A RESEARCH REPORT ON A STUDY OF PORTFOLIO MANAGEMENT ON STOCK EXCHANGE

SUBMITTED TO DEPARTMENT OF BUSINESS ADMINISTRATION SAURASHTRA UNIVERSITY

GUIDED BY DR. HITESH J. SHUKLA (ASSOSIATE PROFESSOR, MBA)

PREPARED BY PRAVEEN CHANPA (STUDENT 4TH SEM, MBA)

DECLARATION
I hereby declare that the project entitled A Research Report onportfolio return at stock exchange submitted for the M.B.A. Degree is my original work and the dissertation has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles. Place: Date: Praveen Chanpa

PREFACE
Being Management students, we need to understand how portfolio analysis is done. Therefore, we are required to identify the value stocks and the growth stocks to conduct a thorough analysis of the selected Industry. This helps us as the students to develop a sense of awareness around us to keep the details of the stock market. Such an analysis helps to understand the stock market which is highly useful for investors.

Indian stock market is going through a rapid growth and investors need to know which kind of stocks are there to invest. Globalization is the most important factor shaping todays world. India is no exception. The investors are also becoming global and try to invest in stocks that give them more return on their portfolio. This research report offers an insight into the investing pattern of all the investors. Such a work had never been carried out earlier and Im confident that this study will be useful not only to academician but actual investors in addition to students.

I am sure this work will be useful to many and can serve as guide to many who want to invest in India stock market.

It is a pleasure to keep this report in front of you. Project report is vitally important for M.B.A students because it develops the feeling among the students about investors to develop the practical base. Theoretical knowledge is true only when we apply the same in the practical.

ACKNOWLEDGEMENT
A part of the real essence of 6 weeks learning; in conducting this fruitful exercise many key persons had shown an appreciable role in my unforgettable journey. When emotions are profound words sometimes are not sufficient to express our thanks and gratitude. At this moment I would like to take this opportunity and declare the moral share of all those stakeholders in the project property.

I convey heartly thanks and deep sense of gratitude towards the followings:

To almighty God, whose external blessings and divine presence helps us to fulfill all our goals. My GURU and inspirer Dr P.L. CHAUHAN, Professor and Dean, Department of Business Management, Saurashtra University. My esteemed guide Mr. HITESH J. SHUKLA, Asst. Professor, Department of Business Management, Saurashtra University

I would also like to express my thanks and gratitude to all my colleagues, friends, teaching and non-teaching staff members and all those who contributed directly or indirectly through suggestions, thoughts and presence for creating a congenial environment and encouraging me in every way during the project. And last but certainly not the least My Dear Friend Ashish, Mayank and Kapil.

EXECUTIVE SUMMARY

The purpose of the research was to find whether the value stock perform better than the growth stocks in the Indian stock market.

The investors try to maximize their profits by investing wisely. Few investors prefer the value stocks and few of them prefer growth stocks. It might also happen that many of the investor doesnt know the difference between the value and the growth stocks and might have invested just by looking at the scenario of the company.

The report comprises of all the historical data related to the stocks. For the research I have gathered the data of different companies which includes market prices, earning per share, dividend distributed in percentage and price earning ratio.

Apart from the data gathered and the test applied for the conducting the research, there were few limitations which I have taken into consideration.

TABLE OF CONTENT

SR. NO. 1 2 3 4 5 6 7

CONTENT INTRODUCTION STATEMENT OF PROBLEM LITERATURE REVIEW OBJECTIVE OF STUDY METHODOLOGY LIMITATION ANALYSIS Analysis and interpretation Hypothesis test

PAGE NO. 1 26 27 29 31 33 34 52 53 58 60 61 62

8 9 10 11

CONCLUSION AND RECOMMENDATION REFERENCES BIBLOGRAPHY ANNEXURE AND APPENDICES

INTRODUCTION

Stock exchanges are intricately inter-woven in the fabric of a nations economic life. Without a stock exchange, the saving of the community the sinews of economic progress and productive efficiency would remain underutilized.

The task of mobilization and allocation of savings could be attempted in the old days by a much less specialized institution that the stock exchanges. But as business and industry expanded and the economy assumed more complex nature, the need for permanent finance arose.

Entrepreneurs needed money for long term whereas investors demanded liquidity the facility to convert their investments into cash at any given time. The answer was a ready market for investment and this was how the stock exchange came into being.

Stock exchange means anybody of individuals, whether incorporated or not, constituted for the purpose of regulating or controlling the business of buying, selling, or dealing in securities.

These securities include:

Shares, Scrips, Stocks, Bonds, Debentures stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; Government securities; and Rights or interest in securities.

Function

The stock exchanges in India have an important role to play in the building of a real shareholders democracy. Aim of the stock exchange authorities is to make it as nearly perfect in the social and ethical sense as it is in the economic.

To protect the interests of the investing public, the authorities of the stock exchanges have been increasingly subjecting not only its members to a high degree of discipline, but also those who use its facilities joint stock companies and the other bodies in whose stocks and shares it deals.

There are stringent regulations to ensure that directors of joint stock companies keep their shareholders fully informed of the affairs of the company.

In fact, some of the conditions that the stock exchange imposes upon companies before their shares are listed are more rigorous and wholesome than the statutory provisions such as those contained in the Companies Act.

Organization Structure of the Secondary Market

The stock exchanges are the exclusive centers for trading of securities. At present, there are 23 operative stock exchanges I India. Most of the stock exchanges in the country are incorporated as Association of Persons of section 25 companies under the Companies Act. These are organized as mutuals and are considered beneficial under in terms of ax benefits and matters of compliance.

The trading members, who provide broking services also, own, control and manage the stock exchanges. They elect their representatives to regulate the funding of the exchange, including their own activities.

Until recently, the area of operation/jurisdiction of an exchange was specified at the time of its recognition, which in effect precluded competition among the exchanges. These are called regional exchanges.

In order to provide an opportunity to investors to invest/ trade in the securities of local companies, it is mandatory for the companies, wishing to list their securities, to list on the regional stock exchange nearest to their registered office

If they so wish, they can seek listing on other exchange as well. Monopoly of the exchanges within their allocated area, regional aspirations of the people and mandatory listing on the 24 exchanges (The Capital Stock Exchange, the latest in the list, is yet to commence trading) in the country recognized over a period of time to enable investors across the length and breath of the country to access the market.

The three newly set up exchanges over the counter Exchange of India (OTCEI), National Stock Exchange of India (NSE) and Inter-connected Stock Exchange of India
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(ICSE) were permitted since their inception to have nation-wide trading. Listing on these exchanges was considered adequate compliance with the requirement of listing on the regional exchange.

SEBI recently allowed all exchange to set up trading terminals anywhere in country. Many of them have already expanded trading operations to different parts of the country.

The trading platforms of a few exchanges are now accessible from many locations. Further, with extensive use of information technology, the trading platforms of a few exchanges are also accessible from anywhere through the internet and mobile devices; this made a huge difference in a geographically vast country like India.

It significantly expanded the reach of the exchange to the homes of ordinary investors and assuaged the aspirations of people to have exchanges in their vicinity. The issuers/investors bow prefers to list/trade on exchanges providing nationwide network rather than on regional exchanges.

Consequently, territorial jurisdiction of an exchange, opportunity to invest in securities of local companies through listing on regional exchanges, and convenience of trading from a nearby exchange lost relevance.

Regulatory Framework

The four main legislations governing the securities market are:

The SEBI Act, 1992 which establishes SEBI to protect investors and develop and regulate securities market;

The Companies Act, 1956, which sets out the code of conduct for the corporate sector in relation to issue, allotment and transfer of securities, and disclosures to be made in public issue;

The Securities Contracts (Regulation) Act, 1956, which provides for regulation of transaction in securities through control over stock exchanges; and

The Depositories Act, 1996 which provides for electronic maintenance and transfer of

ownership of demat securities.

Stock Markets & Financial Development in India

The role of stock markets as a source of economic growth has been widely debated. It is well recognized that stock markets influence economic activity through the creation of liquidity. Liquid financial market was an important enabling factor behind most of the early innovations that characterized the early phases of the Industrial Revolution.

Recent advances in this area that stock markets remain an important conduit for enhancing developments. Many profitable investments necessitate a long term commitment of capital, but investors might be reluctant to relinquish control of their savings for long periods. Liquid equity markets make investments less risky and more attractive.

At the same time, companies enjoy permanent access to capital raised through equity issues. By facilitating longer term and more profitable investments, liquid markets improve the allocation of capital and enhance the prospects for long-term economic growth. Furthermore, by making investments relatively less risky, stock market liquidity can also lead to more savings and investments.

Over the years, the stock market in India has become strong. The number of stock exchange increased from 8 in 1971 to 9 in 1980 to 21 in 1993 and further to 23 as at end march 2000.

The number of listed companies also moved up over the same period from 1,599 to 2,265 and thereafter to 5,968 in 1990 and 9.871 in March, 2000. The market capitalization at BSE as a percentage of GDP at current market prices also improved considerably from around 28 per cent in the early nineties to over 45 per cent at the end of the nineties, after witnessing a fall in certain intervening years.

In 1998, India ranked twenty-first in the world in terms of market capitalization, nineteenth in terms of total value traded and second in terms of number of listed domestic companies.

Though the Indian Stock market was founded more than a century ago, it remained quite dormant from independence in 1947 up to the early eighties, with a capitalization ratio (market capitalization to GDP) of only 4 per cent.

However, the patterns of demand for capitalization have undergone significant changes during the last two decades and improved stock market activity. It may be recalled that till the 90s institutional term landing acted as the primary source of industrial finance in India. Financial institutions raised money through government guaranteed bonds at low rates of interests, in which, lent funds at connectional rate of interest.

This system provided corporate a cushion to absorb the relatively high risk of implementing new projects. This, in turn, discouraged the corporate to raise risk capital from equity markets. On this account, the debt market segment, which is sensitive to economic information also remained underdeveloped an illiquid. With onset of reform process in the 90s institutions has to raise resources at market related rates.

At the same time, the market has witnessed the introduction of several new customizes bonds at maturities tailored to suit investors need and with market driven coupons. Along with this development, a number of measures were initiated to reform the stock markets, which helped to improve the overall activity in the stock market significantly. The turnover ratio increase from low of 6.7 percent at the beginning of the 90s to reach 35.1 percent in 1999-2000, expecting certain years of relative in activity.

The Indian capital market has experienced a significant structural transformation over the years. It now compels well with those in developed markets. This was deemed necessary because of the gradual opening of the economy and the need to promote transparency in alternative sources of financing.

The regulatory and supervisory structure has being over valued with most of the powers for regulating the capital market having been vested with securities and exchange board of India (SEBI). Apart from changes in the fundamental factors information asymmetries and the associated constraints to efficient price discovery remain at the heart of the volatile movements in stock prices.

The extant of stock price volatility is also influenced by the extant of integration between the domestic and international capital markets as well as the regulatory frame work governing the stock market.

In India, two most important factors which has a significant bearing on the behaviour of the stock prices during the 90s were net investments by FIIs and trends in the international stock exchanges, specially NASDAQ. Stock market volatility has tended to decline in recent years, with the co-efficient variation in the BSE Sensex working out to 70.51 percent during 1995-96 to 1999-2000.

Asset price bubbles entail significant risks in the form of higher inflation when the bubble grows in size and in the form of financial instability and lost output when the bubble bursts. Monetary and fiscal authorities, therefore, closely watch the asset market developments. The positive wealth effect resulting from bull runs could impart a first round of risk to inflation.

If the bull run is prolonged, a second round of pressure on prices may result from subsequent upward wage revisions. Since financial assets are used as collaterals, asset booms may also give rise to large credit expansion. When domestic supply fails to respond to the rising demand, it could give rise to higher external current account deficit. The asset price cycle may follow.

When the asset prices collapse, firms may faced savior financing constraints as a result of declining value of their collaterals, making lenders reluctant to land at a scale they do when asset prices are rising. Recognizing this alternative complexities emanating from asset market bubbles, information on asset prices are being increasing used as a critical input for the conduct of the public policies.

