Risk And Return Analysis 4g2q5t

RISK AND RETURN ANALYSIS 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 , 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 ed 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.

1.2 INDUSTRY PROFILE

HISTORY OF INDIAN STOCK MARKET: Evolution Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meagre and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. 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

Stock Exchange") was established in Bombay Development of cotton mills industry and set up of many others Establishment of "The Ahmedabad Share and Stock Brokers' Association" Sharp increase in share prices of jute industries in 1870's was followed by a boom

1908

in tea stocks and coal "The Calcutta Stock Exchange Association" was formed

1920

Madras witnessed boom and business at "The Madras Stock Exchange" was

1923

transacted with 100 brokers. When recession followed, number of brokers came down to 3 and the Exchange

1934 1936 1937

was closed down Establishment of the Lahore Stock Exchange Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in South India with establishment

1940

of new textile mills and plantation companies Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was

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"

Post Independance Scenario: The depression witnessed after the Independance led to closure of a lot of exchanges in the country. Lahore Estock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was ed in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized under the Act were: 1. Bombay 2. Calcutta 3. Madras 4. Ahmedabad

5. Delhi 6. Hyderabad 7. Bangalore 8. Indore

Many more stock exchanges were established during 1980's, namely: 1. Cochin Stock Exchange (1980) 2. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) 3. Pune Stock Exchange Limited (1982)

4. Ludhiana Stock Exchange Association Limited (1983) 5. Gauhati Stock Exchange Limited (1984) 6. Kanara Stock Exchange Limited (at Mangalore, 1985) 7. Magadh Stock Exchange Association (at Patna, 1986) 8. Jaipur Stock Exchange Limited (1989)

9. Bhubaneswar Stock Exchange Association Limited (1989) 10. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) 11. Vadodara Stock Exchange Limited (at Baroda, 1990)

12. Coimbatore Stock Exchange 13. Meerut Stock Exchange Trading Pattern of the Indian Stock Market Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are divided into two categories:

Types of Transactions The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:

Indian stock exchange allows a member broker to perform following activities: 1. Act as an agent, 2. Buy and sell securities for his clients and charge commission for the same, 3. Act as a trader or dealer as a principal, 4. Buy and sell securities on his own and risk.

Over The Counter Exchange of India (OTCEI) Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry. This age-old trading mechanism in the Indian stock markets used to create many functional inefficiencies. Lack of liquidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. In order to overcome these inefficiencies, OTCEI was incorporated in 1990 under the Companies Act 1956. OTCEI is the first screen based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.

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 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 ed by totally computerized network.

1.3 COMPANY PROFILE

HISTORY The Karvy group was formed in 1983 at Hyderabad, India.Karvy ranks among the top player in almost all the fields it operates. Karvy Computershare limited is India’s largest registrar and Transfer agent with a client base of nearly 500 blue chip corporate, managing over 2 crore s. Karvy was started by a group of five chartered ants in 1979.The partners decided to offer, other than the audit services, value added services like corporate advisory services to their clients. The first firm in the group, karvy consultants limited was incorporated on 23rd july,1983.In a very short period, it became the largest registrar and transfer agent in india.The business was spun off to form a separate t venture with Computershare of Australia, in 2005. Karvy’s foray into stock broking began with marketing IPOs, in 1993.within a few years, karvy began topping the IPO procurement league tables and it has consistently maintained its position among the top 5.Karvy was among the first few of NSE in 1994, and became a member of stock exchange ,Mumbai in 2001.Dematerialisation of shares gathered pace in mid-90s and

karvy was in the forefront educating investors on the advantages of dematerializing their shares. Today Karvy is among the top 5 Depository participant in India. While the registry business is a 50:50 t venture with Computershare of Australia, it has participation by ICICI ventures limited and Barings Asia limited, in Karvy stock broking limited. Karvy has always believed in adding value to services it offers to clients. A top-notch research team based in Mumbai and Hyderabad s its employees to advise clients on their investment needs. With the information overload today, Karvy’s team of analysts help investors makes the right calls, in equities, mutual funds, insurance. Karvy Realty services which started in 2006,has quickly established itself as a broker who adds value, in the realty sector .Karvy Global offers ninche off shoring services to clients in the US.Karvy has 575 offices over 375 locations across India and overseas at Dubai and Newyork.over 9000 highly qualified people staff karvy.

HIP IN STOCKEXCHANGES: Karvy stock brokers limited is ed as a broker with National stock exchange and the Bombay stock exchange, ranks among the top 5 stock brokers in India. Karvy comtrade, member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. IN DEPOSITORY PARTICIPANT: with over 600000 active s ,it ranks among the top 5 depository participant in India, ed with CDSL and NSDL. IN IRDA AND AMFI: A Karvy insurance broker is ed as a broker with IRDA and ranks among the top insurance agent in the country. ed with AMFI as a corporate agent , Karvy is also among top mutual fund mobilize with over rs.5000 crores under management.

KARVY GROUP COMPANIES Karvy group is a diversified financial services conglomerate, which undertakes activities of registrar & transfer agent, depository participant, stock broking, commodities broking, distribution of financial products, non-banking financial services, wealth management and investment banking. It is among the top 5 players in most of the segments of the businesses that it operates in.

KARVY CONSULTANTS LIMITED

As the flagship company of the Karvy Group, Karvy Consultants Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress. Having emerged as a leader in the registry business, KARVY ventured into, transferred its business into a t venture with Computershare Limited of Australia, the world’s largest registrar. Karvy consultancy limited provides IT enabled services and domestic BPO services.

KARVY Stock Broking Limited flows freely towards attaining diverse goals of the customer through varied services. It creates a plenty of opportunities for the customer by opening up investment vistas backed by research-based advisory services. In Karvy , growth knows no limits and success recognizes no boundaries. . KARVY Stock Broking Limited is a member of: 1) National Stock Exchange (NSE), 2) Bombay Stock Exchange (BSE) SERVICES Stock broking services: Karvy offer trading on a vast platform; National Stock Exchange, Bombay Stock Exchange .More importantly, it makes trading safe to the maximum possible extent, by ing for several risk factors and planning accordingly. Karvy is doing this task by its indepth research, constant and sound advisory facilities. Karvy has highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure resultoriented information on market trends, market analysis and market predictions. This crucial information is given as a constant to their customers, through the following daily reports which are delivered to them thrice a day; •

The Pre-session Report, where market scenario for the day is predicted

•

The Mid-session Report, timed to arrive during lunch break , where the market forecast for the rest of the day is given and

•

The Post-session Report, the final report for the day, where the market and the report itself is reviewed.

