THE EFFECT OF ECONOMIC

INDICATORS ON BANK NIFTY

 At

TRADEBULLS SECURITIES PRIVATE LIMITED

Submitted to:
Prof. Mantrark Mehta

Under the Guidance of:

Vinay Tak
(Sales Manager)

Prepared By:
Manali V. Ratani
Roll No. 59
Enrollment No: 167680592059

SHREE CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT AND RESEARCH

 TABLE OF CONTENTS

Declaration

Company Certificate

College Certificate

Preface

Acknowledgement

Executive Summary

1. INTRODUCTION OF THE COMPANY

 The Vision Of The Company

 We continue to focus on what we do best

 PRODUCTS & SERVICES

 Group Companies

 Memberships

 Depository Participant

 Competitors of Tradebulls Securities Pvt Ltd

 SWOT analysis of Tradebulls Securities Pvt. Ltd.

 PESTEL analysis of Finance industry

2. INTRODUCTION OF THE TOPIC

 What is Bank nifty?

  Meaning Of Economic Indicators

 Which are different Economic Indicators?

 Effect Of Such Indicators On Bank Nifty

3. REVIEW OF LITERATURE

4. RESEARCH METHODOLOGY

 OBJECTIVES OF STUDY

 SCOPE OF STUDY

 RESERCH DESIGN

 SOURCES OF DATA

 SAMPLING

 BENIFICIARIES

 LIMITATIONS

5. DATA ANALYSIS AND INTERPRETATION:

6. FINDINGS, CONCLUSIONS AND RECCOMENDATIONS

7. BIBLIOGRAPHY

8. ANNEXTURES
 DECLARATION

This project report entitled “The Effect Of Economic Indicators On Bank Nifty”, has been
submitted to Gujarat Technological University, Ahmedabad in partial fulfillment for the degree
of Master of Business Administration.
I, the undersigned hereby declare that this report has been completed by me under the
guidance of MR. Mantrark Mehta (Faculty Member, Shree Chimanbhai Patel Institute Of
Management And Research).

The report is entirely the result of my own efforts and has not been submitted either in part or
whole to any other institute or university for any degree.

Manali V. Ratani

GTU Enrollment No: 167680592059

Date:
 PREFACE

Technical study is incomplete without the practical knowledge. No doubt theory provides the
fundamental stone for the guidance of practice but practice examines the element of truth
lying in the theory. Therefore, a stand co-ordination of theory and practice is very essential to
wake an MBA perfect.

As a student of Business Management, I was required to undergo 6-8 weeks practical training in
any organization of repute connected with Industry. I completed this practical training at

“TRADEBULLS PRIVATE LIMITED, AHMEDABAD”. This project report of the work consists of
general study of the company and the research conducted on “EFFECT OF ECONOMIC
INDICATORS ON BANK NIFTY” AT TRADEBULLS PRIVATE LIMITED, AHMEDABAD.

Full care has been taken to make this report error free yet the responses collected through
respondent cannot be 100% error free and I hope I shall be excused for that.
 ACKNOWLEDGEMENT

It is my privilege to have accomplished this study under the guidance of Prof. Mantrark Mehta,
my faculty and guide, for taking keen interest full involvement, dynamic motivation and
valuable guidance extended to me throughout the project.

I express my sincerest gratitude and thanks to honorable Mr. Vinay Tak for whose kindness I
had the precious opportunity of attaining Training at Tradebulls Private Limited, under this
brilliant untiring guidance I could complete the Project being undertaken on

“EFFECT OF ECONOMIC INDICATORS ON BANK NIFTY” successfully in time. His meticulous

attention and valuable suggestions have helped me in simplifying the problem in the work.

I would also like to thank the overwhelming support of all the people who gave me an
opportunity to learn and gain knowledge about the various aspects of the industry.

I am indebted to all staff members of the Tradebulls Private Limited for their valuable support
and cooperation during the entire tenure of this project.

Not to forget, the faculty members of Shree Chimanbhai Patel institute Of Management And
Research who have kept my spirits surging and helped me in delivering my best and made me
reach up to this platform.
 EXECUTIVE SUMMARY

The Summer Internship Project at “Tradebulls Private Limited” has given an exposure into the
investment scenario in India. The project while working at “Tradebulls Private Limited” includes
advisory services i.e. educating the existing and potential investors about financial market as an
alternative source to investment. This involves catering to the queries of the investors about
the concept of financial market, the various options that an investor can invest his money into,
funds management of investors.

Analyzing the investors’ behaviour includes understanding the concerns a person has towards
Financial Market, his stages in life and wealth cycle, the effect of the investments made by the
peer groups, effect of the profession he/she is in, education qualification, importance of tax
benefits, the most preferred saving tool etc. and this all is analyzed with the help of a schedule
prepared.

Understanding the significance of financial market, types of instruments present in the Indian
Financial Market such as Futures, Options and Forwards. The various techniques used to
identify the trend of the market and analysing the scrip before investing.

Through the systematic investment plan invest a specific amount for a continuous period, at
regular intervals.
INTRODUCTION
OF
THE COMPANY
 TRADEBULLS SECURITIES PRIVATE LIMITED

Established in 2009, Tradebulls Securities Private Limited is a reputed financial firm offering
world class brokerage services and wealth management to retail clients. These include Equity,
Currency and Commodity Trading. They also provide distribution of Mutual Funds, IPOs,
Personal Loans and Insurance, as well as Portfolio Management, Online Trading and Depository
services.Their research and advisory arm releases high-quality fundamental and technical
research reports at regular intervals. Tradebulls is a company with 1000+ employees. Tradebulls
is also among the top five brokers in Gujarat on NCDEX and BSE in terms of turnover.
Currently Tradebulls is based in 9 cities i.e. Ahmedabad, Bengaluru, Delhi, Gandhinagar,
Hyderabad, Mumbai, Rajkot, Surat and Vadodara with 18 branches.

We continue to focus on what we do best

 delivering powerful, easy-to-use trading technology

 supporting active traders over a wide range of products
 teaching the world a smarter way to seek risk management and spot potential
opportunities

Vision Of Tradebulls:
They Aim : "To provide world-class Wealth Management Services by arranging all conceivable
financial services under one roof at affordable costs through cost-effective delivery systems,
and to achieve organic growth in business by adding newer lines of business, with the help of a
self-motivated and aggressive team of young professionals."
 Philosophy:

The Company’s philosophy is entirely client centric, with a clear focus on providing long term
value addition to clients, while maintaining the highest standards of excellence, ethics and
professionalism. We believe our success is related to belief in our guiding principles.

PRODUCTS AND SERVICES:

1. Equity and Derivatives

 Invest in shares to generate long-term wealth or take the high risk of entering the
derivative segment for lucrative returns. It will handhold you in equity trading and lend
invaluable guidance to manage risks involved in derivatives trading.
 Our in-house research team creates insightful research reports to keep you up-to-date
with the movements of the market and the performance of investment assets.
Derivative market comprises of trading with futures and options. If you have the
investment appetite for high risk, our experts will guide you with strategies to increase
your possibilities of enhancing your earnings, through an arbitrage, hedging activity or
margin trade.

2. Commodity Derivatives

 Are you seeking investment opportunities in new markets? Commodity derivatives is an

emerging investment gateway. Global market movements have an impact on
commodity prices. We at Tradebulls, thoroughly understand these fluctuations in the
commodity prices and use high-end analysis to derive easily consumable insights from
time to time.
 Tradebulls is a member of MCX and NCDEX. Our clients can perform trading transactions
in both these commodity exchanges of India. Based on your existing portfolio, our team
of experts shall guide you to diversify your assets as per your ambitious targets in the
commodity markets. Based on the fundamentals of demand and supply, Commodities
form a separate asset class offering investors, arbitrageurs and speculators immense
potential to earn returns.
3. Currency Trading

 Globalization has led to an increase in foreign investments. With the growing pace of
international trade and developments in the world economies, the value of currency
keeps changing. We help investors with timely tips to benefit from these changes at the
foreign exchange. Our clients earn good returns through currency trading using our
high-end currency analysis tools
 With seamless customer experience, our clients enjoy a blend of best in class solutions
integrated together to create a portfolio as per their comfort zone.

4. Online Trading

 Everything that you ever wanted to be at your fingertips for trading in the various
investment markets is available with our well-structured online trading facility. An
intuitive interface, well organized data and 24/7 online support gives you a seamless
trading experience.
 We bring to our clients a platform that perfectly blends the benefits of traditional
methods of trading with the new-age convenience of technology. Enjoy instant trading
on the move and grab the opportunities that are otherwise missed due to lengthy
procedures. Keep track of your investment portfolio with the latest data analytics tools.
Utilize internet banking to manage funds for trading purposes.

