Hedging Risk Through Derivatives and Portfolio Management

Dissertation Synopsis
HEDGING RISK THROUGH DERIVATIVES

AND PORTFOLIO MANAGEMENT
MBA-FINANCE
SAHIBZABA AJIT SINGH INSTITUTE OF

INFORMATION TECHNOLOGY AND RESEARCH
MOHALI (PUNJAB TECHNICAL UNIVERSITY)
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INDEX
CHAPTER NUMBER SUBJECT PAGE NUMBER

1 Executive Summary 3
2 INTRODUCTION 4
3 RESEARCH METHODOLOGY 6-8

• OBJECTIVES 7
• LIMITATIONS 8
4 CRITICAL REVIEW OF LITERATURE 10-43
5.0 Port folio And Portfolio Management

4.0 ANALYSIS 44-59
• Determinants
• Analysis
• Impact
5.0 CONCLUSION 86
6.0 BIBLIOGRAPHY 87-89
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EXECUTIVE SUMMARY
This project had been initiated for the purpose of acquainting myself with, right from the basics
of the financial terminology used in the stock markets, further up to gaining in depth knowledge
of all the issues concerning the management of various risks faced by a stock brokerage
company.
This work is a detailed study of stock market and stocks. It’s about the ways in which investors
can invest in stock market. The initial phase of the document explains what I have understood
about the functioning of stock market. I have tried to explain the entire cash and derivative
market in detail with the help of live examples. All these calculations give a better insight to my
work. After this I have tried to analyze the risk arising due to fluctuations of the shares in stock
market. This risk arises due to number of reasons, which I have tried to put across. The focus in
this project is on hedging risk in stock market. I have tried to find out various ways to hedge risk,
to minimize risk while maximizing returns. The entire work has not been done till date.
Application of these ways to hedge risk in stock market is yet to be done, it’s in progress.
The first half of the project examines the working of a stock market and the role of the
intermediaries i.e. brokers, the set up of the operational networks used by the company, the
financial products offered by the company and the coordination between the risk management
department and the other branches and functional departments of the company.
The second part of the project deals with exploring the statutory requirements provided by the
various regulatory authorities in India and the compliance with these requirements by the
company within the purview of risk management.
At the same time I am trying to analyze some top notch companies to make sure that the
companies selected for investing money are really worth to invest in a large amount. All this has
been done with the help of Annual report Quarterly results and daily news. I have calculated
various ratios that combined with some other factors will help me analyze and decide some good
companies in which one can invest one’s funds.
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INTRODUCTION
The time one talks about stock market, another word also clicks and that is risk. People have lost
their millions in this stock market. Stocks are just like gamble for those who don’t know how to
invest. The market behaves differently to different people. For speculators it can be risky. They
are the speculators, who mostly lose the most. If I talk about wise people these are always
hedgers. Hedgers always keep risk involved in mind and try to minimize it using different
strategies. Though hedging doesn’t always give good returns but it helps one to take out his
money with sufficient if not unlimited profits. This document tries to hedge that business risk
arising out of fluctuations in stock market. When I started to learn hedging at that time the stock
market was going through its bearish phase, it was a slow moving market, and market trend
came unexpectedly. So it's high time when everybody should hedge. Initially I have tried to
show how people suffer losses and make gains in the absence of hedging and then comes
understanding those strategies that would help one two hedge. For hedging, derivatives are best
instruments and I have tried to show all combinations that can be used for hedging. It also has
detailed study of some companies that would help one to compare those companies and decide
which is better to invest in. The future prospects of a company can also seen using this analysis.
For this some ratios like PE ratio, price to sales, price to operating profits will be used, apart
from that value at risk is another factor that helps one in making decisions
For my understanding I referred to a book-NCFM derivatives market. This was that book that
actually helps me understanding the derivative market. For all the data collection
www.moneycontrol.com and NSE’s site www.nse.india.com proved to be a great help for me.
It helps me track all the historic information about companies. The only limitation of this project
is that in initial phases I have chosen companies that were most actively being traded those days.
And I have not been able to keep a track of all the companies listed. There are two reasons for
this
It's was really not possible to analyze 100 companies
The companies I have decided to chose for analysis are some top notch companies
though there are some midcaps too but they are very few..
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Derivatives are a huge project to understand. I have tried to cover everything but due to time
constraint I have to limit its study. This may be a major limitation of this project.
The project begins with stock market its scenario and gives explanation why people prefer
investing in Indian markets. And then it shifts to its major focus risk .with each step I have
understood it better. The following work is the detailed explanation of my work. But before I
give all the details it's important to know what are stocks.
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Research Methodology
Research is a common parlance which refers to search for knowledge. Research is an organized
inquiry carried out to provide information for solving problems. More specifically, it is the
process of determining, acquiring, analyzing and synthesizing, and disseminating relevant data,
information and insights to decision makers in ways that mobilize the organization to take
appropriate actions that, in turn, maximize business performances. A good research generates
data that is derived by proficiently conducted reference which is used reliably for decision
making. In a good research methodology the purpose is clearly defined, design and process is
thoroughly planned, highly ethical standards are used and the researcher makes decisions
passably for decision maker’s need.
TYPES OF RESEARCH
Descriptive Research – it includes surveys and fact finding enquiries of different kinds.
Its major purpose is to describe the state of affairs as it exists at present and the
researcher has no control over the variables.
Analytical Research – in this type of research the researcher uses facts and information
already available to analyze, to make a critical evaluation of the material.
Applied Research – it aims at finding the solution for an immediate problem faced by
the industry/business organization like identifying social, economic or political trends
that may effect a particular institution or the evaluation of the marketing research.
Fundamental Research – it is concerned with the generalization and with the

