..., named “Past and Present of Capital Market” it has been mentioned that the Indian stock markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only few brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States to Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as “The Stock Exchange“). Trading was at that time limited to a dozen brokers. These stock brokers organized an informal association...
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...I have been analyzing the effect of foreign institutional investment on the Indian Stock Market. I will analyses historic price movement in the Indian Stock Market and match these movements with the inflow of investment by foreign institutional thereby providing the effect on the Indian Stock Market. The total assets under their management amounts to almost 18% of the entire market capitalization. The dissertation paper will examine the role of these investors in Indian stock markets and analyses the market movement using the direction of the funds flow from these investors. This research is basically based on with the help of both primary and secondary data. Literature review: Gay and Robert (2008) investigated the impact of macroeconomic factors on the returns of four emerging markets. The emerging stock markets included were India, Brazil, China and Russia. Their multifactor model comprised of exchange rate and oil prices. By employing ARIMA model on monthly data of March 1999 to July 2006, they concluded that these two macroeconomic variables had no significant relationship with the returns of emerging markets. Hassan and Nasir (2008) also investigated the relationship between equity prices and macroeconomic forces in long run by using monthly data of June 1998 to June 2008.To analyze the causal relationship among macroeconomic forces and stock prices ARDL approach had been used. Results of ARDL concluded the macroeconomic factors that had the main contribution...
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...IMPACT OF OIL TRADE ON EXCHANGE RATE OF INDIA Introduction India in the 21st century is one of the fastest growing countries of the world. Oil being the bloodline of the growing economy, is a necessary commodity and has a very inelastic demand, steadily growing with time. In 2011, India was the fourth largest energy consumer in the world after the United States, China, and Russia. India's economy grew at an annual rate of approximately 7 percent since 2000 and proved relatively resilient to the 2008 global financial crisis. India was the 10th largest economy in the world in 2011, as measured by nominal gross domestic product (GDP). In the International Energy Outlook 2011, EIA projects India and China to account for the biggest share of Asian energy demand growth through 2035. India is heavily dependent on crude oil imported from the Middle East and imports more than 70% of its domestic demand. Due to a stagnation of domestic production, the import of crude has gone up from 11.68 million tons (mt) in 1970–1971 to 196 mt in 2007–2008. Oil import bill for India in 2007–2008 was $144.93 billion. With the high demand of oil and other petroleum, and their fluctuating price in the global markets, we are at a very high risk of foreign exchange risk. With so much purchase of energy imports, it might lead to exchange rate movements. And the volatility in the exchange rates (caused by the oil price volatility) may have severe effects on the economy, especially on infrastructural projects...
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...Depreciating Rupee: Introduction: Depreciation refers to a fall in the value of the domestic currency which is caused by the demand for foreign currency exceeding its supply in the market. In such a situation one has to pay more than before to get units of foreign currency. This fall takes place in the market and on its own. Market determined exchange rate serves the purpose of aligning the domestic economy with the world economy was the price route. As consequences the domestic price gets linked up with those of the world price. With the liberalizations and globalization of the economy in recent years, imports are bound to increase. The lessening of restrictions on imports and lowering of tariff on imports which the economic reform implies, an increase in imports has in fact taken place. Again with trade having become an important element of the new strategy of growth. As per the basic laws of economics if the demand for USD in India exceeds its supply then it’s worth will go up and that of the INR will come down in that respect. It may be that importers are the major entities who are in need of the dollar for making their payments. Likelihood here could be that the Foreign Institutional Investors are retreating their investments in the country and taking them elsewhere. This can create a shortfall in supply of the dollar in India. This state of affairs can only be addressed by exporters who can bring in dollars in the system....
