ACKNOWLEDGEMENTS

First and foremost, I praise and thank God Almighty from the depth of my heart, which
has been the source of strength in the completion of this project work.
It is my profound concern to thank the principal, Fr. Josekutty P.D, M. COM, Kristu
Jayanti College who paved the path for offering me this opportunity and avenues of infinite
possibilities of knowledge.
I further express my deep sense of gratitude to Prof. A.M.Tatti MBA, coordinator of
MBA department, Kristu Jayanti College for his constant encouragement and valuable help.
I wish to extend my sincere and profound thanks to prof.Arun Kumar, MBA dean Kristu
Jayanti college for the help extend towards me during the period of dissertation work.
And I am deeply indebted to Prof. Aloysius Edward, Kristu Jayanti College, for his
guidance, assistance and for giving all the formal support to conduct this study and for
completing this project work.
I am also thankful to the librarian, Kristu Jayanti College for their encouragement and
valuable help.
I take this opportunity to acknowledge indebt ness to Mr. Liju Varghese Thomas,
Mathew Abraham, Jino Thomas and Tony Chacko for their earnest support and cooperation in the course of my study.
I am also thankful to my parents and friends for their encouragement and support
Finally I would like to express my sincere gratitude to all those who spend their valuable
time for providing necessary data for this organizational study.

Abhilash p.j

EXECUTIVE SUMMARY
To day the avenues for investment are abundant like bank deposits, property insurance,
shares etc. but taking an investment decision would be more critical. Analysis the risk associated
with every investment option and evaluate the return out of that investment become very crucial
.since the globalization and the privatization move of the Indian economy during the last decades
of the 20 th century pumped billions of foreign capital into the Indian economy as in the form of
FDI and FII that could be one reason to drive the Indian economy into newer heights .Indian
stock market also part of this unparallel growth. The confidence of primary and secondary
market investors also increased several fold, these changing scenario encourage people to invest
more in shares and bond who earlier park their saving as fixed deposits and other type of
investment like property ,gold etc,

The topic risk and return analyses relevant in this circumstance .i have been
selected five sectors which have an important role in propelling Indian growth engine. The
sectors are banking, pharmaceutical, automobile, information technology, automobile and oil and
gas sector. These entire five sectors have a different perspective in terms of profit making,
growth, employment generation etc. the companies come under study are HDFC Bank, ICICI
bank, SBI, Dr.reddys 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.

TABLE OF CONTENTS

CHAPTER

CONTENT

NO

PAGE
NO

INTRODUCTION

6-17

RESEARCH DESIGN

18-23

PROFILE OF THE INDUSTRIES

24-45

DATA ANALYSIS AND INTERPRETATION

46-105

FINDINGS,CONCLUSIONS AND
5

RECOMMENDATIONS

106-109

BIBLIOGRAPHY

110

NO
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.1
4.11
4.12
4.13
4.14
4.16
4.17
4.18
4.19
4.2
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.28
4.29
4.3
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.4
4.41
4.42
4.43
4.44
4.45

LIST OF TABLES

PAGE

TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -JANUARY

TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC -FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF HDFC MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ICICI MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SBI -MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF DR.REDDYS MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY-FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RANBAXY -MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF SUN PHARMA-MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL -FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF BPCL-MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC -JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF ONGC MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF RELIANCE MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF INFOSYS MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TCS-MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF WIPRO MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF M&M MARCH
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI JANUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI FEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF MARUTI MARCH
TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORS-JANUARY
TABLES SHOWING STOCK RETURN AND MARKET RETURN OF TATA MOTORSFEBRUARY
TABLE SHOWING STOCK RETURN AND MARKET RETURN OF TATAMOTORS-MARCH

56
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60
61
62
64
65
66
68
70
71
72
73
75
76
77
79
80
81
82
84
86
87
90
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92
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99
100
102
103
104
106
107
108
110
111
112
113
114
115

NO
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45

LIST OF GRAPH

PAGE NO

STOCK RETURN V/S MARKET RETURN OF HDFC JANUARY

STOCK RETURN V/S MARKET RETURN OF HDFC FEBRUARY
STOCK RETURN V/S MARKET RETURN OF HDFC -MARCH
STOCK RETURN V/S MARKET RETURN OF ICICI JANUARY
STOCK RETURN V/S MARKET RETURN OF ICICI FEBRUARY
STOCK RETURN V/S MARKET RETURN OF ICICI -MARCH
STOCK RETURN V/S MARKET RETURN OF SBI - JANUARY
STOCK RETURN V/S MARKET RETURN OF SBI -FEBRUARY
STOCK RETURN V/S MARKET RETURN OF SBI MARCH
STOCK RETURN V/S MARKET RETURN OF DR.REDDYS JANUARY
STOCK RETURN V/S MARKET RETURN OF DR.REDDYS FEBRUARY
STOCK RETURN V/S MARKET RETURN OF DR.REDDYS MARCH
STOCK RETURN V/S MARKET RETURN OF RANBAXY JANUARY
STOCK RETURN V/S MARKET RETURN OF RANBAXY-FEBRUARY
STOCK RETURN V/S MARKET RETURN OF RANBAXY MARCH
STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-JANUARY
STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-FEBRUARY
STOCK RETURN V/S MARKET RETURN OF SUN PHARMA-MARCH
STOCK RETURN V/S MARKET RETURN OF BPCL JANUARY
STOCK RETURN V/S MARKET RETURN OF BPCL FEBRUARY
STOCK RETURN V/S MARKET RETURN OF BPCL- MARCH
STOCK RETURN V/S MARKET RETURN OF ONGC JANUARY
STOCK RETURN V/S MARKET RETURN OF ONGC FEBRUARY
STOCK RETURN V/S MARKET RETURN OF ONGC MARCH
STOCK RETURN V/S MARKET RETURN OF RELIANCE JANUARY
STOCK RETURN V/S MARKET RETURN OF RELIANCE FEBRUARY
STOCK RETURN V/S MARKET RETURN OF RELIANCE MARCH
STOCK RETURN V/S MARKET RETURN OF INFOSYS JANUARY
STOCK RETURN V/S MARKET RETURN OF INFOSYS FEBRUARY
STOCK RETURN V/S MARKET RETURN OF INFOSYS MARCH
STOCK RETURN V/S MARKET RETURN OF TCS JANUARY
STOCK RETURN V/S MARKET RETURN OF TCS FEBRUARY
STOCK RETURN V/S MARKET RETURN OF TCS-MARCH
STOCK RETURN V/S MARKET RETURN OF WIPRO JANUARY
STOCK RETURN V/S MARKET RETURN OF WIPRO FEBRUARY
STOCK RETURN V/S MARKET RETURN OF WIPRO-MARCH
STOCK RETURN V/S MARKET RETURN OF M&M JANUARY
STOCK RETURN V/S MARKET RETURN OF M&M FEBRUARY
STOCK RETURN V/S MARKET RETURN OF M&M MARCH
STOCK RETURN V/S MARKET RETURN OF MARUTI JANUARY
STOCK RETURN V/S MARKET RETURN OF MARUTI FEBRUARY
STOCK RETURN V/S MARKET RETURN OF MARUTI MARCH
STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-JANUARY
STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-FEBRUARY
STOCK RETURN V/S MARKET RETURN OF TATA MOTORS-MARCH

56
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60
61
62
64
65
66
67
69
70
71
72
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79
81
90
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95
96
97
98
100
101
102
103
105
106
107
108
109
110
111
112
115
116
117
118
120

CHAPTER: I

INTRODUCTION TO THE RESERCH TOPIC

1.1 INTRODUCTION
Before 1990s 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 90s foreign

capital flowing to India .new

multinational entered the market and a lot of investment opportunities were opened to the people
who kept their saving in bank and other kind of fixed assets .
The topic analysis of risk and return in the banking, pharmaceutical, IT, oil & gas and
automobile had been selected because a lot of investors are making investment in the shares of
different companies. The investors have to be aware of the risk involved in making the
investment .so the investors have to calculate the variance and the beta value to know the present
condition of the Company to know whether there is any risk in investing in the particular
company and does the company offer good returns.

The companies which I have been selected for research having different growth strategies
and difference in revenue, profitability and market capitalization.

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

supply, product range and reach-even though reach in rural India still remains a challenge for the
private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian
banks are considered to have clean, strong and transparent balance sheets-as compared to other
banks in comparable economies in its region. The Reserve Bank of India is an autonomous body,
with minimal pressure from the government.
The Indian pharmaceutical is one of the fast growing sector not only in India but also the whole
world There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other
country outside the U.S, and in 2008, almost 25% of all Abbreviated New Drug Applications
(ANDA) to the FDA are expected to be filed by Indian companies. Growths in other fields
notwithstanding, generics are still a large part of the picture. London research company Global
6

Insight estimates that Indias 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 Indias software exports is about 61 per cent. In 1999-2000, more
than a third of Fortune 500 companies outsourced their software requirements to India

The Indian automotive industry has flourished like never before in the recent years.
This extra-ordinary growth that the Indian automotive industry has witnessed is a result of a two
major factors namely, the improvement in the living standards of the middle class, and an
increase in their disposable incomes.

The data collected is mainly secondary in nature and no questionnaire has been
formulated for the research .the data(that is the stock price and S&P CNX Nifty index)has been
7

collected from various websites and has been analyzed and interpreted in order to find out the
spread of return with the help of standard deviation and beta.

1.2 SUBJECT BACKGROUND OF THE RESEARCH TOPIC

A company ,which has a high intrinsic worth ,is not necessarily the best stock to buy .it
may have no growth prospects or it may be overpriced .similarly a company that performs well
during any one year may not be the best to buy .on the contrary ,a company which has been
badly for sometime might have turn the corner and it may be the best to buy ,as its shares may be
under prices and it has good prospects of growth hence an analysis of risk or return guides an
investor in proper profitable investment .

1.2.1 RETURN
Return is the primary motivating force that drives investment .it represents the reward for
undertaking investment .since the game of investing is about returns, measurement of realized
return is necessary to assess how well the investment manager has done. In addition historical
return is often used as an important input on estimating future return.

THE COMPONENT OF RETURN

The return of an investment consist of two component
Current return the component that often comes to mind when one is thinking about return is the
periodic cash flow such as dividend or interest generated by the investment .current return is
measured as the periodic income in relation to the beginning price of the investment.
Capital return

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

return .it is simply the price appreciation (or depreciation) divided by the beginning price of the
assets.
Thus total return =current return + capital return

1.2.2 RISK
Risk refers to the possibility tat the actual outcome of an investment will differ from its expected
outcome .more specifically, most investors are concerned about the actual outcome being less
than the expected outcome .the wider the range of possible outcomes the greater the risk.

DIFFERENT TYPE OF RISK

Forces that contribute to variance in return-price or dividend-constitute the element of risk .some
influence are external to the organization can not be controlled other influence are internal to the
organization that are controllable to a large extent .in an investment decision those factors which
is uncontrollable is called systematic risk .on the other hand those factors are controllable and
internal to the organization are called unsystematic risk these are the two broad categories of risk
.

SYSTEMATIC RISK.
MARKET RISK

This is the most familiar of all risks. Also referred to as volatility, market risk is the the
day-to-day fluctuations in a stock's price. Market risk applies mainly to stocks and options. As a
whole, stocks tend to perform well during a bull market and poorly during a bear market volatility is not so much a cause but an effect of certain market forces. Volatility is a measure of
risk because it refers to the behavior, or "temperament", of your investment rather than the
reason for this behavior. Because market movement is the reason why people can make money
from stocks, volatility is essential for returns, and the more unstable the investment the more
chance there is that it will experience a dramatic change in either direction.
Market risk is caused by investors reaction to the tangible as well as intangible events
.expectation of lower corporate profile in general may cause the larger body of common stocks to
fall in price .investors are expressing their judgment that too much is being paid for earning in
the light of anticipated events .the basis for the reaction is a set of real, tangible, events
political, social or economic.

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.

10

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 firms financing methods and reflected in the
variability of earnings before taxes (EBT), a measure of earnings that has been adjusted for and
is influenced by the cost of debt financing. This risk is often discussed within the context of the
Capital Structure topics.
By Engaging in debt financing the firm changes the characteristics of the earning stream
available to the common stock holders, specifically ,the reliance in debt financing ,called
financial leverage ,has at least three important effect on common stock holders .1)increase the
variability of their return 2)effect their expectation concerning to the return 3)increase the risk of
being ruined .
11

1.2.3 INVESTMENT
Investment is the employment of the fund with aim of achieving additional growth in
value .an investment is a sacrifice of current money or other resources for future benefits .it is the
allocation of monetary resources to assets that are expected to yield gain or positive return over a
given periods of time .it involves the commitment of resources which have saved or put away
from current consumption in the hope that some benefits will acure in future.
The three key aspects of any investment are time capital gain and risk the sacrifice takes
place now and is certain .the benefits are expected in the future and tend to be uncertain.
Risk: investment is considered to involve limited risk and is confined to those avenues where the
principle is safe. No investments are completely risk free
Capital gain: If purchase of securities is preceded by proper investigation and analysis and
review to receive a stable return over a period of time it is termed as investment.
Time: A longer time, fund allocation is termed as investment. The investor constantly evaluates
the work of a security. There has to be a constant review of securities to find out whether it is a
suitable investment. The investment is an attempt to carefully plan, evaluate and allocate funds in
various investments which offer safety of principal, moderate and continuous return and long
term commitment.

1.2.4 INVESTMENT DECISION

In stock market parlance investment decision refers to making a decision regarding the buy
and sell orders. As we know economic analysis or factors play in any investment decision which
is made for making a gain and better returns. Economic analysis and forecasting company
performance and of returns is necessary for making investment.
Any investment is risky and such investment decision is difficult to make. It is based on
availability of money and information on economy industry and company, share prices are ruled
by expectation of the market and the market sentiments.
As we know these decisions are influenced by availability of money and flow of information.
What to buy and sell also depends on the fair value of shares and the extent of over valuation and
under valuation. For making such a decision the common investors have to depend more up on a
study of fundamental rather than technical, although technical are also important
12

1.2.5 PRIMARY AND SECONDARY CAPITAL MARKET

Primary market is the market for issue of new securities .it therefore essentially consists of
the companies issuing securities, he public subscribing to these securities, he regulatory agencies
like SEBI and the government, merchant bankers and bank who underwrite the issues and help in
collecting subscription money from the public.
Secondary Market refers to a market where securities are traded after being initially offered
to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading
is done in the secondary market. Secondary market comprises of equity markets and the debt
markets.

For the general investor, the secondary market provides an efficient platform for trading of
his securities. For the management of the company, Secondary equity markets serve as a
monitoring and control conduitby 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.

13

There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE),
which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years,
there has been a rapid change in the Indian securities market, especially in the secondary market.
Advanced technology and online-based transactions have modernized the stock exchanges. In
terms of the number of companies listed and total market capitalization, the Indian equity market
is considered large relative to the countrys stage of economic development. The number of
listed companies increased from 5,968 in March 1990 to about 20,000 by May 2006 and market
capitalization has grown almost 11 times during the same period. The debt market, however, is
almost nonexistent

1.2.7 BOMBAY STOCK EXCHANGE LIMITED (BSE)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.
Popularly known as "BSE", it was established as "The Native Share & Stock Brokers
Association" in 1875. It is the first stock exchange in the country to obtain permanent
recognition in 1956 from the Government of India under the Securities Contracts (Regulation)
Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital
market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an
Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity
incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE
(Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange
Board of India (SEBI).With demutualization, the trading rights and ownership rights have been
de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The
Exchange is professionally managed under the overall direction of the Board of Directors. The
Board comprises eminent professionals, representatives of Trading Members and the Managing
Director of the Exchange. The Board is inclusive and is designed to benefit from the
participation of market intermediaries. In terms of organization structure, the Board formulates
larger policy issues and exercises over-all control. The committees constituted by the Board are
broad-based. The day-to-day operations of the Exchange are managed by the Managing Director
and a management team of professionals.
The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.
The systems and processes of the Exchange are designed to safeguard market integrity and
14

enhance transparency in operations. During the year 2004-2005, the trading volumes on the
Exchange showed robust growth. The Exchange provides an efficient and transparent market for
trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT)
is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and
clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

1.2.8 THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the
country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,
1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment
in June 1994. The Capital Market (Equities) segment commenced operations in November 1994
and operations in Derivatives segment commenced in June 2000

It is the largest stock exchange in India and the third largest in the world in terms of
volume of transactions. NSE is mutually-owned by a set of leading financial institutions, banks,
insurance companies and other financial intermediaries in India but its ownership and
management operate as separate entities. As of 2006, the NSE VSAT terminals, 2799 in total,
cover more than 1500 cities across India. In March 2006, the NSE had a total market
capitalization of 4,380,774 crore INR making it the second-largest stock market in South Asia in
terms of market-capitalization.

15

1.2.9 S&P CNX NIFTY

S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. It
is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives
and index funds.S&P CNX Nifty is owned and managed by India Index Services and Products
Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized
company focused upon the index as a core product. IISL have a consulting and licensing
agreement with Standard & Poor's (S&P), who are world leaders in index services.
The average total traded value for the last six months of all Nifty stocks is approximately
45.24% of the traded value of all stocks on the NSE .Nifty stocks represent about 57.92% of the
total market capitalization as on April 10, 2007. Impact cost of the S&P CNX Nifty for a
portfolio size of Rs.5 million is 0.08% .P CNX Nifty is professionally maintained and is ideal for
derivatives trading

1.2.10 TYPES OF STOCKS

1. BLUE CHIP STOCKS
the term blue chip comes from poker, where the blue chip carry the higest value
.large established firms with a long record of profit growth, dividend payout and a reputation
for quality management, products and service are referred to as blue chip companies. these
firms are generally leaders in their industries and are considered likely candidates for long
term growth .because blue chip companies are held in such high esteem, they often set the
standard by which other companies in their field are measured .well known blue chip
companies includes IBM, Coco-Cola, general electric and McDonald
2. PENNY STOCKS
Penny stocks are low priced speculative stock, that are very risky .companies with a short or
erratic history of revenues and earnings issue them .they are the lowest of the low in price
and many stock exchanges choose not trade them.
3. INCOME STOCKS
Income stocks are those stocks that pay higher than average dividend over a sustained period
.these above average dividend tends to be paid by large, established companies with stable
16

earnings. Income stocks are popular with investors who want steady income for a long time
and who do not need much growth in their stocks value .
4) VALUE STOCK
A value stock is a stock that is currently selling at a low price .companies that have good
earning and growth potential but whose stock price do not reflect this are considered value
companies .both the market and investors are largely ignoring their stocks. Investors who buy
value stocks believe that thes3e stocks are only temporarily out of favor and will soon
experience great growth .factors such as new management, a new product or operation that
are more efficient may make a value stock grow quickly.

17

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 doesnt make any sense proper analysis of risk and the expected return is very
important to become an efficient investor. Keeping this point in mind dissertation titled risk
and return analysis has been chosen to analyze fifteen different companies from five different
sectors namely automobile, InfoTech, Oil&gas, Pharma and Banking .The share price and
market price for three consecutive month starting from January 2007 to march 2007 ,were
selected for analysis
This study is conducted to find out how the expected return is calculated from an investment
and risk associated with that investment by measuring beta () and standard deviation. .

