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CHAPTER 1
1.1 INTRODUCTION
Risk and return are most important concepts in finance. Risk and return concepts are
basic to the understanding of the valuation of assets or securities.
Return expresses the amount which an investor actually earned on an investment
during a certain period. Return includes the interest, dividend and capital gains; while
risk represents the uncertainty associated with a particular task. In financial terms, risk
is the chance or probability that a certain investment may or may not deliver the
actual/expected returns.
The risk and return trade off says that the potential return rises with an increase in
risk. It is important for an investor to decide on a balance between the desire for the
lowest possible risk and highest possible return.
Risk in investment exists because of the inability to make perfect or accurate
forecasts. Risk in investment is defined as the variability that is likely to occur in
future cash flows from an investment. The greater variability of these cash flows
indicates greater risk.
Variance or standard deviation measures the deviation about expected cash flows of
each of the possible cash flows and is known as the absolute measure of risk; while
co-efficient of variation is a relative measure of risk.
The term "risk and return" refers to the potential financial loss or gain
experienced through investments in securities. An investor who has registered
a profit is said to have seen a "return" on his or her investment. The "risk" of
the investment, meanwhile, denotes the possibility or likelihood that the
investor could lose money.
If an investor decides to invest in a security that has a relatively low risk, the
potential return on that investment is typically fairly small. Conversely, an
investment in a security that has a high risk factor also has the potential to
garner higher returns.
Any rational investor, before investing his or her invertible wealth in the stock,
analyses the risk associated with particular stock. The actual return he receives from a
stock may vary from his expected return and the risk is expressed in terms of
variability of return. The down side risk may be caused by several factors, either
common to all stock or specific to a particular stock. Investor in general would like to
analyze the risk factors and a through knowledge of the risk help him to plan his
portfolio in such a manner so as to minimize the risk associated with the investment.
RISK & RETURN
Investment decisions are influenced by various motives. Some people invest in
a business to acquire control & enjoy the prestige associated with in. some people
invest in expensive yachts & famous villas to display their wealth. Most investors,
however, are largely guided by the pecuniary motive of earning a return on their
investment. For earning returns investors have to almost invariably bear some risk. In
general, risk & return go hand in hand.
Sometimes the best investments are the ones you don't make. This is a maxim which
best explains the complexity of making investments. There are many investment
avenues available for investors today.
In financial planning, the investment goal must be considered in defining risk. If your
goal is to provide an acceptable amount of retirement income, you should construct an
investment portfolio to generate an expected return that is sufficient to meet your
investment goal. But because there is uncertainty that the portfolio will earn
its expected long-term return, the long-term realized return may fall short of the
expected return. This raises the possibility that available retirement funds fall short of
needs - that is, the investor might outlive the investment portfolio. This is an example
of "shortfall risk." The magnitude and consequences of the potential shortfall deserve
special consideration from investors. [3] However, since the uncertainty of return
could also result in a realized return that is higher than the expected return,
the investment portfolio might "outlive" the investor. Therefore, considerations of
shortfall risk are subsumed by considering risk as theuncertainty of investment return.
Different people have different motives for investing. For most investors their interest
in investment is an expectation of some positive rate of return. But investors cannot
overlook the fact that risk is inherent in any investment. Risk varies with the nature of
return commitment. Generally, investment in equity is considered to be more risky
than investment in debentures & bonds. A closer look at risk reveals that some are
uncontrollable (systematic risk) and some are controllable (unsystematic risk).
RETURN
Return is the primary motivating force that drives investment. It represents the reward
for undertaking investment. Since the game of investing is about returns (after
allowing for risk), measurement of realized (historical) returns is necessary to assess
how well the investment manager has done.
In addition, historical returns are often used as an important input in estimating future
prospective returns.
Components of Return
The return of an investment consists of two components.
Current Return:
The first component that often comes to mind when one is thinking about return is the
periodic cash flow, such as dividend or interest, generated by the investment. Current
return is measured as the periodic income in relation to the beginning price of the
investment.
Capital Return:
The second component of return is reflected in the price change called the capital
return- it is simply the price appreciation (or depreciation) divided by the beginning
price of the asset. For assets like equity stocks, the capital return predominates.Thus,
the total return for any security (or for that matter any asset) is defined as:
Total Return = Current return + Capital return
entity to assume that risk. A perfect hedge can reduce risk to nothing except for the
costs of the hedge.
declines, since they're worth less to investors than newly issued bonds paying a higher
rate. Rising interest rates also usually mean lower stock prices, since investors put
more money into interest-paying investments because they can get a strong return
with less risk.
3. Purchasing power risk:
Variations in the return are caused also by the loss of the purchasing power of
currency. Inflation is the reason behind the loss of the purchasing power. Purchasing
power risk is probable loss in the purchasing power of returns to be received.
Inflation may be demand pull or cost push inflation. On demand pull inflation the
demand for goods and services are in excess of their supply. At full employment level
of factors of production, economy would not be able to supply more goods in short
run and the demand for the products pushes the price upwards. The equilibrium
between the demand and the supply is attained at the higher price.
The cost push inflation as the name itself indicates that the inflation or the raise in the
price is caused by the increase in the cost. The increase in the cost of raw material,
labour and equipment makes the cost of production high and ends in high price level.
Thus the cost inflation has a spiraling effect on the price level.
Unsystematic Risk
This is the risk inherent in a particular asset class. The best way to combat this risk is
by diversification. However, one must remember that the diversification must be in
the class of asset and not the asset itself. An example of the above is evenly
distributing your portfolio in bank deposits, Reserve Bank of India (RBI) bonds, real
estate and equities. That way if a certain unsystematic risk affects let's say the real
estate market (say the prices crashes), then the presence of other classes of assets in
your portfolio saves you from a total washout. However, note that diversifying within
the same asset class (buying different equity shares) is not strictly combating
unsystematic risk.
Unsystematic risk can be classified into five types.
1. Business Risk 2. Financial Risk 3. Regulation Risk 4. Reinvestment Risk
5. International Risk
1. Business Risk:
It is that portion of unsystematic risk caused by operating environment of the
business. Business risk arises from the inability of the firm to maintain its competitive
edge and the growth of the stability of the earning variation that occurs in the
operating environment is reflected in the operating income and expected dividends. It
indicates business risk. Business risk is any risk that can lower a businesss net assets
or net income that could, in turn, lower the return of any security based on it. Some
business risks are sector risks that can affect every company in a particular sector,
while some business risks affect only a particular company.
2. Financial Risk:
It refers to the variability of the income to the equity capital due to debt capital.
Financial risk in a company is associated with the capital structure of the company.
Capital structure of the company consists of equity funds and borrowed funds. The
presence of debt and preference capital results in commitment of paying interest or
prefixed rate of dividend.
This arises due to changes in the capital structure of the company. It is also known as
leveraged risk and expressed in the terms of debt-equity ratio. Excess of debt over
equity in the capital structure of a company indicates that the company is highly
geared even if the per capital earnings of such company may be more. Because of
highly dependence on borrowings exposes to the risk of winding up for its inability to
honour its commitments towards lenders and creditors. So the investors should be
aware of this risk and portfolio manager should also be very careful.
3. Regulation Risk:
Some investment can be relatively attractive to other investments because of
certain regulations or tax laws that give them an advantage of some kind. Municipal
bonds, for example pay interest that is exempt from local, state and federal taxation.
As a result of that special tax exemption, municipal can price bonds to yield a lower
interest rate since the net after-tax yield may still make them attractive to investors.
The risk of a regulatory change that could adversely affect the stature of an
investment is a real danger. In 1987, tax laws changes dramatically lessened the
attractiveness of many existing limited partnership that relied upon special tax
considerations as part of their total return. Prices for many limited partnership tumbled
when investors were left with different securities, in effect, than what they originally
bargained for. To make matter worse, there was not an extensive secondary market for
these liquid securities and many investors found themselves unable to sell those
securities at anything but "fire sale" prices if at all.
4. Reinvestment Risk:
It is important to understand that YTM is a promised yield, because investors
can earn the indicated yield only if the bond is held to maturity and the coupons are
reinvested at the calculated YTM (yield to maturity). Obviously, no trading can be
done for a particular bond if the YTM is to earned. The investor simply buys and
holds. Reinvestment risk the YTM calculation assumes that the investor reinvests all
coupons received from a bond at a rate equal to computed YTM at the bond, thereby
earning interest over interest over the life of the bond at the computed YTM rate in
effect, this calculation assumes that the reinvestment rate is the yield to maturity. If
the investor spends the coupons, or reinvest them at a rate different from the assumed
reinvestment rate of 10 percent, the realized yield that will actually be earned at the
termination of the investment in the bond will differ from the promised YTM. And, in
fact-coupons almost always will be reinvested at rates higher or lower than the
computed YTM, resulting in a realized yield that differs from the promised yield. This
gives rise to reinvestment rate risk. This interest-on-interest concept significantly
affects the potential dollar return. The exact impact is a function of coupon and time
of maturity, with reinvestment becoming more important as either coupon or time to
maturity, or both, rises specifically.
1. Holding everything else constant, the longer maturity of a bond, the
greater the reinvestment risks. Holding everything else constant, the higher
the coupon rate, the greater the dependence of the total dollar returns from
the bond on the reinvestment of the coupon payments.
5. International Risk:
International risk can include both country risk and exchange rate risk.
i. Exchange Rate Risk:
All investors who invest internationally in today's increasingly global
investment arena face the prospect of uncertainty in the returns after they convert the
foreign gain back to their own currency. Unlike the past when most U.S. investors
ignored international investing alternatives, investors today must recognize and
understand exchange rate risk, which can be defined as the variability in returns on
securities caused by currency fluctuations. Exchange rate risk is sometimes called
currency risk. Currency risk affects international mutual funds, global mutual funds,
closed-end single country funds, American depository receipts, foreign stocks and
foreign bonds. For example, a U.S. investor who buys a German stock denominated in
marks must ultimately convert the returns from this stock back to dollars. If the
exchange rate has moved against the investor, losses from these exchange rate
movements can partially or totally negate the original return earned.
ii. Country Risk:
Country risk, also referred to as political risk, is an important risk for investors
today. With more investors investing internationally, both directly and indirectly, the
political, and therefore economic, stability and viability of a country's economy needs
to be considered. The United States has the lowest country risk, and other countries
can be judged on a relative basis using the United States as a benchmark. Example of
countries that needed careful monitoring in the 1990s because of country risk included
the former Soviet Union and Yugoslavia, China, Hong Kong and South Africa.
iii. Liquidity risk
Liquidity risk is the risk associated with particular secondary market in which a
security trades. An investment that can be bought or sold quickly and without
significant price concession is considered liquid. The more uncertainty about the time
element and the price concession, the greater the liquidity risks. A treasury bill has
little or no liquidity risk, whereas a small OTC stock may have substantial liquidity
risk. \
RISK AVOIDANCE:
Investment planning is almost impossible without a thorough understanding of risk.
There is a risk/return trade off. That is, the greater risk is accepted, and the greater
must be the potential return as reward for committing ones fund to an uncertain
outcome. Generally, as the level of risk rises, the rate of return should also rise, and
vice versa. One way to handle risk is to avoid it. Risk avoidance occurs when one
chooses to completely avoid the activity the risk is associated with. In the investment
world, avoidance of some risk is deemed to be possible through the act of investing in
risk-free investments. Stock market risk can be completely avoided by one choosing
to have no exposure to it by not investing in equity securities.
1. Risk transfer:
Another way to handle risk is to transfer the risk. Risk transfer in investing can be
done where one may choose to purchase a municipal bond that is insured. One may
purchase a put option on a stock, which allows the person to put to or sell to
someone his or her stock at a set price, regardless of how much lower the stock may
drop. There are many examples of risk transfer in the area of investing.
2. The Risk Averse Investor:
Do investors dislike risk? In economics in general, and investments in particular, the
standard assumption is that investors are rational. Rational investors prefer certainty
to uncertainty. A risk-averse investor is one who will not assume risk simply for its
own sake and will not incur any given level of risk unless there is an expectation of
adequate compensation for having done so. In fact, investors cannot reasonably
expect to earn larger returns without assuming larger risks. Investors deal with risk by
choosing (implicitly or explicitly) the amount of risk they are willing to incur. Some
investors choose to incur high level of risk with expectation of high levels of return.
Other investors are unwilling to assume much risk, and they should not expect to earn
large returns.
