A STUDY ON “SYSTEMATIC RISK OF SELECT BANKING SCRIPTS TRADED IN NSE” FROM INDIA BULLS LTD PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT FOR The Award of De ree of MASTER!S IN BUSINESS ADMINISTRATION
DECLARATION
I hereby declare that this Project Report titled “SYSTEMATIC RISK OF SELECT BANKING SCRIPS TRADED IN NSE” submitted by me to the Department of Business Management, XXXXX, Hyderabad is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma/certificate or published any time before.
PLACE: DATE:
(XXXX)
ACKNO"LEDGEMENT
I take this opportunity to thank ### of. XXXX, for his encouragement in doing the project work.
I would like to thank ### Fa$%&'( of MBA Dept, her guidance and suggestion. I take the opportunity to express my deep and sincere gratitude to the management of INDIA BULLS LTD for their gesture of allowing me to undertake this project and its arious employees who lent their hand towards the completion this study.
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"ontents 1. Introduction.....................................................................................................................................5 1. a Objectives..................................................................................................................................15 To measure the comparative beta analysis of selected Indian banks................................................15 To evaluate the correlation between nifty returns and ICICI bank returns.......................................15 To evaluate the correlation between Nifty returns and HDFC returns............................................. 15 To evaluate the correlation between Nifty and Andhra bank returns............................................... 15 To evaluate the correlation between Nifty and Vijay bank returns.................................................. 15 Limitations........................................................................................................................................ 16 1.b Data Collection Methods........................................................................................................... 16 2. Literature Review..........................................................................................................................17 About Beta – Definition, Theory..................................................................................................... 17 3. Company Profile........................................................................................................................... 23 3.a Introduction of NSE................................................................................................................... 23 Nifty index can be used by individuals to track market movements and compare performance of individual companies’ vis-à-vis market performance..........................................................................27 Shareholders evaluation of management decisions - performance of a company vis-à-vis the market generally reflects the perception of the investor...................................................................... 27 Assist traders and market intermediaries to evaluate performance and sentiments across the market. ..............................................................................................................................................................27 Index funds can replicate Nifty indices to earn market returns........................................................ 27 Derivative trading - Investors can use Nifty indices for hedging their exposures in the equity markets. ...............................................................................................................................................28 Benchmarking NAV performances - Nifty is the benchmark for performance of open ended and close ended funds.................................................................................................................................28 CNX Nifty Junior represents about 10% of the total market capitalization as on August 31, 2004 ..............................................................................................................................................................29 The average traded value for the last six months of all Junior Nifty stocks is approximately 8% of the traded value of all stocks on the NSE ........................................................................................... 29 Impact cost for CNX Nifty Junior for a portfolio size of Rs.2.50 million is 0.30%.........................29 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 .......................................................................................33 Nifty stocks represent about 57.92% of the total market capitalization as on April 10, 2007. .......33 Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.08% ...........................34 S&P CNX Nifty is professionally maintained and is ideal for derivatives trading.......................... 34 3.b Introduction to ICICI Bank........................................................................................................37 3.c Introduction to HDFC Bank......................................................................................................42 3.d Introduction to Andhra Bank..................................................................................................... 45 4. Data Analysis................................................................................................................................ 49 Tables and charts of Weekly, Monthly and Yearly with Interpretation.......................................... 49 5. Conclusion.................................................................................................................................... 78 7. Methodology................................................................................................................................. 79 8. Bibliography................................................................................................................................. 80
*+ I,'rod%$'-o,
The Reserve Bank of India (RBI) is India's central bank. Though public sector banks currently dominate the banking industry, numerous private and foreign banks e ist. India's government! o"ned banks dominate the market. Their performance has been mi ed, "ith a fe" being consistently profitable. #everal public sector banks are being restructured, and in some the government either already has or "ill reduce its o"nership.
Private and foreign banks
The RBI has granted operating approval to a fe" privately o"ned domestic banks$ of these many commenced banking business. %oreign banks operate more than &'( branches in India. The entry of foreign banks is based on reciprocity, economic and political bilateral relations. )n inter!departmental committee approves
applications for entry and e pansion.
Capital adequacy norm
%oreign banks "ere re*uired to achieve an + percent capital ade*uacy norm by ,arch &--., "hile Indian banks "ith overseas branches had until ,arch &--' to meet that target. )ll other banks had to do so by ,arch &--/. The banking sector is to be used as a model for opening up of India's insurance sector to private domestic and foreign participants, "hile keeping the national insurance companies in operation.
Banking
India has an e tensive banking net"ork, in both urban and rural areas. )ll large Indian banks are nationali0ed, and all Indian financial institutions are in the public sector.
RBI banking
The Reserve Bank of India is the central banking institution. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India . It supervises and administers
e change control and banking regulations, and administers the government's monetary policy. It is also responsible for granting licenses for ne" bank branches. 1' foreign banks operate in India "ith full banking licenses. #everal licenses for private banks have been approved. 2espite fairly broad banking coverage nation"ide, the financial system remains inaccessible to the poorest people in India.
Indian banking system
The banking system has three tiers. These are the scheduled commercial banks$ the regional rural banks "hich operate in rural areas not covered by the scheduled banks$ and the cooperative and special purpose rural banks.
Scheduled and non scheduled banks
There are appro imately +( scheduled commercial banks, Indian and foreign$ almost 1(( regional rural banks$ more than .'( central cooperative banks, 1( land development banks$ and a number of
primary agricultural credit societies. In terms of business, the public sector banks, namely the #tate Bank of India and the nationali0ed banks, dominate the banking sector. 3oIndia has an e tensive banking net"ork, in both urban and rural areas. )ll large Indian banks are nationali0ed, and all Indian financial institutions are in the public sector. The Reserve Bank of India is the central banking institution. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India . It supervises and administers e change control and banking regulations, and administers the government's monetary policy. It is also responsible for granting licenses for ne" bank branches. 1' foreign banks operate in India "ith full banking licenses. #everal licenses for private banks have been approved. 2espite fairly broad banking coverage nation"ide, the financial system remains inaccessible to the poorest people in India. The banking system has three tiers. These are the scheduled commercial banks$ the regional rural banks "hich operate in rural
areas not covered by the scheduled banks$ and the cooperative and special purpose rural banks. There are appro imately +( scheduled commercial banks, Indian and foreign$ almost 1(( regional rural banks$ more than .'( central cooperative banks, 1( land development banks$ and a number of primary agricultural credit societies. In terms of business, the public sector banks, namely the #tate Bank of India and the nationali0ed banks, dominate the banking sector.
Local financing
the e tent to
Cal financing
)ll sources of local financing are available to foreign!participation companies incorporated in India, regardless of the e tent of foreign participation. 4nder foreign e change regulations, foreigners and non!residents, including foreign companies, re*uire the permission
of the Reserve Bank of India to borro" from a person or company resident in India.
Regulations on Foreign Banks
%oreign banks in India are sub5ect to the same regulations as scheduled banks. They are permitted to accept deposits and provide credit in accordance "ith the banking la"s and RBI regulations. 6urrently about 1' foreign banks are licensed to operate in India. %oreign bank branches in India finance trade through their global net"orks.
RBI restrictions
The Reserve Bank of India lays do"n restrictions on bank lending and other activities "ith large companies. These restrictions, popularly kno"n as 7consortium guidelines7 seem to have outlived their usefulness, because they hinder the availability of credit to the non!food sector and at the same time do not foster competition bet"een banks.
Indian vs Foreign banks
,ost Indian banks are "ell behind foreign banks in the areas of customer funds transfer and clearing systems. They are hugely over!staffed and are unlikely to be able to compete "ith the ne" private banks that are no" entering the market. 8hile these ne" banks and foreign banks still face restrictions in their activities, they are "ell!capitali0ed, use modern e*uipment and attract high!caliber employees.
!overnment and RBI regulations
)ll commercial banks face stiff restrictions on the use of both their assets and liabilities. %orty percent of loans must be directed to 7priority sectors7 and the high li*uidity ratio and cash reserve re*uirements severely limit the availability of deposits for lending. The RBI re*uires that domestic Indian banks make 9( percent of their loans at concessional rates to priority sectors' selected by the government. These sectors consist largely of agriculture, e porters, and small businesses. #ince :uly &--., foreign banks have been
re*uired to make .1 percent of their loans to these priority sector. 8ithin the target of .1 percent, t"o sub!targets for loans to the small scale sector (minimum of &( percent) and e ports (minimum of &1 percent) have been fi ed. %oreign banks, ho"ever, are not re*uired to open branches in rural areas, or to make loans to the agricultural sector. 6ommercial banks lent dols + billion in the Indian financial year (I%;, )pril!,arch) &--<=-+, up sharply from dols 9.9 billion in the previous year. The deployment of gross loans "as as follo"s> &--<!-+ ()pril!:anuary)
@ross Bank 3oans %ood ?rocurement ?riority #ector Industrial 3oans 3oans to Trade Ather 3oans
?ercent
&(( &'.' .&./ 1-.9 (.(< 1..9.
#ource> @overnment of India Bconomic #urvey
"eed to Ponder
2ebates on India's slo"do"n focus on the manufacturing sector "hich is dangerously misleading> one of the biggest areas of "orry about India's economic slo"do"n is being ignored ! the systemic fla" of India's banking sector. #tories about the real health of Indian banks get less publici0ed because banks are still
over"helmingly o"ned, controlled and directed by the government, i.e., the ministry of finance (,o%). Banks have no effective mouthpiece either.
!rey future
one more reason being the opacity of the The Reserve Bank of India. This does not mean a forecast of doom for the Indian banking sector the kind that has "ashed out south Bast )sia. )nd also not because Indian banks are healthy. 8e still have no clue about the real non!performing assets of financial institutions and banks. ,any banks are no" listed. That puts additional responsibility of sharing information. It is no" clear that it "as the financial sector that
caused the sensational meltdo"n of some )sian nations. India is not Thailand, Indonesia and Corea. Borro"ed investment in property in India is lo" and property prices have already fallen, letting out steam gently. Aur micro!meltdo"n has already been happening.
Conclusion
#till, there are several other "orries about the banking sector, mainly confusion over o"nership and control. #ometime soon India "ill be forced to apply the norms of developed countries and many banks (including some of the biggest) "ill sho" very poor return ratios and do0ens of banks "ill be bankrupt. 8hen that happens the t"o popular reasons to defend bad banks "ill disappear. These are> one, to save face in the remote hope of those fortunes "ill revive' and t"o, some banks are too big to be allo"ed to fail, fearing social upheaval.
&. a Ab5ectives
# To measure the comparative beta analysis of selected Indian banks. # To evaluate the correlation bet"een nifty returns and I6I6I bank returns. # To evaluate the correlation bet"een Difty returns and E2%6 returns. # To evaluate the correlation bet"een Difty and )ndhra bank returns. # To evaluate the correlation bet"een Difty and Fi5ay bank returns.
L-.-'a'-o,/
&. 1. The data collected is only from secondary source. The data "hich is collected for doing this report has been
collected from Internet 8ebsites "here there can be some hitches. .. The Time period taken for doing the data analysis has been
from from D#B (Difty) 1((/!(<.
&.b 2ata 6ollection ,ethods
%or the purpose of the study "as collected through secondary source of data collection method. ,a5or source of data are published stock prices of E2%6, I6I6I Bank )D2 DI%T;.
&.c Time ?eriod>
I collected "eekly average prices of E2%6, I6I6I B)DC )D2 DI%T; for the period of )?R 1((/!,)R 1((<.
0+ L-'era'%re Re1-ew
)bout Beta G 2efinition, Theory
#efinitions of B$%&
&. ) *uantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the #H? '((. #pecifically, the performance the stock, fund or portfolio has e perienced in the last ' years as the #H? moved &I up or do"n. ) beta above & is more volatile than the overall market, "hile a beta belo" & is less volatile. 1. ) measure of securities or portfolio's volatility, or systematic
risk, in comparison to the market as a "hole. )lso kno"n as 7Beta coefficient.7 Dotes> Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to s"ings in the market. ) beta of & indicates that the security's price "ill move
"ith the market. ) beta less than & means the security "ill be less volatile than the market. ) beta greater than & indicates that the security's price "ill be more volatile than the market. %or e ample, if a stock's beta is &.1 it's theoretically 1(I more volatile than the market. ,any utilities stocks have a beta of less than &. 6onversely most high!tech D)#2)J!based stocks have a beta greater than &, offering the possibility of a higher rate of return but also posing more risk.
B$%&
Beta describes the relationship bet"een the stocks return and the market inde returns. This can be positive and negative. It is the
percentage change in the price of the stock regressed (or related) to the percentage change in the market inde . If beta is &, a one percentage change in market inde "ill lead to one percentage
change in price of the stock. If beta is (, stock price is unrelated to the market inde and if the market goes up by a K&I, the stock
price "ill fall by &I beta measures the systematic market related
risk, "hich cannot be eliminated by diversification. If the portfolio is efficient, beta measures the systematic risk effectively. An the other hand alpha and epsilon measures the unsystematic risk, "hich can be reduced by efficient diversification. ,ore details of beta are discussed else "here in the book. Beta measures no diversifiable risk. Beta sho" ho" the price of a security responds to market forces. In effect, of more responsive the price of a security is to changes in the market, the higher "ill be its beta. Beta is calculated by relating the returns on a security "ith the returns for the market. ,arket returns is measured by the averages returns of a large sample of stocks, such as the #H? '(( stock inde . The beta for the overall market is e*ual to &.(( and other betas are vie"ed in relation to this value. Betas can be positive or negative. Eo"ever, nearly all betas are positive and most betas lie some"here bet"een (.9 and &.-. 3isted in Table .!. are the betas for some stocks, as reported by value line in late &--.
Beta 6oefficient on #elected #tocks
6ompany )von products Bausch H 3omb Benguer 6orp, Black H 2ecker 6alifornia 8ater 6ampbell #oap 6hrysler 6orp. 6lub ,ed 6oca!6ola 6ompa*!6omputer 2elta )ir 3ines 2isney @oodyear Tire Eecla ,ining Idaho ?o"er IB, Cellogg 3a*uinta Inns ,attel ,c2onald's ,errill 3ynch De"mont ,ining ?espi 6o. ?eidmont Datural @as Juaker #tate 6orp. Reebok, Intl= #mucker, :.,. Te aco
Beta &.9 &.1' (.&1 &./' (.' & &.1' &.(' &.&' &.9' &.&' &.1' &.(' (..' (./ (.-' &.& (.+ &.9' (.+/ &.<' (..' &.&' (./ (.&./ (.(./
Tootsie Roll Toys 'R' 4s 8endy's Intl.
