Risk Managementfull

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CHAPTER I INTRODUCTION 1.1 ABOUT THE STUDY

Investing in securities such as shares, debentures, bonds are profitable as well as exciting. It is indeed rewarding but involves a great deal of risk. Investing in financial securities is considered to be one of the vast avenues for investing ones savings. Risk management is a discipline that enables people and organizations to cope with uncertainty by taking steps to protect its vital assets and resources. Risk can be explained as uncertainty and is usually associated with the unpredictability of an investment performance. All investments are subject to risk, but some have a greater degree of risk than others. Risk is often viewed as the potential for an investment to decrease in value. Derivatives are the instruments most commonly used in financial risk management. The Derivatives are exchange traded contracts like futures, options etc. Such a contract is built upon a tradable asset or assets like equities, stock indices, and commodities and so on. Because unique derivative contracts tend to be costly to create and monitor, the most cost-effective financial risk management methods usually involve derivatives that trade on well-established financial markets. The most important element of managing risk is keeping losses small; never give in to fear or hope when it comes to keeping losses small.
THE ORIGIN OF DERIVATIVES The origin of derivatives can be traced back to the need of farmers to protect themselves against fluctuations in the price of their crop. From the time it was sown to the time it was ready for harvest, farmers would face price uncertainty. Through the use of simple derivative products, it was possible for the farmer to partially or fully transfer price risks .These were simple contracts developed to meet the needs of farmers and were basically a means of reducing risk. Derivatives are securities under the SCRA and hence the trading of derivatives is governed by the regulatory framework under the SCRA. DEFINITION OF DERIVATIVES Derivatives indicate that it has no independent value i.e. its value is entirely derived from the value of the underlying asset. The underlying asset can be securities, commodities, bullion currencies, live stocks or anything else. In other words, derivative means forward, future, option or any other hybrid contract of predetermined fixed duration linked for the purpose of contract fulfillment to the value of specified real or financial assets or to an index of securities. The Securities Contracts (Regulation) Act, 1956 defines derivative includes: A contract which derives its value from the prices, or index of prices, of underlying securities.
TYPES OF DERIVATIVES
Derivatives
Future
Option
Forward
Swaps
Furthermore, derivatives may be grouped as exchange traded or over the counter (OTC). Exchange derivatives which include futures, are traditional highly standardized contract and readily provide liquidity and minimize credit risk. FORWARD CONTRACT A forward contract is an agreement to buy or sell an asset on a specified date for a specified price. One of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date for the same price. Other contract details like delivery date, price and quantity are negotiated bilaterally by the parties.
FUTURE CONTRACT In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price. The future date is called the delivery date or final settlement date. The pre-set price is called the futures price. The price of the underlying asset on the delivery date is called the settlement price. The settlement price, normally, converges towards the futures price on the delivery date. A futures contract gives the holder the right and the obligation to buy or sell, which differs from an options contract, which gives the buyer the right, but not the obligation, and the option writer (seller) the obligation, but not the right. To exit the commitment, the holder of a futures position has to sell his long position or buy back his short position, effectively closing out the futures position and its contract obligations. DIFFERENCES BETWEEN FORWARDS AND FUTURES A standardized forward contract is a futures contract. The differences are: A forward contract is a tailor made contract (the terms are negotiated between the buyer and the seller), whereas a futures contract is a standardized contract (quantity, date and delivery conditions are standardized). While there is no secondary market for forward contracts, the futures contracts are traded on organized exchanges.
Forward contracts usually end with deliveries, whereas futures contracts are settled with the differences. OPTIONS Options are the standardized financial contracts that allows the buyer (holder) of the option, i.e. the right at the cost of option premium, not the obligation, to buy (call options) a specified date through exchanges under stringent financial securities against default. An option to buy is called call options and option to sell is called put option. Further, if an option i.e. exercisable on or before the expiry date is called American option and one that is exercisable only on expiry date , is called European option. The price at which the option is to be exercised is called strike price or exercise price. As in the case of future contracts, option contracts can be settled by delivery of the underlying asset or the cash. However, unlike futures cash settlement in option contract entails paying/receiving the differences between the strike price/exercise prices of the underlying asset. SWAPS Swaps are transactions which obligates the two parties to the contract to exchange a series of cash flows at specified intervals known as payment or settlement dates. They can be regarded as portfolios of forward's contracts. A contract whereby two parties agree to exchange (swap) payments, based on some notional principle amount is called as a SWAP. In case of swap, only the payment flows are exchanged and not the principle amount.
THE PARTICIPANTS IN A DERIVATIVES MARKET Participants
Hedgers
Speculators
Arbitrageurs
HEDGERS Hedger Use futures or options markets to reduce or eliminate the risk associated with price of an asset. SPECULATORS Speculators use futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. ARBITRAGEURS Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit.
THE NEED FOR A DERIVATIVES MARKET The derivatives market performs a number of economic functions: It helps in transferring risks. It helps in the discovery of future as well as current prices. It increase the volume traded in markets because of participation of risk adverse people in greater numbers. It increases savings and investment in the long run.
1.1.1 INTRODUCTION TO FUTURES

FUTURES OF DERIVATIVE IN INDIA A futures market was designed to solve the problems that exist in forward markets. A futures contract is an agreement between the buyer and seller for the purchase and sale of a particular asset at a specific future date. The price at which the asset would change hands in the future is agreed upon at the time of entering into the contract. The actual purchase or sale of the underlying involving payment of cash and delivery of the instrument does not take place until the contracted date of delivery. A future contract involves an obligation on both the parties to fulfill the terms of the contract. Liquidity is one of the most important parameters in judging the attractiveness of a market for investors. In the index futures market, the bid-offer spread i.e. the difference between the price at which one can sell
and the price at which one can buy, is around 0.15-0.2, or around two basis points. An average Indian investor is more aware of speculation than hedging in equities. With the introduction of options and futures trading on the index and certain stocks, learned investors can speculate in equity markets. The standardized items in a future contract are; Quantity of underlying Quality of underlying The date and the month of delivery Location of settlement STRATEGIES OF FUTURES However since the index is nothing but a security whose price or level is a weighted average of securities constituting an index, all strategies that can be implemented using stock futures can also be implemented using index futures. Hedging: Long security, sell futures Speculation: Bullish security, buy futures Speculation: Bearish security, sell futures Arbitrage: Overpriced futures: buy spot, sell futures Arbitrage: Under-priced futures: buy futures, sell spot
TYPES OF FUTURES Futures are broadly dividing in to two types, namely: 1. Commodity future 2. Financial futures Commodity Futures Commodity future is a futures contract in commodities like agricultural products, metals and minerals etc. in organized commodity future market, contracts are standardized with standard quantities. Of course, this standard varies from commodity to commodity. They also have fixed delivery dates in each month or a month in a year. In India, commodity futures in agriculture products are very popular. Financial futures Financial future refers to a future contract in foreign exchange of financial instruments like treasury bills, commercial papers, stock market index or interest rates. It is an area where financial service companies can play a very dynamic role. Financial futures are very popular because these protect against exchange rate/ interest rate fluctuations and for ensuring future interest rate on loan.
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KEY FEATURES OF FUTURES CONTRACTS The key features of future contract are: Standardization Intermediation by the exchange Price limits Margin requirements Marking to market
Standardisation: Traded futures contracts are standardized in terms of asset quality, asset quantity, and maturity date. The purpose of standardization is to promote liquidity and allow parties to the futures contracts to close out their positions readily. Intermediation by the Exchange: In a traded futures contract the exchange interposes itself between the buyer and the seller of the contract. This means that the exchange becomes the seller to the buyer and the buyer to the seller. Price limits: Futures exchanges impose limits on price movements of futures contracts. Price limits are meant to prevent panic buying or selling, triggered by rumors, and to prevent overreaction to real information. Marking-to-market: While forward contracts are settled on the maturity date, futures contracts are marked to market on a periodic basis. This means that the profits and losses on futures contracts are settled on a periodic basis.
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ADVANTAGES OF FUTURES AND OPTIONS Trading in futures and options facilitates attractive trading profit even in the very short term. These instruments are also useful as an effective mechanism to hedge market risk. From the operators' point of view, the advantages are many. 1) Limited Risk and Unlimited Profit Buyers of put or call options have to lose only unto the premium they paid and hence the risk is limited on their side. On the other hand, the profitability from option buying stands unlimited. A call option is bought on the anticipation that the price of the asset is likely to go up during the contract period. If the price is moving up as expected, the option buyer can make immense returns.
2) Higher leverage
Options and futures are high leverage products in the sense that one can hold a substantially valuable position through investing a limited amount of money.
3) Lower transaction cost

