i

“A STUDY ON THE IMPACT OF SELECTED MACRO-ECONOMIC FACTORS

ON SHARE PRICE MOVEMENT OF CERTAIN VITAL SECTORS”

By

T.V.HEMA PRIYA
Reg.No: 71104631018

of
KONGU ENGINEERING COLLEGE
PERUNDURAI, ERODE- 638052.

A PROJECT REPORT
Submitted to the
FACULTY OF MANAGEMENT STUDIES

In partial fulfillment of the requirements

for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION

JUNE , 2006
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BONAFIDE CERTIFICATE

Certified that this project report titled “ A Study on the impact of

Selected Macro-economic factors on share price movement of certain vital

sectors” is the bonafide work of Ms.T.V.HemaPriya who carried out the research

under my supervision. Certified further , that to the best of my knowledge the work

reported herein does not form part of any other project report or dissertation on

the basis of which a degree or award was conferred on an earlier occasion on this

or any other candidate.

SUPERVISOR DIRECTOR

Viva - Voce held on _______________.

INTERNAL EXAMINER EXTERNAL EXAMINER

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ABSTRACT

The present study attempted to analyse the impact of selected macro economic
factors like Inflation,Call Money Rate,SENSEX,Dollar value,Deposit Rate,investment by
FII on share price movements of selected companies in certain vital sectors namely
Cement,Information Technology, Telecom, Auto,FMCG,Infrastructure,Media and
Power.The companies are selected based on market capitalisation of the shares.

The descriptive research is used by the researcher. The sampling technique that
was adopted for the study was non-probability Sampling.Secondary data is used for
conducting this research. The collected data was analysed using descriptive statistics .To
get the result of the research the data are analysed using statistical tools like Regression
coefficient, ANOVA(F test)and t test.

Regression coefficient is used to learn more about the relationship between

several independent variables and a dependent variable.Since there are more than two
independent variables F test is used and to know the specificity (that is which
independent variable has an impact on share price movement) t test is used.

From this study it is clear that Sensex is the major factors having an impact on
share price variations in Cement,IT,Auto and FMCG Sectors.FII also influence the share
price variations in Cement and IT sectors.Inflation,Call Money Rate and Dollar value
also have an impact to certain extent in IT and Auto
sectors.Telecom,Infrastructure,Media and Power sectors does not have an impact on the
Macro-economic factors.
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Investors have to keep in mind the various macro economic factors that affects the
share price before making an investment.The area of study is restricted to certain sectors
and certain companies and hence the results may not be extended to other
companies.Further studies can be made by taking many other factors in to consideration.
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ACKNOWLEDGEMENT
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I am indebted to our honorable Correspondent

Thiru.P.SATHIYAMOORTHY B.E., M.B.A.,, M.S., for providing excellent

environment and infrastructure at Kongu Engineering College, Perundurai for

successfully completing my MBA course.

I thank our principal , Dr.A.M.NATARAJAN, B.E., M.Sc., for providing

the necessary facilities throughout the course of the project.

My sincere regards to our beloved Head of the Department and project

guide, Department of Management Studies, Mr. P. SURESH KUMAR, M.Sc.,

(Agri),M.B.A., for his valuable guidance, support, and above all his whole hearted

encouragement.

I take this opportunity to express my heartfelt gratitude to Kotak Securities

for entrusting a project of this magnitude to me.

I am deeply indebted to Mr.laiju (Branch Manager,Salem) Kotak Securities

for his guidance and encouragement in completing the project to a success.

TABLE OF CONTENTS
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CHAPTER PAGE
PARTICULARS
NO. NO.
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ABSTRACT (ENGLISH) ii
ABSTRACT (TAMIL) iv
LIST OF TABLES viii
1 INTRODUCTION
1.1 Industry Profile 1
1.2 Company Profile 7
2 OBJECTIVES OF THE STUDY
2.1 Objectives of the study 12
2.2 Need for the study 12
2.3 Scope of the study 13
2.3 Limitations of the Study 13
3 REVIEW OF LITERATURE 14
4 RESEARCH METHODOLOGY
4.1 Research Design 18
4.2 Data Collection 19
4.3 Sampling Plan 19
4.4 Statistical Tools 20
5 ANALYSIS AND INTERPRETATION
5.1 Analysis of data 23
6 RESULTS AND FINDINGS 57
7 RECOMMENDATIONS 60
8 CONCLUSION 61
ANNEXURE 62
REFERENCES 63
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LIST OF TABLES

TABLE PAGE
TABLE HEADINGS
NO. NO.

CEMENT SECTOR

% Return of the share price of Cement Sector and the % 25

change in the factors
26
Regression Analysis

ANOVA Table 26

Regression Output 27

Inference
28
IT SECTOR

% Return of the share price of IT Sector and the % change in 29

the factors

Regression Analysis 30

ANOVA Table 30
Regression Output
31
Inference
32

TELECOM SECTOR

% Return of the share price of Cement Sector and the % 33

change in the factors
34
Regression Analysis

ANOVA Table 34

Regression Output 35
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TABLE PAGE
TABLE HEADINGS
NO. NO.
Inference
36

AUTO SECTOR

% Return of the share price of Cement Sector and the % 37

change in the factors
38
Regression Analysis

ANOVA Table 38

Regression Output 39
Inference
40

FMCG SECTOR

% Return of the share price of Cement Sector and the % 41

change in the factors
42
Regression Analysis

ANOVA Table 42

Regression Output 43

Inference
44

INFRASTRUCTURE SECTOR
45
% Return of the share price of Cement Sector and the %
change in the factors 46
Regression Analysis
46
ANOVA Table
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TABLE PAGE
TABLE HEADINGS
NO. NO.

Regression Output
47
Inference
48

MEDIA SECTOR

% Return of the share price of Cement Sector and the % 49

change in the factors
50
Regression Analysis

ANOVA Table 50

Regression Output
51
Inference
52

POWER SECTOR

% Return of the share price of Cement Sector and the % 53

change in the factors
54
Regression Analysis

ANOVA Table 54

Regression Output
55
Inference
56