Technical Analysis on Equity Shares

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A STUDY ON TECHNICAL ANALYSIS ON EQUITY SHARES

IN

INTER CONNECTED STOCK EXCHANGE

A Project report submitted to Jawaharlal Nehru Technological University,

Hyderabad, in partial fulfillment of the requirements for the award of the

degree of

MASTER OF BUSINESS ADMINISTRATION

By

K.RADHIKA DEVI

Reg. No. 10241E0021

Under the Guidance of

Dr.P.B.APPA RAO

Professor

Department of Management Studies

Gokaraju Rangaraju Institute of Engineering & Technology

(Affiliated to Jawaharlal Technological University, Hyderabad)

Hyderabad

2010-2012


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CERTIFICATE

This is to certify that the project entitled A STUDY ON TECHNICAL

ANALYSIS ON EQUITY SHARES has been submitted by Ms. K.RADHIKA DEVI

(Reg. No. 10241E0021) in partial fulfillment of the requirements for the award of theDegree of Master of Business Administration from Jawaharlal Nehru Technological

University, Hyderabad. The result embodied in the project has not been submitted to any

other University or Institution for the award of any other Degree or Diploma.

Internal guide Head of Department

Dr.P.B.APPA RAO K.V.S. RAJU

Professor Professor & HODDepartment of Management Studies Department of Management StudiesGRIET GRIET

S. RAVINDRA CHARYProject CoordinatorAssociate ProfessorDepartment of Management StudiesGRIET


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DECLARATION

I hereby declare that the project entitled A study on TTEECCHHNNIICCAALLAANNAALLYYSSIISS

OONNEEQQUUIITTYYSSHHAARREESSsubmitted in partial fulfillment of the requirements for award

of the degree of MBA at Gokaraju Rangaraju Institute of Engineering and

Technology,affiliated to Jawaharlal Nehru Technological University, Hyderabad, is an

authentic work and has not been submitted to any other University/Institute for award of

any degree/diploma.

K.RADHIKA DEVI(10241E0021)MBA, GRIET

HYDERABAD


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ACKNOWLEDGEMENTS

Firstly I would like to express our immense gratitude towards our institution

Gokaraju Rangaraju Institute of Engineering & Technology,which created a great

platform to attain profound technical skills in the field of MBA, thereby fulfilling our

most cherished goal.

I would thank all employees of INTER CONNECTAD STOCK EXCHANGE and

Ms. SIRISHA,for guiding and helping me in successful completion of the project.

I sincerely express my gratitude to the principal Dr. J. N. MURTHYand for his

inspiration and timely support in successful completion of my project work.

I am very much thankful to Dr. P.B.APPA RAO, Professor of Management

Studies, for extending his guidance and cooperation in doing this project.

I am also thankful to our project coordinator Mr. S. Ravindra Chary for

extending his cooperation in completion of Project.

I convey my thanks to my beloved parents, friends and my facultywho helped

me directly or indirectly in bringing this project successfully.

K. RADHIKA DEVI

(10241E0021)


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CONTENTS

LIST OF TABLES i

LIST OF FIGURES ii

CHAPTERS PARTICULARS PAGE NO.

1 INTRODUCTION

1.1 INTRODUCTION TO THE TOPIC

1.2 OBJECTIVES OF THE STUDY

1.3 SCOPE AND LIMITATION OF THE STUDY

1.4 RESEARCH METHODOLOGY

1.5DATA COLLECTION

2 SUBJECT LITERATURE

3 INDUSTRY PROFILE

4 COMPANY PROFILE

5 DATA ANALYSIS AND INTERPRETATION

6 FINDINGS, SUGGESTIONS & CONCLUSION

5.1 FINDINGS

5.2 SUGGESTIONS

5.3 CONCLUSION

BIBLIOGRAPHY


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LIST OF FIGURES

S.NO PARTICULARS PAGENO.

1 MONTH-WISE MARKET PRICES FROM JANUARY2012 TO MARCH-2012

2 MONTH-WISE MARKET PRICES FROM JANUARY2012 TO MARCH-2012

3 MONTH-WISE SBI PRICES FROM JANUARY 2012 TOMARCH-2012

4 MONTH-WISE SBI PRICES FROM APRIL-2012 TOJUNE-2012

5 MONTH-WISE ICICI PRICES FROM JANUARY -2012TO MARCH-2012

6 MONTH-WISE ICICI PRICES FROM APRIL-2012 TOJUNE-2012

7 MONTH-WISE HDFC PRICES FROM JANUARY-2012TO MARCH-2012

8 MONTH-WISE HDFC PRICES FROM APRIL-2012 TOJUNE-2012

9,10 CALCULATION OF CO-RELATION BETWEEN SBIAND MARKET RETURNS

11,12 CALCULATION OF CO-RELATION BETWEEN ICICIAND MARKET RETURNS

13,14 CALCULATION OF CO-RELATION BETWEEN HDFCAND MARKET RETURNS

15 CALCULATION OF BETA


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LIST OF FIGURES

SNO PARTICULARS PAGE NO.

1.BANK-WISE HALF-YEARLY AVERAGE RETURNS

AND STANDARD DEVIATION

2.CO-RELELATION BETWEEN

BANKS(SBI,ICICI,HDFC) AND MARKET

3. BETA VALUES OF SBI ,ICICI, HDFC BANKS


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CHAPTER - 1

INTRODUCTION


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INTRODUCTION OF THE STUDY:

The methods used to analyze securities and make investment decisions fall

into two very broad categories: fundamental analysis and technical analysis. Fundamental

analysis involves analyzing the characteristics of a company in order to estimate its value.

Technical analysis takes a completely different approach; it doesnt care one bit about the

value of a company or a commodity. Technicians (sometimes called chartists) are only

interested in the price movements in the market.

Despite all the fancy and exotic tools it employs, technical analysis really

just studies supply and demand in a market in an attempt to determine what direction, or

trend, will continue in the future. In other words, technical analysis attempts tounderstand the emotions in the market by studying the market itself, as opposed to its

components. If you understand the benefits and limitations of technical analysis, it can

give you a new set or skills that will enable you to be a better trader or investor.

Technical analysis is a method of evaluating securities by analyzing the

statistics generalized by market activity, such as past prices and volume. Technical

analysis does not attempt to measure a securitys intrinsic value, but instead use charts

and other tools to identify patterns that can suggest future activity.

Just as there are many investment styles on the fundamental side, there are

also many different types of technical traders. Some rely on chart patterns; others use

technical indicators and oscillators, and most use some combination of the two. In any

case, technical analysts exclusive use of historical price and volume data is what

separates them from their fundamental counterparts. Unlike fundamental analysis,

technical analysts dont care whether a stock is undervalued the only thing that matters

is a securitys past trading data and what information this data can provide about where

the society might move in the future.


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The field of technical analysis is based on three assumptions:

The market discounts everything.

Price moves in trends.

History tends to repeat itself.


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OBJECTIVES OF THE STUDY:

To analyze the price movements of shares of SBI, ICICI, and HDFC interpret the

corrections and trends by using Technical Analysis tools.

To forecast the future trends and provide suitable suggestions to the investors.

To calculate the risk associated with the Investment

To find out systematic risk of securities


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SCOPE OF THE STUDY:

The study covers a period of six months from January 2012 to June 2012.

The study helps to find out the future trends in the prices of SBI, ICICI, HDFC equity

shares. Valuable hints can be identified by the investors for their future buying and

selling.

LIMITATIONS OF THE STUDY:

One of the most important limitations for most technical analysis methods is the fact

that there are so many people using the basic technical analysis methods already, and the

number is increasing every day, making it harder for a single trader to make money on

the market with the methods.

Because of these methods are so widely spread and there is so much money riding on

the methods, some also claim that technical analysis has become self-fulfilling prophecy,

as people trend to enter the market and put their stops on the same places, increasing the

volatility towards the technical analysis method being correct.

Technical analysis systems usually do not take into account correlation between

different markets. If you are analyzing several markets and they all give similar signals,

they may have close correlations, meaning that the risk profile for each is very similar,

and that the prices of the assets move in close steps with each other.


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Research Methodology:

Research methodology is a way to systematically solve the research problem. Itmay be understood as a science of studying how research is done scientifically. Thevarious steps that are generally adopted by a researcher in studying research problem

along with the logic behind them. It is necessary for the researcher to know not only theresearch methods/ techniques but also the methodology.

Analytical Research:

Research Design was based on analytical research, on the other hand, the

researcher has to use facts or information already available, and analyze these

to make these to make a critical evaluation of the material.

Sources of Data:

The main sources of data are collected through website, various

Publication books, magazines, newspaper and reports prepared by research

Scholars etc.

Data Collection:

Data required for the purpose of the study have been collected from the

Websites of the banks concerned.