Another advantage of future trading is much lower relative commission. Your commission for trading a future contract is one tenth of a percent (0.10% to 0.20%). Commissions on individual stocks are typically as much as one percent for both buying and selling.
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4) High Liquidity Most futures markets are very liquid, i.e. there are huge amounts of contracts traded every day. This ensures that market orders can be placed very quickly as there are always buyers and sellers for most contracts. USES OF FUTURES Futures contracts are useful for the following purposes: Risk management Portfolio allocation Hedging facility Reducing the equity exposure in a mutual fund scheme Investing the funds based by new scheme Preserving the value of portfolio during times of market stress.
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1.2 ABOUT THE INDUSTRY

STOCK MARKET OF INDIA INTRODUCTION Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock). A stock exchange, (formerly a securities exchange) is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders to trade stocks and other securities. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost paperless. Now investors dont have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are
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electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. Supply and demand in stock markets are driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities.
POST INDEPENDENCE SCENARIO The depression witnessed after the Independence led to closure of a lot of exchanges in the country. Lahore Estock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized are Bomboy, Calcutta, madras, Ahmedabad, Delhi, Hyderabad, Bangalore, and Indore. Stock exchange means anybody or individuals whether
incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.
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TYPES OF TRANSACTIONS The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:
SPOT DELIVERY TRANSACTIONS Includes transactions that require delivery and payment within stipulated time period at the time of entering into the contract
FORWARD TRANSACTIONS Transactions in which delivery and payment can be extended by further period of 14 days each. The overall period should not exceed 90 days from the date of contract..
This period shall not be more than 14 days following the date of the contract
Indian stock exchange allows a member broker to perform following activities:

Act as an agent, Buy and sell securities for his clients and charge commission for the same, Act as a trader or dealer as a principal, Buy and sell securities on his own account.
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BOMBAY STOCK EXCHANGE The stock exchange, Mumbai, popularly known as BSE was established in 1875 as the native share and stock brokers .it is the oldest one in Asia. Even older than the Tokyo stock exchange, which was established in 1878. it is a voluntary non-profit making association of persons(AOP) and is currently in the process of converting itself into demutualize and corporate entity. It has evolved over the years into its present status as the premier stock exchange in the country. It is the first stock exchange in the country to have obtained permanent recognition in 1956 from the government of India under the securities contracts regulation act, 1956. The exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interest of the investors and ensures redressal of their grievances whether against the companies or its own member brokers. The objective of BSE Stock Exchange is To safe guard the interest of investing public having dealing on the exchange. To establish and promote honourable and just practices in securities transactions. To promote, develop and maintain well-regulated market for dealing in securities. To promote industrial development in the country through efficient resource mobilization by the way of investment in
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Corporate Securities. Trading system of BSE In March 1995, the Bombay stock exchange has been introduced screen based trading called BOLT (BSE on-line trading). The BOLT is designed to get best bids and offers as well as the best buy and sell orders from the order book. Now the BOLT has a nation wide network. Trading work stations are connected with the main computer at MUMBAI through wide area network (WAN).the capacity of the tandem hardware of BOLT is 5,00,000 trader per day(in 6 hours i.e. from 9:30 a.m to 3.30 p.m). After getting specific approval from SEBI, BOLT connected have been installed in Ahmedabad, Rajkot, Pune, Vododara and Calcutta.
OVER THE COUNTER EXCHANGE OF INDIA (OTCEI) Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry. This age-old trading mechanism in the Indian stock markets used to create much functional inefficiency. Lack of liquidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. In order to overcome these inefficiencies, OTCEI was incorporated in 1990 under the Companies Act 1956. The OTCEI was standard with the objective of providing a market for the smaller companies that could not afford the listing fees of the large exchanges and did not fulfill the minimum capital requirements. It aimed at
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creating a fully decentralized and transparent market. Over the counter means trading across the country in scripts.
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OTCEI Is the first screen based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
Advantages of OTCEI
Greater liquidity and lesser risk of intermediary charges due to widely spread trading mechanism across India The screen-based scripless trading ensures transparency and accuracy of prices Faster settlement and transfer process as compared to other exchanges
NATIONAL STOCK EXCHANGE In order to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. NSE provides exposure to investors in two types of markets, namely: 1. Wholesale debt market 2. Capital market There are two kinds of players in NSE:
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Trading member Participants Trading at NSE Fully automated screen-based trading mechanism Strictly follows the principle of an order-driven market Trading members are linked through a communication network This network allows them to execute trade from their offices The prices at which the buyer and seller are willing to transact will appear on the screen

When the prices match the transaction will be completed A confirmation slip will be printed at the office of the trading member
Advantages of trading at NSE

Integrated network for trading in stock market of India Fully automated screen based system that provides higher degree of transparency Investors can transact from any part of the country at uniform prices Greater functional efficiency supported by totally computerized network
THE ROLE OF STOCK EXCHANGES
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Stock exchanges have multiple roles in the economy, this may include the following Raising capital for businesses The Stock Exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public. Mobilizing savings for investment When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized and redirected to promote business activity with benefits for several economic sectors such as agriculture, commerce and industry, resulting in stronger economic growth and higher productivity levels and firms. Facilitating company growth Companies view acquisitions as an opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion.
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Redistribution of wealth Stock exchanges do not exist to redistribute wealth. However, both casual and professional stock investors, through dividends and stock price increases that may result in capital gains, will share in the wealth of profitable businesses. Corporate governance By having a wide and varied scope of owners, companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than privately-held companies (those companies where shares are not publicly traded, often owned by the company founders and/or their families and heirs, or otherwise by a small group of investors). However, some well-documented cases are known where it is alleged that there has been considerable slippage in corporate governance on the part of some public companies. The dot-com bubble in the early 2000s, and the sub prime mortgage crisis in 2007-08, is classical examples of corporate mismanagement. American International Group (2008), Lehman Brothers (2008), and Satyam Computer Services (2009) were among the most widely scrutinized by the media.
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Creating investment opportunities for small investors As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors. Government capital-raising for development projects Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds can be raised through the Stock Exchange whereby members of the public buy them, thus loaning money to the government. The issuance of such bonds can obviate the need to directly tax the citizens in order to finance development, although by securing such bonds with the full faith and credit of the government instead of with collateral, the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature. Barometer of the economy At the stock exchange, share prices rise and fall depending, largely, on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. An economic recession, depression, or financial crisis could eventually lead to a stock market crash.
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1.3 ABOUT THE COMPANY