18

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 1950s 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

19

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
companys 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 its come the importance of risk and return
analysis.

Compare different investment option in terms of risk and return .the popular conception
is if the risk is high the return one can expect would be high and
vice versa.

Risk and return analysis would help the investor to park his money in most appropriate
investment avenue. The investors are two type risk taker and risk averter. If some one
20

wants to invest highly volatile stock with the expectation of high return he can go for
that, another type of investor want regular income at the same time safety.

Risk and return analysis would help the investors to properly diversify his portfolio of
securities. the measurement of beta will help the investor to quantify the systematic risk
and unsystematic risk associated with the a particular investment

Investor can make portfolio revision at the right time with minimum cost by analyzing
the risk and return of securities. Portfolio revision is an inevitable part of an investment
decision.

To make estimation on the amount of income one can expect from an investment is
possible by analyzing the historical return of a particular stock.

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

Analysis the expected return from an investment option.

2.5 OBJECTIVES OF THE STUDY

To analyze the risk and return of the companies.

To measure actual return and expected returns with the help of

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.REDDYS LAB, RANBAXY
OIL&GAS SECTOR-ONGC, BPCL, RELIANCE
21

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 () = (N*(X*Y) (X*Y))/ (N*( X^2)-(X) ^2)

2.8 SOURCES OF DATA

The datas 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 .

22

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. Its 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 datas 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.

23

CHAPTER: 3

PROFILES

3.1 THE INDIAN ECONOMY AN OVERVIEW

Economics experts and various studies conducted across the globe envisage India and
china to rule the world in the 21st century. For over a century the United States has been the
largest economy in the world but major developments have taken place in the world economy
since then, leading to the shift of focus from the us and the rich countries of Europe to the two
Asian giants- India and China. The rich countries of Europe have seen the greatest decline in
global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of
about 1 percentage points each. Within Asia, the rising share of China and India has more than
made up the declining global share of Japan since 1990.
During the seventies and the eighties, ASEAN countries and during the eighties South
Korea, along with China and India, contributed to the rising share of Asia in world GDP. US
and the rich countries of Europe to the two Asian giants- India and China. According to some
experts, the share of the US in world GDP is expected to fall (from 21per cent to 18 per cent) and
that of India to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as
the third pole in the global economy after the US and China. By 2025 the Indian economy is
projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar
economy will be complete by 2035, with the Indian economy only a little smaller than the US
economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth
driver than the six largest countries in the EU, though its impact will be a little over half that of
the US. India, which is now the fourth largest economy in terms of purchasing power parity, will
overtake Japan and become third major economic power within 10 years.

INDIA - A GROWING ECONOMY

In a robust demonstration of the nascent strength, the Indian economy, after growing at
8.5% and 9.5% in the two previous year is projected to grow at 11% in the current year 200708.growth of gross domestic product (GDP) at constant prices in excess of 8.0%has been
achieved by the economy in only five years of recorded history, and two out of these five are in
24

the last three years Growth in the Indian economy has steadily increased since 1979, averaging
5.7% per year in the 23-year growth record. In fact, the Indian economy has posted an excellent
average GDP growth of 6.8% since 1994 (the period when India's external crisis was brought
under control). However, in comparison to many East Asian economies, having growth rates
above 7%, the Indian growth experience lags behind. The tenth five-year plan aims at achieving
a growth rate of 8% for the coming 2-3 years. Though, the growth rate for 2004-05 is less than
that of 2003-04, it is still among the high growth Rates seen in India since independence. Many
factors are behind this robust performance of the Indian economy in 2004-05. High growth rates
in Industry & service sector and a benign world economic environment provided a backdrop
conducive to the Indian economy. Another positive feature was that the growth was accompanied
by continued maintenance of relative stability of prices. However, agriculture fell sharply from
its 2003-04 level of 9 % to 1.1% in the current year primarily because of a bad monsoon. Thus,
there is a paramount need to move Indian agriculture beyond its centuries old dependency on
monsoon. This can be achieved by bringing more area under irrigation and by better water
management.

25

3.2 INDUSTRY PROFILE

3.2.1 BANKING SECTOR

Banking in India originated in the first decade of 18th century with The General Bank of
India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks
are now defunct. The oldest bank in existence in India is the State Bank of India being
established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign
banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time,
Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due
to which banking activity took roots there and prospered. The first fully Indian owned bank was
the Allahabad Bank, which was established in 1865.
By the 1900s, the market expanded with the establishment of banks such as Punjab National
Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded
under private ownership. The Reserve Bank of India formally took on the responsibility of
regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve
Bank was nationalized and given broader powers.

In the early 1990s the then Narasimha Rao government embarked on a policy of
liberalization and gave licenses to a small number of private banks, which came to be known as
New Generation tech-savvy banks, which included banks such as UTI Bank (the first of such
new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the
rapid growth in the economy of India, kick started the banking sector in India, which has seen
rapid growth with strong contribution from all the three sectors of banks, namely, government
banks, private banks and foreign banks.
The next stage for the Indian banking has been setup with the proposed relaxation in the norms
for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights
which could exceed the present cap of 10%,at present it has gone up to 49% with some
restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time,
were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The
new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.
26

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

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

supply, product range and reach-even though reach in rural India still remains a challenge for the
private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian
banks are considered to have clean, strong and transparent balance sheets-as compared to other
banks in comparable economies in its region. The Reserve Bank of India is an autonomous body,
with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee
is to manage volatility-without any stated exchange rate-and this has mostly been true. With the
growth in the Indian economy expected to be strong for quite some time-especially in its services
sector, the demand for banking services-especially retail banking, mortgages and investment
services are expected to be strong. M&As, takeovers, asset sales and much more action will
happen on this front in India.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its
stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor
has been allowed to hold more than 5% in a private sector bank since the RBI announced norms
in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is
with the Government of India holding a stake), 29 private banks (these do not have government
stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They
have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by
ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the
banking industry, with the private and foreign banks

27

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 Indias share of the global generics market will have risen from 4% to 35%
in 2006, over 20,000 registered drug manufacturers in India sold $15 billion worth of
formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the
bulk drugs were exported, mostly to the United States and Russia. Most of the players in the
market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian
market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down
from 70% thirty years ago.
Most pharma companies operating in India, even the multinationals, employ Indians almost
exclusively from the lowest ranks to high level management. Mirroring the social structure, firms
are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are
often a mix of public and private enterprise. Although many of these companies are publicly
owned, leadership passes from father to son and the founding family holds a majority share.
In terms of the global market, India currently holds a modest 3 % share, but it has been growing
at approximately 10% per year. India gained its foothold on the global scene with its
28

innovatively-engineered generic drugs and active pharmaceutical ingredients (API), and it is now
seeking to become a major player in outsourced clinical research and development
The important players in the Indian pharmaceutical sector are dr.reddys lab, sun pharma
,Ranbaxy, biocon ,cipla, Serum Institute of India ,Wockhardt, Aventis Pharma, Novo Nordisk

3.2.3 OIL&GAS INDUSTRY

Indian oil and gas industry estimated to be a US$ 90 billion industry, the Indian oil and
gas industry is among the largest contributors to the central and state exchequers in India. Its
share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a
capacity to process 148.97 million tonnes per year as of December 2006, are run by state-run
companies.
Economic Survey 2006-07 says:
During 2005-06, refinery throughput at 130.11 million tones was up 2.1 per cent from
127.42 million tones in the previous year. During April-December 2006, the throughput was
107.42 million tones.
Crude oil production in 2006-07 up to December 2006 was 25.40 million tones, up 6.03
per cent from 24.03 million tones in the first nine months of 2005-06. Natural gas production up
to December 2006 at 23.53 billion cubic meters, however, was down 2.42 per cent from 24.10
billion cubic meters in the same period of the previous year. Thus, on the aggregate, oil and oil
equivalent of gas (O+OEG) production in 2006-07 up to December 2006, year-on-year,
increased by only about 1.85 per cent.
India ranks sixth in the world in terms of petroleum demand and by 2010, India is
projected to replace South Korea and emerge as the fourth-largest consumer of energy, after the
United States, China and Japan.
Since India is dependent on imports for nearly 70 per cent of its petroleum
requirements, energy security has become a prime Government concern. In recent years this has
taken the form of trying to get a stake in oil and gas fields from Myanmar to central Asia and
Africa. However, the major thrust still lies in searching for hydrocarbons in onshore and offshore
blocks in India. Recent finds are making oil majors take notice of the potential in prospective
basins. Besides, the cost effectiveness of refining in India is drawing global players here. While
29

on the one hand, international companies are looking for a share in the fast-growing refinery
sector, domestic oil companies are being invited by countries such as Yemen, Nigeria and Saudi
Arabia to pick up stake in existing refineries and also set up Greenfield units.

Growing energy demand of India and necessity to service that to ensure economic growth
is not compromised, presents business opportunities in the complete value chain of oil and gas
sector. Exploration for domestic production growth, development of discovered fields,
transportation of crude oil, gas and products, refining to service the petroleum product domestic
demand and exports, retailing infrastructure; prospective blocks to encourage all these sectors
provide business and investment opportunities.

The main players of Indian oil and gas sector are ONCE,HPCL,BPCL, Reliance energy
,cairn energy ,BP, British gas ,shell etc

3.2.4 INFOTECH INDUSTRY

The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a
staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000.
No other Indian industry has performed so well against the global competition. Today, India
exports software and services to nearly 95 countries around the world. The share of North
America (U.S. & Canada) in Indias 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 Indias IT
industry in 2008 are US $ 87 billion and market openings are emerging across four broad sectors,
IT services, software products, IT enabled services, and e-businesses thus creating a number of
opportunities for Indian companies. In addition to the export market, all of these segments have a
domestic market component as well.
Today IT & ITES sector contribute over 7.5 % of the overall GDP growth of India and
its account for 35% of the total export from in India .in terms of employment generation this
sector alone giving 2.2 million jobs .The market capitalization of Indian IT companies come
around US $225 billion. Government of India (GOI) has taken a major step towards promoting
the domestic industry and achieving the full potential of the Indian IT entrepreneurs by forming a
new ministry for IT . Constraints have been comprehensively identified and steps taken to
30

overcome them and also to provide incentives. Thus for example, venture capital has been the
main source of finance for software industry around the world. However, majority of the
software units in India is in the small and medium enterprise sector and there is a critical
shortage of venture capital kind of support.
Indias most prized resource in todays knowledge economy is its readily available
technical work force. India has the second largest English-speaking scientific professionals in
the world, second only to the U.S. It is estimated that India has over 4 million technical workers,
over 1,832 educational institutions and polytechnics, which train more than 67,785 computer
software professionals every year. Government of India is stepping up the number and quality of
training facilities in the country to capitalize on this extraordinary human resource.

3.2.5 AUTOMOBILE INDUSTRY

The Indian automotive industry has flourished like never before in the recent years. This
extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a two
major factors namely, the improvement in the living standards of the middle class, and an
increase in their disposable incomes.
Moreover, the liberalization steps, such as, relaxation of the foreign exchange and
equity regulations, reduction of tariffs on imports, and refining the banking policies, initiated by
the Government of India, have played an equally important role in bringing the Indian
Automotive industry to great heights. It is estimated that the sale of passenger cars have tripled
compared to their sale in the last five years. Thus, the sale of cars has reached a figure of 1
million users and is expected to increase further. It's also to be noted that the demand for
luxurious models, SUVs, and mini-cars for family owners, have shot up, largely due to increase
in the consumer's buying capacity.
The increased demand for Indian automobiles has resulted in a large number of multinational auto companies, especially from Japan, U. S. A., and Europe, entering the Indian market
and working in collaboration with the Indian firms. Also, the institutionalization of automobile
finance has further paved the way to sustain a long-term high growth for the industry.
A well developed transport network indicates a well developed economy. For rapid
development a well-developed and well-knit transportation system is essential. As India's
transport network is developing at a fast pace, Automobile Industry is growing too. Also, the
industry has strong backward and forward linkages and hence provides employment to a large
31

section of the population. Thus the role of Automobile Industry cannot be overlooked in Indian
Economy. All kinds of vehicles are produced by the Automobile Industry. It includes the
manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry
can be broadly divided into the Car manufacturing, two-wheeler manufacturing and heavy
vehicle manufacturing units.
The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private
Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd.,Hyundai
Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name a few. The
two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter
India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like buses, trucks, defense
vehicles, auto rickshaws and other multi-utility vehicles are manufactured by Tata-Telco, Ashok
Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.

32

3.3 PROFILE OF THE COMPANIES

ICICI BANK
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in
the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of
Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by
ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the
initiative of the World Bank, the Government of India and representatives of Indian industry.
The principal objective was to create a development financial institution for providing mediumterm and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institution offering only project finance to a diversified
financial services group offering a wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first
Indian company and the first bank or financial institution from non-Japan Asia to be listed on the
NYSE.
ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3
bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended
March 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank
has a network of 741 branches (including 48 extension counters) and over 3300 ATMs in India
and presence in 30 International locations. ICICI Bank offers a wide range of banking products
and financial services to corporate and retail customers through a variety of delivery channels
and through its specialized subsidiaries and affiliates in the areas of investment banking, life and
non-life insurance, venture capital and asset management. . ICICI Bank currently has
subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong
Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United
States, United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary has
established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of
market capitalization

33

HDFC BANK
HDFC is India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the Corporation
has maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also
has a large corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered
office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank
in January 1995.
The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up
capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and
about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American
Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional
Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The
Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository
Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
Currently (2007), HDFC Bank has over 600 branches located in over 300 cities of India, and all
branches of the bank are linked on an online real-time basis. The bank offers many innovative
products & services to individuals, corporate, trusts, governments, partnerships, financial
institutions, currently (2007)

34

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.

35

DR. REDDYS LABORATORIES

Dr. Reddys 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 Indias first
discovery led global pharmaceutical company. In fact, it is this spirit of entrepreneurship that has
shaped the company to become what it is today. Today, Dr. Reddys 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. Reddys Laboratories Limited, together with its subsidiaries, operates as a
pharmaceutical company worldwide. It focuses on formulations, active pharmaceutical
ingredients and intermediates, generic drugs, critical care products, biotechnology products,
custom pharmaceutical services, and drug discovery. The company conducts research in the
areas of cancer, cardiovascular disorders, bacterial infection, and metabolic disorders. It markets
its products in approximately 100 countries worldwide, including India, Russia, the United
Kingdom, The United States, Germany, Brazil, and South Africa. The company has an
agreement with ClinTec International for the development an anti-cancer compound, DRF 1042
for the treatment of various types of cancer.

RANBAXY LABORATORIES LIMITED

Ranbaxy

Laboratories Limited,

is an integrated, research based, international

pharmaceutical company, based in India , producing a wide range of quality, affordable generic
medicines, trusted by healthcare professionals and patients across geographies. It is ranked
amongst the top ten generic companies worldwide. The Company has world class manufacturing
facilities in 9 countries on ground presence in 49 countries and its products available in over 125
countries

across

the

globe

Ranbaxy was incorporated in 1961 and went public in 1973. For the twelve months ended
December 31, 2006, the Company's Global Sales were at US $1340 Mn. Overseas markets
accounted for around 80% of global sales. The Company's largest market, USA with the sales of
US $ 380 Mn, , while Europe and BRICS (Brazil, Russia, India, China, South Africa) countries
contributed US $194 Mn and US $ 477 Mn to global sales.
36

Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative
offices across the globe with a presence in 23 of the Top 25 pharma markets of the world.
Ranbaxy has robust operations in USA, UK, France, Germany, Russia, India, Romania and
South Africa, and is strengthening its business in Japan, Italy, Spain and several other markets in
the Asia Pacific. While the Company is aggressively pursing its internationalization strategy it
has also gained market leadership in India, leveraging its strong brand building skills. A balanced
geographical presence coupled with a strong product flow from a wide therapeutic range serve as
the business building blocks of the Company.
Growth through acquisition is one of Ranbaxys stated strategies. The Company has successfully
concluded 15 acquisitions since 2004, including 8 in 2006 (4 in Europe, 1 in the US, 2 in India
and 1 in South Africa). Ranbaxy will continue to look at target acquisitions in US, Europe, India
and emerging markets based on value and synergies that can be unlocked from such transactions.

SUN PHARMA
Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were initially
limited to 2 states - West Bengal and Bihar. Sales were rolled out nationally in 1985. Products
that are used in cardiology were introduced in 1987, and Monotrate, one of the first products
launched at that time has since become one of our largest selling products. Important products in
Cardiology were then added; several of these were introduced for the first time in India.
Sun Pharma was listed on the main stock exchanges in India in 1994; and the Rs. 55 crore issue
of a Rs. 10 face value equity share at a premium of Rs. 140/- was oversubscribed 55 times. The
minimum 25% that was required under the regulations then for listing was offered to the public,
the owner family continues to hold a majority stake in Sun Pharma. They used this money to
build a Greenfield site for API manufacture, as well as for acquisitions. For the acquisitions, by
1997, our headquarters were shifted to Mumbai, the commercial capital of the country. We
began on the first of our international acquisitions with an initial $7.5 million investment in
Caraco Pharma Labs, Detroit. By 2000, they had completed 8 acquisitions, each such move
adding new therapy areas or offering an entry to important international markets. A new research
center was set up in Mumbai for generic product development for the US market. In India, as
new therapy areas were entered into post acquisition; customer attention, product selection and
37

focused marketing helped us gain a foothold in areas like orthopedics, gynecology, oncology,
etc. From a ranking at 38th in 1994, by 2000 they were ranked 5th with a leadership in 8 of the 11
therapy areas that we are present in. The year 2000 was the year of turnaround at the US
subsidiary, Caraco, as it began to receive approvals after successful inspection by the USFDA. In
December 2004, a research center spread over 16 acres was inaugurated by the President of
India, with special lab space for drug discovery and innovation. Typically companies or assets
that could be turned around and brought on track were identified.