Data Analysis:

The data required so collected have been analyzed by using MS-EXCEL.

In the process of analysis Average rate of return, Standard deviation,

Co-efficient of correlation, Covariance and beta values have been collected


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Research tools used:

Returns:

A major purpose of investment is to set a return or income on the funds invested. On a

bond an investor expects to receive interest. On a stock, dividends may be anticipated.

The investor may expect capital gains from some investments and rental income from

house property return may take several forms

Returnsfor the collected data is calculated using the following formula

Pt = current price

Po = previous price

Average of the Returns calculated as follows:

Standard Deviation:

1. A measure of the dispersion of a set of data from its mean. The more spread apart the

data, the higher the deviation. Standard deviation is calculated as the square root of

variance.

2. In finance, standard deviation is applied to the annual rate of return of an investment to

measure the investment's volatility. Standard deviation is also known as historical

volatility and is used by investors as a gauge for the amount of expected volatility.


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Standard deviation is a statistical measurement that sheds light on historical volatility.

For example, a volatile stock will have a high standard deviation while the deviation of a

stable blue chip stock will be lower. A large dispersion tells us how much the return on

the fund is deviating from the expected normal returns.

Risk is calculated as follows:

D = deviation; N=No. of days

Beta:

Measures volatility or systemic risk compared to the market or the benchmark index

Beta Value Calculated as follows:

BETA= COVARIANCE OF MARKET AND SBI / VARIANCE OF MARKET


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CHAPTER - 2

REVIEW OF LITERATURE


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EQUITY SHARES

Equity represents an ownership position in a corporation. It is residual claim in

the sense that creditors and preference shareholders must be paid as scheduled before

equity shareholders can receive payment. In bankruptcy equity holders are principle

entitled only to assets remaining after all prior claimants has been satisfied. Thus risk is

highest with equity shares and so must be its expected return. When investors buy equity

shares, they receive certificates of ownership as proof of their being part owners of the

company. The certificate states the number of shares purchased and their par value. The

attitude towards equity shares varied from extreme pessimism to optimism from time to

time.

The main advantages of equity shares are listed below:

Potential for Profit : The potential for profit is greater in equity shares than in any

other investment security. Current dividends yield may be low but potential of

capital gains is great. The total yield or yields to maturity may be substantial over

a period of time.

Limited Liability: In corporate form of organization, its owners have, generally,

limited liability. An equity share is usually fully paid. Shareholders may lose their

investments, but no more. They are not further liable for any failure in the part of

corporation of meet its obligation.

Hedge against Inflation: The equity share is good hedge against inflation though it

does not fully compensate for the declining purchasing power as it is subject to

money-rate risk. But when interest rates are high, shares tend to be less attractive,and prices tend to be depressed.

Share in Growth: A share is its ability to The major advantage of investment in

equity increase in value by sharing in the growth of company profits over the long

run.


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Tax Advantage: Equity shares also offers tax advantage to the investors. The

larger yield on equity shares results from an increase in principal of capital gains,

which are taxed at lower rate than other incomes in most of the countries.

EQUITY CAPITAL TERMINOLOGY:

The important terms used in equity capital are listed below:

Authorized Capital: The authorized capital is the maximum number of shares

of each type that may be issued by the company. To change this number, or

provision of any class of shares, the company requires the formal approval of

shareholders.

Issued Capital: Issued capital is the part of the authorized capital that has been

issued for cash, property, or service.

Paid up Capital: Fully paid shares are those shares for which the corporation

has received full payment up to the par-value, or up to the amount established

as the selling price of no-par-shares. Partly paid shares are those shares that

have been issued for less than par-value or the agreed subscription.

NATURE OF EQUITY SHARES:

Equity shares represent an ownership of a corporation. It is true that the equity shares

must bear first impact of any adversity, but it is also true that the equity shares is the only

class of securities privileged to enjoy maximum participation in an extensive growth of

the company. The risk of the one may be regarded as price. In fact, the investor is vitally

concerned with the yield earned over the commensurate with the opportunity of the other.

Evidence of Ownership: When investor buys equity shares, they receive certificates

of ownership as a proof of their part as owners of the company. This certificates state the

number of shares purchased, their par value, if any, and usually the transfer agent. When

equity shares are purchased on the market (that when it is not a new issue which is

purchased from the company).


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Maturity of Equity Shares: Equity shares have no maturity date. Their life is limited

by the length of time stated in the corporate charter know as Memorandum of

Association. The corporate life might be for stated or limited period, or it might be

perpetual. Most corporations have a perpetual character. The date on which the equity is

sold by the investor is the maturity date, and the price at which the equity is sold is called

the maturity period that the equity is owned.

Par Value: Par value is the face value of the share. Equity shares have par value, a

nominal stated value. The par value of an equity shares indicates the amount of capital

originally subscribed by the shareholders. New shares cannot be sold less than par value.

If the equity shares are sold for more than par, the excess is transferred to Share

Premium Account.

Net Asset Value and Book Value: Distrust of present value formulae, the quest for

objectivity and perhaps even nostalgia lead some analyst to place greater emphasis on the

asset value factor when evaluating investment worth of a companys equity shares. Net

assets or net worth can be calculated from either the asset of liability side of balance

sheet.

Financial Analysis and Accounting Data: The historical numbers that analyst uses

to prepare rates and forecasting equations are generally based on figures that have been

taken from the published financial statements of the firm being analyzed. Although these

statements may have been prepared according to generally accept accounting

principles, there may be significant variation in real economic meaning of financial

reports.


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INVESTMENT PROCESS IN EQUITY SHARES:

Investment process describes how an investor should go about making decisions with

regard to what marketable securities to invest in, how extensive the investment should be

and when the investment should be made. An eight-step procedure for making these

decisions forms the basis for the investment process.

1. What is Investment

2. Understanding Shares

3. Finding a Broker

4. Evaluation of Shares

5. Research Tools

6. Investing Strategy

7. Investing Technique

8. What Moves the Market

Step 1: What is Investment?

Investment in broad sense means the sacrifice of current rupees for further rupees.

Investing is making your money work for you without taking any more risks than

necessary for your comfort.

Investing is the proactive use of your money to make more money.

How to calculate Risk Premium?

Risk premium is what a stock should return over a risk-free investment. It is

your reward for taking a risk with your money.

Weak demand is the important factor in stock pricing:


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Despite high crude oil prices, its weak demand for gasoline that holds back oil

stock prices. Supply and demand is an important factor in determining price of

stocks. Corrections is natural part of stock market cycle.

Step 2: Understanding Shares

Bull and Bear stock market are the two sides of same coin: Bull and bear

markets go together and are necessary for an efficient market.

Poll results show confidence in stocks: The results of a poll on where the sensex

be at the end of 2009 show stock investors are positive.

Step 3: Finding a Broker

To decide which type of broker is right for you, you need to use these resources to

find the brokerage arrangement that best fits your needs.

Thirteen of the top online stock trading sites offer investors a wide variety of

services including research and advice.

Brokers offer different levels of service. A broker fills in the gaps in knowledge

and experience.

Stock prices are driven by the relationship between buyers and sellers. Attractive

stocks have more buyers than sellers, which drives up prices, while less attractive

stocks feel the reverse effect.

Step 4: Evaluating Stocks for Investment

Fundamental analysis relies on several tools to give investors an accurate picture

of the financial health of a company and how the market values the stock. The following

are the most popular tools of fundamental analysis. They focus on earnings, growth, and

value in the market.


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a) Earnings Per Share EPS

b) Price to Earnings Ratio P/E

c) Projected Earnings Growth PEG

d) Price to Sales P/S

e) Price to Book P/B

f) Dividend Payout Ratio

g) Dividend Yield

h) Book Value

i) Return on Equity

Step 5: Research Tools

The internet is a gold mine of information, but youll need some tools to get to the

nuggets. Research tools make the job easier if you know where to find them and how to

use them.

The better stock screens offer similar characteristics that give you greater

flexibility when looking for investment candidates and eliminate other

companies.

Stock screens will save time and help to build a thoughtful portfolio by

focusing on those companies that meet your investing requirements.

Stock screens can help any investor make better stock selections by reducing

the number of companies to research.

Dividend ratios can tell much about a stock and its future payout prospects.

One of the best sources of information on companies is free and as near as

your computer.


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Step 6: Investing Strategies

What strategy to use as an investor? The different investment strategies and how to

develop personal investment strategy is explained below:

When and how to sell a winning stock?

o Knowing when and how to sell a winning stock is as important as

knowing when to sell a losing stock.

Dont be too conservative with stocks:

o Following a too conservative investment strategy in retirement may not

protect you from outliving your money.

Step 7: Investing Techniques

Investing techniques offer powerful ways for investors to execute their strategies. These

techniques provide a structure for investing.

