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ANNEXURE-I

DECLARATION

I here by declare that this project report Titled


STUDY ON EQUITY ANALYSIS Submitted by me
to the department Of business Management, O.U.,
Hyderabad, Is a bonefide work undertaken by me And
it is not submitted to any other University or
institution for the award of Any degree diploma/
certificate or Published any time before.

Name &address of the student


student

Signature of the

ACKNOWLEDGEMENT

I am
in

J.VIDYANANDAGUPTA

have

did

project

the

STUDY ON EQUITY ANALYSIS from Osmania University Many


people played a key role in helping me to do this project. In this place,
I particular Thanks full, to our college management For providing
information

in the equity and I would like to thank the Mr.

VISWANATH SHARMA who provided Me a text books to prepare


the matter and provided a proper guidance For the project information
I would

like to

thank full

to the

Mr. MUSTAFA SHAIKH ( branch manager )where he has given a


permission to do the Project and helped me to do a research in the
equity analysis and Given a material what ever I required for the
project from the company

TABLE OF CONTENTS
CHAPTER

PAGE NUMBER

1. INTRODUCTION...1-7
definition
Objectives
Limitations
2. REVIEW OF LITERATURE. 8-33
Bombay stock exchange
Reliance energy
Theoretical perspectives
risk
3. THE COMPANY.34-44
company profile
group
company products
KMCO
KMAMC
4. DATA ANALYSIS & PRESENTATION.45-91
Presentation and Analysis
Tables
Graphs
5. FINDINGS & CONCLUSIONS ..92-96
GLOSSARY
METHODLOGY
6. BIBLIOGRAPHY97

LIST OF TABLES
TABLE
NUMBER

PAGE

2.1) Difference between futures & Forwards.....


.19
2.2) Black-scholes formulae..
..38
2.3) Difference between futures & Options
40
2.4) Call Options IN/AT/OUT the money
contracts...41
2.5) Put Options IN/AT/OUT the money
contracts....41
2.6) Highest investor population...
..51
2.7) Message Codes...
.63
2.8) Auction enquiry for user..
64
2.9) NSE Dates wise Data..
.67
2.10) Initial margin charged on F&O
MKT.70
2.11) Open position self disclosing Obligation
71
2.12) Future and option contract specifications...
72
3.1) Board of
Directors..77
4.1) ONGC F&O Call Option Contract.
78
4.2) ONGC F&O Call Option Contract
Continued...79

4.3) ONGC F&O Put Option Contract...


..80
4.4) ONGC F&O Put Option Contract
Continued.....81
4.5) Future Price Table..
82
4.6) Call Price
Table..84
4.7) Put Price
Table...86
4.8) Spot/Future Price...
.88

INTRODUCTION

One way for a company to grow and bring new products to the market is
that it has to raise money. Two ways to raise money are first they can
borrow it or, second they can sell shares of ownership in the company.
Many companies also do both.
Companies are able to borrow money by taking out loans. The lenders
then divide the loan into smaller pieces and sell the bonds or debt
instruments in the secondary market. This allows each investor to be a
creditor to the company. The company then takes the money raised and
uses it as it sees fit.
Companies also raise money by selling ownership in the company.
Companies divide the ownership into shares or equity instruments and
then sell them to investors. The company to uses the proceeds from the
sale of the shares as it sees fit.
As an investor in either a debt or equity instruments there are risks. With
a debt instruments there is the major risk that the company will not be
able to make the loan payments and will default on the loan an...

EQUITY
Definition 1:
Ownership interest in a corporation in the form of common stock or
preferred stock. It also refers to total assets minus total liabilities, in
which case it is also referred to as shareholder's equity or net worth or
book value. In real estate, it is the difference between what a property is
worth and what the owner owes against that property (i.e. the difference
between the house value and the remaining mortgage or loan payments
on a house). In the context of a futures trading account, it is the value of
the securities in the account, assuming that the account is liquidated at
the going price. In the context of a brokerage account, it is the net value

of the account, i.e. the value of securities in the account less any margin
requirements.
Definition 2
Ownership interest in a corporation in the form of common stock or
preferred stock.
Definition 3
Total assets minus total liabilities; here also called shareholder's equity
or net worth or book value.
Home Equity
Looking for a second mortgage or to borrow against the money you have
down on your house? Find out all you need to know in this
comprehensive article about home equity.
Introduction to Buying a Home
Learn the steps how to make a sound financial decision when buying a
house. Understand what considerations are needed when it's time to
decide how much to spend and whether it is better to rent or buy a
home.
Selling a Home
Looking to sell your home or just to find out the best practice for the
process? Learn the steps you need to take to sell your home, and how
to get the best price.

Technical analysis
Should I buy today? What will prices be tomorrow, next week, or next
year? Wouldn't investing be easy if we knew the answers to these
seemingly simple questions? Alas, if you are reading this book in the
hope that technical analysis has the answers to these questions, I'm
afraid I have to disappoint you early--it doesn't. However, if you are
reading this book with the hope that technical analysis will improve your
investing, I have good news--it will!

Some history
The term "technical analysis" is a complicated sounding name for a very
basic approach to investing. Simply put, technical analysis is the study of
prices, with charts being the primary tool.
The roots of modern-day technical analysis stem from the Dow Theory,
developed around 1900 by Charles Dow. Stemming either directly or
indirectly from the Dow Theory, these roots include such principles as
the trending nature of prices, prices discounting all known information,
confirmation and divergence, volume mirroring changes in price, and
support/resistance. And of course, the widely followed Dow Jones
Industrial Average is a direct offspring of the Dow Theory.
Charles Dow's contribution to modern-day technical analysis cannot be
understated. His focus on the basics of security price movement gave
rise to a completely new method of analyzing the markets.

Fundamental analysis
If we were all totally logical and could separate our emotions from our
investment decisions, then, fundamental analysis the determination of
price based on future earnings, would work magnificently. And since we
would all have the same completely logical expectations, prices would
only change when quarterly reports or relevant news was released.
Investors would seek "overlooked" fundamental data in an effort to find
undervalued securities.
The hotly debated "efficient market theory" states that security prices
represent everything that is known about the security at a given moment.
This theory concludes that it is impossible to forecast prices, since prices
already reflect everything that is currently known about the security.

REASEARCH METHODOLOGY

10

The data had been collected through primary and secondary source.

Primary data:
The data had been collected through India Infolines staff, and

Project guide.

Secondary data:
The data had been collected through Journals, Newspapers, and

Internet.

For the purpose of the study data was collected through secondary
source of data collection method. Major source of the data are published
net stocks of POWER COMPANIES.

11

OBJECTIVES

1. Study the volatility in the POWER COMPANIES Stock prices.

2. Return and risk of investing in the POWER COMPANIES


stocks.

3. Correlation among BSE SENSEX with RELIANCE ENERGY


and NTPC.

4. To find whether the stock prices of the POWER COMPANIES


Stock prices can varies on the same way or not with BSE
SENSEX.

5. To find the year of 2007 BSE SENSEX top gainers in power


sector.

6. To find which company investor could get more returns in


both companies of RELIANCE ENERGY and NTPC.

12

LIMITATIONS

1. The number of scrips considered is only two RELIANCE


ENERGY, NTPC with BSE

2. The time period taken for doing the data analysis has taken
from (JUL-2007 to DEC-2007)

3. The data for doing this project has been collected from
internet, company websites, books where there can be some
hitches

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LITERATURE REVIEW
Investing is a business of relative changes. when the economic out look
is assessed along with the direction of changes in the overall market for
stocks, the analyst must realize that even though industry groups and or
individual companies may find it difficult to buck the trend, they do not
necessarily respond to the same degree.
For the analyst industry analysis demands insight into
1. the key sectors or sub divisions of overall economic activity that
influence particular industries, and
2. The relative strength or weakness of particular industry or other
groupings under specific sets of assumptions about economic
activity. the analyst with an economic fore cast that he has
developed from scratch, or a set of figures that he has developed
from fore casts prepared by others, is now ready to apply this
information to an appropriate industry.

BOMBAY STOCK EXCHANGE (BSE)

14

About the Bombay Stock Exchange


Bombay Stock Exchange Limited is the oldest stock exchange in Asia
with a rich heritage. Popularly known as "BSE", it was established as
"The Native Share Stock Brokers Association" in 1875. It is the first stock
exchange in the country to obtain permanent recognition in 1956 from
the Government of India under the Securities Contracts (Regulation) Act,
1956.The Exchange's pivotal and pre-eminent role in the development of
the Indian capital market is widely recognized and its index, SENSEX, is
tracked worldwide. Earlier an Association of Persons (AOP), the
Exchange is now a demutualised and corporatised entity incorporated
under the provisions of the Companies Act, 1956, BSE (Corporatisation
and Demutualization) Scheme, 2005 notified by the Securities and
Exchange Board of India (SEBI).
With demutualization, the trading rights and ownership rights have been
de-linked effectively addressing concerns regarding perceived and real
conflicts of interest. The Exchange is professionally managed under the
overall direction of the Board of Directors. The Board comprises eminent
professionals, representatives of Trading Members and the Managing
Director of the Exchange. The Board is inclusive and is designed to
benefit from the participation of market intermediaries.
In terms of organization structure, the Board formulates larger policy
issues and exercises over-all control. The committees constituted by the
Board are broad-based. The day-to-day operations of the Exchange are
managed by the Managing Director and a management team of
professionals.
Exchange has a nation-wide reach with a presence in 417 cities and
towns of India. The systems and processes of the Exchange are
designed to safeguard market integrity and enhance transparency in
operations. During the year 2004-2005, the trading volumes on the
Exchange showed robust growth.

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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 77992-2002 certified. The surveillance and clearing & settlement functions of
the Exchange are ISO 9001:2000 certified.

History of the Bombay Stock Exchange:


The Bombay Stock Exchange is known as the oldest exchange in Asia.
It traces its history to the 1850s, when stockbrokers would gather under
banyan trees in front of Mumbai's Town Hall. The location of these
meetings changed many times, as the number of brokers constantly
increased. The group eventually moved to Dalal Street in 1874 and in
1875 became an official organization known as 'The Native Share &
Stock Brokers Association'. In 1956, the BSE became the first stock
exchange to be recognized by the Indian Government under the
Securities Contracts Regulation Act.
The Bombay Stock Exchange developed the BSE Sensex in 1986,
giving the BSE a means to measure overall performance of the
exchange. In 2000 the BSE used this index to open its derivatives
market, trading Sensex futures contracts. The development of Sensex
options along with equity derivatives followed in 2001 and 2002,
expanding the BSE's trading platform.
Historically an open-cry floor trading exchange, the Bombay Stock
Exchange switched to an electronic trading system in 1995. It took the
exchange only fifty days to make this transition.

RELIANCE ENERGY

16

Powering Progress, Energizing the Economy:


Reliance Energy Limited, incorporated in 1929, is a fully integrated utility
engaged in the generation, transmission and distribution of electricity. It
ranks among India's top listed private companies on all major financial
parameters, including assets, sales, profits and market capitalization.
A key constituent of the Reliance - Anil Dhirubhai Ambani Group, India's
third largest business house, Reliance Energy is India's foremost private
sector utility with aggregate group revenues of Rs. 13,017 crore (US$ 3
billion) and total assets of Rs. 12,166 crores (US$ 2.80 billion).
Reliance Energy companies distribute more than 28 billion units of
electricity to cover 25 million consumers across different parts of the
country including Mumbai and Delhi in an area that spans over 1,24,300
sq. kms. It generates 941 MW of electricity, through its power stations
located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.
Reliance Energy has emerged as one of the leading players in India in
the Engineering, Procurement and Construction (EPC) segment of the
power sector.
Reliance Energy companies currently pursue several gas, coal, wind
and hydro-based power generation projects in Maharashtra, Uttar
Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of
over 13,510 MW. These projects are at various stages of development.
Reliance Energy is also active in the trading and transmission of power,
making it a fully integrated player in the power sector.
Reliance Energy has also forayed as an equity investor in to the
infrastructure business, including in the prestigious Mumbai metro rail
project and various road projects of the National Highways Authority of
India.
REL is committed to creating superior value for all its stakeholders and
be amongst the most admired and trusted utility companies in the world
by setting new benchmarks in standards of corporate governance,

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operational and financial excellence, responsible corporate citizenship


and profitable growth. Reliance Energy Ltd. Energizing the Power
Sector.
Reliance Energy Limited, incorporated in 1929, is a fully integrated utility
engaged in the generation, transmission and distribution of electricity. It
ranks among Indias top listed private companies on all major financial
parameters, including assets, sales, profits and market capitalization.
A constituent of the Reliance Anil Dhirubhai Ambani Group, Reliance
Energy is India s foremost private sector utility with aggregate estimated
revenues of Rs 9,500 crore (US$2.1 billion)and total assets of Rs 10,700
crore (US$2.4 billion). Reliance Energy distributes more than 21 billion
units of electricity to over 25 million consumers in Mumbai, Delhi, Orissa
and Goa, across an area that spans 1,24,300 sq.kms. It generates 941
MW of electricity, through its power stations located in Maharashtra,
Andhra Pradesh, Kerala, Karnataka and Goa.
Reliance Energy is currently pursuing several gas, coal, wind and hydrobased

power

generation

projects

in

Maharashtra,Uttar

Pradesh,Arunachal Pradesh and Uttaranchal with aggregate capacity of


over 12,500 MW.These projects are at various stages of development.
Reliance Energy is vigorously participating in emerging opportunities in
the areas of trading and transmission of power. It is also engaged in a
portfolio of services in the power sector in Engineering, Procurement
and Construction (EPC) through a network of regional offices in India.
o be amongst the most admired and most trusted integrated utility
companies in the world, delivering reliable and quality products and
services to all customers at competitive costs, with international
standards of customer care thereby creating superior value for all
stakeholders.
To set new benchmarks in standards of corporate performance and
governance through the pursuit of operational and financial excellence,
responsible citizenship and profitable growth.