formulation of a research study concerning some natural phenomenon or relating to pure
mathematics or concerned human behavior.
Quantitative Research – it is based on the measurement of the quantity or amount. It is

applicable to phenomenon that can be expressed in terms of quantity.
Qualitative Research – on the other hand is concerned with qualitative phenomenon, i.e.
phenomenon related or involving quality or kind. Such kind of result is especially
important in the behavioral sciences where the aim is to discover the underlying motives
of human behavior.
Conceptual Research – it is related to some abstract idea or theory and is generally used
by philosophers and researchers and thinkers to develop new concepts or to reinterpret
existing ones.
Empirical Research – it relies on experience and observation alone, often without due
regard for system and theory. It is data based research, coming up with conclusions,
which are capable of being verified with observation or experiment.
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RESEARCH PROCESS
Various steps involved in research done on Derivatives, Stock Market, understanding of

arbitrage, speculation...Etc
Literature Survey – before starting the research we conducted an in-depth study of the
topic so as to draw a clear image of what and how the research has to be carried out.
Formulating the Research Problem – the next step was to find out the problem of the
case. The most important task was to define the problem clearly from an analytical point
of view. This is the most important step because; if a problem is well defined then it
means that it is half solved.
Collection and Analysis of Data – the data was collected from internet, different
financial websites, journals, and different financial news paper projected data and
published data provided by the financial companies.
Interpretation of Data and Preparation of Report – the findings was identified and
recommendations were made and the final report was prepared.
1. AIM
money with sufficient if not unlimited profits. The report I make is tries to hedge that business
risk arising out of fluctuations in stock market. When I started to learn hedging at that time the
stock market was going through its bearish phase, it was a slow moving market, and market
trend came unexpectedly. So it's high time when everybody should hedge. Initially I have tried
to show how people suffer losses and make gains in the absence of hedging and then comes
instruments. The basic aim of this report is to learn the derivative and the usage of derivative in
hedging the risk.
2. PRIMARY OBJECTIVE
• The project is aims to study and gaining in depth Knowledge of all issues
concerning the management of various risks faced by a stock brokerage company
• In the current scenario of credit crunch in the market, how we hedge the risk
through derivatives and portfolio management?
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• To acquainting from the basics of the financial terminology which is used in the
stock markets and financial companies.
3. SCOPE OF STUDY
Analysis of Derivatives, stock market and portfolio managemnt help us to plan, evaluate and
decision are to be taken at what time and how we can hedge our risk in stock market and play
safe to increase our capital which is invested in market and to secure our position from future
risk.
4. LIMITATIONS
• Analysis is based only on monetary information and non monetary factors are ignored.
• Report is made from secondary data only.
• Approximate but not true figures are available
• It doesn’t involve visiting any organization and finding out the true data figures
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CRITICAL REVIEW OF LITERATURE
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Critical Review of Literature
money with sufficient if not unlimited profits. This document tries to hedge that business risk
arising out of fluctuations in stock market. When I started to learn hedging at that time the stock
market was going through its bearish phase, it was a slow moving market, and market trend
came unexpectedly. So it's high time when everybody should hedge. Initially I have tried to
show how people suffer losses and make gains in the absence of hedging and then comes
