Risk and Return of Equity Investment

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR
CHAPTER-I INTRODUCTION
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CHAPTER- I INTRODUCTION
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1.1 Background of the Study
The dissertation comprises of study and analysis of risk and return in the IT sector. The intention of the project is to understand the volatility in the share market and how it is going to affect the investors. In early 1990s the main areas of investment were bank deposits, gold, property and other such forms of tangible assets. But for the past few years we have been witnessing a lot of investment opportunities coming up in the form of primary and secondary market. Since the globalization which had its inception in 1992, foreign investments have been flowing to India. New multinationals entered the market and a lot of investment opportunities were opened to the people who kept their savings in bank and other kinds of fixed assets. For the past few years India has been seeing drastic growth in the investment made in the primary and secondary markets. There were also investment opportunities like mutual funds, insurance etc. The investors have to be aware of the risk involved in making the investment. So the investors have to calculate the variance and the beta value to know the present condition of the company to know whether there is any risk in investing in the particular company and does the company offer good returns. In todays scenario people are showing more interest in investment to get return on investment to get return on investment by capital appreciation instead of keeping their savings or surplus dead.
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1.2 STOCK MARKET

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A stock market or equity market is a public market (a loose network of economic transactions agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market was estimated at about $36.6 trillion US at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock
not a physical facility or discrete entity) for the trading of company stock and derivatives at an
or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The stock market in the United States is NYSE while in Canada; it is the Toronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Brse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Bombay Stock Exchange and the Karachi Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.
1.2. a) Trading
Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order. Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The
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other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders.
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Actual trades are based on an auction market model where a potential buyer bids a specific market means you will accept any ask price or bid price for the stock, respectively.) When the
price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at
bid and ask prices match, a sale takes place, on a first-come-first-served basis if there are multiple bidders or askers at a given price. The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace (virtual or real). The exchanges provide real-time trading information on the listed securities, facilitating price discovery. The New York Stock Exchange is a physical exchange, also referred to as a listed exchange only stocks listed with the exchange may be traded. Orders enter by way of exchange members and flow down to a floor broker, who goes to the floor trading post specialist for that stock to trade the order. The specialist's job is to match buy and sell orders using open outcry. If a spread exists, no trade immediately takes place--in this case the specialist should use his/her own resources (money or stock) to close the difference after his/her judged time. Once a trade has been made the details are reported on the "tape" and sent back to the brokerage firm, which then notifies the investor who placed the order. Although there is a significant amount of human contact in this process, computers play an important role, especially for so-called "program trading". The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer network. The process is similar to the New York Stock Exchange. However, buyers and sellers are electronically matched. One or more NASDAQ market makers will always provide a bid and ask price at which they will always purchase or sell 'their' stock. The Paris Bourse, now part of Euro next, is an order-driven, electronic stock exchange. It was automated in the late 1980s. Prior to the 1980s, it consisted of an open outcry exchange. Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading system was introduced, and the order matching process was fully automated.
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From time to time, active trading (especially in large blocks of securities) has moved away from the 'active' exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves, according to data compiled by Boston-based Aite Group LLC, a brokerageindustry consultant. Now that computers have eliminated the need for trading floors like the Big Board's, the balance of power in equity markets is shifting. By bringing more orders in-house, where clients can move big blocks of stock anonymously, brokers pay the exchanges less in fees and capture a bigger share of the $11 billion a year that institutional investors pay in trading commissions as well as the surplus of the century had taken place.
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to their internal systems. That share probably will increase to 18 percent by 2010 as more
1.2. b) Market participants

A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories (and emotional ties) to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other financial institutions). The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small' investor, but only after the large institutions had managed to break the brokers' solid front on fees. (They then went to 'negotiated' fees, but only for large institutions.) However, corporate governance (at least in the West) has been very much adversely affected by the rise of (largely 'absentee') institutional 'owners'.
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1.2. c) The stock market, individual investors, and financial risk

Riskier long-term saving requires that an individual possess the ability to manage the
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associated increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government insured) bank deposits or bonds. This is something that could affect not only the individual investor or household, but also the economy on a large scale. The following deals with some of the risks of the financial sector in general and the stock market in particular. This is certainly more important now that so many newcomers have entered the stock market, or have acquired other 'risky' investments (such as 'investment' property, i.e., real estate and collectables).
1.2. d) Stock market index

The movements of the prices in a market or section of a market are captured in price indices called stock market indices, of which there are many, e.g., the S&P, the FTSE and the Euronext indices. Such indices are usually market capitalization weighted, with the weights reflecting the contribution of the stock to the index. The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment.
History
In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers. A common misbelieve is that in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp where those gatherings occurred; the Van der Beurze had Antwerp, as most of the merchants of that period, as their primary place for trading. The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam.
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In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in independent city states not ruled by a duke but a council of influential citizens. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first share on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them". There are now stock markets in virtually every developed and most developing economies, with the world's biggest markets being in the United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea and the Netherlands
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government securities during the 14th century. This was only possible because these were
IMPORTANCE OF STOCK MARKET Function and purpose

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an up and coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their
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consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'tre of central banks. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and an individual buyer or seller that the counterparty could default on the transaction. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity. An important aspect of modern financial markets, however, including the stock markets, is absolute discretion. For example, American stock markets see more unrestrained acceptance of any firm than in smaller markets. For example, Chinese firms that possesses little or no perceived value to American society profit American bankers on Wall Street, as they reap large commissions from the placement, as well as the Chinese company which yields funds to invest in China. However, these companies accrue no intrinsic value to the long-term stability of the American economy, but rather only short-term profits to American business men and the Chinese; although, when the foreign company has a presence in the new market, this can benefit the market's citizens. Conversely, there are very few large foreign corporations listed on the Toronto Stock Exchange TSX, Canada's largest stock exchange. This discretion has insulated Canada to some degree to worldwide financial conditions. In order for the stock markets to truly facilitate economic growth via lower costs and better employment, great attention must be given to the foreign participants being allowed in.
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deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to
Relation of the stock market to the modern financial system

The financial systems in most western countries have undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing, flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations. The general public's heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process.
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Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 percent of households' financial financial portfolios has gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized countries. In all developed economic systems, such as the European Union, the United States, Japan and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits to more risky securities of one sort or another.
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wealth, compared to less than 20 percent in the 2000s. The major part of this adjustment in
Irrational behavior
Sometimes the market seems to react irrationally to economic or financial news, even if that news is likely to have no real effect on the technical value of securities itself. But this may be more apparent than real, since often such news has been anticipated, and a counter reaction may occur if the news is better (or worse) than expected. Therefore, the stock market may be swayed in either direction by press releases, rumors, euphoria and mass panic; but generally only briefly, as more experienced investors (especially the hedge funds) quickly rally to take advantage of even the slightest, momentary hysteria. Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the stock market behavior difficult to predict. Emotions can drive prices up and down, people are generally not as rational as they think, and the reasons for buying and selling are generally obscure. Behaviorists argue that investors often behave 'irrationally' when making investment decisions thereby incorrectly pricing securities, which causes market inefficiencies, which, in turn, are opportunities to make money. However, the whole notion of EMH is that these non-rational reactions to information cancel out, leaving the prices of stocks rationally determined.
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1.3 INDIAN STOCK MARKET

