A PROJECT REPORT ON An Analysis of Volatility in Stock Market (with reference to 100 Scripts of NSE & BSE from Jan

1999 to June 2009)

Supervisor: Name: Mr. Amit Gogia Designation: Sales Manager Religare Security Kaithal

Submitted by: Name of Student: Vikash Bhanwala Roll No.-1009004

SARSWATI INSTITUTE OF MANAGEMENT & TECHNOLOGY TEEK (KAITHAL)

COURSE- MBA SESSION-2009-2011

1.1Preface
For any management course, summer training is essential and important part of curriculum of MBA degree. It is an exposure to corporate environment and help MBA aspirants to get acquainted with organizational norms, procedure, practices, ethics, and culture. It also gives an insight of actual functioning of the organization. It helps the student to understand and to correlate with theoretical aspect with practical reality.

It was the great experience to work with RELIGARE SECURITIES Ltd. During my summer project which has helped me to improve my communication and interpersonal skills and also give me the better understanding of the subject Demat Account.

1.2 Acknowledgement
I am grateful to make this report under my summer project for duration of two months in course of Master In Business Administration. I have done my project work in RELIGARE SECURITIES Ltd. at KAITHAL.

I would like to express my gratitude toward RELIGARE company for giving me this opportunity to work on a project at one of the prestigious and professional organization.

I would like to thank all the people who directly or indirectly helped me during my summer project and helped me in making this report. Mr. BHARAT KHURANA, Branch Manager, Religare Securities Ltd. Kaithal :- He has given me valuable information about stock market and depositaries. Mr.Amit Gogia, Relationship Manager, Religare Securities Ltd. :- He helped me in my marketing research and other part of project. Prof. Pooja Bansal, Prof. Nidhi garg has given their valuable guidance in making of this report.

In the last, I would like to thank all my colleagues in Religare Securities Ltd, College who has helped in making of this report. Without the help of above mentioned people making of this report could be very difficult for me.

1.3 Declaration
I hereby declare that this report on An analysis of volatility in stock market(with reference to 100 scripts of NSE & BSE from Jan 1999 to June 2009) has been written and prepared by me during the academic year 2008-2010. This project was done under the able guidance and supervision of Mr. Bharat Khurana, Branch Manager, Mr. Amit Gogia, Sales Manager, Religare Securities Ltd., Kaithal) and Prof. Pooja Bansal., Faculty, Saraswati Institute of Management & Technology. I also declare that this project is the result of my own effort and has not been submitted to any other institution.

Contents
1.
2.

An introduction to Religare Securities An over view of Capital Market Objective of the Project Role and importance of Stock Exchange Functions of Stock Market Development and trend of Indian Stock Market Globalization on Indian Stock Market

3. 4.

5. 6. 7. 8. 9. 10. 10. 11.

Securities Exchange Board of India(SEBI) and functions Concept of Risk & Return and Beta Overview and reasons of Volatility Review of related literature Research Methodology Analysis and Results Conclusion Bibliography

INTRODUCTION TO RELIGARE SECURITIES LTD.

Religare, a Ranbaxy promoter group company, is one of Indias largest and fastest growing integrated financial services institutions. The company offers a large and diverse bouquet of services ranging from equities, commodities, insurance broking, to wealth advisory, portfolio management services, personal finance services, Investment banking and institutional broking services. The services are broadly clubbed across three key business verticals- Retail, Wealth management and the Institutional spectrum. Religare Enterprises Limited is the holding company for all its businesses, structured and being operated through various subsidiaries. Religares retail network spreads across the length and breadth of the country with its presence through more than 900 locations across more than 300 cities and towns. Having spread itself fairly well across the country and with the promise of not resting on its laurels, it has also aggressively started eyeing global geographies

Recently, Religare has also partnered with AEGON, one of the largest insurance and pension companies globally, to offer Life Insurance and Mutual Fund products in India. The venture shall combine the international expertise of AEGON with the distribution strength of Religare.

Vision & Mission of Religare Securities Ltd.

Vision:To build Religare as a globally trusted brand in the financial Services domain and present it as the investment of India` Mission:Providing financial care driven by the core values of diligence and transparency. Brand Essence:Providing financial service care

Management profile:-

Mr. Sunil Godhwani- CEO & Managing director, Religare Enterprises Ltd. He is also a director in subsidiary business including
Religare Securities Ltd., Religare Commodities Ltd. and Religare Insurance Broking Ltd.

Mr. Anil Saxena:-Group chief operating officer, Religare Enterprises Ltd. Mr. Anil Saxena (Group Chief Finance Officer),

Aged 38 years, carries the overall responsibility for management and supervision of our group and has played a key role in driving its growth. He joined RSL on August 1, 2001. RSL, at that relevant point of time, was a subsidiary of Fortis Financial Services Limited, our Promoter Group Company. He received a bachelors degree in commerce from the University of Delhi. He is a member of the Institute of Chartered Accountants of India as well as the Institute of the Cost and Works Accountants of India. Prior to joining us, he was at Kotak Securities Limited as their Vice-President. In the past, he has also worked with Fortis Financial Services Limited and R. Singhania & Co. He has over 15 years of experience in the financial services industry.

Board of Directors - Religare Enterprises Limited

Mr. Malvinder Mohan Singh - Chairman (Non Executive) Mr. Sunil Godhwani - CEO & Managing Director Mr. Shivinder Mohan Singh - Non Executive Director Mr. Harpal Singh - Non Executive Director Mr.Deepak Ramchand Sabnani - Independent Director Mr.Padam Bahl - Independent Director Mr.J.W. Balani - Independent Director Mr. Baldev Singh Johal - Independent Director Mr. R. K. Shetty - Alternate to Mr. J. W. Balani Capt.G.P.S.Bhalla - Alternate to Mr. Deepak Sabnani

Establishment of Religare Securities Ltd.:Religare Enterprises Limited establish on may 2006 by Ranbaxy Promoter group company . The group include following:

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Brand Identity
Name:Religare is a Latin word that translates as 'to bind together'. This name has been chosen to reflect the integrated nature of the financial services the company offers. The name is intended to unite and bring together the phenomenon of money and wealth to co-exist and serve the interest of individuals and institutions, alike. Symbol:The Religare name is paired with the symbol of a four-leaf clover. The four-leaf clover is used to define the rare quality of good fortune that is the aim of every financial plan. It has traditionally been considered good fortune to find a single four leaf clover considering that statistically one may need to search through over 10,000 three-leaf clovers to even find one four leaf clover Each leaf of the four-leaf clover has a special meaning in the sphere of Religare. 1st Leaf :The first leaf of the clover represents Hope. The aspirations to succeed the dream of becoming, Of new possibilities. It is the beginning of every step and the foundations on which a person reaches for the stars. 2nd Leaf :The second leaf of the clover represents Trust. The ability to place ones own faith in another. To have a relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all not in the binding but in the bond that is built. 3rd Leaf:The third leaf of the clover represents Care. The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all. 4th Leaf:The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative moments of success.

Investment Banking
We provide innovative, integrated and best-fit solutions to our corporate customers. It is our continuous endeavor to provide value enhancement through diverse financial solutions on an ongoing basis, through offerings like Corporate Debt, Private Equity, IPO, ECB, FCCB, GDR/ADR etc. Investment Banking with Religare offers the following services:-

Corporate Finance:We focus on finding right and relevant partners for our clients, who not only help in adding value but also improve the future valuation of the organization. We specialize in structured financing and providing advisory services related to financial planning, modeling and advising on financial requirements.

Corporate finance products offered by us:Placement of Debt

Syndication of Domestic Loan / Foreign Currency Loan Securitization Debt Swap & Loan Restructuring Short Term Corporate Debt Working Capital (Cash Credit & Short term Loan) Capital Market Instruments Overseas Acquisition Placement of Equity (Private Equity) Both for listed and unlisted companies Merchant Banking IPO/FPO/RIGHTS Mergers & Acquisitions Corporate Advisory Services ADR/GDR/FCCB BUY BACK OF SHARES

R-ALLY
Trading in Equities with Religare truly empowers you for your investment needs. A highly process driven, diligent approach backed by powerful Research & Analytics and one of the best in class dealing rooms ensures that you have a superlative experience. Further, Religare also has one of the largest retail networks, with its presence in more than 900 locations across more than 320 towns & cities. This means, you can walk into any of these branches and connect to our highly skilled and dedicated relationship managers to get the best services. You could also choose to enjoy the freedom to execute your own trade through our online mechanism.

International Advisory
International Advisory Fund Management Services (AFMS)

- A new horizon for international investments

We provide our wealth clients an opportunity to invest in international financial instruments (currently limited to the US). Equities, Mutual Funds and Debts are some of the key instruments available and the clients have the option to choose from various asset allocation modules. Why Invest Overseas? Avenues for enhancing returns, minimizing risk and portfolio diversification Global outreach of opportunities Pre-approved route for resident individuals to invest (Healthy Govt. Patronage and favorable regulatory developments)

ON LINE TRADING BY RELIGARE SECURITIES LTD.

On line investing will never be the same .Trade rewards at Religare on line .A unique 360 degree portal that offers not just an enriched investment experience but also reward each time you invest . Now can reward points each time you trade in Equities and Commodities or invest in mutual funds and your favorite IPOs with us through our highly sophisticated and customized trading platform R-ACE (Religare Advanced Client Engine) .You can start redeeming your reward points against our list of attractive Gift Vouchers and Offers . So join the revolution! Enrich your experience of investing online and open yourself to a whole new world of rewards and goodies. All this with a host of revolutionary features, will surely change the way you invest online.

PORTFOLIO MANAGEMENT SERVICE (PMS)

Religare offers PMS to address varying investment preferences. As a focused service, PMS pays attention to details, and portfolios are customized to suit the unique requirements of investors. Religare PMS currently extends five portfolio management schemes, viz Panther, Tortoise, Elephant, Caterpillar and Leo. Each scheme is designed keeping in mind the varying tastes, objectives and risk tolerance of our investors.

Investment Philosophy
We believe that our investors are better served by a disciplined investment approach, which combines an understanding of the goals and objectives of the investor with a fine tuned strategy backed by research. Stock specific selection procedure based on fundamental research for making sound investment decisions. Focus on minimizing investment risk by following rigorous valuation disciplines. Capital preservation. Selling discipline and use of Derivatives to control volatility. Overall to enhance absolute return for investors.

Our Schemes:-

Panther:The Panther portfolio aims to achieve higher returns by taking aggressive positions across sectors and market capitalizations. It is suitable for the High Risk High Return investor with a strategy to invest across sectors and take advantage of various market conditions.

