Professional Documents
Culture Documents
2gi20ba108 Suprit Naik (Equity Research)
2gi20ba108 Suprit Naik (Equity Research)
Titles No
No
Declaration
Acknowledgement
Company Certificate
College Certificate
Executive Summary
Chapter I Introduction
1. Industry Profile
2. Origin and Evolution of the Industry
Bibliography
Industry Profile
STOCK EXCHANGE Stock exchange is a place or platform where the stock brokers and
traders can purchase and sell the various shares, bonds and other securities of the company.
Many of the company have their stocks listed in the Securities Exchange Board of India,
trading in such stocks and securities are considered to be most secure and also less risky as
those are listed in the SEBI which has good control and also conduct periodic inspection.
More of the liquid securities attract more number of investors. It also refers to as collection of
various markets and exchanges which conduct basic transaction such as buying and selling of
securities and financial instruments in the initial stages, initial public offerings are made in
primary market and further dealings are made in secondary market. Stock exchange is the
most important investment avenue in today’s era.
At the initial stage SEBI was a non-statutory body without any statutory power however,
through the amendment of SEBT Act 1992 it was given with additional statutory power. It
has its headquarters located in Mumbai.
NRI’s and Overseas Citizen of India (OCI)-These are people of Indian origin who
reside outside India.
The Bombay Stock Exchange Limited is a standout amongst the most prepared Stock
Exchange in Asia with a rich heritage of over 138 Years of essence. In the great 'old days,
BSE was set up as "The Native Share and Stock Brokers Association". It was set up in the
year 1875 and transformed into the essential stock exchange India to be seen by the
Government. In 1956, BSE got an unchanging affirmation from the Government of India
under the Securities Contracts Regulation Act 1956. Today BSE is the world's fundamental
exchange the extent that the amount of recorded associations and the world's fifth in
treatment of trades through its electronic trading structure.
The associations recorded on BSE arrange a total market capitalization of USD Trillion 1.24
as of March, 2014. BSE ranges to in excess of 430 urban groups and town the country over
and has around 5,381 (as of May, 2014) out of which 1294 associations are in suspended
order and 4087 associations are fit the bill for trading.
THE BSE ON-LINE TRADING (BOLT) BSE On-Line Trading (BOLT) framework was
presented on fourteenth Mar 1995. It encourages on-line screen based exchanging different
securities. Jolt is presently working in 25,000 Trader Workstations situated crosswise over
more than 369 urban communities in India
BSE VISION
"Rise as chief Indian stock trade with best-in-class worldwide practice in innovation, items
advancement and client benefit"
HISTORY OF BSE
The Bombay Stock Exchange is known as the most seasoned stock trade in Asia. It follows
its history to the 1850s, when stockbrokers would accumulate under banyan trees before
Mumbai's Town Hall. The area of these gatherings changed commonly, as the quantity of
agents always expanded. The gathering in the end moved to Dalal Street in 1874 and in 1875
turned into an official association known as 'The Native Share and Stock Brokers
Association'. In 1956, the BSE turned into the primary stock trade to be perceived by the
Indian Government under the Securities Contracts Regulation Act. Verifiably an open-cry
floor exchanging trade, the Bombay Stock Exchange changed to an electronic exchanging
framework in 1995. It took the trade just fifty days to make this change.
It is one of the leading stock exchanges that exist in India, it is located in Mumbai. It was
established as the first electronic exchange in the country in the year 1992 it was the prior
exchange which facilitated the modern fully automated electronic screen based trading
system.
It became most popular with the introduction of NIFTY 50. It was used mostly among all the
Indian investors and it is also treated and considered as the barometer all around the world.
It is using one of the tremendous technology as it receives more than billon messages every
day all of them should be clarified and given the conclusions and do get answered if no, then
it creates huge consequences on investors. It commenced its 6 operations from 1994 with the
new launch of cash market as well as whole sale debt market, it also entered into global
trading index namely S&P and DOW JONES.
Securities Market:
Securities market helps in transferring of assets from people with unmoving assets to people
who have a productive requirement meant from them. To state properly, securities markets
make available networks for distribution of funds to ventures and in this manner these two
exercises. As result, the savers and financial specialists are definitely not inhibited by their
separate capacities, but by the economy’s capacities to invest and save respectively, which
certainly improves investment in the economy.
Primary Market:
This was issued by the company for increasing new capital generating on the investors by
creating initial public offers(IPO) or rights problems or proposals aimed to sale the equity or
debenture.
Secondary Market:
It makes available liquidity to the securities, over trade and settlement on the stock
exchanges. It works through two ways that are Over the Counter (OTC) market and Trade
Exchanged Business sector. OTC markets are the agreeable kind of business sectors where
exchanges are talked about and under standardized. In this sort of business sector, the
securities are exchanged and settled together through the counter. Indian markets have known
OTC trade like the OTCEI; be that as it may they don’t give numerous volumes. The
additional decision of exchanging is over the stock trade way, wherever exchanging and
settlement is done by means of the stock trades and the purchasers and dealers don’t have any
acquaintance with each other. The exchanges performed on the trade are settled over the
clearing company, who executes as middle person and insurance settlement.
COMPANY PROFILE
Reliance Capital is part of the Reliance Group and is one of India's leading and amongst
most valuable financial services companies in the private sector. Reliance Capital Limited
(RCL) was incorporated in year 1986 at Ahmedabad in Gujarat as Reliance Capital &
Finance Trust Limited. The name RCL came into effect from January 5, 1995. In 2002, RCL
shifted its registered office to Jamnagar in Gujarat before it finally moved to Mumbai in
Maharashtra, in 2006.
RCL entered the Capital Market with a maiden public issue in 1990 and in subsequent years
further tapped the capital market through rights issue and public issues. The equity shares
were initially listed on the Ahmedabad Stock Exchange and The Stock Exchange Mumbai.
Presently the shares are listed on The Stock Exchange Mumbai and the National Stock
Exchange of India. In 2006, Reliance Capital Ventures Limited merged with RCL and with
this merger the shareholder base of RCL rose from 0.15 million shareholders to 1.3 million.
Type: Public
Type: Public
Number of 900
employees:
Website: www.reliancesmartmoney.com
Reliance Securities
Reliance Commodities
Reliance Money
Reliance Securities Research Team will conduct a periodic review of the portfolio and will
remove or reduce the quantity of underperforming stocks. All clients will receive email
notifications whenever a portfolio review is done.
Buying and selling brokerage will be charged as per your brokerage plan, there is no extra
charges for this service.
Reliance Securities Research Calls & Reports: Reliance Securities Research Team keep
you update with latest market moves and provide you Intraday Calls, Positional Calls and
Fundamental Calls. This is free service and available to all Reliance Securities customers.
Daily Market Technical outlook, Pre-market Calls, Positional Pick, Quarterly Results updates
and analysis report in English and Hindi, Event Updates is available. Traded is investment
ideas which is published bi-weekly for short term investment (1 to 3 months).
Regular Stock Purchase Plan (RSP): Reliance Securities’ Equity Systematic Investment
Plan (SIP) allows you to invest a certain pre-determined amount or quantity at a regular
interval (daily, weekly, monthly, etc.). With RSL Regular Stock Purchase Plan (RSP), you
can make regular and disciplined investment in your chosen scrip or ETF. SIP can be done
via "Amount-based strategy" or "Quantity-based strategy". List of Stocks/ETFs are defined
by reliance research team for RSP investment. This service is also free of cost. Brokerage and
other charges are as per client brokerage plan.
