Lkp Project.docx

Karnatak Law Society’s

Gogte Institute of Technology (Approved by AICTE, Permanently Affiliated and Autonomous Institution under VTU Belagavi)

Department of MBA “Jnana Ganga”, Udyambag, Belagavi – 590008, Karnataka, India

SUMMER PROJECT ON “EVALUATION OF STOCK MARKET MOVEMENT WITH RESPECT TO CURRENCY FLUCTUATIONS” AT LKP SECURITIES LTD

Submitted by KIRAN CHOUDHARI 2GI15MBA16

Govindraj Mane Professor KLS, GIT

Mr.Ravi Kiran Regional Manager LKP Securities Ltd

Academic Year: 2015-2016

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CERTIFICATE This is to certify that, KIRAN CHOUDHARI bearing USN 2GI15MBA16 is a bonafide student of Master of Business Administration (MBA) course of KLS, Gogte Institute of Technology, Department of MBA, batch of (1st) affiliated to Visvesvaraya Technological University (VTU), Belagavi. The summer project is undertaken by him for a period of 6 weeks under the supervision of Prof. Govindraj Mane partial fulfillment of the requirements for the award of the degree of MBA of VTU Belagavi.

Signature of the Internal Guide

Signature of HOD

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Signature of Principal

DECLARATION I, KIRAN CHOUDHARI, hereby declare that the summer project undertaken at LKP Securities ltd, prepared by me under the guidance of Prof. Govindraj Mane and external assistance by Mr.Ravi Kiran I also declare that this summer project is submitted adhering Institute and University regulations towards the partial fulfillment for the award of the degree of Master of Business Administration by VTU Belagavi. I have undergone in plant for a period of 6 weeks. I further declare that this report is based on the original study undertaken by me and has not been submitted for the award of any degree from any other university/Institution Place: Belagavi

Signature of the Student

Date:

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ACKNOWLEDGEMENT No work is said to be complete without thanking the people who have helped me in perceiving any job. So this acknowledgement is for those people who have played their role in completion of my summer project. The project would not have been completed without the kind cooperation and help of certain individuals to whom I owe this heartfelt gratitude. I extend my sincere thanks to my bellowed Principal Dr. A. S. Deshpande, Gogte Institute of Technology, Belagavi. I also dedicate my sincere thanks to Dr. P M Kulkarni, Head of the Department, Department of MBA, Gogte Institute of Technology, Belagavi. I would like to express my sincere gratitude to my Prof. Govindraj Mane for his valuable guidance in the completion of this project successfully. I would like to extend my sincere gratitude to Mr.Ravi Kiran, for his constant support for carrying out this project in his organization. I also express thanks to all the faculty members for their valuable suggestions, encouragements, guidance and support. I would also like to thank all the respondents for extending the required timely help. I would like to thank my family who were a constant source of encouragement and provided me with the necessary resources. I would lastly thank non teaching staf and all my friends who were directly and indirectly involved with their help and guidance in successful completion of my study.

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TABLE OF CONTENTS CHAPTER NUMBER

CONTENT

CHAPTER-I Introduction to the summer project

PAGE NUMBER 1-2

a) General introduction about summer project

2-2

b) Title of the summer project

3-3

c) Need for the study

3-3

d) Objectives of the study

3-3

e) Scope of the study

4-4

f) Research methodology

4-4

g) Literature review

5-6

h) Limitation of the study

7-7

CHAPTER-II Industry and company profile a) Industry profile

8—11

b) Company profile

12-12

c) Promoters, vision, mission, and quality policy

13-14

d) Area of operation and products and service offered

15-17

e) Infrastructure facilities

18-18

f) Competitor’s information

19-19

g) SWOT analysis

20-21

h) Future growth and prospectus

21-21

i) Company’s financial statements analysis

22-27

CHAPTER-III Theoretical background of the study

28-29

CHAPTER-VI Analysis and interpretation of the data with Graph

30-51

CHAPTER-V Summary of finding, suggestions ,and conclusion

52-55

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LIST OF TABLES AND CHARTS Sl no

LIST OF TABLES

Page no

2.1

Balance sheet of LKP ltd

22-23

2.2

Profit and Loss account of LKP ltd

24-24

2.3

Table showing Gross Profit Ratio

25-25

2.4

Table showing Net Profit Ratio

25-25

2.5

Table Showing Current Ratio

26-26

2.6

Table Showing Debt Equity Ratio

26-26

2.7

Table showing Debtors Turnover Ratio

27-27

4.1

Table showing USD/INR monthly Average for the year 2016

31-31

4.2

Table showing Sensex monthly Average for the year 2016

31-31

4.3

Table showing Average INR/USD and Sensex for the year 2016

32-32

4.4

Table showing percentage change in Dollar and Sensex

32-32

4.5

Table showing correlation coefficient between change in dollarand sensex

33-33

movements 4.6

Table showing Euro/INR monthly average for the year 2016

36-36

4.7

Table showing percentage change in Euro and sensex

36-36

4.8

Table showing correlation coefficient between change in euro and sensex

37-37

movements 4.9

Table showing GBP/INR monthly average for the year 2016

40-40

4.10

Table showing percentage change in GBP and sensex

40-40

4.11

Table showing correlation coefficient between GBP and sensex movements

41-41

4.12

Table showing CHF/INR monthly average for the year 2016

44-44

4.13

Table showing percentage change in CHF and sensex

44-44

4.14

Table showing correlation coefficient between CHF and sensex movements

45-45

4.15

Table showing JPY/INR monthly average for the year 2016

48-48

4.16

Table showing percentage change in JPY and sensex

48-48

4.17

Table showing correlation coefficient between JPY and sensex movements

49-49

SL no 4.1 4.2

LIST OF CHARTS Table showing sensex movements for the year 2016 Table showing INR/USD movements for the year 2016

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Page no 34-34 34-34

4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10

Table showing sensex movements for the year 2016 Table showing INR/EURO movements for the year 2016 Table showing sensex movements for the year 2016 Table showing INR/GBP movements for the year 2016 Table showing sensex movements for the year 2016 Table showing INR/CHF movements for the year 2016 Table showing sensex movements for the year 2016 Table showing INR/JPY movements for the year 2016

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38-38 38-38 42-42 42-42 46-46 46-46 50-50 50-50

CHAPTER - I INTRODUCTION TO SUMMER PROJECT

a) GENERAL INTRODUCTION ABOUT THE SUMMER PROJECT

The Forex market is a market where trading happens between different types of international currencies. The trading happens between different currencies where buyers and sellers of different countries come and trade in forex market.