In addition, Karvy publish a monthly magazine called KARVY Finapolis which analyzes the latest stock market trends and takes a close look at the various investment options, and products available in the market, while a weekly report, called KARVY Bazaar Baatein, keeps you more informed on the immediate trends in the stock market. In addition, specific industry reports give comprehensive information on various industries. Besides this, Karvy also offer special portfolio analysis packages that provide daily technical advice on scrip’s for successful portfolio management and provide customized advisory services to help customer make the right financial moves that are specifically suited to their portfolio. Depository participant services: Karvy is ed as a member with NSDL and CSDL in 1988.it is powerful medium for trading and settlement of dematerialized shares. it has established live DPMs, Internet access to s and an easier transaction process in order to offer more convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to demat division including technological enhancements like SPEED-e; make response time quick and delivery impeccable. A wide national network makes its efficiencies accessible to all. Advisory Services: Through ‘KARVY – the Finapolis', It delivers advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in deg the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. Private client group services:

This specialized division was set up to cater to the high net worth individuals and institutional clients keeping in mind that they require a different kind of financial planning and management that will augment not just existing finances but their life-style as well. To do this Karvy follow a hard-nosed business approach with the soft touch of dedicated customer care and personalized attention. Karvy research reports have been widely appreciated by this segment. The delivery and modules have been fine tuned by giving clients access to online portfolio information, constant updates on their portfolios as well as value-added advice on portfolio churning, sector switches etc. The investment recommendations given by Karvy research team in the cash market have enjoyed a high success rate.

Karvy Comtrade Limited, an ISO 9001:2008 certified company, is another venture of the prestigious Karvy group. The company provides investment, advisory and brokerage services in

Indian Commodities Markets. And most importantly, it offer a wide reach through its branch network of over 225 branches located across 180 cities.

Karvy Comtrade Limited is member of

1) Multi commodity Exchange(MCX) 2) NCDEX 3) ICEX

KIBL provide both life and non-life insurance products to retail individuals, high net-worth clients and corporates. In beginning period Karvy provides holistic and tailor made policies for different segments of customers. With Indian markets seeing a sea change, both in of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as a product which provides a financial solution for the customer. Karvy’s wide national network, spanning the length and breadth of India, further s these initiatives. Its strengths include personalized service provided by a dedicated team committed in giving hasslefree service to the clients.

Karvy Insurance broking PVT LTD provides various insurance products like Kotak-life,LIClife,Max newyork life,SBI-life,Star health &allied, Royal sundaram-Gen,met-life,ING vysyalife,HDFC-life,chole-gen,Birla sun life etc.,

Karvy Investor Services Limited (‘KISL’), a SEBI ed Merchant Banker has emerged as a leading Investment Banking entity in the country with over a decade of experience. KISL has built its reputation by capitalizing on its qualified professionals, who have successfully executed a large number of complex and unique transactions. Karvy has quality professional team which offers value-added corporate financial services and act as a professional navigator for long term growth of clients, who include leading corporate, State Governments, Foreign Institutional Investors, public and private sector companies and Banks in Indian and global markets. Credentials •

Emerging as a leading Investment Banker with a strong from its Group entities in Research, Stock Broking, Institutional Sales and Retail Distribution.

•

Strong team of more than 25 qualified professionals operating from six cities; Hyderabad, Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two overseas offices at New York (USA) and Dubai.

•

One of the largest retail distribution networks with over 584 branches in over 389 cities/towns.

•

Excellent Institutional Sales Desk.

Karvy Realty (India) Limited is engaged in the business of real estate and property services offering: •

Buying/ selling/ renting of properties

•

Identifying valuable investments opportunities in the real estate sector

•

Facilitating financial for real estate and investments in properties

•

Real estate portfolio advisory services.

KRIL is personal real estate advisor guides customers through real estate transactions and offering valuable investment opportunities. Building on the KARVY brand as a leading industry benchmark for world class customer servicing and quality standards, KRIL brings to investors a reputation of reliability, dependability and honesty. Karv understands needs and preferences of their clients and its qualified professional team help to establish fruitful relationships with buyers and sellers of properties. A single stop shop for realty services offering: •

Transacting Options: Choose to buy, sell or rent properties (residential and commercial)

•

Investing Options: Give your investments a good opportunity with properties marketed by KRIL.

•

Financing Options: Get unmatched deals for financing your investment

•

Research Options: We undertake valuation and feasibility studies, area analysis and customized analysis on behalf of clients.

KRIL has ongoing relations with builders and developers across the country which will help customers to place their investments in the most genuine properties for a good value appreciation at the right place and at the right price. KRIL is committed to the guiding principles of quality, timely service delivery, fair pricing, transparency and integrity.

The KARVY Group, a pioneer in financial services in India, has forayed into the retail finance space with its Non Banking Financial Corporation (NBFC) – Karvy Financial Services Ltd or Karvy Finance. Karvy Finance has a vision to be the “Category Champion” for Capital Markets and Retail Finance in India. Karvy Finance offers a complete bouquet of financial services products to its customers with secured and unsecured lending products (such as Securities Finance, Secured Business Loans, Loan against Gold and Personal /Business Loan.

Karvy Computershare Private Limited (KL), presently India’s largest registrar and transfer agent, is a 50:50 t venture between the Karvy group and Computershare Limited. Over the past five years, Computershare has become both the world’s largest provider of investor services. The prime focus of our growth and solution development has centered on issuers, their stakeholders and the challenge of removing barriers to efficient servicing of these important stakeholders Groups. Karvy has 30,000 clients and 100 million investors and its spend over A$100M annually on technology services, including substantial expenditure on research and development. Computershare is considered a world leader in share registration, employee equity plans, proxy solicitation and other specialized financial, governance and stakeholder communication services. KL provides registry services to domestic and foreign mutual funds and corporates across the country: •

Servicing over 67million investors, more than 500 corporates and 29 mutual funds

•

Handled over 1,000 issuances, open offers, buy back offers etc.

