RESEARCH REPORT

ON

RISK AND RETURNS OF

SECURITIES
(A case study of selected companies)

In The Partial Fulfilment Of the requirement for award of the Degree of Master of Business Administration (MBA)

CONTENTS
2

CHAPTER NO.

DESCRIPTION

1. 2. 3

INTRODUCTION TO TOPIC REVIEW OF LITERATURE RESEARCH METHODOLOGY a. Data sources b. Research design c. Data collection d. Need of study e. Objectives of study f. Scope of study g. Limitations of study

4 5

DATA ANALYSIS AND INTERPRETATION FINDINGS AND SUGGESTIONS BIBLIOGRAPHY

CHAPTER -1 INTRODUCTION

STATEMENT OF 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

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 investments actual return will be different than expected. Technically, this is 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. 2. Systematic risk (uncontrollable risk) non-diversifiable risk 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) b) c) Market risk Interest rate risk 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)

Financial risk It is associated with the capital structure of the company.

RETURNS
6

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 assets 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

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.
7

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 any assets 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

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. 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 symbol. 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 countrys stage of economic development. The 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 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 worlds most advanced secondary markets within a year or two. The key ingredients that underlie market quality in Indias 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.

10

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 Indias stock exchanges have adopted open electronic limit order. Before 1994, Indias stock markets were dominated by BSE in other parts of the country. 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.

11

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 consolidate and merge existing stock exchanges. Not all of Indias 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. Indias 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 marketbased 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.

12

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 (FIIs) 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.
13

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. 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. FIIs and domestic institutional investors are, however, not permitted to trade without delivery, since no delivery transactions are limited only to individual investors. One of SEBIs 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 brokers daily position.

14

The intraday trading limit is the limit to a brokers 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 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 brokers funding cost is about 24-36 percent (Endo 1998). Thus, speculative trading without the delivery of shares is no longer cost-free. Each brokers 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.

15

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

the date of contract. 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.

16

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 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 Till recent past, floor recognized in 1963. At present there are 23 Stock Exchanges.

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
17

Exchange introduced Automated Network Trading System (MANTRA) on October 7, 1996 Apart from Bombay Stock Exchanges have introduced screen based trading.

FUNCTION 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 suppliers 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. stimulates the capital formation. The negotiability and transferability of the securities, investors are willing to subscribe to the initial public offering (IPO). This

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 investors 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.

18

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. 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
19

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.

20

The Governing Board of Stock Exchanges:

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.

21

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 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.

22

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 applicants 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. 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 The persons eligible to become trading members are bodies corporate, companies Institutions including subsidiaries of banks engaged in financial services and such

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 economys 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

23

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 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) b) The SEBI Act, 1992 which establishes SEBI to protect investors and develop and The Companies Act, 1956, which sets out the code of conduct for the corporate regulate the Markets. 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

24

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 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
25

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 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

26

A type of security that signifies ownership in a corporation and represents a claim on part of the corporations 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 to 10% of the companys 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 dayto-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
27

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 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. 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

28

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.

CHAPTER-3 REVIEW OF LITERATURE

29

REVIEW OF LITERATURE
Dunn and Theisen (1983) rank the annual performance of 201 institutional portfolios for the period 1973 through 1982 without controlling for fund risk. They found no evidence that funds performed within the same quartile over the ten-year period. They also found that ranks of individual managers based on 5-year compound returns revealed no consistency. Grinblatt and Titman (1992) analyze performance of 279 funds over the period of 1975 to 1984 using a benchmark technique and find evidence that performance differences between funds persists over time. Hendricks, Patel, and Zeckhauser (1993) study 165 no-load growth-oriented funds over the period 1974 to 1988 and obtain similar results. In a study of 728 mutual fund returns over the period 1976 to 1988. Volkman and Wohar (1995) extend this analysis to examine factors that impact performance persistence. Their data consists of 322 funds over the period 1980 to 1989, and shows performance persistence is negatively related to size and negatively related to levels of management fees. Bauman and Miller (1995) studied the persistence of pension and investment fund performance by type of investment organization and investment style. They employed a quartile ranking technique because they noted that "investors pay particular attention to consultants' and financial periodicals' investment performance rankings of mutual funds and pension funds" (Bauman & Miller, 1995, p. 79). They found that portfolios managed by investment advisors showed more consistent performance (measured by quartile rankings) over market cycles and that funds managed by banks and insurance companies showed the least consistency. They suggest that this result may be caused by a higher turnover in the decision-making structure in these less consistent funds. This study controls for the effects of turnover of key decision makers by restricting the sample to those funds with the same manager for the entire period of study.

30

Kahn and Rudd 1995 study of 300 equity funds and 195 bond funds between 1983 and 1993, only the bond funds show evidence of persistence. Car hart (1997) shows that expenses and common factors in stock returns such as beta, market capitalization, one-year return momentum, and whether the portfolio is value or growth oriented "almost completely" explain short term persistence in risk-adjusted returns. He concludes that his evidence does not "support the existence of skilled or informed mutual fund portfolio managers". Detzel and Weigand (1998) use a regression residual technique to control for the effects of investment style, size and expense ratios. They find, after controlling for these variables, no evidence of performance persistence. Mishra (2002) measured mutual fund performance using lower partial moment. In this paper, measures of evaluating portfolio performance based on lower partial moment are developed. Risk from the lower partial moment is measured by taking into account only those states in which return is below a pre-specified target rate like risk-free rate. Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those used previously by incorporating the volatility of a fund's return in a simple yet meaningful manner. S.Narayan Rao evaluated performance of Indian mutual funds in a bear market through relative performance index, risk-return analysis, Treynors ratio, Sharpes ratio, Sharpes measure , Jensens measure, and Famas measure. The study used 269 open-ended schemes (out of total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes in the sample of 58 were able to satisfy investors expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk.