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Foreign exchange rate is the charge of a foreign currency comparative to domestic currency. The exchange of currencies is completed in the foreign exchange market, which is one of the main monetary markets. A foreign swap bond typically states the currency pair, the amount of the contract, the established rate of exchange etc. There are primarily two strategies used by the governments to find the value of home currency in relation to other currencies: fixed and floating exchange rate Fixed exchange rate regime: Fixed exchange rate is when a currency’s charge is maintain at a set ratio to the value of one more currency or to any further measure of price. While the price of currency rise over the permitted limits, the government sells the currency in the open market, thereby increasing its supply and reducing value

Floating exchange rate regime: A floating exchange rate is determined the supply and demand for the currency in a market. It is termed as “self-correcting”, if any variation in the value caused by differences in supply and demand will automatically be corrected by the market

b) TITLE OF THE PROJECT “Evaluation of stock market movements with respect to currency fluctuations” c) NEED FOR THE STUDY 1. To get the knowledge of securities and investment. LKP SECURITIES LTD

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2. To know about the factors that are affecting for the investment decision of investors. 3. To get the knowledge of investment decision. d) OBJECTIVES OF THE STUDY:1. To study about the stock market of India 2. To find the correlation between change in indices and exchange rates. 3. To examine how the stock prices and exchange rates are connected to each other.

e) SCOPE OF STUDY: A study was conducted in “LKP Securities Ltd. "To evaluate the stock market movements with respect to currency fluctuation”. The Indian stock market (Sensex) and the exchange rates. This study was mainly concentrated to observe how change in exchange rates and stock price LKP SECURITIES LTD

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are correlated for one year i.e., from Jan 2016 to Dec 2016 this will help the domestic as well as international investors to hedge and diversify the portfolio based on the risk and return associated with stocks and the exchange rates. f) METHODOLOGY: For this study, the data have been collected mainly from secondary sources Secondary Data: The collection of secondary data was done mainly through the Internet. Various sources of information and data relating to the topic were referred to. A statistical method that is average price calculation and the correlation coefficient is used to find the relationship between two variables.

g) LITERATURE REVIEW Many factors, such as company performance, dividends, stock prices of other nations, gross domestic product, exchange rates, interest rates, current account, money supply, employment, their information etc. have an impact on daily stock prices. The issue of inter temporal relation between stock returns and exchange rates has turn into the considerable interest, since they both play important roles in influencing the development of a country’s economy. In addition, the LKP SECURITIES LTD

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association between stock returns and foreign exchange rates has frequently been utilized in forecasting the future trends for each other by investors. Moreover, the continuing increases in the world trade and capital actions have made the exchange rates as one of the main determinants of business profitability and equity prices. Makar and Huffman (2008, pp 219-231) examined the existing relationship between stocks returns of UK multinationals and changes in the principal exchange rate in which each firm is most exposed using a unique dataset of recently available accounting disclosures. Their findings suggest that there are a greater number of firms with significant exposures using this unique firm principal currency data, when compared with estimates of exposures using a broad exchange rate index data. This means that most firms are concerned mainly with the principal currency with which they are exposed. Entorf and Jamin (2007, pp 355, 362) analyzed value changes of companies in the German stock market in response to the US dollar. Using time series and panel data of German Deutsche Aktien Xchange companies, Deutsche Mark/dollar rates and 22 macroeconomic factors, they found out that the time variant exposure of German stock market companies were quite unstable. The ratio of exports/gross domestic product (GDP) positively affects dollar sensitivity; In a study carried out by Bae, Kwon and Li (2008, pp 1) to investigate the effects of exchange rate changes on security returns and how economic and translation exposure components of exchange rate risk are priced across countries. Employing America Depositary Receipts (ADR) of four countries, they came out with four major findings. They found a negative relationship between exchange rate changes and the underlying shares returns of ADRs, but a positive relationship to ADR returns observed in the market. Hsin et al (2007, pp 385) investigated the absence of the prevailing evidence on the large exposure of U.S stocks to exchange rate risk by considering a firm‟s pre-hedging currency exposure to its expected hedging activity and the delayed reaction of its stocks to currency movements. LKP SECURITIES LTD

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Tai (2005, pp 455) investigate the likelyhood of asymmetric currency exposure using U.S bank stock returns. His findings showed that more than 80% of the samples are significantly exposed to exchange rate variations in an asymmetric way based on test of multifactor model with multivariate

GARCH

(Generalised

Autoregressive

Conditional

Heteroscedasticity)

parameterization. This finding is strong to whether contemporaneous or lagged exchange rate variations are used to estimate the model. Chen and So (2002, pp 411) studied the relationship between exchange rate inconsistency and the volatility of the returns of U.S multinationals. Using samples of U.S multinationals with sales in the Asian-Pacific region, how variations in exchange rates around the 1997 Asian financial crises affected the sensitivity of those firms to stock market risk was looked at. Chamberlain, Howe and Popper (1997, pp 871) in their study, examined “foreign exchange exposure of a sample of U.S and Japanese firms. They made estimates of exchange rate sensitivity of the equity returns of the U.S bank holding companies and compare them to those of the Japanese banks using daily data. Their results show that a large fraction of the U.S companies stock returns move with the exchange rate, while few of the observed Japanese returns do so.

h) LIMITATION OF THE STUDY: The following are the main limitations encountered in this project. (a) The scope of study is vast and the time that could be allocated was very limited (6 weeks). Hence it was not possible to do analyze on a daily basis. (b) Financial information in any company has its own limitations are crucial and very confidential. (c) Since analysis is based on opinions and attitudes, the result at best are near truth. (d) Conclusions are drawn on the basis of limited data available. LKP SECURITIES LTD

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CHAPTER - II INDUSTRY AND COMPANY PROFILE

a) INDUSTRY PROFILE:  INTRODUCTION TO INDIAN STOCK MARKET: Capital market is the foundation of any nation's economy. It encourages change of reserve funds to speculations. money market can be delegated primary and secondary market. The new issue of securities happens in primary market and trading of shares happens in secondary market. Primary market is otherwise called new issue market. Value first enter capital market however interest in primary market. In India, normal financial specialists taking an interest in the primary market is huge. The quantity of organizations offering equity in primary markets increased consistently in the post freedom period till the year 1995. After 1995, there is a consistent droop LKP SECURITIES LTD

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experienced by the primary market offering value. The fundamental explanation behind droop is absence of speculators' trust in the essential market. So it is essential to comprehend the causes and measures of recovery of financial specialists' certainty prompting to capital activating and interest in right roads making, monetary development in the nation. In earlier times, to buy and sell the stocks the investors have to assemble in a stock exchange but now with huge development in IT sector these transactions are carried out easily using Internet. With this development almost all transactions are done through internet this will help stock exchange to become paperless.



