1

What Does - BRIC Mean?

"The term 'BRIC' (BRAZIL, RUSSIA, INDIA, CHINA) was coined by Jim O'Neill [Goldman Sachs' London-based head of global economic research] at Goldman Sachs in November 2001," says Maria Gordon, speaking on a July 25 conference call. Gordon, based in London, is a portfolio manager for the new BRIC fund, and executive director and co-head of GSAM's global emerging markets equity. The other portfolio managers for the BRIC fund are: Singaporebased Kenny Tjan, executive director and co-head of GSAM's global emerging markets equity; Richard Flax executive director, global emerging markets equity, London; and Mark Syn, executive director, global emerging markets equity, Singapore. At the end of the nineties, the emerging markets attracted attention mainly through a series of crises. In 1994, Mexico was shaken by the so-called Tequila crisis, and in 1997-98, the booming Tiger countries in Asia were hit. Then in early 1999, Russia declared insolvency and in the same year Brazil just managed to escape the bankruptcy of the state. Finally, in 2001 the financial and currency systems in Argentina collapsed. In most cases, the economic crises were only of short duration. Today most of the former Tiger countries are no longer counted as developing countries. They have outgrown this state and are now viewed as industrialised countries. Much the same applies to Mexico. An aspect of importance for future developments is the fact that the crises concerned frequently triggered sweeping reforms, and not just in the countries directly affected! In recent years, BRIC countries have, for example, built up substantial foreignexchange reserves thanks to large trade surpluses. Russia and Brazil have improved their debt structures and China is in the process of significantly deregulating its currency and share trading systems. These factors are also reflected in higher credit ratings of rating agencies. Three of these four countries already have a prized investment grade rating.

Younger populations and new pools of consumers are helping drive interest in BRIC investing. According to GSAM, the pool of new consumers in BRIC countries with annual incomes of above $15,000 will, by 2025, be almost twice the total population of Japan, three times the total population of Germany, and four times the total population of the U.K., France, or Italy. The four countries form natural markets for each other: "China and India are key sources of demand for natural resources; Russia and Brazil are key sources of supply for natural resources," explains Gordon, adding that BRIC countries contributed one-third of global growth in past five yrs, according to Jim O'Neill. With valuations more modest since the emerging markets' sell off this year, Gordon asserts that Ex-India, (which at 19.9 times earnings still has relatively high P/E multiples), BRIC markets have more attractive fundamentals than the U.S., Europe, or Japan markets. She calls BRIC a "very profitable slice of the universe." Including India, the P/E ratio for BRICs is 11.8 times earnings, while the U.S. is 16.8 and Japan is 19, according to GSAM. The BRIC fund is designed to be part of a core and satellite approach to asset management with the BRIC fund one of the satellites complementing a "core" of more diverse equity and fixed-income assets. Because it will invest in a relatively low number of companies, the BRIC fund is considered more concentrated than many emerging markets funds, and may be more volatile as well. Emerging markets funds have an average volatility of around 20% while the BRIC fund may have closer to 25% volatility, according to Gordon Feature of BRIC COUNTRY The development model of the other BRIC countries seems to have different drivers, much more influenced by natural resources in the case of Russia and Brazil, while India is testing its own version of economic development with a strong component of outsourced services. This new dimension of growth in services rather than manufacturing has been made possible by the advent of the internet and the huge reduction in communication costs linked to it. These new
3

models for growth have been untested over long periods but may prove to be other pathways for achieving growth 1. Swiftly growing economies 2. Giant countries, with giant populations, 3. LOW cost of production 4. More visibility OF INCOME GROWTHS

BRIC leaders in 2008: Manmohan Singh (India), Dmitry Medvedev (Russia), Hu Jintao (China) and Luiz Incio Lula da Silva (Brazil). In economics, BRIC or BRICs is an acronym that refers to the fast growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by Goldman Sachs in 2001. Goldman Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world. Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association, like the European Union has done. However, there are strong indications that the "four BRIC countries have been seeking to form a "political club" or "alliance", and thereby converting "their growing economic power into greater geopolitical clout". One of the recent

indications was from a BRIC Summit meeting in 2008, in the Russian city of Yekaterinburg between the foreign ministers of the BRIC countries. Also in his Latin America trip Russian President Dmitry Medvedev while visiting Brazil, met with Brazilian President Luiz Incio Lula da Silva and agreed to visa-free travel. Medvedev has also recently made a trip to New Delhi, India to meet with Indian President, Prathiba Patil and Prime Minister Manmohan Singh to discuss a nuclear deal as well as agreeing to cooperate in the spheres of finance and financial security, tourism, culture and fighting drug trafficking.

The BRIC thesis

So Paulo,Brazil. Goldman Sachs argues that the economic potential of Brazil, Russia, India, and China is such that they may become among the four most dominant economies by the year 2050. These countries encompass over twenty-five percent of the world's land coverage, forty percent of the world's population and hold a combined GDP (PPP) of 15.435 trillion dollars. On almost every scale, they would be the largest entity on the global stage. These four countries are among the biggest and fastest growing Emerging Markets. The size of the world stock market is estimated at about $36.6 trillion US at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.)

The BRIC term

The Sao Paulo Stock Exchange is the second largest in the Americas and the third largest in the world Various sources refer to a purported "original" BRIC agreement that predates the Goldman Sachs thesis. Some of these sources claim that President Vladimir Putin of Russia was the driving force behind this original cooperative coalition of developing BRIC countries. However, thus far, no text has been made public of any formal agreement to which all four BRIC states are signatories. This does not mean, however, that they have not reached a multitude of bilateral or even trilateral agreements. Evidence of agreements of this type are abundant and are available on the foreign ministry websites of each of the four countries. Trilateral agreements and frameworks made among the BRICs include the Shanghai Cooperation Organization (member states include Russia and China, associate members include India) and the IBSA Trilateral Forum, which unites Brazil, India, and South Africa in annual dialogues. Also important to note is the G-20 coalition
of developing states which includes all the BRICs.

Also, because of the popularity of the Goldman Sachs thesis "BRIC", this term has sometimes been extended to "BRICK" (K for South Korea), "BRIMC" (M for Mexico), "BRICA" (GCC Arab countries Saudi Arabia, Qatar, Kuwait, Bahrain, Oman and the United Arab Emirates) and "BRICET" (including Eastern Europe and Turkey) have become more generic marketing terms to refer to these emerging markets.

Marketing
The BRIC term is also used by companies who refer to the four named countries as key to their emerging markets strategies. By comparison the reduced acronym IC would not be attractive, although the term "Chindia" is often used. The BRIC's study specifically focuses on large countries, not necessarily the wealthiest or the most productive and was never intended to be an investment thesis. If investors read the Goldman's research carefully, and agreed with the conclusions, then they would gain exposure to Asian debt and equity markets rather than to Latin America. According to estimates provided by the USDA, the wealthiest regions outside of the G6 in 2015 will be Hong Kong, South

Korea and Singapore. Combined with China and India, these five economies are likely
to be the world's five most influential economies outside of the G6.

On the other hand, when the "R" in BRIC is extended beyond Russia and is used as a loose term to include all of Eastern Europe as well, then the BRIC story becomes more compelling. At issue are the multiple serious problems which confront Russia (declining population, potentially unstable government, environmental degradation, critical lack of modern infrastructure, etc), and the comparatively much lower growth rate seen in Brazil. However, Brazil's lower growth rate obscures the fact that the country is wealthier than China or India on a per-capita basis, has a more developed and global integrated financial system and has an economy potentially more diverse than the other BRICs due to its raw material and manufacturing potential. Many other Eastern European countries, such as Poland, the Czech Republic, Slovakia, Hungary, Romania, Bulgaria, and several others were able to continually sustain high economic growth rates and do not experience some of the problems that Russia experiences or experience them to a lesser extent. In terms of GDP per capita in 2007, Brazil ranks 64th, Russia 54th, China 105th and India 131st. By comparison South Korea currently ranks 28th, Singapore 21st, and Hong Kong 27th.

WHAT IS EQUITY MARKET? A stock market, or equity market, is a private or public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market is estimated at about $36.6 trillion US at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.) The stocks are listed and traded on stock exchanges which are entities a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The stock market in the United States includes the trading of all securities listed on the NYSE, the NASDAQ, the Amex, as well as on the many regional exchanges, e.g. OTCBB and Pink Sheets. European examples of stock exchanges include the London Stock Exchange, the Deutsche Brse and the Paris Bourse, now part of Euronext.

CORRELATION
Correlation in statistics, refer to relationship between any two, or more variables viz. height and weight, rainfall and yield, price and demand. Two variables are said to be correlated if with a change in the value of one variable there arises a change in the value of another variable. On the other hand if a change in the value of one variable does not bring any change in the value of the another variable, the two variable are said to have no relation with each other. DEFINITION According to CROXTON and COWDEN "When the relationship is of a quantitative nature, the appropriate tool for discovering and measuring the relationship, and expressing it in a brief formula is known as correlation". According to SIMPSON and KAFKA "Correlation analysis deals with the association between two or more variables". Uses of Correlation 1. It is used in deriving precisely the degree , and the direction of relationship between variables. 2. It is used to developing the concept of regression, and the ratio of variables for a given value of another variable 3. It is used in reducing the range of uncertainty in the matter of prediction. 4. It is used in presenting the average relationship between any two variables through a single value of co-efficient of correlation. 5. In the field of economics it is used in understanding the economic behavior, and locating the important variables on which others depend . 6. In the field of business it is used advantageously to estimate the cost of sales, volume of sales, sales prices, and any other values on the basis of some other variable which are financially related to each other.

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7. In the field of science and philosophy , also the method of correlation are used in making progressive developments in the respective lines. CORRELATION FINANCIAL The relationship between two variables during a period of time, especially one that shows a close match between the variables' movements. For example, all utility stocks tend to have a high degree of correlation because their share prices are influenced by the same forces. Conversely, gold stock price movements are not closely correlated with utility stock price movements because the two are influenced by very different factors. The concept of correlation is frequently used in portfolio analysis. In investment terms, correlation is the extent to which the values of different types of investments move in tandem with one another in response to changing economic and market conditions. Correlation is measured on a scale of - 1 to +1. Investments with a correlation of + 0.5 or more tend to rise and fall in value at the same time. Investments with a negative correlation of - 0.5 to - 1 are more likely to gain or lose value in opposing cycles.