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Mission

Excellence in Energy

To attain global best practices and become a world-class utility.

To provide uninterrupted, affordable, quality, reliable and clean


power to millions of customers.

To achieve excellence in service, quality, reliability, safety and


customer care.

To earn the trust and confidence of all customers and


stakeholders and by exceeding their expectations, make the
company a respected household name.

To work with vigour,dedication and innovation, with total customer


satisfaction as the ultimate goal.

To consistently achieve high growth with the highest levels of


productivity.

To be a technology driven, efficient and financially sound


organization.

To be a responsible corporate citizen, nurturing human values


and concern for the environment and above all, people.

To contribute towards community development and nation


building.

To promote a work culture that fosters individual growth, team


spirit and creativity to overcome challenges and attain goals.

To encourage ideas, talent and value systems.

To uphold

the

guiding

principles

of

trust,

integrity

and

transparency in all aspects of interactions and dealings Reliance


Energy Ltd. is a part of the Reliance Group of Companies. Other
companies are:

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Generation
Creating the Power Capability
As the integrated power utility REL has setup; a full fledged, Generation
division having proven expertise in designing, engineering, erection,
installation, commissioning, operations and maintenance of power
projects.
The division implements project plans for in house power projects and
supports ventures undertaken by other affiliate companies.
The division is fully integrated and has in house capabilities to address
every aspect of power projects including:
Mechanical
Civil
Electrical
Instrumentation
Environmental
Seven decades of experience and continuous investment in modernizing
its distribution infrastructure have helped the company achieve the
enviable distinction of operating its network with 99.93% reliability!
The efforts made towards achieving higher levels of efficiency have
reduced distribution losses to 12.01% - The lowest in the country!
Today the company caters to 5 million satisfied customers!

Investor Relations
Allotment of equity shares on 31st March2006
The Company has, on 31st March, 2006, allotted 1,04,16,000 equity
shares of Rs.10 each for cash at a price of Rs.573 (including a premium
of Rs. 563) per Share to the Promoters viz. AAA Project Ventures Private
Limited, against the outstanding warrants issued on 2nd August, 2005.
These Shares will be subject to lock in up to 1st August 2006.
Consequent upon the said allotment, the paid-up Capital of the
Company stands increased to 21,23,20,251 fully paid up equity shares

20

of Rs.10 each and the net worth will increase to approximately Rs.6,954
crore. Investor Information

Investor Information

Shareholder Satisfaction Survey- 2005 - Response Form

Investor Guides

Annual General Meeting

Extraordinary General Meeting

Postal Ballot

Memorandum of Association

Forms

Listings

Stock Quotations

Equity History

GDRs

Share Holding Patterns

Dividends

Service Standards

Dematerialization/Transfer of shares

Investor Queries / Grievances

Public Notices
Reliance Energy Ltd. is an actively traded scrip listed on the Stock
Exchange, Mumbai (BSE) and National Stock Exchange Limited (NSE).
It is traded in the A Group of BSE. The shares are admitted to the
depository systems of both NSDL and CDSL and over 97% of shares
have been dematerialized. Its GDRs are listed on the London Stock
Exchange and Convertible Bonds are listed on the Singapore Stock
Exchange and Luxembourg Stock Exchange.
Reliance Energy Ltd. is a widely held company, with its shares held by
Reliance Group Companies and about 96000 investors.

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NTPC
NTPC is largest power generating company of India. A public sector
company, it was incorporated in the year 1975 to accelerate power
development in the country as a wholly owned company of the
Government of India. At present, Government of India holds 89.5% of
the total equity shares of the company and the balance 10.5% is held by
FIIs, Domestic Banks, Public and others. Within a span of 31 years,
NTPC has emerged as a truly national power company, with power
generating facilities in all the major regions of the country.
NTPCs core business is engineering, construction and operation of
power generating plants. It also provides consultancy in the area of
power plant constructions and power generation to companies in India
and abroad. As on date the installed capacity of NTPC is 27,904 MW
through its 15 coal based (22,895 MW), 7 gas based (3,955 MW) and 4
Joint Venture Projects (1,054 MW). NTPC acquired 50% equity of the
SAIL Power Supply Corporation Ltd. (SPSCL). This JV company
operates the captive power plants of Durgapur (120 MW), Rourkela (120
MW) and Bhilai (74 MW). NTPC also has 28.33% stake in Ratnagiri Gas
& Power Private Limited (RGPPL) a joint venture company between
NTPC, GAIL, Indian Financial Institutions and Maharashtra SEB Holding
Co. Ltd. The present capacity of RGPPL is 740 MW.
NTPCs share on 31 Mar 2007 in the total installed capacity of the
country was 20.18% and it contributed 28.50% of the total power
generation of the country during 2006-07.
NTPC has set new benchmarks for the power industry both in the area
of power plant construction and operations. It is providing power at the
cheapest average tariff in the country. With its experience and expertise
in the power sector, NTPC is extending consultancy services to various
organisations in the power business.

22

NTPC is committed to the environment, generating power at minimal


environmental cost and preserving the ecology in the vicinity of the
plants. NTPC has undertaken massive afforestation in the vicinity of its
plants. Plantations have increased forest area and reduced barren land.
The massive afforestation by NTPC in and around its Ramagundam
Power station (2600 MW) have contributed reducing the temperature in
the areas by about 3c. NTPC has also taken proactive steps for ash
utilization. In 1991, it set up Ash Utilization Division to manage efficient
use of the ash produced at its coal stations. This quality of ash produced
is ideal for use in cement, concrete, cellular concrete, building material.
A "Centre for Power Efficiency and Environment Protection (CENPEEP)"
has been established in NTPC with the assistance of United States
Agency for International Development. (US AID). Cenpeep is efficiency
oriented, eco-friendly and eco-nurturing initiative - a symbol of NTPC's
concern towards environmental protection and continued commitment to
sustainable power development in India.
As a responsible corporate citizen, NTPC is making constant efforts to
improve the socio-economic status of the people affected by the
projects. Through its Rehabilitation and Resettlement programmers, the
company endeavors to improve the overall socio-economic status of
Project Affected Persons.
NTPC was among the first Public Sector Enterprises to enter into a
Memorandum of Understanding (MOU) with the Government in 1987-88.
NTPC has been Placed under the 'Excellent category' (the best
category) every year since the MOU system became operative.
Recognizing its excellent performance and vast potential, Government of
the India has identified NTPC as one of the jewels of Public Sector
Navratnas- a potential global giant. Inspired by its glorious past and
vibrant present, NTPC is well on its way to realize its vision of being A
world class integrated power major, powering Indias growth, with
increasing global presence.

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INSTALLED CAPACITY AN OVERVIEW


Projects No. of Projects Commissioned Capacity
NTPC OWNED
COAL

15

22,895

GAS/LIQ. FUEL 07

3,955

TOTAL

26,850

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Over the last three decades, NTPC has spearheaded development of


thermal power generation in the Indian power sector. In this process, it
has built a strong portfolio of coal and gas/liquid fuel based generation
capacities. The company has made initial forays in the area of
hydropower development and plans to have a significant share of hydro
power in its future generation portfolio. Although NTPC is also offering
technical services, both in domestic and international markets, through
its Consultancy Wing, the generation business would continue to be the
single largest revenue generator for NTPC.
The Indian power sector is witnessing several changes in the business
and regulatory environment. The legal and policy framework has
changed substantially with the enactment of the Electricity Act 2003. In
the foreseeable future, India faces formidable challenges in meeting its
energy needs. Recently, a draft integrated energy policy has been
issued, which addresses all aspects including energy security, access,
availability, affordability, pricing, efficiency and environment. To meet the
twin objectives of ensuring availability of electricity to consumers at
competitive rates, as well as attract large private investments in the
sector, a new Tariff policy has also been issued. The power sector thus
offers a mixed bag of challenges and opportunities to players and NTPC
would continue to review its business strategy and portfolio in light of
these changes.

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Growth of the Generation Business


Developing and operating world-class power stations is NTPCs core
competence. Its scale of operation, financial strength and large
experience serve to provide an advantage over competitors. To meet the
objective of making available reliable and quality power at competitive
prices, NTPC would continue to speedily implement projects and
introduce state-of-art technologies.
Total capacity portfolio
Indias generation capacity can be expected to grow from the current
levels of about 120 GW to about 225-250 GW by 2017. NTPC currently
accounts for about 20% of the countrys installed capacity and almost
60% of the total installed capacity in the Central sector in the country.
Going forward, in its target to remain the largest generating utility of
India, NTPC would Endeavour to maintain or improve its share of Indias
generating capacity. Towards this end, NTPC would target to build an
overall capacity portfolio of over 66,000 MW by 2017.
Fuel / Energy mix for capacity addition
Currently, coal has a dominant share in the power generation capacities
in India. This is also reflected in the high share of coal-based capacities
in NTPCs current portfolio. With high uncertainties involved in Domestic
gas/ LNG, both in terms of availability and prices, NTPC would continue
to set up large pit-head coal based projects, including few integrated
coal cum power projects. To reduce the dependence on fossil fuels,
there is a need to push for renewable sources of power in the sector.
NTPC would avail of opportunities to add hydropower to its portfolio
subject to competitive tariffs. A first step in this direction has already
been taken with the investment in Koldam Hydro Power Project. NTPC
would continue to closely monitor developments on nuclear front also
and be open to setting up around 2000 MW of Nuclear power generation
capacity, possibly through a Joint Venture. As a leader in power

25

generation, NTPC would also consider other energy sources such as


biomass, cogeneration, fuel

cells, etc for future development thereby reducing the dependence on


thermal fuels.
While a decision on the fuel/energy mix for NTPC in the future would be
largely governed by their relative tariff-competitiveness, the fuel mix in
2017 may be different from the existing portfolio, though not very
significantly.

THEORATICAL PERSPECTIVES
SECURITIES
Various types of securities are traded in the market.brodly securities
represent evidence to property right.security provides a claim on an
asset and any future cash flozs the asset may generate. Commonly we

26

think of securities as shares and bonds.According to the securities


contracts

regulation

act

1956,

securities

include

shares,scrips.

Stocks,bonds, debentures or other marketable lide securities of any


incorporated company or other body corporate, or government.
Securities are classified on the basis of return and the source of issue.
On the basis of income they may be classified as fixed or variable
income securities. In the case of fized income security, the income is
fixed at the time of issue itself. Bonds debentures and preference shares
fall into this category. Sources of issue may be government, semi
government and corporate. The incomes of the variable securities vary
from year to year. Dividends of the equity shares of companies can be
cited as an example for this. Corporate generally raises funds through
fixed and variable income securities like equity shares, preference
shares and debentures.
EQUITY SHARES
Equity shares are commonly referred to common stock or ordinary
shares. Even though the words shares and stocks are interchangeably
used, there is a difference between them. Share capital of a members
fully paid up shares of equal value merged into one fund. It is a set of
shares put together in a bundle. The stock is expressed in terms of
money and not as many shares. Stock can be divided into fractions of
any amount and such fractions may be transferred like shares.
Shares certificate means a certificate under the common seal of the
company specifying the number of shares held by any member. Share
certificate provides the prima facie evidence of title of the members to
such shares. This gives the shareholder the facility of dealing more
easily with his shares in the market. It enables him to sell his shares by
showing marketable title.

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Equity shares have the following rights according to section 85 (2) of the
companies act 1956.
1. Right to vote at the general body meetings of the company.
2. Right to control the management of the company.
3. Right to share in the profits in the form of dividends and bonus
shares.
4. Right to claim on the residual after repayment of all the claims in
the case of winding up pf the company.
5. Right of pre-emption in the matter of issue of new capital.
6. Right to apply to court if there is any discrepancy in the rights set
aside.
7. Right to receive a copy of the statutory report, copies of annual
accounts along with audited report.
8. Right to apply the company law board for calling an extraordinary
general meeting.
In a limited company the equity shareholders are liable to pay the
companys debt only to the extent of their share in the paid up capital.
The equity shares have certain advantages. The main advantages
are

Capital appreciation
Limited liability
Free tradeability
Tax advantages (in certain cases) and
Hedge against inflation

SWEAT EQUITY
Sweat equity is a new equity instrument introduced in the companies
(amendment) ordinance, 1998. newly inserted section 79A of the
companies act, 1956 allows issue of sweat equity. However, it should be
issued out of a class of equity shares already issued by the company. It

28

cannot form a new class of equity shares. Section 79A (2) explains that
all limitations, restrictions and provisions applicable to equity shares are
applicable to sweat equity. Thus, sweat equity forms a part of equity
share capital.
The definition of sweat equity has two different dimensions:

Shares issued at a discount to employees and directors.

Shares issued for consideration other than cash for providing


know-how or making available rights in the nature of intellectual
property rights or value additions, by whatever name called.

Reasons for issuing sweat equity


Directors and employees contribute intellectual property rights to the
company. This may be in the form of providing technical know-how
captured by way pf research, contributing to the company in the form of
strategy, software developed for the company, or adding profit.
NON-VOTING SHARES
Non-voting shares carry no voting rights. They carry additional dividends
instead of the voting rights. Even through the idea was widely discussed
in 1987, it was only on the year 1994 that the finance ministry
announced certain broad guidelines for the issue of non voting shares.

