Description
The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions.
ACKNOWLEDGEMENTS
First and foremost, I praise and thank God Almighty from the depth of my heart, which has been the source of strength in the completion of this project work. It is my profound concern to thank the principal, Fr. Josekutty P.D, M. COM, Kristu Jayanti College who paved the path for offering me this opportunity and avenues of infinite possibilities of knowledge. I further express my deep sense of gratitude to Prof. A.M.Tatti MBA, coordinator of MBA department, Kristu Jayanti College for his constant encouragement and valuable help. I wish to extend my sincere and profound thanks to prof.Arun Kumar, MBA dean Kristu Jayanti college for the help extend towards me during the period of dissertation work. And I am deeply indebted to Prof. Aloysius Edward, Kristu Jayanti College, for his guidance, assistance and for giving all the formal support to conduct this study and for completing this project work. I am also thankful to the librarian, Kristu Jayanti College for their encouragement and valuable help. I take this opportunity to acknowledge indebt ness to Mr. Liju Varghese Thomas, Mathew Abraham, Jino Thomas and Tony Chacko for their earnest support and cooperation in the course of my study. I am also thankful to my parents and friends for their encouragement and support Finally I would like to express my sincere gratitude to all those who spend their valuable time for providing necessary data for this organizational study.
Abhilash p.j
EXECUTIVE SUMMARY
To day the avenues for investment are abundant like bank deposits, property insurance, shares etc. but taking an investment decision would be more critical. Analysis the risk associated with every investment option and evaluate the return out of that investment become very crucial .since the globalization and the privatization move of the Indian economy during the last decades of the 20 th century pumped billions of foreign capital into the Indian economy as in the form of FDI and FII that could be one reason to drive the Indian economy into newer heights .Indian stock market also part of this unparallel growth. The confidence of primary and secondary market investors also increased several fold, these changing scenario encourage people to invest more in shares and bond who earlier park their saving as fixed deposits and other type of investment like property ,gold etc,
The topic ‘risk and return analyses relevant in this circumstance .i have been selected five sectors which have an important role in propelling Indian growth engine. The sectors are banking, pharmaceutical, automobile, information technology, automobile and oil and gas sector. These entire five sectors have a different perspective in terms of profit making, growth, employment generation etc. the companies come under study are HDFC Bank, ICICI bank, SBI, Dr.reddy’s lab, Ranbaxy, sun pharma, BPCL, ONGC, Reliance, Infosys ,TCS, Wipro, M&M, Tata motors, Maruti Udyog ltd etc.
The stock price where taken from the S&P CNX Nifty .the stock price for the month of January, February and march 2007 .for calculating beta and standard deviation mathematical formula being used .the beta and standard deviation helps to find out total risk and systematic risk The main objectives are to calculating the beta and variance to help the investors to arrive at a decision of invest in the shares which offer maximum return with minimum risk and also to gain knowledge of the stock market .the findings and suggestion certainly would be help the investors.
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TABLE OF CONTENTS
CHAPTER NO
CONTENT
PAGE NO
1
INTRODUCTION
6-17
2
RESEARCH DESIGN
18-23
3
PROFILE OF THE INDUSTRIES
24-45
4
DATA ANALYSIS AND INTERPRETATION FINDINGS,CONCLUSIONS AND
46-105
5
RECOMMENDATIONS
106-109
BIBLIOGRAPHY
110
3
NO
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.1 4.11 4.12 4.13 4.14 4.16 4.17 4.18 4.19 4.2 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.28 4.29 4.3 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.4 4.41 4.42 4.43 4.44 4.45
LIST OF TABLES
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY-FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY -MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL-MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC -JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS-MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –MARCH TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORS-JANUARY TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORSFEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TATAMOTORS-MARCH
PAGE
56 57 58 60 61 62 64 65 66 68 70 71 72 73 75 76 77 79 80 81 82 84 86 87 90 91 92 94 95 96 98 99 100 102 103 104 106 107 108 110 111 112 113 114 115
4
NO
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.40 4.41 4.42 4.43 4.44 4.45
LIST OF GRAPH
PAGE NO
56 57 59 60 61 62 64 65 66 67 69 70 71 72 74 75 76 78 79 81 90 91 92 93 95 96 97 98 100 101 102 103 105 106 107 108 109 110 111 112 115 116 117 118 120
STOCK RETURN V/S MARKET RETURN OF HDFC –JANUARY STOCK RETURN V/S MARKET RETURN OF HDFC –FEBRUARY STOCK RETURN V/S MARKET RETURN OF HDFC -MARCH STOCK RETURN V/S MARKET RETURN OF ICICI –JANUARY STOCK RETURN V/S MARKET RETURN OF ICICI –FEBRUARY STOCK RETURN V/S MARKET RETURN OF ICICI -MARCH STOCK RETURN V/S MARKET RETURN OF SBI - JANUARY STOCK RETURN V/S MARKET RETURN OF SBI -FEBRUARY STOCK RETURN V/S MARKET RETURN OF SBI –MARCH STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –JANUARY STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –FEBRUARY STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –MARCH STOCK RETURN V/S MARKET RETURN OF RANBAXY –JANUARY STOCK RETURN V/S MARKET RETURN OF RANBAXY-FEBRUARY STOCK RETURN V/S MARKET RETURN OF RANBAXY –MARCH STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-JANUARY STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-FEBRUARY STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-MARCH STOCK RETURN V/S MARKET RETURN OF BPCL –JANUARY STOCK RETURN V/S MARKET RETURN OF BPCL –FEBRUARY STOCK RETURN V/S MARKET RETURN OF BPCL- MARCH STOCK RETURN V/S MARKET RETURN OF ONGC –JANUARY STOCK RETURN V/S MARKET RETURN OF ONGC –FEBRUARY STOCK RETURN V/S MARKET RETURN OF ONGC –MARCH STOCK RETURN V/S MARKET RETURN OF RELIANCE –JANUARY STOCK RETURN V/S MARKET RETURN OF RELIANCE –FEBRUARY STOCK RETURN V/S MARKET RETURN OF RELIANCE –MARCH STOCK RETURN V/S MARKET RETURN OF INFOSYS –JANUARY STOCK RETURN V/S MARKET RETURN OF INFOSYS –FEBRUARY STOCK RETURN V/S MARKET RETURN OF INFOSYS –MARCH STOCK RETURN V/S MARKET RETURN OF TCS –JANUARY STOCK RETURN V/S MARKET RETURN OF TCS –FEBRUARY STOCK RETURN V/S MARKET RETURN OF TCS-MARCH STOCK RETURN V/S MARKET RETURN OF WIPRO –JANUARY STOCK RETURN V/S MARKET RETURN OF WIPRO –FEBRUARY STOCK RETURN V/S MARKET RETURN OF WIPRO-MARCH STOCK RETURN V/S MARKET RETURN OF M&M –JANUARY STOCK RETURN V/S MARKET RETURN OF M&M –FEBRUARY STOCK RETURN V/S MARKET RETURN OF M&M –MARCH STOCK RETURN V/S MARKET RETURN OF MARUTI –JANUARY STOCK RETURN V/S MARKET RETURN OF MARUTI –FEBRUARY STOCK RETURN V/S MARKET RETURN OF MARUTI –MARCH STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-JANUARY STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-FEBRUARY STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-MARCH
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CHAPTER: I
INTRODUCTION TO THE RESERCH TOPIC
1.1 INTRODUCTION
Before 1990’s the main area of investment were bank deposits, gold, property and such other forms of tangible assets but for the past few years we had been witnessing a lot of investment opportunities coming up in the form of primary and secondary market since the globalization which had its inception during 90’s foreign capital flowing to India .new
multinational entered the market and a lot of investment opportunities were opened to the people who kept their saving in bank and other kind of fixed assets . The topic analysis of risk and return in the banking, pharmaceutical, IT, oil & gas and automobile had been selected because a lot of investors are making investment in the shares of different companies. 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.
The companies which I have been selected for research having different growth strategies and difference in revenue, profitability and market capitalization.
Currently (2007), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The Indian pharmaceutical is one of the fast growing sector not only in India but also the whole world There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields notwithstanding, generics are still a large part of the picture. London research company Global 6
Insight estimates that India’s share of the global generics market will have risen from 4% to 35% in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago.
Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and gas industry is among the largest contributors to the central and state exchequers in India. Its share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a capacity to process 148.97 million tones per year as of December 2006, are run by state-run companies. Economic Survey 2006-07 says: During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from 127.42 million tones in the previous year. During April-December 2006, the throughput was 107.42 million tones.
The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000. No other Indian industry has performed so well against the global competition. Today, India exports software and services to nearly 95 countries around the world. The share of North America (U.S. & Canada) in India’s software exports is about 61 per cent. In 1999-2000, more than a third of Fortune 500 companies outsourced their software requirements to India
The Indian automotive industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automotive industry has witnessed is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes.
The data collected is mainly secondary in nature and no questionnaire has been formulated for the research .the data(that is the stock price and S&P CNX Nifty index)has been 7
collected from various websites and has been analyzed and interpreted in order to find out the spread of return with the help of standard deviation and beta.
1.2 SUBJECT BACKGROUND OF THE RESEARCH TOPIC
A company ,which has a high intrinsic worth ,is not necessarily the best stock to buy .it may have no growth prospects or it may be overpriced .similarly a company that performs well during any one year may not be the best to buy .on the contrary ,a company which has been badly for sometime might have turn the corner and it may be the best to buy ,as its shares may be under prices and it has good prospects of growth hence an analysis of risk or return guides an investor in proper profitable investment .
1.2.1 RETURN
Return is the primary motivating force that drives investment .it represents the reward for undertaking investment .since the game of investing is about returns, measurement of realized return is necessary to assess how well the investment manager has done. In addition historical return is often used as an important input on estimating future return.
THE COMPONENT OF RETURN The return of an investment consist of two component Current return the component that often comes to mind when one is thinking about return is the periodic cash flow such as dividend or interest generated by the investment .current return is measured as the periodic income in relation to the beginning price of the investment. Capital return the second component of return is reflected in the price change called the capital
return .it is simply the price appreciation (or depreciation) divided by the beginning price of the assets. Thus total return =current return + capital return
1.2.2 RISK
Risk refers to the possibility tat the actual outcome of an investment will differ from its expected outcome .more specifically, most investors are concerned about the actual outcome being less than the expected outcome .the wider the range of possible outcomes the greater the risk.
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DIFFERENT TYPE OF RISK
Forces that contribute to variance in return-price or dividend-constitute the element of risk .some influence are external to the organization can not be controlled other influence are internal to the organization that are controllable to a large extent .in an investment decision those factors which is uncontrollable is called systematic risk .on the other hand those factors are controllable and internal to the organization are called unsystematic risk these are the two broad categories of risk .
SYSTEMATIC RISK.
MARKET RISK
This is the most familiar of all risks. Also referred to as volatility, market risk is the the day-to-day fluctuations in a stock's price. Market risk applies mainly to stocks and options. As a whole, stocks tend to perform well during a bull market and poorly during a bear market volatility is not so much a cause but an effect of certain market forces. Volatility is a measure of risk because it refers to the behavior, or "temperament", of your investment rather than the reason for this behavior. Because market movement is the reason why people can make money from stocks, volatility is essential for returns, and the more unstable the investment the more chance there is that it will experience a dramatic change in either direction. Market risk is caused by investors reaction to the tangible as well as intangible events .expectation of lower corporate profile in general may cause the larger body of common stocks to fall in price .investors are expressing their judgment that too much is being paid for earning in the light of anticipated events .the basis for the reaction is a set of real, tangible, events – political, social or economic.
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INTEREST RATE RISK – Interest rate risk is the risk that an investment's value will change as a result of a change in interest rates. This risk affects the value of bonds more directly than stocks. the root cause of interest rate risk lies in the fact that ,if the RBI increase or decrease the interest rate (repo rate ) the interest on government securities rise or fall ,the rate of return demanded on alternative investment vehicle ,such as stocks and bonds issued in the private sector ,rise or fall .in other words as the cost of money changes for nearly risk free securities, the cost of money to more risk prone issues will also change. INFLATION RISK (PURCHASING POWER RISK) The loss of purchasing power due to the effects of inflation. When inflation is present, the currency loses its value due to the rising price level in the economy. The higher the inflation rate, the faster the money loses its value. LIQUIDITY RISK The uncertainty associated with the ability to sell an asset on short notice without loss of value. A highly liquid asset can be sold for fair value on short notice. This is because there are many interested buyers and sellers in the market. An illiquid asset is hard to sell because there there few interested buyers. This type of risk is important in some project investment decisions but is discussed extensively in Investment courses. FOREIGN EXCHANGE RISKS Uncertainty that is associated with potential changes in the foreign exchange value of a currency. There are two major types: translation risk and transaction risks. TRANSLATION RISKS Uncertainty associated with the translation of foreign currency denominated accounting statements into the home currency. This risk is extensively discussed in Multinational Financial Management courses.
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TRANSACTIONS RISKS Uncertainty associated with the home currency values of transactions that may be affected by changes in foreign currency values. This risk is extensively discussed in the Multinational Financial Management courses.
UNSYSTEMATIC RISK
Unsystematic risk are those risk which is firm specific or peculiar to a firm or industry the different type of unsystematic risk are discussing below. BUSINESS RISK The uncertainty associated with a business firm's operating environment and reflected in the variability of earnings before interest and taxes (EBIT). Since this earnings measure has not had financing expenses removed, it reflects the risk associated with business operations rather than methods of debt financing. This risk is often discussed in General Business Management courses. Business risk can be divided into two board categories: external and internal .internal business risk is largely associated with the efficiency with which a firm conduct its operation within the border operating environment imposed upon it .each firm has it s on internal risk, and the degree to which it is successful in coping with them is reflected in operating efficiency. FINANCIAL RISK The uncertainty brought about by the choice of a firm’s financing methods and reflected in the variability of earnings before taxes (EBT), a measure of earnings that has been adjusted for and is influenced by the cost of debt financing. This risk is often discussed within the context of the Capital Structure topics. By Engaging in debt financing the firm changes the characteristics of the earning stream available to the common stock holders, specifically ,the reliance in debt financing ,called financial leverage ,has at least three important effect on common stock holders .1)increase the variability of their return 2)effect their expectation concerning to the return 3)increase the risk of being ruined . 11
1.2.3 INVESTMENT
Investment is the employment of the fund with aim of achieving additional growth in value .an investment is a sacrifice of current money or other resources for future benefits .it is the allocation of monetary resources to assets that are expected to yield gain or positive return over a given periods of time .it involves the commitment of resources which have saved or put away from current consumption in the hope that some benefits will acure in future. The three key aspects of any investment are time capital gain and risk the sacrifice takes place now and is certain .the benefits are expected in the future and tend to be uncertain. Risk: investment is considered to involve limited risk and is confined to those avenues where the principle is safe. No investments are completely risk free Capital gain: If purchase of securities is preceded by proper investigation and analysis and review to receive a stable return over a period of time it is termed as investment. Time: A longer time, fund allocation is termed as investment. The investor constantly evaluates the work of a security. There has to be a constant review of securities to find out whether it is a suitable investment. The investment is an attempt to carefully plan, evaluate and allocate funds in various investments which offer safety of principal, moderate and continuous return and long term commitment.
1.2.4 INVESTMENT DECISION
In stock market parlance investment decision refers to making a decision regarding the buy and sell orders. As we know economic analysis or factors play in any investment decision which is made for making a gain and better returns. Economic analysis and forecasting company performance and of returns is necessary for making investment. Any investment is risky and such investment decision is difficult to make. It is based on availability of money and information on economy industry and company, share prices are ruled by expectation of the market and the market sentiments. As we know these decisions are influenced by availability of money and flow of information. What to buy and sell also depends on the fair value of shares and the extent of over valuation and under valuation. For making such a decision the common investors have to depend more up on a study of fundamental rather than technical, although technical are also important 12
1.2.5 PRIMARY AND SECONDARY CAPITAL MARKET
Primary market is the market for issue of new securities .it therefore essentially consists of the companies issuing securities, he public subscribing to these securities, he regulatory agencies like SEBI and the government, merchant bankers and bank who underwrite the issues and help in collecting subscription money from the public. 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.
For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.
1.2.6 STOCK MARKET
Stock market is place where the stocks or shares are purchased and sold .stock exchange is an organized market where securities are traded .these securities are issued by the government, semi-government, public sector undertakings and companies for borrowing funds and raising resources. securities are defined as any monetary claims and includes stock ,shares, debentures ,bonds etc .if these securities are marketable as in the case of government stocks; they are transferable by endorsement and are like moveable property .they are tradable on the stock exchange .
Exchanges are located all over the world with the most famous one being the New York stock exchange. The NYSE annually traded almost 14 trillion dollars worth of capital .thousands of stocks are listed on this exchange. when you buy a stock you will need to learn which exchanges list it other than locating quote in the news paper with online trading and the automation of order system ,there is very little reason to determine where the stock trades from the customers viewpoint.
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There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE), which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years, there has been a rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the country’s stage of economic development. The number of listed companies increased from 5,968 in March 1990 to about 20,000 by May 2006 and market capitalization has grown almost 11 times during the same period. The debt market, however, is almost nonexistent
1.2.7 BOMBAY STOCK EXCHANGE LIMITED (BSE)
Bombay Stock Exchange Limited 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 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The day-to-day operations of the Exchange are managed by the Managing Director and a management team of professionals. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and 14
enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.
1.2.8 THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000
It is the largest stock exchange in India and the third largest in the world in terms of volume of transactions. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India. In March 2006, the NSE had a total market capitalization of 4,380,774 crore INR making it the second-largest stock market in South Asia in terms of market-capitalization.
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1.2.9 S&P CNX NIFTY
S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. The average total traded value for the last six months of all Nifty stocks is approximately 45.24% of the traded value of all stocks on the NSE .Nifty stocks represent about 57.92% of the total market capitalization as on April 10, 2007. Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.08% .P CNX Nifty is professionally maintained and is ideal for derivatives trading
1.2.10 TYPES OF STOCKS
1. BLUE CHIP STOCKS the term ‘blue chip’ comes from poker, where the blue chip carry the higest value .large established firms with a long record of profit growth, dividend payout and a reputation for quality management, products and service are referred to as blue chip companies. these firms are generally leaders in their industries and are considered likely candidates for long term growth .because blue chip companies are held in such high esteem, they often set the standard by which other companies in their field are measured .well known blue chip companies includes IBM, Coco-Cola, general electric and McDonald 2. PENNY STOCKS Penny stocks are low priced speculative stock, that are very risky .companies with a short or erratic history of revenues and earnings issue them .they are the lowest of the low in price and many stock exchanges choose not trade them. 3. INCOME STOCKS Income stocks are those stocks that pay higher than average dividend over a sustained period .these above average dividend tends to be paid by large, established companies with stable 16
earnings. Income stocks are popular with investors who want steady income for a long time and who do not need much growth in their stocks value . 4) VALUE STOCK A value stock is a stock that is currently selling at a low price .companies that have good earning and growth potential but whose stock price do not reflect this are considered value companies .both the market and investors are largely ignoring their stocks. Investors who buy value stocks believe that thes3e stocks are only temporarily out of favor and will soon experience great growth .factors such as new management, a new product or operation that are more efficient may make a value stock grow quickly.
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CHAPTER 2:
RESEARCH DESIGN
2.1 TITLE OF THE DISSERTATION
The title of the dissertation is “Analysis of risk and return in banking,pharmaceutical, InfoTech, oil &gas and automobile sector”
2.2 STATEMENT OF THE PROBLEM
Security analysis is built around the idea that investors are concerned with two principal properties inherent in securities: the return that can be expected from holding a security, and risk that the return that is achieved will be less than the return that was expected. The primary purpose of this dissertation is to focus upon return and risk and how they are measured. Investors want to maximize expected returns subjected to their tolerance for risk. Return is the motivating force and the principle reward in the investment process and it is the key method available to investors in comparing alternative investment. Measuring historical return allows investors to assess how well have done, and it plays a part in the estimation of future unknown returns. Making the money only the half of the battle safeguarding the hard earned money is the top most concern for many investors, simply investing some where and waiting for the blessings of the goddess of luck doesn’t make any sense proper analysis of risk and the expected return is very important to become an efficient investor. Keeping this point in mind dissertation titled ‘risk and return analysis’ has been chosen to analyze fifteen different companies from five different sectors namely automobile, InfoTech, Oil&gas, Pharma and Banking .The share price and market price for three consecutive month starting from January 2007 to march 2007 ,were selected for analysis This study is conducted to find out how the expected return is calculated from an investment and risk associated with that investment by measuring beta (?) and standard deviation. .
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2.3 REVIEW OF LITERATURE
In the area of risk and return analysis two well known economist made effort to study the relation between risk and return and they are the people who quantify the risk and return aspects of an instrument .they are Harry markowitz and William Sharpe. Very broadly the investment process consists of two tasks. The first task is security analysis which focuses on assessing the risk and return characteristics of the available investment alternatives. The second task is portfolio selection which involves choosing the best possible portfolio from the set of feasible portfolio.
Portfolio theory, originally proposed by Harry markowitz in the 1950’s was the first formal attempt to quantify the risk of portfolio and develop a methodology for determining the optimal portfolio .prior to the development of portfolio theory ,investors dealt with the concept of return and risk somewhat loosely .Harry markowitz was the first person to show quantitatively why and how diversification reduce risk .in recognition of his seminal contribution in this field he was awarded the Nobel prize in economics in 1990. Harry markowitz developed an approach that helps the investors to achieve his optimal portfolio position .in this contest William Sharpe and others try to find out an answer for a question ,what is the relationship between risk and return and they developed capital asset pricing theory .(CAPM) The CAPM, in essence, predicts the relationship between the risk of an asset and its expected return .this relationship is very useful in two important ways .first, it produces a bench mark for evaluating various instrument .second it helps us to make an informal guess about the return that can be expected from an assets that has not yet been traded in the market.
De Bondt and Thayler study the price in relation to book value in a universe of all NYSE and American Stock Exchange equity issue. It has explained the relation between the market price and book value, with stock being assigned in quintiles from lowest price to book ratios. The earning yields effect on stock return is significantly positive only in January for the sub period.
Piotroski investigates whether fundamental analysis can be used to provide abnormal returns, and right shift the returns spectrum earned by a value investor. He focused on high book to
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market securities, and show that the mean return earned by a high book to market investor can be shifted to the right by at least 7.5% annually. The authors developed portfolio based on four fundamental conditions namely: Single Value P/E, Market Price <Book Value, established track recode on the shareholders return. Barely and Myers supported Quality of earning as a key performance measure. It is based on the following argument “the problem is that the earnings that firms report are book, or accounting figures, and as such reflect a series of more or less arbitrary choices of accounting methods. A switch in the depreciation method used for reporting purposes directly affects earning per share. other accounting choices which affect reported earning are the valuation of inventory, the procedures by which the account for two merging companies are combined the choice between expensing and capitalizing. The total value of the companies existing stock is equal to the discounted value of that portion of the total dividend stream which will be paid to the stock outstanding today. The net cash flow to share holders after paying for future investment is sometime s knows as “company’s cash flow”. This analysis is done at portfolio return on the excess returns for the market factors using CAPM.
2.4 SIGNIFICANCE OF THE STUDY
Indian security market moving to newer heights since from the last few years and the investors also getting reasonable income, that some times more than expected but the next day the price would be crumbling down like a glass house this is the picture of Indian stock market, means market is highly volatile and is still in the hands of speculators and gamblers. In this chaos where is the common investor who investing their hard earned money expecting a regular income and security of his investment so here it’s come the importance of risk and return analysis.
•
Compare different investment option in terms of risk and return .the popular conception is if the risk is high the return one can expect would be high and vice versa.
•
Risk and return analysis would help the investor to park his money in most appropriate investment avenue. The investors are two type risk taker and risk averter. If some one 20
wants to invest highly volatile stock with the expectation of high return he can go for that, another type of investor want regular income at the same time safety. • Risk and return analysis would help the investors to properly diversify his portfolio of securities. the measurement of beta will help the investor to quantify the systematic risk and unsystematic risk associated with the a particular investment • Investor can make portfolio revision at the right time with minimum cost by analyzing the risk and return of securities. Portfolio revision is an inevitable part of an investment decision. • To make estimation on the amount of income one can expect from an investment is possible by analyzing the historical return of a particular stock. • • To quantify the systematic (non-diversifiable )and unsystematic (diversifiable )risk Analysis the expected return from an investment option.
2.5 OBJECTIVES OF THE STUDY
• • To analyze the risk and return of the companies. To measure actual return and expected returns with the help of deviation and beta • • • To study the volatility of companies in comparison with the market. To guide the investors of various investment opportunities To find out the risk less companies to invest in using beta values. standard
2.6 SCOPE OF THE STUDY
In the national stock exchange (NSE)there are 1185 companies are listed so far out of this fifty companies are very important ,which form the S&P CNX Nifty index .From this fifty companies fifteen companies chosen BANKING SECTOR-SBI, ICICI BANK, HDFC BANK PHARMACEUTICAL SECTOR-SUN PHARMA, DR.REDDY’S LAB, RANBAXY OIL&GAS SECTOR-ONGC, BPCL, RELIANCE 21 companies have been selected were chosen five different sectors ,the
INFOTECH –WIPRO, INFOSYS, TCS AUTOMOBILE UDYOG LTD SECTORE –TATA MOTORS,MAHINDRA &MAHINDRA,MARUTI
2.7 METHODOLOGY
The following measures were used to analyze the data collected; MS excel is used in order to calculate standard deviation and beta as well as to draw charts. The other kinds of formulae used are Computation of standard deviation Rate of return = (closing stock-opening stock)/ (opening stock)*100 Standard deviation calculated as per the excel formulae Variance= square of the standard deviation Computation of beta:
Stock price(Y) = (closing-opening)/ (opening)*100 (of stock price)
Market return(X) = (closing-opening)/ (opening)*100 (of index price)
BETA (?) = (N*(?X*Y) – (?X*?Y))/ (N*(? X^2)-(?X) ^2)
2.8 SOURCES OF DATA
The data’s which is collected from various secondary sources like internet, journals and other publications .the stock price and market index were collected from the national stock exchange official website(www.nse_india.com) apart from that data have been taken from different company websites .
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2.8 LIMITATIONS OF THE STUDY
• • • The area of study is limited to few sectors of group a stock. The study is limited to data of the last three months only. Risk can not be measured accurately as the market condition is always fluctuating and uncertain. • 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
2.9 CHAPTER SCHEME
This dissertation consists of five chapters, each chapter deals with different aspects of this project. The first chapter contains the introduction to the dissertation and the theoretical background of the problem. In this chapter gives an idea about different type of return and risk apart from that brief about Indian stock exchanges like BSE and NSE. The second chapter deals with the way in which the study has been conducted. the important topics of this chapter is statement of the problem ,significance of this study ,scope, methodology and limitation of the study etc. The third chapter would give an idea of the current Indian economy and the industry have been selected and also about the companies come under study. It’s been mentioned the importance of each sector to the Indian economy as well. The fourth chapter deals with the data analysis and interpretation section, here data’s been analyzed by using mathematical formula to find out the expected return, beta and standard deviation. The final and fifth chapter consists of finding derived from this study, conclusion and the recommendations to the investors.
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CHAPTER: 3
PROFILES
3.1 THE INDIAN ECONOMY –AN OVERVIEW
Economics experts and various studies conducted across the globe envisage India and china to rule the world in the 21st century. For over a century the United States has been the largest economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the us and the rich countries of Europe to the two Asian giants- India and China. The rich countries of Europe have seen the greatest decline in global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of about 1 percentage points each. Within Asia, the rising share of China and India has more than made up the declining global share of Japan since 1990. During the seventies and the eighties, ASEAN countries and during the eighties South Korea, along with China and India, contributed to the rising share of Asia in world GDP. US and the rich countries of Europe to the two Asian giants- India and China. According to some experts, the share of the US in world GDP is expected to fall (from 21per cent to 18 per cent) and that of India to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China. By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years.
INDIA - A GROWING ECONOMY In a robust demonstration of the nascent strength, the Indian economy, after growing at 8.5% and 9.5% in the two previous year is projected to grow at 11% in the current year 200708.growth of gross domestic product (GDP) at constant prices in excess of 8.0%has been achieved by the economy in only five years of recorded history, and two out of these five are in 24
the last three years Growth in the Indian economy has steadily increased since 1979, averaging 5.7% per year in the 23-year growth record. In fact, the Indian economy has posted an excellent average GDP growth of 6.8% since 1994 (the period when India's external crisis was brought under control). However, in comparison to many East Asian economies, having growth rates above 7%, the Indian growth experience lags behind. The tenth five-year plan aims at achieving a growth rate of 8% for the coming 2-3 years. Though, the growth rate for 2004-05 is less than that of 2003-04, it is still among the high growth Rates seen in India since independence. Many factors are behind this robust performance of the Indian economy in 2004-05. High growth rates in Industry & service sector and a benign world economic environment provided a backdrop conducive to the Indian economy. Another positive feature was that the growth was accompanied by continued maintenance of relative stability of prices. However, agriculture fell sharply from its 2003-04 level of 9 % to 1.1% in the current year primarily because of a bad monsoon. Thus, there is a paramount need to move Indian agriculture beyond its centuries old dependency on monsoon. This can be achieved by bringing more area under irrigation and by better water management.
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3.2 INDUSTRY PROFILE
3.2.1 BANKING SECTOR
Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.
In the early 1990s the then Narasimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. 26
All this led to the retail boom in India. People not just demanded more from their banks but also received more.
Currently (2007), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility-without any stated exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector, the demand for banking services-especially retail banking, mortgages and investment services are expected to be strong. M&As, takeovers, asset sales and much more action will happen on this front in India. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks
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3.2.2 PHARMACEUTICAL INDUSTRY
The first Indian pharmaceutical company, Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, appeared in Calcutta in 1930. For the next 60 years, most of the drugs in India were imported by multinationals either in fully-formulated or bulk form. The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970, enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out, Indian companies started to take their places. They carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that India’s share of the global generics market will have risen from 4% to 35% in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago. Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share. In terms of the global market, India currently holds a modest 3 % share, but it has been growing at approximately 10% per year. India gained its foothold on the global scene with its 28
innovatively-engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research and development The important players in the Indian pharmaceutical sector are dr.reddy’s lab, sun pharma ,Ranbaxy, biocon ,cipla, Serum Institute of India ,Wockhardt, Aventis Pharma, Novo Nordisk
3.2.3 OIL&GAS INDUSTRY
Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and gas industry is among the largest contributors to the central and state exchequers in India. Its share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a capacity to process 148.97 million tonnes per year as of December 2006, are run by state-run companies. Economic Survey 2006-07 says: During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from 127.42 million tones in the previous year. During April-December 2006, the throughput was 107.42 million tones. Crude oil production in 2006-07 up to December 2006 was 25.40 million tones, up 6.03 per cent from 24.03 million tones in the first nine months of 2005-06. Natural gas production up to December 2006 at 23.53 billion cubic meters, however, was down 2.42 per cent from 24.10 billion cubic meters in the same period of the previous year. Thus, on the aggregate, oil and oil equivalent of gas (O+OEG) production in 2006-07 up to December 2006, year-on-year, increased by only about 1.85 per cent. India ranks sixth in the world in terms of petroleum demand and by 2010, India is projected to replace South Korea and emerge as the fourth-largest consumer of energy, after the United States, China and Japan. Since India is dependent on imports for nearly 70 per cent of its petroleum requirements, energy security has become a prime Government concern. In recent years this has taken the form of trying to get a stake in oil and gas fields from Myanmar to central Asia and Africa. However, the major thrust still lies in searching for hydrocarbons in onshore and offshore blocks in India. Recent finds are making oil majors take notice of the potential in prospective basins. Besides, the cost effectiveness of refining in India is drawing global players here. While 29
on the one hand, international companies are looking for a share in the fast-growing refinery sector, domestic oil companies are being invited by countries such as Yemen, Nigeria and Saudi Arabia to pick up stake in existing refineries and also set up Greenfield units.
Growing energy demand of India and necessity to service that to ensure economic growth is not compromised, presents business opportunities in the complete value chain of oil and gas sector. Exploration for domestic production growth, development of discovered fields, transportation of crude oil, gas and products, refining to service the petroleum product domestic demand and exports, retailing infrastructure; prospective blocks to encourage all these sectors provide business and investment opportunities.
The main players of Indian oil and gas sector are ONCE,HPCL,BPCL, Reliance energy ,cairn energy ,BP, British gas ,shell etc
3.2.4 INFOTECH INDUSTRY
The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000. No other Indian industry has performed so well against the global competition. Today, India exports software and services to nearly 95 countries around the world. The share of North America (U.S. & Canada) in India’s software exports is about 61 per cent. In 1999-2000, more than a third of Fortune 500 companies outsourced their software requirements to India According to a NASSCOM-McKinsey report, annual revenue projections for India’s IT industry in 2008 are US $ 87 billion and market openings are emerging across four broad sectors, IT services, software products, IT enabled services, and e-businesses thus creating a number of opportunities for Indian companies. In addition to the export market, all of these segments have a domestic market component as well. Today IT & ITES sector contribute over 7.5 % of the overall GDP growth of India and its account for 35% of the total export from in India .in terms of employment generation this sector alone giving 2.2 million jobs .The market capitalization of Indian IT companies come around US $225 billion. Government of India (GOI) has taken a major step towards promoting the domestic industry and achieving the full potential of the Indian IT entrepreneurs by forming a new ministry for IT . Constraints have been comprehensively identified and steps taken to 30
overcome them and also to provide incentives. Thus for example, venture capital has been the main source of finance for software industry around the world. However, majority of the software units in India is in the small and medium enterprise sector and there is a critical shortage of venture capital kind of support. India’s most prized resource in today’s knowledge economy is its readily available technical work force. India has the second largest English-speaking scientific professionals in the world, second only to the U.S. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. Government of India is stepping up the number and quality of training facilities in the country to capitalize on this extraordinary human resource.
