"various macro economic factors, such as developments or changes in marketstructures within an economy. So the period of time in which the interactionbetween London stock exchange and other stock markets observed is critical to theend result. This observation is a key platform on which the current study illustratesthe interaction and co movement between stock prices of the London stockexchange and stock price of different organisation in UK. Simultaneously it isprudent to estimate that in developed country?s economy stock market shows highdegree of co-movement during the period of the study. Reinforcing this view is thefact that the Lon don stock market lacks the depth and liquidity of other largermarkets in Asia, Europe and North America. Hence, rises in stock prices here wouldnot normally be expected to result in an appreciation in the value of the Indianrupee as the portfolio balance model postulates, and as is observed by the trends inthese variables during the period mentioned in the study.1.6 Structure of the research workAs highlighted by Baillie et.al (2009, p 296), “the research is carried out on thebasis of definite structure which underlines an overview of all the chapters.” Presentresearch has demonstrated 5 chapters which are included inside the presentresearch are described below.8 Chapter 1 Introduction.Chapter 2Literature review ChangeAmongst those affectedChapter 3 Research Methodology. Data analysis and findings change.Chapter 4Conclusion and RecommendationChapter 5Fig 2: Structure of researchSource: Frynas, J.G., 2007, p 18Chapter 1- The first chapter provides a formal introduction to the topic and subjectof the research. It gives the background as well as reason for choosing theparticular topic. The chapter also discusses the goal of the study and objectivesrequired to fulfill that goal (Bakshi et.al., 2007). A brief methodology depicting theknow-how of the third chapter and the overall structure of the study have also beenprovided. In the end the ethical issues concerned with carrying out the study andoverview of the present position of the stock market is also discussed.Chapter 2- The second chapter is concerned with literature review of the research,that is, it deals with theories, frameworks and models relevant to the research9 subject. As analysed by Bollerslev, (2006, p 307-327), “it mainly consists oftheoretical information taken from academic journals and websites that are relatedto the topic.” Theories have been provided regarding elements of stock marketmovement pattern and its variation across different time frame since last 6 years.Theoretical evidence has also been provided regarding impact of organisationalstock price and their variability on the overall movement of the (London stockexchange) Chapter 3- The third chapter demonstrates methodological partof the study,whichhelps the analyst to select a combination of appropriate methods from a poolof strategies, designs, philosophies and approaches (Bahra, 2007).This alsodescribes about different sources of data from which relevant information can becollected and also different ways of analysing the collected data. The chapterdescribes about the limitations part which is inevitably occurs during of the study.Entire time series data was collected from the web sites sources to explain thenature of the movement and variability of the stock marketwith the stock prices ofdifferent organisation.Chapter 4- The fourth chapter is all about analysing the data with the help ofsuitable research method. In this research, analysis of the data has been done bothgraphically and by using statistical software The information obtained from theanalysis is discussed elaborately by linking them with the theories described inchapter 2. Chapter 5- The last chapter deals with the aspect of concluding the wholeresearch. As acknowledged by Levine et al. (2008, p 116), “the researcher reaches10 to a definite conclusion by concluding objectives as well.” This means that that theresearcher tries to justify the objectives that were framed in the beginning of thestudy. Due to certain limitations, there arises an opportunity for future research onthe same topic. Few recommendations have also been provided by the researcherto make the research successful in future (Branson et. at., 2009).Finally, at the end of the research references are provided which consists of books,journals and websites that have been referred to by the analyst while collectingdata and preparing the literature review. Appendix is also attached after the list ofreferences, which consist of the questions being asked in the interview and duringthe survey. Chapter-2Literature Review“We are at that moment of maneuvering a handful of exchange businessprogramme thatcanclaim to have a truly international franchise ,which facilitates to diversify our strategic imperatives in various equities and fixed incomethroughouteconomic cycle”-Director of Capital Markets and Chief Executive Officer of Borsa Italiana11 2.0 IntroductionSeveral studies, such as Brooks (2009) have pointed out that much of theinformation would be revealed in the volatility of stock prices, rather than the priceitself. There are several reasons to analyze the cross-border volatility spillovers. Inaddition to various domestic factors, volatility of major foreign trading partners isone of the important determinants of stock return volatility in a domestic marketEarly research focused exclusively on the spillover of the return among the majorstock exchanges (Bahra, 2007). But, studying the stock market it has been clearthat the