Effect of International Equity Market and Currency on Indian Equity Market

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SUMMER TRAINING REPORT

ON

EFFECT OF INTERNATIONAL MARKET ON INDIAN MARKET

Submitted in partial fulfillment of the requirements of

POST GRADUATE DIPLOMA IN INTERNATIONAL BUSINESS

By

MAYANK ARORA

2010-12

FT-IB-10-830

IILM GRADUATE SCHOOL OF MANAGEMENT

GREATER NOIDA



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ACKNOWLEDGMENT

A project report seems to be an individual effort but is in fact a team work. Summer

training at GEOJIT BNP PARIBAS was just like an opportunity to shake hand with the

practical world of business.

It is a matter of great pleasure and privilege to present this project report on EFFECT OF

INTERNATIONAL MARKET ON INDIAN MARKET.

I wish to record a deep sense of respect and gratitude to my project guide and the facultymentor of the college IILM-GSM, Mr. AMIT KUMAR for his encouragement to course my

work. It is due to his enduring effort and guidance that my project report made a success.

I also take the opportunity to express my deep regards and gratitude to the branch manager

ofGEOJIT BNP PARIBAS MR.SUBROTO SARKAAR who gave me guidance to take up

and complete the project.

I am grateful to Mr. RAKESH, an employer for sharing his experience & knowledge &

without whose help the project would not have got any shape.

I would like to thank Mr. NAVEEN, Mr. ASHISH and Ms. NEERJA for their constant

support & encouragement.



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DECLARATION FORM

I hereby declare that the Project work entitled EFFECT OF INTERNATIONAL MARKET

ON INDIAN MARKETsubmitted by me for the Summer Internship during the Post

Graduate Diploma in Management Program to Institute for Integrated Learning in

Management, Greater Noida is my own original work and has not been submitted earlier

either to IILM GSM or to any other Institution for the fulfillment of the requirement for any

course of study. I also declare that no chapter of this manuscript in whole or in part is lifted

and incorporated in this report from any earlier / other work done by me or others.

Place : GREATER NOIDA

Date : 14thJuly

Name of Student:MAYANK ARORA

Address :B-66 GANESH NAGAR,

NEAR JANAKPURI EAS METRO STATION,

NEWDELHI Signature of Student



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Table of Contents

Executive Summary ...........................................................................................................6

Introduction of project........................................................................................................7

INDUSTRY STUDY...........................................................................................................8STOCK EXCHANGE MARKET.........................................................................................8FOREX TRADING ..............................................................................................................9

COMPANY STUDY ..........................................................................................................11

COMPANY PROFILE…………………………………………………………………….11

FINANCIAL PROFILA AND JOINTVENTURES……………………………………………………………………………..…12 SWOT ANALYSIS GEOJIT BNP PARIBAS……………………………………….…....13

RESEARCH METHODOLOGY......................................................................................18 LIMITATIONS OF METHODOGY……………………………………….,.……………19 RESEARCH OBJECTIVE………………………………………………………………..19 LIMITATION OF PROJECT……………………………………………………………...20 WORK DONE IN OFFICE………………………………………………………………..20

INTERNATIONAL MARKETS AND THEIR EFFECT…….......…………….……21

SHANGHAI STOCK EXCHANGE…………….…………………………………..…21

INTRODUCTION…………………………………………………………………...…...22MOVING AVERAGE ANALYSIS………………………….………………………......24 COMPARISION WITH SENSEX…………………………………………………...…..25

NASDAQ STOCK EXCHANGE…………………………………………………….26

INTRODUCTION………………………………………………………………………27 MOVING AVERAGE ANALYSIS…………………………………………………….28 COMAPARISION WITH SENSEX…………………………………………………….29

CURRENCY MARKET………………………………………………………………..30



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DOLLAR……………………………………………………………………………..….33

RESEARCH ON DOLLAR…………………………………………………………...…34 EFFECTS………………………………………………………………………………....35 FINDINGS…………………………………………………………………………...…..36

MOVING AVERAGE ANALYSIS………………………………………………….......37 EURO………………………………………………………………………………….…38

RESEARCH ON EURO……………………………………………………………….…39 MOVING AVERAGE ANALYSIS………………………………………………...........40 FINDINGS…………………………………………………………………………….…41

CRUDE OIL………………………………………………………………………….….42 EFFECTS……………………………………………………………………………..…..45 RESEARCH………………………………………………………………………..…….46 MOVING AVERAGE ANALYSIS……………………………………………….…….49

CONCLUSION…………………………………………………………………….…...50 SUGGESTIONS TO THE COMPANY…………………………………………….…..51 LEARNING OUTCOMES……………………………………………………………..52



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EXECUTIVE SUMMARY

The purpose of industrial training is to acclimatize the students with the organization

& the industry in which this organization exists. Summer training is a part of managementstudy & is very important for each &every student. Management trainees are trained in such

a way that after they come out, they can manage the matters of organization in a planned and

systematic manner.

This project is aimed at understanding the international stock market and foreign currencies

and their effect on SENSEX. The other objective is to find how oil prices effect inflation and

GDP of India.

Project discusses the impact of Nikkei and Nasdaq on sensex and stocks in BSE.

It also discusses the comparison of DOLLAR with RUPEE and its effect on Indian market

with the help of 5 days moving average. Fluctuation in DOLLAR affects INDIAN

MARKET because US market is a huge market, so any minor fluctuation also shows a

significant effect on Indian market.

Project discusses the comparison of YEN with RUPEE and its effect on Indian market with

the help of 5 days moving average. Fluctuation in YEN affects INDIAN MARKET because

JAPAN market is a huge market, so any minor fluctuation also shows a significant effect on

Indian market.

The project also discusses the crude oil in terms of US $ per barrel. Oil prices highly affect

Indian growth and its market. With increase in oil prices, inflation increases and growth

decreases. As the oil prices decrease, inflation of India decrease and its growth increase.



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INTRODUCTION OF THE PROJECT

INTERNATIONAL MARKET HAS A GREAT IMPACT ON INDIAN STOCK

MARKET.

Crude oil prices, international market, currency market and foreign investment affect the

Indian stock market BSE.

Every news has an impact on stock market. Share market works on demand and supply

phenomenon. More foreign investment means more buying means prices will go up. More

selling by foreign investment means prices will go down and so the SENSEX.

Since it is a global world now, most of the companies has presence in foreign countries like

Infosys, Satyam, Wipro, etc. moreover, many Indian companies take up projects from foreign

countries which in turn increase or decrease the price of the shares.

Similar is in the case of oil prices. Normally if the price of oil increase, the price of oil related

scrip increase and vice versa.

Recently the BSE SENSEX fall was due to AMERICAN RECESSION, as well as profit

booking by retail investors and foreign institutions for various reasons like applying for

reliance power IPO, etc.



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INDUSTRY STUDY

STOCK EXCHANGE MARKET

Stock exchange market is a market which deals in financial assets or instruments .These

Instruments are issued by corporate units, business organisations and central and state

Government. They issue securities to meet current expenditure and mobilize financial

resources for making investment. The purpose of a stock exchange market is to facilitate the

exchange of securities between buyers and sellers by providing a market place(virtual or

real). The exchanges provide real timetrading information on the listed securities, and

facilitateprice discovery.

A stock market or equity market is a public market for the trading of derivatives and

company stock at an agreed price, these are securities listed on a stock exchange as well as

those which are traded privately.

The largest stock market inthe United States, by market cap, is the New York Stock

Exchange, NYSE. In Canada, the largest stock market is the Toronto Stock Exchange. Major

European examples of stockexchanges include the London Stock Exchange, Paris Bourse,

and the Deutsche Bourse. Asian examples include the Tokyo Stock Exchange, the Hong

Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange.



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FOREX TRADING

WHAT IS FOREX TRADING

FOREX has exploded in popularity over the last 40 years as more and more people have

discovered currency trading. The currency exchange market, also known as FOREX, is one

of the fastest growing markets and the largest market in the world today. The average day see

over 2.5 trillion dollars exchange hands. Throughout the year, world currencies fluctuate in

value. Some currencies grow in value, while other currencies lose value. Investors make

money by exchanging two currencies that are fluctuating in value.

In the currency market, there are many participants. Governments exchange currencies as

International business every day. Other players include hedge funds, private investors and

banks.

Since the major world currencies are centred in different locations around the world, the

Forex market is open 24 hours a day. Markets close only on the weekends.

Every participant works with its own currency first. The British exchange pounds, and

Americans trade dollars. All currencies, known as goods in Forex, are traded in pairs. There

are eight major currencies in the market.

