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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.

INTRODUCTION TO TOPIC

2.

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

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.

Systematic risk (uncontrollable risk) non-diversifiable risk

2.

Unsystematic risk (controllable risk) diversifiable risk


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

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

Market risk

b)

Interest rate risk

c)

Purchase power risk

UNSYSTEMATIC RISK OF DIVERSIFIABLE RISK:


It is unique to the firm or industry.

It stems from managerial inefficiency,

technological changes, consumer preferences, labour problems etc. The magnitude and
nature differs from firm to firm, industry to industry.
It can be classified into 2 types
1)

Business risk

Internal risk

Fluctuations in sales

Research and development

Personal management

External risk (P,E,S,T factors)

2)

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.
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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.

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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.

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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.


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

compulsory for stock exchanges.


Stock exchanges were permitted to expand their trading to locations outside their
jurisdiction through computer terminals. Thus, major stock exchanges in India have
started locating computer terminals in far-flung areas, while smaller regional exchanges
are planning to consolidate by using centralized trading under a federated structure.
Online trading systems have been introduced in almost all stock exchanges. Trading
is much more transparent and quicker than in the past. Until the early 1990s, the trading
and settlement infrastructure of the Indian capital market was poor. Trading on all stock
exchanges was through open outcry, settlement systems were paper-based, and market
intermediaries were largely unregulated.
The regulatory structure was fragmented and there was neither comprehensive
registration nor an apex body of regulation of the securities market. Stock exchanges
were run as brokers clubs as their management was largely composed of brokers. There
was no prohibition on insider trading, or fraudulent and unfair trade practices. Since
1992, there has been intensified market reform, resulting in a big improvement in
securities trading, especially in the secondary market for equity. Most stock exchanges
have introduced online trading and set up clearing houses/corporations. A depository has
become operational for scrip less trading and the regulatory structure has been overhauled
with most of the powers for regulating the capital market vested with SEBI. The Indian
capital market has experienced a process of structural transformation with operations
conducted to standards equivalent to those in the developed markets. It was opened up for
investment by foreign institutional investors (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.
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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.

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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.

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INDUSTRY PROFILE
Stock exchange is an organized market place where securities are traded. These securities
are issued by the government, semi-government bodies, public sector undertakings and
companies for borrowing funds and raising resources. Securities are defined as any
monetary claims (promissory notes or I.O.U) and also include shares, debentures, bonds
and etc., if these securities are marketable as in the case of the government stock, they are
transferable by endorsement and alike movable property. They are tradable on the stock
exchange. So, are the case shares of companies.
Under the Securities Contract Regulation Act of 1956, securities trading is
regulated by the Central Government and such trading can take place only in stock
exchanges recognized by the government under this Act. As referred to earlier there are at
present 23 such recognized stock exchanges in India. Of these, major stock exchanges,
like Bombay Stock Exchange, National Stock Exchange, Inter-Connected Stock
Exchange, Calcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are permanently
recognized while a few are temporarily recognized. The above act has also laid down that
trading in approved contract should be done through registered members of the exchange.
As per the rules made under the above act, trading in securities permitted to be traded
would be in the normal trading hours (10 A.M to 3.30 P.M) on working days in the
trading ring, as specified for trading purpose.Contracts approved to be traded are the
following:

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

the payment is made.

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

the date of contract.

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

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

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

be approved by the governing board of the stock exchange.


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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

recognized in 1963. At present there are 23 Stock Exchanges.

Till recent past, floor

trading took place in all Stock Exchanges. In the floor trading system, the trade takes
place through open outcry system during the official trading hours. Trading posts are
assigned for different securities whereby and sell activities of securities took place. This
system needs a face to face contact among the traders and restricts the trading
volume. The speed of the new information reflected on the prices was rather than the
investors. The Setting up of NSE and OTCEI (Over the counter exchange of India with
the screen based trading facility resulted in more and more Sock exchanges turning
towards the computer based trading. BSE introduced the screen based trading system in
1995, which known as BOLT (Bombay on line Trading. System)

Madras Stock
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.

The negotiability and transferability of the

securities, investors are willing to subscribe to the initial public offering (IPO). This
stimulates the capital formation.

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.

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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 insider dealings.
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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.

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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.

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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.

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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.

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

Institutions including subsidiaries of banks engaged in financial services and such

other

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

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

activity related to banking or financial services or treasury.

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

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

engaged in any fund-based activities.


The securities market achieves one of the most important functions of channeling idle
resources to productive resources or from less productive resources to more productive
resources. Hence in the broader context the people who save and investors who invest
focus more towards the 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 listed stocks, market

23

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)

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

regulate the Markets.


b)

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

sector in relation to issue, allotment and transfer of securities, and disclosures to be made
in public issues.
c)

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

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


securities through control over stock exchanges, and
d)

The Depositories Act, 1996 which provides for electronic maintenance and

transfer of ownership of demat securities.


Regulators
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
24

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

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 show
27

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.

To observe the relation between Returns and Risk in the yearly fluctuations in

prices.

