RELATIONSHIP STUDY OF INDIAN STOCK MARKET AND GOLD PRICES

Guided By Mrs. Jyoti Verma

Presented By Aman srivastava (11200691) Sarita yadav(11200673) Nishant sharma(11200576) Vineet kumar(11200542

INTRODUCTION OF INDIAN STOCK MARKET

Stock Exchanges are the exclusive centres for trading of securities. The Bombay stock Exchanges (BSE) and National Stock Exchange of India Ltd (NSE) are the two primary exchanges in India. Both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE on line Trading) and NEAT (National Exchange Automated Trading) system.

GOLD AS INVESTMENT
Of all the precious metals, gold is the most popular as an investment. The gold market is subject to speculation as are other markets. Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions Gold is traded continuously throughout the world based on the intra- day spot price.

INVESTMENT VEHICLES
GOLD BARS
most traditional way of investing in gold These can easily be bought or sold at the major banks. Bars generally carry lower price premiums than gold bullion coins

COINS
common way of owning gold Coins priced according to their fine weight, plus a small premium based on supply and demand Coins may be purchased from a variety of dealers

REVIEW OF LITERATURE
A Study of the effect of Macroeconomic Variables on Stock Market: Indian Perspective - Effect of various macroeconomic variable on stock market- gold price, oil price, exchange rate - correlation, granger causality test Causal Nexus between Gold Price Movement and Stock Market: Evidence from Indian Stock MarketGold price and stock market moves in an opposite direction. - granger causality test, co integration. IMPACT OF MACRO-ECONOMIC VARIABLES ON STOCK PRICES IN INDIA The movement of stock indices is highly sensitive to the changes in fundamentals of the economy It study four major variables gold price, forex, inflation, exchange rate

REVIEW OF LITERATURE
Is it true that Indian gold price influenced by Indian stock market reaction Study between 2nd January 1991 and 10th August 2012 using daily time

series data with the application of bivariate and multivariate cointegration test. An Empirical Analysis of the Relationship Between Stock Market Indices And Macroeconomic Variables: Evidences from India The analysis reveals that macroeconomic variables and the stock market index are co-integrated. The granger causality test result shows that there exist unidirectional causal relationship from Foreign Exchange Reserve (FER) and T-Bill Rates (TB) to BSE Sensitivity Index, which shows that these two variables leads BSE Sensitivity Index

NEED AND SCOPE OF THE STUDY

Study of various macroeconomic variable which effect Indian stock market Currency fluctuation Gold price

OBJECTIVE OF THE STUDY

To investigate the relationship between Indian stock market and Gold Price (GP). To examine the existence of correlation between stock price & macroeconomic variable(DOLLAR) & the extent to which they are correlated.

RESEARCH METHODOLOGY
The empirical research is conducted using annual data ranging from 1990-91 to 2010-11 which covers 21 annual observations Descriptive statistics technique Correlation matrix analysis

DATA ANALYSIS AND INTERPRETATION

GOLD AND NSE CORRELATION -0.035068 DOLLAR AND NSE CORRELATION -0.24434 GOLD AND NSE COVARIANCE -0.00011412 DOLLAR AND NSE COVARIANCE -0.00044952 GOLD AND BSE -0.06585 DOLLAR AND BSE -0.1799 GOLD AND BSE -0.0004108 DOLLAR AND BSE -0.000634

 Gold & BSE- Coefficient of Correlation between gold and BSE SENSEX is coming out to be -0.065 and covariance -0.00041082 which is negative in nature.

Dollar and NSE-Its correlation is -0.24 and covariance is -0.00044952.

Dollar & BSE -Its coefficient of correlation and covariance is -0.17995681 and -0.00063468 respectively.

Gold & NSE- Correlation of coefficient between gold price and NSE is coming out to be -0.035 and covariance is -0.00011412

DESCRIPTIVE STATISTICS
Standard deviation of return on gold is coming out to be 0.04 which is low which signifies that there is very less fluctuation in return. Means return on gold is showing a steady growth. Thats why investor is always having bull eyes on gold because of less involvement of risk. S.D. of NSE is coming out to be 8.10 which are quite high which shows that there are high fluctuations in value of nifty. This fluctuation is directly related with risk involved, so risk averse investor tend to invest less in stock market.

Finding and Limitation

The result of our study shows that there is negative relationship between gold price and Stock market of India, when gold price tend to grow stock market start losing its value and vice versa. Same in the case of dollar and stock market index they also share negative correlation or inverse relationship when Indian rupee start losing its value against U.S dollar Indian stock market also loses its value and vice versa

Limitation
This paper will only show the relationship between 2000-2013. As the aim of the paper is to help investor in decision making but this paper only consist of relationship between gold, U.S dollar and Indian stock market.

CONCLUSION
The relationship between gold, U.S dollar and Indian stock market is inverse between these three investment avenues.
Various investors can take help of this paper and understand the relationship between these avenues and choose which one is best for them.

THANK YOU