the impact of macroeconomic factors on share price

www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 Page 34

The Impact of Macroeconomic Factors on Share Price Movements of Trading

Sectors

Ms.Sharmila Preethi, Assistant Professor, Department of Management Studies,

Sri Ramakrishna Engineering College, Coimbatore -641 022, Tamilnadu, India.

N.Sangeetha, II MBA,

Sri Ramakrishna Engineering College, Coimbatore -641 022, Tamilnadu, India

ABSTRACT

Stock market plays the vital role in transferring the funds from capital borrowers to capital investors

which in turn is very essential for economic growth. A well performing stock exchange is very helpful

for economic activity through growth and saving, efficient allocation of investment.

Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and

decision-making of the whole economy. The causal relations and dynamic interactions among

macroeconomic variables and stock prices are important in the formulation of the nation’s

macroeconomic policy. The present study analysis is to determine the risk return relationship of the

stocks, to study the relationship between the macro economic factors and the share price movements,

to analyze the impact of the factors on the performance of the companies’ stocks and to determine the

performance of the sectors based on their returns.

KEYWORDS: Macroeconomic factors, Risk, Return, Shares, Stock Market.

1. INTRODUCTION

A stock market is a public market for trading company stocks and derivatives at an agreed price; these

are securities which are listed on a stock exchange. The stock market is often considered the primary

indicator of a country's economic strength and development. Stock prices change every day because of

market forces. By this we mean that stock prices change because of “supply and demand”. If more

people want to buy a stock (demand) than to sell it (supply), then the price moves up. Conversely, if

more people wanted to sell a stock than to buy it, there would be greater supply than demand and the

price would fall. Macroeconomics is a branch of economics dealing with the performance,

structure, behavior, and decision-making of the whole economy. This includes national, regional, and

global economies. A well performing stock exchange is a boon for a better economic activity through

growth and saving, efficient allocation of investment and attracting FDI. The stock prices should

reflect the expectations of future corporate performance, and corporate profits generally reflect the

level of economic activities. If stock prices accurately reflects the underlying fundamentals, then it

should be employed as leading indicator of future economic activities. Therefore, the causal relations

and dynamic interactions among macroeconomic variables and stock prices are important in the

formulation of the nation’s macroeconomic policy.

2. REVIEW OF LITERATURE

Ramin Cooper Maysami, Lee Chuin Howe (2007) in their study “Relationship between

Macroeconomic Variables and Stock Market Indices: Cointegration Evidence from stock Exchange of

Singapore’s All-S Sector Indices” concluded that the Singapore’s stock market and the property index

form cointegrating relationship with changes in the short and long-term interest rates, industrial

production, price levels, exchange rate and money supply. Tarika Singh, Seema Mehta, M.S.Varsha

(April 2011) in their study “Macroeconomic factors and stock returns: Evidence from Taiwan”,

concluded that exchange rate and GDP seem to affect returns of all portfolios, while inflation rate,

exchange rate, and money supply were having negative relationship with returns for portfolios of big


and medium companies. Mazharul H. Kazi (2008) in his study “Stock Market Price Movements and

Macroeconomic Variables”, concluded that the future direction about the suitability of contemporary

empirical technique that is more efficient over the traditional methods for analyzing asset pricing and

its return generating process in any securities market Daferighe. Emmanuel E, Aje. Samuel O(2009) in

their study “An Impact Analysis of Real Gross Domestic Product Inflation and Interest Rates on Stock

Prices of Quoted Companies in Nigeria”, concluded that while a reduction in interest and inflation rate

resulted in increased stock prices, increased RDGP has a positive impact. Government should

therefore implement policies that will reduce inflation rate and improve the standard of living of its

citizens. Interest rate should be made moderate so as to encourage investment and transactions in

stock. Sulaiman D. Mohammad, Adnan Hussain (2009) in their study “Impact of Macroeconomics

Variables on Stock Prices: Emperical Evidance in Case of Kse”, concluded that the influence of

foreign exchange rate and foreign exchange reserve significantly affect the stock prices, while other

variables like IPI and GFCF are insignificantly affect stock prices..