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INTRODUCTION TO BRIC COUNTRIES India

Flag

National Emblem

Capital Official languages Government President

New

Delhi

) 2834N 7712E28.567N 77.2E

Hindi, English Federal republic [8] Parliamentary democracy Pratibha Patil

Prime Minister Manmohan Singh Chief Justice K. G. Balakrishnan Sansad

Legislature

12

Upper House

Rajya Sabha

Lower House Lok Sabha from United Kingdom 15 August 1947 26 January 1950

Independence Area Total Declared Republic

3,287,240 km2 (7th) 1,269,210 sq mi

Population 2008 estimate 1,147,995,904 (2nd) 2001 census 1,028,610,328 2007 estimate $1.100 trillion (12th) $941 (132nd) Indian rupee () (INR)

GDP (nominal) Total Per capita

Currency

India, officially the Republic of India (Hindi: Bhrat Gaarjya; see also other Indian languages), is a country in South Asia. It is the seventhlargest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on the east, India has a coastline of 7,517 kilometers (4,671 mi). It is bordered by Pakistan to the west; People's Republic of China (PRC), Nepal, and Bhutan to the north; and Bangladesh and Myanmar to the east. India is in the vicinity of Sri Lanka, the Maldives, and Indonesia in the Indian Ocean.

Economy of India
The economy of India was under socialism-based policies for an entire generation from the 1950s until the 1980s. The economy was characterized by extensive
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regulation, protectionism, and public ownership, leading to pervasive corruption and slow growth. Since 1991, the ongoing economic liberalization has moved India towards a capitalist market economy. It has created millions of better paying jobs and a fast-growing middle class. Agriculture provides livelihood for 60% of Indians. The service sector makes up a further 28% of employment, and industrial sector around 12%.One estimate says that only one in five job-seekers has had any sort of vocational training. The labor force totals half a billion workers. For output, the agricultural sector accounts for 17% of GDP; the service and industrial sectors make up 54% and 29% respectively. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. Major industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery and software design. In 2007, India's GDP was $1.237 trillion, which makes it the twelfth-largest economy in the world or fourth largest by purchasing power adjusted exchange rates. India's nominal per capita income of $1043 is ranked 136th in the world. In the late 2000s, India's growth has averaged 7.5% a year, increases which will double the average income within a decade. Unemployment rate is 7% (2008 estimate). Indian economic reforms have meant growing trade and globalization. India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to the World Trade Statistics of the WTO in 2006, India's total merchandise trade (counting exports and imports) was valued at $294 billion in 2006 and India's services trade inclusive of export and import was $143 billion. Thus, India's global economic engagement in 2006 covering both merchandise and services trade was of the order of $437 billion, up by a record 72% from a level of $253 billion in 2004. India's trade has reached a still relatively moderate share 24% of GDP in 2006, up from 6% in 1985.India has economic disparities at the state level; more market-friendly states have raised living standards faster and
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higher. Despite sustained high economic growth rate, approximately 80% of Indian population lives on less than $2 a day (PPP), more than double the same poverty rate in China Even though the Green Revolution ended famines in India, 40% of children under the age of three are underweight and a third of all men and women suffer from chronic energy deficiency.

MAIN INDEX OF INDIA

1.BSE 2.NSE Introduction TO BSE Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning three centuries in its 133 years of existence. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, BSE has
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two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners. Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z groups. BSE 30 ACC Ltd. Cement and cement products Ambuja Cements Ltd. Cement and Cement Products Bajaj Auto Ltd. Automobiles - 2 and 3 Wheelers Bharat Heavy Electricals Ltd. Electrical Equipment Bharti Airtel Ltd. Telecommunication - Services Cipla Ltd. Pharmaceuticals DLF Ltd. Developers/Construction Grasim Industries Ltd. Diversified Housing Development Finance Corporation Ltd. Finance - Housing HDFC Bank Ltd. Banks Hindalco Industries Ltd. Aluminium Hindustan Unilever Ltd. FMCG ICICI Bank Ltd. Banks Infosys Technologies Ltd. Information Technology ITC Ltd. FMCG Larsen & Toubro Ltd. Engineering Mahindra & Mahindra Ltd. Automobiles - 4 wheelers Maruti Udyog Ltd. Automobiles - 4 wheelers NTPC Ltd. Power Oil & Natural Gas Corporation Ltd. Oil Exploration/Production Ranbaxy Laboratories Ltd. Pharmaceuticals
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Reliance Communications Limited Telecom Reliance Energy Ltd. Power Reliance Industries Ltd. Refineries Satyam Computer Services Ltd. Computers - Software State Bank of India Banks Tata Consultancy Services Ltd. Computers - Software Tata Motors Ltd. Automobiles - 4 Wheelers Wipro Ltd. Computers Software NSE National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted by leading Financial Institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure, market practices and trading volumes. NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has written for itself the mandate to create World-class Stock Exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE is set up on a demutualised model wherein the ownership, management and trading rights are in the hands of three different sets of people. This has completely eliminated any conflict of interest.

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50 COMPANIES ABB Ltd. Electrical equipment ACC Ltd. Cement and cement products Ambuja Cements Ltd. Cement and Cement Products Bajaj Auto Ltd. Automobiles - 2 and 3 Wheelers Bharat Heavy Electricals Ltd. Electrical Equipment Bharat Petroleum Corporation Ltd. Refineries Bharti Airtel Ltd. Telecommunication - Services Cipla Ltd. Pharmaceuticals Dr. Reddy's Laboratories Ltd. Pharmaceuticals GAIL (India) Ltd. Gas Glaxosmithkline Pharmaceuticals Ltd. Pharmaceuticals Grasim Industries Ltd. Cement and Cement Products HCL Technologies Ltd. Computers - Software HDFC Bank Ltd. Banks Hero Honda Motors Ltd. Automobiles - 2 and 3 Wheelers Hindalco Industries Ltd. Aluminium Hindustan Petroleum Corporation Ltd. Refineries Hindustan Unilever Ltd. Diversified Housing Development Finance Corporation Ltd. Finance - Housing I T C Ltd. Cigarettes ICICI Bank Ltd. Banks Infosys Technologies Ltd. Computers - Software Larsen & Toubro Ltd. Engineering Mahanagar Telephone Nigam Ltd. Telecommunication - Services Mahindra & Mahindra Ltd. Automobiles - 4 wheelers Maruti Udyog Ltd. Automobiles - 4 wheelers NTPC Ltd. Power National Aluminium Co. Ltd. Aluminium
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Oil & Natural Gas Corporation Ltd. Oil Exploration/Production Punjab National Bank Banks Ranbaxy Laboratories Ltd. Pharmaceuticals Reliance Communications Ltd. Telecommunication - Services Reliance Energy Ltd. Power Reliance Industries Ltd. Refineries Reliance Petroleum Ltd. Refineries Satyam Computer Services Ltd. Computers - Software Siemens Ltd. Electrical Equipment State Bank of India Banks Steel Authority of India Ltd. Steel and Steel Products Sterlite Industries (India) Ltd. Metals Sun Pharmaceutical Industries Ltd. Pharmaceuticals Suzlon Energy Ltd. Electrical Equipment Tata Consultancy Services Ltd. Computers - Software Tata Motors Ltd. Automobiles - 4 Wheelers Tata Power Co. Ltd. Power Tata Steel Ltd. Steel and Steel Products Unitech Ltd. Construction Videsh Sanchar Nigam Ltd. Telecommunication - Services Wipro Ltd. Computers - Software Zee Entertainment Enterprises Ltd. Media & Entertainmen

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China
People's Republic of China Zhnghu Rnmn Gnghgu

Flag

Emblem

Capital

Beijing
3955N 11623E39.917N 116.383E

Ethnic groups

91.9% Han, 1.30% Zhuang, 0.86% Manchu, 0.79% Uyghur, 0.79% Hui, 0.72% Miao, 0.65% Yi, 0.62% Tujia, 0.47% Mongol, 0.44% Tibetan, 0.26% Buyei, 0.15% Korean, 1.05% other (See:List of ethnic groups in China) Socialist Single-party communist state Hu Jintao Wen Jiabao
of of

Government - President - Premier - NPCSC - CPPCC

Chairman Chairman

state,[3]

Wu Bangguo Jia Qinglin

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Legislature Area - Total Population

National People's Congress

9,640,821 km2 or (3rd/4th) 3,704,427 sq mi

9,671,018 km2

- 2007 estimate 1,321,851,888 (1st) - 2000 census GDP (nominal) - Total - Per capita Currency 1,242,612,226 2008 estimate $4.329 trillion (3rd) $3,260 (104th) Yuan (CNY)

China's development was influenced by the alien peoples on the frontiers of Chinese civilization, who were sinicized into the Chinese polity . ECONOMY Economic system in transition, cautiously moving away from Soviet-style central planning and gradually adopting market economy mechanisms and reduced government role. Industry, largely based on state and collective ownership, marked by increasing technological advancements and productivity. China's people's communes eliminated by 1984--after more than twenty-five years--and responsibility system of production introduced in agricultural sector. Private ownership of production assets legal, although major nonagricultural and industrial facilities still state owned and centrally planned. Restraints on foreign trade relaxed and joint ventures encouraged. Shanghai Stock Exchange

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The Shanghai Stock Exchange (SSE) (simplified Chinese: traditional Chinese: ; pinyin: Shnghi Zhngqun Jioysu) is a Chinese stock exchange or bourse that is based in the city of Shanghai. It is one of the three stock exchanges operating independently in the People's Republic of China, the other two are the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. Unlike the Hong Kong Stock Exchange, the Shanghai Stock Exchange is still not entirely open to foreign investors due to tight capital account controls exercised by the Chinese mainland authorities.

Shanghai Stock Exchange building (in 2008) at Shanghai's new Pudong financial district.The first share list appeared in June 1866 and by then Shanghai's International Settlement had developed the conditions conducive to the emergence of a share market: several banks, a legal framework for joint-stock companies, and an interest in diversification among the established trading houses (although the trading houses themselves remained partnerships). At the end of 2007, the Shanghai Stock Exchange had 860 listed companies with a combined market capitalization of US$3.7 trillion, making it the largest in mainland China and sixth largest in the world. 31 COMPANIES LISTED UNDER SHIANGHAI Kweichow Moutai Co., Ltd Maanshan Iron & Steel Co., Ltd.
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Minmetals Development Co., Ltd Nanjing Textiles Import & Export Corp Ltd. Ningbo Bird Co., Ltd. Shanghai Automotive Industry Corporation (Group) Shanghai Bailian Group Co., Ltd. Shanghai Pharmaceutical (Group) Co., Ltd Shanghai Pudong Development Bank Sinopec Shanghai Petrochemical Company Limited Xiamen C&D Inc. Aerospace Communications Holdings Co., Ltd. Beijing Shunxin Agriculture Co., Ltd. Beijing Tongrentang Co., Ltd. Beiqi Foton Motor Company Limited Beiya Industrial (Group) Co. Ltd. China Merchants Bank China Minsheng Banking Corporation Limited China Yangtze Power Co Ltd. Chongqing Department Store Co. Ltd. Citychamp Dartong Co., Ltd. Daheng New Epoch Technology, Inc. Dashang Group Co., Ltd. Datang Telecom Technology Co., Ltd. Dazhong Transportation (Group) Co., Ltd. GITI Tire (China) Investment Company Ltd. Guangzhou Development Industry (Holdings) Co., Ltd. Handan Iron & Steel Co., Ltd. Hua Xia Bank Limited Inner Mongolia BaoTou Steel Union Co. Inner Mongolia Yili Industrial Group Company Limited
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Russia
Russian Federation Rossiyskaya Federatsiya

Flag

Coat of arms

Capital (and largest city)

Moscow
5545N 3737E55.75N 37.617E

Ethnic groups

79.8% Russian 3.8% Tatar 2.0% Ukrainian 1.2% Bashkir 1.1% Chuvash 12.1% others[1] Federal Presidential republic Dmitry Medvedev (Ind.)