ONGC
Since its inception, ONGC has been instrumental in transforming the country's limited
upstream sector into a large viable playing field, with its activities spread throughout India and
significantly in overseas territories. In the inland areas, ONGC not only found new resources in
Assam but also established new oil province in Cambay basin (Gujarat), while adding new
petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and
offshore).
ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay
High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge
oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over
5 billion tones of hydrocarbons, which were present in the country, were discovered. The most
important contribution of ONGC, however, is its self-reliance and development of core
competence in E&P activities at a globally competitive level.
Ranks 24th among Global Energy Companies by Market Capitalization in PFC
Energy 50 (December 2004). [ONGC was ranked 17th till March 2004, before the shares prices
dropped marginally for external reasons. ONGC placed at the top of all Indian Corporate listed
in Forbes 400 Global Corporate (rank 133rd) and Financial Times Global 500 (rank 326th), by
Market Capitalization. It recognized as the Most Valuable Indian Corporate, by Market
Capitalization, Net Worth and Net Profits, in current listings of Economic Times 500 (4th time in
a row), Business Today 500, Business Baron 500 and Business Week.
ONGC Has created the highest-ever Market Value-Added (MVA) of Rs. 24,258 Crore and
the fourth-highest Economic Value-Added (EVA) of Rs. 596 Crore, as assessed in the 5th
Business Today-Stern Stewart study (April 2003), ahead of private sector leaders like Reliance
38

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

RELIANCE ENERGY
Reliance Energy came into existence when it took over BSES in 2002 is a company
under the Reliance - Anil Dhirubhai Ambani Group [1] banner, one of India's largest
conglomerates. The company is headed by Anil Ambani.The company's corporate Headquarters
is situated in Sector 24,Noida. The company is the sole distributor of electricity to consumers in
the suburbs of Mumbai. It also runs power generation, transmission and distribution businesses
in other parts of Maharashtra, Goa and Andhra Pradesh. Reliance Energy plans to increase its
power generation capacity by adding 16,000 MW with investments of $13 billion. Reliance
Energy Ltd is India's leading integrated power utility company in the private sector. It has a
significant presence in generation, transmission and distribution of power in Maharashtra, Goa
and Andhra Pradesh.
With the ushering in of the power sector reforms and in the new environment of
opportunity for the power sector, REL is a key player in this transformation process. Reliance's
gas finds in KG-D6 block in Krishna Godavari basin which constitutes 60% of India's present
total gas production, will provide an enormous opportunity to scale up power generation
capacities in India. With the new gas find, REL has the unique advantage of integration from
'well head to wall socket'. This will help the company position itself as a global integrated energy
player under the Reliance banner.
REL and its affiliate power companies rank among the top 25 listed private sector
companies on major financial parameters. REL is part of the Reliance industries-India's private
sector company ranked among the world's 175 largest companies in terms of net profit and the
500 largest companies in terms of sales. REL is committed to creating superior value for all its
stakeholders and be amongst the most admired and trusted utility companies in the world by
setting new benchmarks in standards of corporate governance, operational and financial
excellence, responsible corporate citizenship and profitable growth.

39

BHARAT PETROLEUM CORPORATION LIMITED (BPCL)

Bharat Petroleum Corporation Limited (BPCL) is one of India's largest PSU companies. As the
name suggests its interests are in Petroleum sector. It is involved in the refining and retailing of
petroleum products. The government of India formed the company by taken over Burma shell
group of companies in 24th January 1976. On 1st August 1977, it was renamed Bharat Petroleum
Corporation Limited. It was also the first refinery to process newly found indigenous crude
(Bombay High), in the country
BPCL has a number of refineries in India. The important three are Mumbai Refinery - 12 Million
Metric Tones (MMT) Capacity, Kochi Refinery - 7.5 MMT, Numaligarh Refinery - 3 MMT.
BPCL is a Fortune Global 500 company as per the ranking of 2006. It was ranked at position
368. BPCL had registered revenue of $ 17.613 billion in 2006 and has employee strength of
14,667

TATA CONSULTANCY SERVICES LIMITED (TCS LIMITED)

Tata Consultancy Services Limited (TCS Limited) is an information technology,
consulting, services and business-process outsourcing organization which commenced operations
in 1968. As of 2006, it is Asia's largest IT services firm with annualized revenues of over US $4
billion (estimated for FY 2006-07) and has the largest number of employees among all the Indian
IT companies with strength of over 87,000.For fiscal year 2005-06, it posted a net profit of Rs.
3,709.TCS is part of one of Asia's largest conglomerates and most respected groups, the Tata
Group, which has interests in areas such as energy, telecommunications, financial services,
chemicals, engineering and materials.
Tata Consultancy Services (TCS). Through its Global Network Delivery Model,
Innovation Network, and Solution Accelerators, TCS focuses on helping global organizations
address their business challenges effectively. TCS continues to invest in new technologies,
processes, and people which can help its customers succeed. From generating novel concepts
through TCS Innovation Labs and academic alliances, to drawing on the expertise of key
partners, it keeps clients operating at the very edge of technological possibility. Whether TCS is
envisioning a business advantage, engineering an IT solution, or executing an outsourcing
strategy, it helps its customers experience certainty in their every day business.

40

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

41

MAHINDRA&MAHINDRA
The Mahindra Group is a US $4 billion* conglomerate is a leading manufacturer of
multi-utility vehicles and tractors with significant presence in key sectors like infrastructure,
information technology and financial services. The Group completed 60 years in 2005. Set up in
1945 to make general-purpose utility vehicles, Mahindra & Mahindra first became known as the
maker of the iconic Jeep in India. The company branched out into manufacturing light
commercial vehicles and agricultural tractors. Mahindra & Mahindra rapidly grew from being a
maker of army vehicles and tractors to a major automobile manufacturer with a growing global
appetite. Now the Group has a leading presence in many other key sectors -- Trade and Financial
Services (Mahindra Intertrade, Mahindra & Mahindra Financial Services Limited), Mahindra
Systems and Automotive Technologies (Mahindra Engineering Services, Mahindra Ugine),
Information Technology (Tech Mahindra, Bristlecone), and Infrastructure Development
(Mahindra GESCO, Club Mahindra Holidays, Mahindra World City). Two Group companies
Mahindra Finance and Tech Mahindra made their debut on the bourses in 2006 in line with the
commitment that each of the business segments would have flagship companies that will be
listed.

The Group employs over 34,000 people and has eight state-of-the-art manufacturing
facilities in India. Mahindra & Mahindra has made strategic acquisitions of plants in China and
the United Kingdom, and has three assembly plants in the USA. Mahindra & Mahindra has
entered into partnerships with international companies like Renault SA, France, and International
Truck and Engine Corporation, USA.

Mahindra & Mahindra's products are being exported to the USA, Russia and several other
countries in Africa, Asia, Europe and Latin America. Its global subsidiaries include Mahindra
Europe Sal. Based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China)
Tractor Company Limited .Mahindra & Mahindras 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.

42

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 Worlds Most Reputable Companies and in the Top 10
list of Most Reputable Indian companies.

TATA MOTORS LIMITED

Tata Motors Limited is India's largest automobile company, with revenues of Rs. 24,000
crores (USD 5.5 billion) in 2005-06. It is the leader by far in commercial vehicles in each
segment, and the second largest in the passenger vehicles market with winning products in the
compact, midsize car and utility vehicle segments. The company is the world's fifth largest
medium and heavy commercial vehicle manufacturer.
The company's 22,000 employees are guided by the vision to be best in the manner in which we
operate, best in the products we deliver, and best in our value system and ethics.Established in
1945, Tata Motors' presence indeed cuts across the length and breadth of India. Close to 4
million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's
manufacturing base is spread across Jamshedpur, Pune and Lucknow, supported by a nationwide dealership, sales, services and spare parts network comprising over 2,000 touch point.
Tata Motors, the first company from India's engineering sector to be listed in the New
York Stock Exchange (September 2004), has also emerged as a global automotive company. In
43

2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck
maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to
launch new products. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a
reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as
well. Hispano's presence is being expanded in other markets.
In 2006, it has formed a joint venture with the Brazil-based Marcopolo, a global
leader in body-building for buses and coaches, to manufacture and assemble fully-built buses and
coaches. Tata Motors and the Fiat Group have recently signed a memorandum of understanding
to establish an industrial joint venture in India to manufacture passenger With 1,400 engineers
and scientists, the company's Engineering Research Centre, established in 1966, has enabled
pioneering technologies and products. The company today has R&D centers in Pune,
Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK.
The pace of new product development has quickened. In 2005, Tata Motors created a new
segment by launching the Tata Ace, India's first indigenously developed mini-truck. The years to
come will see the introduction of several other innovative vehicles, all rooted in emerging
customer needs. Besides product development, R&D is also focusing on environment-friendly
technologies in emissions and alternative fuels.
Through its subsidiaries, the company is engaged in engineering and automotive solutions,
construction equipment manufacturing, auto finance, automotive vehicle components
manufacturing and supply chain activities, machine tools and factory automation solutions, highprecision tooling and plastic and electronic components for automotive and computer
applications, and automotive retailing and service operations.
True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate
Social Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in
community and social initiatives on human rights, labour and environment standards in
compliance with the principles of the Global Compact. Simultaneously, it also plays an active
role in community development, serving rural communities adjacent to its manufacturing
locations.
With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

44

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.

45

CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

4.1 BANKING SECTOR

4.1.1 HDFC BANK

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
1,079.80
1,070.00
1,068.00
1,065.30
1,056.00
1,050.05
1,054.70
1,056.90
1,054.00
1,024.95
1,032.00
1,013.90
1,018.45
998.65
1,008.50
996.15
1,018.30
1,061.60
1,079.95
1,094.00
1,104.00
1,096.10
1,099.00
1,061.15
1,065.00
1,061.05
1,052.00
1,068.40
1,070.00
1,056.30
1,055.00
1,032.90
1,040.00
1,058.45
1,061.05
1,066.10
1,070.00
1,062.40
1,066.00
1,078.60

BETA

0.708544

SENSEX PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7 4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15 3942.25
3944.55 4052.45
4052.85
4078.4
4090.7
4080.5
4084.9 4076.45
4075.2 4109.05
4126 4090.15
4089.6 4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4 4124.45
4123.85
4082.7
SUM
SD

STOCK MARKET
RETURN RETURN
Y
X
-0.90758 1.037504
-0.25281 0.407965
-0.56345
-0.95598
0.20859
-0.16917
-2.75617
-1.25273
-1.75388
-0.55678
-1.94413
-1.55077
-1.22459 2.338954
4.252185
2.73542
1.300986 0.630421
-0.71558
-0.24935
-3.44404
-0.20686
-0.37089 0.830634
1.558935
-0.86888
-1.28037 0.314212
-2.09479
-0.89089
1.774038
0.57296
0.475944 1.359954
-0.71028
-0.57733
1.181989
-0.99785
-7.2659
1.9514
1.7856
VAR

X*Y
-0.94161
-0.10314
0.538641
-0.03529
3.452733
0.976531
3.014908
-2.86426
11.63151
0.820168
0.178427
0.712432
-0.30808
-1.35453
-0.40231
1.86622
1.016453
0.647261
0.410067
-1.17945
18.077
3.1883

TABLE 1
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK & MARKET RETURNS COMPARISION

5
4
RETURN
3
2
1
0
-1
-2
-3
-4
1/2 1/4 1/6 1/8 1/10 1/12 1/14 1/16 1/18 1/20 1/22 1/24 1/26 1/28 1/30

DATE

GRAPH 1
Y=STOCK RETURN, X =MARKET RETURN

46

Y
X

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

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
OPEN

X*Y

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

0.730583

12-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

BETA

DATE

OPEN

CLOSE

MARKET
RETURN

1-Feb-07

0.39731

X^2

3.200883

-3.80387

-12.1758

14.46945

SUM

-3.82372

-9.62403

36.79962

92.62204

SD

2.029832 VAR

4.120217

TABLE 2

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

47

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

RETURNS

STOCK AND MARKET RETURNS COMPARISION

2/1

DATE

STOCK
RETURN

SENSEX PRICE

Standard deviation (total risk associated with stock) is 2.02 where as the beta value is
0.397.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. There is a huge difference between systematic and
unsystematic risk here virtually no systematic risk associated with this stock when we camper it
with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the
stock in comparison with market returns. The above graph revels that the average stock return is
well above the market return.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07

STOCK PRICE
OPEN
CLOSE
960
980.3
980
937.6
921.65
928.05
929
927.95
956
915.55
919
974.15
983
976.9
976.9
950.05
960
960.15
926.2
932.95
965
918.4
935
903.5
910
924.65
935
955.25
958
965.6
989 1,025.90
1,030.00 1,011.15
1,018.00
973.2
973
958.45
952
933.75
946
954.15

SENSEX PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM

STOCK
RETURN
Y
2.114583
-4.32653
0.694407
-0.11302
-4.23117
6.001088
-0.62055
-2.74849
0.015625
0.728784
-4.82902
-3.36898
1.60989
2.165775
0.793319
3.731041
-1.8301
-4.40079
-1.49538
-1.91702
0.861522
-11.165

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314

X*Y
3.714946
9.636836
-2.79514
-0.24803
4.009822
22.23575
0.723343
-1.26798
0.014766
-2.4619
0.172233
2.851188
3.013557
1.015111
1.434227
11.04099
0.74115
4.955006
2.257502
-1.98629
0.743544
-26.833

2.881033

VARIANCE

8.300353

0.77031
BETA

SD

TABLE 3

48

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
5.775917

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

8

RETURNS

6
4
2

-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

GRAPH 3

Standard deviation (total risk associated with stock) is 2.88 where as the beta value is
0.770.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price.

The beginning months of any financial year always controversial especially in terms of
politically and financially it will have a negative impact on the stock market .the fluctuation of
the stock is mainly because of these two risk .here is the case of HDFC bank the analysis revels
up and downs quite frequently but not to much, so the risk associated with this stock is
comparatively low and proper diversification of the portfolio will help to eliminate the risk
associated with this stock.

49

4.1.2 ICICI BANK

STOCK PRICE
OPEN
CLOSE
892
897.45
909.75
894.55
895
890.5
890
910.1
917
906.3
905.2
912.35
909.95
883.85
890
892.35
915
972.3
977.8
957.85
964.85
960.05
960
986.85
986.85
971.25
971.25
985.4
994.4
977.2
975
964.3
999
974.55
988
991.45
991.45
955.95
970
941.1

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07
BETA

.94665

STOCK
R
Y
0.610987
-1.67079
-0.50279
2.258427
-1.16685
0.789881
-2.86829
0.264045
6.262295
-2.04029
-0.49749
2.796875
-1.58079
1.456885
-1.72969
-1.09744
-2.44745
0.34919
-3.58061
-2.97938
-7.37327

SENSEX PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7
4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15
3942.25
3944.55
4052.45
4052.85
4078.4
4090.7
4080.5
4084.9
4076.45
4075.2
4109.05
4126
4090.15
4089.6
4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4
4124.45
4123.85
4082.7
sum
SD
2.7466

MARKET
R
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.951434
variance

X*Y
0.633901
-0.68162
0.480658
-0.38205
1.461746
-0.43979
4.448069
0.617589
17.13001
-1.28624
0.124046
-0.57856
-1.31306
-1.26586
-0.54349
0.977692
-1.40229
0.474883
2.0672
2.972988
-14.3884
7.5443sa

TABLE 4
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURN COMPARISION

8
4
2

-2
-4

DATE

GRAPH 4

50

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

-6
1/2

RETURN

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
3.808093

Standard deviation (total risk associated with stock) is 2.746 where as the beta
value is 0.95.it shows that diversification of this stock would help the investor to eliminate
considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the
low volatility of the price of the stock in comparison with market returns. The above graph revels
that the average stock return is well above the market return.

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

STOCK PRICE
OPEN CLOSE
951
952.55
959.9
944.9
959.65
946.8
949.85
957.9
961
983.15
988
999.7
999
996.15
990.1
966.15
960
955.9
932.35
914.4
920
949.6
952.4
980.2
985
969.45
987
969.3
974
946.2
954.8
907
913.8
904
904
875.8
849.8
829.5

BETA

1.57268

STOCK
R
SENSEX PRICE
OPEN
CLOSE
Y
4083.4
4137.2
0.162986
4140.2
4183.5
-1.56266
4193.15
4215.35
-1.33903
4216.55
4195.9
0.847502
4198.2
4224.25
2.304891
4232
4223.4
1.184211
4223.5
4187.4
-0.28529
4187.2
4058.3
-2.41895
4069.1
4044.55
-0.42708
4044.9
4047.1
-1.92524
4046.8
4146.2
3.217391
4149.25
4164.55
2.918942
4164.85
4106.95
-1.57868
4107.15
4096.2
-1.79331
4096.65
4040
-2.85421
4046
3938.95
-5.00628
3939.1
3942
-1.07244
3948.05
3893.9
-3.11947
3893.4
3745.3
-2.3888
SUM
-15.1355
SD
2.15814
TABLE 5

MARKET
X
1.31753
1.045843
0.529435
-0.48974
0.620504
-0.20321
-0.85474
-3.07843
-0.60333
0.054389
2.456262
0.368741
-1.39021
-0.26661
-1.38284
-2.64582
0.073621
-1.37156
-3.80387
-9.62403
variance

X*Y
0.214739
-1.6343
-0.70893
-0.41505
1.430194
-0.24065
0.243845
7.44656
0.257671
-0.10471
7.902755
1.076334
2.194691
0.478112
3.946907
13.24574
-0.07895
4.278549
9.086682
145.6648
4.657567

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
92.62204

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

4

-2

-4

DATE

GRAPH 5
51

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

-6
2/1

RETURNS

Standard deviation (total risk associated with stock) is 2.16 where as the beta value is 1.57
.the beta values greater than 1 it shows that this stock is more risky and volatile than the index.
the systematic risk here is well above the standard risk associated with any stock so an investor
should be careful while investing this stock. the average stock return and market return shows a
decreasing trend and also decrease in stock return well above the market return .

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07

STOCK PRICE
CLOS
E
OPEN
840 855.35
850
842.9
855.5 821.55
845
847.9
882.5 828.65
831
863
871.65
858.6
865
868.7
871.25
877.6
849.8
829.4
835
823.9
822.7
810
828 822.55
833.8
824
828 870.55
970.35
899.6
870
891.6
899
875.7
866.1 857.85
859.45
855.3
803.65 853.35

STOCK
RETURN

SENSEX PRICE
OPEN
3745.4
3811.65
3726.5
3577.15
3661.55
3627.25
3761.85
3717.45
3735.25
3768.4
3644.9
3639.35
3611.3
3680.35
3697.7
3764.5
3876.75
3863.45
3818.75
3759.15
3788.85

MARKET
RETURN

CLOSE
3811.2
3726.75
3576.5
3655.65
3626.85
3761.65
3718
3734.6
3770.55
3641.1
3643.6
3608.55
3678.9
3697.6
3764.55
3875.9
3861.05
3819.95
3761.1
3798.1
3821.55
SUM

Y
1.827381
-0.83529
-3.96844
0.343195
-6.10198
3.850782
-1.49716
0.427746
0.728838
-2.40056
-1.32934
-1.5437
-0.65821
-1.17534
5.138889
-7.29118
2.482759
-2.59177
-0.95255
-0.48287
6.184284
-9.84453

X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314

X*Y
3.210383
1.860519
15.97386
0.753137
5.782764
14.26825
1.745165
0.197335
0.688789
8.109328
0.047413
1.306439
-1.23211
-0.55089
9.290497
-21.5762
-1.00546
2.918167
1.438017
-0.50032
5.3374
-23.6595

SD

3.2701

variance

10.69355

0.6203
BETA

TABLE 6

52

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
5.775917

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

8
6
4
2
0
-2
-4
-6
-8

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 6
Standard deviation (total risk associated with stock) is 2.04 where as the beta value is
0.62.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price.

