benefit for the
economy. The blue chips companies are attracted by investors and this company can
contribute large proportion in national GDP. Bangladesh traditionally known as an agro-
based economy as manufacturing industries have a low share in GDP. We need
substantial boost in the industrial sector to reach an overall growth rate comparable to
other emerging economies in the region.

3.2 The Condition of Our Economy in last 10 years:

After devastating flood of 1998-1999, govt. undertook effective rehabilitation
programmed to boost the economic activities of the country, which resulted in economic
stability for the last few years but economic activities were slow down during the fiscal
year 2000-2001.During the fiscal year 2002-2003, the govt. has taken some time-befitting
reform programmed covering both macro & micro economic levels. To encourage foreign
direct investment & also to bring discipline in banking sector side-by-side total economy,
a number of new laws have been enacted and existing laws have been suitably amended
to meet the demand of the day. Among which include some of the following: Money
laundering prevention act, Bangladesh Bank (Amendment) act 2003, Money loan court
act 2003, etc. In 2004, growth rate in agricultural sector declined 2.7% while industrial

13
sector witnessed 7.7% growth. Remittances from expatriate Bangladeshis increased by
9.7% and foreign exchange reserve increased by 235 million USD at the end of financial
year. After 2005 the trend of G.D.P is increasing up to the mark. Moreover due to
different fiscal policies taken by Government fiscal income increasing day by day.
In 2009-2010 Government takes necessary steps which inspired people to pay income
tax, industry tax, other tax.
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
RealG.D.P 5.2% 4.40% 5.30% 6.30% 5.40% 6.63 6.43 6.19 5.74 5.83
% % % % %
3.3 Contribution of Capital Market in Gross Domestic
Product:

The potential contribution of capital market in financing development is yet to be realized

in Bangladesh. This is evidenced by the fact that market capitalization as a proportion of

GDP is of the order of six percent of GDP. In contrast, the relevant orders of magnitude in

India, Pakistan, and Sri Lanka are respectively 47%, 20%, and 15%. Given the size of

population of Bangladesh and steady growth of its GDP exceeding five percent over the

past one decade, considerable unrealized opportunities exist for utilizing the capital

market as a vehicle for raising long-term investment finance.

3.4Market Capitalization to GDP of CSE:

Table-3.7: Market Capitalization to GDP

Year M. Capitalization to GDP % index Marginal growth rate
(%)

2002 2.15
100

14
 2003 2.80
130.2326 30.23256
2004 6.07
282.3256 116.7857
2005 5.61
260.9302 -7.57825
2006 6.44
299.5349 14.79501
Source: www.csebd.com

3.5 Performance of stock market (CSE):

Now we see the market condition of November-2006 at a glance.

Schedule Company Trading

Change Change
Index (+/-)
Change % (+/-) %
Schedule 212 (+/-) 2.00
% (1)0.95
Trading day
CSE general share price index:
Securities 21
(a) 3683.72 50.87 1.40
Total paid up 6873.55 121.47 1.80 205.45
Maximum (2) Total 8.25 3.86
capital
(b) (in
3456.49 - -
crore) transacted amount
Minimum
Closing 3683.72 25837.87
- (236.95)
- (in0.91
crore)
Total market 9.78 2.79 22.17
index
capitalization
CSE-30 price index: (3) Daily average
(a)
(in crore) 3254.05 11.45 0.36 transacted amount
Maximum 37255.88 19414.93 108.83
(b) 3000.62 - - (4) Total
Minimum transacted share
Closing 3254.05 - -
(000)
index
1774.09 724.68 69.06
(5) Daily average
Source:CSE Bazaar transacted share
porikroma (000)
(6) No of 153
transacted
company where:
(a) Price 39
increased
15 (b) Price 106
decreased
Price 08
Unchangeable
 Performance of stock market (2007):
Now we see the market condition of December-2007 at a glance.

Schedule Company Trading

Change Change
Index (+/-)
Change % (+/-) %
Schedule 227 (+/-) -----% (1) Trading
------ day
CSE general share price index:
Securities 16
(a) 7689.1309 47.81 0.63
Total paid up 8884.59 7.75 0.09 298.13
Maximum (2) Total (337.05) (53.06)
capital
(b) (in
7317.2598 - -
crore) transacted
Minimum
61247.92
Closing 7657.0590 - 284.63 0.47(in crore)
- amount
Total market
index 18.63 (13.13) (41.33)
capitalization (3) Daily average
(in crore) transacted
Source:CSE Bazaar amount
23783.07 (33109.52) (58.20)
porikroma
(4) Total
transacted share
(000)
1486.44 (1358.19) (47.75)
(5) Daily average
transacted share
(000)
(6) No of 177
transacted
company where:
(a) Price 81
increased
Performance of (b) Price 90
stock market decreased
Price 06
(2008) Unchangeable

Now we see the market condition of November-2008 at a glance.