(.+ &.9' &.&
,any large brokerage firms (such as ,errill 3ynch) as "ell as subscription services (such as value line) publish betas for a large number of stocks. Investors "ill find beta helpful in assessing systematic risk and understanding the impact of market movement can have on the return e pected from a share turn over the ne t year, a stock having a beta of &.+( "ould be e pected to provide a &( percent to e periences an increase in returns of appro imately &+ percent (&.+(L&(I) over the same period. This particular stock is much more volatile than the market as a "hole. 2ecreases in market return are translated into decrease security returns and this "here the risk lies. In the preceding e ample, if the market is e pected to e periences a negative return &( percent, then the stock "ith a beta of &.+ should e perience a &+ percent decrease M&.+ times G &(N. #tocks having betas of less than & "ill,
of course be less responsive to changing returns in the market, and therefore are considered less risky. ) *uantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the #H? '((. #pecifically, the performance the stock, fund or portfolio has e perienced in the last ' years as the #H? moved &I up or do"n. ) beta above & is more volatile than the overall market, "hile a beta belo" & is less volatile. ) measure of a security's or portfolio's volatility, or systematic risk, in comparison to the market as a "hole. )lso kno"n as 7beta coefficient.7
2+ Co.3a,( Prof-&e
..a Introduction of D#B
The D#B "as incorporated in Dov &--1 "ith an e*uity capital of Rs.1' 6rores. The International securities constancy (I#6) of Eong Cong has helped in setting up D#B. I#6 has prepared the detailed business plans and installation of hard "are and soft"are system. The promotion of D#B "ere financial institution, insuranceOs, companies, banks and #BBI capital market 3td. Infrastructure leasing and financial service limited. )nd stock Eolding 6orporation limited. It has been set up to strength the move to"ards professionalisation of capital market as "ell as provides nation "ide securities trading facilities to investors. D#B e change in traditional sense "as brokers o"n and manages the e change. ) t"o tier administrative set up involving a company board and a governing aboard of e change is envisaged.
D#B is a national market of share ?#4 bonds, debentures and government securities since infrastructure and trading facilities are provided.
"S$'"IF%()
The D#B on )pril 11, &--/ launched a ne" e*uity Inde . The D#B! '(. The ne" Inde "hich replaces the e isting D#B G&(( Inde is
e pected to serve as an appropriate Inde futures and options. P%iftyQ means Dational Inde for %ifty #tock.
for ne" segment of
The D#B!'( comprises '( companies that represent 1( board industry groups "ith a aggregate market capitali0ation of around Rs.&<(, ((( crores. )ll company included in the Inde have a
market capitali0ation in e cess of Rs.'(( crores each and should have traded for +'I of trading day at an impact cost of less then &.'I.
The base period for the inde
is the close of prices on Dovember ., completion of operations on D#B
&--', "hich makes one year of
capital market segment. The base value of Inde is set at &(((.
"S$'*I#C&P I"#$+)
The D#B midcap Inde or the :unior Difty comprises fifty stocks that represents 1& board industries group and "ill provide proper representation of madcap segment of Indian 6apital ,arket. )ll stocks in a inde should have market capitali0ation off greater then
Rs.1(( crores and should have +'I of trading days at impact cost of less than 1.'I. The base period for the inde is Dovember 9th, &--/, "hich
signifies 1 years of completion of operations of the capital market segment the operations. The base value of inde has been at &(((. )verage daily turnover of the present scenario 1'+1&1 (laces) and number of average daily trades d1&/( (laces).
India is a land of many cultures and languages. Its vibrancy and *uest for gro"th thro"s up as many *uestions as it thro"s up ne" ans"ers. 8ith globali0ation people are constantly seeking broader hori0on of kno"ledge and information. Eo" much has the country prosperedR Eo" "ell is the economy doingR Difty is the platform on "hich India finds these ans"ers. The Difty Inde is a composite of the top '( stocks listed on the
Dational #tock B change (D#B). It is a simplified tool that helps investors and ordinary people alike, to understand "hat is
happening in the stock market and by e tension, the economy. If the Difty Inde performs "ell, it is a signal that companies in India
are performing "ell and conse*uently that the country is doing "ell. )n upbeat economy is usually reflected in a strong performance of the Difty Inde . ) rising inde are gung!ho about the future. is also indicative that the investors
The Difty Inde
is based upon solid economic research. It is
internationally respected and recogni0ed as a pioneering effort in providing simpler understanding of stock market comple ities. Difty is the flagship inde of D#B, the .rd largest stock e change in the "orld in terms of number of transactions (#tock %utures). LDifty has been used to represent #H? 6DS Difty, o"ned and managed by India Inde #ervices and ?roducts 3td. (II#3), a 5oint
venture bet"een D#B and 6RI#I3. # Difty inde can be used by individuals to track market movements and compare performance of individual companiesO vis!T!vis market performance. # #hareholders evaluation of management decisions ! performance of a company vis!T!vis the market generally reflects perception of the investor. # )ssist traders and market intermediaries to evaluate performance and sentiments across the market. # Inde funds can replicate Difty indices to earn market returns. the
# 2erivative trading ! Investors can use Difty indices for hedging their e posures in the e*uity markets. # Benchmarking D)F performances ! Difty is the benchmark for performance of open ended and close ended funds.
"S$ "ifty ,unior IndeThe ne t rung of li*uid securities after #H? 6DS Difty is the 6DS Difty :unior inde . It may be useful to think of the #H? 6DS Difty and the 6DS Difty :unior as making up the &(( most li*uid stocks in India. )s "ith the #H? 6DS Difty, stocks in the 6DS Difty :unior are filtered for li*uidity, so they are the most li*uid of the stocks e cluded from the #H? 6DS Difty.
The maintenance of the #H? 6DS Difty and the 6DS Difty :unior are synchroni0ed so that the t"o inde es "ill al"ays be dis5oint sets$ i.e. a stock "ill never appear in both inde es at the same time.
Eence it is al"ays meaningful to pool the #H? 6DS Difty and the 6DS Difty :unior into a composite &(( stock inde es or portfolio. The main features of the 6DS Difty :unior Inde are> # 6DS Difty :unior represents about &(I of the total market capitali0ation as on )ugust .&, 1((9 # The average traded value for the last si months of all :unior
Difty stocks is appro imately +I of the traded value of all stocks on the D#B # Impact cost for 6DS Difty :unior for a portfolio si0e of Rs.1.'( million is (..(I
6AD#TIT4BDT# 3I#T A% 6DS DI%T; :4DIAR
6ompany TF# ,otor 6ompany 3td. )shok 3eyland 3td. ?un5ab Tractors 3td. )ndhra Bank Bank of Baroda Bank of India 6anara Bank 6orporation Bank Indian Averseas Bank Industrial 2evelopment Bank of India 3td. ID@ Fysya Bank 3td. Cotak ,ahindra Bank 3td. #yndicate Bank 4nion Bank of India 4TI Bank 3td. Fi5aya Bank Bharat %orge 3td. Ingersoll Rand (India) 3td.
Industry )utomobiles ! 1 and . "heelers )utomobiles ! 9 "heelers )utomobiles ! 9 "heelers Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks 6astings=forgings 6ompressors = pumps
I#D 6ode IDB9-9B(&(1. IDB1(+)(&(1IDB&<()(&(&. IDB9.9)(&(&. IDB(1+)(&(&. IDB(+9)(&(&/ IDB9</)(&(&9 IDB&&1)(&(&' IDB'/')(&(&9 IDB((+)(&(&' IDB&//)(&(&& IDB1.<)(&(&( IDB//<)(&(&+ IDB/-1)(&(&/ IDB1.+)(&(1/ IDB<(')(&(&/ IDB9/')(&(1' IDB&<<)(&(&+
,oser Baer India 3td. I!%le #olutions 3td. ,phasis B%3 3td. ?atni 6omputer #ystems 3td. ?olaris #oft"are 3ab 3td. :aiprakash )ssociates 3td. Dirma 3td. 6ummins India 3td. Bharat Blectronics 3td. Reliance 6apital 3td. 3I6 Eousing %inance 3td. I%6I 3td. Infrastructure 2evlopment %inance 6o. 3td. Indian Eotels 6o. 3td. #terlite Industries (India) 3td. 6ontainer 6orporation of India 3td. )sian ?aints 3td. )urobindo ?harma 3td. )ventis ?harma 3td. Biocon 3td. 6adila Eealthcare 3td.
6omputers ! hard"are 6omputers ! soft"are 6omputers ! soft"are 6omputers ! soft"are 6omputers ! soft"are 6onstruction 2etergents 2iesel engines Blectronics ! industrial %inance %inance ! housing %inancial institution %inancial institution Eotels ,etals ,iscellaneous ?aints ?harmaceuticals ?harmaceuticals ?harmaceuticals ?harmaceuticals
IDB<.-)(&(&' IDB++&2(&(1< IDB.'/)(&(&+ IDB//(%(&(&1 IDB</.)(&(1. IDB9''%(&(&< IDB(-&)(&(&& IDB1-+)(&(1( IDB1/.)(&(&/ IDB(&.)(&(&' IDB&&')(&(&+ IDB(.-)(&(&( IDB(9.2(&(&/ IDB('.)(&(1IDB1/+)(&(.& IDB&&&)(&(&< IDB(1&)(&(&+ IDB9(/)(&(1IDB('+)(&(&( IDB.</@(&(&. IDB(&(B(&(&-
3upin 3td. Dicholas ?iramal India 3td. ?fi0er 3td. 8ockhardt 3td. Bongaigaon Refinery H ?etrochemicals 3td. 6hennai ?etroleum 6orporation 3td. IB? 6o. 3td. Reliance ?etroleum 3td. Tata Teleservices (,aharashtra) 3td. Raymond 3td. )pollo Tyres 3td. TF# ,otor 6ompany 3td.
?harmaceuticals ?harmaceuticals ?harmaceuticals ?harmaceuticals Refineries Refineries Refineries Refineries Telecommunication ! services Te tile products Tyres )utomobiles ! 1 and . "heelers
IDB.1/)(&(1IDB&9()(&(19 IDB&+1)(&(&+ IDB(9-B(&(1' IDB19&)(&(&1 IDB&<+)(&(&/ IDB1/&)(&(&( IDB9<'E(&(&& IDB'&<B(&(&. IDB.(&)(&(&9 IDB9.+)(&(&9 IDB9-9B(&(1.
"S$ "IF%( ./ I"#$+)
#H? 6DS Difty is a "ell diversified '( stock inde accounting for 11
sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, inde funds. #H? 6DS Difty is o"ned and managed by India Inde #ervices and based derivatives and inde
?roducts 3td. (II#3), "hich is a 5oint venture bet"een D#B and 6RI#I3. II#3 is India's first specialised company focused upon the inde as a core product. II#3 have a consulting and licensing
agreement "ith #tandard H ?oor's (#H?), "ho are "orld leaders in inde services. # The average total traded value for the last si months of all Difty
stocks is appro imately 9'.19I of the traded value of all stocks on the D#B # Difty stocks represent about '<.-1I of the total market capitali0ation as on )pril &(, 1((<.
# Impact cost of the #H? 6DS Difty for a portfolio si0e of Rs.' million is (.(+I # #H? 6DS Difty is professionally maintained and is ideal for derivatives trading
6ompany )BB 3td. )66 3td. Ba5a5 )uto 3td. Bharat Eeavy Blectricals 3td. Bharat ?etroleum 6orporation 3td. Bharti )irtel 3td. 6ipla 3td. 2abur India 3td. 2r. Reddy's 3aboratories 3td. @)I3 (India) 3td. @la osmithkline ?harmaceuticals 3td. @rasim Industries 3td. @u5arat )mbu5a 6ements 3td. E63 Technologies 3td. E2%6 Bank 3td. Industry Blectrical e*uipment 6ement and cement products )utomobiles ! 1 and . "heelers Blectrical e*uipment Refineries Telecommunication ! services ?harmaceuticals ?ersonal care ?harmaceuticals @as ?harmaceuticals 6ement and cement products 6ement and cement products 6omputers ! soft"are Banks I#D 6ode IDB&&<)(&(&9 IDB(&1)(&(1' IDB&&+)(&(&1 IDB1'<)(&(&+ IDB(1-)(&(&& IDB.-<2(&(&/ IDB('-)(&(1/ IDB(&/)(&(1/ IDB(+-)(&(1. IDB&1-)(&(&IDB&'-)(&(&/ IDB(9<)(&(&. IDB(<-)(&(19 IDB+/()(&(1< IDB(9()(&(&+
Eero Eonda ,otors 3td. Eindalco Industries 3td. Eindustan 3ever 3td. Eindustan ?etroleum 6orporation 3td. Eousing 2evelopment %inance 6orporation 3td. I T 6 3td. I6I6I Bank 3td. Indian ?etrochemicals 6orporation 3td. Infosys Technologies 3td. 3arsen H Toubro 3td. ,ahanagar Telephone Digam 3td. ,ahindra H ,ahindra 3td. ,aruti 4dyog 3td. Dational )luminium 6o. 3td. Ail H Datural @as 6orporation 3td. ?un5ab Dational Bank Ranba y 3aboratories 3td. Reliance 6ommunications 3td. Reliance Bnergy 3td. Reliance Industries 3td. Reliance ?etroleum 3td.
)utomobiles ! 1 and . "heelers )luminium 2iversified Refineries %inance ! housing 6igarettes Banks ?etrochemicals 6omputers ! soft"are Bngineering Telecommunication ! services )utomobiles ! 9 "heelers )utomobiles ! 9 "heelers )luminium Ail e ploration=productio n Banks ?harmaceuticals Telecommunication ! services ?o"er Refineries Refineries
IDB&'+)(&(1/ IDB(.+)(&(1( IDB(.()(&(1< IDB(-9)(&(&' IDB((&)(&(1+ IDB&'9)(&(1' IDB(-()(&(&. IDB((/)(&(&IDB((-)(&(1& IDB(&+)(&(.( IDB&'.)(&(&IDB&(&)(&(&+ IDB'+'B(&(&( IDB&.-)(&(1/ IDB1&.)(&(&& IDB&/()(&(&9 IDB(&')(&(1+ IDB..(E(&(&+ IDB(./)(&(&/ IDB((1)(&(&+ IDB9<'E(&(&&
#atyam 6omputer #ervices 3td. #iemens 3td. #tate Bank of India #teel )uthority of India 3td. #terlite Industries (India) 3td. #un ?harmaceutical Industries 3td. #u0lon Bnergy 3td. Tata 6onsultancy #ervices 3td. Tata ,otors 3td. Tata ?o"er 6o. 3td. Tata #teel 3td. Fidesh #anchar Digam 3td. 8ipro 3td. Uee Bntertainment Bnterprises 3td.
