INTRODUCTION

A portfolio is a collection of securities, since it is rarely desirable to invest the entire funds of an Individual in single, it is essential that every security be viewed in a portfolio context. The expected rate of return should depend on expected return of each security contained in portfolio. Investing in securities such as shares, debentures and bonds in portfolio as well as exciting. It in indecent rewarding, but involves a great deal of risk and calls or scientific knowledge as well as artistic skill. It determines future risk and return in holding of individual security. Portfolio risk can be reduced by adding security with greater individual risk that another security in the portfolio. This is because; it depends on co-variance among returns of individual security. OBJETIVES 1. The basic objective is to minimize risk 2. The purpose of study is to find out what percentage of investment should be invested between two companies on the basis of risk and return. 3. This percentage helps in allocating the funds available for investment based on portfolio. 4. To determine co-efficient co-relation of portfolios. 5. To give suggestions regarding selection of securities to construct good portfolio. 6. To determine standard deviation and variance of portfolios.

LIMITATIONS 1. This study was undertaken for short period of time, it is not detail in all aspects. 2. The study is restricted only to companies which are analyzed and hence conclusions cannot be generalized for other companies. 3. The portfolio risk varies from company to company. 4. The study was undertaken to analyzed portfolio management and investment decision for a period of one month. PURPOSE OF THE STUDY The purpose of the study is to find out at what percentage of investment should be invested between the two companies, on the basis of risk and return of each security in comparison. These percentage help in allocation the funds available for investment based on portfolios. The Methodology of the study consists of Source of data collection Statistical tool

Source of data collection:

The data had been collected through Primary and Secondary sources. Primary Sources: The data had been collected through project guide and staff of the Company. Secondary Sources:

The data had been collected through Books, Journals and Websites.

Arithmetic average or mean:

The arithmetic average measures the central tendency. The purpose of computing an average value for a set of observations is to obtain a single value, which is representative of all the items. The mail objective of average is to arrive at a single value which is a representative of the

characteristics of the entire mass of data and arithmetic average or mean of a series(sigma x) divided by the number of items (N) constituting the series. Thus, if X1,X2,X3...........................Xn are the given N observations. Then

STANDARD DEVIATION: The concept of standard deviation was first suggested By Karl Pear Son in 1983. It may be defined as the positive square root of the arithmetic mean of the squares of deviations of the given observations from their arithmetic mean in short S.D may be defined as Root Mean Square Deviation from Mean. It is by far the most important and widely used measure of studying dispersions. For a set of N observations X1, X2 ...Xn with a mean X, Deviations from Mean: (X1-X),(X2-X),.............(Xn-X) Mean-square deviations from Mean: =1/N(X1-X)2+(X2-X)2+.................+(Xn-X)

Root mean square deviation from mean, i.e. VARIANCE: The square of standard deviation is known as Variance. Variance is the square root of the standard deviation 3

Variance = (S.D)2 Where, (S.D) is standard deviation CORRELATION: Correlation is a statistical technique, which measures and analyse the degree or extent to which two or more variables fluctuate with reference to one another. Correlation thus denotes the interdependence amongst variables. The degrees are expressed by a coefficient, which ranges between -1 and +1. Thus direction of change is indicated by (+) or (-) signs. The former refers to a sympathetic movement in a same direction and the later in the opposition direction. Karl Pearsons method of calculating coefficient (r) is based on covariance of the concerned variables. It was devised by Karl Pearson, a great British Biometrician. This measure known as Pearsonian correlation coefficient between two variables(series) X and Y usually denoted by r is a numerical measure of linear relationship and is defined as the ratio of the covariance between X and Y (written as Cov(X,Y) to the product of standard deviation of X and Y. Symbolically,

Where xi = Xi-X, yi = Yi-Y xiyi = sum of the product of deviations in X and Y series calculated with reference to their arithmetic means.

REVIVIEW OF LITERATURE

INTRODUCTION TO PORTFOLIO MANAGEMENT PORTFOLIO: The portfolio analysis begins where the security analysis ends and this fact have important consequences for investors. Portfolios, which are combinations of securities may or may not take on the aggregate characteristics of their individual part. A portfolio is a collection of securities it is rarely desirable to invest the entire funds of an individual or an institution in a single security, it is essential that every security be viewed in a portfolio context. Portfolio analysis considers the determination of future risk and return in holding various blends of individual securities. Portfolio expected return is a weighted average of expected return of individual security but portfolio variances, in short contrast, can be something less than a weighted average of securities variances. As a result an investor can something reduce portfolio risk by adding security in portfolio. This is because risk depends greatly on the co-variance among return of individual securities. Portfolio expected return in a weighted average the expected return of its securities, the contribution each security to the portfolios expected return depends its expected return and its proportionate share of the initial portfolios market value. It follows that an investor who simply wants the greatest possible expected return should hold one security, the one which is considered to have a greatest expected return.

OBJECTIVES OF PORTFOLIO MANAGEMENT The objectives of portfolio management can be classified as under. 1. BASIC OBJECTIVE The basis objectives of portfolio management is i. ii. To maximize yield, and To minimize risk.

2. SECONDARY OBJECTIVE i. ii. iii. iv. v. vi. Regular return Stable Income Appreciation of capital More liquidity Safety of investment Tax benefits

NEED FOR PORTFOLIO MANAGEMENT Portfolio management is a process encompassing many activities of investment in assets and securities. It is dynamic and flexible concept and involves regular and systematic analysis judgment and action. The objectives of this service is to help the unknown and investors with the expertise of professionals in investment portfolio management, it involves construction of a portfolio based upon the investors objectives, constraint preferences for risk and return and tax liability. The portfolio is reviewed and adjusted from time to time in tune with the market conditions, the evaluation of portfolio is to be done in terms of targets set of risk and return.

Portfolio construction refers to the allocation of surplus funds in hand among a variety of financial asset open for investment. Portfolio theory concern itself with the principles governing such allocation. The modern view of investment is oriented more towards the assembly of proper combinations of individual securities to form investment portfolios. A combination of securities hold together well give a beneficial result if they are grouped in a manner o secure higher return after taking into consideration the risk element. Modern portfolio theory believes in the maximization of return through a combination of securities. The modern portfolio theory discusses the relationship between different securities and then draws inter-relationship of risk between them. It is not necessary to achieve success only by trying to get all securities of minimum risk. The theory states that by combining a security of high risk, success can be achieved by an investor in making a choice of investment outlets. ELEMENTS OF PORTFOLIO MANAGEMENT PORTFOLIO MANAGEMENT IS AN ON-GOING PROCESS INVOLVOING THE FOLLOWING BASIC TASKS 1. Identification of the investors objectives, constraints and preferences. 2. Strategies are to be developed and implemented in tune with Investment policy formulated. 3. Review and monitoring of the performances of the portfolio 4. Finally the evaluation of the portfolio. RISK Risk is uncertainty of the income/capital appreciation or loss of both. All investments are risky. The higher the risk taken, the high-risk the return but proper management of risk involves the right choice if investment whose risk are compensating, the total Risk of two companies may be different and even lower than the risk of a group of two companies if their risks are offset by each other. 7

The two major types of risks are systematic or market related risks & unsystematic or company related risks. The systematic risks are the market problems, raw material availability, tax policy or any Government pricy, inflation, risk interest risk and financial risk. The unsystematic risk is mismanagement, increasing inventory, wrong financial policy, default marketing etc. The company specific risk (unsystematic risks) can be reduced by diversifying into a few companies belonging to various industry group, asset groups or different types of instruments like Equity shares, bonds, distributors etc. These asset classes are bank deposits, company deposits, gold, silver, land, real-estates, equity share etc., Industry groups are tea, sugar, paper chemical, steel electricity, electronics, computer software etc. Each of them has different riskreturn characteristics and investments based on individual preferences. The second category of risk (systematic risk) is managed by the use of data of different company shares. RETURN ON PORTFOLIO Each security in a portfolio contributes returns in the proportion of its investments in security. These the portfolio expected return is the weighted average of the expected returns, from each of the securities, with weights representing the proportionate share of the security in the total investment. Why does an investor have so many securities in is portfolio? If the security ABC gives the maximum return; why not be invest in that security all his funds and these maximize return? The answer to this question lies in the

investors perception of risk attached to investments, his objectives of income, safety, appreciation, liquidity and hedge against loss of value of money etc. This pattern of investment in different asset categories. Security categories, type of instruments, Etc., Would all be described under the caption of diversification, which aims at the reduction or even elimination of non-systematic or company related risk and achieve the specific objectives of investor.

PORTFOLIO RISK Risk on portfolio is different from the risk on individual securities. This risk is reflected in the variability of the return from zero to infinity. The expected return depends probability of the return and their weighted contribution to the risk of the portfolio. There are two measures of risk this context one is the absolute deviation and the other standard deviation. Most investors invest in a portfolio of assets, as they do not want to put all this eggs in one basket. Hence, what really matters to them is not the risk and return of stock in isolation, but the risk and return of the portfolio as a whole. Risk-Return Analysis Risk and return are the most important concepts in finance. In fact, they are the foundation of the modern finance theory. All Investments have some risks. Investment in shares of companies has its own risks or uncertainty. These risks arise out of variability of return or yields and uncertainty of appreciation or deprecation of shares prices, loss of liquidity etc. The risk over time can be represented by the variance of the return, while the return over time can be represented by the variance of the return, while the return over time is capital appreciation plus payout divided by the purchase price of the share. Normally, the higher the risk that the investor takes, the higher is the return. There is, however a risk less turn on capital of about 12% which is the bank rate changed by the RBI or long term yielded on government securities at around 13% to 14%. This risk less return refers to lack of variability of return and no uncertainty in the repayment of capital. But other risks such as loss of liquidity due to parting with money etc., may however remain but are rewarded; by the total return on the capital. Risk return is subject to variation and the objective of the portfolio manager is to reduce that variability and thus reduce the risk by choosing an appropriate portfolio.

