RESEARCH REPORT
ON
A STUDY OF PORTFOLIO MANAGEMENT ON
STOCK EXCHANGE
SUBMITTED
TO
DEPARTMENT OF BUSINESS ADMINISTRATION
SAURASHTRA UNIVERSITY
GUIDED BY
DR. HITESH J. SHUKLA
(ASSOSIATE PROFESSOR, MBA)
PREPARED BY
PRAVEEN CHANPA
(STUDENT 4TH SEM, MBA)
DECLARATION
I hereby declare that the project entitled A Research Report onportfolio return at stock
exchange submitted for the M.B.A. Degree is my original work and the dissertation has not
formed the basis for the award of any degree, associate ship, fellowship or any other similar
titles.
Place:
Date:
Praveen Chanpa
PREFACE
Being Management students, we need to understand how portfolio analysis is done.
Therefore, we are required to identify the value stocks and the growth stocks to conduct a
thorough analysis of the selected Industry. This helps us as the students to develop a sense of
awareness around us to keep the details of the stock market. Such an analysis helps to
understand the stock market which is highly useful for investors.
Indian stock market is going through a rapid growth and investors need to know which kind
of stocks are there to invest.
Globalization is the most important factor shaping todays world. India is no exception. The
investors are also becoming global and try to invest in stocks that give them more return on
their portfolio. This research report offers an insight into the investing pattern of all the
investors. Such a work had never been carried out earlier and Im confident that this study
will be useful not only to academician but actual investors in addition to students.
I am sure this work will be useful to many and can serve as guide to many who want to invest
in India stock market.
It is a pleasure to keep this report in front of you. Project report is vitally important for M.B.A
students because it develops the feeling among the students about investors to develop the
practical base. Theoretical knowledge is true only when we apply the same in the practical.
ACKNOWLEDGEMENT
A part of the real essence of 6 weeks learning; in conducting this fruitful exercise many key
persons had shown an appreciable role in my unforgettable journey. When emotions are
profound words sometimes are not sufficient to express our thanks and gratitude. At this
moment I would like to take this opportunity and declare the moral share of all those
stakeholders in the project property.
I convey heartly thanks and deep sense of gratitude towards the followings:
To almighty God, whose external blessings and divine presence helps us to fulfill all
our goals.
I would also like to express my thanks and gratitude to all my colleagues, friends, teaching
and non-teaching staff members and all those who contributed directly or indirectly through
suggestions, thoughts and presence for creating a congenial environment and encouraging me
in every way during the project.
And last but certainly not the least
My Dear Friend Ashish, Mayank and Kapil.
EXECUTIVE SUMMARY
The purpose of the research was to find whether the value stock perform better than
the growth stocks in the Indian stock market.
The investors try to maximize their profits by investing wisely. Few investors prefer
the value stocks and few of them prefer growth stocks. It might also happen that many of the
investor doesnt know the difference between the value and the growth stocks and might have
invested just by looking at the scenario of the company.
The report comprises of all the historical data related to the stocks. For the research I
have gathered the data of different companies which includes market prices, earning per
share, dividend distributed in percentage and price earning ratio.
Apart from the data gathered and the test applied for the conducting the research,
there were few limitations which I have taken into consideration.
TABLE OF CONTENT
SR. NO.
CONTENT
PAGE NO.
INTRODUCTION
STATEMENT OF PROBLEM
26
LITERATURE REVIEW
27
OBJECTIVE OF STUDY
29
METHODOLOGY
31
LIMITATION
33
ANALYSIS
34
52
Hypothesis test
CONCLUSION AND RECOMMENDATION
53
58
REFERENCES
60
10
BIBLOGRAPHY
61
11
62
INTRODUCTION
Stock exchanges are intricately inter-woven in the fabric of a nations economic life.
Without a stock exchange, the saving of the community the sinews of economic progress
and productive efficiency would remain underutilized.
The task of mobilization and allocation of savings could be attempted in the old days
by a much less specialized institution that the stock exchanges. But as business and industry
expanded and the economy assumed more complex nature, the need for permanent finance
arose.
Entrepreneurs needed money for long term whereas investors demanded liquidity
the facility to convert their investments into cash at any given time. The answer was a ready
market for investment and this was how the stock exchange came into being.
Function
The stock exchanges in India have an important role to play in the building of a real
shareholders democracy. Aim of the stock exchange authorities is to make it as nearly perfect
in the social and ethical sense as it is in the economic.
To protect the interests of the investing public, the authorities of the stock exchanges
have been increasingly subjecting not only its members to a high degree of discipline, but
also those who use its facilities joint stock companies and the other bodies in whose stocks
and shares it deals.
There are stringent regulations to ensure that directors of joint stock companies keep
their shareholders fully informed of the affairs of the company.
In fact, some of the conditions that the stock exchange imposes upon companies
before their shares are listed are more rigorous and wholesome than the statutory provisions
such as those contained in the Companies Act.
The stock exchanges are the exclusive centers for trading of securities. At present,
there are 23 operative stock exchanges I India. Most of the stock exchanges in the country are
incorporated as Association of Persons of section 25 companies under the Companies Act.
These are organized as mutuals and are considered beneficial under in terms of ax benefits
and matters of compliance.
The trading members, who provide broking services also, own, control and manage
the stock exchanges. They elect their representatives to regulate the funding of the exchange,
including their own activities.
If they so wish, they can seek listing on other exchange as well. Monopoly of the
exchanges within their allocated area, regional aspirations of the people and mandatory
listing on the 24 exchanges (The Capital Stock Exchange, the latest in the list, is yet to
commence trading) in the country recognized over a period of time to enable investors across
the length and breath of the country to access the market.
The three newly set up exchanges over the counter Exchange of India (OTCEI),
National Stock Exchange of India (NSE) and Inter-connected Stock Exchange of India
3
(ICSE) were permitted since their inception to have nation-wide trading. Listing on these
exchanges was considered adequate compliance with the requirement of listing on the
regional exchange.
SEBI recently allowed all exchange to set up trading terminals anywhere in country.
Many of them have already expanded trading operations to different parts of the country.
The trading platforms of a few exchanges are now accessible from many locations.
Further, with extensive use of information technology, the trading platforms of a few
exchanges are also accessible from anywhere through the internet and mobile devices; this
made a huge difference in a geographically vast country like India.
It significantly expanded the reach of the exchange to the homes of ordinary investors
and assuaged the aspirations of people to have exchanges in their vicinity. The
issuers/investors bow prefers to list/trade on exchanges providing nationwide network rather
than on regional exchanges.
Regulatory Framework
The SEBI Act, 1992 which establishes SEBI to protect investors and develop and
regulate securities market;
The Companies Act, 1956, which sets out the code of conduct for the corporate sector
in relation to issue, allotment and transfer of securities, and disclosures to be made in
public issue;
The Securities Contracts (Regulation) Act, 1956, which provides for regulation of
transaction in securities through control over stock exchanges; and
The Depositories Act, 1996 which provides for electronic maintenance and transfer of
The role of stock markets as a source of economic growth has been widely debated. It is
well recognized that stock markets influence economic activity through the creation of
liquidity. Liquid financial market was an important enabling factor behind most of the early
innovations that characterized the early phases of the Industrial Revolution.
Recent advances in this area that stock markets remain an important conduit for
enhancing developments. Many profitable investments necessitate a long term commitment
of capital, but investors might be reluctant to relinquish control of their savings for long
periods. Liquid equity markets make investments less risky and more attractive.
At the same time, companies enjoy permanent access to capital raised through equity
issues. By facilitating longer term and more profitable investments, liquid markets improve
the allocation of capital and enhance the prospects for long-term economic growth.
Furthermore, by making investments relatively less risky, stock market liquidity can also lead
to more savings and investments.
Over the years, the stock market in India has become strong. The number of stock
exchange increased from 8 in 1971 to 9 in 1980 to 21 in 1993 and further to 23 as at end
march 2000.
The number of listed companies also moved up over the same period from 1,599 to
2,265 and thereafter to 5,968 in 1990 and 9.871 in March, 2000. The market capitalization at
BSE as a percentage of GDP at current market prices also improved considerably from
around 28 per cent in the early nineties to over 45 per cent at the end of the nineties, after
witnessing a fall in certain intervening years.
Though the Indian Stock market was founded more than a century ago, it remained
quite dormant from independence in 1947 up to the early eighties, with a capitalization ratio
(market capitalization to GDP) of only 4 per cent.
However, the patterns of demand for capitalization have undergone significant changes
during the last two decades and improved stock market activity. It may be recalled that till the
90s institutional term landing acted as the primary source of industrial finance in India.
Financial institutions raised money through government guaranteed bonds at low rates of
interests, in which, lent funds at connectional rate of interest.
This system provided corporate a cushion to absorb the relatively high risk of
implementing new projects. This, in turn, discouraged the corporate to raise risk capital from
equity markets. On this account, the debt market segment, which is sensitive to economic
information also remained underdeveloped an illiquid. With onset of reform process in the
90s institutions has to raise resources at market related rates.
At the same time, the market has witnessed the introduction of several new customizes
bonds at maturities tailored to suit investors need and with market driven coupons. Along
with this development, a number of measures were initiated to reform the stock markets,
which helped to improve the overall activity in the stock market significantly. The turnover
ratio increase from low of 6.7 percent at the beginning of the 90s to reach 35.1 percent in
1999-2000, expecting certain years of relative in activity.
The Indian capital market has experienced a significant structural transformation over
the years. It now compels well with those in developed markets. This was deemed necessary
because of the gradual opening of the economy and the need to promote transparency in
alternative sources of financing.
The regulatory and supervisory structure has being over valued with most of the powers
for regulating the capital market having been vested with securities and exchange board of
India (SEBI). Apart from changes in the fundamental factors information asymmetries and
the associated constraints to efficient price discovery remain at the heart of the volatile
movements in stock prices.