Without a stock exchange the saving of the community, economic progress and
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productive efficiency would remain under utilized. Stock Exchanges are structured marketplace where affiliates of the union gather to sell firm's shares and other securities. India Stock Exchanges can either be a conglomerate/ firm or mutual group. The affiliates act as intermediaries to their patrons or as key players for their own accounts. Stock Exchanges in India also assist the issue and release of securities and other monetary tools incorporating the fortification of revenues and dividends. The book keeping of the trade is centralized but the buying and selling is associated to a particular place as advanced marketplaces are mechanized. The buying and selling on an exchange is only open to its affiliates and brokers. The task of mobilization and allocation of savings could be attempted in the old days by a much less specialized institution than the stock exchange but as business and industry expanded and the economy assumed more complex nature. The need for permanent finance arose when entrepreneurs needed money for long term. Where as investors demanded liquidity the facility to convert their investments into cash at any given time. The answer was ready market for investments and this was how the stock exchange came into being, stock exchange means anybody of individuals, whether incorporated or not constituted for the purpose of regulating or controlling the business of buying, selling or dealing in securities. Investment is the employment of fund 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 since benefit will accrue in future. Investment is the allocation of monetary resources to assets that are expected to yield some gain or positive return over a given period of time. These assets range from safe investment to risky investments. Investment in this form is called as Financial Investments.
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1.3.1 INVESTMENT MEANING AND CONCEPT OF INVESTMENT (according to Finance Term) Investment means the investing of money or buying of Assets. For Examples Buying stocks and bonds Investing in real estate Mortgages
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These investments may then provide a future income and increase in value (i.e., investing in real estate).
CHARACTERISTICS OF INVESTMENT Investment refers to invest money in financial physical assets and Marketable assets. Major investments feature such as risk, return, safety, liquidity, marketability conceal ability, capital growth, purchasing power, stability and the benefits.
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The figure indicates that an important characteristic of investments is outlined as: Risk Risk refers to the loss of principal amount of an investment. It is one of the major characteristics of an investment. The risk depends on the following factors: The investment maturity period is longer, in this case, investor will take larger risk. Government or Semi Government bodies are issuing securities which have less risk. In the case of the debt instrument or fixed deposit, the risk of above investment is less due to their secured and fixed interest payable on them. For instance Debentures. In the case of ownership instrument like equity or preference shares, the risk is more due to their unsecured nature and variability of their return and ownership character. The risk of degree of variability of returns is more in the case of ownership capital compare to debt capital. The tax provisions would influence the return of risk. Risk Return Safety Liquidity Marketability Conceal ability Capital growth Purchasing power stability Stability of income Tax benefits.
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Return Return refers to expected rate of return from an investment Return is an important characteristic of investment. Return is the major factor which influences the pattern of investment that is made by the investor. Investor always prefers to high rate of return for his investment.
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Safety Safety is also one of the essential and crucial elements of investment. Investor prefers safety about his capital. Capital is the certainty of return without loss of money or it will take time to retain it. If investor prefers less risk securities, he chooses Government bonds. In the case, investor prefers high rate of return investor will choose private Securities and Safety of these securities is low. Liquidity Liquidity refers to an investment ready to convert into cash position. In other words, it is available immediately in cash form. Liquidity means that investment is easily realizable, saleable or marketable. When the liquidity is high, then the return may be low. For example, UTI units. An investor generally prefers liquidity for his investments, safety of funds through a minimum risk and maximization of return from an investment. Marketability Marketability refers to buying and selling of Securities in market. Marketability means transferability or salability of an asset. Securities are listed in a stock market which are more easily marketable than which are not listed. Public Limited Companies shares are more easily transferable than those of private limited companies. Conceal ability Conceal ability is another essential characteristic of the investment. Conceal ability means investment to be safe from social disorders, government confiscations or unacceptable levels of taxation, property must be concealable and leave no record of income received from its use or sale. Gold and precious stones have long been esteemed for these purposes, because they combine high value with small bulk and are readily transferable.
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Safety refers to the protection of investor principal amount and expected rate of return.
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Capital Growth Capital Growth refers to appreciation of investment. Capital growth has today become an important character of investment. It is recognizing in connection between corporation and industry growth and very large capital growth. Investors and their advisers are constantly seeking growth stock in the right industry and bought at the right time. Purchasing Power Stability It refers to the buying capacity of investment in market. Purchasing power stability has become one of the import traits of investment. Investment always involves the commitment of current funds with the objective of receiving greater amounts of future funds. Stability of Income It refers to constant return from an investment. Another major characteristic feature of the Investment is the stability of income. Stability of income must look for different path just as security of principal. Every investor always considers stability of monetary income and stability of purchasing power of income. Tax Benefits Tax benefits are the last characteristic feature of the investment. Tax benefits refer to plan an investment programmed without regard to ones status may be costly to the investor. There are actually two problems: One concerned with the amount of income paid by the investment. Another is the burden of income tax upon that income.
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One needs to invest to: Earn return on your idle resources, Generate a specified sum of money for a specific goal in life Make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value.
Factors influencing investment 1. Increasing rate of taxation. 2. High interest rate. 3. High rate of inflation
Equity investment an overview Equity investment generally refers to the buying and holding of shares of stocks on the stock market by individual and funds in anticipation of income from dividend and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity participation in a private company or a company being created or newly created. In simple terms, equity share is the total equity capital of a company is divided into equal units of small denominations, each called a share.
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Reason for Investment
Reason for issuing shares to the general public Most companies are usually started privately by their promoter(s). However, the promoters capital and the borrowings from banks and financial institutions may not be sufficient for setting up or running the business over a long term. So companies invite the public to contribute towards the equity and issue shares to individual investors. The way to invite share capital from the public is through a Public Issue. Simply stated, a public issue is an offer to the public to subscribe to the share capital of a company. Once this is done, the company allots shares to the applicants as per the prescribed rules and regulations laid down by SEBI.
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Reason for investment in equities When a person buys a share of a company he becomes a shareholder in that company. Shares are also known as Equities. Equities have the potential to increase in value over time. It also provides your portfolio with the growth necessary to reach your long term investment goals. Research studies have proved that the equities have outperformed most other forms of investments in the long term. This may be illustrated with the help of following examples:
a) Over a 15 year period between 1990 to 2005, Nifty has given an annualized return of
17%. b) In the last 15-20 years, the average return from equity was about 16 per cent pa. c) Equities are considered the most challenging and the rewarding, when compared to other investment options. d) Research studies have proved that investments in some shares with a longer tenure of investment have yielded far superior returns than any other investment. However, this does not mean all equity investments would guarantee similar high returns. Equities are high risk investments. The investor needs to study them carefully before investing.
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Factors influencing price of a stock Broadly there are two factors: (1) Stock specific and (2) Market specific. The stock-specific factor is related to peoples expectations about the company, its future earnings capacity, financial health and management, level of technology and marketing skills. The market specific factor is influenced by the investors sentiment towards the stock market as a whole. This factor depends on the environment rather than the performance of any particular company. Events favorable to an economy, political or regulatory environment like high economic growth, friendly budget, stable government etc. can fuel euphoria in the investors, resulting in a boom in the market. On the other hand, unfavorable events like war, economic crisis, communal riots, minority government etc. depress the market irrespective of certain companies performing well. However, the effect of market-specific factor is generally short-term. Despite ups and downs, price of a stock in the long run gets stabilized based on the stock specific factors. Therefore, a prudent advice to all investors is to analyze and invest and not speculate in shares. Evolution of equity market in India Bombay stock exchange is the oldest stock exchange in ASIA with a rich heritage. Popularly known as BSE it was established as The Native Share & Stock Brokers Association in 1875. It is the first stock exchange in the country to obtain permanent, recognition in 1956from the Govt. Of India under the security contracts (regulation) Act 1956. The exchange pivotal & prominent role in the development of Indian capital market is widely recognized & its index. SENSEX is tracked worldwide. Earlier an association of person (A.O.P) the exchange is now a demutualised & corporative entity incorporated under the provision of the Companies Act 1956, pursuant to the BSE (corporation & demutualization) scheme, 2005 notified by the security exchange board of India (SEBI). The exchange is professionally managed under the overall direction of the board of director. The board comprises eminent professionals, representative of trading members & the managing director
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of exchange. The board is inclusive & is designed to benefit from the participation of members intermediaries.
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The exchange has national wide reach with a presence in 417 cities & towns of India. surveillance & clearing & settlement functions of the exchange are ISO 9001:2000 certified. NSE started trading in equity segment (Capital Market Segment) on November 3, 1994
During the year of 2004-2005 the trading volumes on the exchange showed robust growth. The
and within a short span of 1 year became the largest exchange in India in terms of volumes transacted. Trading volumes in the equity segment have grown rapidly with average daily turnover increasing from Rs. 17 crores during the 1994-95 to Rs. 4328 crores during the 2003-04. During the year 2004-05 NSE reported turnover of Rs.1099,535 crores in equity segment accounting for 68.60%of the total Indian securities markets. Both BSE & NSE has reported a turnover of more than 1600897.314 crores
The main advantages of equity shares are listed below:
1)
Potential for profit: - The potential for profit is greater in equity shares then in any other investment security. Current dividend yield may be low but potential of capital gain is great. The total yield or yield to maturity may be substantial over a period of time.
2)
Limited liability: - In corporate form of organization. Its owners have, generally limited. Equity share is usually fully paid. Shareholders may lose their investment but no more. They are not further liable for any failure on the part of the corporation to meet its obligation.
3)
risk.
Hedge against inflation:- the equity share is a good hedge against inflation thought it does not fully compensate for the declining purchasing power as it is subject to the money rate
4)
Free transferability:- the owners of shares have the right to transfer his interest to someone else. The buyer should ensure that the issuing corporation transfer the ownership on its books so that dividend. Voting rights & other privilege will accrue to the new owner.
5)
Share in growth - the major advantage of investment in equity shares is its ability to increase in value by sharing in growth of company profits over the long run.
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6)
Tax advantage: - equity shares also offer tax advantage to the investor. The larger yield on equity shares result from an increase in principal or capital gain, which are taxed at lower rate than other incomes in most of the countries. Sources of acquiring equity shares The investor can acquire equity share either by the following two ways: 1. Primary market 2. Secondary market You may subscribe to issues made by corporate in the primary market. In the primary market, resources are mobilized by the corporate through fresh public issues (IPOs) or through private placements. Alternately, you may purchase shares from the secondary market. To buy and sell securities you should approach a SEBI registered trading member (broker) of a recognized stock exchange.
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Primary market The primary market provides the channel for sale of new securities. Primary Market provides opportunity to issuers of securities; Government as well as Corporate, to raise resources to meet their requirements of investment and/or discharge some obligation. They may issue the securities at face value, or at a discount/premium and these securities may take a variety of forms such as equity, debt etc. They may issue the securities in domestic market and/or international market.
Secondary market Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.
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TYPES OF ANALYSIS
The two main categories of analysis are fundamental analysis and technical analysis.
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Fundamental Analysis Fundamental analysis considers the financial and economic data that may influence the viability of a company. There are many flavors of fundamental analysis centered on such concepts as value, growth and turnarounds. Technical analysis is the study of the price chart. It assumes that by looking at the progress of that little squiggly line you can forecast the future trend of a stock. Fundamental analysis is essential to most investors, and technical analysis is essential to most traders and speculators. Derision and scorn is poured down on tech methods by hardcore fundamental investors who regard the whole business as flawed and nave, whereas technical analysts or "chartists" hold that in today's well informed markets all possible data is already reflected in the share price, and that fundamental analysis is futile, at least for everyday people who's analysis skills are somewhat below those of the teams of analysts toiling away around the clock for the major banks and funds, who seem to know everything anyway. Technical Analysis
When skillfully applied, technical analysis can provide useful insights into the best time to buy, perhaps because of some innate truth, but probably just because so many people believe in their validity many technical signals are in fact very useful and reliable indicators of at least the very short term future price movements. At any rate the fundamental basis of a good technical analyst's trading method boils down to "run your profits and cut your losses", which usually means hanging on to an up trending stock and ditching it when it starts to falter. Merely following a trend can be a profitable and honorable profession, and sophisticated trading methods frequently are little more than a few bells and whistles attached to a simple concept of going with the trend. Those who completely ignore technical methods out of hand are often proven right in the end, but aren't likely to have bought at the best possible time. Likewise, you should not ignore fundamental analysis. While charting is useful, unless you fully understand a company you really are doing nothing more than attempting to divine the future by watching the past, and major underlying changes happen all the time when management is changed, profits are made and lost and new products are introduced. Many of the smaller companies are too thinly traded to show any useful technical signal, and often larger funds won't touch them, your only way of analyzing them is through fundamental
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methods. Ideally you should concentrate on fundamental reasons for buying a stock, this is very important, and try to fine tune your purchase timing with charting, if you want to do that. Chartists are not investors, they are speculators, and frequently are the ones buying stocks right expensive, and sold out.
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at the top of the trend when fundamental investors have long since decided the stock was too
1.3.2 RISK "Risk" is the investor's four-letter word. Everybody is risk-averse. Risk can be defined as the chance that the expected or prospective advantage, gain, profit or return may not materialize; that the actual outcome of investment may be less than the expected outcome. Risk is composed of demand that brings in variation in return of income. The main force contributing to risk is price. The variance and standard deviations of return serve as the alternative statistical measures of the risk of the security in absolute sense. Similarly covariance measures the risk of the security relative to the other securities in a portfolio. Types of risk 1] Systematic risk 2] Unsystematic risk
CLASSIFICATION OF RISK
Systematic risk Market risk or Economic risk Interest rate risk Purchase power risk
Unsystematic risk Business risk Financial risk
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Systematic risk Systematic risk is non-diversifiable and is associated with securities market as well as the economy, sociological, political and legal considerations of the price of all securities in the economy. The effect of these factors is to put pressure on all securities in such a way that the price of all stocks will move in the same direction. The following are the factors that influence systematic risk.
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1. Market risk Market risk is referred to as stock variable due to change in investors attitude and expectations. The investors reaction towards tangible events is the chief cause affecting market risk. Market risks cannot be eliminated while financial risk can be reduced. Market risk includes such factors as business recessions, depressions and long-run changes in consumption in the economy. 2. Interest rate risk The price of all securities rise or fall depending on the change in interest rates, the longer the maturity period of a security, the higher the yield on an investment and lower the fluctuations in prices. Interest rates continuously change for bond, preference stock and equity stocks. Interest rate risk can be reduced by diversifying in various kinds of securities and also buying securities of different maturity dates. 3. Purchase power risk Purchasing power risk is also known as inflation risk. This risk arises out if change in the prices if goods and services and technically it covers both inflation and deflation period. Therefore, in India, purchasing power risk is associated with inflation and rising price in the economy.
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Unsystematic risk Unsystematic risk is unique to a firm of industry. It dose not affect an average investor. Unsystematic risk is caused by factors like labour strike, irregular disorganized management policies and consumer preference. These factors are independent of the price mechanism operating in the securities market. The following are the factors that influence unsystematic risk.
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1. Business risk Ever corporate organization has its own objectives and goals and aims at a particular gross profit and operating income and also expects to provide a certain level of dividend income to its shareholders. It also hopes to plough back some profit.
Business risk is also associated with risks directly affecting the internal environment of the firm and those if circumstance beyond its control. The former is classified as internal business risk and the latter as external business risk, within these two broad categories of risk, the firm operations.
2. Financial risk: Financial risk in a company is associated with the method through which it plans its financial structure. If the capital structure of a company tends to make earnings unstable, the company may fail financial. How a company rises funds to finance its needs and growth will have an impact on its future earnings and consequently on the stability of earnings. Debt financing provides a low cost source of funds to a company, at the same time providing financial leverage for the common stock holders. As long as the earnings of the company are higher than the cost of borrowed funds the earnings per share of common stock are increased.
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1.3.3 RETURN A major purpose of investment is to set a return or income on the funds investment. On a investor may expect capital gains from some investments and rental income from house property. Return is the amount or rate of produce, proceeds, gain, fruit and profit which accrues to an economic agent from an undertaking or enterprise or investment. It is a reward for and a motivating force behind investment, the objective of which is usually to maximize return. Return on a typical investment has to components; the basic one which is the periodic cash or income receipts, either inters toe dividend; and the other which is the appreciation or depreciation in the price of value of the asset, called the capital gain or the capital loss. The capital gain is the difference between the purchase price of the asset and the price at which it can be or is sold. The income component is usually but not necessarily received in cash viz., stock dividend. The total return on an investment thus can be defines as income plus/minus appreciation/depreciation. Types of return: 1. 2. 3. 4. Internal rate of return Expected return Rate of return Holding period return Internal rate of return The internal rate of return (IRR) is a capital budgeting method used by firms to decide whether they should make long-term investments. The IRR is the annualised effective compounded return rate which can be earned on the invested capital, i.e. the yield on the investment. A project is a good investment proposition if its IRR is greater than the rate of return that could be earned by alternative investments (investing in other projects, buying bonds, even putting the money in a bank account). The IRR should include an appropriate risk premium. Mathematically the IRR is defined as any discount rate that results in a net present value of zero of a series of cash flows. In general, if the IRR is cost of capital, or hurdle rate, the project will add value for the company greater than the project's.
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bond an investor expects to receive interest. On a stock, dividends may be anticipated. The
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Expected return The expected rate of return is the weighted average of all possible return multiplied by their respective probabilities. Expected return is the estimation of the value of an investment, including the change in price and any payments or dividends, calculated from a probability distribution curve of all possible rates of return. In general, if an asset is risky, the expected return will be the risk-free rate of return plus a certain risk premium, also called expected value. The average of a probability distribution of possible returns, calculated by using the following formula: Expected Return:
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Rate of return :
In finance, rate of return (ROR) or return on investment (ROI) is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is also known as rate of profit, rate of return or return. ROI is the return on a past or current investment, or the estimated return on a future investment. ROI is usually given as a percent rather than decimal value... However, ROI is most often stated as an annual or annualized rate of return, and it is most often stated for a calendar or fiscal year Rate of return for the given period is calculated by using the formula, Annual income + (Ending price Beginning price) Rate of return = -------------------------------------------------------------Beginning price
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Holding period return:
designing time period in which the asset is held by the investor. It is to be noted that HYP does
not mean that the security is actually sold and the gain or loss is actually realized by the investor. The concept of HYP is applicable whether one is measuring the realized return or estimated the future return.
1.3.4 INTRODUCTION TO BOMBAY STOCK EXCHANGE Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning three centuries in its 133 years of existence. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, BSE has two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners. Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient access to resources. There is perhaps no major corporate in India which has not sourced BSE's services in raising resources from the capital market. Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood at USD 1.79 trillion. An investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z groups.
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Holding period yield (HYP) measures the total return an investment during a given or
The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature, and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market sentiments and BSE has entered into an index cooperation agreement with Deutsche Brse. This agreement has made SENSEX and other BSE indices available to investors in Europe and America. Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its iShares brand, has created the 'iShares BSE SENSEX India Tracker' which tracks the SENSEX. The ETF enables investors in Hong Kong to take an exposure to the Indian equity market. The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on BSE. It brings to the investors a trading tool that can be easily used for the purposes of investment, trading, hedging and arbitrage. SPICE allows small investors to take a long term view of the market. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of India. BSE has always been at par with the international standards. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certifications. It is also the first exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System (BOLT). BSE continues to innovate. In recent times, it has become the first national level stock exchange to launch its website in Gujarati and Hindi to reach out to a larger number of investors. It has successfully launched a reporting platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly named 'BSE Broadcast' which enables information dissemination to the common man on the street.
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market realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices.
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CHAPTER-II RESEARCH DESIGN
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CHAPTER-II
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RESEARCH DESIGN
2.1 Title of the study
Study of Risk and Return of Equity Investment in the Information Technology sector
2.2 Statement of the Problem
This dissertation has been conducted on the Study of Risk and Return of Equity Investment in the Information Technology sector. All the investors try to get maximum return with minimum risk by investing in the shares. The investors continuously follow the market to find the best stock to invest in. The investors are in the darkness of how to select an appropriate company to invest in. This project helps in finding out how an investor can analyze the risk of investing in particular securities.
2.3 Objectives of the Study
To analyze the risk and returns of the companies.
To find out the risk less companies to invest in share market by using Beta values. To study the volatility of companies with the market.
2.4 Scope of the Study