•

Fully integrated service provider with cross border capabilities leveraging a combination of global expertise and domestic knowledge

Karvy Global Services is a knowledge services company. It provides specialist resources to extend in house analyst teams in driving clear business results. It serves investment banks, insurance providers, brokerages, hedge funds, research agencies, and life settlement providers across the United States, Middle East, and Europe.. The mission ststement of Karvy Global services limited is "Our clients are our business partners. Our goal is to help them succeed".

The key values that transcend the organization are: •

Integrity in all business functions

•

Transparency in the organization

•

Performance based culture

SOME OF KARVY CLIENTS:

QUALITY POLICY To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy will strive to exceed Customer's expectations. Quality Objectives As per the Quality Policy, Karvy will : •

Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services.

•

Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.

•

Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs.

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Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics.

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Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients.

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Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same.

Strive to keep all stake-holders(shareholders, clients, investors, employees, suppliers and regulatory authorities) proud and satisfied.

ACHIEVEMENTS: •

Among the top 5 stock brokers in India (4% of NSE volumes)

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India's No. 1 Registrar & Securities Transfer Agents

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Among the top 3 Depository Participants

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Largest Network of Branches & Business Associates

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ISO 9002 certified operations by DNV

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Among top 10 Investment bankers

•

Largest Distributor of Financial Products

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Adjudged as one of the top 50 IT uses in India by MIS Asia

1.3 objectives of the study Primary objective ✔ To analysis risk and return of companies listed in NIFTY Secondary objective ✔ To find out the rate of return of securities for period of one year ✔ To calculate standard deviation and variance to measure risk involved in that

securities. ✔ To calculate BETA value in order to know whether investment in that securities is risky or not. 1.4 Limitations of the study •

This study does not consider bonus shares issued by companies during this last one year period.

•

There is no guarantee that what has worked for over a hundred and fifty years in the past may continue to work in the future.

•

The study is confined to 1 year only and hence the changes taken place before and after these periods have not been taken into considerations.

•

The study considers only 12 companies out of 50 companies.

•

The time is one of the constraint factors to learn about the share market

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.”

Rate of return (R) =DIV+(P1-p0)p0 DIV=dividend per share received in year. P1=price of share in the beginning of the year. P0=price of share at the end of the 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.

Unrealized capital gain or loss: If an investor holds a share and does not sell it at the end of a period ,the difference between the beginning and ending share prices is the unrealized capital gain(or loss). AVERAGE RATE OF RETUEN: The average rate of return is the sum of the various one period rates of return by the number of periods. Average rate of return can be calculated as follows. Ro=1n[R1+R2+….+Rn] = 1/nt=1nRt Ro = average rate of return. Rt=the observed or realized rates of return in periods 1,2,…t n = the total number of periods. RISK

Risk may be described as variability/fluctuation/deviation of actual return from expected return from a given asset/investment. Higher the variability, greater is the risk. TYPES OF RISK: The risk of a security can be broadly classified into two types. Such as systematic risk and unsystematic risk. Standard deviation has been used as a proxy measure for total risk. SYSTEMATIC RISK: Systematic risk is due to risk factors that affect the entire market such as investment policy changes, foreign investment policy, change in taxation clauses, shift in socio-economic parameters, global security threats and measures etc. Systematic risk is the risk that affects a security or portfolio due to its relationship with the market. Systematic risk is also called market risk, aggregate risk, or undiversifiable risk. Systematic risk can’t be reduced through portfolio diversification. Since this risk is associated with overall market sentiment rather than performance of few stocks. Systematic risk results from forces which can’t be controlled by a firm. Systematic risk is measured with beta coefficient. It represents the security’s 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, σ = Square root of t-1nR-Ro2/n standard deviation =variance VARIANCE: It equals to average of squares of deviations of individual returns from expected returns. Symbolically, σ 2 = t-1nR-Ro2/n BETA The Beta (β) 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 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

is to analysis the risk and returns using statistical

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 2010 to 31st march 2011. The closing prices of share prices were taken and the risk and return of companies were analyzed.

DATA ANALYSIS AND INTERPRETATION CALCULATION OF RATE OF RETURN OF SECURITY FOR PERIOD OF ONE YEAR 1. HINDALCO Month

Average close Price

Capital Gain/ Loss(%)

Dividend per share

Dividend yield

-

-

-

Rate of Return (%)(R)

(R-R1)

(R-R1)2

-

Mar -10

171.42

Apr-10

180.45

5.267763

1.35

0.79

6.06

3.5

12.25

May-10

159.42

-11.6542

1.35

0.75

-10.91

-13.47

181.44

June-10

144.77

-9.18956

1.35

0.85

-8.34

-10.9

118.81

July-10

151.4

4.579678

1.35

0.93

5.51

2.95

8.7

Aug-10

167.7

10.76618

1.35

0.89

11.66

9.1

82.81

Sep-10

186.76

11.36553

1.35

0.81

12.17

9.61

92.35

Oct-10

212.02

13.52538

1.35

0.72

14.24

11.69

136.06

Nov-10

217.49

2.57994

1.35

0.63

3.21

0.66

0.44

Dec-10

227.86

4.768035

1.35

0.62

5.39

2.83

8.01

Jan-11

234.5

2.91407

1.35

0.59

3.51

0.95

0.9

Feb-11

218.39

-6.86995

1.35

0.58

-6.29

-8.85

78.32

Mar-11

205.08

-6.0946

1.35

0.62

-5.47

-8.04

64.64

Average Rate of Return (R1): = 6.06-10.91-8.34+5.51+11.66+12.17+14.24+3.21+5.39+3.51 -6.29-5.47 = 2.56%

VARIANCE: ∑ (R-R1)2=785.33, n=12 Var =785.33/11 =71.39 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 13.53% was obtained in October 2010 and lowest return 0f -11.65% was obtained in may 2010.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 -10

