You are on page 1of 70

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 beenwitnessing 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, 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 (2012), 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 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.

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 19992000. 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 19992000, more than a third of Fortune 500 companies outsourced their software requirements to India

OBJECTIVES OF THE STUDY

To analyze the risk and return of the companies.

To measure actual Returns and expected returns with the help of standard deviation 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.

SCOPE OF THE STUDY


In the national stock exchange (NSE)there are 1285 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 three companies have been selected were chosen three different sectors , the companies chosen

BANKING SECTOR- ICICI BANK. PHARMACEUTICAl SECTOR-SUN PHARMA. INFOTECH SECTOR INFOSYS.

METHODOLOGY
The following measures were used to analyses the data collected. MS Excel is used in order to calculate standard deviation and beta as well as to draw charts. The data 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

Need for the study

Nobody knows what the future holds. So whenever we talk about future returns, we should be humble. Always and inevitably, there is an element of uncertainty or risk. Perhaps the returns wont materialize. Perhaps they will exceed our expectations. We cant be sure. The study of risk and return is not a mechanical one. Anticipation returns in the future and recognizing risks have even religious dimensions. See Vogel and hays, Islamic law and finance. Religion. Risk and return Investors who buy value stocks believe that these stocks are only temporarily out of favour 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.

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 cannot 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

SUBJECT BACKGROUND OF THE RESEARCH TOPIC


7

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 .

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 consists of two components: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 of the assets. Thus total return = current return + 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

RISK

Risk refers to the possibility that 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 cannot 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 behaviour, or "temperament", of your investment rather than the reason for this behaviour. 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.

INTEREST RATE RISK


9

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. inflation rate, the faster the money loses its value. The higher the

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.

10

TRANSLATION RISKS
Uncertainty associated with the t r a n s l a t i o n o f f o r e i g n c u r r e n c y d e n o m i n a t e d accounting statements into the home currency. This risk is extensively discussed in 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 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. of debt financing. This risk is often discussed in General Business

FINANCIAL RISK
11

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.

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 continuous return and long term commitment. principal, moderate and

INVESTMENT DECISION
12

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

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 13

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.

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.

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 14

20,000 by May 2006 and market capitalization has grown almost 12 times during the same period. The debt market, however, is almost nonexistent.

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)

15

BOMBAY STOCK EXCHANGE LIMITED (BSE)

16

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 corporatized entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization 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 t h e 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 process of exchange are designed to safeguard market integrity and 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.

THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)

17

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 ownership companies and other financial intermediaries in India but its 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 crores INR making it the second-largest stock market in South Asia in terms of market-capitalization.

S&P CNX NIFTY

18

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 represents 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

TYPES OF STOCKS

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

19

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 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.

BANKING SECTOR
20

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.

PHARMACEUTICAL INDUSTRY
21

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. Home-grown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise.

22

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 19992000. 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 19992000, 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.

PROFILE OF THE COMPANIES


23

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 medium- term 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 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 B ank 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 capital.

SUN PHARMA
24

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 centre 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 focused marketing helped us gain a foothold in areas like orthopaedics, gynaecology, oncology, etc. From a ranking at 38
th

in

1994, by 2000 they were ranked 5th with a leadership in 8 of the 12 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 centre 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.

25

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 centres 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 in2002 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.

26

27

COMPANY PROFILE

SSKI, a veteran equities solutions company with over 8 decades of experience in the Indian stock markets. The SSKI Group comparies of institutional Broking and Corporate Finance. The institutional broking division caters to domestic and foreign institutional investors, while the Corporate Finance Division focuses on ninche areas such as infrastructure, telecom and media, SSKI has been voted as the Top Domestic Brokerage House in the research category, by the Euro Money survey and Asia Money survey.

Share khan is also about focus. Sharekhan does not claim expertise in too many things. Sharekhans exoertise lies in stocks and thats what he talks about with authority.So when he says that investing in stocks shouldnot be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is some thing that is spoken with years of focused learning and experience in the stock markets. And these beliefs are reflected in everything Sharekhan does for you! Share khan Indias leading stockbroker is the retail arm of SSKI, An organization with over eighty years experience in the stock market. With over 240share shops in 121 Cities, and Indias premier online trading destinations-www.sharekhan.com, ours customer enjoy multi-channel access at the stock markets, share khan offer u trade execution facilities for cash as well as derivaties on the BSE &NSE and most
28

importunity we bring you investment advice tempered by eighty years of broking experience.

Through our portal Sharekhan.com, weve been providing investors a powerful online trading platform, the latest news, research and other knowledge-based tools for over 5years now. We have dedicated terms for fundamental and technical research so that you get all the information your need to take the right investment decisions. With branches and outlets across the country , our ground network is one of the biggest in India. We have a talent pool of experienced professionals specially designated to guide you when you need assistance, which is why investing with us is bound to be a hassle-free experience for you!

Reason why you should choose Share Khan 1. Experience: SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money Brokers poll held recently, SSKI won the Indias best broking division in February 2000, it has been providing institutional-level research and broking services to individual investors. 2.Technology: With our online trading account you can buy and sell shares in an instant from any PC with an Internet connection. You will get acces to our powerful inline trading tools that will help you take complete control over your investment in shares.