3.2.5 AUTOMOBILE INDUSTRY
The Indian automotive industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes. Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies, initiated by the Government of India, have played an equally important role in bringing the Indian Automotive industry to great heights. It is estimated that the sale of passenger cars have tripled compared to their sale in the last five years. Thus, the sale of cars has reached a figure of 1 million users and is expected to increase further. It's also to be noted that the demand for luxurious models, SUVs, and mini-cars for family owners, have shot up, largely due to increase in the consumer's buying capacity. The increased demand for Indian automobiles has resulted in a large number of multinational auto companies, especially from Japan, U. S. A., and Europe, entering the Indian market and working in collaboration with the Indian firms. Also, the institutionalization of automobile finance has further paved the way to sustain a long-term high growth for the industry. A well developed transport network indicates a well developed economy. For rapid development a well-developed and well-knit transportation system is essential. As India's transport network is developing at a fast pace, Automobile Industry is growing too. Also, the industry has strong backward and forward linkages and hence provides employment to a large 31
section of the population. Thus the role of Automobile Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by the Automobile Industry. It includes the manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly divided into the Car manufacturing, two-wheeler manufacturing and heavy vehicle manufacturing units. The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd.,Hyundai Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name a few. The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like buses, trucks, defense vehicles, auto rickshaws and other multi-utility vehicles are manufactured by Tata-Telco, Ashok Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.
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3.3 PROFILE OF THE COMPANIES
ICICI BANK
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing mediumterm and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended March 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank has a network of 741 branches (including 48 extension counters) and over 3300 ATMs in India and presence in 30 International locations. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. . ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary has established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of market capitalization
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HDFC BANK
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB". Currently (2007), HDFC Bank has over 600 branches located in over 300 cities of India, and all branches of the bank are linked on an online real-time basis. The bank offers many innovative products & services to individuals, corporate, trusts, governments, partnerships, financial institutions, currently (2007)
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STATE BANK OF INDIA
State Bank of India (SBI) is the largest bank in India. It is also, measured by the number of branch offices and employees, the largest bank in the world. Established in 1806 as Bank of Bengal, it remains the oldest commercial bank in the Indian Subcontinent and also the most successful one providing various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The government nationalized the bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In recent years the bank has focused on reducing its huge staff through Golden handshake schemes and computerizing its operations. The roots to the State Bank of India are traceable to the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27 January 1921, and named the reorganized banking entity the Imperial Bank of India. All these Presidency banks were incorporated as joint stock companies, and were the result of the royal charters. The Imperial Bank of India continued to remain a joint stock company. Until the establishment of a central bank in India the Imperial Bank and its early predecessors served as the nation's central bank printing currency. State Bank of India has often acted as guarantor to the Indian Government, most notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9400 branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500 branches being incorporated so far. The bank has the largest ATM network in the country having more than 5600 in number [1]. The State Bank of India has had steady growth over its history, though it was marred by the Harshad Mehta scam in 1992.
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DR. REDDY’S LABORATORIES
Dr. Reddy’s Laboratories was founded by Dr Anji Reddy, an entrepreneur-scientist, in 1984. The DNA of the company is drawn from its founder and his vision to establish India’s first discovery led global pharmaceutical company. In fact, it is this spirit of entrepreneurship that has shaped the company to become what it is today. Today, Dr. Reddy’s continues its journey. Leveraging on its ‘Low Cost, High Intellect’ advantage. Foraying into new markets and new businesses. Taking on new challenges and growing stronger and more capable. Each failure and each success renewing the sense of purpose and helping the company evolve Dr. Reddy’s Laboratories Limited, together with its subsidiaries, operates as a pharmaceutical company worldwide. It focuses on formulations, active pharmaceutical ingredients and intermediates, generic drugs, critical care products, biotechnology products, custom pharmaceutical services, and drug discovery. The company conducts research in the areas of cancer, cardiovascular disorders, bacterial infection, and metabolic disorders. It markets its products in approximately 100 countries worldwide, including India, Russia, the United Kingdom, The United States, Germany, Brazil, and South Africa. The company has an agreement with ClinTec International for the development an anti-cancer compound, DRF 1042 for the treatment of various types of cancer.
RANBAXY LABORATORIES LIMITED
Ranbaxy Laboratories Limited, is an integrated, research based, international
pharmaceutical company, based in India , producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It is ranked amongst the top ten generic companies worldwide. The Company has world class manufacturing facilities in 9 countries on ground presence in 49 countries and its products available in over 125 countries across the globe
Ranbaxy was incorporated in 1961 and went public in 1973. For the twelve months ended December 31, 2006, the Company's Global Sales were at US $1340 Mn. Overseas markets accounted for around 80% of global sales. The Company's largest market, USA with the sales of US $ 380 Mn, , while Europe and BRICS (Brazil, Russia, India, China, South Africa) countries contributed US $194 Mn and US $ 477 Mn to global sales. 36
Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative offices across the globe with a presence in 23 of the Top 25 pharma markets of the world. Ranbaxy has robust operations in USA, UK, France, Germany, Russia, India, Romania and South Africa, and is strengthening its business in Japan, Italy, Spain and several other markets in the Asia Pacific. While the Company is aggressively pursing its internationalization strategy it has also gained market leadership in India, leveraging its strong brand building skills. A balanced geographical presence coupled with a strong product flow from a wide therapeutic range serve as the business building blocks of the Company. Growth through acquisition is one of Ranbaxy’s stated strategies. The Company has successfully concluded 15 acquisitions since 2004, including 8 in 2006 (4 in Europe, 1 in the US, 2 in India and 1 in South Africa). Ranbaxy will continue to look at target acquisitions in US, Europe, India and emerging markets based on value and synergies that can be unlocked from such transactions.
SUN PHARMA
Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were initially limited to 2 states - West Bengal and Bihar. Sales were rolled out nationally in 1985. Products that are used in cardiology were introduced in 1987, and Monotrate, one of the first products launched at that time has since become one of our largest selling products. Important products in Cardiology were then added; several of these were introduced for the first time in India. Sun Pharma was listed on the main stock exchanges in India in 1994; and the Rs. 55 crore issue of a Rs. 10 face value equity share at a premium of Rs. 140/- was oversubscribed 55 times. The minimum 25% that was required under the regulations then for listing was offered to the public, the owner family continues to hold a majority stake in Sun Pharma. They used this money to build a Greenfield site for API manufacture, as well as for acquisitions. For the acquisitions, by 1997, our headquarters were shifted to Mumbai, the commercial capital of the country. We began on the first of our international acquisitions with an initial $7.5 million investment in Caraco Pharma Labs, Detroit. By 2000, they had completed 8 acquisitions, each such move adding new therapy areas or offering an entry to important international markets. A new research center was set up in Mumbai for generic product development for the US market. In India, as new therapy areas were entered into post acquisition; customer attention, product selection and 37
focused marketing helped us gain a foothold in areas like orthopedics, gynecology, oncology, etc. From a ranking at 38th in 1994, by 2000 they were ranked 5th with a leadership in 8 of the 11 therapy areas that we are present in. The year 2000 was the year of turnaround at the US subsidiary, Caraco, as it began to receive approvals after successful inspection by the USFDA. In December 2004, a research center spread over 16 acres was inaugurated by the President of India, with special lab space for drug discovery and innovation. Typically companies or assets that could be turned around and brought on track were identified.
ONGC
Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories. In the inland areas, ONGC not only found new resources in Assam but also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and offshore). ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tones of hydrocarbons, which were present in the country, were discovered. The most important contribution of ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally competitive level. Ranks 24th among Global Energy Companies by Market Capitalization in PFC Energy 50 (December 2004). [ONGC was ranked 17th till March 2004, before the shares prices dropped marginally for external reasons. ONGC placed at the top of all Indian Corporate listed in Forbes 400 Global Corporate (rank 133rd) and Financial Times Global 500 (rank 326th), by Market Capitalization. It recognized as the Most Valuable Indian Corporate, by Market Capitalization, Net Worth and Net Profits, in current listings of Economic Times 500 (4th time in a row), Business Today 500, Business Baron 500 and Business Week. ONGC Has created the highest-ever Market Value-Added (MVA) of Rs. 24,258 Crore and the fourth-highest Economic Value-Added (EVA) of Rs. 596 Crore, as assessed in the 5th Business Today-Stern Stewart study (April 2003), ahead of private sector leaders like Reliance 38
and Infosys. ONGC is the only Public Sector Enterprise to achieve a positive MV A as well as EVA.
RELIANCE ENERGY
Reliance Energy came into existence when it took over BSES in 2002 is a company under the Reliance - Anil Dhirubhai Ambani Group [1] banner, one of India's largest conglomerates. The company is headed by Anil Ambani.The company's corporate Headquarters is situated in Sector 24,Noida. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also runs power generation, transmission and distribution businesses in other parts of Maharashtra, Goa and Andhra Pradesh. Reliance Energy plans to increase its power generation capacity by adding 16,000 MW with investments of $13 billion. Reliance Energy Ltd is India's leading integrated power utility company in the private sector. It has a significant presence in generation, transmission and distribution of power in Maharashtra, Goa and Andhra Pradesh. With the ushering in of the power sector reforms and in the new environment of opportunity for the power sector, REL is a key player in this transformation process. Reliance's gas finds in KG-D6 block in Krishna Godavari basin which constitutes 60% of India's present total gas production, will provide an enormous opportunity to scale up power generation capacities in India. With the new gas find, REL has the unique advantage of integration from 'well head to wall socket'. This will help the company position itself as a global integrated energy player under the Reliance banner. REL and its affiliate power companies rank among the top 25 listed private sector companies on major financial parameters. REL is part of the Reliance industries-India's private sector company ranked among the world's 175 largest companies in terms of net profit and the 500 largest companies in terms of sales. REL is committed to creating superior value for all its stakeholders and be amongst the most admired and trusted utility companies in the world by setting new benchmarks in standards of corporate governance, operational and financial excellence, responsible corporate citizenship and profitable growth.
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BHARAT PETROLEUM CORPORATION LIMITED (BPCL)
Bharat Petroleum Corporation Limited (BPCL) is one of India's largest PSU companies. As the name suggests its interests are in Petroleum sector. It is involved in the refining and retailing of petroleum products. The government of India formed the company by taken over Burma shell group of companies in 24th January 1976. On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. It was also the first refinery to process newly found indigenous crude (Bombay High), in the country BPCL has a number of refineries in India. The important three are Mumbai Refinery - 12 Million Metric Tones (MMT) Capacity, Kochi Refinery - 7.5 MMT, Numaligarh Refinery - 3 MMT. BPCL is a Fortune Global 500 company as per the ranking of 2006. It was ranked at position 368. BPCL had registered revenue of $ 17.613 billion in 2006 and has employee strength of 14,667
TATA CONSULTANCY SERVICES LIMITED (TCS LIMITED)
Tata Consultancy Services Limited (TCS Limited) is an information technology, consulting, services and business-process outsourcing organization which commenced operations in 1968. As of 2006, it is Asia's largest IT services firm with annualized revenues of over US $4 billion (estimated for FY 2006-07) and has the largest number of employees among all the Indian IT companies with strength of over 87,000.For fiscal year 2005-06, it posted a net profit of Rs. 3,709.TCS is part of one of Asia's largest conglomerates and most respected groups, the Tata Group, which has interests in areas such as energy, telecommunications, financial services, chemicals, engineering and materials. Tata Consultancy Services (TCS). Through its Global Network Delivery Model, Innovation Network, and Solution Accelerators, TCS focuses on helping global organizations address their business challenges effectively. TCS continues to invest in new technologies, processes, and people which can help its customers succeed. From generating novel concepts through TCS Innovation Labs and academic alliances, to drawing on the expertise of key partners, it keeps clients operating at the very edge of technological possibility. Whether TCS is envisioning a business advantage, engineering an IT solution, or executing an outsourcing strategy, it helps its customers experience certainty in their every day business.
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WIPRO TECHNOLOGIES
Wipro Technologies is an IT service company established in 1980 in India. It is a subsidiary of Wipro Limited (incorporated 1946, in operation since 1945). It is headquartered in Bangalore. It is the third largest IT services company in India. It has 68,000 employees as of Apr 2007, inclusive of its BPO arm which it acquired in 2002.[1] Wipro Technologies has over 300 customers across USA, Europe and Japan including 50 of the Fortune 500 companies. Some of its customers are Boeing, Cisco, Ericsson, IBM, Microsoft, Prudential, Seagate, Sony, Sun Microsystems and Toshiba. It is listed on the New York Stock Exchange and is part of its TMT (technology media telecom) index. With revenue in the excess of US $3 billion, Wipro is one of India's major information technology companies. Wipro has dedicated development centers and offices across India, Europe, North America and Asia Pacific. The current Chairman, Managing Director and majority stake owner is Azim Premji. From inception, the software and hardware divisions have been headed by him
INFOSYS TECHNOLOGIES LIMITED
Infosys Technologies Limited is an information technology (IT) Services Company founded in Pune, India in 1981 by N. R. Narayana Murthy and six of his colleagues. In 1983, Infosys moved its headquarters to Bangalore, the capital of Karnataka. It operates nine development centers in India and has over 30 offices worldwide. Annual revenues for fiscal year 2007 exceeded US$3.1 billion with a market capitalization of over US$30 billion. With over 72,000 employees worldwide, Infosys is one of India's largest IT companies. In 1999 Infosys attained a SEI-CMM Level 5 ranking and became the first Indian company to be listed on NASDAQ. In 2001 it was rated "Best Employer in India" by Business Today,[3] and in 2002 Business World named Infosys "India's Most Respected Company". Infosys won the Global MAKE (Most Admired Knowledge Enterprises) award, for the years 2004 and 2003, being the only Indian company to win this award
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MAHINDRA&MAHINDRA
The Mahindra Group is a US $4 billion* conglomerate is a leading manufacturer of multi-utility vehicles and tractors with significant presence in key sectors like infrastructure, information technology and financial services. The Group completed 60 years in 2005. Set up in 1945 to make general-purpose utility vehicles, Mahindra & Mahindra first became known as the maker of the iconic Jeep in India. The company branched out into manufacturing light commercial vehicles and agricultural tractors. Mahindra & Mahindra rapidly grew from being a maker of army vehicles and tractors to a major automobile manufacturer with a growing global appetite. Now the Group has a leading presence in many other key sectors -- Trade and Financial Services (Mahindra Intertrade, Mahindra & Mahindra Financial Services Limited), Mahindra Systems and Automotive Technologies (Mahindra Engineering Services, Mahindra Ugine), Information Technology (Tech Mahindra, Bristlecone), and Infrastructure Development (Mahindra GESCO, Club Mahindra Holidays, Mahindra World City). Two Group companies Mahindra Finance and Tech Mahindra made their debut on the bourses in 2006 in line with the commitment that each of the business segments would have flagship companies that will be listed.
The Group employs over 34,000 people and has eight state-of-the-art manufacturing facilities in India. Mahindra & Mahindra has made strategic acquisitions of plants in China and the United Kingdom, and has three assembly plants in the USA. Mahindra & Mahindra has entered into partnerships with international companies like Renault SA, France, and International Truck and Engine Corporation, USA.
Mahindra & Mahindra's products are being exported to the USA, Russia and several other countries in Africa, Asia, Europe and Latin America. Its global subsidiaries include Mahindra Europe Sal. Based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Company Limited .Mahindra & Mahindra’s Automotive Sector makes a wide rage of vehicles including MUVs, LCVs and three wheelers. Mahindra & Mahindra is the largest manufacturer of MUVs, offering over 20 models including new generation multi-utility vehicles like the Scorpio and the Bolero. The company is a market leader in the Utility Vehicle segment.
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Mahindra & Mahindra is the fourth-largest tractor company in the world. It is also the largest manufacturer of tractors in India with sustained market leadership of around 23 years. It designs, develops, manufactures and markets tractors as well as farm implements. The Sector has also found significant success in the international market. Mahindra (China) Tractor Company Limited manufactures tractors for the growing Chinese market and is a hub for tractor exports to the USA and other western nations. Mahindra & Mahindra has a 100% subsidiary, Mahindra USA, where it assembles 14 products for the American market. 'Mahindra' tractor has come to be recognized as a powerful symbol of productivity and performance. Farm Equipment Sector received the coveted Deming Application Prize for manufacturing in 2003, for establishing Total Quality Management in all operations. Mahindra & Mahindra Limited is the only tractor company in the world to have achieved this honor.
Over the years, the Mahindras has transformed itself into a group that has a leadership position in all the sectors it operates in and has a growing global footprint. Forbes has ranked the Mahindra Group in its Top 200 list of the World’s Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies.
TATA MOTORS LIMITED
Tata Motors Limited is India's largest automobile company, with revenues of Rs. 24,000 crores (USD 5.5 billion) in 2005-06. It is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer. The company's 22,000 employees are guided by the vision to be best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Close to 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base is spread across Jamshedpur, Pune and Lucknow, supported by a nationwide dealership, sales, services and spare parts network comprising over 2,000 touch point. Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as a global automotive company. In 43
2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to launch new products. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano's presence is being expanded in other markets. In 2006, it has formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches, to manufacture and assemble fully-built buses and coaches. Tata Motors and the Fiat Group have recently signed a memorandum of understanding to establish an industrial joint venture in India to manufacture passenger With 1,400 engineers and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centers in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. The pace of new product development has quickened. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, R&D is also focusing on environment-friendly technologies in emissions and alternative fuels. Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment manufacturing, auto finance, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, highprecision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations. True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate Social Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in community and social initiatives on human rights, labour and environment standards in compliance with the principles of the Global Compact. Simultaneously, it also plays an active role in community development, serving rural communities adjacent to its manufacturing locations. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.
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MARUTI UDYOG LTD
Maruti Udyog Ltd is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. 18.28% of the company is owned by the government, and 54.2% by Suzuki of Japan. The Indian government held an Initial Public Offering of 25 % of shares in June 2003
Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983. Through 2004, Maruti has produced over 5 Million vehicles. Maruti are sold in India and various several other countries, depending up on export orders. Cars similar to Maruti (but not manufactured by Maruti Udyog) are sold by Suzuki in Pakistan and other South Asian countries. The company annually exports more than 30,000 cars and has an extremely large domestic market in India selling over five hundred thousand cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a
million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts. Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model.
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CHAPTER IV
DATA ANALYSIS AND INTERPRETATION
4.1 BANKING SECTOR
4.1.1 HDFC BANK
STOCK PRICE OPEN CLOSE 1,079.80 1,070.00 1,068.00 1,065.30 1,056.00 1,050.05 1,054.70 1,056.90 1,054.00 1,024.95 1,032.00 1,013.90 1,018.45 998.65 1,008.50 996.15 1,018.30 1,061.60 1,079.95 1,094.00 1,104.00 1,096.10 1,099.00 1,061.15 1,065.00 1,061.05 1,052.00 1,068.40 1,070.00 1,056.30 1,055.00 1,032.90 1,040.00 1,058.45 1,061.05 1,066.10 1,070.00 1,062.40 1,066.00 1,078.60 0.708544 SENSEX PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD STOCK MARKET RETURN RETURN Y X -0.90758 1.037504 -0.25281 0.407965 -0.56345 -0.95598 0.20859 -0.16917 -2.75617 -1.25273 -1.75388 -0.55678 -1.94413 -1.55077 -1.22459 2.338954 4.252185 2.73542 1.300986 0.630421 -0.71558 -0.24935 -3.44404 -0.20686 -0.37089 0.830634 1.558935 -0.86888 -1.28037 0.314212 -2.09479 -0.89089 1.774038 0.57296 0.475944 1.359954 -0.71028 -0.57733 1.181989 -0.99785 -7.2659 1.9514 1.7856 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y -0.94161 -0.10314 0.538641 -0.03529 3.452733 0.976531 3.014908 -2.86426 11.63151 0.820168 0.178427 0.712432 -0.30808 -1.35453 -0.40231 1.86622 1.016453 0.647261 0.410067 -1.17945 18.077 3.1883
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
TABLE 1 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK & MARKET RETURNS COMPARISION
5 4 RETURN 3 2 1 0 -1 -2 -3 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
Y X
DATE
GRAPH 1
Y=STOCK RETURN, X =MARKET RETURN
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Standard deviation (total risk associated with stock) is 1.79 where as the beta value is 0.71.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
STOCK PRICE DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA OPEN 1,080.05 1,109.50 1,086.25 1,110.70 1,085.00 1,109.90 1,088.25 1,095.55 1,090.00 1,048.25 1,025.00 1,049.00 1,039.25 1,030.00 1,018.00 979.5 977.7 955 906 0.39731 DATE 1,103.95 1,106.10 1,103.35 1,089.30 1,101.95 1,109.80 1,113.80 1,096.05 1,068.70 1,017.25 1,041.80 1,033.25 1,031.60 1,016.00 987.3 958.2 951.75 975.9 935 SENSEX PRICE OPEN 4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 SD TABLE 2 CLOSE 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 SUM STOCK RETURN Y 2.212861 -0.30644 1.574223 -1.92671 1.562212 -0.00901 2.347806 0.045639 -1.95413 -2.95731 1.639024 -1.50143 -0.73611 -1.35922 -3.01572 -2.17458 -2.65419 2.188482 3.200883 -3.82372 2.029832 VAR MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 X*Y 2.915509 -0.32049 0.833449 0.943582 0.969359 0.001831 -2.00677 -0.1405 1.178979 -0.16085 4.025873 -0.55364 1.023342 0.36238 4.170246 5.753551 -0.1954 -3.00164 -12.1758 36.79962 4.120217 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 92.62204
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
R ETU R N S
Y X
DATE
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Standard deviation (total risk associated with stock) is 2.02 where as the beta value is 0.397.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
STOCK PRICE OPEN CLOSE 960 980.3 980 937.6 921.65 928.05 929 927.95 956 915.55 919 974.15 983 976.9 976.9 950.05 960 960.15 926.2 932.95 965 918.4 935 903.5 910 924.65 935 955.25 958 965.6 989 1,025.90 1,030.00 1,011.15 1,018.00 973.2 973 958.45 952 933.75 946 954.15 0.77031
SENSEX PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
STOCK RETURN Y 2.114583 -4.32653 0.694407 -0.11302 -4.23117 6.001088 -0.62055 -2.74849 0.015625 0.728784 -4.82902 -3.36898 1.60989 2.165775 0.793319 3.731041 -1.8301 -4.40079 -1.49538 -1.91702 0.861522 -11.165 2.881033
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VARIANCE
X*Y 3.714946 9.636836 -2.79514 -0.24803 4.009822 22.23575 0.723343 -1.26798 0.014766 -2.4619 0.172233 2.851188 3.013557 1.015111 1.434227 11.04099 0.74115 4.955006 2.257502 -1.98629 0.743544 -26.833 8.300353
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 5.775917
BETA
TABLE 3
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GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 RETURNS 4 2 0 -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29 Y X
DATE
GRAPH 3
Standard deviation (total risk associated with stock) is 2.88 where as the beta value is 0.770.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
The beginning months of any financial year always controversial especially in terms of politically and financially it will have a negative impact on the stock market .the fluctuation of the stock is mainly because of these two risk .here is the case of HDFC bank the analysis revels up and downs quite frequently but not to much, so the risk associated with this stock is comparatively low and proper diversification of the portfolio will help to eliminate the risk associated with this stock.
49
4.1.2 ICICI BANK
STOCK PRICE OPEN CLOSE 892 897.45 909.75 894.55 895 890.5 890 910.1 917 906.3 905.2 912.35 909.95 883.85 890 892.35 915 972.3 977.8 957.85 964.85 960.05 960 986.85 986.85 971.25 971.25 985.4 994.4 977.2 975 964.3 999 974.55 988 991.45 991.45 955.95 970 941.1 .94665 SENSEX PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 sum SD 2.7466 TABLE 4 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS STOCK R Y 0.610987 -1.67079 -0.50279 2.258427 -1.16685 0.789881 -2.86829 0.264045 6.262295 -2.04029 -0.49749 2.796875 -1.58079 1.456885 -1.72969 -1.09744 -2.44745 0.34919 -3.58061 -2.97938 -7.37327 MARKET R X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 variance
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 0.633901 -0.68162 0.480658 -0.38205 1.461746 -0.43979 4.448069 0.617589 17.13001 -1.28624 0.124046 -0.57856 -1.31306 -1.26586 -0.54349 0.977692 -1.40229 0.474883 2.0672 2.972988 -14.3884 7.5443sa
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 3.808093
STOCK AND MARKET RETURN COMPARISION
8 6 RETURN 4 2 0 -2 -4 -6 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30 1/2 1/4 1/6 1/8 Y X
DATE
GRAPH 4
50
Standard deviation (total risk associated with stock) is 2.746 where as the beta value is 0.95.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
STOCK PRICE OPEN CLOSE 951 952.55 959.9 944.9 959.65 946.8 949.85 957.9 961 983.15 988 999.7 999 996.15 990.1 966.15 960 955.9 932.35 914.4 920 949.6 952.4 980.2 985 969.45 987 969.3 974 946.2 954.8 907 913.8 904 904 875.8 849.8 829.5 1.57268 STOCK R SENSEX PRICE OPEN CLOSE Y 4083.4 4137.2 0.162986 4140.2 4183.5 -1.56266 4193.15 4215.35 -1.33903 4216.55 4195.9 0.847502 4198.2 4224.25 2.304891 4232 4223.4 1.184211 4223.5 4187.4 -0.28529 4187.2 4058.3 -2.41895 4069.1 4044.55 -0.42708 4044.9 4047.1 -1.92524 4046.8 4146.2 3.217391 4149.25 4164.55 2.918942 4164.85 4106.95 -1.57868 4107.15 4096.2 -1.79331 4096.65 4040 -2.85421 4046 3938.95 -5.00628 3939.1 3942 -1.07244 3948.05 3893.9 -3.11947 3893.4 3745.3 -2.3888 SUM -15.1355 SD 2.15814 TABLE 5 MARKET X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 variance
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X*Y 0.214739 -1.6343 -0.70893 -0.41505 1.430194 -0.24065 0.243845 7.44656 0.257671 -0.10471 7.902755 1.076334 2.194691 0.478112 3.946907 13.24574 -0.07895 4.278549 9.086682 145.6648 4.657567
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 92.62204
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
4 2 RETURNS 0 -2 -4 -6 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 Y X
DATE
GRAPH 5 51
Standard deviation (total risk associated with stock) is 2.16 where as the beta value is 1.57 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. the systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. the average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return .
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
STOCK PRICE CLOS E OPEN 840 855.35 850 842.9 855.5 821.55 845 847.9 882.5 828.65 831 863 871.65 858.6 865 868.7 871.25 877.6 849.8 829.4 835 823.9 822.7 810 828 822.55 833.8 824 828 870.55 970.35 899.6 870 891.6 899 875.7 866.1 857.85 859.45 855.3 803.65 853.35 0.6203
SENSEX PRICE OPEN 3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 CLOSE 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55 SUM SD
STOCK RETURN Y 1.827381 -0.83529 -3.96844 0.343195 -6.10198 3.850782 -1.49716 0.427746 0.728838 -2.40056 -1.32934 -1.5437 -0.65821 -1.17534 5.138889 -7.29118 2.482759 -2.59177 -0.95255 -0.48287 6.184284 -9.84453 3.2701
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 variance X*Y 3.210383 1.860519 15.97386 0.753137 5.782764 14.26825 1.745165 0.197335 0.688789 8.109328 0.047413 1.306439 -1.23211 -0.55089 9.290497 -21.5762 -1.00546 2.918167 1.438017 -0.50032 5.3374 -23.6595 10.69355 X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 5.775917
BETA
TABLE 6
52
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 6 Standard deviation (total risk associated with stock) is 2.04 where as the beta value is 0.62.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
In the case of icici bank the stock is more volatile and the systematic risk associated with this stock is very high since the beta value on an average greater than 1 its above the standard. The fluctuation in this stock mainly because of inflationary trend in the economy because of high inflation rate RBI forced to increase the CRR and interest rate that would be the reason for the down ward trend of this stock. the average stock return is below the market return so an investor must take an extra care while investing in this stock .
53
4.1.3 SBI STOCK PRICE NIFTY PRICE
DATE
2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07
OPEN
1,250.00 1,250.00 1,270.00 1,241.00 1,248.80 1,219.85 1,171.00 1,145.00 1,162.00 1,235.00 1,255.00 1,219.00 1,226.00 1,282.25 1,218.00 1,225.05 1,174.05 1,175.25 1,190.00 1,162.00
CLOSE
1,253.55 1,264.85 1,243.00 1,244.10 1,213.70 1,174.90 1,136.40 1,147.45 1,225.45 1,222.25 1,209.80 1,222.55 1,229.00 1,220.30 1,224.55 1,174.05 1,172.55 1,176.45 1,156.15 1,140.45
OPEN
3966.25 4007.7 4027.3 3990.15 3983.3 3933.3 3910.95 3852.15 3944.55 4052.85 4090.7 4084.9 4075.2 4126 4089.6 4102.65 4066.6 4092.05 4148.4 4123.85
CLOSE
4007.4 4024.05 3988.8 3983.4 3933.4 3911.4 3850.3 3942.25 4052.45 4078.4 4080.5 4076.45 4109.05 4090.15 4102.45 4066.1 4089.9 4147.7 4124.45 4082.7
SUM 1.66073 BETA
STOCK RETURN Y 0.284 1.188 -2.12598 0.249799 -2.8107 -3.68488 -2.95474 0.213974 5.460413 -1.03239 -3.60159 0.291222 0.244698 -4.83135 0.537767 -4.1631 -0.12776 0.102106 -2.84454 -1.85456 -21.4596
MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
X*Y 0.294651 0.484662 2.032389 -0.04226 3.521046 2.051683 4.582134 0.500475 14.93652 -0.65084 0.898043 -0.06024 0.203255 4.197866 0.168973 3.70885 -0.0732 0.138859 1.64224 1.850581 -41.877 5.780065
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 3.808093
SD 2.569884 TABLE 7
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 -2 -4 -6 DATE 1/30 X
GRAPH 7
54
Standard deviation (total risk associated with stock) is 2.57 where as the beta value is 1.66 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return
STOCK PRICE DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA OPEN 1,158.00 1,215.00 1,176.00 1,205.00 1,195.00 1,195.00 1,206.00 1,199.65 1,182.95 1,150.00 1,110.55 1,128.00 1,132.10 1,099.70 1,105.00 1,135.00 1,070.00 1,091.00 971.6 0.169704 CLOSE 1,203.00 1,181.05 1,197.05 1,196.50 1,195.05 1,205.25 1,199.65 1,183.70 1,173.40 1,102.30 1,122.60 1,132.10 1,107.75 1,105.90 1,078.05 1,058.20 1,088.40 1,069.15 1,041.85 NIFTY PRICE OPEN 4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 sum SD CLOSE 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 STOCK RETURN Y 3.88601 -2.79424 1.789966 -0.70539 0.004184 0.857741 -0.52653 -1.32955 -0.8073 -4.14783 1.085048 0.363475 -2.15087 0.56379 -2.43891 -6.76652 1.719626 -2.00275 7.230342 -6.16972 3.004418 MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 VAR X*Y 5.119933 -2.92234 0.94767 0.345458 0.002596 -0.1743 0.45005 4.09294 0.487069 -0.2256 2.665162 0.134028 2.990153 -0.15031 3.372621 17.90301 0.1266 2.746898 -27.5033 10.40834 9.026525 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
TABLE 8 GRAHHICAL REPRESENTATON OF STOCK AND MARKET
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 8 55
Standard deviation (total risk associated with stock) is 3.004where as the beta value is 0.16974.it shows that diversification of the portfolio of stocks would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price and the average return is much below the market return.
STOCK PRICE
DATE
1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
NIFTY PRICE
OPEN
3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85
OPEN
1,042.00 1,035.00 999 999 998 989 1,001.10 990 979 960 955 925 924.8 930 955 992 1,034.00 1,030.00 1,006.00 974 990.1
CLOSE
1,055.65 1,004.90 962.55 988.05 964.4 999.3 982.65 974.2 980.4 948 922.1 913.6 926.5 952.35 982.95 1,029.40 1,026.20 1,013.65 973.65 985.65 994.45
CLOSE
3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55
BETA
0.79409
SUM SD
STOCK RETURN Y 1.309981 -2.90821 -3.64865 -1.0961 -3.36673 1.041456 -1.84297 -1.59596 0.143003 -1.25 -3.44503 -1.23243 0.183824 2.403226 2.926702 3.770161 -0.75435 -1.58738 -3.21571 1.196099 0.43935 -12.5297 2.170108
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 2.301403 6.4777 14.68663 -2.40537 3.190606 3.858893 2.148261 -0.73628 0.135145 4.222614 0.122871 1.043014 0.3441 1.126405 5.291127 11.15675 0.305496 1.787288 4.85461 1.239324 0.379184 -30.1128 4.709368
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 5.775917
TABLE 9
56
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
COMPARISION OF STOCK AND MARKET RETURNS
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH 9
Standard deviation (total risk associated with stock) is 2.403where as the beta value is 0.794.it shows that diversification of the portfolio of stocks would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price and the average return is much below the market return.
Usually the beginning o f the financial year a bad month for the financial sector stocks mainly because of the impact of the budget and this year due to inflationary pressure RBI force to rise CRR level and the interest rate it had an negative impact on the profitability of the banks this leads the collapse of banking stocks .here the stock price is more fluctuating than the market price .so the investment option would be how effectively we tackle our interest rate risk and political risk by proper diversification of the portfolio .
