Risk and Return Proj

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ACKNOWLEDGEMENTS

First and foremost, I praise and thank God Almighty from the depth of my heart, which

has been the source of strength in the completion of this project work.

It is my profound concern to thank the principal, Fr. Josekutty P.D, M. COM, Kristu

Jayanti College who paved the path for offering me this opportunity and avenues of infinite

possibilities of knowledge.

I further express my deep sense of gratitude to Prof. A.M.Tatti MBA, coordinator of

MBA department, Kristu Jayanti College for his constant encouragement and valuable help.

I wish to extend my sincere and profound thanks to prof.Arun Kumar, MBA dean Kristu

Jayanti college for the help extend towards me during the period of dissertation work.

And I am deeply indebted to Prof. Aloysius Edward, Kristu Jayanti College, for his

guidance, assistance and for giving all the formal support to conduct this study and for

completing this project work.

I am also thankful to the librarian, Kristu Jayanti College for their encouragement and

valuable help.

I take this opportunity to acknowledge indebt ness to Mr. Liju Varghese Thomas,

Mathew Abraham, Jino Thomas and Tony Chacko for their earnest support and co-

operation in the course of my study.

I am also thankful to my parents and friends for their encouragement and support

Finally I would like to express my sincere gratitude to all those who spend their valuable

time for providing necessary data for this organizational study.

Abhilash p.j



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EXECUTIVE SUMMARY

To day the avenues for investment are abundant like bank deposits, property insurance,

shares etc. but taking an investment decision would be more critical. Analysis the risk associated

with every investment option and evaluate the return out of that investment become very crucial

.since the globalization and the privatization move of the Indian economy during the last decades

of the 20 th century pumped billions of foreign capital into the Indian economy as in the form of

FDI and FII that could be one reason to drive the Indian economy into newer heights .Indian

stock market also part of this unparallel growth. The confidence of primary and secondary

market investors also increased several fold, these changing scenario encourage people to invest

more in shares and bond who earlier park their saving as fixed deposits and other type of investment like property ,gold etc,

The topic ‘risk and return analyses relevant in this circumstance .i have been

selected five sectors which have an important role in propelling Indian growth engine. The

sectors are banking, pharmaceutical, automobile, information technology, automobile and oil and

gas sector. These entire five sectors have a different perspective in terms of profit making,

growth, employment generation etc. the companies come under study are HDFC Bank, ICICI

bank, SBI, Dr.reddy’s lab, Ranbaxy, sun pharma, BPCL, ONGC, Reliance, Infosys ,TCS, Wipro,

M&M, Tata motors, Maruti Udyog ltd etc.

The stock price where taken from the S&P CNX Nifty .the stock price for the

month of January, February and march 2007 .for calculating beta and standard deviation

mathematical formula being used .the beta and standard deviation helps to find out total risk and

systematic risk

The main objectives are to calculating the beta and variance to help the investors to arrive at a

decision of invest in the shares which offer maximum return with minimum risk and also to gain

knowledge of the stock market .the findings and suggestion certainly would be help the

investors.



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TABLE OF CONTENTS

CHAPTER

NO

CONTENT PAGE

NO

1 INTRODUCTION 6-17

2 RESEARCH DESIGN 18-23

3 PROFILE OF THE INDUSTRIES 24-45

4 DATA ANALYSIS AND INTERPRETATION 46-105

5

FINDINGS,CONCLUSIONS AND

RECOMMENDATIONS 106-109

BIBLIOGRAPHY 110



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NO LIST OF TABLES PAGE

4.1 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -JANUARY 56

4.2 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -FEBRUARY 57

4.3 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC MARCH 58

4.4 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI JANUARY 60

4.5 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI FEBRUARY 61

4.6 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI MARCH 62

4.7 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI JANUARY 64

4.8 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -FEBRUARY 65

4.9 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -MARCH 66

4.1 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –JANUARY 684.11 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –FEBRUARY 70

4.12 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS –MARCH 71

4.13 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY –JANUARY 72

4.14 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY-FEBRUARY 73

4.16 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY -MARCH 75

4.17 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-JANUARY 76

4.18 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-FEBRUARY 77

4.19 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-MARCH 79

4.2 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -JANUARY 80

4.21 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -FEBRUARY 81

4.22 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL-MARCH 82

4.23 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC -JANUARY 84

4.24 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC –FEBRUARY 86

4.25 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC –MARCH 87

4.26 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –JANUARY 90

4.27 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –FEBRUARY 91

4.28 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE –MARCH 92

4.28 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –JANUARY 94

4.29 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –FEBRUARY 95

4.3 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS –MARCH 96

4.31 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS –JANUARY 98

4.32 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS –FEBRUARY 99

4.33 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS-MARCH 100

4.34 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –JANUARY 102

4.35 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –FEBRUARY 103

4.36 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO –MARCH 104

4.37 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –JANUARY 106

4.38 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –FEBRUARY 107

4.39 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M –MARCH 1084.4 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –JANUARY 110

4.41 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –FEBRUARY 111

4.42 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI –MARCH 112

4.43 TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORS-JANUARY 113

4.44 TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORSFEBRUARY 114

4.45 TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TATAMOTORS-MARCH 115



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NO LIST OF GRAPH PAGE NO

4.1 STOCK RETURN V/S MARKET RETURN OF HDFC –JANUARY 56

4.2 STOCK RETURN V/S MARKET RETURN OF HDFC –FEBRUARY 57

4.3 STOCK RETURN V/S MARKET RETURN OF HDFC -MARCH 59

4.4 STOCK RETURN V/S MARKET RETURN OF ICICI –JANUARY 60

4.5 STOCK RETURN V/S MARKET RETURN OF ICICI –FEBRUARY 61

4.6 STOCK RETURN V/S MARKET RETURN OF ICICI -MARCH 62

4.7 STOCK RETURN V/S MARKET RETURN OF SBI - JANUARY 64

4.8 STOCK RETURN V/S MARKET RETURN OF SBI -FEBRUARY 65

4.9 STOCK RETURN V/S MARKET RETURN OF SBI –MARCH 664.10 STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –JANUARY 67

4.11 STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –FEBRUARY 69

4.12 STOCK RETURN V/S MARKET RETURN OF DR.REDDYS –MARCH 70

4.13 STOCK RETURN V/S MARKET RETURN OF RANBAXY –JANUARY 71

4.14 STOCK RETURN V/S MARKET RETURN OF RANBAXY-FEBRUARY 72

4.16 STOCK RETURN V/S MARKET RETURN OF RANBAXY –MARCH 74

4.17 STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-JANUARY 75

4.18 STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-FEBRUARY 76

4.19 STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-MARCH 78

4.20 STOCK RETURN V/S MARKET RETURN OF BPCL –JANUARY 79

4.21 STOCK RETURN V/S MARKET RETURN OF BPCL –FEBRUARY 81

4.22 STOCK RETURN V/S MARKET RETURN OF BPCL- MARCH 90

4.23 STOCK RETURN V/S MARKET RETURN OF ONGC –JANUARY 914.24 STOCK RETURN V/S MARKET RETURN OF ONGC –FEBRUARY 92

4.25 STOCK RETURN V/S MARKET RETURN OF ONGC –MARCH 93

4.26 STOCK RETURN V/S MARKET RETURN OF RELIANCE –JANUARY 95

4.27 STOCK RETURN V/S MARKET RETURN OF RELIANCE –FEBRUARY 96

4.28 STOCK RETURN V/S MARKET RETURN OF RELIANCE –MARCH 97

4.28 STOCK RETURN V/S MARKET RETURN OF INFOSYS –JANUARY 98

4.29 STOCK RETURN V/S MARKET RETURN OF INFOSYS –FEBRUARY 100

4.30 STOCK RETURN V/S MARKET RETURN OF INFOSYS –MARCH 101

4.31 STOCK RETURN V/S MARKET RETURN OF TCS –JANUARY 102

4.32 STOCK RETURN V/S MARKET RETURN OF TCS –FEBRUARY 103

4.33 STOCK RETURN V/S MARKET RETURN OF TCS-MARCH 105

4.34 STOCK RETURN V/S MARKET RETURN OF WIPRO –JANUARY 106

4.35 STOCK RETURN V/S MARKET RETURN OF WIPRO –FEBRUARY 1074.36 STOCK RETURN V/S MARKET RETURN OF WIPRO-MARCH 108

4.37 STOCK RETURN V/S MARKET RETURN OF M&M –JANUARY 109

4.38 STOCK RETURN V/S MARKET RETURN OF M&M –FEBRUARY 110

4.39 STOCK RETURN V/S MARKET RETURN OF M&M –MARCH 111

4.40 STOCK RETURN V/S MARKET RETURN OF MARUTI –JANUARY 112

4.41 STOCK RETURN V/S MARKET RETURN OF MARUTI –FEBRUARY 115

4.42 STOCK RETURN V/S MARKET RETURN OF MARUTI –MARCH 116

4.43 STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-JANUARY 117

4.44 STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-FEBRUARY 118

4.45 STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-MARCH 120



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CHAPTER: I INTRODUCTION TO THE RESERCH TOPIC

1.1 INTRODUCTION

Before 1990’s the main area of investment were bank deposits, gold, property and such

other forms of tangible assets but for the past few years we had been witnessing a lot of

investment opportunities coming up in the form of primary and secondary market since the

globalization which had its inception during 90’s foreign capital flowing to India .new

multinational entered the market and a lot of investment opportunities were opened to the people

who kept their saving in bank and other kind of fixed assets .The topic analysis of risk and return in the banking, pharmaceutical, IT, oil & gas and

automobile had been selected because a lot of investors are making investment in the shares of

different companies. The investors have to be aware of the risk involved in making the

investment .so the investors have to calculate the variance and the beta value to know the present

condition of the Company to know whether there is any risk in investing in the particular

company and does the company offer good returns.

The companies which I have been selected for research having different growth strategies

and difference in revenue, profitability and market capitalization.

Currently (2007), overall, banking in India is considered as fairly mature in terms of

supply, product range and reach-even though reach in rural India still remains a challenge for the

private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian

banks are considered to have clean, strong and transparent balance sheets-as compared to other

banks in comparable economies in its region. The Reserve Bank of India is an autonomous body,

with minimal pressure from the government.

The Indian pharmaceutical is one of the fast growing sector not only in India but also the whole

world There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other

country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications

(ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields

notwithstanding, generics are still a large part of the picture. London research company Global



7

Insight estimates that India’s share of the global generics market will have risen from 4% to 35%

in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of

formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the

bulk drugs were exported, mostly to the United States and Russia. Most of the players in the

market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian

market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down

from 70% thirty years ago.

Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and

gas industry is among the largest contributors to the central and state exchequers in India. Its

share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a

capacity to process 148.97 million tones per year as of December 2006, are run by state-run

companies.

Economic Survey 2006-07 says:

During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from

127.42 million tones in the previous year. During April-December 2006, the throughput was

107.42 million tones.

The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a

staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000.

No other Indian industry has performed so well against the global competition. Today, India

exports software and services to nearly 95 countries around the world. The share of North

America (U.S. & Canada) in India’s software exports is about 61 per cent. In 1999-2000, more

than a third of Fortune 500 companies outsourced their software requirements to India

The Indian automotive industry has flourished like never before in the recent years.

This extra-ordinary growth that the Indian automotive industry has witnessed is a result of a two

major factors namely, the improvement in the living standards of the middle class, and an

increase in their disposable incomes.

The data collected is mainly secondary in nature and no questionnaire has been

formulated for the research .the data(that is the stock price and S&P CNX Nifty index)has been



8

collected from various websites and has been analyzed and interpreted in order to find out the

spread of return with the help of standard deviation and beta.

1.2 SUBJECT BACKGROUND OF THE RESEARCH TOPIC

A company ,which has a high intrinsic worth ,is not necessarily the best stock to buy .it

may have no growth prospects or it may be overpriced .similarly a company that performs well

during any one year may not be the best to buy .on the contrary ,a company which has been

badly for sometime might have turn the corner and it may be the best to buy ,as its shares may be

under prices and it has good prospects of growth hence an analysis of risk or return guides an

investor in proper profitable investment .

1.2.1 RETURNReturn is the primary motivating force that drives investment .it represents the reward for

undertaking investment .since the game of investing is about returns, measurement of realized

return is necessary to assess how well the investment manager has done. In addition historical

return is often used as an important input on estimating future return.

THE COMPONENT OF RETURN

The return of an investment consist of two component

Current return the component that often comes to mind when one is thinking about return is the

periodic cash flow such as dividend or interest generated by the investment .current return is

measured as the periodic income in relation to the beginning price of the investment.

Capital return the second component of return is reflected in the price change called the capital

return .it is simply the price appreciation (or depreciation) divided by the beginning price of the

assets.

Thus total return =current return + capital return

1.2.2 RISK

Risk refers to the possibility tat the actual outcome of an investment will differ from its expected

outcome .more specifically, most investors are concerned about the actual outcome being less

than the expected outcome .the wider the range of possible outcomes the greater the risk.



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DIFFERENT TYPE OF RISK

Forces that contribute to variance in return-price or dividend-constitute the element of risk .some

influence are external to the organization can not be controlled other influence are internal to the

organization that are controllable to a large extent .in an investment decision those factors which

is uncontrollable is called systematic risk .on the other hand those factors are controllable and

internal to the organization are called unsystematic risk these are the two broad categories of risk

.

SYSTEMATIC RISK.

MARKET RISK

This is the most familiar of all risks. Also referred to as volatility, market risk is the the

day-to-day fluctuations in a stock's price. Market risk applies mainly to stocks and options. As a

whole, stocks tend to perform well during a bull market and poorly during a bear market -

volatility is not so much a cause but an effect of certain market forces. Volatility is a measure of

risk because it refers to the behavior, or "temperament", of your investment rather than the

reason for this behavior. Because market movement is the reason why people can make money

from stocks, volatility is essential for returns, and the more unstable the investment the more

chance there is that it will experience a dramatic change in either direction.

Market risk is caused by investors reaction to the tangible as well as intangible events

.expectation of lower corporate profile in general may cause the larger body of common stocks tofall in price .investors are expressing their judgment that too much is being paid for earning in

the light of anticipated events .the basis for the reaction is a set of real, tangible, events –

political, social or economic.



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INTEREST RATE RISK –

Interest rate risk is the risk that an investment's value will change as a result of a change

in interest rates. This risk affects the value of bonds more directly than stocks. the root cause of

interest rate risk lies in the fact that ,if the RBI increase or decrease the interest rate (repo rate )

the interest on government securities rise or fall ,the rate of return demanded on alternative

investment vehicle ,such as stocks and bonds issued in the private sector ,rise or fall .in other

words as the cost of money changes for nearly risk free securities, the cost of money to more risk

prone issues will also change.

INFLATION RISK (PURCHASING POWER RISK)

The loss of purchasing power due to the effects of inflation. When inflation is present, the

currency loses its value due to the rising price level in the economy. The higher the inflation

rate, the faster the money loses its value.

LIQUIDITY RISK

The uncertainty associated with the ability to sell an asset on short notice without loss of value.

A highly liquid asset can be sold for fair value on short notice. This is because there are many

interested buyers and sellers in the market. An illiquid asset is hard to sell because there there

few interested buyers. This type of risk is important in some project investment decisions but is

discussed extensively in Investment courses.

FOREIGN EXCHANGE RISKS

Uncertainty that is associated with potential changes in the foreign exchange value of a currency.

There are two major types: translation risk and transaction risks.

TRANSLATION RISKS

Uncertainty associated with the translation of foreign currency denominated accounting

statements into the home currency. This risk is extensively discussed in Multinational Financial

Management courses.



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TRANSACTIONS RISKS

Uncertainty associated with the home currency values of transactions that may be affected by

changes in foreign currency values. This risk is extensively discussed in the Multinational

Financial Management courses.

UNSYSTEMATIC RISK

Unsystematic risk are those risk which is firm specific or peculiar to a firm or industry the

different type of unsystematic risk are discussing below.

BUSINESS RISK

The uncertainty associated with a business firm's operating environment and reflected in the

variability of earnings before interest and taxes (EBIT). Since this earnings measure has not had

financing expenses removed, it reflects the risk associated with business operations rather than

methods of debt financing. This risk is often discussed in General Business Management

courses.

Business risk can be divided into two board categories: external and internal .internal business

risk is largely associated with the efficiency with which a firm conduct its operation within the

border operating environment imposed upon it .each firm has it s on internal risk, and the degree

to which it is successful in coping with them is reflected in operating efficiency.

FINANCIAL RISK

The uncertainty brought about by the choice of a firm’s financing methods and reflected in the

variability of earnings before taxes (EBT), a measure of earnings that has been adjusted for and

is influenced by the cost of debt financing. This risk is often discussed within the context of the

Capital Structure topics.

By Engaging in debt financing the firm changes the characteristics of the earning stream

available to the common stock holders, specifically ,the reliance in debt financing ,called

financial leverage ,has at least three important effect on common stock holders .1)increase the

variability of their return 2)effect their expectation concerning to the return 3)increase the risk of

being ruined .



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1.2.3 INVESTMENT

Investment is the employment of the fund with aim of achieving additional growth in

value .an investment is a sacrifice of current money or other resources for future benefits .it is the

allocation of monetary resources to assets that are expected to yield gain or positive return over a

given periods of time .it involves the commitment of resources which have saved or put away

from current consumption in the hope that some benefits will acure in future.

The three key aspects of any investment are time capital gain and risk the sacrifice takes

place now and is certain .the benefits are expected in the future and tend to be uncertain.

Risk: investment is considered to involve limited risk and is confined to those avenues where the

principle is safe. No investments are completely risk free

Capital gain: If purchase of securities is preceded by proper investigation and analysis and

review to receive a stable return over a period of time it is termed as investment.

Time: A longer time, fund allocation is termed as investment. The investor constantly evaluates

the work of a security. There has to be a constant review of securities to find out whether it is a

suitable investment. The investment is an attempt to carefully plan, evaluate and allocate funds in

various investments which offer safety of principal, moderate and continuous return and long

term commitment.

1.2.4 INVESTMENT DECISION

In stock market parlance investment decision refers to making a decision regarding the buy

and sell orders. As we know economic analysis or factors play in any investment decision which

is made for making a gain and better returns. Economic analysis and forecasting company

performance and of returns is necessary for making investment.

Any investment is risky and such investment decision is difficult to make. It is based on

availability of money and information on economy industry and company, share prices are ruled

by expectation of the market and the market sentiments.

As we know these decisions are influenced by availability of money and flow of information.

What to buy and sell also depends on the fair value of shares and the extent of over valuation and

under valuation. For making such a decision the common investors have to depend more up on a

study of fundamental rather than technical, although technical are also important



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1.2.5 PRIMARY AND SECONDARY CAPITAL MARKET

Primary market is the market for issue of new securities .it therefore essentially consists of

the companies issuing securities, he public subscribing to these securities, he regulatory agencies

like SEBI and the government, merchant bankers and bank who underwrite the issues and help in

collecting subscription money from the public.

Secondary Market refers to a market where securities are traded after being initially offered

to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading

is done in the secondary market. Secondary market comprises of equity markets and the debt

markets.

For the general investor, the secondary market provides an efficient platform for trading of

his securities. For the management of the company, Secondary equity markets serve as a

monitoring and control conduit—by facilitating value-enhancing control activities, enabling

implementation of incentive-based management contracts, and aggregating information (via

price discovery) that guides management decisions.

1.2.6 STOCK MARKET

Stock market is place where the stocks or shares are purchased and sold .stock exchange is

an organized market where securities are traded .these securities are issued by the government,

semi-government, public sector undertakings and companies for borrowing funds and raising

resources. securities are defined as any monetary claims and includes stock ,shares, debentures

,bonds etc .if these securities are marketable as in the case of government stocks; they are

transferable by endorsement and are like moveable property .they are tradable on the stock

exchange .

Exchanges are located all over the world with the most famous one being the New York

stock exchange. The NYSE annually traded almost 14 trillion dollars worth of capital .thousands

of stocks are listed on this exchange. when you buy a stock you will need to learn which

exchanges list it other than locating quote in the news paper with online trading and the

automation of order system ,there is very little reason to determine where the stock trades from

the customers viewpoint.



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There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE),

which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years,

there has been a rapid change in the Indian securities market, especially in the secondary market.

Advanced technology and online-based transactions have modernized the stock exchanges. In

terms of the number of companies listed and total market capitalization, the Indian equity market

is considered large relative to the country’s stage of economic development. The number of

listed companies increased from 5,968 in March 1990 to about 20,000 by May 2006 and market

capitalization has grown almost 11 times during the same period. The debt market, however, is

almost nonexistent

1.2.7 BOMBAY STOCK EXCHANGE LIMITED (BSE)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.

Popularly known as "BSE", it was established as "The Native Share & Stock Brokers

Association" in 1875. It is the first stock exchange in the country to obtain permanent

recognition in 1956 from the Government of India under the Securities Contracts (Regulation)

Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital

market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an

Association of Persons (AOP), the Exchange is now a demutualised and corporatised entityincorporated under the provisions of the Companies Act, 1956, pursuant to the BSE

(Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange

Board of India (SEBI).With demutualization, the trading rights and ownership rights have been

de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The

Exchange is professionally managed under the overall direction of the Board of Directors. The

Board comprises eminent professionals, representatives of Trading Members and the Managing

Director of the Exchange. The Board is inclusive and is designed to benefit from the

participation of market intermediaries. In terms of organization structure, the Board formulates

larger policy issues and exercises over-all control. The committees constituted by the Board are

broad-based. The day-to-day operations of the Exchange are managed by the Managing Director

and a management team of professionals.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.

The systems and processes of the Exchange are designed to safeguard market integrity and



15

enhance transparency in operations. During the year 2004-2005, the trading volumes on the

Exchange showed robust growth. The Exchange provides an efficient and transparent market for

trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT)

is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and

clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

1.2.8 THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which recommended

promotion of a National Stock Exchange by financial institutions (FIs) to provide access to

investors from all across the country on an equal footing. Based on the recommendations, NSE

was promoted by leading Financial Institutions at the behest of the Government of India and was

incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the

country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,

1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment

in June 1994. The Capital Market (Equities) segment commenced operations in November 1994

and operations in Derivatives segment commenced in June 2000

It is the largest stock exchange in India and the third largest in the world in terms of

volume of transactions. NSE is mutually-owned by a set of leading financial institutions, banks,

insurance companies and other financial intermediaries in India but its ownership and

management operate as separate entities. As of 2006, the NSE VSAT terminals, 2799 in total,

cover more than 1500 cities across India. In March 2006, the NSE had a total market

capitalization of 4,380,774 crore INR making it the second-largest stock market in South Asia in

terms of market-capitalization.



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1.2.9 S&P CNX NIFTY

S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. Itis used for a variety of purposes such as benchmarking fund portfolios, index based derivatives

and index funds.S&P CNX Nifty is owned and managed by India Index Services and Products

Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized

company focused upon the index as a core product. IISL have a consulting and licensing

agreement with Standard & Poor's (S&P), who are world leaders in index services.

The average total traded value for the last six months of all Nifty stocks is approximately

45.24% of the traded value of all stocks on the NSE .Nifty stocks represent about 57.92% of the

total market capitalization as on April 10, 2007. Impact cost of the S&P CNX Nifty for a

portfolio size of Rs.5 million is 0.08% .P CNX Nifty is professionally maintained and is ideal for

derivatives trading

1.2.10 TYPES OF STOCKS

1. BLUE CHIP STOCKS

the term ‘blue chip’ comes from poker, where the blue chip carry the higest value

.large established firms with a long record of profit growth, dividend payout and a reputation

for quality management, products and service are referred to as blue chip companies. these

firms are generally leaders in their industries and are considered likely candidates for long

term growth .because blue chip companies are held in such high esteem, they often set the

standard by which other companies in their field are measured .well known blue chip

companies includes IBM, Coco-Cola, general electric and McDonald

2.

PENNY STOCKSPenny stocks are low priced speculative stock, that are very risky .companies with a short or

erratic history of revenues and earnings issue them .they are the lowest of the low in price

and many stock exchanges choose not trade them.

3. INCOME STOCKS

Income stocks are those stocks that pay higher than average dividend over a sustained period

.these above average dividend tends to be paid by large, established companies with stable



17

earnings. Income stocks are popular with investors who want steady income for a long time

and who do not need much growth in their stocks value .