Participants make money in Forex trading by buying at a low price and selling at high price.

Successful traders learn how to recognize trends, market indicators and other financial data.

Participants make money quickly through leverage. Leverage is simply the ratio of

investment to financial value. Leverage allows the participants to make or lose money fast.

Forex is somewhat similar to the stock market, but still there are many differences. In the

stock market, physical shares are purchased and In the Forex markets, only agreements are

exchanged to trade shares.

In order to make real money in Forex, it is important to understand history andthe general

principles of the market. The most successful investors understand the markets inside deeply

and out. They have respect for the history of the market, and use this history to make better

decisions in the future.



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RISK INVOLVED IN FOREX TRADING

FOREX TRADING is quote risky and this stops many people from investing in the

international currency markets. Forex trading is very risky if you do not know what you are

doing. You must understand that any type of business investment somehow includes some

risk. You cannot lose money more than you invest. This amount is also known as margin. If

your investment is $1,000 , you will not lose more money than this.

Few factors to be considered ahead of time:

1. Before investment is made, Recognition of SCAMS should be learnt

There are many scams we need to avoid. As the information relating to Forex increases, it is

getting easier to recognize legitimate programs from scams. Do a simple internet search

before getting involved in any program, or purchase reputable software like Easy Forex to

protect your investments.

2. Fluctuations in currency

All investors face the risk of a major currency collapse. It is important to stay abreast of

changes occurring in the economic climate of world. Attention must be paid to the news to

make sure you do not miss important financial events.

3. Unpredictable economic events of future

No one can predict the future. No amount of diversification can prepare a participant for any

possible future financial scenario.

4. Management of risk by leverage

Risk of loss can be managed through leverage. Less leverage in investment means you can

limit your losses, and more leverage means you can lose more money in the investments.



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ORGANISATIONAL STRUCTURE

COMPANY PROFILE

HISTORY OF GEOJIT BNP PARIBAS

1986 -Membership in Cochin Stock Exchange (CSE).

It all started in the year 1987 when Mr. C.J. George and Mr.RanajitKanjilal founded

Geojit as a partnership firm..

In 1994, it became a Public Limited Company named Geojit Securities Ltd.

The Kerala State Industrial Development Corporation Ltd. (KSIDC), in 1995,

became a co-promoter of Geojit by acquiring a 24 percent stake in the company, the

only instance in India of a government entity participating in the equity of a stock

broking company.

The year 1995 also saw Geojit being listed on the leading regional stock exchanges.

1996-Launch of Portfolio Management Services with SEBI registration.

1997 -Depository Participant (DP) under National Securities Depository Limited.

1999 -Membership in Bombay Stock Exchange (BSE).

Geojit listed at The Stock Exchange, Mumbai (BSE) in the year 2000.

2001-Becomes India's first DP to launch depository transactions through

Internet.Company‘s wholly owned subsidiary, Geojit Commodities Limited, launched

Online Futures Trading in agri-commodities, precious metals and energy futures on

multiple commodity exchanges in 2003. This was also the year when the company

was renamed as Geojit Financial Services Ltd. (GFSL). Company renamed as Geojit

BNP Paribas.



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With effect from July 2005, the company is also listed at The National Stock

Exchange (NSE). Company is a charter member of the Financial Planning Standards

Board of India and is one of the largest Depository Participant(DP) brokers in the

country.

Global banking major BNP Paribas took a stake in the year 2007 to become the single

largest shareholder. Consequently, Geojit BNP Paribas has been renamed as Geojit

BNP Paribas Financial Services Ltd..

2007-BNP Paribas takes a stake in the company‘s equity, making it the single largest

shareholder. ,Establishes Joint Venture in Saudi Arabia to serve the Saudi national

and the NRI.

2008-BNP Paribas Securities India (P) Ltd. – a Joint Venture with BNP Paribas S.A.

for Institutional Brokerage.

2009-Launch of Property Services division, Launch of online trading in Currency

Derivatives.,Consequent to BNP Paribas becoming the largest stakeholder in Geojit

BNP Paribas, company is renamed as Geojit BNP Paribas Financial Services Ltd.

2010Launch of FLIP(Financial Investment Platform), a new advanced online

investment platform, Launch of state of the art Mobile Trading platform to empower

clients to trade from anywhere, even while on the move through the innovative

application FLIP- ME.

MAJOR SHARE HOLDERS OF GEOJIT BNP PARIBAS

In 2007, global banking major BNP Paribas joined the company

Mr.C.J.George-

KSIDC (Kerala State Industrial Development Corporation) –

Mr.RakeshJhunjhunwala – when it took a stake to become the single largest

shareholder.



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FINANCIAL PROFILE OF GEOJIT BNP PARIBAS

24 years of history in Indian Capital Market

GEOJIT BNP Paribas has 24 years of in-depth broking experience in the Indian Capital

Market. More than 5,76,000 clients and over Rs.13,800 crores (as of 31st Dec ‘2010) in

Assets Under Management reflect the trust reposed in our expertise.

WIDE RANGE OF PRODUCT AND SERVICES

Geojit BNP Paribas offers a wide range of trading and investment products and solutions.

Certified financial advisors help clients to arrive at the right financial solution to meet their

individual needs. The wide range on offer includes - Equities , Derivatives ,Currency Futures,

Custody Accounts, Mutual Funds, Life Insurance & General Insurance, IPOs, Portfolio

Management Services, Property Services , Margin Funding, Loans against Shares .

ABOUT BNP PARIBAS

BNP Paribas (www.bnpparibas.com) is one of the 6 strongest banks in the world according to

Standard & Poor's.* With a presence in 85 countries and more than 205,000 employees,

165,200 of which in Europe, BNP Paribas is a global-scale European leader in financial

services. It holds key positions in its three activities: Retail banking, Investment Solutions

and Corporate & Investment Banking. The Group benefits from its four domestic markets:

Belgium, France, Italy and Luxembourg. BNP Paribas also has a significant presence in the

United States and strong positions in Asia and the emerging markets. BNP Paribas has been

operating in India since 1860 in a number of businesses such as Investment Banking ,Private

banking , Life Insurance and Asset Management, Infrastructure Funding, Retail Financing

,Car Contract Hiring.



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ATTRACTIVE BROKERAGE SLABS

We provide value for money! To start with, we offer low online brokerage charges which

further decrease automatically, as and when, your volumes increase.

0.03 to 0.01 for intra-day trades

0.30 to 0.10 for delivery trades

Rs 75 to Rs 30 for F&O

JOINT VENTURES AND BUSINESS PARTNERSHIPS

Strategic joint ventures and business partnerships in the Middle East has provided the

company access to the large Non-Resident Indian(NRI) population in the region. Now, as apart of the BNP Paribas global network, Geojit BNP Paribas is well positioned to further

expand its reach to NRIs in 85 countries. BarjeelGeojit Securities is the joint venture with the

Al Saud group in the United Arab Emirates that is headquartered in Dubai with branches in

Abu Dhabi, Ras Al Khaimah, Sharjah and Muscat. AloulaGeojit Brokerage Company

headquartered in Riyadh is the other joint venture with the Al Johar group in Saudi Arabia.

The company also has a business partnership with the Bank of Bahrain and Kuwait, one of

the largest retail banks in Bahrain and Kuwait.



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SWOT ANALYSIS OF GEOJIT BNP PARIBAS

STRENGTHS WEAKNESSES

GEOJIT BNP PARIBAS has 24 years of

history in Indian Capital Market

GEOJIT BNP Paribas has a first mover

advantage in online trading

Strong shareholders

Wide range of trading and investment

products and solutions

Low online brokerage charges

1st to launch internet trading

Company do not conduct promotional

activities

Its researchers rarely give live updates

on news channel unlike other broking

companies

Employees are not satisfied on the basis

of salary.



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THREATS OPPORTUNITIES

Company has to face real toughcompetition. There are number of broking

firms like RELIGARE, BULLS INDIA,

SHARE KHAN, and ANGEL BROKING.

GEOJIT has less stake in his own

company and Management is under control

of BNP PARIBAS, which is an

international bank. If something happens to

BNP PARIBAS then it will majorly affect

the company also.

If company conducts promotionalactivities here in north India, then

It will help it to enhance its business.

BNP PARIBAS is a renowned bank.

Its identity is known worldwide so if

GEOJIT uses this back up properly

then it will of great benefit to the

company.

If company be in regular contact with

them and convince them to continue

trading, company can increase its

turnover.

