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A
WINTER PROJECT REPORT

ON
CORRELATION BETWEEN NSE AND DOW JONES

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF
BACHELOR OF BUSINESS ADMINISTRATION(BBA)
GUIDED BY- SUBMITTED BY-
MR. NILESH PATEL MEET JOSHI (16)

TY.BBA FINANCE
SHREE UTTAR GUJARAT BBA COLLEGE

AFFILIATED TO VEER NARMAD SOUTH GUJARAT UNIVERSITY
YEAR 2023
1
DECLARATION
I MEET JOSHI hereby declares that the project entitled “CORRELATION BETWEEN NSE
AND DOW JONES’’ under guidance of MR. NILESH PATEL submitted in partial fulfillment
of requirement for the award of Bachelor of Business Administration , it is my original work
with my own understanding and competency of the above topic with help of secondary data
available from different sites and sources available for it.
DATE- MEET JOSHI
PLACE-
_______________
SIGN
2
ACKNOWLEDGEMENT
I am thankful to the VEER NARMAD SOUTH GUJARAT UNIVERSITY for providing me

this great opportunity of doing “CORRELATION BETWEEN NSE AND DOW JONES’’. In
preparation of this report , I feel great pleasure because it gives me extensive practical
knowledge in my career. I get idea about different stock exchanges and how they work and
what’s their growth of different financial years.
I am thankful to MR. NILESH PATEL (Assistant Prof.) for guiding me during the whole
project time and giving me his best support and wide knowledge for undertaking this
opportunity.
I am also thankful to the Institute’s library and office staff for their support in making of this
report. Last but not least , I am thankful to all those people , who have directly or indirectly
provided their support to me .
3
EXECUTIVE SUMMARY
THE project named “CORRELATION BETWEEN NSE AND DOW JONES” focuses on the
different aspects of both stock exchanges . In which many things are widely covered . In this
report our main objective was to find out the different aspects of stock exchanges in which
they mainly keep their attention on such as returns of the different financial years. And on
which year and why the stock markets crashed and what was reason for it . And we have our
firm attention correlation between given two indexes which are NIFTY-50 for NSE and DJIA
for DOW JONES . both are situated in Mumbai and New York .
The project also draws attention on different types of sectors of their listed indices which is
main contributor of their stock exchanges . Both of markets are extensively covered in report
. This report highlight many things about the two stock exchanges and their working format
and the things to be followed .
Both stock exchanges are in Top 10 positions of world stock exchanges .
As the report has been tried to covered as many essential aspect it could covered and if
anything is Insufficient or missed out I am very sorry for that inconvenience .
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INDEX
SR.NO CONTENTS PAGE NO
> Declaration 2
> Acknowledgement 3
> Executive summary 4
1 Introduction 8
1.1 National Stock Exchange 9
1.2 Dow Jones 11
2 Company Profile 14
2.1 National Stock exchange (INDEX) 15
2.2 Dow Jones (INDEX) 20
3 Industry Profile 24
3.1 Indian Stock Exchanges 25
3.1.1 Bombay Stock Exchange (BSE) 26
3.1.2 BSE Indices 27
3.2 New York Stock Exchange (NYSE) 34
3.2.1 NYSE Indices 36
3.2.2 NYSE Crashes List 36
3.3 Dow Jones 37
3.3.1 Dow Jones Crashes List 38
3.4 NIFTY-50 39
3.4.1 NSE INDICES 39
5
3.4.2 NSE Crashes List 41
4 Literature review 44
4.1 Information about both exchanges 45
4.2 Dow jones relation with Indian stock Markets 46
4.3 Correlation 47
5 Research Methodology 51
5.1 Objective of study 51
5.2 Importance of study 52
5.3 Research design 53
5.4 Sampling size and frame 54
5.5 Techniques of analysis 54
5.6 Limitation of study 54
6 Theoretical profile 56
6.1 Returns of Dow jones 60
6.2 Returns of NSE 61
6.3 Method used for correlation 62
7 Data Analysis 64
7.1 Karl Pearson correlation with Interpretation 65
7.2 Spearman Rank correlation with Interpretation 92
8 Findings 117
9 Conclusion 119
10 Bibliography 120
6
List of table and graphs
TABLES AND GRAPHS PAGE NUMBER
NSE INDEX 20
DOW JONES INDEX 23
SENSEX PIE CHART 33
NSE PIE CHART 42
NIGTY50 vs Other indices 58
7
CH-1
INTRODUCTION
8
NATIONAL STOCK EXCHANGE {NSE}
National Stock Exchange was incorporated in the year 1992 to bring about transparency in
the Indian equity markets. Instead of trading memberships being confined to a group of
brokers, NSE ensured that anyone who was qualified, experienced, and met the minimum
financial requirements was allowed to trade. In this context, NSE was ahead of its time
when it separated ownership and management of the exchange under SEBI’S supervision.
Stock price information that could earlier be accessed only by a handful of people could
now be seen by a client in a remote location with the same ease. The paper-based settlement
was replaced by electronic depository-based accounts and settlement of trades was always
done on time. One of the most critical changes involved a robust risk management system
that was set in place, to ensure that settlement guarantees would protect investors
against broker defaults.
NSE was set up by a group of leading Indian financial institutions at the behest of
the Government of India to bring transparency to the Indian capital market. Based on the
recommendations laid out by the Pherwani committee, NSE was established with a
diversified shareholding comprising domestic and global investors. The key domestic
investors include Life Insurance Corporation, State Bank Of India, IFCI Limited, IDFC
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Limited and Stock Holding Corporation Of India Limited.Key global investors include
Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius
Limited, Aranda Investments (Mauritius) Pte Limited, and PI Opportunities Fund .
~ MARKETS
NSE offers trading and investment in the following segments
Equity -
 Equity
 Indices
 Mutual fund
 Exchange traded funds
 Initial Public Offerings
 Security Lending and Borrowing etc.
TRADING SCHEDULE
Trading on the equities segment takes place on all days of the week (except Saturdays and
Sundays and holidays declared by the Exchange in advance). The market timings of the
equities segment are:
 (1) Pre-open session:
 Order entry & modification Open: 09:00 hrs

 Order entry & modification Close: 09:08 hrs*
*
with random closure in last one minute. Pre-open order matching starts immediately after
the close of pre-open order entry.
1. Regular trading session

2. Normal/Retail Debt/Limited Physical Market Open: 09.15 hrs
 Normal/Retail Debt/Limited Physical Market Close: 15:30 hrs.
 Aftermarket hours: 16:00 – 09:00 hrs
10
 National Stock Exchange of India Limited (NSE) is one of the leading stock
exchanges in India, based in Mumbai. It is the world's largest derivatives exchange by
number of contracts traded and the fourth largest in cash equities by number of
trades for the calendar year 2021. NSE is under the ownership of various financial
institutions such as banks and insurance companies.
 National Stock Exchange has a total maket capitalization of more than US$ 3.4 trillion,
Making it the world’s 8-largest stock exchange as of Feburary 2023 NSE's flagship
index, the NIFTY 50, a 50 stock index is used
 extensively by investors in India and around the world as a barometer of the Indian
capital market. The NIFTY 50 index was launched in 1996 by NSE.
Dow Jones Industrial Average { DJI } –
The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (DAU), is
a stock market index of 30 prominent companies listed on stock exchanges in the United
States.
The DJIA is one of the oldest and most commonly followed equity indexes. Many professionals
consider it to be an inadequate representation of the overall U.S. stock market compared to a
broader market index such as the S&P 500. The DJIA includes only 30 large companies. It
is Price-weighted , unlike stock indices, which use market capitalization. Furthermore, the
DJIA does not use a weighted arithmetic mean.
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The value of the index can also be calculated as the sum of the stock prices of the companies
included in the index, divided by a factor, which is currently (as of November 2021)
approximately 0.152. The factor is changed whenever a constituent company undergoes a stock
split so that the value of the index is unaffected by the stock split.
First calculated on May 26, 1896,] the index is the second-oldest among U.S. market indices,
after the Dow Jones Transportation Average. It was created by Chales Dow, the editor of The
Wall Street Journal and the co-founder of Dow Jones & Company, and named after him and
his business associate, statistician EDWARD JONES. The word "industrial" in the name of the
index initially emphasized the heavy industry sector, but over time stocks from many other
types of companies have been added to the DJIA.
The index is maintained by S&P DOW JONES INDICES, an entity majority-owned by S&P
Global. Its components are selected by a committee. The ten components with the
largest dividend yields are commonly referred to as the Dogs of the Dow. As with all stock
prices, the prices of the constituent stocks and consequently the value of the index itself are
affected by the performance of the respective companies as well as macroeconomic factors.
 SIX BASIC TENETS OF DOW THEORY -

