How Indian Stock Market Is Affected By Other Foreign Market

975 WordsApr 25, 20174 Pages
The world today is more connected that it has ever been. We are buying and selling things from and to almost every other country in the world. The economies have financial relationship with large number of countries and to some or greater extent they affect our economy and we affect theirs. Some of the global market indices that have a key influence on Indian market are NYSE, NASDAQ, NIKKEI, Dow-Jones, FTSE, S&P500, Kospai etc. So the aim of this project is to understand how Indian stock market is affected by other foreign market. This study will help us in understanding the level of interdependency among the major stock markets in the world and its impact on india’s market. As the aim of investor is to reduce the risk so investor will…show more content…
However if the value of stock index is decreasing it indicates that in general corporate in the country may be facing trouble. Increasing value of stock index also means that investors are gaining faith in the economy. Stock index can be constructed for entire world called global indices like S&P global100, MSCI global (MSCI which include over 6000 stocks from different parts of the developed world), for a particular continent like (S&P Latin America 500), for entire country like (sensex and nifty for India), or for a particular sector like (BSE BANKEX for top banking companies in India). How stock index is calculated? A stock index is created by selecting a group of high performing stocks. Like the index of nation stock exchange (India) is nifty50 and it comprises of 50 stocks. So if the value of the nifty index goes up it means that most of the stocks in nifty are performing well. A stock index can be calculated in two ways – 1.By considering the price of the component stocks alone. This method is called the price-weighted method. 2.By considering the market value or size of the company – called the capitalization weighted method. Mostly for calculating the value of a index weighted market capitalization of the companies is used. Example of index calculation:- Lets us see how the value of a stock index is calculated by taking the example of hypothetical stocks. Consider the base index value is set to 100 for the stocks.

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