Factor Affecting Stock Market Volatility

PREFACE

A project report on stock market is being prepared in attempts to interpret in-

depth study of volatility in Indian stock market. This report helps us to understand
various terminologies in stock market. This report gave me opportunity to have
complete idea about volatility in stock market. This gave me idea about technical
and fundamental analysis in stock market and how trading is being done in stock
market. This project report helps in following aspects,

•Build understanding of central ideas and theories of stock market.

•Develop familiarity with the analysis of stock market.

•Furnish institutional material relevant for understanding the environment in

which trading decisions are taken.

This project will guide to investors for an investment in stock market. This project
Deployed a lot time for collections of information from various sources. This
project will be very helpful to know volatility from January 2006 to December
2006 and reasons for such high volatility and would be able to take decisions for
investment in volatile stock market
 DECLERATION

I hereby declare that the dissertation “Factor Affecting Stock Market Volatility”
submitted for the MBA Degree at DAYANANDA SAGAR BUSINESS SCHOOL, is my
original work and the dissertation has not formed the basis for the award of any
degree, associate ship, fellowship or any other similar titles.

Place: Bangalore Signature of Students

Date:
 CERTIFICATE

This is to certify that the dissertation entitled “Factor Affecting Stock Market
Volatility” is there search work carried out by Miss Sapna D’SA student of PGDM,
at DAYANANDA SAGAR BUSINESS SCHOOL Studies during the year 2017 -2019, in
partial fulfillment of the requirements for the of the Degree of MBA and that the
dissertation has not formed the basis for the award previously of any degree,
diploma, associate ship, fellowship or any other similar title

It is certified that the work mentioned above is carried out under my guidance.

Date: Signature of the faulty guide

Place:
 Acknowledgement

Practical knowledge is required in every field. Only theoretical knowledge is not

important the practical knowledge is essential. In this type of project work
important to management student. In the training period there is vital
opportunity to study the practical approach

In the first place, we thank for given us their valuable guidance for
the project. Without their help it would have been impossible for us to complete
the project
Executive summery

Stock market is an avenue for growth of earnings. This project includes how
broking is being done in stock market. It involves stock market analysis such as
fluctuations in Sensex reasons for fluctuations in stock market, fluctuations in
stock market and reasons for the same. Stock market has been the best avenue
for investment in securities since last 10 years. Mostly future and option trading
was the worst trading in stock market in these sessions. I have covered various
sessions for analyses from April 2006 to March 2011.

In these sessions, stock market was most volatile so that I have covered various
analyses with most affected factors to the global market. I have made analysis of
Sensex which made of 30 Shares.

In this project, I have included most gainer period and most loser period with
reasons for the same. I also included comparison between Bond yields and
foreign investments by foreign investors
Chapter 1

Introduction to the project

Stock exchanges to some extent play an important role as indicators, reflecting

the performance of the country's economic state of health. Stock market is a
place where securities are bought and sold. It is exposed and are determined by
the demand and supply of stocks at a given time. Stockbrokers are the ones who
buy and sell securities on behalf of individuals and institutions for some
commission.

The Securities and Exchange Board of India (SEBI) is the authorized body, which
regulates the operations of stock exchanges, banks and other financial institutions
.The past performances in the capital markets especially the securities scam by
Harshad Mehta has led to tightening of the operations by SEBI. In addition the
international trading and investment exposure has made it imperative to better
operational efficiency. With the view to improve, discipline and bring greater
transparency in this sector, constant efforts are being made and to a certain
extent improvements have been made.

As the condition of capital markets are constantly improving, it has started

drawing attention of lot more people than before. On the career related aspects,
professionals have opportunities to choose from for a wide range of jobs available
in a number of organizations in this sector and one can expect to have good times
ahead of him
1.1INDIAN CAPITAL MARKET OVERVIEW

1.1.1 Evolution

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly
200 years ago. The earliest records of security dealings in India are meager and
obscure. The East India Company was the dominant institution in those days and
business in its loan securities used to be transacted towards the close of the
eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses
took place in Bombay. Though the trading list was broader in 1839, there were
only half a dozen brokers recognized by banks and merchants during 1840 and
1850. The 1850's witnessed a rapid development of commercial enterprise and
brokerage business attracted many men into the field and by 1860 the number of
brokers increased into 60. In 1860-61 the American Civil War broke out and
cotton supply from United States to Europe was stopped; thus, the 'Share Mania'
in India began. The number of brokers increased to about 200 to 250.

