A

DISSERTATION REPORT

ON

AN ANALYSIS OF THE FINANCIAL CRISIS IN THE INDIAN STOCK MARKET

AND THE GLOBAL STOCK MARKET MOVEMENT

Submitted to the Uttaranchal University in partial fulfillment of the requirements for the
award of the

Degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

SINNI KUMARI

Enrolment No:(UU2219000134)

Under the guidance of

DR. FARMAN ALI

ASSISTANT PROFESSOR

(Batch2022-24)
Uttaranchal Institute of Management

UTTARANCHAL UNIVERSITY, DEHRADUN

UTTARANCHAL UNIVERSITY, DEHRADUN
 CANDIDATE’S DECLARATION

I, SINNI KUMARI hereby declares that the dissertation, entitled AN ANALYSIS OF

THE FINANCIAL CRISIS IN THE INDIAN STOCK MARKET AND THE
GLOBAL STOCK MARKET MOVEMENT submitted to the Uttaranchal University,
Dehradun in partial fulfillment of the requirements for the award of the degree of master of
administration is a record of original research work undergone by the supervision and
guidance Dr. FARMAN ALI (Assistant Professor), Uttaranchal Institute of Management,
Uttaranchal University, and it has not formed the basis for the award of any
degree/fellowship or other similar title to any candidate of any university/institute.

Date: Signature of The Student

This is to certify that the statement made by the candidate is true to the best of my
knowledge and belief.

Date: Signature of Guide

Designation

Dr. Tilottama Singh

HOD - UIM
 ACKNOWLEDGEMENT

Preparing a project of this nature is an arduous task and I was fortunate enough to get
support from a large number of persons to whom I shall always remain grateful.

I take this opportunity to thank all the respondents for giving their precious time and
relevant information and experience, I require without which this project would have been
a different story.

In addition, I am thankful to DR. FARMAN ALI Assistant Professor, Management

Department & all the faculty of the institute for their full-hearted co-operation & guidance.
This project study is the result of their right direction, motivation and support.

I would like to express my special guidance to my Parents and my friends, who are always
a source of inspiration for me.

SINNI KUMARI
MBA IV TH SEM
UTTARANCHAL UNIVERSITY,
DEHRADUN
 TABLE OF CONTENT

S.NO INDEX Page no.

1. Candidate’s Declaration 3

2. Acknowledgement 4

3. TABLE OF CONTENTS 5

4. ABSTRACT 6-7

5. CHAPTER -1 INTRODUCTION 8-18

6. CHAPTER -2 REVIEW OF 19-26

LITRATURE

7. CHAPTER -3 RESEARCH 27-32

METHODOLOGY

8. CHAPTER -4 DATA ANALYSIS AND 31-54

INTERPRETATION

9. CHAPTER -5 CONCLUSION 54-56

10. CHAPTER -6 57-58

BIBLIOGRAPHY&REFERENCES
 CHAPTER-1

INTRODUCTION

Definition of 'Stock Market'

Stock Market is a place where shares of pubic listed companies are traded. The primary
market is where companies float shares to the general public in an initial public offering
(IPO) to raise capital.

Description: Once new securities have been sold in the primary market, they are traded in
the secondary market—where one investor buys shares from another investor at the
prevailing market price or at whatever prices both the buyer and seller agree upon. The
secondary market or the stock exchanges are regulated by the regulatory authority. In
India, the secondary and primary markets are governed by the Security and Exchange
Board of India (SEBI).

A stock exchange facilitates stock brokers to trade company stocks and other securities. A
stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting place
of the stock buyers and sellers. India's premier stock exchanges are the Bombay Stock
Exchange and the National Stock Exchange.

The BSE and NSE

Most of the trading in the Indian stock market takes place on its two stock exchanges:
the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has
been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started
trading in 1994. However, both exchanges follow the same trading mechanism, trading
hours, settlement process, etc. At the last count, the BSE had more than 5,000 listed firms,
whereas the rival NSE had about 1,600. Out of all the listed firms on the BSE, only about
500 firms constitute more than 90% of its market capitalization; the rest of the crowd
consists of highly illiquid shares.

Almost all the significant firms of India are listed on both the exchanges. NSE enjoys a
dominant share in spot trading, with about 70% of the market share, as of 2009, and almost
a complete monopoly in derivatives trading, with about a 98% share in this market, also as
of 2009. Both exchanges compete for the order flow that leads to reduced costs, market
efficiency, and innovation. The presence of arbitragers keeps the prices on the two stock
exchanges within a very tight range.

Origin of various stock exchanges:

The origin of the New York Stock Exchange (NYSE) is dated back to May 17, 1792, when
the Buttonwood Agreement was signed by twenty-four stock brokers outside of 68 Wall
Street in New York under a buttonwood tree. Also called the “Big Board”, it is the largest
stock exchange in the world in terms of dollar volume and second largest in terms of
number of companies listed. The Tokyo stock exchange was established on May 15, 1878
and trading began on June 1, 1878. In 1943, the exchange was combined with ten other
stock exchanges in major Japanese cities to form a single Japanese Stock Exchange. It is
the second largest stock exchange market in terms of monetary volume and currently has
2302 listed companies. The Hong Kong stock exchange is the 8th largest stock exchange in
the world in terms of Market capitalization. The Hang Sang Index (HIS), was started on
November 24, 1969. The Russian stock exchange was established in 1995 by consolidating
the separate regional stock exchanges into one uniformly regulated trading floor. The
Korea stock exchange was created by the integration of the three existing of the Korean
Spots and Futures exchanges (Korean stock exchange, Korean futures exchange &
KOSDAQ) under the Korea Stock and Futures Exchange Act.3.5. In this paper, the names
of the countries and the names of the indices of those countries have been used
interchangeably. Thus, the names of the countries represent the indices for the purpose of
analysis and they need to be interpreted that way. Again, all the analyses have been done
with the closing prices. The following table gives the country and the exchange with the
name of its indices.
Table : 1 Countries and Indices:

Country Stock exchange name Indices name

India National Stock S & P Nifty

Exchange
India Bombay Stock Sensex
Exchange
Hong Kong Hong Kong Stock Hang Seng
Exchange
USA New York Stock NYSE
Exchange
Russian Russian Stock Exchange RTS Index
Korea Korean Stock Exchange KRX 100

The Indian stock market scene really picked up after the opening up of the economy in the
early nineties. The whole of nineties were used to experiment and fine tune an efficient and
effective system. The ‘badla’ system was stopped to control unnecessary volatility while
the derivatives segment started as late as 2000. The corporate governance rules were
gradually put in place which initiated the process of bringing the listed companies at a
uniform level. On the global scale, the economic environment started taking paradigm shift
with the ‘dot com bubble burst’, 9/11, and soaring oil prices. The slowdown in the US
economy and interest rate tightening made the equation more complex. However after
2000 riding on a robust growth and a maturing economy and relaxed regulations, outside
investors- institutional and others got more scope to operate. This opening up of the system
led to increased integration with heightened cross-border flow of capital, with India
emerging as an investment ‘hot spot’ resulting in our stock exchanges being impacted by
global cues like never before. The study pertains to comparative analysis of the Indian
Stock Market with respect to various international counterparts. Exchanges are now
crossing national boundaries to extend their service areas and this has led to cross-border
integration. Also, exchanges have begun to offer cross-border trading to facilitate overseas
investment options for investors. This not only increased the appeal of the exchange for
investors but also attracts more volume. Exchanges regularly solicit companies outside
their home territory and encourage them to list on their exchange and global competition
has put pressure on corporations to seek capital outside their home country. The Indian
stock market is the world third largest stock market on the basis of investor base and has a
collective pool of about 20 million investors. There are over 9,000 companies listed on the
stock exchanges of the country. The Bombay Stock Exchange, established in 1875, is the
oldest in Asia. National Stock Exchange, a more recent establishment which came into
existence in1992, is the largest and most advanced stock market in India is also the third
biggeststock exchange in Asia in terms of transactions. It is among the 5 biggest stock
exchangesin the world in terms of transactions volume.The stock market has responded to
the COVID-19 pandemic with worrying volatility, as traders have panic-sold out of fear.

As a result of the recent turmoil, the market-wide circuit-breakers that attempt to prevent
panic-trading, have been triggered four times alone in March. The market has reacted to
recent unpredictability with large drops, triggering a market wide circuit breaker four times
in March. The safeguard pauses trading for 15 minutes in hopes the market will calm. The
U.S. Securities and Exchange Commission mandated the creation of market-wide circuit-
breakers to prevent a repeat of the Oct. 19, 1987 market crash, in which the Dow plunged
22.6%. Since then, they have only been triggered once in 1997 before the four times this
March.

IN INDIA

Investor sentiment in India is so low that despite relatively lower cases, Indian market has
fared worst among global peers. Indian stock market has lost 26 per cent in dollar terms
between February 1 and April 9, compared with a fall of 20 per cent and 14 per cent in the
European and US markets. Emerging markets, reflected by the MSCI EM index, and
declined 15 per cent during the same period.
China, where the coronavirus originated, has been least affected, with just 3 per cent fall in
the stock market between February 1 and April 9.
"We do recognise equity market is dynamic, often distorted and is perennially mispriced
(and that's the reason for the existence of market and stock analysts), but nonetheless is
perhaps the best measure (to estimate the cost of COVID-19) currently. And, for now,
while the US and other EMs have lost around 15% since February 1, India has eroded
around 25%. That's a lot of pain," says Edelweiss Securities in a research note dated April
12.

Trading Mechanism

Trading at both the exchanges takes place through an open electronic limit order book in
which order matching is done by the trading computer. There are no market
makers or specialists and the entire process is order-driven, which means that market
orders placed by investors are automatically matched with the best limit orders. As a result,
buyers and sellers remain anonymous. The advantage of an order-driven market is that it
brings more transparency by displaying all buy and sell orders in the trading system.
However, in the absence of market makers, there is no guarantee that orders will be
executed.

All orders in the trading system need to be placed through brokers, many of which provide
an online trading facility to retail customers. Institutional investors can also take advantage
of the direct market access (DMA) option in which they use trading terminals provided by
brokers for placing orders directly into the stock market trading system.

Settlement and Trading Hours

Equity spot markets follow a T+2 rolling settlement. This means that any trade taking
place on Monday gets settled by Wednesday. All trading on stock exchanges takes place
between 9:55 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday through
Friday. Delivery of shares must be made in dematerialized form, and each exchange has its
own clearing house, which assumes all settlement risk by serving as a central counterparty.
Market Indexestwo prominent Indian market indexes are Sensex and Nifty. Sensex is the
oldest market index for equities; it includes shares of 30 firms listed on the BSE, which
represent about 45% of the index's free-float market capitalization. It was created in 1986
and provides time series data from April 1979, onward.Another index is the Standard and
Poor's CNX Nifty; it includes 50shares listed on the NSE, which represent about 62% of its
free-float market capitalization. It was created in 1996 and provides time series data from
July 1990, onward.

