Equity Risk

CHAPTER – 1
INTRODUCTION
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1.1 INTRODUCTION
Investment is the employment of funds with the aim of achieving additional income or
growth in value. The essential quality of an investment is that it involves ‘waiting’ for a
reward. It involves the commitment of resources which have been saved or put away from
current consumption in the hope that some benefits will accrue in future. The term
‘investment’ does not appear to be as simple as it has been defined. Investment has been
future categorized by financial experts and economists. It has also often been confused
with the term speculation. the following discussions will give an explanation of the various
ways in which investment is related or differentiated from the financial and economic
sense and how speculation differ from investment. However, it must be clearly established
that investment involves long-term commitment.
RISK:
In the investing world, the dictionary definition of risk is the chance that an investment’s
actual return will be different than expected. Technically, this is measured in statistics by
standard deviation. Risk means you have the possibility of losing some, or even all, of our
original investment.
Risk consists of 2 components:
1. Systematic risk (uncontrollable risk) non – diversifiable risk

2. Unsystematic risk (controllable risk) diversifiable risk
1. Systematic Risk
The risk that affects the entire market and the factors are beyond the control of the
corporate and the investor. They cannot be avoided by the investor. It is sub-divided into.
 Market risk
 Interest rate risk
 Purchase power risk
2
a.Market risk
Within the context of the capital asset pricing model (CAPM), the economy wide
uncertainty that all assets are to and cannot be diversified away are often referred to as
systematic risk, non –diversifiable risk or the risk of the market portfolio. This type of the
risk is discussed extensively in investment courses.
b. Interest rate risk
The uncertainty associated with the effects of changes in market interest rates. There are
two types of interest rate risk identified: price risk and reinvestment rate risk. The price
risk is sometimes referred to as maturity risk since the greater the maturity of an
investment, the greater the change in price for a given change in interest rates. Both type
of interest rate risks are important in banking and are addressed extensively in banking
management classes.
c.Purchase power risk (inflation risk)
The loss of purchasing power due to the effects of inflation is Purchase power risk. When
inflation is present, the currency losses it’s value due to the rising price level in the
economy. The higher the inflation rate the faster the money loses its value.
2. Unsystematic risk or diversifiable risk
It is unique to the firm or industry. It is caused from managerial inefficiency, technological

changes, consumer preferences, labour problems etc. The magnitude and nature differ
from firm to firm and industry to industry.
It can be classified into 2 types
a. Business risk
b. Financial risk
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a. Business Risk:
The uncertainty associated with a business firm’s operating environment and reflected in
the variability of earnings before interest and taxes (EBIT). Since this earnings measure
has not had financing expenses removed, it reflects the risk associated with business
operations rather than methods of debt financing. This risk is often discussed in general
business management courses.
 Internal risk
 Fluctuations in sales
 Research and development
 Personal management
 External risk
b. Financial Risk:
The uncertainty brought about by the choice of a firm’s financing methods and reflected in
the variability of earnings before taxes (EBT), a measure of earnings that has been
adjusted for and is influenced by the cost of debt financing. This risk is often discussed
within the context of the capital structure topics.
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RETURNS
A major purpose of investment is to set a return of income on the funds invested. On a

bond an investor expects to receive interest. On a stock, dividends may be anticipated. The
investor may expect capital gains from some investments and rental incomes from house
property. Return may take several forms.
Measurements of Returns
The purpose of investment is to get return or income on the funds invested in different
financial assets. The most important characteristics of financial assets are the size and
variability of their future returns. Since the return on income varies, various statistical
techniques are used to measure it. Over the years, May methods were adopted for
quantifying returns. These are now categorized as traditional and modern techniques of
measurement.
Traditional method of measurement
Computation of yield to measure a financial asset is the simplest and oldest techniques of
measurement. Yield can be both expected or estimated and actual for a particular period.
The formula used to find yield is:
Expected cash income

 Estimated yield = ------------------------------------
Current price of asset
Cash income
 Actual yield = --------------------------------
Amount invested
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The yield that is calculated for a particular period to find out the return on the amount that
is invested, for example, the annual yield on the Unit Trust Certificate is the dividend
income divided by the amount invested.
Measuring Returns – Improved Technique: The ‘holding period yield’ is one of the new
techniques in measuring returns. The traditional methods did not provide a satisfactory returns
measure. Some of the gaps that were identified were: (a) that the traditional method does not
distinguish between divided and earnings portion that the traditional method does not
distinguish between divided and earnings portion that the company retains (Earnings Yield
Method); (b) Dividend Yield Method ignores the possibility of price appreciation on retained
earnings. It is useful only for those shareholders who wish to retain shares always and are not
interested in selling and anticipate that dividends are not going to change; (c) the yield to
maturity is useful only to those bond holders who will hold it to maturity. All investors may not
hold bonds till maturity for obvious reasons. These methods are thus known to serve a limited
purpose only. The better method measures return through the holding period yield. This
measure appears more rational and clearly defined. It serves two purposes: (a) It measures that
total return per rupee of the original investment, and (b) through this method, comparisons can
be drawn of any asset’s expected return. An asset can be compared with other both historically
and for future periods. The holding period yield can be used for any asset. For example, returns
from savings accounts, stocks money, real estate and bonds can be compared through this
measure. The formula for the holding period yield is:
Income payments received during the year in Rs. + Capital change for the period in
Rs.
Price in rupees of original investment at the beginning of period
Dividend + (Pt-Po)
= _________________
Po
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A look at this formula shows that the Holding Period Yield (HPY) considers everything
the investor receives over the specified period during which the asset is held relative to
what was originally invested in the assets. It also considers all income payments; and
positive and negative capital changes during the period. These are then measured relative
to the original investment in rupees. The HPY also measures past receipts of payments as
well as for an unknown future. It is useful for comparing any time period; it can be used
on both Bond and Stocks.
Measure of Dispersion:
Dispersion methods help to assess risk in receiving a reward or return on

investment. The greater the potential dispersion, the greater is the risk. One of the
simplest methods in calculating dispersion is range. The range, however, has limited
importance. It is useful when there are small samples. It loses its effectiveness when the
number of values in a sample increases. The best and most effective method to find out
how the data scattered around a frequency distribution is to use the standard deviation
method. This method is related to the mean deviation and implies in this case the means
as a point of reference from which deviation occurs. The standard deviation is based on
mean and it cannot show any result without first finding out the mean. The standard
deviation is recognized by the following symbol . The standard deviation is also related
to variance. Variance is the square of standard deviation. In other words, standard
deviation is the square root of the variance. This relationship shows that they have similar
statistical characteristics. Therefore, standard deviation and variance are considered
equivalent to each other as measures of risk. For a security analyst they help in depicting
dispersion of HPYs around HPY.
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1.2 OBJECTIVES:-
1. To Study the Concept of Returns & Risks.
2. To study how Risk on Return of investment evaluated.
3. To calculate the Returns & Risk of Selected companies equity Stocks.
4. To estimate weather the company is reliable for the investor to invest in the shares of the
company based on Risk & Return Tradeoff.
5. To study and advice the investor in making effective investment.
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1.3 NEED OF THE STUDY
In Indian financial environment investors are facing a lot risk to invest in various financial
instruments. The investment risk can be either reduced or can be transferred. Most of the
times investors try to maximize returns but want minimum risk in their investment. The
present study enables us to identify the different types of risks and how to minimize them.
In investment avenues it is very important to know about Risk and Returns so that one can
have hassle free investment.
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1.4 SCOPE OF THE STUDY
The present study has been undertaken to observe the risk and returns associated with few
selected Equities stocks. The scope of the study consists of 5 Company stocks from both
private and public sector which includes IT, Banking, Electronics, Cement and
Infrastructure Sector. The scope of the study is confined to 5 Companies.
Sample size- 5 Companies

Duration- 3 months
1.5 RESEARCH METHODLOGY
During my project, I collected data through various sources like primary & secondary
sources of data.
Primary source includes:-

1) Interview with branch manager.
2) Interview with investors of the firm.
3) Live trading in the market.
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Secondary source includes:-
1) Various books related to stock market.
2) Books related to Financial Management.
3) Web sites were used as the vital information source.
TOOLS USED:
1: Standard Deviation
2: Variance
3. Mean
4. Line & Bar Graph
1.6 LIMITATIONS OF THE STUDY
1. This project report data is collected mainly from secondary sources.
2. This project analysis report may not be applicable in all equity markets.
3. Project took only 5 companies of NSE for equity analysis. It will not be applicable
to total NSE’S Nifty index.
4. The accuracy of the study is based on the accuracy of the data present in the NSE
listings
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5. Detailed study of topic was not possible due to limited size of the project. The time
taken for the study is limited.
CHAPTER-2
REVIEW OF LITERATURE
&
THEORITICAL ASPECT
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2.1 REVIEW OF LITERATURE
Review 1: Stock market risk and return: an equilibrium approach.
Author: RF Whitelaw
Source: Review of Financial Studies (2000) 13 (3):521-547.doi: 10.1093/rfs/13.3.521
Abstract
Empirical evidence that expected stock returns are weakly related to volatility at the
market Level appears to contradict the intuition that risk and return are positively related.
We investigate this issue in a general equilibrium exchange economy characterized by a
Regime-switching consumption process with time-varying transition probabilities between
Regimes. When estimated using consumption data, the model generates a complex, non-
Linear and time-varying relation between expected returns and volatility, duplicating the
Salient features of the risk/return trade-off in the data. The results emphasize the
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Importance of time-varying investment opportunities and highlight the perils of relying on
intuition from static models.
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Review 2: Components of Market Risk and Return.
Author: John M. Maheu and Thomas H. McCurdy
Source: journal of financial econometrics (2007) 5 (4):560-

590.doi: 10.1093/jjfinec/nbm012first published online: august 31, 2007
Abstract
This article proposes a flexible but parsimonious specification of the joint dynamics of
market risk and return to produce forecasts of a time-varying market equity premium. Our
parsimonious volatility model allows components to decay at different rates, generates
mean-reverting forecasts, and allows variance targeting. These features contribute to
realistic equity premium forecasts for the U.S. market over the 1840–2006 periods. For
example, the premium forecast was low in the mid-1990s but has recently increased.
Although the market's total conditional variance has a positive effect on returns, the
smooth long-run component of volatility is more important for capturing the dynamics of
the premium. This result is robust to univariate specifications that condition on either
levels or logs of past realized volatility (RV), as well as to a new bivariate model of
returns and RV.
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Review 3: The Risk and Predictability of International Equity Returns.
Author: Wayne E. Ferson
Source: Review of Financial Studies (1993) 6 (3):527-566.doi: 10.1093/rfs/6.3.527
Abstract
We investigate predictability in national equity market returns, and its relation to global

economic risks. We show how to consistently estimate the fraction of the predictable
variation that is captured by an asset pricing model for the expected returns. We use a
model in which conditional betas of the national equity markets depend on local
information variables, while global risk premium depend on global variables. We examine
single- and multiple-beta models, using monthly data for 1970 to 1989. The models
capture much of the predictability for many countries. Most of this is related to time
variation in the global risk premium.
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Review 4: Growth or Glamour? Fundamentals and Systematic Risk in Stock
Returns.
Author: John Y. Campbell, Christopher Polk and TuomoVuolteenaho
Source: Review of Financial Studies (2010) 23 (1):305-344.doi: 10.1093/rfs/hhp029First

published online: April 22, 2009
Abstract
The cash flows of growth stocks are particularly sensitive to temporary movements in
aggregate stock prices, driven by shocks to market discount rates, while the cash flows of
value stocks are particularly sensitive to permanent movements, driven by shocks to
aggregate cash flows. Thus, the high betas of growth (value) stocks with the market's
discount-rate (cash-flow) shocks are determined by the cash-flow fundamentals of growth
and value companies. Growth stocks are not merely “glamour stocks” whose systematic
risks are purely driven by investor sentiment. More generally, the systematic risks of
individual stocks with similar accounting characteristics are primarily driven by the
systematic risks of their fundamentals.
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Review 5: Is Default Risk Negatively Related to Stock Returns?
Author: SudheerChava andAmiyatoshPurnanandam
Source: Review of Financial Studies (2010) 23 (6):2523-

