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Investment is the employment of funds with the aim of achieving additional income or growth in value. The essential quality of an investment is that it involves ‘waiting’ for a reward. It involves the commitment of resources which have been saved or put away from current consumption in the hope that some benefits will accrue in future. The term ‘Investment’ does not appear to be as simple as it has been defined. Investment has been further categorized by financial experts and economists. It has also often been confused with the term speculation. The following discussion will give an explanation of the various ways in which investment is related or differentiated from the financial and economic sense and how speculation differs from investment. However, it must be clearly established that investment involves longterm commitment.
RETURNS: A major purpose of investment is to set a return of income on the funds invested. On a bond an investor expects to receive interest. On a stock, dividends may be anticipated. The investor may expect capital gains from some investments and rental income from house property.
RISK: In the investing world, the dictionary definition of risk is the chance that an investment’s actual return will be different than expected. Technically, this is
measured in statistics by Standard Deviation. Risk means you have the possibility of losing some, or even all, of our original investment. Risk consists of 2 components: 1. Systematic risk (uncontrollable risk) non-diversifiable risk 2. Unsystematic risk (controllable risk) diversifiable risk SYSTEMATIC RISK: The risk that affects the entire market, the factors are beyond the control of the corporate and the investor. They cannot be avoided by the investor. It is sub-divided into. a) Market risk b) Interest rate risk c) Purchase power risk UNSYSTEMATIC RISK OF DIVERSIFIABLE RISK: It is unique to the firm or industry. It stems from managerial inefficiency, technological changes, consumer preferences, labour problems etc. The magnitude and nature differs from firm to firm, industry to industry. It can be classified into 2 types 1) Business risk • • • • • Internal risk Fluctuations in sales Research and development Personal management External risk (P,E,S,T factors)
2) Financial risk It is associated with the capital structure of the company.
STATEMENT OF THE PROBLEM
The problem undertaken to study in the present project work is to calculate returns and risk associated with different stocks listed on NSE Stock Exchange. Returns and Risk are calculated to study the price movements in the stock market. After doing this project one can make decisions regarding the investment in which company one can expect.
NEED FOR THE STUDY
Stock Markets have existed in India for a very long time yet the professionals in the field of finance talking negatively about these instruments. The reason why I bring it up again is that it is very important to understand what the old system was verse the new the old system were based on trust. They were closed group system and hence deviation from truly competitive markets. Such closed groups are
vulnerable to problem when the demand of the economy reach beyond the capacity of the group and group has expended without open and transparent criteria for entry, the net work of trust gets disrupted, with the result that the system is disrupted by frauds. On the other hand, the modern market place of Stock Markets, having well developed risk management, transparent rules for entry and stringent regulation, is faceless. That the old type system had to transform into a new is definitely clear they
have played a very important role in the past. In is merely that had to modern markets to keep up with the demand of the times.
SCOPE OF THE STUDY
The present study has been undertaken to observe the risk and returns associated with few selected stocks. The scope of the study consists of 15 Company stocks from different sectors like infrastructure, Pharmacy, Automobile, Power, Public Sector and Energy etc., the scope of the study is confined to 50 Companies.
This research study has been based on descriptive and explanative and exploratory method. It describes securities market in India, and explains risk and returns involved in equity investment. Finally it explores various alternatives regarding equity investment.
TOOLS OF DATA COLLECTION
The present data is based upon secondary data sources: a) Data collected from journals, magazines and newspapers. b) Data collected from the reference books.
OBJECTIVES OF THE STUDY
1. The main objective of this project is to analyze the price fluctuations of various companies. 2. To observe the relation between Returns and Risk in the daily fluctuations in prices. 3. To evaluate the price movements of the selected stocks based on fundamental analysis.
1. This project report data collected from secondary sources only. 2. This project analysis report may not be applicable in all equity markets. 3. Project took only 15 companies of NSE for equity analysis. It will not applicable to total NSE’S Nifty Index. 4. The accuracy of the study is based on the accuracy of the data presented in the NSE listings. 5. Detailed study of topic was not possible due to limited size of the project. The time taken for the study is limited.
A major purpose of investment is to set a return of income on the funds invested. On a bond an investor expects to receive interest. On a stock, dividends may be anticipated. The investor may expect capital gains from some investments and rental income from house property. Return may take several forms.
Measurement of Returns The purpose of investment is to get a return or income on the funds invested in different financial assets. The most important characteristics of financial assets are the size and variability of their future returns. Since the return on income varies, various statistical techniques are used to measure it. Over the years, may methods were adopted for quantifying returns. These are now categorized as traditional and modern techniques of measurement.
Traditional Method of Measurement Computation of yield to measure a financial asset’s return is the simplest and oldest technique of measurement. Yield can be both expected or estimated and actual for a particular period. The formula used to find yield is: Expected Cash Income a) Estimated Yield = ---------------------------Current Price of Asset
Cash Income b) Actual Yield = --------------------Amount Invested
The yield that is calculated is for a particular period to find out the return on the amount that is invested. For example, the annual yield on the Unit Trust
Certificate is the dividend income divided by the amount invested.
Measuring Returns – Improved Technique The ‘holding period yield’ is one of the new techniques in measuring returns. The traditional methods did not provide a satisfactory returns measure. Some of the gaps that were identified were: (a) that the traditional method does not distinguish between divided and earnings portion that the traditional method does not distinguish between divided and earnings portion that the company retains (Earnings Yield Method), (b) Dividend Yield Method ignores the possibility of price appreciation on retained earnings. It is useful only for those shareholders who wish to retain shares always and are not interested in selling and anticipate that dividends are not going to change; (c) the yield to maturity is useful only to those bond holders who will hold it to maturity. All investors may not hold bonds till maturity for obvious reasons. These methods are thus known to serve a limited purpose only. The better method measures return through the holding period yield. This measure appears more rational and clearly defined. It serves two purposes: (a) It measures that total return per rupee of the original investment, and (b) through this method, comparisons can be drawn of
any asset’s expected return. An asset can be compared with other both historically and for future periods. The holding period yield can be used for any asset. For example, returns from savings accounts, stocks money, real estate and bonds can be compared through this measure. The formula for the holding period yield is: Income payments received during the year in Rs. + Capital change for the period in Rs.
Price in rupees of original investment at the beginning of period
Dividend + (Pt-Po) = -------------------------Po A look at this formula shows that the Holding Period Yield (HPY) considers everything the investor receives over the specified period during which the asset is held relative to what was originally invested in the assets. It also considers all income payments; and positive and negative capital changes during the period. These are then measured relative to the original investment in rupees. The HPY also measures past receipts of payments as well as for an unknown future. It is useful for comparing any time period, it can be used on both Bond and Stocks.
Measure of Dispersion Dispersion methods help to assess risk in receiving a reward or return on investment. The greater the potential dispersion, the greater the risk. One of the simplest methods in calculating dispersion is range. The range, however, has limited importance. It is useful when there are small samples. It loses its effectiveness when the number of values in a sample increases. The best and most effective method to find out how the data scattered around a frequency distribution is to use the standard deviation method. This method is related to the mean deviation and implies in this case the means as a point of reference from which deviation occurs. The standard deviation is based on mean and it cannot show any result without first finding out the mean. The standard deviation is recognized by the following symbolφ . The
standard deviation is also related to variance. Variance is the square of standard deviation. In other words, standard deviation is the square root of the variance. This relationship shows that they have similar statistical characteristics. Therefore,
standard deviation and variance are considered equivalent to each other as measures of risk. For a security analyst they help in depicting dispersion of HPYs around HPY. There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE), which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years, there has been a rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the country’s stage of economic development. The
number of listed companies increased from 5,968 in March 1990 to about 10,000 by May 1998 and market capitalization has grown almost 11 times during the same period. The debt market, however, is almost non-existent in India even though there has been a large volume of Government bonds traded. Banks and financial institutions have been holding a substantial part of these bonds as statutory liquidity requirement. The portfolio restrictions on financial institutions’ statutory liquidity requirement are still in place. A primary auction market for Government securities has been created and a primary dealer system was introduced in 1995. There are six authorized primary dealers. Currently, there are 31 mutual funds, out of which 21 are in the private sector. Mutual funds were opened to the private sector in 1992. Earlier, in 1987, banks were allowed to enter this business, breaking the monopoly of the Unit Trust of India (UTI), which maintains a dominant position. Before 1992, many factors obstructed the expansion of equity trading. Fresh capital issues were controlled through the Capital Issues Control Act. Trading practices were not transparent, and there was a large amount of insider trading. Recognizing the importance of increasing investor protection, several measures were enacted to improve the fairness of the capital market. ‘The Securities and Exchange Board of India (SEBI) was established in 1988’. Despite the rules it set, problems continued to exist, including those relating to disclosure criteria, lack of Brokers, capital adequacy, and poor regulation of merchant bankers and underwriters. There have been significant reforms in the regulation of the securities market since 1992 in conjunction with overall economic and financial reforms. In 1992, the SEBI Act was enacted giving SEBI statutory status as an apex regulatory body. And a series of reforms was introduced to improve investor
protection, automation of stock trading, integration of national markets, and efficiency of market operations. India has seen a tremendous change in the secondary market for equity. Its equity market will most likely be comparable with the world’s most advanced secondary markets within a year or two. The key ingredients that underlie market quality in India’s equity market are: • • Exchanges based on open electronic limit order book Nationwide integrated market with a large number of informed traders and fluency of short or long positions. • No counterparty risk. Among the processes that have already started and are soon to be fully implemented are electronic settlement trade and exchange-traded derivatives. Before 1995, markets in India used open outcry, a trading process in which traders shouted and hand signaled from within a pit. One major policy initiated by SEBI from 1993 involved the shift of all exchanges to screen-based trading, motivated primarily by the need for greater transparency. The first exchange to be based on an open electronic limit order book was the National Stock Exchange (NSE), which started trading debt instruments in June 1994 and equity in November 1994. In March 1995, BSE shifted from open outcry to a limit order book market. Currently, 17 of India’s stock exchanges have adopted open electronic limit order. Before 1994, India’s stock markets were dominated by BSE in other parts of the country.