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The Information Technology companies selected for the purpose of the study are:
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HCL TCS WIPRO INFOSYS TECH MAHINDRA
2.5 Methods of Data Collection
Data collected are of Secondary Data source.
Secondary Data
These data already exists and are available from various sources like websites, journals, books, company reports etc. The daily open and close prices of stocks and indices were taken from the official website of Bombay Stock Exchange.
2.6 Tools of Analysis
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Basically whole data analysis has been performed using spreadsheet in excel. Statistical function of Beta, Standard Deviation, Correlation Co-efficient and other similar techniques will be used for data analysis. The main objectives are to calculate the beta and variance to help the minimum risk and also to gain knowledge of the stock market. Based on the findings suggestions are given which will be a guide to the investors.
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investors to arrive at a decision of investment in shares which offer maximum return with
2.7 Limitations
The area of study is limited to few sectors. The study is limited to the data of the past 2 years only. The study is mainly based on secondary data and no field work is done because of time constraint.
To analyze the risk and return only standard deviation and Beta is used and no other statistical tools are used.
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2.8 Chapter Scheme

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Chapter I: Introduction
This chapter explains comprehensive description about introduction to the study and background of the topic. Chapter II: Research Design This chapter includes various aspects of study undergone like methodology used for analysis and interpretation of data, major issue on which study has undergone, scope of study, need of study, objective of study, research design, limitation of study, sampling data used for study. Chapter III: Profiles It explains about the history of Information Technology industry. And the profiles of companies which are used for study. Chapter IV: Analysis and Interpretation This chapter explains about detailed analysis and interpretation of the study using various statistical techniques. Chapter V: Findings, Conclusion & Suggestions
This chapter deals with findings, suggestions and conclusions drawn from the study
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CHAPTER-III INDUSTRY & COMPANY PROFILES
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3.1 INDUSTRY PROFILE

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The software industry comprises of businesses involved in the development, maintenance and
publication of computer software. The software industry started in the mid-1970s at the time of the personal computer software. The industry also includes software services such as training and consultancy. The Software Industry comprises of businesses related to the production and maintenance of computer software. The roots of the industry lie in the IT phenomenon. The largest and most profitable of software companies are located in the United States. As of 2006, the software industry is dominated by Microsoft. Software Magazines 500 list in 2005 shows the total amount of revenue brought in by software companies per locale, with the highest being California due to silicon Valley and the amount of Fortune 500 software companies residing in that area. The IT industry is witnessing a rapid growth and offers lucrative job opportunities making IT a premium career option for the youth. In fact, it is one of the fastest growing sectors of Indian industry. The success can be attributed to factor advantage of high quality of software human resources. The Software Industry has succeeded in converting this comparative advantage to increasing exports. More and more companies are receiving the ISO 9000 certification and the day is not far when India will have the highest number of ISO 9000 companies in the world.
INDIAN INFORMATION TECHNOLOGY SECTOR