2559.doi: 10.1093/rfs/hhp107First published online: January 5, 2010
Abstract
We find a positive cross-sectional relationship between expected stock returns and default
risk, contrary to the negative relationship estimated by prior studies. Whereas prior studies
use noisy ex post realized returns to estimate expected returns, we use ex ante estimates
based on the implied cost of capital. The results suggest that investors expected higher
returns for bearing default risk, but they were negatively surprised by lower-than-expected
returns on high default risk stocks in the 1980s. We also extend the sample compared with
prior studies and find that the evidence based on realized returns is considerably weaker in
the 1952–1980 period.
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Review 6: Does Systemic Risk in the Financial Sector Predict
Future Economic Downturns?
Author: Linda Allen, Turan G. Baliand Yi Tang
Source: Review of Financial Studies (2012) 25 (10):3000-3036.doi: 10.1093/rfs/hhs094.
Abstract
We derive a measure of aggregate systemic risk, designated CATFIN that complements

bank-specific systemic risk measures by forecasting macroeconomic downturns six
months into the future using out-of-sample tests conducted with U.S., European, and Asian
bank data. Consistent with bank “specialness,” the CATFIN of both large and small banks
forecasts macroeconomic declines, whereas a similarly defined measure for both
nonfinancial firms and simulated “fake banks” has no marginal predictive ability. High
levels of systemic risk in the banking sector impact the macro economy through aggregate
lending activity. A conditional asset pricing model shows that CATFIN is priced for
financial and nonfinancial firms.
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2.2 INTRODUCTION-WORKING OF A BROKING FIRM
Stock broker
According to SEBI stock broker is a member of a recognized stock exchange(s) and is

engaged in buying, selling and dealing in securities. In other words broker is an
Intermediary who arranges to buy and sell securities on behalf of clients i.e. the buyer and
the seller. A broker can deal in securities only after getting registered with SEBI. Through
stock exchanges the constitution of a broking firm may be a Proprietary concern, a
partnership firm or a corporate.
Compliance department
The functions carried out by compliance department are as follows.
1. Client registration application form.
2. Broker client agreement on stamp paper of value as applicable in the respective state.
3. Identity Proof Like
 Copy of passport
 Copy of ration card
 Copy of driving license
 Copy of voters’ identity card
 Copy of pan card
 Letter from bank certifying account number and period from which the same is in
operation.
4. Letter of running account
 Client registration application form.
 Broker client agreement on stamp paper.
 Certified copy of memorandum and articles of association.
 Certified copy of resolution authorizing the company to open account with HDFC
and appointing persons authorized to operate upon said account on behalf of
company.
5. Proof of identity in respect of authorized director.
6. Letter from the bank certifying account number and period from which the
Same is in operation.
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Dealing department
Dealing department is a very important department in the broking firm as it carries out
most important activities of buying and selling of securities. The people doing dealing are
called as dealers. He is the person dealing on behalf of the Investor, therefore when the
investor wants to trade in some scrip’s he must inform the dealer first and then the dealer
deals in the market. The following are the activities carried out in a dealing department.
Entering order
The trading member can enter orders in the normal market and auction market. When
An order enters the trading system it is an active order, it tries to find out on the other
Side of the books if it finds the match, trade is generated. If it does not find a match,
The order becomes a passive order and goes and sits in the order book.
Order modification
All orders can be modified in the system till the time they do not get fully traded and
only during the market hours. Once an order is modified, the branch order values limit for
the branch and get adjusted automatically.
Order cancellation
Order cancellation functionality can be performed only for orders which have not
been fully or partially traded (for the untraded part of partially traded orders only) and
only during market hours.
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Order matching
The buy and sell orders are matched on book type, symbol, series, quantity and price.
The best sell order is the order with the lowest price and best buy order is the order with
the highest price. The unmatched orders are queued in the system by the following
Priority.
Risk and return plays a key role in most individuals investors “decision making process.
Every investor wants to avoid risk and maximize return. In general, risk and return go
hand in hand. If an investor wishes to earn higher returns than the investor must appreciate
that this will only be achieved by accepting a commensurate increase in risk. Risk and
return are positively correlated; an increase in one is accompanied by an increase in the
other. Investment decisions, therefore, involve a tradeoff between risk and return, which is
considered to be central to the investment decision making.
STATEMENT OF THE PROBLEM
In the current economic scenario, interest rates are falling and fluctuating, and reflects on
the share market which has put more investors in the trouble. One finds it difficult to take
decision on investment. This is primarily, because investments are risky in nature and
investors have to consider various factors before investing in investment avenues.
Therefore the study aims to compare stocks of various companies from different sectors
like Banking, Infrastructure, Electronics, IT and Cement Sectors in the form of their risk,
return & liquidity.
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RISK AND RETURN ANALYSIS
Return expresses the amount which an investor actually earned on an investment during a
certain period. Return includes the interest, dividend and capital gains: while risk
represents the uncertainty associated with a particular task. In financial terms, risk is the
chance or probability that a certain investment may or may not deliver the actual /
expected returns.
The risk return trade off says that the potential return rises with an increase in risk. It is
important for an investor to decide on a balance between the desire for the lowest possible
risk and highest possible return.
The risk -return relationship is a fundamental concept in not only financial analysis, but in
every aspect of life. If decisions are to lead to benefit maximization, it is necessary that
individuals/institutions consider the combined influence on expected (future) return or
benefit as well as on risk/cost. The requirement that expected return/benefit be
commensurate with risk/cost is known as the “risk/return trade-off” in finance.
This discussed the trade-off and, using conventional statistical tools, provides a method for
quantifying risk .Two categories of risk borne by the firm’s stockholders, business risk and
financial risk, are discussed and demonstrated, as is the concept of leverage. The session
also examines risk reduction via portfolio diversification and what requirements need to be
met for firms to experience the benefits of diversification. The capital asset pricing model
(CAPM) is used to demonstrate the risk / return trade-off by relating the required return on
the firm’s investments to its beta (or market) risk.
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RISK ANALYSIS:
Risk in investment exists because of the inability to make perfect or accurate forecasts.
Risk in investment is defined as the variability that is likely to occur in future cash flows
from an investment. The greater variability of the cash flows indicates greater risk.
Variance or standard deviation measures the deviation about expected cash flows of each
of the possible cash flows and is known measure of risk; while co-efficient of variation is a
relative measure of risk.
For carrying out risk analysis, following methods are used:
 Payback (How long will it take to recover the investment)

 Certainty equivalent (The amount that will certainly come to you)
 Risk adjusted discount rate (Present value i.e. PV of future inflows with discount
rate)
However in practice, sensitivity analysis and conservative forecast techniques being

simpler and easier to handle, are used for risk analysis. Sensitivity analysis (a variation of
breakeven analysis) allows estimating the impact of change in behavior of critical
variables on the investment cash flows. Conservative forecasts include using short
payback or higher discount rates for discounting cash flows.
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Investment risk
Investment risk is related to the probability of earning a low or negative actual return as
compared to the return that is estimated. There are 2 types of investments risks:
1. STAND- ALONE RISK

This risk is associated with a single asset, meaning that the risk will cease to exist
if that particular asset is not held. The impact of standalone risk can be mitigated
by diversifying the portfolio.
Standalone risk= Market + Firms specific risk
Where
 Market risk is a portion of the security’s stand-alone risk that cannot be
eliminated through diversification and it is measured by beta.
 Firms risk is a portion of a security’s stand-alone that can be eliminated
through proper diversification
2. PORTFOLIO RISK
This is the risk involved in a certain combination of assets in a portfolio which fails
to deliver the overall objective of the portfolio. Risk can be minimized but cannot
be eliminated, whether the portfolio is balanced or not. A balanced portfolio
reduces risk while a non- balanced portfolio increases risk.
Sources of risk
 Inflation
 Business cycle
 Interest rates
 Management
 Business risk
 Financial risk
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RETURN ANALYSIS:
An investment is the current commitment of funds done in the expectation of earning

greater amount in future. Returns are subject to uncertainty or variance. Longer the period
of investment, greater will be the returns sought. An investor will also like to ensure that
the returns are greater than the rate of inflation.
An investor will look forward to getting compensated by way of an expected return based
on 3 factors:
 Risk involved
 Duration of investment (Time value of money)
 Expected price levels(inflation)
The basic rate or time value of money is the real risk free rate (RRFR) which is free of any
risk premium and inflation. This rate generally remains stable; but in the long run there
could be gradual changes in the RRFR depending upon factors such as consumption
trends, economic growth and openness of the economy.
If we include the component of inflation into the RRFR without the risk premium, such a
return will be known as nominal risk free rate (NRFR)
NRFR + (1+RRFR)*(1+expected rate of inflation)-1
Third component is the risk premium that represents all kind of uncertainties and is
calculated as fallows-
Expected return = NRFR + RISK PREMIUM
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RISK AND RETURN TRADE OFF
The risk -return tradeoff could be called the “ability-to-sleep-at-night test”. While some
people can handle the equivalent of financial skydiving without batting an eye, other are
terrified to climb the financial ladder without a secure harness. Deciding what amount of
risk you can take while remaining comfortable with your investments is very important.
In the investing world, the dictionary definition of risk is the chance that an investment’s
actual return will be different than expected. Technically, this is measured in statistics by
standard deviation. Risk means you have the possibility of losing some, or even all, of our
original investment.
Low levels of uncertainty (low risk) are associated with low potential returns. High levels
of uncertainty (high risk) are associated with high potential returns. The risk-return
tradeoff is the balance between the desire for the lowest possible risk and the highest
possible return. This is demonstrated graphically in the chart below. A higher standard
deviation means a higher risk and higher possible return.
Risk/Return Tradeoff
Low risk
Higher risk
Low return
Return High potential
return
Standard Deviation (or Risk)

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A common misconception is that higher risk equals greater return. The risk-return tradeoff
tells us that the higher risk gives us the possibility of higher returns. There are no
guarantees. Just as risk means higher potential returns, it also means higher potential
losses.
On the lowest end of the scale, the risk-free of return is represented by the return on US
Government securities because their chance of default is next to nothing. If the risk-free
rate is currently 6%, this means, with virtually no risk, we can earn 6% per year on our
money.
The common question arises: who want to earn 6% when index funds average 12% per
year over the long run? The answer to this risk is that even the entire market carries risk.
The return on index funds is not 12% every year, but rather -5 % one year, 25% the next
year, and so on. An investor still faces substantially risk and volatility to get an overall
return that is higher than a predictable government security. We call this additional return
the risk premium, which is this case is 6% (12%-6%).
Determining what risk level is most appropriate for you isn’t an easy question to answer.
Risk tolerance differs from person to person. Your decision will depend on your goals,
incomes and personal situation, among other factors.
Investor makes investment with the objective of earning some tangible benefit. This
benefit in financial terminology is termed as return and is a reward for taking a specified
amount of risk.
Risk is defined as the possibility of the actual return being different from the expected
return on an investment over the period of investment. Low risk leads to low returns. For
instance, in case of government securities, while the rate of return is low, the risk of
defaulting is also low. High risk leads to higher potential returns, but may also lead to
higher losses. Long-term returns on stocks are much higher than the returns on
government securities, but the risk of losing money is also higher.
Rate of return on an investment can be calculated using the following formula-
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M
S
P
C
E
T
N
O
Y
A
H
R
V
I
L
K
U
D
G
Return = (Amount received-Amount invested)/Amount invested
SOURCES OF RISK
COMPONENTS OF RISK:
Asper the present conversations risk may be categorized:





Market risk
Credit risk
Operational risk
Reputation risk
Legal risk
Market Risk
Market risk is broadly defined as the risk to an entity of losses resulting from adverse
changes in financial assets prices, which could include changes in interest rates, currency
rates and commodity prices. Banks perennially exposed to this risk. Keeping the level of
computerized and MIS, banks have been advised to adopt easy-to-comprehend analytical
tools for management of market risk. International banks, on the other hand, have made,
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considerable progress in opting more sophisticated techniques like duration, Earnings at
risk (EAR), value at risk (VAR) and complex simulation models.
Credit Risk:
The major activity of any commercial banks is lending and the major risk in lending
operation in credit risk is the possibility of losses associated with changes in the credit
profile of borrowers or counter parties. These could take the forms of our right default or
alternatively, losses from changes in portfolio value arising from actual or perceived
deterioration in credit quality. Credit risk involves the inability or unwillingness of a
borrower or counterparty to meet its obligations in accordance with the agreed terms.
Operational risk:
It is defined as any risk other than credit or market risk. It arises out of various types of
human and technical errors, environmental risk, legal risk, social risk. The process of
operational risk assessments needs to address the likelihood of a particular operational risk
occurring. An effective internal audit system and concurrent audit system and concurrent
audit system can reduce operation risk to an inspection, to minimizing risk of frauds. The
bank will periodically review the system and procedures and guidelines to make them
simple and thus minimize operational risk.
Reputational risk:
Reputation is a paramount importance of banks. Banks only lose their reputation with dire
consequences. It is therefore imperative that they safeguard their reputation zealously.
Banks must not give double of any sort regarding honoring their L.C.commitments, ban
guarantees and repayment of deposit liabilities. If otherwise in order the banks have not
honored their L.C/B.G. commitment and consequently have suffered severe damages to
reputation and the risk of complete collapse.
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Legal risk:
Legal risk is the risk that a firm will insure loss if a contractthough was enforced actually
is not. The global derivatives study group identified several sources of legal risk for
innovative financial instruments that are often associated with risk management, including
conflicts between oral contracts formation and the status of frauds in certain countries and
jurisdictions ,the capacity of certain types transactions, the enforceability of close meeting,
and the legality of financial instrument. In addition, unaccepted changes in law and
regulations can expose firms to potential losses as well.
TYPES OF RISK
Market Risk:
This is when stock or bond prices drop and you appear to lose money on your investment.
However, most losses are sustained over the short term of a year or less. As long as you
don't sell, your investment will have the chance to recover from price declines and earn
you a greater profit.
Inflation Risk:
The risk that the rising costs of inflation will outpace the growth of your investment over
time.
Company Risk:
This is the risk that the individual company in which you invest will fail to perform as
expected.
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Credit Risk:
Specific to bonds, credit risk refers to the company or government's inability to repay
principal plus interest to the bondholder.
Maturity Risk:
Also specific to bonds, this is the risk that the value of a bond may change from the time it
is issued to when it matures. The longer the period to maturity, the greater is the potential
for price fluctuation. That is why long-term bonds generally offer a higher interest rate to
compensate for this greater risk.
Legislative Risk:
Whatever laws the government passes today may be extinct tomorrow. For example, the
long-term capital gains tax rate has been changed five times in the last 20 years, with the
most recent cut at 20%. Factors such as tax deduction and deferral should never be your
sole reason for selecting an investment. These perks are at the mercy of Congress.
Global Risk:
It's always a bigger risk to invest overseas than at home. Then again, it's generally more
rewarding to vacation in Europe than lounging around in the backyard. Over 50% of the
world's capital market opportunities exist outside of the U.S., so a purely domestic strategy
can severely limit your long-term earnings potential.
Timing Risk:
32
Timing risk works two ways. First, you run the risk of investing a large sum of money
when share prices hit their peak. Second, there's the risk that you'll need to access your
money to pay for retirement or college expenses during a temporary market setback
causing you to lose money on your investment.
STATISTICAL TOOLS
 STANDARD DEVIATION (S.D)

 COEFFICIENT OF CORRELATION
 MEAN
 LINE GRAPH
1. Standard Deviation (S.D):
This is the most commonly used measure of risk in finance. Its square also is widely used
to find out the risk associated with a security. Standard deviation is a statistical term that
measures the amount of variability or dispersion around an average. Standard deviation is
also a measure of volatility. Generally speaking, dispersion is the difference between the
actual value and the average value. The larger this dispersion or variability is, the higher
the standard deviation. The smaller this dispersion or variability is the lower the standard
deviation. Chartists can use the standard deviation to measure expected risk and determine
the significance of certain price movements.
STANDARD DEVIATION =(X-X1)2/n
2. Variance:
In probability theory and statistics, the variance is a measure of how far a set of numbers is

spread out. It is one of several descriptors of a probability distribution, describing how far
the numbers lie from the mean (expected value). In particular, the variance is one of
the moments of a distribution. In that context, it forms part of a systematic approach to
distinguishing between probability distributions. While other such approaches have been
developed, those based on moments are advantageous in terms of mathematical and
computational simplicity.
33
The variance is a parameter describing in part either the actual probability distribution of
an observed population of numbers, or the theoretical probability distribution of a sample
(a not-fully-observed population) of numbers. In the latter case a sample of data from such
a distribution can be used to construct an estimate of its variance: in the simplest cases this
estimate can be the sample variance.
CHAPTER-3
COMPANY PROFILE
34
1.1 COMPANY PROFILE
CD Equisearch has established Brokerage house with over 30 years of rich experience in
financial services. It has the Professional Management. It’sguiding principles – Trust,
Transparency and Thought leadership and It Empanelled with large number of FII’s and
DII’. One of the most reputed names in fundamental research.
CD has been set up to engage in
 Stock Broking
 Equity
 Derivatives
 Depository Services
 Distribution of Investment Products
 Distribution of Insurance
 Commodities Broking
35
 Currency
Headquartered in Mumbai, CD has a growing network of offices across several states to

ensure easy accessibility to our clients wherever they are. CD has Branch Offices spread
across the country to offer better reach and service to the investor. The company currently
marks its presence in the following regions:
 Mumbai
 Kolkata
 Delhi
 Hyderabad
 Jaipur
 Vijayawada
Opening Shortly
 Ahmadabad
 Bangalore
 Pune
Expansion Plans
 Setting up Regional Offices/Branch Office in 25 Metros/ Tier II cities in next 24
36
months
 Expansion at 1000+ locations through Sub Brokers in the next 24 months
 IPO / PE in another 3-4 years
 To be amongst the top 10 broking house in India by 2013
Access to clients:
 User friendly back office software.

 All segments through single login.
 Client Position
1. Segment wise ledger balance
2. DP stock position – DP, pool, BTST
3. Open position in FNO and commodities.
 Viewing and printing of bills.

 Viewing and printing of ledger for all the segments.
 Risk Management report.
 Brokerage report.
Management
CD Equisearch is managed by professional’s who have years of experience in financial

service industry –
37
Mr. Chandravadan Desai – Chairman
Mr. Pranay Desai – Director
Mr. VikashKalani – COO
Mr. JayeshVora – CFO
GUIDING PRINCIPLE
At CD Equisearch, the selection and recommendations of wealth creating opportunities are

primarily based on the 3C Principle’s:
 Conservation of capital
 Consistent growth in value of investment over a period of time
 Continual cash inflow through handsome dividends
PRODUCTS AND SERVICES
38
We are a one-stop financial services shop, most respected for quality of its advice,
personalized service and cutting-edge technology.
Equities
CD provided the prospect of researched investing to its clients, which was hitherto
restricted only to the institutions. Research for the retail investor did not exist prior to CD.
CD leveraged technology to bring the convenience of trading to the investor’s location of
preference (residence or office) through computerized access. CD made it possible for
clients to view transaction costs and ledger updates in real time.
PMS
Our Portfolio Management Service is a product wherein an equity investment portfolio is

created to suit the investment objectives of a client. We at CD invest your resources into
stocks from different sectors, depending on your risk-return profile. This service is
particularly advisable for investors who cannot afford to give time or don't have that
expertise for day-to-day management of their equity portfolio.
Research
Sound investment decisions depend upon reliable fundamental data and stock selection
techniques. CD Equisearch is proud of its reputation for, and we want you to find the facts
that you need. Equity investment professionals routinely use our research and models as
integral tools in their work. They choose Ford Equity Research when they can clear your
doubts.
Commodities
CD extension into commodities trading reconciles its strategic intent to emerge as a one-
stop solutions financial intermediary. Its experience in securities broking has empowered it
with requisite skills and technologies. The Company’s commodities business provides a
39
contra-cyclical alternative to equities broking. The company was among the first to offer
the facility of commodities trading in India’s young commodities market (the MCX
commenced operations only in 2003). Average monthly turnover on the commodity
exchanges increased from Rs. 0.34 bntoRs. 20.02 bn. The commodities market has several
products with different and non-correlated cycles. On the whole, the business is fairly
insulated against cyclical gyrate in the business.
Invest Online
CD has made investing in Mutual funds and primary market so effortless. All you have to
do is register with us and that’s all. No paperwork no queues and No registration charges.
Invest in Mutual Fund
CD offers you a host of mutual fund choices under one roof, backed by in-depth research
and advice from research house and tools configured as investor friendly.
Apply in IPO’s
You could also invest in Initial Public Offers (IPO’s) online without going through the
hassles of filling ANY application form/ paperwork.
Stay connected to the market:

The trader of today, you are constantly on the move. But how do you stay connected to the
market while on the move? Simple, subscribe to CD Stock Messaging Service and get
Market on your Mobile!
Insurance
An entry into this segment helped complete the client’s product basket; concurrently, it
graduated the Company into a one-stop retail financial solutions provider. To ensure
40
maximum reach to customers across India, we have employed a multi-pronged approach
and reach out to customers via our Network, Direct and Affiliate channels. Following the
opening of the sector in 1999-2000, a number of private sector insurance service providers
commenced operations aggressively and helped grow the market. The company’s entry
into the insurance sector de-risked the company from a predominant dependence on
broking and equity-linked revenues. The annuity based income generated from insurance
intermediation result in solid core revenues acrossthetenure of the policy.
Wealth Management Service
Imagine a financial firm with the heart and soul of a two-person organization. A world
leading wealth Management Company that sits down with you to understand your needs
and goals. We offer you a dedicated group for giving you the most personal attention at
every level.
Roles and Responsibilities in Organization:
We will give updates to customers in
41
 Economic Outlook and Updates
 Sector & Company Reports
 Technical Recommendations
 Daily Market Report
 Daily Technical Outlook
 Reports on New Fund Offerings
 Weekly analysis of mutual funds – Fund Focus
 Weekly debt report: Debt Dose
 Offer daily technical calls through SMS to our clients
Key learning in organization:
 Equity
 Mutual Funds
 Tax savings schemes in mutual funds
 Online and Offline trading
 IPO (Initial public offer)
 Derivatives
 Forex market
 Currency
 Commodities
 Risk-Return profile in futures and options-s&pcnx nifty
42
CHAPTER-4
DATA ANALYSIS
&
INTERPRETATION
43
4.1 INFOSYS
Infosys Limited (formerly Infosys Technologies Limited) is an

Indian multinational provider of business consulting, technology, engineering, and
outsourcing services. It is headquartered in Bangalore, Karnataka. Infosys is the third-
largest India-based IT services company by 2012 revenues. Of this revenue, the majority
comes from international business. In 2009, Infosys collected 1.2% of its income from the
domestic Indian market.
Infosys was co-founded in 1981 by N. R. Narayana Murthy, NandanNilekani, N. S.

