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° A method of evaluating a security that entails attempting to
measure its intrinsic value by examining related economic,
financial and other qualitative and quantitative
factors. Fundamental analysis attempt to study everything
that can affect the security's value, including
macroeconomic factors (like the overall economy and
industry conditions) and company-specific factors (like
financial condition and management).

The end goal of performing fundamental analysis is to

produce a value that an investor can compare with the
security's current price, with the aim of figuring out what
sort of position to take with that security
° The fundamental school of thought appraised the
intrinsic value of shares through

‡ Economic Analysis

‡ Industry Analysis

‡ Company Analysis
 ˜

 

 
  
Inflation Product line Balance sheet
Tax structure Sector wise Income statement
GDP Business cycle Financial statement
Budget Past performance Market share
Interest Rate Performance of Product Growth of sales

Monsoon & Agriculture Role of government in Operating efficiency

industry
Foreign exchange rate Labour conditions Earnings of the company

Money supply & Liquidity Competitive condition Preference share

Saving & investment Industry life cycle Ratio analysis

Business cycle SWOT analysis Management
° A stock market or equity market is a public (a loose
network of economic transactions, not a physical
facility or discrete) entity for the trading of
company stock (shares) and derivatives at an agreed
price; these are securities listed on a stock
exchange as well as those only traded privately
° The size of the world stock market was estimated at
about $36.6 trillion at the start of October
2010.[1] The total world derivatives market has been
estimated at about $791 trillion face or nominal
value,[2] 11 times the size of the entire world economy
° The stock market is one of the most important
sources for companies to raise money. This allows
businesses to be publicly traded, or raise
additional capital for expansion by selling shares
of ownership of the company in a public market.
The liquidity that an exchange provides affords
investors the ability to quickly and easily sell
securities. This is an attractive feature of investing
in stocks, compared to other less liquid
investments such as real estate
° A stock exchange is an entity that provides "trading" facilities
for stock brokers and traders to trade stocks, bonds, and
other securities. Stock exchanges also provide facilities for issue
and redemption of securities and other financial instruments, and
capital events including the payment of income and dividends.
Securities traded on a stock exchange include shares issued by
companies, unit trusts, derivatives, pooled investment products
and bonds.
° The initial offering of stocks and bonds to investors is by definition
done in the primary market and subsequent trading is done in
the secondary market. A stock exchange is often the most
important component of a stock market. Supply and demand in
stock markets is driven by various factors that, as in all free
markets, affect the price of stocks.
° 
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1. Sensex. INDIA
2. New York Stock Exchange, New York City
3. London Stock Exchange, the City of London
4. Tokyo Stock Exchange,Tokyo
5. Toronto Stock Exchange,Toronto
6. Sao Paulo Stock Exchange,Sao Paulo
7. Australian Securities Exchange's Sydney Exchange
Centre, Sydney
8. Borsa Italiana, Milan Stock Exchange
9. Paris Stock Exchange, Paris
10. SWX Swiss Exchange, Zurich
INDIAN STOCK EXCHANGE