COMPANY HISTORY & BACKGROUND Established in the year 1986, Asit C. Mehta Investment Intermediates Ltd. (ACMIIL) is the most trusted and reputed brokerage house in India. It is known for providing investment-related services in the capital markets, the money markets as well as depository services in India. The company is jointly promoted by noted stock market professionals, Mr. Asit C. Mehta and Mrs. Deena A. Mehta, and is a part of the Mumbai-based Nucleus Group of Companies. The other group companies are engaged in commodity broking, derivatives broking, interbank Forex broking, and development of databases, back-office applications for banks, corporate document management solutions and geographical information systems (GIS). VISION, MISSION & QUALITY Envisioned to be the Trusted Financial Intermediary, the group has etched out a very specific corporate purpose To reach appropriate financial products, services and solutions to every Indian entity. The group believes in transparency and fairness in all business dealings, recognizes knowledge as a key driver of this business rather than capital-, product-, processand technology-led innovations for business improvements, and ensures regulatory and legal compliance for economic sustainability. The quality policy involves providing effective and costefficient services to meet the investment needs of clients, and delivery of services through knowledge-based processes.
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THE FIRSTS TO OUR CREDIT:

First multiple seat holder and multiple exchange members. First private VSAT network user. First to utilize the franchisee business model for sub-brokers. First to achieve the ISO quality certification for business processes. First to receive a CRISIL grading for quality of operations and services.
SERVICE STANDARDS & COMPLIANCE In order to institutionalize business processes, our company has moved to a documented customer-centric quality management system. This has ensured that the entire organization is driven by the common objective of delivering quality brokerage services that would create a unique brand and top-of-the-mind recall. We are the first brokerage house to be certified under ISO 9001:2000 for the Equity and Debt segments. We are also first stock brokerage house to be graded under the Broker Grading service by Credit Rating & Information Services of India Ltd. (CRISIL) for our quality of operations and services provided to clients. OUR SERVICES Equity and Derivatives Trading: Equity trading is offered to retail clients through different channels in the Bombay Stock Exchange (BSE) & the National Stock Exchange of India (NSE), for the cash and the derivatives segments.
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Online Trading: Investmentz.com is our trading portal that offers online trading to retail investors in the BSE and NSE cash and derivatives segments. The investors can do their own trading through a browserbased interface as well as a streamer-based solution called live exchange. This service is also available through an Interactive Voice Response (IVR) facility for those clients who are unable to access the Internet service at any time. Institutional Desk: Equity trade execution services are provided to institutional investors by our institutional desk. Research and market information is provided to mutual funds and banks aid them in making investment decisions. These services are provided with seamless connectivity to custodians. Portfolio Advisory Service: ACMIIL holds a portfolio management license issued by SEBI. It service is available to Resident Indian and NonResident India (NRI), for managing their equity & mutual fund portfolio. Investment Banking: ACMIIL has been granted a Category I Merchant Banking license by SEBI. It offers services in mergers, amalgamations, private equity, public offerings and a full gamut of investment banking services. Commodity trading services are provided through our associate, Asit C. Mehta Commodity Services Pvt. Ltd. The company is member of Indias premier commodity exchanges, namely, the Multi Commodity Exchange of India Ltd. (MCX), the National Commodity & Derivatives Exchange, India (NCDEX) and the East India Cotton Exchange Association (EICA).
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Debt Market Desk: We are members of the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India (NSE). The service involves providing quotes and executing trades in government securities (G-Sec), treasury bills and other state-guaranteed bonds. SUPPORT SERVICES Research Investors are provided with extensive information on markets and companies through hourly market reviews, periodic market commentary and recommendations, which enable them to make informed decisions. The company firmly believes that providing continuous and accurate decision making tools can add substantial value to its investors. Advisory services are provided as a value-added service to all retail and institutional clients. This service is delivered through the hourly, daily, weekly, fortnightly and monthly publication of fundamental and technical research. Calls are made through broadcast services on our private VSAT network, SMS and e-mail. Accounts information to the retail clients is provided through access on our website. This assists clients in knowing details about their trading accounts and their resultant obligations through various reports like Bill, Contract, Financial Ledger, Transaction Register, Stock Register, Portfolio Tracker, Stock holding position, etc. Potential Growth Areas The Company looks forward to
strengthening its FII client base to supplement its domestic institutional business through strategic tie-ups with similar institutional participants globally.
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ADDRESS Asit C Mehta Investment Intermediates Ltd. Nucleus House, Saki Vihar Road, Andheri (E), Mumbai 400 072. India. Call: 91-22-28583333. Fax: 91-22-28577647. Email: acmill@acm.co.in SEBI REGISTRATION NO

BSE CM: INB 010607233 & Derivatives: INF 010607233 NSE CM: INB 230607239 & Derivatives: INF 230607239 & WDM: INB 230607239 PMS: INP000001920 Merchant Banking: INM000010973
MANAGEMENT Cash Market: BSE, NSE Derivatives: BSE, NSE MEMBERSHIP Chief Executive Officer: Mrs. Deena Asit Mehta Whole-time Director

: Mr. Kirit H Vora
Debt: NSE Foreign Exchange: Accredited by FEDAI PMS under SEBI License Merchant Banking: Approved by SEBI under Category I Commodities: NCDEX MCX, DGCX, EAST INDIA COTTON
CLEARING BANK: Bank of India
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REACH AND ACCESS (AS ON DEC 31, 2008) Investment Centres : 653 (branches, franchisee, etc.)
States & UT covered : 25 Employees : 517
Asit C Mehta Commodity Services Pvt.Ltd. (ACM CS) is member of the following commodity exchanges: 1. Multi Commodity Exchange of India Ltd. (MCX) 2. National Commodities and Derivatives Exchange of India Ltd. (NCDX) 3. Cotton Exchange of India Ltd. In addition, Asit C Mehta Comdex Services, DMCC is member of Dubai Gold and Commodities Exchange, UAE (DGCX). We provide research and advisory services to various participants and commodities market in India and the Middle East. Our customers include producers, processors, hedgers, consumers and speculators.
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PROFILE OF COMPANIES TAKEN FOR ANALYSIS OF RESEARCH CIPLA