After-hours trading of stocks may seem like a great idea, but it is full of risks

for the average investor.

Diversify stocks by industry to avoid across-the-board losses on bad economic

news. Investments should not be correlated to achieve diversity.

Investing with expectations of high returns is not investing but gambling.

Dont try to double or triple your money quickly in the stock market youll

be disappointed and perhaps poorer.

Step 8: What Moves the Market?

What makes the market rise or fall? Sometimes it seems to have a mind of its own that

reacts poorly to good news and with enthusiasm to bad news. One should learn thefactors that are the major influences on the markets and how to use this information.

Major economic and political factors shape the market, but most of all the market hates

uncertainty.


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Technical Analysis

Technical analysis is a security analysis discipline for forecasting the future

direction of prices through the study of past market data, primarily price and volume.

History

The principles of technical analysis derive from the observation of financial

markets over hundreds of years. The oldest known hints of technical analysis appear in

Joseph de la Vega's accounts of the Dutch markets in the 17th century. In Asia, the oldest

example of technical analysis is thought to be a method developed by Homma Munehisaduring early 18th century which evolved into the use of candlestick techniques, and is

today a main charting tool.

Dow Theory is based on the collected writings of Dow Jones co-founder and

Editor Charles Dow, and inspired the use and development of modern technical analysis

from the end of the 19th century. Other pioneers of analysis techniques include Ralph

Nelson Elliott and William Delbert Gann who developed their respective techniques in

the early 20th century.

Many more technical tools and theories have been developed and enhanced in

recent decades, with an increasing emphasis on computer-assisted techniques.

General Description

Technical analysts seek to identify price patterns and trends in financial markets

and attempt to exploit those patterns. While technicians use various methods and tools,the study of price charts is primary.

Technicians especially search for archetypal patterns, such as the well-known head and

shoulders or double top reversal patterns, study indicators such as moving averages, and


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look for forms such as lines of support, resistance, channels, and more obscure

formations such as flags, pennants or balance days.

Technical analysts also extensively use indicators, which are typically

mathematical transformations of price or volume. These indicators are used to help

determine whether an asset is trending, and if it is, its price direction. Technicians also

look for relationships between price, volume and, in the case of futures, open interest.

Examples include the relative strength index, and MACD. Other avenues of study include

correlations between changes in options (implied volatility) and put/call ratios with price.

Other technicians include sentiment indicators, such as Put/Call ratios and Implied

Volatility in their analysis.

Technicians seek to forecast price movements such that large gains from

successful trades exceed more numerous but smaller losing trades, producing positive

returns in the long run through proper risk control and money management.

There are several schools of technical analysis. Adherents of different schools (for

example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the

other approaches, yet many traders combine elements from more than one school. Some

technical analysts use subjective judgment to decide which pattern a particular instrumentreflects at a given time, and what the interpretation of that pattern should be. Some

technical analysts also employ a strictly mechanical or systematic approach to pattern

identification and interpretation.

Technical analysis is frequently contrasted with fundamental analysis, the study

of economic factors that influence prices in financial markets. Technical analysis holds

that prices already reflect all such influences before investors are aware of them, hence

the study of price action alone. Some traders use technical or fundamental analysis

exclusively, while others use both types to make trading decisions.

Users of technical analysis are most often called technicians or market

technicians. Some prefer the term technical market analyst or simply market analyst. An


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In the foreign exchange markets, its use may be more widespread than

fundamental analysis. While some isolated studies have indicated that technical trading

rules might lead to consistent returns in the period prior to 1987, most academic work has

focused on the nature of the anomalous position of the foreign exchange market. It is

speculated that this anomaly is due to central bank intervention. Recent research suggests

that combining various trading signals into a Combined Signal Approach may be able to

increase profitability and reduce dependence on any single rule.

Principles

Technicians say that a market's price reflects all relevant information, so their

analysis looks at the history of a security's trading pattern rather than external drivers

such as economic, fundamental and news events. Price action also tends to repeat itself

because investors collectively tend toward patterned behavior hence technicians' focus

on identifiable trends and conditions.

Market action discounts everything

Based on the premise that all relevant information is already reflected by prices,

pure technical analysts believe it is redundant to do fundamental analysis they say news

and news events do not significantly influence price, and cite supporting research such as

the study by Cutler, Poterba, and Summers titled "What Moves Stock Prices?"

On most of the sizable return days [large market moves]...the information that the

press cites as the cause of the market move is not particularly important. Press reports on

adjacent days also fail to reveal any convincing accounts of why future profits or discount

rates might have changed. Our inability to identify the fundamental shocks that accounted

for these significant market moves is difficult to reconcile with the view that such shocks

account for most of the variation in stock returns.


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Prices move in trends

Technical analysts believe that prices trend directionally, i.e., up, down, or

sideways (flat) or some combination. The basic definition of a price trend was originally

put forward by Dow Theory.

An example of a security that had an apparent trend is AOL from November 2001

through August 2002. A technical analyst or trend follower recognizing this trend would

look for opportunities to sell this security. AOL consistently moves downward in price.

Each time the stock rose, sellers would enter the market and sell the stock; hence the

"zig-zag" movement in the price. The series of "lower highs" and "lower lows" is a tell

tale sign of a stock in a down trend. In other words, each time the stock moved lower, it

fell below its previous relative low price. Each time the stock moved higher, it could not

reach the level of its previous relative high price.

Note that the sequence of lower lows and lower highs did not begin until August.

Then AOL makes a low price that doesn't pierce the relative low set earlier in the month.

Later in the same month, the stock makes a relative high equal to the most recent relativehigh. In this a technician sees strong indications that the down trend is at least pausing

and possibly ending, and would likely stop actively selling the stock at that point.

History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of the

investors that preceded them. "Everyone wants in on the next Microsoft," "If this stock

ever gets to $50 again, I will buy it," "This company's technology will revolutionize itsindustry, therefore this stock will skyrocket" these are all examples of investor

sentiment repeating itself. To a technician, the emotions in the market may be irrational,

but they exist. Because investor behavior repeats itself so often, technicians believe that

recognizable (and predictable) price patterns will develop on a chart.


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Technical analysis is not limited to charting, but it always considers price trends.

For example, many technicians monitor surveys of investor sentiment. These surveys

gauge the attitude of market participants, specifically whether they are bearish or bullish.

Technicians use these surveys to help determine whether a trend will continue or if a

reversal could develop; they are most likely to anticipate a change when the surveys

report extreme investor sentiment. Surveys that show overwhelming bullishness, for

example, are evidence that an uptrend may reverse the premise being that if most

investors are bullish they have already bought the market (anticipating higher prices).

And because most investors are bullish and invested, one assumes that few buyers

remain. This leaves more potential sellers than buyers, despite the bullish sentiment. Thissuggests that prices will trend down, and is an example of contrarian trading.


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CHAPTER 3

INDUSTRY PROFILE


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STOCK MARKETS IN INDIA

Stock exchanges are the perfect type of market for securities whether of

government and semi-government bodies or other public bodies as also for shares and

debentures issued by the joint-stock companies. In the stock market, purchases and sales

of shares are affected in conditions of free competition. Government securities are traded

outside the trading ring in the form of over the counter sales or purchase. The bargains

that are struck in the trading ring by the members of the stock exchanges are at the fairest

prices determined by the basic laws of supply and demand.

Definition of a stock exchange:

Stock exchange means anybody or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business of buying,selling or dealing in securities. The securities include:

Shares of public company.

Government securities.

Bonds

Functions of Stock Exchanges:

Stock exchanges provide liquidity to the listed companies. By giving quotations tothe listed companies, they help trading and raise funds from the market. Over the hundred

and twenty years during which the stock exchanges have existed in this country and

through their medium, the central and state government have raised crores of rupees by

floating public loans. Municipal corporations, trust and local bodies have obtained from

the public their financial requirements, and industry, trade and commerce- the backbone

of the countrys economy-have secured capital of crores or rupees through the issue of

stocks, shares and debentures for financing their day-to-day activities, organizing new

ventures and completing projects of expansion, diversification and modernization. By

obtaining the listing and trading facilities, public investment is increased and companies

were able to raise more funds. The quoted companies with wide public interest have

enjoyed some benefits and assets valuation has become easier for tax and other purposes.


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Various Stock Exchanges in India:

At present there are 23 stock exchanges recognized under the securities contracts

(regulation), Act, 1956. Major of them:

Ahmadabad Stock Exchange Association Ltd.

Bombay stock Exchange

Bangalore Stock Exchange

Calcutta Stock Exchange

Cochin Stock Exchange Ltd.

Coimbatore Stock Exchange

Delhi Stock Exchange Association

Guwahati Stock Exchange Ltd

Hyderabad Stock Exchange Ltd.

Jaipur Stock Exchange Ltd

Kanara Stock Exchange Ltd

Madras Stock Exchange

Madhya Pradesh Stock Exchange Ltd.

