Volatility in Indian stock market

CHINMAY KU. MOHANTA

 INDIAN STOCK MARKET

BSE NSE

Popularly Known as BSE Popularly known as NIFTY 50

SENSEX( SENSitive indEX )
Has a significant trading
volume
In January 8, 2008 crossed
21000
Now around 8000-9000
Covers around 1500 cities
through VSAT
Moves almost parallel to BSE
Crossed 6000
Now around 2000-3000
 VOLATILITY
Reasons :

 Fundamental  FII & FDI Participation

Perception of investors  Operator driven
 Company’s Market
Performance  Govt. & Economic
 Demand & Supply of Policies
Shares in the Market
 VOLATILITY (contd..)
Fundamental Perceptions
 Awareness about the fundamental analysis of the indices

 Different people take it differently

Companies Performance
 The various sectors show variability in their performance

 Returns of the companies scrip in last couple of years

 Future projects & investments

 VOLATILITY (contd..)
Demand & Supply of Shares
 More demand more price and vice-versa

 Shortage of shares = High Demand = Higher price

 More shares = Less demand = Lesser price

FII & FDI Participation

 More FII & FDI inflows leads to higher demand of shares

 Indian investors mostly follow the foreign investors

 VOLATILITY (contd..)

Operator Driven
 Indian stock market is said to be operator driven
 The players play a vital role in its movement

Govt. & Economic Policies

 The financial policies affect investors interest
 Economic performance of the country
 Govt. decision on various financial policies
 VOLATILITY (contd..)
FDI & FII Investments (in Cr.INR)
Net Investment in Net Investment in
Year Equity Debt
2001-02 80,670 6,850
2002-03 25,280 600
2003-04 3,99,590 58,050
2004-05 4,41,230 17,590
2005-06 4,88,010 -73,340
2006-07 2,52,370 56,070
2007-08 5,34,038 1,27,753
2008-09 -1,40,325 -28,633
 Conclusion

 Indian stock market is fully driven by the participants

 People are trendy enough to follow the FDIs

 Presence of Large number of participants with variation

in perception
 Government policies

Affect the movement of the STOCK-MARKET