Pre-Independence Scenario - Establishment of Different Stock Exchanges

Year 1874: Brokers used to gather at a street (Dalal) for transacting purpose. Year 1875: Bombay stock exchange has been established. Year 1894: "The Ahmadabad Share and Stock Brokers’ Association" has been established. Year 1908:"The Calcutta Stock Exchange Association" was formed. Year 1920: Madras Stock Exchange transacted with 100 brokers. But after 3 years in 1923 with a recession the number of brokers has fallen to 3. Year 1934: Lahore stock exchange has formed, Year 1940: Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was established Year 1944: Hyderabad stock exchange has been established. 

Post independence scenario:

The misery saw after the Independence prompted to conclusion of a ton of trades in the nation. Lahore Stock Exchange was shut down after the parcel of India, and later on converged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was enlisted in 1957 and got acknowledgment just by 1963. A large portion of alternate Exchanges were in a hopeless state till LKP SECURITIES LTD

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1957 when they connected for acknowledgment under Securities Contracts (Regulations) Act, 1956. The Exchanges that were perceived under the Act were:

1. Bombay 2. Calcutta 3. Madras 4. Ahmadabad 5. Delhi 6. Hyderabad 7. Bangalore 8. Indore

Presently , there are 21 perceived stock trades in India which exclude Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).Government arrangements amid 1980's additionally assumed an imperative part in the improvement of the Indian Stock Markets.

Indian stock exchange allows a member broker to perform following activities:    

Act as an agent, Buy and sell securities for his clients and charge commission for the same, Act as a trader or dealer as a principal, Buy and sell securities on his own account and risk.

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b) COMPANY PROFILE: Background and Inception of the LKP:

LKP Securities was begun as one of India's first securities business houses in 1948 is today one of the nation's biggest multi-dimensional money related administrations assemble. LKP. LKP Finance Limited is a Non Banking Finance Company (NBFC) enlisted with Reserve Bank of India and a recorded open constrained organization having a total assets of Rs.142 crores as on FY10. It is the India’s first financial group to be awarded the prestigious ISO 9002 certified KPMG Quality Registrar, USA, for certain businesses.

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Since 1948, LKP keeps on giving customers a solitary source equipped for addressing every one of their needs by its Equities markets, Debt markets, Corporate Finance, Investment Banking, Merchant Banking, Wealth Management or Commodities

LKP Securities Limited and its associates enjoy the following registrations & memberships: 1. 2. 3. 4. 5. 6.

Category I Merchant Bankers with SEBI. Membership of BSE & NSE (Capital & Debt Market). AMFI registered all India Mutual Fund Distributors. Member of Commodity Exchanges MCX, NCDX . ICEX and DGCX (Dubai). Member of NSE for Interest Rate Futures. Member of MCX SX and NSE Currency.

c) Promoters Vision, Mission and Quality policy of LKP Securities: Promoters 1) Mr. M V DOSHI (chairman) Mr. M v Doshi is the chairman of the company. he is with the company from 1982. He has 34 years of experience in the finance field. 2) Mr. PRATIK DOSHI (Director) Mr Pratik Doshi has 9 years of experience in foreign exchange field. 3) Mr. VINEET N. SUCHANTI (Director) Mr Vineet Suchanti has 14 years of experience in the finance field. LKP SECURITIES LTD

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Vision: "To be the leading emerging markets financial services group driven by innovation, delivering superior value for all stakeholders globally"

Mission: Providing complete financial care driven by the core values of diligence and transparency. Quality policy: LKP is committed to client satisfaction by offering quality services meeting their specifications and expectations at competitive prices by customer- employee in involvement and adopting good quality management systems.

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It aims to create and maintain safe and healthy working conditions, protect the environment, strive for continual improvement of company personnel, quality and process of services and meet regulatory requirements.

d) Areas of Operation – Global/National/regional: LKP Presence in 600 + locations, 70,200 retail and high net worth clients giving nationwide access. Pan India footprint with 540 branches in 147 cities and strong network to facilitate research. Network of 520 outlets across 220 cities in India with 545 sub brokers and 60 branches. Head Office:

Registered office:

10th Floor, Nariman Bhavan,

203, Embassy Center,

Vinay k. shah marg

Nariman Point,

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Nariman Point,

Mumbai-400 021.

Mumbai -400 021, Maharashtra. Email: www.lkpsec.com

Products & Service profile of LKP: Equities Retail: LKP offers a wide range of administrations that incorporates Equity Broking in Cash and Derivatives, Internet based exchanging, Demat administrations and Research administrations. At the point when customers manage LKP they are managing an expert agent who has incorporated hazard administration framework set up at Mumbai. Commodities: A sister concern of the famous and trusted LKP Group, Alpha Commodities offers a total bundle of customer benevolent administrations in the prospering Commodity Futures advertise. Items LKP SECURITIES LTD

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have dependably been the establishment of world exchange, and as they turn into an inexorably appealing speculation alternative, LKP at Alpha Commodities hope to guide and help financial specialist in all the conceivable approaches to help you in every one of your attempts in the product markets. Currency Derivatives: With the open of currency derivative , LKP offer its customers yet another portion for exchanging. Mutually controlled by SEBI and RBI furnishes brokers with another lucrative exchanging road. Mutual Funds & Insurance Advisory: LKP Investment Advisory Services Offer tailor-made riches administration to Retail, High Net worth Individual and Corporate Clients. Organization firmly trusts that Investment Planning is the venturing stone to accomplish one's monetary yearnings.

Currency Derivatives: With the launch of currency derivatives , LKP offers its customers yet another portion for exchanging. Mutually controlled by SEBI and RBI furnishes brokers with another lucrative exchanging road. Cash subsidiaries can be portrayed as a future contract between two gatherings, to purchase or offer the fundamental at a future date, for this situation the basic being a money. LKP offers cash subsidiary exchanging through NSE - Futures and Options, MCX-SX - Futures. The various services provided by LKP are: • Dematerialization of Shares. • Re materialization of Shares. • Pledging of Share. • Maintenance of beneficial Holdings. LKP SECURITIES LTD

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• •

Electronic Credit against Corporate Actions. SMS alerts on all transactions.

e) Infrastructural facilities of LKP:

All the Branches are connected internally via LAN and externally through VSAT or ISDN network to provide real time data transfer. Each branch having TV and other electronic medium to facilitate real time updates and dissemination of information to the customer. The employees are well trained and qualified Investment advisors to take care of the needs of the customer.