 The Market Discounts Everything
 The Three-Trend Market
 The Three Phases of Primary Trends
 Market Indexes Must Confirm Each Other
 Volume Must Confirm The Trend
 Trend Remains in effect until Clear Reversal occurs
Dow theory is a theory on stock market analysis developed by Charles Dow in the late 19th
century. The six tenets of Dow theory are as follows:
 The market discounts everything: This tenet suggests that the current price of a
security reflects all available information, including economic, political, and market-
related factors.
 The market has three trends: Dow theory identifies three types of trends in the market:
the primary trend, which is the main direction of the market; the secondary trend,
which is a correction against the primary trend; and the minor trend, which is the day-
to-day fluctuations of the market.
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 The primary trend is significant: According to Dow theory, the primary trend is the
most important trend, as it reflects the long-term direction of the market.
 The market averages must confirm each other: Dow theory states that both the Dow
Jones Industrial Average and the Dow Jones Transportation Average must confirm
each other's trends to provide a reliable signal of the market's direction. For example,
if the Dow Jones Industrial Average is trending up, but the Dow Jones Transportation
Average is trending down, it could indicate a divergence in the market.
 Volume should confirm the trend: Dow theory suggests that volume should increase
as the trend progresses, as it indicates a growing consensus among investors about the
direction of the market.
 Trends persist until there is a clear reversal: According to Dow theory, trends tend to
persist until there is a clear reversal, which could be indicated by a significant change
in the direction of the market averages or a shift in the underlying economic
conditions.
These tenets are still used by many technical analysts today and form the basis of modern
technical analysis.
13
CH-2
COMPANY
PROFILE
14
NATIONAL STOCK EXCHANGE [NSE] –
Nifty Broad market indices NSE Indices Limited (formerly known as India Index Services &
Products Limited-IISL), a NSE group company, was set-up in May 1998 to provide a variety
of indices and index related services for the capital markets. In order to develop, construct and
maintain indices on Indian equities that serve as useful market performance benchmarks that
may be useful underlying indices for investment products, NSE Indices Limited, an NSE group
company has developed a series of broad equity indices introducing a structure that efficiently
represents large, mid and small market capitalisation segments of the Indian capital market.
Under this structure, there are 17 broad market indices as shown below:
NIFTY 50 INDEX
The Nifty 50 is the flagship index on the National Stock Exchange of India Ltd. (NSE). The
Index tracks the behaviour of a portfolio of blue-chip companies, the largest and most liquid
Indian securities. It includes 50 of the all companies listed and/ or traded on the NSE, captures
approximately 66% of its float-adjusted market capitalization and is a true reflection of the
Indian stock market. The Nifty 50 covers major sectors of the Indian economy and offers
investment managers exposure to the Indian market in one efficient portfolio. The Index has
been trading since April 1996 and is well suited for benchmarking, index funds and index-
based derivatives. The Nifty 50 is owned and managed by NSE Indices Limited (formerly
known as India Index Services & Products Limited-IISL), India’s first specialized company
15
focused on an index as a core product. Highlights The Nifty 50 is a 50 stock, float-adjusted
market-capitalization weighted index for India. It is used for a variety of purposes, such as
benchmarking fund portfolios, index-based derivatives and index funds. The Nifty 50 is
derived from economic research and is created for those interested in investing and trading in
Indian equities. Market Representation: The Nifty 50 stocks represent about 66% of the total
floatadjusted market capitalization of the National Stock Exchange (NSE). Turnover
Representation: The Nifty 50 stocks represent about 54% of the total float adjusted market
capitalization of the National Stock Exchange (NSE). Nifty Indices – Methodology Document,
February 2023 20230222 16 Trading in derivative contracts based on Nifty 50: The National
Stock Exchange of India Limited (NSE) commenced trading in derivatives with index futures
on June 12, 2000. The futures contracts on the NSE are based on the Nifty 50. The exchange
introduced trading on index options based on the Nifty 50 on June 4, 2001. Additionally,
exchange traded derivatives contracts linked to Nifty 50 are traded at Singapore Exchange Ltd.
(SGX). Index Computation: The Nifty 50 is computed using a float-adjusted, market
capitalization weighted methodology*, wherein the level of the index reflects the total market
value of all the stocks in the index relative to a particular base period. The methodology also
takes into account constituent changes in the index and corporate actions such as stock splits,
rights issuance, etc., without affecting the index value. * Beginning June 26, 2009, the Nifty
50 is being computed using float-adjusted market capitalization weighted method, wherein the
level of index reflects the float-adjusted market capitalization of all stocks in the Index.
Nifty 50 is a stock market index in India that represents the performance of 50 large
and well-established companies across various sectors listed on the National Stock Exchange
(NSE). Here are some details about Nifty 50:
Composition:
Nifty 50 consists of 50 companies from various sectors, such as banking, financial services,
energy, information technology, and consumer goods. The companies are chosen based on a
combination of market capitalization, liquidity, and trading frequency.
Weightage:
The weightage of each company in the index is based on its free float market capitalization.
This means that the market capitalization of only the shares available for trading in the
market is considered for calculating the weightage.
16
Calculation:
The index is calculated using the free float market capitalization weighted methodology,
where the total market capitalization of all the companies in the index is divided by a
predetermined base value, and then multiplied by 100 to arrive at the index value.
Historical performance:
Nifty 50 was launched on April 22, 1996, with a base value of 1,000. Since then, it has
grown significantly, and as of February 2023, the index value is over 18,000.
Importance:
Nifty 50 is one of the most widely followed stock market indices in India and is often used
as a benchmark for the performance of the Indian stock market. It is also used as an
underlying for various financial products, such as index funds, exchange-traded funds
(ETFs), and futures and options contracts.
Rebalancing:
The composition of Nifty 50 is reviewed and rebalanced twice a year, in March and
September, based on the market capitalization of the companies. The index is maintained and
managed by the Index Maintenance Sub-Committee of the NSE Indices Limited.
17
18
19
1) Dow Jones Industrial Average
Dow Jones Industrial Average (DJIA) is a stock market index that represents the top 30 well-
established public-owned companies on the New
York Stock Exchange and Nasdaq.
A Brief History Of Dow Jones Industrial Average

This is the second-oldest US market index coming after the Dow Jones Transportation
Average.
The Dow Jones Industrial Average only represented bluechip companies having a stable
financial background. It started with only 12
companies in 1986. Now 30 companies have been added to the list. The composition of the
DJIA changes with the change in the economy.
If a component of the Dow drops and becomes less relevant to the current trends of the
economy, it will be dropped and replaced with a new name that matches the new trend better.
OTHER US INDEXES –
OTHER U.S. LAST CHG CHG %
Dow Jones Transportation Average 14,645.29 -490.58 -3.24%
Dow Jones Utility Average Index 938.87 -14.74 -1.55%
Dow Jones U.S. Total Stock Exchange 40,369.89 -876.83 -2.13%
NASDAQ 100 Index (NASDAQ Calculation) 12,060.30 -297.89 -2.41%
S&P Market 400 Index 2,601.34 -64.78 -2.43%
NYSE Composite Index 15,572.52 -267.63 -1.69%
Barron’s 400 Index 973.72 -27.35 -2.73%
CBOE Volatility Index 22.87 2.85 14.24%
20
AS OF 22 FEBUARY 2023
WHAT IS AN INDEX?
 It is a statistical means of calculating change in a market or economy

 It is simply a weighted average representative of a sample market
 Changes in an index are calculated from abase value
 There are numerous indices that cover abroad range of markets and sectors within
those markets
CHANGES TO THE COMPONENTS

1896 - When the index launched, it included just 12 companies that were almost
purely industrial in nature.
The first components operated in railroads, cotton, gas, sugar ,tobacco and oil.
1928 - The index grew to 30 components
1932 - eight stocks within the Dow were replaced. However, during this change, the
Coca- Cola Company and Procter & Gamble.Co. were added to the index
2018 -Walgreens Boots Alliance, Inc. replaced General Electric Company.
21
Last Today's % value 1 year % value
Equities Price change change
109.25
3M COMMM:NYQ 0.00% -25.99%
USD
173.48
American Express COAXP:NYQ 0.00% -10.98%
USD
238.24
Amgen Inc AMGN:NSQ -0.95% +7.91%
USD
148.48
Apple Inc AAPL:NSQ -2.67% -11.25%
USD
205.52
Boeing Co BA:NYQ 0.00% -1.68%
USD
240.71
Caterpillar Inc CAT:NYQ 0.00% +25.40%
USD
161.00
Chevron Corp CVX:NYQ 0.00% +20.67%
USD
49.69
Cisco Systems Inc CSCO:NSQ -2.13% -13.14%
USD
59.80
Coca-Cola Co KO:NSQ 0.00% -4.38%
USD
56.84
Dow Inc DOW:NSQ 0.00% -6.19%
USD
361.12
Goldman Sachs Group Inc GS:NYQ 0.00% +4.36%
USD
295.50
Home Depot Inc HD:NYQ 0.00% -14.81%
USD
Honeywell International Inc 196.76
-2.31% +8.03%
HON:NSQ USD
26.06
Intel Corp INTC:NSQ -5.61% -42.14%
USD
International Business Machines 131.71
0.00% +5.92%
Corp IBM:NYQ USD
158.00
Johnson & Johnson JNJ:NYQ 0.00% -3.28%
USD
139.63
JPMorgan Chase & Co JPM:NYQ 0.00% -8.22%
USD
268.55
McDonald’s Corp MCD:NYQ 0.00% +7.16%
USD
22
109.07
Merck & Co Inc MRK:NYQ 0.00% +42.82%
USD
252.67
Microsoft Corp MSFT:NSQ -2.09% -12.25%
USD
FIG - INDEX CONSTITUENTS OF DOW JONES AS OF FEBUARY2023
FIGURE OF DOW JONES CAPITALIZATION FROM 2000 – 2023 [FEB]
23
CH-3
INDUSTRY
PROFILE
24
INDIAN STOCK MARKET
Humble beginnings
Stock trading in India goes back to the 18th century when the East India Company began
trading in loan securities. Later in 1830s, corporate shares started being traded in Bombay with
the stock of Bank and Cotton presses.
Stock exchanges in India began informally back in 1850s when 22 stockbrokers began trading
opposite the Town Hall of Bombay under a banyan tree.
The Companies Act was introduced in 1850, following which investors started showing an
interest in corporate securities. The concept of limited liability also put an appearance around
this time.
A series of stock exchanges

In 1894, the BSE was followed by the Ahmedabad Stock Exchange which focused on trading
in shares of textile mills.
Shares of plantations and jute mills commenced being traded at the Calcutta Stock Exchange
in 1908.
The Madras Stock Exchange followed, being set up in 1920
Post-independence scenario
Post- independence, BSE dominated the volume of trading. However, the low level of
transparency and undependable clearing and settlement systems, increased the need for a
financial market regulator
The Sensex or Sensitive Index was launched in 1986, followed by the BSE National Index in
1989.
In 1988, the Securities and Exchange Board of India (SEBI) was born as a non-statutory body,
which was further given statutory status by passing SEBI Act on 30 January, 1992
Current status of stock trading in India
At present, the BSE is measured as the world’s 11th largest stock exchange, with market
capitalization likely to be around $1.7 trillion.
The market capitalization of the NSE is estimated to be over $1.65 trillion.
The flagship benchmark index of BSE is called the Sensex and for NSE it is the Nifty50.
25
BOMBAY STOCK EXCHANGE [BSE]
ry -
History -
Bombay Stock Exchange was started by Premchand Roychand in 1875. While BSE Limited is
now synonymous with Dalal Street, it was not always so. In the 1850s, five stock brokers
gathered together under a Banyan tree in front of Mumbai Town Hall, where Horniman Circle
is now situated. A decade later, the brokers moved their location to another leafy setting, this
time under banyan trees at the junction of Meadows Street and what was then called Esplanade
Road, now Mahatma Gandhi Road. With a rapid increase in the number of brokers, they had
to shift places repeatedly. At last, in 1874, the brokers found a permanent location, the one that
they could call their own. The brokers group became an official organization known as "The
Native Share & Stock Brokers Association" in 1875.
The Bombay Stock Exchange continued to operate out of a building near the Town Hall until
1928. The present site near Horniman circle was acquired by the exchange in 1928, and a
building was constructed and occupied in 1930. The street on which the site is located came to
be called Dalal Street in Hindi (meaning "Broker Street") due to the location of the exchange.
On 31 August 1957, the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act. Construction of the present
building, the Phiroze jeejebhoy Towers at Dalal street, Fort area, began in the late 1970s and
was completed and occupied by the BSE in 1980. Initially named the BSE Towers, the name
26
of the building was changed soon after occupation, in memory of SirPhiroze Jamshedji
jeejebhoy, chairman of the BSE since 1966, following his death.
ABOUT BSE –
BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian Stock
exchange which is located on Dalal street in Mumbai. Established in 1875 by cotton merchant
Premchand Roychand, a Jain businessman, it is the oldest stock exchange in Asia and also the
tenth oldest in the world. The BSE is the 6th largest stock exchange with an overall market
capitalization of more than ₹276.713 lakh crore or US$3.56 trillion, as of January 2022.
There are 7,400 companies are listed of which 4,000 are traded on the stock exchanges at BSE
and NSE. Hence the stocks trading at the BSE and NSE account for around 10% of theIndian
company, which derives most of its income-related activity from the unorganized sector and
household spending.
The Indian stock market has two main indices, Sensex and Nifty-50. Sensex is the index of
BSE and Nifty-50 is of NSE. Sensex has 30 number stocks as its constituents and Nifty has 50.
In this article, we talk about Sensex 30 companies and their weightage in the Index.
Their Weightage in The Sensex 30 Companies: Index
SL WEIGHT(%) Name Industry Price Mcap Full M.Cap FF