31

CHAPTER-4 RESEARCH METHODOLOGY

32

RESEARCH METHODOLOGY
Research project has a specified framework for collecting the data in an effect manner. Such framework is called Research Design. The research process consisted of following steps: Developing the Research Plan: It is very important to researching anything to know about its main sources where we get the main information regarding the research plan. The development of research plan has following steps: Data Sources: There are two types of data were taken into consideration i.e. Secondary data and primary data. The secondary data has been used to make the analysis because lack of sufficient time and resources to collect the primary data. Secondary Data: Secondary data is that data which is already existed. This is indirect collection of data from sources containing past or recent past information like:Annual reports, Balance sheet, Books, Newspapers and Magazines and Other companys publications.

Research Design-:Research

design specifies the methods and procedures for

conducting a particular study. A research design is the arrangement of conditions for collection and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in procedure. Research design is broadly classified into three types as Exploratory Research Design Descriptive Research Design Causal Research Design

I have chosen the descriptive research design.

33

DESCRIPTIVE RESEARCH DESIGN: Descriptive research studies are those studies which are concerned with described the characteristics of particular individual. In descriptive as well as in diagnostic studies, the researcher must be able to define clearly, what he wants to measure and must find adequate methods for measuring it along with a clear cut definition of population he want to study. Since the aim is to obtain complete and accurate information in the said studies, the procedure to be used must be carefully planned. The research design must make enough provision for protection against bias and must maximize reliability, with due concern for the economical completion of the research study.

NEED OF 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 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.

34

OBJECTIVE OF THE STUDY

The objectives aim to highlight the reasons how important is the financial system and financial statement for an organization or company. There are various objectives of the study are as follows: 1. The main objective of this project is to analyze the price fluctuations of various

companies. 2. prices. To observe the relation between Returns and Risk in the yearly fluctuations in

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

LIMITATIONS
This project report data collected from secondary sources only. This project analysis report may not be applicable in all equity markets. Project took only 15 companies of NSE for equity analysis. It will not applicable to total NSES Nifty Index. The accuracy of the study is based on the accuracy of the data presented in the NSE listings.

35

Detailed study of topic was not possible due to limited size of the project. The time taken for the study is limited.

CHAPTER-5 DATA ANALYSIS & INTERPRETATION

36

ABB RETURNS FOR THE YEAR 2011

Std. Month Start End Returns 0.06861233 January February 454 471.05 485.15 367.2 5 -0.22046492 0.15324324 March 370 426.7 3 0.14279009 April 426.15 487 7 0.32846938 May 490 650.95 8 0.16876876 June July 666 780 778.4 700.6 9 -0.10179487 0.09165467 August 695 758.7 6 0.02549186 September October November December 764.95 785.1 745.35 749.4 784.45 769.55 741.05 767.1 2 -0.01980639 -0.0057691 0.02361889 0.054568 0.054568 0.054568 0.054568 -0.02907614 0.000845422 -0.07437439 0.00553155 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 Avg.Ret Deviation 0.01404433 5 0.000197243 -0.27503292 0.075643106 0.09867524 3 0.009736804 0.08822209 7 0.007783138 0.27390138 8 0.11420076 9 0.013041816 -0.15636287 0.024449348 0.03708667 6 0.001375422 0.07502197 Variance

-0.0603371 0.003640566 -0.0309491 0.000957847

37

5 0.65481397 Total Standard Deviation 9 0.218224232 0.134853

CALCULATION OF BETA
Price of Share 232.475 218.25 225.2 288.425 356.225 381.525 434.075 522.425 576.55 604.95 0.0611 9 0.0318 44 0.2807 5 0.2350 7 0.0710 23 0.1377 37 0.2035 36 0.1036 03 0.0492 59 0.0037441 4 0.0010140 54 0.0788208 12 0.0552577 99 0.0050441 99 0.0189714 03 0.0414270 07 0.0107336 62 0.0024264 02 Retur n (x)

X2

Sensex 18327.7 6 17823.4 19445.2 2 19135.9 6 18503.2 8 18845.8 7 18197.2 16676.7 5 16453.7 6 17705.0 1

y 0.027518 9 0.090993 86 0.015904 2 0.033062 4 0.018515 1 0.034419 7 0.083554 1 0.013371 3 0.076046 45

y2

xy

0.000757 29 0.008279 883 0.000252 942 0.001093 12 0.000342 809 0.001184 719 0.006981 281 0.000178 792 0.005783 062

0.0016 84 0.0028 98 0.0044 7 0.0077 7 0.0013 15 0.0047 4 0.0170 1 0.0013 9 0.0037 46

38

616.025 655.625 Sum

0.0183 07 0.0642 83 1.134 223

0.0003351 57 0.0041323 18 0.221906 953

16123.4 6 15454.9 2 194364 .83

0.089327 8 0.041463 8 0.15306 68

0.007979 46 0.001719 247 0.034552 606

0.0016 4 0.0026 7 0.030 03

=nXY(x) (y)/nx2(x)2

1.613265 8

From the analysis we find that the value of beta is -.6132658 and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 6%

39

BHARATI AIRTEL RETURNS FOR THE YEAR 2011

Std. Month January Start 715 End 633.95 Returns -0.11335664 0.01397490 February 629.7 638.5 9 -0.0495 Avg.Ret -0.0495 Deviation Variance

-0.06385664 0.004077671 0.06347490 9 0.004029064 0.03851533

March

632.7

625.75

-0.01098467 0.20170817

-0.0495

1 0.001483431 0.25120817

April

626.4

752.75

4 0.07160122

-0.0495

4 0.063105547 0.12110122

May June July

765.35 870 803.15

820.15 802.15 410.1

8 -0.07798851 -0.48938554 0.01578947

-0.0495 -0.0495 -0.0495

8 0.014665507 -0.02848851 0.000811595 -0.43988554 0.193499292 0.06528947

August

418

424.6

4 0.00023886

-0.0495

4 0.004262715 0.04973886

September October

418.65 426

418.75 292.85

3 -0.31255869 0.02585616

-0.0495 -0.0495

3 0.002473954 -0.26305869 0.069199872 0.07535616

November

292

299.55

4 0.08150213

-0.0495

4 0.005678552 0.13100213

December

304.9 Total

329.75

2 -0.5936031

-0.0495

2 0.017161559 0.380448759 0.1780563

Standard Deviation

40

CALCULATION OF BETA
Price of Share 674.475 634.1 629.225 689.575 792.75 836.075 606.625 421.3 418.7 359.425 295.775 317.325 Sum 0.0598 6 0.0076 9 0.0959 12 0.1496 21 0.0546 52 0.2744 4 0.3055 0.0061 7 0.1415 7 0.1770 9 0.0728 59 0.599 27 0.0035 83 5.91E05 0.0091 99 0.0223 86 0.0029 87 0.0753 16 0.0933 31 3.81E05 0.0200 42 0.0313 6 0.0053 08 0.263 611 Retur n (x) X2 Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8 y 0.0275 2 0.0909 94 0.0159 0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 0.0893 3 0.0414 6 0.153 07 41

y2

xy

0.0007 57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

0.0016473 2 0.0006995 66 0.0015253 95 0.0049468 28 0.0010118 78 0.0094460 54 0.0255259 13 8.25194E05 0.0107658 3 0.0158189 22 0.0030210 29 0.032573 957

