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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 Mr.Ravi Kiran


Professor Regional Manager
KLS, GIT 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 Signature of Principal

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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 co-
operation 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 staff
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 CONTENT PAGE
NUMBER NUMBER
CHAPTER-I Introduction to the summer project 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

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SL no LIST OF CHARTS Page no
4.1 Table showing sensex movements for the year 2016 34-34
4.2 Table showing INR/USD movements for the year 2016 34-34
4.3 Table showing sensex movements for the year 2016 38-38
4.4 Table showing INR/EURO movements for the year 2016 38-38
4.5 Table showing sensex movements for the year 2016 42-42
4.6 Table showing INR/GBP movements for the year 2016 42-42
4.7 Table showing sensex movements for the year 2016 46-46
4.8 Table showing INR/CHF movements for the year 2016 46-46
4.9 Table showing sensex movements for the year 2016 50-50
4.10 Table showing INR/JPY movements for the year 2016 50-50

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CHAPTER - I
INTRODUCTION TO
SUMMER PROJECT

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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.

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

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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.
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.

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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
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.

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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
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

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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.
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.

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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.

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CHAPTER - II
INDUSTRY AND
COMPANY PROFILE

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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
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,

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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 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

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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.

b) COMPANY PROFILE:

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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.

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. Category I Merchant Bankers with SEBI.


2. Membership of BSE & NSE (Capital & Debt Market).
3. AMFI registered all India Mutual Fund Distributors.
4. Member of Commodity Exchanges MCX, NCDX . ICEX and DGCX (Dubai).
5. Member of NSE for Interest Rate Futures.
6. Member of MCX SX and NSE Currency.

c) Promoters Vision, Mission and Quality policy of LKP Securities:

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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.

Vision:

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"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.
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:

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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,

Nariman Point, Mumbai-400 021.

Mumbai -400 021,

Maharashtra.

Email: www.lkpsec.com

Products & Service profile of LKP:

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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
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:

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

e) Infrastructural facilities of LKP:

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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.

f) Competitors Information:

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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

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:

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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.
 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 March 2016 March 2015 March 2014


Source of fund:
Total Share Capital 12.20 12.20 12.20

Equity Share Capital 12.20 12.20 12.20

Share application 0.00 0.00 0.00


money

Preference Share 0.00 0.00 0.00


Capital
Reserves 144.69 146.10 146.00

Revaluation Reserves 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 1.52 1.43 1.24


Depreciation
Net Block 0.51 0.58 0.77

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Capital Work in 0.00 0.00 0.00
Progress

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 40.81 30.10 23.70


Balance

Total Current Assets 84.10 81.58 53.41

Loans and 99.44 125.74 154.11


Advances
Fixed Deposits 0.00 0.00 0.00

Total CA, Loans & 183.54 207.32 207.52


Advances

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 & 36.92 13.92 7.70


Provisions
Net Current Assets 146.62 193.40 199.82

Miscellaneous 0.00 0.00 0.00


Expenses

Total Assets 223.95 264.62 237.43

Contingent 8.34 8.34 8.34


Liabilities

Book Value(Rs) 128.62 129.77 129.69

Source: Moneycontrol.com

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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

Income

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

Expenditure

Employment Cost 5.78 5.69 5.07

Miscellaneous 12.84 38.14 3.82


Expenses
Total Expenses 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

Profit before tax 11.87 22.41 7.07

Tax 3.00 4.67 -0.40

Reported net profit 8.87 17.74 7.48


Source: Moneycontrol.com

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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 Net profit Sales Revenue NPR


2016 8.87 45.38 19.54
2015 17.74 83.47 21.25
2014 7.48 35.25 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.

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

Year Net profit Sales Revenue NPR


2016 84.10 34.80 2.41
2015 81.58 10.61 7.68
2014 53.41 4.48 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 Debt Equity DER
2016 67.05 156.89 0.42
2015 106.31 158.30 0.67
2014 79.23 158.20 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.

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5) Debtors Turnover Ratio

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

Year Net credit sales Average Debtors DTR


2016 45.38 5.21 8.71
2015 83.47 5.77 14.46
2014 35.25 0.19 185.52

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.