(Cr.) (Cr.)
1 11.95 RIL Integrated Oil & Gas 2555.95 16,50,677.12 8,25,338.56
2 10.57 HDFC Bank Banks 1508.6 9,23,919.15 7,29,896.13
3 8.72 ICICI Bank Banks 908.35 6,01,920.14 6,01,920.14
4 8.39 Infosys IT Consulting & Software 1530.5 6,66,328.56 5,79,705.85
27
5 7.06 HDFC Personal Products 2497.25 4,92,237.09 4,87,314.72
6 5.19 TCS IT Consulting & Software 3207.15 12,80,539.91 3,58,551.18
7 4.89 ITC Cigarettes,Tobacco Products 353.75 4,75,767.12 3,37,794.66
8 3.9 L&T Construction & Engineering 2006.9 3,12,948.54 2,69,135.74
9 3.69 Kotak Mahindra Banks 1899.85 3,49,514.50 2,55,145.58

Bank
10 3.27 Axis Bank Banks 863.95 2,62,846.94 2,26,048.37
11 3.25 HUL Housing Finance 2546.35 5,90,933.95 2,24,554.90
12 2.95 SBI Banks 584.8 4,73,807.64 2,03,737.28
13 2.82 Bharti Airtel Telecom Services 818.4 4,32,763.25 1,94,743.46
14 2.48 Bajaj Finance Holding Companies 7121.6 3,89,028.60 1,71,172.58
15 1.86 M&M Cars & Utility Vehicles 1335.7 1,66,755.63 1,28,401.84
16 1.85 Asian Paints Furniture,Furnishing,Paints 3140.5 2,71,961.35 1,27,821.83
17 1.7 HCL Tech IT Consulting & Software 1044.8 3,01,216.83 1,17,474.56
18 1.7 Maruti Suzuki Cars & Utility Vehicles 9236.35 2,66,043.42 1,17,059.10
India
19 1.54 Sun Pharma Pharmaceuticals 1044 2,35,981.06 1,06,191.48
20 1.51 Titan Co Other Apparels & 2763.25 2,22,017.56 1,04,348.25

Accessories
28
21 1.31 Tata Steel Iron & Steel/Interm.Products 102.2 1,37,229.57 90,571.51
22 1.24 Bajaj Finserv Finance (including NBFCs) 1723.25 2,25,208.18 85,579.11
23 1.22 UltraTech Cement & Cement Products 6727.55 2,10,720.97 84,288.39

Cement
24 1.16 NTPC Electric Utilities 178.15 1,63,146.41 79,941.74
25 1.06 Power Grid Electric Utilities 228.05 1,49,100.30 73,059.15
26 1.05 IndusInd Bank Banks 1148.15 86,453.33 72,620.79
27 1.02 Tech Mahindra IT Consulting & Software 1052.95 1,09,947.41 70,366.35
28 0.98 Nestle India Packaged Foods 20418.8 1,83,276.15 67,812.18
29 0.87 Wipro IT Consulting & Software 388.65 2,22,888.89 60,180.00
30 0.79 Dr Reddy’s Labs Pharmaceuticals 4592.35 75,107.66 54,828.59
What is S&P BSE Sensex?

It is a bellwether index of the Indian economy. There are 30 number stocks included in this
index. These 30 companies are the largest and the most traded (liquid) companies in their
29
sectors. The size and trading volumes ensure that they are true representatives of their
sector/industry. Moreover, companies from a range of sectors/industries are included in the
index. This variety of companies enables the index like Sensex to mimic the trend of its
economy.
The base year for S&P BSE Sensex is 1978-79. The launch date of Sensex was 01-Jan’1986
What does it mean when we say Sensex is at 55,000 points?
The base year for S&P BSE Sensex is 1978-79. In this year, it is hypothetically assumed that
Sensex was trading at 100 points.
The launch date of Sensex was 01-Jan’1986. On this date, the Sensex traded at 561 points
(see the above chart). What do 561 points mean? As compared to the Years 1978-79, the
index went up 5.61 times till 1986, in 7 Years.
Similarly, when we say that Sensex is at 55,000 points in Year-2022, this is a comparative
number with respect to the year 1978-79 (100 points).
To understand how the numbers 561 and 55,000 points are derived, I’ll suggest you read
this article about Sensex capital. It will give a fair idea of the calculation methodology.
30
Between the years 1979 and 2022, Sensex has appreciated from 100 to 55,000 points. This is
a growth rate of about 15.8% p.a. in 43 years.
What is Free Float vs Market Capitalization?
visit the BSE India website and search for stock. On the stock page, you will find two market
capitalizations mentioned for each stock. The first will be Full Market Capitalisation, and the
second will be Free Float Market Cap.
What is the difference?
 Free Float Market Cap: represent those shares of the company which is readily
available for trading. Out of the total number of stocks issued by the company, only a
part of it is actively traded in the market. These active stocks build free-float market
capitalization.
 Full Market Cap: represents all shares issued by the company. Needless to say that
free float market cap will always be less than or equal to the full market cap.
Free Float Market </= Full Market Cap
31
32
Major fall of Sensex –
Crash Date Event Points Lost % Lost
23rd March 2020 COVID-19 3943.72 13.15%
28th April 1992 Harshad Mehta Scam 570 12.77%
24th October 2008 US Financial Crisis 1070 10.95%
12th March 2020 COVID-19 2919.26 8.18%
16th March 2020 COVID-19 2713.41 7.96%
21st January 2008 US Financial Crisis 1408 7.40%
18th May 2006 -- 826 6.76%
17th March 2008 US Financial Crisis 951 6.03%
24th August 2015 -- 1624 5.93%
9th November 2016 Demonetisation 1689 5.90%
33
NEW YORK STOCK EXCHANGE
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock
exchange in the Financial District of Lower Manhattan in New York City. It is by
far the world’s largest stock exchange by market capitalization of its listed companies at
US$30.1 trillion as of February 2018. The average daily trading value was
approximately US$169 billion in 2013. The NYSE trading floor is at the new York stock
exchange building on 11 Wall Street and 18 Broad Street and is a National Historic Landmark.
An additional trading room, at 30 Broad street, was closed in February 2007.
The NYSE is owned by Intercontinental exchange, an American holding company that it also
lists (NYSE: ICE). Previously, it was part of NYSE Euronext (NYX), which was formed by
the NYSE's 2007 merger with Euronext
NYSE Composite Index
In the mid-1960s, the NYSE composite index (NYSE: NYA) was created, with a base value of
50 points equal to the 1965 yearly close. This was done to reflect the value of all stocks trading
34
at the exchange instead of just the 30 stocks included in the DOW JONES INDUSRTAL
AVERAGE. To raise the profile of the composite index, in 2003, the NYSE set its new base
value of 5,000 points equal to the 2002 yearly close. Its close at the end of 2013 was 10,400.32.
OTHER U.S STOCK EXCHANGES INDICES
U.S KEY LAST CHG % CHG

DJIA 33220.67 91.08 0.27%
Nasdaq Composite 11523.86 31.56 0.27%
S&P 500 4006.21 8.87 0.22%
Russell 2000 1896.88 8.67 0.46%
OTHER U.S LAST CHG % CHG
DJ Transportation Average 14638.97 -6.32 -0.04%
DJ Utility Average 944.94 6.07 0.65%
DJ Total Stock Market 40490.10 120.21 0.30%
Nasdaq 100 12090.12 29.82 0.25%
S&P MidCap 400 2610.93 9.59 0.37%
NYSE Composite 15585.95 13.43 0.09%
Barron’s 400 976.92 3.20 0.33%
CBOE Volatility 22.40 -0.47 -2.06%
AS OF FEBURARY 2023
35
NYSE CRASH LIST –
There have been several crashes in the history of the New York Stock Exchange (NYSE).
Here is a list of some of the most significant ones:
Panic of 1907: The NYSE experienced a sharp drop in stock prices due to a liquidity crisis and
bank runs.
1. Black Tuesday (1929): On October 29, 1929, the NYSE experienced a severe crash that
signaled the start of the Great Depression.
2. Black Monday (1987): On October 19, 1987, the NYSE experienced its largest single-
day percentage decline in history, with the Dow Jones Industrial Average dropping by
22.6%.
3. Dot-com bubble (2000): The NYSE experienced a major market correction as the
technology sector, which had seen explosive growth, suffered a significant downturn.
4. Global Financial Crisis (2008): The NYSE experienced a severe downturn as a result
of the subprime mortgage crisis and the collapse of major financial institutions.
5. COVID-19 pandemic (2020): The NYSE experienced a sharp decline in stock prices
due to the economic impact of the COVID-19 pandemic.
DOW JONES -
Dow Jones is not an industry, but rather a financial news and data company that provides a
wide range of financial news, data, and analytics services to businesses, investors, and
financial professionals. However, the Dow Jones Industrial Average (DJIA) is a stock market
index that tracks the performance of 30 large publicly traded companies in the United States,
which span various industries.
Here is a breakdown of the industries represented in the DJIA:
Technology: Several technology companies are included in the DJIA, such as Apple,
Microsoft, and Intel.
Financials: The DJIA also includes several financial companies, such as Goldman Sachs,
JPMorgan Chase, and Visa.
36
Health Care: Companies such as Johnson & Johnson, Pfizer, and Merck & Co. are included
in the DJIA's health care sector.
Consumer Goods: The DJIA also includes companies in the consumer goods sector, such as
Procter & Gamble, Coca-Cola, and McDonald's.
Industrials: Several industrial companies are included in the DJIA, including Boeing,
Caterpillar, and 3M.
Energy: Energy companies such as Chevron and ExxonMobil are also included in the DJIA.
Telecommunications: The DJIA includes telecommunications companies such as Verizon

Communications and AT&T.
Basic Materials: Basic materials companies such as Dow Chemical and DuPont are also
included in the DJIA.
Overall, the DJIA provides a diverse representation of some of the largest and most
influential companies in the United States, across a range of industries.
DOW JONES CRASH LIST –