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f) Competitors Information: Today, LKP Securities Ltd. is a well-established brand among retail and individual investors in India, Even though LKP is facing high level competition in India. Following are the main competitors of LKP Securities Ltd. Competitors Si. No

Name Of Stock Brokers

1

Sharekhan

2

India Infoline

3

Karvy Stock Broking Ltd

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4

Motilal Oswal

5

Religar

6

Angel Broking

7

Reliance Money

8

Anand Rathi Securities Ltd

9

Geojit Financial Service

g) SWOT ANALYSIS OF LKP: Strengths:  Strong brand name. Because it established since from 1948.  Dedicated, intelligent and loyal staff.  Well-maintained infrastructure.  On-line trading products.  Experienced top management.  Dedicated Research team.

Weakness:  Time consuming process for account opening, resolving the problems of customers, etc.  Lack of awareness among south region customers.  Localized presence due to in sufficient investment for country wide expansion. LKP SECURITIES LTD

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 The Future prospects and growth in various field is as fallows  The company has a good network of franchisee and offices in north India and is planning open more offices in south India.

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Opportunities:  It can easily tap the retail investors with small saving through promotional channels like print media electronic media.  Product and service expansion.  Economy is growing at healthy rate leading to investment / capital requirement  Attract the customers who are dissatisfied with other brokers & DPs. Threats:  Aggressive special technique by close contenders may hamper LKP acknowledgment by new customers.  Exchange rate fluctuations  External changes (government, politics, taxes, etc)

h) Future growth and prospects for LKP: The company has a good network of franchisee and offices in north India and is planning open more offices in south India.

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i) FINANCIAL STATEMENT ANALYSIS Table no 2.1: showing the Balance Sheet of LKP Ltd (Rs in cr) Particulars Source of fund: Total Share Capital

March 2016

March 2015

March 2014

12.20

12.20

12.20

Equity Share Capital

12.20

12.20

12.20

Share application money

0.00

0.00

0.00

Preference Share Capital Reserves

0.00

0.00

0.00

144.69

146.10

146.00

0.00

0.00

0.00

Net worth

156.89

158.30

158.20

Secured Loans

27.13

62.31

40.19

Unsecured Loans

39.92

44.00

39.04

Total Debt

67.05

106.31

79.23

Total Liabilities

223.94

246.61

237.43

Gross Block

2.03

2.01

2.01

Less: Accum Depreciation Net Block

1.52

1.43

1.24

0.51

0.58

0.77

Revaluation Reserves

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Capital Work in Progress

0.00

0.00

0.00

Investments

76.82

70.64

36.84

Inventories

32.87

39.94

29.33

Sundry Debtors

10.42

11.54

0.38

Cash and Bank Balance

40.81

30.10

23.70

Total Current Assets

84.10

81.58

53.41

Loans and Advances

99.44

125.74

154.11

Fixed Deposits

0.00

0.00

0.00

183.54

207.32

207.52

Differed Credit

0.00

0.00

0.00

Current Liabilities

34.80

10.61

4.48

Provisions

2.12

3.31

3.22

Total CL & Provisions Net Current Assets

36.92

13.92

7.70

146.62

193.40

199.82

0.00

0.00

0.00

223.95

264.62

237.43

8.34

8.34

8.34

Total CA, Loans & Advances

Miscellaneous Expenses Total Assets Contingent Liabilities LKP SECURITIES LTD

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Book Value(Rs)

128.62

129.77

129.69

Source: Moneycontrol.com

Extract of Profit and Loss Account: Table no 2.2: showing the profit and loss account of LKP securities Particulars

March 2016

March 2015

March 2014

Sales Turnover

45.38

83.47

35.25

Excise Duty

0.00

0.00

0.00

Net Sales

45.38

83.47

35.25

Other Income

1.93

0.23

0.32

Stock Adjustments

0.00

0.00

0.00

Total Income

47.31

83.70

35.57

Employment Cost

5.78

5.69

5.07

Miscellaneous Expenses Total Expenses

12.84

38.14

3.82

18.62

43.83

8.89

Operating profit

26.76

39.64

26.36

PBDIT

28.69

39.87

26.68

Interest

16.73

17.35

19.45

PBDT

11.96

22.52

7.23

Deprecation

0.09

0.11

0.16

Income

Expenditure

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Profit before tax

11.87

22.41

7.07

Tax

3.00

4.67

-0.40

Reported net profit Source: Moneycontrol.com

8.87

17.74

7.48

1. Gross Profit Ratio: Table no 2.3: Gross Profit Ratio = Gross Profit / Net Sales Revenue

Year

Gross Profit

Net Sales revenue

GPR

2016

28.69

45.38

63.22

2015

39.87

83.47

47.76

2014

26.68

35.25

75.68

Gross profit ratio establishes relationship between gross profit and net sales. the gross profit ratio of the company 75.68 in 2014 it was reduced to 47.76 in 2015 and again it was raised to 63.22 in 2016 2) Net profit ratio Table no 2.4: Net profit ratio = Net profit / sales revenue Year 2016 2015 2014

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Net profit 8.87 17.74 7.48

Sales Revenue 45.38 83.47 35.25

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NPR 19.54 21.25 23.19

It shows the profitability position of the company. it indicates how much the company is able to earn after deducting all direct and indirect expenses. The net profit ratio was highest 23.19% in 2014 as compared 21.25 in 2015 and 19.54 in 2016.

Kjdri33) current ratio Table no 2.5: Current ratio= current assets/ current liabilities

Year 2016 2015 2014

Net profit 84.10 81.58 53.41

Sales Revenue 34.80 10.61 4.48

NPR 2.41 7.68 11.92

It expresses the relationship between current assets and current liabilities the current ratio of the company was continually decreasing from the year 2014 11.92 to 7.68 and in 2016, 2.41. 4) Debt Equity Ratio Table no 2.6: Debt equity ratio = Debt/Equity Table : 6 Year 2016 2015 2014

Debt 67.05 106.31 79.23

Equity 156.89 158.30 158.20

DER 0.42 0.67 0.50

Debt equity ratio indicates to what extent the firm depends upon outsiders for its existence. It is useful to owners to measure how much they have to invest to have control over the firm. In LKP the DER was high in 2014 and 2015 compared to 2016. LKP SECURITIES LTD

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5) Debtors Turnover Ratio Table no 2.7: Debtors’ Turnover Ratio = Net Credit Sales during the Year / Average Debtors

Year 2016 2015 2014

Net credit sales 45.38 83.47 35.25

Average Debtors 5.21 5.77 0.19

DTR 8.71 14.46 185.52

It establishes relationship between net credit sales and average receivables. In LKP the DTR was very high 185.52 in 2014 and it has come down to 14.46 in 2015 and 8.71 in 2016.

