Synopsis STOCK MKT

8/8/2019 Synopsis STOCK MKT.

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COMPARATIVE ANALYSIS OF FACTORS INFLUENCING THE

GROWTH

OF STOCK MARKET

(Case of Bombay Stock Exchange (BSE))

An outline of proposed research work

Submitted

To

BPS Mahila Vishwavidyalaya, Khanpur kalan,Sonipat

For Registration

To

Doctor in Philosophy

In

Mangament

Proposed Guide: Submitter:

Parul MittalRoll No. 1032

School of Management Studies

BPS Mahila Vishwavidyalaya, Khanpur Kalan,Sonipat(Har.)-131305


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ABSTRACT

The objective of this research is to find the factors that affect the growth ofBombay stock exchange (Indian stock market).Some factors that may beaffecting the Indian stock exchange are demand & supply, bank rate,

political factors, role of financial institutions market cap, EPS, impact ofnews, world events, business fundamentals, corporate financial results, theeconomy, investor sentiment, government monetary policy, trade cycle,interest rates etc. We will consider the data of all these variables such asincluding macro variables foreign exchange rate, foreign exchange reserve,industrial production index, whole sale price index, and gross fixed capitalformation etc. We try to make link these factors to stock prices. Compared to

earlier work we will use multiple regression analysis and compare theresults. We will compare the factors and analyze these factors. So that wecan evaluate which factors influence the growth of stock market more andclosely & which has no significant effect. It will help to check the majorfactors. Now a day, stock market has a significant role in Indian economyand it is affected by the growth of industries. In other words, it is also calledas barometer to measuring the efficiency of industries and Indian economy.The study will be very helpful for national policy makers, researchers and corporate managers etc.


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Introduction

The market where the outstanding securities are traded is known assecondary market. It also known as stock market or stock exchange. It deals

in shares, debentures, bonds etc. The emergence of stock market can betraced back to 1830.Securities and stock exchanges are privately organizedmarkets which are used to facilitate trading in securities. The stock market isone of the most important sources forcompanies to raise money. This allows

businesses to be publicly traded, or raise additional capital for expansion byselling shares of ownership of the company in a public market. The liquiditythat an exchange provides affords investors the ability to quickly and easilysell securities. This is an attractive feature of investing in stocks, comparedto other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an importantpart of the dynamics of economic activity, and can influence or be anindicator of social mood. An economy where the stock market is on the riseis considered to be an up-and-coming economy. In fact, the stock market isoften considered the primary indicator of a country's economic strength anddevelopment.

The stock market is supposed to play an important role in the economy inthe sense that it mobilizes domestic resources and channels them to

productive investments. However, to perform this role it must havesignificant relationship with the economy. The role of long-term capital inthe economic development of a nation cannot be over emphasized. Mosteconomic managers recognize that a well organized capital market is crucialfor mobilizing both domestic and international capital. In many developingCountries, however, capital have been a major constraint in economicdevelopment. Capital markets are key elements of a modern, market-

based economic system as they serve as the channel for flow of long termfinancial resources from the savers ofcapital to the borrowers of capital.

Efficient capital markets are hence essential for economic growth andprosperity. With growing globalization of economies, the internationalcapital markets are also becoming increasingly integrated. While suchintegration is positive for global economic growth, the downside risk is the
http://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Share_(finance)http://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Share_(finance)


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contagion effect of financial crisis, especially if its origin lies in the biggermarkets. Stock market is a critical cog in the wheel that smoothens thetransfer of funds for economic growth. Broadly speaking, stock exchangesare expected to accelerate economic growth by increasing liquidity offinancial assets and making global risk diversification easier for investors

promoting wiser investment decisions. In principle, a well functioning stockmarket may help the economic growth and development process in aneconomy through growth of savings, efficient allocation of investmentresources and alluring of foreign port folio investment. The stock marketencourages saving by providing households having invest able funds, anadditional financial instrument, which meets their risk preferences landliquidity needs better, it in fact provides individuals with relatively liquid

means for risk sharing in investment projects.

In India there are 23 stock exchanges but the two most popular Stockexchanges are:

Bombay stock exchange

National stock exchange

In this research I will consider only BSE.