Here are some of the major crashes in the history of the Dow Jones Industrial Average:
 Panic of 1907: The Dow Jones Industrial Average fell by 48% from its peak in 1906 to
its bottom in November 1907.
 Stock Market Crash of 1929: The Dow Jones Industrial Average fell by 89% from its
peak in September 1929 to its bottom in July 1932 during the Great Depression.
 Black Monday (1987): The Dow Jones Industrial Average fell by 22.6% on October
19, 1987, which is still the largest single-day percentage drop in its history.
 Dot-com Bubble (2000): The Dow Jones Industrial Average fell by 24% from its peak
in January 2000 to its bottom in September 2001 as the dot-com bubble burst.
 Financial Crisis of 2008: The Dow Jones Industrial Average fell by 54% from its peak
in October 2007 to its bottom in March 2009 during the global financial crisis.
It is worth noting that the Dow Jones Industrial Average is just one stock market index, and
there have been many other stock market crashes throughout history that have affected other
indices and financial markets as well.
37
NIFTY 50 –
The NIFTY 50 is a stock market index in India that represents the performance of the top 50
companies listed on the National Stock Exchange (NSE) in India. The index is calculated by
taking the weighted average of the stock prices of the 50 companies, based on their market
capitalization.
The NIFTY 50 is considered a benchmark index for the Indian stock market and is used by
investors and financial professionals to gauge the overall performance of the Indian stock
market. The companies included in the index represent various sectors of the Indian economy,
such as financials, technology, energy, consumer goods, and healthcare.
Some of the top companies included in the NIFTY 50 index are Reliance Industries, HDFC
Bank, Infosys, Tata Consultancy Services, and Housing Development Finance Corporation.
Like other stock market indices, the NIFTY 50 can be affected by various factors such as global
economic conditions, company earnings reports, political events, and monetary policy
decisions made by the Reserve Bank of India. The index is used as a benchmark to track the
performance of Indian stocks and can be used as a tool to guide investment decisions.
LIST OF NIFTY 50 COMPANIES –

1. Adani Ports and Special Economic Zone Ltd.
2. Asian Paints Ltd.
3. Axis Bank Ltd.
4. Bajaj Auto Ltd.
5. Bajaj Finance Ltd.
6. Bharat Petroleum Corporation Ltd.
7. Bharti Airtel Ltd.
8. Britannia Industries Ltd.
9. Cipla Ltd.
10. Coal India Ltd.
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11. Divi's Laboratories Ltd.
12. Dr. Reddy's Laboratories Ltd.
13. Eicher Motors Ltd.
14. Grasim Industries Ltd.
15. HCL Technologies Ltd.
16. HDFC Bank Ltd.
17. HDFC Life Insurance Company Ltd.
18. Hero MotoCorp Ltd.
19. Hindalco Industries Ltd.
20. Hindustan Petroleum Corporation Ltd.
21. Housing Development Finance Corporation Ltd.
22. ICICI Bank Ltd.
23. Indian Oil Corporation Ltd.
24. IndusInd Bank Ltd.
25. Infosys Ltd.
26. ITC Ltd.
27. JSW Steel Ltd.
28. Kotak Mahindra Bank Ltd.
29. Larsen & Toubro Ltd.
30. Mahindra & Mahindra Ltd.
31. Maruti Suzuki India Ltd.
32. Nestle India Ltd.
33. NTPC Ltd.
34. Oil & Natural Gas Corporation Ltd.
35. Power Grid Corporation of India Ltd.
36. Reliance Industries Ltd.
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37. SBI Life Insurance Company Ltd.
38. Shree Cement Ltd.
39. State Bank of India
40. Sun Pharmaceutical Industries Ltd.
41. Tata Consultancy Services Ltd.
42. Tata Motors Ltd.
43. Tata Steel Ltd.
44. Tech Mahindra Ltd.
45. Titan Company Ltd.
46. UltraTech Cement Ltd.
47. UPL Ltd.
48. Wipro Ltd.
49. Zee Entertainment Enterprises Ltd.
50. HDFC
Note: The list of companies included in the NIFTY 50 index is subject to periodic review and
changes by the National Stock Exchange of India. The above list is accurate as of the date
mentioned.
NSE MARKET CRASH LIST –
There have been several instances of market crashes in the history of the National Stock
Exchange (NSE) in India. Here are some of the major crashes that have occurred in the NSE:
 October 24, 2008 - The Nifty 50 index fell by 9.98% or 432.90 points, the biggest
single-day decline in its history at that time. This crash was triggered by the global
financial crisis that originated in the United States.
 January 21, 2008 - The Nifty 50 index fell by 7.4%, or 437 points, in a single trading
session. This crash was attributed to fears of a US recession and global economic
slowdown.
40
 March 23, 2020 - The Nifty 50 index fell by 12.98%, or 1,135 points, in a single trading
session. This crash was triggered by the COVID-19 pandemic and the ensuing
lockdowns, which led to a sharp decline in global economic activity.
 May 17, 2004 - The Nifty 50 index fell by 11.13%, or 220 points, in a single trading
session. This crash was triggered by the unexpected defeat of the ruling government in
the general elections, which created uncertainty and volatility in the markets.
 January 21, 2021 - The Nifty 50 index fell by 3.80%, or 527 points, in a single trading
session. This crash was attributed to concerns over rising COVID-19 cases in India and
the potential impact on the economy.
It's important to note that market crashes are not uncommon and can be caused by a variety of
factors, including global economic conditions, political events, and unforeseen events such as
pandemics. Investors should always be aware of the risks involved in investing and maintain a
diversified portfolio to minimize potential losses in the event of a market downturn.
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DIFFERENT SECTORS BY PERCENTAGE REPRESENTATION [NSE]–
42
CH-4
LITERATURE
REVIEW
43
SOME INFORMATION ABOUT BOTH MARKETS –
The National Stock Exchange (NSE) of India and the Dow Jones Industrial Average (DJIA)
of the United States are two of the most widely followed stock market indices in the world.
Both indices are used as barometers of the overall health of their respective economies and
are closely watched by investors, analysts, and policymakers alike. In this literature review,
we will examine the key features, historical performance, and economic significance of these
two indices.
The National Stock Exchange (NSE) of India was established in 1992 and is the largest stock
exchange in India in terms of market capitalization. The NSE index, known as the Nifty 50, is
a broad-based index of the 50 most actively traded stocks on the NSE. The Nifty 50 is
calculated using a free float market capitalization weighted methodology, which means that
the index is weighted according to the total market value of the shares that are available for
trading. This methodology ensures that the index reflects the true market value of the
underlying companies and provides a more accurate representation of the overall market
performance.
The Dow Jones Industrial Average (DJIA) is a stock market index that was created by
Charles Dow in 1896 and is the oldest continuing U.S. market index. The DJIA is comprised
of 30 large, publicly-traded companies in the United States, representing a wide range of
industries including technology, financials, and consumer goods. Unlike the NSE, the DJIA is
price-weighted, which means that the index is calculated based on the stock prices of the
underlying companies, rather than their market capitalization. This methodology can lead to
distortions in the index, as a high-priced stock can have a disproportionate impact on the
overall performance of the index.
In terms of historical performance, both indices have had periods of strong growth and
significant declines. The Nifty 50 has experienced several periods of significant growth,
including a 17% increase in 2017 and a 47% increase in 2014. However, the index has also
experienced significant declines, such as a 38% drop in 2008 during the global financial
crisis. Similarly, the DJIA has experienced periods of strong growth, including a 25%
increase in 2017 and a 26% increase in 2013. However, the index has also suffered
significant declines, such as a 54% drop in 2009 during the global financial crisis.
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In terms of economic significance, both indices are important indicators of the overall health
of their respective economies. The Nifty 50 is considered to be a key barometer of the Indian
economy, reflecting the performance of major companies across a wide range of sectors.
Similarly, the DJIA is widely viewed as a bellwether of the U.S. economy, reflecting the
performance of major companies across a wide range of industries. The performance of both
indices can have significant implications for investor sentiment, corporate earnings, and
overall economic growth.
In conclusion, the NSE and Dow Jones are two important stock market indices that reflect the
overall health of the Indian and U.S. economies, respectively. While both indices have had
periods of significant growth and decline, they are widely followed by investors, analysts,
and policymakers as key indicators of economic performance.
Dow Jones Relation With Indian Stock Market -

“There is a high correlation between the Indian Markets and the US Markets in local
currency terms in both the short term and the Long term. However, in constant currency
terms the Indian Markets have lagged the US markets as the INR depreciation has impacted
the performance of the Indian Markets negatively,” informs Ashish Ranawade, Head of
Products, Emkay Wealth Management
If we talk about the correlation of DJIA and Sensex in the last 10 years, their correlation
coefficient comes out to be 0.36. This means that there is a positive correlation between
both markets. Though there is a positive correlation coefficient, the correlation level is less.
A low correlation makes it perfect for Indian investors to invest in the US stock market.
“The correlation between the US and the Indian market (adjusted for foreign exchange
rate) has been between 0.1 and 0.2 over the last 20 years. This is important to note because,
the lower the correlation, the higher is the diversification providing stability in a portfolio,”
says Anup Bansal, Chief Investment Officer, Scripbox
A geographically diversified portfolio, especially if it includes US stocks, can bring

stability in your returns. As both the economy, US and India, have a strong future ahead,
diversification will help you to manage risk as well.
For the last ten years, before 2020, the Sensex has grown by 9.5% CAGR and Dow Jones
has grown by 10.87%. This implies that it is beneficial to invest in the US stock market.
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In conclusion:
So before investing in a US stock to diversify the portfolio, make sure to make your own
diversification strategy to get the maximum benefit out of it and reduce the risk.
Is the correlation between Indian and US stock market low

well. The Nifty 50 crossed 16000 for the first time and looks to gain further ground On the face
of it, both the Indian stock market and the US stocks are doing. While the Sensex, representing
top 30 Indian stocks, is up by nearly 42 per cent over the last 12 months, the Dow 30, the
barometer of the US economy, is up almost 31 per cent over the same period. Deep down, there
are ample opportunities in the broader market of both the economies.
However, looking at returns over 1-3 years may not be the right approach and any correlation
should be considered over a longer time frame. The US economy, on the back of its inherent
strength, is known to have a boosting effect on the global economy. The US Federal Reserve
has been taking adequate measures to ensure the US economy is not only on track to its pre-
Covid levels but is also in a position to meet the growing demand in the post-Covid world.
Above figure shows returns of US stock vs Indian for each years from
2011- 2021.
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Correlation -
For the unversed, correlation is a measure of the mutual relationship (or lack of) between two
variables. It basically indicates whether the two variables move together or move in opposing
directions or have no relationship with one another.
A correlation coefficient of 1 indicates a perfectly direct relationship in which the two

variables move together, a correlation of -1 indicates a perfectly inverse relationship and a
correlation of 0 indicates that there is no relationship between the two variables at all.
I compared the monthly returns of the last ten years of the two indices and computed a
correlation coefficient of 0.54. This indicates that there is a semi-strong relationship between
the two markets and hence any diversification strategies must be handled with caution.
Furthermore, the correlation coefficient in the last three years has been 0.64 which indicates
that there is a definite relationship between the two.
Volatility
What is Volatility and why should you care about it? Volatility is the standard deviation of
returns around its mean. It is a good indicator of how much the market moves up and down in
the defined period (preferably short term).
A lot of long-term investors tend not to care about volatility but it is important because if you
are involved in a highly volatile market then a market dip might compel you to sell early.
Hence volatility can work as a measure of risk. I once again looked at the last ten year’s
returns while calculating volatility. The volatility of the Dow Jones Index was 3.92% whereas
the BSE Sensex was considerably more volatile at 5.06% in the last ten years. On this
evidence, it can be inferred that at least in the last ten years the Indian markets have been
riskier while giving the same returns as the US markets.
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Valuations
In terms of valuations, the Dow Jones industrial average has a PE Ratio of 16 whereas the
Sensex has a PE ratio of 33.13. This doesn’t mean that the Indian market is overvalued and
you should only invest in the US Markets.
It essentially means that the market believes that the earnings of Indian companies will grow
faster than US companies. Given that the Indian GDP has grown at a faster rate than the US
GDP in recent years, this might not be an unreasonable expectation. In the last ten years too,
profit after tax of Indian companies in the index grew 12.6% compounded annually against
11% compounded annual growth of US companies.
FINAL CORRELATION-
The National Stock Exchange (NSE) is a stock exchange located in India, while the Dow Jones
Industrial Average (DJIA) is a stock market index that represents 30 large publicly traded
companies in the United States. As such, there may be some correlation between the two
markets, but it is not necessarily a direct one-to-one relationship.
There are several factors that can affect the correlation between the NSE and the DJIA,
including:
Global economic conditions:
If there are global economic conditions that affect both India and the US, such as a recession
or a period of economic growth, then the NSE and the DJIA may be more correlated.
Company performance:
The performance of the individual companies listed on the NSE and the DJIA can also affect
their correlation. For example, if a particular company that is listed on both exchanges has a
positive earnings report, then both exchanges may experience an uptick in performance.
48
Exchange rate fluctuations:
The exchange rate between the Indian rupee and the US dollar can also affect the correlation
between the NSE and the DJIA. If the exchange rate is favourable for one country, then
investors may be more likely to invest in that country's stock market, leading to increased
correlation.
Overall, while there may be some correlation between the NSE and the DJIA, it is not a direct
relationship and can be influenced by a variety of factors.
49
CH-5
RESEARCH
METHODOL
OGAY
50
Research Objective -
 To study the correlation between NSE and Dow Jones

