Krishna Project Work

FINANCIAL RISK NANAuENENT
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St.Peter`s Engineering College
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INTRODUCTION
Risk Management is the identiIication, assessment, and prioritization oI risks Iollowed by
coordinated and economical application oI resources to minimize, monitor, and control the
probability and/or impact oI unIortunate events. Risks can come Irom uncertainty in Iinancial
markets, project Iailures, legal liabilities, credit risk, accidents, natural causes and disasters as
well as deliberate attacks Irom an adversary. Several risk management standards have been
developed including the Project Management Institute, the National Institute oI Science and
Technology, actuarial societies, and ISO standards. Methods, deIinitions and goals vary widely
according to whether the risk management method is in the context oI project management,
security, engineering, industrial processes, Iinancial portIolios, actuarial assessments, or public
health and saIety.
The strategies to manage risk include transIerring the risk to another party, avoiding the risk,
reducing the negative eIIect oI the risk, and accepting some or all oI the consequences oI a
particular risk.


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Certain aspects of many of the risk management standards have come under criticism for
having no measurable improvement on risk even though the confidence in estimates and
decisions in Introduction
In ideal risk management, a prioritization process is Iollowed whereby the risks with the greatest
loss and the greatest probability oI occurring are handled Iirst, and risks with lower probability oI
occurrence and lower loss are handled in descending order. In practice the process can be very
diIIicult, and balancing between risks with a high probability oI occurrence but lower loss versus
a risk with high loss but lower probability oI occurrence can oIten be mishandled.
Intangible risk management identiIies a new type oI a risk that has a 100 probability oI
occurring but is ignored by the organization due to a lack oI identiIication ability. For example,
when deIicient knowledge is applied to a situation, a knowledge risk materializes. Relationship
risk appears when ineIIective collaboration occurs. Process-engagement risk may be an issue
when ineIIective operational procedures are applied. These risks directly reduce the productivity
oI knowledge workers, decrease cost eIIectiveness, proIitability, service, quality, reputation,
brand value, and earnings quality. Intangible risk management allows risk management to create
immediate value Irom the identiIication and reduction oI risks that reduce productivity.
Risk management also Iaces diIIiculties allocating resources. This is the idea oI opportunity cost.
Resources spent on risk management could have been spent on more proIitable activities. Again,
ideal risk management minimizes spending while maximizing the reduction oI the negative
eIIects oI risks.


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OB1ECTIVES-
1. To know how to manage risk associated with Iinancial assets.
2. To study diIIerent types oI risk associated with Iinancial assets.
3. To understand how to minimize the risk using diIIerent strategies.
4. To study how to suggest the investors regarding the investment options.
To know how the investors should be protected Irom diIIerent types oI risks

NEED OF THE STUDY

In Indian Iinancial environment investors are Iacing a lot risk to invest in various
Iinancial instruments. The investment risk can be either reduced or can be transIerred. Most oI
the times investors try to maximize returns but want minimum risk in their investment. The
present study enables us to identiIy the diIIerent types oI risks and how to minimize them. In
investment avenues it is very important to know about Risk and Returns so that one can have
hassle Iree investment.


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SCOPE OF THE STUDY

O The study has only made a humble attempt at evaluation oI Risk and Return
only in Indian context.
O The study is restricted to only NSE listed companies.
O The other statistical tools Ior Iurther in depth analysis could not be used due
to constraint oI time.
O The study was under taken with some market assumptions but in reality they
could not be applicable.


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METHODOLOGY-
The process oI research work done the present project works is 'A
study on risk management process in this project the methodology adopted is the two steps.
1. ata collection.
2. ata analysis.
1. ata collection- ata means the inIormation regarding the topic so researched this can
be done using two sources.
1. Primary data.
2. Secondary data.
(1). Primary data-
The Iirst hand inIormation is gathered is known as primary data.
(2). Secondary data-
The inIormation gathered Irom already available sources such as news`s
papers, internet, books, Iinancial reports this project work has been done using the web sites.
www.nseindia.com, www.valueresearch.com, www.anIi.com
And Iinancial details oI the company.


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2. ata analysis-
ata analysis is the time series analysis where tables and graphs have been
used to analysis the data the Iollowing Iormulas has been applied.

LIMITATIONS:-
1. To do the project the time given is not suIIicient.
2. The data on which the project done is completely not reliable.
3. The area covered under this project is very limited on the basis oI which the inIerences
can be made.
4. The data available is not suIIicient to do the project.
5. The opening price oI Iuture value and closing price oI Iuture value has taken Ior
calculation.


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INDUSTRY PROFILE

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning
three centuries in its 133 years oI existence. What is now popularly known as BSE was
established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the Iirst stock exchange in the country which obtained permanent recognition (in 1956)
Irom the Government oI India under the Securities Contracts (Regulation) Act 1956. BSE's
pivotal and pre-eminent role in the development oI the Indian capital market is widely
recognized. It migrated Irom the open outcry system to an online screen-based order driven
trading system in 1995. Earlier an Association oI Persons (AOP), BSE is now a corporatized and
demutualised entity incorporated under the provisions oI the Companies Act, 1956, pursuant to
the BSE (Corporatization and emutualization) Scheme, 2005 notiIied by the Securities and
Exchange Board oI India (SEBI). With demutualization, BSE has two oI world's best exchanges,
eutsche Borse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has Iacilitated the growth oI the Indian corporate sector by
providing it with an eIIicient access to resources. There is perhaps no major corporate in India
which has not sourced BSE's services in raising resources Irom the capital market.

Today, BSE is the world's number 1 exchange in terms oI the number oI listed companies and
the world's 5th in transaction numbers. The market capitalization as on ecember 31, 2007 stood
at US 1.79 trillion. An investor can choose Irom more than 4,700 listed companies, which Ior

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easy reIerence, are classiIied into A, B, S, T and Z groups.

The BSE Index, SENSEX, is India's Iirst stock market index that enjoys an iconic stature, and is
tracked worldwide. It is an index oI 30 stocks representing 12 major sectors. The SENSEX is
constructed on a 'Iree-Iloat' methodology, and is sensitive to market sentiments and market
realities. Apart Irom the SENSEX, BSE oIIers 21 indices, including 12 sectorial indices. BSE
has entered into an index cooperation agreement with eutsche Brse. This agreement has made
SENSEX and other BSE indices available to investors in Europe and America. Moreover,
Barclays Global Investors (BGI), the global leader in ETFs through its iShares brand, has
created the 'iShares BSE SENSEX India Tracker' which tracks the SENSEX. The ETF enables
investors in Hong Kong to take an exposure to the Indian equity market.
BSE has tied up with U.S. Futures Exchange (USFE) Ior U.S. dollar-denominated Iutures trading
oI SENSEX in the U.S. The tie-up enables eligible U.S. investors to directly participate in India's
equity markets Ior the Iirst time, without requiring American epository Receipt (AR)
authorization. The Iirst Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on
BSE. It brings to the investors a trading tool that can be easily used Ior the purposes oI
investment, trading, hedging and arbitrage. SPICE allows small investors to take a long-term
view oI the market.

BSE provides an eIIicient and transparent market Ior trading in equity, debt instruments and
derivatives. It has a nation-wide reach with a presence in more than 450 cities and towns oI
India. BSE has always been at par with the international standards. The systems and processes
are designed to saIeguard market integrity and enhance transparency in operations. BSE is the

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Iirst exchange in India and the second in the world to obtain an ISO 90012000 certiIication. It is
also the Iirst exchange in the country and second in the world to receive InIormation Security
Management System Standard BS 7799-2-2002 certiIication Ior its BSE On-line Trading System
(BOLT).
BSE continues to innovate. In recent times, it has become the Iirst national level stock exchange
to launch its website in Gujarati and Hindi to reach out to a larger number oI investors. It has
successIully launched a reporting platIorm Ior corporate bonds in India christened the ICM or
Indian Corporate ebt Market and a unique ticker-***-screen aptly named 'BSE Broadcast'
which enables inIormation dissemination to the common man on the street.

In 2006, BSE launched the irectors atabase and ICERS (Indian Corporate Electronic
Reporting System) to Iacilitate inIormation Ilow and increase transparency in the Indian capital
market. While the irectors atabase provides a single-point access to inIormation on the boards
oI directors oI listed companies, the ICERS Iacilitates the corporates in sharing with BSE their
corporate announcements.

BSE also has a wide range oI services to empower investors and Iacilitate smooth transactions
Investor Services The epartment oI Investor Services redresses grievances oI investors. BSE
was the Iirst exchange in the country to provide an amount oI Rs.1 million towards the investor
protection Iund; it is an amount higher than that oI any exchange in the country. BSE launched a
nationwide investor awareness programme 'SaIe Investing in the Stock Market' under which 264
programs were held in more than 200 cities.


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The BSE On-line Trading (BOLT) BSE On-line Trading (BOLT) Iacilitates on-line screen
based trading in securities. BOLT is currently operating in 25,000 Trader Workstations located
across over 450 cities in India.

BSEWEBX.com In February 2001, BSE introduced the world's Iirst centralized exchange-based
Internet trading system, BSEWEBX.com. This initiative enables investors anywhere in the world
to trade on the BSE platIorm.

Surveillance BSE's On-Line Surveillance System (BOSS) monitors on a real-time basis the
price movements, volume positions and members' positions and real-time measurement oI
deIault risk, market reconstruction and generation oI cross market alerts.

BSE Training Institute BTI imparts capital market training and certiIication, in collaboration
with reputed management institutes and universities. It oIIers over 40 courses on various aspects
oI the capital market and Iinancial sector. More than 20,000 people have attended the BTI
programs.