29

3.Accessibility: In addition to our online and phone trading services, we also have a ground network of 240 share shops across 121 cities in India where you can get personalized services. 4.Knowledge: In a business where the right information at the right time can translate into direct profit, you get access to wide range of information on our content- rich portal, Sharekhan.com. You will also get a useful set of knowledge-based tools that will empower you to take informed decisions. 5.Convenience: You can all our Dial-n-Trade number to get investment and execute your transaction. We have a dedicated call-center to provide this service via a toll-free number from anywhere in India. 6.Customer service: Our customer service team will assist you for any help that you need relating to transactions, billing, demat and other queries, our customer service can be contacted via a toll-free number, email or live chat on sharekhan.com 7.Investment Advice: Sharekhan has dedicated research teams for fundamental and technical research.Our analysts constantly track the pulse of the market and provide timely investment advice to you in the form of daily research emails, online chat, printed reports on SMS on your phone.Cutomers of Share Khan Experience language, presentation style, content or for that matter the online trading facility find a common thread; one that helps the customers make informed decisions and simplifies investing in stocks. The common thread of empowerment is what Sharekhans all about! Sharekhan is also about focus. Share khan does not claim
30

expertise in too many things. Sharekhans expertise lies in stocks and thats what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and experience in the stock markets. And these beliefs are reflected in everything Sharekhan does for customers. To sum up, Sharekhan brings to customers a user-friendly online trading facility, coupled with a wealth of content that will help customers stalk the right shares. Those of customers who feel comfortable dealing with a human being and would rather visit a brick-and-mortar outlet than talk to a PC; Sharekhan offers customers the facility to visit (or talk to) any of sharekhans share shops across the country. In fact Sharekhan runs Indias largest chain of share shops with over hundred outlets in 80 cities!

Sharekhan services: Sharekhan, one of Indias leading brokerage houses, is the retail arm of SSKI. With over 512 share shops in 170 cities, and Indias premier online trading portal www.sharekhan.com, sharekhans customers enjoy multi-channel access to the stock markets.

31

32

Figure 3.1

Online Services to Suit customers Needs: With a Sharekhan online trading account, customers can buy and sell shares in an instant! Anytime customers like trading account that suits customers trading habits and preferences the Classic Account for most investors and Speed trade for active day traders. Customers Classic Account also comes with Dial-n-Trade completely free, which is an exclusive service for trading shares by using customers telephone. When beginning customers foray in investing in shares, customers need a lot of things from the right information at customers disposal, to assistance when customers need it and advice on investing.Sharekhan have been in this business for over 80 years now, and with sharekhan customers get a host of serices and tools that are difficult to fing in one place anywhere else. The Sharekhan First Step program, built specifically for new investors. All customers have to do is walk into any of
33

sharekhans 512 share shops across 170 cities in India to get a host of trading related services sharekhans friendly customer service staff will also help customers with any accounts related queries customers may have. A Sharekhan outlet offers the following services: Online BSE and NSE execution (through BOLT & NEAT terminals)Free access to investment advice from Sharekhan value line (a monthly publication with reviews of recommendations, stocks to watch out for etc) Daily research reports and market review(High Noon & Eagle Eye) Pre-market Report (Morning Cuppa) Daily trading calls based on Technical Analysis Cool trading products(Darling Derivatives and Market Strategy) Personalised Advice Live Market Information Depository Services: Demat & Remat Transactions Derivatives Trading (Futures and Options) Commodities Trading IPOs & Mutual Funds Distribution

INDUSTRY PROFILE

34

ORGANIZATION ON INDIAN STOCK EXCHANGES The recognized stock exchanges in India vary from voluntary non-profit making organizations(Bombay, Ahmedabad,Indore) to Joint stock Companies Limited by shares (Calcutta, Delhi, Bangalore) and companies limited by guarantee (Madras & Hyderabad). There is a broad uniformity in the organization of stock exchanges, since the Article of Association defining the constitution of the recognized stock exchanges is approved by the central government. BSE was the first Stock Exchange to get permanent recognisation followed by Calcutta, Delhi, Madras, Ahmedabad, Hyderabad, Indore and Bangalore. The other exchanges were official recognisation will renew for another term. As per the present guidelines, the proposed region in which the stock exchange is to be set up must be industrially developed with a sizeable number of industrial units and should be able to attract at least 50 companies independently.

FACTORS

AFFECTING

THE

PRICES

IN

THE

STOCK

MARKET.

Important Factors Affecting to the Prices in the Stock Market are 1. Monetary Policy 2. Inflation 3. FII (Foreign institutional investors) 4. Political Influence 5. Company Announcements 6. SEBI Regulation 7. Annual Budget

35

1.Monetary policy is the process by which the government, central bank, or monetary authority manages the supply of money, or trading in foreign exchange markets.[1] Monetary theory provides insight into how to craft optimal monetary policy. Monetary policy is generally referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply. Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy has the goal of raising interest rates to combat inflation (or cool an otherwise overheated economy). Monetary policy should be contrasted with fiscal policy, which refers to government borrowing, spending and taxation Overview Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate (in order to achieve policy goals). The beginning of monetary policy as such comes from the late 19th century, where it was used to maintain the gold standard.

2. INFLATION Inflation is a rise in the general level of prices of goods and services in a given economy over a period of time. It may also refer to the rise in the prices of some more specific set of

goods or services. In either case, it is measured as the percentage rate of change of a price index.

