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INTRODUCTION

Investment is the employment of funds with the aim of achieving additional

income or growth in value. The essential quality of an investment is that it involves

‘waiting’ for a reward. It involves the commitment of resources which have been

saved or put away from current consumption in the hope that some benefits will

accrue in future. The term ‘Investment’ does not appear to be as simple as it has been

defined. Investment has been further categorized by financial experts and economists.

It has also often been confused with the term speculation. The following discussion

will give an explanation of the various ways in which investment is related or

differentiated from the financial and economic sense and how speculation differs from

investment. However, it must be clearly established that investment involves long-

term commitment.

RETURNS:

A major purpose of investment is to set a return of income on the funds

invested. On a bond an investor expects to receive interest. On a stock, dividends

may be anticipated. The investor may expect capital gains from some investments

and rental income from house property.

RISK:

In the investing world, the dictionary definition of risk is the chance that an

investment’s actual return will be different than expected. Technically, this is

[1]
measured in statistics by Standard Deviation. Risk means you have the possibility of

losing some, or even all, of our original investment.

Risk consists of 2 components:

1. Systematic risk (uncontrollable risk) non-diversifiable risk

2. Unsystematic risk (controllable risk) diversifiable risk

SYSTEMATIC RISK:

The risk that affects the entire market, the factors are beyond the control of the

corporate and the investor. They cannot be avoided by the investor. It is sub-divided

into.

a) Market risk

b) Interest rate risk

c) Purchase power risk

UNSYSTEMATIC RISK OF DIVERSIFIABLE RISK:

It is unique to the firm or industry. It stems from managerial inefficiency,

technological changes, consumer preferences, labour problems etc. The magnitude

and nature differs from firm to firm, industry to industry.

It can be classified into 2 types

1) Business risk

• Internal risk

• Fluctuations in sales

• Research and development

• Personal management

• External risk (P,E,S,T factors)

[2]
2) Financial risk

It is associated with the capital structure of the company.

STATEMENT OF THE PROBLEM

The problem undertaken to study in the present project work is to calculate

returns and risk associated with different stocks listed on NSE Stock Exchange.

Returns and Risk are calculated to study the price movements in the stock market.

After doing this project one can make decisions regarding the investment in which

company one can expect.

NEED FOR THE STUDY

Stock Markets have existed in India for a very long time yet the professionals

in the field of finance talking negatively about these instruments. The reason why I

bring it up again is that it is very important to understand what the old system was

verse the new the old system were based on trust. They were closed group system

and hence deviation from truly competitive markets. Such closed groups are

vulnerable to problem when the demand of the economy reach beyond the capacity of

the group and group has expended without open and transparent criteria for entry, the

net work of trust gets disrupted, with the result that the system is disrupted by frauds.

On the other hand, the modern market place of Stock Markets, having well

developed risk management, transparent rules for entry and stringent regulation, is

faceless. That the old type system had to transform into a new is definitely clear they

[3]
have played a very important role in the past. In is merely that had to modern markets

to keep up with the demand of the times.

SCOPE OF THE STUDY

The present study has been undertaken to observe the risk and returns

associated with few selected stocks. The scope of the study consists of 15 Company

stocks from different sectors like infrastructure, Pharmacy, Automobile, Power,

Public Sector and Energy etc., the scope of the study is confined to 50 Companies.

RESEARCH METHODOLOGY

This research study has been based on descriptive and explanative and

exploratory method. It describes securities market in India, and explains risk and

returns involved in equity investment. Finally it explores various alternatives

regarding equity investment.

TOOLS OF DATA COLLECTION

The present data is based upon secondary data sources:

a) Data collected from journals, magazines and newspapers.

b) Data collected from the reference books.

[4]
OBJECTIVES OF THE STUDY

1. The main objective of this project is to analyze the price fluctuations of

various companies.

2. To observe the relation between Returns and Risk in the daily fluctuations in

prices.

3. To evaluate the price movements of the selected stocks based on fundamental

analysis.

LIMITATIONS

1. This project report data collected from secondary sources only.

2. This project analysis report may not be applicable in all equity markets.

3. Project took only 15 companies of NSE for equity analysis. It will not

applicable to total NSE’S Nifty Index.

4. The accuracy of the study is based on the accuracy of the

data presented in the NSE listings.

5. Detailed study of topic was not possible due to limited size of

the project. The time taken for the study is limited.

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INTRODUCTION

RETURNS

A major purpose of investment is to set a return of income on the funds

invested. On a bond an investor expects to receive interest. On a stock, dividends

may be anticipated. The investor may expect capital gains from some investments

and rental income from house property. Return may take several forms.

Measurement of Returns

The purpose of investment is to get a return or income on the funds invested in

different financial assets. The most important characteristics of financial assets are

the size and variability of their future returns. Since the return on income varies,

various statistical techniques are used to measure it. Over the years, may methods

were adopted for quantifying returns. These are now categorized as traditional and

modern techniques of measurement.

Traditional Method of Measurement

Computation of yield to measure a financial asset’s return is the simplest and

oldest technique of measurement. Yield can be both expected or estimated and actual

for a particular period. The formula used to find yield is:

Expected Cash Income

a) Estimated Yield = ----------------------------

Current Price of Asset

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Cash Income

b) Actual Yield = ---------------------

Amount Invested

The yield that is calculated is for a particular period to find out the return on

the amount that is invested. For example, the annual yield on the Unit Trust

Certificate is the dividend income divided by the amount invested.

Measuring Returns – Improved Technique

The ‘holding period yield’ is one of the new techniques in measuring returns.

The traditional methods did not provide a satisfactory returns measure. Some of the

gaps that were identified were: (a) that the traditional method does not distinguish

between divided and earnings portion that the traditional method does not distinguish

between divided and earnings portion that the company retains (Earnings Yield

Method), (b) Dividend Yield Method ignores the possibility of price appreciation on

retained earnings. It is useful only for those shareholders who wish to retain shares

always and are not interested in selling and anticipate that dividends are not going to

change; (c) the yield to maturity is useful only to those bond holders who will hold it

to maturity. All investors may not hold bonds till maturity for obvious reasons.

These methods are thus known to serve a limited purpose only. The better method

measures return through the holding period yield. This measure appears more rational

and clearly defined. It serves two purposes: (a) It measures that total return per rupee

of the original investment, and (b) through this method, comparisons can be drawn of

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any asset’s expected return. An asset can be compared with other both historically

and for future periods.

The holding period yield can be used for any asset. For example, returns from

savings accounts, stocks money, real estate and bonds can be compared through this

measure. The formula for the holding period yield is:

Income payments received during the year in Rs. + Capital change for the period in

Rs.

Price in rupees of original investment at the beginning of period

Dividend + (Pt-Po)

= --------------------------

Po

A look at this formula shows that the Holding Period Yield (HPY) considers

everything the investor receives over the specified period during which the asset is

held relative to what was originally invested in the assets. It also considers all income

payments; and positive and negative capital changes during the period. These are

then measured relative to the original investment in rupees. The HPY also measures

past receipts of payments as well as for an unknown future. It is useful for comparing

any time period, it can be used on both Bond and Stocks.

[8]
Measure of Dispersion

Dispersion methods help to assess risk in receiving a reward or return on

investment. The greater the potential dispersion, the greater the risk. One of the

simplest methods in calculating dispersion is range. The range, however, has limited

importance. It is useful when there are small samples. It loses its effectiveness when

the number of values in a sample increases. The best and most effective method to

find out how the data scattered around a frequency distribution is to use the standard

deviation method. This method is related to the mean deviation and implies in this

case the means as a point of reference from which deviation occurs. The standard

deviation is based on mean and it cannot show any result without first finding out the

mean. The standard deviation is recognized by the following symbolφ . The

standard deviation is also related to variance. Variance is the square of standard

deviation. In other words, standard deviation is the square root of the variance. This

relationship shows that they have similar statistical characteristics. Therefore,

standard deviation and variance are considered equivalent to each other as measures

of risk. For a security analyst they help in depicting dispersion of HPYs around HPY.

There are 22 stock exchanges in India, the first being the Bombay Stock

Exchange (BSE), which began formal trading in 1875, making it one of the oldest in

Asia. Over the last few years, there has been a rapid change in the Indian securities

market, especially in the secondary market. Advanced technology and online-based

transactions have modernized the stock exchanges. In terms of the number of

companies listed and total market capitalization, the Indian equity market is

considered large relative to the country’s stage of economic development. The

[9]
number of listed companies increased from 5,968 in March 1990 to about 10,000 by

May 1998 and market capitalization has grown almost 11 times during the same

period.

The debt market, however, is almost non-existent in India even though there

has been a large volume of Government bonds traded. Banks and financial institutions

have been holding a substantial part of these bonds as statutory liquidity requirement.

The portfolio restrictions on financial institutions’ statutory liquidity requirement are

still in place. A primary auction market for Government securities has been created

and a primary dealer system was introduced in 1995. There are six authorized primary

dealers. Currently, there are 31 mutual funds, out of which 21 are in the private

sector. Mutual funds were opened to the private sector in 1992. Earlier, in 1987, banks

were allowed to enter this business, breaking the monopoly of the Unit Trust of India

(UTI), which maintains a dominant position. Before 1992, many factors obstructed

the expansion of equity trading. Fresh capital issues were controlled through the

Capital Issues Control Act. Trading practices were not transparent, and there was a

large amount of insider trading. Recognizing the importance of increasing investor

protection, several measures were enacted to improve the fairness of the capital

market. ‘The Securities and Exchange Board of India (SEBI) was established in

1988’. Despite the rules it set, problems continued to exist, including those relating to

disclosure criteria, lack of Brokers, capital adequacy, and poor regulation of merchant

bankers and underwriters. There have been significant reforms in the regulation of the

securities market since 1992 in conjunction with overall economic and financial

reforms. In 1992, the SEBI Act was enacted giving SEBI statutory status as an apex

regulatory body. And a series of reforms was introduced to improve investor


[10]
protection, automation of stock trading, integration of national markets, and efficiency

of market operations. India has seen a tremendous change in the secondary market for

equity. Its equity market will most likely be comparable with the world’s most

advanced secondary markets within a year or two. The key ingredients that underlie

market quality in India’s equity market are:

• Exchanges based on open electronic limit order book

• Nationwide integrated market with a large number of informed traders and

fluency of short or long positions.