National stock exchange:
The National Stock Exchange oI India Limited is the largest stock exchange oI the country. NSE
has been setting the agenda Ior change in the securities markets in India. The last decade has
seen us play a major role in bringing investors Irom various cities and towns online, ensuring
complete transparency, introducing Iinancial guarantee oI settlements, ensuring scientiIically

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designed and proIessionally managed indices and introducing dematerialization in the country.
NSE's wholly-owned subsidiaries, National Securities Clearing Corporation Ltd. (NSCCL)
provides clearing and settlement oI securities, India Index Services and Products Ltd. (IISL)
provides indices and index services, NSE.IT Ltd. and NSE InIoTech Services Ltd. Iorms the
technological strength. Today, we are the Third largest exchange in the world in terms oI the
number oI transactions executed on a stock exchange, and still Iorging ahead. At NSE, we are
constantly working towards creating a more transparent, vibrant & innovative capital market.
This invariably implies that our need Ior competent people is continuous. As the leading stock
exchange and Iiscal entity in the country, we believe in recruiting the Iinest oI talent in the
industry.
About the National Stock Exchange of India:
In the Iast growing Indian Iinancial market, there are 23 stock exchanges trading securities. The
National Stock Exchange oI India (NSE) situated in Mumbai - is the largest and most advanced
exchange with 1016 companies listed and 726 trading members.
The NSE is owned by the group oI leading Iinancial institutions such as Indian Bank or LiIe
Insurance Corporation oI India. However, in the totally de-mutualized Exchange, the ownership
as well as the management does not have a right to trade on the Exchange. Only qualiIied traders
can be involved in the securities trading.
The NSE is one oI the Iew exchanges in the world trading all types oI securities on a single
platIorm, which is divided into three segments Wholesale ebt Market (WM), Capital Market
(CM), and Futures & Options (F&O) Market. Each segment has experienced a signiIicant growth

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throughout a Iew years oI their launch. While the WM segment has accumulated the annual
growth oI over 36 since its opening in 1994, the CM segment has increased by even 61
during the same period.
The National Stock Exchange oI India has stringent requirements and criteria Ior the companies
listed on the Exchange. Minimum capital requirements, project appraisal, and company's track
record are just a Iew oI the criteria. In addition, listed companies pay variable listing Iees based
on their corporate capital size.
The National Stock Exchange oI India Ltd. provides its clients with a single, Iully electronic
trading platIorm that is operated through a VSAT network. Unlike most world exchanges, the
NSE uses the satellite communication system that connects traders Irom 345 Indian cities. The
advanced technologies enable up to 6 million trades to be operated daily on the NSE trading
platIorm.
Stock Market History
The World's Market - Stock Market History
When people talk about the Stock Market, it's no always immediately clear what they're reIerring
to. Is the Stock Market a place? Or is it something diIIerent? To many people it is an abstract
idea. They buy stocks in "the stock market" without ever leaving the comIort oI their computer
terminal. But the stock market is indeed a physical place with buildings and addresses, a place
you can go visit.


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all Street is the Place
Many Iolks think oI Wall Street and the Stock Market as one in the same, and that view isn't
really Iar Irom the truth. Wall Street is the place where it all started and where the world's largest
Iinancial market was born and prospered. From Wall Street sprang a new industry with its own
language and terminology.
The History
Wall Street can trace its name back to 1653. Originally it was set up Ior deIense and not Ior
commerce. Settlers oI utch descent, who were always on the lookout Irom attacks by Native
Americans and the British built a 12 Ioot stockade Ience. Little did they know that this Ience
would go on to become the center oI Iinancial activity in the world. The wall lasted a good while,
until 1685. At that point the wall was torn down and a new street was built. The British called it
Wall Street.

The Rise of the Stock Exchanges
What helped Wall Street rise to pre-eminence was the emergence oI two great Stock Exchanges,
which gave order to the chaotic trading and gave birth to the Iinancial markets as we know them
today.
The year was 1790. The place was Philadelphia. The occasion was the Iounding oI the Iirst stock
exchange in America. Two years later a group oI New York merchants met to discuss how to
take command oI the securities business. The merchants, a group oI 24 men, Iounded what is

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now known as the New York Stock Exchange. But in early 1817, the merchant group Irom New
York, distressed at the sorry state oI their stock exchange, sent a representative to Philadelphia to
observe how things were being done. Upon arriving with news about the robust exchange in
Philadelphia, the New York Stock and Exchange Board was soon Iormally organized.
The exchange opened up shop on Wall Street. As Ior the New York Stock Exchange, it has since
moved past its humble beginnings to the point where its system now Iacilitates billions oI dollars
worth oI trades each day. But there was a gradual build up to this sort oI status. In the early
1900s massive amounts oI money were made on Wall Street. But the boom period could not be
sustained indeIinitely. And in 1929 this principle came Iront and center as the stock market crash
oI 1929 seared the national. Nay, global. Psyche and triggered what was to be called the Great
epression.
While many oI the powers that be realized that the markets could not sustain a boom Iorever,
very Iew publicized this view, choosing instead to let the market be its own judge, jury and
executioner. As a result oI the laissez-Iaire attitude, many people. Rich and poor alike. Lost a lot
oI money.
But the stock market crash oI 1929 was just the beginning oI sorrows Ior Wall Street. For while
the economy eventually recovered Irom its catastrophic losses, the market excesses that had
Iactored into the crash in the late 1920s seeped back into the picture. The result was the stock
market crash oI 1987, which saw the ow Jones suIIer what was the largest single-day loss in
the stock markets history.

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Since then, the government and the industry have tried to put measures in place to curtail, iI not
entirely eliminate, the possibility oI such a large-scale crash. The stock markets are now an
integral part oI the global economy, and so proper saIeguards to reduce the risks oI another
disastrous crash are necessary.
But while eIIorts have been made to reduce the risk, the possibility Ior another stock market
crash can never be ruled out.
Current Stock Market
The current "stock market" is comprised oI 300,000 computers situated on pro trader's desks.
These computers are networked together using sophisticated protocols. This level oI inIormation
sharing makes pricing an almost exact science.
These 300,000 computers are Iurther linked to another 26 million computers worldwide. These
computers are located in banks, small businesses, and large corporations. These computers
comprise the banking networks which make computerized transactions possible.
Finally, these computers are connected to another 300 million computers which connect and
disconnect Irom the Iinancial markets daily. In New York City alone, these transactions amount
to over $2.2 trillion dollars daily


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Trends of stock market
1. Markets Crash! Dow 1ones Falls 500 Points

At this point in time, it seems like the ow Jones Industrial Average (the main stock index) is
Ialling oII in record losses every day. It`s almost a weekly habit that we see the 'biggest decline
in history in the markets, only to have this loss dwarIed by next week`s action. Let`s Iace it, we
are in bear market territory. As we continue to Ieel the brunt oI a global market slowdown.
don`t expect things to improve any time soon. We may see this news trend Ior quite some time.
. Commodities are the Next Bull Market

The Iirst two quarters oI the 2008 Iiscal year proved to be stellar Ior anything and everything tied
to commodities, the third quarter was anything but. Although we were seeing some record levels
in the price oI crude oil, natural gas and gold in 2008, it would seem that now all those proIits
have been erased. and then some! As things continue to Iall, we get analysts calling Ior the
'next bull market in oil or another commodity like wheat or ethanol. It`s one oI the most
popular themes, and one oI the biggest pitIalls you need to avoid as an investor.

3. Blue Chips Produce Superior Earnings Numbers
II you are an investor, you have probably heard time and time again that you NEE to be in a
massive company in order to reduce your portIolio risk. This is actually not true at all. Granted,
in most cases a large company will move less and is less likely to go bankrupt. However, the true

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risk oI a company is on its balance sheet and it`s volatility in trading hours. We`ve seen massive
companies that were 'too big to Iail go bankrupt, namely banks like Lehman Brothers and
Wachovia. on`t always believe that these 'blue chip big boys are going to save you Irom loss.
. Ben Bernanke and Federal Reserve in Talks to Cut Rates
As our overall economy spirals, a lot oI Iocus has been put on Ben Bernanke and Henry Paulson.
The Federal Reserve and the U.S. Treasury are in the international spotlight. as American
Iinancial systems are now a gauge Ior the global economy. Almost every time the market takes a
hit, there is a new discussion oI the Fed 'cutting rates or making borrowing cheaper in layman`s
terms. Maybe talks between the Fed and the U.S. Treasury to put together bailout plans and rate
cuts are over-emphasized. so keep a skeptical eye out!
5. United States Meltdown has Become Global
Globalization is real, and we`ve seen this Iirsthand as the United States recession has now spread
into international markets. The Asian and European indices now track what the U.S. exchanges
are doing, and act accordingly. When we had a 1000 point day, Asian markets took oII. This
may not happen the other way around all the time, but we can clearly see that the American
markets have adversely aIIected the overall investing conditions. It`s a scary time out there, so be
sure that you know where your money is. and make sure to diversiIy your risk to enhance your
returns.
6. Financials Underwrite Massive Amounts of Debt
Everyone is scrambling Ior liquid assets, bottom line. Anything that is close to cash is in high
demand nowadays. and the Iinancial companies oI the world have begun to look Ior potential
lenders o that they can get some debt oII their books. When banks take out loans, they are in
eIIect gambling that they will get reimbursed in the Iuture. With things like sub-prime home

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mortgage loans, this doesn`t always happen. When markets began turning on banks, debt became
unpayable. and Iinancial institutions had to start underwriting the bad bookings to clear their
balance sheets. This has continued Ior about a year to this point, and the trend is not going to
reverse any time soon as European and Asian economies start to struggle.
. Foreign Exchange Markets Heat Up
So what is the deal with Forex? Forex, or the Foreign Exchange, is the global exchange market
Ior currency. You can trade spreads between economies by using the country`s currency (e.g.
U.S. ollar, Euro, Japanese Yen, Chinese Juan) and trading them based on strength. Foreign
exchange markets have really heated up as oI late, as they are a place oI relative saIety when put
in comparison to the stock market. The diIIerence between the two is that in Forex, there is a
winner and a loser. In the stock market, everyone can win and everyone can lose. right now the
latter is more true. Because oI this obvious win-lose payoII, Forex can be used to make money
betting eIIectively between currencies even in a bad market!
8. orldwide Consolidation Has M&A Activity Reeling
As global markets continue to struggle in dealing with credit problems and consumer spending
cuts, it is important to keep an eye on the consolidating markets. This may be more obvious in
the Iinancial companies, as many banks are being bought out and acquired by stronger Iirms. As
competition dwindles and the weak companies are pushed out oI the marketplace, we have an
area where mergers and acquisitions (M&A) are alive and well. When things are cheap, more
things are bought. so maybe the Iinancial turmoil isn`t always a negative thing iI you are a
large multinational corporation.
9. Emerging Markets Boost Growth Overseas
While 2007 may have been the year oI growth in China, many oI these popular growth havens

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have been picked apart by an international market slowdown sparked by the United States
economy. How Iar can these markets Iall? II you are in the camp that would believe these
economies are perIorming up to expectation, place some speculative bets into emerging economy
tied companies like those invested heavily in Brazil and India. You may be in Ior some monster
gains once things turn around.
10. Crude Oil and Natural Gas Stage Big Movements
Going with the commodity theme, it seems that high/low crude oil is mentioned every day. Ever
since crude prices per barrel jumped to $145 people have been Ireaking out about what is going
to happen next. Even as crude has now Iallen to $80, nearly halI oI where it once was, people are
still very concerned with the moves in crude oil and natural gas. The argument is still alive and
well with which is the better commodity, but both energy plays can be an excellent hedge to a
Ilailing market. Keep an eye on the trends in stock market news that talk about moves in the
energy commodities, and you may Iind yourselI ahead!
We want to thank you Ior checking out BullishBankers.com. With a chance to out-perIorm the
research Iirms that charge you high Iees to see the same quality investment rationale we are
giving you complimentary, every little bit helps. So please join our newsletter and subscribe to
our Ieed to stick with the best bulls on the Street!