If it gives concentration to other

financial products also like insurance,

mutual funds, portfolio management

system. Marginal trading fund, then it

will be profitable to company.



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SWOT ANALYSIS OF GEOJIT BNP PARIBAS

STRENGTHS

1. GEOJIT BNP PARIBAS has 24 years of history in Indian Capital Market. There are

more than 5,76,000 clients and over Rs 13,800 crores (as of 31st Dec ‘2010) in Assets

Under Management which reflect the trust reposed in our expertise.

2. In the year 2000, Geojit BNP Paribas pioneered the individuals with the facility to

trade online. It was a first mover advantage in online trading.

3. Geojit BNP Paribas is backed by strong shareholders. In 2007, global banking major

BNP Paribas joined the company‘s other major shareholders

Mr.C.J.George, KSIDC (Kerala State Industrial Development Corporation)and

Mr.RakeshJhunjhunwala.

4. Geojit BNP Paribas offers a wide range of trading and investment products and

solutions. The wide range on offer includes – Equities,Derivatives ,Currency Futures,

Custody Accounts , Mutual Funds , Life Insurance & General Insurance , IPOs ,

Portfolio Management Services , Property Services , Margin Funding , Loans against

Shares.

5. We provide value for money! To start with, we offer low online brokerage charges

which decrease automatically when, your volume of trade increase.



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6. Learn the craft - You too can develop your trading skills by availing of the effective

guidance by our research department. We offer-

Daily mails delivered to our client‘s mailbox on market conditions and

recommendations.

Technical analysis of BSE 200 Index scrips.

Free monthly investment magazine.

Services of professionally qualified executives at 540 offices across India.

Our strong research ideas have been instrumental in converting our clients into

successful traders.

multiple channel options- Internet, Phone or Branch.

7. 1st to launch internet trading in the year 2000.

8. 1st to launch exclusive branches for women in 2005.

9. We provide online fund transfer through multiple bank payment gateways (HDFC

Bank, Citibank, SBI, Axis bank and many more) and facility for RTGS/ NEFT.

WEAKNESSES

1.

Company is not popular in north India. There is less awareness of this companyamong people. Company do not conduct promotional activities.

2. Its researchers rarely give live updates on news channel unlike other broking

companies.

3. Employees are not satisfied on the basis of salary.



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OPPORTUNITIES

1. If company conducts promotional activities here in north india, then it will help it to

enhance its business.

2. BNP PARIBAS is a renowned bank. Its identity is known worldwide so if GEOJIT

uses this back up properly then it will of great benefit to the company.

3. Company has a real good number of clients but maximum of them are inactive so if

company be in regular contact with them and convince them to continue trading,

company can increase its turnover.

4. Company deals majorly in equity and commodity only, if it gives concentration to

other financial products also like insurance, mutual funds, portfolio management

system. Marginal trading fund, then it will be profitable to company.

THREATS

1. Company has to face real tough competition. There are number of broking firms like

RELIGARE, BULLS INDIA, SHARE KHAN, and ANGEL BROKING.

2. GEOJIT has less stake in his own company and Management is under control of

BNP PARIBAS, which is an international bank. If something happens to BNP

PARIBAS then it will majorly affect the company also.



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RESEARCH METHODOLOGY

My primary objective of doing this project is to get the first-hand knowledge of

functioningofanexporthouse.Sinceiarenotcomparingtwodifferententitiesonthe basis of their

financial results, rather I am learning the impact of crude oil, international market and forex

market on SENSEX . Hence exploratory research designis theneed of thehour.

Furtherthere are fewreasons which mademe to useExploratoryQualitative research:

Itisnotalwaysdesirableorpossibletousefullystructuredorformalmethodsto obtain

information fromrespondents.

Peoplemaybeunable&unwillingtoanswercertainquestionsorunabletogive truthful

answers.

Peoplemaybeunabletoprovideaccurateanswertoquestionthattaptheirsub

consciousness.

Thus,projectresearchmethodology is as follows:

InPrimarydata,QualitativeresearchthroughIn-DepthInterviewshasbeen

adopted. Forinterviewsnon – structuredopen-endedquestions areused.

In Secondary data, bothinternal&externalresearchisdone. For internal

researchReadytousedocumentsavailablewiththeorganizationareused.For

external researchInternet website& publishedbooks areconsulted.

Secondary data is collected from articles in journals and magazines. The database

of SEBI, RBI, NSE and BSE is taken. As this topic is very new, article from

other website links is taken and other data is collected from various broking

firms.



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Limitations ofthe Methodology

1. Concern about the validity: the issue arises from the fact that qualitative research

does no trely on tests for reliability & credibility that are external to data collection

&analysis.

2. Labour intensive data collection: It can be extremely time consuming.Data

collection is the labour intensive process the researcher immerses himself or

herself to build an understanding of the organization, through contact with the

employees, exposure to the norms & familiarity with their practices.

3. Conclusion &interpretation of qualitative research: They are

pr imar i l y communicated in the form of case studies. The case study is written

after an extensive process of data collection through interviewing &participant

observation.

4. Need for training in qualitative research: There is a need of training in qualitative

research methodology. Person shaving low knowledge in this field don‘t go for such

methodology.

RESEARCH OBJECTIVE

1. To find how international stock market ( NASDAQ, NIKKIE-JAPAN STOCK

MARKET) affects Indian market and find reasons of such an effect.

2. To find how currency market affects Indian market and find reasons of such an effect.

DOLLAR $ – inverse relationship with Indian market

YEN – inverse relationship with Indian market

3. To find how oil prices effect inflation and GDP of India.



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LIMITATIONS OF PROJECT

The analysis is purely based on the primary and secondary data.

The primary data comprises only of feedback collected from retail investors and

existing clients.

The currency future is a new concept, the study is based on information from different

articles. Trading of currency like euro, pound, and yen is newly concept.

Facing problem in research because there is no data available of foreign market in

office.

Geojitbnpparibas has international links with market but there are no NRI clients

available in pitampura branch.

Respondents from whom we got filled the questionnaire could provide wrong data.

May small sample size doesn‘t cover the all population characteristics.

WORK DONE IN OFFICE

1. Watching trading on terminal every day.

2. Analysing equity market and commodity market mutual funds

Equity market – stocks / shares (which one is better to invest in market for intraday

activities)

Mutual funds – research on like – HDFC TOP 200, SBI , RELIANCE

3. Selling – DE mat a/c, systematic investment plan ( mutual funds )

4. Back office work.



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NIKKEI



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RESEARCH ON NIKKIE – JAPAN STOCK EXCHANGE

Fukushima Daiichi Leaking Dangerous Radiation, Tokyo is under Threat as Nuclear

Reactor Containment Damaged,Fire and Explosions, Asian Markets Melt Down,Nikkei

down 11%.

Nikkei is a stock exchange market in japan and it affects SENSEX and Indian stock

exchange-BSE.

NEWS RELATED TO NIKKEI WHICH SHOWS ITS IMPACT ON ASIAN

MARKETS

Japan‘s Nuclear Disaster makes a turn for the worse as there is a Fire and Blast in the Nuclear

Reactor which led to a huge Radiation Leak. Japan‘s prime minister warned people within 20

miles of the Plant to evacuate and others within 30 miles to remain indoors. There is a high

probability that the Nuclear Containment Vessel may get damaged as Temperatures kept onrising with the failure of the Cooling Systems.

Asian Markets which were up on the news that the Nuclear Accident will only be minor in

proportionhave woken up to a new reality.The Japanese Stock Index which was down by 6%

has fallen to 11% as fears and panic reaches the Stock Market.Other Asian Stock Markets

like Taiwa, Hong Kong, Sensex are down by 3-4% as well as supply chains of

semiconductors and electronics will be severely disrupted.Japan is the world‘s 3rd largest

economy and a serious problem is that it would affect all its major trading partners like

China, India, Taiwan and Hong Kong.Japan‘s GDP will face negative consequences and a 2-

3% hit this year can be expected leading to a slowdown in global trade and growth and Indian

growth is decreasing and inflation is increasing day by day.



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EFFECT ON INDIAN MARKET

The industries like Banking and IT are linked with Japan therefore the shares of these

industry stocks led the advances rising 1.5-2 per cent. Five stocks - Infosys, ICICI Bank,

TVS, SBI and HDFC - are contributing nearly 125 points to the Sensex. Only 3 of the 30

stocks were trading in the red on Sensex. The auto mobile industry is directly related to japan

because all the auto mobile companies have its origin in Japan for example Hero Honda was

the top gainer, rising over 3 per cent. SBI, TCS and ONGC gained 2-3 per cent. Amongst the

laggards, Maruti and Tata Power declined.