4) VALUE STOCK

A value stock is a stock that is currently selling at a low price .companies that have good

earning and growth potential but whose stock price do not reflect this are considered value

companies .both the market and investors are largely ignoring their stocks. Investors who buy

value stocks believe that thes3e stocks are only temporarily out of favor and will soon

experience great growth .factors such as new management, a new product or operation that

are more efficient may make a value stock grow quickly.



18

CHAPTER 2: RESEARCH DESIGN

2.1 TITLE OF THE DISSERTATION

The title of the dissertation is “Analysis of risk and return in banking,pharmaceutical,

InfoTech, oil &gas and automobile sector”

2.2 STATEMENT OF THE PROBLEM

Security analysis is built around the idea that investors are concerned with two principal properties inherent in securities: the return that can be expected from holding a security, and risk

that the return that is achieved will be less than the return that was expected. The primary

purpose of this dissertation is to focus upon return and risk and how they are measured.

Investors want to maximize expected returns subjected to their tolerance for risk. Return is the

motivating force and the principle reward in the investment process and it is the key method

available to investors in comparing alternative investment. Measuring historical return allows

investors to assess how well have done, and it plays a part in the estimation of future unknown

returns.

Making the money only the half of the battle safeguarding the hard earned money is the top most

concern for many investors, simply investing some where and waiting for the blessings of the

goddess of luck doesn’t make any sense proper analysis of risk and the expected return is very

important to become an efficient investor. Keeping this point in mind dissertation titled ‘risk

and return analysis’ has been chosen to analyze fifteen different companies from five different

sectors namely automobile, InfoTech, Oil&gas, Pharma and Banking .The share price and

market price for three consecutive month starting from January 2007 to march 2007 ,were

selected for analysis

This study is conducted to find out how the expected return is calculated from an investment

and risk associated with that investment by measuring beta (β) and standard deviation. .



19

2.3 REVIEW OF LITERATURE

In the area of risk and return analysis two well known economist made effort to study the

relation between risk and return and they are the people who quantify the risk and return aspects

of an instrument .they are Harry markowitz and William Sharpe.

Very broadly the investment process consists of two tasks. The first task is security analysis

which focuses on assessing the risk and return characteristics of the available investment

alternatives. The second task is portfolio selection which involves choosing the best possible

portfolio from the set of feasible portfolio.

Portfolio theory, originally proposed by Harry markowitz in the 1950’s was the first formal

attempt to quantify the risk of portfolio and develop a methodology for determining the optimal

portfolio .prior to the development of portfolio theory ,investors dealt with the concept of return

and risk somewhat loosely .Harry markowitz was the first person to show quantitatively why and

how diversification reduce risk .in recognition of his seminal contribution in this field he was

awarded the Nobel prize in economics in 1990.

Harry markowitz developed an approach that helps the investors to achieve his optimal

portfolio position .in this contest William Sharpe and others try to find out an answer for a

question ,what is the relationship between risk and return and they developed capital asset

pricing theory .(CAPM)The CAPM, in essence, predicts the relationship between the risk of an asset and its expected

return .this relationship is very useful in two important ways .first, it produces a bench mark for

evaluating various instrument .second it helps us to make an informal guess about the return that

can be expected from an assets that has not yet been traded in the market.

De Bondt and Thayler study the price in relation to book value in a universe of all NYSE and

American Stock Exchange equity issue. It has explained the relation between the market price

and book value, with stock being assigned in quintiles from lowest price to book ratios. The

earning yields effect on stock return is significantly positive only in January for the sub period.

Piotroski investigates whether fundamental analysis can be used to provide abnormal returns,

and right shift the returns spectrum earned by a value investor. He focused on high book to



20

market securities, and show that the mean return earned by a high book to market investor can be

shifted to the right by at least 7.5% annually.

The authors developed portfolio based on four fundamental conditions namely: Single Value

P/E, Market Price <Book Value, established track recode on the shareholders return.

Barely and Myers supported Quality of earning as a key performance measure. It is based

on the following argument “the problem is that the earnings that firms report are book, or

accounting figures, and as such reflect a series of more or less arbitrary choices of accounting

methods. A switch in the depreciation method used for reporting purposes directly affects

earning per share. other accounting choices which affect reported earning are the valuation of

inventory, the procedures by which the account for two merging companies are combined the

choice between expensing and capitalizing. The total value of the companies existing stock is

equal to the discounted value of that portion of the total dividend stream which will be paid to

the stock outstanding today.

The net cash flow to share holders after paying for future investment is sometime s knows as

“company’s cash flow”.

This analysis is done at portfolio return on the excess returns for the market factors using CAPM.

2.4 SIGNIFICANCE OF THE STUDY

Indian security market moving to newer heights since from the last few years and the

investors also getting reasonable income, that some times more than expected but the next day

the price would be crumbling down like a glass house this is the picture of Indian stock market,

means market is highly volatile and is still in the hands of speculators and gamblers. In this

chaos where is the common investor who investing their hard earned money expecting a regular

income and security of his investment so here it’s come the importance of risk and return

analysis.

• Compare different investment option in terms of risk and return .the popular conception

is if the risk is high the return one can expect would be high and

vice versa.

• Risk and return analysis would help the investor to park his money in most appropriate

investment avenue. The investors are two type risk taker and risk averter. If some one



21

wants to invest highly volatile stock with the expectation of high return he can go for

that, another type of investor want regular income at the same time safety.

• Risk and return analysis would help the investors to properly diversify his portfolio of

securities. the measurement of beta will help the investor to quantify the systematic risk

and unsystematic risk associated with the a particular investment

• Investor can make portfolio revision at the right time with minimum cost by analyzing

the risk and return of securities. Portfolio revision is an inevitable part of an investment

decision.

• To make estimation on the amount of income one can expect from an investment is

possible by analyzing the historical return of a particular stock.

• To quantify the systematic (non-diversifiable )and unsystematic (diversifiable )risk

• Analysis the expected return from an investment option.

2.5 OBJECTIVES OF THE STUDY

• To analyze the risk and return of the companies.

• To measure actual return and expected returns with the help of standard

deviation and beta

• To study the volatility of companies in comparison with the market.

• To guide the investors of various investment opportunities

• To find out the risk less companies to invest in using beta values.

2.6 SCOPE OF THE STUDY

In the national stock exchange (NSE)there are 1185 companies are listed so far out of

this fifty companies are very important ,which form the S&P CNX Nifty index .From this fifty

companies fifteen companies have been selected were chosen five different sectors ,the

companies chosen

BANKING SECTOR-SBI, ICICI BANK, HDFC BANK

PHARMACEUTICAL SECTOR-SUN PHARMA, DR.REDDY’S LAB, RANBAXY

OIL&GAS SECTOR-ONGC, BPCL, RELIANCE



22

INFOTECH –WIPRO, INFOSYS, TCS

AUTOMOBILE SECTORE –TATA MOTORS,MAHINDRA &MAHINDRA,MARUTI

UDYOG LTD

2.7 METHODOLOGY

The following measures were used to analyze the data collected;

MS excel is used in order to calculate standard deviation and beta as well as to draw charts.

The other kinds of formulae used are

Computation of standard deviation

Rate of return = (closing stock-opening stock)/ (opening stock)*100

Standard deviation calculated as per the excel formulae

Variance= square of the standard deviation

Computation of beta:

Stock price(Y) = (closing-opening)/ (opening)*100 (of stock price)

Market return(X) = (closing-opening)/ (opening)*100 (of index price)

BETA (β) = (N*(∑X*Y) – (∑X*∑Y))/ (N*(∑ X^2)-(∑X) ^2)

2.8 SOURCES OF DATA

The data’s which is collected from various secondary sources like internet,

journals and other publications .the stock price and market index were collected from the

national stock exchange official website(www.nse_india.com) apart from that data have been

taken from different company websites .



23

2.8 LIMITATIONS OF THE STUDY

• The area of study is limited to few sectors of group a stock.

• The study is limited to data of the last three months only.

• Risk can not be measured accurately as the market condition is always

fluctuating and uncertain.

• The study is mainly based on secondary data and no field work is done

because of time constraint.

• To analyze the risk and return only standard deviation and beta is used and no

other statistical tools are used

2.9 CHAPTER SCHEME

This dissertation consists of five chapters, each chapter deals with different aspects of this

project. The first chapter contains the introduction to the dissertation and the theoretical

background of the problem. In this chapter gives an idea about different type of return and risk

apart from that brief about Indian stock exchanges like BSE and NSE.

The second chapter deals with the way in which the study has been conducted. the

important topics of this chapter is statement of the problem ,significance of this study ,scope,

methodology and limitation of the study etc.

The third chapter would give an idea of the current Indian economy and the industry have

been selected and also about the companies come under study. It’s been mentioned the

importance of each sector to the Indian economy as well.

The fourth chapter deals with the data analysis and interpretation section, here data’s been

analyzed by using mathematical formula to find out the expected return, beta and standard

deviation.

The final and fifth chapter consists of finding derived from this study, conclusion and the

recommendations to the investors.



24

CHAPTER: 3 PROFILES

3.1 THE INDIAN ECONOMY –AN OVERVIEW

Economics experts and various studies conducted across the globe envisage India and

china to rule the world in the 21st century. For over a century the United States has been the

largest economy in the world but major developments have taken place in the world economy

since then, leading to the shift of focus from the us and the rich countries of Europe to the two

Asian giants- India and China. The rich countries of Europe have seen the greatest decline in

global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of

about 1 percentage points each. Within Asia, the rising share of China and India has more than

made up the declining global share of Japan since 1990.

During the seventies and the eighties, ASEAN countries and during the eighties South

Korea, along with China and India, contributed to the rising share of Asia in world GDP. US

and the rich countries of Europe to the two Asian giants- India and China. According to some

experts, the share of the US in world GDP is expected to fall (from 21per cent to 18 per cent) and

that of India to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as

the third pole in the global economy after the US and China. By 2025 the Indian economy is

projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar

economy will be complete by 2035, with the Indian economy only a little smaller than the US

economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth

driver than the six largest countries in the EU, though its impact will be a little over half that of

the US. India, which is now the fourth largest economy in terms of purchasing power parity, will

overtake Japan and become third major economic power within 10 years.

INDIA - A GROWING ECONOMY

In a robust demonstration of the nascent strength, the Indian economy, after growing at

8.5% and 9.5% in the two previous year is projected to grow at 11% in the current year 2007-

08.growth of gross domestic product (GDP) at constant prices in excess of 8.0%has been

achieved by the economy in only five years of recorded history, and two out of these five are in



25

the last three years Growth in the Indian economy has steadily increased since 1979, averaging

5.7% per year in the 23-year growth record. In fact, the Indian economy has posted an excellent

average GDP growth of 6.8% since 1994 (the period when India's external crisis was brought

under control). However, in comparison to many East Asian economies, having growth rates

above 7%, the Indian growth experience lags behind. The tenth five-year plan aims at achieving

a growth rate of 8% for the coming 2-3 years. Though, the growth rate for 2004-05 is less than

that of 2003-04, it is still among the high growth Rates seen in India since independence. Many

factors are behind this robust performance of the Indian economy in 2004-05. High growth rates

in Industry & service sector and a benign world economic environment provided a backdrop

conducive to the Indian economy. Another positive feature was that the growth was accompanied

by continued maintenance of relative stability of prices. However, agriculture fell sharply from

its 2003-04 level of 9 % to 1.1% in the current year primarily because of a bad monsoon. Thus,

there is a paramount need to move Indian agriculture beyond its centuries old dependency on

monsoon. This can be achieved by bringing more area under irrigation and by better water

management.



26

3.2 INDUSTRY PROFILE

3.2.1 BANKING SECTOR

Banking in India originated in the first decade of 18th century with The General Bank of

India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks

are now defunct. The oldest bank in existence in India is the State Bank of India being

established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign

banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time,

Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due

to which banking activity took roots there and prospered. The first fully Indian owned bank wasthe Allahabad Bank, which was established in 1865.

By the 1900s, the market expanded with the establishment of banks such as Punjab National

Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded

under private ownership. The Reserve Bank of India formally took on the responsibility of

regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve

Bank was nationalized and given broader powers.

In the early 1990s the then Narasimha Rao government embarked on a policy of

liberalization and gave licenses to a small number of private banks, which came to be known as

New Generation tech-savvy banks, which included banks such as UTI Bank (the first of such

new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the

rapid growth in the economy of India, kick started the banking sector in India, which has seen

rapid growth with strong contribution from all the three sectors of banks, namely, government

banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights

which could exceed the present cap of 10%,at present it has gone up to 49% with some

restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time,

were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The

new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.



27

All this led to the retail boom in India. People not just demanded more from their banks but also

received more.

Currently (2007), overall, banking in India is considered as fairly mature in terms of

supply, product range and reach-even though reach in rural India still remains a challenge for the

private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian

banks are considered to have clean, strong and transparent balance sheets-as compared to other

banks in comparable economies in its region. The Reserve Bank of India is an autonomous body,

with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee

is to manage volatility-without any stated exchange rate-and this has mostly been true. With the

growth in the Indian economy expected to be strong for quite some time-especially in its services

sector, the demand for banking services-especially retail banking, mortgages and investment

services are expected to be strong. M&As, takeovers, asset sales and much more action will

happen on this front in India.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its

stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor

has been allowed to hold more than 5% in a private sector bank since the RBI announced norms

in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is

with the Government of India holding a stake), 29 private banks (these do not have government

stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They

have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by

ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the

banking industry, with the private and foreign banks



28

3.2.2 PHARMACEUTICAL INDUSTRY

The first Indian pharmaceutical company, Bengal Chemicals and Pharmaceutical Works,

which still exists today as one of 5 government-owned drug manufacturers, appeared in Calcutta

in 1930. For the next 60 years, most of the drugs in India were imported by multinationals either

in fully-formulated or bulk form. The government started to encourage the growth of drug

manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970, enabled

the industry to become what it is today. This patent act removed composition patents from food

and drugs, and though it kept process patents, these were shortened to a period of five to seven

years. The lack of patent protection made the Indian market undesirable to the multinational

companies that had dominated the market, and while they streamed out, Indian companies started

to take their places. They carved a niche in both the Indian and world markets with their

expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although

some of the larger companies have taken baby steps towards drug innovation, the industry as a

whole has been following this business model until the present.

There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other

country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications

(ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields

notwithstanding, generics are still a large part of the picture. London research company Global

Insight estimates that India’s share of the global generics market will have risen from 4% to 35%

in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of

formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the

bulk drugs were exported, mostly to the United States and Russia. Most of the players in the

market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian

market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down

from 70% thirty years ago.

Most pharma companies operating in India, even the multinationals, employ Indians almost

exclusively from the lowest ranks to high level management. Mirroring the social structure, firms

are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are

often a mix of public and private enterprise. Although many of these companies are publicly

owned, leadership passes from father to son and the founding family holds a majority share.

In terms of the global market, India currently holds a modest 3 % share, but it has been growing

at approximately 10% per year. India gained its foothold on the global scene with its



29

innovatively-engineered generic drugs and active pharmaceutical ingredients (API), and it is now

seeking to become a major player in outsourced clinical research and development

The important players in the Indian pharmaceutical sector are dr.reddy’s lab, sun pharma

,Ranbaxy, biocon ,cipla, Serum Institute of India ,Wockhardt, Aventis Pharma, Novo Nordisk

3.2.3 OIL&GAS INDUSTRY

Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and

gas industry is among the largest contributors to the central and state exchequers in India. Its

share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a

capacity to process 148.97 million tonnes per year as of December 2006, are run by state-run

companies.

Economic Survey 2006-07 says:

During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from

127.42 million tones in the previous year. During April-December 2006, the throughput was

107.42 million tones.

Crude oil production in 2006-07 up to December 2006 was 25.40 million tones, up 6.03

per cent from 24.03 million tones in the first nine months of 2005-06. Natural gas production up

to December 2006 at 23.53 billion cubic meters, however, was down 2.42 per cent from 24.10

billion cubic meters in the same period of the previous year. Thus, on the aggregate, oil and oil

equivalent of gas (O+OEG) production in 2006-07 up to December 2006, year-on-year,

increased by only about 1.85 per cent.

India ranks sixth in the world in terms of petroleum demand and by 2010, India is

projected to replace South Korea and emerge as the fourth-largest consumer of energy, after the

United States, China and Japan.

Since India is dependent on imports for nearly 70 per cent of its petroleum

requirements, energy security has become a prime Government concern. In recent years this has

taken the form of trying to get a stake in oil and gas fields from Myanmar to central Asia and

Africa. However, the major thrust still lies in searching for hydrocarbons in onshore and offshore

blocks in India. Recent finds are making oil majors take notice of the potential in prospective

basins. Besides, the cost effectiveness of refining in India is drawing global players here. While



30

on the one hand, international companies are looking for a share in the fast-growing refinery

sector, domestic oil companies are being invited by countries such as Yemen, Nigeria and Saudi

Arabia to pick up stake in existing refineries and also set up Greenfield units.

Growing energy demand of India and necessity to service that to ensure economic growth

is not compromised, presents business opportunities in the complete value chain of oil and gas

sector. Exploration for domestic production growth, development of discovered fields,

transportation of crude oil, gas and products, refining to service the petroleum product domestic

demand and exports, retailing infrastructure; prospective blocks to encourage all these sectors

provide business and investment opportunities.

The main players of Indian oil and gas sector are ONCE,HPCL,BPCL, Reliance energy

,cairn energy ,BP, British gas ,shell etc

3.2.4 INFOTECH INDUSTRY

The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a

staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000.

No other Indian industry has performed so well against the global competition. Today, India

exports software and services to nearly 95 countries around the world. The share of NorthAmerica (U.S. & Canada) in India’s software exports is about 61 per cent. In 1999-2000, more

than a third of Fortune 500 companies outsourced their software requirements to India

According to a NASSCOM-McKinsey report, annual revenue projections for India’s IT

industry in 2008 are US $ 87 billion and market openings are emerging across four broad sectors,

IT services, software products, IT enabled services, and e-businesses thus creating a number of

opportunities for Indian companies. In addition to the export market, all of these segments have a

domestic market component as well.

Today IT & ITES sector contribute over 7.5 % of the overall GDP growth of India and

its account for 35% of the total export from in India .in terms of employment generation this

sector alone giving 2.2 million jobs .The market capitalization of Indian IT companies come

around US $225 billion. Government of India (GOI) has taken a major step towards promoting

the domestic industry and achieving the full potential of the Indian IT entrepreneurs by forming a

new ministry for IT . Constraints have been comprehensively identified and steps taken to



31

overcome them and also to provide incentives. Thus for example, venture capital has been the

main source of finance for software industry around the world. However, majority of the

software units in India is in the small and medium enterprise sector and there is a critical

shortage of venture capital kind of support.

India’s most prized resource in today’s knowledge economy is its readily available

technical work force. India has the second largest English-speaking scientific professionals in

the world, second only to the U.S. It is estimated that India has over 4 million technical workers,

over 1,832 educational institutions and polytechnics, which train more than 67,785 computer

software professionals every year. Government of India is stepping up the number and quality of

training facilities in the country to capitalize on this extraordinary human resource.

3.2.5 AUTOMOBILE INDUSTRY

The Indian automotive industry has flourished like never before in the recent years. This

extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a two

major factors namely, the improvement in the living standards of the middle class, and an

increase in their disposable incomes.

Moreover, the liberalization steps, such as, relaxation of the foreign exchange and

equity regulations, reduction of tariffs on imports, and refining the banking policies, initiated by

the Government of India, have played an equally important role in bringing the Indian

Automotive industry to great heights. It is estimated that the sale of passenger cars have tripled

compared to their sale in the last five years. Thus, the sale of cars has reached a figure of 1

million users and is expected to increase further. It's also to be noted that the demand for

luxurious models, SUVs, and mini-cars for family owners, have shot up, largely due to increase

in the consumer's buying capacity.

The increased demand for Indian automobiles has resulted in a large number of multi-

national auto companies, especially from Japan, U. S. A., and Europe, entering the Indian marketand working in collaboration with the Indian firms. Also, the institutionalization of automobile

finance has further paved the way to sustain a long-term high growth for the industry.

A well developed transport network indicates a well developed economy. For rapid

development a well-developed and well-knit transportation system is essential. As India's

transport network is developing at a fast pace, Automobile Industry is growing too. Also, the

industry has strong backward and forward linkages and hence provides employment to a large



32

section of the population. Thus the role of Automobile Industry cannot be overlooked in Indian

Economy. All kinds of vehicles are produced by the Automobile Industry. It includes the

manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry

can be broadly divided into the Car manufacturing, two-wheeler manufacturing and heavy

vehicle manufacturing units.

The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private

Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd.,Hyundai

Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name a few. The

two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter

India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like buses, trucks, defense

vehicles, auto rickshaws and other multi-utility vehicles are manufactured by Tata-Telco, Ashok

Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.





34

HDFC BANK

HDFC is India's premier housing finance company and enjoys an impeccable track

record in India as well as in international markets. Since its inception in 1977, the Corporationhas maintained a consistent and healthy growth in its operations to remain the market leader in

mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has

developed significant expertise in retail mortgage loans to different market segments and also

has a large corporate client base for its housing related credit facilities. With its experience in the

financial markets, a strong market reputation, large shareholder base and unique consumer

franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

The Housing Development Finance Corporation Limited (HDFC) was amongst the

first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in

the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The

bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered

office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank

in January 1995.

The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up

capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and

about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American

Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional

Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The

Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository

Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".

Currently (2007), HDFC Bank has over 600 branches located in over 300 cities of India, and all

branches of the bank are linked on an online real-time basis. The bank offers many innovative

products & services to individuals, corporate, trusts, governments, partnerships, financial

institutions, currently (2007)



35

STATE BANK OF INDIA

State Bank of India (SBI) is the largest bank in India. It is also, measured by the number of

branch offices and employees, the largest bank in the world. Established in 1806 as Bank of

Bengal, it remains the oldest commercial bank in the Indian Subcontinent and also the most

successful one providing various domestic, international and NRI products and services, through

its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a

regional banking behemoth. The government nationalized the bank in 1955, with the Reserve

Bank of India taking a 60% ownership stake. In recent years the bank has focused on reducing its

huge staff through Golden handshake schemes and computerizing its operations.

The roots to the State Bank of India are traceable to the first decade of 19th century, when the

Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The

government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of

Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27 January 1921, and

named the reorganized banking entity the Imperial Bank of India. All these Presidency banks

were incorporated as joint stock companies, and were the result of the royal charters. The

Imperial Bank of India continued to remain a joint stock company. Until the establishment of a

central bank in India the Imperial Bank and its early predecessors served as the nation's central

bank printing currency.

State Bank of India has often acted as guarantor to the Indian Government, most notably during

Chandra Shekhar's tenure as Prime Minister of India. With more than 9400 branches and a

further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival

ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and

semi-urban branches under its Core Banking System (CBS), with over 4500 branches being

incorporated so far. The bank has the largest ATM network in the country having more than

5600 in number [1]. The State Bank of India has had steady growth over its history, though it

was marred by the Harshad Mehta scam in 1992.



36

DR. REDDY’S LABORATORIES

Dr. Reddy’s Laboratories was founded by Dr Anji Reddy, an entrepreneur-scientist, in

1984. The DNA of the company is drawn from its founder and his vision to establish India’s first

discovery led global pharmaceutical company. In fact, it is this spirit of entrepreneurship that hasshaped the company to become what it is today. Today, Dr. Reddy’s continues its journey.

Leveraging on its ‘Low Cost, High Intellect’ advantage. Foraying into new markets and new

businesses. Taking on new challenges and growing stronger and more capable. Each failure and

each success renewing the sense of purpose and helping the company evolve

Dr. Reddy’s Laboratories Limited, together with its subsidiaries, operates as a

pharmaceutical company worldwide. It focuses on formulations, active pharmaceutical

ingredients and intermediates, generic drugs, critical care products, biotechnology products,

custom pharmaceutical services, and drug discovery. The company conducts research in the

areas of cancer, cardiovascular disorders, bacterial infection, and metabolic disorders. It markets

its products in approximately 100 countries worldwide, including India, Russia, the United

Kingdom, The United States, Germany, Brazil, and South Africa. The company has an

agreement with ClinTec International for the development an anti-cancer compound, DRF 1042

for the treatment of various types of cancer.