Market Regulation

The overall responsibility of development, regulation, and supervision of the stock market
rests with the Securities and Exchange Board of India (SEBI), which was formed in 1992
as an independent authority. Since then, SEBI has consistently tried to lay down market
rules in line with the best market practices. It enjoys vast powers of imposing penalties on
market participants, in case of a breach.

Who Can Invest In India?

India started permitting outside investments only in the 1990s. Foreign investments are
classified into two categories: foreign direct investment (FDI) and foreign portfolio
investment (FPI). All investments in which an investor takes part in the day-to-day
management and operations of the company are treated as FDI, whereas investments in
shares without any control over management and operations are treated as FPI.

For making portfolio investment in India, one should be registered either as a foreign
institutional investor (FII) or as one of the sub-accounts of one of the registered FIIs. Both
registrations are granted by the market regulator, SEBI. Foreign institutional investors
mainly consist of mutual funds, pension funds, endowments, sovereign wealth funds,
insurance companies, banks, and asset management companies. At present, India does not
allow foreign individuals to invest directly in its stock market. However, high-net-worth
individuals (those with a net worth of at least US$50 million) can be registered as sub-
accounts of an FII.

Foreign institutional investors and their sub-accounts can invest directly into any of the
stocks listed on any of the stock exchanges. Most portfolio investments consist of
investment in securities in the primary and secondary markets, including
shares, debentures, and warrants of companies listed or to be listed on a recognized stock
exchange in India. FIIs can also invest in unlisted securities outside stock exchanges,
subject to the approval of the price by the Reserve Bank of India. Finally, they can invest
in units of mutual funds and derivatives traded on any stock exchange. An FII registered as
a debt-only FII can invest 100% of its investment into debt instruments. Other FIIs must
invest a minimum of 70% of their investments in equity. The balance of 30% can be
invested in debt. FIIs must use special non-resident rupee bank accounts, in order to move
money in and out of India. The balances held in such an account can be fully repatriated.

Restrictions and Investment Ceilings

The government of India prescribes the FDI limit and different ceilings have been
prescribed for different sectors. Over a period of time, the government has been
progressively increasing the ceilings. FDI ceilings mostly fall in the range of 26-100%.By
default, the maximum limit for portfolio investment in a particular listed firm is decided by
the FDI limit prescribed for the sector to which the firm belongs. However, there are two
additional restrictions on portfolio investment. First, the aggregate limit of investment by
all FIIs, inclusive of their sub-accounts in any particular firm, has been fixed at 24% of
the paid-up capital. However, the same can be raised up to the sector cap, with the approval
of the company's boards and shareholders.

Secondly, investment by any single FII in any particular firm should not exceed 10% of the
paid-up capital of the company. Regulations permit a separate 10% ceiling on investment
for each of the sub-accounts of an FII, in any particular firm. However, in the case of
foreign corporations or individuals investing as a sub-account, the same ceiling is only 5%.
Regulations also impose limits for investment in equity-based derivatives trading on stock
exchanges.
Investments for Foreign Entities
Foreign entities and individuals can gain exposure to Indian stocks through institutional
investors. Many India-focused mutual funds are becoming popular among retail investors.
Investments could also be made through some of the offshore instruments,
like participatory notes (PNs) and depositary receipts, such as American depositary
receipts (ADRs), global depositary receipts (GDRs), and exchange-traded funds (ETFs)
and exchange-traded notes (ETNs).As per Indian regulations, participatory notes
representing underlying Indian stocks can be issued offshore by FIIs, only to regulated
entities. However, even small investors can invest in American depositary receipts
representing the underlying stocks of some of the well-known Indian firms, listed on
the New York Stock Exchange. ADRs are denominated in dollars and subject to the
regulations of the U.S. Securities and Exchange Commission (SEC).Likewise, global
depositary receipts are listed on European stock exchanges. However, many promising
Indian firms are not yet using ADRs or GDRs to access offshore investors. Retail investors
also have the option of investing in ETFs and ETNs, based on Indian stocks. India ETFs
mostly make investments in indexes made up of Indian stocks. Most of the stocks included
in the index are the ones already listed on NYSE and Nasdaq. As of 2009, the two most
prominent ETFs based on Indian stocks are the Wisdom-Tree India Earnings Fund (EPI)
and the Power Shares India Portfolio Fund (PIN). The most prominent ETN is the MSCI
India Index Exchange Traded Note (INP). Both ETFs and ETNs provide a good investment
opportunity for outside investors.

The Bottom Line

Emerging markets like India are fast becoming engines for future growth. Currently, only a
very low percentage of the household savings of Indians are invested in the domestic stock
market, but with GDP growing at 7%-8% annually and a stable financial market, we might
see more money joining the race. Maybe it's the right time for outside investors to seriously
think about joining the India bandwagon.

BSE- Bombay Stock Exchange

Established in 1875, BSE Ltd. (formerly known as Bombay Stock Exchange Ltd.), is
Asia’s first Stock Exchange and one of India’s leading exchange groups. Over the past 137
years, BSE has facilitated the growth of the Indian corporate sector by providing it an
efficient capital-raising platform. BSE’s popular equity index – the S&P BSE SENSEX –
is India’s most widely tracked stock market benchmark index. More than 5000 companies
are listed on BSE making it world’s No. 1 exchange in terms of listed members. The
companies listed on BSE Ltd command a total market capitalization of USD 1.32 Trillion
as of January 2013. It is also one of the world’s leading exchanges (3rd largest in
December 2012) for Index options trading (sourse: world federation of exchange). BSE
also provides a host of other services to capital market participants including risk
management, clearing, settlement, market data services and education. It has a global reach
with customers around the world and a nation-wide presence. BSE systems and processes
are designed to safeguard market integrity, drive the growth of the Indian capital market
and stimulate innovation and competition across all market segments. BSE is the first
exchange in India and second in the world to obtain an ISO 9001:2000 certifications. The
Bombay Stock Exchange is the oldest exchange in India.

It traces its history to 1855, whenfourGujarati and one Parsi stockbroker would gather
under banyan trees in front of Mumbai’s Town Hall. The location of these meetings
changed many times, as the number of brokers constantly increased. The group eventually
moved to Dalal Street in 1874 and in 1875 became an official organization known as ‘The
Native Share & Stock Brokers Association’. In 1958, the BSE became the first stock
exchange to be recognized by the Indian Government under the Securities Contracts
Regulation Act. In 1980 the exchange moved to the Phiroze Jeejeebhoy Towers at Dalal
Street, Fort area. In 1986 it developed the BSE SENSEX index, giving the BSE a means to
measure overall 5 performance of the exchange. In 2000 the BSE used this index to open
its derivatives market, trading SENSEX futures contracts. The development of SENSEX
options along with equity derivatives followed in 2001 and 2002, expanding the BSE’s
trading platform.Historically an open outcry floor trading exchange, the Bombay Stock
Exchange switched to an electronic trading system in 1995. It took the exchange only fifty
days to make this transition. This automated, screen-based trading platform called BSE On-
line trading (BOLT) had a capacity of 8 million orders per day.
The National Stock Exchange (NSE)

Is the leading stock exchange in India and the fourth largest in the world by equity trading
volume in 2015, according to World Federation of Exchanges (WFE).It began operations
in 1994 and is ranked as the largest stock exchange in India in terms of total and average
daily turnover for equity shares every year since 1995, based on annual reports of SEBI.
NSE launched electronic screen-based trading in 1994, derivatives trading (in the form of
index futures) and internet trading in 2000, which were each the first of its kind in India.
NSE has a fully-integrated business model comprising our exchange listings, trading
services, clearing and settlement services, indices, market data feeds, technology solutions
and financial education offerings. NSE also oversees compliance by trading and clearing
members and listed companies with the rules and regulations of the exchange. NSE is a
pioneer in technology and ensures the reliability and performance of its systems through a
culture of innovation and investment in technology. NSE believes that the scale and
breadth of its products and services, sustained leadership positions across multiple asset
classes in India and globally enable it to be highly reactive to market demands and changes
and deliver innovation in both trading and non-trading businesses to provide high-quality
data and services to market participants and clients. Mr. Ashok Chawla is the Chairman of
the Board of Directors of NSE and Mr. Vikram Limaye is the Managing Director and CEO
of NSE.

Hong Kong Stock Exchange

Hang Seng Indices Company Limited (Hang Seng Index), a wholly –owned subsidiary of
Hang Seng Bank, was established in 1984 and is Hong Kong’s leading index compiler
covering Hong Kong and mainland China markets. Hang Seng Index’s calculates and
manages the Hang Seng Family of Indexes. Starting in 1969 with the creation of the Hang
Seng Index, now widely recognized as the barometer of the Hong Kong stock market,
Hang Seng Index has been at the forefront of the market, developing numerous market
measures to help investors make their investment decisions. Indexes in the Hang Seng
Family of Indexes are grouped into five categories – Flagship Indexes, Benchmark
Indexes, Thematic Indexes, Strategy Indexes and Bond Indexes – then classified as Hong
Kong-listed, Cross-market or Mainland-listed according to where their constituents
are listed.Currently, the Hang Seng Family of Indexes comprises over 300 real-time and
daily indexes. Going forward, Hang Seng Indexes will continue to broaden its index series
to meet the widening spectrum of investor demand for index investment solutions. The
Hong Kong stock exchange is the 8th largest stock exchange in the world in terms of
Market capitalization. The Hang Sang Index (HIS), was started on November 24, 1969.
The Russian stock exchange was established in 1995 by consolidating the separate regional
stock exchanges into one uniformly regulated trading floor.

The trading day consists of:

 Pre-opening auction session from 9:00 am to 9:30 am. The opening price of a
security is reported shortly after 9:20 am.
 A morning continuous trading session from 09:30 am to 12:00 pm .
 An extended morning session from 12:00 noon to 1:00 pm, also referred to as the
lunch break. Continuous trading proceeds in specifically-designated securities
(currently two ETFs, 4362 and 4363).
 Trading in other securities is not possible. However, previously-placed orders in
any securities can be cancelled from 1:00 pm onwards.
 An afternoon continuous trading session from 1:00 pm to 4:00 pm
The history of the securities exchange began formally in the late 19th century with the first
establishment in 1891, though informal securities exchanges are known to have been in
existence since 1861. The exchange has predominantly been the main exchange for Hong
Kong despite co-existing with other exchanges at different points in time. After a series of
complex mergers and acquisitions, in the twenty first century, HKSE remains the core.
From 1947 to 1969 the exchange 7monopolized the Hong Kong market.