6omputers ! soft"are Blectrical e*uipment Banks #teel and steel products ,etals ?harmaceuticals Blectrical e*uipment 6omputers ! soft"are )utomobiles ! 9 "heelers ?o"er #teel and steel products Telecommunication ! services 6omputers ! soft"are ,edia H entertainment
IDB1<')(&(1+ IDB((.)(&(19 IDB(/1)(&(&1 IDB&&9)(&(&& IDB1/+)(&(.& IDB(99)(&(1+ IDB(9(E(&(&. IDB9/<B(&(1IDB&'')(&(&9 IDB19')(&(&. IDB(+&)(&(&1 IDB&'&)(&(&. IDB(<')(&(11 IDB1'/)(&(1+
..b Introduction to I6I6I Bank
I6I6I Bank is India's second!largest bank "ith total assets of about Rs. 1,'&..+- bn (4#V '/.. bn) at ,arch .&, 1((/ and profit after ta of Rs. 1'.9( bn (4#V '/- mn) for the year ended ,arch .&,
1((/ (Rs. 1(.(' bn (4#V 99- mn) for the year ended ,arch .&, 1(('). I6I6I Bank has a net"ork of <9& branches (including 9+ e tension counters) and over ..(( )T,s in India and presence in .( International locations. I6I6I Bank offers a "ide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its speciali0ed subsidiaries and affiliates in the areas of investment banking, life and non!life insurance, venture capital and asset management. I6I6I Bank set up its international banking group in fiscal 1((1 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. I6I6I Bank currently has subsidiaries in the 4nited Cingdom, Russia and 6anada, branches in #ingapore, Bahrain, Eong Cong, #ri 3anka and 2ubai International %inance 6entre and representative offices in
the 4nited #tates, 4nited )rab Bmirates, 6hina, #outh )frica and Bangladesh. Aur 4C subsidiary has established a branch in Belgium. I6I6I Bank is the most valuable bank in India in terms of market capitali0ation. I6I6I Bank's e*uity shares are listed in India on the Bombay #tock B change and the Dational #tock B change of India 3imited and its )merican 2epositary Receipts ()2Rs) are listed on the De" ;ork #tock B change (D;#B). I6I6I Bank has formulated a 6ode of Business 6onduct and Bthics for its directors and employees. I6I6I Bank "as originally promoted in &--9 by I6I6I 3imited, an Indian financial institution, and "as its "holly!o"ned subsidiary. I6I6I's shareholding in I6I6I Bank "as reduced to 9/I through a public offering of shares in India in fiscal &--+, an e*uity offering in the form of )2Rs listed on the D;#B in fiscal 1(((, I6I6I Bank's ac*uisition of Bank of ,adura 3imited in an all!stock amalgamation in fiscal 1((&, and secondary market sales by I6I6I to institutional investors in fiscal 1((& and fiscal 1((1. I6I6I "as formed in &-'' at the initiative of the 8orld Bank, the @overnment of India and
representatives of Indian industry. The principal ob5ective "as to create a development financial institution for providing medium! term and long!term pro5ect financing to Indian businesses. In the &--(s, I6I6I transformed its business from a development financial institution offering only pro5ect finance to a diversified financial services group offering a "ide variety of products and services, both directly and through a number of subsidiaries and affiliates like I6I6I Bank. In &---, I6I6I become the first Indian company and the first bank or financial institution from non!:apan )sia to be listed on the D;#B. )fter consideration of various corporate structuring alternatives in the conte t of the emerging competitive scenario in the Indian banking industry, and the move to"ards universal banking, the managements of I6I6I and I6I6I Bank formed the vie" that the merger of I6I6I "ith I6I6I Bank "ould be the optimal strategic alternative for both entities, and "ould create the optimal legal structure for the I6I6I group's universal banking strategy. The merger "ould enhance value for I6I6I shareholders through the merged entity's access to lo"!cost deposits, greater opportunities
for earning fee!based income and the ability to participate in the payments system and provide transaction!banking services. The merger "ould enhance value for I6I6I Bank shareholders through a large capital base and scale of operations, seamless access to I6I6I's strong corporate relationships built up over five decades, entry into ne" business segments, higher market share in various business segments, particularly fee!based services, and access to the vast talent pool of I6I6I and its subsidiaries. In Actober 1((&, the Boards of 2irectors of I6I6I and I6I6I Bank approved the merger of I6I6I and t"o of its "holly!o"ned retail finance subsidiaries, I6I6I ?ersonal %inancial #ervices 3imited and I6I6I 6apital #ervices 3imited, "ith I6I6I Bank. The merger "as approved by shareholders of I6I6I and I6I6I Bank in :anuary 1((1, by the Eigh 6ourt of @u5arat at )hmedabad in ,arch 1((1, and by the Eigh 6ourt of :udicature at ,umbai and the Reserve Bank of India in )pril 1((1. 6onse*uent to the merger, the I6I6I group's financing and banking operations, both "holesale and retail, have been integrated in a single entity.
L%ree float holding e cludes all promoter holdings, strategic investments and cross holdings among %ormula> 6urrent 6lose Returns %ormula> D X y ! X Xy DX
1
public sector entities.
W ?revious 6lose
Beta
W
G (X )1
..c Introduction to E2%6 Bank
0ousing Finance Sector
)gainst the milieu of rapid urbani0ation and a changing socio! economic scenario, the demand for housing has gro"n e plosively. The importance of the housing sector in the economy can be illustrated by a fe" key statistics. )ccording to the Dational Building Argani0ation (DBA), the total demand for housing is estimated at 1 million units per year and the total housing shortfall is estimated to be &-.9 million units, of "hich &1.</ million units is from rural areas and /./9 million units from urban areas. The housing industry is the second largest employment generator in the country. It is estimated that the budgeted 1 million units "ould lead to the creation of an additional &( million man!years of direct employment and another &' million man!years of indirect employment. Eaving identified housing as a priority area in the Dinth %ive ;ear ?lan (&--<!1((1), the Dational Eousing ?olicy has envisaged an investment target of Rs. &,'(( billion for this sector. In order to
achieve this investment target, the @overnment needs to make lo" cost funds easily available and enforce legal and regulatory reforms.
Background)'
E2%6 "as incorporated in &-<< "ith the primary ob5ective of meeting a social need G that of promoting home o"nership by providing long!term finance to households for their housing needs. E2%6 "as promoted "ith an initial share capital of Rs. &(( million.
Business 1b2ectives)'
The primary ob5ective of E2%6 is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home
o"nership. )nother ob5ective is to increase the flo" of resources to the housing sector by integrating the housing finance sector "ith the overall domestic financial markets..
1rgani3ational !oals)'
E2%6Os a) main goals are to
2evelop close relationships "ith individual households,
b) ,aintain its position as the premier housing finance institution in c) d) Transform ideas into viable the and country, creative solutions,
?rovide consistently high returns to shareholders, and
e) To gro" through diversification by leveraging off the e isting client base.
..d Introduction to )ndhra Bank
)ndhra Bank "as founded by 2r.Bhogara5u ?attabhi #itaramayya. The bank commenced business on 1+th Dovember &-1. "ith a paid up capital of Rs & lakh and an authorised capital of Rs &( lakh. )ndhra Bank has a net"ork of &<&. Business 2elivery 6hannels, consisting of &,&<- branches, &91 B tension 6ounters, .'9 )T,s and .+ #atelite Branches spread over 1& #tates and 1 4nion Territories as at the end of #eptember 1(('. The bank has entered into sharing arrangements "ith #tate Bank of India, E2%6 Bank, I2BI Bank, Indian Bank and 4TI Bank, offering over -,((( )T,s spread across the country for use by customers. )ndhra Bank provides state!of!the!art services to its customers. )ll the branches of the bank are computeri0ed and +'( branches are net"orked under core banking solution providing ')D;8EBRB B)DCID@'. The Bank also provides instant transfer fund facility through its branches. The Bank has been ranked 'th in the 1((' Business Today survey of India's Best Banks.
..e Introduction to FI
B)DC
Fi5aya Bank "as established on 1.rd Actober &-.& by late #hri ).B.#hetty and other enterprising farmers in ,angalore, Carnataka. The ob5ective behind establishment of the Bank "as essentially to promote banking habit, thrift and entrepreneurship among the farming community of 2akshina Cannada district in Carnataka #tate. The bank became a scheduled bank in &-'+. 2uring &-/.!/+, nine smaller banks merged "ith Fi5aya Bank and the Bank steadily gre" into a large )ll India bank. Fi5aya Bank "as nationali0ed on )pril &', &-+( and today the Bank has a net"ork of -&. branches that span all 1+ states and . union territories in the country. Fi5ay Bank has been constantly focusing on technological up gradation. )s on Actober 1((', all the -&. branches have been computeri0ed, covering -<I of the bank's total business. The Bank has diversified into ne" areas such as credit card, merchant banking, hire purchase and leasing, and electronic
remittance services. Fi5aya Bank is one of the fe" banks in the country to take up principal membership of FI#) International and ,aster6ard International Fi5aya Bank has the highest number of branches in its home state Carnataka. 2uring the first *uarter of financial year 1((/!1((< the bank has opened &/ Branches. T"o B tension 6ounters upgraded into full fledged Branch. In line "ith the prevailing trends, the bank has been giving greater thrust to"ards technological up gradation of its operations. The bank has net"ork of -9+ branches,/( B tension 6ounters and &/+ )T,s. .-- branches, .' e tension counters and '9 officers are functioning on 6B# platform. Reali0ing your constantly evolving and diverse needs, the bank has diversified too. Bntering several ne" areas such as credit card, merchant banking, hire purchase and leasing, and electronic remittance services.
Fi5aya Bank is one among the fe" banks in the country to take up principal membership of FI#) International and ,aster6ard
International. The driving force behind Fi5aya Bank's every initiative has been its &&9(9 strong dedicated "orkforce.
4+ Da'a A,a&(/-/
Tables and charts of 8eekly, ,onthly and ;early "ith Interpretation.
%able sho4ing 4eekly average price and Return of ICICI and "ifty
I6I6I 6ompany Base Falue 8eek& "eek1 8eek. 8eek9 8eek' 8eek/ 8eek< 8eek+ 8eek8eek&( 8eek&& 8eek&1 8eek&. 8eek&9 8eek&' ?rice /&..+< '+1.&& '<-.9. '+9.+. /99.&+ /.-.9' '-1.(+ '</.<''+..' '91 9+../& 9+/..+ '(1.'. 9-(.99-1.'+ 9-1.<Return
!! &./. !'.&< !(.9/ (.-. &(.&' !(.<. !<.9& !1.'+ !..1( !1.-. !&(.<< (.'< ...1 !1.9( (.9. ?rice /(/.-9 '+9.<' '+9.<< '<1.9 /9(.<9 /9..'/ /(9.<< '<+.(< '<&.('9-.'/ '&(.&. 9+(.11 '(1.9< 9++.9/ 9-..(' 9-(.<'
DI%T; Return ( ) !! ..(9 !..// (.(( !1.&1 &&.-9 (.99 !/.(. !9.9& !&.1& !..<< !<.&< !'.+/ 9./. !1.<(.-9
8eek&/ 8eek&< 8eek&+ 8eek&8eek1( 8eek1& 8eek11 8eek1. 8eek19 8eek1' 8eek1/ 8eek1< 8eek1+ 8eek18eek.( 8eek.& 8eek.1 8eek.. 8eek.9 8eek.' 8eek./ 8eek.< 8eek.+ 8eek.8eek9( 8eek9& 8eek91 8eek9. 8eek99
9+&.< '&(.+& '9/.(. '/..1 '++.. '--.'/ '-'.(/(9.1' /&9.//&+ /'(..1 /<<.<< <((.&9 /-..1+ <./.9. <91.&9 <</.1< <<9.19 +9&.-9 +<9.1+<9./' +<..9' +<1.99 +1/.1& +//.-/ ++..<-(&.+1 -(&.-< -/-.'+
(.(9 !1.1' /.(9 /.+..&9 9.9/ &.-& !(.<' &.'9 &.<. (.'9 '.1. 9.11 ...( !(.-+ /.11 (.<+ 9./( !(.1/ +.<9 ..+9 (.(9 !(.&9 !(.&1 !'..( 9.-. &.-9 1.(9 (.(1
9+'.9-1.++ '99.'+ ''9.(1 '+-.1< '<<.(9 '-+.9 '-+./+ /&/.&/(-..' /9<.<& //+./<(&.9& /-9.<<(&.1& <.+.9< <<1.11 </+.&' +11.+' +''.<1 +</.+/ +/<./+ +<1 +99.+& +<(.&+ +</..9 +<'.+ -('.+1 </9.'<
!(.9< !(.-&.99 &(.9&.<. /../ !1.(+ ..<( (.(' 1.-1 !&.&& /..( ..19 9.+!(.-9 (.-1 '..& 9.'< !(.'. <.&1 ..-1.9< !&.(' (.'( !..&1 ..(( (.<& !(.(/ ..9.
8eek9' 8eek9/ 8eek9< 8eek9+ 8eek98eek'( 8eek'& 8eek'1
-+(.. -<+.' -9+.1/ -+1..< -9&.1& -/-.(. +<1./' +.'.-/
<.'( &.&& !(.&+ !..(../( !9.&1.-/ !-.-'
-<..1. -<+.1-9+.1/ -<9.'& -/&.'& -'<.<& -11./ +91.-9
!&'.'1<.1(.'1 !..(< 1.<< !&... !(.9( !../<
weekly returns 30.00 25.00 20.00 15.00 10.00 5.00 Week16 Week31 Week41 Week11 Week21 Week26 Week36 Week46 -5.00 -10.00 -15.00 -20.00
Return y Returns x
Fig 5 a
he above table and chart depicts the price and return of I6I6I and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the I6I6I and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een I6I6I stock and DI%T;.
Week51
Week6
Week1
0.00
%able Sho4ing *onthly Returns of ICICI &nd "ifty and Beta
6ompany month& month1 month. month9 month' month/ month< month+ monthmonth&( month&& month&1
Returns ( ) !(.<< !(.&9 !9.(+ (..' ..9/ '.<1.-. 1... ...(.1/ 1.(1.&.
Return !(./+ (.9+ !9.' (.'+ ..&< 1.(& 1.+9 1.'' ..'. (.(& ..&1 !&.&9
Beta (.<9 (.-+ (.9& (.-(.<1 (..( (.-( (.&& (.-. (.-!(./1 (.+-
Monthly returns
8 6 4 2 0 -2 -4 -6
Fig 5 b
Returns of x Returns of y 1 3 5 7 9 11
The above table and chart depicts the price and return of I6I6I and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the I6I6I and nifty. In the /th month there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een I6I6I stock and DI%T;.
Beta 1.20 1.00 0.80 0.60 0.40 0.20 0.00 -0.20 -0.40 -0.60 -0.80 1 2 3 4 5 6 7 8 9 10 11 12 13 Beta
Fig 5 c
The above chars sho"s the changes in monthly beta values of I6I6I , "here in month of &&th, the beta value is !(./1 "hich is negative. #o there "as lo" risk compared to other months and can be e pected high returns.
%able Sho4ing 6eekly &verage Price and Returns 1f 0#FC and "ifty
8eekly ?rice "eek & "eek 1 "eek . "eek 9 "eek ' "eek / "eek < "eek + "eek "eek &( "eek && "eek &1 "eek &. "eek &9 "eek &' "eek &/ "eek &< "eek &+ "eek &"eek 1( "eek 1&
DI%T; ?rices &.91.9+ &1+'.-. &1<1./' &.(1.9/ &.&9.-. &.//.1. &1<&.<< &&<<.1&&'..-. &&11.9' &(...+< &(<-.&. &(--.-9 &&-1..&&'+./1 &(<&.1+ &&'<.1' &1&<.< &1/'.+< &.((..+ &1<<.9< Returns of S (.91 !1.1!(.1( (.&9 9.-< !(.+/ !<.1& !'.9& !&... !&1./& !(.1< 1.++ +.9< '.-' !-.+& !(../ -.1+ 9.-1 '..< &.<9 !1.'9 ?rices &.9&.(. &1<-.+. &1<1.&. &.(1.+1 &.1<.+9 &./9.'9 &1.'.+. &&/<.(< &&/&..&(+-.+&(.+..1 &(-1.++ &&&9.19 &1((.1 &&.&.'. &(<<.++ &&</./' &11+.(+ &1<..+ &1-+.-1 &1+&.-.
