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RELATIONSHIPRELATIONSHIPRELATIONSHIPRELATIONSHIPRELATIONSHIP
Degree of Bachelor of Business Studies
RELATIONSHIP
INDIAN
De...
This is to certify that the project report entitled
of Inflation
partial fulfillment of BBS. This report has not been subm...
3
ABSTRACT
The relationship between stock prices and inflation has been subjected to
extensive research in the past decade...
4
Table of Content
Title of Chapter page no.
 Acknowledgement…………………………………………..5
 Inflation: An Introduction………………………………...
5
Acknowledgement
One of the best parts of preparing this project is the opportunity to thank those who have
contributed t...
6
INTRODUCTION
INFLATION
 It is defined as the rise in the general price level and fall in the money value
 It occurs wh...
7
COST-PUSH INFLATION
 Cost push inflation is caused by an increase in production costs. It is generally caused by an
inc...
8
 Creditors lose and debtors gain if the lender does not anticipate inflation
correctly. For those who borrow, this is s...
9
 Consumer Price Index (CPI) - A measure of price changes in consumer goods
and services such as gasoline, food, clothin...
10
INFLATION IN INDIA
The annualized inflation rate in India is 5.37% as of February 2015, as per the Indian ministry
of s...
11
depicting and controlling inflation. The Central Bank works on the objective to control and
have a stable price for com...
12
since 1991 with the trade liberalization in place have widely contributed to the reduced
manufacturing competition with...
13
storage of grains leads to lesser or deteriorated output hence increasing the prices for the
commodities as the demand ...
14
The inflation rate in India was recorded at 6.1% (WPI) in August 2013. Historically, from
1969 until 2013, the inflatio...
15
WHAT IS STOCK MARKET??
A stock market is place or public entity for buying and selling of company shares and
derivative...
16
12 Pune Stock Exchange Ltd
Shivleela Chambers, 752, Sadashiv Peth, Rb Kumthekar
Marg Pune – 411030
13 The Vadodara Stoc...
17
 It possess the maximum number of listed organization in the world.
 Index of BSE is known as SENSEX which include 30...
18
examples
explains the meaning of this statement.
Positive
• Labor-0market adjustments - Inflation would lower the real ...
19
LITERATURE REVIEW
Saurabh Singh, Dr. L.K. tripathy, Kirti Lalwani has done their research on “AN IMPIRICAL
STUDY OF IMP...
20
Geert Bekaert and Eric Engstrom has done their research on “INFALTION AND THE
STOCK MARKET:UNDERSTANDING THE ‘FED MODEL...
21
RESEARCH OBJECTIVE
The overall objectives in this study are to re-examine the relationship between
inflation and the In...
22
RESEARCH METHODOLOGY
The objective of this research is to find out the relationship between Inflation Rate and Indian
S...
23
HYPOTHESIS
As explained in this research methodology, the data has been taken serial wise wherein
inflation is compared...
24
3. Hypothesis- (Yearly Data of Inflation and BSE Bankex)
Ho(Null Hypothesis) – Performance of BSE Bankex does not depen...
25
Observation and Analysis
The observation and analysis has been presented index wise. Therefore, this section shall
brie...
26
Correlation between Inflation and BSE Sensex
Descriptive Statistics
Mean Std. Deviation N
Inflation_Rate 6.9160 3.33938...
27
Regression between inflation and BSE Sensex
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method...
BSE Sensex=4497+1255.448(Inflation Rate)
Inflation Rate is Independent Variable
BSE Sensex
And 4497.196 is the intercept
B...
29
Relation between Inflation and CNX Nifty
So, In-order to find the relationship between Inflation and BSE CNX Nifty and ...
30
Correlation between inflation and CNX Nifty
Descriptive Statistics
Mean Std. Deviation N
Inflation_Rate 6.9160 3.33938 ...
31
Regression between Inflation and CNX Nifty
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method
...
Inflation Rate is Independent Variable
CNX Nifty
And
Inflation Rate is Independent Variable
CNX Nifty
And 1440.061

Infla...
33
Relation between Inflation and BSE Bankex
So, In-order to find the relationship between Inflation and BSE Bankex and ch...
34
Correlation between inflation and BSE Bankex
Descriptive Statistics
Mean Std. Deviation N
Inflation_Rate 7.6583 3.31401...
35
Regression between Inflation And BSE Bankex
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method...
Inflation Rate is Independent Variable
BSE Bankex
And 5918.551
Inflation Rate is Independent Variable
BSE Bankex
And 5918....
37
Relation between Inflation and Bank Nifty
So, In-order to find the relationship between Inflation and Bank Nifty and ch...
38
Correlation between Inflation and Bank Nifty
Descriptive Statistics
Mean Std. Deviation N
Inflation_Rate 8.4400 3.05773...
39
Regression of Inflation and Bank Nifty
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method
1 In...
Inflation Rate is Independent Variable
Bank Nifty
And 9473.643
Inflation Rate is Independent Variable
Bank Nifty
And 9473....
41
Relation between Inflation and BSE FMCG
So, In-order to find the relationship between Inflation and BSE FMCG and check ...
42
Correlation of Inflation and BSE FMCG
Descriptive Statistics
Mean Std. Deviation N
BSE_FMCG 2906.8767 2237.59334 15
Inf...
43
Regression between inflation and BSE FMCG
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method
1...
And 874.477And 874.477

And 874.477
And now coming to the analysis part, the level of significance 0.
than 5%
moderately
...
45
Relation between Inflation and BSE Consumer Durables
So, In-order to find the relationship between Inflation and BSE Co...
46
Correlation between Inflation and BSE Consumer Durables
Descriptive Statistics
Mean Std. Deviation N
Inflation_Rate 6.9...
47
Regression between Inflation and BSE Consumer Durables
Variables Entered/Removeda
Model Variables
Entered
Variables
Rem...
And 1594.213And 1594.213

And 1594.213
And now coming to the analysis part,
than 5% significance level and so we can say ...
49
FINAL OBSERVATION AND CONCLUSION
So, on the basis of the result of both the test i.e. Test of Correlation and Test of R...
50
4) In HYPOTHESIS 4 Null hypothesis is accepted and Alternate hypothesis is rejected.
So, it signifies that there is no ...
