Risk and Return Analysis

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 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.

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

street (now well known as "Dalal Street") for the purpose of transacting business.

1875 "The Native Share and Stock Brokers' Association" (also known as "The Bombay

Stock Exchange") was established in Bombay

1880's Development of cotton mills industry and set up of many others

1894 Establishment of "The Ahmedabad Share and Stock Brokers' Association"

1880 - 90's Sharp increase in share prices of jute industries in 1870's was followed by a boom

in tea stocks and coal

1908 "The Calcutta Stock Exchange Association" was formed

1920 Madras witnessed boom and business at "The Madras Stock Exchange" was

transacted with 100 brokers.

1923 When recession followed, number of brokers came down to 3 and the Exchange

was closed down

1934 Establishment of the Lahore Stock Exchange

1936 Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange

1937 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

of new textile mills and plantation companies

1940 Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was

established

1944 Establishment of "The Hyderabad Stock Exchange Limited"

1947 "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 registered 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 account 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 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.

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

accounts. Karvy was started by a group of five chartered accountants 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 joint 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 members 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 joint 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 supports 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.

MEMBERSHIP

IN STOCKEXCHANGES: Karvy stock brokers limited is registered 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 accounts ,it ranks among the top

5 depository participant in India, registered with CDSL and NSDL.

IN IRDA AND AMFI: A Karvy insurance broker is registered as a broker with IRDA and ranks

among the top insurance agent in the country. Registered 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 joint 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

accounting for several risk factors and planning accordingly. Karvy is doing this task by its in-

depth research, constant feedback and sound advisory facilities. Karvy has highly skilled

research team, comprising of technical analysts as well as fundamental specialists, secure result-

oriented information on market trends, market analysis and market predictions. This crucial

information is given as a constant feedback 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 registered 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

accounts 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 designing the

right investment portfolio for each customer according to individual needs and budget

considerations with a comprehensive support 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 support

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 terms 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 supports these initiatives. Its

strengths include personalized service provided by a dedicated team committed in giving hassle-

free service to the clients.

http://www.karvycomtrade.com/

Karvy Insurance broking PVT LTD provides various insurance products like Kotak-life,LIC-

life,Max newyork life,SBI-life,Star health &allied, Royal sundaram-Gen,met-life,ING vysya-

life,HDFC-life,chole-gen,Birla sun life etc.,

Karvy Investor Services Limited (‘KISL’), a SEBI registered 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 support 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 support 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 (KCPL), presently India’s largest registrar and transfer

agent, is a 50:50 joint 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.

KCPL 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,

http://www.karvycomputershare.com/Default.aspx

http://www.karvyglobal.com/index.php

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:

http://upload.wikimedia.org/wikipedia/en/3/3c/Wipro_Logo.svg

http://4.bp.blogspot.com/_AcBUSVxs82w/SsA1Z90-1VI/AAAAAAAAVK4/UEGRHw5kOYc/s1600-h/UTI_Mutual_Fund_Logo.jpg

http://2.bp.blogspot.com/_AcBUSVxs82w/S54vA_yKwCI/AAAAAAAAa6E/ckQw1vmYhHI/s1600-h/DLF-Logo.gif

http://4.bp.blogspot.com/_AcBUSVxs82w/S4dM_e_5ViI/AAAAAAAAaIg/uA_us4hcLOA/s1600-h/Dabur_Logo.jpg

http://2.bp.blogspot.com/_AcBUSVxs82w/TMGMm9EaKmI/AAAAAAAAigA/mxzH1KlKo_8/s1600/Bank_Of_Baroda_Logo.jpg

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.

Continue to uphold the values of honesty & integrity and strive to establish unparalleled

standards in business ethics.

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.

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)

India's No. 1 Registrar & Securities Transfer Agents

Among the top 3 Depository Participants

Largest Network of Branches & Business Associates

ISO 9002 certified operations by DNV

Among top 10 Investment bankers

Largest Distributor of Financial Products

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) =¿+(P 1−p 0)

p 0

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[R 1+R 2+….+Rn] = 1/n∑

t=1

n

Rt

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−1

n

(R−Ro ) 2/n

standard deviation =√variance

VARIANCE:

It equals to average of squares of deviations of individual returns from expected returns.