There are two types of risks, namely. I. II. Market risk or systematic risk, and Company risk or unsystematic risk. The unsystematic risk can be reduced by diversifying the portfolio of scripts to an optimum level of about 15 shares. These scripts should be so chosen that the risk on each of them is diverse and their variability of return is also different. By investing in such a diverse set of scripts, the total risk can be reduced as some of them may have positive and other negative covariance and they may vary in the degree of risk as well. The unsystematic risk can be lowered by diversifying into basket of scripts. Thus a degree of diversification of investment is necessary pre-requisite of portfolio management and for reducing the risk. In the management of a portfolio, the problem of risk management is vital, given the individual preference of portfolio holders the portfolio is to be constructed in such manner that its exposure to the market related risks cannot be reduced the company related risks can be 10

eliminated through a proper diversification into around 15 scripts of different groups of industries and companies would be able to reduce the company related risks involved almost to negligible proportion. An optimum degree of diversification can be secured which would minimize risk and optimize return, if the co- variance of scripts included in the portfolio is less than 1 to negative. The co-efficient of correlation is also designed to measure the relationship between two securities. It is given an indication of the variables being positively or negatively related to each other. If the co-efficient of correlation is zero then it means that the returns on securities are independent of one another. When correlation co-efficient is 1, the portfolio risk will be minimum. PORTFOLIO AND DIVERSIFICATION A combination of securities that have risk and return features make up a portfolio, portfolio may or may not on aggregate characterizes of individual facts.

Portfolio analysis takes the various risk factors for each industry and considers the mixed effect of combined securities. Portfolio selection involves choosing the best portfolio to suit the risk return preferences of the portfolio investors. Management of portfolio is a dynamic activity of evaluating and revising the portfolio in terms of its objectives. Thus the risk reduce the basic principle is that if a portfolio holds several asset or securities

which many include cash also, even if one goes bad the other will provide protection with the loss The diversification can be either vertical or horizontal. In vertical diversification a portfolio can have scripts of different companies within the same industry. In horizontal diversification one can have different scripts chosen from different industries.

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EXAMPLES OF VERTICLE DIVERSIFICATION

(A) Cement Industry ACC Limited JK Cement L and T Birla Cement Vishnu Cement

(B) Textile Industry Garden silk Mill Reliance Industry Grasim Industry Bombay dying Barcode Rayon

HORIZONTAL DIVERSIFICAITON

Tesco Limited {MFG) ACC Limited {Cement} Cotton Silk {Textiles} Infosys limited {Software} BSE Limited {Power} L and T Limited {Construction} Diversification should neither be too much nor to less. It should be an adequate

diversification according to the size holds the better it is, according to the modern approach diversification should be related to the quality of scripts which leads too the quality of portfolio. Experience has shown that beyond the certain securities by adding more securities expensive.

SIMPLE DIVERSIFICATION REDUCE RISK An assets total risk can be divided into systematic plus unsystematic risk, as shown below: Systematic risk (undiversifiable risk) + unsystematic risk (diversifiable)- Total risk= Va Unsystematic risk is that portion of the risk that is unique to the firm (for the example, risk due to strikes and management errors Unsystematic risk can be reduce to Zero by simple diversification.

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Simple diversification is the random selection of securities that is to be added to a portfolio. As the number of randomly selected securities added to a portfolio is increased, the level of unsystematic risk approaches zero. However, market-related systematic risk cannot be reduced by simple diversification. This risk is common to all securities. How total risk approaches systematic risk as the number of securities in a portfolio increase as in figure below.

UNSYSTEMATIC RISK TOTAL RISK

RISK 0 SYSTAMATIC RISK

RANDOMLY SELECTED SECUTITIES IN THE PORTFOLIO MORKOWITZ MODEL THE MEAN-VARIANCE CEIFERTION: Dr.Harry M. Markowitz is credited with developing the first modern portfolio analysis model since the basic elements of modern portfolio theory emanate from a series of proposition concerning rational investor behavior set forth by Markowitz, then of the rand corporation, in 1952 and later in a more complete monograph sponsored by the cowls foundation. To reach this objective, Markowitz model is a theoretical framework for the analysis of return choice decision is based on the concept of efficient portfolio. A portfolio is efficient when it is expected to yield the highest return for the level of risk accepted or, alternatively, the smallest portfolio risk for a specified level of expected return, to 13

build an efficient portfolio an expected return level is chosen, and asset are substituted until the portfolio combination with the smallest variance at the return level is found. As this process is repeated for other expected returns, set of efficient portfolios is generated. ASSUMPTIONS The Markowitz model is based on several assumptions regarding investor behavior. I. Investors consider each investment alternative as being represented by a probability distribution of expected returns over some holding period. (II) Investors maximize one period expected utility and process utility demonstrates diminishing marginal utility of wealth. II. III. IV. Individual estimates risk on the basis of the variability of expected return. Investors base decision slowly on expected return and various (or standard deviation) of return only. For a given risk level, investors prefer high return lower returns, similarly for a given level expected return, investor prefer less risk to more risk. curve, which

Under these assumption, a single asset or portfolio of asset it considered to be efficient if no other asset or portfolio of asset offers higher expected return with the same(or lower) risk or lower risk with the same (or higher) expected return. THE SPECIFIC MODEL In developing this model, Markowitz first disposed of the investment behavior rule that the investor should maximize expected return. This rule implies that the non diversified single security portfolio with the higher expected return is the most desirable portfolio only by buying that single security can expected return be maximized. The

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Single security portfolio would obviously be preferable if the investor is perfect certain that this highest expected return would turn out to be the actual return, However, under real world conditions of uncertainty, most risk adverse investors join with

Markowitz in discarding the role of calling for maximizing expected returns. As an alternative, Markowitz offers the expected returns/variance of return rule. Markowitz has shown the effect of diversification by reading the risk of securities, according to him the securities with co-variance which is either negative or low amongst themselves is the best manner to reduce risk. Markowitz has been able to show that securities which have less than positive correlation will reduce risk without, in between securities in the portfolio will show less risk. According to him, Investing in a Large number of securities is not the right method of investment. It is the right kind of securities which bring the maximum results. The following formula has been given by Henry Markowitz for a two securities portfolio. p = (X1)2 (1)2 + (X1)2(2)2 - 2(X1)(X2)(r12)(1)(2) 2p = (X1)2(2)2+(X1)2( 1)2 2(X1)(X2)(r12)( 1)(2) Where 2p = Variance of the portfolio return p = Standard deviation of the portfolio return X1 = Proportion of the portfolio invested in security 1 X2 = Proportion of the portfolio invested in security 2 1 = Standard deviation of the return on security 1

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2 = Standard deviation of the return on security 2 r12 = Co-efficient of co-relation between the returns on securities 1 and 2 EFFICIENT FRONTIEF OR EFFICIENT PORTFOLIO To construct an efficient portfolio, we have to conceptualize various combinations of investments in a basket and designate them as portfolio 1 and n. The expected return form these portfolios have to be worked out. The risk on these portfolios is to be estimated by measuring the standard deviation of different portfolios returns. In order to understand more easily we will see Markowitz graphical selection of portfolio. If there are n asset available the capital markets, we can constitute two assets portfolio, three asset portfolio, four asset portfolio, and ---------------n asset portfolio. For each portfolio there are n possible proportions of investments. Together they results in an almost infinite number of portfolios. The risk and return can be seen in the graph below.

Xp Ry Rx X Y

FIG: EFFICIENT FRONTIER

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OBSERVATIONS The Markowitz graphic selection of portfolio is said to be not an efficient one because if an investor is ready to take risk at X he can vote the last portfolio y. From the risk Z and Rx point of view it is not an efficient portfolio. X is a dominated portfolio Y and Z is a dominant portfolio When the outer points of an efficient portfolio are jointed a shell is formed or a broken egg is formed. The shape depends upon degree of correlation among securities, therefore the shell is called attainable set, feasible set or opportunity set, it is so called because all the available investment opportunities in the market like either on the border or with in the border. CONCEPT OF EFFICIENT PORTFOLIO Assume that x is selected it is an in efficient portfolio because. I. II. If he is prepare to take a risk of X for the same risk Y. Given in the higher rate of RY. Therefore Y is a dominant portfolio and X is a dominated portfolio If an investor is satisfied with the return of RX the same return can be earned by choosing portfolio Z, which has a smaller risk of Z (As against larger risk X). The dominance principle state that among all the investment opportunity available with a given return, the investment with the least risk is the most desirable one or among the investment in a given risk class, the one with the highest return with the most desirable one. Risk principle is also called efficient set theorem. In the light of this the segment A, B is the relevant portion of the feasible set is called the Markowitz efficient frontier. It is so called because all efficient portfolios lie on this frontier.

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An efficient portfolio is one, that gives the highest return for given return or a minimum risk for a given return, these efficient portfolios are also refer as mean variance efficient portfolios. The shape of the efficient frontier is given by RP/p MODIFICTION TO THE EFFICIENT FRONTIER Two modifications to the efficient frontier must be discussed: WHAT HAPPENS WHEN SHORT SELLING IS ADDED, and WHAT HAPPENS WHEN LEVERAGED PORTFOLIOS ARE ADDED? A.SHORT SELLING The ability to short sell has two effects on the efficient frontier the frontier probable shifts up and to the left, and it continues to the right. The ability to short sell securities created a new set of possible investment. A security sold short produces a positive return when as security has a large decrease in price and a negative return when its price increases. It potentially improves the efficient frontier because the ability to short sell doubles the number possible investments. Since investors are free not to short sell the introduction of the ability to short sell cant make investors worse off. If it never pays to short sell, the worst that can happen is that the efficient frontier is unchanged without short sales, all investors can do is not to holds securities that they believe do poorly. With short sales an opportunity is created that is expected to have almost the opposite characteristics of the investment when purchased. With short sales it is possible. In a sense to disinvest in poor investments (hold them in negative amount) and hence gain it they do poorly. If it ever pays to short sell any securities the efficient frontier is shifted up and to the left. This is an example of the old economic adage that a decision maker cant be worse off by being given additional choices and the decision maker may well better off. In addition short sales allow the investor to decrease or eliminate market risk in a large well diversified portfolio, unique risk is eliminated and only.