MEANING OF RETURN:
Return is one of the primary objectives of investment, which acts as a driving force
for investment. Risk is inevitable and it is positively correlated with expected return.
Return to an investor is of two types, current yield and capital appreciation. Current
yield is the return, which is got in the form of individuals/interest whereas capital
appreciation is the return, which we get after liquidation of shares.
Return = Current yield (dividend/interest) + Capital
Appreciation/ Capital Gain
TYPES OF RETURN
1.
HISTORICAL RETURNS
Return calculated are on past data which has already occurred is called as historical
return. Historical return is a post-mortem analysis of investment, which lacks insight
for future. Historical return is less risky and more accurate compared to expected
return since it does not involve prediction of interest or dividend or closing price.
Historical return is also called as post return or actual return.
Return = Cash payment + Closing price - Beginning price
Beginning Price
2.
EXPECTED RETURN
Return calculated based or future estimates and calculation is called as expected return.
Expected Return = Expected Dividend + Capital Gain (expected)
Beginning price
RISK MEASUREMENT
Understanding the nature of risk is not adequate unless the investor or analyst is
capable of expressing it in some quantitative terms. Expressing the risk of a stock in
quantitative terms makes it comparable with other stocks. Measurement cannot be
assured of cent percent accuracy because risk is caused by numerous factors such as
social, political, economic and managerial efficiency. Measurement provides and
approximates qualification of risk.
1. Volatility:
Of all the ways to describe risk, the simplest and possibly most accurate is "the
uncertainty of a future outcome". The anticipated for some future period is known as
expected return. The actual return over some past period is known as the realized
return. The simplest fact that dominates investing is that the realized return on an asset
with any risk attached to it may be different from what was expected. Volatility may
be described as the range of movement (or price fluctuation) from the expected level of
return. The more a stock. For example, goes up and down in price, the more volatile
that stock is. Because wide price swings create more uncertainty of an eventual
outcome, increased volatility can be equated with increased risk. Being able to
measure and determine the past volatility of a security is important in that it provides
some insight into the riskness of that security as an investment.
2. Standard Deviation:
Investors and analyst should be at least familiar with study of probability
distributions. Since the return, an investor will earn from investing is not known, it
must be estimated.
In statistics and probability theory, standard deviation (represented by the symbol
sigma, ) shows how much variation or "dispersion" exists from the average (mean,
or expected value). A low standard deviation indicates that the data points tend to be
very close to the mean; high standard deviation indicates that the data points are
spread out over a large range of values.
Rate of Return =
Variance (2) =
Deviation
12
Standard deviation =
7. Take the square root of the number from the previous step. This is the standard
deviation.
o You may need to use a basic calculator to find the square root.
o Be sure to use significant figures when rounding your answer.
Probability Distribution:
Probability represents the likelihood of various outcomes and are typically
expressed as a decimal (sometimes fractions arc used). The sum of the probabilities of
all possible outcomes must be 1.0, because they must completely describe all the
(perceived) likely occurrences. Probability distribution can be either discrete or
continuous. With a discrete probability, a probability is assigned to each possible
outcome. With a continuous probability distribution an infinite number of possible
outcomes exist. The most familiar continuous distribution is the normal distribution
depicted by the well-known bell shaped curve often used in statistics. It is a twoparameter distribution in that the mean and the variance fully describe it. To describe
the single most likely outcomes from a particular probability distribution, it is
necessary to calculate its expected value. The expected value is average of all possible
return outcomes, where each outcome is weighted by its respective probability of
occurrence. For investors, this can be described as the expected return. To calculate
the total risk associated with the expected return, the variance or standard deviation is
used. Since variance, volatility and risk can in this context be used synonymously, the
larger the standard deviation, the more uncertain the outcome.
Calculating a standard deviation using probability distributions involves
making subjective estimates of the probabilities and the likely returns. However, we
cannot avoid such estimates because future returns are uncertain. The prices of
securities are based on investors' expectations about the future. The relevant standard
deviation in this situation is the ex-ante standard deviation and not the ex-post based
on realized returns. Although standard deviations are based on realized returns are
often used as proxies for ex-ante standard deviations, investors should be careful to
remember that the past cannot always be extrapolated into the future without
modifications. Ex-post standard deviations may be convenient, but they are subject to
errors. One important point about the estimation of standard deviation is the distinction
between individual securities and portfolios. Standard deviation is a measure of the
total risk of an asset or a portfolio, including therefore both systematic and
unsystematic risk. It captures the total variability in the assets or portfolio's return,
whatever the sources of that variability. In summary, the standard deviation of return
measures the total risk of one security or the total risk of a portfolio of securities.
Risk-Return Tradeoff
The principle thai potential return rises with an increase in risk. Low levels of uncertainty
(low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk)
are associated with high potential returns. According to the risk-return tradeoff, invested money
can render higher profits only if it is subject to the possibility of being lost.
In 1860-61 the American Civil War broke out and cotton supply from United States of Europe
was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about
200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began
(for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).
At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a
place in a street (now appropriately called as Dalal Street) where they would conveniently
assemble and transact business. In 1887, they formally established in Bombay, the "Native Share
and Stock Brokers' Association" (which is alternatively known as " The Stock Exchange "). In
1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.
Thus, the Stock Exchange at Bombay was consolidated.
Pre-Independance Scenario - Establishment of Different Stock Exchanges
1874
With the rapidly developing share trading business, brokers used to gather at a
1875
street (now well known as "Dalal Street") for the purpose of transacting business.
"The Native Share and Stock Brokers' Association" (also known as "The Bombay
1880's
1894
1880 - 90's
1908
1920
1923
1934
1936
1937
1940
1944
1947
established
Establishment of "The Hyderabad Stock Exchange Limited"
"Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and
Shares Exchange Limited" were established and later on merged into "The Delhi
Stock Exchange Association Limited"
Types of Transactions
The flowchart below describes the types of transactions that can be carried out on the Indian
stock exchanges:
Advantages of OTCEI
1. Greater liquidity and lesser risk of intermediary charges due to widely spread trading
mechanism across India
2. The screen-based scripless trading ensures transparency and accuracy of prices
3. Faster settlement and transfer process as compared to other exchanges
4. Shorter allotment procedure (in case of a new issue) than other exchanges
National Stock Exchange:
In order to lift the Indian stock market trading system on par with the international standards. On
the basis of the recommendations of high powered Pherwani Committee, the National Stock
Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit
and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and others.
NSE provides exposure to investors in two types of markets, namely:
1. Wholesale debt market
2. Capital market
Wholesale Debt Market - Similar to money market operations, debt market operations involve
institutional investors and corporate bodies entering into transactions of high value in financial
instrumets
like
treasury
bills,
government
securities,
commercial
papers
etc.
Trading at NSE
1. Fully automated screen-based trading mechanism
2. Strictly follows the principle of an order-driven market
3. Trading members are linked through a communication network
4. This network allows them to execute trade from their offices
5. The prices at which the buyer and seller are willing to transact will appear on the screen
6. When the prices match the transaction will be completed
7. A confirmation slip will be printed at the office of the trading member
Advantages of trading at NSE
1. Integrated network for trading in stock market of India
2. Fully automated screen based system that provides higher degree of transparency
3. Investors can transact from any part of the country at uniform prices
4. Greater functional efficiency supported by totally computerized network.
Overview
TheIIFLGroupisaleadingfinancialservicescompanyinIndia,promotedbyfirstgeneration
entrepreneurs.Wehaveadiversifiedbusinessmodelthatincludescreditandfinance,wealth
management, financial product distribution, asset management, capital market advisory and
investmentbanking.
Wehavealargelyretailfocussedmodel,servicingover2millioncustomers,includingseveral
lakh firsttime customers for mutual funds, insurance and consumer credit. This has been
achievedduetoourextensivedistributionreachofcloseto4,000businesslocationsandalso
innovativemethodslikeseminarsalesanduseofmobilevansformarketinginsmallerareas.
Ourevolutionfromanentrepreneurialstartuptoamarketleadershippositionisastoryofsteady
growthbyadaptingtothechangingenvironment,withoutlosingthefocusonourcoredomainof
financialservices.OurNBFCandlendingbusinessaccountsfor68%ofourconsolidatedincome
inFY13andhasadiversifiedproductportfolioratherthanremainingamonolineNBFC.Weare
aleaderindistributionoflifeinsuranceandmutualfundsamongnonbankentities.Althoughthe
shareofequitybrokingintotalincomewasonly13%inFY13,IIFLcontinuestoremaina
leadingplayerinboth,retailandinstitutionalspace.
Location
Mumbai
Corporateoffice
IIFLC entre,LowerParel
IIFLHouse,SunInfotechPark,RoadNo.16V,PlotNo.B23,Thane
Registeredoffice
Yearof
incorporation
Industry
Keybusinesses
Employees
Businesslocations
Globalreach
IndustrialArea,WagleEstate,Thane,Maharashtra400604
1995
FinancialServices
Credit &Finance,WealthManagement,Financial
Product
Distri bution,CapitalMarketRelated
14,000+
Aroun d4,000locationsin900citiesandtowns
SriLanka,Singapore,Dubai,NewYork,Mauritius,UK,HongKong,
Switzerland
Listings
Listingdate
NSE, BSE
17May,2005
Registrars
Shorttermdebt
Link IntimeIndiaPvt.Ltd.
rating
Longtermdebt
rating
Domains
ISINcode
Bloombergcode
CRISILA1+&ICRA(A1+)
ICRA(AA)&CRISILAA/Stable
www.indiainfoline.com,www.iiflfinance.com,
www.ttweb.indiainfoline.com,www.flame.org.in
INE53 0B01024
IIFLINEQUITY
Wehaveatrackrecordofuninterruptedprofitsanddividendssincelisting.
Revenues
EBIDTA
PAT
Networth
ROE
Segmentalrevenuesplit
Vision
TobecomethemostrespectedcompanyinthefinancialservicesspaceinIndia.
Values
ValuesareIIFLaresummarisedinoneacronym:GIFTS.
Growthwithfocusedteamofdynamicprofessionals.
Integrityinallaspectsofbusinessnocompromiseinanysituation.
Fairnessinallourdealingsemployees,customers,vendorsandshareholdersallincluded.
Transparencyinwhatwedoandinhowandwhywedoit.
Serviceorientationisourcorevalue,imbibedbyallsalesaswellassupportteams.
Businessstrategy
Steadygrowthbyadaptingtothechangingenvironment,withoutlosingthefocusonour
coredomainoffinancialservices.
Deriskedbusinessthroughmultipleproductsanddiversifiedrevenuestream.
Knowledgeisthekeytopowersuperiorfinancialdecisions.
Keepcostslowandcontinuouslystriveforinnovation.
Customerstrategy
Remainlargelyaretailfocusedorganisation,drivingstickinessthroughknowledgeand
qualityservice.
Catertountappedareasinsemiurbanandruralareas,whichisrelativelysafefromcut
throatcompetition.
Targetthemicro,smallandmediumenterprisesmushroomingacrossthecountrythrough
aclusterapproachforlendingbusiness.
Usewidemultimodalnetworkservingasonestopshoptocustomers.
Peoplestrategy
Attractthebesttalentanddrivenpeople.
Ensureconducivemeritenvironment.
Liberalownershipsharing.
Ourlogo
The Shree Yantra is regarded in India as the most powerful and
mysticallybeautifulofallyantras(Sanskritwordforasymbolusedto
focus the mind). It predates the Vedas and is supposed to be the
favouriteYantraofLakshmi,theGoddessofWealthandProsperity.
Thispowerfulsymbol,saidtopromoteharmonyandtranquillityas
well,hasenduredformanycenturies.IIFLisengagedinthebusiness
ofcreatingwealthandtheadoptionoftheShreeYantraasitslogowas
butnatural.
Positioning
WhenwepioneeredonlinetradinginIndiawiththelaunchofourbrand5paisa,thetagline
wasItsallaboutmoney,honey.
WerecentlyrealignedourpositioningfromKnowledgeistheEdgetoWhenitsabout
Money.
TheIIFLbrandisassociatedwithtrust,knowledgeandqualityservice.Butmoreimportantly,the
brandstandsfortimelyassistanceprovidedtothecountrysunderbankedcustomers.
OurStrengths:
Managerialdepth
OurpromotersindividuallyarefirstgenerationIndianentrepreneurswithmeritoriousacademic
backgroundsandimpeccableprofessionalcareers.
