A RESEARCH STUDY ON IMPACT OF GLOBAL INDICES ON INDIAN INDICES
Abstract
In the current era of globalization of financial markets, it is of utmost importance to understand the relationship between various global markets. An investor has to correlate his risk return profile to the global scenario. The stock market performance is one of the prime indicators which can be used to judge the performance of the economy of any country. The world’s major stock market indicators are of that of New York Stock Exchange’s (NYSE) indicator S&P 100, National Stock Dealer’s Automated Quotations (NASDAQ), Tokyo Stock Exchange’s (TSE) indicator NIKKEI 225, London Stock Exchange’s (LSE) Indicator FTSE 100 and Hong Kong Stock Exchange’s (HKSE) indicator HANG SENG. In the era of financial globalization the performance of businesses in various countries are inter linked due to which recession in a major economy can impact other economies. This in turn affects the performances of stock markets indicated by various prominent indices. This paper tries to test the relationship between the fluctuations in the global indices and its impact on the performance of the Indian stock market. For this purpose the study tries to correlate the performance of Bombay Stock Exchange (BSE) using its indicator BSE SENSEX with 5 important Indices viz., FTSE 1001, NIKKEI2, HANG SENG3, S&P 100 and NASDAQ. The study has collected data from January 2011 – May 2012 related to the above indicators and calculated the monthly holding period returns. The monthly returns of BSE have been compared with each of the returns of the other markets and the correlation between them was established. To confirm the significance of correlation between the indices, T- test was employed. The study finds that there is a significant impact of global markets on Indian markets.
Keywords
Stock Exchange, BSE, NASDAQ, NYSE, FTSE 100, NIKKEI, HANG SENG, Fluctuations, Market Indices, IMPACT OF GLOBAL INDICES ON INDIAN INDICES, Comparison of indices.