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

January

454

February

471.05

End

Returns

485.15 0.068612335
367.2

-0.22046492

Avg.Ret

Deviation

Variance

0.054568 0.014044335 0.000197243


0.054568

-0.27503292 0.075643106

March

370

426.7 0.153243243

0.054568 0.098675243 0.009736804

April

426.15

487 0.142790097

0.054568 0.088222097 0.007783138

May

490

650.95 0.328469388

June

666

778.4 0.168768769

0.054568 0.114200769 0.013041816

July

780

700.6

0.054568

August

695

758.7 0.091654676

September

764.95

784.45 0.025491862

0.054568

-0.02907614 0.000845422

October

785.1

769.55

-0.01980639

0.054568

-0.07437439

November

745.35

741.05

-0.0057691

0.054568

-0.0603371 0.003640566

December

749.4

767.1 0.023618895

0.054568

-0.0309491 0.000957847

Total
Standard Deviation

-0.10179487

0.654813979

0.054568 0.273901388

0.07502197

-0.15636287 0.024449348

0.054568 0.037086676 0.001375422

0.00553155

0.218224232
0.134853

37

CALCULATION OF BETA
Price of
Share

Retur
n (x)

X2

225.2

0.0611
9
0.0318
44

0.0037441
4
0.0010140
54

17823.4
19445.2
2

288.425

0.2807
5

0.0788208
12

19135.9
6

381.525

0.2350
7
0.0710
23

0.0552577
99
0.0050441
99

18503.2
8
18845.8
7

434.075

0.1377
37

0.0189714
03

18197.2

522.425

0.2035
36

0.0414270
07

16676.7
5

604.95

0.1036
03
0.0492
59

0.0107336
62
0.0024264
02

16453.7
6
17705.0
1

616.025

0.0183
07

0.0003351
57

16123.4
6

655.625

0.0642
83

0.0041323
18

15454.9
2

1.134
223

0.221906
953

194364
.83

232.475
218.25

356.225

576.55

Sum

Sensex
18327.7
6

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

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

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

xy

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

1.613265
8

38

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

Start

End

Avg.Ret

February

629.7

March

632.7

625.75

-0.01098467

-0.0495 0.038515331 0.001483431

April

626.4

752.75 0.201708174

-0.0495 0.251208174 0.063105547

May

765.35

820.15 0.071601228

-0.0495 0.121101228 0.014665507

June

870

802.15

-0.07798851

-0.0495

-0.02848851 0.000811595

July

803.15

410.1

-0.48938554

-0.0495

-0.43988554 0.193499292

638.5 0.013974909

-0.0495

Variance

715

September

-0.11335664

Deviation

January

August

633.95

Returns

-0.06385664 0.004077671

-0.0495 0.063474909 0.004029064

418

424.6 0.015789474

-0.0495 0.065289474 0.004262715

418.65

418.75 0.000238863

-0.0495 0.049738863 0.002473954


-0.0495

October

426

292.85

November

292

299.55 0.025856164

-0.0495 0.075356164 0.005678552

December

304.9

329.75 0.081502132

-0.0495 0.131002132 0.017161559

Total

-0.31255869

-0.26305869 0.069199872

-0.5936031

0.380448759

Standard Deviation

0.1780563

CALCULATION OF BETA
Price of
Share
674.475

Retur
n (x)

X2

Sense
x
18327.
76

y2

xy

40

629.225

0.0598
6
0.0076
9

689.575

0.0959
12

0.0091
99

19135.
96

0.1496
21
0.0546
52
0.2744
4

0.0223
86
0.0029
87

18503.
28
18845.
87

0.0753
16

18197.
2

0.3055
0.0061
7
0.1415
7
0.1770
9

0.0933
31

16676.
75

3.81E05

16453.
76

0.0200
42

17705.
01

0.0313
6

16123.
46

0.0728
59
0.599
27

0.0053
08

15454.
92

0.263
611

19436
4.8

634.1

792.75
836.075
606.625
421.3
418.7
359.425
295.775
317.325
Sum

0.0035
83

17823.
4

0.0275
2

0.0007
57

5.91E05

19445.
22

0.0909
94

0.0082
8

0.0159
0.0330
6
0.0185
15
0.0344
2
0.0835
5
0.0133
7

0.0002
53

0.0760
46
0.0893
3
0.0414
6
0.153
07

0.0057
83

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

0.0010
93
0.0003
43

0.0016473
2
0.0006995
66
0.0015253
95
0.0049468
28
0.0010118
78

0.0011
85

0.0094460
54

0.0069
81

0.0255259
13

0.0001
79

8.25194E05
0.0107658
3

0.0079
79
0.0017
19

0.0158189
22
0.0030210
29

0.034
553

0.032573
957

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.

41

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

Start

End

Returns

Avg.Ret

Deviation

Variance

January

1372

1320.8

-0.03731778

0.049991

-0.08730878 0.007622824

February

1315

1403.85

0.06756654

0.049991

March

1385

1510.55 0.090649819

April

1520

1655.7 0.089276316

0.049991 0.039285316 0.001543336

May

1703.65

2178.15 0.278519649

0.049991 0.228528649 0.052225343

June

2134.6

2204.05

0.03253537

0.049991

-0.01745563 0.000304699

July

2229

2230.3 0.000583221

0.049991

-0.04940778 0.002441129

August

2250

2309.5 0.026444444

0.049991

-0.02354656

September

2319

2328.85

0.00424752

0.049991

-0.04574348 0.002092466

October

2301

2217.8

-0.03615819

0.049991

-0.08614919 0.007421683

0.049991

-0.03469654

0.01757554

0.0003089

0.049991 0.040658819

0.00165314

0.00055444

November

2209.95

2243.75 0.015294464

December

2249.75

2403.3 0.068252028

0.049991 0.018261028 0.000333465

0.599893395

0.077705274

Total
Standard Deviation

0.00120385

0.08047

42

CALCULATION OF BETA

Price of
Share

Retur
n (x)