NirmalJain,Chairman,isarankholderCharteredAccountant,CostAccountantandanMBA
fromIIMAhmedabadandMr.R.Venkataraman,ManagingDirector,isanElectronicsEngineer
fromIITKharagpurandanMBAfromIIMBangalore.
ThePromotershavebuiltthebusinessfromscratch,withoutpedigreeofalargefamilybusiness
orinheritedwealthandsteeredittowardsamarketleadingpositionbydintofhardworkand
enterprise.
Wehaveconsistentlyattractedthebestofthetalentfromacrossthefinancialsectorprivate
sectorbanks,foreignbanks,publicsectorbanksandestablishedNBFCs.Theseniormanagement
teamhaveyearsofexperienceandbackgroundssimilartopromotersandleadscompetentteams.
IIFLhasuninterruptedhistoryofprofitsanddividendssincelisting.Wehavedeliveredtotal
shareholderreturnsof34.3%CAGRfromlistingtillMarch31,2013.
Governance
ThePromotershavedemonstratedanexemplarytrackrecordofgovernanceandutmostintegrity.
Therehavebeennonotableregulatorystricturesoroversighteverinthegroupshistory.Thisis
despiteawidespreadandbroadrangeofoperationsgovernedbymultipleregulatorsincluding
RBI,SEBI,IRDA,FMCandNHB.Inaddition,wehaveeightlicensedsubsidiariesinmajor
globalfinancialcentres.
OurBoardhasindependentdirectors,highlyrespectedfortheirprofessionalintegrityaswellas
richfinancialandbankingexperienceandexpertise.Wehaveanadvisoryboardcomprising
stalwartswithlongandimmaculatecareersinbanks,publicserviceandlegalprofession.
Noneofthepromotersfamilymembershasheldmanagerialorboardpositionorhaverelated
partyorfinancialtransactionofanysignificance,sincelisting.Further,wehavenotlenttoany
relatedpartyorassociatedconcerns.Thepromotersdonothaveanyotherbusinessinterestsand
arecommittedtothecorebusinessoffinancialservicesundertheIIFLumbrella.
People
Ourpeopleformthebackboneofourorganizationandarethefoundationofoursuccess.We
havesignificantownershipbyemployeeswithacredoofownerswork,workersown,which
hasenabledustomaintainahighlymotivatedstaffdrivenbyownermindset.Wecreateowners
outofouremployeesnotjustbyofferingafinancialstakebutalsothroughautonomytotake
decisions,makemistakesandgrowconfidence,competenceandcareer.
Knowledge
IIFL is a knowledge driven organization and has over the years developed and
institutionalizedknowledgeaboutitsbusinessesatallthelevels.
Ourrootsareinoriginalresearchoneconomy,sectors,companies,capitalmarketsandglobal
financial trends. Our inhouse research capabilities gives us an edge in understanding
industrytrends,macroeconomicsituations,businesscycles,inflationandinterestratetrends,
technologicalchanges,regulatoryandlegalupdates,environmentalfactorsimpactinglabour,
rawmaterialsupply,pollutionnormsandforintermediateproductstrendsinendusersectors
andforconsumptionproductstrendsincustomershabits.
We have strong origination and KYC processes across our businesses to get deep
understandingofcustomersneedsandprofile.
Innovation
Wehavesuccessfullyexecutedanumberofinnovativeanddisruptiveideasinthefinancial
servicesindustrytorisefromastartuptoleadershippositioninlessthantwodecades.For
instance:
Wegaveawayallourresearchfreeonindiainfoline.comandacquiredmillionsofreaders.
Wepioneeredonlinetradingandrevolutionizedbrokingatlowestrateof5basispoints.
Weinductedahighprofileinstitutionalteamfromaforeignbrokeragehouseinafirstofits
kinddealinIndiabrokingindustry.
Distributionreach
Wearepresentinaround4,000businesslocationsacrossmorethan900citiesinIndia.Our
global footprint covers Colombo, Dubai, New York, Mauritius, London, Geneva and
Singapore.
Deriskedbusiness
IIFLhasaderiskedanddiversifiedbusinessmodelacrossmultiplerevenuestreams.We
offermultipleproductsacrossallsegmentsoffinancialservices.
Riskmanagement
The basis of our risk management and hence our sustainability is our underlying
conservatism.Theobjectiveofourriskmanagementprocessistoinsulatethecompanyfrom
risksassociatedwiththebusinesswhilesimultaneouslycreatinganenvironmentconducive
forgrowth.
Theeffectivenessofourriskmanagementpracticeemanatesfromourrichexperience.Itis
derivedfromadeepunderstandingoftheIndianeconomy,sectorialtrendsandcorporate
fundamentals.
Ourabilitytomanageorganizationalriskcascadesfromourboardofdirectors,comprising
professionals with rich and varied experience. The risk appetite defined by our board is
reflectedinourbusinessplansandintegratedintoouroperations.
Weidentifyrisksthroughappropriatesystems,indicatorsandrisksurveysreinforcedbyour
mangers. The companys welldefined organizational structure, documented policies and
standardoperatingprocedures,authoritymatrixandinternalcontrols ensureefficiencyof
operations,compliancewithinternalandregulatoryrequirements.
Wecontinuouslystrengthenourriskmeasurementtoolscustomizedtothenatureofeach
businesssegment.Manycriticaldecisionlevelsforinvestments,majorlendingandpolicy
initiativesareinstitutionalizedtroughappropriatecommittees.
Wellcapitalized
TheGrouphasnetworthofaroundRs20billion.Thecompanyhasasignificantlyunutilized
capacitytoleverage.
Technology
Rightfrominception,IIFLhasincubatedanddevelopednextgenerationtechnologyforits
corebusinesses.
IIFLsfrontofficesoftwareisseamlesslyintegratedtoahighlyautomatedproprietaryback
office,riskmanagementandMISsoftware.
IIFL Trader Terminal is an entirely home grown proprietary technology, which allows
tradinginEquitiesCash&Derivatives,Commodities,Forex,MutualFunds,NFOsandIPOs
onasinglescreen.
Customerservice
Ourexistingcustomerserviceorganizationhasevolvedwiththesingulargoalsinceinception
thatourcustomerexperienceshouldbethebest.Weofferservicesthroughmultiplecustomer
touchpointssuchaspersonalinteractionatouroffices,callcentre,email,andonlineweb
basedinterface.Wehavemadesignificantinvestmentinsystems,technology,peopleand
their training, to ensure high service standards. We have also won an award for Best
CustomerServiceinFinancialServices2013.
3
4
Whatwedo(ProductandServices)?
IIFLGroupofferscredit&financefacilitiesthroughitssubsidiaries:
IndiaInfolineFinanceLtd(98.87%subsidiary);and
IndiaInfolineHousingFinanceLtd(Whollyownedsubsidiary).
TheNBFChas ahighqualityloanbookofclosetoRs10,000crores,withadiversified
portfolioincluding:
Homeloans
SME&Traderloans
Healthcare&Equipmentfinancing
LoanssecuredagainstGold
CommercialVehiclefinancing
LoanssecuredagainstProperty
LoanssecuredagainstShares
WehavechosentobeadiversifiedportfoliocompanyratherthanamonolineNBFC.We
exerciseutmostprudenceincreditselection,monitoringandavoidconcentration.Ourcredit
evaluationprocessnotonlytakesintoaccountthevalueandqualityofthecollateral,butalso
thecashflowsofthepotentialborrower.Backedbyadiversifiedportfolio,robustcredit
assessment,effectiveriskmanagementtechniquesandanefficientcollectionmechanism,the
netNPAsarekeptwellundercontrolatlessthan0.2%.TheNBFCandlendingbusiness
accountedfor68%ofourconsolidatedincomeinFY13.
3
5
Revenues
Loanbook
36
Loanbookbreakup
NIM
37
GrossNPA
NetNPA
CAR
38
IIFLGroupofferswealthadvisoryservicesthroughitssubsidiaryIIFLWealthManagement
Ltd(82.44%subsidiary).
Thereisanincreasingneedforacomprehensivewealthmanagementsolutionasopposedto
disparateservicestoaddresscomplexityrelatedtotreasury,personalportfolio,cashflows
andlongterminvestments.Weareamongsttheleadingwealthmanagementcompanieswith
AssetsunderAdvice(AuA)ofmorethanRs40,000croreswithaHNIclientbaseofover
4,000families.
Our fixed income practice coupled with a large bond desk facilitate s direct access to
sovereign,corporateandcollateraliseddebt.
ThebusinessgrewrevenuesfromRs180millionin200809toRs2billionin201213.We
havemanagedthefivesignificantconstituentsthatgointosuccessfulwealthmanagement
andadvisoryservices:
We distribute a range of financial products like life insurance, mutual funds, National
PensionScheme(NPS),governmentandcorporatebonds.Infact,weareamarketleader
amongnonbankpromotedentitiesindistributionoflifeinsuranceandmutualfunds.
Wefollowanopenarchitectureapproachandconstantlytrytoinnovatechannelsthatreach
outtocustomersinthemostcosteffectivewaypossible.Ourstrengthinsemiurbanandrural
areashashelpedusreachseverallakhfirsttimecustomers.Weconductedasurveyofour
100smallcustomers.Watchthemonwww.indiainfoline.com/inclusion
IIFLsannualpremiummobilisation(APE)stoodatoverRs320croresduringFY13.
WepioneeredinternetbrokinginIndiaandrationalisedbrokerageratesfrom150basis
pointsinthelateninetiesto5basispoints.Althoughtheshareofequitybrokingintotal
incomewasonly13%inFY13,wecontinuetoremainaleadingplayerinboth,retailand
institutionalspace.
Ourextensionintocommoditiesandcurrencyadvisoryreconcileswithitsvisiontoemerge
asaonestopshopfinancialintermediary.Weareintheprocessofbuildingacultureof
advisoryandfinancialplanningtomoveawayfrompureexecutionandderiskourbusiness
further.
IIFLCapital,theinstitutionalequitiesdivisionoftheIIFLGroup,isthefirstportofcallfor
most leading foreign institutional investors and mutual funds that in vest in India. Our
unmatchedblockplacementcapabilityisrenownedandisunderpinnedbyourreputationfor
integrityandclientconfidentiality.
Revenuesincreased2.3%toRs552.53crin201213.
Marketshareinequity
Marketshareincommodity
4
1
WelaunchedourMutualFundbusinesstooffernicheproducts.TheIIFLNiftyETF,our
maidenscheme,carriesthelowestexpensesofanyequityETFinIndia.
Ourpassively managed Dividend OpportunitiesETF has beenrankedthesecondbest
performerbyValueResearch.Atotalofsixschemeshave beenlaunched,includingfour
closeendeddebtschemesandtwoopenendedequity
schemes.Total assets under
management (AUM) stoodat Rs3,271million
asonMarch 31,
2013.
Ourstrengthliesingaugingthemarketpulseandlaunchingnicheproductswithlowchurn
andoperationalefficiency,therebykeepingcostslow.
Thebusinessleveragesuponthestrengthofourresearchandplacementcapabilitiesofthe
institutionalandretailsalesteams.Ourexperiencedinvestmentbankingteampossessesthe
skillsettomanageallkindsofinvestmentbankingtransactions.Ourcloseinteractionswith
investorsaswellascorporatehelpsusunderstandandoffertailormadesolutionstofulfil
requirements.
Wepossessstrongplacementcapabilitiesacrossinstitutional,HNIandretailinvestors.
Someofourmarqueetransactions:
Awards:
1)BestWealthManagementHouse(India),2011&2012,TripleA
2) No.1inFixedIncomePortfolioManagementinIndia,2012EuroMoney
3)BestBrokingHousewithGlobalPresence,2011&2012D&B
4)TopPerformer,Equity(FICategory),2012BSEBestCommoditiesInvestment,2012Euro
Money
5)BestCustomerServiceinFinancialServices,2013RetailerCustomerServiceAwards
IndiaInfolineLtd
BSE:532636|NSE:INDIAINFO|ISIN:INE530B01024
MarketCap:[Rs.Cr.]1,426|FaceValue:[Rs.]2Industry:Finance&Investments
49.651.40(2.9%)
BSE
Day'sHigh|Low
Day'sVolumes
52WkHigh|Low
OpenPrice
Turnover
DeliverableVol.