In the case of icici bank the stock is more volatile and the systematic risk associated
with this stock is very high since the beta value on an average greater than 1 its above the
standard. The fluctuation in this stock mainly because of inflationary trend in the economy
because of high inflation rate RBI forced to increase the CRR and interest rate that would be the
reason for the down ward trend of this stock. the average stock return is below the market return
so an investor must take an extra care while investing in this stock .

53

4.1.3 SBI
STOCK PRICE NIFTY PRICE
DATE

OPEN

CLOSE

OPEN

CLOSE

2-Jan-07

1,250.00

1,253.55

3966.25

4007.4

3-Jan-07

1,250.00

1,264.85

4007.7

4024.05

4-Jan-07

1,270.00

1,243.00

4027.3

3988.8

5-Jan-07

1,241.00

1,244.10

3990.15

3983.4

8-Jan-07

1,248.80

1,213.70

3983.3

3933.4

9-Jan-07

1,219.85

1,174.90

3933.3

3911.4

10-Jan-07

1,171.00

1,136.40

3910.95

3850.3

11-Jan-07

1,145.00

1,147.45

3852.15

3942.25

12-Jan-07

1,162.00

1,225.45

3944.55

4052.45

15-Jan-07

1,235.00

1,222.25

4052.85

4078.4

16-Jan-07

1,255.00

1,209.80

4090.7

4080.5

17-Jan-07

1,219.00

1,222.55

4084.9

4076.45

18-Jan-07

1,226.00

1,229.00

4075.2

4109.05

19-Jan-07

1,282.25

1,220.30

4126

4090.15

22-Jan-07

1,218.00

1,224.55

4089.6

4102.45

23-Jan-07

1,225.05

1,174.05

4102.65

4066.1

24-Jan-07

1,174.05

1,172.55

4066.6

4089.9

25-Jan-07

1,175.25

1,176.45

4092.05

4147.7

29-Jan-07

1,190.00

1,156.15

4148.4

4124.45

31-Jan-07

1,162.00

1,140.45

4123.85

4082.7

SUM

STOCK
RETURN
Y
0.284
1.188
-2.12598
0.249799
-2.8107
-3.68488
-2.95474
0.213974
5.460413
-1.03239
-3.60159
0.291222
0.244698
-4.83135
0.537767
-4.1631
-0.12776
0.102106
-2.84454
-1.85456
-21.4596

MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.951434

X*Y
0.294651
0.484662
2.032389
-0.04226
3.521046
2.051683
4.582134
0.500475
14.93652
-0.65084
0.898043
-0.06024
0.203255
4.197866
0.168973
3.70885
-0.0732
0.138859
1.64224
1.850581
-41.877

VAR

5.780065

1.66073
BETA

SD
2.569884
TABLE 7

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

6

2
Y

-4
-6
DATE

GRAPH 7

54

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

-2

1/4

0
1/2

RETURNS

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
3.808093

Standard deviation (total risk associated with stock) is 2.57 where as the beta value is 1.66
.the beta values greater than 1 it shows that this stock is more risky and volatile than the index.
The systematic risk here is well above the standard risk associated with any stock so an investor
should be careful while investing this stock. The average stock return and market return shows a
decreasing trend and also decrease in stock return well above the market return
STOCK PRICE
DATE

OPEN

STOCK
RETURN

NIFTY PRICE

CLOSE

OPEN

CLOSE

MARKET
RETURN

X*Y

X^2

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

0.169704

-3.80387

-27.5033

14.46945

-6.16972

-9.62403

10.40834

47.79203

SD

3.004418

VAR

9.026525

TABLE 8
GRAHHICAL REPRESENTATON OF STOCK AND MARKET

STOCK AND MARKET RETURNS COMPARISION

8
6
4
2
0
-2
-4
-6
-8

DATE

GRAPH 8
55

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

RETURNS

BETA

7.230342

sum

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.

DATE

STOCK PRICE

NIFTY PRICE

OPEN

OPEN

CLOSE

CLOSE

1-Mar-07

1,042.00

1,055.65

3745.4

3811.2

2-Mar-07

1,035.00

1,004.90

3811.65

3726.75

5-Mar-07

999

962.55

3726.5

3576.5

6-Mar-07

999

988.05

3577.15

3655.65

7-Mar-07

998

964.4

3661.55

3626.85

8-Mar-07

989

999.3

3627.25

3761.65

9-Mar-07

1,001.10

982.65

3761.85

3718

12-Mar-07

990

974.2

3717.45

3734.6

13-Mar-07

979

980.4

3735.25

3770.55

14-Mar-07

960

948

3768.4

3641.1

15-Mar-07

955

922.1

3644.9

3643.6

16-Mar-07

925

913.6

3639.35

3608.55

19-Mar-07

924.8

926.5

3611.3

3678.9

20-Mar-07

930

952.35

3680.35

3697.6

21-Mar-07

955

982.95

3697.7

3764.55

22-Mar-07

992

1,029.40

3764.5

3875.9

23-Mar-07

1,034.00

1,026.20

3876.75

3861.05

26-Mar-07

1,030.00

1,013.65

3863.45

3819.95

28-Mar-07

1,006.00

973.65

3818.75

3761.1

29-Mar-07

974

985.65

3759.15

3798.1

30-Mar-07

990.1

994.45

3788.85

3821.55

BETA

0.79409

SUM
SD

STOCK
RETURN
Y
1.309981
-2.90821
-3.64865
-1.0961
-3.36673
1.041456
-1.84297
-1.59596
0.143003
-1.25
-3.44503
-1.23243
0.183824
2.403226
2.926702
3.770161
-0.75435
-1.58738
-3.21571
1.196099
0.43935
-12.5297
2.170108

TABLE 9

56

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
2.301403
6.4777
14.68663
-2.40537
3.190606
3.858893
2.148261
-0.73628
0.135145
4.222614
0.122871
1.043014
0.3441
1.126405
5.291127
11.15675
0.305496
1.787288
4.85461
1.239324
0.379184
-30.1128
4.709368

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
5.775917

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

COMPARISION OF STOCK AND MARKET

RETURNS
6
RETURNS

4
2
Y
0
X
-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

GRAPH 9

Standard deviation (total risk associated with stock) is 2.403where as the beta value is
0.794.it shows that diversification of the portfolio of stocks would help the investor to eliminate
considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the
low volatility of the price of the stock in comparison with market returns. The above graph revels
that the average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price and the average return is much below the market
return.

Usually the beginning o f the financial year a bad month for the financial sector stocks
mainly because of the impact of the budget and this year due to inflationary pressure RBI force
to rise CRR level and the interest rate it had an negative impact on the profitability of the banks
this leads the collapse of banking stocks .here the stock price is more fluctuating than the market
price .so the investment option would be how effectively we tackle our interest rate risk and
political risk by proper diversification of the portfolio .

57

4.2

PHARMASUICAL INDUSTRY

4.2.1 DR.REDDYS LAB

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
813.9
807.4
805.3
809.05
812.1
828.1
830
810.4
812
812.2
812
798.15
798
774.95
794
791.9
792
809.45
812.9
803.9
811.8
808.8
816
815.35
819
815.8
817
811.5
815.5
810.05
830
771.25
773
762.9
766
763.7
768
751.8
759.95
743.05

BETA

0.72526

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7
4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15
3942.25
3944.55
4052.45
4052.85
4078.4
4090.7
4080.5
4084.9
4076.45
4075.2
4109.05
4126
4090.15
4089.6
4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4
4124.45
4123.85
4082.7
SUM
SD

STOCK
RETURN
Y
-0.7986
0.4657
1.9702
-2.3614
0.0246
-1.7057
-2.8885
-0.2645
2.2033
-1.1071
-0.3695
-0.0797
-0.3907
-0.6732
-0.6683
-7.0783
-1.3066
-0.3003
-2.1094
-2.2238
-19.662
1.9314

MARKET
RETURN
X
1.0375
0.408
-0.956
-0.169
-1.253
-0.557
-1.551
2.339
2.7354
0.6304
-0.249
-0.207
0.8306
-0.869
0.3142
-0.891
0.573
1.36
-0.577
-0.998
1.9514
VAR

X*Y
-0.8286
0.19
-1.8835
0.3995
-0.0309
0.9497
4.4794
-0.6186
6.0269
-0.698
0.0921
0.0165
-0.3245
0.5849
-0.21
6.306
-0.7486
-0.4083
1.2178
2.2191
16.731
3.7304

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.32828
1.849475
0.333311
0.995712
25.76932

TABLE 10
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 10
58

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

Standard deviation (total risk associated with stock) is 1.93where as the beta value is
0.725.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. When we camper it with the total risk. Here the beta is
less than 1 it shows that the low volatility of the price of the stock in comparison with market
returns. The above graph revels that the average stock return is well above the market return and
frequent fluctuation in price put the stock under the scanner.
STOCK PRICE
DATE

OPEN

1-Feb-07

STOCK
RETURN

NIFTY PRICE

CLOSE

OPEN

CLOSE

4083.4

MARKET
RETURN

4137.2

-0.1611

X*Y

1.3175

-0.2122

X^2

745

743.8

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

0.364004

14-Feb-07

706.25

719.9

4044.9

4047.1

1.9327

0.0544

0.1051

0.002958

15-Feb-07
19Feb 07

724.75

738.4

4046.8

4146.2

1.8834

2.4563

4.6261

6.033222

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

-15.576

-9.624

31.783

47.79203

SUM
0.55673

SD

1.6295

VAR

2.6553

TABLE 11
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 11

59

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

RETURNS

BETA

Standard deviation (total risk associated with stock) is 1.62 where as the beta value is
0.55 .it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of February this stock fluctuating
along with the market .here the non diversifiable risk is very less so proper diversification of the
portfolio ensure maximum return with minimum investment

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN
CLOSE
670
661.75
655
660.1
601
617.5
630
622.55
635
635.25
641
668.55
679.9
660
678
658.4
660
661
645
648.45
655
672.45
681
683.6
689
683
682.4
690
690
689
654.9
692
714.5
-0.1705

677.25
682.4
679.2
682
686.3
682.15
692.15
706.5
728.25

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3680.35
3697.7
3764.5
3876.75
3863.45
3818.75
3759.15
3788.85

STOCK
RETURN
Y
-1.2313
0.7786
2.7454
-1.1825
0.0394
4.298
-2.9269
-2.8909
0.1515
0.5349
2.6641
0.3818

MARKET
RETURN
X
1.7568
-2.227
-4.025
2.1945
-0.948
3.7053
-1.166
0.4613
0.9451
-3.378
-0.036
-0.846

X*Y
-2.1633
-1.7343
-11.051
-2.5951
-0.0373
15.925
3.4117
-1.3337
0.1432
-1.8069
-0.095
-0.3231

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232

-1.7054
-0.0878
-0.4689
-1.1594
-0.5362
-0.9942
5.6879
2.0954
1.9244
8.1178
2.2031

1.8719
0.4687
1.8079
2.9592
-0.405
-1.126
-1.51
1.0361
0.8631
2.4033
VAR

-3.1923
-0.0412
-0.8478
-3.431
0.2172
1.1194
-8.5868
2.1711
1.6609
-12.59
4.8536

3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

3678.9
3697.6
3764.55
3875.9
3861.05
3819.95
3761.1
3798.1
3821.55
SUM
SD

TABLE 12

60

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

8

RETURNS

6
4
2

-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

GRAPH 12

Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk
associated with this stock can be eliminated with proper diversification of the portfolio in this
particular month the return from this stock much above the market return but some trading day
the price of the stock is crumbling down may be because of the high selling trend for short term
profile

The overall performance of this stock is promising the risk associated with this stock
comparatively less. Investor can hold the stock for a long time. The average beta is less than one
that means this stock is less volatile than the market. Proper diversification of the portfolio will
help the investor to eliminate the considerable part of the risk

61

4.2.2 RANBAXY

2-Jan-07

391

399.15

3966.25

3-Jan-07

397.4

412.1

4007.7

4-Jan-07

414

413.2

4027.3

5-Jan-07

411

413.8

3990.15

8-Jan-07

412

418.8

3983.3

9-Jan-07

425

416.8

3933.3

10-Jan-07

417.5

411.15

3910.95

11-Jan-07

411.9

416.4

3852.15

12-Jan-07

416.1

421.25

3944.55

15-Jan-07

426.95

430.4

4052.85

16-Jan-07

431

429.65

4090.7

17-Jan-07

430

432.3

4084.9

18-Jan-07

436

430.4

4075.2

19-Jan-07

432

414.5

4126

22-Jan-07

417

404.55

4089.6

23-Jan-07

408

399.45

4102.65

24-Jan-07

409.5

400.8

4066.6

25-Jan-07

402.05

397.3

4092.05

29-Jan-07

400

402.4

4148.4

31-Jan-07

404

408.95

4123.85

0.42651

X*Y
2.1626
1.5091
0.1847
-0.1152
-2.0676
1.0743
2.3587
2.5553
3.3856
0.5094
0.0781
-0.1106
-1.0669
3.5198
-0.9381
1.8669
-1.2173
-1.6067
-0.3464
-1.2226
10.513
3.6506

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

5
4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 13
62

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/12

1/10

1/8

1/6

1/4

1/2

RETURNS

BETA

MARKET
RETURN
X
1.0375
0.408
-0.956
-0.169
-1.253
-0.557
-1.551
2.339
2.7354
0.6304
-0.249
-0.207
0.8306
-0.869
0.3142
-0.891
0.573
1.36
-0.577
-0.998
1.9514
VAR

STOCK
RETURN
Y
2.0844
4007.4
3.699
4024.05
-0.1932
3988.8
0.6813
3983.4
1.6505
3933.4
-1.9294
3911.4
-1.521
3850.3
1.0925
3942.25
1.2377
4052.45
0.8081
4078.4
-0.3132
4080.5
0.5349
4076.45
-1.2844
4109.05
-4.0509
4090.15
-2.9856
4102.45
-2.0956
4066.1
-2.1245
4089.9
-1.1814
4147.7
0.6
4124.45
1.2252
4082.7
SUM
-4.0658
SD
1.9106
TABLE 13

NIFTY PRICE
OPEN
CLOSE

1/14

DATE

STOCK PRICE
OPEN
CLOSE

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

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

STOCK PRICE
OPEN CLOSE
409
411.2
413
413.05
414
414.7
414.7
420.05
424.2
419.3
421.9
420.95
424.05
416.75
413.6
409.15
409.1
411.5
408
415.45
415
393.35
396
391.6
385
395.5
396.5
382.7
383
367.45
367
356.55
365
351.35
354.1
351.6
342
337.85

BETA

0.0797

NIFTY PRICE
OPEN
CLOSE
4083.4
4137.2
4140.2
4183.5
4193.15
4215.35
4216.55
4195.9
4198.2
4224.25
4232
4223.4
4223.5
4187.4
4187.2
4058.3
4069.1
4044.55
4044.9
4047.1
4046.8
4146.2
4149.25
4164.55
4164.85
4106.95
4107.15
4096.2
4096.65
4040
4046
3938.95
3939.1
3942
3948.05
3893.9
3893.4
3745.3
SUM

STOCK
RETURN
Y
0.5379
0.0121
0.1691
1.2901
-1.1551
-0.2252
-1.7215
-1.0759
0.5867
1.826
-5.2169
-1.1111
2.7273
-3.4805
-4.0601
-2.8474
-3.7397
-0.706
-1.2135
-19.404

SD

MARKET
RETURN
X
1.3175
1.0458
0.5294
-0.49
0.6205
-0.203
-0.855
-3.078
-0.603
0.0544
2.4563
0.3687
-1.39
-0.267
-1.383
-2.646
0.0736
-1.372
-3.804
-9.624

X*Y
0.7087
0.0127
0.0895
-0.6318
-0.7168
0.0458
1.4714
3.3121
-0.3539
0.0993
-12.814
-0.4097
-3.7915
0.9279
5.6144
7.5337
-0.2753
0.9683
4.6158
6.4067

2.1069 VAR
4.4389
TABLE 14
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

63

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

STOCK AND MARKET RETURNS COMPARISION

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

RETURNS

4
3
2
1
0
-1
-2
-3
-4
-5
-6

DATE

GRAPH 14
Total risk associated with this stock is 2.20 and the beta is -0.17 here it means all the risk
associated with this stock can be eliminated with proper diversification of the portfolio in this
particular month the return from this stock much above the market return but some trading day
the price of the stock is crumbling down may be because of the high selling trend for short term
profit.

