This undertaking is to acquire penetrations of Indian Financial Market and is to understand the mechanism of Indian Financial Market particularly in Capital Market, Derivatives Market and Foreign Exchange Market. In this undertaking I have taken top-down attack to understand the factors impacting Indian Financial Market and analysis them in item.
This interim studies contains parts as
Introduction to Financial Market.
Introduction to Capital Market.
Introduction to Derivatives Market.
Introduction to Foreign Exchange Market.
An Analysis of FIIs on Stock Market.
An Analysis of DIIs on Stock Market.
An Analysis of Gold Prices on Stock Market.
An Analysis of US-INR exchange rate on Stock Market.
The Project farther surveies includes understanding factors impacting Indian Financial Market and analyzing major factors what really drives or lead Indian Stock Market and understanding why some statistical value are overriding and happening the tendencies.
1.2.1 Objective of the Undertaking
To understand the mechanism of Indian Financial Market.
To understand the impact of FII on Stock Market and happen out what really drives or lead Indian Stock Market.
To understand the impact of DII on Stock Market and happen out what really drives or lead Indian Stock Market.
To understand the impact of Gold Prices on Stock Market and happen out what really drives or lead Indian Stock Market.
To happen out is at that place any relation or tendency between Capital Market, Forex Market, and Commodities Market.
Secondary informations: Following secondary beginnings are used to roll up the relevant information.
NSEIndiaA -A hypertext transfer protocol: //www.nseindia.com
RBI INDIA – www.rbi.org.in
Magazines, studies and diaries.
During this stage the informations collected from assorted beginnings will be used to carry through the aims of undertaking and had used clip series informations analysis to come to conclusion
1.2.3 Restrictions of the Study
As the subject, Financial Market is so huge and it needs a batch of resources to analyse them all. Handling and analysing such a varied and diversified informations needs a batch of clip and resources.
As the undertaking is based on secondary informations, possibility of unauthorised information can non be avoided and besides for reasoning that a peculiar factor impacting a peculiar fiscal market is up-to a certain extent is non possible as fiscal market besides depend investor ‘s sentiments.
As the undertaking is based on secondary informations which is clip series informations. So coming to the decision that these through a clip series in which non- stationary can be removed wholly.
2 ABOUT THE company
Phinnacle Wealth Management is an independent fiscal services house that offers individualized services harmonizing to the demands of the clients. The Head office of Phinnacle Wealth Management is at UB City Bangalore and its has more than 10 subdivision all over India.
The assorted merchandises & A ; Services that Phinnacle offers are guided by a set of commandments that is doctrine:
Fiscal life mark is imperative.
Allotment of Assetss should be carefully considered.
Hazard Coverage is important.
Markets will be Volatile.
Time value of Money is critical.
Success of a program depends on executing.
Products & A ; Servicess
As an household Doctors, Phinnacle wealth Management marks to go a Family Wealth Advisor of a household, wherein if there is a demand for Investment or any related issues phiNNACLE is at that place for them. Hence Phinnacle has about all the merchandises in its basket related to investing.
Some of the Product offered by phiNNACLE are:
Private equity Fund
Retirement Planning Model
Every Merchandise that phiNNACLE Wealth Management offers is advised after an extended research on it.
The phiNNACLE Wealth Management besides provides services for all its merchandises offered. It gives fiscal studies to its clients and advices them excessively on timely footing.
Wealth Advisory As Personal CFO
Investing Advisory Services
As per my acquisition at phiNNACLE Wealth Management is non Product oriented wherein a company tries to sell its pre-defined merchandises whichever gives it maximal gross, instead phiNNACLE Wealth Management is Customer Oriented where in it offers the merchandise harmonizing to client ‘s demand along with the transparence in the procedure
3. Introduction to Indian Financial market
A Fiscal Market is defined as the market in which different fiscal assets are credited or transferred. Its provides “ one topographic point ” where all interested purchasers and Sellerss can take participate. Simply we can state that it provides a mechanism that allows people to purchase and sell fiscal assets.
The Reserve Bank of India has played an active function in reforming Indian Financial Market through a batch of economic policy reforms but still Indian Financial Market comprises of Unorganized and Organized sectors.