Recent Developments and Policy Issues. Financial industry did not have equal access to markets and was unable to participate in forming prices, compared with market participants in Mumbai (Bombay). As a result, the prices in markets outside Mumbai were often different from prices in Mumbai. These pricing errors limited order flow to these markets. Explicit nationwide connectivity and implicit movement toward one national market has changed this situation. NSE has established satellite communications which give all trading members of NSE equal access to the market. Similarly, BSE and the Delhi Stock Exchange are both expanding the number of trading terminals located all over the country. The arbitrages are eliminating pricing discrepancies between markets. The Indian capital market still faces many challenges if it is to promote more efficient allocation and mobilization of capital in the economy. Firstly, market infrastructure has to be improved as it hinders the efficient flow of information and effective corporate governance. Accounting standards will have to adapt to internationally accept accounting practices.
The court system and legal mechanism should be enhanced to better protect small shareholders’ rights and their capacity to monitor corporate activities. Secondly, the trading system has to be made more transparent. Market information is a crucial public good that should be disclosed or made available to all participants to achieve market efficiency. SEBI should also monitor more closely cases of insider trading. Thirdly, India may need further integration of the national capital market through consolidation of stock exchanges. The trend all over the world is to
consolidate and merge existing stock exchanges. Not all of India’s 22 stock exchanges may be able to justify their existence. There is a pressing need to develop a uniform settlement cycle and common clearing system that will bring an end to unnecessary speculation based on arbitrage opportunities. Fourthly, the payment system has to be improved to better link the banking and securities industries. India’s banking system has yet to come up with good electronic funds transfer (EFT) solutions. EFT is important for problems such as direct payments of dividends through bank accounts, eliminating counterparty risk, and facilitating foreign institutional investment. The capital market cannot thrive alone; it has to be integrated with the other segments of the financial system. The global trend is for the elimination of the traditional wall between banks and the securities market. Securities market development has to be supported by overall macroeconomic and financial sector environments. Further liberalization of interest rates, reduced fiscal deficits, fully market-based issuance of Government securities and a more competitive banking sector will help in the development of a sounder and a more efficient capital market in India. Capital Market Reforms and Developments Reforms in the Capital Market Over the last few years, SEBI has announced several far-reaching reforms to promote the capital market and protect investor interests. Reforms in the secondary market have focused on three main areas • • • structure and functioning of stock exchanges, automation of trading and post trade systems, And the introduction of surveillance and monitoring systems. Computerized online trading of securities.
And settings up of clearing houses or settlement guarantee funds were made compulsory for stock exchanges. Stock exchanges were permitted to expand their trading to locations outside
their jurisdiction through computer terminals. Thus, major stock exchanges in India have started locating computer terminals in far-flung areas, while smaller regional exchanges are planning to consolidate by using centralized trading under a federated structure. Online trading systems have been introduced in almost all stock exchanges. Trading is much more transparent and quicker than in the past. Until the early 1990s, the trading and settlement infrastructure of the Indian capital market was poor. Trading on all stock exchanges was through open outcry, settlement systems were paper-based, and market intermediaries were largely unregulated. The regulatory structure was fragmented and there was neither comprehensive registration nor an apex body of regulation of the securities market. Stock exchanges were run as “brokers clubs” as their management was largely composed of brokers. There was no prohibition on insider trading, or fraudulent and unfair trade practices. Since 1992, there has been intensified market reform, resulting in a big improvement in securities trading, especially in the secondary market for equity. Most stock exchanges have introduced online trading and set up clearing houses/corporations. A depository has become operational for scrip less trading and the regulatory structure has been overhauled with most of the powers for regulating the capital market vested with SEBI. The Indian capital market has experienced a process of structural transformation with operations conducted to standards equivalent to those in the developed markets. It was opened up for investment by foreign institutional investors
(FII’s) in 1992 and Indian companies were allowed to raise resources abroad through Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs). The primary and secondary segments of the capital market expanded rapidly, with greater institutionalization and wider participation of individual investors accompanying this growth. However, many problems, including lack of confidence in stock investments, institutional overlaps, and other governance issues, remain as obstacles to the improvement of Indian capital market efficiency.
Since 1991/92, the primary market has grown fast as a result of the removal of investment restrictions in the overall economy and a repeal of the restrictions imposed by the Capital Issues Control Act. In 1991/92, Rs62.15 billion was raised in the primary market. This figure rose to Rs276.21 billion in 1994/95. Since 1995/1996, however, smaller amounts have been raised due to the overall downtrend in the market and tighter entry barriers introduced by SEBI for investor protection .SEBI has taken several measures to improve the integrity of the secondary market. Legislative and regulatory changes have facilitated the corporatization of stockbrokers. Capital adequacy norms have been prescribed and are being enforced. A mark-to-market margin and intraday trading limit have also been imposed. Further, the stock exchanges have put in place circuit breakers, which are applied in times of excessive volatility. The disclosure of short sales and long purchases is now required at the end of the day to reduce price volatility and further enhance the integrity of the secondary market.
MARK-TO-MARKET MARGIN AND INTRADAY LIMIT
Under the current clearing and settlement system, if an Indian investor buys and subsequently sells the same number of shares of stock during a settlement period, or sells and subsequently buys, it is not necessary to take or deliver the shares. The difference between the selling and buying prices can be paid or received. In other words, the squaring-off of the trading position during the same settlement period results in non delivery of the shares that the investor traded. Thus, possible at a relatively low cost. FII’s and domestic institutional investors are, however, not permitted to trade without delivery, since no delivery transactions are limited only to individual investors. One of SEBI’s primary concerns is the risk of settlement chaos that may be caused by an increasing number of no delivery transactions as the stock market becomes excessively speculative. Accordingly, SEBI has introduced a daily mark-to-market margin and intraday trading limit. The daily mark-to-market margin is a margin on a broker’s daily position. The intraday trading limit is the limit to a broker’s intraday trading volume. Every broker is subject to these requirements. Each stock exchange may take any other measures to ensure the safety of the market. BSE and NSE impose on members a more stringent daily margin, including one based on concentration of business. A daily mark-to-market margin is 100 percent of the notional loss of the stockbroker for every stock, calculated as the difference between buying or selling price and the closing price of that stock at the end of that
day. However, there is a threshold limit of 25 percent of the base minimum capital plus additional capital kept with the stock exchange or Rs1 million, whichever is lower. Until the notional loss exceeds the threshold limit, the margin is not payable. This margin is payable by a stockbroker to the stock exchange in cash or as a bank guarantee from a scheduled commercial bank, on a net basis. It will be released on the pay-in day for the settlement period. The margin money is held by the exchange for 612 days. This cost the broker about 0.4-1.2 percent of the notional loss, assuming that the broker’s funding cost is about 24-36 percent (Endo 1998). Thus, speculative trading without the delivery of shares is no longer cost-free. Each broker’s trading volume during a day is not allowed to exceed the intraday trading limit. This limit is 33.3 times the base minimum capital deposited with the exchange on a gross basis, i.e., purchase plus sale. In the event of brokers wishing to exceed this limit, they have to deposit additional capital with the exchange and this cannot be withdrawn for six months.
Stock exchange is an organized market place where securities are traded. These securities are issued by the government, semi-government bodies, public sector undertakings and companies for borrowing funds and raising resources. Securities are defined as any monetary claims (promissory notes or I.O.U) and also include shares, debentures, bonds and etc., if these securities are marketable as in the case of the government stock, they are transferable by endorsement and alike movable property. They are tradable on the stock exchange. So, are the case shares of companies. Under the Securities Contract Regulation Act of 1956, securities’ trading is regulated by the Central Government and such trading can take place only in stock exchanges recognized by the government under this Act. As referred to earlier there are at present 23 such recognized stock exchanges in India. Of these, major stock exchanges, like Bombay Stock Exchange, National Stock Exchange, Inter-Connected Stock Exchange, Calcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are permanently recognized while a few are temporarily recognized. The above act has also laid down that trading in approved contract should be done through registered members of the exchange. As per the rules made under the above act, trading in securities permitted to be traded would be in the normal trading hours (10 A.M to 3.30 P.M) on working days in the trading ring, as specified for trading purpose.