Future outlook
The views expressed below are the opinions oI the author based on the principles oI technical
analysis, a science that has been tested and proven Ior more than hundred years. The views are
unbiased and inIormative in nature. These do not constitute an oIIer to buy or sell stocks. Every

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eIIort has been made by the author to ensure correctness oI the inIormation presented. The author
cannot be held responsible Ior omissions, mistakes etc.
Investing or trading in stock markets is a high risk activity. Those who cannot aIIord to risk their
money should reIrain Irom dealing in stocks.
The author has no vested interest in any oI the stocks mentioned. He and/or his close associates
may or may not be having positions at the time oI writing this article.
The reader needs to understand that this article is purely Ior inIormative purposes only and all
transactions, iI entered into by him will be solely at his risk. The author does not guarantee that
the projected targets will be achieved within the stipulated time Irame.
Source Ior the price data displayed in graphics and tables
National Stock Exchange oI India Limited, Mumbai, India (www.nseindia.com)

hat is the reason behind this huge rise in index?
Like all other Iinancial markets, Indian markets are also governed by the Iundamental principles
oI demand and supply gap. When interest rates were lowered, stock market looked an attractive
option and investors began to look Ior opportunities. Huge Ioreign Iunds are another reason Ior
the upsurge. Liquidity is one more Iactor one can easily transact with a click oI a mouse unlike
the old days when physical share certiIicates were in use.
Whatever be the reason behind any move, it is always reIlected in the charts. All other Iactors,
namely, business conditions, economy growth etc. are always discounted when analyzing the
market technically.

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How many stocks got beneIited Irom this nearly Iive Iold rise in index in the last 4 years? Let us
analyze some oI the index stocks.

* Adjusted Close 1 due to stock split / bonus / rights issue
** Close 1 as on 31/07/2004
*** Close 1 as on 31/08/2003
It can be seen Irom the above table that not all the index stocks have perIormed in the same
manner. ABB, BHARTIARTL and SAIL have outperIormed when compared to the overall
index.

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It should be noted here, that the perIormance` in stock market by scrip has nothing to do with
the Iinancial perIormance oI the company. It just implies that the investors have chased this stock
more strongly compared to the rest.
We can see no direct relationship between the overall index perIormance and the individual
stocks` perIormance. This indicates the demand and supply gap scenario Ior the stocks discussed.
hat could be the reason for the uneven performance?
The price oI a particular stock on a given day is decided by the market participants. They are
FII`s or the Ioreign institutional investors
FI`s or the Iinancial institutions
MF`s or the mutual Iunds
Long term investors
Medium term investors
Short term investors
ay traders
Speculators
Punters
erivative traders
When thousands oI people are trading a particular stock, no one can be very clear oI what the
other trader thinks. This leads to volatility and uncertainty in the markets.

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When one person buys a stock, obvious reason is that he thinks that it will go up. The person
who sold the stock thought that it would either go down or he had enough proIit or loss.
In a complex scenario like this, price Iluctuations happen regularly. The investor needs to take
advantage oI the situation by buying when the demand just starts picking up Ior the stock and
sell when it just starts diminishing.
Having said that it is diIIicult Ior an ordinary investor to completely understand and assess the
market status.
hat can the investor do now?
Ideally, one would like to take some money home. II one has remained a long term investor and
likely to get some proIit, he can book it.
Remember that the chance oI the proIit going down may increase with the time a stock being
held. For the one who wants to invest Ior long term in stocks, he has to be cautious, as can be
seen Irom the charts and tables provided.

Some thoughts on investing in stocks:
Not too many people understand the stock market dynamics. So take proIessional advice, consult
a qualiIied and experienced person. He may charge you a little, but it is worth taking the risk
than worrying later.

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Invest the amount that you can aIIord to lose. There are only probabilities, no certainties in
Iinancial markets. Keep doing your research. Observe prices at least once a week. II you think
you gained a reasonable amount, book your proIits at least partially. Last but not least, never
borrow money to invest in stocks thinking that prices will always go up!


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Introduction:-
Indiabulls is India`s leading Financial, Real Estate and Power Company with a wide presence
throughout India. They ensure convenience and reliability in all their products and services.
Indiabulls has over 640 branches all over India. The customers oI Indiabulls are more than
4,50,000 which covers Irom a wide range oI Iinancial services and products Irom securities,
derivatives trading, depositary services, research & advisory services, consumer secured &
unsecured credit, loan against shares and mortgage & housing Iinance. The company employs
around 4000 Relationship managers who help the clients to satisIy their customized Iinancial
goals. Indiabulls entered the Real Estate business in the year 2005 with its group oI companies.
Large scale projects worth several hundred million dollars are evaluated by them.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE), Bombay Stock
Exchange (BSE) and Luxembourg Stock Exchange. The market capitalization oI Indiabulls is
around US 2500 million (29
th
ecember, 2006). Consolidated net worth oI the group is around
US 700 million. Indiabulls and its group companies have attracted US 500 million oI equity
capital in Foreign irect Investment (FI) since March 2000. Some oI the large shareholders oI
Indiabulls are the largest Iinancial institutions oI the world such as Fidelity Funds, Goldman
Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.

Growth of Indiabulls

Year 000-01:
One oI India`s Iirst trading platIorms was set up by Indiabulls Financial Services Ltd. with the
development oI an in-house team.

Year 001-03:
The service oIIered by Indiabulls was increased to include Equity, F&O, Wholesale ebt,
Mutual Iund, IPO Financing/istribution and Equity Research.

Year 003-0:
In this particular year Indiabulls ventured into istribution and Commodities Trading business.

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26

Year 00-05:
O This was one oI the most important years in the history oI Indiabulls. In this year
O Indiabulls came out with its initial public oIIer (IPO) in September 2004.
O Indiabulls started its Consumer Finance business.
O Indiabulls entered the Indian Real Estate market and became the Iirst company to bring
FI in Indian Real Estate.
O Indiabulls won bids Ior landmark properties in Mumbai.

Year 005-06:
In this year the company acquired over 115 acres oI land in Sonepat Ior residential home site
development. The world renowned investment banks like Merrill Lynch and Goldman Sachs
increased their shareholding in Indiabulls. It also became a market leader in securities brokerage
industry, with around 31 share in Online Trading. The world`s largest hedge Iund, Farallon
Capital and its aIIiliates committed Rs. 2000 million Ior Indiabulls subsidiaries Viz. Indiabulls
Credit Services Ltd. and Indiabulls Housing Finance Ltd. In the same year, the Steel Tycoon Mr.
L N Mittal promoted LNM India Internet venture Ltd. acquired 8.2 stake in Indiabulls Credit
Services Ltd.

Year 006-0:
In this year, Indiabulls Financial Services Ltd. was included in the prestigious Morgan Stanley
Capital International Index (MSCI). Indiabulls Financial Services Ltd. was beneIited with the
Farallon Capital agreeing to invest Rs. 6,440 million in it. The company also received an 'in
principle approval Irom Government oI India Ior development oI multi product SEZ in the state
oI Maharashtra. Indiabulls Financial Services Ltd acquired 100 oI the equity share capital oI
Noble Realtors Pvt. Ltd. Noble Realtors is a Company engaged in the business oI construction
and development oI real estate projects. Indiabulls Real Estate Business was demerged to
become a separate entity called Indiabulls Real Estate Ltd. The Board oI Indiabulls Financial

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27
Services Ltd., Resolved to Amalgamate Indiabulls Credit Services Ltd and demerge Indiabulls
Securities Limited.
Indiabulls Financial Services Ltd
Year 008-09:
Several developments across its group companies have propelled indiabulls Iorward and are
expected to continue to power the rise oI this conglomerate. Indiabulls Iinancial services limited
has recently signed a joint venture agreement with sogecap, the insurance arm oI Societe
Generale (SocGen) Ior its upcoming liIe insurance venture.
At the same time it has also signed a Memorandum oI understanding with MMTC.
On the asset management Iront, the company has received Iormal approval uhby7hbIrom SEBI
and is expected to shortly launch its Iirst NFO.
Indiabulls enter in to Public issue Ior his Indiabulls power Ltd.

Promoters for Indiabulls
Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal
Are the promoters oI Indiabulls Financial Services Limited. While
Sameer Gehlaut will have a 23.0 stake in the company post the IPO
Rajiv Rattan and Saurabh Mittal will have a post issue holding oI 11.5 and 10.1 respectively.
All the three promoters oI the company are engineering graduates while Saurabh Mittal is a
management graduate as well.

Sector:-

Since Indiabulls derives most oI its revenues Irom the brokerage business, its Iortunes are very
much dependent on the PerIormance oI the capital markets, i.e. debt, derivative and equity
markets.

The Indian equity markets have grown Irom strength to strength in the last decade with
combined daily volumes oI all segments on the BSE and the NSE touching Rs 232 bn in April
2004, Irom Rs 5 bn in FY96.

Total shareholders in the country are over 20 m (2 oI population) and this is the third largest
aIter the US and Japan, in absolute terms.

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28
Senior Vice President
Yuv Raj Singh
Regional Manager
Dashmeet Singh
Branch Manager
Senior Sales Manager
Sujeet Roy Chowdary

Support System
Vishal
Sales Function
Subrot
RM/SRM
Satish Kumar

ARM
Raja
Local Compliance
Officer
Chary
Back Office
Executive
Ifran Khan
Dealer
Badri Nath

However, iI one were to compare the percentage oI all households in India that are invested in
the stock markets, it is only about 1.9 as compared to an estimated 52(including indirect
ownership by way oI mutual Iunds) oI all households in the US. This highlights the long-term
potential Ior the sector. to apply

The Team:-
Indiabulls Securities Ltd, main strength lies in its Iormidable team. This team comprising
highly qualiIied and experienced personnel has been responsible Ior the overall management oI
the company and has provided direction in diverse areas oI business strategy, operating
management, regulatory reporting, human resources development and product development.