Symbolically,

σ 2 = ∑t−1

n

(R−Ro ) 2/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 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 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

http://www.nseindia.com/

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

month Apr-10 May-10

Jun-10 Jul-10 Aug-10

Sep-10 Oct-10 Nov-10

Dec-10 Jan-11 Feb-11 Mar-11

-15

-10

-5

0

5

10

15

5.28

-11.65

-9.18

4.59

10.78 11.3713.53

2.594.77

2.92

-6.86 -6.09

Month

total return(%)

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



Dividend per share

Dividend yield(%)


(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

MONTH

Mar-10

Apr-10

May-10




-20

-15

-10

-5

0

5

10

15

20

Rate of Return

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



Dividend per share

Dividend yield


(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


=(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

month Apr-10 May-10




-15

-10

-5

0

5

10

15

6.37

-11.41

-2.2

10.99

3.85

9.5 9.76

-11.86-10.82 -10.36

-9.27

0.48

Month

total return(%)

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


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 -1.56 14 2.4 0.84 -2.39 5.71


=-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

month Apr-10 May-10




-10

-5

0

5

10

15

20

25

-2.01

11.31

6.39

18.62

7.49

13

-3.46

1.38

-4.76

-7.67

-2.38

0.840000000000001

total return(%)

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



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


= 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

month Apr-10 May-10




-10

-8

-6

-4

-2

0

2

4

6

8

4.01

-0.73000000000000

1

0.4

2.52

-0.33000000000000

1

7.04

2.7

-7.82

5.14

1.38

-6.27

3.63total return(%)

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



Dividend per share

Dividend yield


(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


= (-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

month Apr-10 May-10




-25

-20

-15

-10

-5

0

5

10

15

-0.48

-6.48

-21.51 -21.22

3.17 2.65

8.38

-6.95

9.32

1.26

-6.56

4.44total return(%)

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



Dividend per share

Dividend yield

Rate of Return (%) ( 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


= 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

month Apr-10 May-10




-30

-25

-20

-15

-10

-5

0

5

10

15

0.21

-12.85

-25.24

4.5

9.0611.59

6.73

2.37 1.54.19

-3.17

6.17total return(%)

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



Dividend per share

Dividend yield

Rate of Return (%)( 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


= (-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

month Apr-10 May-10




-15

-10

-5

0

5

10

15

-1.36

-9.29

-2.93

2.45

-1.55

6.04

10.78

-12.46

-1.41

-4.72 -4.9

2.59

total return(%)

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



Dividend per share

Dividend yield


(R-R1) (R-R1)2

Mar -10 1604.705

Apr-10 1610.058 0.33 12.5 0.78 1.11 0.37 0.14

May-10 1586.488 -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 1849.609 7.3 12.5 0.73 8.03 7.29 53.14

Aug-10 1820.382 -1.58 12.5 0.68 -0.9 -1.64 2.69

Sep-10 1944.036 6.79 12.5 0.69 7.48 6.74 45.43

Oct-10 2032.569 4.55 12.5 0.64 5.19 4.45 19.8

Nov-10 2070.907 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 1746.425 -11.72 12.5 0.63 -11.09 -11.83 139.95

Feb-11 1580.995 -9.47 12.5 0.72 -8.75 -9.49 90.06

Mar-11 1575.289 -0.36 12.5 0.79 0.43 -0.31 0.1


= 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

month Apr-10 May-10

Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

-8

-6

-4

-2

0

2

4

65.08

-4.77

2.272.69

3.34

1.69

2.75

-6.66

-1.94-1.06

-5.37

-2.56

total return(%)

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



Dividend per share

Dividend yield


(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-10 334.4136 4.1 2 0.62 4.72 4.61 21.25

July-10 331.4068 -0.9 2 0.6 -0.3 -0.41 0.17

Aug-10 313.0068 -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-10 338.2857 8.21 2 0.64 8.85 8.74 76.39