LKP SECURITIES LTD Page 36


CHAPTER IV
ANALYSIS AND
INTERPRETATION OF THE
DATA

LKP SECURITIES LTD Page 37


TABLE NO 4.1: USD/INR MONTHLY AVERAGE FOR THE YEAR 2016

MONTHS HIGHEST PRICE LOWEST PRICE AVERAGE PRICE


January 16 68.265 66.120 67.320
February 16 68.909 67.485 68.226
March 16 68.360 66.120 66.917
April 16 66.852 66.014 66.438
May 16 67.780 66.225 66.934
June 16 68.223 66.441 67.257
July 16 67.555 66.600 67.159
August 16 67.370 66.560 66.929
September 16 67.148 66.250 66.717
October 16 67.005 66.362 66.736
November 16 68.881 66.217 67.687
December 16 68.598 67.308 67.803

TABLE NO 4.2: SENSEX MONTHLY AVERAGE FOR THE YEAR 2016

MONTHS HIGH LOW AVERAGE


January 16 26197.27 23839.76 24779.65
February 16 25002.32 22494.61 23688.30
March 16 25479.62 23133.18 24811.95
April 16 26100.59 24523.20 25441.47
May 16 26837.20 25057.93 25693.69
June 16 27105.41 25911.33 26717.74
July 16 28240.20 27034.14 27713.41
August 16 28532.25 27627.97 28006.90
September 16 29077.28 27716.78 28502.55
October 16 28477.65 27488.30 28001.69
November 16 28029.80 25717.93 26718.09
December 16 26803.76 25753.74 26372.93

LKP SECURITIES LTD Page 38


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

MONTH INR/USD AverageSensex


Average price
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 % change in Dollar % change in Sensex


January 16 2.52 -4.77
February 16 0.49 -7.51
March 16 -2.89 10.17
April 16 0.26 1.04
May 16 1.18 4.14
June 16 0.44 1.24
July 16 -1.26 3.90
August 16 0.48 1.43
September 16 -0.62 -2.06
October 16 0.20 0.23
November 16 2.87 -4.57
December 16 -0.94 -0.10
Sources: Investing.com

LKP SECURITIES LTD Page 39


TABLE NO 4.5: CORRELATION COEFFECIENT OF CHANGE IN DOLLAR AND SENSEX
MOVEMENTS

%change in %change in X-Mx Y-My (X-Mx)* (Y-My)* (X-Mx)*


dollar (X) Sensex (Y) (X-Mx) (Y-My) (Y-My)
2.52 -4.77 2.292 -5.032 5.256 25.318 -11.535
0.49 -7.51 0.262 -7.772 0.069 60.399 -2.040
-2.89 10.17 -3.118 9.908 9.719 98.175 -30.889
0.26 1.04 0.032 0.778 0.001 0.606 0.025
1.18 4.14 0.952 3.878 0.907 15.041 3.694
0.44 1.24 0.212 0.978 0.045 0.957 0.208
-1.26 3.90 -1.488 3.638 2.213 13.237 -5.412
0.48 1.43 0.252 1.168 0.064 1.365 0.295
-0.62 -2.06 -0.848 -2.322 0.718 5.390 1.968
0.20 0.23 -0.027 -0.032 0.001 0.001 0.001
2.87 -4.57 2.642 -4.832 6.983 23.345 -12.768
-0.94 -0.10 -1.168 -0.362 1.363 0.131 0.422

2.76 3.14 27.338 243.965 -56.031


‘X’ values

Mean of X = X/n X=2.76 n=12 2.76/12 Mean= 0.23

∑(X-Mx)*(X-Mx) = 27.338

‘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) = -56.031

Correlation coefficient

= ∑(X-Mx)(Y-My)
√∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My)

= -56.031
√ (27.338)(243.965)

= -0.6861

LKP SECURITIES LTD Page 40


CHART NO 4.1: SENSEX MOVEMENTS FOR THE YEAR 2016

Sensex
30000

25000

20000

15000
Sensex
10000

5000

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

INR/USD
69
68.5
68
67.5
67
66.5 INR/USD
66
65.5
65

LKP SECURITIES LTD Page 41


ANALYSIS AND INTERPRETATION

In the year 2016 there was a negative correlation between the sensex movements and Rupee rate
against dollars

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.