Cipla founded as The Chemical, Industrial & Pharmaceutical Laboratories is a major Indian pharmaceutical company, best-known for manufacturing economical anti-AIDS drugs. The company was founded in 1935 by Khwaja Abdul Hamied, and its Chairman today is Yusuf Hamied (b. 1936), the founder's eldest son. Today (2007), Cipla is the world's largest manufacturer of antiretroviral drugs to fight HIV/AIDS, as measured by units produced, distributed and sold. Cipla ignores foreign patents on these drugs where no Indian law is broken in the process. By doing so Cipla has reduced the cost of providing antiretroviral to AIDS patients from $12,000 (and beyond) to around $300 per year. While this sum remains out of reach for many millions of people in 'Third World' countries, charitable sources often are in a position to make up the difference for destitute patients. The customary treatment of AIDS consists of a cocktail of three drugs. Cipla produces an all-in-one pill called Triomune which contains all three substances (Lamivudine, stavudine and Nevirapine), something difficult elsewhere because the three patents are held by different companies.
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RANBAXY
When we set out on our way in 1961, little did we realize the impact we would make on the Indian and global pharmaceutical industry. The Indian pharmaceutical industry is at the center stage in the global pharmaceutical arena and Ranbaxy is at the forefront in delivering the India centric advantages to the advanced and developing countries of the world. From a small domestic company at inception in late 60s, Ranbaxy has grown formidably to be an integrated, research based, international pharmaceutical company with over a billion dollar global sales, as envisioned by the Chief architect and visionary of today's Ranbaxy, Late Dr Parvinder Singh, Chairman and Managing Director, in the early 90's.It is with the unwavering ' dedication ' and the ' will to win ' of Team Ranbaxy across the globe that we have traversed this journey so far. We are committed to provide quality generics at affordable prices to the patients worldwide with a view to help bring down the healthcare costs. As we move ahead we are determined to capitalize on the new opportunities based on our strong fundamentals of innovation, entrepreneurship and aggressive marketing. We remain committed to enhancing shareholder value as we actively pursue our strategy of growth through organic and inorganic means. Today, we are amongst the Top 10 global generic companies; As we step into the next phase, we are driven by our ambition, willing to invest in the growth of our people and business, marching towards the new horizon of global leadership."
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TATA STEEL
Established in 1907, Tata Steel is Asia's first and India's largest private sector steel company. Tata Steel is among the lowest cost producers of steel in the world and one of the few select steel companies in the world that is EVA+ (Economic Value Added). Its captive raw material resources and the state-of-the-art 5 MTPA (million tones per annum) plant at Jamshedpur, in Jharkhand State, India give it a competitive edge. Determined to be a major global steel player, Tata Steel has recently included in its fold Nat Steel, Asia (2 MTPA) and Millennium Steel (1.7 MTPA) creating a manufacturing network in eight markets in South East Asia and Pacific rim countries. Soon the Jamshedpur plant will expand its capacity from 5 MTPA to 7 MTPA by 2008. The Company plans to enhance its capacity, manifold through organic growth and investments. The Company's wire manufacturing unit in Sri Lanka is known as Lanka Special Steel, while the joint venture in Thailand for limestone mining is known as Sila Eastern. Tata Steel's products are targeted at the quality conscious auto sector and the burgeoning construction industry. With wire manufacturing facilities in India, Sri Lanka and Thailand, the Company plans to emerge as a major global player in the wire business. While the Company is focused in the pursuit of its operational goals, it is also committed to being a good corporate citizen.
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SAIL STEEL
Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defense industries and for sale in export markets. Strength has been the diversified range of quality steel products catering to the domestic, as well as the export markets and a large pool of technical and professional expertise. It is to continuously adapt to the competitive business environment and excel as a business organization, both within and outside India SAIL Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanized sheets, electrical sheets, structural, railway products, plates, bars and rods, stainless steel and other alloy steels. It produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias largest producer of iron ore and of having the countrys second largest mines network. It wide ranges of long and flat steel products are much in demand in the domestic as well as the international market.
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This vital responsibility is carried out by SAIL's own Central Marketing Organization (CMO) and the International Trade Division. CMO encompasses India. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organization at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified. The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. SAIL's Consultancy Division (SAILCON) at New Delhi Offer services and consultancy to clients world-wide. Since its inception, SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. Besides, it has immensely contributed to the development of technical and managerial expertise. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry. a wide network of 37 branch office and 25 departmental Warehouses located in Major cities and towns throughout
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RELIANCE POWER
Reliance Energy came into existence when it took over BSES in 2002 is a company under the Reliance - Anil Dhirubhai Ambani Group [1] banner, one of India's largest conglomerates. The company is headed by Anil Ambani.The company's corporate Headquarters is situated in Sector 24, Noida. Reliance Energy plans to increase its power generation capacity by adding 16,000 MW with investments of $13 billion. Reliance Energy Ltd is India's leading integrated power utility company in the private sector. It has a significant presence in generation, transmission and distribution of power in Maharashtra, Goa and Andhra Pradesh. Total gas production, will provide an enormous opportunity to scale up power generation capacities in India. This will help the company position itself as a global integrated energy player under the Reliance banner. REL and its affiliate power companies rank among the top 25 listed private sector companies on major financial parameters. REL is part of the Reliance industries-India's private sector company ranked among the world's 175 largest companies in terms of net profit and the 500 largest companies in terms of sales. REL is committed to creating superior value for all its stakeholders and be amongst the most admired and trusted utility companies in the world by setting new benchmarks in standards of corporate governance, operational and financial excellence, responsible corporate citizenship and profitable growth.
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TATA POWER
Recognized as Indias largest private sector power utility, with a reputation for trustworthiness, built up over nearly nine decades, Tata Power surges ahead into yet another year with plans of sustained growth, greater value to consumer and reliable power supply. Lead by a powerful vision, Tata Power pioneered the generation of electricity in India. It has now successfully served the Mumbai consumers for over ninety years and has spread its footprints across the nation. Today, it is the countrys largest private player in the sector. Apart from Mumbai and Delhi, the company has generation capacities in Jojobera, Jharkhand and Karnataka. Tata Power has an installed power generation capacity of above 2300 Mega Watts, with the Mumbai power business, which has a unique mix of Thermal and Hydro Power, generated at the Thermal Power Station, Trombay, and the Hydro Electric Power Stations at Bhira, Bhivpuri and Khopoli, accounting for 1797 MW. Its diverse generation capability facilitates the company in producing low cost energy, thereby giving its consumers a greater value for money. Among its many achievements that Tata Power can proudly boast of are the installation and commissioning of Indias first 500 MW unit (at its Thermal Power Generating Station, Trombay) the 150 MW Pumped Storage Unit at its Hydro Generating Station, Bhira, and environmental control systems like the Flue Gas Desulphurisation plant.
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Tata Power has a first of its kind joint venture with Power Grid Corporation of India for the 1200 km Tata Transmission Project. Tata Power Trading Company Limited (TPTCL), a wholly owned subsidiary of the Tata Power Company has been awarded the first ever power trading license by the Central Electricity Regulatory Commission (CERC) under section 14 of the Electricity Act 2003, enabling it to carry out transactions all over India. Tata Power is committed to setting high standards in its pursuit of social responsibility and remaining sensitive to the issues of resource conservation, environment protection and enrichment and development of local communities in its areas of operations. The company has a simple philosophy that guides its activities in these matters, Giving back is a means towards going ahead". Leveraging upon its engineering skills and understanding of the power business, Tata Power has carried out several overseas projects and successfully completed erection, testing and commissioning of major power projects in Saudi Arabia, Bangladesh, Kuwait, Algeria, Myanmar and Thailand. The company has also undertaken projects pertaining to power plant / operations management and plant operations training.
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WIPRO
Azim Premji is a graduate in Electrical Engineering from Stanford University, USA. He started off in Wipro with a simple Vision to build an organization on a foundation of Values. Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. Wipro provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally. Wipro Limited (NYSE:WIT) is a leading provider of IT solutions for customers across Americas, Europe, Asia, Australia and the Middle East. Started as a ground nut crushing unit in 1947, Wipro has grown into a multi business multi location conglomerate. We have grown from a India centric consumer products manufacturing company to a global company providing comprehensive service portfolio, an adaptive, value-driven engagement model and our quality leadership in every aspect of service delivery. The depth and width of the services that we provide is perhaps unmatched by any other company. During the fiscal year ended March 31, 2009 (fiscal 2009), 94% of Wipros operating income was generated from its IT Services. In Fiscal 2009, IT products represented 3% of its operating income, and consumer care and lighting, and others represented 3% of operating income. In January 2009, Wipro Technologies acquired Citi Technology Services Ltd.
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TATA CONSULTANCY SERVICES