The extant of stock price volatility is also influenced by the extant of integration
between the domestic and international capital markets as well as the regulatory frame work
governing the stock market.
In India, two most important factors which has a significant bearing on the behaviour of
the stock prices during the 90s were net investments by FIIs and trends in the international
stock exchanges, specially NASDAQ. Stock market volatility has tended to decline in recent
years, with the co-efficient variation in the BSE Sensex working out to 70.51 percent during
1995-96 to 1999-2000.
Asset price bubbles entail significant risks in the form of higher inflation when the
bubble grows in size and in the form of financial instability and lost output when the bubble
bursts. Monetary and fiscal authorities, therefore, closely watch the asset market
developments. The positive wealth effect resulting from bull runs could impart a first round
of risk to inflation.
If the bull run is prolonged, a second round of pressure on prices may result from
subsequent upward wage revisions. Since financial assets are used as collaterals, asset booms
may also give rise to large credit expansion. When domestic supply fails to respond to the
rising demand, it could give rise to higher external current account deficit. The asset price
cycle may follow.
When the asset prices collapse, firms may faced savior financing constraints as a result
of declining value of their collaterals, making lenders reluctant to land at a scale they do
when asset prices are rising. Recognizing this alternative complexities emanating from asset
market bubbles, information on asset prices are being increasing used as a critical input for
the conduct of the public policies.
The function of the financial market is to facilitate the transfer of funds from surplus
sectors (lenders) to deficit sectors (borrowers). Normally, households have excess of funds or
savings, which they lend to borrowers in the corporate and public sectors whose requirement
of funds far exceeds their savings. A financial market consists of investors and buyers, sellers,
dealers and does not refer to a physical location. Formal trading rules and communication
networks for originating and trading financial securities link the participants in the market.
Money Market
Capital Market
Organized Market
Unorganized Market
The organized market is dominated by commercial banks. The other major players are the
Reserve Bank of India, Life Insurance Corporation, General Insurance Corporation, Unit
Trust of India, Securities Trading Corporation of India, other primary dealers and the various
mutual funds. Despite rapid expansion of the organized money through a large network of
banking institutions that have extended their reach even to the rural areas, there is still an
active unorganized money market. It consists of indigenous bankers and moneylenders.
10
In the unorganized market, there is no clear demarcation between short-term and longterm finance and even between the purposes of finance. The unorganized sector continues to
provide finance for trade as well as personal consumption. The inability of poor to meet the
creditworthiness requirements of the banking sector makes them take recourse to the
institutions that still remain outside the regulatory framework of banking. But this market is
shrinking.
11
I. MONEY MARKET:
It is a market dealing in equity and equity linked securities. This market comprises
of primary market and second market.
The capital market provides the framework in which savings and investment take
place. On the one hand it enables companies to raise resources from the investors and on the
other, it facilitates households to invest their saving in industrial or commercial activities.
Those saving instruments that can be bought or sold freely are called securities. These include
a range of products debt and equity that can be traded. The market where such trades take
place is the securities market or capital market and comprises the various exchanges,
intermediaries and its regulatory institutions.
12
Primary Segments
Secondary Segments
The primary market deals with the issue of new instruments by the corporate sector
such as equity shares, preference shares, and debentures. The public sector consisting of
central and state governments, various public sector industrial units (PSUs) and statutory and
other authorities such as state electricity boards and port trusts also issue bonds. The primary
market in which public issue of securities is made through a prospectus is a retail market and
there is no physical location. Direct mailing, advertisements and brokers reach the investors.
Screen based trading eliminates the need trading floor.
The Secondary Market Or Stock Exchange where existing securities are traded is an
auction arena. It may have a physical location like a stock exchange or a trading floor. Since
1995, the trading in securities is screen-based. Screen-based training eliminates need for a
trading floor. And, since the last few years Internet-based trading has also made an
appearance in India.
The Secondary Market consists of 23 stock exchanges including the National Stock
Exchange (NSE) and the Over-the Counter Exchange Of India (OTCEI) and also Bombay
Stock Exchange (BSE). The secondary market provides a trading place or terminals for the
securities already issued to be bought and sold. It also provides liquidity to the initial buyers
in the primary market to re-offer the securities to any interested buyer at any price, if
mutually accepted. An active secondary market actually promotes the growth of the primary
market and capital formation because investors in the primary market are assured of a
continuous market and they can liquidate their investments in the stock exchange.
13
There are several major players in the primary market. These include the merchant
bankers, mutual funds, financial institutions, foreign institutional investors (FIIs) and
individual investors. R & T agents, Custodians and Depositories are capital market
intermediaries that provide important infrastructure services for both primary and secondary
markets.
It is important to ensure a smooth working of this market, as it is the arena where the
players in the economic growth of a country interact. Various laws have been passed from
time to time to meet this objective. The financial market in India was highly segmented until
the initiation of reforms in 1992-93 on account of a variety of regulations and administered
prices include barriers to entry. The reform process was initiated with establishment of
securities and exchange of India (SEBI).
14
Equity Market
Thus, risk is highest with equity shares and so must be its expected return. When
investors buy equity shares, they receive certificates of ownership as proof of their being part
owners of the company. The certificate state the number of states the number of shares
purchased and their par value.
July 9, 1875
: Native brokers from the Native share and Stock Brokers Association in
1921
increase.
1923
1925
Dec 1, 1939
1943
: Forward trading banned till 1946. Only ready to deliver and hand
into force.
15
1957
recognition.
1964
Apr 1, 1966
1973
Construction
of
Towers,
named
after
late
PhirozeJamshedjiJeejeevhoy, starts.
Jan, 2 1986
Apr 1988
Jan 1992
May 1992
May 27, 1992 : Reliance is the first Indian company to make a GDR issue.
May 30, 1992 : The capital Issues Control Act, 194-7 is replaced.
Sep 1992
Nov 1992
The first private sector mutual fund, Kothari Pioneer Mutual fund,
begins operations.
1993
June 1994
Nov 1994
March1995
Apr 1995
Oct 1995
trading.
Apr 1996
Feb 1997
May 1997
Nov 1998
NSE.
Mar 11, 1999 : Infosys Technologies is the first company to be listed on NASDAQ
: ICICI is the first India Company to be listed on the New York Stock
Exchange (NYSE).
: For the first time in BSEs history, the Sensex closes above the 5,000
mark at 5,031.78.
Jan 2000
: Internet trading commences on NSE. On Feb 14, 2000, BSE Sensex hits
17
Apr 10, 2000 : The Sensex is revamped to include Dr. Reddys Lab, Reliance Petroleum,
Satyam Computers and Zee Telefilms replacing Indian Hotels, Tata Chemicals,
Tata power, and IDBI.
June 2000
: BSE and NSE introduce derivatives trading in the form of index futures.
July 9, 2000
Mar 2001
: Ketan Parekh scam breaks. SEBI suspends all the broker directors of the
June 2001
July 2001
: A SEBI directive bans carry forward. All major securities are moved to
Value stocks
Stocks that are considered to be undervalued based upon such ratios as price-to-book
or price-to-earnings (P/E). These stocks generally have lower price-to-book and priceearnings ratios, higher dividend yields and lower forecasted growth rates than growth stocks.
Shares of companies that are considered underpriced by the market considering their
fundamental characteristics and that therefore represent an attractive investment opportunity.
18
Growth stocks
There are two types of stocks that you will want to fill your portfolio with. These are
growth stocks and value stocks. Growth stocks are those with statistically high levels of
return and value stocks are those that tend to be undervalued. As a stock investor, there are
several valuation tools that assist you in selecting the right stocks for inclusion in your
portfolio. Balancing your portfolio by including a mixture of growth and value stocks allows
you to minimize risk while still maximizing your potential gain. True diversification of your
investment portfolio results from the strategic inclusion of both growth and value stocks in
the proper amounts. If you want to effectively manage your portfolio you need to learn to
classify stocks into their proper categories so that you can make effective purchases.
No matter what your specific investment goals, choosing the right stocks for your
portfolio is possible through the use of proper valuation methods. In order to choose the right
stocks you need to have a good understanding of what ultimately gets growth and value
stocks placed into their respective categories.
While there are no absolute rules for categorizing growth and value stocks there are
some broad definitions on which most investors agree. Though there are a few stocks that fall
closer to the line between these two broad definitions, most can be easily classified into one
or the other.
19
The purpose of growth investing is to choose a stock in a growing company that has a
high potential for continued growth. Value investing focuses more on purchasing stocks that
are currently undervalued in the market and which therefore have a lower purchase price.
These value stocks can increase significantly in value once the market makes corrections to
reflect their true worth.
Although investors have some varying methods for determining what makes a good
growth stock, all definitions typically include the following characteristics.
A high growth rate, both historically and projected. When you look at a growth
stocks historic performance, you need to take into consideration the size of the company that
issues the stock. Smaller companies should have a historic growth rate of ten or more percent
over the course of at least the last five years. Larger companies should have an historical
growth rate of somewhere between five and seven percent over the same number of years.
Projections for company growth should measure up to or exceed that of the stocks
historic performance.
The company should have a high return on equity (ROE) measure. You should also
consider comparing the companys ROE to that of other stocks in the same industry over the
course of at least a five year period. A growth stocks ROE will rank significantly higher than
average among its industry.
20
Some investors make the mistake of thinking that cheap stocks are all value stocks,
when in reality a value stock can have a hefty purchase price. What makes a value stock is its
placement within the current stock market a placement which does not reflect the true value
of the stock itself.
Here are a few of the commonly accepted measures for determining what makes a
value stock.
The current price earnings ratio (P/E) of the stock should be in the lowest ten
The price to earnings growth ratio (PEG) should be less than one percent, which
actually indicates that the stock is undervalued. Dont mistake this measure for insufficient
growth potential.
The company issuing the stock should hold assets which are at least twice its
current liabilities and should have equity which is equal to, if not greater than, its debt.
