Management Dynamics

Tanu Agarwal ¹, Saurabb Kumar ², Satyendra P. Singh ³

Affiliations
1 School of Management Studies, Motilal Nehru National Institute of Technology, Teliyarganj, Allahabad, Pin-211004, IN
2 School of Management Studies, Motilal Nehru National lnstitute of Technology, Teliyarganj, Allahabad, Pin-211004, IN
3 School of Management, G D Goenka University, Sohna Road, Gurgaon, Pin- 122103, IN

Abstract

Stock markets are often referred to as barometer of an economy. Stock market indices not only tell us about the condition of stock markets but in a way they also reflect the health of an economy. Stock prices do not move in vacuum rather they are affected by a large number of factors. The objective of the study is to identify the factors affecting the movement of Indian stock market and the impact of these factors on the same. For the purpose of this study, CNX Nifty has been used to represent the movement of Indian stock markets. CNX Nifty is a well-diversified index consisting of 50 large cap companies representing most of the important sectors of Indian economy. The study deals with the time series data and consists of eleven variables i.e. Oil Prices, S&P 500, Nikkei, FTSE, NASDAQ, Wholesale Price Index as a proxy for inflation. Index of Industrial Production, Foreign Exchange Rate, Current Account Deficit, FII Investment and CNX Nifty. The study has been conducted over a period of 32 quarters from financial year 2005-06 to 2012-13. Researchers have used Principal Component Analysis and Regression Analysis for conducting the study and drawing the conclusions. All these variables have been clubbed into two factors namely Macroeconomic Factors and International Factors. The study revealed that both these factors i.e. macroeconomic factors as well as international factors have significant impact on movement of CNX Nifty.

Keywords

Indian Stock Market, CNX Nifty, Macro Economic Factors, International Factors, Principal Component Analysis, Regression Analysis, Arbitrage Pricing Theory.

Full Text

   

Satyendra P. Singh ¹, Ridhi Bhatia ²

Affiliations
1 School of Management, G. D. Goenka University, Sohna Road, Gurgaon, Haryana, IN
2 School of Business, Galgotias University, Yamuna Expressway, Greater Noida, New Delhi, Pin-201308, IN

Abstract

Investment in share market involves high level of risk. This risk is multiplied with the increase in volatility in stock prices. Therefore it is important for an investor to have proper knowledge of the risk and returns attached with various stocks so that a better risk-return trade off can be reached and a wise investment decision can be made. For quite a few years, Indian Stock Markets, driven by domestic as well as foreign institutional investors, have been growing at unprecedented rate and thus have given an opportunity for investors to earn superior returns. But, at the same time, the level of volatility has also been very high and this has increased the risk. Although an investor can construct diversified portfolio for reducing risk, this diversification may not help in dealing with the systematic risk attached with stocks selected in the portfolio. Therefore calculating only total risk of various stocks is not enough, rather one should also know how much of this risk is systematic risk and how much is unsystematic risk. This study aims at finding out the risk attached with the stocks of prominent companies of IT (Information Technology) and Banking Sector and beta factors of these companies. Authors have also found out the systematic and unsystematic risk attached with the shares of these companies.

Keywords

Risk, Systematic Risk, Unsystematic Risk, Beta Factor, Variance, Coefficient of Determination.

Full Text

   

Tanu Jain ¹, Satyendra P. Singh ²

Affiliations
1 Independent Researcher & Free Lance Professional, Brahmapuri, Raipur, C.G., IN
2 Professor, Alliance School of Business, Alliance University, Chandapura-Anekal Main Road, Anekal, Bengaluru, IN

Abstract

Foreign institutional investors (FIIs) play a vital role in the stock market of a country and Indian stock markets are no exception to this. FIIs bring liquidity, buoyancy and growth in stock markets but at the same time they also enhance the level of volatility and instability. Over past few years the stock markets in India have shown an impressive growth. The stock market indices are making new strides and increasing number of shares are making new highs. Following India’s impressive growth story, increasing corporate profitability and competitiveness, and better integration with the world economy, the investment by foreign institutional investors (FIIs) in the stock markets of India has gone up tremendously. Investment decisions of foreign institutional investors in India are affected by so many factors. Investment behavior of domestic institutional investors (DIIs) is one such important factor. This research paper is an attempt to analyze the impact of domestic institutional investors on the investment decision of foreign institutional investors in India. In other words, this study explores whether Domestic Institutional Investors affect the investment decisions of Foreign Institutional Investors in India or not. For this purpose, researchers have used regression analysis. Mutual fund investments have been taken as proxy for investment by DIIs. Investment patterns of FIIs and DIIs have been divided into eight variables i.e. FII Equity Purchases, FII Equity Sales, FII Debt Purchases, FII Debt Sales, MF Equity Purchases, MF Equity Sales, MF Debt Purchases and MF Debt Sales respectively. The study reveals that investment decisions of DIIs affect the investment decisions of FIIs.

Keywords

FIIs, DIIs, Investment Decision, Equity Purchases and Sales, Debt Purchases and Sales

Full Text