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29

Vision statement: To become the preIerred long term Iinancial partner to a wide base oI
customers whilst optimizing stake holder`s value
Mission statement: To establish a base oI 1 million satisIied customers by 2010. We will
create this by being a responsible and trustworthy partner
Corporate action: An Approach to Business that reIlects Responsibility, Transparency and
Ethical Behavior. Respect Ior Employees, Clients & Stakeholder groups

Indiabulls Group entities in India
O Indiabulls Capital Services Ltd.
O Indiabulls Commodities Pvt. Ltd.
O Indiabulls Credit Services Ltd.
O Indiabulls Finance Co. Pvt. Ltd
O Indiabulls Housing Finance Ltd.
O Indiabulls Insurance Advisors Pvt. Ltd.
O Indiabulls Resources Ltd.
O Indiabulls Securities Ltd.
O Indiabulls Power Ltd.

Indiabulls Securities Ltd is listed on the National Stock Exchange (NSE) and the Bombay
Stock Exchange (BSE) and its global depository shares are listed on the Luxembourg Stock
Exchange


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30

Reasons to choose Indiabulls Securities Ltd:

The Indiabulls Financial Services stock is the best perIorming stock in the MSCI Index the
global benchmark Ior equity investments

A person who bought Indiabulls shares in the IPO at Rs. 19 (US$ 0.48) in September 2004 has
been rewarded almost 100 times in three and a halI years a Ieat unparalleled in the history oI
Indian capital markets

Indiabulls Real Estate Limited partnered Farallon Capital Management LLC oI the US to bring
the Iirst Foreign irect Investment into real estate

O Seven Reasons why investing with Indiabulls Securities Limited is smarter
1) Customization: Formulates investment plans based on customer individual requirements
) Expertise: Brings within customer reach, about institutional expertise and companies
valuable understanding oI the Iinancial markets
3) One-stop shop: Caters to all customers` investment needs under one rooI.
) Trust: Enjoys the pedigree oI Indiabulls Securities Ltd and share its expertise in Iinancial
services.
5) Personalized service: Helps customer through the entire investment process, step by step,
with innovative and eIIicient services.
6) Unbiased & Objective advice: We partner you in your investment process, with our
team oI expert investment advisors
Reasons to apply
Online trading potential is huge: Online trading accounted Ior 5 oI overall market in
FY04 as compared to an estimated 3 in FY03. Indiabulls currently has almost 20 market
share oI volumes in the Internet trading space. The table below indicates the growth in volumes
oI the Internet trading segment on the NSE over the last Iew years. The growth is indicative oI
the potential oI this segment, which we believe is likely to be robust going Iorward as well.


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31
This is primarily driven by increasing penetration oI computers, signiIicant decline in Internet
charges, convenience oI usage and cost advantage. To put things in perspective, the oIIline
brokerage on equities is around 1.0 as compared to 0.5 in the online trading space.

NSE online trading statistics...

Enabled
members`
Registered
clients`
Trading Value (Rs
bn)
of total trading
value

FY00 3
FY01 61 13,58 3 0.5
FY0 8 31,899 81 1.6
FY03
CM 80 36,0 15 .5
F&O`` 13 69,30 51 1.
FY0
CM 0 13,5 39 3.5
F&O`` 1 16,6 30

CM: Cash Market, F&O: Futures and Options market
` At the end of the financial year
`` trading value for F&O segment compiled from 1une 009

Advisory services:

Indiabulls is also into mutual Iund and insurance advisory businesses. Though this Iield is
extremely competitive and requires signiIicant research skills, these are highly proIitable
business segments. Though these businesses currently account Ior an insigniIicant portion oI
overall revenues, considering the penetration levels oI mutual Iunds and insurance in the country,
prospects are promising.

Aggressive growth plans:

Indiabulls has set aggressive targets to expand its business in the oIIline space. This includes
investments in upgradation oI branch network and opening another 75 branches by the end oI
calendar year 2009 (150 in total). The company has also indicated its intent to acquire strategic
stake in other companies towards growing the business inorganically


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32

Products provided
Power Indiabulls An online trading system designed Ior the high-volume trader. The platIorm
provides enhanced trade inIormation and executes orders on an integrated soItware based trading
platIorm.
Indiabulls financial service offers:
SME Iinance
Mortgage loans
Commercial vehicle loans
Farm equipment loans
Commercial credit loans
Loan against shares and
Third part distribution oI insurance products.

Broking: Equity, erivatives, Commodities, Currency erivatives.

Distribution: Mutual Iunds, IPO`s, Home loans, Insurace.

Divisions:
Investment Advisory and Broking? ivision
Project Syndication ivision?
Institutional Equity Broking? ivision
Institutional ebt Broking? ivision

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33

Retail Offerings:
Wealth Management Services
PortIolio Management Services
Securities Broking-Equities and derivatives
epository & Custodial Service & istribution oI Iinancial Products.

Services:
Indiabulls securities provides a wide range of services that include
Power Indiabulls: An online trading system designed Ior the high-volume trader. The
platIorm provides enhanced trade inIormation and executes orders on an integrated soItware
based trading platIorm.
1) Equities
2) Commodities
3) Wholesale debts
4) Futures and options
5) epository services
6) Equity research services
7) Post Trade -Custodial,
8) epository Services
9) Payment Gateway
10) Other back oIIice support

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34

Online Banks Tie-ups for trading:
Company having online transaction tie-ups with banks like
HFC BANK,
ICICI BANK,
IBI BANK,
CITI BANK.

Company Achievements:
The India bulls Group is one oI the top IiIteen conglomerates in the country with businesses in
several signiIicant sectors.

The India bulls Financial Services stock is the best perIorming stock in the MSCI Index the
global benchmark Ior equity investments.

India bulls Real Estate Limited partnered Farallon Capital Management LLC oI the US to bring
the Iirst Foreign irect Investment into real estate.

India bulls Financial Services Limited was accorded the highest rating P1 Ior short term debt
and the highest rating oI AAA (SO) by CRISIL Ior loan receivables securitization while India
bulls Securities Limited is the only broker in India to be assigned CRISIL`s highest broker
quality grading oI BQ1.

In ecember 2007, India bulls acquired Pyramid Retail including Pyramid Mega stores and
Trumart, their chain oI liIestyle and convenience outlets


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35

Company competitors

Kotak Securities Ltd,
ICICI Securities Ltd,
HFC Securities Ltd,
Religare Securities Ltd,
Birla Money,
IndiainIoline Ltd.

Financial position:
Balance Sheet of
Indiabulls Securities Ltd
------------------- in Rs. Cr. -------------------

Mar '06 Mar '0 Dec '0 Mar '08 Mar '09

1 mths 1 mths 9 mths 1 mths 1 mths

Sources OI Funds
Total Share Capital 17.83 17.83 55.28 55.28 55.28
Equity Share Capital 17.83 17.83 50.69 50.69 50.69
Share Application Money 0.00 0.00 0.00 0.00 0.00
PreIerence Share Capital 0.00 0.00 4.59 4.59 4.59
Reserves 163.24 301.33 475.95 308.74 236.02
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 181.07 319.16 531.23 364.02 291.30
Secured Loans 2.91 4.55 44.74 45.04 42.50
Unsecured Loans 349.30 35.00 105.00 335.00 69.50
Total ebt 352.21 39.55 149.74 380.04 112.00
Total Liabilities 533.28 358.71 680.97 744.06 403.30

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36

ancial Performance

Shareholding pattern in Indiabulls
From 30 Sep 009

Share holding pattern
as on :
31/1/009 30/09/009 30/06/009
Mar '06 Mar '07 ec '07 Mar '08 Mar '09

1 mths 1 mths 9 mths 1 mths 1 mths

Application OI Funds
Gross Block 60.92 132.71 153.09 155.33 161.32
Less Accum. epreciation 12.64 27.01 42.49 48.14 71.23
Net Block 48.28 105.70 110.60 107.19 90.09
Capital Work in Progress 3.14 2.96 1.54 0.92 0.18
Investments 0.00 0.00 48.27 48.32 51.77
Inventories 0.00 0.00 0.00 0.00 0.00
Sundry ebtors 0.00 95.24 0.00 112.62 26.24
Cash and Bank Balance 728.30 109.95 718.83 655.77 27.63
Total Current Assets 728.30 205.19 718.83 768.39 53.87
Loans and Advances 104.07 49.76 459.93 67.21 126.54
Fixed eposits 0.00 307.40 0.00 416.90 434.56
Total CA, Loans & Advances 832.37 562.35 1,178.76 1,252.50 614.97
eIIered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 342.98 296.66 616.93 430.99 288.37
Provisions 7.53 15.63 41.27 233.89 65.35
Total CL & Provisions 350.51 312.29 658.20 664.88 353.72
Net Current Assets 481.86 250.06 520.56 587.62 261.25
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 533.8 358. 680.9 .05 03.9

Contingent Liabilities 0.00 1.54 1.75 1.87 0.29
Book Value (Rs) 101.53 178.96 20.78 14.18 11.31

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37
Share holding pattern
as on :
31/1/009 30/09/009 30/06/009
Face value 2.00 2.00 2.00

No. Of
Shares

Holding
No. Of
Shares

Holding
No. Of
Shares

Holding
Promoter's holding
Indian Promoters 75368614 24.32 75368614 24.32 75368614 29.72
Sub total 75368614 24.32 75368614 24.32 75368614 29.72
Non promoter's holding
Institutional investors
Banks Fin. Inst. and
Insurance
131800 0.04 41300 0.01 41300 0.02
FII's 141369414 45.62 147281983 47.53 82471653 32.52
Sub total 150775461 48.65 155954530 50.33 83290623 32.84
Other investors
Private Corporate
Bodies
9918855 3.20 5988096 1.93 3902722 1.54
NRI's/OCB's/Foreign
Others
33301563 10.75 28467067 9.19 35648843 14.06
Others 15612572 5.04 23742559 7.66 39177681 15.45
Sub total 58832990 18.99 58197722 18.78 78729246 31.04
General public 24911235 8.04 20359934 6.57 16241286 6.40
Grand total 309888300 100.00 309880800 100.00 253629769 100.00

ABOUT INDIABULLS GROUP

The Indiabulls Group is one oI the top IiIteen conglomerates in the country with businesses in
several signiIicant sectors.