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CHAPTER III THEORETICAL BACKGROUND OF THE STUDY

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THEORETICAL BACKGROUND OF THE STUDY This study helps us to examine the impact of currency fluctuations on Indian stock market when there is fluctuation in a Rupee value against U S Dollar, EURO, POUND, FRANC, and YEN. To observe the impact I have collected data relating to sensex movements and rupee value against all the five currencies for the one whole year from January 2016 to December 2016. This data will help us to know what kind of variations that are happened in a stock market when the rupee is appreciated and when the rupee is depreciated. In the study with the collected data I have found the correlation and coefficient between the currency rate and sensex movements for the year 2016 and also the correlation between rupee and sensex for each month of 2016 from January to December with graphical representation.

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CHAPTER IV ANALYSIS AND INTERPRETATION OF THE DATA

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TABLE NO 4.1: USD/INR MONTHLY AVERAGE FOR THE YEAR 2016 MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

HIGHEST PRICE 68.265 68.909 68.360 66.852 67.780 68.223 67.555 67.370 67.148 67.005 68.881 68.598

LOWEST PRICE 66.120 67.485 66.120 66.014 66.225 66.441 66.600 66.560 66.250 66.362 66.217 67.308

AVERAGE PRICE 67.320 68.226 66.917 66.438 66.934 67.257 67.159 66.929 66.717 66.736 67.687 67.803

TABLE NO 4.2: SENSEX MONTHLY AVERAGE FOR THE YEAR 2016 MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

HIGH 26197.27 25002.32 25479.62 26100.59 26837.20 27105.41 28240.20 28532.25 29077.28 28477.65 28029.80 26803.76

LOW 23839.76 22494.61 23133.18 24523.20 25057.93 25911.33 27034.14 27627.97 27716.78 27488.30 25717.93 25753.74

AVERAGE 24779.65 23688.30 24811.95 25441.47 25693.69 26717.74 27713.41 28006.90 28502.55 28001.69 26718.09 26372.93

TABLE NO 4.3: AVERAGE INR/USD AND AVERAGE SENSEX FOR THE YEAR 2016 MONTH

INR/USD Average price

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AverageSensex

January 16 67.320 24779.65 February 16 68.226 23688.30 March 16 66.917 24811.95 April 16 66.438 25441.47 May 16 66.934 25693.69 June 16 67.257 26717.74 July 16 67.159 27713.41 August 16 66.929 28006.90 September 16 66.717 28502.55 October 16 66.736 28001.69 November 16 67.687 26718.09 December 16 67.803 26372.93 TABLE NO 4.4: PERCENTAGE CHANGE IN DOLLAR AND SENSEX Month January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16 Sources: Investing.com

% change in Dollar 2.52 0.49 -2.89 0.26 1.18 0.44 -1.26 0.48 -0.62 0.20 2.87 -0.94

% change in Sensex -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23 -4.57 -0.10

TABLE NO 4.5: CORRELATION COEFFECIENT OF CHANGE IN DOLLAR AND SENSEX MOVEMENTS %change in dollar (X) 2.52 0.49 -2.89 0.26 1.18 0.44 -1.26 0.48 -0.62 0.20 2.87

%change in Sensex (Y) -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23 -4.57

LKP SECURITIES LTD

X-Mx

Y-My

2.292 0.262 -3.118 0.032 0.952 0.212 -1.488 0.252 -0.848 -0.027 2.642

-5.032 -7.772 9.908 0.778 3.878 0.978 3.638 1.168 -2.322 -0.032 -4.832

(X-Mx)* (X-Mx) 5.256 0.069 9.719 0.001 0.907 0.045 2.213 0.064 0.718 0.001 6.983

Page 39

(Y-My)* (Y-My) 25.318 60.399 98.175 0.606 15.041 0.957 13.237 1.365 5.390 0.001 23.345

(X-Mx)* (Y-My) -11.535 -2.040 -30.889 0.025 3.694 0.208 -5.412 0.295 1.968 0.001 -12.768

-0.94

-0.10

2.76 ‘X’ values

3.14

Mean of X = X/n

-1.168

X=2.76

-0.362

1.363

0.131

0.422

27.338

243.965

-56.031

n=12

2.76/12

Mean= 0.23

n=12

3.14/12

Mean = 0.262

∑(X-Mx)*(X-Mx) = 27.338 ‘Y’ values Mean of Y= Y/n

Y=3.14

∑(Y-My)*(Y-My) = 243.965 X and Y combined N=12 ∑(X-Mx)(Y-My) = -56.031 Correlation coefficient = ∑(X-Mx)(Y-My) √∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My) = -56.031 √ (27.338)(243.965) = -0.6861

CHART NO 4.1: SENSEX MOVEMENTS FOR THE YEAR 2016

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Sensex 30000 25000 20000 15000

Sensex

10000 5000 0 6 6 6 6 6 6 16 16 v-16 t-16 16 l -16 -1 -1 -1 r-1 a r-1 eb-1 y cgpn n c o u a p e e u J O Ju A F Ja N S D A M M

CHART NO 4.2: INR/USD MOVEMENTS FOR THE YEAR 2016

INR/USD 69 68.5 68 67.5 67

INR/USD

66.5 66 65.5 65 6 16 v-16 16 16 l -16 16 y-16 r-16 r-16 16 16 t-1 cgpnnbc o u a p a e e e u u a J O J A F J N S D A M M

ANALYSIS AND INTERPRETATION In the year 2016 there was a negative correlation between the sensex movements and Rupee rate against dollars LKP SECURITIES LTD

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The sensex closed at 26626.46 on December. During the year the sensex hit a high of 29077.28 on September 2016 and a low of 22494.61 on February 2016. The total change % of sensex during the year was 3.14% The INR/USD closed at 67.955 on December 2016. During the year the rupee hit a high of 68.909 on February 2016 and a low of 66.014 on April 2016. The total chage % of Rupee to dollar was 2.76% in 2016. The chart shows whenever the rupee appreciated against dollar the sensex performed well and when rupee depreciated the sensex has fallen. This indicates the positive correlation between sensex and rupee and a negative correlation between sensex and dollar.