57
4.2
PHARMASUICAL INDUSTRY
STOCK RETURN Y -0.7986 0.4657 1.9702 -2.3614 0.0246 -1.7057 -2.8885 -0.2645 2.2033 -1.1071 -0.3695 -0.0797 -0.3907 -0.6732 -0.6683 -7.0783 -1.3066 -0.3003 -2.1094 -2.2238 -19.662 1.9314 MARKET RETURN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
4.2.1 DR.REDDYS LAB
STOCK PRICE OPEN CLOSE 813.9 807.4 805.3 809.05 812.1 828.1 830 810.4 812 812.2 812 798.15 798 774.95 794 791.9 792 809.45 812.9 803.9 811.8 808.8 816 815.35 819 815.8 817 811.5 815.5 810.05 830 771.25 773 762.9 766 763.7 768 751.8 759.95 743.05 0.72526 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y -0.8286 0.19 -1.8835 0.3995 -0.0309 0.9497 4.4794 -0.6186 6.0269 -0.698 0.0921 0.0165 -0.3245 0.5849 -0.21 6.306 -0.7486 -0.4083 1.2178 2.2191 16.731 3.7304
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.32828 1.849475 0.333311 0.995712 25.76932
TABLE 10 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
RETURNS
Y X
1/2
1/4
1/6
1/8
1/10
1/12
1/14
1/16
1/18
1/20
1/22
1/24
1/26
1/28
DATE
GRAPH 10 58
1/30
Standard deviation (total risk associated with stock) is 1.93where as the beta value is 0.725.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. When we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return and frequent fluctuation in price put the stock under the scanner.
STOCK PRICE DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19Feb 07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA OPEN 745 750 754.7 750.5 751 746.6 744.8 748 725 706.25 724.75 742 731 730 730 713.65 706 690 681 0.55673 CLOSE 743.8 745.65 750.3 750.3 745.95 741.55 731.65 725.2 726.25 719.9 738.4 730.85 729.2 729.5 706.35 681.55 689.3 693.25 676.9 NIFTY PRICE OPEN 4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 SD CLOSE 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 SUM STOCK RETURN Y -0.1611 -0.58 -0.583 -0.0266 -0.6724 -0.6764 -1.7656 -3.0481 0.1724 1.9327 1.8834 -1.5027 -0.2462 -0.0685 -3.2397 -4.498 -2.3654 0.471 -0.6021 -15.576 1.6295 VAR MARKET RETURN X 1.3175 1.0458 0.5294 -0.49 0.6205 -0.203 -0.855 -3.078 -0.603 0.0544 2.4563 0.3687 -1.39 -0.267 -1.383 -2.646 0.0736 -1.372 -3.804 -9.624 X*Y -0.2122 -0.6066 -0.3087 0.0131 -0.4172 0.1375 1.5091 9.3834 -0.104 0.1051 4.6261 -0.5541 0.3423 0.0183 4.48 11.901 -0.1741 -0.646 2.2901 31.783 2.6553 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
TABLE 11 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 11
59
Standard deviation (total risk associated with stock) is 1.62 where as the beta value is 0.55 .it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock fluctuating along with the market .here the non diversifiable risk is very less so proper diversification of the portfolio ensure maximum return with minimum investment
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 670 661.75 655 660.1 601 617.5 630 622.55 635 635.25 641 668.55 679.9 660 678 658.4 660 661 645 648.45 655 672.45 681 683.6 689 683 682.4 690 690 689 654.9 692 714.5 -0.1705 677.25 682.4 679.2 682 686.3 682.15 692.15 706.5 728.25
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55 SUM SD
STOCK RETURN Y -1.2313 0.7786 2.7454 -1.1825 0.0394 4.298 -2.9269 -2.8909 0.1515 0.5349 2.6641 0.3818 -1.7054 -0.0878 -0.4689 -1.1594 -0.5362 -0.9942 5.6879 2.0954 1.9244 8.1178 2.2031
MARKET RETURN X 1.7568 -2.227 -4.025 2.1945 -0.948 3.7053 -1.166 0.4613 0.9451 -3.378 -0.036 -0.846 1.8719 0.4687 1.8079 2.9592 -0.405 -1.126 -1.51 1.0361 0.8631 2.4033 VAR
X*Y -2.1633 -1.7343 -11.051 -2.5951 -0.0373 15.925 3.4117 -1.3337 0.1432 -1.8069 -0.095 -0.3231 -3.1923 -0.0412 -0.8478 -3.431 0.2172 1.1194 -8.5868 2.1711 1.6609 -12.59 4.8536
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 12
60
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 RETURNS 4 2 0 -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29 Y X
DATE
GRAPH 12
Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk associated with this stock can be eliminated with proper diversification of the portfolio in this particular month the return from this stock much above the market return but some trading day the price of the stock is crumbling down may be because of the high selling trend for short term profile
The overall performance of this stock is promising the risk associated with this stock comparatively less. Investor can hold the stock for a long time. The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk
61
4.2.2 RANBAXY
DATE
2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07
STOCK PRICE OPEN CLOSE
391 397.4 414 411 412 425 417.5 411.9 416.1 426.95 431 430 436 432 417 408 409.5 402.05 400 404 399.15 412.1 413.2 413.8 418.8 416.8 411.15 416.4 421.25 430.4 429.65 432.3 430.4 414.5 404.55 399.45 400.8 397.3 402.4 408.95
NIFTY PRICE OPEN CLOSE
3966.25 4007.7 4027.3 3990.15 3983.3 3933.3 3910.95 3852.15 3944.55 4052.85 4090.7 4084.9 4075.2 4126 4089.6 4102.65 4066.6 4092.05 4148.4 4123.85
BETA
0.42651
STOCK RETURN Y 2.0844 4007.4 3.699 4024.05 -0.1932 3988.8 0.6813 3983.4 1.6505 3933.4 -1.9294 3911.4 -1.521 3850.3 1.0925 3942.25 1.2377 4052.45 0.8081 4078.4 -0.3132 4080.5 0.5349 4076.45 -1.2844 4109.05 -4.0509 4090.15 -2.9856 4102.45 -2.0956 4066.1 -2.1245 4089.9 -1.1814 4147.7 0.6 4124.45 1.2252 4082.7 SUM -4.0658 SD 1.9106 TABLE 13
MARKET RETURN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
X*Y 2.1626 1.5091 0.1847 -0.1152 -2.0676 1.0743 2.3587 2.5553 3.3856 0.5094 0.0781 -0.1106 -1.0669 3.5198 -0.9381 1.8669 -1.2173 -1.6067 -0.3464 -1.2226 10.513 3.6506
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 13 62
The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.423It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return
STOCK PRICE OPEN CLOSE 409 411.2 413 413.05 414 414.7 414.7 420.05 424.2 419.3 421.9 420.95 424.05 416.75 413.6 409.15 409.1 411.5 408 415.45 415 393.35 396 391.6 385 395.5 396.5 382.7 383 367.45 367 356.55 365 351.35 354.1 351.6 342 337.85 0.0797 NIFTY PRICE OPEN CLOSE 4083.4 4137.2 4140.2 4183.5 4193.15 4215.35 4216.55 4195.9 4198.2 4224.25 4232 4223.4 4223.5 4187.4 4187.2 4058.3 4069.1 4044.55 4044.9 4047.1 4046.8 4146.2 4149.25 4164.55 4164.85 4106.95 4107.15 4096.2 4096.65 4040 4046 3938.95 3939.1 3942 3948.05 3893.9 3893.4 3745.3 SUM SD STOCK RETURN Y 0.5379 0.0121 0.1691 1.2901 -1.1551 -0.2252 -1.7215 -1.0759 0.5867 1.826 -5.2169 -1.1111 2.7273 -3.4805 -4.0601 -2.8474 -3.7397 -0.706 -1.2135 -19.404 MARKET RETURN X 1.3175 1.0458 0.5294 -0.49 0.6205 -0.203 -0.855 -3.078 -0.603 0.0544 2.4563 0.3687 -1.39 -0.267 -1.383 -2.646 0.0736 -1.372 -3.804 -9.624
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07
X*Y 0.7087 0.0127 0.0895 -0.6318 -0.7168 0.0458 1.4714 3.3121 -0.3539 0.0993 -12.814 -0.4097 -3.7915 0.9279 5.6144 7.5337 -0.2753 0.9683 4.6158 6.4067
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
BETA
2.1069 VAR 4.4389 TABLE 14 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
63
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 -6 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 14 Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk associated with this stock can be eliminated with proper diversification of the portfolio in this particular month the return from this stock much above the market return but some trading day the price of the stock is crumbling down may be because of the high selling trend for short term profit.
STOCK PRICE OPEN CLOSE
344 345 345.5 325 322 312 334 328 323.75 316.5 315 315.95 315 314 319.5 318.9 340 335 334.2 334.25 333 0.90549 342.75 347.3 320.7 322.3 307.25 328.45 326.05 323.75 320.7 312.25 315 311.2 316.25 314 316.95 336.35 331.55 335 333.2 330.15 327.05
DATE
1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
NIFTY PRICE OPEN CLOSE
3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55
BETA
SUM SD TABLE 15
STOCK RETUR Y -0.3634 0.6667 -7.178 -0.8308 -4.5807 5.2724 -2.3802 -1.2957 -0.9421 -1.3428 0 -1.5034 0.3968 0 -0.7981 5.4719 -2.4853 0 -0.2992 -1.2266 -1.7868 -15.205 2.6885
MARKE RETURN X 1.7568 -2.227 -4.025 2.1945 -0.948 3.7053 -1.166 0.4613 0.9451 -3.378 -0.036 -0.846 1.8719 0.4687 1.8079 2.9592 -0.405 -1.126 -1.51 1.0361 0.8631 2.4033 VAR
X*Y -0.6384 -1.4849 28.893 -1.8231 4.3411 19.536 2.7745 -0.5978 -0.8903 4.5361 0 1.2723 0.7428 0 -1.4429 16.193 1.0065 0 0.4517 -1.271 -1.5421 70.056 7.2279
X^2 3.0864 4.9612 16.202 4.8157 0.8981 13.729 1.3587 0.2128 0.8931 11.411 0.0012 0.7162 3.5040 0.2196 3.2684 8.7570 0.1640 1.2677 2.2790 1.0735 0.7447 79.565
64
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 15 Standard deviation (total risk associated with stock) is 2.69where as the beta value is 0.91 .it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock fluctuating along with the market .here the non diversifiable risk is very less so proper diversification of the portfolio ensure maximum return with minimum investment
The overall performance of this stock is promising the risk associated with this stock comparatively less. Investor can hold the stock for a long time. The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk
65
4.2.3 SUN PHARMASUICAL
STOC K RETU RN Y 0.1677 0.4304 -0.298 -0.4162 0.8878 -0.6401 -0.5939 5.3168 1.0196 1.45 -1.1394 2.3922 -1.1322 -2.1 2.5944 -0.3473 -5.413 0.459 -0.9078 0.9354 2.6652 2.1008 MARK ET RETU RN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
STOCK PRICE OPEN CLOSE 983.9 985.55 987.5 991.75 990.05 987.1 985 980.9 980 988.7 992 985.65 985 979.15 962.05 1,013.20 1,020.00 1,030.40 1,031.00 1,045.95 1,048.80 1,036.85 1,020.00 1,044.40 1,059.85 1,047.85 1,050.00 1,027.95 1,033.00 1,059.80 1,051.00 1,047.35 1,079.80 1,021.35 1,034.95 1,039.70 1,030.00 1,020.65 1,021.00 1,030.55 0.61224
NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 sum SD TABLE 16
X*Y 0.174 0.1756 0.2848 0.0704 -1.1121 0.3564 0.921 12.436 2.7891 0.9141 0.2841 -0.4948 -0.9405 1.8246 0.8152 0.3094 -3.1015 0.6242 0.5241 -0.9334 15.92 4.4135
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
DATE
GRAPH 16 66
Standard deviation (total risk associated with stock) is 2.10 where as the beta value is 0.612.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of January this stock is more fluctuating as a comparison to the market price
STOCK RETURN Y 1.0533 -0.1053 1.7099 -3.0052 0.8077 2.0808 -1.6635 -0.7695 1.7034 2.9617 1.4464 0.7984 -0.7996 -1.0739 -4.104 -4.1238 0.2602 -1.9586 -1.1383 -5.9198 2.0387 MARKE T RETURN X 1.3175 1.0458 0.5294 -0.49 0.6205 -0.203 -0.855 -3.078 -0.603 0.0544 2.4563 0.3687 -1.39 -0.267 -1.383 -2.646 0.0736 -1.372 -3.804 -9.624 VAR
DATE
1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07
STOCK PRICE OPEN CLOSE
1,034.80 1,044.90 1,035.15 1,069.80 1,040.00 1,026.05 1,052.00 1,020.20 998 991 1,016.30 1,027.05 1,038.00 1,029.00 1,047.75 1,016.05 979.9 972.65 940 1,045.70 1,043.80 1,052.85 1,037.65 1,048.40 1,047.40 1,034.50 1,012.35 1,015.00 1,020.35 1,031.00 1,035.25 1,029.70 1,017.95 1,004.75 974.15 982.45 953.6 929.3
NIFTY PRICE OPEN CLOSE
4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3
BETA
sum 0.75786 SD TABLE 17 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
X*Y 1.3878 -0.1101 0.9053 1.4718 0.5012 -0.4228 1.4219 2.3687 -1.0277 0.1611 3.5528 0.2944 1.1116 0.2863 5.6752 10.911 0.0192 2.6863 4.3299 35.524 4.1565
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 17 67
Standard deviation (total risk associated with stock) is 2.04where as the beta value is 0.76.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price
STOCK RETURN Y 3.8315 2.0053 -0.7376 0.7439 0.6257 -0.093 0.9744 2.6876 0.3391 -2.6898 -0.6968 -0.2611 -0.6672 -1.4811 -0.1523 0.1555 -0.3627 -1.466 -2.9617 -0.0887 3.9813 3.6863 1.8059 MARKE RETURN X 1.7568 -2.227 -4.025 2.1945 -0.948 3.7053 -1.166 0.4613 0.9451 -3.378 -0.036 -0.846 1.8719 0.4687 1.8079 2.9592 -0.405 -1.126 -1.51 1.0361 0.8631 2.4033 VAR
DATE
1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
STOCK PRICE OPEN CLOSE
920 950 949 941 943 967.85 975 986 1,017.45 1,029.80 1,019.00 1,015.05 1,011.70 1,006.00 1,018.00 1,028.80 1,034.00 1,030.00 1,029.80 1,014.95 1,016.00 955.25 969.05 942 948 948.9 966.95 984.5 1,012.50 1,020.90 1,002.10 1,011.90 1,012.40 1,004.95 991.1 1,016.45 1,030.40 1,030.25 1,014.90 999.3 1,014.05 1,056.45
NIFTY PRICE OPEN CLOSE
3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55
X*Y 6.7313 -4.4665 2.9691 1.6325 -0.5929 -0.3446 -1.1358 1.2399 0.3205 9.0865 0.0249 0.2209 -1.2489 -0.6942 -0.2753 0.4602 0.1469 1.6506 4.4712 -0.0919 3.4361 23.541 3.2613
X^2 3.086 4.961 16.20 4.815 0.898 13.72 1.358 0.212 0.893 11.41 0.001 0.716 3.504 0.219 3.268 8.757 0.164 1.267 2.279 1.073 0.744 79.56
BETA
0.29157
SUM SD TABLE 18
68
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH The total risk (standard deviation) associated with the stock is 3.69 and the beta is .0.29 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
69
4.3
OIL AND GAS INDUSTRY
4.3.1 BPCL
STOCK PRICE OPEN CLOSE 983.9 985.55 987.5 991.75 990.05 987.1 985 980.9 980 988.7 992 985.65 985 979.15 962.05 1,013.20 1,020.00 1,030.40 1,031.00 1,045.95 1,048.80 1,036.85 1,020.00 1,044.40 1,059.85 1,047.85 1,050.00 1,027.95 1,033.00 1,059.80 1,051.00 1,047.35 1,079.80 1,021.35 1,034.95 1,039.70 1,030.00 1,020.65 1,021.00 1,030.55 0.61224 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 19 STOCK RETURN Y 0.1677 0.4304 -0.298 -0.4162 0.8878 -0.6401 -0.5939 5.3168 1.0196 1.45 -1.1394 2.3922 -1.1322 -2.1 2.5944 -0.3473 -5.413 0.459 -0.9078 0.9354 2.6652 2.1008 MARKET RETURN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 0.174 0.1756 0.2848 0.0704 -1.1121 0.3564 0.921 12.436 2.7891 0.9141 0.2841 -0.4948 -0.9405 1.8246 0.8152 0.3094 -3.1015 0.6242 0.5241 -0.9334 15.92 4.4135
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
DATE
GRAPH 19 70
Standard deviation (total risk associated with stock) is 2.67 where as the beta value is 0.61.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of January this stock is more fluctuating as a comparison to the market price
MARKET STOCK NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 1.0533 1.3175 1.3878 4140.2 4183.5 -0.1053 1.0458 -0.1101 4193.15 4215.35 1.7099 0.5294 0.9053 4216.55 4195.9 -3.0052 -0.49 1.4718 4198.2 4224.25 0.8077 0.6205 0.5012 4232 4223.4 2.0808 -0.203 -0.4228 4223.5 4187.4 -1.6635 -0.855 1.4219 4187.2 4058.3 -0.7695 -3.078 2.3687 4069.1 4044.55 1.7034 -0.603 -1.0277 4044.9 4047.1 2.9617 0.0544 0.1611 4046.8 4146.2 1.4464 2.4563 3.5528 4149.25 4164.55 0.7984 0.3687 0.2944 4164.85 4106.95 -0.7996 -1.39 1.1116 4107.15 4096.2 -1.0739 -0.267 0.2863 4096.65 4040 -4.104 -1.383 5.6752 4046 3938.95 -4.1238 -2.646 10.911 3939.1 3942 0.2602 0.0736 0.0192 3948.05 3893.9 -1.9586 -1.372 2.6863 3893.4 3745.3 -1.1383 -3.804 4.3299 SUM -5.9198 -9.624 35.524 0.75786 SD 2.0387 VAR 4.1565 TABLE 20 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS STOCK PRICE OPEN CLOSE 1,034.80 1,045.70 1,044.90 1,043.80 1,035.15 1,052.85 1,069.80 1,037.65 1,040.00 1,048.40 1,026.05 1,047.40 1,052.00 1,034.50 1,020.20 1,012.35 998 1,015.00 991 1,020.35 1,016.30 1,031.00 1,027.05 1,035.25 1,038.00 1,029.70 1,029.00 1,017.95 1,047.75 1,004.75 1,016.05 974.15 979.9 982.45 972.65 953.6 940 929.3
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 20 71
Standard deviation (total risk associated with stock) is 2.04 where as the beta value is 0.76.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 920 955.25 950 969.05 949 942 941 948 943 948.9 967.85 966.95 975 984.5 986 1,012.50 1,017.45 1,020.90 1,029.80 1,002.10 1,019.00 1,011.90 1,015.05 1,012.40 1,011.70 1,004.95 1,006.00 991.1 1,018.00 1,016.45 1,028.80 1,030.40 1,034.00 1,030.25 1,030.00 1,014.90 1,029.80 999.3 1,014.95 1,014.05 1,016.00 1,056.45 0.29157
SSTOCK MARKET NIFTY PRICE RETUR RETURN OPEN CLOSE Y X 3745.4 3811.2 3.8315 1.7568 3811.65 3726.75 2.0053 -2.227 3726.5 3576.5 -0.7376 -4.025 3577.15 3655.65 0.7439 2.1945 3661.55 3626.85 0.6257 -0.948 3627.25 3761.65 -0.093 3.7053 3761.85 3718 0.9744 -1.166 3717.45 3734.6 2.6876 0.4613 3735.25 3770.55 0.3391 0.9451 3768.4 3641.1 -2.6898 -3.378 3644.9 3643.6 -0.6968 -0.036 3639.35 3608.55 -0.2611 -0.846 3611.3 3678.9 -0.6672 1.8719 3680.35 3697.6 -1.4811 0.4687 3697.7 3764.55 -0.1523 1.8079 3764.5 3875.9 0.1555 2.9592 3876.75 3861.05 -0.3627 -0.405 3863.45 3819.95 -1.466 -1.126 3818.75 3761.1 -2.9617 -1.51 3759.15 3798.1 -0.0887 1.0361 3788.85 3821.55 3.9813 0.8631 SUM 3.6863 2.4033 SD 1.8059 VAR
X*Y 6.7313 -4.4665 2.9691 1.6325 -0.5929 -0.3446 -1.1358 1.2399 0.3205 9.0865 0.0249 0.2209 -1.2489 -0.6942 -0.2753 0.4602 0.1469 1.6506 4.4712 -0.0919 3.4361 23.541 3.2613
X^2 3.08642 4.96123 16.2024 4.81576 0.89810 13.7291 1.35874 0.21283 0.89312 11.4115 0.00127 0.71623 3.50401 0.21968 3.26843 8.75700 0.16400 1.26773 2.27906 1.07358 0.74487 79.5652
TABLE 21
72
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 21 Standard deviation (total risk associated with stock) is 2.67 where as the beta value is 0.61.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price. the kind volatility shown in the grape make this stock more riskier one .so the investor should be cautious enough while he go for an investment in this particular stock.
73
4.3.2 ONGC
STOCK PRICE OPEN CLOSE 880 876.85 886.75 872.5 865.9 874.35 869.05 895.2 895 911.15 919.7 916.45 916.5 890.55 887.1 914.6 916 923.65 923 916.1 919.8 919.95 921 895.05 896 914.8 922 896.3 909.9 894.45 895 891.9 896.7 912.75 918 921.15 912 916.85 925 911.4 1.046071 NIFTY PRICE OPEN CLOSE 3966.25 4016.65 4007.7 4029.8 4027.3 4041 3990.15 4011.45 3983.3 3987.45 3933.3 3963.75 3910.95 3911.95 3852.15 3953.1 3944.55 4059.15 4052.85 4099.65 4090.7 4107.45 4084.9 4096.75 4075.2 4140.25 4126 4137.15 4089.6 4114.5 4102.65 4105.1 4066.6 4098.25 4092.05 4157.95 4148.4 4167.15 4123.85 4137.85 SUM SD TABLE 22 STOCK RETURN Y -0.358 -1.607 0.9759 3.009 1.8045 -0.3534 -2.8314 3.1 0.8352 -0.7476 0.0163 -2.8176 2.0982 -2.7874 -1.698 -0.3464 1.7899 0.3431 0.5318 -1.4703 -0.5131 1.8332 MARKET RETURN X 1.270722 0.551438 0.340178 0.533815 0.104185 0.774159 0.025569 2.620614 2.905274 1.154743 0.409465 0.290093 1.596241 0.270238 0.608862 0.059717 0.778291 1.61044 0.451981 0.339489 16.69551 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y -0.45486 -0.88616 0.331967 1.606265 0.187999 -0.27357 -0.0724 8.123875 2.426348 -0.86324 0.006678 -0.81736 3.349255 -0.75327 -1.03384 -0.02068 1.393061 0.552602 0.240363 -0.49914 12.54389 3.360452
X^2 1.614734 0.304084 0.115721 0.284958 0.010855 0.599322 0.000654 6.86762 8.440619 1.333431 0.167662 0.084154 2.547984 0.073028 0.370712 0.003566 0.605738 2.593516 0.204287 0.115252 26.3379
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 23 74
Standard deviation (total risk associated with stock) is 1.83 where as the beta value is 1.04 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock. So an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more vigilant
MARKET STOCK NIFTY PRICE RETURN RETURN DATE OPEN CLOSE Y X X*Y 1-Feb-07 4083.4 4141.6 -0.1261 1.425283 -0.17972 2-Feb-07 4140.2 4198.7 -1.5707 1.412975 -2.21929 5-Feb-07 4193.15 4219 -1.9448 0.616482 -1.19895 6-Feb-07 4216.55 4228.15 -0.9597 0.275106 -0.26401 7-Feb-07 4198.2 4232.3 -1.989 0.812253 -1.61558 8-Feb-07 4232 4245.3 -1.7582 0.314272 -0.55257 9-Feb-07 4223.5 4239.2 -1.4604 0.37173 -0.54288 12-Feb-07 4187.2 4187.2 -2.3874 0 0 13-Feb-07 4069.1 4132.7 2.9767 1.562999 4.652649 14-Feb-07 4044.9 4057.35 1.7853 0.307795 0.54951 15-Feb-07 4046.8 4155.7 0.1381 2.691015 0.371687 19-Feb-07 4149.25 4177.7 -0.011 0.685666 -0.00757 20-Feb-07 4164.85 4175.45 -3.7198 0.254511 -0.94672 21-Feb-07 4107.15 4132.8 -0.7955 0.624521 -0.49678 22-Feb-07 4096.65 4126.9 -2.0562 0.738408 -1.51835 23-Feb-07 4046 4065.45 -3.4884 0.480722 -1.67694 26-Feb-07 3939.1 3958.9 1.1574 0.502653 0.581788 27-Feb-07 3948.05 3958 -2.0716 0.252023 -0.52209 28-Feb-07 3893.4 3893.4 -1.6474 0 0 SUM -19.929 13.32841 -5.58582 BETA 1.072406 SD 1.7069 VAR 2.913487 TABLE 23 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 912 910.85 920 905.55 928.1 910.05 917 908.2 910 891.9 910 894 897 883.9 888 866.8 860 885.6 885 900.8 905 906.25 906.25 906.15 910 876.15 880 873 872.95 855 860 830 825.1 834.65 835.1 817.8 801.25 788.05 X^2 2.031431 1.996499 0.38005 0.075684 0.659755 0.098767 0.138183 0 2.442966 0.094738 7.241562 0.470138 0.064776 0.390026 0.545247 0.231093 0.25266 0.063516 0 17.17709
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 23
75
Standard deviation (total risk associated with stock) is 1.71 where as the beta value is 1.07 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 788.05 795.95 802 798.9 785 773.05 785 768.95 776.1 764.85 766 779.5 786.6 783.4 786 793.6 798 807.15 791 781.35 789.9 776.5 786 762.85 769 793.15 800 790.8 790.9 811.65 824 852.3 874 843.1 840 850.25 850 864.55 860 874.8 872 880.8 0.514967
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 24
STOCK RETURN Y 1.0025 -0.3865 -1.5223 -2.0446 -1.4496 1.7624 -0.4068 0.9669 1.1466 -1.22 -1.6964 -2.9453 3.1404 -1.15 2.6236 3.4345 -3.5355 1.2202 1.7118 1.7209 1.0092 3.3821 1.9816
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 1.761169 0.860958 6.127571 -4.48681 1.373724 6.530204 0.474203 0.446077 1.083611 4.121186 0.060505 2.492616 5.8786 -0.53901 4.743143 10.16336 1.431789 -1.37391 -2.58418 1.783122 0.870977 41.2189 3.926655
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
76
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 24 The total risk (standard deviation) associated with the stock is 1.98 and the beta is 0.514 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average market return is well above the stock return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
77
RELIANCE ENERGY
STOCK RETURN Y 0.759542 -0.21824 -0.8232 -1.14043 -0.46667 -2.32139 -2.96154 1.554455 2.329435 3.732867 -0.8473 0.733083 -1.57356 -3.74766 -2.52885 -0.88583 -0.35468 -0.89744 0.128713 0.686275 -8.84241 1.795059 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
STOCK PRICE OPEN CLOSE 520.05 524 526.95 525.8 534.5 530.1 530.5 524.45 525 522.55 527.7 515.45 520 504.6 505 512.85 513 524.95 514.35 533.55 537 532.45 532 535.9 537 528.55 535 514.95 520 506.85 508 503.5 507.5 505.7 507 502.45 505 505.65 510 513.5 0.828539
NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 25
X*Y 0.788028 -0.08903 0.786958 0.192923 0.584607 1.292516 4.592677 3.635799 6.371982 2.353276 0.211271 -0.15165 -1.30705 3.256271 -0.79459 0.789172 -0.20322 -1.22047 -0.07431 -0.6848 20.33036 3.222236
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 78
Standard deviation (total risk associated with stock) is 1.95where as the beta value is 0.83 .it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of January this stock is more fluctuating as a comparison to the market price. Frequent up and downs
MARKET STOCK NIFTY PRICE RETURN RETURN DATE OPEN CLOSE Y X X*Y 1-Feb-07 4083.4 4137.2 0.991529 1.31753 1.306368 2-Feb-07 4140.2 4183.5 1.454373 1.045843 1.521046 5-Feb-07 4193.15 4215.35 2.700935 0.529435 1.429969 6-Feb-07 4216.55 4195.9 1.173285 -0.48974 -0.5746 7-Feb-07 4198.2 4224.25 -0.43594 0.620504 -0.2705 8-Feb-07 4232 4223.4 0.901786 -0.20321 -0.18326 9-Feb-07 4223.5 4187.4 -2.46751 -0.85474 2.109082 12-Feb-07 4187.2 4058.3 -4.49107 -3.07843 13.82545 13-Feb-07 4069.1 4044.55 0.35514 -0.60333 -0.21427 14-Feb-07 4044.9 4047.1 1.25 0.054389 0.067987 15-Feb-07 4046.8 4146.2 -1.5245 2.456262 -3.74457 19-Feb-07 4149.25 4164.55 -1.86813 0.368741 -0.68886 20-Feb-07 4164.85 4106.95 -3.39518 -1.39021 4.719995 21-Feb-07 4107.15 4096.2 0.211254 -0.26661 -0.05632 22-Feb-07 4096.65 4040 -2.7783 -1.38284 3.841943 23-Feb-07 4046 3938.95 -2.28682 -2.64582 6.050526 26-Feb-07 3939.1 3942 0.337168 0.073621 0.024823 27-Feb-07 3948.05 3893.9 -1.42997 -1.37156 1.961295 28-Feb-07 3893.4 3745.3 -4.45219 -3.80387 16.93557 SUM -15.7542 -9.62403 48.06167 BETA 0.933932 SD 2.10782 VAR 4.442905 TABLE 26 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 519.4 524.55 526 533.65 535 549.45 554 560.5 562 559.55 560 565.05 569.4 555.35 560 534.85 535 536.9 540 546.75 551 542.6 546 535.8 539 520.7 520.7 521.8 527.3 512.65 516 504.2 504.2 505.9 510.5 503.2 502 479.65
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
79
Standard deviation (total risk associated with stock) is 2.11 where as the beta value is 0.93.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price and the fluctuation in the stock price compel the investor to compete with the bulls and bears in the market.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 479.65 480.9 480.9 475.5 475.5 469.9 469.9 475 475 478.25 478.25 489.2 489.2 480.55 480.55 473.25 473.25 466.15 466.15 458.85 458.85 462.2 462.2 456.05 456.05 457.6 457.6 477.15 477.15 491.45 491.45 492 492 485.25 485.25 475.85 475.85 482.05 482.05 485.8 485.8 494.2 0.492648
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 27
STOCK RETURN Y 0.260607 -1.12289 -1.17771 1.085337 0.684211 2.289597 -1.76819 -1.51909 -1.50026 -1.56602 0.730086 -1.33059 0.339875 4.27229 2.996961 0.111914 -1.37195 -1.93715 1.302932 0.777928 1.729107 3.286983 1.729454
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 0.457839 2.501115 4.740538 2.381756 -0.64842 8.483614 2.061094 -0.70081 -1.41783 5.290157 -0.02604 1.126087 0.636213 2.002446 5.418148 0.331178 0.555611 2.181103 -1.96698 0.806041 1.492321 35.70519 2.99101
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
80
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH The total risk (standard deviation) associated with the stock is 1.73 and the beta is 0.492 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
81
4.4 INFOTECH SECTOR
4.4.1 INFOSYS
STOCK PRICE OPEN CLOSE 2,253.00 2,272.65 2,272.65 2,311.35 2,321.20 2,285.30 2,286.00 2,275.05 2,275.05 2,205.60 2,216.00 2,190.10 2,200.00 2,164.45 2,181.00 2,183.00 2,200.00 2,223.40 2,232.95 2,242.95 2,245.20 2,222.20 2,245.00 2,205.45 2,206.00 2,224.15 2,225.00 2,202.35 2,215.00 2,254.00 2,248.00 2,235.15 2,201.00 2,234.05 2,241.00 2,241.00 2,235.00 2,244.40 2,240.00 2,247.30 0.680402 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 28 STOCK RETURN Y 0.87217 1.702858 -1.54661 -0.479 -3.05268 -1.16877 -1.61591 0.091701 1.063636 0.447838 -1.02441 -1.76169 0.822756 -1.01798 1.760722 -0.57162 1.50159 0 0.420582 0.325893 -3.22893 1.302383 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 0.90488 0.694706 1.478525 0.081031 3.824184 0.650754 2.50591 0.214485 2.909492 0.282326 0.255432 0.364423 0.683409 0.884501 0.553239 0.509248 0.860351 0 -0.24281 -0.32519 17.08889 1.14361
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 29 82
The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.68 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA MARKET STOCK NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 0.842222 1.31753 1.109653 4140.2 4183.5 -0.41538 1.045843 -0.43443 4193.15 4215.35 1.534676 0.529435 0.812511 4216.55 4195.9 0.129956 -0.48974 -0.06364 4198.2 4224.25 4.500011 0.620504 2.792275 4232 4223.4 0.367865 -0.20321 -0.07476 4223.5 4187.4 -0.55382 -0.85474 0.473376 4187.2 4058.3 0.695931 -3.07843 -2.14238 4069.1 4044.55 -1.99064 -0.60333 1.201009 4044.9 4047.1 0.107353 0.054389 0.005839 4046.8 4146.2 2.496882 2.456262 6.132995 4149.25 4164.55 -0.24769 0.368741 -0.09133 4164.85 4106.95 -0.63578 -1.39021 0.88386 4107.15 4096.2 -2.08051 -0.26661 0.554681 4096.65 4040 -0.88821 -1.38284 1.228257 4046 3938.95 -1.7691 -2.64582 4.680714 3939.1 3942 -0.70949 0.073621 -0.05223 3948.05 3893.9 -1.92825 -1.37156 2.644718 3893.4 3745.3 -4.69954 -3.80387 17.87646 SUM -5.24352 -9.62403 37.53758 0.812765 SD 1.946677 VAR 3.78955 TABLE 29 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 2,250.00 2,268.95 2,275.00 2,265.55 2,235.00 2,269.30 2,270.00 2,272.95 2,255.55 2,357.05 2,365.00 2,373.70 2,374.40 2,361.25 2,335.00 2,351.25 2,351.00 2,304.20 2,282.20 2,284.65 2,324.90 2,382.95 2,382.00 2,376.10 2,375.05 2,359.95 2,360.00 2,310.90 2,308.00 2,287.50 2,278.00 2,237.70 2,234.00 2,218.15 2,230.00 2,187.00 2,180.00 2,077.55 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
DATE
GRAPH 29
83
Standard deviation (total risk associated with stock) is 1.94 where as the beta value is 0.81.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price and the fluctuation in the stock price compel the investor to compete with the bulls and bears in the market.