625.22

-

-

-

Apr-10

665.14

6.38

8

1.28

7.66

6.15

37.82

May-10

539.61

-18.87

8

1.2

-17.67

-19.18

367.87

June-10

482.98

-10.49

8

1.48

-9.01

-10.52

110.67

July-10

508.39

5.26

8

1.66

6.92

5.41

29.27

Aug-10

524.44

3.16

8

1.57

4.73

3.22

10.37

Sep-10

602.84

14.95

8

1.53

16.48

14.97

224.1

Oct-10

635

5.33

8

1.33

6.66

5.15

26.52

-

Nov-10

613.38

-3.4

8

1.26

-2.14

-3.65

13.32

Dec-10

647.83

5.62

8

1.3

6.92

5.41

29.27

Jan-11

651.19

0.52

8

1.23

1.75

0.24

0.06

Feb-11

623.21

-4.3

8

1.23

-3.07

-4.58

20.98

Mar-11

608.03

-2.44

8

1.28

-1.16

-2.67

7.13

Average Rate of Return(R1): = 7.66+(-17.67)+(-9.01)+6.92+4.73+16.48+6.66+(-2.14)+6.92+1.75 +(-3.07)+(-1.16) = 1.51% VARIANCE: ∑ (R-R1)2=877.38,n=12 Var =877.38/11 =79.76 STANDARD DEVIATION: σ =79.76 =8.94

GRAPH CALCULATION OF RATE OF RETURN OF TATASTEEL FOR PERIOD OF ONE YEAR

INTERPRETATION: During the period of last 12 months (march 2010-march 2011),the highest return of 16.48% was obtained in September 2010 and lowest return 0f -17.67% was obtained in may 2010.The average rate of return of TATA STEEL for 12 months period was 1.51%.standard deviation of returns was 8.94. 3. DLF CALCULATION OF RATE OF RETURN OF DLF 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 -10

307.15

Apr-10

324.71

5.72

2

0.65

6.37

7.62

58.06

May-10

285.66

-12.03

2

0.62

-11.41

-10.16

103.23

June-10

277.28

-2.9

2

0.7

-2.2

-0.95

0.9

July-10

305.87

10.27

2

0.72

10.99

12.24

149.82

Aug-10

315.66

3.2

2

0.65

3.85

5.1

26.01

Sep-10

343.67

8.87

2

0.63

9.5

10.75

115.56

Oct-10

375.21

9.18

2

0.58

9.76

11.01

121.22

Nov-10

328.72

-12.89

2

0.53

-11.86

-10.61

112.57

Dec-10

291.15

-11.43

2

0.61

-10.82

-9.57

91.58

Jan-11

258.97

-11.05

2

0.69

-10.36

-9.11

82.99

Feb-11

232.96

-10.04

2

0.77

-9.27

-8.02

64.32

Mar-11

232.08

-0.38

2

0.86

0.48

1.73

2.99

Average Rate of Return(R1): =(6.37+(-11.41)+(-2.2)+10.00+3.85+9.5+9.76+(-11.86)+(-10.82)+(-10.36) +(-9.27)+0.48/12 = -1.25%

VARIANCE: ∑ (R-R1)2=929.25,n=12 Var =929.25/11 =84.47 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 10.99% was obtained in July 2010 and lowest return 0f -11.86% was obtained in Nov 2010.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 -10

528.69

Apr-10

504.05

-4.66

14

2.65

-2.01

-5.24

27.46

May-10

547.06

8.53

14

2.78

11.31

8.08

65.29

June-10

568.02

3.83

14

2.56

6.39

3.16

9.99

July-10

659.81

16.16

14

2.46

18.62

15.39

236.85

Aug-10

695.27

5.37

14

2.12

7.49

4.26

18.15

Sep-10

771.65

10.99

14

2.01

13

9.77

95.45

Oct-10

731

-5.27

14

1.81

-3.46

-6.69

44.76

Nov-10

727.02

-0.54

14

1.92

1.38

-1.85

3.42

Dec-10

678.41

-6.69

14

1.93

-4.76

-7.99

63.84

Jan-11

612.39

-9.73

14

2.06

-7.67

-10.9

118.81

Feb-11

583.81

-4.67

14

2.29

-2.38

-5.61

31.47

Mar-11

574.69

14

2.4

0.84

-2.39

5.71

-1.56

Average Rate of Return(R1): =-2.01+11.31+6.39+18.62+7.49+13+(-3.46)+1.38+(-4.76)+(-7.67) + (-2.38)+0.84 = 3.23%

VARIANCE: ∑ (R-R1)2=721.2,n=12 Var =721.2/11 =65.56 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 18.62% was obtained in July 2010 and lowest return 0f -7.67% was obtained in JAN 2011.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 Capital close Gain/ Price Loss (%)

Dividend per share

Dividend yield

Rate of Return (%)(R)

(R-R1)

(R-R1)2

Mar -10

203.3

Apr-10

207.66

2.14

3.8

1.87

4.01

3.04

9.24

May-10

202.35

-2.56

3.8

1.83

-0.73

-1.7

2.89

June-10

199.35

-1.48

3.8

1.88

0.4

-0.57

0.32

July-10

200.56

0.61

3.8

1.91

2.52

1.55

2.4

Aug-10

196.10

-2.22

3.8

1.89

-0.33

-1.3

1.69

Sep-10

206.10

5.1

3.8

1.94

7.04

6.07

36.84

Oct-10

207.87

0.86

3.8

1.84

2.7

1.73

2.99

Nov-10

187.82

-9.65

3.8

1.83

-7.82

-8.79

77.26

Dec-10

193.68

3.12

3.8

2.02

5.14

4.17

17.32

Jan-11

192.55

-0.58

3.8

1.96

1.38

0.41

0.17

Feb-11

176.68

-8.24

3.8

1.97

-6.27

-7.24

52.42

Mar-11

179.29

1.48

3.8

2.15

3.63

2.66

7.08

Average Rate of Return(R1): = 4.01+(-0.73)+0.4+2.52+(-0.33)+7.04+2.7+(-7.82)+5.14+1.38+ (-6.27)+3.63/12 = 0.97%

VARIANCE: ∑ (R-R1)2=210.69,n=12 Var =210.69/11 =19.15 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 7.04% was obtained in Sep 2010 and lowest return 0f -7.82% was obtained in NOV 2011.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

Average close Price

Capital Gain/ Dividend Dividend Rate of Loss (%) per yield Return share (%)(R)

(R-R1)