Schedule Company Change
(+/-) %
Schedule 238 ----- ------
Securities
Total paid up 11960.53 (96.17) (0.80)
capital (in
crore) 16
70976.38 (6439.97) (8.32)
Total market
capitalization
(in crore)
 Source:CSE Bazaar porikroma Trading Change
(+/-) %
(1) Trading
day 21
753.01
(2) Total (457.96) (37.82)
transacted
amount (in
crore)
35.86 (27.88) (43.74)
(3) Daily
average
transacted
amount
76352.21 (47708.27) (38.46)
(4) Total
transacted
share (000)
3635.82 (2893.68) (88.32)
Index Change
(+/-) %
(5) Daily
CSE general share price index: average
(a) 8390.4117 753.15 8.99 transacted
Maximum share (000)
(b) 7627.4361 - - (6) No of 195
Minimum transacted
Closing .- - - company
index where:
CSE-30 price index: (a) Price 29
(a) 7453.4774 665.45 8.97
increased
Maximum
(b) 6755.0003 - - (b) Price 158
Minimum decreased
Closing - - - Price 08
index Unchangeable

Performance of stock market (2009):

Now we see the market condition of December-2009 at a glance.

17
Schedule Company Trading
Change Change
(+/-) % (+/-) %
Schedule 217 ----- (1) Trading
------
Securities day 20
Total paid up 15512.49 54.05 0.35
capital (in
1321.69
crore) (2) Total (201.63) (13.24)
transacted
147080.71 3734.90 2.61
Total market amount (in
capitalization crore)
(in crore) 66.8 (10.09) (13.24)
Source:CSE Bazaar (3) Daily
porikroma average
transacted
amount
Index Change 78793.62 (21205.24) (21.21)
(+/-) %
CSE general share price index:
(4) Total
(a) 13181.3755 412.87 transacted
3.23
Maximum share (000)
(b) 12536.6188 - - 3939.68 (1060.26) (21.21)
Minimum (5) Daily
Closing 13181.3755 - average
-
index transacted
CSE-30 price index: share (000)
(a) 10306.8659 286.50 (6)2.86
No of 200
Maximum transacted
(b) 9786.4589 - -
company
Minimum
where:
Closing 10306.8659 - -
index (a) Price 108
increased
(b) Price 92
decreased
Price -
Unchangeable
Performance of
stock market (2010):
Now we see the market condition of October-2010 at a glance.

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Schedule Company Change
Index Change
(+/-) (+/-)% % Trading Change
Schedule CSE general 222 -----
share price index: ------ (+/-) %
Securities
(a) 22743.8551 1943.08 9.37 (1) Trading
Total paid up
Maximum 21153.44 (142.00) (0.67) 20
capital
(b) (in 21089.1345 - - day
crore)
Minimum 4251.24
284473.63
Closing 13181.3755 - (463.39) (0.16)
- (2) Total 1480.87 53.45
Total
index market
CSE-30 price index: transacted
capitalization
(a) 18597.5409 21994.66 12.01 amount (in
(in crore)
Maximum
(b) 16799.0573 - - crore)
Minimum 212.56 58.65 38.11
Closing 18597.5409 - - (3) Daily
index
Source:CSE Bazaar porikroma average
transacted
amount
273775.65 81390.31 42.31
(4) Total
transacted
share (000)
13688.78 30000.271 28.08
(5) Daily
average
transacted
share (000)
(6) No of 210
transacted
3.6 Relationship Between company
Schedule Company & Year. where:
(a) Price 136
Now we can draw a relationship between increased
Schedule Company & year. (b) Price 71
decreased
Price 03
Year Unchangeabl Schedule company
Year Schedule company
2006e 212(Nov)
2001 177
2002 185 2007 227(Dec)
2003 195 2008 238(Nov)
2004 199 2009 217(Dec)
2005 210 2010 222(Oct)

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Comment: From this table we see that number of schedule company increases with
respect to year.

Relationship between total transaction amount & year:

Year Total transacted amount Year Total transacted amount

2001 72.74 crore 2006 205.45 crore
2002 41.04 2007 298.13
2003 162.75 2008 753.01
2004 215.98 2009 1321.69
2005 74.34 2010 4251.24
Comment: From this data we find that in 2010 total transaction in amount is the highest.
And in 2002 total transaction is the lowest.