They have right to participate on the bonus issue. The non-voting shares
also can be listed and traded on the stock exchanges. If non-voting
shares are not paod dividend for two years, the shares would
automatically get voting rights. The company can issue this to a
maximum of 25 percent pf the voting stock. The dividend on non-voting

29

shares would have to be 20 percent higher than the dividend on voting


shares. All rights and bonus share for the non-voting shares have to be
issued in the form of non-voting shares only.

RIGHT SHARES
Shares offered to the existing shareholders at a price by the company
are called rightshares. They are offered to the shareholders as a matter
of legal right. If a public company wants to increase its subscribed
capital by way of issuing shares after two years from its formation date
or one year from the date of first allotment, whichever is earlier, such
shares should be offered first to the existing shareholders in proportion
to the capital paid up on the shares held by them at the date of such
offer. This pre-emptive right can be forfeited by the shareholders through
a special resolution. The shareholder can renounce the right shares in
favour of his nominee. He may renounce all or part of the shares offered
to him. The right shares may be partly paid. Minimum subscription limit is
prescribed for right issues. In the event of company failing to receive
90% subscription, the company shall have to return the entire money
received. At present, SEBI has removed this limit. Right issues are
regulated under the provisions of the companies act and SEBI.

BONUS SHARES
Bonus shares is the distribution of shares in addition to the cash
dividends to the existing shareholders. Bonus shares are issued to the
existing shareholders without any payment of cash.the aim of bonus
share is to capitalise the free reserves. The bonus issue is made out of

30

free reserves built out of genuine profit or share premium collected in


cash only. The bonus issue could be made only when all the partly paid
shares, if any, existing are made fully paid-up.
PREFERENCE STOCK
The characters of the preferred stock are hybrid in nature. Some of its
features resemble the bond and others the equity shares. Like the
bonds, their claims on the companys income are limited and they
receive fixed dividend. In the event of liquidation of the company their
claims on the assets of the firm are also fixed. At the same time like the
equity, it is a perpetual liability of the corporate. The decision to pay
dividend to the preferred stock is at the discretion of the board of
directors. In the case of bonds, payment of interest rate is mandatory.

Cumulative preference shares


The cumulative total of all unpaid preferred dividends must be paid
before dividends are paid on the common equity. The unpaid dividends
are known as arrearages. The arrearages do not earn interest. The non
payment of the dividend only continues to grow. The arrearages accrue
only for a limited number of years and not indefinitely. Generally three
years of arrears accrue and the accumulative feature ceases after three
years. But the dividends in arrears continue if there is no such provision
in the articles of association. In the case of liquidation, no arrears of
dividends are payable unless there is a provision for them in the articles
of association.

Non-cumulative shares
As the name suggests, the dividend does not accumulate. If there is no
profit or inadequate profit in the company in a particular year, the
company does not pay it. In the winding up of a company if the
preference and equity shares are fully paid, they have no further rights to

31

have claims in the surplus. If there is a provision in the articles of


association for such claims, then they have the rights to claim.

Convertible preference shares


The convertibility feature makes the preference share a more attractive
investment security. The conversion feature is almost identical with that
of the bonds. These preference shares are convertible as equity shares
at the end of the spicified period and are quasi-equity shares. This gives
the additional privilege of sharing the potential increase in the equity
value, along with the security and stability of income.

Redeemable preference shares


If there is a provision in the articles of association, redeemable
preference shares can be issued. But redemption of the shares can be
done only when
a) The partly paid up shares are made fully paid up.
b) The fund for redemption is created from the profits, which would
otherwise be available for distribution of dividends or out of the
proceeds of a fresh issue of shares for the purpose.
c) If any premium has to be paid on redemption, it should be paid
out of the profits or out of the companys share premium account.
d) When redemption is made out of profits, a sum equal to the
nominal value of the redeemed shares should be transferred to
the capital redemption reserve account.

Irredeemable preference shares


This type of shares is not redeemable except on occasions like winding
up of the business. In India, this type of shares was permitted till 15 th

32

June 1988. The introduction of section 80A in the companies act 1956
put an end to it.

Cumulative convertible preference shares (CCPS)


This CCPS was introduced by the government in 1984. This preference
share gives a regular return of 10 % during the gestation period from 3
years to 5 years and then converted into equity as per the agreement.
According to the guidelines CCPS can be issued for any of the following
purposes.
a) Setting up of new projects
b) Expansion or diversification of existing projects.
c) Normal capital expenditure of modernisation and
d) Working capital requirements.
CCP failed to attract to the interest of the investors because the rate of
interest is very low and the gain that could be received from the
conversion into equity also depends on the profitable functioning of the
equity.

RISK
Any rational investor, before investing his or her investible wealth in
stock, analysis the risk associated with the particular stock. The actual
return he receives from a stock may vary from his caused by several
factors, either common to all stock or specific to a particular stock.
Investor in general would like to analyse the risk factors and a through

33

knowledge of the risk helps him to plan his portfolio in such a manner so
as to minimise the risk associated with the investment

Risk defined
The dictionary meaning of risk is the possibility of laws or injury; the
degree or probability of such loss. In risk, the probable out comes of all
the possible events are listed. Once the events are listed subjectively,
the derived probalibilities can be assigned to the entire possible events.
Risk consists of two components, the systematic risk and unsystematic
risk. The systematic risk caused by factors external to the particular
company and uncontrollable by the company. The systematic risk affects
the market as a whole. In the case of unsystematic risk the factors are
specific, unique and related to the particular industry or company.

Systematic Risk
The systematic risk affects the entire market. Often we read in the news
paper that the stock market is in the bear hug or in the bull grip. This
indicates that the entire market is moving in a particular direction either
downward or upward. The economic conditions, political situations and
the sociological changes affect the security market. The recession in the
economy affect the profit prospect of the industry and the stock market.
The 1998 recession experienced by developed and developing countries
has affected the stock markets all over the world. The South East Asian
crisis has affected the stock market world wide. There factors are
beyond and control of the corporate and the investor. They cant be
entirely avoided by the investor. It derives home the point that the
systematic risk is unavoidable. The systematic risk further subdivided in
to
1. Market risk
2. Interest rate risk

34

3. Purchase power risk.

Market Risk
Jack Clark Francis has defined market risk has that portion of total
variability of return caused by the alternating forces of bull and bear
markets. When the security index moves upward haltingly for a
significant period of time, it is known as bull market. In the bull market,
the index moves from a low level to peak. Bear market just a reverse to
the bull market; the index declines haltingly from the peak to a market
low point called through for a significant period of a time. During the bull
and bear market more than 80 % of the securities prices rise or fall along
with the stock market indices.
The forces that affect the stock market or tangible and intangible events.
The tangible events are real events such as earthquake, war, political
uncertainty and fall in the value of currency.

Interest rate risk


Interest rate risk is the variation in the single period rates of return
caused by the fluctuations in the market interest rate. Most commonly
interest rate risk affects the price of bonds, debentures and stocks. The
fluctuations in the interest rates are caused by the changes in the
government monetary policy and the changes that occur in the interest
rates of treasury bills and the government bonds. The bond issued by
the government and quasi-government or considered to be risk free. If
higher interest rates are offered, investor would like to switch his
investments from private sector bonds to public sector bonds. If the
government to tied over the deficit in the budget floats a new loan / bond
of a higher rate of interest, there would be a definite shift in the funds
from low yielding bonds to high yielding bonds and from stocks to bonds.

35

The best example is that in April 1996, most of the initial public offerings
of many companies remained undersubscribed but IDBI and IFC bonds
were oversubscribed. The assured rate of return attracted the investors
from the stock market to the bond market.

Purchasing Power Risk


Variations in the returns are caused also by the loss of purchasing power
of currency. Inflation is the reason behind the loss of purchasing power.
The level of inflation proceeds faster than the increase in capital value.
Purchasing power risk is the probable loss in the purchasing power of
the return to be received. The rise in price penalises the returns to the
investor, and every potential rise in price is a risk to the investor.
The inflation may be demand-pull or cost-push inflation. In the demandpull inflation, the demand for goods and services or excess of their
supply. At full employment level of factors of production, the economy
would not be able to supply more goods in the short run and demand for
products pushes the price upward. The supply cant be increased unless
there is expansion of labour force or machinery for production. The
equilibrium between demand and supply is attained at a higher price
level.

Unsystematic Risk
As already mentioned unsystematic risk is unique and peculiar to a firm
or an industry. Unsystematic risk stems from managerial inefficiency,
technological change in production process, availability of raw material,
changes in the consumer preference, and labour problems. The nature
and magnitude of the above mentioned factors differ from industry to
industry and company to company. They have to be analysed separately

36

for each industry and firm. The changes in the consumer preferences
affect the iron and steel industry. Technological changes affect the
information technology. Technology industry more than that of consumer
product industry. Thus, it differs from industry to industry. Financial
leverage of the companies that is debt-equity portion of the companies
differs from each others. Broadly, unsystematic risk can be classified
into:
1. Business Risk
2. Financial Risk

Business Risk
Business risk is that portion of the unsystematic risk caused by the
operating environment of the business. Business risk arises from the
inability of a firm to maintain its competitive edge and the growth or
stability of the earnings. Variation that occurs in the operating
environment is reflected on the operating income and expected
dividends. The variation in the expected operated income indicates the
business risk.

Internal business risk

Internal business risk is associated with the operational efficiency of the


firm. The operational efficiency differs from company to company. The
efficiency of operation is reflected on the companys achievements of its
pre-set goals and the fulfillment of the promises to its investors.
Fluctuations in the sales
Research and development ( R&D)
Personnel management
Fixed cost

37

Single product
External business risk
External risk is the result of operating conditions imposed on the firm by
circumstances beyond its control. The external environments in which it
operates exert some pressure on the firm. The external factors are social
and regulatory factors, monetary and fiscal polices of the government,
business cycle and the general economic environment within which a
firm or an industry operators. A government policy that favours a
particular industry could result in the rise price of the particular industry.
For instance, the Indian sugar and fertilizer industry depend much on
external factors.
Social and regulatory factors
Political risk
Business cycle

Financial Risk
It refers to the variability of the income to the equity capital due to the
debt capital. Financial risk in a company is associated with the capital
structure of the company. Capital structure of the company consists of
equity funds and borrowed funds. The presence of debt and preference
capital structure of the company consists of equity funds and borrowed
funds. The presence of debt and preference capital result in a
commitment of paying interest or pre fixed rate of dividend. The residual
income alone would available to the equity holders. The interests
payments affect the payments that are due to the equity debtors. The
debt financing increased the variability of the returns to the common
stock holders and affect their expectations regarding the return. The use

38

of debt with the owned funds to increase the return to the share holders
is known as financial leverage.

Risk Measurement
Understanding the nature of the risk is not adequate unless the investor
or analyst is capable of expressing it in some quantitative terms.
Expressing the risk of a stock in quantitative terms make it comparable
with other stocks. Measurement cant be assured of cent percent
accuracy because risk is caused by numerous factors such as social,
political, economic and managerial efficiency. Measurement provides an
approximate quantification of risk. The statistical tool often used to
measure and used as a proxy for risk is the standard deviation.

Standard Deviation
It is a measure of the values of the variable around its mean or it is the
square root of the sum of the squared deviations from the mean divided
by the number of observances. The arithmetic mean of the returns may
be same for two companies but the returns may vary widely.

COMPANY PROFILE
The Kotak Mahindra Group

39

Kotak Mahindra is one of India's leading financial institutions, offering


complete financial solutions that encompass every sphere of life. From
commercial banking, to stock broking, to mutual funds, to life insurance,
to investment banking, the group caters to the financial needs of
individuals and corporates.
The group has a net worth of around Rs. 3,100 crore, employs around
9,600 people in its various businesses and has a distribution network of
branches, franchisees, representative offices and satellite offices across
300 cities and towns in India and offices in New York, London, Dubai and
Mauritius. The Group services around 2.2 million customer accounts.

Group Management
Mr. Uday Kotak

Executive Vice Chairman & Managing Director

Mr. Shivaji Dam


Mr. C. Jayaram
Mr. Dipak Gupta

The Kotak Mahindra Group was born in 1985 as Kotak Capital


Management Finance Limited. This company was promoted by Uday
Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish
Mahindra and Anand Mahindra took a stake in 1986, and that's when the
company changed its name to Kotak Mahindra Finance Limited.
Since then it's been a steady and confident journey to growth and success.
1986
1987
1990

Kotak Mahindra Finance Limited starts the activity of Bill Discounting


Kotak Mahindra Finance Limited enters the Lease and Hire Purchase
market
The Auto Finance division is started

40

1991

The Investment Banking Division is started. Takes over FICOM, one of

1992

India's largest financial retail marketing networks


Enters the Funds Syndication sector
Brokerage and Distribution businesses incorporated into a separate

1995

company - Kotak Securities. Investment Banking division incorporated


into a separate company - Kotak Mahindra Capital Company
The Auto Finance Business is hived off into a separate company - Kotak
Mahindra Prime Limited (formerly known as Kotak Mahindra Primus

1996

Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak


Mahindra Limited, for financing Ford vehicles. The launch of Matrix
Information Services Limited marks the Group's entry into information

1998

distribution.
Enters the mutual fund market with the launch of Kotak Mahindra Asset
Management Company.
Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance
business.

2000

Kotak Securities launches its on-line broking site (now


www.kotaksecurities.com). Commencement of private equity activity

2001
2003
2004

2005

2006

through setting up of Kotak Mahindra Venture Capital Fund.


