MBA PROJECT REPORT ON ANOMALY IMPACT ON INDIAN STOCK MARKET OF FOOTWEAR INDUSTRY
Anomaly Impact on Indian Stock Market of Footwear Industry Project Report
- Introduction of Anomaly
- Objective of the Study
- Research Methodology
- Analysis of Data
- Security Market
The securities were classified into ownership securities such as equity shares and preference shares and creditor ship securities such as debentures and bonds. Recently companies to raise funds for their projects are issuing a number of new securities with innovative features. Convertible Debentures, Deep Discount Bonds, Zero coupon Bonds, Flexi Bonds, Floating Rate Bonds, Global Depository Receipts, Euro-currency Bonds, etc. are some of these new securities.
There are three alternative approaches to security analysis :-
- Fundamental analysis
- Technical analysis
- Efficient market hypothesis (EMH )
Fundamental Analysis : Fundamental factors affecting the company such as the EPS of the company, the dividend pay out ratio, the competition faced by the company , the market share, quality of management, etc. A fundamental analyst studies not only the fundamental factors affecting the industry to which the company belongs as also the economy fundamentals.
The fundamental analyst works out the true worth or intrinsic value of a security based on its fundamentals; then compares this intrinsic value with the current market price. If the current market price is higher than the intrinsic value, the share said to be overpriced and vice-versa
Technical Analysis : The current market price is compared with the future predicted price to determine the extent of mispricing. Technical analysis is an approach, which concentrates on price movements and ignores the fundamentals of the shares.
Efficient Market Hypothesis : Efficient market hypothesis, it is possible for an investor to earn normal returns by randomly choosing securities of given risk level.
Anomaly Introduction : Empirical evidences from research in the past few decades and stock market realities suggest that efficient market hypothesis does not fully explain some important features of stock price behavior, termed as, anomalies. These Anomalies result cross sectional differences in stock returns over time and category. The stock market anomalies contradict the efficient market hypothesis the research for anomalies is effectively the research for patterns in stock prices that can be exploited to outperform a buy and hold strategy.
Anomalies: A number of anomalies have been documented till date, namely day-of-the –week effect January effect, monthly effect, tax year effect, price earnings ratio anomaly and size anomaly, to name a few.
Size Anomaly : The size anomaly or the small firm effect states that firms with smaller market capitalization earn higher risk adjusted returns than those with larger market capitalization. The resent research makes an attempt to find out whether the returns generated by small stocks are higher as compared to those of large stocks in the Indian stock market.
Monday Effect : Monday effect, the return of the Monday has been compared with the average return of rest of the days.
Friday Effect : Similarly, in Friday effect, the return of the Friday has been compared with the mean return of the rest of the days.
Semi-Month Effect : In the case of the semi-monthly effect, the mean return of the first half month, i.e. return on the 30th and 31st calendar days of the preceding month and 1 to 14th calendars days of the current month have been compared with the average return of the rest of the days.
Objectives of the Project Report :
- To study the impact of irregularity on share market of the footwear industry.
- The relationship between footwear Industry and cyclical variation in stock market.
- To study the periodic (Monday, Friday & semi-monthly) effect.
- To study the change in financial condition of business.
This research study carried out is descriptive & exploratory in nature. Descriptive research includes fact finding and enquiries of different kinds.
Exploratory research studies are those whose main purpose is that of formulating a problem for more precise investigation or of developing the working hypotheses for an operational point of view
The daily closing prices of the footwear industry data of four companies that are Liberty, Bata, Bhartiya International Ltd. and Superhouse Ltd. Have been collected from the websites of Bombay Stock Exchange (BSE). National Stock Exchange (NSE) And see the anomalies impact on the Indian stock market. By the help of three methods (Semi-monthly, Monday Effect, Friday Effect) I have analyzed the anomaly effect on Indian stock market
Analysis of Friday Effect
The Friday is the last trading day of the week and most of the result of the companies are made public on this day, it brings enthusim in the market resulting in the bulk buying by the investors. To analyze the Friday effect, the return of the Friday has been compared with the return of the rest of day. All the above listed Fact is based on this table
The returns on Monday is quite different from return of other days and is usually negative. The most satisfactory explanation given for the negative return is that most of the unfavorable news appears on weekends. This unfavorable news disappoints the market resulting in a distress selling on the followings Monday. All the above listed Fact is based on this table
For the empirical test of above, a comparison of the average return of first half month (taken as return on 30th , 31st calendar days of preceding month and 1 to 14 calendar days of current month) with the average return of rest of the days has been made. All the above listed Fact is based on this table
|Statistics||First Half||Second Half|
This study has been shown that the anomalies exist in India
In case of the semi-monthly effect was most prevalent in Indian stock market. Friday effect was found in existence. And the Monday effect is quite existence. The above indicate that the Indian stock market is not fully efficient till now.
It would improve the performance of portfolios maintained by both individuals and institutional investors
Project Description :
Title : Anomaly Impact on Indian Stock Market of Footwear Industry Project Report- 60 Pages
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