Nov-10 344.3214 1.78 2 0.59 2.37 2.26 5.11

Dec-10 363.5273 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-11 311.4325 -11.33 2 0.57 -10.76 -10.87 118.16

Mar-11 303.5727 -2.52 2 0.64 -1.88 -1.99 3.96


= 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

month Apr-10 May-10


-8

-6

-4

-2

0

2

4

65.08

-4.77

2.272.69

3.34

1.69

2.75

-6.66

-1.94-1.06

-5.37

-2.56

total return(%)

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



Dividend per share

Dividend yield


(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-10 681.3825 -6.32 5 0.69 -5.63 -7.86 61.78

June-10 715.5727 5.02 5 0.73 5.75 3.52 12.39

July-10 722.1523 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 5 0.66 10.02 7.79 60.68

Nov-10 807.186 -1.95 5 0.61 -1.34 -3.57 12.74

Dec-10 788.1432 -2.36 5 0.62 -1.74 -3.97 15.76

Jan-11 768.895 -2.44 5 0.63 -1.81 -4.04 16.32

Feb-11 844.8125 9.87 5 0.65 10.52 8.29 68.72

Mar-11 866.6023 2.58 5 0.59 3.12 0.94 0.88


= 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

month Apr-10 May-10


-8

-6

-4

-2

0

2

4

65.08

-4.77

2.272.69

3.34

1.69

2.75

-6.66

-1.94-1.06

-5.37

-2.56

total return(%)

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



Dividend per share

Dividend yield


R-R1 (R-R1)2

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 23.3 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


= 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

month Apr-10 May-10


-8

-6

-4

-2

0

2

4

65.08

-4.77

2.272.69

3.34

1.69

2.75

-6.66

-1.94-1.06

-5.37

-2.56

total return(%)

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)

3.1 HINDALCO

Date Dividend Average return on HINDALCO

Average return on NIFTY

BETA

Mar 2011 1.35 0.006006 0.002875 1.169854

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) = 7.40309E-06

7.99434E-06 Beta = __________________

7.40309E-06

= 1.169

3.1 GRAPH

Calculation of BETA value of Hindalco

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.006-0.002

0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

f(x) = 1.16985383029043 x + 0.00704723463113361R² = 0.417811158671514

HINDALCO

HINDALCOLinear (HINDALCO)

return on NIFTY

Retu

rn on

Hind

alco

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 Tata steel


BETA

Mar 2011 8 0.012369 0.002875 1.29423

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:

Cov (return on tatasteel, return on NIFTY) Beta = ______________________________ Var (return on nifty)

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


BETA = 1.29423

GRAPH

Calculation of BETA value of Tata steel

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.0060

0.005

0.01

0.015

0.02

0.025

f(x) = 1.29342574309884 x + 0.0126892361098602R² = 0.484060004274737

Tata steel

tata steelLinear (tata steel)

return on Nifty

retu

rn o

n ta

tast

eel

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 DLF


BETA

Mar 2011 2 0.018056 0.002875 1.41406

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

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.006

-0.01

-0.005

0

0.005

0.01

0.015

0.02

f(x) = 1.41406062299086 x + 0.00246052563326481R² = 0.330233419273394

DLF

DLFLinear (DLF)Linear (DLF)

Return on NIFTY

Retu

rn on

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 BPCL


BETA

Mar 2011 14 0.026855 0.002875 0.41575

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


2.84108E-06 Beta = __________________

7.40309E-06

= 0.41575

GRAPH

Calculation of BETA value of BPCL

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.0060

0.005

0.01

0.015

0.02

0.025

0.03

0.035

f(x) = 0.415749610997945 x + 0.0227772160757036R² = 0.0345343869079452

BPCL

BPCLLinear (BPCL)

Return on NIFTY

Retu

rn o

n BP

CL

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 NTPC


BETA

Mar 2011 3.80 0.019867 0.002875 0.36381

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


2.51691E-06 Beta = __________________ 7.40309E-06

= 0.36831

GRAPH

Calculation of beta value of NTPC for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.0060