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History of Bombay stock Exchange (BSE)

The Bombay Stock Exchange is the oldest exchange in Asia. It traces itshistory to the 1850s, when 4 Gujarati and 1 Parsi stockbroker would gatherunder banyan trees in front of Mumbai's Town Hall. The location of thesemeetings changed many times, as the number of brokers constantlyincreased. The group eventually moved to Dalal Street in 1874 and in 1875

became an official organization known as 'The Native Share & StockBrokers Association'. It was established on 1st july 1875.In 1956, the BSE

became the first stock exchange to be recognized by the Indian Governmentunder the Securities Contracts Regulation Act, 1956 on 31 august 1957. TheBombay Stock Exchange developed the BSE Sensex in 1986, giving theBSE a means to measure overall performance of the exchange. The Bombay

Stock Exchange switched to an electronic trading system in 1995. Thisautomated, screen-based trading platform called BSE On-line trading(BOLT) currently has a capacity of 8 million orders per day. The BSE hasalso introduced the world's first centralized exchange-based internet tradingsystem, BSEWEBx.co.in to enable investors anywhere in the world to tradeon the BSE platform.The BSE is currently housed in Phiroze JeejeebhoyTowers at Dalal Street, Fort area,Mumbai,India.

It has the largest number of listed companies in the world, with 4990 listedas of August 2010.. On Aug, 2010, the equity market capitalization of thecompanies listed on the BSE was US$1.39 trillion, making it the 4th largeststock exchange in Asia and the 11th largest in the world.

With over 4,990 Indian companies listed & over 7700 scrip on the stockexchange, it has a significant trading volume. The BSE SENSEX (Sensitiveindex), also called the "BSE 30", is a widely used market index in India andAsia. Though many other exchanges exist, BSE and the National StockExchange of India account for most of the trading in shares in India.

It is called as 30 stock index because it is based on 30 specified i.e. a groupof securities which are of financially sound and well established companies.
http://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Fort_(Mumbai_precinct)http://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/1000000000000_(number)http://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/BSE_Sensexhttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Fort_(Mumbai_precinct)http://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/1000000000000_(number)http://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/BSE_Sensexhttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India


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BSE Vision

The vision of the Bombay Stock Exchange is to "Emerge as the premierIndian stock exchange by establishing global benchmarks."

BSE Management

Bombay Stock Exchange is managed professionally by Board of Directors.It comprises of eminent professionals, representatives of Trading Membersand the Managing Director. The Board is an inclusive one and is shaped to

benefit from the market intermediaries participation.

The Board exercises complete control and formulates larger policy issues.The day-to-day operations of BSE are managed by the Managing Directorand its school of professional as a management team.

BSE (2008-09):

No of shares traded 739600 No of shares delivered 196330Value of shares delivered 230332

Turnover 1100075


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Description

Regularly updated (4-5 times a day) stock quotes from the Bombay Stock

Exchange (BSE), India.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2010 105 100 113 110 106 110 109 110 109 106 83

2009 109 100 111 110 105 110 114 106 110 109 106 115

2008 115 104 106 110 109 106 115 105 110 114 101 115

2007 115 100 111 107 115 104 111 114 101 115 109 106

2006 111 114 121 101 115 109 107 115 104 111 110 105

2005 106 101 115 104 111 110 105 115 111 106 111 1102004 109 101 115 106 102 109 109 111 110 106 119 114

2003 114 95 106 110 109 106 114 102 110 114 100 111

2002 106 113 86 115 104 106 115 104 111

BSE INDICES:

For the premier stock exchange that pioneered the securities transactionbusiness in India, over a century of experience is a proud achievement. A lothas changed since 1875 when 318 persons by paying a then princely amountof Re. 1, became members of what today is called Bombay Stock ExchangeLimited (BSE).


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Over the decades, the stock market in the country has passed through goodand bad periods. The journey in the 20th century has not been an easy one.Till the decade of eighties, there was no measure or scale that could

precisely measure the various ups and downs in the Indian stock market.BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently

became the barometer of the Indian stock market.

The launch of SENSEX in 1986 was later followed up in January 1989 byintroduction of BSE National Index (Base: 1983-84 = 100). It comprised 100stocks listed at five major stock exchanges in India - Mumbai, Calcutta,Delhi, Ahmedabad and Madras. The BSE National Index was renamed BSE-100 Index from October 14, 1996 and since then, it is being calculatedtaking into consideration only the prices of stocks listed at BSE. BSElaunched the dollar-linked version of BSE-100 index on May 22, 2006.