The group companies have a market capitalisation oI over Rs. 25,000 crore (US$ 6.25 billion)
while group revenues have grown at a cumulative annual rate oI over 100 to now reach Rs.

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38
3100 crore (US$ 775 million) and the group proIit has surged to over Rs. 1200 crore (US$ 300
million). Its companies, listed in important Indian and overseas markets, have
distributed over Rs. 700 crore (US$ 175 million) as dividend in the year 2008.

Indiabulls Financial Services Limited was accorded the highest rating P1 Ior short term debt
and the highest rating oI AAA (SO) by CRISIL Ior loan receivables securitisation while
Indiabulls Securities Limited is the only broker in India to be assigned CRISIL`s highest broker
quality grading oI BQ1.

In ecember 2007, Indiabulls acquired Pyramid Retail including Piramyd Megastores and
Trumart, their chain oI liIestyle and convenience outlets
Indiabulls` growth has been nothing short oI stupendous. In less than eight years since the
company was Iirst registered, it has grown Irom just Iive employees to 21,000 and Irom one
oIIice to 600 across the country

The Indiabulls Financial Services stock is the best perIorming stock in the MSCI Index the
global benchmark Ior equity investments.

A person who bought Indiabulls shares in the IPO at Rs. 19 (US$ 0.48) in September 2004 has
been rewarded almost 100 times in three and a halI years a Ieat unparalleled in the history oI
Indian capital markets

Indiabulls Real Estate Limited partnered Farallon Capital Management LLC oI the US to bring
the Iirst Foreign irect Investment into real estate.

Companies History in India
In 1999, three IIT-elhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal acquired
Orbis,a elhi based stock broking company. Young entrepreneur Sameer Gehlaut established
Indiabulls in 2000, aIter acquiring orbis Securities, a stock brokerage company in elhi. The
group started its operations Irom a small oIIice near Hauz Khas bus terminal in elhi.The oIIice
had a tin rooI and two computers. The idea oI leveraging technology Ior trading stocks led to the
creation oI Indiabulls Incorporated on 10th January 2000, it was converted into a public limited
company on 27th February 2004.

Its original idea oI leveraging technology bore Iruit when Indiabulls was accorded permission to
conduct online trading on Indian stock exchanges.


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39
The company had achieved the distinction oI becoming only the second brokerage Iirm in India
to be granted this consent. The challenges Iacing it were immense not least oI all the mind set
oI investors who were called to make the big leap Irom traditional stock trading to a completely
online interIace. Having overcome this resistance, the company later expanded its service
portIolio to include equity, F&O, wholesale debt, mutual Iund distribution and equity research.

In 2003/04, Indiabulls ventured into insurance distribution and commodity trading. It
successIully Iloated its IPO in September 2004 and in the same year entered the consumer
Iinance segment. Real estate, the new sunrise industry, was the next Irontier Ior Indiabulls. In
2004/05, it entered this sector. But it wasn`t just real estate that was booming.

Opportunities were opening up in retail and inIrastructure as well. To cement its position in the
Indian business and industry Iirmament,

Indiabulls acquired Pyramid Retail In 2007 and marked its presence in the power sector by
launching Indiabulls Power.

Brand Values

Indiabulls is amongst the largest non-banking Iinancial services companies in India and enjoys
strong brand recognition and customer acceptance.

The company attributes its dominant position in the brokerage industry to the preIerential status
it enjoys with investors Coupled with its Iorays into various segments; the Group believes that
the bulk oI its brand story is yet to be written.

Indeed, when a case study on India`s youngest brands which have had a proIound impact on the
economy is craIted, Indiabulls will Ieature prominently in it.

THINGS

Recent Developments

Several developments across its group companies have propelled Indiabulls Iorward and are
expected to continue to power the rise oI this conglomerate.

Indiabulls Financial Services Limited has recently signed a joint venture agreement with
Sogecap, the insurance arm oI Societe Generale (SocGen) Ior its upcoming liIe insurance
venture.

At the same time it has also signed a Memorandum oI Understanding with MMTC, the largest
commodity trading house in India, to establish a Commodities Exchange with 26 Ownership
held by MMTC.

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40

On the asset management Iront, the company has received Iormal approval Irom SEBI and is
expected to shortly launch its Iirst NFO.

The Board of Directors

Following is the list of our Board Members as on November , 009.

Mr. Sameer Gehlaut

Chairman & CEO

Gagan Banga

Executive Director

Rajiv Rattan

CEO

Shamsher Singh

Director

Aishwarya Katoch

Director

Karan Singh Director

Prem Prakash Mird

Director

Saurabh K Mittal

Executive Director

Amit 1ain

Company Secretary


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41


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42
Process
According to the standard ISO 31000 "Risk management -- Principles and guidelines on
implementation, the process oI risk management consists oI several steps as Iollows
Establishing the context
Establishing the context involves
1. Identification oI risk in a selected domain oI interest
2. Planning the remainder oI the process.
3. Mapping out the Iollowing
4 the social scope oI risk management
4 the identity and objectives oI stakeholders
4 The basis upon which risks will be evaluated, constraints.
4. Defining a framework Ior the activity and an agenda Ior identiIication.
5. Developing an analysis oI risks involved in the process.
6. Mitigation oI risks using available technological, human and organizational resources.
Identification
AIter establishing the context, the next step in the process oI managing risk is to identiIy
potential risks. Risks are about events that, when triggered, cause problems. Hence, risk
identiIication can start with the source oI problems, or with the problem itselI.
O Source analysis: - Risk sources may be internal or external to the system that is the
target oI risk management.

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43
Examples oI risk sources are stakeholders oI a project, employees oI a company
or the weather over an airport.
O Problem analysis: - Risks are related to identiIy threats. For example the threat oI
losing money, the threat oI abuse oI privacy inIormation or the threat oI accidents and
casualties. The threats may exist with various entities, most important with shareholders,
customers and legislative bodies such as the government.
When either source or problem is known, the events that a source may trigger or the events that
can lead to a problem can be investigated. For example stakeholders withdrawing during a
project may endanger Iunding oI the project; privacy inIormation may be stolen by employees
even within a closed network; lightning striking a Boeing 747 during takeoII may make all
people onboard immediate casualties.
The chosen method oI identiIying risks may depend on culture, industry practice and
compliance. The identiIication methods are Iormed by templates or the development oI templates
Ior identiIying source, problem or event. Common risk identiIication methods are
O Objectives-based risk identification:-Organizations and project teams have objectives.
Any event that may endanger achieving an objective partly or completely is identiIied as
risk.
O Scenario-based risk identification in scenario analysis diIIerent scenarios are created.
The scenarios may be the alternative ways to achieve an objective, or an analysis oI the
interaction oI Iorces in, Ior example, a market or battle. Any event that triggers an

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44
undesired scenario alternative is identiIied as risk - see Futures Studies Ior methodology
used by Futurists.
O Taxonomy-based risk identification The taxonomy in taxonomy-based risk
identiIication is a breakdown oI possible risk sources. Based on the taxonomy and
knowledge oI best practices, a questionnaire is compiled. The answers to the questions
reveal risks. Taxonomy-based risk identiIication in soItware industry can be Iound in
CMU/SEI-93-TR-6.
O Common-risk checking In several industries lists with known risks are available. Each
risk in the list can be checked Ior application to a particular situation. An example oI
known risks in the soItware industry is the Common Vulnerability and Exposures list
Iound at http//cve.mitre.org.
O Risk charting (risk mapping)-This method combines the above approaches by listing
Resources at risk, Threats to those resources ModiIying Factors which may increase or
decrease the risk and Consequences it is wished to avoid. Creating a matrix under these
headings enables a variety oI approaches. One can begin with resources and consider the
threats they are exposed to and the consequences oI each. Alternatively one can start with
the threats and examine which resources they would aIIect, or one can begin with the
consequences and determine which combination oI threats and resources would be
involved to bring them about.
Assessment
Once risks have been identiIied, they must then be assessed as to their potential severity oI loss
and to the probability oI occurrence. These quantities can be either simple to measure, in the case

page
45
oI the value oI a lost building, or impossible to know Ior sure in the case oI the probability oI an
unlikely event occurring. ThereIore, in the assessment process it is critical to make the best
educated guesses possible in order to properly prioritize the implementation oI the risk
management plan.
The Iundamental diIIiculty in risk assessment is determining the rate oI occurrence since
statistical inIormation is not available on all kinds oI past incidents. Furthermore, evaluating the
severity oI the consequences (impact) is oIten quite diIIicult Ior immaterial assets. Asset
valuation is another question that needs to be addressed. Thus, best educated opinions and
available statistics are the primary sources oI inIormation. Nevertheless, risk assessment should
produce such inIormation Ior the management oI the organization that the primary risks are easy
to understand and that the risk management decisions may be prioritized. Thus, there have been
several theories and attempts to quantiIy risks. Numerous diIIerent risk Iormulae exist, but
perhaps the most widely accepted Iormula Ior risk quantiIication is
Rate of occurrence multiplied by the impact of the event equals risk
Later research
|
has shown that the Iinancial beneIits oI risk management are less dependent on
the Iormula used but are more dependent on the Irequency and how risk assessment is
perIormed.
In business it is imperative to be able to present the Iindings oI risk assessments in Iinancial
terms. Robert Courtney Jr. (IBM, 1970) proposed a Iormula Ior presenting risks in Iinancial
terms. The Courtney Iormula was accepted as the oIIicial risk analysis method Ior the US
governmental agencies. The Iormula proposes calculation oI ALE (annualized loss expectancy)

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46
and compares the expected loss value to the security control implementation costs (cost-beneIit
analysis).
Potential risk treatments
Once risks have been identiIied and assessed, all techniques to manage the risk Iall into one or
more oI these Iour major categories
6|

O Avoidance (eliminate)
O Reduction (mitigate)
O Transfer (outsource or insure)
O Retention (accept and budget)
Ideal use oI these strategies may not be possible. Some oI them may involve trade-oIIs that are
not acceptable to the organization or person making the risk management decisions. Another
source, Irom the US epartment oI eIense, eIense Acquisition University, calls these
categories ACAT, Ior Avoid, Control, Accept, or TransIer. This use oI the ACAT acronym is
reminiscent oI another ACAT (Ior Acquisition Category) used in US eIense industry
procurements, in which Risk Management Iigures prominently in decision making and planning.
Risk avoidance
Includes not perIorming an activity that could carry risk. An example would be not buying a
property or business in order to not take on the liability that comes with it. Another would be not
Ilying in order to not take the risk that the airplane were to be hijacked. Avoidance may seem the
answer to all risks, but avoiding risks also means losing out on the potential gain that accepting