5. Depository Services

 You need a demat account to store your shares for online trading. We are registered as
a depository participant with CDSL (Central Depository Services Limited). Our endeavor
is to deliver the best online trading experience to our demat account holders.
 As a reputed depository participant, we deliver an array of facilities for our respected
clients. You can benefit from competitive transaction charges. Avail detailed statements
of demat account online. For a richer customer experience, we fine tune our processes
regularly. Our world class customer service team ensures speedy resolution for your
concerns.
6. IPO (Initial Public Offerings)

 IPO or Initial Public Offer gives investors the opportunity to invest early in companies
and gain higher investment returns in a shorter time span. Our team at Tradebulls keeps
track of companies entering the capital markets. Our timely guidance will guide you to
make the right investments for your portfolio, at the right time. We enable our clients to
make better allocation of their resources in alignment with the IPO issue date.
 Also, enjoy value-added services such as upcoming IPO updates, brief profiles of
companies entering the market and more. Our experts have the right networks and
resources to give you the right advice about risk and returns along with best-in-class
services.

7. Mutual Funds

 Enjoy carefully selected mutual fund investment plans to fulfil your investment goals.
Right from choosing well-suited mutual funds to enabling seamless management of your
portfolio of diversified funds, our experts take care of your every need. Our fund
managers guide you with in-depth information and research insights.
 We believe in serving our clients with innovative ideas through a simplified approach.
Our services are tailored as per international standards to meet the varying needs of
budding investors to an experienced market player. With seamless customer
experience, our clients enjoy a blend of best in class solutions integrated together to
create a portfolio as per their comfort zone.

8. Insurance

 While we worry about the future, our present gets affected. Now, secure your future and
the future of your loved ones with the wide range of life insurance policies presented by
Tradebulls experts.

 Whether it is the dream of buying an expensive car or sending your kids abroad for further
studies, you can start by investing in a suitable policy at the right time. To continue to lead
an independent life when you grow old, choose from our range of retirement policies.
Unfortunate events or unexpected health concerns in life cannot be predicted. It is best to
be prepared for such events with an insurance policy that can take care of your financial
 needs on time. Basically, insurance investments can support you with money when you
need it the most.
 Enjoy our best in class life insurance solutions with seamless customer service experience.
No matter what your life goals are, our insurance experts will guide you with the right set of
insurance plans as per your needs.

GROUP COMPANIES

 Tradebulls Securities (P) Limited

 Tradebulls Commodities Broking (P) Limited

 Tradebulls Commodities (P) Limited

MEMBERSHIPS

 NSE
 BSE
 MCX
 NCDEX
 ACE Commodity Exchange

DEPOSITORY PARTICIPANTS

 CDSL (Central Depository Services Limited)

COMPETITORS OF TRADEBULLS PVT. LTD.

 Indiabulls Securities Pvt. Ltd.

 Angel Broking
 Sherkhan
 Motilal Oswal
 Arihant Capital Market Ltd.
  Choice Stock Broking Pvt. Ltd.
 SMC Global Securities Pvt. Ltd.
 Navkar Stock Broking
 Kotak Securities
 Zerodha Securities Pvt. Ltd.
 HDFC Securities
 Ventura Securities Ltd.

SWOT ANALYSIS:

Strength, Weakness, Opportunity, and Threats (SWOT) of Tradebulls Securities Pvt Ltd is given
below.

1) Strength:

 The first and for most thing of strength of Tradebulls is its ability to provide high return.

 Large number of securities which provides medium for investment.

 Large number of Brokers who plays a role of facilitator for investment.

 SEBI a regulatory body of Stock market who protects the interest of the investors.

2) Weakness:

 The weak point of Tradebulls stock market is its volatility i.e. High risk.

 It is a kind of gambling where no guarantee of return and some time it depends on luck
also.

3) Opportunity:

 Tradebulls Stock market provides an opportunity to money lender and money seeker to
Invest and use money for their plan.

 It provides an opportunity to the investor to be the owner of the company and

contribute in the business decision of the company.
  Tradebulls Stock market is a kind of indicator of the economic growth of the country
where it provides an opportunity to gain according to the inflation of the country or
more than that.

4) Threats:

 There are many competitors of stock market such as post office savings, public
provident fund, company fixed deposits, fixed deposits with bank etc. which
provides fixed and assured returns.

PESTLE ANALYSIS OF TRADEBULLS SECURITIES PVT. LTD

1. Political:

The capital market is very vulnerable. India has been politically instable in the past but it is a
little politically stable now-a-days. The political instability of the country has a very strong
impact on the capital market. The share market of India changes as the political changes took
place. The BSE Index, SENSEX goes up and down with any kind of small and big political news,
like, if there is news that a particular political party has withdrawn its support from the ruling
party, and then the capital market will go down with a bang. The capital market is too weak and
is based on speculations. The political stability of the country is very important for the stability
and growth. The political imbalance or balance of the country is the major factor in deciding the
capital market. The political factors include:

 Employment Laws

 Tax Policy

 Trade Restrictions and Tariffs

 Political Stability

2. Economical:

The economical measures taken by the government of India has a very strong relationship with
the capital market. Whenever the annual budget is announced the capital market goes up and
down with the economical policies of the government .If the policies are supportive to the
companies then the capital market takes it positively and if there is any other policy that is not
supportive and it is not welcomed then the capital market goes down. Like, in the case of
allocation of 3-G spectrum, those companies that got the license for 3-G, they witnessed sharp
growth in their share values so the economic policies play a major part in the growth and
decline of the capital market and again if there is relaxation on any kind of taxes on items of
automobile industry then the share of automobile sector goes up and virtually strengthen the
capital market. The economical factors include:
 Inflation Rate

 Economic Growth

 Exchange Rates

 Interest Rates

3. Social:

India is a country of unity in diversity .India is socially rich but the capital market is not very
attached with the social factors .Yes, there is some relation between the social factors with the
capital market. If there is any big social factor then to some extent it affects the capital market
but small social factors don’t impact at all. Like, there was opposition of reliance fresh in many
cities and many stores were closed. The share prices of the reliance fresh went down but the
impact was on and individual firm there was not much impact on the capital market of on a
whole the social factors have not much of impact on the capital market. The social factors
include:
 Emphasis on Safety

 Career Attitudes

 Population Growth Rate

 Age Distribution

 Health Consciousness

4. Technological:

The technological factors have not that much effect on the capital market. India is technological
backward country. Same as social factors, technological factor can have an effect on an
individual form but it cannot have a big impact on a whole of capital market. The Bajaj got a
patent on its dts-i technology, and launched it in its new bike but it does not effect on capital
market. The technological change in India is always on a lower basis and it doesn’t effect on
country as a whole. The technological factors include:
 R&D Activity

 Technology Incentives

 Rate of Technological Change

 Automation

5. Environmental factors:

Initially The environmental factors don’t play a vital role in the capital market. But the time has
changed and people are more eco-friendly. This is really bothering them that if any firm or
industry is environment friendly or not. An increasing number of people, investors, corporate
executives are paying importance to these facts, the capital markets still see the environment
as a liability. They belie that it is of no use for their strategy. The environmental performance is
even under-valued by the markets.

6. Legal factors:

Legal factors play an important role in the development and sustain the capital market. Legal
issues relating to any industry or firm decides the fate of the capital market. If the govt. of India
or the parliament introduces a new law that can affect the running of the industry then the
industry will be demotivated and this demonization will lead to the demonization of the
investors and will result in the fall of capital market. Like after the Hardhat Mehta scam, new
rules and regulations were introduced like PAN card was made necessary for trading, if any
investor was investing too much money in a small firm, then the investors were questioned
,etc. These regulations were meant to maintain transparency in the capital market, but at that
time, investment was discouraged. Legal factors are necessary for the improvement and
stability of the capital market.
INTRODUCTION
OF THE
TOPIC
 THE EFFECT OF ECONOMIC INDICATORS ON BANK NIFTY

MEANING OF BANK NIFTY:

 Bank Nifty represents the 12 most liquid and large capitalised stocks from the
banking sector which trade on the National Stock Exchange (NSE). It provides
investors and market intermediaries a benchmark that captures the capital market
performance of Indian banking sector.

 Bank Nifty is the bank index traded in the F&O segment of NSE. It comprises of
most liquid banking stocks listed on NSE. This index provides investors and market
intermediaries with a benchmark that captures the capital market performance of
Indian Banks.

Market Representation

 CNX Bank Index represent about 14.66% of the free float market capitalization of the
stocks listed on NSE and 84.66% of the free float market capitalization of the stocks
forming part of the banking sector universe as on June 30, 2011.