Tortoise:The Tortoise portfolio aims to achieve growth in the portfolio value over a period of time by way of careful and judicious investment in fundamentally sound companies having good prospects. The scheme is suitable for the Medium Risk Medium Return investor with a strategy to invest in companies which have consistency in earnings, growth and financial performance.

Elephant:The Elephant portfolio aims to generate steady returns over a longer period by investing in Securities selected only from BSE 100 and NSE 100 index. This plan is suitable for the Low Risk Low Return investor with a strategy to invest in blue chip companies, as these companies have steady performance and reduce liquidity risk in the market.

Caterpillar:The Caterpillar portfolio aims to achieve capital appreciation over a long period of time by investing in a diversified portfolio. This scheme is suitable for investors with a high risk appetite. The investment strategy would be to invest in scrips which are poised to get a re-rating either because of change in business, potential fancy for a particular sector in the coming years/months, business diversification leading to a better operating performance, stocks in their early stages of an upturn or for those which are in sectors currently ignored by the market.

Leo:Leo is aimed at retail customers and structured to provide medium to long-term capital appreciation by investing in stocks across the market capitalization range. This scheme is a mix of moderate and aggressive investment strategies. Its aim is to have a balanced portfolio comprising selected investments from both Tortoise and Panther. Exposure to Derivatives is taken within permissible regulatory limits.

The Religare Edge:We serve you with a diligent, transparent & process driven approach and ensure that your money gets the care it deserves.

No experts, only expertise:Religare PMS comes to you from Religare, a Ranbaxy promoter group company with a
solid reputation for an ethical and scientific approach to financial management. While we offer you the services of a Dedicated Relationship Manager who is at your service 24x7, we do not depend on individual expertise alone. For you, this means lower risk, higher dependability and unhindered continuity. Moreover, you are not limited by a particular individuals investment style.

No Hidden profits:
We ensure that a part of the broking at Religare Portfolio Management Services is through external broking houses. This means that your portfolio is not churned needlessly. Using more broking firms gives us access to a larger number of reports and analysis, enabling us to make better, more informed decisions. Furthermore, your portfolio is customised to suit your investment objectives.

Daily disclosures:
Religare Portfolio Management Services gives you daily updates on your investment. You can pinpoint where your money is being invested, 24x7, instead of waiting till the end of the month to keep track.

What is on Line Share Trading or internet trading?

On line trading is a service offered on the internet for purchase and sale of share. In the real world, you place order on your stock broker either verbally (personally or telephonically) or in a return form (Fax). In on Line Trading, you will access a stock brokers website through your internet enabled PC and place orders through the brokers internet based trading engine .These orders are routed to the stock Exchange either out manual intervention and executed there on in a matter of a few second.

How Online Trading Is Done

Computer at NSE via VSAT at NSEs office. A message relating to the order activity is broadcast to the respective member. The order confirmation message is immediately displayed on the PC of the broker. This order matches with the existing passive order(s), otherwise it waits for the active orders to enter the system. On order matching, a message

is broadcast to the respective member. The trading system operates on a strict price time priority. All orders received on the system are sorted with the best priced order getting the first priority for matching i.e., the best buy orders match with the best sell order. Similar priced orders are sorted on time priority basis, i.e. the one that came in early gets priority over the later one. Orders are matched automatically by the computer keeping the System transparent, objective and fair. Where an order does not find a match, it remains in the system and is displayed to the whole market, till a fresh order comes in or the earlier order is cancelled or modified. The trading system provides tremendous flexibility to the users in terms of kinds of orders that can be placed on the system. Several timerelated (good till cancelled, good till day, immediate or cancel), price-related (buy/sell limit and stop loss orders) or volume related (all or none, minimum fill, etc) conditions can be easily built into an order. The trading system also provides complete market information on-line. The market screens at any point of time provide complete information on total order depth in a security, the five best buys and sells available in the market, the quantity traded during the day in that security, the high and the low, the last traded price, etc. Investors can also know the fate of the orders almost as soon as they are placed with the trading members. Thus the NEAT system provides an Open Electronic Consolidated Limit Order Book (OECLOB). Limit orders are orders to buy or sell shares at a stated quantity and stated price. If the price quantity conditions do not match, the limit order will not be executed. The term limit order book refers to the fact that only limit orders are stored in the book and all market orders are crossed against the limit orders sitting in the book. Since the order book is visible to all market participants, it is termed as an Open Book. Let us start with the United States. A brief set of information consisting of Stock Exchanges functioning, online share broking firms, and the latest technology they are offering for hassle -tree service for their customers etc.

Why Online Share Trading?

What about security of my money, demat shares and my transaction documents?

Isn't trading through the Internet a difficult and cumbersome process? But I am not comfortable with Internet, or with finance, how can online trading be easy for me? Isn't trading through the Internet a costly affair? I am pretty satisfied with my present broker who serves me off line. Why should I choose to go online to trade shares? How frequently is the price updated at all these online trading sites? How can I be sure that I shall be trading at a price I want to or at a ricpe appearing in the website? Is trading through the Internet safe? The safety of transactions on the Internet depends on the encryption system used. The better this transaction system, the more difficult it is for any person to hack the site.

Firstly:
Internationally, the best system available today, is the 128-bit encryption, a system, which even the Pentagon uses. ICICIdirect.com is one of the few online share-trading sites in the country equipped with this 128-bit encryption.

Secondly:
you too can ensure the safety of the transactions online. You normally get a secured user id and password, the secrecy of which is to be maintained entirely by you.

Thirdly:
If the transaction system requires no manual intervention, you further improve the safety in the transactions. Among Indian sites, ICICIdirect.com is one of the very few fully integrated online trading sites. This enables the elimination of the possibility of any manual intervention. Which means orders are directly sent to the exchange ensuring that you get the best and right price?

No charge till you profit

So sure are we of our approach to Portfolio Management that we do not charge you for our services, until your investments start showing profit. With customized investment options Religare Portfolio Management Services invites you to invest across five broad portfolios to suit your investment needs. Except fixed administrative charges.

An overview of capital market

The term capital market refers to the institutional arrangements for facilitating the borrowing and lending of long term funds. In widest sense, it consists of a series of channels through which savings the community are available for industrial and commercial enterprises and public authorities. The major functions performed by a capital market are: 1. Mobilization of financial resources on a nation wide scale. 2. Securing the foreign capital and know how to fill up the deficit in the required resources for economic growth at a faster rate. 3. Effective allocation of the mobilized financial resources, by directing the same to projects yielding highest yield or to the projects needed to promote balanced economic development. Intermediaries: Intermediaries are institutional or individual agencies who assist in the process of transforming savings into investment. The major intermediaries in the capital market are: 1. Merchant banker, 2. Under-writers, 3. Registrars, 4. Brokers, 5. Depositories, 6. Collecting agents, 7. Agents, 8. Stock brokers and sub brokers. 9. Mutual funds.

Market Types
The Capital Market system has four types of market. (a) Normal Market Normal market consists of various book types wherein orders are segregated as Regular Lot Orders, Special Term Orders, Negotiated Trade Orders and Stop Loss Orders depending on their order attributes. (b) Odd Lot Market Pursuant to the directive of SEBI to provide an exit route for small investors holding physical shares in securities mandated for compulsory dematerialized settlement, the Exchange has provided a facility for such trading in physical shares not exceeding 500 shares. This market segment is referred to as 'Limited Physical Market' (small window). The Limited Physical Market was introduced on June 7, 1999. (c) RETDEBT Market Trading in the Retail Debt Market takes place in the same manner in which the trading takes place in the equities (Capital Market) segment. The RETDEBT Market facility on the NEAT system of Capital Market Segment is used for entering transactions in RDM session. Trading Members who are registered members of NSE in the Capital Market segment or Wholesale Debt Market segment are allowed to trade in Retail Debt Market (RDM) subject to fulfilling the capital adequacy norms. (d) Auction Market In the Auction market, auctions are initiated by the Exchange on behalf of trading members for settlement related reasons. Auctions are initiated by the Exchange on behalf of trading members for settlement related

reasons. The main reasons are Shortages, Bad Deliveries and Objections. There are three types of participants in the auction market. (a) Initiator: The party who initiates the auction process is called an initiator. (b) Competitor: The party who enters on the same side as of the initiator is called a competitor. (c) Solicitor: The party who enters on the opposite side as of the initiator is called a solicitor. Other types of Capital Market These are of two types: a) Primary Market or New Issue Market b) Secondary Market or Stock Market

Primary and Secondary Market

In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Primary market is where a company makes its first contract with the public at large in search of capital. Secondary market is an equity trading avenue in which already existing/preissued securities are traded amongst investors. The secondary market refers to the stock market where the long term financial instruments which are used for raising capital are traded.

Stock Exchange: An Overview

To stock exchange is basically a market place where buyers and sellers transact business through agents called broker. That is why stock exchange is often referred to a stock market or share market. The term security is a broad

genetic term covering equity shares, preference shares, debentures and loans. Floated by Govt. and any other instrument prescribed by Govt. as a security.

In a laymans language you can define stock exchange as legally recognized place where the brokers can sell and purchase securities as the described by the common public. In a stock exchange only the member can transact in securities according to the rules and regulations, laws and by the laws of the stock exchange. Those members are at liberty to act either as jobbers brokers. The stock exchange is an institution of paramount importance in economic life of a country. In fact in the absence of the stock it would be impossible to mobilize the resources from investors to the new projects as the ownership right i.e. share will not via bought and sold. This is the stock exchange that provides liquidity to the private investment in corporate enterprises. The past decade in many ways has been remarkable for securities market in India. It has grown exponentially as measured in terms of amount raised from the market, number of stock exchanges and other intermediaries, the number of listed stocks, market capitalization, trading volumes and turnover on stock exchanges, and investor population. Along with this growth, the profiles of the investors, issuers and intermediaries have changed significantly. The market has witnessed several institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency, transparency, liquidity and safety. In a short span of time, Indian derivatives market has got a place in list of top global exchanges. In single stock futures category, the Futures Industry Association (FIA) placed NSE in second position in the year 2000.

Reforms in the securities market, particularly the establishment and empowerment of SEBI, market determined allocation of resources, screen based nation-wide trading, dematerialization and electronic transfer of securities, rolling settlement and ban on deferral products, sophisticated risk management and derivatives trading, have greatly improved the regulatory framework and efficiency of trading and settlement. Indian market is now comparable to many developed markets in terms of a number of qualitative parameters. Management of stock exchange is done by an elected body of members. These bodies are known by different names in different stock exchange for example, Bombay, Indore,, Ahemdabad stock exchange are managed by a Governing board, the madras stock exchange is managed by a committee while other stock exchanges are managed by board of directors. These governing bodies are powerful bodies enjoying extensive administrative power of management and control over their respective stock exchange; the day to day functions of the stock exchanges are executed by the subcommittee like the defaulters committee, listing committee, settlement committee etc. The stock exchanges are the important segments of their capital market. If the stock exchange is well organized and regulated and work smoothly then it is an indicator of healthy capital market. If the state of the stock exchange is good then overall capital market will grow and otherwise it can suffer a great set back which is not good for the country. The stock market and the capital market are controlled by the government at various stages.