Reliance Securities Mutual Fund Investment: With RSL, you can invest in Mutual fund
online. You can opt Reliance Mutual Funds or any other house mutual funds. Reliance has
separate site for mutual fund investment https://www.reliancemutual.com/. To avail the
Mutual fund service you don’t have to be reliance securities client. You can avail MF service
directly after completing KYC process.
Reliance Securities IPO Investment: On Reliance Security website you can get complete
details about open IPO, Upcoming IPOs, IPO News and Analyst report for all open IPO to
take better decision.
Reliance Securities FD investment: For safe and low risk investment, fix deposit is
considered as best option. With rsec.co.in, you can invest in online FD with your own
comfort. Currently RSL is providing Corporate FDs with Shriram transport finance company
limited and Mahindra & Mahindra finance ltd. RSL is just is acting as a distributor in this
service, RSL is not liable for any profit or loss on corporate FDs.
Reliance Securities AMO: After Market Order allows you to place an order for a stock
beyond market hours.
Reliance Securities Cash N Carry (CNC): This is the most conservative product where
investor needs to block the entire amount of required funds or shares at the time of order
placement. It is suitable for long-term investors looking at safe exposure.
Reliance Securities NRML: This is a delivery based product giving flexibility to pay the
remaining amount not later than 5 days from the exchange payout day. It is most suitable for
short term investors.
Reliance Securities Cover Order: This allows you to take advantage of intraday trading in
huge volumes with minimum margin and at the same time limiting losses.
Reliance Securities Bracket order: This is a special 3-leg order type which allows traders to
place the main order as well as the stop-loss and the profit taking order, all in a single click.
Reliance Securities NRI Service: Reliance Securities provide NRI Services to trade in
equity delivery only. No derivative trading and Intraday is allowed through Reliance. Key
Features of Reliance NRI service are:
Online delivery based trade on NSE and BSE.
Dedicated customer Service Desk.
Specialized Research.
Portfolio Tracker.
Investing in IPOs and Mutual Fund.
Buy, sell or hold recommendations.
To attain global best practices and become' a world-class financial services enterprise
guided by its purpose to move towards greater degree of sophistication and maturity.
Reliability, safety and customer care as the ultimate goal.
To earn the trust and confidence of all stakeholders, exceeding their expectations and
make the Company a respected household name.
To consistently achieve high growth with the highest levels of productivity.
To be a technology driven, efficient and financially sound organization.
To uphold the guiding principles of trust, integrity and transparency in all aspects of
interactions and dealings.
Reliance money is carrying business such as it is giving a service of online trading with less
brokerage Charge, and it also having financial products such as Life Insurance. General
insurance giving investment facility in Equity, mutual fund, PMS, and also it is carrying a.
money transfer and money exchange, and also dealing with gold coins.
Vision
To be the most trusted financial services brand creating continuous value for our customers
by helping them achieve financial prosperity via innovative & analytically driven solutions
Mission
To simplify investments & trading for our customers through technology backed, user
friendly, value-broking services.
Promise
Quality policy
Talented, efficient and competent team of youngsters rolling out high profile applications for
the global business community, keeping in mind true quality, total customer satisfaction,
delivering on time, right time, every time.
Reliance Money has 6 departments and the details of the same are as following
Administration Department
Administrators are basically facilitators of the company. They take care of all the facilitating
activities of all the departments. They help in coordinating different activities in an
organization from selecting the location of the outlet-to providing necessary infrastructure
and maintaining the same.
In Reliance Money sales and distribution department plays an important role in the following
way
Marketing Department
Marketing is the delivery of customer satisfaction at a profit. Marketing, any other business
function deals with customer. Creating customer value and satisfaction are the heart of the
modem marketing. Therefore two fold goal marketing is to attract new customers by
promising superiors value and to keep current customers by delivering satisfaction.
In Reliance Money they follow that HR professional must be highly knowledgeable about the
market place for capital, products and services. HR must not only be knowledgeable of
specific customer issues, but also of key aspects of the macro-societal environment such as:
Changing values.
Major problems and the challenges, which are shared by the large segments of the
population.
Structures of inter-personal relationship that influence buying process.
Talent management.
Operation Department
The role of operation department is to carry out the policies and underwriting works. The
other functions include performing the day to day activities as well as smooth functioning of
enterprise business.
Money
Issuing the policies.
Verification of the documents.
Settling down the claims.
Charges deduction.
Dispatching the policy documents. Settling the customer's problems.
Making records related with the customers.
Follow up.
Finance Department
Finance is the life blood of the organization it is one of the main departments in the company.
To run any organization it should have sufficient fund and it should carry the cost as
minimum as possible. The company may arrange required finance by the way of the equity
fund or by way of debt fund. Whatever it may be the ultimate goal of the finance department
is to maximize that value of the firm to its equity shareholders.
Financial decision
Investment decision
Dividend decision.
Capital structure decision
Areas of Operation
Reliance securities offer the services not only all over India but also outside India.
The first organised stock exchange in India was started in 1875 at Bombay and it is
stated to be the oldest in Asia. In 1894 the Ahmedabad Stock Exchange was started to
facilitate dealings in the shares of textile mills there. The Calcutta stock exchange was
started in 1908 to provide a market for shares of plantations and jute mills.
Then the madras stock exchange was started in 1920. At present there are 24 stock
exchanges in the country, 21 of them being regional ones with allotted areas. Two
others set up in the reform era, viz., the National Stock Exchange (NSE) and Over the
Counter Exchange of India (OICEI), have mandate to have nation-wise trading.
The Stock Exchanges are being administered by their governing boards and executive
chiefs. Policies relating to their regulation and control are laid down by the Ministry
of Finance. Government also Constituted Securities and Exchange Board of India
(SEBI) in April 1988 for orderly development and regulation of securities industry
and stock exchanges.
II. Major Players in the Industry
Zerodha
Zerodha Broking Limited is an Indian financial services company offering retail brokerage,
currencies and commodities trading, mutual funds, and bonds. Founded in 2010, the company
is headquartered in Bangalore. Valued over $1 billion, it is the largest brokerage firm in India
by active client base.
Porter's Five Forces Model
A model was put forward by Michael. E. Porter in an article in the Harvard Business Review
in 1979. This model, known as Porter's Five Forces Model is a strategic management tool that
helps determine the competitive landscape of an industry. Each of the five forces mentioned
in the model and their strengths help strategic planners understand the inherent profit
potential within an industry. The strengths of these forces vary across the industry to industry,
which means that every industry is different regarding the profitability and attractiveness.
The structure of an industry, even though it is stable, can change over time. These Porter’s
five forces are as follows:
If suppliers have strong bargaining power then they will extract higher price
from the Reliance Securities. It will impact the potential of Reliance Securities
to maintain above average profits in Investment Services industry.
Bargaining Power of Buyers
If the buyers have strong bargaining power then they usually tend to drive
price down thus limiting the potential of the Reliance Capital to earn
sustainable profits
As customers do not have much bargaining power, they can easily switch to
another company based on the tenues and quality of services provided
SWOC analysis of Reliance Money analyses the brand by its strengths, weaknesses,
opportunities & Challenges. In Reliance Money SWOC Analysis, the strengths and
weaknesses are the internal factors whereas opportunities and Challenges are the external
factors.