Both growth and value stocks serve a specific purpose in your portfolio. Dont
overload your portfolio with one type or the other. Instead focus on creating an ideal balance
of the two types. This will result in maximum returns with minimal risk.
Assignment:
21
22
There has been great demand for growth issues. I.e. shares of companies with
growth prospects. It has been observed that the wider the distribution of corporate securities
among investors, the grater the reception accorded to new or additional issues of capital; the
more mobile the additional issues of capital; the more mobile the market, the grater the
participation of investors and traders in the raising of corporate capital.
The available data about the share ownership in the country show that there is gradual
widening if ownership. The increasing participation in stock market activities by financial
and non financial intermediaries, particularly of institutions which are mainly investors has
tended to create an orderly and stable market.
Further more, equity analysis is more complicated than bond appraisal, and greater
skill is required in selecting equity than fixed income securities. The attitude towards equity
shares has varied from extreme pessimism to optimism from time to time.
It is equity shares that entice most investors, and some investors have been known to
feel grater sympathy for their equity than their spouses. Presence of market and business risks
23
associated with such investments fails to keep the investing public and institution out of the
market because of their confidence in the ultimate success of the equity shares, i.e. towards
overshadow risks. In fact the advantages of equity shares ownership are enough to lure the
investors and change their attitude towards securities.
Humans are by nature value and profit maximizers. In all we do, we implicitly
calculate and compare the expected gains with the risks involved. That is, we try to maximize
our profit with as low risk as possible.
A number of papers have dealt with methods showing evidence that markets are
inefficient and investors are able to achieve abnormal returns, i.e. finding portfolios of
companies that will beat the market, by conducting different kinds of stock picking
techniques. Some of the common market irregularities are the January effect - that stocks
generate abnormally high returns in the month of January, the Monday effect - that Mondays
are the worst day of holding shares, the size effect - that small-cap firms outperform large-cap
firms, insider transactions - that insider transactions reveal a concealed message about the
companys true market valuation, and lastly that value stocks outperform growth stocks.
(Damodaran, 2002; Ross, Westerfield& Jaffe 2005) The focus in this thesis will be on the
value versus growth perspective, since it is a common way for individuals and mutual funds
to classify and base their investment decisions on.
24
25
STATEMENT OF PROBLEM
There has been a long ongoing discussion among market participants whether growth
stocks are constantly being overvalued and hence generating less return on a risk-adjusted
basis, than the more stable value stocks. Value stocks are usually defined as companies with
low valuation multiples (P/B, P/E ratios) and high dividend yield while growth stocks are
defined as companies with high valuation multiples (P/B, P/E) and low dividend yield.
(Sharpe et al. 1999)
Most previous research, by for example Fama and French (1992), Chan, Hamao and
La-konishok (1991) and Basu (1977), shows that value stocks outperforms growth stocks. A
majority of these studies have been performed on the US stock market, the worlds largest
market for listed securities, and I found that there were no studies that specifically focus on
the Indian stock market, which is largest in asianbased on equity trading.
As there was no studies conducted on the value and growth stocks of stock exchange
of India, I found a scope for study on this topic and therefore following is the hypothesis of
this study.
Ho1: there is no statistical significant difference between average market price of
value stock and growth stock.
Ho2: there is no statistical significant difference between average earning price per
share of value stock and growth stock.
Ho3: there is no statistical significant difference between average dividend of value
stock and growth stock.
Ho4: there is no statistical significant difference between average price earning ratio
of value stock and growth stock.
26
LITERATURE REVIEW
However their return is maximized by holding risky portfolio for month. These
finding support rao et al. (1998) study were stock return of different time horizon are used to
establish the relationship between portfolio return and risk and risk. The relationship is
moderate in cases of monthly return. However the relationship between portfolios expected
return and risk is moderate on quarterly return. This trend of stock market signifies effect that
investor gradually readjust their holding of stocks in response to market or non market ever.
MounaAbdelhedi, 2009 in their research analyzed the risk factor and investor
sentiment effecting cross section variations in return and came to a conclusion that using
sample of stocks traded on Tunisian stock exchange, there are common return factors related
to market and size factors that help capture the cross section stock returns. The study of
relationship between the institutional investor sentiment and the size of sorted portfolio
returns provides empirical evidence that investor sentiment explains excess return and that
current return effects change in sentiment. More ever the addition of sentiment measures to
the four factor model draws a declining of market factor explanatory power as well as the
insignificance of the size factor on Tunisian stock returns.
27
From all the literature reviewed by me, I found that there were many research
conducted on portfolio return and stock exchange of various countries but there was a scope
for research on the study of portfolio return on Indian stock exchange, further it motivated
me to study investors behavior of going for the value stocks or growth stocks.
28
OBJECTIVE OF STUDY
The objective of study is very clear as the Indian stock market is largest stock market
in the asian stock market where the trading of stocks takes place in the form of shares and
securities. In this study as a researcher Im interested in learning that why the investors prefer
more growth stocks or the value stocks which are listed in the Indian stock market.
While doing this research I would be able to know how the Indian stock market work
fundamentally with the changing emotions of the investors. Further with this study it would
be a clear understanding about the perception of the investors towards the value stocks or
growth stocks.
As an investor it is interesting to know that in which kind of share i.e. growth stocks
or value stocks the investor is investing his money. Likewise it is also interesting to
understand that as an investor regular earnings are more important or by taking more risk the
investor is expecting more return.
Through detail learning on this topic I would definitely gain more knowledge about
stock market of India. My study on the stock market would definitely help to the researcher
who are willing to go for the research on this dynamic market.
I have referred the research reports and thesis which are related to the stock markets but I
found that there were no studies conducted on this topic and therefore there was a scope for
29
me to study that value stocks are better or growth stocks are better and investors prefer which
type of stocks for the investment purpose.
30
METHODOLOGY
The quantitative research method is used when gathering information. Based on this
multiple the sample is divided into two extreme groups of low and high P/E companies. This
creates two portfolios, which symbolizes value and growth stocks.
Methodological Approach
The deductive method works by using statements which you then can deduct new
hypothesis from, that is, working with an already known formula, assumption or theory and
try to apply this to observations made in the real world and thereby explain the world through
the pre understood theories. These hypotheses can then be proven right or wrong by using
empirical studies. (Holme& Solvang, 1991) This thesis will tilt towards the deductive method
since known formulas are being used, P/E, and then are applied to observations made on the
stock market. The empirical findings can then be tested through statistical formulas in order
to confirm or reject the previous conclusions.
The inductive method on the other hand works in the opposite way. It focuses on the
observations made of the world and a specific occurrence and tries to work out a formula
explaining the observations. The specific observation is made into a generalization about the
world. To some extent this thesis will also use the inductive method since the sample of value
and growth companies and the conclusions drawn from these observations will be accepted as
a description of the whole population of companies, i.e. the random sample of value
31
companies will be used as a description for all value companies and the random sample of
growth companies will be used as a description for all growth companies.
Listed companies on the Indian Stock Exchange will be divided into two groups:
growth and value companies based on their P/E ratios. To get the statistical framework the
Ive gathered historical stock information from the internet site of BSE India, explained
further below. From the first two groups will be created, based on their P/E ratios. Form this
two portfolios the conclusion will be generated.
32
The data is collected from BSE 500 companies and the sample data is for only 100
companies and therefore the conclusion might be biased.
The samples of the companies which I have gathered are for 10 years. In these 10
years, few of the companies might have merged with other companies or might have
been absorbed by the other companies.
Among all the investors there are few investors who do not have the knowledge of the
value stocks and the growth stocks. They invest their money looking at the good
future prospects of the companies and the current scenario of the companies.
The data collected is at the end of the financial year, which means study does not
include the whole financial years data or the data between the two financial years.
33
ANALYSIS
This chapter of the report includes the quantitate and analytical detailed analysis of the study
problem.
As mentioned earlier in methodology; it includes
Sample selection.
Collection of data.
Sample Selection.
Samples are selected from the population by non-probability sampling technique using
convenient sampling as population size is definite and this method will provide ease for
sampling from the population.
Sample size is of 50 value stock companies and 50 growth stock companies samples from the
population.
34
Collection of Data.
Data were collected using secondary data collection method which Includes
Data Sources:
35
Sr
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Market Price
Company Name
2001
2002
200
3
2007
25.1
5
2008
200
9
2010
23.5
24.5
7.25
35.5
38.7
34.9
26.9
8.59
23.75
45.95
47.05
25.5
51
68.25
125
160
35
515
114.
4
738
31.25
240
45.7
5
142
1133.
95
75
125
94
810
846
587
280
27.1
8.45
10.1
511
850
389.
95
12.0
1
483.
3
247.3
1344.
4
627.7
5
182.45
372.5
4.75
4.1
3.5
10.5
13.79
110
129.7
94.5
6.75
169.
75
347
511
402
739.9
Ashima Ltd.
32.25
19.7
119.8
154
12.5
137.
5
11.8
257.
05
22.8
11.19
8.85
7.01
2.5
5.1
362.5
789
726
585
954.9
32.3
39.9
45.5
14
14.5
40.75
9.98
9.69
20.7
46.5
8.45
3.36
13.2
5
835
22.9
5
37.8
5
7.25
17.5
30.5
83.65
21.25
3.95
27.5
23.5
24
30.6
17.6
18.4
7.79
18
42
50
18.5
25.5
33.5
24.3
20.5
8.5
3.94
5.01
11.65
9.3
4.2
5.75
8.75
6.03
7.3
5.7
2.78
123.3
255
1766
2620
3070
2700
140
490
294.
75
675
130
315.1
143.5
5
3.54
5249.
7
387
42.1
70
222
302
356
243.
85
282
252.
95
79.3
216.
5
253.9
21.3
266
308.6
5
15.25
2.3
2.25
3.5
5.3
3.9
5.95
4.1
35.2
41.2
7.25
38.4
34.2
54
41.0
5
139.2
6.4
145
29.4
74.6
55.4
65
65.6
4.92
18.9
5
75.0
5
1.2
72.5
5
3.02
3.67
207.