A capital market comprises of financial assets excluding coins and currency. The majority of financial assets include banking accounts, pension, provident funds, mutual funds, insurance policies, shares and securities.

Financial assists are the claim of holders over issuer (business firms and government). They enter in the different segments of financial market, those having short maturities are non transferable like bank savings, and current accounts set the identifications for the monetary financial assets. This market is known as money market, equity, preferential shares and bonds and debentures issued by the companies and bond securities issued by the government constitute the financial assets which are traded in the capital market Both money market and financial market constitute the financial market. Capital market generally known as stock exchange. This is an institution around which every activity of national capital market resolves. Through the medium of stock exchange the investors gets on impetus and motivation to invest in securities. Without stock exchange they would not able to make the liquidity in their securities. If there will no stock exchange then they could not be able to get so much return on their investment. The stock exchange provides the opportunities to the investors for continuing trading in securities.

Origin and Growth

The first stock exchange was set up in India under the name of Native share and stock brokers association of Bombay (known as Mumbai stock exchange) in 1875. The stock exchanges in India had made a phenomenal growth since World War II. During this period, numerous stock exchanges were set up at Ahmedabad,

Kanpur, and Hydrabad and at Delhi. In 1951 the government prepared a draft bill for stock exchange regulation and referred it to an expert committee under the chairmanship of A.D.Gorwala.

On the recommendations of the committee, the government passed the securities contracts (regulation) act, 1956. The principal objectives of this act are: 1. To regulate stock market practices. 2. To create efficient securities market. 3. To ensure fair dealing and protection to investors. 4. To improve the working of stock exchange. So far govt. of India has recognized 23 stock exchanges which are as follows: U.P. stock exchange, Kanpur. Vadodara stock exchange, Vadodara. Koyambtour stock exchange, Coimbatore. Meerut stock exchange, Meerut. Mumbai stock exchange, Mumbai. Over the counter exchange of India, Mumbai. National stock exchange, Mumbai. Ahmedabad stock exchange, Ahmedabad. Bangalore stock exchange, Bangalore.

 Bhuvaneshwar stock exchange, Bhuvneshwar. Calcutta stock exchange, Calcutta Cochin stock exchange, Cochin. Delhi stock exchange, Delhi. Guwahati stock exchange Guwahati. Hydrabad stock exchange, Hydrabad.

Jaipur stock exchange, Jaipur. Canara Stock exchange, Mangalore. Ludhiana stock exchange, Ludhiana. Chennai stock exchange, Chennai. M.P. stock exchange, Indore. Magadh stock exchange, Patna. Pune stock exchange, Pune. Saurashtra stock exchange, Rajkot. So there are 21 stock exchanges in India (excluding NSE and OTCI), the largest among them being the Bombay stock exchange (BSE). BSE alone accounts for over 80% of the total volume of transactions in shares. Typically, a stock exchange is governed by a board consisting of directors largely elected by the member brokers, and a few is nominated by the government. Government nominees include representatives of the Ministry of Finance, as well as some public representatives, who are expected to safeguard the public interest in the functioning of the exchanges. The board is headed by a president, who is an elected member, usually nominated by the government from the elected members. The Executive director, who is usually appointed by stock exchange with government approval, is the operational chief of the stock exchange. His duty is to

ensure that the day to day operations of the stock exchange are carried out in accordance with the various rules and regulations governing its functioning. The overall development and regulation of the securities market has been entrusted to the Securities and Exchange Board of India(SEBI) by an act of parliament in 1992.

OBJECTIVES OF THE STUDY

1. To study the investors perception towards Stock Market. 2. To study the awareness level about Stocks. 3. To study the preference of investment of investors. 4. To study the market share of particular Stock. 5. To study the volatility of Stock market. 6. To study the awareness of Stocks at different different time.

Role and Importance of Stock Exchange

The stock exchange plays a vital role in the economic functions of any country. Its role can be elaborated as under :

Liquidity and price continuity : The stock exchange provides a liquidity and continuous market where investors can convert their money in to securities in to money quickly with little variations in current market price during the trading hours by making bids and offer as it is open auction market where buyer and sellers compete among each other. The free market operation provides marketability, stability and continuity in prices.

Safety to investors : The transactions in the stock market are susceptible to fraud and manipulation by the speculators and members. To come over this, the central government has been provided wide powers by SCRA, 1956 and 1957. There are well defined by laws rules and regulations to admission of members, share trading practices, listing securities, continuous disclosure of material information by a listed company, penalties etc. to curb the unhealthy and speculative practices..

Evaluation of securities : Stock exchange like any other market, provides a mechanism for fixing the prices of securities through the inter play of demand and supply. It provides the mean for continuous process of evaluation of securities in term of their real worth in the market as close as possible to investment values, based on present and future earnings capacity, growth potential etc. The prices quoted on the stock market are given wide publicity and coverage through financial dailies like The Economic Times, Financial Express, Business Standard and websites also like www.nseindia.com, www.bseindia.com, www.timesofmoney.com.

Mobilization of savings : stock market mobilizes the saving of individuals and institutions and directs its flows into the most productive channels so as to serve in the best possible manner the interest of investors and economy. In prosperous and growing industries, the share price exhibits a rising trend and more flows of funds takes place. While in declining and sick industries, it shows declining trend and restricts the flow of funds these industries. The price movement on the stock exchange governs the flow of funds into a particular industry; thereby a well regulated stock exchange is of immense importance to economic development.

Widening share-ownership base : In a democratic developing economy, the fruits of growth in the national income should be shared by as many people as possible. The diffused ownership of the means of production helps in reducing the income disparities and checking the concentration of wealth in a few hands. In this endeavor, it becomes the duty of the security market to educate the masses in the art investment in securities in general and especially in developing countries where majority of people lives in the villages, uneducated and adequate up-to-date information is not available.

Functions of Stock Market

Maintaining active trading : Shares are traded on the stock exchange. Enabling the investors to buy and sell securities. The prices may vary from transaction to transaction. A continuous trading increases the liquidity or marketability of share traded on the stock exchange.

Fixation of prices : Prices is determined by the transaction that flow from investors demand and suppliers preference. Usually the traded prices are made known to public this help the investor to make better decision.

Ensure safe and fair dealing : The rules regulations and bye-laws of the stock exchange provide a measure of safety to the investors. Transactions

are conducted under competitive conditions enabling the investors to get a fair deal.

Aids in financing the industry : A continuous market for share provides a favorable climate for raising capital. The negotiability and transferability of the securities helps the companies to raise long term funds. When it is easy to trade the securities investors are willing to subscribe to initial public offering. This stimulates the capital formation.

Dissemination of information : Stock exchange provides the information through various publications. They publish the share prices traded on daily basis along with the volume traded. Directory of corporate information is useful for the investors assessment regarding the corporate handout, handbooks and pamphlets provide information regarding the functioning of stock exchange.

Performance induces : The price of stock reflects the performance of the traded companies. This makes the corporate more concerned with its public image and tries to maintain good performance.

Self-regulation organization : The stock exchange monitors the integrity of the members brokers, listed companies and clients. Continuous internal audit safeguards the investors against unfair trade practices; it settles the disputes between member brokers, investors and brokers.

Developments and Trends of Indian Stock Market

The post independent India has seen many radical changes in the stock market. With the rapid industrialization and increased pressure for economic

development, the government has taken many steps to promote the health of the Indian stock market. This is the evidence from the number of legislations that have come up after independence. The increase in the number and scope of development banks, growth in the underwriting business, rise in the number of stock exchanges and the emergence of full fledged regulatory body like the Controller of capital issue (now abolished) and the Securities and Exchange Board of India (SEBI) indicate the amount of efforts that has gone into creating a strong and well developed capital market. With the growing financial needs of the economy in general, and corporate and individual investors in particular, the Indian capital market has witnessed the emergence of newer type of organizations like Mutual Funds and Asset Management Companies, Merchant Bankers, specialist services like Financial Advertisement, Credit Rating, Custodial and Depository services etc. even the working of stock exchange has made a departure from conventional floor trading to online and a much more transparent system of trading with the establishment of new variant of stock exchanges like National Stock Exchange (NSE) and Over the Counter Exchange of India (OTCEI). With an intention to promoting investors convenience and physical shares have given way to dematerialized scripts, where an investor is saved from the botheration of handling and safeguarding physical certificates.

Globalization on Indian Securities Market

In view of the globalization and the policy of liberalization, the Indian stock market is getting increasingly integrated with the rest of the world. Indian companies have been permitted to resources from abroad through issue of ADRs,

GDRs, FCCBs and EDBs. Indian companies are permitted to list their securities on foreign stock exchanges by sponsoring ADR/GDR issues against block shareholding. Further NRIs and OCBs are allowed to invest in Indian companies. FIIs have been permitted to invest in all type of securities, including government securities. The investment by FIIs enjoys full capital account convertibility with the evidence of the globalization, the quest for funds has broken the national frontiers and issues of securities have expanded their investor base in other countries also. Many new instruments have been issued overseas to raise capital from abroad like the floating rates notes (FRNs), the fixed rate bonds, Resurgent Indian Board etc. In the international debt market, the most commonly, important and widely accepted instruments has been, however the GDRs. This is the evidence from the fact that since the financial year 1993 to financial year 1997, the amount raise through GDRs has increased with the only drop in the year 1996 when it showed an decrease. There has been no dearth of instrument floating by Indian companies in the international capital market, foreign currency, convertible bonds, Yankee bonds etc are few examples of this category.

Securities and Exchange Board of India (SEBI)

SEBI was initially constituted on 12 April 1988 as a non statutory body through a resolution of the government for dealing with all matters relating to development and regulation of securities market and investor protection and to

advise the government on all these matters. SEBI was given statutory status and power through an ordinance promulgated on January 30, 1992. SEBI is managed by six members-one chairman (nominated by central government), two members (officers of central ministers), one member from RBI and remaining two members are nominated by central government. The office of SEBI is situated at Mumbai with its regional offices at Calcutta, Delhi and Chennai. In 1988 the initial capital of SEBI was Rs. 7.5 crore which are provided by its promoters (IDBI, ICICI, IFCI). This amount was invested and with its interest amount day to day SEBI are met. All statutory power for regulating Indian capital market are vested with SEBI itself.