36

[1] Mainstream economists overwhelmingly agree that high rates of inflation are caused by high rates of growth of the money supply.[2] Views on the factors that determine moderate rates of inflation, especially in the short run, are more varied: changes in inflation are sometimes attributed mostly to changes in real demand for goods and services or fluctuations in available supplies (i.e. changes in scarcity), and sometimes to changes in the supply or demand for money. In the midtwentieth century, two camps disagreed strongly on the main causes of inflation (at moderate rates): the "monetarists" argued that money supply dominated all other factors in determining inflation, while "Keynesians" argued that real demand was often more important than changes in the money supply. A variety of inflation measures are in use, because there are many different price indices, designed to measure different sets of prices that affect different people. Two widely known indices for which inflation rates are commonly reported are the Consumer Price Index (CPI), which measures nominal consumer prices, and the GDP deflator, which measures the nominal prices of goods and services produced by a given country or region A movie ticket was for a few paise in my dads time. Now it is worth Rs.50. My dads first salary for the month was Rs.400 and over he years it has now become Rs.75,000. This is what inflation is, the price of everything goes up. Because the price goes up, the salaries go up. Inflation today is caused more by global rather than by domestic factors. Naturally, as the Indian economy undergoes structural changes, the causes of domestic inflation too have undergone tectonic changes. Needless to emphasise, causes of today's inflation are complicated. However, it is indeed intriguing that the policy response even to this day unfortunately has been fixated on the traditional anti-inflation instruments of the pre-liberalisation era. Global imbalance the cause for global liquidity The reason for this imbalance in the global economy is the fact that after the Asian currency crisis; many countries found the virtues of a weak currency and engaged in 'competitive devaluation.'

37

Under this scenario, many countries simply leveraged their weak currency vis--vis the US dollar to gain to the global (read US) markets. This mercantilist policy to maintain their competitiveness is achieved when their central banks intervenes in the currency markets leading to accumulation of foreign exchange, notably the US dollar, against their own currency. Naturally, as the players fear a fall in the value of the dollar and reach out to various assets and commodities, the prices of these commodities and assets too will rise. The psychological dimension But as the imbalance shows no sign of correcting, players seek to shift to commodities and assets across continents to hedge against the impending fall in the US dollar. Thus, it is a fight between central banks and the psychology of market players across continents. As a corrective measure, economists are coming to the conclusion that most of the currencies across the globe are highly undervalued vis--vis the dollar, which, in turn, requires a significant dose of devaluation. For instance, a consensus exists amongst economists and currency traders that the Yen is one of the most highly undervalued currencies (estimated at around 60%) along with the Chinese Yuan (estimated at 50%) followed by other countries in Asia. This artificial undervaluation of currencies is another fundamental cause for increasing global liquidity. In 2005, international crude oil prices gained another 35 per cent and global demand for oil grew by only 1.6 per cent. Nonetheless, the world's supply of dollars increased by a further $460 billion.

Naturally, with all currencies refusing to be revalued, this leads to increased global liquidity. While one is not sure as to whether the increase in the prices of crude led to the increase of other commodities or vice versa, the fact of the matter is that, in the aggregate, increased liquidity has led to the increase in commodity prices as a whole.

38

This Reserve Bank of India's strategy of dealing with excessive liquidity through the Market Stabilization Scheme (MSS) has its own limitations. Similarly, the increase in repo rates (ostensibly to make credit overextension costly) and increase in CRR rates (to restrict excessive money supply) are policy interventions with serious limitations in the Indian context with such huge forex inflows. A consumer price index (CPI) is an index number measuring the average price of consumer goods and services purchased by households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics. Introduction Two basic types of data are required to construct the CPI: price data and weighting data. The price data are collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times. The weighting data are estimates of the shares of the different types of expenditure as fractions of the total expenditure covered by the index. These weights are usually based upon expenditure data obtained for sampled periods from a sample of households. Although some of the sampling is done using a sampling frame and probabilistic sampling methods, much is done in a commonsense way (purposive sampling) that does not permit estimation of confidence

intervals. Therefore, the sampling variance is normally ignored, since a single estimate is required in most of the purposes for which the index is used. Stocks greatly affect this cause. The coverage of the index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups such as the very rich or the very poor may be excluded. Black market expenditure and expenditure on illegal drugs and prostitution are often 39

excluded for practical reasons, although the professional ethics of the statistician require objective description free of moral judgments. Saving and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance. The index reference period, usually called the base year, often differs both from the weightreference period and the price reference period. This is just a matter of rescaling the whole timeseries to make the value for the index reference-period equal to 120. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.

40

Banking Sector ICICI Bank September

ICICI Date
30-Sep-12 29-Sep-12 28-Sep-12 27-Sep-12 26-Sep-12 23-Sep-12 22-Sep-12 21-Sep-12 20-Sep-12

Stock price Ope Close n


889. 2 862. 15 890. 5 874. 5 844 848. 3 880. 1 886. 9 862. 875.4 890.7 868.7 5 886.0 5 858.0 5 843.7 5 862.3 5 901.2 882.3

Sensex price Clos Open e


5109.8 4998.9 4993.3 5 5080.1 5 5139.2 5161.3 4981.7 4977.8 4965.0 5040 5017. 2 5064. 3 5124. 65 5153. 25 5059. 45 4946. 8 4940. 45 5012.