0.005

0.01

0.015

0.02

0.025

0.03

f(x) = 0.368312313909944 x + 0.0193760353890619R² = 0.0984416232989118

NTPC

NTPCLinear (NTPC)

Return on NIFTY

Retu

rn on

NTP

C

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 WIPRO


BETA

Mar 2011 3.80 0.00389 0.002875 0.51358

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


3.52192E-06 Beta = __________________

7.40309E-06

= 0.51358

GRAPH

Calculation of beta value of WIPRO for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.006

-0.02

-0.015

-0.01

-0.005

0

0.005

0.01

0.015

f(x) = 0.515381530983389 x + 0.00196651930565048R² = 0.036530471894145

WIPRO

WIPROLinear (WIPRO)

Return on NIFTY

Retu

rn o

n W

IPRO

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 GRASIM


BETA

Mar 2011 30 0.015888 0.002875 0.88944

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) = 6.58492E-06


6.58492E-06 Beta = __________________ 7.40309E-06

= 0.89

GRAPH

Calculation of beta value of GRASIM for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.006

-0.01

-0.005

0

0.005

0.01

0.015

0.02

0.025

f(x) = 0.963566187567175 x + 0.0123078416816634R² = 0.176265707364208

GRASIM

GRASIMLinear (GRASIM)

Return on NIFTY

Retu

rn on

GRA

SIM

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 SAIL


BETA

Mar 2011 3.3 0.024019 0.002875 1.1754

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


6.58492E-06 Beta = __________________ 7.40309E-06

= 1.18

GRAPH

Calculation of beta value of SAIL for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.0060

0.005

0.01

0.015

0.02

0.025

0.03

f(x) = 1.17541122441966 x + 0.0150544215383837R² = 0.386206907198583

SAIL

SAILLinear (SAIL)

Return on NIFTY

Retu

rn on

SAIL

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


BETA

Mar 2011 12.5 0.009292 0.002875 1.24115

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


9.18876E-06 Beta = __________________ 7.40309E-06

= 1.24

GRAPH

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

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.006

-0.004

-0.002

0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

f(x) = 1.34458388417764 x + 0.00628405651055263R² = 0.789808689641446

L&T

L&TLinear (L&T)

Return on NIFTY

Retu

rn on

L&T

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


BETA

Mar 2011 8 0.009155 0.002875 0.914027

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) = 9.18876E-06


6.24611E-06 Beta = __________________ 7.40309E-06

= 0.914

GRAPH

Calculation of beta value of CIPLA for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.006

-0.01

-0.005

0

0.005

0.01

0.015

0.02

0.025

f(x) = 0.963719258620888 x + 0.0123075407223705R² = 0.176314436396909

CIPLA

CIPLALinear (CIPLA)

REturn on NIFTY

Retu

rn on

CIPL

A

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


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


4.858844E-06 Beta = __________________ 7.40309E-06

= 0.71092

GRAPH

Calculation of beta value of SIEMENS for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.0060

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

0.018

f(x) = 0.710961675819824 x + 0.00745824801305011R² = 0.339861324470531

SIEMENS

SIEMENSLinear (SIEMENS)

Return on NIFTY

Retu

rn on

SIEM

ENS

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


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) = 4.5088E-06


4.858844E-06 Beta = __________________ 7.40309E-06

= 0.6597

GRAPH

Calculation of beta value of BHEL for period of one year

-0.008 -0.006 -0.004 -0.002 0 0.002 0.004 0.0060

0.002

0.004

0.006

0.008

0.01

0.012

0.014

f(x) = 0.660795701875678 x + 0.00864977222445732R² = 0.424356223912626

BHEL

BHELLinear (BHEL)

Return on NIFTY

Retu

rn on

BHEL

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:


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:


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:


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


WIPRO:


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


GRASIM:


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:


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


L&T


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


CIPLA:


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


SIEMENS:


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:


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


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

http://www.stockmaster.com/

http://www.equitymaster.com/

Risk and Return Analysis

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