The decision relating to oil prices had a positive effect on global market. The Dow closed

off the intraday lows, falling nearly 60 points to 12,050. The market fell 240 points in early

trade after jobless claims rose suggesting a rise in rate of unemployment. All Asian markets

were trading higher. The Hang Sang rose over 1.5 per cent. South Korea's Kopi gained over 1

per cent and JAPAN‘S NIKKEI traded 0.80 per cent higher.

Shares of home appliances and handset makers LG Electronics gained 2.4 per cent and LG

Display, which produces TV flat screens, increased 2 per cent. Hitachi rose 1.9 per cent to

484 yen on news that an alliance it has formed with General Electric has moved a step closer

to being commissioned to build a nuclear power plant in Lithuania.

EFFECT ON ASIAN MARKET

The benchmark Nikkei [.N225 9974.47 38.35 (+0.39%)] increased 0.2 per cent after

opening marginally lower. The broader Topix was also flat at 857.03. Australian stocks

opened 0.3 per cent lower because global economic fears weighed, with global miner BHP

Billiton down 2 per cent after its $12.1 billion takeover for the shale gas firm Petro hawk.

The benchmark S&P/ASX 200 index [.AXJO 4473.50 -17.20 (-0.38%)] fell 13.7 points

to 4477.0. New Zealand's benchmark NZX 50 index gained 0.2 per cent to 3,417.6

BHP swooped on Petro hawk with an all-cash offer at a 65 per cent premium , marking

the Anglo-Australian firm's biggest step into the growing shale-gas industry.

http://data.cnbc.com/quotes/.N225

http://data.cnbc.com/quotes/.AXJO


http://www.cnbc.com/id/43762373




http://data.cnbc.com/quotes/.N225



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FINDINGS

Japan withdrew its money from Indian market. This had an impact on world economy.

Japan is the third largest economy in the World, after US and China. Because of the loss

Japan will need money to fund its reconstruction, so it may cash in the US bonds. This will

force US fed to buy these bonds, and which will induce liquidity crunch into the US market.

The pull-out of the Japanese fund will lead to fall in stock prices in these markets.

In the short term, most of the nuclear power plants of Japan have gone offline. Japan willhave to depend more and more on crude oil to meet its energy needs. Japan has number of oil

fired power plants, and to meet its energy needs, it may buy more oil from the world market.

The crude oil prices, which were already on upward trend, as a result will see a further spike.

The rise in crude oil prices will impact the world‘s economy in short term. Because of

increase in the value of Yen (as a result of lack of yen supply), there will be an increase in the

cost of these auto components.

Most direct impact will be the pull out of Japan‘s investments in the Indian capital market.

Japanese investment firms will draw the money from Indian market to fund the Japanese

reconstruction. This will have a negative impact on the stock market in short term. Japanese

have also made investment in number of important infrastructure projects in the country such

as Delhi Metro, Delhi Mumbai corridor etc. These projects might see delay because of lack of

availability of funds.



27

ANALYSIS OF FLUCTUATIONS IN THE POINTS OF NIKKEI

This graph shows the two months data of NIKKEI and analysis have been done using 5-days

moving averages concept.

Furthermore, the interpretation shows when the investors should buy and when they should

sell the stocks in this market exchange.

INTERPRETATION

This graphical interpretation is done on the basis of five days moving average. Blue line in

the graph shows rates of NIKKEI as listed on its stock exchange market and the black line

shows the five days moving average of these rates. It shows that when the rate moves below

its moving average, it means the shares should be sold whereas if the moving average is

below then the shares should be purchased because that means rates are low.

8200

8400

8600

8800

9000

9200

9400

9600

9800

10000

10200

RATE

RATE

5 per. Mov. Avg.

(RATE)



28

COMPARISION OF SENSEX WITH NIKKIE

INTERPRETATION

The graph is the graphical representation of effect of fluctuations in NIKKIE on SENSEX.

Red line shows the points on NIKKIE and the blue line shows the points of SENSEX.

The data taken is of two months i.e. MAY and JUNE. The graph represents that as there is a

fall in NIKKIE points, points in sensex also fall and as seen from 31st may, as the points of

NIKKIE increased, points of SENSEX also increased. This shows that NIKKIE directly

affects INDIAN STOCK MARKET.

8200

8400

8600

8800

9000

9200

9400

9600

9800

10000

10200

sensex

nikkie



29

NASDAQ



30

INTRODUCTION

NASDAQ is a New York stock exchange it was founded in 1971. The full form of

NASDAQ National Association of Securities Dealers automate quotation (NASDAQ).US

economy is world largest economy. If there is downfall in us economy then it will definitely

affect the Asian market. SENSEX is directly related to NASDAQ.

There is a weak trend on Nasdaq which shows greater impact on the Indian stocks market

SENSEX and SENSEX, NIFFTY market failed to opened on a strong note. The market is

remained high volatile in which investor cannot judge properly when to invest and how much

money should invest.

RELATIONSHIP

There is inter dependency between nasdaq and sensex Correlation between values range from

-1 to +1, with 1 indicating the perfect correlation i.e. a 10% fall or rise in index A will cause

10% fall or rise in index B. The figures at the top of the page show the exact correlation

values for all the five indices. The findings are interesting and instructive. While there is

indeed a link between Indian and global markets, the correlation varies from strong to weak.

Indian markets were found to be most strongly correlated with Hong Kong markets. On an

average, a 10% rise (or fall) in the Hang Seng results in a 6.5% change in the Sensex. The

second highest correlation was with the South Korean index Kospi.

FINDI NGS

As NASDAQ is a key index and stocks on sensex is totally based on counters like

RELIANCE, INFOSYS, SBI, L&T, and ITC which showed wild movements. There is

slowdown in NASDAQ which directly effect on the software sector. The large number of

software stocks hit the lower circuit during this two month.

Infosys and Global Tele services were among the few stocks which failed and remain in

downward trend .Other stock and sectors showed mixed trend in which SBI and L&T dipped,

and ITC remained constant.

Due to globalisation and Indian developing trend in Indian markets the changes in other

developed countries like US, JAPAN, CHINA etc. And though local factors do influence the

markets more, the Indian markets won‘t keep rising even when US markets are either fallingor stagnant

http://en.wikipedia.org/wiki/National_Association_of_Securities_Dealers

http://en.wikipedia.org/wiki/National_Association_of_Securities_Dealers



31

ANALYSIS OF FLUCTUATIONS IN THE POINTS OF NASDAQ

This graph shows the two months data of NASDAQ and analysis have been done using 5-

days moving averages concept.


sell the stocks in this market exchange.

INTERPRETATION


the graph shows rates of NASDAQ as listed on its stock exchange market and the black line

shows the five days moving average of these rates. It shows that when the rate moves below

its moving average, it means the shares should be sold whereas if the moving average is

below then the shares should be purchased because that means rates are low.

2450

2500

25502600

2650

2700

2750

2800

2850

2900

RATE

RATE

5 per. Mov.

Avg. (RATE)



32

GRAPHICAL REPRESENTATION OF EFFECT OF NASDAQ ON SENSEX

The graph shows the effect of NASDAQ on SENSEX.

INTERPRETATION :

The graph is the graphical representation of effect of fluctuations in NASDAQ on SENSEX.

Red line shows the points on NASDAQ and the blue line shows the points of SENSEX.

The data taken is of two months i.e. MAY and JUNE. The graph represents that as there is a

fall in its points, points in sensex also fall and as seen from 31st may, as the points of

NASDAQ increased, points of SENSEX also increased. This shows that NSDAQ directly

affects INDIAN STOCK MARKET.

2450

2500

2550

2600

2650

2700

2750

2800

2850

2900

sensex

nasdaq



33

CURRENCY

MARKET

Every major development in Indian economy or world economy affects the Indian

currency market.

Earlier the corporate executivesused to be ill-informed about international news,movement of

oil prices or other factors influencingthe currency market. Today, India follows

theLiberalised Exchange Rate Management System(LERMS), under which it is absolutely

essentialfor corporate executives to understand how theexchange rate moves, and why do

they move. With the large volume of transactions, a movement ofeven 2-3 paisa in the

exchange rate can hit thebottom line of any corporate. There are a numberof instances when a

sudden movement in the exchange rate have made companies loss or gainheavily in foreign

currency transactions. There are several factors which influence thecurrency market. Some of

the important ones among them, which have had an impact on the marketrecently, arediscussed below:



34

Inflow of Foreign Funds: The exchange rate depends on demandand supply of currency.