X2

1447.775

0.0096
74
0.0649
91

9.36E05
0.0042
24

17823.
4
19445.
22

1587.85

0.0967
52

0.0093
61

19135.
96

2169.325

0.2223
45
0.1176
9

0.0494
37
0.0138
51

18503.
28
18845.
87

2229.65

0.0278
08

0.0007
73

18197.
2

2279.75

0.0224
7

0.0005
05

16676.
75

0.0003
75

16453.
76

0.0007
71

17705.
01

2226.85

0.0193
77
0.0277
7
0.0144
1

0.0002
08

16123.
46

2326.525
Sum

0.0447
61
0.583

0.0020
04
0.081

15454.
92
19436

1346.4
1359.425

1940.9

2323.925
2259.4

Sense
x
18327.
76

y2

0.0275
2
0.0909
94

0.0007
57
0.0082
8

0.0159
0.0330
6
0.0185
15
0.0344
2
0.0835
5
0.0133
7

0.0002
53

0.0760
46
0.0893
3
0.0414
6
-

0.0057
83

0.0010
93
0.0003
43
0.0011
85
0.0069
81
0.0001
79

0.0079
79
0.0017
19
0.034

xy
0.0002662
16
0.0059137
56
0.0015387
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
43

695

602

4.8

0.153
07

553

0.006837
624

0.4152
5

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

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
Std.
Month

Start

End

Returns

191.95 0.026470588

Avg.Ret

Deviation

Variance

January

187

February

192

March

188

220.05 0.170478723

0.05324 0.117238723 0.013744918

April

218.5

240.75 0.101830664

0.05324 0.048590664 0.002361053

May

243.05

222.8

-0.08331619

0.05324

-0.13655619 0.018647593

June

225

253.35

0.126

0.05324

0.07276 0.005294018

July

253.35

275.05

0.08565226

0.05324

0.03241226 0.001050555

August

277

270.85

-0.02220217

0.05324

-0.07544217

September

271

279.9 0.032841328

0.05324

-0.02039867 0.000416106

October

283

287.1 0.014487633

0.05324

-0.03875237 0.001501746

November

284.2

320 0.125967628

December

315.1

335.05 0.063313234

191.5

-0.00260417

0.05324

-0.02676941 0.000716601

0.05324

-0.05584417 0.003118571

0.00569152

0.05324 0.072727628 0.005289308


0.05324 0.010073234

0.00010147
44

Total

0.638919535

0.057933459

Standard Deviation

0.0694823

CALCULATION OF BETA
Price of
Share

Retur
n (x)

X2

204.025

0.0120
07
0.0640
16

0.0001
44
0.0040
98

17823.
4
19445.
22

229.625

0.1254
75

0.0157
44

19135.
96

239.175

0.0143
71
0.0268
33

0.0002
07
0.0007
2

18503.
28
18845.
87

264.2

0.1046
31

0.0109
48

18197.
2

273.925

0.0368
09

0.0013
55

16676.
75

285.05

0.0055
67
0.0348
52

3.1E05
0.0012
15

16453.
76
17705.
01

302.1
325.075

0.0598
14
0.0760

0.0035
78
0.0057

16123.
46
15454.

189.475
191.75

232.925

275.45

Sense
x
18327.
76

y2

0.0275
2
0.0909
94

0.0007
57
0.0082
8

0.0159
0.0330
6
0.0185
15
0.0344
2
0.0835
5
0.0133
7
0.0760
46
0.0893
3
-

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

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
45

Sum

51

84

92

0.560
425

0.043
822

19436
4.8

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

0.0414
6
0.153
07

19
0.034
553

0.0031533
63
0.009076
7

0.4135
8

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%

46

HCL TECH RETURNS FOR THE YEAR 2011


Std.
Month

Start

End

Returns

Avg.Ret

Deviation

Variance

January

116.5

116.1

-0.00343348

0.1141

-0.11753348 0.013814118

February

111.15

100.2

-0.09851552

0.1141

-0.21261552 0.045205359
-0.07277347 0.005295978

March

98

102.05 0.041326531

0.1141

April

100.55

129.85 0.291397315

0.1141 0.177297315 0.031434338

May

130.55

June

166.9

0.27843738

0.1141

0.16433738 0.027006775

172

185.95 0.081104651

0.1141

-0.03299535 0.001088693

July

186

241 0.295698925

0.1141 0.181598925 0.032978169

August

242

300 0.239669421

0.1141 0.125569421

September

299

340.8 0.139799331

October

342

306.25

-0.10453216

0.01576768

0.1141 0.025699331 0.000660456


0.1141

-0.21863216 0.047800023

November

302.5

337.1 0.114380165

0.1141 0.000280165 7.84926E-08

December

339.95

371.8 0.093690249

0.1141

Total

-0.02040975 0.000416558

1.369022808

0.221468225

Standard Deviation

0.1358517

CALCULATION OF BETA

Price of
Share

Return
(x)

X2

Sensex

y2

xy

47

116.3

18327.7
6

- 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
0.20339
18845.8 0.01851509 0.00034 0.0037658
178.975
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
0.01320 0.00017 17705.0 0.07604644 0.00578 0.0010043
324.125
7
4
1
8
3
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
Sum