SWOC Analysis is a proven management framework which enables a brand like Reliance
Money to benchmark its business & performance as compared to the competitors. Reliance
Money is one of the leading brands in the banking & financial services sector.
The table below lists the Reliance Money SWOC (Strengths, Weaknesses, Opportunities,
Challenges), top Reliance Money competitors and includes its target market, segmentation,
positioning & Unique Selling Proposition (USP).
Strengths
There are 80 official reliance securities Branches in India and 1380 Franchise network
so in total 1460 branches.
Ranks among the top 3 private sector financial services and banking groups, in terms
of net worth.
Highly qualified, Co-operative and experienced branch managers working in the
company.
Company using updated software (TICK PRO) to maintain client’s transactions
properly.
Brand name of the Company.
Company quickly adapt the new technology.
Strong Customer Relationship.
Differentiated products
Weakness
No access to rural market
For the intraday system automatically sell the shares at 2.55pm.
Opportunities
market fluctuations
Entry of foreign finance firms in Indian Market
Large number of financial giants presents in this field
Rigid policies of the government
Competition from banks and insurance sectors.
Internet is not available in major part of the nation.
Future Growth and Prospectus
The growth of financial sector in India at present is nearly 8.5% per year. The rise in the
growth rate suggests the growth of the economy. Reliance securities can have a wide network
in the Indian market and it has more than 1460 branches and has covered 40 cities in India. It
has maintained good brand name and have the good network around the world. Their future
goal is the build-up the business in and around the world such as America, Japan, Singapore
etc. and their business operations and their trading activities day by day increases and the
reliance securities main goals and objectives is to become the number one company in
upcoming years and increase their growth rate by increasing day to day trading activities.
Chapter II: Theoretical background of the study
Every stock is associated with two principal factors risk and return. The risk and return can
give a clear picture of the stock to the investor to make his investment decision making. The
analysis of risk and return will help the investor to manage an effective portfolio. Managing
an effective portfolio purely depends upon the nature and understandings of the investor.
Seeking in depth knowledge about the market trend, instruments available in the market and
market fluctuation can help the investor in understanding the market. Portfolio management a
various group of securities lined up which behaves differently yields interest payment and
dividends. If the securities are grouped in a correct and systematic manner it will yield high
returns. Human tendency is that they always want low risk with higher return, but sometimes
it is possible not all the times. Each individual securities have their own rate of risk and return
attributes. The viability of return is turned as security falls, the investor may have to incur
huge losses. Each and every investor differs upon their ability to bear risk. They can be
classified into low risk taking, high risk taking and moderate risk-taking investors. The
investors can diversify their risk by investing in different industry and sectors rather than
investing in one particular industry. So, this type of investment can make your investment
less risky, as the risk is spread to different industry. However, if one industry share price falls
the return of that particular industry is affected the securities belonging to another industry
may yield returns. This results in diversification of risk. Another important question pertains
to how many portfolios may be constructed. We can form any number of portfolios with the
given set of securities but the investor has to decide the portfolio needs to be selected to the
shareholder. Rational investor search for the most efficient of these portfolios. Portfolio
structured is to design portfolio that furnishes low risk with high risk this type of portfolio is
known as a risk and return. His method of portfolio selection came to known as Markowitz’s
model. Markowitz’s works mark the beginning of today’s modern portfolio theory.
Markowitz’s showed that for a given level of estimated return and for a given level of
estimated return and for a given security world, finding a specific portfolio that dominate the
others requires knowledge of the covariance or correlation matrix between all possible
security combinations. Subsequent to the publication of his paper, numerous investment firms
and portfolio proportions so as to minimize portfolio managers began to program Markowitz
algorithms which prescribed portfolio proportions so as to minimize portfolio variance.
Risk: Investor cannot expect return without considering the risk involved in the stock market.
Risk refers to probability of expected return differ from the actual return on investment.
There are two types of risks involved
1. Systematic Risk:
There are some which we cannot control, those risks are called as systematic risk. If we know
how to accept the risk as the primary portion of the investment, we can allocate the risk in an
efficient manner and diversify the strategies which can help in some situation. By learning
how to avoid risk it can make a smart investment plan. The external factors of the company
tend to create risk which are uncontrollable by the company. Risks like interest rates,
recessions and wars are inevitable in nature and cannot be diversified. These are the net
examples for systematic risk.
a) Market Risk:
There are certain possibilities that financial markets may collapse and make a wave effect on
portfolio. For instance: all the stocks will decrease its value when the whole stock market is
affected, until the market recovers even the stocks cannot recover.
Some companies don’t survive from market downturns this is because of the introduction of
the market risk, which can even cause loss of principle. But most common risk involved is
selling your shares when prices are low at the time of market collapse.
There are certain risks that the interest rate may possibly go up. If the interest rate goes up,
inflation increases and the fixed income investments decreases, since they are worthless
because the newly issued bonds will pay much high rate of interest. The incline interest rate
also points out low stock price, Interest yielding investments with less risk and high return
attracts the investors to pool more money into them.
The loss of the purchasing power of currency may result in variation in the return. Inflation is
the main reason behind the loss of purchasing power. When there is more risk in purchasing
the less return you get. Purchasing power also effects on the standard of living.
Inflation can be either be forenamed as demand pull or cost push inflation. In demand pull the
goods and services will be in their excess supply. Factors of production, economy will not be
able to supply more goods in short run at the full employment level and the demand for the
products will make the price higher. The equilibrium between supply and demand is attained
at high price.
2. Unsystematic Risk
Business risk is an unsystematic risk which is caused by operating environment. Business risk
is arrived when there is an inability in the firm to maintain a competitive edge and when the
growth becomes stagnant and which reflects in the operating income and the expected
dividends. So, this indicated the business risk. Business risk may be any risk which can
depreciate the firm’s net assets or net income that could symbolically lower the return of any
Security based on it. Some business risks are sector risk which affect all the companies under
the particular sector, while some business risk only affect particular companies.
b) Financial Risk:
Financial risk refers to the instability of revenue to equity capital to debt capital as the debt
capital raises the capital by taking loans. Capital structure of the company is related with
financial risk of company. Equity funds and borrowed funds are associated with Capital
structure of the company. The appearance of debt and preference capital makes the way to
engagement of interest paying or prefixed rate of dividend. The changes in the capital
structure is the main reason for this interest paying scenario. It can be called as leveraged risk
and it can be expressed in the form of debt-equity ratio. Surplus of loans over the equity
capital in the capital structure of the firm indicates that the firm is Excess of debt over equity
in the capital structure of a company indicates that the company is hugely geared even after
per capital earnings of such company might be more. The risk of winding up of the firm due
to its incapacity to honor its commitments towards creditors and lenders due to highly
dependence on the borrowings. So investors must be careful and aware of risk associated
with the investment and the portfolio managers must be dedicated keeping track of the market
fluctuations.
Return: Return is the main objective of the investment. Every investment is made with an
expectation of earning returns or dividends. Return to investors is of two types, current yield
and capital appreciation. Current yield is the interest rate we get from shares and capital
appreciation is which we get after liquidating the shares. Returns are of two types:
1. Historical return
The returns which are often associated with the past performance or old data is called as
historical return. It is a post-mortem analysis of investment, which lacks insight for future.