6Mth.Avg.Vol.
49.901.35(2.8%)
NSE
Day'sHigh|Low
Day'sVolumes
52WkHigh|Low
OpenPrice
Turnover
DeliverableVol.
6Mth.Avg.Vol.
2014Jul31,00:00
50.25|47.05
64,802
93.35|47.05
48.50
3,136,730.00
15,345
280,636.89
2014Jul31,00:00
50.45|47.40
384,610
93.30|47.40
48.85
18,527,443.10
148,065
662,095.40
DividendHistory
Dividend
(Rs)
Date
25Jan06 2
21Jul06 1
24Mar
3
07
30Jun08 6
FacevalueRs)
10
10
10
10
30Jan09 2.8
18Aug
1.2
09
27Jan10 1.8
8Mar11 3
2
2
21May
12
1.5
3
5Feb13
Annualdividend(Rs)Dividend%ofFV
FY06
FY07
3
3
30
30
FY08
FY09
6
2.8
60
140
FY010
FY011
3
3
150
150
FY012
FY013
1.5
3
75
150
45
ShareholdingPattern
Mar2013
Dec2012
Sep2012
Jun2012
Mar2012
Promoter
and 31.10%
PromoterGroup
Indian
31.10%
31.61%
31.68%
31.60%
31.61%
31.61%
31.68%
31.60%
31.61%
Foreign
Public
Institutions
68.90%
43.68%
68.39%
44.19%
68.32%
44.70%
68.40%
44.86%
68.39%
44.16%
FII
39.34%
39.92%
40.08%
39.63%
39.84%
DII
NonInstitutions
4.34%
25.22%
4.27%
24.20%
4.62%
23.62%
5.23%
23.54%
4.32%
24.23%
BodiesCorporate
2.78%
2.99%
2.29%
2.39%
2.05%
Custodians
Total
Philosophy:
IIFL(IndiaInfoline)iscommittedtoplacingtheInvestorFirst,bycontinuouslystrivingto
increasetheefficiencyoftheoperationsaswellasthesystemsandprocessesforuseof
corporateresourcesinsuchawaysoastomaximizethevaluetothestakeholders.TheGroup
aims at achieving not only the highest possible standards of legal and regu latory
compliances,butalsoofeffectivemanagement.
Committees:
AuditCommittee
Termsofreference&Composition,NameofmembersandChairman:TheAuditcommittee
comprisesMrNileshVikamsey(Chairman),MrRVenkataraman,MrKrantiSinha,twoof
whom are independent Dire ctors. The Chairman along with the Statutory and Internal
AuditorsareinviteestotheMeeting.TheTermsofreferenceofthiscommitteeareasunder:
ToinvestigateintoanymatterthatmaybeprescribedundertheprovisionsofSection292A
ofThe Companies Act,1956Recommendationand removal ofExternalAuditor and
fixationoftheAuditFees.Reviewingwiththemanagementthefinancialstatementsbefore
submissionofthesametotheBoard.OverseeingofCompany'sfinancialreportingprocess
anddisclosureofitsfinancialinformation.ReviewingtheAdequacyoftheInternalAudit
Function.
Compensation/RemunerationCommittee
Termsofreference&Composition,NameofmembersandChairman:TheCompensation/
RemunerationCommitteecomprisesMrKrantiSinha(Chairman)&MrNileshVikamsey,
bothofwhomareindependentDirectors.TheTermsofreferenceofthiscommitteeareas
under: To fix suitable re muneration package of all the Executive Directors and Non
ExecutiveDirectors,SeniorEmployeesandofficersi.e.Salary,perquisites,bonuses,stock
options,pensions etc.Determinationofthefixedcomponentandperformancelinked
incentivesalongwiththeperformancecriteriatoallemployeesofthecompanyService
Contracts,NoticePeriod,SeveranceFeesofDirectorsandemployees.StockOptiondetails:
whethertobeissuedatdiscountaswellastheperiodoverwhichtobeaccruedandover
which exercisable.Tocon ductdiscussions withthe HRdepartmentandform suitable
remunerationpolicies.
ShareTransferandInvestorGrievanceCommittee
DetailsoftheMembers,ComplianceOfficer,NoofComplaintsreceivedandpendingand
pending transfers as on close of the financial year. The committee functions under the
Chairmanship of Mr Kranti Sinha, a Nonexecutive independent Director. The other
MembersofthecommitteeareMr.NirmalJainandMr.RVenkataraman.MsSunilLotke,
CompanySecretaryistheComplianceOfficeroftheCompany.
BoardofDirectors
Mr.NirmalJain(Chairman,IndiaInfolineLtd).
Mr.R.Venkataraman(ManagingDirector,IndiaInfolineLtd).
Mr.ArunKumarPurwar
(IndependentDirectorofIndiaInfolineLimitedsinceMarch2008).
Mr.ChandranRatnaswami
(NonExecutiveDirectorofIndiaInfolineLimitedsinceMay2012).
Mr.KrantiSinha(IndependentDirectorofIndiaInfolineLimitedsinceJanuary2005).
Mr.MaheshNarayanSingh
(IndependentDirectorofIndiaInfolineFinanceLimitedsinceSeptember2009).
Mr.NileshVikamsey
(Independent Director of India Infoline Limited & India Infoline Finance Limited since
February2005).
Dr.SubbaramanNarayan
(IndependentDirectorofIndiaInfolineLimitedsinceJuly2012).
Mr.VijayKumarChopra
(IndependentDirectorofIndiaInfolineFinanceLimitedsinceJune2012).
IIFLFoundation
InlinewithIIFLsvisiontobethemostrespectedcompanyinthefinancialservicesspace,
the company recognises the importance of contributing to and sustaining social
transformation.TheIIFLFoundationhasbeensetuptoworkinareasofskilldevelopment
forvariousindustriesandtoensurefinancialinclusionthroughthesupportandupliftmentof
theunderprivilegedsectionsofsociety.
TheIIFLFoundationfocusesonspecificareasofneed,includinghealthcareandeducation.
Thefoundationwillscreenandselectinstitutionsanddevelopmentalagencieswhichare
working in these domains and will provide necessary aid to improve the lives of the
underprivilegedandhelptheminachievingtheirpotential.
TheIIFLFoundationhasinitiatedcareerguidancetothestudentsofHighSchoolandJunior
collegesinremoteareasofMaharashtratoenablethemtopursuethecareerwhichprovides
rightemploymentopportunities.
FLAME
FLAME(FinancialLiteracyAgendaforMassEmpowerment) isanIIFLFoundation
initiativetopromotefinancialliteracyamongstthemassesinordertomakethemanintegral
partofIndia'sspectaculargrowthstory.InaneraofacceleratingGDPandrisingpercapita
growth,financialliteracyhasbecomemorecriticalthaneverbeforesuchthatweallreapthe
tangiblebenefitsofthenation'seconomicprosperity.Financialinclusionhasbeenquitehigh
on the governmental agenda , given its emphasis on widening the Banking & Financial
servicesnetworkacrossthecountry.TheFLAMEinitiativestandscommittedtocomplement
this effortbyhelpingcommonpeoplegainfinancialgrowthandsecuritythoughbetter
awarenessandeducationonthevarietyoffinancialproductswhileavoidingthelureofand
loss from unrealistic claims made byunscrupulous agents and ponzi schemes. Visit our
dedicatedsiteforfinancialliteracy:www.flame.org.in
Scholarships
HNemkumarandNirmalJainScholarship(May2012)Indiahasalargenumberofgifted
anddeservingstudentswhoareunabletoavailofahighqualitylearningexperiencefrom
reputedinstitutionsinIndiaorabroadduetofinancialorotherconstraints.YoungIndia
Fellowsreachesouttosuchstudents.TheYIFscholarshipshavebeenmadepossibleby
generous donations by a stellar set of individuals including Mr. Nirmal Jain and Mr. H
NemkumaronbehalfofIIFLFoundation.
Thisyear,57YoungIndiaFellowsoftheFoundingClassgraduatedandembarkedupon
careersrangingfromdesigntechnologytoruraldevelopment,fromventurephilanthropyto
corporate strategy, and from ethnographic research to institution building. The Founding
FellowsareFulbrightScholars,INSEADWhartonMBAcandidates,PrimeMinisters,Rural
Development Fellows, legal entrepreneurs, McKinsey and BCG consultants, budding
psychologists,artists,writersandfilmmakers,researchscholarsatleadingthinktanksand
inspired entrepreneurs trying and testing new ideas for technologydriven social change.
Expressing gratitude for the support offered by Mr. Nirmal Jain & Mr. Nemkumar, in
launchingthisprograminitsfoundingyear,theYoungIndiaFellowsawardedapersonalized
ValedictoryScrolltograduatingFellows.
FinancialliteracyforSupportingtheUnderprivileged
IIFLhasalsotiedupwithKJSomaiyaInstituteofManagementStudies&Research(SIMSR)
toimpartbasicfinancialknowledgetounderprivilegedsectionsandphysicallyhandicapped
sections of the society. The programmes covers lessons on savings, budgeting, banking,
creditmanagement,microfinanceandselfhelpgroups(SHGs).TheIIFLFoundationunder
the FLAME initiative has tied up with Somaiya Institute to impart financial literacy to
NationalSocietyforEqualOpportunitiesfortheHandicappedIndia(NASEOH)sincethe
lasttwoyears.
SWOTANALYSISOFIIFL
STRENGHTS:
Lowbrokeragesystem
Effective after sales services
system
A
d
v
i
s
o
r
y
d
e
s
k
o
p
e
r
a
t
i
o
n
s
p
r
o
v
i
d
e
d
b
y
f
u
l
l
e
r
t
o
n
W
e
l
l
e
s
t
a
b
l
i
s
h
e
d
b
r
a
n
d
e
q
u
i
t
y
Teletradealsopossible
F
r
e
e
d
o
a
c
c
o
u
n
t
w
i
t
h
d
i
f
f
e
r
e
n
t
f
a
c
i
l
i
t
i
e
s
P
e
r
s
o
n
a
l
i
z
a
l
e
r
t
s
Consolidated statementsa
uniqueserviceoffering
WEAKNESSES:
Lack of
Aggressive
advertiseme
nts and
sales
promotion
programme
d. The
working of
the sales
force is
traditional.
Inventoryinvestmentsshouldbe
more.
Miscommunication
and
ineffective coordination at
variouslevelofhierarchy.
OPPORTUNITIES:
G
r
o
w
i
n
g
c
a
p
i
t
a
l
m
a
r
k
e
t
i
n
I
n
d
i
a
&
o
t
h
e
r
c
o
u
n
t
r
y
P
o
l
i
t
i
c
a
l
s
t
a
b
i
l
i
t
y
i
n
I
n
d
i
a
&
o
t
h
e
r
c
o
u
n
t
r
y
BettergovernancebySEBI
Decreasing interest rates in
India, so people are
motivated to earn more
returns through capital
market.
THREATS:
Demand&supply
Increasing competition in
securitymarket
Lostinfaithinsharemarket
afterbigscamsinthestock
market
Naturalcalamities
Inabilityofcustomerstopay
brokerageattherighttime
High risk involved in the
stockmarket.
COMPETITORSOFIIFL:
SHAREKHAN
RELIANCEMONEY
UNICON
KARVY
INDIABULLS
RKGLOBALSECURITIES
RELIGARE
CHAPTER 2
REVIEW OF LITERATURE
RETURN:
Return can be defined as Income received on an investment plus any change in market price,
usually expressed as a percent of the beginning market price of the investment.
+(P 1 p 0)
Rate of return (R) =
p0
DIV=dividend per share received in year.
DIVIDEND YIELD:
Dividend yield is the percentage of dividend income, and it is given by dividing the
dividend per share at the end the year by the share price in the beginning of the year.
Dividend yield=DIV/p0
CAPITAL GAIN:
Capital Gain is the difference of the share price at the end and share price in the beginning
divided by the share price in the beginning.
Capital Gain= (p1-p0)/p0
Positive capital gain or loss:
If the ending price were greater than the beginning price, there would be a positive capital
gain or capital loss.
Negative capital gain or loss:
If the ending price were less than the beginning price, there would be a negative capital
gain or capital loss.
Ro= n
=
t=1
forces
which
cant
be
controlled
by
firm.
Systematic risk is measured with beta coefficient. It represents the securitys volatility relative to
that of an average security.
if beta = 1 means that security is of average risk (or exactly in sync with market).