With a view to provide a better representation of the increasing number oflisted companies, larger market capitalization and the new industry sectors,BSE launched on 27 May, 1994 two new index series viz., the 'BSE-200'and the 'DOLLEX-200'. Since then, BSE has come a long way in attuningitself to the varied needs of investors and market participants. In order tofulfill the need for still broader, segment-specific and sector-specific indices,BSE has continuously been increasing the range of its indices. BSE-500Index and 5 sectorial indices were launched in 1999. In 2001, BSE launchedBSE-PSU Index, DOLLEX-30 and the country's first free-float based index -

the BSE TECK Index. Over the years, BSE shifted all its indices to the free-float methodology (except BSE-PSU index).


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Current Index

HighLow% ChangeIndices

BSE

SensexTimeCurrent Value

09:19 19728.10 19760.13 19728.10 0.18

Live Quotes of BSE Sensex Scrips 24-Nov 09:19

Company Current Price Previous Close % Change Volume

MAH & MAH 772.50 759.70 1.68 6,512

BHARTI TELE 333.00 329.15 1.17 37,709

TATA POWER 1311.00 1301.65 0.72 489TATA STEEL 615.85 612.05 0.62 24,088

B H E L 2269.95 2257.50 0.55 4,303

ICICI BANK 1162.00 1156.65 0.46 6,718

I T C 173.15 172.40 0.44 1,950

NTPC LTD 180.75 180.00 0.42 10,972

TATA MOTORS 1218.40 1213.65 0.39 6,066

MARUTI UDYOG 1443.65 1438.85 0.33 572

DLF LTD 315.85 314.80 0.33 20,923

O N G C 1275.00 1270.90 0.32 1,212

RELIANCE 998.10 994.90 0.32 14,661

HEROHONDA M 1958.25 1953.05 0.27 346

S B I 2959.00 2952.60 0.22 15,683

HIND UNI LT 300.85 300.35 0.17 1,420

HINDALCO 210.60 210.60 0.00 16,879

REL COM LTD 146.00 146.05 -0.03 33,713

RELIANCE ENR 936.30 937.30 -0.11 5,515

STERLITE (I) 171.20 171.60 -0.23 22,092INFOSYS TECH 3006.00 3013.30 -0.24 522

CIPLA LTD. 344.00 345.40 -0.41 1,477

TCS 1027.80 1032.20 -0.43 1,337

JAIPRAK ASSO 123.10 123.70 -0.49 21,250

HOUS DEV FIN 700.25 704.80 -0.65 2,920

H D F C BANK 2354.00 2370.35 -0.69 565

ACC LTD 995.00 1004.95 -0.99 1,025

WIPRO 411.00 417.20 -1.49 3,202
http://myiris.com/shares/company/quoteShow.php?icode=MAHMAHINhttp://myiris.com/shares/company/quoteShow.php?icode=BHATELEEhttp://myiris.com/shares/company/quoteShow.php?icode=TATPOWCOhttp://myiris.com/shares/company/quoteShow.php?icode=TATIROSChttp://myiris.com/shares/company/quoteShow.php?icode=BHAHEAELhttp://myiris.com/shares/company/quoteShow.php?icode=ICICIBCOhttp://myiris.com/shares/company/quoteShow.php?icode=ITChttp://myiris.com/shares/company/quoteShow.php?icode=NATTHEPChttp://myiris.com/shares/company/quoteShow.php?icode=TATENGLChttp://myiris.com/shares/company/quoteShow.php?icode=MARUDYOGhttp://myiris.com/shares/company/quoteShow.php?icode=DLFUNIVEhttp://myiris.com/shares/company/quoteShow.php?icode=OILNATGChttp://myiris.com/shares/company/quoteShow.php?icode=RELINDUShttp://myiris.com/shares/company/quoteShow.php?icode=HERHONMOhttp://myiris.com/shares/company/quoteShow.php?icode=STABANIAhttp://myiris.com/shares/company/quoteShow.php?icode=HINLEVERhttp://myiris.com/shares/company/quoteShow.php?icode=HININDUShttp://myiris.com/shares/company/quoteShow.php?icode=RELCOMVEhttp://myiris.com/shares/company/quoteShow.php?icode=BSEShttp://myiris.com/shares/company/quoteShow.php?icode=STEINDIAhttp://myiris.com/shares/company/quoteShow.php?icode=INFTECHNhttp://myiris.com/shares/company/quoteShow.php?icode=CIPLAhttp://myiris.com/shares/company/quoteShow.php?icode=TATCONSEhttp://myiris.com/shares/company/quoteShow.php?icode=JAYREWCEhttp://myiris.com/shares/company/quoteShow.php?icode=HOUDEVFChttp://myiris.com/shares/company/quoteShow.php?icode=HDFCBANKhttp://myiris.com/shares/company/quoteShow.php?icode=ASSCEMCOhttp://myiris.com/shares/company/quoteShow.php?icode=WIPROhttp://myiris.com/shares/company/quoteShow.php?icode=MAHMAHINhttp://myiris.com/shares/company/quoteShow.php?icode=BHATELEEhttp://myiris.com/shares/company/quoteShow.php?icode=TATPOWCOhttp://myiris.com/shares/company/quoteShow.php?icode=TATIROSChttp://myiris.com/shares/company/quoteShow.php?icode=BHAHEAELhttp://myiris.com/shares/company/quoteShow.php?icode=ICICIBCOhttp://myiris.com/shares/company/quoteShow.php?icode=ITChttp://myiris.com/shares/company/quoteShow.php?icode=NATTHEPChttp://myiris.com/shares/company/quoteShow.php?icode=TATENGLChttp://myiris.com/shares/company/quoteShow.php?icode=MARUDYOGhttp://myiris.com/shares/company/quoteShow.php?icode=DLFUNIVEhttp://myiris.com/shares/company/quoteShow.php?icode=OILNATGChttp://myiris.com/shares/company/quoteShow.php?icode=RELINDUShttp://myiris.com/shares/company/quoteShow.php?icode=HERHONMOhttp://myiris.com/shares/company/quoteShow.php?icode=STABANIAhttp://myiris.com/shares/company/quoteShow.php?icode=HINLEVERhttp://myiris.com/shares/company/quoteShow.php?icode=HININDUShttp://myiris.com/shares/company/quoteShow.php?icode=RELCOMVEhttp://myiris.com/shares/company/quoteShow.php?icode=BSEShttp://myiris.com/shares/company/quoteShow.php?icode=STEINDIAhttp://myiris.com/shares/company/quoteShow.php?icode=INFTECHNhttp://myiris.com/shares/company/quoteShow.php?icode=CIPLAhttp://myiris.com/shares/company/quoteShow.php?icode=TATCONSEhttp://myiris.com/shares/company/quoteShow.php?icode=JAYREWCEhttp://myiris.com/shares/company/quoteShow.php?icode=HOUDEVFChttp://myiris.com/shares/company/quoteShow.php?icode=HDFCBANKhttp://myiris.com/shares/company/quoteShow.php?icode=ASSCEMCOhttp://myiris.com/shares/company/quoteShow.php?icode=WIPRO


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COMPANIES LISTED ON BSE:

Companies whose stocks are listed on the Bombay Stock Exchange (BSE).Most of them are headquartered in India but there are also companies frommany other countries. Out of all some are given below:

Ambuja cement limited

Axis bank BPL Group Bajaj Auto Bajaj Hindusthan Limited Bank of India CEAT Limited Canara bank

Dabur

Essar

GAIL

HCL

HP

HUL

Hero Honda

IDBI

Kotak

Maruti

NDTV

ONGC

PNB

Punj Lloyd

Ranbaxy

Reliance SBI

Tata

UBI

Voltus

Wipro
http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/BPL_Grouphttp://en.wikipedia.org/wiki/Bajaj_Autohttp://en.wikipedia.org/wiki/Bajaj_Hindusthan_Limitedhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/CEAT_Limitedhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/BPL_Grouphttp://en.wikipedia.org/wiki/Bajaj_Autohttp://en.wikipedia.org/wiki/Bajaj_Hindusthan_Limitedhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/CEAT_Limited


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LITERATURE REVIEW:

There is a lot work that has been done so far in this regard. Now we haveoverview of some of economists works in this section as review literature.The hypothesis the change in macro economics variable have got strongimpact on assets prices as subject extensive research

Dr. Nishat (2004) analyze long term relationship between variables are stockprice. He used CPI, IIP, money supply and foreign exchange rate asexplanatory variable in this paper result indicates are causal relation between

the stock price and economy. He used Indian stock exchange 100 index pricefor 1974 to 2004. Analysis of his work found that industrial productionindex is largely positively significant while inflation is significantlynegatively related he used granger causality test to determined effect theabove said variables to stock price he found that interest rate is not causescientifically to stock price. He used unit root technique to make datastationary.