Project report on Relationship Of Inflation with Indian Stock Market
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This project shows the relationship between Inflation and Indian Stock Market

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Project report on Relationship Of Inflation with Indian Stock Market

  1. 1. RELATIONSHIPRELATIONSHIPRELATIONSHIPRELATIONSHIPRELATIONSHIP Degree of Bachelor of Business Studies RELATIONSHIP INDIAN Degree of Bachelor of Business Studies RELATIONSHIP INDIAN Degree of Bachelor of Business Studies RELATIONSHIP INDIAN A Project Report submitted in Degree of Bachelor of Business Studies RELATIONSHIP INDIAN A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies RELATIONSHIP INDIAN A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Roll No. 12035234032 KESHAV MAHAVIDYALAYA RELATIONSHIP INDIAN A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Roll No. 12035234032 KESHAV MAHAVIDYALAYA H (UNIVERSITY OF DELHI) RELATIONSHIP INDIAN A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Roll No. 12035234032 KESHAV MAHAVIDYALAYA H-4 (UNIVERSITY OF DELHI) RELATIONSHIP STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA 4-5 (UNIVERSITY OF DELHI) RELATIONSHIP OF STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA 5-Zone, Pitampura (UNIVERSITY OF DELHI) OF STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) 1 OF STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) 1 OF INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Rohit Kumar Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Submitted by: Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Roll No. 12035234032 KESHAV MAHAVIDYALAYA Zone, Pitampura (UNIVERSITY OF DELHI) INFLATION WITH STOCK MARKET A Project Report submitted in Partial Fulfillment of the Degree of Bachelor of Business Studies Roll No. 12035234032 KESHAV MAHAVIDYALAYA INFLATION WITH STOCK MARKET A Project Report submitted in Degree of Bachelor of Business Studies INFLATION WITH STOCK MARKET A Project Report submitted in Degree of Bachelor of Business Studies INFLATION WITH STOCK MARKET Degree of Bachelor of Business Studies INFLATION WITH STOCK MARKET Degree of Bachelor of Business Studies INFLATION WITHINFLATION WITHINFLATION WITHINFLATION WITHINFLATION WITH
  2. 2. This is to certify that the project report entitled of Inflation partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar Bbs 3 This is to certify that the project report entitled of Inflation carrie partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar Bbs 3 This is to certify that the project report entitled of Inflation carrie partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar Bbs 3rd This is to certify that the project report entitled of Inflation carrie partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar rd Year This is to certify that the project report entitled of Inflation carried out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar Year This is to certify that the project report entitled of Inflation d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar Year This is to certify that the project report entitled of Inflation with d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Rohit Kumar Year This is to certify that the project report entitled with d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree This is to certify that the project report entitled with d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree This is to certify that the project report entitled with Indian Stock Market” d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree This is to certify that the project report entitled Indian Stock Market” d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Dr. Madhu Pruthi This is to certify that the project report entitled Indian Stock Market” d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Dr. Madhu Pruthi Certificate This is to certify that the project report entitled Indian Stock Market” d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Dr. Madhu Pruthi Principal Certificate This is to certify that the project report entitled Indian Stock Market” d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree /Diploma. Dr. Madhu Pruthi Principal Certificate This is to certify that the project report entitled Indian Stock Market” d out by Rohit Kumar partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree /Diploma. Dr. Madhu Pruthi Principal 2 Certificate This is to certify that the project report entitled Indian Stock Market” d out by Rohit Kumar at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree /Diploma. Dr. Madhu Pruthi Principal 2 Certificate This is to certify that the project report entitled Indian Stock Market” at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree /Diploma. Dr. Madhu Pruthi Principal Certificate This is to certify that the project report entitled Indian Stock Market” at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree /Diploma. Dr. Madhu Pruthi Principal Certificate This is to certify that the project report entitled Indian Stock Market” at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree /Diploma. Dr. Madhu Pruthi Certificate This is to certify that the project report entitled Indian Stock Market” at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Dr. Madhu Pruthi This is to certify that the project report entitled Indian Stock Market” at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Project Supervisor This is to certify that the project report entitled Indian Stock Market” is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Project Supervisor This is to certify that the project report entitled is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor This is to certify that the project report entitled is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor This is to certify that the project report entitled “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Kangan Jain Project Supervisor “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree Project Supervisor “Relationship is the project work at Keshav Mahavidyalaya for partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree “Relationship is the project work partial fulfillment of BBS. This report has not been submitted to any other organization for the award of any other Degree
  3. 3. 3 ABSTRACT The relationship between stock prices and inflation has been subjected to extensive research in the past decades and has arouse the interests of researchers, academics, practitioners and policy makers globally, particularly since the 1990s. This research paper tries to examine the relationship of inflation with Indian stock market and also what impact inflation leave on Indian Stock Market. Further this research paper attempt to investigate to what extent inflation affects stock market. For this purpose some stock indexes are selected to see the effect of inflation. These indexes are BSE SENSEX, NSE NIFTY, BSE BANKEX, BANK NIFTY, BSE Consumer Durables, and BSE FMCG. In my research, the inflation data is taken according to CPI (consumer price index). The statistical has used in this research to do the analysis based on yearly to find out the relationship between inflation and stock market.
  4. 4. 4 Table of Content Title of Chapter page no.  Acknowledgement…………………………………………..5  Inflation: An Introduction…………………………………...6  Causes of Inflation…………………………………………..6-7  Cost of Inflation……………………………………………..7-8  How inflation is Measured…………………………………..8-9  Inflation in India……………………………………………..10-12  Issue  Optimal Inflation Rate  Money Supply and Inflation  Global trade  Factors………………………………………………………12-14  Demand factors  Supply factors  Domestic factors  External factors  Value  What is Stock Market……………………………………….15  Types of Stock Market in India……………………………..  BSE: Bombay Stock Exchange……………………………..16  NSE: National Stock Exchange……………………………..17  What are the effect of inflation on an economy……………..17-18  How does Inflation affect Stock Market …………………….18  How are companies affected by inflation and how does investor view the impact……………………………………………………….18  Literature Review………………………………………….19-20  Research Objective………………………………………...21  Research Methodology…………………………………….22  Hypothesis………………………………………………….23-24  Observation…………………………………………………25-48  Relation between inflation with BSE Sensex, CNX Nifty, BSE Bankex, Bank Nifty, BSE Consumer Durables, BSE FMCG  Conclusion………………………………………………….49-50  Limitation of study………………………………………….51  Bibliography………………………………………………..52
  5. 5. 5 Acknowledgement One of the best parts of preparing this project is the opportunity to thank those who have contributed to its preparation. The list of expression of thanks – no matter how extensive is always incomplete and inadequate, these acknowledgements are no exception. Therefore, I would like to thank my teacher of Finance, Ms. Kangan Jain, for her unwavering guidance and help in completing this research project. Her suggestions and support to improve my research methodology was valuable for the completion of this project successfully. I am also very thankful to all the people who answered my questions willingly and participated in my research for giving me their precious time. Also, I wish to thank all those authors whose journals I referred to and websites like Wikipedia and Investopedia in order to provide valuable information to complete my project. Finally, I thank my fellow students who helped me wherever I needed help, and enabled me to complete my project on time. Rohit Kumar 2063
  6. 6. 6 INTRODUCTION INFLATION  It is defined as the rise in the general price level and fall in the money value  It occurs when the amount of buying power is more than the output of goods and services.  It also occurs when the amount of money exceeds the amount of goods and services available TYPES OF INFLATION 1) Creeping inflation 2) Trotting inflation 3) Galloping inflation 4) Hyper inflation CREEPING INFLATION- when there is general rise in prices at very low rates, which is 2- 4% annually TROTTING INFLATION- when there is rise in price to almost 5% GALLOPING INFLATION- when rate is increased with a noticeable speed and at a remarkable rate usually from 10-20% HYPER INFLATION-when the inflation rate rise to over 20% CAUSES OF INFLATION DEMAND-PULL INFLATION:-  Occurs when the consumers, businesses and the governments’ demand for goods and services more than the supply; therefore the cost of item rises unless the supply is perfectly elastic  The increase in demand is created from in increase in other areas, such as the supply of money, the increase of wage which would then give rise in disposable income, and once the consumer have more disposal income this would lead to aggregate spending  As a result in aggregate spending there would also be an increase in demand for exports and possible hoarding and profiteering from producers. The excessive demand, the price of final goods and services would be forced to increase and this increase give rise to inflation
  7. 7. 7 COST-PUSH INFLATION  Cost push inflation is caused by an increase in production costs. It is generally caused by an increase in wages or an increase in the profit margin of the entrepreneurs MONETARY INFLATION Monetary inflation occur when there is an excessive supply of money. It is understood that the government increase the money supply faster than the quantity of goods increase, which result in inflation. Interestingly as the supply of good increase the money supplyhas to increase or else price actually go down STRUCTURAL INFLATION Planned inflation that is caused by government’s monetary policy is called structural inflation. This type of inflation is not caused by the excess of demand or supply but is built into an economy due to governments’ monetary policy. In developed countries they are characterized by a lack of adequate resources like capital, foreign exchange, land and infrastructure. Furthermore, over-population with the majority depending on agriculture for livelihood means that there is a fragmentation of landholdings. There are other institutional factors like land-ownership, technological backwardness and low rate of investment in agriculture. IMPORTED INFLATION Another type of inflation is imported inflation. This occur when the inflation of goods and services from foreign countries that are experiencing inflation are imported and the increase in prices for that imported goods or services will directly affect the cost of living. COSTS OF INFLATION Almost everyone thinks inflation is evil, but it isn't necessarily so. Inflation affects different people in different ways. It also depends on whether inflation is anticipated or unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated inflation), then we can compensate and the cost isn't high. For example, banks can vary their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up. Problems arise when there is unanticipated inflation:
  8. 8. 8  Creditors lose and debtors gain if the lender does not anticipate inflation correctly. For those who borrow, this is similar to getting an interest-free loan.  Uncertainty about what will happen next makes corporations and consumers less likely to spend. This hurts economic output in the long run.  People living off a fixed-income, such as retirees, see a decline in their purchasing power and, consequently, their standard of living.  The entire economy must absorb repricing costs ("menu costs") as price lists, labels, menus and more have to be updated.  If the inflation rate is greater than that of other countries, domestic products become less competitive. People like to complain about prices going up, but they often ignore the fact that wages should be rising as well. The question shouldn't be whether inflation is rising, but whether it's rising at a quicker pace than your wages. Finally, inflation is a sign that an economy is growing. In some situations, little inflation (or even deflation) can be just as bad as high inflation. The lack of inflation may be an indication that the economy is weakening. As you can see, it's not so easy to label inflation as either good or bad - it depends on the overall economy as well as your personal situation. HOW IN FLATION IS MEASURED? Measuring inflation is a difficult problem for government statisticians. To do this, a number of goods that are representative of the economy are put together into what is referred to as a "market basket." The cost of this basket is then compared over time. This results in a price index, which is the cost of the market basket today as a percentage of the cost of that identical basket in the starting year. In North America, there are two main price indexes that measure inflation:
  9. 9. 9  Consumer Price Index (CPI) - A measure of price changes in consumer goods and services such as gasoline, food, clothing and automobiles. The CPI measures price change from the perspective of the purchaser. CPI data can be found at the Bureau of Labor Statistics.  Wholesale price index (WPI)- The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries ( like the Philippines) use WPI changes as a central measure of inflation.But now India has adopted new CPI to measure inflation. However, United States now report a producer price index instead.  Producer Price Indexes (PPI) - A family of indexes that measure the average change over time in selling prices by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. U.S. PPI data can be found at the Bureau of Labor Statistics. You can think of price indexes as large surveys. Each month, the U.S. Bureau of Labor Statistics contacts thousands of retail stores, service establishments, rental units and doctors' offices to obtain price information on thousands of items used to track and measure price changes in the CPI. They record the prices of about 80,000 items each month, which represent a scientifically selected sample of the prices paid by consumers for the goods and services purchased. In the long run, the various PPIs and the CPI show a similar rate of inflation. This is not the case in the short run, as PPIs often increase before the CPI. In general, investors follow the CPI more than the PPIs.
