...Although there is no way to control weather, there exists a new solution to the financial effect that weather can have on the incomes of economic agents of developed and emerging economies. There are number of instruments and tools available for management of weather risk. Weather risk management is a definitive guide to the rapidly expanding WRM market. It is the most dynamic sector of the financial arena and is drawing the interest of the companies that are seeking to protect against the financial impact of non catastrophic weather. So for hedging weather risk weather derivatives have been developed. DERIVATIVE TRADING Like any other derivatives weather derivatives are structured as Future, Option or swaps based on different weather indices. Usually most weather derivative transactions are done on over the SInternational Financial Future Option Exchange (LIFFE) offer standardized weather contracts. In India derivative instruments are traded both on OTC market and derivative exchanges. OTC contracts such as forward and swaps are bilaterally negotiated between two parties.OTC terms are flexible and customized. In India OTC derivatives are generally prohibited with some exceptions. An exchange traded contract such as future has a standardized format that specifies the underlying assets to be delivered, size of the contract, time period etc. Margin requirement and...
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...SECURITY ANALYSIS AND POR TFOLIO MANAGEMENT LESSON 16: STOCK MARKET INDICES Stock market indices are the barometers of the stock market. They mirror the stock market behavior.With some 7,000 companies listed on the Bombay stock exchange, it is not possible to look at the prices of every stock to find out whether the market movement is upward or downward. The indices give a broad outline of the market movement and represent the market. Some of the stock market indices are BSE Sensex, BSE200, Dollex, NSE-50, CRISIL-500, Business Line 250 and RBI Indices of Ordinary Shares. Market Capitalisation (MC) = Number of shares × Prices of shares X = 100 × Rs. 20 = Rs. 2,000 Y = 200 × Rs. 30 = Rs. 6,000 Z = 250 × Rs. 40 = Rs. 10,000 Aggregate Market Capitalisation = Rs. 18,000. Index at period N = 100 Market Price at N + 1 X Share price = Rs. 25 Y Share price = Rs. 40 Z Share price = Rs. 50 Market capitalisation X = 100 × Rs. 25 = Rs. 2,500 Y = 200 × Rs. 40 = Rs. 8,000 Z = 250 × Rs. 50 = Rs. 12,500 Aggregate Market Capitaliation = Rs. 23,000 Index at period N + 1 = Rs. 23,000 × 100/18,000 N + 1 = 127.78 The weight may be the trading volumeof the particular scrip.When the index uses the trading volume as weight, on its shows the depth of the market in terms of trading volumes and conditions. All India Equity index of Financial Express with base year 1979 uses the trading volume of the scrip as weight. The Business Line - (BL) - 250 (Base January 17 1994 = 100) a comprehensive index comprising...
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...Login Register | Resources | Practice Tests | Ask Experts | Question Papers | Jobs | Universities | Colleges | Courses | Schools | Training | | Gift Shop | Bookmarks | Reviews | Learn English | Social Hub | Links | New Posts | My India | Members | Polls | | | Active Members Today * R Pramod (199) * Ajay (121) * Abhinav (75)Last 7 Days * R Pramod (1735) * Sukhdev Singh (962) * Pramod (598)more... | Impact of Foreign Institutional Investors on Indian Stock Market Posted Date: Total Responses: 0 Posted By: hardeep Member Level: Silver Points/Cash: 10 | | CHAPTER I INTRODUCTION 1.1 INTRODUCTION 1.1.1 FOREIGN INSTITUTIONAL INVESTORS FII is defined as an institution organized outside of India for the purpose of making investments into the Indian securities market under the regulations prescribed by SEBI. ‘FII’ include “Overseas pension funds, mutual funds, investment trust, asset management company, nominee company, bank, institutional portfolio manager, university funds, endowments, foundations, charitable trusts, charitable societies, a trustee or power of attorney holder incorporated or established outside India proposing to make proprietary investments or investments on behalf of a broad-based fund. FIIs can invest their own funds as well as invest on behalf of their overseas clients registered as such with SEBI. These client accounts that the FII manages are known as ‘sub-accounts’...
