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IN THE NAME OF ALLAH THE MOSTPOWERFUL AND THE MOST BENEFICIAL
Research proposal
Presentation slides
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HOW THE STOCK EXCHANGE INDEXINCREASES AND DECREASES WHAT
ARE THE FACTORS RESPONSIBLE FOR
IT"
Proposal submitted on:
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INTRODUCTION OF THE TOPIC
Many kinds of factors affect the stock
market. Social unrest can cause the market to
drop, while a company discovering a new
source of renewable energy can cause stock
market prices to soar. Several economic
factors affect the stock market that everyinvestor should be aware of before getting
involved in market investing.
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VARIABLES TO STUDY:
Inflation and deflation:Inflation can have an adverse affect on the stock
market, according to the article titled "Forces that MoveStock Prices" as published on the financial websiteInvestopedia. Inflation is the rate at which the price ofgoods and services increases. It is the result of severalfactors, including a rise in the cost of manufacturing,transporting and selling goods.
Interest rates:Interest rates as established by the Federal ReserveBoard and individual banks can have an affect on thestock market, according to an informational pamphlettitled "What Drives Stock Prices" published by the New
York Stock Exchange. Higher interest rates mean thatmoney
Foreign markets :Economic trends in foreign markets can have an effecton the stock market in the United States, according tothe article titled "Riding the Economic Roller Coaster"published in "Inc." magazine. When the economies inforeign countries are down, American companies cannotsell as many goods overseas as they used to.
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OBJECTIVE OF THE STUDY
To understand the stock exchange practices
To provide knowledge to new investorsabout the market
How the company performance increase itsshare worth on the stock exchange index
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IMPORTANCE OF THE STUDY
The study has importance for the
students doing their specialization in
the field of finance as well as for the
new investors who are willing to invest
in the stock exchange. The study is
important to know the market forces
and factors responsible for the change
in stock index so that the investor may
be aware of the forces which can bring
the share price up or down
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LITERATURE REVIEWInflation or recession - which do stock investors fear the most?
Since most well-allocated stock investors are also bond investors,
the question becomes even more important.
Rising Interest Rates
The most common treatment for inflation is for the Fed to raise
interest rates. Rising interest rates play havoc with bonds since
new bonds pay more interest than older bonds. To compensatefor the difference in interest rates, bond prices fall.
Interest rate increase slows down stock exchange
A surprise interest rate cut of one percentage point can send
stock prices up by seven to nine percent, says Bjorn land,
professor of economics at BI Norwegian School of Management.
This is a stronger link than in other similar analyses of data fromthe US.
The relationship between trading volume and volatility is of
some importance. For example, transaction taxes are often
proposed as a mechanism for reducing the eects of speculation
on asset prices (Summers and Summers(1989), Niehans(1994)).
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RESEARCH METHODOLOGY/DESIGN
Secondary data will be analyzed to understand
the history of stock exchange. Investment booksand internet material will be analyzed. The focus
of study will be to analyze the stock market of
Pakistan specially Karachi Stock Exchange
KSE100 index as benchmark. This research is
partly qualitative and partly quantitative. The
data of different industries companies will be
analyzed in accordance with their share values
and the factors responsible for it and the effect
of those factors on the performance of stockexchange. The history of the companies will also
be taken into consideration. It will also be
analyzed that how the companies business
practices effect their share value and their share
to the stock market.
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CONTENTS OF THE RESEARCH
Introduction of the stock exchange
Research methodology
Literature review
Findings
Conclusion and recommendations
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SCHEDULE OF THE WORK
As it is mention in the research methodology the
data will be collected through secondary sources
(books, internet, and research articles literature
review) initially I will emphasize on the current
mechanism of the stock exchange and analyzeits current performance and position. I will
review the literature available about stock
exchange Then I will analyze the finding and on
the basis of findings conclusion and
recommendation will be made.
It is estimated that it will take five to six weeks
to complete this project
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REFERENCES
"Inc." Magazine: Riding the Economic Roller Coaster
New York Stock Exchange: What Drives Stock Prices
Investopedia: Forces the Move Stock Prices
PBS Online News hour: Economic Downturn
http://lanles.williams.edu/ tdvorak
Kim and Wei(2000) and Choe et al(1999)
Stieglitzs (1998) article in the Financial Times
and Krugmans(1997) in Fortune.
(Tobin(1984), Eichengreen and Wyplosz(1996)).Tsar and Werner (1995)).
Summers and Summers(1989), Niehans(1994)).
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PRESENTED BY:
Mohammad Irfan Malik
MBA III Section A
Roll Number 51
Federal Urdu University
Karachi