If beta > 1 means that security has more unavoidable risk.
If beta <1 means, it is a less risky stock compared to average risk.
UNSYSTEMATIC RISK:
Unsystematic risk is due to factors specific to an industry or a company like labor unions,
product category, research and development, pricing, marketing strategy etc.unlike systematic
risk, the unsystematic risk can be reduced /avoided through diversification. Total risk of a fully
diversified portfolio equals to the market risk of the portfolio as its specific risk becomes zero.
MEASUREMENT RISK FOR A SINGLE ASSET:
The statistical measures of a risk of an asset are:
(a ) Standard deviation
(b) co-efficient of variation
STANDARD DEVIATION OF RETURN:
Standard deviation is the most common statistical measure of risk of an asset from the expected
value of return.It measures the fluctuations around mean returns.It represents the square root of
average squared deviations of individual returns(Ri) from the expected return(Ro).symbolically,
n
= Square root of
standard deviation =
( RRo ) 2/n
t 1
variance
VARIANCE:
It equals to average of squares of deviations of individual returns from expected returns.
Symbolically,
n
2=
BETA
( RRo ) 2/ n
t 1
The Beta () of a stock or portfolio is a number describing the relation of its returns with that of
the financial market as a whole.]
An asset has a Beta of zero if its returns change independently of changes in the market's returns.
A positive beta means that the asset's returns generally follow the market's returns, in the sense
that they both tend to be above their respective averages together, or both tend to be below their
respective averages together. A negative beta means that the asset's returns generally move
opposite the market's returns: one will tend to be above its average when the other is below its
average.[
The beta coefficient is a key parameter in the capital asset pricing model (CAPM). It measures
the part of the asset's statistical variance that cannot be removed by the diversification provided
by the portfolio of many risky assets, because of the correlation of its returns with the returns of
the other assets that are in the portfolio. Beta can be estimated for individual companies using
regression analysis against a stock market index .
The formula for the beta of an asset within a portfolio is
,
Where ra measures the rate of return of the asset, rp measures the rate of return of the portfolio,
and cov(ra,rp) is the covariance between the rates of return. The portfolio of interest in the CAPM
formulation is the market portfolio that contains all risky assets, and so the rp terms in the
formula are replaced by rm, the rate of return of the market.
CHAPTER 3
RESEARCH METHODOLOGY
RESEARCH DESIGN
I used DESCRIPTIVE research design for this study.This project analyses the equity
market and its fluctuations in India. The project aims to analyze the average return of the selected
companies listed in NIFTY for the study. It also measures the risk involved in investing in the
stocks. BETA value is calculated for all 12 companies to know whether investment in that
company is risky or not.
METHODOLOGY
SAMPLE SIZE:
For risk and return analysis, I took 12 NIFTY companies out of 50 companies.
Population size=50
Sample size=12
SAMPLING TECHNIQUE:
I used simple random sampling to select samples from population.
DATA AND SOURCES OF DATA
Main objective of this analysis
tools.Source of data collected are Secondary. Print media and internet has been used for data
collection.
The
data
was
obtained
from
the
national
stock
exchange
website
(www.nseindia.com). For the purpose of this study the daily closing prices of 12 companies
included in National Stock Exchange were taken and their price movements are computed and
studied. The 12 companies are,
1.Hindalco
2.Tata steel
3. DLF
4. BPCL
5. NTPC
6. WIPRO
7. GRASIM
8. SAIL
9. L&T
10.CIPLA
11. SIEMENS
12. BHEL
TIME PERIOD COVERED
The daily share prices of above mentioned companies and NIFTY were taken for a period of one
year from 1 march 2013 to 31st march 2014. The closing prices of share prices were taken and the
risk and return of companies were analyzed.
Average
close
Price
Capital
Gain/
Loss(%)
-
Dividend
per share
Dividend
yield
Rate of
Return
(%)(R)
(R-R1)
(R-R1)2
5.267763
1.35
0.79
6.06
3.5
12.25
159.42
-14.6542
1.35
0.75
-13.91
-13.47
181.44
June-13
144.77
-9.18956
1.35
0.85
-8.34
-13.9
118.81
July-13
151.4
4.579678
1.35
0.93
5.51
2.95
8.7
Aug-13
167.7
13.76618
1.35
0.89
11.66
9.1
82.81
Sep-13
186.76
11.36553
1.35
0.81
12.17
9.61
92.35
Oct-13
212.02
13.52538
1.35
0.72
14.24
11.69
136.06
Nov-13
217.49
2.57994
1.35
0.63
3.21
0.66
0.44
Dec-13
227.86
4.768035
1.35
0.62
5.39
2.83
8.01
Jan-14
234.5
2.91407
1.35
0.59
3.51
0.95
0.9
Feb-14
218.39
-6.86995
1.35
0.58
-6.29
-8.85
78.32
Mar-14
205.08
-6.0946
1.35
0.62
-5.47
-8.04
64.64
Mar -13
171.42
Apr-13
180.45
May-13
VARIANCE:
(R-R1)2=785.33, n=12
Var =785.33/11
=71.39
STANDARD DEVIATION:
=
71.393
=38.44
GRAPH
CALCULATION OF RATE OF RETURN OF HINDALCO FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 13.53% was obtained in October 2013 and lowest return 0f -14.65% was obtained in
may 2013.The average rate of return of HINDALCO for 12 months period was 1.83%.Standard
Deviation of returns of HINDALCO was 8.44.
2. TATA STEEL
CALCULATION OF RATE OF RETURN OF TATASTEEL FOR PERIOD OF
ONE YEAR
Month
Average
close
Price
Capital
Gain/
Loss(%)
Dividend
per share
Dividend
yield(%)
Rate of
Return
(%)(R)
(R-R1)
(R-R1)2
Mar -13
625.22
Apr-13
665.14
6.38
1.28
7.66
6.15
37.82
May-13
539.61
-18.87
1.2
-17.67
-19.18
367.87
June-13
482.98
-13.49
1.48
-9.01
-13.52
113.67
July-13
508.39
5.26
1.66
6.92
5.41
29.27
Aug-13
524.44
3.16
1.57
4.73
3.22
13.37
Sep-13
602.84
14.95
1.53
16.48
14.97
224.1
Oct-13
635
5.33
1.33
6.66
5.15
26.52
Nov-13
613.38
-3.4
1.26
-2.14
-3.65
13.32
Dec-13
647.83
5.62
1.3
6.92
5.41
29.27
Jan-14
651.19
0.52
1.23
1.75
0.24
0.06
Feb-14
623.21
-4.3
1.23
-3.07
-4.58
20.98
Mar-14
608.03
-2.44
1.28
-1.16
-2.67
7.13
= 1.51%
VARIANCE:
(R-R1)2=877.38,n=12
Var =877.38/11
=79.76
STANDARD DEVIATION:
=
79.76
=8.94
GRAPH
CALCULATION OF RATE OF RETURN OF TATASTEEL FOR PERIOD OF ONE
YEAR
INTERPRETATION:
Average
close
Price
Capital
Gain/
Loss(%)
Dividend
per share
Dividend
yield
Rate of
Return
(%)(R)
(R-R1)
(R-R1)2
Mar -13
307.15
Apr-13
324.71
5.72
0.65
6.37
7.62
58.06
May-13
285.66
-12.03
0.62
-14.41
-13.16
133.23
June-13
277.28
-2.9
0.7
-2.2
-0.95
0.9
July-13
305.87
13.27
0.72
13.99
12.24
149.82
Aug-13
315.66
3.2
0.65
3.85
5.1
26.01
Sep-13
343.67
8.87
0.63
9.5
13.75
115.56
Oct-13
375.21
9.18
0.58
9.76
11.01
121.22
Nov-13
328.72
-12.89
0.53
-14.86
-13.61
112.57
Dec-13
291.15
-14.43
0.61
-13.82
Jan-14
258.97
-14.05
0.69
-13.36
-9.11
82.99
Feb-14
232.96
-13.04
0.77
-9.27
-8.02
64.32
Mar-14
232.08
-0.38
0.86
0.48
1.73
2.99
-9.57
91.58
+(-9.27)+0.48/12
= -1.25%
VARIANCE:
(R-R1)2=929.25,n=12
Var =929.25/11
=84.47
STANDARD DEVIATION:
=
84.47
=9.19
GRAPH
CALCULATION OF RATE OF RETURN OF DLF FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 13 months (march 2013-march 2014),the highest
return of 13.99% was obtained in July 2013 and lowest return 0f -14.86% was obtained in Nov
2013.The average rate of return of DLF for 13 months period was -1.25%.Standard Deviation of
returns of DLF was 9.19.
4.BPCL
CALCULATION OF RATE OF RETURN OF BPCL FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capital
Gain/
Loss (%)
Dividend
per share
Dividend
yield
Rate of
Return
(%) (R)
(R-R1)
(R-R1)2
Mar -13
528.69
Apr-13
504.05
-4.66
14
2.65
-2.01
-5.24
27.46
May-13
547.06
8.53
14
2.78
11.31
8.08
65.29
June-13
568.02
3.83
14
2.56
6.39
3.16
9.99
July-13
659.81
16.16
14
2.46
18.62
15.39
236.85
Aug-13
695.27
5.37
14
2.12
7.49
4.26
18.15
Sep-13
771.65
13.99
14
2.01
13
9.77
95.45
Oct-13
731
-5.27
14
1.81
-3.46
-6.69
44.76
Nov-13
727.02
-0.54
14
1.92
1.38
-1.85
3.42
Dec-13
678.41
-6.69
14
1.93
-4.76
-7.99
63.84
Jan-14
612.39
-9.73
14
2.06
-7.67
-13.9
118.81
Feb-14
583.81
-4.67
14
2.29
-2.38
-5.61
31.47
Mar-14
574.69
14
2.4
0.84
-2.39
5.71
-1.56
VARIANCE:
(R-R1)2=721.2,n=12
Var =721.2/11
=65.56
STANDARD DEVIATION:
=
65.56
=8.09
GRAPH
CALCULATION OF RATE OF RETURN OF BPCL FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 18.62% was obtained in July 2013 and lowest return 0f -7.67% was obtained in JAN
2014.The average rate of return of BPCL for 12 months period was 3.23%.Standard Deviation
of returns of BPCL was 8.09.
5. NTPC
CALCULATION OF RATE OF RETURN OF NTPC FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capital
Gain/
Loss (%)
Dividend
per share
Dividend
yield
Rate
of Return
(%)(R)
(R-R1)
(R-R1)2
Mar -13
203.3
Apr-13
207.66
2.14
3.8
1.87
4.01
3.04
9.24
May-13
202.35
-2.56
3.8
1.83
-0.73
-1.7
2.89
June-13
199.35
-1.48
3.8
1.88
0.4
-0.57
0.32
July-13
200.56
0.61
3.8
1.91
2.52
1.55
2.4
Aug-13
196.13
-2.22
3.8
1.89
-0.33
-1.3
1.69
Sep-13
206.13
5.1
3.8
1.94
7.04
6.07
36.84
Oct-13
207.87
0.86
3.8
1.84
2.7
1.73
2.99
Nov-13
187.82
-9.65
3.8
1.83
-7.82
-8.79
77.26
Dec-13
193.68
3.12
3.8
2.02
5.14
4.17
17.32
Jan-14
192.55
-0.58
3.8
1.96
1.38
0.41
0.17
Feb-14
176.68
-8.24
3.8
1.97
-6.27
-7.24
52.42
Mar-14
179.29
1.48
3.8
2.15
3.63
2.66
7.08
VARIANCE:
(R-R1)2=213.69,n=12
Var =213.69/11
=19.15
STANDARD DEVIATION:
=
19.15
=4.38
GRAPH
CALCULATION OF RATE OF RETURN OF NTPC FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 7.04% was obtained in Sep 2013 and lowest return 0f -7.82% was obtained in NOV
2014.The average rate of return of NTPC for 12 months period was 0.97%.Standard Deviation
of returns of NTPC was 4.38.