Relationship between Total transacted share (000) & year

:

Year Total transacted. share Year Total transacted. share

2001 36368.72 2006 37255.88
2002 15484.18 2007 23783.07
2003 56514.63 2008 76352.21
2004 34775.86 2009 78793.62
2005 17643.57 2010 273775.65
Comment: From this data we find that in2010 total transaction in share is highest. And in
2002 total transaction in share is lowest..Source:CSE official website

3.7 Some Current Information of CSE

The regional efficiency of transaction in CSE (October 2010)

20
Transaction According to Category (October 2010)

Source:CSE Bazaar Porikroma

3.8 Identification of Problems & Remedial Measures:

Problems of stock market:

21
At the early stages of development in most countries, banking sector plays the leading
role in intermediating savings into investment. However, it is generally acknowledged
that excessive reliance on the banking system is serious risks for financial sector. It is,
therefore, an imperative that attention should be paid to the development of capital
market as an alternative channel for intermediation function. Many markets, smaller than
Bangladesh is displayed in the world media and attracts international investors, whereas,
ups and downs of Bangladesh stock market is not news at all in the world forums. The
problems of stock market are discussed below:
Bangladesh capital market is not fully equipped. We only have equity share and a
nominal presence of corporate bond. The Bangladesh security market is still very small.
The market rose abruptly during the end 1996 and fell abruptly and continues the
downward trend in terms of both volumes of transactions and price index.
i.The real problem lies with physical transfer of shares. After automation, Dhaka
and Sylhet are connected with Chittagong stock exchange and trading occurs at
the same time. As a result, shares and securities are required to be sent/to take
delivery from that region for settlement. Its really a cumbersome work. Because,
at the time of sending security, there attached 117 form along with that security.
The share/security are sent through courier services. Though there is an insurance
policy against the risks of transfer of shares, nevertheless, for avoiding risks, the
clearing and settlement department takes some actions. When they intend to
transfer share to any regional office, they separate the 117 form and securities
into two parts and putting them in two separate packets, they sent the same
through two separate courier services. This is surely a time consuming and
difficult problem.

ii. At present, all share price index are used at the Chittagong stock exchange. But
this is not a proper methodology.
iii. As all the systems are going on manually, hence system department have to work
much. In addition, stock exchange has render services to various broker
workstations to solve the technical problems. As a result, more personnel are

22
 required for system department to reduce the burden of work. But, they are not
getting personnel as per their requirement.
iv. People who invest or are involved in capital market activities have not sufficient
knowledge about the market and the product.
v. The environment around the capital market is full of rumors of scams and wrong
dealings. Brokers are accused of manipulating prices; companies are accused of
miss-pricing their stocks and misrepresentation of performance
vi. A thin market having small market capitalization ratio and low level of liquidity
characterizes the stock market of Bangladesh.

For solving the problems of Chittagong Stock Exchange may

be taken into consideration:-

Introducing Central Depository System (CDS)

To solve the problem associated with physical transfer of Share, CDS should immediately
be introduced. It will ensure proper monitoring; eliminate forgery of share documents,
apart form giving the speed of doing business in the capital market. Without CDS the
automated system will remain under-utilized. To bring efficiency in the market,
particularly with ever-increasing trade volume and to derive maximum transparency,
CDS should be implemented as soon as possible.

Selective Index should be calculated

23
 To make appropriate the methodology of index, selective index should be
calculated instead of all share price index. This program should be run immediately to
find proper price index.

Appointment of Technical Expert:

More technical expert is to be appointed for system department to minimize the work
burden.

Fund Transfer:
Short term credit line for the investors should be provided by the broker, so that the
investors can buy shares without depositing fund. For this purpose investors be rated
particularly the institutional investors to determine Client's credit Worthiness.
Following things should also be taken into consideration

a) Interference of all kind should be avoided

b) Monitoring and Supervision cell of Regulatory Bodies should
work round the clock.
c) All operational decisions must be allowed by Chittagong Stock
Exchange Boards.

24
 Chapter-4

Price Behavior
Of
National Credit & Commerce Bank Ltd.

25
4.1 A Breif Overview of The National Credit and
Commerce Bank Ltd.:
National credit and commerce bank Ltd, formerly the National Credit limited, was
primarily established as an Investment company in November 1985 to further the
business activity and industrialization in Bangladesh to create new employment
opportunities, by acting as a catalyst for the attraction of new entrepreneurs, capital, skills
and technology. It has been converted to a scheduled commercial bank in May 1993.The
purpose of the bank is to become the bank of choice in the communities that they serve.
They accomplish this by offering to their customers the financial services they expect. In
accomplishing this mission, the bank has now been free from all the natures of a problem
bank through fulfilling all the conditions set by the central bank. We proudly say:
NCCBL is profit making and problem-free. NCCBL has offered 20 percent profit to its
shareholders in the 2000.