Contracts approved to be traded are the following: • Spot delivery deals are for deliveries of shares on the same day or the next day
as the payment is made. • Hand deliveries deals for delivering shares within a period of 7 to 14 days from
the date of contract. • Delivery through clearing for delivering shares with in a period of two months from the date of the contract, which is now reduce to 15 days.(Reduced to 2 days in demat trading) • Special Delivery deals for delivering of shares for specified longer periods as
may be approved by the governing board of the stock exchange. Except in those deals meant for delivery on spot basis, all the rest are to be put through by the registered brokers of a stock exchange. The securities contracts (Regulation) rules of 1957 laid down the condition for such trading, the trading hours, rules of trading, settlement of disputes, etc. as between the members and of the members with reference to their clients.
HISTORY OF STOCK EXCHANGES IN INDIA
The origin of the Stock Exchanges in India can be traced back to the later half of 19th century. After the American Civil War (1860-61) due to the share mania of the public, the number of brokers dealing in shares increased. The brokers organized an informal association in Mumbai named “The Native Stock and Share Brokers Association in 1875”.later evolved as Bombay stock exchange. Increased activity in trade and commerce during the First World War and Second World War resulted in an increase in the stock trading. The Growth of Stock Exchanges suffered a set after the
end of World War. Worldwide depression affected those most of the Stock Exchanges in the early stages had a speculative nature of working without technical strength. After independence, government took keen interest to regulate the speculative nature of stock exchange working. In that direction, securities and Contract Regulation Act 1956 was passed, this gave powers to Central Government to regulate the stock exchanges. Further to develop secondary markets in the country, stock exchanges established at Mumbai, Chennai, Delhi, Hyderabad, Ahmedabad and Indore. The Bangalore Stock Exchange was recognized in 1963. At present there are 23 Stock Exchanges. Till
recent past, floor trading took place in all Stock Exchanges. In the floor trading system, the trade takes place through open outcry system during the official trading hours. Trading posts are assigned for different securities whereby and sell activities of securities took place. This system needs a face – to – face contact among the traders and restricts the trading volume. The speed of the new information reflected on the prices was rather than the investors. The Setting up of NSE and OTCEI (Over the counter exchange of India with the screen based trading facility resulted in more and more Sock exchanges turning towards the computer based trading. BSE introduced the screen based trading system in 1995, which known as BOLT (Bombay on – line Trading. System) Madras Stock Exchange introduced Automated Network Trading
System (MANTRA) on October 7, 1996 Apart from Bombay Stock Exchanges have introduced screen based trading.
FUNCTIONS OF STOCK EXCHANGE
Maintain Active Trading: Shares are traded on the stock exchanges, enabling the investors to buy and sell securities. The prices may vary from transaction to transaction. A continuous trading increases the liquidity or marketability of the shares traded on the stock exchanges.
Fixation of Prices: Price is determined by the transactions that flow from investors demand and the supplier’s preferences. Usually the traded prices are made known to the public. This helps the investors to make the better decision.
Ensures safe and fair dealings: The rules, regulations and bylaws of the Stock Exchanges provide a measure of safety to the investors. Transactions are conducted under competitive conditions
enabling the investors to get a fair deal.
Aids in financing the Industry: A continuous market for shares provides a favorable climate for raising capital. The negotiability and transferability of the securities, investors are willing to subscribe to the initial public offering (IPO). This stimulates the capital formation.
Dissemination of Information: Stock Exchanges provide information through their various publications. They publish the share prices traded on their basis along with the volume traded. Directory of Corporate Information is useful for the investor’s assessment regarding the corporate. Handouts, handbooks and pamphlets provide information regarding the functioning of the Stock Exchanges.
Performance Inducer: The prices of stocks reflect the performance of the traded companies. This makes the corporate more concerned with its public image and tries to maintain good performance.
Self-regulating organization: The Stock Exchanges monitor the integrity of the members, brokers, listed companies and clients. Continuous internal audit safeguards the investors against unfair trade practices. It settles the disputes between member brokers, investors and brokers.
REGULATORY FRAME WORK
This Securities Contract Regulation Act, 1956 and Securities and Exchange board of India (SEB1) Act, 1992, provides a comprehensive legal framework. A 3-tier regulatory structure comprising the ministry of finance, SEB1 and the Governing Boards of the Stock Exchanges regulates the functioning of Stock Exchanges.
Ministry of finance The Stock Exchange division of the Ministry of Finance has powers related to the application of the provision of the SCR Act and licensing of dealers in the other area. According to SEBI Act, The Ministry of Finance has the appellate and the supervisory power over the SEBI. It has powered to grant recognition to the Stock Exchange and regulation of their operations. Ministry of Finance has the power to approve the appointments of executives chiefs and the nominations of the public representatives in the government Boards of the Stock Exchanges. It has the responsibility of preventing undesirable speculation.
The Securities and Exchange Board of India The Securities and Exchange Board of India even though established in the year 1988. Received statutory powers only on 30th January 1992. Under the SEBI Act, a wide variety of powers are vested in the hands of SEBI. SEBI has the powers to regulate the business of Stock Exchanges, other security and mutual funds. Registration and regulation of market intermediaries are also carried out by SEBI. It has responsibility to prohibit the fraudulent unfair trade practices and insider dealings. Takeovers are also monitored by the SEBI has the multi pronged duty to promote the healthy growth of the capital market and protect the investors.
The Governing Board of Stock Exchanges:
The Governing Board of the Stock Exchange consists of elected members of directors, government nominees and public representatives. Rules, by laws and regulations of the Stock Exchange substantial powers to the executive director for maintaining efficient and smooth day-to day functioning of Stock Exchange. The Governing Board has the responsibility to maintain and orderly and well-regulated market. The Governing body of the Stock Exchange consists of 13 members of which • Six members of the Stock Exchange are elected by the members of the Stock
Exchange. • • • • Central Government nominates not more than three members. The board nominates three public representatives. SEBI nominates persona not exceeding three and The Stock Exchange appoints one Executive Director.
One third of the elected members retire at annual general meeting (AGM). The retired member can offer himself for election if he is not elected for two consecutive years. If a member serves in the governing body for two years consecutively, he should refrain offering himself for another two years. The members of the governing body elect the president and vice-president. It needs to approval from the Central Government or the Board. The office tenure for the president and vice-president is on year. They can offer themselves for re-election, if they have not held for two consecutive years. In that case they can offer themselves for re-election after a gap of one-year period.
NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) of India became operational in the capital market segment on third November 1994 in Mumbai. The genesis of the NSE lies in the recommendations of the pherwani committee (1991). Apart from the NSE. It had recommended for the establishment of National Stock market System also. The committee pointed out some major defects in the Indian stock market. The defects specified are. • • • • • Lack of liquidity in most of the markets in terms of depth and breadth. Lack of ability to develop markets for debt. Lack of infrastructure facilities and outdated trading system. Lack of transparency in the operations that affect investors’ confidence. Outdated settlement system that are inadequate to cater to the growing volume,
leading to delays. • Lack of single market due to the inability of various stock exchanges to function
cohesively with legal structure and regulatory framework. These factors led to the establishment of the NSE. The main objectives of NSE are as follows
To establish a nationwide trading facility for equities, debt and hybrid
To ensure equal access investors all over the country through
communication network. • To provide a fair, efficient and transparent securities market to investors using
an electronic communication network. • • To enable shorter settlement cycle and book entry settlement system. To meet current international standards of securities market. Promoters of NSE: IDBI, ICICI, IFCI, LIC, GIC, SBI, Bank of Baroda. Canara Bank, Corporation Bank, Indian Bank, Oriental Bank of Commerce. Union Bank of India, Punjab National Bank, Infrastructure Leasing and Financial Services, Stock Holding Corporation of India and SBE capital market are the promoters of NSE.