=nXY-(x)(y)/nx2-

(x)2

0.0030 1

From the analysis we find that the value of beta is -0.00301. and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 0.03%

BHEL RETURNS FOR THE YEAR 2011

Std. Month January February Start 1372 1315 End 1320.8 1403.85 Returns -0.03731778 0.06756654 0.09064981 March 1385 1510.55 9 0.08927631 April 1520 1655.7 6 0.27851964 May June 1703.65 2134.6 2178.15 2204.05 9 0.03253537 0.049991 0.049991 0.049991 0.049991 Avg.Ret 0.049991 0.049991 Deviation Variance

-0.08730878 0.007622824 0.01757554 0.04065881 9 0.03928531 6 0.001543336 0.22852864 9 0.052225343 -0.01745563 0.000304699 0.00165314 0.0003089

42

0.00058322 July 2229 2230.3 1 0.02644444 August September October 2250 2319 2301 2309.5 2328.85 2217.8 4 0.00424752 -0.03615819 0.01529446 November 2209.95 2243.75 4 0.06825202 December 2249.75 2403.3 8 0.59989339 Total Standard Deviation 5 0.077705274 0.08047 0.049991 0.049991 -0.03469654 0.01826102 8 0.000333465 0.00120385 0.049991 0.049991 0.049991 -0.02354656 0.00055444 0.049991 -0.04940778 0.002441129

-0.04574348 0.002092466 -0.08614919 0.007421683

CALCULATION OF BETA

Price of Share 1346.4 1359.425 1447.775 1587.85

Retur n (x)

X2

Sense x 18327. 76 17823. 4 19445. 22 19135. 96

y 0.0275 2 0.0909 94 0.0159

y2

xy 0.0002662 16 0.0059137 56 0.0015387

43

0.0096 74 0.0649 91 0.0967 52

9.36E05 0.0042 24 0.0093 61

0.0007 57 0.0082 8 0.0002 53

1940.9 2169.325 2229.65 2279.75 2323.925 2259.4 2226.85 2326.525 Sum

0.2223 45 0.1176 9 0.0278 08 0.0224 7 0.0193 77 0.0277 7 0.0144 1 0.0447 61 0.583 695

0.0494 37 0.0138 51 0.0007 73 0.0005 05 0.0003 75 0.0007 71 0.0002 08 0.0020 04 0.081 602

18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 0.0893 3 0.0414 6 0.153 07

0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

58 0.0073512 4 0.0021790 46 0.0009571 51 0.0018774 51 0.0002590 98 0.0021114 7 0.0012868 99 0.0018559 42 0.006837 624

=nXY-(x)(y)/nx2(x)2

0.4152 5

From the analysis we find that the value of beta is -0.41525. and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 4% CIPLA RETURNS FOR THE YEAR 2011
44

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

45

CALCULATION OF BETA
Price of Share 189.475 191.75 204.025 229.625 232.925 239.175 264.2 273.925 275.45 285.05 302.1 325.075 Sum 0.0120 07 0.0640 16 0.1254 75 0.0143 71 0.0268 33 0.1046 31 0.0368 09 0.0055 67 0.0348 52 0.0598 14 0.0760 51 0.560 425 0.0001 44 0.0040 98 0.0157 44 0.0002 07 0.0007 2 0.0109 48 0.0013 55 3.1E05 0.0012 15 0.0035 78 0.0057 84 0.043 822 Retur n (x) X2 Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8 y 0.0275 2 0.0909 94 0.0159 0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 0.0893 3 0.0414 6 0.153 07 y2 xy 0.0003304 16 0.0058250 31 0.0019955 72 0.0004751 48 0.0004968 09 0.0036013 55 0.0030755 61 -7.4441E05 0.0026503 75 0.0053430 6 0.0031533 63 0.009076 7

0.0007 57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

=nXY-(x)(y)/nx2(x)2

0.4135 8

46

From the analysis we find that the value of beta is -0.41358. and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 4%

47

HCL TECH RETURNS FOR THE YEAR 2011

Std. Month January February Start 116.5 111.15 End 116.1 100.2 Returns -0.00343348 -0.09851552 0.04132653 March 98 102.05 1 0.29139731 April May 100.55 130.55 129.85 166.9 5 0.27843738 0.08110465 June 172 185.95 1 0.29569892 July 186 241 5 0.23966942 August 242 300 1 0.13979933 September October 299 342 340.8 306.25 1 -0.10453216 0.11438016 November 302.5 337.1 5 0.09369024 December 339.95 371.8 9 1.36902280 Total Standard Deviation 8 0.221468225 0.1358517 0.1141 -0.02040975 0.000416558 0.1141 0.1141 0.1141 0.1141 0.1141 0.1141 -0.03299535 0.001088693 0.18159892 5 0.032978169 0.12556942 1 0.02569933 1 0.000660456 -0.21863216 0.047800023 0.00028016 5 7.84926E-08 0.01576768 0.1141 0.1141 0.1141 -0.07277347 0.005295978 0.17729731 5 0.031434338 0.16433738 0.027006775 Avg.Ret 0.1141 0.1141 Deviation Variance

-0.11753348 0.013814118 -0.21261552 0.045205359

48

CALCULATION OF BETA

Price of Share 116.3

Return (x)