LKP SECURITIES LTD Page 42


TABLE NO 4.6: EURO/INR MONTHLY AVERAGE FOR THE YEAR 2016

MONTHS HIGH LOW AVERAGE


January 16 74.7595 71.2410 73.1607
February 16 77.8730 73.3240 75.7637
March 16 75.6575 72.4000 74.5559
April 16 76.2315 74.6280 75.3430
May 16 77.0260 74.3160 75.6229
June 16 76.9560 73.9470 75.6060
July 16 75.3970 73.4990 74.3055
August 16 76.2800 73.7990 74.9986
September 16 75.5175 73.9720 74.8117
October 16 74.8565 72.4860 73.5714
November 16 75.6305 71.8930 72.9913
December 16 73.4450 70.3540 71.4541

TABLE NO 4.7: PERCENTAGE CHAGE IN EURO AND SENSEX

MONTHS % change in Euro % change in Sensex


January 16 2.29 -4.77
February 16 0.83 -7.51
March 16 1.67 10.17
April 16 0.93 1.04
May 16 -1.68 4.14
June 16 0.20 1.24
July 16 -0.65 3.90
August 16 0.34 1.43
September 16 0.11 -2.06
October 16 -2.12 0.23
November 16 -0.81 -4.57
December 16 -1.61 -0.10

LKP SECURITIES LTD Page 43


TABLE NO 4.8: CORRELATION COEFFECIENT OF CHANGE IN EURO AND SENSEX
MOVEMNTS

%change in %change in X-Mx Y-My (X-Mx)* (Y-My)* (X-Mx)*


dollar (X) Sensex (Y) (X-Mx) (Y-My) (Y-My)
2.29 -4.77 2.332 -5.032 5.437 25.318 -11.732
0.83 -7.51 0.872 -7.772 0.760 60.399 -6.774
1.67 10.17 1.712 9.908 2.930 98.175 16.960
0.93 1.04 0.972 0.778 0.944 0.606 0.756
-1.68 4.14 -1.638 3.878 2.684 15.041 -6.354
0.20 1.24 0.242 0.978 0.058 0.957 0.236
-0.65 3.90 -0.608 3.638 0.370 13.237 -2.213
0.34 1.43 0.382 1.168 0.146 1.365 0.446
0.11 -2.06 0.152 -2.322 0.023 5.390 -0.352
-2.12 0.23 -2.078 -0.032 4.319 0.001 0.066
-0.81 -4.57 -0.768 -4.832 0.590 23.345 3.712
-1.61 -0.10 -1.568 -0.362 2.460 0.131 0.567

-0.5 3.14 20.721 243.965 -4.682

‘X’ values

Mean of X = X/n X=-0.5 n=12 -0.5/12 Mean= -0.0416

∑(X-Mx)*(X-Mx) = 20.721

‘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) = -4.682

Correlation coefficient

= ∑(X-Mx)(Y-My)
√∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My)

= -4.682
√ (20.721)(243.965)

= -0.0659

LKP SECURITIES LTD Page 44


CHART NO 4.3: SENSEX MOVEMENTS FOR THE YEAR 2016

Sensex
30000

25000

20000

15000
Sensex
10000

5000

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

INR/EUR
77
76
75
74
73
72 INR/EUR
71
70
69

LKP SECURITIES LTD Page 45


ANALYSIS AND INTERPRETATION

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.

LKP SECURITIES LTD Page 46


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

MONTHS HIGH LOW AVERAGE


January 16 98.619 95.580 96.960
February 16 99.544 94.540 97.648
March 16 96.700 93.971 95.380
April 16 97.545 93.348 95.094
May 16 99.241 95.559 97.217
June 16 101.049 89.116 95.567
July 16 90.236 86.251 88.296
August 16 89.555 85.984 87.708
September 16 89.188 85.972 87.724
October 16 86.180 78.817 82.313
November 16 86.032 81.399 84.214
December 16 86.909 82.883 84.570

TABLE NO 4.10: PERCENTAGE CHANGE IN GBP AND SENSEX

MONTHS %change in GBP % change in Sensex


January 16 -0.90 -4.77
February 16 -1.85 -7.51
March 16 0.25 10.17
April 16 2.02 1.04
May 16 0.24 4.14
June 16 -7.66 1.24
July 16 -1.89 3.90
August 16 -0.19 1.43
September 16 -1.84 -2.06
October 16 -5.46 0.23
November 16 5.07 -4.57
December 16 -2.26 -0.10