INTRODUCTON TO EQUITY MARKET

Indian Capital Market

The function of the financial market is to facilitate the transfer of funds from surplus sectors (lenders) to deficit sectors (borrowers). Normally, households have excess of funds or savings, which they lend to borrowers in the corporate and public sectors whose requirement of funds far exceeds their savings. A financial market consists of investors and buyers, sellers, dealers and does not refer to a physical location. Formal trading rules and communication networks for originating and trading financial securities link the participants in the market.

As elsewhere in the world, the Indian financial system consists of: -

Money Market Capital Market

The money market has two components.

Organized Market Unorganized Market

The organized market is dominated by commercial banks. The other major players are the Reserve Bank of India, Life Insurance Corporation, General Insurance Corporation, Unit Trust of India, Securities Trading Corporation of India, other primary dealers and the various mutual funds. Despite rapid expansion of the organized money through a large network of banking institutions that have extended their reach even to the rural areas, there is still an active unorganized money market. It consists of indigenous bankers and moneylenders.
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In the unorganized market, there is no clear demarcation between short-term and longterm finance and even between the purposes of finance. The unorganized sector continues to provide finance for trade as well as personal consumption. The inability of poor to meet the creditworthiness requirements of the banking sector makes them take recourse to the institutions that still remain outside the regulatory framework of banking. But this market is shrinking.

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INDIAN CAPITAL MARKET CLASSIFICATION

Indian capital market can be broadly classified, into the following:

I. MONEY MARKET:

It is a market, which deals in short term securities such as treasury bills, certificate of deposits etc.

II. DEBT MARKET:

It is a market dealing in debt securities such as debentures, bonds etc.

III. SECURITIES MARKET:

It is a market dealing in equity and equity linked securities. This market comprises of primary market and second market.

The capital market provides the framework in which savings and investment take place. On the one hand it enables companies to raise resources from the investors and on the other, it facilitates households to invest their saving in industrial or commercial activities. Those saving instruments that can be bought or sold freely are called securities. These include a range of products debt and equity that can be traded. The market where such trades take place is the securities market or capital market and comprises the various exchanges, intermediaries and its regulatory institutions.

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The capital market consists of these segments.

Primary Segments

Secondary Segments

The primary market deals with the issue of new instruments by the corporate sector such as equity shares, preference shares, and debentures. The public sector consisting of central and state governments, various public sector industrial units (PSUs) and statutory and other authorities such as state electricity boards and port trusts also issue bonds. The primary market in which public issue of securities is made through a prospectus is a retail market and there is no physical location. Direct mailing, advertisements and brokers reach the investors. Screen based trading eliminates the need trading floor.

The Secondary Market Or Stock Exchange where existing securities are traded is an auction arena. It may have a physical location like a stock exchange or a trading floor. Since 1995, the trading in securities is screen-based. Screen-based training eliminates need for a trading floor. And, since the last few years Internet-based trading has also made an appearance in India.

The Secondary Market consists of 23 stock exchanges including the National Stock Exchange (NSE) and the Over-the Counter Exchange Of India (OTCEI) and also Bombay Stock Exchange (BSE). The secondary market provides a trading place or terminals for the securities already issued to be bought and sold. It also provides liquidity to the initial buyers in the primary market to re-offer the securities to any interested buyer at any price, if mutually accepted. An active secondary market actually promotes the growth of the primary market and capital formation because investors in the primary market are assured of a continuous market and they can liquidate their investments in the stock exchange.

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There are several major players in the primary market. These include the merchant bankers, mutual funds, financial institutions, foreign institutional investors (FIIs) and individual investors. R & T agents, Custodians and Depositories are capital market intermediaries that provide important infrastructure services for both primary and secondary markets.

It is important to ensure a smooth working of this market, as it is the arena where the players in the economic growth of a country interact. Various laws have been passed from time to time to meet this objective. The financial market in India was highly segmented until the initiation of reforms in 1992-93 on account of a variety of regulations and administered prices include barriers to entry. The reform process was initiated with establishment of securities and exchange of India (SEBI).

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Equity Market

Equity represents an ownership position in a corporation. It is a residual claim, in the sense that creditors and preference shareholders must be paid as scheduled before equity shareholders can receive any payment. In bankruptcy equity holders are in principle entitled only to assets remaining after all prior claimants have 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 state the number of states the number of shares purchased and their par value.

A Brief History of the rise of the Equity trading in India

July 9, 1875

: Native brokers from the Native share and Stock Brokers Association in

Bombay. Membership fee is Re. 1. The association has 318 members.

1899 1921

: Bombay stock Exchange acquires own premises.

: Clearing houses are established for settlement of trades as volumes

increase.
1923 1925 Dec 1, 1939 1943 : K R P Shroff becomes the honorary president of BSE.

: Bombay Securities Contract control Act (BSCCA) comes into force.

: Stock Exchange building is acquired. : Forward trading banned till 1946. Only ready to deliver and hand delivery

contracts permitted.
1956 : Securities Contract Regulation Act drafted on the lines of BSCCA comes

into force.

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1957

: BSE becomes the first exchange in India to get the permanent

recognition.
1964 Apr 1, 1966 Jun 29, 1969 1973 : Unit Trust of India (UTI) is born. : K R P Shroff retires and Phiroze J Jeejeebhoy becomes chairman.

: Morarji Desai bans forward trading.

:

Construction

of

Towers,

named

after

late

PhirozeJamshedjiJeejeevhoy, starts.
Jan, 2 1986 : BSE Sensesex launched as the first stock market index with1978-79 as

the base year.

Nov 1987 Apr 1988 Jan 1992 May 1992 May 27, 1992 May 30, 1992 Sep 1992 : SBI Mutual Fund launches Magnum Regular Income Scheme. : Securities and Exchange Board of India (SEBI) set up. : SEBI had given statutory powers. : Harshad Mehta securities scam breaks. : Reliance is the first Indian company to make a GDR issue.

: The capital Issues Control Act, 194-7 is replaced.

:

Foreign Institutional Investors are permitted to invest in the Indian securities market.

Nov 1992

Finance Minister Manmohan Singh inaugurates Over the Counter Exchange of India.

Oct 30, 1993

: The first private sector mutual fund, Kothari Pioneer Mutual fund, begins

operations.
1993 June 1994 Nov 1994 : SEBI bans badla trading on BSE. : NSE commences operations in wholesale debt market segment. : The capital market segment of NSE goes o stream. Trading is screen

based for the first time in India.

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March1995 Apr 1995

: BSE online trading system (BOLT) replaces open outcry system. : The National Securities Cleaning Corporation Limited, Indias first

clearing corporation is set up.

Oct 1995 : NSE overtakes BSE as the largest stock exchange in terms of volume of

trading.
Apr 1996 Feb 1997 May 1997 Nov 1998 : The National Securities Depository Limited is created. : SEBI releases norms for takeovers and acquisitions. : BSE introduces screen based trading. : SEBI recognized Interconnected Stock Exchange founded by 15 regional

stock exchanges. This exchange starts functioning in Feb., 1999

Feb 1999 : Launch of automated lending and borrowing mechanism (ALBM) on

NSE.
Mar 11, 1999

: Infosys Technologies is the first company to be listed on NASDAQ through a public offering of American Depository Receipts.

Mar 22, 1999 Sep 1999

: Central Depository Services (India) promoted by BSE operations.

: ICICI is the first India Company to be listed on the New York Stock Exchange (NYSE).

Oct 11, 1999

: For the first time in BSEs history, the Sensex closes above the 5,000

mark at 5,031.78.
Jan 2000 : BSE creates a Z category of scrips in addition to A, B1, and B2

comprising scrips that breached or failed to comply with the listing agreement.
Feb 2000 : Internet trading commences on NSE. On Feb 14, 2000, BSE Sensex hits

all-time high of 6150. On Feb. 21, NSE records peak market capitalization of Rs. 11, 94,282 crore.

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Apr 10, 2000

: The Sensex is revamped to include Dr. Reddys Lab, Reliance Petroleum, Satyam Computers and Zee Telefilms replacing Indian Hotels, Tata Chemicals, Tata power, and IDBI.

June 2000 July 9, 2000 Oct 19, 2000 Jan 22, 2001

: BSE and NSE introduce derivatives trading in the form of index futures. : BSE turns 125. : Wipro lists in the NYSE.

: Borrowing and Lending Securities Scheme (BLESS) launched on BSE to promote securities lending and borrowing activities.

Mar 2001

: Ketan Parekh scam breaks. SEBI suspends all the broker directors of the

BSE in relation to KP scam.

May 2001 June 2001 July 2001

: BSE advises compulsory demat for B2 scrips. : Index options start trading on NSE.
: A SEBI directive bans carry forward. All major securities are moved to

rolling settlement. Options of individual scrips start trading NSE.

Nov 9, 2001 : BSE and NSE launch futures in individual stocks.

Value stocks

Stocks that are considered to be undervalued based upon such ratios as price-to-book or price-to-earnings (P/E). These stocks generally have lower price-to-book and priceearnings ratios, higher dividend yields and lower forecasted growth rates than growth stocks. Shares of companies that are considered underpriced by the market considering their fundamental characteristics and that therefore represent an attractive investment opportunity.

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Growth stocks

In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. A growth company typically has some sort of competitive advantage (a new product, a breakthrough patent, overseas expansion) that allows it to fend off competitors.

Growth and Value Stocks

There are two types of stocks that you will want to fill your portfolio with. These are growth stocks and value stocks. Growth stocks are those with statistically high levels of return and value stocks are those that tend to be undervalued. As a stock investor, there are several valuation tools that assist you in selecting the right stocks for inclusion in your portfolio. Balancing your portfolio by including a mixture of growth and value stocks allows you to minimize risk while still maximizing your potential gain. True diversification of your investment portfolio results from the strategic inclusion of both growth and value stocks in the proper amounts. If you want to effectively manage your portfolio you need to learn to classify stocks into their proper categories so that you can make effective purchases.

No matter what your specific investment goals, choosing the right stocks for your portfolio is possible through the use of proper valuation methods. In order to choose the right stocks you need to have a good understanding of what ultimately gets growth and value stocks placed into their respective categories.

While there are no absolute rules for categorizing growth and value stocks there are some broad definitions on which most investors agree. Though there are a few stocks that fall closer to the line between these two broad definitions, most can be easily classified into one or the other.
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The purpose of growth investing is to choose a stock in a growing company that has a high potential for continued growth. Value investing focuses more on purchasing stocks that are currently undervalued in the market and which therefore have a lower purchase price. These value stocks can increase significantly in value once the market makes corrections to reflect their true worth.

Growth Stocks Defined

Although investors have some varying methods for determining what makes a good growth stock, all definitions typically include the following characteristics.

A high growth rate, both historically and projected. When you look at a growth

stocks historic performance, you need to take into consideration the size of the company that issues the stock. Smaller companies should have a historic growth rate of ten or more percent over the course of at least the last five years. Larger companies should have an historical growth rate of somewhere between five and seven percent over the same number of years.

Projections for company growth should measure up to or exceed that of the stocks

historic performance.

The company should have a high return on equity (ROE) measure. You should also

consider comparing the companys ROE to that of other stocks in the same industry over the course of at least a five year period. A growth stocks ROE will rank significantly higher than average among its industry.

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Value Stocks Defined

Some investors make the mistake of thinking that cheap stocks are all value stocks, when in reality a value stock can have a hefty purchase price. What makes a value stock is its placement within the current stock market a placement which does not reflect the true value of the stock itself.

Here are a few of the commonly accepted measures for determining what makes a value stock.

The current price earnings ratio (P/E) of the stock should be in the lowest ten

percent of all companies in its industry.

The price to earnings growth ratio (PEG) should be less than one percent, which

actually indicates that the stock is undervalued. Dont mistake this measure for insufficient growth potential.

The company issuing the stock should hold assets which are at least twice its current

liabilities and should have equity which is equal to, if not greater than, its debt.