X2

Sensex 18327.7 6

y2

xy

- 0.00834 0.02751891 0.00075 0.0025140 105.675 0.09136 6 17823.4 1 7 88 - 0.00285 19445.2 0.09099386 0.0048650 100.025 0.05347 9 2 2 0.00828 6 0.15171 0.02301 19135.9 0.01590416 0.00025 0.0024128 115.2 2 7 6 6 3 5 0.29101 18503.2 - 0.00109 0.0096216 148.725 6 0.08469 8 0.03306236 3 6 178.975 0.20339 18845.8 0.01851509 0.00034 0.0037658 6 0.04137 7 6 3 88

0.19290 0.03721 0.03441974 0.00118 0.0066397 213.5 4 2 18197.2 3 5 1 0.26932 0.07253 16676.7 0.08355406 0.00698 0.0225028 271 1 4 5 3 1 5 0.18044 16453.7 - 0.00017 0.0024127 319.9 3 0.03256 6 0.01337131 9 6 324.125 0.01320 0.00017 17705.0 0.07604644 0.00578 0.0010043

49

65

- 0.00017 16123.4 0.08932782 0.00797 0.0011919 319.8 0.01334 8 6 3 9 56 0.11280 0.01272 15454.9 0.04146380 0.00171 0.0046773 355.875 5 5 2 5 9 2 1.2566 0.3156 194364 0.1530667 0.0345 0.044655 35 64 .8 76 53 92

Sum

=nXY-(x)(y)/nx2(x)2

2.06482694 1

From the analysis we find that the value of beta is -2.064826941. and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 20.6%

50

INFOSYS RETURNS FOR THE YEAR 2011

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

51

6 Standard Deviation 0.09959580

CALCULATION OF BETA

Price of Share 1211.325 1261.625 1270.95 1420.2 1562.6 1695.925 1917.45 2097.575 2223.175 2268.1 2291.175 2514.05

Retur n (x)

X2

Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92

y 0.027518 911 0.090993 862 0.015904 166 0.033062 36 0.018515 096 0.034419 743 0.083554 063 0.013371 31 0.076046 448 0.089327 823 0.041463 805

y2

xy 0.001142 72 0.000672 559 0.001867 66 0.003315 08 0.001579 755 0.004495 97 0.007849 06 0.000800 66 0.001536 715 0.000908 8 0.004033 41
52

0.0415 25 0.0073 91 0.1174 32 0.1002 68 0.0853 23 0.1306 22 0.0939 4 0.0598 79 0.0202 08 0.0101 74 0.0972 75

0.0017 24 5.46E05 0.0137 9 0.0100 54 0.0072 8 0.0170 62 0.0088 25 0.0035 85 0.0004 08 0.0001 04 0.0094 63

0.0007 57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19

Sum

0.764 035

0.072 349

19436 4.8

0.153066 776

0.034 553 0.8098 5

0.020624 32

=nXY-(x)(y)/nx2-(x)2

From the analysis we find that the value of beta is -0.80985 and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 8%

M&M RETURNS FOR THE YEAR 2011

Std. Month Start End Returns 0.09510869 January 276 302.25 6 0.05661016 February 295 311.7 9 0.25786885 March 305 383.65 2 0.26789658 April May 384.85 501 487.95 668.9 3 0.33512974 0.11799 0.11799 0.11799 0.11799 -0.06137983 0.13987885 2 0.14990658 3 0.21713974 0.022471984 0.047149667
53

Avg.Ret

Deviation

Variance

0.11799

-0.0228813

0.000523554

0.003767484

0.019566093

1 0.02559347 June 674 691.25 2 0.22949763 July August 698.7 876.65 859.05 8 0.11799

0.11799 -0.09239653 0.11150763 8

0.008537118

0.012433953 0.017640934

863.65 -0.01482918 0.02098144

0.11799 -0.13281918

September

865.05

883.2

6 0.03357623

0.11799 -0.09700855

0.00941066

October

892

921.95

3 0.10682795

0.11799 -0.08441377

0.007125684

November

930

1029.35

7 0.00171455

0.11799 -0.01116204

0.000124591

December

1079

1080.85

1 1.41597615

0.11799 -0.11627545

0.01351998

Total Standard Deviation

0.162271703 0.11628689

CALCULATION OF BETA

Price of Share 289.125 303.35

Retur n (x)

X2

Sense x 18327. 76 17823. 4

y 0.0275 2

y2

xy 0.0013 5
54

0.0492

0.0024 21

0.000757 29

344.325 436.4 584.95 682.625 778.875 870.15 874.125 906.975 979.675 1079.925 Sum

0.1350 75 0.2674 07 0.3403 99 0.1669 8 0.141 0.1171 88 0.0045 68 0.0375 8 0.0801 57 0.1023 3 1.441 884

0.0182 45 0.0715 07 0.1158 71 0.0278 82 0.0198 81 0.0137 33 2.09E05 0.0014 12 0.0064 25 0.0104 71 0.287 87

19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

0.0909 94 0.0159 0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 0.0893 3 0.0414 6 0.153 07

0.008279 883 0.000252 942 0.001093 12 0.000342 809 0.001184 719 0.006981 281 0.000178 792 0.005783 062 0.007979 46 0.001719 247 0.034552 606

0.0122 91 0.0042 5 0.0112 5 0.0030 92 0.0048 5 0.0097 9 -6.1E05 0.0028 58 0.0071 6 0.0042 4 0.024 73

=nXY-(x)(y)/nx2(x)2

2.345281 405

From the analysis we find that the value of beta is 2.345281405 and beta is here positive it shows that the return of sensex and return of stock have the positive relationship. This also indicate that if sensex is increased by 10% then stock is increased by around 23.5%
55