New York Stock Exchange- NYSE

The origin of the New York Stock Exchange (NYSE) is dated back to May 17, 1792, when
the Buttonwood Agreement was signed by twenty-four stock brokers outside of 68 Wall
Street in New York under a buttonwood tree. Also called the “Big Board”, it is the largest
stock exchange in the world in terms of dollar volume and second largest in terms of
number of companies listed. The New York Stock Exchange (NYSE), sometimes known
as the “Big Board” is a stock exchange located at 11 Wall Street, Lower Manhattan, New
York City, New York, United States. It is by far the world’s largest stock exchange by
market capitalization of its listed companies at US$16.613 trillion as of May 2013.
Average daily trading value was approximately US$153 billion in 2008.The NYSE trading
floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of
trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007. The
main building, located at 18 Broad Street, between the corners of Wall Street and
Exchange Place, was designated a National Historic Landmark in 1978, as was the 11 Wall
Street building. The NYSE is operated by NYSE Euronext (NYSE: NYX), which was
formed by the NYSE’s 2007 merger with the fully electronic stock exchange Euronext. In
December 2012, it was announced that the company would be sold to Intercontinental
Exchange (ICE), a futures exchange headquartered in Atlanta, Georgia, The United States,
for $8 8 billion, a figure that is significantly less than the $11 billion bid for the company
tendered in 2011.

Tokyo Stock Exchange

The TSE is incorporated as a kabushikigaisha with nine directors, four auditors and eight
executive officers. Its headquarters are located at 2-1 Nihonbashi-KabutochōChūō, Tokyo,
or “Kabuto-chō”, which is the largest financial district in Japan. Its operating hours are
from 8:00 to 11:30 a.m., and from 12:30 to 5:00 p.m. From April 24, 2006, the afternoon
trading session started at its usual time of 12:30 p.m.. Stocks listed on the TSE are
separated into the First Section for large companies, the Second Section for mid-sized
companies, and the Mothers (Market of the high growth and emerging stocks) section for
high-growth startup companies. As of October 31, 2010, there are 1,675 First Section
companies, 437 Second Section companies and 182 Mothers companies. The main indices
tracking the TSE are the Nikkei 225 index of companies selected by the Nihon Keizai
Shimbun (Japan’s largest business newspaper), the TOPIX index based on the share prices
of First Section companies, and the J30 index of large industrial companies maintained by
Japan’s major broadsheet newspapers. Ninety-four domestic and 10 foreign securities
companies participate in TSE trading.

Other TSE-related institutions include:

The exchange’s press club, called the Kabuto Club which meets on the third floor of the
TSE building. Most Kabuto Club members are affiliated with the Nihon Keizai Shimbun,
Kyodo News, Jiji Press, or business television broadcasters such as Bloomberg LP and
CNBC. The Kabuto Club is generally busiest during April and May, when public
companies release their annual accounts. On 15 June 2007, the TSE paid $303 million to
acquire a 4.99% stake in Singapore Exchange Ltd.

Korea stock exchange

It was created by the integration of the three existing of the Korean Spots and Futures
exchanges (Korean stock exchange, Korean futures exchange & KOSDAQ) under the
Korea Stock and Futures Exchange Act.3.5. The Korea Exchange was created through the
integration of Korea Stock Exchange, Korea Futures Exchange and KOSDAQ Stock
Market under the Korea Stock &Futures Exchange Act. The securities and derivatives
markets of former exchanges are now business divisions of Korea Exchange: the Stock
Market Division, KOSDAQ Market Division and Derivatives Market Division. As of
January 2015, Korea Exchange had 2,030 listed companies with a combined market
capitalization of $1.2 trillion. SustainableStock Exchanges The exchange has normal
trading sessions from 09:00 am to 03:30 pm on all days of the week except Saturdays,
Sundays and holidays declared by the Exchange in advance. On 22 May 2015,The Korea
Exchange joined the United Nations Sustainable Stock Exchanges initiative in an event
with the UN-SG Ban Ki-moon in attendance, as well as senior officials from UN Global
Compact and UNCTAD. The names of the countries and the names of the indices of those
countries have been used interchangeably. Thus, the names of the countries represent the
indices for the purpose of analysis and they need to be interpreted that way.

Again, all the analyses have been done with the closing prices. The following table gives
the country and the exchange with the name of its indices.
COVID-19 Impact On Stock Market

COVID-19 and stock market crash

The sentiment in the stock markets across the world is gloomy. This is reflected in the
frequent crashes in the share markets in all parts of the world. Financial markets in India
are witnessing sharp volatility currently as a result of the fallout in global markets. The fall
is in line with the global benchmark indices as the domestic market usually tracks the
major global indices and the high volatility is likely to continue in the near future. Further,
with overseas investors (FPIs) flying to the safety of dollar-backed assets from emerging
markets has led to a sharp downfall in the Indian Stock Market. S&P BSE Sensex which
was 42273 points on 20 January, 2023 is 29894 points on 08 April, 2023. The price to
Earnings Ratio of Sensex is less than 18 (P/e is 17.81 on 31March, 2023) which is far less
than the historical range between 20-24. Markets across large, mid, and small caps have
corrected sharply from their peaks. In the FY20 the mid-cap index fell by 26 per cent while
the Sensex fell by 22 per cent.

COVID-19 is a black swan event

Throughout history, there have been highly improbable events that catch almost everyone
by surprise and can potentially have a large impact on the status quo by disrupting human
activities and creating havoc. Such kind of events are called black swans. The name stems
from the fact that until 1697, mankind believed that all swans were white. Then Dutch
explorers sighted black swans for the first time in Western Australia, completely nullifying
the belief that swans can only be white. Thus, the term ‘black swan’ morphed into
describing an event that occurred despite seeming impossible. Black swan is the
occurrence of a highly unexpected event that also has an extreme impact. The field of
finance regularly attempts to capture outlier events and fails with equal regularity. Impact
of novel coronavirus (COVID-19) on the stock market is one such event, which has all
characteristics of black swan.
The Stock Market has a history of crash and recovery
The worldwide Stock market has a history of crash and recovery and the Indian Stock
Market is no different from that. Sensex plunged 53 per cent in one year in “Harshad
Mehta Scam” (1992) but recovered 127 per cent in 1.5 years. During the “Asian Crisis”
(1996) Sensex dipped 40 per cent in four years but recovered 115 per cent in one year.
During “Tech Bubble” (2000) Sensex crashed 56 per cent in 1.5 years but recovered 138
per cent in 2.5 years. When the US faced the “Real Estate – Lehman” crisis (2008) Sensex
crashed 61 per cent in a year but recovered 157 per cent in 1.5 years. The current market
has crashed around 30 per cent in less than three months. Due to COVID-19, no one knows
when the economy will be back on track. Some Experts even compare this meltdown of
economies with the “Great Depression” of the 20th Century. The “Great Depression”
started in 1929 and lasted until the late 1930s. Between 1929 and 1932, worldwide Gross
Domestic Product (GDP) fell by an estimated 15 per cent. By comparison, worldwide GDP
fell by less than 1 per cent from 2008 to 2009 during the Great Recession.

Recovery in the current stock market

It would be foolish to expect a quick economic rebound from the current COVID-19 effect.
Though the financial crisis is inevitable, considering all-out efforts by central banks and
fiscal authorities, to soften the blow, deep economic slump might be avoided. The problem
in the current scenario is that until we know how quickly and thoroughly the public-health
challenge will be met, economists cannot predict the endgame of this crisis. Trade-in 2023
is expected to fall steeply in every region of the world and basically across all sectors. But
global trade could rebound rapidly after that. However, it would depend on how quickly
the pandemic is brought under control, and the policy choices which the governments took
to support their economies. Once this pandemic is over with normalcy returning to business
and economy, the stock market will start moving in a positive direction, and as witnessed
in the past, recovery would be faster than expected. It is true about the market that whether
it is the correction or growth, both phases make equity or stock market interesting and
worth taking exposures. But it is highly advisable that do not jump into the market or do
not try to catch the falling knife.

How covid -19 change the impact of stock market globally

The world is staring at a recession, economic output in June 2023 quarter is going to
shrink, and growth for FY21 will be sharply lower — these will take a toll on corporate
earnings as well as stock prices
Global financial markets that were cheerfully sailing on fair winds of liquidity, infused by
global central banks, have been suddenly hit by a giant wave of selling that has sent prices
crashing and left investors gasping for breath

Characterizing Daily Stock Market Jumps

In Baker, Bloom, Davis and Sammon (2019), we examine next-day newspaper

explanations for each daily move in the U.S. stock market greater than 2.5 percent, up
or down. By this criterion, there were 1,129 stock market jumps from 2 January 1900
to 24 March 2023. Jump days account for 3.5% of all trading days and 47% of total
squared daily return variation.

To characterize these jumps, we read the lead article about each jump in next-
day (or same-evening) newspapers to classify the journalist’s explanation into one of
16 categories, which include Macroeconomic News and Outlook, Government
Spending, Monetary Policy, Unknown or No Explanation Offered, and Other –
Specify. Our coding guide in Baker, Bloom, Davis and Sammon (2018) describes the
methodology in detail.

Table 1 draws on our classification effort to underscore the unprecedented

impact of the COVID-19 pandemic on the U.S. stock market. In the period before 24
February 2023 – spanning 120 years and more than 1,100 jumps – contemporary
journalistic accounts attributed not a single daily stock market jump to infectious
disease outbreaks or policy responses to such outbreaks.1 Perhaps surprisingly, even
the Spanish Flu fails to register in next-day journalistic explanations for large daily
stock market moves.

Data for the past month tell a dramatically different story. From 24 February to
24 March 2023, there were 22 trading days and 18 market jumps – more than any other
period in history with the same number of trading days. Jump frequency during this
period is 23 times the average pace since 1900. Moreover, next-day newspaper accounts
 attribute 15 or 16 of the 18 jumps to news about COVID-19 developments and policy
responses to the pandemic.2 In short, no previous infectious disease episode led to daily
stock market swings that even remotely resemble the response in the past month to
COVID-19 developments.

Quantifying the Contribution of COVID-19 to U.S. Stock Market Volatility

In Baker, Bloom, Davis, and Kost (2019), we use a mechanized approach to

quantify the role of COVID-19 and other infectious diseases in U.S. stock market
volatility. In a first step, we calculate the monthly fraction of articles in 11 major US
newspapers that contain (a) terms related to the economy, (b) terms related to equity
markets, and (c) terms related to market volatility. We multiplicatively rescale this
monthly series to match the mean value of the VIX

since 1985. Figure 2 plots our resulting newspaper-based Equity Market Volatility
(EMV) tracker alongside the VIX itself. As the figure shows, our EMV tracker
performs well in the sense of mirroring the time-series behavior of implied stock
market volatility. The same is true with respect to realized stock market volatility.

In a second step, we identify the subset of EMV articles that contain one or more
terms related to COVID-19 or other infectious diseases. Specifically, we flag EMV
articles that mention one of the following terms: epidemic, pandemic, virus, flu, disease,
coronavirus, MERS, SARS, Ebola, H5N1, or H1N1. Multiplying the fraction of EMV
articles that contain one of these terms by our EMV tracker yields our Infectious Disease
EMV tracker displayed inFigure
3. The inset portion of Figure 3 displays the results of the same quantification
exercise at a weekly frequency.