Both growth and value stocks serve a specific purpose in your portfolio. Dont overload your portfolio with one type or the other. Instead focus on creating an ideal balance of the two types. This will result in maximum returns with minimal risk.

Assignment:

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 Identify 5 growth stocks and 5 value stocks.

Why did you choose each stock for your list?

Which of these stocks would you like to add to your portfolio?

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Changing Attitude towards Equity Ownership

With a broadening of the corporate sector, volume of business on the exchanges in India is likely to increase. The greater interest shown in recent years by investors is partly reflected in the over-subscription of new issues.

There has been great demand for growth issues. I.e. shares of companies with growth prospects. It has been observed that the wider the distribution of corporate securities among investors, the grater the reception accorded to new or additional issues of capital; the more mobile the additional issues of capital; the more mobile the market, the grater the participation of investors and traders in the raising of corporate capital.

The available data about the share ownership in the country show that there is gradual widening if ownership. The increasing participation in stock market activities by financial and non financial intermediaries, particularly of institutions which are mainly investors has tended to create an orderly and stable market.

Further, the various growth-permitting factors including regulatory measures, progressive spread of literacy and dissemination of investment information all tend to contribute to a healthy growth of the stock market. In the security market, equity shares are the most romantic of all the form of securities.

Further more, equity analysis is more complicated than bond appraisal, and greater skill is required in selecting equity than fixed income securities. The attitude towards equity shares has varied from extreme pessimism to optimism from time to time.

It is equity shares that entice most investors, and some investors have been known to feel grater sympathy for their equity than their spouses. Presence of market and business risks
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associated with such investments fails to keep the investing public and institution out of the market because of their confidence in the ultimate success of the equity shares, i.e. towards overshadow risks. In fact the advantages of equity shares ownership are enough to lure the investors and change their attitude towards securities.

Humans are by nature value and profit maximizers. In all we do, we implicitly calculate and compare the expected gains with the risks involved. That is, we try to maximize our profit with as low risk as possible.

A number of papers have dealt with methods showing evidence that markets are inefficient and investors are able to achieve abnormal returns, i.e. finding portfolios of companies that will beat the market, by conducting different kinds of stock picking techniques. Some of the common market irregularities are the January effect - that stocks generate abnormally high returns in the month of January, the Monday effect - that Mondays are the worst day of holding shares, the size effect - that small-cap firms outperform large-cap firms, insider transactions - that insider transactions reveal a concealed message about the companys true market valuation, and lastly that value stocks outperform growth stocks. (Damodaran, 2002; Ross, Westerfield& Jaffe 2005) The focus in this thesis will be on the value versus growth perspective, since it is a common way for individuals and mutual funds to classify and base their investment decisions on.

An example of a great value investor is Warren Buffett. According to Forbes Magazine (Kroll & Goldman, 2005) Buffett is currently the second wealthiest person in the world with a net worth of more than $44 billion. He has been able to create his fortune by using the techniques of fundamental analysis in order to find value stocks, typically mature companies found in the Manufacturing, Real-estate and Timber & Pulp industries, worth $1 selling for $0.5. His skills as an investor are evident when looking at the US holding company Berkshire Hathaway, where he is the chairman and CEO, increasing in value over 30 years from $290/share to more than $84 000/share. (Miles, 2004)

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On the other hand, investing in growth companies, typically younger companies found in the Healthcare and Technology-industries, can also create high returns. An example of this is the Swedish IT-firm Framfab, increasing in share price by 1515% within nine months from its initial public offering in June of 1999. However six years later Framfabs stock price has dropped 90% compared to the introduction price. This shows that an investor can make great profits on both types of investments but returns might differ remarkably in the long-run.

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STATEMENT OF PROBLEM

There has been a long ongoing discussion among market participants whether growth stocks are constantly being overvalued and hence generating less return on a risk-adjusted basis, than the more stable value stocks. Value stocks are usually defined as companies with low valuation multiples (P/B, P/E ratios) and high dividend yield while growth stocks are defined as companies with high valuation multiples (P/B, P/E) and low dividend yield. (Sharpe et al. 1999)

Most previous research, by for example Fama and French (1992), Chan, Hamao and La-konishok (1991) and Basu (1977), shows that value stocks outperforms growth stocks. A majority of these studies have been performed on the US stock market, the worlds largest market for listed securities, and I found that there were no studies that specifically focus on the Indian stock market, which is largest in asianbased on equity trading.

As there was no studies conducted on the value and growth stocks of stock exchange of India, I found a scope for study on this topic and therefore following is the hypothesis of this study. Ho1: there is no statistical significant difference between average market price of value stock and growth stock. Ho2: there is no statistical significant difference between average earning price per share of value stock and growth stock. Ho3: there is no statistical significant difference between average dividend of value stock and growth stock. Ho4: there is no statistical significant difference between average price earning ratio of value stock and growth stock.

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LITERATURE REVIEW

S. M. Tariq Jafar, D. S. Chaubey and Shruti Nagar,2010 tried to analyzed the relationship between risks return and diversification effect on portfolio risk with composite of market and non-market risk. The core objective of their study was to investigate that there is linear relationship between portfolio risk and return, diversification across the stocks will lead to decline of non market risk. They came to a conclusion that is what time horizon is involved in adjusting the investor exposer to their risk weighted portfolio in response to market and non market events Indian stock market approaches to efficiency with longer time horizon for holding of stock. Investors do not realize maximum return by holding risky portfolio for in trading. However to some extent they reduce the impact of non market risk of portfolio. Portfolio with high beta value is categorized as low risky. They get the high return by holding risky portfolio for month.

However their return is maximized by holding risky portfolio for month. These finding support rao et al. (1998) study were stock return of different time horizon are used to establish the relationship between portfolio return and risk and risk. The relationship is moderate in cases of monthly return. However the relationship between portfolios expected return and risk is moderate on quarterly return. This trend of stock market signifies effect that investor gradually readjust their holding of stocks in response to market or non market ever.

MounaAbdelhedi, 2009 in their research analyzed the risk factor and investor sentiment effecting cross section variations in return and came to a conclusion that using sample of stocks traded on Tunisian stock exchange, there are common return factors related to market and size factors that help capture the cross section stock returns. The study of relationship between the institutional investor sentiment and the size of sorted portfolio returns provides empirical evidence that investor sentiment explains excess return and that current return effects change in sentiment. More ever the addition of sentiment measures to the four factor model draws a declining of market factor explanatory power as well as the insignificance of the size factor on Tunisian stock returns.

27

MayankJoshipura, 2009 studied the presence of any abnormal returns on surrounding the bonus announcement and execution; and the effect of bonus offer on trading volume. He concluded that Indian markets have the semi strong form of market efficiency, as any information content with the bonus announcement is absorbed on the announcement day and nothing is seen on the effective day. And bonus announcement leads to improvement in liquidity permanently, but positive wealth effect is concentrated just prior to and on the day of bonus announcement.

Anamika Sharma 2009, studied an empirical analysis of public announcement of open offer on the stock performance of target company against S&P CNX Nifty; public announcement creates value for investors of target company; and gauge whether motives of open offer have any significant impact on the efficiency of capital market and came to conclusion that public announcement of open offer has significant impact on investors behavior while selecting securities, she also found that in the post announcement period, the abnormal gains were not eroded substantially, and she also concluded that investors have prior information about the public announcement, raising question on the effectiveness of regulations on insider trading.

From all the literature reviewed by me, I found that there were many research conducted on portfolio return and stock exchange of various countries but there was a scope for research on the study of portfolio return on Indian stock exchange, further it motivated me to study investors behavior of going for the value stocks or growth stocks.

28

OBJECTIVE OF STUDY

The objective of study is very clear as the Indian stock market is largest stock market in the asian stock market where the trading of stocks takes place in the form of shares and securities. In this study as a researcher Im interested in learning that why the investors prefer more growth stocks or the value stocks which are listed in the Indian stock market.

While doing this research I would be able to know how the Indian stock market work fundamentally with the changing emotions of the investors. Further with this study it would be a clear understanding about the perception of the investors towards the value stocks or growth stocks.

As an investor it is interesting to know that in which kind of share i.e. growth stocks or value stocks the investor is investing his money. Likewise it is also interesting to understand that as an investor regular earnings are more important or by taking more risk the investor is expecting more return.

Through detail learning on this topic I would definitely gain more knowledge about stock market of India. My study on the stock market would definitely help to the researcher who are willing to go for the research on this dynamic market.

Purpose: The purpose is to investigate if an investor by purchasing a portfolio based on value stocks will outperform a portfolio based on growth stocks.

I have referred the research reports and thesis which are related to the stock markets but I found that there were no studies conducted on this topic and therefore there was a scope for

29

me to study that value stocks are better or growth stocks are better and investors prefer which type of stocks for the investment purpose.

30

METHODOLOGY

The quantitative research method is used when gathering information. Based on this multiple the sample is divided into two extreme groups of low and high P/E companies. This creates two portfolios, which symbolizes value and growth stocks.

Methodological Approach

What are you interested in as a researcher? Is it to understand how everything fits together or is it a specific target or event? Within these questions lie basic philosophical thoughts which every researcher has to reflect upon before he or she proceeds. The questions behind the issue are the deductive method and the inductive method. These are two platforms which a researcher can begin the investigation from.

The deductive method works by using statements which you then can deduct new hypothesis from, that is, working with an already known formula, assumption or theory and try to apply this to observations made in the real world and thereby explain the world through the pre understood theories. These hypotheses can then be proven right or wrong by using empirical studies. (Holme& Solvang, 1991) This thesis will tilt towards the deductive method since known formulas are being used, P/E, and then are applied to observations made on the stock market. The empirical findings can then be tested through statistical formulas in order to confirm or reject the previous conclusions.

The inductive method on the other hand works in the opposite way. It focuses on the observations made of the world and a specific occurrence and tries to work out a formula explaining the observations. The specific observation is made into a generalization about the world. To some extent this thesis will also use the inductive method since the sample of value and growth companies and the conclusions drawn from these observations will be accepted as a description of the whole population of companies, i.e. the random sample of value
31

companies will be used as a description for all value companies and the random sample of growth companies will be used as a description for all growth companies.

Listed companies on the Indian Stock Exchange will be divided into two groups: growth and value companies based on their P/E ratios. To get the statistical framework the Ive gathered historical stock information from the internet site of BSE India, explained further below. From the first two groups will be created, based on their P/E ratios. Form this two portfolios the conclusion will be generated.

32

LIMITATIONS OF THE STUDY

The data is collected from BSE 500 companies and the sample data is for only 100 companies and therefore the conclusion might be biased.

The samples of the companies which I have gathered are for 10 years. In these 10 years, few of the companies might have merged with other companies or might have been absorbed by the other companies.

Among all the investors there are few investors who do not have the knowledge of the value stocks and the growth stocks. They invest their money looking at the good future prospects of the companies and the current scenario of the companies.

The data collected is at the end of the financial year, which means study does not include the whole financial years data or the data between the two financial years.

33

ANALYSIS

This chapter of the report includes the quantitate and analytical detailed analysis of the study problem. As mentioned earlier in methodology; it includes Sample selection. Collection of data. Analysing and interpreting the data.

Sample Selection.
Samples are selected from the population by non-probability sampling technique using convenient sampling as population size is definite and this method will provide ease for sampling from the population.

Sample size is of 50 value stock companies and 50 growth stock companies samples from the population.

34

Collection of Data.