ONGC RETURNS FOR THE YEAR 2011

Std. Month Start End Returns Avg.Ret Deviation 0.62069403 January 667 654.95 -0.01806597 0.06258649 February 650.3 691 9 0.17491152 March 664.05 780.2 8 0.10865384 April 780 864.75 6 0.30104595 May 898.7 1169.25 5 0.63876 0.63876 0.63876 0.63876 0.63876 3 0.70134649 9 0.81367152 8 0.74741384 6 0.93980595 5 0.55183317 June 1171.1 1069.3 -0.08692682 0.09279947 July 1065.2 1164.05 4 0.01759656 August 1165 1185.5 7 0.63876 0.63876 0.63876 9 0.73155947 4 0.65635656 7 0.63574013 September 1175.55 1172 -0.00301986 0.63876 7 0.60162528 October November 1175.45 1144.9 1131.8 1199.75 -0.03713471 0.04790811 0.63876 0.63876 6 0.68666811 0.361952984 0.471513099
56

Variance

0.385261083

0.491886911

0.662061355

0.558627457

0.883235234

0.304519858

0.535179264

0.430803942

0.404165522

4 0.61716531

December

1204 Total

1178

-0.02159468 0.63876

0.63876

0.380893027 5.870099736 0.69941045

Standard Deviation

CALCULATION OF BETA
Price of Share 660.975 670.65 722.125 822.375 1033.975 1120.2 1114.625 1175.25 1173.775 1153.625 0.0146 37 0.0767 54 0.1388 26 0.2573 04 0.0833 92 0.0049 8 0.0543 9 0.0012 6 0.0171 7 0.0002 14 0.0058 91 0.0192 73 0.0662 05 0.0069 54 2.48E05 0.0029 58 1.58E06 0.0002 95 Retur n (x) X2 Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 y 0.0275 2 0.0909 94 0.0159 0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 y2 xy

0.000757 29 0.008279 883 0.000252 942 0.001093 12 0.000342 809 0.001184 719 0.006981 281 0.000178 792 0.005783 062

0.0004 0.0069 84 0.0022 1 0.0085 1 0.0015 44 0.0001 71 0.0045 4 1.68E05 0.0013 1

57

1172.325 1191 Sum

0.0162 1 0.0159 3 0.634 045

0.0002 63 0.0002 54 0.102 333

16123. 46 15454. 92 19436 4.8

0.0893 3 0.0414 6 0.153 07

0.007979 46 0.001719 247 0.034552 606

0.0014 5 0.0006 6 0.010 36

=nXY-(x)(y)/nx2(x)2

0.515070 534

From the analysis we find that the value of beta is 0.515070534 and beta is here positive it shows that the return of sensex and return of stock have the positive relationship. This also indicate that if sensex is increased by 10% then stock is increased by around 5%

58

REL RETURNS FOR THE YEAR 2011

Std. Month Start End Returns 0.06741935 January February 1240 1290 1323.6 1266.05 5 -0.01856589 0.24094571 March 1228.7 1524.75 5 0.18598161 April May June July 1523 1851 2330 2029.9 1806.25 2271.9 2023.4 1955.4 5 0.2273906 -0.13158798 -0.03670132 0.01838590 August September October November 1968.9 2024.8 2199.9 1920.05 2005.1 2201.65 1931.15 1063.5 1 0.08734196 -0.12216464 -0.44610817 0.01446511 December 1075 1090.55 6 0.08680225 Total Standard Deviation 4 0.389387646 0.180136 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 Avg.Ret Deviation 0.06018935 5 0.003622758 -0.02579589 0.000665428 0.23371571 5 0.054623035 0.17875161 5 0.2201606 0.03195214 0.04847069 Variance

-0.13881798 0.019270432 -0.04393132 0.01115590 1 0.000124454 0.08011196 0.006417926 -0.12939464 0.016742974 -0.45333817 0.00723511 6 5.23469E-05 0.2055155 0.00192996

59

CALCULATION OF BETA

Price of Share 1281.8 1278.025 1376.725 1664.625 2061.45 2176.7 1992.65 1987 2113.225 2065.525 1491.775 1082.775 Sum

Retur n (x) 0.0029 5 0.0772 29 0.2091 19 0.2383 87 0.0559 07 0.0845 5 0.0028 4 0.0635 25 0.0225 7 0.2777 7 0.2741 7 0.020 68

X2

Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

y 0.027518 911 0.090993 862 0.015904 166 0.033062 36 0.018515 096 0.034419 743 0.083554 063 0.013371 31 0.076046 448 0.089327 823 0.041463 805 0.153066 776

y2

xy

8.67E06 0.0059 64 0.0437 31 0.0568 28 0.0031 26 0.0071 49 8.04E06 0.0040 35 0.0005 1 0.0771 59 0.0751 69 0.273 688

0.0007 57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

8.10453E05 0.007027 323 0.003325 87 0.007881 64 0.001035 128 0.002910 348 0.000236 911 0.000849 42 0.001716 53 0.024812 984 0.011368 133 0.033698 414

=nXY-(x)(y)/nx2-(x)2

0.0332
60

71

From the analysis we find that the value of beta is 0.033271 and beta is here positive it shows that the return of sensex and return of stock have the positive relationship. This also indicate that if sensex is increased by 10% then stock is increased by around 0.3%

61

SATYAM RETURNS FOR THE YEAR 2011

Std. Month January February March Start 175 55 42.5 End 53.85 41.35 38.45 Returns -0.69228571 -0.24818182 -0.09529412 0.20154043 April 38.95 46.8 6 0.12910052 May 47.25 53.35 9 0.30514705 June July 54.4 71.25 71 104.65 9 0.46877193 0.17596153 August September October November 104 122.9 119 100.5 122.3 119.1 102.2 90.15 8 -0.03091945 -0.14117647 -0.10298507 0.07857142 December 91 98.15 9 0.04825027 Total Standard Deviation 9 1.011991302 0.29040077 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825 Avg.Ret 0.04825 0.04825 0.04825 Deviation Variance

-0.74053571 0.548393144 -0.29643182 0.087871823 -0.14354412 0.020604914 0.15329043 6 0.023497958 0.08085052 9 0.006536808 0.25689705 9 0.065996099 0.42052193 0.176838693 0.12771153 8 0.016310237 -0.07916945 0.006267801 -0.18942647 0.035882388 -0.15123507 0.022872048 0.03032142 9 0.000919389

62

CALCULATION OF BETA

Price of Share 114.425 48.175 40.475 42.875 50.3 62.7 87.95 113.15 121 110.6 95.325 94.575 Sum