Shahid Ahmed (2003) has worked on SENSEX index price effects by real

and financial sector performance in economy for the period 1997 to 2007.He used variables export and foreign exchange rate and foreign directinvestment. He used methodology of granger causality test he finding are allvariables are significantly effect stock price. He found the data is notstationary which sign that there is speculation in stock market he run ARwhich has high significance value.

Fazal Hussain and Tariq Masood (2001) they used variable investment, GDPand consumption and used granger casualty test to define the relation ship

between these variables to stock price therefinding on two lags above said variables highly significant effect on stock

prices.

Robert D. gay (2008) used MA method with OLS to find relation shipbetween stock prices and variables effects on four emerging economiesIndia, Russia, Brazil and China. He used oil price, exchange rate, and


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moving average lags values as explanatory variables but result areinsignificants which shows inefficiency in market final conclusion is thatthese economies are emerging so domestics factors more influence outsidefactors oil price and exchange rate.

Dr. Aftab(2000). He try to link between monetary and fiscal policy ofPakistan equities market and the result of his analysis is significant. Hefound that fiscal and monetary policy change market capitalization throughequity (changes floated shares) and liquidity which can significantly causalrelation shows with market capitalization/ stock price.

M.Shahbaz (2006) he tries make relationship between stock prices and rateof inflation he used ARDL model which used dynamics analysis. His findingare stock hedges against inflation in long run but not in short run and discuss

black economy which effect long run and short run prices of the stock heused variables CPI, as proxy of inflation and share of black economy thesample size he took 1971 to 2006.

Safail Sharma (2007) he used rate of interest, exchange rate, industrialproduction index, money supply and inflation as explanatory variables heused AR and MA as also explanatory variable to remove effects of nonstationary in the data. His finding are lags values are highly correlated withcurrent prices suggest speculation in market. Exchange rate, industrial

production index and money supply is significantly related he took data set1986 to 2004.

Song-zan-chiou-wei(2000) he used money supply oil price and exchangerate as explanatorily variables for Asian stock market he used VAR modelapplied to observed the differences of the structure of fluctuation after 1997financial crises. His finding oil prices and inflation are highly effect thestock market of Asian economy.

Desislava Dimintrova (2005) he used exchange on stock prices by

multivariate model he link exchange rate with economic policy (fiscal andmonetary policy) with exchange rate and found relation with stock prices hedefines interest parity condition effect on stock prices his results showsunambiguous effects on deprecation of stock prices on exchange ratedeprecation.


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OBJECTIVES OF STUDY:

The main objective of this study is to analyze & compare all the factors thataffect the development & growth of the Bombay Stock Exchange.

Otherobjectives are:

To compare all factors affecting stock exchange. To analyze the major factor that affects the growth. To analyze the risk i.e. certain & uncertain risk.

To check the controllable as well as uncontrollable factors. To assess the efficiency of the Bombay Stock Exchange by testing the

random-walk hypothesis To analyze the impact of the listing on the development of the

Bombay Stock Exchange. To make policy recommendations that will promote effective

development of Bombays capital market.


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Factors affecting growth of BSE:

The stock market is influenced by many factors simultaneously. There is notone single factor that makes the stock market rise or fall. Rather, a largenumber of factors come together to shape the overall investmentenvironment and cause the stock market to shift. Investors must understandall of the factors that influence the stock market in order to be able toforecast the future of the stock market. We will analyze the effect of thefactors on the development of the BSE by examining the followingcharacteristics:

Business Fundamentals

The ebbs and flows of the stock exchange, though seemingly random tosome, follow certain patterns of movement over daily, quarterly and yearlytime periods. Through a method called technical analysis, traders can trackstock prices, market volumes and overall averages within different time

periods, according to How the Market Works, a stock market reference site.Moving averages in particular are charted over 50- and 200-day time framesand provide information on selective company stock prices as well as marketvolume trends. Traders who follow moving averages can track long-term

trends and spot potential indicators of upcoming changes within a marketbased on how closely stock prices follow existing trends.