DATE
1-Mar-07

STOCK PRICE
OPEN CLOSE

NIFTY PRICE
OPEN
CLOSE

344

342.75

3745.4

3811.2

2-Mar-07

345

347.3

3811.65

3726.75

5-Mar-07

345.5

320.7

3726.5

3576.5

6-Mar-07

325

322.3

3577.15

3655.65

7-Mar-07

322

307.25

3661.55

3626.85

8-Mar-07

312

328.45

3627.25

3761.65

9-Mar-07

334

326.05

3761.85

3718

12-Mar-07

328

323.75

3717.45

3734.6

13-Mar-07

323.75

320.7

3735.25

3770.55

14-Mar-07

316.5

312.25

3768.4

3641.1

15-Mar-07

315

315

3644.9

3643.6

16-Mar-07

315.95

311.2

3639.35

3608.55

19-Mar-07

315

316.25

3611.3

3678.9

20-Mar-07

314

314

3680.35

3697.6

21-Mar-07

319.5

316.95

3697.7

3764.55

22-Mar-07

318.9

336.35

3764.5

3875.9

23-Mar-07

340

331.55

3876.75

3861.05

26-Mar-07

335

335

3863.45

3819.95

28-Mar-07

334.2

333.2

3818.75

3761.1

29-Mar-07

334.25

330.15

3759.15

3798.1

30-Mar-07

333

327.05

3788.85

3821.55

BETA

0.90549

SUM
SD
TABLE 15

64

STOCK
RETUR
Y
-0.3634
0.6667
-7.178
-0.8308
-4.5807
5.2724
-2.3802
-1.2957
-0.9421
-1.3428
0
-1.5034
0.3968
0
-0.7981
5.4719
-2.4853
0
-0.2992
-1.2266
-1.7868
-15.205
2.6885

MARKE
RETURN
X
1.7568
-2.227
-4.025
2.1945
-0.948
3.7053
-1.166
0.4613
0.9451
-3.378
-0.036
-0.846
1.8719
0.4687
1.8079
2.9592
-0.405
-1.126
-1.51
1.0361
0.8631
2.4033
VAR

X*Y
-0.6384
-1.4849
28.893
-1.8231
4.3411
19.536
2.7745
-0.5978
-0.8903
4.5361
0
1.2723
0.7428
0
-1.4429
16.193
1.0065
0
0.4517
-1.271
-1.5421
70.056
7.2279

X^2
3.0864
4.9612
16.202
4.8157
0.8981
13.729
1.3587
0.2128
0.8931
11.411
0.0012
0.7162
3.5040
0.2196
3.2684
8.7570
0.1640
1.2677
2.2790
1.0735
0.7447
79.565

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

8
6
4
2
0
-2
-4
-6
-8

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 15
Standard deviation (total risk associated with stock) is 2.69where as the beta value is 0.91
.it shows that diversification of this stock would help the investor to eliminate considerable part
of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of
the price of the stock in comparison with market returns. The above graph revels that the average
stock return is below the market return. In the month of February this stock fluctuating along
with the market .here the non diversifiable risk is very less so proper diversification of the
portfolio ensure maximum return with minimum investment

The overall performance of this stock is promising the risk associated with this stock
comparatively less. Investor can hold the stock for a long time. The average beta is less than one
that means this stock is less volatile than the market. Proper diversification of the portfolio will
help the investor to eliminate the considerable part of the risk

65

4.2.3 SUN PHARMASUICAL

0.61224

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7 4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15 3942.25
3944.55 4052.45
4052.85
4078.4
4090.7
4080.5
4084.9 4076.45
4075.2 4109.05
4126 4090.15
4089.6 4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4 4124.45
4123.85
4082.7
sum
SD

MARK
ET
RETU
RN
X
1.0375
0.408
-0.956
-0.169
-1.253
-0.557
-1.551
2.339
2.7354
0.6304
-0.249
-0.207
0.8306
-0.869
0.3142
-0.891
0.573
1.36
-0.577
-0.998
1.9514
VAR

X*Y
0.174
0.1756
0.2848
0.0704
-1.1121
0.3564
0.921
12.436
2.7891
0.9141
0.2841
-0.4948
-0.9405
1.8246
0.8152
0.3094
-3.1015
0.6242
0.5241
-0.9334
15.92
4.4135

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

TABLE 16
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

6
4
2
Y
0
X
-2
-4

DATE

GRAPH 16
66

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

-6
1/2

BETA

STOCK PRICE
OPEN
CLOSE
983.9
985.55
987.5
991.75
990.05
987.1
985
980.9
980
988.7
992
985.65
985
979.15
962.05
1,013.20
1,020.00
1,030.40
1,031.00
1,045.95
1,048.80
1,036.85
1,020.00
1,044.40
1,059.85
1,047.85
1,050.00
1,027.95
1,033.00
1,059.80
1,051.00
1,047.35
1,079.80
1,021.35
1,034.95
1,039.70
1,030.00
1,020.65
1,021.00
1,030.55

RETURNS

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOC
K
RETU
RN
Y
0.1677
0.4304
-0.298
-0.4162
0.8878
-0.6401
-0.5939
5.3168
1.0196
1.45
-1.1394
2.3922
-1.1322
-2.1
2.5944
-0.3473
-5.413
0.459
-0.9078
0.9354
2.6652
2.1008

Standard deviation (total risk associated with stock) is 2.10 where as the beta value is
0.612.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of January this stock is more
fluctuating as a comparison to the market price

STOCK PRICE
OPEN
CLOSE

DATE

NIFTY PRICE
OPEN
CLOSE

1-Feb-07

1,034.80

1,045.70

2-Feb-07

1,044.90

1,043.80

4140.2

4183.5

5-Feb-07

1,035.15

1,052.85

4193.15

4215.35

6-Feb-07

1,069.80

1,037.65

4216.55

4195.9

7-Feb-07

1,040.00

1,048.40

4198.2

4224.25

8-Feb-07

1,026.05

1,047.40

4232

4223.4

4083.4

4137.2

4187.4

9-Feb-07

1,052.00

1,034.50

4223.5

12-Feb-07

1,020.20

1,012.35

4187.2

4058.3

13-Feb-07

998

1,015.00

4069.1

4044.55

14-Feb-07

991

1,020.35

4044.9

4047.1

15-Feb-07

1,016.30

1,031.00

4046.8

4146.2

19-Feb-07

1,027.05

1,035.25

4149.25

4164.55

20-Feb-07

1,038.00

1,029.70

4164.85

4106.95

21-Feb-07

1,029.00

1,017.95

4107.15

4096.2

22-Feb-07

1,047.75

1,004.75

4096.65

4040

23-Feb-07

1,016.05

974.15

4046

3938.95

26-Feb-07

979.9

982.45

3939.1

3942

27-Feb-07

972.65

953.6

3948.05

3893.9

28-Feb-07

940

929.3

3893.4

3745.3

MARKE
T
RETURN
X
1.3175
1.0458
0.5294
-0.49
0.6205
-0.203
-0.855
-3.078
-0.603
0.0544
2.4563
0.3687
-1.39
-0.267
-1.383
-2.646
0.0736
-1.372
-3.804
-9.624
VAR

X*Y
1.3878
-0.1101
0.9053
1.4718
0.5012
-0.4228
1.4219
2.3687
-1.0277
0.1611
3.5528
0.2944
1.1116
0.2863
5.6752
10.911
0.0192
2.6863
4.3299
35.524
4.1565

sum
0.75786
SD
TABLE 17
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 17
67

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

RETURNS

BETA

STOCK
RETURN
Y
1.0533
-0.1053
1.7099
-3.0052
0.8077
2.0808
-1.6635
-0.7695
1.7034
2.9617
1.4464
0.7984
-0.7996
-1.0739
-4.104
-4.1238
0.2602
-1.9586
-1.1383
-5.9198
2.0387

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

Standard deviation (total risk associated with stock) is 2.04where as the beta value is
0.76.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of February this stock is more
fluctuating as a comparison to the market price

DATE

STOCK PRICE
OPEN
CLOSE

NIFTY PRICE
OPEN
CLOSE

1-Mar-07

920

955.25

3745.4

3811.2

2-Mar-07

950

969.05

3811.65

3726.75

5-Mar-07

949

942

3726.5

3576.5

6-Mar-07

941

948

3577.15

3655.65

7-Mar-07

943

948.9

3661.55

3626.85

8-Mar-07

967.85

966.95

3627.25

3761.65

9-Mar-07

975

984.5

3761.85

3718

12-Mar-07

986

1,012.50

3717.45

3734.6

13-Mar-07

1,017.45

1,020.90

3735.25

3770.55

14-Mar-07

1,029.80

1,002.10

3768.4

3641.1

15-Mar-07

1,019.00

1,011.90

3644.9

3643.6

16-Mar-07

1,015.05

1,012.40

3639.35

3608.55

19-Mar-07

1,011.70

1,004.95

3611.3

3678.9

20-Mar-07

1,006.00

991.1

3680.35

3697.6

21-Mar-07

1,018.00

1,016.45

3697.7

3764.55

22-Mar-07

1,028.80

1,030.40

3764.5

3875.9

23-Mar-07

1,034.00

1,030.25

3876.75

3861.05

26-Mar-07

1,030.00

1,014.90

3863.45

3819.95

28-Mar-07

1,029.80

999.3

3818.75

3761.1

29-Mar-07

1,014.95

1,014.05

3759.15

3798.1

30-Mar-07

1,016.00

1,056.45

3788.85

3821.55

BETA

0.29157

SUM
SD
TABLE 18

68

STOCK
RETURN
Y
3.8315
2.0053
-0.7376
0.7439
0.6257
-0.093
0.9744
2.6876
0.3391
-2.6898
-0.6968
-0.2611
-0.6672
-1.4811
-0.1523
0.1555
-0.3627
-1.466
-2.9617
-0.0887
3.9813

MARKE
RETURN
X
1.7568
-2.227
-4.025
2.1945
-0.948
3.7053
-1.166
0.4613
0.9451
-3.378
-0.036
-0.846
1.8719
0.4687
1.8079
2.9592
-0.405
-1.126
-1.51
1.0361
0.8631

X*Y
6.7313
-4.4665
2.9691
1.6325
-0.5929
-0.3446
-1.1358
1.2399
0.3205
9.0865
0.0249
0.2209
-1.2489
-0.6942
-0.2753
0.4602
0.1469
1.6506
4.4712
-0.0919
3.4361

X^2
3.086
4.961
16.20
4.815
0.898
13.72
1.358
0.212
0.893
11.41
0.001
0.716
3.504
0.219
3.268
8.757
0.164
1.267
2.279
1.073
0.744

3.6863
1.8059

2.4033
VAR

23.541
3.2613

79.56

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

5
4
3
2
1
0
-1
-2
-3
-4
-5

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH
The total risk (standard deviation) associated with the stock is 3.69 and the beta is
.0.29 It shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. There is a huge difference between systematic and
unsystematic risk here virtually no systematic risk associated with this stock when we camper it
with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the
stock in comparison with market returns. The above graph revels that the average stock return is
well above the market return.

The average beta is less than one that means this stock is less volatile than the market.
Proper diversification of the portfolio will help the investor to eliminate the considerable part of
the risk. when we compare the market return with the stock return stock return shows a
decreasing tendency means capital appreciation of the stock could not happened in the last three
month .so it is better to hold the stock for some time and the position of the stock may improve
in the nearest future at that time investor can sell off his holding

69

4.3

OIL AND GAS INDUSTRY

4.3.1 BPCL

0.61224

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7
4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15
3942.25
3944.55
4052.45
4052.85
4078.4
4090.7
4080.5
4084.9
4076.45
4075.2
4109.05
4126
4090.15
4089.6
4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4
4124.45
4123.85
4082.7
SUM
SD
TABLE 19

X*Y
0.174
0.1756
0.2848
0.0704
-1.1121
0.3564
0.921
12.436
2.7891
0.9141
0.2841
-0.4948
-0.9405
1.8246
0.8152
0.3094
-3.1015
0.6242
0.5241
-0.9334
15.92
4.4135

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

STOCK AND MARKET RETURNS COMPARISION

6
4
2
Y
0
X
-2
-4

DATE

GRAPH 19
70

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

-6
1/2

BETA

STOCK PRICE
OPEN
CLOSE
983.9
985.55
987.5
991.75
990.05
987.1
985
980.9
980
988.7
992
985.65
985
979.15
962.05 1,013.20
1,020.00 1,030.40
1,031.00 1,045.95
1,048.80 1,036.85
1,020.00 1,044.40
1,059.85 1,047.85
1,050.00 1,027.95
1,033.00 1,059.80
1,051.00 1,047.35
1,079.80 1,021.35
1,034.95 1,039.70
1,030.00 1,020.65
1,021.00 1,030.55

RETURNS

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

MARKET
RETURN
X
1.0375
0.408
-0.956
-0.169
-1.253
-0.557
-1.551
2.339
2.7354
0.6304
-0.249
-0.207
0.8306
-0.869
0.3142
-0.891
0.573
1.36
-0.577
-0.998
1.9514
VAR

STOCK
RETURN
Y
0.1677
0.4304
-0.298
-0.4162
0.8878
-0.6401
-0.5939
5.3168
1.0196
1.45
-1.1394
2.3922
-1.1322
-2.1
2.5944
-0.3473
-5.413
0.459
-0.9078
0.9354
2.6652
2.1008

Standard deviation (total risk associated with stock) is 2.67 where as the beta value is
0.61.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of January this stock is more
fluctuating as a comparison to the market price

STOCK AND MARKET RETURNS COMPARISION

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 20
71

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

BETA

RETURNS

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

MARKET
STOCK
NIFTY PRICE
RETURN RETURN
OPEN
CLOSE
Y
X
X*Y
4083.4
4137.2
1.0533
1.3175
1.3878
4140.2
4183.5
-0.1053
1.0458
-0.1101
4193.15
4215.35
1.7099
0.5294
0.9053
4216.55
4195.9
-3.0052
-0.49
1.4718
4198.2
4224.25
0.8077
0.6205
0.5012
4232
4223.4
2.0808
-0.203
-0.4228
4223.5
4187.4
-1.6635
-0.855
1.4219
4187.2
4058.3
-0.7695
-3.078
2.3687
4069.1
4044.55
1.7034
-0.603
-1.0277
4044.9
4047.1
2.9617
0.0544
0.1611
4046.8
4146.2
1.4464
2.4563
3.5528
4149.25
4164.55
0.7984
0.3687
0.2944
4164.85
4106.95
-0.7996
-1.39
1.1116
4107.15
4096.2
-1.0739
-0.267
0.2863
4096.65
4040
-4.104
-1.383
5.6752
4046
3938.95
-4.1238
-2.646
10.911
3939.1
3942
0.2602
0.0736
0.0192
3948.05
3893.9
-1.9586
-1.372
2.6863
3893.4
3745.3
-1.1383
-3.804
4.3299
SUM
-5.9198
-9.624
35.524
0.75786
SD
2.0387 VAR
4.1565
TABLE 20
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS
STOCK PRICE
OPEN
CLOSE
1,034.80 1,045.70
1,044.90 1,043.80
1,035.15 1,052.85
1,069.80 1,037.65
1,040.00 1,048.40
1,026.05 1,047.40
1,052.00 1,034.50
1,020.20 1,012.35
998 1,015.00
991 1,020.35
1,016.30 1,031.00
1,027.05 1,035.25
1,038.00 1,029.70
1,029.00 1,017.95
1,047.75 1,004.75
1,016.05
974.15
979.9
982.45
972.65
953.6
940
929.3

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

Standard deviation (total risk associated with stock) is 2.04 where as the beta value is
0.76.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of February this stock is more
fluctuating as a comparison to the market price

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN
CLOSE
920
955.25
950
969.05
949
942
941
948
943
948.9
967.85
966.95
975
984.5
986
1,012.50
1,017.45
1,020.90
1,029.80
1,002.10
1,019.00
1,011.90
1,015.05
1,012.40
1,011.70
1,004.95
1,006.00
991.1
1,018.00
1,016.45
1,028.80
1,030.40
1,034.00
1,030.25
1,030.00
1,014.90
1,029.80
999.3
1,014.95
1,014.05
1,016.00
1,056.45
0.29157

SSTOCK MARKET
NIFTY PRICE
RETUR
RETURN
OPEN
CLOSE
Y
X
3745.4
3811.2
3.8315
1.7568
3811.65 3726.75
2.0053
-2.227
3726.5
3576.5 -0.7376
-4.025
3577.15 3655.65
0.7439
2.1945
3661.55 3626.85
0.6257
-0.948
3627.25 3761.65
-0.093
3.7053
3761.85
3718
0.9744
-1.166
3717.45
3734.6
2.6876
0.4613
3735.25 3770.55
0.3391
0.9451
3768.4
3641.1 -2.6898
-3.378
3644.9
3643.6 -0.6968
-0.036
3639.35 3608.55 -0.2611
-0.846
3611.3
3678.9 -0.6672
1.8719
3680.35
3697.6 -1.4811
0.4687
3697.7 3764.55 -0.1523
1.8079
3764.5
3875.9
0.1555
2.9592
3876.75 3861.05 -0.3627
-0.405
3863.45 3819.95
-1.466
-1.126
3818.75
3761.1 -2.9617
-1.51
3759.15
3798.1 -0.0887
1.0361
3788.85 3821.55
3.9813
0.8631
SUM
3.6863
2.4033
SD
1.8059 VAR

TABLE 21

72

X*Y
6.7313
-4.4665
2.9691
1.6325
-0.5929
-0.3446
-1.1358
1.2399
0.3205
9.0865
0.0249
0.2209
-1.2489
-0.6942
-0.2753
0.4602
0.1469
1.6506
4.4712
-0.0919
3.4361
23.541
3.2613

X^2
3.08642
4.96123
16.2024
4.81576
0.89810
13.7291
1.35874
0.21283
0.89312
11.4115
0.00127
0.71623
3.50401
0.21968
3.26843
8.75700
0.16400
1.26773
2.27906
1.07358
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

5
4
3
2
1
0
-1
-2
-3
-4
-5

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 21
Standard deviation (total risk associated with stock) is 2.67 where as the beta value is
0.61.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price. the kind volatility shown in the grape make this
stock more riskier one .so the investor should be cautious enough while he go for an investment
in this particular stock.

73

4.3.2 ONGC

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
880
876.85
886.75
872.5
865.9
874.35
869.05
895.2
895
911.15
919.7
916.45
916.5
890.55
887.1
914.6
916
923.65
923
916.1
919.8
919.95
921
895.05
896
914.8
922
896.3
909.9
894.45
895
891.9
896.7
912.75
918
921.15
912
916.85
925
911.4

BETA

1.046071

NIFTY PRICE
OPEN
CLOSE
3966.25 4016.65
4007.7
4029.8
4027.3
4041
3990.15 4011.45
3983.3 3987.45
3933.3 3963.75
3910.95 3911.95
3852.15
3953.1
3944.55 4059.15
4052.85 4099.65
4090.7 4107.45
4084.9 4096.75
4075.2 4140.25
4126 4137.15
4089.6
4114.5
4102.65
4105.1
4066.6 4098.25
4092.05 4157.95
4148.4 4167.15
4123.85 4137.85
SUM
SD
TABLE 22

STOCK
RETURN
Y
-0.358
-1.607
0.9759
3.009
1.8045
-0.3534
-2.8314
3.1
0.8352
-0.7476
0.0163
-2.8176
2.0982
-2.7874
-1.698
-0.3464
1.7899
0.3431
0.5318
-1.4703
-0.5131
1.8332

MARKET
RETURN
X
1.270722
0.551438
0.340178
0.533815
0.104185
0.774159
0.025569
2.620614
2.905274
1.154743
0.409465
0.290093
1.596241
0.270238
0.608862
0.059717
0.778291
1.61044
0.451981
0.339489
16.69551
VAR

X*Y
-0.45486
-0.88616
0.331967
1.606265
0.187999
-0.27357
-0.0724
8.123875
2.426348
-0.86324
0.006678
-0.81736
3.349255
-0.75327
-1.03384
-0.02068
1.393061
0.552602
0.240363
-0.49914
12.54389
3.360452

X^2
1.614734
0.304084
0.115721
0.284958
0.010855
0.599322
0.000654
6.86762
8.440619
1.333431
0.167662
0.084154
2.547984
0.073028
0.370712
0.003566
0.605738
2.593516
0.204287
0.115252
26.3379