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...volatility of USDINR currency pair. USDINR currency pair was introduced in regulated stock exchange of National Stock Exchange in the year 2008. USDINR currency stated to trade as a future instrument on 29.08.2008. Though it’s a delayed decision undertaken in India to introduce currency futures in regulated exchange within the three years of its introduction 10 times of volume traded has increased. The pricing of currencies is supposed to be dependent on volatility of the markets. Therefore it’s important to know the volatility implications of currency market to trade in futures market. To understand volatility implications it is examined using ARCH, GARCH, and GARCH (1, 1) model in this paper. The study finds the evidence of time varying volatility of futures. The study finds an evidence of time varying volatility, which exhibits clustering, high persistence and predictability of currency futures in Indian Market. Key words: Time Varying Volatility, currency futures, USDINR and GARCH Introduction Currency Futures has been selected as the object of study because of its fangled launching in 2008 in regulated stock exchanges. Most of the corporations, banks and traders, use forward contracts in India for their forex risk management. But now it paved way to individuals and retailers who can hedge their foreign exchange risks by trading in currency futures and options in recognized stock exchanges. Currency...
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...as well as from alternative sources of financing. Another strategic challenge facing banking institutions today is the growing and changing needs and expectations of consumers in tandem with increased education levels and growing wealth. Consumers are becoming increasingly discerning and have become more involved in their financial decisions. This paper investigates the factors which are affecting the acceptance of ebanking services among the customers and also indicates level of concern regarding security and privacy issues in Indian context. Primary data was collected from 200 respondents through a structured questionnaire. Descriptive statistics was used to explain demographic profile of respondents and Factor and Regression analyses were used to know the factors affecting e-banking services among customer in India. The finding depicts many factors like security and privacy and awareness level increased the acceptance of e-banking services among Indian customers. The finding shows that if banks provide them necessary guidance and ensure safety of their accounts, customers are willing to adopt e-banking, Keywords: Security, Privacy, Awareness, Customers, E-banking...
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...ICAI, New Delhi) Introduction Depreciation refers to a fall in the value of the domestic currency which is caused by the demand for foreign currency exceeding its supply in the market. In such a situation one has to pay more than before to get units of foreign currency. This fall takes place in the market and on its own. Market determined exchange rate serves the purpose of aligning the domestic economy with the world economy was the price route. As consequences the domestic price gets linked up with those of the world price. With the liberalizations and globalization of the economy in recent years, imports are bound to increase. The lessening of restrictions on imports and lowering of tariff on imports which the economic reform implies, an increase in imports has in fact taken place. Again with trade having become an important element of the new strategy of growth. India got freedom from British rule on Aug 15, 1947. At that time the Indian rupee was linked to the British pound and its value was at par with the American dollar. There was no foreign borrowing on India's balance sheet. To finance welfare and development activities, especially with the introduction of the Five-Year Plan in 1951, the government started external borrowings. This required the devaluation of the rupee.- After independence, Indian choose to adopt a fixed rate currency regime. The rupee was pegged at 4.79 against a dollar between 1948 and 1966. India faced a serious balance of payment crisis in 1991 and...
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...INTRODUCTION The recent moves of the government to gradually deregulate the Petroleum, Oil and Lubricants(POL) sector in India as part of the agenda of ‘neo-liberal reform’ has generated discontent among the people. In the run-up to complete deregulation, there are instances of increase in the domestic price of POL products that are proportionately more than the rise in their international prices. In the most recent instance (of 13th September, 2012), the diesel price was raised by Rs.5 per litre at one go, even without any rise in international prices. These steps are being taken to eliminate the government subsidy on these products in a step-by-step manner. Deregulation of the POL sector is bound to eliminate the direct or indirect subsidies completely. And reduction in subsidy, according to the government, is the need of the hour in order to reduce the fiscal deficit as proportion to GDP. Deregulation is also necessitated in the current neo-liberal environment because if the government keeps subsidizing the public sector owned oil marketing companies (OMCs) like Indian Oil, Hindustan Petroleum and Bharat Petroleum, then the private companies like Reliance and others would not get a ‘level playing field’ and they would not be able to compete in price. In this way, the present subsidy regime indirectly restricts the private players from entering the oil marketing sector. Hence, if the priorities of the government in power are the reduction of subsidies and ensuring...