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...Developed and Developing Equity Markets Syed Zulfiqar Ali Shah Assistant Professor-Finance, Department of Business Administration Faculty of Management Sciences, International Islamic University Islamabad E-mail: zulfiqar.shah@gmail.com Muhammad Husnain Ph.D Scholar (Finance) Mohammad Ali Jinnah University Islamabad Email: Husnain_ctn@yahoo.com Abstract Financial economists have continuously questioned the efficient market hypothesis especially in last decade. Major part of discussion is whether the equity markets are efficient and if not then up to what extent one can forecast the meaningful future movement of equity prices. On one side there are believers of random walk and contrary there are followers of chartist theories. Those who negate the random walk suggested that there exist anomalies in the equity markets and hence are not perfectly efficient. The major objective of this study is to check the weak form of efficiency and presence of calendar anomalies in equity markets of developing and developed countries. On the basis of most recent and relatively longer horizon (14 Year) data on daily basis and a range of powerful econometrics this study suggested that in broader sense both of developed and developing equity markets are weak form inefficient. Hence there is no remarkable difference in term of market efficiency in equity markets of developed and developing countries. Hence one can reject the random walk hypothesis and therefore presence of markets efficiency is again a matter...
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...CA 95064 Abstract A key challenge for macroeconomic policy in open economies is how to simultaneously manage exchange rates, interest rates and capital account openness—the trilemma. This paper calculates a trilemma index for India and investigates its evolution over time. We find that financial integration has increased markedly after the mid-2000s, with corresponding limitations on monetary independence and exchange rate stability. This tradeoff has been mitigated, however, with the rise of international reserves as a partially independent instrument of macroeconomic policy. In addition, we confirm that the weighted sum of the three indexes adds up to a constant, validating the notion that a rise in one trilemma variable should be traded-off with a drop of the weighted sum of the other two. Finally, we consider the implications of changes in the trilemma index for macroeconomic outcomes. We find some evidence that greater financial integration and corresponding loss of monetary autonomy and exchange rate stability has influenced inflation and inflation volatility, though not in a consistent manner. ∗ This paper was written for the 7th NIPFP-DEA Research Meeting held in New Delhi, India, August 31September 1, 2010. We thank Yuhan Xue for excellent research assistance. Preliminary draft: please do not quote or cite 1. Introduction A key challenge for macroeconomic policy in...
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...Efficient Market Hypothesis: Examining the Case of South Asian Stock Markets Sharon Prakash Abstract This study examines the relevance of the Efficient Market Hypothesis among emerging stock markets belonging to the South Asian Association for Regional Cooperation (India, Pakistan, Sri Lanka and Bangladesh) and the Global economy. The study employs daily closing prices of eminent market indices from a time period 2004-2013.The stock returns have been subjected to unit root tests such as the Augmented Dickey Fuller test and a panel unit root test. Additionally the existence of random walk for these stock markets has also been examined through the Jarque-Bera statistic. The results indicate information inefficiency in the time period under study for all indices. Investors can therefore predict future prices on the basis of historical information, and receive excessive returns. The results have implications for developing economies wherein the government has to ensure that all asset related information be made public, to curb state interference. Introduction The concept of Efficient Market Hypothesis (EMH) holds special importance in the field of Finance, especially Capital markets. This hypothesis postulates that markets are informationally efficient. This asserts that the price of any security will fully reflect all the information that is available to the investors. That being said, one cannot consistently achieve returns that are excess of the average market returns on...
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...Reserve Bank of India Occasional Papers Vol. 24, No. 3, Winter 2003 Derivatives and Volatility on Indian Stock Markets Snehal Bandivadekar and Saurabh Ghosh * Derivative products like futures and options on Indian stock markets have become important instruments of price discovery, portfolio diversification and risk hedging in recent times. This paper studies the impact of introduction of index futures on spot market volatility on both S&P CNX Nifty and BSE Sensex using ARCH/GARCH technique. The empirical analysis points towards a decline in spot market volatility after the introduction of index futures due to increased impact of recent news and reduced effect of uncertainty originating from the old news. However, further investigation also reveals that the market wide volatility has fallen during the period under consideration. Surrogate indices like BSE 200 and Nifty Junior are introduced to evaluate whether the introduction of index futures per se has been instrumental in reducing the spot market volatility or the volatility has fallen in line with general fall in market wide volatility. The results using these surrogate indices show that while the ‘futures effect’ plays a definite role in the reduction of volatility in the case of S&P CNX Nifty, in the case of BSE Sensex, where derivative turnover is considerably low, its role seems to be ambiguous. JEL Classification: G1, G14, G15 Key words: Derivatives, index futures, stock markets, volatility, ARCH-GARCH Introduction...