Meerut Stock Exchange Ltd.

National Stock Exchange of India

Pune Stock Exchange Ltd.

Uttar Pradesh Stock Exchange Association

Vadodara Stock Exchange Ltd.

Out of these major stock exchanges were:

National Stock Exchange (NSE):

The National Stock Exchange of India Limited has genesis in the report of the

High Powered Study Group on Establishment of New Stock Exchanges, which

recommended promotion of a National Stock Exchange by financial institutions (FIs) to

provide access to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of


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the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country. On its recognition as a stock

exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE

commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.

The Capital Market (Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000.

NSE's mission is setting the agenda for change in the securities markets in India. The

NSE was set-up with the main objectives of:

Establishing a nation-wide trading facility for equities and debt instruments.

Ensuring equal access to investors all over the country through an appropriate

communication network.

Providing a fair, efficient and transparent securities market to investors using

electronic trading systems.

Enabling shorter settlement cycles and book entry settlements systems, and

Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have become

industry benchmarks and are being emulated by other market participants. NSE is more

than a mere market facilitator. It's that force which is guiding the industry towards new

horizons and greater opportunities.

Bombay Stock Exchange (BSE):

The Stock Exchange, Mumbai, popularly known as "BSE" was established in

1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia,

even older than the Tokyo Stock Exchange, which was established in 1878. It is a

voluntary non-profit making Association of Persons (AOP) and is currently engaged in

the process of converting itself into demutualised and corporate entity. It has evolved

over the years into its present status as the premier Stock Exchange in the country. It is

the first Stock Exchange in the Country to have obtained permanent recognition in 1956

from the Govt. of India under the Securities Contracts (Regulation) Act 1956.The

Exchange, while providing an efficient and transparent market for trading in securities,

debt and derivatives upholds the interests of the investors and ensures redresses of their


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grievances whether against the companies or its own member-brokers. It also strives to

educate and enlighten the investors by conducting investor education programmers and

making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the

policies and regulates the affairs of the Exchange. The Governing Board consists of 9

elected directors, who are from the broking community (one third of them retire ever year

by rotation), three SEBI nominees, six public representatives and an Executive Director

& Chief Executive Officer and a Chief Operating Officer.

The Executive Director as the Chief Executive Officer is responsible for the day-

to-day administration of the Exchange and the Chief Operating Officer and other Heads

of Department assist him.

The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining

to constitution of the Executive Committee of the Exchange. Accordingly, an Executive

Committee, consisting of three elected directors, three SEBI nominees or public

representatives, Executive Director & CEO and Chief Operating Officer has been

constituted. The Committee considers judicial & quasi matters in which the Governing

Board has powers as an Appellate Authority, matters regarding annulment of

transactions, admission, continuance and suspension of member-brokers, declaration of a

member-broker as defaulter, norms, procedures and other matters relating to arbitration,

fees, deposits, margins and other monies payable by the member-brokers to the

Exchange, etc.


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REGULATORY FRAME WORK OF STOCK EXCHANGE:

A comprehensive legal framework was provided by the Securities Contract

Regulation Act, 1956 and Securities Exchange Board of India 1952. Three tier

regulatory structure comprising

Ministry of finance

The Securities And Exchange Board of India

Governing body

Members of the stock exchange:

The securities contract regulation act 1956 has provided uniform regulation for

the admission of members in the stock exchanges. The qualifications for becoming a

member of a recognized stock exchange are given below:

The minimum age prescribed for the members is 21 years.

He should be an Indian citizen.

He should be neither a bankrupt nor compound with the creditors.

He should not be convicted for fraud or dishonesty.

He should not be engaged in any other business connected with a company.

He should not be a defaulter of any other stock exchange.

The minimum required education is a pass in 12th

standard examination.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):

The securities and exchange board of India was constituted in 1988 under a

resolution of government of India. It was later made statutory body by the SEBI act

1992.according to this act, the SEBI shall constitute of a chairman and four other

members appointed by the central government. With the coming into effect of the

securities and exchange board of India act, 1992 some of the powers and functions

exercised by the central government, in respect of the regulation of stock exchange were

transferred to the SEBI.


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OBJECTIVES AND FUNCTIONS OF SEBI:

To protect the interest of investors in securities.

Regulating the business in stock exchanges and any other securities market.

Registering and regulating the working of intermediaries associated with

securities market as well as working of mutual funds.

Promoting and regulating self-regulatory organizations.

Regulating substantial acquisition of shares and takeover of companies.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK

EXCHANGES):

Board of Directors of Stock Exchange has to be reconstituted so as to include

non-members, public representatives and government representatives to the extent of

50% of total number of members.

Capital adequacy norms have been laid down for the members of various

stock exchanges depending upon their turnover of trade and other factors.

All recognized stock exchanges will have to inform about transactions within

24 hrs.

Buying and selling shares:

To buy and sell the shares the investor has to locate register broker or sub broker

who render prompt and efficient service to him. The order to buy or sell specifying the

number of shares of the company of investors choice is placed with the broker. The

order may be of any type. After receiving the order the broker tries to execute the order in

his computer terminal. Once matching order is found, the order is executed. The broker

then delivers the contract note to the investor. It gives the details regarding the name of

the company, number of shares bought, price, brokerage, and the date of delivery of

share. In this physical trading form, once the broker gets the share certificate through the

clearing houses he delivers the share certificate along with transfer deed to the investor.

The investor has to fill the transfer deed and stamp it. The stamp duty is one of the

percentage considerations, the investor should lodge the share certificate and transfer


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deed to the register or transfer agent of the company. If it is bought in the DEMAT form,

the broker has to give a matching instruction to his depository participant to transfer

shares bought to the investors account. The investor should be account holder in any of

the depository participant. In the case of sale of shares on receiving payment from the

purchasing broker, the broker effects the payment to the investor.

Share groups:

The scripts traded on the BSE have been classified into A,B1,B2,C,F and

Z groups. The A group represents those, which are in the carry forward system. The

F group represents the debt market segment (fixed income securities). The Z group

scripts are of the blacklisted companies. The C group covers the odd lot securities in

A, B1&B2 groups.

ROLLING SETTLEMENT SYSTEM:

Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3

or 5days) after the trading day. The shares bought and sold are paid in for n days after the

trading day of the particular transaction. Share settlement is likely to be completed much

sooner after the transaction than under the fixed settlement system.

The rolling settlement system is noted by T+N i.e. the settlement period is n days

after the trading day. A rolling period which offers a large number of days negates theadvantages of the system. Generally longer settlement periods are shortened gradually.

SEBI made RS compulsory for trading in 10 securities selected on the basis of the

criteria that they were in compulsory demats list and had daily turnover of about Rs.1

crore or more. Then it was extended to A stocks in Modified Carry Forward Scheme,

Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and lending

Securities Scheme (BELSS) with effect from Dec 31, 2001.

SEBI has introduced T+5 rolling settlement in equity market from July 2001 and

subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling

settlement experience it was further reduced to T+2 to reduce the risk in the market and

to protect the interest of the investors from 1stApril 2003.


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Activities on T+1:

Conformation of the institutional trades by the custodian is sent to the stock

exchange by 11.00 am. A provision of an exception window would be available for late

confirmation. The time limit and the additional changes for the exception window are

dedicated by the exchange.

The exchanges/clearing house/ clearing corporation would process and download the

obligation files to the brokers terminals late by 1.30 p.m on T+1. Depository participants

accept the instructions for pay in securities by investors in physical form up to 4 p.m and

in electronic form up to 6 p.m. the depositories accept from other DPs till 8p.m for same

day processing.

Activities on T+2:

The depository permits the download of the paying in files of securities and funds

till 10.30 am on T+2 from the brokers pool accounts. The depository processes the pay

in requests and transfers the consolidated pay in files to clearing House/clearing

Corporation by 11.00am/on T+2. The exchange/clearing house/clearing corporation

executes the pay-out of securities and funds latest by 1.30 p.m on T+2 to the depositories

and clearing banks. In the Demat mode net basis settlement is allowed. The buy and sale

positions in the same scrip can be settled and net quantity has to be settled

The analysis makes a separation between operating and financing items in the

financial statements. This is inspired by the Modigliani and Miller notion that it is the

operating activities that generate value, not the (zero net-present-value) financing

activities. The separation also arises from an appreciation that financial assets and

liabilities are typically close to market value in the balance sheet and thus are already

valued, but not so the operating assets and liabilities.

The distinction is a feature of the accounting-based valuation model in Feltham

and Ohlson (1995) and of economic profit versions of the residual income model.

Recent FASB statements have required many financial assets to be marked to market.


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But, correspondingly, unrealized gains and losses are now recognized in comprehensive

income and these, like all income line items, have to be considered in a ratio analysis.