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SHORT SALES ALLOWED NO SHORT SALES

Risk(standard deviation) Market risk remains short sales allow the reduction of market risk to very low levels. Thus the addition of short positions operates as a hedging mechanism, reducing the market exposure of a portfolio. The extension of the efficient frontier to the right arises from the tendency of a very large amount of short selling to increase the risk and return on the portfolio, this increase in risk is easy to understand. Short sales it involves unlimited loss, the short sales can increase the possible lives of the return for any level of risk short sales can be abused and position taken that are too extreme. However short selling per se in not bad. Like any other investment strategy, it can be used prudently or imprudently. B.LEVERAGED PORTFOLIO Markowitz model, which recognized the existence of both systematic and unsystematic risk, did not allow the borrowing and lending opportunities. The investor is assumed to have a certain amount of initial wealth to invest for a given holding period, of all the period that are available, the optimal one is shown to correspond to the point where one of the investors indifference curves in tangent to the efficient set. At the end of the holding period, the investors initial wealth will have either increased or decreased, depending on the portfolios rate of return. Again in the Markowtz is approach it is assumed that the asset that the asset has an uncertain return over the investors holding period.

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Since none of the assets has a perfectly negative correlation with any other asset, all the portfolio also have uncertain returns over the investors holding period, and these are risky, furthermore, in the Markowitz approach, to purchase a portfolio of asset. This means that the investor is not allowed to use financial leverage. To expand the Markowitz approach investor can consider risk free assets and financial leverage by first investing is not only risky assets but also in risk free assets, and second by borrowing money at a given rate of interest.

1. RISK FREE ASSET Investment in risk free assets is often referred to as risk free lending. Since this approach involves investing for a single holding period, it means that the return of the risk free asset is certain that is if the investor purchases this asset at the beginning of the holding period, then the investor knows exactly what the value of the asset will be at the end of the holding period. Since there is no uncertainty about terminal value of the risk free asset, standard deviation of the risk free assets is by definition zero. In turn this means that the co variance between the rate of return on the risk free asset and the rate of return on any risky is zero. 2. INVESTING IN BOTH THE RISK FREE ASSET AND RISK ASSET: The efficient frontier would be altered substantially if a risk free security is included among available investment opportunities. While a risk free security does not exist in the strict sense of the word, there are securities which promise return with relative certainty. They are characterized by an absence of default risk and interest rate, full payment of principle is assured without serious prospect of capital, loss arising from changes in the level of interest rates. Risk free securities of this type include cash, short-term treasury bills, and time deposits in banks or savings and loan association, cash would be dominated by the other positive return investments. Given the opportunity to either borrow or lend at the risk free rate, and investor proceeds to identify the optimal portfolio by plotting his or her indifference curves on graph and noting where one of them is tangent to the in different efficient set.

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For example portfolio, A has an expected return of 11 percent and standard deviation of 12.5 percent. However portfolio A is not efficient, since portfolio B has the same expected return bur a standard deviation of only 8 percent. Portfolio H has a higher return and the same risk as portfolio. A it is more attractive than portfolio A but not efficient, Since portfolio F has a still higher return with the same degree of risk as C and H. Portfolio A is a single-equity portfolio that has the highest return and risk, in no way can investor return improves on its return-to-risk ratio. If investor moves to the right on the curve, return decrease and risk decreased. Hence investor is on the efficient frontier. It represent all possible portfolios that are efficient as investor moves the left and down. The only way the investor can obtain a high return on the efficient frontier is to accept a higher amount of risk. To be realistic, assume that the investors borrowing rate is above the lending rate. Combination of lending and borrowing with a portfolio are risky asset lie along a straight Line with lending and borrowing the efficient frontier. Notices that for all investors lend and borrow improve their opportunities. The ability to lend is hardly controversial the borrowing part may be more controversial, borrowing and buying a less risky portfolio can give higher returns and less risk and buying a more risky portfolio. Higher expected return at the same risk level by borrowing of course borrowing like short sales or almost any financial mechanism can be abused. It can be used to take extreme and imprudent risk positions. On the other hand it can be used to enhance performance. Rejecting borrowing entirely would throughout positive opportunities for example, consider an investor wishing to have a high portfolio with higher expected return than offered by portfolio B. This investor would have the same expected return and less risky by buying portfolio B and borrowing than by buying portfolio Y, which does not involving borrowing. Returning to the concept of the efficient frontier, it is necessary to deal further in to the subject of prudent investment. In an efficient frontier an investor should never hold a security or portfolio that lies below that frontier. Because all single securities expect the riskless asset lie 21

below the frontier. There is almost never a situation where a single security is efficient all efficient portfolios are well diversified. INVESTMENT DECISION MEANING OF INVESTMENT In the financial sense investment is to commitment persons funds to drive future income in the form of interest divided premium pension benefits or appreciation in the value of their capital purchasing of shares, debentures, post office savings certificate Insurance policies all investments in the financial sense, such investment generate financial assets. In economic sense investment means the net addition to the economys capital stock which consists of good and service that are used in the production of other goods and services.Investment in this sense includes the formation of new productivity capital in the form of new construction, plant and machinery inventories etc, such investment generate physical assets. DEFINATION OF INVESTMENT According to F.Amling, Investment may be defined as the purchase by an individual or institution investor of a financial or real asset that produces a return proportional to the risk assumed over some future investment period. According to D.E Fisher and R.J. Jordan, Investment is a commitment of funds made in the expectation of same positive rate of return. If the investment is properly undertaken the return will be commensurate with risk the investor assumes. CONCEPT OF INVESTMENT Investment will generally be used in its financial sense and as such investment is the allocation of monetary resources to assets that are expected to yield some gain or positive return over a given period of time. Investment is a commitment of persons funds to derive future income in the form of interest, dividends, rents premium, pension benefits or the appreciation of value of his principle capital. 22

Any investor would like to know the media or range of investments so that he can use his discretion and save in those investments which will given him both security and stable return. The ultimate objective of the investor is to derive a variety of investment that meet his preference for risk and expected return. The investors will select the portfolio which will maximize his utility. Another important consideration is the temperament and psychology of the investor. It is not only the construction of a portfolio that will promise the highest expected return, but it is the satisfaction of the need of the investor.Many types of investment media or channels for making investments are available. Securities ranging from free instruments to highly speculative shares and debentures are available for an alternative investment. All investments are risky as the investor parts with his money. An efficient investor with proper training can reduce the risk and maximize returns lie can avoid pitfalls and protect his interests. Money and information are the basis and the first requirement of investment is the availability of money or savings but money is not enough as investments are generally made on the basis of information of the companies. Instruments industry and economy both money and information flow help making investment management. There are different methods of classifying the investment avenues. A major classification is physical investment and financial investments. They are physical, if savings are used to acquire physical assets, useful for consumption or production. Some physical assets like ploughs, tractors or harvesters are useful in agricultural production. A few useful physical assets like cars, jeeps etc., are useful in business. Many items of physical assets are not useful for further production or goods or create income as in the case of consumer durables, gold, silver etc. Among different types of investment, some are marketable and transferable and others are not examples of marketable assets are share and debentures of public limited companies particularly the listed companies in are investments investment in Bank deposits, provident fund and pension funds insurance certificates, post office deposits, National savings certificate, company deposits private limited companies shares etc.

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INVESTMENT PROCESS The investment process may be described in the following stages. INVESTMENT POLICY: 1. The government or the investors before proceeding into investment formulates the policy for the systematic functioning. The essential ingredients of the policy are inevitable funds, objectives and the knowledge about the investment alternative and market. 2. INVESTMENT ANALYSIS: After arranging a logical order of investment preferred the next step is to analyses the securities available for investment. The investor must make a comparative analysis of types of industry kind of securities etc. The primary concerns at this stage would be to form beliefs regarding future behavior of prices and stocks the expected return and associated risks. 3. INVESTMENT VALUATION Investment value in general in taken to be the present worth to the owners of future benefits from investment. The investor has to bear in mind the value of these investment an appropriate set of weights have to be applied with the use of forecasted benefits to estimate the value of the investment asset such as stocks debentures and bonds and other assets. Comparison of the value with the current market prices of the asset allows a determination of the relative attractiveness of the asset. Each asset much be value on its individual merit. 4. PORTFOLIO CONSTRUCTION AND FEEDBACK: Portfolio construction requires knowledge of the different aspects of securities in relation to safety and growth of principle, liquidity of assts etc. In this stage, we study. Determination of diversification level, consideration of investment timing, selection of Investment assets, allocation of invisible wealth to different investment, evaluation of portfolio for feedback.

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INVESTMENT DECISION-GUIDELINES FOR EQUITY INVESMENT Equity shares are characterized by price fluctuation, which can produce substantial gains of inflict sever losses. Given the volatility and dynamism of the stock, market investor requires greater competence and skill-along with a touch of good luck too to invest in equity shares here are some general guidelines to play to equity game irrespective of whether you are aggressive or conservation or conservative.

Adopt a suitable formula plan Establish value anchors Assess market psychology Combine fundamental and technical analysis Diversify sensibly Periodically review and revise your portfolio.

REQUIREMENT OF PORTFOLIO: 1. Maintain adequate diversification when relative values of various securities in the portfolio changes. 2. Incorporate new information relevant for risk return assessment. 3. Expand or contract the size of portfolio to absorb funds or with draw funds 4. Reflect changes in investor risk disposition.

