A STUDY ON IMPACT OF FOREGIN STOCK MARKETS ON INDIAN STOCK MARKET

PRESENTED BY Alex Praveen Arjun Balamurugan Gouthaman Krishnan Koodalingam Sathish Ranjith

A STUDY ON IMPACT OF FOREGIN STOCK MARKETS ON INDIAN STOCK MARKET

The Significance of this study is to capture the trends, similarities and patterns in the activities and movements of the Indian Stock Market in Comparison to its International counterparts. Main hypothesis is what impact would the result have on the understanding that international diversification of investment is desirable and profitable with regard to both risk and return?

 The aim is to help investors (Current and Potential) understand the impact of important happenings on the Indian stock Exchange.
The study will focus on two things 1. To analyse the impact of other foreign market on indian stock market 2. To guide the investors of various investment opportunities.

INDIAN STOCK MARKET

INDIAN STOCK MARKET

BSE In 1957, it became the first stock exchange to be recognized by the Indian govt under the Securities Contract Regulation Act 1956 Establised in1875 Asias first stock exchange and 10th largest stock exchange in the world. NSE Incorporated in Nov 1992 11th largest stock exchange in the world.

TOOLS OF ANALYSIS
Standard Deviation Correlation Co Efficient of Determination

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

BRAZIL STOCK EXCHANGE Founded on August 23, 1890
BOVESPA

In 1972- implement an automated system for dissemination of information online and in real-time through an ample network of terminals. Bovespa introduced in 1999 the Home Broker Home Broker - Users to execute buy and sell orders online In 2000, Bovespa created three new listing segments the Novo Mercado(New Market), Level 2 and Level 1. BM&F BM&F creating 3rd largest stock exchange in the world.

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

COMPARISON OF INDIA VS BRAZIL During 2005-06 minimum correlation with positive correlation for return Same period the percentage change relation is also positive but it is lesser than the return In 2009-10 MC with negative correlation Highest being 1.486 in 2005-2006 period with respect to return.

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

INDONESIA STOCK EXCHANGE Opened in 1977 during World War I and II On July 13, 1992 the exchange was privatized under the ownership of Jakarta Exchange Inc. In September 2007, JSE and Surabaya Stock Exchange merged and named Indonesian stock exchange Two of the Primary stock markets indices are the JSX Composite and the Jakarta Islamic Index(JII). There are approximately 30 corporate stocks listed on the JII

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

COMPARISON OF INDIA VS INDONESIA During 2005-06 minimum correlation with positive correlation for return Same period the percentage change relation is also positive but it is Greater than the return In 2009-10 MC with Positive correlation for return Highest being 0.396 in 2009-2010 period with respect to return.

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

JAPAN STOCK EXCHANGE The Tokyo Stock Exchange or TSE for short, is located in Tokyo, Japan third largest stock exchange in the world 2,292 listed companies with a combined market capitalization of US$3.8 trillion as of Dec 2010 The London Stock Exchange and the TSE developing jointly traded products and share technology

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

COMPARISON OF INDIA VS JAPAN During 2005-06 minimum correlation with positive correlation for return Same period the percentage change relation is also positive but it is lesser than the return In 2009-10 MC with Negative correlation for return Highest being 0.115 in 2007-2008 period with respect to Percentage change in daily value.

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

CHINA STOCK EXCHANGE There are the two stock exchanges operating independently in china 1. Shanghai Stock Exchange (SSE) 2. Shenzhen stock exchange SSE is the worlds 5th large stock market The first shares list appeared in June 1866 In 1920 and 1921, Shanghai securities & Commodities Exchange and Shanghai Chinese Merchant Exchange started operation On November 26, 1990, Shanghai Stock Exchange was reestablished.

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

COMPARISON OF INDIA VS CHINA During 2005-06 minimum correlation with Positive correlation for return Same Period the Percentage change relation is also Positive but it is greater than the return During 2009-10 Minimum correlation with Positive correlation for return Highest being 0.509in 2009-2010 period with respect to return .

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

LONDON STOCK EXCHANGE Fourth largest stock exchange in the world In December 2005, the London Stock Exchange rejected a 1.6 billion takeover offer from Macquarie Bank. The LSE received an unsolicited approach from NASDAQ valuing the company at 2.4 billion. This too it rejected.

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

COMPARISON INDIA VS UK(LONDON) During 2005-06 minimum correlation with Positive correlation for return Same Period the Percentage change relation is also Positive but it is lesser than the return During 2009-10 Minimum correlation with Positive correlation for return Highest being 1.187in 2007-2008 period with respect to return .

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

US STOCK EXCHANGE The NASDAQ(National Association of Securities Dealers Automated Quotations) Stock Market , is an American stock exchange. It is the largest electronic screen based equity securities trading market in the United states and second largest by market capitalization in the world In 1992, it joined with London Stock Exchange to form the first international linkage of securities markets. To Qualify for listing on the exchange, a company must be registered with United States Securities and Exchange Commission (SEC).

IMPACT OF VARIOUS FOREIGN STOCK MARKETS ON INDIAN MARKET

COMPARISON INDIA VS US During 2005-06 minimum correlation with Positive correlation for return Same Period the Percentage change relation is also Positive but it is Greater than the return During 2007-2008 Minimum correlation with Positive correlation for return Highest being 0.494 in 20072008 period with respect to return .

CONCLUSION
This Study validates the popular belief that the markets in general and Indian market in particular is more integrated with other global exchanges from 2005 Onwards. Because we were insulated due to government policies and was just making the transition However in the later time periods , the influence of other stock markets increased on our NSE, but at a very low, almost significant level. Due to our government policies and investors risk taking approach.

Thank you