TABLE NO 4.6: EURO/INR MONTHLY AVERAGE FOR THE YEAR 2016 MONTHS January 16 LKP SECURITIES LTD

HIGH 74.7595

LOW 71.2410 Page 42

AVERAGE 73.1607

February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

77.8730 75.6575 76.2315 77.0260 76.9560 75.3970 76.2800 75.5175 74.8565 75.6305 73.4450

73.3240 72.4000 74.6280 74.3160 73.9470 73.4990 73.7990 73.9720 72.4860 71.8930 70.3540

75.7637 74.5559 75.3430 75.6229 75.6060 74.3055 74.9986 74.8117 73.5714 72.9913 71.4541

TABLE NO 4.7: PERCENTAGE CHAGE IN EURO AND SENSEX MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

% change in Euro 2.29 0.83 1.67 0.93 -1.68 0.20 -0.65 0.34 0.11 -2.12 -0.81 -1.61

% change in Sensex -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23 -4.57 -0.10

TABLE NO 4.8: CORRELATION COEFFECIENT OF CHANGE IN EURO AND SENSEX MOVEMNTS %change in dollar (X) 2.29 0.83 1.67 0.93 -1.68 0.20 -0.65 0.34 0.11 -2.12

%change in Sensex (Y) -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23

LKP SECURITIES LTD

X-Mx

Y-My

2.332 0.872 1.712 0.972 -1.638 0.242 -0.608 0.382 0.152 -2.078

-5.032 -7.772 9.908 0.778 3.878 0.978 3.638 1.168 -2.322 -0.032

(X-Mx)* (X-Mx) 5.437 0.760 2.930 0.944 2.684 0.058 0.370 0.146 0.023 4.319

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(Y-My)* (Y-My) 25.318 60.399 98.175 0.606 15.041 0.957 13.237 1.365 5.390 0.001

(X-Mx)* (Y-My) -11.732 -6.774 16.960 0.756 -6.354 0.236 -2.213 0.446 -0.352 0.066

-0.81 -1.61

-4.57 -0.10

-0.5

3.14

-0.768 -1.568

-4.832 -0.362

0.590 2.460

23.345 0.131

3.712 0.567

20.721

243.965

-4.682

‘X’ values Mean of X = X/n

X=-0.5

n=12

-0.5/12

Mean= -0.0416

n=12

3.14/12

Mean = 0.262

∑(X-Mx)*(X-Mx) = 20.721 ‘Y’ values Mean of Y= Y/n

Y=3.14

∑(Y-My)*(Y-My) = 243.965 X and Y combined N=12 ∑(X-Mx)(Y-My) = -4.682 Correlation coefficient = ∑(X-Mx)(Y-My) √∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My) = -4.682 √ (20.721)(243.965) = -0.0659 CHART NO 4.3: SENSEX MOVEMENTS FOR THE YEAR 2016

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Sensex 30000 25000 20000 15000

Sensex

10000 5000 0 6 6 6 6 6 6 16 16 v-16 t-16 16 l -16 -1 -1 -1 r-1 a r-1 eb-1 y cgpn n c o u a p e e u J O Ju A F Ja N S D A M M

CHART NO 4.4: INR/EURO MOVEMENTS FOR THE YEAR 2016

INR/EUR 77 76 75 74 73

INR/EUR

72 71 70 69 6 6 6 6 6 6 6 16 16 v-16 16 l -16 -1 t-1 y-1 pr-1 a r-1 eb-1 a n-1 cgpn c o u a e e u u J O J A F J N S D A M M

ANALYSIS AND INTERPRETATION

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In the year 2016 there was a negative correlation between the sensex movements and Rupee rate against Euro The sensex closed at 26626.46 on December. During the year the sensex hit a high of 29077.28 on September 2016 and a low of 22494.61 on February 2016. The total change % of sensex during the year was 3.14% The INR/EUR closed at 71.461 on December 2016. During the year it hit a high of 77.8730 in February 2016 and a low of 70.3540 in December 2016.the total % change of INR/EUR for the year was -0.5. The chart shows whenever the rupee appreciated against Euro the sensex performed well and when rupee depreciated the sensex has fallen. This indicates the positive correlation between sensex and rupee and a negative correlation between sensex and Euro.

TABLE NO 4.9: GBP/INR MONTHLY AVERAGE FOR THE YEAR 2016 LKP SECURITIES LTD

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MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

HIGH 98.619 99.544 96.700 97.545 99.241 101.049 90.236 89.555 89.188 86.180 86.032 86.909

LOW 95.580 94.540 93.971 93.348 95.559 89.116 86.251 85.984 85.972 78.817 81.399 82.883

AVERAGE 96.960 97.648 95.380 95.094 97.217 95.567 88.296 87.708 87.724 82.313 84.214 84.570

TABLE NO 4.10: PERCENTAGE CHANGE IN GBP AND SENSEX MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

%change in GBP -0.90 -1.85 0.25 2.02 0.24 -7.66 -1.89 -0.19 -1.84 -5.46 5.07 -2.26

% change in Sensex -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23 -4.57 -0.10

TABLE NO 4.11: CORRELATION OF COEFFECIENTS OF GBP AND SENSEX MOVEMENTS %change in %change in Euro (X) Sensex (Y) -0.90 -4.77 -1.85 -7.51 0.25 10.17 2.02 1.04 0.24 4.14 -7.66 1.24 -1.89 3.9 -0.19 1.43 LKP SECURITIES LTD

X-Mx

Y-My

0.306 -0.644 1.456 3.226 1.446 -6.454 -0.684 1.016

-5.032 -7.772 9.908 0.778 3.878 0.978 3.638 1.168

(X-Mx)* (X-Mx) 0.094 0.415 2.119 10.406 2.090 41.656 0.468 1.032

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(Y-My)* (Y-My) 25.318 60.399 98.175 0.606 15.041 0.957 13.237 1.365