At the end of the American Civil War, the brokers who thrived out of Civil War in
1874,found a place in a street (now appropriately called as Dalal Street) where
they would conveniently assemble and transact business. In 1887, they formally
established in Bombay, the "Native Share and Stock Brokers' Association”, which
is alternatively known as “The Stock Exchange". In 1895, the Stock Exchange
acquired a premise in the same street and it was inaugurated in 1899. Thus, the
Stock Exchange at Bombay was consolidated.

The Indian stock market has been assigned an important place in financing the
Indian corporate sector. The principal functions of the stock markets are:

 enabling mobilizing resources for investment directly from the investors

 Providing liquidity for the investors and monitoring.
 Disciplining company

The two major stock exchanges in India are:-

 National Stock Exchange(NSE)
  Bombay Stock Exchange (BSE).

1.2 National Stock Exchange

With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On
the basis of their commendations of high powered Pherwani Committee.

The National Stock Exchange was incorporated in 1992 by Industrial Development

Bank of India, Industrial Credit and Investment Corporation of India, Industrial
Finance Corporation of India, all Insurance Corporations, selected commercial
banks and others.

The National Stock Exchange (NSE) is India's leading stock exchange covering
various cities and towns across the country. NSE was set up by leading institutions
to provide a modern, fully automated screen-based trading system with national
reach. The Exchange has brought about unparalleled transparency, speed &
efficiency, safety and market integrity. It has set up facilities that serve as a model
for the securities industry in terms of systems, practices, and procedures.

Trading at NSE can be classified under two broad categories:

 Wholesale debt market

 Capital market

Wholesale debt market operations are similar to money market operations -

institutions and corporate bodies enter into high value transactions in financial
instruments such as government securities, treasury bills, public sector unit
bonds, commercial paper, certificate of deposit, etc.

Capital market: A market where debtor equity securities are traded.

There are two kinds of players in NSE

 Trading members
 Participants

Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large
players like banks who take direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading

mechanism, which adopts the principle of an order-driven market. Trading
members can stay at their offices and execute the trading, since they are linked
through a communication network. The prices at which the buyer and seller are
willing to transact will appear on the screen. When the prices match the
transaction will be completed and a confirmation slip will be printed at the office
of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as
follows:

• NSE brings an integrated stock market trading network across the nation.
Investors can trade at the same price from anywhere in the country since inter-
market operations are streamlined coupled with the countrywide access to the
securities.

•Delays in communication, late payments and the malpractice’s prevailing in the

traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with
the support of total computerized network.

unless stock markets provide professionals service and foreign investors will not
be interested in capital market operations. And capital market being one of the
major sources of long-term finance for industrial projects, India cannot afford to
damage the capital market path. In this regard NSE gains vital importance in the
Indian capital market system
Thus, at present, there are totally twenty-one recognized stock exchanges in India
excluding over the Counter Exchange of India Limited (OTCEI) and the National
Stock Exchange of India Limited (NSEIL).

1.1.2 Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges is limited to listed securities of public limited

companies. They are broadly divided into two categories, namely, specified
securities (forward list) and non-specified securities (cash list). Equity shares of
dividend paying, growth-oriented companies with a paid-up capital of at least 50
million and a market capitalization of at least 100 million and having more than
20,000 shareholders are, normally, put in the specified group and the balance in
non-specified group.

Two types of transactions can be carried out on the Indian stock exchanges:

(a) Spot delivery transactions "for delivery and payment within the time or on the
date stipulated when entering into the contract which shall not be more than 14
days following the date of the contract”

(b) Forward transactions "delivery and payment can be extended by further

period of 14 days each so that the overall period does not exceed 90 days from
the date of the contract". The latter is permitted only in the case of specified
shares.