Tata Consultancy Services Limited (TCS Limited) is an information technology, consulting, services and business-process outsourcing organization which commenced operations in 1968. With a workforce of over 74,000 professionals spread across more than 50 global delivery centre, it helps organizations stay ahead with new technology. Its clients include seven of the top ten corporations in the Fortune 500 list of the largest corporations in the United States. TCS products and services help companies in various sectors effectively meet their business challenges. With technical expertise and employing a flexible approach to client relationships, TCS offers its clients: consulting, IT services, business process outsourcing, infrastructure outsourcing, and engineering and industrial services. Since its inception, the company has invested in new technologies, processes, and people in order to help its customers succeed. With inputs from its innovation labs and university alliances, and drawing on the expertise of key partners, TCS keeps clients up-to-date with new technology. This has helped the company meet various benchmarks of excellence in software development - it is the world's first organization to achieve an enterprise-wide Maturity Level 5 on quality improvement models, CMMI and P-CMM, using the most rigorous assessment methodology, SCAMPISM. The company is listed on the National Stock Exchange and Bombay Stock Exchange in India.
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ICICI
ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is India's largest private sector bank and second largest overall. ICICI Bank has total assets of about USD 56 Billion, a network of over 619 branches and offices, and about 2400 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank's equity shares are listed in India on stock exchanges at Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its ADRs are listed on the New York Stock Exchange (NYSE). ICICI was established by the Government of India in the 1960s as a Financial Institution (FI, other such institutions were IDBI and SIDBI) with the objective to finance large industrial projects. ICICI was not a bank - it could not take retail deposits; and nor was it required to comply with Indian banking requirements for liquid reserves. ICICI borrowed funds from many multilateral agencies (such as the World Bank), often at concessional rates. These funds were deployed in large corporate loans. All this changed in 1990s. ICICI founded a separate legal entity ICICI Bank which undertook normal banking operations - taking deposits, credit cards, car loans etc.
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ICICI Bank now has the largest market share among all banks in retail or consumer financing. ICICI Bank is the largest issuer of credit cards in India .It was the first bank to offer a wide network of ATM's and had the largest network of ATM's till 2005, before SBI caught up with it. ICICI bank now has the largest market value of all banks in India, and is widely seen as a sophisticated bank able to take on many global banks in the Indian market. The bank is expanding in overseas markets. It has operations in the UK, Hong Kong, Singapore and Canada. It acquired a small bank in Russia recently. It has tie-ups with major banks in the US and China. The bank is aggressively targeting the NRI (Non Resident Indian) population for expanding its business. The principal objective was to create a development financial institution for providing medium term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.
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STATE BANK OF INDIA

State Bank of India (SBI) is the largest bank in India. It is also, measured by the number of branch offices and employees, the largest bank in the world. Established in 1806 as Bank of Bengal, it remains the oldest commercial bank in the Indian Subcontinent. The government nationalized the bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In recent years the bank has focused on reducing its huge staff through Golden handshake schemes and computerizing its operations. The roots to the State Bank of India are traceable to the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The government amalgamated Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras on 27January 1921, and named the reorganized banking entity the Imperial Bank of India. All these Presidency banks were incorporated as joint stock companies, and were the result of the royal charters. The Imperial Bank of India continued to remain a joint stock company. With more than 9400 branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500 branches being incorporated so far. The bank has the largest ATM network in the country having more than5600 in number.
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There are seven other associate banks that fall under SBI. They all use the "State Bank of" name followed by the regional headquarters' name. These were originally banks belonging to princely states before the government nationalized them in 1959. In tune with the first Five Year Plan, emphasizing the development of rural India, the government integrated these banks with the State Bank of India to expand its rural outreach. The State Bank group refers to the seven associates and the parent bank. All the banks use the same logo of a blue keyhole. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline. In recent years the bank has focused on two priorities, reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defect to the private sector, and, computerizing its operations.
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CHAPTER-II MAIN THEME OF THE PROJECT 2.1 OBJECTIVES OF THE STUDY

To analyze the companies performance in the derivatives market. To see whether there is any risk less profit derivative available in the market. To suggest suitable measures and strategies in the future market. To show the beta calculation for measuring the risk and variability of different companies shares.
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2.2 SCOPE OF THE STUDY

The study is confined to very few sectors like Pharmaceutical, Steel, Power, IT and Banking. The study is undertaken to know beta and volatility values of ten companies from the said industries. They are:
S.No 1 2 3 4 5
Industry Pharmaceutical Steel Power IT Banking
Company Cipla Ranbaxy Tata Sail Reliance Tata Wipro TCS ICICI SBI
LIMITATIONS OF THE STUDY

Availability of data because the data used for calculating Beta is only one month In the stock market various options are available like commodities, cash market; options except form this I have used stock futures for calculation. Derivatives were introduced recently in India. As a result the information regarding derivatives is limited.
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2.3 RESEARCH METHODOLOGY

2.3.1 RESEARCH MEANING Research in common refers to a search for knowledge. Research is considered as an endeavor to discover answers to intellectual and practical problems through the application of scientific method to knowable universe. In short, research is an art of scientific investigation. 2.3.2 RESEARCH DESIGN A research design is an arrangement of condition and analysis of data in a manner that aims to combine with relevance to the research purpose with economy in procedure. The research design is simply the frame work for the study. 2.3.3 SOURCES OF DATA SECONDARY DATA The report is prepared by using secondary data. The secondary data are collected from reports, magazines, and journals and also from websites. Market movements of the ten different companies was observed for one month with Nifty Index Futures, observation on the price movement of derivative market for the purpose of analysis of data were collected from the official websites of National Stock exchange and Derivatives India (www.nseindia.com & derivativesindia.com) The observation period was from 1ST may to 31ST may 09.
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2.3.4 ANALYTICAL TOOLS USED BETA Beta measures the non diversifiable risk. Beta shows how the price of a security responds to market forces. It can be positive or negative.
Computation of Beta:
Beta = n. xy - (x) (y) n. x^2-(x) ^2 Stock Return (Y) = (Adj Close Open) / Open*100 Market Return(X) = (Adj Close Open) / Open*100 STANDARD DEVIATION This is the most commonly used measure of risk in fianc. Its square also is widely used to find out the risk associated with a security.
Computation of standard deviation:
Rate of Return
= (Adj Close Open) / Open*100
Computation of Variance =
( Ri R )
n i =1
n 1
Standard Deviation = Square Root of Variance Volatility = Standard Deviation of Return on Securities
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2.4 REVIEW OF LITERATURE

While, by using the Geweke feedback measures, Chan L.H. has tried to examine the effect of extended trading hours of the Hong-Kong index futures on the flow of information between cash and futures markets. They have found that extension of trading hour leads to a stronger information flow from the cash market to the futures market, i.e., the spot market leads the futures market.
Timothy J.B. et al. (1999), Chan L.H. et al. (2002) and Lien D. et al. (2003) had tried to investigate some policy effect on the information flow between the cash and futures market at the index and stock level. Simply by using the multiple regression technique [Stoll & Whaley (1990) and Grunbichler (1994)] on the return innovations in the spot and futures markets, Timothy et al. concluded that the trading mechanism, changed from floor-based trading to automated screen based trading leads to change spot the substantial bi-directional into the information flow between and futures markets
unidirectional flow of information from futures to spot market. They also proved the significant increase in the contemporaneous relation among the spot and futures markets. Lien explored whether the price discovery function of futures price has been enhanced in the Australian market after the switch of futures contract from cash settlement to physical delivery. They have found that there is significant flow of information from spot to futures market in both the period of cash settlement and physical delivery. Moreover, they pointed out the increase in the magnitude of information flow from spot to futures market after switching of ISF contracts into physical delivery.
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The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking-in asset prices. As instruments of risk management, these generally do not influence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investors. Derivative products initially emerged, as hedging devices against fluctuations in commodity prices and commodity-linked derivatives remained the sole form of such products for almost three hundred years. The financial derivatives came into spotlight in post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two-thirds of total transactions in derivative products. In recent years, the market for financial derivatives has grown tremendously both in terms of variety of instruments available, their complexity and also turnover. In the class of equity derivatives, futures and options on stock indices have gained more popularity than on individual stocks, especially among institutional investors, who are major users of index-linked derivatives.
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Even small investors find these useful due to high correlation of the popular indices with various portfolios and ease of use. If markets are complete and perfect, derivative and underlying spot prices must reflect information simultaneously; otherwise, induce arbitrage opportunity. In practice, when institutional characteristics and transaction cost are taken into consideration, one market may lead the others without implying arbitrage opportunity. To the extent that the futures or options are able to reduce the transaction cost, their introduction should be expected to increase the flow of information into the market. A simple way to test for this is to study the lead-lag relationship between price changes in the underlying spot and derivative market. All of the past studies reveal the fact that futures market leads the spot market at the index level; while, an opposite relationship is found if we go for the underlying stocks listed in both the spot and futures markets. Though there are a number of studies examined the flow of information between spot and futures market, but only a few of them accounted for the underlying stocks. This study contributes to the literature by (i) investigating the leading role played the spot or the futures market in discovering not only the index price but also the prices of some underlying stocks listed in those markets and (ii) examining the leading role for the whole period along with for the subsequent annual periods with a view to know how such role varies from time to time. difference in prices would
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CHAPTER III ANALYSIS AND INTERPRETATION