Technological revolutions sometimes bring unexpected opportunities for countries. India, a relative laggard among developing countries in terms of economic growth, seems to have found such an opportunity in the information technology revolution as an increasingly favored location for customized software development. Early success has led to speculation about how long the Indian software industry can sustain its growth. It has also led to the hope that software and information technology can be the engine of growth for poor, labor abundant countries. The Electronics industry has emerged as the fastest growing segment of the Indian industry both in terms of production and exports. This growth has had significant economic and social impacts. Today the local and global impact of the electronics industry has been due to its modern incarnation viz., the Information Technology (IT) Industry.
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The Indian IT industry has a prominent global presence today largely due to the software external competition has resulted in this skewed growth. More recently however, policy manufacturing facilities, R&D Centres and offshore software development facilities. The domestic market for both software and hardware is getting revitalized. All these developments have had a significant impact not only on the economy but also the environmental and social milieu. A number of new policy initiatives are on the anvil to enhance and sustain the growth of the IT industry this times the focus being both on hardware and software. More recently, the software industry has begun slowly moving up the value chain from programming to systems analysis and design. More offshore work is being carried out in India. R&D Centres and manufacturing facilities are being set up in India by MNCs. New policies and plans with fiscal incentives, modifications in export-import policies, support for infrastructure are now promoting foreign investment and focusing on providing impetus to software and hardware sectors of the IT industry both domestic and export. This is also creating changes in the grey market.
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sector. Promotion of the software industry and protection of the hardware industry from
changes have led to a tremendous influx of leading multinational companies into India to set up
THE INDIAN SOFTWARE INDUSTRY: STRUCTURE & PROSPECTS 1. THE CURRENT SITUATION: The Indian software industry specializes in the export of
low-end software development services, competing primarily on cost and availability of software talent. The Indian comparative advantage is based on cost and availability of software talent: the ability to offer the services of a large number of software professionals at costs substantially lower than those in the U.S. U.S. firms do not outsource requirement analysis, specification, and high-level design, nor do they outsource larger scale system integration types of activities to India. However, the leading Indian software firms do have the ability to provide these highend services. The industry is diffusing geographically. Although Bangalore is still home to many of the leading firms, the industry is not confined to Bangalore and is diffusing to regions other than Bangalore and Bombay, with a substantial presence in Hyderabad, Madras, and Delhi, and a growing presence in Calcutta and Pune.
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The domestic market is still small. Although PCs are diffusing more rapidly, communication attitude of the department of telecommunications as it tries to retain control over
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bandwidth is still limited. The bandwidth problem is compounded because of the intransigent telecommunications in India. The result is that Internet access in India is still slow and
expensive. In addition, various infrastructure constraints have combined to slow the adoption of IT for business and government operations: Insufficient electricity and transportation system, limited competition in the economy, and uncreative and less informed top managers. Few software products of any significance have been developed, partly as a consequence of the under-developed domestic market. However, Indian firms have had some success in other developing countries and the Middle East with vertical products such as banking products, accounting packages and ERP packages tailored to the developing country environment.
2. THE NEAR FUTURE IS BRIGHT: The Indian software industry is poised for continued
growth over the next 3-5 years. Demand should remain high. Despite the end of the Y2K work and the slowdown in ERP projects, demand for maintenance, porting and application development will still be substantial. New ERP-like sources of demand, such as e-commerce, front office, and customer management tools will gain strength. There are few alternatives to India. Although Ireland, Eastern Europe, China, and Philippines are also alternative development sites, there are several factors that favor Indias position as a leading source of customized offshore software development: First mover advantage; the size of the talent pool; language skills; and availability of a legal & commercial system that is similar to those in the West.
3. CHALLENGES TO LONG TERM GROWTH: Long run growth in Indian software services
exports requires better project management skills and better business strategies or managerial capabilities. Project management expertise is scarce, because the industry is still young in India and large scale projects where project managers are trained are still relatively rare. This problem is exacerbated by a large number of experienced professionals who emigrate to the U.S. Management capability is weak. It is likely that many of the existing firms will fail the challenge of moving beyond low-end services. However, this should not be a major problem
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for the industry as a whole because some Indian firms are already looking outside of their boundaries and even outside India to get the managers they need.
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Software talent is still plentiful but experienced engineers and managers are not. Although Indian software firms complain the shortage of engineers, many engineers working in the industry are under-utilized: much of the work does not require extensive engineering knowledge. Rather, it requires familiarity with standard platforms, software languages such as VB, C++ and Java as well as familiarity with development environments and tools that can be
acquired on the job or through specialized courses (offered by private firms like NIIT and Aptech). In addition, many of the existing engineering colleges have added IT and software development courses to their curricula and there are both public and private initiatives to increase the supply of skilled software engineers. However, as the industry continues to grow, the shortage of skilled and experienced software engineers and project managers will become increasingly evident. The industry will have to tap new sources of supply and better utilize the existing engineering talent.
The Indian software industry faces a number of challenges as the labor cost advantages diminish and competition from other countries with supplies of educated and underutilized workers increases. However, even if the projected goals are only partially achieved, the Indian software industry will still have achieved a substantial role in the world software industry, especially in customized software and software services. If the projected trends in demand for skilled workers hold, demographics alone should continue to ensure the survival and growth, albeit perhaps at a reduced rate, of the Indian software services industry. The Indian success story has been a combination of resource endowments (created in part by a policy of substantial investments in higher education), good timing and exemption from a normally intrusive government laws. Indias success also testifies to the abundant supply of entrepreneurs who recognized and responded to the opportunity that the IT revolution in the West represented.
STRUCTURE AND COMPOSITION OF THE INDIAN SOFTWARE INDUSTRY
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Indias software sector displays many unusual features from an Indian perspective. The most obvious one is its export orientation. Given Indias size and history of inward development, most of industries tend to be driven by the domestic market. However, exports account for 65% domestic market, so that the share of exports has actually increased over time. There are important qualitative differences between the export market and the domestic market. The first difference is the types of software developed. The domestic market has a higher proportion of revenues from the sale of software packages and products. Whereas, these products account for nearly 40% of the domestic market, and account for a little fewer than 10% of exports. Over 80% of exports are software services including custom software development, consultancy, and professional services. Even though the bulk of the product revenues in the domestic market are probably accounted for by imported software products, \Indian firms have produced some moderately successful products, such as accounting packages and word processing packages in Indian languages, for the domestic market. A number of medium-sized firms make products for Indian and Middle East markets which are much customized to the countrys own business culture, etc. In the area of ERP packages, a couple of firms are trying to compete with global giants like SAP, BAAN and PeopleSoft in the domestic market. The second difference between the domestic and export sector relates to the stages of software development as described earlier. Indian firms usually provide low-level design, coding, and some types of testing services for export. For domestic clients, the industry provides a wider range of services that usually spans the entire lifecycle of software development. Some of the domestic projects are much larger and more challenging than export projects, with the screen based trading system for the Bombay Stock Exchange and the Reservation System for Railways, both by executed by CMC, an experienced public sector firm, being two recent examples.
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of the total software revenue. Not only that, software exports grown somewhat faster than the
SECTOR STRUCTURE / MARKET SIZE
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The Indian information technology (IT) industry has played a key role in putting India on the global map. Thanks to the success of the IT industry, India is now a power to reckon with. According to the National Association of Software and Service Companies (NASSCOM), the risen from 1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated 5.8 per cent in FY 2009-10. Further, the industry body expects the sector to grow between 4 per cent and 7 per cent during 2010-11 and return to over 10 per cent growth next year. India's IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Software testing, and Web services. As per NASSCOM's latest findings:
Indian IT-BPO sector grew by 12 per cent in FY 2010 to reach US$ 71.7 billion in aggregate revenue (including hardware). Of this, the software and services segment accounted for US$ 59.6 billion.
IT-BPO exports (including hardware exports) grew by 16 per cent from US$ 40.9 billion in FY 2007-08 to US$ 47.3 billion in FY 2009-10.
Moreover, according to a study by Springboard Research, the Indian IT services market is estimated to remain the fastest growing in the Asia-Pacific region with a compound annual growth rate (CAGR) of 18.6 per cent. At present, there are 60 million Internet users in the country. According to the Manufacturers Association of IT (MAIT), the number of active Internet entities rose to 8.6 million by March 2009 from 7.2 million units in March 2008. MAIT has outlined 'Goal 511', an ambitious target that talks about 500 million Internet users, 100 million broadband connections and 100 million connected devices by 2012. A study by MAIT estimated that the total PC sale in India is likely to grow by 7 per cent in 2009-10, with total sales expected to cross 7.3 million units. Moreover, software companies continued to constitute the fastest growing firms in the Deloitte Technology Fast 50 India 2009 programme. In 2009, the composition of software companies amounted to as much as 80 per cent. Despite the slowdown and challenges for growth, the report stated that the average growth rate of the top ten winners increased significantly to 1,003 per cent, compared with 845 per cent in the previous year.
OUTSOURCING
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apex body for software services in India, the revenue of the information technology sector has
According to NASSCOM, software and services exports (including exports of IT services, business process outsourcing (BPO), engineering services and research and development (R&D) and software products) reached US$ 47 billion in FY 2008-09, contributing nearly 78
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per cent to the total software and services revenue of US$ 59.6 billion.
India continues to be the most preferred destination for companies looking to offshore their IT and back-office functions. It also retains its low-cost advantage and is among the most financially attractive locations when viewed in combination with the business environment it offers and the availability of skilled people, according to global management consultancy, AT Kearney. Global IT giant, IBM, plans to scale up its business process outsourcing (BPO) operations in the country and looks to recruit 5,000 people to support the expansion.
Some big deals in the outsourcing space include:
HCL Technologies has entered into a five-year deal with media conglomerate News Corp for managing its data centers and IT across British newspapers. The deal is pegged to be in the range of US$ 200-US$ 250 million, according to industry experts.
HCL Technologies has also received a contract worth US$ 50 million from UK-based defence equipment maker Meggitt for providing engineering services. Wal-Mart has selected three IT vendors in India Infosys Technologies, Cognizant Technology Solutions and UST Global for multi-year contracts worth over US$ 600 million.
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STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR DOMESTIC MARKETS
India's domestic market has also become a force to reckon with, as the existing IT NASSCOM, domestic IT market (including hardware) reached US$ 24.3 billion in FY 2008-09 as against US$ 23.1 billion in FY 2007-08, a growth of 5.3 per cent. India Inc's demand for IT services and products has bolstered growth in the domestic sector with deal sizes going up remarkably and contracts worth US$ 50 million-US$ 100 million up for grabs. The market for enterprise networking equipment in India is estimated to grow from US$ 1 billion in 2008 to US$ 1.7 billion by 2012, recording a compounded annual growth rate (CAGR) of 15 per cent during this period, according to a study by Springboard Research. HCL Info systems has bagged an order worth US$ 23.69 million from the Gujarat government to supply and implement biometric attendance and computer aided learning systems in over 7,000 schools across the state.
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infrastructure evolves both in terms of technology and depth of penetration. According to
INVESTMENTS
The Andhra Pradesh Government expects the IT-related SEZs and Software Technology Parks of India (STPI) in the State to receive about US$ 3.27 billion investments in the next five years.
Mahindra Satyam has tied up with defence and security company Saab to develop its operations in India for the global defence and homeland security market. The estimated deal value is US$ 400 million.
San Francisco-based Virtualization solutions provider VMware Inc plans to invest US$ 100 million in India by end 2010. The total investments of EMC Corporation, a leading global player of information infrastructure solutions, in India will touch US$ 2 billion by 2014.
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According to a report of the Internet and Mobile Association of India (IAMAI), rural India has 3.3 million active internet users as on March 2008. (Since rural India was mapped for the first time, the year-on-year growth of internet users in rural India could not be estimated.) The in time. The accessibility of mobile and internet in the rural area has spread awareness among rural people about information technology. IT has penetrated the rural market by providing rural people with their required services. Now, with the huge accessibility of internet and mobile, rural people can get access to information from any part of the country, thereby increasing awareness among the rural sector about the commodities traded in the market and various other information on their business activities.
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research also notes there are 5.5 million people who claim to have used Internet at some point
GOVERNMENT INITIATIVES
The government set up the National Taskforce on Information Technology and Software Development with the objective of framing a long term National IT Policy for the country.
Enactment of the Information Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions. The government-led National e-Governance Programme, has played an important role in increasing internet penetration in rural India.
ROAD AHEAD
The Indian information technology sector continues to be one of the sunshine sectors of the Indian economy showing rapid growth and promise. According to a report prepared by McKinsey for NASSCOM, the exports component of the Indian industry is expected to reach US$ 175 billion in revenue by 2020. The domestic component will contribute US$ 50 billion in revenue by 2020. Together, the export and domestic markets are likely to bring in US$ 225 billion in revenue, as new opportunities emerge in areas such as public sector and healthcare and as geographies including Brazil, Russia, India, China (BRIC) and Japan opt for greater outsourcing.
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INDIAN SOFTWARE: POTENTIAL AND PROSPECTS