Data were collected using secondary data collection method which Includes
Data Sources:

The sources of data are as follows

The data has been collected from the bse website and includes 10 years; -market price -earning per share -price earning ratio, and -dividend declared in percentage. Lets first undergo in details of the market price, price earning ratio, earning per share and dividend declared in percentage of value stock companies and the growth stock companies. It is shown it table observation in this way

35

GROWTH STOCK
Market Price 2001 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Agro Dutch Industries Ltd. Agro Tech Foods Ltd. Alfa Laval (India) Ltd. Alstom Power India Ltd. Ambalal Sarabhai Enterprise Ltd. Apollo Hospitals Enterprises Ltd. Ashima Ltd. Associated Cement Cos. Ltd. Avon Organics Ltd. Balaji Distilleries Ltd. Birla Ericsson Opticaal Ltd. Cinevistaas Ltd. Computech International Ltd. Credit Rating Information Services Dalmia Cement (Bharat) Ltd. Eicher Motors Ltd. Eskay K'n'IT (India) Ltd. Essar Oil Ltd. Essar Shipping Ltd. Excell Industries Ltd. Ajanta Pharma Ltd. Aksh Optifibre Ltd. Alps Industries Ltd. Archies Greetings & Gifts Ltd. Arvind Mills Ltd. Assam Company Ltd. Atul Ltd. Ballarpur Industries Ltd. 23.5 45.95 125 31.25 4.75 110 32.25 119.8 7.25 83.65 27.5 42 11.65 123.3 130 21.3 15.25 5 6.4 55.4 89.9 85.05 99 70.5 8.2 29.55 11.75 47.1 2002 24.5 47.05 160 35 4.1 129.7 19.7 154 17.5 21.25 23.5 50 9.3 315.1 143.55 42.1 2.3 5.95 7.25 65 47.5 61.9 27.1 109.5 13.6 16 18 51.5 2003 7.25 25.5 240 45.75 3.5 94.5 12.5 137.5 30.5 3.95 8.45 18.5 4.2 255 140 70 2.25 4.1 5 65.6 22 14.75 19.55 52.8 18.5 9.55 29.4 36.55 2004 35.5 51 515 114.4 6.75 169.75 11.8 257.05 32.3 3.36 13.25 25.5 5.75 490 294.75 222 3.5 4.92 18.95 75.05 42 14.4 38.5 56.55 46.05 18.5 33.95 67.25 2005 38.7 68.25 738 182.45 10.5 347 22.8 362.5 39.9 9.98 24 33.5 8.75 675 387 302 5.3 35.2 38.4 60.05 58 40 99.5 72.75 115.95 46.5 78 96.5 2006 34.9 142 1133.95 372.5 13.79 511 11.19 789 45.5 9.69 30.6 24.3 6.03 1766 266 308.65 8 41.2 34.2 59.4 74 63.25 202 158 101 24.25 147.85 139 2007 25.15 75 850 389.95 12.01 483.3 8.85 726 14 8 17.6 20.5 7.3 2620 356 243.85 3.9 54 41.05 40.7 73 46 52.15 120.5 43.4 16.45 86 105.05 2008 26.9 125 810 587 27.1 511 7.01 835 22.95 37.85 18.4 8.5 5.7 3070 282 252.95 3.67 207.7 145 53 82 46 41.25 84 39.65 25.7 57.25 29 2009 8.59 94 846 280 8.45 402 2.5 585 14.5 20.7 7.79 3.94 2.78 2700 79.3 216.5 1.2 72.55 29.4 25.5 51.3 9.2 6.8 46.8 13.5 8.97 44 14.61 2010 23.75 247.3 1344.4 627.75 10.1 739.9 5.1 954.9 40.75 46.5 18 5.01 3.54 5249.7 253.9 647 3.02 139.2 74.6 58.8 183 27 9 95.5 34 20.5 87.1 26.25

SrNo

Company Name

36

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Bata India Ltd. Bhartiya International Ltd. Bhushan Steel & Strips Ltd. Binani Industries Ltd. Birla Corporation Ltd. Carborundum Universal Ltd. Ceat Ltd. Century Textiles & Industries Ltd. CESC Ltd. Chambal Fertilisers & Chemicals Ltd. Chemplast Sanmar Ltd. Cybertech Systems and Software Ltd. Deepak Fertilizers &Petrochemicals Dena Bank Elder Pharmaceuticals Ltd. Escorts Ltd. Eveready Industries India Ltd. Federal Bank Ltd. Finolex Industries Ltd. Fulford (India) Ltd. Gammon India Ltd. Goldiam International Ltd. AVERAGE 41.1 34.45 20 42 16.8 72 21 31.6 18.55 9.6 18.25 22 13 8.15 32 76.1 20.5 44 16.85 128.1 105.1 45 45.968 2002 41 30 16.25 24.95 17.9 83.1 25.35 33.8 11.5 12.5 24 19.5 17 7.95 30.15 63.45 11 105 28.5 130 66.3 36.9 49.161 2003 26 20.5 22.55 10.4 12.35 110 25.35 42.3 15.2 13.8 26.5 6.15 18.55 12.25 27.2 35.1 10.45 94.5 33.5 60.5 99.75 24 42.481 2004 49 32.85 61 17.85 62.5 217 36 96.15 103 18.9 26 4.1 33.25 29.5 133 63.1 23.8 372.5 51 284.4 440 45.05 97.3546

Market Price 2005 82 53.65 208 29.25 181 129.9 99 226.4 194 30.15 38.5 10.4 63.5 33 180 81.95 63.4 156.5 71.5 444.6 218 114.05 134.1046 2006 241 154.9 186 109.6 324.9 153.55 66.85 448 347 39.85 9 10.71 99.3 36.75 286 91.95 133.95 204 70 665 545.7 143.25 217.6902 2007 138.05 114.9 513.8 214.05 188.5 139.5 105.2 540 371 31 7 20.1 81 34.6 409 114 65.5 198 68.95 535 290 99.5 216.367 2008 142 56.3 699 121.85 199 109.95 112 733 412 50.95 8.61 15.8 100.95 51 375 86.85 38.9 218 66.5 549 391 54.15 240.6678 2009 104.3 21.7 398.3 30.8 177 79.5 36.85 221.25 213.55 42.6 4.7 8.6 56 32.85 220 35.5 17.95 139.9 28.25 402 58.5 12 158.76 2010 231 64.35 1775 96.9 399.9 173.45 150.25 511 384.9 61.5 9.21 18.1 114 78.9 360 148.7 60.45 267.25 65.95 960 236 45.6 343.7596

37

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Agro Dutch Industries Ltd. Agro Tech Foods Ltd. Alfa Laval (India) Ltd. Alstom Power India Ltd. Ambalal Sarabhai Enterprise Ltd. Apollo Hospitals Enterprises Ltd. Ashima Ltd. Associated Cement Cos. Ltd. Avon Organics Ltd. Balaji Distilleries Ltd. Birla Ericsson Opticaal Ltd. Cinevistaas Ltd. Computech International Ltd. Credit Rating Information Services Dalmia Cement (Bharat) Ltd. Eicher Motors Ltd. Eskay K'n'IT (India) Ltd. Essar Oil Ltd. Essar Shipping Ltd. Excell Industries Ltd. Ajanta Pharma Ltd. Aksh Optifibre Ltd. Alps Industries Ltd. Archies Greetings & Gifts Ltd. Arvind Mills Ltd. Assam Company Ltd. Atul Ltd. Ballarpur Industries Ltd. 2.25 0.17 5.61 0.59 -0.29 7.76 1.19 2.78 1.12 -16.88 4.27 -1.18 5.90 15.59 37.64 5.08 1.58 0.29 51.00 1.79 0.06 4.55 13.53 2.46 -9.57 -5.55 4.79 3.61 2002 -0.22 0.05 6.25 2.73 -1.07 3.41 -6.74 1.00 2.32 -1.04 2.63 -0.68 0.48 21.09 65.56 141.90 -0.44 0.53 2.56 6.47 0.18 -1.01 2.90 2.43 -4.43 -4.61 1.51 2.18 2003 1.35 -0.12 8.93 5.78 -4.07 6.96 -6.48 6.08 3.80 -5.83 -3.34 0.96 0.96 28.83 26.00 18.73 -3.06 0.12 2.10 1.60 0.33 -0.47 0.68 4.72 7.08 0.22 11.28 1.29 2004 2.20 0.02 9.17 2.72 0.66 9.40 -7.08 11.25 3.27 -7.26 0.23 1.72 0.58 28.67 33.16 23.23 -0.72 0.04 4.30 0.46 0.39 -0.40 -0.18 8.19 4.95 -9.90 1.18 1.98 2005 -1.17 -0.70 10.82 2.61 -1.77 12.12 -6.31 21.23 -1.11 -9.75 0.74 1.34 2.57 34.99 40.34 20.95 0.06 0.28 9.57 0.24 0.67 1.69 7.92 9.28 6.28 -9.97 6.07 2.71

EPS 2006 1.37 0.88 10.33 3.08 -0.83 12.53 0.46 12.69 2.94 -47.51 -0.21 -1.40 0.91 27.12 22.18 77.20 0.09 -0.89 4.69 0.28 1.11 0.73 7.36 10.32 5.98 -0.83 28.00 3.23 2007 2.89 1.03 11.07 16.63 -3.86 19.63 -1.28 19.42 -14.89 -1.99 -0.21 8.75 1.31 56.53 53.95 21.82 0.52 -0.56 3.14 1.23 1.96 0.11 2.27 12.03 5.54 -0.80 9.98 3.79 2008 0.23 1.11 12.19 11.42 -0.53 14.10 -9.36 19.06 -3.78 19.00 0.31 0.60 -4.01 174.28 69.70 19.49 0.29 -0.36 5.67 3.62 2.69 1.70 3.50 12.17 0.60 -0.53 7.99 1.34 2009 -10.16 1.34 13.28 20.61 1.42 17.19 -2.44 21.28 2.48 0.76 -1.92 0.15 -42.01 196.32 19.61 22.52 0.63 -4.30 1.75 0.40 3.74 -0.18 -4.40 -1.61 -4.63 -0.62 14.59 0.32 2010 0.65 1.68 13.69 24.99 -0.90 22.90 -1.59 20.93 3.96 -0.45 0.76 0.06 -44.50 255.52 16.92 60.36 0.35 0.25 1.46 7.30 5.96 -1.07 -1.52 13.03 2.18 -0.61 18.71 0.70

38

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Bata India Ltd. Bhartiya International Ltd. Bhushan Steel & Strips Ltd. Binani Industries Ltd. Birla Corporation Ltd. Carborundum Universal Ltd. Ceat Ltd. Century Textiles & Industries Ltd. CESC Ltd. Chambal Fertilisers & Chemicals Ltd. Chemplast Sanmar Ltd. Cybertech Systems and Software Ltd. Deepak Fertilizers &Petrochemicals Dena Bank Elder Pharmaceuticals Ltd. Escorts Ltd. Eveready Industries India Ltd. Federal Bank Ltd. Finolex Industries Ltd. Fulford (India) Ltd. Gammon India Ltd. Goldiam International Ltd. AVERAGE -0.59 20.84 13.77 6.67 -1.65 21.03 -0.39 5.80 -11.26 2.80 3.24 0.05 8.39 -1.29 6.69 14.60 2.13 28.11 1.96 0.62 23.52 2.65 5.76 2002 -0.87 14.31 7.84 1.05 2.15 35.16 2.43 5.28 -15.24 2.44 5.11 -0.11 6.51 4.44 4.56 1.13 8.16 8.91 2.76 15.31 22.96 8.78 7.78 2003 -1.28 10.36 13.60 -13.65 0.54 39.20 5.24 7.54 -8.48 2.20 4.45 -1.08 8.58 5.52 6.89 3.33 2.00 48.36 6.25 -2.03 15.06 11.11 5.56 2004 -2.85 9.03 22.31 -13.87 5.40 33.98 4.01 8.23 10.64 3.08 0.55 -2.09 9.06 11.15 13.56 -28.75 -0.07 62.65 7.25 29.75 23.42 14.14 6.86