RANBAXY LABORATORIES LIMITED

Ranbaxy Laboratories Limited, is an integrated, research based, international

pharmaceutical company, based in India , producing a wide range of quality, affordable generic

medicines, trusted by healthcare professionals and patients across geographies. It is ranked

amongst the top ten generic companies worldwide. The Company has world class manufacturing

facilities in 9 countries on ground presence in 49 countries and its products available in over 125

countries across the globe

Ranbaxy was incorporated in 1961 and went public in 1973. For the twelve months ended

December 31, 2006, the Company's Global Sales were at US $1340 Mn. Overseas markets

accounted for around 80% of global sales. The Company's largest market, USA with the sales of

US $ 380 Mn, , while Europe and BRICS (Brazil, Russia, India, China, South Africa) countries

contributed US $194 Mn and US $ 477 Mn to global sales.



37

Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative

offices across the globe with a presence in 23 of the Top 25 pharma markets of the world.

Ranbaxy has robust operations in USA, UK, France, Germany, Russia, India, Romania and

South Africa, and is strengthening its business in Japan, Italy, Spain and several other markets in

the Asia Pacific. While the Company is aggressively pursing its internationalization strategy it

has also gained market leadership in India, leveraging its strong brand building skills. A balanced

geographical presence coupled with a strong product flow from a wide therapeutic range serve as

the business building blocks of the Company.

Growth through acquisition is one of Ranbaxy’s stated strategies. The Company has successfully

concluded 15 acquisitions since 2004, including 8 in 2006 (4 in Europe, 1 in the US, 2 in India

and 1 in South Africa). Ranbaxy will continue to look at target acquisitions in US, Europe, Indiaand emerging markets based on value and synergies that can be unlocked from such transactions.

SUN PHARMA

Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were initially

limited to 2 states - West Bengal and Bihar. Sales were rolled out nationally in 1985. Products

that are used in cardiology were introduced in 1987, and Monotrate, one of the first products

launched at that time has since become one of our largest selling products. Important products inCardiology were then added; several of these were introduced for the first time in India.

Sun Pharma was listed on the main stock exchanges in India in 1994; and the Rs. 55 crore issue

of a Rs. 10 face value equity share at a premium of Rs. 140/- was oversubscribed 55 times. The

minimum 25% that was required under the regulations then for listing was offered to the public,

the owner family continues to hold a majority stake in Sun Pharma. They used this money to

build a Greenfield site for API manufacture, as well as for acquisitions. For the acquisitions, by

1997, our headquarters were shifted to Mumbai, the commercial capital of the country. We

began on the first of our international acquisitions with an initial $7.5 million investment in

Caraco Pharma Labs, Detroit. By 2000, they had completed 8 acquisitions, each such move

adding new therapy areas or offering an entry to important international markets. A new research

center was set up in Mumbai for generic product development for the US market. In India, as

new therapy areas were entered into post acquisition; customer attention, product selection and



38

focused marketing helped us gain a foothold in areas like orthopedics, gynecology, oncology,

etc. From a ranking at 38th

in 1994, by 2000 they were ranked 5th

with a leadership in 8 of the 11

therapy areas that we are present in. The year 2000 was the year of turnaround at the US

subsidiary, Caraco, as it began to receive approvals after successful inspection by the USFDA. In

December 2004, a research center spread over 16 acres was inaugurated by the President of

India, with special lab space for drug discovery and innovation. Typically companies or assets

that could be turned around and brought on track were identified.

ONGC

Since its inception, ONGC has been instrumental in transforming the country's limited

upstream sector into a large viable playing field, with its activities spread throughout India and

significantly in overseas territories. In the inland areas, ONGC not only found new resources in

Assam but also established new oil province in Cambay basin (Gujarat), while adding new

petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and

offshore).

ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay

High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge

oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over

5 billion tones of hydrocarbons, which were present in the country, were discovered. The mostimportant contribution of ONGC, however, is its self-reliance and development of core

competence in E&P activities at a globally competitive level.

Ranks 24th among Global Energy Companies by Market Capitalization in PFC

Energy 50 (December 2004). [ONGC was ranked 17th till March 2004, before the shares prices

dropped marginally for external reasons. ONGC placed at the top of all Indian Corporate listed

in Forbes 400 Global Corporate (rank 133rd) and Financial Times Global 500 (rank 326th), by

Market Capitalization. It recognized as the Most Valuable Indian Corporate, by Market

Capitalization, Net Worth and Net Profits, in current listings of Economic Times 500 (4th time in

a row), Business Today 500, Business Baron 500 and Business Week.

ONGC Has created the highest-ever Market Value-Added (MVA) of Rs. 24,258 Crore and

the fourth-highest Economic Value-Added (EVA) of Rs. 596 Crore, as assessed in the 5th

Business Today-Stern Stewart study (April 2003), ahead of private sector leaders like Reliance



39

and Infosys. ONGC is the only Public Sector Enterprise to achieve a positive MV A as well as

EVA.

RELIANCE ENERGY

Reliance Energy came into existence when it took over BSES in 2002 is a company

under the Reliance - Anil Dhirubhai Ambani Group [1] banner, one of India's largest

conglomerates. The company is headed by Anil Ambani.The company's corporate Headquarters

is situated in Sector 24,Noida. The company is the sole distributor of electricity to consumers in

the suburbs of Mumbai. It also runs power generation, transmission and distribution businesses

in other parts of Maharashtra, Goa and Andhra Pradesh. Reliance Energy plans to increase its

power generation capacity by adding 16,000 MW with investments of $13 billion. RelianceEnergy Ltd is India's leading integrated power utility company in the private sector. It has a

significant presence in generation, transmission and distribution of power in Maharashtra, Goa

and Andhra Pradesh.

With the ushering in of the power sector reforms and in the new environment of

opportunity for the power sector, REL is a key player in this transformation process. Reliance's

gas finds in KG-D6 block in Krishna Godavari basin which constitutes 60% of India's present

total gas production, will provide an enormous opportunity to scale up power generation

capacities in India. With the new gas find, REL has the unique advantage of integration from

'well head to wall socket'. This will help the company position itself as a global integrated energy

player under the Reliance banner.

REL and its affiliate power companies rank among the top 25 listed private sector

companies on major financial parameters. REL is part of the Reliance industries-India's private

sector company ranked among the world's 175 largest companies in terms of net profit and the

500 largest companies in terms of sales. REL is committed to creating superior value for all its

stakeholders and be amongst the most admired and trusted utility companies in the world by

setting new benchmarks in standards of corporate governance, operational and financial

excellence, responsible corporate citizenship and profitable growth.



40

BHARAT PETROLEUM CORPORATION LIMITED (BPCL)

Bharat Petroleum Corporation Limited (BPCL) is one of India's largest PSU companies. As the

name suggests its interests are in Petroleum sector. It is involved in the refining and retailing of petroleum products. The government of India formed the company by taken over Burma shell

group of companies in 24th January 1976. On 1st August 1977, it was renamed Bharat Petroleum

Corporation Limited. It was also the first refinery to process newly found indigenous crude

(Bombay High), in the country

BPCL has a number of refineries in India. The important three are Mumbai Refinery - 12 Million

Metric Tones (MMT) Capacity, Kochi Refinery - 7.5 MMT, Numaligarh Refinery - 3 MMT.

BPCL is a Fortune Global 500 company as per the ranking of 2006. It was ranked at position

368. BPCL had registered revenue of $ 17.613 billion in 2006 and has employee strength of

14,667

TATA CONSULTANCY SERVICES LIMITED (TCS LIMITED)

Tata Consultancy Services Limited (TCS Limited) is an information technology,

consulting, services and business-process outsourcing organization which commenced operations

in 1968. As of 2006, it is Asia's largest IT services firm with annualized revenues of over US $4

billion (estimated for FY 2006-07) and has the largest number of employees among all the Indian

IT companies with strength of over 87,000.For fiscal year 2005-06, it posted a net profit of Rs.

3,709.TCS is part of one of Asia's largest conglomerates and most respected groups, the Tata

Group, which has interests in areas such as energy, telecommunications, financial services,

chemicals, engineering and materials.

Tata Consultancy Services (TCS). Through its Global Network Delivery Model,

Innovation Network, and Solution Accelerators, TCS focuses on helping global organizations

address their business challenges effectively. TCS continues to invest in new technologies,

processes, and people which can help its customers succeed. From generating novel conceptsthrough TCS Innovation Labs and academic alliances, to drawing on the expertise of key

partners, it keeps clients operating at the very edge of technological possibility. Whether TCS is

envisioning a business advantage, engineering an IT solution, or executing an outsourcing

strategy, it helps its customers experience certainty in their every day business.



41

WIPRO TECHNOLOGIES

Wipro Technologies is an IT service company established in 1980 in India. It is a

subsidiary of Wipro Limited (incorporated 1946, in operation since 1945). It is headquartered in

Bangalore. It is the third largest IT services company in India. It has 68,000 employees as of Apr

2007, inclusive of its BPO arm which it acquired in 2002.[1]

Wipro Technologies has over 300 customers across USA, Europe and Japan including 50 of the

Fortune 500 companies. Some of its customers are Boeing, Cisco, Ericsson, IBM, Microsoft,

Prudential, Seagate, Sony, Sun Microsystems and Toshiba. It is listed on the New York Stock

Exchange and is part of its TMT (technology media telecom) index.

With revenue in the excess of US $3 billion, Wipro is one of India's major information

technology companies. Wipro has dedicated development centers and offices across India,

Europe, North America and Asia Pacific.

The current Chairman, Managing Director and majority stake owner is Azim Premji. From

inception, the software and hardware divisions have been headed by him

INFOSYS TECHNOLOGIES LIMITED

Infosys Technologies Limited is an information technology (IT) Services Company

founded in Pune, India in 1981 by N. R. Narayana Murthy and six of his colleagues. In 1983,

Infosys moved its headquarters to Bangalore, the capital of Karnataka. It operates nine

development centers in India and has over 30 offices worldwide. Annual revenues for fiscal year

2007 exceeded US$3.1 billion with a market capitalization of over US$30 billion. With over

72,000 employees worldwide, Infosys is one of India's largest IT companies.

In 1999 Infosys attained a SEI-CMM Level 5 ranking and became the first Indian company to be

listed on NASDAQ. In 2001 it was rated "Best Employer in India" by Business Today,[3] and in

2002 Business World named Infosys "India's Most Respected Company". Infosys won the

Global MAKE (Most Admired Knowledge Enterprises) award, for the years 2004 and 2003,

being the only Indian company to win this award



42

MAHINDRA&MAHINDRA

The Mahindra Group is a US $4 billion* conglomerate is a leading manufacturer of

multi-utility vehicles and tractors with significant presence in key sectors like infrastructure,

information technology and financial services. The Group completed 60 years in 2005. Set up in

1945 to make general-purpose utility vehicles, Mahindra & Mahindra first became known as the

maker of the iconic Jeep in India. The company branched out into manufacturing light

commercial vehicles and agricultural tractors. Mahindra & Mahindra rapidly grew from being a

maker of army vehicles and tractors to a major automobile manufacturer with a growing global

appetite. Now the Group has a leading presence in many other key sectors -- Trade and Financial

Services (Mahindra Intertrade, Mahindra & Mahindra Financial Services Limited), Mahindra

Systems and Automotive Technologies (Mahindra Engineering Services, Mahindra Ugine),

Information Technology (Tech Mahindra, Bristlecone), and Infrastructure Development

(Mahindra GESCO, Club Mahindra Holidays, Mahindra World City). Two Group companies

Mahindra Finance and Tech Mahindra made their debut on the bourses in 2006 in line with the

commitment that each of the business segments would have flagship companies that will be

listed.

The Group employs over 34,000 people and has eight state-of-the-art manufacturingfacilities in India. Mahindra & Mahindra has made strategic acquisitions of plants in China and

the United Kingdom, and has three assembly plants in the USA. Mahindra & Mahindra has

entered into partnerships with international companies like Renault SA, France, and International

Truck and Engine Corporation, USA.

Mahindra & Mahindra's products are being exported to the USA, Russia and several other

countries in Africa, Asia, Europe and Latin America. Its global subsidiaries include Mahindra

Europe Sal. Based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China)

Tractor Company Limited .Mahindra & Mahindra’s Automotive Sector makes a wide rage of

vehicles including MUVs, LCVs and three wheelers. Mahindra & Mahindra is the largest

manufacturer of MUVs, offering over 20 models including new generation multi-utility vehicles

like the Scorpio and the Bolero. The company is a market leader in the Utility Vehicle segment.



43

Mahindra & Mahindra is the fourth-largest tractor company in the world. It is also the

largest manufacturer of tractors in India with sustained market leadership of around 23 years. It

designs, develops, manufactures and markets tractors as well as farm implements. The Sector has

also found significant success in the international market. Mahindra (China) Tractor Company

Limited manufactures tractors for the growing Chinese market and is a hub for tractor exports to

the USA and other western nations. Mahindra & Mahindra has a 100% subsidiary, Mahindra

USA, where it assembles 14 products for the American market. 'Mahindra' tractor has come to be

recognized as a powerful symbol of productivity and performance. Farm Equipment Sector

received the coveted Deming Application Prize for manufacturing in 2003, for establishing Total

Quality Management in all operations. Mahindra & Mahindra Limited is the only tractor

company in the world to have achieved this honor.

Over the years, the Mahindras has transformed itself into a group that has a leadership

position in all the sectors it operates in and has a growing global footprint. Forbes has ranked the

Mahindra Group in its Top 200 list of the World’s Most Reputable Companies and in the Top 10

list of Most Reputable Indian companies.

TATA MOTORS LIMITED

Tata Motors Limited is India's largest automobile company, with revenues of Rs. 24,000

crores (USD 5.5 billion) in 2005-06. It is the leader by far in commercial vehicles in each

segment, and the second largest in the passenger vehicles market with winning products in the

compact, midsize car and utility vehicle segments. The company is the world's fifth largest

medium and heavy commercial vehicle manufacturer.

The company's 22,000 employees are guided by the vision to be best in the manner in which we

operate, best in the products we deliver, and best in our value system and ethics.Established in

1945, Tata Motors' presence indeed cuts across the length and breadth of India. Close to 4

million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's

manufacturing base is spread across Jamshedpur, Pune and Lucknow, supported by a nation-

wide dealership, sales, services and spare parts network comprising over 2,000 touch point.

Tata Motors, the first company from India's engineering sector to be listed in the New

York Stock Exchange (September 2004), has also emerged as a global automotive company. In



44

2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck

maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to

launch new products. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a

reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as

well. Hispano's presence is being expanded in other markets.

In 2006, it has formed a joint venture with the Brazil-based Marcopolo, a global

leader in body-building for buses and coaches, to manufacture and assemble fully-built buses and

coaches. Tata Motors and the Fiat Group have recently signed a memorandum of understanding

to establish an industrial joint venture in India to manufacture passenger With 1,400 engineers

and scientists, the company's Engineering Research Centre, established in 1966, has enabled

pioneering technologies and products. The company today has R&D centers in Pune,

Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK.

The pace of new product development has quickened. In 2005, Tata Motors created a new

segment by launching the Tata Ace, India's first indigenously developed mini-truck. The years to

come will see the introduction of several other innovative vehicles, all rooted in emerging

customer needs. Besides product development, R&D is also focusing on environment-friendly

technologies in emissions and alternative fuels.

Through its subsidiaries, the company is engaged in engineering and automotive solutions,

construction equipment manufacturing, auto finance, automotive vehicle components

manufacturing and supply chain activities, machine tools and factory automation solutions, high-

precision tooling and plastic and electronic components for automotive and computer

applications, and automotive retailing and service operations.

True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate

Social Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in

community and social initiatives on human rights, labour and environment standards in

compliance with the principles of the Global Compact. Simultaneously, it also plays an active

role in community development, serving rural communities adjacent to its manufacturing

locations.

With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.



45

MARUTI UDYOG LTD

Maruti Udyog Ltd is one of India's leading automobile manufacturers and the market

leader in the car segment, both in terms of volume of vehicles sold and revenue earned. 18.28%

of the company is owned by the government, and 54.2% by Suzuki of Japan. The Indian

government held an Initial Public Offering of 25 % of shares in June 2003

Maruti Udyog Limited (MUL) was established in February 1981, though the actual

production commenced in 1983. Through 2004, Maruti has produced over 5 Million vehicles.

Maruti are sold in India and various several other countries, depending up on export orders. Cars

similar to Maruti (but not manufactured by Maruti Udyog) are sold by Suzuki in Pakistan and

other South Asian countries.

The company annually exports more than 30,000 cars and has an extremely large

domestic market in India selling over five hundred thousand cars annually. Maruti 800, till 2004,

was the India's largest selling compact car ever since it was launched in 1983. More than a

million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales

charts. Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is

commonly used to refer to this compact car model. Till recently the term "Maruti", in popular

Indian culture, was associated to the Maruti 800 model.



46

CHAPTER IV DATA ANALYSIS AND INTERPRETATION

4.1 BANKING SECTOR

4.1.1 HDFC BANK

STOCK PRICE SENSEX PRICESTOCK RETURN

MARKETRETURN

DATE OPEN CLOSE OPEN CLOSE Y X X*Y X^2

2-Jan-07 1,079.80 1,070.00 3966.25 4007.4 -0.90758 1.037504 -0.94161 1.076414

3-Jan-07 1,068.00 1,065.30 4007.7 4024.05 -0.25281 0.407965 -0.10314 0.166435

4-Jan-07 1,056.00 1,050.05 4027.3 3988.8 -0.56345 -0.95598 0.538641 0.913889

5-Jan-07 1,054.70 1,056.90 3990.15 3983.4 0.20859 -0.16917 -0.03529 0.028617

8-Jan-07 1,054.00 1,024.95 3983.3 3933.4 -2.75617 -1.25273 3.452733 1.569333

9-Jan-07 1,032.00 1,013.90 3933.3 3911.4 -1.75388 -0.55678 0.976531 0.310009

10-Jan-07 1,018.45 998.65 3910.95 3850.3 -1.94413 -1.55077 3.014908 2.4049

11-Jan-07 1,008.50 996.15 3852.15 3942.25 -1.22459 2.338954 -2.86426 5.470704

12-Jan-07 1,018.30 1,061.60 3944.55 4052.45 4.252185 2.73542 11.63151 7.482521

15-Jan-07 1,079.95 1,094.00 4052.85 4078.4 1.300986 0.630421 0.820168 0.3974316-Jan-07 1,104.00 1,096.10 4090.7 4080.5 -0.71558 -0.24935 0.178427 0.062173

17-Jan-07 1,099.00 1,061.15 4084.9 4076.45 -3.44404 -0.20686 0.712432 0.042791

18-Jan-07 1,065.00 1,061.05 4075.2 4109.05 -0.37089 0.830634 -0.30808 0.689953

19-Jan-07 1,052.00 1,068.40 4126 4090.15 1.558935 -0.86888 -1.35453 0.754953

22-Jan-07 1,070.00 1,056.30 4089.6 4102.45 -1.28037 0.314212 -0.40231 0.098729

23-Jan-07 1,055.00 1,032.90 4102.65 4066.1 -2.09479 -0.89089 1.86622 0.793681

24-Jan-07 1,040.00 1,058.45 4066.6 4089.9 1.774038 0.57296 1.016453 0.328283

25-Jan-07 1,061.05 1,066.10 4092.05 4147.7 0.475944 1.359954 0.647261 1.849475

29-Jan-07 1,070.00 1,062.40 4148.4 4124.45 -0.71028 -0.57733 0.410067 0.333311

31-Jan-07 1,066.00 1,078.60 4123.85 4082.7 1.181989 -0.99785 -1.17945 0.995712

SUM -7.2659 1.9514 18.077 25.76932

BETA 0.708544 S D 1.7856 VAR 3.1883

TABLE 1

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

GRAPH 1

Y=STOCK RETURN, X =MARKET RETURN

STOCK & MARKET RETURNS COMPARISION

-4 -3 -2 -1 0 1 2 3 4 5

1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30

DATE

RETURN

Y X



47

Standard deviation (total risk associated with stock) is 1.79 where as the beta value is

0.71.it shows that diversification of this stock would help the investor to eliminate considerable

part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility

of the price of the stock in comparison with market returns. The above graph revels that the

average stock return is well above the market return.

STOCK PRICE SENSEX PRICE

STOCK

RETURN

MARKET

RETURN

DATE OPEN DATE OPEN CLOSE Y X X*Y X^2

1-Feb-07 1,080.05 1,103.95 4083.4 4137.2 2.212861 1.31753 2.915509 1.735884

2-Feb-07 1,109.50 1,106.10 4140.2 4183.5 -0.30644 1.045843 -0.32049 1.093788

5-Feb-07 1,086.25 1,103.35 4193.15 4215.35 1.574223 0.529435 0.833449 0.280301

6-Feb-07 1,110.70 1,089.30 4216.55 4195.9 -1.92671 -0.48974 0.943582 0.239842

7-Feb-07 1,085.00 1,101.95 4198.2 4224.25 1.562212 0.620504 0.969359 0.385025

8-Feb-07 1,109.90 1,109.80 4232 4223.4 -0.00901 -0.20321 0.001831 0.041296

9-Feb-07 1,088.25 1,113.80 4223.5 4187.4 2.347806 -0.85474 -2.00677 0.73058312-Feb-07 1,095.55 1,096.05 4187.2 4058.3 0.045639 -3.07843 -0.1405 9.476728

13-Feb-07 1,090.00 1,068.70 4069.1 4044.55 -1.95413 -0.60333 1.178979 0.364004

14-Feb-07 1,048.25 1,017.25 4044.9 4047.1 -2.95731 0.054389 -0.16085 0.002958

15-Feb-07 1,025.00 1,041.80 4046.8 4146.2 1.639024 2.456262 4.025873 6.033222

19-Feb-07 1,049.00 1,033.25 4149.25 4164.55 -1.50143 0.368741 -0.55364 0.13597

20-Feb-07 1,039.25 1,031.60 4164.85 4106.95 -0.73611 -1.39021 1.023342 1.932673

21-Feb-07 1,030.00 1,016.00 4107.15 4096.2 -1.35922 -0.26661 0.36238 0.07108

22-Feb-07 1,018.00 987.3 4096.65 4040 -3.01572 -1.38284 4.170246 1.912239

23-Feb-07 979.5 958.2 4046 3938.95 -2.17458 -2.64582 5.753551 7.00038

26-Feb-07 977.7 951.75 3939.1 3942 -2.65419 0.073621 -0.1954 0.00542

27-Feb-07 955 975.9 3948.05 3893.9 2.188482 -1.37156 -3.00164 1.881186

28-Feb-07 906 935 3893.4 3745.3 3.200883 -3.80387 -12.1758 14.46945SUM -3.82372 -9.62403 36.79962 92.62204

BETA 0.39731 SD 2.029832 VAR 4.120217

TABLE 2


STOCK AND MARKET RETURNS COMPARISION

-5

-4

-3

-2

-1

0

1

2

3

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X



48



part of risk associated with this stock. There is a huge difference between systematic and

unsystematic risk here virtually no systematic risk associated with this stock when we camper it

with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the

stock in comparison with market returns. The above graph revels that the average stock return is

well above the market return.