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURNS

4
3
2
1
0
-1
-2
-3
-4

DATE

GRAPH 23
74

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

RETURNS

STOCK AND MARKET RETURNS COMPARISION

Standard deviation (total risk associated with stock) is 1.83 where as the beta value is
1.04 .the beta values greater than 1 it shows that this stock is more risky and volatile than the
index. The systematic risk here is well above the standard risk associated with any stock. So an
investor should be careful while investing this stock. The average stock return and market return
shows a decreasing trend and also decrease in stock return well above the market return.
Frequent fluctuation in the stock price makes the investor more vigilant
MARKET
STOCK
NIFTY PRICE
RETURN RETURN
DATE
OPEN
CLOSE
Y
X
X*Y
1-Feb-07
4083.4
4141.6
-0.1261
1.425283 -0.17972
2-Feb-07
4140.2
4198.7
-1.5707
1.412975 -2.21929
5-Feb-07
4193.15
4219
-1.9448
0.616482 -1.19895
6-Feb-07
4216.55 4228.15
-0.9597
0.275106 -0.26401
7-Feb-07
4198.2
4232.3
-1.989
0.812253 -1.61558
8-Feb-07
4232
4245.3
-1.7582
0.314272 -0.55257
9-Feb-07
4223.5
4239.2
-1.4604
0.37173 -0.54288
12-Feb-07
4187.2
4187.2
-2.3874
0
0
13-Feb-07
4069.1
4132.7
2.9767
1.562999 4.652649
14-Feb-07
4044.9 4057.35
1.7853
0.307795
0.54951
15-Feb-07
4046.8
4155.7
0.1381
2.691015 0.371687
19-Feb-07
4149.25
4177.7
-0.011
0.685666 -0.00757
20-Feb-07
4164.85 4175.45
-3.7198
0.254511 -0.94672
21-Feb-07
4107.15
4132.8
-0.7955
0.624521 -0.49678
22-Feb-07
4096.65
4126.9
-2.0562
0.738408 -1.51835
23-Feb-07
4046 4065.45
-3.4884
0.480722 -1.67694
26-Feb-07
3939.1
3958.9
1.1574
0.502653 0.581788
27-Feb-07
3948.05
3958
-2.0716
0.252023 -0.52209
28-Feb-07
3893.4
3893.4
-1.6474
0
0
SUM
-19.929
13.32841 -5.58582
BETA
1.072406
SD
1.7069 VAR
2.913487
TABLE 23
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK PRICE
OPEN
CLOSE
912
910.85
920
905.55
928.1
910.05
917
908.2
910
891.9
910
894
897
883.9
888
866.8
860
885.6
885
900.8
905
906.25
906.25
906.15
910
876.15
880
873
872.95
855
860
830
825.1
834.65
835.1
817.8
801.25
788.05

X^2
2.031431
1.996499
0.38005
0.075684
0.659755
0.098767
0.138183
0
2.442966
0.094738
7.241562
0.470138
0.064776
0.390026
0.545247
0.231093
0.25266
0.063516
0
17.17709

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 23

75

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

Standard deviation (total risk associated with stock) is 1.71 where as the beta value is 1.07
.the beta values greater than 1 it shows that this stock is more risky and volatile than the index.
The systematic risk here is well above the standard risk associated with any stock so an investor
should be careful while investing this stock. The average stock return and market return shows a
decreasing trend and also decrease in stock return well above the market return.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07

STOCK PRICE
OPEN
CLOSE
788.05
795.95
802
798.9
785
773.05
785
768.95
776.1
764.85
766
779.5
786.6
783.4
786
793.6
798
807.15
791
781.35
789.9
776.5
786
762.85
769
793.15
800
790.8
790.9
811.65
824
852.3
874
843.1
840
850.25
850
864.55
860
874.8
872
880.8

BETA

0.514967

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65 3726.75
3726.5
3576.5
3577.15 3655.65
3661.55 3626.85
3627.25 3761.65
3761.85
3718
3717.45
3734.6
3735.25 3770.55
3768.4
3641.1
3644.9
3643.6
3639.35 3608.55
3611.3
3678.9
3680.35
3697.6
3697.7 3764.55
3764.5
3875.9
3876.75 3861.05
3863.45 3819.95
3818.75
3761.1
3759.15
3798.1
3788.85 3821.55
SUM
SD
TABLE 24

76

STOCK
RETURN
Y
1.0025
-0.3865
-1.5223
-2.0446
-1.4496
1.7624
-0.4068
0.9669
1.1466
-1.22
-1.6964
-2.9453
3.1404
-1.15
2.6236
3.4345
-3.5355
1.2202
1.7118
1.7209
1.0092
3.3821
1.9816

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
1.761169
0.860958
6.127571
-4.48681
1.373724
6.530204
0.474203
0.446077
1.083611
4.121186
0.060505
2.492616
5.8786
-0.53901
4.743143
10.16336
1.431789
-1.37391
-2.58418
1.783122
0.870977
41.2189
3.926655

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

5
4
3
2
1
0
-1
-2
-3
-4
-5

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 24
The total risk (standard deviation) associated with the stock is 1.98 and the beta is 0.514 It
shows that diversification of this stock would help the investor to eliminate considerable part of
risk associated with this stock. There is a huge difference between systematic and unsystematic
risk here virtually no systematic risk associated with this stock when we camper it with the total
risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in
comparison with market returns. The above graph revels that the average market return is well
above the stock return.

The average beta is less than one that means this stock is less volatile than the market.
Proper diversification of the portfolio will help the investor to eliminate the considerable part of
the risk. when we compare the market return with the stock return stock return shows a
decreasing tendency means capital appreciation of the stock could not happened in the last three
month .so it is better to hold the stock for some time and the position of the stock may improve
in the nearest future at that time investor can sell off his holding

77

RELIANCE ENERGY

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
520.05
524
526.95
525.8
534.5
530.1
530.5
524.45
525
522.55
527.7
515.45
520
504.6
505
512.85
513
524.95
514.35
533.55
537
532.45
532
535.9
537
528.55
535
514.95
520
506.85
508
503.5
507.5
505.7
507
502.45
505
505.65
510
513.5

BETA

0.828539

MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.951434
VAR

STOCK
RETURN
Y
0.759542
-0.21824
-0.8232
-1.14043
-0.46667
-2.32139
-2.96154
1.554455
2.329435
3.732867
-0.8473
0.733083
-1.57356
-3.74766
-2.52885
-0.88583
-0.35468
-0.89744
0.128713
0.686275
-8.84241
1.795059

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7 4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15 3942.25
3944.55 4052.45
4052.85
4078.4
4090.7
4080.5
4084.9 4076.45
4075.2 4109.05
4126 4090.15
4089.6 4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4 4124.45
4123.85
4082.7
SUM
SD
TABLE 25

X*Y
0.788028
-0.08903
0.786958
0.192923
0.584607
1.292516
4.592677
3.635799
6.371982
2.353276
0.211271
-0.15165
-1.30705
3.256271
-0.79459
0.789172
-0.20322
-1.22047
-0.07431
-0.6848
20.33036
3.222236

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

5
4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH
78

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

RETURNS

STOCK AND MARKET RETURNS COMPARISION

Standard deviation (total risk associated with stock) is 1.95where as the beta value is 0.83 .it
shows that diversification of this stock would help the investor to eliminate considerable part of
risk associated with this stock. Here the beta is less than 1 it shows that the low volatility of the
price of the stock in comparison with market returns. The above graph revels that the average
stock return is below the market return. In the month of January this stock is more fluctuating as
a comparison to the market price. Frequent up and downs
MARKET
STOCK
NIFTY PRICE
RETURN RETURN
DATE
OPEN
CLOSE
Y
X
X*Y
1-Feb-07
4083.4
4137.2
0.991529
1.31753
1.306368
2-Feb-07
4140.2
4183.5
1.454373
1.045843
1.521046
5-Feb-07
4193.15
4215.35
2.700935
0.529435
1.429969
6-Feb-07
4216.55
4195.9
1.173285
-0.48974
-0.5746
7-Feb-07
4198.2
4224.25
-0.43594
0.620504
-0.2705
8-Feb-07
4232
4223.4
0.901786
-0.20321
-0.18326
9-Feb-07
4223.5
4187.4
-2.46751
-0.85474
2.109082
12-Feb-07
4187.2
4058.3
-4.49107
-3.07843
13.82545
13-Feb-07
4069.1
4044.55
0.35514
-0.60333
-0.21427
14-Feb-07
4044.9
4047.1
1.25
0.054389
0.067987
15-Feb-07
4046.8
4146.2
-1.5245
2.456262
-3.74457
19-Feb-07
4149.25
4164.55
-1.86813
0.368741
-0.68886
20-Feb-07
4164.85
4106.95
-3.39518
-1.39021
4.719995
21-Feb-07
4107.15
4096.2
0.211254
-0.26661
-0.05632
22-Feb-07
4096.65
4040
-2.7783
-1.38284
3.841943
23-Feb-07
4046
3938.95
-2.28682
-2.64582
6.050526
26-Feb-07
3939.1
3942
0.337168
0.073621
0.024823
27-Feb-07
3948.05
3893.9
-1.42997
-1.37156
1.961295
28-Feb-07
3893.4
3745.3
-4.45219
-3.80387
16.93557
SUM
-15.7542
-9.62403
48.06167
BETA
0.933932
SD
2.10782 VAR
4.442905
TABLE 26
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK PRICE
OPEN CLOSE
519.4
524.55
526
533.65
535
549.45
554
560.5
562
559.55
560
565.05
569.4
555.35
560
534.85
535
536.9
540
546.75
551
542.6
546
535.8
539
520.7
520.7
521.8
527.3
512.65
516
504.2
504.2
505.9
510.5
503.2
502
479.65

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

79

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

Standard deviation (total risk associated with stock) is 2.11 where as the beta value is
0.93.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of February this stock is more
fluctuating as a comparison to the market price and the fluctuation in the stock price compel the
investor to compete with the bulls and bears in the market.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07

STOCK PRICE
OPEN
CLOSE
479.65
480.9
480.9
475.5
475.5
469.9
469.9
475
475
478.25
478.25
489.2
489.2
480.55
480.55
473.25
473.25
466.15
466.15
458.85
458.85
462.2
462.2
456.05
456.05
457.6
457.6
477.15
477.15
491.45
491.45
492
492
485.25
485.25
475.85
475.85
482.05
482.05
485.8
485.8
494.2

BETA

0.492648

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM
SD
TABLE 27

80

STOCK
RETURN
Y
0.260607
-1.12289
-1.17771
1.085337
0.684211
2.289597
-1.76819
-1.51909
-1.50026
-1.56602
0.730086
-1.33059
0.339875
4.27229
2.996961
0.111914
-1.37195
-1.93715
1.302932
0.777928
1.729107
3.286983
1.729454

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
0.457839
2.501115
4.740538
2.381756
-0.64842
8.483614
2.061094
-0.70081
-1.41783
5.290157
-0.02604
1.126087
0.636213
2.002446
5.418148
0.331178
0.555611
2.181103
-1.96698
0.806041
1.492321
35.70519
2.99101

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

6

RETURNS

4
2
Y
0
X
-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

GRAPH
The total risk (standard deviation) associated with the stock is 1.73 and the beta is 0.492 It
shows that diversification of this stock would help the investor to eliminate considerable part of
risk associated with this stock. There is a huge difference between systematic and unsystematic
risk here virtually no systematic risk associated with this stock when we camper it with the total
risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in
comparison with market returns. The above graph revels that the average stock return is well
above the market return.

The average beta is less than one that means this stock is less volatile than the market.
Proper diversification of the portfolio will help the investor to eliminate the considerable part of
the risk. when we compare the market return with the stock return stock return shows a
decreasing tendency means capital appreciation of the stock could not happened in the last three
month .so it is better to hold the stock for some time and the position of the stock may improve
in the nearest future at that time investor can sell off his holding

81

4.4 INFOTECH SECTOR

4.4.1 INFOSYS

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
2,253.00 2,272.65
2,272.65 2,311.35
2,321.20 2,285.30
2,286.00 2,275.05
2,275.05 2,205.60
2,216.00 2,190.10
2,200.00 2,164.45
2,181.00 2,183.00
2,200.00 2,223.40
2,232.95 2,242.95
2,245.20 2,222.20
2,245.00 2,205.45
2,206.00 2,224.15
2,225.00 2,202.35
2,215.00 2,254.00
2,248.00 2,235.15
2,201.00 2,234.05
2,241.00 2,241.00
2,235.00 2,244.40
2,240.00 2,247.30

BETA

0.680402

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7 4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15 3942.25
3944.55 4052.45
4052.85
4078.4
4090.7
4080.5
4084.9 4076.45
4075.2 4109.05
4126 4090.15
4089.6 4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4 4124.45
4123.85
4082.7

STOCK
RETURN
Y
0.87217
1.702858
-1.54661
-0.479
-3.05268
-1.16877
-1.61591
0.091701
1.063636
0.447838
-1.02441
-1.76169
0.822756
-1.01798
1.760722
-0.57162
1.50159
0
0.420582
0.325893

MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785

X*Y
0.90488
0.694706
1.478525
0.081031
3.824184
0.650754
2.50591
0.214485
2.909492
0.282326
0.255432
0.364423
0.683409
0.884501
0.553239
0.509248
0.860351
0
-0.24281
-0.32519

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712

-3.22893
1.302383

1.951434
VAR

17.08889
1.14361

25.76932

SUM
SD
TABLE 28

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

4
3
2
1
0
-1
-2
-3
-4

DATE

GRAPH 29
82

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

RETURNS

STOCK AND MARKET RETURNS COMPARISION

The total risk (standard deviation) associated with the stock is 1.95 and the beta is 0.68 It
shows that diversification of this stock would help the investor to eliminate considerable part of
risk associated with this stock. There is a huge difference between systematic and unsystematic
risk here virtually no systematic risk associated with this stock when we camper it with the total
risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in
comparison with market returns. The above graph revels that the average stock return is well
above the market return
X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

STOCK AND MARKET RETURNS COMPARISION

6
4
2
Y
0
X
-2
-4

DATE

GRAPH 29

83

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

-6
2/1

BETA

RETURNS

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

MARKET
STOCK
NIFTY PRICE
RETURN RETURN
OPEN
CLOSE
Y
X
X*Y
4083.4
4137.2
0.842222
1.31753
1.109653
4140.2
4183.5
-0.41538
1.045843
-0.43443
4193.15
4215.35
1.534676
0.529435
0.812511
4216.55
4195.9
0.129956
-0.48974
-0.06364
4198.2
4224.25
4.500011
0.620504
2.792275
4232
4223.4
0.367865
-0.20321
-0.07476
4223.5
4187.4
-0.55382
-0.85474
0.473376
4187.2
4058.3
0.695931
-3.07843
-2.14238
4069.1
4044.55
-1.99064
-0.60333
1.201009
4044.9
4047.1
0.107353
0.054389
0.005839
4046.8
4146.2
2.496882
2.456262
6.132995
4149.25
4164.55
-0.24769
0.368741
-0.09133
4164.85
4106.95
-0.63578
-1.39021
0.88386
4107.15
4096.2
-2.08051
-0.26661
0.554681
4096.65
4040
-0.88821
-1.38284
1.228257
4046
3938.95
-1.7691
-2.64582
4.680714
3939.1
3942
-0.70949
0.073621
-0.05223
3948.05
3893.9
-1.92825
-1.37156
2.644718
3893.4
3745.3
-4.69954
-3.80387
17.87646
SUM
-5.24352
-9.62403
37.53758
0.812765
SD
1.946677 VAR
3.78955
TABLE 29
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK PRICE
OPEN
CLOSE
2,250.00 2,268.95
2,275.00 2,265.55
2,235.00 2,269.30
2,270.00 2,272.95
2,255.55 2,357.05
2,365.00 2,373.70
2,374.40 2,361.25
2,335.00 2,351.25
2,351.00 2,304.20
2,282.20 2,284.65
2,324.90 2,382.95
2,382.00 2,376.10
2,375.05 2,359.95
2,360.00 2,310.90
2,308.00 2,287.50
2,278.00 2,237.70
2,234.00 2,218.15
2,230.00 2,187.00
2,180.00 2,077.55

Standard deviation (total risk associated with stock) is 1.94 where as the beta value is
0.81.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of February this stock is more
fluctuating as a comparison to the market price and the fluctuation in the stock price compel the
investor to compete with the bulls and bears in the market.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN
CLOSE
2,080.00 2,159.15
2,173.60 2,093.50
2,077.90 2,007.15
2,013.00 2,114.45
2,167.40 2,085.35
2,090.00 2,135.75
2,130.35 2,120.95
2,120.00 2,115.30
2,117.00 2,105.05
2,075.00 2,020.00
2,051.00 2,079.40
2,090.00 2,047.45
2,070.00 2,087.25
2,100.00 2,055.90
2,061.60 2,093.95
2,110.00 2,119.05
2,120.00 2,092.60
2,105.00 2,058.15
2,030.00 1,992.05
1,961.90 1,990.70
1,995.00 2,018.65
0.954343

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM
SD

TABLE 30

84

STOCK
RETURN
Y
3.805288
-3.68513
-3.40488
5.039742
-3.78564
2.188995
-0.44124
-0.2217
-0.56448
-2.6506
1.38469
-2.03589
0.833333
-2.1
1.56917
0.42891
-1.29245
-2.22565
-1.86946
1.467965
1.185464
-6.37357
2.421995

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
6.685213
8.208193
13.70541
11.05963
3.5876
8.110854
0.514334
-0.10228
-0.53346
8.953977
-0.04939
1.72298
1.559918
-0.98428
2.836871
1.269241
0.523415
2.505945
2.822239
1.521015
1.023125
74.94056
5.866058

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

6

RETURNS

4
2
Y
0
X
-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

GRAPH 30

Standard deviation (total risk associated with stock) is 2.42 where as the beta value is
0.954.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 by some small decimal. The
above graph revels that the average stock return is below the market return. In the month of
March this stock price showing sudden ups and downs.