(R-R1)2

Mar -10

712.13

Apr-10

706.75

-0.76

2

0.28

-0.48

2.35

5.52

May-10

658.94

-6.76

2

0.28

-6.48

-3.65

13.32

June-10

515.23

-21.81

2

0.3

-21.51

-18.68

348.94

July-10

403.89

-21.61

2

0.39

-21.22

-18.39

338.19

Aug-10

414.66

2.67

2

0.5

3.17

6

36

Sep-10

423.65

2.17

2

0.48

2.65

5.48

30.03

Oct-10

457.16

7.91

2

0.47

8.38

11.21

125.66

Nov-10

423.36

-7.39

2

0.44

-6.95

-4.21

16.97

Dec-10

460.81

8.85

2

0.47

9.32

12.15

147.62

Jan-11

464.65

0.83

2

0.43

1.26

4.09

16.73

Feb-11

432.18

-6.99

2

0.43

-6.56

-3.73

13.91

Mar-11

449.40

3.98

2

0.46

4.44

7.27

52.85

Average Rate of Return(R1): = (-0.48)+(-6.48)+(-21.51)+(-21.22)+3.17+2.65+8.38+(- 6.95) +9.32+1.26+(-6.56)+4.44 = -2.83%

VARIANCE: ∑ (R-R1)2=1145.74,n=12 Var =1145.74/11 =104.15

STANDARD DEVIATION: σ =1145.74 =10.20

GRAPH CALCULATION OF RATE OF RETURN OF WIPRO FOR PERIOD OF ONE YEAR

INTERPRETATION: During the period of last 12 months (march 2010-march 2011),the highest return of 9.32% was obtained in Dec 2010 and lowest return 0f -21.51% was obtained in JUN 2011.The average rate of return of WIPRO for 12 months period was -2.83%.standard Deviation of returns of WIPRO was 10.20.

7. GRASIM CALCULATION OF RATE OF RETURN OF GRASIM FOR PERIOD OF ONE YEAR Month

Average Capital close Gain/ Loss Price (%)

Dividend Dividend Rate of per yield Return share (%) ( R)

(R-R1)

(R-R1)2

Mar -10

2848.76

Apr-10

2824.94

-0.84

30

1.05

0.21

0.21

0.04

May-10

2431.98

-13.91

30

1.06

-12.85

-12.85

165.12

June-10

1788.21

-26.47

30

1.23

-25.24

-25.24

637.06

July-10

1838.63

2.82

30

1.68

4.5

4.5

20.25

Aug-10

1975.33

7.43

30

1.63

9.06

9.06

82.08

Sep-10

2174.21

10.07

30

1.52

11.59

11.59

134.33

Oct-10

2290.62

5.35

30

1.38

6.73

6.73

45.29

Nov-10

2314.97

1.06

30

1.31

2.37

2.37

5.62

Dec-10

2319.57

0.2

30

1.3

1.5

1.5

2.25

Jan-11

2386.86

2.9

30

1.29

4.19

4.19

17.56

Feb-11

2281.16

-4.43

30

1.26

-3.17

-3.17

10.05

Mar-11

2391.73

4.85

30

1.32

6.17

6.17

38.07

Average Rate of Return(R1): = 0.21+(-12.85)+(-25.24)+4.5+9.06+11.59+6.73+2.37+1.5+4.19 +(-3.17)+6.17 = 0.42%

VARIANCE: ∑ (R-R1)2=1157.72,n=12

Var =1157.72/11 =105.24 STANDARD DEVIATION: σ =105.24 =10.26

GRAPH CALCULATION OF RATE OF RETURN OF GRASIM FOR PERIOD OF ONE YEAR

INTERPRETATION: During the period of last 12 months (march 2010-march 2011),the highest return of 11.59% was obtained in Sep 2010 and lowest return 0f -25.24% was obtained in JUN 2011.The average rate of return of GRASIM for 12 months period was 0.42%.Standard Deviation of returns of GRASIM was 10.26. 8. SAIL CALCULATION OF RATE OF RETURN OF SAIL FOR PERIOD OF ONE YEAR Month

Average Capital close Gain/ Price Loss (%)

Dividend Dividend Rate of per yield Return share (%)( R)

(R-R1)

(R-R1)2

Mar -10

238.31

Apr-10

231.78

-2.74

3.3

1.38

-1.36

0.04

0.0016

May-10

206.96

-10.71

3.3

1.42

-9.29

-7.89

62.25

June-10

197.6

-4.52

3.3

1.59

-2.93

-1.53

2.34

July-10

199.15

0.78

3.3

1.67

2.45

3.85

14.82

Aug-10

192.76

-3.21

3.3

1.66

-1.55

-0.15

0.02

Sep-10

201.11

4.33

3.3

1.71

6.04

7.44

55.35

Oct-10

219.49

9.14

3.3

1.64

10.78

12.18

148.35

Nov-10

188.84

-13.96

3.3

1.5

-12.46

-11.06

122.32

Dec-10

182.88

-3.16

3.3

1.75

-1.41

-0.01

0.0001

Jan-11

170.95

-6.52

3.3

1.8

-4.72

-3.32

11.02

Feb-11

159.28

-6.83

3.3

1.93

-4.9

-3.5

12.25

Mar-11

160.11

0.52

3.3

2.07

2.59

3.99

15.92

Average Rate of Return(R1): = (-1.36)+(-9.29)+(-2.93)+2.45+(-1.55)+6.04+10.78+(-12.46)+ (-1.41)+(-4.72)+(-4.9)+2.59/12 = -1.31% %

VARIANCE: ∑ (R-R1)2=444.66,n=12 Var =444.66/11 =40.42 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 10.78% was obtained in oct 2010 and lowest return 0f -12.46% was obtained in NOV 2011.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

Mar -10

1604.70 5

Apr-10

1610.05

Capital Dividend Dividend Rate of Gain/ per yield Return Loss share (%)( R) (%)

0.33

12.5

0.78

1.11

(R-R1)

0.37

(R-R1)2

0.14

8

May-10

1586.48 8

-1.46

12.5

0.78

-0.68

-1.42

2.02

June-10

1723.85

8.66

12.5

0.79

9.45

8.71

75.86

July-10

1849.60 9

7.3

12.5

0.73

8.03

7.29

53.14

Aug-10

1820.38 2

-1.58

12.5

0.68

-0.9

-1.64

2.69

Sep-10

1944.03 6

6.79

12.5

0.69

7.48

6.74

45.43

Oct-10

2032.56 9

4.55

12.5

0.64

5.19

4.45

19.8

Nov-10

2070.90 7

1.89

12.5

0.61

2.5

1.76

3.1

Dec-10

1978.18

-4.48

12.5

0.6

-3.88

-4.62

21.34

Jan-11

1746.42 5

-11.72

12.5

0.63

-11.09

-11.83

139.95

Feb-11

1580.99 5

-9.47

12.5

0.72

-8.75

-9.49

90.06

Mar-11

1575.28 9

-0.36

12.5

0.79

0.43

-0.31

0.1

Average Rate of Return(R1): = 1.11+(-0.68)+9.45+8.03+(-0.9)+7.48+5.19+2.5+(-3.88) + (-11.09)+(-8.75)+0.43/12 =0.74%

VARIANCE: ∑ (R-R1)2=453.63,n=12 Var =453.63/11 =41.239 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 9.45% was obtained in May 2010 and lowest return 0f -11.09% was obtained in JAN 2011.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.

