Study on analysis of stock return behavior of Infosys
Submitted in partial fulfillment of the requirements for the award of the degree Of MASTER OF BUSINESS ADMINISTRATION (SBS SWISS BUSINESS SCHOOL) To SBS SWISS BUSINESS SCHOOL, ZURICH

BY Sivaji.A Student Registration Number – SA1032 Under the guidance of Prof. Vaishnavi Bhatt


Infosys has been a prime beneficiary of the outsourcing boom that has taken place in India throughout the 2000s. Infosys' biggest risk is its continued rapid growth.Introduction:Infosys Limited. In recent years. While the company's reputation is a major asset in attracting new recruits. Infosys Limited was started in 1981 by seven people with US$ 250. independent testing and validation services. particularly new recruits. HR. and implementation of software. despite lower salaries. It commands larger. product engineering.604 billion. re-engineering. Infosys' business is employee intensive. corporations have flocked to India in search of inexpensive but skilled labor for their own overseas operations. maintenance. application services. its closest competitor. resulting in higher revenue per employee. however. Their offerings are in business and technology consulting. less than the industry average. systems integration. as U. The company's reputation and its best in industry training make it easy for it to attract high caliber candidates. maintenance. At the same time. IT infrastructure services and business process outsourcing. Although Infosys' margins have dropped in recent years. Infosys Technologies (NASDAQ: INFY) is an Indian IT services firm that develops custom software and provides business process outsourcing (accounting. it pays its employees. the company is still significantly more profitable than Wipro. Today. Infosys are global leaders in the "next generation" of IT and consulting with revenues of US$ 6. Infosys along with other Indian firms have also faced rapid wage inflation. IT) for large corporations.000 employees at the end of 2003 to over 72.S. formerly Infosys Technologies Limited is a global technology Services Company headquartered in Bangalore. more lucrative projects. Services: Infosys makes most of its money from the development. Industries: Infosys primarily serves the following industries:     Manufacturing Banking and financial services Insurance Telecom . India.000 today. training and integrating increasingly large numbers of new recruits will prove a major challenge for the company. meaning that the company has to hire large numbers of employees to in order to grow revenue. It is the second largest IT exporter in India. custom software development. In the near term. The company has grown from just over 15.

• The share price surged to Rs. Infosys is currently trading at Rs. • Infosys made an initial public offer at Rs. 8. Infosys’ sales and earnings compounded at more than 70% a year. Infosys pioneered the Global Delivery Model (GDM).84%.3%. .100 by 1999 making it the costliest share on the market at the time. • In 1982. almost a 60% premium on the day of listing. with the least amount of acceptable risk. Infosys opened an office in Bangalore which soon became its headquarters. 95 a share in February 1993 and was listed on stock exchanges in India in June 1993 • Interestingly. a sovereign wealth fund owned by Abu Dhabi. 95 per share. where it makes the best economic sense. The capital appreciation via Infosys shares is out of this world. 2228 (NSE). and the Government of Singapore also hold significant shareholdings. since listing on the Bombay Stock Exchange till the year 2000. Abu Dhabi Investment Authority. Hence Infosys has given its investors handsome dividends every quarter on quarter. banking and financial services are the largest accounting for 30. Infosys takes pride in building strategic long-term client relationships. • The trading opened at Rs. 6 years and the share multiplied 85 times • According to Forbes magazine. which is close 23 times of its IPO price.5% of our revenues come from existing customers Life Insurance Corporation of India has 3. followed by Telecom at 19. The GDM is based on the principle of taking work to the location where the best talent is available.2% of the company's revenue.145 a share. Infosys IPO was undersubscribed but Morgan Stanley bailed it put by picking up 13% of equity at the offer price of Rs. 98. The remaining public shares are owned by financial institutions and individual investors.   Retail Energy Transportation Of the 7 industries that Infosys serves. which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing.

Thus. the findings of past studies are strong indications of information content of volatility on the markets. At the same time they observed that there exists a bi-directional causal relation between return and volume. which could be used by investors to earn abnormal profit. Bekaert and Wu (2000) not only support this finding. The study found out there is a contemporaneous and dynamic relationship between return volatility and trading volume and return volatility contains information about upcoming trading volumes. In summary. Assogbavi (2007) used vector auto-regression model to analyze dynamic relationship between returns and trading volume using weekly data of individual equities of the Russian Stock Exchange. evidence of the speed of information transmission in markets. The studies are given as follows. Using the Generalized Method of Moment (GMM) approach to estimate the simultaneous equations to of trading volume and .(2005) for the Kuala Lumpur stock exchange found that the persistence in return volatility remains even after volume is included in the conditional variance equation Ratner and Leal (2001) examine the Latin American and Asian financial markets and find a positive contemporaneous relation between return and volume in these countries except India.Literature review: Many studies have been made by the various researchers into various aspects of stock returns and stock volume of companies and Indian stock market. Al-Khouri and Ajlouni (2007) reported that the price-limit technique was effective in reducing the volatility in the Amman stock exchange. They found a strong evidence of bi-directional relationship between volume and returns Floros and Vougas (2007) used GARCH and GMM method to investigate the relationship between trading volume and returns in Greek stock index futures market and found that trading volume was used as the indicator of prices. De Medeiros and Doornik (2006) investigated the empirical relationship between stock returns. return volatility and trading volume using data from the Brazilian stock market. Ahmed et at. Atmeh and Dobbs (2006) investigated the performance of moving average trading rules in the Jordanian stock market and found that technical trading rules can help to predict market movements. . but also suggest that negative shocks generate a greater response in volatility than positive shocks of an equal magnitude. Schwert (1981) to measure the impact on the value of a firm of a change in the regulatory environment. the return and volume are strongly related contemporaneously but there is little evidence that either can be used to predict the other.

nseindia. Rashid (2008) explained the impact of trading volume on stock market volatility in the Arab Economy.. et. Limitations:• • The study is limited to three years data of Infosys stock returns The survey is restricted to hundred respondents only because of time constraint Bibliography: • www. most of previous researchers found significantly positive contemporaneous relationship between trading volume and price volatility but they found negative relationship between lagged trading volume and price volatility. The study found that there is an increasing in both trading volume and stock price volatility and volume-stock price movements are significantly integrated for all selected markets in the study. Sabri. Zolontoy and Melenberg (2007) studied the dynamic relationship between trading volume. . volatility. so this study will be the first to provide evidence on how Indian stock market and trading volume responds to new information. (2007) investigated the dynamic relation between market-wide trading activity and returns in 46 markets and reported strong positive relationship between turnover and past returns. and stock returns at the international stock markets and found no evidence of the trading volume affecting the serial correlation of stock market returns. Griffin. Up to now.price volatility. Research objective:• • To study stock returns changes of Infosys basis on stock volume To understand the investor perception towards stock returns of Infosys Hypothesis statement:• There has been significant change of Infosys stock return on the basis of stock volume Research methodology:• • T-test Multiple regression Sample size:• Sample size of this research is 100 respondents through interviews and questioner basis. there is no empirical study about trading volume and stock returns in Indian stock market is undertaken. http://www.• • • .