7
60.05
59.4
40.7
53
25.5
58.8
89.9
47.5
42
58
74
73
82
51.3
183
85.05
61.9
14.4
40
63.25
27.1
99.5
202
6.8
70.5
109.5
52.8
72.75
158
95.5
13.6
18.5
115.95
101
84
39.6
5
46.8
8.2
38.5
56.5
5
46.0
5
46
41.2
5
27
99
46
52.1
5
120.
5
9.2
22
14.7
5
19.5
5
13.5
34
29.55
16
9.55
46.5
20.5
11.75
18
78
51.5
96.5
139
44
14.6
1
87.1
47.1
29.4
36.5
5
25.7
57.2
5
8.97
Atul Ltd.
24.25
147.8
5
2004
2005
2006
18.5
33.9
5
67.2
5
43.4
16.4
5
86
105.
05
29
GROWTH STOCK
36
647
26.25
Sr
No
29
30
31
32
33
34
35
36
37
38
Market Price
Company Name
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
41.1
41
26
49
82
241
138.05
142
104.3
231
34.45
20.5
32.85
53.65
154.9
114.9
56.3
21.7
64.35
22.55
61
208
186
513.8
699
398.3
1775
42
30
16.2
5
24.9
5
10.4
17.85
29.25
109.6
214.05
121.85
30.8
96.9
16.8
17.9
12.35
62.5
181
324.9
188.5
199
177
399.9
72
110
217
129.9
153.55
139.5
109.95
79.5
173.45
21
83.1
25.3
5
25.35
36
99
66.85
105.2
112
150.25
31.6
33.8
42.3
96.15
226.4
448
540
733
18.55
11.5
15.2
103
194
347
371
412
36.85
221.2
5
213.5
5
9.6
12.5
13.8
18.9
30.15
39.85
31
50.95
42.6
61.5
20
511
384.9
39
18.25
24
26.5
26
38.5
8.61
4.7
9.21
40
22
19.5
6.15
4.1
10.4
10.71
20.1
15.8
8.6
18.1
41
Deepak Fertilizers
&Petrochemicals
13
17
18.55
33.25
63.5
99.3
81
100.95
56
114
8.15
12.25
29.5
33
36.75
34.6
51
32.85
78.9
27.2
133
180
286
409
375
220
360
76.1
7.95
30.1
5
63.4
5
35.1
63.1
81.95
91.95
114
86.85
35.5
148.7
20.5
11
10.45
23.8
63.4
133.95
65.5
38.9
17.95
60.45
42
43
44
45
Dena Bank
Elder Pharmaceuticals Ltd.
Escorts Ltd.
Eveready Industries India
Ltd.
32
46
44
105
94.5
372.5
156.5
204
198
218
139.9
267.25
47
16.85
28.5
33.5
51
71.5
70
68.95
66.5
28.25
65.95
48
128.1
130
60.5
284.4
444.6
665
535
549
402
960
49
105.1
66.3
99.75
440
218
545.7
290
391
58.5
236
45
45.9
68
36.9
49.1
61
24
42.4
81
45.05
97.35
46
114.05
134.1
046
143.25
217.6
902
99.5
216.3
67
54.15
240.66
78
12
158.
76
45.6
343.75
96
50
37
Sr
No
1
2
3
4
5
6
7
8
9
10
11
EPS
Company Name
200
3
200
4
2.20
200
5
1.17
0.70
10.8
2
2001
2002
2.25
-0.22
0.17
0.05
1.35
0.12
5.61
6.25
8.93
9.17
0.59
2.73
2.72
-0.29
-1.07
5.78
4.07
7.76
3.41
Ashima Ltd.
1.19
-6.74
6.96
6.48
2.78
1.00
6.08
9.40
7.08
11.2
5
1.12
16.88
2.32
-1.04
3.27
7.26
4.27
2.63
3.80
5.83
3.34
2.61
1.77
12.1
2
6.31
21.2
3
1.11
9.75
0.23
0.74
-1.18
-0.68
0.96
1.72
5.90
0.48
15.59
21.09
37.64
12
Cinevistaas Ltd.
13
2006
2007
2008
2009
2010
1.37
2.89
0.23
-10.16
0.65
0.88
1.03
1.11
1.34
1.68
10.33
11.07
12.19
13.28
13.69
3.08
16.63
11.42
20.61
24.99
-0.83
-3.86
-0.53
1.42
-0.90
12.53
19.63
14.10
17.19
22.90
0.46
-1.28
-9.36
-2.44
-1.59
12.69
19.42
14.89
19.06
21.28
20.93
-3.78
2.48
3.96
-1.99
19.00
0.76
-0.45
-0.21
-0.21
0.31
-1.92
0.76
1.34
-1.40
8.75
0.60
0.15
0.06
0.58
28.6
7
33.1
6
23.2
3
0.72
2.57
34.9
9
40.3
4
20.9
5
0.91
1.31
27.12
56.53
-4.01
174.2
8
-42.01
196.3
2
-44.50
255.5
2
22.18
53.95
69.70
19.61
16.92
77.20
21.82
19.49
22.52
60.36
0.06
0.09
0.52
0.29
0.63
0.35
0.02
0.66
2.94
47.51
1.58
-0.44
0.96
28.8
3
26.0
0
18.7
3
3.06
18
0.29
0.53
0.12
0.04
0.28
-0.89
-0.56
-0.36
-4.30
0.25
19
51.00
2.56
2.10
4.30
9.57
4.69
3.14
5.67
1.75
1.46
20
1.79
6.47
1.60
0.46
0.24
0.28
1.23
3.62
0.40
7.30
21
0.06
0.18
1.11
1.96
2.69
3.74
5.96
4.55
-1.01
1.69
0.73
0.11
1.70
-0.18
-1.07
13.53
2.90
0.68
0.39
0.40
0.18
0.67
0.33
0.47
7.92
7.36
2.27
3.50
-4.40
-1.52
2.46
2.43
4.72
8.19
9.28
10.32
12.03
12.17
-1.61
13.03
4.95
9.90
6.28
9.97
5.98
5.54
0.60
-4.63
2.18
-0.83
-0.80
-0.53
-0.62
-0.61
1.18
6.07
28.00
9.98
7.99
14.59
18.71
1.98
2.71
3.23
3.79
1.34
0.32
0.70
14
15
16
17
22
23
5.08
65.56
141.9
0
24
25
-9.57
-4.43
7.08
-5.55
-4.61
Atul Ltd.
4.79
1.51
0.22
11.2
8
3.61
2.18
1.29
26
27
28
38
Sr
No
EPS
Company Name
2001
2002
2003
2004
2005
200
6
200
7
200
8
200
9
2010
29
-0.59
-0.87
-1.28
-2.85
0.10
0.69
0.79
1.72
1.16
2.23
30
20.84
14.31
10.36
9.03
8.54
13.77
7.84
6.67
1.05
13.60
13.65
22.31
13.87
37.89
15.16
-1.65
2.15
0.54
5.40
11.28
5.02
16.3
3
7.33
74.9
6
68.4
9
42.2
7
2.83
99.2
0
37.0
9
42.0
2
21.03
35.16
39.20
33.98
8.59
8.21
6.28
6.40
6.21
Ceat Ltd.
-0.39
2.43
5.24
4.01
-0.53
0.09
8.60
7.91
99.7
7
51.9
5
51.0
6
10.4
1
40.0
7
5.82
7.08
37.9
0
-4.71
47.03
5.80
11.26
5.28
15.24
7.54
8.23
11.78
-8.48
10.64
22.26
11.7
2
22.8
4
29.3
2
35.7
5
36.6
9
30.0
5
25.4
2
32.7
9
2.80
2.44
2.20
3.08
4.59
4.88
3.63
4.90
5.54
5.98
3.24
5.11
4.45
0.55
5.26
0.77
0.37
0.15
-1.39
-1.60
1.66
31
32
33
34
35
36
37
38
39
CESC Ltd.
Chambal Fertilisers & Chemicals
Ltd.
Chemplast Sanmar Ltd.
196.46
51.13
72.37
42.83
34.66
40
0.05
-0.11
-1.08
-2.09
-0.26
1.90
2.94
1.10
2.59
41
Deepak Fertilizers
&Petrochemicals
8.39
6.51
8.58
9.06
9.04
9.04
10.5
4
-1.29
4.44
5.52
11.15
2.82
6.69
4.56
6.89
13.60
7.03
30.0
6
16.8
6
14.7
4
26.8
6
14.60
1.13
3.33
13.56
28.75
2.54
21.6
0
11.3
7
12.5
4
38.2
1
2.81
3.63
2.04
10.45
2.13
8.16
2.00
-0.07
8.30
8.91
48.36
62.65
13.73
-1.85
34.2
0
-2.66
32.4
2
2.67
29.2
6
19.56
28.11
2.24
13.0
4
32.7
1
1.96
2.76
6.25
7.25
7.73
0.62
15.31
-2.03
29.75
22.21
5.63
28.8
8
5.74
39.4
2
23.52
22.96
15.06
23.42
7.52
5.12
9.93
-3.06
59.4
3
12.4
6
10.67
3.41
46.6
6
13.4
3
2.65
8.78
11.11
14.14
18.32
9.07
7.78
5.56
6.86
7.09
9.06
-0.04
16.9
8
-5.24
13.4
2
2.05
5.76
5.28
12.7
7
42
43
44
45
46
47
48
49
50
Dena Bank
Elder Pharmaceuticals Ltd.
Escorts Ltd.
Eveready Industries India Ltd.
Federal Bank Ltd.
-4.69
19.51
17.83
29.30
27.16
34.26
16.93
21.48
39
Sr
No
DIVIDEND
Company Name
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
15
10
15
12.5
10
10
10
15
10
Cinevistaas Ltd.