Return Mark Stock et


1.5520 3.3125 2.4424 1.3208 1.6647 0.5364 2.0168 1.6124 2.3312 -1.366 0.3660 81 1.4208 9 0.8759 58 0.2733 89 1.9733 4 0.7005 6 0.7503 3 0.9566

X*y
2.1299 77 1.2122 72 3.4704 5 1.1569 26 0.4551 08 1.0584 34 1.4129 09 1.2098 2.2301

X^2
1.8659 63 0.1340 15 2.0189 28 0.7673 03 0.0747 41 3.8940 71 0.4907 9 0.5629 97 0.9152

41

25 19-Sep-12 16-Sep-12 15-Sep-12 14-Sep-12 13-Sep-12 12-Sep-12 9-Sep-12 8-Sep-12 7-Sep-12 6-Sep-12 5-Sep-12 2-Sep-12 877. 7 891 875 856. 85 872. 5 880. 3 925. 75 901. 9 894 875 877 891. 5

5 859.5 883.9 876.2 864.0 5 852.4 862.3 5 896.8 918.9 5 897.3 5 889.2 5 883.2 887.1 5

5 5062.3 5 5123.3 5 5068.4 5042.5 5 5153.7 5 5054.4 5 4873.7 5 4873.7 5 4878.6 5005.5 4924.2 4990.1 5

55 5075. 7 5084. 25 5031. 95 5140. 2 5133. 25 4923. 65 4867. 75 4867. 75 4835. 4 4945. 9 5015. 45 4943. 25 2.0736 0.7969 0.1371 0.8403 2.3037 2.0391 3.1272 1.8905 0.3747 1.6286 0.7070 0.4879

87 0.2637 12 0.7631 7 0.7191 6 1.9365 2 0.3977 7 2.5878 2 0.1231 2 0.1231 2 0.8855 1.1906 9 1.8530 93 0.9398 5 4.5740 9

44 0.5468 3 0.6081 4 0.0986 3 1.6272 33 0.9163 49 5.2767 63 0.3849 84 0.2327 3 0.3318 1 1.9391 2 1.3100 54 0.4585 93 12.398 5 3.4654 99

5 0.0695 44 0.5824 32 0.5171 94 3.7501 21 0.1582 2 6.6968 05 0.0151 56 0.0151 56 0.7841 2 1.4177 43 3.4339 53 0.8833 21 29.047 8

Beta

0.4427 77

SD

1.8615 85

Var

42

ICICI Bank October

ICICI Date
31-Oct12 28-Oct12 26-Oct12

Stock price Ope n


935 912. 65 885

Close
931.1 5 933.3 5 871.7

Sensex price Clos Open e


4874.4 4823.5 4791.3 4849. 5 4772. 15 4751. 3

Return Stock
0.4128 2.3803 1.5028

Mark et
0.5108 3 1.0645 8 0.8348

X*y
0.2103 43 2.5340 2 1.2546 28

X^2
0.2609 49 1.1333 3 0.6969 69

43

5 25-Oct12 24-Oct12 21-Oct12 20-Oct12 19-Oct12 18-Oct12 17-Oct12 14-Oct12 13-Oct12 12-Oct12 12-Oct12 10-Oct12 7-Oct-12 5-Oct-12 4-Oct-12 3-Oct-12 879 884. 8 880 885. 35 888 888 895 877 875. 5 840 852 824. 9 817. 1 801 834 860 878.4 868.4 5 870.5 5 878.0 5 904.1 5 876.5 898.8 5 890.4 879.8 5 859.7 832.5 842.6 5 824.4 5 779.2 5 800.9 5 839.1 4883.6 5 4886.8 5 5019.9 5012.2 5130.8 5057.3 5 5156.2 5049.4 5 5080.4 5 5086.5 5 5106.6 5124.7 5137.9 5214.9 5 5341.9 5358.9 4888. 05 4888. 05 4974. 35 5099. 4 5077. 85 5132. 3 5128. 25 5037. 5 5139. 15 5091. 9 5049. 95 5098. 35 5191. 6 5201. 8 5360. 7 5326. 6 0.0683 1.8479 1.0739 0.8245 1.8187 1.2950 0.4302 1.5279 0.4969 2.3452 2.2887 2.1518 0.8995 2.7154 3.9628 2.4302 0.0900 97 0.0245 56 0.9073 9 1.7600 57 -1.032 1.4820 01 0.7360 1 0.2366 6 1.1554 09 0.1051 79 1.1093 5 0.3196 7 1.0451 74 0.2521 6 0.3519 35 0.6027 4 1.5918 2 0.0061 5 0.0453 8 0.9744 12 1.4512 2 1.8769 1.9192 6 0.3166 1 0.3616 0.5740 76 0.2466 71 2.5390 02 0.6878 5 0.9401 58 0.6847 03 1.3946 6 1.4647 88 1.7048 6 3.5623 0.0081 27 0.0006 03 0.8233 54 3.0978 02 1.0650 3 2.1963 28 0.5417 07 0.0560 08 1.3349 71 0.0120 63 1.2306 55 0.1021 87 1.0923 89 0.0635 84 0.1238 58 0.3632 9 14.202 19

Beta

0.1212 SD

1.8874 Var

44

18

46

ICICI Bank November

45

ICICI Date
30-Nov12 29-Nov12 28-Nov12 25-Nov12 24-Nov12 23-Nov12 22-Nov12 21-Nov12 18-Nov12 17-Nov12 16-Nov12 15-Nov12 14-Nov12 12-Nov12 9-Nov-12 8-Nov-12 4-Nov-12

Stock price Ope Close n


724 750. 5 730 725. 3 726 739. 95 740. 05 762. 9 770 790. 5 787 819 837. 9 856. 25 886. 75 884. 5 889. 6 712.4 5 733.9 5 749.8 5 718.2 730.1 726.7 745.4 5 731.6 770.1 778.2 788.8 5 789.8 5 821 821 862.1 5 881.3 884.3

Sensex price Clos Open e


5278.6 5216.7 5 5241.5 5 5325.4 5292.2 5 5309.7 5159.7 5 5217.3 5 5131.2 5059.1 5027.1 4899.1 5 4873.8 4794.8 5 4779.5 4707.5 5 4731.3 5257. 95 5258. 45 5265. 75 5284. 2 5289. 35 5221. 05 5168. 85 5148. 35 5068. 5 5030. 45 4934. 75 4905. 8 4778. 35 4812. 35 4706. 45 4756. 45 4710. 05

