A STUDY ON THE IMPACT OF EXCHANGE RATES ON THE INDIAN STOCK

MARKET
at
XYZ PVT. LIMITED
Dissertation submitted in partial fulfilment of the requirements for the award of the
degree of
MASTER OF BUSINESS ADMINISTRATION
of
CMR INSTITUTE OF MANAGEMENT STUDIES (AUTONOMOUS)
affiliated to Bangalore University
by
Mr. SUDEEP SURESH CHATHOTH
Register No: 12201075


Under the guidance of
Ms. Geetha Venu
Professor

Department of Management Program




CMR Institute of Management Studies (Autonomous)
C.A. #2, 3
rd
C cross, 6
th
A Main, HRBR layout
2
nd
Block, Kalyana Nagar
Bengaluru-560 043
INTRODUCTION

The Asian crisis of 1997-98 has made a strong pitch for dynamic linkage between stock
prices and exchange rates. During the crisis period, the world has noticed that the emerging
markets collapsed due to substantial depreciation of exchange rates (in terms of US$) as well
as dramatic fall in the stock prices. This has become important again from the view point of
large cross border movement of funds due to portfolio investment and not due to actual trade
flows, though trade flows have some impact on stock prices of the companies whose main
sources of revenue comes from foreign exchange.
PROBLEM STATEMENT
There has been an increasing impact of exchange rates on the Indian Economy. Various
currencies have an impact on the Indian Stock prices. Certain currencies strengthen certain
sectors whereas certain sectors are weakened by exchange rates. Identification of the factors
affecting the Indian share market would help formulate appropriate measure in order to
mitigate the problems. This project also aims to identify specific patterns in the co
movements between exchange rates and stock prices. Over the years, Indian Rupee is slowly
moving towards full convertibility, which has also had an impact in the Indian capital market
as international investors have invested about US $15 billion in Indian capital market. In this
background, this study aims at examining the dynamic linkages between exchange rate of
Indian Rupee and stock market index in India.This project aims to identify how Exchange
Rates affect the stock prices and hence the Indian Share Market

OBJECTIVES
1. To study the trend in Exchange Rate and S&P BSE Sensex.
2. To study the impact of exchange rates on Indian Share Market.
3. To identify the sectors which are affected by fluctuation in exchange rates.



RESEARCH DESIGN
Methodology
The present study is directed towards studying the dynamics between stock returns volatility
and exchange rates movement. Focus of the study is towards Sensex returns and
The currencies which are being cross compared are Indian Rupee(INR)-US Dollar(US$) as
per RBI Reference Rates.
Period of study
The period studied is from 2008-2012
Technique of Data Collection
Data collection would be using the secondary methods of data collection.
The site being referred are www.rbi.org.in and www.sebi.gov.in for currecy related
information and stock related information.
LIMITATION AND SCOPE OF STUDY
1. Exchange rates which determine stock prices. It would not be possible to assess
qualitatively how much the stock prices are influenced.
2. The study is being conducted for dollar and rupee fluctuation and not for other
currencies . Hence it is difficult to assess if the same findings apply for other
currencies.
CHAPTER SCHEME
The caper schemes is overview of all the chapter
Chapter 1: Introduction
Chapter 2: Research Design
Chapter 3: Data Analysis and Interpretation
Chapter 4: Summary of Findings, Suggestion and Conclusion

BIBLIOGRAPHY
ANNEXURES























Sudeep Suresh Prof. GeethaVenu
(Student Signature) (Internal Guide Signature)