14
15
16
17
18
19
20
21
35
25
25
20
15
15
22
6.67
35
55
50
25
23
7.5
7.5
15
24
15
20
15
25
20
20
20
25
10
10
26
10
10
10
15
20
27
Atul Ltd.
10
15
20
15
20
30
30
30
30
40
28
30
20
20
25
25
27.5
30
35
25
25
Ashima Ltd.
10
11
12
13
40
Sr
No
Company Name
200
1
200
2
200
3
2004
DIVIDEND
200
2005
6
200
7
2008
200
9
201
0
29
15
7.5
20
25
30
30
27
20
20
15
15
15
15
15
10
10
31
10
10
25
25
25
25
25
25
32
20
25
21
35
33
10
15
22.5
35
40
45
60
34
10
15
30
25
26.67
15
15
35
Ceat Ltd.
10
10
10
10
18
40
40
36
10
15
17.5
20
25
30
37.5
45
45
55
37
CESC Ltd.
25
25
35
40
40
40
38
14
15
15
16
18
18
18
18
18
19
39
10
40
10
40
41
42
Dena Bank
43
44
45
6.4
10
10
10
10
25
20
22
22
30
30
30
35
40
45
10
12
20
20
20
20
25
25
25
25
25
25
30
Escorts Ltd.
45
10
10
10
15
10
40
10
46
30
35
40
70
25
35
40
40
50
50
47
15
30
20
30
30
30
30
30
10
30
48
15
20
25
30
30
40
20
45
49
40
10
25
25
33.33
24
25
25
30
30
50
45
9.63
3
30
8.1
8
15
6.58
7
40
9.193
9
25
8.776
6
20
10.2
4
20
10.4
3
0
12.89
3
0
11.8
2
10
15.9
3
AVERAGE
41
Sr
No
Company Name
2001
Agro Dutch Industries Ltd.
10.44
2002
113.1
6
270.2
9
941.0
0
5.37
212.5
0
22.28
25.60
26.88
56.16
52.97
12.82
7.92
42.06
-16.38
-3.83
-0.86
10.23
14.18
38.04
13.58
18.06
Ashima Ltd.
27.10
-1.93
-1.67
43.09
-2.92
154.0
0
22.62
22.84
6.47
7.54
8.03
-4.95
20.53
1
2
3
4
5
6
7
8
2003
2004
16.14
2550.
00
10
Balaji Distilleries Ltd.
12
13
14
15
16
17
20
-35.47
19.27
14.83
1.97
19.38
4.38
9.91
7.91
14.94
8.84
17.09
3.45
2.19
5.38
8.89
4.19
0.30
3.74
9.56
9.65
-5.23
-0.74
17.24
11.23
34.17
0.13
2.83
2.38
10.05
263.8
9
41.00
30.95
1498.
33
21
18.69
61.29
31.38
7.32
9.34
28.75
-36.00
208.6
5
28.66
45.06
11.19
6.90
-0.86
-3.07
2.61
9.30
-5.32
-3.47
43.41
-1.87
2.45
11.92
2.61
28.77
13.05
23.62
28.33
33.96
22
25.47
8.70
116.9
6
0.85
36.54
161.3
6
109.7
7
120.9
4
16.61
72.8
2
76.7
8
23.4
5
112.6
1
70.1
5
63.7
0
13.5
9
66.67
23
32.4
3
25.0
0
3.40
19.2
9
62.17
43.81
15.48
-0.94
-6.07
5.85
-0.20
145.7
1
17.36
-4.02
83.8
1
1.99
27.2
4
59.35
2.34
14.17
6.63
5.57
46.3
5
-1.42
65.12
11.99
-4.86
9.59
14.4
2
88.3
3
123.0
0
127.
17
46.29
4.41
163.1
5
107.6
9
4.01
249.
83
86.5
7
7.29
212.1
4
4.00
88.89
28
Atul Ltd.
Ballarpur Industries Ltd.
-0.75
10.29
103.3
3
9.61
10.72
12.66
576.9
4
1.90
16.8
7
16.8
0
63.7
5
13.7
2
51.1
1
8.63
27.45
22.9
7
11.79
15.31
10.0
2
6.90
43.03
45.62
12.98
12.5
6
5.28
-3.21
15.01
27.06
29.22
32.31
4.04
418.
18
-4.66
12.8
5
35.6
1
25.12
11.22
4.05
86.64
16.89
98.20
17.62
23.6
7
7.84
18.4
6
147.2
0
4.06
26.2
7
0.07
13.7
5
66.67
26
27
6.60
11.1
8
36.24
7.50
96.4
3
13.0
7
33.0
9
37.2
4
24
25
51.40
51.13
-6.91
37.3
8
40.78
-3.11
24.6
2
66.45
5.95
23.3
9
1.02
27.4
9
-1.02
57.61
2010
-0.46
18
19
200
9
-0.68
-2.53
2008
9.88
8.94
73.31
Cinevistaas Ltd.
6.44
2007
24.33
11
Birla Ericsson Opticaal Ltd.
-5.93
28.6
3
2006
-3.61
17.0
7
35.9
5
9
Avon Organics Ltd.
2005
33.0
8
97.5
0
68.2
1
69.9
0
25.57
14.64
30.48
7.83
20.5
6
66.08
8.62
27.7
2
7.17
48.49
21.64
1.55
29.0
7
2.92
14.4
7
3.02
45.6
6
23.68
83.50
-0.08
20.55
556.8
0
51.10
8.05
30.70
25.23
-5.93
7.33
15.60
33.61
4.66
37.50
42
Sr
No
2001
69.6
6
-47.13
200
3
20.3
1
1.65
2.10
1.98
3.64
6.28
1.45
2.07
2.73
5.49
6.30
10.1
8
23.76
1.66
0.76
-1.29
-1.93
8.33
22.8
7
11.57
16.05
2.36
2.81
6.39
Ceat Ltd.
3.42
53.7
5
10.43
4.84
8.98
15.12
186.7
9
5.45
6.40
11.68
19.22
-1.65
-0.75
5.61
1.79
9.68
8.72
3.43
5.12
6.27
6.14
6.57
5.63
5.96
47.27
7.32
473.
78
4.70
169.9
5
5.69
-1.96
-40.00
1.55
2.61
2.16
3.67
7.02
-6.33
1.79
2.22
2.65
11.70
4.78
6.61
9.81
13.24
Escorts Ltd.
5.21
56.15
3.95
10.5
4
9.62
1.35
5.23
-2.19
340.0
0
1.57
11.78
1.95
5.95
11.40
8.60
10.33
7.03
9.25
206.
61
8.49
5.36
29.8
0
9.56
20.02
4.47
2.89
6.62
18.79
28.99
4.20
2.16
3.19
6.23
25.39
3.41
57.46
30.94
29
Bata India Ltd.
30
31
32
33
Birla Corporation Ltd.
34
35
36
37
38
39
CESC Ltd.
40
41
42
43
44
Company Name
Dena Bank
2002
45
46
47
48
49
50
Goldiam International Ltd.
AVERAGE
16.9
8
53.0
6
2008
200
9
2010
82.56
89.9
1
103.5
9
7.12
7.67
11.06
6.85
7.01
4.02
9.03
3.13
2.35
0.83
1.90
19.9
0
18.7
0
4.46
22.2
1
3.90
5.53
10.56
4.21
12.4
2
27.93
742.
78
38.2
3
15.1
9
12.2
3
18.4
2
10.3
8
2.80
7.82
3.19
19.98
8.70
11.93
13.71
6.51
11.11
8.17
11.6
9
8.54
18.9
2
10.40
10.28
57.40
7.69
3.38
6.84
14.36
3.32
10.90
7.69
8.88
3.32
5.84
2.23
4.43
9.81
12.29
23.93
8.19
17.4
0
7.64
10.2
7
4.92
13.6
1
40.5
7
35.4
1
4.07
-17.47
5.64
10.9
8
14.4
7
13.2
4
41.0
5
-14.62
6.72
3.09
6.24
20.5
3
5.79
12.2
5
6.72
9.84
11.59
4.78
9.23
14.2
5
40.6
3
18.5
2
56.6
4
13.93
6.76
28.02
4.70
13.94
15.7
9
48.1
6
18.8
4
22.6
4
39.38
1353.7
5
2.29
9.8
1
22.24
28.1
5
2004
2005
2006
2007
-17.19
820.0
0
349.
28
21.8
8
174.
75
15.6
8
4.91
21.8
3
-18.82
-5.76
14.23
6.18
43
Sr
No
Market Price
Company Name
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
201.3
172
124.05
407
61
60.75
207
624
270
471.1
48.2
79.35
123.8
248
285
291
275
41.9
18.3
71.8
45.1
80.5
98.1
256.85
21.1
40.7
37.8
35.8
18.4
56.25
246
331
325.5
300
395
635
759.2
1250
809
2047
385
363
337.05
770
1500
3100
595
515
577.9
878.5
79.25
115
289
456
690
1660
710
986.95
455
1071
41.5
73
75
193
372
703
604.9
393.4
85.95
401
26.6
48
48.5
77.9
167
540.95
417
333
68
323.7
59.85
52.4
66
392.25
161
507
194
189.1
48.95
136
10
135.35
413
52
85
90
189
126
196.5
30.2
51.45
11
Bank Of Baroda
56.5
48.7
86
243.5
219.05
232
209.4
282
236
643.15
12
Bank of India
10.4
25.9
37.75
58.9
103.95
133
159.8
256.95
221
343.75
13
85.1
150
101
294
552.7
1405
661.25
810
709
914.9
14
71
100
92
120.15
196
220
190
197.9
181
353
15
87.6
69.5
69
107.6
42
86.1
37.2
36.8
34.85
58.6
16
48
128.4
182
504.75
668
1332.1
1477.8
1124
898
2204
17
77
110
241
739
1396
448
309.2
275
97.6
256.9
18
139.9
172.5
223.5
604.3
783
2277
2275
2070
1514
2398
19
177
333
222
487.1
354.05
438.9
300
410.95
380
518.7
20
127
130
123.5
464.95
474.7
684.7
325
253.7
275
833
21
225.05
187
188.45
197.9
192.65
251
210.15
244
327.7
696
22
50.1
52.3
82.1
117
132
175
123.55
109
65
276
23
Cipla Ltd.