• No counterparty risk.

Among the processes that have already started and are soon to be fully

implemented are electronic settlement trade and exchange-traded derivatives.

Before 1995, markets in India used open outcry, a trading process in which traders

shouted and hand signaled from within a pit. One major policy initiated by SEBI from

1993 involved the shift of all exchanges to screen-based trading, motivated primarily

by the need for greater transparency. The first exchange to be based on an open

electronic limit order book was the National Stock Exchange (NSE), which started

trading debt instruments in June 1994 and equity in November 1994. In March 1995,

BSE shifted from open outcry to a limit order book market. Currently, 17 of India’s

stock exchanges have adopted open electronic limit order. Before 1994, India’s stock

markets were dominated by BSE in other parts of the country.

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Recent Developments and Policy Issues.

Financial industry did not have equal access to markets and was unable to

participate in forming prices, compared with market participants in Mumbai

(Bombay). As a result, the prices in markets outside Mumbai were often different

from prices in Mumbai. These pricing errors limited order flow to these markets.

Explicit nationwide connectivity and implicit movement toward one national

market has changed this situation. NSE has established satellite communications

which give all trading members of NSE equal access to the market. Similarly, BSE

and the Delhi Stock Exchange are both expanding the number of trading terminals

located all over the country. The arbitrages are eliminating pricing discrepancies

between markets. The Indian capital market still faces many challenges if it is to

promote more efficient allocation and mobilization of capital in the economy.

Firstly, market infrastructure has to be improved as it hinders the efficient

flow of information and effective corporate governance. Accounting standards will

have to adapt to internationally accept accounting practices.

The court system and legal mechanism should be enhanced to better protect small

shareholders’ rights and their capacity to monitor corporate activities.

Secondly, the trading system has to be made more transparent. Market

information is a crucial public good that should be disclosed or made available to all

participants to achieve market efficiency. SEBI should also monitor more closely

cases of insider trading.

Thirdly, India may need further integration of the national capital market

through consolidation of stock exchanges. The trend all over the world is to

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consolidate and merge existing stock exchanges. Not all of India’s 22 stock exchanges

may be able to justify their existence. There is a pressing need to develop a uniform

settlement cycle and common clearing system that will bring an end to unnecessary

speculation based on arbitrage opportunities.

Fourthly, the payment system has to be improved to better link the banking

and securities industries. India’s banking system has yet to come up with good

electronic funds transfer (EFT) solutions. EFT is important for problems such as

direct payments of dividends through bank accounts, eliminating counterparty risk,

and facilitating foreign institutional investment. The capital market cannot thrive

alone; it has to be integrated with the other segments of the financial system. The

global trend is for the elimination of the traditional wall between banks and the

securities market. Securities market development has to be supported by overall

macroeconomic and financial sector environments. Further liberalization of interest

rates, reduced fiscal deficits, fully market-based issuance of Government securities

and a more competitive banking sector will help in the development of a sounder and

a more efficient capital market in India. Capital Market Reforms and Developments

Reforms in the Capital Market Over the last few years, SEBI has announced several

far-reaching reforms to promote the capital market and protect investor interests.

Reforms in the secondary market have focused on three main areas

• structure and functioning of stock exchanges,

• automation of trading and post trade systems,

• And the introduction of surveillance and monitoring systems. Computerized

online trading of securities.

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• And settings up of clearing houses or settlement guarantee funds were made

compulsory for stock exchanges.

Stock exchanges were permitted to expand their trading to locations outside

their jurisdiction through computer terminals. Thus, major stock exchanges in India

have started locating computer terminals in far-flung areas, while smaller regional

exchanges are planning to consolidate by using centralized trading under a federated

structure.

Online trading systems have been introduced in almost all stock exchanges.

Trading is much more transparent and quicker than in the past. Until the early 1990s,

the trading and settlement infrastructure of the Indian capital market was poor.

Trading on all stock exchanges was through open outcry, settlement systems were

paper-based, and market intermediaries were largely unregulated.

The regulatory structure was fragmented and there was neither comprehensive

registration nor an apex body of regulation of the securities market. Stock exchanges

were run as “brokers clubs” as their management was largely composed of brokers.

There was no prohibition on insider trading, or fraudulent and unfair trade practices.

Since 1992, there has been intensified market reform, resulting in a big improvement

in securities trading, especially in the secondary market for equity. Most stock

exchanges have introduced online trading and set up clearing houses/corporations. A

depository has become operational for scrip less trading and the regulatory structure

has been overhauled with most of the powers for regulating the capital market vested

with SEBI. The Indian capital market has experienced a process of structural

transformation with operations conducted to standards equivalent to those in the

developed markets. It was opened up for investment by foreign institutional investors

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(FII’s) in 1992 and Indian companies were allowed to raise resources abroad through

Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds

(FCCBs). The primary and secondary segments of the capital market expanded

rapidly, with greater institutionalization and wider participation of individual

investors accompanying this growth. However, many problems, including lack of

confidence in stock investments, institutional overlaps, and other governance issues,

remain as obstacles to the improvement of Indian capital market efficiency.

PRIMARY MARKET

Since 1991/92, the primary market has grown fast as a result of the removal

of investment restrictions in the overall economy and a repeal of the restrictions

imposed by the Capital Issues Control Act. In 1991/92, Rs62.15 billion was raised in

the primary market. This figure rose to Rs276.21 billion in 1994/95. Since 1995/1996,

however, smaller amounts have been raised due to the overall downtrend in the

market and tighter entry barriers introduced by SEBI for investor protection .SEBI has

taken several measures to improve the integrity of the secondary market. Legislative

and regulatory changes have facilitated the corporatization of stockbrokers. Capital

adequacy norms have been prescribed and are being enforced. A mark-to-market

margin and intraday trading limit have also been imposed. Further, the stock

exchanges have put in place circuit breakers, which are applied in times of excessive

volatility. The disclosure of short sales and long purchases is now required at the end

of the day to reduce price volatility and further enhance the integrity of the secondary

market.

[15]
MARK-TO-MARKET MARGIN AND INTRADAY LIMIT

Under the current clearing and settlement system, if an Indian investor buys

and subsequently sells the same number of shares of stock during a settlement period,

or sells and subsequently buys, it is not necessary to take or deliver the shares. The

difference between the selling and buying prices can be paid or received. In other

words, the squaring-off of the trading position during the same settlement period

results in non delivery of the shares that the investor traded.

Thus, possible at a relatively low cost. FII’s and domestic institutional

investors are, however, not permitted to trade without delivery, since no delivery

transactions are limited only to individual investors. One of SEBI’s primary concerns

is the risk of settlement chaos that may be caused by an increasing number of no

delivery transactions as the stock market becomes excessively speculative.

Accordingly, SEBI has introduced a daily mark-to-market margin and

intraday trading limit. The daily mark-to-market margin is a margin on a broker’s

daily position. The intraday trading limit is the limit to a broker’s intraday trading

volume. Every broker is subject to these requirements.

Each stock exchange may take any other measures to ensure the safety of the

market. BSE and NSE impose on members a more stringent daily margin, including

one based on concentration of business. A daily mark-to-market margin is 100 percent

of the notional loss of the stockbroker for every stock, calculated as the difference

between buying or selling price and the closing price of that stock at the end of that

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day. However, there is a threshold limit of 25 percent of the base minimum capital

plus additional capital kept with the stock exchange or Rs1 million, whichever is

lower. Until the notional loss exceeds the threshold limit, the margin is not payable.

This margin is payable by a stockbroker to the stock exchange in cash or as a bank

guarantee from a scheduled commercial bank, on a net basis. It will be released on the

pay-in day for the settlement period. The margin money is held by the exchange for 6-

12 days. This cost the broker about 0.4-1.2 percent of the notional loss, assuming that

the broker’s funding cost is about 24-36 percent (Endo 1998).

Thus, speculative trading without the delivery of shares is no

longer cost-free. Each broker’s trading volume during a day is not allowed to exceed

the intraday trading limit. This limit is 33.3 times the base minimum capital deposited

with the exchange on a gross basis, i.e., purchase plus sale. In the event of brokers

wishing to exceed this limit, they have to deposit additional capital with the exchange

and this cannot be withdrawn for six months.

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INDUSTRY PROFILE

Stock exchange is an organized market place where securities are traded.

These securities are issued by the government, semi-government bodies, public sector

undertakings and companies for borrowing funds and raising resources. Securities are

defined as any monetary claims (promissory notes or I.O.U) and also include shares,

debentures, bonds and etc., if these securities are marketable as in the case of the

government stock, they are transferable by endorsement and alike movable property.

They are tradable on the stock exchange. So, are the case shares of companies.

Under the Securities Contract Regulation Act of 1956, securities’ trading is

regulated by the Central Government and such trading can take place only in stock

exchanges recognized by the government under this Act. As referred to earlier there are

at present 23 such recognized stock exchanges in India. Of these, major stock

exchanges, like Bombay Stock Exchange, National Stock Exchange, Inter-Connected

Stock Exchange, Calcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are

permanently recognized while a few are temporarily recognized. The above act has also

laid down that trading in approved contract should be done through registered members

of the exchange. As per the rules made under the above act, trading in securities

permitted to be traded would be in the normal trading hours (10 A.M to 3.30 P.M) on

working days in the trading ring, as specified for trading purpose.

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Contracts approved to be traded are the following:

• Spot delivery deals are for deliveries of shares on the same day or the next day

as the payment is made.

• Hand deliveries deals for delivering shares within a period of 7 to 14 days from

the date of contract.