STOCK

RETURN

MARKET

RETURN


1-Mar-07 960 980.3 3745.4 3811.2 2.114583 1.756822 3.714946 3.0864222-Mar-07 980 937.6 3811.65 3726.75 -4.32653 -2.22738 9.636836 4.96123

5-Mar-07 921.65 928.05 3726.5 3576.5 0.694407 -4.02522 -2.79514 16.20243

6-Mar-07 929 927.95 3577.15 3655.65 -0.11302 2.194484 -0.24803 4.815762

7-Mar-07 956 915.55 3661.55 3626.85 -4.23117 -0.94769 4.009822 0.898109

8-Mar-07 919 974.15 3627.25 3761.65 6.001088 3.705286 22.23575 13.72915

9-Mar-07 983 976.9 3761.85 3718 -0.62055 -1.16565 0.723343 1.35874

12-Mar-07 976.9 950.05 3717.45 3734.6 -2.74849 0.461338 -1.26798 0.212833

13-Mar-07 960 960.15 3735.25 3770.55 0.015625 0.945051 0.014766 0.893121

14-Mar-07 926.2 932.95 3768.4 3641.1 0.728784 -3.37809 -2.4619 11.4115

15-Mar-07 965 918.4 3644.9 3643.6 -4.82902 -0.03567 0.172233 0.001272

16-Mar-07 935 903.5 3639.35 3608.55 -3.36898 -0.8463 2.851188 0.716232

19-Mar-07 910 924.65 3611.3 3678.9 1.60989 1.871902 3.013557 3.50401720-Mar-07 935 955.25 3680.35 3697.6 2.165775 0.468705 1.015111 0.219685

21-Mar-07 958 965.6 3697.7 3764.55 0.793319 1.807881 1.434227 3.268432

22-Mar-07 989 1,025.90 3764.5 3875.9 3.731041 2.959224 11.04099 8.757009

23-Mar-07 1,030.00 1,011.15 3876.75 3861.05 -1.8301 -0.40498 0.74115 0.164008

26-Mar-07 1,018.00 973.2 3863.45 3819.95 -4.40079 -1.12594 4.955006 1.267733

28-Mar-07 973 958.45 3818.75 3761.1 -1.49538 -1.50966 2.257502 2.279062

29-Mar-07 952 933.75 3759.15 3798.1 -1.91702 1.036138 -1.98629 1.073583

30-Mar-07 946 954.15 3788.85 3821.55 0.861522 0.863059 0.743544 0.74487

SUM -11.165 2.403314 -26.833 5.775917

BETA

0.77031

SD 2.881033 VARIANCE 8.300353

TABLE 3





50

4.1.2 ICICI BANK


STOCK

R

MARKETR


2-Jan-07 892 897.45 3966.25 4007.4 0.610987 1.037504 0.633901 1.076414

3-Jan-07 909.75 894.55 4007.7 4024.05 -1.67079 0.407965 -0.68162 0.1664354-Jan-07 895 890.5 4027.3 3988.8 -0.50279 -0.95598 0.480658 0.913889

5-Jan-07 890 910.1 3990.15 3983.4 2.258427 -0.16917 -0.38205 0.028617

8-Jan-07 917 906.3 3983.3 3933.4 -1.16685 -1.25273 1.461746 1.569333

9-Jan-07 905.2 912.35 3933.3 3911.4 0.789881 -0.55678 -0.43979 0.310009

10-Jan-07 909.95 883.85 3910.95 3850.3 -2.86829 -1.55077 4.448069 2.4049

11-Jan-07 890 892.35 3852.15 3942.25 0.264045 2.338954 0.617589 5.470704

12-Jan-07 915 972.3 3944.55 4052.45 6.262295 2.73542 17.13001 7.482521

15-Jan-07 977.8 957.85 4052.85 4078.4 -2.04029 0.630421 -1.28624 0.39743

16-Jan-07 964.85 960.05 4090.7 4080.5 -0.49749 -0.24935 0.124046 0.062173

17-Jan-07 960 986.85 4084.9 4076.45 2.796875 -0.20686 -0.57856 0.042791

18-Jan-07 986.85 971.25 4075.2 4109.05 -1.58079 0.830634 -1.31306 0.689953

19-Jan-07 971.25 985.4 4126 4090.15 1.456885 -0.86888 -1.26586 0.75495322-Jan-07 994.4 977.2 4089.6 4102.45 -1.72969 0.314212 -0.54349 0.098729

23-Jan-07 975 964.3 4102.65 4066.1 -1.09744 -0.89089 0.977692 0.793681

24-Jan-07 999 974.55 4066.6 4089.9 -2.44745 0.57296 -1.40229 0.328283

25-Jan-07 988 991.45 4092.05 4147.7 0.34919 1.359954 0.474883 1.849475

29-Jan-07 991.45 955.95 4148.4 4124.45 -3.58061 -0.57733 2.0672 0.333311

31-Jan-07 970 941.1 4123.85 4082.7 -2.97938 -0.99785 2.972988 0.995712

sum -7.37327 1.951434 -14.3884 3.808093

BETA .94665 SD 2.7466 variance 7.5443sa

TABLE 4


STOCK AND MARKET RETURN COMPARISION

-6

-4

-2

0

2

4

6

8

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N

Y

X

GRAPH 4



51

Standard deviation (total risk associated with stock) is 2.746 where as the betavalue is 0.95.it shows that diversification of this stock would help the investor to eliminateconsiderable part of risk associated with this stock. Here the beta is less than 1 it shows that thelow volatility of the price of the stock in comparison with market returns. The above graph revels

that the average stock return is well above the market return.


STOCK

R MARKET


1-Feb-07 951 952.55 4083.4 4137.2 0.162986 1.31753 0.214739 1.735884

2-Feb-07 959.9 944.9 4140.2 4183.5 -1.56266 1.045843 -1.6343 1.093788

5-Feb-07 959.65 946.8 4193.15 4215.35 -1.33903 0.529435 -0.70893 0.280301

6-Feb-07 949.85 957.9 4216.55 4195.9 0.847502 -0.48974 -0.41505 0.239842

7-Feb-07 961 983.15 4198.2 4224.25 2.304891 0.620504 1.430194 0.385025

8-Feb-07 988 999.7 4232 4223.4 1.184211 -0.20321 -0.24065 0.041296

9-Feb-07 999 996.15 4223.5 4187.4 -0.28529 -0.85474 0.243845 0.730583

12-Feb-07 990.1 966.15 4187.2 4058.3 -2.41895 -3.07843 7.44656 9.476728

13-Feb-07 960 955.9 4069.1 4044.55 -0.42708 -0.60333 0.257671 0.364004

14-Feb-07 932.35 914.4 4044.9 4047.1 -1.92524 0.054389 -0.10471 0.002958

15-Feb-07 920 949.6 4046.8 4146.2 3.217391 2.456262 7.902755 6.033222

19-Feb-07 952.4 980.2 4149.25 4164.55 2.918942 0.368741 1.076334 0.13597

20-Feb-07 985 969.45 4164.85 4106.95 -1.57868 -1.39021 2.194691 1.932673

21-Feb-07 987 969.3 4107.15 4096.2 -1.79331 -0.26661 0.478112 0.07108

22-Feb-07 974 946.2 4096.65 4040 -2.85421 -1.38284 3.946907 1.912239

23-Feb-07 954.8 907 4046 3938.95 -5.00628 -2.64582 13.24574 7.00038

26-Feb-07 913.8 904 3939.1 3942 -1.07244 0.073621 -0.07895 0.00542

27-Feb-07 904 875.8 3948.05 3893.9 -3.11947 -1.37156 4.278549 1.881186

28-Feb-07 849.8 829.5 3893.4 3745.3 -2.3888 -3.80387 9.086682 14.46945

SUM -15.1355 -9.62403 145.6648 92.62204

BETA 1.57268 SD 2.15814 variance 4.657567

TABLE 5



-6

-4

-2

0

2

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T

U R N S

Y

X

GRAPH 5



52

Standard deviation (total risk associated with stock) is 2.16 where as the beta value is 1.57

.the beta values greater than 1 it shows that this stock is more risky and volatile than the index.

the systematic risk here is well above the standard risk associated with any stock so an investor

should be careful while investing this stock. the average stock return and market return shows a

decreasing trend and also decrease in stock return well above the market return .


STOCK

RETURN

MARKET

RETURN

DATE OPENCLOSE OPEN CLOSE Y X X*Y X^2

1-Mar-07 840 855.35 3745.4 3811.2 1.827381 1.756822 3.210383 3.086422

2-Mar-07 850 842.9 3811.65 3726.75 -0.83529 -2.22738 1.860519 4.96123

5-Mar-07 855.5 821.55 3726.5 3576.5 -3.96844 -4.02522 15.97386 16.20243

6-Mar-07 845 847.9 3577.15 3655.65 0.343195 2.194484 0.753137 4.815762

7-Mar-07 882.5 828.65 3661.55 3626.85 -6.10198 -0.94769 5.782764 0.898109

8-Mar-07 831 863 3627.25 3761.65 3.850782 3.705286 14.26825 13.72915

9-Mar-07 871.65 858.6 3761.85 3718 -1.49716 -1.16565 1.745165 1.35874

12-Mar-07 865 868.7 3717.45 3734.6 0.427746 0.461338 0.197335 0.212833

13-Mar-07 871.25 877.6 3735.25 3770.55 0.728838 0.945051 0.688789 0.893121

14-Mar-07 849.8 829.4 3768.4 3641.1 -2.40056 -3.37809 8.109328 11.4115

15-Mar-07 835 823.9 3644.9 3643.6 -1.32934 -0.03567 0.047413 0.001272

16-Mar-07 822.7 810 3639.35 3608.55 -1.5437 -0.8463 1.306439 0.716232

19-Mar-07 828 822.55 3611.3 3678.9 -0.65821 1.871902 -1.23211 3.504017

20-Mar-07 833.8 824 3680.35 3697.6 -1.17534 0.468705 -0.55089 0.219685

21-Mar-07 828 870.55 3697.7 3764.55 5.138889 1.807881 9.290497 3.26843222-Mar-07 970.35 899.6 3764.5 3875.9 -7.29118 2.959224 -21.5762 8.757009

23-Mar-07 870 891.6 3876.75 3861.05 2.482759 -0.40498 -1.00546 0.164008

26-Mar-07 899 875.7 3863.45 3819.95 -2.59177 -1.12594 2.918167 1.267733

28-Mar-07 866.1 857.85 3818.75 3761.1 -0.95255 -1.50966 1.438017 2.279062

29-Mar-07 859.45 855.3 3759.15 3798.1 -0.48287 1.036138 -0.50032 1.073583

30-Mar-07 803.65 853.35 3788.85 3821.55 6.184284 0.863059 5.3374 0.74487

SUM -9.84453 2.403314 -23.6595 5.775917

BETA

0.6203

SD 3.2701 variance 10.69355

TABLE 6





54

4.1.3 SBI

STOCK PRICE NIFTY PRICESTOCK

RETURN

MARKET

RETURN


2-Jan-07 1,250.00 1,253.55 3966.25 4007.4 0.284 1.037504 0.294651 1.076414

3-Jan-07 1,250.00 1,264.85 4007.7 4024.05 1.188 0.407965 0.484662 0.1664354-Jan-07 1,270.00 1,243.00 4027.3 3988.8 -2.12598 -0.95598 2.032389 0.913889

5-Jan-07 1,241.00 1,244.10 3990.15 3983.4 0.249799 -0.16917 -0.04226 0.028617

8-Jan-07 1,248.80 1,213.70 3983.3 3933.4 -2.8107 -1.25273 3.521046 1.569333

9-Jan-07 1,219.85 1,174.90 3933.3 3911.4 -3.68488 -0.55678 2.051683 0.310009

10-Jan-07 1,171.00 1,136.40 3910.95 3850.3 -2.95474 -1.55077 4.582134 2.4049

11-Jan-07 1,145.00 1,147.45 3852.15 3942.25 0.213974 2.338954 0.500475 5.470704

12-Jan-07 1,162.00 1,225.45 3944.55 4052.45 5.460413 2.73542 14.93652 7.482521

15-Jan-07 1,235.00 1,222.25 4052.85 4078.4 -1.03239 0.630421 -0.65084 0.39743

16-Jan-07 1,255.00 1,209.80 4090.7 4080.5 -3.60159 -0.24935 0.898043 0.062173

17-Jan-07 1,219.00 1,222.55 4084.9 4076.45 0.291222 -0.20686 -0.06024 0.042791

18-Jan-07 1,226.00 1,229.00 4075.2 4109.05 0.244698 0.830634 0.203255 0.689953

19-Jan-07 1,282.25 1,220.30 4126 4090.15 -4.83135 -0.86888 4.197866 0.754953

22-Jan-07 1,218.00 1,224.55 4089.6 4102.45 0.537767 0.314212 0.168973 0.098729

23-Jan-07 1,225.05 1,174.05 4102.65 4066.1 -4.1631 -0.89089 3.70885 0.793681

24-Jan-07 1,174.05 1,172.55 4066.6 4089.9 -0.12776 0.57296 -0.0732 0.328283

25-Jan-07 1,175.25 1,176.45 4092.05 4147.7 0.102106 1.359954 0.138859 1.849475

29-Jan-07 1,190.00 1,156.15 4148.4 4124.45 -2.84454 -0.57733 1.64224 0.333311

31-Jan-07 1,162.00 1,140.45 4123.85 4082.7 -1.85456 -0.99785 1.850581 0.995712

SUM -21.4596 1.951434 -41.877 3.808093

BETA

1.66073

SD 2.569884 VAR 5.780065

TABLE 7



-6

-4

-2

0

2

4

6

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 7



55



The systematic risk here is well above the standard risk associated with any stock so an investor

should be careful while investing this stock. The average stock return and market return shows a

decreasing trend and also decrease in stock return well above the market return

STOCK PRICE NIFTY PRICE

STOCK

RETURN

MARKET

RETURN


1-Feb-07 1,158.00 1,203.00 4083.4 4137.2 3.88601 1.31753 5.119933 1.735884

2-Feb-07 1,215.00 1,181.05 4140.2 4183.5 -2.79424 1.045843 -2.92234 1.093788

5-Feb-07 1,176.00 1,197.05 4193.15 4215.35 1.789966 0.529435 0.94767 0.280301

6-Feb-07 1,205.00 1,196.50 4216.55 4195.9 -0.70539 -0.48974 0.345458 0.239842

7-Feb-07 1,195.00 1,195.05 4198.2 4224.25 0.004184 0.620504 0.002596 0.385025

8-Feb-07 1,195.00 1,205.25 4232 4223.4 0.857741 -0.20321 -0.1743 0.041296

9-Feb-07 1,206.00 1,199.65 4223.5 4187.4 -0.52653 -0.85474 0.45005 0.730583

12-Feb-07 1,199.65 1,183.70 4187.2 4058.3 -1.32955 -3.07843 4.09294 9.476728

13-Feb-07 1,182.95 1,173.40 4069.1 4044.55 -0.8073 -0.60333 0.487069 0.364004

14-Feb-07 1,150.00 1,102.30 4044.9 4047.1 -4.14783 0.054389 -0.2256 0.002958

15-Feb-07 1,110.55 1,122.60 4046.8 4146.2 1.085048 2.456262 2.665162 6.033222

19-Feb-07 1,128.00 1,132.10 4149.25 4164.55 0.363475 0.368741 0.134028 0.13597

20-Feb-07 1,132.10 1,107.75 4164.85 4106.95 -2.15087 -1.39021 2.990153 1.932673

21-Feb-07 1,099.70 1,105.90 4107.15 4096.2 0.56379 -0.26661 -0.15031 0.07108

22-Feb-07 1,105.00 1,078.05 4096.65 4040 -2.43891 -1.38284 3.372621 1.912239

23-Feb-07 1,135.00 1,058.20 4046 3938.95 -6.76652 -2.64582 17.90301 7.00038

26-Feb-07 1,070.00 1,088.40 3939.1 3942 1.719626 0.073621 0.1266 0.00542

27-Feb-07 1,091.00 1,069.15 3948.05 3893.9 -2.00275 -1.37156 2.746898 1.881186

28-Feb-07 971.6 1,041.85 3893.4 3745.3 7.230342 -3.80387 -27.5033 14.46945

sum -6.16972 -9.62403 10.40834 47.79203

BETA 0.169704 SD 3.004418 VAR 9.026525

TABLE 8

GRAHHICAL REPRESENTATON OF STOCK AND MARKET


-8

-6

-4

-2

0

2

4

6

8

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E

T U R N S

Y

X

GRAPH 8



56

Standard deviation (total risk associated with stock) is 3.004where as the beta value is

0.16974.it shows that diversification of the portfolio of stocks would help the investor to

eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows

that the low volatility of the price of the stock in comparison with market returns. The above

graph revels that the average stock return is below the market return. In the month of March this

stock is more fluctuating as a comparison to the market price and the average return is much

below the market return.

STOCK PRICE NIFTY PRICESTOCK

RETURN

MARKET

RETURN


1-Mar-07 1,042.00 1,055.65 3745.4 3811.2 1.309981 1.756822 2.301403 3.086422

2-Mar-07 1,035.00 1,004.90 3811.65 3726.75 -2.90821 -2.22738 6.4777 4.96123

5-Mar-07 999 962.55 3726.5 3576.5 -3.64865 -4.02522 14.68663 16.20243

6-Mar-07 999 988.05 3577.15 3655.65 -1.0961 2.194484 -2.40537 4.815762

7-Mar-07 998 964.4 3661.55 3626.85 -3.36673 -0.94769 3.190606 0.898109

8-Mar-07 989 999.3 3627.25 3761.65 1.041456 3.705286 3.858893 13.72915

9-Mar-07 1,001.10 982.65 3761.85 3718 -1.84297 -1.16565 2.148261 1.35874

12-Mar-07 990 974.2 3717.45 3734.6 -1.59596 0.461338 -0.73628 0.212833

13-Mar-07 979 980.4 3735.25 3770.55 0.143003 0.945051 0.135145 0.893121

14-Mar-07 960 948 3768.4 3641.1 -1.25 -3.37809 4.222614 11.4115

15-Mar-07 955 922.1 3644.9 3643.6 -3.44503 -0.03567 0.122871 0.001272

16-Mar-07 925 913.6 3639.35 3608.55 -1.23243 -0.8463 1.043014 0.716232

19-Mar-07 924.8 926.5 3611.3 3678.9 0.183824 1.871902 0.3441 3.504017

20-Mar-07 930 952.35 3680.35 3697.6 2.403226 0.468705 1.126405 0.219685

21-Mar-07 955 982.95 3697.7 3764.55 2.926702 1.807881 5.291127 3.268432

22-Mar-07 992 1,029.40 3764.5 3875.9 3.770161 2.959224 11.15675 8.757009

23-Mar-07 1,034.00 1,026.20 3876.75 3861.05 -0.75435 -0.40498 0.305496 0.164008

26-Mar-07 1,030.00 1,013.65 3863.45 3819.95 -1.58738 -1.12594 1.787288 1.267733

28-Mar-07 1,006.00 973.65 3818.75 3761.1 -3.21571 -1.50966 4.85461 2.279062

29-Mar-07 974 985.65 3759.15 3798.1 1.196099 1.036138 1.239324 1.073583

30-Mar-07 990.1 994.45 3788.85 3821.55 0.43935 0.863059 0.379184 0.74487

SUM -12.5297 2.403314 -30.1128 5.775917

BETA 0.79409 SD 2.170108 VAR 4.709368

TABLE 9



57


COMPARISION OF STOCK AND MARKET

RETURNS

-6

-4

-2

0

2

4

6

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 9


0.794.it shows that diversification of the portfolio of stocks would help the investor to eliminate

considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the

low volatility of the price of the stock in comparison with market returns. The above graph revels

that the average stock return is below the market return. In the month of March this stock is more

fluctuating as a comparison to the market price and the average return is much below the market

return.

Usually the beginning o f the financial year a bad month for the financial sector stocks

mainly because of the impact of the budget and this year due to inflationary pressure RBI force

to rise CRR level and the interest rate it had an negative impact on the profitability of the banks

this leads the collapse of banking stocks .here the stock price is more fluctuating than the market

price .so the investment option would be how effectively we tackle our interest rate risk and

political risk by proper diversification of the portfolio .



58

4.2 PHARMASUICAL INDUSTRY 4.2.1 DR.REDDYS LAB

MARKET


STOCK

RETURN RETURN


2-Jan-07 813.9 807.4 3966.25 4007.4 -0.7986 1.0375 -0.8286 1.076414

3-Jan-07 805.3 809.05 4007.7 4024.05 0.4657 0.408 0.19 0.166435

4-Jan-07 812.1 828.1 4027.3 3988.8 1.9702 -0.956 -1.8835 0.913889

5-Jan-07 830 810.4 3990.15 3983.4 -2.3614 -0.169 0.3995 0.028617

8-Jan-07 812 812.2 3983.3 3933.4 0.0246 -1.253 -0.0309 1.569333

9-Jan-07 812 798.15 3933.3 3911.4 -1.7057 -0.557 0.9497 0.310009

10-Jan-07 798 774.95 3910.95 3850.3 -2.8885 -1.551 4.4794 2.4049

11-Jan-07 794 791.9 3852.15 3942.25 -0.2645 2.339 -0.6186 5.470704

12-Jan-07 792 809.45 3944.55 4052.45 2.2033 2.7354 6.0269 7.482521

15-Jan-07 812.9 803.9 4052.85 4078.4 -1.1071 0.6304 -0.698 0.39743

16-Jan-07 811.8 808.8 4090.7 4080.5 -0.3695 -0.249 0.0921 0.062173

17-Jan-07 816 815.35 4084.9 4076.45 -0.0797 -0.207 0.0165 0.042791

18-Jan-07 819 815.8 4075.2 4109.05 -0.3907 0.8306 -0.3245 0.689953

19-Jan-07 817 811.5 4126 4090.15 -0.6732 -0.869 0.5849 0.754953

22-Jan-07 815.5 810.05 4089.6 4102.45 -0.6683 0.3142 -0.21 0.098729

23-Jan-07 830 771.25 4102.65 4066.1 -7.0783 -0.891 6.306 0.793681

24-Jan-07 773 762.9 4066.6 4089.9 -1.3066 0.573 -0.7486 0.32828

25-Jan-07 766 763.7 4092.05 4147.7 -0.3003 1.36 -0.4083 1.849475

29-Jan-07 768 751.8 4148.4 4124.45 -2.1094 -0.577 1.2178 0.333311

31-Jan-07 759.95 743.05 4123.85 4082.7 -2.2238 -0.998 2.2191 0.995712

SUM -19.662 1.9514 16.731 25.76932

BETA 0.72526 SD 1.9314 VAR 3.7304

TABLE 10



1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R

E T U R N S

Y

X

GRAPH 10



59

Standard deviation (total risk associated with stock) is 1.93where as the beta value is0.725.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. When we camper it with the total risk. Here the beta isless than 1 it shows that the low volatility of the price of the stock in comparison with marketreturns. The above graph revels that the average stock return is well above the market return and

frequent fluctuation in price put the stock under the scanner. MARKET


STOCK

RETURN RETURN


1-Feb-07 745 743.8 4083.4 4137.2 -0.1611 1.3175 -0.2122 1.735884

2-Feb-07 750 745.65 4140.2 4183.5 -0.58 1.0458 -0.6066 1.093788

5-Feb-07 754.7 750.3 4193.15 4215.35 -0.583 0.5294 -0.3087 0.280301

6-Feb-07 750.5 750.3 4216.55 4195.9 -0.0266 -0.49 0.0131 0.239842

7-Feb-07 751 745.95 4198.2 4224.25 -0.6724 0.6205 -0.4172 0.385025

8-Feb-07 746.6 741.55 4232 4223.4 -0.6764 -0.203 0.1375 0.041296

9-Feb-07 744.8 731.65 4223.5 4187.4 -1.7656 -0.855 1.5091 0.730583

12-Feb-07 748 725.2 4187.2 4058.3 -3.0481 -3.078 9.3834 9.476728

13-Feb-07 725 726.25 4069.1 4044.55 0.1724 -0.603 -0.104 0.36400414-Feb-07 706.25 719.9 4044.9 4047.1 1.9327 0.0544 0.1051 0.002958