Figure 3 establishes three points. First, before the COVID-19 pandemic, no

infectious disease outbreak made a sizable contribution to U.S. stock market volatility.
The 2003 SARS epidemic and the 2015 Ebola epidemic led to modest, short-lived
spikes in volatility, and the Bird Flu and Swine Flu epidemics barely registered. Second,
the COVID-19 pandemic drove the tremendous surge in stock market volatility since
late February. Recall from Figure 1 that this surge led to the third highest realized
volatility peak since 1900. So, the volatility peak is extraordinarily high by historical
standards (Figure 1), and it’s almost entirely triggered by COVID-19 developments,
including policy responses to the pandemic. Third, the COVID-19 volatility surge took
off in the fourth week of February 2023.

Table 2 provides more information about newspaper coverage of various

infectious disease outbreaks since 1985. For each episode, we report the mean value
of our Infectious Disease EMV tracker, the fraction of EMV articles that contains one
of our infectious disease terms (as listed above), and the fraction of articles about
Economic Policy Uncertainty (EPU) that contains one of those terms. Here, we use
the EPU index developed by Baker, Bloom and Davis (2016). The bottom row shows
averages for the full period from January 1985 to March 2023.

By these metrics, the early-phase impact of COVID-19 looks similar to the

impact of other infectious disease outbreaks in the past 35 years. In January 2023, for
example, the Infectious Disease EMV tracker is only modestly elevated, and the percent
of EMV and EPU

articles that discuss COVID-19 developments is roughly in line with previous

experiences during the SARS and Ebola epidemics. By February, however, COVID-19
developments began to dominate newspaper coverage of stock market volatility and
figure prominently in newspaper discussions of economic policy uncertainty. By March,
COVID-19 developments receive attention in more than 90% of all newspaper
discussions of market volatility and policy uncertainty. These data confirm the
unprecedented impact of the COVID-19 pandemic.

Why Such a Powerful Stock Market Impact?

Why have COVID-19 developments exerted such powerful effects on the stock
market since late February? Clearly, the current pandemic has grave implications for
public health and for the economy. So, part of the answer surely lies in the severity of
the pandemic, the apparent ease with which COVID-19 spreads, and the non-negligible
mortality rate among those who contract the virus. Still, we think this answer is highly
incomplete. Like Barro, Ursua and Weng (2023), we regard the mortality rates
experienced during the Spanish Flu as a worst-case upper bound on the potential
mortality induced by COVID-19. Yet, as Table 1 shows, the Spanish Flu did not trigger
even a small number of daily stock market jumps.

A second potential answer, particularly in comparison to the Spanish Flu, is that

information about pandemics is richer and diffuses much more rapidly now than a
century earlier.3 According to this explanation, the stock market impact of the COVID-
19 pandemic is more temporally concentrated and more likely to trigger daily stock
market jumps and high stock market volatility than Spanish Flu developments a century
earlier. Here as well, there may be something to this explanation, but it is also highly
incomplete. As Velde (2023) discusses, the negative stock market impact of the Spanish
Flu was fairly modest even over time spans of several months. Hence, explanations that
stress greater information availability and its more rapid diffusion do not take us very far
in rationalizing the huge stock market drop since 24 February. A third explanation
stresses the interconnectedness of the modern economy: the commonplace nature of
long-distance travel and, in Europe, cross-border commuting; decades of falling
communication costs, falling transport costs and, until recently, falling tariffs; dense,
geographically expansive supply chains; and the ubiquity of just-in-time inventory
systems, which are highly vulnerable to supply disruptions.4 In addition, the structure of
the economy has shifted over time to services, many of which involve face-to-face
interactions. An abrupt uptake of voluntary and compulsory social distancing practices
brings a sharp drop in demand for such services. Again, there is merit in this explanation,
but it also strikes us as insufficient on its own to explain the stock market reaction. That
brings us to behavioral and policy reactions to the COVID-19 pandemic. As Baldwin
(2023) puts it, “COVID-19 and the containment policies have directly and massively
reduced the flow of labour to businesses. The result has been a sudden and massive
reduction in the output of goods and services.” Voluntary adoption of social distancing
practices has also played a significant role. Current containment efforts are much more
extensive and widespread than similar efforts in the past, including during the Spanish
Flu. They also have more potent effects in the modern economy for reasons sketched
above. In our view, the policy response to the COVID-19 pandemic provides the most
compelling explanation for its unprecedented impact on the stock market. Oddly enough,
this somewhat mirrors the impact of COVID-19 in more severe cases, where an
autoimmune response generates a cytokine storm, damaging lung tissue (Shi et al., 2023)

The healthcare rationale for travel restrictions, social distancing mandates, and
other containment policies is clear. These policies also bring great economic damage.
Recent stock market behavior is an early and visible reflection of the (expected) damage.
These circumstances motivate efforts to address the mortality risks posed by the
COVID-19 pandemic while shifting to less sweeping containment policies that do not
strangle the economy, as in Cochrane (2023), Dewatripont et al. (2023), Ichino et al.
(2023) and Monras (2023), among others.
 CHAPTER -2

REVIEW OF LITRATURE

Fauzi, R. and Wahyudi, I. (2016) conducted an analytical assessment to examine the

effect of the firm as well as the stock characteristics on the market stock returnsthrough the
technique of stock market crash analysis. It was a very relevant study that aimed at
determining the factors of stocks and companies that were impacted by the stock market
crash happening in Indonesia. Here, it was reported that there were 3 main stock market
crashes which had occurred in the years 1997, 2000 and 2008. The data collected was
then analysed using the research technique of multivariate regression method. It was
revealed from this study that the stocks which had higher betas along with larger
capitalization and also, more return volatility, comparatively higher debt ratios etc.
showed the tendency to lose more value on the crash day. It was also highlighted by the
current study that there were short-term as well as long-run oscillatory impacts over stock
returns during most of the crashes. Though the study implied useful insights, yet it
suffered from several limitations which makes the conducting of the current study more
justifiable.

Peiro, A. (2016) to examine the stock prices as well as the macroeconomic factors with
special reference to some European evidence. This research paper analysed the level to
which the stock prices depend on the macroeconomic variables covering some economies
of Europe that comprised of France, Germany as well as the United Kingdom. The study
reported that in the recent past, the long-term interest rates and industrial production
had been quite important variables which resulted in approximately one-half of the annual
movements in the stock prices. According to this study, both the factors seemed to be
equally significant, yet a closer investigation showed that the weight of the stipulated
factors had taken a turn from the interest rates to the level of production. Also, this
evidence was common to all three of the stipulated Europeancountries. It was also found to
be in sharp contrast with the results pertaining to the United States. The research study
documented that the production, as well as the interest rates, determined the stock returns
in the locations including France, Germany, and the UK. Furthermore, the study showed
that production had gradually gained relevance which was relative to the rates of interest.
Ultimately, the results proved that all of this proof was quite common in the European
context.In spite of being useful research, some research gaps were identified in relation to
this research. It was conducted outside India. It focused on the macro- environmental
factors in terms of their impact on the stock returns. Thus, it didn’t take into the internal
organizational factors related to its capital structure orprofitability. Also, this research was
majorly secondary in nature.

Reddy, Y.V. and Narayan, P. (2016) conducted extensive research via examining the
literature on the stock returns through the technique of ‘Content Analysis’. It was
documented that the prominent objective of any investment was to earn a return. Further,
it was presented that return on the investment done in stocks included the dividend and
also, the capital enhancement. These returns were documented to be influenced by both
the systematic as well as the unsystematic risks. This study highlighted systematic risk as
comprising the macroeconomic variables and the unsystematic risk including the
company-specific factors. It was mentioned by the researchers that the stock returns were
always a ground where several scholars had shown intensive interest for the past years.
Further, the main goal of this analysis was identified as to carry a content analysis of the
available literature on the stock returns for 15 years, which extended from the year 2000
till the year 2014. The data was gathered from around sixty-three different journals. This
research study concluded that the areas concerned with the elements of forecasting of
stock returns along with the domain of variability of stock returns had been the important
area of investigation which need to be further explored. Research gaps that have been
identified pertaining to this study were that it was based on past data and more
secondary in nature. It was a diverse study with a general focus on all possible factors that
could impact the stock market returns. Thus, it lacked the specificity or precision of just
assessing the impact of a firm’s profitability and financial leverage on its stock prices and
stock market returns. This was secondary research whereas stock markets are identified by
their volatile nature, thus it leaves the scope for conducting recent studies in this regard.

Salamat, A. and Mustafa, H.H.H. (2016) aimed at examining the role that the capital
structure of a company plays over stock return. This research represented examination via
empirical evidence regarding the stocks of firms over Amman Stock Exchange, Wasfi.
This analysis was conducted with the objective being the examination of the relation
existing between a company’s capital structure as well as their stock returns specifically
for industrial firms that were on the Amman Stock Exchange from 2007 to the year 2014.
This study utilized the research technique of using unbalanced panel data statistical
approach for data analysis. The analytical tool and techniques were applied to the
collected data for drawing meaningful interpretations to examine the formulated
objectives of the study. This study documented that there existed a significant
unfavourable effect of capital structure on the stock return of the firms registered on the
stipulated stock exchange. Some of the research disparities identified included the study
not being conducted in the Indian context and the operations of stocks or their value might
not be on the same lines as in India thus, the results might not be replicated in the context
of other stock exchanges. Also, there was a limited number and domain of firms that were
selected for the study registered on the Amman stock exchange whereas, in the current
study, the stocks being chosen belong to firms operating in different sectors of businesses.
Also, the time period taken for this study with empirical evidence is not recent in
comparison to existing research. Further, only the effect of capital structure has been
studied on the returns of the stock market and the variable of net adjusted profit effect on
the stock market pricesis missing.

A study was conducted by Ilukhin, E. (2015) for analysing the effect of the financial
leverage over a company’s performance which is in reference to evidence from Russia.
This examined the relation of financial leverage with a firm’s accomplishment. Results
revealed that the financial leverage of the firm can positively influence the firm’s
performance because it was documented that it can be seen as the main way to discipline
the management. This particular study was conducted on a large sample of companies in
Russia over the period from the year 2004 to the year 2013. It was revealed that the
findings were robust as it included using different measures of the firm’s performance,
checking the sub-samples and then, applying the time clusters along with the application
of an alternative estimation approach. It was found from this research that the results
supported the pecking-order theory. Some of the research gaps that were highlighted from
this study which signifies the relevance of conducting the current study have been that the
study wasn’t conducted in relation to the Indian stock exchange. Also, the period of study
taken was not recent. Further, examination of the impact of FL on a firm’s performance
and not on its stock prices or returns on the stock market. Even, the study of the effect of a
firm’s profitability on its stock prices and market returns has not been considered in the
given study.