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...than individual markets. This includes national, regional, and global economies. Macroeconomic is a factor that is pertinent to a broad economy at the regional or national level and affects a large population rather than a few select individuals. Macroeconomic factors are key indicators of economic performance and are closely monitored by governments, businesses and consumers. Macroeconomic factors are the factors which affect the wider economy. In other words these factors seem to summarize the picture of economy. Macroeconomic variables include economic output, unemployment, inflation, interest rates, money supply, exchange rate, foreign reserves, savings and investment. Variables used in study: • Consumer Price Index (CPI) Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the CPI) over time. A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households. It captures the retail price movement for different sections of consumers. In India, the Consumer Price Index or CPI measures...
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...Challenges Shaikh Faisal. Assistant Professor Dr. Rafiq Zakaria Campus Millennium Institute of Management Aurangabad Introduction: The global financial system has undergone a period of unprecedented turmoil. Market confidence dwindled and has remained fragile, leading to the collapse or near-collapse of large, and in some cases systemically important, financial institutions, and calling forth public intervention in the financial system on a scale not seen for decades. The financial system has been severely weakened by mounting losses on impaired and illiquid assets, uncertainty regarding the availability and cost of funding, and further deterioration of loan portfolios as global economic growth slows. Finding a purely private sector resolution of financial market strains has become increasingly difficult, while case-by-case intervention by authorities has not alleviated market concerns. In response, more comprehensive approaches are now being considered or implemented to bring about a more orderly process of deleveraging and to break the adverse feedback loop between the financial system and the global economy. Such a comprehensive approach—if well coordinated among countries—should be sufficient to restore confidence and the proper functioning of markets and avert a more protracted downturn in the global economy. Significant writedowns have already been realized, but more may lie ahead. . . The estimate of aggregate write downs by IMF based on global holdings of U...
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...an rupee AN ASSIGNMENT ON FLUCTUATIONS IN INDIAN CURRENCY AND ITS IMPACTS SUBMITTED TO: Professor Harshit Shah SUBMITTED BY: Amber A Maheshwari (NR12070) SUBMITTED ON: 19th September 2013 INTRODUCTION TO EXCHANGE RATE MECHANISM: All economies that interact with international economy can be broadly classified into three categories on the basis of exchange rate policy of the country. 1) FIXED EXCHANGE RATE: These economies peg the value of their currency with some other prominent currency like US dollar. This system is simple and provides stability to the economy (of course, if the economy of the country to whose currency its currency is pegged is stable). This type of exchange rate regime is maintained by generally smaller economies like Nepal and Bhutan (pegged to Indian Rupee) or several African nations. Rational behind such regime is that in case of small economy – if the exchange rate is market determined – the sudden influx or out flux of even relatively small amount of foreign capital will have large impact on exchange rate and cause instability to its economy. Notable exception is China which despite being large economy has its currency pegged to US dollar. 2) FLOATING (OR FREE) EXCHANGE RATE: Bigger and developed economies like US, UK, Japan etc generally let market determine their exchange rate. In such economy exchange rate is determined by demand and supply of the currency. For example consider exchange rate of US dollar versus Japanese Yen...
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...Team Members Economic times article and reflective note Should RBI check rupee's rise? Posted on October 20, 2010 | View 124 We expect the Reserve Bank of India (RBI) to intervene in the foreign exchange market to mop up surplus capital flows. This means that the RBI will buy dollars and inject rupee liquidity into the economy. This, of course, is different from imposing controls to turn capital flows away, which we do not expect. Why? Well, the RBI must generate more money to fund growth at reasonable interest rates. Its 100-basis-point hike in cash reserve ratio has pulled money growth down to a tight 15% level. This is clearly insufficient to fund loan demand growing at 20%. Won’t this fuel inflation? Not really. Some monetary expansion is necessary for growth; it is only excessive money supply that is inflationary — the difference between eating and overeating. Second, the RBI needs to inject liquidity to fund government borrowing. Although the Centre and states plan to borrow around Rs 2,000 billion (net) in October-March 2011, it is difficult to see how banks and insurers can put in more than Rs 1,400 billion. This means that the RBI will have to plug the gap either by directly buying government bonds through open market purchase or indirectly by injecting rupees through forex intervention. Third, the RBI needs to recoup the $35 billion of forex reserves sold during the 2008 credit crisis to arrest the deterioration in vulnerability indicators. Short-term external...