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...Reliance Communications Limited Reliance Communications Limited Date of Listing (NSE) : 06-Mar-2006 Face Value : 5.00 ISIN : INE330H01018 Industry : TELECOMMUNICATION - SERVICES Constituent Indices : CNX 500,CNX Infrastructure,NIFTY,CNX 100 Issued Cap. : 2064026881(shares) as on 10-Aug-2010 Market Cap. : Rs. 36099.83(Cr) as on 10-Aug-2010 Impact Cost: 0.08 as on Jul-2010 52 week high/low price : 321.00/131.50 Ex-Date Purpose 16-Sep-2009 : Annual General Meeting 04-Aug-2009 : INT DIV-RE.0.80 PER SHAREPURPOSE REVISED 19-Sep-2008 : AGM/DIVIDEND - 15% 05-Jul-2007 : AGM/DIVIDEND-10% Reliance Capital Limited Reliance Capital Limited Date of Listing (NSE) : 29-Nov-1995 Face Value : 10.00 ISIN : INE013A01015 Industry : FINANCE Constituent Indices : CNX 500,NIFTY,CNX 100 Issued Cap. : 245632800(shares) as on 10-Aug-2010 Market Cap. : Rs. 18666.86(Cr) as on 10-Aug-2010 Impact Cost: 0.06 as on Jul-2010 52 week high/low price : 976.65/611.10 Ex-Date Purpose 30-Jun-2009 : DIVIDEND-RS.6.50 PR SHARE 18-Jun-2008 : DIVIDEND-RS5.50 PER SHARE 30-May-2007 : AGM/DIV-RS.3.50 PER SH 24-May-2006 : DIVIDEND-RS.3.20/- PER SH 30-May-2005 : DIVIDEND-30% In four years (2005-06 to 2008-09) ■ Revenues: Rs. 426 crore to Rs 5,976 crore, a 14-fold increase ■ Net profits: Rs. 36 crore to Rs 1,016 core, a 28-fold increase ■ Total assets: Rs. 2,810 crore to Rs 24,260 crore, an 9-fold increase ...
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...Table of Contents 1. Brief History of The Indian Capital Market 3 2. Indices 4 3. Companies quoted 6 4. Rupee vs Dollar 7 1. Brief History of The Indian Capital Market The history of the capital market in India dates back to the eighteenth century, one of the oldest in Asia; When East India Company securities were traded in the country. Until the end of the nineteenth century securities trading was unorganized and the main trading centres were Mumbai and Calcutta. Of the two, Bombay was the chief trading centre wherein bank shares were the major trading stock During the American Civil War (1860-61). Bombay was an important source of supply for cotton. Hence, trading activities flourished during the period, resulting in a boom in share prices. This boom, the first in the history of the Indian capital market lasted for a half a decade. The bubble burst on July 1, 1865 when there was tremendous slump in share prices. Trading was at that time limited to a dozen brokers; their trading place was under a banyan tree in front of the Town hall in Mumbai. These stock brokers organized informal association in 1897 – Native Shares and Stock Brokers Association, Bombay. The Stock exchanges in Calcutta ad Ahmedabad also industrial and trading centers, came up later. The Bombay Stock Exchange was recognized in May 1927 under the Bombay Securities Contracts Control Act, 1925. The capital market was not well organized and developed during the British rule because the British...
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...Literature Review To examine the dynamic linkages between the foreign exchange and stock markets for India, Samanta and Nath (2003) employed the Granger causality test on daily data during the period March 1993 to December 2002. The empirical findings of the study suggest that these two markets did not have any causal relationship. When the study extended its analysis to verily if liberalization in both the markets brought them together, it found no significant causal relationship between the exchange rate and stock price movements, except for the years l993, 2001 and 2002 during when a unidirectional causal influence from stock index return to return in forex market is detected and a very mild causal influence in the reverse direction is...
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...Derivatives Exchanges. 3. Explain what is meant by a perfect hedge. Does a perfect hedge always lead to a better outcome then an imperfect hedge? Explain your answer. 4. What do you understand by commodity futures? What are the benefits of commodity futures at national level? 5. Compare between forward, future and option. 6. Explain the regulatory framework of futures trading in India. 7. Explain carefully differences between hedging, speculation and arbitrage in the context of financial derivatives. 8. Explain the term ‘Financial derivative’. What are the important features .Explain with suitable examples. Which are different types of instruments ? 9. What do you mean by SWAPs? Explain the different type of Swaps in detail that are used to hedge different risks. 10. Explain what do you mean by long hedges and short hedges with example. 11. Discuss in detail what do you understand by hedge ratio and hedging effectiveness. 12. “Derivative contracts are used as a tool of hedging in financial market” . Explain the different types of risk that occur in a financial market. 13. Clearing house is the ‘de facto’ guarantor for all the transactions in futures. Describe briefly the functions of a clearing house. 14. What is currency Swap? Classify the different types of currency rate Swaps . How a person can do “Arbitrage” using currency future? 15. OTC derivatives v/s. Exchange traded derivatives 16. What are T-bill futures? Classify the hedging strategies...