Retur n (x) 0.5789 8 0.1598 3 0.0592 96 0.1731 78 0.2465 21 0.4027 11 0.2865 26 0.0693 77 0.0859 5 0.1381 1 0.0078 7 0.266 865

X2

Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

y 0.027518 911 0.090993 862 0.015904 166 0.033062 36 0.018515 096 0.034419 743 0.083554 063 0.013371 31 0.076046 448 0.089327 823 0.041463 805 0.153066 776

y2

xy

0.3352 2 0.0255 47 0.0035 16 0.0299 91 0.0607 73 0.1621 76 0.0820 97 0.0048 13 0.0073 87 0.0190 74 6.19E05 0.730 657

0.0007 57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

0.015932 951 0.014543 91 0.000943 05 0.005725 67 0.004564 358 0.013861 22 0.023940 45 0.000927 66 0.006536 22 0.012337 093 0.000326 23 0.033317 55

63

=nXY-(x)(y)/nx2-(x)2

-0.435

From the analysis we find that the value of beta is -.435 and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 4%

64

SBI RETURNS FOR THE YEAR 2011

Std. Month January February Start 1329 1139 End 1151 1025.3 Returns -0.13393529 -0.09982441 0.05164087 March 1014.7 1067.1 9 0.18812433 April 1076.15 1278.6 2 0.41018675 May June 1325.25 2039.7 1868.85 1745.3 7 -0.14433495 0.04659156 July August 1731 1820 1811.65 1742.9 6 -0.04236264 0.24642248 September October 1761 2191.55 2194.95 2191.05 7 -0.00022815 0.02402834 November 2187 2239.55 9 0.01024042 December 2246 2269 7 0.55654936 Total Standard Deviation 3 0.294606301 0.15668607 0.0464 -0.03615957 0.001307515 0.0464 -0.02237165 0.000500491 0.0464 0.0464 0.0464 0.0464 0.0464 Avg.Ret Deviation Variance 0.032520817 0.021381577

0.0464 -0.18033529 0.0464 -0.14622441 0.00524087 9 0.14172433 2 0.36378675 7

2.74668E-05

0.020085786

0.132340805 0.036379822

0.0464 -0.19073495 0.00019156 6

3.66974E-08 0.007878806

0.0464 -0.08876264 0.20002248 7

0.040008995 0.002174184

0.0464 -0.04662815

65

CALCULATION OF BETA

Price of Share 1240 1082.15 1040.9 1177.375 1597.05 1892.5 1771.325 1781.45 1977.975 2191.3 2213.275 2257.5 Sum

Retur n (x)

X2

Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

y 0.0275 2 0.0909 94 0.0159 0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 0.0893 3 0.0414 6 0.153 07

y2

xy

0.1273 0.0381 2 0.1311 12 0.3564 5 0.1849 97 0.0640 3 0.0057 16 0.1103 17 0.1078 5 0.0100 28 0.0199 82 0.697 007

0.016204 879 0.001453 025 0.017190 487 0.127056 409 0.034224 015 0.004099 721 3.26733E05 0.012169 937 0.011631 666 0.000100 567 0.000399 268 0.224562 648

0.0007 57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

0.003503 113 0.003468 555 0.002085 235 0.011785 069 0.003425 243 0.002203 864 0.000477 6 0.001475 089 0.008201 625 0.000895 806 0.000828 517 0.003682 026

66

=nXY-(x)(y)/nx2-(x)2

0.5241 4

From the analysis we find that the value of beta is -0.52414. and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 5%

TATA MOTORS RETURNS FOR THE YEAR 2011

Std. Month Start End Returns Avg.Ret 0.1487421 January 160.95 149.65 -0.07020814 0.00844309 February 148.05 149.3 4 0.23408624 March 146.1 180.3 2 8 0.1487421 8 0.1487421 8 0.1487421 April 182 243.8 0.33956044 0.34632294 May 250.2 336.85 2 8 0.1487421 8 0.1487421 June July 348.6 292.3 290.75 421.55 -0.16594951 0.44218268 8 0.1487421 -0.31469169 0.29344050 0.099030861 0.086107332 0.19081826 0.19758076 2 0.039038157 0.036411608 -0.14029909 0.08534406 2 0.007283609 0.019683834 -0.21895032 0.047939242 Deviation Variance

67

9 0.15768321 August 423 489.7 5 0.20299145 September 491.4 591.15 3

8 0.1487421 8 0.1487421 8 0.1487421

9 0.00894103 5 0.05424927 3 0.002942984 7.99421E-05

October

594.8

567.25

-0.04631809 0.17684117

8 0.1487421 8 0.1487421

-0.19506027 0.02809899 1

0.038048509

November

563.5

663.15

0.000789553

December

682.8

791.55

0.15927065 1.78490615

0.01052847

0.000110849

Total Standard Deviation

0.37746648 0.17735709

CALCULATION OF BETA

Price of Share 155.3 148.675 163.2

Retur n (x) 0.0426 6 0.0976 96

X2

Sense x 18327. 76 17823. 4 19445. 22

Y 0.027518 911 0.090993 862

y2

xy

0.0018 2 0.0095 45

0.0007 57 0.0082 8

0.001173 939 0.008889 765

68

212.9 293.525 319.675 356.925 456.35 541.275 581.025 613.325 737.175 Sum

0.3045 34 0.3786 99 0.0890 9 0.1165 25 0.2785 6 0.1860 96 0.0734 38 0.0555 91 0.2019 32 1.739 502

0.0927 41 0.1434 13 0.0079 37 0.0135 78 0.0775 96 0.0346 32 0.0053 93 0.0030 9 0.0407 77 0.430 521

19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

0.015904 166 0.033062 36 0.018515 096 0.034419 743 0.083554 063 0.013371 31 0.076046 448 0.089327 823 0.041463 805 0.153066 776

0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

0.004843 36 0.012520 68 0.001649 501 0.004010 75 0.023274 81 0.002488 35 0.005584 677 0.004965 86 0.008372 87 0.043178 8

=nXY-(x)(y)/nx2(x)2

3.490411 82

From the analysis we find that the value of beta is -3.49041182 and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 35%