Matrix sold to Friday Corporation
Launches Insurance Services
Kotak Mahindra Finance Ltd. converts to a commercial bank - the first
Indian company to do so.
Launches India Growth Fund, a private equity fund.
Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra
Prime (formerly known as Kotak Mahindra Primus Limited) and sells
Ford credit Kotak Mahindra.
Launches a real estate fund
Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital
Company and Kotak Securities

41

COMPANY PRODUCTS
Kotak Mahindra Bank
At Kotak Mahindra Bank, we address the entire spectrum of financial
needs for individuals and corporates. we have the products, the
experience, the infrastructure and most importantly the commitment to
deliver pragmatic, end-to-end solutions that really work.

Kotak Mahindra Old Mutual Life Insurance is a 76:24 joint venture


between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra
Old Mutual Life Insurance is one of the fastest growing insurance
companies in India and has shown remarkable growth since its inception
in

2001.

Old Mutual, a company with 160 years experience in life insurance, is an


international financial services group listed on the London Stock
Exchange and included in the FTSE 100 list of companies, with assets
under management worth $ 400 Billion as on 30th June, 2006. For
customers, this joint venture translates into a company that combines
international expertise with the understanding of the local market

42

Car Finance
Kotak Mahindra Prime Limited (KMPL) is a subsidiary of Kotak
Mahindra Bank Limited formed to finance all passenger vehicles. The
company is dedicated to financing and supporting automotive and
automotive related manufacturers, dealers and retail customers.The
Company offers car financing in the form of loans for the entire range of
passenger cars and multi utility vehicles. The Company also offers
Inventory funding to car dealers and has entered into strategic
arrangement with various car manufacturers in India for being their
preferred financier
Kotak Securities Ltd.
Kotak Securities Ltd. is India's leading stock broking house with a market
share of around 8.5 % as on 31st March. Kotak Securities Ltd. has been
the largest in IPO distribution.
The accolades that Kotak Securities has been graced with include:

Prime Ranking Award(2003-04)- Largest Distributor of IPO's

Finance Asia Award (2004)- India's best Equity House

Finance Asia Award (2005)-Best Broker In India

Euromoney Award (2005)-Best Equities House In India

Finance Asia Award (2006)- Best Broker In India

Euromoney Award (2006) - Best Provider of Portfolio


Management : Equities

43

Kotak Securities Ltd - Institutional Equities


Kotak Securities, a subsidiary of Kotak Mahindra Bank, is the stockbroking and distribution arm of the Kotak Mahindra Group. The
institutional business division primarily covers secondary market broking.
It caters to the needs of foreign and Indian institutional investors in Indian
equities (both local shares and GDRs). The division also has a
comprehensive research cell with sectoral analysts covering all the major
areas of the Indian economy.
Kotak Mahindra Capital Company (KMCC)
Kotak Mahindra Capital Company (KMCC) helps leading Indian
corporations, banks, financial institutions and government companies
access domestic and international capital markets.
It has been a leader in the capital markets, having consistently led the
league tables for lead management in the past five years, leading 16 of the
20 largest Indian offerings between fiscal 2000 and 2006.
KMCC has the most current understanding of investor appetite, having
been the leading book runner/lead manager in public equity offerings in
the period FY 2002-06
Kotak Mahindra International

Kotak has wholly-owned subsidiaries with offices in Mauritius, London,


Dubai and New York. These subsidiaries specialize in providing services
to overseas investors seeking to invest into India. Investors can access the
asset management capability of the international subsidiaries through
funds domiciled in Mauritius.

44

The international subsidiaries offer brokerage and asset management


services to institutions and high net worth individuals based outside India
through their range of offshore India funds, as well as through specific
advisory and discretionary investment management mandates from
institutional investors. The International subsidiaries also provide lead
management and underwriting services in conjuction with Kotak
Mahindra Capital Company with respect to the issuances of domestic
Indian securities in the international marketplace.
Offerings from the International subsidiaries
Kotak Indian Growth Fund The fund aims to achieve capital appreciation
by being invested in shares and equity-linked instruments of Indian
companies.
Kotak Indian Mid-Cap Fund The fund aims to achieve capital
appreciation by being primarily invested in the shares and equity linked
instruments of mid-capitalisation companies in India.
Kotak Indian Life Sciences Fund The fund aims to achieve capital
appreciation by being invested in shares and equity-linked instruments of
Indian companies in the life sciences business.
Kotak Indian Shariah Fund Kotak Indian Shariah Fund, an Indian Equity
fund which endeavours to achieve capital appreciation by being invested
in the shares and equity-linked instruments of companies which are
Shariah compliant
Indian Equity Fund of Funds The Portfolio endeavours to achieve capital
appreciation by being substantially invested in the shares or units of
Mutual Funds schemes, that are either:
i. Equity schemes investing predominantly in Indian equities.

45

ii. Equity fund of funds schemes investing predominantly in units of


other Mutual Fund schemes that invest mainly in Indian equities.
Kotak Liquid Fund The Kotak Liquid Fund endeavours to invest
predominantly in Debt and Money Market instruments of short maturity
(less than 180 days) and other funds which invest in such securities across
geographies and currencies as applicable under the prevailing laws. The
fund may also invest in bank deposits.
Focused India Portfolio Focused India Portfolio seeks to capture the panIndia story through specific bottom up investments across sectors and
market capitalizations

The Fund
Kotak Realty Fund, established in May 2005, is one of India's first private
equity funds with a focus on real estate and real estate intensive
businesses. Kotak Realty Fund operates as a venture capital fund, under
the SEBI Venture Capital Fund Regulations, 1996 in India. The fund's
corpus has been contributed by leading banks, domestic corporates,
family offices and high net worth individuals. The fund is closed ended
and has a life of seven years.
Investment Formats
The fund would seek equity investments in development projects,
enterprise level investments in real estate operating companies, and in real
estate intensive businesses not limited to hotels, healthcare, retailing,
education and property management. Further, the fund would also be
investing in non-performing loans with underlying property collateral.
Asset Class

46

The fund would invest in all the main property asset classes such as
residential (townships, luxury residential, low cost housing, golf
communities), hospitality (hotels and serviced apartments), office (core
and business parks), shopping centres and alternative asset classes such as
logistics and warehousing.
Geographical Locations
In order to achieve geographical diversity, the fund would invest in not
just the Tier I cities such as Mumbai, NCR and Bangalore but also in Tier
II cities such as Pune, Kolkotta, Hyderabad and Chennai) and other Tier
III cities, examples of which are Nagpur, Coimbotore, Mysore and
Ludhiana)
The Fund Manager believes that through diversification in geographies,
asset class and investment formats, the Fund should be well positioned to
achieve superior risk adjusted returns.
Fund Management Team
Kotak Realty Fund is managed by its investment team located in Mumbai,
India and supported by an organization in which thought leadership,
contrarian play, due diligence, communication and collaborative
partnerships take precedence. The Fund has a core team of professionals
dedicated to sourcing, analyzing, executing and managing the
investments. This unique team brings together profiles combining real
estate corporate finance advisory, investment banking, venture capital,
infrastructure development and finance, and REITS valuation experience.

Kotak Mahindra Asset Management Company Limited (KMAMC)


Kotak Mahindra Asset Management Company Limited (KMAMC), a

47

wholly owned subsidiary of KMBL, is the Asset Manager for Kotak


Mahindra Mutual Fund (KMMF). KMAMC started operations in
December 1998 and has over 4 Lac investors in various schemes. KMMF
offers schemes catering to investors with varying risk - return profiles and
was the first fund house in the country to launch a dedicated gilt scheme
investing only in government securities.
We are sponsored by Kotak Mahindra Bank Limited, one of India's fastest
growing banks, with a pedigree of over twenty years in the Indian
Financial Markets. Kotak Mahindra Asset Management Co. Ltd., a wholly
owned subsidiary of the bank, is our Investment Manager.
We made a humble beginning in the Mutual Fund space with the launch
of our first scheme in December, 1998. Today we offer a complete
bouquet of products and services suiting the diverse and varying needs
and risk-return profiles of our investors.
We are committed to offering innovative investment solutions and worldclass services and conveniences to facilitate wealth creation for our
investors.

As on Mar 30 th, 2007


AUM - Rs. 12125.15 Crores
No. of Investors - 5.05 Lakhs

We are sponsored by Kotak Mahindra Bank Limited, one of


India's fastest growing banks, with a pedigree of over twenty
years in the Indian Financial Markets. Kotak Mahindra Asset
Management Co. Ltd., a wholly owned subsidiary of the bank,
is our Investment Manager.
We made a humble beginning in the Mutual Fund space with
the launch of our first scheme in December, 1998. Today we
offer a complete bouquet of products and services suiting the

48

diverse and varying needs and risk-return profiles of our


investors.
We are committed to offering innovative investment solutions
and world-class services and conveniences to facilitate wealth
creation for our investors.

RETURN
Return is the primary motivating force that derives investment. It
represents the reward for undertaking investment. Since the game of
investing is about return (after allowing for risk), measurement of
realized

(historical) returns is necessary to assess how well the

investment manager has done. In addition, historical are often used as


important input in estimating futures (prospective) returns.

The components of Return


The return of an investment consists of two components.

Current Return

Capital Return

Current Return
The first component that often comes to mind when one is thinking about
return is the periodic cash flow ( income ), 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

49

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


the capital return it is simply the price appreciation (or depreciation )
divided by the beginning price of the asset. For assets like equity stock,
the capital return predominates. Thus, the total return for any security
( or for that matter any asset ) is defined as:
Total return = Current return + Capital return
The current return can be zero or positive, where as the capital return
can be negative, zero, or positive.

ANALYSIS
BSE
RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF BSE
SENSEX FOR THE MONTH OF JULY- 2007
S.NO
1
2
3
4

Date
base
2-Jul-07
3-Jul-07
4-Jul-07
5-Jul-07

Close Price
14431.06
14664.26
14806.51
14880.24
14861.89

Return(X)

X-mean

(X-mean)2

1.62
0.97
0.50
-0.12

1.14
0.50
0.03
-0.60

1.31
0.25
0.00
0.35

50

S.D

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

6-Jul-07
9-Jul-07
10-Jul-07
11-Jul-07
12-Jul-07
13-Jul-07
16-Jul-07
17-Jul-07
18-Jul-07
19-Jul-07
20-Jul-07
23-Jul-07
24-Jul-07
25-Jul-07
26-Jul-07

14964.12
15045.73
15009.88
14910.62
15092.04
15272.72
15311.22
15289.82
15301.17
15550.13
15565.55
15732.2
15794.92
15699.33
15776.31
mean

0.69
0.55
-0.24
-0.66
1.22
1.20
0.25
-0.14
0.07
1.63
0.10
1.07
0.40
-0.61
0.49
0.47

0.22
0.07
-0.71
-1.13
0.74
0.72
-0.22
-0.61
-0.40
1.15
-0.37
0.60
-0.07
-1.08
0.02
variance

0.05
0.01
0.51
1.29
0.55
0.53
0.05
0.37
0.16
1.33
0.14
0.36
0.01
1.16
0.00
0.44

0.67

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN
VARIANCE
S.D
MAX
MIN
RANGE

0.47
0.44
0.67
1.63
-0.66
2.29

The above table shows descriptive statistics of BSE SENSEX for the
month July 2007, it shows that mean value is 0.47,the daily price
variations is 0.44 risk factor in this month is 0.67, maximum returns is
1.63, minimum value is negative (-0.66) and range is 2.29.here the risk
factor is stable when compared to average returns.
GRAPHICAL REPRESENTATION OF RETURNS OF BSE SENSEX
FOR THE MONTH JULY-2007

51

Returns of BSE sensex for the month of Jul


2007
2.00
1.50
1.00
0.50

Return(X)

0.00
-0.50

11

13

15

17

19

-1.00

The above graph represents daily returns of BSE SENSEX for the month
July, The graph reveals that there is a continuous rise in BSE points as
most of its returns are positive.
RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF BSE
SENSEX FOR THE MONTH OF AUGUST- 2007
S.NO
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Date
1-Aug-07
2-Aug-07
3-Aug-07
6-Aug-07
7-Aug-07
8-Aug-07
9-Aug-07
10-Aug-07
13-Aug-07
14-Aug-07
16-Aug-07
17-Aug-07
20-Aug-07
21-Aug-07
22-Aug-07
23-Aug-07
24-Aug-07
27-Aug-07
28-Aug-07

Close Price
14935.77
14985.7
15138.4
14903.03
14932.77
15307.98
15100.15
14868.25
15017.21
15000.91
14358.21
14141.52
14427.55
13989.11
14248.66
14163.98
14424.87
14842.38
14919.19
mean

Return(X)
-5.33
0.33
1.02
-1.55
0.20
2.51
-1.36
-1.54
1.00
-0.11
-4.28
-1.51
2.02
-3.04
1.86
-0.59
1.84
2.89
0.52
-0.27

X-mean
-5.06
0.60
1.29
-1.29
0.47
2.78
-1.09
-1.27
1.27
0.16
-4.02
-1.24
2.29
-2.77
2.12
-0.33
2.11
3.16
0.79
variance

(X-mean)2
25.59
0.36
1.66
1.65
0.22
7.74
1.19
1.60
1.62
0.03
16.12
1.54
5.25
7.67
4.51
0.11
4.46
10.01
0.62
4.84

S.D

2.20

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN

-0.27

VARIANCE

4.84

52

S.D

2.20

MAX

2.89

MIN

-4.28

RANGE

7.18

The above table shows descriptive statistics of BSE SENSEX for the
month august 2007, it shows that mean value is -0.27,the daily price
variations is 4.84, risk factor in this month is 2.20, maximum returns is
2.89, minimum value is negative (-4.28) and range is 7.18.here the risk
factor is very high when compared to average returns.
GRAPHICAL REPRESENTATION OF RETURNS OF BSE SENSEX
FOR THE MONTH AUGUST-2007
Returns of BSE sensex for the month of aug
2007
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
-4.00
-5.00
-6.00