3. SIGNIFICANCE OF THE STUDY

The study will enable the investors to understand the price fluctuations of equity stocks when

influenced by the macro-economic factors. It will help them to make investment decisions. The study

can be extended to reveal the investment pattern of investors relating to the price changes. It can also

be implemented to analyze the impact of the variations of the factors on the other company stocks of

different sectors.

4. OBJECTIVE OF THE STUDY

To determine the risk return relationship of the stock.

To study the relationship between the macro economic factors and the share price movements

To analyze the impact of the factors on the performance of the companies stocks.

To determine the performance of the sectors based on their returns.

5. METHODOLOGY

5.1 Type of research: The type of research used in this study is descriptive in nature

5.2 Sampling method: Stratified random sampling method is used for selecting companies from six

sectors.

5.3 Sample size: The analysis is done with 30 companies taken from 6 sectors (5 companies from each

sector).

5.4 Data collection method: Secondary data is used in this study and was collected from national

stock exchange website and various journals, reports, publications and historical documents.

5.5 Data Collection: The samples are selected from the following 6 industrial sectors 1)Automobiles,

2) Banking, 3) Information Technology, 4) Telecommunication, 5) Fact Moving Consumer Goods, 6)

Oil and petroleum

5.6 Statistical tools: The statistical tools used for the study are 1) Mean, 2) Standard deviation,

3)Regression, 4)Correlation, 5) Trend analysis

6. DATA ANALYSIS AND INTERPRETATION

Table 6.1 Risk Return analysis

Sector Company 2010 2011 2012

Risk Retur

n

Risk Return Risk Retur

n

Automobile Ashok Leyland 3.62 0.26 2.11 -0.048 2.61 0.56

www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 09, July-2013 6

Bajaj 2.53 0.003 4.38 0.24 1.68 -0.058

Mahindra&Mahindra 2.677 0.3295 1.5815 0.3318 2.22 0.1

Tvs 4.066 -0.096 5.0325 0.1955 2.55 0.13

Maruthi 2.49 0.031 1.66 0.051 1.83 0.11

Banking

Axis bank 3.27 0.15 1.76 0.56 2.34 -0.11

Hdfc 2.07 0.24 1.48 0.018 2.83 0.003

Icici 3.49 0.178 1.98 0.118 2.21 0.27

Pnb 2.79 0.03 1.46 0.022 1.82 0.203

Sbi 2.84 0.04 1.75 0.035 2.14 0.25

FMCG Asian paints 1.95 0.12 1.54 0.02 1.45 0.04

Dabur 1.83 0.08 4.24 0.28 1.57 0.007

Hul 1.85 0.028 1.57 0.011 1.81 -0.028

Nestle 2.84 0.02 1.59 -0.06 1.47 0.049

Itc 3.69 0.07 1.05 0.05 2.21 0.15

Information

Technology

Hcl 4.12 0.43 1.59 0.205 2.07 0.048

Satyam 5.08 0.002 0.96 0.056 1.89 0.02

Tcs 3.81 0.11 1.046 0.17 2.24 0.08

Tech Mahindra 2.68 0.06 2.45 0.208 1.76 0.04

Wipro 2.98 0.051 1.06 0.04 1.91 0.18

Oil And

Petroleum

Bharat 4.17 0.27 1.03 0.036 2.86 0.49

Essar 2.78 -0.05 1.39 0.012 2.12 0.21

Hindustan 5.26 0.28 1.26 0.002 1.67 0.14

Indian oil corp 2.48 -0.19 0.82 0.022 2.48 0.30

Oil & natural gas 1.45 0.036 2.78 -0.28 4.12 -0.14

Tele

Communicat

ion

Airtel 3.71 0.05 2.13 0.14 3.37 0.32

Idea 1.06 0.04 2.19 0.22 5.26 0.28

Reliance 1.84 0.02 2.78 0.061 2.53 0.1

Vodafone 3.26 0.016 1.74 0.085 2.79 0.27

Tata 2.72 0.18 1.79 0.027 2.34 0.08

From the above analysis it is inferred that in automobile sector, Ashok Leyland company stocks, in

banking sector, ICICI company stocks, in FMCG sector ITC company stocks, in IT sector, Wipro

company stock, in Oil and Petroleum sector, Indian Oil Corporation company stocks and in

telecommunication sector, Airtel company stocks can be bought as it has low risk.