instruments and I have tried to show all combinations that can be used for hedging. It also has
detailed study of some companies that would help one to compare those companies and decide
which is better to invest in. If we talk in layman terms then we can say how we can make profit
from stock market by securing our capital which is investing in stock market.
To understand how to hedge and portfolio management first we have to understand what
are stocks, stock index?
Stock Market
A stock market (also known as a stock exchange) has two main functions. The first function is to
provide companies with a way of issuing shares to people who want to invest in the company.
This can be illustrated by an example: Suppose a company has a mining lease over an area with
some rich ore deposits. It wants to exploit these deposits, but it doesn’t have any equipment. To
buy the equipment it needs money. One way to raise money is through the stock market. The
company issues a prospectus, which is a sort of advertisement informing people about the
prospects of the company and inviting them to invest some money in it. When the company is
‘floated’ (established) on the stock market, interested investors can become part-owners of the
company by buying ‘shares’. If the company operates at a profit, shareholders benefit in two
ways – through the issuing of dividends in the form of cash or more shares, and through growth
in the value of the shares. On the other hand, if the company does not operate at a profit (e.g., if
the price of the product dips), the shareholders will probably lose money. The second function of
the stock market, related to the first, is to provide a venue for the buying and selling of shares.
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Stock Index
A stock index is a number that represents change in value of a set of stocks that constitute the
index. It’s a relative value because it is expressed relative to the weighted average of the prices
of pre defined equities. The starting value is usually set to be number like 100 or 1000.to define
it in one line I would say it's a barometer of the market behavior.
Significance of the movements

They reflect the changing expectations of the stock market about the future dividends of
corporate sector. The index goes up if the market thinks that the prospective dividends in the
future will be better than previously thought and vice versa.
What Is A Share?
In finance a share is a unit of account for various financial instruments including stocks, bonds,
mutual funds, limited partnerships. In simple Words, a share or stock is a document solely to
stocks is so common that it almost replaces the word stock itself. It is issued by a company,
which entitles its holder to be one of the owners of the company. A share is issued by a company
or can be purchased from the stock market. By owning a share you can earn a portion in the firm
and by selling shares you get capital gain. So, your return is the dividend plus the capital gain.
However, you also run a risk of making a capital loss if you have sold the share at a price below
your buying price.
PRIMARY AND SECONDARY MARKETS

There are two ways for investors to get shares from the primary and secondary markets. In
primary markets, securities are bought by way of public issue directly from the company. In
Secondary market share are traded between two investors.
Primary Market
Market for new issues of securities, as distinguished from the Secondary Market, where
previously issued securities are bought and sold a market is primary if the proceeds of sales
go to the issuer of the securities sold.
Secondary Market
The market where securities are traded after they are initially offered in the primary market is
known as secondary market. Most trading is done in the secondary market. Generally, most
shares have a face value (i.e. the value as in a balance sheet) of Rs.10 though not always offered
to the public at this price. Companies can offer a share with a face value of Rs.10 to the
public at a higher price. The difference between the offer price and the face value is called
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the premium. As per the SEBI guidelines, new companies can offer shares to the public at a
premium provided:
1. The promoter company has a 3 years consistent record of profitable working.