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47
(retaining) the risk may have allowed. Not entering a business to avoid the risk oI loss also
avoids the possibility oI earning proIits.
Risk reduction
Involves methods that reduce the severity oI the loss or the likelihood oI the loss Irom occurring.
For example, sprinklers are designed to put out a Iire to reduce the risk oI loss by Iire. This
method may cause a greater loss by water damage and thereIore may not be suitable. Halon Iire
suppression systems may mitigate that risk, but the cost may be prohibitive as a strategy. Risk
management may also take the Iorm oI a set policy, such as only allow the use oI secured IM
platIorms (like Brosix) and not allowing personal IM platIorms (like AIM) to be used in order to
reduce the risk oI data leaks.
Modern soItware development methodologies reduce risk by developing and delivering soItware
incrementally. Early methodologies suIIered Irom the Iact that they only delivered soItware in
the Iinal phase oI development; any problems encountered in earlier phases meant costly rework
and oIten jeopardized the whole project. By developing in iterations, soItware projects can limit
eIIort wasted to a single iteration.
Outsourcing could be an example oI risk reduction iI the outsourcer can demonstrate higher
capability at managing or reducing risks.
7|
In this case companies outsource only some oI their
departmental needs. For example, a company may outsource only its soItware development, the
manuIacturing oI hard goods, or customer support needs to another company, while handling the
business management itselI. This way, the company can concentrate more on business

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48
development without having to worry as much about the manuIacturing process, managing the
development team, or Iinding a physical location Ior a call center.
Risk retention
Involves accepting the loss when it occurs. True selI insurance Ialls in this category. Risk
retention is a viable strategy Ior small risks where the cost oI insuring against the risk would be
greater over time than the total losses sustained. All risks that are not avoided or transIerred are
retained by deIault. This includes risks that are so large or catastrophic that they either cannot be
insured against or the premiums would be inIeasible. War is an example since most property and
risks are not insured against war, so the loss attributed by war is retained by the insured. Also
any amounts oI potential loss (risk) over the amount insured is retained risk. This may also be
acceptable iI the chance oI a very large loss is small or iI the cost to insure Ior greater coverage
amounts is so great it would hinder the goals oI the organization too much.
Risk transfer
In the terminology oI practitioners and scholars alike, the purchase oI an insurance contract is
oIten described as a "transIer oI risk." However, technically speaking, the buyer oI the contract
generally retains legal responsibility Ior the losses "transIerred", meaning that insurance may be
described more accurately as a post-event compensatory mechanism. For example, a personal
injuries insurance policy does not transIer the risk oI a car accident to the insurance company.
The risk still lies with the policy holder namely the person who has been in the accident. The
insurance policy simply provides that iI an accident (the event) occurs involving the policy

page
49
holder then some compensation may be payable to the policy holder that is commensurate to the
suIIering/damage.
Some ways oI managing risk Iall into multiple categories. Risk retention pools are technically
retaining the risk Ior the group, but spreading it over the whole group involves transIer among
individual members oI the group. This is diIIerent Irom traditional insurance, in that no premium
is exchanged between members oI the group up Iront, but instead losses are assessed to all
members oI the group.

Create a risk-management plan
Select appropriate controls or countermeasures to measure each risk. Risk mitigation needs to be
approved by the appropriate level oI management. For example, a risk concerning the image oI
the organization should have top management decision behind it whereas IT management would
have the authority to decide on computer virus risks.
The risk management plan should propose applicable and eIIective security controls Ior
managing the risks. For example, an observed high risk oI computer viruses could be mitigated
by acquiring and implementing antivirus soItware. A good risk management plan should contain
a schedule Ior control implementation and responsible persons Ior those actions.
According to ISO/IEC 27001, the stage immediately aIter completion oI the Risk Assessment
phase consists oI preparing a Risk Treatment Plan, which should document the decisions about
how each oI the identiIied risks should be handled. Mitigation oI risks oIten means selection oI

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50
security controls, which should be documented in a Statement oI Applicability, which identiIies
which particular control objectives and controls Irom the standard have been selected, and why.
Implementation
Follow all oI the planned methods Ior mitigating the eIIect oI the risks. Purchase insurance
policies Ior the risks that have been decided to be transIerred to an insurer, avoid all risks that
can be avoided without sacriIicing the entity's goals, reduce others, and retain the rest.

Review and evaluation of the plan
Initial risk management plans will never be perIect. Practice, experience, and actual loss results
will necessitate changes in the plan and contribute inIormation to allow possible diIIerent
decisions to be made in dealing with the risks being Iaced.
Risk analysis results and management plans should be updated periodically. There are two
primary reasons Ior this
1. To evaluate whether the previously selected security controls are still applicable and
eIIective, and
2. To evaluate the possible risk level changes in the business environment. For example,
inIormation risks are a good example oI rapidly changing business environment.


page
51
MARUTI
Series Date
Open
Price
Close
Price

return average difference d`d
EQ 4-May-10 821.35 839.35 2.191514 14.6342 12.44272 154.8212
EQ 5-May-10 845 831.65 -1.57988 14.6342 16.21411 262.8974
EQ 6-May-10 827.5 808.55 -2.29003 14.6342 16.92426 286.4306
EQ 7-May-10 815 839.4 2.993865 14.6342 11.64036 135.4981
b# 8-May-10 838 828.3 -1.15752 14.6342 15.79175 249.3793
EQ 11-May-10 836 834.1 -0.22727 14.6342 14.8615 220.8643
EQ 12-May-10 830 863.9 4.084337 14.6342 10.54989 111.3002
EQ 13-May-10 857.6 839.05 -2.16301 14.6342 16.79724 282.1474
EQ 14-May-10 815.65 832.7 2.090357 14.6342 12.54387 157.3487
EQ 15-May-10 842 848.2 0.736342 14.6342 13.89789 193.1513
EQ 18-May-10 924 938.2 1.536797 14.6342 13.09743 171.5428
EQ 19-May-10 960 999.9 4.15625 14.6342 10.47798 109.7881
EQ 20-May-10 992 1,041.85 5.025202 14.6342 9.609028 92.33343
EQ 21-May-10 1,026.00 969.25 -5.53119 14.6342 20.16542 406.6441
EQ 22-May-10 962 961.95 -0.0052 14.6342 14.63943 214.3128
EQ 25-May-10 962.5 973.35 1.127273 14.6342 13.50696 182.4379
EQ 26-May-10 973.5 957.9 -1.60247 14.6342 16.2367 263.6303
EQ 27-May-10 970.2 974.5 0.443208 14.6342 14.19102 201.3851
EQ 28-May-10 974.5 1,003.85 3.011801 14.6342 11.62243 135.0809
EQ 29-May-10 1,009.00 1,027.10 1.793855 14.6342 12.84037 164.8752
14.63423 199.7935
Risk\_(d*d)/(n-1)
Risk\199.7935/19-13.2427

Interpretation: The above table shows highest returns oI 5.02 and lowest 0.0052 with a range
5.0148 the average return is 14.65423. The risk Ior this security is 3.2427.


page
52
MARUTI

-8
-6
-4
-2
0
2
4
6
1 3 5 7 9 11 13 15 17 19
Series1

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53
ACC
Series Date
Open
Price
Close
Price

returns average difference d`d
EQ 4-May-10 660 654.85 -0.7803 0.28731 1.067613 1.139798
EQ 5-May-10 660 656 -0.60606 0.28731 0.893371 0.798111
EQ 6-May-10 655 641.65 -2.03817 0.28731 2.325478 5.407848
EQ 7-May-10 635 624 -1.73228 0.28731 2.019593 4.078758
EQ 8-May-10 626 601.25 -3.95367 0.28731 4.240984 17.98595
EQ 11-May-10 610 591.4 -3.04918 0.28731 3.33649 11.13217
EQ 12-May-10 595 595.5 0.084034 0.28731 0.203276 0.041321
EQ 13-May-10 599 614.6 2.604341 0.28731 -2.31703 5.368631
EQ 14-May-10 600 614.25 2.375 0.28731 -2.08769 4.35845
EQ 15-May-10 625.5 634.95 1.510791 0.28731 -1.22348 1.496907
EQ 18-May-10 697 720.85 3.421808 0.28731 -3.1345 9.825076
EQ 19-May-10 730 749.9 2.726027 0.28731 -2.43872 5.947343
EQ 20-May-10 740 772.6 4.405405 0.28731 -4.1181 16.95871
EQ 21-May-10 765 743.2 -2.84967 0.28731 3.136983 9.840664
EQ 22-May-10 750 729.1 -2.78667 0.28731 3.073977 9.449333
EQ 25-May-10 725.05 724.05 -0.13792 0.28731 0.425232 0.180822
EQ 26-May-10 726 712.1 -1.9146 0.28731 2.201911 4.84841
EQ 27-May-10 729.7 711.1 -2.54899 0.28731 2.836303 8.044613
EQ 28-May-10 711 727.5 2.320675 0.28731 -2.03337 4.134574
EQ 29-May-10 719.9 782.5 8.695652 0.28731 -8.40834 70.70022
0.28731 191.7377

Risk\_(d*d)/(n-1)

RISK\191.7377/19-13.1767


page
54

Interpretation: The above table shows highest returns oI 8.695652 and lowest -3.95367 with
a range 12.649322 The average returns is 0.28731.the risk Ior this security is 10.0914.