Good ratings by international rating agencies and strong economicfundamentals have boosted

foreign investors‘confidence in the Indian market. Huge foreigninvestments have already

come to India, whilebig investments through Foreign InstitutionalInvestors (FIIs) and Foreign

Direct Investment(FDI) are expected in the near future.

Change of Interest Rate: The value of the currency of any countrymajorly depends on the

interest rate of that country. Any change of interest rate by the Federal Reserve Bank of New

York (FED) through the Federal Open Market Committee(FOMC) has a great impact on the

currency market. In the recent past there have been instances of rate hikes by the FED, as a

result of which the USD had appreciated against major international currencies as well as the

Indian Rupee .Even an expectation of change of interest rate has a great impact on currency

market. Whenever there is any such expectation, the market reacts sharply. The possibility of

changes in interest rate is a speculative move, and the market reacts only for a short period of

time. The market generally discounts some portion of such expectations well in advance,

before they actually happen.

Price of Oil: The Indian currency market largely depends on the price of Dubai Crude. It is

observed that USD appreciates at the end of the month when compared to other days of the

month, primarily because of the month-end demand of USD in the wake of payment for

imported oil. However, today‘s market is mature enough, with players of fore ign exchange

covering themselves against this type of expected fluctuations in the market. A large portion

of India‘s import payment is mainly for payment of oil. Internationally, crude prices are

named as BRENT, NYMEX, and Dubai Crude. Whenever there is any hike in the oil price

per barrel, the Indian Rupee depreciates against the US Dollar. As such, the Indian

Government buys more USD against INR to honour the import liability, resulting in heavy

demand for USD. Consequently, the Indian rupee depreciates against USD.

Release of Economic Data: Annual economic review, RBI credit policy and monetary

policystrongly influence the currency market. Understanding the interpretation and

correlation of different data is important to gain a thorough understanding of the exchange

rate movement by any corporate. Any mistake in the interpretation of data released can causeheavy loss to an organisation.



35

‘Exchange Rate’ of a currency:-The exchange rate of the currency of a country in relation

to the currency of another country depends on the economic strengths and the comparative

trade the currency of any economy is based on dynamics of supply and demand, and its value

depends on trading in currency exchanges all over the world. Higher the demand for a

currency on an exchange, the stronger it becomes and vice versa. However, for currencies

like INR which are not traded on exchanges, the value depends on capital inflows in the

country.

There are many participants in any foreign exchange market. These entities — like banks,

corporations, brokers, even individuals buy and sell currencies every day. Here too the

universal economic law of demand and supply is applicable: when there are more buyers for

a currency than sellers, its exchange rate rises. Similarly, when there are more sellers of a

particular currency than buyers, its exchange rate will fall. This does not mean people no

longer want money; it only means that people prefer to keep their wealth in some other form

or another currency.



36

RESEARCH ON DOLLAR



37

Effect of dollar on rupee with reference to the Scenario before occurrence of the current

financial crises:

We were witnessing the surge of dollar-inflows into India due to reasons like strong

economic fundamentals and favourable business atmosphere, etc. These dollar inflowscan be

in the form of Foreign Direct Investment, portfolio inflows, External Commercial

Borrowings by Indian companies abroad,remittances to India by the Non-Resident Indians.

Since the Indian economy and the Indian stock markets have been on a roll, the capital

inflows to India have been pretty strong which primarily led to the appreciation in value of

rupee. This huge influx caused a significant demand – supply gap between the dollar and the

rupee. Due to this exporters were placed at a disadvantage with a rising rupee as the dollar

became weaker. Thus a dollar which fetched Rs. 48 about two years ago today fetched only

Rs. 44 eating into the profit margins of exporters.

At the same time, importers benefit because they need to pay less for their imports, The

Reserve Bank of India (RBI), as the central bank of India, which oversees the foreign

exchange management of this led to a stable and healthy currency.The RBI buys or sells

dollars via state-run banks to prevent excessive volatility in the forex market and avoid any

sharp appreciation or depreciation in the currency. When the RBI intervened to keep the

rupee at some weak value, it had to buy the dollar inflows from exporters, from NRIs, from

foreign direct investors, from companies that borrow abroad. In any case the sellers of dollars

need rupees to conduct their businesses here.

When the RBI buys dollars, it pays for them using freshly printed rupee notes. This leads to

greater money supply, higher credit growth and inflation.

When the RBI purchases foreign currency inflows, the domestic monetary base or money

supply or both rises since for every dollar the RBI buys from the market, an equivalent

amount of rupees gets injected into the system, adding to excess money in the system or the

liquidity overhangAnd precisely, here comes the catch. As RBI sells more rupees, the money

supply increases which mean too much money chasing same (or less) number of goods,

thereby leading to inflation. So in effect one act of RBI creates another problem. The RBI

typically controls the appreciation by manipulating demand-supply dynamics of currency

market. It purchases dollars (to create more demand for dollar) and sells rupees (to increase

supply of INR, thereby decreasing its value. In other words, when the RBI buys dollars from



38

the Indian market, it simultaneously pumps rupees into the currency markets, creating the risk

of inflationary pressures.

To contain inflationary pressures, the RBI adopts a measure termed as ‗sterile intervention.‘

Under this measure, the RBI sells Government of India bonds in the market. With the sale of

these bonds, the rupee, which had flowed into the market for buying dollars, is once again

sucked out of the market. When the RBI buys dollar-denominated assets, (to create demand

for dollars and reduce supply of rupee) it sells rupee-denominated securities to suck the

rupees back. But when the RBI has to suck out a whole lot of rupees back, it has to raise

rupee interest rates, the Repo rate (the interest rate at which commercial banks borrow for

short term from RBI) and the Cash Reserve Ratio (CRR).This is how the RBI protects the

dollar-rupee exchange rates and yet, manages to contain inflation.

Effect of dollar on rupee with reference to theScenario after occurrence of the financial

crises:

. India, which was recently having huge capital dollar inflows, now is experiencing flow of

dollars outside the country due to selling of more Indian shares than bought, thereby making

dollars scarce in India and reduced demand for rupees, simultaneously, as there is increased

demand for dollars due to spurt in crude oil prices and the dipped capital inflows.

The current financial crises that shook the global financial markets has seen unprecedented

bailouts and infusion of dollars into the US economy at a cost of many emerging markets,

from where funds have been pulled out to flow back into America. A weak dollar adversely

affects the exporter.

The higher price of imported goods, especially oil, has also led to an increase in domestic

inflation and a fall in the value of the Indian currency. High inflation and a strong growth in

the Indian economy have already forced the RBI to raise interest rates.



39

FINDINGS

Dollar value increases due to some bankers moving their money from shares into cash

because at the moment cash is the King. They gain more by letting people borrow their

money.

The Dollar Value is increasing due to the sudden surge in the Global Demand for the

Currency. Most of the international trading in commodities is done using DOLLAR as it is

the universal currency.

The exchange rate depends majorly on the basic economic theory, i.e. the demand and

supply. Dollar has become cheaper over the period and the rupee has become stronger. The

demand and supply for the season determines the value of the rupee against dollar. The

inflows of dollars is the supply and the outflow of dollars is the demand.

As for long-term i don't see the dollar sustaining that value because of the large amount of

foreign debt. As well as bad as the US stock market is, other markets seem to be doing a lot

worse ie Moscow.



40

ANALYSIS OF FLUCTUATIONS IN THE VALUE OF RUPEE RELATIVE TO

DOLLAR

This graph shows the two months data of the value of rupee relative to dollar and analysis

have been done using 5-days moving averages concept.


sell the currency in the forex market.

Interpretation:

Dollar fluctuates very marginally. Intraday there is just marginal fluctuation i.e. in points

only. Blue bar shows the rates of dollar and the black line shows the 5 day moving average of

dollar prices. This interpretation shows that when the black line moves below the bars, then

investors should buy the dollar. Similarly, when the black line moves above the bars, then the

investors should sale the dollar. According to this graph, we can see dollar. From 13 th till 17th

of may, the black line is above the bars , which is an indication to the investors to sell the

currency. According to this graph, value of RUPEE increased from 30th of May till 5th of June

as bars are quite below the moving average line and then as we see from 12th

june to 17th

june,blue line is above the bars which shows that investors should sale the currency at this point.

43.6

43.8

44

44.2

44.4

44.6

44.8

45

45.2

45.4

45.6rate

rate

5 per. Mov. Avg.

