ANALYSIS OF THE GLOBAL CAPITAL MARKET

With the growth in the markets, more people are looking at securities as an option of investment. Technology growth in the last decade has been fantastic. With faster modes of information being shared, it means that it is going to be more and more difficult for people playing in the markets to have access to that unique piece of information that will enable them to earn extraordinary returns. In the light of increasing interest of investors in stock market, this project seeks to get thorough knowledge of the stock market and the strategies to be applied while trading in the stock market.

This study is related to the analysis of the capital market of United Kingdom.The analysis is done by studying the fundamental theories of technical analysis and their application with the applicability and efficiency of various technical tools and metastock software.

Stock market analysis is a scientific way of gathering and analyzing information to determine market conditions and identify stocks to buy or sell at a given time.

It is basically the understanding of the stock market and the effect of macroeconomic variables on this market and making decisions regarding when to invest in the market and when to disinvest .So it is crucial to study the trends in the market over years and how the different variables such as political,social etc.affected the market at a particular point of time and then analyse the behavior of the market.

So in the first phase of the study historical daily price data for the banks in the bankex sector on the sensex was collected.The data collected was for 5 years.Then standard deviation for the percentage change of closing prices was calculated.These findings can be used while taking investment decisions because we can see the volatility in the particular month.

After this analysis is done using moving averages as a tool.For that purpose the chart of daily stock prices of ICICI Bank along with its different moving averages is plotted using metastock software.Then the buy and sell signals are identified and the data is analyzed to identify the trends in the market.This analysis helps to identify the entry and exit points from the market.

In the second phase of the project the effect of historical events on the sensex for the year 1996 was studied.I came to know how the market moves according to investors expectations,news etc.For example,in January 1996, due to hawala scandal the market become bearish.

In the last phase of the project analysis of the capital market of United Kingdom i.e.FTSE was done. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange, begun on 3 January 1984.

Standard deviation of change in closing prices for FTSE100 index was from the year 1995 was calculated.These values can be used to analyze the volatility and riskiness in particular month or year.For example,in the 2001 the values of standard deviation are in the range of 1.1-1.8,while in the month of September the value went upto 2.83.It means that month was very much volatile and risky because of the terrorist attack on the WTO.

Buy and sell set up were found out using moving averages.Then the profits for each moving averages were calculated if trading were done using this strategy.

Again the data of historical events happened in the UK for the past 12 years was collected.The effect of different events on the FTSE100 index was studied.It showed many times market moves on expectations and news.

This analysis gives an idea about the trends in the market movement as well as trading strategies to be employed. In addition to this, the project gives the various guidelines to be followed while trading.