• Delivery through clearing for delivering shares with in a period of two months

from the date of the contract, which is now reduce to 15 days.(Reduced to 2

days in demat trading)

• Special Delivery deals for delivering of shares for specified longer periods as

may be approved by the governing board of the stock exchange.

Except in those deals meant for delivery on spot basis, all the rest are to be put

through by the registered brokers of a stock exchange. The securities contracts

(Regulation) rules of 1957 laid down the condition for such trading, the trading hours,

rules of trading, settlement of disputes, etc. as between the members and of the members

with reference to their clients.

HISTORY OF STOCK EXCHANGES IN INDIA

The origin of the Stock Exchanges in India can be traced back to the later half of

19th century. After the American Civil War (1860-61) due to the share mania of the

public, the number of brokers dealing in shares increased. The brokers organized an

informal association in Mumbai named “The Native Stock and Share Brokers

Association in 1875”.later evolved as Bombay stock exchange. Increased activity in

trade and commerce during the First World War and Second World War resulted in an

increase in the stock trading. The Growth of Stock Exchanges suffered a set after the

[19]
end of World War. Worldwide depression affected those most of the Stock Exchanges

in the early stages had a speculative nature of working without technical strength. After

independence, government took keen interest to regulate the speculative nature of stock

exchange working. In that direction, securities and Contract Regulation Act 1956 was

passed, this gave powers to Central Government to regulate the stock exchanges.

Further to develop secondary markets in the country, stock exchanges established at

Mumbai, Chennai, Delhi, Hyderabad, Ahmedabad and Indore. The Bangalore Stock

Exchange was recognized in 1963. At present there are 23 Stock Exchanges. Till

recent past, floor trading took place in all Stock Exchanges. In the floor trading system,

the trade takes place through open outcry system during the official trading hours.

Trading posts are assigned for different securities whereby and sell activities of

securities took place. This system needs a face – to – face contact among the traders

and restricts the trading volume. The speed of the new information reflected on the

prices was rather than the investors. The Setting up of NSE and OTCEI (Over the

counter exchange of India with the screen based trading facility resulted in more and

more Sock exchanges turning towards the computer based trading. BSE introduced the

screen based trading system in 1995, which known as BOLT (Bombay on – line

Trading. System) Madras Stock Exchange introduced Automated Network Trading

System (MANTRA) on October 7, 1996 Apart from Bombay Stock Exchanges have

introduced screen based trading.

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FUNCTIONS OF STOCK EXCHANGE

Maintain Active Trading:

Shares are traded on the stock exchanges, enabling the investors to buy and sell

securities. The prices may vary from transaction to transaction. A continuous trading

increases the liquidity or marketability of the shares traded on the stock exchanges.

Fixation of Prices:

Price is determined by the transactions that flow from investors demand and the

supplier’s preferences. Usually the traded prices are made known to the public. This

helps the investors to make the better decision.

Ensures safe and fair dealings:

The rules, regulations and bylaws of the Stock Exchanges provide a measure of

safety to the investors. Transactions are conducted under competitive conditions

enabling the investors to get a fair deal.

Aids in financing the Industry:

A continuous market for shares provides a favorable climate for raising capital.

The negotiability and transferability of the securities, investors are willing to subscribe

to the initial public offering (IPO). This stimulates the capital formation.

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Dissemination of Information:

Stock Exchanges provide information through their various publications. They

publish the share prices traded on their basis along with the volume traded. Directory of

Corporate Information is useful for the investor’s assessment regarding the corporate.

Handouts, handbooks and pamphlets provide information regarding the functioning of

the Stock Exchanges.

Performance Inducer:

The prices of stocks reflect the performance of the traded companies. This

makes the corporate more concerned with its public image and tries to maintain good

performance.

Self-regulating organization:

The Stock Exchanges monitor the integrity of the members, brokers, listed

companies and clients. Continuous internal audit safeguards the investors against unfair

trade practices. It settles the disputes between member brokers, investors and brokers.

REGULATORY FRAME WORK

This Securities Contract Regulation Act, 1956 and Securities and Exchange

board of India (SEB1) Act, 1992, provides a comprehensive legal framework. A 3-tier

regulatory structure comprising the ministry of finance, SEB1 and the Governing

Boards of the Stock Exchanges regulates the functioning of Stock Exchanges.

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Ministry of finance

The Stock Exchange division of the Ministry of Finance has powers related to

the application of the provision of the SCR Act and licensing of dealers in the other

area. According to SEBI Act, The Ministry of Finance has the appellate and the

supervisory power over the SEBI. It has powered to grant recognition to the Stock

Exchange and regulation of their operations. Ministry of Finance has the power to

approve the appointments of executives chiefs and the nominations of the public

representatives in the government Boards of the Stock Exchanges. It has the

responsibility of preventing undesirable speculation.

The Securities and Exchange Board of India

The Securities and Exchange Board of India even though established in the year

1988. Received statutory powers only on 30th January 1992. Under the SEBI Act, a

wide variety of powers are vested in the hands of SEBI. SEBI has the powers to regulate

the business of Stock Exchanges, other security and mutual funds. Registration and

regulation of market intermediaries are also carried out by SEBI. It has responsibility to

prohibit the fraudulent unfair trade practices and insider dealings. Takeovers are also

monitored by the SEBI has the multi pronged duty to promote the healthy growth of the

capital market and protect the investors.

The Governing Board of Stock Exchanges:

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The Governing Board of the Stock Exchange consists of elected members of

directors, government nominees and public representatives. Rules, by laws and

regulations of the Stock Exchange substantial powers to the executive director for

maintaining efficient and smooth day-to day functioning of Stock Exchange. The

Governing Board has the responsibility to maintain and orderly and well-regulated

market.

The Governing body of the Stock Exchange consists of 13 members of which

• Six members of the Stock Exchange are elected by the members of the Stock

Exchange.

• Central Government nominates not more than three members.

• The board nominates three public representatives.

• SEBI nominates persona not exceeding three and

• The Stock Exchange appoints one Executive Director.

One third of the elected members retire at annual general meeting (AGM). The

retired member can offer himself for election if he is not elected for two consecutive

years. If a member serves in the governing body for two years consecutively, he should

refrain offering himself for another two years.

The members of the governing body elect the president and vice-president. It needs to

approval from the Central Government or the Board. The office tenure for the president

and vice-president is on year. They can offer themselves for re-election, if they have not

held for two consecutive years. In that case they can offer themselves for re-election

after a gap of one-year period.

[24]
NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) of India became operational in the capital

market segment on third November 1994 in Mumbai. The genesis of the NSE lies in the

recommendations of the pherwani committee (1991). Apart from the NSE. It had

recommended for the establishment of National Stock market System also. The

committee pointed out some major defects in the Indian stock market.

The defects specified are.

• Lack of liquidity in most of the markets in terms of depth and breadth.

• Lack of ability to develop markets for debt.

• Lack of infrastructure facilities and outdated trading system.

• Lack of transparency in the operations that affect investors’ confidence.

• Outdated settlement system that are inadequate to cater to the growing volume,

leading to delays.

• Lack of single market due to the inability of various stock exchanges to function

cohesively with legal structure and regulatory framework.

These factors led to the establishment of the NSE.

The main objectives of NSE are as follows

• To establish a nationwide trading facility for equities, debt and hybrid

instruments

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• To ensure equal access investors all over the country through appropriate

communication network.

• To provide a fair, efficient and transparent securities market to investors using

an electronic communication network.

• To enable shorter settlement cycle and book entry settlement system.

• To meet current international standards of securities market.

Promoters of NSE: IDBI, ICICI, IFCI, LIC, GIC, SBI, Bank of Baroda. Canara

Bank, Corporation Bank, Indian Bank, Oriental Bank of Commerce. Union Bank of

India, Punjab National Bank, Infrastructure Leasing and Financial Services, Stock

Holding Corporation of India and SBE capital market are the promoters of NSE.

MEMBERSHIP

Membership is based on factors such as capital adequacy, corporate structure, track

record, education, experience etc. Admission is a two-stage process with applicants

requiring going through a written examination followed by an interview. A committee

consisting of experienced people from the industry to assess the applicant’s capability to

operate as an exchange member, interviews candidates. The exchange admits members

separately to Wholesale Debt Market (WDM) segment and the capital market segment.

Only corporate members are admitted on the debt market segment whereas individuals

and firms are also eligible on the capital market segment. Eligibility criteria for trading

membership on the segment of WDM are as follows.

• The persons eligible to become trading members are bodies corporate,

companies

[26]
• Institutions including subsidiaries of banks engaged in financial services and

such other

• Persons or entities as may be permitted form time to time by RBI/SEBI.

• The whole-time directors should possess at least two years experience in any

activity related to banking or financial services or treasury.

• The applicant must possess a minimum net worth of Rs.2 cores.

• The applicant must be engaged solely in the business of securities and must not

be engaged in any fund-based activities.

The securities market achieves one of the most important functions of channeling

idle resources to productive resources or from less productive resources to more

productive resources. Hence in the broader context the people who save and investors

who invest focus more towards the economy’s abilities to invest and save

respectively. This enhances savings and investments in the economy, the two pillars

for economic growth. The Indian Capital Market has come a long way in this process

and with a strong regulator it has been able to usher an era of a modern capital market

regime. The past decade in many ways has been remarkable for securities market in

India. It has grown exponentially as measured in terms of amount raised from the

market, the number of listed stocks, market capitalization, trading volumes and

turnover on stock exchanges, and investor population. The market has witnessed

fundamental institutional changes resulting in drastic reduction in transaction costs

and significant improvements in efficiency, transparency and safety.

Dependence on Securities Market

Three main sets of entities depend on securities market- the corporate, the

government & households. While the corporate and governments raise resources from
[27]
the securities market to meet their obligations, the households invest their savings in

securities.

Primary Market & Secondary Market

The securities market comprises two segments- primary market (new issues,

offer for sale) & secondary market (trading of stocks). There are two major types of

issuers who issue securities. The corporate entities issue mainly debt and equity

instruments (shares, debentures, etc.), while the governments (central and state

governments) issue debt securities (dated Securities, treasury bills). The two major

exchanges, namely the NSE and the BSE provide trading of securities.