Functions of SEBI
1. To safeguard the interests of investors and to regulate capital market with suitable measures. 2. To regulate the business of stock exchanges and other securities market. 3. To regulate the working of stock brokers, sub-brokers, share transfer agents, trustees, merchant bankers, underwriters, portfolio managers etc. and also to make their registration. 4. To register and regulate collective investment plans of mutual funds. 5. To encourage self regulatory organizations. 6. To eliminate malpractices of security markets. 7. To train the persons associated with security markets and also to encourage investors education. 8. To check insider trading of securities. 9. To supervise the working of various organizations trading in security market and also to ensure systematic dealings.

10. To promote research and investigations for insuring the attainment of above objectives. The following departments of SEBI take care of the activities in the secondary market. Sr.No. 1. Name of the Department Market Intermediaries Registration Supervision 2. Major Activities Registration, supervision, compliance

monitoring and inspections of all market and intermediaries in respect of all segments of the markets viz. equity, equity derivatives, debt

department (MIRSD) and debt related derivatives. Market Regulation Formulating new policies and supervising the Department (MRD) functioning and operations (except relating to derivatives) of securities exchanges, their subsidiaries, and market institutions such as Clearing and settlement organizations and Depositories (Collectively referred to as Market SROs.) Derivatives and New Supervising trading at derivatives segments of Products Departments stock exchanges, introducing new products to (DNPD) be traded, and consequent policy changes

3.

Two main stock exchanges of India:

1. National stock exchange (NSE). 2. Bombay stock exchange (BSE). NSE :

The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. BSE : The Stock Exchange, Mumbai, is now Bombay Stock Exchange Limited. The Exchange has a new name, and an entirely new perspective. A perspective born out of corporatization and demutualization. Bombay Stock Exchange Limited is Asias oldest stock exchange. It carries within itself the depth of knowledge of capital markets acquired since its inception in 1875. Located in Mumbai, the financial capital of India, it has been the backbone of the countrys capital markets.

Concept of Risk & Return

Whenever we talk about investments, there is always some risk associated with all of them. Risk is the most dreaded word in all the financial markets across the globe. Any person, who is operating in the financial markets, in whatever capacity,

has to face risk. So the question in most minds is, what exactly this RISK is? What does it mean? In general terms, risk means any deviation from expectations. In Financial parlance, risk means any deviation from the expected returns. More specifically, the probability that the returns from any asset will differ from the expected yields is the risk inherent in that asset.

Risk inherent in equity investments

Equity investment is the most risky investment in all the financial markets. So one needs to have an understanding of risks associated with equity investments. Broadly, there are two types of risks associated with equity investments, viz., systematic risk and unsystematic risk. Lets have an understanding of these two types of risks.

Systematic Risk Or Market Risk

Systematic risk can be defined as that portion of total risk, which is caused by factors that are uncontrollable, external and broad in their effect. These factors can be attributed to the investors reaction to tangible as well as intangible events.

Tangible events include economic, political and sociological changes that occur within a particular country. Intangible events are subjective and depend on the psyche of the investor. Change in share price is the result of the investors response to external events. For example, the investors reaction to excessive selling could push the prices down much below its fundamental value. Or fear that a particular government may collapse could also adversely affect the stock market, as the investor may be pessimistic about the overall economy of the country.

Interest rate and Inflation are integral forces behind market risk and a part of the larger category of systematic or market risk.

Interest Rate Risk

The deviation of the actual income from the expected income due to fluctuations in interest rates is known as interest rate risk. The rate of return on various securities is benchmarked with the rate of return on government securities, which are considered risk-free by investors. For example, if the interest rate on government securities changes from 9% to 9.5% p.a, then the market prices of all the securities yielding 9% return will decline. The increase in interest rates will cause the price of securities price to fall or vice-versa. Changes in interest rate can influence the purchase of stocks to be more or less attractive, in terms of margin. Changes in interest rate will affect a firm whose capital structure contains a major portion of debt and also, financial institutions whose main area of business is lending. As the interest rate increases, a major portion of the income of these firms (with high debt) will go towards paying interest on borrowed capital. This will result in lower earnings, dividends and ultimately share prices. Increasing interest rate will also impact the lending institutions but in positive way. Increase in interest will increase the revenue of these financial institutions by way of interest received on loans. So, for these institutions higher earning will lead to increase in dividend payment and hence increase in share prices.

Purchasing-Power Risk
Purchasing Power risk can be defined as changes that occur in investor purchasing power as a result of changes in the general price level. Rising prices of goods and services is referred to as inflation, while declining prices of goods and services is

known as deflation. Both inflation and deflation affect the purchasing power of the customer. Any rational investor should include in their estimates, future changes in general price levels. As the interest rate risk affects prices of bonds and stocks, in the same way changes in price levels also affect the prices of stocks. Suppose the consumer index hovers around 3.5% and gradually increases to 4.5 %, then the required rate of return will shift upward, affecting Government bonds as well as stocks. Interest rate risk can be defined as uncertainties in terms of money received, and purchasing power risk in terms of goods and services that can be purchased with the money received.

Measurement of Market Risk

Systematic risk of a portfolio is measured by Beta (). An index of systematic risk. It measures the sensitivity of a stocks return to changes in returns on the market portfolio. The beta of a portfolio is simply a weighted average of the individual stock betas in the portfolio. Beta () is simply the slope (i.e. the change in excess return on the stock over the change in excess return on the market portfolio) of the characteristic line. If the slope is 1.0, it means the stock has the same systematic risk as the market as a whole. A slope greater than 1.0 means that the stocks excess return varies more than proportionally with the excess return of the market portfolio. This type of stock is often called as aggressive investment.

Calculation of Beta () is expressed as (Rj) and the Rate of return on market portfolio i.e. Rm divided by the Standard deviation of the return on market portfolio.

 = Cov (Rj,`Rm)/ sm2 Advantages of Beta To followers of CAPM, beta is a useful measure. A stock's price variability is important to consider when assessing risk. Indeed, if you think about risk as the possibility of a stock losing its value, beta has appeal as a proxy for risk. Intuitively, it makes plenty of sense. Think of an early-stage technology stock with a price that bounces up and down more than the market. It's hard not to think that stock will be riskier than, say, a safe-haven utility industry stock with a low beta. Besides, beta offers a clear, quantifiable measure, which makes it easy to work with. Sure, there are variations on beta depending on things such as the market index used and the time period measured, but broadly speaking, the notion of beta is fairly straightforward to understand. It's a convenient measure that can be used to calculate the costs of equity used in a valuation method that discounts cash flows.

Disadvantages of Beta However, if you are investing in a stock's fundamentals, beta has plenty of shortcomings.

For starters, beta doesn't incorporate new information. Consider the electrical utility company American Electric Power (AEP). Historically, AEP has been considered a defensive stock with a low beta. But when it entered the merchant energy business and assumed high debt levels, AEP's historic beta no longer captured the substantial risks the company took on. At the same time, many technology stocks, such as Google, are so new to the market they have insufficient price history to establish a reliable beta. Another troubling factor is that past price movements are very poor predictors of the future. Betas are merely rear-view mirrors, reflecting very little of what lies ahead. Furthermore, the beta measure on a single stock tends to flip around over time, which makes it unreliable. Granted, for traders looking to buy and sell stocks within short time periods, beta is a fairly good risk metric. But for investors with long-term horizons, it's less useful.

What Is Volatility? People speak of volatility without defining what they mean by the term. In financial terms, volatility is:

The degree to which the price of a security, commodity, or market rises or falls within a short-term period. There are several things to note about this definition. Most importantly, the definition specifically mentions price increases and decreases. People are usually most concerned about volatility during periods when prices decrease or go through a correction. During an extreme bull market, no one (with the possible exception of investors with short positions) seems to care that the markets are exhibiting volatility. Also, most people use volatility and risk interchangeably. However, volatility has to do with variability while risk has to do with variability that is unpredictable or uncertain. Different investors in different market sectors may have different characteristics with respect to risk. Because of this, different sectors may have different volatilities. Therefore, looking at the volatility of a market really means looking at the volatility of the indices of the securities within the market. For each individual security, its beta measures the securitys volatility relative to the market as a whole, but if beta stays the same, and the markets risk increases, then the risk associated with a given security will increase.

What Causes Volatility? There are a number of things that cause volatility. Arbitrage causes volatility. Arbitrage is the simultaneous or almost simultaneous buying and selling of an

asset to profit from price discrepancies. Arbitrage causes markets to adjust prices quickly. This has the effect of causing information to be more quickly assimilated into market prices. This is a curious result because arbitrage requires no more information than the existence of a price discrepancy. Another obvious reason for market volatility is technology. This includes more timely information dissemination, improved technology to make trades and more kinds of financial instruments. The faster information is disseminated, the quicker markets can react to both negative and positive news. Improved trading technology makes it easier to take advantage of arbitrage opportunities, and the resulting price alignment arbitrage causes. Finally, more kinds of financial instruments allow investors more opportunity to move their money to more kinds of investment positions when conditions change.

Unsystematic risk
Unsystematic risk is specific to particular company or an industry. It is that portion of the total risk that arise due to the factors which effects the internal working of the firm. Factors like, management capability, consumer preferences, labor strikes and stages in product life cycle can affect the firms variability in return.

Business Risk Business risk is faced by the firm due to the operating conditions prevailing within a firm and also the extent to which these conditions effects the operating income

and expected dividend variability of the firm. Business risk can be divided into two categories: Internal and External. Internal business risk signifies the internal competency or efficiency of the firm to effectively operate in the environment imposed on it. Every business firm is faced with internal risk and the degree to which these risk are minimized are reduce or minimized depends on the efficiency of the firm. External business risk arises from the circumstances imposed by the operating environment, which are beyond the control of the firm. Financial Risk The ways and means by which company finances their activity constitutes financial risk. The degree of financial risk can be inferred from the capital structure of the firm. The amount of debt or borrowed capital in the financial structure signifies interest payment by the firm to the debt holders or preference shareholders. Financial risk can be avoidable to the extent to which the management has the freedom to decide whether to borrow money or not. A debt free firm has no financial risk. Return The objective of any investor is to maximize expected returns from his investments, subject to various constraints, primary risk. Return is the motivating force, inspiring the investor in the form of rewards, for undertaking the

Investment. The importance of returns in any investment decision can be traced to the following factors:

 It enables investors to compare alternative investments in terms of what they have to offer the investor. Measurement of historical returns enables the investors to assess how well they have done.