Table 6.2 Correlation of the macroeconomic factors in 2012

Automobile Sector

Company Year Factors Inflation GDP Interest Rate Budget Forex Rate

Quarter

Ashok Leyland

2012

Q1 0.13 -0.04 -0.04 -.08 0.04

Q2 -0.15 0.39 -0.39 -.08 -0.36

Q3 0.12 0.12 -0.12 -.08 -0.12

Q4 0.27 0.28 -0.27 -.08 0.34

Bajaj

2012

Q1 -0.05 0.05 -0.05 -0.03 -0.05

Q2 0.39 -0.39 0.39 -0.03 0.39

Q3 0.14 -0.14 0.14 -0.03 0.32

Q4 -0.011 -0.008 0.012 -0.03 -0.11

Mahindra &

Q1 -.15 .15 -0.15 .06 -.14

Q2 .24 -.24 .24 .06 .24


Mahindra 2012 Q3 -.15 -.15 .15 .06 -.15

Q4 -.05 -.016 .05 .06 0.57

Tvs

2012

Q1 0.06 0.04 0.05 0.54 -0.05

Q2 -0.18 0.19 -0.17 0.54 0.19

Q3 0.25 -0.24 0.25 0.54 0.24

Q4 -0.13 0.13 -0.14 0.54 -0.14

Maruthi Suzuki

2012

Q1 -0.09 -0.08 0.09 -0.61 0.11

Q2 -0.06 0.05 -0.05 -0.61 0.06

Q3 0.05 -0.06 0.05 -0.61 0.05

Q4 -0.21 0.21 -0.2 -0.61 -0.21

Banking Sector

Company Year Factors Inflation Gdp Interest Rate Budget Forex Rate

Quarter

Axis Bank

2012

Q1 -0.03 -0.024 0.02 0.59 -0.035

Q2 0.22 -0.23 0.21 0.59 -0.22

Q3 -0.01 0.01 -0.01 0.59 -0.011

Q4 -0.24 0.24 -0.25 0.59 -0.25

HDFC

2012

Q1 -0.12 -0.12 0.12 -0.06 -0.19

Q2 -0.31 0.31 -0.31 -0.06 0.31

Q3 -0.02 0.02 0.2 -0.06 -0.021

Q4 -0.22 0.22 -0.22 -0.06 -0.21

ICICI

2012

Q1 0.39 -0.39 0.39 0.06 0.39

Q2 -0.21 0.21 0.22 0.06 0.21

Q3 0.05 -0.05 0.05 0.06 -0.15

Q4 0.30 -0.28 -0.29 0.06 -0.24

Punjab national

bank

2012

Q1 0.12 0.12 -0.12 -.08 -0.12

Q2 0.27 0.28 -0.27 -.08 0.34

Q3 -0.05 0.05 -0.05 -0.03 -0.05

Q4 0.39 -0.39 0.39 -0.03 0.39

SBI

2012

Q1 -0.21 0.21 0.22 -0.06 0.21

Q2 0.05 -0.05 0.05 -0.06 -0.15

Q3 0.30 -0.28 -0.29 -0.06 -0.24

Q4 -0.21 0.13 -0.15 -0.06 0.30

FMCG Sector


Quarter

Asian Paints

2012

Q1 0.39 -0.39 0.39 0.06 0.39

Q2 -0.21 0.21 0.22 0.06 0.21

Q3 0.05 -0.05 0.05 0.06 -0.15

Q4 0.30 -0.28 -0.29 0.06 -0.24

Dabur

2012

Q1 -0.21 0.21 0.22 -0.06 0.21

Q2 0.05 -0.05 0.05 -0.06 -0.15

Q3 0.30 -0.28 -0.29 -0.06 -0.24

Q4 -0.21 0.13 -0.15 -0.06 0.30

HUL

2012

Q1 -0.21 0.21 0.22 -0.06 0.21

Q2 0.05 -0.05 0.05 -0.06 -0.15

Q3 0.30 -0.28 -0.29 -0.06 -0.24

Q4 -0.21 0.13 -0.15 -0.06 0.30


Nestle

2012

Q1 -0.28 -0.28 0.28 0.62 0.28

Q2 0.10 0.09 -0.09 0.62 0.97

Q3 0.28 0.29 -0.28 0.62 0.28

Q4 0.14 -0.14 -0.15 0.62 0.14

ITC

2012

Q1 0.12 0.12 -0.12 -.09 -0.12

Q2 0.27 0.28 -0.27 -.09 0.34

Q3 -0.05 0.05 -0.05 -0.09 -0.05

Q4 0.39 -0.39 0.39 -0.09 0.39

IT Sector


Quarter

HCL

2012

Q1 0.39 -0.39 0.39 0.06 0.39