QUALITIES FOR SUCCESSFUL INVESTING:

Contrary thinking Patience Composure Flexibility and Openness

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The Organization
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. It 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. The following years witnessed rapid development of Indian capital market with introduction of internet trading, Exchange traded funds (ETF), stock derivatives and the first volatility index IndiaVIX in April 2008, by NSE. August 2008 saw introduction of Currency derivatives in India with the launch of Currency Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009, exactly after one year of the launch of Currency Futures. With this, now both the retail and institutional investors can participate in equities, equity derivatives, currency and interest rate derivatives, giving them wide range of products to take care of their evolving needs

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NSE-Technology
Across the globe, developments in information, communication and network technologies have created paradigm shifts in the securities market operations. Technology has enabled organisations to build new sources of competitive advantage, bring about innovations in products and services, and to provide for new business opportunities. Stock exchanges all over the world have realised the potential of IT and have moved over to electronic trading systems, which are cheaper, have wider reach and provide a better mechanism for trade and post trade execution. NSE believes that technology will continue to provide the necessary impetus for the organisation to retain its competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact that technology will continue to redefine the shape of the securities industry, NSE stresses on innovation and sustained investment in technology to remain ahead of competition. NSE's IT set-up is the largest by any company in India. It uses satellite communication technology to energise participation from around 200 cities spread all over the country. In the recent past, capacity enhancement measures were taken up in regard to the trading systems so as to effectively meet the requirements of increased users and associated trading loads. With upgradation of trading hardware, NSE today can handle up to 15 million trades per day in Capital Market segment. In order to capitalise on in-house expertise in technology, NSE set up a separate company, NSE Technology Services Ltd. which is expected to provide a platform for taking up all IT related assignments of NSE. NEAT is a state-of-the-art client server based application. At the server end, all trading information is stored in an in-memory database to achieve minimum response time and maximum system availability for users. The trading server software runs on a fault tolerant STRATUS main frame computer while the client software runs under Windows on PCs. The telecommunications network which was using X.25 protocol and is the backbone of the automated trading system is being upgraded to use the more popular and modern IP Protocol. This is a major project involving use of X.25 and IP in parallel and ensuring smooth transition to IP. Each trading member trades on the NSE with other members through a PC located in the

27

trading member's office, anywhere in India. The trading members on the various market segments such as CM / F&O, WDM are linked to the central computer at the NSE through dedicated leased lines and VSAT terminals. The Exchange uses powerful RISC -based UNIX servers, procured from HP for the back office processing. The latest software platforms like ORACLE 10g RDBMS, SQL/ORACLE FORMS Front - Ends, etc. have been used for the Exchange applications. The Exchange currently manages its data centre operations, system and database administration, design and development of in-house systems and design and implementation of telecommunication solutions. NSE is one of the largest interactive VSAT based stock exchanges in the world. Today it supports more than 2000 VSATs and 3000 leased lines across the country. The NSE- network is the largest private wide area network in the country and the first extended C- Band VSAT network in the world. Currently more than 9000 users are trading on the real time-online NSE application. There are over 15 large computer systems which include non-stop fault-tolerant computers and high end UNIX servers, operational under one roof to support the NSE applications. This coupled with the nation wide VSAT network makes NSE the country's largest Information Technology user. In an ongoing effort to improve NSE's infrastructure, a corporate network has been implemented, connecting all the offices at Mumbai, Delhi, Calcutta and Chennai. This corporate network enables speedy inter-office communications and data and voice connectivity between offices. In keeping with the current trend, NSE has gone online on the Internet. Apart from having multiple internet links and our own domain for internal browsing and e-mail purposes, we have also set up our own Web site. Currently, NSE is displaying its live stock quotes on the web site (www.nseindia.com) which are updated online. NSE today allows members to provide internet trading facility to their clients through the use of NOW (NSE on web), a shared web infrastructure.

28

Our Group

Associate/Affiliate Companies

NSCCL

NCCL

NSETECH

DotEx Intl. Ltd. IISL NSE.IT

29

COMPANY PROFILE

A world of intelligent investing Ever since its inception in 1993, Networth Stock Broking Limited (NSBL) has sought to provide premium financial services and information, so that the power of investment is vested with the client. We equip those who invest with us to make intelligent investment decisions, providing them with the flexibility to either tap into our extensive knowledge and expertise, or make their own decisions. NSBL made its debut into the financial world by servicing Institutional clients, and proved its high scalability of operations by growing exponentially over a short period of time. Now, powered by a top-notch research team and a network of experts, we provide an array of retail broking services across the globe - spanning India, Middle East, Europe and America. Currently, we are a Depository participant at Central Depository Services India (CDSL) and aim to become one at National Securities Depository (NSDL) by the end of this quarter. Our strong support, technology-driven operations and business units of research, distribution and advisory coalesce to provide you with a one-stop solution to cater to all your broking and investment needs. Our customers have been participating in the booming commodities markets with our membership at the Multi Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange (NCDEX) through Networth Stock.Com Ltd. NSBL is a member of the National Stock Exchange of India Ltd (NSE) and the Bombay Stock Exchange Ltd (BSE) on the Capital Market and Derivatives (Futures & Options) segment . It is also a listed company at the BSE. Corporate overview Networth is a listed entity on the BSE since 1994 30

The company is professionally managed with experience of over a decade in broking and advisory services Networth is a member of BSE, NSE, MCX, NCDEX, AMFI, CDSL Current network in India with 256 branches and franchise. Presence in major metros and cities Empanelled with prominent domestic Mutual Funds, Insurance Companies, Banks, Financial Institutions and Foreign Financial Institutions. Strong experienced professional team 50000+ strong and growing client base Average daily broking turnover of around INR 5 billion AUM with Investment Advisory Services of around INR 6 billion

NSBL - Objectives of the Company: To increase its investors all over the country To provide better services to their clients To maintain good relation with the clients Increasing the profits of the company To lead their transactions under the control Act of Securities Exchange Board of India 1992 NSBL - Product / Service produced: Here the product means service relate to the company the company Brokerage Services. Its has spreaded across over the country with experienced and expertized in the Brokerage services rendered by the Brokers in their Branches to their Investors..

31

NSBL Operating Results: The Operating Results of the NSBL company is satisfactory compare to its competitors are India Bulls, Networth Stock Broking ltd, India info line etc., They are giving quality services to their clients and improving their retained gains. Through this they are creating new clients through adopting different strategies for attracting the clients towards its business then its future glorious. Infrastructure A corporate office and 3 divisional offices in CBD of Mumbai which houses state-of-theart dealing room, research wing & management and back offices. All of 256 branches and franchisees are fully wired and connected to hub at Corporate office at Mumbai. Add on branches also will be wired and connected to central hub Web enabled connectivity and software in place for net trading. 200 operative IDs for dealing room State of the Art accounting and billing system, on line risk management system in place with 100% redundancy back up. In house technology back up team to ensure un-interrupted connectivity.

Products and services portfolio Retail and institutional broking Research for institutional and retail clients Distribution of financial products Corporate finance Net trading Commodities Broking Depository services

The Networth connectivity with 256 branches and growing

For NSBL , financial planning is about more than statistics, it's about helping clients plan for their goals & achieving them. Our unique approach to financial planning helps our

32

clients save, spend, invest and protect the things that are important to them. NSBL believe financial planning should be a long-term and collaborative relationship.Working together with NSBLyou'll define your goals, develop a plan to help you get there and then track your progress along the way.

Re ea s r ch R nline & Of O fli

e broking in com offlin mod e& n itie lue chain nli s ng as va in o O i ffin trad t e g s l N ository a va ue chain Dep n e o Ma agem nt Sch foli em ort e P te orpora Finance C dvisory Se rvi tor A ces ves In Compa y n, on Se ts cto or ng ep roki in Equ b i ne
y m ono Ec r, Derivatie s & ty

Services

Our Financial Planning Process - My Plan 1.Identify&Prioritize Together NSBL will mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. Post that we will prioritize them and draw up a clear picture for your financial future. 33

2.Collate We will collate and review all the necessary documents such as investments, tax returns, insurance policies, retirement plans etc. 3.Analyze NSBL ll analyze your information to assess your current situation and determine what you must do to meet your goals. This could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies and how these elements may impact each other. 4.Recommend NSBL ll provide recommendations that address your goals. NSBL ll also go over the recommendations with you to help you understand them so that you can make informed decisions. NSBL ll understand your concerns and revise the recommendations as appropriate. 5.Act Mutually NSBL will agree on how the recommendations will be carried out. NSBL may carry out the recommendations or serve as your "coach", coordinating the whole process with you. 6. Track As goals and needs evolve over time, NSBL ll track your progress as part of the ongoing process and make necessary modifications

NSBL GROUP COMPANIES Networth Stock Broking Ltd. [NSBL]

NSBL is a member of the National Stock Exchange of India Ltd (NSE) and the Bombay Stock Exchange Ltd (BSE) in the Capital Market and Derivatives (Futures & Options) segment. NSBL has also acquired membership of the currency derivatives segment with NSE, BSE & MCXSX. It is Depository participants with Central Depository Services India (CDSL) and National Securities Depository (India) Limited (NSDL). With a client base of over 1L loyal customers, 34

NSBL is spread across the country though its over 230+ branches. NSBL is listed on the BSE since 1994.

Networth Wealth Solutions Ltd. [NWSL]

NWSL is into the business of delivery of Financial Planning & Advice. Its vision is to Advice & Execute money related solutions to/for our customers in the most Convenient & Consolidated manner, while making sure that their experience with us is always pleasant & memorable resulting in positive advocacy. The product & Services include Financial Planning, Life Insurance, On-line Trading Account, Mutual Funds, Debentures/Bonds, General Insurance, Loans and Depository Services.

Networth Stock .Com Ltd. [NSCL]

NSCL is the commodities arm of NSBL. It is a member at the Multi Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange (NCDEX) and is backed by solid research & analytics in Commodities.