Membership is based on factors such as capital adequacy, corporate structure, track record, education, experience etc. Admission is a two-stage process with applicants requiring going through a written examination followed by an interview. A committee consisting of experienced people from the industry to assess the applicant’s capability to operate as an exchange member, interviews candidates. The exchange admits members separately to Wholesale Debt Market (WDM) segment and the capital market segment. Only corporate members are admitted on the debt market segment whereas individuals and firms are also eligible on the capital market segment. Eligibility criteria for trading membership on the segment of WDM are as follows. • The persons eligible to become trading members are bodies corporate,
Institutions including subsidiaries of banks engaged in financial services and
such other • • Persons or entities as may be permitted form time to time by RBI/SEBI. The whole-time directors should possess at least two years experience in any
activity related to banking or financial services or treasury. • The applicant must possess a minimum net worth of Rs.2 cores. The applicant must be engaged solely in the business of securities and must not
be engaged in any fund-based activities. The securities market achieves one of the most important functions of channeling idle resources to productive resources or from less productive resources to more productive resources. Hence in the broader context the people who save and investors who invest focus more towards the economy’s abilities to invest and save respectively. This enhances savings and investments in the economy, the two pillars for economic growth. The Indian Capital Market has come a long way in this process and with a strong regulator it has been able to usher an era of a modern capital market regime. The past decade in many ways has been remarkable for securities market in India. It has grown exponentially as measured in terms of amount raised from the market, the number of listed stocks, market capitalization, trading volumes and turnover on stock exchanges, and investor population. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency, transparency and safety. Dependence on Securities Market Three main sets of entities depend on securities market- the corporate, the government & households. While the corporate and governments raise resources from
the securities market to meet their obligations, the households invest their savings in securities. Primary Market & Secondary Market The securities market comprises two segments- primary market (new issues, offer for sale) & secondary market (trading of stocks). There are two major types of issuers who issue securities. The corporate entities issue mainly debt and equity instruments (shares, debentures, etc.), while the governments (central and state governments) issue debt securities (dated Securities, treasury bills). The two major exchanges, namely the NSE and the BSE provide trading of securities.
Laws governing capital market The four main legislations governing the securities market are: a) The SEBI Act, 1992 which establishes SEBI to protect investors and develop and regulate the Markets. b) The Companies Act, 1956, which sets out the code of conduct for the corporate sector in relation to issue, allotment and transfer of securities, and disclosures to be made in public issues. c) The Securities Contracts (Regulation) Act, 1956, read with the Securities Contracts (Regulation) Rules, 1957 which provide for regulation of transactions in securities through control over stock exchanges, and d) The Depositories Act, 1996 which provides for electronic maintenance and transfer of ownership of demat securities.
SEBI is the primary regulator of the Securities Market and the entities operating therein. The SEBI Act and the Depositories Act are mostly administered by SEBI. The rules under the securities laws are framed by government and regulations by SEBI. All these are administered by SEBI. The powers under the Companies Act relating to issue and transfer of securities and non-payment of dividend are administered by SEBI in case of listed public companies and public companies proposing to get their securities listed Nifty 50 The 50 stocks that were most favored by institutional investors in the 1960s and 1970s. Companies in this group were usually characterized by consistent earnings growth and high P/E ratios. The Nifty-50 stocks got their notoriety in the bull markets of the 1960s and early 1970s. They became known as "one-decision" stocks because investors were told. They could buy and hold forever. Examples of Nifty-50 stocks included General Electric, Coca-Cola, and IBM. However, part of this list included companies that have been troubled in the last decade, such as Xerox and Polaroid.
Nifty Junior The CNX Nifty Junior is an index for companies on the National Stock Exchange of India. It consists of 50 companies representing approximately 10% of the traded value of all stocks on the National Stock Exchange of India. The CNX Nifty Junior is owned and operated by India Index Services and Products Ltd. It is quoted using the symbol
NSMIDCP. The CNX Nifty Junior and the S&P CNX Nifty represent the 100 most liquid commodities traded on the National Stock Exchange of India. Together, they form a disjoint set; that is to say, no one company can be listed on both indices simultaneously.
Equity Stock or any other security representing an ownership interest. On the balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as "shareholder's equity”. In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage. In the context of real estate, the difference between the current market value of the property and the amount the owner still owes on the mortgage. Thus, it is the amount, if any; the owner would receive after selling a property and paying off the mortgage. Equity is a term whose meaning depends very much on the context. In general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off. For example, a car or house with no outstanding debt is considered the owner's equity since he or she can readily sell the items for cash. Stocks are equity because they represent ownership of a company, whereas bonds are classified as debt because they represent an obligation to pay and not ownership of assets. Market Value
The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. Also known as "market price” The market capitalization plus the market value of debt. Sometimes referred to as "total market value". In the context of securities, market value is often different from book value because the market takes into account future growth potential. Most investors who use fundamental analysis to pick stocks look at a company's market value and then determine whether or not the market value is adequate or if it's undervalued in comparison to its book value, net assets or some other measure.
Stock A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes. Bankrupt and is liquidated. Also known as "shares" or "equity". A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings. In other words, a shareholder is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have. Claim
to 10% of the company’s assets Stocks are the foundation of nearly every portfolio. Historically, they have outperformed most other investments over the long run.
Shareholder Any person, company, or other institution that owns at least 1 share in a company. A shareholder may also be referred to as a stockholder. Shareholders are the owners of a company. They have the potential to profit if the company does well, but that comes with the potential to lose if the company does poorly. Share A unit of ownership interest in a corporation or financial asset. While owning shares in a business does not mean that the shareholder has direct control over the business's day-to-day operations, being a shareholder does entitle the possessor to an equal distribution in any profits, if any are declared in the form of dividends. The two main types of shares are common shares and preferred shares. In the past, shareholders received a physical paper stock certificate that indicated that they owned "x" shares in a company. Today, brokerages have electronic records that show ownership details. Owning a paperless share makes conducting trades a simpler and more streamlined process, which is a far cry from the days were stock certificates needed to be taken to a. Brokerage before a trade could be conducted. While shares
are often used
represent ownership of other classes of financial assets, such as mutual funds.
Risk- Risk is defined as uncertainty in outcomes The chance that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the original investment. It is usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. A fundamental idea in finance is the relationship between risk and return. The greater the amount of risk that an investor is willing to take on, the greater the potential return. The reason for this is that investors need to. be compensated for taking on additional risk
Stock Option A privilege, sold by one party to another, that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed-upon price within a. certain period or on a specific date. In the U.K., it is known as a "share option”. American options can be exercised anytime between the date of purchase and the expiration date. European options may only be redeemed at the expiration date. Most exchange-traded stock options are American. Security An instrument representing ownership (stocks), a debt agreement (bonds), or the rights to ownership (derivatives).A security is essentially a contract that can be assigned a value Andrade.
Examples of a security include a note, stock, preferred share, bond, debenture, option, future, swap, right, warrant, or virtually any other financial asset.
Closing Price The final price at which a security is traded on a given trading day. The closing price represents the most up-to-date valuation of a security until trading commences again on the next trading day.
INDIA BULLS is India’s leading Financial, Real Estate and Power Company with a wide presence throughout India. They ensure convenience and reliability in all their products and services. INDIA BULLS has over 640 branches all over India. The customers of INDIA BULLS are more than 4,50,000 which covers from a wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. The company employs around 4000 Relationship managers who help the clients to satisfy their customized financial goals. INDIA BULLS entered the Real Estate business in the year 2005 with its group of companies. Large scale projects worth several hundred million dollars are evaluated by them. INDIA BULLS Financial Services Ltd is listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The market capitalization of INDIA BULLS is around USD 2500 million (29thDecember,
2006). Consolidated net worth of the group is around USD 700 million. INDIA BULLS and its group companies have attracted USD 500 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some of the large shareholders of INDIA BULLS are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.
Growth of INDIA BULLS Year 2000-01: One of India’s first trading platforms was set up by INDIA BULLS Financial Services Ltd. with the development of an in-house team.
Year 2001-03: The service offered by INDIA BULLS was increased to include Equity, F&O, Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research.
Year 2003-04: In this particular year INDIA BULLS ventured into Distribution and Commodities Trading business.
This was one of the most important years in the history of INDIA BULLS. In this year:
• • •
INDIA BULLS came out with its initial public offer (IPO) in September 2004. INDIA BULLS started its Consumer Finance business. INDIA BULLS entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate.
INDIA BULLS won bids for landmark properties in Mumbai.
Year 2005-06: In this year the company acquired over 115 acres of land in Sonepat for residential home site development. The world renowned investment banks like Merrill Lynch and Goldman Sachs increased their shareholding in INDIA BULLS. It also became a market leader in securities brokerage industry, with around 31% share in Online Trading. The world’s largest hedge fund, Farallon Capital and its affiliates committed Rs. 2000 million for INDIA BULLS subsidiaries Viz. INDIA BULLS Credit Services Ltd. and INDIA BULLS Housing Finance Ltd. In the same year, the Steel Tycoon Mr. L N Mittal promoted LNM India Internet venture Ltd. acquired 8.2% stake in INDIA BULLS Credit Services Ltd.