EPS 2005 0.10 8.54 37.89 -15.16 11.28 8.59 -0.53 11.78 22.26 4.59 5.26 -0.26 9.04 2.82 13.60 -4.69 8.30 13.73 7.73 22.21 7.52 18.32 7.09 2006 0.69 7.08 37.90 5.02 16.33 8.21 0.09 11.72 22.84 4.88 0.77 1.90 9.04 2.54 21.60 2.24 13.04 32.71 3.41 46.66 13.43 9.07 9.06 2007 0.79 7.33 74.96 68.49 42.27 6.28 8.60 29.32 35.75 3.63 0.37 2.94 10.54 7.03 30.06 2.81 -1.85 34.20 5.63 28.88 5.12 5.28 12.77 2008 1.72 7.91 99.77 51.95 51.06 10.41 40.07 36.69 30.05 4.90 0.15 1.10 11.37 12.54 38.21 3.63 -2.66 32.42 5.74 39.42 9.93 -0.04 16.98 2009 1.16 2.83 99.20 37.09 42.02 6.40 -4.71 25.42 32.79 5.54 -1.39 2.59 16.86 14.74 26.86 2.04 2.67 29.26 -3.06 59.43 12.46 -5.24 13.42 2010 2.23 5.82 196.46 51.13 72.37 6.21 47.03 42.83 34.66 5.98 -1.60 1.66 19.51 17.83 29.30 10.45 19.56 27.16 10.67 34.26 16.93 2.05 21.48

39

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Agro Dutch Industries Ltd. Agro Tech Foods Ltd. Alfa Laval (India) Ltd. Alstom Power India Ltd. Ambalal Sarabhai Enterprise Ltd. Apollo Hospitals Enterprises Ltd. Ashima Ltd. Associated Cement Cos. Ltd. Avon Organics Ltd. Balaji Distilleries Ltd. Birla Ericsson Opticaal Ltd. Cinevistaas Ltd. Computech International Ltd. Credit Rating Information Services Dalmia Cement (Bharat) Ltd. Eicher Motors Ltd. Eskay K'n'IT (India) Ltd. Essar Oil Ltd. Essar Shipping Ltd. Excell Industries Ltd. Ajanta Pharma Ltd. Aksh Optifibre Ltd. Alps Industries Ltd. Archies Greetings & Gifts Ltd. Arvind Mills Ltd. Assam Company Ltd. Atul Ltd. Ballarpur Industries Ltd. 0 0 15 0 5 0 0 0 0 0 0 0 35 0 0 15 0 5 10 30 10 0 10 0 0 0 0 0 0 0 0 0 25 0 0 20 0 0 15 20 0 0 0 0 0 0 0 0 0 0 0 0 25 6.67 0 15 0 0 20 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20 35 7.5 25 0 0 15 25 0 15 2002 0 10 2003 0 0 2004 0 0

DIVIDEND 2005 0 0 0 0 0 0 0 10 0 0 0 0 0 0 0 0 0 0 0 0 15 0 7.5 20 10 0 20 25 2006 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 20 10 10 30 27.5 2007 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5 0 0 10 30 30 2008 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 55 5 0 0 10 30 35 2009 0 0 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 5 0 0 15 30 25 2010 0 0 12.5 0 0 0 0 0 10 0 0 0 0 0 0 0 0 0 0 0 15 25 5 20 0 20 40 25

40

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Bata India Ltd. Bhartiya International Ltd. Bhushan Steel & Strips Ltd. Binani Industries Ltd. Birla Corporation Ltd. Carborundum Universal Ltd. Ceat Ltd. Century Textiles & Industries Ltd. CESC Ltd. Chambal Fertilisers & Chemicals Ltd. Chemplast Sanmar Ltd. Cybertech Systems and Software Ltd. Deepak Fertilizers &Petrochemicals Dena Bank Elder Pharmaceuticals Ltd. Escorts Ltd. Eveready Industries India Ltd. Federal Bank Ltd. Finolex Industries Ltd. Fulford (India) Ltd. Gammon India Ltd. Goldiam International Ltd. AVERAGE 15 27 10 0 0 0 10 10 0 14 10 6.4 25 0 20 45 10 30 15 0 40 45 9.633 2002 7.5 20 5 0 0 0 10 15 0 15 40 0 20 0 20 10 0 35 30 15 10 30 8.18 2003 0 20 5 0 0 0 10 17.5 0 15 10 0 22 0 20 10 0 40 20 0 25 15 6.587 2004 0 15 10 0 10 10 10 20 0 16 0 0 22 0 25 0 0 70 30 20 25 40 9.1939

DIVIDEND 2005 0 15 25 0 15 15 0 25 25 18 0 0 30 0 25 0 0 25 30 25 33.33 25 8.7766 2006 0 15 25 0 22.5 30 0 30 25 18 0 0 30 0 25 0 40 35 30 30 24 20 10.24 2007 0 15 25 20 35 25 18 37.5 35 18 0 10 30 8 25 0 0 40 30 30 25 20 10.43 2008 20 15 25 25 40 26.67 40 45 40 18 0 10 35 10 25 0 0 40 30 40 25 0 12.893 2009 25 10 25 21 45 15 0 45 40 18 0 10 40 12 25 10 0 50 10 20 30 0 11.82 2010 30 10 25 35 60 15 40 55 40 19 0 10 45 20 30 15 10 50 30 45 30 10 15.93

41

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Agro Dutch Industries Ltd. Agro Tech Foods Ltd. Alfa Laval (India) Ltd. Alstom Power India Ltd. Ambalal Sarabhai Enterprise Ltd. Apollo Hospitals Enterprises Ltd. Ashima Ltd. Associated Cement Cos. Ltd. Avon Organics Ltd. Balaji Distilleries Ltd. Birla Ericsson Opticaal Ltd. Cinevistaas Ltd. Computech International Ltd. Credit Rating Information Services Dalmia Cement (Bharat) Ltd. Eicher Motors Ltd. Eskay K'n'IT (India) Ltd. Essar Oil Ltd. Essar Shipping Ltd. Excell Industries Ltd. Ajanta Pharma Ltd. Aksh Optifibre Ltd. Alps Industries Ltd. Archies Greetings & Gifts Ltd. Arvind Mills Ltd. Assam Company Ltd. Atul Ltd. Ballarpur Industries Ltd. 10.44 270.29 22.28 52.97 -16.38 14.18 27.10 43.09 6.47 -4.95 6.44 -35.47 1.97 7.91 3.45 4.19 9.65 17.24 0.13 30.95 1498.33 18.69 7.32 28.66 -0.86 -5.32 2.45 13.05 2002 113.16 941.00 25.60 12.82 -3.83 38.04 -2.92 154.00 7.54 -20.53 8.94 -73.31 19.38 14.94 2.19 0.30 -5.23 11.23 2.83 10.05 263.89 -61.29 9.34 45.06 -3.07 -3.47 11.92 23.62 2003 5.37 212.50 26.88 7.92 -0.86 13.58 -1.93 22.62 8.03 -0.68 -2.53 19.27 4.38 8.84 5.38 3.74 -0.74 34.17 2.38 41.00 66.67 -31.38 28.75 11.19 2.61 43.41 2.61 28.33

PRICE EARNING RATIO 2004 16.14 2550.00 56.16 42.06 10.23 18.06 -1.67 22.84 9.88 -0.46 57.61 14.83 9.91 17.09 8.89 9.56 -4.86 123.00 4.41 163.15 107.69 -36.00 -208.65 6.90 9.30 -1.87 28.77 33.96 2005 -33.08 -97.50 68.21 69.90 -5.93 28.63 -3.61 17.07 -35.95 -1.02 32.43 25.00 3.40 19.29 9.59 14.42 88.33 127.17 4.01 249.83 86.57 23.67 12.56 7.84 18.46 -4.66 12.85 35.61 2006 25.47 161.36 109.77 120.94 -16.61 40.78 24.33 62.17 15.48 -0.20 145.71 -17.36 6.63 65.12 11.99 4.00 88.89 -46.29 7.29 212.14 66.67 86.64 27.45 15.31 16.89 -29.22 5.28 43.03 2007 8.70 72.82 76.78 23.45 -3.11 24.62 -6.91 37.38 -0.94 -4.02 -83.81 2.34 5.57 46.35 6.60 11.18 7.50 -96.43 13.07 33.09 37.24 418.18 22.97 10.02 7.83 -20.56 8.62 27.72 2008 116.96 112.61 66.45 51.40 -51.13 36.24 -0.75 43.81 -6.07 1.99 59.35 14.17 -1.42 17.62 4.05 12.98 12.66 576.94 25.57 14.64 30.48 27.06 11.79 6.90 66.08 -48.49 7.17 21.64 2009 -0.85 70.15 63.70 13.59 5.95 23.39 -1.02 27.49 5.85 27.24 -4.06 26.27 -0.07 13.75 4.04 9.61 1.90 16.87 16.80 63.75 13.72 51.11 -1.55 29.07 -2.92 14.47 3.02 45.66 2010 36.54 147.20 98.20 25.12 -11.22 32.31 -3.21 45.62 10.29 103.33 23.68 83.50 -0.08 20.55 15.01 10.72 8.63 556.80 51.10 8.05 30.70 -25.23 -5.93 7.33 15.60 -33.61 4.66 37.50

42

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Bata India Ltd. Bhartiya International Ltd. Bhushan Steel & Strips Ltd. Binani Industries Ltd. Birla Corporation Ltd. Carborundum Universal Ltd. Ceat Ltd. Century Textiles & Industries Ltd. CESC Ltd. Chambal Fertilisers & Chemicals Ltd. Chemplast Sanmar Ltd. Cybertech Systems and Software Ltd. Deepak Fertilizers &Petrochemicals Dena Bank Elder Pharmaceuticals Ltd. Escorts Ltd. Eveready Industries India Ltd. Federal Bank Ltd. Finolex Industries Ltd. Fulford (India) Ltd. Gammon India Ltd. Goldiam International Ltd. AVERAGE -69.66 1.65 1.45 6.30 -10.18 3.42 -53.75 5.45 -1.65 3.43 5.63 473.78 1.55 -6.33 4.78 5.21 9.62 1.57 8.60 206.61 4.47 16.98 53.06 2002 -47.13 2.10 2.07 23.76 8.33 2.36 10.43 6.40 -0.75 5.12 4.70 -169.95 2.61 1.79 6.61 56.15 1.35 11.78 10.33 8.49 2.89 4.20 25.39 2003 20.31 1.98 1.66 -0.76 22.87 2.81 4.84 5.61 -1.79 6.27 5.96 -5.69 2.16 2.22 3.95 10.54 5.23 1.95 5.36 29.80 6.62 2.16 3.41 2004 -17.19 3.64 2.73 -1.29 11.57 6.39 8.98 11.68 9.68 6.14 47.27 -1.96 3.67 2.65 9.81 -2.19 -340.00 5.95 7.03 9.56 18.79 3.19 57.46

PRICE EARNING RATIO 2005 820.00 6.28 5.49 -1.93 16.05 15.12 -186.79 19.22 8.72 6.57 7.32 -40.00 7.02 11.70 13.24 -17.47 7.64 11.40 9.25 20.02 28.99 6.23 30.94 2006 349.28 21.88 4.91 21.83 19.90 18.70 742.78 38.23 15.19 8.17 11.69 5.64 10.98 14.47 13.24 41.05 10.27 6.24 20.53 14.25 40.63 15.79 48.16 2007 174.75 15.68 6.85 3.13 4.46 22.21 12.23 18.42 10.38 8.54 18.92 6.84 7.69 4.92 13.61 40.57 -35.41 5.79 12.25 18.52 56.64 18.84 22.64 2008 82.56 7.12 7.01 2.35 3.90 10.56 2.80 19.98 13.71 10.40 57.40 14.36 8.88 4.07 9.81 23.93 -14.62 6.72 11.59 13.93 39.38 -1353.75 -18.82 2009 89.91 7.67 4.02 0.83 4.21 12.42 -7.82 8.70 6.51 7.69 -3.38 3.32 3.32 2.23 8.19 17.40 6.72 4.78 -9.23 6.76 4.70 -2.29 9.81 2010 103.59 11.06 9.03 1.90 5.53 27.93 3.19 11.93 11.11 10.28 -5.76 10.90 5.84 4.43 12.29 14.23 3.09 9.84 6.18 28.02 13.94 22.24 28.15