Networth Soft Tech Ltd. [NSL]

NSL is an ISO 9001:2000 Certified Company. It is into Application Development & maintenance. Building & Implementation of packaged software across various functions within the Financial Services Industry is at its core. It also provides data center services which include hosting of websites, applications & related services. It combines a unique delivery model infused by a distinct culture of customer satisfaction.

Ravisha Financial Services Pvt Ltd [RFSL]

RFSL, a RBI registered NBFC, is primarily into the business of lending & borrowing funds against securities.

35

NSBL Products and Services Equity Derivatives Currency Derivatives IPO Commodities Depository Services Portfolio Management Services Wealth Management Services Online Platform

36

DATA ANALYSIS AND INTERPRETATION

IMPLEMENTATION OF STUDY:
Share price exercised from 15th Jan to 26th Feb DATE GMR DLF TATA RPOWER BAJAJ 15-Jan-10 67.55 386.3 1456.6 159.3 1726.9 18-Jan-10 67.55 387.3 1443.25 159.6 1735.7 19-Jan-10 66.25 379.7 1419.15 156.75 1776.25 20-Jan-10 65.05 373.7 1421.05 156.9 1820.55 21-Jan-10 63.9 363.55 1356.7 152.95 1798.1 22-Jan-10 62.8 352.75 1334.05 150.5 1786.8 25-Jan-10 62.05 344.15 1319.45 150.2 1731.9 27-Jan-10 59.4 317.45 1311.75 145.45 1670.3 28-Jan-10 61.5 324.3 1323.4 144.15 1683.6 29-Jan-10 59.95 333.65 1304.9 145.95 1747.7 1-Feb-10 60.9 332.35 1293.2 147.5 1713.45 2-Feb-10 59.25 326.35 1284.1 144.85 1685.2 3-Feb-10 58.7 336.1 1298.85 148.1 1709.9 4-Feb-10 55.2 321.35 1277.45 142.5 1683.55 5-Feb-10 52.6 308.7 1285.55 139.95 1683.75 6-Feb-10 55.45 314.55 1301.95 143.35 1721.3 8-Feb-10 56.15 311.5 1284.95 141.65 1699.15 9-Feb-10 55.5 305.95 1300.25 142.4 1728.6 10-Feb-10 55.35 301.65 1275.1 140.85 1773.2 11-Feb-10 56 307 1266 141.65 1788.75 15-Feb-10 55.6 303.35 1239.65 141.05 1792.65 16-Feb-10 56.3 309.75 1236.65 142.35 1797.5 17-Feb-10 56.6 305.8 1262.4 142.4 1839.15 18-Feb-10 55.6 303.7 1252.95 141.55 1812.5 19-Feb-10 54.85 291.1 1240.35 139.8 1806.6 22-Feb-10 55 284.7 1254.6 139 1801.35 23-Feb-10 55.65 290.25 1251.75 138.85 1721.8 24-Feb-10 55.3 288.85 1257.85 137.75 1747.45 25-Feb-10 53.45 289.5 1269.35 136.8 1712.35 26-Feb-10 54.8451 298.45 1213.15 138.1 1817.65

37

DATE HEROHONDA MTNL BHARTI INFOSYS TCS 15-Jan-10 1625.35 88.05 317.4 2675.8 791.4 18-Jan-10 1694.6 90.05 320.7 2686.65 802.2 19-Jan-10 1664.1 89.25 320.55 2635.9 780.7 20-Jan-10 1688.65 86.45 331.5 2657.7 779.4 21-Jan-10 1653.2 84.95 322.4 2625.2 770.65 22-Jan-10 1649.4 82.7 322.15 2575.6 757.85 25-Jan-10 1621.45 82.3 330.9 2542.3 756.2 27-Jan-10 1550.15 77.95 322.9 2502.25 743.3 28-Jan-10 1539.1 75.55 313.65 2491.75 741.75 29-Jan-10 1559 75.8 306.4 2475.5 736.2 1-Feb-10 1580.95 74.75 311.2 2451.25 746.15 2-Feb-10 1568.45 72.4 307.65 2439.95 738.4 3-Feb-10 1599.6 73.7 309 2473.2 752.95 4-Feb-10 1600.45 72.1 304.1 2429.05 738.7 5-Feb-10 1585.4 71 300.05 2352.7 723.5 6-Feb-10 1584.35 71.75 300.4 2379.45 729.7 8-Feb-10 1578.25 73.05 308.35 2403.6 724.15 9-Feb-10 1618.3 74.15 313.15 2473.8 735.15 10-Feb-10 1630.65 72.3 315.3 2466.95 732.3 11-Feb-10 1690.95 73.25 314.5 2498.45 742.7 15-Feb-10 1704.35 71.7 285.6 2498.65 746.15 16-Feb-10 1695.4 72.65 271.6 2541.45 758.15 17-Feb-10 1698.4 75.15 279.15 2518.65 758.65 18-Feb-10 1703 74.9 281.9 2533.65 758.8 19-Feb-10 1680.35 75.7 278.8 2532.4 750.55 22-Feb-10 1707.25 74.6 276.9 2568.35 757.25 23-Feb-10 1693.85 73.45 280.1 2581.3 762.1 24-Feb-10 1672.25 71.95 275.95 2576.3 765.35 25-Feb-10 1700.25 71.35 276.25 2617.35 766.25 26-Feb-10 1777.65 71.85 279.35 2601.95 761.8

Calculation of standard deviation of GMR Company

Squared Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 GMR 67.55 67.55 66.25 65.05 Average 58.475 58.475 58.475 58.475 Deviation 9.075 9.075 7.775 6.575 Deviation 82.35563 82.35563 60.45 43.23

38

21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

63.9 62.8 62.05 59.4 61.5 59.95 60.9 59.25 58.7 55.2 52.6 55.45 56.15 55.5 55.35 56 55.6 56.3 56.6 55.6 54.85 55 55.65 55.3 53.45 54.8 X=1754. 3

58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475 58.475

5.425 4.325 3.575 0.925 3.025 1.475 2.425 0.775 0.225 -3.275 -5.875 -3.025 -2.325 -2.975 -3.125 -2.475 -2.875 -2.175 -1.875 -2.875 -3.625 -3.475 -2.825 -3.175 -5.025 -3.675

29.43 18.705 12.78 0.855 9.15 2.175 5.88 0.6 0.05 10.725 34.515 9.15 5.405 8.85 9.765 6.125 8.265 4.73 3.515 8.265 13.14 12.075 7.98 10.08 25.25 13.505 d2=539.36

=
Where

= 58.466

X = Arithmetic mean X = Value of Variable N = No. of items

= 18

Standard deviation = variance

39

= 18 = 4.242

Calculation of standard deviation of DLF Company

Squared Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 DLF 386.3 387.3 379.7 373.7 363.55 352.75 344.15 317.45 324.3 333.65 332.35 326.35 336.1 321.35 308.7 314.55 311.5 305.95 301.65 307 303.35 309.75 305.8 303.7 291.1 284.7 290.25 288.85 289.5 298.45 X=9693.8 Avg 323.1266667 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 323.1267 deviation deviation 63.17333333 3990.870044 64.1733 4118.212433 56.5733 3200.538273 50.5733 2557.658673 40.4233 1634.043183 29.6233 877.5399029 21.0233 441.9791429 -5.6767 32.22492289 1.1733 1.37663289 10.5233 110.7398429 9.2233 85.06926289 3.2233 10.38966289 12.9733 168.3065129 -1.7767 3.15666289 -14.4267 208.1296729 -8.5767 73.55978289 -11.6267 135.1801529 -17.1767 295.0390229 -21.4767 461.2486429 -16.1267 260.0704529 -19.7767 391.1178629 -13.3767 178.9361029 -17.3267 300.2145329 -19.4267 377.3966729 -32.0267 1025.709513 -38.4267 1476.611273 -32.8767 1080.877403 -34.2767 1174.892163 -33.6267 1130.754953 -24.6767 608.9395229 2 d =26410.8

= 323.127

40

Where

X = Arithmetic mean X = Value of Variable N = No. of items

= 880.66
Standard deviation = variance = 880.66 = 29.68

Calculation of standard deviation of TATA POWER Company

Squared Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 TATA Power Average Deviation deviation 1456.6 1301.213 155.3867 24145.01618 1443.25 1301.213 142.037 20174.50937 1419.15 1301.213 117.937 13909.13597 1421.05 1301.213 119.837 14360.90657 1356.7 1301.213 55.487 3078.807169 1334.05 1301.213 32.837 1078.268569 1319.45 1301.213 18.237 332.588169 1311.75 1301.213 10.537 111.028369 1323.4 1301.213 22.187 492.262969 1304.9 1301.213 3.687 13.593969 1293.2 1301.213 -8.013 64.208169 1284.1 1301.213 -17.113 292.854769 1298.85 1301.213 -2.363 5.583769 1277.45 1301.213 -23.763 564.680169 1285.55 1301.213 -15.663 245.329569 1301.95 1301.213 0.737 0.543169 1284.95 1301.213 -16.263 264.485169 1300.25 1301.213 -0.963 0.927369 1275.1 1301.213 -26.113 681.888769 1266 1301.213 -35.213 1239.955369 1239.65 1301.213 -61.563 3790.002969 1236.65 1301.213 -64.563 4168.380969 1262.4 1301.213 -38.813 1506.448969 1252.95 1301.213 -48.263 2329.317169 1240.35 1301.213 -60.863 3704.304769 1254.6 1301.213 -46.613 2172.771769 41