 To analyize the return percentage of NSE and Dow Jones
 To study the Market condition of previous years of the stock exchanges
 The impact of correlation between two stock exchanges
 To check what impact both stock exchanges have on each other .
Importance of the Study –
The importance that why showed the correlation between two exchanges is to be done is
because of following reasons-
1. Global economic impact: The NSE and Dow Jones are two of the most widely followed
stock market indices in the world. Understanding the relationship between these two
indices can provide insight into the global economic impact of events that affect either
market. For example, changes in the US economy or monetary policy may have a
significant impact on the Indian economy and vice versa.
2. Investment decisions: Investors, traders, and financial institutions often use the
performance of stock market indices as a guide to making investment decisions. By
understanding the correlation between the NSE and Dow Jones, investors can better
manage their portfolios and minimize risk exposure.
3. Market trends: The correlation between the NSE and Dow Jones can also provide
insight into market trends, including the direction and strength of market movements.
This information can help market participants make informed decisions about buying
and selling stocks.
4. Business decisions: Companies operating in India and the US may also benefit from
understanding the correlation between the NSE and Dow Jones. For example, a
company exporting goods to the US may need to consider the impact of changes in the
US economy on their business operations.
51
5. Policy decisions: Governments and policymakers may also use information about the
correlation between the NSE and Dow Jones to make policy decisions related to trade,
investment, and economic growth
Research design-
1. Descriptive Research Design:
The descriptive research design aims to describe and summarize the relationship
between the NSE and Dow Jones Industrial Average. This research design will help to
answer the research questions related to the level and nature of correlation between the
two indices. The study could involve collecting historical data on the NSE and Dow
Jones, calculating correlation coefficients, and presenting the findings in tables, charts,
and graphs.
2. Exploratory Research Design:
The exploratory research design aims to explore the factors that affect the correlation
between the NSE and Dow Jones. This research design will help to answer the research
questions related to the factors that impact the relationship between the two indices.
The study could involve conducting interviews with financial experts, market analysts,
and investors to gather their opinions on the factors that affect the correlation between
the two indices
3. Causal Research Design:
The causal research design aims to establish a cause-and-effect relationship between

the NSE and Dow Jones. This research design will help to answer the research questions
related to the potential impact of the correlation between the two indices on the Indian
and global economy. The study could involve conducting experiments to test the impact
of economic news, political events, and global market trends on the correlation between
the two indices. The findings from these experiments could be used to develop causal
models that could be used to predict the impact of future events on the relationship
between the NSE and Dow Jones.
52
Sampling size-
In the context of correlation between NSE and Dow Jones the meaning of sampling size
is the historical data or returns on which the correlation is been done is called as
sampling size
I had collected data of both Exchanges from year [ 2012-2022] . I had taken the
sampling size data of previous 10 years of data.
Sampling frame -
In the context of correlation between NSE and Dow Jones the meaning of sampling
frame is the closing monthly price of both the stock exchanges . And not only that it
depends on others factors such as economic news , political events and global trends.
Techniques of Analysis –
I have completed my research on basis of two methods which are –
1) Karl Pearson correlation coefficient Method

2) Spearman’s rank correlation Method
Limitations of study-
1. External factors: The correlation between the NSE and Dow Jones may be influenced
by external factors such as geopolitical events, natural disasters, or pandemics, which
can cause volatility and uncertainty in the markets. These external factors may make it
difficult to establish a stable and consistent correlation between the two indices.
2. Sample size: The size of the sample used in the study may also impact the reliability
of the findings. If the sample size is too small, it may not accurately reflect the larger
population and may lead to incorrect conclusions.
3. Time period: The time period selected for the study may also impact the results. For
example, if the time period selected is too short, it may not capture long-term trends
in the correlation between the NSE and Dow Jones.
4. Causation: Correlation does not necessarily imply causation. The study of the
correlation between NSE and Dow Jones may indicate a strong relationship between
the two indices, but it does not necessarily establish a causal relationship. Other
53
factors may be involved in causing changes in either market, which may not be
captured by the study
54
CH-5
THEORITICAL
PROFILE
55
THEOROTICAL INFORMATION ABOUT CORRELATION-
The theory of correlation is a statistical concept that measures the degree of association
between two or more variables. Correlation is an important tool used in many fields, including
finance, economics, psychology, and sociology, among others. Correlation can be positive,
negative, or zero, indicating the direction and strength of the relationship between variables.
Positive correlation occurs when two variables move in the same direction. For example, if the
price of gold increases, the demand for gold jewelry may also increase, leading to a positive
correlation between the two variables. In finance, a positive correlation can be observed
between the performance of two stocks in the same industry, as their fortunes are often linked.
Negative correlation occurs when two variables move in opposite directions. For example, if
the price of a substitute product for gold decreases, the demand for gold jewelry may decrease,
leading to a negative correlation between the two variables. In finance, a negative correlation
can be observed between the performance of two stocks in different industries, as they may be
affected by different market conditions.
Zero correlation occurs when there is no relationship between two variables. For example, there
may be zero correlation between the number of hours a person sleeps and their shoe size, as
the two variables are unrelated. In finance, a zero correlation can be observed between the
performance of two stocks that operate in completely different markets and are not affected by
similar factors.
Correlation is measured using a correlation coefficient, which ranges from -1 to +1. A

correlation coefficient of +1 indicates a perfect positive correlation, while a correlation
coefficient of -1 indicates a perfect negative correlation. A correlation coefficient of 0 indicates
no correlation. The closer the correlation coefficient is to 0, the weaker the relationship between
the two variables.
Correlation is an important tool used in many areas of research and analysis. It allows
researchers to identify the strength and direction of relationships between variables, which can
help in predicting future trends and making informed decisions. However, it is important to
note that correlation does not imply causation, as there may be other factors at play that
influence the variables in question. Therefore, it is important to conduct further research to
establish causation and understand the underlying mechanisms behind the observed
correlations.
56
NATIONAL STOCK EXCHANGE –
Nifty 50 VITAL STATISTICS –
Price- earning ratio 20.73

Price-to-book ratio 4.14
Dividend yield 1.39
Std. deviation 23.59
Returns since inception% 11.11
Nifty 50 returns and Nifty 50 total returns index-
The dividends of the stocks in the Nifty 50 are assumed to be reinvested in the index after the
close of the ex-date. Such an index is called the Total Returns index. The Nifty 50 has a TRI
version also available and the same is used as a benchmark for several mutual funds.
The total returns index therefore has a higher return than the Nifty 50 when considered for any
period of time.
THIS PICTURE GIVES US PROPER IMFORMATION ABOUT THE PERCENTAGE

RETURN OF NIFTY 50 .
FROM FINANCIAL YEAR 2000 – 2022
57
NIFTY-50 VS OTHER STOCK EXCHAGES-
Effect on Dow Jones on Indian Markets –
As a result of globalization, the whole globe has become a one economy, with global financial
markets operating in lockstep. Because we are connected to the rest of the globe via numerous
enterprises, every firm is linked to another, either directly or indirectly, in order to achieve their
goals.
As we all know, the United States has the world's biggest economy. Any unfavourable news in
the US markets has a significant impact on worldwide markets, particularly the Indian stock
markets. As we've seen, the 2008 financial crisis had an impact on practically every country's
economy. The Indian stock markets plummeted, and global house prices began to fall, causing
widespread anxiety throughout the globe. As a result, we may conclude that the five-year charts
58
of the Nifty 50 and the Dow Jones Industrial Average show a clear association between the two
markets.
RETURNS OF DOW JONES –
The returns of the Dow Jones Industrial Average (DJIA) are a measure of the percentage
increase or decrease in the value of the index over a specific period of time. The DJIA is
one of the most widely used stock market indices and is considered a benchmark for the
overall performance of the US stock market.
The returns of the DJIA are calculated using a price-weighted methodology, which means
that the index is calculated based on the stock prices of its 30 component companies. The
returns of the DJIA can be calculated using the following formula:
((Current Value - Previous Value) / Previous Value) x 100
For example, if the DJIA was at 34,000 on January 1 and it increased to 36,000 on
December 31, the return for the year would be:
((36,000 - 34,000) / 34,000) x 100 = 5.88%
The returns of the DJIA can vary widely depending on the specific time period being
considered. Over the long term, the DJIA has historically delivered positive returns, but
there have been periods of volatility and negative returns as well. It's important to note
that past performance is not indicative of future results, and investing in the stock market
carries risks.
RETURNS OF NSE –
The returns of the National Stock Exchange (NSE) are a measure of the percentage
increase or decrease in the value of the index over a specific period of time. The NSE is
the leading stock exchange in India, with more than 2,000 listed companies.
The returns of the NSE are calculated using a free float market capitalization weighted
methodology, which means that the index is calculated based on the market capitalization
of its component companies, adjusted for the proportion of shares that are freely available
for trading. The returns of the NSE can be calculated using the following formula:
59
((Current Value - Previous Value) / Previous Value) x 100
For example, if the NSE was at 15,000 on January 1 and it increased to 17,000 on
December 31, the return for the year would be:
((17,000 - 15,000) / 15,000) x 100 = 13.33%
The returns of the NSE can vary widely depending on the specific time period being
considered. Over the long term, the NSE has historically delivered positive returns, but
there have been periods of volatility and negative returns as well. It's important to note
that past performance is not indicative of future results, and investing in the stock market
carries risks.
MAJOR CORRELATION FACTORS OF NSE AND DOW JONES –
The National Stock Exchange (NSE) and the Dow Jones Industrial Average (DJIA) are
both stock market indices that track the performance of different sets of companies in
different countries. While there can be some indirect relationship between the two indices,
there is no major or direct correlation between the NSE and DJIA.
The stock markets of different countries can be influenced by a variety of factors such as
economic growth, interest rates, geopolitical events, and global market trends. These
factors can impact the performance of both the NSE and DJIA, but the relationship between
the two indices is complex and not always predictable.
For example, a positive development in the US economy could lead to an increase in the
stock prices of US companies listed on the DJIA, which could attract foreign investment
and potentially have a positive impact on the stock prices of companies listed on the NSE.
However, other factors such as currency exchange rates and country-specific economic
conditions can also impact the performance of the NSE and DJIA independently of each
other.
Overall, while there may be some indirect relationship between the NSE and DJIA, the
correlation between the two indices is not major and is subject to a variety of factors that
can impact their performance independently.
60
METHOD USED FOR FINDING CORRELATION-
KARL PEAESON CORRELATION COEFFICIENT -
. The Karl Pearson correlation, also known as Pearson's correlation coefficient, is a
statistical measure that determines the strength and direction of the linear
relationship between two continuous variables. It is denoted by the symbol "r"
and takes values between -1 and 1, with a value of 0 indicating no linear