CURRENT CAPABILITIES
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Supplying programmers or doing simple coding or code conversion does not require a great
deal of knowledge about the customers business domain or specialization in specific technologies. Lacking such expertise and experience, Indian firms have been willing to adapt to any new domain. The most important determinant of success appears to have been the ability to provide trained software programmers at low cost upon demand. In addition to serving a number of industries, most firms also claim to provide services for most platforms. There has been a steady move from mainframe-based systems to open systems. Indian firms jumped onto the open systems bandwagon early in the history of open system and in the past few years most of the firms have gained experience on Windows platforms and a few firms only provide services for Windows and NT platforms. However, the larger firms have projects that span most platforms and provide services on IBM mainframes, Unix Workstations, and Windows NT platforms. The expertise levels of Indian firms on UNIX and WinNT platforms are considered to be on par with other U.S. firms. Some Indian software firms are now beginning to specialize in particular industries (or vertical segments) such as manufacturing, telecommunication or finance in order to build domain specific competencies. Others are focusing on building more generic competencies not related to industries but related to technical areas connected to software development such as networking, systems software, software tools, and conversion & porting. The evidence suggests that some of the established firms are growing in their ability to handle larger and more complex projects than in the past. As U.S. and European firms have become more experienced in outsourcing to India and better able to assess the capabilities of the Indian firms, they have been willing to let a greater fraction of the work be performed offshore. This saves money and economizes on scarce managerial. Some of the larger firms like TCS and Wipro have research divisions. The Indian information technology (IT) industry has played a key role in putting India on the global map. India's IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Software testing, and Web services. Information Technology (IT) industry in India is one of the fastest growing industries.
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Indian IT industry has built up valuable brand equity for itself in the global markets. IT (ITES), which also includes business process outsourcing (BPO) industry. India is considered as a pioneer in software development and a favorite destination for IT-enabled services. The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers for installing system software for a U.S. client. The IT industry originated under unfavorable conditions. Local markets were absent and government policy toward private enterprise was hostile. The industry was begun by Bombay-based conglomerates which entered the business by supplying programmers to global IT firms located overseas. During that time Indian economy was state-controlled and the state remained hostile to the software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on software) and software was not considered an "industry", so that exporters were ineligible for bank finance. Government policy towards IT sector changed when Rajiv Gandhi became Prime Minister in 1984. His New Computer Policy (NCP-1984) consisted of a package of reduced import tariffs on hardware and software (reduced to 60%), recognition of software exports as a "delicensed industry", i.e., henceforth eligible for bank finance and freed from license-permit raj, permission for foreign firms to set up wholly-owned, export-dedicated units and a project to set up a chain of software parks that would offer infrastructure at below-market costs. These policies laid the foundation for the development of a world-class IT industry in India. Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys, HCL etc all are renowned in the global market for their IT prowess.
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industry in India comprises of software industry and information technology enabled services
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Some of the major factors which played a key role in India's emergence as key global IT player are:
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1. INDIAN EDUCATION SYSTEM
The Indian education system places strong emphasis on mathematics and science, resulting in a large number of science and engineering graduates. Mastery over quantitative concepts coupled with English proficiency has resulted in a skill set that has enabled India to reap the benefits of the current international demand for IT. 2. HIGH QUALITY HUMAN RESOURCE Indian programmers are known for their strong technical and analytical skills and their willingness to accommodate clients. India also has one of the largest pools of English-speaking professionals. 3. COMPETITIVE COSTS The cost of software development and other services in India is very competitive as compared to the west. 4. INFRASTRUCTURE SCENARIO Indian IT industry has also gained immensely from the availability of a robust infrastructure (telecom, power and roads) in the country. In the last few years Indian IT industry has seen tremendous growth. Destinations such as Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several IT parks have come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These parks offer Silicon Valley type infrastructure. In the light of all the factors that have added to the strength of Indian IT industry, it seems that Indian success story is all set to continue.
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CHALLENGES BEFORE INDIAN INFORMATION TECHNOLOGY INDUSTRY At present there are a number of challenges that are facing the information technology industry keep maintaining its excellent performance standards. The experts are however of the opinion
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of India. One of the major challenges for the Indian information technology industry was to
that there are certain things that need to be done in order to make sure that India can maintain its status as one of the leading information technology destinations of the world. The first step that needs to be taken is to create an environment for innovation that could be carried for a long time. The innovation needs to be done in three areas that are connected to the information technology industry of India such as business models, ecosystems and knowledge. The information technology sector of India also has to spread the range of its activities and also look at the opportunities in other countries. The improvement however, also needs to be qualitative rather than just being quantitative. The skill level of the information technology professionals is one area that needs improvement and presents a considerable amount of challenge before the Indian information technology industry. The Indian information technology industry also needs to co-ordinate with the academic circles as well as other industries in India for better performance and improved productivity. The experts are of the opinion that the business process outsourcing service providers in India need to change their operations to a way that is more oriented to the knowledge process outsourcing. One of the most important crises facing the Indian information technology industry concerns the human resources aspect. The problems with outsourcing in countries like the United States of America are posing problems for the Indian information technology industry as well. In the recent times a bill has been passed in the state of New Jersey that allows only the citizens or legal non-Americans to be given contracts. This legislation has also affected some other states like Missouri, Connecticut, Wisconsin and Maryland. These states are also supposed to be considering these laws and their implementation. This is supposed to have an adverse effect on the outsourcing that is the source upon which the information technology industry of India thrives. The information technology professionals who aim at working in the country are also likely to be hindered by the legislation as a significant amount of these professionals have been going to work in the USA for a long time.
FUTURE OF INDIAN INFORMATION TTECHNOLOGY INDUSTRY
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The current scenario in the IT industry of India and the tremendous growth registered in recent years has generated much optimism about the future of the Indian Information technology industry. Analysts are upbeat about the huge potential of growth in the Information Technology generate for the Indian economy are Exports - The IT industry accounts for a major share in the exports from India. This is expected to grow further in coming years. The information technology industry is one of the major sources of foreign currency or India. Employment - The biggest benefit of the IT industry is the huge employment it generates. For a developing country like India, with a huge population, the high rate of employment in the IT sector is a big advantage. FDI (Foreign Direct Investment) - High inflow of FDI in the IT sector is expected to continue in coming years. The inflow of huge volumes of FDI in the IT industry of India has not only boosted the industry but the entire Indian economy in recent years. Software exports from India are expected to grow in coming years. New markets for software exports from India have opened up in the Middle East, South and Southeast Asia, Africa, and Eastern Europe. The reputation that India has earned as a major destination for IT outsourcing has opened further possibilities. Many developing countries are now using the Indian model for growth in the IT sector. Another important area of future growth for the IT industry of India is the domestic market. While exports dominate the IT industry at present, there is huge scope of growth in the domestic market which can be tapped in the future. The US recession has had its share of negative impacts on the Indian IT industry. However, the industry has faced the challenges posed by the global market and is sustaining its rate of growth. The focus for the future is to ensure that the benefits of the IT industry percolate to the grass root levels.
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industry in India. The major areas of benefit that the future growth in the IT industry can
3.2
COMPANY PROFILES
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3.2.1 HCL
HCL Technologies is a global IT Services company headquartered in Noida, a suburb of Delhi, India led by Vineet Nayar, HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 5 billion, as of 2010, and employed more than 60,000 workers The name HCL is an abbreviation on Hindustan Computers Limited. Services HCL offers services including Software, Remote Infrastructure Management, Engineering and R&D Services and BPO. HCLs key services include:

Custom Application Services Enterprise Application Services Enterprise Transformation Services Engineering and R&D Services Infrastructure Management Business Processing Outsourcing.
In addition to this, HCL AXON, formed after the acquisition of Axon Group plc in December 2008, offers SAP services including:

Business Consulting Solutions Implementation Application Management Blue ocean upgrades Integration Services.
HCL serves industries such as Financial Services, Education, Hi-tech & Manufacturing, Aerospace & Defense, Telecom, Retail & CPG, Life Sciences, Healthcare, Media & Entertainment, Travel, Transportation & Logistics, Automotive, Government, Energy & Utilities.
3.2.2 INFOSYS
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Infosys Technologies Limited (BSE: 500209, NASDAQ: INFY) is an information technology services company headquartered in Bangalore, India. Infosys is one of the largest IT companies in India with 145,000 employees (including subsidiaries) as of 13 April 2010. It has offices in
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22 countries and development centers in India, China, Australia, UK, Canada and Japan.
History
Infosys was founded on 2 July 1981 in Pune by N R Narayana Murthy and six others: Nandan Nilekani, N. S. Raghavan, Kris Gopalakrishnan, S. D. Shibulal, Ashok Arora and K. Dinesh, with N. S. Raghavan officially being the first employee of the company. Founders started the company with an initial investment of INR 10,000. The company was incorporated as "Infosys Consultants Pvt Ltd." in Model Colony, Pune as the registered office. In 1982, Infosys opened an office in Bangalore which soon became its headquarters. Infosys went public in 1993. Interestingly, Infosys IPO was undersubscribed but it was bailed out by US investment banker Morgan Stanley which picked up 13% of equity at the offer price of Rs. 95 per share. The share price surged to Rs. 8,100 by 1999. By the year 2000 Infosys's shares touched Rs. 15,600 before the catastrophic incident of 9/11, changed all that. According to Forbes magazine, since listing on the Bombay Stock Exchange till the year 2000, Infosys' sales and earnings compounded at more than 70% a year. In the year 2000, President of the United States Bill Clinton complimented India on its achievements in high technology areas citing the example of Infosys. In 2001, it was rated Best Employer in India by Business Today.. Infosys was rated best employer to work for in 2000, 2001, and 2002 by Hewitt Associates. In 2007, Infosys received over 1.3 million applications and hired fewer than 3% of applicants. Infosys won the Global MAKE (Most Admired Knowledge Enterprises) award, for the years 2003, 2004 and 2005, being the only Indian company to win this award and is inducted into the Global Hall of Fame for the same. Business Week reported that Infosys, along with Wipro and TCS accounted for nearly 80% of the [H-1B] visa petitions approved in 2007 for the top 10 participants in the program.
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In 2010, reports were published on the growing resentment among Infosys employees on the internal company policies
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3.2.3 TCS
Tata Consultancy Services (TCS) (BSE: 532540) is a software services and consulting company headquartered in Mumbai, India. TCS is the largest provider of information technology and business process outsourcing services in India. The company is listed on the National Stock Exchange and Bombay Stock Exchange of India. TCS is a subsidiary of one of India's largest and oldest conglomerates, the Tata Group, which has interests in areas such as energy, telecommunications, financial services, manufacturing, chemicals, engineering, materials, government and healthcare
History
Tata Consultancy Services was established in the year 1968 and is a pioneer in the Indian IT industry. Despite unfavorable government regulations like the License Raj the company succeeded in establishing the Indian IT Industry. It began as the "Tata Computer Centre", a division of the Tata Group whose main business was to provide computer services to other group companies. F C Kohli was the first general manager. JRD Tata was the first chairman, followed by Nani Palkhivala. One of TCS' first assignments was to provide punched card services to a sister concern, Tata Steel (then TISCO). It later bagged the country's first software project, the Inter-Branch Reconciliation System (IBRS) for the Central Bank of India. It also provided bureau services to Unit Trust of India, thus becoming one of the first companies to offer BPO services.
In the early 1970s, Tata Consultancy Services started exporting its services. TCS's first international order came from Burroughs, one of the first business computer manufacturers.
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TCS was assigned to write code for the Burroughs machines for several US-based clients. This experience also helped TCS bag its first onsite project - the Institutional Group & Information Company (IGIC), a data centre for ten banks, which catered to two million customers in the
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US, assigned TCS the task of maintaining and upgrading its computer systems.
In 1981, TCS set up India's first software research and development center, the Tata Research Development and Design Center (TRDDC). The first client-dedicated offshore development center was set up for Compaq (then Tandem) in 1985. In 1989, TCS delivered an electronic depository and trading system called SECOM for SIS SegaInterSettle, Switzerland. It was by far the most complex project undertaken by an Indian IT company. TCS followed this up with System X for the Canadian Depository System and also automated the Johannesburg Stock Exchange (JSE). TCS associated with a Swiss partner, TKS Teknosoft, which it later acquired. In the early 1990s, the Indian IT outsourcing industry grew tremendously due to the Y2K bug and the launch of a unified European currency, Euro. TCS pioneered the factory model for Y2K conversion and developed software tools which automated the conversion process and enabled third-party developers and clients to make use of it. In 1999, TCS saw outsourcing opportunity in E-Commerce and related solutions and set up its E-Business division with ten people. By 2004, E-Business was contributing half a billion dollars (US) to TCS. On 9 August 2004, TCS became a publicly listed company, much later than its rivals, Infosys, Wipro and Mahindra Satyam. During 2004, TCS ventured into a new area for an Indian IT services company - Bioinformatics In 2008, the company went through an internal restructuring exercise that executives claim would bring about agility to the organization.
3.2.4 TECH MAHINDRA