Rodrigo (2015) conducted extensive empirical evidence-based research in order to test the
Miller-Modigliani theory being the most probable explanation to define the relationship
between the capital structure as well as the stock market returns. In this, ten stocks having a
market capitalization that exceeded $20billion were used duringthis research. Then, stocks
were separated equally on the basis of the TotalDebt/Equity ratio (financial leverage). The
study documented that between the range of 15%-30% concerning Debt/Equity ratios
there were five firms. On the other hand, the other 5 firms displayed high Debt/Equity
ratios from 300% to 500%. Here, 3 portfolios were formed via an online portfolio manager
followed by holding the stocks for 36 days, up till 30th March 2010. The study
documented that the findings collected from the observed analysis showed that the returns
on the stock market for both portfolios came out to be quite similar. It was seen that the
portfolio which had lower leverage gave returns of 7.99%. On the other hand, the ones
with higher leverage showed returns of 10.39%. Furthermore, numerous other views were
provided on the determinants of the capital structure and returns on the stock market. This
study had some research gaps as it was conducted outside India. It hada narrow approach as
this concentrated on testing a particular theory only. A limited number of companies was
taken as a sample for this study. A study was conducted by Abdullah, B. (2014) for
examining the impact that financial structure along with the financial leverage and the
firm’s profitability would show on the industrial companies’ share value. This research
was conducted on a section of industrial companies of Saudi origin. This study as
conducted by the researcher was with respect to the Saudi industrial companies in order to
find the association between financial structure, financial leverage, profitability and
market value. It considered factors Stock price as the dependent variable, Capital structure,
financial leverage, and Profitability (ROI) as independent variables. This study involved
extensive research with a decent sample, but it was also marked by some research gaps
which make the current study relevant in terms of conducting it in India. Thus, the very
first research gap was that it didn’t have any Indian companies or companies registered on
any of the stock exchanges in India. The study examined the relationship of return on
investment on the stock prices but not of net adjusted prices on the stock price as well as
the stock market returns. Also, the time period of this study doesn’t consider the changes
that had taken place throughout the past five years. Also, the successive change in the
stock prices over the years as represented by the stock market returns was not a part of the
study conducted. Thus,all these research gaps been identified regarding this study validates
the conducting of the current study so as to cover the identified research gaps of the
mentioned study.

A research study was conducted by Balaputhiran, S. (2014) for examining the firm’s
performance and also, its earnings per share. This study was carried on a sample
constituting the listed banks in Sri Lanka. This research paper focused on the
identification of the relationship that existed between the firm performance and the
‘Earnings per Share’ of the various listed banks in the neighbouring country of Sri Lanka.
This study was based on the data which was composed of seven listed banks from all the
banking institutions, finance firms and firms operating in the insurance sector. The period
of the research was covered for five years that stretched from the year 2008 to the year
2012. The research technique employed in this research study was the correlation method
in order to examine the relation of given variables whereas regression was employed to
find the impact of a firm’s performance on EPS. No significant association existed
between the firms’ performance and the EPS. The study further revealed from the
coefficients of correlation that the firm’s performance was not significant in terms of
determining the change in EPS of listed banks in Sri Lanka. This was a useful study
providing valuable inputs in terms of the banking sector and financial sector operating in
a country outside India. Yet, it had several research gaps. The first being that this study
was not conducted in the context of India. It focused on studying the firm’s performance
and not the impact of profitability on the stock prices or stock returns. Further, the period of
the study concerned in this study was not recent thus, it creates scope for recent research to
be conducted to incorporate the recent changes in the environment. Also, the approach has
been narrow as it does pertain to the banking and finance sector. Even, the sample of
banks taken was not representative. Hence, there was scope left for further studies in
various sectors and comprising the proposed variables.

There was a study conducted by Dita and Murtaqi (2014) in Indonesia in order to study
the level and type of relation for net profit, the price to the book value, the debt-equity
ratios and even, the returns on the stock market in the existing in Indonesia (the Year
2009 to 2013). The collected data was analysed through the statistical technique of
multiple regression analysis. It was documented from this study that the net profit margin
had impacted stock returns. The impact of the price to book value was statistically
important on stock returns. The debt-equity ratio exercises a significant relationship on
the returns on the stock. It was documented from the result of this study that the net profit
margin and the debt-to-equity ratio had got a favourable effect on the stock returns which
was statistically significant. It was also represented that the price to book value had a
statistically significant negative relation. ‘Net Profit Margin’ was the most significant
factor out of all. This study was very significant as it provided useful inputs to the current
domain, yet it was marked by various research gaps. Some of the research gaps identified
were that the study was pertaining to Indonesia and the result couldn’t be replicated in the
context of India. Also, the study was not for recent years. The effect of the independent
variables was studied on the stock returns and not the stock prices. It missed the effect of
FL on the stock price and stock returns. It was limited only to the stocks of the consumer
goods industry operating in Indonesia.

A very significant investigation was also made to study the relationship that existed
between the P-E ratio and the returns on the stock market of the firms on the Nairobi
securities exchange by Ogello Catherine Auma in 2014. Here, the researcher did a detailed
review and obtained secondary data through the medium of the financial reports of sixty-
one firms over the Nairobi securities exchange commencing from the beginning of 2009
till the end of 2013. This gathered information was then analysed to draw meaningful
results. In this study, a regression was applied for establishing a relation of the P-E ratio
with stock returns. The analysis concluded that there was a significant relationship
between the P-E ratio and the returns on the stock for the given companies. It was further
shown by this study that the shares having hiked market to book value ratios were found
to have significantly more returns in comparison to shares with the lower market to book
values ratios. Also, a significant relation was exerted by total assets over stock returns of
the stipulated firms. This study emphasized that many other factors also impacted the
stock returns such as the interest rates and industry performance. Thus, it was suggested
to take into consideration. This study advocated the fact that the investors should always
consider these factors as well while making investment decisions. This study in spite of
being very extensive in nature had some research gaps. This was not concerning the firms
listed on any of the stock exchanges in India. Further, an examination of the impact of
financial leverage and profitability on stock market prices wasn’t included in this study.
More emphasis was given to the book value ratios.

Yet, another significant study with practical implications was carried by Uluyol, O., Lebe,
F. and Akbaş, Y.E. (2014). This research examined the relationship that might be there
between FL and the return on equity of the stipulated corporations. It was an empirical
research study that was conducted on the companies that were traded on the İstanbul
Stock Exchange. Furthermore, this empirical research investigated the impact of the
leverage ratio on the Return on Equity. The study was carried out for 5 industries using the
financial leverage- and ROE ratios started from quarter-1 of the financial year 1991 to the
quarter-4 of the financial year 2012. The research study provided the conclusion that the
relation between the debt to total assets and RoE was positive for the construction industry
and it was negative in the Information Technology industry, food industry, mining
industry and textile

industry. This study was marked by several research gaps and some of these gaps which
were identified were that it was pertaining to the stock exchange outside India and not
pertaining to India. It was regarding few specific industries. The study involved studying
the impact of leverage on the companies’ return on equity but excluded studying the
effect on its stock prices and stock market returns. Also, the time period associated with
this study is not recent thus, the results of this study may not be replicated in the current
scenario.

Another study in the related domain was carried by Fawzi, S.M. (2013) realizing the
significance of studying the ‘Earnings and Stock Returns Models’ with special reference
to the evidence from Jordan. One of the major aims behind this research was to find a link
between accrual earnings and the stock returns in the context of the Jordan Capital
Market. For this particular assessment through this research, a sample of about sixty-
seven companies was considered as a representative sample. This research aimed at
deciphering the predictive ability of the accounting earnings and the stock prices. The
period of study was stretched from the year 2004 until the year 2011. This study provided
the findings which indicated that 3 models showed that the earnings and stock prices were
positive as well as significantly related. It was also documented that predictability of
return. The various results that were highlighted from this research provided the
recommendation regarding improving return-earnings relation via aggregation of the
stock earnings and returns. It was quite a relevant study that added to the existing set of
knowledge in the mentioned domain yet, it had some research gaps. This study was
pertaining to the stock exchange operating outside India. The time period taken for the
study was not recentand thus, the results might not seem applicable in the current scenario.
It didn’t consider the impact of financial leverage and net adjusted profit on the stock
pricesand stock returns.

STATEMENT OF THE PROBLEM

- Presently, the fluctuations in the Indian market are attributed heavily to cross
border capital flows in the form of FDI, FII and to reaction of Indian market to
global market cues. In this context, understanding the relationship and influence of
various exchanges on each other is very important.
- With the cross border movements of capital like never before in the form of FDI
and FII, coupled with the easing of restrictions bringing various stock exchanges at
par in terms of system and regulations, it can be assumed reasonably that a
particular stock exchange will have some impact on other exchanges.
- The stock market has responded to the COVID-19 pandemic with worrying
volatility, as traders have panic-sold out of fear.
- As a result of the recent turmoil, the market-wide circuit-breakers that attempt to
prevent panic-trading, have been triggered four times alone in March.
- The market has reacted to recent unpredictability with large drops, triggering a
market wide circuit breaker four times in March. The safeguard pauses trading for
15 minutes in hopes the market will calm.
- The U.S. Securities and Exchange Commission mandated the creation of market-
wide circuit-breakers to prevent a repeat of the Oct. 19, 1987 market crash, in
which the Dow plunged 22.6%. Since then, they have only been triggered once in
1997 before the four times this March.
Need of the study

- The World Market is now a forum for collaboration. Different players from
different backgrounds and countries are now in the same market. The international
market is affected by different markets in different countries. The influence of one
markets over another plays an important role. The 9/11 attacks on Trade Towers
affected American trade. Also, In India 26/11 attack, Demonetization, GST taxes
and now currently in whole world the Corona Virsus or COVID-19 has made the
whole world locked and has majorly affected the stock market all over. But the
impact was global. Local markets for various countries are also directly and
indirectly affected. So, here we learn about the impact of different markets and a
comparative study of different markets. In this regard, the international stock
market indicators are being studied and the linkages between the studied markets.
 Scope of Study

The following research is studying the stock markets and exchanges of India, USA, China,
Taiwan, Japan, Hong Kong, South Korea and UK. The Time Period taken in this study is
from31st January 2014 to 31st March 2023. Basis of the study is daily closing prices of
stock market indices for all the selected countries.

Scope and Limitation

• The scope of the research is to understand the difference between the exchange of
preferred stock and Indian shares.
• This study is based on Historical and Secondary data leading to current and past
climate change.
• This study is limited to the stock exchange.
• This study is based on secondary data and the study methodology is used.

RESEARCH OBJECTIVE

1. To Ensure NYSE-listed companies meet distribution and size standards for

transparency and investor confidence.

2. To Investigate BSE Sensex integration with global markets post-financial crisis.

3. To Analyze global stock exchange rankings, focusing on American dominance and

Indian, Korean, and Taiwanese positioning.

4. To Ensure NYSE compliance through evaluation of various criteria including

stockholders, IPO underwriters, and financial performance.