The brokers who carry over the outstanding pay carry over charges (cantango or
backwardation), which are usually determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell
securities for his clients on a commission basis and also can act as a trader or
dealer as a principal, buy and sell securities on his own account and risk, in
contrast with the practice prevailing on New York and London Stock Exchanges,
where a member can act as a jobber or a broker only. The nature of trading on
Indian Stock Exchanges are that of age old conventional style of face-to-face
trading with bids and offers being made by open outcry. However, there is a great
amount of effort to modernize the Indian stock exchanges in the very recent
times.

1.1.3 Over The Counter Exchange of India (OTCEI)

The traditional trading mechanism prevailed in the Indian stock markets gave way
to many functional inefficiencies, such as, absence of liquidity, lack of
transparency, unduly long settlement periods and benami transactions, which
affected the small investors to a great extent. To provide improved services to
investors, the country's first ring less, scrip less, electronic stock exchange - OTCEI
- was created in 1992 by country's premier financial institutions - Unit Trust of
India, Industrial Credit and Investment Corporation of India, Industrial
Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of
India, General Insurance Corporation and its subsidiaries and Can Bank Financial
Services. Trading at OTCEI is done over the centers spread across the country.
Securities traded on the OTCEI are classified into:

Listed Securities - The shares and debentures of the companies listed on

the OTC can be bought or sold at any OTC counter all over the country and they
should not be listed anywhere else

Permitted Securities - Certain shares and debentures listed on other

exchanges and units of mutual funds are allowed to be traded

Initiated debentures - Any equity holding at least one-lakh debentures

of particular scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges.

That is, certificates of listed securities and initiated debentures are not traded at
OTC. The original certificate will be safely with the custodian. But, a counter
receipt is generated out at the counter, which substitutes the share certificate
and is used for all transactions.
 In the case of permitted securities, the system is similar to a traditional stock
exchange. The difference is that the delivery and payment procedure will be
completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network

Have the following advantages:

 OTCEI has widely dispersed trading mechanism across the country, which
provides greater liquidity and lesser risk of intermediary charges.
 Greater transparency and accuracy of prices is obtained due to the screen
based scrip less trading.
 Since the exact price of the transaction is shown on the computer screen,
the investor gets to know the exact price at which s/he is trading.
 Faster settlement and transfer process compared to other exchanges.
 In the case of an OTC issue (new issue), the allotment procedure is
completed in a month and trading commences after a month of the issue
closure, whereas it takes a longer period for the same with respect to other
exchanges. Thus, with the superior trading mechanism coupled with
information transparency investors are gradually becoming aware of the
manifold advantages of the OTCEI

1.1.5 Bombay Stock Exchange (BSE) – Sensex

For the premier Stock Exchange that pioneered the stock broking activity in India,
128 years of experience seems to be a proud milestone. A lot has changed since
1875 when 318 persons became members of what today is called "The Stock
Exchange, Mumbai" by paying a princely amount of Re 1.

Since then, the country's capital markets have passed through both good and bad
periods. The journey in the 20th century has not been an easy one. Till the decade
of eighties, there was no scale to measure the ups and downs in the Indian stock
market. The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index
that subsequently became the barometer of the Indian stock market.

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.

The Index was initially calculated based on the "Full Market Capitalization"
methodology but was shifted to the free-float methodology with effect from
September 1, 2003. The "Free-float Market Capitalization" methodology of index
construction is regarded as an industry best practice globally. All major index
providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float
methodology.

Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be

the pulse of the Indian stock market. As the oldest index in the country, it
provides the time series data over a fairly long period of time (From 1979
onwards). Small wonder, The SENSEX has over the years become one of the most
prominent brands in the country.