Year 2006-07: In this year, INDIA BULLS Financial Services Ltd. was included in the prestigious Morgan Stanley Capital International Index (MSCI). INDIA BULLS
Financial Services Ltd. was benefited with the Farallon Capital agreeing to invest Rs. 6,440 million in it. The company also received an “in principle approval” from Government of India for development of multi product SEZ in the state of Maharashtra. INDIA BULLS Financial Services Ltd acquired 100% of the equity share capital of Noble Realtors Pvt. Ltd. Noble Realtors is a Company engaged in the business of construction and development of real estate projects. INDIA BULLS Real Estate Business was demerged to become a separate entity called INDIA BULLS Real Estate Ltd. The Board of INDIA BULLS Financial Services Ltd., Resolved to Amalgamate INDIA BULLS Credit Services Ltd and demerge INDIA BULLS Securities Limited. INDIA BULLS Financial Services Ltd Year 2008-09: Several developments across its group companies have propelled INDIA BULLS forward and are expected to continue to power the rise of this conglomerate. INDIA BULLS financial services limited has recently signed a joint venture
agreement with sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture. At the same time it has also signed a Memorandum of understanding with MMTC. On the asset management front, the company has received formal approval uhby7hbfrom SEBI and is expected to shortly launch its first NFO. INDIA BULLS enter in to Public issue for his INDIA BULLS power Ltd.
Promoters for INDIA BULLS Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal Are the promoters of INDIA BULLS Financial Services Limited. While Sameer Gehlaut will have a 23.0% stake in the company post the IPO Rajiv Rattan and Saurabh Mittal will have a post issue holding of 11.5% and 10.1% respectively. All the three promoters of the company are engineering graduates while Saurabh Mittal is a management graduate as well.
Sector Since INDIA BULLS derives most of its revenues from the brokerage business, its fortunes are very much dependent on the Performance of the capital markets, i.e. debt, derivative and equity markets. The Indian equity markets have grown from strength to strength in the last decade with combined daily volumes of all segments on the BSE and the NSE touching Rs 232 bn in April 2004, from Rs 5 bn in FY96. Total shareholders in the country are over 20 m (2% of population) and this is the third largest after the US and Japan, in absolute terms. However, if one were to compare the percentage of all households in India that are invested in the stock markets, it is only about 1.9% as compared to an estimated 52%(including indirect ownership by way of mutual funds) of all households in the US. This highlights the long-term potential for the sector. to apply
The Team: INDIA BULLS Securities Ltd, main strength lies in its formidable team. This team comprising highly qualified and experienced personnel has been responsible for the overall management of the company and has provided direction in diverse areas of business strategy, operating management, regulatory reporting, human resources development and product development.
Senior Vice President Yuv Raj Singh
Regional Manager Dashmeet Singh Branch Manager Senior Sales Manager Sujeet Roy Chowdary
Support System Vishal
Sujeet Roy Chowdary
Sales Function Subrot
Back Office Executive Ifran Khan
Local Compliance Officer Chary
RM/SRM Satish Kumar S
Dealer Badri Nath
Vision statement To become the preferred long term financial partner to a wide base of customers whilst optimizing stake holder’s value Mission statement To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner Corporate action An Approach to Business that reflects Responsibility, Transparency and Ethical Behavior. Respect for Employees, Clients & Stakeholder groups INDIA BULLS Group entities in India • • • • • • • • • INDIA BULLS Capital Services Ltd. INDIA BULLS Commodities Pvt. Ltd. INDIA BULLS Credit Services Ltd. INDIA BULLS Finance Co. Pvt. Ltd INDIA BULLS Housing Finance Ltd. INDIA BULLS Insurance Advisors Pvt. Ltd. INDIA BULLS Resources Ltd. INDIA BULLS Securities Ltd. INDIA BULLS Power Ltd.
INDIA BULLS Securities Ltd is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) and its global depository shares are listed on the Luxembourg Stock Exchange Online trading potential is huge: Online trading accounted for 5% of overall market in FY04 as compared to an estimated 3% in FY03. INDIA BULLS currently has almost 20% market share of volumes in the Internet trading space. The table below indicates the growth in volumes of the Internet trading segment on the NSE over the last few years. The growth is indicative of the potential of this segment, which we believe is likely to be robust going forward as well. This is primarily driven by increasing penetration of computers, significant decline in Internet charges, convenience of usage and cost advantage. To put things in perspective, the offline brokerage on equities is around 1.0% as compared to 0.5% in the online trading space. NSE online trading statistics Enabled members* FY00 FY01 FY02 FY03 CM F&O** FY04 CM F&O** 3 61 82 80 13 70 14 Registered clients* 123,578 231,899 346,420 69,340 413,454 164,642 Trading Value (Rs bn) 73 81 154 51 379 430 % of total trading value 0.5 1.6 2.5 1.4 3.5 2
CM: Cash Market, F&O: Futures and Options market * At the end of the financial year ** trading value for F&O segment compiled from June 2009
Advisory services: INDIA BULLS is also into mutual fund and insurance advisory businesses. Though this field is extremely competitive and requires significant research skills, these are highly profitable business segments. Though these businesses currently account for an insignificant portion of overall revenues, considering the penetration levels of mutual funds and insurance in the country, prospects are promising.
Aggressive growth plans: INDIA BULLS has set aggressive targets to expand its business in the offline space. This includes investments in upgradation of branch network and opening another 75 branches by the end of calendar year 2009 (150 in total). The company has also indicated its intent to acquire strategic stake in other companies towards growing the business inorganically
Power INDIA BULLS An online trading system designed for the highvolume trader. The platform provides enhanced trade information and executes orders on an integrated software based trading platform. INDIA BULLS financial service offers a) SME finance b) Mortgage loans
c) Commercial vehicle loans d) Farm equipment loans e) Commercial credit loans f) Loan against shares and g) Third part distribution of insurance products. Broking Equity, Derivatives, Commodities, Currency Derivatives.
Distribution Mutual funds, IPO’s, Home loans, Insurace. Divisions • • • • Investment Advisory and Broking Division Project Syndication Division Institutional Equity Broking Division Institutional Debt Broking Division
Retail Offerings: • • • • Wealth Management Services Portfolio Management Services Securities Broking-Equities and derivatives Depository & Custodial Service & Distribution of financial . Products. .
SERVICES INDIA BULLS securities provides a wide range of services that include Power INDIA BULLS An online trading system designed for the high-volume trader. The platform provides enhanced trade information and executes orders on an integrated software based trading platform. 1) Equities 2) Commodities 3) Wholesale debts 4) Futures and options 5) Depository services 6) Equity research services 7) Post Trade -Custodial, 8) Depository Services 9) Payment Gateway 10) Other back office support
Online Banks Tie-ups for trading: Company having online transaction tie-ups with banks like a) HDFC BANK, b) ICICI BANK, c) IDBI BANK, d) CITI BANK. Company Achievements: • The INDIA BULLS Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors. The INDIA BULLS Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments. INDIA BULLS Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. • INDIA BULLS Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitization while INDIA BULLS Securities Limited is the only broker in India to be assigned CRISIL’s highest broker quality grading of BQ1.