Historical return is more accurate and less risky compared to expected return as it deals with
the past performance records. Historical return is also called as actual return.
2. Expected return.
Return calculated considering the future estimates and calculation is called as expected
return.
1. Modern approach
2. Traditional approach
Chapter III: Research Methodology
This need for the study depends upon the perspective of the investor. It’s a dream of many
investors to amplify his investment by having an expansive number of shares with him. This
study will let the investor, financial expert and advisor to know the risk involved in the
individual stocks and return the investor can get in future this analysis will help to maintain
effective portfolio. Make investment to create a second source, this study enables us to create
us a second source and it also helps the speculators to improve money management.
The research is derived only on the data collected from period 2017 to 2021.
Sensex is the bench mark index used for the study.
The impact of only a Sensex on the selected companies stock included in the index
are Considered in the study.
Research Methodology:
The data of individual stocks and Sensex were collected from the official Bombay
stock
Exchange website and the companies selected for the study are listed on Bombay
stock Exchange.
The data was collected for 5years for the study (2017-2021).
Data collected from www.bseindia.com.
Secondary data collection method is being used.
Statistics is an effective tool used in portfolio construction deals with a sequence of holding
period returns. It is significant that holding periods must be equal length. The arithmetic
average of all these is called arithmetic mean return.
Ri
AM =∑
N
Were,
N= Number of years.
Standard Deviation:
Sometimes risk is involved in getting the different expected return than that of actual return
on Investment. Technically, this can be measured by setting standard deviation through
statistics. Risk is a probable condition of losing investment because of market uncertainties or
bad Management of portfolios. To measure the risk of securities standard deviation is being
used.
σ =√ ∑¿ ¿ ¿
Beta and its calculation:
The respective measure of non-diversifiable risk is called as Beta. Beta is an index of degree
of Movement of an assets return in response to a change in the market return.
Beta demonstrates the connection between the securities return and the file/ (INDEX)
returns.
Beta = - +1.0
One percent change in the market file returns causes precisely one percent change in the
Security return. It demonstrates that the security moves in cycle with the market.
Beta = - +0.5
One percent change in the market list returns causes 0.5 percent change in the security return.
The security is less unstable contrasted with the market.
Beta = - +2.0
One percent change in the market list return causes 2% change in the security return. The
Security returns is more unpredictable. At the point when there is a decay of 10% in the
Market restore, the security with Beta of 2 would give a negative return of 20%. The security
Beta = - Negative
Negative Beta Value demonstrates that the security return moves the other way to the market
return. A security with a negative beta of - 1 would give an arrival of 10%, if the market
return decreases by 10% and the other way around.
In Sharpe’s index model because of the common movement in the stock market the stocks
vary together. The co movement of stocks with a market index may be calculated with the
assistance of a simple linear regression analysis, taking the returns on the market index (Rm)
as independent variable and returns on an individual security as dependent variable (Ri)
Only few selected stocks listed in Sensex has been covered in the research.
Only 5 years closing price of the selected companies are taken for the analysis in this
present project.
The study limited only to 30 stocks.
The results of the study may not hold good for longer period of time due to volatility
in Indian stock market.
In this study only limited statistical tools are used
Literature review:
P.Naveen and Mrs.K. Neeraja(2018) The study's goal is to assess risk and return in order to
determine which organisations are the best. The data was examined using simple approaches
such as variance, mean, and standard deviation. Over a five-year period, the research
examined five banks: the Central Bank of India, ICICI Bank, HDFC Bank, Syndicate Bank,
and SBI Bank. When compared to all other banks, HDFC bank has had the best return, while
the syndicate bank has the most risk. Finally, the study found that investors should invest in
the proper firm based on their risk appetite.
Suresh A.S and Sai Prakash.L (2018) the goal of the study is to rank stocks based on
returns and to determine the return and risk of public and private banks listed on the Bank
Nifty index. Over the course of a year, they invested in 12 publicly traded banking stocks.
Determine which stocks are the greatest to invest in and which should be avoided. They
found that if investors are willing to take on more risk in exchange for a better return, they
could consider investing in companies such as Yes Bank and IndusInd Bank. However,
investors should consider the risk involved with stocks that provide higher yields. If investors
are searching for a low-risk, moderate-return investment, HDFC bank is a good choice.
Dr. P. Subramanyam and Dr. Nalla Bala Kalyan (2018), analysed the return and risk
assessments of the equity purchased from the secondary market for ten different companies
for a period of one month. The tools and techniques used in this research are beta, expected
return and co-efficient of variation. This paper emphasizes on the market fluctuations
relations to the prices of Scrip's though it is difficult to observe a pattern for the price
movements but efforts have been taken using fundamental analysis and technical analysis.
They concluded that one method is not sufficient to analyse and interpret the fluctuations.
However, suggested that these tools help the investor to define the trends to some extent.
They also concluded form the research that, the month February 2017 was not favorable to
invest in the infrastructure companies.
Dr. S Poornima and Swathiga P (2017), analyzed the relationship between risk & return of
10 selected companies. These ten companies are selected from 2 different sectors i.e.
automobile and IT sector, which are listed on NSE. The tools like average return, SD and
CAPM model are used to perform the analysis. Analysis is done for a period of 3 years. They
concluded that the analysis helps the investors to select the stock based on their own choice.
They advised that in case of the automobile sector it was preferable for the investors to invest
in Maruthi Suzuki and Bosch where as in the IT sector it was HCL Technologies. They
concluded that the automobiles sector had better market growth than the IT sector.
Dr. M. Muthu Gopalakrishnan & Amal Vijay A K (2017), attempted to analyze the risk
return aspects of ten selected pharmaceutical companies which are listed on NSE. The tools
which were used to perform the analysis were mean, beta, standard deviation, alpha,
correlation and covariance. The data collected was for a period of five years, from 2012 to
2015. By analyzing these companies, they understood that if the investor has to get high
returns it is very important to consider the risk and return factors of the stocks. They
concluded that Sun Pharmaceutical Company is giving the high returns but the volatility
associated with the returns of the company is also high, where as for Divi's Laboratories
company had less volatility in the returns and also had good high returns for the stock. So,
they concluded that Divi's Laboratories was the company the investors should prefer in
investing.
Dr. Pramod Kumar Patjoshi (2016), analyzed the risk and return assessments for four
selected bank stocks which are listed on BSE for a period of fifteen years. The study was
conducted to analyze the relationship between the risk and returns of the bank stocks and
Sensex. Tools and techniques like correlation, t-test & regression were used for the study.
From the study they found that the Sensex had high returns when compared to the selected
stocks apart from few stocks. Few stocks had positive correlation and few stocks had
negative correlation with the Sensex returns. They concluded that the banking stocks and the
Sensex change in the similar trend.
Krishnaprabha and Vijayakumar (2015), analyzed the risk and return characteristics of 25
companies which are listed in BSE. These companies were chosen based on high market
capitalization and they were analyzed according to the industry they belonged to. The study
was conducted for a period of 4 years from January 2010 to December 2014. The tools used
for the analysis were returns, beta, standard deviation and covariance. The author believed
that risk and return aspects play a very important role in the investment decision. They
concluded that the long-term investors had a greater advantage as there was less volatility
Haim, Shalit(2014):" Portfolio risk management using the Lorenz curve" from the lorenz curve
we can analyze the value or amount of risk and return in a different conditional value of the
risk and financial data. the Lorenz curve is very easy to calculate because it requires only the
asset value in ascending order. it is carried out to study the risk for all investors of
individuals.