E2%6 Return of ; !-/.'9 !9.1& !&.(. 1..9 (.-/ ..-( !/.-& !<.9. !&.-+ !1.<. !<.+9..+ &.-. +.9& !1.+. !<.'9 +.(1 '.11 ..-/ 1.<. !&.</
8eekly ?rice "eek 11 "eek 1. "eek 19 "eek 1' "eek 1/ "eek 1< "eek 1+ "eek 1"eek .( "eek .& "eek .1 "eek .. "eek .9 "eek .' "eek ./ "eek .< "eek .+ "eek ."eek 9( "eek 9& "eek 91 "eek 9. "eek 99 "eek 9' "eek 9/ "eek 9<
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
E2%6 1.-9 &.'9 &.(' ..+1 '.'< !..'. /.(+ !9.9& (.9' 9.'1 &.(+ /.+. (.(9 !1.&!9.-< 1.'& ..&/ !(.'' !1.++ &.// 9.'( /.+. !(.'/ !9.<( !/.9/ !1.-<
8eekly ?rice "eek 9+ "eek 9"eek '(
DI%T; &'/9.(/ &'9' &''-./9 !1.&9.(9 !9./' &''1.&/ &'/1.-' &'9+.+
E2%6 1.+< !&.11 (.-'
Weekly returns
15.00 10.00 5.00 0.00 1 -5.00 -10.00 -15.00 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 return of x weekly return of y weekly
Fig 7 a
The above table and chart depicts the price and return of E2%6 and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the E2%6 and nifty. In the&/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock
price. This may be because of lo" correlation bet"een E2%6 stock and DI%T;. %able Sho4ing *onthly Returns of ICICI &nd "ifty and Beta
,onthly ,onth & ,onth1 ,onth. ,onth9 ,onth' ,onth/ ,onth< ,onth+ ,onth,onth&( ,onth&& ,onth&1
,onthly of (S) !(./1 !1..< !1.(/ !(.(& 9.-+ (.-9 1.-(.9& !(.(+ (.'/ &.'' !&..<
,onthly of ( !(./< !1.'+ !&.'. !(.1( 9.+& &.(' 1.<. (.-( !(.9. (.'' &../ !&..& (.-(.-9 (.+' (.-9 (.-(.-(.-+ (.-+ (.-(.-/ (.-/ (.-(
Beta
monthly returns
10.00 5.00 0.00 -5.00 1 3 5 7 9 11 mont ly of x mont ly of y
Fig 7 b
The above table and chart depicts the price and return of E2%6 and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the E2%6 and nifty. In the 'th month there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een E2%6 stock and DI%T;.
!eta 1.05 1.00 0.95 0.90 0.85 0.80 0.75 1 2 3 4 5 6 7 8 9 10 11 12 !eta
Fig 7 C
The above chart depicts the changes in the monthly beta values of E2%6, "here in the month of .rd, the beta value is (.+'. #o there "as lo" risk compared to other months of the year.
%able Sho4ing 6eekly &verage prices and returns of the &ndhra Bank and "ifty
8eekly ?rice "eek & "eek 1 "eek . "eek 9 "eek ' "eek / "eek < "eek + "eek "eek &( "eek && "eek &1 "eek &. "eek &9 "eek &' "eek &/ "eek &< "eek &+ "eek &"eek 1(
DI%T; ?rices +'.&. +..&< +&./+(.&' +'.'/ +9.'/ <9.91 <1./<&../ /1.<< '-.1/1.-/ /&.9' /&.&< '-.+1 '-.<' /<../ </.< +(./1 +..'< Returns of S '.91 !../!1.1 (.+1 '.1+ !1.<' !&..&..+ !..-1 !&1.<. !1.&< './. !1./& !&... !1.&9 1../ &9.'+ &&./9 9.&./'
)D2ER) B)DC ?rices +'.-' +1.<+ +(.-/ +&./1 +'.-. +..'< <&.-' <1.-9 <(.(+ /&.&/ '-.+. /..1 /&.'' /(.<. '-.9. /(.+. /-.< <<.+& +&./1 +1.-< Return of ; ..(/ !../!1.1 (.+1 '.1+ !1.<' !&..&..+ !..-1 !&1.<. !1.&< './. !1./& !&... !1.&9 1../ &9.'+ &&./9 9.&./'
8eekly ?rice "eek 1& "eek 11 "eek 1. "eek 19 "eek 1' "eek 1/ "eek 1< "eek 1+ "eek 1"eek .( "eek .& "eek .1 "eek .. "eek .9 "eek .' "eek ./ "eek .< "eek .+ "eek ."eek 9( "eek 9& "eek 91 "eek 9. "eek 99 "eek 9'
DI%T; +'.1+<.<+9.-1 +-.</ +-.&+ -../& -..(& -..'' -&.+< -1.'' -..(& -..99 -&.+ -(.++ -(.+< <9.-< +'.'. +/.'. +/.-9 +/.-< +-.< +/.& ++.<. +/.<1 +&... ..+. &./. !1.(/ 9.9 (.1+ 9.<1 !&..1 (... !(.-& (.9< (.1(./+ !1.&9 !(.+9 !(.&9 !&(.9< '.91 &.// (.1/ (.(' 1./ !..'../ !9.'& !'.</
)D2ER) B)DC +/.&' +<.'' +'.<' +-.'1 +-.<< -9.(& -1.<< -..(+ -1.1. -1.// -1.-. -..'/ -&.'/ -(.<-(.// +&.&< +'.'< +/.-+<.11 +<.1/ +-.'. +/..1 +-.9. +'.9 +(.9+ ..+. &./. !1.(/ 9.9 (.1+ 9.<1 !&..1 (... !(.-& (.9< (.1(./+ !1.&9 !(.+9 !(.&9 !&(.9< '.91 &.// (.1/ (.(' 1./ !..'../ !9.'& !'.</
8eekly ?rice "eek 9/ "eek 9< "eek 9+ "eek 9"eek '(
DI%T; <+.1</..9 <<.91 </.<+ <<.+9 !1.-9 !1.+. 1.9& !(.<. (.&/
)D2ER) B)DC <+.&& <'.<<.<. <<.&/ <<.1+ !1.-9 !1.+. 1.9& !(.<. (.&/
weekly returns
40 30 20 10 0 -10 -20 -30 -40 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 returns of y returns of x
Fig 8 a
The above table and chart depicts the price and return of )ndhra bank and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the )ndhra bank and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact
on stock price. This may be because of lo" correlation bet"een )ndhra bank stock and DI%T;. %able Sho4ing *onthly Returns of ICICI &nd "ifty and Beta
,onthly of S (.(!1.' !... !(.-. +.&&.-' & (.&. !..9 &.+' !&.'. !(.<-
,onthly of ; !(.' !1.' !... !(.-. +.&&.-' & (.&. !..9 &.+' !1.(' !(.1
Beta (.-+ & & & & & & & & & & &
monthly returns
20 15 10 5 0 -5 -10
Fig 8 b
mont ly of y mont y of x 1 2 3 4 5 6 7 8 9 10 11 12
The above table and chart depicts the price and return of )ndhra bank and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the )ndhra bank and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een )ndhra Bank stock and Difty
!eta 1.005 1 0.995 0.99 0.985 0.98 0.975 0.97 1 2 3 4 5 6 7 8 9 10 11 12 !eta
Fig 8 c
The above chart sho"s the change in the monthly beta value of vi5aya bank "here in month of 9th the beta value is (.99 is lo" compare to other of year
%able Sho4ing 6eekly &verage prices and returns of the &ndhra Bank and "ifty
8eekly ?rice "eek & "eek 1 "eek . "eek 9 "eek ' "eek / "eek < "eek + "eek "eek &( "eek && "eek &1 "eek &. "eek &9 "eek &' "eek &/ "eek &< "eek &+ "eek &"eek 1(
DI%T; ?rices '9.+ '..(. '1.11 '..(1 '..+'(.&< .'.1& &+.1< +.<.-.&.+.-1 9(.&& .+.(. .+.+1 ./.++ .9.+< 9(.-. 9..9. 99.-1 99.9. Returns of S 9./+ !..1. !&.'. &.'. &./9 !/.!1-.+1 !9+.&& !'&.+.9'.+' !(./..(/ !'.&1.(+ !' !'.9' &<..+ /.&& ..9. !&.(-
FI B)DC ?rices ''.(' '1.+& '1.& '..-& '..(9 9-./' ...+1 &<.-& +.9< .+.<& .-.'& .-./& .+...+.99 ./.(< ./.1< 9&..9..++ 99.+< 99.19 Return of ; &.1!9.(< !&..9 ..9< !&./& !/..!.&.++ !9<.(9 !'1.<& .'<.(1 1.(< (.1' !..(+ (.&. !/.&< (.'' &9.&1 /.(1 1.1/ !&.9
8eekly ?rice "eek 1& "eek 11 "eek 1. "eek 19 "eek 1' "eek 1/ "eek 1< "eek 1+ "eek 1"eek .( "eek .& "eek .1 "eek .. "eek .9 "eek .' "eek ./ "eek .< "eek .+ "eek ."eek 9( "eek 9& "eek 91 "eek 9. "eek 99 "eek 9'
DI%T; 99.'/ 9<.1+ 9+.1' '&.</ '&.&+ '/.(+ '/.9+ '/.. ''.(+ '<..1 '..+& '...& '1.9' '1../ '&.+& 9/.+1 9/.+ 9<.1+ 9+.&& 9+../ 9-.&/ 9+.+9 9-.&9 9+.9< 9'.-1 (.1/.& 1.(' <.1< !&.&1 -.'< (.<& !(..1 !1.&< 9.(< !/.&1 !(.-. !&./& !(.&< !&.(' !-./. !(.(9 &.(. &.</ (.'1 &./' !(./' (./& !&../ !'.1/
FI B)DC 9'.&& 9<.'1 9-.&9 '&.9 '&.++ '/.<1 '/... '/.&9 ''..'<.&/ '..&. '..1' '1.'/ '1.&/ '&.'+ 9/.1< 9/.9. 9<.9. 9+..< 9+.' 9-.(< 9-.(. 9-./+ 9<..' 9'.1. &.-< '..9 ..9& 9./ (.-. -... !(./!(..9 !&..9 ..1 !<.(' (.1. !&.. !(.</ !&.&& !&(.1(..' 1.&' &.-+ (.1< &.&+ !(.(+ &... !9./!9.9+
8eekly ?rice "eek 9/ "eek 9< "eek 9+ "eek 9"eek '(
DI%T; 9..&. .-.-9 .-.+< 9(.<& 91.9& !/.(+ !<.9 !(.&+ 1.&& 9.&+
FI B)DC 91.+< .-.'& .-.<< 9&.1/ 91.. !'.11 !<.+9 (.// ..<' 1.'1
weekly price 150 100 50 0 1 6 11 16 21 26 31 36 41 46 "er#es2 "er#es1
%ig 9.a The above table and chart depicts the price and return of Fi5aya and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the vi5aya bank and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een Fi5aya bank stock and DI%T;.
%able Sho4ing *onthly Returns and Beta
,onthly of S (../ !1(.+( <9.(+ !.../.9/ ..-. 1.1& !&.1!..&1 (.+& !&... !(.1/
,onthly of ; !(.&/ !1&.<. !1&.<. </.// !1.&9 '.1' ..+. 1..& !&.19 !...< &.&1 !1./&
Beta (.<+ &.(( &.(( (.99 (.-(.-1 (.-/ (.-< &.(( (.+. (.+1 (.-<
monthily returns
100.00 80.00 60.00 40.00 20.00 0.00 -20.00 -40.00
mont ly of x mont ly of y 1 3 5 7 9 11
Fig 9 b
The above table and chart depicts the price and return of vi5aya bank and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the vi5aya bank and nifty. In the 9th "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een vi5aya Bank stock and Difty
!eta 1.20 1.00 0.80 0.60 0.40 0.20 0.00 1 2 3 4 5 6 7 8 9 10 11 12
!eta
Fig 9 c
The above chart sho"s the change in the monthly beta value of vi5aya bank "here in month of 9th the beta value is (.99 is lo" compare to other of year
,onthly beta of private and public sector bank
I6I6I 0.74 0.98 0.41 0.99 0.72 0.30 0.90 0.11 0.93 0.99 -0.62 0.89 E2%6 0.99 0.94 0.85 0.94 0.99 0.99 0.98 0.98 0.99 0.96 0.96 0.90 )D2ER) B)DC 0.98 1 1 1 1 1 1 1 1 1 1 1 FI B)DC 0.78 1.00 1.00 0.44 0.99 0.92 0.96 0.97 1.00 0.83 0.82 0.97
monthly beta
1.50 1.00 0.50 0.00 -0.50 -1.00
Fig .
#$#$# %f$ an% ra !ank 1 3 5 7 9 11 &#'aya !ank
%rom the above table "e can see that beta values of public sector bank and private sector banks in public sector bank there is lo" beta value for Fi5aya "ere has high beta value for the andhra bank so the investment in public sector bank may yeild to lo" returns to the investors compare to the private sector because in private sector bank the both the banks sho"ing less beta value so the investor can e pect high returns
yearly beta
1.2 1 0.8 0.6 0.4 0.2 0 -0.2 -0.4
"er#es1
#$#$#
%f$
an% ra !ank
Fig :
&#'aya !ank
I6I6I 0.89
E2%6 0.99
)D2ER) B)DC 1
FI B)DC -0.25
5+ Co,$&%/-o,
&. 2uring the period 1((/!(<, there "as high correlation bet"een
Difty and I6I6I, E2%6, )ndhra Bank, Fi5aya Bank 1. 2uring this period, all the selected banks Retunes and D#B
Difty returns are moving in same track. .. 2uring this period, there is more volatility in Returns of #tock
and ,arket. 9. 2uring the /th month, the Returns of I6I6I is 1.(& "here
as the Returns of Difty ( ) is '.<-, there is sudden surge. '. 2uring the .rd month, the Returns of Fi5aya Bank is <9.(+
"here as Difty ( ) is 1&.<. only, there "as sudden fall in market.
6+ Me'hodo&o (
6urrent 6lose G ?revious 6lose Returns W ?revious 6lose &((
Beta 8here,
W
D X y ! X Xy DX
1
G (X ) 1
D W Do. of 8eeks, ,onths and ;ears S W ,arket Returns (D#B Difty) ; W #tock Returns (I6I6I, E2%6, )ndhra Bank, Fi5aya Bank)
7+ B-8&-o ra3h(
&. #ecurity )nalysis H ?ortfolio ,anagement by ?R)#)DD) 6E)D2R). 1. #ecurity )nalysis H ?ortfolio ,anagement by %I#EBR 2.B. H :AR2)D .. Investment )nalysis by F.C.B)33). 9. Investment )nalysis by F.).)F)2E)DI.
;isited 6ebsites)
""".hseindia.org """.investopedia.com """.beindia.com """.nseindia.com
""".economictimes.com """.nil.com """.capitalamount.com """.delalstreet.com """.moneycontrol.com """.mediantolinc.com """.sebi.gov.in
doc_867007454.doc
DECLARATION
I hereby declare that this Project Report titled “SYSTEMATIC RISK OF SELECT BANKING SCRIPS TRADED IN NSE” submitted by me to the Department of Business Management, XXXXX, Hyderabad is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma/certificate or published any time before.
