Term paper of Quantitative technique

Analysis of share price of M&M Ltd and Sensex points (closing values)
12/25/2008 Mahindra and Mahindra Ltd JITENDER SINGH

Acknowledgement
The completion and submission of this project would have not been possible without the help of my friends and the source of my project like net and some books. The topic encouraged me to go through it as it is the one of the latest one and find out some special things before Miss Maninder Kaur.

Jitender Singh R346A13 3020070064

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INDEX
S.NO. 1. 2. 3. 4. 6. 7. PARTICULARS History Company’s profile Company’s Business Company’s Product Company’s Group Biblography Page. No. 4 5 6-7 8 9

Company’s Quantitative Analysis 10-17

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Introduction
HISTORY
Mahindra & Mahindra Limited is part of the US $6.7 billion Mahindra Group, an automotive, farm equipment, financial services, trade and logistics, automotive components, after-market, IT and infrastructure conglomerate. The company was set up in 1945 as Mahindra & Mohammed. Later, after the partition of India, Ghulam Mohammad returned to Pakistan and became that nation's first finance minister. Hence, the name was changed from Mahindra & Mohammed to Mahindra & Mahindra in 1948. Initially set up to manufacture general-purpose utility vehicles, Mahindra & Mahindra (M&M) was first known for assembly of the iconic Jeep in India. The company later branched out into manufacture of light commercial vehicles (LCVs) and agricultural tractors, rapidly growing from being a manufacturer of army vehicles and tractors to an automobile major with a growing global market. At present, M&M is the leader in the utility vehicle (UV) segment in India with its flagship UV, the Scorpio (known as the Mahindra Goa in Italy). M&M is India's largest SUV maker.

Profile of Mahindra & Mahindra Limited
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Mahindra & Mahindra Limited

Type Founded Headquarters

Conglomerate 1945 Mumbai, India Keshub Mahindra (Chairman), Anand

Key people

G.Mahindra (Vice-Chairman & Managing Director)

Industry Revenue Employees Website

Automotive US$ 6.7 billion (2008) 65,000 plus www.mahindra.com/

BUSINESS
Mahindra & Mahindra grew from being a maker of army vehicles to a major automobile and tractor manufacturer. It has acquired plants in
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China and the United Kingdom, and has three assembly plants in the USA. M&M has partnerships with international companies like Renault SA, France and International Truck and Engine Corporation, USA. M&M has a global presence and its products are exported to several countries. Its global subsidiaries include Mahindra Europe Srl. based in Italy. Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Co. Ltd. M&M is the third largest tractor company in the world. It is also the largest manufacturer of tractors in India with sustained market leadership of around 25 years. It designs, develops, manufactures and markets tractors as well as farm implements. Mahindra (China) Tractor Co. Ltd. manufactures tractors for the growing Chinese market and is a hub for tractor exports to the USA and other western nations. M&M has a 100% subsidiary, Mahindra USA, which assembles products for the American market. M&M made its entry into the passenger car segment with the Logan in April 2007 under the Mahindra Renault joint venture. M&M will make its maiden entry into the heavy trucks segment with Mahindra International, the joint venture with International Truck, USA. M&M's automotive division makes a wide range of vehicles including MUVs, LCVs and three wheelers. It offers over 20 models including new generation multi-utility vehicles like the Scorpio and the Bolero. At the recent Delhi Auto Show, Mahindra executives said the company is pursuing an aggressive product expansion program that will see the launch of several new platforms and vehicles over the next three years, including an entry-level SUV designed to seat five passengers and powered by a small turbo diesel engine. Later in 2008, it will unveil the all-new Ingenio SUV, which will be joined in 2009 by a pickup derivative. In early 2008, Mahindra commenced its first overseas CKD operations with the launch of the Mahindra Scorpio in Egypt, in partnership with the Bavarian Auto Group. This was soon followed by assembly facilities in Brazil. Vehicles assembled at the Plant in Bramont, Manaus, include Scorpio Pik Ups in single and double cab pick-up body styles as well as sports utility.
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The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its 'Global 200: The World's Best Corporate Reputations' list. Mahindra is also gearing up to sell the Scorpio SUV and pickup next year in North America, through an independent distributor, Global Vehicles USA, based in Alpharetta, Georgia. AWARDS 1. Bombay Chamber Good Corporate Citizen Award for 2006-07 2. Deming Application Prize 3. Japan Quality Medal in 2007 4. Business world FICCI-SEDF Corporate Social responsibility Award 2007