43

VALUE STOCK

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Adani Exports Ltd. Apollo Tyres Ltd. Ashok Leyland Ltd. Asian Paints (India) Ltd. AstraZeneca Pharma India Ltd. Atlas Copco (India) Ltd. Automotive Axles Ltd. Bajaj Auto Finance Ltd. Bajaj Hindustan Ltd. Balaji Telefilms Ltd. Bank Of Baroda Bank of India Bannari Amman Sugars Ltd. BASF India Ltd. Berger Paints India Ltd. Bharat Electronics Ltd. Bharat Forge Ltd. Bharat Heavy Electricals Ltd. Bharat Petroleum Corpn. Ltd. Cadila Healthcare Ltd. Castrol India Ltd. Century Enka Ltd. Cipla Ltd. CMC Ltd. Colgate-Palmolive (India) Ltd. Colour Chem Ltd. Container Corporation Of India Ltd. Corporation Bank 201.3 48.2 45.1 246 385 79.25 41.5 26.6 59.85 135.35 56.5 10.4 85.1 71 87.6 48 77 139.9 177 127 225.05 50.1 964 217.55 152.1 55 145 105.1 2002 172 79.35 80.5 331 363 115 73 48 52.4 413 48.7 25.9 150 100 69.5 128.4 110 172.5 333 130 187 52.3 1026.95 565 144.85 120.1 252.9 135.5 2003 124.05 123.8 98.1 325.5 337.05 289 75 48.5 66 52 86 37.75 101 92 69 182 241 223.5 222 123.5 188.45 82.1 705 496 122.5 201.5 216.5 133 2004 407 248 256.85 300 770 456 193 77.9 392.25 85 243.5 58.9 294 120.15 107.6 504.75 739 604.3 487.1 464.95 197.9 117 1165 505 132.5 249 715.05 281.55

Market Price 2005 61 285 21.1 395 1500 690 372 167 161 90 219.05 103.95 552.7 196 42 668 1396 783 354.05 474.7 192.65 132 257 630 179.5 255.1 860 369 2006 60.75 291 40.7 635 3100 1660 703 540.95 507 189 232 133 1405 220 86.1 1332.1 448 2277 438.9 684.7 251 175 665 541 432.25 345 1410 381.05 2007 207 275 37.8 759.2 595 710 604.9 417 194 126 209.4 159.8 661.25 190 37.2 1477.8 309.2 2275 300 325 210.15 123.55 234.7 1200 327.55 324 1925 275.05 2008 624 41.9 35.8 1250 515 986.95 393.4 333 189.1 196.5 282 256.95 810 197.9 36.8 1124 275 2070 410.95 253.7 244 109 220 822 385.8 246 1749.95 280 2009 270 18.3 18.4 809 577.9 455 85.95 68 48.95 30.2 236 221 709 181 34.85 898 97.6 1514 380 275 327.7 65 216 332.7 479.9 199.25 715 181.5 2010 471.1 71.8 56.25 2047 878.5 1071 401 323.7 136 51.45 643.15 343.75 914.9 353 58.6 2204 256.9 2398 518.7 833 696 276 338.65 1348 678.05 545 1324 481.1

44

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Cummins India Ltd. Dabur India Ltd. Dr. Reddy's Laboratories Ltd. Dredging Corporation of India Ltd. Duphar-Interfran Ltd. E.I.D. Parry (India) Ltd. EIH Ltd. Electrosteel Castings Ltd. Elgi Equipments Ltd. Engineers India Ltd. Essel Propack Ltd. Exide Industries Ltd. FDC Ltd. Federal Bank Ltd. Finolex Cables Ltd. Gail (India) Ltd. Gillette India Ltd. GlaxoSmithkline Consumer Healthcare Ltd. GlaxoSmithKline Pharmaceuticals Ltd. Glenmark Pharmaceuticals Ltd. Godfrey Phillips India Ltd. Godrej Industries Ltd. AVERAGE 54.1 58 1208 68.9 248.25 57.95 204 100 11.25 100 205.1 69.6 206 44 150 45.5 360 366 416 115 384.75 56.05 171.8 2002 54.9 54.2 1101.5 229.8 130 71.6 214 184.15 15.05 264.9 278 64 202 105 141.95 78 326 375.05 338 235 390 16.1 206.981 2003 51.5 36.5 916.8 257.95 117.05 78.95 155.55 216.75 16.95 247.25 127 74 27.25 94.5 79 75 277.85 215 293 207.5 300 14.1 178.825 2004 100.45 76.5 976 513 191.25 200.1 275 299 53.2 323.05 211.7 131.8 111 372.5 120.6 214.2 528 250.2 605 145 369 46 325.72

Market Price 2005 112.95 112.9 738.65 475 197.6 534 309 426 42.75 326 313.7 142.8 45.5 156.5 178 214.5 680 350 719 284 764.7 111 372.827 2006 241 127 1435 615 305 287.9 764 375 76.05 859 458 260.05 49.7 204 356 322 915 674.95 1464 315 1461 608.2 627.15 2007 260 93.5 720 474 220 127.9 93 379 50.55 435 68.95 43.15 31.5 198 83 261.8 772 522 1105 595 1135 158 446.338 2008 325 110 594.95 657 190 175 140.9 46 50 670 37.25 67 28.75 218 73.5 429.9 891 588 1050 493.95 1270 262.5 454.168 2009 187 99.9 497 229.05 107.25 140.65 87.05 15.25 33.8 515.5 12.7 40.85 34.5 139.9 19.55 246 666.3 685 1090 153 725.2 53.05 304.474 2010 505.65 158.5 1285 612 250.2 338.05 119.15 53.5 93.25 2220.1 43.15 125 80.15 267.25 52 412 1414.3 1514 1782.1 267.85 1965 141.65 668.37

45

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Adani Exports Ltd. Apollo Tyres Ltd. Ashok Leyland Ltd. Asian Paints (India) Ltd. AstraZeneca Pharma India Ltd. Atlas Copco (India) Ltd. Automotive Axles Ltd. Bajaj Auto Finance Ltd. Bajaj Hindustan Ltd. Balaji Telefilms Ltd. Bank Of Baroda Bank of India Bannari Amman Sugars Ltd. BASF India Ltd. Berger Paints India Ltd. Bharat Electronics Ltd. Bharat Forge Ltd. Bharat Heavy Electricals Ltd. Bharat Petroleum Corpn. Ltd. Cadila Healthcare Ltd. Castrol India Ltd. Century Enka Ltd. Cipla Ltd. CMC Ltd. Colgate-Palmolive (India) Ltd. Colour Chem Ltd. Container Corporation Of India Ltd. Corporation Bank 11.11 2.51 7.71 16.57 4.5452 4.09 2.41 11.44 9.48 4.23 9.28 3.95 18.64 9.29 10.72 18.21 8.29 12.5 27.34 10.93 7.92 23.48 29.75 16.15 4.6 7.45 32.83 21.82 2002 4.36 5.95 1.56 7.92 1.87 0.59 3.08 3.91 2.52 6.43 3.33 2.12 6.14 3.02 4.12 19.56 5.5 18.4 28.33 14.68 7.2 26.17 38.21 30.12 4.84 12.51 25.56 31.08 2003 8.96 33.05 10.11 22.12 5.47 6.58 3.54 17.15 1.88 11.14 26.11 17.42 13.6 11.83 2.5156 34.36 20.71 21.13 41.67 12.95 11.56 20.28 41.27 24.46 6.52 12.96 42.66 29 2004 9.89 21.11 16.28 15.41 6.29 9.02 8.04 23.39 11.87 10.75 32.97 20.69 34.73 12.09 0.53879 37.87 32.28 25.96 56.49 22.75 48.68 19.9 52.32 31.67 7.94 28.28 53.09 35.15

EPS 2005 0.9 17.64 2.28 18.53 11.55 10.75 7.04 33.93 2.45 7.61 23.08 6.98 45.71 13.47 2.62 55.79 39.64 41.01 32.19 20.93 16 18.35 13.6606 15.22 8.33 13.38 67.64 28.04 2006 1.09 20.39 2.74 19.47 15.37 15.66 6.71 12.12 5.03 9.15 27.1 14.39 80.69 16.11 3.53 72.88 9.5 68.6 4.33 26.26 10.4 6.45 20.01 29.12 10.12 15.15 77.34 30.99 2007 2.78 28.02 3.38 29.3 3.95 7.97 9.52 19.76 0.26 12.2 30.99 22.73 94.64 17.75 2.75 90.57 13.01 98.66 59.18 16.3 13.44 8.34 8.52 42.31 11.78 15.85 106.25 37.38 2008 3.79 5.73 3.53 42.66 4.46 11.06 9.52 5.68 3.04 14.66 42.51 39.82 37.01 20.38 2.92 104.7 13.44 58.41 48.94 18.8 23.56 6.69 9.02 58.23 17.04 24.36 57.87 51.24 2009 5.18 2.76 1.43 41.42 2.91 6.41 -0.03 9.27 5.76 0.07 65.45 58.79 103.05 17.24 2.6 94.19 2.62 63.64 17.53 19.48 24.68 8.29 9.99 69.68 21.31 38.19 60.87 62.24 2010 7.73 8.23 3.18 87.12 1.05 11.97 8.32 24.43 1.66 0.96 87.28 34.03 50.54 24.82 3.76 92.17 -3.07 88.39 45.15 36.87 18.96 49.61 13.69 85.53 31.12 50.3 60.52 81.58

46

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Cummins India Ltd. Dabur India Ltd. Dr. Reddy's Laboratories Ltd. Dredging Corporation of India Ltd. Duphar-Interfran Ltd. E.I.D. Parry (India) Ltd. EIH Ltd. Electrosteel Castings Ltd. Elgi Equipments Ltd. Engineers India Ltd. Essel Propack Ltd. Exide Industries Ltd. FDC Ltd. Federal Bank Ltd. Finolex Cables Ltd. Gail (India) Ltd. Gillette India Ltd. GlaxoSmithkline Consumer Healthcare Ltd. GlaxoSmithKline Pharmaceuticals Ltd. Glenmark Pharmaceuticals Ltd. Godfrey Phillips India Ltd. Godrej Industries Ltd. AVERAGE 5.5 2.73 -2.186 36.39 24.6 24.72 15.94 39.1 0.95 22.64 17.87 11.1 25.21 28.11 21.1 13.66 4.68 25.16 6.8 16.93 45.31 6.84 14.808 2002 4.6 1.17 1.892 39.7 30.52 32.16 0.066 52.25 1.4 4.05 11.87 13.6 33.04 8.91 9.76 13.85 -3.16 24.92 12.4 31.6 38.29 1.8 13.6 2003 4.76 2.58 -1.2352 39.7 11.23 15.03 1.22 60.19 1.87 11.95 9.49 14.7 4.13 48.36 7.83 19 10.04 12 18.8 31.65 49.22 5.87 17.788 2004 5.52 3.54 1.1 58.52 27.37 24.22 3.69 45.5 3.08 14.28 13.27 10.2 3.46 62.65 9.66 22.21 24.16 17.2 26.8 7.49 50.04 13.5 22.6582

EPS 2005 6.93 5.17 1.46 39.77 21.07 58.41 5.58 54.77 3.41 20.06 13.11 10.3 2.85 13.73 10.06 23.02 20.72 23.24 21.6 5.29 61.16 15.58 20.2402 2006 8.87 3.3 0.26 61.26 -5.7 12.98 36.04 41.53 2.81 24.79 2.62 13.4 3.63 32.71 16.47 27.32 18.36 32.76 48 5.54 57.82 14.62 21.802 2007 12.22 2.93 4.28 55.91 20.77 14.28 5.1 51.13 3.37 25.46 2.38 2.07 3.36 34.2 4.5 28.22 35.2 40.28 52.4 11.26 84.73 2.67 26.086 2008 14.18 3.66 4.35 55.29 11.33 -1.86 5.53 2.25 6.3 34.65 1.74 3.3 3.43 32.42 5.81 30.76 34.8 53.8 57.2 15.9 107.92 3.6 24.509 2009 21.9 4.32 1.9 16.49 14.88 77.8 0.1428 4.94 6.34 61.35 2.01 3.55 4.37 29.26 -2.32 22.1 34.92 79.8 67.6 8.72 104.73 0.57 27.608 2010 22.42 4.78 -0.63 25.02 33.36 23.81 1.46 6.45 7.07 12.93 2.24 6.69 7.97 27.16 3.77 24.75 52.4 91.44 76 4.93 113.84 2.54 31.126