  10. 10. 10 INFLATION IN INDIA The annualized inflation rate in India is 5.37% as of February 2015, as per the Indian ministry of statistics and programme implementation. This represents a modest reduction from the previous annual figure of 9.6% for June 2011. Inflation rates in India are usually quoted as changes in the Wholesale Price Index, for all commodities. Many developing countries use changes in the Consumer Price Index (CPI) as their central measure of inflation. India used WPI as the measure for inflation but new CPI(combined) is declared as the new standard for measuring inflation ( April 2014) [[1] ] CPI numbers are typically measured monthly, and with a significant lag, making them unsuitable for policy use. Instead, India uses changes in the Wholesale Price Index (WPI) to measure its rate of inflation. Provisional annual inflation rate based on all India general CPI (Combined) for November 2013 on point to point basis (November 2013 over November 2012) is 11.24% as compared to 10.17% (final) for the previous month of October 2013. The corresponding provisional inflation rates for rural and urban areas for November 2013 are 11.74% and 10.53% respectively. Inflation rates (final) for rural and urban areas for October 2013 are 10.19% and 10.20% respectively. The WPI measures the price of a representative basket of wholesale goods. In India, this basket is composed of three groups: Primary Articles (20.1% of total weight), Fuel and Power (14.9%) and Manufactured Products (65%). Food Articles from the Primary Articles Group account for 14.3% of the total weight. The most important components of the Manufactured Products Group are Chemicals and Chemical products (12%); Basic Metals, Alloys and Metal Products (10.8%); Machinery and Machine Tools (8.9%); Textiles (7.3%) and Transport, Equipment and Parts (5.2%). WPI numbers are typically measured weekly by the Ministry of Commerce and Industry. This makes it more timely than the lagging and infrequent CPI statistic. ISSUE The challenges in developing economy are many, especially when in context of the monetary policy with the Central Bank, the inflation and price stability phenomenon. There has been a universal argument these days when monetary policy is determined to be a key element in
  11. 11. 11 depicting and controlling inflation. The Central Bank works on the objective to control and have a stable price for commodities. A good environment of price stability happens to create saving mobilization and a sustained economic growth. The former Governor of RBI C. Rangarajan points out that there is a long-term trade-off between outputand inflation. He adds on that short-term trade-off happens to only introduce uncertainty about the price level in future. There is an agreement that the central banks have aimed to introduce the target of price stability while an argument supports it for what that means in practice. THE OPTIMAL INFLATION RATE It arises as the basis theme in deciding an adequate monetary policy. There are two debatable proportions for an effective inflation, whether it should be in the range of 1-3 per-cent as the inflation rate that persists in the industrialized economy or should it be in the range of 6-7 per-cents. While deciding on the elaborate inflation rate certain problems occur regarding its measurement. The measurement bias has often calculated an inflation rate that is comparatively more than in nature. Secondly, there often arises a problem when the quality improvements in the product are in need to be captured out, hence it affects the price index. The consumer preference for a cheaper goods affects the consumption basket at costs, for the increased expenditure on the cheaper goods takes time for the increased weight and measuring inflation. The Boskin Commission has measured 1.1 per cent of the increased inflation in USA every-annum. The commission points out for the developed countries comprehensive study on inflation to be fairly low. MONEY SUPPLY AND INFLATION The Quantitative Easing by the central banks with the effect of an increased money supply in an economy often helps to increase or moderate inflationary targets. There is a puzzle formation between low-rate of inflation and a high growth of money supply. When the current rate of inflation is low, a high worth of money supply warrants the tightening of liquidity and an increased interest rate for a moderate aggregate demand and the avoidance of any potential problems. Further, in case of a low output a tightened monetary policy would affect the production in a much more severe manner. The supply shocks have known to play a dominant role in the regard of monetary policy. The bumper harvest in 1998-99 with a buffer yield in wheat, sugarcane, and pulses had led to an early supply condition further driving their prices from what were they in the last year. The increased import competition
  12. 12. 12 since 1991 with the trade liberalization in place have widely contributed to the reduced manufacturing competition with a cheaper agricultural raw materials and the fabric industry. These cost-saving driven technologies have often helped to drive a low-inflation rate. The normal growth cycles accompanied with the international price pressures has several times being characterized by domestic uncertainties. GLOBAL TRADE Inflation in India generally occurs as a consequence of global traded commodities and the several efforts made by The Reserve Bank of India to weaken rupee against dollar. This was done after the Pokhran Blasts in 1998.[4] This has been regarded as the root cause of inflationcrisis rather than the domestic inflation. According to some experts the policy of RBI to absorb all dollars coming into the Indian Economy contributes to the appreciation of the rupee.[5] When the US dollar has shrieked by a margin of 30%, RBI had made a massive injection of dollar in the economy make it highly liquid and this further triggered offinflation in non-traded goods. The RBI picture clearly portrays forsubsidizing exports with a weak dollar-exchange rate.All these account for a dangerous inflationary policies being followed by the central bankof the country.[6] Further, on account of cheap products being importedin the country which are made on a high technological and capital intensive techniques happen to either increase the price of domestic raw materials in the global market or they are forced to sell at a cheaper price, hence fetching heavy losses. FACTORS There are several factors which help to determine the inflationary impact in the country and further help in making a comparative analysis of the policies for the same.The major determinant of the inflation in regard to the employment generation and growth is depicted by the Phillips curve. DEMAND FACTORS It basically occurs in a situation when the aggregate demand in the economy has exceeded the aggregate supply. It could further be described as a situation where too much money chases just few goods. A country has a capacity of producing just 550 units of a commodity but the actual demand in the country is 700 units. Hence, as a result of which due to scarcity in supply the prices of the commodity rises. This has generally been seen in India in context with the agrarian society where due to droughts and floods or inadequate methods for the
  13. 13. 13 storage of grains leads to lesser or deteriorated output hence increasing the prices for the commodities as the demand remains the same. SUPPLY FACTORS The supply side inflation is a key ingredient for the rising inflation in India. The agricultural scarcity or the damage in transit creates a scarcity causing high inflationary pressures. Similarly, the high cost of labor eventually increases the production cost and leads to a high price for the commodity.The energies issues regarding the cost of production often increases the value of the final output produced. These supply driven factors have basically have a fiscal tool for regulation and moderation. Further, the global level impacts of price rise often impactsinflation from the supply side of the economy. Consensus on the prime reason for the sticky and stubbornly highConsumer Price Index, that is retail inflation of India, is due to supply side constraints; and still where interest rate remains the only tool with The Reserve Bank of India.[7] Higher inflation rate also constraints India's manufacturing environment. DOMESTIC FACTORS Developing economies like India have generally a lesser developed financial market which creates a weak bonding between the interest rates and the aggregate demand. This accounts for the real money gap that could be determined as the potential determinant for the price rise and inflation in India. There is a gap in India for both the output and the real money gap. The supply of money grows rapidly while the supply of goods takes due time which causes increased inflation. SimilarlyHoarding has been a problem of major concern in India where onions prices have shot high in the sky. There are several other stances for the gold and silver commodities and their price hike.[9] EXTERNAL FACTORS The exchange rate determination is an important component for the inflationary pressures that arises in the India. The liberal economic perspective in India affects the domestic markets. As the prices inUnited States Of America rises it impacts India where the commodities are now imported at a higher price impacting the price rise. Hence, the nominal exchange rate and the import inflation are a measures that depict the competitiveness and challenges for the economy.[10] VALUE
  14. 14. 14 The inflation rate in India was recorded at 6.1% (WPI) in August 2013. Historically, from 1969 until 2013, the inflation rate in India averaged 7.7% reaching an all time high of 34.7% in September 1974 and a record low of -11.3% in May 1976. The inflation rate for Primary Articles is currently at 9.8% (as of 2012). This breaks down into a rate 7.3% for Food, 9.6% for Non-Food Agriculturals, and 26.6% for Mining Products. The inflation rate for Fuel and Power is at 14.0%. Finally, the inflation rate for Manufactured Articles is currently at 7.3%.[11]