2. The promoter takes up at least 50 per cent of the shares in the issue.
3. All parties applying to the issue should be offered the same instrument at the same terms,
especially regarding the premium.
4. The prospectus should provide justification for the propose premium.
On the other hand, existing companies can make a premium issue without the above restrictions.
A company’s aim is to raise money and simultaneously serve the equity capital. As far as
accounting is concerned, premium is credited to reserves and surplus and it does not increase the
equity. Thus the companies seek to make premium issues. In a buoyant stock market when good
shares trade at very high prices, companies realize that it’s easy to command a high premium.
The biggest difference between them is the length of time you hold onto the assets. An investor
is more interested in the long-term appreciation of his assets, counting on that historical rise in
market equity.
He’s not generally concerned about short-term fluctuations in prices, because he’ll ride them out
over the long haul. An investor relies mostly on Fundamental Analysis, which is the analytical
method of predicting long-term prospects of a particular asset. Most investors adopt a “buy and
hold” approach to assets, which simply means they buy shares of some company and hold onto
them for a long time. This approach can be dangerous, even devastating, in an extremely volatile
market such as today’s BSE or NSE Indexes Show. What most investors need to remember is
this: investing is not about weathering storms with your “beloved” company – it’s about making
money. Traders, on the other hand, are attempting to profit on just those short-term price
fluctuations. The amount of time an active trader holds onto an asset is very short: in many cases
minutes, or sometimes seconds. If you can catch just two index points on an average day, you
can make a comfortable living as a Trader.
Risks Involved In Stock Market
To make Money in the Stock Market, you must assume High Risks.
Tips to Lower your Risk:
1. Do not put more than 10% of your money into any one stock
• Do not own more than 2-3 stocks in any industry
• Buy your stocks over time, not all at once
• Buy stocks with consistent and predictable earnings growth
• Buy stocks with growth rates greater than the total of inflation and interest rates
• Use stop-loss orders to limit your risk
2. Buy Stocks on the Way Down and Sell on the Way Up.
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False: People believe that a falling stock is cheap and a rising stock is too expensive. But on the
way down, you have no idea how much further it may fall. If a stock is rising, especially if it has
broken previous highs, there are no unhappy owners who want to dump it. If the stock is fairly
valued, it should continue to rise.
3. You can Hedge Inflation with Stocks.

When interest rates rise, people start to pull money out of the market and into bonds, so that
pushes prices down. Plus the cost of business goes up, so corporate earnings go down, along
with the stock prices.
4. Young People can afford to take High Risk.