Government - President

- Prime Minister Vladimir Putin (UR) Legislature - Upper House - Lower House Federal Assembly Federation Council State Duma Area 24

- Total

17,075,400 km2 (1st) 6,592,800 sq mi Population

- 2008 estimate - 2002 census GDP (nominal) - Total - Per capita

142,008,838[3] (9th) 145,166,731 2008 estimate $1.778 trillion (8th) $12,579 (52nd)

Rossiyskaya Federatsiya), is a transcontinental country extending over much of northern Eurasia. It is a semi-presidential republic comprising 83 federal subjects. Russia is the largest country in the world, covering more than an eighth of the Earths land area; with 142 million people, it is the ninth largest by population. It extends across the whole of northern Asia and 40% of Europe, spanning 11 time zones and incorporating a great range of environments and landforms. It has the world's largest forest reserves and its lakes contain approximately one-quarter of the world's unfrozen fresh water. Russia age stucture 14.6% (0-14 years), 71.2% (15-64 years) , 14.1(65-over) Economy Since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have bolstered economic growth in Russia. The country ended 2007 with its ninth straight year of growth, averaging 7% annually since the financial crisis of 1998. In 2007, Russia's GDP was $2.076 trillion (est. PPP), the 6th largest in the world, with GDP growing 8.1% from the previous year. Growth was primarily driven by non-traded services and goods for the domestic market, as opposed to oil or mineral extraction and exports. The average salary in Russia was $640 per month in early 2008, up from $80 in 2000. Approximately 14% of Russians lived below the national poverty line in 2007, significantly down from 40% in 1998 at the worst of the post-Soviet

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collapse. Unemployment in Russia was at 6% in 2007, down from about 12.4% in 1999.

A Rosneft petrol station. Russia is the world's leading natural gas exporter and the second leading oil exporter. Russia has the world's largest natural gas reserves, the second largest coal reserves and the eighth largest oil reserves. It is the world's leading natural gas exporter and the second leading oil exporter. Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad. Since 2003, however, exports of natural resources started decreasing in economic importance as the internal market strengthened considerably. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia's GDP and the government predicts this will drop to 3.7% by 2011. Russia is also considered well ahead of most other resource-rich countries in its economic development, with a long tradition of education, science, and industry. The country has more higher education graduates than any other country in Europe. Russia is Europe's key oil and gas supplier. The economic development of the country though has been uneven geographically with the Moscow region contributing a disproportionately high amount of the country's GDP. Much of Russia, especially indigenous and rural communities in Siberia, lags significantly behind. Nevertheless, the middle class has grown from just 8 million persons in 2000 to 55 million persons in 2006. Russia is home to the largest number of billionaires in the world after the United States, gaining 50 billionaires in 2007 for a total of 110. MAIN INDEX
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1.RTS 2.RSE Russian Trading System The Russian Trading System is a stock market established in 1995 in Moscow, consolidating various regional trading floors into one exchange. Originally RTS was modelled on NASDAQ's trading and settlement software; in 1998 the exchange went on line with its own in-house system. Initially created as a nonprofit organization, at the moment RTS is in the process of reorganization: it is being transformed into a joint-stock company.

BRAZIL
Introduction

Federative Republic of Brazil Repblica Federativa do Brasil

Flag

Coat of arms

Braslia Capital
1545S 4757W15.75S 47.95W

27

Largest city Official languages

So Paulo Portuguese 49.7% White 42.6% Pardo (Brown) 6.9% Black 0.5% Asian 0.3% Amerindian Presidential Federal republic Luiz Incio Lula da Silva (PT) Jos Alencar (PRB)

Ethnic groups

Government - President - Vice-President -

President of the Chamber Michel Temer (PMDB) of Deputies Jos Sarney (PMDB) Gilmar Mendes from Portugal September 7, 1822 August 29, 1825 November 15, 1889 Area

- President of the Senate - Chief Justice Independence - Declared - Recognized - Republic

- Total

8,514,877 km2 (5th) 3,287,597 sq mi Population

- 2008 estimate - 2007 census GDP (nominal) - Total - Per capita Currency

196,342,592 (5th) 189,987,291 2008 estimate $1.665 trillion[1] (10th) $6,937[1] (63rd) Real (R$) (BRL) 28

Demographics

Boa Viagem beach in Recife. Much of Brazil's population is concentrated along the coastline.

Downtown Rio de Janeiro, one of the most beautiful and modern cities in Latin America. Population of Brazil is made up of many racial and ethnic groups. Most Brazilians can trace their ancestry to the country's Indigenous peoples, Portuguese colonists, and African slaves. Beginning in the late 19th century, Brazil opened its borders to immigration: people from over 60 nations migrated to Brazil. The largest metropolitan areas in Brazil are So Paulo, Rio de Janeiro, and Belo Horizonte, with 19.7, 11.4, and 5.4 million inhabitants respectively. Almost all the capitals are the largest city in their corresponding state, except for Vitria, the capital of Esprito Santo, and Florianpolis, the capital of Santa Catarina.

29

Economy

So Paulo, the wealthiest city of Brazil and the largest financial center of the country. Brazil is the largest national economy in Latin America, the world's tenth largest economy at market exchange rates and the ninth largest in purchasing power parity (PPP), according to the International Monetary Fund and the World Bank; with large and developed agricultural, mining, manufacturing and service sectors, as well as a large labor pool. Brazilian exports are booming, creating a new generation of tycoons. Major export products include aircraft, coffee, automobiles, soybean, iron ore, orange juice, steel, ethanol, textiles, footwear, corned beef and electrical equipment. The country has been expanding its presence in international financial and commodities markets, and is regarded as one of the group of four emerging economies called BRIC.Nonetheless, foreign direct investment (FDI), related to long-term, less speculative investment in production, is estimated to be $193.8 billion for 2007. Inflation monitoring and control currently plays a major role in Brazil's Central Bank activity in setting out short-term interest rates as a monetary policy measure. According to the Brazilian Constitution of 1988, Brazil is a federation of 26 states, one federal district and also the municipalities. None of these units have the right to secede from the Federation. MAIN INDEX 1.RIO DE JANEIRO STOCK EXCHANGE
30

2.BOVESPA 3.SAO PAULO STOCK EXCHANGE BOVESPAs Indexes Ibovespa The Bovespa Index (Ibovespa) is the oldest and most traditional indicator of the average stock price behavior in Brazil. It represents the present value, in the current currency, of a stock portfolio organized on January 2, 1968 by a hypothetical investment. This portfolio consists of stocks that represent an aggregate value of 80% of the cash volume traded during the twelve months before the organization of its portfolio. IBrX-100 : Top 100 shares most traded in terms of number of trades and financial volume, in the cash market, weighted in accordance with the number of shares in circulation (free float). IBrX 50 : Top 50 shares most traded in terms of number of trades and financial volume, in the cash market, weighted in accordance with the number of shares in circulation (free float). IVBX-2 : 50 shares ranked in decreasing order of liquidity (starting from the 11th), measured by their tradability over the last 12 months. IEE Itel IGC : All exchange listed shares of the electrical power sector companies. : All exchange listed shares of the telecommunications companies. : Shares in all companies that adhered to Novo Mercado, Level 1 or 2,

with weighting in accordance with the Corporate Governance commitment. Novo Mercado companies stocks have weight 2, Level 2s have weight 1.5 and Level 1s have weight 1. Itag : All the shares of companies that offer special tag along rights (spreading control premium) and which were traded at least in 30% of the trading sessions over the last 12 months

31

32

REVIEW OF LITERATURE In this an attempt has been made to present in brief, a review of literature available on the subject to provide a glimpse of the studies done so far on the "Comparative study of Equity Markets of BRIC Countries" . It gives an eye view of the findings of other academic researchers who have follow the path with the study needs to tread. A brief resume of the possible available references is presented below: Fernando Ferrari-Filho And Anthony Spanakos (2007) tried to find out "Why Brazil Has Not Grown: A Comparative Analysis of Brazilian and Chinese Economic Management" . This paper aims to answer a very basic question asked by not only Brazilians, but people in other developing countries where liberal reform agendas were oversold, namely: why has China grown so rapidly and Brazil not. An interesting point of divergence among the BRICs is in the area of economic growth and reforms: the BRIC countries which pursued liberal reforms more aggressively and holistically (Russia and Brazil in the 1990s) grew far slower than those who were more heterodox (China since the 1980s, and India in the 1990s). This is counter-intuitive since conventional wisdom holds that China and Indias growth have largely been the result of freeing up their economies. It also aims at a partial explanation by surveying the results of a generation of Washington Consensus era growth. Something approaching a consensus now exists over the lack of effectiveness of universally applicable holistic reform programs. Given the agnosticism about total liberal packages and the puzzle of why incomplete reformers grew better, the paper engages in a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic

33

policy, especially the monetary and exchange rate regimes, and its effect on growth . That is, the Brazilian experience with inflation targeting and flexible exchange rate regime, since 1999, has contributed to slow start-stop growth and has been relatively high inflation, while the more managed approaches favored by China have done the reverse. Finally, the paper concludes offering policy advice to the other developing countries, BRICs, N-11, or otherwise. Wilson and Purushothaman, ONeil, Jim, Purushothaman, and Stupnystka, 2005). In 2007, they published Brics and Beyond, a full-length book which collected essays that analyzed the trajectories of the BRICs countries, the N-11 (11 other countries that have growth potential), and other possible markets. In the introduction, Jim ONeill wrote that since the original paper on the BRICs countries was written, the equity markets in the BRICs countries had expanded tremendously (in Brazil by 369.0%, India by 49.0%, Russia by 630.0%, and China by 201.0% see ONeill, 2007, p.5) and that Goldman Sachs continues to be bullish about them. After all, regardless of equity market growth, between 2000 and 2006 Brazil averaged only 3.1% economic growth. Goldman Sachs Paulo Leme was sanguine about this, writing Brazil has underperformed not only relative to our expectations but also compared with all the other BRICs. Since 2003, real GDP growth rates in China, India and Russia have averaged 10.2%, 8.0% and 6.9%, in each case far exceeding our estimates of their long-term potential (4.9%, 5.8% and 3.5%, respectively) (Leme, 20071, p.75 ) All four countries had economies where state intervention was considerable up until the 1980s (Brazil and China) or 1990s (Russia and India) and all have moved considerably in favor of freeing market actors and reducing the role of the state. The governments in each of these countries entered the post-World War II period, with a very clear awareness of a need to catch up and with a belief that governments should either actively fill market gaps or that they should wholesale
34

collectivize productive activity. Post War policies involved state-led growth through ambitious multi-year industrialization plans with considerable variety in degrees of success. All pursued policies that were decidedly inward in orientation and Brazil, India and China, displayed little interest in trade, save traditional sectors which were increasingly disadvantaged by macroeconomic policies. The Soviet Union economy, while more global in orientation, understood its trade profile as part of a larger context of Communist solidarity and its trade was determined by political motivations more so than by traditional concerns of price, productivity and quality. Thus,while the Soviet Union was engaged in trade, it did so through the Council of Mutual Economic Assistance, a relatively closed association. The rise in global interest rates, sharp fall in oil prices and global consumption in the early 1980s exposed many structural weaknesses in the models pursued by all four countries. The BRICs countries differed in the speed, pace, and content of the reforms that they implemented, as well as the amount of pressure they endured from international financial institutions and trading partners. Nevertheless, all moved towards liberalizing their economies to degrees unknown by any of those countries for most of the twentieth century. Importantly, all moved towards transforming state-owned enterprises into private or mixed partnerships whose performance would be determined by market rather than political conditions, increasing the role of domestic and foreign (China to a lesser extent) participation in capital markets, felixibilizing labor contracts and rights, and welcoming foreign and domestic private investment, particularly in industries once considered sensitive or part of national security (again, China to a much lesser extent). Given these similarities, what is telling is the stark difference in economic growth over the last decade. More specifically, given that the explanation of the growth of China and India is normally understood as the result of liberalization, it is important to address why liberalization did not have the same effect in Brazil and Russia (in the 1990s). Certain commonalities existed among the many countries and regions in the world which had been hit hard by the rise in oil prices,
35

the global recession in the early 1980s, and its aftermath. These conditions included high or hyper-inflation, overvalued exchange rates, excessive indebtedness (often incurred in a foreign currency), rigid labor markets, inefficient tax collecting agencies, and lack of credibility of monetary policy makers, among others. This comparative study of Brazilian and Chinese macroeconomic policies and outcomes aims to address the puzzle of why the Brazilian economy, despite considerable liberal reforms, has not produced stable and robust growth. It has done this by comparing Brazil to peers in the BRICs group, gleaning information from recent research on the relationship between reforms and growth, and by a focused comparative case study with China. The paper agrees with the finding in the literature that broad liberal reform agendas do not necessarily produce stable and robust economic growth. It does find that certain policies do seem to have more of an effect in limiting external vulnerability and in producing growth, particularly policies that allow governments to maintain autonomy of macroeconomic policies. This confirms Ferrari Filho and Paula (2006) who find that economic performance of BRICs countries is the result of the exchange rate regime, capital account convertibility and fiscal and monetary regimes adopted in each country. This suggests the necessity of (i) ensuring that monetary policy has a significant positive impact on the level of economic activity, (ii) directing financial markets toward financing development rather than rentier-like behavior, and (iii) creating efficient anti- speculation mechanisms to control (or regulate) movements of capital in order to prevent monetary and exchange rate crises and augment the autonomy of domestic decision makers. Exploring the last issue, the main difference among Brazil and China is that, paraphrasing and adapting Stiglitz (2002), financial liberalization and capital mobility in the Brazilian economy in the 1990s were at the center of its currency crisis, while China, due to their measures of capital controls, could manage monetary and fiscal policies proeconomic growth. Interestingly enough, in a panel
36

survey of 49 developing countries between 1970-1995, Gastanaga, Nugent and Pashamova (1998) find that most policy reforms did not have much of an effect on attracting FDI, though capital controls were associated with an increase in FDI and the most important factor was economic growth. Uninterrupted and robust economic growth is the goal of all policy makers, especially in the developing world. Although academic literature has yet to produce clear causal relationships which explain the necessary components for such growth and how to bolster these components, empirical analysis of peer country performance gives valuable signals to policy makers. It may be difficult to say exactly why, with academic certainty, China has grown so robustly and consistently. But when Brazil is compared against China, a strong case may be made for why growth may be weak and interrupted. Shuming Bai (Department of Economics and Finance, College of Business Administration, The University of Texas . Pan American, 2007 ) analyse "The BRIC Impact in Global Financial Markets". Although China.s economic boom has been carried forward at a speed of annual GDP growth of over nine percent for the past twenty-five years, making it the world.s fourth largest economy in 2005 by World Bank, its equity market performance has not impressively reflected it. On the contrary, both Shanghai and Shenzhen, the major stock exchanges declined consecutively for four years until July 2005 when the markets turned around. Bloomberg in January 2007 reports China.s market capitalization has surpassed one trillion value in USD, positioning it as Asia.s third-largest market after Japan and Hong Kong. According to MSCI Barra, an equities tracker in New York, the big emerging markets outperform all major mature markets in 2006, with China leading at 59% return in US dollar, followed by Russia at 50%, India at 48%, Brazil at 38%, and Mexico at 36% contrasting US S&P 500 at 14% and London.s FTSE at 11%, and Japan at 7%. Thus, the emerging market
37

returns provided great diversification benefits when the US and other leading markets were soft. This study updates and extends previous literature on dependencies in stock market indexes and exchange among the five largest emerging economies (the BRIMC) and four developed equity markets in multivariate cointegration analysis. To our best knowledge, there was no study before that put China, Russia and India, Brazil and Mexico together in one analysis to see their relative impact on each other and on other developed markets. Empirical data show that each univariate series of stock prices has a unit root. The multivariate conitegration test and the error correction model suggest a long-run equilibrium relationship among the nine national stock price indexes for the fullsample period and the two post-crisis periods. In the short run, the impulse response analysis in the VAR of nine variables for the. This results conforms with previous study by Masih (1999). Among the three emerging markets, China shows a little more influence than the other two due to its close linkage with the Hong Kong market. China and Russia also show more connection between each other than with India. However, the empirical evidence is rather weak. With China.s stock market reform and regulation, along with its continuously spectacular economic development, China may exert relatively greater influences in the world financial market in the years to come. Our findings have implications for policy makers and global investors. For the policy makers, the cointegrating relations provide them (especially emerging markets) knowledge to adopt more appropriate stock market policies and regulations from the developed markets. For the developed markets, policy makers also need to cope with a world that is far more competitive and dynamic than before and tackle the changes created by global linkages. For global investors, this study sheds more light on how these three emerging markets are related to each other and to other developed markets so that they can diversify and invest globally for greater benefits.
38

DEUTSCHE BORSE AG (February,2007)

Deutsche Brse has developed a

strictly rule-based, transparent and liquid index to give investors the opportunity to participate in these four up-and-coming growth markets: the DAXglobal BRIC index (January 2007)

DAXglobal Average annual performance Annual volatility Correlation Beta BRIC Index 28.34 % 22.91 % 0.4750 0.8057

The index portfolio of the DAXglobal BRIC comprises the top 40 companies from Brazil, Russia, India, and China, which are the largest in terms of market capitalization and are very liquid in terms of turnover. Each country is represented by ten companies. Due to regulatory restrictions in the individual countries and the usually higher level of liquidity in comparison with the underlyings, the stocks from Brazil, Russia, and India are charted via ADRs relating to the respective companies. In order to qualify, the average daily trading volume of each ADR must exceed US$ 1 million. As for China, the calculation of the DAXglobal BRIC index also takes account of the performance of H-shares and red chips from the Hongkong exchange. The index weighting is based on the market capitalization of the individual companies. The maximum proportion attributed to each individual index member is 10 percent; for countries, a cap is set at 35 percent. The weighting is adjusted every three months in order to guarantee the clarity and balance of the index; the composition is reviewed on an annual basis. The DAXglobal BRIC index is disseminated in real time and calculated every trading day between 9 a. m. and 10 p. m. CET.

39

Deutsche Brse also provides a performance indicator once a day based on the closing prices. Calculating the index in euros, US dollars and pounds sterling allows issuers to offer products in various currencies based on the new index; conversion into US dollars and pounds sterling takes place in real time. Ramaprasad Bhar and Biljana Nikolova (14 July 2008) study the level of

integration and the dynamic relationship between the BRIC countries, their respective regions and the world. We find that India shows the highest level of regional and global integration among the BRIC countries, followed by Brazil and Russia and lastly by China. There is a negative relationship between the location conditional volatility of India with that of the Asia-Pacific region and of China with the world, which indicates a presence of diversification opportunities for portfolio investors. Portfolio investors can continue to receive sound returns from taking positions in the index of these countries, however for an outstanding investment performance, they should consider investing in specific areas of growth within the economy rather than the country index.

40

OBJECTIVES Following are the objectives of the study:

41

1. To study the Equity Market of BRIC Countries. 2. To study the factors which lead to the rise of the Equity Market in BRIC Countries. 3. To find the level of Correlation of equity markets among the BRIC Countries. 4. To find the level of Correlation of BRIC Markets with Crude Oil Prices and Gold Prices. 5. To Study the affect the U.S. Financial Crisis on Equity Markets of BRIC Countries.