correlation.
A positive value of r indicates a positive correlation (as one variable increases, so

does the other), while a negative value indicates a negative correlation (as one
variable increases, the other decreases). The magnitude of r indicates the strength
of the correlation, with larger absolute values indicating stronger correlations
Advantages of Karl Pearson Method
1. Measures the strength and direction of a linear relationship: The Karl Pearson
correlation method is effective in measuring the strength and direction of a linear
relationship between two variables. It can identify whether there is a positive,
negative or no correlation between the variables.
2. Provides a numerical value: The correlation coefficient obtained through this method
provides a numerical value that helps to quantify the strength of the relationship
between the variables. This value ranges from -1 to +1, where -1 indicates a perfect
negative correlation, +1 indicates a perfect positive correlation, and 0 indicates no
correlation.
3. Easy to interpret: The correlation coefficient obtained through this method is easy to
interpret, and it can be used to compare the strength of relationships between different
pairs of variables. A higher absolute value of the correlation coefficient indicates a
stronger relationship between the variables.
4. Widely used in research: The Karl Pearson correlation method is one of the most
widely used statistical techniques in research across a range of fields, including social
sciences, healthcare, finance, and engineering.
61
5. Allows for hypothesis testing: The Karl Pearson correlation method can be used to
test hypotheses about the relationship between two variables. It can help researchers
to determine whether the correlation coefficient is statistically significant or due to
chance
FORMULA
The formula for calculating the Karl Pearson correlation coefficient (r) between two variables
X and Y is as follows:
r = ( Σ (Xi - X̄)(Yi - Ȳ) ) / ( √ Σ(Xi - X̄)² √ Σ(Yi - Ȳ)² )
where:
Σ denotes the sum of the values over all i observations;
Xi and Yi are the values of the ith observation of variables X and Y, respectively;
X̄ and Ȳ are the means of variables X and Y, respectively;
√ denotes the square root of the sum of squares of deviations from the mean.
The numerator of the formula represents the sum of cross-products of deviations from the
mean of the two variables, while the denominator represents the product of their standard
deviations. This formula can be used to calculate the correlation coefficient for a sample of
data or for an entire population.
62
CH-7
DATA
ANALYSIS
63
ANALYSIS FOR YEAR 2012-
INDEX 2012 NSE DJIX
JANUARY 0.12 0.01

FEBUARY 0.02 0.01
MARCH -0.008 0.01
APRIL -0.013 -0.003
MAY -0.06 -0.06
JUNE 0.09 0.06
JULY -0.009 0.01
AUGUST 0.03 0.008
SEPTEMBER 0.08 0.03
OCTOBER -0.01 -0.03
NOVEMBER 0.04 -0.01
DECEMBER 0.005 0.01
CORRELATION 0.69845
64
GRAPH OF ANALYSIS -
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC
-0.02
-0.04
-0.06
nse (return) djix(return)

-0.08
Karl Pearson range –
Strong correlation= +0.5 to +1.0 Average correlation= +0.3 to +0.4
Weak or No correlation= +0.1 to +0.2 negative correlation= -0.1 to -1.0
INTERPRETATION-
YEAR 2012-
Here in 2012 the correlation between both stock exchanges is
0.69845 which is termed to mean that there is strong correlation between two exchanges in
year 2012
Reasons-
In 2012 Dow jones and Nifty50 were having rise in markets capitalization because they
were recovering from the shock of 2009 financial crisis .
Dow jones was up by 7.3% whereas Nifty50 was up by 27.70% .
65
INDEX 2013 NSE DJIX
JANUARY 0.01 0.03

FEBUARY -0.05 0.003
MARCH -0.006 0.03
APRIL 0.03 0.01
MAY -0.002 0.02
JUNE -0.01 -0.02
JULY -0.02 0.03
AUGUST -0.04 -0.05
SEPTEMBER 0.03 0.01
OCTOBER 0.08 0.02
NOVEMBER -0.02 0.03
DECEMBER 0.01 0.03
CORRELATION 0.346416
66
GRAPH OF ANALYSIS-
0.1
0.08
0.06
0.04
0.02
0
JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC
-0.02
-0.04
-0.06
NSE DJIX
DATA INTERPRETATION -
YEAR 2013-
0.34616 which is termed to mean that correlation of return is average between two
exchanges in year 2013
Reasons-
The reason for average correlation is that in year 2013 the Intrest rates were low and the
manufacturing sector got the boost in it .
67
ANALYSIS FOR YEAR 2014 –
INDEX 2014 NSE DJIX
JANUARY -0.03 -0.04

FEBUARY 0.04 0.06
MARCH 0.07 0.01
APRIL -0.0008 0.002
MAY 0.07 0.009
JUNE 0.03 0.004
JULY 0.01 -0.02
AUGUST 0.04 0.03
SEPTEMBER -0.007 -0.001
OCTOBER 0.04 0.03
NOVEMBER 0.03 0.02
DECEMBER -0.03 0.002
68
GRAPH OF ANALYSIS –
0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06
NSE DJIX
DATA INTERPRETATION –
YEAR 2014-
0.580078 which is termed to mean that the correlation of return is Strong between two
stock exchanges in year 2014
Reasons-
The reason behind it is there was tremendous growth in US markets . And in India growth
in cash capital of NSE was up by 50%
And other reason is that the new government formation in India which on single day gave
returns up by 2% { Not from any political perspective just citing the data }
In 2014 Dow jones was up by 7.52% and Nifty50 was up by 31.39%
69
INDEX 2015 NSE DJIX
JANUARY 0.06 -0.03

FEBUARY 0.01 0.04
MARCH -0.05 -0.02
APRIL -0.04 0.008
MAY 0.01 -0.0007
JUNE -0.007 -0.02
JULY 0.009 -0.003
AUGUST -0.06 -0.06
SEPTEMBER 0.02 0.01
OCTOBER 0.01 0.08
NOVEMBER -0.01 -0.006
DECEMBER -0.001 -0.02
70
GRAPH OF ANALYSIS-
0.1
0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06
-0.08
NSE DJIX
YEAR 2015-
0.307898 which is termed to mean that the correlation of return is average between two
stock exchanges in year 2015
Reasons-
The reason for this is that there was fear in market over slowdown in China as Yuan has
been depreciated or devaluated two weeks ago and Shanghai stock exchange fell by 8.5%
Also known as great fall of china .
In 2015 Dow jones was down by 2.23% and Nifty50 was down by 4%
71
INDEX 2016 NSE DJIX
JANUARY -0.05 -0.03

FEBUARY -0.07 0.004
MARCH 0.07 0.04
APRIL 0.01 -0.001
MAY 0.04 -0.005
JUNE 0.01 0.007
JULY 0.03 0.02
AUGUST 0.01 -0.0001
SEPTEMBER -0.01 -0.0006
OCTOBER -0.01 -0.0006
NOVEMBER -0.04 0.06
DECEMBER -0.0008 0.02
72
GRAPH OF ANALYSIS-
0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06
-0.08
NSE DJIX
YEAR 2016-
0.217842 which is termed to mean that the correlation of return is weak between two stock
exchange in year 2016
Reasons-
The reason for low or no correlation between both of them is that there was huge fall or
slowdown in different Asian stock exchanges which affected the returns of nse . though
dow jones returns were significant but drop in NSE returns affected the correlation between
it .
73
INDEX 2017 NSE DJIX
JANUARY 0.04 -0.0008

FEBUARY 0.01 0.04
MARCH 0.02 -0.02
APRIL 0.007 0.01
MAY 0.03 0.004
JUNE -0.009 0.009
JULY 0.04 0.01
AUGUST -0.01 -0.0007
SEPTEMBER -0.01 0.01
OCTOBER 0.04 0.03
NOVEMBER -0.02 0.03
DECEMBER 0.04 0.02
CORRELATION -0.07581
74
0.05
0.04
0.03
0.02
0.01
0
-0.01
-0.02
-0.03
NSE DJIX
YEAR 2017-
-0.07581 which is termed to mean that the correlation of return is negatively weak is year
2017
Reasons-
The reason for negative correlation between them is the is there was an uneven returns
between the two markets. When the nifty50 was in positive then dow jones was in negative
so this lead to negative correlation between two exchanges.
75
INDEX 2018 NSE DJIX
JANUARY 0.05 0.05

FEBUARY -0.04 -0.04
MARCH -0.03 -0.02
APRIL 0.05 0.02
MAY 0.001 0.01
JUNE 0.001 -0.01
JULY 0.06 0.04
AUGUST 0.02 0.02
SEPTEMBER -0.05 0.01
OCTOBER -0.05 -0.05
NOVEMBER 0.04 0.006
DECEMBER -0.001 -0.09
76
GRAPH OF ANALYSIS-
0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06
-0.08
-0.1
NSE DJIX
YEAR 2018-
Here is 2018 the correlation between both stock exchanges is
0.623456 which is termed to mean that the return is strong between two exchanges in 2018
Reasons-
In 2018 there is strong correlation between both exchanges . But in 2018 the US market
fall by 5.63% as their was tightening of monetory policy by their central bank and that
same year the trade war was started between US and China .
77
INDEX 2019 NSE DJIX
JANUARY -0.007 0.07

FEBUARY -0.009 0.03
MARCH 0.06 -0.003
APRIL 0.006 0.01
MAY 0.01 -0.06
JUNE -0.02 0.07
JULY -0.06 0.005
AUGUST 0.003 -0.06
SEPTEMBER 0.06 0.03
OCTOBER 0.04 0.01
NOVEMBER 0.01 0.02
DECEMBER 0.009 0.02
78
GRAPH OF ANALYSIS-
0.08
0.06
0.04
0.02
0
-0.02
-0.04
-0.06
-0.08
NSE DJIX
YEAR 2019-
.013249 which is termed to mean that return between two stock exchanges is negatively
weak
Reasons-
The correlation between 2019 is negative between both exchanges because although dow
jones performance was good but at that year the returns of nifty50 were low as compared
to dow jones .
79
INDEX 2020 NSE DJIX
JANUARY -0.01 -0.02