False: The only thing true about this is that young people have time on their side if they lose all
their money. But young people have little disposable income to risk losing. If they follow the
tips above, they can make money over many years. Young people have the time to be patient.
Technical Analysis
It is a method of evaluating future security prices and market directions based on statistical
analysis of variables such as trading volume, price changes, etc., to identify patterns. It is a stock
market term meaning- the attempt to look for numerical trends in a random function. The stock
market used to be filled with technical analysts deciding what to buy and sell, until it was
decided that their success rate is no better than chance. Now technical stock analysis is virtually
non-existent. There are many instances of investors successfully trading a security using only
their knowledge of the security's chart, without even understanding what the company does.
Fundamental Analysis
Fundamental analysis looks at a share’s market price in light of the company’s underlying
business proposition and financial situation. It involves making both quantitative and qualitative
judgments about a company. Fundamental analysis can be contrasted with 'technical analysis’,
which seeks to make judgments about the performance of a share based solely on its historic
price behavior and without reference to the underlying business, the sector it's in, or the
economy as a whole.
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TERMS COMMONLY USED IN STOCK MARKET
Some day-to-day terms we hear in context to the stock market are discussed
henceforth:
ACTIVE SHARES
Shares in which there are frequent and day-to-day dealings, as distinguished from partly active
shares in which dealings are not so frequent. Most shares of leading companies would be active,
particularly those which are sensitive to economic and political events and are, therefore, subject
to sudden price movements. Some market analysts would define active shares as those which are
bought and sold at least three times a week. These shares are easy to buy or sell.
BEAR (MANDIWALA)
An investor who believes that a stock or the market in general will decline, A bear market is an
extended period of falling prices in the overall market.
BULL (TEJIWALA)
An investor who thinks the market or a specific security or industry will rise. A bull market is an
extended period in which the market consistently rises.
STAG
A cautious speculator, who applies for new securities in the anticipation that price will rise by
the time of allotment of shares, is known as stag speculator. This is why; he applies for new
shares with the intention that he will be selling these shares at higher price in future and earn
good profit.
LAME DUCK
When a bear finds it difficult to fulfill his commitment, he is called struggling like a lame duck.
BONDS
A bond is basically a promise note from the government or a private company. You agree to give
them a set amount of money as a loan and they keep it for a set number of years with a
predetermined amount of interest. This is typically a safe bet and one that is a good investment
for a first time investor because there is little risk of losing your money.
BOOK VALUE
Usually called as Book Value per Share and is calculated by dividing the Net Worth of a
Company (common stock plus retained earnings) by the number of shares outstanding. This is
the accounting value of a share of stock, the value of the company's assets a shareholder would
theoretically receive if a company were liquidated.
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BROKER
Every transaction in the stock exchange is carried out through licensed members called brokers.
To trade in shares, you have to approach a broker However, since most stock exchange brokers
deal in very high volumes, they generally do not entertain small investors. These brokers have a
network of sub-brokers who provide them with orders.
The general investors should identify a sub-broker for regular trading in shares and place his
order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his
broker who will then execute it. A stock broker is a person or a firm that trades on its clients
behalf, you tell them what you want to invest in and they will issue the buy or sell order. Some
stock brokers also give out financial advice that you are charged for.
It wasn’t too long ago and investing was very expensive because you had to go through a full
service broker which would give you advice on what to do and would charge you a hefty fee for
it.
BUSINESS CYCLE
The cycle of economic growth and decline is known as business cycle. There are four stages in
the business cycle: expansion, growth, contraction and recession.
BACKWARDATION
Charges paid by the bear speculator for extending settlement date in case of rise in price of
security are known as backwardation.
CAPITAL GAIN / LOSS

The difference between the current market value of an asset and the original cost of the asset,
with cost adjusted for any improvement or depreciation in the asset.
CORPORATION
A form of business organization in which the company is divided into shares of stock. A
corporation is ongoing and the owners face only limited liability.
CURRENT ASSETS
Appears on a company's balance sheet, representing cash, accounts receivable, inventory,
marketable securities, prepaid expenses and other assets that can be converted to cash within one
year
CONTANGO
Charges paid by bull speculator for extending settlement date in case of fall in price are known
as contango.
DIVIDEND
It is a profit earned by the company or the mutual fund, which is shared with the shareholders or
unit-holders either partially or completely.
DEBT/EQUITY RATIO
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A measure of a company's financial leverage, calculated by dividing long term debt by
shareholders' equity is called debt to equity ratio. A higher debt/equity ratio generally means that
a company has been aggressive in financing its growth with debt, which can result in volatile
earnings as a result of the additional interest expense.
DECLARATION DATE
The date on which a company's Board of Directors meet to announce the date and amount of the
next dividend payment. Once the payment has been authorized, it is known as a Declared
Dividend, and becomes a legal liability that must be paid.
DEFERRED INCOME TAXES

