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    Project Report: Investment Analysis & Portfolio Management

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    Ankita Goyal
    The document analyzes the relationship between various macroeconomic variables and the Indian capital market. It finds high correlations between Foreign Direct Investment (FDI) and the BSE Sensex, and stock market turnover on the BSE and NSE exchanges. Inflation and GDP were also found to correlate with stock market performance, though to a lesser degree. The analysis concludes that FDI strongly influences the Indian stock market and economy.

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    Project Report: Investment Analysis & Portfolio Management

    Uploaded by

    Ankita Goyal
    54 views8 pages
    The document analyzes the relationship between various macroeconomic variables and the Indian capital market. It finds high correlations between Foreign Direct Investment (FDI) and the BSE Sensex, and stock market turnover on the BSE and NSE exchanges. Inflation and GDP were also found to correlate with stock market performance, though to a lesser degree. The analysis concludes that FDI strongly influences the Indian stock market and economy.

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    PROJECT REPORT OF IAPM

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    © Attribution Non-Commercial (BY-NC)

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    The document analyzes the relationship between various macroeconomic variables and the Indian capital market. It finds high correlations between Foreign Direct Investment (FDI) and the BSE Sensex, and stock market turnover on the BSE and NSE exchanges. Inflation and GDP were also found to correlate with stock market performance, though to a lesser degree. The analysis concludes that FDI strongly influences the Indian stock market and economy.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    54 views8 pages

    Project Report: Investment Analysis & Portfolio Management

    Uploaded by

    Ankita Goyal
    The document analyzes the relationship between various macroeconomic variables and the Indian capital market. It finds high correlations between Foreign Direct Investment (FDI) and the BSE Sensex, and stock market turnover on the BSE and NSE exchanges. Inflation and GDP were also found to correlate with stock market performance, though to a lesser degree. The analysis concludes that FDI strongly influences the Indian stock market and economy.

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    You are on page 1of 8

    PROJECT REPORT

    OF

    INVESTMENT ANALYSIS & PORTFOLIO


    MANAGEMENT
    ON

    MACROECONOMIC VARIABLE S & ITS


    INFLUENCE ON INDIAN CAPITAL MARKET

    PRESENTED BY:
    Ankita goyal
    Hitesh Nandawana
    Pooja Singh
    Introduction
    Although stock market returns have been the subject of major empirical investigations in the
    industrized countries , almost all these models have considered the stock market variables to
    establish the relationship between the equity market returns and various factors. Even though
    market participants, investors and researcher are aware of the fact that a host of factors in
    agriculture, industry and economy influence the equity returns, there is not much of work which
    has been done in this topic.
    An efficient capital market is one in which security prices adjust rapidly to
    the arrival of new information and, therefore, the current prices of securities
    reflect all information about the security. Moreover , economic theory suggests that stock prices
    should reflect expectations about future corporate performance, and corporate profits generally
    reflect the level of economic activities.
    If stock prices accurately reflect the underlying fundamentals, then the stock prices should be
    employed as leading indicators of future economic activities, and not the other way around.
    Therefore, the causal relations and dynamic interactions among macroeconomic variables and
    stock prices are important in the formulation of the nation’s macroeconomic policy. As for the
    effect of macroeconomic variables such as money supply and interest rate on stock prices.
    Competition among the profit-maximizing investors in an efficient market will ensure that all the
    relevant information currently known about changes in macroeconomic variables are fully
    reflected in current stock prices, so that investors will not be able to earn abnormal profit through
    prediction of the future stock market movements.

    Objective of study
    This study objective is find out how capital market is affected by
    changes in different macro economic variable like inflation, GDP,
    interest rate etc.It basically helps in determining the extent to which
    returns of investors (who has invested in stock exchange ) has been
    affected.

    It also explain the recommendation to control the impact or to play


    safely for investors.

    Hypothesis and limitation


    Methodology
    Research methodology is a way to systematically solve the research problems.
    It may be understood as a science of studying how research is done
    scientifically. We study the various steps that are generally adopted by a
    researcher in studying his research problem along with the logic behind them.
    It is necessary for the researcher to know not only need to know how to
    develop certain indices or tests, how to calculate the mean, the mode, the
    median, standard deviation and chi – square, how to apply the particular
    research techniques, are relevant and which are not and what would they
    mean and indicate and why?

    Researchers also need to understand the assumptions underlying various


    techniques and they need to know the criteria by which they can decide that
    certain techniques and procedures will be applicable to certain problems and
    others will not.

    Secondary Data Collection Methods


    All methods of data collection can supply quantitative data (numbers, statistics or
    financial) or qualitative data (usually words or text). Quantitative data may often be
    presented in tabular or graphical form. Secondary data is data that has already been
    collected by someone else for a different purpose to yours.

    Data anaylsis
    Foreign direct Bse Nse Per
    Years investment(us$million Sensex turnover turnover Inflatio GDP capita
    ) (us$million) (us$million) n income
    2000 3272 5250 378865 865445 3.2 3.2 14667
    2001 4741 3500 406788 906545 3.6 3.5 15890
    2002 5036 3250 450789 967655 3.4 3.8 19040
    2003 4322 4500 502618 1099535 5.4 8.5 20989
    2004 5987 5400 518716 1140071 6.4 7.5 23241
    2005 8901 7750 816074 1569556 4.4 9 27183
    2006 21991 11400 956185 1945285 5.4 9.2 31080
    2007 27288 16400 1578856 3551038 4.4 8 35430
    2008 20700 14450 1100074 2752023 4.5 8.3 40141

    Correlation between sensex and foreign direct investment- r=0.96

    Correlation between bse turnover and FDI- r=0.95

    Correlation between nse turnover and FDI- r=0.94

    Correlation between sensex and inflation- r=0.65

    Correlation between sensex and GDP (gross domestic product)- r=0.48

    Correlation between bse turnover and inflation- r=0.78

    Correlation between bse turnover and GDP- r=0.41

    Correlation between nse turnover and inlation- r=0.6

    Correlation between nse turnover and GDP- r=0.69

    Correlation between sensex and per capita income- r=.93

    Correlation between bse turnover and per capita income- r=0.75

    Correlation between nse turnover and per capita income- r=0.91

    Findings & conclusion


    Above Correlation figure shows that FDI is highly correlated with sensex, with bse turnover and with nse
    turnover.

    It can be interpreted that if fdi move up then sensex, bse turnover and nse turnover too move up and vise versa.
    Source
    1. www.rbi.org.in/

    2. www.nse-india.com

    3. www.bseindia.com/

    4. www.sebi.gov.in/

    5. www.indiainfoline.com/

    6. www.mospi.gov.in/

    7. www.google.com

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