Laws governing capital market

The four main legislations governing the securities market are:

a) The SEBI Act, 1992 which establishes SEBI to protect investors and develop

and regulate the Markets.

b) The Companies Act, 1956, which sets out the code of conduct for the

corporate sector in relation to issue, allotment and transfer of securities, and

disclosures to be made in public issues.

c) The Securities Contracts (Regulation) Act, 1956, read with the Securities

Contracts (Regulation) Rules, 1957 which provide for regulation of

transactions in securities through control over stock exchanges, and

d) The Depositories Act, 1996 which provides for electronic maintenance and

transfer of ownership of demat securities.

Regulators

[28]
SEBI is the primary regulator of the Securities Market and the entities

operating therein. The SEBI Act and the Depositories Act are mostly administered by

SEBI. The rules under the securities laws are framed by government and regulations

by SEBI. All these are administered by SEBI. The powers under the Companies Act

relating to issue and transfer of securities and non-payment of dividend are

administered by SEBI in case of listed public companies and public companies

proposing to get their securities listed

Nifty 50

The 50 stocks that were most favored by institutional investors in the 1960s

and 1970s. Companies in this group were usually characterized by consistent earnings

growth and high P/E ratios. The Nifty-50 stocks got their notoriety in the bull markets

of the 1960s and early 1970s. They became known as "one-decision" stocks because

investors were told. They could buy and hold forever.

Examples of Nifty-50 stocks included General Electric, Coca-Cola, and IBM.

However, part of this list included companies that have been troubled in the last

decade, such as Xerox and Polaroid.

Nifty Junior

The CNX Nifty Junior is an index for companies on the National Stock

Exchange of India. It consists of 50 companies representing approximately 10% of the

traded value of all stocks on the National Stock Exchange of India. The CNX Nifty

Junior is owned and operated by India Index Services and Products Ltd. It is quoted

using the symbol

[29]
NSMIDCP.

The CNX Nifty Junior and the S&P CNX Nifty represent the 100 most liquid

commodities traded on the National Stock Exchange of India. Together, they form a

disjoint set; that is to say, no one company can be listed on both indices

simultaneously.

Equity

Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owners (the

stockholders) plus the retained earnings (or losses). Also referred to as "shareholder's

equity”. In the context of margin trading, the value of securities in a margin account

minus what has been borrowed from the brokerage. In the context of real estate, the

difference between the current market value of the property and the amount the owner

still owes on the mortgage. Thus, it is the amount, if any; the owner would receive

after selling a property and paying off the mortgage.

Equity is a term whose meaning depends very much on the context. In general,

you can think of equity as ownership in any asset after all debts associated with that

asset are paid off. For example, a car or house with no outstanding debt is considered

the owner's equity since he or she can readily sell the items for cash. Stocks are equity

because they represent ownership of a company, whereas bonds are classified as debt

because they represent an obligation to pay and not ownership of assets.

Market Value
[30]
The current quoted price at which investors buy or sell a share of common

stock or a bond at a given time. Also known as "market price” The market

capitalization plus the market value of debt. Sometimes referred to as "total market

value".

In the context of securities, market value is often different from book value

because the market takes into account future growth potential. Most investors who use

fundamental analysis to pick stocks look at a company's market value and then

determine whether or not the market value is adequate or if it's undervalued in

comparison to its book value, net assets or some other measure.

Stock

A type of security that signifies ownership in a corporation and represents a

claim on part of the corporation’s assets and earnings. There are two main types of

stock: common and preferred. Common stock usually entitles the owner to vote at

shareholders' meetings and to receive dividends. Preferred stock generally does not

have voting rights, but has a higher claim on assets and earnings than the common

shares. For example, owners of preferred stock receive dividends before common

shareholders and have priority in the event that a company goes. Bankrupt and is

liquidated. Also known as "shares" or "equity".

A holder of stock (a shareholder) has a claim to a part of the corporation's

assets and earnings. In other words, a shareholder is an owner of a company.

Ownership is determined by the number of shares a person owns relative to the

number of outstanding shares. For example, if a company has 1,000 shares of stock

outstanding and one person owns 100 shares, that person would own and have. Claim
[31]
to 10% of the company’s assets Stocks are the foundation of nearly every portfolio.

Historically, they have outperformed most other investments over the long run.

Shareholder

Any person, company, or other institution that owns at least 1 share in a

company. A shareholder may also be referred to as a stockholder.

Shareholders are the owners of a company. They have the potential to profit if the

company does well, but that comes with the potential to lose if the company does

poorly.

Share

A unit of ownership interest in a corporation or financial asset. While owning

shares in a business does not mean that the shareholder has direct control over the

business's day-to-day operations, being a shareholder does entitle the possessor to an

equal distribution in any profits, if any are declared in the form of dividends. The two

main types of shares are common shares and preferred shares.

In the past, shareholders received a physical paper stock certificate that indicated that

they owned "x" shares in a company. Today, brokerages have electronic records that

show ownership details. Owning a paperless share makes conducting trades a simpler

and more streamlined process, which is a far cry from the days were stock certificates

needed to be taken to a. Brokerage before a trade could be conducted. While shares

[32]
are often used to refer to the stock of a corporation, shares can also

represent ownership of other classes of financial assets, such as mutual funds.

Risk- Risk is defined as uncertainty in outcomes

The chance that an investment's actual return will be different than expected.

This includes the possibility of losing some or all of the original investment. It is

usually measured by calculating the standard deviation of the historical returns or

average returns of a specific investment. A fundamental idea in finance is the

relationship between risk and return. The greater the amount of risk that an investor is

willing to take on, the greater the potential return. The reason for this is that investors

need to. be compensated for taking on additional risk

Stock Option

A privilege, sold by one party to another, that gives the buyer the right, but not

the obligation, to buy (call) or sell (put) a stock at an agreed-upon price within a.

certain period or on a specific date. In the U.K., it is known as a "share option”.

American options can be exercised anytime between the date of purchase and the

expiration date. European options may only be redeemed at the expiration date. Most

exchange-traded stock options are American.

Security

An instrument representing ownership (stocks), a debt agreement (bonds), or

the rights to ownership (derivatives).A security is essentially a contract that can be

assigned a value Andrade.

[33]
Examples of a security include a note, stock, preferred share, bond, debenture, option,

future, swap, right, warrant, or virtually any other financial asset.

Closing Price

The final price at which a security is traded on a given trading day. The

closing price represents the most up-to-date valuation of a security until trading

commences again on the next trading day.

INTRODUCTION(CP)

INDIA BULLS is India’s leading Financial, Real Estate and Power Company

with a wide presence throughout India. They ensure convenience and reliability in all

their products and services. INDIA BULLS has over 640 branches all over India. The

customers of INDIA BULLS are more than 4,50,000 which covers from a wide range

of financial services and products from securities, derivatives trading, depositary

services, research & advisory services, consumer secured & unsecured credit, loan

against shares and mortgage & housing finance. The company employs around 4000

Relationship managers who help the clients to satisfy their customized financial goals.

INDIA BULLS entered the Real Estate business in the year 2005 with its group of

companies. Large scale projects worth several hundred million dollars are evaluated

by them.

INDIA BULLS Financial Services Ltd is listed on the National Stock Exchange

(NSE), Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The

market capitalization of INDIA BULLS is around USD 2500 million (29thDecember,

[34]
2006). Consolidated net worth of the group is around USD 700 million. INDIA

BULLS and its group companies have attracted USD 500 million of equity capital in

Foreign Direct Investment (FDI) since March 2000. Some of the large shareholders of

INDIA BULLS are the largest financial institutions of the world such as Fidelity

Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.

Growth of INDIA BULLS

Year 2000-01:

One of India’s first trading platforms was set up by INDIA BULLS Financial Services

Ltd. with the development of an in-house team.

Year 2001-03:

The service offered by INDIA BULLS was increased to include Equity, F&O,

Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research.

Year 2003-04:

In this particular year INDIA BULLS ventured into Distribution and Commodities

Trading business.

Year 2004-05:

[35]
• This was one of the most important years in the history of INDIA BULLS. In

this year:

• INDIA BULLS came out with its initial public offer (IPO) in September 2004.

• INDIA BULLS started its Consumer Finance business.

• INDIA BULLS entered the Indian Real Estate market and became the first

company to bring FDI in Indian Real Estate.

• INDIA BULLS won bids for landmark properties in Mumbai.

Year 2005-06:

In this year the company acquired over 115 acres of land in Sonepat for

residential home site development. The world renowned investment banks like Merrill

Lynch and Goldman Sachs increased their shareholding in INDIA BULLS. It also

became a market leader in securities brokerage industry, with around 31% share in

Online Trading. The world’s largest hedge fund, Farallon Capital and its affiliates

committed Rs. 2000 million for INDIA BULLS subsidiaries Viz. INDIA BULLS

Credit Services Ltd. and INDIA BULLS Housing Finance Ltd. In the same year, the

Steel Tycoon Mr. L N Mittal promoted LNM India Internet venture Ltd. acquired

8.2% stake in INDIA BULLS Credit Services Ltd.

Year 2006-07:

In this year, INDIA BULLS Financial Services Ltd. was included in the

prestigious Morgan Stanley Capital International Index (MSCI). INDIA BULLS

[36]
Financial Services Ltd. was benefited with the Farallon Capital agreeing to invest Rs.

6,440 million in it. The company also received an “in principle approval” from

Government of India for development of multi product SEZ in the state of

Maharashtra. INDIA BULLS Financial Services Ltd acquired 100% of the equity

share capital of Noble Realtors Pvt. Ltd. Noble Realtors is a Company engaged in the

business of construction and development of real estate projects. INDIA BULLS Real

Estate Business was demerged to become a separate entity called INDIA BULLS Real

Estate Ltd. The Board of INDIA BULLS Financial Services Ltd., Resolved to

Amalgamate INDIA BULLS Credit Services Ltd and demerge INDIA BULLS

Securities Limited.