1.2566 0.3156 194364


- 0.0345
35
64
.8 0.1530667
53 0.044655

48

76

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

92

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%

49

INFOSYS RETURNS FOR THE YEAR 2011


Std.
Month

Start

End

Returns

Avg.Ret

Deviation

Variance

January

1116

1306.65 0.170833333

0.1459 0.024933333 0.000621671

February

1292

1231.25

-0.04702012

0.1459

-0.19292012 0.037218174

March

1218

1323.9 0.086945813

0.1459

-0.05895419 0.003475596

April

1331.15

1509.25 0.133794088

0.1459

-0.01210591 0.000146553

May

1520.1

1605.1 0.055917374

0.1459

-0.08998263 0.008096873

June

1615.35

1776.5 0.099761662

0.1459

-0.04613834 0.002128746

July

1770.55

2064.35 0.165937138

0.1459 0.020037138 0.000401487

2064

2131.15 0.032533915

0.1459

-0.11336609 0.012851869

2139.95

2306.4 0.077782191

0.1459

-0.06811781 0.004640036

2206.2

-0.05313305

0.1459

-0.19903305 0.039614154

August
September
October

2330

November

2203

2379.35 0.080049932

0.1459

-0.06585007 0.004336231

December

2427

2601.1 0.071734652

0.1459

-0.07416535 0.005500499

Total

0.875136926

0.11903189

Standard Deviation

0.09959580

CALCULATION OF BETA

Price of
Share
1211.325

Retur
n (x)

X2

Sense
x
18327.

y2

xy

50

76

1270.95

0.0415
25
0.0073
91

0.0017
24
5.46E05

17823.
4
19445.
22

1420.2

0.1174
32

0.0137
9

19135.
96

1695.925

0.1002
68
0.0853
23

0.0100
54
0.0072
8

18503.
28
18845.
87

1917.45

0.1306
22

0.0170
62

18197.
2

2097.575

0.0939
4

0.0088
25

16676.
75

2268.1

0.0598
79
0.0202
08

0.0035
85
0.0004
08

16453.
76
17705.
01

2291.175

0.0101
74

0.0001
04

16123.
46

2514.05

0.0972
75

0.0094
63

15454.
92

0.764
035

0.072
349

19436
4.8

1261.625

1562.6

2223.175

Sum

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

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

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

0.001142
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
0.020624
32

0.8098
5

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.

51

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

Avg.Ret

Deviation

Variance

-0.0228813

0.000523554

0.11799 -0.06137983

0.003767484

January

276

302.25 0.095108696

February

295

311.7 0.056610169

March

305

383.65 0.257868852

0.11799 0.139878852 0.019566093

April

384.85

487.95 0.267896583

0.11799 0.149906583 0.022471984

May

501

668.9 0.335129741

0.11799 0.217139741 0.047149667

June

674

691.25 0.025593472

0.11799 -0.09239653

July

698.7

859.05 0.229497638

0.11799 0.111507638 0.012433953

August

876.65

863.65 -0.01482918

0.11799 -0.13281918

0.017640934

September

865.05

883.2 0.020981446

0.11799 -0.09700855

0.00941066

October

892

921.95 0.033576233

0.11799 -0.08441377

0.007125684

November

930

1029.35 0.106827957

0.11799

-0.01116204

0.000124591

December

1079

1080.85 0.001714551

0.11799

-0.11627545

0.01351998

Total
Standard Deviation

1.415976159

0.11799

0.008537118

0.162271703
0.11628689

52

CALCULATION OF BETA
0.1171
88

0.0137
33

16676.
75

906.975

0.0045
68
0.0375
8

2.09E05
0.0014
12

16453.
76
17705.
01

979.675

0.0801
57

0.0064
25

16123.
46

1079.925

0.1023
3

0.0104
71

15454.
92

1.441
884

0.287
87

19436
4.8

870.15
874.125

Sum

0.0835
5
0.0133
7
0.0760
46
0.0893
3
0.0414
6
0.153
07

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

0.006981
281

0.0097
9

0.000178
792
0.005783
062

-6.1E05
0.0028
58
0.0071
6
0.0042
4
0.024
73

0.007979
46
0.001719
247
0.034552
606

2.345281
405

53

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%

ONGC RETURNS FOR THE YEAR 2011


Std.
Month

Start

January

667

February

End

Avg.Ret

Deviation

Variance

-0.01806597

0.63876 0.620694033

0.385261083

650.3

691 0.062586499

0.63876 0.701346499

0.491886911

March

664.05

780.2 0.174911528

0.63876 0.813671528

0.662061355

April

780

864.75 0.108653846

0.63876 0.747413846

0.558627457

May

898.7

1169.25 0.301045955

0.63876 0.939805955

0.883235234

June

1171.1

-0.08692682

0.63876 0.551833179

0.304519858

July

1065.2

1164.05 0.092799474

0.63876 0.731559474

0.535179264

1165

1185.5 0.017596567

0.63876 0.656356567

0.430803942

August

654.95

Returns

1069.3

September

1175.55

1172

-0.00301986

0.63876 0.635740137

0.404165522

October

1175.45

1131.8

-0.03713471

0.63876 0.601625286

0.361952984

November

1144.9

1199.75 0.047908114

0.63876 0.686668114

0.471513099

December

1204

0.63876 0.617165316

0.380893027

1178

-0.02159468

54

Total

0.63876

5.870099736

Standard Deviation

0.69941045

CALCULATION OF BETA
Price of
Share

Retur
n (x)