Table No.1: Calculation of Beta and Volatility of CIPLA
Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y -3.076 -1.576 -1.802 1.249 -2.596 -4.475 3.069 0.405 4.347 -0.322 1.78 -11.73 0.921 -5.347 2.779 0.447 -1.755 -0.379 -0.315 -18.377
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
Nifty future open close 3478.7 3664.5 3662 3617.15 3681.8 3615.75 3554.65 3668.75 3631.9 3597.85 3673.15 4324.95 4318.75 4270.35 4211.85 4238.1 4239.55 4117.3 4276.15 n=19 3654 3661.9 3625.05 3683.9 3620.7 3554.6 3681.1 3635.25 3593.45 3671.65 4323.15 4318.45 4270.3 4210.9 4238.5 4237.55 4116.7 4276.05 4337.1
Cipla price(RS) open close 247 241.1 233 228.1 233 229 215 221.7 220.8 232.2 250 259.95 227.8 230 217.65 223.5 225 223.8 224 239.4 237.3 228.8 230.95 226.95 218.75 221.6 222.6 230.4 231.45 254.45 229.45 229.9 217.7 223.7 224.5 221.05 222.95 223.3
x*y -15.505 0.111 1.818 2.305 4.309 7.569 10.920 -0.370 -4.602 -0.662 31.498 1.763 -1.034 7.445 1.758 -0.005 5.087 -1.464 -0.445 50.497
x^2 25.393 0.005 1.018 3.405 2.753 2.860 12.654 0.833 1.120 4.207 313.14 0.022 1.258 1.938 0.400 0.002 8.396 14.866 2.031 396.315
Source: secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*50.497 (24.125)*(-18.377) = -----------------------------------------19*396.315 (24.125) ^2 Beta = 0.2019 Standard deviation = 3.62
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INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here cipla is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here cipla has a lower volatility when compared to other companies.
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Chart No.1: Stock return and Market return of CIPLA
20 15 10 RETURNS 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y
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Table No.2: Calculation of Beta and Volatility of RANBAXY

Ranbaxy price (RS) open close 169.7 179.4 179 181.8 181.95 179 170 178.65 175 185.9 219.9 239.8 213 220 225.8 222.7 269.7 252 261.7 172 178 178.45 179.7 178.65 172.15 176.75 177.35 184.05 200.45 230.25 211.35 218.7 224.1 221.35 267.85 245.4 263.55 271.1 Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 1.355 -0.780 -0.307 -1.155 -1.813 -3.826 3.970 -0.727 5.171 7.826 4.706 -11.86 2.676 1.863 -1.970 20.27 -9.010 4.583 3.591 24.563
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
x*y 6.829 0.055 0.310 -2.131 3.009 6.471 14.12 0.664 -5.474 16.05 83.28 1.783 -3.002 -2.594 -1.246 -0.263 26.108 17.671 5.119 166.779
x^2 25.393 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source: secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*166.779 (24.125)*(24.563) = ----------------------------------------19*396.315 (24.125) ^2 Beta = 0.3707 Standard deviation = 6.658
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INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here Ranbaxy is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here Ranbaxy has a lower volatility when compared to other companies
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Chart No.2: Stock Return and Market Return of RANBAXY
25 20 15 RETURNS 10 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y
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Table No.3: Calculation of Beta and Volatility of RELIANCE POWER

Reliance power price (RS) open close 128.25 128 138.4 137.4 136.9 134.4 129.2 135 127 130.2 144.4 154.4 161.8 171.5 165 166.8 167.9 163.6 181 127.65 136.55 135.55 136.45 133.45 128.25 134.25 129.95 129.1 129.85 150.5 162.15 173.85 166.55 166.05 169.25 158.8 179.9 179.95 Market return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock return y -0.467 6.679 -2.059 -0.691 -2.520 -4.575 3.908 -3.740 1.653 -0.268 4.224 5.019 7.447 -2.886 0.636 1.468 -5.41 9.963 -0.580 17.791
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
x*y -2.357 -0.473 2.077 -1.275 4.182 7.738 13.904 3.415 -1.750 -0.551 74.75 -0.754 -8.354 4.018 0.402 -0.019 15.70 38.41 -0.826 148.250
x^2 25.393 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source: secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*148.250 (24.125)*(17.791) = -----------------------------------------19*396.315 (24.125) ^2 Beta = 0.343631 Standard deviation = 4.286
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INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here Reliance power is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here Reliance power has a lower volatility when compared to other companies
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Chart No.3: Stock Return and Market Return of RELIANCE POWER
20 15 RETURNS 10 5 0 -5 -10 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y
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Table No.4: Calculation of Beta and Volatility of TATA POWER

Tata power Price (RS) open close 904.8 905.5 906.25 915.2 917 912 913 917 869.95 892.4 972 1237.7 1059.8 1065.7 1038 1045.65 1068 1081 1104 907.05 907.9 913.55 911.85 903.6 903.55 910.25 893 885.85 913.4 1079.45 1061.9 1067.15 1041.1 1046.65 1077.15 1061.35 1091.7 1102.6 Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 0.248 0.265 0.805 -0.366 -1.461 -0.926 -0.301 -2.617 1.827 2.353 11.05 -14.20 0.693 -2.308 0.833 3.012 -0.622 0.989 -0.126 -0.850
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
x*y 1.253 -0.018 -0.812 -0.675 2.425 1.566 -1.071 2.389 -1.934 4.826 195.62 2.134 -0.778 3.213 0.527 -0.039 1.804 3.816 -0.180 214.067
x^2 25.393 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source: secondary data
Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*214.067 (24.125)*(-0.850) = ----------------------------------------19*396.315 (24.125) ^2 Beta = 0.588344 Standard deviation = 4.572
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INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here Tata power is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here Tata power has a lower volatility when compared to other companies
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Chart No.4: Stock Return and Market Return of TATA POWER
20 15 10 RETURNS 5 0 -5 -10 -15 -20 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y
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Table No.5: Calculation of Beta and Volatility of ICICI

Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 5.227 3.778 -4.637 1.730 -4.748 -3.280 6.608 -1.633 0.251 5.427 5.665 -3.102 -1.560 -2.232 6.823 0.320 -5.226 2.956 3.362 15.730
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
ICICI price(RS) open close 502.2 543.9 565 540.25 547.55 541 525.05 560.1 536 546.25 684 783.25 724 689.7 658.75 702.65 705.1 691.6 706.3 528.45 564.45 538.8 549.6 521.55 523.25 559.75 550.95 537.35 575.9 722.75 758.95 712.7 674.3 703.7 704.9 668.25 712.05 730.05
x*y 26.340 -0.268 4.678 3.193 7.880 5.548 23.50 1.491 -0.266 11.13 100.2 0.466 1.750 3.108 4.317 -0.004 15.144 11.400 4.792 224.470
x^2 25.393 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source: secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*224.470 (24.125)*(15.730) ---------------------------------------------19*396.315 (24.125) ^2
Beta = 0.55922 Standard deviation = 4.112
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INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here icici is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here icici has a lower volatility when compared to other companies
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Chart No.5: Stock Return and Market Return of ICICI
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Table No.6: Calculation of Beta and Volatility of SBI

Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 3.828 -2.056 -1.850 2.301 -3.447 -7.338 3.557 -3.292 2.611 3.313 11.855 4.000 2.551 -2.660 2.345 -0.778 -2.358 4.262 2.190 19.037
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
SBI price(RS) open close 1320.25 1374 1351 1340.5 1375 1359.95 1255 1309 1240.5 1275 1422.95 1691 1740 1762.65 1699 1735 1727.7 1719.7 1789.95 1370.8 1345.75 1326 1371.35 1327.6 1260.15 1299.65 1265.9 1272.9 1317.25 1591.65 1758.65 1784.4 1715.75 1738.85 1721.5 1686.95 1793 1829.15
x*y 19.294 0.145 1.867 4.246 5.720 12.41 12.65 3.006 -2.765 6.797 209.79 -0.601 -2.862 3.704 1.484 0.010 6.834 16.43 3.121 301.30
x^2 25.39 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source: secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*224.470 (24.125)*(15.730) = ---------------------------------------------19*396.315 (24.125) ^2 Beta = 0.757846 Standard deviation = 4.219
67
INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here SBI is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here SBI has a lower volatility when compared to other companies
68
Chart No.6: Stock Return and Market Return of SBI
69
Table No.7: Calculation of Beta and Volatility of TATA STEEL

Tata steel price(RS) open close 246 265 287 274.8 295.6 284.8 264.9 277.05 257.05 268 299.9 330 325.25 366 360 364.9 368.1 371 370.1 263.65 286.45 269.9 294.55 280.7 270.4 275.9 264.9 264.8 272.5 317.25 328.75 369.35 363.45 362.6 368.6 359.3 374.95 384.85 Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 7.174 8.094 -5.958 7.187 -5.040 -5.056 4.152 -4.385 3.014 1.679 5.785 -0.378 13.558 -0.696 0.722 1.013 -2.390 1.064 3.985 33.526
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
x*y 36.155 -0.574 6.011 13.262 8.364 8.551 14.771 4.004 -3.191 3.444 102.37 0.056 -15.211 0.969 0.456 -0.013 6.927 4.105 5.680 196.149
x^2 25.39 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source: secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*224.470 (24.125)*(15.730) = ------------------------------------------19*396.315 (24.125) ^2 Beta = 0.419979 Standard deviation = 5.20
70
INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here Tata steel is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here Tata steel has a lower volatility when compared to other companies
71
Chart No.7: Stock Return and Market Return of TATA STEEL
72
Table No.8: Calculation of Beta and Volatility of SAIL STEEL

Sail steel Price(RS) open close 112.75 118.75 119.8 118.3 128 126.4 118.5 122.8 115.6 119.9 137 155.25 160.1 164.8 156.25 158.3 160 156.9 154 118.75 119.35 116.95 125.9 125.2 120.55 122.6 118.65 118.95 122.8 148.1 162.2 165.75 157.45 159.2 160.8 152.25 154.95 164.3 Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 5.321 0.505 -2.378 6.424 -2.187 -4.628 3.459 -3.379 2.897 2.418 8.102 4.476 3.529 -4.459 1.888 1.579 -4.843 -1.242 6.688 24.170
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
x*y 26.816 -0.035 2.400 11.85 3.630 7.827 12.308 3.085 -3.067 4.961 143.37 -0.672 -3.959 6.208 1.194 -0.020 14.035 -4.791 9.533 234.685
x^2 25.39 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source : secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*234.685 (24.125)*(24.170) = --------------------------------------------19*396.315 (24.125) ^2 Beta = 0.557847 Standard deviation = 4.098
73
INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here Sail steel is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here Sail steel has a lower volatility when compared to other companies
74
Chart No.8: Stock Return and Market Return of SAIL STEEL
75
Table No.9: Calculation of Beta and Volatility of TCS

Market Return x 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 6.866 -2.671 -0.367 -1.187 1.055 -3.145 4.274 -3.437 2.307 3.28 -0.9103 -9.471 1.694 -4.100 -0.312 -0.760 -1.559 1.916 2.046 -4.482
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
Tcs price(RS) open close 627 670.1 640 640.1 625.1 635.8 616.5 645.9 609 625 725 747 670 678 640 637.9 635 636.65 649.95 670.05 652.2 637.65 632.5 631.7 615.8 642.85 623.7 623.05 645.5 718.4 676.25 681.35 650.2 638 633.05 625.1 648.85 663.25
x*y 34.599 0.189 0.370 -2.191 -1.752 5.319 15.204 3.138 -2.442 6.728 -16.109 1.423 -1.900 5.708 -0.197 0.009 4.517 7.388 2.916 62.921
x^2 25.39 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source : secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*234.685 (24.125)*(24.170) = --------------------------------------------19*396.315 (24.125) ^2 Beta = 0.187631 Standard deviation = 3.599
76
INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here TCS is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here TCS has a lower volatility when compared to other companies
77
Chart No.9: Stock Return and Market Return of TCS
20 15 10 RETURNS 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y
78
Table No.10: Calculation of Beta and Volatility of WIPRO

Market Return X 5.039 -0.070 -1.009 1.845 -1.659 -1.691 3.557 -0.913 -1.058 2.051 17.695 -0.150 -1.121 -1.392 0.632 -0.012 -2.897 3.855 1.425 24.125 Stock Return y 7.735 1.481 -2.379 5.026 -7.071 -1.991 8.031 -0.910 0.689 2.439 3.073 -10.74 2.793 -3.125 -0.417 -3.213 1.027 -0.447 -3.677 -1.683
Date 04.05.08 05.05.08 06.05.08 07.05.08 08.05.08 11.05.08 12.05.08 13.05.08 14.05.08 15.05.08 18.05.08 19.05.08 20.05.08 21.05.08 22.05.08 25.05.08 26.05.08 27.05.08 28.05.08
Wipro price(RS) open close 340 364.5 369.9 363.05 382.5 356.5 348 379 362.65 368.95 410 435 386.6 388.7 371.7 379.6 369.9 380 383.4 366.3 369.9 361.1 381.3 355.45 349.4 375.95 375.55 365.15 377.95 422.6 388.25 397.4 376.55 370.15 367.4 373.7 378.3 369.3
x*y 38.979 -0.105 2.400 9.276 11.735 3.368 28.570 0.831 -0.729 5.003 54.382 1.615 -3.133 4.351 -0.263 0.041 -2.976 -1.724 -5.241 146.381
x^2 25.39 0.005 1.018 3.405 2.753 2.860 12.65 0.833 1.120 4.207 313.1 0.022 1.258 1.938 0.400 0.002 8.396 14.86 2.031 396.315
Source : secondary data Beta = n. xy - (x) (y) n. x^2-(x) ^2 19*234.685 (24.125)*(24.170) = ---------------------------------------------19*396.315 (24.125) ^2 Beta = 0.406144 Standard deviation = 4.633
79
INTERPRETATION The Beta value should fall between 0 and 1 for risk less investment; here wipro is having a beta value between 0 and 1 which indicates less risky investment. More the volatility, higher is the probability of the future generating higher returns to the buyer; here wipro has a lower volatility when compared to other companies
80
Chart No.10: Stock Return and Market Return of WIPRO
20 15 10 RETURNS 5 0 -5 -10 -15 1 3 5 7 9 11 DATE 13 15 17 19 market return x stock return y
81
Table No.11: Beta values of Ten Companies
Companies Cipla Ranbaxy Reliance power Tata power ICICI SBI Tata steel Sail steel TCS Wipro Sources: secondary data
Beta value 0.2017 0.3707 0.3446 0.588 0.559 0.757 0.419 0.557 0.187 0.406
INTERPRETATION SBI got highest beta value followed by Tata power and ICICI occupies the third position. The difference between beta value of TCS, cipla, and reliance power are less than other companies in the month of May 2009.
Beta value 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0
Chart No.11: Beta values of Ten Companies
Companies
Ci pla R Re an ba lia nc x ep y Ta owe ta r po we r I ci ci Sb Ta i ta ste Sa el il s tee l Tc s wi pr o