6. WIPRO
CALCULATION OF RATE OF RETURN OF WIPRO FOR PERIOD OF ONE YEAR
Month
Mar -13
Average
close
Price
712.13
(R-R1)
(R-R1)2
Apr-13
706.75
-0.76
0.28
-0.48
2.35
5.52
May-13
658.94
-6.76
0.28
-6.48
-3.65
13.32
June-13
515.23
-21.81
0.3
-21.51
-18.68
348.94
July-13
403.89
-21.61
0.39
-21.22
-18.39
338.19
Aug-13
414.66
2.67
0.5
3.17
36
Sep-13
423.65
2.17
0.48
2.65
5.48
30.03
Oct-13
457.16
7.91
0.47
8.38
11.21
125.66
Nov-13
423.36
-7.39
0.44
-6.95
-4.21
16.97
Dec-13
460.81
8.85
0.47
9.32
12.15
147.62
Jan-14
464.65
0.83
0.43
1.26
4.09
16.73
Feb-14
432.18
-6.99
0.43
-6.56
-3.73
13.91
Mar-14
449.40
3.98
0.46
4.44
7.27
52.85
VARIANCE:
(R-R1)2=1145.74,n=12
Var =1145.74/11
=134.15
STANDARD DEVIATION:
=
1145.74
=13.20
GRAPH
CALCULATION OF RATE OF RETURN OF WIPRO FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 9.32% was obtained in Dec 2013 and lowest return 0f -21.51% was obtained in JUN
2014.The average rate of return of WIPRO for 12 months period was -2.83%.standard Deviation
of returns of WIPRO was 13.20.
7. GRASIM
CALCULATION OF RATE OF RETURN OF GRASIM FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capital
Gain/ Loss
(%)
(R-R1)
(R-R1)2
Mar -13
2848.76
Apr-13
2824.94
-0.84
30
1.05
0.21
0.21
0.04
May-13
2431.98
-13.91
30
1.06
-12.85
-12.85
165.12
June-13
1788.21
-26.47
30
1.23
-25.24
-25.24
637.06
July-13
1838.63
2.82
30
1.68
4.5
4.5
20.25
Aug-13
1975.33
7.43
30
1.63
9.06
9.06
82.08
Sep-13
2174.21
13.07
30
1.52
11.59
11.59
134.33
Oct-13
2290.62
5.35
30
1.38
6.73
6.73
45.29
Nov-13
2314.97
1.06
30
1.31
2.37
2.37
5.62
Dec-13
2319.57
0.2
30
1.3
1.5
1.5
2.25
Jan-14
2386.86
2.9
30
1.29
4.19
4.19
17.56
Feb-14
2281.16
-4.43
30
1.26
-3.17
-3.17
13.05
Mar-14
2391.73
4.85
30
1.32
6.17
6.17
38.07
VARIANCE:
(R-R1)2=1157.72,n=12
Var =1157.72/11
=135.24
STANDARD DEVIATION:
=
135.24
=13.26
GRAPH
CALCULATION OF RATE OF RETURN OF GRASIM FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 11.59% was obtained in Sep 2013 and lowest return 0f -25.24% was obtained in JUN
2014.The average rate of return of GRASIM for 12 months period was 0.42%.Standard
Deviation of returns of GRASIM was 13.26.
8. SAIL
CALCULATION OF RATE OF RETURN OF SAIL FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capital
Gain/
Loss (%)
(R-R1)
(R-R1)2
Mar -13
238.31
Apr-13
231.78
-2.74
3.3
1.38
-1.36
0.04
0.0016
May-13
206.96
-13.71
3.3
1.42
-9.29
-7.89
62.25
June-13
197.6
-4.52
3.3
1.59
-2.93
-1.53
2.34
July-13
199.15
0.78
3.3
1.67
2.45
3.85
14.82
Aug-13
192.76
-3.21
3.3
1.66
-1.55
-0.15
0.02
Sep-13
201.11
4.33
3.3
1.71
6.04
7.44
55.35
Oct-13
219.49
9.14
3.3
1.64
13.78
12.18
148.35
Nov-13
188.84
-13.96
3.3
1.5
-12.46
-14.06
122.32
Dec-13
182.88
-3.16
3.3
1.75
-1.41
-0.01
0.0001
Jan-14
170.95
-6.52
3.3
1.8
-4.72
-3.32
11.02
Feb-14
159.28
-6.83
3.3
1.93
-4.9
-3.5
12.25
Mar-14
160.11
0.52
3.3
2.07
2.59
3.99
15.92
VARIANCE:
(R-R1)2=444.66,n=12
Var =444.66/11
=40.42
STANDARD DEVIATION:
=
40.42
=6.36
GRAPH
CALCULATION OF RATE OF RETURN OF SAIL FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 13.78% was obtained in oct 2013 and lowest return 0f -12.46% was obtained in NOV
2014.The average rate of return of SAIL for 12 months period was -1.31%.Standard deviation
of returns of SAIL was 6.36.
9. L&T
CALCULATION OF RATE OF RETURN OF L&T FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capita
l Gain/
Loss
(%)
Dividen
d per
share
Dividend Rate of
yield
Return
(%)( R)
(R-R1)
(R-R1)2
Mar -13
1604.70
5
Apr-13
1613.05
8
0.33
12.5
0.78
1.11
0.37
0.14
May-13
1586.48
8
-1.46
12.5
0.78
-0.68
-1.42
2.02
June-13
1723.85
8.66
12.5
0.79
9.45
8.71
75.86
July-13
1849.60
9
7.3
12.5
0.73
8.03
7.29
53.14
Aug-13
1820.38
2
-1.58
12.5
0.68
-0.9
-1.64
2.69
Sep-13
1944.03
6
6.79
12.5
0.69
7.48
6.74
45.43
Oct-13
2032.56
9
4.55
12.5
0.64
5.19
4.45
19.8
Nov-13
2070.90
7
1.89
12.5
0.61
2.5
1.76
3.1
Dec-13
1978.18
-4.48
12.5
0.6
-3.88
-4.62
21.34
Jan-14
1746.42
5
-14.72
12.5
0.63
-14.09
-14.83
139.95
Feb-14
1580.99
5
-9.47
12.5
0.72
-8.75
-9.49
90.06
Mar-14
1575.28
9
-0.36
12.5
0.79
0.43
-0.31
0.1
VARIANCE:
(R-R1)2=453.63,n=12
Var =453.63/11
=41.239
STANDARD DEVIATION:
=
41.239
=6.42
GRAPH
CALCULATION OF RATE OF RETURN OF L&T FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 9.45% was obtained in May 2013 and lowest return 0f -14.09% was obtained in JAN
2014.The average rate of return of L&T for 12 months period was 0.74%.standard Deviation of
returns of L&T was 6.42.
13. CIPLA
CALCULATION OF RATE OF RETURN OF CIPLA FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capital
Gain/
Loss (%)
Dividen
d per
share
Dividend
yield
Rate of
Return
(%)(R)
(R-R1)
(R-R1)2
Mar -13
327.481
Apr-13
335.05
2.31
0.61
2.92
2.81
7.9
May-13
321.25
-4.12
0.6
-3.52
-3.63
13.18
June-13
334.413
6
4.1
0.62
4.72
4.61
21.25
July-13
331.406
8
-0.9
0.6
-0.3
-0.41
0.17
Aug-13
313.006
8
-5.55
0.6
-4.95
-5.06
25.6
Sep-13
312.619
-0.12
0.64
0.52
0.41
0.17
Oct-13
338.285
7
8.21
0.64
8.85
8.74
76.39
Nov-13
344.321
4
1.78
0.59
2.37
2.26
5.11
Dec-13
363.527
3
5.58
0.58
6.16
6.05
36.6
Jan-14
351.245
-3.38
0.55
-2.83
-2.94
8.64
Feb-14
311.4325
-14.33
0.57
-13.76
-13.87
118.16
Mar-14
303.572
7
-2.52
0.64
-1.88
-1.99
3.96
VARIANCE:
(R-R1)2=453.63,n=12
Var =317.13/11
=28.83
STANDARD DEVIATION:
=
317.13
=28.83
= 5.37
GRAPH
CALCULATION OF RATE OF RETURN OF CIPLA FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 8.85% was obtained in OCT 2013 and lowest return 0f -13.76% was obtained in Feb
2014.The average rate of return of CIPLA for 12 months period was 0.11%.Standard Deviation
of returns of CIPLA was 5.37.
11. SIEMENS
Average
close
Price
Capital
Gain/ Loss
(%)
(R-R1)
(R-R1)2
Mar -13
729.314
Apr-13
727.365
-0.27
0.69
0.42
-1.81
3.28
May-13
681.382
5
-6.32
0.69
-5.63
-7.86
61.78
June-13
715.572
7
5.02
0.73
5.75
3.52
12.39
July-13
722.152
3
0.92
0.7
1.62
-0.61
0.37
Aug-13
704.409
-2.46
0.69
-1.77
-4
16
Sep-13
752.767
6.87
0.71
7.58
5.35
28.62
Oct-13
823.238
9.36
0.66
13.02
7.79
60.68
Nov-13
807.186
-1.95
0.61
-1.34
-3.57
12.74
Dec-13
788.143
2
-2.36
0.62
-1.74
-3.97
15.76
Jan-14
768.895
-2.44
0.63
-1.81
-4.04
16.32
Feb-14
844.812
5
9.87
0.65
13.52
8.29
68.72
Mar-14
866.602
3
2.58
0.59
3.12
0.94
0.88
(-1.81)+13.52+3.12
= 2.23%
VARIANCE:
(R-R1)2=297.54,n=12
Var =297.54/11
=27.05
STANDARD DEVIATION:
=
297.54
=27.05
= 5.2
GRAPH
CALCULATION OF RATE OF RETURN OF SIEMENS FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 13.52% was obtained in Feb 2014 and lowest return 0f -5.65% was obtained in May
2013.The average rate of return of SIEMENS for 12 months period was 2.23%.Standard
Deviation of returns of SIEMENS was 5.2.
12. BHEL
CALCULATION OF RATE OF RETURN OF BHEL FOR PERIOD OF ONE YEAR
Month
Average
close
Price
Capital
Gain/
Loss (%)
Dividend
per share
Dividend
yield
Rate of
Return
(%)
(R)
R-R1
(R-R1)2
Mar -13
2398.1
Apr-13
2496.56
4.11
23.3
0.97
5.08
5.46
29.81
May-13
2354.19
-5.7
23.3
0.93
-4.77
-4.39
19.27
June-13
2384.40
1.28
23.3
0.99
2.27
2.65
7.02
July-13
2425.19
1.71
23.3
0.98
2.69
3.07
9.42
Aug-13
2482.96
2.38
23.3
0.96
3.34
3.72
13.84
Sep-13
2501.48
0.75
23.3
0.94
1.69
2.07
4.28
Oct-13
2547.12
1.82
23.3
0.93
2.75
3.13
9.8
Nov-13
2354.19
-7.57
0.91
-6.66
-6.28
39.44
Dec-13
2285.28
-2.93
23.3
0.99
-1.94
-1.56
2.43
Jan-14
2237.84
-2.08
23.3
1.02
-1.06
-0.68
0.46
Feb-14
2094.29
-6.41
23.3
1.04
-5.37
-4.99
24.9
Mar-14
2017.33
-3.67
23.3
1.11
-2.56
-2.18
4.75
23.3
VARIANCE:
(R-R1)2=165.42,n=12
Var =165.42/11
=15.04
STANDARD DEVIATION
=
15.04
=3.89
GRAPH
CALCULATION OF RATE OF RETURN OF BHEL FOR PERIOD OF ONE YEAR
INTERPRETATION:
During the period of last 12 months (march 2013-march 2014),the highest
return of 5.08% was obtained in Apr 2013 and lowest return 0f -6.66% was obtained in Nov
2013.The average rate of return of BHEL for 12 months period was -0.38%.Standard deviation
of returns of BHEL was 3.89.