X2

722.125

0.0146
37
0.0767
54

0.0002
14
0.0058
91

17823.
4
19445.
22

822.375

0.1388
26

0.0192
73

19135.
96

0.2573
04
0.0833
92
0.0049
8

0.0662
05
0.0069
54

18503.
28
18845.
87

2.48E05

18197.
2

0.0543
9
0.0012
6
0.0171
7

0.0029
58

16676.
75

1.58E06

16453.
76

0.0002
95

17705.
01

0.0162
1
0.0159
3

0.0002
63
0.0002
54

16123.
46
15454.
92

660.975
670.65

1033.975
1120.2
1114.625
1175.25
1173.775
1153.625
1172.325
1191

Sense
x
18327.
76

y
0.0275
2
0.0909
94

y2

0.000757
29
0.008279
883

0.0159
0.0330
6
0.0185
15
0.0344
2
0.0835
5
0.0133
7

0.000252
942

0.0760
46
0.0893
3
0.0414

0.005783
062

0.001093
12
0.000342
809
0.001184
719
0.006981
281
0.000178
792

0.007979
46
0.001719
247

xy

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
0.0014
5
0.0006
55

Sum

0.634
045

0.102
333

19436
4.8

6
0.153
07

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

0.034552
606

6
0.010
36

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%

56

REL RETURNS FOR THE YEAR 2011


Std.
Month

Start

January

1240

February

1290

End

Returns

Avg.Ret

1323.6 0.067419355
1266.05

Deviation

Variance

0.00723 0.060189355 0.003622758

-0.01856589

0.00723

-0.02579589 0.000665428

March

1228.7

1524.75 0.240945715

0.00723 0.233715715 0.054623035

April

1523

1806.25 0.185981615

0.00723 0.178751615

0.03195214

May

1851

2271.9

0.2273906

0.00723

0.04847069

June

2330

2023.4

-0.13158798

0.00723

-0.13881798 0.019270432

July

2029.9

1955.4

-0.03670132

0.00723

-0.04393132

August

1968.9

2005.1 0.018385901

September

2024.8

2201.65

0.08734196

0.00723

0.08011196 0.006417926

October

2199.9

1931.15

-0.12216464

0.00723

-0.12939464 0.016742974

November

1920.05

1063.5

-0.44610817

0.00723

-0.45333817

December

1075

0.2201606

0.00192996

0.00723 0.011155901 0.000124454

0.2055155

1090.55 0.014465116

0.00723 0.007235116 5.23469E-05

0.086802254

0.389387646

Total
Standard Deviation

0.180136

CALCULATION OF BETA

Price of
Share

Retur
n (x)

X2

Sense
x

y2

xy
57

18327.
76

1281.8

1376.725

0.0029
5
0.0772
29

8.67E06
0.0059
64

17823.
4
19445.
22

1664.625

0.2091
19

0.0437
31

19135.
96

0.2383
87
0.0559
07
0.0845
5
0.0028
4

0.0568
28
0.0031
26

18503.
28
18845.
87

0.0071
49

18197.
2

8.04E06

16676.
75

0.0635
25
0.0225
7
0.2777
7
0.2741
7
0.020
68

0.0040
35

16453.
76

0.0005
1

17705.
01

0.0771
59

16123.
46

0.0751
69

15454.
92

0.273
688

19436
4.8

1278.025

2061.45
2176.7
1992.65
1987
2113.225
2065.525
1491.775
1082.775
Sum

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

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

0.0007
57
0.0082
8

0.0010
93
0.0003
43

8.10453E05
0.007027
323
0.003325
87
0.007881
64
0.001035
128

0.0011
85

0.002910
348

0.0069
81

0.0057
83

0.000236
911
0.000849
42
0.001716
53

0.0079
79

0.024812
984

0.0017
19

0.011368
133

0.034
553

0.033698
414

0.0002
53

0.0001
79

0.0332
71

58

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%

59

SATYAM RETURNS FOR THE YEAR 2011


Std.
Month

Start

End

Returns

Avg.Ret

Deviation

Variance

January

175

53.85

-0.69228571

0.04825

-0.74053571 0.548393144

February

55

41.35

-0.24818182

0.04825

-0.29643182 0.087871823

March

42.5

38.45

-0.09529412

0.04825

-0.14354412 0.020604914

April

38.95

46.8 0.201540436

0.04825 0.153290436 0.023497958

May

47.25

53.35 0.129100529

0.04825 0.080850529 0.006536808

June

54.4

71 0.305147059

0.04825 0.256897059 0.065996099

July

71.25

August

0.46877193

0.04825

0.42052193 0.176838693

122.3 0.175961538

0.04825 0.127711538 0.016310237

122.9

119.1

-0.03091945

0.04825

-0.07916945 0.006267801

119

102.2

-0.14117647

0.04825

-0.18942647 0.035882388

November

100.5

90.15

-0.10298507

0.04825

-0.15123507 0.022872048

December

91

September

104

104.65

October

98.15 0.078571429

0.04825 0.030321429 0.000919389

0.048250279

1.011991302

Total
Standard Deviation

0.29040077

CALCULATION OF BETA

Price of

Retur

X2

Sense

y2

xy
60

Share

n (x)

x
18327.
76

114.425

40.475

0.5789
8
0.1598
3

42.875

0.0592
96

0.0035
16

19135.
96

62.7

0.1731
78
0.2465
21

0.0299
91
0.0607
73

18503.
28
18845.
87

87.95

0.4027
11

0.1621
76

18197.
2

113.15

0.2865
26

0.0820
97

16676.
75

0.0693
77
0.0859
5
0.1381
1
0.0078
7

0.0048
13

16453.
76

0.0073
87

17705.
01

0.0190
74

16123.
46

6.19E05

15454.
92

0.266
865

0.730
657

19436
4.8

48.175

50.3

121
110.6
95.325
94.575
Sum

0.3352
2

17823.
4

0.0255
47

19445.
22

0.027518
911
0.090993
862
0.015904
166
0.033062
36
0.018515
096
0.034419
743
0.083554
063
0.013371
31