Tech Mahindra Ltd. (TechM) formerly known as Mahindra British Telecom (MBT) is an Information Technology service provider company headquartered in Pune, India. It is a joint
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venture between Mahindra & Mahindra Limited (M&M) and British Telecommunications plc (BT), UK with M&M (Mahindra and Mahindra) holding 44% and BT holding 39% of the equity. Tech Mahindra has its headquarters at Pune, India. Tech Mahindra has grown rapidly to Software Provider in India (Voice & Data, 2009). It has more than 50,000 employees. With its core strength in providing Telecom Solutions, Tech Mahindra provides a wide variety of services ranging from IT Strategy and Consulting to Systems Integration, Application Development & Maintenance, BPO, Infrastructure Management, Security Consulting, Network Transformation Solutions & Services, Value Added Services and Product Engineering. Tech Mahindra is ISO 9001:2000 certified and is assessed at SEI-CMMi Level 5 and SEI-PCMMi Level 5. Tech Mahindra is also BS7799 certified across all development centers. Some of its largest clients are BT, AT&T, Alcatel-Lucent & O2. Significant portion of revenues comes from UK, but the company is aggressively expanding in other major economies like US, Continental Europe, ANZ, Canada & Middle East. Its executive management team consists of Vineet Nayyar (Vice Chairman), Sanjay Kalra (CEO), Sonjoy Anand (Chief Financial Officer), Sujit Baksi (President Corporate Affairs) and L. Ravichandran (Executive Vice President and COO).
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become the 5th largest software exporter in India (Nasscom, 2009) and 1st largest Telecom
Milestones

1986 - Incorporation in India 1987 - Commencement of Business
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1993 - Incorporation of MBT International Inc., the first overseas subsidiary 1994 - Awarded the ISO 9001 certification by BVQI 1995 - Established the UK branch office 9001:1994 by BVQI
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2001 - Incorporated MBT GmbH, Germany incorporated. Re-certified to ISO
2002 - Assessed at Level 5 of SEI CMM by KPMG. Incorporated MBT Software Technologies Pvt. Limited, Singapore 2005 - Acquired Axes Technologies (India) Private Limited, including its US and Singapore subsidiaries. Assessed at Level 3 of SEI CMMI by KPMG 2006 - Name changed to Tech M Limited. Assessed at Level 4 of SEI People-CMM (PCMM) by QAI India. Raised Rs4.65 billion ($100 million) from a hugely successful IPO to build a new facility in Pune, to house about 9,000 staff. Formed a JV with Motorola Inc. under the name CanvasM.
2007 - Acquired iPolicy Networks Private Limited. Launched the Tech M Foundation to address the needs of the privileged in our society. 2009 -Tech M wins bid for Satyam. Tech Mahindra has won the bid for Satyam Computer Services. Tech M bid for Satyam at Rs 58.90 per share, while Larsen & Toubro, the other player in the fray, bid at Rs 45.90 per share.
3.2.5 WIPRO
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Wipro Technologies Limited (BSE: 507685, NYSE: WIT) is a giant information technology services corporation headquartered in Bangalore, India. According to the 200809 revenue, Wipro is one of the largest IT services company in India and employs more than 100,000 care, lighting, engineering and healthcare businesses. Azim Premji is the Chairman of the board. Timeline

1945 - Incorporation as Western India Palm Refined Oil Limited 1947 - Establishment of an oil mill at Amalner, Maharashtra, India 1960 - Manufacture of laundry soap 787 at Amalner 1970 - Manufacture of Bakery Shortening Vanaspati at Amalner 1975 - Diversification into engineering and manufacture of hydraulic cylinders as WINTROL (now called Wipro Fluid Power) division in Bangalore. 1977 - Name of the Company changed to Wipro Products Limited 1980 - Diversification into Information Technology.
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This is the time the top IT Managers Sridhar Mitta, Dr. Laxman Rao, Venkatesh, Sadasivam quit in one stoke from the IT division of giant public sector ECIL, Hyderabad to join Wipro.
1988 - Crossed the $10 million mark in annualized revenues. 1990 - Incorporation of Wipro-GE medical systems 1992 - Going global with global IT services division 1993 - Business innovation award for offshore development 1995 - Wipro gets ISO 9001 quality certification 1996 - Crossed the $100 million mark in annualized revenues. 1997 - Wipro gets SEI CMM level 3 certification, enterprise wide processes
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Start of the Six Sigma initiative, defects prevention practices initiated at project level.
1998 - Wipro first software services company in the world to get SEI CMM level 5 1999 - Wipro's market capitalization is the highest in India. 2000 - Start of the Six Sigma initiative, defects prevention practices initiated at project level. Wipro listed on New York Stock Exchange.
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people worldwide as of 2010. It has interests varying from information technology, consumer
2001 - First Indian company to achieve the "TL9000 certification" for industry specific quality standards.
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Wipro acquires American Management Systems global energy practice. Premji established Azim Premji Foundation, a not-for-profit organization for elementary education. Wipro becomes only Indian company featured in Business Weeks 100 bestperforming technology companies.
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Becomes world's first PCMM Level 5 Company.
2002
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Wipro acquires Spectramind. Ranked the 7th software services company in the world by Business Week (InfoTech 100, November 2002).
2003
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Wipro acquires Nervewire. Wipro Technologies Wins Prestigious IEEE Award for Software Process Excellence. Wipro Technologies awarded prestigious ITSMA award for services marketing excellence. Wipro wins the 2003 Asian Most Admired Knowledge Enterprise Award. Crossed the $1 Billion mark in annualized revenues. Wipro launches Indias first RFID enabled apparel store. Wipro Technologies named Asian Most Admired Knowledge Enterprise second year in a row. IDC rates Wipro as the leader among worldwide offshore service providers.
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2005 - Wipro acquires mPower to enter payments space] and also acquires European System on Chip (SoC) design firm NewLogic 2006 - Wipro acquires Enabler to enter Niche Retail market 2007 - Wipro acquires US's Info crossing for 600mn 2009 - Wipro acquires Gallagher Financial Systems to enter mortgage loan origination space.
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CHAPTER-IV ANALYSIS AND INTERPRETATION
CHAPTER-IV ANALYSIS AND INTERPRETATION

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This chapter deals with the analysis and interpretation of the data collected. The analysis of the data collected is done by finding the stock return, market return, beta and variance to find out the risk and volatility associated with the investment. Based on the analysis and interpretation is made. Some of the formulas used for the analysis are as follows:2011
COMPUTATION OF STANDARD DEVIATION:
RATE OF RETURN= (Adj close-open) * 100 Open Standard Deviation= (X- 2 X) N-1 Variance= Square of standard deviation.
COMPUTATION OF BETA
Stock Return (Y) =
(Adj Close-Open) *100 (of stock price) Open
Market Return (X) =
(Adj close- Open) *100(of BSE price) Open
BETA =
COVAR (X and Y) VAR (X)
OR
BETA = N*( XY) - ( X* Y) N*( X2) - ( X) 2 Table 4.1 Stock and Market return for April 2009-March 2011 of HCL
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MONTH
70
160.06
Table 4.2 Table showing Risk and Return Relationship of HCL
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Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 N=24
MARKET RETURN (X) 17.01 25.7 -1.71 8.02 -0.18 9.15 -7.51 6.87 3.05 -6.38 0.55 6.63 0.02 -3.38 4.47 1.07 0.33 11.33 -0.31 -3.71 5.01 -11.12 -3.27 8.14
STOCK RETURN (Y) 26.68 24.50 7.53 28.41 24.19 13.20 -10.69 10.25 7.98 -6.87 7.44 -3.27 11.06 -0.12 -4.61 6.31 -2.71 7.63 -4.50 -0.30 12.88 8.28 -10.29 7.08
STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR Market Return 70 Stock Return 160.06 Beta 1.5013 Standard Deviation 11.44 Variance 130.92
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ANALYSIS: It can be analyzed from the above calculation that HCL has given significant returns (160.06%) as compared to Sensex in past two years. The beta of the security is 1.5013 and its standard deviation is 11.44. INTERPRETATION: It can be interpreted from the above analysis that although the stock has given significant returns in past two years, but at the same time the risk is also very high. The presence of HCL stock makes anyones portfolio highly risky and also it is very difficult to anticipate short term returns as the standard deviation (11.44) is also high.
TABLE 4.3 Stock and Market return for April 2009-March 2011 of INFOSYS
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5.74 10.71 16.16 3.51 7.88 -4.15 8.61 8.60 -4.96 5.33 -0.79 4.43 -1.46 5.03 -0.43 -2.66 12.34 -2.44 2.05 13.32 -9.65 -4.15 6.65
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93.33
Table 4.4 Table showing Risk and Return Relationship of INFOSYS Market Return Stock Return Beta Standard Deviation Variance
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Month Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 N=24
MARKET RETURN (X)

17.01 25.70 -1.71 8.02 -0.18 9.15 -7.51 6.87 3.05 -6.38 0.55 6.63 0.02 -3.38 4.47 1.07 0.33 11.33 -0.31 -3.71 5.01 -11.12 -3.27 8.14
STOCK RETURN (Y) 13.67
70
93.33
0.5369
6.87
47.24
ANALYSIS: It can be analyzed from the above calculation that INFOSYS stock has given comparatively better returns(93.33%) than the Sensex ( market) returns (70%) in past two years. The beta of the stock is 0.5369 and variance is 47.24. INTERPRETATION: It can be interpreted from the above analsis that INFOSYS has given better returns than market returns. Also the risk involved is low, which is the major tool to attract the investors. The movement of the stock is aptly, in line with the market which can be justified through standard deviation(6.87).
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Table 4.5 Stock and Market return for April 2009-march 2011 of TCS
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Table 4.6 Table showing Risk and Return Relationship of TCS Market Return 70 Stock Return 118.25 Beta 0.8669 Standard Deviation 14.06 Variance 197.69
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MARKET RETURN
17.01 25.70 -1.71 8.02 -0.18 9.15 -7.51 6.87 3.05 -6.38 0.55 6.63 0.02 -3.38 4.47 1.07 0.33 11.33 -0.31 -3.71 5.01 -11.12 -3.27 8.14 70
STOCK RETURN 23.34 16.63 -42.69 38.53 0.02 15.98 1.00 9.95 7.72 -2.03 3.47 2.32 -2.66 -1.85 1.23 12.45 -0.25 9.31 13.24 2.25 9.13 -0.67 -3.82 5.67 118.25
ANALYSIS: It can be analyzed from the above calculation that TCS has given nearly twice the market returns. The beta of the stock has been high (0.8669) in the past two years and the variance is also high (197.69). INTERPRETATION: It can be interpreted from the above analysis that, no doubt, TCS ltd has given tremendous returns to the shareholders as compared to market returns in the past two years. But the major concern for a prospective investor lies in beta, as the beta is gradually reaching towards 1. This will increase the risk appetite of the investor. Also the standard deviation of the stock is high (14.06)
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Table 4.7 Stock and Market return for April 2009-March 2011 of WIPRO
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Table 4.8 Table showing Risk and Return Relationship of WIPRO
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MARKET RETURN (X)