INDIA BULLS Financial Services Ltd

Year 2008-09:

Several developments across its group companies have propelled INDIA

BULLS forward and are expected to continue to power the rise of this conglomerate.

INDIA BULLS financial services limited has recently signed a joint venture

agreement with sogecap, the insurance arm of Societe Generale (SocGen) for its

upcoming life insurance venture.

At the same time it has also signed a Memorandum of understanding with MMTC.

On the asset management front, the company has received formal approval

uhby7hbfrom SEBI and is expected to shortly launch its first NFO.

INDIA BULLS enter in to Public issue for his INDIA BULLS power Ltd.

[37]
Promoters for INDIA BULLS

Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal

Are the promoters of INDIA BULLS Financial Services Limited. While

Sameer Gehlaut will have a 23.0% stake in the company post the IPO

Rajiv Rattan and Saurabh Mittal will have a post issue holding of 11.5% and 10.1%

respectively.

All the three promoters of the company are engineering graduates while Saurabh

Mittal is a management graduate as well.

Sector

Since INDIA BULLS derives most of its revenues from the brokerage

business, its fortunes are very much dependent on the Performance of the capital

markets, i.e. debt, derivative and equity markets.

The Indian equity markets have grown from strength to strength in the last

decade with combined daily volumes of all segments on the BSE and the NSE

touching Rs 232 bn in April 2004, from Rs 5 bn in FY96.

Total shareholders in the country are over 20 m (2% of population) and this is

the third largest after the US and Japan, in absolute terms.

However, if one were to compare the percentage of all households in India that

are invested in the stock markets, it is only about 1.9% as compared to an estimated

52%(including indirect ownership by way of mutual funds) of all households in the

US. This highlights the long-term potential for the sector. to apply
[38]
The Team:

INDIA BULLS Securities Ltd, main strength lies in its formidable team.

This team comprising highly qualified and experienced personnel has been

responsible for the overall management of the company and has provided direction in

diverse areas of business strategy, operating management, regulatory reporting,

human resources development and product development.

Senior Vice President


Yuv Raj Singh

Regional Manager
Dashmeet Singh

Branch Manager
Senior Sales Manager
Sujeet Roy Chowdary

Support System Sujeet Roy Chowdary Sales Function


Vishal Subrot

RM/SRM
Satish Kumar
Back Office Local Compliance
Executive Officer S
Ifran Khan Chary

ARM
Raja
Dealer [39]
Badri Nath
Vision statement

To become the preferred long term financial partner to a wide base of

customers whilst optimizing stake holder’s value

Mission statement

To establish a base of 1 million satisfied customers by 2010. We will create

this by being a responsible and trustworthy partner

Corporate action

An Approach to Business that reflects Responsibility, Transparency and Ethical

Behavior. Respect for Employees, Clients & Stakeholder groups

INDIA BULLS Group entities in India

• INDIA BULLS Capital Services Ltd.

• INDIA BULLS Commodities Pvt. Ltd.

• INDIA BULLS Credit Services Ltd.

• INDIA BULLS Finance Co. Pvt. Ltd

• INDIA BULLS Housing Finance Ltd.

• INDIA BULLS Insurance Advisors Pvt. Ltd.

• INDIA BULLS Resources Ltd.

• INDIA BULLS Securities Ltd.

• INDIA BULLS Power Ltd.

[40]
INDIA BULLS Securities Ltd is listed on the National Stock Exchange (NSE) and

the Bombay Stock Exchange (BSE) and its global depository shares are listed on the

Luxembourg Stock Exchange

Online trading potential is huge:

Online trading accounted for 5% of overall market in FY04 as compared to an

estimated 3% in FY03. INDIA BULLS currently has almost 20% market share of

volumes in the Internet trading space. The table below indicates the growth in

volumes of the Internet trading segment on the NSE over the last few years. The

growth is indicative of the potential of this segment, which we believe is likely to be

robust going forward as well.

This is primarily driven by increasing penetration of computers, significant

decline in Internet charges, convenience of usage and cost advantage. To put things in

perspective, the offline brokerage on equities is around 1.0% as compared to 0.5% in

the online trading space.

NSE online trading statistics

Enabled Registered % of total


Trading Value (Rs bn)
members* clients* trading value
FY00 3
FY01 61 123,578 73 0.5
FY02 82 231,899 81 1.6
FY03 CM 80 346,420 154 2.5
F&O** 13 69,340 51 1.4
FY04 CM 70 413,454 379 3.5
F&O** 14 164,642 430 2

CM: Cash Market, F&O: Futures and Options market

* At the end of the financial year

** trading value for F&O segment compiled from June 2009


[41]
Advisory services:

INDIA BULLS is also into mutual fund and insurance advisory businesses.

Though this field is extremely competitive and requires significant research skills,

these are highly profitable business segments. Though these businesses currently

account for an insignificant portion of overall revenues, considering the penetration

levels of mutual funds and insurance in the country, prospects are promising.

Aggressive growth plans:

INDIA BULLS has set aggressive targets to expand its business in the offline

space. This includes investments in upgradation of branch network and opening

another 75 branches by the end of calendar year 2009 (150 in total). The company has

also indicated its intent to acquire strategic stake in other companies towards growing

the business inorganically

Products provided

Power INDIA BULLS An online trading system designed for the high-

volume trader. The platform provides enhanced trade information and executes orders

on an integrated software based trading platform.

INDIA BULLS financial service offers

a) SME finance

b) Mortgage loans

[42]
c) Commercial vehicle loans

d) Farm equipment loans

e) Commercial credit loans

f) Loan against shares and

g) Third part distribution of insurance products.

Broking Equity, Derivatives, Commodities, Currency Derivatives.

Distribution Mutual funds, IPO’s, Home loans, Insurace.

Divisions

• Investment Advisory and Broking Division


• Project Syndication Division
• Institutional Equity Broking Division
• Institutional Debt Broking Division

Retail Offerings:

• Wealth Management Services


• Portfolio Management Services
• Securities Broking-Equities and derivatives
• Depository & Custodial Service & Distribution of financial .
. Products.

[43]
SERVICES

INDIA BULLS securities provides a wide range of services that include

Power INDIA BULLS

An online trading system designed for the high-volume trader. The platform provides

enhanced trade information and executes orders on an integrated software based

trading platform.

1) Equities

2) Commodities

3) Wholesale debts

4) Futures and options

5) Depository services

6) Equity research services

7) Post Trade -Custodial,

8) Depository Services

9) Payment Gateway

10) Other back office support


[44]
Online Banks Tie-ups for trading:

Company having online transaction tie-ups with banks like

a) HDFC BANK,

b) ICICI BANK,

c) IDBI BANK,

d) CITI BANK.

Company Achievements:

• The INDIA BULLS Group is one of the top fifteen conglomerates in the

country with businesses in several significant sectors. The INDIA BULLS

Financial Services stock is the best performing stock in the MSCI Index – the

global benchmark for equity investments. INDIA BULLS Real Estate Limited

partnered Farallon Capital Management LLC of the US to bring the first

Foreign Direct Investment into real estate.

• INDIA BULLS Financial Services Limited was accorded the highest rating

P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for

loan receivables securitization while INDIA BULLS Securities Limited is the

only broker in India to be assigned CRISIL’s highest broker quality grading of

BQ1.
[45]
• In December 2007, INDIA BULLS acquired Pyramid Retail including

Piramyd Megastores and Trumart, their chain of lifestyle and convenience

outlets

FINANCIAL POSITION

Balancesheet of India bulls securities Ltd In


crores

Mar '06 Mar '07 Dec '07 Mar '08 Mar '09
Sources Of Funds 12 mths 12 mths 9 mths 12 mths 12 mths

Total Share Capital 17.83 17.83 55.28 55.28 55.28


Equity Share Capital 17.83 17.83 50.69 50.69 50.69
Share Application Money 0 0 0 0 0
Preference Share Capital 0 0 4.59 4.59 4.59
Reserves 163.24 301.33 475.95 308.74 236.02
Revaluation Reserves 0 0 0 0 0
Networth 181.07 319.16 531.23 364.02 291.3
Secured Loans 2.91 4.55 44.74 45.04 42.5
Unsecured Loans 349.3 35 105 335 69.5
Total Debt 352.21 39.55 149.74 380.04 112
Total Liabilities 533.28 358.71 680.97 744.06 403.3
Mar '06 Mar '07 Dec '07 Mar '08 Mar '09
Application Of Funds 12 mths 12 mths 9 mths 12 mths 12 mths
Gross Block 60.92 132.71 153.09 155.33 161.32
Less: Accum. Depreciation 12.64 27.01 42.49 48.14 71.23
Net Block 48.28 105.7 110.6 107.19 90.09
Capital Work in Progress 3.14 2.96 1.54 0.92 0.18
Investments 0 0 48.27 48.32 51.77
Sundry Debtors 0 95.24 0 112.62 26.24
Cash and Bank Balance 728.3 109.95 718.83 655.77 27.63
Total Current Assets 728.3 205.19 718.83 768.39 53.87
Loans and Advances 104.07 49.76 459.93 67.21 126.54
Fixed Deposits 0 307.4 0 416.9 434.56
Total CA, Loans & Advances 832.37 562.35 1,178.76 1,252.50 614.97
Deffered Credit 0 0 0 0 0

[46]
Current Liabilities 342.98 296.66 616.93 430.99 288.37
Provisions 7.53 15.63 41.27 233.89 65.35
Total CL & Provisions 350.51 312.29 658.2 664.88 353.72
Net Current Assets 481.86 250.06 520.56 587.62 261.25
Miscellaneous Expenses 0 0 0 0 0
TOTAL ASSETS 533.28 358.72 680.97 744.05 403.29
Contingent Liabilities 0 1.54 1.75 1.87 0.29
Book Value (Rs) 101.53 178.96 20.78 14.18 11.31

ABOUT INDIA BULLS GROUP

The INDIA BULLS Group is one of the top fifteen conglomerates in the

country with businesses in several significant sectors.