PLACE: DATE:
(XXXX)
ACKNO"LEDGEMENT
I take this opportunity to thank ### of. XXXX, for his encouragement in doing the project work.
I would like to thank ### Fa$%&'( of MBA Dept, her guidance and suggestion. I take the opportunity to express my deep and sincere gratitude to the management of INDIA BULLS LTD for their gesture of allowing me to undertake this project and its arious employees who lent their hand towards the completion this study.
!####)
"ontents 1. Introduction.....................................................................................................................................5 1. a Objectives..................................................................................................................................15 To measure the comparative beta analysis of selected Indian banks................................................15 To evaluate the correlation between nifty returns and ICICI bank returns.......................................15 To evaluate the correlation between Nifty returns and HDFC returns............................................. 15 To evaluate the correlation between Nifty and Andhra bank returns............................................... 15 To evaluate the correlation between Nifty and Vijay bank returns.................................................. 15 Limitations........................................................................................................................................ 16 1.b Data Collection Methods........................................................................................................... 16 2. Literature Review..........................................................................................................................17 About Beta – Definition, Theory..................................................................................................... 17 3. Company Profile........................................................................................................................... 23 3.a Introduction of NSE................................................................................................................... 23 Nifty index can be used by individuals to track market movements and compare performance of individual companies’ vis-à-vis market performance..........................................................................27 Shareholders evaluation of management decisions - performance of a company vis-à-vis the market generally reflects the perception of the investor...................................................................... 27 Assist traders and market intermediaries to evaluate performance and sentiments across the market. ..............................................................................................................................................................27 Index funds can replicate Nifty indices to earn market returns........................................................ 27 Derivative trading - Investors can use Nifty indices for hedging their exposures in the equity markets. ...............................................................................................................................................28 Benchmarking NAV performances - Nifty is the benchmark for performance of open ended and close ended funds.................................................................................................................................28 CNX Nifty Junior represents about 10% of the total market capitalization as on August 31, 2004 ..............................................................................................................................................................29 The average traded value for the last six months of all Junior Nifty stocks is approximately 8% of the traded value of all stocks on the NSE ........................................................................................... 29 Impact cost for CNX Nifty Junior for a portfolio size of Rs.2.50 million is 0.30%.........................29 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 .......................................................................................33 Nifty stocks represent about 57.92% of the total market capitalization as on April 10, 2007. .......33 Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.08% ...........................34 S&P CNX Nifty is professionally maintained and is ideal for derivatives trading.......................... 34 3.b Introduction to ICICI Bank........................................................................................................37 3.c Introduction to HDFC Bank......................................................................................................42 3.d Introduction to Andhra Bank..................................................................................................... 45 4. Data Analysis................................................................................................................................ 49 Tables and charts of Weekly, Monthly and Yearly with Interpretation.......................................... 49 5. Conclusion.................................................................................................................................... 78 7. Methodology................................................................................................................................. 79 8. Bibliography................................................................................................................................. 80
*+ I,'rod%$'-o,
The Reserve Bank of India (RBI) is India's central bank. Though public sector banks currently dominate the banking industry, numerous private and foreign banks e ist. India's government! o"ned banks dominate the market. Their performance has been mi ed, "ith a fe" being consistently profitable. #everal public sector banks are being restructured, and in some the government either already has or "ill reduce its o"nership.
Private and foreign banks
The RBI has granted operating approval to a fe" privately o"ned domestic banks$ of these many commenced banking business. %oreign banks operate more than &'( branches in India. The entry of foreign banks is based on reciprocity, economic and political bilateral relations. )n inter!departmental committee approves
applications for entry and e pansion.
Capital adequacy norm
%oreign banks "ere re*uired to achieve an + percent capital ade*uacy norm by ,arch &--., "hile Indian banks "ith overseas branches had until ,arch &--' to meet that target. )ll other banks had to do so by ,arch &--/. The banking sector is to be used as a model for opening up of India's insurance sector to private domestic and foreign participants, "hile keeping the national insurance companies in operation.
Banking
India has an e tensive banking net"ork, in both urban and rural areas. )ll large Indian banks are nationali0ed, and all Indian financial institutions are in the public sector.
RBI banking
The Reserve Bank of India is the central banking institution. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India . It supervises and administers
e change control and banking regulations, and administers the government's monetary policy. It is also responsible for granting licenses for ne" bank branches. 1' foreign banks operate in India "ith full banking licenses. #everal licenses for private banks have been approved. 2espite fairly broad banking coverage nation"ide, the financial system remains inaccessible to the poorest people in India.
Indian banking system
The banking system has three tiers. These are the scheduled commercial banks$ the regional rural banks "hich operate in rural areas not covered by the scheduled banks$ and the cooperative and special purpose rural banks.
Scheduled and non scheduled banks
There are appro imately +( scheduled commercial banks, Indian and foreign$ almost 1(( regional rural banks$ more than .'( central cooperative banks, 1( land development banks$ and a number of
primary agricultural credit societies. In terms of business, the public sector banks, namely the #tate Bank of India and the nationali0ed banks, dominate the banking sector. 3oIndia has an e tensive banking net"ork, in both urban and rural areas. )ll large Indian banks are nationali0ed, and all Indian financial institutions are in the public sector. The Reserve Bank of India is the central banking institution. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India . It supervises and administers e change control and banking regulations, and administers the government's monetary policy. It is also responsible for granting licenses for ne" bank branches. 1' foreign banks operate in India "ith full banking licenses. #everal licenses for private banks have been approved. 2espite fairly broad banking coverage nation"ide, the financial system remains inaccessible to the poorest people in India. The banking system has three tiers. These are the scheduled commercial banks$ the regional rural banks "hich operate in rural
areas not covered by the scheduled banks$ and the cooperative and special purpose rural banks. There are appro imately +( scheduled commercial banks, Indian and foreign$ almost 1(( regional rural banks$ more than .'( central cooperative banks, 1( land development banks$ and a number of primary agricultural credit societies. In terms of business, the public sector banks, namely the #tate Bank of India and the nationali0ed banks, dominate the banking sector.
Local financing
the e tent to
Cal financing
)ll sources of local financing are available to foreign!participation companies incorporated in India, regardless of the e tent of foreign participation. 4nder foreign e change regulations, foreigners and non!residents, including foreign companies, re*uire the permission
of the Reserve Bank of India to borro" from a person or company resident in India.
Regulations on Foreign Banks
%oreign banks in India are sub5ect to the same regulations as scheduled banks. They are permitted to accept deposits and provide credit in accordance "ith the banking la"s and RBI regulations. 6urrently about 1' foreign banks are licensed to operate in India. %oreign bank branches in India finance trade through their global net"orks.
RBI restrictions
The Reserve Bank of India lays do"n restrictions on bank lending and other activities "ith large companies. These restrictions, popularly kno"n as 7consortium guidelines7 seem to have outlived their usefulness, because they hinder the availability of credit to the non!food sector and at the same time do not foster competition bet"een banks.
Indian vs Foreign banks
,ost Indian banks are "ell behind foreign banks in the areas of customer funds transfer and clearing systems. They are hugely over!staffed and are unlikely to be able to compete "ith the ne" private banks that are no" entering the market. 8hile these ne" banks and foreign banks still face restrictions in their activities, they are "ell!capitali0ed, use modern e*uipment and attract high!caliber employees.
!overnment and RBI regulations
)ll commercial banks face stiff restrictions on the use of both their assets and liabilities. %orty percent of loans must be directed to 7priority sectors7 and the high li*uidity ratio and cash reserve re*uirements severely limit the availability of deposits for lending. The RBI re*uires that domestic Indian banks make 9( percent of their loans at concessional rates to priority sectors' selected by the government. These sectors consist largely of agriculture, e porters, and small businesses. #ince :uly &--., foreign banks have been
re*uired to make .1 percent of their loans to these priority sector. 8ithin the target of .1 percent, t"o sub!targets for loans to the small scale sector (minimum of &( percent) and e ports (minimum of &1 percent) have been fi ed. %oreign banks, ho"ever, are not re*uired to open branches in rural areas, or to make loans to the agricultural sector. 6ommercial banks lent dols + billion in the Indian financial year (I%;, )pril!,arch) &--<=-+, up sharply from dols 9.9 billion in the previous year. The deployment of gross loans "as as follo"s> &--<!-+ ()pril!:anuary)
@ross Bank 3oans %ood ?rocurement ?riority #ector Industrial 3oans 3oans to Trade Ather 3oans
?ercent
&(( &'.' .&./ 1-.9 (.(< 1..9.
#ource> @overnment of India Bconomic #urvey
"eed to Ponder
2ebates on India's slo"do"n focus on the manufacturing sector "hich is dangerously misleading> one of the biggest areas of "orry about India's economic slo"do"n is being ignored ! the systemic fla" of India's banking sector. #tories about the real health of Indian banks get less publici0ed because banks are still
over"helmingly o"ned, controlled and directed by the government, i.e., the ministry of finance (,o%). Banks have no effective mouthpiece either.
!rey future
one more reason being the opacity of the The Reserve Bank of India. This does not mean a forecast of doom for the Indian banking sector the kind that has "ashed out south Bast )sia. )nd also not because Indian banks are healthy. 8e still have no clue about the real non!performing assets of financial institutions and banks. ,any banks are no" listed. That puts additional responsibility of sharing information. It is no" clear that it "as the financial sector that
caused the sensational meltdo"n of some )sian nations. India is not Thailand, Indonesia and Corea. Borro"ed investment in property in India is lo" and property prices have already fallen, letting out steam gently. Aur micro!meltdo"n has already been happening.
Conclusion
#till, there are several other "orries about the banking sector, mainly confusion over o"nership and control. #ometime soon India "ill be forced to apply the norms of developed countries and many banks (including some of the biggest) "ill sho" very poor return ratios and do0ens of banks "ill be bankrupt. 8hen that happens the t"o popular reasons to defend bad banks "ill disappear. These are> one, to save face in the remote hope of those fortunes "ill revive' and t"o, some banks are too big to be allo"ed to fail, fearing social upheaval.
&. a Ab5ectives
# To measure the comparative beta analysis of selected Indian banks. # To evaluate the correlation bet"een nifty returns and I6I6I bank returns. # To evaluate the correlation bet"een Difty returns and E2%6 returns. # To evaluate the correlation bet"een Difty and )ndhra bank returns. # To evaluate the correlation bet"een Difty and Fi5ay bank returns.
L-.-'a'-o,/
&. 1. The data collected is only from secondary source. The data "hich is collected for doing this report has been
collected from Internet 8ebsites "here there can be some hitches. .. The Time period taken for doing the data analysis has been
from from D#B (Difty) 1((/!(<.
&.b 2ata 6ollection ,ethods
%or the purpose of the study "as collected through secondary source of data collection method. ,a5or source of data are published stock prices of E2%6, I6I6I Bank )D2 DI%T;.
&.c Time ?eriod>
I collected "eekly average prices of E2%6, I6I6I B)DC )D2 DI%T; for the period of )?R 1((/!,)R 1((<.
0+ L-'era'%re Re1-ew
)bout Beta G 2efinition, Theory
#efinitions of B$%&
&. ) *uantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the #H? '((. #pecifically, the performance the stock, fund or portfolio has e perienced in the last ' years as the #H? moved &I up or do"n. ) beta above & is more volatile than the overall market, "hile a beta belo" & is less volatile. 1. ) measure of securities or portfolio's volatility, or systematic
risk, in comparison to the market as a "hole. )lso kno"n as 7Beta coefficient.7 Dotes> Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to s"ings in the market. ) beta of & indicates that the security's price "ill move
"ith the market. ) beta less than & means the security "ill be less volatile than the market. ) beta greater than & indicates that the security's price "ill be more volatile than the market. %or e ample, if a stock's beta is &.1 it's theoretically 1(I more volatile than the market. ,any utilities stocks have a beta of less than &. 6onversely most high!tech D)#2)J!based stocks have a beta greater than &, offering the possibility of a higher rate of return but also posing more risk.
B$%&
Beta describes the relationship bet"een the stocks return and the market inde returns. This can be positive and negative. It is the
percentage change in the price of the stock regressed (or related) to the percentage change in the market inde . If beta is &, a one percentage change in market inde "ill lead to one percentage
change in price of the stock. If beta is (, stock price is unrelated to the market inde and if the market goes up by a K&I, the stock
price "ill fall by &I beta measures the systematic market related
risk, "hich cannot be eliminated by diversification. If the portfolio is efficient, beta measures the systematic risk effectively. An the other hand alpha and epsilon measures the unsystematic risk, "hich can be reduced by efficient diversification. ,ore details of beta are discussed else "here in the book. Beta measures no diversifiable risk. Beta sho" ho" the price of a security responds to market forces. In effect, of more responsive the price of a security is to changes in the market, the higher "ill be its beta. Beta is calculated by relating the returns on a security "ith the returns for the market. ,arket returns is measured by the averages returns of a large sample of stocks, such as the #H? '(( stock inde . The beta for the overall market is e*ual to &.(( and other betas are vie"ed in relation to this value. Betas can be positive or negative. Eo"ever, nearly all betas are positive and most betas lie some"here bet"een (.9 and &.-. 3isted in Table .!. are the betas for some stocks, as reported by value line in late &--.
Beta 6oefficient on #elected #tocks
6ompany )von products Bausch H 3omb Benguer 6orp, Black H 2ecker 6alifornia 8ater 6ampbell #oap 6hrysler 6orp. 6lub ,ed 6oca!6ola 6ompa*!6omputer 2elta )ir 3ines 2isney @oodyear Tire Eecla ,ining Idaho ?o"er IB, Cellogg 3a*uinta Inns ,attel ,c2onald's ,errill 3ynch De"mont ,ining ?espi 6o. ?eidmont Datural @as Juaker #tate 6orp. Reebok, Intl= #mucker, :.,. Te aco
Beta &.9 &.1' (.&1 &./' (.' & &.1' &.(' &.&' &.9' &.&' &.1' &.(' (..' (./ (.-' &.& (.+ &.9' (.+/ &.<' (..' &.&' (./ (.&./ (.(./
Tootsie Roll Toys 'R' 4s 8endy's Intl.