17.01 25.70 -1.71 8.02 -0.18 9.15 -7.51 6.87 3.05 -6.38 0.55 6.63 0.02 -3.38 4.47 1.07 0.33 11.33 -0.31 -3.71 5.01 -11.12 -3.27 8.14 70
STOCK RETURN (Y) 34.35 14.24 -1.86 29.46 12.10 8.42 2.78 3.95 7.50 -7.21 4.53 1.30 -4.91 -0.25 -42.40 7.12 -3.36 11.81 -7.17 -1.36 17.00 -10.88 0.01 9.90 85.08
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ANALYSIS: It can be analyzed from the above calculation that WIPRO has given more or less similar returns as market returns. But the risk involved is high, the beta of the stock is 0.8639 and also the variance of the stock is significantly high (213.47) INTERPRETATION: It can be interpreted from the above analysis that WIPRO has given good returns over the past two years but not as significant as other companies in the industry. It cannot be recommended as a fruitful stock in the investors portfolio as the beta of the stock is high, so as the standard deviation. The investor could have gained higher returns if they would have invested in other stocks of the same industry.
Table 4.9 Stock and Market return for April 2009-March 2011 of TECH MAHINDRA
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Table 4.10 Table showing Risk and Return Relationship of TECH MAHINDRA
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MARKET RETURN (X)

17.01 25.70 -1.71 8.02 -0.18 9.15 -7.51 6.87 3.05 -6.38 0.55 6.63 0.02 -3.38 4.47 1.07 0.33 11.33 -0.31 -3.71 5.01 -11.12 -3.27 8.14 70
STOCK RETURN (Y)

22.37 42.96 52.62 15.37 9.77 -0.86 -0.96 0.92 6.29 -2.76 -7.65 -4.96 -9.41 -17.36 15.19 -4.66 -9.25 18.18 -4.44 -12.52 9.24 -7.74 -2.01 4.69 113.01
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ANALYSIS: It can be analyzed from the above calculation that TECH MAHINDRA has given higher returns (113.01%) as compared to market return (70%). But the risk involved in the stock is very high; beta of the stock is 1.1156 and variance is 280.58, which is very high compared to other stocks. INTERPRETATION: It can be interpreted from the above analysis that, no doubt, TECH MAHINDRA has given excellent returns to its shareholders. But then too, it would be preferable for the investors not to hold the stock for a long period as the risk factor is very high. Still, as the returns are good, aggressive investors can hold it in their portfolio. Buy at dips and sell at top would be fruitful strategy as the deviation of the stock is very high.
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CHAPTER-V FINDINGS, SUGGESTION & CONCLUSION
CHAPTER V
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FINDINGS, SUGGESTION AND CONCLUSION
5.1
FINDINGS
It has been found that sensex has given significant returns over the past two years i.e. 70
%. As the economy was recovering from the bloodbath of recession and also because of the increase in foreign direct investments & foreign institutional inflows which gave a sharp bounce back to the sensex after making the lows in January 2009. Among all the stocks selected HCL Technologies has given the highest return i.e. 160.06%. But at the same time its beta is also high which will increase the risk for the shareholders.
Infosys has been found the safest security as its beta is lowest among all i.e. 0.5369.
Graph study has shown that Tech Mahindra has the most rapid fluctuations among all. The statement can be supported with the standard deviation 16.57, which is highest among all the stocks. WIPRO has given the least returns among all the securities, it has also has high beta and high standard deviation which makes the security more risky than others.
Also, it has been found that Information Technology sector has outperformed the
market expectations, as all the stocks has given higher returns than market.
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5.1
SUGGESTIONS
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Investing in INFOSYS is the most profitable since the returns generated from it is comparatively high.
Investing in WIPRO is not safe since it is risky and the returns generated from it are
lesser than any other security.
Any investor having a long term horizon must invest in a security having lower beta and lower standard deviation to enjoy safe and fruitful gains in future.
Investors expecting higher returns can invest into high beta stocks. They can follow strategies like buy at dips and sell at top and bottom fishing.
Whenever there is a rise in the sensex, there will be certain sectors which acts as market
leaders and others as market laggards. Therefore, a prospective investor should be cautious and should adopt timing strategy for investment. Smart churning of portfolio is required to reduce the risk and fetch higher returns.
Stock Exchange should take necessary step to improve the surveillance mechanism and
enhance transparency in order to prevent unfair trade practices which result in sharp volatile movements in future markets.
Stock Exchange should take necessary steps to increase participation of retail investors
in the market like conducting investor education programmes with the help of stock brokers.
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Investors can invest in the security having less risk and less volatility on the basis of the market study.
Investors can diversify their investment portfolio so that they are exposed to minimum amount of risk.
Before investing into any investment avenue, investor should be fully aware about its risk and return.
Proper planning is required before constructing a portfolio, to get a thorough knowledge about each security.
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5.3 Conclusion Equity market, share prices and Indices are also dependent on so many other factors. So, it is hard to point out just one or two factors that affect the price of the stocks. There are still some factors that are that directly influence the share prices and indices. Demand and Supply - This fundamental rule of economics holds good for the equity market as well. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling the stock, the price of that particular stock falls. Now it is difficult to predict the trend of the market but your stock broker can give you fair idea of the ongoing trend of the market but be careful before you blindly follow the advice.
News - News is undoubtedly a huge factor when it comes to stock price. Positive news about a company can increase buying interest in the market while a negative press release can ruin the prospect of a stock. Having said that, you must always remember that often times, despite amazingly good news, a stock can show least movement. It is the overall performance of the company that matters more than news. It is always wise to take a wait and watch policy in a volatile market or when there is mixed reaction about a particular stock.
Market Cap - If you are trying to guess the worth of a company from the price of the stock, you are making a huge mistake. It is the market capitalization of the company, rather than the stock, that is more important when it comes to determining the worth of the company. You need to multiply the stock price with the total number of outstanding stocks in the market to get the market cap of a company and that is the worth of the company.
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M.S.R.C.A.S.C
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Earnings Per Share - Earning per share is the profit that the company made per share on the last quarter. It is mandatory for every public company to publish the quarterly report that states the earning per share of the company. This is perhaps the most important factor for deciding the health of any company and they influence the buying tendency in the market resulting in the increase in the price of that particular stock. So, if you want to make a profitable investment, you need to keep watch on the quarterly reports that the companies and scrutinize the possibilities before buying stocks of particular stock.
Price/Earnings Ratio - Price/Earnings ratio or the P/E ratio gives you fair idea of how a company's share price compares to its earnings. If the price of the share is too much lower than the earning of the company, the stock is undervalued and it has the potential to rise in the near future. On the other hand, if the price is way too much higher than the actual earning of the company and then the stock is said to overvalued and the price can fall at any point.
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M.S.R.C.A.S.C
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BIBLIOGRAPHY
BOOKS: Chandra, Prasanna. Investment Analysis and Portfolio Management 2nd edition. New Delhi. Tata Mc Graw- Hill Publishing Co. Ltd Punithavathy Pandian, Security analysis And Portfolio management, Vikas Publishing.
NEWS PAPER: Economic Times The Times of India WEB SITES: www.bseindia.com F&O- Historical Information-Archives www.yahoofinance.com
1 0
M.S.R.C.A.S.C
2011
S ENSEX
Month Apr-09 May09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
OPEN
9,745.77 11,635.24 14,746.51 14,506.43 15,694.78 15,691.27 17,186.20 15,838.63 16,947.46 17,473.45 16,339.32 16,438.45 17,555.04 17,536.86 16,942.82 17,679.34 17,911.31 18,027.12 20,094.10 20,272.49 19,529.99 20,621.61 18,425.18 17,982.28
TECH MAHINDRA
OPEN
268.00 331.25 479.90 735.30 864.00 945.00 939.00 920.00 932.00 998.00 967.45 898.00 854.00 770.00 637.90 734.00 703.00 640.00 762.00 732.00 643.00 704.10 657.90 645.60
CLOSE
11,403.25 14,625.25 14,493.84 15,670.31 15,666.64 17,126.84 15,896.28 16,926.22 17,464.81 16,357.96 16,429.55 17,527.77 17,558.71 16,944.63 17,700.90 17,868.29 17,971.12 20,069.12 20,032.34 19,521.25 20,509.09 18,327.76 17,823.40 19,445.22
CLOSE
327.95 473.55 732.40 848.30 948.45 936.85 930.00 928.45 990.60 970.45 893.45 853.40 773.60 636.35 734.80 699.80 637.95 756.35 728,20 640.35 702.40 649.60 644.70 675.85
X*Y 380.5 1 1104. 07 -89.98 123.2 7 -1.76 -7.87 7.21 6.32 19.18 17.61 -4.21 -32.88 -0.19 58.68 67.90 -4.99 -3.05 205.9 8 1.38 46.45 46.29 86.07 6.57 38.18 2070. 74
X*X 289.3 4 660.4 9 2.92 64.32 0.03 83.72 56.40 47.20 9.30 40.70 0.30 43.96 0.00 11.42 19.98 1.14 0.11 128.3 7 0.10 13.76 25.10 123.6 5 10.69 66.26 1699. 29
Y*Y 500.4 2 1845. 56 2768. 86 236.2 4 95.45 0.74 0.92 0.85 39.56 7.62 58.52 24.60 88.55 301.3 7 230.7 4 21.72 85.56 330.5 1 19.71 156.7 5 85.38 59.91 4.04 22.00 6985. 58
(Y-STOCK AVG)2 312.229 1463.828 2296.326 113.849 25.705 30.914 32.036 14.288 2.528 55.652 152.523 93.316 199.092 486.644 110.040 87.610 194.603 181.710 83.540 296.528 20.612 154.754 45.024 0.001 6453.349
ANNEXURE
1 0
M.S.R.C.A.S.C
2011
Table showing stock prices related to TECH MAHINDRA for April 2009- March 2011
2011
Table showing stock prices related to WIPRO for April 2009March 2011
S ENSEX
Month Apr-09 May09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May10 Jun-10 Jul-10 Aug-10 Sep-10
OPEN
9,745.77 11,635.24 14,746.51 14,506.43 15,694.78 15,691.27 17,186.20 15,838.63 16,947.46 17,473.45 16,339.32 16,438.45 17,555.04 17,536.86
WIPRO
OPEN
246.00 334.00 384.80 379.00 491.30 555.00 591.20 605.00 591.20 605.00 632.00 697.70 708.30 670.00
CLOSE
11,403.25 14,625.25 14,493.84 15,670.31 15,666.64 17,126.84 15,896.28 16,926.22 17,464.81 16,357.96 16,429.55 17,527.77 17,558.71 16,944.63
CLOSE
330.50 381.55 377.65 490.65 550.75 601.75 607.65 628.90 679.40 647.40 676.70 706.80 673.50 668.35
X*Y 584.2 9 365.9 7 3.18 236.2 7 -2.18 77.04 -20.88 27.14 22.88 46.00 2.49 8.62 -0.10 0.85 189.5 3 7.62 -1.11 133.8 1
X*X 289.3 4 660.4 9 2.92 64.32 0.03 83.72 56.40 47.20 9.30 40.70 0.30 43.96 0.00 11.42 19.98 1.14 0.11 128.3 7
Y*Y 1179. 92 202.7 8 3.46 867.8 9 146.4 1 70.90 7.73 15.60 56.25 51.98 20.52 1.69 24.11 0.06 1797. 76 50.69 11.29 139.4 8
(Y-STOCK AVG)2 879.123 91.012 43.034 613.058 54.760 13.838 3.686 0.563 7.840 141.848 0.029 11.560 92.352 24.503 2218.410 5.856 64.964 50.552
16,942.82 17,679.34 17,911.31 18,027.12
17,700.90 17,868.29 17,971.12 20,069.12
668.00 384.00 413.70 401.00
384.75 411.35 399.80 448.35
1 0
M.S.R.C.A.S.C
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
20,094.10 20,272.49 19,529.99 20,621.61 18,425.18 17,982.28
20,032.34 19,521.25 20,509.09 18,327.76 17,823.40 19,445.22
452.00 426.00 419.00 492.00 438.35 435.20
419.60 420.20 490.25 438.45 438.40 450.25
2.22 5.05 85.17 120.9 9 -0.03 80.59 1596. 33
0.10 13.76 25.10 123.6 5 10.69 66.26 1699. 29
242.736 21.996 0.001
4910.630
Table showing stock prices related to TCS for April 2009- March 2011
SENSEX
Month Apr-09 May09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
OPEN
9,745.77 11,635.24 14,746.51 14,506.43 15,694.78 15,691.27 17,186.20 15,838.63 16,947.46 17,473.45 16,339.32 16,438.45
TCS
OPEN
505.25 600.00 680.00 380.00 527.00 534.00 620.00 625.00 696.00 750.70 735.45 763.10
CLOSE
11,403.25 14,625.25 14,493.84 15,670.31 15,666.64 17,126.84 15,896.28 16,926.22 17,464.81 16,357.96 16,429.55 17,527.77
CLOSE
623.20 699.75 389.70 526.40 527.00 619.35 626.35 687.20 749.75 735.45 761.00 780.80
X*Y 397.0 1 427.3 9 73.00 309.0 1 0.00 146.2 2 -7.51 68.36 23.55 12.95 1.91 15.38
X*X 289.3 4 660.4 9 2.92 64.32 0.03 83.72 56.40 47.20 9.30 40.70 0.30 43.96
Y*Y 544.7 6 276.5 6 1822. 44 1484. 56 0.00 255.3 6 1.00 99.00 59.60 4.12 12.04 5.38
(Y-STOCK AVG)2 347.450 142.325 2245.812 1144.469 21.902 127.238 13.690 27.563 9.120 45.293 1.513 5.664
1 0
M.S.R.C.A.S.C
2011
51.41 1.85 289.0 0 118.3 7 0.00 98.01 5207. 17
140.897 36.724 151.290
Apr-10 May10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
17,555.04 17,536.86 16,942.82 17,679.34 17,911.31 18,027.12 20,094.10 20,272.49 19,529.99 20,621.61 18,425.18 17,982.28
17,558.71 16,944.63 17,700.90 17,868.29 17,971.12 20,069.12 20,032.34 19,521.25 20,509.09 18,327.76 17,823.40 19,445.22
786.90 756.00 742.00 748.00 846.00 844.00 928.80 1,053.00 1.067.55 1,165.00 1,157.20 1,190.00
766.00 742.00 751.15 841.10 843.85 922.55 1,051.80 1,076.70 1,165,05 1,157.15 1,112.95 1,182.50
-0.05 6.25 5.50 13.32 -0.08 105.4 8 -4.10 -8.35 45.74 7.45 12.49 46.15 1697. 07
0.00 11.42 19.98 1.14 0.11 128.3 7 0.10 13.76 25.10 123.6 5 10.69 66.26 1699. 29
86.68 175.3 0 5.06 83.36 0.45 14.59 32.15 5129. 47
21.252 72.932 6.003 19.625 28.837 72.590 0.001 4546.957
Table showing stock prices related to INFOSYS for April 2009March 2011
S ENSEX Month Apr-09 May09 Jun-09 Jul-09 Aug-09 Sep-09