Akshata .B (2014) studied the various procedures to reduce high rate of volatility and in
hcapital income it identify the role of stock brokers and sub stock brokers. Thus study
evaluates the poor liquidity in the market and need to reduce transaction cost and there is
inefficiency in the performance of the Indian capital market. The study gives an idea to have
great improvement of the regularity frame work and efficiency, settlement of securities.
Prashant Athma (2013) this studies the increase of index Funds and Exchange Traded
Funds in India to calculate the performance of index fund and Exchange Traded Funds in
India .The study evaluate Exchange Traded Funds with higher return and lower risk
compared to index funds. The study found that Exchange Traded Funds have a better
performance compared to index return which has better future for Exchange Traded Funds.
Dhanesh Kumar Khatri (2012) in their article found that a leading technical analyst,
provides a more specific definition: "The technical approach to investment is essentially a
reflection of the idea that prices move in trends that are determined by the changing attitudes
of investors toward a variety of economic, monetary, political, and psychological forces. The
art of technical analysis, for it is an art, is to identify a trend reversal at a relatively early stage
and ride on that trend until the weight of the evidence shows or proves that the trend has
reversed."
Mihir Dash, Anirban Dutta, and Mohit Sabharwal (2011) this study explains the explore
the relation between market crash effect and the Month-of-the-year return in Indian Stock
market. ANOVA result discloses that there is no significant difference in mean monthly
return between the different months. Conclusion for the study at the end of the year effect, as
general public spend their saving towards purchase of house hold goods, similarly return is
noticed. In March negative return is noticed, as investor in order to reduce their stock burden
prefers to re-invest their shares.
P. Nageswari, DR.M. Selvam and DR.J. Gayathri (2011) examines the return of the month
effect in Indian stock market. The study considers S & P CNX Nifty and BSE Sensex data for
six years from 1st January 2005 to 31st December 2010. The study also shows that the semi-
month effect and turn of the month effect was not prevalent in the Indian stock market during
the study period. By analysing these irregularities in Indian stock market it is concluded that
most of the cash flow entered in the Indian stock market in first few days of the month, as a
result stock prices increases.
Sangeetha Chhabra (2010) examines its seasonal irregularities that still persist in the
Developed and Developing Markets and the Indian and US markets are taken as the
representative of Emerging and Developed Markets. The study shows the data encountered
during January 1998 and December 2007 BSE Sensex and S&P 500 for US Markets data to
analysis Turn of the Month effect, Semi Month effect, Monthly effect, Monday effect and
Friday effect. Result for this study shows SEBI as a regulator of India's stock market security
exchange commission in US need to take steps in order to increase the informational
efficiency of stock market.
Vikram Bahure (2009) examined the weekend effect of stock return in Indian market. The
study evaluates daily returns of stocks at the end day of the week by taking the context of the
Indian stock Market. The study found to have the data relating opening and closing price of
three major operations in India BSE Sensex, BSE 200 and the S&P Nifty has been collection.
Monday returns remained less than other days, and Friday remained greater than other days.
The limitations of the study are the author considers cyclic factor rather than fundamental
factors and consider only weekly variation in stock returns.
Shijin and Crew (2007) from March 1996 to march 2006 shijin carefully tested the return
and risk elements of average stocks in Indian market by selecting 70 sample companies from
Bombay stock exchange. The result of Vector Autoregressive Approach pointed that market
risk proxy had constant effects on Indian stock market stock returns. 19 Irala (2007) from the
period 1994 to 2006 irala selected 660 companies as samples to find the proof for instability
in their beta value.
Chapter IV:
Analysis and Interpretation of the Data
Rm
R m=∑ = 18.20564119
N
σm= √¿ ¿ ¿=8.306311833
2016 268.1
Ri
R i=∑ = 25.68038242
N
σi= √ ¿ ¿ ¿ = 26.14555082
From the above table we can see that the return of the stock of Asian paints is 25.68
And Risk is 26.15. Beta of the stock is 2.84 since, the beta is greater than 1 it is riskier. Hence
it is suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 50.93
and in 2018 the return is -4.27 showing a downtrend. In 2019 the return is -5.52 and for the
next year 2020 there is an increase in the return to 32.13 and the next year 2021 has increased
to 55.13 The returns are having too much of fluctuations and not suitable investment.
Ri
R i=∑
N
= 11.46202438
σi= √ ¿ ¿ ¿ =15.39735614
From the above table we can see that the return of the stock of Axis Bank ltd is 11.46
and Risk is 15.98. Beta of the stock is 0.69 since, the beta is less than 1 it is less risky.
Hence it is suggested that the stock is associated with very less return and more risk. It
is the not at all suggested for investment.
From the above chart we can find the fluctuations of yearly return. At 2017 the returns
are at 24.98 which is a very good indicator of growth. In 2018 the return has taken
downward trend to 10.21 and for the next year 2019 the return has raised to 21.65 For
2020 the return has gone down to -17.72 and at 2021 the return has gone up to 18.20
The returns are having too much of fluctuations and not suitable investment.
Ri
R i=∑
N
= 7.589593262
σi= √ ¿ ¿ ¿ =14.91078724
From the above table we can see that the return of the stock of Bajaj Auto Ltd. is 7.59 and
Risk is 14.91 Beta of the stock is 1.25 since, the beta is greater than 1 it is riskier. Hence it is
suggested that the stock is associated with low return and high risk and it is not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. At 2017 the returns are at
26.17 which is a very good indicator of growth. In 2018 the return has taken downward trend
to -18.20 and for the next year 2019 the return has raised to 17.18 For 2020 the return has
gone down to 8.21 and at 2021 the return has gone down to 4.58. The returns are having too
much of fluctuations and not suitable investment.
Ri
R i=∑
N
= 57.5555743
σi= √ ¿ ¿ ¿ =28.34605446
From the above table we can see that the return of the stock of Bajaj Finance Ltd. is 57.56
and Risk is 28.35. Beta of the stock is 1.53 since, the beta is greater than 1 it is riskier. Hence
it is suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 109.33
showing a positive trend and in 2018 the return has been decreased to 50.34 In 2019 the
return has been increased to 60.35 and in the year 2020 the return as decreased to 25.05 for
the next year 2021 there is a still more increase to 42.71
2016 2894.15
Ri
R i=∑
N
= 49.74656758
σi= √ ¿ ¿ ¿ =39.16337239
From the above table we can see that the return of the stock of Bajaj Finance Ltd. is 49.75
and Risk is 39.16. Beta of the stock is 3.66 since, the beta is greater than 1 it is riskier. Hence
it is suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 the return of the
stock is 80.99 which is the extreme level of growth. In the year 2018 there is a drastic change
in the return which has collapsed to 23.72 showing a deep downtrend and in the next year
2019 the return where increase to 44.85 and in the year 2020 the return decrease to -5.16 and
in the year 2021 the return is increase to 104.30
Table 7: Table showing risk and return of Bharti Airtel Ltd.