(.+ &.9' &.&
,any large brokerage firms (such as ,errill 3ynch) as "ell as subscription services (such as value line) publish betas for a large number of stocks. Investors "ill find beta helpful in assessing systematic risk and understanding the impact of market movement can have on the return e pected from a share turn over the ne t year, a stock having a beta of &.+( "ould be e pected to provide a &( percent to e periences an increase in returns of appro imately &+ percent (&.+(L&(I) over the same period. This particular stock is much more volatile than the market as a "hole. 2ecreases in market return are translated into decrease security returns and this "here the risk lies. In the preceding e ample, if the market is e pected to e periences a negative return &( percent, then the stock "ith a beta of &.+ should e perience a &+ percent decrease M&.+ times G &(N. #tocks having betas of less than & "ill,
of course be less responsive to changing returns in the market, and therefore are considered less risky. ) *uantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the #H? '((. #pecifically, the performance the stock, fund or portfolio has e perienced in the last ' years as the #H? moved &I up or do"n. ) beta above & is more volatile than the overall market, "hile a beta belo" & is less volatile. ) measure of a security's or portfolio's volatility, or systematic risk, in comparison to the market as a "hole. )lso kno"n as 7beta coefficient.7
2+ Co.3a,( Prof-&e
..a Introduction of D#B
The D#B "as incorporated in Dov &--1 "ith an e*uity capital of Rs.1' 6rores. The International securities constancy (I#6) of Eong Cong has helped in setting up D#B. I#6 has prepared the detailed business plans and installation of hard "are and soft"are system. The promotion of D#B "ere financial institution, insuranceOs, companies, banks and #BBI capital market 3td. Infrastructure leasing and financial service limited. )nd stock Eolding 6orporation limited. It has been set up to strength the move to"ards professionalisation of capital market as "ell as provides nation "ide securities trading facilities to investors. D#B e change in traditional sense "as brokers o"n and manages the e change. ) t"o tier administrative set up involving a company board and a governing aboard of e change is envisaged.
D#B is a national market of share ?#4 bonds, debentures and government securities since infrastructure and trading facilities are provided.
"S$'"IF%()
The D#B on )pril 11, &--/ launched a ne" e*uity Inde . The D#B! '(. The ne" Inde "hich replaces the e isting D#B G&(( Inde is
e pected to serve as an appropriate Inde futures and options. P%iftyQ means Dational Inde for %ifty #tock.
for ne" segment of
The D#B!'( comprises '( companies that represent 1( board industry groups "ith a aggregate market capitali0ation of around Rs.&<(, ((( crores. )ll company included in the Inde have a
market capitali0ation in e cess of Rs.'(( crores each and should have traded for +'I of trading day at an impact cost of less then &.'I.
The base period for the inde
is the close of prices on Dovember ., completion of operations on D#B
&--', "hich makes one year of
capital market segment. The base value of Inde is set at &(((.
"S$'*I#C&P I"#$+)
The D#B midcap Inde or the :unior Difty comprises fifty stocks that represents 1& board industries group and "ill provide proper representation of madcap segment of Indian 6apital ,arket. )ll stocks in a inde should have market capitali0ation off greater then
Rs.1(( crores and should have +'I of trading days at impact cost of less than 1.'I. The base period for the inde is Dovember 9th, &--/, "hich
signifies 1 years of completion of operations of the capital market segment the operations. The base value of inde has been at &(((. )verage daily turnover of the present scenario 1'+1&1 (laces) and number of average daily trades d1&/( (laces).
India is a land of many cultures and languages. Its vibrancy and *uest for gro"th thro"s up as many *uestions as it thro"s up ne" ans"ers. 8ith globali0ation people are constantly seeking broader hori0on of kno"ledge and information. Eo" much has the country prosperedR Eo" "ell is the economy doingR Difty is the platform on "hich India finds these ans"ers. The Difty Inde is a composite of the top '( stocks listed on the
Dational #tock B change (D#B). It is a simplified tool that helps investors and ordinary people alike, to understand "hat is
happening in the stock market and by e tension, the economy. If the Difty Inde performs "ell, it is a signal that companies in India
are performing "ell and conse*uently that the country is doing "ell. )n upbeat economy is usually reflected in a strong performance of the Difty Inde . ) rising inde are gung!ho about the future. is also indicative that the investors
The Difty Inde
is based upon solid economic research. It is
internationally respected and recogni0ed as a pioneering effort in providing simpler understanding of stock market comple ities. Difty is the flagship inde of D#B, the .rd largest stock e change in the "orld in terms of number of transactions (#tock %utures). LDifty has been used to represent #H? 6DS Difty, o"ned and managed by India Inde #ervices and ?roducts 3td. (II#3), a 5oint
venture bet"een D#B and 6RI#I3. # Difty inde can be used by individuals to track market movements and compare performance of individual companiesO vis!T!vis market performance. # #hareholders evaluation of management decisions ! performance of a company vis!T!vis the market generally reflects perception of the investor. # )ssist traders and market intermediaries to evaluate performance and sentiments across the market. # Inde funds can replicate Difty indices to earn market returns. the
# 2erivative trading ! Investors can use Difty indices for hedging their e posures in the e*uity markets. # Benchmarking D)F performances ! Difty is the benchmark for performance of open ended and close ended funds.
"S$ "ifty ,unior IndeThe ne t rung of li*uid securities after #H? 6DS Difty is the 6DS Difty :unior inde . It may be useful to think of the #H? 6DS Difty and the 6DS Difty :unior as making up the &(( most li*uid stocks in India. )s "ith the #H? 6DS Difty, stocks in the 6DS Difty :unior are filtered for li*uidity, so they are the most li*uid of the stocks e cluded from the #H? 6DS Difty.
The maintenance of the #H? 6DS Difty and the 6DS Difty :unior are synchroni0ed so that the t"o inde es "ill al"ays be dis5oint sets$ i.e. a stock "ill never appear in both inde es at the same time.
Eence it is al"ays meaningful to pool the #H? 6DS Difty and the 6DS Difty :unior into a composite &(( stock inde es or portfolio. The main features of the 6DS Difty :unior Inde are> # 6DS Difty :unior represents about &(I of the total market capitali0ation as on )ugust .&, 1((9 # The average traded value for the last si months of all :unior
Difty stocks is appro imately +I of the traded value of all stocks on the D#B # Impact cost for 6DS Difty :unior for a portfolio si0e of Rs.1.'( million is (..(I
6AD#TIT4BDT# 3I#T A% 6DS DI%T; :4DIAR
6ompany TF# ,otor 6ompany 3td. )shok 3eyland 3td. ?un5ab Tractors 3td. )ndhra Bank Bank of Baroda Bank of India 6anara Bank 6orporation Bank Indian Averseas Bank Industrial 2evelopment Bank of India 3td. ID@ Fysya Bank 3td. Cotak ,ahindra Bank 3td. #yndicate Bank 4nion Bank of India 4TI Bank 3td. Fi5aya Bank Bharat %orge 3td. Ingersoll Rand (India) 3td.
Industry )utomobiles ! 1 and . "heelers )utomobiles ! 9 "heelers )utomobiles ! 9 "heelers Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks Banks 6astings=forgings 6ompressors = pumps
I#D 6ode IDB9-9B(&(1. IDB1(+)(&(1IDB&<()(&(&. IDB9.9)(&(&. IDB(1+)(&(&. IDB(+9)(&(&/ IDB9</)(&(&9 IDB&&1)(&(&' IDB'/')(&(&9 IDB((+)(&(&' IDB&//)(&(&& IDB1.<)(&(&( IDB//<)(&(&+ IDB/-1)(&(&/ IDB1.+)(&(1/ IDB<(')(&(&/ IDB9/')(&(1' IDB&<<)(&(&+
,oser Baer India 3td. I!%le #olutions 3td. ,phasis B%3 3td. ?atni 6omputer #ystems 3td. ?olaris #oft"are 3ab 3td. :aiprakash )ssociates 3td. Dirma 3td. 6ummins India 3td. Bharat Blectronics 3td. Reliance 6apital 3td. 3I6 Eousing %inance 3td. I%6I 3td. Infrastructure 2evlopment %inance 6o. 3td. Indian Eotels 6o. 3td. #terlite Industries (India) 3td. 6ontainer 6orporation of India 3td. )sian ?aints 3td. )urobindo ?harma 3td. )ventis ?harma 3td. Biocon 3td. 6adila Eealthcare 3td.
6omputers ! hard"are 6omputers ! soft"are 6omputers ! soft"are 6omputers ! soft"are 6omputers ! soft"are 6onstruction 2etergents 2iesel engines Blectronics ! industrial %inance %inance ! housing %inancial institution %inancial institution Eotels ,etals ,iscellaneous ?aints ?harmaceuticals ?harmaceuticals ?harmaceuticals ?harmaceuticals
IDB<.-)(&(&' IDB++&2(&(1< IDB.'/)(&(&+ IDB//(%(&(&1 IDB</.)(&(1. IDB9''%(&(&< IDB(-&)(&(&& IDB1-+)(&(1( IDB1/.)(&(&/ IDB(&.)(&(&' IDB&&')(&(&+ IDB(.-)(&(&( IDB(9.2(&(&/ IDB('.)(&(1IDB1/+)(&(.& IDB&&&)(&(&< IDB(1&)(&(&+ IDB9(/)(&(1IDB('+)(&(&( IDB.</@(&(&. IDB(&(B(&(&-
3upin 3td. Dicholas ?iramal India 3td. ?fi0er 3td. 8ockhardt 3td. Bongaigaon Refinery H ?etrochemicals 3td. 6hennai ?etroleum 6orporation 3td. IB? 6o. 3td. Reliance ?etroleum 3td. Tata Teleservices (,aharashtra) 3td. Raymond 3td. )pollo Tyres 3td. TF# ,otor 6ompany 3td.
?harmaceuticals ?harmaceuticals ?harmaceuticals ?harmaceuticals Refineries Refineries Refineries Refineries Telecommunication ! services Te tile products Tyres )utomobiles ! 1 and . "heelers
IDB.1/)(&(1IDB&9()(&(19 IDB&+1)(&(&+ IDB(9-B(&(1' IDB19&)(&(&1 IDB&<+)(&(&/ IDB1/&)(&(&( IDB9<'E(&(&& IDB'&<B(&(&. IDB.(&)(&(&9 IDB9.+)(&(&9 IDB9-9B(&(1.
"S$ "IF%( ./ I"#$+)
#H? 6DS Difty is a "ell diversified '( stock inde accounting for 11
sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, inde funds. #H? 6DS Difty is o"ned and managed by India Inde #ervices and based derivatives and inde
?roducts 3td. (II#3), "hich is a 5oint venture bet"een D#B and 6RI#I3. II#3 is India's first specialised company focused upon the inde as a core product. II#3 have a consulting and licensing
agreement "ith #tandard H ?oor's (#H?), "ho are "orld leaders in inde services. # The average total traded value for the last si months of all Difty
stocks is appro imately 9'.19I of the traded value of all stocks on the D#B # Difty stocks represent about '<.-1I of the total market capitali0ation as on )pril &(, 1((<.
# Impact cost of the #H? 6DS Difty for a portfolio si0e of Rs.' million is (.(+I # #H? 6DS Difty is professionally maintained and is ideal for derivatives trading
6ompany )BB 3td. )66 3td. Ba5a5 )uto 3td. Bharat Eeavy Blectricals 3td. Bharat ?etroleum 6orporation 3td. Bharti )irtel 3td. 6ipla 3td. 2abur India 3td. 2r. Reddy's 3aboratories 3td. @)I3 (India) 3td. @la osmithkline ?harmaceuticals 3td. @rasim Industries 3td. @u5arat )mbu5a 6ements 3td. E63 Technologies 3td. E2%6 Bank 3td. Industry Blectrical e*uipment 6ement and cement products )utomobiles ! 1 and . "heelers Blectrical e*uipment Refineries Telecommunication ! services ?harmaceuticals ?ersonal care ?harmaceuticals @as ?harmaceuticals 6ement and cement products 6ement and cement products 6omputers ! soft"are Banks I#D 6ode IDB&&<)(&(&9 IDB(&1)(&(1' IDB&&+)(&(&1 IDB1'<)(&(&+ IDB(1-)(&(&& IDB.-<2(&(&/ IDB('-)(&(1/ IDB(&/)(&(1/ IDB(+-)(&(1. IDB&1-)(&(&IDB&'-)(&(&/ IDB(9<)(&(&. IDB(<-)(&(19 IDB+/()(&(1< IDB(9()(&(&+
Eero Eonda ,otors 3td. Eindalco Industries 3td. Eindustan 3ever 3td. Eindustan ?etroleum 6orporation 3td. Eousing 2evelopment %inance 6orporation 3td. I T 6 3td. I6I6I Bank 3td. Indian ?etrochemicals 6orporation 3td. Infosys Technologies 3td. 3arsen H Toubro 3td. ,ahanagar Telephone Digam 3td. ,ahindra H ,ahindra 3td. ,aruti 4dyog 3td. Dational )luminium 6o. 3td. Ail H Datural @as 6orporation 3td. ?un5ab Dational Bank Ranba y 3aboratories 3td. Reliance 6ommunications 3td. Reliance Bnergy 3td. Reliance Industries 3td. Reliance ?etroleum 3td.
)utomobiles ! 1 and . "heelers )luminium 2iversified Refineries %inance ! housing 6igarettes Banks ?etrochemicals 6omputers ! soft"are Bngineering Telecommunication ! services )utomobiles ! 9 "heelers )utomobiles ! 9 "heelers )luminium Ail e ploration=productio n Banks ?harmaceuticals Telecommunication ! services ?o"er Refineries Refineries
IDB&'+)(&(1/ IDB(.+)(&(1( IDB(.()(&(1< IDB(-9)(&(&' IDB((&)(&(1+ IDB&'9)(&(1' IDB(-()(&(&. IDB((/)(&(&IDB((-)(&(1& IDB(&+)(&(.( IDB&'.)(&(&IDB&(&)(&(&+ IDB'+'B(&(&( IDB&.-)(&(1/ IDB1&.)(&(&& IDB&/()(&(&9 IDB(&')(&(1+ IDB..(E(&(&+ IDB(./)(&(&/ IDB((1)(&(&+ IDB9<'E(&(&&
#atyam 6omputer #ervices 3td. #iemens 3td. #tate Bank of India #teel )uthority of India 3td. #terlite Industries (India) 3td. #un ?harmaceutical Industries 3td. #u0lon Bnergy 3td. Tata 6onsultancy #ervices 3td. Tata ,otors 3td. Tata ?o"er 6o. 3td. Tata #teel 3td. Fidesh #anchar Digam 3td. 8ipro 3td. Uee Bntertainment Bnterprises 3td.