Q2 -0.21 0.21 0.22 0.06 0.21

Q3 0.05 -0.05 0.05 0.06 -0.15

Q4 0.30 -0.28 -0.29 0.06 -0.24

Satyam

2012

Q1 0.12 0.12 -0.12 -0.03 -0.12

Q2 0.27 0.28 -0.27 -0.03 0.34

Q3 -0.05 0.05 -0.05 -0.03 -0.05

Q4 0.39 -0.39 0.39 -0.03 0.39

TCS

2012

Q1 -0.21 0.21 0.22 0.09 0.21

Q2 0.05 -0.05 0.05 0.09 -0.15

Q3 0.30 -0.28 -0.29 0.09 -0.24

Q4 -0.21 0.13 -0.15 0.09 0.30

Tech Mahindra

2012

Q1 0.02 0.02 -0.06 -0.04 -0.02

Q2 -0.05 -0.04 0.043 -0.04 0.04

Q3 -0.26 0.21 -0.20 -0.04 -0.15

Q4 0.19 -0.13 0.13 -0.04 0.13

Wipro

2012

Q1 -0.01 -0.02 0.02 -0.14 -0.05

Q2 0.25 0.25 -0.25 -0.14 -0.25

Q3 -0.51 0.45 -0.45 -0.14 0.36

Q4 0.76 -0.38 0.38 -0.14 0.36

Oil and Petroleum Sector


Quarter

Bharat

2012

Q1 0.19 0.19 -0.19 -0.05 0.29

Q2 -0.04 -0.04 0.06 -0.05 0.05

Q3 -0.02 0.02 -0.02 -0.05 -0.08

Q4 -0.72 0.28 -0.28 -0.05 -0.28

Essar

2012

Q1 0.08 0.08 -0.08 -0.07 0.09

Q2 0.22 0.24 -0.22 -0.07 -0.23

Q3 -0.39 0.29 -0.29 -0.07 -0.09

Q4 -0.38 0.13 -0.12 -0.07 -0.13

Hindustan

2012

Q1 0.24 -0.24 0.11 0.59 -0.23

Q2 0.009 0.009 -0.009 -0.05 -0.007

Q3 -0.29 0.21 -0.21 -0.05 -0,25

Q4 -0.71 0.24 -0.24 -0.05 -0.24

Indian

Q1 0.16 0.15 -0.15 -0.08 0.16

Q2 0.133 0.133 -0.133 -0.08 -0.13


Oil Corporation 2012 Q3 -0.22 0.16 -0.16 -0.08 -0.22

Q4 -0.71 0.20 -0.20 -0.08 -0.20

Oil & Natural

Gas

2012

Q1 0.30 0.31 -0.31 -0.20 0.41

Q2 0.23 0.23 -0.24 -0.20 -0.23

Q3 -0.22 0.16 -0.16 -0.20 0.11

Q4 -0.12 0.19 -0.19 -0.20 -0.19

Telecommunication Sector


Quarter

Airtel

2012

Q1 -0.02 -0.02 0.02 0.02 -0.08

Q2 0.02 0.02 -0.02 0.02 -0.02

Q3 -0.25 0.24 -0.24 0.02 -0.04

Q4 -0.07 0.07 -0.07 0.02 -0.06

idea

2012

Q1 -0.24 0.06 -0.06 0.04 -0.06

Q2 0.41 -0.15 0.15 0.04 -0.13

Q3 -0.09 -0.09 0.09 0.04 0.09

Q4 0.22 0.22 -0.22 0.04 0.29

Reliance

2012

Q1 0.09 0.09 -0.09 -.072 0.05

Q2 0.21 -0.21 0.21 -.072 -0.21

Q3 -0.10 0.10 -0.10 -.072 -0.10

Q4 0.02 -0.02 0.02 -.072 0.03

Vodafone

2012

Q1 -0.13 -0.14 0.13 -0.09 0.18

Q2 0.24 -0.24 0.25 -0.09 -0.25

Q3 -0.09 0.09 -0.09 -0.09 -0.09

Q4 -0.22 -0.22 -0.21 -0.09 -0.22

Tata

2012

Q1 -0.004 -0.003 0.003 -0.076 0.04

Q2 0.14 -0.15 0.14 -0.076 -0.14

Q3 -0.16 0.16 -0.16 -0.076 -0.13

Q4 0.12 0.088 0.16 -0.076 0.18

From the above table it is inferred that budget rate, inflation, GDP, interest rate and Forex rate have a

negative relationship with the listed company stocks which and it is implied that there is an indirect

relationship after the announcement of change in macro-economic factors.