On the balance sheet, deferred taxes are a liability that result from income already earned and
recognized for accounting purposes but not for tax purposes.
DEPRECIATION
An expense recorded regularly on a company's books to reduce the value of a long-term tangible
asset. Since it is a non-cash expense, it increases free cash flow while decreasing the amount of a
company's reported earnings.
DERIVATIVE
A security, like an option or future, whose value is derived from another underlying security
DEVALUATION
A significant fall in the value of a currency, as compared to gold or another country's currency
DILUTION
Dilution is the effect on a company's earnings per share caused by the conversion of convertible
securities or the issuance of additional shares of stock. Dilution reduces earnings per share by
increasing the number of shares potentially outstanding.
EQUITY
On the balance sheet, the value of the funds contributed by the owners (the stockholders) plus
the retained earnings (or losses) is stated as equity. The balance sheet may list Owners' Equity or
Shareholders' Equity.
FLOAT
The total number of outstanding shares available on the market
FIXED MATURITY PLAN

The Fixed Maturity Plan or FMP has a portfolio investing in debt securities for fixed periods of
time ranging from 3 months to 1 year, normally. Benefits range from having a quality portfolio,
to greater predictability of returns, to protection from interest rate movements and to tax-free
dividends.
GOING PUBLIC
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The process of selling shares those were formerly privately-held to new investors for the first
time.
INFLATION
Inflation refers to the increase in cost of living over a period of time. It is measured by changes
in the Wholesale Price Index for manufacturers and the Consumer Price Index for consumers.
For example, a masala dosa, which would cost you Rs.4.50 in 1990, costs you Rs.30.00, today.
INITIAL PUBLIC OFFERING

In short known as an IPO, the first sale of stock by a company to the public, IPO’s are often
smaller, newer companies seeking equity capital to expand their businesses.
LIABILITY
The legal obligation to pay a debt is called so. Current liabilities are debts payable within twelve
months; long-term liabilities are debts payable over a period of more than twelve months.
MUTUAL FUND
A mutual fund is a trust that pools together the investments of many investors and invests on
their behalf into stocks, bonds, money markets etc. according to the mandate given to the mutual
fund by the investors Primarily invest in equities or equity-related instruments and are willing to
bear short-term decline in value for possible future appreciation. The schemes generally have
entry load and in exceptional cases, exit load. Investors having short-term objectives and seeking
regular income are advised not to invest in these schemes.
MARKET CAPITALIZATION
The total dollar value of all outstanding shares, calculated by multiplying the number of shares
times the current market price.
NASDAQ
Stands for the National Association of Securities Dealers Automated Quotation System. A
nationwide computerized quotation system for current bid and asked quotations on over 5,500
over-the-counter stocks.
STOCKS
Stocks are a unique kind of investment because they allow you to take partial ownership in a
company. Because of this, the returns are potentially bigger and they have a history of being a
wise way to invest your money.
SHARE
In finance a share is a unit of account for various financial instruments including stocks, bonds,
mutual funds, limited partnerships. In simple Words, a share or stock is a document solely to
stocks is so common that it almost replaces the word stock itself.
It is issued by a company, which entitles its holder to be one of the owners of the company. A
share is issued by a company or can be purchased from the stock market.
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By owning a share you can earn a portion in the firm and by selling shares you get capital gain.
So, your return is the dividend plus the capital gain. However, you also run a risk of making a
capital loss if you have sold the share at a price below your buying price.
SHORT-TERM / LONG TERM CAPITAL GAIN / LOSS