5. To Analyze COVID-19 impact on Indian stock market, focusing on Sensex, Nifty

50, and major banking stocks for wealth erosion and investor sentiment.
 CHAPTER -3

RESEARCH METHODOLOGY

The data collection method used here is second to none. The above information and the
following data are available in various exchanges of different countries. The methodology
of the study pricing including analyzing trend movements. Representing the US stock
market, the major indices are the S&P 100, BSE SENSEX and NIFTY of India, FTSE 100
of the UK, KOSPI of South Korea, NIKKIEI of Japan, Hand Seng of Hong Kong, TSEC
Taiwan and SSE China.

The following methods are used for analysis:

 Descriptive Analysis of the Stock Price.

 Image analysis of price indices.
 Correlations between different stock indices
For the comparative analysis of the different stock exchanges, the period chosen is from 1st
January 2016 to 31st March, 2023. This period is divided into different sets of years, like
2016-17, 2017-18, 2018-19, 2019-120 in order to capture the effect and movement of
stock exchanges with each other during different periods.

The economic situation changes during different times.

RESEARCH DESIGN

A research is the arrangement of the conditions for the collections and analysis of the data
in a manner that aims to combine relevance to the research purpose with economy in
procedure. In fact, the research is design is the conceptual structure within which research
is conducted; it constitutes the blue print of the collection, measurement and analysis of the
data. As search the design includes an outline of what the researcher will do from writing
the hypothesis and its operational implication to the final analysis of data.
The design is such studies must be rigid and not flexible and most focus attention on the
following;

The present study is exploratory in nature, as it seeks to discover ideas and insight to brig
out new relationship. Research design is flexible enough to provide opportunity for
considering different aspects of problem under study. It helps in bringing into focus some
inherent weakness in enterprise regarding which in depth study can be conducted by
management.

The research design used in this project by the researcher is the descriptive research design.

Research Plan: Research Plan is no specific for all types of research; it is decided
depending upon the nature of the problem

Designing a research plan calls for decisions on –

1. Data sources

2. Research Instruments

3. Sampling plan

4. Contact methods.

Data collection:

The current study is purely based on secondary data. The data for the above mentioned
stock indices is available at the corresponding stock exchanges used in the study. The
methodology of the study primarily includes analyzing through qualitative analysis with
certain milestones to understand functions of market.

Secondary Data:

This research is fully based on available secondary data that is journals, Newspaper,
Websites of Exchanges etc. Earlier studied reports area also considered in this study for the
purpose of understand the difference in exchanges and thereof. The study considered on
qualitative data for the analysis and comparative study is conducted with reference to same.

Sampling design:

Stock exchanges representing various regions used in this study include major stock
exchanges as per the convenient sampling methods i.e.

 NSE (India)
 NYSE (USA)
 Hang Seng (South East Asia)
 Tokyo Stock Exchange (Japan)
 Korea (Asia)
Sample size for this study is five.

Tools forAnalysis:

Comparative analysis

To find out Comparative Subjective noteworthy differences among the selected stock
exchanges. This is part of a larger study in which the various sample parameters are
compared with specific parameters, both qualitatively and quantitatively.

Analysis of symptoms

In this section the various exchanges of stock are compared with the following parameters;
• Market Capitalization
• Number of securities listed
• Listing agreements
• Circuit filters
• Living

These parameters are used to look at selected key features of any stock exchange, such as,
market capitalization provides an idea of relative exchange size; and the listed security
number serves as a reference to the volume and acceptance of the exchange. Listing
agreements cover the management issue, while the circuit filters provide insight into the
exchange risk management framework. Finally, the efficiency of the stock exchange is
measured based on the settlement process.

And the main purpose is to help investors know if the various stock exchanges around the
world are impacting on one another or in any way connected with their movements and, if
so, how long.

The following methods are used for analysis.

 Descriptive Analysis of Value of Stocks.

 Graphical analysis of price indices.
 Correlation between the different stock indices.

Analysis and Findings

TOOL FOR DATA ANALYSIS AND INTERPRETATION:

 Regression

 Graphs presentation

 Correlation
Comparative study of Indian Stock Market and International stock market :

In this objective we will analyze the results which are generated by the statistical software
when we applied the statistical tools on our data. The tool which was used in this research
was SPSS (Statistical Package for Social Sciences). In this chapter we will interpret the
results and based on those results we will conclude our research in this last chapter.

Following are the data of dependent and independent variables

1. Indian Stock Exchanges

2. International Stock Exchange

After selection of the above variables we can describe the Indian Stock Marketwithin
the International Stock Marketcomparatively in the following way:

INDSE=f (ISE)
Here INDSE represent number of Indian Stock Exchange and ISE represent numbers
of International Stock Exchange. After specifying the numbers of Indian Stock
Exchange in linear form with an addition of error term, we can write in following way:

INDSE= α + β (ISE)
 CHAPTER -4

DATA ANALYSIS AND INTERPRETATION

The hypothesis that the exchanges impact each other has been tested through various
statistical methods with data on price, returns collected from the exchanges. Mainly the
correlation analysis, exponential trend analysis and the risk-return analysis has been
used to validate the hypothesis.

Price Relationship

Correlation is a numerical summary measure that indicates the strength of relationships

between the pairs of variables. A correlation is very useful but it has its limitations.
That is, it can only measure the strength of a linear relationship. The numerator of the
above formula is also a measure of association between two variables X and Y which is
called the covariance between X and Y. Similar to correlation, a covariance is a single
number that measures the strength of the linear relationship between the two variables.
It is by looking at the sign of the correlation or the covariance, i.e. positive or negative,
that we can tell whether the two variables are positively or negatively related.

Therefore the correlation is better because, unlike the covariance, the correlations are
not affected by the units in which the variables are measured. All the correlations are
between +1 and -1, inclusive. The sign determines whether the relationship is positive
or negative. The strength of the relationship is measured by the absolute value or the
magnitude of the correlation. The closer it is to +1 the stronger the relationship is and
the closer to zero indicates that there is practically no linear relationship. At the
extreme a correlation equal to1 -1 or +1 occurs only when the linear relationship is
perfect. In this part the price data of the various exchanges are collected and subjected
to a correlation test in order to find out the influence that they have on each other. In
other words, an effort has been made to gain insight into how far the price movements
of the exchanges are related with one another.
Market Capitalization

Market capitalization is the measure of corporate size of a country. It shows the current
stock price multiplied by the number of outstanding shares. It is commonly referred to
as Market cap. It is calculated by multiplying the number of common shares with the
current price of those shares. This term is often confused with capitalization, which is
the total amount of funds used to finance a firm's balance sheet and is calculated as
market capitalization plus debt (book or market value) plus preferred stock. While there
are no strong definitions for market cap categorizations, a few terms are frequently
used to group companies based on its capitalization. The table below shows the market
capitalization of ten stock markets in the world. Based on the below study, it can be
observed that India is 9th in the world ranking of Market capitalization. This is in spite
of having the third largest investor base, after Japan and USA, and having the largest
number of companies listed. United States leads the list of countries with the highest
market capitalization. It is interesting to note that the total market capitalization of all
the companies listed on the New York Stock Exchange is greater than the amount of
money in the United States.
Table : 2 Price Relationship

Sr.No Market Market Cap Rank

(US$ trillion)

1 U.S. 23.8 1
2 Japan 5.2 3
3 Hong Kong 4.1 4
4 India 2.2 9
5 Korea 1.3 12

As per the above data here it shoes that the market capitalization of US is more than other
stock exchanges in the world Japan secured 3rd rank in market capitalization where Hong
Kong is on 4th rank. Indian stock exchanges and Korean are far from their competition in
Market capitalization by the ranking. India secured 9th position where Korea is on 12th
rank.

Indian stock exchange need to focus on the prospectus of increase in market capitalization
by the attraction of more people in Invest in stock market. Social awareness program for
the Indian investors as well as policies of tax relief can also attract investor to invest in
stocks.

Listed Securities

Listing in a stock exchange refers to the admission of the securities of the company for
trade dealings in a recognized stock exchange. The securities may be of any public limited
company, Central or State Government, quasi-governmental and other financial
institutions/corporations, municipalities, etc. Securities of any company are listed in a
Market Capitalization in %

 US
 JAPAN
 HONG KONG
 INDIA
  KOREA
And Others 24 stock exchange to provide liquidity to the securities, to mobilize savings
and to protect the interests of the investors.

Table :3 Stock Exchange

Stock Exchange No. of Listed companies

BSE 5763
NSE 1749
NASDAQ 2803
NYSE 2458
Korea Exchange 1859
Japan Exchange Group 3488
Hong Kong Exchange 1784

India has the highest number of companies listed in the stock market. Out of this, about
75% of the companies are listed with the Bombay Stock Exchange. After India, Japan
Exchange Group has the highest number of companies listed.

Here as per no. of securities listed in stock exchanges the BSE is on top with listed
securities of more than 5500 after that Japan stock exchange with listed securities more
than 3400. NASDAQ is with listing securities more than 2800 where NYSE have listed
securities more than 2400.Korean stock exchange have listed securities more than 1800
and Hong Kong stock exchange have more than 1700. NSE is with listed securities more
than 1700. Here one can say that Indian stock exchanges are more focused on listing of
securities capitalization and the number of listing securities are not respondent to each
other the US stock exchange have less securities listed but still its market capitalization is
more than Indian stock exchanges.
 No. of Listed companies

Hong Kong Exchange

Japan Exchange Group

Korea Echange Group

NYSE No. of Listed companies

NASDAQ

NSE

BSE

0 1000 2000 3000 4000 5000 6000

Listing Agreements

Bombay Stock Exchange

Eligibility Criteria for IPOs/FPOs: Companies have been classified as large cap companies
and small cap companies. Company with a minimum issue size of Rs.10Cr and market
capitalization small cap company is a company other than a large cap company.

National Stock Exchange

Eligibility Criteria for New companies (IPOs)

 Paid up capital: Not less than 10Cr

 Market Capitalization: Not less than 25Cr
 At least three years track record: 26 Cr
 The company has not been referred to the Board for Industrial and Financial
Reconstruction (BIFR).
 The net worth of the company has not been wiped out by the accumulated
losses resulting in a negative net worth. The company has not received any
winding up petition accepted by a court.
 Promoters’ mean one or more persons with a minimum 3 years’ experience of
each of them in the same line of business and shall be holding at least 20% of
the post issue equity share capital individually or severally.
 No disciplinary action by other stock exchanges and regulatory authorities in
past three years.
  Existing Companies listed on other stock exchanges Paid up Capital: Not less
than 10Cr MarketCapitalization: Not less than 25 Cr.
 Minimum Listing Requirements for companies listed on other stock exchanges.
The company should have minimum issued and paid up equity capital of Rs.3
Cr. The Company should have profit making track record for last three years.
 Minimum net worth of Rs.20Cr
 Minimum market capitalization of the listed capital should be at least two times
of the paid up capital.