Series1
82
83
Table No.12: Volatility of Ten Companies Companies Cipla Ranbaxy Reliance power Tata power ICICI SBI Tata steel Sail steel TCS Wipro Sources: secondary data INTERPRETATION Ranbaxy got highest volatility followed by Tata steel and Wipro occupies the third position. The difference between volatility of cipla, TCS, and Sail steel are less than other companies in the month of May 2009. volatility 3.62 6.658 4.286 4.572 4.112 4.219 5.20 4.098 3.597 4.633
Volatility 7 6 5 4 3 2 1 0
Chart No.12: Volatility of Ten Companies
Cip
Companies
Re Ran la lia nc baxy ep Ta owe ta r po we r Ici ci Ta Sbi ta ste Sa el il s tee l Tc s wip ro

Series1
84
85
CHAPTER IV FINDINGS, RECOMMENDATIONS AND CONCLUSION 4.1 FINDINGS

Future strategies can reduce the risk into minimum level. Higher beta value share are highly risky and highly profitable share such as SBI, Tata power and ICICI got highest beta values. TCS, cipla and Reliance power are got less beta value when compared to other companies in the month of May 2009. Ranbaxy, Tata steel and wipro has got highest volatility, in the month of May 2009. Cipla, TCS and Sail steel got lower volatility, when compared to other companies in the month of May 2009. The Average Beta value of Pharmaceutical industry will be less than one. So the investment made in this industry will be safe. The Average Beta value of Banking sector will be greater than one that means the risk associated with those stocks are pretty high and the price of the shares are more fluctuating . The investor can make a more profits if he has a very good perception about the market.
86
Tata power got lowest stock return when compared to other companies. Ranbaxy got higher stock return than the market return. The financial future plays an important role in NSE Nifty. There is a relationship with share price movements and NSE future value. Volatility of Indian market is not constant and is varying over time.
87
4.2 RECOMMENDATIONS
If the beta value is less than one then it is a risk less investment. If beta is more than one it carries high risk with it and its better not to invest. Investing in Ranbaxy will be less risky as it has balance between beta and volatility. Investor should carefully study the market and risk involved before investing. SBI has the greater beta value when compared to other companies, so the investor may avoid investment in SBI share. An investor must be in a position to judge which is the right time to enter into the market and quit the market. The investor should be in a position to decide where and how much of funds are he ready to invest in particular security. Investor should not depend entirely on the past returns as the future in uncertain and the stock market is highly volatile.
88
4.3 CONCLUSION
As a whole the stock market is sometime highly volatile. It depends upon the investors how he can make use of this in order to get the money which he has put in the market. An investor should be in a position to analyze the various investment options available to him and thus minimize the risk and maximize the returns. The investor should analyze the market on a continuous basis which will help them to pick the right companies to invest their funds. The beta value, standard deviation helps the investors in arriving at decision. The investors should be in a position to interpret the data in the right manner to arrive at important conclusions and investment decision.
89
BIBLIOGRAPHY
1. Research Methodology by C.R. Kothari in the year 2008- Publication : New Age International Publishers. 2. Human Resource Management by K. Aswathappa in the year 1997 Tata Mc. Graw Hill Publishing Company Limited, New Delhi. 3. LUTHAN, FRED, Organizational Behavior, Eight Edition, McGraw-Hill International Edition, New Delhi, 1990. 4. KOTHARI C. R (2003), Research Methodology; second edition, wisvaprakasham, New Delhi.

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1

CHAPTER I INTRODUCTION 1.1 ABOUT THE STUDY

THE PARTICIPANTS IN A DERIVATIVES MARKET Participants

1.1.1 INTRODUCTION TO FUTURES

3) Lower transaction cost

1.2 ABOUT THE INDUSTRY

Indian stock exchange allows a member broker to perform following activities:

Advantages of trading at NSE

THE ROLE OF STOCK EXCHANGES

1.3 ABOUT THE COMPANY

THE FIRSTS TO OUR CREDIT:

: Mr. Kirit H Vora

CLEARING BANK: Bank of India

States & UT covered : 25 Employees : 517

PROFILE OF COMPANIES TAKEN FOR ANALYSIS OF RESEARCH CIPLA

TATA CONSULTANCY SERVICES

STATE BANK OF INDIA

CHAPTER-II MAIN THEME OF THE PROJECT 2.1 OBJECTIVES OF THE STUDY

2.2 SCOPE OF THE STUDY

Industry Pharmaceutical Steel Power IT Banking

LIMITATIONS OF THE STUDY

2.3 RESEARCH METHODOLOGY

= (Adj Close Open) / Open*100

2.4 REVIEW OF LITERATURE

CHAPTER III ANALYSIS AND INTERPRETATION

Chart No.1: Stock return and Market return of CIPLA

20 15 10 RETURNS 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.2: Calculation of Beta and Volatility of RANBAXY

Chart No.2: Stock Return and Market Return of RANBAXY

25 20 15 RETURNS 10 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.3: Calculation of Beta and Volatility of RELIANCE POWER

Chart No.3: Stock Return and Market Return of RELIANCE POWER

20 15 RETURNS 10 5 0 -5 -10 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.4: Calculation of Beta and Volatility of TATA POWER

Source: secondary data

Chart No.4: Stock Return and Market Return of TATA POWER

20 15 10 RETURNS 5 0 -5 -10 -15 -20 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.5: Calculation of Beta and Volatility of ICICI

Beta = 0.55922 Standard deviation = 4.112

Chart No.5: Stock Return and Market Return of ICICI

20 15 RETURNS 10 5 0 -5 -10 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.6: Calculation of Beta and Volatility of SBI

Chart No.6: Stock Return and Market Return of SBI

20 15 RETURNS 10 5 0 -5 -10 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.7: Calculation of Beta and Volatility of TATA STEEL

Chart No.7: Stock Return and Market Return of TATA STEEL

20 15 RETURNS 10 5 0 -5 -10 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.8: Calculation of Beta and Volatility of SAIL STEEL

Chart No.8: Stock Return and Market Return of SAIL STEEL

20 15 RETURNS 10 5 0 -5 -10 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.9: Calculation of Beta and Volatility of TCS

Chart No.9: Stock Return and Market Return of TCS

20 15 10 RETURNS 5 0 -5 -10 -15 1 3 5 7 9 11 13 15 17 19 DATE market return x stock return y

Table No.10: Calculation of Beta and Volatility of WIPRO

Chart No.10: Stock Return and Market Return of WIPRO

20 15 10 RETURNS 5 0 -5 -10 -15 1 3 5 7 9 11 DATE 13 15 17 19 market return x stock return y

Table No.11: Beta values of Ten Companies

Chart No.11: Beta values of Ten Companies

Ci pla R Re an ba lia nc x ep y Ta owe ta r po we r I ci ci Sb Ta i ta ste Sa el il s tee l Tc s wi pr o

Chart No.12: Volatility of Ten Companies

Re Ran la lia nc baxy ep Ta owe ta r po we r Ici ci Ta Sbi ta ste Sa el il s tee l Tc s wip ro

CHAPTER IV FINDINGS, RECOMMENDATIONS AND CONCLUSION 4.1 FINDINGS

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