Ri
R i=∑
N
= 30.08855816
σi= √ ¿ ¿ ¿ =40.91860616
From the above table we can see that the return of the stock of Bharti Airtel Ltd. is 30.08 and
Risk is 40.92. Beta of the stock is 4.01 since, the beta is greater than 1 it is riskier. Hence it is
suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. At 2017 the returns are at
73.37 which is a very good indicator of growth. In 2018 the return has taken downward trend
to -40.89 and for the next year 2019 the return has raised to 58.68 For 2020 the return has
gone down to 11.74 and at 2021 the return has gone up to 47.54. The returns are having too
much of fluctuations and not suitable investment.
Ri
R i=∑
N
= 14.15109746
σi= √ ¿ ¿ ¿ =35.23410147
From the above table we can see that the return of the stock of Dr Reddy’s Laboratories Ltd.
is 14.15 and Risk is 35.23. Beta of the stock is 1.77 since, the beta is greater than 1 it is
riskier. Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at -21.06
and in 2018 the return is 8.39 showing an uptrend. In 2019 the return has slightly increased to
9.94 and for the next year 2020 there is a huge increase in the return to 80.88 and the next
year 2021 there is a huge decreased to -7.39
Ri
R i=∑
N
= 24.63814078
σi= √ ¿ ¿ ¿ =21.7203474
From the above table we can see that the return of the stock of HCL Technologies is 24.64
and Risk is 21.72 Beta of the stock is -0.16 since, the beta is less than 1 it is less and
moderate risk. Hence it is suggested that the stock is associated with very less return and
moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 the return is at
7.64 and in 2018 the return is 8.07 showing uptrend in the return. In the year 2019 the return
is showing uptrend of 18.07 and for the next year 2020 there is a high increase of 66.46 and
the next year 2021 has showed a downfall of the return to 22.93 but it is at the positive return.
Ri
R i=∑
N
= 19.29234408
σi= √ ¿ ¿ ¿ =9.693077485
From the above table we can see that the return of the stock of Housing Development Finance
Corporation Ltd is 19.29 and Risk is 9.69 Beta of the stock is 0.61 since, the beta is less than
1 it is less and moderate risk. Hence it is suggested that the stock is associated with very less
return and moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 35.48
showing a positive trend and in 2018 the return has been decreased to 15.18 in 2019 the
return has been increased to 22.51 and in the year 2020 the return as decreased to 6.01 for the
next year 2021 the return increased to 17.28
Table 11: Table showing risk and return of HDFC Bank Ltd.
year Closing Ri (Ri−R i) ¿ ( Rm−R m) ( Ri−R i )
price (Rm−R m)
2016 602.1
Ri
R i=∑
N
= 22.01035622
σi= √ ¿ ¿ ¿ =17.18094741
From the above table we can see that the return of the stock of HDFC Bank is 22.01 and Risk
is 17.81. Beta of the stock is 0.99 since, the beta is lesser than 1 it is less risky. Hence it is
suggested that the stock is associated with low return and low risk and it suitable for small
investors or new traders.
From the above chart we can find the fluctuations of yearly return. In 2017 there is a huge
return of 55.56 and in 2018 the return is 13.28 showing a downtrend in the return. In 2019 the
return is increased to 19.84 in 2020 the return is 12.97 and for the next year 2021 there is
decrease to 8.37 points.
2016 826.3
Ri
R i=∑
N
= 25.99693876
σi= √ ¿ ¿ ¿ =22.95611112
From the above table we can see that the return of the stock of Hindustan Unilever Ltd. is
25.99 and Risk is 22.96. Beta of the stock is 0.47 since, the beta is less than 1 it is less and
moderate risk. Hence it is suggested that the stock is associated with very less return and
moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 65.57
showing a positive trend and in 2018 the return has been decreased to 32.89 in 2019 the
return has been decreased to 5.79 and in the year 2020 the return as increased to 24.45 for the
next year 2021 the return as decreased to 1.29
Table 13: Table showing risk and return of ICICI Bank Ltd.
year Closing Ri ( Ri−R i) ¿ ( Rm−R m) ( Ri−R i)
price (Rm−R m)
2016 232.09
Ri
R i=∑
N
= 28.69341682
σi= √ ¿ ¿ ¿ =18.96936891
From the above table we can see that the return of the stock of ICICI Bank Ltd. is 28.69 and
Risk is 18.97. Beta of the stock is 1.07 since, the beta is greater than 1 it is more risky. Hence
it is suggested that the stock is associated with moderate return and moderate risk and it is
suitable for investors who can bear less risk and satisfied with moderate return
From the above chart we can find the fluctuations of yearly return. At 2017 the returns are at
35.29 which is a very good indicator of growth. In 2018 the return has taken downward trend
to 14.65 and for the next year 2019 the return has raised to 49.65. For 2020 the return has
gone down to -0.73 and at 2021 the return has gone up to 44.60. The returns are having too
much of fluctuations and not suitable investment.
Table 14: Table showing risk and return of IndusInd Bank Ltd.
Ri
R i=∑
N
= 2.757400674
σi= √ ¿ ¿ ¿ =29.20996755
From the above table we can see that the return of the stock of Induslnd Bank Ltd. is 2.76 and
Risk is 29.21 Beta of the stock is 2.20 since, the beta is greater than 1 it is riskier. Hence it is
suggested that the stock is associated with greater risk and not suitable for investment. From
the above chart we can find the fluctuations of yearly return. At 2017 the return is very high
and showed an uptrend but in 2018 we can a drastic drop in the return which showed a
downtrend. In 2019 in return has been gone down to -5.53 and in 2020 we can see drop in the
return of -40.75 points but again in 2021 the return has slightly increased to 14.16 but the
returns are not stable enough to invest.
Ri
R i=∑
N
= 30.90145237
σi= √ ¿ ¿ ¿ =24.44998073
From the above table we can see that the return of the stock of Hindustan Unilever Ltd. is
30.90 and Risk is 24.45. Beta of the stock is 0.43 since, the beta is less than 1 it is less and
moderate risk. Hence it is suggested that the stock is associated with very less return and
moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 the return is at
2.83 and in 2018 the return is 26.98 showing uptrend in the return. In the year 2019 the return
is showing downtrend of 10.90 and for the next year 2020 there is a high increase of 71.62
and the next year 2021 has showed a downfall of the return to 42.18 but it is at the positive
return.
Ri
R i=∑
N
= 0.253781791
σi= √ ¿ ¿ ¿ =11.70179982
From the above table we can see that the return of the stock of ITC is 0.25 and Risk is 11.70
Beta of the stock is 0.59 since, the beta is less than 1 it is less and moderate risk. Hence it is
suggested that the stock is associated with very less return and moderate risk and it is not
suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 9.19
and in 2018 the return is 7.05 showing a downtrend. In 2019 the return is -15.62 and for the
next year 2020 there is an increase in the return to -12.05 and the next year
2021 has increased to 12.70 this stock is not suggestible for investment.