STOCK RETURN Y 3.805288 -3.68513 -3.40488 5.039742 -3.78564 2.188995 -0.44124 -0.2217 -0.56448 -2.6506 1.38469 -2.03589 0.833333 -2.1 1.56917 0.42891 -1.29245 -2.22565 -1.86946 1.467965 1.185464 -6.37357 2.421995 MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 2,080.00 2,159.15 2,173.60 2,093.50 2,077.90 2,007.15 2,013.00 2,114.45 2,167.40 2,085.35 2,090.00 2,135.75 2,130.35 2,120.95 2,120.00 2,115.30 2,117.00 2,105.05 2,075.00 2,020.00 2,051.00 2,079.40 2,090.00 2,047.45 2,070.00 2,087.25 2,100.00 2,055.90 2,061.60 2,093.95 2,110.00 2,119.05 2,120.00 2,092.60 2,105.00 2,058.15 2,030.00 1,992.05 1,961.90 1,990.70 1,995.00 2,018.65 0.954343
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
X*Y 6.685213 8.208193 13.70541 11.05963 3.5876 8.110854 0.514334 -0.10228 -0.53346 8.953977 -0.04939 1.72298 1.559918 -0.98428 2.836871 1.269241 0.523415 2.505945 2.822239 1.521015 1.023125 74.94056 5.866058
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 30
84
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH 30
Standard deviation (total risk associated with stock) is 2.42 where as the beta value is 0.954.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 by some small decimal. The above graph revels that the average stock return is below the market return. In the month of March this stock price showing sudden ups and downs.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor
85
4.4.2 TCS
STOCK NIFTY PRICE RETURN STOCK PRICE OPEN CLOSE OPEN CLOSE Y 1,229.40 1,248.50 3966.25 4007.4 1.553603 1,253.00 1,280.15 4007.7 4024.05 2.1668 1,285.00 1,259.05 4027.3 3988.8 -2.01946 1,265.00 1,263.00 3990.15 3983.4 -0.1581 1,259.00 1,243.80 3983.3 3933.4 -1.20731 1,247.90 1,256.40 3933.3 3911.4 0.681144 1,244.55 1,235.40 3910.95 3850.3 -0.73521 1,198.90 1,277.65 3852.15 3942.25 6.568521 1,290.15 1,323.95 3944.55 4052.45 2.61985 1,350.00 1,326.35 4052.85 4078.4 -1.75185 1,388.95 1,324.10 4090.7 4080.5 -4.66899 1,329.90 1,304.65 4084.9 4076.45 -1.89864 1,305.00 1,315.45 4075.2 4109.05 0.800766 1,315.45 1,298.15 4126 4090.15 -1.31514 1,300.10 1,313.45 4089.6 4102.45 1.026844 1,313.10 1,302.70 4102.65 4066.1 -0.79202 1,311.50 1,307.15 4066.6 4089.9 -0.33168 1,325.00 1,315.45 4092.05 4147.7 -0.72075 1,315.00 1,297.75 4148.4 4124.45 -1.31179 1,297.10 1,277.90 4123.85 4082.7 -1.48023 SUM -2.97363 1.325281 SD 2.297689 TABLE 31 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 1.61187 0.883978 1.93055 0.026746 1.51243 -0.37925 1.140138 15.36347 7.166391 -1.1044 1.164195 0.392751 0.665144 1.142699 0.322646 0.7056 -0.19004 -0.98019 0.757335 1.477048 33.6091 5.279376
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
8 6 RETURNS 4 2 0 -2 -4 -6 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30 Y X
DATE
GRAPH 31
86
Standard deviation (total risk associated with stock) is 2.29 where as the beta value is 1.33 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return.
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA MARKET STOCK NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 0.162797 1.31753 0.21449 4140.2 4183.5 0.115473 1.045843 0.120767 4193.15 4215.35 0.061303 0.529435 0.032456 4216.55 4195.9 -1.11196 -0.48974 0.544567 4198.2 4224.25 0.484615 0.620504 0.300706 4232 4223.4 -0.52616 -0.20321 0.106922 4223.5 4187.4 -1.68016 -0.85474 1.436101 4187.2 4058.3 0.464 -3.07843 -1.42839 4069.1 4044.55 -0.24682 -0.60333 0.14891 4044.9 4047.1 0.618516 0.054389 0.033641 4046.8 4146.2 2.15415 2.456262 5.291157 4149.25 4164.55 0.645459 0.368741 0.238007 4164.85 4106.95 -1.09217 -1.39021 1.518339 4107.15 4096.2 -1.24231 -0.26661 0.331209 4096.65 4040 -0.43846 -1.38284 0.606321 4046 3938.95 -1.36293 -2.64582 3.606083 3939.1 3942 1.108491 0.073621 0.081608 3948.05 3893.9 0.80941 -1.37156 -1.11016 3893.4 3745.3 -3.21168 -3.80387 12.21682 SUM -4.28842 -9.62403 24.28956 0.515349 SD 1.20985 VAR 1.463737 TABLE 32 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 1,289.95 1,292.05 1,299.00 1,300.50 1,305.00 1,305.80 1,313.00 1,298.40 1,300.00 1,306.30 1,311.40 1,304.50 1,309.40 1,287.40 1,250.00 1,255.80 1,256.00 1,252.90 1,253.00 1,260.75 1,265.00 1,292.25 1,301.40 1,309.80 1,313.90 1,299.55 1,300.00 1,283.85 1,300.00 1,294.30 1,295.00 1,277.35 1,272.00 1,286.10 1,254.00 1,264.15 1,233.00 1,193.40 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 32
87
Standard deviation (total risk associated with stock) is 1.887 where as the beta value is 0.83.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 1,200.00 1,254.65 1,254.80 1,208.55 1,190.00 1,155.55 1,210.00 1,197.25 1,202.00 1,191.80 1,190.00 1,218.40 1,228.30 1,212.15 1,224.70 1,235.00 1,225.50 1,265.40 1,225.00 1,213.55 1,230.00 1,234.30 1,241.40 1,237.65 1,216.30 1,260.90 1,260.00 1,253.00 1,261.00 1,267.00 1,277.00 1,303.05 1,312.00 1,288.20 1,285.00 1,261.35 1,269.90 1,201.00 1,188.95 1,248.35 1,248.35 1,233.85 0.910386
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
STOCK RETURN Y 4.554167 -3.68585 -2.89496 -1.05372 -0.84859 2.386555 -1.31483 0.841022 3.255814 -0.93469 0.349593 -0.30208 3.666859 -0.55556 0.475813 2.039937 -1.81402 -1.84047 -5.42562 4.996005 -1.16153 0.733854 2.69163
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 8.000859 8.209787 11.65286 -2.31237 0.804193 8.842868 1.532626 0.387995 3.076909 3.157481 -0.01247 0.25565 6.864 -0.26039 0.860213 6.036632 0.734641 2.072249 8.190828 5.176553 -1.00247 72.26864 7.244874
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 33
88
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
S GRAPH 33 Standard deviation (total risk associated with stock) is 2.40 where as the beta value is 0.910 nearer to one some sort of risk associated with this stock which we can not element an investor can go for making an investment in this stock after having an fundamental analysis . Diversification of his portfolio would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 by some small decimal. The above graph revels that the average stock return is below the market return. In the month of March this stock price showing sudden ups and downs.
The average beta is less than one except in the month of January that means the over all performance of this stock is one want to go for an long term investment he can go for this stock because Infosys is one of leading company in the world and the IT sector itself is more promising than any other sector . Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell
89
4.4.3 WIPRO
STOCK RETURN Y 1.41791 1.339869 -2.49196 -1.79803 -2.93624 -0.70205 0.863248 5.008475 1.040323 -0.70478 1.095238 -2.79098 0.722135 -2.56672 1.593137 -0.68 2.411003 1.86112 -3.22432 -2.813 -3.35563 2.246564 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
STOCK PRICE OPEN CLOSE 603 611.55 612 620.2 622 606.5 609 598.05 596 578.5 584 579.9 585 590.05 590 619.55 620 626.45 631.4 626.95 630 636.9 652.1 633.9 637 641.6 637 620.65 612 621.75 625 620.75 618 632.9 639.4 651.3 651.3 630.3 631 613.25 1.35657
NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 34
X*Y 1.471088 0.546619 2.382254 0.304166 3.678318 0.390893 -1.3387 11.71459 2.845719 -0.44431 -0.27309 0.577341 0.59983 2.230171 0.500582 0.605804 1.381409 2.531037 1.8615 2.806958 34.37218 5.047049
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 0 -2 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30 Y X
DATE
GRAPH 34 90
Standard deviation (total risk associated with stock) is 2.24 where as the beta value is 1.37 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more vigilant.
STOCK MARKET NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 -0.40013 1.31753 -0.52718 4140.2 4183.5 2.079365 1.045843 2.17469 4193.15 4215.35 -1.72868 0.529435 -0.91522 4216.55 4195.9 0.126183 -0.48974 -0.0618 4198.2 4224.25 1.069182 0.620504 0.663432 4232 4223.4 -1.14343 -0.20321 0.232362 4223.5 4187.4 0.641628 -0.85474 -0.54843 4187.2 4058.3 -0.50505 -3.07843 1.554762 4069.1 4044.55 1.399046 -0.60333 -0.84408 4044.9 4047.1 1.944183 0.054389 0.105743 4046.8 4146.2 4.153846 2.456262 10.20293 4149.25 4164.55 0.036711 0.368741 0.013537 4164.85 4106.95 -0.85821 -1.39021 1.193087 4107.15 4096.2 0.98965 -0.26661 -0.26385 4096.65 4040 -2.77528 -1.38284 3.837766 4046 3938.95 -6.55172 -2.64582 17.3347 3939.1 3942 -1.824 0.073621 -0.13428 3948.05 3893.9 -1.69919 -1.37156 2.330542 3893.4 3745.3 -4.1908 -3.80387 15.94127 SUM -9.23671 -9.62403 52.28999 1.109377 SD 2.417854 VAR 5.846019 TABLE 3 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
STOCK PRICE OPEN CLOSE 624.8 622.3 630 643.1 645 633.85 634 634.8 636 642.8 642.8 635.45 639 643.1 633.6 630.4 629 637.8 637.8 650.2 650 677 681 681.25 670 664.25 661.85 668.4 668.4 649.85 667 623.3 625 613.6 615 604.55 587 562.4
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 0 -2 -4 -6 -8 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 Y X
DATE
GRAPH 35 91
Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more careful
STOCK RETURN Y 2.388783 -1.84615 -5.79825 7.092593 -5.80782 3.153153 -2.13668 0.315789 1.195841 -3.43478 -1.6958 0.044248 1.447368 -1.05263 5.724671 1.139456 0.378119 -3.01767 -4.21449 -0.7193 -1.85965 -8.70321 3.332687 MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 577.7 591.5 585 574.2 570 536.95 540 578.3 588 553.85 555 572.5 578 565.65 570 571.8 577 583.9 575 555.25 572 562.3 565 565.25 570 578.25 579.5 573.4 550.25 581.75 588 594.7 595.05 597.3 599.8 581.7 583.7 559.1 570 565.9 570 559.4 1.311418
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 36
X*Y 4.196666 4.11209 23.33924 15.56458 5.503993 11.68334 2.490619 0.145686 1.13013 11.60301 0.060483 -0.03745 2.709332 -0.49337 10.34952 3.371905 -0.15313 3.397708 6.362437 -0.74529 -1.60499 102.9865 13.7008
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
92
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 36
Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more vigilant In the case of Wipro the stock is more volatile and the systematic risk associated with this stock is very high since the beta value on an average greater than 1 it’s above the standard. The fluctuation in this stock mainly because of political and economical reason .but I hope this would be a short term phenomena in the long run this stock showing more colour full picture. so I think for the short time investment this stock not good but if you want hold the stock for a long time obviously it’s a promising one.
93
4.5
AUTOMOBILE INDUSTRY
4.5.1 M&M
STOCK PRICE OPEN CLOSE 913 954.2 964.8 934.25 940 927.15 930 896.55 890 898.55 902 891.8 891.8 876.45 882 910.95 915.35 933.45 947.7 950.9 951 986.25 989.85 963.2 971 968.4 968.95 933.8 935.1 928.15 937 921.1 920 908.25 912 922.25 934.7 925.35 930 901.1 1.17056 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 37 STOCK RETURN Y 4.512596 -3.16646 -1.36702 -3.59677 0.960674 -1.13082 -1.72124 3.282313 1.977386 0.33766 3.706625 -2.69233 -0.26777 -3.62764 -0.74324 -1.69691 -1.27717 1.123904 -1.00032 -3.10753 -9.4941 2.4263 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.9514 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 4.681836 -1.2918 1.306839 0.608454 -1.20347 0.629623 2.669251 7.677178 5.40898 0.212868 -0.92423 0.556933 -0.22241 3.151983 -0.23353 1.511752 -0.73177 1.528457 0.577516 3.100858 29.015 5.887
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 37 94
Standard deviation (total risk associated with stock) is 2.423 where as the beta value is 1.17 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return
STOCK PRICE OPEN CLOSE 906 900.35 909.5 908 915 913 954.75 930.35 930.35 910 946 926 936 908.2 921.95 871.95 879.9 852 866.75 818 884.7 865.55 903 889.3 891 874.4 885 877.05 900 862 875.9 844.1 855.85 822.5 861.1 843.35 817 758.6 0.82983 NIFTY PRICE OPEN CLOSE 4083.4 4137.2 4140.2 4183.5 4193.15 4215.35 4216.55 4195.9 4198.2 4224.25 4232 4223.4 4223.5 4187.4 4187.2 4058.3 4069.1 4044.55 4044.9 4047.1 4046.8 4146.2 4149.25 4164.55 4164.85 4106.95 4107.15 4096.2 4096.65 4040 4046 3938.95 3939.1 3942 3948.05 3893.9 3893.4 3745.3 SUM SD TABLE 38 STOCK RETURN Y -0.62362 -0.16493 -0.21858 -2.55564 -2.18735 -2.11416 -2.97009 -5.42329 -3.17081 -5.62446 -2.16458 -1.51717 -1.86308 -0.89831 -4.22222 -3.63055 -3.89671 -2.06132 -7.1481 -52.455 1.8879 MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.624 VAR
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X*Y -0.82164 -0.17249 -0.11572 1.251593 -1.35726 0.429627 2.538655 16.69521 1.91304 -0.30591 -5.31676 -0.55944 2.590059 0.239496 5.838646 9.605797 -0.28688 2.827226 27.19048 62.184 3.5642
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETUR
STOCK AND MARKET RETURNS COMPARISION
4 2 RETURNS 0 Y -2 X -4 -6 -8 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
DATE
GRAPH 38
95
Standard deviation (total risk associated with stock) is 1.887 where as the beta value is 0.83.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 811.35 805.2 805.2 770.5 770.5 709.2 709.2 725.15 725.15 761.05 761.05 765.6 765.6 733.9 733.9 738.25 738.25 760.35 760.35 749.1 749.1 747.05 747.05 730.7 730.7 738.9 738.9 743.85 743.85 753.5 753.5 781.6 781.6 796.8 796.8 788.55 788.55 762.35 762.35 757.75 757.75 780.4 0.6098
STOCK NIFTY PRICE RETURN OPEN CLOSE Y 3745.4 3811.2 -0.758 3811.65 3726.75 -4.30949 3726.5 3576.5 -7.95587 3577.15 3655.65 2.249013 3661.55 3626.85 4.9507 3627.25 3761.65 0.597858 3761.85 3718 -4.14054 3717.45 3734.6 0.592724 3735.25 3770.55 2.993566 3768.4 3641.1 -1.47958 3644.9 3643.6 -0.27366 3639.35 3608.55 -2.18861 3611.3 3678.9 1.122212 3680.35 3697.6 0.669915 3697.7 3764.55 1.297305 3764.5 3875.9 3.729263 3876.75 3861.05 1.944729 3863.45 3819.95 -1.03539 3818.75 3761.1 -3.32255 3759.15 3798.1 -0.6034 3788.85 3821.55 2.989113 SUM -12.972 SD 2.6355 TABLE 39
MARKET RETURN X 0.017568 -0.02227 -0.04025 0.021945 -0.00948 0.037053 -0.01166 0.004613 0.009451 -0.03378 -0.00036 -0.00846 0.018719 0.004687 0.018079 0.029592 -0.00405 -0.01126 -0.0151 0.010361 0.008631 2.4033 VAR
X*Y -0.01332 0.095989 0.320242 0.049354 -0.04692 0.022152 0.048264 0.002734 0.028291 0.049982 9.76E-05 0.018522 0.021007 0.00314 0.023454 0.110357 -0.00788 0.011658 0.050159 -0.00625 0.025798 46.873 6.9461
X^2 0.000309 0.000496 0.00162 0.000482 8.98E-05 0.001373 0.000136 2.13E-05 8.93E-05 0.001141 1.27E-07 7.16E-05 0.00035 2.2E-05 0.000327 0.000876 1.64E-05 0.000127 0.000228 0.000107 7.45E-05 79.5652
96
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH 39
Standard deviation (total risk associated with stock) is 2.04 where as the beta value is 0.62.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
In the analysis the average beta of the stock in the three month (January, February march ) less than 1 it means the systematic risk is moderate .so proper diversification of the stock will safe guard the investors money, but in terms of return it shows below market tendency.
97
4.5.2 MARUTI UDYOG LTD
STOCK PRICE OPEN CLOSE 939 968.6 976.5 974.55 974.55 967.35 969.65 934.95 934.9 897.95 905 886.45 890 880.5 888 905.8 914.7 922.35 922 906.7 913 910.65 930 908.75 908 918.65 922 912.3 915 938.8 940 918.95 921.1 934.15 939 948.05 949.8 936.85 939 924.9 1.239534 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 40 STOCK R Y 3.15229 -0.19969 -0.7388 -3.57861 -3.95229 -2.04972 -1.06742 2.004505 0.83634 -1.65944 -0.25739 -2.28495 1.172907 -1.05206 2.601093 -2.23936 1.416784 0.963791 -1.36344 -1.5016 -9.79707 1.967669 MARKET X 3.15229 -0.19969 -0.7388 -3.57861 -3.95229 -2.04972 -1.06742 2.004505 0.83634 -1.65944 -0.25739 -2.28495 1.172907 -1.05206 2.601093 -2.23936 1.416784 0.963791 -1.36344 -1.5016 -9.79707 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 9.93693 0.039877 0.545829 12.80646 15.62063 4.201367 1.139376 4.018038 0.699464 2.753728 0.066251 5.220979 1.375712 1.106832 6.765684 5.014741 2.007278 0.928894 1.858982 2.254795 95.98259 3.871722
X^2 9.93693 0.039877 0.545829 12.80646 15.62063 4.201367 1.139376 4.018038 0.699464 2.753728 0.066251 5.220979 1.375712 1.106832 6.765684 5.014741 2.007278 0.928894 1.858982 2.254795 78.36184
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 40
98
Standard deviation (total risk associated with stock) is 1.23 where as the beta value is 1.96 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Here the unsystematic risk very less so diversification alone may not be ensure the safety of your money
ST MARKET OCK R NIFTY PRICE DATE OPEN CLOSE Y X X*Y 1-Feb-07 4083.4 4137.2 1.659639 1.31753 2.186623 2-Feb-07 4140.2 4183.5 0.462643 1.045843 0.483852 5-Feb-07 4193.15 4215.35 1.974381 0.529435 1.045306 6-Feb-07 4216.55 4195.9 -1.11601 -0.48974 0.546553 7-Feb-07 4198.2 4224.25 -0.09449 0.620504 -0.05863 8-Feb-07 4232 4223.4 1.150694 -0.20321 -0.23384 9-Feb-07 4223.5 4187.4 -2.16612 -0.85474 1.851473 12-Feb-07 4187.2 4058.3 -3.15387 -3.07843 9.708968 13-Feb-07 4069.1 4044.55 -2.3136 -0.60333 1.395856 14-Feb-07 4044.9 4047.1 -3.79953 0.054389 -0.20665 15-Feb-07 4046.8 4146.2 4.107112 2.456262 10.08814 19-Feb-07 4149.25 4164.55 2.443261 0.368741 0.900931 20-Feb-07 4164.85 4106.95 -2.33029 -1.39021 3.239581 21-Feb-07 4107.15 4096.2 0.604873 -0.26661 -0.16126 22-Feb-07 4096.65 4040 -2.02082 -1.38284 2.794466 23-Feb-07 4046 3938.95 -1.875 -2.64582 4.960918 26-Feb-07 3939.1 3942 1.713955 0.073621 0.126183 27-Feb-07 3948.05 3893.9 0.996243 -1.37156 -1.36641 28-Feb-07 3893.4 3745.3 -5.11245 -3.80387 19.44712 SUM -8.86938 -9.62403 85.35922 BETA 0.921586 SD 2.427088 VAR 5.890755 TABLE 41 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 924.9 940.25 940.25 944.6 944.6 963.25 963.25 952.5 952.5 951.6 951.6 962.55 962.55 941.7 941.7 912 912 890.9 890.9 857.05 857.05 892.25 892.25 914.05 914.05 892.75 892.75 898.15 898.15 880 880 863.5 863.5 878.3 878.3 887.05 887.05 841.7
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 92.62204
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 2/1 2/3 2/5 2/7 2/9
DATE
GRAPH 41
99
Standard deviation (total risk associated with stock) is 2.427 where as the beta value is 0.921.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is and the market return looking southward.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 848 840.9 844 833.1 825 772.9 790 791.75 797 774.85 787 792.35 792 787.2 789.8 797.1 800 801.55 791 791.75 804.1 796.15 798 780.1 786 788.85 792 789.65 796 791.65 790.5 831.3 833 840.65 837.15 821.7 775.25 796.65 828.5 812.45 812 820.2 0.598613
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 42
STOCK R Y -0.83726 -1.29147 -6.31515 0.221519 -2.77917 0.679797 -0.60606 0.924285 0.19375 0.094817 -0.98868 -2.24311 0.362595 -0.29672 -0.54648 5.16129 0.918367 -1.84555 2.7604 -1.93724 1.009852 -7.36022 2.224652
MARKET X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y -1.47092 2.876595 25.4199 0.48612 2.633783 2.518841 0.706454 0.426407 0.183104 -0.3203 0.035263 1.898353 0.678743 -0.13907 -0.98797 15.27342 -0.37192 2.077969 -4.16726 -2.00724 0.871562 46.62182 4.949078
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
100
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29 Y X
DATE
GRAPH 42
Standard deviation (total risk associated with stock) is 2.224 where as the beta value is 0.5986.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price. The average stock return shows a negative trend.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
101
4.5.3 TATA MOTOR
STOCK PRICE OPEN CLOSE 902.1 929.5 934.8 938.25 980 947.1 950 937.4 935 928.5 929 911.1 908.9 908.45 910 918.35 921 941.2 949.75 948.5 950 957.55 964.4 964.75 975 954.45 957.9 950.7 955 963.3 965 950.45 955 916.05 954 927.65 927 899.45 910 878.3 0.699116 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 43 STOCK RETURN Y 3.037357 0.369063 -3.35714 -1.32632 -0.69519 -1.9268 -0.04951 0.917582 2.193268 -0.13161 0.794737 0.036292 -2.10769 -0.75164 0.86911 -1.50777 -4.07853 -2.76205 -2.97195 -3.48352 -16.9323 1.944274 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 3.15127 0.150565 3.209346 0.224368 0.870882 1.072814 0.076779 2.146183 5.999509 -0.08297 -0.19816 -0.00751 -1.75072 0.653089 0.273084 1.343255 -2.33684 -3.75627 1.7158 3.476041 16.23052 3.780203
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
TIME
Y X
DATE
GRAPH 43
102
Standard deviation (total risk associated with stock) is 1.94 where as the beta value is 0.699.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
STOCK PRICE OPEN CLOSE 888.8 906.35 919.8 909.85 914 919.05 923 920.05 920.9 902.3 912 896.8 896.8 905.05 930 875.05 874 866.75 874 850.2 870 869.3 880 869.8 869 856 856 858.85 860 834.8 845.5 817 820 839.55 843.5 823.35 800 782.6 0.784898 NIFTY PRICE OPEN CLOSE 4083.4 4137.2 4140.2 4183.5 4193.15 4215.35 4216.55 4195.9 4198.2 4224.25 4232 4223.4 4223.5 4187.4 4187.2 4058.3 4069.1 4044.55 4044.9 4047.1 4046.8 4146.2 4149.25 4164.55 4164.85 4106.95 4107.15 4096.2 4096.65 4040 4046 3938.95 3939.1 3942 3948.05 3893.9 3893.4 3745.3 SUM SD STOCK RETURN Y 1.974572 -1.08176 0.552516 -0.31961 -2.01976 -1.66667 0.919938 -5.9086 -0.82952 -2.72311 -0.08046 -1.15909 -1.49597 0.332944 -2.93023 -3.37079 2.384146 -2.38886 -2.175 -21.9853 1.979394 MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 VAR
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X*Y 2.601557 -1.13135 0.292521 0.156525 -1.25327 0.338689 -0.78631 18.18922 0.500472 -0.14811 -0.19763 -0.4274 2.07971 -0.08877 4.052035 8.918505 0.175523 3.276467 8.273424 44.82181 3.918002
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
TABLE 44 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 2 RETURNS 0 Y -2 X -4 -6 -8 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 2/1 2/3 2/5 2/7 2/9
DATE
GRAPH 44
103
Standard deviation (total risk associated with stock) is 1.97where as the beta value is 0.784.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 801 789.05 795 775.4 774.1 739.9 746 726.6 747.5 738.6 750.1 766.85 774.95 757.15 757.25 764.7 766 773.1 722.5 743.65 750 725.95 731.1 748.25 751 771.7 774.25 769.25 772 775.8 781 805.1 806 789.55 745 752.55 750 719.6 728.95 716.45 723 728.2 0.468065
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
STOCK RETURN Y -1.49189 -2.46541 -4.41803 -2.60054 -1.19064 2.233036 -2.29692 0.983823 0.926893 2.927336 -3.20667 2.34578 2.756325 -0.64579 0.492228 3.085787 -2.04094 1.013423 -4.05333 -1.7148 0.719225 -8.64109 2.363793
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y -2.62098 5.491407 17.78358 -5.70684 1.128349 8.274036 2.677407 0.453875 0.875961 -9.88881 0.11437 -1.98525 5.15957 -0.30268 0.889889 9.131537 0.826538 -1.14105 6.11914 -1.77677 0.620734 36.12403 5.587515
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 45
104
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 45
The total risk (standard deviation) associated with the stock is 2.36 and the beta is 0.468 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
105
CHAPTER V
FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 FINDINGS
• When comparing the beta value banking companies the average beta greater than one that means the risk associated with those stocks are pretty high and the price of the shares are more fluctuating .one of the reason for this fluctuation may the inflationary trend in the economy banking shares are more bound to interest rate risk . • Pharmaceutical companies beta value less than one means risk is comparatively low so diversification of portfolio may help the investor to eliminate the controllable risk associated with this stocks .the growth in pharma stock mainly because of the growing strength of the Indian pharmaceutical companies .they are largely venturing out of the country through mergers and acquisitions and the increasing consideration of global players India is a low cost hub of research and development. • The beta value of oil and gas companies is less than one but the price of the stocks are highly fluctuating because of the ups and downs of crude oil price in the international market. • IT companies shares are promising one they are more bound to international risk since most of the IT companies largely depends on the US market any downward trend in the US economy may have a negative impact on these companies shares but for the long term investment this shares are promising one . • The stocks of automobile companies are subjected to less risk since the beta is less than one. Stock price of auto companies are growing mainly because of the strong bottom line of these companies .increasing strength of Indian middle class largely responsible for this growth. • Two stocks Dr.reddy’s lab and Ranbaxy shows negative beta in the month of March and February respectively. That means the systematic risk associated with this stock in that particular months is negative.
106
5.2 CONCLUSION
As a whole the stock market is sometime highly volatile .it depends upon the investors how he can make use of this in order to get the money which he has put in the market .an investor should be in a position to analyze the various investment option available to him and thus minimize the risk and maximize the returns .
The investor should analyze the market on a continuous basis which will help them to pick the right companies to invest their funds. the beta value, standard deviation and variance helps the investors in arriving at decision .the investors should be in a position to interpret the data in the right manner to arrive at important conclusions and investment decision .
I hope this dissertation will help the investors as a guiding record in future and help them to make appropriate investment decisions.
107
5.3 RECOMMENDATION
•
Based on the finding derived at ,risk less investment can be made in the pharma stocks .they are volatile but still the risk associated with that stocks are less .
•
In the pharma sector I would suggest you Dr.reddy’s lab and Ranbaxy is the best one anybody can blindly invest in that shares return is must.
•
In my view InfoTech shares are more volatile next to banking investment in info shares could be more riskier since Indian IT companies are more service based rather than product based so anybody can enter in to that sooner or later but the advantage of Indian IT companies are the talent pool available in India
•
When an investor opts to enter the stock market he should first gather sufficient information about the type of investment options available to him
•
The investor should be in a position to decide where and how much of funds are he ready to invest in particular security.
• •
He should diversify his investment portfolio so that he is exposed to minimum risk. Investor should not depend entirely on the past returns as the future is uncertain and the stock market is highly volatile.
•
The investor must be in a position to determine the degree of risk involved and then invest in any security.
•
He should not follow the foot of others while investing because usually people tend to go by the trend.
•
An investor must be in a position to judge which is the right time to enter into the market and quit the market.
108
BIBLIOGRAPHY
. BOOKS Investment management –Preeti Singh-tenth edition –Himalaya publication 2002 Investment analysis and portfolio management –Prasanna Chandra-second edition –Tata McGraw hill publishing company -2005 Security analysis and portfolio management –Donald E Fischer, Ronald j Jordan –sixth edition –prentice hall of India private ltd 2000 Modern portfolio theory and investment analysis –Edwin J Elton, Martin J Gruber –fifth edition –john Wiley & sons -2002 Investment management –V A Avandi-fifth Edition –Himalaya publication house 2003 JOURNALS The ICFAI journal of financial risk management –vol 12 issue 7-June 2006 Business week –vol 26 issue 41 February 2007 The ICFAI journal of applied finance vol 8 issue 8 august 2005
WEBSITES www.economywatch.com/indian economy www.indiainfoline.com www.nse_india .com/equity www.bse_india .com / equity www.vikipidia.com
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doc_153818510.pdf
The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions.
ACKNOWLEDGEMENTS
First and foremost, I praise and thank God Almighty from the depth of my heart, which has been the source of strength in the completion of this project work. It is my profound concern to thank the principal, Fr. Josekutty P.D, M. COM, Kristu Jayanti College who paved the path for offering me this opportunity and avenues of infinite possibilities of knowledge. I further express my deep sense of gratitude to Prof. A.M.Tatti MBA, coordinator of MBA department, Kristu Jayanti College for his constant encouragement and valuable help. I wish to extend my sincere and profound thanks to prof.Arun Kumar, MBA dean Kristu Jayanti college for the help extend towards me during the period of dissertation work. And I am deeply indebted to Prof. Aloysius Edward, Kristu Jayanti College, for his guidance, assistance and for giving all the formal support to conduct this study and for completing this project work. I am also thankful to the librarian, Kristu Jayanti College for their encouragement and valuable help. I take this opportunity to acknowledge indebt ness to Mr. Liju Varghese Thomas, Mathew Abraham, Jino Thomas and Tony Chacko for their earnest support and cooperation in the course of my study. I am also thankful to my parents and friends for their encouragement and support Finally I would like to express my sincere gratitude to all those who spend their valuable time for providing necessary data for this organizational study.
Abhilash p.j
EXECUTIVE SUMMARY
To day the avenues for investment are abundant like bank deposits, property insurance, shares etc. but taking an investment decision would be more critical. Analysis the risk associated with every investment option and evaluate the return out of that investment become very crucial .since the globalization and the privatization move of the Indian economy during the last decades of the 20 th century pumped billions of foreign capital into the Indian economy as in the form of FDI and FII that could be one reason to drive the Indian economy into newer heights .Indian stock market also part of this unparallel growth. The confidence of primary and secondary market investors also increased several fold, these changing scenario encourage people to invest more in shares and bond who earlier park their saving as fixed deposits and other type of investment like property ,gold etc,
The topic ‘risk and return analyses relevant in this circumstance .i have been selected five sectors which have an important role in propelling Indian growth engine. The sectors are banking, pharmaceutical, automobile, information technology, automobile and oil and gas sector. These entire five sectors have a different perspective in terms of profit making, growth, employment generation etc. the companies come under study are HDFC Bank, ICICI bank, SBI, Dr.reddy’s lab, Ranbaxy, sun pharma, BPCL, ONGC, Reliance, Infosys ,TCS, Wipro, M&M, Tata motors, Maruti Udyog ltd etc.
The stock price where taken from the S&P CNX Nifty .the stock price for the month of January, February and march 2007 .for calculating beta and standard deviation mathematical formula being used .the beta and standard deviation helps to find out total risk and systematic risk The main objectives are to calculating the beta and variance to help the investors to arrive at a decision of invest in the shares which offer maximum return with minimum risk and also to gain knowledge of the stock market .the findings and suggestion certainly would be help the investors.