6omputers ! soft"are Blectrical e*uipment Banks #teel and steel products ,etals ?harmaceuticals Blectrical e*uipment 6omputers ! soft"are )utomobiles ! 9 "heelers ?o"er #teel and steel products Telecommunication ! services 6omputers ! soft"are ,edia H entertainment
IDB1<')(&(1+ IDB((.)(&(19 IDB(/1)(&(&1 IDB&&9)(&(&& IDB1/+)(&(.& IDB(99)(&(1+ IDB(9(E(&(&. IDB9/<B(&(1IDB&'')(&(&9 IDB19')(&(&. IDB(+&)(&(&1 IDB&'&)(&(&. IDB(<')(&(11 IDB1'/)(&(1+
..b Introduction to I6I6I Bank
I6I6I Bank is India's second!largest bank "ith total assets of about Rs. 1,'&..+- bn (4#V '/.. bn) at ,arch .&, 1((/ and profit after ta of Rs. 1'.9( bn (4#V '/- mn) for the year ended ,arch .&,
1((/ (Rs. 1(.(' bn (4#V 99- mn) for the year ended ,arch .&, 1(('). I6I6I Bank has a net"ork of <9& branches (including 9+ e tension counters) and over ..(( )T,s in India and presence in .( International locations. I6I6I Bank offers a "ide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its speciali0ed subsidiaries and affiliates in the areas of investment banking, life and non!life insurance, venture capital and asset management. I6I6I Bank set up its international banking group in fiscal 1((1 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. I6I6I Bank currently has subsidiaries in the 4nited Cingdom, Russia and 6anada, branches in #ingapore, Bahrain, Eong Cong, #ri 3anka and 2ubai International %inance 6entre and representative offices in
the 4nited #tates, 4nited )rab Bmirates, 6hina, #outh )frica and Bangladesh. Aur 4C subsidiary has established a branch in Belgium. I6I6I Bank is the most valuable bank in India in terms of market capitali0ation. I6I6I Bank's e*uity shares are listed in India on the Bombay #tock B change and the Dational #tock B change of India 3imited and its )merican 2epositary Receipts ()2Rs) are listed on the De" ;ork #tock B change (D;#B). I6I6I Bank has formulated a 6ode of Business 6onduct and Bthics for its directors and employees. I6I6I Bank "as originally promoted in &--9 by I6I6I 3imited, an Indian financial institution, and "as its "holly!o"ned subsidiary. I6I6I's shareholding in I6I6I Bank "as reduced to 9/I through a public offering of shares in India in fiscal &--+, an e*uity offering in the form of )2Rs listed on the D;#B in fiscal 1(((, I6I6I Bank's ac*uisition of Bank of ,adura 3imited in an all!stock amalgamation in fiscal 1((&, and secondary market sales by I6I6I to institutional investors in fiscal 1((& and fiscal 1((1. I6I6I "as formed in &-'' at the initiative of the 8orld Bank, the @overnment of India and
representatives of Indian industry. The principal ob5ective "as to create a development financial institution for providing medium! term and long!term pro5ect financing to Indian businesses. In the &--(s, I6I6I transformed its business from a development financial institution offering only pro5ect finance to a diversified financial services group offering a "ide variety of products and services, both directly and through a number of subsidiaries and affiliates like I6I6I Bank. In &---, I6I6I become the first Indian company and the first bank or financial institution from non!:apan )sia to be listed on the D;#B. )fter consideration of various corporate structuring alternatives in the conte t of the emerging competitive scenario in the Indian banking industry, and the move to"ards universal banking, the managements of I6I6I and I6I6I Bank formed the vie" that the merger of I6I6I "ith I6I6I Bank "ould be the optimal strategic alternative for both entities, and "ould create the optimal legal structure for the I6I6I group's universal banking strategy. The merger "ould enhance value for I6I6I shareholders through the merged entity's access to lo"!cost deposits, greater opportunities
for earning fee!based income and the ability to participate in the payments system and provide transaction!banking services. The merger "ould enhance value for I6I6I Bank shareholders through a large capital base and scale of operations, seamless access to I6I6I's strong corporate relationships built up over five decades, entry into ne" business segments, higher market share in various business segments, particularly fee!based services, and access to the vast talent pool of I6I6I and its subsidiaries. In Actober 1((&, the Boards of 2irectors of I6I6I and I6I6I Bank approved the merger of I6I6I and t"o of its "holly!o"ned retail finance subsidiaries, I6I6I ?ersonal %inancial #ervices 3imited and I6I6I 6apital #ervices 3imited, "ith I6I6I Bank. The merger "as approved by shareholders of I6I6I and I6I6I Bank in :anuary 1((1, by the Eigh 6ourt of @u5arat at )hmedabad in ,arch 1((1, and by the Eigh 6ourt of :udicature at ,umbai and the Reserve Bank of India in )pril 1((1. 6onse*uent to the merger, the I6I6I group's financing and banking operations, both "holesale and retail, have been integrated in a single entity.
L%ree float holding e cludes all promoter holdings, strategic investments and cross holdings among %ormula> 6urrent 6lose Returns %ormula> D X y ! X Xy DX
1
public sector entities.
W ?revious 6lose
Beta
W
G (X )1
..c Introduction to E2%6 Bank
0ousing Finance Sector
)gainst the milieu of rapid urbani0ation and a changing socio! economic scenario, the demand for housing has gro"n e plosively. The importance of the housing sector in the economy can be illustrated by a fe" key statistics. )ccording to the Dational Building Argani0ation (DBA), the total demand for housing is estimated at 1 million units per year and the total housing shortfall is estimated to be &-.9 million units, of "hich &1.</ million units is from rural areas and /./9 million units from urban areas. The housing industry is the second largest employment generator in the country. It is estimated that the budgeted 1 million units "ould lead to the creation of an additional &( million man!years of direct employment and another &' million man!years of indirect employment. Eaving identified housing as a priority area in the Dinth %ive ;ear ?lan (&--<!1((1), the Dational Eousing ?olicy has envisaged an investment target of Rs. &,'(( billion for this sector. In order to
achieve this investment target, the @overnment needs to make lo" cost funds easily available and enforce legal and regulatory reforms.
Background)'
E2%6 "as incorporated in &-<< "ith the primary ob5ective of meeting a social need G that of promoting home o"nership by providing long!term finance to households for their housing needs. E2%6 "as promoted "ith an initial share capital of Rs. &(( million.
Business 1b2ectives)'
The primary ob5ective of E2%6 is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home
o"nership. )nother ob5ective is to increase the flo" of resources to the housing sector by integrating the housing finance sector "ith the overall domestic financial markets..
1rgani3ational !oals)'
E2%6Os a) main goals are to
2evelop close relationships "ith individual households,
b) ,aintain its position as the premier housing finance institution in c) d) Transform ideas into viable the and country, creative solutions,
?rovide consistently high returns to shareholders, and
e) To gro" through diversification by leveraging off the e isting client base.
..d Introduction to )ndhra Bank
)ndhra Bank "as founded by 2r.Bhogara5u ?attabhi #itaramayya. The bank commenced business on 1+th Dovember &-1. "ith a paid up capital of Rs & lakh and an authorised capital of Rs &( lakh. )ndhra Bank has a net"ork of &<&. Business 2elivery 6hannels, consisting of &,&<- branches, &91 B tension 6ounters, .'9 )T,s and .+ #atelite Branches spread over 1& #tates and 1 4nion Territories as at the end of #eptember 1(('. The bank has entered into sharing arrangements "ith #tate Bank of India, E2%6 Bank, I2BI Bank, Indian Bank and 4TI Bank, offering over -,((( )T,s spread across the country for use by customers. )ndhra Bank provides state!of!the!art services to its customers. )ll the branches of the bank are computeri0ed and +'( branches are net"orked under core banking solution providing ')D;8EBRB B)DCID@'. The Bank also provides instant transfer fund facility through its branches. The Bank has been ranked 'th in the 1((' Business Today survey of India's Best Banks.
..e Introduction to FI
B)DCFi5aya Bank "as established on 1.rd Actober &-.& by late #hri ).B.#hetty and other enterprising farmers in ,angalore, Carnataka. The ob5ective behind establishment of the Bank "as essentially to promote banking habit, thrift and entrepreneurship among the farming community of 2akshina Cannada district in Carnataka #tate. The bank became a scheduled bank in &-'+. 2uring &-/.!/+, nine smaller banks merged "ith Fi5aya Bank and the Bank steadily gre" into a large )ll India bank. Fi5aya Bank "as nationali0ed on )pril &', &-+( and today the Bank has a net"ork of -&. branches that span all 1+ states and . union territories in the country. Fi5ay Bank has been constantly focusing on technological up gradation. )s on Actober 1((', all the -&. branches have been computeri0ed, covering -<I of the bank's total business. The Bank has diversified into ne" areas such as credit card, merchant banking, hire purchase and leasing, and electronic
remittance services. Fi5aya Bank is one of the fe" banks in the country to take up principal membership of FI#) International and ,aster6ard International Fi5aya Bank has the highest number of branches in its home state Carnataka. 2uring the first *uarter of financial year 1((/!1((< the bank has opened &/ Branches. T"o B tension 6ounters upgraded into full fledged Branch. In line "ith the prevailing trends, the bank has been giving greater thrust to"ards technological up gradation of its operations. The bank has net"ork of -9+ branches,/( B tension 6ounters and &/+ )T,s. .-- branches, .' e tension counters and '9 officers are functioning on 6B# platform. Reali0ing your constantly evolving and diverse needs, the bank has diversified too. Bntering several ne" areas such as credit card, merchant banking, hire purchase and leasing, and electronic remittance services.
Fi5aya Bank is one among the fe" banks in the country to take up principal membership of FI#) International and ,aster6ard
International. The driving force behind Fi5aya Bank's every initiative has been its &&9(9 strong dedicated "orkforce.
4+ Da'a A,a&(/-/
Tables and charts of 8eekly, ,onthly and ;early "ith Interpretation.
%able sho4ing 4eekly average price and Return of ICICI and "ifty
I6I6I 6ompany Base Falue 8eek& "eek1 8eek. 8eek9 8eek' 8eek/ 8eek< 8eek+ 8eek8eek&( 8eek&& 8eek&1 8eek&. 8eek&9 8eek&' ?rice /&..+< '+1.&& '<-.9. '+9.+. /99.&+ /.-.9' '-1.(+ '</.<''+..' '91 9+../& 9+/..+ '(1.'. 9-(.99-1.'+ 9-1.<Return
!! &./. !'.&< !(.9/ (.-. &(.&' !(.<. !<.9& !1.'+ !..1( !1.-. !&(.<< (.'< ...1 !1.9( (.9. ?rice /(/.-9 '+9.<' '+9.<< '<1.9 /9(.<9 /9..'/ /(9.<< '<+.(< '<&.('9-.'/ '&(.&. 9+(.11 '(1.9< 9++.9/ 9-..(' 9-(.<'DI%T; Return ( ) !! ..(9 !..// (.(( !1.&1 &&.-9 (.99 !/.(. !9.9& !&.1& !..<< !<.&< !'.+/ 9./. !1.<(.-9
8eek&/ 8eek&< 8eek&+ 8eek&8eek1( 8eek1& 8eek11 8eek1. 8eek19 8eek1' 8eek1/ 8eek1< 8eek1+ 8eek18eek.( 8eek.& 8eek.1 8eek.. 8eek.9 8eek.' 8eek./ 8eek.< 8eek.+ 8eek.8eek9( 8eek9& 8eek91 8eek9. 8eek99
9+&.< '&(.+& '9/.(. '/..1 '++.. '--.'/ '-'.(/(9.1' /&9.//&+ /'(..1 /<<.<< <((.&9 /-..1+ <./.9. <91.&9 <</.1< <<9.19 +9&.-9 +<9.1+<9./' +<..9' +<1.99 +1/.1& +//.-/ ++..<-(&.+1 -(&.-< -/-.'+
(.(9 !1.1' /.(9 /.+..&9 9.9/ &.-& !(.<' &.'9 &.<. (.'9 '.1. 9.11 ...( !(.-+ /.11 (.<+ 9./( !(.1/ +.<9 ..+9 (.(9 !(.&9 !(.&1 !'..( 9.-. &.-9 1.(9 (.(1
9+'.9-1.++ '99.'+ ''9.(1 '+-.1< '<<.(9 '-+.9 '-+./+ /&/.&/(-..' /9<.<& //+./<(&.9& /-9.<<(&.1& <.+.9< <<1.11 </+.&' +11.+' +''.<1 +</.+/ +/<./+ +<1 +99.+& +<(.&+ +</..9 +<'.+ -('.+1 </9.'<
!(.9< !(.-&.99 &(.9&.<. /../ !1.(+ ..<( (.(' 1.-1 !&.&& /..( ..19 9.+!(.-9 (.-1 '..& 9.'< !(.'. <.&1 ..-1.9< !&.(' (.'( !..&1 ..(( (.<& !(.(/ ..9.
8eek9' 8eek9/ 8eek9< 8eek9+ 8eek98eek'( 8eek'& 8eek'1
-+(.. -<+.' -9+.1/ -+1..< -9&.1& -/-.(. +<1./' +.'.-/
<.'( &.&& !(.&+ !..(../( !9.&1.-/ !-.-'
-<..1. -<+.1-9+.1/ -<9.'& -/&.'& -'<.<& -11./ +91.-9
!&'.'1<.1(.'1 !..(< 1.<< !&... !(.9( !../<
weekly returns 30.00 25.00 20.00 15.00 10.00 5.00 Week16 Week31 Week41 Week11 Week21 Week26 Week36 Week46 -5.00 -10.00 -15.00 -20.00
Return y Returns x
Fig 5 a
he above table and chart depicts the price and return of I6I6I and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the I6I6I and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een I6I6I stock and DI%T;.
Week51
Week6
Week1
0.00
%able Sho4ing *onthly Returns of ICICI &nd "ifty and Beta
6ompany month& month1 month. month9 month' month/ month< month+ monthmonth&( month&& month&1
Returns ( ) !(.<< !(.&9 !9.(+ (..' ..9/ '.<1.-. 1... ...(.1/ 1.(1.&.
Return
!(./+ (.9+ !9.' (.'+ ..&< 1.(& 1.+9 1.'' ..'. (.(& ..&1 !&.&9Beta (.<9 (.-+ (.9& (.-(.<1 (..( (.-( (.&& (.-. (.-!(./1 (.+-
Monthly returns
8 6 4 2 0 -2 -4 -6
Fig 5 b
Returns of x Returns of y 1 3 5 7 9 11
The above table and chart depicts the price and return of I6I6I and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the I6I6I and nifty. In the /th month there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een I6I6I stock and DI%T;.
Beta 1.20 1.00 0.80 0.60 0.40 0.20 0.00 -0.20 -0.40 -0.60 -0.80 1 2 3 4 5 6 7 8 9 10 11 12 13 Beta
Fig 5 c
The above chars sho"s the changes in monthly beta values of I6I6I , "here in month of &&th, the beta value is !(./1 "hich is negative. #o there "as lo" risk compared to other months and can be e pected high returns.
%able Sho4ing 6eekly &verage Price and Returns 1f 0#FC and "ifty
8eekly ?rice "eek & "eek 1 "eek . "eek 9 "eek ' "eek / "eek < "eek + "eek "eek &( "eek && "eek &1 "eek &. "eek &9 "eek &' "eek &/ "eek &< "eek &+ "eek &"eek 1( "eek 1&
DI%T; ?rices &.91.9+ &1+'.-. &1<1./' &.(1.9/ &.&9.-. &.//.1. &1<&.<< &&<<.1&&'..-. &&11.9' &(...+< &(<-.&. &(--.-9 &&-1..&&'+./1 &(<&.1+ &&'<.1' &1&<.< &1/'.+< &.((..+ &1<<.9< Returns of S (.91 !1.1!(.1( (.&9 9.-< !(.+/ !<.1& !'.9& !&... !&1./& !(.1< 1.++ +.9< '.-' !-.+& !(../ -.1+ 9.-1 '..< &.<9 !1.'9 ?rices &.9&.(. &1<-.+. &1<1.&. &.(1.+1 &.1<.+9 &./9.'9 &1.'.+. &&/<.(< &&/&..&(+-.+&(.+..1 &(-1.++ &&&9.19 &1((.1 &&.&.'. &(<<.++ &&</./' &11+.(+ &1<..+ &1-+.-1 &1+&.-.