Measurement of historical returns also helps in estimation of future returns.

This reveals that there are two types of returns- Realized or Historical return and expected return. Realized Return This is ex-post return or return that was or could have been earned. Expected Return This is return from an asset that investors anticipate or expect to earn over some future period. The expected return is subject to uncertainty, or risk, and may or may not Risk and return trade off: Risk and return are the primary ingredients in making investment choices. Expected return must be compared to risk. As risk increases, so must the return to compensate for the greater uncertainty. This is called the risk-return trade-off;

Namely, that there is greater risk in investment classes that offer potential of higher returns and vice-versa. Therefore, an investor has to choose between higher returns with higher risk versus lower risk accompanied, alas, by lower returns. The

risk/return trade-off is crucial. A new business may involve a lot of risk, but may offer higher return. On the other hand, government securities have minimal risk, so a low return is appropriate. Risk/Return Trade-Offs for Various Investment Vehicles

Risk and return trade off

CHAPTER 2

Review of the Literature

Review of Related Studies

Several research studies have been carried out to observe the stock market volatility. Volatility of stock returns has been mainly studied in the developed economies. After the seminal work of Engel(1982) on the autoregressive conditional Heteroscedasticity(ARCH) model and its generalized form(GARCH) by Bollerslev(1986), much of the empirical work has been used these models and their extensions. There is relatively less empirical research on stock return volatility in the emerging markets. In the Indian context, Roy and Karmakar (1995) focused on the measurement of the average level of volatility as the sample standard deviation and examined whether volatility has increased in the early 1990s; Goyal (1995) used conditional volatility estimates as suggested by Schwert (1989) to study the nature and trend of stock return volatility and the impact of carry forward system on the level of volatility; Reddy (1997-98) analyzed the effects of market microstructure, e.g., establishment of the NSE and the introduction of Bombay Stock Exchange Online Trading (BOLT) system on the stock return volatility measured as the sample standard deviation of the closing prices. Harvinder Kaurs study describes the extent and pattern of volatility in the Indian stock market during the last decade of the previous millennium i.e. from 19902000 the market is represented by the two most prominent spot prices indices viz. BSE Senses and S & P CNX Nifty.

It is found that the stock market volatility was the highest during 1992 followed by 1990 and 2000, in that order. It fell sharply after 1992 until 1995, after which it started increasing again. Among the months, April has been the most volatile

followed by March and February. Another study by Harvinder Kaur on Time varying Volatility in the Indian stock market describes that asymmetrical GARCH models outperform the conventional OLS models and symmetrical GARCH models. By the application of asymmetrical GARCH models EGARCH (1,1) to senses and TARCH (1,1) to Nifty returns, it is shown that day of the week effect or the weekend effect and the January effect are not present while the return and volatility do show intra week and intra year seasonality. The return and volatility on various weekdays have somewhat changed after the introduction of Rolling settlements. The paper of Golaka C nath and Manoj Dalvi tries to search for a suitable volatility measure for Indian stock market using tick level data and estimates six different kind volatility measures and compare them to understand which one performs best. The realized volatility estimates using the sum of squared returns from high frequency data performs better than the currently used IGARCH model by stock exchanges. The result is in agreement with the findings from developed markets. The aim of paper of Madhusudan Karmakar was to estimate conditional volatility models in an effect to capture the salient features of the stock market volatility in india and evaluates the models in terms of out of sample forecast accuracy. The estimation of volatility is made at macro level on two major market indices, namely, S &P CNX Nifty and BSE Senses. The fitted model is then evaluated in terms of its forecasting accuracy on these two indices.

In addition, 50 individual companies share prices included in S & P CNX Nifty are used to examine the heteroskedastic behavior of Indian stock market at the micro level. The vanilla GARCH (1,1) model has been fitted to both the market

indices and it is found that there is a strong evidence of time varying volatility, a tendency of the periods of high and low volatility to cluster, a high persistence and predictability of volatility. While turning to 50 individual underlying shares, it is observed that the GARCH (1,1) model has been fitted for almost aa companies. only eight out of 50 shares show significant leverage effects and really need an asymmetric GARCH model such as EGARCH to capture their volatility clustering which is left for future research. Prof. Turan and Dr. Bodla (2004) made a study of risk return analysis and correlation analysis for the select Asian stock markets. The study had brought out that the stock markets of Hong Kong and India have generated the highest return amongst select Asian countries, in terms of dollar and local currency respectively. Both risk and return are found lowest in case of Japan. Moreover, the Indian stock market shows the highest potential for inclusion in the international portfolio of equity securities as the correlation coefficients of it with other Asian markets are found lowest. Further, no significant difference is observed between different investment horizons as annualized returns are concerned. In other words, both active and passive investment strategies have yielded the similar level of return/risk irrespective of the country under consideration. Although the stock of Hong Kong and Singapore move more closely, the correlation between the returns of Asian countries is substantially less than unity. It implies that the Asian market offers a good opportunities for equity portfolio diversification.

CHAPTER 3 Research Methodology The procedure adopted for conducted the research requires a lot of attention as it has direct bearing on accuracy, reliability and adequacy of results obtained. It is due to this reason that research methodology, which we used at the time of conducting the research, needs to be elaborated upon. Research methodology is a way of systematically study & solve the research problems. If a researcher wants to claim his study as a good study, he/she must clearly state the methodology adopted in conducting the research so that it may be judged by the reader whether the methodology of work done is sound or not. The research methodology here includes Introductory Population Sampling Technique Sample size Data Collection Statistical Technique Limitation

Introductory The main aim of my project is to find the stock market volatility in context of Indian stock market.. The volatility is measured by risk return pattern and for this purpose I have selected 100 companies and an index for achieving the above mentioned objective I have undertaken the following procedure: Sampling Technique The sample has been selected on the basis of availability of required data. In other words convenient sampling method is adopted. Sample Size From all the listed companies and indices of NSE, 100 companies and S&P CNX Nifty index is selected. The list of the sample companies: 1 2 3 4 5 6 7 8 9 Table 3. 1 10 11 12 13 14 15 16 17 18 19 20 21 Balrampur Chini Mills Ltd Basf India Ltd. Bharat gears Ltd Bharat Petroleum Corporation Ltd Birla Ericsson Optical Ltd Birla Global Finance Ltd Bajaj Auto Ltd Bajaj Hindustan Ltd Bombay Dyeing & Mfg Co. Ltd Can Fin Homes Ltd Carborundam Universal Ltd Ceat Ltd. BALRAMCHIN BASF BHARATGEAR BPCL BIRLAERIC BGFL BAJAJAUTO BAJAJHIND BOMDYEING CANFINHOME CARBORUNIV CEAT Company Name Andhra sugars Ltd Aarti industries Ltd ABB Ltd Associated Cement Co. Ltd. Alfa Laval India Ltd Apollo Tyres Ltd. Arvind Mills Ltd. Ashok Leyland Ltd Asian paints Ltd Symbol ANDHRSUGAR AARTIIND ABB ACC ALFALAVAL APOLLOTYRE ARVINDMILL ASHOKLEY ASIANPAINT

22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64

Century Enka Ltd Chambal Fertilisers & Chemicals Ltd Ciplal Ltd Cochi Refineries Ltd Dhampur Sugar Mills Ltd EIH Ltd Escorts Ltd Essar Oil Ltd The Fedral Bank Ltd Flex Industries Ltd GIC Housing Finance Ltd Godfrey Phillips India Ltd Goetz(India) Ltd Grasim Industries Ltd GTC Industries Ltd Gujrat State Fertilisers & Chemicals Housing Development Finance Corp. HDFC Bank Ltd Hindustan Motors Ltd Hindustan Lever Ltd Hotel Leela Venture Ltd Industrial Development Bank Of India IFB Industries Ltd IFCI Limited Indian Hotels Co. Ltd Infosys Technologies Ltd Indian Oil Corporation Ltd Indian Petrochemicals Corpn. Ltd IPCA Laboratories Ltd ITC Ltd Jay Bharat Maruti Ltd Jayshree Tea & Industries Ltd Laxmi Machine Works Ltd Liberty Shoes Ltd LML Ltd Mahindra & Mahindra Ltd Maharashtra Scooters Ltd Mastek Ltd MRF Ltd Mysore Cements Ltd Nagarjuna Fertilisers & Chemicals Ltd Navneet Publications Ltd Nirma Ltd

CENTENKA CHAMBLFERT CIPLA COCHINREFN DHAMPURSUG EIHOTEL ESCORTS ESSAROIL FEDERALBNK FLEX GICHSGFIN GODFRYPHLP GOETZEIND GRASIM GTCIND GSFC HDFC HDFCBANK HINDMOTOR HLL HOTELEELA IDBI IFBIND IFCI INDHOTEL INFOSYSTCH IOC IPCL IPCALAB ITC JAYBARMARU JAYSREETEA LAXMIMACH LIBERTSHOE LML M&M MAHSCOOTER MASTEK MRF MYSORECEM NAGARFERT NAVNETPUBL NIRMA

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

Oil & Natural Gas Corpn Ltd Oudh Sugar Mills Ltd Parkash Industries Ltd Pidilite Industries Ltd Punjab Tractors Ltd Rajasthan Spg. & Wvg. Mills Ltd Rajsree Sugars & Chemicals Ltd Rama Newsprint and Papers Ltd Ranbaxy Laboratories Ltd Raymond Ltd Reliance Capital Ltd Reliance Industries Ltd Reliance Industrial Infrastructure Ltd S.kumars Nationwide Ltd Steel Authority of India Ltd Sakhti Sugars Ltd Salora International Ltd State Bank of India Siemens Ltd Sirpur Paper mills Ltd Shree Cements Ltd Sun Pharmaceuticals Industries Ltd Supreme Industries Ltd Surya Roshni Ltd Sutlej Industries Ltd Swaraj Engines Ltd Tamilnadu Newsprint & Papers Ltd Tata Power Co. Ltd TIL Ltd Universal Cables Ltd Videocon Appliances Ltd Voltas Ltd Videsh Sanchar Nigam Ltd Wipro Ltd Zodiac Clothing Company Ltd Zuari Industries Ltd

ONGC OUDHSUG PRAKASH PIDILITIND PUNJABTRAC RAJASSPG RAJSREESUG RAMANEWSPR RANBAXY RAYMOND RELCAPITAL RELIANCE RIIL SKUARSYNF SAIL SAKHTISUG SALORAINTL SBIN SIEMENS SIRPAPER SHREECEM SUNPHARMA SUPREMEIND SURYAROSNI SUTLEJINDS SWARAJENG TNPL TATAPOWER TIL UNIVCABLES VDOCONAPPL VOLTAS VSNL WIPRO ZODIACLOTH ZUARIAGRO

Data Collection The data regarding the selected companies is obtained from website of National Stock Exchange and India Infoline. The prices of the equity shares, NSE index figures have been collected from the Website of NSE. Data for the project is collected from secondary sources like newspapers, books, journals etc. Study Period In this study, study period is of 9 years from Jan 1997 to Dec 2005. Daily data of security and stock index have been collected from the website of NSE. Statistical Techniques
No. of statistical techniques are used in project for achieving the desired objective. The daily rate of return is calculated for all the 100 scrips during the study period. So the techniques used in the project are:

Return R = (Pt-Pt-1)/Pt-1 Where R is daily return Pt is the current days closing price Pt-1 is the previous days closing price Standard Deviation Estimates standard deviation based on a sample. The standard deviation is a measure of how widely values are dispersed from the average value (the mean). STDEV uses the following formula:

Variance Estimates variance based on a sample. In addition to numbers, text and logical values such as TRUE and FALSE are included in the calculation. VARA uses the following formula

Skew ness Returns the skew ness of a distribution. Skew ness characterizes the degree of asymmetry of a distribution around its mean. Positive skew ness indicates a distribution with an asymmetric tail extending toward more positive values. Negative skew ness indicates a distribution with an asymmetric tail extending toward more negative values.