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TABLE OF CONTENTS
CHAPTER NO
CONTENT
PAGE NO
1
INTRODUCTION
6-17
2
RESEARCH DESIGN
18-23
3
PROFILE OF THE INDUSTRIES
24-45
4
DATA ANALYSIS AND INTERPRETATION FINDINGS,CONCLUSIONS AND
46-105
5
RECOMMENDATIONS
106-109
BIBLIOGRAPHY
110
3
NO
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.1 4.11 4.12 4.13 4.14 4.16 4.17 4.18 4.19 4.2 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.28 4.29 4.3 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.4 4.41 4.42 4.43 4.44 4.45
LIST OF TABLES
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY-FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY -MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL-MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC -JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS-MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –MARCH TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –JANUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –FEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –MARCH TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORS-JANUARY TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORSFEBRUARY TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TATAMOTORS-MARCH
PAGE
56 57 58 60 61 62 64 65 66 68 70 71 72 73 75 76 77 79 80 81 82 84 86 87 90 91 92 94 95 96 98 99 100 102 103 104 106 107 108 110 111 112 113 114 115
4
NO
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.40 4.41 4.42 4.43 4.44 4.45
LIST OF GRAPH
PAGE NO
56 57 59 60 61 62 64 65 66 67 69 70 71 72 74 75 76 78 79 81 90 91 92 93 95 96 97 98 100 101 102 103 105 106 107 108 109 110 111 112 115 116 117 118 120
STOCK RETURN V/S MARKET RETURN OF HDFC –JANUARY STOCK RETURN V/S MARKET RETURN OF HDFC –FEBRUARY STOCK RETURN V/S MARKET RETURN OF HDFC -MARCH STOCK RETURN V/S MARKET RETURN OF ICICI –JANUARY STOCK RETURN V/S MARKET RETURN OF ICICI –FEBRUARY STOCK RETURN V/S MARKET RETURN OF ICICI -MARCH STOCK RETURN V/S MARKET RETURN OF SBI - JANUARY STOCK RETURN V/S MARKET RETURN OF SBI -FEBRUARY STOCK RETURN V/S MARKET RETURN OF SBI –MARCH STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –JANUARY STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –FEBRUARY STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –MARCH STOCK RETURN V/S MARKET RETURN OF RANBAXY –JANUARY STOCK RETURN V/S MARKET RETURN OF RANBAXY-FEBRUARY STOCK RETURN V/S MARKET RETURN OF RANBAXY –MARCH STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-JANUARY STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-FEBRUARY STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-MARCH STOCK RETURN V/S MARKET RETURN OF BPCL –JANUARY STOCK RETURN V/S MARKET RETURN OF BPCL –FEBRUARY STOCK RETURN V/S MARKET RETURN OF BPCL- MARCH STOCK RETURN V/S MARKET RETURN OF ONGC –JANUARY STOCK RETURN V/S MARKET RETURN OF ONGC –FEBRUARY STOCK RETURN V/S MARKET RETURN OF ONGC –MARCH STOCK RETURN V/S MARKET RETURN OF RELIANCE –JANUARY STOCK RETURN V/S MARKET RETURN OF RELIANCE –FEBRUARY STOCK RETURN V/S MARKET RETURN OF RELIANCE –MARCH STOCK RETURN V/S MARKET RETURN OF INFOSYS –JANUARY STOCK RETURN V/S MARKET RETURN OF INFOSYS –FEBRUARY STOCK RETURN V/S MARKET RETURN OF INFOSYS –MARCH STOCK RETURN V/S MARKET RETURN OF TCS –JANUARY STOCK RETURN V/S MARKET RETURN OF TCS –FEBRUARY STOCK RETURN V/S MARKET RETURN OF TCS-MARCH STOCK RETURN V/S MARKET RETURN OF WIPRO –JANUARY STOCK RETURN V/S MARKET RETURN OF WIPRO –FEBRUARY STOCK RETURN V/S MARKET RETURN OF WIPRO-MARCH STOCK RETURN V/S MARKET RETURN OF M&M –JANUARY STOCK RETURN V/S MARKET RETURN OF M&M –FEBRUARY STOCK RETURN V/S MARKET RETURN OF M&M –MARCH STOCK RETURN V/S MARKET RETURN OF MARUTI –JANUARY STOCK RETURN V/S MARKET RETURN OF MARUTI –FEBRUARY STOCK RETURN V/S MARKET RETURN OF MARUTI –MARCH STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-JANUARY STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-FEBRUARY STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-MARCH
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CHAPTER: I
INTRODUCTION TO THE RESERCH TOPIC
1.1 INTRODUCTION
Before 1990’s the main area of investment were bank deposits, gold, property and such other forms of tangible assets but for the past few years we had been witnessing a lot of investment opportunities coming up in the form of primary and secondary market since the globalization which had its inception during 90’s foreign capital flowing to India .new
multinational entered the market and a lot of investment opportunities were opened to the people who kept their saving in bank and other kind of fixed assets . The topic analysis of risk and return in the banking, pharmaceutical, IT, oil & gas and automobile had been selected because a lot of investors are making investment in the shares of different companies. 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.
The companies which I have been selected for research having different growth strategies and difference in revenue, profitability and market capitalization.
Currently (2007), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The Indian pharmaceutical is one of the fast growing sector not only in India but also the whole world There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields notwithstanding, generics are still a large part of the picture. London research company Global 6
Insight estimates that India’s share of the global generics market will have risen from 4% to 35% in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago.
Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and gas industry is among the largest contributors to the central and state exchequers in India. Its share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a capacity to process 148.97 million tones per year as of December 2006, are run by state-run companies. Economic Survey 2006-07 says: During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from 127.42 million tones in the previous year. During April-December 2006, the throughput was 107.42 million tones.
The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000. No other Indian industry has performed so well against the global competition. Today, India exports software and services to nearly 95 countries around the world. The share of North America (U.S. & Canada) in India’s software exports is about 61 per cent. In 1999-2000, more than a third of Fortune 500 companies outsourced their software requirements to India
The Indian automotive industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automotive industry has witnessed is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes.
The data collected is mainly secondary in nature and no questionnaire has been formulated for the research .the data(that is the stock price and S&P CNX Nifty index)has been 7
collected from various websites and has been analyzed and interpreted in order to find out the spread of return with the help of standard deviation and beta.
1.2 SUBJECT BACKGROUND OF THE RESEARCH TOPIC
A company ,which has a high intrinsic worth ,is not necessarily the best stock to buy .it may have no growth prospects or it may be overpriced .similarly a company that performs well during any one year may not be the best to buy .on the contrary ,a company which has been badly for sometime might have turn the corner and it may be the best to buy ,as its shares may be under prices and it has good prospects of growth hence an analysis of risk or return guides an investor in proper profitable investment .
1.2.1 RETURN
Return is the primary motivating force that drives investment .it represents the reward for undertaking investment .since the game of investing is about returns, measurement of realized return is necessary to assess how well the investment manager has done. In addition historical return is often used as an important input on estimating future return.
THE COMPONENT OF RETURN The return of an investment consist of two component Current return the component that often comes to mind when one is thinking about return is the periodic cash flow such as dividend or interest generated by the investment .current return is measured as the periodic income in relation to the beginning price of the investment. Capital return the second component of return is reflected in the price change called the capital
return .it is simply the price appreciation (or depreciation) divided by the beginning price of the assets. Thus total return =current return + capital return
1.2.2 RISK
Risk refers to the possibility tat the actual outcome of an investment will differ from its expected outcome .more specifically, most investors are concerned about the actual outcome being less than the expected outcome .the wider the range of possible outcomes the greater the risk.
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DIFFERENT TYPE OF RISK
Forces that contribute to variance in return-price or dividend-constitute the element of risk .some influence are external to the organization can not be controlled other influence are internal to the organization that are controllable to a large extent .in an investment decision those factors which is uncontrollable is called systematic risk .on the other hand those factors are controllable and internal to the organization are called unsystematic risk these are the two broad categories of risk .
SYSTEMATIC RISK.
MARKET RISK
This is the most familiar of all risks. Also referred to as volatility, market risk is the the day-to-day fluctuations in a stock's price. Market risk applies mainly to stocks and options. As a whole, stocks tend to perform well during a bull market and poorly during a bear market volatility is not so much a cause but an effect of certain market forces. Volatility is a measure of risk because it refers to the behavior, or "temperament", of your investment rather than the reason for this behavior. Because market movement is the reason why people can make money from stocks, volatility is essential for returns, and the more unstable the investment the more chance there is that it will experience a dramatic change in either direction. Market risk is caused by investors reaction to the tangible as well as intangible events .expectation of lower corporate profile in general may cause the larger body of common stocks to fall in price .investors are expressing their judgment that too much is being paid for earning in the light of anticipated events .the basis for the reaction is a set of real, tangible, events – political, social or economic.
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INTEREST RATE RISK – Interest rate risk is the risk that an investment's value will change as a result of a change in interest rates. This risk affects the value of bonds more directly than stocks. the root cause of interest rate risk lies in the fact that ,if the RBI increase or decrease the interest rate (repo rate ) the interest on government securities rise or fall ,the rate of return demanded on alternative investment vehicle ,such as stocks and bonds issued in the private sector ,rise or fall .in other words as the cost of money changes for nearly risk free securities, the cost of money to more risk prone issues will also change. INFLATION RISK (PURCHASING POWER RISK) The loss of purchasing power due to the effects of inflation. When inflation is present, the currency loses its value due to the rising price level in the economy. The higher the inflation rate, the faster the money loses its value. LIQUIDITY RISK The uncertainty associated with the ability to sell an asset on short notice without loss of value. A highly liquid asset can be sold for fair value on short notice. This is because there are many interested buyers and sellers in the market. An illiquid asset is hard to sell because there there few interested buyers. This type of risk is important in some project investment decisions but is discussed extensively in Investment courses. FOREIGN EXCHANGE RISKS Uncertainty that is associated with potential changes in the foreign exchange value of a currency. There are two major types: translation risk and transaction risks. TRANSLATION RISKS Uncertainty associated with the translation of foreign currency denominated accounting statements into the home currency. This risk is extensively discussed in Multinational Financial Management courses.
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TRANSACTIONS RISKS Uncertainty associated with the home currency values of transactions that may be affected by changes in foreign currency values. This risk is extensively discussed in the Multinational Financial Management courses.
UNSYSTEMATIC RISK
Unsystematic risk are those risk which is firm specific or peculiar to a firm or industry the different type of unsystematic risk are discussing below. BUSINESS RISK The uncertainty associated with a business firm's operating environment and reflected in the variability of earnings before interest and taxes (EBIT). Since this earnings measure has not had financing expenses removed, it reflects the risk associated with business operations rather than methods of debt financing. This risk is often discussed in General Business Management courses. Business risk can be divided into two board categories: external and internal .internal business risk is largely associated with the efficiency with which a firm conduct its operation within the border operating environment imposed upon it .each firm has it s on internal risk, and the degree to which it is successful in coping with them is reflected in operating efficiency. FINANCIAL RISK The uncertainty brought about by the choice of a firm’s financing methods and reflected in the variability of earnings before taxes (EBT), a measure of earnings that has been adjusted for and is influenced by the cost of debt financing. This risk is often discussed within the context of the Capital Structure topics. By Engaging in debt financing the firm changes the characteristics of the earning stream available to the common stock holders, specifically ,the reliance in debt financing ,called financial leverage ,has at least three important effect on common stock holders .1)increase the variability of their return 2)effect their expectation concerning to the return 3)increase the risk of being ruined . 11
1.2.3 INVESTMENT
Investment is the employment of the fund with aim of achieving additional growth in value .an investment is a sacrifice of current money or other resources for future benefits .it is the allocation of monetary resources to assets that are expected to yield gain or positive return over a given periods of time .it involves the commitment of resources which have saved or put away from current consumption in the hope that some benefits will acure in future. The three key aspects of any investment are time capital gain and risk the sacrifice takes place now and is certain .the benefits are expected in the future and tend to be uncertain. Risk: investment is considered to involve limited risk and is confined to those avenues where the principle is safe. No investments are completely risk free Capital gain: If purchase of securities is preceded by proper investigation and analysis and review to receive a stable return over a period of time it is termed as investment. Time: A longer time, fund allocation is termed as investment. The investor constantly evaluates the work of a security. There has to be a constant review of securities to find out whether it is a suitable investment. The investment is an attempt to carefully plan, evaluate and allocate funds in various investments which offer safety of principal, moderate and continuous return and long term commitment.
1.2.4 INVESTMENT DECISION
In stock market parlance investment decision refers to making a decision regarding the buy and sell orders. As we know economic analysis or factors play in any investment decision which is made for making a gain and better returns. Economic analysis and forecasting company performance and of returns is necessary for making investment. Any investment is risky and such investment decision is difficult to make. It is based on availability of money and information on economy industry and company, share prices are ruled by expectation of the market and the market sentiments. As we know these decisions are influenced by availability of money and flow of information. What to buy and sell also depends on the fair value of shares and the extent of over valuation and under valuation. For making such a decision the common investors have to depend more up on a study of fundamental rather than technical, although technical are also important 12
1.2.5 PRIMARY AND SECONDARY CAPITAL MARKET
Primary market is the market for issue of new securities .it therefore essentially consists of the companies issuing securities, he public subscribing to these securities, he regulatory agencies like SEBI and the government, merchant bankers and bank who underwrite the issues and help in collecting subscription money from the public. 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.
For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.
1.2.6 STOCK MARKET
Stock market is place where the stocks or shares are purchased and sold .stock exchange is an organized market where securities are traded .these securities are issued by the government, semi-government, public sector undertakings and companies for borrowing funds and raising resources. securities are defined as any monetary claims and includes stock ,shares, debentures ,bonds etc .if these securities are marketable as in the case of government stocks; they are transferable by endorsement and are like moveable property .they are tradable on the stock exchange .
Exchanges are located all over the world with the most famous one being the New York stock exchange. The NYSE annually traded almost 14 trillion dollars worth of capital .thousands of stocks are listed on this exchange. when you buy a stock you will need to learn which exchanges list it other than locating quote in the news paper with online trading and the automation of order system ,there is very little reason to determine where the stock trades from the customers viewpoint.
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There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE), which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years, there has been a rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the country’s stage of economic development. The number of listed companies increased from 5,968 in March 1990 to about 20,000 by May 2006 and market capitalization has grown almost 11 times during the same period. The debt market, however, is almost nonexistent
1.2.7 BOMBAY STOCK EXCHANGE LIMITED (BSE)
Bombay Stock Exchange Limited 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 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The day-to-day operations of the Exchange are managed by the Managing Director and a management team of professionals. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and 14
enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.
1.2.8 THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000
It is the largest stock exchange in India and the third largest in the world in terms of volume of transactions. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India. In March 2006, the NSE had a total market capitalization of 4,380,774 crore INR making it the second-largest stock market in South Asia in terms of market-capitalization.
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1.2.9 S&P CNX NIFTY
S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. The average total traded value for the last six months of all Nifty stocks is approximately 45.24% of the traded value of all stocks on the NSE .Nifty stocks represent about 57.92% of the total market capitalization as on April 10, 2007. Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.08% .P CNX Nifty is professionally maintained and is ideal for derivatives trading
1.2.10 TYPES OF STOCKS
1. BLUE CHIP STOCKS the term ‘blue chip’ comes from poker, where the blue chip carry the higest value .large established firms with a long record of profit growth, dividend payout and a reputation for quality management, products and service are referred to as blue chip companies. these firms are generally leaders in their industries and are considered likely candidates for long term growth .because blue chip companies are held in such high esteem, they often set the standard by which other companies in their field are measured .well known blue chip companies includes IBM, Coco-Cola, general electric and McDonald 2. PENNY STOCKS Penny stocks are low priced speculative stock, that are very risky .companies with a short or erratic history of revenues and earnings issue them .they are the lowest of the low in price and many stock exchanges choose not trade them. 3. INCOME STOCKS Income stocks are those stocks that pay higher than average dividend over a sustained period .these above average dividend tends to be paid by large, established companies with stable 16
earnings. Income stocks are popular with investors who want steady income for a long time and who do not need much growth in their stocks value . 4) VALUE STOCK A value stock is a stock that is currently selling at a low price .companies that have good earning and growth potential but whose stock price do not reflect this are considered value companies .both the market and investors are largely ignoring their stocks. Investors who buy value stocks believe that thes3e stocks are only temporarily out of favor and will soon experience great growth .factors such as new management, a new product or operation that are more efficient may make a value stock grow quickly.
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CHAPTER 2:
RESEARCH DESIGN
2.1 TITLE OF THE DISSERTATION
The title of the dissertation is “Analysis of risk and return in banking,pharmaceutical, InfoTech, oil &gas and automobile sector”
2.2 STATEMENT OF THE PROBLEM
Security analysis is built around the idea that investors are concerned with two principal properties inherent in securities: the return that can be expected from holding a security, and risk that the return that is achieved will be less than the return that was expected. The primary purpose of this dissertation is to focus upon return and risk and how they are measured. Investors want to maximize expected returns subjected to their tolerance for risk. Return is the motivating force and the principle reward in the investment process and it is the key method available to investors in comparing alternative investment. Measuring historical return allows investors to assess how well have done, and it plays a part in the estimation of future unknown returns. Making the money only the half of the battle safeguarding the hard earned money is the top most concern for many investors, simply investing some where and waiting for the blessings of the goddess of luck doesn’t make any sense proper analysis of risk and the expected return is very important to become an efficient investor. Keeping this point in mind dissertation titled ‘risk and return analysis’ has been chosen to analyze fifteen different companies from five different sectors namely automobile, InfoTech, Oil&gas, Pharma and Banking .The share price and market price for three consecutive month starting from January 2007 to march 2007 ,were selected for analysis This study is conducted to find out how the expected return is calculated from an investment and risk associated with that investment by measuring beta (?) and standard deviation. .
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2.3 REVIEW OF LITERATURE
In the area of risk and return analysis two well known economist made effort to study the relation between risk and return and they are the people who quantify the risk and return aspects of an instrument .they are Harry markowitz and William Sharpe. Very broadly the investment process consists of two tasks. The first task is security analysis which focuses on assessing the risk and return characteristics of the available investment alternatives. The second task is portfolio selection which involves choosing the best possible portfolio from the set of feasible portfolio.
Portfolio theory, originally proposed by Harry markowitz in the 1950’s was the first formal attempt to quantify the risk of portfolio and develop a methodology for determining the optimal portfolio .prior to the development of portfolio theory ,investors dealt with the concept of return and risk somewhat loosely .Harry markowitz was the first person to show quantitatively why and how diversification reduce risk .in recognition of his seminal contribution in this field he was awarded the Nobel prize in economics in 1990. Harry markowitz developed an approach that helps the investors to achieve his optimal portfolio position .in this contest William Sharpe and others try to find out an answer for a question ,what is the relationship between risk and return and they developed capital asset pricing theory .(CAPM) The CAPM, in essence, predicts the relationship between the risk of an asset and its expected return .this relationship is very useful in two important ways .first, it produces a bench mark for evaluating various instrument .second it helps us to make an informal guess about the return that can be expected from an assets that has not yet been traded in the market.
De Bondt and Thayler study the price in relation to book value in a universe of all NYSE and American Stock Exchange equity issue. It has explained the relation between the market price and book value, with stock being assigned in quintiles from lowest price to book ratios. The earning yields effect on stock return is significantly positive only in January for the sub period.
Piotroski investigates whether fundamental analysis can be used to provide abnormal returns, and right shift the returns spectrum earned by a value investor. He focused on high book to
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market securities, and show that the mean return earned by a high book to market investor can be shifted to the right by at least 7.5% annually. The authors developed portfolio based on four fundamental conditions namely: Single Value P/E, Market Price <Book Value, established track recode on the shareholders return. Barely and Myers supported Quality of earning as a key performance measure. It is based on the following argument “the problem is that the earnings that firms report are book, or accounting figures, and as such reflect a series of more or less arbitrary choices of accounting methods. A switch in the depreciation method used for reporting purposes directly affects earning per share. other accounting choices which affect reported earning are the valuation of inventory, the procedures by which the account for two merging companies are combined the choice between expensing and capitalizing. The total value of the companies existing stock is equal to the discounted value of that portion of the total dividend stream which will be paid to the stock outstanding today. The net cash flow to share holders after paying for future investment is sometime s knows as “company’s cash flow”. This analysis is done at portfolio return on the excess returns for the market factors using CAPM.
2.4 SIGNIFICANCE OF THE STUDY
Indian security market moving to newer heights since from the last few years and the investors also getting reasonable income, that some times more than expected but the next day the price would be crumbling down like a glass house this is the picture of Indian stock market, means market is highly volatile and is still in the hands of speculators and gamblers. In this chaos where is the common investor who investing their hard earned money expecting a regular income and security of his investment so here it’s come the importance of risk and return analysis.
•
Compare different investment option in terms of risk and return .the popular conception is if the risk is high the return one can expect would be high and vice versa.
•
Risk and return analysis would help the investor to park his money in most appropriate investment avenue. The investors are two type risk taker and risk averter. If some one 20
wants to invest highly volatile stock with the expectation of high return he can go for that, another type of investor want regular income at the same time safety. • Risk and return analysis would help the investors to properly diversify his portfolio of securities. the measurement of beta will help the investor to quantify the systematic risk and unsystematic risk associated with the a particular investment • Investor can make portfolio revision at the right time with minimum cost by analyzing the risk and return of securities. Portfolio revision is an inevitable part of an investment decision. • To make estimation on the amount of income one can expect from an investment is possible by analyzing the historical return of a particular stock. • • To quantify the systematic (non-diversifiable )and unsystematic (diversifiable )risk Analysis the expected return from an investment option.
2.5 OBJECTIVES OF THE STUDY
• • To analyze the risk and return of the companies. To measure actual return and expected returns with the help of deviation and beta • • • To study the volatility of companies in comparison with the market. To guide the investors of various investment opportunities To find out the risk less companies to invest in using beta values. standard
2.6 SCOPE OF THE STUDY
In the national stock exchange (NSE)there are 1185 companies are listed so far out of this fifty companies are very important ,which form the S&P CNX Nifty index .From this fifty companies fifteen companies chosen BANKING SECTOR-SBI, ICICI BANK, HDFC BANK PHARMACEUTICAL SECTOR-SUN PHARMA, DR.REDDY’S LAB, RANBAXY OIL&GAS SECTOR-ONGC, BPCL, RELIANCE 21 companies have been selected were chosen five different sectors ,the
INFOTECH –WIPRO, INFOSYS, TCS AUTOMOBILE UDYOG LTD SECTORE –TATA MOTORS,MAHINDRA &MAHINDRA,MARUTI
2.7 METHODOLOGY
The following measures were used to analyze the data collected; MS excel is used in order to calculate standard deviation and beta as well as to draw charts. The other kinds of formulae used are Computation of standard deviation Rate of return = (closing stock-opening stock)/ (opening stock)*100 Standard deviation calculated as per the excel formulae Variance= square of the standard deviation Computation of beta:
Stock price(Y) = (closing-opening)/ (opening)*100 (of stock price)
Market return(X) = (closing-opening)/ (opening)*100 (of index price)
BETA (?) = (N*(?X*Y) – (?X*?Y))/ (N*(? X^2)-(?X) ^2)
2.8 SOURCES OF DATA
The data’s which is collected from various secondary sources like internet, journals and other publications .the stock price and market index were collected from the national stock exchange official website(www.nse_india.com) apart from that data have been taken from different company websites .
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2.8 LIMITATIONS OF THE STUDY
• • • The area of study is limited to few sectors of group a stock. The study is limited to data of the last three months only. Risk can not be measured accurately as the market condition is always fluctuating and uncertain. • 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
2.9 CHAPTER SCHEME
This dissertation consists of five chapters, each chapter deals with different aspects of this project. The first chapter contains the introduction to the dissertation and the theoretical background of the problem. In this chapter gives an idea about different type of return and risk apart from that brief about Indian stock exchanges like BSE and NSE. The second chapter deals with the way in which the study has been conducted. the important topics of this chapter is statement of the problem ,significance of this study ,scope, methodology and limitation of the study etc. The third chapter would give an idea of the current Indian economy and the industry have been selected and also about the companies come under study. It’s been mentioned the importance of each sector to the Indian economy as well. The fourth chapter deals with the data analysis and interpretation section, here data’s been analyzed by using mathematical formula to find out the expected return, beta and standard deviation. The final and fifth chapter consists of finding derived from this study, conclusion and the recommendations to the investors.
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CHAPTER: 3
PROFILES
3.1 THE INDIAN ECONOMY –AN OVERVIEW
Economics experts and various studies conducted across the globe envisage India and china to rule the world in the 21st century. For over a century the United States has been the largest economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the us and the rich countries of Europe to the two Asian giants- India and China. The rich countries of Europe have seen the greatest decline in global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of about 1 percentage points each. Within Asia, the rising share of China and India has more than made up the declining global share of Japan since 1990. During the seventies and the eighties, ASEAN countries and during the eighties South Korea, along with China and India, contributed to the rising share of Asia in world GDP. US and the rich countries of Europe to the two Asian giants- India and China. According to some experts, the share of the US in world GDP is expected to fall (from 21per cent to 18 per cent) and that of India to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China. By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years.
INDIA - A GROWING ECONOMY In a robust demonstration of the nascent strength, the Indian economy, after growing at 8.5% and 9.5% in the two previous year is projected to grow at 11% in the current year 200708.growth of gross domestic product (GDP) at constant prices in excess of 8.0%has been achieved by the economy in only five years of recorded history, and two out of these five are in 24
the last three years Growth in the Indian economy has steadily increased since 1979, averaging 5.7% per year in the 23-year growth record. In fact, the Indian economy has posted an excellent average GDP growth of 6.8% since 1994 (the period when India's external crisis was brought under control). However, in comparison to many East Asian economies, having growth rates above 7%, the Indian growth experience lags behind. The tenth five-year plan aims at achieving a growth rate of 8% for the coming 2-3 years. Though, the growth rate for 2004-05 is less than that of 2003-04, it is still among the high growth Rates seen in India since independence. Many factors are behind this robust performance of the Indian economy in 2004-05. High growth rates in Industry & service sector and a benign world economic environment provided a backdrop conducive to the Indian economy. Another positive feature was that the growth was accompanied by continued maintenance of relative stability of prices. However, agriculture fell sharply from its 2003-04 level of 9 % to 1.1% in the current year primarily because of a bad monsoon. Thus, there is a paramount need to move Indian agriculture beyond its centuries old dependency on monsoon. This can be achieved by bringing more area under irrigation and by better water management.
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3.2 INDUSTRY PROFILE
3.2.1 BANKING SECTOR
Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.
In the early 1990s the then Narasimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. 26
All this led to the retail boom in India. People not just demanded more from their banks but also received more.
Currently (2007), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility-without any stated exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector, the demand for banking services-especially retail banking, mortgages and investment services are expected to be strong. M&As, takeovers, asset sales and much more action will happen on this front in India. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks
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3.2.2 PHARMACEUTICAL INDUSTRY
The first Indian pharmaceutical company, Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, appeared in Calcutta in 1930. For the next 60 years, most of the drugs in India were imported by multinationals either in fully-formulated or bulk form. The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970, enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out, Indian companies started to take their places. They carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that India’s share of the global generics market will have risen from 4% to 35% in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago. Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share. In terms of the global market, India currently holds a modest 3 % share, but it has been growing at approximately 10% per year. India gained its foothold on the global scene with its 28
innovatively-engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research and development The important players in the Indian pharmaceutical sector are dr.reddy’s lab, sun pharma ,Ranbaxy, biocon ,cipla, Serum Institute of India ,Wockhardt, Aventis Pharma, Novo Nordisk
3.2.3 OIL&GAS INDUSTRY
Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and gas industry is among the largest contributors to the central and state exchequers in India. Its share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a capacity to process 148.97 million tonnes per year as of December 2006, are run by state-run companies. Economic Survey 2006-07 says: During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from 127.42 million tones in the previous year. During April-December 2006, the throughput was 107.42 million tones. Crude oil production in 2006-07 up to December 2006 was 25.40 million tones, up 6.03 per cent from 24.03 million tones in the first nine months of 2005-06. Natural gas production up to December 2006 at 23.53 billion cubic meters, however, was down 2.42 per cent from 24.10 billion cubic meters in the same period of the previous year. Thus, on the aggregate, oil and oil equivalent of gas (O+OEG) production in 2006-07 up to December 2006, year-on-year, increased by only about 1.85 per cent. India ranks sixth in the world in terms of petroleum demand and by 2010, India is projected to replace South Korea and emerge as the fourth-largest consumer of energy, after the United States, China and Japan. Since India is dependent on imports for nearly 70 per cent of its petroleum requirements, energy security has become a prime Government concern. In recent years this has taken the form of trying to get a stake in oil and gas fields from Myanmar to central Asia and Africa. However, the major thrust still lies in searching for hydrocarbons in onshore and offshore blocks in India. Recent finds are making oil majors take notice of the potential in prospective basins. Besides, the cost effectiveness of refining in India is drawing global players here. While 29
on the one hand, international companies are looking for a share in the fast-growing refinery sector, domestic oil companies are being invited by countries such as Yemen, Nigeria and Saudi Arabia to pick up stake in existing refineries and also set up Greenfield units.
Growing energy demand of India and necessity to service that to ensure economic growth is not compromised, presents business opportunities in the complete value chain of oil and gas sector. Exploration for domestic production growth, development of discovered fields, transportation of crude oil, gas and products, refining to service the petroleum product domestic demand and exports, retailing infrastructure; prospective blocks to encourage all these sectors provide business and investment opportunities.
The main players of Indian oil and gas sector are ONCE,HPCL,BPCL, Reliance energy ,cairn energy ,BP, British gas ,shell etc
3.2.4 INFOTECH INDUSTRY
The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000. No other Indian industry has performed so well against the global competition. Today, India exports software and services to nearly 95 countries around the world. The share of North America (U.S. & Canada) in India’s software exports is about 61 per cent. In 1999-2000, more than a third of Fortune 500 companies outsourced their software requirements to India According to a NASSCOM-McKinsey report, annual revenue projections for India’s IT industry in 2008 are US $ 87 billion and market openings are emerging across four broad sectors, IT services, software products, IT enabled services, and e-businesses thus creating a number of opportunities for Indian companies. In addition to the export market, all of these segments have a domestic market component as well. Today IT & ITES sector contribute over 7.5 % of the overall GDP growth of India and its account for 35% of the total export from in India .in terms of employment generation this sector alone giving 2.2 million jobs .The market capitalization of Indian IT companies come around US $225 billion. Government of India (GOI) has taken a major step towards promoting the domestic industry and achieving the full potential of the Indian IT entrepreneurs by forming a new ministry for IT . Constraints have been comprehensively identified and steps taken to 30
overcome them and also to provide incentives. Thus for example, venture capital has been the main source of finance for software industry around the world. However, majority of the software units in India is in the small and medium enterprise sector and there is a critical shortage of venture capital kind of support. India’s most prized resource in today’s knowledge economy is its readily available technical work force. India has the second largest English-speaking scientific professionals in the world, second only to the U.S. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. Government of India is stepping up the number and quality of training facilities in the country to capitalize on this extraordinary human resource.
3.2.5 AUTOMOBILE INDUSTRY
The Indian automotive industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes. Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies, initiated by the Government of India, have played an equally important role in bringing the Indian Automotive industry to great heights. It is estimated that the sale of passenger cars have tripled compared to their sale in the last five years. Thus, the sale of cars has reached a figure of 1 million users and is expected to increase further. It's also to be noted that the demand for luxurious models, SUVs, and mini-cars for family owners, have shot up, largely due to increase in the consumer's buying capacity. The increased demand for Indian automobiles has resulted in a large number of multinational auto companies, especially from Japan, U. S. A., and Europe, entering the Indian market and working in collaboration with the Indian firms. Also, the institutionalization of automobile finance has further paved the way to sustain a long-term high growth for the industry. A well developed transport network indicates a well developed economy. For rapid development a well-developed and well-knit transportation system is essential. As India's transport network is developing at a fast pace, Automobile Industry is growing too. Also, the industry has strong backward and forward linkages and hence provides employment to a large 31
section of the population. Thus the role of Automobile Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by the Automobile Industry. It includes the manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly divided into the Car manufacturing, two-wheeler manufacturing and heavy vehicle manufacturing units. The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd.,Hyundai Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name a few. The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like buses, trucks, defense vehicles, auto rickshaws and other multi-utility vehicles are manufactured by Tata-Telco, Ashok Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.
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3.3 PROFILE OF THE COMPANIES
ICICI BANK
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing mediumterm and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended March 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank has a network of 741 branches (including 48 extension counters) and over 3300 ATMs in India and presence in 30 International locations. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. . ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary has established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of market capitalization
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HDFC BANK
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB". Currently (2007), HDFC Bank has over 600 branches located in over 300 cities of India, and all branches of the bank are linked on an online real-time basis. The bank offers many innovative products & services to individuals, corporate, trusts, governments, partnerships, financial institutions, currently (2007)
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STATE BANK OF INDIA
State Bank of India (SBI) is the largest bank in India. It is also, measured by the number of branch offices and employees, the largest bank in the world. Established in 1806 as Bank of Bengal, it remains the oldest commercial bank in the Indian Subcontinent and also the most successful one providing various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The government nationalized the bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In recent years the bank has focused on reducing its huge staff through Golden handshake schemes and computerizing its operations. The roots to the State Bank of India are traceable to the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27 January 1921, and named the reorganized banking entity the Imperial Bank of India. All these Presidency banks were incorporated as joint stock companies, and were the result of the royal charters. The Imperial Bank of India continued to remain a joint stock company. Until the establishment of a central bank in India the Imperial Bank and its early predecessors served as the nation's central bank printing currency. State Bank of India has often acted as guarantor to the Indian Government, most notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9400 branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500 branches being incorporated so far. The bank has the largest ATM network in the country having more than 5600 in number [1]. The State Bank of India has had steady growth over its history, though it was marred by the Harshad Mehta scam in 1992.