The growth of equity markets in India has been phenomenal in the decade gone
by. Right from early nineties the stock market witnessed heightened activity in
terms of various bull and bear runs. The SENSEX captured all these events in the
most judicial manner. One can identify the booms and busts of the Indian stock
market through SENSEX

1.1.6. BSEs Turnover for last five years:

Month BSE

High Low No. of share traded

Apr-11 41.00 36.30 33,59,249
May-11 36.15 32.30 22,14,160
Jun-11 35.50 32.50 23,32,176
July-11 33.90 32.25 13,24,173
Aug-11 33.30 28.25 12,68,335
Sep-11 29.60 27.00 7,26,470
Oct-11 27.50 24.25 30,35,927
Nov-11 27.25 23.65 38,50,685
Dec-11 27.70 22.30 11,05,409

Jan-12 33.15 26.25 8,58,325

Feb-12 35.80 31.00 8,67,826

Mar-12 31.95 26.55 4,81,827

Chapter 2

Literature Review:

Abstract:

The movement and volatility in stock markets often reflect the direction of any
economy. The available literature suggests that since the inception of stock
markets researchers are making attempts to establish relationship between
change in macroeconomic factors and stock market returns. From the literature
review, the study has seen that asset-pricing theories do not specify the
fundamental macroeconomic factors that affect securities prices. The purpose of
this paper is to investigate the impact of change in macroeconomic factors on
stock market. In this paper the study has done a literature review and finally has
concluded the relevance of macroeconomic factors for stock markets. The
findings of the study conclude
that the stock markets are very well affected by certain macroeconomic factors
which may be local or international. The findings of the literature review suggests
that the major macroeconomic factors relatively more affecting the stock market
in long run are industrial production; inflation, foreign exchange rate, money
supply and interest rate
Chapter 3

Objective of study:-

3.1 To study volatility in Indian stock market while taking SENSEX of Bombay stock
exchange as a source of secondary data which broadly represent Indian stock
market.

3.2 To study the factors which are making Indian stock market volatile.

3.3To furnish institutional material relevant for understanding the environment in

which stock market fluctuation are occurring
Chapter 4

Research Methodology:-Sources of data:

Data used in this study is of secondary in nature. Sensex is taken as a source of

information which widely describes Indian stock market. Here monthly prices of
BSE Sensex, Inflation, IIP numbers are taken for the study purpose.

Hypothesis:

This is the exploratory research which tries to shows the factors which are making
stock market volatile.

1. Any fluctuation in foreign market has more effect on Indian stock market than
that of domestic market.

2. In the given volatile economic conditions, the market is efficient to any news
and information
Chapter 5

Scope:

5.1 This study can be used by investors, traders and other professionals as a
supplement to their own research.

5.2 This study can be used to individual who are at initial stage of investment in
stock market.

5.3 To different Organization who provides tips for Buying and Selling shares.

5.4 To review market forecast provided by the organization about fluctuation in

the market
Chapter 6

Company profile

Edelweiss Broking Limited

Manandi plaza, 2nd floor,

St. Mark’s road,

Bangalore.

Phone no: 8976112871

Total revenue:8,623cr

Total employees: 10,000+

Employees at this location: 562

Primary line of business: Equity brokerage

Board Directors:

 Rashesh Shah, Chairman & CEO, Edelweiss Group

 Himanshu Kaji, Executive Director & COO, Edelweiss Group
 Rujan Panjwani, Executive Director, Edelweiss Group
 Venkatchalam Ramaswamy, Executive Director, Edelweiss Group
 Vidya Shah, Non-Executive Director, CEO EdelGive Foundation
 Deepak Mittal, Co-Head – Credit, Edelweiss Group
 Nitin Jain, Co-Head, Global Wealth & Asset Management, Edelweiss Group
 Ravi Bubna, Co-Head, Credit, Edelweiss Group
 S Ranganathan, CFO, Edelweiss Group
 Vikas Khemani, Head, Capital Markets and Advisory, Edelweiss Group
  Hemant Daga, Deputy CEO, Global Asset Management, Edelweiss Group

Business profile

Since it is founding in New Delhi in 1996,Edelweiss Group has become the India’s
leading diversified financial service conglomerates providing a broad range of
financial products and services to the substantial diversified client base that
includes corporation, institution and individuals across domestic and global
geographies, with 450 offices in 2 cities worldwide, including the

The company expanded its operations in Bangalore is the second branch of

Edelweiss in 2010

Company News

“Edelweiss raises Rs 2,000 crore in maiden infra fund”, The Economic Times, May
09 2018.

This reflects the shift in mindset of Indian investors towards high quality income
generating alternative and long-term products.