In December 2007, INDIA BULLS acquired Pyramid Retail including Piramyd Megastores and Trumart, their chain of lifestyle and convenience outlets
FINANCIAL POSITION Balancesheet of India bulls securities Ltd crores
Mar '06 12 mths 17.83 17.83 0 0 163.24 0 181.07 2.91 349.3 352.21 533.28 Mar '06 12 mths 60.92 12.64 48.28 3.14 0 0 728.3 728.3 104.07 0 832.37 0 Mar '07 12 mths 17.83 17.83 0 0 301.33 0 319.16 4.55 35 39.55 358.71 Mar '07 12 mths 132.71 27.01 105.7 2.96 0 95.24 109.95 205.19 49.76 307.4 562.35 0 Dec '07 9 mths 55.28 50.69 0 4.59 475.95 0 531.23 44.74 105 149.74 680.97 Dec '07 9 mths 153.09 42.49 110.6 1.54 48.27 0 718.83 718.83 459.93 0 1,178.76 0 Mar '08 12 mths 55.28 50.69 0 4.59 308.74 0 364.02 45.04 335 380.04 744.06 Mar '08 12 mths 155.33 48.14 107.19 0.92 48.32 112.62 655.77 768.39 67.21 416.9 1,252.50 0
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit
Mar '09 12 mths 55.28 50.69 0 4.59 236.02 0 291.3 42.5 69.5 112 403.3 Mar '09 12 mths 161.32 71.23 90.09 0.18 51.77 26.24 27.63 53.87 126.54 434.56 614.97 0
Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses TOTAL ASSETS Contingent Liabilities Book Value (Rs)
342.98 7.53 350.51 481.86 0 533.28 0 101.53
296.66 15.63 312.29 250.06 0 358.72 1.54 178.96
616.93 41.27 658.2 520.56 0 680.97 1.75 20.78
430.99 233.89 664.88 587.62 0 744.05 1.87 14.18
288.37 65.35 353.72 261.25 0 403.29 0.29 11.31
ABOUT INDIA BULLS GROUP The INDIA BULLS Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors. The group companies have a market capitalization of over Rs. 25,000 crore (US$ 6.25 billion) while group revenues have grown at a cumulative annual rate of over 100% to now reach Rs. 3100 crore (US$ 775 million) and the group profit has surged to over Rs. 1200 crore (US$ 300 million). Its companies, listed in important Indian and overseas markets, have distributed over Rs. 700 crore (US$ 175 million) as dividend in the year 2008. INDIA BULLS Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitization while INDIA BULLS Securities Limited is the only broker in India to be assigned CRISIL’s highest broker quality grading of BQ1. In December 2007, INDIA BULLS acquired Pyramid Retail including Piramyd Megastores and Trumart, their chain of lifestyle and convenience outlets INDIA BULLS’ growth has been nothing short of stupendous. In less than eight years since the company was first registered, it has grown from just five employees to 21,000 and from one office to 600 across the country. The INDIA
BULLS Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments. A person who bought INDIA BULLS shares in the IPO at Rs. 19 (US$ 0.48) in September 2004 has been rewarded almost 100 times in three and a half years – a feat unparalleled in the history of Indian capital markets. INDIA BULLS Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. Companies History in India In 1999, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal acquired Orbis,a Delhi based stock broking company. Young entrepreneur Sameer Gehlaut established INDIA BULLS in 2000, after acquiring orbis Securities, a stock brokerage company in Delhi. The group started its operations from a small office near Hauz Khas bus terminal in Delhi.The office had a tin roof and two computers. The idea of leveraging technology for trading stocks led to the creation of INDIA BULLS Incorporated on 10th January 2000, it was converted into a public limited company on 27th February 2004. Its original idea of leveraging technology bore fruit when INDIA BULLS was accorded permission to conduct online trading on Indian stock exchanges. The company had achieved the distinction of becoming only the second brokerage firm in India to be granted this consent. The challenges facing it were immense – not least of all the mind set of investors who were called to make the big leap from traditional stock trading to a completely online interface. Having overcome
this resistance, the company later expanded its service portfolio to include equity, F&O, wholesale debt, mutual fund distribution and equity research. In 2003/04, INDIA BULLS ventured into insurance distribution and commodity trading. It successfully floated its IPO in September 2004 and in the same year entered the consumer finance segment. Real estate, the new sunrise industry, was the next frontier for INDIA BULLS. In 2004/05, it entered this sector. But it wasn’t just real estate that was booming. Opportunities were opening up in retail and infrastructure as well. To cement its position in the Indian business and industry firmament,
INDIA BULLS acquired Pyramid Retail In 2007 and marked its presence in the power sector by launching INDIA BULLS Power Brand Values INDIA BULLS is amongst the largest non-banking financial services companies in India and enjoys strong brand recognition and customer acceptance. The company attributes its dominant position in the brokerage industry to the preferential status it enjoys with investors Coupled with its forays into various segments; the Group believes that the bulk of its brand story is yet to be written. Indeed, when a case study on India’s youngest brands which have had a profound impact on the economy is crafted, INDIA BULLS will feature prominently in it.
Recent Developments Several developments across its group companies have propelled INDIA BULLS forward and are expected to continue to power the rise of this conglomerate.
INDIA BULLS Financial Services Limited has recently signed a joint venture agreement with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture. At the same time it has also signed a Memorandum of Understanding with MMTC, the largest commodity trading house in India, to establish a Commodities Exchange with 26% Ownership held by MMTC. On the asset management front, the company has received formal approval from SEBI and is expected to shortly launch its first NFO.
The Board of Directors Following is the list of our Board Members as on November 4, 2009 Mr. Sameer Gehlaut Gagan Banga Rajiv Rattan Shamsher Singh Aishwarya Katoch Karan Singh Prem Prakash Mird Saurabh K Mittal Amit Jain Chairman & CEO Executive Director CEO Director Director Director Director Executive Director Company Secretary
ABB RETURNS FOR THE YEAR 2009
Month January February March April May June July August September October November December Start 454 471.05 370 426.15 490 666 780 695 764.95 785.1 745.35 749.4 End 485.15 367.2 426.7 487 650.95 778.4 700.6 758.7 784.45 769.55 741.05 767.1 Returns 0.06861233 5 -0.22046492 0.15324324 3 0.14279009 7 0.32846938 8 0.16876876 9 -0.10179487 0.09165467 6 0.02549186 2 -0.01980639 -0.0057691 0.02361889 5 0.65481397 9 Avg.Ret 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 0.054568 Deviation 0.01404433 5 -0.27503292 0.09867524 3 0.08822209 7 0.27390138 8 0.11420076 9 -0.15636287 0.03708667 6 -0.02907614 -0.07437439 -0.0603371 -0.0309491 (Deviation)2 0.000197243 0.075643106 0.009736804 0.007783138 0.07502197 0.013041816 0.024449348 0.001375422 0.000845422 0.00553155 0.003640566 0.000957847 0.218224232 0.134853 Avg.Ret -0.0495 -0.0495 -0.0495 -0.0495 Deviation -0.06385664 0.06347490 9 0.03851533 1 0.25120817 4 (Deviation)2 0.004077671 0.004029064 0.001483431 0.063105547
Total Standard Deviation Month January February March April Start 715 629.7 632.7 626.4 End 633.95 638.5 625.75 752.75
BHARATI AIRTEL RETURNS FOR THE YEAR 2009
Returns -0.11335664 0.01397490 9 -0.01098467 0.20170817 4
0.07160122 May June July August September October November December 765.35 870 803.15 418 418.65 426 292 820.15 802.15 410.1 424.6 418.75 292.85 299.55 329.75 8 -0.07798851 -0.48938554 0.01578947 4 0.00023886 3 -0.31255869 0.02585616 4 0.08150213 2 -0.5936031 -0.0495 -0.0495 -0.0495 -0.0495 -0.0495 -0.0495 -0.0495 -0.0495
0.12110122 8 -0.02848851 -0.43988554 0.06528947 4 0.04973886 3 -0.26305869 0.07535616 4 0.13100213 2 0.014665507 0.000811595 0.193499292 0.004262715 0.002473954 0.069199872 0.005678552 0.017161559 0.380448759 0.1780563 (Deviation)2 0.007622824 0.0003089 0.00165314 0.001543336 0.052225343 0.000304699 0.002441129 0.00055444 0.002092466 0.007421683 0.00120385 0.000333465 0.077705274 0.08047
304.9 Total Standard Deviation Month January February March April May June July August September October November December Start 1372 1315
1385 1520 1703.65 2134.6 2229 2250 2319 2301 2209.95 2249.75
BHEL RETURNS FOR THE YEAR 2009
End 1320.8 1403.85
1510.55 1655.7 2178.15 2204.05 2230.3 2309.5 2328.85 2217.8 2243.75 2403.3
Returns -0.03731778 0.06756654 0.09064981 9 0.08927631 6 0.27851964 9 0.03253537 0.00058322 1 0.02644444 4 0.00424752 -0.03615819 0.01529446 4 0.06825202 8 0.59989339 5