15-Feb-07 724.75 738.4 4046.8 4146.2 1.8834 2.4563 4.6261 6.03322219-

Feb 07 742 730.85 4149.25 4164.55 -1.5027 0.3687 -0.5541 0.13597

20-Feb-07 731 729.2 4164.85 4106.95 -0.2462 -1.39 0.3423 1.932673

21-Feb-07 730 729.5 4107.15 4096.2 -0.0685 -0.267 0.0183 0.07108

22-Feb-07 730 706.35 4096.65 4040 -3.2397 -1.383 4.48 1.912239

23-Feb-07 713.65 681.55 4046 3938.95 -4.498 -2.646 11.901 7.00038

26-Feb-07 706 689.3 3939.1 3942 -2.3654 0.0736 -0.1741 0.00542

27-Feb-07 690 693.25 3948.05 3893.9 0.471 -1.372 -0.646 1.881186

28-Feb-07 681 676.9 3893.4 3745.3 -0.6021 -3.804 2.2901 14.46945

SUM -15.576 -9.624 31.783 47.79203

BETA 0.55673 SD 1.6295 VAR 2.6553

TABLE 11



-5

-4

-3

-2

-1

0

1

2

3

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 11



60


0.55 .it shows that diversification of this stock would help the investor to eliminate considerable



average stock return is below the market return. In the month of February this stock fluctuating

along with the market .here the non diversifiable risk is very less so proper diversification of the

portfolio ensure maximum return with minimum investment

MARKET


STOCK

RETURN RETURN


1-Mar-07 670 661.75 3745.4 3811.2 -1.2313 1.7568 -2.1633 3.086422

2-Mar-07 655 660.1 3811.65 3726.75 0.7786 -2.227 -1.7343 4.96123

5-Mar-07 601 617.5 3726.5 3576.5 2.7454 -4.025 -11.051 16.20243

6-Mar-07 630 622.55 3577.15 3655.65 -1.1825 2.1945 -2.5951 4.815762

7-Mar-07 635 635.25 3661.55 3626.85 0.0394 -0.948 -0.0373 0.898109

8-Mar-07 641 668.55 3627.25 3761.65 4.298 3.7053 15.925 13.72915

9-Mar-07 679.9 660 3761.85 3718 -2.9269 -1.166 3.4117 1.35874

12-Mar-07 678 658.4 3717.45 3734.6 -2.8909 0.4613 -1.3337 0.212833

13-Mar-07 660 661 3735.25 3770.55 0.1515 0.9451 0.1432 0.893121

14-Mar-07 645 648.45 3768.4 3641.1 0.5349 -3.378 -1.8069 11.4115

15-Mar-07 655 672.45 3644.9 3643.6 2.6641 -0.036 -0.095 0.001272

16-Mar-07 681 683.6 3639.35 3608.55 0.3818 -0.846 -0.3231 0.716232

19-Mar-07 689 677.25 3611.3 3678.9 -1.7054 1.8719 -3.1923 3.504017

20-Mar-07 683 682.4 3680.35 3697.6 -0.0878 0.4687 -0.0412 0.219685

21-Mar-07 682.4 679.2 3697.7 3764.55 -0.4689 1.8079 -0.8478 3.268432

22-Mar-07 690 682 3764.5 3875.9 -1.1594 2.9592 -3.431 8.757009

23-Mar-07 690 686.3 3876.75 3861.05 -0.5362 -0.405 0.2172 0.164008

26-Mar-07 689 682.15 3863.45 3819.95 -0.9942 -1.126 1.1194 1.267733

28-Mar-07 654.9 692.15 3818.75 3761.1 5.6879 -1.51 -8.5868 2.279062

29-Mar-07 692 706.5 3759.15 3798.1 2.0954 1.0361 2.1711 1.073583

30-Mar-07 714.5 728.25 3788.85 3821.55 1.9244 0.8631 1.6609 0.74487

SUM 8.1178 2.4033 -12.59 79.5652

BETA -0.1705 SD 2.2031 VAR 4.8536

TABLE 12



61



-6

-4

-2

0

2

4

6

8

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 12

Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk

associated with this stock can be eliminated with proper diversification of the portfolio in this

particular month the return from this stock much above the market return but some trading day

the price of the stock is crumbling down may be because of the high selling trend for short term

profile

The overall performance of this stock is promising the risk associated with this stock

comparatively less. Investor can hold the stock for a long time. The average beta is less than one

that means this stock is less volatile than the market. Proper diversification of the portfolio will

help the investor to eliminate the considerable part of the risk



62

4.2.2 RANBAXYMARKET


STOCK

RETURN RETURN


2-Jan-07 391 399.15 3966.25 4007.4 2.0844 1.0375 2.1626 1.0764143-Jan-07 397.4 412.1 4007.7 4024.05 3.699 0.408 1.5091 0.166435

4-Jan-07 414 413.2 4027.3 3988.8 -0.1932 -0.956 0.1847 0.913889

5-Jan-07 411 413.8 3990.15 3983.4 0.6813 -0.169 -0.1152 0.028617

8-Jan-07 412 418.8 3983.3 3933.4 1.6505 -1.253 -2.0676 1.569333

9-Jan-07 425 416.8 3933.3 3911.4 -1.9294 -0.557 1.0743 0.310009

10-Jan-07 417.5 411.15 3910.95 3850.3 -1.521 -1.551 2.3587 2.4049

11-Jan-07 411.9 416.4 3852.15 3942.25 1.0925 2.339 2.5553 5.470704

12-Jan-07 416.1 421.25 3944.55 4052.45 1.2377 2.7354 3.3856 7.482521

15-Jan-07 426.95 430.4 4052.85 4078.4 0.8081 0.6304 0.5094 0.39743

16-Jan-07 431 429.65 4090.7 4080.5 -0.3132 -0.249 0.0781 0.062173

17-Jan-07 430 432.3 4084.9 4076.45 0.5349 -0.207 -0.1106 0.042791

18-Jan-07 436 430.4 4075.2 4109.05 -1.2844 0.8306 -1.0669 0.68995319-Jan-07 432 414.5 4126 4090.15 -4.0509 -0.869 3.5198 0.754953

22-Jan-07 417 404.55 4089.6 4102.45 -2.9856 0.3142 -0.9381 0.098729

23-Jan-07 408 399.45 4102.65 4066.1 -2.0956 -0.891 1.8669 0.793681

24-Jan-07 409.5 400.8 4066.6 4089.9 -2.1245 0.573 -1.2173 0.328283

25-Jan-07 402.05 397.3 4092.05 4147.7 -1.1814 1.36 -1.6067 1.849475

29-Jan-07 400 402.4 4148.4 4124.45 0.6 -0.577 -0.3464 0.333311

31-Jan-07 404 408.95 4123.85 4082.7 1.2252 -0.998 -1.2226 0.995712

SUM -4.0658 1.9514 10.513 25.76932

BETA 0.42651 SD 1.9106 VAR 3.6506

TABLE 13



-5

-4

-3

-2

-1

0

1

2

3

4

5

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 13



63

The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.423It

shows that diversification of this stock would help the investor to eliminate considerable part of

risk associated with this stock. There is a huge difference between systematic and unsystematic

risk here virtually no systematic risk associated with this stock when we camper it with the total

risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in

comparison with market returns. The above graph revels that the average stock return is well

above the market return

MARKET


STOCK

RETURN RETURN


1-Feb-07 409 411.2 4083.4 4137.2 0.5379 1.3175 0.7087 1.735884

2-Feb-07 413 413.05 4140.2 4183.5 0.0121 1.0458 0.0127 1.093788

5-Feb-07 414 414.7 4193.15 4215.35 0.1691 0.5294 0.0895 0.280301

6-Feb-07 414.7 420.05 4216.55 4195.9 1.2901 -0.49 -0.6318 0.2398427-Feb-07 424.2 419.3 4198.2 4224.25 -1.1551 0.6205 -0.7168 0.385025

8-Feb-07 421.9 420.95 4232 4223.4 -0.2252 -0.203 0.0458 0.041296

9-Feb-07 424.05 416.75 4223.5 4187.4 -1.7215 -0.855 1.4714 0.730583

12-Feb-07 413.6 409.15 4187.2 4058.3 -1.0759 -3.078 3.3121 9.476728

13-Feb-07 409.1 411.5 4069.1 4044.55 0.5867 -0.603 -0.3539 0.364004

14-Feb-07 408 415.45 4044.9 4047.1 1.826 0.0544 0.0993 0.002958

15-Feb-07 415 393.35 4046.8 4146.2 -5.2169 2.4563 -12.814 6.033222

19-Feb-07 396 391.6 4149.25 4164.55 -1.1111 0.3687 -0.4097 0.13597

20-Feb-07 385 395.5 4164.85 4106.95 2.7273 -1.39 -3.7915 1.932673

21-Feb-07 396.5 382.7 4107.15 4096.2 -3.4805 -0.267 0.9279 0.07108

22-Feb-07 383 367.45 4096.65 4040 -4.0601 -1.383 5.6144 1.912239

23-Feb-07 367 356.55 4046 3938.95 -2.8474 -2.646 7.5337 7.0003826-Feb-07 365 351.35 3939.1 3942 -3.7397 0.0736 -0.2753 0.00542

27-Feb-07 354.1 351.6 3948.05 3893.9 -0.706 -1.372 0.9683 1.881186

28-Feb-07 342 337.85 3893.4 3745.3 -1.2135 -3.804 4.6158 14.46945

SUM -19.404 -9.624 6.4067 47.79203

BETA

-

0.0797 SD 2.1069 VAR 4.4389

TABLE 14




64


-6

-5

-4

-3

-2

-10

1

2

3

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 14 Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk

associated with this stock can be eliminated with proper diversification of the portfolio in this particular month the return from this stock much above the market return but some trading day

the price of the stock is crumbling down may be because of the high selling trend for short term

profit.

MARKE


STOCK

RETUR RETURN


1-Mar-07 344 342.75 3745.4 3811.2 -0.3634 1.7568 -0.6384 3.0864

2-Mar-07 345 347.3 3811.65 3726.75 0.6667 -2.227 -1.4849 4.9612

5-Mar-07 345.5 320.7 3726.5 3576.5 -7.178 -4.025 28.893 16.202

6-Mar-07 325 322.3 3577.15 3655.65 -0.8308 2.1945 -1.8231 4.8157

7-Mar-07 322 307.25 3661.55 3626.85 -4.5807 -0.948 4.3411 0.8981

8-Mar-07 312 328.45 3627.25 3761.65 5.2724 3.7053 19.536 13.729

9-Mar-07 334 326.05 3761.85 3718 -2.3802 -1.166 2.7745 1.3587

12-Mar-07 328 323.75 3717.45 3734.6 -1.2957 0.4613 -0.5978 0.2128

13-Mar-07 323.75 320.7 3735.25 3770.55 -0.9421 0.9451 -0.8903 0.8931

14-Mar-07 316.5 312.25 3768.4 3641.1 -1.3428 -3.378 4.5361 11.411

15-Mar-07 315 315 3644.9 3643.6 0 -0.036 0 0.0012

16-Mar-07 315.95 311.2 3639.35 3608.55 -1.5034 -0.846 1.2723 0.7162

19-Mar-07 315 316.25 3611.3 3678.9 0.3968 1.8719 0.7428 3.5040

20-Mar-07 314 314 3680.35 3697.6 0 0.4687 0 0.2196

21-Mar-07 319.5 316.95 3697.7 3764.55 -0.7981 1.8079 -1.4429 3.2684

22-Mar-07 318.9 336.35 3764.5 3875.9 5.4719 2.9592 16.193 8.7570

23-Mar-07 340 331.55 3876.75 3861.05 -2.4853 -0.405 1.0065 0.1640

26-Mar-07 335 335 3863.45 3819.95 0 -1.126 0 1.2677

28-Mar-07 334.2 333.2 3818.75 3761.1 -0.2992 -1.51 0.4517 2.2790

29-Mar-07 334.25 330.15 3759.15 3798.1 -1.2266 1.0361 -1.271 1.0735

30-Mar-07 333 327.05 3788.85 3821.55 -1.7868 0.8631 -1.5421 0.7447

SUM -15.205 2.4033 70.056 79.565

BETA 0.90549 SD 2.6885 VAR 7.2279

TABLE 15



65



-8

-6

-4

-2

0

2

4

6

8

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 15

Standard deviation (total risk associated with stock) is 2.69where as the beta value is 0.91

.it shows that diversification of this stock would help the investor to eliminate considerable part

of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of

the price of the stock in comparison with market returns. The above graph revels that the average

stock return is below the market return. In the month of February this stock fluctuating along

with the market .here the non diversifiable risk is very less so proper diversification of the portfolio ensure maximum return with minimum investment

The overall performance of this stock is promising the risk associated with this stock

comparatively less. Investor can hold the stock for a long time. The average beta is less than one

that means this stock is less volatile than the market. Proper diversification of the portfolio will

help the investor to eliminate the considerable part of the risk



66

4.2.3 SUN PHARMASUICAL

MARK

ET


STOC

K

RETU

RN

RETU

RN

DATE OPEN CLOSE OPEN CLOSE Y X X*Y X^22-Jan-07 983.9 985.55 3966.25 4007.4 0.1677 1.0375 0.174 1.076414

3-Jan-07 987.5 991.75 4007.7 4024.05 0.4304 0.408 0.1756 0.166435

4-Jan-07 990.05 987.1 4027.3 3988.8 -0.298 -0.956 0.2848 0.913889

5-Jan-07 985 980.9 3990.15 3983.4 -0.4162 -0.169 0.0704 0.028617

8-Jan-07 980 988.7 3983.3 3933.4 0.8878 -1.253 -1.1121 1.569333

9-Jan-07 992 985.65 3933.3 3911.4 -0.6401 -0.557 0.3564 0.310009

10-Jan-07 985 979.15 3910.95 3850.3 -0.5939 -1.551 0.921 2.4049

11-Jan-07 962.05 1,013.20 3852.15 3942.25 5.3168 2.339 12.436 5.470704

12-Jan-07 1,020.00 1,030.40 3944.55 4052.45 1.0196 2.7354 2.7891 7.482521

15-Jan-07 1,031.00 1,045.95 4052.85 4078.4 1.45 0.6304 0.9141 0.39743

16-Jan-07 1,048.80 1,036.85 4090.7 4080.5 -1.1394 -0.249 0.2841 0.062173

17-Jan-07 1,020.00 1,044.40 4084.9 4076.45 2.3922 -0.207 -0.4948 0.04279118-Jan-07 1,059.85 1,047.85 4075.2 4109.05 -1.1322 0.8306 -0.9405 0.689953

19-Jan-07 1,050.00 1,027.95 4126 4090.15 -2.1 -0.869 1.8246 0.754953

22-Jan-07 1,033.00 1,059.80 4089.6 4102.45 2.5944 0.3142 0.8152 0.098729

23-Jan-07 1,051.00 1,047.35 4102.65 4066.1 -0.3473 -0.891 0.3094 0.793681

24-Jan-07 1,079.80 1,021.35 4066.6 4089.9 -5.413 0.573 -3.1015 0.328283

25-Jan-07 1,034.95 1,039.70 4092.05 4147.7 0.459 1.36 0.6242 1.849475

29-Jan-07 1,030.00 1,020.65 4148.4 4124.45 -0.9078 -0.577 0.5241 0.333311

31-Jan-07 1,021.00 1,030.55 4123.85 4082.7 0.9354 -0.998 -0.9334 0.995712

sum 2.6652 1.9514 15.92 25.76932

BETA 0.61224 SD 2.1008 VAR 4.4135

TABLE 16



-6

-4

-2

0

2

4

6

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T

U R N S

Y

X

GRAPH 16



67





average stock return is below the market return. In the month of January this stock is more

fluctuating as a comparison to the market price

MARKE

T


STOCK

RETURN RETURN


1-Feb-07 1,034.80 1,045.70 4083.4 4137.2 1.0533 1.3175 1.3878 1.735884

2-Feb-07 1,044.90 1,043.80 4140.2 4183.5 -0.1053 1.0458 -0.1101 1.093788

5-Feb-07 1,035.15 1,052.85 4193.15 4215.35 1.7099 0.5294 0.9053 0.280301

6-Feb-07 1,069.80 1,037.65 4216.55 4195.9 -3.0052 -0.49 1.4718 0.239842

7-Feb-07 1,040.00 1,048.40 4198.2 4224.25 0.8077 0.6205 0.5012 0.3850258-Feb-07 1,026.05 1,047.40 4232 4223.4 2.0808 -0.203 -0.4228 0.041296

9-Feb-07 1,052.00 1,034.50 4223.5 4187.4 -1.6635 -0.855 1.4219 0.730583

12-Feb-07 1,020.20 1,012.35 4187.2 4058.3 -0.7695 -3.078 2.3687 9.476728

13-Feb-07 998 1,015.00 4069.1 4044.55 1.7034 -0.603 -1.0277 0.364004

14-Feb-07 991 1,020.35 4044.9 4047.1 2.9617 0.0544 0.1611 0.002958

15-Feb-07 1,016.30 1,031.00 4046.8 4146.2 1.4464 2.4563 3.5528 6.033222

19-Feb-07 1,027.05 1,035.25 4149.25 4164.55 0.7984 0.3687 0.2944 0.13597

20-Feb-07 1,038.00 1,029.70 4164.85 4106.95 -0.7996 -1.39 1.1116 1.932673

21-Feb-07 1,029.00 1,017.95 4107.15 4096.2 -1.0739 -0.267 0.2863 0.07108

22-Feb-07 1,047.75 1,004.75 4096.65 4040 -4.104 -1.383 5.6752 1.912239

23-Feb-07 1,016.05 974.15 4046 3938.95 -4.1238 -2.646 10.911 7.00038

26-Feb-07 979.9 982.45 3939.1 3942 0.2602 0.0736 0.0192 0.0054227-Feb-07 972.65 953.6 3948.05 3893.9 -1.9586 -1.372 2.6863 1.881186

28-Feb-07 940 929.3 3893.4 3745.3 -1.1383 -3.804 4.3299 14.46945

sum -5.9198 -9.624 35.524 47.79203

BETA 0.75786 SD 2.0387 VAR 4.1565

TABLE 17



-5

-4

-3

-2

-1

0

1

2

3

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 17



68





average stock return is below the market return. In the month of February this stock is more


MARKE


STOCK

RETURN RETURN


1-Mar-07 920 955.25 3745.4 3811.2 3.8315 1.7568 6.7313 3.086

2-Mar-07 950 969.05 3811.65 3726.75 2.0053 -2.227 -4.4665 4.961

5-Mar-07 949 942 3726.5 3576.5 -0.7376 -4.025 2.9691 16.20

6-Mar-07 941 948 3577.15 3655.65 0.7439 2.1945 1.6325 4.815

7-Mar-07 943 948.9 3661.55 3626.85 0.6257 -0.948 -0.5929 0.898

8-Mar-07 967.85 966.95 3627.25 3761.65 -0.093 3.7053 -0.3446 13.72

9-Mar-07 975 984.5 3761.85 3718 0.9744 -1.166 -1.1358 1.358

12-Mar-07 986 1,012.50 3717.45 3734.6 2.6876 0.4613 1.2399 0.212

13-Mar-07 1,017.45 1,020.90 3735.25 3770.55 0.3391 0.9451 0.3205 0.893

14-Mar-07 1,029.80 1,002.10 3768.4 3641.1 -2.6898 -3.378 9.0865 11.41

15-Mar-07 1,019.00 1,011.90 3644.9 3643.6 -0.6968 -0.036 0.0249 0.001

16-Mar-07 1,015.05 1,012.40 3639.35 3608.55 -0.2611 -0.846 0.2209 0.716

19-Mar-07 1,011.70 1,004.95 3611.3 3678.9 -0.6672 1.8719 -1.2489 3.504

20-Mar-07 1,006.00 991.1 3680.35 3697.6 -1.4811 0.4687 -0.6942 0.219

21-Mar-07 1,018.00 1,016.45 3697.7 3764.55 -0.1523 1.8079 -0.2753 3.268

22-Mar-07 1,028.80 1,030.40 3764.5 3875.9 0.1555 2.9592 0.4602 8.757

23-Mar-07 1,034.00 1,030.25 3876.75 3861.05 -0.3627 -0.405 0.1469 0.164

26-Mar-07 1,030.00 1,014.90 3863.45 3819.95 -1.466 -1.126 1.6506 1.267

28-Mar-07 1,029.80 999.3 3818.75 3761.1 -2.9617 -1.51 4.4712 2.279

29-Mar-07 1,014.95 1,014.05 3759.15 3798.1 -0.0887 1.0361 -0.0919 1.073

30-Mar-07 1,016.00 1,056.45 3788.85 3821.55 3.9813 0.8631 3.4361 0.744

SUM 3.6863 2.4033 23.541 79.56

BETA 0.29157 SD 1.8059 VAR 3.2613

TABLE 18



69



-5

-4

-3

-2

-1

0

1

2

3

4

5

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH

The total risk (standard deviation) associated with the stock is 3.69 and the beta is

.0.29 It shows that diversification of this stock would help the investor to eliminate considerable






The average beta is less than one that means this stock is less volatile than the market.

Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk. when we compare the market return with the stock return stock return shows a

decreasing tendency means capital appreciation of the stock could not happened in the last three

month .so it is better to hold the stock for some time and the position of the stock may improve

in the nearest future at that time investor can sell off his holding



70

4.3 OIL AND GAS INDUSTRY

4.3.1 BPCL

MARKET


STOCK

RETURN RETURN

DATE OPEN CLOSE OPEN CLOSE Y X X*Y X^22-Jan-07 983.9 985.55 3966.25 4007.4 0.1677 1.0375 0.174 1.076414

3-Jan-07 987.5 991.75 4007.7 4024.05 0.4304 0.408 0.1756 0.166435

4-Jan-07 990.05 987.1 4027.3 3988.8 -0.298 -0.956 0.2848 0.913889

5-Jan-07 985 980.9 3990.15 3983.4 -0.4162 -0.169 0.0704 0.028617

8-Jan-07 980 988.7 3983.3 3933.4 0.8878 -1.253 -1.1121 1.569333

9-Jan-07 992 985.65 3933.3 3911.4 -0.6401 -0.557 0.3564 0.310009

10-Jan-07 985 979.15 3910.95 3850.3 -0.5939 -1.551 0.921 2.4049

11-Jan-07 962.05 1,013.20 3852.15 3942.25 5.3168 2.339 12.436 5.470704

12-Jan-07 1,020.00 1,030.40 3944.55 4052.45 1.0196 2.7354 2.7891 7.482521

15-Jan-07 1,031.00 1,045.95 4052.85 4078.4 1.45 0.6304 0.9141 0.39743

16-Jan-07 1,048.80 1,036.85 4090.7 4080.5 -1.1394 -0.249 0.2841 0.062173

17-Jan-07 1,020.00 1,044.40 4084.9 4076.45 2.3922 -0.207 -0.4948 0.04279118-Jan-07 1,059.85 1,047.85 4075.2 4109.05 -1.1322 0.8306 -0.9405 0.689953

19-Jan-07 1,050.00 1,027.95 4126 4090.15 -2.1 -0.869 1.8246 0.754953

22-Jan-07 1,033.00 1,059.80 4089.6 4102.45 2.5944 0.3142 0.8152 0.098729

23-Jan-07 1,051.00 1,047.35 4102.65 4066.1 -0.3473 -0.891 0.3094 0.793681

24-Jan-07 1,079.80 1,021.35 4066.6 4089.9 -5.413 0.573 -3.1015 0.328283

25-Jan-07 1,034.95 1,039.70 4092.05 4147.7 0.459 1.36 0.6242 1.849475

29-Jan-07 1,030.00 1,020.65 4148.4 4124.45 -0.9078 -0.577 0.5241 0.333311

31-Jan-07 1,021.00 1,030.55 4123.85 4082.7 0.9354 -0.998 -0.9334 0.995712

SUM 2.6652 1.9514 15.92 25.76932

BETA 0.61224 SD 2.1008 VAR 4.4135

TABLE 19



-6

-4

-2

0

2

4

6

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 19



71





average stock return is below the market return. In the month of January this stock is more


MARKET


STOCK

RETURN RETURN


1-Feb-07 1,034.80 1,045.70 4083.4 4137.2 1.0533 1.3175 1.3878 1.735884

2-Feb-07 1,044.90 1,043.80 4140.2 4183.5 -0.1053 1.0458 -0.1101 1.093788

5-Feb-07 1,035.15 1,052.85 4193.15 4215.35 1.7099 0.5294 0.9053 0.280301

6-Feb-07 1,069.80 1,037.65 4216.55 4195.9 -3.0052 -0.49 1.4718 0.239842

7-Feb-07 1,040.00 1,048.40 4198.2 4224.25 0.8077 0.6205 0.5012 0.385025

8-Feb-07 1,026.05 1,047.40 4232 4223.4 2.0808 -0.203 -0.4228 0.0412969-Feb-07 1,052.00 1,034.50 4223.5 4187.4 -1.6635 -0.855 1.4219 0.730583

12-Feb-07 1,020.20 1,012.35 4187.2 4058.3 -0.7695 -3.078 2.3687 9.476728

13-Feb-07 998 1,015.00 4069.1 4044.55 1.7034 -0.603 -1.0277 0.364004

14-Feb-07 991 1,020.35 4044.9 4047.1 2.9617 0.0544 0.1611 0.002958

15-Feb-07 1,016.30 1,031.00 4046.8 4146.2 1.4464 2.4563 3.5528 6.033222

19-Feb-07 1,027.05 1,035.25 4149.25 4164.55 0.7984 0.3687 0.2944 0.13597

20-Feb-07 1,038.00 1,029.70 4164.85 4106.95 -0.7996 -1.39 1.1116 1.932673

21-Feb-07 1,029.00 1,017.95 4107.15 4096.2 -1.0739 -0.267 0.2863 0.07108

22-Feb-07 1,047.75 1,004.75 4096.65 4040 -4.104 -1.383 5.6752 1.912239

23-Feb-07 1,016.05 974.15 4046 3938.95 -4.1238 -2.646 10.911 7.00038

26-Feb-07 979.9 982.45 3939.1 3942 0.2602 0.0736 0.0192 0.00542

27-Feb-07 972.65 953.6 3948.05 3893.9 -1.9586 -1.372 2.6863 1.88118628-Feb-07 940 929.3 3893.4 3745.3 -1.1383 -3.804 4.3299 14.46945

SUM -5.9198 -9.624 35.524 47.79203

BETA 0.75786 SD 2.0387 VAR 4.1565

TABLE 20



-5

-4

-3

-2

-1

0

1

2

3

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 20



72







MARKET


STOCK

RETUR RETURN


1-Mar-07 920 955.25 3745.4 3811.2 3.8315 1.7568 6.7313 3.08642

2-Mar-07 950 969.05 3811.65 3726.75 2.0053 -2.227 -4.4665 4.96123

5-Mar-07 949 942 3726.5 3576.5 -0.7376 -4.025 2.9691 16.2024

6-Mar-07 941 948 3577.15 3655.65 0.7439 2.1945 1.6325 4.815767-Mar-07 943 948.9 3661.55 3626.85 0.6257 -0.948 -0.5929 0.89810

8-Mar-07 967.85 966.95 3627.25 3761.65 -0.093 3.7053 -0.3446 13.7291

9-Mar-07 975 984.5 3761.85 3718 0.9744 -1.166 -1.1358 1.35874

12-Mar-07 986 1,012.50 3717.45 3734.6 2.6876 0.4613 1.2399 0.21283

13-Mar-07 1,017.45 1,020.90 3735.25 3770.55 0.3391 0.9451 0.3205 0.89312

14-Mar-07 1,029.80 1,002.10 3768.4 3641.1 -2.6898 -3.378 9.0865 11.4115

15-Mar-07 1,019.00 1,011.90 3644.9 3643.6 -0.6968 -0.036 0.0249 0.00127

16-Mar-07 1,015.05 1,012.40 3639.35 3608.55 -0.2611 -0.846 0.2209 0.71623

19-Mar-07 1,011.70 1,004.95 3611.3 3678.9 -0.6672 1.8719 -1.2489 3.50401

20-Mar-07 1,006.00 991.1 3680.35 3697.6 -1.4811 0.4687 -0.6942 0.21968

21-Mar-07 1,018.00 1,016.45 3697.7 3764.55 -0.1523 1.8079 -0.2753 3.26843

22-Mar-07 1,028.80 1,030.40 3764.5 3875.9 0.1555 2.9592 0.4602 8.7570023-Mar-07 1,034.00 1,030.25 3876.75 3861.05 -0.3627 -0.405 0.1469 0.16400

26-Mar-07 1,030.00 1,014.90 3863.45 3819.95 -1.466 -1.126 1.6506 1.26773

28-Mar-07 1,029.80 999.3 3818.75 3761.1 -2.9617 -1.51 4.4712 2.27906

29-Mar-07 1,014.95 1,014.05 3759.15 3798.1 -0.0887 1.0361 -0.0919 1.07358

30-Mar-07 1,016.00 1,056.45 3788.85 3821.55 3.9813 0.8631 3.4361 0.74487

SUM 3.6863 2.4033 23.541 79.5652

BETA 0.29157 SD 1.8059 VAR 3.2613

TABLE 21



73



-5

-4

-3

-2

-1

0

1

2

3

4

5

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 21





average stock return is below the market return. In the month of March this stock is more

fluctuating as a comparison to the market price. the kind volatility shown in the grape make this

stock more riskier one .so the investor should be cautious enough while he go for an investment

in this particular stock.