“By 2020, retail credit should be over 50% of credit book: Rashesh Shah,
Edelweiss Group”, The Economic Times, Nov 24 2017.

Rashesh Shah says after 10 years, Edelweiss raised equity for the first time and
the idea was to raise the capital but also get some marquee investors and they
got investors like CDPQ, Kotak Mutual Fund, HDFC Mutual Fund as well as a lot of
existing investors like Goldman Sachs, Amansa, Steadview came in and
participated.
EDELWEISS STRATEGY

A Strategy that forms the Roof

A roof protects a building and its inhabitants from the vagaries of weather.

At Edelweiss, the business strategy forms the roof that protects the Group from
the vagaries of economic cycles. This strategy has ensured that the Group has
diversified into adjacent spaces, invested in businesses, the brand, processes,
leadership skills of its people, technologies and best practices in risk management
during economic downturns, allowing Edelweiss to reap the benefits when the
market cycles present an opportunity that is to the Group’s advantage.

At the core, our broad strategy, which has resulted in our success over the years,
has remained tied to the following cardinal tenets:

• Pursue new opportunists and grow in

Adjacent spaces

• Diversify Revenue Streams and ensure A balanced mix of revenue from various
Businesses

• Ensure a strong and liquid Balance Sheet with a reasonable leverage

• Focus on Cost Management

• Enable prudent risk taking and ensure robust risk man

• Support the business with strong enterprise functions

• Create a culture of leadership development

• Constantly invest in organization building

Objectives

 Focus on long term

 Fair to client, employee and all stake holders
 Growth of employee, stake holder and client
 Respect risk
 Take care of our people
 Focusing on customer centricity

Vision of GWM

To be recognized as the most reliable and trusted advisor

To be a high quality organization

To be one of the most exciting places to work in the country

Mission statement of GWM

To significantly enhance the no of people participating in markets and help them

achieve their financial goals and dreams by providing smart and need based
investment solution.

Core value : is to protect the principle amount of an investors

Milestones of the Edelweiss Group

In Nov 1995 - Founded Edelweiss capital limited

Mar 2002 - Started stock broking for private and institutional clients

Oct 2005 - Raised equity from GREATER PACIFIC capital

March 2006 - Crossed revenue 1,500mm

Employee strength 500

April 2006 - Started financing and assets management

March 2007 - Crossed Rev 3,718mn

Employee 1,100

December 2007 – Got listed on stock exchange

March 2008 - Started commodities Business

Crossed Revenue 10,889mn

March 2011 - Acquired ANAGRAM CAPITAL

Aug 2011 - Started retail financing and insurance Business

Mar 2015 - Acquired FORE FRONT

Employee 5,555

Mar 2016 - Acquired JP MORGAN

Employee 6,227

Crossed Revenue 53,000+mn

Mar 2018 - Employee 10,052

Crossed profit after tax ex-Insurance Rs.1 000cr

Business Pillar

The weight of a building is borne by its pillars. The stronger the pillars, the taller
the edifice can rise. At Edelweiss, the pillars are its Businesses.

Today, Edelweiss stands tall on five main pillars:

• Credit

• Capital Markets &

Asset Management

• Commodities

• Life Insurance

• Treasury

Product and Services

(a)Investment Banking

Overview

Our Investment Banking business is to providing corporations, entrepreneurs and

Investors, the highest quality independent financial advice and transaction

execution. Our professionals offer a full range of services and transaction
expertise, including private placements of equity. Capital rising services in public
markets, mezzanine and convertible debt, mergers and acquisition and
restructuring advisory services. We have a track record of successfully closing
more than 100 transactions to date.