10. 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 -10

327.481

Apr-10

335.05

2.31

2

0.61

2.92

2.81

7.9

May-10

321.25

-4.12

2

0.6

-3.52

-3.63

13.18

June-10

334.413 6

4.1

2

0.62

4.72

4.61

21.25

July-10

331.406 8

-0.9

2

0.6

-0.3

-0.41

0.17

Aug-10

313.006 8

-5.55

2

0.6

-4.95

-5.06

25.6

Sep-10

312.619

-0.12

2

0.64

0.52

0.41

0.17

Oct-10

338.285 7

8.21

2

0.64

8.85

8.74

76.39

Nov-10

344.321 4

1.78

2

0.59

2.37

2.26

5.11

Dec-10

363.527 3

5.58

2

0.58

6.16

6.05

36.6

Jan-11

351.245

-3.38

2

0.55

-2.83

-2.94

8.64

Feb-11

311.432 5

-11.33

2

0.57

-10.76

-10.87

118.16

Mar-11

303.572 7

-2.52

2

0.64

-1.88

-1.99

3.96

Average Rate of Return(R1): = 2.92+(-3.52)+4.72+(-0.3)+(-4.95)+0.52+8.85+2.37+6.16+(-2.83) +(-10.76)+(-1.88)/12 =0.11%

VARIANCE: ∑ (R-R1)2=453.63,n=12 Var =317.13/11 =28.83 STANDARD DEVIATION: σ =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 2010-march 2011),the highest return of 8.85% was obtained in OCT 2010 and lowest return 0f -10.76% was obtained in Feb 2011.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 CALCULATION OF RATE OF RETURN OF SIEMENS FOR PERIOD OF ONE YEAR Month

Average close Price

Capital Gain/ Loss (%)

Dividend Dividend Rate of per yield Return share (%)( R)

(R-R1)

(R-R1)2

Mar -10

729.314

Apr-10

727.365

-0.27

5

0.69

0.42

-1.81

3.28

May-10

681.382 5

-6.32

5

0.69

-5.63

-7.86

61.78

June-10

715.572 7

5.02

5

0.73

5.75

3.52

12.39

July-10

722.152 3

0.92

5

0.7

1.62

-0.61

0.37

Aug-10

704.409

-2.46

5

0.69

-1.77

-4

16

Sep-10

752.767

6.87

5

0.71

7.58

5.35

28.62

Oct-10

823.238

9.36

Nov-10

807.186

-1.95

Dec-10

788.143 2

-2.36

Jan-11

768.895

Feb-11

Mar-11

5

0.66

10.02

7.79

60.68

0.61

-1.34

-3.57

12.74

5

0.62

-1.74

-3.97

15.76

-2.44

5

0.63

-1.81

-4.04

16.32

844.812 5

9.87

5

0.65

10.52

8.29

68.72

866.602 3

2.58

5

0.59

3.12

0.94

0.88

5

Average Rate of Return(R1): = 0.42+(-5.63)+5.75+1.62+(-1.77)+7.58+10.02+(-1.34)+(-1.74)+ (-1.81)+10.52+3.12 = 2.23%

VARIANCE: ∑ (R-R1)2=297.54,n=12 Var =297.54/11 =27.05 STANDARD DEVIATION:

σ =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 2010-march 2011),the highest return of 10.52% was obtained in Feb 2011 and lowest return 0f -5.65% was obtained in May 2010.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-R1

(R-R1)2

(R)

Mar -10

2398.1

Apr-10

2496.56

4.11

23.3

0.97

5.08

5.46

29.81

May-10

2354.19

-5.7

23.3

0.93

-4.77

-4.39

19.27

June-10

2384.40

1.28

23.3

0.99

2.27

2.65

7.02

July-10

2425.19

1.71

23.3

0.98

2.69

3.07

9.42

Aug-10

2482.96

2.38

23.3

0.96

3.34

3.72

13.84

Sep-10

2501.48

0.75

23.3

0.94

1.69

2.07

4.28

Oct-10

2547.12

1.82

23.3

0.93

2.75

3.13

9.8

Nov-10

2354.19

-7.57

0.91

-6.66

-6.28

39.44

Dec-10

2285.28

-2.93

23.3

0.99

-1.94

-1.56

2.43

Jan-11

2237.84

-2.08

23.3

1.02

-1.06

-0.68

0.46

Feb-11

2094.29

-6.41

23.3

1.04

-5.37

-4.99

24.9

Mar-11

2017.33

-3.67

23.3

1.11

-2.56

-2.18

4.75

23.3

Average Rate of Return(R1): = 5.08-4.77+2.27+2.69+3.34+1.69+2.75-6.66-1.94-1.06-5.37-2.56 = -0.38%

VARIANCE: ∑ (R-R1)2=165.42,n=12

Var =165.42/11 =15.04 STANDARD DEVIATION σ =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 2010-march 2011),the highest return of 5.08% was obtained in Apr 2010 and lowest return 0f -6.66% was obtained in Nov 2010.The average rate of return of BHEL for 12 months period was -0.38%.Standard deviation of returns of BHEL was 3.89.