Our structured approach to identifying ratios contrasts to the purely empirical

approach in Ou and Penman (1989). That paper identified ratios that predicted earnings

changes in the data.

No thought was given to the identification; indeed there was no justification that

earnings changes are the appropriate attribute to forecast for valuation. The approach here

also contrasts to that in Lev and Thiagarajan (1993) who defer to expert judgment and

identify ratios that analysts actually use in practice.

1. Sauda details

A. Cash segments:

In this reports client will get transaction statement for settlement and exchange wise. First

select the date of transactions then exchange by doing drop down and then GO to get

the reports.

B. Derivatives segments:

In this reports client will get transaction statement for the day and exchange. First select

the date of transactions then exchange by doing drop down and then GO to get the

Reports.

2. Delivery details:

A. Delivery information:

In this reports client will get pay in or payout for all the scrip. Whether its NSDL, CDSL

or PHYSICAL entry.


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B. Delivery + shares details:

In this reports client will get the inward (pay in), outward (payout). Actual inward shows

you the pay in done from client actual BO id. Actual outward shows the payout from the

client actual BO id and mismatch position.

3. Demats details:

In this reports client will get the Demat confirmation. We have also defined the meaning

and colour description on header.

4. Clients bills:

A. Cash Segment:

In this reports client will get the bill confirmation for cash segments. First select the date

of transactions then exchange by doing drop down and then GO to get the reports.

While zooming in this report, client can get the cash transaction for that particular bill.

B. Derivatives Segment:

In this reports client will get the bill confirmation for Derivatives segments. First select

the date of transactions then exchange by doing drop down and then go to get the reports.

While zooming in these reports, client can get the Derivatives transaction for that

particular bill.

5. Financial statement:

In this reports client will get the financial statement for the entire year. Client can get the

statement date wise, exchange wise, including margin, across the company after selecting

start and end date, selecting exchange, clicking on include margin, ignore firm number

respectively. While zooming client can get the details for that particular bills, receipt,

payment and voucher. Green highlights show u the entry is unreconcile on that bank.


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BSE started trading in the equities segment (Capital Market segment) on

November 3, 1994 and within a short span of 1 year became the largest exchange in India

in terms of volumes transacted. Trading volumes in the equity segment have grown

rapidly with average daily turnover increasing from Rs.17 crores during 1994-95 to

Rs.6,253 crores during 2005-06. During the year 2005-06, BSE reported a turnover of

Rs.1,569,556 crores in the equities segment. The Equities section provides you with an

insight into the equities segment of BSE and also provides real-time quotes and statistics

of the equities market. In-depth information regarding listing of securities, trading

systems & processes, clearing and settlement, risk management, trading statistics etc are

available.


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CHAPTER - 4

COMPANY PROFILE


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COMPANY PROFILE

Inter-connected stock exchange of India limited [ISE] has been promoted by 14

Regional stock exchanges to provide cost-effective trading linkage/connectivity to all the

members of the participating Exchanges, with the objective of widening the market for

the securities listed on these Exchanges. ISE aims to address the needs of small

companies and retail investors with the guiding principle of optimizing the existing

infrastructure and harnessing the potential of regional markets, so as to transform these

into a liquid and vibrant market through the use of state-of-the-art technology andnetworking.

The participating Exchanges of ISE in all about 4500 stock brokers, out of which

more than 200 have been currently registered as traders on ISE. In order to leverage its

infrastructure and to expand its nationwide reach, ISE has also appointed around 450

Dealers across 70 cities other than the participating Exchange centers. These dealers are

administratively supported through the regional offices of ISE at Delhi [north], kolkata

[east], Coimbatore, Hyderabad [south] and Nagpur [central], besides Mumbai.


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ISE has also floated a wholly-owned subsidiary, ISE securities and services

limited [ISS], which has taken up corporate membership of the National Stock Exchange

of India Ltd. [NSE] in both the Capital Market and Futures and Options segments and

The Stock Exchange, Mumbai In the Equities segment, so that the traders and dealers of

ISE can access other markets in addition to the ISE markets and their local market. ISE

thus provides the investors in smaller cities a one-stop solution for cost-effective and

efficient trading and settlement in securities.

With the objective of broad basing the range of its services, ISE has

started offering the full suite of DP facilities to its Traders, Dealers and their clients.

OBJECTIVES OF THE COMPANY:

Create a single integrated national level solution with access to multiple

markets for providing high cost-effective service to millions of investors

across the country.

Create a liquid and vibrant national level market for all listed companies in

general and small capital companies in particular.

Optimally utilize the existing infrastructure and other resources of

participating Stock Exchanges, which are under-utilized now.

Provide a level playing field to small Traders and Dealers by offering an

opportunity to participate in a national markets having investment-oriented

business.

Reduce transaction cost.

Provide clearing and settlement facilities to the Traders and Dealers across the

Country at their doorstep in a decentralized mode.

Spread de-mat trading across the country


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SAILENT FEATURES

Network of intermediaries:

As at the beginning of the financial year 2003-04, 548 intermediaries (207

Traders and 341 Dealers) are registered on ISE. A broad of members forms the bedrock

for any Exchange, and in this respect, ISE has a large pool of registered intermediaries

who can be tapped for any new line of business.

Robust Operational Systems:

The trading, settlement and funds transfer operations of ISE and ISS are

completely automated and state-of-the-art systems have been deployed. The

communication network of ISE, which has connectivity with over 400 trading members

and is spread across46 cities, is also used for supporting the operations of ISS. The

trading software and settlement software, as well as the electronic funds transfer

arrangement established with HDFC Bank and ICICI Bank, gives ISE and ISS the

required operational efficiency and flexibility to not only handle the secondary market

functions effectively, but also by leveraging them for new ventures.

Skilled and experienced manpower:

ISE and ISS have experienced and professional staff, who have wide experience

in Stock Exchanges/ capital market institutions, with in some cases, the experience going

up to nearly twenty years in this industry. The staff has the skill-set required to perform a

wide range of functions, depending upon the requirements from time to time.

Aggressive pricing policy:

The philosophy of ISE is to have an aggressive pricing policy for the various

products and services offered by it. The aim is to penetrate the retail market and

strengthen the position, so that a wide variety of products and services having appeal for

the retail market can be offered using a common distribution channel. The aggressive

pricing policy also ensures that the intermediaries have sufficient financial incentives for

offering these products and services to the end-clients.


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Trading, Risk Management and Settlement Software Systems:

The ORBIT (Online Regional Bourses Inter-connected Trading) and

AXIS (Automated Exchange Integrated Settlement) software developed on the Microsoft

NT platform, with consultancy assistance from Microsoft, are the most contemporary of

the trading and settlement software introduced in the country. The applications have been

built on a technology platform, which offers low cost of ownership, facilitates simple

maintenance and supports easy up gradation and enhancement. The soft wares are so

designed that the transaction processing capacity depends on the hardware used; capacity

can be added by just adding inexpensive hardware, without any additional software work.

Vibrant Subsidiary Operations:

ISS, the wholly owned subsidiary of ISE, is one of the biggest Exchange

subsidiaries in the country. On any given day, more than 250 registered intermediaries of

ISS traded from 46 cities across the length and breadth of the country.

Name of the Board of directors

1. Prof. P. V. Narasimham Public Interest Director

2. Shri V. Shankar Managing Director

3. Dr. S. D. Israni Public Interest Director

4. Dr. M. Y. Khan Public Interest Director

5. Mr. P. J. Mathew Shareholder Director

6. M. C. Rodrigues Shareholder Director

7. Mr. M. K. Ananda Kumar Shareholder Director

8. Mr. T.N.T Nayar Shareholder Director

9. Mr. K. D. Gupta Shareholder Director

10. Mr. V. R. Bhaskar Reddy Shareholder Director

11. Mr. Jambu Kumar Jain Trading Member Director


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State Bank of India(SBI) is the largest bank in India.

The bank traces its ancestry back through the Imperial Bank of India to the

founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the

Indian Subcontinent. The Government of India nationalized the Imperial Bank of India in

1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank

of India. In 2008, the Government took over the stake held by the Reserve Bank of India.SBI provides a range of banking products through its vast network in India and overseas,

including products aimed at NRIs. The State Bank Group, with over 16000 branches, has

the largest branch network in India. With an asset base of $250 billion and $195 billion in

deposits, it is a regional banking behemoth. It has a market share among Indian

commercial banks of about 20% in deposits and advances, and SBI accounts for almost

one-fifth of the nations loans.

SBI has tried to reduce its over-staffing through computerizing operations and Golden

handshake schemes that led to a flight of its best and brightest managers. These managers

took the retirement allowances and then went on the become senior managers at new

private sector banks.

The State bank of India is 29th most reputable company in the world according to Forbes.