New York Stock Exchange

Domestic listing on NYSE requires minimum certain minimum standards to be met.

Distribution and Size criteria:

 The number of beneficial holders of stock held in "street name" will be

considered in addition to the holders of record. The Exchange will make any
necessary check of such holdings that are in the name of Exchange member
organizations.
 In connection with initial public offerings, spin-offs and carve-outs, the NYSE
will accept an undertaking from the company's underwriter to ensure that the
offering will meet or exceed the NYSE's standards.
 If a company either has a significant concentration of stock or changing market
forces have adversely impacted the public market value of a company that
otherwise would qualify for an Exchange listing, such that its public market
value is no more than 10 percent below the minimum, the Exchange will
consider stockholders' equity of $60 million or $100 million, as applicable, as
an alternate measure of size.
 Pre-tax income is adjusted for various items as defined in Section 102.01C of
the NYSE Listed Company Manual.
 Represents net cash provided by operating activities excluding the changes in
working capital or in operating assets and liabilities, as adjusted for various
items as defined in Section 102.01C of the NYSE Listed Company Manual.
Average global market capitalization for already existing public companies is
represented by the most recent six months of trading history. For IPOs, spin-
offs and carve-outs, it is represented by the valuation of the company as
represented by, in the case of a spin-off, the distribution ratio as priced, or, in
the case of an IPO/carve-out, the as-priced offering in relation to the total
company's capitalization.
Tokyo Stock Exchange:

(A) The number of shareholders:

 In case where the number of shares to be listed is less than 10 thousand units; 800
persons.
 In case where the number of shares to be listed is 10 thousand units or more but less
than 20 thousand units; 1,000 persons,
 In case where the number of shares to be listed is 20 thousand units or more; 1,200
persons.

(B) Number of years since incorporation:

3 years or more have elapsed by the last day of a business year immediately prior to the
day of listing application

(c) Amount of profit:

The amount of profit for the first year of the latest 2 years was 100 million yen or more;
and 400 million yen or more for the latest year, or The amount of profit for the first year of
the latest 3 years was 100 million yen or more; 400 million yen or more for the latest 29
one year of the latest 3 years; and the aggregate amount of profits for all of the latest 3
years was 600 million yen or more.

Hong Kong Stock Exchange

Basic Listing Requirements for Equities

 Profit attributable to shareholders: At least HK$50 million in the last three financial
years
 Market Capitalization: At least HK$200 million at the time of listing
 Revenue: At least HK$500 million for the most recent audited financial year
 Cash flow: Positive cash flow from operating activities of at least HK$100 million
in aggregate for the three preceding financial years.
 Spread of Shareholders:
 100 shareholders for issuers with 24 months of active business pursuits.
 300 shareholders for issuers with 12 months of active business pursuits. Public
float:
 At least 25% of the issuer's total issued share capital must at all times be held by the
public.
Korea Stock Exchange

(A) Quantitative Requirement

 No of Shares: At least 1million shares as of application date.

 Net Worth: At least KRW 10 billion as of application date.
 Sales Amount: At least KRW 30 billion for the latest fiscal year and the average for
the latest three fiscal years should be at least KRW 20 billion.

(B) Financial Requirement

 Profit: Must show operating profits, ordinary profits and net profits.
 Profits for the latest fiscal year should be at least KRW 2.5 billion and the sum for
the latest three fiscal years should be KRW 5 billion.
 Reserve Ratio: At least 50% (25% for large corporations) according to the balance
sheet of the latest fiscal year. iv. Reserve ratio = [(Net worth - Paid-in Capital) /
Paid-in Capital] * 100 v.

No of years since establishment: Have been operating without interruption for at least 3
years since establishment. The Listing agreements are well defined for each exchange
which helps to listing of companies in the exchange. Indian listing criteria are well defined
and that helps to increase no. of listed companies in the exchange.

US listing criteria are more complex than Indian stock exchange so there are fewer
securities registered as compare to India. Other stock exchanges also have well defined
criteria but still that also more complex as compare to Indian stock exchange.

Top 10 Largest Stock Exchanges in the World by Market Capitalization

are as following till (2017-2019):

1- New York Stock Exchange, United States

Founded in 1792, the New York Stock Exchange has been the world’s largest stock
exchange since the end of World War I, when it overtook the London Stock Exchange. It
has a market capitalization of $22.9 trillion and about 2,400 listed companies. According to
the 2017 data from Gallup, more than 54% Americans had invested in stocks listed at the
NYSE. The NYSE alone accounts for roughly 40% of the world’s stock market
capitalization

2- NASDAQ, United States

The NASDAQ Stock Market was founded in 1971 in New York City. NASDAQ is
considered the Mecca of technology companies because many of the world’s largest
technology companies such as Apple, Microsoft, Facebook, Amazon, Alphabet, Tesla,
Cisco, and others are listed here. As of November 2018, NASDAQ had a market
capitalization of $10.8 trillion with an average monthly trading volume of $1.26 trillion.

3- Tokyo Stock Exchange, Japan

Founded in 1878, the Tokyo Stock Exchange is among the top 10 largest stock exchanges
in the world. It has close to 2,300 listed companies with a combined market capitalization
of $5.67 trillion. Trading at the Tokyo Stock Exchange was suspended for four years after
World War II. It resumed operations in 1949. The TSE’s benchmark index is Nikkei 225,
which consists of the largest companies including Toyota, Honda, Suzuki, and Sony.

4- Shanghai Stock Exchange, China

The largest stock exchange in China has a market capitalization of $4.02 trillion. It is a
non-profit organization and has more than 1,000 listed companies. Though its origins date
back to 1866, it was suspended following the Chinese Revolution in 1949. The Shanghai
Exchange in its modern avatar was founded in 1990. Stocks listed at the Shanghai Stock
Exchange have ‘A’ shares that trade in local currency and ‘B’ shares that are priced in the
US dollar for foreign investors.

5- Hong Kong Stock Exchange, Hong Kong

The Hong Kong Stock Exchange was founded in 1891. It has close to 2,000 listed
companies, about half of which are from mainland China. It has a monthly trading volume
of $182 billion and a market capitalization of $3.93 trillion. In 2017, the exchange closed
its physical trading floor to shift to electronic trading. Some of the biggest companies listed
at the Hong Kong Stock Exchange are AIA, Ten cent Holdings, Petro China, China
Mobile, and HSBC Holdings.

6- Euronext, Eurozone

Headquartered in Amsterdam, the Netherlands, Euronext is a pan-European stock exchange

with a presence in France, Belgium, Ireland, and Portugal. It has approximately 1,300
listed companies with a combined market capitalization of $3.92 trillion. Stocks listed at
Euronext trade in euros. Its monthly trading volume is about $174 billion.

7- London Stock Exchange, United Kingdom

The London Stock Exchange was founded in 1698. It has more than 3,000 listed companies
with a combined market capitalization of $3.76 trillion. It is owned and operated by the
London Stock Exchange Group, which was formed in 2007 following the merger of the
LSE with Borsa Italia. The LSE was the world’s largest stock exchange until the end of the
First World War, when it lost that title to the New York Stock Exchange. Some of the
biggest companies listed at the LSE are British Petroleum, Barclays, and GlaxoSmithKline.

8- Shenzhen Stock Exchange, China

Formally established in 1990, the Shenzhen Stock Exchange is one of the only two
independently operating stock exchanges in China. The other one being the Shanghai Stock
Exchange. Its market capitalization is $2.5 trillion as of November 2018. Most of the
companies listed here are based in China and it trades shares in Yuan. The Shenzhen Stock
Exchange launched a Chi Next board in 2009 consisting of high-growth, high-tech start-
ups similar to NASDAQ.

9- Toronto Stock Exchange, Canada

Owned and operated by TMX Group, the Toronto Stock Exchange (TSX) has 2,207 listed
companies with a combined market capitalization of $2.1 trillion, earning it a place among
the world’s top 10 largest stock exchanges. It has an average monthly trade volume of $97
billion. All of Canada’s ‘Big Five’ commercial banks are listed at the Toronto Stock
Exchange. It was founded in 1852. Back in 2011, the TMX Group was in talks to merge
with the London Stock Exchange, but it couldn’t get the approval of shareholders.

10- Bombay Stock Exchange, India

Founded in 1875, the Bombay Stock Exchange was the first stock exchange in Asia. As of
November 2018, it had a market capitalization of $2.05 trillion. It is the stock exchange
with the highest number of listed companies on this list. According to Visual Capitalist,
the BSE has 5,749 listed companies. However, most of them are small-caps. It is located at
Dalal Street in Mumbai.
 1. Descriptive Analysis

This is the tool to summarized the data and provide the measures of the sample data.

Table 4: The Value of Stocks of World’s Major Stock Exchange Markets:

Country Stock Exchange Indices Name Value of Stocks

India National Stock Exchange S & P Nifty 1,450

India Bombay Stock Exchange Sensex 1,482

Honk Kong Hong Kong Stock Exchange Hang Seng 3,165
USA New York Stock Exchange NYSE 18,486

USA Nasdaq Stock Exchange NASDAQ 7,449

China Shenzhen Stock Exchange SZSE 3,424
China Shanghai Stock Exchange SSE 4,460
Korea Korean Stock Exchange KRX 100 1,265
Japan Japan Exchange Group Nikkie 4,910
UK London Stock Exchange FTSE 3,272
Taiwan Taiwan Stock Exchange TAIEX 750

The highly valued Stocks in the world are of New York Stock Exchange, followed by the
other American Stock Exchange called NASDAQ, which clearly justifies the dominant
position of America in the International Stock Markets. Among the above listed stock
exchanges, Indian Stock Exchanges, Bombay Stock Exchange and National Stock
Exchange lies on 8th and 9th position respectively. Korean Exchange is on 10th position
and the last position is of Taiwan Exchange.
Table 5: The Indices of the Major Stock Exchange Markets

Stock 2016 2017 2018 2019 2020 2021 2022 2023

Exchange
S&P 6090 8,809 7,437 8,641 11,069 7,439 18,641 22419
Nifty
Sensex 20,513 29,182 24,870 27,655 35,965 24,871 27,655 73730
Hang Seng 22,035 24,507 19,683 23,374 33,154 17,699 16889 17651
NYSE 9,967 10,537 9,427 11,283 13,637 9,426 17,731 17663
NASDAQ 4,103 4,635 4,613 5,666 7,240 4,611 5,665 15,611
SZSE 2,202 3,434 2,946 3,388 11,160 2,947 3,389 9,463.91
SSE 2,033 3,210 2,737 3,159 3,558 2,737 3,159 3088.64
KRX 100 4,175 4,022 3,633 4,221 5,344 3,635 5,221 5,640.67
Nikkie 14,914 17,674 17518 19,467 23,808 17518 38,992.0 37,934
FTSE 6,510 6,825 5,931 7,099 7,533 6,931 8,119.27 8,121
TAIEX 8,462 9,361 8,145 9,448 11,104 16,145 18,270 20,222

Stock Exchange
80000 S & P Nifty
70000 Sensex
60000 Hang Seng
50000 NYSE
NASDAQ
40000
SZSE
30000
SSE
20000 KRX 100
10000 Nikkie
0 FTSE
TAIEX
The `rate of growth of the Indices of Shenzhen Stock Exchange of China is more than all
other Stock Exchange Indices. The indices of the SZSE in 2018 were 2,202 and now in
2019 it is 11,160. However, in current period, Bombay Stock Exchange is leading the
world’s top exchanges in case of Indices followed by Hang Seng Exchange of Honk Kong.
Korean based Stock Exchange KRX 100 is on last position in case of Indices.