Products
MODELS • Mahindra Thar • Mahindra Bolero ○ Mahindra Bolero Camper
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○ Mahindra Bolero Inspira ○ Mahindra Bolero Stinger Concept • Mahindra Scorpio ○ Mahindra Scorpio Getaway ○ Mahindra Scorpio First • Mahindra Legend

Mahindra-Renault Logan (in cooperation with Renault)

• Mahindra Axe • Mahindra Major ○ Mahindra Souvenir Concept • Mahindra Commander • Mahindra Cab Chassis

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MAHINDRA GROUP
Core Business Activities

• Automotive • Farm Equipment • Systech • Trade & Financial Service • Information Technology • Infrastructure Development
Community Initiatives

• Mahindra United World College of India • Mahindra United, a football club based in Mumbai, Maharashtra • Mahindra Foundation

K. C. Mahindra Education Trust: Nanhi Kale

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Quantitative Technique Analysis

T e va e of M&M L a d S s fromD h lu td n en ex ecem er 01,2007 to b Novem er 30, 2008 b
Date
Monday, December 03, 2007 Tuesday, December 04, 2007 Wednesday, December 05, 2007 Thursday, December 06, 2007 Friday, December 07, 2007 Monday, December 10, 2007 Tuesday, December 11, 2007 Wednesday, December 12, 2007 M&M Ltd.(BSE closing) 750.9 771.85 773.7 784.6 780 776.1 782.8 787.8 Sensex (BSE closing) 19,363.19 19,603.41 19,529.50 19,738.07 19,795.87 19,966.00 19,930.68 20,290.89

Measures of share price of M&M Ltd and Sensex
M&M Ltd.
Mean Median Mode Quartile (Q1) Quartile
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Sensex
15321.58 15422.31 13742.03 17363.27

593.16 592.9 658.65 deviation 533.77 deviation 667.77

(Q3) Standard deviation Skewnees Kurtosis Correlation(Pearson) Regression equation Intercept Slope Covariance

127.6 -0.4524 0.348 0.09545 1759.83 0.0398 370732.72

3056.46 -0.353 -0.281

-17.38 22.86

Interpretation:
Mean:
data. Mean = (X1 + X2 + X3 + …………………………+ Xn)/n Mean of share price of M&M Ltdis 593.16 which show that the average price of shares of the company for last one year is RS 593.16 It helps us to compare the average value of the whole data with next year data. It is used to find a value which can represent the whole set of

M&M Ltd

Sensex 15321.59

Mean Median: The

593.16

median is that point in a distribution above and below which are 50% of the scores; in other words, the median is the midpoint. If there are an odd number of scores, the median is the middle score. If
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there is an even number of scores, the median is the point halfway between the two middle scores. In other words, we can say that median divide the distribution in two equal parts.

M&M Ltd Median
592.9

Sensex
15422.31

Median of M&M Ltd. shows that half of the share prices of company is below 592.9 and half are above. Similarly Sensex value shows that in last one year the middle price of Sensex is 15422.31.

Mode:
numbers.

It is the most frequently occurring number in a group of

M&M Ltd. Mode
658.65

Sensex

Value 658.65 shows that for M&M Ltd the most number of repeated share prices is Rs 658.65.

Quartile: Returns the quartile of a data set. Quartiles often are used
in sales and survey data to divide data into groups. For example, we can use QUARTILE to find the top 25 percent of incomes in a population.
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Quartile deviation

M&M Ltd

Sensex
13742.03 17363.27

Lower quartile (Q1) 533.77 Upper quartile (Q3) 667.77

Lower quartile of the M&M Ltd. is 533.77 which show that out of total values 25 % of the share prices of the company lies before this value. This helps us to calculate the 25th percentile of the company’s share price in last one year. Whereas for Sensex it is 13742.03 which similarly tell us that 25 percent of the total values are below this. Upper Quartile of the M&M Ltd is 667.77 which tell us that of the total number of values of the last years share prices 75 % lies before this. This helps us to divide the whole data into the area which consists of the 75% of the data.

