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

PRESENTED BY Alex Praveen Arjun Balamurugan Gouthaman Krishnan Koodalingam Sathish

THEME
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.

The aim is to help investors (Current and Potential) Understand the impact of important happenings on the Indian Stock Exchange.

 SOURCES OF DATA:The Data is collected from various secondary sources like internet, journals and other Publications. The stock price and market index were collected from the national stock exchange official website. Apart from that, data have been taken from different company websites. TOOLS OF ANALYSIS: Standard Deviation Correlation Co Efficient of Determination

RESULTS AND DISCUSSIONS

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Bovespa introduced in 1999 the Home Broker The System enables 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 The Novo Mercado, Level 2 and Level 1 segments are based on a contractual agreement of the listed company, its controlling share holder and its management to comply with specified regulations. Another side benefit the international expansion of Brazilian Business. On May 08, 2008 Bovespa holding announced Bovespa and BM&F creating the worlds largest stock exchange As a result of an early 2008 stock swap, CME owns 5% stake in BM&F Bovespa and in turn 5% stake in CME Group.

INDONESIA STOCK EXCHANGE: Jakarta Stock exchange or in Indonesian Bursa Efek Jakarta(BEJ) is a stock exchange based in Jakarta Originally Opened in 1912 under the Dutch Colonial Government. It was really Opened in 1977 during World War I and II. After Being reopened in 1977 the exchange was under the management of newly created Capital Supervisory Modal, or Bapepam which was answerable by Ministry of finance 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 by Indonesian Minister of Finance

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Two of the Primary stock markets indices used to measure and report value changes in representative stock groupings are the JSX Composite and the Jakarta Islamic Index(JII). There are approximately 30 corporate stocks listed on the JII

JAPAN STOCK EXCHANGE: The Tokyo Stock Exchange or TSE for short, is located in Tokyo, Japan and is the third largest stock exchange in the world by aggregate market capitalization of its listed companies. The Tokyo Stock Exchange had 2.292 listed companies with a combined market capitalization of US$3.8 trillion as of Dec 2010

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The TSE is Incorporated as a Kabushiki kaisha with nine directors, four auditors and eight executive officers. On 15 June 2007, the TSE paid $303 million to acquire a 4.99% stake in Singapore Stock Exchange Ltd. The London Stock Exchange and the TSE developing jointly traded products and share technology, making the latest cross border deal among bourses as international competition heats up. The TSE looking for some partners in Asia and more specifically seeking an alliance with the SGX, which considered as becoming a leading Financial hub in the Asia Pacific region. TSE is preparing for a takeover of the SGX.

CHINA STOCK EXCHANGE: The Shanghai Stock Exchange (SSE) is a stock exchange that is based in the city of Shanghai, China. It is one of the two stock exchanges operating independently in the people republic of china. The other is the Shenzhen stock exchange. SSE is the worlds 5th large stock market by market capitalization at US$2.7 trillion as of Dec 2010 The first shares list appeared in June 1866 In the early days banks dominated private shares but, by 1880, only the Hong Kong and Shanghai local banks remained. Later in 1920 and 1921, Shanghai securities & Commodities Exchange and Shanghai Chinese Merchant Exchange started operation respectively.

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An amalgamation eventually took place in 1929 and the combined markets operated thereafter as the Shanghai Stock Exchange In 1946 Shanghai Stock Exchange resumed its operations before closing again 3 years later in 1949, after the Communist revolution takes place. On November 26, 1990, Shanghai Stock Exchange was reestablished and operations began a few weeks later on 19th December. There are 2 types of stocks being issued on SSE A shares and B shares. A shares are priced in the local remninbi Yuan currency, while B shares are quoted in U.S. dollars

LONDON STOCK EXCHANGE: The London Stock Exchange is a stock exchange located in the City of London, United Kingdom. As of December 2010. the Exchange had a market capitalization of US$3.6 trillion, making it the fourth largest stock exchange in the world. In 1697, a law was passed to restrain the number and illpractices of brokers and stock jobbers, following a number of insider training and market-rigging incidents. It all brokered to be licensed and to take an oath promising to act lawfully. The nationality requirement was lifted in 1970. The incident caused outcry, forcing the government to pass legislation to prevent another bubble, and it took a long time for the stock exchange to recover.

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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. US STOCK EXCHANGE: The NASDAQ Stock Market , also known as the NASDAQ, is an American stock exchange NASDAQ , originally stood for National Association of Securities Dealers Automated Quotations It is the largest electronic screen based equity securities trading market in the United states and second largest by market capitalization in the world

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Over the years, NASDAQ became more of a stock market by adding trade and volume reporting and automated trading systems. Until 1987, most trading occurred via the telephone, but during the October 1987 stock market crash market often didnt answer their phones, Small Ordered Execution System (SOES) was established, which provides an electronic method for dealers to enter their trades. 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).

FINDINGS
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 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 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

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

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

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 2007-2008 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