1 0 OPEN
9,745.77 11,635.24 14,746.51 14,506.43 15,694.78 15,691.27
INF OSYS
OPEN
1,326.00 1,515.00 1,605.00 1,776.80 2,060.00 2,139.80
CLOSE
11,403.25 14,625.25 14,493.84 15,670.31 15,666.64 17,126.84
CLOSE
1,507.30 1,062.00 1,776.90 2,063.00 2,132.30 2,308.40
X*Y 232.5 3 147.5 2 -18.31 129.6 0 -0.63 72.10
X*X 289.3 4 660.4 9 2.92 64.32 0.03 83.72
Y*Y 186.8 7 32.95 114.7 0 261.1 5 12.32 62.09
(Y-STOCK AVG)2 80.461 1.082 36.120 131.332 1.416 10.112
M.S.R.C.A.S.C
2011
7.08 3.42 1.51 155.0 0 0.06
54.170 42.903 12.041 60.063 24.503
16,339.32 16,438.45 17,555.04 17,536.86 16,942.82 17,679.34 17,911.31 18,027.12 20,094.10 20,272.49 19,529.99 20,621.61 18,425.18 17,982.28
16,429.55 17,527.77 17,558.71 16,944.63 17,700.90 17,868.29 17,971.12 20,069.12 20,032.34 19,521.25 20,509.09 18,327.76 17,823.40 19,445.22
2,470.00 2,636.00 2,620.00 2,697.00 2,655.00 2,801.00 2,781.00 2,707.00 3,044.00 2,988.10 3,040.00 3,449.00 3,133.00 3,025.00
2,601.60 2,615.10 2,736.00 2,657.55 2,788.55 2,788.55 2,707.10 3,041.00 2,969.60 3,049.45 3,445.00 3,116.30 3,003.05 3,236.75
Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
58.370 50.980 7.023 74.304 205.923 78.323 0.001 1086.732
66.73 107.3 1 13.57 54.13 1109. 57
25.10 123.6 5 10.69 66.26 1699. 29
93.12 17.22 44.22 1437. 77
Table showing stock prices related to HCL for April 2009- March 2011
SENSE X
HCL CLOSE
11,403.25 14,625.25
Month Apr-09 May09

1 0
OPEN
9,745.77 11,635.24
OPEN
102.5 134.9
CLOSE
129.85 167.95
X*Y 453.8 3 629.6 5
X*X 289.3 4 660.4 9
Y*Y 711.8 2 600.2 5
(Y-STOCK AVG)2 483.120 392.040
M.S.R.C.A.S.C
2011
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May10 Jun-10 Jul-10 Aug-10
17,186.20 15,838.63 16,947.46 17,473.45
15,896.28 16,926.22 17,464.81 16,357.96
2,301.00 2,195.00 2,399.00 2,606.00
2,205.40 2,383.95 2.605.25 2,476.70
31.17 59.15 26.23 31.64 2.93 -5.24 0.09 4.93 22.48 -0.46 -0.88 139.8 1 0.76 -7.61
56.40 47.20 9.30 40.70 0.30 43.96 0.00 11.42 19.98 1.14 0.11 128.3 7 0.10 13.76
17.22 74.13 73.96 24.60 28.41 0.62 19.62 2.13 25.30 0.18 7.08 152.2 8 5.95 4.20 177.4 2
78.323 15.288 15.210 93.316 0.397 30.140 0.073 37.946 0.109 26.317 54.170
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
14,746.51 14,506.43 15,694.78 15,691.27 17,186.20 15,838.63 16,947.46 17,473.45 16,339.32 16,438.45 17,555.04 17,536.86 16,942.82 17,679.34 17,911.31 18,027.12 20,094.10 20,272.49 19,529.99 20,621.61 18,425.18 17,982.28
14,493.84 15,670.31 15,666.64 17,126.84 15,896.28 16,926.22 17,464.81 16,357.96 16,429.55 17,527.77 17,558.71 16,944.63 17,700.90 17,868.29 17,971.12 20,069.12 20,032.34 19,521.25 20,509.09 18,327.76 17,823.40 19,445.22
172.7 187.25 241 300 342 305 343.9 372 342 369.9 355 383 382.55 369 394.25 390 423.25 405 404 456.05 492.85 445
185.7 240.45 299.3 339.6 305.45 336.25 371.35 346.45 367.45 357.8 394.25 382.55 364.9 392.3 383.55 419.75 404.2 403.8 456.05 493.8 442.15 476.5
-12.88 227.8 5 -4.35 120.7 8 80.28 70.42 24.34 43.83 4.09 -21.68 0.22 0.41 -20.61 6.75 -0.89 86.45 1.40 1.11 64.53 -92.07 33.65 57.63 1754. 72
2.92 64.32 0.03 83.72 56.40 47.20 9.30 40.70 0.30 43.96 0.00 11.42 19.98 1.14 0.11 128.3 7 0.10 13.76 25.10 123.6 5 10.69 66.26 1699. 29
72.250 236.852 30.803 10.758 133.865 7.508 63.521 40.450 23.232 86.676 2.592 54.908 8.585 84.640 25.000 66.912 12.816 224.700 0.001 3011.263
58.22 20.25 0.09 165.8 9 68.56 105.8 8 50.13 3991. 33
1 0
M.S.R.C.A.S.C
2011
56.70 807.1 3 585.1 6 174.2 4 114.2 8 105.0 6 63.68 47.20 55.35 10.69 122.3 2 0.01 21.25 39.82 7.34
8.009 562.164 379.860

Risk and Return of Equity Investment

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STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

1.1 Background of the Study

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

1.2 STOCK MARKET

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

1.2. b) Market participants

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

1.2. c) The stock market, individual investors, and financial risk

1.2. d) Stock market index

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

IMPORTANCE OF STOCK MARKET Function and purpose

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

Relation of the stock market to the modern financial system

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

1.3 INDIAN STOCK MARKET

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

Reason for Investment

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

The main advantages of equity shares are listed below:

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

Unsystematic risk Business risk Financial risk

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

Holding period return:

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

CHAPTER-II RESEARCH DESIGN

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

2.1 Title of the study

2.2 Statement of the Problem

2.3 Objectives of the Study

To analyze the risk and returns of the companies.

2.4 Scope of the Study

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

HCL TCS WIPRO INFOSYS TECH MAHINDRA

2.5 Methods of Data Collection

Data collected are of Secondary Data source.

2.6 Tools of Analysis

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

2.8 Chapter Scheme

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

CHAPTER-III INDUSTRY & COMPANY PROFILES

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

3.1 INDUSTRY PROFILE

INDIAN INFORMATION TECHNOLOGY SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR

STUDY ON RISK AND RETURN OF EQUITY INVESTMENT IN IT SECTOR