Un Organized Sector Chit financess
Self Help Groups
Money loaners includes big husbandmans, bargainers in nutrient grains, retail merchants, sahukars and licensed money loaners.
Autochthonal Bankers includes multanis, shroffs, Marawaris etc who finance trade and besides do many transportation.
Chit Funds is compulsory for chit financess to register themselves harmonizing to Chit Funds Act of 1982
Nidis are companies registered under the Companies Act. They take fixed sedimentations from their members.
Self Help Groups are unregistered supported by Bankss
These unorganised drama a important function in rural countries. Despite of proliferation of assorted bank subdivisions, the usurers and other entity continue of their control these countries. This is because of the guidelines of RBI but high involvement rates have been curbed due to State authorities enterprises.
Organized sector Money Market
Foreign Exchange Market
Capital Market: It Comprises of the establishments and mechanism through which financess are pooled and made available to concern, authorities and persons.
Money Market: It is the market in which short term are borrowed and Lent.
Foreign Exchange Market: All Bankss, exporters and importers together constitute the “ Foreign Exchange market ” .
The Financial Market Facilitate
Raising of Capital
Transportation of Hazard
Foreign Currency Exchange
Different Types of Financial Market in India are
Foreign Exchange Market
A Capital Market consists of Stock Markets and Bond Markets which facilitate the issues of portions, bonds and provide the subsequent trading. Further, capital Market is divided into two markets, one is Primary Market where fresh issue of portion or bonds occur and 2nd one is Secondary Market where bing portion are freely traded.
A Money Market is a market for short-run debt instrument with a adulthood period of one twelvemonth. These instruments are really liquid and excess – ordinary safe as compared to capital market.
A Commodity Market is topographic point where trading of trade goods take topographic point.
A Foreign Exchange Market is a market where trades with exchange of currency where interested investors can merchandise and trades with multi currency demands and can take arbitrage benefits. It is one of the most developed and incorporate market across the Earth.
The Indian Financial Market is playing a major function in the economic growing of the state. Fiscal Market acts as an intermediary and facilitates the flow of financess from the countries of excess to the countries to the country of shortage.
The major map which Financial Market offers to growing of economic are:
Mobilization of nest eggs of the community.
Its deployment in the most productive sectors of the economic system.
Its act as mediators for:
Transfer wealth from rescuers to users, investor and other establishments
Encourages salvaging by supplying the rescuers convenience, security and return
Encourage investings that lead to economic growing through employment and income coevals.
Therefore we can reason that, “ Efficient Financial Market lead to capital formation which lead to overall Economic growing ” .
4. Introduction to CAPITAL MARKET
A Capital Market is a market which deals with publishing and trading in equity portions, medium and long term debt instruments viz. bonds and unsecured bonds. It is a topographic point where companies, fiscal establishments and authorities can raise money by publishing portions, bonds and unsecured bonds.
Components of a Capital Market
Equity Market Debt Market Derivative Market
Equity Market: It facilitates trades in instrument such as stocks and portions.
Debt Market: It facilitate trade in instruments such as bonds and loans which pay involvement
Derivate Market: these are fiscal markets for derivates particularly investors invest in it to pull off hazard
Primary Market: It acts as a channel for sale of new securities. The Government and Corporate sectors will utilize securities to raise resources for their demands. They may publish the securities to raise resources for their demands. They may publish the securities at face value or at a discount/premium. In this market new portions and bonds are issued.
Secondary Market: It refers to a market where securities are traded after being ab initio offered to the populace in the primary market or listed on the Stock Exchange.
As a whole we can state that “ Capital Market helps in raising financess through assorted agencies ” .
Role of Capital Market
It act as channel for sale of new securities.
It installations merchandising in equity and long-run debt instruments.
Its besides act as a beginning of income for investors.
Current Status of the Capital Market
Indian Capital Market has grown exponentially in footings of sum raised from the market, figure of mediators, the figure of naming stocks, trading volume and turnover on Stock exchanges and investor population.
The Indian Market has witnessed several institutional alterations including online trading, drastic decrease in dealing costs and important betterments in efficiency, transparence, liquidness and safety.