Return Mark Stock et


1.5953 2.2052 2.7192 0.9789 0.5647 1.7907 0.7297 4.1028 0.0130 1.5560 0.2351 3.5592 2.0169 4.1268 2.7742 0.3618 0.5958 0.3912 0.7993 48 0.4616 95 0.7736 5 0.0548 1.6695 9 0.1763 65 1.3225 1 1.2219 4 0.5663 1 1.8370 4 0.1357 38 1.9584 3 0.3649 75 1.5284 1.0387 57 0.4491 4

X*y
0.6240 86 1.7627 2 1.2554 32 0.7573 31 0.0309 5 2.9896 63 0.1286 9 5.4259 51 0.0158 7 0.8812 6 0.4318 3 0.4831 2 3.9500 51 1.5025 2 4.2400 57 0.3758 1 0.2675 84

X^2
0.1530 39 0.6389 58 0.2131 63 0.5985 36 0.0030 03 2.7875 17 0.0312 05 1.7490 34 1.4931 29 0.3207 03 3.3747 28 0.0184 25 3.8354 51 0.1332 07 2.3360 14 1.0790 16 0.2017 24

46

3-Nov-12 2-Nov-12 1-Nov-12

880 885. 7 917. 95

878.0 5 885 895

4769.3 4864.2 4766.1 5

4851. 3 4805. 1 4832. 05

0.2216 0.0790 2.5001

1.7193 3 -1.215 1.3826 67 6.9091 3

0.3809 9 0.0960 26 3.4568 6 12.175 36 3.0544 71

2.9560 95 1.4762 24 1.9127 69 25.310 84

Beta

0.5312 18 SD

1.7477 04 Var

47

ICICI

Standard deviation (total risk associated with stock) is 1.86 where as the beta value is 0.44. 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. Standard deviation (total risk associated with stock) is 1.88 where as the beta value is -0.121 the beta values less than 1 it shows that this stock is risky and volatile than the index. The systematic risk here is very high and the standard risk associated with any stock so an investor should be careful while investing this stock. Standard deviation (total risk associated with stock) is 1.747 where as the beta value is 0.531 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. In the case of icecap bank the stock is more volatile and the systematic risk associate with this stock is very high since the beta value on an average less 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.

48

Pharmacitical Sector Sun Pharma September

SUNPHA RMA Date


30-Sep-12 29-Sep-12 28-Sep-12 27-Sep-12 26-Sep-12 23-Sep-12 22-Sep-12 21-Sep-12 20-Sep-12 19-Sep-12 16-Sep-12 15-Sep-12

Stock price Ope Clos n e


66.2 67.1 69.5 68.6 5 69.5 68 71 70.1 69 69.1 68 67.8 65.6 66.7 67.7 5 67.5 67 67.6 5 69.1 72.2 5 71 69.1 5 69.5 68.3

Sensex price Open


5109.8 4998.9 4993.3 5 5080.1 5 5139.2 5161.3 4981.7 4977.8 4965.0 5 5062.3 5 5123.3 5 5068.4

Return Stock
-0.9063 -0.5961 -2.5180 -1.6752 -3.5971 -0.5147 -2.6761 3.0670 2.8986 0.0724 2.2059 0.7375

Close
5040 5017.2 5064.3 5124.6 5 5153.2 5 5059.4 5 4946.8 4940.4 5 5012.5 5 5075.7 5084.2 5 5031.9

Marke t
-1.366 0.3660 81 1.4208 9 0.8759 58 0.2733 89 1.9733 4 0.7005 6 0.7503 3 0.9566 87 0.2637 12 0.7631 7 -

X*y
1.2380 69 0.2182 3 3.5777 8 1.4673 7 0.9834 1 1.0156 9 1.8747 49 -2.3013 2.7730 07 0.0190 82 1.6834 7 -

X^2
1.8659 63 0.1340 15 2.0189 28 0.7673 03 0.0747 41 3.8940 71 0.4907 9 0.5629 97 0.9152 5 0.0695 44 0.5824 32 0.5171

49

5 14-Sep-12 13-Sep-12 12-Sep-12 9-Sep-12 8-Sep-12 7-Sep-12 6-Sep-12 5-Sep-12 2-Sep-12 66.1 5 65.6 67.1 69.9 5 70.4 67.2 68.7 69.5 68.6 67.2 66.9 65.7 5 68 69.4 69.5 5 66.4 67.7 69.5 5042.5 5 5153.7 5 5054.4 5 4873.7 5 4873.7 5 4878.6 5005.5 4924.2 4990.1 5 5140.2 5133.2 5 4923.6 5 4867.7 5 4867.7 5 4835.4 4945.9 5015.4 5 4943.2 5 1.5873 1.9817 -2.0129 -2.7877 -1.4205 3.4970 -3.3479 -2.5899 1.3120

0.7191 6 1.9365 2 0.3977 7 2.5878 2 0.1231 2 0.1231 2 -0.8855 1.1906 9 1.8530 93 0.9398 5

0.5303 6 3.0738 42 0.7882 6 5.2064 91 0.3431 9 0.1748 7 3.0966 1 3.9862 99 4.7993 8 1.2330 4

94 3.7501 21 0.1582 2 6.6968 05 0.0151 56 0.0151 56 0.7841 2 1.4177 43 3.4339 53 0.8833 21