964
1026.95
705
1165
257
665
234.7
220
216
338.65
24
CMC Ltd.
217.55
565
496
505
630
541
1200
822
332.7
1348
25
152.1
144.85
122.5
132.5
179.5
432.25
327.55
385.8
479.9
678.05
26
55
120.1
201.5
249
255.1
345
324
246
199.25
545
27
145
252.9
216.5
715.05
860
1410
1925
1749.95
715
1324
28
Corporation Bank
105.1
135.5
133
281.55
369
381.05
275.05
280
181.5
481.1
VALUE STOCK
44
Sr
No
Company Name
Market Price
200
2005
6
200
1
2002
2003
200
4
2007
2008
2009
2010
54.1
54.9
51.5
100.45
112.95
241
260
325
187
505.65
58
54.2
36.5
76.5
112.9
127
93.5
110
99.9
158.5
29
30
31
1208
1101.5
916.8
976
738.65
1435
720
594.95
497
1285
32
68.9
229.8
257.95
513
475
615
474
657
229.05
612
33
Duphar-Interfran Ltd.
248.25
130
117.05
191.25
197.6
305
220
190
107.25
250.2
34
57.95
71.6
78.95
200.1
534
287.9
127.9
175
140.65
338.05
35
EIH Ltd.
204
214
155.55
275
309
764
93
140.9
87.05
119.15
36
100
184.15
216.75
299
426
375
379
46
15.25
53.5
37
11.25
15.05
16.95
53.2
42.75
76.05
50.55
50
33.8
93.25
38
100
264.9
247.25
323.05
326
859
435
670
515.5
2220.1
39
205.1
278
127
211.7
313.7
458
68.95
37.25
12.7
43.15
40
69.6
64
74
131.8
142.8
260.05
43.15
67
40.85
125
41
FDC Ltd.
206
202
27.25
111
45.5
49.7
31.5
28.75
34.5
80.15
42
44
105
94.5
372.5
156.5
204
198
218
139.9
267.25
43
150
141.95
79
120.6
178
356
83
73.5
19.55
52
44
45.5
78
75
214.2
214.5
322
261.8
429.9
246
412
45
360
326
277.85
528
680
915
772
891
666.3
1414.3
46
366
375.05
215
250.2
350
674.95
522
588
685
1514
47
416
338
293
605
719
1464
1105
1050
1090
1782.1
115
235
207.5
145
284
315
595
493.95
153
267.85
48
49
50
384.75
390
300
369
764.7
1461
1135
1270
725.2
1965
56.05
16.1
14.1
46
111
608.2
158
262.5
53.05
141.65
171.8
206.981
178.825
325.72
372.827
627.15
446.338
454.168
304.474
668.37
45
Sr
No
1
10
11
Bank Of Baroda
12
Bank of India
13
14
15
16
17
18
19
20
21
22
23
Cipla Ltd.
24
CMC Ltd.
25
26
27
28
EPS
Company Name
2001
200
2
2003
2004
2005
11.11
4.36
8.96
9.89
0.9
2.51
5.95
33.05
21.11
17.64
7.71
1.56
10.11
16.28
2.28
16.57
4.545
2
7.92
22.12
15.41
18.53
1.87
5.47
6.29
11.55
4.09
0.59
6.58
9.02
10.75
2.41
3.08
3.54
8.04
7.04
11.44
3.91
17.15
23.39
9.48
2.52
1.88
4.23
6.43
9.28
200
6
1.09
20.3
9
2007
200
8
2009
201
0
2.78
3.79
5.18
7.73
28.02
5.73
2.76
8.23
2.74
19.4
7
15.3
7
15.6
6
3.38
3.53
42.6
6
1.43
3.18
87.1
2
33.93
6.71
12.1
2
11.87
2.45
11.14
10.75
3.33
26.11
3.95
2.12
18.64
29.3
2.91
7.97
4.46
11.0
6
9.52
9.52
-0.03
19.76
5.68
9.27
8.32
24.4
3
5.03
0.26
5.76
1.66
7.61
9.15
12.2
0.07
32.97
23.08
30.99
17.42
20.69
6.98
6.14
13.6
34.73
45.71
9.29
3.02
13.47
34.36
37.87
55.79
3.53
72.8
8
2.75
18.21
4.12
19.5
6
12.09
0.5387
9
0.96
87.2
8
34.0
3
50.5
4
24.8
2
10.72
11.83
2.515
6
27.1
14.3
9
80.6
9
16.1
1
3.04
14.6
6
42.5
1
39.8
2
37.0
1
20.3
8
90.57
8.29
5.5
20.71
32.28
39.64
9.5
13.01
12.5
18.4
28.3
3
14.6
8
21.13
25.96
41.01
68.6
98.66
41.67
56.49
32.19
59.18
12.95
22.75
20.93
4.33
26.2
6
7.2
26.1
7
38.2
1
30.1
2
11.56
48.68
16
10.4
20.28
19.9
41.27
52.32
18.35
13.660
6
24.46
31.67
15.22
4.84
12.5
1
25.5
6
31.0
8
6.52
7.94
8.33
12.96
28.28
13.38
42.66
53.09
67.64
29
35.15
28.04
6.45
20.0
1
29.1
2
10.1
2
15.1
5
77.3
4
30.9
9
27.34
10.93
7.92
23.48
29.75
16.15
4.6
7.45
32.83
21.82
2.62
3.95
41.42
22.73
94.64
17.75
16.3
2.92
104.
7
13.4
4
58.4
1
48.9
4
6.41
65.45
58.79
103.0
5
17.24
2.6
94.19
2.62
63.64
17.53
19.48
13.44
18.8
23.5
6
8.34
6.69
8.29
8.52
9.02
58.2
3
17.0
4
24.3
6
57.8
7
51.2
4
9.99
42.31
11.78
15.85
106.2
5
37.38
24.68
69.68
21.31
38.19
60.87
62.24
1.05
11.9
7
3.76
92.1
7
3.07
88.3
9
45.1
5
36.8
7
18.9
6
49.6
1
13.6
9
85.5
3
31.1
2
50.3
60.5
2
81.5
8
46
Sr
No
29
30
31
32
33
Duphar-Interfran Ltd.
34
35
EIH Ltd.
36
37
38
39
40
41
FDC Ltd.
42
43
44
45
46
47
EPS
Company Name
GlaxoSmithkline Consumer
Healthcare Ltd.
GlaxoSmithKline Pharmaceuticals
Ltd.
48
49
50
2001
200
2
2003
2004
2005
2006
5.5
4.6
4.76
5.52
6.93
2.73
2.18
6
36.3
9
1.17
1.89
2
2.58
1.235
2
3.54
39.7
30.5
2
32.1
6
0.06
6
52.2
5
2008
14.1
8
2009
8.87
2007
12.2
2
21.9
2010
22.4
2
5.17
3.3
2.93
3.66
4.32
4.78
1.1
1.46
39.7
58.52
39.77
0.26
61.2
6
11.23
27.37
21.07
4.35
55.2
9
11.3
3
1.9
16.4
9
14.8
8
15.03
24.22
58.41
4.28
55.9
1
20.7
7
14.2
8
-1.86
-0.63
25.0
2
33.3
6
23.8
1
1.22
3.69
5.58
60.19
45.5
54.77
1.4
1.87
3.08
3.41
4.05
11.8
7
11.95
14.28
9.49
11.1
25.2
1
28.1
1
13.6
33.0
4
21.1
13.6
6
24.6
24.7
2
15.9
4
39.1
0.95
22.6
4
17.8
7
4.68
25.1
6
-5.7
12.9
8
36.0
4
41.5
3
5.1
51.1
3
5.53
77.8
0.14
28
2.25
4.94
6.45
20.06
2.81
24.7
9
3.37
25.4
6
6.3
34.6
5
6.34
61.3
5
7.07
12.9
3
13.27
13.11
2.62
2.38
1.74
2.01
2.24
14.7
10.2
10.3
13.4
2.07
3.3
3.55
6.69
4.13
3.46
2.85
3.36
8.91
48.36
62.65
13.73
34.2
3.43
32.4
2
4.37
29.2
6
7.97
27.1
6
9.76
13.8
5
3.16
24.9
2
7.83
9.66
10.06
22.21
23.02
4.5
28.2
2
5.81
30.7
6
-2.32
19
24.16
20.72
34.8
12
17.2
23.24
35.2
40.2
8
22.1
34.9
2
3.77
24.7
5
10.04
3.63
32.7
1
16.4
7
27.3
2
18.3
6
32.7
6
53.8
79.8
52.4
91.4
4
52.4
11.2
6
84.7
3
57.2
67.6
76
15.9
107.
92
8.72
104.
73
4.93
113.
84
2.67
26.0
86
3.6
24.5
09
0.57
27.6
08
2.54
31.1
26
6.8
16.9
3
45.3
1
12.4
18.8
26.8
21.6
48
31.6
38.2
9
31.65
7.49
5.29
49.22
50.04
61.16
6.84
14.8
08
1.8
13.