  15. 15. 15 WHAT IS STOCK MARKET?? A stock market is place or public entity for buying and selling of company shares and derivatives at an agreed price. These shares and derivatives are listed in stock exchange for trade. TYPES OF MARKET IN INDIA Primarily there are two types of market in India 1) Primary market 2) Secondary market Primary market- it is the market where stock is issued for the first time. So, when the company is listed in stock exchange first and issues its shares- this process is happened in primary market. Secondary market- These is the market where the already issued stock has traded by the small investor, AMC and HNI’s through the licensed share broker. After IPO in primary market the trading has been done in secondary market. SNO. NAME OF STOCK EXCHANGE ADDRESS 1 Ahemdabad Stock Exchange Ltd Kamdhenu Complex Opp, Sahajanand College, Panjarapole, Ambawadi, Ahmedabad - 380001 2 Bse Ltd P J Tower, Dalal Street, Mumbai 400023 3 Calcutta Stock Exchange Ltd 7, Lyons Range, Kolkata – 700001 4 Delhi Stock Exchange Ltd Dse House, 3/1, Asaf Ali Road, New Delhi - 110002 5 Jaipur Stock Exchange 6 MCX- Stock Exchange Ltd 4th Floor, Vibgyor Tower, Plot No C 62, G Block, Bandra Kurla Complex (BKC), Bandra (E), Mumbai - 400051 7 Madhya Pradesh Stock Exchange Ltd Palika Plaza, Phase II, 201, 2nd Floor, MTH Compound, Indore – 452001 8 Madras Stock Exchange Ltd P O Box No 183, New No: 30 (Old No: 11) Second Line Beach, Chennai – 600001 9 Magadh Stock Exchange Ltd 10 National Stock Exchange Of India Ltd Bandra Kurla Complex, Bandra (East) Mumbai 400051 11 OTC Exchange Ltd. 92, Maker Towers 'F', Cuffe Parade, Mumbai - 400005
  16. 16. 16 12 Pune Stock Exchange Ltd Shivleela Chambers, 752, Sadashiv Peth, Rb Kumthekar Marg Pune – 411030 13 The Vadodara Stock Exchange Ltd Fortune Tower, Sayajigunj, Vadodara - 390005 14 U.P. Stock Exchange Ltd Padam Towers, 14/113, Civil Lines, Kanpur - 208001 15 United Stock Exchange Of India Ltd Office No 3 To 6, 7th Floor, Arcadia Building, 195,N.C.P.A Marg, Nariman Point, Mumbai-400021 Some stock exchanges have been granted exit by sebi. These stock exchanges and their date of exits are: SNO. NAME OF STOCK EXCHANGE DATE OF EXIT 1 Hyderabad Stock Exchange 25 jan,2013 2 Coimbatore Stock Exchange Ltd 3 april,2013 3 Saurashtra Kutch Stock Exchange Ltd 5 april,2013 4 Mangalore Stock Exchange 3 march,2014 5 Inter-Connected Stock Exchange Of India Ltd 8 december,2014 6 Cochin Stock Exchange Ltd 23 december,2014 7 Bangalore Stock Exchange Ltd 26 december,2014 8 Ludhiana Stock Exchange Ltd 30 december,2014 9 Gauhati Stock Exchange Ltd 27 january,2015 10 Bhubaneswar Stock Exchange Ltd 9 february, 2015 Two main stock exchanges in are: 1) BSE: Bombay stock exchange and 2) NSE National stock exchange BSE: THE BOMBAY STOCK EXCHANGE  it is one of the largest stock exchange in with more than 6000 stocks listed  it account for two third of the total trading volume in the country.  Established in 1875 and one of the oldest stock exchange in asia.  It was the first one to be recognized by the government of india among the 22 exchanges.  Only stock exchange that had the advantage of getting permanent recognition.  CEO- Ashish Chauhan
  17. 17. 17  It possess the maximum number of listed organization in the world.  Index of BSE is known as SENSEX which include 30 companies.  SENSEX has been calculated since 1986 and initially it was calculated on the total market capitalization methodology. This methodology was changed in 2003 to free float market capitalization.  SENSEX is calculated for every 15 second NSE: NATIONAL STOCK EXCHANGE  It was promoted by leading financial institution at the order of government of india.  In November,1992 NSE was formed as a tax paying company.  It was recognized as a stock exchange in april 1993 under the security contract(regulation) act,1956  Started its operation in june 1994  It commenced its capital market segment started in November 1994, while derivative segment started in june 2000. What are the effects of Inflation on an economy? Inflation has both Negative and Positive points which are as follows. Negative • Add inefficiencies in the market, and make it difficult for companies to budget or plan long- term • Can impose hidden tax increases, as inflated earnings push taxpayers into higher income tax rates. • Cost-push inflation - Rising inflation can prompt employees to demand higher wages, to keep up with consumer prices. Rising wages in turn can help fuel inflation. • Hoarding - People buy consumer durables as stores of wealth in the absence of viable alternatives as a means of getting rid of excess cash before it is devalued, creating shortages of the hoarded objects. • Hyperinflation - If inflation gets totally out of control (in the upward direction), it can grossly interfere with the normal workings of the economy, hurting its ability to supply. • Price inflation has immense effect on the Time Value of Money (TVM)- The above two
  18. 18. 18 examples explains the meaning of this statement. Positive • Labor-0market adjustments - Inflation would lower the real wage if nominal wages are kept constant, Keynesians argue that some inflation is good for the economy, as it would allow labor markets to reach equilibrium faster. • Debt relief - Debtors who have debts with a fixed nominal rate of interest will see a reduction in the "real" interest rate as the inflation rate rises How does rising inflation affect the stock market? To tame inflation, the government usually hikes interest rates. This tends to make debt instruments attractive relative to equities as the former carry a lower risk (small savings instruments are risk free as they are guaranteed by the government). This results in some amount of investments shifting from equity to debt.However, high inflation is not always bad and low inflation need not always be good for equity markets, as the impact will differ for companies and sectors across different time horizons. The first thing to consider is the items where prices are rising. For example a rise in oil prices will impact a wide range of items from food products to those that require transportation. How are companies affected by rising inflation and how does an investor view the impact? A rise in prices of several items means that the input prices for production of various goods and services are rising. In these cases market analysts and fund managers will always consider the net impact on the margin of the entity that they are tracking. While there might be an increase in the input prices, it has to be considered in the backdrop of the company's ability to pass on the price hike to the end-user. If a company is able to sustain its profit margin despite high inflation, the stock price is likely to hold. If the high inflation sustains, at some stage it will lead to a chain reaction across the economy, pushing up interest rates and even affecting demand. An increase in interest rates will push up borrowing costs for corporates while lower demand will hurt growth in revenues. This is likely to impact sentiment for the stock market as a whole.
  19. 19. 19 LITERATURE REVIEW Saurabh Singh, Dr. L.K. tripathy, Kirti Lalwani has done their research on “AN IMPIRICAL STUDY OF IMPACT OF EXCHANGE RATE & INFLATION RATE ON PERFORMANCE OF BSE SENSEX”. In their research paper they tries to examine the primary factors responsible for affecting Bombay Stock Exchange in India. They attempt to investigate the relative influence of the factor affecting BSE and thereby categorized them. Douglason G. Omotor has done his research on “RELATIONSHIP BETWEEN INFLATIOIN AND STOCK MARKET RETURNS” in the context with Nigeria. In his research Douglason tries to find out the relation of Inflation and stock market in Nigeria. His research suggest that stock market returns may provide an effective hedge against in Nigeria. Prof. Lawrence H. Summers has done his research on “INFLATION, THE STOCK MARKET AND OWNER OCCUPIED HOUSING”. In his research he explained the sharp decline in the value of the stock market and increase in the price of the owner occupied housing over the last decade, both of these were result from the interaction of increase in the expected inflation and US tax system. The result in his research paper indicates that tax effects are large enough to account for almost the entire relative price shift which has been observed. His research paper suggest that to a large extent, the increase in the value of housing, and decrease in the value of corporate capital may have a common explanation, the interaction of inflation and a non-indexed tax system. The acceleration of inflation has sharply increased the rate of taxation of corporate capital income, while reducing the effective taxation of owner occupied housing. K.R. Shanmugam and Biswa Swarup Mishra has done his research on “STOCK RETURN- INFLATION IN INDIA”. His study contributes to the stock return-inflation relation literature in developing countries by revisiting the issue with reference to the emerging economy, India. More specifically it test whether the Indian stock market provide an effective hedge against inflation using monthly data on real stock return, inflation and real activity from april 1980 to march 2004 and two step estimation procedure. The result of his study indicate that (i) the indian stock market reflect the future real activity; (ii) this negative stock inflation relation emerges from the unexpected component of the inflation and (iii) this negative relation vanishes when we control for the inflation-real activity relation, thereby support for Fama’s proxy effect hypothesis.