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DR. REDDY’S LABORATORIES
Dr. Reddy’s Laboratories was founded by Dr Anji Reddy, an entrepreneur-scientist, in 1984. The DNA of the company is drawn from its founder and his vision to establish India’s first discovery led global pharmaceutical company. In fact, it is this spirit of entrepreneurship that has shaped the company to become what it is today. Today, Dr. Reddy’s continues its journey. Leveraging on its ‘Low Cost, High Intellect’ advantage. Foraying into new markets and new businesses. Taking on new challenges and growing stronger and more capable. Each failure and each success renewing the sense of purpose and helping the company evolve Dr. Reddy’s Laboratories Limited, together with its subsidiaries, operates as a pharmaceutical company worldwide. It focuses on formulations, active pharmaceutical ingredients and intermediates, generic drugs, critical care products, biotechnology products, custom pharmaceutical services, and drug discovery. The company conducts research in the areas of cancer, cardiovascular disorders, bacterial infection, and metabolic disorders. It markets its products in approximately 100 countries worldwide, including India, Russia, the United Kingdom, The United States, Germany, Brazil, and South Africa. The company has an agreement with ClinTec International for the development an anti-cancer compound, DRF 1042 for the treatment of various types of cancer.
RANBAXY LABORATORIES LIMITED
Ranbaxy Laboratories Limited, is an integrated, research based, international
pharmaceutical company, based in India , producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It is ranked amongst the top ten generic companies worldwide. The Company has world class manufacturing facilities in 9 countries on ground presence in 49 countries and its products available in over 125 countries across the globe
Ranbaxy was incorporated in 1961 and went public in 1973. For the twelve months ended December 31, 2006, the Company's Global Sales were at US $1340 Mn. Overseas markets accounted for around 80% of global sales. The Company's largest market, USA with the sales of US $ 380 Mn, , while Europe and BRICS (Brazil, Russia, India, China, South Africa) countries contributed US $194 Mn and US $ 477 Mn to global sales. 36
Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative offices across the globe with a presence in 23 of the Top 25 pharma markets of the world. Ranbaxy has robust operations in USA, UK, France, Germany, Russia, India, Romania and South Africa, and is strengthening its business in Japan, Italy, Spain and several other markets in the Asia Pacific. While the Company is aggressively pursing its internationalization strategy it has also gained market leadership in India, leveraging its strong brand building skills. A balanced geographical presence coupled with a strong product flow from a wide therapeutic range serve as the business building blocks of the Company. Growth through acquisition is one of Ranbaxy’s stated strategies. The Company has successfully concluded 15 acquisitions since 2004, including 8 in 2006 (4 in Europe, 1 in the US, 2 in India and 1 in South Africa). Ranbaxy will continue to look at target acquisitions in US, Europe, India and emerging markets based on value and synergies that can be unlocked from such transactions.
SUN PHARMA
Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were initially limited to 2 states - West Bengal and Bihar. Sales were rolled out nationally in 1985. Products that are used in cardiology were introduced in 1987, and Monotrate, one of the first products launched at that time has since become one of our largest selling products. Important products in Cardiology were then added; several of these were introduced for the first time in India. Sun Pharma was listed on the main stock exchanges in India in 1994; and the Rs. 55 crore issue of a Rs. 10 face value equity share at a premium of Rs. 140/- was oversubscribed 55 times. The minimum 25% that was required under the regulations then for listing was offered to the public, the owner family continues to hold a majority stake in Sun Pharma. They used this money to build a Greenfield site for API manufacture, as well as for acquisitions. For the acquisitions, by 1997, our headquarters were shifted to Mumbai, the commercial capital of the country. We began on the first of our international acquisitions with an initial $7.5 million investment in Caraco Pharma Labs, Detroit. By 2000, they had completed 8 acquisitions, each such move adding new therapy areas or offering an entry to important international markets. A new research center was set up in Mumbai for generic product development for the US market. In India, as new therapy areas were entered into post acquisition; customer attention, product selection and 37
focused marketing helped us gain a foothold in areas like orthopedics, gynecology, oncology, etc. From a ranking at 38th in 1994, by 2000 they were ranked 5th with a leadership in 8 of the 11 therapy areas that we are present in. The year 2000 was the year of turnaround at the US subsidiary, Caraco, as it began to receive approvals after successful inspection by the USFDA. In December 2004, a research center spread over 16 acres was inaugurated by the President of India, with special lab space for drug discovery and innovation. Typically companies or assets that could be turned around and brought on track were identified.
ONGC
Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories. In the inland areas, ONGC not only found new resources in Assam but also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and offshore). ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tones of hydrocarbons, which were present in the country, were discovered. The most important contribution of ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally competitive level. Ranks 24th among Global Energy Companies by Market Capitalization in PFC Energy 50 (December 2004). [ONGC was ranked 17th till March 2004, before the shares prices dropped marginally for external reasons. ONGC placed at the top of all Indian Corporate listed in Forbes 400 Global Corporate (rank 133rd) and Financial Times Global 500 (rank 326th), by Market Capitalization. It recognized as the Most Valuable Indian Corporate, by Market Capitalization, Net Worth and Net Profits, in current listings of Economic Times 500 (4th time in a row), Business Today 500, Business Baron 500 and Business Week. ONGC Has created the highest-ever Market Value-Added (MVA) of Rs. 24,258 Crore and the fourth-highest Economic Value-Added (EVA) of Rs. 596 Crore, as assessed in the 5th Business Today-Stern Stewart study (April 2003), ahead of private sector leaders like Reliance 38
and Infosys. ONGC is the only Public Sector Enterprise to achieve a positive MV A as well as EVA.
RELIANCE ENERGY
Reliance Energy came into existence when it took over BSES in 2002 is a company under the Reliance - Anil Dhirubhai Ambani Group [1] banner, one of India's largest conglomerates. The company is headed by Anil Ambani.The company's corporate Headquarters is situated in Sector 24,Noida. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also runs power generation, transmission and distribution businesses in other parts of Maharashtra, Goa and Andhra Pradesh. Reliance Energy plans to increase its power generation capacity by adding 16,000 MW with investments of $13 billion. Reliance Energy Ltd is India's leading integrated power utility company in the private sector. It has a significant presence in generation, transmission and distribution of power in Maharashtra, Goa and Andhra Pradesh. With the ushering in of the power sector reforms and in the new environment of opportunity for the power sector, REL is a key player in this transformation process. Reliance's gas finds in KG-D6 block in Krishna Godavari basin which constitutes 60% of India's present total gas production, will provide an enormous opportunity to scale up power generation capacities in India. With the new gas find, REL has the unique advantage of integration from 'well head to wall socket'. This will help the company position itself as a global integrated energy player under the Reliance banner. REL and its affiliate power companies rank among the top 25 listed private sector companies on major financial parameters. REL is part of the Reliance industries-India's private sector company ranked among the world's 175 largest companies in terms of net profit and the 500 largest companies in terms of sales. REL is committed to creating superior value for all its stakeholders and be amongst the most admired and trusted utility companies in the world by setting new benchmarks in standards of corporate governance, operational and financial excellence, responsible corporate citizenship and profitable growth.
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BHARAT PETROLEUM CORPORATION LIMITED (BPCL)
Bharat Petroleum Corporation Limited (BPCL) is one of India's largest PSU companies. As the name suggests its interests are in Petroleum sector. It is involved in the refining and retailing of petroleum products. The government of India formed the company by taken over Burma shell group of companies in 24th January 1976. On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. It was also the first refinery to process newly found indigenous crude (Bombay High), in the country BPCL has a number of refineries in India. The important three are Mumbai Refinery - 12 Million Metric Tones (MMT) Capacity, Kochi Refinery - 7.5 MMT, Numaligarh Refinery - 3 MMT. BPCL is a Fortune Global 500 company as per the ranking of 2006. It was ranked at position 368. BPCL had registered revenue of $ 17.613 billion in 2006 and has employee strength of 14,667
TATA CONSULTANCY SERVICES LIMITED (TCS LIMITED)
Tata Consultancy Services Limited (TCS Limited) is an information technology, consulting, services and business-process outsourcing organization which commenced operations in 1968. As of 2006, it is Asia's largest IT services firm with annualized revenues of over US $4 billion (estimated for FY 2006-07) and has the largest number of employees among all the Indian IT companies with strength of over 87,000.For fiscal year 2005-06, it posted a net profit of Rs. 3,709.TCS is part of one of Asia's largest conglomerates and most respected groups, the Tata Group, which has interests in areas such as energy, telecommunications, financial services, chemicals, engineering and materials. Tata Consultancy Services (TCS). Through its Global Network Delivery Model, Innovation Network, and Solution Accelerators, TCS focuses on helping global organizations address their business challenges effectively. TCS continues to invest in new technologies, processes, and people which can help its customers succeed. From generating novel concepts through TCS Innovation Labs and academic alliances, to drawing on the expertise of key partners, it keeps clients operating at the very edge of technological possibility. Whether TCS is envisioning a business advantage, engineering an IT solution, or executing an outsourcing strategy, it helps its customers experience certainty in their every day business.
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WIPRO TECHNOLOGIES
Wipro Technologies is an IT service company established in 1980 in India. It is a subsidiary of Wipro Limited (incorporated 1946, in operation since 1945). It is headquartered in Bangalore. It is the third largest IT services company in India. It has 68,000 employees as of Apr 2007, inclusive of its BPO arm which it acquired in 2002.[1] Wipro Technologies has over 300 customers across USA, Europe and Japan including 50 of the Fortune 500 companies. Some of its customers are Boeing, Cisco, Ericsson, IBM, Microsoft, Prudential, Seagate, Sony, Sun Microsystems and Toshiba. It is listed on the New York Stock Exchange and is part of its TMT (technology media telecom) index. With revenue in the excess of US $3 billion, Wipro is one of India's major information technology companies. Wipro has dedicated development centers and offices across India, Europe, North America and Asia Pacific. The current Chairman, Managing Director and majority stake owner is Azim Premji. From inception, the software and hardware divisions have been headed by him
INFOSYS TECHNOLOGIES LIMITED
Infosys Technologies Limited is an information technology (IT) Services Company founded in Pune, India in 1981 by N. R. Narayana Murthy and six of his colleagues. In 1983, Infosys moved its headquarters to Bangalore, the capital of Karnataka. It operates nine development centers in India and has over 30 offices worldwide. Annual revenues for fiscal year 2007 exceeded US$3.1 billion with a market capitalization of over US$30 billion. With over 72,000 employees worldwide, Infosys is one of India's largest IT companies. In 1999 Infosys attained a SEI-CMM Level 5 ranking and became the first Indian company to be listed on NASDAQ. In 2001 it was rated "Best Employer in India" by Business Today,[3] and in 2002 Business World named Infosys "India's Most Respected Company". Infosys won the Global MAKE (Most Admired Knowledge Enterprises) award, for the years 2004 and 2003, being the only Indian company to win this award
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MAHINDRA&MAHINDRA
The Mahindra Group is a US $4 billion* conglomerate is a leading manufacturer of multi-utility vehicles and tractors with significant presence in key sectors like infrastructure, information technology and financial services. The Group completed 60 years in 2005. Set up in 1945 to make general-purpose utility vehicles, Mahindra & Mahindra first became known as the maker of the iconic Jeep in India. The company branched out into manufacturing light commercial vehicles and agricultural tractors. Mahindra & Mahindra rapidly grew from being a maker of army vehicles and tractors to a major automobile manufacturer with a growing global appetite. Now the Group has a leading presence in many other key sectors -- Trade and Financial Services (Mahindra Intertrade, Mahindra & Mahindra Financial Services Limited), Mahindra Systems and Automotive Technologies (Mahindra Engineering Services, Mahindra Ugine), Information Technology (Tech Mahindra, Bristlecone), and Infrastructure Development (Mahindra GESCO, Club Mahindra Holidays, Mahindra World City). Two Group companies Mahindra Finance and Tech Mahindra made their debut on the bourses in 2006 in line with the commitment that each of the business segments would have flagship companies that will be listed.
The Group employs over 34,000 people and has eight state-of-the-art manufacturing facilities in India. Mahindra & Mahindra has made strategic acquisitions of plants in China and the United Kingdom, and has three assembly plants in the USA. Mahindra & Mahindra has entered into partnerships with international companies like Renault SA, France, and International Truck and Engine Corporation, USA.
Mahindra & Mahindra's products are being exported to the USA, Russia and several other countries in Africa, Asia, Europe and Latin America. Its global subsidiaries include Mahindra Europe Sal. Based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Company Limited .Mahindra & Mahindra’s Automotive Sector makes a wide rage of vehicles including MUVs, LCVs and three wheelers. Mahindra & Mahindra is the largest manufacturer of MUVs, offering over 20 models including new generation multi-utility vehicles like the Scorpio and the Bolero. The company is a market leader in the Utility Vehicle segment.
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Mahindra & Mahindra is the fourth-largest tractor company in the world. It is also the largest manufacturer of tractors in India with sustained market leadership of around 23 years. It designs, develops, manufactures and markets tractors as well as farm implements. The Sector has also found significant success in the international market. Mahindra (China) Tractor Company Limited manufactures tractors for the growing Chinese market and is a hub for tractor exports to the USA and other western nations. Mahindra & Mahindra has a 100% subsidiary, Mahindra USA, where it assembles 14 products for the American market. 'Mahindra' tractor has come to be recognized as a powerful symbol of productivity and performance. Farm Equipment Sector received the coveted Deming Application Prize for manufacturing in 2003, for establishing Total Quality Management in all operations. Mahindra & Mahindra Limited is the only tractor company in the world to have achieved this honor.
Over the years, the Mahindras has transformed itself into a group that has a leadership position in all the sectors it operates in and has a growing global footprint. Forbes has ranked the Mahindra Group in its Top 200 list of the World’s Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies.
TATA MOTORS LIMITED
Tata Motors Limited is India's largest automobile company, with revenues of Rs. 24,000 crores (USD 5.5 billion) in 2005-06. It is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer. The company's 22,000 employees are guided by the vision to be best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Close to 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base is spread across Jamshedpur, Pune and Lucknow, supported by a nationwide dealership, sales, services and spare parts network comprising over 2,000 touch point. Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as a global automotive company. In 43
2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to launch new products. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano's presence is being expanded in other markets. In 2006, it has formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches, to manufacture and assemble fully-built buses and coaches. Tata Motors and the Fiat Group have recently signed a memorandum of understanding to establish an industrial joint venture in India to manufacture passenger With 1,400 engineers and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centers in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. The pace of new product development has quickened. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, R&D is also focusing on environment-friendly technologies in emissions and alternative fuels. Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment manufacturing, auto finance, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, highprecision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations. True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate Social Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in community and social initiatives on human rights, labour and environment standards in compliance with the principles of the Global Compact. Simultaneously, it also plays an active role in community development, serving rural communities adjacent to its manufacturing locations. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.
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MARUTI UDYOG LTD
Maruti Udyog Ltd is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. 18.28% of the company is owned by the government, and 54.2% by Suzuki of Japan. The Indian government held an Initial Public Offering of 25 % of shares in June 2003
Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983. Through 2004, Maruti has produced over 5 Million vehicles. Maruti are sold in India and various several other countries, depending up on export orders. Cars similar to Maruti (but not manufactured by Maruti Udyog) are sold by Suzuki in Pakistan and other South Asian countries. The company annually exports more than 30,000 cars and has an extremely large domestic market in India selling over five hundred thousand cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a
million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts. Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model.
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CHAPTER IV
DATA ANALYSIS AND INTERPRETATION
4.1 BANKING SECTOR
4.1.1 HDFC BANK
STOCK PRICE OPEN CLOSE 1,079.80 1,070.00 1,068.00 1,065.30 1,056.00 1,050.05 1,054.70 1,056.90 1,054.00 1,024.95 1,032.00 1,013.90 1,018.45 998.65 1,008.50 996.15 1,018.30 1,061.60 1,079.95 1,094.00 1,104.00 1,096.10 1,099.00 1,061.15 1,065.00 1,061.05 1,052.00 1,068.40 1,070.00 1,056.30 1,055.00 1,032.90 1,040.00 1,058.45 1,061.05 1,066.10 1,070.00 1,062.40 1,066.00 1,078.60 0.708544 SENSEX PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD STOCK MARKET RETURN RETURN Y X -0.90758 1.037504 -0.25281 0.407965 -0.56345 -0.95598 0.20859 -0.16917 -2.75617 -1.25273 -1.75388 -0.55678 -1.94413 -1.55077 -1.22459 2.338954 4.252185 2.73542 1.300986 0.630421 -0.71558 -0.24935 -3.44404 -0.20686 -0.37089 0.830634 1.558935 -0.86888 -1.28037 0.314212 -2.09479 -0.89089 1.774038 0.57296 0.475944 1.359954 -0.71028 -0.57733 1.181989 -0.99785 -7.2659 1.9514 1.7856 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y -0.94161 -0.10314 0.538641 -0.03529 3.452733 0.976531 3.014908 -2.86426 11.63151 0.820168 0.178427 0.712432 -0.30808 -1.35453 -0.40231 1.86622 1.016453 0.647261 0.410067 -1.17945 18.077 3.1883
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
TABLE 1 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK & MARKET RETURNS COMPARISION
5 4 RETURN 3 2 1 0 -1 -2 -3 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
Y X
DATE
GRAPH 1
Y=STOCK RETURN, X =MARKET RETURN
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Standard deviation (total risk associated with stock) is 1.79 where as the beta value is 0.71.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
STOCK PRICE DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA OPEN 1,080.05 1,109.50 1,086.25 1,110.70 1,085.00 1,109.90 1,088.25 1,095.55 1,090.00 1,048.25 1,025.00 1,049.00 1,039.25 1,030.00 1,018.00 979.5 977.7 955 906 0.39731 DATE 1,103.95 1,106.10 1,103.35 1,089.30 1,101.95 1,109.80 1,113.80 1,096.05 1,068.70 1,017.25 1,041.80 1,033.25 1,031.60 1,016.00 987.3 958.2 951.75 975.9 935 SENSEX PRICE OPEN 4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 SD TABLE 2 CLOSE 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 SUM STOCK RETURN Y 2.212861 -0.30644 1.574223 -1.92671 1.562212 -0.00901 2.347806 0.045639 -1.95413 -2.95731 1.639024 -1.50143 -0.73611 -1.35922 -3.01572 -2.17458 -2.65419 2.188482 3.200883 -3.82372 2.029832 VAR MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 X*Y 2.915509 -0.32049 0.833449 0.943582 0.969359 0.001831 -2.00677 -0.1405 1.178979 -0.16085 4.025873 -0.55364 1.023342 0.36238 4.170246 5.753551 -0.1954 -3.00164 -12.1758 36.79962 4.120217 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 92.62204
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
R ETU R N S
Y X
DATE
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Standard deviation (total risk associated with stock) is 2.02 where as the beta value is 0.397.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
STOCK PRICE OPEN CLOSE 960 980.3 980 937.6 921.65 928.05 929 927.95 956 915.55 919 974.15 983 976.9 976.9 950.05 960 960.15 926.2 932.95 965 918.4 935 903.5 910 924.65 935 955.25 958 965.6 989 1,025.90 1,030.00 1,011.15 1,018.00 973.2 973 958.45 952 933.75 946 954.15 0.77031
SENSEX PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
STOCK RETURN Y 2.114583 -4.32653 0.694407 -0.11302 -4.23117 6.001088 -0.62055 -2.74849 0.015625 0.728784 -4.82902 -3.36898 1.60989 2.165775 0.793319 3.731041 -1.8301 -4.40079 -1.49538 -1.91702 0.861522 -11.165 2.881033
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VARIANCE
X*Y 3.714946 9.636836 -2.79514 -0.24803 4.009822 22.23575 0.723343 -1.26798 0.014766 -2.4619 0.172233 2.851188 3.013557 1.015111 1.434227 11.04099 0.74115 4.955006 2.257502 -1.98629 0.743544 -26.833 8.300353
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 5.775917
BETA
TABLE 3
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GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 RETURNS 4 2 0 -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29 Y X
DATE
GRAPH 3
Standard deviation (total risk associated with stock) is 2.88 where as the beta value is 0.770.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
The beginning months of any financial year always controversial especially in terms of politically and financially it will have a negative impact on the stock market .the fluctuation of the stock is mainly because of these two risk .here is the case of HDFC bank the analysis revels up and downs quite frequently but not to much, so the risk associated with this stock is comparatively low and proper diversification of the portfolio will help to eliminate the risk associated with this stock.
49
4.1.2 ICICI BANK
STOCK PRICE OPEN CLOSE 892 897.45 909.75 894.55 895 890.5 890 910.1 917 906.3 905.2 912.35 909.95 883.85 890 892.35 915 972.3 977.8 957.85 964.85 960.05 960 986.85 986.85 971.25 971.25 985.4 994.4 977.2 975 964.3 999 974.55 988 991.45 991.45 955.95 970 941.1 .94665 SENSEX PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 sum SD 2.7466 TABLE 4 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS STOCK R Y 0.610987 -1.67079 -0.50279 2.258427 -1.16685 0.789881 -2.86829 0.264045 6.262295 -2.04029 -0.49749 2.796875 -1.58079 1.456885 -1.72969 -1.09744 -2.44745 0.34919 -3.58061 -2.97938 -7.37327 MARKET R X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 variance
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 0.633901 -0.68162 0.480658 -0.38205 1.461746 -0.43979 4.448069 0.617589 17.13001 -1.28624 0.124046 -0.57856 -1.31306 -1.26586 -0.54349 0.977692 -1.40229 0.474883 2.0672 2.972988 -14.3884 7.5443sa
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 3.808093
STOCK AND MARKET RETURN COMPARISION
8 6 RETURN 4 2 0 -2 -4 -6 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30 1/2 1/4 1/6 1/8 Y X
DATE
GRAPH 4
50
Standard deviation (total risk associated with stock) is 2.746 where as the beta value is 0.95.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
STOCK PRICE OPEN CLOSE 951 952.55 959.9 944.9 959.65 946.8 949.85 957.9 961 983.15 988 999.7 999 996.15 990.1 966.15 960 955.9 932.35 914.4 920 949.6 952.4 980.2 985 969.45 987 969.3 974 946.2 954.8 907 913.8 904 904 875.8 849.8 829.5 1.57268 STOCK R SENSEX PRICE OPEN CLOSE Y 4083.4 4137.2 0.162986 4140.2 4183.5 -1.56266 4193.15 4215.35 -1.33903 4216.55 4195.9 0.847502 4198.2 4224.25 2.304891 4232 4223.4 1.184211 4223.5 4187.4 -0.28529 4187.2 4058.3 -2.41895 4069.1 4044.55 -0.42708 4044.9 4047.1 -1.92524 4046.8 4146.2 3.217391 4149.25 4164.55 2.918942 4164.85 4106.95 -1.57868 4107.15 4096.2 -1.79331 4096.65 4040 -2.85421 4046 3938.95 -5.00628 3939.1 3942 -1.07244 3948.05 3893.9 -3.11947 3893.4 3745.3 -2.3888 SUM -15.1355 SD 2.15814 TABLE 5 MARKET X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 variance
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X*Y 0.214739 -1.6343 -0.70893 -0.41505 1.430194 -0.24065 0.243845 7.44656 0.257671 -0.10471 7.902755 1.076334 2.194691 0.478112 3.946907 13.24574 -0.07895 4.278549 9.086682 145.6648 4.657567
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 92.62204
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
4 2 RETURNS 0 -2 -4 -6 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 Y X
DATE
GRAPH 5 51
Standard deviation (total risk associated with stock) is 2.16 where as the beta value is 1.57 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. the systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. the average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return .
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
STOCK PRICE CLOS E OPEN 840 855.35 850 842.9 855.5 821.55 845 847.9 882.5 828.65 831 863 871.65 858.6 865 868.7 871.25 877.6 849.8 829.4 835 823.9 822.7 810 828 822.55 833.8 824 828 870.55 970.35 899.6 870 891.6 899 875.7 866.1 857.85 859.45 855.3 803.65 853.35 0.6203
SENSEX PRICE OPEN 3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 CLOSE 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55 SUM SD
STOCK RETURN Y 1.827381 -0.83529 -3.96844 0.343195 -6.10198 3.850782 -1.49716 0.427746 0.728838 -2.40056 -1.32934 -1.5437 -0.65821 -1.17534 5.138889 -7.29118 2.482759 -2.59177 -0.95255 -0.48287 6.184284 -9.84453 3.2701
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 variance X*Y 3.210383 1.860519 15.97386 0.753137 5.782764 14.26825 1.745165 0.197335 0.688789 8.109328 0.047413 1.306439 -1.23211 -0.55089 9.290497 -21.5762 -1.00546 2.918167 1.438017 -0.50032 5.3374 -23.6595 10.69355 X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 5.775917
BETA
TABLE 6
52
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 6 Standard deviation (total risk associated with stock) is 2.04 where as the beta value is 0.62.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
In the case of icici bank the stock is more volatile and the systematic risk associated with this stock is very high since the beta value on an average greater than 1 its above the standard. The fluctuation in this stock mainly because of inflationary trend in the economy because of high inflation rate RBI forced to increase the CRR and interest rate that would be the reason for the down ward trend of this stock. the average stock return is below the market return so an investor must take an extra care while investing in this stock .
53
4.1.3 SBI STOCK PRICE NIFTY PRICE
DATE
2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07
OPEN
1,250.00 1,250.00 1,270.00 1,241.00 1,248.80 1,219.85 1,171.00 1,145.00 1,162.00 1,235.00 1,255.00 1,219.00 1,226.00 1,282.25 1,218.00 1,225.05 1,174.05 1,175.25 1,190.00 1,162.00
CLOSE
1,253.55 1,264.85 1,243.00 1,244.10 1,213.70 1,174.90 1,136.40 1,147.45 1,225.45 1,222.25 1,209.80 1,222.55 1,229.00 1,220.30 1,224.55 1,174.05 1,172.55 1,176.45 1,156.15 1,140.45
OPEN
3966.25 4007.7 4027.3 3990.15 3983.3 3933.3 3910.95 3852.15 3944.55 4052.85 4090.7 4084.9 4075.2 4126 4089.6 4102.65 4066.6 4092.05 4148.4 4123.85
CLOSE
4007.4 4024.05 3988.8 3983.4 3933.4 3911.4 3850.3 3942.25 4052.45 4078.4 4080.5 4076.45 4109.05 4090.15 4102.45 4066.1 4089.9 4147.7 4124.45 4082.7
SUM 1.66073 BETA
STOCK RETURN Y 0.284 1.188 -2.12598 0.249799 -2.8107 -3.68488 -2.95474 0.213974 5.460413 -1.03239 -3.60159 0.291222 0.244698 -4.83135 0.537767 -4.1631 -0.12776 0.102106 -2.84454 -1.85456 -21.4596
MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
X*Y 0.294651 0.484662 2.032389 -0.04226 3.521046 2.051683 4.582134 0.500475 14.93652 -0.65084 0.898043 -0.06024 0.203255 4.197866 0.168973 3.70885 -0.0732 0.138859 1.64224 1.850581 -41.877 5.780065
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 3.808093
SD 2.569884 TABLE 7
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 -2 -4 -6 DATE 1/30 X
GRAPH 7
54
Standard deviation (total risk associated with stock) is 2.57 where as the beta value is 1.66 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return
STOCK PRICE DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA OPEN 1,158.00 1,215.00 1,176.00 1,205.00 1,195.00 1,195.00 1,206.00 1,199.65 1,182.95 1,150.00 1,110.55 1,128.00 1,132.10 1,099.70 1,105.00 1,135.00 1,070.00 1,091.00 971.6 0.169704 CLOSE 1,203.00 1,181.05 1,197.05 1,196.50 1,195.05 1,205.25 1,199.65 1,183.70 1,173.40 1,102.30 1,122.60 1,132.10 1,107.75 1,105.90 1,078.05 1,058.20 1,088.40 1,069.15 1,041.85 NIFTY PRICE OPEN 4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 sum SD CLOSE 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 STOCK RETURN Y 3.88601 -2.79424 1.789966 -0.70539 0.004184 0.857741 -0.52653 -1.32955 -0.8073 -4.14783 1.085048 0.363475 -2.15087 0.56379 -2.43891 -6.76652 1.719626 -2.00275 7.230342 -6.16972 3.004418 MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 VAR X*Y 5.119933 -2.92234 0.94767 0.345458 0.002596 -0.1743 0.45005 4.09294 0.487069 -0.2256 2.665162 0.134028 2.990153 -0.15031 3.372621 17.90301 0.1266 2.746898 -27.5033 10.40834 9.026525 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
TABLE 8 GRAHHICAL REPRESENTATON OF STOCK AND MARKET
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 8 55
Standard deviation (total risk associated with stock) is 3.004where as the beta value is 0.16974.it shows that diversification of the portfolio of stocks would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price and the average return is much below the market return.
STOCK PRICE
DATE
1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
NIFTY PRICE
OPEN
3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85
OPEN
1,042.00 1,035.00 999 999 998 989 1,001.10 990 979 960 955 925 924.8 930 955 992 1,034.00 1,030.00 1,006.00 974 990.1
CLOSE
1,055.65 1,004.90 962.55 988.05 964.4 999.3 982.65 974.2 980.4 948 922.1 913.6 926.5 952.35 982.95 1,029.40 1,026.20 1,013.65 973.65 985.65 994.45
CLOSE
3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55
BETA
0.79409
SUM SD
STOCK RETURN Y 1.309981 -2.90821 -3.64865 -1.0961 -3.36673 1.041456 -1.84297 -1.59596 0.143003 -1.25 -3.44503 -1.23243 0.183824 2.403226 2.926702 3.770161 -0.75435 -1.58738 -3.21571 1.196099 0.43935 -12.5297 2.170108
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 2.301403 6.4777 14.68663 -2.40537 3.190606 3.858893 2.148261 -0.73628 0.135145 4.222614 0.122871 1.043014 0.3441 1.126405 5.291127 11.15675 0.305496 1.787288 4.85461 1.239324 0.379184 -30.1128 4.709368
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 5.775917
TABLE 9
56
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
COMPARISION OF STOCK AND MARKET RETURNS
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH 9
Standard deviation (total risk associated with stock) is 2.403where as the beta value is 0.794.it shows that diversification of the portfolio of stocks would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price and the average return is much below the market return.
Usually the beginning o f the financial year a bad month for the financial sector stocks mainly because of the impact of the budget and this year due to inflationary pressure RBI force to rise CRR level and the interest rate it had an negative impact on the profitability of the banks this leads the collapse of banking stocks .here the stock price is more fluctuating than the market price .so the investment option would be how effectively we tackle our interest rate risk and political risk by proper diversification of the portfolio .
57
4.2
PHARMASUICAL INDUSTRY
STOCK RETURN Y -0.7986 0.4657 1.9702 -2.3614 0.0246 -1.7057 -2.8885 -0.2645 2.2033 -1.1071 -0.3695 -0.0797 -0.3907 -0.6732 -0.6683 -7.0783 -1.3066 -0.3003 -2.1094 -2.2238 -19.662 1.9314 MARKET RETURN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
4.2.1 DR.REDDYS LAB
STOCK PRICE OPEN CLOSE 813.9 807.4 805.3 809.05 812.1 828.1 830 810.4 812 812.2 812 798.15 798 774.95 794 791.9 792 809.45 812.9 803.9 811.8 808.8 816 815.35 819 815.8 817 811.5 815.5 810.05 830 771.25 773 762.9 766 763.7 768 751.8 759.95 743.05 0.72526 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y -0.8286 0.19 -1.8835 0.3995 -0.0309 0.9497 4.4794 -0.6186 6.0269 -0.698 0.0921 0.0165 -0.3245 0.5849 -0.21 6.306 -0.7486 -0.4083 1.2178 2.2191 16.731 3.7304
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.32828 1.849475 0.333311 0.995712 25.76932
TABLE 10 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
RETURNS
Y X
1/2
1/4
1/6
1/8
1/10
1/12
1/14
1/16
1/18
1/20
1/22
1/24
1/26
1/28
DATE
GRAPH 10 58
1/30
Standard deviation (total risk associated with stock) is 1.93where as the beta value is 0.725.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. When we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return and frequent fluctuation in price put the stock under the scanner.