75

Standard deviation (total risk associated with stock) is 1.83 where as the beta value is1.04 .the beta values greater than 1 it shows that this stock is more risky and volatile than theindex. The systematic risk here is well above the standard risk associated with any stock. So aninvestor should be careful while investing this stock. The average stock return and market returnshows a decreasing trend and also decrease in stock return well above the market return.

Frequent fluctuation in the stock price makes the investor more vigilantMARKET


STOCK

RETURN RETURN


1-Feb-07 912 910.85 4083.4 4141.6 -0.1261 1.425283 -0.17972 2.031431

2-Feb-07 920 905.55 4140.2 4198.7 -1.5707 1.412975 -2.21929 1.996499

5-Feb-07 928.1 910.05 4193.15 4219 -1.9448 0.616482 -1.19895 0.38005

6-Feb-07 917 908.2 4216.55 4228.15 -0.9597 0.275106 -0.26401 0.075684

7-Feb-07 910 891.9 4198.2 4232.3 -1.989 0.812253 -1.61558 0.659755

8-Feb-07 910 894 4232 4245.3 -1.7582 0.314272 -0.55257 0.098767

9-Feb-07 897 883.9 4223.5 4239.2 -1.4604 0.37173 -0.54288 0.138183

12-Feb-07 888 866.8 4187.2 4187.2 -2.3874 0 0 0

13-Feb-07 860 885.6 4069.1 4132.7 2.9767 1.562999 4.652649 2.44296614-Feb-07 885 900.8 4044.9 4057.35 1.7853 0.307795 0.54951 0.094738

15-Feb-07 905 906.25 4046.8 4155.7 0.1381 2.691015 0.371687 7.241562

19-Feb-07 906.25 906.15 4149.25 4177.7 -0.011 0.685666 -0.00757 0.470138

20-Feb-07 910 876.15 4164.85 4175.45 -3.7198 0.254511 -0.94672 0.064776

21-Feb-07 880 873 4107.15 4132.8 -0.7955 0.624521 -0.49678 0.390026

22-Feb-07 872.95 855 4096.65 4126.9 -2.0562 0.738408 -1.51835 0.545247

23-Feb-07 860 830 4046 4065.45 -3.4884 0.480722 -1.67694 0.231093

26-Feb-07 825.1 834.65 3939.1 3958.9 1.1574 0.502653 0.581788 0.25266

27-Feb-07 835.1 817.8 3948.05 3958 -2.0716 0.252023 -0.52209 0.063516

28-Feb-07 801.25 788.05 3893.4 3893.4 -1.6474 0 0 0

SUM -19.929 13.32841 -5.58582 17.17709

BETA 1.072406 SD 1.7069 VAR 2.913487TABLE 23

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN


-5-4

-3

-2

-1

0

1

2

3

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 23



76





decreasing trend and also decrease in stock return well above the market return.

MARKET


STOCK

RETURN RETURN


1-Mar-07 788.05 795.95 3745.4 3811.2 1.0025 1.756822 1.761169 3.086422

2-Mar-07 802 798.9 3811.65 3726.75 -0.3865 -2.22738 0.860958 4.96123

5-Mar-07 785 773.05 3726.5 3576.5 -1.5223 -4.02522 6.127571 16.20243

6-Mar-07 785 768.95 3577.15 3655.65 -2.0446 2.194484 -4.48681 4.815762

7-Mar-07 776.1 764.85 3661.55 3626.85 -1.4496 -0.94769 1.373724 0.898109

8-Mar-07 766 779.5 3627.25 3761.65 1.7624 3.705286 6.530204 13.729159-Mar-07 786.6 783.4 3761.85 3718 -0.4068 -1.16565 0.474203 1.35874

12-Mar-07 786 793.6 3717.45 3734.6 0.9669 0.461338 0.446077 0.212833

13-Mar-07 798 807.15 3735.25 3770.55 1.1466 0.945051 1.083611 0.893121

14-Mar-07 791 781.35 3768.4 3641.1 -1.22 -3.37809 4.121186 11.4115

15-Mar-07 789.9 776.5 3644.9 3643.6 -1.6964 -0.03567 0.060505 0.001272

16-Mar-07 786 762.85 3639.35 3608.55 -2.9453 -0.8463 2.492616 0.716232

19-Mar-07 769 793.15 3611.3 3678.9 3.1404 1.871902 5.8786 3.504017

20-Mar-07 800 790.8 3680.35 3697.6 -1.15 0.468705 -0.53901 0.219685

21-Mar-07 790.9 811.65 3697.7 3764.55 2.6236 1.807881 4.743143 3.268432

22-Mar-07 824 852.3 3764.5 3875.9 3.4345 2.959224 10.16336 8.757009

23-Mar-07 874 843.1 3876.75 3861.05 -3.5355 -0.40498 1.431789 0.164008

26-Mar-07 840 850.25 3863.45 3819.95 1.2202 -1.12594 -1.37391 1.26773328-Mar-07 850 864.55 3818.75 3761.1 1.7118 -1.50966 -2.58418 2.279062

29-Mar-07 860 874.8 3759.15 3798.1 1.7209 1.036138 1.783122 1.073583

30-Mar-07 872 880.8 3788.85 3821.55 1.0092 0.863059 0.870977 0.74487

SUM 3.3821 2.403314 41.2189 79.5652

BETA 0.514967 SD 1.9816 VAR 3.926655

TABLE 24



77



-5

-4

-3

-2

-1

0

1

2

3

4

5

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 24

The total risk (standard deviation) associated with the stock is 1.98 and the beta is 0.514 It





comparison with market returns. The above graph revels that the average market return is well

above the stock return.


Proper diversification of the portfolio will help the investor to eliminate the considerable part of

the risk. when we compare the market return with the stock return stock return shows a






78

RELIANCE ENERGY

MARKET


STOCK

RETURN RETURN


2-Jan-07 520.05 524 3966.25 4007.4 0.759542 1.037504 0.788028 1.0764143-Jan-07 526.95 525.8 4007.7 4024.05 -0.21824 0.407965 -0.08903 0.166435

4-Jan-07 534.5 530.1 4027.3 3988.8 -0.8232 -0.95598 0.786958 0.913889

5-Jan-07 530.5 524.45 3990.15 3983.4 -1.14043 -0.16917 0.192923 0.028617

8-Jan-07 525 522.55 3983.3 3933.4 -0.46667 -1.25273 0.584607 1.569333

9-Jan-07 527.7 515.45 3933.3 3911.4 -2.32139 -0.55678 1.292516 0.310009

10-Jan-07 520 504.6 3910.95 3850.3 -2.96154 -1.55077 4.592677 2.4049

11-Jan-07 505 512.85 3852.15 3942.25 1.554455 2.338954 3.635799 5.470704

12-Jan-07 513 524.95 3944.55 4052.45 2.329435 2.73542 6.371982 7.482521

15-Jan-07 514.35 533.55 4052.85 4078.4 3.732867 0.630421 2.353276 0.39743

16-Jan-07 537 532.45 4090.7 4080.5 -0.8473 -0.24935 0.211271 0.062173

17-Jan-07 532 535.9 4084.9 4076.45 0.733083 -0.20686 -0.15165 0.042791

18-Jan-07 537 528.55 4075.2 4109.05 -1.57356 0.830634 -1.30705 0.68995319-Jan-07 535 514.95 4126 4090.15 -3.74766 -0.86888 3.256271 0.754953

22-Jan-07 520 506.85 4089.6 4102.45 -2.52885 0.314212 -0.79459 0.098729

23-Jan-07 508 503.5 4102.65 4066.1 -0.88583 -0.89089 0.789172 0.793681

24-Jan-07 507.5 505.7 4066.6 4089.9 -0.35468 0.57296 -0.20322 0.328283

25-Jan-07 507 502.45 4092.05 4147.7 -0.89744 1.359954 -1.22047 1.849475

29-Jan-07 505 505.65 4148.4 4124.45 0.128713 -0.57733 -0.07431 0.333311

31-Jan-07 510 513.5 4123.85 4082.7 0.686275 -0.99785 -0.6848 0.995712

SUM -8.84241 1.951434 20.33036 25.76932

BETA 0.828539 SD 1.795059 VAR 3.222236

TABLE 25



-5

-4-3

-2

-1

0

1

2

3

4

5

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH



79

Standard deviation (total risk associated with stock) is 1.95where as the beta value is 0.83 .it


risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the

price of the stock in comparison with market returns. The above graph revels that the average

stock return is below the market return. In the month of January this stock is more fluctuating as

a comparison to the market price. Frequent up and downs

MARKET


STOCK

RETURN RETURN


1-Feb-07 519.4 524.55 4083.4 4137.2 0.991529 1.31753 1.306368 1.735884

2-Feb-07 526 533.65 4140.2 4183.5 1.454373 1.045843 1.521046 1.093788

5-Feb-07 535 549.45 4193.15 4215.35 2.700935 0.529435 1.429969 0.280301

6-Feb-07 554 560.5 4216.55 4195.9 1.173285 -0.48974 -0.5746 0.239842

7-Feb-07 562 559.55 4198.2 4224.25 -0.43594 0.620504 -0.2705 0.385025

8-Feb-07 560 565.05 4232 4223.4 0.901786 -0.20321 -0.18326 0.0412969-Feb-07 569.4 555.35 4223.5 4187.4 -2.46751 -0.85474 2.109082 0.730583

12-Feb-07 560 534.85 4187.2 4058.3 -4.49107 -3.07843 13.82545 9.476728

13-Feb-07 535 536.9 4069.1 4044.55 0.35514 -0.60333 -0.21427 0.364004

14-Feb-07 540 546.75 4044.9 4047.1 1.25 0.054389 0.067987 0.002958

15-Feb-07 551 542.6 4046.8 4146.2 -1.5245 2.456262 -3.74457 6.033222

19-Feb-07 546 535.8 4149.25 4164.55 -1.86813 0.368741 -0.68886 0.13597

20-Feb-07 539 520.7 4164.85 4106.95 -3.39518 -1.39021 4.719995 1.932673

21-Feb-07 520.7 521.8 4107.15 4096.2 0.211254 -0.26661 -0.05632 0.07108

22-Feb-07 527.3 512.65 4096.65 4040 -2.7783 -1.38284 3.841943 1.912239

23-Feb-07 516 504.2 4046 3938.95 -2.28682 -2.64582 6.050526 7.00038

26-Feb-07 504.2 505.9 3939.1 3942 0.337168 0.073621 0.024823 0.00542

27-Feb-07 510.5 503.2 3948.05 3893.9 -1.42997 -1.37156 1.961295 1.88118628-Feb-07 502 479.65 3893.4 3745.3 -4.45219 -3.80387 16.93557 14.46945

SUM -15.7542 -9.62403 48.06167 47.79203

BETA 0.933932 SD 2.10782 VAR 4.442905

TABLE 26



-5

-4

-3

-2

-1

0

1

2

3

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X



80






fluctuating as a comparison to the market price and the fluctuation in the stock price compel the

investor to compete with the bulls and bears in the market.

MARKET


STOCK

RETURN RETURNDATE OPEN CLOSE OPEN CLOSE Y X X*Y X^2

1-Mar-07 479.65 480.9 3745.4 3811.2 0.260607 1.756822 0.457839 3.086422

2-Mar-07 480.9 475.5 3811.65 3726.75 -1.12289 -2.22738 2.501115 4.96123

5-Mar-07 475.5 469.9 3726.5 3576.5 -1.17771 -4.02522 4.740538 16.20243

6-Mar-07 469.9 475 3577.15 3655.65 1.085337 2.194484 2.381756 4.815762

7-Mar-07 475 478.25 3661.55 3626.85 0.684211 -0.94769 -0.64842 0.898109

8-Mar-07 478.25 489.2 3627.25 3761.65 2.289597 3.705286 8.483614 13.72915

9-Mar-07 489.2 480.55 3761.85 3718 -1.76819 -1.16565 2.061094 1.35874

12-Mar-07 480.55 473.25 3717.45 3734.6 -1.51909 0.461338 -0.70081 0.212833

13-Mar-07 473.25 466.15 3735.25 3770.55 -1.50026 0.945051 -1.41783 0.893121

14-Mar-07 466.15 458.85 3768.4 3641.1 -1.56602 -3.37809 5.290157 11.4115

15-Mar-07 458.85 462.2 3644.9 3643.6 0.730086 -0.03567 -0.02604 0.00127216-Mar-07 462.2 456.05 3639.35 3608.55 -1.33059 -0.8463 1.126087 0.716232

19-Mar-07 456.05 457.6 3611.3 3678.9 0.339875 1.871902 0.636213 3.504017

20-Mar-07 457.6 477.15 3680.35 3697.6 4.27229 0.468705 2.002446 0.219685

21-Mar-07 477.15 491.45 3697.7 3764.55 2.996961 1.807881 5.418148 3.268432

22-Mar-07 491.45 492 3764.5 3875.9 0.111914 2.959224 0.331178 8.757009

23-Mar-07 492 485.25 3876.75 3861.05 -1.37195 -0.40498 0.555611 0.164008

26-Mar-07 485.25 475.85 3863.45 3819.95 -1.93715 -1.12594 2.181103 1.267733

28-Mar-07 475.85 482.05 3818.75 3761.1 1.302932 -1.50966 -1.96698 2.279062

29-Mar-07 482.05 485.8 3759.15 3798.1 0.777928 1.036138 0.806041 1.073583

30-Mar-07 485.8 494.2 3788.85 3821.55 1.729107 0.863059 1.492321 0.74487

SUM 3.286983 2.403314 35.70519 79.5652

BETA 0.492648 SD 1.729454 VAR 2.99101

TABLE 27



81



-6

-4

-2

0

2

4

6

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH







above the market return.




decreasing tendency means capital appreciation of the stock could not happened in the last threemonth .so it is better to hold the stock for some time and the position of the stock may improve




82

4.4 INFOTECH SECTOR

4.4.1 INFOSYS

MARKET


STOCK

RETURN RETURN


2-Jan-07 2,253.00 2,272.65 3966.25 4007.4 0.87217 1.037504 0.90488 1.076414

3-Jan-07 2,272.65 2,311.35 4007.7 4024.05 1.702858 0.407965 0.694706 0.166435

4-Jan-07 2,321.20 2,285.30 4027.3 3988.8 -1.54661 -0.95598 1.478525 0.913889

5-Jan-07 2,286.00 2,275.05 3990.15 3983.4 -0.479 -0.16917 0.081031 0.028617

8-Jan-07 2,275.05 2,205.60 3983.3 3933.4 -3.05268 -1.25273 3.824184 1.569333

9-Jan-07 2,216.00 2,190.10 3933.3 3911.4 -1.16877 -0.55678 0.650754 0.310009

10-Jan-07 2,200.00 2,164.45 3910.95 3850.3 -1.61591 -1.55077 2.50591 2.4049

11-Jan-07 2,181.00 2,183.00 3852.15 3942.25 0.091701 2.338954 0.214485 5.470704

12-Jan-07 2,200.00 2,223.40 3944.55 4052.45 1.063636 2.73542 2.909492 7.482521

15-Jan-07 2,232.95 2,242.95 4052.85 4078.4 0.447838 0.630421 0.282326 0.39743

16-Jan-07 2,245.20 2,222.20 4090.7 4080.5 -1.02441 -0.24935 0.255432 0.062173

17-Jan-07 2,245.00 2,205.45 4084.9 4076.45 -1.76169 -0.20686 0.364423 0.042791

18-Jan-07 2,206.00 2,224.15 4075.2 4109.05 0.822756 0.830634 0.683409 0.689953

19-Jan-07 2,225.00 2,202.35 4126 4090.15 -1.01798 -0.86888 0.884501 0.754953

22-Jan-07 2,215.00 2,254.00 4089.6 4102.45 1.760722 0.314212 0.553239 0.098729

23-Jan-07 2,248.00 2,235.15 4102.65 4066.1 -0.57162 -0.89089 0.509248 0.793681

24-Jan-07 2,201.00 2,234.05 4066.6 4089.9 1.50159 0.57296 0.860351 0.328283

25-Jan-07 2,241.00 2,241.00 4092.05 4147.7 0 1.359954 0 1.849475

29-Jan-07 2,235.00 2,244.40 4148.4 4124.45 0.420582 -0.57733 -0.24281 0.333311

31-Jan-07 2,240.00 2,247.30 4123.85 4082.7 0.325893 -0.99785 -0.32519 0.995712

SUM -3.22893 1.951434 17.08889 25.76932

BETA 0.680402 SD 1.302383 VAR 1.14361

TABLE 28



-4

-3

-2

-1

0

1

2

3

4

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 29



83

The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.68 Itshows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. There is a huge difference between systematic and unsystematicrisk here virtually no systematic risk associated with this stock when we camper it with the totalrisk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in

comparison with market returns. The above graph revels that the average stock return is wellabove the market returnMARKET


STOCK

RETURN RETURN


1-Feb-07 2,250.00 2,268.95 4083.4 4137.2 0.842222 1.31753 1.109653 1.735884

2-Feb-07 2,275.00 2,265.55 4140.2 4183.5 -0.41538 1.045843 -0.43443 1.093788

5-Feb-07 2,235.00 2,269.30 4193.15 4215.35 1.534676 0.529435 0.812511 0.280301

6-Feb-07 2,270.00 2,272.95 4216.55 4195.9 0.129956 -0.48974 -0.06364 0.239842

7-Feb-07 2,255.55 2,357.05 4198.2 4224.25 4.500011 0.620504 2.792275 0.385025

8-Feb-07 2,365.00 2,373.70 4232 4223.4 0.367865 -0.20321 -0.07476 0.041296

9-Feb-07 2,374.40 2,361.25 4223.5 4187.4 -0.55382 -0.85474 0.473376 0.730583

12-Feb-07 2,335.00 2,351.25 4187.2 4058.3 0.695931 -3.07843 -2.14238 9.47672813-Feb-07 2,351.00 2,304.20 4069.1 4044.55 -1.99064 -0.60333 1.201009 0.364004

14-Feb-07 2,282.20 2,284.65 4044.9 4047.1 0.107353 0.054389 0.005839 0.002958

15-Feb-07 2,324.90 2,382.95 4046.8 4146.2 2.496882 2.456262 6.132995 6.033222

19-Feb-07 2,382.00 2,376.10 4149.25 4164.55 -0.24769 0.368741 -0.09133 0.13597

20-Feb-07 2,375.05 2,359.95 4164.85 4106.95 -0.63578 -1.39021 0.88386 1.932673

21-Feb-07 2,360.00 2,310.90 4107.15 4096.2 -2.08051 -0.26661 0.554681 0.07108

22-Feb-07 2,308.00 2,287.50 4096.65 4040 -0.88821 -1.38284 1.228257 1.912239

23-Feb-07 2,278.00 2,237.70 4046 3938.95 -1.7691 -2.64582 4.680714 7.00038

26-Feb-07 2,234.00 2,218.15 3939.1 3942 -0.70949 0.073621 -0.05223 0.00542

27-Feb-07 2,230.00 2,187.00 3948.05 3893.9 -1.92825 -1.37156 2.644718 1.881186

28-Feb-07 2,180.00 2,077.55 3893.4 3745.3 -4.69954 -3.80387 17.87646 14.46945

SUM -5.24352 -9.62403 37.53758 47.79203BETA 0.812765 SD 1.946677 VAR 3.78955

TABLE 29



-6

-4

-2

0

2

4

6

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 29



84






fluctuating as a comparison to the market price and the fluctuation in the stock price compel the

investor to compete with the bulls and bears in the market.