47

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Adani Exports Ltd. Apollo Tyres Ltd. Ashok Leyland Ltd. Asian Paints (India) Ltd. AstraZeneca Pharma India Ltd. Atlas Copco (India) Ltd. Automotive Axles Ltd. Bajaj Auto Finance Ltd. Bajaj Hindustan Ltd. Balaji Telefilms Ltd. Bank Of Baroda Bank of India Bannari Amman Sugars Ltd. BASF India Ltd. Berger Paints India Ltd. Bharat Electronics Ltd. Bharat Forge Ltd. Bharat Heavy Electricals Ltd. Bharat Petroleum Corpn. Ltd. Cadila Healthcare Ltd. Castrol India Ltd. Century Enka Ltd. Cipla Ltd. CMC Ltd. Colgate-Palmolive (India) Ltd. Colour Chem Ltd. Container Corporation Of India Ltd. Corporation Bank 100 40 40 70 40 37.5 35 30 25 15 40 15 27 50 50 40 30 30 75 55 75 50 45 35 82.5 40 67 40 2002 100 45 45 90 40 40 60 45 25 50 40 25 33 50 50 50 35 40 110 65 75 60 70 40 42.5 50 100 40 2003 60 45 50 110 37 340 75 45 30 150 60 30 30 50 60 70 60 40 150 90 165 55 100 40 42.5 60 110 45

DIVIDEND IN PERCENTAGE 2004 45 45 75 85 39 50 100 60 40 150 65 30 36 60 65 100 100 60 175 90 82.5 60 150 55 60 60 125 60 2005 45 45 100 95 500 50 125 75 50 800 50 20 45 60 70 112 125 80 125 100 82.5 60 175 45 70 60 145 65 2006 40 45 120 125 200 60 130 40 60 150 50 30 70 70 100 146 150 145 25 120 82.5 60 100 50 75 110 180 70 2007 40 45 150 130 600 40 125 30 60 175 60 35 70 70 50 180 175 245 160 150 90 60 100 80 95 240 220 90 2008 30 50 150 170 750 40 65 10 60 175 80 40 70 70 25 207 175 152.5 40 350 140 50 100 110 1300 100 185 105 2009 30 45 100 175 750 40 27 20 70 15 90 80 100 70 30 187 50 170 70 350 150 50 100 150 1500 190 140 125 2010 30 75 150 270 500 50 85 60 70 15 150 70 100 80 55 192 50 233 140 400 250 60 100 200 2000 250 140 165

48

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Cummins India Ltd. Dabur India Ltd. Dr. Reddy's Laboratories Ltd. Dredging Corporation of India Ltd. Duphar-Interfran Ltd. E.I.D. Parry (India) Ltd. EIH Ltd. Electrosteel Castings Ltd. Elgi Equipments Ltd. Engineers India Ltd. Essel Propack Ltd. Exide Industries Ltd. FDC Ltd. Federal Bank Ltd. Finolex Cables Ltd. Gail (India) Ltd. Gillette India Ltd. GlaxoSmithkline Consumer Healthcare Ltd. GlaxoSmithKline Pharmaceuticals Ltd. Glenmark Pharmaceuticals Ltd. Godfrey Phillips India Ltd. Godrej Industries Ltd. AVERAGE 40 160 30 50.37 65 100 40 50 25 70 60 75 25 67 54 40 65 30 75 40 15 63 2002 75 50 150 75 60 70 60 100 75 27.5 73.33 35 20 35 75 45 22.5 70 55 60 185 10 58.88 2003 200 140 100 100 60 60 30 100 90 40 65 40 200 40 30 70 27.5 70 70 65 170 33.33 80.007

DIVIDEND IN PERCENTAGE 2004 200 200 100 120 60 75 30 100 120 65 80 40 225 70 40 80 85 70 100 65 190 50 85.75 2005 200 250 100 120 25 125 40 125 100 75 90 25 75 25 45 80 85 70 240 35 220 66.67 111.8 2006 200 250 100 150 25 225 100 125 100 80 220 30 80 35 60 100 100 80 280 35 225 83.33 105.7 2007 200 175 75 150 50 295 70 125 100 95 100 35 100 40 70 100 116.7 100 310 40 250 100 125.2 2008 230 150 75 150 100 25 90 125 120 110 60 40 100 40 75 100 125 120 360 70 250 125 148.79 2009 450 175 125 50 150 1000 60 125 130 185 15 60 121.75 50 10 70 125 150 400 40 250 125 174.82 2010 600 200 225 30 150 500 60 125 200 1060 16 100 175 50 30 75 150 180 300 40 250 150 212.12

49

SrNo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Name 2001 Adani Exports Ltd. Apollo Tyres Ltd. Ashok Leyland Ltd. Asian Paints (India) Ltd. AstraZeneca Pharma India Ltd. Atlas Copco (India) Ltd. Automotive Axles Ltd. Bajaj Auto Finance Ltd. Bajaj Hindustan Ltd. Balaji Telefilms Ltd. Bank Of Baroda Bank of India Bannari Amman Sugars Ltd. BASF India Ltd. Berger Paints India Ltd. Bharat Electronics Ltd. Bharat Forge Ltd. Bharat Heavy Electricals Ltd. Bharat Petroleum Corpn. Ltd. Cadila Healthcare Ltd. Castrol India Ltd. Century Enka Ltd. Cipla Ltd. CMC Ltd. Colgate-Palmolive (India) Ltd. Colour Chem Ltd. Container Corporation Of India Ltd. Corporation Bank 18.12 19.20 5.85 14.85 84.70 19.38 17.22 2.33 6.31 32.00 6.09 2.63 4.57 7.64 8.17 2.64 9.29 11.19 6.47 11.62 28.42 2.13 32.40 13.47 33.07 7.38 4.42 4.82 2002 39.45 13.34 51.60 41.79 194.12 194.92 23.70 12.28 20.79 64.23 14.62 12.22 24.43 33.11 16.87 6.56 20.00 9.38 11.75 8.86 25.97 2.00 26.88 18.76 29.93 9.60 9.89 4.36 2003 13.84 3.75 9.70 14.72 61.62 43.92 21.19 2.83 35.11 4.67 3.29 2.17 7.43 7.78 27.43 5.30 11.64 10.58 5.33 9.54 16.30 4.05 17.08 20.28 18.79 15.55 5.08 4.59

PRICE EARNING RATIO 2004 41.15 11.75 15.78 19.47 122.42 50.55 24.00 3.33 33.05 7.91 7.39 2.85 8.47 9.94 199.71 13.33 22.89 23.28 8.62 20.44 4.07 5.88 22.27 15.95 16.69 8.80 13.47 8.01 2005 67.78 16.16 9.25 21.32 129.87 64.19 52.84 4.92 65.71 11.83 9.49 14.89 12.09 14.55 16.03 11.97 35.22 19.09 11.00 22.68 12.04 7.19 18.81 41.39 21.55 19.07 12.71 13.16 2006 55.73 14.27 14.85 32.61 201.69 106.00 104.77 44.63 100.80 20.66 8.56 9.24 17.41 13.66 24.39 18.28 47.16 33.19 101.36 26.07 24.13 27.13 33.23 18.58 42.71 22.77 18.23 12.30 2007 74.46 9.81 11.18 25.91 150.63 89.08 63.54 21.10 746.15 10.33 6.76 7.03 6.99 10.70 13.53 16.32 23.77 23.06 5.07 19.94 15.64 14.81 27.55 28.36 27.81 20.44 18.12 7.36 2008 164.64 7.31 10.14 29.30 115.47 89.24 41.32 58.63 62.20 13.40 6.63 6.45 21.89 9.71 12.60 10.74 20.46 35.44 8.40 13.49 10.36 16.29 24.39 14.12 22.64 10.10 30.24 5.46 2009 52.12 6.63 12.87 19.53 198.59 70.98 2865.00 7.34 8.50 431.43 3.61 3.76 6.88 10.50 13.40 9.53 37.25 23.79 21.68 14.12 13.28 7.84 21.62 4.77 22.52 5.22 11.75 2.92 2010 60.94 8.72 17.69 23.50 836.67 89.47 48.20 13.25 81.93 53.59 7.37 10.10 18.10 14.22 15.59 23.91 -83.68 27.13 11.49 22.59 36.71 5.56 24.74 15.76 21.79 10.83 21.88 5.90

50

SrNo 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Name 2001 Cummins India Ltd. Dabur India Ltd. Dr. Reddy's Laboratories Ltd. Dredging Corporation of India Ltd. Duphar-Interfran Ltd. E.I.D. Parry (India) Ltd. EIH Ltd. Electrosteel Castings Ltd. Elgi Equipments Ltd. Engineers India Ltd. Essel Propack Ltd. Exide Industries Ltd. FDC Ltd. Federal Bank Ltd. Finolex Cables Ltd. Gail (India) Ltd. Gillette India Ltd. GlaxoSmithkline Consumer Healthcare Ltd. GlaxoSmithKline Pharmaceuticals Ltd. Glenmark Pharmaceuticals Ltd. Godfrey Phillips India Ltd. Godrej Industries Ltd. AVERAGE 9.84 21.25 -552.51 1.89 10.09 2.34 12.80 2.56 11.84 4.42 11.48 6.27 8.17 1.57 7.11 3.33 76.92 14.55 61.18 6.79 8.49 8.19 3.10 2002 11.93 46.32 -582.14 5.79 4.26 2.23 3240.31 3.52 10.75 65.41 23.42 4.71 6.11 11.78 14.54 5.63 -103.16 15.05 27.26 7.44 10.19 8.94 75.63 2003 10.82 14.15 -742.21 6.50 10.42 5.25 127.50 3.60 9.06 20.69 13.38 5.03 6.60 1.95 10.09 3.95 27.67 17.92 15.59 6.56 6.10 2.40 -0.27 2004 18.20 21.61 887.27 8.77 6.99 8.26 74.53 6.57 17.27 22.62 15.95 12.92 32.08 5.95 12.48 9.64 21.85 14.55 22.57 19.36 7.37 3.41 39.83

PRICE EARNING RATIO 2005 16.30 21.84 505.92 11.94 9.38 9.14 55.38 7.78 12.54 16.25 23.93 13.86 15.96 11.40 17.69 9.32 32.82 15.06 33.29 53.69 12.50 7.12 33.40 2006 27.17 38.48 5519.23 10.04 -53.51 22.18 21.20 9.03 27.06 34.65 174.81 19.41 13.69 6.24 21.62 11.79 49.84 20.60 30.50 56.86 25.27 41.60 146.44 2007 21.28 31.91 168.22 8.48 10.59 8.96 18.24 7.41 15.00 17.09 28.97 20.85 9.38 5.79 18.44 9.28 21.93 12.96 21.09 52.84 13.40 59.18 41.53 2008 22.92 30.05 136.77 11.88 16.77 -94.09 25.48 20.44 7.94 19.34 21.41 20.30 8.38 6.72 12.65 13.98 25.60 10.93 18.36 31.07 11.77 72.92 26.45 2009 8.54 23.13 261.58 13.89 7.21 1.81 609.64 3.09 5.33 8.40 6.32 11.51 7.89 4.78 -8.43 11.13 19.08 8.58 16.12 17.55 6.92 93.07 -13.71 2010 22.55 33.16 -2039.68 24.46 7.50 14.20 81.61 8.29 13.19 171.70 19.26 18.68 10.06 9.84 13.79 16.65 26.99 16.56 23.45 54.33 17.26 55.77 1.27

51

Analysis and interpretation

YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

MARKET PRICE VALUE GROWTH 171.8 45.968 206.981 49.161 178.825 42.481 325.716 97.3546 372.827 134.1046 627.147 217.6902 446.338 216.3672 454.168 240.6678 304.474 158.7596 668.368 343.7596

EPS P/E RATIO VALUE GROWTH VALUE GROWTH 14.80798 5.76 3.10 53.06 13.59968 7.78 75.63 25.39 17.78781 5.56 -0.27 3.41 22.65818 6.86 39.83 57.46 20.24021 7.09 33.40 30.94 21.8018 9.06 146.44 48.16 26.0862 12.77 41.53 22.64 24.5086 16.98 26.45 -18.82 27.60786 13.42 -13.71 9.81 31.126 21.48 1.27 28.15

DIVIDEND VALUE GROWTH 50.36735 9.633333 58.8766 8.177083 80.0066 6.586875 85.75 9.193878 111.8234 8.7766 105.7366 10.24 125.2334 10.43 148.79 12.8934 174.815 11.82 212.12 15.93

52

HYPOTHESIS TEST From the results of the analysis, test is carried out about the capital adequacy ratio of tested banks. Formula One Way ANNOVA is calculated using the formula, MS Between (Estimate of population variance based on between samples variance) F= -----------------------------------------------------------------------------------Ms within (Estimate of population variance based on within samples variance) Where, Degree of freedom:V1 = (k 1) V2 = (n 1) V1 = Degree of freedom for greater variance. V2 = Degree of freedom for Smaller variance. n = total number of items in all the samples i.e., n1 + n2 + + nk k = number of samples. Level of significance 5% Note: How to calculate One Way ANOVA Technique in detail, is given in Annexure 1.