STOCK PRICE DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19Feb 07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA OPEN 745 750 754.7 750.5 751 746.6 744.8 748 725 706.25 724.75 742 731 730 730 713.65 706 690 681 0.55673 CLOSE 743.8 745.65 750.3 750.3 745.95 741.55 731.65 725.2 726.25 719.9 738.4 730.85 729.2 729.5 706.35 681.55 689.3 693.25 676.9 NIFTY PRICE OPEN 4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 SD CLOSE 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 SUM STOCK RETURN Y -0.1611 -0.58 -0.583 -0.0266 -0.6724 -0.6764 -1.7656 -3.0481 0.1724 1.9327 1.8834 -1.5027 -0.2462 -0.0685 -3.2397 -4.498 -2.3654 0.471 -0.6021 -15.576 1.6295 VAR MARKET RETURN X 1.3175 1.0458 0.5294 -0.49 0.6205 -0.203 -0.855 -3.078 -0.603 0.0544 2.4563 0.3687 -1.39 -0.267 -1.383 -2.646 0.0736 -1.372 -3.804 -9.624 X*Y -0.2122 -0.6066 -0.3087 0.0131 -0.4172 0.1375 1.5091 9.3834 -0.104 0.1051 4.6261 -0.5541 0.3423 0.0183 4.48 11.901 -0.1741 -0.646 2.2901 31.783 2.6553 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
TABLE 11 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 11
59
Standard deviation (total risk associated with stock) is 1.62 where as the beta value is 0.55 .it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock fluctuating along with the market .here the non diversifiable risk is very less so proper diversification of the portfolio ensure maximum return with minimum investment
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 670 661.75 655 660.1 601 617.5 630 622.55 635 635.25 641 668.55 679.9 660 678 658.4 660 661 645 648.45 655 672.45 681 683.6 689 683 682.4 690 690 689 654.9 692 714.5 -0.1705 677.25 682.4 679.2 682 686.3 682.15 692.15 706.5 728.25
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55 SUM SD
STOCK RETURN Y -1.2313 0.7786 2.7454 -1.1825 0.0394 4.298 -2.9269 -2.8909 0.1515 0.5349 2.6641 0.3818 -1.7054 -0.0878 -0.4689 -1.1594 -0.5362 -0.9942 5.6879 2.0954 1.9244 8.1178 2.2031
MARKET RETURN X 1.7568 -2.227 -4.025 2.1945 -0.948 3.7053 -1.166 0.4613 0.9451 -3.378 -0.036 -0.846 1.8719 0.4687 1.8079 2.9592 -0.405 -1.126 -1.51 1.0361 0.8631 2.4033 VAR
X*Y -2.1633 -1.7343 -11.051 -2.5951 -0.0373 15.925 3.4117 -1.3337 0.1432 -1.8069 -0.095 -0.3231 -3.1923 -0.0412 -0.8478 -3.431 0.2172 1.1194 -8.5868 2.1711 1.6609 -12.59 4.8536
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 12
60
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 RETURNS 4 2 0 -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29 Y X
DATE
GRAPH 12
Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk associated with this stock can be eliminated with proper diversification of the portfolio in this particular month the return from this stock much above the market return but some trading day the price of the stock is crumbling down may be because of the high selling trend for short term profile
The overall performance of this stock is promising the risk associated with this stock comparatively less. Investor can hold the stock for a long time. The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk
61
4.2.2 RANBAXY
DATE
2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07
STOCK PRICE OPEN CLOSE
391 397.4 414 411 412 425 417.5 411.9 416.1 426.95 431 430 436 432 417 408 409.5 402.05 400 404 399.15 412.1 413.2 413.8 418.8 416.8 411.15 416.4 421.25 430.4 429.65 432.3 430.4 414.5 404.55 399.45 400.8 397.3 402.4 408.95
NIFTY PRICE OPEN CLOSE
3966.25 4007.7 4027.3 3990.15 3983.3 3933.3 3910.95 3852.15 3944.55 4052.85 4090.7 4084.9 4075.2 4126 4089.6 4102.65 4066.6 4092.05 4148.4 4123.85
BETA
0.42651
STOCK RETURN Y 2.0844 4007.4 3.699 4024.05 -0.1932 3988.8 0.6813 3983.4 1.6505 3933.4 -1.9294 3911.4 -1.521 3850.3 1.0925 3942.25 1.2377 4052.45 0.8081 4078.4 -0.3132 4080.5 0.5349 4076.45 -1.2844 4109.05 -4.0509 4090.15 -2.9856 4102.45 -2.0956 4066.1 -2.1245 4089.9 -1.1814 4147.7 0.6 4124.45 1.2252 4082.7 SUM -4.0658 SD 1.9106 TABLE 13
MARKET RETURN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
X*Y 2.1626 1.5091 0.1847 -0.1152 -2.0676 1.0743 2.3587 2.5553 3.3856 0.5094 0.0781 -0.1106 -1.0669 3.5198 -0.9381 1.8669 -1.2173 -1.6067 -0.3464 -1.2226 10.513 3.6506
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 13 62
The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.423It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return
STOCK PRICE OPEN CLOSE 409 411.2 413 413.05 414 414.7 414.7 420.05 424.2 419.3 421.9 420.95 424.05 416.75 413.6 409.15 409.1 411.5 408 415.45 415 393.35 396 391.6 385 395.5 396.5 382.7 383 367.45 367 356.55 365 351.35 354.1 351.6 342 337.85 0.0797 NIFTY PRICE OPEN CLOSE 4083.4 4137.2 4140.2 4183.5 4193.15 4215.35 4216.55 4195.9 4198.2 4224.25 4232 4223.4 4223.5 4187.4 4187.2 4058.3 4069.1 4044.55 4044.9 4047.1 4046.8 4146.2 4149.25 4164.55 4164.85 4106.95 4107.15 4096.2 4096.65 4040 4046 3938.95 3939.1 3942 3948.05 3893.9 3893.4 3745.3 SUM SD STOCK RETURN Y 0.5379 0.0121 0.1691 1.2901 -1.1551 -0.2252 -1.7215 -1.0759 0.5867 1.826 -5.2169 -1.1111 2.7273 -3.4805 -4.0601 -2.8474 -3.7397 -0.706 -1.2135 -19.404 MARKET RETURN X 1.3175 1.0458 0.5294 -0.49 0.6205 -0.203 -0.855 -3.078 -0.603 0.0544 2.4563 0.3687 -1.39 -0.267 -1.383 -2.646 0.0736 -1.372 -3.804 -9.624
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07
X*Y 0.7087 0.0127 0.0895 -0.6318 -0.7168 0.0458 1.4714 3.3121 -0.3539 0.0993 -12.814 -0.4097 -3.7915 0.9279 5.6144 7.5337 -0.2753 0.9683 4.6158 6.4067
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
BETA
2.1069 VAR 4.4389 TABLE 14 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
63
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 -6 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 14 Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk associated with this stock can be eliminated with proper diversification of the portfolio in this particular month the return from this stock much above the market return but some trading day the price of the stock is crumbling down may be because of the high selling trend for short term profit.
STOCK PRICE OPEN CLOSE
344 345 345.5 325 322 312 334 328 323.75 316.5 315 315.95 315 314 319.5 318.9 340 335 334.2 334.25 333 0.90549 342.75 347.3 320.7 322.3 307.25 328.45 326.05 323.75 320.7 312.25 315 311.2 316.25 314 316.95 336.35 331.55 335 333.2 330.15 327.05
DATE
1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
NIFTY PRICE OPEN CLOSE
3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55
BETA
SUM SD TABLE 15
STOCK RETUR Y -0.3634 0.6667 -7.178 -0.8308 -4.5807 5.2724 -2.3802 -1.2957 -0.9421 -1.3428 0 -1.5034 0.3968 0 -0.7981 5.4719 -2.4853 0 -0.2992 -1.2266 -1.7868 -15.205 2.6885
MARKE RETURN X 1.7568 -2.227 -4.025 2.1945 -0.948 3.7053 -1.166 0.4613 0.9451 -3.378 -0.036 -0.846 1.8719 0.4687 1.8079 2.9592 -0.405 -1.126 -1.51 1.0361 0.8631 2.4033 VAR
X*Y -0.6384 -1.4849 28.893 -1.8231 4.3411 19.536 2.7745 -0.5978 -0.8903 4.5361 0 1.2723 0.7428 0 -1.4429 16.193 1.0065 0 0.4517 -1.271 -1.5421 70.056 7.2279
X^2 3.0864 4.9612 16.202 4.8157 0.8981 13.729 1.3587 0.2128 0.8931 11.411 0.0012 0.7162 3.5040 0.2196 3.2684 8.7570 0.1640 1.2677 2.2790 1.0735 0.7447 79.565
64
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 15 Standard deviation (total risk associated with stock) is 2.69where as the beta value is 0.91 .it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock fluctuating along with the market .here the non diversifiable risk is very less so proper diversification of the portfolio ensure maximum return with minimum investment
The overall performance of this stock is promising the risk associated with this stock comparatively less. Investor can hold the stock for a long time. The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk
65
4.2.3 SUN PHARMASUICAL
STOC K RETU RN Y 0.1677 0.4304 -0.298 -0.4162 0.8878 -0.6401 -0.5939 5.3168 1.0196 1.45 -1.1394 2.3922 -1.1322 -2.1 2.5944 -0.3473 -5.413 0.459 -0.9078 0.9354 2.6652 2.1008 MARK ET RETU RN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
STOCK PRICE OPEN CLOSE 983.9 985.55 987.5 991.75 990.05 987.1 985 980.9 980 988.7 992 985.65 985 979.15 962.05 1,013.20 1,020.00 1,030.40 1,031.00 1,045.95 1,048.80 1,036.85 1,020.00 1,044.40 1,059.85 1,047.85 1,050.00 1,027.95 1,033.00 1,059.80 1,051.00 1,047.35 1,079.80 1,021.35 1,034.95 1,039.70 1,030.00 1,020.65 1,021.00 1,030.55 0.61224
NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 sum SD TABLE 16
X*Y 0.174 0.1756 0.2848 0.0704 -1.1121 0.3564 0.921 12.436 2.7891 0.9141 0.2841 -0.4948 -0.9405 1.8246 0.8152 0.3094 -3.1015 0.6242 0.5241 -0.9334 15.92 4.4135
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
DATE
GRAPH 16 66
Standard deviation (total risk associated with stock) is 2.10 where as the beta value is 0.612.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of January this stock is more fluctuating as a comparison to the market price
STOCK RETURN Y 1.0533 -0.1053 1.7099 -3.0052 0.8077 2.0808 -1.6635 -0.7695 1.7034 2.9617 1.4464 0.7984 -0.7996 -1.0739 -4.104 -4.1238 0.2602 -1.9586 -1.1383 -5.9198 2.0387 MARKE T RETURN X 1.3175 1.0458 0.5294 -0.49 0.6205 -0.203 -0.855 -3.078 -0.603 0.0544 2.4563 0.3687 -1.39 -0.267 -1.383 -2.646 0.0736 -1.372 -3.804 -9.624 VAR
DATE
1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07
STOCK PRICE OPEN CLOSE
1,034.80 1,044.90 1,035.15 1,069.80 1,040.00 1,026.05 1,052.00 1,020.20 998 991 1,016.30 1,027.05 1,038.00 1,029.00 1,047.75 1,016.05 979.9 972.65 940 1,045.70 1,043.80 1,052.85 1,037.65 1,048.40 1,047.40 1,034.50 1,012.35 1,015.00 1,020.35 1,031.00 1,035.25 1,029.70 1,017.95 1,004.75 974.15 982.45 953.6 929.3
NIFTY PRICE OPEN CLOSE
4083.4 4140.2 4193.15 4216.55 4198.2 4232 4223.5 4187.2 4069.1 4044.9 4046.8 4149.25 4164.85 4107.15 4096.65 4046 3939.1 3948.05 3893.4 4137.2 4183.5 4215.35 4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3
BETA
sum 0.75786 SD TABLE 17 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
X*Y 1.3878 -0.1101 0.9053 1.4718 0.5012 -0.4228 1.4219 2.3687 -1.0277 0.1611 3.5528 0.2944 1.1116 0.2863 5.6752 10.911 0.0192 2.6863 4.3299 35.524 4.1565
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 17 67
Standard deviation (total risk associated with stock) is 2.04where as the beta value is 0.76.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price
STOCK RETURN Y 3.8315 2.0053 -0.7376 0.7439 0.6257 -0.093 0.9744 2.6876 0.3391 -2.6898 -0.6968 -0.2611 -0.6672 -1.4811 -0.1523 0.1555 -0.3627 -1.466 -2.9617 -0.0887 3.9813 3.6863 1.8059 MARKE RETURN X 1.7568 -2.227 -4.025 2.1945 -0.948 3.7053 -1.166 0.4613 0.9451 -3.378 -0.036 -0.846 1.8719 0.4687 1.8079 2.9592 -0.405 -1.126 -1.51 1.0361 0.8631 2.4033 VAR
DATE
1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07
STOCK PRICE OPEN CLOSE
920 950 949 941 943 967.85 975 986 1,017.45 1,029.80 1,019.00 1,015.05 1,011.70 1,006.00 1,018.00 1,028.80 1,034.00 1,030.00 1,029.80 1,014.95 1,016.00 955.25 969.05 942 948 948.9 966.95 984.5 1,012.50 1,020.90 1,002.10 1,011.90 1,012.40 1,004.95 991.1 1,016.45 1,030.40 1,030.25 1,014.90 999.3 1,014.05 1,056.45
NIFTY PRICE OPEN CLOSE
3745.4 3811.65 3726.5 3577.15 3661.55 3627.25 3761.85 3717.45 3735.25 3768.4 3644.9 3639.35 3611.3 3680.35 3697.7 3764.5 3876.75 3863.45 3818.75 3759.15 3788.85 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55
X*Y 6.7313 -4.4665 2.9691 1.6325 -0.5929 -0.3446 -1.1358 1.2399 0.3205 9.0865 0.0249 0.2209 -1.2489 -0.6942 -0.2753 0.4602 0.1469 1.6506 4.4712 -0.0919 3.4361 23.541 3.2613
X^2 3.086 4.961 16.20 4.815 0.898 13.72 1.358 0.212 0.893 11.41 0.001 0.716 3.504 0.219 3.268 8.757 0.164 1.267 2.279 1.073 0.744 79.56
BETA
0.29157
SUM SD TABLE 18
68
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH The total risk (standard deviation) associated with the stock is 3.69 and the beta is .0.29 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
69
4.3
OIL AND GAS INDUSTRY
4.3.1 BPCL
STOCK PRICE OPEN CLOSE 983.9 985.55 987.5 991.75 990.05 987.1 985 980.9 980 988.7 992 985.65 985 979.15 962.05 1,013.20 1,020.00 1,030.40 1,031.00 1,045.95 1,048.80 1,036.85 1,020.00 1,044.40 1,059.85 1,047.85 1,050.00 1,027.95 1,033.00 1,059.80 1,051.00 1,047.35 1,079.80 1,021.35 1,034.95 1,039.70 1,030.00 1,020.65 1,021.00 1,030.55 0.61224 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 19 STOCK RETURN Y 0.1677 0.4304 -0.298 -0.4162 0.8878 -0.6401 -0.5939 5.3168 1.0196 1.45 -1.1394 2.3922 -1.1322 -2.1 2.5944 -0.3473 -5.413 0.459 -0.9078 0.9354 2.6652 2.1008 MARKET RETURN X 1.0375 0.408 -0.956 -0.169 -1.253 -0.557 -1.551 2.339 2.7354 0.6304 -0.249 -0.207 0.8306 -0.869 0.3142 -0.891 0.573 1.36 -0.577 -0.998 1.9514 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 0.174 0.1756 0.2848 0.0704 -1.1121 0.3564 0.921 12.436 2.7891 0.9141 0.2841 -0.4948 -0.9405 1.8246 0.8152 0.3094 -3.1015 0.6242 0.5241 -0.9334 15.92 4.4135
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
DATE
GRAPH 19 70
Standard deviation (total risk associated with stock) is 2.67 where as the beta value is 0.61.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of January this stock is more fluctuating as a comparison to the market price
MARKET STOCK NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 1.0533 1.3175 1.3878 4140.2 4183.5 -0.1053 1.0458 -0.1101 4193.15 4215.35 1.7099 0.5294 0.9053 4216.55 4195.9 -3.0052 -0.49 1.4718 4198.2 4224.25 0.8077 0.6205 0.5012 4232 4223.4 2.0808 -0.203 -0.4228 4223.5 4187.4 -1.6635 -0.855 1.4219 4187.2 4058.3 -0.7695 -3.078 2.3687 4069.1 4044.55 1.7034 -0.603 -1.0277 4044.9 4047.1 2.9617 0.0544 0.1611 4046.8 4146.2 1.4464 2.4563 3.5528 4149.25 4164.55 0.7984 0.3687 0.2944 4164.85 4106.95 -0.7996 -1.39 1.1116 4107.15 4096.2 -1.0739 -0.267 0.2863 4096.65 4040 -4.104 -1.383 5.6752 4046 3938.95 -4.1238 -2.646 10.911 3939.1 3942 0.2602 0.0736 0.0192 3948.05 3893.9 -1.9586 -1.372 2.6863 3893.4 3745.3 -1.1383 -3.804 4.3299 SUM -5.9198 -9.624 35.524 0.75786 SD 2.0387 VAR 4.1565 TABLE 20 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS STOCK PRICE OPEN CLOSE 1,034.80 1,045.70 1,044.90 1,043.80 1,035.15 1,052.85 1,069.80 1,037.65 1,040.00 1,048.40 1,026.05 1,047.40 1,052.00 1,034.50 1,020.20 1,012.35 998 1,015.00 991 1,020.35 1,016.30 1,031.00 1,027.05 1,035.25 1,038.00 1,029.70 1,029.00 1,017.95 1,047.75 1,004.75 1,016.05 974.15 979.9 982.45 972.65 953.6 940 929.3
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 20 71
Standard deviation (total risk associated with stock) is 2.04 where as the beta value is 0.76.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 920 955.25 950 969.05 949 942 941 948 943 948.9 967.85 966.95 975 984.5 986 1,012.50 1,017.45 1,020.90 1,029.80 1,002.10 1,019.00 1,011.90 1,015.05 1,012.40 1,011.70 1,004.95 1,006.00 991.1 1,018.00 1,016.45 1,028.80 1,030.40 1,034.00 1,030.25 1,030.00 1,014.90 1,029.80 999.3 1,014.95 1,014.05 1,016.00 1,056.45 0.29157
SSTOCK MARKET NIFTY PRICE RETUR RETURN OPEN CLOSE Y X 3745.4 3811.2 3.8315 1.7568 3811.65 3726.75 2.0053 -2.227 3726.5 3576.5 -0.7376 -4.025 3577.15 3655.65 0.7439 2.1945 3661.55 3626.85 0.6257 -0.948 3627.25 3761.65 -0.093 3.7053 3761.85 3718 0.9744 -1.166 3717.45 3734.6 2.6876 0.4613 3735.25 3770.55 0.3391 0.9451 3768.4 3641.1 -2.6898 -3.378 3644.9 3643.6 -0.6968 -0.036 3639.35 3608.55 -0.2611 -0.846 3611.3 3678.9 -0.6672 1.8719 3680.35 3697.6 -1.4811 0.4687 3697.7 3764.55 -0.1523 1.8079 3764.5 3875.9 0.1555 2.9592 3876.75 3861.05 -0.3627 -0.405 3863.45 3819.95 -1.466 -1.126 3818.75 3761.1 -2.9617 -1.51 3759.15 3798.1 -0.0887 1.0361 3788.85 3821.55 3.9813 0.8631 SUM 3.6863 2.4033 SD 1.8059 VAR
X*Y 6.7313 -4.4665 2.9691 1.6325 -0.5929 -0.3446 -1.1358 1.2399 0.3205 9.0865 0.0249 0.2209 -1.2489 -0.6942 -0.2753 0.4602 0.1469 1.6506 4.4712 -0.0919 3.4361 23.541 3.2613
X^2 3.08642 4.96123 16.2024 4.81576 0.89810 13.7291 1.35874 0.21283 0.89312 11.4115 0.00127 0.71623 3.50401 0.21968 3.26843 8.75700 0.16400 1.26773 2.27906 1.07358 0.74487 79.5652
TABLE 21
72
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 21 Standard deviation (total risk associated with stock) is 2.67 where as the beta value is 0.61.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price. the kind volatility shown in the grape make this stock more riskier one .so the investor should be cautious enough while he go for an investment in this particular stock.
73
4.3.2 ONGC
STOCK PRICE OPEN CLOSE 880 876.85 886.75 872.5 865.9 874.35 869.05 895.2 895 911.15 919.7 916.45 916.5 890.55 887.1 914.6 916 923.65 923 916.1 919.8 919.95 921 895.05 896 914.8 922 896.3 909.9 894.45 895 891.9 896.7 912.75 918 921.15 912 916.85 925 911.4 1.046071 NIFTY PRICE OPEN CLOSE 3966.25 4016.65 4007.7 4029.8 4027.3 4041 3990.15 4011.45 3983.3 3987.45 3933.3 3963.75 3910.95 3911.95 3852.15 3953.1 3944.55 4059.15 4052.85 4099.65 4090.7 4107.45 4084.9 4096.75 4075.2 4140.25 4126 4137.15 4089.6 4114.5 4102.65 4105.1 4066.6 4098.25 4092.05 4157.95 4148.4 4167.15 4123.85 4137.85 SUM SD TABLE 22 STOCK RETURN Y -0.358 -1.607 0.9759 3.009 1.8045 -0.3534 -2.8314 3.1 0.8352 -0.7476 0.0163 -2.8176 2.0982 -2.7874 -1.698 -0.3464 1.7899 0.3431 0.5318 -1.4703 -0.5131 1.8332 MARKET RETURN X 1.270722 0.551438 0.340178 0.533815 0.104185 0.774159 0.025569 2.620614 2.905274 1.154743 0.409465 0.290093 1.596241 0.270238 0.608862 0.059717 0.778291 1.61044 0.451981 0.339489 16.69551 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y -0.45486 -0.88616 0.331967 1.606265 0.187999 -0.27357 -0.0724 8.123875 2.426348 -0.86324 0.006678 -0.81736 3.349255 -0.75327 -1.03384 -0.02068 1.393061 0.552602 0.240363 -0.49914 12.54389 3.360452
X^2 1.614734 0.304084 0.115721 0.284958 0.010855 0.599322 0.000654 6.86762 8.440619 1.333431 0.167662 0.084154 2.547984 0.073028 0.370712 0.003566 0.605738 2.593516 0.204287 0.115252 26.3379
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 23 74
Standard deviation (total risk associated with stock) is 1.83 where as the beta value is 1.04 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock. So an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more vigilant
MARKET STOCK NIFTY PRICE RETURN RETURN DATE OPEN CLOSE Y X X*Y 1-Feb-07 4083.4 4141.6 -0.1261 1.425283 -0.17972 2-Feb-07 4140.2 4198.7 -1.5707 1.412975 -2.21929 5-Feb-07 4193.15 4219 -1.9448 0.616482 -1.19895 6-Feb-07 4216.55 4228.15 -0.9597 0.275106 -0.26401 7-Feb-07 4198.2 4232.3 -1.989 0.812253 -1.61558 8-Feb-07 4232 4245.3 -1.7582 0.314272 -0.55257 9-Feb-07 4223.5 4239.2 -1.4604 0.37173 -0.54288 12-Feb-07 4187.2 4187.2 -2.3874 0 0 13-Feb-07 4069.1 4132.7 2.9767 1.562999 4.652649 14-Feb-07 4044.9 4057.35 1.7853 0.307795 0.54951 15-Feb-07 4046.8 4155.7 0.1381 2.691015 0.371687 19-Feb-07 4149.25 4177.7 -0.011 0.685666 -0.00757 20-Feb-07 4164.85 4175.45 -3.7198 0.254511 -0.94672 21-Feb-07 4107.15 4132.8 -0.7955 0.624521 -0.49678 22-Feb-07 4096.65 4126.9 -2.0562 0.738408 -1.51835 23-Feb-07 4046 4065.45 -3.4884 0.480722 -1.67694 26-Feb-07 3939.1 3958.9 1.1574 0.502653 0.581788 27-Feb-07 3948.05 3958 -2.0716 0.252023 -0.52209 28-Feb-07 3893.4 3893.4 -1.6474 0 0 SUM -19.929 13.32841 -5.58582 BETA 1.072406 SD 1.7069 VAR 2.913487 TABLE 23 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 912 910.85 920 905.55 928.1 910.05 917 908.2 910 891.9 910 894 897 883.9 888 866.8 860 885.6 885 900.8 905 906.25 906.25 906.15 910 876.15 880 873 872.95 855 860 830 825.1 834.65 835.1 817.8 801.25 788.05 X^2 2.031431 1.996499 0.38005 0.075684 0.659755 0.098767 0.138183 0 2.442966 0.094738 7.241562 0.470138 0.064776 0.390026 0.545247 0.231093 0.25266 0.063516 0 17.17709
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 23
75
Standard deviation (total risk associated with stock) is 1.71 where as the beta value is 1.07 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 788.05 795.95 802 798.9 785 773.05 785 768.95 776.1 764.85 766 779.5 786.6 783.4 786 793.6 798 807.15 791 781.35 789.9 776.5 786 762.85 769 793.15 800 790.8 790.9 811.65 824 852.3 874 843.1 840 850.25 850 864.55 860 874.8 872 880.8 0.514967
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 24
STOCK RETURN Y 1.0025 -0.3865 -1.5223 -2.0446 -1.4496 1.7624 -0.4068 0.9669 1.1466 -1.22 -1.6964 -2.9453 3.1404 -1.15 2.6236 3.4345 -3.5355 1.2202 1.7118 1.7209 1.0092 3.3821 1.9816
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 1.761169 0.860958 6.127571 -4.48681 1.373724 6.530204 0.474203 0.446077 1.083611 4.121186 0.060505 2.492616 5.8786 -0.53901 4.743143 10.16336 1.431789 -1.37391 -2.58418 1.783122 0.870977 41.2189 3.926655
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
76
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 24 The total risk (standard deviation) associated with the stock is 1.98 and the beta is 0.514 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average market return is well above the stock return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
77
RELIANCE ENERGY
STOCK RETURN Y 0.759542 -0.21824 -0.8232 -1.14043 -0.46667 -2.32139 -2.96154 1.554455 2.329435 3.732867 -0.8473 0.733083 -1.57356 -3.74766 -2.52885 -0.88583 -0.35468 -0.89744 0.128713 0.686275 -8.84241 1.795059 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
STOCK PRICE OPEN CLOSE 520.05 524 526.95 525.8 534.5 530.1 530.5 524.45 525 522.55 527.7 515.45 520 504.6 505 512.85 513 524.95 514.35 533.55 537 532.45 532 535.9 537 528.55 535 514.95 520 506.85 508 503.5 507.5 505.7 507 502.45 505 505.65 510 513.5 0.828539
NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 25
X*Y 0.788028 -0.08903 0.786958 0.192923 0.584607 1.292516 4.592677 3.635799 6.371982 2.353276 0.211271 -0.15165 -1.30705 3.256271 -0.79459 0.789172 -0.20322 -1.22047 -0.07431 -0.6848 20.33036 3.222236
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 78
Standard deviation (total risk associated with stock) is 1.95where as the beta value is 0.83 .it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of January this stock is more fluctuating as a comparison to the market price. Frequent up and downs
MARKET STOCK NIFTY PRICE RETURN RETURN DATE OPEN CLOSE Y X X*Y 1-Feb-07 4083.4 4137.2 0.991529 1.31753 1.306368 2-Feb-07 4140.2 4183.5 1.454373 1.045843 1.521046 5-Feb-07 4193.15 4215.35 2.700935 0.529435 1.429969 6-Feb-07 4216.55 4195.9 1.173285 -0.48974 -0.5746 7-Feb-07 4198.2 4224.25 -0.43594 0.620504 -0.2705 8-Feb-07 4232 4223.4 0.901786 -0.20321 -0.18326 9-Feb-07 4223.5 4187.4 -2.46751 -0.85474 2.109082 12-Feb-07 4187.2 4058.3 -4.49107 -3.07843 13.82545 13-Feb-07 4069.1 4044.55 0.35514 -0.60333 -0.21427 14-Feb-07 4044.9 4047.1 1.25 0.054389 0.067987 15-Feb-07 4046.8 4146.2 -1.5245 2.456262 -3.74457 19-Feb-07 4149.25 4164.55 -1.86813 0.368741 -0.68886 20-Feb-07 4164.85 4106.95 -3.39518 -1.39021 4.719995 21-Feb-07 4107.15 4096.2 0.211254 -0.26661 -0.05632 22-Feb-07 4096.65 4040 -2.7783 -1.38284 3.841943 23-Feb-07 4046 3938.95 -2.28682 -2.64582 6.050526 26-Feb-07 3939.1 3942 0.337168 0.073621 0.024823 27-Feb-07 3948.05 3893.9 -1.42997 -1.37156 1.961295 28-Feb-07 3893.4 3745.3 -4.45219 -3.80387 16.93557 SUM -15.7542 -9.62403 48.06167 BETA 0.933932 SD 2.10782 VAR 4.442905 TABLE 26 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 519.4 524.55 526 533.65 535 549.45 554 560.5 562 559.55 560 565.05 569.4 555.35 560 534.85 535 536.9 540 546.75 551 542.6 546 535.8 539 520.7 520.7 521.8 527.3 512.65 516 504.2 504.2 505.9 510.5 503.2 502 479.65
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
79
Standard deviation (total risk associated with stock) is 2.11 where as the beta value is 0.93.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price and the fluctuation in the stock price compel the investor to compete with the bulls and bears in the market.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 479.65 480.9 480.9 475.5 475.5 469.9 469.9 475 475 478.25 478.25 489.2 489.2 480.55 480.55 473.25 473.25 466.15 466.15 458.85 458.85 462.2 462.2 456.05 456.05 457.6 457.6 477.15 477.15 491.45 491.45 492 492 485.25 485.25 475.85 475.85 482.05 482.05 485.8 485.8 494.2 0.492648
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 27
STOCK RETURN Y 0.260607 -1.12289 -1.17771 1.085337 0.684211 2.289597 -1.76819 -1.51909 -1.50026 -1.56602 0.730086 -1.33059 0.339875 4.27229 2.996961 0.111914 -1.37195 -1.93715 1.302932 0.777928 1.729107 3.286983 1.729454
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 0.457839 2.501115 4.740538 2.381756 -0.64842 8.483614 2.061094 -0.70081 -1.41783 5.290157 -0.02604 1.126087 0.636213 2.002446 5.418148 0.331178 0.555611 2.181103 -1.96698 0.806041 1.492321 35.70519 2.99101
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
80
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH The total risk (standard deviation) associated with the stock is 1.73 and the beta is 0.492 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
81
4.4 INFOTECH SECTOR
4.4.1 INFOSYS
STOCK PRICE OPEN CLOSE 2,253.00 2,272.65 2,272.65 2,311.35 2,321.20 2,285.30 2,286.00 2,275.05 2,275.05 2,205.60 2,216.00 2,190.10 2,200.00 2,164.45 2,181.00 2,183.00 2,200.00 2,223.40 2,232.95 2,242.95 2,245.20 2,222.20 2,245.00 2,205.45 2,206.00 2,224.15 2,225.00 2,202.35 2,215.00 2,254.00 2,248.00 2,235.15 2,201.00 2,234.05 2,241.00 2,241.00 2,235.00 2,244.40 2,240.00 2,247.30 0.680402 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 28 STOCK RETURN Y 0.87217 1.702858 -1.54661 -0.479 -3.05268 -1.16877 -1.61591 0.091701 1.063636 0.447838 -1.02441 -1.76169 0.822756 -1.01798 1.760722 -0.57162 1.50159 0 0.420582 0.325893 -3.22893 1.302383 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 0.90488 0.694706 1.478525 0.081031 3.824184 0.650754 2.50591 0.214485 2.909492 0.282326 0.255432 0.364423 0.683409 0.884501 0.553239 0.509248 0.860351 0 -0.24281 -0.32519 17.08889 1.14361
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 29 82
The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.68 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA MARKET STOCK NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 0.842222 1.31753 1.109653 4140.2 4183.5 -0.41538 1.045843 -0.43443 4193.15 4215.35 1.534676 0.529435 0.812511 4216.55 4195.9 0.129956 -0.48974 -0.06364 4198.2 4224.25 4.500011 0.620504 2.792275 4232 4223.4 0.367865 -0.20321 -0.07476 4223.5 4187.4 -0.55382 -0.85474 0.473376 4187.2 4058.3 0.695931 -3.07843 -2.14238 4069.1 4044.55 -1.99064 -0.60333 1.201009 4044.9 4047.1 0.107353 0.054389 0.005839 4046.8 4146.2 2.496882 2.456262 6.132995 4149.25 4164.55 -0.24769 0.368741 -0.09133 4164.85 4106.95 -0.63578 -1.39021 0.88386 4107.15 4096.2 -2.08051 -0.26661 0.554681 4096.65 4040 -0.88821 -1.38284 1.228257 4046 3938.95 -1.7691 -2.64582 4.680714 3939.1 3942 -0.70949 0.073621 -0.05223 3948.05 3893.9 -1.92825 -1.37156 2.644718 3893.4 3745.3 -4.69954 -3.80387 17.87646 SUM -5.24352 -9.62403 37.53758 0.812765 SD 1.946677 VAR 3.78955 TABLE 29 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 2,250.00 2,268.95 2,275.00 2,265.55 2,235.00 2,269.30 2,270.00 2,272.95 2,255.55 2,357.05 2,365.00 2,373.70 2,374.40 2,361.25 2,335.00 2,351.25 2,351.00 2,304.20 2,282.20 2,284.65 2,324.90 2,382.95 2,382.00 2,376.10 2,375.05 2,359.95 2,360.00 2,310.90 2,308.00 2,287.50 2,278.00 2,237.70 2,234.00 2,218.15 2,230.00 2,187.00 2,180.00 2,077.55 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
DATE
GRAPH 29
83
Standard deviation (total risk associated with stock) is 1.94 where as the beta value is 0.81.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price and the fluctuation in the stock price compel the investor to compete with the bulls and bears in the market.