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There are 23 stock
ý '$ ý$ ''
exchanges in ý '$" '$ ý)
India. Among them ý ' ý)$#
two are national ý '$ ý 
level stock ý  ý $
exchanges namely ý  ý  
Bombay Stock ý
 ˜-$
 ý $
Exchange (BSE) ' ý%#$
and National Stock ý  ý,"''
Exchange of India ý $*$ ý.
ý
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(NSE). The rest 21
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are Regional Stock
Exchanges (RSE).
° Madras Stock Exchange Ltd (MSE) is a self regulatory organization
having permanent recognition under the Securities Contracts
(Regulations) Act, 1956, and the fist Stock Exchange in the southern
part of the country. Established in the year 1937, the Exchange has
a long history of service to the nation and pioneered the
development of the capital market in this part of the country by
catering to the needs of the industrial entrepreneurs to raise capital
for industrial promotion and providing investment opportunities to
the public.
° The Exchange is a demutualised corporate entity pursuant to the
MSE (Corporatization and Demutualization) Scheme, 2005
approved by the Securities and Exchange Board of India (SEBI).
The stakeholders of the Exchange include Financial Institution of the
Tamil Nadu State Government, leading corporate houses, high net
worth individuals and Trading Members of the Exchange.
° MSE has a strategic arrangement with the National Stock
Exchange (NSE) which provides for the facility of trading by the
members of MSE on NSE platform and also for trading of MSE
listed companies on the NSE.
° )' /
The following is the list of Board of Directors of the
Exchange 2010-2011
‡ Mr.V.C.Davey
‡ Public Interest Director
‡ Mr. Kalpathi S. Suresh
‡ Shareholder Director
‡ Mr. N. Sandeep Reddy
‡ Shareholder Director
‡ Mr. Hiren B. Shah
‡ Shareholder Director
‡ Mr. V. Nagappan
‡ Trading Member Director
‡ Mr. S. Veeraraghavan
‡ Trading Member Director
1. Empowerment of the investors through education
has been the focus of the Exchange. The Exchange
has established an exclusive investment education
centre named as the ³MSE Institute of Capital
Markets´ to cater to the educational needs of the
market participants.
2. The Exchange also provides Depository Services as
Depository Participant of CDSL and NSDL.
3. MSE has set up subsidiary, trading facilities are
provided to the investors.
4. Account Modification.
5. Initial Public Offer.
‡ Chen, Roll and Ross (1986) who considered some
significant economic variables to have systematic influence
on asset returns implemented one of the most famous APT
tests on this subject
‡ Roll and Ross (1980) found that three or four systematic
risk factors are statistically adequate to explain the asset
returns in the period of 1962-1972
‡ Chen (1983) found five factors in the NYSE and AMEX
during 1963-1978
‡ Dhrymesetal (1985) found a changing number of
factors depending on the period length and the size of the
stock groups under analysis.
‡ Cheng (1995)implemented factor analysis on both
asset returns and macroeconomic variables in order to
derive priced security factors and macroeconomic
factors, and then compared these two categories of
factors with a canonical correlation analysis in order to
reach a statistically significant relation
‡ A research by Özcam (1997)
‡ Özcam (1997) can be considered an
example of APT testing in Istanbul Stock Exchange. In
this research, seven macroeconomic variables of
Turkish economy are separated into expected and
unexpected series by a regression process, and then
two-step testing methodology is implemented on these
series
‡ Altay (2001) is another example of two different APT tests
in Istanbul Stock Exchange. In the first test, factor analysis
method is employed in daily returns of 121 to 265 stocks in
the1993-2000 periods for each year and one dominant
significant factor is found among several minor significant
factors for each year
‡ In Indian context, Naka, Atsuyuki, Mukherjee, Tarun K.
Tufte,
‡ Naka, Atsuyuki, Mukherjee, Tarun K. Tufte,
‡ David R. (1998)
‡ David R. (1998) analyzed relationships among selected
‡ macroeconomic variables and the Indian stock market.
They found that three long-term equilibrium relationships
exist among these variables. Their results suggested that
domestic inflation is the most severe deterrent to Indian
stock market performance, and domestic output growth is
its predominant driving force
° ‡Industrial exchange ° ‡Exports and credit budget
Production; rate Imports outstanding financing;
‡Inflation; ‡Market ° ‡Population ° ‡Commercial ° ‡Housing
‡Interest indices; ° ‡Inventories bank asset construction
rates; ‡Oil price value;
‡Treasury bill ‡Overall ° ‡Book-to
rates; production; market equity ° ‡Money
‡Long and ‡Gross value; stock;
short-terms Domestic ° Dividend ° ‡Consumer
Govt. bond Production yields; price index;
° rates ‡Gross ° ‡Spread of ° ‡Price-
° ‡Corporate national long and earnings
bond rates product; short-runs ratio;
‡Equity ‡Weekly bond ° ‡Farm size;
returns wages
‡Money ° Yield ° ‡Corporate
‡Per capita supply, ° High and low- profit;
consumption ‡Wholesale grades bond ° ‡International
‡Risk sales yield; or global
Premium ‡Labour force index
‡Term ° ‡Current
structure ‡Building liabilities; ° ‡Federal debt
‡Foreign construction ° ‡Consumer ° ‡Federal
° PRIMARY:
To Analyze the stock market reaction to the
changes in market on the basis of E.I.C analysis
° SECONDARY:
a) To analyze the Volatility of stock market
b) To analyze the affect of FII on stock
market
° To make the proper decision of buy & sell.
° To value the share properly.
° To know the investment perspective.
° To know the factors which influence the market.
° To know how the FII influence the stock exchange
& to what extent market depends on them.
° To understand the volatile behavior of market.
° Time constraints.
° Unavailability of Historical data.
° Less awareness about Financial complexity.
° The reliance on secondary sources of information
limits the degree of detail sought about a specific
sector or a company in some cases.
° The complexity of the stock market & economy.
° Use multiple regression analysis and investigate
the relationship of macroeconomic variable with
stock prices

° Use historical Data and there comparison

° Primary Data:
SEBI Bulletin is the main source of data
collection

° Secondary Data:
Wikipedia
Investopidia
FICCI Website
Economy watch