  20. 20. 20 Geert Bekaert and Eric Engstrom has done their research on “INFALTION AND THE STOCK MARKET:UNDERSTANDING THE ‘FED MODEL’”. The fed model postulate that the dividend or earning yield on stock equal the yield on nominal treasury bonds, or at least dividend the two should be highly correlated. They shows that the effect is consistent with modern asset pricing theory incorporating uncertainty about the real growth prospects and also habit based risk aversion . Michael D. Bordo, Michael J. Dueker and David C. Wheelock has done their research on “INFALTION, MONETARY POLICY AND STOCK MARKET CONDITIONS” His research papers examines the association between inflation monetary policy and US stock market condition during the second half of the 20th century. They use latent variable VAR to estimate the impact of inflation and other macroeconomics shocks on a latent index of stock market conditions. They investigate the extent to which various shocks contribute to change in the market conditions, above and beyond their direct effect on real stock price.
  21. 21. 21 RESEARCH OBJECTIVE The overall objectives in this study are to re-examine the relationship between inflation and the Indian Stock Market. The specific objectives of the study are to examine whether expected and unexpected inflation has significant relationship and influence to Indian stock market of in the short run and long run for India. It is well known fact that inflation has impact on stock returns and stock market. This research identifies that either Inflation has positive or negative relation with Indian Stock Market.
  22. 22. 22 RESEARCH METHODOLOGY The objective of this research is to find out the relationship between Inflation Rate and Indian Stock Market because Inflation Rate has a considerable influence on on Stock Market. To find out the relation we select six indices (BSE Sensex, NSE Nifty, BSE Bankex, Bank Nifty, BSE Consumer Durables and BSE FMCG). Sensex and Nifty are the major stock indices of India, if inflation rate affect these stock indices than it affect whole stock market. The yearly data of Inflation is available from 1958 but data of Sensex and Nifty are not available for that much longer duration. The inflation data is based on Consumer Price Index (CPI) and data of all indices is taken on closing date of 31 December every year. Inflation data is taken from www.Inflation.eu Data of Stock Indices is taken from BSE (www.bseindia.com), NSE (www.nseindia.com) and Moneycontrol (www.moneycontrol.com) The purpose is to check here the degree of association between Inflation and all the indices mentioned here as to know what kind of relationship exist between and so correlation analysis is used as it is an appropriate statistical tool for discovering and measuring the relationship between Inflation and Indian Stock Market After using correlation analysis, an attempt will be made to find whether we can use the value of inflation to predict the value of unknown variable which in our case will be the all six indices used in this research for study. So, here we need to find out what level of variation in the value of these variables can be explained by a given change in Inflation and the appropriate tool for it is regression which show the average change in the value of the dependent variable for a given value of the independent variable. On obtaining the result through the test done, the significance value was noted, and the observations were duly noted. In later sections, these observations are then analyzed and finally the conclusions are drawn on the evidence available and test done on the data gathered.
  23. 23. 23 HYPOTHESIS As explained in this research methodology, the data has been taken serial wise wherein inflation is compared against the various indexes to know the nature of relationship between them The hypothesis thus stated would be regarding the effectiveness of inflation in our country to Indian Stock Market. For checking this relationship various stock indexes are selected these are:- 1) BSE Sensex 2) NSE Nifty 3) BSE Bankex 4) Bank Nifty 5) BSE Consumer Durables 6) BSE FMCG The reason why we have chosen these variables is because Sensex and Nifty are the major stock indices used to track Stock Market and Stock Prices, Bankex and Bank Nifty are the indices to track the performance of banking sector. BSE Consumer Durables is used to track consumer durables product and BSE FMCG is used to track the performance of FMCG sector 1. Hypothesis- (Yearly Data of Inflation and BSE Sensex) Ho(Null Hypothesis)-Performance of BSE SENSEX does not depend on performance of inflation rate H1(Alternate Hypothesis)- performance of BSE SENSEX depends on performance of inflation rate 2. Hypothesis- (Yearly Data of Inflation and NSE Nifty) Ho(Null Hypothesis)- performance of NIFTY does not depends on performance of Inflation rate. H1(Alternate Hypothesis)- performance of NIFTY depends on performance of Inflation rate
  24. 24. 24 3. Hypothesis- (Yearly Data of Inflation and BSE Bankex) Ho(Null Hypothesis) – Performance of BSE Bankex does not depend on the performance of Inflation Rate. H1(Alternate Hypothesis)- Performance of BSE Bankex depend on the performance of Inflation. 4. Hypothesis- (Yearly Data of Inflation and Bank Nifty) Ho(null Hypothesis)- Performance of Bank Nifty does not depend on the performance of Inflation Rate. H1(Alternate Hypothesis)- Performance of Bank Nifty depend on the performance of Inflation Rate. 5. Hypothesis- (Yearly Data of Inflation and BSE Consumer Durables) Ho(Null Hypothesis)- Performance of BSE Consumer Durables does not depend on the performance of Inflation Rate. H1(Alternate Hypothesis)-Performance of BSE Consumer Durables depend on performance of Inflation Rate. 6. Hypothesis- (Yearly Data of Inflation and BSE FMCG) Ho(Null Hypothesis)- Performance of BSE FMCG does not depend on the performance of Inflation Rate. H1(alternate Hypothesis)- Performance of BSE FMCG depend on the performance of Inflation Rate.
  25. 25. 25 Observation and Analysis The observation and analysis has been presented index wise. Therefore, this section shall briefly details out first on the methodology behind computation of the various variables discussed and then about the significance of the particular value with respect to the parameters set. Relation between Inflation and BSE Sensex So, In-order to find the relationship between Inflation and BSE Sensex and check reliability of this research. But before it is officially released, we need to conduct the following test- Test of correlation between Inflation and BSE Sensex The purpose of using correlation is because the relationship here is of quantitative in nature and so it an appropriate statistical tool for discovering and measuring the relationship and expressing it in a comprehensive manner. Test of Regression of Inflation on BSE Sensex The purpose of using regression is to analyze how much “change in BSE Sensex” is responsible for a given change in Inflation. The purpose of regression is to estimate the value of unknown variable from the known value of other variable. In our case the known variable is Inflation and unknown variable is BSE Sensex.
  26. 26. 26 Correlation between Inflation and BSE Sensex Descriptive Statistics Mean Std. Deviation N Inflation_Rate 6.9160 3.33938 15 BSE_Sensex 13179.8767 7742.37221 15 Correlations Inflation_Rate BSE_Sensex Inflation_Rate Pearson Correlation 1 .541* Sig. (2-tailed) .037 N 15 15 BSE_Sensex Pearson Correlation .541* 1 Sig. (2-tailed) .037 N 15 15 *. Correlation is significant at the 0.05 level (2-tailed). Observations  The level of significance is 0.037 which is less than 5% and so we can say that the level of correlation between inflation and BSE Sensex is significant and also the Pearson Correlation value of “0.541” shows that there is a strong degree of positive correlation between Inflation and BSE Sensex  There is a positive correlation between them, it signifies increase in inflation rate always give positive impact on BSE Sensex
  27. 27. 27 Regression between inflation and BSE Sensex Variables Entered/Removeda Model Variables Entered Variables Removed Method 1 Inflation_Rate b . Enter a. Dependent Variable: BSE_Sensex b. All requested variables entered. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .541 a .293 .239 6754.78031 a. Predictors: (Constant), Inflation_Rate ANOVA a Model Sum of Squares df Mean Square F Sig. 1 Regression 246068843.705 1 246068843.705 5.393 .037 b Residual 593151741.429 13 45627057.033 Total 839220585.134 14 a. Dependent Variable: BSE_Sensex b. Predictors: (Constant), Inflation_Rate Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 4497.196 4125.617 1.090 .295 Inflation_Rate 1255.448 540.607 .541 2.322 .037 a. Dependent Variable: BSE_Sensex Observation Regression equation is as follows
  28. 28. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable BSE Sensex And 4497.196 is the intercept BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable BSE Sensex And 4497.196 is the intercept   BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable BSE Sensex And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable BSE Sensex And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable BSE Sensex is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And 4497.196 is the intercept And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable is dependent variable And now coming to the analysis part, the level of significance 0.037 which is less than 5% significance level and so we can say that the model is fit and also the R value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) Inflation Rate is Independent Variable And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. BSE Sensex=4497+1255.448(Inflation Rate) And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R value of “0.293” shows that 29.3% vari explained by a given change in Inflation Rate. 28 BSE Sensex=4497+1255.448(Inflation Rate) where, And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R value of “0.293” shows that 29.3% variation in the value of BSE Sensex can be explained by a given change in Inflation Rate. 28 where, And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be explained by a given change in Inflation Rate. where, And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less and so we can say that the model is fit and also the R2 ation in the value of BSE Sensex can be And now coming to the analysis part, the level of significance 0.037 which is less
  29. 29. 29 Relation between Inflation and CNX Nifty So, In-order to find the relationship between Inflation and BSE CNX Nifty and check reliability of this research. But before it is officially released, we need to conduct the following test- Test of correlation between Inflation and CNX Nifty The purpose of using correlation is because the relationship here is of quantitative in nature and so it an appropriate statistical tool for discovering and measuring the relationship and expressing it in a comprehensive manner. Test of Regression of Inflation on CNX Nifty The purpose of using regression is to analyze how much “change in CNX Nifty” is responsible for a given change in Inflation. The purpose of regression is to estimate the value of unknown variable from the known value of other variable. In our case the known variable is Inflation and unknown variable is CNX Nifty.