23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

1251.75 1257.85 1269.35 1213.15 X=39 036.4

1301.213 1301.213 1301.213 1301.213

-49.463 -43.363 -31.863 -88.063

2446.588369 1880.349769 1015.250769 7755.091969 d2=111825

= 1301.213
Where X = Arithmetic mean X = Value of Variable N = No. of items

= 3727.5

Standard deviation = variance = 3727.5 = 61.05

Calculation of standard deviation of R-POWER Company

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 R-Power 159.3 159.6 156.75 156.9 152.95 150.5 150.2 145.45 144.15 145.95 147.5 144.85 Average Deviation Sqr Deviation 145.07333 14.22666667 202.3980444 145.0733 14.5267 211.0250129 145.0733 11.6767 136.3453229 145.0733 11.8267 139.8708329 145.0733 7.8767 62.04240289 145.0733 5.4267 29.44907289 145.0733 5.1267 26.28305289 145.0733 0.3767 0.14190289 145.0733 -0.9233 0.85248289 145.0733 0.8767 0.76860289 145.0733 2.4267 5.88887289 145.0733 -0.2233 0.04986289 42

03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

148.1 142.5 139.95 143.35 141.65 142.4 140.85 141.65 141.05 142.35 142.4 141.55 139.8 139 138.85 137.75 136.8 138.1 X=4 352.2

145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733 145.0733

3.0267 -2.5733 -5.1233 -1.7233 -3.4233 -2.6733 -4.2233 -3.4233 -4.0233 -2.7233 -2.6733 -3.5233 -5.2733 -6.0733 -6.2233 -7.3233 -8.2733 -6.9733

9.16091289 6.62187289 26.24820289 2.96976289 11.71898289 7.14653289 17.83626289 11.71898289 16.18694289 7.41636289 7.14653289 12.41364289 27.80769289 36.88497289 38.72946289 53.63072289 68.44749289 48.62691289 d2=1225.83

= 145.07

Where

X = Arithmetic mean X = Value of Variable N = No. of items

= 40.86

Standard deviation = variance = 40.86 = 6.392

43

Calculation of standard deviation of BAJAJ Company

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 BAJAJ 1726.9 1735.7 1776.25 1820.55 1798.1 1786.8 1731.9 1670.3 1683.6 1747.7 1713.45 1685.2 1709.9 1683.55 1683.75 1721.3 1699.15 1728.6 1773.2 1788.75 1792.65 1797.5 1839.15 1812.5 1806.6 1801.35 1721.8 1747.45 1712.35 1817.65 X=525 13.65 Average 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 1750.455 Deviation -23.555 -14.755 25.795 70.095 47.645 36.345 -18.555 -80.155 -66.855 -2.755 -37.005 -65.255 -40.555 -66.905 -66.705 -29.155 -51.305 -21.855 22.745 38.295 42.195 47.045 88.695 62.045 56.145 50.895 -28.655 -3.005 -38.105 67.195 Squared Deviation 554.838 217.71 665.382 4913.309 2270.046 1320.959 344.288 6424.824 4469.591 7.590025 1369.37 4258.215 1644.708 4476.279 4449.557 850.014 2632.203 477.641 517.335 1466.507 1780.418 2213.232 7866.803 3849.582 3152.261 2590.301 821.109 9.030025 1451.991 4515.168 d2=71580.26

= 1750.455

Where

X = Arithmetic mean X = Value of Variable 44

N = No. of items

= 2386
Standard deviation = variance = 2386 = 48.84

Calculation of standard deviation of HERO HONDA Company

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 HEROHONDA Average Deviation Squared Deviation 1625.35 1643.837 -18.487 341.7692 1694.6 1643.837 50.763 2576.882 1664.1 1643.837 20.263 410.5892 1688.65 1643.837 44.813 2008.205 1653.2 1643.837 9.363 87.66577 1649.4 1643.837 5.563 30.94697 1621.45 1643.837 -22.387 501.1778 1550.15 1643.837 -93.687 8777.254 1539.1 1643.837 -104.737 10969.84 1559 1643.837 -84.837 7197.317 1580.95 1643.837 -62.887 3954.775 1568.45 1643.837 -75.387 5683.2 1599.6 1643.837 -44.237 1956.912 1600.45 1643.837 -43.387 1882.432 1585.4 1643.837 -58.437 3414.883 1584.35 1643.837 -59.487 3538.703 1578.25 1643.837 -65.587 4301.655 1618.3 1643.837 -25.537 652.1384 1630.65 1643.837 -13.187 173.897 1690.95 1643.837 47.113 2219.635 1704.35 1643.837 60.513 3661.823 1695.4 1643.837 51.563 2658.743 1698.4 1643.837 54.563 2977.121 1703 1643.837 59.163 3500.261 1680.35 1643.837 36.513 1333.199 1707.25 1643.837 63.413 4021.209 1693.85 1643.837 50.013 2501.3 1672.25 1643.837 28.413 807.2986 1700.25 1643.837 56.413 3182.427 1777.65 1643.837 133.813 17905.92 X=493 15.1 d2=103229.2

45

= 1643.837
Where X = Arithmetic mean X = Value of Variable N = No. of items

= 3441
Standard deviation = variance = 3441 = 58.65

Calculation of standard deviation of MTNL Company

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 MTNL 88.05 90.05 89.25 86.45 84.95 82.7 82.3 77.95 75.55 75.8 74.75 72.4 73.7 72.1 71 71.75 73.05 74.15 72.3 73.25 71.7 72.65 75.15 74.9 75.7 74.6 Average 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 76.49333 Deviation Squared Deviation 11.55667 133.5566 13.55667 183.7833 12.75667 162.7326 9.95667 99.13528 8.45667 71.51527 6.20667 38.52275 5.80667 33.71742 1.45667 2.121887 -0.94333 0.889871 -0.69333 0.480706 -1.74333 3.039199 -4.09333 16.75535 -2.79333 7.802692 -4.39333 19.30135 -5.49333 30.17667 -4.74333 22.49918 -3.44333 11.85652 -2.34333 5.491195 -4.19333 17.58402 -3.24333 10.51919 -4.79333 22.97601 -3.84333 14.77119 -1.34333 1.804535 -1.59333 2.5387 -0.79333 0.629372 -1.89333 3.584698

46

23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

73.45 71.95 71.35 71.85 X=229 4.8

76.49333 76.49333 76.49333 76.49333

-3.04333 -4.54333 -5.14333 -4.64333

9.261857 20.64185 26.45384 21.56051 d2=995.7

=76.493
Where X = Arithmetic mean X = Value of Variable N = No. of items

=33.19

Standard deviation = variance = 33.19 = 5.76

Calculation of standard deviation of BHARTI AIRTEL Company

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 Bharti Airtel 317.4 320.7 320.55 331.5 322.4 Average 302.595 302.595 302.595 302.595 302.595 Deviation 14.805 18.105 17.955 28.905 19.805 Squared Deviation 219.188 327.791 322.382 835.499 392.238

47

22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

322.15 330.9 322.9 313.65 306.4 311.2 307.65 309 304.1 300.05 300.4 308.35 313.15 315.3 314.5 285.6 271.6 279.15 281.9 278.8 276.9 280.1 275.95 276.25 279.35 X=907 7.85

302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595 302.595

19.555 28.305 20.305 11.055 3.805 8.605 5.055 6.405 1.505 -2.545 -2.195 5.755 10.555 12.705 11.905 -16.995 -30.995 -23.445 -20.695 -23.795 -25.695 -22.495 -26.645 -26.345 -23.245

382.398 801.173 412.293 122.213 14.47802 74.04602 25.55302 41.02402 2.265025 6.477025 4.818025 33.12002 111.408 161.417 141.729 288.83 960.69 549.668 428.283 566.202 660.233 506.025 709.956 694.059 540.33 d2=10335.79

= 302.595
Where X = Arithmetic mean X = Value of Variable N = No. of items

= 344.52
Standard deviation = variance = 344.52 = 18.56

Calculation of standard deviation of INFOSYS Company

Date INFOSYS Average Deviation Squared Deviation

48

15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

2675.8 2686.65 2635.9 2657.7 2625.2 2575.6 2542.3 2502.25 2491.75 2475.5 2451.25 2439.95 2473.2 2429.05 2352.7 2379.45 2403.6 2473.8 2466.95 2498.45 2498.65 2541.45 2518.65 2533.65 2532.4 2568.35 2581.3 2576.3 2617.35 2601.95 X=75807.1

2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333 2526.903333

148.8967 159.7467 108.9967 130.7967 98.29667 48.69667 15.39667 -24.6533 -35.1533 -51.4033 -75.6533 -86.9533 -53.7033 -97.8533 -174.203 -147.453 -123.303 -53.1033 -59.9533 -28.4533 -28.2533 14.54667 -8.25333 6.746667 5.496667 41.44667 54.39667 49.39667 90.44667 75.04667

22170.22 25519 11880.27 17107.77 9662.235 2371.365 237.0574 607.7868 1235.757 2642.303 5723.427 7560.882 2884.048 9575.275 30346.8 21742.49 15203.71 2819.964 3594.402 809.5922 798.2508 211.6055 68.11751 45.51752 30.21335 1717.826 2958.997 2440.031 8180.6 5632.002 d2=215777.5

= 2526.904
Where X = Arithmetic mean X = Value of Variable N = No. of items

= 7192.58
Standard deviation = variance 49

= 7192.58 = 84.81

Calculation of standard deviation of TCS Company

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 TCS 791.4 802.2 780.7 779.4 770.65 757.85 756.2 743.3 741.75 736.2 746.15 738.4 752.95 738.7 723.5 729.7 724.15 735.15 732.3 742.7 746.15 758.15 758.65 758.8 750.55 757.25 762.1 765.35 766.25 761.8 X=226 08.4 Average 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 753.6133 Deviation Squared Deviation 37.78667 1427.832 48.5867 2360.667 27.0867 733.6893 25.7867 664.9539 17.0367 290.2491 4.2367 17.94963 2.5867 6.691017 -10.3133 106.3642 -11.8633 140.7379 -17.4133 303.223 -7.4633 55.70085 -15.2133 231.4445 -0.6633 0.439967 -14.9133 222.4065 -30.1133 906.8108 -23.9133 571.8459 -29.4633 868.086 -18.4633 340.8934 -21.3133 454.2568 -10.9133 119.1001 -7.4633 55.70085 4.5367 20.58165 5.0367 25.36835 5.1867 26.90186 -3.0633 9.383807 3.6367 13.22559 8.4867 72.02408 11.7367 137.7501 12.6367 159.6862 8.1867 67.02206 10411