The gain/loss occurring on or before one year of capital investment is termed as Short-term
capital gain/loss. If it exceeds one year then it is termed as Long-term capital gain/loss.
SECURITY
According to the Securities Exchange Act of 1934, this is the definition of a security: "The term
'security' means any note, stock, treasury stock, bond, debenture, certificate of interest or
participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease,
any collateral-trust certificate, pre organization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit, for a security, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or group or index of
securities (including any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to foreign currency, or
in general, any instrument commonly known as a 'security'; or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe
to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of
exchange, or banker's acceptance which has a maturity at the time of issuance of not exceeding
nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise
limited.
TARANIWALAS
In BSE jobbers are called Taraniwalas. They may work as broker also. In BSE authorized
assistant or agent of the Taraniwalas can purchase and sell securities on behalf of Taraniwalas.
These agents are called half commission agents. They usually specialize in one or two securities.
After this there is need to understand the different types of markets, the risks involve in stock
market, the terms usually use in stock market, derivatives, how we hedge the risk and what are
the different strategies and derivative option available in the market and how we use them.
SEBI (Securities and Exchange Board of India)
In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government
of India through an executive resolution, and was subsequently upgraded as a fully autonomous
body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board
of India Act (SEBI Act) on 30th January 1992. In place of Government Control, statutory and
autonomous regulatory boards with defined responsibilities, to cover both development &
regulation of the market, and independent powers have been set up. Paradoxically this is a
positive outcome of the Securities Scam of 1990-91.
The basic objectives of the Board were identified as:
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• To protect the interests of investors in securities;
• To promote the development of Securities Market;
• To regulate the securities market and
• For matters connected therewith or incidental thereto.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in the
securities markets like capitalization requirements, margining, establishment of clearing
corporations etc. reduced the risk of credit and also reduced the market.
SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the
eligibility criteria, the code of obligations and the code of conduct for different intermediaries
like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers,
credit rating agencies, underwriters and others. It has framed bye-laws, risk identification and
risk management systems for Clearing houses of stock exchanges, surveillance system etc.
which has made dealing in securities both safe and transparent to the end investor.
Another significant event is the approval of trading in stock indices (like S&P CNX Nifty &
Sensex) in 2000. A market Index is a convenient and effective product because of the following
reasons:
• It acts as a barometer for market behavior;

• It is used to benchmark portfolio performance;
• It is used in derivative instruments like index futures and index options;
• It can be used for passive fund management as in case of Index Funds.
Two broad approaches of

