A Report on Interrelationship Between Foreign Exchange Rates, Equity Market and Commodty Markets in India

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A REPORT
ON INTERRELATIONSHIP BETWEEN FOREIGN EXCHANGE RATES, EQUITY MARKET AND
COMMODTY MARKETS IN INDIA

By Aniketh Jayanthi Enrollment Number: 11BSPHH010110 MBA: 2011-2013

Faculty Guide Company Guide Dr. Jadhav Aditya Mohan, Mr.Praveen Kumar Nuka Faculty: IBS Hyderabad , IFHE University Assistant Vice president , Nostro Forex
Internship Certificate

To whomsoever it may concern

This is to certify that Mr. Aniketh Jayanthi enrollment number 11BSPHH010110 student of IBS Hyderabad has undergone 12 weeks of summer internship in our company from 12th March to 30th May 2012 under the guidance of Mr. Praveen Kumar Nuka, AVP – Research and submitted a project titled “Interrelationship between foreign exchange rates, Equity markets and Commodity markets in India”.

During this period we found his conduct satisfactory. We wish him all the best for his future endeavors.

ACKNOLWEDGEMENTS

I would like to express my gratitude to a couple of people without whose help the project would not have materialized. First and foremost I would like to thank my company guide and Vice President of Nostro Financial Services, Mr.Praveen Kumar Nuka and Mr. Pavan Reddy, director of Nostro financial services for their continuous guidance, advice and assistance in carrying out the necessary research required to complete this project. They were very helpful in giving good insights into the nature of the financial services industry and the Indian forex markets. Sessions with them have helped me a great deal in identifying the topic for this project. I would like to thank Mr. Jadhav Aditya Mohan my faculty guide whose advice has helped me a great deal in carrying out the project. He provided me with the required books for reference. His suggestions were highly valuable. I would finally like to thank my fellow interns who have given valuable suggestions with respect to the internship related work and project related work.

INDEX
Serial No| Contents| Page numbers|
1.| Introduction| 5|
2.| Objectives| 5|
3.| Methodology| 5|
4.| Limitations| 5|
5.| Financial Industry analysis| 6|
6.| Company analysis| 15|
7.| Correlations| 17|
8.| Regressions| 22|
9.| Granger’s causality | 24|
10.| Conclusion| 26|
11.| Learning’s from SIP| 27|
12.| References| 28|

Introduction:
People investing in various markets of the world i.e. commodities, stocks, currencies etc on a regular basis often see certain patterns with respect to the directions in which they move. It is very apparent that these markets are highly interrelated and one can often predict the movement of one particular market based on the movements of other markets and hence take their investment decisions. There are enough economic explanations to substantiate for...
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