  30. 30. 30 Correlation between inflation and CNX Nifty Descriptive Statistics Mean Std. Deviation N Inflation_Rate 6.9160 3.33938 15 CNX_Nifty 3981.9133 2290.34539 15 Correlations Inflation_Rate CNX_Nifty Inflation_Rate Pearson Correlation 1 .536* Sig. (2-tailed) .039 N 15 15 CNX_Nifty Pearson Correlation .536* 1 Sig. (2-tailed) .039 N 15 15 *. Correlation is significant at the 0.05 level (2-tailed). Observations  The level of significance is 0.039 which is less than 5% and so we can say that the level of correlation between inflation and CNX Nifty is significant and also the Pearson Correlation value of “0.536” shows that there is a strong degree of positive correlation between Inflation and CNX Nifty.  There is a positive correlation between them, it signifies increase in inflation rate always give positive impact on CNX Nifty.
  31. 31. 31 Regression between Inflation and CNX Nifty Variables Entered/Removeda Model Variables Entered Variables Removed Method 1 Inflation_Rateb . Enter a. Dependent Variable: CNX_Nifty b. All requested variables entered. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .536a .287 .232 2006.73572 a. Predictors: (Constant), Inflation_Rate ANOVAa Model Sum of Squares df Mean Square F Sig. 1 Regression 21088700.571 1 21088700.571 5.237 .039b Residual 52350847.271 13 4026988.252 Total 73439547.842 14 a. Dependent Variable: CNX_Nifty b. Predictors: (Constant), Inflation_Rate Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 1440.061 1225.654 1.175 .261 Inflation_Rate 367.532 160.606 .536 2.288 .039 a. Dependent Variable: CNX_Nifty Observation Regression equation is as follows CNX Nifty=1440.061+367.532(Inflation Rate) where,
  32. 32. Inflation Rate is Independent Variable CNX Nifty And Inflation Rate is Independent Variable CNX Nifty And 1440.061  Inflation Rate is Independent Variable CNX Nifty 1440.061 And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R value of “ explained by a given change in Inflation Rate. Inflation Rate is Independent Variable CNX Nifty 1440.061 And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R value of “ explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable 1440.061 And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R value of “ explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R value of “0.287 explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R 0.287 explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R 0.287” explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R ” shows that 28.7 explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R shows that 28.7 explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R shows that 28.7 explained by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R shows that 28.7 explained by a given change in Inflation Rate. Inflation Rate is Independent Variable And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R shows that 28.7 explained by a given change in Inflation Rate. And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R shows that 28.7% vari explained by a given change in Inflation Rate. And now coming to the analysis part, than 5% significance level and so we can say that the model is fit and also the R % vari explained by a given change in Inflation Rate. 32 And now coming to the analysis part, the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R % variation in the value of CNX Nifty explained by a given change in Inflation Rate. 32 the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty explained by a given change in Inflation Rate. the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty explained by a given change in Inflation Rate. the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty explained by a given change in Inflation Rate. the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty the level of significance 0.039 than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty the level of significance 0.039 which is less than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty which is less than 5% significance level and so we can say that the model is fit and also the R ation in the value of CNX Nifty can be which is less than 5% significance level and so we can say that the model is fit and also the R can be which is less than 5% significance level and so we can say that the model is fit and also the R can be which is less than 5% significance level and so we can say that the model is fit and also the R2 can be which is less
  33. 33. 33 Relation between Inflation and BSE Bankex So, In-order to find the relationship between Inflation and BSE Bankex and check reliability of this research. But before it is officially released, we need to conduct the following test- Test of correlation between Inflation and BSE Bankex The purpose of using correlation is because the relationship here is of quantitative in nature and so it an appropriate statistical tool for discovering and measuring the relationship and expressing it in a comprehensive manner. Test of Regression of Inflation on BSE Bankex The purpose of using regression is to analyze how much “change in BSE Bankex” is responsible for a given change in Inflation. The purpose of regression is to estimate the value of unknown variable from the known value of other variable. In our case the known variable is Inflation and unknown variable is BSE Bankex.
  34. 34. 34 Correlation between inflation and BSE Bankex Descriptive Statistics Mean Std. Deviation N Inflation_Rate 7.6583 3.31401 12 BSE_Bankex 9744.1625 5369.57479 12 Correlations Inflation_Rate BSE_Bankex Inflation_Rate Pearson Correlation 1 .308 Sig. (2-tailed) .330 N 12 12 BSE_Bankex Pearson Correlation .308 1 Sig. (2-tailed) .330 N 12 12 Observations  The level of significance is 0.330 which is more than 5% and so we can say that the level of correlation between inflation and BSE Bankex is not significant and also the Pearson Correlation value of “0.308” shows that there is a strong degree of positive correlation between Inflation and BSE Bankex.  There is a positive correlation between them, it signifies increase in inflation rate always give positive impact on BSE Bankex.
  35. 35. 35 Regression between Inflation And BSE Bankex Variables Entered/Removeda Model Variables Entered Variables Removed Method 1 Inflation_Rateb . Enter a. Dependent Variable: BSE_Bankex b. All requested variables entered. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .308a .095 .005 5357.32616 a. Predictors: (Constant), Inflation_Rate ANOVAa Model Sum of Squares Df Mean Square F Sig. 1 Regression 30146230.922 1 30146230.922 1.050 .330b Residual 287009436.173 10 28700943.617 Total 317155667.095 11 a. Dependent Variable: BSE_Bankex b. Predictors: (Constant), Inflation_Rate Coefficientsa Model Unstandardized Coefficients Standardized Coefficients T Sig. B Std. Error Beta 1 (Constant) 5918.551 4040.469 1.465 .174 Inflation_Rate 499.536 487.414 .308 1.025 .330 a. Dependent Variable: BSE_Bankex Observation Regression equation is as follows BSE Bankex =5918.551+499.536(Inflation Rate) where,
  36. 36. Inflation Rate is Independent Variable BSE Bankex And 5918.551 Inflation Rate is Independent Variable BSE Bankex And 5918.551  Inflation Rate is Independent Variable BSE Bankex And 5918.551 And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable BSE Bankex And 5918.551 And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable BSE Bankex is dependent variable And 5918.551 And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable is the intercept the analysis part, than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable is dependent variable the analysis part, than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change Inflation Rate is Independent Variable the analysis part, than 5% significance level and so we can say that the model value of “0.095” shows that 9.5 explained by a given change in Inflation Rate. the analysis part, than 5% significance level and so we can say that the model value of “0.095” shows that 9.5% vari in Inflation Rate. the analysis part, than 5% significance level and so we can say that the model % vari in Inflation Rate. 36 the analysis part, the level of significance 0.330 which is more than 5% significance level and so we can say that the model % variation in the value of BSE Bankex in Inflation Rate. 36 the level of significance 0.330 which is more than 5% significance level and so we can say that the model ation in the value of BSE Bankex in Inflation Rate. the level of significance 0.330 which is more than 5% significance level and so we can say that the model ation in the value of BSE Bankex in Inflation Rate. the level of significance 0.330 which is more than 5% significance level and so we can say that the model ation in the value of BSE Bankex in Inflation Rate. the level of significance 0.330 which is more than 5% significance level and so we can say that the model ation in the value of BSE Bankex the level of significance 0.330 which is more than 5% significance level and so we can say that the model ation in the value of BSE Bankex the level of significance 0.330 which is more than 5% significance level and so we can say that the model ation in the value of BSE Bankex the level of significance 0.330 which is more than 5% significance level and so we can say that the model is not ation in the value of BSE Bankex the level of significance 0.330 which is more is not ation in the value of BSE Bankex the level of significance 0.330 which is more is not ation in the value of BSE Bankex the level of significance 0.330 which is more fit and also the R ation in the value of BSE Bankex the level of significance 0.330 which is more fit and also the R ation in the value of BSE Bankex can be the level of significance 0.330 which is more fit and also the R can be the level of significance 0.330 which is more fit and also the R can be the level of significance 0.330 which is more fit and also the R can be the level of significance 0.330 which is more fit and also the R22
  37. 37. 37 Relation between Inflation and Bank Nifty So, In-order to find the relationship between Inflation and Bank Nifty and check reliability of this research. But before it is officially released, we need to conduct the following test- Test of correlation between Inflation and Bank Nifty The purpose of using correlation is because the relationship here is of quantitative in nature and so it an appropriate statistical tool for discovering and measuring the relationship and expressing it in a comprehensive manner. Test of Regression of Inflation on Bank Nifty The purpose of using regression is to analyze how much “change in Bank Nifty” is responsible for a given change in Inflation. The purpose of regression is to estimate the value of unknown variable from the known value of other variable. In our case the known variable is Inflation and unknown variable is Bank Nifty.