Dividend
Average return
on NIFTY
BETA
1.35
Average return
on
HINDALCO
0.006006
Mar 2014
0.002875
1.169854
Feb 2014
1.35
-0.00043
-0.0005
Jan 2014
1.35
0.002528
-0.00562
Dec 2013
1.35
0.013129
0.001384
Nov 2013
1.35
0.005046
-0.00188
Oct 2013
1.35
0.008092
-0.00081
Sep 2013
1.35
0.013655
0.005077
Aug 2013
1.35
0.008808
-3.59E-05
July 2013
1.35
0.014513
0.001232
June 2013
1.35
0.01
0.003414
May 2013
1.35
0.000423
-0.00101
Apr 2013
1.35
0.00611
8.31E-05
Mar 2013
1.35
0.011542
0.002466
BETA calculation:
Cov (return on Hindalco, return on NIFTY)
Beta = ______________________________
Var (return on NIFTY)
Cov(return on hindalco, return on nifty) = 7.99434E-06
Var (return on nifty)
Beta
= 7.40309E-06
7.99434E-06
__________________
7.40309E-06
= 1.169
3.1 GRAPH
Calculation of BETA value of Hindalco
HINDALCO
0.02
0.01
f(x) = 1.17x + 0.01
0.01
R = 0.42
0.01
HINDALCO
0.01
Return on Hindalco
Linear (HINDALCO)
0.01
0
0
0
-0.01 -0.01
0.01 0.01
return on NIFTY
INTERPRETATION:
Since the beta value is GREATER than 1(BETA=1.169), return on HINDALCO is
more volatile than the return on NIFTY.
2. TATA STEEL
Table showing calculation of beta value of Tatasteel for period of one year
Date
dividend
Average return
on NIFTY
BETA
Average return
on
Tata steel
0.012369
Mar 2014
0.002875
1.29423
Feb 2014
0.010981
-0.0005
Jan 2014
0.007368
-0.00562
Dec 2013
0.011216
0.001384
Nov 2013
0.012646
-0.00188
Oct 2013
0.013647
-0.00081
Sep 2013
0.023141
0.005077
Aug 2013
0.013205
-3.59E-05
July 2013
0.021762
0.001232
June 2013
0.017424
0.003414
May 2013
0.005674
-0.00101
Apr 2013
0.009419
8.31E-05
Mar 2013
0.0114738
0.002466
BETA CALCULATION:
Cov (return on tatasteel, return on NIFTY)
______________________________
Var (return on nifty)
Beta =
= 7.40309E-06
BETA
1.29423
GRAPH
Tata steel
0.03
0.02
f(x) = 1.29x + 0.01
R = 0.48
0.02
return on tatasteel
tata steel
Linear (tata steel)
0.01
0.01
0
-0.01 -0.01
0.01
0.01
return on Nifty
INTERPRETATION:
Since the beta value is GREATER than 1(BETA=1.29), return on Tata steel is
more volatile than the return on NIFTY.
3. DLF
Table showing calculation of beta value of DLF for period of one year
Date
dividend
Average return
on NIFTY
BETA
Average return
on
DLF
0.018056
Mar 2014
0.002875
1.41406
Feb 2014
0.006513
-0.0005
Jan 2014
-0.00647
-0.00562
Dec 2013
-0.00391
0.001384
Nov 2013
0.003959
-0.00188
Oct 2013
0.007955
-0.00081
Sep 2013
0.010686
0.005077
Aug 2013
-0.00008
-3.59E-05
July 2013
0.0030607
0.001232
June 2013
0.003248
0.003414
May 2013
-0.004753
-0.00101
Apr 2013
0.000057
8.31E-05
Mar 2013
0.0029438
0.002466
BETA CALCULATION:
Cov (return on DLF, return on nifty) =9.51178E-06
Var (return on nifty)
=9.45206E-06
9.66315E-06
Beta = __________________
7.40309E-06
= 1.41406
GRAPH
Calculation on BETA value of DLF
DLF
0.02
0.02
0.01
f(x) = 1.41x + 0
R = 0.33
0.01
Return on DLF
DLF
Linear (DLF)
Linear (DLF)
0
-0.01
-0.01
0.01
0.01
-0.01
-0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is GREATER than 1(BETA=1.41), return on DLF is more
volatile than the return on NIFTY.
4. BPCL
Table showing calculation of beta value of BPCL for period of one year
Date
dividend
Average return
on NIFTY
BETA
14
Average return
on
BPCL
0.026855
Mar 2014
0.002875
0.41575
Feb 2014
14
0.02165
-0.0005
Jan 2014
14
0.019236
-0.00562
Dec 2013
14
0.017954
0.001384
Nov 2013
14
0.01381
-0.00188
Oct 2013
14
0.01761
-0.00081
Sep 2013
14
0.01633
0.005077
Aug 2013
14
0.0287
-3.59E-05
July 2013
14
0.020139
0.001232
June 2013
14
0.032245
0.003414
May 2013
14
0.031467
-0.00101
Apr 2013
14
0.028509
8.31E-05
Mar 2013
14
0.024404
0.002466
BETA CALCULATION:
Cov (return on BPCL, return on nifty) = 2.84108E-06
Var (return on nifty)
= 7.40309E-06
2.84108E-06
Beta = __________________
7.40309E-06
= 0.41575
GRAPH
Calculation of BETA value of BPCL
BPCL
0.04
0.03
0.03
f(x) = 0.42x + 0.02
0.02
R = 0.03
Return on BPCL
BPCL
Linear (BPCL)
0.02
0.01
0.01
0
-0.01-0.01 0
0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.4175), return on BPCL is less
volatile than the return on NIFTY.
5. NTPC
Table showing calculation of beta value of NTPC for period of one year
Date
dividend
Mar 2014
3.80
Average return
on
NTPC
0.019867
Feb 2014
3.80
0.018304
-0.0005
Jan 2014
3.80
0.018244
-0.00562
Dec 2013
3.80
0.019566
0.001384
Nov 2013
3.80
0.018683
-0.00188
Oct 2013
3.80
0.018897
-0.00081
Sep 2013
3.80
0.023247
0.005077
Aug 2013
3.80
0.012514
-3.59E-05
July 2013
3.80
0.017863
0.001232
June 2013
3.80
0.023298
0.003414
May 2013
3.80
0.022424
-0.00101
Apr 2013
3.80
0.017058
8.31E-05
Mar 2013
3.80
0.024382
0.002466
BETA calculation:
Cov (return on NTPC, return on nifty)
= 2.51691E-06
= 7.40309E-06
2.51691E-06
Beta = __________________
7.40309E-06
= 0.36831
GRAPH
Average return
on NIFTY
BETA
0.002875
0.36381
NTPC
0.03
0.03
0.02
f(x)
= 0.37x + 0.02
R = 0.1
Return on NTPC
0.02
NTPC
Linear (NTPC)
0.01
0.01
0
-0.01 -0.01
0.01
0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.3683), return on NTPC is less
volatile than the return on NIFTY.
6. WIPRO
dividend
Mar 2014
3.80
Average return
on
WIPRO
0.00389
Feb 2014
3.80
0.00122
-0.0005
Jan 2014
3.80
-0.00497
-0.00562
Dec 2013
3.80
0.012528
0.001384
Nov 2013
3.80
0.004419
-0.00188
Oct 2013
3.80
-0.00019
-0.00081
Sep 2013
3.80
0.010235
0.005077
Aug 2013
3.80
0..003348
-3.59E-05
July 2013
3.80
0.009534
0.001232
June 2013
3.80
-0.01631
0.003414
May 2013
3.80
0.002902
-0.00101
Apr 2013
3.80
-0.00088
8.31E-05
Mar 2013
3.80
0.003279
0.002466
BETA calculation:
Cov (return on WIPRO, return on nifty)
= 3.52192E-06
= 7.40309E-06
3.52192E-06
Beta = __________________
7.40309E-06
= 0.51358
GRAPH
Average return
on NIFTY
BETA
0.002875
0.51358
WIPRO
0.02
0.01
0.01
f(x) = 0.52x + 0
R = 0.04
0
-0.01
0
0.01
-0.01
WIPRO
0.01
Linear (WIPRO)
-0.01
-0.02
-0.02
Return on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.513), return on NTPC is less
volatile than the return on NIFTY.
7. GRASIM
dividend
Mar 2014
30
Average return
on
GRASIM
0.015888
Feb 2014
30
0.013199
-0.0005
Jan 2014
30
0.010967
-0.00562
Dec 2013
30
0.01357
0.001384
Nov 2013
30
0.012135
-0.00188
Oct 2013
30
0.013363
-0.00081
Sep 2013
30
0.01803
0.005077
Aug 2013
30
0.019441
-3.59E-05
July 2013
30
0.016085
0.001232
June 2013
30
0.017957
0.003414
May 2013
30
-0.00532
-0.00101
Apr 2013
30
0.00878
8.31E-05
Mar 2013
30
0.012336
0.002466
BETA calculation:
Cov (return on GRASIM, return on nifty)
Var (return on nifty)
= 6.58492E-06
= 7.40309E-06
6.58492E-06
Beta = __________________
7.40309E-06
= 0.89
GRAPH
Average return
on NIFTY
BETA
0.002875
0.88944
GRASIM
0.03
0.02
f(x)
0.02= 0.96x + 0.01
R = 0.18
GRASIM
0.01
Return on GRASIM
Linear (GRASIM)
0.01
0
-0.01 -0.01
0
-0.01
0.01
0.01
-0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.89), return on GRASIM is less
volatile than the return on NIFTY.
8. SAIL
dividend
Mar 2014
3.3
Average return
on
SAIL
0.024019
Feb 2014
3.3
0.018102
-0.0005
Jan 2014
3.3
0.011455
-0.00562
Dec 2013
3.3
0.018639
0.001384
Nov 2013
3.3
0.013203
-0.00188
Oct 2013
3.3
0.008118
-0.00081
Sep 2013
3.3
0.020849
0.005077
Aug 2013
3.3
0.013138
-3.59E-05
July 2013
3.3
0.020256
0.001232
June 2013
3.3
0.015415
0.003414
May 2013
3.3
0.013525
-0.00101
Apr 2013
3.3
0.006958
8.31E-05
Mar 2013
3.3
0.019873
0.002466
BETA calculation:
Cov (return on SAIL, return on nifty)
= 8.03265E-06
= 7.40309E-06
6.58492E-06
Beta = __________________
7.40309E-06
= 1.18
Average return
on NIFTY
BETA
0.002875
1.1754
GRAPH
SAIL
0.03
0.03
0.02
f(x)
= 1.18x + 0.02
R = 0.39
0.02
Return on SAIL
SAIL
Linear (SAIL)
0.01
0.01
0
-0.01
-0.01
0.01
0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is GREATER than 1(BETA=1.18), return on SAIL is more
volatile than the return on NIFTY.
9. L&T
dividend
Average return
on L&T
Average return
on NIFTY
BETA
1.24115
Mar 2014
12.5
0.009292
0.002875
Feb 2014
12.5
0.006622
-0.0005
Jan 2014
12.5
-0.00259
-0.00562
Dec 2013
12.5
0.005181
0.001384
Nov 2013
12.5
0.002844
-0.00188
Oct 2013
12.5
0.004558
-0.00081
Sep 2013
12.5
0.012179
0.005077
Aug 2013
12.5
0.006959
-3.59E-05
July 2013
12.5
0.006829
0.001232
June 2013
12.5
0.01346
0.003414
May 2013
12.5
0.009367
-0.00101
Apr 2013
12.5
0.006688
8.31E-05
Mar 2013
12.5
0.009275
0.002466
BETA calculation:
Cov (return on L&T, return on nifty)
= 9.18876E-06
= 7.40309E-06
9.18876E-06
Beta = __________________
7.40309E-06
= 1.24
GRAPH
L&T
0.02
0.01
f(x)
= 1.34x + 0.01
0.01
R = 0.79
0.01
0.01
Return on L&T
L&T
0.01
Linear (L&T)
0
0
0
-0.01
-0.01
0.01
0.01
0
Return on NIFTY
INTERPRETATION:
Since the beta value is GREATER than 1 (BETA=1.24), return on L&T is
more volatile than the return on NIFTY.
10. CIPLA
Calculation of beta value of CIPLA for period of one year
Date
dividend
Average return
on CIPLA
Average return
on NIFTY
BETA
0.914027
Mar 2014
0.009155
0.002875
Feb 2014
0.001563
-0.0005
Jan 2014
-0.00021
-0.00562
Dec 2013
0.006237
0.001384
Nov 2013
0.004122
-0.00188
Oct 2013
0.010339
-0.00081
Sep 2013
0.009182
0.005077
Aug 2013
0.003076
-3.59E-05
July 2013
0.004778
0.001232
June 2013
0.00814
0.003414
May 2013
0.003574
-0.00101
Apr 2013
0.006732
8.31E-05
Mar 2013
0.009773
0.002466
BETA calculation:
Cov (return on CIPLA, return on nifty)
Var (return on nifty)
= 9.18876E-06
= 7.40309E-06
6.24611E-06
Beta = __________________
7.40309E-06
= 0.914
GRAPH
CIPLA
0.03
0.02
f(x) = 0.96x + 0.01
0.02
R = 0.18
0.01
CIPLA
Return on CIPLA
Linear (CIPLA)
0.01
0
-0.01 -0.01 0
-0.01
0.01 0.01
-0.01
REturn on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.91), return on CIPLA is less
volatile than the return on NIFTY.