42

RESEARCH METHODOLOGY
43

It is imperative to decide upon and document a research methodology well in advance to carry out the research in a most effective and systemic way. This section describes the research methodology adopted to serve the objectives of the study in an effective manner. SOURCES OF DATA COLLECTION: Primary and Secondary sources of information were utilized for the collection of required data, as comprehensive analysis requires a great deal of it. PRIMARY DATA Primary data are the first hand information, which we can get directly from the people working in that concern. It can be collected by interview, survey, questionnaires etc. SECONDARY DATA The secondary data is the information about the facts that we can get from published materials such as books, journal , Internet, books etc. I am using secondary sources of the data collection. ANALYSIS In my project the source of data collection is Secondary. The present study being qualitative as well as descriptive in nature was based on study of secondary data . Analysis was done by performing basic mathematics operations on the data collected. Following are the areas which are covered:1. To find the correlation between INDIAN and RUSSIAN Equity Market. 2. To find the correlation between SENSEX values and OIL Price. 3. To find the correlation between SENSEX and GOLD Price 4. To find the effect of change in OIL and GOLD PRICES on INDIA AND RUSSIA
5. Mathematical Formulas are used to find the correlation

44

The formula for Pearson's correlation takes on many forms. A commonly used formula is shown below.

N =Number of values or elements x=First Score Y = Second Score XY = Sum of the product of first and Second Scores X = Sum of First Scores Y = Sum of Second Scores X2 = Sum of square First Scores Y2 = Sum of square Second Scores

45

46

CORRELATION BETWEEB RUSSIA AND INDIA INDEX Comparing the values of RTS EXCHANGE and NSE Stock Exchange. 5.1 Table shows the value of RTS

country Russia

Jan04 567

June04 605

Jan05 667

June05 1125

Jan06 1460

June06 1921

Jan07 1829

June07 2290

Jan08 2460

June 08 631

Jan09 631

5.1 Graph shows the value of RTS

Russia
3000 2500 Index Value 2000 1500 1000 500 0
1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 1/ 0 6 1/ 20 6/ 0 7 1/ 20 07 1/ 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09

Russia

Years

5.2 Table showing % change in index of RUSSIA And INDIA

India Russia

June04 -21 -2

Jan05 38 9

June05 0.3 10

Jan06 36 69

June06 4 30

Jan07 34 32

June07 8 -5

Jan08 43 25

June 08 -21 7

Jan09 -38 -74

47

5.2 Graph showing % change in index of RUSSIA And INDIA

India And Russia 80 60 % Change in values 40 20 0

04

India Russia
1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09 05 1/ 1/ 20 6/ 1/ 20 05

-20 -40 -60 -80 -100

6/ 1/ 20

Ye ars

CORRELATION Correlation between these two are R = 0.68 INTERPRETATION There exist a fairly high correlation between the Russia and India. It means the factors that affect are same. These may be Foreign capital flow and high correlation of both the countries with the World Equity Market It shows that the Economy of these countries are of similar nature. If the value of one is increasing then the value of other is also increasing but the rate of increase is different.

48

COMPARING RUSSIAN STOCK EXCHANGE WITH CHANGING PRICE OF GOLD 5.3 Table showing % change in RTS values and GOLD prices

Particular Gold Russia

June04 -5 -2

Jan05 10 9

June05 -5 10

Jan06 24 69

June06 22 30

Jan07 1 32

June07 5 -5

Jan08 25 25

June 08 6 7

Jan09 -2 -74

5.3 Graph showing % change in RTS values and GOLD prices

Russia And Gold
100
% Change in values Russia Gold

50 0
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08

-50

-100 Date

. CORRELATION Correlation = 0 .4 INTERPRETATION There exist low correlation between these. The effect of change in price of gold effects little the equity market of Russia.

1/ 1/ 20 09

1/ 12 00

49

FINDING CORRELATION BETWEEN CHINA STOCK MARKET AND RUSIA INDEX

5.4 Table showing % change in RTS values and China Index values
Country China Russia June04 6 -2 Jan05 -20 9 June05 -19 10 Jan06 12 69 June06 45 30 Jan07 59 32 June07 50 -5 Jan08 32 25 June 08 -35 7 Jan09 -47 -74

5.4 Graph showing % change in RTS values and China Index values

Russia And China 100

% Change in Values

Russia China

50 0 -50 -100
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09

Date

CORRELATION Correlation = 0 .5 INTERPRETATION There exists moderate correlation between these. It means the economy of both the countries is some where similar in nature and some factors which affect one also affect to the other.

50

FINDING CORRELATION BETWEEN RUSSIA INDEX AND BRAZIL 5.5 Table showing % change in Brazil and Russia Index values

Country Brazil Russia

June04 -13 -2

Jan05 49 9

June05 -11 10

Jan06 29 69

June06 13 30

Jan07 18 32

June07 20 -5

Jan08 20 25

June 08 14 7

Jan09 -48 -74

5.5 Graph showing % change in RTS values and China Index values

Brazil and Russia 100 % Change 50 0

Rus s ia Brazil

-100

CORRELATION Correlation = 0 .6 INTERPRETATION There is fairly high correlation between these two countries. It means the factors that affect are same. These may be Foreign capital flow and high correlation of both the countries with the World Equity Market It shows that the Economy of these countries are of similar nature.

6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09

-50

Date

51

FINDING CORRELATION BETWEEN INDIAN STOCK MARKET AND GOLD PRICE 5.6 Table showing values of NIFTY
Country India Jan04 1912.25 June04 1507.9 Jan05 2080.5 June05 2087.55 Jan06 2836.55 June06 2962.25 Jan07 3966.4 June07 4297.05

Country India

Jan08 6144.35

June 08 4870.1

Jan09 3033.45

5.6 Graph showing values of NIFTY

7000 6000 5000 4000 3000 2000 1000 0

INDIA index

Index Values

INDIA

5.7 Table showing % change in Index values Nifty and Gold prices

Particular Gold India

1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 6/ 0 5 1/ 20 1/ 0 5 12 0 6/ 06 1/ 20 1/ 0 6 1/ 20 6/ 0 7 1/ 20 1/ 0 7 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09
Years

June04 -5 -21

Jan05 10 38

June05 -5 0.3

Jan06 24 36

June06 22 4

Jan07 1 34

June07 5 8

Jan08 25 43

June 08 6 -21

Jan09 -2 -38

52

5.7 Graph showing % change in Index values Nifty and Gold prices

In d ia A n d G o ld
60 40

% Cnahge

20 0 1 6 1 6 1 7 1 6 8 - 2 0 6 /1 /2 0 0 4 /1 /2 0 0 5 /1 /2 0 0 5 /1 2 0 0 6 /1 /2 0 0 6 /1 /2 0 0 6 /1 /2 0 0 7 /1 /2 0 0 8 /1 /2 0 0 1 /1 /2 0 0 9 -40 -60

India G old

D a te

CORRELATION Correlation = .44 INTERPRETATION Rang of correlation lies between -1<=r <=1 . There exist moderate correlation between these. There is very little effect of change in prices of gold with change in stock value of India.

53

FINDING CORRELATION BETWEEN CHINA SSE COMPOSITE INDEX AND INDIA INDEX VALUES 5.8 Tables showing values of SSE COMPOSITE INDEX
Country China Country China 1/1/2004 1494 1/1/2008 5262 6/1/2004 1580 6/1/2008 3433 1/1/2005 1267 1/1/2009 1821 6/1/2005 1034 1/12006 1161 6/1/2006 1684 1/1/2007 2675 6/1/2007 4001

5.8 Graph showing values of SSE COMPOSITE INDEX

6000 5000
Index Values China Index

4000 3000 2000 1000 0

1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 6/ 0 5 1/ 20 1/ 0 5 12 0 6/ 06 1/ 20 1/ 0 6 1/ 20 6/ 0 7 1/ 20 1/ 0 7 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09

China

Years

5.9 Table showing % change in China and India Index values

Country India China

June04 -21 6

Jan05 38 -20

June05 0.3 -19

Jan06 36 12

June06 4 45

Jan07 34 59

June07 8 50

Jan08 43 32

June 08 -21 -35

Jan09 -38 -47

54

5.9 Graph showing % change in China and India Index values

C h in a An d In d ia
100
%Change in value

India C hina

50 0 -50 -100
D a te
6/1/2004 1/1/2005 6/1/2005 1/120066/1/2006 1/1/2007 6/1/2007 1/1/2008 6/1/2008 1/1/2009

CORRELATION Correlaiton = .49 INTERPRETATION There exists a positive and moderate correlation between these two countries. Certain factors are same which affect the economy and equity market of both the countries.

55

FINDING CORRELATION BETWEEN BRAZIL AND INDIA INDEX VALUES

5.10 Table showing value of BOVESPA Index

Country Brazil Country Brazil 1/1/2004 22445 1/1/2008 63886 6/1/2004 19546 6/1/2008 72593 1/1/2005 29196 1/1/2009 37550 6/1/2005 37748 1/12006 33456 6/1/2006 37748 1/1/2007 44474 6/1/2007 53423

5.10 Graph showing value of BOVESPA Index

Brazil
80000 70000 60000 50000 40000 30000 20000 10000 0
1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 6/ 0 5 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 6/ 0 7 1/ 20 1/ 0 7 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09

Brazil

Points

BOVESPA As On

5.11 Table showing % change in Brazil and India Index values

Country India Brazil

June04 -21 -13

Jan05 38 49

June05 0.3 -11

Jan06 36 29

June06 4 13

Jan07 34 18

June07 8 20

Jan08 43 20

June 08 -21 14

Jan09 -38 -48

56

5.11 Graph showing % change in Brazil and India Index values

Brazil and India

60 40 20 0 -20 -40 -60
% Change in value

India Brazil

00 4

00 5

CORRELATION Correlation = .7 INTERPRETATION It shows there exist fairly high correlation between these two. That means the economy of these two countries behaves same in same situations and both are inter related. These may be foreign capital flow and high correlation of both the countries with the World Equity Market It shows that the Economy of these countries is of similar nature.

06 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 2 00 9

6/ 1/ 2

1/ 1/ 2

6/ 1/ 2

1/ 12 0

00 5

Date

57

FINDING CORRELATION BETWEEN CHINA SSE COMPOSITE INDEX AND GOLD PRICE 5.12 Table showing % change in China Index values and Gold prices

Gold China

June04 -5 6

Jan05 10 -20

June05 -5 -19

Jan06 24 12

June06 22 45

Jan07 1 59

June07 5 50

Jan08 25 32

June 08 6 -35

Jan09 -2 -47

5.12 Graph showing % change in China Index values and Gold prices

China And Gold

80

Gold China

% change in value

60 40 20 0
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08

-40 -60

Date

CORRELATION Correlation = .25 INTREPRETATION It shows there is very low correlation between change in price of gold and change in value of China index . There is near about no effect if the prices of gold are changing on the equity market

1/ 1/ 20 09

1/ 12 00

-20

58

FINDING CORRELATION BETWEEN CHINA SSE COMPOSITE INDEX AND BRAZIL INDEX 5.13 Table showing % change in China Index values and Brazil Index

Brazil China

June04 -13 6

Jan05 49 -20

June05 -11 -19

Jan06 29 12

June06 13 45

Jan07 18 59

June07 20 50

Jan08 20 32

June 08 14 -35

Jan09 -48 -47

5.13 Graph showing % change in China Index values and Brazil Index
C h ina And B raz il 100
%Change in value 6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09 China Braz il

50 0

-50

-100

D ate

CORRELATION

Correlation = .3
INTREPRETATION

It shows there is low correlation between these two countries. It shows the
economy of the countries is different. The factors that affect the equity market are different.