History:

The roots of the State Bank of India rest in the first decade of 19th century, when

the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806.The Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay

(incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843).

All three Presidency banks were incorporated as joint stock companies, and were the

result of the royal charters. These three banks received the exclusive right to issue paper


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currency in 1861 with the Paper Currency Act, a right they retained until the formation of

the Reserve Bank of India.

The Presidency banks amalgamated on 27 January 1921, and the reorganized

banking entity took as its name Imperial Bank of India. The Imperial Bank of Indiacontinued to remain a joint stock company.

Pursuant to the provisions of the State Bank of India Act (1955), the Reserve

Bank of India, which is India's central bank, acquired a controlling interest in the

Imperial Bank of India. On 30 April 1955 the Imperial Bank of India became the State

Bank of India. The Govt. of India recently acquired the Reserve Bank of India's stake in

SBI so as to remove any conflict of interest because the RBI is the country's banking

regulatory authority

Branches

The corporate center of SBI is located in Mumbai. In order to cater to different functions,

there are several other establishments in and outside Mumbai, apart from the corporate

center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices,

located at major cities throughoutIndia. It is recorded that SBI has about 10000 branches;

well networked to cater to its customers.

ATM Services

SBI provides easy access to money to its customers through more than 8500

ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of

State Bank Group, which includes the ATMs of State Bank of India as well as the

Associate Banks State Bank of Bikaner & Jaipur, State Bank of hyd, State Bank of

Indore, etc. You may also transact money through SBI Commercial and International

Bank Ltd by using the ATM-cum-Debit(Cash+Plus)card.


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Subsidiaries

The State Bank Group includes a network of eight banking subsidiaries and

several non-banking subsidiaries. Through the establishments, it offers various services

including merchant banking services, fund management, factoring services, primary

dealership in govt securities, credit cards and insurance.

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

Products and Services

Personal Banking

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

Other Services

Agriculture/Rural BankingNRI Services

ATM Services

Demat Services

Corporate Banking

Internet Banking


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HistoryICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI

Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an

equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's

acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and

secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002.

ICICI was formed in 1955 at the initiative of the World Bank, the Government of India

and representatives of Indian industry.

The principal objective was to create a development financial institution for

providing medium-term and long-term project financing to Indian businesses.

In the 1990s, ICICI transformed its business from a development financial institution

offering only project finance to a diversified financial services group offering a wide

variety of products and services, both directly and through a number of subsidiaries and

affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first

bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards

universal banking, the managements of ICICI and ICICI Bank formed the view that the

merger of ICICI with ICICI Bank would be the optimal strategic alternative for both

entities, and would create the optimal legal structure for the ICICI group's universal

banking strategy.

The merger would enhance value for ICICI shareholders through the merged

entity's access to low-cost deposits, greater opportunities for earning fee-based income

and the ability to participate in the payments system and provide transaction-banking

services.


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The merger would enhance value for ICICI Bank shareholders through a large

capital base and scale of operations, seamless access to Icecaps strong corporate

relationships built up over five decades, entry into new business segments, higher market

share in various business segments, particularly fee-based services, and access to the vast

talent pool of ICICI and its subsidiaries.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the

merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal

Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The

merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the

High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of

Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to themerger, the ICICI group's financing and banking operations, both wholesale and retail,

have been integrated in a single entity. ICICI Bank has formulated a Code of Business

Conduct and Ethics for its directors and employees


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History

Housing Development Finance Corporation Limited, more popularly known asHDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of theIndian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks toreceive an 'in principle' approval from RBI, for setting up a bank in the private sector.The bank was incorporated with the name 'HDFC Bank Limited', with its registeredoffice in Mumbai. The following year, it started its operations as a ScheduledCommercial Bank. Today, the bank boasts of as many as 1412 branches and over 3275ATMs across India.

Amalgamations

In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a privatesector bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC andTimes became the first two private banks in the New Generation Private Sector Banks tohave gone through a merger. In 2008, RBI approved the amalgamation of CenturionBank of Punjab with HDFC Bank. With this, the Deposits of the merged entity becameRs. 1,22,000 crore, while the Advances were Rs. 89,000 crore and Balance Sheet sizewas Rs. 1,63,000 crore.

Tech-Savvy

HDFC Bank has always prided itself on a highly automated environment, be it interms of information technology or communication systems. All the braches of the bankboast of online connectivity with the other, ensuring speedy funds transfer for the clients.At the same time, the bank's branch network and Automated Teller Machines (ATMs)allow multi-branch access to retail clients. The bank makes use of its up-to-datetechnology, along with market position and expertise, to create a competitive advantageand build market share.

Capital Structure

At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5billion), of this the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equityshare, the HDFC Group holds 19.4%. Foreign Institutional Investors (FIIs) have around28% of the equity and about 17.6% is held by the ADS Depository (in respect of thebank's American Depository Shares (ADS) Issue). The bank has about 570,000shareholders. Its shares find a listing on the Stock Exchange, Mumbai and National Stock


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Exchange, while its American Depository Shares are listed on the New York StockExchange (NYSE), under the symbol 'HDB'.

Products & Services

Personal Banking

Savings Accounts

Salary Accounts

Current Accounts

Fixed Deposits

Demat Account

Safe Deposit Lockers

Loans

Credit Cards

Debit Cards

Prepaid Cards Investments & Insurance

Forex Services

Payment Services

NetBanking

InstaAlerts

MobileBanking

InstaQuery

ATM

PhoneBanking

NRI Banking

Rupee Savings Accounts

Rupee Current Accounts

Rupee Fixed Deposits

Foreign Currency Deposits

Accounts for Returning Indians

Quickremit (North America, UK, Europe, Southeast Asia)

IndiaLink (Middle East, Africa) Cheque LockBox

Telegraphic / Wire Transfer

Funds Transfer through Cheques / DDs / TCs

Mutual Funds

Private Banking

Portfolio Investment Schemes


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CHAPTER 5

DATA ANALYSIS

AND

INTERPRETATION


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Table: 01Month-Wise Market Prices

January 2012 February 2012 March 2012

DateClosing

PriceReturn Date

Closing

PriceReturn Date

Closing

PriceReturn

02 5785.83 2.5484 01 6605 0.8503 01 6809.48 -0.6971

03 5942.39 2.7059 02 6650.48 0.6886 02 6836.27 0.3934

04 5934.43 -0.134 03 6717.47 1.0073 03 6826.9 -0.1371

05 5934.77 0.0057 06 6779.41 0.9221 05 6807.03 -0.2911

06 5934.4 -0.0062 07 6738.02 -0.6105 06 6697.43 -1.6101

07 5942.19 0.1313 08 6788.91 0.7553 07 6635.39 -0.9263

09 5947.54 0.09 09 6847.44 0.8621 09 6730.09 1.4272

10 6080.88 2.2419 10 6825.15 -0.3255 12 6838.04 1.604

11 6110.26 0.4832 13 6839.78 0.2144 13 6887.91 0.7293

12 6097.16 -0.2144 14 6878.82 0.5708 14 6997.7 1.59413 6146.5 0.8092 15 7023.11 2.0976 15 6953.12 -0.6371

16 6155.78 0.151 16 7032.08 0.1277 16 6866.66 -1.2435

17 6258.4 1.6671 17 7076.99 0.6386 19 6796.42 -1.0229

18 6227.93 -0.4869 21 7129.67 0.7444 20 6698.24 -1.4446

19 6311.34 1.3393 22 6960.61 -2.3712 21 6722.51 0.3623

20 6344.09 0.5189 23 6933.15 -0.3945 22 6842.24 1.781

23 6346.06 0.0311 24 6871.91 -0.8833 23 6708.88 -1.9491

24 6444.56 1.5521 27 6678.83 -2.8097 26 6729.12 0.3017

25 6497.43 0.8204 28 6831.83 2.2908 27 6683.31 -0.6808

27 6554.58 0.8796 29 6857.28 0.3725 28 6660.81 -0.3367

30 6417.22 -2.0956 29- 6575.18 -1.2856

31 6549.31 2.0584 30 6647.77 1.104


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Table: 02Month-Wise Market Prices

Half-yearly average rate of returns of a Market = 0.1393

Variance of a Market = 1.2098

Standard deviation of a Market = 1.0999

April 2012 May 2012 June 2012

Date Closing

PriceReturn

Date Closing

PriceReturn

Date Closing

PriceReturn

02 6806.09 2.3816 02 6687.94 -0.1578 01 6177.22 -1.6373

03 6864.24 0.8544 03 6622.15 -0.9837 04 6178.64 0.023

04 6835.13 -0.4241 04 6496.99 -1.89 05 6194.73 0.260409 6730.78 -1.5267 07 6534.95 0.5843 06 6345.26 2.43