 The total traded value for the last six months of all the CNX Bank Index constituents
is approximately 14.11% of the traded value of all stocks on the NSE and 82.90% of
the traded value of the stocks forming part of the banking sector.

Calculation Methodology

The index is a free float market capitalization weighted index with base date of January 01,
2000, indexed to a base value of 1000.

LIST OF BANKS INCLUDED IN BANK NIFTY:

1. Axis Bank Ltd – AXISBANK

2. Bank of Baroda – BANKBARODA
3. Canara Bank – CANBK
4. HDFC Bank Ltd – HDFCBANK
5. ICICI Bank Ltd – ICICIBANK
6. Kotak Mahindra Bank Ltd. – KOTAKBANK
7. Punjab National Bank – PNB
8. State Bank of India – SBIN
 9. Indusind Bank
10. Yes Bank
11. IDFC Bnk
12. Federal Bank

MEANING OF ECONOMIC INDICATORS:

 An economic indicator is a statistic about an economic activity. Economic indicators

allow analysis of economic performance and predictions of future performance. One
application of economic indicators is the study of business cycles. Economic indicators
include various indices, earnings reports, and economic summaries.
Examples: unemployment rate, housing starts, consumer price index (a measure
for inflation), consumer leverage ratio, industrial production, bankruptcies, gross
domestic product, broadband internet penetration, retail sales, stock
market prices, money supply changes.
 Key statistics that indicate the direction of an economy. They are of three main types:
(1) Leading indicators (such as new orders for consumer durables,
net business formation, and share prices) that attempt to predict the economy's
direction, (2) Coincident indicators (such as gross domestic product, employment levels,
retail sales) that show up together with the occurrence of associated economic activity,
and (3) Lagging indicators (such as gross national product, consumer price index,
interest rates) that become apparent only after the occurrence of associated economic
activity.

VARIOUS ECONOMIC INDICATORS INCLUDE:

1. GDP (Gross Domestic Product) of the nation

2. CPI (Consumer Price Index)
3. WPI (Wholesale Price Index)
4. Unemployment Rates Prevailing In The Country
5. Rate Of Inflation
6. Monetary Policy
7. Interest Rate
8. Repo rate
9. Reverse Repo rate
10. IIP (Index Of Industrial Production)
These Economic Indicators affect the index which represents the stock regarding the banking
sector i.e. Bank Nifty.
By studing the effect of economic indicators, we can predict the future effect that would be
there on the Bank Nifty due to changes in such Economic Indicators.

1. INDEX OF INDUSTRIAL PRODUCTION:

 The Index of Industrial Production (IIP) is an index for India which details out the
growth of various sectors in an economy such as mineral mining, electricity and
manufacturing. The all India IIP is a composite indicator that measures the short-term
changes in the volume of production of a basket of industrial products during a given
period with respect to that in a chosen base period. It is compiled and published
monthly by the Central Statistical Organisation (CSO) six weeks after the reference
month ends.
 The level of the Index of Industrial Production (IIP) is an abstract number, the magnitude
of which represents the status of production in the industrial sector for a given period of
time as compared to a reference period of time. The base year was at one time fixed at
1993–94 so that year was assigned an index level of 100. The current base year is 2011-
2012.[1].
 The Eight Core Industries comprise nearly 40.27% of the weight of items included in the
Index of Industrial Production (IIP). These are Electricity , steel, refinery products, crude
oil, coal, cement, natural gas and fertilisers.
 Recent revision of IIP released by CSO with 2004–05 as the base year comprises 682
items. As per chief statistician T C A Anant, this index shall give a better picture of
growth in various sectors of the economy, because it is broader and includes
technologically advanced goods such as cell phones and iPods. The previous base year
(1993–94) was not usable as the list contained an array of outdated items such as
typewriters and tape recorders.
 Weighted arithmetic mean of quantity relatives with weights being allotted to various
items in proportion to value added by manufacture in the base year by using Laspeyres'
formula.
 where I is the index, Ri is the production relative of the ith item for the month in
question and Wi is the weight allotted to it.
2. GDP (GROSS DOMESTIC PRODUCT):

 Gross domestic product is the best way to measure a country's economy. GDP is the
total value of everything produced by all the people and companies in the country. It
doesn't matter if they are citizens or foreign-owned companies. If they are located
within the country's boundaries, the government counts their production as GDP.

 The gross domestic product (GDP) is one of the primary indicators used to gauge the
health of a country's economy. It represents the total dollar value of all goods and
services produced over a specific time period; you can think of it as the size of the
economy. Usually, GDP is expressed as a comparison to the previous quarter or year.
For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy
has grown by 3% over the last year. The United States has a GDP of $18,869.4 billion as
of the fourth quarter of 2016, according to the Bureau of EconomicAnaysis.

 Measuring GDP is complicated (which is why we leave it to the economists), but at its
most basic, the calculation can be done in one of two ways: either by adding up what
everyone earned in a year (income approach), or by adding up what everyone spent
(expenditure method). Logically, both measures should arrive at roughly the same total.

 The income approach, which is sometimes referred to as GDP(I), is calculated by adding

up total compensation to employees, gross profits for incorporated and non
incorporated firms, and taxes less any subsidies. The expenditure method is the more
common approach and is calculated by adding total consumption, investment,
government spending, and net exports.

 The components of GDP are:

Personal Consumption Expenditures plus Business Investment plus Government

Spending plus (Exports minus Imports).

Now that you know what the components are, it's easy to calculate a country's gross
domestic product using this standard formula: C + I + G + (X-M)

3. WPI (WHOLESALE PRICE INDEX)

 The Wholesale Price Index (WPI) is the price of a representative

basket of wholesale goods. Some countries (like the Philippines) use WPI changes as a
central measure of inflation.But now India has adopted new CPI to measure inflation.
However, United States now report a producer price index instead.
  WPI in India is published by the Office of Economic Adviser, Ministry of Commerce and
Industry.
 WPI is the primary measure that is used by the Indian central government for
ascertaining inflation as WPI in contrast to CPI accounts for changes in price at an early
distribution stage.WPI index in fact includes all transactions at first point of bulk sale in
the domestic market. Provisional WPI for all of the commodities is released on 14th of
every month (the next working day, if 14th of the month is a national holiday). The
base year for the WPI index has been revised for the seventh time from the earlier
2004-2005 to 2011-12 to better capture changes in the economy.
 The Wholesale Price Index or WPI is "the price of a representative basket of wholesale
goods". Some countries use the changes in this index to measure inflation in their
economies, in particular India – The Indian WPI figure was released weekly on every
Thursday .
 The wholesale price index (WPI) is based on the wholesale price of a few relevant
commodities of over 240 commodities available. The commodities chosen for the
calculation are based on their importance in the region and the point of time the WPI is
employed. For example in India about 435 items were used for calculating the WPI in
base year 1993-94 while the advanced base year 2004-05 uses 676 items.[1] .Currently
the base year has been revised from 2004-05 to 2011-12 by the Office of Economic
Advisor(OEA), Department of Industrial Policy and Promotion, Ministry of Commerce
and Industry to align it with the base year of other macro economic indicators like the
Gross Domestic Product(GDP)and Index of Industrial Production(IIP).[2]