Raghavan, S. Gopalakrishnan, S. D. Shibulal, K. Dinesh and Ashok Arora after they
resigned from Patni Computer Systems. The company was incorporated as "Infosys
Consultants Pvt Ltd." in Model Colony, Pune as the registered office and signed up its first
client, Data Basics Corporation, in New York. In 1983, Infosys corporate headquarters
was relocated to Bangalore. In 1999, Infosys achieved Capability Maturity Model level 5
certification.
In recent years, Infosys has begun shifting operations to the United States and other
countries outside of India. In 2012, Infosys announced a new office in Milwaukee,
Wisconsin to service Harley-Davidson, being the 18th international office in the United
States. Infosys hired 1,200 United States employees in 2011, and expanded the workforce
by an additional 2,000 employees in 2012. Globally, Infosys has 67 offices between the
US, India, China, Australia, Japan, Middle East,
UK, Germany, France, Switzerland, Netherlands, Poland, Canada.
44
CALCULATION OF VARIANCE
STOCK1- INFOSYS:
THE BELOW TABLE REPRESENTS THE MONTH NOVEMBER 2019

RETURNS
TABLE NO: 1.1

Open Close Average
Symbol Series Date Returns(R1) R1-R2 (R1-R2)2
Price Price Returns(R2)
INFY EQ 1-Nov-19 2,362.00 2,364.65 0.112193057 2.177586683 -2.06539 4.265851

INFY EQ 2-Nov-19 2,371.00 2,388.10 0.721214677 2.177586683 -1.45637 2.121019
INFY EQ 5-Nov-19 2,383.10 2,378.45 -0.195124 2.177586683 -2.37271 5.629756
INFY EQ 6-Nov-19 2,384.00 2,381.65 -0.09857383 2.177586683 -2.27616 5.180907
INFY EQ 7-Nov-19 2,382.00 2,404.40 0.94038623 2.177586683 -1.2372 1.530665
INFY EQ 8-Nov-19 2,372.00 2,375.30 0.139123103 2.177586683 -2.03846 4.155334
INFY EQ 9-Nov-19 2,365.00 2,348.70 -0.68921776 2.177586683 -2.8668 8.218568
INFY EQ 12-Nov-19 2,355.00 2,358.95 0.167728238 2.177586683 -2.00986 4.039531
INFY EQ 13-Nov-19 2,354.00 2,338.30 -0.66694987 2.177586683 -2.84454 8.091388
INFY EQ 15-Nov-19 2,335.15 2,296.30 -1.66370469 2.177586683 -3.84129 14.75552
INFY EQ 16-Nov-19 2,291.00 2,343.35 2.285028372 2.177586683 0.107442 0.011544
INFY EQ 19-Nov-19 2,344.00 2,358.55 0.620733788 2.177586683 -1.55685 2.423791
INFY EQ 20-Nov-19 2,377.15 2,324.75 -2.2043203 2.177586683 -4.38191 19.20111
INFY EQ 21-Nov-19 2,329.70 2,349.85 0.86491823 2.177586683 -1.31267 1.723098
INFY EQ 22-Nov-19 2,348.00 2,382.60 1.473594549 2.177586683 -0.70399 0.495605
INFY EQ 23-Nov-19 2,382.00 2,377.55 -0.1868178 2.177586683 -2.3644 5.590409
INFY EQ 26-Nov-19 2,390.75 2,417.40 1.114712956 2.177586683 -1.06287 1.129701
INFY EQ 27-Nov-19 2,422.00 2,470.65 2.00867052 2.177586683 -0.16892 0.028533
INFY EQ 29-Nov-19 2,450.00 2,445.25 -0.19387755 2.177586683 -2.37146 5.623843
INFY EQ 30-Nov-19 2,441.60 2,436.85 -0.19454456 2.177586683 -2.37213 5.627007
TOTAL 4.355173366 99.84318
Variance = Total /no. of days

=99.84318/20
=4.992159
Standard Deviation = √ Variance

=√ 4.992159
= 2.234314
45
STOCK NAME: INFOSYS
THE BELOW TABLE REPRESENTS THE MONTH DECEMBER 2012 RETURNS
TABLE NO: 1.2

Open Close Average
INFY EQ 3-Dec-19 2,437.00 2,439.15 0.08822323 -3.070089332 3.158313 9.974938

INFY EQ 4-Dec-19 2,429.00 2,437.45 0.34787979 -3.070089332 3.417969 11.68251
INFY EQ 5-Dec-19 2,429.00 2,382.50 -1.91436805 -3.070089332 1.155721 1.335692
INFY EQ 6-Dec-19 2,394.00 2,338.30 -2.32664996 -3.070089332 0.743439 0.552702
INFY EQ 7-Dec-19 2,321.00 2,321.15 0.00646273 -3.070089332 3.076552 9.465173
INFY EQ 10-Dec-19 2,320.95 2,313.55 -0.31883496 -3.070089332 2.751254 7.569401
INFY EQ 11-Dec-19 2,316.00 2,294.05 -0.94775475 -3.070089332 2.122335 4.504304
INFY EQ 12-Dec-19 2,310.00 2,297.80 -0.52813853 -3.070089332 2.541951 6.461514
INFY EQ 13-Dec-19 2,304.95 2,283.55 -0.92843663 -3.070089332 2.141653 4.586676
INFY EQ 14-Dec-19 2,273.00 2,278.80 0.25516938 -3.070089332 3.325259 11.05735
INFY EQ 17-Dec-19 2,267.00 2,266.25 -0.03308337 -3.070089332 3.037006 9.223405
INFY EQ 18-Dec-19 2,260.00 2,271.00 0.48672566 -3.070089332 3.556815 12.65093
INFY EQ 19-Dec-19 2,274.00 2,296.15 0.97405453 -3.070089332 4.044144 16.3551
INFY EQ 20-Dec-19 2,306.10 2,299.60 -0.28186115 -3.070089332 2.788228 7.774216
INFY EQ 21-Dec-19 2,299.00 2,296.85 -0.09351892 -3.070089332 2.97657 8.859971
INFY EQ 24-Dec-19 2,321.10 2,322.30 0.05169963 -3.070089332 3.121789 9.745566
INFY EQ 26-Dec-19 2,323.00 2,315.25 -0.33362032 -3.070089332 2.736469 7.488263
INFY EQ 27-Dec-19 2,327.80 2,287.75 -1.72050863 -3.070089332 1.349581 1.821368
INFY EQ 28-Dec-19 2,302.10 2,323.20 0.91655445 -3.070089332 3.986644 15.89333
INFY EQ 31-Dec-19 2,315.00 2,318.70 0.15982721 -3.070089332 3.229917 10.43236
TOTAL -6.14017866 167.4348

=167.4348/20
=8.371738

=√ 8.371738
= 2.893396
46
STOCK NAME: INFOSYS
THE BELOW TABLE REPRESENTS THE MONTH JANUARY 2013 RETURNS
TABLE NO: 1.3

Open Close Average (R1-
Symbol Series Date Returns(R1) R1-R2
Price Price Returns(R2) R2)2
INFY EQ 1-Jan-2020 2,327.60 2,308.85 -0.805550782 3.14480788 -3.95036 15.60533

INFY EQ 2-Jan-2020 2,316.20 2,309.20 -0.302219152 3.14480788 -3.44703 11.882
INFY EQ 3-Jan-2020 2,315.00 2,337.90 0.989200864 3.14480788 -2.15561 4.646642
INFY EQ 4-Jan-2020 2,348.40 2,349.55 0.048969511 3.14480788 -3.09584 9.584215
INFY EQ 7-Jan-2020 2,351.10 2,374.80 1.00803879 3.14480788 -2.13677 4.565782
INFY EQ 8-Jan-2020 2,365.00 2,344.00 -0.88794926 3.14480788 -4.03276 16.26313
INFY EQ 9-Jan-2020 2,340.20 2,331.00 -0.393128792 3.14480788 -3.53794 12.517
INFY EQ 10-Jan-2020 2,331.00 2,322.30 -0.373230373 3.14480788 -3.51804 12.37659
INFY EQ 11-Jan-2020 2,521.00 2,712.10 7.580325268 3.14480788 4.435517 19.67381
INFY EQ 14-Jan-2020 2,759.80 2,806.50 1.692151605 3.14480788 -1.45266 2.11021
INFY EQ 15-Jan-2020 2,806.00 2,787.05 -0.67533856 3.14480788 -3.82015 14.59352
INFY EQ 16-Jan-2020 2,781.00 2,767.45 -0.487234808 3.14480788 -3.63204 13.19173
INFY EQ 17-Jan-2020 2,792.00 2,797.95 0.213108883 3.14480788 -2.9317 8.594859
INFY EQ 18-Jan-2020 2,805.00 2,788.05 -0.604278075 3.14480788 -3.74909 14.05565
INFY EQ 21-Jan-2020 2,763.05 2,796.30 1.203380322 3.14480788 -1.94143 3.769141
INFY EQ 22-Jan-2020 2,793.60 2,783.55 -0.359750859 3.14480788 -3.50456 12.28193
INFY EQ 23-Jan-2020 2,781.00 2,789.60 0.30924128 3.14480788 -2.83557 8.040438
INFY EQ 24-Jan-2020 2,810.00 2,798.20 -0.419928826 3.14480788 -3.56474 12.70735
INFY EQ 25-Jan-2020 2,810.00 2,814.65 0.165480427 3.14480788 -2.97933 8.876392
INFY EQ 28-Jan-2020 2,812.00 2,810.65 -0.048008535 3.14480788 -3.19282 10.19408
INFY EQ 29-Jan-2020 2,806.00 2,799.00 -0.249465431 3.14480788 -3.39427 11.52109
INFY EQ 30-Jan-2020 2,804.75 2,790.65 -0.502718602 3.14480788 -3.64753 13.30445
INFY EQ 31-Jan-2020 2,792.00 2,789.50 -0.089541547 3.14480788 -3.23435 10.46102
TOTAL 6.28961576 265.7681

=265.7681/24
=11.07366975

=√ 11.07366975
47
= 3.327712391
FIGURE1.1: GRAPH SHOWING INFOSYS RETURNS FOR NOVEMBER 2019
RETURNS OF NOVEMBER 2019

3
1
RETURNS
0
-1
-2
-3
FIGURE1.2: GRAPH SHOWING INFOSYS RETURNS FOR DECEMBER 2019
RETURNS OF DECEMBER 2019

1.5
0.5
0
RETURNS
-0.5
-1
-1.5
-2
-2.5
FIGURE1.3: GRAPH SHOWING INFOSYS RETURNS FOR JANUARY 2020
RETURNS OF JANUARY 2020

10
RETURNS
4
-2
48
TABLE NO.1.4
SUMMARY OF STATISTICS NOV 2019 DEC 2019 JAN 2020

RETURNS 4.355173 -6.140178 6.289615
MEAN 2.177586 -3.070089 3.144807
STANDARD DEVIATION (RISK) 2.234314 2.893396 3.327712
VARIANCE 4.992159 8.371738 11.073669
FIGURE 1.4: GRAPH SHOWINGINFOSYS RETURNSAND RISK

8
Returns
0
Risk
November December January
-2
-4
-6
-8
INTERPRETATION
The above graph shows returns and risk of 3 month i.e. November 2019, December 2019
and January 2020.Here the market condition are going up and down, thus the cause of
Europe and US markets are going in loss.
49
4.2 HDFC (Housing Development Finance Corporation)
HDFC Bank Limited (BSE: 500180, NSE: HDFCBANK, NYSE: HDB) is an
Indian financial services company based in Maharashtra that was incorporated in August
1994. HDFC Bank is the fifth or sixth largest bank in India by assets and the first largest
bank by market capitalization as of November 1, 2012. The bank was promoted by
the Housing Development Finance Corporation, a premier housing finance company (set
up in 1977) of India. As on December 2012, HDFC Bank has 2,776 branches and 10,490
ATMs, in 1,399 cities in India, and all branches of the bank are linked on an online real-
time basis. As of December 2012 the bank had balance sheet size of Rs. 3837 billion. For
the fiscal year 2011-12, the bank has reported net profit of 5,167.07 crore (US$940.41
million), up 31.6% from the previous fiscal.
HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation

Limited (HDFC), India's largest housing finance company. It was among the first
companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector. The Bank started operations as a scheduled commercial
bank in January 1995 under the RBI's liberalization policies.
Times Bank Limited (owned by Bennett, Coleman & Co. /The Times Group) was merged
with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India.
Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of
Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more
than 1,000. The amalgamated bank emerged with a base of about Rs. 1, 22,000crore and
net advances of about Rs.89, 000crore. The balance sheet size of the combined entity is
more than Rs. 1, 63,000crore.
50
STOCK 2- HDFC:

RETURNS
TABLE NO: 2.1

Serie Open Close Average (R1-
Symbol Date Returns(R1) R1-R2
s Price Price Returns(R2) R2)2
HDFC EQ 1-Nov-19 758 763.5 0.72559367 5.174671333 -4.44908 19.79429