FEBUARY -0.03 -0.1
MARCH -0.22 -0.17
APRIL 0.19 0.16
MAY 0.03 0.06
JUNE 0.04 0.01
JULY 0.06 0.02
AUGUST 0.04 0.06
SEPTEMBER -0.01 -0.03
OCTOBER 0.01 -0.04
NOVEMBER 0.11 0.1
DECEMBER 0.06 0.02
80
GRAPH OF ANALYSIS-
Chart Title
0.25
0.2
0.15
0.1
0.05
0
-0.05
-0.1
-0.15
-0.2
-0.25
NSE DJIX
year 2020-
here in 2020 the correlation between both stock exchanges is
0.932661 which is termed to mean that return between two stock exchanges is strong in
year 2020
Reasons-
The correlation is very strong between them because the returns were up by very high dow
jones was up by7.25% and Nifty50 was up by 14.17% this was because the relief of covid-
19 and stock market were getting out of the panic situation.
81
INDEX 2021 NSE DJIX
JANUARY -0.02 0.01

FEBUARY 0.01 0.02
MARCH -0.004 0.04
APRIL -0.01 0.02
MAY 0.06 0.01
JUNE 0.009 -0.002
JULY 0.005 0.008
AUGUST 0.07 0.01
SEPTEMBER 0.03 -0.04
OCTOBER 0.007 0.04
NOVEMBER -0.05 -0.03
DECEMBER 0.01 0.06
82
GRAPH OF ANALYSIS-
0.08
0.06
0.04
0.02
0
JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV
-0.02
-0.04
-0.06
NSE DJIX
DATA INTERPRETATION-
year 2021-
0.071463 which is termed to mean that return is positively weak in year 2021
Reasons-
In 2021 their were some sectors who were in positive side but due to many incidents such
as increase in covid cases, rise in oil prices per barrel lead to overall low correlation
between two of them.
83
INDEX 2022 NSE DJIX
JANUARY -0.03 -0.03

FEBUARY -0.04 -0.04
MARCH -0.04 0.04
APRIL -0.03 -0.05
MAY -0.02 -0.002
JUNE -0.04 -0.06
JULY 0.08 0.05
AUGUST 0.02 -0.03
SEPTEMBER -0.02 -0.09
OCTOBER 0.06 0.1
NOVEMBER 0.03 0.05
DECEMBER -0.03 -0.03
84
0.15
0.1
0.05
0
-0.05
-0.1
NSE DJIX+Sheet11!$E$3:$E$14
year 2022-
0.697815 which is termed to mean that return is strong between both exchanges in 2022.
Reasons-
In year 2022 there is very high correlation between two stock exchanges becauses of
many common factors such as increase in repo rate by RBI and increase in intrest rate of
dollar currency by federal banks and their effects gave direct results on stock exchanges.
85
Data Analysis with SPEARMAN’S RANK CORRELATION Method
-
Spearman rank correlation is a statistical measure of the strength and direction of the
association between two variables. It is a non-parametric measure, which means it does
not assume any particular distribution for the data.
The Spearman rank correlation coefficient is denoted by the symbol "r". It ranges
between -1 and 1, where -1 indicates a perfect negative correlation, 0 indicates no
correlation, and 1 indicates a perfect positive correlation.
To calculate the Spearman rank correlation coefficient, the ranks of the observations for
each variable are used rather than the actual values. The formula for calculating
Spearman's rank correlation coefficient is:
r = 1 - 6∑d^2/n(n^2 - 1)
where ∑d^2 is the sum of the squared differences between the ranks of the paired
observations, n is the sample size.
Spearman rank correlation is useful when the data do not meet the assumptions of
parametric tests, such as normality or homoscedasticity. It is commonly used in social
sciences, psychology, and other fields to study relationships between variables.
The Spearman Rank Correlation can take a value from +1 to -1 where,
 A value of +1 means a perfect association of rank
 A value of 0 means that there is no association between ranks
 A value of -1 means a perfect negative association of rank
86
Advantages of spearman’s rank correlation-
1. Robustness to outliers: The Spearman rank correlation method is less sensitive to

outliers than other correlation methods. Outliers can skew the data and lead to incorrect
conclusions about the relationship between variables. The Spearman method uses ranks
rather than actual values, reducing the impact of outliers on the results.
2. No assumption of normality: The Spearman rank correlation method does not require
the data to be normally distributed. This makes it a useful tool for analyzing non-normal
data or data that violates the assumptions of other correlation methods.
3. Ability to handle non-linear relationships: The Spearman rank correlation method is

useful for detecting non-linear relationships between variables. It is not restricted to
detecting linear relationships only, which makes it a powerful tool for analyzing
complex data.
4. Applicable to ordinal data: The Spearman rank correlation method is applicable to both
continuous and ordinal data. Ordinal data is data that is ranked or ordered, rather than
measured on a continuous scale. This makes the Spearman method useful for analyzing
data that is not measured on a continuous scale.
5. Simple to use and interpret: The Spearman rank correlation method is simple to use and
interpret. It produces a correlation coefficient that ranges from -1 to +1, with higher
absolute values indicating stronger relationships. This makes it easy to communicate
the results of the analysis to others.
6. Insensitivity to changes in location or scale: The Spearman rank correlation method is

insensitive to changes in location or scale of the data. This means that the method is not
affected by changes in the units used to measure the variables, making it a more general
and flexible tool for analyzing data
87
INDEX 2012 NSE DJIX RANK NSE RANK DJIX
JANUARY 0.12 0.01 12 8

FEBUARY 0.02 0.01 8 8
MARCH -0.008 0.01 5 8
APRIL -0.013 -0.003 2 4
MAY -0.06 -0.06 1 1
JUNE 0.09 0.06 11 12
JULY -0.009 0.01 4 8
AUGUST 0.003 0.008 6 5
SEPTEMBER 0.08 0.03 10 11
OCTOBER -0.01 -0.03 3 2
NOVEMBER 0.04 -0.01 9 3
DECEMBER 0.005 0.01 7 8
88
GRAPH REPRESENTATION-
14
12
10
-2
nse djix rank nse rank djix
In year 2012 the correlation between the two exchanges is 0.688858 which is termed to be
as an average correlation as there are not more positive signs in the market condition.
Spearman correlation range -
-1 indicates a perfect negative correlation
0 indicates no correlation between the two variables
1 indicates a perfect positive correlation
Reasons-
{ Reasons are mentioned earlier in Karl pearson coefficient correlation test }
89
JANUARY 0.01 0.03 8.5 10

FEBUARY -0.05 0.003 1 3
MARCH -0.006 0.03 6 10
APRIL 0.03 0.01 10.5 4.5
MAY -0.002 0.02 7 6.5
JUNE -0.01 -0.02 5 2
JULY -0.02 0.03 3.5 10
AUGUST -0.04 -0.05 2 1
SEPTEMBER 0.03 0.01 10.5 4.5
OCTOBER 0.08 0.02 12 6.5
NOVEMBER -0.02 0.03 3.5 10
DECEMBER 0.01 0.03 8.5 10
90
14
12
10
0
-2
Year 2013-
In 2013 the correlation between two stock exchanges as per the spearman’s correlation
0.190243 which is meant that there is weak correlation between two exchanges .
Reasons-
91
JANUARY 0.03 -0.04 1.5 1

FEBUARY 0.04 0.06 9 12
MARCH 0.07 0.01 11.5 8
APRIL -0.0008 0.002 4 4.5
MAY 0.07 0.009 11.5 7
JUNE 0.03 0.004 6.5 6
JULY 0.01 -0.02 5 2
AUGUST 0.04 0.03 9 10.5
SEPTEMBER -0.007 -0.001 3 3
OCTOBER 0.04 0.03 9 10.5
NOVEMBER 0.03 0.02 6.5 9
DECEMBER -0.03 0.002 1.5 4.5
92
GRAPH REPRESENTATION -
14
12
10
0
-2
YEAR 2014-
In year 2014 the correlation between the two stock exchanges is 0.747809 which is meant
that the there is good correlation between the two stock exchanges .
Reasons-
93
JANUARY 0.06 -0.03 12 2

FEBUARY 0.01 0.04 9 11
MARCH -0.05 -0.02 2 4
APRIL -0.04 0.008 3 9
MAY 0.01 -0.0007 9 8
JUNE -0.007 -0.02 5 4
JULY 0.009 -0.003 7 7
AUGUST -0.06 -0.06 1 1
SEPTEMBER 0.02 0.01 11 10
OCTOBER 0.01 0.08 9 12
NOVEMBER -0.01 -0.006 4 6
DECEMBER -0.001 -0.02 6 4
CORRELATION 0.41844
94
GRAPH REPRESENTATION -
14
12
10
0
-2
YEAR 2015-
In year 2015 the correlation between the two stock exchanges is 0.41844 which is meant
that there is an average correlation between the two markets.
Reasons-
95
JANUARY -0.05 -0.03 2 1

FEBUARY -0.07 0.004 1 7
MARCH 0.07 0.04 12 11
APRIL 0.01 -0.001 8 3
MAY 0.04 -0.005 11 2
JUNE 0.01 0.007 8 8
JULY 0.03 0.02 10 9.5
AUGUST 0.01 -0.0001 8 6
SEPTEMBER -0.01 -0.0006 4.5 4.5
OCTOBER -0.01 -0.0006 4.5 4.5
NOVEMBER -0.04 0.06 3 12
DECEMBER -0.0008 0.02 6 9.5
96
14
12
10
0
-2
YEAR 2016-
In year 2016 the correlation between the two stock exchanges as per the spearman rank
correlation is 0.145135 which is termed to be low correlation as two stock exchanges were
mostly negative in year 2016.
Reasons-
97
JANUARY 0.04 -0.0008 10.5 2

FEBUARY 0.01 0.04 6 12
MARCH 0.02 -0.02 7 1
APRIL 0.007 0.01 5 7
MAY 0.03 0.004 8 4
JUNE -0.009 0.009 4 5
JULY 0.04 0.01 10.5 7
AUGUST -0.01 -0.0007 2.5 3
SEPTEMBER -0.01 0.01 2.5 7
OCTOBER 0.04 0.03 10.5 10.5
NOVEMBER -0.02 0.03 1 10.5
DECEMBER 0.04 0.02 10.5 9
98
14
12
10
0
-2
YEAR 2017-
In 2017 the correlation between the two stock exchanges is -0.04497 which is termed to be
negative correlation as of spearman rank correlation . this is because in 2017 the most of
the months the markets were in red sign
Reasons-
99
JANUARY 0.05 0.05 10.5 12

FEBUARY -0.04 -0.04 3 3
MARCH -0.03 -0.02 4 4
APRIL 0.05 0.02 10.5 9.5
MAY 0.001 0.01 6.5 7.5
JUNE 0.001 -0.01 6.5 5
JULY 0.06 0.04 12 11
AUGUST 0.02 0.02 8 9.5
SEPTEMBER -0.05 0.01 1.5 7.5
OCTOBER -0.05 -0.05 1.5 2
NOVEMBER 0.04 0.006 9 6
DECEMBER -0.001 -0.09 5 1
CORRELATION 0.74956
100
14
12
10
0
-2
nse djix rank nse+Sheet7!$E$3:$E$14 rank djix
YEAR 2018
In 2018 the correlation between two stock exchanges is 0.74956 as both stock exchanges
were in boom in almost every month due to growth in it and it is termed as good correlation
between them .
Reasons-
101
JANUARY -0.007 0.07 4 11.5