53

Calculation: Calculation for the F- test is as follow, Table 1: Raw Data

F TEST
The test is carried out from the raw data on four factor i.e. market price, price earning ratio, earning per share, and dividend, results are as follows.. 1. Market price
Anova: Single Factor- MP SUMMARY Groups VALUE GROWTH Count Sum Average 10 3756.644 375.6644 10 1546.314 154.6314 Variance 30712 10020.88

ANOVA Source of Variation Between Groups Within Groups Total

SS 244278 366595.9 610873.9

df

MS 1 244278 18 20366.44 19

F P-value F crit 11.99415 0.002774 4.413873

Result of ANOVA: FCal.= 11.99415 FTab.= 4.413873 FCal.>FTab.

Findings From The Study: By dividing the mean square of Between Groups by the mean square of Within Groups, we obtain an F-value of 11.99415 which is greater than the cut-off value of 4.413873 for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to reject the hypothesis thatthere is no statistical significant difference between average market price of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor "market price" has difference value stock and growth.

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Anova: Single Factor- EPS SUMMARY Groups VALUE GROWTH Count Sum Average 10 220.2243 22.02243 10 106.759 10.6759 Variance 31.25772 28.57956

ANOVA Source of Variation Between Groups Within Groups Total

SS 643.7183 538.5356 1182.254

df

MS 1 643.7183 18 29.91864 19

F P-value F crit 21.51563 0.000204 4.413873

Result of ANOVA: FCal.= 21.51563 FTab.= 4.413873 FCal.>FTab.

Findings From The Study: By dividing the mean square of Between Groups by the mean square of Within Groups, we obtain an F-value of 21.51563 which is greater than the cut-off value of 4.413873 for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to reject the hypothesis thatthere is no statistical significant difference between average earning price per share of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor "earning price per share " has difference in value stock and growth stock.

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Anova: Single Factor- P/E Ratio SUMMARY Groups VALUE GROWTH Count Sum Average 10 353.6895 35.36895 10 260.1975 26.01975 Variance 2220.324 559.5028

ANOVA Source of Variation Between Groups Within Groups Total

SS 437.0377 25018.44 25455.48

df

MS 1 437.0377 18 1389.913 19

F P-value F crit 0.314435 0.581885 4.413873

Result of ANOVA: FCal.= 0.314435 FTab.= 4.413873 FCal.<FTab.

Findings From The Study: By dividing the mean square of Between Groups by the mean square of Within Groups, we obtain an F-value of 0.314435which is greater than the cut-off value of 4.413873 for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to accept the hypothesis thatthere is no statistical significant difference between average price earning ratio of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor "priceearning ratio " has no difference in value stock and growth stock.

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Anova: Single Factor- dividend SUMMARY Groups VALUE GROWTH Count Sum Average 10 1153.519 115.3519 10 103.6812 10.36812 Variance 2639.844 6.998877

ANOVA Source of Variation Between Groups Within Groups Total

SS 55107.97 23821.58 78929.55

df

MS 1 55107.97 18 1323.421 19

F 41.64053

P-value F crit 4.5206 4.413873

Result of ANOVA: FCal.= 41.64053 FTab.= 4.413873 FCal.>FTab.

Findings From The Study: By dividing the mean square of Between Groups by the mean square of Within Groups, we obtain an F-value of 41.64053 which is greater than the cut-off value of 4.413873 for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to reject the hypothesis thatthere is no statistical significant difference between average dividend of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor dividend" has difference in value stock and growth stock.

Findings of the data as a whole As the data of market price clearly shows that value stocks are greater than in value stocks than the growth stocks, we can say that the investors prefer value stock than growth stocks. Even we can also see that price earning ratio is also greater in value stocks. In value stocks the dividends are declared but in the growth stocks companies do not prefer to declare dividend. In value stocks the risk is more associated as it is having more market price there is a possibility for the investor to loose money while in growth stocks the risk is moderate or very less. Value stock is risk associated but they give more returns than the growth stocks.

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CONCLUSION AND RECOMMENDATION

From the above calculations and findings we can conclude very clearly that the investors in the Indian stock market prefer the value stocks than the growth stocks as it has brighter prospects in future and investors hope for better returns from the growth stocks

A large body of empirical research indicates that value stocks on average earn higher returns than growthstocks. The reward to value investing is more pronounced for small stocks but it is also present in the larger stocks.

Growth stocks rocketed in value, prompting speculation that value investors were an endangered species. A more careful examination, however, suggests that the differences across the performance of equity classes in the late 2001s were not grounded on fundamental patterns of profitability growth. Instead, the most plausible interpretation of the events of the late-2001s is that investor sentiment reached exaggerated levels of optimism about the prospects for technology, media and telecommunications stocks. The resulting valuations were hard to reconcile with economic logic.

Similarly, the sharp rise and decline in recent years of technology and other growth-oriented stocks calls into question the argument that growth stocks are less risky investments. Rather, the evidence suggests that value stocks are not more risky than growth stocks, based on a variety of indicators including beta and return volatility. Indeed, using one popular risk indicator which focuses on performance in down markets, value stocks suffer less severely than growth stocks when the stock market or the overall economy does poorly.

The superior performance of value stocks cannot be attributed to their risk exposures. Instead a more convincing explanation for the value premium rests on features of investor behavior as well as the agency costs of delegated investment management. Several studies provide evidence in support of extrapolative biases in investor behavior.

The argument that the value premium is an artifact of data-snooping poses a tougher challenge. In this respect, however, two features of the debate about value investing are crucial. In particular, a logically coherent account exists that can explain the returns to value stocks, and there is empirical support for theextrapolation hypothesis. These features
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distinguish the value premium from many other anomalous patternsthat have been documented on stock returns. Many apparent violations of the efficient markets hypothesis, such as day-of-the-week patterns in stock returns, lack a convincing logical basis. In the absence of a plausible rationale, there is a legitimate concern that the anomalous pattern is merely a statistical fluke that has been uncovered through data-mining. Instead, the value premium reflects ingrained patterns of investor behavior or the incentives of professional investment managers. As in the case of numerous past episodes in financial history, investors will continue to extrapolate from the past and get excessively excited about promising new technologies. They will overbid the prices of growth stocks, and conversely, beat down value stocks too low. As a result, patient investing in value stocks will continue to be a rewarding long-term investment strategy.

The research report will be a guide for the investors those who invest money and for those who are the future investors. This study will provide them to further know about what are the advantages and limitations of investing in value stock or growth stock in the Indian stock market.

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REFERENCES

1. k.s. chalapatirao, 2001-2002, An Overview of the Indian Stock Market with Emphasis on Ownership Pattern of Listed Companies. 2. Gurucharansingh and salonykansal, Jan-june 2010, impact of union budget on indian stock market- A case study of NSE. 3. P. Krishna Prasanna, 2008, Foreign Institutional Investors: Investment Preferences in India. 4. Dr.NeenaSinha, Dr.K.P.Kaushik, and Ms.TimcyChaudhary, November 2010, select

measuring post merger and acquisition performance: an investigation of financial sector organisation in India. 5. Mohammad Vesal, 2011, Long Run Effects of Natural Disasters.

6. Krishnamurthy Subramanian, 2009-2010, value creation in mergers and acquitions. 7. Lei Gao, 2005, Calendar Effects in Chinese Stock Market. 8. Kim Shannon, 2002, practical tools for analysing value stocks. 9. RaffeallaPorta, Josef Lakonishok, AndreiShleifer, and Robert Vishny, june 1997, Good News for Value Stocks: Further Evidence on Market Efficiency 10. Partha S. Mohanram, march 2003, Is Fundamental Analysis Effective for Growth Stocks? 11. S.S.S. Kumar, 2004-05, role of institutional investors in Indian stock market. 12. Louis K. C. Chan and Josef Lakonishok, july 2002, value and growth investing: A Review And Update. 13. P. Reinhard Hansen and A. Lunde, Feb 2003, testing the significance of the calendar effects. 14. Banz, RolfW., 1981, The relationship between return and market value of common stock, Journal of Financial Economics 9, 318. 15. Chan, Louis K. C., Yasushi Hamao, and Josef Lakonishok, 1991, Fundamentals and stock returns in Japan,Journal of Finance 46, 17391764.

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BIBLOGRAPHY
WWW.GOOGLE.CO.IN WWW.BSEINDIA.COM WWW.WIKIPEDIA.COM WWW.INVESTOPEDIA.COM WWW.MONEYCONTROL.COM WWW.MINISTRYOFFINANCE.GOV WWW.TIMESOFINDIA.COM WWW.ECONOMICSTIMES.COM WWW.BUSINESSSTANDARD.COM WWW.PROJECTPARADICE.COM SPECIAL ISSUE JOURNAL- THE ANALYST

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Annexure & Appendices Annexure 1: One Way ANOVA Test Calculation Steps

One Way ANNOVA technique involves the following steps: (i) Obtain the mean of each sample.

X1, X2, X3, ...,Xk When there are k samples. (ii) Work out the mean of the sample means as follows:

(iii) Take the deviations of the sample means from the mean of the sample means and calculate the square of such deviations which may be multiplied by the number of items in the corresponding sample, and then obtain their total. This is known as the sum of squares for variance between the samples (or SS between). Symbolically, this can be written:

(iv) Divide the result of the (iii) step by the degrees of freedom between the samples to obtain variance or mean square (MS) between samples. Symbolically, this can be written:

(v) Obtain the deviations of the values of the sample items for all the samples from corresponding means of the samples and calculate the squares of such deviations and then obtain their total. This total is known as the sum of squares for variance within samples (or SS within). Symbolically this can be written:

(vi) Divide the result of (v) step by the degrees of freedom within samples to obtain the variance or mean square (MS) within samples.

Where (n k) represents degrees of freedom within samples,

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n = total number of items in all the samples i.e., n1 + n2 + + nk k = number of samples.

(vii) For a check, the sum of squares of deviations for total variance can also be worked out by adding the squares of deviations when the deviations for the individual items in all the samples have been taken from the mean of the sample means.

This total should be equal to the total of the result of the (iii) and (v) steps explained above i.e., SS for total variance = SS between + SS within.

The degrees of freedom for total variance will be equal to the number of items in all samples minus one i.e., (n 1). The degrees of freedom for between and within must add up to the degrees of freedom for total variance i.e., (n 1) = (k 1) + (n k)

This fact explains the additive property of the ANOVA technique. (viii) Finally, F-ratio may be worked out as under:

SETTING UP ANALYSIS OF VARIANCE TABLE For the sake of convenience the information obtained through various steps stated above can be put as under:

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