Philosophically, a bank is a financial institution, which accepts depositors money for

safekeeping and contracts with the depositors to lend this money at interest to individuals
who are in need of its use and who can give ample security that the loans will be paid.
From the profits made from lending money at interest the banker agrees to pay the
legitimate depositors a fixed sum of interest besides safeguarding the deposits.

NCC Bank - At Present

Having started its operations as a commercial bank in 1993, recovering from some
primary difficulties, NCCB Bank has now emerged as a major player in the financial
sector. The bank has been able to attain a commendable CAMEL rating and its
performance has been outstanding in terms of profitability for the year ended 2000.
Listed in both the Dhaka and Chittagong bourses since late 1999 with an IPO that raised
the paid-up capital of the bank to Tk.39 crore, the current price levels of its shares and
turnover in trading is evidence of its high rating among investors.

26
Banks are the pillars of the financial system. Specially, in Bangladesh, the health of the
banking system is very vital because the capital market is little developed here. As the
banks are still the major sources of credit and exercise great influence on the financial
system, it is extremely important that the countrys banking system should be in good
health in the interest of investment activities, meeting the needs of all kinds of finance
and related matters.
Over the years, NCCBL has built itself as one of the pillars of Bangladeshs financial
sector and is playing a pivotal role in extending the role of the private sector of the
economy. The bank has a strong branch network nation wide with 29 branches and 1
booth to effectively address the needs of its cross- segment customer base.
3.2 Capital market reaction of firm oriented announcements:
We know there is a dramatic increase in volume in the announcement week (week 0). The
increased trading volume activity (TVA) at the time of announcement can be finding by
using the following formula:

Number of shares of firm i traded in time t

TVAi,t =
Number of shares of firm i outstanding in time t
Hare another issue is important, which is security return variability (SRV). This measure
examines whether there is increased variability in security returns at the time the release
is announced. SRV can be obtained by using the following formula:

Ui,t2
SRVi,t =

V (Ui,t )
Where
Ui,t = the abnormal return of security i in time t.
V (Ui,t ) = variance of abnormal returns in a non announcement period.

27
4.2 An Analysis of Price Behavior of Stock
Market:
As my selected company is National credit and commerce bank Ltd. (NCCBL), I am
choosing this company as sample for my calculation purpose. I have highlighted the price
behavior of NCCBL with respect to different factors. For this purpose, I will use different
statistical measure. One of the important measures is co-efficient of variation. It is a
standardized measure of the risk and calculated as the standard deviation divided by the
average return.

The price behavior of NCCBL in the year 2001

Year-2001

Ending Market (Y-) (Y-)2

Price (Y)
158.75 (39.1136364) 1529.876552
163.75 (34.1136364) 1163.740188
158.00 (39.8636364) 1589.109507
173.75 (24.1136364) 581.4674604
N/A -------- ---------
228.25 30.3863636 923.3310928
211.50 13.6363636 185.9504122
203.00 5.1363636 26.38223103
210.75 12.8863636 166.0583668
210.25 12.3863636 153.4220032
213.75 15.8863636 252.3765484
244.75 46.8863636 2198.331092
Y=2176.5 (Y-)=0 (Y-)2=8770.045454

28
We Know,
Y
=
N
2176.5
=

11

=197.8636364
(Y-)2
=

N-1

= 29.61426253

And co-efficient of variation (CV) is,

=

=14.97%

source: Data collected from CSEweb site

29
The price Behavior of NCCBL in the year 2002
Year-2002

Ending Market (Y- ) (Y-)2

Price (Y)
232.00 17.9791667 323.2504352
254.50 40.4791667 1638.562937
286.50 72.4791667 5253.229606
224.00 9.9791667 99.58376803
215.00 0.9791667 0.958767426
217.00 2.9791667 8.875434226
212.00 (2.0208333) 4.083767226
192.50 (21.5208333) 463.1462659
174.75 (39.2708333) 1542.198348
170.50 (43.5208333) 1894.062931
185.25 (28.7708333) 827.7608488
204.25 (9.7708333) 95.46918338
=2568.25 (Y- )=0 (Y-)2
=12151.18229

We Know,
Y
=
N
2568.25
=

12
=214.0208333
(Y-)2
=

30
 N-1

= 33.23631953
And co-efficient of variation (CV) is,

=

= 15.53%

=15.53%
source: Data collected from CSE web site

The Price Behavior of NCCBL in the year 2003

Year-2003

Ending (Y-) (Y-)2

Market Price
(Y)
188.50 10.1875 103.7851563
182.50 4.1875 17.53515625
178.50 0.1875 0.03515625
197.50 19.1875 368.1601563
191.25 12.9375 167.3789063
193.25 14.9375 223.1289063
164.25 (14.0625) 197.7539063
148.25 (30.0625) 903.7539063
148.50 (29.8125) 888.7851563
160.75 (17.5625) 308.4414063
196.50 18.1875 330.7851563
190.00 11.6875 136.5976563
Y= 2139.75 (Y-)=0 (Y-)2=3646.140626