Table 6: Comparative Central Tendency of all the Stock Exchanges:

Stock Exchange Mean Median St. Deviation

S & P Nifty 8,409 8,641 1,845
Sensex 27,637 27,655 5,704
Hang Seng 24,551 23,374 5,134
NYSE 10,970 10,537 1,642
NASDAQ 5,251 4,635 1,248
SZSE 4,626 3,388 3,686
SSE 2,939 3,159 585
KRX 100 4,279 4,175 639
Nikkie 18,676 17,674 3,296
FTSE 6,780 6,825 605
TAIEX 9,304 9,361 1,153

The central tendency of the various Stock Exchanges’ Indices is measured in form of
Mean, Median and Standard Deviation. It is again lead by Bombay Stock Exchange,
followed by Hang Seng. The lowest Mean value is of Shanghai Stock Exchange of China.

2. Graphical Analysis

To show the movements of the indices of the selected countries stock markets, following
graphical presentation has been made.

Figure 1: The Value of the Various Stock Exchanges:

The above graph is showing the comparative level of values of the Stocks of different
countries.

Source https://www.livemint.com/market/stock-market-news/how-does-the-us-market-
influence-the-indian-stock-market-11703069788322.html

The comparative analysis of the Stock Indices of the world’s top Stock Exchanges has been
presented in the above graphical representation. The top position is of BSE, Hang Seng and
Nikkie. The rate of growth of the SZSE is shown here which is higher than others. The
current lowest position is of SSE, KRX 100and FTSE (UK Stock Exchange).
 3. Correlation Analysis

Table 7 : Showing the Correlation between India’s Stock Prices with other Countries’
Stock Prices.

S&P Sensex Hang NYSE NASDAQ SZSE SSE KRX Nikkie FTSE TAIEX
Nifty Seng 100

S&PNifty 1 0.997 0.875 0.893 0.914 0.878 0.951 0.760 0.957 0.794 0.931
Sensex 0.997 1 0.879 0.88 0.898 0.885 0.944 0.754 0.946 0.769 0.923
Hang Seng 0.875 0.899 1 0.968 0.883 0.951 0.693 0.964 0.862 0.878 0.975
NYSE 0.893 0.88 0.968 1 0.956 0.933 0.735 0.961 0.920 0.923 0.984
NASDAQ 0.914 0.898 0.883 0.956 1 0.928 0.796 0.873 0.984 0.812 0.923
SZSE 0.878 0.885 0.951 0.933 0.928 1 0.694 0.921 0.922 0.734 0.912
SSE 0.951 0.944 0.693 0.735 0.796 0.694 1 0.536 0.872 0.682 0.801
KRX 100 0.761 0.755 0.964 0.962 0.873 0.921 0.537 1 0.809 0.872 0.927
Nikkie 0.957 0.947 0.862 0.92 0.985 0.922 0.872 0.809 1 0.761 0908
FTSE 0.794 0.769 0878 0.923 0.812 0734 0.682 0.872 0.760 1 0.937
TAIEX 0.931 0.923 0.975 0.984 0.923 0.912 0.801 0.927 0.908 0.937 1

The study of relationship between BSE Sensex and other selected indices indicates
that there is a significant relationship between BSE Sensex and other world major indices.
In all the cases correlation is significant at 1% level of significance, indicating that strong
integration of Indian stock market with major world markets in the post global financial
crisis. The correlation of Indian stock market is weak with KRX 100, Korean Stock Market
and strong correlation with China, Japan and Taiwan Stock Markets. However, no
conclusion can be drawn on the basis of analysis of correlation and thus, high
significant correlation warrants a detailed study to find whether the phenomenon is short
lived or is valid in the long run as well. Granger causality and co integration techniques
need to employ to be check the correlation results further for analysis of short run and long
run effects respectively.
 Global stock markets gained $17 trillion in value in 2023
 The value of the global stock markets is approaching $90 trillion.
 Central banks and political developments around the world have boosted equities.
 Big years for large U.S. tech stocks made up a significant part of the gains.

Stock market ends in red:

Source: https://timesofindia.indiatimes.com/business/india-business/its-boomgpt-time-for-
us-tech-stocks/articleshow/101770440.cms

 He noted that the rising number of coronavirus cases could force the government to
further extend the on-going lockdown and it could further put pressure on an
already slowing economy.

Asian Stock Markets Ailing After Coronavirus Outbreak

Stock market losses in Asia recorded in January after the initial outbreak of the novel
coronavirus in China pale in comparison to market crashes happening on the continent
at the moment, while the whole world economy is severely compromised during the
ongoing pandemic.

 The Hong Kong Hang Seng index closed today almost 22 percent lower than on Jan
2, the first trading day of 2023. In Korea and Japan, two countries also majorly
impacted by the virus and the measures to slow it, leading market indices were
down even more today - by 26 and 28 percent, respectively, compared to the
beginning of the year.
 The Shanghai Composite went on a prolonged trading hiatus in January and was
hanging on following measures by the Chinese government. But as the virus' march
continues, even the SSE slid majorly and is down 11.5 percent since Jan 2.
 CHAPTER-6

FINDING

1.As per Market capitalization India ranked 9th in the world, all other Market studied in
this project are higher market capitalization that India.

2. Listing of securities is more as compare to other exchanges.

3. Listing agreements are well defined in Indian market as a result more listed companies
are there in Indian stock exchange.

4. Circuit Filter Criteria is well defined in Indian stock exchange which helps market to
sustain in long run.

5. The comparison showed that Indian stock exchange has the governance system and an
efficient mechanism in place to be a world class institute, specially the requirements of
Clause 49 (listing Agreement) promulgated by SEBI and the advanced trading and
settlement mechanism of NSE, respectively.

6. Listing of foreign companies still not allowed. The companies with subsidies lunched in
India can list for same. This can be due to lack of depth and breadth of the market.

7. Listing of securities in Indian market is more but the market capitalization is low as
compared to other stock exchanges in the study.

8. There were in such a difference in trading mechanism of exchanges.

 CHAPTER-5

CONCLUSION
The novel coronavirus or has held far reaching consequences beyond the spread of the
disease and the efforts to quarantine it. As the virus is spreading around the world, the
concern has also increased towards the total supply chain as well as the unprecedented
crash in the Sensex and the Nifty 50 (National Stock Exchange).

Although the Union Budget announced by Finance Minister Nirmala Sitharaman on

February 1 was the beginning of the drop as many investors had lost their faith on the
policies introduced, the global market started falling from January 17, 2023.

The Indian stock market was giving a very uncertain response to the capital market since
many of the investors were decisively dependent on various indices from the US, Europe
and the Asian markets such as DOW Jones International Index, Germany’s DAX as well as
Singapore’s SGX Nifty.

The first strike from the pandemic’s scare was on February 28, 2023, where the Sensex had
a fall of 1500 points and there was a cumulative loss of investors’ wealth amounting to
around 5.5 lakh crore rupees. This was also because of the trigger on February 27 when
DOW Jones fell 600 points and the rupee also had fallen to 72.27 against the USD.

All the banks were severely hit when HDFC Bank, one of the prime triggers in Nifty 50
index (and the leading stock of Nifty Bank Index) registered a drop in its share price from
1200 to 1170 in a single day. The pandemic’s influence was so high that the price dropped
to as low as 740 (38%). The same was also the fate of ICICI bank, which dropped from
525 to 495 on February 28 and so far reached as low as 275 (47%).
The investors have reacted in what looks like a rational way since human-to-human
infection was confirmed on January 20 by the World Health Organisation (WHO). This
was also seen when iShares MSCI China ETF went down 11% along with the US airline
sector being off 7% and Brent oil (a global benchmark of MCX) was down 13%.

Nifty started falling from February, 13, 2023 and it had a consistent drop till March 24,
2023 from 12250 it dropped to about 7500, which is a drop of 4750 points (38%). If we
compare it to the previous financial crisis of 2008, the NIFTY dropped 4150 points (64%)
from 6400 to 2250 points.

However, we must also consider the fact that it is just the beginning as far as the pandemic
scare is concerned and it might drop even further. Moreover, the 2008 fall happened in a
period of eleven months but the present plunge has happened over 6 weeks only which is
an unprecedented event in the market. In the meantime, the fall was also supported by the
Organisation of Petroleum Exporting Countries (OPEC) who reportedly ‘scrambled’ after
the steep decline in the oil prices due to the lower demand from China. The biggest trigger
is that the fear factor in the market is going up. The fall has also been too-fast-too-soon and
as witnessed, the Asian market has also plunged.

When we try to look at the reasons, we must remember that stock prices are driven by
corporate profits. So, the expected global economic slowdown due to the fast spread of the
Corona Virus and an attendant drop in earnings is the biggest reason. When it is expected
that the profit in the recent quarter is going to get a slump due to all obvious reasons, a
steep drop in the capital market is not abnormal.

Risk factor is also a reason for the crisis. Investors on the slightest hint of any risk in their
capital intend to square off their buying positions which result in the fall as far as the value
of stocks are concerned. There has been a growth in the number of mutual fund companies
who are a large contributor to the FIIs and the FDIs of the capital market. These companies
tend to pull out their investments in a risky scenario and up to a certain extent can be
considered a trigger in the fall. This cannot be negated since they are left with an
answerable risk factor and their performance on the same is dependent on how they
manage the risks involved.

Deglobalisation is another factor to be kept in view with respect to the recent fall due to the
pandemic. All the nations have started practicing lock down since it arguably seems to be a
prime solution for the growing disease. Upon doing so, nations have closed their
international borders and that is definitely going to make an impact on the development of
all companies performing in the stock market. We, the nation of prime income on out
sourced mechanism, will definitely be affected by the wide spread lockdown. Same will be
the case of many other industries since development in the market is a global effort and
lack of sourcing of various components will be the prime factor of the slowdown.

To conclude, this is not a very good time to predict or expect the economy to have a
recovery anytime soon. With the spread of the Corona Virus increasing day by day, it will
be very hard to predict if the Nifty will have a further drop to a historical slowdown or will
the Government as well as the Reserve Bank of India be able to find an appropriate
solution to contain the increasing panic concerning .
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