FEBUARY -0.009 0.03 3 9.5
MARCH 0.06 -0.003 11.5 3
APRIL 0.006 0.01 6 5.5
MAY 0.01 -0.06 8.5 1.5
JUNE -0.02 0.07 2 11.5
JULY -0.06 0.005 1 4
AUGUST 0.003 -0.06 5 1.5
SEPTEMBER 0.06 0.03 11.5 9.5
OCTOBER 0.04 0.01 10 5.5
NOVEMBER 0.01 0.02 8.5 7.5
DECEMBER 0.009 0.02 7 7.5
CORELLATION -0.26372
102
14
12
10
0
-2
YEAR 2019-
In 2019 the correlation between two stock exchanges is -0.26372 which is negative
correlation . the main reason for that is both stock exchanges were in negative as the market
was falling due to fear of outbreak of covid-19.
Reasons-
103
JANUARY -0.01 -0.02 3.5 5

FEBUARY -0.03 -0.1 2 2
MARCH -0.22 -0.17 1 1
APRIL 0.19 0.16 12 12
MAY 0.03 0.06 6 9.5
JUNE 0.04 0.01 7.5 6
JULY 0.06 0.02 9.5 7.5
AUGUST 0.04 0.06 7.5 9.5
SEPTEMBER -0.01 -0.03 3.5 4
OCTOBER 0.1 -0.04 5 3
NOVEMBER 0.11 0.1 11 11
DECEMBER 0.06 0.02 9.5 7.5
104
14
12
10
0
-2
YEAR 2020-
In year 2020 the correlation between the two stock exchanges is 0.883599 which is very
good correlation between two stock exchanges and it shows strong signs of correlation
between these two exchanges .
Reasons-
105
JANUARY -0.02 0.01 2 6

FEBUARY 0.01 0.02 8.5 8.5
MARCH -0.004 0.04 4 10.5
APRIL -0.01 0.02 3 8.5
MAY 0.06 0.01 11 6
JUNE 0.009 -0.002 7 3
JULY 0.005 0.008 5 4
AUGUST 0.07 0.01 12 6
SEPTEMBER 0.03 -0.04 10 1
OCTOBER 0.007 0.04 6 10.5
NOVEMBER -0.05 -0.03 1 2
DECEMBER 0.01 0.06 8.5 12
CORRELATION 0.00531
106
Chart Title
14
12
10
0
-2
NSE DJIX RANK NSE RANK DJIX
YEAR 2021-
In year 2021 the correlation between the two stock exchanges is 0.00531 which is termed
to low correlation between two stock exchanges . the nain reason behind this is the
increased tensions of covid-19 and the lockdown period and the restrictions of it.
Reasons-
107
JANUARY -0.03 -0.03 5 6

FEBUARY -0.04 -0.04 2 4
MARCH -0.04 0.04 2 9
APRIL -0.03 -0.05 5 3
MAY -0.02 -0.002 7.5 8
JUNE -0.04 -0.06 2 2
JULY 0.08 0.05 12 10.5
AUGUST 0.02 -0.03 9 6
SEPTEMBER -0.02 -0.09 7.5 1
OCTOBER 0.06 0.1 11 12
NOVEMBER 0.03 0.05 10 10.5
DECEMBER -0.03 -0.03 5 6
108
14
12
10
0
-2
nse djix rank nse rank djix Series5
YEAR 2022-
In year 2022 the correlation between the two stock exchanges is 0.591413 which is termed
to be as an average correlation between both of these stock exchanges.
Reasons-
109
Ch-8
FINDINGS
110
Here we will discuss what we have find out of the data analysis which
has been done with two different methods –
After the completion of the whole part od the data analysis which is been done by two different
methods,
3) Karl Pearson correlation method

4) Spearman’s rank correlation methods
I have concluded that there are not only one or two factors which affects the correlation between
the two stock exchanges but there are many factors which are unprecedented . Like in year
2019 the U.S stocks crashed due to more registered covid cases in U.S.A but at that time the
Indian stock market does not fell much effect of it . And when both stock exchanges have many
common factors which correlate them directly or indirectly . In data analysis part I have
collected the data of both stock exchanges of their past 11 years returns percentage and after
evaluating that I have learned about the factors that decides correlation between these two
stocks such as If U.S is having recession it will affect Indian I.T stock because when there will
be recession the IT contracts which US companies gives to India as it is more economically
beneficial for them so in that part of time it will directly affect Indian stock exchanges and it
will be in negative sign. The Dow Jones and Nifty 50 both indices are having major top
companies included in it they mainly have more impact on stock exchange and that particular
industry so it is the main factor that the market is unknown of it .
In data analysis section the different years correlation are mentioned which are mostly affected
on Nifty 50 stock exchange due to happening in US markets . there is much pf them in these
analysis of correlation.
In different years of the analysis the returns of US markets and Indian markets are not having
much different results in the recent years but there is more of interrelation between the two
stock exchanges.
111
CH-9
CONCLUSION
112
AS I Have concluded my findings now it’s giving it a conclusion based on my research which
I have performed .
The correlation between Indian stock exchanges and US stock exchanges occurs due to many
reasons . and same for downfall as well. These depends on various factors of the market which
os volatile . In my research I found out that both stocks performance is at good percentage but
as of my report I find out that the correlation between two exchanges are mostly similar due to
same growth percentage monthly ( some to all cases ) which is major benefit for both stock
exchanges .
NSE and Dow Jones are both important indicators of the health and performance of their
respective economies. The NSE is the leading stock exchange in India, while the Dow Jones
Industrial Average is a stock market index in the United States that tracks the performance of
30 large publicly traded companies.
One of the key factors that can influence the correlation between NSE and Dow Jones is global
economic conditions. For example, if there is a recession or economic downturn in the US, it
could lead to decreased investment in US-based companies and a decline in the Dow Jones.
This could, in turn, have a negative impact on NSE and lead to a negative correlation between
the two indices.
Another factor that can influence the correlation between NSE and Dow Jones is political
stability. For example, if there is political turmoil in the US or India, it could lead to a decline
in investor confidence and a decline in both indices. This could lead to a negative correlation
between the two indices.
Trade relations between the US and India can also influence the correlation between NSE and
Dow Jones. For example, if there is a trade dispute between the two countries, it could lead to
decreased investment in companies based in both countries and a decline in both indices. This
could lead to a negative correlation between the two indices.
Industry-specific news can also influence the correlation between NSE and Dow Jones. For
example, if there is positive news about the tech industry in the US, it could lead to increased
investment in US-based tech companies and a rise in the Dow Jones. This could, in turn, have
a positive impact on NSE and lead to a positive correlation between the two indices.
113
It's important to note that correlation does not imply causation. Even if there is a strong
correlation between the two indices, it doesn't necessarily mean that one is causing the other to
move in a particular direction. It could be the result of other underlying factors that are affecting
both markets simultaneously.
Therefore, it's important to analyze the underlying factors that are influencing the movements
of NSE and Dow Jones before making any investment decisions. This can help investors make
informed decisions and minimize their risk exposure.
Here I am finishing my report on the topic that was assigned to me if there was any information
left behind I sincerely apologize for it ..
114
BIBLIOGRAPHY
https://www.nseindia.com/
https://www.moneycontrol.com/indian-indices/nifty-50-9.html
https://groww.in/p/national-stock-exchange
https://finance.yahoo.com/quote/%5EDJI/
https://www.investopedia.com/ask/answers/difference-between-dow-and-nasdaq/
https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
https://en.wikipedia.org/wiki/National_Stock_Exchange_of_India
https://in.investing.com/indices/s-p-cnx-nifty-historical-data
https://www.wsj.com/market-
data/quotes/index/IN/NATIONAL%20STOCK%20EXCHANGE%20OF%20INDIA/NIF
TY50/historical-prices
https://www.niftyindices.com/reports/historical-data
115
116

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A

WINTER PROJECT REPORT

CORRELATION BETWEEN NSE AND DOW JONES

GUIDED BY- SUBMITTED BY-

MR. NILESH PATEL MEET JOSHI (16)

SHREE UTTAR GUJARAT BBA COLLEGE

DATE- MEET JOSHI

I am thankful to the VEER NARMAD SOUTH GUJARAT UNIVERSITY for providing me

Both stock exchanges are in Top 10 positions of world stock exchanges .

SR.NO CONTENTS PAGE NO

> Executive summary 4

1.1 National Stock Exchange 9

1.2 Dow Jones 11

2.1 National Stock exchange (INDEX) 15

2.2 Dow Jones (INDEX) 20

3.1 Indian Stock Exchanges 25

3.1.1 Bombay Stock Exchange (BSE) 26

3.1.2 BSE Indices 27

3.2 New York Stock Exchange (NYSE) 34

3.2.1 NYSE Indices 36

3.2.2 NYSE Crashes List 36

3.3 Dow Jones 37

3.3.1 Dow Jones Crashes List 38

3.4.1 NSE INDICES 39

4.1 Information about both exchanges 45

4.2 Dow jones relation with Indian stock Markets 46

5.1 Objective of study 51

5.2 Importance of study 52

5.3 Research design 53

5.4 Sampling size and frame 54

5.5 Techniques of analysis 54

5.6 Limitation of study 54

6.1 Returns of Dow jones 60

6.2 Returns of NSE 61

6.3 Method used for correlation 62

7.1 Karl Pearson correlation with Interpretation 65

7.2 Spearman Rank correlation with Interpretation 92

TABLES AND GRAPHS PAGE NUMBER

DOW JONES INDEX 23

SENSEX PIE CHART 33

NSE PIE CHART 42

NIGTY50 vs Other indices 58

NSE offers trading and investment in the following segments

 (1) Pre-open session:

 Order entry & modification Open: 09:00 hrs

1. Regular trading session

Dow Jones Industrial Average { DJI } –

 SIX BASIC TENETS OF DOW THEORY -

A Brief History Of Dow Jones Industrial Average

OTHER U.S. LAST CHG CHG %

Dow Jones Transportation Average 14,645.29 -490.58 -3.24%

Dow Jones Utility Average Index 938.87 -14.74 -1.55%

Dow Jones U.S. Total Stock Exchange 40,369.89 -876.83 -2.13%

NASDAQ 100 Index (NASDAQ Calculation) 12,060.30 -297.89 -2.41%

S&P Market 400 Index 2,601.34 -64.78 -2.43%

NYSE Composite Index 15,572.52 -267.63 -1.69%

Barron’s 400 Index 973.72 -27.35 -2.73%

CBOE Volatility Index 22.87 2.85 14.24%

 It is a statistical means of calculating change in a market or economy

CHANGES TO THE COMPONENTS

1928 - The index grew to 30 components

2018 -Walgreens Boots Alliance, Inc. replaced General Electric Company.