11

13

15

17

19

Return(X)

The above graph represents daily returns of BSE SENSEX for the month
august, The graph reveals that there is a continuous rise and fall in BSE
points as most of its returns are in negative value. Thus we can say that
there was a frequent inflow of funds and market capitalization.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF BSE


SENSEX FOR THE MONTH OF SEPTEMBER- 2007
S.NO
1
2
3
4

Date
3-Sep-07
4-Sep-07
5-Sep-07
6-Sep-07

Close Price
15422.05
15465.4
15446.15
15616.31

Return(X)
3.37
0.28
-0.12
1.10

53

X-mean
2.63
-0.46
-0.87
0.36

(X-mean)2
6.90
0.21
0.75
0.13

S.D

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

7-Sep-07
10-Sep-07
11-Sep-07
12-Sep-07
13-Sep-07
14-Sep-07
17-Sep-07
18-Sep-07
19-Sep-07
20-Sep-07
21-Sep-07
24-Sep-07
25-Sep-07
26-Sep-07
27-Sep-07

15590.42
15596.83
15542.77
15505.36
15614.44
15603.8
15504.43
15669.12
16322.75
16347.95
16564.23
16845.83
16899.54
16921.39
17150.56
mean

-0.17
0.04
-0.35
-0.24
0.70
-0.07
-0.64
1.06
4.17
0.15
1.32
1.70
0.32
0.13
1.35
0.74

-0.91
-0.70
-1.09
-0.98
-0.04
-0.81
-1.38
0.32
3.43
-0.59
0.58
0.96
-0.42
-0.61
0.61
variance

0.83
0.49
1.19
0.97
0.00
0.66
1.91
0.10
11.75
0.35
0.34
0.91
0.18
0.38
0.37
1.50

1.22

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN

0.74

VARIANCE

1.50

S.D

1.22

MAX

4.17

MIN

-0.64
4.81

RANGE

The above table shows descriptive statistics of BSE SENSEX for the
month September 2007, it shows that mean value is 0.74,the daily price
variations is 1.50, risk factor in this month is 1.22, maximum returns is
4.17, minimum value is negative (-0.64) and range is 4.81.here the risk
factor is very high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF BSE SENSEX


FOR THE MONTH SEPTEMBER-2007

54

Returns of BSE SENSEX for the month of sep


2007
5.00
4.00
3.00
2.00

Return(X)

1.00
0.00
-1.00

11

13

15

17

19

The above graph represents daily returns of BSE SENSEX for the month
September; the graph reveals that there is a continuous rise in BSE
points as most of its returns are positive.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF BSE


SENSEX FOR THE MONTH OF OCTOBER- 2007
S.NO
1

Date
1-Oct-07

Close Price
17328.62

Return(X)
1.04

55

X-mean
0.40

(X-mean)2
0.16

S.D

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

3-Oct-07
4-Oct-07
5-Oct-07
8-Oct-07
9-Oct-07
10-Oct-07
11-Oct-07
12-Oct-07
15-Oct-07
16-Oct-07
17-Oct-07
18-Oct-07
19-Oct-07
22-Oct-07
23-Oct-07
24-Oct-07
25-Oct-07
26-Oct-07

17847.04
17777.14
17773.36
17491.39
18280.24
18658.25
18814.07
18419.04
19058.67
19051.86
18715.82
17998.39
17559.98
17613.99
18492.84
18512.91
18770.89
19243.17
mean

2.99
-0.39
-0.02
-1.59
4.51
2.07
0.84
-2.10
3.47
-0.04
-1.76
-3.83
-2.44
0.31
4.99
0.11
1.39
2.52
0.63

2.36
-1.03
-0.66
-2.22
3.88
1.43
0.20
-2.73
2.84
-0.67
-2.40
-4.47
-3.07
-0.33
4.35
-0.53
0.76
1.88
variance

5.55
1.05
0.43
4.93
15.02
2.05
0.04
7.48
8.05
0.45
5.75
19.96
9.43
0.11
18.96
0.28
0.58
3.54
5.46

2.34

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
0.63

MEAN

5.46

VARIANCE

2.34

S.D

4.99

MAX

-3.83

MIN

8.82

RANGE

The above table shows descriptive statistics of BSE SENSEX for the
month October 2007, it shows that mean value is 0.63, the daily price
variations is 5.46, risk factor in this month is 2.34, maximum returns is
4.99, minimum value is negative (-3.83) and range is 8.82.here the risk
factor is very high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF BSE SENSEX


FOR THE MONTH OCT-2007

56

Returns of BSEsensex for the month of oct


2007
6.00
5.00
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
-4.00
-5.00

Return(X)
1

11

13

15

17

19

The above graph represents daily returns of BSE SENSEX for the month
October, The graph reveals that there is a continuous rise and fall in
BSE points as most of its returns are in negative value. Thus we can say
that there was a frequent inflow of funds and market capitalization.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF BSE


SENSEX FOR THE MONTH OF NOVEMBER- 2007
S.NO

Date

Close Price

Return(X)

57

X-mean

(X-mean)2

S.D

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

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

19724.35
19976.23
19590.78
19400.67
19289.83
19058.93
18907.6
18737.27
19035.48
19929.06
19784.89
19698.36
19633.36
19280.8
18602.62
18526.32
18852.87
19247.54
19127.73
mean

2.50
1.28
-1.93
-0.97
-0.57
-1.20
-0.79
-0.90
1.59
4.69
-0.72
-0.44
-0.33
-1.80
-3.52
-0.41
1.76
2.09
-0.62
-0.01

2.52
1.29
-1.91
-0.96
-0.56
-1.18
-0.78
-0.89
1.61
4.71
-0.71
-0.42
-0.32
-1.78
-3.50
-0.40
1.78
2.11
-0.61
variance

6.33
1.67
3.67
0.91
0.31
1.40
0.61
0.79
2.58
22.18
0.50
0.18
0.10
3.17
12.27
0.16
3.16
4.44
0.37
3.41

1.85

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
-0.01

MEAN

3.41

VARIANCE

1.85

S.D

4.69

MAX

-3.52

MIN

8.21

RANGE

The above table shows descriptive statistics of BSE SENSEX for the
month November2007, it shows that mean value is -0.01the daily price
variations is 3.41, risk factor in this month is 1.85, maximum returns is
4.69, minimum value is negative (-3.52) and range is 8.21.here the risk
factor is very high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF BSE SENSEX


FOR THE MONTH NOVEMBER-2007

58

Returns of BSEsensex for the month of nov


2007
6.00
4.00
2.00
Return(X)

0.00
-2.00

11

13

15

17

19

-4.00

The above graph represents daily returns of BSE SENSEX for the month
November, The graph reveals that there is a continuous rise and fall in
BSE points as most of its returns are in negative value. Thus we can say
that there was a frequent inflow of funds and market capitalization.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF BSE


SENSEX FOR THE MONTH OF DECEMBER- 2007
S.No

Date

Close Price

Return(X)

59

X-mean

(X-mean)2

S.D

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

3-Dec-07
4-Dec-07
5-Dec-07
6-Dec-07
7-Dec-07
10-Dec-07
11-Dec-07
12-Dec-07
13-Dec-07
14-Dec-07
17-Dec-07
18-Dec-07
19-Dec-07
20-Dec-07
24-Dec-07
26-Dec-07
27-Dec-07
28-Dec-07
31-Dec-07

19603.41
19529.5
19738.07
19795.87
19966
19930.68
20290.89
20375.87
20104.39
20030.83
19261.35
19079.64
19091.96
19162.57
19854.12
20192.52
20216.72
20206.95
20286.99
mean

2.49
-0.38
1.07
0.29
0.86
-0.18
1.81
0.42
-1.33
-0.37
-3.84
-0.94
0.06
0.37
3.61
1.70
0.12
-0.05
0.40
0.32

2.17
-0.70
0.75
-0.03
0.54
-0.50
1.49
0.10
-1.65
-0.69
-4.16
-1.27
-0.26
0.05
3.29
1.38
-0.20
-0.37
0.07
variance

4.69
0.49
0.56
0.00
0.29
0.25
2.21
0.01
2.74
0.47
17.33
1.60
0.07
0.00
10.81
1.91
0.04
0.14
0.01
2.29

1.51

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
0.32

MEAN

2.29

VARIANCE

1.51

S.D

3.61

MAX

-3.84

MIN

7.45

RANGE

The above table shows descriptive statistics of BSE SENSEX for the
month December2007, it shows that mean value is 0.32,the daily price
variations is 2.29, risk factor in this month is 1.51, maximum returns is
3.61, minimum value is negative (-3.84) and range is 7.45.here the risk
factor is very high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF BSE SENSEX


FOR
THE MONTH DECEMBER-2007

60

Returns of BSE sensex for the month of


dec 2007
4.00
3.00
2.00
1.00
0.00
-1.00

11

13

15

17

19

Return(X)

-2.00
-3.00
-4.00
-5.00

The above graph represents daily returns of BSE SENSEX for the month
December, The graph reveals that there is a continuous rise and fall in
BSE points as most of its returns are in negative value. Thus we can say
that there was a frequent inflow of funds and market capitalization.

RELIANCE ENERGY
RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF
RELIANCE ENERGY FOR THE MONTH OF JUL- 2007

61

S.No

Date

Close Price

Return(x)

(X-MEAN)

(X-MEAN)2

S.D

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

base
2-Jul-07
3-Jul-07
4-Jul-07
5-Jul-07
6-Jul-07
9-Jul-07
10-Jul-07
11-Jul-07
12-Jul-07
13-Jul-07
16-Jul-07
17-Jul-07
18-Jul-07
19-Jul-07
20-Jul-07
23-Jul-07
24-Jul-07
25-Jul-07
26-Jul-07

579.45
624.75
615.55
613.55
592.65
598.15
616.05
615
625.9
669.1
676.4
704.55
700.2
688.5
686
688.75
715.3
774.9
778.7
800.9
Mean

7.82
-1.47
-0.32
-3.41
0.93
2.99
-0.17
1.77
6.90
1.09
4.16
-0.62
-1.67
-0.36
0.40
3.85
8.33
0.49
2.85
1.77

6.05
-3.24
-2.09
-5.17
-0.84
1.23
-1.94
0.01
5.14
-0.68
2.39
-2.38
-3.44
-2.13
-1.37
2.09
6.57
-1.28
1.08
variance

36.61
10.49
4.38
26.76
0.70
1.50
3.75
0.00
26.37
0.46
5.74
5.68
11.82
4.54
1.87
4.36
43.10
1.63
1.18
10.05

3.17

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
1.77

MEAN

10.05

VARIANCE
S.D

3.17

MAX

8.33

MIN

-3.41

RANGE

11.74

The above table shows descriptive statistics of RELIANCE ENERGY for


the month of July- 2007, it shows that mean value is 1.77,the daily price
variations is 10.05, risk factor in this month is 3.17, maximum returns is
8.33, minimum value is negative (-3.41) and range is 11.74.here the risk
factor is very high when compared to average returns.
GRAPHICAL REPRESENTATION OF RETURNS OF RELIANCE
ENERGY FOR THE MONTH JULY-2007

62

The above graph represents daily returns of RELIANCE ENERGY for


the month of July; the graph reveals that there is a continuous rise in
RELIANCE points as most of its returns are positive.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF


RELIANCE ENERGY FOR THE MONTH OF AUG- 2007
S.No

Date

Close Price

Return(x)

63

(X-MEAN)

(X-MEAN)2

S.D

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

1-Aug-07
2-Aug-07
3-Aug-07
6-Aug-07
7-Aug-07
8-Aug-07
9-Aug-07
10-Aug-07
13-Aug-07
14-Aug-07
16-Aug-07
17-Aug-07
20-Aug-07
21-Aug-07
22-Aug-07
23-Aug-07
24-Aug-07
27-Aug-07
28-Aug-07

737.4
752.8
755
742.15
764.75
783
758.4
748.3
753.3
753.65
717
718.25
724.6
691.9
723.5
704.5
735.8
762.5
766.45
mean

-7.93
2.09
0.29
-1.70
3.05
2.39
-3.14
-1.33
0.67
0.05
-4.86
0.17
0.88
-4.51
4.57
-2.63
4.44
3.63
0.52
-0.18

-7.75
2.27
0.47
-1.52
3.22
2.56
-2.96
-1.15
0.85
0.22
-4.69
0.35
1.06
-4.34
4.74
-2.45
4.62
3.81
0.70
variance

60.09
5.13
0.22
2.33
10.38
6.57
8.79
1.33
0.71
0.05
21.96
0.12
1.13
18.80
22.51
6.00
21.34
14.48
0.48
10.65

3.26

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
-0.18

MEAN

10.65

VARIANCE

3.26

S.D

4.57

MAX

-7.93

MIN

12.50

RANGE

The above table shows descriptive statistics of RELIANCE ENERGY for


the month of August- 2007, it shows that mean value is -0.18,the daily
price variations is 10.65, risk factor in this month is 3.26, maximum
returns is 4.57, minimum value is negative (-7.93) and range is
12.50.here the risk factor is very high when compared to average
returns.
GRAPHICAL REPRESENTATION OF RETURNS OF RELIANCE
ENERGY FOR THE MONTH AUGUST-2007

64

The above graph represents daily returns of RELIANCE ENERGY for


the month of August, The graph reveals that there is a continuous rise
and fall in reliance points as most of its returns are in negative value.
Thus we can say that there was a frequent inflow of funds and market
capitalization.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF


RELIANCE ENERGY FOR THE MONTH OF SEP- 2007
S.No
1

Date
3-Sep-07

Close Price
777.4

Return(x)
1.43

65

(X-MEAN)
-0.63

(X-MEAN)2
0.40

S.D

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

4-Sep-07
5-Sep-07
6-Sep-07
7-Sep-07
10-Sep-07
11-Sep-07
12-Sep-07
13-Sep-07
14-Sep-07
17-Sep-07
18-Sep-07
19-Sep-07
20-Sep-07
21-Sep-07
24-Sep-07
25-Sep-07
26-Sep-07
27-Sep-07

823.35
823.8
860.6
850.4
864.3
860.35
894
890.2
883
907.8
927.25
947.85
988.4
1009.55
1093.9
1087.2
1025.95
1117.15
mean

5.91
0.05
4.47
-1.19
1.63
-0.46
3.91
-0.43
-0.81
2.81
2.14
2.22
4.28
2.14
8.36
-0.61
-5.63
8.89
2.06

3.85
-2.00
2.41
-3.24
-0.42
-2.52
1.85
-2.48
-2.87
0.75
0.08
0.16
2.22
0.08
6.30
-2.67
-7.69
6.83
variance

14.84
4.02
5.80
10.52
0.18
6.33
3.43
6.17
8.22
0.56
0.01
0.03
4.92
0.01
39.64
7.14
59.18
46.65
11.48

3.39

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
2.06

MEAN

11.48

VARIANCE

3.39

S.D

8.89

MAX

-5.63
MIN
14.52

RANGE

The above table shows descriptive statistics of RELIANCE ENERGY for


the month of September- 2007, it shows that mean value is 2.06,the
daily price variations is 11.48, risk factor in this month is 3.39, maximum
returns is 8.89, minimum value is negative (-5.63) and range is
14.52.here the risk factor is very high when compared to average
returns.
GRAPHICAL REPRESENTATION OF RETURNS OF RELIANCE
ENERGY FOR THE MONTH SEPTEMBER-2007

66

The above graph represents daily returns of RELIANCE ENERGY for


the month of September; the graph reveals that there is a continuous
rise in RELIANCE points as most of its returns are positive.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF


RELIANCE ENERGY FOR THE MONTH OF OCT- 2007
S.No
1

Date
1-Oct-07

Close Price
1349.55

Return(x)
20.80

67

(X-MEAN)
18.32

(X-MEAN)2
335.46

S.D

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

3-Oct-07
4-Oct-07
5-Oct-07
8-Oct-07
9-Oct-07
10-Oct-07
11-Oct-07
12-Oct-07
15-Oct-07
16-Oct-07
17-Oct-07
18-Oct-07
19-Oct-07
22-Oct-07
23-Oct-07
24-Oct-07
25-Oct-07
26-Oct-07

1449
1481.4
1448.05
1380.15
1533.95
1585.7
1603.05
1636.7
1844.4
1900.85
1766.55
1591.2
1334.15
1367.5
1522.8
1655.7
1648
1670.35
mean

7.37
2.24
-2.25
-4.69
11.14
3.37
1.09
2.10
12.69
3.06
-7.07
-9.93
-16.15
2.50
11.36
8.73
-0.47
1.36
2.49

4.88
-0.25
-4.74
-7.18
8.66
0.89
-1.39
-0.39
10.20
0.57
-9.55
-12.41
-18.64
0.01
8.87
6.24
-2.95
-1.13
variance

23.83
0.06
22.45
51.50
74.93
0.79
1.94
0.15
104.10
0.33
91.25
154.09
347.51
0.00
78.66
38.94
8.72
1.28
70.32

8.39

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
2.49

MEAN

70.32

VARIANCE

8.39

S.D

20.80

MAX

-16.15

MIN

36.96

RANGE

The above table shows descriptive statistics of RELIANCE ENERGY for


the month of October- 2007, it shows that mean value is 2.49,the daily
price variations is 70.32, risk factor in this month is 8.39, maximum
returns is 20.80, minimum value is negative (-16.15) and range is
36.96.here the risk factor is very high when compared to average
returns.
GRAPHICAL REPRESENTATION OF RETURNS OF RELIANCE
ENERGY FOR THE MONTH OCTOBER-2007

68

The above graph represents daily returns of RELIANCE ENERGY for


the month of October; the graph reveals that there is a continuous rise
in RELIANCE points as most of its returns are positive.

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF


RELIANCE ENERGY FOR THE MONTH OF NOV- 2007
S.No
1

Date
1-Nov-07

Close Price
1766.35

Return(x)
5.75

69

(X-MEAN)
5.42

(X-MEAN)2
29.35

S.D

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

2-Nov-07
5-Nov-07
6-Nov-07
7-Nov-07
8-Nov-07
9-Nov-07
12-Nov-07
13-Nov-07
14-Nov-07
15-Nov-07
16-Nov-07
19-Nov-07
20-Nov-07
21-Nov-07
22-Nov-07
23-Nov-07
26-Nov-07
27-Nov-07

1852.5
1817.4
1848
1819.8
1849.4
1838.45
1816.9
1857.5
1920.55
1853.6
1826.1
1829.85
1795.1
1692.25
1603.85
1725.3
1790.3
1757.35
mean

4.88
-1.89
1.68
-1.53
1.63
-0.59
-1.17
2.23
3.39
-3.49
-1.48
0.21
-1.90
-5.73
-5.22
7.57
3.77
-1.84
0.33

4.55
-2.22
1.35
-1.86
1.30
-0.92
-1.50
1.91
3.06
-3.82
-1.81
-0.12
-2.23
-6.06
-5.55
7.24
3.44
-2.17
variance

20.68
4.95
1.83
3.44
1.68
0.85
2.26
3.63
9.39
14.56
3.29
0.02
4.97
36.71
30.84
52.46
11.82
4.71
12.50

3.54

DESCRIPTIVE STATISTICS.
SUMMARY STATEMENT
0.33

MEAN

12.50

VARIANCE

3.54

S.D

7.57

MAX

-5.73

MIN

13.30

RANGE

The above table shows descriptive statistics of RELIANCE ENERGY for


the month of November- 2007, it shows that mean value is 0.33,the daily
price variations is 12.50, risk factor in this month is 3.54, maximum
returns is 7.57, minimum value is negative (-5.73) and range is
13.30.here the risk factor is very high when compared to average
returns.
GRAPHICAL REPRESENTATION OF RETURNS OF RELIANCE
ENERGY FOR THE MONTH NOVEMBER-2007

70

The above graph represents daily returns of RELIANCE ENERGY for


the month of November, The graph reveals that there is a continuous
rise and fall in reliance points as most of its returns are in negative
value. Thus we can say that there was a frequent inflow of funds and
market capitalization

RETURNS, MEAN, VARIANCE AND STANDARD DEVIATION OF


RELIANCE ENERGY FOR THE MONTH OF DEC- 2007
S.No
1

Date
3-Dec-07

Close Price
1900.05

Return(x)
8.12

71

(X-MEAN)
7.05

(X-MEAN)2
49.70

S.D

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

4-Dec-07
5-Dec-07
6-Dec-07
7-Dec-07
10-Dec-07
11-Dec-07
12-Dec-07
13-Dec-07
14-Dec-07
17-Dec-07
18-Dec-07
19-Dec-07
20-Dec-07
24-Dec-07
26-Dec-07
27-Dec-07
28-Dec-07
31-Dec-07

1898.35
1889
1946.5
1937.6
1945.4
1948.25
1933.3
1912.3
1912.4
1828.8
1805.15
1881.3
1940.15
2063
2111.9
2134.1
2158.35
2135.45
mean

-0.09
-0.49
3.04
-0.46
0.40
0.15
-0.77
-1.09
0.01
-4.37
-1.29
4.22
3.13
6.33
2.37
1.05
1.14
-1.06
1.07

-1.16
-1.56
1.97
-1.53
-0.67
-0.92
-1.84
-2.16
-1.07
-5.44
-2.36
3.15
2.06
5.26
1.30
-0.02
0.07
-2.13
variance

1.35
2.44
3.90
2.33
0.45
0.85
3.38
4.65
1.13
29.61
5.59
9.91
4.23
27.68
1.69
0.00
0.00
4.54
8.08

2.84

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
1.07

MEAN

8.08

VARIANCE

2.84

S.D

8.12

MAX

-4.37

MIN

12.49

RANGE

The above table shows descriptive statistics of RELIANCE ENERGY for


the month of December- 2007, it shows that mean value is 1.07,the daily
price variations is 8.08, risk factor in this month is 2.84, maximum
returns is 8.12, minimum value is negative (-4.37) and range is
12.49.here the risk factor is very high when compared to average
returns.

GRAPHICAL REPRESENTATION OF RETURNS OF RELIANCE


ENERGY FOR THE MONTH DECEMBER-2007.

72

The above graph represents daily returns of RELIANCE ENERGY for


the month of December. The graph reveals that there is a continuous
rise and fall in reliance points as most of its returns are in negative
value. Thus we can say that there was a frequent inflow of funds and
market capitalization

CORRELATION OF RETURNS BETWEEN RELIANCE ENERGY AND


BSE SENSEX FOR THE MONTH OF JUL-2007

73

S.No

Date

Returns of
Reliance energy

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

2-Jul-07
3-Jul-07
4-Jul-07
5-Jul-07
6-Jul-07
9-Jul-07
10-Jul-07
11-Jul-07
12-Jul-07
13-Jul-07
16-Jul-07
17-Jul-07
18-Jul-07
19-Jul-07
20-Jul-07
23-Jul-07
24-Jul-07
25-Jul-07
26-Jul-07

7.82
-1.47
-0.32
-3.41
0.93
2.99
-0.17
1.77
6.90
1.09
4.16
-0.62
-1.67
-0.36
0.40
3.85
8.33
0.49
2.85

Returns of
BSE sensex
1.62
0.97
0.50
-0.12
0.69
0.55
-0.24
-0.66
1.22
1.20
0.25
-0.14
0.07
1.63
0.10
1.07
0.40
-0.61
0.49

Correlation

0.39

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
reliance energy and BSE SENSEX it shows that there exists a positive
correlation between both the scripts. Thus we can say that both the
markets are going according to the market conditions. If we see the
returns of reliance energy it has some negative returns (-3.41,-1.47,0.62,-0.36,-0.32,-0.17) but still the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN RELIANCE ENERGY AND
BSE SENSEX FOR THE MONTH OF AUG-2007

74

S.No

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Date

1-Aug-07
2-Aug-07
3-Aug-07
6-Aug-07
7-Aug-07
8-Aug-07
9-Aug-07
10-Aug-07
13-Aug-07
14-Aug-07
16-Aug-07
17-Aug-07
20-Aug-07
21-Aug-07
22-Aug-07
23-Aug-07
24-Aug-07
27-Aug-07
28-Aug-07

Returns of Reliance
energy
-7.93
2.09
0.29
-1.70
3.05
2.39
-3.14
-1.33
0.67
0.05
-4.86
0.17
0.88
-4.51
4.57
-2.63
4.44
3.63
0.52

Returns of
BSE sensex
-5.33
0.33
1.02
-1.55
0.20
2.51
-1.36
-1.54
1.00
-0.11
-4.28
-1.51
2.02
-3.04
1.86
-0.59
1.84
2.89
0.52

Correlation

0.91

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
reliance energy and BSE SENSEX it shows that there exists a positive
correlation between both the scripts. Thus we can say that both the
markets are going according to the market conditions. If we see the
returns of reliance energy it has huge negative returns (-7.93,-4.86,4.51,-3.14,-2.63,-1.70,-1.33) but still the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN RELIANCE ENERGY AND
BSE SENSEX FOR THE MONTH OF SEP-2007

75

S.No

Date

Returns of
Reliance energy

Returns of
BSE sensex

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

3-Sep-07
4-Sep-07
5-Sep-07
6-Sep-07
7-Sep-07
10-Sep-07
11-Sep-07
12-Sep-07
13-Sep-07
14-Sep-07
17-Sep-07
18-Sep-07
19-Sep-07
20-Sep-07
21-Sep-07
24-Sep-07
25-Sep-07
26-Sep-07
27-Sep-07

1.43
5.91
0.05
4.47
-1.19
1.63
-0.46
3.91
-0.43
-0.81
2.81
2.14
2.22
4.28
2.14
8.36
-0.61
-5.63
8.89

3.37
0.28
-0.12
1.10
-0.17
0.04
-0.35
-0.24
0.70
-0.07
-0.64
1.06
4.17
0.15
1.32
1.70
0.32
0.13
1.35

Correlation

0.26

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
reliance energy and BSE SENSEX it shows that there exists a positive
correlation between both the scripts. Thus we can say that both the
markets are going according to the market conditions. If we see the
returns of reliance energy it has some negative returns (-5.63,-1.19,0.81,-0.61,-0.46,-0.43) but still the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN RELIANCE ENERGY AND
BSE SENSEX FOR THE MONTH OF OCT-2007

76

S.No

Date

Returns of
Reliance energy

Returns of
BSE sensex

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

1-Oct-07
3-Oct-07
4-Oct-07
5-Oct-07
8-Oct-07
9-Oct-07
10-Oct-07
11-Oct-07
12-Oct-07
15-Oct-07
16-Oct-07
17-Oct-07
18-Oct-07
19-Oct-07
22-Oct-07
23-Oct-07
24-Oct-07
25-Oct-07
26-Oct-07

20.80
7.37
2.24
-2.25
-4.69
11.14
3.37
1.09
2.10
12.69
3.06
-7.07
-9.93
-16.15
2.50
11.36
8.73
-0.47
1.36