Ri
R i=∑
N
= 24.35557667
σi= √ ¿ ¿ ¿ =12.54394056
From the above table we can see that the return of the stock of Kotak Mahindra Bank is 24.34
and Risk is 12.54 Beta of the stock is -0.13 since, the beta is less than 1 it is less and
moderate risk. Hence it is suggested that the stock is associated with very less return and
moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 40.34
showing a positive trend and in 2018 the return has been decreased to 24.34 In 2019 the
return has been increased to 34.25 and in the year 2020 the return as decreased to 18.46 for
the next year 2021 there is a still more decrease reaching the downtrend to 4.39
Table 18: Table showing risk and return of Larsen & Toubro
Ltd.
year Closing Ri (Ri−R i) ¿ (Rm−R m) ( Ri−R i)
price ( Rm−R m)
2016 899.64
Ri
R i=∑
N
= 19.08880903
σi= √ ¿ ¿ ¿ =23.44654271
From the above table we can see that the return of the stock of Larsen & Toubro Ltd. is 19.09
and Risk is 23.45. Beta of the stock is 2.05 since, the beta is greater than 1 it is riskier. Hence
it is suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 39.72
and in 2018 the return is 14.44 showing a downtrend. In 2019 the return is -9.70 and for the
next year 2020 there is an increase in the return to -0.88 and the next year 2021 has increased
to 51.86 this stock is not suggestible for investment.
Ri
R i=∑
N
= 13.7616286
σi= √ ¿ ¿ ¿ =25.85388076
From the above table we can see that the return of the stock of Mahindra & Mahindra Ltd. is
13.76 and Risk is 25.85. Beta of the stock is 1.48 since, the beta is greater than 1 it is riskier.
Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 26.81
which is very good indicator of growth and in 2018 the return is 7.01 showing a huge
downtrend. In 2019 the return has decreased to -33.87 and for the next year 2020 there is a
increase in the return to 35.59 and the next year 2021 has slightly decrease to 33.26
Table 20: Table showing risk and return of Maruti Suzuki India
Ltd
year Closing Ri (Ri−R i) ¿ (Rm−R m) ( Ri−R i)
price (Rm−R m)
2016 5323
Ri
R i=∑
N
= 13.45771587
σi= √ ¿ ¿ ¿ =36.16752617
From the above table we can see that the return of the stock of Maruti Suzuki India Ltd. is
13.45 and Risk is 36.16. Beta of the stock is 3.28 since, the beta is greater than 1 it is riskier.
Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. In 2017 there is a huge
return of 82.82 and in 2018 the return is -23.32 showing a downtrend in the return. In 2019
the return is increased to -1.27 in 2020 the return is 3.83 and for the next year 2021 there is
increase to 5.23 points.
Table 21: Table showing risk and return of Nestle India Ltd.
Ri
R i=∑
N
= 27.00450336
σi= √ ¿ ¿ ¿ =11.96418478
From the above table we can see that the return of the stock of Nestle India is 27.00
And Risk is 11.96 Beta of the stock is -1.03 since, the beta is lesser than 1 it is riskier. Hence
it is suggested that the stock is associated with low return and High risk and it not suitable for
Investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 30.10
and in 2018 the return is 41.58 showing a positive return as the last year. In 2019 the return
has decreased to 33.16 showing a downtrend and in the year 2020 the return decreased to
24.36 and in 2021 the return has again collapsed to 5.82
Ri
R i=∑
N
=1.227831821
σi= √ ¿ ¿ ¿ =19.15882075
From the above table we can see that the return of the stock of NTPC is 1.23 and Risk is
19.16. Beta of the stock is 1.85 since, the beta is greater than 1 it is riskier. Hence it is
suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 7.59
which is good indicator of growth and in 2018 the return is -16.11 showing a downtrend. In
2019 the return has slightly increased to -3.89 and for the next year 2020 there is a decrease
in the return to -16.59 and the next year 2021 the return as increased to
35.15
Table 23: Table showing risk and return of Power Grid Corp of
India Ltd.
year Closing Ri ( Ri−R i) ¿ (Rm−R m) ( Ri−R i)
price ( Rm−R m)
2016 137.59
Ri
R i=∑
N
= 7.089181666
σi= √ ¿ ¿ ¿ =13.02660006
From the above table we can see that the return of the stock of Power Grid of India Ltd. Is
7.09 and Risk is 13.03 Beta of the stock is 1.14 since, the beta is greater than 1 it is riskier.
Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 9.21
which is a moderate indicator of growth and in 2018 the return has been decreased to -0.67
showing a downtrend. In 2019 the return has slightly decreased to -4.42 and for the next year
2020 there is a increase in the return to -0.21and the next year 2021 the return been increased
to 31.54
2016 534.96
Ri
R i=∑
N
= 37.2451729
σi= √ ¿ ¿ ¿ =17.28109077
From the above table we can see that the return of the stock of Reliance Industries Ltd. is
37.24 and Risk is 17.28 Beta of the stock is 1.27 since, the beta is greater than 1 it is riskier.
Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return in the year 2017 the return
of the stock is 70.75 which is very good indicator of growth and in the year 2018 there is a
drastic change in the return which has collapsed to 21.71 In the year 2019 the return has
slightly increased to 35.06 and for the next year 2020 There is a decrease in the return to
32.32 and in the year 2021 the return has slightly decrease to 26.57.
Table 25: Table showing risk and return of State Bank of India
Ri
R i=∑
N
= 18.96342585
σi= √ ¿ ¿ ¿ =33.75873844
From the above table we can see that the return of the stock of State Bank of India is 18.96
and Risk is 33.76. Beta of the stock is 2.88 since, the beta is greater than 1 it is riskier. Hence
it is suggested that the stock is associated with greater risk and not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 return is at 23.92
which is very good indicator of growth and in 2018 the return is -4.47 showing a downtrend.
In 2019 the return has slightly increased to 12.87 and for the next year 2020 there is a
decrease in the return to -17.65 and the next year 2021 the return as increased to
80.16
Ri
R i=∑
N
= 7.61320808
σi= √ ¿ ¿ ¿ =24.34508239
From the above table we can see that the return of the stock of sun pharmaceutical industries
Ltd. is 7.61 and Risk is 23.34 Beta of the stock is 1.23 since, the beta is greater than 1 it is
riskier. Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. In 2017 the return is -9.36
showing a downtrend. In 2018 the return has still showed a downtrend -24.55 and for the next
year 2019 there is an increase in the return to 0.43 and the next year 2020 has increase to
36.96 and in the year 2021 the return is 34.59 this stock is not suggestible for investment.
Table 27: Table showing risk and return of Tata Steel Ltd.
Ri
R i=∑
N
= 35.96288659
σi= √ ¿ ¿ ¿ =47.90099355
From the above table we can see that the return of the stock of Tata Steel Ltd. is 35.96 and
Risk is 47.90 Beta of the stock is 5.54 since, the beta is greater than 1 it is riskier. Hence it is
suggested that the stock is associated with greater risk and not suitable for investment. From
the above chart we can find the fluctuations of yearly return.
In 2017 return is at 87.28 and in 2018 the return is -25.22 showing a downtrend. In 2019 the
return is -9.55 and for the next year 2020 there is an increase in the return to 36.35 and the
next year 2021 has increased to 90.96 this stock is not that suggestible for investment.
Ri
R i=∑
N
= 24.31198014
σi= √ ¿ ¿ ¿ =10.46055622
Interpretation:
From the above table we can see that the return of the stock of tech Mahindra Ltd. is 24.31
and Risk is 10.46 Beta of the stock is -0.90 since, the beta is less than 1 it is less and
moderate risk. Hence it is suggested that the stock is associated with very less return and
moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. At 2017 the returns are at
14.33 which is a very good indicator of growth. In 2018 the return has taken upward trend to
40.24 and for the next year 2019 the return has gone down to 14.14. For 2020 the return has
taken upward trend to 32.80 and at 2021 the return has gone down to 20.04. The returns are
having too much of fluctuations and not suitable investment.