Table 6.3 Regression Analysis For The Stocks And Macro Economic Factors

Automobile Sector

Company Factors Inflation GDP Interest

Rate

Budget Forex

Rate year

Ashok Leyland 2012 1.51 1.59 1.51 1.55 1.72

2011 .73 1.76 1.79 1.8 1.9

2010 1.43 1.48 1.27 1.46 .05

Bajaj 2012 3.11 3.21 3.12 3.29 3.88

2011 3.96 3.24 3.29 3.25 3.61

2010 2.96 2.91 2.97 2.97 3.11

Mahindra &

Mahindra

2012 2.80 2.85 3.75 2.65 2.80

2011 2.78 2.85 2.93 2.79 2.85

2010 2.86 2.76 2.78 2.74 3.06

.Maruthi 2012 .21 1.76 1.92 1.87 1.96


Suzuki 2011 .22 1.82 1.91 1.87 1.99

2010 .21 1.82 1.91 1.99 1.85

Tvs 2012 .21 .83 2.13 1.92 2.87

2011 .24 .77 2.05 1.93 2.91

2010 .35 .78 2.03 1.91 2.76

Banking Sector

Company Factors Inflation GDP Interest

Rate

Budget Forex

Rate Year

Axis Bank 2012 -.49 2.29 2.29 2.86 2.47

2011 -.62 2.14 2.25 2.81 2.81

2010 -.45 2.18 2.12 2.7 2.64

HDFC 2012 .06 .53 1.36 1.55 .047

2011 .073 .54 1.34 1.53 .676

2010 .046 .49 1.55 1.51 .64

ICICI 2012 .56 1.95 .49 2.18 2.56

2011 .73 1.84 .54 2.14 2.53

2010 .60 1.99 .52 2.14 2,43

Punjab National

Bank

2012 .47 1.18 1.82 1.79 .94

2011 .64 1.2 1.95 1.84 .97

2010 .04 1.14 1.99 1.86 .99

SBI 2012 .66 1.38 .67 1.59 2.64

2011 .90 1.35 .81 1.64 2.69

2010 .72 1.34 .84 1.75 2.47

FMCG Sector

Company Factors Inflation GDP Interest rate Budget Forex rate

Year

Asian paints 2012 .89 2.18 .99 1.86 1.47

2011 .68 2.14 .96 1.81 1.67

2010 .84 2.1 .82 1.71 1.64

Dabur 2012 -.45 2.18 2.12 2.70 -1.35

2011 -.62 2.14 2.26 2.81 -1.32

2010 -.45 2.14 2.29 2.86 -1.5

Hul 2012 .44 1.18 2.87 2.51 1.35

2011 .61 1.15 2.74 2.61 1.32

2010 .48 1.14 2.71 2.66 1.52

Nestle 2012 .041 2,18 2.12 2.70 1.35

2011 .068 2.15 2.25 2.81 1.32

2010 .055 2.14 2.29 2.86 1.52

Itc 2012 2.25 2.66 2.45 3.2 2.33

2011 2.18 2.23 2.50 3.6 2.33

2010 2.20 2.25 2.52 3.4 2.31

Information Technology

Company Factors inflation GDP interest rate budget forex rate

year

HCL 2012 .65 .88 3.12 2.06 2.47

2011 .86 .84 3.25 2.11 2.43

2010 .71 .86 3.29 2.16 2.34


Satyam 2012 .01 2.56 .82 3.50 -1.35

2011 -.02 2.5 .95 3.51 -1.32

2010 .008 2.5 .99 3.56 -1.52

TCS 2012 -.45 2.18 2.12 2.71 -1.35

2011 -.62 2.15 2.25 2.81 -1.33

2010 -.49 2.14 2.29 2.86 -1.52

Tech Mahindra 2012 .003 2.18 3.12 2.71 .64

2011 -.01 2.15 3.25 2.81 .67

2010 -.0008 2.14 3.29 2.86 .47

Wipro 2012 -.38 2.24 2.8 -0.38 -.05

2011 -.43 2.34 2.91 -0.36 -0.3

2010 -.42 2.36 2.9 -0.53 -0.5

Oil and Petroleum Sector


year

Bharat 2012 2.24 -.38 2.80 -.38 -0.19

2011 2.34 -.4 2.91 -.36 -0.44

2010 2.36 -0.42 2.96 -.53 -0.61

Essar 2012 -.445 2.18 2.12 2.51 -0.47