1.04
2.99
-0.39
-0.02
-1.59
4.51
2.07
0.84
-2.10
3.47
-0.04
-1.76
-3.83
-2.44
0.31
4.99
0.11
1.39
2.52

Correlation

0.72

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
reliance energy and BSE SENSEX it shows that there exists a positive
correlation between both the scripts. Thus we can say that both the
markets are going according to the market conditions. If we see the
returns of reliance energy it has huge negative returns (-16.15,-9.93,7.07,-4.69,-2.25,-0.47) but still the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN RELIANCE ENERGY AND
BSE SENSEX FOR THE MONTH OF NOV-2007

77

S.No

Date

Returns of
Reliance energy

Returns of
BSE sensex

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

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

5.75
4.88
-1.89
1.68
-1.53
1.63
-0.59
-1.17
2.23
3.39
-3.49
-1.48
0.21
-1.90
-5.73
-5.22
7.57
3.77
-1.84

2.50
1.28
-1.93
-0.97
-0.57
-1.20
-0.79
-0.90
1.59
4.69
-0.72
-0.44
-0.33
-1.80
-3.52
-0.41
1.76
2.09
-0.62

Correlation

0.76

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
reliance energy and BSE SENSEX it shows that there exists a positive
correlation between both the scripts. Thus we can say that both the
markets are going according to the market conditions. If we see the
returns of reliance energy it has huge negative returns (-5.73,-5.22,3.49,-1.89,-1.84,-1.53,-1.48,-1.17) but still the overall correlation is
positive.
CORRELATION OF RETURNS BETWEEN RELIANCE ENERGY AND
BSE SENSEX FOR THE MONTH OF DEC-2007

78

S.No

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Date

Returns of Reliance
energy

3-Dec-07
4-Dec-07
5-Dec-07
6-Dec-07
7-Dec-07
10-Dec-07
11-Dec-07
12-Dec-07
13-Dec-07
14-Dec-07
17-Dec-07
18-Dec-07
19-Dec-07
20-Dec-07
24-Dec-07
26-Dec-07
27-Dec-07
28-Dec-07
31-Dec-07

8.12
-0.09
-0.49
3.04
-0.46
0.40
0.15
-0.77
-1.09
0.01
-4.37
-1.29
4.22
3.13
6.33
2.37
1.05
1.14
-1.06

Returns of
BSE sensex

Correlation

2.49
-0.38
1.07
0.29
0.86
-0.18
1.81
0.42
-1.33
-0.37
-3.84
-0.94
0.06
0.37
3.61
1.70
0.12
-0.05
0.40

0.75

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
reliance energy and BSE SENSEX it shows that there exists a positive
correlation between both the scripts. Thus we can say that both the
markets are going according to the market conditions. If we see the
returns of reliance energy it has huge negative returns (-1.09,-1.06,0.77,-0.49,-0.46,-0.09) but still the overall correlation is positive.
RETURN, MEAN, VARIANCE AND STANDARD DEVIATION OF NTPC
FOR THE MONTH OF JUL-2007

79

S.No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Date
base
2-Jul-07
3-Jul-07
4-Jul-07
5-Jul-07
6-Jul-07
9-Jul-07
10-Jul-07
11-Jul-07
12-Jul-07
13-Jul-07
16-Jul-07
17-Jul-07
18-Jul-07
19-Jul-07
20-Jul-07
23-Jul-07
24-Jul-07
25-Jul-07
26-Jul-07

Close Price
150.35
152.05
151.9
155.4
152.9
155.15
157.15
155.9
154.85
156.9
157.1
154.95
155.1
155.75
156.25
154.75
157.85
163.65
167.65
168.15
mean

RETURN(X)

X-MEAN

(X-MEAN)2

S.D

1.13
-0.10
2.30
-1.61
1.47
1.29
-0.80
-0.67
1.32
0.13
-1.37
0.10
0.42
0.32
-0.96
2.00
3.67
2.44
0.30
0.60

0.53
-0.70
1.70
-2.21
0.87
0.69
-1.40
-1.27
0.72
-0.47
-1.97
-0.50
-0.18
-0.28
-1.56
1.40
3.07
1.84
-0.30
variance

0.28
0.49
2.90
4.88
0.76
0.47
1.95
1.62
0.52
0.22
3.87
0.25
0.03
0.08
2.43
1.97
9.45
3.40
0.09
1.88

1.37

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN

0.60

VARIANCE

1.88

S.D

1.37

MAX

3.67

MIN

-1.61

RANGE

5.28

The above table shows descriptive statistics of NTPC for the month of
Jul- 2007, it shows that mean value is 0.60,the daily price variations is
1.88, risk factor in this month is 1.37, maximum returns is 3.67, minimum
value is negative (-1.61) and range is 5.28.here the risk factor is very
high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF NTPC FOR THE


MONTH OF JUL-2007

80

The above graph represents daily returns of NTPC for the month of Jul,
the graph reveals that there is a continuous rise and fall in NTPC points
as most of its returns are in negative value. Thus we can say that there
was a frequent inflow of funds and market capitalization.

RETURN, MEAN, VARIANCE AND STANDARD DEVIATION OF NTPC


FOR THE MONTH OF AUG-2007
S.No
1

Date
1-Aug-07

Close Price
160.35

RETURN(X)
-4.64

81

X-MEAN
-4.64

(X-MEAN)2
21.54

S.D

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

2-Aug-07
3-Aug-07
6-Aug-07
7-Aug-07
8-Aug-07
9-Aug-07
10-Aug-07
13-Aug-07
14-Aug-07
16-Aug-07
17-Aug-07
20-Aug-07
21-Aug-07
22-Aug-07
23-Aug-07
24-Aug-07
27-Aug-07
28-Aug-07

162.35
165.9
163.55
166.75
170.95
169.7
164.85
167.95
172.7
168.1
162.65
163.85
159.65
160.9
160.2
163.8
168
167.4
mean

1.25
2.19
-1.42
1.96
2.52
-0.73
-2.86
1.88
2.83
-2.66
-3.24
0.74
-2.56
0.78
-0.44
2.25
2.56
-0.36
0.00

1.24
2.18
-1.42
1.95
2.52
-0.73
-2.86
1.88
2.83
-2.67
-3.24
0.74
-2.57
0.78
-0.44
2.24
2.56
-0.36
variance

1.55
4.77
2.01
3.82
6.33
0.54
8.18
3.53
7.99
7.11
10.53
0.54
6.58
0.61
0.19
5.04
6.56
0.13
5.13

2.27

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN

0.00

VARIANCE

5.13

S.D

2.27

MAX

2.83

MIN

-4.64

RANGE

7.47

The above table shows descriptive statistics of NTPC for the month of
Aug- 2007, it shows that mean value is 0.00,the daily price variations is
5.13, risk factor in this month is 2.27, maximum returns is 2.83, minimum
value is negative (-4.64) and range is 7.47.here the risk factor is very
high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF NTPC FOR THE


MONTH OF AUG-2007

82

The above graph represents daily returns of NTPC for the month of Aug,
the graph reveals that there is a continuous rise and fall in NTPC points
as most of its returns are in negative value. Thus we can say that there
was a frequent inflow of funds and market capitalization.

RETURN, MEAN, VARIANCE AND STANDARD DEVIATION OF NTPC


FOR THE MONTH OF SEP-2007
S.No
1
2

Date
3-Sep-07
4-Sep-07

Close Price
185.35
181.25

RETURN(X)
10.72
-2.21

83

X-MEAN
9.90
-3.04

(X-MEAN)2
97.99
9.22

S.D

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

5-Sep-07
6-Sep-07
7-Sep-07
10-Sep-07
11-Sep-07
12-Sep-07
13-Sep-07
14-Sep-07
17-Sep-07
18-Sep-07
19-Sep-07
20-Sep-07
21-Sep-07
24-Sep-07
25-Sep-07
26-Sep-07
27-Sep-07

185.6
186.2
187.05
191.1
196
190.45
191.95
185.75
183.55
184.6
189.4
189.5
187.35
196.45
194.45
191.5
193.95
mean

2.40
0.32
0.46
2.17
2.56
-2.83
0.79
-3.23
-1.18
0.57
2.60
0.05
-1.13
4.86
-1.02
-1.52
1.28
0.82

1.58
-0.50
-0.37
1.34
1.74
-3.66
-0.04
-4.05
-2.01
-0.25
1.78
-0.77
-1.96
4.03
-1.84
-2.34
0.46
variance

2.48
0.25
0.13
1.80
3.03
13.36
0.00
16.43
4.03
0.06
3.16
0.59
3.84
16.27
3.39
5.48
0.21
9.56

3.09

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN

0.82

VARIANCE

9.56

S.D

3.09

MAX

10.72

MIN

-3.23

RANGE

13.95

The above table shows descriptive statistics of NTPC for the month of
Sep- 2007, it shows that mean value is 0.82,the daily price variations is
9.56, risk factor in this month is 3.09, maximum returns is 10.72,
minimum value is negative (-3.23) and range is 13.95.here the risk factor
is very high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF NTPC FOR THE


MONTH OF SEP-2007

84

The above graph represents daily returns of NTPC for the month of Sep,
the graph reveals that there is a continuous rise and fall in NTPC points
as most of its returns are in negative value. Thus we can say that there
was a frequent inflow of funds and market capitalization.

RETURN, MEAN, VARIANCE AND STANDARD DEVIATION OF NTPC


FOR THE MONTH OF OCT-2007
S.No
1
2
3

Date
1-Oct-07
3-Oct-07
4-Oct-07

Close Price
206.5
216.8
226.35

RETURN(X)
6.47
4.99
4.40

85

X-MEAN
5.50
4.02
3.44

(X-MEAN)2
30.28
16.16
11.81

S.D

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

5-Oct-07
8-Oct-07
9-Oct-07
10-Oct-07
11-Oct-07
12-Oct-07
15-Oct-07
16-Oct-07
17-Oct-07
18-Oct-07
19-Oct-07
22-Oct-07
23-Oct-07
24-Oct-07
25-Oct-07
26-Oct-07

214.45
204.9
218.15
219.3
222.55
217.65
227.4
231.5
220.45
208.35
201.55
199.6
218.8
222.15
222.55
228.9
mean

-5.26
-4.45
6.47
0.53
1.48
-2.20
4.48
1.80
-4.77
-5.49
-3.26
-0.97
9.62
1.53
0.18
2.85
0.97

-6.23
-5.42
5.50
-0.44
0.51
-3.17
3.51
0.83
-5.74
-6.46
-4.23
-1.94
8.65
0.56
-0.79
1.88
variance

38.76
29.39
30.23
0.19
0.26
10.05
12.33
0.70
32.97
41.70
17.91
3.75
74.84
0.32
0.62
3.55
18.73

4.33

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN

0.97

VARIANCE

18.73

S.D

4.33

MAX

9.62

MIN

-5.49

RANGE

15.11

The above table shows descriptive statistics of NTPC for the month of
Oct- 2007, it shows that mean value is 0.97,the daily price variations is
18.73, risk factor in this month is 4.33, maximum returns is 9.62,
minimum value is negative (-5.49) and range is 15.11.here the risk factor
is very high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF NTPC FOR THE


MONTH OF OCT-2007

86

The above graph represents daily returns of NTPC for the month of Oct,
the graph reveals that there is a continuous rise and fall in NTPC points
as most of its returns are in negative value. Thus we can say that there
was a frequent inflow of funds and market capitalization.

RETURN, MEAN, VARIANCE AND STANDARD DEVIATION OF NTPC


FOR THE MONTH OF NOV-2007
S.No
1
2
3
4

Date
1-Nov-07
2-Nov-07
5-Nov-07
6-Nov-07

Close Price
230.15
234.85
237.05
240.25

RETURN(X)
0.55
2.04
0.94
1.35

87

X-MEAN
0.35
1.85
0.74
1.15

(X-MEAN)2
0.12
3.41
0.55
1.33

S.D

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

7-Nov-07
8-Nov-07
9-Nov-07
12-Nov-07
13-Nov-07
14-Nov-07
15-Nov-07
16-Nov-07
19-Nov-07
20-Nov-07
21-Nov-07
22-Nov-07
23-Nov-07
26-Nov-07
27-Nov-07

240.75
240.1
241.15
253.45
272.15
277.55
269.4
264.4
264.9
259.85
239.4
227.3
236.75
238.7
235
mean

0.21
-0.27
0.44
5.10
7.38
1.98
-2.94
-1.86
0.19
-1.91
-7.87
-5.05
4.16
0.82
-1.55
0.20

0.01
-0.47
0.24
4.91
7.18
1.79
-3.13
-2.05
-0.01
-2.10
-8.07
-5.25
3.96
0.63
-1.75
variance

0.00
0.22
0.06
24.06
51.59
3.20
9.81
4.21
0.00
4.42
65.05
27.56
15.70
0.39
3.05
11.30

3.36

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN
VARIANCE

0.20
11.30

S.D
MAX

3.36
7.38

MIN
RANGE

-7.87
15.25

The above table shows descriptive statistics of NTPC for the month of
Nov- 2007, it shows that mean value is 0.20,the daily price variations is
11.30, risk factor in this month is 3.36, maximum returns is 7.38,
minimum value is negative (-7.87) and range is 15.25.here the risk factor
is very high when compared to average
returns.

GRAPHICAL REPRESENTATION OF RETURNS OF NTPC FOR THE


MONTH OF NOV-2007

88

RETURNS OF NTPC FOR THE MONTH OF NOV-2007


10.00
5.00
0.00

RETURN(X)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

-5.00
-10.00

The above graph represents daily returns of NTPC for the month of Nov,
the graph reveals that there is a continuous rise and fall in NTPC points
as most of its returns are in negative value. Thus we can say that there
was a frequent inflow of funds and market capitalization.