Table 29: Table showing risk and return of Tech Mahindra Ltd.
2016 488.7
Ri
R i=∑
N
= 28.82177302
σi= √ ¿ ¿ ¿ =23.13138867
From the above table we can see that the return of the stock of tech Mahindra Ltd. is 28.82
and Risk is 23.13 Beta of the stock is -0.05 since, the beta is less than 1 it is less and
moderate risk. Hence it is suggested that the stock is associated with very less return and
moderate risk and it is not suitable for investment.
From the above chart we can find the fluctuations of yearly return. In 2017 the return of the
stock is 3.1 which is the extreme level of growth. In the year 2019 there is a drastic change in
the return Which has collapsed to -5.76 showing a deep downtrend and in the next year 2020
the return where increase to 27.59 and in the year 2021 the return increase to 64.54 which has
boomed again.
Table 30: Table showing risk and return of Titan Co Ltd.
Ri
R i=∑
N
= 58.49415006
σi= √ ¿ ¿ ¿ =54.80758473
From the above table we can see that the return of the stock of Titan Co Ltd. is 58.49 and
Risk is 54.81 Beta of the stock is 5.31 since, the beta is greater than 1 it is riskier. Hence it is
suggested that the stock is associated with greater risk and not suitable for investment. From
the above chart we can find the fluctuations of yearly return. In 2017 there is a huge return
162.78 and in 2018 the return is 8.64 showing a downtrend in the return. In 2019 the return is
increased to 27.71 in 2020 the return is constant as the last year with slight changes, and for
the next year 2021 there is a high increase of 61.36 points.
Table 31: Table showing risk and return of Ultra Tech Cement Ltd.
Ri
R i=∑
N
= 21.32365786
σi= √ ¿ ¿ ¿ =21.128648
From the above table we can see that the return of the stock of Ultra Tech Cement Ltd.
is 21.32 and Risk is 21.13 Beta of the stock is 2.23 since, the beta is greater than 1 it is
riskier. Hence it is suggested that the stock is associated with greater risk and not suitable for
investment.
From the above chart we can find the fluctuations of yearly return. At 2017 the return is high
and showed an uptrend but in 2018 we can a drastic drop in the return which showed a
downtrend. In 2019 in return has been slightly increased and in 2020 and 2021 we can see
high increase of 30.59. And 49.17 points.
Findings
The risks involved in the stocks are not same for each year. It always varies from
time to time.
Titan Company returns are heavily fluctuating at 2017 the return is 162.79 and
suddenly collapsed to 8.64 in the 2018
The returns of Induslnd bank from 2017 are as follows 49.01, -3.10, -5.53, -40.76,
and 14.16. We can see that it is constantly giving negative except 2017 and 2021.
Hence there is no development in the stock returns.
The returns of NTPC from 2017 are as follows 7.59, -16.11, -3.90, -16.59, and
35.15. We can see that it is constantly giving negative except 2017 and 2021.
Hence there is no development in the stock returns.
By the analysis we can see that Bajaj Finance Ltd. has always given effective
returns. The returns are 109.33, 50.34, 60.35, 25.05 and 42.71 from 2017
respectively, so axis can help in constructing effective portfolio.
When we compare Titan Company with other stocks, we can find that Titan
Company has never given negative returns. The return of the stock is 58.49 and
risk is 54.81 where risk is lower than return, hence it is good for investment.
The Risk and Return of Tech Mahindra is 28.82 and 23.13 respectively, as it
contains less risk and less return it is good for entry level traders.
It is said that when risk is high the return will also be high, but when we see ITC
Risk is 11.70 and Return is 0.25. By this we can conclude that Return is not
dependent on Risk.
Suggestions
Investor should analyze the risk factors involved in the stock market and also
have thorough knowledge of the risk which will help him to plan his investment
in such a manner to minimize the risk involved with investments.
The investor should always be prepared to hold the stock for a certain period of
time to take out the benefits from the rising trends in the market. Investor
should be very careful in the timings of the purchase and sale of the stock which
is the most important aspect in trading.
There is another way to avoid the risk that is to have an investment in short term
security rather than having in long term investment.
The standard deviation calculation can yield the variability of the return, if at all
any inconsistency found in the earnings it is better to avoid it.
According to the study I can suggest that investors can invest in the shares which
earn higher average return. The investors can also invest in the companies which
is associated with lesser risk.
The risk and return of Ultra tech Cement are 21.32, 21.12 respectively. This has
given moderate risk with moderate return. Hence it is good for investment.
Conclusion
This study was conducted for testing the utility of Sharpe’s single index model in
optimum portfolio construction which included 30 company scrips which is listed at
Bombay stock exchange with Sensex as the bench mark index. This study made an
effort to help the investors who plan to invest in the companies which are listed at
Bombay stock exchange considering only 30 companies which are listed in Sensex. The
method chosen for study is very effective and feasible as it is done continuously. This
study will help the investors to minimize the overall risk and maximize return on their
investment over the period of time and manage effective portfolio. Sharpe’s index model
developed by William Sharpe proves that it is the best model for investment. Thus, the
investors can diversify their risk by investing in group of securities.
Bibliography
Prasanna Chandra, ‘Investment Analysis and Portfolio Management’, Tata Mcgraw hill
publication, 2nd edition 2005.
Manjunatha T (2009), ‘Risk and Return analysis of Bombay stock exchange Sensex
companies’.
Indian journal of finance, volume.3 (12), page number 21-27.
Oviatt, BM & Bauerschmidt, AD, (1991) ‘A test of simultaneous relationships management
science’, Business risk and return, volume.37 (11), page number 1105-1423.
Bettis RA and Mahajan V (1985), ‘Risk return performance of diversified firms’.
Management science, volume.31 (7), page number 785-799.
Cootner, ph. & Holland, dm (1970) ‘Rate of Return and Business Risk’. The bell journal of
Economics and management science, volume.1 (2), page number 211-236.
Guptha SK and Joshi R, (2014) ‘Security Analysis and Portfolio Management’. New delhi:
Kalyani publishers.
Madhavan, Ananth; Yaung, Jain (2003), ‘Practical risk analysis’, journal of portfolio
Management, volume 30.1, page number 73-85.
Jenning, William W; Reichenstein, William (2008), ‘the extend portfolio in private wealth
Management’, the journal of wealth management, volume 11.1, page number 36-40.
S.kushalapas; Kundar, Sharmila (2014), ‘Risk management through efficient portfolios’,
journal of applied financial management perspective, page number 967-974.
Jones Trauist Brown Jack, (2009) Integrating Asset Liability Risk management with portfolio
Optimization for individual investors of wealth management, volume.12.3, page number 12-
15.
Wood, David A (2002), ‘Portfolio optimization benefits from integration analysis of risk’,
Strategy and Valuation, Journal of oil and gas, volume.100.27, page number 26-33.
Drake John R, Byrd Terry Anthony (2006), ‘Risk in the information technology project
portfolio management’, Journal of information technology theory and application,
volume.8.3, page number 1-11.
Dowd, Kewin (1999), ‘Financial risk management’, Financial Analysis Journal, Volume
55.4, page number 65-71,
Websites:
www.reliancesmartmoney.com
www.bseindia.com
www.wikipedia.com
www.nseindia.com
www.moneycontrol.com