4. CPI (CONSUMER PRICE INDEX)

 A consumer price index (CPI) measures changes in the price level of market
basket of consumer goods and servicespurchased by households.
 The CPI is a statistical estimate constructed using the prices of a sample of
representative items whose prices are collected periodically. Sub-indices and sub-sub-
indices are computed for different categories and sub-categories of goods and services,
being combined to produce the overall index with weights reflecting their shares in the
total of the consumer expenditurescovered by the index. It is one of several price
indices calculated by most national statistical agencies. The annual percentage change in
a CPI is used as a measure of inflation. A CPI can be used to index (i.e., adjust for the
effect of inflation) the real value of wages, salaries, pensions, for regulating prices and
for deflating monetary magnitudes to show changes in real values. In most countries,
the CPI, along with the population census, is one of the most closely watched national
economic statistics.
 The index is usually computed monthly, or quarterly in some countries, as a weighted
average of sub-indices for different components of consumer expenditure, such as food,
 housing, shoes, clothing, each of which is in turn a weighted average of sub-sub-indices.
At the most detailed level, the elementary aggregate level, (for example, men's shirts
sold in department stores in San Francisco), detailed weighting information is
unavailable, so indices are computed using an unweighted arithmetic or geometric
mean of the prices of the sampled product offers. (However, the growing use
of scanner data is gradually making weighting information available even at the most
detailed level.) These indices compare prices each month with prices in the price-
reference month. The weights used to combine them into the higher-level aggregates,
and then into the overall index, relate to the estimated expenditures during a preceding
whole year of the consumers covered by the index on the products within its scope in
the area covered. Thus the index is a fixed-weight index, but rarely a true Laspeyres
index, since the weight-reference period of a year and the price-reference period,
usually a more recent single month, do not coincide. It takes time to assemble and
process the information used for weighting which, in addition to household expenditure
surveys, may include trade and tax data.
 Ideally, the weights would relate to the composition of expenditure during the time
between the price-reference month and the current month. There is a large technical
economics literature on index formulae which would approximate this and which can be
shown to approximate what economic theorists call a true cost of living index. Such an
index would show how consumer expenditure would have to move to compensate for
price changes so as to allow consumers to maintain a constant standard of living.
Approximations can only be computed retrospectively, whereas the index has to appear
monthly and, preferably, quite soon. Nevertheless, in some countries, notably in the
United States and Sweden, the philosophy of the index is that it is inspired by and
approximates the notion of a true cost of living (constant utility) index, whereas in most
of Europe it is regarded more pragmatically.
 The coverage of the index may be limited. Consumers' expenditure abroad is usually
excluded; visitors' expenditure within the country may be excluded in principle if not in
practice; the rural population may or may not be included; certain groups such as the
very rich or the very poor may be excluded. Saving and investment are always excluded,
though the prices paid for financial services provided by financial intermediaries may be
included along with insurance.
 The CPI statistics cover professionals, self-employed, poor, unemployed and retired
people in the country. People not included in the report are nonmetro populations,
farm families, armed forces, and people serving in prison and those in mental hospitals.
 The CPI represents the cost of a basket of goods and services across the country on a
monthly basis. Those goods and services are broken into eight major groups:

• Food and beverages

• Housing
 • Apparel

• Transportation

• Medical care

• Recreation

• Education and communication

• Other goods and services

 CPI and WPI will reflect the economic indicator of inflation.

 REVIEW
OF
LITERATURE
International Journal of Marketing, Financial Services & Management
Research____________________ ISSN 2277- 3622
Vol.2, No. 8, August (2013)
Online available at www.indianresearchjournals.com
85

1. The Effect of Economic Indicators on the Volatility of Indian Stock Market:

Using Independent Component Regression

*Ranajit Chakrabarty **Asima Sarkar

 This paper studies the impact of economic indicators on the volatility of the Indian stock
market.

 Volatility of the most characterizing indicator of the Indian stock market i.e. Nifty has
been calculated by using a GARCH (1,1) model. Twelve economic indicators have been
taken to see the effect of them on the GARCH volatility of the Indian stock market
indicator i.e. Nifty. Since for GDP, only quarterly data is available, for rest of the
indicators quarterly average have been taken for the study.

 While using the linear regression model taking GARCH Volatility of Nifty as the
dependent variable and the 12 economic indicators as the independent variables,
multicollinearity among most of the economic indicators (7 out of 12) is experienced, so
it is not possible to drop all of these variables.

 Analyzing the data it has been found that no economic indicators are following Normal
distribution. To eradicate the multicollinearity, an Independent Component Analysis
(ICA) has been adopted to get the independent components of those economic
indicators which are showing high multicollinearity.

 After taking the monthly data of the rest of the 11 indicators, the same set of analyses
have been performed and has been seen that the result of the Independent Component
Regression has been improved.

 Leading economic indicators have significant role to play for the overall movement of
the stock market volatility.

 which means that keeping a close watch on these economic indicators, a recession or a
boom in the market can be predicted.
 2. The effect of Macroeconomic Determinants on the Performance of the
Indian Stock Market

Samveg Patel

 The study investigates the effect of macroeconomic determinants on the performance

of the Indian Stock Market using monthly data over the period January 1991 to
December 2011 for eight macroeconomic variables, namely, Interest Rate, Inflation,
Exchange Rate, Index of Industrial Production, Money Supply, Gold Price, Silver Price &
Oil Price, and two stock market indices namely Sensex and S&P CNX Nifty. By applying
Augmented Dickey Fuller Unit root test, Johansen Cointegration test, Granger Causality
test and Vector Error Correction Model (VECM), the study found that Interest Rate is
I(0); Sensex, Nifty, Exchange Rate, Index of Industrial Production, Gold Price, Silver Price
and Oil Price are I (1); and Inflation and Money Supply are I (2).

 It also found the long run relationship between macroeconomic variables and stock
market indices. The study also revealed the causality run from exchange rate to stock
market indices to IIP and Oil Price.

 First, exchange rate contains some significant information to forecast stock market
performance. Therefore, Reserve Bank of India should try to maintain a healthy
exchange rate.

 Second, as Index of Industrial Production is a highly significant factor, policy makers

should try to support industry growth through appropriate policy.

 Third, Money supply and Inflation are major factors affecting stock markets

117
ISSN: 0971-1023
NMIMS Management Review
Volume XXII August 2012
[email protected]
 3. Impact of macroeconomic indicators on Indian capital markets

Karam Pal and Ruhee Mittal

Haryana School of Business,
Guru Jambheshwar University of Science and Technology, Hisar, India

 Purpose – The purpose of this paper is to examine the long-run relationship between
the Indian capital markets and key macroeconomic variables such as interest rates,
inflation rate, exchange rates and gross domestic savings (GDS) of Indian economy.

 Design/methodology/approach – Quarterly time series data spanning the period from

January 1995 to December 2008 has been used. The unit root test, the co-integration
test and error correction mechanism (ECM) have been applied to derive the long run
and short-term statistical dynamics.

 Findings – The findings of the study establish that there is co-integration between
macroeconomic variables and Indian stock indices which is indicative of a long-run
relationship. The ECM shows that the rate of inflation has a significant impact on both
the BSE Sensex and the S&P CNX Nifty.

 Interest rates on the other hand, have a significant impact on S&P CNX Nifty only.
However, in case of foreign exchange rate, significant impact is seen only on BSE Sensex.
The changing GDS is observed as insignificantly associated with both the BSE Sensex and
the S&P CNX Nifty. The paper, on the whole, conclusively establishes that the capital
markets indices are dependent on macroeconomic variables even though the same may
not be statistically significant in all the cases.

 Originality/value – This study emphasises on the impact of macroeconomic variables on

the stock market performance of a developing economy, whose performance is
measured by these variables.

APJEM
Arth Prabandh: A Journal of Economics and Management
Vol.2 Issue 11 November 2013, ISSN 2278-0629
Pinnacle Research Journals 9
http://www.prj.co.in
 4. A STUDY ON IMPACT OF MACRO-ECONOMIC VARIABLES ON INDIAN
STOCK MARKET VOLATILITY

Simran Waraich

Amanjot Kaur Sodhi

 Stock prices and their volatility have now become the widespread features of securities
markets.

 The growing linkages of stock market indices with inflation, liquidity, growth rate, crude
oil prices, exchange rates etc. have given volatility a new dimension - influence of
macroeconomic variables.

 This research paper revisits the relationship between stock price and some key macro-
economic variables in India for the period 2010-2015 using quarterly time series data.

 The results of this study should not be treated as conclusive. There are other important
factors like cost of equity capital, asset valuation, industry analysis, a firm's
management and operational efficiency etc., that account for any changes in the stock
prices. Any investor while making investment decisions must consider all relevant
factors and sources of information.
Volume 4, Issue 4, April 2016

5. A Study on the Volatility and Returns of the Indian Banking Sector Index with
Reference to NSE Nifty

International Journal of Advance Research in Computer Science and Management Studies

Research Article / Survey Paper / Case Study

Available online at: www.ijarcsms.com

Dr. Prema Chandran

Associate Professor in Finance
Amity Global Business School
Bangalore – India

 This paper is a humble attempt to measure the volatility of the Bank index stocks and
compare it with that of the volatility of NIFTY.

 Stock markets in general are considered volatile and volatility plays a key role in
measuring the riskreturn trade-offs. While there are so many factors that make the
stock market volatile, one is very curious to understand if the volatility of the stock
market in India is in line with the volatility of the different sectors in India, in this case
the banking sector.

 Estimating volatility enables the pricing of securities and, understanding stock market
volatility or individual stock price volatility enables good decisions on the part of
investors. Investors who are risk-averse would not be happy to invest in a highly
fluctuating stock, whereas those with a thirst for riskiness would happily invest in a
highly volatile market.

 Volatility is simply a measure of variability or dispersion from the mean values. In this
study standard deviation and individual beta values have been calculated to get an idea
of the volatility.