The average beta is less than one that means this stock is less volatile than the market.
Proper diversification of the portfolio will help the investor to eliminate the considerable part of
the risk. when we compare the market return with the stock return stock return shows a
decreasing tendency means capital appreciation of the stock could not happened in the last three
month .so it is better to hold the stock for some time and the position of the stock may improve
in the nearest future at that time investor

85

4.4.2 TCS
MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.951434
VAR

X*Y
1.61187
0.883978
1.93055
0.026746
1.51243
-0.37925
1.140138
15.36347
7.166391
-1.1044
1.164195
0.392751
0.665144
1.142699
0.322646
0.7056
-0.19004
-0.98019
0.757335
1.477048
33.6091
5.279376

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

8
6
4
2

-2
-4

DATE

GRAPH 31

86

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

-6
1/2

BETA

RETURNS

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK
NIFTY PRICE
RETURN
STOCK PRICE
OPEN
CLOSE OPEN
CLOSE
Y
1,229.40 1,248.50 3966.25
4007.4
1.553603
1,253.00 1,280.15
4007.7 4024.05
2.1668
1,285.00 1,259.05
4027.3
3988.8
-2.01946
1,265.00 1,263.00 3990.15
3983.4
-0.1581
1,259.00 1,243.80
3983.3
3933.4
-1.20731
1,247.90 1,256.40
3933.3
3911.4
0.681144
1,244.55 1,235.40 3910.95
3850.3
-0.73521
1,198.90 1,277.65 3852.15 3942.25
6.568521
1,290.15 1,323.95 3944.55 4052.45
2.61985
1,350.00 1,326.35 4052.85
4078.4
-1.75185
1,388.95 1,324.10
4090.7
4080.5
-4.66899
1,329.90 1,304.65
4084.9 4076.45
-1.89864
1,305.00 1,315.45
4075.2 4109.05
0.800766
1,315.45 1,298.15
4126 4090.15
-1.31514
1,300.10 1,313.45
4089.6 4102.45
1.026844
1,313.10 1,302.70 4102.65
4066.1
-0.79202
1,311.50 1,307.15
4066.6
4089.9
-0.33168
1,325.00 1,315.45 4092.05
4147.7
-0.72075
1,315.00 1,297.75
4148.4 4124.45
-1.31179
1,297.10 1,277.90 4123.85
4082.7
-1.48023
SUM
-2.97363
1.325281
SD
2.297689
TABLE 31

Standard deviation (total risk associated with stock) is 2.29 where as the beta value is
1.33 .the beta values greater than 1 it shows that this stock is more risky and volatile than the
index. The systematic risk here is well above the standard risk associated with any stock so an
investor should be careful while investing this stock. The average stock return and market return
shows a decreasing trend and also decrease in stock return well above the market return.
X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

STOCK AND MARKET RETURNS COMPARISION

3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 32

87

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

2/1

BETA

RETURNS

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

MARKET
STOCK
NIFTY PRICE
RETURN RETURN
OPEN
CLOSE
Y
X
X*Y
4083.4
4137.2
0.162797
1.31753
0.21449
4140.2
4183.5
0.115473
1.045843
0.120767
4193.15
4215.35
0.061303
0.529435
0.032456
4216.55
4195.9
-1.11196
-0.48974
0.544567
4198.2
4224.25
0.484615
0.620504
0.300706
4232
4223.4
-0.52616
-0.20321
0.106922
4223.5
4187.4
-1.68016
-0.85474
1.436101
4187.2
4058.3
0.464
-3.07843
-1.42839
4069.1
4044.55
-0.24682
-0.60333
0.14891
4044.9
4047.1
0.618516
0.054389
0.033641
4046.8
4146.2
2.15415
2.456262
5.291157
4149.25
4164.55
0.645459
0.368741
0.238007
4164.85
4106.95
-1.09217
-1.39021
1.518339
4107.15
4096.2
-1.24231
-0.26661
0.331209
4096.65
4040
-0.43846
-1.38284
0.606321
4046
3938.95
-1.36293
-2.64582
3.606083
3939.1
3942
1.108491
0.073621
0.081608
3948.05
3893.9
0.80941
-1.37156
-1.11016
3893.4
3745.3
-3.21168
-3.80387
12.21682
SUM
-4.28842
-9.62403
24.28956
0.515349
SD
1.20985 VAR
1.463737
TABLE 32
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK PRICE
OPEN
CLOSE
1,289.95 1,292.05
1,299.00 1,300.50
1,305.00 1,305.80
1,313.00 1,298.40
1,300.00 1,306.30
1,311.40 1,304.50
1,309.40 1,287.40
1,250.00 1,255.80
1,256.00 1,252.90
1,253.00 1,260.75
1,265.00 1,292.25
1,301.40 1,309.80
1,313.90 1,299.55
1,300.00 1,283.85
1,300.00 1,294.30
1,295.00 1,277.35
1,272.00 1,286.10
1,254.00 1,264.15
1,233.00 1,193.40

Standard deviation (total risk associated with stock) is 1.887 where as the beta value is
0.83.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of February this stock is more
fluctuating as a comparison to the market price

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN
CLOSE
1,200.00 1,254.65
1,254.80 1,208.55
1,190.00 1,155.55
1,210.00 1,197.25
1,202.00 1,191.80
1,190.00 1,218.40
1,228.30 1,212.15
1,224.70 1,235.00
1,225.50 1,265.40
1,225.00 1,213.55
1,230.00 1,234.30
1,241.40 1,237.65
1,216.30 1,260.90
1,260.00 1,253.00
1,261.00 1,267.00
1,277.00 1,303.05
1,312.00 1,288.20
1,285.00 1,261.35
1,269.90 1,201.00
1,188.95 1,248.35
1,248.35 1,233.85
0.910386

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM
SD

TABLE 33

88

STOCK
RETURN
Y
4.554167
-3.68585
-2.89496
-1.05372
-0.84859
2.386555
-1.31483
0.841022
3.255814
-0.93469
0.349593
-0.30208
3.666859
-0.55556
0.475813
2.039937
-1.81402
-1.84047
-5.42562
4.996005
-1.16153
0.733854
2.69163

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
8.000859
8.209787
11.65286
-2.31237
0.804193
8.842868
1.532626
0.387995
3.076909
3.157481
-0.01247
0.25565
6.864
-0.26039
0.860213
6.036632
0.734641
2.072249
8.190828
5.176553
-1.00247
72.26864
7.244874

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

6

RETURNS

4
2
Y
0
X
-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

S
GRAPH 33
Standard deviation (total risk associated with stock) is 2.40 where as the beta value is
0.910 nearer to one some sort of risk associated with this stock which we can not element an
investor can go for making an investment in this stock after having an fundamental analysis .
Diversification of his portfolio would help the investor to eliminate considerable part of risk
associated with this stock. Here the beta is less than 1 by some small decimal. The above graph
revels that the average stock return is below the market return. In the month of March this stock
price showing sudden ups and downs.

The average beta is less than one except in the month of January that means the over all
performance of this stock is one want to go for an long term investment he can go for this stock
because Infosys is one of leading company in the world and the IT sector itself is more
promising than any other sector . Proper diversification of the portfolio will help the investor to
eliminate the considerable part of the risk. when we compare the market return with the stock
return stock return shows a decreasing tendency means capital appreciation of the stock could
not happened in the last three month .so it is better to hold the stock for some time and the
position of the stock may improve in the nearest future at that time investor can sell

89

4.4.3 WIPRO

1.35657

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7 4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15 3942.25
3944.55 4052.45
4052.85
4078.4
4090.7
4080.5
4084.9 4076.45
4075.2 4109.05
4126 4090.15
4089.6 4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4 4124.45
4123.85
4082.7
SUM
SD
TABLE 34

STOCK
RETURN
Y
1.41791
1.339869
-2.49196
-1.79803
-2.93624
-0.70205
0.863248
5.008475
1.040323
-0.70478
1.095238
-2.79098
0.722135
-2.56672
1.593137
-0.68
2.411003
1.86112
-3.22432
-2.813
-3.35563
2.246564

MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.951434
VAR

X*Y
1.471088
0.546619
2.382254
0.304166
3.678318
0.390893
-1.3387
11.71459
2.845719
-0.44431
-0.27309
0.577341
0.59983
2.230171
0.500582
0.605804
1.381409
2.531037
1.8615
2.806958
34.37218
5.047049

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

6
4
2

-2

DATE

GRAPH 34
90

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

-4
1/2

BETA

RETURNS

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
603
611.55
612
620.2
622
606.5
609
598.05
596
578.5
584
579.9
585
590.05
590
619.55
620
626.45
631.4
626.95
630
636.9
652.1
633.9
637
641.6
637
620.65
612
621.75
625
620.75
618
632.9
639.4
651.3
651.3
630.3
631
613.25

Standard deviation (total risk associated with stock) is 2.24 where as the beta value is 1.37 .the
beta values greater than 1 it shows that this stock is more risky and volatile than the index. The
systematic risk here is well above the standard risk associated with any stock so an investor
should be careful while investing this stock. The average stock return and market return shows a
decreasing trend and also decrease in stock return well above the market return. Frequent
fluctuation in the stock price makes the investor more vigilant.

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

STOCK AND MARKET RETURNS COMPARISION

6
4
2
0

-2

-4
-6

DATE

GRAPH 35
91

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

-8
2/1

BETA

RETURNS

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

STOCK
MARKET
NIFTY PRICE
RETURN RETURN
OPEN
CLOSE
Y
X
X*Y
4083.4
4137.2
-0.40013
1.31753
-0.52718
4140.2
4183.5
2.079365
1.045843
2.17469
4193.15
4215.35
-1.72868
0.529435
-0.91522
4216.55
4195.9
0.126183
-0.48974
-0.0618
4198.2
4224.25
1.069182
0.620504
0.663432
4232
4223.4
-1.14343
-0.20321
0.232362
4223.5
4187.4
0.641628
-0.85474
-0.54843
4187.2
4058.3
-0.50505
-3.07843
1.554762
4069.1
4044.55
1.399046
-0.60333
-0.84408
4044.9
4047.1
1.944183
0.054389
0.105743
4046.8
4146.2
4.153846
2.456262
10.20293
4149.25
4164.55
0.036711
0.368741
0.013537
4164.85
4106.95
-0.85821
-1.39021
1.193087
4107.15
4096.2
0.98965
-0.26661
-0.26385
4096.65
4040
-2.77528
-1.38284
3.837766
4046
3938.95
-6.55172
-2.64582
17.3347
3939.1
3942
-1.824
0.073621
-0.13428
3948.05
3893.9
-1.69919
-1.37156
2.330542
3893.4
3745.3
-4.1908
-3.80387
15.94127
SUM
-9.23671
-9.62403
52.28999
1.109377
SD
2.417854 VAR
5.846019
TABLE 3
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK PRICE
OPEN
CLOSE
624.8
622.3
630
643.1
645
633.85
634
634.8
636
642.8
642.8
635.45
639
643.1
633.6
630.4
629
637.8
637.8
650.2
650
677
681
681.25
670
664.25
661.85
668.4
668.4
649.85
667
623.3
625
613.6
615
604.55
587
562.4

Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11 .the
beta values greater than 1 it shows that this stock is more risky and volatile than the index. The
systematic risk here is well above the standard risk associated with any stock so an investor
should be careful while investing this stock. The average stock return and market return shows a
decreasing trend and also decrease in stock return well above the market return. Frequent
fluctuation in the stock price makes the investor more careful

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN
CLOSE
577.7
591.5
585
574.2
570
536.95
540
578.3
588
553.85
555
572.5
578
565.65
570
571.8
577
583.9
575
555.25
572
562.3
565
565.25
570
578.25
579.5
573.4
550.25
581.75
588
594.7
595.05
597.3
599.8
581.7
583.7
559.1
570
565.9
570
559.4
1.311418

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM
SD
TABLE 36

92

STOCK
RETURN
Y
2.388783
-1.84615
-5.79825
7.092593
-5.80782
3.153153
-2.13668
0.315789
1.195841
-3.43478
-1.6958
0.044248
1.447368
-1.05263
5.724671
1.139456
0.378119
-3.01767
-4.21449
-0.7193
-1.85965
-8.70321
3.332687

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
4.196666
4.11209
23.33924
15.56458
5.503993
11.68334
2.490619
0.145686
1.13013
11.60301
0.060483
-0.03745
2.709332
-0.49337
10.34952
3.371905
-0.15313
3.397708
6.362437
-0.74529
-1.60499
102.9865
13.7008

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

8
6
4
2
0
-2
-4
-6
-8

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 36

Standard deviation (total risk associated with stock) is 2.41where as the beta value is 1.11
.the beta values greater than 1 it shows that this stock is more risky and volatile than the index.
The systematic risk here is well above the standard risk associated with any stock so an investor
should be careful while investing this stock. The average stock return and market return shows a
decreasing trend and also decrease in stock return well above the market return. Frequent
fluctuation in the stock price makes the investor more vigilant
In the case of Wipro the stock is more volatile and the systematic risk associated with
this stock is very high since the beta value on an average greater than 1 its 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 its a promising one.

93

4.5

AUTOMOBILE INDUSTRY

4.5.1 M&M

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07
BETA

STOCK PRICE
OPEN
CLOSE
913
954.2
964.8
934.25
940
927.15
930
896.55
890
898.55
902
891.8
891.8
876.45
882
910.95
915.35
933.45
947.7
950.9
951
986.25
989.85
963.2
971
968.4
968.95
933.8
935.1
928.15
937
921.1
920
908.25
912
922.25
934.7
925.35
930
901.1
1.17056

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7
4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15
3942.25
3944.55
4052.45
4052.85
4078.4
4090.7
4080.5
4084.9
4076.45
4075.2
4109.05
4126
4090.15
4089.6
4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4
4124.45
4123.85
4082.7
SUM
SD
TABLE 37

STOCK
RETURN
Y
4.512596
-3.16646
-1.36702
-3.59677
0.960674
-1.13082
-1.72124
3.282313
1.977386
0.33766
3.706625
-2.69233
-0.26777
-3.62764
-0.74324
-1.69691
-1.27717
1.123904
-1.00032
-3.10753
-9.4941
2.4263

MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.9514
VAR

X*Y
4.681836
-1.2918
1.306839
0.608454
-1.20347
0.629623
2.669251
7.677178
5.40898
0.212868
-0.92423
0.556933
-0.22241
3.151983
-0.23353
1.511752
-0.73177
1.528457
0.577516
3.100858
29.015
5.887

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

5
4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 37
94

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

RETURNS

STOCK AND MARKET RETURNS COMPARISION

Standard deviation (total risk associated with stock) is 2.423 where as the beta value is
1.17 .the beta values greater than 1 it shows that this stock is more risky and volatile than the
index. The systematic risk here is well above the standard risk associated with any stock so an
investor should be careful while investing this stock. The average stock return and market return
shows a decreasing trend and also decrease in stock return well above the market return

0.82983

NIFTY PRICE
OPEN
CLOSE
4083.4
4137.2
4140.2
4183.5
4193.15
4215.35
4216.55
4195.9
4198.2
4224.25
4232
4223.4
4223.5
4187.4
4187.2
4058.3
4069.1
4044.55
4044.9
4047.1
4046.8
4146.2
4149.25
4164.55
4164.85
4106.95
4107.15
4096.2
4096.65
4040
4046
3938.95
3939.1
3942
3948.05
3893.9
3893.4
3745.3
SUM
SD
TABLE 38

STOCK
RETURN
Y
-0.62362
-0.16493
-0.21858
-2.55564
-2.18735
-2.11416
-2.97009
-5.42329
-3.17081
-5.62446
-2.16458
-1.51717
-1.86308
-0.89831
-4.22222
-3.63055
-3.89671
-2.06132
-7.1481
-52.455
1.8879

MARKET
RETURN
X
1.31753
1.045843
0.529435
-0.48974
0.620504
-0.20321
-0.85474
-3.07843
-0.60333
0.054389
2.456262
0.368741
-1.39021
-0.26661
-1.38284
-2.64582
0.073621
-1.37156
-3.80387
-9.624
VAR

X*Y
-0.82164
-0.17249
-0.11572
1.251593
-1.35726
0.429627
2.538655
16.69521
1.91304
-0.30591
-5.31676
-0.55944
2.590059
0.239496
5.838646
9.605797
-0.28688
2.827226
27.19048
62.184
3.5642

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETUR

STOCK AND MARKET RETURNS COMPARISION

4
2
0
Y
-2
X
-4
-6

DATE

GRAPH 38

95

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

-8
2/1

BETA

RETURNS

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

STOCK PRICE
OPEN
CLOSE
906
900.35
909.5
908
915
913
954.75
930.35
930.35
910
946
926
936
908.2
921.95
871.95
879.9
852
866.75
818
884.7
865.55
903
889.3
891
874.4
885
877.05
900
862
875.9
844.1
855.85
822.5
861.1
843.35
817
758.6

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

Standard deviation (total risk associated with stock) is 1.887 where as the beta value is
0.83.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN CLOSE
811.35
805.2
805.2
770.5
770.5
709.2
709.2
725.15
725.15
761.05
761.05
765.6
765.6
733.9
733.9
738.25
738.25
760.35
760.35
749.1
749.1
747.05
747.05
730.7
730.7
738.9
738.9
743.85
743.85
753.5
753.5
781.6
781.6
796.8
796.8
788.55
788.55
762.35
762.35
757.75
757.75
780.4
0.6098

STOCK
NIFTY PRICE
RETURN
OPEN
CLOSE
Y
3745.4
3811.2
-0.758
3811.65
3726.75
-4.30949
3726.5
3576.5
-7.95587
3577.15
3655.65
2.249013
3661.55
3626.85
4.9507
3627.25
3761.65
0.597858
3761.85
3718
-4.14054
3717.45
3734.6
0.592724
3735.25
3770.55
2.993566
3768.4
3641.1
-1.47958
3644.9
3643.6
-0.27366
3639.35
3608.55
-2.18861
3611.3
3678.9
1.122212
3680.35
3697.6
0.669915
3697.7
3764.55
1.297305
3764.5
3875.9
3.729263
3876.75
3861.05
1.944729
3863.45
3819.95
-1.03539
3818.75
3761.1
-3.32255
3759.15
3798.1
-0.6034
3788.85
3821.55
2.989113
SUM
-12.972
SD
2.6355
TABLE 39

96

MARKET
RETURN
X
0.017568
-0.02227
-0.04025
0.021945
-0.00948
0.037053
-0.01166
0.004613
0.009451
-0.03378
-0.00036
-0.00846
0.018719
0.004687
0.018079
0.029592
-0.00405
-0.01126
-0.0151
0.010361
0.008631
2.4033
VAR

X*Y
-0.01332
0.095989
0.320242
0.049354
-0.04692
0.022152
0.048264
0.002734
0.028291
0.049982
9.76E-05
0.018522
0.021007
0.00314
0.023454
0.110357
-0.00788
0.011658
0.050159
-0.00625
0.025798
46.873
6.9461

X^2
0.000309
0.000496
0.00162
0.000482
8.98E-05
0.001373
0.000136
2.13E-05
8.93E-05
0.001141
1.27E-07
7.16E-05
0.00035
2.2E-05
0.000327
0.000876
1.64E-05
0.000127
0.000228
0.000107
7.45E-05
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

6

RETURNS

4
2
Y
0
X
-2
-4
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-6

DATE

GRAPH 39

Standard deviation (total risk associated with stock) is 2.04 where as the beta value is
0.62.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price.

In the analysis the average beta of the stock in the three month (January, February march )
less than 1 it means the systematic risk is moderate .so proper diversification of the stock will
safe guard the investors money, but in terms of return it shows below market tendency.