= Y/N
2139.75
=

12
=178.3125
(Y-)2
=

31
 N-1

= 18.20624425

And co-efficient of variation (CV) is,

=

= 10.21%.

source:Data collected from CSE web site

The Price Behavior of NCCBL in the year 2004

Year-2004
Ending Market (Y-) (Y-)2
Price (Y)
185.00 (102.375) 10480.64063
180.00 (107.375) 11529.39063
174.00 (113.375) 12853.89063
195.00 (92.375) 8533.140625
237.25 (50.125) 2512.515625
279.25 (8.125) 66.015625
205.75 (81.625) 6662.640625
293.00 5.625 31.640625
341.25 53.875 2902.515625
367.50 80.125 6420.015625
450.25 162.875 26528.26563
540.25 252.875 63945.76563
Y=3448.5 (Y-)=0 (Y-)2 =152466.4375

32
We Know,
=Y/N

3448.5
=

12
=287.375
(Y-)2
=

N-1

= 117.7309867

And co-efficient of variation (CV) is,

=

= 40.97%

source: Data collected from CSE web site

The Price Behavior of NCCBL in the year 2005

Year-2005

33
Ending (Y-)
Market (Y-)2
Price (Y)

463.25 72.4583333 5250.210065

530.50 139.7083333 19518.41839

697.50 306.7083333 94070.00172

442.00 51.2083333 2622.293399

314.75 (76.0416667) 5782.335075

315.50 (75.2916667) 5668.835074

251.00 (139.7916667) 19541.71008

328.00 (62.7916667) 3942.793407

351.75 (39.0416667) 1524.251739

341.00 (49.7916667) 2479.210073

340.75 (50.0416667) 2504.168406

313.50 (77.2916667) 5974.001741

Y=4689.5 (Y-)= 0 (Y-)2 =168878.2292
We Know,
= Y / N
= 4689.5 / 12

=390.7916667
(Y-)2
= = 123.9054732

N-1
And co-efficient of variation (CV) is,
= /

= 31.70 % source: Data collected from CSEweb site

The Price Behavior of NCCBL in the year 2006

34
Year-2006
Ending Market (Y-) (Y-)2
Price (Y)
290.75 23.67 560.2689
273.50 6.42 41.2164
279.25 12.17 148.1089
269.00 1.92 3.6864
233.00 (34.08) 1161.4464
230.50 (36.58) 1338.0964
236.25 (30.83) 950.4889
282.50 15.42 237.7764
278.75 11.67 136.1889
267.00 (0.08) 0.0064
274.25 7.17 51.4089
290.25 23.17 536.8489
Y=3205.00 (Y-)=0 (Y-)2 =5165.5418
We Know,

= Y / N

= 3205.00 / 12

= 267.0833
(Y-)2
=

N-1
= 21.67
And co-efficient of variation (CV) is,
= /
= 8.11%

source: Data collected from CSE website

35
The Price Behavior of NCCBL in the year 2007

Year-2007
Ending Market (Y-) (Y-)2
Price (Y)
319.00 (15.6875) 246.0977
293.50 (41.1875) 1696.4102
293.75 (40.9375) 1675.8789
252.00 (82.6875) 6837.2227
273.75 (60.9375) 3713.3789
235.75 (98.9375) 9788.6289
360.50 25.8125 666.2852
359.75 25.0625 628.1289
340.00 5.3125 28.2227
423.25 88.5625 7843.3164
421.25 86.5625 7493.0664
443.75 109.0625 11894.62891
Y=4016.25 (Y-)=0 (Y-)2 =52511.26562
We Know,

= Y / N

= 4016.25/12

=334.6875
(Y-)2
=

N-1
= 69.09
And co-efficient of variation (CV) is,

= /

= 20.64%

Source: Data collected from CSE website

36
The Price Behavior of NCCBL in the year 2008

Year-2008
Ending Market (Y-) (Y-)2
Price (Y)
443.50 45.1042 2034.3889
448.50 50.1042 2510.4309
463.25 64.8542 4206.0673
364.25 (34.1458) 1165.9357
369.25 (2.1458) 4.6045
435.75 37.3542 1395.3363
401.00 2.6042 6.7819
399.50 1.1042 1.2193
386.75 (11.6458) 135.6247
343.00 (55.3958) 3068.6947
325.75 (72.6458) 5277.4123
373.25 (25.1458) 632.3126
Y=4780.75 (Y-)=0 (Y-)2 =20438.80729
We Know,
= Y / N