 Banks in India as in any country are highly regulated and the macro level decisions of the
economy could have a direct impact on the banking sector.
International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org Volume 3 Issue 3ǁ March. 2014ǁ PP.33-39
www.ijbmi.org 33 | Page

6. CASH RESERVE RATIO IMPACT ON STOCK MARKET (INDIA) IN LONG RUN

K.RAVI TEJA*; MANDARAPU TEJASWI**;

BANDLA MADHAVI***; G.UJWALA****

*MBA II YEAR
MET INSTITUTE OF MANAGEMENT,
BHUJBAL KNOWLEDGE CITY
NASIK, MAHARASHTRA, INDIA

**MBA I YEAR
ST. PIOUS X P.G COLLEGE FOR WOMEN (MBA)
NACHARAM, HYD, AP, INDIA

***MBA I YEAR
VIGNAN’S NIRULA INST... OF TECH... FOR WOMEN
PEDDAPALAKALURU, GUNTUR, AP, INDIA

****MBA I YEAR
KASTURBA GANDHI COLLEGE FOR WOMEN
WEST MARREDPALLY, SEC-BAD, AP, INDIA

 The following paper tries to examine cash reserve ratio effect on stock market returns in
India. Also this paper attempts to investigate relative other factors which influence stock
market returns in India. The following are the different determinants which we have
considered Inflation, Cash balance of scheduled and commercial banks with RBI, Repo
rate, Reverse repo rate, Index of industrial product, Domestic institutional investment,
Foreign institutional investment, Bank nifty and Nifty prices.

 In India cash reserve ratio decision is taken by Reserve Bank of India which is also known
as central bank of India. And also Reserve Bank of India takes decisions on repo rate,
reverse repo rate & statutory liquidity ratio. Any fluctuations in cash reserve ratio will be
having direct impact on stock market and on overall economy of the nation. During this
 analysis we have taken yearly basis database of different determinants which effects
directly or indirectly on stock market returns. Cash reserve ratio is generally changed by
RBI to control the inflation.

 RBI liquidity control tool CRR had played vital role in influencing the interest rates and
flow of liquidity from the deposit holders into the banks.

 IIP is heavily depending on the interest rates and the CRR. It has been observed that
whenever inflation is moving upside due to the excess liquidity, increase of CRR is
fueling the repo-rate and reverse repo-rates to go up side: which is affecting the
borrowing cost for the industries.
7. Dynamic Linkages Between Cnxbank Nifty and Exchange Rates: Evidence
From Indian Market

International Journal of Business and Management Invention ISSN (Online): 2319 – 8028,
ISSN (Print): 2319 – 801X www.ijbmi.org Volume 3 Issue 3ǁ March. 2014ǁ PP.33-39

N.S.Nataraja1, Ganesh.L2 and Sunil Kumar1

1(General Management, Alliance University, Bangalore, India)
2(Institute of Management, Christ University, Bangalore, India)

 The present study deals with the examination of the causal relationship between foreign
exchange rates and Bank stock prices in India from January 2010 to December 2013
using the information of daily closing observations of the NSE Bank Nifty and the
nominal Indian Rupee per US dollar exchange rates.

 The exchange rate of Indian rupee and US Dollar has been taken for the study, because,
US dollar is considered as a prominent currency for foreign trade. Statistical tests are
applied to study the behavior and dynamics of both the series.

 The study also investigates the effect of both the time series mutually. The results of the
study indicate both Bank Nifty returns and Exchange Rates are not normally distributed.
Also it was found that, time series; Exchange rate and Bank Nifty returns are stationary
at the level form itself. A negative correlation is observed between Bank Nifty returns
and Exchange Rates.

 In order to determine the direction of influence between the two series, Granger
Causality test is applied.

 It proved unidirectional causality running from exchange rate to Banks stock returns,
that is, an increase in the exchange rate caused a decline in the Banks stocks prices.
8. IMPACT OF GROSS DOMESTIC PRODUCT ON INDIAN STOCK MARKET- AN
EMPIRICAL STUDY

Published in 2012

 Stock market is considered as the barometer for the economic health of any country.

 The various phases of business and economic cycle are also reflected in the movement
of stock market index. The epoch making changes in the stock market substantiates the
relationship between the economic factors of a country and stock market movement.

 Thus the movement of macroeconomic factors plays an imperative role in influencing

the movement of any stock market index. Among many macroeconomic factors, the
movement of GDP plays a crucial role.

 The Gross Domestic Product reflects a consolidated report of the performance of the
Indian economy. The ongoing changes in the Indian stock market and changes in the
GDP in the last decade lead to many empirical studies.

 This paper employs quarterly data from June 2000 to March 2010 to study the
relationship between the NIFTY Index and GDP.

 The cointegration and Pairwise granger causality test surfaces the fact that there is a
bidirectional causal relationship between GDP and NIFTY, i.e. changes in stock market
will affect GDP and vice versa. Government and policy makers should give importance to
this bi-directional causal relationship while framing policies.

 The result shows very clearly there is cointegration between the Nifty and GDP.

 The result found out that there is a bidirectional causal relationship between GDP and
nifty, i.e. changes in stock market will affect GDP and vice versa.
9. A STUDY OF IMPACT OF MACROECONOMIC VARIABLES ON PERFORMANCE
OF NIFTY:

Date Written: March 21, 2013

*Saurabh Singh
Assistant Professor, Graduate School of Business, Devi Ahilya Vishwavidyalaya, Indore –
452001 (M.P.) India
**Dr. L.K Tripathi
HOD, School of Commerce, Devi Ahilya Vishwavidyalaya, Indore – 452001 (M.P.) India
***Arpan Parashar
Assistant Professor, Rukmani Devi Panna Lal Laddha Maheshwari College, Devi Ahilya
Vishwavidyalaya, Indore – 452001 (M.P.) India

 The paper tries to examine the primary factors responsible for affecting National Stock
Exchange (NSE) in India.

 Further this paper attempts to investigate the relative influence of the factors affecting
NSE and thereby categorizing them.

 It is a well known fact that dollar price or money exchange rate, IIP numbers and WPI
values has a great influence on Nifty therefore; this research identifies the level of
influence of exchange rate, IIP numbers and WPI values on Nifty.

 For establishing the relationship Regression Analysis has been used by using SPSS.

 The results suggest that values of IIP, WPI and Exchange Rate significantly affect the
performance of Nifty.
 RESEARCH
METHODOLOGY
STATEMENT OF PROBLEM:

THERE IS AN EFFECT OF ECONOMIC INDICATORS (IIP,GDP,WPI AND CPI) ON BANK NIFTY.

RESEARCH OBJECTIVE:

1. To study the relationship between economic indicators (IIP, GDP, WPI, CPI) and Bank
Nifty.
2. Understanding the casual relationship between these economic indicators (IIP, GDP,
WPI, CPI) and Bank Nifty.

RESEARCH PLAN:

 From the very huge population available, we have considered the data of past six year
i.e. from 2011-12 to 2016-17 as sample for this study and analysis.

 After the collection of the required data, the available data is converted into the
quarterly data for the better and efficient study and presentation. The type of the year
which is considered here is the financial year i.e. from April to March.

 The type of analysis which is considered here is Regression Analysis so that the
relationship between the economic indicators and the Bank Nifty can be identified and
can be understood by considering the independent factors i.e. economic indicators and
the dependent factor i.e. Bank Nifty for the study and analysis.

SOURECES OF DATA:

 Here the sources considered for the data collection are secondary in nature. These data
is considered from the released data by the RBI (Reserve Bank Of India) and CSO
(Central Statistical Organization).

 The data of past six years i.e. from 2011-12 to 2016-17 is considered regarding the IIP,
GDP, WIP, CPI And Bank Nifty.
 DATA ANALYSIS
AND
INTERPRETATION
Year Quarter IIP GDP(in billion) WPI CPI Bank Nifty