11. SIEMENS
Calculation of beta value of SIEMENS for period of one year
Date
dividend
Average return
on SIEMENS
Average return
on NIFTY
BETA
Mar 2014
0.007477
0.002875
0.710962
Feb 2014
0.005868
-0.0005
Jan 2014
0.008877
-0.00562
Dec 2013
0.008671
0.001384
Nov 2013
0.00264
-0.00188
Oct 2013
0.00513
-0.00081
Sep 2013
0.01525
0.005077
Aug 2013
0.00654
-3.59E-05
July 2013
0.00589
0.001232
June 2013
0.01131
0.003414
May 2013
0.00755
-0.00101
Apr 2013
0.00516
8.31E-05
Mar 2013
0.01134
0.002466
BETA calculation:
Cov (return on CIPLA, return on nifty)
=4.858844E-06
= 7.40309E-06
4.858844E-06
Beta = __________________
7.40309E-06
= 0.71092
GRAPH
SIEMENS
0.02
0.02
0.01
0.01
f(x) = 0.71x + 0.01
0.01
R = 0.34
0.01
Return on SIEMENS
SIEMENS
Linear (SIEMENS)
0.01
0
0
0
-0.01
0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.71), return on SIEMENS is
less volatile than the return on NIFTY.
12. BHEL
dividend
Average return
on BHEL
Average return
on NIFTY
BETA
Mar 2014
23.30
0.011872
0.002875
0.6597
Feb 2014
23.30
0.006309
-0.0005
Jan 2014
23.30
0.007714
-0.00562
Dec 2013
23.30
0.012614
0.001384
Nov 2013
23.30
0.004457
-0.00188
Oct 2013
23.30
0.006314
-0.00081
Sep 2013
23.30
0.010715
0.005077
Aug 2013
23.30
0.008489
-3.59E-05
July 2013
23.30
0.009855
0.001232
June 2013
23.30
0.01277
0.003414
May 2013
23.30
0.005697
-0.00101
Apr 2013
23.30
0.011074
8.31E-05
Mar 2013
23.30
0.008976
0.002466
BETA calculation:
Cov (return on BHEL, return on nifty)
= 4.5088E-06
= 7.40309E-06
4.858844E-06
Beta = __________________
7.40309E-06
= 0.6597
GRAPH
BHEL
0.01
0.01
f(x) = 0.66x + 0.01
R = 0.42
0.01
0.01
Return on BHEL
BHEL
Linear (BHEL)
0.01
0
0
0
-0.01 -0.01
0.01 0.01
Return on NIFTY
INTERPRETATION:
Since the beta value is LESSER than 1(BETA=0.65), return on BHEL is less
volatile than the return on NIFTY.
FINDINGS
HINDALCO:
During the period of last 12 months (march 2013-march 2014),the highest return of
14.24% was obtained in October 2013 and lowest return 0f -10.91% was obtained in may
2013.
The average rate of return of HINDALCO for 12 months period was 2.56%.
Standard Deviation of returns of HINDALCO was 8.44.
BETA value of HINDALCO was 1.16
HINDALCO yield moderate returns for the last 12 months. Returns deviate on an average by
about 8% from the average rate of return of 2.56%.In future, average returns may be, between
2.36 to 2.76.
Since the beta value is GREATER than 1(BETA=1.16), return on HINDALCO is more volatile
than the return on NIFTY. So that investment in this share is high risky.
TATA STEEL:
During the period of last 12 months (march 2013-march 2014),the highest return of
16.48% was obtained in September 2013 and lowest return 0f -17.67% was obtained in
may 2013.
The average rate of return of TATA STEEL for 12 months period was 1.51%.
Standard deviation of returns of TATA STEEL was 8.94.
BETA value of TATA STEEL was 1.3
Returns deviate on an average by about 9% from the average rate of return of 1.51%. In future,
average returns may be, between 1.01 to 1.29.
Since the beta value is GREATER than 1(BETA=1.3), return on TATA STEEL is more volatile
than the return on NIFTY. So that investment in this share is high risky.
DLF:
During the period of last 13 months (march 2013-march 2014),the highest return of 10.99% was
obtained in July 2013 and lowest return 0f -11.86% was obtained in Nov 2013.
The average rate of return of DLF for 13 months period was -1.25%.
Standard Deviation of returns of DLF was 9.19.
BETA value of DLF was 1.4.
Returns deviate on an average by about 9% from the average rate of return of -1.25% .In futures,
average returns may go high because budget 2014 gives more importance to infrastructure sector.
Since the beta value is GREATER than 1(BETA=1.4), return on DLF is more volatile than the
return on NIFTY. So that investment in this share is highly risky.
BPCL:
During the period of last 12 months (march 2013-march 2014),the highest return of
18.62% was obtained in July 2013 and lowest return 0f -7.67% was obtained in JAN
2014.
The average rate of return of BPCL for 12 months period was 3.23%.
Standard Deviation of returns of BPCL was 8.09.
BETA value of BPCL was 0.41
The monthly rate of returns of BPCL shows a low degree of variability. Returns deviate on an
average by about 8% from the average rate of return of 3.23%.BPCL yield more returns among
12 companies.
Since the beta value is LESSER than 1(BETA=0.41), return on BPCL is less volatile than the
return on NIFTY. So that investment in this share is less risky.
NTPC:
During the period of last 12 months (march 2013-march 2014),the highest return of
7.04% was obtained in Sep 2013 and lowest return 0f -7.82% was obtained in NOV 2014.
The average rate of return of NTPC for 12 months period was 0.97%.
Standard Deviation of returns of NTPC was 4.38.
BETA value of NTPC was 0.37
The monthly rate of returns of NTPC shows a low degree of variability. Returns deviate on an
average by about 4% from the average rate of return of 0.97%.
Since the beta value is LESSER than 1(BETA=0.37), return on NTPC is less volatile than the
return on NIFTY. So that investment in this share is less risky.
WIPRO:
During the period of last 12 months (march 2013-march 2014),the highest return of
9.32% was obtained in Dec 2013 and lowest return 0f -21.51% was obtained in JUN
2014.
The average rate of return of WIPRO for 12 months period was -2.83%.
Standard Deviation of returns of WIPRO was 10.20.
BETA value of WIPRO was 0.53
The monthly rate of returns of WIPRO shows a moderate degree of variability. Returns deviate
on an average by about 10% from the average rate of return of -2.8%.
Since the beta value is LESSER than 1(BETA=0.53), return on WIPRO is less volatile than the
return on NIFTY. So that investment in this share is less risky.
GRASIM:
During the period of last 12 months (march 2013-march 2014),the highest return of
11.59% was obtained in Sep 2013 and lowest return 0f -25.24% was obtained in JUN
2014.
The average rate of return of GRASIM for 12 months period was 0.42%.
Standard Deviation of returns of GRASIM was 10.26.
BETA value of GRASIM was 0.88
The monthly rate of returns of GRASIM shows a moderate degree of variability. Returns deviate
on an average by about 10% from the average rate of return of 0.42%
Since the beta value is LESSER than 1(BETA=0.88), return on GRASIM is less volatile than the
return on NIFTY. So that investment in this share is moderate risky.
SAIL:
During the period of last 12 months (march 2013-march 2014),the highest return of
10.78% was obtained in oct 2013 and lowest return 0f -12.46% was obtained in NOV
2014.
The average rate of return of SAIL for 12 months period was -1.31%.
Standard deviation of returns of SAIL was 6.36.
BETA value of SAIL was 1.17
The Returns deviate on an average by about 6% from the average rate of return of -1.31%.
Since the beta value is GREATER than 1(BETA=1.71), return on SAIL is more volatile than the
return on NIFTY. So that investment in this share is highly risky.
L&T
During the period of last 12 months (march 2013-march 2014),the highest return of
9.45% was obtained in May 2013 and lowest return 0f -11.09% was obtained in JAN
2014
.The average rate of return of L&T for 12 months period was 0.74%.
Standard Deviation of returns of L&T was 6.42.
BETA value of L&T was 1.24
Returns deviate on an average by about 6% from the average rate of return of 0.74%.
Since the beta value is GREATER than 1(BETA=1.24), return on L&T is more volatile than the
return on NIFTY. So that investment in this share is highly risky.
CIPLA:
During the period of last 12 months (march 2013-march 2014),the highest return of
8.85% was obtained in OCT 2013 and lowest return 0f -10.76% was obtained in Feb
2014.
The average rate of return of CIPLA for 12 months period was 0.11%.
Standard Deviation of returns of CIPLA was 5.37.
BETA value of CIPLA was 0.91.
The monthly rate of returns of CIPLA shows a low degree of variability. Returns deviate on an
average by about 5% from the average rate of return of 0.11%.
Since the beta value is LESSER than 1(BETA=0.91), return on CIPLA is less volatile than the
return on NIFTY. So that investment in this share is less risky.
SIEMENS:
During the period of last 12 months (march 2013-march 2014),the highest return of
10.52% was obtained in Feb 2014 and lowest return 0f -5.65% was obtained in May
2013.
The average rate of return of SIEMENS for 12 months period was 2.23%.
Standard Deviation of returns of SIEMENS was 5.2.
BETA value of BHEL was 0.71.
The monthly rate of returns of SIEMENS shows a low degree of variability. Returns deviate on
an average by about 5% from the average rate of return of 2.23
Since the beta value is LESSER than 1(BETA=0.71), return on SIEMENS is less volatile than
the return on NIFTY. So that investment in this share is less risky.
BHEL:
During the period of last 12 months (march 2013-march 2014),the highest return of
5.08% was obtained in Apr 2013 and lowest return 0f -6.66% was obtained in Nov 2013.
The average rate of return of BHEL for 12 months period was -0.38%.
Standard deviation of returns of BHEL was 3.89.
BETA value of BHEL was 0.65.
The monthly rate of returns of BHEL shows a low degree of variability. Returns deviate on
an average by about 3% from the average rate of return of -0.38%.
Since the beta value is LESSER than 1(BETA=0.65), return on BHEL is less volatile than the
return on NIFTY. So that investment in this share is less risky.
SUGGESTIONS
In a fast growing economy country like India, everyone wants to earn maximum profit from
Indian Stock Market, and thats obvious. Everyone want to be rich as earlier as possible, and I
think stock market trading is best option to be. There are different sectors related to the Indian
growing Economy which provides excellent investment and money making opportunities.
In market buying the right stocks and a good company from the top sectors is not a science, but
is still not an easy game. With thousands of companies to invest and choose from, luck is not the
way to go. Any company you choose to invest, just make sure that they have an outstanding
business model, clean books, and low debt and rising business revenues with atleast 5 years
business growth plans and certain factors we need to considered.
The factors are,
I suggest that new investors gain profit if they involved in safety investment. For experienced
investors, both risky and safety investment is suitable. Before investing in stock market,
investors need to analysis many factors. Just investing in company without analyzing those
factors, gives them loss. Sometimes investors may gain profit by luck. But luck wont help you
at all time.
CONCLUSION
In India most of the industries require huge amount of investments. Funds are raised mostly
through the issue of share. An investor is satisfied from the reasonable return from investment in
shares. Besides the investors are motivated to buy the shares from the stock market either for
speculation or investments. Speculation involves higher risks to get return on the other hand
investment involves no such risks and returns will be fair.
An investor can succeed in his investment only when he is able to select the right shares. The
investors should keenly watch the situations like market price, economy, company progress,
returns, and the risk involved in a share before taking decision on a particular share. This study
made will help the investors know the behavior of share prices and thus can succeed.
REFERENCES
1. Kothari.C.R. Research Methods and Techniques, Wishwa Prakashan Publishing,
New Delhi, 1990.
2. Prasanna Chandra, Financial Management-Theory and Practice, Tata Mc Graw Hill,
International Edition, 5th edition, 2000.
3. IM pandey ,Financial management, ninth edition 2005.
4. NCFM capital market (Dealers module).
WEBSITES
1. www.nseindia.com
2. www.moneycontrol.com
3. www.equitymaster.com
4. www.stockmaster.com