This is the presentation for "The affect of current (2011) downturn in US and European countries on Indian Stock market."

1. Impact of happenings in US and Europe on Indian Stock Market Presented By PiyushChawala SukantPrusty Anurag Nath SatishNaik Manjushaa Hemanth Kumar

3. Housing Slump

4. Subprime Mortgage Crisis

5. Financial Innovation

6. Impacts

7. Bank Failures

8. Home Foreclosures

9. Federal Reserve Steps in

10. Changes in the Market

11. Events

12. Bear Stearns Bailout

13. Northern Rock/Bank of England

14. Countrywide

15. Solutions

16. The Federal Reserve has tried to take corrective measures

17. Regulation

19. People bought and built more and more

20. Thought it was a good investment

21. Thought that home values would not decrease

23. Housing price correction

24. Negative equity

26. Today almost no reserve is required due to new rules that the public doesn’t even know about

27. Banks are able to issue more loans when they do not have to keep a reserve on hand

28. When they run out of qualified candidates, they reduce the requirements, which leads to subprime mortgagesThese loans slowly inflate the system, and create wealth that is not “real”

31. Adjustable Rate Mortgages

32. Investment Vehicles that went wrong

33. Mortgage Backed Securities (MBS)

34. CDOs – Collateralized debt obligations

37. To meet deficit he borrows money in forms bonds instruments or even foreign government.

38. Total loans and interest adds up $14 trillion

39. Pays money of interest by loans. reduce spending or raise taxes

41. Overseas manufacturing recession

42. Lead to stagflation

45. It benefited countries such as Portugal, Italy, Ireland, Greece and Spain (together now known as the PIIGS)

46. Before introduction of Euro, they borrowed money at interest rates much higher than the rates at which a country like Germany borrowed.

48. Inflation in the PIIGS countries was higher than the rate of interest.

50. The debt of Greece, currently amounts to around 160 per cent of it’s GDP. So, other than the citizens, the governments also started to borrow.

51. A job which now pays 55,000 euros in Germany, pays 70,000 euros in Greece, even with the fact that Germany is a more productive nation.

53. To put things in perspective, Spain now has as many unsold homes as the United States, even though the US is six times bigger.

54. Most of these new homes were financed with capital from abroad.

56. Germany  ECB rescue fund. In case of Greece, a lot of German and French banks which have lent money will be in trouble if Greece defaults

58. So the citizens money  gold or will continue using the euro.

59. People at the same time demanding their money back. Will lead to a lot of banks collapsing.

61. ECB acceptance of Greek bonds as collateral

62. Despite high debt & deficits.

63. Investors charged near-zero spreads

64. Failure to send Greece to the IMF in early 2010.

67. Falling household and business demand in the slump-hit economy hits the exports/imports of its trading partners.

68. The share of exports to EU (excluding UK) and imports from EU has fallen over the years.

74. We have a large number of global financial firms which operate across the world and in case of a decline in one major market, there is a pull out from other markets as well.FIIs pulled out nearly Rs 2,000 crore from the stock and debt market in September 2011, the second consecutive month in which overseas capital outflows were greater than inflows.

76. ECBs declined in the first stage of the crisis as well.

78. It could be that NRI preferred to invest higher proceeds in India seeing crisis in their own economies. In case of remittances, we see a decline in crisis period Oct 08 – Mar 09 but see improvements as crisis eases.

79. There were huge concerns of remittances collapsing because of the crisis. In some countries they did collapse worsening poverty status.

81. So even if an economy’s macroeconomic conditions and outlook look favorable, the decline in confidence can disrupt the economic conditions.

82. Decline in confidence is also one of the reasons for decline in business investments which led to decline in overall Indian GDP growth.

83. Credit growth also declined because of decline in business investments. RBI Governor MrSubbarao has stressed on this channel on numerous occasions

85. The business and trade cycle of India has started to follow the cycles of advanced economies. RBI Executive Director Deepak Mohanty in his speech explained the increasing correlation: With increased global integration, the Indian economy now is subject to greater influence of global business cycles. The correlation between the cyclical component of the index of industrial production (IIP) of the advanced economies and India has risen to 0.50 during the period 1991-2009 from 0.20 in during the period 1971-1990

87. In recent years, some Indian conglomerates initiated or increased their stakes in American and European companies.

88. There could be decline of exports of goods and services to Europe and through the reduction of revenues or loss incurred from European-related operations of these companies.