3. Introduction to money Market
A Money Market is a market for short term debt instruments with a adulthood period of one twelvemonth. These instruments are really liquid and excess ordinary safe as compared to Capital Market. A Money Market is alternate to High Investment Risk which is at that place in Capital market.
Major Players in Money Market
Government of India and other crowned head organic structures
Banks and Development Financial Institutions
Public & A ; Private Sector companies
Chiefly Government of India, Statutory organic structures and Bank issues and trade in Money Market.
Role of Bank in Money Market
Bank plays a major function in Money Market and they are major participants in this market.
There are three of import functions which Bank dramas in Money Market
Bank borrows fund in the money market to fund theirs necessitate and to fulfill the modesty demand i.e. Cash Reserve Requirement as stated by Reserve Bank of India. It besides borrow fund for longer periods by publishing negotiable Certificate of Deposits.
Bank raise financess in the money market through Repurchase understanding.
Bank besides act as traders in involvement rate barter minutess by functioning as “ Counterparty ” .
Instruments in Money Market
Money Market instruments Certificate of Deposits
Government Dated securities
Name Money: It is an sum borrowed or Lent on demand for short periods of 24 hours. The call money market forms a portion of national money market where twenty-four hours to twenty-four hours surplus fund largely of Bankss are traded. Name Money is lent chiefly to due to run into short term mismatches as meet CRR demand in our state.
Treasury Bills: Treasury bills are short term instruments issued by the Reserve bank of India at a fixed sum and at a prefixed twenty-four hours.
Certificate of Deposits: The certification of Deposits are issued at a price reduction rate and at the clip of adulthood the holder gets the face value. Generally commercial Bankss and fiscal Institutions issue the Cadmiums
Commercial Documents: Commercial Documents are negotiable short term unbarred promissory notes with fixed adulthoods, issued by good rated companies.These are normally issued at a price reduction.
Dated Government Securities: Government securities comprise of dated securities issued by the Government of India and province authoritiess. In this day of the month of adulthood is specified. It is of three types viz. zero voucher bond, drifting rate bond and capital indexed bond.
Money Market is subjected to double ordinance of RBI and SEBI.
4. Introduction to fOREIGN EXCHANGE MARKET
A Foreign Exchange Market is a market where exchange of different currencies happen. It operates at the purest signifier of supply and demand for currencies. It besides plays an indispensable function in finding the exchange rate.
Why Foreign Exchange Market was created?
The Foreign Exchange Market was created because
Inward remittals due to exports and remittals from Indians working abroad consequence in flow of foreign currency into the state. Foreign inward remittals result in addition in money circulation and foreign outward remittals of contraction of money in circulation and escape of foreign currency.
Therefore carry oning concern abroad or prosecuting in any fiscal minutess with individuals in other states involves foreign minutess.
Besides foreign entities can put in Indian Business entities ( FDI-Foreign Direct Investment ) , and FIIs in the Indian Capital Markets.
Hence is the demand for a Foreign Exchange Market.
Function of Foreign Exchange Market
The chief maps of Foreign Exchange Market are
Transfer Function Credit map Hedging
Transportation Function: As the Foreign Exchange Market is involved in exchange of currency so it facilitate the Purchasing Power transportation of one state to another as many inward and outward remittals happens
Recognition Function: As the Foreign Exchange trades with exchange of currency, many participant gives recognition to merchandise for Export and Imports concern.
Hedging: As the Foreign Exchange trades with exchange of currency, many investors enjoy the as free market state of affairs many currency goes up and down.
Current Status of Indian foreign Market
The Foreign Exchange Market has growing exponentially in footings of figure of participants taking portion and besides in footings of trading volume since its origin in 1978
Now Foreign Exchange Market consists of more than 90 Authorized Traders.
For screening out the jobs of Clearing and colony of all dealing disputes there has been Uncluttering Corporation of India Limited established.
It is regulated by RBI and Foreign exchange Dealers Association of India.
5.AN Analysis of fii on stock market
Foreign institutional investorA means an entity established or incorporated outside India which proposes to do investing in India. Positive newss about the Indian economic system combined with a aggressive market have made India an attractive finish for foreign institutional investors.