Beta

1.3959 2 SD

2.3015 78 Var

5.2972 63

50

SunPharma October

SUNPH ARMA Date


31-Oct12 28-Oct12 26-Oct12 25-Oct12 24-Oct12 21-Oct12

Stock price Ope Clos n e


63.9 62 61.8 60.9 63.2 5 60.8 63.4 5 62.8 61.6 5 61 60.9 5 61.8

Sensex price Open Close

Return Stoc k
0.704 2 1.290 3 0.242 7 0.164 2 3.636 4 1.644 7

Market

X*y

X^2

4874.4 4823.5 4791.3 4883.65 4886.85 5019.9

4849.5 4772.1 5 4751.3 4888.0 5 4888.0 5 4974.3 5

-0.51083 -1.06458 -0.83485 0.09009 7 0.02455 6 -0.90739

0.3597 41 0.260949 1.3736 5 1.13333 0.2026 33 0.0147 94 0.0892 9 1.4924 0.696969 0.008127 0.000603 0.823354

51

20-Oct12 19-Oct12 18-Oct12 17-Oct12 14-Oct12 13-Oct12 12-Oct12 12-Oct12 10-Oct12 7-Oct-12 5-Oct-12 4-Oct-12 3-Oct-12

60.2 62.3 5 62 65 62.9 62.2 60.4 58.9 59.9 62.8 5 64.1 64.0 5 65.1

61.4 5 60.7 60.9 62.7 5 63.3 62.3 5 62.2 59.6 5 58.9 58.6 60 64.2 64.7 5

5012.2 5130.8 5057.35 5156.2 5049.45 5080.45 5086.55 5106.6 5124.7 5137.9 5214.95 5341.9 5358.9

5099.4 5077.8 5 5132.3 5128.2 5 5037.5 5139.1 5 5091.9 5049.9 5 5098.3 5 5191.6 5201.8 5360.7 5326.6

2.076 4 2.646 4 1.774 2 3.461 5 0.635 9 0.241 2 2.980 1 1.273 3 1.669 4 6.762 1 6.396 3 0.234 2 0.537 6

1.76005 7 -1.032 1.48200 1 -0.73601 -0.23666 1.15540 9 0.10517 9 -1.10935 -0.31967 1.04517 4 -0.25216 0.35193 5 -0.60274 -1.59182

2 3.6546 04 3.097802 2.7310 42 1.06503 2.6293 6 2.196328 2.5477 17 0.541707 -0.1505 0.2786 36 0.3134 48 1.4125 8 0.056008 1.334971 0.012063 1.230655

0.5336 68 0.102187 7.0676 1 1.092389 1.6128 78 0.063584 0.0824 2 0.123858 0.3240 51 0.36329 1.5597 7 14.20219 7.2010 93

Beta

0.12081 SD

2.683 485 Var

52

SunPharma November

SUNPHAR MA Date

Stock price Open Clos e


52.65

Sensex price Open Clos e


5257. 95

Return Stock Mark er


0.3912

X*y
0.7188 4

X^2

30-Nov-12

51.7

5278.6

1.8375

0.153039

53

29-Nov-12 28-Nov-12 25-Nov-12 24-Nov-12 23-Nov-12 22-Nov-12 21-Nov-12 18-Nov-12 17-Nov-12 16-Nov-12 15-Nov-12 14-Nov-12 12-Nov-12 9-Nov-12 8-Nov-12 4-Nov-12 3-Nov-12 2-Nov-12 1-Nov-12

52.25 51.95 50.55 52.05 54.5 54.9 55 54.8 58 60 63.35 67.7 64.35 67 67.9 65.05 63.75 63.5 63.25

52.1 52.3 50.05 50.9 52 53.6 53 55.5 55.4 57.1 58.9 64.2 66.1 63.85 67.05 67.55 65.45 63.75 63.1

5216.7 5 5241.5 5 5325.4 5292.2 5 5309.7 5159.7 5 5217.3 5 5131.2 5059.1 5027.1 4899.1 5 4873.8 4794.8 5 4779.5 4707.5 5 4731.3 4769.3 4864.2 4766.1

5258. 45 5265. 75 5284. 2 5289. 35 5221. 05 5168. 85 5148. 35 5068. 5 5030. 45 4934. 75 4905. 8 4778. 35 4812. 35 4706. 45 4756. 45 4710. 05 4851. 3 4805. 1 4832.

0.2871 0.6737 0.9891 2.2094 4.5872 2.3679 3.6364 1.2774 4.4828 4.8333 7.0245 5.1699 2.7195 4.7015 1.2518 3.8432 2.6667 0.3937 -

0.7993 48 0.4616 95 0.7736 5 0.0548 1.6695 9 0.1763 65 1.3225 1 1.2219 4 0.5663 1 1.8370 4 0.1357 38 1.9584 3 0.3649 75 1.5284 1.0387 57 0.4491 4 1.7193 3 -1.215 1.3826

0.2294 8 0.3120 56 0.7652 33 0.1210 7 7.6586 51 0.4176 2 4.8091 29 1.5608 7 2.5386 14 8.8790 42 0.9534 9 10.124 83 0.9925 5 7.1857 73 1.3003 6 1.7261 2 4.5848 8 0.4783 5 -

0.638958 0.213163 0.598536 0.003003 2.787517 0.031205 1.749034 1.493129 0.320703 3.374728 0.018425 3.835451 0.133207 2.336014 1.079016 0.201724 2.956095 1.476224 1.912769

54

05

0.2372

67 6.9091 3

0.3279 1 40.257 8 9.6700 29 25.31084

Beta

1.7561 39 SD

3.1096 67 Var

Sun Pharmacy

Standard deviation (total risk associated with stock) is 2.30where as the beta value is -1.39. It shows that diversification of this stock would help the investor to eliminate considerable part of 55

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. Standard deviation (total risk associated with stock) is 2.68 where as the beta value is -0.12. 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 October 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. Total risk associated with this stock is 3.10 and the beta is 1.756 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 high. The average beta is more than one that means this stock is high volatile than the market. Proper diversification of the portfolio will help the investor to eliminate the considerable part of the risk.