HDFC EQ 2-Nov-19 772 766.25 -0.7448187 5.174671333 -5.91949 35.04036
HDFC EQ 5-Nov-19 767.75 770 0.29306415 5.174671333 -4.88161 23.83009
HDFC EQ 6-Nov-19 766.3 783.75 2.27717604 5.174671333 -2.8975 8.395479
HDFC EQ 7-Nov-19 781.25 799.65 2.3552 5.174671333 -2.81947 7.949419
HDFC EQ 8-Nov-19 791.25 793.8 0.32227488 5.174671333 -4.8524 23.54575
HDFC EQ 9-Nov-19 790.1 793.95 0.48728009 5.174671333 -4.68739 21.97164
HDFC EQ 12-Nov-19 794.3 791.6 -0.3399219 5.174671333 -5.51459 30.41074
HDFC EQ 13-Nov-19 790.05 784.55 -0.6961585 5.174671333 -5.87083 34.46664
HDFC EQ 15-Nov-19 784.7 793.15 1.07684465 5.174671333 -4.09783 16.79218
HDFC EQ 16-Nov-19 789 774.85 -1.7934094 5.174671333 -6.96808 48.55415
HDFC EQ 19-Nov-19 775 764.85 -1.3096774 5.174671333 -6.48435 42.04678
HDFC EQ 20-Nov-19 767 782.05 1.96219035 5.174671333 -3.21248 10.32003
HDFC EQ 21-Nov-19 782.15 778.75 -0.4346992 5.174671333 -5.60937 31.46504
HDFC EQ 22-Nov-19 782 775.15 -0.8759591 5.174671333 -6.05063 36.61013
HDFC EQ 23-Nov-19 777.6 779.35 0.22505144 5.174671333 -4.94962 24.49874
HDFC EQ 26-Nov-19 784.8 775.65 -1.1659021 5.174671333 -6.34057 40.20287
HDFC EQ 27-Nov-19 779 799.2 2.59306804 5.174671333 -2.5816 6.664676
HDFC EQ 29-Nov-19 799.55 821.8 2.78281533 5.174671333 -2.39186 5.720975
HDFC EQ 30-Nov-19 822.05 843.5 2.60933033 5.174671333 -2.56534 6.580974
TOTAL 10.3493427 474.861

=474.861/20
=23.74305
51
=√ 23.74305
= 4.872684
STOCK NAME: HDFC
TABLE NO: 2.2

Serie Open Close Returns(R1 Average (R1-
Symbol Date R1-R2
s Price Price ) Returns(R2) R2)2
HDFC EQ 3-Dec-19 840 836.2 -0.45238095 -1.669971121 1.21759 1.482526

HDFC EQ 4-Dec-19 836 841.55 0.663875598 -1.669971121 2.333847 5.446841
HDFC EQ 5-Dec-19 845.5 837.95 -0.89296274 -1.669971121 0.777008 0.603742
HDFC EQ 6-Dec-19 841 844.15 0.374554102 -1.669971121 2.044525 4.180083
HDFC EQ 7-Dec-19 842.35 837.75 -0.54609129 -1.669971121 1.12388 1.263106
HDFC EQ 10-Dec-19 840 865.8 3.071428571 -1.669971121 4.7414 22.48087
HDFC EQ 11-Dec-19 868.35 874.95 0.760062187 -1.669971121 2.430033 5.905062
HDFC EQ 12-Dec-19 875 859.7 -1.74857143 -1.669971121 -0.0786 0.006178
HDFC EQ 13-Dec-19 859.1 854.3 -0.55872425 -1.669971121 1.111247 1.23487
HDFC EQ 14-Dec-19 856.05 852.3 -0.43805852 -1.669971121 1.231913 1.517609
HDFC EQ 17-Dec-19 846.2 836.85 -1.10493973 -1.669971121 0.565031 0.31926
HDFC EQ 18-Dec-19 841.8 846.85 0.599904966 -1.669971121 2.269876 5.152337
HDFC EQ 19-Dec-19 846.6 830.75 -1.87219466 -1.669971121 -0.20222 0.040894
HDFC EQ 20-Dec-19 836 831 -0.59808612 -1.669971121 1.071885 1.148937
HDFC EQ 21-Dec-19 829.5 830.2 0.084388186 -1.669971121 1.754359 3.077777
HDFC EQ 24-Dec-19 832 828.7 -0.39663462 -1.669971121 1.273337 1.621386
HDFC EQ 26-Dec-19 830 834.7 0.56626506 -1.669971121 2.236236 5.000752
HDFC EQ 27-Dec-19 839 828.45 -1.25744934 -1.669971121 0.412522 0.170174
HDFC EQ 28-Dec-19 828.35 834.4 0.730367598 -1.669971121 2.400339 5.761626
HDFC EQ 31-Dec-19 831.55 828.85 -0.32469485 -1.669971121 1.345276 1.809768
TOTAL -3.33994224 68.2238

=68.2238/20
=3.41119

=√ 3.41119
52
= 1.846941
STOCK NAME: HDFC
TABLE NO: 2.3

Serie Average
Symbol Date Open Price Close Price Returns(R1) R1-R2 (R1-R2)2
s Returns(R2)
HDFC EQ 1-Jan-2020 834.65 832.95 -0.203678188 -5.31436511 5.110687 26.11912

HDFC EQ 2-Jan-2020 837 846.6 1.146953405 -5.31436511 6.461319 41.74864
HDFC EQ 3-Jan-2020 849.85 845.5 -0.511855033 -5.31436511 4.80251 23.0641
HDFC EQ 4-Jan-2020 845 837.7 -0.863905325 -5.31436511 4.45046 19.80659
HDFC EQ 7-Jan-2020 842 822.95 -2.262470309 -5.31436511 3.051895 9.314062
HDFC EQ 8-Jan-2020 823 840.3 2.102065614 -5.31436511 7.416431 55.00344
HDFC EQ 9-Jan-2020 840.1 830 -1.202237829 -5.31436511 4.112127 16.90959
HDFC EQ 10-Jan-2020 835 825.5 -1.137724551 -5.31436511 4.176641 17.44433
HDFC EQ 11-Jan-2020 827 809.5 -2.116082225 -5.31436511 3.198283 10.22901
HDFC EQ 14-Jan-2020 810.1 827.05 2.09233428 -5.31436511 7.406699 54.8592
HDFC EQ 15-Jan-2020 830 825.5 -0.542168675 -5.31436511 4.772196 22.77386
HDFC EQ 16-Jan-2020 826 818.85 -0.865617433 -5.31436511 4.448748 19.79136
HDFC EQ 17-Jan-2020 820 807.6 -1.512195122 -5.31436511 3.80217 14.4565
HDFC EQ 18-Jan-2020 810.8 822.7 1.467686236 -5.31436511 6.782051 45.99622
HDFC EQ 21-Jan-2020 826.5 812.5 -1.693889897 -5.31436511 3.620475 13.10784
HDFC EQ 22-Jan-2020 811 813.35 0.289765721 -5.31436511 5.604131 31.40628
HDFC EQ 23-Jan-2020 816.8 820.85 0.495837414 -5.31436511 5.810203 33.75845
HDFC EQ 24-Jan-2020 817.15 807.65 -1.16257725 -5.31436511 4.151788 17.23734
HDFC EQ 25-Jan-2020 807.8 805.85 -0.241396385 -5.31436511 5.072969 25.73501
HDFC EQ 28-Jan-2020 809 801.7 -0.902348578 -5.31436511 4.412017 19.46589
HDFC EQ 29-Jan-2020 801.05 802.5 0.181012421 -5.31436511 5.495378 30.19917
HDFC EQ 30-Jan-2020 806 797.15 -1.098014888 -5.31436511 4.21635 17.77761
HDFC EQ 31-Jan-2020 794 786.55 -0.938287154 -5.31436511 4.376078 19.15006
TOTAL -10.62873022 602.6961 602.6961

=602.6961/24
=25.11233942
=√ 25.11233942
53
= 5.01122135
FIGURE2.1: GRAPH SHOWING HDFC RETURNS FOR NOVEMBER 2019

4
1 RETURNS
-1
-2
-3
FIGURE2.2: GRAPH SHOWING HDFC RETURNS FOR DECEMBER 2019

4
1 RETURNS
-1
-2
-3
FIGURE2.3: GRAPH SHOWING HDFC RETURNS FOR JANUARY 2020
54
2.5
1.5
0.5
RETURNS
0
-0.5
-1
-1.5
-2
-2.5
TABLE NO: 2.4

RETURNS 10.349342 -3.339942 -10.62873
MEAN 5.174671 -1.669971 -5.314365
VARIANCE 23.74305 3.41119 25.112339
FIGURE 2.4: GRAPH SHOWING HDFC RETURNS AND RISK

15
10
Returns
0
Risk
-5
-10
-15
55
INTERPRETATION
Europe and US markets are going in loss.
4.3 BHEL (Bharat Heavy Electricals Limited)

Bharat Heavy Electricals Limited (BHEL) (BSE: 500103, NSE: BHEL) is an Indian state-
owned integrated power plant equipment manufacturer and operates as an engineering and
manufacturing company based in New Delhi, India. Established in 29 August 1956 &
Production started from 6 November 1960, BHEL ushered in the indigenous Heavy
Electrical Equipment industry in India. The company has been earning profits
continuously since 1971-72 and paying dividends since 1976-77. It is one of the only 7
mega Public Sector Undertakings (PSUs) of India clubbed under the esteemed
'Maharatna' status. On 1 February 2013, the Government of
India granted Maharatna status to Bharat Heavy Electricals Limited.
It is engaged in the design, engineering, manufacture, construction, testing, commissioning

and servicing of a wide range of products and services for the core sectors of the economy,
viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil & Gas and
Defense. It has 15 manufacturing divisions, two repair units, four regional offices, eight
service centers, eight overseas offices and 15 regional centers and currently operates at
more than 150 project sites across India and abroad. Most of its manufacturing units and
other entities have been accredited to Quality Management Systems (ISO 9001:2008),
Environmental Management Systems (ISO 14001:2004) and Occupational Health &
Safety Management Systems (OHSAS 18001:2007).
56
It is the 7th largest power equipment manufacturer in the world. In the year 2011, it was
ranked ninth most innovative company in the world by US business magazine Forbes.
BHEL is the only Indian Engineering company on the list, which contains online retail
firm Amazon at the second position with Apple and Google at fifth and seventh positions,
respectively. It is also placed at 4th place in Forbes Asia's Fabulous 50 List of 2010.
STOCK 3- BHEL:

RETURNS
TABLE NO: 3.1

Average
Symbol Series Date Open Price Close Price Returns(R1) R1-R2 (R1-R2)2
Returns(R2)
BHEL EQ 1-Nov-19 224.2 226.55 1.048171276 1.965091932 -0.91692 0.840743

BHEL EQ 2-Nov-19 228.7 229.45 0.327940533 1.965091932 -1.63715 2.680265
BHEL EQ 5-Nov-19 228.3 230.65 1.02934735 1.965091932 -0.93574 0.875618
BHEL EQ 6-Nov-19 229.35 232.75 1.482450403 1.965091932 -0.48264 0.232943
BHEL EQ 7-Nov-19 231.75 236.95 2.243797195 1.965091932 0.278705 0.077677
BHEL EQ 8-Nov-19 235.5 237.95 1.040339703 1.965091932 -0.92475 0.855167
BHEL EQ 9-Nov-19 236.1 232.25 -1.63066497 1.965091932 -3.59576 12.92947
BHEL EQ 12-Nov-19 231.55 232 0.194342475 1.965091932 -1.77075 3.135554
BHEL EQ 13-Nov-19 232 231.6 -0.17241379 1.965091932 -2.13751 4.568931
BHEL EQ 15-Nov-19 230 235.35 2.326086957 1.965091932 0.360995 0.130317
BHEL EQ 16-Nov-19 234 230.3 -1.58119658 1.965091932 -3.54629 12.57616
BHEL EQ 19-Nov-19 231 229.15 -0.8008658 1.965091932 -2.76596 7.650522
BHEL EQ 20-Nov-19 230.85 228.15 -1.16959064 1.965091932 -3.13468 9.826235
BHEL EQ 21-Nov-19 229.2 222.2 -3.05410122 1.965091932 -5.01919 25.1923
BHEL EQ 22-Nov-19 223 221.3 -0.76233184 1.965091932 -2.72742 7.43884
BHEL EQ 23-Nov-19 222.05 224.7 1.193424904 1.965091932 -0.77167 0.59547
BHEL EQ 26-Nov-19 225 221.15 -1.71111111 1.965091932 -3.6762 13.51447
BHEL EQ 27-Nov-19 222.55 223.9 0.606605257 1.965091932 -1.35849 1.845486
BHEL EQ 29-Nov-19 224.6 222.15 -1.09082814 1.965091932 -3.05592 9.338647
BHEL EQ 30-Nov-19 224.45 234.35 4.410781911 1.965091932 2.44569 5.981399
57
TOTAL 3.930183863 120.2862