= 753.613

Where

X = Arithmetic mean X = Value of Variable 50

N = No. of items

= 347

Standard deviation = variance = 347 = 18.62

Correlation between TCS and INFOSYS

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 Deviation of TCS (X) 37.78667 48.5867 27.0867 25.7867 17.0367 4.2367 2.5867 -10.3133 -11.8633 -17.4133 -7.4633 -15.2133 -0.6633 -14.9133 -30.1133 -23.9133 -29.4633 -18.4633 -21.3133 -10.9133 -7.4633 4.5367 5.0367 5.1867 -3.0633 3.6367 8.4867 11.7367 12.6367 8.1867 Deviation of INFOSYS (Y) 148.8967 159.7467 108.9967 130.7967 98.29667 48.69667 15.39667 -24.6533 -35.1533 -51.4033 -75.6533 -86.9533 -53.7033 -97.8533 -174.203 -147.453 -123.303 -53.1033 -59.9533 -28.4533 -28.2533 14.54667 -8.25333 6.746667 5.496667 41.44667 54.39667 49.39667 90.44667 75.04667 Product Deviation 5626.310467 7761.564989 2952.360914 3372.815264 1674.650878 206.3131818 39.82656629 254.2568789 417.0341439 895.1010839 564.6232739 1322.846639 35.62139889 1459.315619 5245.8272 3526.087825 3632.91328 980.4621589 1277.802669 310.5193989 210.8628539 65.99387779 -41.5695472 34.99293773 -16.83794 150.7291048 461.6482193 579.7538968 1142.947435 614.3845733 dxdy=44759.15924

51

Co-Variance (COVxy) = (1/n) dxdy = (1/30)(44759.15924) =1492

= 0.954

Correlation between BHARTI-AIRTEL and MTNL

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 Deviation of BHARTI Deviation of MTNL Product Deviation 14.805 11.55667 171.0964994 18.105 13.55667 245.4435104 17.955 12.75667 229.0460099 28.905 9.95667 287.7975464 19.805 8.45667 167.4843494 19.555 6.20667 121.3714319 28.305 5.80667 164.3577944 20.305 1.45667 29.57768435 11.055 -0.94333 -10.42851315 3.805 -0.69333 -2.63812065 8.605 -1.74333 -15.00135465 5.055 -4.09333 -20.69178315 6.405 -2.79333 -17.89127865 1.505 -4.39333 -6.61196165 -2.545 -5.49333 13.98052485 -2.195 -4.74333 10.41160935 5.755 -3.44333 -19.81636415 10.555 -2.34333 -24.73384815 12.705 -4.19333 -53.27625765 11.905 -3.24333 -38.61184365 -16.995 -4.79333 81.46264335 -30.995 -3.84333 119.1240134 -23.445 -1.34333 31.49437185 -20.695 -1.59333 32.97396435 -23.795 -0.79333 18.87728735 -25.695 -1.89333 48.64911435 -22.495 -3.04333 68.45970835 -26.645 -4.54333 121.0570279 -26.345 -5.14333 135.5010289 -23.245 -4.64333 107.9342059 dxdy=1996.399

Co-Variance (COVxy) = (1/n)dxdy 52

= (1/30) (1996.399) = 665.4

= 6.168

Correlation between BAJAJ and HERO HONDA

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10 Deviation of BAJAJ -23.555 -14.755 25.795 70.095 47.645 36.345 -18.555 -80.155 -66.855 -2.755 -37.005 -65.255 -40.555 -66.905 -66.705 -29.155 -51.305 -21.855 22.745 38.295 42.195 47.045 88.695 62.045 56.145 50.895 -28.655 -3.005 -38.105 67.195 Deviation of HEROHONDA -18.487 50.763 20.263 44.813 9.363 5.563 -22.387 -93.687 -104.737 -84.837 -62.887 -75.387 -44.237 -43.387 -58.437 -59.487 -65.587 -25.537 -13.187 47.113 60.513 51.563 54.563 59.163 36.513 63.413 50.013 28.413 56.413 133.813 Product Deviation 435.461285 -749.008065 522.684085 3141.167235 446.100135 202.187235 415.390785 7509.481485 7002.192135 233.725935 2327.133435 4919.378685 1794.031535 2902.807235 3898.040085 1734.343485 3364.941035 558.111135 -299.938315 1804.192335 2553.346035 2425.781335 4839.465285 3670.768335 2050.022385 3227.404635 -1433.122515 -85.381065 -2149.617365 8991.564535

53

dxdy=66252.6545

Co-Variance (COVxy) = (1/n)dxdy = (1/30) (66252.6545) =22082

= 7.709

Correlation between R-POWER and TATA POWER

Date 15-Jan-10 18-Jan-10 19-Jan-10 20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 Deviation of POWER 14.22666667 14.5267 11.6767 11.8267 7.8767 5.4267 5.1267 0.3767 -0.9233 0.8767 2.4267 -0.2233 3.0267 -2.5733 -5.1233 -1.7233 -3.4233 -2.6733 -4.2233 -3.4233 -4.0233 -2.7233 -2.6733 -3.5233 -5.2733 -6.0733 -6.2233 155.3867 142.037 117.937 119.837 55.487 32.837 18.237 10.537 22.187 3.687 -8.013 -17.113 -2.363 -23.763 -15.663 0.737 -16.263 -0.963 -26.113 -35.213 -61.563 -64.563 -38.813 -48.263 -60.863 -46.613 -49.463 2210.634786 2063.328888 1377.114968 1417.276248 437.0544529 178.1965479 93.4956279 3.9692879 -20.4852571 3.2323929 -19.4451471 3.8213329 -7.1520921 61.1493279 80.2462479 -1.2700721 55.6731279 2.5743879 110.2830329 120.5446629 247.6864179 175.8244179 103.7587929 170.0450279 320.9488579 283.0947329 307.8230879 RDeviation of TATA Product Deviation

54

24-Feb-10 25-Feb-10 26-Feb-10

-7.3233 -8.2733 -6.9733

-43.363 -31.863 -88.063

317.5602579 263.6121579 614.0897179 dxdy=10974.68622

Co-Variance (COVxy) = (1/n)dxdy = (1/30)(10974.69) = 3657.9

= 9.37

Correlation between GMR and DLF

Date 15-Jan-10 18-Jan-10 19-Jan-10 Deviation of GMR Deviation of DLF Product Deviation 9.075 63.17333333 573.298 9.075 64.1733 582.3726975 7.775 56.5733 439.8574075

55

20-Jan-10 21-Jan-10 22-Jan-10 25-Jan-10 27-Jan-10 28-Jan-10 29-Jan-10 01-Feb-10 02-Feb-10 03-Feb-10 04-Feb-10 05-Feb-10 06-Feb-10 08-Feb-10 09-Feb-10 10-Feb-10 11-Feb-10 15-Feb-10 16-Feb-10 17-Feb-10 18-Feb-10 19-Feb-10 22-Feb-10 23-Feb-10 24-Feb-10 25-Feb-10 26-Feb-10

6.575 5.425 4.325 3.575 0.925 3.025 1.475 2.425 0.775 0.225 -3.275 -5.875 -3.025 -2.325 -2.975 -3.125 -2.475 -2.875 -2.175 -1.875 -2.875 -3.625 -3.475 -2.825 -3.175 -5.025 -3.675

50.5733 40.4233 29.6233 21.0233 -5.6767 1.1733 10.5233 9.2233 3.2233 12.9733 -1.7767 -14.4267 -8.5767 -11.6267 -17.1767 -21.4767 -16.1267 -19.7767 -13.3767 -17.3267 -19.4267 -32.0267 -38.4267 -32.8767 -34.2767 -33.6267 -24.6767

332.5194475 219.2964025 128.1207725 75.1582975 -5.2509475 3.5492325 15.5218675 22.3665025 2.4980575 2.9189925 5.8186925 84.7568625 25.9445175 27.0320775 51.1006825 67.1146875 39.9135825 56.8580125 29.0943225 32.4875625 55.8517625 116.0967875 133.5327825 92.8766775 108.8285225 168.9741675 90.6868725 dxdy=3579.195

Co-Variance (COVxy) = (1/n) dxdy = (1/30)(3579.195) = 1192.947

=9.473

56

Portfolio Weight GMR AND DLF

Deriving the Minimum risk portfolio the following formula is used (b)2 rab (a) (b) Xa = (a)2 + (b)2 2(rab)(a)(b) Where Xa is proportion of GMR Xb is proportion of DLF a is standard deviation of GMR b is standard deviation of DLF (29.68)2 (9.473)(4.242)(29.68) Xa = (4.242)2 + (29.68)2 2(9.473)(4.242)(29.68) 880.9 1192.67 = 17.99 + 880.9 2385.34 -311.77 =

57

-1486.45 = 0.21 Xa = 0.21 Xb = 1 Xa Xb = 1 ( 0.21)

Xb = 1 -0.21 Xb = 0.79

Portfolio Weight R-POWER AND TATA POWER

Deriving the Minimum risk portfolio the following formula is used (b)2 rab (a) (b) Xa = (a)2 + (b)2 2(rab)(a)(b) Where Xa is proportion of R-POWER Xb is proportion of TATA POWER a is standard deviation of R-POWER b is standard deviation of TATA POWER (61.05)2 (9.37)(6.392)(61.05) Xa = (6.392)2 + (61.05)2 2(9.37)(6.392)(61.05) 58