Technology Sector Infosy s September


INFOSY Stock price Sensex 56 Return

S Date
30-Sep12 29-Sep12 28-Sep12 27-Sep12 26-Sep12 23-Sep12 22-Sep12 21-Sep12 20-Sep12 19-Sep12 16-Sep12 15-Sep12 14-Sep12 13-Sep12 12-Sep12 9-Sep-12 8-Sep-12

Ope n
2531 .9 2482 2480 2377 .2 2345 2328 2384 2440 2377 2399 2457 .9 2378 2251 2223 .1 2208 2328 .1 2300

Close
2533.0 5 2551.1 2470.2 5 2444.1 5 2355 2338.8 2352.6 2435.6 5 2436.5 5 2362.6 5 2395.1 5 2409.9 2351.6 5 2222.0 5 2198.4 5 2274.3 2338.4 5

price Clos Open e


5109. 8 4998. 9 4993. 35 5080. 15 5139. 2 5161. 3 4981. 7 4977. 8 4965. 05 5062. 35 5123. 35 5068. 4 5042. 55 5153. 75 5054. 45 4873. 75 4873. 75 5040 5017. 2 5064. 3 5124. 65 5153. 25 5059. 45 4946. 8 4940. 45 5012. 55 5075. 7 5084. 25 5031. 95 5140. 2 5133. 25 4923. 65 4867. 75 4867. 75

Stock

Mark et
-1.366 0.3660 81 1.4208 9 0.8759 58 0.2733 89 1.9733 4 0.7005 6 0.7503 3 0.9566 87 0.2637 12 0.7631 7 0.7191 6 1.9365 2 0.3977 7 2.5878 2 0.1231 2 0.1231 2

X*y
0.0620 4 1.0191 85 0.5586 2 2.4669 95 0.1265 84 0.9154 7 0.9227 23 0.1337 68 2.3967 49 0.3995 8 1.9483 74 0.9647 3 8.6588 52 0.0187 87 1.1292 78 0.2844 91 0.2058 1

X^2

0.0454 2.7840 0.3931 2.8163 0.4264 0.4639 1.3171 0.1783 2.5053 1.5152 2.5530 1.3415 4.4713 0.0472 0.4325 2.3109 1.6717

1.865963 0.134015 2.018928 0.767303 0.074741 3.894071 0.49079 0.562997 0.91525 0.069544 0.582432 0.517194 3.750121 0.15822 6.696805 0.015156 0.015156

57

7-Sep-12 6-Sep-12 5-Sep-12 2-Sep-12

2297 .9 2253 .9 2293 .7 2385

2291.4 5 2302.5 5 2265.1 2319.2

4878. 6 5005. 5 4924. 2 4990. 15

4835. 4 4945. 9 5015. 45 4943. 25

0.2807 2.1585 1.2469 2.7589

0.8855 1.1906 9 1.8530 93 0.9398 5 4.5740 9

0.2485 52 2.5700 8 2.3106 1 2.5929 66 13.940 37 3.9758 34

0.78412 1.417743 3.433953 0.883321 29.0478

Beta

0.497 84 SD

1.9939 49 Var

58

Infosys October

INFOSY S Date
31-Oct12 28-Oct12 26-Oct12 25-Oct12 24-Oct12 21-Oct12 20-Oct12 19-Oct12 18-Oct12 17-Oct12 14-Oct12 13-Oct12

Stock price Open Close


2877. 55 2858. 65 2838. 65 2858. 7 2767. 3 2722. 65 2747. 55 2727. 75 2701. 55 2746. 55 2743. 75 2696. 7

Sensex price Open Clos e


4849. 5 4772. 15 4751. 3 4888. 05 4888. 05 4974. 35 5099. 4 5077. 85 5132. 3 5128. 25 5037. 5 5139. 15

Return Stock Mark et


0.5108 3 1.0645 8 0.8348 5 0.0900 97 0.0245 56 0.9073 9 1.7600 57 -1.032 1.4820 01 0.7360 1 0.2366 6 1.1554 09

X*y
0.3854 5 2.2723 91 0.6782 27 0.1528 85 0.0154 48 0.8223 32 3.6319 17 -0.218 0.0905 7 0.3878 49 0.2850 1 0.9476

X^2
0.2609 49 1.1333 3 0.6969 69 0.0081 27 0.0006 03 0.8233 54 3.0978 02 1.0650 3 2.1963 28 0.5417 07 0.0560 08 1.3349 71

2856 2921 2861. 9 2812 2750 2747. 55 2692 2722 2699. 9 2761. 1 2712. 1 2719

4874.4 4823.5 4791.3 4883.6 5 4886.8 5 5019.9 5012.2 5130.8 5057.3 5 5156.2 5049.4 5 5080.4 5

0.7546 2.1345 0.8124 1.6969 0.6291 0.9063 2.0635 0.2122 0.0612 0.5270 1.2043 0.8202