(rate)



41

YEN

http://www.premiuminvestments.in/premium_img/0952876001300092228.jpg



42

INTRODUCTION

The Japanese yen is one of the largest currencies, in terms of international trade and forex

trading.

All of the major currencies in the forex market have central banks behind them. In the case of

the Japanese yen, that is the Bank of Japan. Like developed country central banks, the Bank

of Japan has a mandate to act in a fashion that minimizes inflation and encourages growth.

The Japanese economy has some particular and peculiar attributes that yen traders need to

understand.

Despite its size, Japan has been notably lacking in growth since the collapse of its real estate

bubble. Writers often refer to a "lost decade" in Japan, and though that may not be entirely

accurate, growth has rarely exceeded 2% between 2001 and 2011, and has contracted to zero

or negative rates multiple times. Japan is also notable for inflation, or rather its almost near-

absence of it. Japan has actually experienced deflation for much of the last decade.

Japan is also the oldest major economy in the world, and has one of the lowest fertility rates.

That suggests an increasingly aging workforce with fewer and fewer younger workers to

support the economy through taxation and consumption. Japan is also quite closed to

immigration, and that establishes difficult demographics.

Japan is also an advanced economy with a well-educated workforce. Although industries like

shipbuilding have migrated to countries like South Korea and China, Japan is still a leading

manufacturer of consumer electronics, autos and technological components. This has left

Japan with significant exposure to the global economy, but increasing reliance on China as a

trade partner.There is lot of money invested by japan in india this will increase the prices of

shares in Indian market.

http://www.investopedia.com/terms/l/lost-decade.asp?partner=sfgate

http://www.investopedia.com/terms/i/inflation.asp?partner=sfgate

http://www.investopedia.com/terms/d/demographics.asp?partner=sfgate

http://www.investopedia.com/terms/d/demographics.asp?partner=sfgate

http://www.investopedia.com/terms/i/inflation.asp?partner=sfgate

http://www.investopedia.com/terms/l/lost-decade.asp?partner=sfgate



43

FINDINGS

The key reason for increasing the momentum of Japanese investments in India is the

growth potential of the local market. Japanese automobile and general machinery

companies were most interested in India as an investment destination.

Japanese companies invested directly in India, rather than the current norm of coming

through Singapore and Mauritius. In yet another move to increase the flow of

Japanese investment into India, visiting Japanese Prime Minister Yukio Hatoyama

assured India‘s leading industrialists and bankers to look into the option of directly

linking the rupee and yen.

A suggestion was made to link the rupee and yen as a large number of Japanese

pension funds and other investors are keen to invest in India. They will come directly

instead of coming through Singapore and Mauritius.

A suggestion was made in this regard by U K Sinha, chairman and managing director

of UTI Asset Management Company.Sinha told Business Standard: Currently,

Japanese investors face delays in converting the yen into the dollar and then dollar

into the rupee. Besides, the Japanese investors face volatility in the Indian markets.

Hatoyama‘s response is crucial when the Japanese foreign direct investment (FDI) in

India trippled to $5.4 billion (nearly Rs 25,160 crore) in 2008 from $1.78 billion

(nearly Rs 8,290 crore) in 2007, overtaking the Japanese FDI in China.

Japan could tap investment opportunities in power, clean technologies, nuclear

energy, energy efficiency, university linkage and human resource development.

Moreover, J P Nayak, whole-time director of L&T, and Hari S Bhartia, co-chairman

and managing director of Jubilant Organosys, emphasised the need for more Japanese

investments in India‘s infrastructure companies at a time when India had proposed aninvestment of $500 billion.



44

EFFECT ON INDIAN MARKET DUE TO JAPAN EARTH QUAKE

Two things. Firstly, though it sounds selfish (which is how the markets are) the quake does

not affect India directly. There is no direct consequence of the earthquake and that is

probably what has kept the markets in the green today. One can call it ―mildly negative‖.

Secondly, any such disaster, in its wake, creates immense business opportunities. It is said

that every natural disaster creates new millionaires. The sheer work of reconstruction,

presents opportunities to rebuild, which otherwise were not required. Constructing homes,

roads, rebuilding infrastructure, laying pipes, factories, telecom networks, towers, there is a

lot which will need to be made all over again. And that is where many make money. Just as

war is a business opportunity for many, such calamities are also unfortunately, business

opportunities for many. And that is a capitalistic outlook, which is also the markets

perspective. And that is why the Indian markets are largely unaffected.

But what could be the indirect consequences of this earthquake in terms of business?

Undoubtedly, it would all depend on the movement of the Japanese yen vis-à-vis the Indian

rupee. A rising rupee would mean less outgo for companies like Maruti which have royalty

payments to make and vice versa when rupee falls against the yen. Similarly, raw material

costs would go up when there are more imports from Japan. We have to remember that as far

as Japan is concerned, India is an emerging market and it exports to India and not vice versa.

So any major indirect impact on India also seems unlikely.

It could have some negative impact on shipping, what with six of Japan‘s ports currently

closed of which many would not be able to resume operations at least for the next few

months. Suzuki, Mitsubishi and Toyota amongst many have announced halting production till

16th March. What this means is that we could see a shortage of Japanese cars around the

world. And that is an opportunity for many but not Indian cars.

On the other hand, reconstruction work may boost imports to Japan. But India does not

really have too much to give to a developed country like Japan, so in terms of opportunities –

it would be very restricted or even nil. Yes, tourism will be affected to Japan but for the rest

of the world or to India? No impact as such, apart from sentiments taking a hit. And what

about funds coming to India or removing funds from India?



45

As far as funds coming to India are concerned, it is unlikely that funds will remove money

from a developed economy and put that in an emerging market like India. But yes, we could

see some Japanese companies or funds liquidating their funds invested in India to tide over

their current crisis.

THE EFFECT ON STOCK EXCHANGE MARKET

NEW DELHI: With the Yen for the first time in 16 years breaching the 80-mark against the

US dollar, Indian companies that had used the Japanese currency to raise overseas debt may

have some reason to worry as their repayment cost could go up.

The yen touched 79.98 against the greenback at around 9.55PM India time as increased risk

of radiation from quake-hit nuclear power plants raised fears of Japanese companies

repatriating funds home. In April 1995, three months after the Kobe earthquake, the Japanese

currency had touched 79.75 against the US dollar, a post World War II high, as the Clinton

administration had threatened sanctions over opening the auto market to US exports.

Currency traders are predicting that the currency could break the 1995 record as market

intervention by the Japanese authorities could suck out liquidity since banks would have to

sell US dollars.

Japanese market faced a sudden down fall due to earthquake /tsunami therefore Japanese

market started withdrawing its money from other stock markets, which affected Indianmarket as well. The market value of Japanese based companies listed on sensex decreased.

Like MARUTI SUZUKI , the market value of its share decreased by 20%.

http://timesofindia.indiatimes.com/topic/India

http://timesofindia.indiatimes.com/topic/India



46

If the yen continues to appreciate against the dollar, it would have a negative impact on the

raw materials that Maruti consumes

Share Price Movement During The Last 12 Months

Period Price Latest Price Gain/Loss (Rs.) % Gain/Loss

3-Days 1259.25 1166.15 -93.10 -7.39

5-Days 1269.10 1166.15 -102.95 -8.11

7-Days 1266.10 1166.15 -99.95 -7.89

15-Days 1292.90 1166.15 -126.75 -9.80

1-Month 1230.35 1166.15 -64.20 -5.22

3-Month 1381.70 1166.15 -215.55 -15.60

6-Month 1386.75 1166.15 -220.60 -15.91

9-Month 1364.35 1166.15 -198.20 -14.53

1-Year 1460.00 1166.15 -293.85 -20.13



47

ANALYSIS OF FLUCTUATIONS IN THE VALUE OF RUPEE RELATIVE TO YEN

This graph shows the two months data of the value of rupee relative to yen and analysis have

been done using 5-days moving averages concept.


sell the currency in the forex market.

INTERPRETATION:


the graph shows yen prices relative to rupee i.e. 1 yen=.544369 INR on 2nd

may and the black

line shows the five days moving average of this rate. It shows that when the yen price moves

below its moving average, it means the currency should be sold whereas if the yen price

moves above the moving average, it means the currency should be bought. Black line is

above the blue line that means currency should be sold as it means currency has increased in

terms of value. Then in end of may, blue line is quite above the black line which interpret that

the currency should be bought. Currency rate increased around 20 th of june and in end of

month again the rates fall.