STOCK RETURN Y 3.805288 -3.68513 -3.40488 5.039742 -3.78564 2.188995 -0.44124 -0.2217 -0.56448 -2.6506 1.38469 -2.03589 0.833333 -2.1 1.56917 0.42891 -1.29245 -2.22565 -1.86946 1.467965 1.185464 -6.37357 2.421995 MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 2,080.00 2,159.15 2,173.60 2,093.50 2,077.90 2,007.15 2,013.00 2,114.45 2,167.40 2,085.35 2,090.00 2,135.75 2,130.35 2,120.95 2,120.00 2,115.30 2,117.00 2,105.05 2,075.00 2,020.00 2,051.00 2,079.40 2,090.00 2,047.45 2,070.00 2,087.25 2,100.00 2,055.90 2,061.60 2,093.95 2,110.00 2,119.05 2,120.00 2,092.60 2,105.00 2,058.15 2,030.00 1,992.05 1,961.90 1,990.70 1,995.00 2,018.65 0.954343
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
X*Y 6.685213 8.208193 13.70541 11.05963 3.5876 8.110854 0.514334 -0.10228 -0.53346 8.953977 -0.04939 1.72298 1.559918 -0.98428 2.836871 1.269241 0.523415 2.505945 2.822239 1.521015 1.023125 74.94056 5.866058
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 30
84
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH 30
Standard deviation (total risk associated with stock) is 2.42 where as the beta value is 0.954.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 by some small decimal. The above graph revels that the average stock return is below the market return. In the month of March this stock price showing sudden ups and downs.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor
85
4.4.2 TCS
STOCK NIFTY PRICE RETURN STOCK PRICE OPEN CLOSE OPEN CLOSE Y 1,229.40 1,248.50 3966.25 4007.4 1.553603 1,253.00 1,280.15 4007.7 4024.05 2.1668 1,285.00 1,259.05 4027.3 3988.8 -2.01946 1,265.00 1,263.00 3990.15 3983.4 -0.1581 1,259.00 1,243.80 3983.3 3933.4 -1.20731 1,247.90 1,256.40 3933.3 3911.4 0.681144 1,244.55 1,235.40 3910.95 3850.3 -0.73521 1,198.90 1,277.65 3852.15 3942.25 6.568521 1,290.15 1,323.95 3944.55 4052.45 2.61985 1,350.00 1,326.35 4052.85 4078.4 -1.75185 1,388.95 1,324.10 4090.7 4080.5 -4.66899 1,329.90 1,304.65 4084.9 4076.45 -1.89864 1,305.00 1,315.45 4075.2 4109.05 0.800766 1,315.45 1,298.15 4126 4090.15 -1.31514 1,300.10 1,313.45 4089.6 4102.45 1.026844 1,313.10 1,302.70 4102.65 4066.1 -0.79202 1,311.50 1,307.15 4066.6 4089.9 -0.33168 1,325.00 1,315.45 4092.05 4147.7 -0.72075 1,315.00 1,297.75 4148.4 4124.45 -1.31179 1,297.10 1,277.90 4123.85 4082.7 -1.48023 SUM -2.97363 1.325281 SD 2.297689 TABLE 31 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 1.61187 0.883978 1.93055 0.026746 1.51243 -0.37925 1.140138 15.36347 7.166391 -1.1044 1.164195 0.392751 0.665144 1.142699 0.322646 0.7056 -0.19004 -0.98019 0.757335 1.477048 33.6091 5.279376
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
8 6 RETURNS 4 2 0 -2 -4 -6 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30 Y X
DATE
GRAPH 31
86
Standard deviation (total risk associated with stock) is 2.29 where as the beta value is 1.33 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return.
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA MARKET STOCK NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 0.162797 1.31753 0.21449 4140.2 4183.5 0.115473 1.045843 0.120767 4193.15 4215.35 0.061303 0.529435 0.032456 4216.55 4195.9 -1.11196 -0.48974 0.544567 4198.2 4224.25 0.484615 0.620504 0.300706 4232 4223.4 -0.52616 -0.20321 0.106922 4223.5 4187.4 -1.68016 -0.85474 1.436101 4187.2 4058.3 0.464 -3.07843 -1.42839 4069.1 4044.55 -0.24682 -0.60333 0.14891 4044.9 4047.1 0.618516 0.054389 0.033641 4046.8 4146.2 2.15415 2.456262 5.291157 4149.25 4164.55 0.645459 0.368741 0.238007 4164.85 4106.95 -1.09217 -1.39021 1.518339 4107.15 4096.2 -1.24231 -0.26661 0.331209 4096.65 4040 -0.43846 -1.38284 0.606321 4046 3938.95 -1.36293 -2.64582 3.606083 3939.1 3942 1.108491 0.073621 0.081608 3948.05 3893.9 0.80941 -1.37156 -1.11016 3893.4 3745.3 -3.21168 -3.80387 12.21682 SUM -4.28842 -9.62403 24.28956 0.515349 SD 1.20985 VAR 1.463737 TABLE 32 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 1,289.95 1,292.05 1,299.00 1,300.50 1,305.00 1,305.80 1,313.00 1,298.40 1,300.00 1,306.30 1,311.40 1,304.50 1,309.40 1,287.40 1,250.00 1,255.80 1,256.00 1,252.90 1,253.00 1,260.75 1,265.00 1,292.25 1,301.40 1,309.80 1,313.90 1,299.55 1,300.00 1,283.85 1,300.00 1,294.30 1,295.00 1,277.35 1,272.00 1,286.10 1,254.00 1,264.15 1,233.00 1,193.40 X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
3 2 1 0 -1 -2 -3 -4 -5 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
RETURNS
Y X
DATE
GRAPH 32
87
Standard deviation (total risk associated with stock) is 1.887 where as the beta value is 0.83.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of February this stock is more fluctuating as a comparison to the market price
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 1,200.00 1,254.65 1,254.80 1,208.55 1,190.00 1,155.55 1,210.00 1,197.25 1,202.00 1,191.80 1,190.00 1,218.40 1,228.30 1,212.15 1,224.70 1,235.00 1,225.50 1,265.40 1,225.00 1,213.55 1,230.00 1,234.30 1,241.40 1,237.65 1,216.30 1,260.90 1,260.00 1,253.00 1,261.00 1,267.00 1,277.00 1,303.05 1,312.00 1,288.20 1,285.00 1,261.35 1,269.90 1,201.00 1,188.95 1,248.35 1,248.35 1,233.85 0.910386
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
STOCK RETURN Y 4.554167 -3.68585 -2.89496 -1.05372 -0.84859 2.386555 -1.31483 0.841022 3.255814 -0.93469 0.349593 -0.30208 3.666859 -0.55556 0.475813 2.039937 -1.81402 -1.84047 -5.42562 4.996005 -1.16153 0.733854 2.69163
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y 8.000859 8.209787 11.65286 -2.31237 0.804193 8.842868 1.532626 0.387995 3.076909 3.157481 -0.01247 0.25565 6.864 -0.26039 0.860213 6.036632 0.734641 2.072249 8.190828 5.176553 -1.00247 72.26864 7.244874
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 33
88
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
S GRAPH 33 Standard deviation (total risk associated with stock) is 2.40 where as the beta value is 0.910 nearer to one some sort of risk associated with this stock which we can not element an investor can go for making an investment in this stock after having an fundamental analysis . Diversification of his portfolio would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 by some small decimal. The above graph revels that the average stock return is below the market return. In the month of March this stock price showing sudden ups and downs.
The average beta is less than one except in the month of January that means the over all performance of this stock is one want to go for an long term investment he can go for this stock because Infosys is one of leading company in the world and the IT sector itself is more promising than any other sector . Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell
89
4.4.3 WIPRO
STOCK RETURN Y 1.41791 1.339869 -2.49196 -1.79803 -2.93624 -0.70205 0.863248 5.008475 1.040323 -0.70478 1.095238 -2.79098 0.722135 -2.56672 1.593137 -0.68 2.411003 1.86112 -3.22432 -2.813 -3.35563 2.246564 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
STOCK PRICE OPEN CLOSE 603 611.55 612 620.2 622 606.5 609 598.05 596 578.5 584 579.9 585 590.05 590 619.55 620 626.45 631.4 626.95 630 636.9 652.1 633.9 637 641.6 637 620.65 612 621.75 625 620.75 618 632.9 639.4 651.3 651.3 630.3 631 613.25 1.35657
NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 34
X*Y 1.471088 0.546619 2.382254 0.304166 3.678318 0.390893 -1.3387 11.71459 2.845719 -0.44431 -0.27309 0.577341 0.59983 2.230171 0.500582 0.605804 1.381409 2.531037 1.8615 2.806958 34.37218 5.047049
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 0 -2 -4 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30 Y X
DATE
GRAPH 34 90
Standard deviation (total risk associated with stock) is 2.24 where as the beta value is 1.37 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more vigilant.
STOCK MARKET NIFTY PRICE RETURN RETURN OPEN CLOSE Y X X*Y 4083.4 4137.2 -0.40013 1.31753 -0.52718 4140.2 4183.5 2.079365 1.045843 2.17469 4193.15 4215.35 -1.72868 0.529435 -0.91522 4216.55 4195.9 0.126183 -0.48974 -0.0618 4198.2 4224.25 1.069182 0.620504 0.663432 4232 4223.4 -1.14343 -0.20321 0.232362 4223.5 4187.4 0.641628 -0.85474 -0.54843 4187.2 4058.3 -0.50505 -3.07843 1.554762 4069.1 4044.55 1.399046 -0.60333 -0.84408 4044.9 4047.1 1.944183 0.054389 0.105743 4046.8 4146.2 4.153846 2.456262 10.20293 4149.25 4164.55 0.036711 0.368741 0.013537 4164.85 4106.95 -0.85821 -1.39021 1.193087 4107.15 4096.2 0.98965 -0.26661 -0.26385 4096.65 4040 -2.77528 -1.38284 3.837766 4046 3938.95 -6.55172 -2.64582 17.3347 3939.1 3942 -1.824 0.073621 -0.13428 3948.05 3893.9 -1.69919 -1.37156 2.330542 3893.4 3745.3 -4.1908 -3.80387 15.94127 SUM -9.23671 -9.62403 52.28999 1.109377 SD 2.417854 VAR 5.846019 TABLE 3 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
STOCK PRICE OPEN CLOSE 624.8 622.3 630 643.1 645 633.85 634 634.8 636 642.8 642.8 635.45 639 643.1 633.6 630.4 629 637.8 637.8 650.2 650 677 681 681.25 670 664.25 661.85 668.4 668.4 649.85 667 623.3 625 613.6 615 604.55 587 562.4
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 0 -2 -4 -6 -8 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 Y X
DATE
GRAPH 35 91
Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more careful
STOCK RETURN Y 2.388783 -1.84615 -5.79825 7.092593 -5.80782 3.153153 -2.13668 0.315789 1.195841 -3.43478 -1.6958 0.044248 1.447368 -1.05263 5.724671 1.139456 0.378119 -3.01767 -4.21449 -0.7193 -1.85965 -8.70321 3.332687 MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 577.7 591.5 585 574.2 570 536.95 540 578.3 588 553.85 555 572.5 578 565.65 570 571.8 577 583.9 575 555.25 572 562.3 565 565.25 570 578.25 579.5 573.4 550.25 581.75 588 594.7 595.05 597.3 599.8 581.7 583.7 559.1 570 565.9 570 559.4 1.311418
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 36
X*Y 4.196666 4.11209 23.33924 15.56458 5.503993 11.68334 2.490619 0.145686 1.13013 11.60301 0.060483 -0.03745 2.709332 -0.49337 10.34952 3.371905 -0.15313 3.397708 6.362437 -0.74529 -1.60499 102.9865 13.7008
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
92
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
8 6 4 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 36
Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Frequent fluctuation in the stock price makes the investor more vigilant In the case of Wipro the stock is more volatile and the systematic risk associated with this stock is very high since the beta value on an average greater than 1 it’s above the standard. The fluctuation in this stock mainly because of political and economical reason .but I hope this would be a short term phenomena in the long run this stock showing more colour full picture. so I think for the short time investment this stock not good but if you want hold the stock for a long time obviously it’s a promising one.
93
4.5
AUTOMOBILE INDUSTRY
4.5.1 M&M
STOCK PRICE OPEN CLOSE 913 954.2 964.8 934.25 940 927.15 930 896.55 890 898.55 902 891.8 891.8 876.45 882 910.95 915.35 933.45 947.7 950.9 951 986.25 989.85 963.2 971 968.4 968.95 933.8 935.1 928.15 937 921.1 920 908.25 912 922.25 934.7 925.35 930 901.1 1.17056 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 37 STOCK RETURN Y 4.512596 -3.16646 -1.36702 -3.59677 0.960674 -1.13082 -1.72124 3.282313 1.977386 0.33766 3.706625 -2.69233 -0.26777 -3.62764 -0.74324 -1.69691 -1.27717 1.123904 -1.00032 -3.10753 -9.4941 2.4263 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.9514 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 4.681836 -1.2918 1.306839 0.608454 -1.20347 0.629623 2.669251 7.677178 5.40898 0.212868 -0.92423 0.556933 -0.22241 3.151983 -0.23353 1.511752 -0.73177 1.528457 0.577516 3.100858 29.015 5.887
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 37 94
Standard deviation (total risk associated with stock) is 2.423 where as the beta value is 1.17 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return
STOCK PRICE OPEN CLOSE 906 900.35 909.5 908 915 913 954.75 930.35 930.35 910 946 926 936 908.2 921.95 871.95 879.9 852 866.75 818 884.7 865.55 903 889.3 891 874.4 885 877.05 900 862 875.9 844.1 855.85 822.5 861.1 843.35 817 758.6 0.82983 NIFTY PRICE OPEN CLOSE 4083.4 4137.2 4140.2 4183.5 4193.15 4215.35 4216.55 4195.9 4198.2 4224.25 4232 4223.4 4223.5 4187.4 4187.2 4058.3 4069.1 4044.55 4044.9 4047.1 4046.8 4146.2 4149.25 4164.55 4164.85 4106.95 4107.15 4096.2 4096.65 4040 4046 3938.95 3939.1 3942 3948.05 3893.9 3893.4 3745.3 SUM SD TABLE 38 STOCK RETURN Y -0.62362 -0.16493 -0.21858 -2.55564 -2.18735 -2.11416 -2.97009 -5.42329 -3.17081 -5.62446 -2.16458 -1.51717 -1.86308 -0.89831 -4.22222 -3.63055 -3.89671 -2.06132 -7.1481 -52.455 1.8879 MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.624 VAR
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X*Y -0.82164 -0.17249 -0.11572 1.251593 -1.35726 0.429627 2.538655 16.69521 1.91304 -0.30591 -5.31676 -0.55944 2.590059 0.239496 5.838646 9.605797 -0.28688 2.827226 27.19048 62.184 3.5642
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETUR
STOCK AND MARKET RETURNS COMPARISION
4 2 RETURNS 0 Y -2 X -4 -6 -8 2/1 2/3 2/5 2/7 2/9 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27
DATE
GRAPH 38
95
Standard deviation (total risk associated with stock) is 1.887 where as the beta value is 0.83.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 811.35 805.2 805.2 770.5 770.5 709.2 709.2 725.15 725.15 761.05 761.05 765.6 765.6 733.9 733.9 738.25 738.25 760.35 760.35 749.1 749.1 747.05 747.05 730.7 730.7 738.9 738.9 743.85 743.85 753.5 753.5 781.6 781.6 796.8 796.8 788.55 788.55 762.35 762.35 757.75 757.75 780.4 0.6098
STOCK NIFTY PRICE RETURN OPEN CLOSE Y 3745.4 3811.2 -0.758 3811.65 3726.75 -4.30949 3726.5 3576.5 -7.95587 3577.15 3655.65 2.249013 3661.55 3626.85 4.9507 3627.25 3761.65 0.597858 3761.85 3718 -4.14054 3717.45 3734.6 0.592724 3735.25 3770.55 2.993566 3768.4 3641.1 -1.47958 3644.9 3643.6 -0.27366 3639.35 3608.55 -2.18861 3611.3 3678.9 1.122212 3680.35 3697.6 0.669915 3697.7 3764.55 1.297305 3764.5 3875.9 3.729263 3876.75 3861.05 1.944729 3863.45 3819.95 -1.03539 3818.75 3761.1 -3.32255 3759.15 3798.1 -0.6034 3788.85 3821.55 2.989113 SUM -12.972 SD 2.6355 TABLE 39
MARKET RETURN X 0.017568 -0.02227 -0.04025 0.021945 -0.00948 0.037053 -0.01166 0.004613 0.009451 -0.03378 -0.00036 -0.00846 0.018719 0.004687 0.018079 0.029592 -0.00405 -0.01126 -0.0151 0.010361 0.008631 2.4033 VAR
X*Y -0.01332 0.095989 0.320242 0.049354 -0.04692 0.022152 0.048264 0.002734 0.028291 0.049982 9.76E-05 0.018522 0.021007 0.00314 0.023454 0.110357 -0.00788 0.011658 0.050159 -0.00625 0.025798 46.873 6.9461
X^2 0.000309 0.000496 0.00162 0.000482 8.98E-05 0.001373 0.000136 2.13E-05 8.93E-05 0.001141 1.27E-07 7.16E-05 0.00035 2.2E-05 0.000327 0.000876 1.64E-05 0.000127 0.000228 0.000107 7.45E-05 79.5652
96
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
DATE
GRAPH 39
Standard deviation (total risk associated with stock) is 2.04 where as the beta value is 0.62.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
In the analysis the average beta of the stock in the three month (January, February march ) less than 1 it means the systematic risk is moderate .so proper diversification of the stock will safe guard the investors money, but in terms of return it shows below market tendency.
97
4.5.2 MARUTI UDYOG LTD
STOCK PRICE OPEN CLOSE 939 968.6 976.5 974.55 974.55 967.35 969.65 934.95 934.9 897.95 905 886.45 890 880.5 888 905.8 914.7 922.35 922 906.7 913 910.65 930 908.75 908 918.65 922 912.3 915 938.8 940 918.95 921.1 934.15 939 948.05 949.8 936.85 939 924.9 1.239534 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 40 STOCK R Y 3.15229 -0.19969 -0.7388 -3.57861 -3.95229 -2.04972 -1.06742 2.004505 0.83634 -1.65944 -0.25739 -2.28495 1.172907 -1.05206 2.601093 -2.23936 1.416784 0.963791 -1.36344 -1.5016 -9.79707 1.967669 MARKET X 3.15229 -0.19969 -0.7388 -3.57861 -3.95229 -2.04972 -1.06742 2.004505 0.83634 -1.65944 -0.25739 -2.28495 1.172907 -1.05206 2.601093 -2.23936 1.416784 0.963791 -1.36344 -1.5016 -9.79707 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 9.93693 0.039877 0.545829 12.80646 15.62063 4.201367 1.139376 4.018038 0.699464 2.753728 0.066251 5.220979 1.375712 1.106832 6.765684 5.014741 2.007278 0.928894 1.858982 2.254795 95.98259 3.871722
X^2 9.93693 0.039877 0.545829 12.80646 15.62063 4.201367 1.139376 4.018038 0.699464 2.753728 0.066251 5.220979 1.375712 1.106832 6.765684 5.014741 2.007278 0.928894 1.858982 2.254795 78.36184
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
RETURNS
Y X
DATE
GRAPH 40
98
Standard deviation (total risk associated with stock) is 1.23 where as the beta value is 1.96 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. The systematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows a decreasing trend and also decrease in stock return well above the market return. Here the unsystematic risk very less so diversification alone may not be ensure the safety of your money
ST MARKET OCK R NIFTY PRICE DATE OPEN CLOSE Y X X*Y 1-Feb-07 4083.4 4137.2 1.659639 1.31753 2.186623 2-Feb-07 4140.2 4183.5 0.462643 1.045843 0.483852 5-Feb-07 4193.15 4215.35 1.974381 0.529435 1.045306 6-Feb-07 4216.55 4195.9 -1.11601 -0.48974 0.546553 7-Feb-07 4198.2 4224.25 -0.09449 0.620504 -0.05863 8-Feb-07 4232 4223.4 1.150694 -0.20321 -0.23384 9-Feb-07 4223.5 4187.4 -2.16612 -0.85474 1.851473 12-Feb-07 4187.2 4058.3 -3.15387 -3.07843 9.708968 13-Feb-07 4069.1 4044.55 -2.3136 -0.60333 1.395856 14-Feb-07 4044.9 4047.1 -3.79953 0.054389 -0.20665 15-Feb-07 4046.8 4146.2 4.107112 2.456262 10.08814 19-Feb-07 4149.25 4164.55 2.443261 0.368741 0.900931 20-Feb-07 4164.85 4106.95 -2.33029 -1.39021 3.239581 21-Feb-07 4107.15 4096.2 0.604873 -0.26661 -0.16126 22-Feb-07 4096.65 4040 -2.02082 -1.38284 2.794466 23-Feb-07 4046 3938.95 -1.875 -2.64582 4.960918 26-Feb-07 3939.1 3942 1.713955 0.073621 0.126183 27-Feb-07 3948.05 3893.9 0.996243 -1.37156 -1.36641 28-Feb-07 3893.4 3745.3 -5.11245 -3.80387 19.44712 SUM -8.86938 -9.62403 85.35922 BETA 0.921586 SD 2.427088 VAR 5.890755 TABLE 41 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN STOCK PRICE OPEN CLOSE 924.9 940.25 940.25 944.6 944.6 963.25 963.25 952.5 952.5 951.6 951.6 962.55 962.55 941.7 941.7 912 912 890.9 890.9 857.05 857.05 892.25 892.25 914.05 914.05 892.75 892.75 898.15 898.15 880 880 863.5 863.5 878.3 878.3 887.05 887.05 841.7
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 92.62204
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 Y 0 X -2 -4 -6 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 2/1 2/3 2/5 2/7 2/9
DATE
GRAPH 41
99
Standard deviation (total risk associated with stock) is 2.427 where as the beta value is 0.921.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is and the market return looking southward.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 848 840.9 844 833.1 825 772.9 790 791.75 797 774.85 787 792.35 792 787.2 789.8 797.1 800 801.55 791 791.75 804.1 796.15 798 780.1 786 788.85 792 789.65 796 791.65 790.5 831.3 833 840.65 837.15 821.7 775.25 796.65 828.5 812.45 812 820.2 0.598613
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD TABLE 42
STOCK R Y -0.83726 -1.29147 -6.31515 0.221519 -2.77917 0.679797 -0.60606 0.924285 0.19375 0.094817 -0.98868 -2.24311 0.362595 -0.29672 -0.54648 5.16129 0.918367 -1.84555 2.7604 -1.93724 1.009852 -7.36022 2.224652
MARKET X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y -1.47092 2.876595 25.4199 0.48612 2.633783 2.518841 0.706454 0.426407 0.183104 -0.3203 0.035263 1.898353 0.678743 -0.13907 -0.98797 15.27342 -0.37192 2.077969 -4.16726 -2.00724 0.871562 46.62182 4.949078
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
100
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
6 4 RETURNS 2 0 -2 -4 -6 -8 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29 Y X
DATE
GRAPH 42
Standard deviation (total risk associated with stock) is 2.224 where as the beta value is 0.5986.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price. The average stock return shows a negative trend.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
101
4.5.3 TATA MOTOR
STOCK PRICE OPEN CLOSE 902.1 929.5 934.8 938.25 980 947.1 950 937.4 935 928.5 929 911.1 908.9 908.45 910 918.35 921 941.2 949.75 948.5 950 957.55 964.4 964.75 975 954.45 957.9 950.7 955 963.3 965 950.45 955 916.05 954 927.65 927 899.45 910 878.3 0.699116 NIFTY PRICE OPEN CLOSE 3966.25 4007.4 4007.7 4024.05 4027.3 3988.8 3990.15 3983.4 3983.3 3933.4 3933.3 3911.4 3910.95 3850.3 3852.15 3942.25 3944.55 4052.45 4052.85 4078.4 4090.7 4080.5 4084.9 4076.45 4075.2 4109.05 4126 4090.15 4089.6 4102.45 4102.65 4066.1 4066.6 4089.9 4092.05 4147.7 4148.4 4124.45 4123.85 4082.7 SUM SD TABLE 43 STOCK RETURN Y 3.037357 0.369063 -3.35714 -1.32632 -0.69519 -1.9268 -0.04951 0.917582 2.193268 -0.13161 0.794737 0.036292 -2.10769 -0.75164 0.86911 -1.50777 -4.07853 -2.76205 -2.97195 -3.48352 -16.9323 1.944274 MARKET RETURN X 1.037504 0.407965 -0.95598 -0.16917 -1.25273 -0.55678 -1.55077 2.338954 2.73542 0.630421 -0.24935 -0.20686 0.830634 -0.86888 0.314212 -0.89089 0.57296 1.359954 -0.57733 -0.99785 1.951434 VAR
DATE 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 31-Jan-07 BETA
X*Y 3.15127 0.150565 3.209346 0.224368 0.870882 1.072814 0.076779 2.146183 5.999509 -0.08297 -0.19816 -0.00751 -1.75072 0.653089 0.273084 1.343255 -2.33684 -3.75627 1.7158 3.476041 16.23052 3.780203
X^2 1.076414 0.166435 0.913889 0.028617 1.569333 0.310009 2.4049 5.470704 7.482521 0.39743 0.062173 0.042791 0.689953 0.754953 0.098729 0.793681 0.328283 1.849475 0.333311 0.995712 25.76932
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 3 2 1 0 -1 -2 -3 -4 -5 1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30
TIME
Y X
DATE
GRAPH 43
102
Standard deviation (total risk associated with stock) is 1.94 where as the beta value is 0.699.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is below the market return. In the month of March this stock is more fluctuating as a comparison to the market price.
STOCK PRICE OPEN CLOSE 888.8 906.35 919.8 909.85 914 919.05 923 920.05 920.9 902.3 912 896.8 896.8 905.05 930 875.05 874 866.75 874 850.2 870 869.3 880 869.8 869 856 856 858.85 860 834.8 845.5 817 820 839.55 843.5 823.35 800 782.6 0.784898 NIFTY PRICE OPEN CLOSE 4083.4 4137.2 4140.2 4183.5 4193.15 4215.35 4216.55 4195.9 4198.2 4224.25 4232 4223.4 4223.5 4187.4 4187.2 4058.3 4069.1 4044.55 4044.9 4047.1 4046.8 4146.2 4149.25 4164.55 4164.85 4106.95 4107.15 4096.2 4096.65 4040 4046 3938.95 3939.1 3942 3948.05 3893.9 3893.4 3745.3 SUM SD STOCK RETURN Y 1.974572 -1.08176 0.552516 -0.31961 -2.01976 -1.66667 0.919938 -5.9086 -0.82952 -2.72311 -0.08046 -1.15909 -1.49597 0.332944 -2.93023 -3.37079 2.384146 -2.38886 -2.175 -21.9853 1.979394 MARKET RETURN X 1.31753 1.045843 0.529435 -0.48974 0.620504 -0.20321 -0.85474 -3.07843 -0.60333 0.054389 2.456262 0.368741 -1.39021 -0.26661 -1.38284 -2.64582 0.073621 -1.37156 -3.80387 -9.62403 VAR
DATE 1-Feb-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07 12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 BETA
X*Y 2.601557 -1.13135 0.292521 0.156525 -1.25327 0.338689 -0.78631 18.18922 0.500472 -0.14811 -0.19763 -0.4274 2.07971 -0.08877 4.052035 8.918505 0.175523 3.276467 8.273424 44.82181 3.918002
X^2 1.735884 1.093788 0.280301 0.239842 0.385025 0.041296 0.730583 9.476728 0.364004 0.002958 6.033222 0.13597 1.932673 0.07108 1.912239 7.00038 0.00542 1.881186 14.46945 47.79203
TABLE 44 GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
4 2 RETURNS 0 Y -2 X -4 -6 -8 2/11 2/13 2/15 2/17 2/19 2/21 2/23 2/25 2/27 2/1 2/3 2/5 2/7 2/9
DATE
GRAPH 44
103
Standard deviation (total risk associated with stock) is 1.97where as the beta value is 0.784.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
DATE 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 BETA
STOCK PRICE OPEN CLOSE 801 789.05 795 775.4 774.1 739.9 746 726.6 747.5 738.6 750.1 766.85 774.95 757.15 757.25 764.7 766 773.1 722.5 743.65 750 725.95 731.1 748.25 751 771.7 774.25 769.25 772 775.8 781 805.1 806 789.55 745 752.55 750 719.6 728.95 716.45 723 728.2 0.468065
NIFTY PRICE OPEN CLOSE 3745.4 3811.2 3811.65 3726.75 3726.5 3576.5 3577.15 3655.65 3661.55 3626.85 3627.25 3761.65 3761.85 3718 3717.45 3734.6 3735.25 3770.55 3768.4 3641.1 3644.9 3643.6 3639.35 3608.55 3611.3 3678.9 3680.35 3697.6 3697.7 3764.55 3764.5 3875.9 3876.75 3861.05 3863.45 3819.95 3818.75 3761.1 3759.15 3798.1 3788.85 3821.55 SUM SD
STOCK RETURN Y -1.49189 -2.46541 -4.41803 -2.60054 -1.19064 2.233036 -2.29692 0.983823 0.926893 2.927336 -3.20667 2.34578 2.756325 -0.64579 0.492228 3.085787 -2.04094 1.013423 -4.05333 -1.7148 0.719225 -8.64109 2.363793
MARKET RETURN X 1.756822 -2.22738 -4.02522 2.194484 -0.94769 3.705286 -1.16565 0.461338 0.945051 -3.37809 -0.03567 -0.8463 1.871902 0.468705 1.807881 2.959224 -0.40498 -1.12594 -1.50966 1.036138 0.863059 2.403314 VAR
X*Y -2.62098 5.491407 17.78358 -5.70684 1.128349 8.274036 2.677407 0.453875 0.875961 -9.88881 0.11437 -1.98525 5.15957 -0.30268 0.889889 9.131537 0.826538 -1.14105 6.11914 -1.77677 0.620734 36.12403 5.587515
X^2 3.086422 4.96123 16.20243 4.815762 0.898109 13.72915 1.35874 0.212833 0.893121 11.4115 0.001272 0.716232 3.504017 0.219685 3.268432 8.757009 0.164008 1.267733 2.279062 1.073583 0.74487 79.5652
TABLE 45
104
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK AND MARKET RETURNS COMPARISION
5 4 3 2 1 0 -1 -2 -3 -4 -5 3/1 3/3 3/5 3/7 3/9 3/11 3/13 3/15 3/17 3/19 3/21 3/23 3/25 3/27 3/29
RETURNS
Y X
DATE
GRAPH 45
The total risk (standard deviation) associated with the stock is 2.36 and the beta is 0.468 It shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematic risk here virtually no systematic risk associated with this stock when we camper it with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in comparison with market returns. The above graph revels that the average stock return is well above the market return.
The average beta is less than one that means this stock is less volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a decreasing tendency means capital appreciation of the stock could not happened in the last three month .so it is better to hold the stock for some time and the position of the stock may improve in the nearest future at that time investor can sell off his holding
105
CHAPTER V
FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 FINDINGS
• When comparing the beta value banking companies the average beta greater than one that means the risk associated with those stocks are pretty high and the price of the shares are more fluctuating .one of the reason for this fluctuation may the inflationary trend in the economy banking shares are more bound to interest rate risk . • Pharmaceutical companies beta value less than one means risk is comparatively low so diversification of portfolio may help the investor to eliminate the controllable risk associated with this stocks .the growth in pharma stock mainly because of the growing strength of the Indian pharmaceutical companies .they are largely venturing out of the country through mergers and acquisitions and the increasing consideration of global players India is a low cost hub of research and development. • The beta value of oil and gas companies is less than one but the price of the stocks are highly fluctuating because of the ups and downs of crude oil price in the international market. • IT companies shares are promising one they are more bound to international risk since most of the IT companies largely depends on the US market any downward trend in the US economy may have a negative impact on these companies shares but for the long term investment this shares are promising one . • The stocks of automobile companies are subjected to less risk since the beta is less than one. Stock price of auto companies are growing mainly because of the strong bottom line of these companies .increasing strength of Indian middle class largely responsible for this growth. • Two stocks Dr.reddy’s lab and Ranbaxy shows negative beta in the month of March and February respectively. That means the systematic risk associated with this stock in that particular months is negative.
106
5.2 CONCLUSION
As a whole the stock market is sometime highly volatile .it depends upon the investors how he can make use of this in order to get the money which he has put in the market .an investor should be in a position to analyze the various investment option available to him and thus minimize the risk and maximize the returns .
The investor should analyze the market on a continuous basis which will help them to pick the right companies to invest their funds. the beta value, standard deviation and variance helps the investors in arriving at decision .the investors should be in a position to interpret the data in the right manner to arrive at important conclusions and investment decision .
I hope this dissertation will help the investors as a guiding record in future and help them to make appropriate investment decisions.
107
5.3 RECOMMENDATION
•
Based on the finding derived at ,risk less investment can be made in the pharma stocks .they are volatile but still the risk associated with that stocks are less .
•
In the pharma sector I would suggest you Dr.reddy’s lab and Ranbaxy is the best one anybody can blindly invest in that shares return is must.
•
In my view InfoTech shares are more volatile next to banking investment in info shares could be more riskier since Indian IT companies are more service based rather than product based so anybody can enter in to that sooner or later but the advantage of Indian IT companies are the talent pool available in India
•
When an investor opts to enter the stock market he should first gather sufficient information about the type of investment options available to him
•
The investor should be in a position to decide where and how much of funds are he ready to invest in particular security.
• •
He should diversify his investment portfolio so that he is exposed to minimum risk. Investor should not depend entirely on the past returns as the future is uncertain and the stock market is highly volatile.
•
The investor must be in a position to determine the degree of risk involved and then invest in any security.
•
He should not follow the foot of others while investing because usually people tend to go by the trend.
•
An investor must be in a position to judge which is the right time to enter into the market and quit the market.
108
BIBLIOGRAPHY
. BOOKS Investment management –Preeti Singh-tenth edition –Himalaya publication 2002 Investment analysis and portfolio management –Prasanna Chandra-second edition –Tata McGraw hill publishing company -2005 Security analysis and portfolio management –Donald E Fischer, Ronald j Jordan –sixth edition –prentice hall of India private ltd 2000 Modern portfolio theory and investment analysis –Edwin J Elton, Martin J Gruber –fifth edition –john Wiley & sons -2002 Investment management –V A Avandi-fifth Edition –Himalaya publication house 2003 JOURNALS The ICFAI journal of financial risk management –vol 12 issue 7-June 2006 Business week –vol 26 issue 41 February 2007 The ICFAI journal of applied finance vol 8 issue 8 august 2005
WEBSITES www.economywatch.com/indian economy www.indiainfoline.com www.nse_india .com/equity www.bse_india .com / equity www.vikipidia.com
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