6
5.87
17.7
88
13.5
22.65
82
15.58
20.24
02
5.54
57.8
2
14.6
2
21.8
02
1.46
47
Sr
No
Company Name
200
1
200
2
200
3
DIVIDEND IN PERCENTAGE
200
200
200
200
4
5
6
7 2008
200
9
201
0
100
100
60
45
45
40
40
30
30
30
40
45
45
45
45
45
45
50
45
75
40
45
50
75
100
120
150
150
100
150
70
90
110
85
95
125
130
170
175
270
40
40
37
39
500
200
600
750
750
500
37.5
40
340
50
50
60
40
40
40
50
35
60
75
100
125
130
125
65
27
85
30
45
45
60
75
40
30
10
20
60
25
25
30
40
50
60
60
60
70
70
10
15
50
150
150
800
150
175
175
15
15
11
Bank Of Baroda
40
40
60
65
50
50
60
80
90
150
12
Bank of India
15
25
30
30
20
30
35
40
80
70
13
27
33
30
36
45
70
70
70
100
100
14
50
50
50
60
60
70
70
70
70
80
15
50
50
60
65
70
100
50
25
30
55
16
40
50
70
100
112
146
180
207
187
192
17
30
35
60
100
125
150
175
175
50
50
18
30
40
40
60
80
145
245
152.5
170
233
19
75
110
150
175
125
25
160
40
70
140
20
55
65
90
90
100
120
150
350
350
400
21
75
75
165
82.5
82.5
82.5
90
140
150
250
22
50
60
55
60
60
60
60
50
50
60
23
Cipla Ltd.
45
70
100
150
175
100
100
100
100
100
24
CMC Ltd.
35
40
40
55
45
50
80
110
25
82.5
42.5
42.5
60
70
75
95
1300
150
150
0
200
200
0
26
40
50
60
60
60
110
240
100
190
250
27
67
100
110
125
145
180
220
185
140
140
28
Corporation Bank
40
40
45
60
65
70
90
105
125
165
48
Sr
No
Company Name
DIVIDEND IN PERCENTAGE
200
200
200
200
4
5
6
7 2008
200
1
200
2
2003
2009
2010
65
75
200
200
200
200
200
230
450
600
29
30
100
50
140
200
250
250
175
150
175
200
31
40
150
100
100
100
100
75
75
125
225
32
50
75
100
120
120
150
150
150
50
30
33
Duphar-Interfran Ltd.
25
60
60
60
25
25
50
100
150
150
34
70
70
60
75
125
225
295
25
1000
500
35
EIH Ltd.
60
60
30
30
40
100
70
90
60
60
36
75
100
100
100
125
125
125
125
125
125
37
25
75
90
120
100
100
100
120
130
200
38
67
40
65
75
80
95
110
185
1060
39
54
27.5
73.3
3
65
80
90
220
100
60
15
16
40
40
35
40
40
25
30
35
40
FDC Ltd.
65
20
200
225
75
80
100
100
60
121.7
5
100
41
42
30
35
40
70
25
35
40
40
50
50
43
75
75
30
40
45
60
70
75
10
30
44
40
45
70
80
80
100
70
75
15
22.5
27.5
85
85
100
100
116.
7
100
45
125
125
150
63
70
70
70
70
80
100
120
150
180
55
70
100
240
280
310
360
400
300
46
47
48
49
50
175
40
60
65
65
35
35
40
70
40
40
160
185
170
190
250
250
250
10
58.
88
33.33
80.0
07
50
85.
75
225
83.3
3
105
.7
250
30
50.
37
220
66.6
7
111
.8
100
125
.2
125
148.
79
125
174.
82
150
212.
12
49
Sr
No
Company Name
2001
2002
2003
2004
2005
2006
2007
18.12
39.45
13.84
41.15
67.78
55.73
74.46
19.20
13.34
3.75
11.75
16.16
14.27
9.81
5.85
51.60
9.70
15.78
9.25
14.85
11.18
14.85
41.79
14.72
84.70
194.12
61.62
19.47
122.4
2
21.32
129.8
7
25.91
150.6
3
19.38
194.92
43.92
50.55
64.19
32.61
201.6
9
106.0
0
17.22
23.70
21.19
24.00
52.84
104.7
7
63.54
2.33
12.28
2.83
3.33
4.92
6.31
20.79
35.11
33.05
65.71
44.63
100.8
0
21.10
746.1
5
11.83
20.66
10.33
41.3
2
58.6
3
62.2
0
13.4
0
89.08
2008
164.
64
7.31
10.1
4
29.3
0
115.
47
89.2
4
2009
2010
52.12
60.94
6.63
8.72
12.87
17.69
19.53
23.50
836.6
7
198.59
70.98
2865.0
0
89.47
7.34
13.25
8.50
81.93
431.43
53.59
48.20
10
32.00
64.23
4.67
7.91
11
Bank Of Baroda
6.09
14.62
3.29
7.39
9.49
8.56
6.76
6.63
3.61
7.37
12
Bank of India
2.63
12.22
2.17
2.85
14.89
9.24
7.03
3.76
10.10
13
4.57
24.43
7.43
8.47
12.09
17.41
6.99
6.45
21.8
9
6.88
18.10
14
7.64
33.11
7.78
14.55
13.66
10.70
14.22
8.17
16.87
27.43
16.03
24.39
13.53
13.40
15.59
16
2.64
6.56
5.30
13.33
11.97
18.28
16.32
9.53
17
9.29
20.00
11.64
22.89
35.22
47.16
23.77
37.25
23.91
83.68
18
11.19
9.38
10.58
23.28
19.09
23.06
23.79
27.13
19
6.47
11.75
5.33
8.62
11.00
33.19
101.3
6
9.71
12.6
0
10.7
4
20.4
6
35.4
4
10.50
15
9.94
199.7
1
21.68
11.49
20
11.62
8.86
9.54
20.44
22.68
26.07
19.94
14.12
22.59
21
28.42
25.97
16.30
4.07
12.04
24.13
15.64
13.28
36.71
22
2.13
2.00
4.05
5.88
7.19
27.13
14.81
7.84
5.56
23
Cipla Ltd.
32.40
26.88
17.08
22.27
18.81
33.23
27.55
21.62
24.74
24
CMC Ltd.
13.47
18.76
20.28
15.95
41.39
18.58
28.36
4.77
15.76
25
33.07
29.93
18.79
16.69
21.55
42.71
27.81
22.52
21.79
26
7.38
9.60
15.55
8.80
19.07
22.77
20.44
5.22
10.83
27
4.42
9.89
5.08
13.47
12.71
18.23
18.12
8.40
13.4
9
10.3
6
16.2
9
24.3
9
14.1
2
22.6
4
10.1
0
30.2
4
11.75
21.88
28
Corporation Bank
4.82
4.36
4.59
8.01
13.16
12.30
7.36
5.46
2.92
5.90
5.07
50
Sr
No
Company Name
29
30
31
32
33
Duphar-Interfran Ltd.
34
35
EIH Ltd.
36
37
38
39
40
41
FDC Ltd.
42
43
44
45
46
47
48
49
50
2001
2002
2003
9.84
11.93
10.82
21.25
552.5
1
46.32
582.1
4
14.15
742.2
1
1.89
5.79
6.50
10.09
4.26
2.34
2008
22.9
2
30.0
5
2009
2010
8.54
23.1
3
22.55
38.48
2007
21.2
8
31.9
1
5519.
23
168.
22
8.77
505.
92
11.9
4
10.04
261.
58
13.8
9
10.42
6.99
9.38
-53.51
8.48
10.5
9
5.25
127.5
0
8.26
74.5
3
9.14
55.3
8
22.18
12.80
2.23
3240.
31
2.56
3.52
3.60
10.75
9.06
4.42
65.41
20.69
11.48
23.42
13.38
6.27
4.71
5.03
8.17
6.11
6.60
1.57
11.78
1.95
7.11
14.54
10.09
5.95
12.4
8
7.78
12.5
4
16.2
5
23.9
3
13.8
6
15.9
6
11.4
0
17.6
9
9.03
11.84
6.57
17.2
7
22.6
2
15.9
5
12.9
2
32.0
8
136.
77
11.8
8
16.7
7
94.0
9
25.4
8
20.4
4
3.33
3.95
9.64
9.32
76.92
5.63
103.1
6
27.67
14.55
15.05
17.92
61.18
27.26
15.59
6.79
7.44
6.56
21.8
5
14.5
5
22.5
7
19.3
6
8.49
10.19
6.10
7.37
32.8
2
15.0
6
33.2
9
53.6
9
12.5
0
8.19
8.94
2.40
3.41
7.12
3.10
75.63
-0.27
39.8
3
33.4
0
AVERAGE
2004
18.2
0
21.6
1
2005
16.3
0
21.8
4
887.
27
2006
27.17
21.20
8.96
18.2
4
33.16
2039.6
8
24.46
7.21
7.50
1.81
609.
64
14.20
3.09
8.29
7.94
19.3
4
21.4
1
20.3
0
5.33
13.19
8.40
171.70
6.32
11.5
1
19.26
81.61
19.41
7.41
15.0
0
17.0
9
28.9
7
20.8
5
13.69
9.38
8.38
7.89
10.06
6.24
9.84
9.28
-8.43
11.1
3
13.79
11.79
6.72
12.6
5
13.9
8
4.78
21.62
5.79
18.4
4
41.60
21.9
3
12.9
6
21.0
9
52.8
4
13.4
0
59.1
8
25.6
0
10.9
3
18.3
6
31.0
7
11.7
7
72.9
2
146.4
4
41.5
3
26.4
5
27.06
34.65
174.8
1
49.84
20.60
30.50
56.86
25.27
18.68
16.65
19.0
8
26.99
8.58
16.1
2
17.5
5
16.56
6.92
93.0
7
13.7
1
17.26
23.45
54.33
55.77
1.27
51
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
MARKET PRICE
GROW
VALUE TH
171.8
206.9
81
178.8
25
325.7
16
372.8
27
627.1
47
446.3
38
454.1
68
45.968
304.4
74
668.3
68
158.75
96
343.75
96
49.161
42.481
97.354
6
134.10
46
217.69
02
216.36
72
240.66
78
EPS
P/E RATIO
DIVIDEND
GROWT
VALU GROWT
GROW
VALUE
H
E
H
VALUE
TH
14.807
50.367 9.6333
98
5.76
3.10
53.06
35
33
13.599
75.6
58.876 8.1770
68
7.78
3
25.39
6
83
17.787
80.006 6.5868
81
5.56 -0.27
3.41
6
75
22.658
39.8
9.1938
18
6.86
3
57.46
85.75
78
20.240
33.4
111.82
21
7.09
0
30.94
34 8.7766
21.801
146.