69

TATATEA RETURNS FOR THE YEAR 2011

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

70

CALCULATION OF BETA
Price of Share 605.475 592.925 577.775 636 694.075 712.575 790.475 899.925 923.775 878.825 879.4 923.525 Sum 0.0207 3 0.0255 5 0.1007 75 0.0913 13 0.0266 54 0.1093 22 0.1384 61 0.0265 02 0.0486 6 0.0006 54 0.0501 76 0.448 919 0.0004 3 0.0006 53 0.0101 56 0.0083 38 0.0007 1 0.0119 51 0.0191 71 0.0007 02 0.0023 68 4.28E07 0.0025 18 0.056 997 Retur n (x) X2 Sense x 18327. 76 17823. 4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8 y 0.0275 2 0.0909 94 0.0159 0.0330 6 0.0185 15 0.0344 2 0.0835 5 0.0133 7 0.0760 46 0.0893 3 0.0414 6 0.153 07 y2 xy

0.000757 29 0.008279 883 0.000252 942 0.001093 12 0.000342 809 0.001184 719 0.006981 281 0.000178 792 0.005783 062 0.007979 46 0.001719 247 0.034552 606

0.0005 7 0.0023 3 0.0016 0.0030 2 0.0004 94 0.0037 6 0.0115 7 0.0003 5 0.0037 -5.8E05 0.0020 8 0.027 41

71

=nXY-(x)(y)/nx2(x)2

0.5026 6

From the analysis we find that the value of beta is -0.50266 and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 5%

WIPRO RETURNS FOR THE YEAR 2011

Std. Month January February Start 233.4 229 End 231.55 207.5 Returns -0.00792631 -0.09388646 0.20244498 March 204.5 245.9 8 0.34491869 April May 246 330.2 330.85 382.25 9 0.15763173 0.10074 0.10074 0.10074 Avg.Ret Deviation Variance 0.011808366 0.03787946

0.10074 -0.10866631 0.10074 -0.19462646 0.10170498 8 0.24417869 9 0.05689173

0.010343905

0.059623237 0.00323667
72

8 June 385.1 377.95 -0.01856661 0.29669312 July 378 490.15 2 0.11123459 August 494.9 549.95 3 0.09274047 September 551 602.1 2 0.00314569 October 604 605.9 5 0.04320066 November 603 629.05 3 0.07722772 December 631.25 680 3 1.20885831 Total Standard Deviation 7 0.10074 0.10074 0.10074

8 0.10074 -0.11930661 0.19595312 2 0.01049459 3 0.000110136 0.038397626 0.014234066

0.10074 -0.00799953

6.39925E-05

-0.0975943

0.009524648

0.10074 -0.05753934

0.003310775

0.10074 -0.02351228

0.000552827

0.18908571 0.1255275

CALCULATION OF BETA

Price of Share 232.475 218.25

Retur n (x) -

X2 0.0037

Sense x 18327. 76 17823.

y -

y2 0.0007

xy 0.001683
73

225.2 288.425 356.225 381.525 434.075 522.425 576.55 604.95 616.025 655.625 Sum

0.0611 9 0.0318 44 0.2807 5 0.2350 7 0.0710 23 0.1377 37 0.2035 36 0.1036 03 0.0492 59 0.0183 07 0.0642 83 1.134 223

44 0.0010 14 0.0788 21 0.0552 58 0.0050 44 0.0189 71 0.0414 27 0.0107 34 0.0024 26 0.0003 35 0.0041 32 0.221 907

4 19445. 22 19135. 96 18503. 28 18845. 87 18197. 2 16676. 75 16453. 76 17705. 01 16123. 46 15454. 92 19436 4.8

0.027518 911 0.090993 862 0.015904 166 0.033062 36 0.018515 096 0.034419 743 0.083554 063 0.013371 31 0.076046 448 0.089327 823 0.041463 805 0.153066 776

57 0.0082 8 0.0002 53 0.0010 93 0.0003 43 0.0011 85 0.0069 81 0.0001 79 0.0057 83 0.0079 79 0.0017 19 0.034 553

865 0.002897 628 0.004465 1 0.007771 96 0.001314 989 0.004740 86 0.017006 28 0.001385 31 0.003745 936 0.001635 35 0.002665 42 0.030027 88

=nXY-(x)(y)/nx2(x)2

1.616768 146

From the analysis we find that the value of beta is 1.616768146 and beta is here positive it shows that the return of sensex and return of stock have the positive relationship. This also indicate that if sensex is increased by 10% then stock is increased by around 16%
74

ZEEL RETURNS FOR THE YEAR 2011

75

Std. Month Start End Returns Avg.Ret 0.05132 January 141.9 110.35 -0.22233968 2 0.05132 February 109.8 106.85 -0.02686703 2 0.05132 March 106.5 106.35 -0.00140845 2 0.05132 April 106.25 113 0.063529412 2 0.012207412 0.05132 May 116.7 168.3 0.442159383 2 0.390837383 0.05132 June 175 177.25 0.012857143 2 0.05132 July 178.1 185.95 0.044076362 2 0.05132 August 187.8 210.6 0.121405751 2 0.070083751 0.05132 September 217 238.75 0.100230415 2 0.048908415 0.05132 October 238.1 231.55 -0.02750945 2 0.05132 November 230 254.25 0.105434783 2 0.054112783 0.05132 December 256 Total 257.1 0.004296875 0.615865515 2 -0.04702512 0.002211362 0.256877381 0.002928193 -0.07883145 0.006214397 0.002392033 0.004911732 -0.00724564 5.24993E-05 -0.03846486 0.001479545 0.15275386 0.000149021 -0.05273045 0.0027805 -0.07818903 0.006113525 -0.27366168 0.074890713 Deviation Variance

Standard Deviation

0.14630943
76

CALCULATION OF BETA

Price of Share 232.475 218.25 225.2 288.425 356.225 381.525 434.075 522.425 576.55 604.95 616.025 655.625 Sum

Retur n (x) 0.0611 9 0.0318 44 0.2807 5 0.2350 7 0.0710 23 0.1377 37 0.2035 36 0.1036 03 0.0492 59 0.0183 07 0.0642 83 1.134 223