LKP SECURITIES LTD Page 47


TABLE NO 4.11: CORRELATION OF COEFFECIENTS OF GBP AND SENSEX
MOVEMENTS

%change in %change in X-Mx Y-My (X-Mx)* (Y-My)* (X-Mx)*


Euro (X) Sensex (Y) (X-Mx) (Y-My) (Y-My)
-0.90 -4.77 0.306 -5.032 0.094 25.318 -1.539
-1.85 -7.51 -0.644 -7.772 0.415 60.399 5.006
0.25 10.17 1.456 9.908 2.119 98.175 14.425
2.02 1.04 3.226 0.778 10.406 0.606 2.511
0.24 4.14 1.446 3.878 2.090 15.041 5.607
-7.66 1.24 -6.454 0.978 41.656 0.957 -6.314
-1.89 3.9 -0.684 3.638 0.468 13.237 -2.489
-0.19 1.43 1.016 1.168 1.032 1.365 1.187
-1.84 -2.06 -0.634 -2.322 0.402 5.390 1.472
-5.46 0.23 -4.254 -0.032 18.098 0.001 0.135
5.07 -4.57 6.276 -4.832 39.386 23.345 -30.323
-2.26 -0.1 -1.054 -0.362 1.111 0.131 0.381

-14.47 3.14 117.277 243.965 -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

LKP SECURITIES LTD Page 48


CHART 4.5: SENSEX MOVEMENTS FOR THE YEAR 2016

Sensex
30000

25000

20000

15000
Sensex
10000

5000

CHART 4.6: INR/GBP MOVEMENTS FOR THE YEAR 2016

INR/GBP
100

95

90

85
INR/GBP
80

75

70

LKP SECURITIES LTD Page 49


ANALYSIS AND INTERPRETATION

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.

LKP SECURITIES LTD Page 50


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

MONTHS HIGH LOW AVERAGE


January 16 68.255 65.672 66.859
February 16 70.654 66.154 68.799
March 16 69.264 66.237 68.213
April 16 70.055 67.896 68.912
May 16 70.226 67.218 68.367
June 16 70.779 67.414 69.394
July 16 69.627 67.429 68.394
August 16 70.137 67.832 68.889
September 16 69.240 67.672 68.510
October 16 68.649 66.781 67.608
November 16 70.102 67.143 67.903
December 16 67.770 65.594 66.469

TABLE NO 4.13: PERCENTAGE CHANGE IN CHF AND SENSEX FOR THE YEAR 2016

MONTHS % change in CHF % change in Sensex


January 16 0.40 -4.77
February 16 2.97 -7.51
March 16 0.85 10.17
April 16 0.47 1.04
May 16 -2.27 4.14
June 16 2.24 1.24
July 16 -0.56 3.90
August 16 -1.01 1.43
September 16 0.64 -2.06
October 16 -1.58 0.23
November 16 -0.01 -4.57
December 16 -1.02 -0.10

LKP SECURITIES LTD Page 51


TABLE NO 4.14: CORRELATION OF COEFFECIENTS OF CHF AND SENSEX
MOVEMENTS

%change in %change in X-Mx Y-My (X-Mx) (Y-My)* (X-Mx)*


CHF (X) Sensex (Y)
(X-Mx) (Y-My) (Y-My)

0.4 -4.77 0.307 -5.032 0.094 25.318 -1.543


2.97 -7.51 2.877 -7.772 8.275 60.399 -22.36
0.85 10.17 0.757 9.908 0.573 98.175 7.497
0.47 1.04 0.377 0.778 0.142 0.6058 0.293
-2.27 4.14 -2.363 3.878 5.585 15.041 -9.166
2.24 1.24 2.147 0.978 4.608 0.9571 2.1
-0.56 3.9 -0.653 3.638 0.427 13.237 -2.377
-1.01 1.43 -1.103 1.168 1.217 1.365 -1.289
0.64 -2.06 0.65 -2.322 0.423 5.3901 -1.509
-1.58 0.23 -1.673 -0.032 2.8 0.001 0.053
-0.01 -4.57 -0.103 -4.832 0.011 23.345 0.499
-1.02 -0.1 -1.113 -0.362 1.24 0.1308 0.403