The group companies have a market capitalization of over Rs. 25,000 crore

(US$ 6.25 billion) while group revenues have grown at a cumulative annual rate of

over 100% to now reach Rs. 3100 crore (US$ 775 million) and the group profit has

surged to over Rs. 1200 crore (US$ 300 million). Its companies, listed in important

Indian and overseas markets, have

distributed over Rs. 700 crore (US$ 175 million) as dividend in the year 2008.

INDIA BULLS Financial Services Limited was accorded the highest rating

P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan

receivables securitization while INDIA BULLS Securities Limited is the only broker

in India to be assigned CRISIL’s highest broker quality grading of BQ1.

In December 2007, INDIA BULLS acquired Pyramid Retail including

Piramyd Megastores and Trumart, their chain of lifestyle and convenience

outlets INDIA BULLS’ growth has been nothing short of stupendous. In less than

eight years since the company was first registered, it has grown from just five

employees to 21,000 and from one office to 600 across the country. The INDIA

[47]
BULLS Financial Services stock is the best performing stock in the MSCI Index – the

global benchmark for equity investments.

A person who bought INDIA BULLS shares in the IPO at Rs. 19 (US$ 0.48)

in September 2004 has been rewarded almost 100 times in three and a half years – a

feat unparalleled in the history of Indian capital markets. INDIA BULLS Real Estate

Limited partnered Farallon Capital Management LLC of the US to bring the first

Foreign Direct Investment into real estate.

Companies History in India

In 1999, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh

Mittal acquired Orbis,a Delhi based stock broking company. Young entrepreneur

Sameer Gehlaut established INDIA BULLS in 2000, after acquiring orbis Securities,

a stock brokerage company in Delhi. The group started its operations from a small

office near Hauz Khas bus terminal in Delhi.The office had a tin roof and two

computers. The idea of leveraging technology for trading stocks led to the creation of

INDIA BULLS Incorporated on 10th January 2000, it was converted into a public

limited company on 27th February 2004.

Its original idea of leveraging technology bore fruit when INDIA BULLS was

accorded permission to conduct online trading on Indian stock exchanges.

The company had achieved the distinction of becoming only the second

brokerage firm in India to be granted this consent. The challenges facing it were

immense – not least of all the mind set of investors who were called to make the big

leap from traditional stock trading to a completely online interface. Having overcome

[48]
this resistance, the company later expanded its service portfolio to include equity,

F&O, wholesale debt, mutual fund distribution and equity research.

In 2003/04, INDIA BULLS ventured into insurance distribution and

commodity trading. It successfully floated its IPO in September 2004 and in the same

year entered the consumer finance segment. Real estate, the new sunrise industry, was

the next frontier for INDIA BULLS. In 2004/05, it entered this sector. But it wasn’t

just real estate that was booming.

Opportunities were opening up in retail and infrastructure as well. To cement

its position in the Indian business and industry firmament,

INDIA BULLS acquired Pyramid Retail In 2007 and marked its presence in the

power sector by launching INDIA BULLS Power

Brand Values

INDIA BULLS is amongst the largest non-banking financial services

companies in India and enjoys strong brand recognition and customer acceptance.

The company attributes its dominant position in the brokerage industry to the

preferential status it enjoys with investors Coupled with its forays into various

segments; the Group believes that the bulk of its brand story is yet to be written.

Indeed, when a case study on India’s youngest brands which have had a profound

impact on the economy is crafted, INDIA BULLS will feature prominently in it.

Recent Developments

Several developments across its group companies have propelled INDIA

BULLS forward and are expected to continue to power the rise of this conglomerate.

[49]
INDIA BULLS Financial Services Limited has recently signed a joint venture

agreement with Sogecap, the insurance arm of Societe Generale (SocGen) for its

upcoming life insurance venture.

At the same time it has also signed a Memorandum of Understanding with

MMTC, the largest commodity trading house in India, to establish a Commodities

Exchange with 26% Ownership held by MMTC.

On the asset management front, the company has received formal approval

from SEBI and is expected to shortly launch its first NFO.

The Board of Directors

Following is the list of our Board Members as on November 4, 2009

Mr. Sameer Gehlaut Chairman & CEO

Gagan Banga Executive Director

Rajiv Rattan CEO

Shamsher Singh Director

Aishwarya Katoch Director

Karan Singh Director

Prem Prakash Mird Director

Saurabh K Mittal Executive Director

Amit Jain Company Secretary

[50]
DATA ANALYSIS
ABB RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.06861233 0.01404433
January 454 485.15 5 0.054568 5 0.000197243
February 471.05 367.2 -0.22046492 0.054568 -0.27503292 0.075643106
0.15324324 0.09867524
March 370 426.7 3 0.054568 3 0.009736804
0.14279009 0.08822209
April 426.15 487 7 0.054568 7 0.007783138
0.32846938 0.27390138
May 490 650.95 8 0.054568 8 0.07502197
0.16876876 0.11420076
June 666 778.4 9 0.054568 9 0.013041816
July 780 700.6 -0.10179487 0.054568 -0.15636287 0.024449348
0.09165467 0.03708667
August 695 758.7 6 0.054568 6 0.001375422
0.02549186
September 764.95 784.45 2 0.054568 -0.02907614 0.000845422
October 785.1 769.55 -0.01980639 0.054568 -0.07437439 0.00553155
November 745.35 741.05 -0.0057691 0.054568 -0.0603371 0.003640566
0.02361889
December 749.4 767.1 5 0.054568 -0.0309491 0.000957847
0.65481397
Total 9 0.218224232
Standard Deviation 0.134853
BHARATI AIRTEL RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 715 633.95 -0.11335664 -0.0495 -0.06385664 0.004077671
0.01397490 0.06347490
February 629.7 638.5 9 -0.0495 9 0.004029064
0.03851533
March 632.7 625.75 -0.01098467 -0.0495 1 0.001483431
0.20170817 0.25120817
April 626.4 752.75 4 -0.0495 4 0.063105547

[51]
0.07160122 0.12110122
May 765.35 820.15 8 -0.0495 8 0.014665507
June 870 802.15 -0.07798851 -0.0495 -0.02848851 0.000811595
July 803.15 410.1 -0.48938554 -0.0495 -0.43988554 0.193499292
0.01578947 0.06528947
August 418 424.6 4 -0.0495 4 0.004262715
0.00023886 0.04973886
September 418.65 418.75 3 -0.0495 3 0.002473954
October 426 292.85 -0.31255869 -0.0495 -0.26305869 0.069199872
0.02585616 0.07535616
November 292 299.55 4 -0.0495 4 0.005678552
0.08150213 0.13100213
December 304.9 329.75 2 -0.0495 2 0.017161559
Total -0.5936031 0.380448759
Standard Deviation 0.1780563
BHEL RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 1372 1320.8 -0.03731778 0.049991 -0.08730878 0.007622824
February 1315 1403.85 0.06756654 0.049991 0.01757554 0.0003089
0.09064981 0.04065881
March 1385 1510.55 9 0.049991 9 0.00165314
0.08927631 0.03928531
April 1520 1655.7 6 0.049991 6 0.001543336
0.27851964 0.22852864
May 1703.65 2178.15 9 0.049991 9 0.052225343
June 2134.6 2204.05 0.03253537 0.049991 -0.01745563 0.000304699
0.00058322
July 2229 2230.3 1 0.049991 -0.04940778 0.002441129
0.02644444
August 2250 2309.5 4 0.049991 -0.02354656 0.00055444
September 2319 2328.85 0.00424752 0.049991 -0.04574348 0.002092466
October 2301 2217.8 -0.03615819 0.049991 -0.08614919 0.007421683
0.01529446
November 2209.95 2243.75 4 0.049991 -0.03469654 0.00120385
0.06825202 0.01826102
December 2249.75 2403.3 8 0.049991 8 0.000333465
0.59989339
Total 5 0.077705274
Standard Deviation 0.08047

CIPLA RETURNS FOR THE YEAR 2009

[52]
Month Start End Returns Avg.Ret Deviation (Deviation)2
0.02647058
January 187 191.95 8 0.05324 -0.02676941 0.000716601
February 192 191.5 -0.00260417 0.05324 -0.05584417 0.003118571
0.17047872 0.11723872
March 188 220.05 3 0.05324 3 0.013744918
0.10183066 0.04859066
April 218.5 240.75 4 0.05324 4 0.002361053
May 243.05 222.8 -0.08331619 0.05324 -0.13655619 0.018647593
June 225 253.35 0.126 0.05324 0.07276 0.005294018
July 253.35 275.05 0.08565226 0.05324 0.03241226 0.001050555
August 277 270.85 -0.02220217 0.05324 -0.07544217 0.00569152
0.03284132
September 271 279.9 8 0.05324 -0.02039867 0.000416106
0.01448763
October 283 287.1 3 0.05324 -0.03875237 0.001501746
0.12596762 0.07272762
November 284.2 320 8 0.05324 8 0.005289308
0.06331323 0.01007323
December 315.1 335.05 4 0.05324 4 0.00010147
0.63891953
Total 5 0.057933459
Standard Deviation 0.0694823

HCL TECH RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 116.5 116.1 -0.00343348 0.1141 -0.11753348 0.013814118
February 111.15 100.2 -0.09851552 0.1141 -0.21261552 0.045205359
0.04132653
March 98 102.05 1 0.1141 -0.07277347 0.005295978
0.29139731 0.17729731
April 100.55 129.85 5 0.1141 5 0.031434338
May 130.55 166.9 0.27843738 0.1141 0.16433738 0.027006775
0.08110465
June 172 185.95 1 0.1141 -0.03299535 0.001088693
0.29569892 0.18159892
July 186 241 5 0.1141 5 0.032978169
0.23966942 0.12556942
August 242 300 1 0.1141 1 0.01576768
0.13979933 0.02569933
September 299 340.8 1 0.1141 1 0.000660456