2011-12 Q1 234.6266667 19717.87 152.5333333 89.13333333 5585.96

Q2 230.68 19109.98 155.1 92.26666667 5229.63

Q3 233.41 20737.12 157.2333333 94.6 4944.25

Q4 250.32 21501.59 159.6666667 95.33333333 5202.95

2012-13 Q1 230.77 20779.26 164.0333333 98.2 5093.83

Q2 228.66 20468.18 167.3 102.2666667 5341.49

Q3 237.84 21743.09 168.7 104.4333333 5752.01

Q4 255.12 22474.99 170.4333333 105.6333333 5907.52

2013-14 Q1 222.89 22164.90 171.9666667 107.5 5859.06

Q2 228.08 21990.40 178.4 112.3333333 5747.16

Q3 227.81 23122.19 180.6 116.1333333 6153.52

Q4 244.57 23566.20 179.6 114.2666667 6280.58

2014-15 Q1 226.47 23774.18 181.9333333 116.1333333 7145.52

Q2 220.83 23809.06 185.3 120.3666667 7141.68

Q3 220.29 24595.10 181.2 120.8 8232.42

Q4 250.68 25011.90 176.3333333 120.6666667 8642.37

2015-16 Q1 232.65 25579.49 177.8333333 122.6666667 8332.39

Q2 235.03 25760.44 176.8666667 125.9333333 8216.17

Q3 227.83 26389.05 177.0666667 127.9666667 7950.32

Q4 247.45 27176.16 174.9333333 128 7419.64

2016-17 Q1 229.57 27514.07 180.3 130.4 7960.4

Q2 227.71 27505.60 183.5666667 133.3 8643.06

Q3 225.26 28144.40 183.4666667 133.4 8329.72

Q4 251.47 28690.32 185.3 132.6 8751.6

 IIP DATA

YEAR: 2011-12

2012 2012 2012 2011 2011 2011 2011 2011 2011 2011 2011
Item 2011
:03 :02 :01 :12 :11 :10 :09 :08 :06 :05 :04
Descrip :07
(MA (FEB (JAN (DEC (NO (OCT (SEP (AU (JUN (MA (APR
tion (JUL)
R) ) ) ) V) ) ) G) ) Y) )
Basic 163. 152. 156. 156. 148. 147. 140. 144. 149. 145. 149. 145.
Goods 3 9 9 6 0 3 2 7 1 9 4 2
Capital 313. 261. 256. 263. 257. 225. 286. 261. 248. 325. 248. 264.
Goods 2 8 8 5 3 4 8 6 5 2 6 8
Consum
er
Durable 327. 297. 287. 298. 297. 288. 308. 278. 304. 281. 282. 290.
s 1 5 4 0 8 1 4 0 6 7 6 5
Consum
er 204. 199. 202. 208. 184. 168. 177. 167. 182. 179. 179. 180.
Goods 7 2 2 0 7 4 8 2 0 1 3 8
Consum
er Non-
durable 156. 160. 168. 172. 139. 121. 126. 123. 133. 138. 138. 137.
s 2 2 4 3 9 0 0 3 5 4 4 3
Interme
diate 155. 145. 146. 149. 141. 133. 139. 142. 146. 144. 143. 144.
Goods 1 4 5 7 4 8 7 6 2 1 7 4
1319 1217 1218 1248 1169 1084 1178 1117 1163 1214 1142 1163
.6 .0 .2 .1 .1 .0 .9 .4 .9 .4 .0 .0
Averag 263. 243. 243. 249. 233. 216. 235. 223. 232. 242. 228. 232.
e 92 4 64 62 82 8 78 48 78 88 4 6
YEAR: 2012-13

2013 2013 2013 2012 2012 2012 2012 2012 2012 2012 2012
Item 2012
:03 :02 :01 :12 :11 :10 :09 :08 :06 :05 :04
Descrip :07
(MA (FEB (JAN (DEC (NO (OCT (SEP (AU (JUN (MA (APR
tion (JUL)
R) ) ) ) V) ) ) G) ) Y) )

Basic 168. 150. 162. 160. 149. 153. 144. 149. 150. 151. 155. 148.
Goods 6 2 7 1 6 7 0 0 6 2 9 0

Capital 343. 285. 250. 260. 235. 241. 248. 250. 234. 235. 227. 207.
Goods 2 5 5 7 4 1 7 0 0 0 3 9
Consum
er
Durable 311. 289. 285. 273. 301. 336. 303. 280. 307. 307. 310. 306.
s 2 7 4 9 1 2 9 7 0 2 1 2
Consum
er 208. 200. 207. 200. 184. 191. 177. 173. 183. 185. 187. 187.
Goods 4 7 2 6 2 7 8 3 3 8 1 5
Consum
er Non-
durable 167. 165. 176. 171. 137. 134. 127. 130. 134. 137. 138. 140.
s 6 4 2 5 8 5 8 7 3 7 3 5

Interme
diate 158. 144. 151. 149. 139. 146. 142. 146. 146. 145. 148. 141.
Goods 3 3 7 4 4 7 1 4 3 4 6 8

1357 1235 1233 1216 1147 1203 1144 1130 1155 1162 1167 1131
.3 .8 .7 .2 .5 .9 .3 .1 .5 .3 .3 .9

Averag 271. 247. 246. 243. 229. 240. 228. 226. 231. 232. 233. 226.
e 46 16 74 24 5 78 86 02 1 46 46 38
YEAR: 2013-14

2014 2014 2014 2013 2013 2013 2013 2013 2013 2013 2013
Item 2013
:03 :02 :01 :12 :11 :10 :09 :08 :06 :05 :04
Descrip :07
(MA (FEB (JAN (DEC (NO (OCT (SEP (AU (JUN (MA (APR
tion (JUL)
R) ) ) ) V) ) ) G) ) Y) )

Basic 176. 156. 167. 164. 153. 153. 153. 150. 152. 148. 155. 150.
Goods 3 9 3 9 6 1 6 4 1 4 5 1

Capital 303. 235. 240. 254. 235. 247. 232. 245. 271. 219. 218. 207.
Goods 8 3 7 3 6 2 4 0 3 6 8 3
Consum
er
Durable 274. 261. 261. 229. 235. 295. 271. 257. 277. 276. 253. 276.
s 4 2 6 1 8 8 6 4 6 1 5 8
Consum
er 203. 190. 206. 191. 167. 182. 179. 171. 182. 183. 174. 190.
Goods 9 2 2 3 8 1 6 7 1 1 7 6
Consum
er Non-
durable 175. 162. 184. 176. 140. 137. 143. 137. 144. 146. 143. 156.
s 9 1 2 3 8 0 1 8 2 2 5 4
Interme
diate 160. 150. 158. 157. 144. 150. 148. 152. 151. 147. 150. 145.
Goods 3 0 2 2 6 6 3 0 0 3 2 3

1294 1155 1218 1173 1078 1165 1128 1114 1178 1120 1096 1126
.6 .7 .2 .1 .2 .8 .6 .3 .3 .7 .2 .5

Averag 258. 231. 243. 234. 215. 233. 225. 222. 235. 224. 219. 225.
e 92 14 64 62 64 16 72 86 66 14 24 3
YEAR: 2014-15

2015 2015 2015 2014 2014 2014 2014 2014 2014 2014 2014
Item 2014
:03 :02 :01 :12 :11 :10 :09 :08 :06 :05 :04
Descrip :07
(MA (FEB (JAN (DEC (NO (OCT (SEP (AU (JUN (MA (APR
tion (JUL)
R) ) ) ) V) ) ) G) ) Y) )
Basic 180. 164. 175. 174. 168. 167. 161. 164. 162. 163. 167. 163.
Goods 8 6 4 6 2 9 3 0 8 5 1 0
Capital 331. 254. 270. 269. 252. 239. 260. 220. 263. 270. 228. 235.
Goods 5 9 5 7 1 2 9 6 2 7 0 0
Consum
er
Durable 261. 251. 246. 208. 201. 191. 241. 218. 220. 211. 262. 255.
s 9 2 6 0 6 8 5 8 9 9 7 4
Consum
er 202. 199. 202. 192. 165. 149. 172. 161. 171. 166. 182. 181.
Goods 7 6 3 4 1 0 4 1 3 9 7 5
Consum
er Non-
durable 179. 179. 184. 186. 150. 132. 145. 138. 151. 149. 151. 152.
s 3 2 8 2 6 0 0 3 7 0 0 2
Interme
diate 164. 151. 158. 159. 151. 145. 151. 151. 155. 151. 155. 149.
Goods 8 8 3 0 4 5 3 9 4 2 5 7
1321 1201 1237 1189 1089 1025 1132 1054 1125 1113 1147 1136
.0 .3 .9 .9 .0 .4 .4 .7 .3 .2 .0 .8
Averag 264. 240. 247. 237. 217. 205. 226. 210. 225. 222. 229. 227.
e 2 26 58 98 8 08 48 94 06 64 4 36
Year: 2015-16

2016 2016 2016 2015 2015 2015 2015 2015 2015 2015 2015
Item 2015
:03 :02 :01 :12 :11 :10 :09 :08 :06 :05 :04
Descrip :07
(MA (FEB (JAN (DEC (NO (OCT (SEP (AU (JUN (MA (APR
tion (JUL)
R) ) ) ) V) ) ) G) ) Y) )

Basic 188. 173. 178. 175. 167. 175. 168. 170. 171. 171. 177. 167.
Goods 7 5 8 8 3 0 0 0 6 9 4 3