MARKET


STOCK

RETURN RETURN


1-Mar-07 2,080.00 2,159.15 3745.4 3811.2 3.805288 1.756822 6.685213 3.086422

2-Mar-07 2,173.60 2,093.50 3811.65 3726.75 -3.68513 -2.22738 8.208193 4.96123

5-Mar-07 2,077.90 2,007.15 3726.5 3576.5 -3.40488 -4.02522 13.70541 16.20243

6-Mar-07 2,013.00 2,114.45 3577.15 3655.65 5.039742 2.194484 11.05963 4.815762

7-Mar-07 2,167.40 2,085.35 3661.55 3626.85 -3.78564 -0.94769 3.5876 0.898109

8-Mar-07 2,090.00 2,135.75 3627.25 3761.65 2.188995 3.705286 8.110854 13.72915

9-Mar-07 2,130.35 2,120.95 3761.85 3718 -0.44124 -1.16565 0.514334 1.35874

12-Mar-07 2,120.00 2,115.30 3717.45 3734.6 -0.2217 0.461338 -0.10228 0.212833

13-Mar-07 2,117.00 2,105.05 3735.25 3770.55 -0.56448 0.945051 -0.53346 0.893121

14-Mar-07 2,075.00 2,020.00 3768.4 3641.1 -2.6506 -3.37809 8.953977 11.4115

15-Mar-07 2,051.00 2,079.40 3644.9 3643.6 1.38469 -0.03567 -0.04939 0.001272

16-Mar-07 2,090.00 2,047.45 3639.35 3608.55 -2.03589 -0.8463 1.72298 0.716232

19-Mar-07 2,070.00 2,087.25 3611.3 3678.9 0.833333 1.871902 1.559918 3.504017

20-Mar-07 2,100.00 2,055.90 3680.35 3697.6 -2.1 0.468705 -0.98428 0.219685

21-Mar-07 2,061.60 2,093.95 3697.7 3764.55 1.56917 1.807881 2.836871 3.268432

22-Mar-07 2,110.00 2,119.05 3764.5 3875.9 0.42891 2.959224 1.269241 8.757009

23-Mar-07 2,120.00 2,092.60 3876.75 3861.05 -1.29245 -0.40498 0.523415 0.164008

26-Mar-07 2,105.00 2,058.15 3863.45 3819.95 -2.22565 -1.12594 2.505945 1.267733

28-Mar-07 2,030.00 1,992.05 3818.75 3761.1 -1.86946 -1.50966 2.822239 2.279062

29-Mar-07 1,961.90 1,990.70 3759.15 3798.1 1.467965 1.036138 1.521015 1.073583

30-Mar-07 1,995.00 2,018.65 3788.85 3821.55 1.185464 0.863059 1.023125 0.74487

SUM -6.37357 2.403314 74.94056 79.5652

BETA 0.954343 SD 2.421995 VAR 5.866058

TABLE 30



85



-6

-4

-2

0

2

4

6

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 30



part of risk associated with this stock. Here the beta is less than 1 by some small decimal. The

above graph revels that the average stock return is below the market return. In the month of

March this stock price showing sudden ups and downs.






in the nearest future at that time investor



86

4.4.2 TCS

STOCK PRICE IFTY PRICE

STOCK

RETURN

MARKET

RETURN


2-Jan-07 1,229.40 1,248.50 3966.25 4007.4 1.553603 1.037504 1.61187 1.076414

3-Jan-07 1,253.00 1,280.15 4007.7 4024.05 2.1668 0.407965 0.883978 0.1664354-Jan-07 1,285.00 1,259.05 4027.3 3988.8 -2.01946 -0.95598 1.93055 0.913889

5-Jan-07 1,265.00 1,263.00 3990.15 3983.4 -0.1581 -0.16917 0.026746 0.028617

8-Jan-07 1,259.00 1,243.80 3983.3 3933.4 -1.20731 -1.25273 1.51243 1.569333

9-Jan-07 1,247.90 1,256.40 3933.3 3911.4 0.681144 -0.55678 -0.37925 0.310009

10-Jan-07 1,244.55 1,235.40 3910.95 3850.3 -0.73521 -1.55077 1.140138 2.4049

11-Jan-07 1,198.90 1,277.65 3852.15 3942.25 6.568521 2.338954 15.36347 5.470704

12-Jan-07 1,290.15 1,323.95 3944.55 4052.45 2.61985 2.73542 7.166391 7.482521

15-Jan-07 1,350.00 1,326.35 4052.85 4078.4 -1.75185 0.630421 -1.1044 0.39743

16-Jan-07 1,388.95 1,324.10 4090.7 4080.5 -4.66899 -0.24935 1.164195 0.062173

17-Jan-07 1,329.90 1,304.65 4084.9 4076.45 -1.89864 -0.20686 0.392751 0.042791

18-Jan-07 1,305.00 1,315.45 4075.2 4109.05 0.800766 0.830634 0.665144 0.689953

19-Jan-07 1,315.45 1,298.15 4126 4090.15 -1.31514 -0.86888 1.142699 0.75495322-Jan-07 1,300.10 1,313.45 4089.6 4102.45 1.026844 0.314212 0.322646 0.098729

23-Jan-07 1,313.10 1,302.70 4102.65 4066.1 -0.79202 -0.89089 0.7056 0.793681

24-Jan-07 1,311.50 1,307.15 4066.6 4089.9 -0.33168 0.57296 -0.19004 0.328283

25-Jan-07 1,325.00 1,315.45 4092.05 4147.7 -0.72075 1.359954 -0.98019 1.849475

29-Jan-07 1,315.00 1,297.75 4148.4 4124.45 -1.31179 -0.57733 0.757335 0.333311

31-Jan-07 1,297.10 1,277.90 4123.85 4082.7 -1.48023 -0.99785 1.477048 0.995712

SUM -2.97363 1.951434 33.6091 25.76932

BETA 1.325281 SD 2.297689 VAR 5.279376

TABLE 31



-6

-4

-2

0

2

4

6

8

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 31



87

Standard deviation (total risk associated with stock) is 2.29 where as the beta value is1.33 .the beta values greater than 1 it shows that this stock is more risky and volatile than theindex. The systematic risk here is well above the standard risk associated with any stock so aninvestor should be careful while investing this stock. The average stock return and market returnshows a decreasing trend and also decrease in stock return well above the market return.


STOCK

RETURN

MARKET

RETURN


1-Feb-07 1,289.95 1,292.05 4083.4 4137.2 0.162797 1.31753 0.21449 1.735884

2-Feb-07 1,299.00 1,300.50 4140.2 4183.5 0.115473 1.045843 0.120767 1.093788

5-Feb-07 1,305.00 1,305.80 4193.15 4215.35 0.061303 0.529435 0.032456 0.280301

6-Feb-07 1,313.00 1,298.40 4216.55 4195.9 -1.11196 -0.48974 0.544567 0.239842

7-Feb-07 1,300.00 1,306.30 4198.2 4224.25 0.484615 0.620504 0.300706 0.385025

8-Feb-07 1,311.40 1,304.50 4232 4223.4 -0.52616 -0.20321 0.106922 0.041296

9-Feb-07 1,309.40 1,287.40 4223.5 4187.4 -1.68016 -0.85474 1.436101 0.730583

12-Feb-07 1,250.00 1,255.80 4187.2 4058.3 0.464 -3.07843 -1.42839 9.476728

13-Feb-07 1,256.00 1,252.90 4069.1 4044.55 -0.24682 -0.60333 0.14891 0.364004

14-Feb-07 1,253.00 1,260.75 4044.9 4047.1 0.618516 0.054389 0.033641 0.002958

15-Feb-07 1,265.00 1,292.25 4046.8 4146.2 2.15415 2.456262 5.291157 6.033222

19-Feb-07 1,301.40 1,309.80 4149.25 4164.55 0.645459 0.368741 0.238007 0.13597

20-Feb-07 1,313.90 1,299.55 4164.85 4106.95 -1.09217 -1.39021 1.518339 1.932673

21-Feb-07 1,300.00 1,283.85 4107.15 4096.2 -1.24231 -0.26661 0.331209 0.07108

22-Feb-07 1,300.00 1,294.30 4096.65 4040 -0.43846 -1.38284 0.606321 1.912239

23-Feb-07 1,295.00 1,277.35 4046 3938.95 -1.36293 -2.64582 3.606083 7.00038

26-Feb-07 1,272.00 1,286.10 3939.1 3942 1.108491 0.073621 0.081608 0.00542

27-Feb-07 1,254.00 1,264.15 3948.05 3893.9 0.80941 -1.37156 -1.11016 1.881186

28-Feb-07 1,233.00 1,193.40 3893.4 3745.3 -3.21168 -3.80387 12.21682 14.46945

SUM -4.28842 -9.62403 24.28956 47.79203

BETA 0.515349 SD 1.20985 VAR 1.463737

TABLE 32



-5

-4

-3

-2

-1

0

1

2

3

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 32



88








STOCK

RETURN

MARKET

RETURN


1-Mar-07 1,200.00 1,254.65 3745.4 3811.2 4.554167 1.756822 8.000859 3.086422

2-Mar-07 1,254.80 1,208.55 3811.65 3726.75 -3.68585 -2.22738 8.209787 4.96123

5-Mar-07 1,190.00 1,155.55 3726.5 3576.5 -2.89496 -4.02522 11.65286 16.20243

6-Mar-07 1,210.00 1,197.25 3577.15 3655.65 -1.05372 2.194484 -2.31237 4.815762

7-Mar-07 1,202.00 1,191.80 3661.55 3626.85 -0.84859 -0.94769 0.804193 0.898109

8-Mar-07 1,190.00 1,218.40 3627.25 3761.65 2.386555 3.705286 8.842868 13.72915

9-Mar-07 1,228.30 1,212.15 3761.85 3718 -1.31483 -1.16565 1.532626 1.35874

12-Mar-07 1,224.70 1,235.00 3717.45 3734.6 0.841022 0.461338 0.387995 0.212833

13-Mar-07 1,225.50 1,265.40 3735.25 3770.55 3.255814 0.945051 3.076909 0.893121

14-Mar-07 1,225.00 1,213.55 3768.4 3641.1 -0.93469 -3.37809 3.157481 11.4115

15-Mar-07 1,230.00 1,234.30 3644.9 3643.6 0.349593 -0.03567 -0.01247 0.001272

16-Mar-07 1,241.40 1,237.65 3639.35 3608.55 -0.30208 -0.8463 0.25565 0.716232

19-Mar-07 1,216.30 1,260.90 3611.3 3678.9 3.666859 1.871902 6.864 3.504017

20-Mar-07 1,260.00 1,253.00 3680.35 3697.6 -0.55556 0.468705 -0.26039 0.219685

21-Mar-07 1,261.00 1,267.00 3697.7 3764.55 0.475813 1.807881 0.860213 3.268432

22-Mar-07 1,277.00 1,303.05 3764.5 3875.9 2.039937 2.959224 6.036632 8.757009

23-Mar-07 1,312.00 1,288.20 3876.75 3861.05 -1.81402 -0.40498 0.734641 0.164008

26-Mar-07 1,285.00 1,261.35 3863.45 3819.95 -1.84047 -1.12594 2.072249 1.267733

28-Mar-07 1,269.90 1,201.00 3818.75 3761.1 -5.42562 -1.50966 8.190828 2.279062

29-Mar-07 1,188.95 1,248.35 3759.15 3798.1 4.996005 1.036138 5.176553 1.073583

30-Mar-07 1,248.35 1,233.85 3788.85 3821.55 -1.16153 0.863059 -1.00247 0.74487

SUM 0.733854 2.403314 72.26864 79.5652

BETA 0.910386 SD 2.69163 VAR 7.244874

TABLE 33



89



-6

-4

-2

0

2

4

6

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

SGRAPH 33


0.910 nearer to one some sort of risk associated with this stock which we can not element an

investor can go for making an investment in this stock after having an fundamental analysis .

Diversification of his portfolio would help the investor to eliminate considerable part of risk

associated with this stock. Here the beta is less than 1 by some small decimal. The above graph

revels that the average stock return is below the market return. In the month of March this stock price showing sudden ups and downs.

The average beta is less than one except in the month of January that means the over all

performance of this stock is one want to go for an long term investment he can go for this stock

because Infosys is one of leading company in the world and the IT sector itself is more

promising than any other sector . Proper diversification of the portfolio will help the investor to

eliminate the considerable part of the risk. when we compare the market return with the stock

return stock return shows a decreasing tendency means capital appreciation of the stock could

not happened in the last three month .so it is better to hold the stock for some time and the

position of the stock may improve in the nearest future at that time investor can sell



90

4.4.3 WIPRO


STOCK

RETURN

MARKET

RETURN


2-Jan-07 603 611.55 3966.25 4007.4 1.41791 1.037504 1.471088 1.076414

3-Jan-07 612 620.2 4007.7 4024.05 1.339869 0.407965 0.546619 0.166435

4-Jan-07 622 606.5 4027.3 3988.8 -2.49196 -0.95598 2.382254 0.913889

5-Jan-07 609 598.05 3990.15 3983.4 -1.79803 -0.16917 0.304166 0.028617

8-Jan-07 596 578.5 3983.3 3933.4 -2.93624 -1.25273 3.678318 1.569333

9-Jan-07 584 579.9 3933.3 3911.4 -0.70205 -0.55678 0.390893 0.310009

10-Jan-07 585 590.05 3910.95 3850.3 0.863248 -1.55077 -1.3387 2.4049

11-Jan-07 590 619.55 3852.15 3942.25 5.008475 2.338954 11.71459 5.470704

12-Jan-07 620 626.45 3944.55 4052.45 1.040323 2.73542 2.845719 7.482521

15-Jan-07 631.4 626.95 4052.85 4078.4 -0.70478 0.630421 -0.44431 0.39743

16-Jan-07 630 636.9 4090.7 4080.5 1.095238 -0.24935 -0.27309 0.062173

17-Jan-07 652.1 633.9 4084.9 4076.45 -2.79098 -0.20686 0.577341 0.042791

18-Jan-07 637 641.6 4075.2 4109.05 0.722135 0.830634 0.59983 0.689953

19-Jan-07 637 620.65 4126 4090.15 -2.56672 -0.86888 2.230171 0.754953

22-Jan-07 612 621.75 4089.6 4102.45 1.593137 0.314212 0.500582 0.098729

23-Jan-07 625 620.75 4102.65 4066.1 -0.68 -0.89089 0.605804 0.793681

24-Jan-07 618 632.9 4066.6 4089.9 2.411003 0.57296 1.381409 0.328283

25-Jan-07 639.4 651.3 4092.05 4147.7 1.86112 1.359954 2.531037 1.849475

29-Jan-07 651.3 630.3 4148.4 4124.45 -3.22432 -0.57733 1.8615 0.333311

31-Jan-07 631 613.25 4123.85 4082.7 -2.813 -0.99785 2.806958 0.995712

SUM -3.35563 1.951434 34.37218 25.76932

BETA 1.35657 SD 2.246564 VAR 5.047049TABLE 34



-4

-2

0

2

4

6

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 34



91

Standard deviation (total risk associated with stock) is 2.24 where as the beta value is 1.37 .the beta values greater than 1 it shows that this stock is more risky and volatile than the index. Thesystematic risk here is well above the standard risk associated with any stock so an investor should be careful while investing this stock. The average stock return and market return shows adecreasing trend and also decrease in stock return well above the market return. Frequent

fluctuation in the stock price makes the investor more vigilant.


STOCK

RETURN

MARKET

RETURN


1-Feb-07 624.8 622.3 4083.4 4137.2 -0.40013 1.31753 -0.52718 1.735884

2-Feb-07 630 643.1 4140.2 4183.5 2.079365 1.045843 2.17469 1.093788

5-Feb-07 645 633.85 4193.15 4215.35 -1.72868 0.529435 -0.91522 0.280301

6-Feb-07 634 634.8 4216.55 4195.9 0.126183 -0.48974 -0.0618 0.239842

7-Feb-07 636 642.8 4198.2 4224.25 1.069182 0.620504 0.663432 0.385025

8-Feb-07 642.8 635.45 4232 4223.4 -1.14343 -0.20321 0.232362 0.041296

9-Feb-07 639 643.1 4223.5 4187.4 0.641628 -0.85474 -0.54843 0.730583

12-Feb-07 633.6 630.4 4187.2 4058.3 -0.50505 -3.07843 1.554762 9.47672813-Feb-07 629 637.8 4069.1 4044.55 1.399046 -0.60333 -0.84408 0.364004

14-Feb-07 637.8 650.2 4044.9 4047.1 1.944183 0.054389 0.105743 0.002958

15-Feb-07 650 677 4046.8 4146.2 4.153846 2.456262 10.20293 6.033222

19-Feb-07 681 681.25 4149.25 4164.55 0.036711 0.368741 0.013537 0.13597

20-Feb-07 670 664.25 4164.85 4106.95 -0.85821 -1.39021 1.193087 1.932673

21-Feb-07 661.85 668.4 4107.15 4096.2 0.98965 -0.26661 -0.26385 0.07108

22-Feb-07 668.4 649.85 4096.65 4040 -2.77528 -1.38284 3.837766 1.912239

23-Feb-07 667 623.3 4046 3938.95 -6.55172 -2.64582 17.3347 7.00038

26-Feb-07 625 613.6 3939.1 3942 -1.824 0.073621 -0.13428 0.00542

27-Feb-07 615 604.55 3948.05 3893.9 -1.69919 -1.37156 2.330542 1.881186

28-Feb-07 587 562.4 3893.4 3745.3 -4.1908 -3.80387 15.94127 14.46945

SUM -9.23671 -9.62403 52.28999 47.79203BETA 1.109377 SD 2.417854 VAR 5.846019

TABLE 3



-8

-6

-4

-2

0

2

4

6

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E

T U R N S

Y

X

GRAPH 35



92

Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11 .the

beta values greater than 1 it shows that this stock is more risky and volatile than the index. The

systematic risk here is well above the standard risk associated with any stock so an investor


decreasing trend and also decrease in stock return well above the market return. Frequent

fluctuation in the stock price makes the investor more careful


STOCK

RETURN

MARKET

RETURN


1-Mar-07 577.7 591.5 3745.4 3811.2 2.388783 1.756822 4.196666 3.086422

2-Mar-07 585 574.2 3811.65 3726.75 -1.84615 -2.22738 4.11209 4.96123

5-Mar-07 570 536.95 3726.5 3576.5 -5.79825 -4.02522 23.33924 16.20243

6-Mar-07 540 578.3 3577.15 3655.65 7.092593 2.194484 15.56458 4.815762

7-Mar-07 588 553.85 3661.55 3626.85 -5.80782 -0.94769 5.503993 0.8981098-Mar-07 555 572.5 3627.25 3761.65 3.153153 3.705286 11.68334 13.72915

9-Mar-07 578 565.65 3761.85 3718 -2.13668 -1.16565 2.490619 1.35874

12-Mar-07 570 571.8 3717.45 3734.6 0.315789 0.461338 0.145686 0.212833

13-Mar-07 577 583.9 3735.25 3770.55 1.195841 0.945051 1.13013 0.893121

14-Mar-07 575 555.25 3768.4 3641.1 -3.43478 -3.37809 11.60301 11.4115

15-Mar-07 572 562.3 3644.9 3643.6 -1.6958 -0.03567 0.060483 0.001272

16-Mar-07 565 565.25 3639.35 3608.55 0.044248 -0.8463 -0.03745 0.716232

19-Mar-07 570 578.25 3611.3 3678.9 1.447368 1.871902 2.709332 3.504017

20-Mar-07 579.5 573.4 3680.35 3697.6 -1.05263 0.468705 -0.49337 0.219685

21-Mar-07 550.25 581.75 3697.7 3764.55 5.724671 1.807881 10.34952 3.268432

22-Mar-07 588 594.7 3764.5 3875.9 1.139456 2.959224 3.371905 8.757009

23-Mar-07 595.05 597.3 3876.75 3861.05 0.378119 -0.40498 -0.15313 0.16400826-Mar-07 599.8 581.7 3863.45 3819.95 -3.01767 -1.12594 3.397708 1.267733

28-Mar-07 583.7 559.1 3818.75 3761.1 -4.21449 -1.50966 6.362437 2.279062

29-Mar-07 570 565.9 3759.15 3798.1 -0.7193 1.036138 -0.74529 1.073583

30-Mar-07 570 559.4 3788.85 3821.55 -1.85965 0.863059 -1.60499 0.74487

SUM -8.70321 2.403314 102.9865 79.5652

BETA 1.311418 SD 3.332687 VAR 13.7008

TABLE 36



93



-8

-6

-4

-2

0

2

4

6

8

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 36

Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11




decreasing trend and also decrease in stock return well above the market return. Frequent

fluctuation in the stock price makes the investor more vigilant

In the case of Wipro the stock is more volatile and the systematic risk associated with

this stock is very high since the beta value on an average greater than 1 it’s above the standard.

The fluctuation in this stock mainly because of political and economical reason .but I hope this

would be a short term phenomena in the long run this stock showing more colour full picture. so

I think for the short time investment this stock not good but if you want hold the stock for a long

time obviously it’s a promising one.



94

4.5 AUTOMOBILE INDUSTRY

4.5.1 M&M


STOCK

RETURN

MARKET

RETURN


2-Jan-07 913 954.2 3966.25 4007.4 4.512596 1.037504 4.681836 1.076414

3-Jan-07 964.8 934.25 4007.7 4024.05 -3.16646 0.407965 -1.2918 0.166435

4-Jan-07 940 927.15 4027.3 3988.8 -1.36702 -0.95598 1.306839 0.913889

5-Jan-07 930 896.55 3990.15 3983.4 -3.59677 -0.16917 0.608454 0.028617

8-Jan-07 890 898.55 3983.3 3933.4 0.960674 -1.25273 -1.20347 1.569333

9-Jan-07 902 891.8 3933.3 3911.4 -1.13082 -0.55678 0.629623 0.310009

10-Jan-07 891.8 876.45 3910.95 3850.3 -1.72124 -1.55077 2.669251 2.4049

11-Jan-07 882 910.95 3852.15 3942.25 3.282313 2.338954 7.677178 5.470704

12-Jan-07 915.35 933.45 3944.55 4052.45 1.977386 2.73542 5.40898 7.482521

15-Jan-07 947.7 950.9 4052.85 4078.4 0.33766 0.630421 0.212868 0.39743

16-Jan-07 951 986.25 4090.7 4080.5 3.706625 -0.24935 -0.92423 0.062173

17-Jan-07 989.85 963.2 4084.9 4076.45 -2.69233 -0.20686 0.556933 0.042791

18-Jan-07 971 968.4 4075.2 4109.05 -0.26777 0.830634 -0.22241 0.689953

19-Jan-07 968.95 933.8 4126 4090.15 -3.62764 -0.86888 3.151983 0.754953

22-Jan-07 935.1 928.15 4089.6 4102.45 -0.74324 0.314212 -0.23353 0.098729

23-Jan-07 937 921.1 4102.65 4066.1 -1.69691 -0.89089 1.511752 0.793681

24-Jan-07 920 908.25 4066.6 4089.9 -1.27717 0.57296 -0.73177 0.328283

25-Jan-07 912 922.25 4092.05 4147.7 1.123904 1.359954 1.528457 1.849475

29-Jan-07 934.7 925.35 4148.4 4124.45 -1.00032 -0.57733 0.577516 0.333311

31-Jan-07 930 901.1 4123.85 4082.7 -3.10753 -0.99785 3.100858 0.995712

SUM -9.4941 1.9514 29.015 25.76932

BETA 1.17056 SD 2.4263 VAR 5.887

TABLE 37



-5

-4-3

-2

-1

0

1

2

3

4

5

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 37



95

Standard deviation (total risk associated with stock) is 2.423 where as the beta value is1.17 .the beta values greater than 1 it shows that this stock is more risky and volatile than theindex. The systematic risk here is well above the standard risk associated with any stock so aninvestor should be careful while investing this stock. The average stock return and market returnshows a decreasing trend and also decrease in stock return well above the market return


STOCK

RETURN

MARKETRETURN


1-Feb-07 906 900.35 4083.4 4137.2 -0.62362 1.31753 -0.82164 1.735884

2-Feb-07 909.5 908 4140.2 4183.5 -0.16493 1.045843 -0.17249 1.093788

5-Feb-07 915 913 4193.15 4215.35 -0.21858 0.529435 -0.11572 0.280301

6-Feb-07 954.75 930.35 4216.55 4195.9 -2.55564 -0.48974 1.251593 0.239842

7-Feb-07 930.35 910 4198.2 4224.25 -2.18735 0.620504 -1.35726 0.385025

8-Feb-07 946 926 4232 4223.4 -2.11416 -0.20321 0.429627 0.041296

9-Feb-07 936 908.2 4223.5 4187.4 -2.97009 -0.85474 2.538655 0.730583

12-Feb-07 921.95 871.95 4187.2 4058.3 -5.42329 -3.07843 16.69521 9.476728

13-Feb-07 879.9 852 4069.1 4044.55 -3.17081 -0.60333 1.91304 0.364004

14-Feb-07 866.75 818 4044.9 4047.1 -5.62446 0.054389 -0.30591 0.002958

15-Feb-07 884.7 865.55 4046.8 4146.2 -2.16458 2.456262 -5.31676 6.033222

19-Feb-07 903 889.3 4149.25 4164.55 -1.51717 0.368741 -0.55944 0.13597

20-Feb-07 891 874.4 4164.85 4106.95 -1.86308 -1.39021 2.590059 1.932673

21-Feb-07 885 877.05 4107.15 4096.2 -0.89831 -0.26661 0.239496 0.07108

22-Feb-07 900 862 4096.65 4040 -4.22222 -1.38284 5.838646 1.912239

23-Feb-07 875.9 844.1 4046 3938.95 -3.63055 -2.64582 9.605797 7.00038

26-Feb-07 855.85 822.5 3939.1 3942 -3.89671 0.073621 -0.28688 0.00542

27-Feb-07 861.1 843.35 3948.05 3893.9 -2.06132 -1.37156 2.827226 1.881186

28-Feb-07 817 758.6 3893.4 3745.3 -7.1481 -3.80387 27.19048 14.46945

SUM -52.455 -9.624 62.184 47.79203

BETA 0.82983 SD 1.8879 VAR 3.5642

TABLE 38

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETUR


-8

-6

-4

-2

0

2

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 38



96






fluctuating as a comparison to the market price.