co-movements is a combined study of information spillover both in termsof returns as well as the volatility of returns. Volatility linkages, i.e. inter-marketlinkages of stock price is the another significant aspect of international stock marketintegration (Chandra, 2010).Regional economic integration can take place among the markets within the sameregion because of so many factors, such as economic ties among the countries,lower geographical distance, foreign investments, contagion effect etc.Cuddington & Urzua (2009) illustrated in their study that thestock markets ofUSA, Britain, Japan, Germany, South Korea Singapore, Hong-Kong, Taiwan andAustralia are interdependent with world stock markets. The period of study wasfrom 1992 to 1994. The method involved was co-integration test. The studyprovided two specific results. The first was that there was inevitableinterdependency among the Asian stock markets and the developed countries of the12 OECD. The second conclusion of the study was that the markets of the USA andBritain exert a dominant role both in the long-run and the short –run. Theinvestigation by Deaton & Laroque( 2009)of the markets of Hong-Kong, Korea andThailand during the period of 1997-1998 established the existence of co-integrationmarkets. The study confirmed that the Hong-Kong stock market played a dominantrole. The method used for the study was Multivariate VAR-EGARCH Model.In the paper of Deb, Vuyyri and Roy, monthly volatility of market indices (Sensex &S&P CNX-Nifty) of London stock exchange market has been modeled using eightdifferent univariate models. They found GARCH model to be the overall superiormodel based on most of the symmetric loss functions though ARCH (auto regressiveconditional heteroskedacity) has been found to be better than the other models forinvestors who are more concerned about under predictions than over predictions.Mukherjee et al. (2008) in their study found that Hong Kong, Korea, Singapore andThailand are found to be the four Asian markets from where there is a significantflow of information in India. Similarly, among others, stock markets in Pakistan andSri Lanka are found to be strongly influenced by movements in Indian market.Though most of the information gets transmitted among the markets without muchdelay, some amount of information still remains and can successfully transmit assoon as the market opens in the next day.13 2.1. The theory of stock market integration and recession.Explanation of interdependence of stock market can be broadly classified in threecategories, firstly; contagion effect, secondly; economic integration and finally stockmarket characteristic (Engle, 2008)2.1.1 ContagionContagion is the co-movement of asset markets of different countries not caused bya common movement of fundamentals (Jondeau and Rockinger, 2010). Contagionis measured in terms of the residuals from the co-movement that is not caused byany economic fundamentals. Informational factor responsible for this contagion canbe explained in terms of Keynesian „Beauty Contest? where each judge votesaccording to the way he thinks the other judges may do. So an internationalinvestor will sell off his investment if he thinks that other investors may do thesame in that specific asset class. Due to this herd behavior of the investor stockmarkets show almost similar kind of up and downturn. This contagion effect candrag along other stock markets without any fundamental economic reason.Institutional factors responsible for such co-movement can be the case of forcedredemption and two stage investment strategies (Branson et.al., 2009).2.1.2 Economic Integration Jackwerth (2009) opined that co-movement of stock market of different countriescan be explained in terms of their degree of macroeconomic integration. In an openeconomic system a significant contributor to this integration is degree of bilateral14 trade. If country A is the principal importer of any specific product class from B,then reduction in import demand of A because of its domestic reasons will exertssubstantial pressure on the stock market of country B. For example India being theprincipal exporter of IT enabled services to USA, that suffered a huge shock in post9/11 period because of a sudden reduction in import demand. This result adownturn of equity prices of IT industries in both the countries. Integration can alsotake place through macroeconomic variables like interest rate, inflation, and wagestructure or labor movement between countries. As these variables influence stockmarket returns, so correlation between them will also influence the correlationbetween their stock markets ( Longin and B. Solnik, 2005).2.1.3 Stock Market CharacteristicsApart from the reasons discussed above, stock market characteristics like size,volatility and industrial similarity may also dictate the level of integration. Size itselfplays a pivotal role in stock market integration. Liquidity, information andtransaction costs vary from market to market depending on their size. So large sizedifferential between stock markets results larger differences in above factors whichin turn induces less co-movement amongst them. Existence of risk return trade offalso causes stock market integration. As return from any stock market is thefunction of its volatility, therefore volatility in some stock market because of anyexternal shocks results almost similar kind of trend in terms of return.According to Gurucharan Singh (2007, p 82),”Industrial similarity as the reason forstock market correlation got substantial attention in different literatures.15 "