X2

Sensex 18327.7 6 17823.4 19445.2 2 19135.9 6 18503.2 8 18845.8 7 18197.2 16676.7 5 16453.7 6 17705.0 1 16123.4 6 15454.9 2 194364 .83

y 0.027518 9 0.090993 86 0.015904 2 0.033062 4 0.018515 1 0.034419 7 0.083554 1 0.013371 3 0.076046 45 0.089327 8 0.041463 8 0.15306 68

y2

xy

0.0037441 4 0.0010140 54 0.0788208 12 0.0552577 99 0.0050441 99 0.0189714 03 0.0414270 07 0.0107336 62 0.0024264 02 0.0003351 57 0.0041323 18 0.221906 953

0.000757 29 0.008279 883 0.000252 942 0.001093 12 0.000342 809 0.001184 719 0.006981 281 0.000178 792 0.005783 062 0.007979 46 0.001719 247 0.034552 606

0.0016 84 0.0028 98 0.0044 7 0.0077 7 0.0013 15 0.0047 4 0.0170 1 0.0013 9 0.0037 46 0.0016 4 0.0026 7 0.030 03

77

=nXY-(x) (y)/nx2-(x)2

1.613265 8

From the analysis we find that the value of beta is -1.6132658 and beta is here negative it shows that the return of sensex and return of stock have the negative relationship. This also indicate that if sensex is increase by 10% then stock is decreased by around 16%

TABLE-1 SELECTED COMPANIES AVG RISK & AVG RETURN FOR THE YEAR 2007
Avg.Return S.No. 1 2 3 4 5 6 Name of the company ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS s 0.046 0.050 0.024 -0.037 0.003 0.023 Avg.Risk 0.077 0.108 0.114 0.264 0.069 0.063
78

7 8 9 10 11 12 13 14 15

M&M ONGC REL SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL

0.020 -0.001 0.006 0.013 0.010 0.012 0.019 -0.034 0.016

0.055 0.086 0.157 0.085 0.107 0.077 0.077 0.202 0.065

GRAPH-1 INTERPRETRATION: CIPLA and WIPRO are in loss and risk is more, ABB is showing less risk compare to other companies.

79

TABLE-2 SELECTED COMPANIES AVG. RISK & AVG. RETURNS FOR THE YEAR 2008
Avg.Return S.No. 1 2 3 4 5 6 7 8 9 Name of the company ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL s 0.055 0.006 0.049 0.049 0.037 0.029 0.044 0.030 0.004 Avg.Risk 0.089 0.093 0.113 0.128 0.096 0.077 0.110 0.080 0.087
80

10 11 12 13 14 15

SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL

0.048 0.030 0.008 0.051 -0.045 -0.011

0.048 0.096 0.100 0.088 0.199 0.108

GRAPH-2 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 2008.

81

TABLE-3 SELECTED COMPANIES AVG. RISK & AVG. RETURN FOR THE YEAR 2009
Avg.Return S.No. 1 2 3 4 5 6 7 8 9 10 11 12 Name of the company ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL SATYAM SBI TATA MOTORS s 0.057 0.004 0.035 -0.010 0.018 0.022 0.047 -0.009 -0.006 -0.022 -0.024 0.091 Avg.Risk 0.150 0.054 0.108 0.208 0.089 0.177 0.059 0.113 0.073 0.150 0.189 0.264
82

13 14 15

TATA TEA WIPRO ZEEL

-0.017 0.029 0.053

0.073 0.084 0.139

GRAPH-3 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 2009.

83

TABLE-4 SELECTED COMPANIES AVG. RISK & AVG. RETURN FOR THE YEAR 2010 Avg.Return S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Name of the company ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL s -0.028 0.050 0.043 -0.014 -0.032 -0.021 -0.003 0.035 0.128 -0.010 0.062 -0.005 0.025 -0.015 0.027 Avg.Risk 0.239 0.044 0.191 0.072 0.171 0.065 0.066 0.102 0.177 0.089 0.108 0.075 0.126 0.057 0.123

84

GRAPH-4 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 2010

85

TABLE-5

SELECTED COMPANIES AVG. RISK & AVG. RETURN FOR THE YEAR 2011 Avg.Return S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Name of the company ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL s 0.055 -0.050 0.050 0.053 0.114 0.146 0.118 0.639 0.007 0.048 0.046 0.149 0.034 0.101 0.051 Avg.Risk 0.13485 0.17806 0.08047 0.06948 0.13585 0.09959 0.11629 0.69941 0.18014 0.29041 0.15669 0.17736 0.06990 0.12553 0.14631

86

GRAPH-5 INTERPRETATION: ABB, Dr.REDDYS and INFOSYS are in huge losses. NALCO earned high returns and risk is less compare to other companies in the year 2011.

87

CHAPTER-6 FINDINGS & SUGGESTIONS

88

FINDINGS-:
After the data is analyzed the following facts have been observed. 2007: From risk-return analysis of 2007, 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. 2008: 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. 2009: 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. 2010: 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. 2011: 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 due to launch of TATA NANO.

89

SUGGESTIONS-:
After observing the facts found out after the analysis and interpretations the following suggestions are made to the investors. 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. As the world economy is influenced by US economy, the worst scenario of US economy is influencing the others countries stock markets. 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. 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. 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.

90

BIBLIOGRAPHY

91

BIBLIOGRAPHY
Puthi Sing.,Investing Management, 3rd edition, New Delhi, Vikas Publication House Pvt. Ltd. Maheshwari, S.N, Advanced Accounting, 4th edition Sultan Chand & Sons Publication, New Delhi, 2004,(tools of financial analysis) Punithyathy Pandiyam,,Security Analysis And PortfolioManagemenet5th edition,Kalyani Publishers,NewDelhi. Kothari C.R., Research Methodology Methods and Techniques (Second Edition) New Age International Publishers, Ansari Road, Daryaganj, New Delhi110002 http://www.NSEindia.com http://www.Investopedia.com http://www. Glossary reuters.com http://www. Capitalmarket.com http://www. Answers.com

92

93