E2%6 Return of ; !-/.'9 !9.1& !&.(. 1..9 (.-/ ..-( !/.-& !<.9. !&.-+ !1.<. !<.+9..+ &.-. +.9& !1.+. !<.'9 +.(1 '.11 ..-/ 1.<. !&.</
8eekly ?rice "eek 11 "eek 1. "eek 19 "eek 1' "eek 1/ "eek 1< "eek 1+ "eek 1"eek .( "eek .& "eek .1 "eek .. "eek .9 "eek .' "eek ./ "eek .< "eek .+ "eek ."eek 9( "eek 9& "eek 91 "eek 9. "eek 99 "eek 9' "eek 9/ "eek 9<
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
E2%6 1.-9 &.'9 &.(' ..+1 '.'< !..'. /.(+ !9.9& (.9' 9.'1 &.(+ /.+. (.(9 !1.&!9.-< 1.'& ..&/ !(.'' !1.++ &.// 9.'( /.+. !(.'/ !9.<( !/.9/ !1.-<
8eekly ?rice "eek 9+ "eek 9"eek '(
DI%T; &'/9.(/ &'9' &''-./9 !1.&9.(9 !9./' &''1.&/ &'/1.-' &'9+.+
E2%6 1.+< !&.11 (.-'
Weekly returns
15.00 10.00 5.00 0.00 1 -5.00 -10.00 -15.00 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 return of x weekly return of y weekly
Fig 7 a
The above table and chart depicts the price and return of E2%6 and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the E2%6 and nifty. In the&/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock
price. This may be because of lo" correlation bet"een E2%6 stock and DI%T;. %able Sho4ing *onthly Returns of ICICI &nd "ifty and Beta
,onthly ,onth & ,onth1 ,onth. ,onth9 ,onth' ,onth/ ,onth< ,onth+ ,onth,onth&( ,onth&& ,onth&1
,onthly of (S) !(./1 !1..< !1.(/ !(.(& 9.-+ (.-9 1.-(.9& !(.(+ (.'/ &.'' !&..<
,onthly of (
!(./< !1.'+ !&.'. !(.1( 9.+& &.(' 1.<. (.-( !(.9. (.'' &../ !&..& (.-(.-9 (.+' (.-9 (.-(.-(.-+ (.-+ (.-(.-/ (.-/ (.-(Beta
monthly returns
10.00 5.00 0.00 -5.00 1 3 5 7 9 11 mont ly of x mont ly of y
Fig 7 b
The above table and chart depicts the price and return of E2%6 and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the E2%6 and nifty. In the 'th month there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een E2%6 stock and DI%T;.
!eta 1.05 1.00 0.95 0.90 0.85 0.80 0.75 1 2 3 4 5 6 7 8 9 10 11 12 !eta
Fig 7 C
The above chart depicts the changes in the monthly beta values of E2%6, "here in the month of .rd, the beta value is (.+'. #o there "as lo" risk compared to other months of the year.
%able Sho4ing 6eekly &verage prices and returns of the &ndhra Bank and "ifty
8eekly ?rice "eek & "eek 1 "eek . "eek 9 "eek ' "eek / "eek < "eek + "eek "eek &( "eek && "eek &1 "eek &. "eek &9 "eek &' "eek &/ "eek &< "eek &+ "eek &"eek 1(
DI%T; ?rices +'.&. +..&< +&./+(.&' +'.'/ +9.'/ <9.91 <1./<&../ /1.<< '-.1/1.-/ /&.9' /&.&< '-.+1 '-.<' /<../ </.< +(./1 +..'< Returns of S '.91 !../!1.1 (.+1 '.1+ !1.<' !&..&..+ !..-1 !&1.<. !1.&< './. !1./& !&... !1.&9 1../ &9.'+ &&./9 9.&./'
)D2ER) B)DC ?rices +'.-' +1.<+ +(.-/ +&./1 +'.-. +..'< <&.-' <1.-9 <(.(+ /&.&/ '-.+. /..1 /&.'' /(.<. '-.9. /(.+. /-.< <<.+& +&./1 +1.-< Return of ; ..(/ !../!1.1 (.+1 '.1+ !1.<' !&..&..+ !..-1 !&1.<. !1.&< './. !1./& !&... !1.&9 1../ &9.'+ &&./9 9.&./'
8eekly ?rice "eek 1& "eek 11 "eek 1. "eek 19 "eek 1' "eek 1/ "eek 1< "eek 1+ "eek 1"eek .( "eek .& "eek .1 "eek .. "eek .9 "eek .' "eek ./ "eek .< "eek .+ "eek ."eek 9( "eek 9& "eek 91 "eek 9. "eek 99 "eek 9'
DI%T; +'.1+<.<+9.-1 +-.</ +-.&+ -../& -..(& -..'' -&.+< -1.'' -..(& -..99 -&.+ -(.++ -(.+< <9.-< +'.'. +/.'. +/.-9 +/.-< +-.< +/.& ++.<. +/.<1 +&... ..+. &./. !1.(/ 9.9 (.1+ 9.<1 !&..1 (... !(.-& (.9< (.1(./+ !1.&9 !(.+9 !(.&9 !&(.9< '.91 &.// (.1/ (.(' 1./ !..'../ !9.'& !'.</
)D2ER) B)DC +/.&' +<.'' +'.<' +-.'1 +-.<< -9.(& -1.<< -..(+ -1.1. -1.// -1.-. -..'/ -&.'/ -(.<-(.// +&.&< +'.'< +/.-+<.11 +<.1/ +-.'. +/..1 +-.9. +'.9 +(.9+ ..+. &./. !1.(/ 9.9 (.1+ 9.<1 !&..1 (... !(.-& (.9< (.1(./+ !1.&9 !(.+9 !(.&9 !&(.9< '.91 &.// (.1/ (.(' 1./ !..'../ !9.'& !'.</
8eekly ?rice "eek 9/ "eek 9< "eek 9+ "eek 9"eek '(
DI%T; <+.1</..9 <<.91 </.<+ <<.+9 !1.-9 !1.+. 1.9& !(.<. (.&/
)D2ER) B)DC <+.&& <'.<<.<. <<.&/ <<.1+ !1.-9 !1.+. 1.9& !(.<. (.&/
weekly returns
40 30 20 10 0 -10 -20 -30 -40 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 returns of y returns of x
Fig 8 a
The above table and chart depicts the price and return of )ndhra bank and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the )ndhra bank and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact
on stock price. This may be because of lo" correlation bet"een )ndhra bank stock and DI%T;. %able Sho4ing *onthly Returns of ICICI &nd "ifty and Beta
,onthly of S (.(!1.' !... !(.-. +.&&.-' & (.&. !..9 &.+' !&.'. !(.<-
,onthly of ; !(.' !1.' !... !(.-. +.&&.-' & (.&. !..9 &.+' !1.(' !(.1
Beta (.-+ & & & & & & & & & & &
monthly returns
20 15 10 5 0 -5 -10
Fig 8 b
mont ly of y mont y of x 1 2 3 4 5 6 7 8 9 10 11 12
The above table and chart depicts the price and return of )ndhra bank and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the )ndhra bank and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een )ndhra Bank stock and Difty
!eta 1.005 1 0.995 0.99 0.985 0.98 0.975 0.97 1 2 3 4 5 6 7 8 9 10 11 12 !eta
Fig 8 c
The above chart sho"s the change in the monthly beta value of vi5aya bank "here in month of 9th the beta value is (.99 is lo" compare to other of year
%able Sho4ing 6eekly &verage prices and returns of the &ndhra Bank and "ifty
8eekly ?rice "eek & "eek 1 "eek . "eek 9 "eek ' "eek / "eek < "eek + "eek "eek &( "eek && "eek &1 "eek &. "eek &9 "eek &' "eek &/ "eek &< "eek &+ "eek &"eek 1(
DI%T; ?rices '9.+ '..(. '1.11 '..(1 '..+'(.&< .'.1& &+.1< +.<.-.&.+.-1 9(.&& .+.(. .+.+1 ./.++ .9.+< 9(.-. 9..9. 99.-1 99.9. Returns of S 9./+ !..1. !&.'. &.'. &./9 !/.!1-.+1 !9+.&& !'&.+.9'.+' !(./..(/ !'.&1.(+ !' !'.9' &<..+ /.&& ..9. !&.(-
FI
B)DC ?rices ''.(' '1.+& '1.& '..-& '..(9 9-./' ...+1 &<.-& +.9< .+.<& .-.'& .-./& .+...+.99 ./.(< ./.1< 9&..9..++ 99.+< 99.19 Return of ; &.1!9.(< !&..9 ..9< !&./& !/..!.&.++ !9<.(9 !'1.<& .'<.(1 1.(< (.1' !..(+ (.&. !/.&< (.'' &9.&1 /.(1 1.1/ !&.98eekly ?rice "eek 1& "eek 11 "eek 1. "eek 19 "eek 1' "eek 1/ "eek 1< "eek 1+ "eek 1"eek .( "eek .& "eek .1 "eek .. "eek .9 "eek .' "eek ./ "eek .< "eek .+ "eek ."eek 9( "eek 9& "eek 91 "eek 9. "eek 99 "eek 9'
DI%T; 99.'/ 9<.1+ 9+.1' '&.</ '&.&+ '/.(+ '/.9+ '/.. ''.(+ '<..1 '..+& '...& '1.9' '1../ '&.+& 9/.+1 9/.+ 9<.1+ 9+.&& 9+../ 9-.&/ 9+.+9 9-.&9 9+.9< 9'.-1 (.1/.& 1.(' <.1< !&.&1 -.'< (.<& !(..1 !1.&< 9.(< !/.&1 !(.-. !&./& !(.&< !&.(' !-./. !(.(9 &.(. &.</ (.'1 &./' !(./' (./& !&../ !'.1/
FI
B)DC 9'.&& 9<.'1 9-.&9 '&.9 '&.++ '/.<1 '/... '/.&9 ''..'<.&/ '..&. '..1' '1.'/ '1.&/ '&.'+ 9/.1< 9/.9. 9<.9. 9+..< 9+.' 9-.(< 9-.(. 9-./+ 9<..' 9'.1. &.-< '..9 ..9& 9./ (.-. -... !(./!(..9 !&..9 ..1 !<.(' (.1. !&.. !(.</ !&.&& !&(.1(..' 1.&' &.-+ (.1< &.&+ !(.(+ &... !9./!9.9+8eekly ?rice "eek 9/ "eek 9< "eek 9+ "eek 9"eek '(
DI%T; 9..&. .-.-9 .-.+< 9(.<& 91.9& !/.(+ !<.9 !(.&+ 1.&& 9.&+
FI
B)DC 91.+< .-.'& .-.<< 9&.1/ 91.. !'.11 !<.+9 (.// ..<' 1.'1weekly price 150 100 50 0 1 6 11 16 21 26 31 36 41 46 "er#es2 "er#es1
%ig 9.a The above table and chart depicts the price and return of Fi5aya and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the vi5aya bank and nifty. In the 9/ "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een Fi5aya bank stock and DI%T;.
%able Sho4ing *onthly Returns and Beta
,onthly of S (../ !1(.+( <9.(+ !.../.9/ ..-. 1.1& !&.1!..&1 (.+& !&... !(.1/
,onthly of ; !(.&/ !1&.<. !1&.<. </.// !1.&9 '.1' ..+. 1..& !&.19 !...< &.&1 !1./&
Beta (.<+ &.(( &.(( (.99 (.-(.-1 (.-/ (.-< &.(( (.+. (.+1 (.-<
monthily returns
100.00 80.00 60.00 40.00 20.00 0.00 -20.00 -40.00
mont ly of x mont ly of y 1 3 5 7 9 11
Fig 9 b
The above table and chart depicts the price and return of vi5aya bank and D#B DI%T; during the period 1((/!(<. By looking at the chart it can be observed that there e ists randomness in the returns of the vi5aya bank and nifty. In the 9th "eek there is a sudden surge in the returns of market, ho"ever, there is a very little impact on stock price. This may be because of lo" correlation bet"een vi5aya Bank stock and Difty
!eta 1.20 1.00 0.80 0.60 0.40 0.20 0.00 1 2 3 4 5 6 7 8 9 10 11 12
!eta
Fig 9 c
The above chart sho"s the change in the monthly beta value of vi5aya bank "here in month of 9th the beta value is (.99 is lo" compare to other of year
,onthly beta of private and public sector bank
I6I6I 0.74 0.98 0.41 0.99 0.72 0.30 0.90 0.11 0.93 0.99 -0.62 0.89 E2%6 0.99 0.94 0.85 0.94 0.99 0.99 0.98 0.98 0.99 0.96 0.96 0.90 )D2ER) B)DC 0.98 1 1 1 1 1 1 1 1 1 1 1 FI
B)DC 0.78 1.00 1.00 0.44 0.99 0.92 0.96 0.97 1.00 0.83 0.82 0.97monthly beta
1.50 1.00 0.50 0.00 -0.50 -1.00
Fig .
#$#$# %f$ an% ra !ank 1 3 5 7 9 11 &#'aya !ank
%rom the above table "e can see that beta values of public sector bank and private sector banks in public sector bank there is lo" beta value for Fi5aya "ere has high beta value for the andhra bank so the investment in public sector bank may yeild to lo" returns to the investors compare to the private sector because in private sector bank the both the banks sho"ing less beta value so the investor can e pect high returns
yearly beta
1.2 1 0.8 0.6 0.4 0.2 0 -0.2 -0.4
"er#es1
#$#$#
%f$
an% ra !ank
Fig :
&#'aya !ank
I6I6I 0.89
E2%6 0.99
)D2ER) B)DC 1
FI
B)DC -0.255+ Co,$&%/-o,
&. 2uring the period 1((/!(<, there "as high correlation bet"een
Difty and I6I6I, E2%6, )ndhra Bank, Fi5aya Bank 1. 2uring this period, all the selected banks Retunes and D#B
Difty returns are moving in same track. .. 2uring this period, there is more volatility in Returns of #tock
and ,arket. 9. 2uring the /th month, the Returns of I6I6I
is 1.(& "hereas the Returns of Difty ( ) is '.<-, there is sudden surge. '. 2uring the .rd month, the Returns of Fi5aya Bank
is <9.(+"here as Difty ( ) is 1&.<. only, there "as sudden fall in market.
6+ Me'hodo&o (
6urrent 6lose G ?revious 6lose Returns W ?revious 6lose &((
Beta 8here,
W
D X y ! X Xy DX
1
G (X ) 1
D W Do. of 8eeks, ,onths and ;ears S W ,arket Returns (D#B Difty) ; W #tock Returns (I6I6I, E2%6, )ndhra Bank, Fi5aya Bank)
7+ B-8&-o ra3h(
&. #ecurity )nalysis H ?ortfolio ,anagement by ?R)#)DD) 6E)D2R). 1. #ecurity )nalysis H ?ortfolio ,anagement by %I#EBR 2.B. H :AR2)D .. Investment )nalysis by F.C.B)33). 9. Investment )nalysis by F.).)F)2E)DI.
;isited 6ebsites)
""".hseindia.org """.investopedia.com """.beindia.com """.nseindia.com
""".economictimes.com """.nil.com """.capitalamount.com """.delalstreet.com """.moneycontrol.com """.mediantolinc.com """.sebi.gov.in
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