  38. 38. 38 Correlation between Inflation and Bank Nifty Descriptive Statistics Mean Std. Deviation N Inflation_Rate 8.4400 3.05773 10 Bank_Nifty 9679.3700 4248.23609 10 Correlations Inflation_Rate Bank_Nifty Inflation_Rate Pearson Correlation 1 .018 Sig. (2-tailed) .962 N 10 10 Bank_Nifty Pearson Correlation .018 1 Sig. (2-tailed) .962 N 10 10 Observations  The level of significance is 0.962 which is more than 5% and so we can say that the level of correlation between inflation and Bank Nifty is not significant and also the Pearson Correlation value of “0.018” shows that there is a very weak positive or no correlation between Inflation and Bank Nifty.  There is a very weak positive correlation between inflation rate and Bank Nifty.
  39. 39. 39 Regression of Inflation and Bank Nifty Variables Entered/Removeda Model Variables Entered Variables Removed Method 1 Inflation_Rateb . Enter a. Dependent Variable: Bank_Nifty b. All requested variables entered. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .018a .000 -.125 4505.24129 a. Predictors: (Constant), Inflation_Rate ANOVAa Model Sum of Squares Df Mean Square F Sig. 1 Regression 49996.196 1 49996.196 .002 .962b Residual 162377592.365 8 20297199.046 Total 162427588.561 9 a. Dependent Variable: Bank_Nifty b. Predictors: (Constant), Inflation_Rate Coefficientsa Model Unstandardized Coefficients Standardized Coefficients T Sig. B Std. Error Beta 1 (Constant) 9473.643 4383.152 2.161 .063 Inflation_Rate 24.375 491.132 .018 .050 .962 a. Dependent Variable: Bank_Nifty Observation Regression equation is as follows Bank Nifty=9473.643+24.375(Inflation Rate) where,
  40. 40. Inflation Rate is Independent Variable Bank Nifty And 9473.643 Inflation Rate is Independent Variable Bank Nifty And 9473.643  Inflation Rate is Independent Variable Bank Nifty And 9473.643 And now coming to the analysis par than 5% significance level and so we can say that the model is value of “0.00 by a given change in Inflation Rate. Inflation Rate is Independent Variable Bank Nifty And 9473.643 And now coming to the analysis par than 5% significance level and so we can say that the model is value of “0.00 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable And 9473.643 And now coming to the analysis par than 5% significance level and so we can say that the model is value of “0.00 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis par than 5% significance level and so we can say that the model is value of “0.00 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis par than 5% significance level and so we can say that the model is value of “0.00 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis par than 5% significance level and so we can say that the model is value of “0.00” sh by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis par than 5% significance level and so we can say that the model is ” shows that 0 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis par than 5% significance level and so we can say that the model is ows that 0 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable is the intercept And now coming to the analysis par than 5% significance level and so we can say that the model is ows that 0 by a given change in Inflation Rate. Inflation Rate is Independent Variable is dependent variable And now coming to the analysis par than 5% significance level and so we can say that the model is ows that 0 by a given change in Inflation Rate. Inflation Rate is Independent Variable And now coming to the analysis par than 5% significance level and so we can say that the model is ows that 0% var by a given change in Inflation Rate. And now coming to the analysis par than 5% significance level and so we can say that the model is % var by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. than 5% significance level and so we can say that the model is % variation in the value of Bank Nifty by a given change in Inflation Rate. 40 t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty 40 t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is ation in the value of Bank Nifty t, the level of significance 0. than 5% significance level and so we can say that the model is not ation in the value of Bank Nifty t, the level of significance 0.962 which is more not ation in the value of Bank Nifty 62 which is more fit and also the R ation in the value of Bank Nifty can be explained 62 which is more fit and also the R can be explained 62 which is more fit and also the R can be explained 62 which is more fit and also the R can be explained 62 which is more fit and also the R can be explained 62 which is more fit and also the R2 can be explained 2 can be explained
  41. 41. 41 Relation between Inflation and BSE FMCG So, In-order to find the relationship between Inflation and BSE FMCG and check reliability of this research. But before it is officially released, we need to conduct the following test. Test of correlation between Inflation and BSE FMCG The purpose of using correlation is because the relationship here is of quantitative in nature and so it an appropriate statistical tool for discovering and measuring the relationship and expressing it in a comprehensive manner. Test of Regression of Inflation on BSE FMCG The purpose of using regression is to analyze how much “change in BSE FMCG” is responsible for a given change in Inflation. The purpose of regression is to estimate the value of unknown variable from the known value of other variable. In our case the known variable is Inflation and unknown variable is BSE FMCG.
  42. 42. 42 Correlation of Inflation and BSE FMCG Descriptive Statistics Mean Std. Deviation N BSE_FMCG 2906.8767 2237.59334 15 Inflation_Rate 6.9160 3.33938 15 Correlations BSE_FMCG Inflation_Rate BSE_FMCG Pearson Correlation 1 .439 Sig. (2-tailed) .102 N 15 15 Inflation_Rate Pearson Correlation .439 1 Sig. (2-tailed) .102 N 15 15 Observations  The level of significance is 0.102 which is more than 5% and near to 10% so we can say that the level of correlation between inflation and BSE FMCG is moderately significant and also the Pearson Correlation value of “0.439” shows that there is a strong degree of positive correlation between Inflation and BSE FMCG.  There is a positive correlation between them, it signifies increase in inflation rate always give positive impact on BSE FMCG.
