SYNOPSIS

FACTORS AFFECTING THE STOCK MARKET

FOR THE AWARD of M.B.A.

IN
MANAGEMENT
BY
Ankit Gupta

UNDER THE SUPERVISION OF

MRS. SURAT PYARI

DEPARTMENT OF MANAGEMENT
FACULTY OF SOCIAL SCIENCES

DAYALBAGH EDUCATIONAL INSTITUTE

(DEEMED UNIVERSITY)
DAYALBAGH
AGRA - 282005
2019

Ankit Gupta
1805741
MBA Regular
1st Year

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CONTENTS
Chapter Chapter Page
No no.
1 Introduction 3
2 Need of Study 4
3 Objectives of Study 4
4 Review of Literature 5
5 Research Methodology 6
6 References 7

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Introduction
Stock market has been assigned an important place in financing the Indian
corporate sector. It is one of the most lively sectors in the financial system,
marking an important contribution to economic development. It is a financial
market where traders and brokers buy and sell stocks, bonds and securities. It is
a market where real assets are converted to financial assets to raise fund from the
market for the companies. The main attraction of the stock markets is that they
provide for entrepreneurs and governments a means of mobilizing resources
directly from the investors, and to the investors they offer liquidity. Indian Stock
Market is one of the oldest stock market in the Asia.

Indian stock market is considered as the secondary stock market and is a market
for old securities i.e. those which have been already issued and listed on a stock
exchange. These securities are purchased and sold continuously among investors
without the involvement of companies. Stock exchange provides not only free
transferability of shares but also makes continuous evaluation of securities traded
in the market. There are total of 23 stock exchanges in India. India’s largest two
stock exchanges are: a) Bombay stock Exchange also known as BSE, is the oldest
stock exchange of India and In 1986 it developed the BSE SENSEX index, giving
the BSE a means to measure overall performance of the stock markets. b)
National Stock Exchange also known as NSE. The National Stock Exchange of
India Limited is the leading stock exchange of India, located in Mumbai. The
NSE was established in 1992 as the first demutualized electronic exchange in the
country.

Paper studies the relationship between different factors determining the stock
prices in Indian Stock market. An analysis is done with independent variables as
Gold prices, interest rates, socio-political factors, company performance, mergers
and acquisitions (M & A) and stock prices as dependent variable in order to
validate if these variables are statistically significant in explaining the behavior
of stock prices in Indian market or not.

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NEED OF THE STUDY
Stock market is one of the vital sources of investment to earn good return, which
could be more than the real expected rate of return. (Real rate of return is = actual
rate of return – inflation rate). To earn in stock market, knowledge related to it is
very important. Performance of stock market is reflected by number of factors
related to country’s economy, industrial positions, companies’ performance and
factors related globe. If investor wants smart movement in stock market he is
required to understand effect of major factors in stock market. Before
understanding effect of major factors it is important to aware about these major
factors.

The main purpose of the study is to test whether the variables that are found
significant in the literature, also holds true for Indian Stock Market or not i.e. if
there exists a causal relationship between dependent and independent variables
or not?

Objectives
The main objectives of the study is
 To study about the stock market of India.
 To identify the factors affecting the stock market.
 To know how those factors affect the stock market.
 To study how the rumours affect the stock markets.

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Literature Review
1.Kaliyamoorthy and Parithi (2010) conducted a study on relationship between
gold market and stock market. NSE monthly index data and monthly gold prices
is taken as variable from June 2009 to June 2010. The result shows that there is
no relationship between gold prices and stock market indices. Stock market
indices are increased and gold market is also increased, but stock market is not a
reason for increase in the gold rates.

2. Mishra et al. (2010) made a study on the volatility of gold price and stock
market in India. This study uses data monthly from the database of reserve bank
of India. This research analyses the data from 1970 to 2009 annual price
movement of gold in Indian market and stock market, BSE 100 index period
January 1991 to December 2009. This study used Augmented Dickey-Fuller unit
root, Granger Causality test and Co-integration test. This study tells that there
exist long run equilibrium relation between gold market prices and stock market
in India.

3. In literature, French (reference 2), et al. documented theoretically, that stock

returns responded negatively to both the long term and short term interest rates.

4. Tobin Q. Dalvi and Baghi (2014) and Uno and Kamiyama (2010) calculated
stock market liquidity and firm performance relationship and found that stock
market liquidity was correlated with higher firm performance.

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Research Methodology
Tools Used
 A time series simple linear regression is run where dependent variable is stock
price (Nifty500 Index) & SENSEX and independent variables are Gold
prices, interest rates, socio-political factors, company performance, mergers
and acquisitions (M & A).

Data Collection
 The study is based on the secondary data. The period for study is being taken
for 2012 to 2018. The study based on secondary data and annual report of few
companies have been taken from various websites of respected companies and
other related websites.

Research Design
 For completing this research paper we adopt Descriptive research design.

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References

1. Kaliyamoorthy S, Parithi S (2012). Relationship of Gold Market and Stock

Market: An Analysis. International Journal of Business Management
Tomorrow. 2(6):1-6.
2. French KR., Schwert GW.& Stambaugh RE (1987). Expected stock
returns and volatility. Journal of Finance Economics. 19, 3–29
3. Amihud, Y., & Mendelson, H. (2006). Stock and bond liquidity and its
effect on prices and financial policies. Financial Markets and Portfolio
Management,20(1), 19-32.
4. Chen, Nai-Fu, Richard Roll, and Stephen A. Ross. 1986. Economic Forces
and the Stock Market. The Journal of Business59 (3): 383-403.
5. Avadhani, V. A. (2009). Securities Analysis and Portfolio Management
(Nineth Revised Edition ed.). Mumbai, Maharastra, India: Himalaya
Publishing House.

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