[53]
October 342 306.25 -0.10453216 0.1141 -0.21863216 0.047800023
0.11438016 0.00028016
November 302.5 337.1 5 0.1141 5 7.84926E-08
0.09369024
December 339.95 371.8 9 0.1141 -0.02040975 0.000416558
1.36902280
Total 8 0.221468225
Standard Deviation 0.1358517

INFOSYS RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.17083333 0.02493333
January 1116 1306.65 3 0.1459 3 0.000621671
February 1292 1231.25 -0.04702012 0.1459 -0.19292012 0.037218174
0.08694581
March 1218 1323.9 3 0.1459 -0.05895419 0.003475596
0.13379408
April 1331.15 1509.25 8 0.1459 -0.01210591 0.000146553
0.05591737
May 1520.1 1605.1 4 0.1459 -0.08998263 0.008096873
0.09976166
June 1615.35 1776.5 2 0.1459 -0.04613834 0.002128746
0.16593713 0.02003713
July 1770.55 2064.35 8 0.1459 8 0.000401487
0.03253391
August 2064 2131.15 5 0.1459 -0.11336609 0.012851869
0.07778219
September 2139.95 2306.4 1 0.1459 -0.06811781 0.004640036
October 2330 2206.2 -0.05313305 0.1459 -0.19903305 0.039614154
0.08004993
November 2203 2379.35 2 0.1459 -0.06585007 0.004336231
0.07173465
December 2427 2601.1 2 0.1459 -0.07416535 0.005500499
0.87513692
Total 6 0.11903189
Standard Deviation 0.09959580
M&M RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.09510869
January 276 302.25 6 0.11799 -0.0228813 0.000523554
[54]
0.05661016
February 295 311.7 9 0.11799 -0.06137983 0.003767484
0.25786885 0.13987885
March 305 383.65 2 0.11799 2 0.019566093
0.26789658 0.14990658
April 384.85 487.95 3 0.11799 3 0.022471984
0.33512974 0.21713974
May 501 668.9 1 0.11799 1 0.047149667
0.02559347
June 674 691.25 2 0.11799 -0.09239653 0.008537118
0.22949763 0.11150763
July 698.7 859.05 8 0.11799 8 0.012433953
August 876.65 863.65 -0.01482918 0.11799 -0.13281918 0.017640934
0.02098144
September 865.05 883.2 6 0.11799 -0.09700855 0.00941066
0.03357623
October 892 921.95 3 0.11799 -0.08441377 0.007125684
0.10682795
November 930 1029.35 7 0.11799 -0.01116204 0.000124591
0.00171455
December 1079 1080.85 1 0.11799 -0.11627545 0.01351998
1.41597615
Total 9 0.162271703
Standard Deviation 0.11628689

ONGC RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.62069403
January 667 654.95 -0.01806597 0.63876 3 0.385261083
0.06258649 0.70134649
February 650.3 691 9 0.63876 9 0.491886911
0.17491152 0.81367152
March 664.05 780.2 8 0.63876 8 0.662061355
0.10865384 0.74741384
April 780 864.75 6 0.63876 6 0.558627457
0.30104595 0.93980595
May 898.7 1169.25 5 0.63876 5 0.883235234
0.55183317
June 1171.1 1069.3 -0.08692682 0.63876 9 0.304519858
0.09279947 0.73155947
July 1065.2 1164.05 4 0.63876 4 0.535179264
[55]
0.01759656 0.65635656
August 1165 1185.5 7 0.63876 7 0.430803942
0.63574013
September 1175.55 1172 -0.00301986 0.63876 7 0.404165522
0.60162528
October 1175.45 1131.8 -0.03713471 0.63876 6 0.361952984
0.04790811 0.68666811
November 1144.9 1199.75 4 0.63876 4 0.471513099
0.61716531
December 1204 1178 -0.02159468 0.63876 6 0.380893027
Total 0.63876 5.870099736
Standard Deviation 0.69941045
REL RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.06741935 0.06018935
January 1240 1323.6 5 0.00723 5 0.003622758
February 1290 1266.05 -0.01856589 0.00723 -0.02579589 0.000665428
0.24094571 0.23371571
March 1228.7 1524.75 5 0.00723 5 0.054623035
0.18598161 0.17875161
April 1523 1806.25 5 0.00723 5 0.03195214
May 1851 2271.9 0.2273906 0.00723 0.2201606 0.04847069
June 2330 2023.4 -0.13158798 0.00723 -0.13881798 0.019270432
July 2029.9 1955.4 -0.03670132 0.00723 -0.04393132 0.00192996
0.01838590 0.01115590
August 1968.9 2005.1 1 0.00723 1 0.000124454
September 2024.8 2201.65 0.08734196 0.00723 0.08011196 0.006417926
October 2199.9 1931.15 -0.12216464 0.00723 -0.12939464 0.016742974
November 1920.05 1063.5 -0.44610817 0.00723 -0.45333817 0.2055155
0.01446511 0.00723511
December 1075 1090.55 6 0.00723 6 5.23469E-05
0.08680225
Total 4 0.389387646
Standard Deviation 0.180136

SATYAM RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 175 53.85 -0.69228571 0.04825 -0.74053571 0.548393144
February 55 41.35 -0.24818182 0.04825 -0.29643182 0.087871823
March 42.5 38.45 -0.09529412 0.04825 -0.14354412 0.020604914
April 38.95 46.8 0.20154043 0.04825 0.15329043 0.023497958

[56]
6 6
0.12910052 0.08085052
May 47.25 53.35 9 0.04825 9 0.006536808
0.30514705 0.25689705
June 54.4 71 9 0.04825 9 0.065996099
July 71.25 104.65 0.46877193 0.04825 0.42052193 0.176838693
0.17596153 0.12771153
August 104 122.3 8 0.04825 8 0.016310237
September 122.9 119.1 -0.03091945 0.04825 -0.07916945 0.006267801
October 119 102.2 -0.14117647 0.04825 -0.18942647 0.035882388
November 100.5 90.15 -0.10298507 0.04825 -0.15123507 0.022872048
0.07857142 0.03032142
December 91 98.15 9 0.04825 9 0.000919389
0.04825027
Total 9 1.011991302
Standard Deviation 0.29040077
SBI RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 1329 1151 -0.13393529 0.0464 -0.18033529 0.032520817
February 1139 1025.3 -0.09982441 0.0464 -0.14622441 0.021381577
0.05164087 0.00524087
March 1014.7 1067.1 9 0.0464 9 2.74668E-05
0.18812433 0.14172433
April 1076.15 1278.6 2 0.0464 2 0.020085786
0.41018675 0.36378675
May 1325.25 1868.85 7 0.0464 7 0.132340805
June 2039.7 1745.3 -0.14433495 0.0464 -0.19073495 0.036379822
0.04659156 0.00019156
July 1731 1811.65 6 0.0464 6 3.66974E-08
August 1820 1742.9 -0.04236264 0.0464 -0.08876264 0.007878806
0.24642248 0.20002248
September 1761 2194.95 7 0.0464 7 0.040008995
October 2191.55 2191.05 -0.00022815 0.0464 -0.04662815 0.002174184
0.02402834
November 2187 2239.55 9 0.0464 -0.02237165 0.000500491
0.01024042
December 2246 2269 7 0.0464 -0.03615957 0.001307515
0.55654936
Total 3 0.294606301
Standard Deviation 0.15668607

[57]
TATA MOTORS RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.1487421
January 160.95 149.65 -0.07020814 8 -0.21895032 0.047939242
0.00844309 0.1487421
February 148.05 149.3 4 8 -0.14029909 0.019683834
0.23408624 0.1487421 0.08534406
March 146.1 180.3 2 8 2 0.007283609
0.1487421
April 182 243.8 0.33956044 8 0.19081826 0.036411608
0.34632294 0.1487421 0.19758076
May 250.2 336.85 2 8 2 0.039038157
0.1487421
June 348.6 290.75 -0.16594951 8 -0.31469169 0.099030861
0.44218268 0.1487421 0.29344050
July 292.3 421.55 9 8 9 0.086107332
0.15768321 0.1487421 0.00894103
August 423 489.7 5 8 5 7.99421E-05
0.20299145 0.1487421 0.05424927
September 491.4 591.15 3 8 3 0.002942984
0.1487421
October 594.8 567.25 -0.04631809 8 -0.19506027 0.038048509
0.17684117 0.1487421 0.02809899
November 563.5 663.15 1 8 1 0.000789553
0.1487421
December 682.8 791.55 0.15927065 8 0.01052847 0.000110849
1.78490615
Total 4 0.37746648
Standard Deviation 0.17735709
TATATEA RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


0.00140484
January 605.05 605.9 3 0.03419 -0.03278516 0.001074867
February 606 579.85 -0.04315182 0.03419 -0.07734182 0.005981756
0.02373029
March 571 584.55 8 0.03419 -0.0104597 0.000109405
0.14321819 0.10902819
April 593.5 678.5 7 0.03419 7 0.011887148
May 695 693.15 -0.00266187 0.03419 -0.03685187 0.00135806
0.02436079
June 704 721.15 5 0.03419 -0.0098292 9.66133E-05
[58]
0.16568493 0.13149493
July 730 850.95 2 0.03419 2 0.017290917
0.10508771 0.07089771
August 855 944.85 9 0.03419 9 0.005026487
September 950.55 897 -0.05633581 0.03419 -0.09052581 0.008194921
October 901 856.65 -0.04922309 0.03419 -0.08341309 0.006957743
0.05948477 0.02529477
November 854 904.8 8 0.03419 8 0.000639826
0.03868653 0.00449653
December 906 941.05 4 0.03419 4 2.02188E-05
0.41028551
Total 9 0.058637962
Standard Deviation 0.069903482