Establishment of developments banks and financing institutions:

The government has established various developments banks & inst. LikeIFCI, IDBI, LIC, UTI, ICICI etc. These have contributed to the growth ofcapital market in India by advancing finance for establishment of industrialunits.

Growing public confidence:

At present there are 4 rating agencies working in India. They are CRISIL(1988), ICRA ltd. (1991), CARE (1993), and FITCH. These agencies have

bee providing guidance to investors for determining the credit riskassociated with a debt instrument by rating them. This is likely helpful in thegrowth of secondary market.


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Government Monetary Policy

The monetary policy of the government, as well as the policies ofgovernments around the world, influences the stock market. If thegovernment tightens monetary policy or raises interest rates, then there isless money in the financial system for corporations and individuals to

borrow. This can lead to a reduction in corporate growth and possibly slowerprofit growth also. On the other hand, a loose money supply and lowerinterest rates can bolster corporate and personal borrowing and fuel growth,expansions and corporate profits. This in turn can lead to a higher stockmarket.

Geo-Political Changes

Geo-political changes also influence the stock market. New governmentregulations can increase or decrease corporate profits. New governmentalregimes can change the playing field in certain sectors or even the entireeconomy. A change in trade policy can greatly affect corporations that do

business internationally. A change in government tax policy can alsoinfluence the overall economy and in turn affect the stock market.

Investor SentimentPsychology plays a big part in investing. Investors tend to be very optimisticor very pessimistic. Since the value of a stock is ultimately based on the lawof supply and demand, investor sentiment plays a big role in the stockmarket. If investors are generally pessimistic about the future then they willsell stocks, which in turn will drive the market lower. Conversely, ifinvestors are optimistic, they will buy stocks and force the market higher.Investor sentiment largely explains why the stock market will can go highereven during a recession and can fall when the economy is doing well.

Corporate ResultsPerhaps the biggest influence on the stock market is corporate results. Theearnings of a corporation is the driving force behind a stock's price.Investors own a stock to participate in the profitability of a corporation. Astock's price will rise if corporate earnings grow or fall as earnings declineor growth slows.
http://www.ehow.com/business/http://www.ehow.com/legal/http://www.ehow.com/business/http://www.ehow.com/legal/


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The Economy

The economy's influence on the stock market can be seen by its impact oncorporate profits. When the economy is in a recession andunemployment is high, then the profits of corporations will decline.This decline in profits will result in lower stock prices and ultimately alower stock market in general. When the economy is doing well,corporate profits will increase, which will lead to higher stock prices

World Events

Factors involving world events -- both foreseen and unforeseen -- can haveregional or global effects within the stock exchange system. Crop

production, manufacturing industries or infrastructure damage occurs inareas affected by natural disasters, all of which affect stock marketconditions within the region. Economic conditions such as inflation orrecession also have a direct impact on what direction the stock market goesin. Factors involving world events also take the form of corruption withinthe market, which has a direct effect on the trustworthiness of the system asa whole. Stock market directions are also affected by countries who are atwar or regions affected by terrorist activities. Whether these effects benefitor harm market growth depends on how circumstances affect business andcommerce within an affected region.

Demand and Supply:This is the vital factor that affects share prices. Whenwe get to see that more people are buying stocks, then there is an increase inthe price of that particular stock. On the other hand price of stock falls whenmore people are selling their stocks. So it is very difficult to predict theIndian stock market. This is the main reason why we need to get in touchwith a good stock market consultant. There is consultancy for us which canhelp us a lot on choosing the right stocks for us.


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Market cap

It is a very big mistake when we try to guess a companys worth from the

price of a stock. We should know that the more important is the marketcapitalization of the particular company. This helps to determine the worthof a company. So market cap serves as an important use to determine share

prices.

There are many things that we need to consider when we go for investingour hard earned money in the stock market. We should never be in a haste toinvest our money in the stock market. We should always get in touch with agood stock market consultancy where it can give us some share tips. Theyare the one who can give you advice where to invest our money and wherenot to. They know to distinguish the good stock from the bad ones.

