IMPACT ON STOCK

MARKET

PREPARED BY: TAPAN ACHE VAZIM MAHAMOOD.P RAKESH.K P URVISH NAGPAL SHIJIN.P V RIJAPUL ISLAM VISHWAM PRITHVI

ABOUT STOCK MARKET

Stock market is also called equity market.

A stock market is a public entity for the trading of company  stock and derivatives at an agreed price.

A stock market is a platform to buy and sell stocks.

The stock quotes are decided by demand and supply.

Cond….It represents the secondary market where

existing securities are traded.

Stock exchange provides an organised mechanism for purchase and sale of existing securities.

INTEREST RATE Interest is nothing more than the cost

someone pays for the use of someone else's money.

The interest rate that applies to investors is the U.S. Federal Reserve's federal funds rate. This is the cost that banks are charged for borrowing money from Federal Reserve banks.

Basically, by increasing the federal funds rate, the Fed attempts to lower the supply of money by making it more expensive to obtain.

EFFECTS OF AN INCREASE When the Fed increases the federal

funds rate, it does not have an immediate impact on the stock market.

Businesses are also indirectly affected by an increase in the federal funds rate as a result of the actions of individual consumers.

Businesses are affected in a more direct way as well.

STOCK PRICE EFFECTSChanges in the federal funds rate affect the

behavior of consumers and business, but the stock market is also affected.

INVESTMENT EFFECTS For many investors, a declining market or

stock price is not a desirable outcome.

Investors wish to see their invested money increase in value.

investing in stocks can be viewed as too risky compared to other investments.

Satyam’s shares plunged 77.69% in a single trading session on 7 January 2009, as chairman Ramalinga Raju resigned after announcing during trading hours that the company’s accounts were inflated.

Satyam stock is being removed from its S&P CNX Nifty 50-share index from Jan 12

Satyam will also be excluded from the CNX 100 index, CNX 500 index and the CNX IT index

SATYAM SCANDAL

Contd…

Satyam has lost more than 10000 Crore rupee in a single day trading. $8 Crore changed hands at BSE and 33 Crore changed hands at NSE.

Satyam’s American Depository Receipts, listed on the New York Stock Exchange, witness a sharp plunge when the American markets open trading in said stock has been suspended to.

Contd….Fund Houses sold shares in the open market

- Swiss Finance Corp Mauritius Ltd: Sold 7786759 shares at Rs.74.61- Aberdeen International India Opportunities Mauritius Ltd: Sold 9830811 shares of the company at Rs.43.41- Aberdeen Asset Managers Ltd Aberdeen Global Asia Pacific fund: Sold 4179064 shares at Rs.43.41

15 Indian stocks on US bourses bore the brunt of the negative market sentiment and witnessed a fall of $1.94 billion in their combined market capitalization.

Contd….

Bombay's main benchmark index tumbled 7.3 percent and the Indian rupee fell sharply.

Realty and infrastructure shares tumbled on market perception that a number of firms in these sectors do not strictly follow good corporate governance practices.

Satyam’s largest shareholder, Aberdeen AMC, dumped the tainted software entity’s shares.

Contd…SEBI announced the certification of

corporate results from the December 2008 quarter by auditors would be subject to peer review to assure investors that the fraud at Satyam was unique.

India’s biggest engineering and construction firm by revenue L&T slumped 12.7%to Rs 717.60 on fears that it is likely to register huge losses on its exposure to Satyam Computer taken just before the accounting fraud.