0.0082
8

0.076046
448
0.089327
823
0.041463
805
0.153066
776

0.0057
83

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

0.0079
79

0.012337
093

0.0017
19

0.000326
23
0.033317
55

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

0.0007
57

0.0002
53
0.0010
93
0.0003
43
0.0011
85
0.0069
81
0.0001
79

0.034
553

-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.
61

This also indicate that if sensex is increase by 10% then stock is decreased
by around 4%

62

SBI RETURNS FOR THE YEAR 2011


Std.
Month

Start

End

Returns

January

1329

1151

-0.13393529

0.0464 -0.18033529

0.032520817

February

1139

1025.3

-0.09982441

0.0464 -0.14622441

0.021381577

March

1014.7

1067.1

0.051640879

0.0464 0.005240879

2.74668E-05

April

1076.15

1278.6

0.188124332

0.0464 0.141724332 0.020085786

May

1325.25

1868.85

0.410186757

0.0464 0.363786757 0.132340805

June

2039.7

1745.3

-0.14433495

0.0464 -0.19073495

0.036379822

July

1731

1811.65

0.046591566

0.0464 0.000191566

3.66974E-08

August

1820

1742.9

-0.04236264

0.0464 -0.08876264

0.007878806

September

1761

2194.95

0.246422487

0.0464 0.200022487 0.040008995

October

2191.55

2191.05

-0.00022815

0.0464 -0.04662815

0.002174184

November

2187

2239.55

0.024028349

0.0464 -0.02237165

0.000500491

December

2246

2269

0.010240427

0.0464 -0.03615957

0.001307515

Total

Avg.Ret

Deviation

0.556549363

Variance

0.294606301

Standard Deviation

0.15668607

CALCULATION OF BETA

Price of
Share

Retur
n (x)

X2

Sense
x

y2

xy
63

18327.
76

1240
0.016204
879

17823.
4

0.0275
2

0.0007
57

1040.9

0.1273
0.0381
2

0.001453
025

19445.
22

0.0909
94

0.0082
8

1177.375

0.1311
12

0.017190
487

19135.
96

0.0002
53

0.127056
409
0.034224
015

18503.
28
18845.
87

1771.325

0.3564
5
0.1849
97
0.0640
3

0.004099
721

18197.
2

1781.45

0.0057
16

3.26733E05

16676.
75

2191.3

0.1103
17
0.1078
5

0.012169
937
0.011631
666

16453.
76
17705.
01

2213.275

0.0100
28

0.000100
567

16123.
46

2257.5

0.0199
82

0.000399
268

15454.
92

0.697
007

0.224562
648

19436
4.8

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

1082.15

1597.05
1892.5

1977.975

Sum

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

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

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.
64

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

January

160.95

149.65

-0.07020814 0.14874218 -0.21895032

0.047939242

February

148.05

149.3

0.008443094 0.14874218 -0.14029909

0.019683834

March

146.1

180.3

0.234086242 0.14874218 0.085344062 0.007283609

April

182

243.8

0.33956044

May

250.2

336.85

0.346322942 0.14874218 0.197580762 0.039038157

June

348.6

290.75

-0.16594951 0.14874218 -0.31469169

July

292.3

421.55

0.442182689 0.14874218 0.293440509 0.086107332

August

423

489.7

0.157683215 0.14874218 0.008941035

September

491.4

591.15

0.202991453 0.14874218 0.054249273 0.002942984

October

594.8

567.25

-0.04631809 0.14874218 -0.19506027

November

563.5

663.15

0.176841171 0.14874218 0.028098991 0.000789553

December

682.8

791.55

0.15927065

Total
Standard Deviation

Returns

1.784906154

Avg.Ret

0.14874218

0.14874218

Deviation

0.19081826

0.01052847

Variance

0.036411608

0.099030861

7.99421E-05

0.038048509

0.000110849
0.37746648
0.17735709

65

CALCULATION OF BETA

Price of
Share

Retur
n (x)