The equation for skew ness is defined as:

where n = no. of observation xi = values s = standard deviation

Kurtosis Returns the kurtosis of a data set. Kurtosis characterizes the relative peaked ness or flatness of a distribution compared with the normal distribution. Positive kurtosis

indicates a relatively peaked distribution. Negative kurtosis indicates a relatively flat distribution. Kurtosis is defined as

where: s is the sample standard deviation.

Limitations of the Study However I have tried my best in collecting the relevant information. Yet there are always present some limitations under which researcher has to work. Here following are some limitations under which I had to work as shown below:
Sample Size

The prime limitation of the study is the size of the sample. The sample consists of 100 scrips, which are specified, in the National Stock Exchange. A larger sample, including more number of scrips would be a right choice. However, in general, a sample of carefully selected 100 scrips is considered as a larger sample. Since the sample scrips are selected randomly from the specified group shares, it is considered that the above sample would be sufficient for the purpose of analysis.

Time Constraint We had a limited time for conducting this analysis report, which was of three four months only. So some shortfalls may be present.

Based on secondary source Data is collected from secondary sources so authenticity of data depends on the authenticity of the sources from which the data is collected.

Chapter 4 Analysis and Results

Return & risk Statistics for S & P CNX Nifty and 100 NSE listed companies for period commencing from Jan 1999 to June 2009
Table 4.1
No. of S&P CNX Nifty Aandhra Sugar Aarti Industries ABB ACC Alfa Laval Apollo Tyre Arvind Mill Ashok Leyland Asian Paint Bajaj Hindustan Bajaj Hotel Balrampur Chini BASF Bharat Gear Bharat Petrol Birla Eric Birla Global Bombay Dyeing Can Fin Home Carborundam Ceat Century Enka Chambal Fertiliser Cipla Cochi Refinary Dhampur Eih Hotel Escorts Mean 0.00064 0.00150 0.00165 0.00056 0.00053 0.00126 0.00100 0.00063 0.00059 0.00032 0.00267 0.00038 0.00150 0.00042 0.00241 0.00082 0.00100 0.00245 0.00097 0.00099 0.00087 0.00067 0.00021 0.00089 0.00066 0.00099 0.00152 0.00008 0.00050 S.D. 0.01610 0.04047 0.03675 0.02491 0.03653 0.02904 0.03605 0.03630 0.04082 0.02269 0.04503 0.02415 0.02912 0.02728 0.06672 0.03405 0.04284 0.04734 0.03584 0.02779 0.03481 0.03785 0.03923 0.02536 0.03447 0.03376 0.04611 0.02398 0.03446 Var 0.00026 0.00164 0.00135 0.00062 0.00133 0.00084 0.00130 0.00132 0.00167 0.00051 0.00203 0.00058 0.00085 0.00074 0.00445 0.00116 0.00184 0.00224 0.00128 0.00077 0.00121 0.00143 0.00154 0.00064 0.00119 0.00114 0.00213 0.00057 0.00119 Skew -0.2230 0.4479 -2.5419 -0.0144 -7.4277 0.3976 0.7316 0.9495 -5.0370 -3.9980 -4.1125 -1.0456 0.5084 -0.0815 8.0156 -1.4314 1.0001 -1.4780 0.5477 1.1211 -5.6816 0.5245 -5.5839 1.1761 -9.2054 -0.6616 0.9170 0.2993 0.4682 Kurt 4.9533 3.4985 50.5802 3.3209 186.1596 1.8251 3.0446 3.9726 118.4198 77.6867 87.2412 19.2264 1.8135 7.7111 176.1557 24.2277 3.6914 35.3938 2.7793 10.8599 137.0795 1.7343 133.9161 14.0711 200.3654 25.3624 5.8465 2.2389 2.4433 2256 1975 2009 2256 2256 2236 2256 2256 2256 2256 1814 2256 2255 2237 1710 2253 2251 1863 2256 2225 2165 2254 2230 1935 2256 2256 2132 2254 2256

Essar Oil Federal Bank Flex GIC Housing Godfrey Phillip Goetz Grasim GTC Gujrat stat HDFC HDFC Bank Hindustan Motor HLL Hotel Leela IDBI IFB IFCI Indian Hotel Infosys IOC IPCA Lab IPCL ITC Jai Bharat Maruti Jai Sree Tea Laxmi Machine Liberty LML M&M Maharashtra Scot. Mastek MRF Mysore Cement Nagarjun Navneet Nirma ONGC Oudh Sugar Parkash Pidilite Punjab Tractors Rajasthan Spinning Rajsree Sugar Rama Newsprint

0.00131 0.00110 0.00088 0.00074 0.00136 0.00117 0.00098 0.00273 0.00077 0.00052 0.00161 0.00133 0.00022 0.00091 0.00068 0.00297 0.00041 0.00014 0.00164 0.00035 0.00167 0.00075 0.00098 0.00195 0.00062 0.00126 0.00107 0.00070 0.00074 0.00065 0.00198 0.00036 0.00165 0.00044 0.00127 0.00040 0.00121 0.00227 0.00360 0.00080 0.00008 0.00128 0.00152 0.00231

0.04315 0.03738 0.04746 0.03591 0.03117 0.03142 0.02886 0.06864 0.03712 0.03334 0.02674 0.04663 0.02861 0.03483 0.03499 0.08609 0.04033 0.02311 0.04226 0.03016 0.03394 0.03300 0.02501 0.04759 0.03522 0.03503 0.03336 0.03653 0.03117 0.03595 0.05230 0.02752 0.05624 0.03213 0.03555 0.02557 0.02866 0.06872 0.09076 0.02613 0.02874 0.04011 0.04581 0.06027

0.00186 1.7684 0.00140 -2.3276 0.00225 0.6658 0.00129 0.6965 0.00097 0.5154 0.00099 0.7620 0.00083 0.2149 0.00471 2.6111 0.00138 0.7300 0.00111 -11.1489 0.00071 0.6340 0.00217 1.9639 0.00082 -13.5299 0.00121 1.0264 0.00122 0.1567 0.00741 1.6802 0.00163 1.4708 0.00053 0.0716 0.00179 -5.0763 0.00091 -2.2754 0.00115 0.2569 0.00109 -0.0509 0.00063 0.1208 0.00226 -0.0748 0.00124 -0.6680 0.00123 -1.3008 0.00111 0.7831 0.00133 0.6102 0.00097 0.0654 0.00129 -0.0700 0.00274 -1.1547 0.00076 0.8112 0.00316 0.9132 0.00103 1.3837 0.00126 -3.9836 0.00065 0.6821 0.00082 0.4435 0.00472 1.2917 0.00824 2.6628 0.00068 -2.3476 0.00083 -5.6578 0.00161 0.6822 0.00210 1.8444 0.00363 1.4500

13.0071 49.9083 3.6863 5.6132 2.6547 2.7336 2.0167 30.6058 3.6157 284.2803 7.8185 11.7272 428.4556 5.3425 10.3853 17.1110 7.2762 3.3235 75.3539 39.1808 1.5236 8.2825 2.5586 7.9374 19.4248 20.6714 3.3706 2.3805 1.6496 19.4435 11.7912 4.8589 4.0422 7.5287 86.6597 4.1648 3.7120 57.1374 28.7117 47.6701 138.8020 3.4385 14.3287 7.0477

2197 1935 2255 2171 2175 2235 2256 2164 2254 2256 2256 2218 2256 2170 2256 1877 2256 2256 2256 2172 2253 2256 2256 1784 2180 2047 2123 2152 2256 2194 2236 2193 2214 2256 1771 2222 2254 1669 1563 2248 2206 1998 2203 2254

Ranbaxy Raymond Reliance Capital Reliance Ind. RIIL S.kumar SAIL Sakhti Sugar Salora SBI Siemens Sirpur Paper Mill Sree Cement Sun Pharma Supreme Surya Roshni Sutlej Swaraj Engine Tamilnadu Newsprint Tata Power Til Ltd Universal Cable Videocon Appliances Voltas VSNL Wipro Zodiac Zuari

0.00082 0.00097 0.00105 0.00088 0.00092 0.00220 0.00144 0.00198 0.00328 0.00082 0.00096 0.00148 0.00225 0.00126 0.00054 0.00109 0.00111 0.00042 0.00071 0.00096 0.00358 0.00267 0.00106 0.00146 0.00034 0.00193 0.00188 0.00013

0.02827 0.03205 0.03443 0.02765 0.03147 0.06063 0.04340 0.05576 0.08052 0.02618 0.02861 0.04139 0.03701 0.03785 0.03230 0.04301 0.04010 0.02528 0.03815 0.02840 0.07461 0.06430 0.04755 0.03444 0.03962 0.04743 0.04182 0.03846

0.00080 -3.4658 0.00103 0.4810 0.00119 0.1713 0.00076 -2.4000 0.00099 0.6777 0.00368 2.8438 0.00188 1.2409 0.00311 0.8238 0.00648 20.5876 0.00069 0.1106 0.00082 0.2248 0.00171 0.5865 0.00137 0.5075 0.00143 -4.7604 0.00104 0.3075 0.00185 0.7756 0.00161 -1.1597 0.00064 0.2211 0.00146 0.6023 0.00081 0.1355 0.00557 9.2363 0.00413 1.3216 0.00226 1.5711 0.00119 0.6107 0.00157 -2.5416 0.00225 -4.6166 0.00175 -0.4373 0.00148 -0.5453

58.8981 1.6071 1.4417 48.7777 3.2315 32.3337 8.2761 3.7497 706.9379 2.3040 2.1910 4.6941 2.0463 78.6828 1.2816 6.3195 15.9793 1.6889 2.7820 4.1597 208.2372 11.4994 8.5168 1.9305 42.6803 71.7315 12.3605 12.7290

2256 2256 2256 2256 2230 1779 2256 2150 2015 2256 2256 1848 1933 2254 2237 2143 1267 2196 2253 2256 1463 1657 2206 2255 2047 2212 1843 2214

It is obvious from Table 4.1 that Parkash industries shows the highest daily return (0.00360) followed by TIL ltd (0.00358) and Salora International (0.00328). The bottom three companies on the basis of daily returns are Punjab tractors (0.00008) followed by EIH (0.00008) and Zuari (0.00013). Standard deviation, which is a measure of total risk, turns highest in case of Park ash industries (0.09076) followed by IFB (0.08609) and Salora (0.08052). on the other hand the least risky companies are Asian paints (0.02269), Indian hotel (0.02311), EIH hotel (0.02398). From this result it is clear that Parkash industry which has highest return have highest standard deviation (risk).