10 6734.03 0.0483 08 6406.07 -1.9722 07 6406.54 0.9658

11 6707.13 -0.3995 09 6358.22 -0.7469 08 6429.05 0.3514

12 6760.98 0.8029 10 6348.82 -0.1478 11 6407.76 -0.331213 6689.94 -1.0507 11 6300.73 -0.7575 12 6476.48 1.0724

16 6718.82 0.4317 14 6262.7 -0.6036 13 6481.45 0.0767

17 6788.99 1.0444 15 6306.76 0.7035 14 6399.89 -1.2584

18 6806.86 0.2632 16 6214.37 -1.4649 15 6487.13 1.3631

19 6833.46 0.3908 17 6222.92 0.1376 18 6396.6 -1.395520 6777.81 -0.8144 18 6241.2 0.2938 19 6440.74 0.6901

23 6662.83 -1.6964 21 6263.56 0.3583 20 6474.67 0.5268

24 6679.96 0.2571 22 6209.65 -0.8607 21 6530.9 0.8685

25 6650.58 -0.4398 23 6176.39 -0.5356 22 6513.78 -0.2621

26 6629.67 -0.3144 24 6263.39 1.4086 25 6483.63 -0.462927 6622.89 -0.1023 25 6272.97 0.153 26 6500.12 0.2543

28 6650.25 0.4131 28 6350.89 1.2422 27 6525.5 0.3905

30 6698.51 0.7257 29 6352.29 0.022 28 6530.99 0.0841

30 6290.01 -0.9804 29 6682.47 2.319431 6280.04 -0.1585


57/77

Table: 03

Month-Wise SBI Prices


DateClosing

PriceReturn Date

Closing

Price ReturnDate

Closing

PriceReturn

021629.65 0.6267

012077.1 0.7787

012219.75

-1.0542

03 1706.5 4.7157 02 2072.65 -0.2142 02 2245.7 1.1691

041695.15

-0.6651

032103.1 1.4691

032250.75 0.2249

051691.7

-0.2035

062163.05 2.8506

052174.15

-3.4033

061676.15

-0.9192

072152.05 -0.5085

062151

-1.0648

071669.75

-0.3818

082175.4 1.085

072141.05

-0.4626

091637.75

-1.9165

092181.95 0.3011

092222.3 3.7949

10 1702.05 3.9261 10 2172.5 -0.4331 12 2310.25 3.9576

11 1725.75 1.3924 13 2129 -2.0023 13 2327.65 0.7532

12 1760.7 2.0252 14 2198.45 3.2621 14 2351.5 1.0246

131777.15 0.9343

152250.5 2.3676

152299.45

-2.2135

161816.65 2.2227

162349.05 4.379

162227.95

-3.1094

171842.85 1.4422

172416.75 2.882

192159.65

-3.0656

18 1863.6 1.126 21 2451.75 1.4482 20 2184.15 1.1344

19 1883.7 1.0786 22 2257.8 -7.9107 21 2233.55 2.2617

201931.8 2.5535

232261.25 0.1528

222160.6

-3.2661

23 1940.65 0.4581 24 2206.8 -2.408 23 2165.25 0.2152

242041.3 5.1864

272125.1 -3.7022

262118.3

-2.1683

25 2056.6 0.7495 28 2229.55 4.9151 27 2129.8 0.5429

27 2042.6

-

0.6807 29 2243.4 0.6212 28 2081.15

-

2.2843

301990.7

-2.5409

29-2061.6

-0.9394

31 2061.05 3.5339 30 2095 1.6201


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Table: 04Month-Wise SBI Prices

Half-yearly average rate of returns of a SBI =0.2525

Variance of a SBI = 5.1858

Standard deviation of a SBI = 2.2772


Date ClosingPrice

ReturnDate Closing

PriceReturn

Date ClosingPrice

Return

02 2129.4 1.642 02 2139.45 0.0702 01 2026.2 -1.4302

03 2170.9 1.9489 03 2085.2 -2.5357 04 2046.2 0.9871

04 2164.3 -0.304 04 1993.6 -4.3929 05 2080.25 1.6641

09 2101.3 -2.9109 07 2026.15 1.6327 06 2159.45 3.8072

10 2151 2.3652 08 1958.95 -3.3166 07 2167.85 0.389

11 2160.3 0.4324 09 1887.6 -3.6423 08 2180.05 0.5628

12 2224.1 2.9533 10 1843.75 -2.3231 11 2164.55 -0.711

13 2211.45 -0.5688 11 1852.2 0.4583 12 2206.9 1.956516 2265.4 2.4396 14 1840.2 -0.6479 13 2222.25 0.6955

17 2299.95 1.5251 15 1859.95 1.0733 14 2154.25 -3.06

18 2289.6 -0.45 16 1829.2 -1.6533 15 2182.8 1.3253

19 2271.3 -0.7993 17 1848.1 1.0332 18 2087.65 -4.3591

20 2260.45 -0.4777 18 1942 5.0809 19 2103.1 0.7401

23 2192.1 -3.0237 21 2007.4 3.3677 20 2116.7 0.6467

24 2188.45 -0.1665 22 1938.5 -3.4323 21 2177.95 2.8937

25 2171.7 -0.7654 23 1956.45 0.926 22 2156.75 -0.9734

26 2159.2 -0.5756 24 1970.8 0.7335 25 2114.9 -1.9404

27 2125.7 -1.5515 25 2005 1.7353 26 2116.1 0.0567

28 2131.05 0.2517 28 2100.35 4.7556 27 2113.4 -0.1276

30 2137.95 0.3238 29 2120.3 0.9498 28 2095.45 -0.8493

30 2097.5 -1.0753 29 2159.15 3.0399

31 2055.6 -1.9976


59/77


60/77

Table: 06Month-Wise ICICI Prices

Half-yearly average rate of returns of a ICICI = 0.2388

Variance of a Market = 4.7498

Standard deviation of a Market = 2.1793


Date Closing

PriceReturn

Date Closing

PriceReturn

Date Closing

PriceReturn

02 890.85 0.4057 02 881.7 0.0284 01 781.7 -0.3315

03 907.55 1.8746 03 857.55 -2.739 04 790.3 1.1002

04 890.45 -1.8842 04 833.95 -2.752 05 790.25 -0.0063

09 870.05 -2.291 07 847.7 1.6488 06 807.1 2.1322

10 864.45 -0.6436 08 830.3 -2.0526 07 829.95 2.8311

11 864.9 0.0521 09 821.8 -1.0237 08 829 -0.1145

12 878.15 1.532 10 812.8 -1.0952 11 825.5 -0.4222

13 864.65 -1.5373 11 812.95 0.0185 12 838.8 1.611116 873.45 1.0178 14 799.1 -1.7037 13 849.1 1.2279

17 885.65 1.3968 15 816.7 2.2025 14 819.4 -3.4978

18 882.15 -0.3952 16 794.1 -2.7672 15 844.9 3.112

19 877.8 -0.4931 17 787.25 -0.8626 18 816.7 -3.3377

20 860.5 -1.9708 18 805.05 2.261 19 826.4 1.1877

23 843.45 -1.9814 21 810.8 0.7142 20 833.3 0.8349

24 847.5 0.4802 22 800.85 -1.2272 21 850.55 2.0701

25 838.65 -1.0442 23 795.7 -0.6431 22 852.05 0.1764

26 841.55 0.3458 24 819.9 3.0413 25 847.35 -0.5516

27 860.75 2.2815 25 815.9 -0.4879 26 845.45 -0.2242

28 868.9 0.9468 28 834.55 2.2858 27 852.45 0.828

30 881.45 1.4444 29 838.95 0.5272 28 856.5 0.4751

30 817 -2.6164 29 899.6 5.0321

31 784.3 -4.0024


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Table: 07

Month-Wise HDFC Prices


DateClosing

PriceReturn Date

Closing

Price ReturnDate

Closing

PriceReturn

02427.2 0.0351

01496.7 1.1815

01514.15

-0.7049

03 439.15 2.7973 02 497.8 0.2215 02 518.3 0.8072

04 443.25 0.9336 03 506.35 1.7176 03 518.9 0.1158

05442.55

-0.1579

06506.7 0.0691

05511.3

-1.4646

06452.5 2.2483

07509.65 0.5822

06507.6

-

0.7236

07451.1

-0.3094

08508 -0.3238

07515.3 1.5169

09 454.9 0.8424 09 522.15 2.7854 09 522.85 1.4652

10459.45 1.0002

10516.2 -1.1395

12519.85

-0.5738

11 462.25 0.6094 13 522 1.1236 13 524.8 0.9522

12 466.6 0.941 14 517.7 -0.8238 14 527.05 0.4287

13469.3 0.5787

15532.95 2.9457

15510.95

-3.0547

16

461.15

-

1.7366

16

526.2 -1.2665

16

507.7

-

0.636117

467.25 1.322817

527.55 0.256619

498.65-

1.7825

18 480.3 2.7929 21 531.1 0.6729 20 504.85 1.2434

19 485 0.9786 22 531.75 0.1224 21 515.4 2.0897

20488.7 0.7629

23531.8 0.0094

22502.6

-2.4835

23483.9

-0.9822

24524.5 -1.3727

23513.85 2.2384

24488.5 0.9506

27513.3 -2.1354

26510.55

-0.6422

25 490.1 0.3275 28 530.2 3.2924 27 518.05 1.46927

483.6-

1.326329

517.8 -2.338728

513.3-

0.9169

30479.05

-0.9409

29-510.7

-0.5065

31 490.9 2.4736 30 520.05 1.8308


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Table: 08Month-Wise HDFC Prices