-6
-4
-2
0
2
4
6
8
10
1 3 5 7 9 11 13 15 17 19
Series1

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55

AXISBANK

Series Date
Open
Price
Close
Price

EQ 4-May-10 575 609.35 5.973913 0.9244 -5.04951 25.49755
EQ 5-May-10 620 627.35 1.185484 0.9244 -0.26108 0.068163
EQ 6-May-10 635 605.25 -4.68504 0.9244 5.609442 31.46584
EQ 7-May-10 612.5 624.75 2 0.9244 -1.0756 1.156909
EQ 8-May-10 623 607.25 -2.52809 0.9244 3.452493 11.91971
EQ 11-May-10 613.1 620.35 1.182515 0.9244 -0.25811 0.066622
EQ 12-May-10 630.4 669 6.123096 0.9244 -5.19869 27.02641
EQ 13-May-10 659 671.7 1.927162 0.9244 -1.00276 1.005526
EQ 14-May-10 659 637.55 -3.25493 0.9244 4.179335 17.46684
EQ 15-May-10 680 659.6 -3 0.9244 3.924403 15.40094
EQ 18-May-10 730 778.4 6.630137 0.9244 -5.70573 32.5554
EQ 19-May-10 808 764.8 -5.34653 0.9244 6.270938 39.32466
EQ 20-May-10 676.65 728.55 7.67014 0.9244 -6.74574 45.50496
EQ 21-May-10 734 736.2 0.299728 0.9244 0.624675 0.390219
EQ 22-May-10 738 762.85 3.367209 0.9244 -2.44281 5.9673
EQ 25-May-10 766 774 1.044386 0.9244 -0.11998 0.014396
EQ 26-May-10 765.25 744.75 -2.67886 0.9244 3.603266 12.98353
EQ 27-May-10 751.9 797.75 6.097885 0.9244 -5.17348 26.76492
EQ 28-May-10 799 782.05 -2.1214 0.9244 3.045805 9.276927
EQ 29-May-10 790 778.95 -1.39873 0.9244 2.323137 5.396966
0.924403 15.46269

Risk\_(d*d)/(n-1)

RISK\15.46269/19-10.90212


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56

Interpretation: The above table shows highest returns oI 7.67014 and lowest -5.34653 with a
range 13.01667.The average returns is 0.9021

-6
-4
-2
0
2
4
6
8
10
1 3 5 7 9 11 13 15 17 19
Series1
ok

page
57
BHEL
Series Date
Open
Price
Close
Price

EQ 4-May-10 1,703.65 1,706.70 0.179027 -0.02 -0.2 0.040537
EQ 5-May-10 1,715.00 1,732.25 1.005831 -0.02 -1.03 1.057074
EQ 6-May-10 1,765.00 1,700.85 -3.63456 -0.02 3.61 13.04836
EQ 7-May-10 1,710.00 1,710.05 0.002924 -0.02 -0.03 0.000637
EQ 8-May-10 1,714.95 1,646.45 -3.99429 -0.02 3.97 15.77659
EQ 11-May-10 1,660.00 1,606.80 -3.20482 -0.02 3.18 10.12837
EQ 12-May-10 1,590.00 1,689.75 6.273585 -0.02 -6.3 39.63829
EQ 13-May-10 1,695.00 1,684.75 -0.60472 -0.02 0.58 0.339201
EQ 14-May-10 1,650.00 1,658.10 0.490909 -0.02 -0.51 0.263394
EQ 15-May-10 1,665.00 1,706.65 2.501502 -0.02 -2.52 6.369624
EQ 18-May-10 1,880.40 2,014.85 7.150074 -0.02 -7.17 51.4431
EQ 19-May-10 2,350.00 2,167.70 -7.75745 -0.02 7.74 59.83234
EQ 20-May-10 2,110.60 2,036.55 -3.50848 -0.02 3.49 12.15339
EQ 21-May-10 2,050.00 1,965.10 -4.14146 -0.02 4.12 16.96742
EQ 22-May-10 1,955.00 1,978.20 1.186701 -0.02 -1.21 1.461707
EQ 25-May-10 2,000.00 2,004.30 0.215 -0.02 -0.24 0.056316
EQ 26-May-10 2,000.00 1,992.80 -0.36 -0.02 0.34 0.114035
EQ 27-May-10 2,020.00 2,082.85 3.111386 -0.02 -3.13 9.820051
EQ 28-May-10 2,078.05 2,127.55 2.382041 -0.02 -2.4 5.780903
EQ 29-May-10 2,130.00 2,178.15 2.260563 -0.02 -2.28 5.211511
-0.02231 12.47514

Risk\_(d*d)/(n-1)
RISK\12.47514/19-10.810300


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58
Interpretation: The above table shows highest returns oI 7.67014 and lowest -7.7574 with a
range 15.42754. The risk Ior this security is 0.81030

-10
-8
-6
-4
-2
0
2
4
6
8
1 3 5 7 9 11 13 15 17 19
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59
L&T
Series Date
Open
Price
Close
Price

returns average difference D`D
EQ 4-May-10 900 952.85 5.872222 0.82049 -5.05173 25.52
EQ 5-May-10 959.8 981.45 2.255678 0.82049 -1.43518 2.06
EQ 6-May-10 990 970.95 -1.92424 0.82049 2.744736 7.534
EQ 7-May-10 975 987.6 1.292308 0.82049 -0.47181 0.223
EQ 8-May-10 986 991.4 0.547667 0.82049 0.272827 0.074
EQ 9-May-10 996 963.8 -3.23293 0.82049 4.053426 16.43
EQ 10-May-10 970 982.4 1.278351 0.82049 -0.45786 0.21
EQ 11-May-10 990 976.35 -1.37879 0.82049 2.199282 4.837
EQ 12-May-10 950 946.4 -0.37895 0.82049 1.199441 1.439
EQ 13-May-10 987 989 0.202634 0.82049 0.61786 0.382
EQ 14-May-10 1,140.40 1,231.65 8.001578 0.82049 -7.18108 51.57
EQ 15-May-10 1,300.00 1,343.15 3.319231 0.82049 -2.49874 6.244
EQ 16-May-10 1,340.00 1,361.30 1.589552 0.82049 -0.76906 0.591
EQ 17-May-10 1,350.00 1,238.30 -8.27407 0.82049 9.094568 82.71
EQ 18-May-10 1,229.95 1,300.75 5.756332 0.82049 -4.93584 24.36
EQ 19-May-10 1,320.00 1,304.95 -1.14015 0.82049 1.960646 3.844
EQ 20-May-10 1,315.00 1,252.80 -4.73004 0.82049 5.550532 30.81
EQ 21-May-10 1,277.00 1,312.20 2.75646 0.82049 -1.93597 3.748
EQ 22-May-10 1,320.00 1,345.70 1.94697 0.82049 -1.12648 1.269
EQ 23-May-10 1,366.00 1,402.20 2.650073 0.82049 -1.82958 3.347
0.820494 13.36

Risk\_(d*d)/(n-1)
RISK\13.36005/19-10.8385


page
60

Interpretation: The above table shows highest returns oI 8.001578 and lowest
-8.27407 with a range 16.2756. The average returns are 0.820494. The risk Ior this security is
0.8385.

-10
-8
-6
-4
-2
0
2
4
6
8
10
1 3 5 7 9 11 13 15 17 19
Series1

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61
NTPC

Series Date
Open
Price
Close
Price

EQ 4-May-10 192 193.5 0.78125 -0.1646 -0.94589 0.894708
EQ 5-May-10 195 191 -2.05128 -0.1646 1.886642 3.559418
EQ 6-May-10 191.95 194.15 1.146132 -0.1646 -1.31077 1.718123
EQ 7-May-10 196 192 -2.04082 -0.1646 1.876176 3.520038
EQ 8-May-10 192.1 189.9 -1.14524 -0.1646 0.980597 0.96157
EQ 11-May-10 191.95 188.05 -2.03178 -0.1646 1.867139 3.486208
EQ 12-May-10 189 191.25 1.190476 -0.1646 -1.35512 1.83634
EQ 13-May-10 193 188.9 -2.12435 -0.1646 1.959712 3.840472
EQ 14-May-10 187.9 188.85 0.505588 -0.1646 -0.67023 0.449206
EQ 15-May-10 189.95 187.55 -1.26349 -0.1646 1.09885 1.207472
EQ 18-May-10 196 206.6 5.408163 -0.1646 -5.5728 31.05614
EQ 19-May-10 211 205.9 -2.41706 -0.1646 2.252422 5.073403
EQ 20-May-10 205 208.55 1.731707 -0.1646 -1.89635 3.596133
EQ 21-May-10 208.6 212.15 1.701822 -0.1646 -1.86646 3.483679
EQ 22-May-10 213 216.6 1.690141 -0.1646 -1.85478 3.440212
EQ 25-May-10 216 212.4 -1.66667 -0.1646 1.502027 2.256084
EQ 26-May-10 213 201.6 -5.35211 -0.1646 5.187473 26.90987
EQ 27-May-10 204.8 202.05 -1.34277 -0.1646 1.178133 1.387998
EQ 28-May-10 204.8 207.8 1.464844 -0.1646 -1.62948 2.655217
EQ 29-May-10 210.1 215.4 2.522608 -0.1646 -2.68725 7.221303
-0.16464 5.42768

Risk\_(d*d)/(n-1)
RISK\5.42768/19-10.5344


page
62

Interpretation: The above table shows highest returns oI 5.408163 and lowest -5.35211 With
a range 10.7602. The average returns are -0.16464. The risk Ior this security is 0.5344.

-6
-4
-2
0
2
4
6
1 3 5 7 9 11 13 15 17 19
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63
RELIANCE

Series Date
Open
Price
Close
Price

EQ 4-May-10 1,851.00 1,887.10 1.950297 0.51596 -1.43434 2.057323
EQ 5-May-10 1,885.00 1,883.65 -0.07162 0.51596 0.587578 0.345248
EQ 6-May-10 1,889.00 1,881.50 -0.39704 0.51596 0.912995 0.833561
EQ 7-May-10 1,850.00 1,915.55 3.543243 0.51596 -3.02728 9.164444
EQ 8-May-10 1,920.00 1,900.30 -1.02604 0.51596 1.542002 2.377769
EQ 11-May-10 1,919.00 1,861.60 -2.99114 0.51596 3.507101 12.29976
EQ 12-May-10 1,849.95 1,959.90 5.943404 0.51596 -5.42744 29.45715
EQ 13-May-10 1,972.25 1,933.00 -1.99011 0.51596 2.506073 6.280401
EQ 14-May-10 1,902.25 1,908.95 0.352214 0.51596 0.163746 0.026813
EQ 15-May-10 1,915.00 1,950.70 1.86423 0.51596 -1.34827 1.817831
EQ 18-May-10 2,147.00 2,367.55 10.27247 0.51596 -9.75651 95.18955
EQ 19-May-10 2,450.00 2,230.90 -8.94286 0.51596 9.458817 89.46922
EQ 20-May-10 2,200.00 2,152.45 -2.16136 0.51596 2.677324 7.168062
BL 21-May-10 2,160.00 2,160.00 0 0.51596 0.51596 0.266215
EQ 22-May-10 2,145.00 2,115.45 -1.37762 0.51596 1.893582 3.585654
EQ 25-May-10 2,099.80 2,185.75 4.093247 0.51596 -3.57729 12.79698
EQ 26-May-10 2,200.00 2,194.75 -0.23864 0.51596 0.754596 0.569416
EQ 27-May-10 2,180.10 2,142.70 -1.71552 0.51596 2.231478 4.979492
EQ 28-May-10 2,172.00 2,186.35 0.660681 0.51596 -0.14472 0.020944
EQ 29-May-10 2,180.00 2,220.55 1.860092 0.51596 -1.34413 1.80669
EQ #####10 2,244.80 2,271.90 1.207234 0.51596 -0.69127 0.47786

0.51596 280.9904

Risk\_(d*d)/(n-1)
RISK\280.9904/19-13.8456


page
64
Interpretation: The above table shows highest returns oI 10.27247 and lowest -8.94286.The
range 19.21533. The average return is 0.51596 The risk Ior this security is 3.8456.