Capital 280. 231. 212. 219. 190. 278. 287. 267. 289. 265. 234. 248.
Goods 7 1 2 5 6 6 2 5 9 4 9 0
Consum
er
Durable 288. 277. 260. 242. 226. 272. 262. 256. 244. 246. 252. 258.
s 3 2 5 5 1 2 0 0 2 1 4 7
Consum
er 204. 200. 202. 198. 166. 176. 174. 170. 173. 179. 178. 186.
Goods 0 8 1 6 8 3 5 8 2 0 7 5
Consum
er Non-
durable 170. 170. 178. 181. 143. 138. 139. 137. 145. 152. 149. 157.
s 6 5 9 2 3 3 8 0 1 4 5 9
Interme
diate 171. 159. 162. 161. 149. 154. 154. 156. 158. 153. 157. 153.
Goods 8 2 8 4 2 7 0 2 5 1 4 2

1304 1212 1195 1179 1043 1195 1185 1157 1182 1167 1150 1171
.1 .3 .3 .0 .3 .1 .5 .5 .5 .9 .3 .6

Averag 260. 242. 239. 235. 208. 239. 237. 231. 236. 233. 230. 234.
e 82 46 06 8 66 02 1 5 5 58 06 32
Year: 2016-17

2017 2017 2017 2016 2016 2016 2016 2016 2016 2016 2016
Item 2016
:03 :02 :01 :12 :11 :10 :09 :08 :06 :05 :04
Descrip :07
(MA (FEB (JAN (DEC (NO (OCT (SEP (AU (JUN (MA (APR
tion (JUL)
R) ) ) ) V) ) ) G) ) Y) )

Basic 198. 177. 188. 185. 175. 182. 174. 176. 174. 182. 184. 175.
Goods 2 9 4 7 3 4 7 0 5 2 4 4

Capital 285. 222. 235. 212. 217. 203. 225. 207. 204. 222. 205. 185.
Goods 7 9 5 4 9 3 2 7 6 8 6 2
Consum
er
Durable 322. 274. 278. 220. 247. 273. 298. 261. 258. 259. 267. 289.
s 7 5 0 9 3 8 4 4 4 5 2 2
Consum
er 209. 189. 203. 186. 175. 173. 185. 171. 175. 184. 180. 182.
Goods 2 5 2 2 5 8 1 8 6 1 8 8
Consum
er Non-
durable 164. 155. 173. 172. 147. 134. 140. 136. 142. 154. 146. 140.
s 2 8 5 5 0 2 2 3 8 2 5 6
Interme
diate 174. 158. 160. 159. 152. 158. 157. 161. 164. 162. 164. 156.
Goods 1 8 0 2 8 7 4 4 1 3 0 7

1354 1179 1238 1136 1115 1126 1181 1114 1120 1165 1148 1129
.1 .4 .6 .9 .8 .2 .0 .6 .0 .1 .5 .9

Averag 270. 235. 247. 227. 223. 225. 236. 222. 233. 229. 225.
e 82 88 72 38 16 24 2 92 224 02 7 98
 GDP DATA

Year Quarter IIP GDP(in billion) WPI CPI Bank Nifty

2011-12 Q1 234.6267 19717.87 152.5333 89.13333 5585.96
Q2 230.68 19109.98 155.1 92.26667 5229.63
Q3 233.41 20737.12 157.2333 94.6 4944.25
Q4 250.32 21501.59 159.6667 95.33333 5202.95
2012-13 Q1 230.77 20779.26 164.0333 98.2 5093.83
Q2 228.66 20468.18 167.3 102.2667 5341.49
Q3 237.84 21743.09 168.7 104.4333 5752.01
Q4 255.12 22474.99 170.4333 105.6333 5907.52
2013-14 Q1 222.89 22164.90 171.9667 107.5 5859.06
Q2 228.08 21990.40 178.4 112.3333 5747.16
Q3 227.81 23122.19 180.6 116.1333 6153.52
Q4 244.57 23566.20 179.6 114.2667 6280.58
2014-15 Q1 226.47 23774.18 181.9333 116.1333 7145.52
Q2 220.83 23809.06 185.3 120.3667 7141.68
Q3 220.29 24595.10 181.2 120.8 8232.42
Q4 250.68 25011.90 176.3333 120.6667 8642.37
2015-16 Q1 232.65 25579.49 177.8333 122.6667 8332.39
Q2 235.03 25760.44 176.8667 125.9333 8216.17
Q3 227.83 26389.05 177.0667 127.9667 7950.32
Q4 247.45 27176.16 174.9333 128 7419.64
2016-17 Q1 229.57 27514.07 180.3 130.4 7960.4
Q2 227.71 27505.60 183.5667 133.3 8643.06
Q3 225.26 28144.40 183.4667 133.4 8329.72
Q4 251.47 28690.32 185.3 132.6 8751.6
 CPI DATA

2011-12 Apr-11 88.4

May-11 89.1
Jun-11 89.9
Jul-11 91.2
Aug-11 92.2
Sep-11 93.4
Oct-11 94.5
Nov-11 94.9
Dec-11 94.4
Jan-12 94.8
Feb-12 95.2
Mar-12 96

2012-13 Apr-12 96.7

May-12 98.3
Jun-12 99.6
Jul-12 101.1
Aug-12 102.4
Sep-12 103.3
Oct-12 104
Nov-12 104.5
Dec-12 104.8
Jan-13 105.1
Feb-13 105.8
Mar-13 106
2013-14 Apr-13 106.4
May-13 107.2
Jun-13 108.9
Jul-13 110.7
Aug-13 112.1
Sep-13 114.2
Oct-13 115.5
Nov-13 117.4
Dec-13 115.5
Jan-14 114.2
Feb-14 114
Mar-14 114.6

2014-15 Apr-14 115.4

May-14 116
Jun-14 117
Jul-14 119.5
Aug-14 120.7
Sep-14 120.9
Oct-14 121
Nov-14 121.1
Dec-14 120.3
Jan-15 120.3
Feb-15 120.6
Mar-15 121.1
2015-16 Apr-15 121.5
May-15 122.4
Jun-15 124.1
Jul-15 124.7
Aug-15 126.1
Sep-15 127
Oct-15 127.7
Nov-15 128.3
Dec-15 127.9
Jan-16 128.1
Feb-16 127.9
Mar-16 128

2016-17 Apr-16 129

May-16 130.3
Jun-16 131.9
Jul-16 133
Aug-16 133.5
Sep-16 133.4
Oct-16 133.8
Nov-16 133.6
Dec-16 132.8
Jan-17 132.4
Feb-17 132.6
Mar-17 132.8
 WPI DATA

YEAR: 2016-17

Mar Nov Aug May

Feb- Jan- Dec- Oct- Sep- Jul- Jun- Apr-
- - - -
201 201 201 201 201 201 201 201
201 201 201 201
7 7 6 6 6 6 6 6
7 6 6 6
ALL
COMMODIT 185. 185. 185. 183. 183. 183. 183. 183. 184. 182. 180. 177.
IES 3 5 1 3 5 6 2 3 2 9 2 8

YEAR: 2016-17

Mar Nov Aug May

Feb- Jan- Dec- Oct- Sep- Jul- Jun- Apr-
- - - -
201 201 201 201 201 201 201 201
201 201 201 201
6 6 5 5 5 5 5 5
6 5 5 5
ALL
COMMODIT 175. 174. 175. 176. 177. 176. 176. 176. 177. 179. 178. 176.
IES 3 1 4 8 5 9 5 5 6 1 0 4

YEAR: 2014-15

Mar Nov Aug May

Feb- Jan- Dec- Oct- Sep- Jul- Jun- Apr-
- - - -
201 201 201 201 201 201 201 201
201 201 201 201
5 5 4 4 4 4 4 4
5 4 4 4
ALL
COMMODIT 176. 175. 177. 178. 181. 183. 185. 185. 185. 183. 182. 180.
IES 1 6 3 7 2 7 0 9 0 0 0 8
YEAR: 2013-14

Mar Nov Aug May

Feb- Jan- Dec- Oct- Sep- Jul- Jun- Apr-
- - - -
201 201 201 201 201 201 201 201
201 201 201 201
4 4 3 3 3 3 3 3
4 3 3 3
ALL
COMMODIT 180. 179. 179. 179. 181. 180. 180. 179. 175. 173. 171. 171.
IES 3 5 0 6 5 7 7 0 5 2 4 3

YEAR: 2012-13

Mar Nov May Mar

Feb- Jan- Dec- Oct- Sep- Aug- Jul- Jun-
- - - -
201 201 201 201 201 201 201 201
201 201 201 201
3 3 2 2 2 2 2 2
3 2 2 2
ALL
COMMODITI 163.
170. 170. 170. 168. 168. 168. 168. 167. 165. 164. 163. 5
ES 1 9 3 8 8 5 8 3 8 7 9

YEAR: 2011-12

Mar Nov Aug May

Feb- Jan- Dec- Oct- Sep- Jul- Jun- Apr-
- - - -
201 201 201 201 201 201 201 201
201 201 201 201
2 2 1 1 1 1 1 1
2 1 1 1
ALL
COMMODIT 161. 159. 158. 157. 157. 157. 156. 154. 154. 153. 152. 152.
IES 0 3 7 3 4 0 2 9 2 1 4 1
 HYPOTHESIS FORMULATION

H0 : There is no impact of the Economic Indicators on Bank Nifty.

