PROJECT REPORT
ON
Submitted By
Ambati.venkatareddy (1226212102)
Borra.Madhav (1226212105)
Ekta Tatyal (1226212107)
MBA (IBF) 2012-14
Axis Bank:
AXIS Bank is one of the fastest growing banks in private sector. The Bank operates in four
segments, namely treasury, retail banking, corporate/ wholesale banking and other banking
business. The treasury operations include investments in sovereign and corporate debt, equity
and mutual funds, trading operations, derivative trading and foreign exchange operations on
the account, and for customers and central funding. Retail banking includes lending to
individuals/ small businesses subject to the orientation, product and granularity criterion. It
also includes liability products, card services, Internet banking, automated teller machines
(ATM) services, depository, financial advisory services, and nonresident Indian (NRI)
services. The corporate/ wholesale banking segment includes corporate relationships not
included under retail banking, corporate advisory services, placements and syndication,
management of publics issue, project appraisals, capital market related services, and cash
management services. The Bank's registered office is located at Ahmadabad and their Central
Office is located at Mumbai. The Bank has a very wide network of more than 1042 branches
(including 56 Service Branches/ CPCs as on June 30, 2010). The Bank has a network of over
4,474 ATMs providing 24 hrs a day banking convenience to their customers. This is one of
the largest ATM networks in the country.
OBJECTIVES
1. To find out the relationship between Axis banks stock and movement in the Bankex
and Sensex.
2. To find out reasons for fluctuation in Axis Bank stock.
BANKEX
Bombay Stock Exchange Limited launched "BSE BANKEX Index" on 23 June 2003. This
index consists of major Public and Private Sector Banks listed on BSE. The BSE BANKEX
Index is displayed on-line on the BOLT trading terminals nationwide. The main Objective of
BANKEX is: It is an Index to track the performance of listed equity of Banks It is a suitable
benchmark for the Central Government to monitor its wealth on the bourses.
Features:
A few important features of the BANKEX are:
BANKEX tracks the performance of the leading banking sector stocks listed on the
BSE.
The base value for BANKEX is 1000 points. 14 stocks which represent 90% of total market
capitalization of all banking sector stocks listed on BSE are included in the index. The index
is determined on a real time basis through BSE online trading (BOLT) terminals.
SENSEX:
Sensex is basically an indicator of the health of the stock markets in India. It is the most popular stock market
index in India. It is just a number and the value of Sensex is closely followed by a number of investors,
promoters, market experts, brokers and several other stakeholders not only in India but across the world. One
can know the relative strength or weakness of the Indian stock market by the movement of Sensex on the
Bombay Stock Exchange, popularly known as BSE.
Sensex is an index of equity shares of Indias top 30 companies representing 12major sectors in India.
The composition of Sensex changes dynamically existing companies are excluded and new companies are
added on a regular basis. However, the total number of companies in the Sensex is always kept at thirty.
India in the annual conference of the All India Congress Meeting in a paper entitled "Stray
thoughts on Bank Nationalization. The meeting received the paper with enthusiasm. In the
early 1990s, the then government embarked on a policy of liberalization, licensing a small
number of private banks. These came to be known as New Generation tech-savvy banks, and
included Global Trust Bank (the first of such new generation banks to be set up), which later
amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis Bank), ICICI
Bank and HDFC Bank. This move, along with the rapid growth in the economy of India,
revitalized the banking sector in India, which has seen rapid growth with strong contribution
from all the three sectors of banks, namely, government banks, private banks and foreign
banks. By 2010, banking in India was generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheets relative to other banks in
comparable economies in its region. The Reserve Bank of India is an autonomous body, with
minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is
to manage volatility but without any fixed exchange rate-and this has mostly been true.
SOURCES OF DATA
Monthly reports of axis Bank from Jun 2008 to Jun 2013 were retrieved from the internet.
Use of prowess for getting the values of Bankex, Sensex and Volume of shares.
FORMULA USED
Regression equations used
1. Return on stock = + ( Return on Bankex) +
2. Return on Bankex= + ( Return on Sensex) +
3. Actual error square= + (Change in volume) +
4. Actual error= + ( Estimated error) +
Regression: A statistical procedure used to find relationships among a set of variables.
Regression is the attempt to explain the variation in a dependent variable using the variation
in independent variables.
Observation 1:
Dependent Variable(Y) = axis bank actual
Independent Variable(X) =Bankex actual
H0: Axis bank actual is not depends on bankex actual
H1: Axis bank actual is depends on bankex actual
After running the regression the result which we got are:
Regression
Dependent variable
Independent variable
Bankex actual
60
R2
0.813971929
Adjusted R2
0.810764548
P-value
7.57157E-23
T-value
15.93050229
0.0018464
1.099961514
F-value
253.7809031
Significance level
7.57157E-23
Value of R square, which indicates that 81% of the variance in axis bank actual, can
be predicted from the variables Bankex actual.
R square of 0.81 means that 81% of the variance in the observed values of the
dependent variable is explained by the model, and 19% of those differences remain
unexplained because so many other factors influence the axis bank actual.
The Adjusted R square is used to estimate the expected shrinkage in R square that
would not generalize to the population because our solution is over fitted to the data
set by including too many independent variables ,R square = .813971829and the
Adjusted R square= .810764548,These values are very close, anticipating minimal
shrinkage based on this indicator.
T-Value (15.93). we can conclude that the relationship between the axis bank actual
and Bankex actual is significant, i.e the higher the returns of Bankex, the higher the
returns of Axis and vice-versa
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Each independent variable has another number attached to it in the regression result
its p-value or significance level. The p-value is a percentage. It tells you how likely
it is that the coefficient for that independent variable emerged by chance and does not
describe a real relationship. A p-value of 0.00 means that there is a 0% chance that the
relationship emerged randomly and a 100% chance that the relationship is real.
There is also a significance level for the model as a whole. This is the Significance
Fvalue in Excel; some other statistical programs call it by other names. This
measures the likelihood that the model as a whole describes a relationship that
emerged at random, rather than a real relationship. As with the p-value, the lower the
significance F value, the greater the chance that the relationships in the model are real.
The value of significance F is 0.00 which is less than 0.05 hence it indicates that the
relationship among variables in the model is real.
Observation 2:
Dependent Variable(Y) = Bankex actual
Independent Variable(X) = Sensex actual
H0: Bankex actual not depends on senex actual
H1: Bankex actual depends on senex actual
After running the regression the result which we got are:
Regression
Dependent variable
Bankex actual
Independent variable
Sensex actual
60
R2
0.849931993
Adjusted R2
0.847344613
P-value
1.46133E-25
T-value
18.12433277
0.007153469
1.309211549
F-value
328.4914383
Significance level
1.46133E-25
Value of R square, which indicates that 84% of the variance in Bankex actual, can be
predicted from the variables senex actual.
R square of 0.84 means that 84% of the variance in the observed values of the
dependent variable is explained by the model, and 16% of those differences remain
unexplained because so many other factors influence the banex actual.
The Adjusted R square is used to estimate the expected shrinkage in R square that
would not generalize to the population because our solution is over fitted to the data
set by including too many independent variables ,R square = .849931993and the
Adjusted R square= .847344613, These values are very close, anticipating minimal
shrinkage based on this indicator.
T-value (18.12). we can conclude that the relationship between the bankex actual and
senex actual is significant, i.e the higher the returns of Bankex, the higher the returns
of Axis and vice-versa.
Each independent variable has another number attached to it in the regression result
its p-value or significance level. The p-value is a percentage. It tells you how likely
it is that the coefficient for that independent variable emerged by chance and does not
describe a real relationship. A p-value of 0.00 means that there is a 0% chance that the
relationship emerged randomly and a 100% chance that the relationship is real.
The value of significance F is 0.00 which is less than 0.05 hence it indicates that the
relationship among variables in the model is real.
Observation 3:
Dependent Variable (Y) = error square
Independent Variable(X) = volume change
H0: Error square not depends on volume change
H1: Error square depends on volume change
After running the regression the result which we got are:
Regression
Dependent variable
error square
Independent variable
volume change
60
R2
0.00749522
Adjusted R
-0.009616931
P-value
0.510707554
T-value
0.661820009
0.005249649
0.00084
F-value
0.438005724
Significance level
0.510707554
Value of R square, which indicates that 0.74% of the variance in error square of Axis,
can be predicted from the variables volume change of Axis.
R square of 0.0074 means that 0.74% of the variance in the observed values of the
dependent variable is explained by the model, and 99.26% of those differences remain
unexplained because so many other factors influence the error square.
Adjusted R square -0.009 means that The is used to estimate the expected shrinkage
in R square that would not generalize to the population because our solution is over
fitted to the data set by including too many independent variables, R square =
.00749522and the Adjusted R square= -0.009616931, These values are not very close,
anticipating minimal shrinkage based on this indicator.
T-value (0.66). Thus, we can conclude that the relationship between the estimated
error of Axis and volume of Axis stocks traded in the market are not significant.
Each independent variable has another number attached to it in the regression result
its p-value or significance level. The p-value is a percentage. It tells you how likely
it is that the coefficient for that independent variable emerged by chance and does not
describe a real relationship. A p-value of 0.51 means that there is a 51% chance that
the relationship emerged randomly and a 49% chance that the relationship is real.
The value of significance F is 0.51which is greater than 0.05 hence it indicates that
the relationship among variables in the model is not real.
Observation 4:
Dependent Variable (Y) = Axis Actual error
Independent Variable(X) = Axis estimate error
H0: Actual error not depends on estimate error
H1: Actual error depends on estimate error
After running the regression the result which we got are:
Regression
Dependent variable
Independent variable
60
0.999932298
Adjusted R2
0.999931131
P-value
1.2758E-122
T-value
925.5483482
0.00513866
0.999882254
F-value
856639.7448
Significance level
1.2758E-122
Value of R square, which indicates that 99% of the variance in Actual error can be
predicted from the variables estimate error.
R square of 0.99 means that 99% of the variance in the observed values of the
dependent variable is explained by the model, and 1% of those differences remain
unexplained because so many other factors influence the actual error.
The Adjusted R square is used to estimate the expected shrinkage in R square that
would not generalize to the population because our solution is over fitted to the data
set by including too many independent variables ,R square = .99and the Adjusted R
square= .99, These values are very close, anticipating minimal shrinkage based on this
indicator.
T-value (925.54). we can conclude that the relationship between the Axis Actual error
and Axis estimate error is significant.
Each independent variable has another number attached to it in the regression result
its p-value or significance level. The p-value is a percentage. It tells you how likely
it is that the coefficient for that independent variable emerged by chance and does not
describe a real relationship. A p-value of 0.00 means that there is a 0% chance that the
relationship emerged randomly and a 100% chance that the relationship is real.
The value of significance F is 0.00 which is less than 0.05 hence it indicates that the
relationship among variables in the model is real.
Conclusion:
Axis Bank is co-related with Bankex & SENSEX. While analyzing the facts it was figured
out that the error occurs in between Axis Bank & Bankex results to be around 10%. Yet while
establishing the relation between Bankex & SENSEX the error was minimized to the extent
of 8%. Hence it can be said that, Bankex & SENSEX are highly affecting the Axis Banks
shares. But the error still prevails due to the change in demand and supply constrain. On
further research it was seen that, if we conglomerate all the above factors in our model the
error part would be limited to zero.
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