1.12 3.14 25.39 243.97 -27.39


‘X’ values

Mean of X = X/n X=1.12 n=12 1.12/12 Mean= 0.0933

∑(X-Mx)*(X-Mx) = 25.39

‘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) = -27.39

Correlation coefficient

= ∑(X-Mx)(Y-My)
√∑(X-Mx)*(X-Mx)*(Y-My)*(Y-My)

= -27.39
√ (25.39) (243.965)

= -0.3480

LKP SECURITIES LTD Page 52


CHART NO 4.7: SENSEX MOVEMENTS FOR THE YEAR 2016

Sensex
30000

25000

20000

15000
Sensex
10000

5000

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

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

LKP SECURITIES LTD Page 53


ANALYSIS AND INTERPRETATION

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.

LKP SECURITIES LTD Page 54


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

MONTHS HIGH LOW AVERAGE


January 16 0.5878 0.5494 0.5691
February 16 0.6169 0.5571 0.5953
March 16 0.6085 0.5840 0.5925
April 16 0.6250 0.5883 0.6060
May 16 0.6286 0.6027 0.6146
June 16 0.6818 0.6062 0.6382
July 16 0.6738 0.6249 0.6463
August 16 0.6717 0.6467 0.6610
September 16 0.6682 0.6386 0.6545
October 16 0.6579 0.6326 0.6427
NovembOer 16 0.6613 0.5985 0.6236
December 16 0.6026 0.5715 0.5840

TABLE NO 4.16: PERCENTAGE CHANGE IN JPY AND SENSEX

MONTHS % change in JPY % change in Sensex


January 16 1.89 -4.77
February 16 7.95 -7.51
March 16 -2.78 10.17
April 16 6.12 1.04
May 16 -2.79 4.14
June 16 7.64 1.24
July 16 -0.09 3.90
August 16 -0.81 1.43
September 16 1.41 -2.06
October 16 -3.12 0.23
November 16 -5.80 -4.57
December 16 -3.22 -0.10

LKP SECURITIES LTD Page 55


TABLE NO 4.17: CORRELATION OF COEFFECIENTS OF JPY AND SENSEX
MOVEMENTS

% change in % change in (X-Mx) ( Y-My) (X-Mx)* (Y-My)* (X-Mx)*


JPY Sensex (X-Mx) (Y-My) (Y-My)
1.89 -4.77 1.357 -5.032 1.8405 25.318 -6.826
7.95 -7.51 7.417 -7.772 55.007 60.399 -57.64
-2.78 10.17 -3.313 9.908 10.978 98.175 -32.83
6.12 1.04 5.587 0.778 31.211 0.6058 4.3483
-2.79 4.14 -3.323 3.878 11.045 15.041 -12.89
7.64 1.24 7.107 0.978 50.505 0.9571 6.9527
-0.09 3.9 -0.623 3.638 0.3885 13.237 -2.268
-0.81 1.43 -1.343 1.168 1.8045 1.365 -1.569
1.41 -2.06 0.877 -2.322 0.7685 5.3901 -2.035
-3.12 0.23 -3.653 -0.032 13.347 0.001 0.1157
-5.8 -4.57 -6.333 -4.832 40.111 23.345 30.601
-3.22 -0.1 -3.753 -0.362 14.088 0.1308 1.3575
6.4 3.14 231.093 243.965 -72.68

‘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

LKP SECURITIES LTD Page 56


CHART NO4.9: SENSEX MOVEMENTS FOR THE YEAR 2016

Sensex
30000

25000

20000

15000
Sensex
10000

5000

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
INR/JPY
0.56
0.54
0.52
0.5

LKP SECURITIES LTD Page 57


ANALYSIS AND INTERPRETATION

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 Page 58


CHAPTER V
SUMMARY OF FINDINGS
SUGGESTIONS AND
CONCLUSION

LKP SECURITIES LTD Page 59


FINDINGS
 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 Page 60


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 Page 61


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.

LKP SECURITIES LTD Page 62


BIBLIOGRAPHY

Websites

www.moneycontrol.com

www.investing.com

www.lkpsec.com

Book

Security analysis and portfolio management – (Author: Prasanna Chandra)

LKP SECURITIES LTD Page 63