Foreign Institutional Investors has immense direct impact on Stock market. I had taken informations from 4th April 2006 to 31st March 2011 of FIIs influx and escape of money to happen out the impact of FIIs activity on Nifty India.
I found positive co-relation of 11 % merely and even there is immense influx of FIIs the Market Behaves in same mode. But statistical the value is coming really low. I think this value got affected to Recession Period.
So to understand impact of FIIs in better manner I am traveling calculate the value excepting the Recession in my hereafter Studies and besides I am traveling to happen out the targeted sectors by FIIs.
6.AN Analysis of DII on stock market
Domestic Institutional Investors ( DIIs ) means institutional investor who is registered in the state in which he is merchandising refers to the Indian institutional investors who are puting in the fiscal markets of India
Domestic Institutional Investors has by and large direct impact on Stock market. I had taken informations from 16th April 2007 to 31st March 2011 of DIIs influx and escape of money to happen out the impact of DIIs activity on Nifty India.
I found Negative co-relation of 16 % .
In future surveies, I am traveling calculate correlativity between FIIs & A ; DIIs to understand the investing nature of DIIs and to happen FIIs lead DIIs or frailty versa.
7.AN ANALYSIS of gold anD IT ‘S monetary values on stock market
Gold plays a double function as a pecuniary plus or investing and as a trade good.
Monetary or investing demand for gilded tends to rule during periods of planetary economic and geopolitical convulsion. It is besides a important perennial factor in certain states with less developed banking systems and historically high rising prices.
The purest trade good demand for gilded derives from its medical and industrial utilizations.
For 1000s of old ages, Gold has been valued as a planetary currency, a trade good, an investing and merely an object of beauty. As fiscal markets developed quickly during the 1980s and 1990s, gold receded into the background and many investors lost touch with the plus. But recent old ages have seen a dramatic resurgence in investor involvement in gold.
Some investors have bought gold as a tactical plus in order to capitalise on the positive monetary value mentality associated with strong demand and tight supply in the industry.Others have bought gold as a long-run or strategic plus seeking to take advantage of its alone investing features.
The 2007-2009 fiscal crisis has put gold ‘s long standing function as a safe oasis plus steadfastly back in the limelight. But gold has a function to play in heightening portfolio public presentation regardless of the wellness of the fiscal sector or broader economic system. Gold has proven itself to be an effectual portfolio diversifier – returns are by and large uncorrelated with those fiscal assets typically held by US investors.
It besides has a long history as an rising prices and dollar hedge.
So to understand whether Gold has impact on Stock market. I had taken informations from 10th Nov 2003 to 31st March 2011. I found positive co-relation of 80 % .
In my hereafter Studies, I am traveling to look and happen out why the Correlation is coming so high.
8.AN ANALYSIS of US-INR exchange Rate on stock market
The US-INR Exchange Rate means the value of one Indian Rupees in comparing to one US Dollar. The US Dollar is by far the most widely traded currency In add-on, the widespread of the US Dollar reflects its usage a “ vehicle ” currency in foreign exchange minutess. The US Dollar ‘s vehicle currency function is besides due to the presence of big and liquid US Dollar money. It has strong international presence and over the old ages it has emerged as a Prime Minister currency
So to understand whether US-INR Exchange rate has impact on Stock market. I had taken informations from 03th Jan 2005 to 31st March 2011. I found negative co-relation of 21 % .
In my hereafter Studies, I am traveling to look and happen out why the Correlation is negative.
From the above surveies we can do out that the Indian Financial Market are going more and more competitory with the entry of foreign participants into the Indian market
The fiscal market in India at present is more advanced than many other sectors. Indian Financial Market helps in advancing the nest eggs of the economic system – assisting to follow an effectual channel to convey assorted fiscal policies.
The Indian fiscal sector is well-developed, competitory, efficient and integrated to confront all dazes. In the India fiscal market there are assorted types of fiscal merchandises whose monetary values are determined by the legion purchasers and Sellerss in the market. The other deciding factor of the monetary values of the fiscal merchandises is the market forces of demand and supply. The assorted other types of Indian markets help in the operation of the broad India fiscal sector.