= 4780.75 / 12

= 398.3958
(Y-)2
=

N-1
= 43.1053

And co-efficient of variation (CV) is,

= /

37
= 10.82%

source: Data collected from CSE web site

The Price Behavior of NCCBL in the year 2009

Year-2009
Ending Market (Y-) (Y-)2
Price (Y)
331.50 (35.96) 1293.1216
325.50 (41.96) 1760.6416
313.75 (53.71) 2884.7641
372.75 5.29 27.9841
258.00 (109.46) 11981.4916
315.75 (51.71) 2673.9241
340.50 (26.96) 726.8416
354.50 (12.96) 167.9616
355.25 (12.21) 149.0841
265.00 (2.46) 6.0516
493.50 126.04 15886.0816
583.50 216.04 46673.2816
Y=4409.50 (Y-)=0 (Y-)2 =84231.2292
We Know,

= Y / N

= 4409.50 / 12

=367.46
(Y-)2
=

N-1
= 87.51
And co-efficient of variation (CV) is,

= /

38
= 23.82%

Source: Data collected from CSE web site

The Price Behavior of NCCBL in the year 2010

Year-2010
Ending Market (Y-) (Y-)2
Price (Y)
641.50 120.20 14448.04
602.25 80.95 6552.9025
559.25 37.95 1440.2025
403.50 (117.80) 13876.84
453.00 (68.30) 4664.89
470.25 (51.05) 2606.1025
429.50 (91.80) 8427.24
431.75 (89.55) 8019.2025
464.50 (56.80) 3226.24
574.25 52.95 2803.7025
704.50 183.20 33562.24
- - -
Y=5734.25 (Y-)=0 (Y-) =99627.6025
2

We Know,
= Y / N

=5734.25 / 11

=521.30
(Y-)2
=

N-1
= 99.82

And co-efficient of variation (CV) is,

39
 = /

= 19.15%

Source: Data collected from CSE web site

Comment: From this discussion we find the five years respective co-efficient of
variation i.e.
Year Co-efficient of variation
16....................................14.96 %
17....................................15.53 %
18....................................10.21 %
19....................................40.97 %
20....................................31.70 %
21....................................08.12 %
22....................................20.64 %
23....................................10.82 %
24....................................23.82 %
25....................................19.15 %

In the year 2004 the co-efficient of variation is highest. If coefficient of variation is more
the price variability is more. Because the price variability of year 2004 and the growth
rate of the share prices are the highest of all, as price increase from tk185 to 540tk.the
lowest variable year is 2006 as coefficient of variation is 08.12%.Because the variability
is lesser in this year.

40
 CHAPTER-5
Analysis of Price Behavior
with
Respect to Different Variables

41
5.1 Reaction of Trading Volume and Share Price with
Respect to Different Variable:

(2001 2005)

Variable Year
2001 2002 2003 2004 2005

Share Price 244.75 204.25 190.00 540.25 313.50

Price Change 14.50 10.26 (3.31) 19.99 (8.00)

Trading 405780 146000 79530 131007 120725
volume
(Share)

EPS 24.14 44.47 30.99 46.91 36.11

Dividend

Cash 18.00 ----- 10.00 ------- 10.00

(%)

Bonus 12.00 15.00 10.00 30.00 10.00

(%)

DPS 30.00 15.00 20.00 30.00 20.00

ROE (%) 28.71 20.59 16.10 20.83 18.93

42
ROI (%) N/A 7.83% 12.04% 9.24% 8.00%

GDP 5.20% 4.40% 5.30% 6.30% 5.40%

No of 29 31 32 36 41
branches

Source: www.nccblbd.com

(2006 - 2010)
Variable Year
2006 2007 2008 2009 2010
Share Price 274.25 243.75 325.75 583.50 574.25

Price Change 2.72 5.34 (5.03) 18.24 23.63

Trading volume 62118 100303 97541 363230 1672441

(Share)

EPS 36.11 39.88 50.09 50.20 75.26

Dividend

Cash 3.63 2.25 .

