GROWTH IN STOCK MARKET

DOES NOT INDICATE

GROWTH OF AN ECONOMY

MADE BY:-
SONAM SETH
SONAL BAJAJ
AKANSHA DHINGRA
PRACHI ARORA
FF3
BBb
STOCK MARKET
 What is a stock market?
 A stock market, or equity market, is a private or
public market for the trading of company stock and
derivatives at an agreed price; these are securities
listed on a stock exchange as well as those only
traded privately.
 The size of the world stock market is estimated at
about $36.6 trillion US at the beginning of October
2008.
 The total world derivatives market has been
estimated at about $791 trillion face or nominal
value, 11 times the size of the entire world economy.
 The stocks are listed and traded on stock exchanges
which are entities a corporation or mutual
organization specialized in the business of bringing
buyers and sellers of the organizations to a listing of
stocks and securities together.
 Functions of Stock Market
 Connecting those who seek money with those who
can provide it.
 Create an auction mechanism in which prices can
be decided for investments.
 Distributing the future risk of investments across
many millions of individuals.
 Providing the claim tickets upon which future
wealth can be staked.
 Connecting financial institutions together to create
money.
ECONOMIC GROWTH
 What is Economic Growth
 Economic growth is the increase in the amount of
the goods and services produced by an economy
over time.
 It is conventionally measured as the percent rate of
increase in real gross domestic product, or real
GDP.
 Growth is usually calculated in real terms, i.e.
inflation-adjusted terms, in order to net out the
effect of inflation on the price of the goods and
services produced.
 In economics, "economic growth" or "economic
growth theory" typically refers to growth of
potential output, i.e., production at "full
employment," which is caused by growth in
aggregate demand or observed output.
 Economic growth is generally distinguished from
development economics. The former is primarily
the study of how countries can advance their
economies. The latter is the study of the economic
aspects of the development process in low-income
countries.
ECONOMIC GROWTH
INDICATORS
 Economic Growth Indicators
 An economic indicator (or business indicator) is a
statistic about the economy. Economic indicators allow
analysis of economic performance and predictions of
future performance.
 Economic indicators include various indices, earnings
reports, and economic summaries, such as
unemployment, housing starts, Consumer Price Index
(a measure for inflation), industrial production,
bankruptcies, Gross Domestic Product, broadband
internet penetration, retail sales, stock market prices,
and money supply changes
1) GDP (Gross Domestic Product):
 It is the monetary value of all the finished goods and services produced within a
country's borders in a specific time period, though GDP is usually calculated on an
annual basis. It includes all of private and public consumption, government outlays,
investments and exports less imports that occur within a defined territory.
GDP = C + G + I + NX
where:
"C" is equal to all private consumption, or consumer spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses spending on capital
"NX" is the nation's total net exports, calculated as total exports minus total imports.
(NX = Exports - Imports)
 GDP is commonly used as an indicator of the economic health of a country, as well
as to gauge a country's standard of living.
 2) Consumer Price Index:

It is a measure that examines the weighted average of prices

of a basket of consumer goods and services, such as
transportation, food and medical care. The CPI is calculated
by taking price changes for each item in the predetermined
basket of goods and averaging them; the goods are weighted
according to their importance. Changes in CPI are used to
assess price changes associated with the cost of living.
Sometimes referred to as "headline inflation".
 
 3) Industrial Production Index:
It is an economic indicator that is released
monthly by the Federal Reserve Board. The indicator measures
the amount of output from the manufacturing, mining, electric
and gas industries.
 4) Retail Price Index:

An index that gathers the prices of several retail goods in outlets across the
United States in order to give an indication of the rate of inflation .

 5) Stock Market:
A stock market, or equity market, is a private or public market for the
trading of company stock and derivatives at an agreed price; these are securities
listed on a stock exchange as well as those only traded privately.

 6) Bankruptcy:
Bankruptcy is a legally declared inability or impairment of ability of an
individual or organization to pay its creditors.
7) Unemployment :
Unemployment occurs when a person is available to work and currently
seeking work, but the person is without work . The prevalence of
unemployment is usually measured using the unemployment rate,
which is defined as the percentage of those in the labor force who are
unemployed.

8) Interest Rate:

 Interest rate prevalent in a country gives an approximate indication of

the expected/required rate of return by that country in the coming near
future.
Reasons for Economic Growth
Fall
 Bad lending policies resulting in low interest rates, high
liquidity and low volatility, which led financial institutions
to underestimate risks, a breakdown of credit and risk
management practices in many financial institutions, and
shortcomings in financial regulation and supervision.

 This environment both fueled a U.S. housing boom and

encouraged banks and other institutions to take on
excessive leverage to generate high returns.

 Financial institutions weakened their lending standards and

took on excessive risk.
Analysis of economic indicators
for INDIA
 INDIA
Stock market index values over the past few years
GDP growth rate for the past few years
 Other Key Indicators (Jan’09)

Interest Rate 5%

Inflation 3.5%

Unemployment 7%

Industrial Production -0.5

THANK
YOU