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...advantage at 2-digit and 4-digit levels of industrial classification. The paper highlights the problems faced by the footwear industry and identifies the role of entrepreneurship for the progress of the industry. The analysis shows that in recent years, specifically the period from 2003-06, the footwear industry has moved from disadvantage (as compared with China and India) position to comparative advantage. The study indicates that there is potential for higher growth of the industry and it can become a source of export earnings. The study suggests that in the rapidly changing global economic environment and in the face of increasing cost of doing business in Pakistan, there is a need to strengthen the competitiveness of the footwear industry in Pakistan. JEL classification: L67 Keywords: Revealed Comparative Advantage, Footwear, Pakistan. 1. INTRODUCTION The global export patterns are changing fast as a result of reduction in trade barriers and technological advancements that have led to gains in productivity and change in comparative advantage patterns in world economies. Asian economies such as China and India are enjoying a notable growth in changing circumstances across the world. Pakistan also has great potential for higher growth however the political threats, socioeconomic environment and lack of updated technologies are obstruction in the way of progress. Some sectors of Pakistan economy have shown a...
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...INTRODUCTION This following report is used to justify the proposed country, India, as the potential country for Global Business Solutions’ client, Rein Wess (RW), to produce and sell their books. Therefore, this report highlights and debates on both aspects presented within the economic environment of India. ECONOMIC ANALYSIS Opportunities • Sustained Economic Growth According to various sources such as FTSE, MSCI (Morgan Stanley Capital International), The Economist and Standard & Poor, India is believed to be a huge emerging market. India’s annual real GDP3 estimated growth is approximately 8% yearly in 2000 to 2008. This suggests that the current economic conditions are largely favourable as the economy is growing strongly and positively despite the GFC4. This provides RW’s business a stable economic foundation to start their business steadily in India. [pic] Figure 1, Source: (World Bank, 2011) & (ET Bureau, 2011) • Large Population Market India’s current 1.21 billion population (Census India, 2011) is expected to grow at 1.3% in 2010. (World Bank, 2011) Of which, 672 million people are in the age-group 15 to 64 years which falls under the "working age population". 50% of India's population is under 25 years of age and there is a higher male to female ratio (Census India, 2011). This is highly favourable for RW because there might be an increase in demand for educational books as both new entrants (mainly males) of the workforce along with...
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...Empirical Investigation of Indian Stock Market and Debt Market Post Liberalization Prepared by Group I Monika Aggarwal (1) VipulAggarwal (2) VrindaAilani (3) ParasharAnand (4) PraneetBattina (5) Rahul Balyan (6) Supervised & Mentored by Dr.Nupur Gupta Bhattacharya Faculty, K J Somaiya Institute of Management Studies & Research Contents Abstract..................................................................................................................................3 Literature Review....................................................................................................................4 Introduction............................................................................................................................6 1) Debt Market.........................................................................................................................6 2) Equity Market......................................................................................................................8 Relation between Debt and Equity Market................................................................................10 Empirical Relation.................................................................................................................12 Limitations of Study................................................................................................................15 Conclusion.....................................
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...January 2014 CRISIL Economy First Cut IIP: Industrial production slips again Overview: Index of industrial production (IIP) fell by 2.1 per cent in November on a year-on-year basis, even sharper than October’s decline of 1.6 per cent. Despite a pick-up in core infrastructure industries such as mining and electricity, industrial production fell in November as the manufacturing sector contracted by 3.5 per cent compared to a year ago. Industrial growth is likely to remain weak for the rest of 2013-14 due to infrastructure and input constraints, and weak domestic demand. Robust export growth with rising global demand may however, provide some cushion to manufacturing production. Even though the mining ban has been lifted in Karnataka, revival in mining output will be slow as it will take time for firms to obtain relevant clearances and ramp up production. The Cabinet Committee on Investments has also been fast-tracking stalled projects; however, as most of these are infrastructure projects and have long gestation periods, the impact of these measures will not be felt until 2014-15. Core sectors such as mining and electricity rebounded in November from last month’s lows as higher coal production lifted mining output and raised power production. Electricity output grew by 6.3 per cent while mining expanded by 1.0 per cent in November. Mining sector has now contracted for three consecutive years (-2.2 per cent for April-November 2013) while manufacturing growth has completely collapsed...
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