Calculation of beta value for period of one year (Mar2010-Mar11) Date

Dividend

3.1 HINDALCO Average return on

Average return on NIFTY

BETA

1.169854

HINDALCO Mar 2011

1.35

0.006006

0.002875

Feb 2011

1.35

-0.00043

-0.0005

Jan 2011

1.35

0.002528

-0.00562

Dec 2010

1.35

0.013129

0.001384

Nov 2010

1.35

0.005046

-0.00188

Oct 2010

1.35

0.008092

-0.00081

Sep 2010

1.35

0.013655

0.005077

Aug 2010

1.35

0.008808

-3.59E-05

July 2010

1.35

0.014513

0.001232

June 2010

1.35

0.01

0.003414

May 2010

1.35

0.000423

-0.00101

Apr 2010

1.35

0.00611

8.31E-05

Mar 2010

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

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

Average return on NIFTY

BETA

1.29423

Tata steel Mar 2011

8

0.012369

0.002875

Feb 2011

8

0.010981

-0.0005

Jan 2011

8

0.007368

-0.00562

Dec 2010

8

0.011216

0.001384

Nov 2010

8

0.012646

-0.00188

Oct 2010

8

0.013647

-0.00081

Sep 2010

8

0.023141

0.005077

Aug 2010

8

0.013205

-3.59E-05

July 2010

8

0.021762

0.001232

June 2010

8

0.017424

0.003414

May 2010

8

0.005674

-0.00101

Apr 2010

8

0.009419

8.31E-05

Mar 2010

8

0.0114738

0.002466

BETA CALCULATION: Beta =

Cov (return on tatasteel, return on NIFTY) ______________________________

Var (return on nifty) Cov (return on tatasteel, return on nifty) = 8.8282E-06 Var (return on nifty)

= 7.40309E-06

BETA

=

1.29423 GRAPH

Calculation of BETA value of Tata steel

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

Average return on NIFTY

BETA

0.002875

1.41406

DLF Mar 2011

2

0.018056

Feb 2011

2

0.006513

-0.0005

Jan 2011

2

-0.00647

-0.00562

Dec 2010

2

-0.00391

0.001384

Nov 2010

2

0.003959

-0.00188

Oct 2010

2

0.007955

-0.00081

Sep 2010

2

0.010686

0.005077

Aug 2010

2

-0.00008

-3.59E-05

July 2010

2

0.0030607

0.001232

June 2010

2

0.003248

0.003414

May 2010

2

-0.004753

-0.00101

Apr 2010

2

0.000057

8.31E-05

Mar 2010

2

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

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

Average return on NIFTY

BETA

0.41575

BPCL Mar 2011

14

0.026855

0.002875

Feb 2011

14

0.02165

-0.0005

Jan 2011

14

0.019236

-0.00562

Dec 2010

14

0.017954

0.001384

Nov 2010

14

0.01381

-0.00188

Oct 2010

14

0.01761

-0.00081

Sep 2010

14

0.01633

0.005077

Aug 2010

14

0.0287

-3.59E-05

July 2010

14

0.020109

0.001232

June 2010

14

0.032245

0.003414

May 2010

14

0.031467

-0.00101

Apr 2010

14

0.028509

8.31E-05

Mar 2010

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

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

Average return on

Average return on NIFTY

BETA

0.36381

NTPC Mar 2011

3.80

0.019867

0.002875

Feb 2011

3.80

0.018304

-0.0005

Jan 2011

3.80

0.018244

-0.00562

Dec 2010

3.80

0.019566

0.001384

Nov 2010

3.80

0.018683

-0.00188

Oct 2010

3.80

0.018897

-0.00081

Sep 2010

3.80

0.023247

0.005077

Aug 2010

3.80

0.012514

-3.59E-05

July 2010

3.80

0.017863

0.001232

June 2010

3.80

0.023298

0.003414

May 2010

3.80

0.022424

-0.00101

Apr 2010

3.80

0.017058

8.31E-05

Mar 2010

3.80

0.024382

0.002466

BETA calculation: Cov (return on NTPC, return on nifty)

= 2.51691E-06

Var (return on nifty)

= 7.40309E-06 2.51691E-06 Beta = __________________

7.40309E-06 = 0.36831

GRAPH

Calculation of beta value of NTPC for period of one year

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

Calculation of beta value of WIPRO for period of one year Date

dividend

Average return on

Average return on NIFTY

BETA

0.51358

WIPRO Mar 2011

3.80

0.00389

0.002875

Feb 2011

3.80

0.00122

-0.0005

Jan 2011

3.80

-0.00497

-0.00562

Dec 2010

3.80

0.012528

0.001384

Nov 2010

3.80

0.004419

-0.00188

Oct 2010

3.80

-0.00019

-0.00081

Sep 2010

3.80

0.010235

0.005077

Aug 2010

3.80

0..003348

-3.59E-05

July 2010

3.80

0.009534

0.001232

June 2010

3.80

-0.01631

0.003414

May 2010

3.80

0.002902

-0.00101

Apr 2010

3.80

-0.00088

8.31E-05

Mar 2010

3.80

0.003279

0.002466

BETA calculation: Cov (return on WIPRO, return on nifty)

= 3.52192E-06

Var (return on nifty)

= 7.40309E-06 3.52192E-06

Beta = __________________

7.40309E-06 = 0.51358

GRAPH

Calculation of beta value of WIPRO for period of one year

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

Calculation of beta value of GRASIM for period of one year Date

dividend

Average return on

Average return on NIFTY

BETA

0.88944

GRASIM Mar 2011

30

0.015888

0.002875

Feb 2011

30

0.013199

-0.0005

Jan 2011

30

0.010967

-0.00562

Dec 2010

30

0.01357

0.001384

Nov 2010

30

0.012135

-0.00188

Oct 2010

30

0.013363

-0.00081

Sep 2010

30

0.01803

0.005077

Aug 2010

30

0.019441

-3.59E-05

July 2010

30

0.016085

0.001232

June 2010

30

0.017957

0.003414

May 2010

30

-0.00532

-0.00101

Apr 2010

30

0.00878

8.31E-05

Mar 2010

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

Calculation of beta value of GRASIM for period of one year

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

Calculation of beta value of SAIL for period of one year Date

dividend

Average return on

Average return on NIFTY

BETA

1.1754

SAIL Mar 2011

3.3

0.024019

0.002875

Feb 2011

3.3

0.018102

-0.0005

Jan 2011

3.3

0.011455

-0.00562

Dec 2010

3.3

0.018639

0.001384

Nov 2010

3.3

0.013203

-0.00188

Oct 2010

3.3

0.008118

-0.00081

Sep 2010

3.3

0.020849

0.005077

Aug 2010

3.3

0.013138

-3.59E-05

July 2010

3.3

0.020256

0.001232

June 2010

3.3

0.015415

0.003414

May 2010

3.3

0.013525

-0.00101

Apr 2010

3.3

0.006958

8.31E-05

Mar 2010

3.3

0.019873

0.002466

BETA calculation: Cov (return on SAIL, return on nifty)