Avg.Ret 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991 0.049991
Deviation -0.08730878 0.01757554 0.04065881 9 0.03928531 6 0.22852864 9 -0.01745563 -0.04940778 -0.02354656 -0.04574348 -0.08614919 -0.03469654 0.01826102 8
Total Standard Deviation
CIPLA RETURNS FOR THE YEAR 2009
Month January February March April May June July August September October November December
Start 187 192 188 218.5 243.05 225 253.35 277 271 283 284.2 315.1
End 191.95 191.5 220.05 240.75 222.8 253.35 275.05 270.85 279.9 287.1 320 335.05
Returns 0.02647058 8 -0.00260417 0.17047872 3 0.10183066 4 -0.08331619 0.126 0.08565226 -0.02220217 0.03284132 8 0.01448763 3 0.12596762 8 0.06331323 4 0.63891953 5
Avg.Ret 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324 0.05324
Deviation -0.02676941 -0.05584417 0.11723872 3 0.04859066 4 -0.13655619 0.07276 0.03241226 -0.07544217 -0.02039867 -0.03875237 0.07272762 8 0.01007323 4
(Deviation)2 0.000716601 0.003118571 0.013744918 0.002361053 0.018647593 0.005294018 0.001050555 0.00569152 0.000416106 0.001501746 0.005289308 0.00010147 0.057933459 0.0694823
Total Standard Deviation
HCL TECH RETURNS FOR THE YEAR 2009
Month January February March April May June July August September Start 116.5 111.15 98 100.55 130.55 172 186 242 299 End 116.1 100.2 102.05 129.85 166.9 185.95 241 300 340.8 Returns -0.00343348 -0.09851552 0.04132653 1 0.29139731 5 0.27843738 0.08110465 1 0.29569892 5 0.23966942 1 0.13979933 1 Avg.Ret 0.1141 0.1141 0.1141 0.1141 0.1141 0.1141 0.1141 0.1141 0.1141 Deviation -0.11753348 -0.21261552 -0.07277347 0.17729731 5 0.16433738 -0.03299535 0.18159892 5 0.12556942 1 0.02569933 1 (Deviation)2 0.013814118 0.045205359 0.005295978 0.031434338 0.027006775 0.001088693 0.032978169 0.01576768 0.000660456
October November December
342 302.5 339.95
306.25 337.1 371.8
-0.10453216 0.11438016 5 0.09369024 9 1.36902280 8
0.1141 0.1141 0.1141
-0.21863216 0.00028016 5 -0.02040975
0.047800023 7.84926E-08 0.000416558 0.221468225 0.1358517
Total Standard Deviation
INFOSYS RETURNS FOR THE YEAR 2009
Month January February March April May June July August September October November December Start 1116 1292 1218 1331.15 1520.1 1615.35 1770.55 2064 2139.95 2330 2203 2427 End 1306.65 1231.25 1323.9 1509.25 1605.1 1776.5 2064.35 2131.15 2306.4 2206.2 2379.35 2601.1 Returns 0.17083333 3 -0.04702012 0.08694581 3 0.13379408 8 0.05591737 4 0.09976166 2 0.16593713 8 0.03253391 5 0.07778219 1 -0.05313305 0.08004993 2 0.07173465 2 0.87513692 6 Avg.Ret 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 0.1459 Deviation 0.02493333 3 -0.19292012 -0.05895419 -0.01210591 -0.08998263 -0.04613834 0.02003713 8 -0.11336609 -0.06811781 -0.19903305 -0.06585007 -0.07416535 (Deviation)2 0.000621671 0.037218174 0.003475596 0.000146553 0.008096873 0.002128746 0.000401487 0.012851869 0.004640036 0.039614154 0.004336231 0.005500499 0.11903189 0.09959580 Avg.Ret 0.11799 Deviation -0.0228813 (Deviation)2 0.000523554
Total Standard Deviation Month January Start 276 End 302.25
M&M RETURNS FOR THE YEAR 2009
Returns 0.09510869 6
0.05661016 February March April May June July August September October November December 295 305 384.85 501 674 698.7 876.65 865.05 892 930 1079 311.7 383.65 487.95 668.9 691.25 859.05 863.65 883.2 921.95 1029.35 1080.85 9 0.25786885 2 0.26789658 3 0.33512974 1 0.02559347 2 0.22949763 8 -0.01482918 0.02098144 6 0.03357623 3 0.10682795 7 0.00171455 1 1.41597615 9 0.11799 0.11799 0.11799 0.11799 0.11799 0.11799 0.11799 0.11799 0.11799 0.11799 0.11799 -0.06137983 0.13987885 2 0.14990658 3 0.21713974 1 -0.09239653 0.11150763 8 -0.13281918 -0.09700855 -0.08441377 -0.01116204 -0.11627545 0.003767484 0.019566093 0.022471984 0.047149667 0.008537118 0.012433953 0.017640934 0.00941066 0.007125684 0.000124591 0.01351998 0.162271703 0.11628689
Total Standard Deviation
ONGC RETURNS FOR THE YEAR 2009
Month January February March April May June July Start 667 650.3 664.05 780 898.7 1171.1 1065.2 End 654.95 691 780.2 864.75 1169.25 1069.3 1164.05 Returns -0.01806597 0.06258649 9 0.17491152 8 0.10865384 6 0.30104595 5 -0.08692682 0.09279947 4 Avg.Ret 0.63876 0.63876 0.63876 0.63876 0.63876 0.63876 0.63876 Deviation 0.62069403 3 0.70134649 9 0.81367152 8 0.74741384 6 0.93980595 5 0.55183317 9 0.73155947 4 (Deviation)2 0.385261083 0.491886911 0.662061355 0.558627457 0.883235234 0.304519858 0.535179264
0.01759656 August September October November December 1165 1175.55 1175.45 1144.9 1185.5 1172 1131.8 1199.75 1178 7 -0.00301986 -0.03713471 0.04790811 4 -0.02159468 0.63876 0.63876 0.63876 0.63876 0.63876 0.63876
0.65635656 7 0.63574013 7 0.60162528 6 0.68666811 4 0.61716531 6 0.430803942 0.404165522 0.361952984 0.471513099 0.380893027 5.870099736 0.69941045 (Deviation)2 0.003622758 0.000665428 0.054623035 0.03195214 0.04847069 0.019270432 0.00192996 0.000124454 0.006417926 0.016742974 0.2055155 5.23469E-05 0.389387646 0.180136
1204 Total Standard Deviation Month January February March April May June July August September October November December Start 1240 1290 1228.7 1523 1851 2330 2029.9 1968.9 2024.8 2199.9 1920.05 1075
REL RETURNS FOR THE YEAR 2009
End 1323.6 1266.05 1524.75 1806.25 2271.9 2023.4 1955.4 2005.1 2201.65 1931.15 1063.5 1090.55 Returns 0.06741935 5 -0.01856589 0.24094571 5 0.18598161 5 0.2273906 -0.13158798 -0.03670132 0.01838590 1 0.08734196 -0.12216464 -0.44610817 0.01446511 6 0.08680225 4 Avg.Ret 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 0.00723 Deviation 0.06018935 5 -0.02579589 0.23371571 5 0.17875161 5 0.2201606 -0.13881798 -0.04393132 0.01115590 1 0.08011196 -0.12939464 -0.45333817 0.00723511 6
Total Standard Deviation
SATYAM RETURNS FOR THE YEAR 2009
Month January February March April Start 175 55 42.5 38.95 End 53.85 41.35 38.45 46.8 Returns -0.69228571 -0.24818182 -0.09529412 0.20154043 Avg.Ret 0.04825 0.04825 0.04825 0.04825 Deviation -0.74053571 -0.29643182 -0.14354412 0.15329043 (Deviation)2 0.548393144 0.087871823 0.020604914 0.023497958
6 0.12910052 May June July August September October November December Total Standard Deviation Month January February March April May June July August September October November December Start 1329 1139 1014.7 1076.15 1325.25 2039.7 1731 1820 1761 2191.55 2187 2246 End 1151 1025.3 1067.1 1278.6 1868.85 1745.3 1811.65 1742.9 2194.95 2191.05 2239.55 2269 47.25 54.4 71.25 104 122.9 119 100.5 91 53.35 71 104.65 122.3 119.1 102.2 90.15 98.15 9 0.30514705 9 0.46877193 0.17596153 8 -0.03091945 -0.14117647 -0.10298507 0.07857142 9 0.04825027 9 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825 0.04825
6 0.08085052 9 0.25689705 9 0.42052193 0.12771153 8 -0.07916945 -0.18942647 -0.15123507 0.03032142 9 0.006536808 0.065996099 0.176838693 0.016310237 0.006267801 0.035882388 0.022872048 0.000919389 1.011991302 0.29040077 Avg.Ret 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 0.0464 Deviation -0.18033529 -0.14622441 0.00524087 9 0.14172433 2 0.36378675 7 -0.19073495 0.00019156 6 -0.08876264 0.20002248 7 -0.04662815 -0.02237165 -0.03615957 (Deviation)2 0.032520817 0.021381577 2.74668E-05 0.020085786 0.132340805 0.036379822 3.66974E-08 0.007878806 0.040008995 0.002174184 0.000500491 0.001307515 0.294606301 0.15668607
SBI RETURNS FOR THE YEAR 2009
Returns -0.13393529 -0.09982441 0.05164087 9 0.18812433 2 0.41018675 7 -0.14433495 0.04659156 6 -0.04236264 0.24642248 7 -0.00022815 0.02402834 9 0.01024042 7 0.55654936 3
Total Standard Deviation
TATA MOTORS RETURNS FOR THE YEAR 2009
Month January February March April May June July August September October November December Start 160.95 148.05 146.1 182 250.2 348.6 292.3 423 491.4 594.8 563.5 682.8 End 149.65 149.3 180.3 243.8 336.85 290.75 421.55 489.7 591.15 567.25 663.15 791.55 Returns -0.07020814 0.00844309 4 0.23408624 2 0.33956044 0.34632294 2 -0.16594951 0.44218268 9 0.15768321 5 0.20299145 3 -0.04631809 0.17684117 1 0.15927065 1.78490615 4 Avg.Ret 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 0.1487421 8 Deviation -0.21895032 -0.14029909 0.08534406 2 0.19081826 0.19758076 2 -0.31469169 0.29344050 9 0.00894103 5 0.05424927 3 -0.19506027 0.02809899 1 0.01052847 (Deviation)2 0.047939242 0.019683834 0.007283609 0.036411608 0.039038157 0.099030861 0.086107332 7.99421E-05 0.002942984 0.038048509 0.000789553 0.000110849 0.37746648 0.17735709 Avg.Ret 0.03419 0.03419 0.03419 0.03419 0.03419 0.03419 Deviation -0.03278516 -0.07734182 -0.0104597 0.10902819 7 -0.03685187 -0.0098292 (Deviation)2 0.001074867 0.005981756 0.000109405 0.011887148 0.00135806 9.66133E-05