=120.2862/20
=6.014311

=√ 6.014311
= 2.452409
STOCK NAME: BHEL
TABLE NO: 3.2

Average
Symbol Series Date Open Price Close Price Returns(R1) R1-R2 (R1-R2)2
Returns(R2)
BHEL EQ 3-Dec-19 233.1 237.85 2.03775204 -2.912121601 4.949874 24.50125

BHEL EQ 4-Dec-19 238.25 237.6 -0.2728227 -2.912121601 2.639299 6.965899
BHEL EQ 5-Dec-19 240 237.45 -1.0625 -2.912121601 1.849622 3.4211
BHEL EQ 6-Dec-19 238.7 241.75 1.2777545 -2.912121601 4.189876 17.55506
BHEL EQ 7-Dec-19 243.9 243 -0.3690037 -2.912121601 2.543118 6.467449
BHEL EQ 10-Dec-19 243.65 243.5 -0.0615637 -2.912121601 2.850558 8.12568
BHEL EQ 11-Dec-19 245 237.3 -3.1428571 -2.912121601 -0.23074 0.053239
BHEL EQ 12-Dec-19 239 232.45 -2.7405858 -2.912121601 0.171536 0.029425
BHEL EQ 13-Dec-19 232 227.95 -1.7456897 -2.912121601 1.166432 1.360563
BHEL EQ 14-Dec-19 228.25 224.9 -1.4676889 -2.912121601 1.444433 2.086386
BHEL EQ 17-Dec-19 224.8 220.9 -1.7348754 -2.912121601 1.177246 1.385909
BHEL EQ 18-Dec-19 221.3 230.2 4.02169001 -2.912121601 6.933812 48.07774
BHEL EQ 19-Dec-19 232.8 233.55 0.32216495 -2.912121601 3.234287 10.46061
BHEL EQ 20-Dec-19 231 232 0.43290043 -2.912121601 3.345022 11.18917
BHEL EQ 21-Dec-19 230.1 227.65 -1.0647545 -2.912121601 1.847367 3.412765
BHEL EQ 24-Dec-19 228 227.6 -0.1754386 -2.912121601 2.736683 7.489434
BHEL EQ 26-Dec-19 228 230.2 0.96491228 -2.912121601 3.877034 15.03139
BHEL EQ 27-Dec-19 230.7 226.05 -2.0156047 -2.912121601 0.896517 0.803743
BHEL EQ 28-Dec-19 227.3 227.5 0.08798944 -2.912121601 3.000111 9.000666
BHEL EQ 31-Dec-19 226.25 228.25 0.8839779 -2.912121601 3.7961 14.41037
58
TOTAL -5.8242432 191.8279

=191.8279/20
=9.591393

=√ 9.591393
= 3.096997
STOCK NAME: BHEL
TABLE NO: 3.3

Serie Open Close Average
Symbol Date Return(R1) R1-R2 (R1-R2)2
s Price Price Returns(R2)
BHEL EQ 1-Jan-2020 230.25 232.6 1.02062975 -1.953365607 2.973995 8.844648

BHEL EQ 2-Jan-2020 235.8 238.05 0.954198473 -1.953365607 2.907564 8.453929
BHEL EQ 3-Jan-2020 239.65 238.8 -0.35468391 -1.953365607 1.598682 2.555783
BHEL EQ 4-Jan-2020 237.45 242.8 2.253105917 -1.953365607 4.206472 17.6944
BHEL EQ 7-Jan-2020 243.5 239.8 -1.51950719 -1.953365607 0.433858 0.188233
BHEL EQ 8-Jan-2020 239.55 243.9 1.815904822 -1.953365607 3.76927 14.2074
BHEL EQ 9-Jan-2020 243.25 236.9 -2.61048304 -1.953365607 -0.65712 0.431803
BHEL EQ 10-Jan-2020 237.5 231.9 -2.35789474 -1.953365607 -0.40453 0.163644
BHEL EQ 11-Jan-2020 231.5 226.85 -2.00863931 -1.953365607 -0.05527 0.003055
BHEL EQ 14-Jan-2020 227.25 229.25 0.880088009 -1.953365607 2.833454 8.028459
BHEL EQ 15-Jan-2020 230 228.95 -0.45652174 -1.953365607 1.496844 2.240542
BHEL EQ 16-Jan-2020 228.05 225.4 -1.16202587 -1.953365607 0.79134 0.626219
BHEL EQ 17-Jan-2020 226.2 225.05 -0.50839965 -1.953365607 1.444966 2.087927
BHEL EQ 18-Jan-2020 226 226.45 0.199115044 -1.953365607 2.152481 4.633173
BHEL EQ 21-Jan-2020 226.4 232.05 2.495583039 -1.953365607 4.448949 19.79314
BHEL EQ 22-Jan-2020 232 230.5 -0.64655172 -1.953365607 1.306814 1.707763
BHEL EQ 23-Jan-2020 230.1 231 0.391134289 -1.953365607 2.3445 5.49668
BHEL EQ 24-Jan-2020 230 228.2 -0.7826087 -1.953365607 1.170757 1.370672
BHEL EQ 25-Jan-2020 227.5 229.4 0.835164835 -1.953365607 2.78853 7.775902
BHEL EQ 28-Jan-2020 231.5 228.05 -1.49028078 -1.953365607 0.463085 0.214448
BHEL EQ 29-Jan-2020 228.2 223.3 -2.14723926 -1.953365607 -0.19387 0.037587
BHEL EQ 30-Jan-2020 224.2 221.75 -1.09277431 -1.953365607 0.860591 0.740617
59
BHEL EQ 31-Jan-2020 220.5 227.8 3.310657596 -1.953365607 5.264023 27.70994
TOTAL -3.90673121 136.0641

=136.0641/24
= 5.669338201

=√ 5.669338201
= 2.381037211
FIGURE3.1: GRAPH SHOWING BHEL RETURNS FOR NOVEMBER 2019

5
1 RETURNS
-1
-2
-3
-4
FIGURE3.2: GRAPH SHOWING BHEL RETURNS FOR DECEMBER 2019

5
1 RETURNS
-1
-2
-3
-4
FIGURE3.3: GRAPH SHOWING BHEL RETURNS FOR JANUARY 2020
60
4
1 RETURNS
-1
-2
-3
TABLE NO: 3.4

RETURNS 3.930183 -5.82424 -3.90673
MEAN 1.965091 2.912121 -1.95336
VARIANCE 6.014311 9.591393 5.669338
FIGURE3.4:GRAPH SHOWING BHEL RETURNS AND RISK

6
0
November December January Returns
Risk
-2
-4
-6
-8
61
INTERPRETATION
Europe and US markets are going loss.
4.4 ACC (Associated Cement Companies)
ACC Limited (Formerly The Associated Cement Companies Limited)

(BSE: 500410, NSE: ACC) is the largest producer of cement in India based in Mumbai. Its
registered office is called Cement House. It is located on Maharishi Karve
Road, Mumbai. The stock price of company contributes in calculating BSE Sensex.
The management control of company was taken over by Swiss cement major Holcim in
2004. On 1 September 2006 the name of The Associated Cement Companies Limited was
changed to ACC Limited. The company is only Cement Company to get Super brand
status in India.
In 1936 ten cement companies belonging to Tata’s, Khataus, Killick, Nixonand FE

Dinshaw groups merged to form a single entity, The Associated Cement Companies. Sir
Nowroji B Saklatvala was the first chairman of ACC. The first board of directors had
some prominent industrialists - J R D Tata, Ambalal
Sarabhai, WalchandHirachand, DharamseyKhatau, Sir Akbar Hydari, NawabSalar Jung
Bahadur and Sir HomyMody.
62
STOCK 4- ACC CEMENT:

RETURNS
TABLE NO: 4.1

Open Close Average
ACC EQ 1-Nov-19 1,384.95 1,395.10 0.732878443 -1.043957753 1.776836 3.157147

ACC EQ 2-Nov-19 1,406.15 1,408.40 0.160011379 -1.043957753 1.203969 1.449542
ACC EQ 5-Nov-19 1,409.00 1,436.55 1.955287438 -1.043957753 2.999245 8.995472
ACC EQ 6-Nov-19 1,434.90 1,473.40 2.683113806 -1.043957753 3.727072 13.89106
ACC EQ 7-Nov-19 1,473.00 1,472.70 -0.0203666 -1.043957753 1.023591 1.047739
ACC EQ 8-Nov-19 1,461.00 1,473.40 0.848733744 -1.043957753 1.892691 3.582281
ACC EQ 9-Nov-19 1,478.85 1,453.25 -1.73107482 -1.043957753 -0.68712 0.47213
ACC EQ 12-Nov-19 1,464.60 1,434.45 -2.05858255 -1.043957753 -1.01462 1.029463
ACC EQ 13-Nov-19 1,435.00 1,423.80 -0.7804878 -1.043957753 0.26347 0.069416
ACC EQ 15-Nov-19 1,420.05 1,404.40 -1.10207387 -1.043957753 -0.05812 0.003377
ACC EQ 16-Nov-19 1,410.95 1,378.10 -2.32821858 -1.043957753 -1.28426 1.649326
ACC EQ 19-Nov-19 1,380.00 1,382.65 0.192028986 -1.043957753 1.235987 1.527663
ACC EQ 20-Nov-19 1,385.00 1,378.90 -0.44043321 -1.043957753 0.603525 0.364242
ACC EQ 21-Nov-19 1,385.35 1,384.30 -0.07579312 -1.043957753 0.968165 0.937343
ACC EQ 22-Nov-19 1,381.10 1,391.65 0.763883861 -1.043957753 1.807842 3.268291
ACC EQ 23-Nov-19 1,393.00 1,381.30 -0.83991385 -1.043957753 0.204044 0.041634
ACC EQ 26-Nov-19 1,385.00 1,382.80 -0.15884477 -1.043957753 0.885113 0.783425
ACC EQ 27-Nov-19 1,385.00 1,390.50 0.397111913 -1.043957753 1.44107 2.076682
ACC EQ 29-Nov-19 1,385.10 1,396.10 0.794166486 -1.043957753 1.838124 3.378701
ACC EQ 30-Nov-19 1,399.00 1,383.90 -1.07934239 -1.043957753 -0.03538 0.001252
63
TOTAL -2.08791551 47.72619

=47.72619/20
=2.386309

=√ 2.386309
= 1.544768
STOCK NAME: ACC
TABLE NO: 4.2

Open Close Average (R1-
Symbol Series Date Returns(R1) R1-R2
Price Price Returns(R2) R2)2
ACC EQ 3-Dec-19 1,392.25 1,435.90 3.13521279 -0.794677585 3.92989 15.44404