(X-Mx)* (Y-My) -1.539 5.006 14.425 2.511 5.607 -6.314 -2.489 1.187

-1.84 -5.46 5.07 -2.26

-2.06 0.23 -4.57 -0.1

-14.47

3.14

-0.634 -4.254 6.276 -1.054

-2.322 -0.032 -4.832 -0.362

0.402 18.098 39.386 1.111

5.390 0.001 23.345 0.131

1.472 0.135 -30.323 0.381

117.277

243.965

-9.941

‘X’ values Mean of X = X/n

X=-14.47

n=12

-14.47/12

Mean= -1.20

∑(X-Mx)*(X-Mx) = 117.277 ‘Y’ values Mean of Y= Y/n

Y=3.14

n=12

3.14/12

Mean = 0.262

∑(Y-My)*(Y-My) = 243.965 X and Y combined N=12 ∑(X-Mx)(Y-My) = -9.941 Correlation coefficient = ∑(X-Mx)(Y-My) √∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My) = -9.941 √ (117.277) (243.965) = -0.0588 CHART 4.5: SENSEX MOVEMENTS FOR THE YEAR 2016

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Sensex 30000 25000 20000 15000

Sensex

10000 5000 0 6 6 6 6 6 6 16 16 v-16 t-16 16 l -16 -1 -1 -1 r-1 a r-1 eb-1 y cgpn n c o u a p e e u J O Ju A F Ja N S D A M M

CHART 4.6: INR/GBP MOVEMENTS FOR THE YEAR 2016

INR/GBP 100 95 90 85

INR/GBP

80 75 70 16 v-16 t-16 -16 -16 l -16 -16 y-16 r-16 r-16 -16 -16 cg p b n n a e Ju Oc Ju Ap Ma Fe Ja No Se D Au M

ANALYSIS AND INTERPRETATION

LKP SECURITIES LTD

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In the year 2016 there was a negative correlation between the sensex movements and Rupee rate against Pounds.(GBP) The sensex closed at 26626.46 on December. During the year the sensex hit a high of 29077.28 on September 2016 and a low of 22494.61 on February 2016. The total change % of sensex during the year was 3.14% The INR/GBP closed at 83.846 in December 2016.during the year it has hit a high of 101.049 in the month of june 2016 and a low of 78.817 in the month of oct 2016. The total change % of INR/GBP for the year 2016 was -14.47%. The chart shows whenever the rupee appreciated against GBP the sensex performed well and when rupee depreciated the sensex has fallen. This indicates the positive correlation between sensex and rupee and a negative correlation between sensex and GBP.

TABLE NO 4.12: CHF/INR MONTHLY AVERAGE FOR THE YEAR 2016 LKP SECURITIES LTD

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MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

HIGH 68.255 70.654 69.264 70.055 70.226 70.779 69.627 70.137 69.240 68.649 70.102 67.770

LOW 65.672 66.154 66.237 67.896 67.218 67.414 67.429 67.832 67.672 66.781 67.143 65.594

AVERAGE 66.859 68.799 68.213 68.912 68.367 69.394 68.394 68.889 68.510 67.608 67.903 66.469

TABLE NO 4.13: PERCENTAGE CHANGE IN CHF AND SENSEX FOR THE YEAR 2016 MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

% change in CHF 0.40 2.97 0.85 0.47 -2.27 2.24 -0.56 -1.01 0.64 -1.58 -0.01 -1.02

% change in Sensex -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23 -4.57 -0.10

TABLE NO 4.14: CORRELATION OF COEFFECIENTS OF CHF AND SENSEX MOVEMENTS %change in %change in X-Mx CHF (X) Sensex (Y) 0.4 2.97 0.85 0.47 -2.27 2.24 -0.56

-4.77 -7.51 10.17 1.04 4.14 1.24 3.9

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0.307 2.877 0.757 0.377 -2.363 2.147 -0.653

Y-My

-5.032 -7.772 9.908 0.778 3.878 0.978 3.638 Page 51

(X-Mx)

(Y-My)*

(X-Mx)*

(X-Mx)

(Y-My)

(Y-My)

0.094 8.275 0.573 0.142 5.585 4.608 0.427

25.318 60.399 98.175 0.6058 15.041 0.9571 13.237

-1.543 -22.36 7.497 0.293 -9.166 2.1 -2.377

-1.01 0.64 -1.58 -0.01 -1.02

1.43 -2.06 0.23 -4.57 -0.1

1.12 ‘X’ values

3.14

Mean of X = X/n

-1.103 0.65 -1.673 -0.103 -1.113

1.168 -2.322 -0.032 -4.832 -0.362

1.217 0.423 2.8 0.011 1.24 25.39

X=1.12

n=12

1.12/12

Mean= 0.0933

n=12

3.14/12

Mean = 0.262

∑(X-Mx)*(X-Mx) = 25.39 ‘Y’ values Mean of Y= Y/n

Y=3.14

∑(Y-My)*(Y-My) = 243.965 X and Y combined N=12 ∑(X-Mx)(Y-My) = -27.39 Correlation coefficient = ∑(X-Mx)(Y-My) √∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My) = -27.39 √ (25.39) (243.965) = -0.3480 CHART NO 4.7: SENSEX MOVEMENTS FOR THE YEAR 2016

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1.365 5.3901 0.001 23.345 0.1308 243.97

-1.289 -1.509 0.053 0.499 0.403 -27.39

Sensex 30000 25000 20000 15000

Sensex

10000 5000 0 6 6 6 6 6 6 16 16 v-16 t-16 16 16 -1 -1 -1 r-1 a r-1 eb-1 y cg- Jul pn n c o a p e e u O Ju A F Ja N S D A M M

CHART NO 4.8: CHF/INR MOVEMENTS FOR THE YEAR 2016

CHF/INR 69.5 69 68.5 68 67.5 67 66.5 66 65.5 65 64.5

CHF/INR

16 v-16 t-16 16 16 l -16 16 y-16 r-16 r-16 16 16 cgpbnnc o u a a p e e e u u a J O J A F J N S D A M M

ANALYSIS AND INTERPRETATION

LKP SECURITIES LTD

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In the year 2016 there was a negative correlation between the sensex movements and Rupee rate against Franc(CHF). The sensex closed at 26626.46 on December. During the year the sensex hit a high of 29077.28 on September 2016 and a low of 22494.61 on February 2016. The total change % of sensex during the year was 3.14% The INR/CHF has closed at 66.727 in December 2016. During the year it has it a high of 70.779 in June 2016 and a low of 68.255 in January 2016. The total change % of INR/CHF during the year was 1.12% The chart shows whenever the rupee appreciated against CHF the sensex performed well and when rupee depreciated the sensex has fallen. This indicates the positive correlation between sensex and rupee and a negative correlation between sensex and CHF.