Offerings
Private equity advisory- we have been a leading private equity advisor for over a
developed a strong expertise across industries which enables us to recognize
emerging industry themes and position transactions within the context

Structured finance advisory-over the years, we have built up significant expertise

in structure appropriate financing solutions for client specific situations and
identifying and placing the transaction with institutional investors. Our portfolio
of solutions comprises the following promoters funding and acquisition financing

Mergers and acquisitions advisory-Edelweiss M&A team provides insights into

how companies can grow and enhance their value. The M&A team are engaged in
turnkey transaction management and advise a diverse range of clients in medium
to large transactions. Our key strengths include independent advice, deep sector
knowledge backed by professionals with a range of training and experience that
spans across multiple cross-border deals and our relationships with large
corporation

Real estate advisory-our advisory solutions are primarily focused on capital rising
and cover the optimal financing mix, project valuation, investment structuring
and accomplishing capital rising at either the enterprise level or the asset level.
we manage Real Estate IPOs, QIPs, advise enterprise level private equity
financings, and enterprise level private equity financings, and enterprise level
mezzanine financing and structured debt. We have completed over $ 700 million
in capital rising in the last 18 months across multiple formats

Equity capital markets- we are in the vanguard of equity capital markets having
brought to the market a large number of successful and path breaking
transactions. We advise leading Indian companies, banks, institutions and
businesses which are seeking to mobilize capital from investors in India and
overseas. Within the practice, we provide opportunities for clients to raise funds
through the following –Initial public offering (IPOs) Follow-on public offerings
(POs)

Qualified institutional placements (QIP) Rights issues preferential allotments

foreign currency convertible bonds (FCCBs) global depository receipts (GDRs)
Infrastructure advisory- A critical ingredient for sustainable development in India
is the pressing need for infrastructure creation on a commercially viable basis.
This signifies immense opportunities and challenges for the sector. Recognizing
this, Edelweiss new infrastructure practice has been formed to provide innovative
solutions tailored to the unique financing and advisory requirements of Indian
infrastructure projects and developers. Our team has a dedicated focus on the
infrastructure sector, with considerable experience, a deep understanding and a
vast network of key relationship. We provide infrastructure project companies
and developers the full range of capital and advisory services

Debt restructuring advisory-At Edelweiss we have a very competent team

offering comprehensive debt restructuring solutions, both under the formal
corporate Debt restructuring (CDR)mechanism as well as negotiation with lender.
Our team of senior ex-bankers and restructuring specialists have unparalleled
experience of restructuring debts worth over Rs.75,000 crores, and an ability to
provide complete solutions and support to the corporate.

(B)Institutional Equities

Edelweiss capital’s Institutional Equities business (IE) has become one of the top
five domestic brokerage houses and top three derivatives desks. It is the only
brokerage on the street with a quant desk that provides a wide product range,
and intensive execution systems have enabled us to relentlessly service our
clients in different ways.it caters to a wide clientele comprising leading domestic
and international institutional investors, including pension funds, hedge funds,
mutual funds, insurance companies, and banks

(C)Asset Management

Overview

Edelweiss Asset Management offers a range of investment products and advisory

services across the risk return spectrum to individual and institutional investors.
Our close focus on client requirements is our inspiration in designing products
which offer the best opportunity for asset growth with a constant focus on risk
and preservation of capital.
Offering

Portfolio Management-Edelweiss offers the discerning investor an opportunity to

access its asset management expertise through its portfolio management
services. The basics objective of this product is to provide unbiased investment
management strategy based on rigorous fundamental analysis while taking
cognizance of market conditions and movements.

Mutual funds- Edelweiss Asset management limited follows a research based and
process orients investment approach. Edelweiss Asset management limited is
committed to observe the highest ethical standards while deploying investors
monies, servicing investors and dealing with business partners.

(D)Wealth Management

Overview

It is a specialized profession where our experts combine their efforts to meet the
wealth planning, investment, and financial management needs of individuals,
families, family offices, or corporate. Edelweiss wealth management takes one
step closer to you, by providing an “all-in –one approach”. Advice on

Asset allocation and thereby creating customized financial solutions for HNWIs,

NRIs, trusts and corporate. We offer advisory services on structured products.