X2

155.3

Sense
x
18327.
76

163.2

0.0426
6
0.0976
96

0.0018
2
0.0095
45

17823.
4
19445.
22

212.9

0.3045
34

0.0927
41

19135.
96

319.675

0.3786
99
0.0890
9

0.1434
13
0.0079
37

18503.
28
18845.
87

356.925

0.1165
25

0.0135
78

18197.
2

456.35

0.2785
6

0.0775
96

16676.
75

581.025

0.1860
96
0.0734
38

0.0346
32
0.0053
93

16453.
76
17705.
01

613.325

0.0555
91

0.0030
9

16123.
46

737.175

0.2019
32

0.0407
77

15454.
92

1.739
502

0.430
521

19436
4.8

148.675

293.525

541.275

Sum

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

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

0.0007
57
0.0082
8

0.001173
939
0.008889
765
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

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

3.490411
82

66

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%

67

TATATEA RETURNS FOR THE YEAR 2011


Std.
Month

Start

End

Returns

Avg.Ret

Variance

0.03419

-0.03278516

0.001074867

January

605.05

February

606

579.85

-0.04315182

0.03419

-0.07734182

0.005981756

March

571

584.55 0.023730298

0.03419

-0.0104597

0.000109405

April

593.5

678.5 0.143218197

0.03419 0.109028197

0.011887148

May

695

693.15

-0.00266187

0.03419

-0.03685187

0.00135806

June

704

721.15 0.024360795

0.03419

-0.0098292

9.66133E-05

July

730

850.95 0.165684932

0.03419 0.131494932

0.017290917

August

855

944.85 0.105087719

0.03419 0.070897719

0.005026487

September

605.9 0.001404843

Deviation

950.55

897

-0.05633581

0.03419

-0.09052581

0.008194921

October

901

856.65

-0.04922309

0.03419

-0.08341309

0.006957743

November

854

904.8 0.059484778

0.03419 0.025294778

0.000639826

December

906

941.05 0.038686534

0.03419 0.004496534

2.02188E-05

Total

0.410285519

0.058637962

Standard Deviation

0.069903482

CALCULATION OF BETA
Price of
Share
605.475
592.925

Retur
n (x)
-

X2
0.0004

Sense
x
18327.
76
17823.

y2
-

0.000757

xy
0.0005
68

0.0207
3
0.0255
5
0.1007
75

0.0006
53
0.0101
56

19445.
22
19135.
96

712.575

0.0913
13
0.0266
54

0.0083
38
0.0007
1

18503.
28
18845.
87

790.475

0.1093
22

0.0119
51

18197.
2

899.925

0.1384
61

0.0191
71

16676.
75

0.0007
02

16453.
76

878.825

0.0265
02
0.0486
6

0.0023
68

17705.
01

879.4

0.0006
54

4.28E07

16123.
46

923.525

0.0501
76

0.0025
18

15454.
92

0.448
919

0.056
997

19436
4.8

577.775
636
694.075

923.775

Sum

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

0.0275
2

29

0.0909
94
0.0159
0.0330
6
0.0185
15
0.0344
2
0.0835
5
0.0133
7

0.008279
883
0.000252
942

0.000178
792

7
0.0023
3
0.0016
0.0030
2
0.0004
94
0.0037
6
0.0115
7
0.0003
5

0.0760
46
0.0893
3
0.0414
6
0.153
07

0.005783
062

0.0037

0.007979
46

-5.8E05
0.0020
8
0.027
41

0.001093
12
0.000342
809
0.001184
719
0.006981
281

0.001719
247
0.034552
606

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.

69

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

Start

End

Returns

January

233.4

231.55

-0.00792631

0.10074 -0.10866631

0.011808366

February

229

207.5

-0.09388646

0.10074 -0.19462646

0.03787946

March

204.5

245.9

0.202444988

0.10074 0.101704988 0.010343905

April

246

330.85

0.344918699

0.10074 0.244178699 0.059623237

May

330.2

382.25

0.157631738

0.10074 0.056891738

June

385.1

377.95

-0.01856661

0.10074

July

378

490.15

0.296693122

0.10074 0.195953122 0.038397626

August

494.9

549.95

0.111234593

0.10074 0.010494593 0.000110136

September

551

602.1

0.092740472

0.10074 -0.00799953

6.39925E-05

October

604

605.9

0.003145695

0.10074

-0.0975943

0.009524648

November

603

629.05

0.043200663

0.10074 -0.05753934

0.003310775

December

631.25

680

0.077227723

0.10074 -0.02351228

0.000552827

Total
Standard Deviation

1.208858317

Avg.Ret

Deviation

-0.11930661

Variance

0.00323667
0.014234066

0.18908571
0.1255275

70

CALCULATION OF BETA

Price of
Share

Retur
n (x)

X2

232.475

Sense
x
18327.
76

225.2

0.0611
9
0.0318
44

0.0037
44
0.0010
14

17823.
4
19445.
22

288.425

0.2807
5

0.0788
21

19135.
96

381.525

0.2350
7
0.0710
23

0.0552
58
0.0050
44

18503.
28
18845.
87

434.075

0.1377
37

0.0189
71

18197.
2

522.425

0.2035
36

0.0414
27

16676.
75

604.95

0.1036
03
0.0492
59

0.0107
34
0.0024
26

16453.
76
17705.
01

616.025

0.0183
07

0.0003
35

16123.
46

655.625

0.0642
83

0.0041
32

15454.
92

1.134
223

0.221
907

19436
4.8

218.25

356.225

576.55

Sum

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

0.0007
57
0.0082
8

0.001683
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

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

71

=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%

ZEEL RETURNS FOR THE YEAR 2011


Std.
Month

Start

End

Returns

Avg.Ret

Deviation

Variance

January

141.9

110.35

-0.22233968

0.051322

-0.27366168

0.074890713

February

109.8

106.85

-0.02686703

0.051322

-0.07818903

0.006113525

March

106.5

106.35

-0.00140845

0.051322

-0.05273045

0.0027805

April

106.25

113

0.063529412

0.051322 0.012207412

0.000149021

May

116.7

168.3

0.442159383

0.051322 0.390837383

0.15275386

June

175

177.25

0.012857143

0.051322

-0.03846486

0.001479545

July

178.1

185.95

0.044076362

0.051322

-0.00724564

5.24993E-05

August

187.8

210.6

0.121405751

0.051322 0.070083751

0.004911732

September

217

238.75

0.100230415

0.051322 0.048908415

0.002392033

October

238.1

231.55

-0.02750945

0.051322

-0.07883145

0.006214397

November

230

254.25

0.105434783

0.051322 0.054112783

0.002928193

December

256

257.1

0.004296875

0.051322

0.002211362

-0.04702512

72

Total

0.615865515

0.256877381

Standard Deviation

0.14630943

CALCULATION OF BETA

Price of
Share

Retur
n (x)