0.535

0.54

0.545

0.55

0.555

0.56

0.565

Series 1

Series 1

5 per. Mov. Avg. (Series 1)



48

CRUDE OIL RESEARCH



49

LIST OF OIL COMPANIES IN INDIA

.

1. Reliance Industries - The Company is owned by AMBANI‘S which is India‘s

largest Private Company Reliance Industries is also an Oil and Gas manufacturingcompany . The market capitalisation exceeding $30 billion it is India‘s most

valued company. The company is also one of the biggest exporters in India with

one of the largest petrochemical and oil refining complexes in the world at

Jamnagar.

2. ONGC Corp – ONGC ranks 3rd in Oil & Gas Exploration & Production (E&P)

Industry globally. ONGC‘s wholly-owned subsidiary ONGC Videsh Ltd. (OVL) is

the biggest Indian multinational, with 40 Oil & Gas projects in 15 countries. The

company earned a revenue of approxRs. 20,000 crores with net profit margin of

34% in Dec‘10

3. GAIL India – .It emphasizes on clean fuel industrialization, creating a

quadrilateral of green energy corridors that connect major consumption centers in

India with major gas fields, LNG terminals and other cross border gas sourcing

points. GAIL is one of the best performing stocks in the Energy Industry in India

in the last couple of years. It is a well managed fast growing company in one of the

best sectors in India with high competitive barriers.

4. Cairn India - With a market cap Rs. 66,000 crores, Cairn India is now one of the

biggest private exploration and production companies currently operating in the

region. A subsidiary of the British company. Cairn India‘s strategy is to establish

commercial reserves from strategic positions in order to create and deliver

shareholder value. Cairn India has recently agreed to be taken over by London

listed India‘s largest Mining Group it is the second largest Oil and Gas private

company listed on the Indian stock exchange.

5. BPCL – BPCL is along with HPCL and IOCL, a major distributor of petroleum,

cooking gas and diesel in the Indian marke.The company‘s low margins and



50

abysmal stock price performance is due to the government control which forces it

to sell at below cost leading to huge losses and curtails capex for growth.

6. Indian Oil Corporation Ltd (IOCL) – The Company covers the entire

hydrocarbon value chain – from refining, pipeline transportation and marketing of

petroleum products to exploration & production of crude oil & gas, marketing of

natural gas, and petrochemicals. With a market capitalisation of Rs. 75,000 crores,

it is in the Fortune ‗Global 500′ listing, ranked at the 125th position in the year

2010 IOCL it is also suffers from government mal-interference and not a good

investment

7. Hindustan Petroleum Corp. Ltd (HPCL – One of the smallest major Oil and Gas

PSUs with a market capitalisation of Rs. 11,000 crores. It has two major refineries

producing a wide variety of petroleum fuels & specialties, one in Mumbai (West

Coast) and the other in Vishakhapatnam, (East Coast).

8. Oil India Ltd.- With a market capitalisation of Rs. 31,000 crores, OIL is engaged

in the business of exploration, development and production of crude oil and natural

gas, transportation of crude oil and production of LPG. It became a wholly-owned

Government of India enterprise in 1981. It has emerged as a consistently profitable

international company with exploration blocks as far as Libya and sub-Saharan

Africa.

9. Petro net LNG Ltd. - It was formed as a Joint Venture by the Government of India

to import LNG and set up LNG terminals in the country, it involves India‘s leading

oil and natural gas industry players. The promoters are GAIL, ONGC, and IOCL

& BPCL. The company has a Market cap Rs. 9,000 crores. The revenues earned in

Dec‘10 were approximately Rs.3600 crores with a net profit margin of 5%.



51

EFFECT OF MEETING IN SAUDI ARABIA

There is meeting in which Saudi Arabian oil minister Ali al- Naimi said, OPEC‘s biggest

producer, Kuwait, Qatar and the United Arab Emirates voted for a 1.5 million-barrel-per-day

increase in oil production. Libya, Angola, Ecuador, Algeria, Iran and Venezuela were

opposed to the increase, according to OPEC delegates. If they had agreed to increase the

production, then the prices of oil would have decreased and inflation would have been

controlled and GDP would have increased. But it did not happen in the meeting, they did not

agree to this so therefore government has approved a price hike for diesel, LPG ,kerosene and

petrol. Diesel prices will increase by Rs 3 a litre, and LPG would cost Rs 50 more per

cylinder. Kerosene prices have been increased by Rs 2 per litre.Petrol prices have been

increased by Rs. 5. The hike in prices is exclusive of Value Added Tax (VAT). Indian crude

oil companies purchase Crude Oil purchase from International market. They buy crude oil at

higher price and selling oil at less price as compare to buying price. So government provides

Subsidies to oil companies so that they can provide oil at low price in Indian market. This is

the reason why government raising prices day by day to provide recovery of money.

MAJOR PRODUCERS OF OIL

Many people may not realize that the U.S. is the third largest oil producer in the world, with

8.7% of total global oil production. The U.S. trails only Russia (12.9%) and Saudi Arabia

(12.0%).When the dollar falls, as this makes oil cheaper for buyers in other currencies.

Can oil prices be controlled

Yes oil prices can be controlled if there is a hopeful of a normal monsoon this year,

based on the information available. The government expects the monsoons to help

control inflation in the country

And as per the demand and supply rule the demand side, there is usually a rise in

demand for crude oil due to seasonality effect (summer); China’s role in the world’s

crude oil demand will be a key factor.From the supply side, the speculation

over OPEC’s oil production quota is still high and if Saudi Arabia will raise its oil

production quota this might also bring down crude oil prices.



52

RESEARCH ANALYSIS OF OIL

EFFECT OF FALL IN OIL PRICES IN INDIA

There is a high fall in crude oil prices this is the another reason that led the market higher

because India is one of the major oil importers in the world. Oil marketing companies as wellas airline companies were effected therefore this is led to buy oil from market. BPCL, HPCL

and IOC gained 1-2.5%. ONGC was the leader on Nifty, with rising 2.5% and GAIL gained

over 1%.Jet Airways surged 9% and Spice Jet gained 7%. Kingfisher Airlines went up 2.5%.

There is a relation between oil , inflation and growth of indaineconomyIf oil prices decrease

from $150/barrel to $100/barrel, then growth of India will increase from 7.3% to 8.3% and

inflation will decrease from 9.6% to 6.8%.

There is some positive effects of falling crude prices could be increases in the local fuel

prices , which are expected to boost inflationary pressures. If prices fall then vehicle owners

in India they get some relief in terms of petrol price, this will held only when crude oil prices

slide to USD 90 per barrel. This will also help to control inflation in India and increase the

GDP.

According to data available on internet it is seen that one one dollar hike in crude price

results in a push of 40 paisa per litre in petrol prices and 30 paisa per litre in diesel prices inthe Indian market

http://www.moneycontrol.com/nifty/nse/nifty-live

http://www.moneycontrol.com/nifty/nse/nifty-live



53

EFFECT OF INCREASE IN OIL PRICES IN INDIA

According to my research, if oil price increases from $100/barrel to $150/barrel, then

growth of india will decrease from 8.3% to 7.3% and inflation will increase from

6.8% to 9.6%.As per my research there is negative relationship between annual

percentages in oil price the growth rate reduced to 0.1 percentages.

A rise in price to $150 a barrel would slow world growth by 0.4% in 2011 and

2012.The Petroleum Minister S Jaipal Reddy on June 10, 2011 met Finance Minister

Pranab Mukherjee. The OMCs purchase crude oil at market rate and they sell diesel,

kerosene and cooking gas at government-subsidized price, because of this mismatch

between buying and selling price, OMCs are making loss of Rs 450 crore a

day.OMCs incur revenue loss of Rs 12.64 on every litre of diesel, Rs 26.16 on every

litre of kerosene and Rs 381 for every LPG cylinder.Crude oil has averaged $110

barrel this month. In June 2010, diesel price was increased by Rs 2 per litre, kerosene

by Rs 3 per litre and LPG by Rs 35 and government also increase the petrol prices by

Rs 5 per litre.

Crude oil prices have been on a spike, sending fears of slower economic growth in the

nations dependent on imports to meet energy needs. Global crude oil is trading at

above $105 per barrel,

It has created a 'worst-case scenario', where the price reaches $200 a barrel in the

second quarter of 2011.