TABLE NO 4.15: JPY/INR MONTHLY AVERAGE FOR THE YEAR 2016 LKP SECURITIES LTD

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MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 NovembOer 16 December 16

HIGH

LOW 0.5494 0.5571 0.5840 0.5883 0.6027 0.6062 0.6249 0.6467 0.6386 0.6326 0.5985 0.5715

0.5878 0.6169 0.6085 0.6250 0.6286 0.6818 0.6738 0.6717 0.6682 0.6579 0.6613 0.6026

AVERAGE 0.5691 0.5953 0.5925 0.6060 0.6146 0.6382 0.6463 0.6610 0.6545 0.6427 0.6236 0.5840

TABLE NO 4.16: PERCENTAGE CHANGE IN JPY AND SENSEX MONTHS January 16 February 16 March 16 April 16 May 16 June 16 July 16 August 16 September 16 October 16 November 16 December 16

% change in JPY 1.89 7.95 -2.78 6.12 -2.79 7.64 -0.09 -0.81 1.41 -3.12 -5.80 -3.22

% change in Sensex -4.77 -7.51 10.17 1.04 4.14 1.24 3.90 1.43 -2.06 0.23 -4.57 -0.10

TABLE NO 4.17: CORRELATION OF COEFFECIENTS OF JPY AND SENSEX MOVEMENTS % change in JPY

% change in Sensex

(X-Mx)

( Y-My)

(X-Mx)* (X-Mx)

(Y-My)* (Y-My)

(X-Mx)* (Y-My)

1.89 7.95 -2.78 6.12 -2.79 7.64 -0.09

-4.77 -7.51 10.17 1.04 4.14 1.24 3.9

1.357 7.417 -3.313 5.587 -3.323 7.107 -0.623

-5.032 -7.772 9.908 0.778 3.878 0.978 3.638

1.8405 55.007 10.978 31.211 11.045 50.505 0.3885

25.318 60.399 98.175 0.6058 15.041 0.9571 13.237

-6.826 -57.64 -32.83 4.3483 -12.89 6.9527 -2.268

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-0.81 1.41 -3.12 -5.8 -3.22 6.4

1.43 -2.06 0.23 -4.57 -0.1 3.14

-1.343 0.877 -3.653 -6.333 -3.753

1.168 -2.322 -0.032 -4.832 -0.362

1.8045 0.7685 13.347 40.111 14.088 231.093

1.365 5.3901 0.001 23.345 0.1308 243.965

‘X’ values Mean of X = X/n

X=6.4

n=12

6.4/12

Mean= 0.5333

∑(X-Mx)*(X-Mx) = 231.09 ‘Y’ values Mean of Y= Y/n

Y=3.14

n=12

3.14/12

Mean = 0.262

∑(Y-My)*(Y-My) = 243.965 X and Y combined N=12 ∑(X-Mx)(Y-My) = -72.68 Correlation coefficient = ∑(X-Mx)(Y-My) √∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My) = -72.68 √ (231.093) (243.965) = -0.3061 CHART NO4.9: SENSEX MOVEMENTS FOR THE YEAR 2016

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-1.569 -2.035 0.1157 30.601 1.3575 -72.68

Sensex 30000 25000 20000 15000

Sensex

10000 5000 0 6 6 6 6 6 6 16 16 v-16 t-16 16 16 -1 -1 -1 r-1 a r-1 eb-1 y cg- Jul pn n c o a p e e u O Ju A F Ja N S D A M M

CHART NO 4.10: INR/JPY MOVEMENTS FOR THE YEAR 2016

INR/JPY 0.68 0.66 0.64 0.62 0.6 0.58 0.56 0.54 0.52 0.5

INR/JPY

6 6 6 6 6 6 16 v-16 t-16 16 16 l -16 -1 y-1 pr-1 a r-1 eb-1 a n-1 cgpn c o u a e e u u J O J A F J N S D A M M

ANALYSIS AND INTERPRETATION

LKP SECURITIES LTD

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In the year 2016 there was a negative correlation between the sensex movements and Rupee rate against YEN(JPY). The sensex closed at 26626.46 in December. During the year the sensex hit a high of 29077.28 on September 2016 and a low of 22494.61 on February 2016. The total change % of sensex during the year was 3.14% The INR/JPY closed at 0.58 in December 2016. During the year it has hit a high of 0.6818 in June 2016 and a low of 0.5494 in January 2016. The total change % of INR/JPY during the year was 6.4%. The chart shows whenever the rupee appreciated against YEN the sensex performed well and when rupee depreciated the sensex has fallen. This indicates the positive correlation between sensex and rupee and a negative correlation between sensex and YEN

LKP SECURITIES LTD

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CHAPTER V SUMMARY OF FINDINGS SUGGESTIONS AND CONCLUSION

FINDINGS LKP SECURITIES LTD

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

The relationship between stock returns and exchange rates often utilized in forecasting the future trends.



Exchange rate changes directly influence the international competitiveness of firms, When the Exchange rate appreciates, since exporters will lose their competitiveness in international market, the sales and profits of exporters will shrink and the stock prices will decline.

  

When the market goes up the rupee appreciates and vice versa. RBI cut rates affects more on exchange rates. Exports and imports of a country determine the exchange rate.

LKP SECURITIES LTD

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SUGGESTIONS 

The investor should be cautious when market goes up. The other currency falls to a particular level wait for the least value and the dollar to stabilize, then that is the peak for



the market and it is the right time to sell. The investor should be cautious when the market comes down the currency appreciates and the rupee falls wait for the market to stabilize and that is the right time to make buy



decision. The company should provide more knowledge about the impact of exchange rates on

 

stock market to the investors in order to help them from wrong investment decisions. As an investor an individual have to look at the factors affecting exchange rates. The company should conduct seminars or sessions for the investors to give them



knowledge about the factors affecting the stock market.

LKP SECURITIES LTD

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CONCLUSION This study examines the dynamics between the instability of stock returns and movement of exchange rates, in terms of the degree of interdependency. To begin with, the average price and the coefficient of correlation between the two variables are computed, which indicated slight negative correlation between them. As the exchange rate depreciates the sensex will move up the demand for rupee increases for investing in stocks this result in rupee appreciation. As the rupee depreciates the investor will sell their stocks which will result in fall in sensex points the demand for rupee decreases resulting in other currency appreciation. The investor should be cautious when the market goes up the other currency will depreciate and the demand for rupee increases for investing in stocks this result in rupee appreciation. The rupee appreciation and the rupee depreciation have positive as well as negative impact in making investment decisions.

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BIBLIOGRAPHY Websites www.moneycontrol.com www.investing.com www.lkpsec.com Book Security analysis and portfolio management – (Author: Prasanna Chandra)

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