Total Standard Deviation Month January February March April May June Start 605.05 606 571 593.5 695 704 End 605.9 579.85 584.55 678.5 693.15 721.15
TATATEA RETURNS FOR THE YEAR 2009
Returns 0.00140484 3 -0.04315182 0.02373029 8 0.14321819 7 -0.00266187 0.02436079 5
0.16568493 July August September October November December 730 855 950.55 901 854 906 850.95 944.85 897 856.65 904.8 941.05 2 0.10508771 9 -0.05633581 -0.04922309 0.05948477 8 0.03868653 4 0.41028551 9 0.03419 0.03419 0.03419 0.03419 0.03419 0.03419
0.13149493 2 0.07089771 9 -0.09052581 -0.08341309 0.02529477 8 0.00449653 4 0.017290917 0.005026487 0.008194921 0.006957743 0.000639826 2.02188E-05 0.058637962 0.069903482
Total Standard Deviation
WIPRO RETURNS FOR THE YEAR 2009
Month January February March April May June July August September October November December Start 233.4 229 204.5 246 330.2 385.1 378 494.9 551 604 603 631.25 End 231.55 207.5 245.9 330.85 382.25 377.95 490.15 549.95 602.1 605.9 629.05 680 Returns -0.00792631 -0.09388646 0.20244498 8 0.34491869 9 0.15763173 8 -0.01856661 0.29669312 2 0.11123459 3 0.09274047 2 0.00314569 5 0.04320066 3 0.07722772 3 1.20885831 7 Avg.Ret 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 0.10074 Deviation -0.10866631 -0.19462646 0.10170498 8 0.24417869 9 0.05689173 8 -0.11930661 0.19595312 2 0.01049459 3 -0.00799953 -0.0975943 -0.05753934 -0.02351228 (Deviation)2 0.011808366 0.03787946 0.010343905 0.059623237 0.00323667 0.014234066 0.038397626 0.000110136 6.39925E-05 0.009524648 0.003310775 0.000552827 0.18908571 0.1255275
Total Standard Deviation
ZEEL RETURNS FOR THE YEAR 2009
Month January February March April May June July August September October November December
Start 141.9 109.8 106.5 106.25 116.7 175 178.1 187.8 217 238.1 230 256
End 110.35 106.85 106.35 113 168.3 177.25 185.95 210.6 238.75 231.55 254.25 257.1
Returns -0.22233968 -0.02686703 -0.00140845 0.06352941 2 0.44215938 3 0.01285714 3 0.04407636 2 0.12140575 1 0.10023041 5 -0.02750945 0.10543478 3 0.00429687 5 0.61586551 5
Avg.Ret 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322 0.051322
Deviation -0.27366168 -0.07818903 -0.05273045 0.01220741 2 0.39083738 3 -0.03846486 -0.00724564 0.07008375 1 0.04890841 5 -0.07883145 0.05411278 3 -0.04702512
(Deviation)2 0.074890713 0.006113525 0.0027805 0.000149021 0.15275386 0.001479545 5.24993E-05 0.004911732 0.002392033 0.006214397 0.002928193 0.002211362 0.256877381 0.14630943
Total Standard Deviation
TABLE-1 SELECTED COMPANIES AVG RISK & AVG RETURN FOR THE YEAR 2005
S.No. Name of the company Avg.Returns Avg.Risk
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL
0.046 0.050 0.024 -0.037 0.003 0.023 0.020 -0.001 0.006 0.013 0.010 0.012 0.019 -0.034 0.016
0.077 0.108 0.114 0.264 0.069 0.063 0.055 0.086 0.157 0.085 0.107 0.077 0.077 0.202 0.065
INTERPRETRATION: CIPLA and WIPRO are in loss and risk is more, ABB is showing less risk compare to other companies in 2005 TABLE-2
SELECTED COMPANIES AVG. RISK & AVG. RETURNS FOR THE YEAR 2006
S.No. Name of the company Avg.Returns Avg.Risk
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL
0.055 0.006 0.049 0.049 0.037 0.029 0.044 0.030 0.004 0.048 0.030 0.008 0.051 -0.045 -0.011
0.089 0.093 0.113 0.128 0.096 0.077 0.110 0.080 0.087 0.048 0.096 0.100 0.088 0.199 0.108
INTERPRETATION: WIPRO and ZEEL are in loss and risk is more, ABB earned more returns than other companies and risk is less compare to other companies in the year 2006. TABLE-3 SELECTED COMPANIES AVG. RISK & AVG. RETURN
FOR THE YEAR 2007
S.No. Name of the company Avg.Returns Avg.Risk
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
ABB BHARATI AIRTEL BHEL CIPLA HCLTECH INFOSYS M&M ONGC REL SATYAM SBI TATA MOTORS TATA TEA WIPRO ZEEL
0.057 0.004 0.035 -0.010 0.018 0.022 0.047 -0.009 -0.006 -0.022 -0.024 0.091 -0.017 0.029 0.053
0.150 0.054 0.108 0.208 0.089 0.177 0.059 0.113 0.073 0.150 0.189 0.264 0.073 0.084 0.139
INTERPRETATION: SATYAM, SBI earned more, loss risk is more. CIPLA, ONGC and TATA TEA also earned loss and risk is high. TATA MOTORS returns are high compare to other companies in the year 2006. TABLE-4 SELECTED COMPANIES AVG. RISK & AVG. RETURN FOR THE YEAR 2008
Name of the company
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
-0.028 0.050 0.043 -0.014 -0.032 -0.021 -0.003 0.035 0.128 -0.010 0.062 -0.005 0.025 -0.015 0.027
0.239 0.044 0.191 0.072 0.171 0.065 0.066 0.102 0.177 0.089 0.108 0.075 0.126 0.057 0.123
INTERPRETATION: ABB, HCL earned more loss CIPLA, INFOSYS, SATYAM, WIPRO, M&M also earned loss risk is high. AIRTEL earned high returns and risk is less compare to other companies in the year 2008 TABLE-5 SELECTED COMPANIES AVG. RISK & AVG. RETURN FOR THE YEAR 2009
Name of the company
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
0.055 -0.050 0.050 0.053 0.114 0.146 0.118 0.639 0.007 0.048 0.046 0.149 0.034 0.101 0.051
0.13485 0.17806 0.08047 0.06948 0.13585 0.09959 0.11629 0.69941 0.18014 0.29041 0.15669 0.17736 0.06990 0.12553 0.14631
INTERPRETATION: ABB, Dr.REDDY’S and INFOSYS are in huge losses. NALCO earned high returns and risk is less compare to other companies in the year 2008.
Year Avg.Returns Avg.Risk 2005 0.0113 0.1071 2006 0.0256 0.1008 2007 0.0179 0.1287 2008 0.01613 0.1137 2009 0.1041 0.1774
After the data is analyzed the following facts have been observed.
2005: From risk-return analysis of 2005, it is found that risk of all companies are higher than their returns, but in comparison returns of ABB and BHARTHI AIRTEL has higher, where as CIPLA and WIPRO has negative returns. 2006: From the analysis, the risk of all companies is higher than their returns excluding satyam (Mahindra satyam). In comparison returns of ABB and TATA TEA is higher, WIPRO continued its negative returns along with ZEEL. 2007: From the analysis, the M&M is performing better than other companies. In this year most of the companies has negative returns. Satyam in particular has negative returns and higher risk, this is due to BANKRUPTCY. 2008: From the analysis, BHARATI AIRTEL is performing better followed by RELIANCE industries. In this year total software industry is not doing well because of financial crisis in USA, followed by high inflation rate. In this year TELECOM industry is performing better when compared to other industries. 2009: From the analysis, total software industry having started recovering, so their stocks were going along with their risk. This year was good as all the companies are doing well. TATA Motors is also another stock which is performing well, this is due to launch of TATA NANO (world’s cheapest car)
After observing the facts found out after the analysis and interpretations the following suggestions are made to the investors.
1. When there is more risk, the return will also be highs but this does not hold in all situations especially in the case of economic crisis.
2. As the world economy is influenced by US economy, the worst scenario of US economy is influencing the others countries stock markets.
3. The sentiments and emotions sometimes play a vital role in causing fluctuations in the stock markets. Therefore it is not advisable to invest at the time of crisis.
4. When markets are sliding down steeply, the investors will not be protected against the risk of investment. Therefore it is not advisable to invest when the markets are very volatile.
5. Always it is felt that market position never stays for a long time. In this opinion Bullish and Bearish markets end after some time. Therefore one can invest the time of Bearish and soon after they reach bullish trend they can sell them off.
The present project work has been undertaken to study the risk-return relationship of individual securities as well as nifty index to observe whether the stock prices have any relationship with risk and return. As this project work is done by studying 15 individual stocks of nifty and nifty index, there is much scope for the analysis, interpretation and conclusion.
As the economy is fluctuations very badly, the stock prices are affected by these fluctuations and the market has become so volatile. In this situation investors should be very careful. The firm which is dealing the trading of share market should be caution enough so that investors may not suffer losses.
Investing management By Puthi Sing.
Security analysis and portfolio management By Punithvathy Pandiyam
• • • • •
NSEindia.com Investopedia.com Glossary.reuters.com Capitalmarket.com Answers.com
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