ACC EQ 4-Dec-19 1,437.00 1,426.65 -0.7202505 -0.794677585 0.074427 0.005539
ACC EQ 5-Dec-19 1,427.30 1,431.95 0.32578995 -0.794677585 1.120468 1.255448
ACC EQ 6-Dec-19 1,430.10 1,418.35 -0.8216209 -0.794677585 -0.02694 0.000726
ACC EQ 7-Dec-19 1,425.00 1,414.80 -0.7157895 -0.794677585 0.078888 0.006223
ACC EQ 10-Dec-19 1,414.80 1,413.50 -0.0918858 -0.794677585 0.702792 0.493916
ACC EQ 11-Dec-19 1,416.00 1,427.90 0.84039548 -0.794677585 1.635073 2.673464
ACC EQ 12-Dec-19 1,439.00 1,421.05 -1.247394 -0.794677585 -0.45272 0.204952
ACC EQ 13-Dec-19 1,433.00 1,396.05 -2.5785066 -0.794677585 -1.78383 3.182046
ACC EQ 14-Dec-19 1,403.00 1,404.35 0.09622238 -0.794677585 0.8909 0.793703
ACC EQ 17-Dec-19 1,404.90 1,414.65 0.69399957 -0.794677585 1.488677 2.21616
ACC EQ 18-Dec-19 1,415.55 1,410.65 -0.3461552 -0.794677585 0.448522 0.201172
ACC EQ 19-Dec-19 1,424.00 1,415.05 -0.6285112 -0.794677585 0.166166 0.027611
ACC EQ 20-Dec-19 1,416.00 1,402.50 -0.9533898 -0.794677585 -0.15871 0.02519
ACC EQ 21-Dec-19 1,399.00 1,397.30 -0.1215154 -0.794677585 0.673162 0.453147
ACC EQ 24-Dec-19 1,397.50 1,410.85 0.95527728 -0.794677585 1.749955 3.062342
ACC EQ 26-Dec-19 1,414.95 1,415.25 0.02120216 -0.794677585 0.81588 0.66566
ACC EQ 27-Dec-19 1,419.70 1,402.90 -1.1833486 -0.794677585 -0.38867 0.151065
ACC EQ 28-Dec-19 1,405.00 1,409.45 0.31672598 -0.794677585 1.111404 1.235218
ACC EQ 31-Dec-19 1,411.95 1,432.20 1.43418676 -0.794677585 2.228864 4.967836
64
TOTAL -1.5893552 37.06546

=37.06546/20
=1.853273

=√ 1.853273
= 1.36135
STOCK NAME: ACC

TABLE NO: 4.3
Open Close Average
Symbol Series Date Return(R1) R1-R2 (R1-R2)2
Price Price Return(R2)
ACC EQ 1-Jan-2020 1,440.00 1,431.10 -0.61805556 -5.112413134 4.494358 20.19925

ACC EQ 2-Jan-2020 1,437.20 1,429.50 -0.53576399 -5.112413134 4.576649 20.94572
ACC EQ 3-Jan-2020 1,432.55 1,436.30 0.261770968 -5.112413134 5.374184 28.88185
ACC EQ 4-Jan-2020 1,443.80 1,434.80 -0.62335504 -5.112413134 4.489058 20.15164
ACC EQ 7-Jan-2020 1,439.00 1,417.45 -1.49756776 -5.112413134 3.614845 13.06711
ACC EQ 8-Jan-2020 1,415.00 1,417.65 0.187279152 -5.112413134 5.299692 28.08674
ACC EQ 9-Jan-2020 1,420.00 1,397.70 -1.57042254 -5.112413134 3.541991 12.5457
ACC EQ 10-Jan-2020 1,400.60 1,379.05 -1.5386263 -5.112413134 3.573787 12.77195
ACC EQ 11-Jan-2020 1,382.00 1,361.40 -1.49059334 -5.112413134 3.62182 13.11758
ACC EQ 14-Jan-2020 1,363.10 1,360.35 -0.20174602 -5.112413134 4.910667 24.11465
ACC EQ 15-Jan-2020 1,364.00 1,388.40 1.788856305 -5.112413134 6.901269 47.62752
ACC EQ 16-Jan-2020 1,387.00 1,384.50 -0.18024513 -5.112413134 4.932168 24.32628
ACC EQ 17-Jan-2020 1,381.00 1,358.85 -1.60391021 -5.112413134 3.508503 12.30959
ACC EQ 18-Jan-2020 1,360.50 1,345.15 -1.12826167 -5.112413134 3.984151 15.87346
ACC EQ 21-Jan-2020 1,346.05 1,335.50 -0.78377475 -5.112413134 4.328638 18.73711
ACC EQ 22-Jan-2020 1,328.95 1,358.90 2.253658904 -5.112413134 7.366072 54.25902
ACC EQ 23-Jan-2020 1,358.05 1,355.10 -0.21722322 -5.112413134 4.89519 23.96288
ACC EQ 24-Jan-2020 1,348.20 1,345.90 -0.17059783 -5.112413134 4.941815 24.42154
ACC EQ 25-Jan-2020 1,339.00 1,326.75 -0.91486184 -5.112413134 4.197551 17.61944
ACC EQ 28-Jan-2020 1,330.10 1,328.85 -0.0939779 -5.112413134 5.018435 25.18469
ACC EQ 29-Jan-2020 1,329.00 1,304.90 -1.81339353 -5.112413134 3.29902 10.88353
65
ACC EQ 30-Jan-2020 1,310.25 1,324.75 1.106659035 -5.112413134 6.219072 38.67686
ACC EQ 31-Jan-2020 1,328.00 1,323.10 -0.3689759 -5.112413134 4.743437 22.5002
TOTAL -10.2248263 551.8005

=551.8005/24
=22.9916895

=√ 22.9916895
=4.794965015
FIGURE4.1: GRAPH SHOWING ACC RETURNS FOR NOVEMBER 2019

3
1
RETURNS
0
-1
-2
-3
FIGURE4.2: GRAPH SHOWING ACC RETURNS FOR DECEMBER 2019

4
1 RETURNS
-1
-2
-3
66
FIGURE4.3: GRAPH SHOWING ACC RETURNS FOR JANUARY 2020

2.5
1.5
0.5
RETURNS
0
-0.5
-1
-1.5
-2
-2.5
TABLE NO: 4.4

RETURNS -2.08791 -1.589355 -10.22482
MEAN -1.043957 -0.794677 -5.112413
VARIANCE 2.386309 1.853273 22.991689
FIGURE4.4: GRAPH SHOWING ACC RETURNS AND RISK

6
0
-2
Returns
Risk
-4
-6
-8
-10
-12
67
INTERPRETATION
4.5 RELIANCE INFRASTRUCTURE
Reliance Infrastructure Ltd. (BSE: 500390, NSE: RELINFRA) formerly known

as Reliance Energy and prior to that as Bombay Suburban Electric Supply (BSES), Its
India's largest private sector enterprise in power utility [3] and it’s a company under
the Reliance Anil Dhirubhai Ambani Group banner, one of India's largest conglomerates.
The company is headed by Anil Ambani. The company's corporate headquarters is situated
in Mumbai. The company is the sole distributor of electricity to consumers in the suburbs
of Mumbai. It also runs power generation, transmission and distribution businesses in
other parts of Maharashtra, Goa and Andhra Pradesh.
Reliance Energy came into existence when it took over BSES in 2002. In April 2008,
Reliance Energy changed its name to Reliance Infrastructure.
68
STOCK 5- RELIANCE INFRASTRUCTURE:

RETURNS
TABLE NO: 5.1

Average
Open Close
Symbol Series Date Returns(R1) Returns(R2 R1-R2 (R1-R2)2
Price Price
)
RELINFRA EQ 1-Nov-19 472.05 481.9 2.086643364 0.565455754 1.521188 2.314012

RELINFRA EQ 2-Nov-19 487.1 486.75 -0.071853829 0.565455754 -0.63731 0.406164
RELINFRA EQ 5-Nov-19 485.1 487.6 0.515357658 0.565455754 -0.0501 0.00251
RELINFRA EQ 6-Nov-19 483.05 478.75 -0.890177 0.565455754 -1.45563 2.118867
RELINFRA EQ 7-Nov-19 480.5 485.05 0.946930281 0.565455754 0.381475 0.145523
RELINFRA EQ 8-Nov-19 480 476.35 -0.760416667 0.565455754 -1.32587 1.757938
RELINFRA EQ 9-Nov-19 477.9 471.05 -1.433354258 0.565455754 -1.99881 3.995241
RELINFRA EQ 12-Nov-19 471.5 473.85 0.498409332 0.565455754 -0.06705 0.004495
RELINFRA EQ 13-Nov-19 473 471.35 -0.348837209 0.056545575 -0.40538 0.164335
RELINFRA EQ 15-Nov-19 467 474.35 1.573875803 0.565455754 1.00842 1.016911
RELINFRA EQ 16-Nov-19 472 462.3 -2.055084746 0.565455754 -2.62054 6.867233
RELINFRA EQ 19-Nov-19 462 458.8 -0.692640693 0.565455754 -1.2581 1.582807
RELINFRA EQ 20-Nov-19 462.25 449.95 -2.660897783 0.565455754 -3.22635 10.40936
RELINFRA EQ 21-Nov-19 452.25 454.8 0.56384743 0.565455754 -0.00161 2.59E-06
RELINFRA EQ 22-Nov-19 456.65 460.15 0.76645133 0.565455754 0.200996 0.040399
RELINFRA EQ 23-Nov-19 460.5 455.9 -0.998914224 0.565455754 -1.56437 2.447253
RELINFRA EQ 26-Nov-19 457 457.75 0.164113786 0.565455754 -0.40134 0.161075
RELINFRA EQ 27-Nov-19 461 471 2.169197397 0.565455754 1.603742 2.571987
69
RELINFRA EQ 29-Nov-19 473.9 476.3 0.506435957 0.565455754 -0.05902 0.003483
RELINFRA EQ 30-Nov-19 479.3 485.3 1.251825579 0.565455754 0.68637 0.471104
TOTAL 1.130911509 36.4807

=36.4807/20
=1.824035

=√ 1.824035
=1.350568
STOCK NAME: RELIANCE INFRASTRUCTURE

TABLE NO: 5.2
Average
Serie Open Close
Symbol Date Returns(R1) Returns(R2 R1-R2 (R1-R2)2
s Price Price
)
RELINFRA EQ 3-Dec-19 488.2 488.7 0.102417042 1.014234754 -0.911817711 0.831411539

RELINFRA EQ 4-Dec-19 488 498.2 2.090163934 1.014234754 1.075929181 1.157623602
RELINFRA EQ 5-Dec-19 503 500.65 -0.467196819 1.014234754 -1.481431573 2.194639504
RELINFRA EQ 6-Dec-19 504.95 512.3 1.455589662 1.014234754 0.441354909 0.194794155
RELINFRA EQ 7-Dec-19 514.75 507.05 -1.495871782 1.014234754 -2.510106536 6.300634822
RELINFRA EQ 10-Dec-19 510.5 518.55 1.576885406 1.014234754 0.562650653 0.316575757
RELINFRA EQ 11-Dec-19 521 517.2 -0.729366603 1.014234754 -1.743601356 3.04014569
RELINFRA EQ 12-Dec-19 519.5 526.45 1.337824832 1.014234754 0.323590078 0.104710539
RELINFRA EQ 13-Dec-19 527.25 515.1 -2.304409673 1.014234754 -3.318644426 11.01340083
RELINFRA EQ 14-Dec-19 518.2 521.15 0.569278271 1.014234754 -0.444956483 0.197986271
RELINFRA EQ 17-Dec-19 519.35 515.5 -0.741311254 1.014234754 -1.755546008 3.081941786
RELINFRA EQ 18-Dec-19 513.65 523.15 1.84950842 1.014234754 0.835273667 0.697682098
RELINFRA EQ 19-Dec-19 526.9 526.25 -0.123363067 1.014234754 -1.137597821 1.294128801
RELINFRA EQ 20-Dec-19 524.5 522.6 -0.362249762 1.014234754 -1.376484515 1.894709621
RELINFRA EQ 21-Dec-19 518.2 514.25 -0.762253956 1.014234754 -1.77648871 3.155912135
RELINFRA EQ 24-Dec-19 515 517.25 0.436893204 1.014234754 -0.57734155 0.333323265
RELINFRA EQ 26-Dec-19 517 521.15 0.80270793 1.014234754 -0.211526823 0.044743597
RELINFRA EQ 27-Dec-19 524.1 515.5 -1.640908224 1.014234754 -2.655142977 7.049784229
RELINFRA EQ 28-Dec-19 517.1 517.05 -0.00966931 1.014234754 -1.023904063 1.048379531
70
RELINFRA EQ 31-Dec-19 518.25 520.55 0.443801254 1.014234754 -0.570433499 0.325394377
TOTAL 2.028469507 44.27792215

=44.27792215/20
=2.213896

=√ 2.213896
=1.487917
STOCK NAME: RELIANCE INFRASTRUCTURE

TABLE NO: 5.3
Open Close Average
Symbol Series Date Return(R1) R1-R2 ( R1-R2)2
Price Price Return(R2)
RELINFRA EQ 1-Jan-2020 525 544.15 3.647619048 -2.081197411 5.728816 32.81