97

4.5.2 MARUTI UDYOG LTD

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
939
968.6
976.5
974.55
974.55
967.35
969.65
934.95
934.9
897.95
905
886.45
890
880.5
888
905.8
914.7
922.35
922
906.7
913
910.65
930
908.75
908
918.65
922
912.3
915
938.8
940
918.95
921.1
934.15
939
948.05
949.8
936.85
939
924.9

BETA

1.239534

STOCK
R
Y
3.15229
-0.19969
-0.7388
-3.57861
-3.95229
-2.04972
-1.06742
2.004505
0.83634
-1.65944
-0.25739
-2.28495
1.172907
-1.05206
2.601093
-2.23936
1.416784
0.963791
-1.36344
-1.5016
-9.79707
1.967669

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7 4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15 3942.25
3944.55 4052.45
4052.85
4078.4
4090.7
4080.5
4084.9 4076.45
4075.2 4109.05
4126 4090.15
4089.6 4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4 4124.45
4123.85
4082.7
SUM
SD
TABLE 40

MARKET
X
3.15229
-0.19969
-0.7388
-3.57861
-3.95229
-2.04972
-1.06742
2.004505
0.83634
-1.65944
-0.25739
-2.28495
1.172907
-1.05206
2.601093
-2.23936
1.416784
0.963791
-1.36344
-1.5016
-9.79707
VAR

X*Y
9.93693
0.039877
0.545829
12.80646
15.62063
4.201367
1.139376
4.018038
0.699464
2.753728
0.066251
5.220979
1.375712
1.106832
6.765684
5.014741
2.007278
0.928894
1.858982
2.254795
95.98259
3.871722

X^2
9.93693
0.039877
0.545829
12.80646
15.62063
4.201367
1.139376
4.018038
0.699464
2.753728
0.066251
5.220979
1.375712
1.106832
6.765684
5.014741
2.007278
0.928894
1.858982
2.254795
78.36184

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 40

98

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

RETURNS

STOCK AND MARKET RETURNS COMPARISION

Standard deviation (total risk associated with stock) is 1.23 where as the beta value is
1.96 .the beta values greater than 1 it shows that this stock is more risky and volatile than the
index. The systematic risk here is well above the standard risk associated with any stock so an
investor should be careful while investing this stock. The average stock return and market return
shows a decreasing trend and also decrease in stock return well above the market return. Here the
unsystematic risk very less so diversification alone may not be ensure the safety of your money
ST
MARKET
OCK R
NIFTY PRICE
DATE
OPEN
CLOSE
Y
X
X*Y
1-Feb-07
4083.4
4137.2
1.659639
1.31753
2.186623
2-Feb-07
4140.2
4183.5
0.462643
1.045843
0.483852
5-Feb-07
4193.15
4215.35
1.974381
0.529435
1.045306
6-Feb-07
4216.55
4195.9
-1.11601
-0.48974
0.546553
7-Feb-07
4198.2
4224.25
-0.09449
0.620504
-0.05863
8-Feb-07
4232
4223.4
1.150694
-0.20321
-0.23384
9-Feb-07
4223.5
4187.4
-2.16612
-0.85474
1.851473
12-Feb-07
4187.2
4058.3
-3.15387
-3.07843
9.708968
13-Feb-07
4069.1
4044.55
-2.3136
-0.60333
1.395856
14-Feb-07
4044.9
4047.1
-3.79953
0.054389
-0.20665
15-Feb-07
4046.8
4146.2
4.107112
2.456262
10.08814
19-Feb-07
4149.25
4164.55
2.443261
0.368741
0.900931
20-Feb-07
4164.85
4106.95
-2.33029
-1.39021
3.239581
21-Feb-07
4107.15
4096.2
0.604873
-0.26661
-0.16126
22-Feb-07
4096.65
4040
-2.02082
-1.38284
2.794466
23-Feb-07
4046
3938.95
-1.875
-2.64582
4.960918
26-Feb-07
3939.1
3942
1.713955
0.073621
0.126183
27-Feb-07
3948.05
3893.9
0.996243
-1.37156
-1.36641
28-Feb-07
3893.4
3745.3
-5.11245
-3.80387
19.44712
SUM
-8.86938
-9.62403
85.35922
BETA
0.921586
SD
2.427088 VAR
5.890755
TABLE 41
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN
STOCK PRICE
OPEN
CLOSE
924.9
940.25
940.25
944.6
944.6
963.25
963.25
952.5
952.5
951.6
951.6
962.55
962.55
941.7
941.7
912
912
890.9
890.9
857.05
857.05
892.25
892.25
914.05
914.05
892.75
892.75
898.15
898.15
880
880
863.5
863.5
878.3
878.3
887.05
887.05
841.7

STOCK AND MARKET RETURNS COMPARISION

6

2
Y
0
X
-2
-4

DATE

GRAPH 41

99

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

-6
2/1

RETURNS

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
92.62204

Standard deviation (total risk associated with stock) is 2.427 where as the beta value is
0.921.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is and the market return looking southward.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07

STOCK PRICE
OPEN
CLOSE
848
840.9
844
833.1
825
772.9
790
791.75
797
774.85
787
792.35
792
787.2
789.8
797.1
800
801.55
791
791.75
804.1
796.15
798
780.1
786
788.85
792
789.65
796
791.65
790.5
831.3
833
840.65
837.15
821.7
775.25
796.65
828.5
812.45
812
820.2

BETA

0.598613

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM
SD
TABLE 42

100

STOCK
R
Y
-0.83726
-1.29147
-6.31515
0.221519
-2.77917
0.679797
-0.60606
0.924285
0.19375
0.094817
-0.98868
-2.24311
0.362595
-0.29672
-0.54648
5.16129
0.918367
-1.84555
2.7604
-1.93724
1.009852
-7.36022
2.224652

MARKET
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
-1.47092
2.876595
25.4199
0.48612
2.633783
2.518841
0.706454
0.426407
0.183104
-0.3203
0.035263
1.898353
0.678743
-0.13907
-0.98797
15.27342
-0.37192
2.077969
-4.16726
-2.00724
0.871562
46.62182
4.949078

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

6

RETURNS

4
2
0

-2

-4
-6
3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

-8

DATE

GRAPH 42

Standard deviation (total risk associated with stock) is 2.224 where as the beta value is
0.5986.it shows that diversification of this stock would help the investor to eliminate
considerable part of risk associated with this stock. Here the beta is less than 1 it shows that the
low volatility of the price of the stock in comparison with market returns. The above graph revels
that the average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price.
The average stock return shows a negative trend.

The average beta is less than one that means this stock is less volatile than the market.
Proper diversification of the portfolio will help the investor to eliminate the considerable part of
the risk. when we compare the market return with the stock return stock return shows a
decreasing tendency means capital appreciation of the stock could happened in the last three
month .so it is better to hold the stock for some time and the position of the stock may improve
in the nearest future at that time investor can sell off his holding

101

4.5.3 TATA MOTOR

0.699116

NIFTY PRICE
OPEN
CLOSE
3966.25
4007.4
4007.7
4024.05
4027.3
3988.8
3990.15
3983.4
3983.3
3933.4
3933.3
3911.4
3910.95
3850.3
3852.15
3942.25
3944.55
4052.45
4052.85
4078.4
4090.7
4080.5
4084.9
4076.45
4075.2
4109.05
4126
4090.15
4089.6
4102.45
4102.65
4066.1
4066.6
4089.9
4092.05
4147.7
4148.4
4124.45
4123.85
4082.7
SUM
SD
TABLE 43

STOCK
RETURN
Y
3.037357
0.369063
-3.35714
-1.32632
-0.69519
-1.9268
-0.04951
0.917582
2.193268
-0.13161
0.794737
0.036292
-2.10769
-0.75164
0.86911
-1.50777
-4.07853
-2.76205
-2.97195
-3.48352
-16.9323
1.944274

MARKET
RETURN
X
1.037504
0.407965
-0.95598
-0.16917
-1.25273
-0.55678
-1.55077
2.338954
2.73542
0.630421
-0.24935
-0.20686
0.830634
-0.86888
0.314212
-0.89089
0.57296
1.359954
-0.57733
-0.99785
1.951434
VAR

X*Y
3.15127
0.150565
3.209346
0.224368
0.870882
1.072814
0.076779
2.146183
5.999509
-0.08297
-0.19816
-0.00751
-1.75072
0.653089
0.273084
1.343255
-2.33684
-3.75627
1.7158
3.476041
16.23052
3.780203

X^2
1.076414
0.166435
0.913889
0.028617
1.569333
0.310009
2.4049
5.470704
7.482521
0.39743
0.062173
0.042791
0.689953
0.754953
0.098729
0.793681
0.328283
1.849475
0.333311
0.995712
25.76932

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

4
3
2
1
0
-1
-2
-3
-4
-5

DATE

GRAPH 43

102

1/30

1/28

1/26

1/24

1/22

1/20

1/18

1/16

1/14

1/12

1/10

1/8

1/6

1/4

1/2

BETA

TIME

DATE
2-Jan-07
3-Jan-07
4-Jan-07
5-Jan-07
8-Jan-07
9-Jan-07
10-Jan-07
11-Jan-07
12-Jan-07
15-Jan-07
16-Jan-07
17-Jan-07
18-Jan-07
19-Jan-07
22-Jan-07
23-Jan-07
24-Jan-07
25-Jan-07
29-Jan-07
31-Jan-07

STOCK PRICE
OPEN
CLOSE
902.1
929.5
934.8
938.25
980
947.1
950
937.4
935
928.5
929
911.1
908.9
908.45
910
918.35
921
941.2
949.75
948.5
950
957.55
964.4
964.75
975
954.45
957.9
950.7
955
963.3
965
950.45
955
916.05
954
927.65
927
899.45
910
878.3

Standard deviation (total risk associated with stock) is 1.94 where as the beta value is
0.699.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. Here the beta is less than 1 it shows that the low volatility
of the price of the stock in comparison with market returns. The above graph revels that the
average stock return is below the market return. In the month of March this stock is more
fluctuating as a comparison to the market price.

DATE
1-Feb-07
2-Feb-07
5-Feb-07
6-Feb-07
7-Feb-07
8-Feb-07
9-Feb-07
12-Feb-07
13-Feb-07
14-Feb-07
15-Feb-07
19-Feb-07
20-Feb-07
21-Feb-07
22-Feb-07
23-Feb-07
26-Feb-07
27-Feb-07
28-Feb-07

0.784898

STOCK
RETURN
Y
1.974572
-1.08176
0.552516
-0.31961
-2.01976
-1.66667
0.919938
-5.9086
-0.82952
-2.72311
-0.08046
-1.15909
-1.49597
0.332944
-2.93023
-3.37079
2.384146
-2.38886
-2.175
-21.9853
1.979394

NIFTY PRICE
OPEN
CLOSE
4083.4
4137.2
4140.2
4183.5
4193.15
4215.35
4216.55
4195.9
4198.2
4224.25
4232
4223.4
4223.5
4187.4
4187.2
4058.3
4069.1
4044.55
4044.9
4047.1
4046.8
4146.2
4149.25
4164.55
4164.85
4106.95
4107.15
4096.2
4096.65
4040
4046
3938.95
3939.1
3942
3948.05
3893.9
3893.4
3745.3
SUM
SD

MARKET
RETURN
X
1.31753
1.045843
0.529435
-0.48974
0.620504
-0.20321
-0.85474
-3.07843
-0.60333
0.054389
2.456262
0.368741
-1.39021
-0.26661
-1.38284
-2.64582
0.073621
-1.37156
-3.80387
-9.62403
VAR

X*Y
2.601557
-1.13135
0.292521
0.156525
-1.25327
0.338689
-0.78631
18.18922
0.500472
-0.14811
-0.19763
-0.4274
2.07971
-0.08877
4.052035
8.918505
0.175523
3.276467
8.273424
44.82181
3.918002

X^2
1.735884
1.093788
0.280301
0.239842
0.385025
0.041296
0.730583
9.476728
0.364004
0.002958
6.033222
0.13597
1.932673
0.07108
1.912239
7.00038
0.00542
1.881186
14.46945
47.79203

TABLE 44
GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

STOCK AND MARKET RETURNS COMPARISION

4
2
0
Y
-2
X
-4
-6

DATE

GRAPH 44

103

2/27

2/25

2/23

2/21

2/19

2/17

2/15

2/13

2/11

2/9

2/7

2/5

2/3

-8
2/1

RETURNS

BETA

STOCK PRICE
OPEN
CLOSE
888.8
906.35
919.8
909.85
914
919.05
923
920.05
920.9
902.3
912
896.8
896.8
905.05
930
875.05
874
866.75
874
850.2
870
869.3
880
869.8
869
856
856
858.85
860
834.8
845.5
817
820
839.55
843.5
823.35
800
782.6

Standard deviation (total risk associated with stock) is 1.97where as the beta value is
0.784.it shows that diversification of this stock would help the investor to eliminate considerable
part of risk associated with this stock. There is a huge difference between systematic and
unsystematic risk here virtually no systematic risk associated with this stock when we camper it
with the total risk. Here the beta is less than 1 it shows that the low volatility of the price of the
stock in comparison with market returns. The above graph revels that the average stock return is
well above the market return.

DATE
1-Mar-07
2-Mar-07
5-Mar-07
6-Mar-07
7-Mar-07
8-Mar-07
9-Mar-07
12-Mar-07
13-Mar-07
14-Mar-07
15-Mar-07
16-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
28-Mar-07
29-Mar-07
30-Mar-07
BETA

STOCK PRICE
OPEN
CLOSE
801
789.05
795
775.4
774.1
739.9
746
726.6
747.5
738.6
750.1
766.85
774.95
757.15
757.25
764.7
766
773.1
722.5
743.65
750
725.95
731.1
748.25
751
771.7
774.25
769.25
772
775.8
781
805.1
806
789.55
745
752.55
750
719.6
728.95
716.45
723
728.2
0.468065

NIFTY PRICE
OPEN
CLOSE
3745.4
3811.2
3811.65
3726.75
3726.5
3576.5
3577.15
3655.65
3661.55
3626.85
3627.25
3761.65
3761.85
3718
3717.45
3734.6
3735.25
3770.55
3768.4
3641.1
3644.9
3643.6
3639.35
3608.55
3611.3
3678.9
3680.35
3697.6
3697.7
3764.55
3764.5
3875.9
3876.75
3861.05
3863.45
3819.95
3818.75
3761.1
3759.15
3798.1
3788.85
3821.55
SUM
SD

TABLE 45

104

STOCK
RETURN
Y
-1.49189
-2.46541
-4.41803
-2.60054
-1.19064
2.233036
-2.29692
0.983823
0.926893
2.927336
-3.20667
2.34578
2.756325
-0.64579
0.492228
3.085787
-2.04094
1.013423
-4.05333
-1.7148
0.719225
-8.64109
2.363793

MARKET
RETURN
X
1.756822
-2.22738
-4.02522
2.194484
-0.94769
3.705286
-1.16565
0.461338
0.945051
-3.37809
-0.03567
-0.8463
1.871902
0.468705
1.807881
2.959224
-0.40498
-1.12594
-1.50966
1.036138
0.863059
2.403314
VAR

X*Y
-2.62098
5.491407
17.78358
-5.70684
1.128349
8.274036
2.677407
0.453875
0.875961
-9.88881
0.11437
-1.98525
5.15957
-0.30268
0.889889
9.131537
0.826538
-1.14105
6.11914
-1.77677
0.620734
36.12403
5.587515

X^2
3.086422
4.96123
16.20243
4.815762
0.898109
13.72915
1.35874
0.212833
0.893121
11.4115
0.001272
0.716232
3.504017
0.219685
3.268432
8.757009
0.164008
1.267733
2.279062
1.073583
0.74487
79.5652

GRAHHICAL REPRESENTATON OF STOCK AND MARKET RETURN

5
4
3
2
1
0
-1
-2
-3
-4
-5

3/29

3/27

3/25

3/23

3/21

3/19

3/17

3/15

3/13

3/11

3/9

3/7

3/5

3/3

3/1

RETURNS

STOCK AND MARKET RETURNS COMPARISION

DATE

GRAPH 45

The total risk (standard deviation) associated with the stock is 2.36 and the beta is 0.468 It
shows that diversification of this stock would help the investor to eliminate considerable part of
risk associated with this stock. There is a huge difference between systematic and unsystematic
risk here virtually no systematic risk associated with this stock when we camper it with the total
risk. Here the beta is less than 1 it shows that the low volatility of the price of the stock in
comparison with market returns. The above graph revels that the average stock return is well
above the market return.

The average beta is less than one that means this stock is less volatile than the market.
Proper diversification of the portfolio will help the investor to eliminate the considerable part of
the risk. when we compare the market return with the stock return stock return shows a
decreasing tendency means capital appreciation of the stock could not happened in the last three
month .so it is better to hold the stock for some time and the position of the stock may improve
in the nearest future at that time investor can sell off his holding

105

CHAPTER V

FINDINGS, CONCLUSION AND

RECOMMENDATION

5.1 FINDINGS

When comparing the beta value banking companies the average beta greater than one that
means the risk associated with those stocks are pretty high and the price of the shares are
more fluctuating .one of the reason for this fluctuation may the inflationary trend in the
economy banking shares are more bound to interest rate risk .

Pharmaceutical companies beta value less than one means risk is comparatively low so
diversification of portfolio may help the investor to eliminate the controllable risk
associated with this stocks .the growth in pharma stock mainly because of the growing
strength of the Indian pharmaceutical companies .they are largely venturing out of the
country through mergers and acquisitions and the increasing consideration of global
players India is a low cost hub of research and development.

The beta value of oil and gas companies is less than one but the price of the stocks are
highly fluctuating because of the ups and downs of crude oil price in the international
market.

IT companies shares are promising one they are more bound to international risk since
most of the IT companies largely depends on the US market any downward trend in the
US economy may have a negative impact on these companies shares but for the long term
investment this shares are promising one .

The stocks of automobile companies are subjected to less risk since the beta is less than
one. Stock price of auto companies are growing mainly because of the strong bottom line
of these companies .increasing strength of Indian middle class largely responsible for this
growth.

Two stocks Dr.reddys lab and Ranbaxy shows negative beta in the month of March and
February respectively. That means the systematic risk associated with this stock in that
particular months is negative.

106

5.2 CONCLUSION
As a whole the stock market is sometime highly volatile .it depends upon the investors how
he can make use of this in order to get the money which he has put in the market .an investor
should be in a position to analyze the various investment option available to him and thus
minimize the risk and maximize the returns .

The investor should analyze the market on a continuous basis which will help them to
pick the right companies to invest their funds. the beta value, standard deviation and variance
helps the investors in arriving at decision .the investors should be in a position to interpret the
data in the right manner to arrive at important conclusions and investment decision .

I hope this dissertation will help the investors as a guiding record in future and help them
to make appropriate investment decisions.

107

5.3 RECOMMENDATION

Based on the finding derived at ,risk less investment can be made in the pharma
stocks .they are volatile but still the risk associated with that stocks are less .

In the pharma sector I would suggest you Dr.reddys lab and Ranbaxy is the best one
anybody can blindly invest in that shares return is must.

In my view InfoTech shares are more volatile next to banking investment in info
shares could be more riskier since Indian IT companies are more service based rather
than product based so anybody can enter in to that sooner or later but the advantage of
Indian IT companies are the talent pool available in India

When an investor opts to enter the stock market he should first gather sufficient
information about the type of investment options available to him

The investor should be in a position to decide where and how much of funds are he
ready to invest in particular security.

He should diversify his investment portfolio so that he is exposed to minimum risk.

Investor should not depend entirely on the past returns as the future is uncertain and
the stock market is highly volatile.

The investor must be in a position to determine the degree of risk involved and then
invest in any security.

He should not follow the foot of others while investing because usually people tend to
go by the trend.

An investor must be in a position to judge which is the right time to enter into the
market and quit the market.

108

BIBLIOGRAPHY
.
BOOKS
Investment management Preeti Singh-tenth edition Himalaya publication 2002
Investment analysis and portfolio management Prasanna Chandra-second edition Tata
McGraw hill publishing company -2005
Security analysis and portfolio management Donald E Fischer, Ronald j Jordan sixth
edition prentice hall of India private ltd 2000
Modern portfolio theory and investment analysis Edwin J Elton, Martin J Gruber fifth
edition john Wiley & sons -2002
Investment management V A Avandi-fifth Edition Himalaya publication house 2003
JOURNALS
The ICFAI journal of financial risk management vol 12 issue 7-June 2006
Business week vol 26 issue 41 February 2007
The ICFAI journal of applied finance vol 8 issue 8 august 2005

WEBSITES
www.economywatch.com/indian economy
www.indiainfoline.com
www.nse_india .com/equity
www.bse_india .com / equity
www.vikipidia.com

109

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