59

FINDING CORRELATION BETWEEN GOLD PRICE AND BRAZIL INDEX 5.14 Table showing % change in Gold Price and Brazil Index
June04 -13 -5 Jan05 49 10 June05 -11 -5 Jan06 29 24 June06 13 22 Jan07 18 1 June07 20 5 Jan08 20 25 June 08 14 6 Jan09 -48 -2

Brazil Gold

5.14 Graph showing % change in Gold Price and Brazil Index

Brazil And Gold

%Change in value 60 40 20 0
00 5 6/ 1/ 20 1/ 1/ 2

Gold Brazil

-40 -60

6/ 1/ 2

-20

CORRELATION Correlation = -.01 INTERPRETATION It shows the negative very low near about no correlation between the rise of gold prices and BRAZIL Index. Negative correlation means if the price of one is increasing then the price of other is decreasing.

00 5 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09

04

Date

60

FINDING CORRELATION BETWEEN OIL PRICE AND INDIA INDEX Oil prices are taken as DOLLAR PER BARREL and the average of the month is taken to find the correlation. 5.15 Table showing % change in Oil Price and India Index

Oil India

June04 9 -17

Jan05 18 31

June05 25 9

Jan06 20 39

June06 9 -3

Jan07 -26 50

June07 28 8

Jan08 32 19

June 08 41 20

Jan09 -71 -36

5.15 Graph showing % change in Oil Price and India Index

Oil and India 100 % Change in value 6 50 0
1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09

Oil India

-50

-100

/1 /2 00 4

Date

CORRELATION Correlation = .37 INTERPRETATION

It shows the low but positive correlation between the rise in the price of Oil and India Index value. It indicates the oil prices and index value of India rise because of speculation of world is in rising.

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FINDING CORRELATION BETWEEN OIL PRICE AND INDIA INDEX 5.16 Table showing % change in Oil Price and Brazil Index
June04 9 -11 Jan05 18 22 June05 25 4 Jan06 20 37 June06 9 -2 Jan07 -26 28 June07 28 23 Jan08 32 4 June 08 41 19 Jan09 -71 -42

Oil Brazil

5.16 Graph showing % change in Oil Price and Brazil Index

Oil and Brazil

60 40 20

Oil Brazil

CORRELATION Correlation = .5 INTERPRETATION It shows there is high correlation between these two . it means if the prices of oil increases then index value of Brazil also increases.

% Change in values 6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09 0 -20 -40 -60 -80 Date

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FINDING CORRELATION BETWEEN OIL PRICE AND RUSSIA INDEX 5.17 Table showing % change in Oil Price and Russia Index
June04 9 -3 Jan05 18 6 June05 25 12 Jan06 20 77 June06 9 1 Jan07 -26 45 June07 28 1 Jan08 32 -1 June 08 41 12 Jan09 -71 -68

Oil Russia

5.17 Graph showing % change in Oil Price and Russia Index

Russia and Oil
% Change in 100 values 50 0
00 4 00 5 00 5 00 6 00 7 00 7 00 8 6/ 1/ 2 1/ 1/ 2 1/ 12 0 6/ 1/ 2 1/ 1/ 2 1/ 1/ 2 6/ 1/ 2 6/ 1/ 2 1/ 1/ 2 6/ 1/ 2 00 9 00 8 06

Oil Russia

-50

-100 Date

CORRELATION Correlation = .49 INTERPRETATION It shows there is high correlation between these two . it means if the prices of oil increases then index value of Russia also increases .Russia is an oil producing country when the prices of oil increases the value of Index also increases and decreases when oil prices decreases.

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FINDING CORRELATION BETWEEN OIL PRICE AND CHINA INDEX 5.18 Table showing % change in Oil Price and China Index
June04 9 -3 Jan05 18 6 June05 25 12 Jan06 20 77 June06 9 1 Jan07 -26 45 June07 28 1 Jan08 32 -1 June 08 41 12 Jan09 -71 -68

Oil Russia

5.18 Graph showing % change in Oil Price and China Index

China And Oil 100
% Change in Oil China

50
value 6/ 1/ 20 0 4 1/ 1/ 20 0 5 6/ 1/ 20 0 5 1/ 12 0 06 6/ 1/ 20 0 6 1/ 1/ 20 0 7 6/ 1/ 20 0 7 1/ 1/ 20 0 8 6/ 1/ 20 0 8 1/ 1/ 20 0 9

-50

-100

Date

CORRELATION Correlation = - .01 INTERPRETATION It shows there is negative correlation between these two. It means if the prices of oil increases then index value of Brazil also decreases stay unchanged. China is

not oil producing country so when the prices of oil increases import charges also increases and it results into decrease in the value of index.

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Global Financial Crisis And Emerging Markets CORRELATION BEFORE CRISS 5.19 Tables showing the value of India and Russia Index and Prices of Oil
2/1/2008 -0.7 0.17 -1.2 3/1/2008 -11 14.2 0 4/1/2008 4 1.4 3.9 5/1/2008 6 11.4 3.4 6/1/2008 -17 8.6 3.9 7/1/2008 -6 -0.08 -17.9 8/1/2008 12 -7.6 -10.1 9/1/2008 -10 -19.2 -33.9 10/1/2008 -32 -31.1 -39.8

India Oil Russia

India Oil Russia

11/1/2008 -0.6 -20.8 0.58

12/1/2008 3 -31.7 8.7

1/1/2009 -0.7 4.5 -1.4

2/1/2009 2 -4 12.45

3/1/2009 -7.5 18.5 3.8

4/1/2009 22 14.27 21.63

5.19 Graph showing the value of India and Russia Index and Prices of Oil
India,Russia And Oil 40 20 0 -20 -40
Points Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr08 08 08 08 08 08 08 08 08 08 08 09 09 09 09 India Oil Rus sia

-60

Date

CORRELATION India & Oil = 0.11 Russia & Oil = 0.42 INTERPRETATION Correlation between India and Oil is low and between Russia and oil is high.It shows the equity market of Russia affects with changing prices of oil. If the prices increases the index moves up if decreases then move down.

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How did a house fire in America turn into a global banking crisis? 1. Sub-prime mortgages are a financial innovation designed to provide home ownership opportunities to borrowers in the U.S. with a higher risk profile (such as borrowers with low incomes, bad credit histories or limited disposable income). Most of the sub-prime mortgages were given out on a variable interest-rate basis, with the risk of potentially large adjustments to monthly payments if interest rates rose. Instruments of this nature increase the probability of foreclosure. 2. Institutions (lenders) were easy with credit regarding these mortgages under the assumption that housing prices would continue to appreciate in value. Even if some of the sub-prime borrowers would default, an ever expanding housing market would still improve the lenders overall position. However, money market rates increased, inciting foreclosures, as expected, but occurred at the same time the housing market and valuations cooled. This left the lending institutions with assets of significantly reduced, and in some case worthless, value. And why did it spread out globally? Many of these sub-prime mortgages actually never made it on the balance sheets of the lending institutions that originated them. Increasingly, these products had been bundled together with prime mortgages and a variety of assets to be sold on the market (so-called mortgage-backed securities, MBS). The problem was that assets with different risk profiles were bundled together and nevertheless received a high investment grading, making them attractive to international investors, including European banks with free cash to go assetshopping. 1. However, when sub-prime borrowers failed to repay their mortgages, the originating institution needed to finance the foreclosure with their own money, bringing the asset back on its balance sheet. This left many banks in a financially unviable situation, in a rather short, unmanageable timeframe. And, the fact that nobody knew how much more of those MBS would return on their balance sheets,

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banks effectively stopped lending to each other, drying up liquidity substantially, both in the US and in Europe. As the financial crisis continues to roil credit and stock markets around the globe, there seems to be no country or continent is being spared the consequences. The BRIC countries consist of Brazil, Russia, India and China is no exception. The US financial crisis that started in July 2007 with the collapse of two Bear Sterns subprime hedge funds has now turned into a full-blown global economic crisis. Arguably, the climax of the financial crisis has been reached with the collapse of Lehman Brothers on September 15, and the subsequent fall of stock markets all around the world.

CORRELATION AFTER CORRELATION 5.20 Tables showing the value of India and Russia Index and Prices of Oil
2/1/2007 -3 13.5 4.4 3/1/2007 -4 -1.2 -6.1 4/1/2007 0.32 8.6 9 5/1/2007 11 -0.06 -9.6 6/1/2007 1.7 5.3 4.7 7/1/2007 4.7 9.7 5.9 8/1/2007 -4.6 -2.5 -4.9 9/1/2007 10.2 8.4 2.3

India Oil Russia

India Oil Russia

10/1/2008 -32 -31.1 -39.8

11/1/2008 -0.6 -20.8 0.58

12/1/2008 3 -31.7 8.7

1/1/2009 -0.7 4.5 -1.4

2/1/2009 2 -4 12.45

3/1/2009 -7.5 18.5 3.8

4/1/2009 22 14.27 21.63

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5.20 Graph showing the value of India and Russia Index and Prices of Oil
Points

In d ia ,R u s s ia A n d O il

40 20 0 -2 0 -4 0 -6 0 D a te

In d ia Oil R u s s ia

Fe b - Ma r- Ap r- Ma y- Ju n - Ju l- Au g -S e p - O ct- N o v-D e c- Ja n - Fe b - Ma r- Ap r08 08 08 08 08 08 08 08 08 08 08 09 09 09 09

CORRELATION India and Oil = 0.31 Russia and Oil = 0.42 Interpretation After crisis correlation between India and Oil increases. Correlation between Russia and Oil remain same. Generally risks to BRIC markets have intensifiedThe BRIC had been fairly resilient to the global credit turmoil, however the giant economy is slowly facing greater risks. As the credit crunch crisis has intensified, BRIC countries that once appeared relatively immune to the financial and economic shocks emanating from mature markets have increasingly been tested. Deleveraging by global financial institutions has raised the cost and reduced the availability of external financing and investor risk appetite has decreased, reducing the demand for BRIC market assets. The pronounced reduction in investors risk appetite has resulted in a retrenchment in short-term capital flows to the BRIC markets, exerting pressure on local markets, and sharply raising costs of credit.