54

WHY OIL PRICES INCREASES

High crude prices have slowed the economic recovery in the United States, the

world‘s largest oil consumer, and could derail growth in China and India Experts

attributed spike in prices to a variety of factors, including North Korea‘s missile

launches, the crisis between Israel & Lebanon, Iranian Nuclear programme & US

department showing a decline in petroleum reserves.

The US Dollar has traditionally seen a rise in value when oil prices went up. This

happens because oil is generally priced in dollars, and the demand for the currency

rises with higher energy costs.

1. Japan withdrew its money from Indian market

Impact on World‘s economy – Japan is the third largest economy in the World, after US

and China. Since Japan will need money to fund its reconstruction, it might cash in the US

bonds. This will force US fed to buy these bonds, and which will induce liquidity crunch

in the US market. The pullout of the Japanese fund might lead to fall in stock prices in

these markets in short term most of the nuclear power plants of Japan have went offline.

Japan will depend more and more on crude oil to meet its energy needs. Japan has number

of oil fired power plants, and to meet its energy needs, it might buy more oil from the

world market. The crude oil prices, which were already on upward trend, will see a further

spike as a result of this. The rise in crude oil prices will impact the world‘s economy in

short term.Most direct impact will be the pull out of Japan‘s investments in the Indian

capital market. Japanese investment firms will draw money from the Indian market to fund

the Japanese reconstruction. This will have a negative impact on the stock market in short

term. Japanese have also made investment in number of important infrastructure projectsin the country such as Delhi Metro, Delhi Mumbai corridor etc. These projects might see

delay because of lack of availability of funds. Also because of increase in the value of Yen

(as a result of lack of yen supply), there will be an increase in the cost of these auto

components.



55

ANALYSIS OF FLUCTUATIONS IN THE VALUE OF CRUDE OIL

This graph shows the two months data of the value of CRUDE OIL and analysis have been

done using 5-days moving averages concept.


sell the crude oil in the market

INTERPRETATION


the graph shows oil prices and the black line shows the five days moving average of oil. It

shows that when the OIL price moves below its moving average, it means the oil should be

sold. The oil prices in first week of May continuously decreased from $113.285 to $97.74 till

8th of May. After that, there was just a marginal change in the rate of oil of approximately

Rs.1 or Rs.2. So, that is why investor had to take advice of analyst and wait for the

suggestions of analysts. If he wants to earn profit, then he can prefer doing intraday trading.

This way he will have to face less risk and can generate profit as well.

0

20

40

60

80

100

120

RATE

RATE

5 per. Mov. Avg.(RATE)



56

CONCLUSION

Many corporates are now entering into derivative contracts to protect future cash outflow.

Further, some corporates also consider options such as double-no-touch barrier, particularly when

entering into contract-like structure deposits on foreign currency denominated fund. While

entering into such transactions, a corporate has to look into all factors that may influence

theexchange rate of the currency pair (such as USDINR, Euro-USD and USD-JPY, and also

perhapsUSD-CHF and GBP-USD).Nowadays many corporates take Term Liability and enter into

transactions bywhich they can reducethe Rupee interestburden by swipingthe same liability

intoJapanese Yen (JPY),as interest rate onJPY is lower than thaton the Indian Rupee.But in this

type oftransaction, thecorporate is exposed to the currency risk of bothUSD-INR and USD-JPY.

We are living in a global economy. As such,the Indian economy is no longer immune to

international news and events, and reactsaccordingly. Some countries are now

consideringconverting some portion of their reserve intoEuro from USD, and recently a number

ofinternational transactions have started movingfrom USD to Euro. These changing

circumstancesmay influence the Euro-USD exchange rate In India, direct quotationfor USD-INR

is available, but direct exchange ratebetween other foreign currencies (other thanUSD) and the

Indian Rupee is not available.So, if any corporate has to buy JPY to honourits financial liability

on the maturity date, it hasto undertake two transactions. First of all it willhave to buy USD from

Indian market againstIndian Rupee. Then it will have to buy JPY from the international market

against the said USD.

Long gone are the days of thefixed exchange rate regime, when

corporate executives used to be illinformedabout international

news,movement of oil prices or otherfactors influencing the currencymarket.



57

SUGESSTIONS TO THE COMPANY

1. Company should conduct promotional activities here in north India, and then it will

be able to enhance its business.

2. Company deals majorly in equity and commodity only, it should concentrate on other

financial products also like insurance, mutual funds, portfolio management system.

Marginal trading fund, then it will be profitable to company.

3. There should be separate departments for dealing in equity, commodity and currency

market.

4. Employees do not seem to be happy with their salary package and secondly they do

not get extra payment or bonus if they show good performance and bring good

number of clients for the company.

5. Company has opened number of branches in Delhi but in each branch only two

terminals are kept and amount of work done and number of clients is limited, so

instead of this I think, company should decrease number of branches, two branches

should be combined, so that COST reduces.

6. Each employer including terminal users and back office employers are given the

burden of completing targets of selling De-mat accounts, due to which they are not

able to focus on their defined work, instead of this in each branch there should be a

separate sales department.



58

LEARNING OUTCOME FROM SUMMER INTERNSHIP PROGRAM

1. I watched terminal trading for two months and learnt how to advice the clients to do safe

trading by booking profits.

2. I learnt how to do trading on terminal.

3. I also learnt to fill DE-MAT account form and all the requirements like-

72 times signature of client is required

Copy of pan card

1 address proof (voter id card, driving licence, electricity bill, rent agreement,

telephone bill, passport, ration card)

1 cancelled cheque

Bank statement of last 6 months

2 passport size photographs

( all these have to be self attested )

4. Learnt about safe investment i.e. via SIP (systematic investment plan) and various

categories provide by various companies and banks.

5. I did telephonic calling as well as door-to-door calling to convince the clients for SIP

or to open their DE-MAT account with our company. I called around 500 persons and

data is provided by company only. But that it‘s not easy to convince anyone especially

when they have to invest money in equity market/shares

6. I also called the existing clients to inform them to activate the new free service the

company is providing i.e. MOBILE TRADING and called inactive clients to know

about the problems they are facing and solving them to make them active.

Problems faced by clients -

They don‘t have knowledge of various products company offers like mobile

trading, Commodity trading, marginal trade funding

They don‘t get proper information of online trading, how much amount is in debit

as well as credit side of their account.

7. Every Sunday we used to get training from different companies like

SBI

RELIANCE MUTUAL FUND

MIRAE ASSEST (MUTUAL FUND)

Two general sessions were conducted in the main branch of GEOJIT, where wewere provided knowledge about the company, mutual funds, insurance etc.



59

REFRENCES

1 www.bloomberg.com

2. Yahoo.finance.com

3. http://www.exchangerates.org.uk/commodities/OIL-USD-history.html

4. Moneycontrol.com

5. Geojitcomtrade.com

6. Geojitbnpparibas.com

7. www.nism.ac.in

8. www.nse.com

9. www.myirish.com

10. http://www.chillibreeze.com/articles_various/Dollar-Fluctuations.asp

11. http://www.forex-rates.biz/EUR/INR/

12. http://money.sulekha.com/infosys-cfo-sees-rupee-depreciation-cushioning-euro-

weakness-impact_news_2825

13. http://www.marketoracle.co.uk/Article27213.html

14. http://www.sharetipsinfo.com/risingcrude-oil.html15. http://www.2point6billion.com/news/2011/07/14/chinas-beijing-shanghai-high-

speed-rail-breaks-down-again-9742.html

16. http://www.business-standard.com/india/news/gains-intact-sensex150-

points/141096/on

17. Times of india.com

18. Economic times.com

http://www.bloomberg.com/

http://www.exchangerates.org.uk/commodities/OIL-USD-history.html

http://www.nism.ac.in/

http://www.nse.com/

http://www.myirish.com/

http://www.chillibreeze.com/articles_various/Dollar-Fluctuations.asp


http://www.forex-rates.biz/EUR/INR/


http://money.sulekha.com/infosys-cfo-sees-rupee-depreciation-cushioning-euro-weakness-impact_news_2825




http://www.marketoracle.co.uk/Article27213.html


http://www.sharetipsinfo.com/risingcrude-oil.html


http://www.2point6billion.com/news/2011/07/14/chinas-beijing-shanghai-high-speed-rail-breaks-down-again-9742.html




http://www.business-standard.com/india/news/gains-intact-sensex150-points/141096/on














http://www.myirish.com/

http://www.nse.com/

http://www.nism.ac.in/

http://www.exchangerates.org.uk/commodities/OIL-USD-history.html

http://www.bloomberg.com/



Documents

Effect of International Equity Market and Currency on Indian Equity Market