(%)
Bonus 10.00 12.50 30.00 30.00 47.00
(%)
DPS 13.63 14.75 30 30 47

ROE (%) 20.33 24.35 26.34 25.55 26.75

ROI (%) 8.33 % 7.23% 09.29% 8.40% 8.30%

GDP 6.63 % 6.43 % 6.19 % 5.74 % 5.83 %

No of 42 47 53 64 79
branches

Source: www.nccblbd.com
43
The relationship between share price & different variables are stated below: First we
draw a relationship between share price and trading volume.
(2001-2005)

The diagram and the pie shows relationship between share prices.volume in respect to
year. Here we see the price2004 and trading volume of share year 2001 is the highest of
all.The share volume of year 2001 is 405780.
(2006 2010)

44
Here in the diagram vertical axis shows the share price and horizontal axis shows the
trading volume in respect to year. we see the price2009 and trading volume of share year
2010 is the highest of all. The share volume of year 2001 is 405780.

Source: Field work Documents.

5.2Relationship Between Share Price & Trading Volume
(2001 2005)

Comment(2001 -2005) : In 2001 share price is TK.244.75 and trading volume

(in share) is 4,05,780.So there is a high trading occurred in 2001.In 2004 share price is
540.25 but trading volume is lower. So in 2004 share price is highest but trading volume
is lower.
(2006 2010)

45
Comment(2006-2010): In 2009 share price is TK.583.50 and trading volume (in share) is
363230.So there is a high price occurred in 2009.In 2019 share price is 574.25 and
trading volume is 1672441. So in 2010 trading volume is in the highest.
Source:Field work Documents.

5.3 Price Changes with Respect to Years (2001 2005)

Price changes with respect to
years

25
20
15
price changes

10
5
0
-5
-10
2001 2002 2003 2004 2005

Series1 14.5 10.26 -3.31 19.99 -8

year

Comment (2001 2005) : From this graph we see that in 2003 & in 2005, share price
change is negative. And in 2004 share price change is highest of all. In 2004 rate of
change is19.99.

46
Price Changes with Respect to Years (2006 2010)

Price changes with respect to years

30

20
price changes

10

0
2006 2007 2008 2009 2010
-10
year

Comment(2006 2010) : From this graph we see that in 2008 share price change is
negative that means share price decreases in that year. And in 2010 share price change is
highest of all.
Source:Field work Documents.

5.4 Relationship Between Share Price and Price

Changes

(2001 2005)

47
Here through the presentation of data (price change and share prices) in the diagram we
find that where price change is positive, the trend of increasing price also positive. Here
we see that price change 19.99and increasing rate of price is tk540.30.
(2006-2010)

Here through the presentation of data (price change and share prices) in the diagram we
find that where price change is positive, the trend of increasing price also positive. Here
we see that price change 23.63and increasing rate of price is tk574.

5.5 Relationship between Share price & EPS

(2001 2005)

Comment; EPS and price of share has positive relation.If the price increases the EPS
also increases. Otherwise vice versa.

48
(2006 2010)

Comment: When share price increases then earning per share (EPS) increases and
otherwise vice versa.

Source:Field work Documents.

5.6 Relationship Between Dividend Per Share and Share

Price
(2001 2005)

There is a positive relationship between price and dividend per share .when highest DPS
given to the shareholder share prices increase vice versa.Here in the diagram we see that
when 30%DPS is given ,the share price reaches to the highest,

49
(2006 2010)

Comment: Dividend can be two kinds: stock and cash dividend. By the term stock
dividend we mean that a dividend paid in the form of additional shares of stock rather
than in cash. On average, the price of a companys stock rises shortly after it announces
stock dividend.
Source:Field work Documents.

5.7Relationship Between Share Price & ROE (%)

50
Field Work Documents.
Comment: By return on equity (ROE), we can measure companys profitability. The
ratio of net income to common equity measures the ROE. When net income available is
higher than it increases the share price.

5.8 Factors Affecting Pricing of Shares:

Share prices are affected by the economic, social, political, and industrial and company
related issues. Some of the factors are also responsible for affecting the share prices
-which are stated below:
1. Interest rate
2. Inflation
3. GDP growth
4. Energy Prices
5. Political Unrest
6. War/ terrorism
7. Regulatory changes.

5.9Reasons for Changes (increase/decrease) in Share Prices of

National Credit and Commerce Bank LTD.

Legal ways of increasing price:

i. The Government has taken some time befitting reform programmed
covering both macro and micro economic levels. A number of new laws have
been enacted & exiting laws have been suitably amended to meet the demand of
the day. Example: The paid-up capital of bank must be 100 crore ordered by
Central Bank.
ii. Money Laundering Prevention Act 2002, Bangladesh Bank
(Amendment) Act 2003, Introduction of floating exchange rate, relaxation of

51
 L/C margin etc also created scope for better growth by increasing scope for
business.
iii. Positive and progressive measures adopted by the Government during this
period. Example: Suppose one director invested in share TK.20, 00,000; he can
get loan up to 1 crore. If his directorship canceled by any other reasons, he can get
benefit by 80 lakh. Now govt. has taken remedial measures for such type of
crime. At present, the people who have more shares can apply for directorship.
iv. When company declares highest DPS,EPS through AGM.