2011 -.62 2.14 2.26 2.61 -0.46

2010 -.49 2.14 2.29 2.66 -0.63

Hindustan 2012 -0.36 2.18 1.12 2.7 1.97

2011 -0.5 2.14 1.26 2.8 1.97

2010 -0.4 2.16 1.29 2.8 1.92

Indian Oil

Corporation

2012 0.38 2.24 2.80 -0.38 -1.35

2011 0.43 2.34 2.91 -0.36 -1.32

2010 0.42 2.36 2.96 -0.53 -1.35

Oil & Natural

Gas

2012 .45 2.18 2.12 2.70 -1.35

2011 .62 2.12 2.25 2.81 -1.33

2010 .49 2.14 2.29 2.86 -1.52

Telecommunication Sector


year

Airtel 2012 -0.45 2.18 2.12 2.70 -1.35

2011 -0.62 2.15 2.26 2.81 -1.33

2010 -0.49 2.14 2.29 2.86 -1.52

Idea 2012 0.12 2.19 2.12 2.50 -0.55

2011 0.19 2.16 2.26 2.53 -0.54

2010 0.14 2.14 2.53 2.55 -0.65

Reliance 2012 0.45 2.34 2.12 2.70 -0.35

2011 0.62 2.32 2.16 2.81 -0.32

2010 0.49 2.29 2.29 2.86 -0.52

Vodafone 2012 0.65 2.78 1.7 2.71 1.64

2011 0.86 2.74 1.8 2.81 1.677

2010 0.71 2.74 1.79 2.86 1.47

Tata telecom

2012 2.12 2.03 2,01 2.25 2.31

2011 1.99 1.97 2.16 2.38 2.29

2010 2.09 1.97 2.19 2.44 2.43


From the above table, it is inferred that none of the factors affect the share price movements of

automobile sector. In the banking sector, the share price of Axis bank is dependent on inflation rate

and the HDFC bank share price is dependent on inflation and Forex rate. In the FMCG sector, the

share price of Dabur is dependent on inflation and forex rate and the share price of Nestle is dependent

on the inflation rate. In the Information Technology sector, the share price of TCS and Tech Mahindra

companies are dependent on inflation rate, TCS share prices is also dependent on forex rate and the

share price of Wipro is dependent on the budget rate. In Oil and petroleum sector, the share price of

Bharat petroleum and Essar petroleum is dependent on inflation and the foreign exchange rate.

Whereas Hindustan petroleum share prices is dependent on inflation rate, the share price of Indian Oil

Corporation is dependent on the Budget and forex rate and the Oil & Natural Gas share price is

dependent on forex rate. In the Telecom sector, the share price of Airtel is affected by both inflation

rate and forex rate and the share price of Idea and Reliance are affected by the forex rate.

6.4 Trend Analysis

Figure 6.4.1 Performance of Automobile sector

The above chart shows the trend analysis of the automobile sector. It shows that there will be increase

in the performance of automobiles in next 2 years.

Figure 6.4.2 Performance of Banking sector

The above chart shows the trend analysis of the banking sector. It shows that there will be increase in

the performance of banking in next 2 years.