So, we have come to know about the factors affecting BSE (Indian stockexchange). Remember that it is very important to make a good marketresearch before investing in any stock or company.
http://www.sharetipsinfo.com/stockmarket-consultant.htmlhttp://www.sharetipsinfo.com/stockmarket-consultant.html


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RESEARCH METHODOLODY:

Research is the movement from the known to unknown. Research is the

scientific investigation. Research is both art and science. Every research

project conducted scientifically has a specified framework for collection and

analysis of data in manner that aims at combining relevance to the research

purpose with economy in procedure. This framework is called research

design. Any research design consists following stages:

Deciding the approach to be used in the design.

Deciding the data needed.

Identifying the probable source of data.

Deciding how the data should be gathered.

Anticipating the results, their interpretation and presentation.

The study will use extensively secondary data.

TYPE:

This research is secondary in nature & will be using the already existing datafor further pursuance.

DESIGN:

This research is an Empirical & analytical design of research. It is data basedresearch and based on observation. In it we will use the already availableinformation and facts for the purpose of analyzing.

METHODS/TOOLS:

Regression analysis


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Econometrics

Data base

ANALYSIS:

The empirical result or evidence provided by the various studies mentionedin the section of review literature will show that which factor have strongeffects on the stock market. We can find out the comparativeness of allfactors. It also helpful to check all major factor and relationship betweenthese. It will evaluate the dependent and independent factors and relationship

between. It will also helpful to check which one is controllable factor andwhich are uncontrollable. Il will check correlation between all these factors.If market is inefficient with respect to information then it has importantimplication both at micro and macro level.


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REFERNCES:

Economic survey of India 2008-09

Determinants of Investment Behavior India: National Bureau ofEconomic Research

Shapiro, M.O. 1986: Investment, output and the cost of capital.Brookings Papers on Economic Activity, 1: 11 l-52.

BSE from From Wikipedia, the encyclopedia World-exchanges.org "BSE - Key statistics". Bseindia.com.

http://www.bseindia.com/about/st_key/list_cap_raised.asp. Retrieved2010-08-26.

BSE website, "Listing and Capital Raised" Market Hours, Bombay Stock Exchange via Wikinvest How the Market Works: Stock Price Factors Path to Investing: Stock Market Influences

Shefali sharma and balwinder Singh macroeconomics variables inIndia.

Stock Prices, Real Sector and the Causal Analysis: The Case of Indiaretrieved by

journal of management and social sciences. Demirguc-Kunt, A. 1992. Developing Country Capital Structure and

Emerging Stock Markets. World Bank Working Papers WPS 933. Demirguc-Kunt, A. and H. Huizinga. 1992. Barriers to Portfolio

Investments inEmerging

Stock Markets. World Bank Working papers WPS 984. Dwyer, G.P. and M.S. Wallace, 1992, Co integration and Market

Efficiency, Journal of International Money & Finance, 14, 801-821

Annual reports of state bank of India (2008-09)

BOOKS:

Maridula Goyal; Financial Market OperationsPandayan; Securities analysis & Portfolio Mnagement
http://www.world-exchanges.org/http://www.bseindia.com/about/st_key/list_cap_raised.asphttp://www.bseindia.com/about/st_key/list_cap_raised.asphttp://www.bseindia.com/about/st_key/list_cap_raised.asphttp://www.wikinvest.com/List_of_Stock_Exchangeshttp://www.howthemarketworks.com/popular-topics/stock-price-factors.phphttp://www.pathtoinvesting.org/invmarkets/thefed/marketcycle/im2_marketcycle_021.htmhttp://www.world-exchanges.org/http://www.bseindia.com/about/st_key/list_cap_raised.asphttp://www.bseindia.com/about/st_key/list_cap_raised.asphttp://www.bseindia.com/about/st_key/list_cap_raised.asphttp://www.wikinvest.com/List_of_Stock_Exchangeshttp://www.howthemarketworks.com/popular-topics/stock-price-factors.phphttp://www.pathtoinvesting.org/invmarkets/thefed/marketcycle/im2_marketcycle_021.htm


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Documents

Synopsis STOCK MKT