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...What Is Stock Market?? A stock market or equity market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares); these may include securities listed on a stock exchange as well as those only traded privately. What Is Stock Exchange?? A stock exchange is a place or organization by which stock traders (people and companies) can trade stocks. Companies may want to get their stock listed on a stock exchange. Other stocks may be traded "over the counter", that is, through a dealer. A large company will usually have its stock listed on many exchanges across the world.[4] Exchanges may also cover other types of security such as fixed interest securities or indeed derivatives. The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as, "An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities." Difference Of Stock Market And Stock Exchange The stock market represents the companies that list equity shares for public investors to buy and sell. Stock exchanges are the infrastructure that facilitate the trading of those equity securities, or stocks. Without a stock exchange, companies would have no formal mechanism on which to list shares, and without a stock market, exchanges would have no reason to exist. Stock...
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...Techno-Fundamental Approach to build an Equity Portfolio and Study of Price Fluctuations with volume SIP project report submitted in partial fulfilment of the requirements for the PGDM Program By Chetan Arora 2010065 Supervisors Mr. Kartikeye Vatsa Deputy Manager (Financial Analyst) Dr. Gajavelli V S Professor Institute of Management Technology, Nagpur Institute of Management Technology, Nagpur 2010 - 2012 1 ACKNOWLEDGEMENTS I am sincerely grateful to Punjab National Bank for providing an opportunity to do an internship under its umbrella. This Summer Internship is a necessary component towards fulfilment of the requirements of the Post Graduate Diploma in Management (PDGM) program that I am currently undergoing from Institute of Management Technology, Nagpur. Having undergone the Summer Internship from one of India‘s most prestigious and respected institution, and India‘s second largest treasury division, has indeed been a learning, rewarding and pleasurable experience for me. I also want to express my gratitude and sincere thanks to my project guide Mr. Kartikeye Vatsa, Deputy Manager (Financial Analyst), Treasury Division and his senior Mr Rajan Ravat, Chief Manager, Treasury Division for constantly guiding and supervising my project. This project would not have been possible without their support and motivation. I would also like to thank Mr. Rajesh Bhagat, Manager, Treasury Department for their unending help in understanding the work culture at Punjab...
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...describes how government of India and RBI (Reserve bank of India, equivalent to Fed Reserve in US) tackled aftermath of global financial crisis in India. Effects of Global crisis Aftermath of Financial crisis was more prominent during 2008. As the global financial crisis began unfolding in the first nine months of 2008, foreign institutional investors pulled out close to $10 billion from India, dragging the capital market down with it. The liquidity crisis, coupled with the credit squeeze and a weak currency, hurt various sectors. Banks have reined in retail financing, affecting home and auto loans. Car loans account for 70% of consumer auto purchases now, down from 85% a year ago. Meanwhile, consumers are deferring other purchases while financiers have been logging a drop in loan disbursal rates At that time the Bombay Stock Exchange Index, or Sensex, tumbled 6% to a two-year low. For the first time in five years, the central bank cut the cash reserve ratio, the amount of funds that banks have to keep with the Reserve Bank of India by 50 basis points, to 8.5%, on Oct. 6, 2008. The same evening, the Securities & Exchange Commission of India eased some restrictions on foreign portfolio investors—such as registering in India before buying shares and limits on offshore derivatives—it had imposed in 2007. The stock market remained choppy, there's been a credit squeeze, interest rates were up, and banks continue to rein in loans as inflation hovers at 12%. Growth has slowed...
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