X2

225.2

0.0611
9
0.0318
44

0.0037441
4
0.0010140
54

17823.4
19445.2
2

288.425

0.2807
5

0.0788208
12

19135.9
6

381.525

0.2350
7
0.0710
23

0.0552577
99
0.0050441
99

18503.2
8
18845.8
7

434.075

0.1377
37

0.0189714
03

18197.2

522.425

0.2035
36

0.0414270
07

16676.7
5

0.1036
03
0.0492
59
0.0183
07

0.0107336
62
0.0024264
02
0.0003351
57

16453.7
6
17705.0
1
16123.4
6

232.475
218.25

356.225

576.55
604.95
616.025

Sensex
18327.7
6

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

y2

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

xy

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
73

655.625
Sum

0.0642
83

0.0041323
18

15454.9
2

1.134
223

0.221906
953

194364
.83

8
0.041463
8
0.15306
68

0.001719
247
0.034552
606

4
0.0026
7
0.030
03

1.613265
8

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

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
S.No.

Name of the company

Avg.Returns

Avg.Risk

ABB

0.046

0.077

BHARATI AIRTEL

0.050

0.108
74

BHEL

0.024

0.114

CIPLA

-0.037

0.264

HCLTECH

0.003

0.069

INFOSYS

0.023

0.063

M&M

0.020

0.055

ONGC

-0.001

0.086

REL

0.006

0.157

10

SATYAM

0.013

0.085

11

SBI

0.010

0.107

12

TATA MOTORS

0.012

0.077

13

TATA TEA

0.019

0.077

14

WIPRO

-0.034

0.202

15

ZEEL

0.016

0.065

GRAPH-1
INTERPRETRATION:
75

CIPLA and WIPRO are in loss and risk is more, ABB is showing less risk compare to
other companies.

TABLE-2
SELECTED COMPANIES AVG. RISK & AVG. RETURNS
FOR THE YEAR 2008
S.No.

Name of the company

Avg.Returns

Avg.Risk

ABB

0.055

0.089

BHARATI AIRTEL

0.006

0.093

BHEL

0.049

0.113

CIPLA

0.049

0.128

HCLTECH

0.037

0.096

INFOSYS

0.029

0.077

M&M

0.044

0.110
76

ONGC

0.030

0.080

REL

0.004

0.087

10

SATYAM

0.048

0.048

11

SBI

0.030

0.096

12

TATA MOTORS

0.008

0.100

13

TATA TEA

0.051

0.088

14

WIPRO

-0.045

0.199

15

ZEEL

-0.011

0.108

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.

77

TABLE-3
SELECTED COMPANIES AVG. RISK & AVG. RETURN
FOR THE YEAR 2009
S.No.

Name of the company

Avg.Returns

Avg.Risk

ABB

0.057

0.150

BHARATI AIRTEL

0.004

0.054

BHEL

0.035

0.108

CIPLA

-0.010

0.208

HCLTECH

0.018

0.089

INFOSYS

0.022

0.177

M&M

0.047

0.059

ONGC

-0.009

0.113

REL

-0.006

0.073

10

SATYAM

-0.022

0.150
78

11

SBI

-0.024

0.189

12

TATA MOTORS

0.091

0.264

13

TATA TEA

-0.017

0.073

14

WIPRO

0.029

0.084

15

ZEEL

0.053

0.139

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.

79

TABLE-4
SELECTED COMPANIES AVG. RISK & AVG. RETURN
FOR THE YEAR 2010
S.No.

Name of the company

Avg.Returns

Avg.Risk

ABB

-0.028

0.239

BHARATI AIRTEL

0.050

0.044

BHEL

0.043

0.191

CIPLA

-0.014

0.072

HCLTECH

-0.032

0.171

INFOSYS

-0.021

0.065

M&M

-0.003

0.066

ONGC

0.035

0.102

REL

0.128

0.177

10

SATYAM

-0.010

0.089

11

SBI

0.062

0.108

12

TATA MOTORS

-0.005

0.075

13

TATA TEA

0.025

0.126

14

WIPRO

-0.015

0.057

15

ZEEL

0.027

0.123

80

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

81

TABLE-5

SELECTED COMPANIES AVG. RISK & AVG. RETURN


FOR THE YEAR 2011
S.No.

Name of the company

Avg.Returns

Avg.Risk

ABB

0.055

0.13485

BHARATI AIRTEL

-0.050

0.17806

BHEL

0.050

0.08047

CIPLA

0.053

0.06948

HCLTECH

0.114

0.13585

INFOSYS

0.146

0.09959

M&M

0.118

0.11629

ONGC

0.639

0.69941

REL

0.007

0.18014

10

SATYAM

0.048

0.29041

11

SBI

0.046

0.15669

12

TATA MOTORS

0.149

0.17736

13

TATA TEA

0.034

0.06990

14

WIPRO

0.101

0.12553

15

ZEEL

0.051

0.14631

82

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.

83

CHAPTER-6
FINDINGS
&
SUGGESTIONS

84

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.

85

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.

86

BIBLIOGRAPHY

87

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

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