CRESCENT BUSINESS SCHOOL

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

REPORT SUBMITTED ON

EMPIRICAL RELATIONSHIP BETWEEN MUTUAL FUND AND NIFTY

SUBMITTED BY,
K.Thamin
basha,
0929166.
 Mutual fund And nifty

Introduction:

The present study aims to examine return, risk, and inflation, which in the literature are
considered to be the major determinants of FII. The proposed relationship among the factors is
that inflation and risk in the domestic country. The given inflation and FII data are on 1992 to
200.the determinants of FII in the Indian context. We attempt to analyze the effect of FII on
Inflation.

Mutual fund:

A mutual fund is a professionally managed type of collective investment scheme that pools
money from many investors and invests typically in investment securities (stocks, bonds, short-
term money market instruments, other mutual funds, other securities, and/or commodities such
as precious metals).[1] The mutual fund will have a fund manager that trades (buys and sells) the
fund's investments in accordance with the fund's investment objective. In the U.S., a fund
registered with the Securities and Exchange Commission (SEC) under both SEC and Internal
Revenue Service (IRS) rules must distribute nearly all of its net income and net realized gains
from the sale of securities (if any) to its investors at least annually. Most funds are overseen by a
board of directors or trustees (if the U.S. fund is organized as a trust as they commonly are)
which is charged with ensuring the fund is managed appropriately by its investment adviser and
other service organizations and vendors, all in the best interests of the fund's investors.

Nifty:

The S&P CNX Nifty is the headline index on the National Stock Exchange of India Ltd.(NSE).
The S&P CNX Nifty tracks the behavior of a portfolio of blue chip companies, the largest and
most liquid Indian securities. It includes 50 of the approximately 935 companies listed on the
NSE, captures approximately 60% of its equity market capitalization and is a true reflection of
the Indian stock market. The S&P CNX Nifty covers 22 sectors of the Indian economy and
offers investment managers exposure to the Indian market in one efficient portfolio. The index
has been trading since April 1996 and is well suited for benchmarking, index funds and
indexbased derivatives.

The S&P CNX Nifty is unique in this respect. Selection of the index set is based on four
CRITERIA:
• Liquidity (Impact Cost)
• Market Capitalization
• Floating Stock
• Others
Liquidity. For inclusion in the index, the security should have traded at an average impact cost
of 0.75% or less during the last six months, for 90% of the observations. Impact cost is the cost
of executing a transaction in a security in proportion to the weight of its market capitalization
against the index market capitalization, at any point in time. This is the percentage mark up
suffered while buying/selling the desired quantity of a security compared to its ideal price --
(best buy + best sell)/2.
Market Capitalization. Companies eligible for inclusion in the S&P CNX Nifty must have a
six-month average market capitalization of Rs 5 billion or more, during the latest six months.
Shares Outstanding. Companies eligible for inclusion in the S&P CNX Nifty should have at
least 12% of its stock available to investors (float). For this purpose, float shall mean stocks
which are not held by the promoters and associated entities (where identifiable) of such
companies.
Data and method:

This empirical study is to test whether there is a positive relation between the mutual fund and
sensex

For this purpose, this study employs the simple regression model

Y=a+b(x)

Applying this formula to the test

Y=nifty

X=mutual fund

nifty= a+b (mutualfund).

 Conclusion:

By analyzing the data of 2008 and 2009 we found that R square= 69.9% T

By analysing the data of 2008 and 2009 ,

we found that R square= 69.9%. This means that only
69.9% regressor xi.
of the variation of yi around ybar is explained by the regressor xi. Therefore, there is presence of correlation between nift
MF and IIP. y
Though the Co- efficient of 'x' is Positve, MF affects the IIP positively but nifty positively so impact on the
its impact on economic growth is negligible. economy is negligible

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