We offer advisory services on structured products, portfolio management, mutual

funds, insurance, derivative strategies, direct equity, IPOs, real estate funds and
art funds.
Competitors of Edelweiss
Chapter 6

Data Analysis and Interpretation

For the month of April 2006

Date Open High Low Close

3-Apr-06 11342.96 11579.1 11342.96 11564.36

4-Apr-06 11599.8 11710.69 11570.11 11638.0
15-Apr-06 11671.14 11755.2 11653.39 11746.9
7-Apr-06 11845.13 11930.66 11564.87 11589.44
10-Apr-06 11620.38 11691.92 11535.28 11662.55
12-Apr-06 11.693.15 11702.77 11302.78 11355.73
13-Apr-06 11366.91 11380.83 11008.43 11237.23
17-Apr-06 11323.74 11560.9 11323.74 11539.68

Analysis

In starting of financial year market was opened at 11,342 points and closed at
11,851 points at the end of the month. This month market was crossed 12,000
mark and made all time high12,102 on 21st& all time low 11,008 on 13th.

Reasons

•Increased in crude oil prices.

•Financial Results of Indian corporate.

•FIIs positive response in Financial Results.

•FIIs positive response in 3rd week than average buying and selling
Chapter 7

Findings

After undertaking the in depth study of stock market and various financial
markets, it was found that the several events which had most affected in
fluctuation of Sensex particular month.

2006-07

Factors which affect heavily in the year 2006-07 are as follows

•Fluctuation in crude oil prices

Expectation of good result

•Financial Results of Indian corporate.

•FIIs positive response in Financial Results.

•Kerala and Bengal election.

•Increased Inflation rate.

•Expectation of good result.

•Rumor of resigning of our Prime Minister Dr. Manmohan Singh.

•Weak global markets concern

IIP rose to 12.4 per cent.

•Appreciation of Rupee Value.

•Higher growth in GDP (8 per cent)

•Hike in the CRR rate.

•Successful IPO (Parsvnath Devlopers and Shobha Developers).

•Raising Short-Term Capital Gains Tax to 15 per cent.

•Making Long-Term Capital Gains Taxable.

•Introduction of Tax on Dividends.

•Increase in Service Tax rates: The spread of Service.

•Non Reintroduction of Section 80 L.

•RIL’s MoU with Dow chemical

2008-9

Factors which affect heavily in the year 2007-08 are as follows:

•Hike in the CRR and Raporate.

•Announcement of monetary policy.

•GDP Growth rate at 9.4 percent 18 years high.

•Higher growth in manufacturing and service sectors.

•Investment pattern of FIIs.

•Decrease in inflation rate.

•Positive forecasting of monsoon.

•Positive sentiments from global market.

•Listing with a bang of DLF and Vishal retail.

•Strengthening of Japanese Yen and US dollar and Euro.

•SBI announced merger with one of the associates State Bank of Saurastra.

•Appreciation of rupee value.

•Diwali and second quarter result.

•Hike in CRR to 7.5 per cent

Hike in CRR to 7.5 per cent.

•Higher crude oil price (crossed $ 100).

•Subprime in the US country.

•Poor Listing of Reliance Power.

•Poor industrial growth data.

•Union Budget of P.Chindambaram.

•Announcement of agriculture loan waiver `60,000 crores. 2008-09

Factors which affect heavily in the year 2008-09 are as follows:

•Citi Groups loss of $5.1 Billion.

•Good third quarter result.

•Higher crude oil price ($127/barrel)

•Higher inflation rate (8 per cent)

•The debacle of UPA government in Karnataka assembly election.

•Ranbaxy’s acquisition with Japanese based firm Daiichi Sankyo

•Advance tax payment.

•Threat of fall of UPA government over the nuclear issue.

•Poor IIP numbers.

• Negative sentiment of global economy.

•Financial crisis in US and European country

Cut in CRR and repos.

•Selection of Barak O’bama in US election.

•Terrorist Attack on Mumbai Taj Hotel.

•US had official accept the recession in their economy.

•Decline in export of 1201 per cent.

•US government had announced $1 trillion bailout package

Satyam Scandal (Fraud)

•Union Budget

2009-10

•Recovery in global market.

•FIIs investment.

•Loksabha Election.

•GDP growths.

•Good monsoon

•Union Budget make the recovery at last.

2010-11

•Starting with good result of Indian corporate.

•Heavily investment of FIIs in Indian bourses

•Goldman Sachs controversy makes all the financial market floundering at the
end of the month.