3727.10 3656.47 = 40.85 +3727.10 7312.94 70.63 = - 3544.99 = - 0.02

Xa = - 0.02 Xb = 1 Xa Xb = 1 (-0.02) Xb = 1 + 0.02 Xb = 1.02

Portfolio Weight BAJAJ AND HERO HONDA

Deriving the Minimum risk portfolio the following formula is used (b)2 rab (a) (b) Xa = (a)2 + (b)2 2(rab)(a)(b) Where Xa is proportion of BAJAJ Xb is proportion of HERO HONDA a is standard deviation of BAJAJ b is standard deviation of HERO HONDA

59

(58.65)2 (7.709)(48.84)(58.65) Xa = (48.84)2 + (58.65)2 2(7.709)(48.84)(58.65)

3439.8 22082.17 = 2385.34 +3439.8 44164.3

-18642.37 = -38339.16 = 0.49

Xa = 0.49 Xb = 1 Xa Xb = 1 (0.49) Xb = 1 + 0.49 Xb = 1.49

Portfolio Weight BHARTI AND MTNL

Deriving the Minimum risk portfolio the following formula is used (b) 2 rab (a) (b) Xa = (a)2 + (b)2 2(rab)(a)(b) Where Xa is proportion of BHARTI 60

Xb is proportion of MTNL a is standard deviation of BHARTI b is standard deviation of MTNL (5.76)2 (7.709)(18.56)(5.76) Xa = (18.56)2 + (5.76)2 2(7.709)(18.56)(5.76) 33.18 824.13 = 344.47 +33.18 1648.27 -790.95 = -1270.62 = 0.62

Xa = 0.62 Xb = 1 Xa Xb = 1 (0.62) Xb = 1 + 0.62 Xb = 1.62

Portfolio Weight of TCS AND INFOSYS

Deriving the Minimum risk portfolio the following formula is used (b)2 rab (a) (b) Xa = (a)2 + (b)2 2(rab)(a)(b) Where Xa is proportion of TCS 61

Xb is proportion of INFOSYS

a is standard deviation of TCS b is standard deviation of INFOSYS (84.81)2 (0.954)(18.62)(84.81) Xa = (18.62)2 + (84.81)2 2(0.954)(18.62)(84.81)

7192.7 1506.5 = 346.7 +7192.7 3013 5686.2 = 4526.4 = Xa = 1.26 Xb = 1 Xa Xb = 1 (1.26) Xb = 0.26 1.26

PORTFOLIO RISK
It is calculated with the help of following formula, p = (X1)2 (1)2 + (X2)2(2)2 - 2(X1)(X2)(r12)(1)(2)

62

Where, p = Portfolio risk X1 = Proportion of Investment in security 1

X2 = Proportion of Investment in security 2 1 = Standard deviation of security 1 2 = Standard deviation of security 2 r12= Correlation Co-efficient between security 1&2

Portfolio risk between GMR AND DLF

X1 = 0.21 1 = 4.242 r12 =9.473 p =(X1)2 (1)2 + (X2)2(2)2 - 2(X1)(X2)(r12)(1)(2) p = (0.21) 2 (4.242) 2+(0.79) 2 (29.68) 2 -2(0.21)(0.79)(9.473)(4.242)(29.68) p = 12.44 X2=0.79 2 =29.68

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CONCLUSIONS
CONCLUSUION OF GMR AND DLF
As per the calculation the GMR bears a proportion of 0.21 and where as DLF bears a proportion of 0.79. The expected returns of the GMR is 58.473and DLF is 323.127. The variance of the GMR is 18 and DLF is 880.66. The standard deviation between the companies is 4.242% for GMR and 29.68% for DLF. In the combination, the risk of the GMR is less than the DLF comparisons, therefore investor can invest fund in GMR where as the portfolio risk, combined risk between two is 12.44% which is less than DLF and greater than the GMR. So, investor can invest in combined portfolio than individual.

Portfolio risk between R-POWER AND TATA

X1 = -0.02 1 = 6.392 X2=1.02 2 = 61.05

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r12=9.37 p =(X1)2 (1)2 + (X2)2(2)2 - 2(X1)(X2)(r12)(1)(2) p = (-0.02) 2 (6.392) 2+(1.02) 2 (61.05) 2 -2(-0.02)(1.02)(9.37)(6.392)(61.05) p= 63.46

CONCLUSUION OF R-POWER AND TATA POWER

As per the calculation the R-POWER bears a proportion of 0.02 and where as TATA POWER bears a proportion of 1.02. The expected returns of the R-POWER is 145.07and TATA POWER is 1301.213. The variance of the R-POWER is 40.86 and TATA POWER is 3727.5. The standard deviation between the companies is 6.392% for R-POWER and 61.05% for TATA POWER In the combination, the risk of the R-POWER is less than the TATA POWER comparisons, therefore investor can invest combined money or fund in R-POWER where as the portfolio risk, combined risk between two is 63.46 which is greater than R-POWER and TATA POWER. So investor better go for investing in R-POWER than in combined portfolios.

Portfolio risk between of BAJAJ AND HERO HONDA

X1 =0.49 1 =48.84 X2=1.49 2 =58.65 65

r12=7.709 p =(X1)2 (1)2 + (X2)2(2)2 - 2(X1)(X2)(r12)(1)(2) p = (0.49) 2 (48.84) 2+(1.49) 2 (58.65) 2-2(0.49)(1.49)(7.709)(48.84)(58.65) p= 155.03

CONCLUSUION OF BAJAJ AND HERO HONDA

As per the calculation the BAJAJ bears a proportion of 0.49 and where as HERO HONDA bears a proportion of 1.49. The expected returns of the BAJAJ is 1750.45 and HERO HONDA is 1643.84. The variance of the BAJAJ is 2386 and HERO HONDA is 3441. The standard deviation between the companies is 48.84% for BAJAJ and 58.65% for HERO HONDA.

In the combination the risk of the BAJAJ is less than the HERO HONDA comparisons, therefore investor can invest combined money or fund in BAJAJ where as the portfolio risk, combined risk between two is 12.45% which is less than BAJAJ and HERO HONDA.

Portfolio risk between BHARTI AND MTNL

X1 = 0.62 1 =18.56 X2=1.62 2 =5.76 66

r12=6.168 p =(X1)2 (1)2 + (X2)2(2)2 - 2(X1)(X2)(r12)(1)(2) p = (0.62) 2 (18.56) 2+(1.62) 2 (5.76) 2-2(0.62)(1.62)(6.168)(18.56)(5.76) p= (1105.10) p=33.2

CONCLUSUION OF BHARTI AND MTNL

As per the calculation the BHARTI bears a proportion of 0.62 and where as MTNL bears a proportion of 1.62. The expected returns of the BHARTI is 302.6 and MTNL is 76.5. The variance of the bharti is 344.5 and MTNL is 33.2. The standard deviation between the companies is 18.56% for BHARTI and 5.76% for MTNL. In the combination the risk of the BHARTI is less than the MTNL comparisons, therefore investor can invest combined money or fund in BHARTI where as the portfolio risk, combined risk between two is 33.2% which is less than BHARTI and MTNL. So, investors better go for investing in BHARTI than in combined portfolio.

Portfolio risk between TCS AND INFISYS

X1 =1.26 1 =18.62 X2=0.26 2 =84.81

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r12=0.954 p =(X1)2 (1)2 + (X2)2(2)2 - 2(X1)(X2)(r12)(1)(2) p = (1.26) 2 (18.62) 2+(0.26) 2 (84.81) 2-2(1.26)(0.26)(0.954)(18.62)(84.81) p = 49.93 p =7.06

CONCLUSUION OF TCS AND INFOSYS

As per the calculation the TCS bears a proportion of 1.26 and where as INFOSYS bears a proportion of 0.26. The expected returns of the TCS is 753.6 and INFOSYS is 2526.9. The variance of the TCS is 347.03 and INFOSYS is 7192.58. The standard deviation between the companies is 18.62% for TCS and 84.81% for INFOSYS.

In the combination the risk of the INFOSYS is less than the TCS comparisons, therefore investor can invest combined money or fund in INFOSYS where as the portfolio risk, combined risk between two is 7.06% which is less than TCS and INFOSYS. So, investor can go for investing in combined portfolio rather than individual stocks.

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FINDINGS AND SUGGESTIONS

1. After the finding of the GMR and DLF companies the DLF is the high risky than the GMR because the standard deviation of the DLF is more 2. 3. than the GMR 4. After the finding of the R-POWER and TATA POWER companies the TATA POWER is highly risky than the R-POWER, because the standard deviation of the TATA POWER is more than the R-POWER. 5. After the finding of the BAJAJ and HERO HONDA companies the HERO HONDA is risky than the BAJAJ, because the standard deviation of the HERO HONDA is more than the BAJAJ. 6. After the finding of the BHARTI and MTNL companies the BHARTI is the highly risky than the MTNL, because the standard deviation of the BHARTI is more than the MTNL. 7. After the finding of the TCS and INFOSYS companies the INFOSYS is highly risky than the TCS, because the standard deviation of the INFOSYS is more than the TCS.

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8. At last we suggest that after analysing 5- sectors i.e. INFRA,POWER, AUTOMOBILE, TELECOMMUNICATIION and IT, we suggest that investors can get better returns by investing in combined portfolio of IT-sector than any other sectors. And individually, investors better to invest in GMR, MTNL and RELIANCE POWER because standard deviations of these stocks are very less than other companys stocks.

BIBLIOGRAPHY Books Referred:

Security Analysis & Portfolio Management by Prasanna Chandra Publisher: Tata Mcgraw Hill Security Analysis & Portfolio Management by Fisher D.E. and Jordan RJ Publisher:Prentice Hall; 6 Fac Sub edition (January 3, 1995) Investment Management & Security Analysis by Preeti Singh Publisher:Himalaya;Edition:14

Visited Website:
WWW.nseindia.org WWW. Investopedia.com

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