Variance turns highest in case of Prankish (0.00824) followed by IFB (0.00741) and Salora (0.00648).on the other hand the least variance companies are Asian paints (0.00051), Indian hotel (0.00053), EIH hotel (0.00057). A relatively small variance means a high degree of uniformity in the data, with smaller overall divergence of individual observations from their mean. A high variance, on the other hand, indicates a greater degree of diversions of individual observations from the mean. This helps decide which of the two sets of data with the same mean value, is represented more adequately by their respective means. Skew ness turns highest in case of Salora (20.587) followed by TIL Ltd. (9.236) and Bharat Gear (8.016).on the other hand the least Skew ness companies are HLL (-13.509), HDFC (-11.148), CIPLA (-9.205). Kurtosis turns highest in case of Salora (706.937) followed by HLL (428.455) and HDFC (284.280).on the other hand the least Kurtosis companies are Supreme (1.282), Reliance Capital (1.442), IPCA Lab (1.524).

Beta values for S&P CNX Nifty and 100 NSE listed companies. Table 4.2
Company Name Aadhra Sugar Aarti Industries ABB ACC Alfa Laval Apollo Tyre Arvind Mill Ashok leyland Asian Paint Bajaj Auto Bajaj Hindustan Balrampur Chini BASF Ltd Bharat Gear Bharat Petrol Birla Eric Birla Global Finance Bombay Dyeing Can Fin Home Carborundam Ceat Century Enka Chambal Fertiliser Ciplal Cochi Refinery Dhampur EIH Escorts Essar Oil Fedral Bank Flex GIC Housing Godfrey Phillip Goetz Grasim GTC Ind gujrat stat HDFC HDFC Bank Hindustan Motor HLL Hotel Leela Venture Beta 0.03431 0.00810 0.62292 1.09619 0.10934 1.04259 1.12732 0.96628 0.44250 0.69746 0.14165 0.59786 0.00234 0.06554 0.01757 0.27088 -0.01391 0.98667 0.07757 0.06871 0.56924 0.01010 0.34149 0.66500 0.84474 0.26662 0.16927 1.07750 0.71525 0.63226 0.38597 0.21024 0.01994 0.04292 0.82831 -0.00452 0.03687 0.53807 0.80053 0.96057 0.75212 0.86140 0.94941

IDBI IFB IFCI Indian Hotel Infosys IOC IPCA lab IPCL ITC Ltd Jai Bharat Maruti Jai Sree Tea Laxmi Machine Liberty LML M&M Maharashtra Scooter Mastek MRF Mysore Cement Nagarjun Navneet Nirma ONGC Oudh Sugar Parkash Pidilite Punjab Tractors Rajasthan Spinning Rajsree Sugar Rama News Ranbaxy Raymond Reliance capital Reliance Ind. RIIL S&P CNX Nifty S.kumar Sail Sakhti Sugar Salora SBI Shree Cement Siemens Sirpur Paper Mill Sun Pharma Supreme Surya Roshni Sutlej Swaraj Engine Tamilnadu Newsprint

0.22829 1.03814 0.60624 1.16071 -0.04145 1.11427 0.10375 0.90269 0.06528 -0.03041 0.03902 -0.02087 1.17448 1.01084 0.07726 -0.08402 0.03778 0.04619 0.79566 -0.02692 -0.01429 0.09634 -0.13635 0.57034 0.14562 0.06091 -0.01007 0.10523 0.33767 0.73960 0.89132 1.41422 1.11119 0.23334 1.00000 0.03396 1.31575 0.05445 0.06053 1.11604 0.16493 0.81697 -0.02731 -0.00501 -0.01129 0.03010 0.02592 0.01365 0.02810

Tata Power TIL Universal Cable Videocon Appliances Voltas VSNL Wipro Zodiac Zuari

0.99190 -0.01970 0.03910 0.85453 0.71012 -0.02144 -0.02959 -0.03225 0.02341

It is obvious from the table 4.2, that the lowest Beta is of Oudh Sugar (-0.136) and followed by Mastek (-0.080) and IOC (-0.041). On the other hand the highest Beta company is Reliance Capital (1.414) followed by SAIL (1.316) and LML (1.174). It means these companies have beta higher then the index which is one. Reliance capital has the highest beta but the highest return security is Park ash Industries. Mean Daily Return of Various Months for S&P CNX Nifty (Jan 1999 to June 2009).

Return
Table 4.3

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1999 0.00381 0.00140 -0.00106 0.00588 -0.00126 0.00607 0.00119 -0.00489 0.00081 -0.00163 -0.00293 0.00249

2000 -0.00529 0.00512 0.00258 0.00200 -0.00444 -0.00506 -0.00031 -0.00427 0.00279 -0.00440 -0.00030 0.00366

2002 0.00487 0.00090 0.00439 -0.00434 0.00721 0.00226 0.00459 0.00350 0.00012 -0.00285 0.00192 0.00342

2004 0.00248 0.00340 -0.00359 -0.00403 -0.00052 0.00301 -0.00455 0.00210 -0.00439 -0.00373 0.00366 -0.00080

2005 0.00381 -0.00063 -0.00733 -0.00083 0.00173 -0.00243 -0.00141 -0.00084 -0.00679 0.00301 0.00476 -0.00033

2006 0.00071 0.00312 -0.00051 -0.00179 -0.00231 0.00145 -0.00421 0.00254 -0.00238 -0.00055 0.00523 0.00197

2007 -0.00207 0.00112 -0.00411 -0.00222 0.00360 0.00573 0.00199 0.00686 0.00214 0.00418 0.00195 0.00696

2008 -0.00158 -0.00014 -0.00062 0.00077 -0.00819 0.00077 0.00376 0.00003 0.00310 0.00122 0.00463 0.00265

2009 -0.00045 0.00113 -0.00143 -0.00330 0.00425 0.00272 0.00207 0.00145 0.00422 -0.00452 0.00566 0.00311

Average 0.000699 0.001713 -0.001297 -0.000873 0.000009 0.001613 0.000346 0.000719 -0.000040 -0.001029 0.002733 0.002572

Return
0.004000 0.002000 0.000000 -0.002000 1 2 3 4 5 6 7 Months 8 9 10 11 12 Series1

Mean Daily Risk (S.D.) of Various Months for S&P CNX Nifty (Jan 1999 to June 2009).

S.D.
Table 4.4
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1999 0.0220 0.0130 0.0350 0.0160 0.0080 0.0090 0.0140 0.0150 0.0090 0.0300 0.0170 0.0140 2000 0.0149 0.0100 0.0161 0.0167 0.0149 0.0306 0.0184 0.0162 0.0140 0.0239 0.0118 0.0146 2002 0.0202 0.0182 0.0153 0.0326 0.0217 0.0135 0.0159 0.0139 0.0130 0.0205 0.0168 0.0143 2004 0.0256 0.0184 0.0199 0.0351 0.0264 0.0148 0.0176 0.0107 0.0204 0.0159 0.0144 0.0142 2005 0.0121 0.0158 0.0290 0.0223 0.0090 0.0127 0.0101 0.0057 0.0252 0.0121 0.0125 0.0122 2006 0.0099 0.0148 0.0118 0.0110 0.0135 0.0113 0.0101 0.0085 0.0072 0.0084 0.0069 0.0096 2007 0.0080 0.0089 0.0109 0.0136 0.0075 0.0094 0.0105 0.0151 0.0181 0.0153 0.0130 0.0097 2008 0.0218 0.0169 0.0148 0.0140 0.0421 0.0146 0.0129 0.0099 0.0083 0.0097 0.0068 0.0074 2009 0.0167 0.0078 0.0108 0.0123 0.0068 0.0073 0.0094 0.0098 0.0119 0.0151 0.0095 0.0109 Avera ge 0.0168 0.0138 0.0181 0.0193 0.0167 0.0136 0.0132 0.0117 0.0142 0.0168 0.0121 0.0119

Risk
0.0250 0.0200 0.0150 0.0100 0.0050 0.0000 1 2 3 4 5 6 7 8 9 10 11 12 Series1

Mean Daily Coefficient of variation of various Months for S&P CNX Nifty (Jan 1999 to June 2009). Coefficient of Variation Table 4.5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1999 0.1734 0.1080 -0.0303 0.3673 -0.1574 0.6743 0.0848 -0.3257 0.0898 -0.0543 -0.1721 0.1779 2000 -0.3550 0.5124 0.1604 0.1197 -0.2982 -0.1653 -0.0171 -0.2638 0.1996 -0.1840 -0.0251 0.2508 2002 0.2410 0.0492 0.2872 -0.1332 0.3325 0.1674 0.2886 0.2518 0.0090 -0.1388 0.1145 0.2394 2004 0.0971 0.1847 -0.1807 -0.1148 -0.0197 0.2035 -0.2585 0.1958 -0.2146 -0.2340 0.2540 -0.0565 2005 0.3148 -0.0397 -0.2527 -0.0371 0.1923 -0.1915 -0.1397 -0.1473 -0.2694 0.2484 0.3808 -0.0271 2006 0.0720 0.2106 -0.0435 -0.1627 -0.1709 0.1284 -0.4168 0.2986 -0.3301 -0.0655 0.7585 0.2055 2007 -0.2589 0.1254 -0.3771 -0.1630 0.4806 0.6096 0.1897 0.4540 0.1184 0.2734 0.1503 0.7177 2008 -0.0723 -0.0083 -0.0417 0.0552 -0.1944 0.0530 0.2916 0.0030 0.3739 0.1255 0.6764 0.3573 2009 -0.0269 0.1446 -0.1320 -0.2695 0.6296 0.3705 0.2206 0.1475 0.3537 -0.2995 0.5938 0.2865 Averag e 0.0206 0.1430 -0.0678 -0.0376 0.0883 0.2055 0.0270 0.0682 0.0367 -0.0365 0.3034 0.2390

Coefficient of Variation
0.4000 0.3000 0.2000 0.1000 0.0000 -0.1000 1 2 3 4 5 6 7 8 9 10 11 12 Series1

Table 4.3 summarizes the volatility of daily returns in each month for the period of study. It can be seen from table 4.3 that volatility has varied across months in a year and across years. November has been the most volatile month followed by December and February. The higher volatility in the month of February may be due to the most significant economic event in a year namely the presentation of the Union Budget, which is usually presented on the last day of the month. Volatility in November and December is higher due to the effect of half year results declared by various companies. It can be seen from the table 4.4 that S.D. is highest in the month of April followed by March and January. This may be due to the reason that new financial year is started and there are always some new policies of Govt. related to the corporate sector. Annual reports of various companies are also published in this month. From table 4.3, we can see that the most volatile year is 2006.