Figure 6.4.3 Performance of FMCG sector

0

1000

2000

3000

2009 2010 2011 2012 2013 2014

pe

rfo

rman

ce

year

Banks

Banks

0

500

1000

1500

pe

rfo

rman

ce

year

Automobiles

Automobiles


The above chart shows the trend analysis of the Fast Moving Consumer Goods sector. It shows that

there will be increase in the performance of Fast Moving Consumer Goods sector in next 2 years.

Figure 6.4.4 Performance of Information Technology sector

The above chart shows the trend analysis of the information technology sector. It shows that there will

be increase in the performance of information technology sector in next 2 years.

Figure 6.4.5 Performance of Oil & Petroleum sector

The above chart shows the trend analysis of the Oil and petroleum sector. It shows that there will be

decline in the performance of Oil and petroleum sector in next 2 years.

Figure 6.4.6 Performance of Telecommunication sector

The above chart shows the trend analysis of the telecommunication sector. It shows that there will be

decline in the performance of telecommunication sector in next 2 years.

0

1000

2000

3000

2009 2010 2011 2012 2013 2014 pe

rrfo

rman

ce

year

FMCG

fmcg

0

500

1000

2009 2010 2011 2012 2013 2014

pe

rfo

rman

ce

year

IT

IT

0

200

400

600

pe

rfo

rman

ce

year

Oil & Petroleum

oil & Petroleum

-100

0

100

200

300

pe

rfo

rman

ce

year

Telecommunication

Telecommunication


7 FINDINGS

Risk Return Analysis

Investments can be made in Ashok Leyland stock, ICICI stock, ITC company stocks, TCS

stock, Indian Oil Corporation stock and in Airtel stock as the risk is low and there is an average

return

Regression Analysis

The change in Inflation rate affects the stock price of Axis bank, HDFC bank, Dabur, Nestle,

TCS, Tech Mahindra, Bharat petroleum, Hindustan petroleum and Airtel.

The change in forex rate affects the stock price of Reliance, Idea, Airtel, Indian Oil

corporation, Oil and Natural Gas, TCS and Dabur.

The change in the budget affects the stock price of Wipro, Oil and natural gas.

Trend Analysis

The performance of the each sector for last 3 years are analyzed and forecasted for next 2

years. From the analysis it is interpreted that the performance of Banking sector will be good and the

Telecommunication sector will be the low performing sector.

8 RECOMMENDATIONS

To investors

The macroeconomic factors have considerable impact on the share price movements and hence

the investors can consider the change in macroeconomic factor before making the investment.

The investor should have knowledge of exchanging the stocks during the change in

macroeconomic factor.

Banking sector is high performing sector which investors can invest in future.

To management

The management can give awareness regarding the consequences of the effect on the stock

price fluctuation to the investors before investing.

The management can give Seminars, presentations to the regular investors about the cautious

method taken when there is a change in macroeconomic factor.

9.REFERENCES

Book references

1. S.Kevin,”Security Analysis and Portfolio Management”, Prentice Hall publication.

2. Punithavathy Pandian,”Security Analysis and Portfolio Management”, Vikas Publishing

House

Article references

Mazharul H. Kazi (2008)1,”Stock Market Price Movements and Macroeconomic Variables”,

Vol. 4 No.3 June 2008 Pp.114-126

Ramin Cooper Maysami, Lee Chuin Howe(2007), “Relationship between Macroeconomic

Variables and Stock Market Indices: Cointegration Evidence from stock Exchange of

Singapore’s All-S Sector Indices”, Jurnal Pengurusan 24(2007)

Tarika Singh, Seema Mehta, M.S.Varsha(2011), “Macroeconomic factors and stock returns:

Evidence from Taiwan”, Vol. 2(4), pp.217-227

Tarika Singh, Seema Mehta, M.S.Varsha(2011), “Macroeconomic factors and stock returns:

Evidence from Taiwan”, Vol. 2(4), pp.217-227

Sulaiman D. Mohammad, Adnan Hussain, (2009) “Impact of Macroeconomics Variables on

Stock Prices: Emperical Evidance in Case of Kse”, European Journal of Scientific Research,

Vol.38 No.1, pp.96-103

the impact of macroeconomic factors on share price

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