= 8.03265E-06

Var (return on nifty)

= 7.40309E-06 6.58492E-06

Beta = __________________

7.40309E-06 = 1.18

GRAPH

Calculation of beta value of SAIL for period of one year

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

Calculation of beta value of L&T for period of one year Date

dividend

Average return on L&T

Average return on NIFTY

BETA 1.24115

Mar 2011

12.5

0.009292

0.002875

Feb 2011

12.5

0.006622

-0.0005

Jan 2011

12.5

-0.00259

-0.00562

Dec 2010

12.5

0.005181

0.001384

Nov 2010

12.5

0.002844

-0.00188

Oct 2010

12.5

0.004558

-0.00081

Sep 2010

12.5

0.012179

0.005077

Aug 2010

12.5

0.006959

-3.59E-05

July 2010

12.5

0.006829

0.001232

June 2010

12.5

0.01346

0.003414

May 2010

12.5

0.009367

-0.00101

Apr 2010

12.5

0.006688

8.31E-05

Mar 2010

12.5

0.009275

0.002466

BETA calculation: Cov (return on L&T, return on nifty)

= 9.18876E-06

Var (return on nifty)

= 7.40309E-06 9.18876E-06

Beta = __________________

7.40309E-06 = 1.24

GRAPH

Calculation of beta value of L&T for period of one year

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 2011

8

0.009155

0.002875

Feb 2011

8

0.001563

-0.0005

Jan 2011

8

-0.00021

-0.00562

Dec 2010

8

0.006237

0.001384

Nov 2010

8

0.004122

-0.00188

Oct 2010

8

0.010339

-0.00081

Sep 2010

8

0.009182

0.005077

Aug 2010

8

0.003076

-3.59E-05

July 2010

8

0.004778

0.001232

June 2010

8

0.00814

0.003414

May 2010

8

0.003574

-0.00101

Apr 2010

8

0.006732

8.31E-05

Mar 2010

8

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

Calculation of beta value of CIPLA for period of one year

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 2011

5

0.007477

0.002875

0.710962

Feb 2011

5

0.005868

-0.0005

Jan 2011

5

0.008877

-0.00562

Dec 2010

5

0.008671

0.001384

Nov 2010

5

0.00264

-0.00188

Oct 2010

5

0.00513

-0.00081

Sep 2010

5

0.01525

0.005077

Aug 2010

5

0.00654

-3.59E-05

July 2010

5

0.00589

0.001232

June 2010

5

0.01131

0.003414

May 2010

5

0.00755

-0.00101

Apr 2010

5

0.00516

8.31E-05

Mar 2010

5

0.01134

0.002466

BETA calculation: Cov (return on CIPLA, return on nifty)

=4.858844E-06

Var (return on nifty)

= 7.40309E-06 4.858844E-06

Beta = __________________

7.40309E-06 = 0.71092

GRAPH

Calculation of beta value of SIEMENS for period of one year

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

Calculation of beta value of BHEL for period of one year

Date

dividend

Average return on BHEL

Average return on NIFTY

BETA

Mar 2011

23.30

0.011872

0.002875

0.6597

Feb 2011

23.30

0.006309

-0.0005

Jan 2011

23.30

0.007714

-0.00562

Dec 2010

23.30

0.012614

0.001384

Nov 2010

23.30

0.004457

-0.00188

Oct 2010

23.30

0.006314

-0.00081

Sep 2010

23.30

0.010715

0.005077

Aug 2010

23.30

0.008489

-3.59E-05

July 2010

23.30

0.009855

0.001232

June 2010

23.30

0.01277

0.003414

May 2010

23.30

0.005697

-0.00101

Apr 2010

23.30

0.011074

8.31E-05

Mar 2010

23.30

0.008976

0.002466

BETA calculation: Cov (return on BHEL, return on nifty) Var (return on nifty)

= 4.5088E-06 = 7.40309E-06

4.858844E-06 Beta = __________________

7.40309E-06 = 0.6597

GRAPH

Calculation of beta value of BHEL for period of one year

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 2010-march 2011),the highest return of 14.24% was obtained in October 2010 and lowest return 0f -10.91% was obtained in may 2010.

•

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 2010-march 2011),the highest return of 16.48% was obtained in September 2010 and lowest return 0f -17.67% was obtained in may 2010.

•

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 2010-march 2011),the highest return of 10.99% was obtained in July 2010 and lowest return 0f -11.86% was obtained in Nov 2010. •

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 2011 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 2010-march 2011),the highest return of 18.62% was obtained in July 2010 and lowest return 0f -7.67% was obtained in JAN 2011.

•

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 2010-march 2011),the highest return of 7.04% was obtained in Sep 2010 and lowest return 0f -7.82% was obtained in NOV 2011.

•

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 2010-march 2011),the highest return of 9.32% was obtained in Dec 2010 and lowest return 0f -21.51% was obtained in JUN 2011.

•

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 2010-march 2011),the highest return of 11.59% was obtained in Sep 2010 and lowest return 0f -25.24% was obtained in JUN 2011.

•

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 2010-march 2011),the highest return of 10.78% was obtained in oct 2010 and lowest return 0f -12.46% was obtained in NOV 2011.

•

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 2010-march 2011),the highest return of 9.45% was obtained in May 2010 and lowest return 0f -11.09% was obtained in JAN 2011

•

.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 2010-march 2011),the highest return of 8.85% was obtained in OCT 2010 and lowest return 0f -10.76% was obtained in Feb 2011.

•

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 2010-march 2011),the highest return of 10.52% was obtained in Feb 2011 and lowest return 0f -5.65% was obtained in May 2010.

•

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 2010-march 2011),the highest return of 5.08% was obtained in Apr 2010 and lowest return 0f -6.66% was obtained in Nov 2010.

•

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 that’s 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, •

Annual returns of company’s share.

•

Risk incurred in that company. Companies can face such risks as: •

Critical raw materials becoming depleted

•

Rail transportation service being terminated

•

Manpower and/or skills shortages occurring

•

Moving average of company share.

•

Beta value of returns of company

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 won’t 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