  43. 43. 43 Regression between inflation and BSE FMCG Variables Entered/Removeda Model Variables Entered Variables Removed Method 1 Inflation_Rateb . Enter a. Dependent Variable: BSE_FMCG b. All requested variables entered. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .439a .192 .130 2086.82921 a. Predictors: (Constant), Inflation_Rate ANOVAa Model Sum of Squares df Mean Square F Sig. 1 Regression 13482405.184 1 13482405.184 3.096 .102b Residual 56613129.937 13 4354856.149 Total 70095535.121 14 a. Dependent Variable: BSE_FMCG b. Predictors: (Constant), Inflation_Rate Coefficientsa Model Unstandardized Coefficients Standardized Coefficients T Sig. B Std. Error Beta 1 (Constant) 874.477 1274.573 .686 .505 Inflation_Rate 293.869 167.016 .439 1.760 .102 a. Dependent Variable: BSE_FMCG Observation Regression equation is as follows BSE FMCG=874.477+293.869(Inflation Rate) where, Inflation Rate is Independent Variable BSE FMCG is dependent variable
  44. 44. And 874.477And 874.477  And 874.477 And now coming to the analysis part, the level of significance 0. than 5% moderately value of BSE FMCG And 874.477 And now coming to the analysis part, the level of significance 0. than 5% moderately value of BSE FMCG And 874.477 is the intercept And now coming to the analysis part, the level of significance 0. than 5% moderately value of BSE FMCG is the intercept And now coming to the analysis part, the level of significance 0. than 5% but near to 10% moderately value of BSE FMCG is the intercept And now coming to the analysis part, the level of significance 0. but near to 10% moderately fi value of BSE FMCG is the intercept And now coming to the analysis part, the level of significance 0. but near to 10% fit and also the R value of BSE FMCG is the intercept And now coming to the analysis part, the level of significance 0. but near to 10% t and also the R value of BSE FMCG is the intercept And now coming to the analysis part, the level of significance 0. but near to 10% t and also the R value of BSE FMCG can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. but near to 10% t and also the R can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. but near to 10% significance level and so we can say that the model is t and also the R can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is t and also the R2 value of “0.192 can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is value of “0.192 can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is value of “0.192 can be explained by a given change in Inflation Rate. 44 And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is value of “0.192 can be explained by a given change in Inflation Rate. 44 And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is value of “0.192 can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is value of “0.192” shows that can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is ” shows that can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is ” shows that can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is ” shows that can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is ” shows that can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is ” shows that 19.2 can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0. significance level and so we can say that the model is 19.2% vari can be explained by a given change in Inflation Rate. And now coming to the analysis part, the level of significance 0.10 significance level and so we can say that the model is % vari can be explained by a given change in Inflation Rate. 102 which is significance level and so we can say that the model is % vari can be explained by a given change in Inflation Rate. which is significance level and so we can say that the model is % variation in the can be explained by a given change in Inflation Rate. which is significance level and so we can say that the model is ation in the can be explained by a given change in Inflation Rate. which is more significance level and so we can say that the model is ation in the more significance level and so we can say that the model is ation in the more ation in the
  45. 45. 45 Relation between Inflation and BSE Consumer Durables So, In-order to find the relationship between Inflation and BSE Consumer Durables and check reliability of this research. But before it is officially released, we need to conduct the following test- Test of correlation between Inflation and BSE Consumer Durables The purpose of using correlation is because the relationship here is of quantitative in nature and so it an appropriate statistical tool for discovering and measuring the relationship and expressing it in a comprehensive manner. Test of Regression of Inflation on BSE Consumer Durables The purpose of using regression is to analyze how much “change in BSE Consumer Durables” is responsible for a given change in Inflation. The purpose of regression is to estimate the value of unknown variable from the known value of other variable. In our case the known variable is Inflation and unknown variable is BSE Consumer Durables.
  46. 46. 46 Correlation between Inflation and BSE Consumer Durables Descriptive Statistics Mean Std. Deviation N Inflation_Rate 6.9160 3.33938 15 BSE_Consumer_Durables 3968.6273 2866.36055 15 Correlations Inflation_Rate BSE_Consumer _Durables Inflation_Rate Pearson Correlation 1 .400 Sig. (2-tailed) .140 N 15 15 BSE_Consumer_Durables Pearson Correlation .400 1 Sig. (2-tailed) .140 N 15 15 Observations  The level of significance is 0.140 which is more than 5% and so we can say that the level of correlation between inflation and BSE Consumer Durables is not significant and also the Pearson Correlation value of “0.400” shows that there is a moderate degree of positive correlation between Inflation and BSE Consumer Durables.  There is a positive correlation between them, it signifies increase in inflation rate always give positive impact on BSE Consumer Durables.
  47. 47. 47 Regression between Inflation and BSE Consumer Durables Variables Entered/Removeda Model Variables Entered Variables Removed Method 1 Inflation_Rateb . Enter a. Dependent Variable: BSE_Consumer_Durables b. All requested variables entered. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .400a .160 .095 2726.26034 a. Predictors: (Constant), Inflation_Rate ANOVAa Model Sum of Squares df Mean Square F Sig. 1 Regression 18401878.581 1 18401878.581 2.476 .140b Residual 96622440.766 13 7432495.444 Total 115024319.347 14 a. Dependent Variable: BSE_Consumer_Durables b. Predictors: (Constant), Inflation_Rate Coefficientsa Model Unstandardized Coefficients Standardized Coefficients T Sig. B Std. Error Beta 1 (Constant) 1594.213 1665.118 .957 .356 Inflation_Rate 343.322 218.192 .400 1.573 .140 a. Dependent Variable: BSE_Consumer_Durables Observation Regression equation is as follows BSE Consumer Durables= 1594.213+343.322(Inflation Rate) where, Inflation Rate is Independent Variable BSE Consumer Durables is dependent variable
  48. 48. And 1594.213And 1594.213  And 1594.213 And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. And 1594.213 And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. And 1594.213 And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. is the intercept And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16 can be explained by a given change in Inflation Rate. And now coming to the analysis part, than 5% significance level and so we can say that the model is value of “0.160” shows that 16% vari can be explained by a given change in Inflation Rate. And now coming to the analysis part, than 5% significance level and so we can say that the model is % vari can be explained by a given change in Inflation Rate. And now coming to the analysis part, than 5% significance level and so we can say that the model is % vari can be explained by a given change in Inflation Rate. 48 And now coming to the analysis part, the level of significance 0.140 than 5% significance level and so we can say that the model is % variation in the value of BSE Consumer Durables can be explained by a given change in Inflation Rate. 48 the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables can be explained by a given change in Inflation Rate. the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables can be explained by a given change in Inflation Rate. the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables can be explained by a given change in Inflation Rate. the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables can be explained by a given change in Inflation Rate. the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables can be explained by a given change in Inflation Rate. the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables the level of significance 0.140 than 5% significance level and so we can say that the model is ation in the value of BSE Consumer Durables the level of significance 0.140 than 5% significance level and so we can say that the model is not ation in the value of BSE Consumer Durables the level of significance 0.140 not ation in the value of BSE Consumer Durables the level of significance 0.140 which is fit and also the R ation in the value of BSE Consumer Durables which is fit and also the R ation in the value of BSE Consumer Durables which is fit and also the R ation in the value of BSE Consumer Durables which is more fit and also the R ation in the value of BSE Consumer Durables more fit and also the R ation in the value of BSE Consumer Durables more fit and also the R2 ation in the value of BSE Consumer Durables 2
  49. 49. 49 FINAL OBSERVATION AND CONCLUSION So, on the basis of the result of both the test i.e. Test of Correlation and Test of Regression conducted above, we could make out that- The correlation coefficient of Inflation with major stock indices is sometimes highly positively or sometimes very low positive. This show the degree of association between Inflation and Various Stock Market Indices is very uncertain and random and hence stock market return cannot be predicted. So, by using above statements we can safely conclude that stock market prices follow a random walk such that outperforming the stock market is not possible The regression coefficient of Inflation with major stock market indices is always positive. This shows that inflation can be used to explain the variation in the movement of the the stock market and hence Indian Stock Market can be affected by the change in the inflation rate in Indian economy. So, in the light of the all observation in all the above cases the results are: 1) In HYPTHESIS 1 Null hypothesis is rejected and Alternate hypothesis is accepted. So, it signifies that there is significant relationship between inflation and BSE Sensex, which means that increase or decrease in inflation will increase or decrease the Sensex. 2) In HYPOTHESIS 2 Null hypothesis is rejected and Alternate hypothesis is accepted So, it signifies that there is significant relationship between Inflation and CNX Nifty, which means that increase or decrease in Inflation Rate will increase or decrease Nifty BSE Sensex and CNX Nifty are the two major indices of Indian Stock Market which represent the behavior of overall Stock market in India. Inflation affect these two stock indices which means that inflation affect Indian Stock Market. So objective of this study has been satisfied by these results. But to get on concrete result we check 4 more indices BSE Bankex, Bank Nifty, BSE Consumer Durables and BSE FMCG 3) In HYPOTHESIS 3 Null hypothesis is accepted and Alternate hypothesis is rejected. So It signifies that there is no signification relationship between Inflation and BSE Bankex
  50. 50. 50 4) In HYPOTHESIS 4 Null hypothesis is accepted and Alternate hypothesis is rejected. So, it signifies that there is no significant relationship between Inflation and Bank Nifty. 5) In HYPOTHESIS 5 Null Hypothesis is accepted and alternate hypothesis is rejected which means that there is no significant relationship between Inflation and BSE FMCG. 6) In HYPOTHESIS 6 Null hypothesis is rejected and Alternate hypothesis is accepted. So it signifies that there is significant relationship but moderately significant relationship between Inflation and BSE Consumer Durables. The purpose of study was to find out the effectiveness, Impact and relationship of Inflation with the Indian Stock Market and to uncover the impact of inflation on Stock Market. There were many objectives behind conducting the study but the main objective was to find out the nature of relationship that Indian Stock Market has with Inflation because inflation has considerable influence on economy and Stock Market The project was begin with an extensive introduction about the inflation, stock market and how inflation affect stock market and economy. In this research the data were taken on yearly basis. The inflation data is taken on annual basis according to CPI (Consumer Price Index). The data of all the indices also taken on annual basis, the data of index is taken on closing price for all years. The final result goes in favor of the study that Inflation has relationship with Indian Stock Market because Inflation shows a positive effect on most of the indices. So, the end result is that Inflation always leave positive impact on Indian Stock Market

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