H1 : There is significant impact of Economic Indicators (IIP, GDP, WPI, CPI) on Bank Nifty.

REGRESSION ANALYSIS

 In statistical modeling, regression analysis is a statistical process for estimating the

relationships among variables.

 It includes many techniques for modeling and analyzing several variables, when the
focus is on the relationship between a dependent variable and one or
more independent variables (or 'predictors').

 More specifically, regression analysis helps one understand how the typical value of the
dependent variable (or 'criterion variable') changes when any one of the independent
variables is varied, while the other independent variables are held fixed.

 Regression analysis is widely used for prediction and forecasting

 One of the primary advantages of regression-based forecasting techniques is that they

use research and analysis to predict what is likely to happen in the next quarter, year or
even farther into the future.

 Regression analysis is also used to understand which among the independent variables
are related to the dependent variable, and to explore the forms of these relationships.

 Here in our study Bank Nifty is considered as DEPENDENT VARIABLE, as we are

considering the effect in it due to economic indicators.

 Whereas, the economic indicators considered here amounts to INDEPENDENT FACTORS

under regression analysis study. Here in our analysis we are considering IIP (index of
industrial production), GDP (gross domestic product), WPI (wholesale price index) and
CPI (consumer price index) as economic indicators and analysis would be done to
examine the effect of these economic indicators on Bank Nifty.
 DATA TABLE

Year Quarter IIP GDP(in billion) WPI CPI Bank Nifty

2011-12 Q1 234.6267 19717.87 152.5333 89.13333 5585.96
Q2 230.68 19109.98 155.1 92.26667 5229.63
Q3 233.41 20737.12 157.2333 94.6 4944.25
Q4 250.32 21501.59 159.6667 95.33333 5202.95
2012-13 Q1 230.77 20779.26 164.0333 98.2 5093.83
Q2 228.66 20468.18 167.3 102.2667 5341.49
Q3 237.84 21743.09 168.7 104.4333 5752.01
Q4 255.12 22474.99 170.4333 105.6333 5907.52
2013-14 Q1 222.89 22164.90 171.9667 107.5 5859.06
Q2 228.08 21990.40 178.4 112.3333 5747.16
Q3 227.81 23122.19 180.6 116.1333 6153.52
Q4 244.57 23566.20 179.6 114.2667 6280.58
2014-15 Q1 226.47 23774.18 181.9333 116.1333 7145.52
Q2 220.83 23809.06 185.3 120.3667 7141.68
Q3 220.29 24595.10 181.2 120.8 8232.42
Q4 250.68 25011.90 176.3333 120.6667 8642.37
2015-16 Q1 232.65 25579.49 177.8333 122.6667 8332.39
Q2 235.03 25760.44 176.8667 125.9333 8216.17
Q3 227.83 26389.05 177.0667 127.9667 7950.32
Q4 247.45 27176.16 174.9333 128 7419.64
2016-17 Q1 229.57 27514.07 180.3 130.4 7960.4
Q2 227.71 27505.60 183.5667 133.3 8643.06
Q3 225.26 28144.40 183.4667 133.4 8329.72
Q4 251.47 28690.32 185.3 132.6 8751.6
 SUMMARY OUTPUT

REGRESSION STATISTICS

Multiple R 0.923179261
R Square 0.852259948
Adjusted R Square 0.821156779
Standard Error 572.6032942
Observations 24

ANOVA

df SS MS F Significance F

0.00000000113283
Regression 4 35936445.41 8984111.353 27.40106
Residual 19 6229616.119 327874.5326
Total 23 42166061.53
 Coefficie Standard P- Lower Upper Lower Upper
nts Error t Stat value 95% 95% 95.0% 95.0%
- - - -
545.475 4725.133 0.11544 0.909 10435.2 9344.34 10435.2 9344.34
Intercept 5674 617 13 307 9387 2732 9387 2732
- - - -
0.73581 14.42978 0.05099 0.959 30.9377 29.4660 30.9377 29.4660
IIP 0917 668 2501 864 0147 7964 0147 7964
- -
GDP(in 0.13358 0.247185 0.54043 0.595 0.38377 0.65095 0.38377 0.65095
billion) 8613 003 9799 173 5543 277 5543 277
- - - -
26.8265 35.49347 0.75581 0.459 101.115 47.4621 101.115 47.4621
WPI 7141 589 697 028 2701 2725 2701 2725
- -
78.9354 65.00240 1.21434 0.239 57.1161 214.987 57.1161 214.987
CPI 53 942 6571 493 532 0592 532 0592
 RESIDUAL OUTPUT

Observation Predicted Bank Nifty Residuals

1 4859.800168 726.1598319
2 4959.973206 269.6567942
3 5302.28207 -358.0320704
4 5384.574456 -181.6244562
5 5411.605886 -317.775886
6 5604.969957 -263.4799574
7 5901.998287 -149.9882872
8 6035.280134 -127.7601339
9 6123.780477 -264.7204767
10 6305.589938 -558.4299378
11 6697.921581 -544.4015805
12 6624.384462 -343.8044623
13 6750.237245 395.2827547
14 7002.89075 138.7892496
15 7252.488388 979.9316123
16 7405.835629 1236.534371
17 7612.554457 719.8355428
18 7918.764252 297.4057477
19 8163.178908 -212.8589081
20 8313.752432 -894.1124321
21 8417.52548 -457.1254803
22 8559.04194 84.01805981
23 8656.754833 -327.0348329
24 8598.065062 153.534938
 Residuals
1500

1000

500

0
Residuals
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
-500

-1000

-1500
 INTERPREATATION

 As the value of f is less than 0.05, H1 is accepted i.e. there is a significant impact of
Economic Indicators on Bank Nifty.

R square:

 R-squared is a statistical measure of how close the data are to the fitted regression line.
It is also known as the coefficient of determination, or the coefficient of multiple
determination for multiple regression.

 R2 is a statistic that will give some information about the goodness of fit of a model. In
regression, the R2 coefficient of determination is a statistical measure of how well the
regression line approximates the real data points. An R2 of 1 indicates that the
regression line perfectly fits the data.

 The value of R square describes the goodness of the fit to the data.

 When the value of it is nearer to 1, it shows the good fit. And when the value is

HERE, IN OUR ANALYSIS THE VALUE OF R SQUARE IS NEARER TO ONE, I.E. 0.85. THUS IT SHOWS
THE GOOD FIT AND LESS VARIATION. THE REGRESSION LINE FITS WELL THE DATA.

WE CAN CONCLUDE THAT 85% VARIATION IN THE NIFTY IS EXPLAINED BY CHANGES IN IIP, GDP,
WPI AND CPI- THE INDEPENDENT FACTORS OF OUR SYUDY.

Coefficients:

IIP -0.73581

GDP(in billion) 0.133589

WPI -26.8266
CPI 78.93545
 1. IIP:

With one unit increase in IIP, bank nifty will decrease by 0.73581 units. And with one
unit decrease in IIP, bank nifty will increase by 0.73581 units. There would be inverse
relationship between them.

2. GDP:

With one unit increase in GDP, bank nifty will increase by 0.133 units. And there would
be reduction of 0.133 units due to one unit decrease in GDP.

3. WPI:

Due to one unit increase in WPI, bank nifty will decrease by 26.82 units and vice versa.

4. CPI:

There will be increment in the value of bank nifty by 78.93 units due to one unit
increased in CPI. It shows the positive relation between CPI and BANK NIFTY.

Residuals:

 The residuals shows how far away the actual data points are from predicted data points.

 The difference between the observed value of the dependent variable (y) and the
predicted value (ŷ) is called the residual (e). Each data point has one residual. Residual =
Observed value - Predicted value. e = y - ŷ Both the sum and the mean of the
residuals are equal to zero.
 FINDINGS,
CONCLUSION,
AND
RECOMMENDATION
FINDINGS AND CONCLUSION:

 As the value of F is less than 0.05, so here null hypothesis i.e. H0 is rejected and H1 is
acceped.

 And from the results of the regression analysis, we can conclude that there is a significant
impact of Economic Indicators(IIP, GDP, WPI, CPI) on Bank Nifty.
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Inflation may impact Bank Nifty, bank stocks

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