RETURN, MEAN, VARIANCE AND STANDARD DEVIATION OF NTPC


FOR THE MONTH OF DEC-2007
S.No
1
2

Date
3-Dec-07
4-Dec-07

Close Price
240.2
239.15

RETURN(X)
2.21
-0.44

89

X-MEAN
1.84
-0.81

(X-MEAN)2
3.37
0.66

S.D

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

5-Dec-07
6-Dec-07
7-Dec-07
10-Dec-07
11-Dec-07
12-Dec-07
13-Dec-07
14-Dec-07
17-Dec-07
18-Dec-07
19-Dec-07
20-Dec-07
24-Dec-07
26-Dec-07
27-Dec-07
28-Dec-07
31-Dec-07

245.1
245.2
245.8
241.25
243.55
251.15
245.75
246.85
228.1
231.8
228.9
228.85
236.65
239.65
240.2
241.4
250.9
mean

2.49
0.04
0.24
-1.85
0.95
3.12
-2.15
0.45
-7.60
1.62
-1.25
-0.02
3.41
1.27
0.23
0.50
3.94
0.38

2.11
-0.34
-0.13
-2.23
0.58
2.74
-2.53
0.07
-7.97
1.25
-1.63
-0.40
3.03
0.89
-0.15
0.12
3.56
variance

4.46
0.11
0.02
4.96
0.33
7.53
6.39
0.00
63.56
1.55
2.65
0.16
9.19
0.79
0.02
0.02
12.66
6.23

2.50

DESCRIPTIVE STATISTICS
SUMMARY STATEMENT
MEAN
VARIANCE
S.D
MAX
MIN
RANGE

0.38
6.23
2.50
3.94
-7.60
11.53

The above table shows descriptive statistics of NTPC for the month of
Dec- 2007, it shows that mean value is 0.38,the daily price variations is
6.23, risk factor in this month is 2.50, maximum returns is 3.94, minimum
value is negative (-7.60) and range is 11.53.here the risk factor is very
high when compared to average returns.

GRAPHICAL REPRESENTATION OF RETURNS OF NTPC FOR THE


MONTH DEC-2007

90

The above graph represents daily returns of NTPC for the month of Dec;
the graph reveals that there is a continuous rise in NTPC points as most
of its returns are in positive value.

CORRELATION OF RETURNS BETWEEN NTPC AND BSE SENSEX


FOR THE MONTH OF JULY-2007

91

S.No

Date

RETURNS OF NTPC

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

2-Jul-07
3-Jul-07
4-Jul-07
5-Jul-07
6-Jul-07
9-Jul-07
10-Jul-07
11-Jul-07
12-Jul-07
13-Jul-07
16-Jul-07
17-Jul-07
18-Jul-07
19-Jul-07
20-Jul-07
23-Jul-07
24-Jul-07
25-Jul-07
26-Jul-07

1.13
-0.10
2.30
-1.61
1.47
1.29
-0.80
-0.67
1.32
0.13
-1.37
0.10
0.42
0.32
-0.96
2.00
3.67
2.44
0.30

RETURNS OF
BSE SENSEX
1.62
0.97
0.50
-0.12
0.69
0.55
-0.24
-0.66
1.22
1.20
0.25
-0.14
0.07
1.63
0.10
1.07
0.40
-0.61
0.49

Correlation

0.24

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
NTPC and BSE SENSEX it shows that there exists a positive correlation
between both the scripts. Thus we can say that both the markets are
going according to the market conditions. If we see the returns of NTPC
it has some negative returns (-1.61,-1.37,-0.96,-0.67,-0.10) but still the
overall correlation is positive.
CORRELATION OF RETURNS BETWEEN NTPC AND BSE SENSEX
FOR THE MONTH OF AUG-2007

92

S.No

Date

RETURNS OF NTPC

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

1-Aug-07
2-Aug-07
3-Aug-07
6-Aug-07
7-Aug-07
8-Aug-07
9-Aug-07
10-Aug-07
13-Aug-07
14-Aug-07
16-Aug-07
17-Aug-07
20-Aug-07
21-Aug-07
22-Aug-07
23-Aug-07
24-Aug-07
27-Aug-07
28-Aug-07

-4.64
1.25
2.19
-1.42
1.96
2.52
-0.73
-2.86
1.88
2.83
-2.66
-3.24
0.74
-2.56
0.78
-0.44
2.25
2.56
-0.36

RETURNS OF
BSE SENSEX
-5.33
0.33
1.02
-1.55
0.20
2.51
-1.36
-1.54
1.00
-0.11
-4.28
-1.51
2.02
-3.04
1.86
-0.59
1.84
2.89
0.52

Correlation

0.87

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
NTPC and BSE SENSEX it shows that there exists a positive correlation
between both the scripts. Thus we can say that both the markets are
going according to the market conditions. If we see the returns of NTPC
it has huge negative returns (-4.64,-3.24,-2.86,-2.66,-2.56,-1.42) but still
the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN NTPC AND BSE SENSEX
FOR THE MONTH OF SEP-2007

93

S.No

Date

RETURNS OF NTPC

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

3-Sep-07
4-Sep-07
5-Sep-07
6-Sep-07
7-Sep-07
10-Sep-07
11-Sep-07
12-Sep-07
13-Sep-07
14-Sep-07
17-Sep-07
18-Sep-07
19-Sep-07
20-Sep-07
21-Sep-07
24-Sep-07
25-Sep-07
26-Sep-07
27-Sep-07

10.72
-2.21
2.40
0.32
0.46
2.17
2.56
-2.83
0.79
-3.23
-1.18
0.57
2.60
0.05
-1.13
4.86
-1.02
-1.52
1.28

RETURNS OF
BSE SENSEX
3.37
0.28
-0.12
1.10
-0.17
0.04
-0.35
-0.24
0.70
-0.07
-0.64
1.06
4.17
0.15
1.32
1.70
0.32
0.13
1.35

Correlation

0.62

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
NTPC and BSE SENSEX it shows that there exists a positive correlation
between both the scripts. Thus we can say that both the markets are
going according to the market conditions. If we see the returns of NTPC
it has some are negative returns (-3.23,-2.83,-2.21,-1.52,-1.13) but still
the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN NTPC AND BSE SENSEX
FOR THE MONTH OF OCT-2007

94

S.No

Date

RETURNS OF NTPC

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

1-Oct-07
3-Oct-07
4-Oct-07
5-Oct-07
8-Oct-07
9-Oct-07
10-Oct-07
11-Oct-07
12-Oct-07
15-Oct-07
16-Oct-07
17-Oct-07
18-Oct-07
19-Oct-07
22-Oct-07
23-Oct-07
24-Oct-07
25-Oct-07
26-Oct-07

6.47
4.99
4.40
-5.26
-4.45
6.47
0.53
1.48
-2.20
4.48
1.80
-4.77
-5.49
-3.26
-0.97
9.62
1.53
0.18
2.85

RETURNS OF
BSE SENSEX
1.04
2.99
-0.39
-0.02
-1.59
4.51
2.07
0.84
-2.10
3.47
-0.04
-1.76
-3.83
-2.44
0.31
4.99
0.11
1.39
2.52

Correlation

0.83

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
NTPC and BSE SENSEX it shows that there exists a positive correlation
between both the scripts. Thus we can say that both the markets are
going according to the market conditions. If we see the returns of NTPC
it has some negative returns (-5.49,-5.26,-4.77,-4.45,-3.26) but still the
overall correlation is positive.
CORRELATION OF RETURNS BETWEEN NTPC AND BSE SENSEX
FOR THE MONTH OF NOV-2007

95

S.No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Date

RETURNS OF NTPC

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

0.55
2.04
0.94
1.35
0.21
-0.27
0.44
5.10
7.38
1.98
-2.94
-1.86
0.19
-1.91
-7.87
-5.05
4.16
0.82
-1.55

RETURNS OF
BSE SENSEX
2.50
1.28
-1.93
-0.97
-0.57
-1.20
-0.79
-0.90
1.59
4.69
-0.72
-0.44
-0.33
-1.80
-3.52
-0.41
1.76
2.09
-0.62

Correlation

0.54

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
NTPC and BSE SENSEX it shows that there exists a positive correlation
between both the scripts. Thus we can say that both the markets are
going according to the market conditions. If we see the returns of NTPC
it has some negative returns (-7.87,-5.05,-2.94,-1.91,-1.86,-1.55) but still
the overall correlation is positive.
CORRELATION OF RETURNS BETWEEN NTPC AND BSE SENSEX
FOR THE MONTH OF DEC-2007.

96

S.No

Date

RETURNS OF NTPC

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

3-Dec-07
4-Dec-07
5-Dec-07
6-Dec-07
7-Dec-07
10-Dec-07
11-Dec-07
12-Dec-07
13-Dec-07
14-Dec-07
17-Dec-07
18-Dec-07
19-Dec-07
20-Dec-07
24-Dec-07
26-Dec-07
27-Dec-07
28-Dec-07
31-Dec-07

2.21
-0.44
2.49
0.04
0.24
-1.85
0.95
3.12
-2.15
0.45
-7.60
1.62
-1.25
-0.02
3.41
1.27
0.23
0.50
3.94

RETURNS OF
BSE SENSEX
2.49
-0.38
1.07
0.29
0.86
-0.18
1.81
0.42
-1.33
-0.37
-3.84
-0.94
0.06
0.37
3.61
1.70
0.12
-0.05
0.40

Correlation

0.78

GRAPHICAL REPRESENTATION

The above table and graph represents the correlation of returns between
NTPC and BSE SENSEX it shows that there exists a positive correlation
between both the scripts. Thus we can say that both the markets are
going according to the market conditions. If we see the returns of NTPC
it has some negative returns ( -7.60,-2.15,-1.85,-1.25,-0.44) but still the
overall correlation is positive

97

FINDINGS & CONCLUSIONS

1.

For the month of jul-2007 the correlation between BSE and


RELIANCE ENERGY is very significant and positive. (0.39),
however NTPC is correlated low (0.24) with BSE.

2.

For the month of aug-2007 the correlation between BSE and


RELIANCE ENERGY is very significant and positive.(0.91),
however NTPC is correlated (0.89)with BSE.

3.

For the month of sep-2007 the correlation between BSE and


NTPC is very significant and positive. (0.62), however
RELIANCE ENERGY is correlated low (0.26) with BSE.

4.

For the month of oct-2007 the correlation between BSE and


NTPC is very significant and positive. (0.83), however
RELIANCE ENERGY is correlated low (0.72) with BSE.

5.

For the month of nov-2007 the correlation between BSE and


RELIANCE ENERGY is very significant and positive. (0.76),
however NTPC is correlated low (0.54) with BSE.

6.

For the month of dec-2007 the correlation between BSE and


NTPC is very significant and positive. (0.78), however
RELIANCE ENERGY is correlated low (0.75) with BSE.

The above information is indicate the RELIANCE ENERGY


could get more returns when compare to NTPC. Therefore
RELIANCE ENERGY was top gainer in the BSE SENSEX for the year
of 2007.

98

3. COEFFICIENT OF DETERMINATION (r2): This gives the percentage


variation in the dependent variable that is accounted by the independent
variable i.e. it gives the ratio of explained variance to the total variance.

4. COEFFICIENT OF NON DETERMINATION (1-r2): This gives the


Extent to which a variable is dependable.

99

5. KARL PEARSONS COEFFICIENT OF CORRELATION:

100

a. For Actual Mean

R=

Sum x*y
Sqrt (sum x**2) * sqrt (sum y**2)
x = X-Avg (Avg1 = Average of first series)
y = Y-Avg (Avg2 = Average of second series)

b. For Assumed Mean


R=

N*Sum u*v Sum u * Sum v


(Sqrt ((N * Sum u2 u**2)) * (sqrt ((N * Sum v2 v**2))

u= X-A1

(A1 = Assumed mean for X-Series)

v= Y-A2

(A2 = Assumed mean for Y-Series)

6. RETURN: It refers to the benefits from an investment. It is considered


as percentage.
It is of four types
Single Period Return
Multi Period Return
Ex-Period Return
Ex-Ante Return
7. RISK: It refers to the variability in returns from a security. The most
common measure of risk of a security is the standard deviation and
variance of returns.

101

Standard deviation of returns measures the extent of


deviation of returns from the
Average value of returns.

Variance is referred as the square of standard


deviation.

Risk is of two types:


Systematic risk
Unsystematic risk
8. SENSEX: Sensex is sensitive index. An index is a number used to
represent the changes in a set of values between a base and another
time period.

OBJECTIVES OF SENSEX:
1. to measure market movements.
2. Benchmark for funds performance.
FORMS OF SENSEX:
BSE, NSE, S&P 100, BL, ET-500, ChSE, HSE, CSE, BaSE
BSE consist of: BSE-30, BSE-100, BSE-TECK, BSE IT, BSEPSU,
BANKEX

102

BIBLIOGRAPHY

I. Reference Books:
S.No Name of the book

Name of Author

Edition

1.

Security Analysis and Portfolio

Donald E.Fischer and

6th Edition

Management

Rinald J.Jordon

2.

Security Analysis and Portfolio


Management
(Vikas Publishing Pvt., Ltd.,)

Punithavathy Pandian 5th Reprint

3.

Investments Analysis and


Portfolio Management

Prasanna Chandra

II. News Papers


1.

Economic Times

2.

Business Line

III. Websites
1.

www.bseindia.com

2.

www.reliance-energy.com

3.

www.ntpc.co.in

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