105.73
8
9.06
44
48.16
66
10.24
26.086
41.5
125.23
2
12.77
3
22.64
34
10.43
24.508
26.4
12.893
6
16.98
5
-18.82 148.79
4
27.607
13.7
174.81
86
13.42
1
9.81
5
11.82
31.126
21.48
1.27
28.15
212.12
15.93
52
HYPOTHESIS TEST
From the results of the analysis, test is carried out about the capital adequacy ratio of tested
banks.
Formula
One Way ANNOVA is calculated using the formula,
MS Between (Estimate of population variance based on between samples variance)
F= -----------------------------------------------------------------------------------Ms within (Estimate of population variance based on within samples variance)
Where, Degree of freedom:V1 = (k 1)
V2 = (n 1)
V1 = Degree of freedom for greater variance.
V2 = Degree of freedom for Smaller variance.
n = total number of items in all the samples i.e., n1 + n2 + + nk
k = number of samples.
Level of significance 5%
Note: How to calculate One Way ANOVA Technique in detail, is given in Annexure 1.
53
Calculation:
Calculation for the F- test is as follow,
Table 1: Raw Data
F TEST
The test is carried out from the raw data on four factor i.e. market price, price earning ratio,
earning per share, and dividend, results are as follows..
1. Market price
Anova: Single FactorMP
SUMMARY
Groups
Count
VALUE
10
GROWTH
10
Sum
3756.6
44
1546.3
14
Averag
e
Variance
375.66
44
30712
154.63
14 10020.88
ANOVA
Source of Variation
Within Groups
SS
24427
8
36659
5.9
Total
61087
3.9
Between Groups
df
1
18
MS
F
24427
8 11.99415
20366.
44
Pvalue
0.0027
74
F crit
4.4138
73
19
Result of ANOVA:
FCal.= 11.99415
FTab.= 4.413873
FCal.>FTab.
Findings From The Study:
By dividing the mean square of Between Groups by the mean square of Within
Groups, we obtain an F-value of 11.99415 which is greater than the cut-off value of 4.413873
for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is
sufficient evidence to reject the hypothesis thatthere is no statistical significant difference
54
between average market price of value stock and growth stock. Furthermore from the analysis
of these data we can conclude that the factor "market price" has difference value stock and
growth.
55
Count
VALUE
10
GROWTH
10
ANOVA
Source of Variation
Within Groups
SS
643.71
83
538.53
56
Total
1182.2
54
Between Groups
Sum
220.22
43
106.75
9
df
1
18
Averag
e
22.022
43
10.675
9
MS
643.71
83
29.918
64
Variance
31.2577
2
28.5795
6
F
21.5156
3
P-value
0.0002
04
F crit
4.4138
73
19
Result of ANOVA:
FCal.= 21.51563
FTab.= 4.413873
FCal.>FTab.
Findings From The Study:
By dividing the mean square of Between Groups by the mean square of Within
Groups, we obtain an F-value of 21.51563 which is greater than the cut-off value of 4.413873
for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is
sufficient evidence to reject the hypothesis thatthere is no statistical significant difference
between average earning price per share of value stock and growth stock. Furthermore from
the analysis of these data we can conclude that the factor "earning price per share " has
difference in value stock and growth stock.
56
Count
VALUE
10
GROWTH
10
ANOVA
Source of Variation
Within Groups
SS
437.03
77
25018.
44
Total
25455.
48
Between Groups
Sum
353.68
95
260.19
75
df
1
18
Averag
e
35.368
95
26.019
75
MS
437.03
77
1389.9
13
Variance
2220.32
4
559.502
8
F
0.31443
5
P-value
0.5818
85
F crit
4.4138
73
19
Result of ANOVA:
FCal.= 0.314435
FTab.= 4.413873
FCal.<FTab.
Findings From The Study:
By dividing the mean square of Between Groups by the mean square of Within
Groups, we obtain an F-value of 0.314435which is greater than the cut-off value of 4.413873
for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is
sufficient evidence to accept the hypothesis thatthere is no statistical significant difference
between average price earning ratio of value stock and growth stock. Furthermore from the
analysis of these data we can conclude that the factor "priceearning ratio " has no difference
in value stock and growth stock.
57
Count
VALUE
10
GROWTH
10
Sum
1153.5
19
103.68
12
Averag
e
115.35
19
10.368
12
Variance
2639.84
4
6.99887
7
ANOVA
Source of Variation
Within Groups
SS
55107.
97
23821.
58
Total
78929.
55
Between Groups
df
1
18
MS
55107.
97
1323.4
21
F
41.6405
3
Pvalue
4.520
6
F crit
4.4138
73
19
Result of ANOVA:
FCal.= 41.64053
FTab.= 4.413873
FCal.>FTab.
Findings From The Study:
By dividing the mean square of Between Groups by the mean square of Within
Groups, we obtain an F-value of 41.64053 which is greater than the cut-off value of 4.413873
for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is
sufficient evidence to reject the hypothesis thatthere is no statistical significant difference
between average dividend of value stock and growth stock. Furthermore from the analysis of
these data we can conclude that the factor dividend" has difference in value stock and
growth stock.
the dividends are declared but in the growth stocks companies do not prefer to declare
dividend. In value stocks the risk is more associated as it is having more market price there is
a possibility for the investor to loose money while in growth stocks the risk is moderate or
very less. Value stock is risk associated but they give more returns than the growth stocks.
A large body of empirical research indicates that value stocks on average earn higher returns
than growthstocks. The reward to value investing is more pronounced for small stocks but it
is also present in the larger stocks.
Growth stocks rocketed in value, prompting speculation that value investors were an
endangered species. A more careful examination, however, suggests that the differences
across the performance of equity classes in the late 2001s were not grounded on fundamental
patterns of profitability growth. Instead, the most plausible interpretation of the events of the
late-2001s is that investor sentiment reached exaggerated levels of optimism about the
prospects for technology, media and telecommunications stocks. The resulting valuations
were hard to reconcile with economic logic.
Similarly, the sharp rise and decline in recent years of technology and other growth-oriented
stocks calls into question the argument that growth stocks are less risky investments. Rather,
the evidence suggests that value stocks are not more risky than growth stocks, based on a
variety of indicators including beta and return volatility. Indeed, using one popular risk
indicator which focuses on performance in down markets, value stocks suffer less severely
than growth stocks when the stock market or the overall economy does poorly.
The superior performance of value stocks cannot be attributed to their risk exposures. Instead
a more convincing explanation for the value premium rests on features of investor behavior
as well as the agency costs of delegated investment management. Several
studies provide evidence in support of extrapolative biases in investor behavior.
59
The argument that the value premium is an artifact of data-snooping poses a tougher
challenge. In this respect, however, two features of the debate about value investing are
crucial. In particular, a logically coherent account exists that can explain the returns to value
stocks, and there is empirical support for theextrapolation hypothesis. These features
distinguish the value premium from many other anomalous patternsthat have been
documented on stock returns. Many apparent violations of the efficient markets hypothesis,
such as day-of-the-week patterns in stock returns, lack a convincing logical basis. In the
absence of a plausible rationale, there is a legitimate concern that the anomalous pattern is
merely a statistical fluke that has been uncovered through data-mining. Instead, the value
premium reflects ingrained patterns of investor behavior or the incentives of professional
investment managers. As in the case of numerous past episodes in financial history, investors
will continue to extrapolate from the past and get excessively excited about promising new
technologies. They will overbid the prices of growth stocks, and conversely, beat down value
stocks too low. As a result, patient investing in value stocks will continue to be a rewarding
long-term investment strategy.
The research report will be a guide for the investors those who invest money and for those
who are the future investors. This study will provide them to further know about what are the
advantages and limitations of investing in value stock or growth stock in the Indian stock
market.
60
REFERENCES
5.
6.
7.
8.
9.
Dr.K.P.Kaushik,
and
Ms.TimcyChaudhary,
November
2010,
select
61
BIBLOGRAPHY
WWW.GOOGLE.CO.IN
WWW.BSEINDIA.COM
WWW.WIKIPEDIA.COM
WWW.INVESTOPEDIA.COM
WWW.MONEYCONTROL.COM
WWW.MINISTRYOFFINANCE.GOV
WWW.TIMESOFINDIA.COM
WWW.ECONOMICSTIMES.COM
WWW.BUSINESSSTANDARD.COM
WWW.PROJECTPARADICE.COM
SPECIAL ISSUE JOURNAL- THE ANALYST
62
(iii) Take the deviations of the sample means from the mean of the sample means and
calculate the square of such deviations which may be multiplied by the number of items in
the corresponding sample, and then obtain their total. This is known as the sum of squares for
variance between the samples (or SS between). Symbolically, this can be written:
(iv) Divide the result of the (iii) step by the degrees of freedom between the samples to obtain
variance or mean square (MS) between samples. Symbolically, this can be written:
(v) Obtain the deviations of the values of the sample items for all the samples from
corresponding means of the samples and calculate the squares of such deviations and then
obtain their total. This total is known as the sum of squares for variance within samples (or
SS within). Symbolically this can be written:
(vi) Divide the result of (v) step by the degrees of freedom within samples to obtain the
variance or mean square (MS) within samples.
This total should be equal to the total of the result of the (iii) and (v) steps explained above
i.e.,
SS for total variance = SS between + SS within.
The degrees of freedom for total variance will be equal to the number of items in all samples
minus one i.e., (n 1). The degrees of freedom for between and within must add up to the
degrees of freedom for total variance i.e.,
(n 1) = (k 1) + (n k)
This fact explains the additive property of the ANOVA technique.
(viii) Finally, F-ratio may be worked out as under:
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