Chapter 5 Conclusion
The measure findings of the study are listed below: Lowest ten and top ten companies according to the return are as follows:
Lowest return securities Punjab Tractors 0.00008 Eih Hotel 0.00008 Zuari 0.00013 Indian Hotel 0.00014 Century Enka 0.00021 HLL 0.00022 Asian Paint 0.00032 VSNL 0.00034 IOC 0.00035 MRF 0.00036 Highest return securities Rama Newsprint 0.00231 Bharat Gear 0.00241 Birla Global 0.00245 Universal Cable 0.00267 Bajaj Hindustan 0.00267 GTC 0.00273 IFB 0.00297 Salora 0.00328 Til Ltd 0.00358 Parkash 0.00360

Lowest ten and top ten companies according to the S.D. are as follows:
Lowest S.D. securities Asian Paint 0.02269 Indian Hotel 0.02311 Eih Hotel 0.02398 Bajaj Hotel 0.02415 ABB 0.02491 ITC 0.02501 Swaraj Engine 0.02528 Chambal Fertiliser 0.02536 Nirma 0.02557 Pidilite 0.02613 Hghest S.D. securities Rama Newsprint 0.06027 S.kumar 0.06063 Universal Cable 0.06430 Bharat Gear 0.06672 GTC 0.06864 Oudh Sugar 0.06872 Til Ltd 0.07461 Salora 0.08052 IFB 0.08609 Parkash 0.09076

Lowest ten and top ten companies according to the Variance are as follows:
Lowest VAR. securities Asian Paint Indian Hotel Eih Hotel Bajaj Hotel ABB ITC Swaraj Engine Chambal Fertiliser Nirma Pidilite 0.00051 0.00053 0.00057 0.00058 0.00062 0.00063 0.00064 0.00064 0.00065 0.00068 Highest VAR. securities Rama Newsprint 0.00363 S.kumar 0.00368 Universal Cable 0.00413 Bharat Gear 0.00445 GTC 0.00471 Oudh Sugar 0.00472 Til Ltd 0.00557 Salora 0.00648 IFB 0.00741 Parkash 0.00824

Lowest ten and top ten companies according to the Skewness are as follows:
Lowest SKEW securities HLL -13.52991 HDFC -11.14893 Cipla -9.20537 ACC -7.42768 Carborundam -5.68162 Punjab Tractors -5.65784 Century Enka -5.58385 Infosys -5.07629 Ashok Leyland -5.03697 Sun Pharma -4.76043 Highest SKEW securities IFB 1.68023 Essar Oil 1.76843 Rajsree Sugar 1.84443 Hindustan Motor 1.96390 GTC 2.61110 Parkash 2.66277 S.kumar 2.84381 Bharat Gear 8.01556 Til Ltd 9.23631 Salora 20.58760

Lowest ten and top ten companies according to the Kurtosis are as follows:
Lowest KURT securities Supreme 1.28157 Reliance Capital 1.44170 IPCA Lab 1.52358 Raymond 1.60713 M&M 1.64959 Swaraj Engine 1.68887 Ceat 1.73431 Balrampur Chini 1.81345 Alfa Laval 1.82508 Voltas 1.93051 Highest KURT securities Century Enka 133.9161 Carborundam 137.0795 Punjab Tractors 138.8020 Bharat Gear 176.1557 ACC 186.1596 Cipla 200.3654 Til Ltd 208.2372 HDFC 284.2803 HLL 428.4556 Salora 706.9379

Lowest ten and top ten companies according to the Beta are as follows:
Lowest beta securities Oudh Sugar -0.13635 Mastek -0.08402 IOC -0.04145 Zodiac -0.03225 Jai Sree Tea -0.03041 Wipro -0.02959 Sirpur Paper Mill -0.02731 Navneet -0.02692 VSNL -0.02144 Liberty -0.02087 Highest beta securities Escorts 1.07750 ACC 1.09619 Reliance Ind. 1.11119 IPCA lab 1.11427 SBI 1.11604 Arvind Mill 1.12732 Infosys 1.16071 LML 1.17448 Sail 1.31575 Reliance capital 1.41422

Months with Highest Return November December February

Months with Highest S.D. April March January

Bibliography
1. 2. 3. 4. 5. 6. 7. 8.

www.nseindia.com www.nsdl.co.in www.cdsl.co.in www.religaresecurities.com www.reliancemoney.com www.uniconinvestment.com www.moneycontrol.com www.bseindia.com

OBJECTIVES OF THE STUDY

1. 2.

To study the investors perception towards Stock Market. To study the awareness level about Stocks.

3. To study the preference of investment of investors. 4. To study the market share of particular Stock. 5. To study the volatility of Stock market. 6. To study the awareness of Stocks at different different time.

Basically there are some objectives of every study. The main objectives of my study are as follow:

SWOT Analysis

STRENGTHS

Services:As a product Religare is a extremely innovative product with very less cost. Services like online trading facility, institutional and domestic broking, customized research reports with almost 80% efficiency etc give Religare an edge over its competitors. Religare provides other support services that make retail investors more confident and assured with their trading. SMS alerts (allowing traders and investors to make the most of the available opportunities), Softer, intangible features like imagery, equity driving preference. Through efficient trading processes Investors can place their orders directly on the Internet, do all the information seeking and basically own investing process.

Distribution Network:Religare with almost 900 location spread across 300 cities beefed up by comprehensive online research, advice and transaction services. In near future expect to make 200000+ retail customers being serviced through centralized call centre / web solution,

60 branches/semi branches servicing affluent/aggressive traders through highly skilled financial advisors, 250 independent investment managers/franchisees servicing 50000 highly valued clients, strong advisory role through Fundamental & technical research and new initiatives are being made in Portfolio Management Services & Commodities trading.

Products:Companys product line is quite flexible in the sense that there is a product for every kind of investors. Also all the products cover all the loop holes of all the products offered by the other competitors like low cost, user friendly online trading services etc.

Branch Network:Branch network is a strength of the company.

Performing Organization:In stage of evaluation Religare is going to be a Performing Organization from a Learning Organization

Weakness
Customer Satisfaction:As far as customer satisfaction goes Religare has to tighten their socks. Many broking house catering to heavy investors or small segment of the market can afford to and does provide relationship managers for their customers, who can understand the trading needs of individual customers, and advise accordingly. However, a broking house like Religare, that caters to the mass segment, is in no position to provide relationship managers for individual customers.

Branding:Though the company has a efficient products but large part of investment interested population does not know the company. The most basic expectation for a trader or investor when one begins trading is that one must get timely delivery of shares and proceeds from sale of shares. Also ones cash balances with the broker must be safe and secure. Though this confidence in the broker comes with time and experience, good and transparent practices also play a major role in imbibing confidence in traders.

Competition from banks:Most of the banks due to good branding have the faith of the customers of their banking database. So they enjoy the liberty of huge database and customers find it more reliable to trade there rather than with a unknown broker. Also banks like HDFC Bank and ICICI Bank have the advantage of linking the trading accounts of their customers to saving accounts. This makes trading easier, and at the same time a trader withdraws exactly as much money from his account as is needed to complete the trade. Similarly sales proceeds are credited directly to saving account. Limited exploration of potential market. Less market awareness about full product range. Low customer confident in the quality of services. Religare Securities has less number of brokers. Religare Securities has less number of branches. Religare Securities has less number of employees. Religare Securities is in evolution stage.

Opportunities:-

The external environment analysis may reveal certain new opportunities for profit and growth.

Ever-increasing market:After the NSE brought the screen based trading system stock markets are now more secured which has attracted lot of retail investors and the demand is increasing day by day. This has resulted in improved liquidity and heavy volumes on transactions. Religare is one of the early entrants here. As to how much it will roar and how swift it can swoop on the market, the future alone can answer such queries. Religare has been a mega player and is known for being a mover of stocks. It is also known for putting big deals through and enjoys good networking with the FIIs.

Improving Technology:In country like India technology is always improving which gives the company a chance to keep on improving their product with time whereas for the small players like local brokers it will be difficult to keep the same pace as the changing technology. Also with SEBI lying down some strict guidelines small brokers are finding it harder to retain the customers with no research department and small capital. The traditional business model

is highly dependent on a large network of sub-brokers, and many established players may not have systems (technology, customer service, etc.) capable of directly servicing so many retail customers.

Unfulfilled needs of the customers:With so many competitors offering their products in the market but no one is able to completely satisfy the customers. Some have the problem of lack of information or some were scared of volatility of the stock markets. Religare has the opportunity to tap this unsatisfied set of customers and to make hold in the market. The Internet serves to break all barriers to information, as it offers an extremely hassle-free investing platform. And, Religare hopes to fully utilize and capitalize on this platform. This original idea by Religare itself was born out of the consumer's need for a more transparent, easy to understand and convenient option of investing in stocks.

Education Level:The education level in the country is improving year after year as far as technology goes. With that the understanding of the stock market is also increasing and a lot of retail investors are steeping in the markets which is being shown by increasing volumes, transactions and indices.

Threats
New Competitors:-

A lot of new competitors are trying to enter the market in this bullish run to taste the flavor of this cherry. This is creating a lot of competition for large players like Religare and it is creating little confusion in the minds of the customers about the services provided by the broker. Also many banking firms are entering into the market with huge investment. Competitors like ICICI, KOTAK, HDFC, 5-PAISA etc. are posing a lot of threats to the company.