•Crisis in European country make fall in the Sensex

•Fear of higher inflation rate (13.73 per cent).

•Higher industrial production.

•Acquisitions, Mergers, IPOs, new orders make rise in the Sensex.

•Less than expected hike in interest rate.

•Opening ceremony of CWG proves that India is economically powerful.

•Dismal IIP numbers.

•Industrial growth was declined to 4.4 per cent.

•Higher inflation rate.

•RBIs quarterly review of credit policy.

•Announcement of Union Budget.

•Tsunami in Japan
Chapter 8

Limitations of the study

8.1 The study can be done for larger period only, lower tenure don’t give good
results8.

2 Perfect data for the study cant captured from this sorter period8.

3 The time Period which is given for study is very sorter.

Chapter 9

Conclusion

India has been witness to a four-year up and down cycle in the stock markets.
Since 1992, the Indian markets have peaked every fourth year and then dropped
35-45% during the next three years. What is surprising though is that the Dalal
Street has bucked the trend this time around. Some of the major conclusions
derived in the study are as under.

•Declaration of any financial result and other information of the company have
direct effect on its stock price.

•News related to any political and economic affair has also the direct effect on
stock market.

•Fluctuation in crude oil prices.

•Fluctuation in interest rate

•Change in monitory policy.

•Change in various rates like CRR & SLR.

•Global economy

The fluctuation in the market is the result of multi dimension impact of multiple
factors more affects are line with each other sometime directly or some time
indirectly. The present study an attempt has made to cover the major obvious
factors that could be some more factors may be note directly not related but
indirectly related can also have some bearing the phenomena of fluctuation. It is a
complete phenomenon where the permutation and combination or the factors
are constantly changes.

The analysis provides history in major which was serve as guide post studying
and forecasting the trends

In short, the following hypothesis have been tested and proved positive.

(a)Any fluctuation in foreign market has more effect on Indian stock market than
that of domestic market.

(B)In the given volatile economic conditions, the market is efficient to any news
and information.

At the end it is concluded that following are Major factors, which have generally
contributed to fall & rise in SENSEX & NIFTY:

1. US economic growth

2. Crude oil prices

3. Emerging market valuations

4. Foreign direct investment (FDI)

5. Capital spending
6. Equity supply

7. Government policy toward foreign firms

8. Politics

9. Domestic risk

10. Foreign institutional investors (FII) withdrawals

11. US Fed interest rates

12. Indian industry growth

13. Budget 2006-07 and finance bill

14. Tax circular regarding transaction tax to FII.

Chapter 10

Recommendations

After this study, I would like to give following recommendations, which can help
to the Investors, Brokers and SEBI and the policy makers in general.

INVESTORS

•I would suggest that Long term Investors should not invest into panic market,
which led investors to erode their wealth.

•It must be remembered that Long-term investors should go for frontline stocks,
which helps to keep their income regular and steady.

•I would also suggest that Investors should take into consideration various things
before investing into scripts such as:

Long term growth prospect in company

Financial positions of company

Liquidity position

Dividend

Past performance of company

Brokers

1. Brokers should separate their portfolio from High Net worth Individuals (HNI).
2. Brokers should not exceed their trading limit in terms of upper and lower limit.

3. Brokers should not go for margin trading which results into defalcation to the
investors.

4. Brokers should go for margin trading where HNIs are major clients because of
reputation working with them to some extent

SEBI

•SEBI should come out with new regulation in context of circuit breakers.

•SEBI should monitor HNI transactions in domestic as well as global market.

•SEBI should issue regularly draft containing penalty details on defaulters to keep
market less speculative
Chapter 11

Bibliography

11.1 Magazines

11.1.1 Capita market March 27-April 2006 page no. 13.

11.1.2 Capita market May 22-June 4 2006 page no.76-78.

11.1.3 Capita market July 3-July 16 2006 page no. 20.

11.1.4Capita market Sept 25-Oct 8 2006 page 16.

11.2Web Sites

11.3 NEWS PAPERS

11.3.1. Business standard

11.3.2. Financial express

11.3.3. Economic times

11.3.4. Times of India

11.4 REPORTS AND JOURNALS

11.4.1
11.4.2