Illegal ways of increasing price:

i. Activities of Syndicate a handful of broker members and issuers.
ii. Market is affected by the activities of market gambler like Bull curtail
which control the market condition..

5.10 Reasons for Decreasing Price:

When a company declares right share and bonus its price then decreases.
We can draw a example for this purpose:

Before right offer:

No of shares...........................................40,000

Price............................................................$30

Market capitalization.........................1200,000

Right share.............................................10,000

52
 Price...........................................................$25

Market capitalization...........................250,000

After right offer:

No of shares...........................................50,000

Market capitalization.........................1450,000

Market price................................................$29

Dilution.........................................................$1

I. Most of the time when companies are giving cash dividend in poor
amount then the prices of share decrease.
II. Disclosure of unregulated rumors and sensitive information.

5.11 SWOT Analysis:

Strength:
NCCBL is a company of A category that maintains AGM regularly.
It declares higher dividend and earning per share
Maintains higher share price and monthly changes in %.
The investors are interested to invest in this bank and earn higher profit.

Weakness
It is a problem free bank,inspite of all there may be some miscommunication
between company and the investors due to lack of use of modern technology.
Lack of public awareness about stock market in the country

53
Opportunities:
If the bank provides dividend in a stable rate, it can satisfy the investors.
Thus investor will increase, volume will increase and price will
automatically high.
The investors will invest that company where they get higher profit. If
NCCBL can maintain the growth rate of price; it will prove as a profitable
company to the investor for investment.

Threats:
Sudden fluctuation in share price from higher to lower can create
bad impression in the mind of the investor
Fund constraint in financing for modern technologies.
If the company gives right share every year, the number of share
will increase .Therefore; the supply of shares will be more than demand.

Chapter-6

54
 Findings, Recommendations &
Conclusion

6.1 Summery of Findings of the Study:

From our study and analysis of market information and stock prices of our selected
bank (2001-2010), we have got some important ideas which will add a new dimension in
the stock market decision CSE.
1. When companies are issuing right share then the prices of share increases.

2. When net income after tax of the companies increase, then there is a possibility
to increase price
3. When companies are giving stock dividend then the prices of share increase.

55
 4. Most of the time when companies are giving cash dividend in poor amount then
the prices of share decrease.

5. When companies are issuing right share then the prices of share decreases.

6. It is mandatory for the companies to inform the shareholders and CSE about
EPS, Cash dividend, bonus share, right share etc in perfect time. But some
companies try to hide information.
7. Some companies do not maintain secrecy about their shares price sensitive
information.
8. Sometimes prices of share are increased or decreased by the rumor.

9. Sometimes SEC, CSE take some experimental approach in the market. Which
are sometimes giving negative result.

6.2 Recommendations of the Study

1. Company should inform the shareholders about EPS, DPS,Bonus
regularly.
2. It should observe the market condition properly to avoid price fluctuation.
3. The company should maintain good communication with shareholders to
hold the trust of them.
4. CSE must have to be more effective and have to increase inquiry about the
companies about their price sensitivity.
5. CSE should investigate the companies records to find out whether the
companies are following rules of CSE.
6. CSE must use modified circuit breaker of prices of share according to the
market perspective.

56
 7. Necessary action should be taken by CSE against the companies which are
not maintaining regularity in publishing EPS, DPS, ROI and other records.
8. CSE should be more rigid in maintaining rules so that companies can not
disclose the secret information in the market.
9. CSE should take their decision after observing the market condition
properly.

6.3 Conclusion
In our study we have discussed the stock market, market condition and price behavior of
shares traded in the stock market. we have a little scope and time to study all the listed
companies of CSE. So we have selected one of them as the element of our study. By
studying the stock prices and trading volume of shares of NCCBL we have tried to
analyze the reasons for increasing and decreasing of prices of stock. The information that
we get will help CSE to control the stock market. Price behavior of the listed companies
has a great impact on market. . Recent records of CSE are the proof of it. But there are
some companies which are increasing prices without following the rules and regulations
of CSE. As a result prices of such companies reach to peak suddenly and again fall down

57
quickly. It is a great threat to share market.CSE should be more effective and careful in
controlling and regulating the market condition.

References
1. CSE Bazaar Porikroma-A monthly Magazine Published by CSE.

2. Bangladesh Capital Market A publication of Chittagong Stock Exchange

3. www.stockmarket.com

4. www.csebd.com- official web site of CSE.

5. Field Work Documents.

58
 7. Portfolio- A preview of capital market and National Economy

8. www.nccblbd.com.

59