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Economic growth in India in 2Q08 moderated to 7.9% compared to 8.8% in 1Q08 underpinned by a weakening investment. However, Indias private consumption and export growth have held up well amid the global financial crisis. GDP growth in China however eased to 10.5% in 1H08 from 12% in 2007 due to slowing exports. Other activities continued to be supported by steady investment growth and accelerating consumption. Among the BRIC countries, Chinas GDP appears to be the most resilient.. Investors will likely remain on the sidelines as BRIC equity markets go through a correction after rising rapidly over the past three years. Case in point is Russia, when regulators halted stock trading for a second day and poured USD44bln into its three biggest banks in a bid to halt the biggest financial crisis since its devaluation and debt default a decade ago. Chinas stocks fell to the lowest in almost 21 months after China Merchants Bank Co. said it held USD70mln of debt issued by bankrupt Lehman Brothers Holdings Inc. Growth slowdown as high energy prices inhibit household spending and a spillover from the US slowdown impacts exports. Indeed, if food and oil prices continue higher, the impact of rising prices on basic necessities and rising interest rates could be quite damaging for growth in these economies and traumatic for their societies. The risk is for a higher than expected slowdown in emerging market economic growth under the weight of higher costs, lower household spending and higher interest rates.

BRAZIL
When the global financial crisis arrived, it struck at Brazilian equities first, then moved to the currency markets, and has since pushed up interest rates and increased uncertainty, threatening to slow economic growth in the near future. As of this writing, Brazilian equities continue to fall, as do equities across the world.

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Brazil GDP growth in Brazil in 2007 was the highest in Latin American countries. However, the GDP growth began to slow in 2008, even before the October crisis. In 2Q08, Brazils GDP grew 6.13% y-o-y from 5.84% in 1Q08. Despite the moderate increase in the GDP growth, Brazils economy is facing an awkward combination of slow activity and more difficult external conditions. Growth in Brazil is forecasted to decrease below trend as exports and remittances are dampened by the U.S slowdown. The financial crisis has triggered downwards revisions in economic growth in Brazil for 2009. While the country is set to post 5.1% GDP growth for 2008, the forecast for 2009 is 2.8%. The financial crisis and decline in commodity prices which tend to reduce the amount of exports contribute to lower growth BOVESPA In the beginning of 2008, MSCI Emerging Markets/MSCI World Markets showed some weakness. Emerging Markets started underperforming the World Markets. Commodity prices are weak and there are concerns about growth and demand for commodities Lower export growth Export growth in Brazil is expected to come down below trend, and activity would remain sluggish in Mexico as exports and remittances are dampened by the US slowdown. The country is less reliant on US demand than in the past (exports to the US are down from around 27% of the total in 2003 to 15% in 2008), but with other important export destinations faltering, notably the EU (which accounts for 24% of Brazils exports) and China(6%),the country is vulnerable to trade contagion. Main export goods for Brazil are transport equipment, iron ore, soybeans, footwear, coffee, and automobiles.

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RUSSIA
Like other BRIC countries, Russia is in the grips of global financial market turmoil. The Russian stock exchange index RTS has fallen by around 50% from its peak in May 2008, reaching the level of summer 2006. After many years of strengthening rouble have witnessed a slight weakening, and the central bank has had to intervene by buying the currency in order to prevent its excessive weakening against a currency basket made up of the US dollar and the Euro. Russas GDP growth is expected to weaken appreciably, reflecting slowing world demand and tightening financial conditions. In 2Q08, Russias GDP moderated to 7.5% from 8.5% in 1Q08. For Russia, the effects of the global credit crunch are compounded by domestic factors, particularly a lack of confidence on the part of foreign investors in Russia. The impact of the crisis on most Russians has so far been minimal, partly because the crisis has received little attention in the largely state-linked mainstream media. And it has not done much damage to the image of the country's popular but increasingly authoritarian government. The fall in oil prices to close to US$50/barrel envisaged makes Russia reliant on other areas of the economy to sustain growth. But lack of diversification and weaknesses in the business environment mean there are few alternatives for Russia. Russias oil supply to decline in 2008Russias oil production is now forecast to experience a minor decline of around 20 tb/d over the previous year to average 9.85 mb/d in 2008, indicating a downward revision of 30 tb/d from last months assessment. The downward revision was made to accommodate the adjustment to preliminary third-quarter production figures as well as minor revisions to the first and the second quarters. According to preliminary data, Russias oil supply stood at 9.84 mb/d in the third quarter, with many operators in Russia reporting losses due to the relatively high duties. On a quarterly basis, Russian oil supply is seen averaging 9.78 mb/d, 9.74 mb/d, 9.84 mb/d and 10.03 mb/d respectively.
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RTS INDEX RTS Index was trending up during the 1996-1997 period. The index moved from 72 levels to 570 levels. During the uptrend RSI signaled deceleration. The market made higher highs but the RSI failed to make higher highs. The uptrend was followed by a correction after breaking down the trend channel. During 2002-2003 period, RTS was testing its 1997 highs. The market again made higher highs but the RSI failed to make higher highs. The uptrend was followed by a 2 year long consolidation period. In 2005, the RTS index broke above the 2 year long consolidation range at 750 levels and reached the upper boundary at 1,800. The market made higher highs after 2006 and reached to 2500 levels but the speed was decelerating. RSI was failing to make higher highs. The index broke down the long term trend channel and we are now in a correction period. 580 levels is an important long term support for the RTS index. We will follow RSI to see the deceleration of the downtrend.

INDIA
India has been hurt by the global financial crisis, but it may be better positioned for a quick recovery and for future growth than many of the other developing economies. The Indian financial sector is relatively insulated; the rupee is not fully convertible; and Indian banks did not have significant exposure to subprime loans in the United States. The stock market, however, has been badly hit as foreign institutional investors (FIIs) have sold almost US$10bln of their investments in Indian companies to cover losses accrued in their home markets. From January 2008 to late October 2008, the Bombay Stock Exchange fell almost 50 percent, from above 20,000 to around 10,500. There has also been an intense liquidity crisis in the Indian economy, created by the tightening of global credit markets and the withdrawal of FIIs, as well as earlier government efforts to fight inflation and shore up the declining rupee. Slower GDP growth.The economic cycle in

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emerging Asia started to turn in early 2008, and more weakness is expected ahead in response to slowing demand from advanced economies and growing strains in regional financial markets. In India, growth in 2Q08 came down to 7.9% from 8.5% in 1Q08, on the back of weakening investment, while private consumption and export growth have held up well amid the global financial crisis. SENSEX (INDIA) 1990-1992 was a strong period for the SENSEX, where the index moved from 700 to 3,800. However, after 1992 we saw a choppy sideways movement between 2,500 and 6,500. The consolidation range had a slightly positive slope. The index moved in the wide range between 1992 and 2005. During 2002-2003 SENSEX tested the lower boundary of the consolidation range and rebounded from 2,800 levels. In March 2005, the index reached 7,000. After a short pullback, SENSEX broke above the upper boundary and started its strong uptrend. In the beginning of 2008, India's SENSEX index was testing 21,000 levels. The global sell-off and sharp corrections in the World markets pushed the SENSEX back to the previous consolidation range in 10 months. The index tested the upper boundary of the consolidation range at 8,000 and rebounded. 20-50 and 100 week moving averages are signaling a bear market. 8,000 is strong support. If the index holds above 8,000 levels we can expect a rebound towards the moving averages at 12,000 levels

CHINA
Chinas economic growth rate slipped into single digits in the 3Q08 for the first time in at least four years under the impact of the global credit crisis and weakness in the domestic property sector. Annual gross domestic product growth slowed more sharply than expected to 9%from 10.1% in the 2Q08. China's economic expansion was the weakest since at least the second quarter of 2003, when growth slumped because of the severe acute respiratory syndrome, or SARS, epidemic.