STOCK

RETURN

MARKETRETURN


1-Mar-07 811.35 805.2 3745.4 3811.2 -0.758 0.017568 -0.01332 0.000309

2-Mar-07 805.2 770.5 3811.65 3726.75 -4.30949 -0.02227 0.095989 0.000496

5-Mar-07 770.5 709.2 3726.5 3576.5 -7.95587 -0.04025 0.320242 0.00162

6-Mar-07 709.2 725.15 3577.15 3655.65 2.249013 0.021945 0.049354 0.000482

7-Mar-07 725.15 761.05 3661.55 3626.85 4.9507 -0.00948 -0.04692 8.98E-05

8-Mar-07 761.05 765.6 3627.25 3761.65 0.597858 0.037053 0.022152 0.001373

9-Mar-07 765.6 733.9 3761.85 3718 -4.14054 -0.01166 0.048264 0.000136

12-Mar-07 733.9 738.25 3717.45 3734.6 0.592724 0.004613 0.002734 2.13E-05

13-Mar-07 738.25 760.35 3735.25 3770.55 2.993566 0.009451 0.028291 8.93E-05

14-Mar-07 760.35 749.1 3768.4 3641.1 -1.47958 -0.03378 0.049982 0.001141

15-Mar-07 749.1 747.05 3644.9 3643.6 -0.27366 -0.00036 9.76E-05 1.27E-07

16-Mar-07 747.05 730.7 3639.35 3608.55 -2.18861 -0.00846 0.018522 7.16E-05

19-Mar-07 730.7 738.9 3611.3 3678.9 1.122212 0.018719 0.021007 0.00035

20-Mar-07 738.9 743.85 3680.35 3697.6 0.669915 0.004687 0.00314 2.2E-05

21-Mar-07 743.85 753.5 3697.7 3764.55 1.297305 0.018079 0.023454 0.000327

22-Mar-07 753.5 781.6 3764.5 3875.9 3.729263 0.029592 0.110357 0.000876

23-Mar-07 781.6 796.8 3876.75 3861.05 1.944729 -0.00405 -0.00788 1.64E-05

26-Mar-07 796.8 788.55 3863.45 3819.95 -1.03539 -0.01126 0.011658 0.000127

28-Mar-07 788.55 762.35 3818.75 3761.1 -3.32255 -0.0151 0.050159 0.000228

29-Mar-07 762.35 757.75 3759.15 3798.1 -0.6034 0.010361 -0.00625 0.000107

30-Mar-07 757.75 780.4 3788.85 3821.55 2.989113 0.008631 0.025798 7.45E-05

SUM -12.972 2.4033 46.873 79.5652

BETA 0.6098 SD 2.6355 VAR 6.9461

TABLE 39



97



-6

-4

-2

0

2

4

6

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 39







In the analysis the average beta of the stock in the three month (January, February march )

less than 1 it means the systematic risk is moderate .so proper diversification of the stock will

safe guard the investors money, but in terms of return it shows below market tendency.



98

4.5.2 MARUTI UDYOG LTD


STOCK

R MARKET


2-Jan-07 939 968.6 3966.25 4007.4 3.15229 3.15229 9.93693 9.93693

3-Jan-07 976.5 974.55 4007.7 4024.05 -0.19969 -0.19969 0.039877 0.0398774-Jan-07 974.55 967.35 4027.3 3988.8 -0.7388 -0.7388 0.545829 0.545829

5-Jan-07 969.65 934.95 3990.15 3983.4 -3.57861 -3.57861 12.80646 12.80646

8-Jan-07 934.9 897.95 3983.3 3933.4 -3.95229 -3.95229 15.62063 15.62063

9-Jan-07 905 886.45 3933.3 3911.4 -2.04972 -2.04972 4.201367 4.201367

10-Jan-07 890 880.5 3910.95 3850.3 -1.06742 -1.06742 1.139376 1.139376

11-Jan-07 888 905.8 3852.15 3942.25 2.004505 2.004505 4.018038 4.018038

12-Jan-07 914.7 922.35 3944.55 4052.45 0.83634 0.83634 0.699464 0.699464

15-Jan-07 922 906.7 4052.85 4078.4 -1.65944 -1.65944 2.753728 2.753728

16-Jan-07 913 910.65 4090.7 4080.5 -0.25739 -0.25739 0.066251 0.066251

17-Jan-07 930 908.75 4084.9 4076.45 -2.28495 -2.28495 5.220979 5.220979

18-Jan-07 908 918.65 4075.2 4109.05 1.172907 1.172907 1.375712 1.375712

19-Jan-07 922 912.3 4126 4090.15 -1.05206 -1.05206 1.106832 1.10683222-Jan-07 915 938.8 4089.6 4102.45 2.601093 2.601093 6.765684 6.765684

23-Jan-07 940 918.95 4102.65 4066.1 -2.23936 -2.23936 5.014741 5.014741

24-Jan-07 921.1 934.15 4066.6 4089.9 1.416784 1.416784 2.007278 2.007278

25-Jan-07 939 948.05 4092.05 4147.7 0.963791 0.963791 0.928894 0.928894

29-Jan-07 949.8 936.85 4148.4 4124.45 -1.36344 -1.36344 1.858982 1.858982

31-Jan-07 939 924.9 4123.85 4082.7 -1.5016 -1.5016 2.254795 2.254795

SUM -9.79707 -9.79707 95.98259 78.36184

BETA 1.239534 SD 1.967669 VAR 3.871722

TABLE 40



-5

-4

-3

-2

-1

0

1

2

3

4

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

R E T U R N S

Y

X

GRAPH 40



99

Standard deviation (total risk associated with stock) is 1.23 where as the beta value is1.96 .the beta values greater than 1 it shows that this stock is more risky and volatile than theindex. The systematic risk here is well above the standard risk associated with any stock so aninvestor should be careful while investing this stock. The average stock return and market returnshows a decreasing trend and also decrease in stock return well above the market return. Here the

unsystematic risk very less so diversification alone may not be ensure the safety of your money


ST

OCK R MARKET


1-Feb-07 924.9 940.25 4083.4 4137.2 1.659639 1.31753 2.186623 1.735884

2-Feb-07 940.25 944.6 4140.2 4183.5 0.462643 1.045843 0.483852 1.093788

5-Feb-07 944.6 963.25 4193.15 4215.35 1.974381 0.529435 1.045306 0.280301

6-Feb-07 963.25 952.5 4216.55 4195.9 -1.11601 -0.48974 0.546553 0.239842

7-Feb-07 952.5 951.6 4198.2 4224.25 -0.09449 0.620504 -0.05863 0.385025

8-Feb-07 951.6 962.55 4232 4223.4 1.150694 -0.20321 -0.23384 0.041296

9-Feb-07 962.55 941.7 4223.5 4187.4 -2.16612 -0.85474 1.851473 0.730583

12-Feb-07 941.7 912 4187.2 4058.3 -3.15387 -3.07843 9.708968 9.476728

13-Feb-07 912 890.9 4069.1 4044.55 -2.3136 -0.60333 1.395856 0.364004

14-Feb-07 890.9 857.05 4044.9 4047.1 -3.79953 0.054389 -0.20665 0.002958

15-Feb-07 857.05 892.25 4046.8 4146.2 4.107112 2.456262 10.08814 6.033222

19-Feb-07 892.25 914.05 4149.25 4164.55 2.443261 0.368741 0.900931 0.13597

20-Feb-07 914.05 892.75 4164.85 4106.95 -2.33029 -1.39021 3.239581 1.932673

21-Feb-07 892.75 898.15 4107.15 4096.2 0.604873 -0.26661 -0.16126 0.07108

22-Feb-07 898.15 880 4096.65 4040 -2.02082 -1.38284 2.794466 1.912239

23-Feb-07 880 863.5 4046 3938.95 -1.875 -2.64582 4.960918 7.00038

26-Feb-07 863.5 878.3 3939.1 3942 1.713955 0.073621 0.126183 0.00542

27-Feb-07 878.3 887.05 3948.05 3893.9 0.996243 -1.37156 -1.36641 1.881186

28-Feb-07 887.05 841.7 3893.4 3745.3 -5.11245 -3.80387 19.44712 14.46945

SUM -8.86938 -9.62403 85.35922 92.62204

BETA 0.921586 SD 2.427088 VAR 5.890755

TABLE 41



-6

-4

-2

0

2

4

6

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R E T U R N S

Y

X

GRAPH 41



100





average stock return is and the market return looking southward.


STOCK

R MARKET


1-Mar-07 848 840.9 3745.4 3811.2 -0.83726 1.756822 -1.47092 3.086422

2-Mar-07 844 833.1 3811.65 3726.75 -1.29147 -2.22738 2.876595 4.96123

5-Mar-07 825 772.9 3726.5 3576.5 -6.31515 -4.02522 25.4199 16.20243

6-Mar-07 790 791.75 3577.15 3655.65 0.221519 2.194484 0.48612 4.815762

7-Mar-07 797 774.85 3661.55 3626.85 -2.77917 -0.94769 2.633783 0.898109

8-Mar-07 787 792.35 3627.25 3761.65 0.679797 3.705286 2.518841 13.729159-Mar-07 792 787.2 3761.85 3718 -0.60606 -1.16565 0.706454 1.35874

12-Mar-07 789.8 797.1 3717.45 3734.6 0.924285 0.461338 0.426407 0.212833

13-Mar-07 800 801.55 3735.25 3770.55 0.19375 0.945051 0.183104 0.893121

14-Mar-07 791 791.75 3768.4 3641.1 0.094817 -3.37809 -0.3203 11.4115

15-Mar-07 804.1 796.15 3644.9 3643.6 -0.98868 -0.03567 0.035263 0.001272

16-Mar-07 798 780.1 3639.35 3608.55 -2.24311 -0.8463 1.898353 0.716232

19-Mar-07 786 788.85 3611.3 3678.9 0.362595 1.871902 0.678743 3.504017

20-Mar-07 792 789.65 3680.35 3697.6 -0.29672 0.468705 -0.13907 0.219685

21-Mar-07 796 791.65 3697.7 3764.55 -0.54648 1.807881 -0.98797 3.268432

22-Mar-07 790.5 831.3 3764.5 3875.9 5.16129 2.959224 15.27342 8.757009

23-Mar-07 833 840.65 3876.75 3861.05 0.918367 -0.40498 -0.37192 0.164008

26-Mar-07 837.15 821.7 3863.45 3819.95 -1.84555 -1.12594 2.077969 1.26773328-Mar-07 775.25 796.65 3818.75 3761.1 2.7604 -1.50966 -4.16726 2.279062

29-Mar-07 828.5 812.45 3759.15 3798.1 -1.93724 1.036138 -2.00724 1.073583

30-Mar-07 812 820.2 3788.85 3821.55 1.009852 0.863059 0.871562 0.74487

SUM -7.36022 2.403314 46.62182 79.5652

BETA 0.598613 SD 2.224652 VAR 4.949078

TABLE 42



101



-8

-6

-4

-2

0

2

4

6

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 42


0.5986.it shows that diversification of this stock would help the investor to eliminate

considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the

low volatility of the price of the stock in comparison with market returns. The above graph revels

that the average stock return is below the market return. In the month of March this stock is morefluctuating as a comparison to the market price.

The average stock return shows a negative trend.




decreasing tendency means capital appreciation of the stock could happened in the last threemonth .so it is better to hold the stock for some time and the position of the stock may improve




102

4.5.3 TATA MOTOR


STOCK

RETURN

MARKET

RETURN


2-Jan-07 902.1 929.5 3966.25 4007.4 3.037357 1.037504 3.15127 1.076414

3-Jan-07 934.8 938.25 4007.7 4024.05 0.369063 0.407965 0.150565 0.1664354-Jan-07 980 947.1 4027.3 3988.8 -3.35714 -0.95598 3.209346 0.913889

5-Jan-07 950 937.4 3990.15 3983.4 -1.32632 -0.16917 0.224368 0.028617

8-Jan-07 935 928.5 3983.3 3933.4 -0.69519 -1.25273 0.870882 1.569333

9-Jan-07 929 911.1 3933.3 3911.4 -1.9268 -0.55678 1.072814 0.310009

10-Jan-07 908.9 908.45 3910.95 3850.3 -0.04951 -1.55077 0.076779 2.4049

11-Jan-07 910 918.35 3852.15 3942.25 0.917582 2.338954 2.146183 5.470704

12-Jan-07 921 941.2 3944.55 4052.45 2.193268 2.73542 5.999509 7.482521

15-Jan-07 949.75 948.5 4052.85 4078.4 -0.13161 0.630421 -0.08297 0.39743

16-Jan-07 950 957.55 4090.7 4080.5 0.794737 -0.24935 -0.19816 0.062173

17-Jan-07 964.4 964.75 4084.9 4076.45 0.036292 -0.20686 -0.00751 0.042791

18-Jan-07 975 954.45 4075.2 4109.05 -2.10769 0.830634 -1.75072 0.689953

19-Jan-07 957.9 950.7 4126 4090.15 -0.75164 -0.86888 0.653089 0.75495322-Jan-07 955 963.3 4089.6 4102.45 0.86911 0.314212 0.273084 0.098729

23-Jan-07 965 950.45 4102.65 4066.1 -1.50777 -0.89089 1.343255 0.793681

24-Jan-07 955 916.05 4066.6 4089.9 -4.07853 0.57296 -2.33684 0.328283

25-Jan-07 954 927.65 4092.05 4147.7 -2.76205 1.359954 -3.75627 1.849475

29-Jan-07 927 899.45 4148.4 4124.45 -2.97195 -0.57733 1.7158 0.333311

31-Jan-07 910 878.3 4123.85 4082.7 -3.48352 -0.99785 3.476041 0.995712

SUM -16.9323 1.951434 16.23052 25.76932

BETA 0.699116 SD 1.944274 VAR 3.780203

TABLE 43



-5

-4

-3

-2

-1

0

1

2

3

4

1 / 2

1 / 4

1 / 6

1 / 8

1 / 1 0

1 / 1 2

1 / 1 4

1 / 1 6

1 / 1 8

1 / 2 0

1 / 2 2

1 / 2 4

1 / 2 6

1 / 2 8

1 / 3 0

DATE

T I M E Y

X

GRAPH 43



103

Standard deviation (total risk associated with stock) is 1.94 where as the beta value is0.699.it shows that diversification of this stock would help the investor to eliminate considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatilityof the price of the stock in comparison with market returns. The above graph revels that theaverage stock return is below the market return. In the month of March this stock is more



STOCK

RETURN

MARKET

RETURN


1-Feb-07 888.8 906.35 4083.4 4137.2 1.974572 1.31753 2.601557 1.735884

2-Feb-07 919.8 909.85 4140.2 4183.5 -1.08176 1.045843 -1.13135 1.093788

5-Feb-07 914 919.05 4193.15 4215.35 0.552516 0.529435 0.292521 0.280301

6-Feb-07 923 920.05 4216.55 4195.9 -0.31961 -0.48974 0.156525 0.239842

7-Feb-07 920.9 902.3 4198.2 4224.25 -2.01976 0.620504 -1.25327 0.385025

8-Feb-07 912 896.8 4232 4223.4 -1.66667 -0.20321 0.338689 0.041296

9-Feb-07 896.8 905.05 4223.5 4187.4 0.919938 -0.85474 -0.78631 0.730583

12-Feb-07 930 875.05 4187.2 4058.3 -5.9086 -3.07843 18.18922 9.476728

13-Feb-07 874 866.75 4069.1 4044.55 -0.82952 -0.60333 0.500472 0.364004

14-Feb-07 874 850.2 4044.9 4047.1 -2.72311 0.054389 -0.14811 0.002958

15-Feb-07 870 869.3 4046.8 4146.2 -0.08046 2.456262 -0.19763 6.033222

19-Feb-07 880 869.8 4149.25 4164.55 -1.15909 0.368741 -0.4274 0.13597

20-Feb-07 869 856 4164.85 4106.95 -1.49597 -1.39021 2.07971 1.932673

21-Feb-07 856 858.85 4107.15 4096.2 0.332944 -0.26661 -0.08877 0.07108

22-Feb-07 860 834.8 4096.65 4040 -2.93023 -1.38284 4.052035 1.912239

23-Feb-07 845.5 817 4046 3938.95 -3.37079 -2.64582 8.918505 7.00038

26-Feb-07 820 839.55 3939.1 3942 2.384146 0.073621 0.175523 0.00542

27-Feb-07 843.5 823.35 3948.05 3893.9 -2.38886 -1.37156 3.276467 1.881186

28-Feb-07 800 782.6 3893.4 3745.3 -2.175 -3.80387 8.273424 14.46945

SUM -21.9853 -9.62403 44.82181 47.79203

BETA 0.784898 SD 1.979394 VAR 3.918002

TABLE 44



-8

-6

-4

-2

0

2

4

2 / 1

2 / 3

2 / 5

2 / 7

2 / 9

2 / 1 1

2 / 1 3

2 / 1 5

2 / 1 7

2 / 1 9

2 / 2 1

2 / 2 3

2 / 2 5

2 / 2 7

DATE

R

E T U R N S

Y

X

GRAPH 44



104









STOCK

RETURN

MARKET

RETURN


1-Mar-07 801 789.05 3745.4 3811.2 -1.49189 1.756822 -2.62098 3.086422

2-Mar-07 795 775.4 3811.65 3726.75 -2.46541 -2.22738 5.491407 4.96123

5-Mar-07 774.1 739.9 3726.5 3576.5 -4.41803 -4.02522 17.78358 16.202436-Mar-07 746 726.6 3577.15 3655.65 -2.60054 2.194484 -5.70684 4.815762

7-Mar-07 747.5 738.6 3661.55 3626.85 -1.19064 -0.94769 1.128349 0.898109

8-Mar-07 750.1 766.85 3627.25 3761.65 2.233036 3.705286 8.274036 13.72915

9-Mar-07 774.95 757.15 3761.85 3718 -2.29692 -1.16565 2.677407 1.35874

12-Mar-07 757.25 764.7 3717.45 3734.6 0.983823 0.461338 0.453875 0.212833

13-Mar-07 766 773.1 3735.25 3770.55 0.926893 0.945051 0.875961 0.893121

14-Mar-07 722.5 743.65 3768.4 3641.1 2.927336 -3.37809 -9.88881 11.4115

15-Mar-07 750 725.95 3644.9 3643.6 -3.20667 -0.03567 0.11437 0.001272

16-Mar-07 731.1 748.25 3639.35 3608.55 2.34578 -0.8463 -1.98525 0.716232

19-Mar-07 751 771.7 3611.3 3678.9 2.756325 1.871902 5.15957 3.504017

20-Mar-07 774.25 769.25 3680.35 3697.6 -0.64579 0.468705 -0.30268 0.219685

21-Mar-07 772 775.8 3697.7 3764.55 0.492228 1.807881 0.889889 3.26843222-Mar-07 781 805.1 3764.5 3875.9 3.085787 2.959224 9.131537 8.757009

23-Mar-07 806 789.55 3876.75 3861.05 -2.04094 -0.40498 0.826538 0.164008

26-Mar-07 745 752.55 3863.45 3819.95 1.013423 -1.12594 -1.14105 1.267733

28-Mar-07 750 719.6 3818.75 3761.1 -4.05333 -1.50966 6.11914 2.279062

29-Mar-07 728.95 716.45 3759.15 3798.1 -1.7148 1.036138 -1.77677 1.073583

30-Mar-07 723 728.2 3788.85 3821.55 0.719225 0.863059 0.620734 0.74487

SUM -8.64109 2.403314 36.12403 79.5652

BETA 0.468065 SD 2.363793 VAR 5.587515

TABLE 45



105



-5

-4

-3

-2

-1

0

1

2

3

4

5

3 / 1

3 / 3

3 / 5

3 / 7

3 / 9

3 / 1 1

3 / 1 3

3 / 1 5

3 / 1 7

3 / 1 9

3 / 2 1

3 / 2 3

3 / 2 5

3 / 2 7

3 / 2 9

DATE

R E T U R N S

Y

X

GRAPH 45







above the market return.









106

CHAPTER V FINDINGS, CONCLUSION AND

RECOMMENDATION

5.1 FINDINGS

• When comparing the beta value banking companies the average beta greater than one that

means the risk associated with those stocks are pretty high and the price of the shares are

more fluctuating .one of the reason for this fluctuation may the inflationary trend in the

economy banking shares are more bound to interest rate risk .

• Pharmaceutical companies beta value less than one means risk is comparatively low so

diversification of portfolio may help the investor to eliminate the controllable risk

associated with this stocks .the growth in pharma stock mainly because of the growing

strength of the Indian pharmaceutical companies .they are largely venturing out of the

country through mergers and acquisitions and the increasing consideration of global

players India is a low cost hub of research and development.

• The beta value of oil and gas companies is less than one but the price of the stocks are

highly fluctuating because of the ups and downs of crude oil price in the international

market.

• IT companies shares are promising one they are more bound to international risk since

most of the IT companies largely depends on the US market any downward trend in the

US economy may have a negative impact on these companies shares but for the long term

investment this shares are promising one .

• The stocks of automobile companies are subjected to less risk since the beta is less than

one. Stock price of auto companies are growing mainly because of the strong bottom line

of these companies .increasing strength of Indian middle class largely responsible for this

growth.

• Two stocks Dr.reddy’s lab and Ranbaxy shows negative beta in the month of March and

February respectively. That means the systematic risk associated with this stock in that

particular months is negative.



107

5.2 CONCLUSION

As a whole the stock market is sometime highly volatile .it depends upon the investors howhe can make use of this in order to get the money which he has put in the market .an investor

should be in a position to analyze the various investment option available to him and thus

minimize the risk and maximize the returns .

The investor should analyze the market on a continuous basis which will help them to

pick the right companies to invest their funds. the beta value, standard deviation and variance

helps the investors in arriving at decision .the investors should be in a position to interpret the

data in the right manner to arrive at important conclusions and investment decision .

I hope this dissertation will help the investors as a guiding record in future and help them

to make appropriate investment decisions.



108

5.3 RECOMMENDATION

• Based on the finding derived at ,risk less investment can be made in the pharma

stocks .they are volatile but still the risk associated with that stocks are less .

• In the pharma sector I would suggest you Dr.reddy’s lab and Ranbaxy is the best one

anybody can blindly invest in that shares return is must.

• In my view InfoTech shares are more volatile next to banking investment in info

shares could be more riskier since Indian IT companies are more service based rather

than product based so anybody can enter in to that sooner or later but the advantage of

Indian IT companies are the talent pool available in India

• When an investor opts to enter the stock market he should first gather sufficient

information about the type of investment options available to him

• The investor should be in a position to decide where and how much of funds are he

ready to invest in particular security.

• He should diversify his investment portfolio so that he is exposed to minimum risk.

• Investor should not depend entirely on the past returns as the future is uncertain and

the stock market is highly volatile.

• The investor must be in a position to determine the degree of risk involved and then

invest in any security.

• He should not follow the foot of others while investing because usually people tend to

go by the trend.

• An investor must be in a position to judge which is the right time to enter into the

market and quit the market.



109

BIBLIOGRAPHY

.

BOOKS

Investment management –Preeti Singh-tenth edition –Himalaya publication 2002

Investment analysis and portfolio management –Prasanna Chandra-second edition –Tata

McGraw hill publishing company -2005

Security analysis and portfolio management –Donald E Fischer, Ronald j Jordan –sixth

edition –prentice hall of India private ltd 2000

Modern portfolio theory and investment analysis –Edwin J Elton, Martin J Gruber –fifth

edition –john Wiley & sons -2002

Investment management –V A Avandi-fifth Edition –Himalaya publication house 2003

JOURNALS

The ICFAI journal of financial risk management –vol 12 issue 7-June 2006

Business week –vol 26 issue 41 February 2007

The ICFAI journal of applied finance vol 8 issue 8 august 2005

WEBSITESwww.economywatch.com/indian economy

www.indiainfoline.com

www.nse_india .com/equity

www.bse_india .com / equity

www.vikipidia.com



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