59

12-Oct12 12-Oct12 10-Oct12 7-Oct-12 5-Oct-12 4-Oct-12 3-Oct-12

2595 2593. 4 2545 2560 2457. 95 2452. 2 2490

2679. 35 2504. 55 2589. 95 2508. 7 2446. 95 2438. 5 2475. 9

5086.5 5 5106.6 5124.7 5137.9 5214.9 5 5341.9 5358.9

5091. 9 5049. 95 5098. 35 5191. 6 5201. 8 5360. 7 5326. 6

3.2505 3.4260 1.7662 2.0039 0.4475 0.5587 0.5663

0.1051 79 1.1093 5 0.3196 7 1.0451 74 0.2521 6 0.3519 35 0.6027 4 1.5918 2

1 0.3418 84 3.8006 34 0.5646 2.0944 3 0.1228 48 0.1966 2 0.3413 08 7.9565 67 2.6024 37

0.0120 63 1.2306 55 0.1021 87 1.0923 89 0.0635 84 0.1238 58 0.3632 9 14.202 19

Beta

0.5652 78 SD

1.6132 07 Var

60

Infosys November

INFOSY S Date
30-Nov12 29-Nov12 28-Nov12 25-Nov12 24-Nov12 23-Nov12 22-Nov-

Stock price Open Close


2606. 85 2597. 95 2636. 15 2599. 7 2666. 2 2652. 65 2724

Sensex price Open Clos e


5257. 95 5258. 45 5265. 75 5284. 2 5289. 35 5221. 05 5168.

Return Stock Mark et


0.3912 0.7993 48 0.4616 95 0.7736 5 0.0548 1.6695 9 0.1763

X*y
0.3918 1 0.7392 3 0.2837 08 1.6124 08 0.0522 9 1.3949 62 0.8412

X^2
0.15303 9 0.63895 8 0.21316 3 0.59853 6 0.00300 3 2.78751 7 0.03120

2581 2622. 2 2620. 05 2655 2641 2675 2600

5278.6 5216.7 5 5241.5 5 5325.4 5292.2 5 5309.7 5159.7

1.0015 0.9248 0.6145 2.0829 0.9542 0.8355 4.7692

61

12 21-Nov12 18-Nov12 17-Nov12 16-Nov12 15-Nov12 14-Nov12 12-Nov12 9-Nov-12 8-Nov-12 4-Nov-12 3-Nov-12 2-Nov-12 1-Nov-12 2720 2731. 05 2768. 3 2795 2800. 1 2810. 15 2610. 7 2845 2815. 05 2845 2834 2820 2840 2670. 1 2740. 8 2753. 5 2778. 3 2798. 3 2808. 8 2775. 7 2835. 3 2842. 1 2825. 95 2802. 1 2834. 4 2836. 6

5 5217.3 5 5131.2 5059.1 5027.1 4899.1 5 4873.8 4794.8 5 4779.5 4707.5 5 4731.3 4769.3 4864.2 4766.1 5

85 5148. 35 5068. 5 5030. 45 4934. 75 4905. 8 4778. 35 4812. 35 4706. 45 4756. 45 4710. 05 4851. 3 4805. 1 4832. 05 1.8346 0.3570 0.5346 0.5975 0.0643 0.0480 6.3201 0.3409 0.9609 0.6696 1.1256 0.5106 0.1297

65 1.3225 1 1.2219 4 0.5663 1 1.8370 4 0.1357 38 1.9584 3 0.3649 75 1.5284 1.0387 57 0.4491 4 1.7193 3 -1.215 1.3826 67 6.9091 3

26 2.4262 23 0.4362 4 0.3027 61 1.0976 25 0.0087 3 0.0940 83 2.3066 94 0.5212 07 0.9981 48 0.3007 4 1.9353 1 0.6204 3 0.1655 3 7.8290 31 4.0028 47

5 1.74903 4 1.49312 9 0.32070 3 3.37472 8 0.01842 5 3.83545 1 0.13320 7 2.33601 4 1.07901 6 0.20172 4 2.95609 5 1.47622 4 1.91276 9 25.3108 4

Beta

0.3415 21 SD

2.0007 12 Var

62

Infosys
The total risk (standard deviation) associated with the stock is 1.99 and the beta is 0.49. 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 compare it with the 63

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. Standard deviation (total risk associated with stock) is 1.61 where as the beta value is 0.56. 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 October 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. Standard deviation (total risk associated with stock) is 2.00 where as the beta value is 0.3415. 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 November 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.

64

FINDINGS
When comparing the beta value Banking companies the average beta less than one that means the risk associated with those stock are pretty low and the price of the shares are more fluctuating. One of the reason for this fluctuating may the inflationary trend in the economy baking shares are more bound to interest rate risk. 65

Pharmaceutical companys beta values less than one means risk is comparatively low so diversification of portfolio may help the investor to eliminate the controllable risk associated with this stock. 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 merger and acquisitions and the increasing consideration of global players India is low cost hub of research and development.

It Companies shares are promising one they are more bound to international risk since most other 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.

Few Socks negative beta in the month of October and November that means the systematic risk associated with this stock in that particular month is negative. And they have moved against the nifty.

Recommendations
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 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 66

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 them 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.

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

67

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.

68

69

Bibliography Books

Preeeti Singh,(2002) Investment management, 10th edition, Himalaya publication. Prasanna Chandra, (2005) Investment Analysis, 2nd editon,Ms.Graw hill publishing Company. VA Avanti, (2003), Investment Management, 5thedition, Himalaya Publications House. Edwin J Elton,(2002),Modern Portfolio Theory and Investment Analysis , 5th edition John Wiley & sons.

Websites
w w w . e co no m yw a t c h. co m/ i n d ia n w w w . n s e_ in di a. co m w w w . b s e_ in di a. co m

70