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  • 1. Stock indices and Factors Affecting Share pricesSUBMITTED BY (N.V.S Raghunath)Reg NO: 10P35F1271 Under The Guidance and SupervisionOf Prof. Samanvi Bhograj BHAVAN - NIFTE SCHOOL OF BUSINESSNO 60, 60FT ROAD, OFF BELLARY ROAD,SAHAKAR NAGAR, BANGALORE-560092. 2010-121|Page

2. DECLARATIONI hereby declare that this report titled Stock indices and FactorsAffecting Share prices is a record of independent work carried out byme under the guidance and supervision of Prof. Samanvi Bhograj,Project Guide, BNSB towards the partial fulfillment ofrequirements for the M.B.A. degree course of BharathiarUniversity at Bhavan NIFTE School of business.I further declare that this Project is the result of my own effortsand that it has not been submitted to any other university orinstitute for the award of a degree or diploma or any other similartitle of recognition.PLACE: BangaloreN.V.S RaghunathDATE :2|Page 3. GUIDES CERTIFICATEThis is to certify that the Dissertation Project Report entitled Stock indicesand Factors Affecting Share prices, done by N.V.S Raghunath (Reg No. -10P35F1271) is a bona fide work done carried under my guidance during theacademic year 2010-12 in a partial fulfilment of the requirement for theaward of MBA degree by Bharathiar University. To the best of myknowledge this report has not formed the basis for the award of any otherdegree. Prof. Samanvi Bhograj (GUIDE)3|Page 4. ACKNOWLEDGEMENTAny successful work is always a product of many handscoming together in co-operation and assistance. Thiswork is no different. A number of people are responsiblefor accomplishment of this work. Their guidance andsuggestions were highly helpful during the course. I express my deep sense of gratitude to Prof.Samanvi Bhograj, my project guide, Bhavan NIFTESchool of Business, Bangalore, for her most valuableguidance, inspiring supervision, periodical monitoringand sparing his precious time for this project.I also express my sincere gratitude to my friends for allthe inspirations and giving me an opportunity to carryout the project report. Without their help, the projectreport would not have been possible.Thanking you,N.V.S Raghunath4|Page 5. CONTENTS Chapter No. Name of the conceptPage No. Executive summary 6 7 IntroductionObjectives of the study9Scope of the study 91 Methodology of the study10 Limitations of the study 112Review of Literature 123 Industry Profile304 Data analysis and interpretation415Findings, Suggestions and Conclusion 636Bibliography 685|Page 6. Executive SummaryThe stock indices is used to measure a section of the stock market So, these indices werequoted by the news or financial service firms so they used to get a benchmarks thefinancial service firms were nothing but brokerage company . So to make in a properorder the stock indices had introduced S&P CNX Nifty junior, S&P CNX-500, CNXMidcap-200. These were the indices we will come over While coming to the Stock Prices it will be vary according to the factorsinfluenced so, here the factors influence it may be economic factor, demand and supply,geographical factor. So to understand the stock price variation here I had taken the 5companies of automobile sectorTo understand the concept of stock indices. Study the major companies those are part ofthe Indices. We have to study the volatility of stock prices and indices. And the impact ofDifferent economic, industry and company specific factors that affect the stock pricesand stock market indicesThe analysis and interpretation of various Companiesof Automobile sector were done because we will come to know which company is doingbetterFindings and suggestion .The various factors influencethe stock market prices it may be due to demand and supply; news, eps, fresh issue ofshares, etc will be the causes of fluctuation of pricesSuggestion is that if the investor wants to invest in a particular company he/she has toanalyze the present scenario of the company there business profile, market share of thecompany, balance sheet. Conclusion-is process of constructing an index is tedious butvery useful for a normal investor who works on his own in his investment game. Theprocess of constructing market leader index in this present project work is given clearlyand any investor can follow this process to easily construct his own index6|Page 7. CHAPTER 1 - INTRODUCTION7|Page 8. INTRODUCTIONAn index is a number used to represent the changes in asset of values between a basetime period and another time period. A stock index is a number that helps measure thelevels of the market. Returns on the index thus are supposed to represent returns on themarket.Index means the statistical composite that measures changes in the economy or infinancial markets, often expressed in percentage changes from a base year or from theprevious month. Indexes measure the ups and downs of stock, bond, and somecommodities markets, in terms of market prices and weighting of companies in the