WIPRO RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 233.4 231.55 -0.00792631 0.10074 -0.10866631 0.011808366
February 229 207.5 -0.09388646 0.10074 -0.19462646 0.03787946
0.20244498 0.10170498
March 204.5 245.9 8 0.10074 8 0.010343905
0.34491869 0.24417869
April 246 330.85 9 0.10074 9 0.059623237
0.15763173 0.05689173
May 330.2 382.25 8 0.10074 8 0.00323667
June 385.1 377.95 -0.01856661 0.10074 -0.11930661 0.014234066
0.29669312 0.19595312
July 378 490.15 2 0.10074 2 0.038397626
0.11123459 0.01049459
August 494.9 549.95 3 0.10074 3 0.000110136
0.09274047
September 551 602.1 2 0.10074 -0.00799953 6.39925E-05
0.00314569
October 604 605.9 5 0.10074 -0.0975943 0.009524648
0.04320066
November 603 629.05 3 0.10074 -0.05753934 0.003310775
0.07722772
December 631.25 680 3 0.10074 -0.02351228 0.000552827
1.20885831
Total 7 0.18908571
Standard Deviation 0.1255275

[59]
ZEEL RETURNS FOR THE YEAR 2009

Month Start End Returns Avg.Ret Deviation (Deviation)2


January 141.9 110.35 -0.22233968 0.051322 -0.27366168 0.074890713
February 109.8 106.85 -0.02686703 0.051322 -0.07818903 0.006113525
March 106.5 106.35 -0.00140845 0.051322 -0.05273045 0.0027805
0.06352941 0.01220741
April 106.25 113 2 0.051322 2 0.000149021
0.44215938 0.39083738
May 116.7 168.3 3 0.051322 3 0.15275386
0.01285714
June 175 177.25 3 0.051322 -0.03846486 0.001479545
0.04407636
July 178.1 185.95 2 0.051322 -0.00724564 5.24993E-05
0.12140575 0.07008375
August 187.8 210.6 1 0.051322 1 0.004911732
0.10023041 0.04890841
September 217 238.75 5 0.051322 5 0.002392033
October 238.1 231.55 -0.02750945 0.051322 -0.07883145 0.006214397
0.10543478 0.05411278
November 230 254.25 3 0.051322 3 0.002928193
0.00429687
December 256 257.1 5 0.051322 -0.04702512 0.002211362
0.61586551
Total 5 0.256877381
Standard Deviation 0.14630943

[60]
TABLE-1

SELECTED COMPANIES AVG RISK & AVG RETURN FOR THE YEAR
2005
S.No. Name of the company Avg.Returns Avg.Risk
1 ABB 0.046 0.077
2 BHARATI AIRTEL 0.050 0.108
3 BHEL 0.024 0.114
4 CIPLA -0.037 0.264
5 HCLTECH 0.003 0.069
6 INFOSYS 0.023 0.063
7 M&M 0.020 0.055
8 ONGC -0.001 0.086
9 REL 0.006 0.157
10 SATYAM 0.013 0.085
11 SBI 0.010 0.107
12 TATA MOTORS 0.012 0.077
13 TATA TEA 0.019 0.077
14 WIPRO -0.034 0.202
15 ZEEL 0.016 0.065

INTERPRETRATION:
CIPLA and WIPRO are in loss and risk is more, ABB is showing less risk compare to
other companies in 2005
TABLE-2
[61]
SELECTED COMPANIES AVG. RISK & AVG. RETURNS
FOR THE YEAR 2006
S.No. Name of the company Avg.Returns Avg.Risk
1 ABB 0.055 0.089
2 BHARATI AIRTEL 0.006 0.093
3 BHEL 0.049 0.113
4 CIPLA 0.049 0.128
5 HCLTECH 0.037 0.096
6 INFOSYS 0.029 0.077
7 M&M 0.044 0.110
8 ONGC 0.030 0.080
9 REL 0.004 0.087
10 SATYAM 0.048 0.048
11 SBI 0.030 0.096
12 TATA MOTORS 0.008 0.100
13 TATA TEA 0.051 0.088
14 WIPRO -0.045 0.199
15 ZEEL -0.011 0.108

INTERPRETATION:
WIPRO and ZEEL are in loss and risk is more, ABB earned more returns than other
companies and risk is less compare to other companies in the year 2006.

TABLE-3
SELECTED COMPANIES AVG. RISK & AVG. RETURN
[62]
FOR THE YEAR 2007
S.No. Name of the company Avg.Returns Avg.Risk
1 ABB 0.057 0.150
2 BHARATI AIRTEL 0.004 0.054
3 BHEL 0.035 0.108
4 CIPLA -0.010 0.208
5 HCLTECH 0.018 0.089
6 INFOSYS 0.022 0.177
7 M&M 0.047 0.059
8 ONGC -0.009 0.113
9 REL -0.006 0.073
10 SATYAM -0.022 0.150
11 SBI -0.024 0.189
12 TATA MOTORS 0.091 0.264
13 TATA TEA -0.017 0.073
14 WIPRO 0.029 0.084
15 ZEEL 0.053 0.139

INTERPRETATION:
SATYAM, SBI earned more, loss risk is more. CIPLA, ONGC and TATA
TEA also earned loss and risk is high. TATA MOTORS returns are high compare to
other companies in the year 2006.
TABLE-4
SELECTED COMPANIES AVG. RISK & AVG. RETURN
FOR THE YEAR 2008
[63]
S.No. Name of the company Avg.Returns Avg.Risk
1 ABB -0.028 0.239
2 BHARATI AIRTEL 0.050 0.044
3 BHEL 0.043 0.191
4 CIPLA -0.014 0.072
5 HCLTECH -0.032 0.171
6 INFOSYS -0.021 0.065
7 M&M -0.003 0.066
8 ONGC 0.035 0.102
9 REL 0.128 0.177
10 SATYAM -0.010 0.089
11 SBI 0.062 0.108
12 TATA MOTORS -0.005 0.075
13 TATA TEA 0.025 0.126
14 WIPRO -0.015 0.057
15 ZEEL 0.027 0.123

INTERPRETATION:
ABB, HCL earned more loss CIPLA, INFOSYS, SATYAM, WIPRO, M&M also
earned loss risk is high. AIRTEL earned high returns and risk is less compare to other
companies in the year 2008
TABLE-5

SELECTED COMPANIES AVG. RISK & AVG. RETURN


FOR THE YEAR 2009
[64]
S.No. Name of the company Avg.Returns Avg.Risk
1 ABB 0.055 0.13485
2 BHARATI AIRTEL -0.050 0.17806
3 BHEL 0.050 0.08047
4 CIPLA 0.053 0.06948
5 HCLTECH 0.114 0.13585
6 INFOSYS 0.146 0.09959
7 M&M 0.118 0.11629
8 ONGC 0.639 0.69941
9 REL 0.007 0.18014
10 SATYAM 0.048 0.29041
11 SBI 0.046 0.15669
12 TATA MOTORS 0.149 0.17736
13 TATA TEA 0.034 0.06990
14 WIPRO 0.101 0.12553
15 ZEEL 0.051 0.14631

INTERPRETATION:
ABB, Dr.REDDY’S and INFOSYS are in huge losses. NALCO earned high returns
and risk is less compare to other companies in the year 2008.

[65]
NSE INDEX

Year Avg.Returns Avg.Risk


2005 0.0113 0.1071
2006 0.0256 0.1008
2007 0.0179 0.1287
2008 0.01613 0.1137
2009 0.1041 0.1774

FINDINGS

[66]
After the data is analyzed the following facts have been observed.

2005: From risk-return analysis of 2005, it is found that risk of all companies are

higher than their returns, but in comparison returns of ABB and BHARTHI

AIRTEL has higher, where as CIPLA and WIPRO has negative returns.

2006: From the analysis, the risk of all companies is higher than their returns

excluding satyam (Mahindra satyam). In comparison returns of ABB and

TATA TEA is higher, WIPRO continued its negative returns along with ZEEL.

2007: From the analysis, the M&M is performing better than other companies. In this

year most of the companies has negative returns. Satyam in particular has

negative returns and higher risk, this is due to BANKRUPTCY.

2008: From the analysis, BHARATI AIRTEL is performing better followed by

RELIANCE industries. In this year total software industry is not doing well

because of financial crisis in USA, followed by high inflation rate. In this year

TELECOM industry is performing better when compared to other industries.

2009: From the analysis, total software industry having started recovering, so their

stocks were going along with their risk. This year was good as all the

companies are doing well. TATA Motors is also another stock which is

performing well, this is due to launch of TATA NANO (world’s cheapest car)

Suggestions

[67]
After observing the facts found out after the analysis and interpretations the

following suggestions are made to the investors.

1. When there is more risk, the return will also be highs but this does not hold in all

situations especially in the case of economic crisis.

2. As the world economy is influenced by US economy, the worst scenario of US

economy is influencing the others countries stock markets.

3. The sentiments and emotions sometimes play a vital role in causing fluctuations in

the stock markets. Therefore it is not advisable to invest at the time of crisis.

4. When markets are sliding down steeply, the investors will not be protected against

the risk of investment. Therefore it is not advisable to invest when the markets are

very volatile.

5. Always it is felt that market position never stays for a long time. In this opinion

Bullish and Bearish markets end after some time. Therefore one can invest the

time of Bearish and soon after they reach bullish trend they can sell them off.

CONCLUSION

[68]
The present project work has been undertaken to study the risk-return

relationship of individual securities as well as nifty index to observe whether the stock

prices have any relationship with risk and return. As this project work is done by

studying 15 individual stocks of nifty and nifty index, there is much scope for the

analysis, interpretation and conclusion.

As the economy is fluctuations very badly, the stock prices are affected by

these fluctuations and the market has become so volatile. In this situation investors

should be very careful. The firm which is dealing the trading of share market should

be caution enough so that investors may not suffer losses.

[69]
BIBLIOGRAPHY

• Investing management

- By Puthi Sing.

• Security analysis and portfolio management

- By Punithvathy Pandiyam

• NSEindia.com

• Investopedia.com

• Glossary.reuters.com

• Capitalmarket.com

• Answers.com

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