RELINFRA EQ 2-Jan-2020 549 543.35 -1.029143898 -2.081197411 1.052054 1.10
RELINFRA EQ 3-Jan-2020 546 546 0 -2.081197411 2.081197 4.33
RELINFRA EQ 4-Jan-2020 543.5 547.2 0.680772769 -2.081197411 2.76197 7.62
RELINFRA EQ 7-Jan-2020 549.2 550.95 0.318645302 -2.081197411 2.399843 5.75
RELINFRA EQ 8-Jan-2020 550.2 567.1 3.071610324 -2.081197411 5.152808 26.55
RELINFRA EQ 9-Jan-2020 567.5 560.35 -1.259911894 -2.081197411 0.821286 0.67
RELINFRA EQ 10-Jan-2020 565 565.65 0.115044248 -2.081197411 2.196242 4.82
RELINFRA EQ 11-Jan-2020 566.25 547.9 -3.240618102 -2.081197411 -1.15942 1.34
RELINFRA EQ 14-Jan-2020 548.7 558.55 1.795152178 -2.081197411 3.87635 15.02
RELINFRA EQ 15-Jan-2020 558 555 -0.537634409 -2.081197411 1.543563 2.38
RELINFRA EQ 16-Jan-2020 553.2 535.8 -3.145336226 -2.081197411 -1.06414 1.13
RELINFRA EQ 17-Jan-2020 534.7 526.2 -1.589676454 -2.081197411 0.491521 0.24
RELINFRA EQ 18-Jan-2020 526.95 527.3 0.066419964 -2.081197411 2.147617 4.61
RELINFRA EQ 21-Jan-2020 527.8 548.5 3.921940129 -2.081197411 6.003138 36.03
RELINFRA EQ 22-Jan-2020 551.25 540.55 -1.941043084 -2.081197411 0.140154 0.01
RELINFRA EQ 23-Jan-2020 543.5 534.3 -1.692732291 -2.081197411 0.388465 0.15
RELINFRA EQ 24-Jan-2020 534.5 518.1 -3.06828812 -2.081197411 -0.98709 0.97
RELINFRA EQ 25-Jan-2020 516.05 540.15 4.670090108 -2.081197411 6.751288 45.57
71
RELINFRA EQ 28-Jan-2020 540.1 529.15 -2.027402333 -2.081197411 0.053795 0.002
RELINFRA EQ 29-Jan-2020 529 518.55 -1.975425331 -2.081197411 0.105772 0.011
RELINFRA EQ 30-Jan-2020 521.45 518.4 -0.58490747 -2.081197411 1.49629 2.23
RELINFRA EQ 31-Jan-2020 516.1 515.5 -0.116256539 -2.081197411 1.964941 3.86
TOTAL -4.162394822

=200.6954/24
=8.362309322

=√ 8.362309322
=2.891765779
FIGURE5.1: GRAPH SHOWING RELINFRA RETURNS FOR NOVEMBER 2019

3
1
RETURNS
0
-1
-2
-3
FIGURE5.2: GRAPH SHOWING RELINFRA RETURNS FOR DECEMBER 2019
72
3
1
RETURNS
0
-1
-2
-3
FIGURE5.3: GRAPH SHOWING RELINFRA RETURNS FOR JANUARY 2020

6
2
RETURNS
1
-1
-2
-3
-4
TABLE NO: 5.4

RETURNS 1.130911 2.028469 -4.16239
MEAN 0.5654557 1.014234 2.081197
VARIANCE 1.824035 2.213896 8.362309
FIGURE5.4: GRAPH SHOWING RELINFRA RETURNS AND RISK
73
4
0
Returns
Risk
-1
-2
-3
-4
-5
INTERPRETATION
4.6 RESULTS
TABLE NO 6.1
SR.NO COMPANIES NOVEMBER 2019 DECEMBER 2019 JANUARY 2019
74
Return Risk Return Risk Return Risk
1. INFOSYS 4.355 2.234 -6.140 2.893 6.289 3.327
2. HDFC 10.349 4.872 -3.339 1.846 -10.628 5.011
3. BHEL 3.930 2.452 -5.824 3.096 -3.906 2.381
4. ACC -2.087 1.544 -1.589 1.361 -10.224 4.794
5. RELIINFRA 1.130 1.350 2.028 1.487 -4.162 2.891
FIGURE6.1: GRAPH SHOWING RETURNS & RISK OF COMPANIES FOR

NOVEMBER 2019
RETURNS & RISK OF NOVEMBER 2019

12
10
0
INFOSYS HDFC BHEL ACC RELIINFRA
-2
-4
RETURNS RISK
75
DECEMBER 2019
RETURNS & RISK OF DECEMBER 2019

4
0
-2
-4
-6
-8
RETURNS RISK

JANUARY 2020
76
RETURNS & RISK OF JANUARY2020
8
6
4
2
0
-2
-4
-6
-8
-10
-12
RETURNS RISK
INTERPRETATION:
 If the returns are taken into the consideration HDFC tops the first position with
10.349. The least return is also given by HDFC with -10.62.
 Among the five companies HDFC is having the highest risk with Standard
Deviation of 5.01 & RELIANCE INFRASTRUCTURE is having the least
Standard Deviation of 1.35
 Hence the investors can invest in INFOSYS as it has the possibility of increasing
its returns and also can invest in RELIANCE INFRASTRUCTURE as the risk
involved is lower as compared to that of other equities.
77
CHAPTER-5
 FINDINGS
 SUGGESTIONS
 LIMITATIONS
 CONCLUSION
5.1 FINDINGS
After the data is analyzed the following facts have been observed.
1. INFOSYS
78
 If we see the trend of INFOSYS Equity fund, it has ups and downs in
trends.
 In the starting month i.e. 3-Nov-2019 the close price is 2364 whereas in
month end i.e. 31-Jan-2020 the close price is 2789.
 In INFOSYS, the average risk of 3 months is 2.818 and the average return
is 1.501.
2. HDFC
 If we see the trend of HDFC Equity fund, it has ups and downs in trends.
 In the starting month i.e. 3-Nov-2019 the close price is 763.5 whereas in
month end i.e. 31-Jan-2020 the close price is 786.55.
 In HDFC, the average risk of 3 months is 3.9096 and the average return is
-3.618.
3. BHEL
 If we see the trend of BHEL Equity fund, it has ups and downs in trends.
 In BHEL, the average risk of 3 months is 2.643 and the average return is
-1.933.
4. ACC:
 If we see the trend of ACC Equity fund, it has ups and downs in trends.
79
 In ACC, the average risk of 3 months is 2.566 and the average return is
-4.633.
5. RELINFRA:
 If we see the trend of RELINFRA Equity fund, it has ups and downs in
trends.
 In RELINFRA, the average risk of 3 months is 1.909 and the average return
is -0.334
5.2 SUGGESTIONS
After observing the data, many facts are found out. After the analysis and interpretation
the following suggestions are made to the investor.
80
 When there is more risk, the return will also be highs but this does not hold in all
situations especially in the case of economic crises.
 As the world economy is influenced by US economy, the worst scenario is US
economy is influencing the others countries stock markets.
 The sentiments and emotions sometimes play a vital role in causing fluctuations in
the stock markets. Therefore it is advisable not to invest at the time of crisis.
 When markets are sliding down steeply, the investors will not be protected against
the risk of investment. Therefore it is advisable not to invest when the markets are
very volatile.
 Always it is felt that market position never stays for a long time. In this position
bullish and bearish markets end after some time. Therefore one can invest at the
time of bearish market and soon after they reach bullish trend they can sell them
off.
81
5.4 CONCLUSION
The present project work has been undertaken to study the risk-return relationship of
individual securities as well as nifty index to observe whether the stock prices have any
relationship with risk and return. As this project work is done by studying 5 individual
stocks of nifty and nifty index, there is much scope for the analysis, interpretation and
conclusion.
As the economy is fluctuating very badly, the stock prices are affected by these
fluctuations and the market has become so volatile. In this situation investors should be
very careful. The firm which is dealing in the trading of share market should be caution
enough so that investors may not suffer losses.
82
CHAPTER-6
83
BIBLIOGRAPHY
6.1 BIBLIOGRAPHY
Books:
 Investing Management
 By Preeti Singh
 Himalaya Publishing House
 Security analysis and portfolio management
 By punithvathyPandiyam
 Vikas Publishing House pvt. Ltd.
 Financial Markets & Services
 Gordon Natarajan
 Himalaya Publishing House
 The Indian Financial System
 Bharati V. Pathak
84
 Dorling Kindersley (India) pvt. Ltd.
Journals:
1. Journals of financial economics
2. Journals of finance
3. Journals of financial and quantitative analysis
4. Review of financial studies
5. Financial review
6. The journal of business
7. Financial India-the quarterly journal of finance
8. Indian journal of finance
9. Financial analysts journals
10. International journal of finance and economics
Websites:
www.nseindia.com
www.oxfordjournals.org
www.investopedia.com
www.glossary.reuters.com
www.capitalmarket.com
www.answers.com
85
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Equity Risk

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CHAPTER – 1

Risk consists of 2 components:

1. Systematic risk (uncontrollable risk) non – diversifiable risk

b. Interest rate risk

c.Purchase power risk (inflation risk)

2. Unsystematic risk or diversifiable risk

It is unique to the firm or industry. It is caused from managerial inefficiency, technological

It can be classified into 2 types

A major purpose of investment is to set a return of income on the funds invested. On a

Traditional method of measurement

Expected cash income

Dispersion methods help to assess risk in receiving a reward or return on

1. To Study the Concept of Returns & Risks.

2. To study how Risk on Return of investment evaluated.

3. To calculate the Returns & Risk of Selected companies equity Stocks.

company based on Risk & Return Tradeoff.

5. To study and advice the investor in making effective investment.

Sample size- 5 Companies

1.5 RESEARCH METHODLOGY

Primary source includes:-

4. Line & Bar Graph

1.6 LIMITATIONS OF THE STUDY

1. This project report data is collected mainly from secondary sources.

to total NSE’S Nifty index.

taken for the study is limited.

Review 1: Stock market risk and return: an equilibrium approach.

Source: Review of Financial Studies (2000) 13 (3):521-547.doi: 10.1093/rfs/13.3.521

Author: John M. Maheu and Thomas H. McCurdy

Source: journal of financial econometrics (2007) 5 (4):560-

Author: Wayne E. Ferson

Source: Review of Financial Studies (1993) 6 (3):527-566.doi: 10.1093/rfs/6.3.527

We investigate predictability in national equity market returns, and its relation to global

Author: John Y. Campbell, Christopher Polk and TuomoVuolteenaho

Source: Review of Financial Studies (2010) 23 (1):305-344.doi: 10.1093/rfs/hhp029First

Author: SudheerChava andAmiyatoshPurnanandam

Source: Review of Financial Studies (2010) 23 (6):2523-

Author: Linda Allen, Turan G. Baliand Yi Tang

Source: Review of Financial Studies (2012) 25 (10):3000-3036.doi: 10.1093/rfs/hhs094.

We derive a measure of aggregate systemic risk, designated CATFIN that complements

According to SEBI stock broker is a member of a recognized stock exchange(s) and is

STATEMENT OF THE PROBLEM

For carrying out risk analysis, following methods are used:

 Payback (How long will it take to recover the investment)

However in practice, sensitivity analysis and conservative forecast techniques being

1. STAND- ALONE RISK

An investment is the current commitment of funds done in the expectation of earning

NRFR + (1+RRFR)*(1+expected rate of inflation)-1

Expected return = NRFR + RISK PREMIUM

Standard Deviation (or Risk)

Rate of return on an investment can be calculated using the following formula-

Asper the present conversations risk may be categorized:

 STANDARD DEVIATION (S.D)

1. Standard Deviation (S.D):

STANDARD DEVIATION =(X-X1)2/n

In probability theory and statistics, the variance is a measure of how far a set of numbers is

CD has been set up to engage in

Headquartered in Mumbai, CD has a growing network of offices across several states to

 Setting up Regional Offices/Branch Office in 25 Metros/ Tier II cities in next 24

 User friendly back office software.

2. DP stock position – DP, pool, BTST

3. Open position in FNO and commodities.

 Viewing and printing of bills.