-10
-5
0
5
10
15
1 3 5 7 9 11 13 15 17 19 21
Series1

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65
SUZLON

Series Date
Open
Price
Close
Price

EQ 4-May-10 66 65.9 -0.15152 0.99925 1.150768 1.324267
EQ 5-May-10 67.1 72.35 7.824143 0.99925 -6.82489 46.57912
EQ 6-May-10 73.05 73.75 0.958248 0.99925 0.041005 0.001681
EQ 7-May-10 76.3 77.4 1.441678 0.99925 -0.44242 0.19574
EQ 8-May-10 77.75 76.2 -1.99357 0.99925 2.992822 8.956984
EQ 11-May-10 77.5 75.1 -3.09677 0.99925 4.096027 16.77744
EQ 12-May-10 74.1 80.85 9.109312 0.99925 -8.11006 65.77305
EQ 13-May-10 82 76.9 -6.21951 0.99925 7.218765 52.11057
EQ 14-May-10 75.5 75.6 0.13245 0.99925 0.866803 0.751347
EQ 15-May-10 76.5 76.65 0.196078 0.99925 0.803175 0.645089
EQ 18-May-10 86.3 93.35 8.169177 0.99925 -7.16992 51.40781
EQ 19-May-10 95.05 89.9 -5.4182 0.99925 6.417454 41.18372
EQ 20-May-10 87.8 92.7 5.580866 0.99925 -4.58161 20.99117
EQ 21-May-10 91.7 90.45 -1.36314 0.99925 2.362394 5.580904
EQ 22-May-10 90 94 4.444444 0.99925 -3.44519 11.86934
EQ 25-May-10 92.4 89.45 -3.19264 0.99925 4.191894 17.57197
EQ 26-May-10 89 86.75 -2.52809 0.99925 3.527343 12.44215
EQ 27-May-10 88 89.75 1.988636 0.99925 -0.98938 0.978879
EQ 28-May-10 91.3 90.75 -0.60241 0.99925 1.601663 2.565323
EQ 29-May-10 93.5 97.9 4.705882 0.99925 -3.70663 13.7391
0.99923 18.5728

Risk\_(d*d)/(n-1)
RISK\18.57228/19-10.9886


page
66

Interpretation: The above table shows highest returns oI 9.109312 and lowest -5.4182 with
a range 14.5275. The average is 0.999253. The risk Ior this security is 0.9886.

-8
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-4
-2
0
2
4
6
8
10
1 3 5 7 9 11 13 15 17 19
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67
TATACOMM

Series Date
Open
Price
Close
Price

EQ 4-May-10 574.9 555.3 -3.40929 -1.9274 1.481889 2.195994
EQ 5-May-10 570.05 564.25 -1.01745 -1.9274 -0.90995 0.828001
EQ 6-May-10 573.05 561.95 -1.937 -1.9274 0.009604 9.22E-05
EQ 7-May-10 567.25 561.65 -0.98722 -1.9274 -0.94018 0.88394
EQ 8-May-10 557 555.65 -0.24237 -1.9274 -1.68503 2.839327
EQ 11-May-10 555 539 -2.88288 -1.9274 0.955483 0.912948
EQ 12-May-10 548.8 554 0.947522 -1.9274 -2.87492 8.265176
EQ 13-May-10 555 567.45 2.243243 -1.9274 -4.17064 17.39427
EQ 14-May-10 558 533.4 -4.4086 -1.9274 2.481202 6.156364
EQ 15-May-10 539 523.8 -2.82004 -1.9274 0.892637 0.796801
EQ 18-May-10 570.8 600.85 5.264541 -1.9274 -7.19194 51.72402
EQ 19-May-10 595 607.75 2.142857 -1.9274 -4.07026 16.56699
EQ 20-May-10 611 612.05 0.171849 -1.9274 -2.09925 4.406848
EQ 21-May-10 605 585.95 -3.14876 -1.9274 1.22136 1.491721
EQ 22-May-10 600 583.45 -2.75833 -1.9274 0.830933 0.69045
EQ 25-May-10 590 585.15 -0.82203 -1.9274 -1.10537 1.221834
EQ 26-May-10 590 542.4 -8.0678 -1.9274 6.140397 37.70447
EQ 27-May-10 554.4 521.9 -5.86219 -1.9274 3.934793 15.4826
EQ 28-May-10 522 497.85 -4.62644 -1.9274 2.699037 7.2848
EQ 29-May-10 499.4 467.8 -6.32759 -1.9274 4.400193 19.3617
-1.9274 196.2083

Risk\_(d*d)/(n-1)
RISJK\196.2083/193.213


page
68

Interpretation: The above table shows highest returns oI 5.264541 and lowest -8.0678
with a range 13.3323. The average returns are -1.9274. The risk Ior this security is 3.2135.

-10
-8
-6
-4
-2
0
2
4
6
1 3 5 7 9 11 13 15 17 19
Series1

page
69
IPRO

Series Date
Open
Price
Close
Price

EQ 4-May-10 330.2 365.55 10.70563 0.16675 -10.5389 111.068
EQ 5-May-10 373.7 369.5 -1.1239 0.16675 1.290649 1.665775
EQ 6-May-10 370 359.4 -2.86486 0.16675 3.031618 9.190707
EQ 7-May-10 360 381.15 5.875 0.16675 -5.70825 32.58408
EQ 8-May-10 382 355.1 -7.04188 0.16675 7.208638 51.96446
EQ 11-May-10 357 349.6 -2.07283 0.16675 2.239582 5.015728
EQ 12-May-10 348 374.5 7.614943 0.16675 -7.44819 55.47553
EQ 13-May-10 373 374.55 0.41555 0.16675 -0.2488 0.0619
EQ 14-May-10 359.95 363.4 0.958466 0.16675 -0.79171 0.62681
EQ 15-May-10 370 377.6 2.054054 0.16675 -1.8873 3.561905
EQ 18-May-10 400 416.95 4.2375 0.16675 -4.07075 16.57098
EQ 19-May-10 421.35 385.35 -8.54397 0.16675 8.710719 75.87662
EQ 20-May-10 390 396.25 1.602564 0.16675 -1.43581 2.061554
EQ 21-May-10 393 375.85 -4.36387 0.16675 4.530621 20.52652
EQ 22-May-10 376 369.35 -1.76862 0.16675 1.93537 3.745657
EQ 25-May-10 370 366.95 -0.82432 0.16675 0.991077 0.982234
EQ 26-May-10 367.7 374 1.713353 0.16675 -1.5466 2.391972
EQ 27-May-10 387.7 379.25 -2.17952 0.16675 2.346273 5.504998
EQ 28-May-10 379 369.15 -2.59894 0.16675 2.765698 7.649083
EQ 29-May-10 376.45 382.25 1.540709 0.16675 -1.37396 1.887756
0.166753 20.42061

Risk\_(d*d)/(n-1)

RISK\20.42061/19-11.0367


page
70

Interpretation: The above table shows highest returns oI 10.70563 and lowest -8.54397
with a range 19.24957. The average return is 0.166753. The risk Ior this security is 1.0367.

-10
-5
0
5
10
15
1 3 5 7 9 11 13 15 17 19
Series1

page
71
FINDINGS
The Present project work has been undertaken to study the risk and returns available
with diII securities on National Stock Exchange. The Iollowing Iacts have been identiIied aIter
the study.
Ranks Companies Returns Risk
1 Maruti 14.6342 3.2427
2 Suzlon 0.9992 0.9886
3 Axis bank 0.9244 0.90212
4 LT 0.8204 0.8385
5 Reliance 0.51596 3.8456
6 Acc 0.28731 3.1767
7 Wipro 0.1667 1.0367
8 BHEL -0.02 0.8103
9 NTPC -0.1646 0.5344
10 TATA COMM -1.9274 3.2135

The above companies are ranked according to the returns and their risks are compared
with their returns.


page
72
SUGGESTIONS-

AIter studying the project the above Iacts were Iound out on the basis oI above
Iindings we can suggest the Iollowing.

Investor`s shows interest to invest the securities whose risk is less and return will be more
the above rule is satisIied in the Iollowing.
O Maruti is showing an average return oI 14.6342. Where its risk is only 3.2427.
O Suzlon is showing and average return oI 0.9992. Where its risk is only 0.9886.
O Axis bank is showing and average return oI 0.9244. Where its risk is only 0.9021.
O LT is showing and average return oI 0.8204. Where its risk is only 0.8385.
O Reliance is showing and average return oI 0.5159. Where its risk is only 3.8456.
O ACC is showing and average return oI 0.2873. Where its risk is only 3.1767.
O Wipro is showing and average return oI 0.1667. Where its risk is only 1.0367.


page
73
CONCLUSION
Normally investors think that any investment whose risk is high will have more returns
and vice versa. But these days the stocks are not Iollowing any such trends. This present project
has been undertaken to identiIy the opportunities available in the stock markets. In terms oI risk
and return, the investments will be evaluated. The main aim oI investor is to have saIety to his
investment Iirst and then returns aIter that no risk or less risk. The present project work shows
that the company`s returns are not Iollowing any trends but very volatile. This can be because oI
the volatile stock market conditions like Iluctuations in interest rate, InIlation, Foreign
institutional investors etc., this project can be concluded as an attempt to identiIy the stocks with
more returns and iI these have high risk. The measures Ior reducing the or to transIer the risk.


page
74
Bibliography

Reference Books
Title Author Name
Options, Futures and other derivatives John C. Hull
Financial derivatives S.L.Gupta
Financial Risk Management
The Mathematics oI Financial erivatives

EBSITES

www.derivativesIndia.com www.nseindia.com
www.bseindia.com www.sebi.gov.in
www.888options.com www.indiainIoline.com
www.mininova.org www.bambooweb.com
www.google.com www.wikipedia.com
www.hdIcsec.com www.getpedia.com

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