Standard Deviation:
The standard deviation is a measure of how widely values are dispersed from the average value (the mean).

M&M Ltd
Standard deviation
127.60

Sensex
3056.46

The high Standard deviation of the company and Sensex shows that during last one year the fluctuation of share prices are very high and the stocks volatility is also very high. This shows that in current situation the shares of M&M Ltd are less trust worthy.

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Variance: =
Where ‘x’ is the (number1, size. sample mean AVERAGE number2…) and n is the sample

M&M Ltd

Sensex
9341951.828

Variance

16281.66

It measures the variability of the data from its mean, variance of M&M Ltd, which is high and shows that square of the deviation in the share price of the company from the middle value is high.

Covariance:
The covariance is:

Where x and y are the sample means and n is the sample size. Covariance 370732.7267

It measures how the share price of M&M Ltd and the points of Sensex vary simultaneously. The value of covariance is very high which means the share price of M&M Ltd and Sensex deviate simultaneously.
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Skewnees: Skewnees characterizes the degree of asymmetry of a
distribution around its mean. Positive Skewnees indicates a distribution with an asymmetric tail extending toward more positive values. Negative Skewnees indicates a distribution with an asymmetric tail extending toward more negative values.

Skewness =
M&M Ltd Skewness -0.4254

Sensex
-0.353

Negative skewness of M&M Ltd shows that values distribution are more towards the negative side of mean i.e. more values are less than the mean of the share price.

Kurtosis:

Kurtosis characterizes the relative peakedness or flatness of a distribution compared with the normal distribution. Positive kurtosis indicates a relatively peaked distribution. Negative kurtosis indicates a relatively flat distribution.

M&M Ltd
Kurtosis 0.348

Sensex
-0.282

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Positive Kurtosis of M&M Ltd shows that the distribution curve of the share prices of the company is having more peakedness than the normal distribution curve. Whereas the negative value of the Sensex shows that the peakedness in its distribution curve is less than normal distribution curve.

Correlation:

It helps to determine the relationship between two properties. It measures the extent of relationship between the stock market index return and the stock return in a particular period.

Pearson coefficient correlation

of 0.9545

As the correlation between the shares prices of the M&M Ltd and Sensex is 0.9545, which is positive hence it shows the high positive relation between the company and the Sensex. This means that both M&M Ltd and Sensex are related enough that Sensex can explain the movements of share prices of M&M Ltd. This means that if prices at Sensex falls this can intimate that prices of M&M Ltd will also Fall.

Regression: It is used to check the dependency of one variable on
the other. It shows the change in dependent variable with change in independent variable. In this case, the value of share price of M&M Ltd is depending upon the Sensex value. So, we only find the regression equation of share price of M&M Ltd on Sensex. Let us suppose X denotes the share price of M&M Ltd and Y denotes value of Sensex. The general, regression equation of X on Y; X-x=bxy (Y-y)
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Where “x” is arithmetic mean of M&M Ltd share prices and “y” is arithmetic mean of Sensex valves.

Regression equation of M&M Ltd share price on X=0.387Y- 5376.29 Sensex

Trend Line: Returns values along a linear trend. It fits a straight line
(using the method of least squares) to the arrays known _y's and known_x's. It Returns the y-values along that line for the array of new_x's that you specify. Trend line for M&M Ltd share price (BSE closing)

Above trend line of the M&M Ltd. shows that from last one year the share price of the company is falling and it is falling with the same pattern i.e. both the side of the trend line have equal data.

Trend line of Sensex:

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Above trend line of the Sensex shows that from last one year the share price of the company is falling and it is falling with the same pattern i.e. both the side of the trend line have equal data.

Bibliography:
www.google.com www.wikipedia.com www.mahindraltd.com www.yahoofinance.com www.economictimes.com

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