index.An index is a statistical measure of change in an economy or a securities market. In thecase of financial markets, an index is essentially an imaginary portfolio of securitiesrepresenting a particular market or a portion of it. Each index has its own calculationmethodology and is usually expressed in terms of a change from a base value. Thus, thepercentage changes is more important that the actually numeric value. For example,knowing that a stock exchange is at, say, 5,000 dont tell you much. However, knowingthat the index has risen 30% over the last year to 5,000 gives a much betterdemonstration of performance.Index values are useful for investors to track changes in market values over long periodsof time. For example, the widely used Standard and Poors 500 Index is computed bycombining 500 large-cap and U.S. stocks together into one index value. Investors cantrack changes in the indexs value over time and use it as a benchmark to compare theirown portfolio returns. Technically, you cant actually invest in an index. Rather, youinvest in a security such as an index fund or ETF that attempts to track an index asclosely as possible called stock index. The plural of index can be spelled either indexes orindices.8|Page 9. OBJECTIVES OF THE STUDYThe main objective of this project is to understand the composition and performanceNational Stock Exchange index NIFTY. And automobile sectorIt includes:1. To understand the concept of stock indices.2. To study the major companies those are part of the Automobile sector.3. To study the volatility of stock prices and indices.4. To study the impact of different economic, industry and company specific factorsthat effect the stock prices and stock market indices.SCOPE OF THE STUDY5 companies from Automobile sectors have been selected to study the market and toconstruct the NIFTY index. The market prices of all 5 companies from 2008-2011 weretaken for study. The market share is taken as base for the selection of index constructioni.e. companies have been selected on the basis of this market share.9|Page 10. METHODOLOGYSources of data:Data collection is an actively in marketing research. The design of the data collectionmethod is the spine of research design. The sources of data are classified in totwo types The Primary Data. The Secondary Data.PRIMARY DATA:The primary data are fresh data collected directly from the field and thereforeconsist of original information gathered for the specific purpose. It is expensive,laborious, and time consuming. But it assures a greater degree of accuracy and reliabilityas it comes straight from the horses month.SECONDARY DATA:The secondary data are the data, which the investigator borrows from other whohave collected it for various other purposes. Therefore it may not entirely be reliable. It isless expensive and involves less expensive and involves less time and labor than thecollection of primary data.The Sources of collecting Data:I.Websites of different online trading firms. II.Newspaper, magazines, trade journals.III.Publications of different online trading firms.IV. Interaction with managers and customers.10 | P a g e 11. LIMITATIONS Information is collected primarily from secondary sources and may not beaccurate. Index and stock prices moments are observed here for three years Period is from 2008 -2011 to work on any study comprehension11 | P a g e 12. CHAPTER 2 - REVIEW OF LITERATURE12 | P a g e 13. The securities market achieves one of the most important functions of channeling idleresources to productive resources or from less productive resources to more productiveresources. Hence in the broader context the people who save and investors who investfocus more towards the economys abilities to invest and save respectively. Thisenhances savings and investments in the economy, the two pillars for economic growth.The Indian Capital Market has come a long way in this process and with a strongregulator it has been able to usher an era of a modern capital market regime. The pastdecade in many ways has been remarkable for securities market in India. It has grownexponentially as measured in terms of amount raised from the market, the number oflisted stocks, market capitalization, trading volumes and turnover on stock exchanges,and investor population. The market has witnessed fundamental institutional changesresulting in drastic reduction in transaction costs and significant improvements inefficiency, transparency and safety.DEPENDENCE OF SECURITIES MARKET:Three main sets of entities depend on securities market- the corporate, the government &households. While the corporate and governments raise resources from the securitiesmarket to meet their obligations, the households invest their savings in securities.PRIMARY MARKET & SECONDARY MARKET:The securities market comprises two segments- primary market (new issues, offer forsale) & secondary market (trading of stocks). There are two major types of issuers whoissue securities. The cor