Half-yearly average rate of returns of a HDFC bank = 0.2290

Variance of a HDFC bank =2.1141

Standard deviation of a HDFC bank = 1.4539


Date Closing

PriceReturn

Date Closing

PriceReturn

Date Closing

PriceReturn

02 527.1 1.3556 02 549.8 1.4017 01 491.45 -2.8659

03 529.8 0.5122 03 552.55 0.5002 04 496.8 1.0886

04 526.6 -0.604 04 536.75 -2.8595 05 501.8 1.0064

09 522.95 -0.6931 07 532.15 -0.857 06 519.35 3.4974

10 524.5 0.2964 08 515.45 -3.1382 07 537.25 3.4466

11 526.25 0.3337 09 512.45 -0.582 08 538.3 0.1954

12 530.4 0.7886 10 516.75 0.8391 11 539.55 0.2322

13 530.25 -0.0283 11 510.8 -1.1514 12 549.55 1.853416 529.6 -0.1226 14 500.5 -2.0164 13 542.7 -1.2465

17 530.85 0.236 15 499.05 -0.2897 14 534.4 -1.5294

18 536.9 1.1397 16 495.15 -0.7815 15 547.85 2.5168

19 554.2 3.2222 17 497.35 0.4443 18 533 -2.7106

20 551.1 -0.5594 18 500.45 0.6233 19 537.1 0.7692

23 544.9 -1.125 21 497.45 -0.5995 20 534.5 -0.4841

24 541.7 -0.5873 22 489.05 -1.6886 21 543 1.5903

25 546.9 0.9599 23 487 -0.4192 22 544.15 0.2118

26 540.55 -1.1611 24 499.05 2.4743 25 537.25 -1.268

27 540.55 0 25 500.35 0.2605 26 544.1 1.275

28 543.15 0.481 28 507.95 1.5189 27 548.7 0.8454

30 542.2 -0.1749 29 504.6 -0.6595 28 547 -0.3098

30 500.65 -0.7828 29 563.5 3.0165

31 505.95 1.0586


63/77

0

0.5

1

1.5

2

2.5

SBI ICICI HDFC

AVG RETURNS

STANDARD DEVIATION

Fig: 1 Bank wise half yearly average rate of return and standard deviation

INTERPRETATION:

An average rate of return of SBI bank ltd is 0.25. Where as the risk (i.e. standard

deviation) is 2.28. The risk is higher than that of the returns.

An average rate of return of ICICI bank ltd is 0.24. Where as the risk (i.e.

standard deviation) is 2.08. The risk is higher than that of the returns.

An average rate of return of SBI bank ltd is 0.23. Where as the risk (i.e. standard

deviation) is 1.45. The risk is higher than that of the returns.

BANKS AVG

RETURNS

STANDARD

DEVIATION

SBI 0.2525 2.28

ICICI 0.2388 2.18HDFC 0.2290 1.45


64/77


65/77

Table: 10

Month-Wise SBI Bank and Market Returns


DateSBI

Return

MRK

ReturnDate

SBI

Return

MRK

ReturnDate

SBI

Return

MRK

Return

02 1.642 2.3816 02 0.0702 -0.157 01 -1.43 -1.637

03 1.9489 0.8544 03 -2.536 -0.983 04 0.9871 0.023

04 -0.304 -0.424 04 -4.393 -1.89 05 1.6641 0.2604

09 -2.910 -1.527 07 1.6327 0.5843 06 3.8072 2.43

10 2.3652 0.0483 08 -3.317 -1.972 07 0.389 0.9658

11 0.4324 -0.399 09 -3.642 -0.746 08 0.5628 0.351412 2.9533 0.8029 10 -2.323 -0.147 11 -0.711 -0.331

13 -0.568 -1.051 11 0.4583 -0.757 12 1.9565 1.0724

16 2.4396 0.4317 14 -0.648 -0.603 13 0.6955 0.0767

17 1.5251 1.0444 15 1.0733 0.7035 14 -3.06 -1.258

18 -0.45 0.2632 16 -1.653 -1.464 15 1.3253 1.3631

19 -0.799 0.3908 17 1.0332 0.1376 18 -4.359 -1.396

20 -0.477 -0.814 18 5.0809 0.2938 19 0.7401 0.6901

23 -3.023 -1.696 21 3.3677 0.3583 20 0.6467 0.5268

24 -0.166 0.2571 22 -3.432 -0.860 21 2.8937 0.8685

25 -0.765 -0.44 23 0.926 -0.535 22 -0.973 -0.26226 -0.575 -0.314 24 0.7335 1.4086 25 -1.94 -0.463

27 -1.551 -0.102 25 1.7353 0.153 26 0.0567 0.2543

28 0.2517 0.4131 28 4.7556 1.2422 27 -0.128 0.3905

30 0.3238 0.7257 29 0.9498 0.022 28 -0.849 0.0841

30 -1.075 -0.980 29 3.0399 2.3194

31 -1.998 -0.158


66/77

Table: 11

Month-Wise ICICI Bank and Market Returns


Date ICICIReturn

MRKReturn

Date ICICIReturn

MRKReturn

Date ICICIReturn

MRKReturn

02 1.7309 0.1237 01 -1.53 0.8503 01 -2.4435 -0.697

03 4.1568 2.7059 02 1.565 0.6886 02 2.08062 0.393404 2.4262 -0.134 03 1.4078 1.0073 03 0.31016 -0.137

05 0.572 0.0057 06 1.4265 0.9221 05 -3.8761 -0.291

06 0.5487 -0.006 07 0.9754 -0.611 06 -1.9817 -1.610

07 -0.785 0.1313 08 -1.809 0.7553 07 0.92593 -0.926

09 0.0402 0.09 09 2.136 0.8621 09 6.2246 1.427210 3.8485 2.2419 10 -1.213 -0.326 12 1.63442 1.604

11 0.665 0.4832 13 0.6895 0.2144 13 -0.0054 0.7293

12 0.2501 -0.214 14 0.8078 0.5708 14 2.60865 1.59413 1.0364 0.8092 15 4.028 2.0976 15 -2.4742 -0.637

16 0.2406 0.151 16 -1.148 0.1277 16 -1.4243 -1.24317 -0.752 1.6671 17 1.3108 0.6386 19 -0.916 -1.022

18 -2.068 -0.486 21 0.9679 0.7444 20 -0.1156 -1.444

19 3.5095 1.3393 22 -3.421 -2.371 21 3.0687 0.3623

20 5.814 0.5189 23 -1.395 -0.395 22 -3.8433 1.781

23 1.7979 0.0311 24 -1.293 -0.883 23 1.28412 -1.94924 3.305 1.5521 27 -4.798 -2.81 26 -4.2975 0.3017

25 -0.852 0.8204 28 2.6891 2.2908 27 0.476 -0.680

27 1.0813 0.8796 29 -0.467 0.3725 28 -1.9292 -0.336

30 -4.07 -2.095 29- -0.355 -1.28531 5.8748 2.0584 30 3.64465 1.104


67/77

Table: 12

Month-Wise ICICI Bank and Market Returns


Date ICICIReturn

MRKReturn

Date ICICIReturn

MRKReturn

Date ICICIReturn

MRKReturn

02 0.4057 2.3816 02 0.0284 -0.157 01 -0.332 -1.637

03 1.8746 0.8544 03 -2.739 -0.983 04 1.1002 0.023

04 -1.884 -0.424 04 -2.752 -1.89 05 -0.006 0.2604

09 -2.291 -1.527 07 1.6488 0.5843 06 2.1322 2.4310 -0.643 0.0483 08 -2.053 -1.972 07 2.8311 0.9658

11 0.0521 -0.399 09 -1.024 -0.746 08 -0.114 0.3514

12 1.532 0.8029 10 -1.095 -0.147 11 -0.422 -0.331

13 -1.537 -1.051 11 0.0185 -0.757 12 1.6111 1.0724

16 1.0178 0.4317 14 -1.704 -0.603 13 1.2279 0.

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