90. Analysts fear the crisis in the euro zone would impact equity markets worldwide, including India, and companies may be forced to defer fundraising plans.

91. Meanwhile, a weaker euro is worrying exporters.

94. RBI governor signals halt in interest rate hikes after 6 continuous rates hikes reaching to 6.25%

95. India’s growth story intact at +8%

98. The Dow tumbled 512 points -- its ninth deepest point drop ever -- as fear about the global economy spooked investors.

99. In India, the stock market plunged deep into red on worries over a possible recession in the US with the benchmark Sensex crashing by over 700 points at one time to slip below 17,000 level.

102. Standard & Poor's downgrade of the US sovereign debt rating triggered a flight from risky assets in global stock markets.

104. 29 AUGUST RISE US Fed refrained from announcing another stimulus Investors were relieved that America’s central bank has stopped short of launching a third bond buying programme, known as Quantitative Easing (QE) It could have increased the flow of money into commodities and emerging markets, including India, stoking inflation. The RBI on Monday unveiled the much awaited draft norms on new banking licences that will allow corporates to set up banks. Shares of non-banking finance companies jumped after the announcement

105. 23 SEPTEMBERInvestors fret as stocks heads for weak end, Sensex sheds 199 points in worsening global crisis, Rs breaches 50 as RBI refuses to intervene Sensex falls by 199 points or 1.2%

107. Rupee reached to a 28 month low of 49.90/$

108. Corporates and Bank want RBI to intervene in the Forex market to stop the free fall of Rupee.

109. RBI deputy governor SubirGokarn told “very narrow objective of smoothening what might be a very volatile market situation, nothing beyond that”

111. 30th September 2011 Deviation

112. The impact of Europe on Indian Stock Market1stMarch 2011 Sensex rose 623 points , biggest gain in 22 months, From 17823.4 to 18446.5

113. The impact of Europe on Indian Stock Market1stMarch 2011

115. The impact of Europe on Indian Stock Market18thAugust 2011 Sensex fell by 371 points to 16,469.79, its lowest level in nearly 15 months.

116. The impact of Europe on Indian Stock Market18thAugust 2011 The reason for this drop European markets fell sharply amid deepening fears of major global economies, including the US dipping into recession again Renewed Eurozone debt crisis also dragged the index down

117. The impact of Europe on Indian Stock Market24thJune 2011 SENSEX ended the day 513.19 points higher at 18,240.68

119. Its prime minister pledged to push radical economic reforms through parliament.

122. Greece's prime minister cancelled a US trip to chair an emergency cabinet meeting at home

123. German Chancellor Angela Merkel suffered a regional election loss

126. Greece expected to clinch the release of a 8 billion euro ($11 billion) aid that it needs to avoid running out of cash next month.

127. S&P downgraded its rating on Italy by one notch to A/A-1 but European Central Bank buying Italian debt also aided the sentiment.

129. The impact of Europe on Indian Stock Market22ndSept 2011

131. IMF warned that Europe's sovereign debt crisis risks tearing a giant hole in banks' capital.

132. In Europe, questions about the ability of the euro zone to manage some of its countries' heavy debt remain, stock losses amounted to a fall of over 21 percent for the year-to-date.

133. The slide was further aggravated by the weakness of the Indian rupee.

136. The parliaments of Finland and Germany were set to vote on the approval to extend the powers of the euro zone rescue fund considered critical to bailing out Europe’s weak economies.

137. The new plan was to leverage the €440-billion rescue fund, known as the European Financial Stability Facility (EFSF), to help struggling European nations avert debt defaults

139. Movement of FTSE and SENSEX

141. Cautious approach towards permitting foreign investments in Indian business sectors

142. Bureaucratic hurdles & regulatory constraints

143. Indian companies have major outsourcing deals with American & European companies.

146. Imposition of prudential limits on Banks, such as inter-bank liabilities, borrowing and lending, money market, assets

147. Implementation of Basel II.

148. Banks credit quality remained high.