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SSE COMPOSITE INDEX CHINA The uptrend that started in 2006 pushed the index from 1,500 levels to 6,000 in two years. During the strong uptrend, every correction took place in the parallel trend channel and above the moving average. The first trend reversal signal was generated at the beginning of 2008, when SSE Composite broke down the two year long uptrend . Since then the index has been in a downtrend and gave back almost all the gains of 2006 and 2007. The downtrend is continuing in a clear parallel trend channel. We will be following the upper boundary of the parallel trend channel and the moving average for a trend reversal. The important resistances are at 2,300-2,500 range. What is being done to solve the problem? 1 The U.S. government has spent (or committed) more than a trillion dollars in trying to prevent the collapse of U.S. financial markets. Following the bailout of Bear Sterns, AIG, Freddie Mac, and Fannie Mae, the U.S. Congress approved the Emergency Economic Stabilization Act to give authority to the U.S. Treasury to buy troubled mortgages and mortgage-related securities. However, the original package (US$ 700 billion) has been revised to include a recapitalization of banks, federal guarantees on new bank debt for three years and FDIC insurance for noninterest bearing accounts. If the troubled assets (MBS) bought by the Treasury are later sold at a fair market value, this could ultimately be a profitable transaction for the U.S. government. And, if the Treasury finds the right buyers for the banks that it partially owns, then it could also end up making money. 2 In Europe, the Bank of England pledged US$ 87 billion in direct support to the countrys major financial institutions. British Prime Minister Gordon Browns rescue package which involves direct capitalization and guarantee of inter-bank lending has been adopted by other major European countries and the U.S. government (as mirrored by the new revisions adopted by the U.S. Treasury). Furthermore, central banks around the world (Fed, ECB, Canada, Sweden,
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Switzerland, and China) introduced coordinated interest rate cuts to lower the cost of borrowing, with the aim of restoring confidence in the global economy. 3 The Reserve Bank of India on March 04,2009 has announced the rate cut. It has reduced the repo rate by 50 basis points to 5% and cut the reverse repo rate by 50 basis points to 3.5% with immediate effect. WHY BRIC COUNTRIES PERFORM DIFFERENTLY The behavior of these countries are different with respect to changing conditions. Russia The Russian economy is dominated by the energy sector: Crude oil exports make up about 60% of Russian exports. Russias share of global crude oil production in 2003 was some 11%, making the country the second largest oil producer in the world after Saudi Arabia. Russia has a share of 5% in global oil reserves, placing it in ninth position amongst oil producing countries. More than a quarter of world natural gas reserves are located on Russian territory. Only Qatar and Iran also have double-digit shares, each about 15%, of world gas reserves. Russia leads in the production of natural gas as well, followed closely by the U. S.A. Steadily rising prices for oil have generated substantial, unforeseen income in US dollars for oil producers and for the Russian state since the end of the nineties. This has enabled Russia to make early repayments of government debt. Since 1999, public sector debt in Russia has been halved to around 35% of GDP. Although the heavy dependency of Russia on oil and gas may at first sight be a source of concern, the Russian economy is relatively well prepared for periods of declining oil prices. According to initial budget plans, the public sector budget would slide into deficit only at oil prices of under 30 US dollars a barrel. The countrys foreign-exchange reserves are at a record level and form a cushion against possible external shocks. India
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For years, India has attracted attention through the successful establishment there of English-speaking call centres and software companies. It is unusual for the export of services to play a major role in a developing country. The dynamic growth of this sector is likely to continue, and is a positive feature of India. Although the IT sector only accounted for 3% of Indian GDP in 2003, the services sector has had a decisive impact on overall growth in the country in recent years. The Indian economy continues to centre on traditional industries, however. The agricultural sector accounts for about a quarter of economic output and twothirds of the workforce are employed in this sector. Traditional goods also make up the bulk of Indian exports. In industry, the textile sector dominates. The major role that agriculture still plays is also reflected in income levels in India. In terms of per capita income, India trails far behind the other BRIC countries. In greatly implified terms it can be concluded that Brazil stands for raw materials and agricultural produce, Russia for oil and gas, that India has found a promising niche with its IT and call-centre services and that China is the most advanced of all in many industrial areas thanks to its international competitiveness. Brazil What oil and gas is for Russia, iron ore, coffee and soya are for Brazil. In the export of these goods especially Brazil leads the world. And even though their share of Brazilian exports is much lower today than it was ten years ago, high prices for soya and iron ore are having a positive impact on the countrys trade balance. However, Brazil is much more than just a producer of raw materials. In 2004, over 50% of the goods exported by Brazil, the biggest country in Latin America both in terms of area and economic power, were manufactured products. Brazil also produces oil although its share of world reserves of 1% is minor compared to say Russias. But at least the country can meet its oil needs from its own production. High oil prices thus do not have a negative effect on the countrys current account balance. The high level of Brazilian foreign debt (135% of exports) is still a problem and the relatively low savings rate as well as investment
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shortfalls in infrastructure are curbing growth. However, since 2003 current account surpluses have made it possible for Brazil to build up foreign exchange reserves, and growth should accelerate to nearly 4% in 2007. Adjustments in the structure of government debt have lessened the vulnerability of the country to external shocks. China There are frequent reports on the shift of production facilities from industrial countries to China. Will the largest Asian country soon become the worlds most important production centre? Sweeping economic reforms have a long tradition in China. Since the end of the seventies, the government has been endeavouring to improve the countrys economic structures. With success: the share of manufactured goods in exports has now reached some 50%. The start of the process of change in China is reflected in the growth of the economy. Since 1982, Chinas economy, with a few exceptions, has grown year for year by over 7%. Not only industrial countries dream of such continuously high growth. China also tops the growth rankings in direct comparisons with other developing countries. In spite of the lengthy phase of unusually high growth, China is still far removed from the status of an industrial country. Like Russia, China is still in a transformation process, evolving from a centrally-planned into a market economy. Such sweeping reform processes take time and are subject to the risk of temporary setbacks.

Volatile oil prices have varying impacts on the Brics economies. High oil prices help large producers like Russia that rely on exports for fiscal revenue and foreign exchange. For the net oil-importing countries of China and India, the price of oil is a key determinant of inflation, the cost of production, the trade balance and the strength of the currency. Whereas Brazil, which is now largely self-sufficient and has insulated its economy from oil price shock on net basis.

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In 2007, Russias real gross domestic product (GDP) grew by about 8.1%, surpassing average growth rates in all other G-8 countries, and marking the countrys seventh consecutive year of economic expansion. Russias economic growth over the past seven years has been driven primarily by energy exports, given the increase in Russian oil production and relatively high world oil prices during the period. While Russia might expect their large oil reserves to pave the way for economic development, it is observed that oil-exporting economies have experienced difficulty in converting oil revenues into a continuous source of financing for economic growth and development. Oil exports have represented a greater share of gross domestic product (GDP) in Russia than Brazil, China and India over past 5 years. Oil exports contribution to Russian GDP have increased from 15.8% of GDP in 2003 to 17.5% of GDP in 2007. Revenue from oil and gas extraction and export is a central component of the Russian governments budget, and the hydrocarbon industry is one of the main drivers of the country's economy. Russian government is keenly interested in increasing both production and exports in order to maximise revenue and keep the economy growing steadily. Russian governments central aim is to maximise revenue from the oil and gas sectors, as about 40% of the state budget comes from oil- and gas-related activities. One of the major drawbacks for oil export dependent economies is that they can be hurt by the impact of volatile oil export revenues on the exchange rate. A surge in export revenues can lead to a surplus in a nations balance of payments, which results in a stronger domestic currency. Foreign-exchange appreciation can have some unexpected spillover effects for other parts of the economy. Appreciation of domestic currency results in a loss of competitiveness in other economic sectors as imports become cheaper and exports more expensive. Even if domestic currency
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depreciates, local manufacturers of tradable goods who were disadvantaged when the currency was strong may still be unable to fully capitalise on the improved exchange-rate environment if the volatility in the currency discourages investment in other industries.

MAINLY 1.Russia is the oil producing country. High prices of oil favorably affect the country. 2. Brazil raw material and agricultural produce. 3.India it is IT services and for the large domestic consumer market size 4.China is increasingly playing the role of a high developed workbench for industrial countries

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CONCLUSION 1.POSITIVE CORRELATION : There exist a positive correlation between the

equity market of all BRIC COUNTRIES. It means there are some common factors
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which affects these countries. Following are the factors that could be the reasons for the positive correlation of EQUITY MARKET OF BRIC COUNTRIES

LARGE POPULATION :- The BRIC nations represent over 40% of the worlds population and occupy over a quarter of the worlds land area. As the emerging middle class continues to develop, the BRIC nations will be a significant consumer of goods and services. China is First, India is second, Brazil on fifth, and Russia is on ninth position in population.

PREFERABLE DEMOGRAPHICAL PROFILE

:- BRIC Countries

provide preferable demography profile to the investors. In India percentage of young population is 63.5 , In China the percentage of young population is 71.5, In Russia its 71.2% and in Brazil its 66.8.

HIGH CONSUMPTION: - Bric countries represent 40% of word's population so they have high domestic consumption capacity because of that these countries are still doing well in the period of recession. Growing consumer spending in BRIC Countries also help them to face the financial crisis.

RELATIVE POLITICAL STABILITY: - Political stability determines the factors which determine economic growth such as investments (foreign direct investment (FDI), stock market capitalization, private investment) technologies which comes with FDI and skilled labor who migrate to countries which have political stability. So political stability indirectly determines economic growth. Bric countries have relative political stability.

2. AFFECT OF OIL PRICES ON BRIC COUNTRIES

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The correlation between Oil price and BRIC countries is positive but in case of China which shows it is not a oil producing country. INDIA AND CHINA ;-India is net importer of oil so high prices of oil also adversely affect the Indian Economy but high oil prices could also be result of an overall bullish sentiments of FII's about the word economy. So the factors which has lead high oil price in oil during 2005 to 2008 are also the factors which has lead rise in the Equity of BRIC Countries. The same reasons exist for the correlation of GOLD PRICE and Equity Market of BRIC COUNTRIES .The same thesis hold true for China but probably to a lesser extent because China story is of high manufacturing and export story but India story is primarily of high domestic consumption story . For the net oil-importing countries of China and India, the price of oil is a key determinant of inflation, the cost of production, the trade balance and the strength of the currency. BRAZIL AND RUSSIA: - Brazil and Russia are having different story so they are favorably affected by oil prices and have different pattern. Russia is an oil producing country so it affects favorability with high rate of oil prices. Volatile oil prices have varying impacts on the BRICs economies. High oil prices help large producers like Russia that rely on exports for fiscal revenue and foreign exchange. Brazil, is now largely self-sufficient and has insulated its economy from oil price shock on net basis.

3. AFFCT OF U.S. FINANCIAL CRISIS ON EQUITY MARKET OF BRIC COUNTRIES

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The present FINANCIAL CRISIS has adversely affected all the Equity Markets of the World including BRIC Equity Market also. Global Economy is now days too much interlinked even in decline these countries show positive correlation. This may be due to the fact that as the economy went into recessionary mode there is a high risk aversion on the parts of the global factors and FII's. As the global economy has set to slow in 2009, BRIC economies are feeling the consequences. CHINA AND BRAZIL:-China and Brazil will see weaker demand from the USA and Europe for their exports, China SSE Composite broke down the two year long uptrend. The financial crisis has triggered downwards revisions in economic growth in Brazil for 2009 RUSSIA AND INDIA :- Russia is probably the most vulnerable of the BRIC countries, as its economy is the least diversified. Russia is heavily reliant on hydrocarbon exports, accounting for half of export revenues in 2007. Oil prices fell from US$147 per barrel in July 2008 to below US$70 in October 2008 amid the global economic slowdown. Additionally, Russia is considered more risky by foreign investors. India's economy depends on the services sector, accounting for more than half of GDP. The sector has thrived on outsourcing from the developed world. India's services sector, oriented towards developed economies. From January 2008 to late October 2008, the Bombay Stock Exchange fell almost 50 percent, from above 20,000 to around 10,500. We all know that equity is high risk high return asset class and as in the bullish period it attracts more capital flow similarly in bearish period there is a phenomenon of capital flight during risk time the global investor would prefer to take whatever profit these emerging markets are offer and would park the same money in more secure asset class like various debt based instrument. India's services sector, oriented towards developed economies, suffered.

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However, unlike other emerging economies, BRIC have large trade surpluses and foreign exchange reserves that make them more resilient to the crisis. When the markets will recover these are more likely to be chosen.

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LIMITATIONS AND SUGGESTIONS The present study has been carried out with the following limitations:
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1. Combined correlation is not calculated. The analysis of Multiple variable is

not analysed. 2. Analysis is only a mean and not an end in itself. The analyst has to make interpretation and draw his conclusions. Different people may interpret the same analysis in different ways. 3. The country correlation is calculated on the basis of stock values at the end of six month period from 2004 to 2009. 4. Due to only use of secondary data for the analysis there can be various errors while using the information provided by secondary sources.

5. The better results could be achieved to study the monthly average values of the

stock and it will give more reliable results. Factor analysis and other statistical measures can be used for better results.

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BIBLIOGRAPHY

1. www.google.com 2. www.nseindia.com 3. DIGAMBAR PATRI , D.N PATRI, QUNTITAVE TECHNIQUES (2007)

Pg.No- 4.1-4.20

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