SEBI is to integrate the securities market at the national level, and also to diversify the trading
products, so that there is an increase in number of traders including banks, financial institutions,
insurance companies, mutual funds, and primary dealers etc. to transact through the Exchanges.
In this context the introduction of derivatives trading through Indian Stock Exchanges permitted
by SEBI in 2000 AD is a real landmark.
SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory framework for
derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement
of Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the
recommendations of the committee and approved the phased introduction of derivatives trading
in India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-
laws" as recommended by the Dr LC Gupta Committee for Regulation and Control of Trading
and Settlement of Derivatives Contracts.
SEBI then appointed the J. R. Verma Committee to recommend Risk Containment
Measures (RCM) in the Indian Stock Index Futures Market. The report was submitted in
November 1998.
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However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to
include "derivatives" in the definition of securities to enable SEBI to introduce trading in
derivatives. The necessary amendment was then carried out by the Government in 1999. The
Securities Laws (Amendment) Bill, 1999 was introduced. In December 1999 the new framework
was approved.
Derivatives have been accorded the status of `Securities'. The ban imposed on trading in
derivatives in 1969 under a notification issued by the Central
Government was revoked. Thereafter SEBI formulated the necessary regulations/bye-laws and
intimated the Stock Exchanges in 2000. The derivative trading started in India at NSE in 2000
and BSE started trading in the year 2001.
NSE (National Stock Exchange)
The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock exchange. It
is the large stock exchange in India in terms daily turnover and number of trades, for both
equities and derivative trading. Though a number of other exchanges exist, NSE and the Bombay
Stock Exchange are the two most significant stock exchanges in India, and between them are
responsible for the vast majority of share transactions.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies
and other financial intermediaries in India but its ownership and management operate as separate
entities. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across
India. In October 2007, the equity market capitalization of the companies listed on the NSE was
US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the third
largest Stock Exchange in the world in terms of the number of trades in equities.[4]It is the second
fastest growing stock exchange in the world with a recorded growth of 16.6%.
The National Stock Exchange of India 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. In April 1993, it was recognized as a stock exchange under the Securities Contracts
(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment of the NSE commenced
operations in November 1994, while operations in the Derivatives segment commenced in June
2000.
Markets
Currently, NSE has the following major segments of the capital market:
• Equity
• Futures and Options
• Retail Debt Market
• Wholesale Debt Market
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NSE Indices
• S&P CNX Nifty
• CNX Nifty Junior
• CNX IT
• Bank Nifty
• Mininifty
• CNX 100 CNX Midcap
BSE (Bombay Stock Exchange)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.
Popularly known as "BSE", it was established as "The Native Share & Stock Brokers
Association" in 1875. It is the first stock exchange in the country to obtain permanent
recognition in 1956 from the Government of India under the Securities Contracts (Regulation)
Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital
market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an
Association of Persons (AOP), the Exchange is now a demutualised and corporatized entity
incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE
(Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange
Board of India (SEBI).
Of the 22 stock exchanges in the country, Mumbai's (earlier known as Bombay), Bombay Stock
Exchange is the largest, with over 6,000 stocks listed. The BSE accounts for over two thirds of
the total trading volume in the country. Approximately 70,000 deals are executed on a daily
basis, giving it one of the highest per hour rates of trading in the world. There are around 3,500
companies in the country which are listed and have a serious trading volume. The market
capitalization of the BSE is Rs.5 trillion. The BSE `Sensex' is a widely used market index for the
BSE.
With demutualization, the trading rights and ownership rights have been de-linked effectively
addressing concerns regarding perceived and real conflicts of interest. The Exchange is
professionally managed under the overall direction of the Board of Directors. The Board
comprises eminent professionals, representatives of Trading Members and the Managing
Director of the Exchange. The Board is inclusive and is designed to benefit from the
participation of market intermediaries.
In terms of organization structure, the Board formulates larger policy issues and exercises over-
all control. The committees constituted by the Board are broad-based. The day-to-day operations
of the Exchange are managed by the Managing Director and a management team of
professionals.
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The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The
systems and processes of the Exchange are designed to safeguard market integrity and enhance
transparency in operations. During the year 2004-2005, the trading volumes on the Exchange
showed robust growth.
The Exchange provides an efficient and transparent market for trading in equity, debt
instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system
of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement
functions of the Exchange are ISO 9001:2000 certified.
BSE - Other Indices

Apart from BSE SENSEX, which is the most popular stock index in India, BSE uses other stock
indices as well:
BSE 100
BSE 500
BSEPSU
BSEMIDCAP
BSESMLCAP
BSEBANKEX
Initial Public Offerings

Corporates may raise capital in the primary market by way of an initial public offer, rights issue
or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the
primary market. This Initial Public Offering can be made through the fixed price method, book
building method or a combination of both.
In case the issuer chooses to issue securities through the book building route then as per SEBI
guidelines, an issuer company can issue securities in the following manner:
100% of the net offer to the public through the book building route
75% of the net offer to the public through the book building process and 25% through the fixed
price portion
Under the 90% scheme, this percentage would be 90 and 10 respectively.
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Difference between shares offered through book building
and offer of shares through normal public issue:
Features Fixed Price process Book Building process
Pricing Price at which the securities are Price at which securities will be offered/allotted
offered/allotted is known in is not known in advance to the investor. Only an
advance to the investor. indicative price range is known.
Demand Demand for the securities offered Demand for the securities offered can be known
is known only after the closure of everyday as the book is built.
the issue
Payment Payment if made at the time of Payment only after allocation.
subscription wherein refund is
given after allocation.
Book Building – Glossary

Bid
A bid is the demand for a security that can be entered by the syndicate/sub-syndicate members in
the system. The two main components of a bid are the price and the quantity.
Bidder
The person who has placed a bid in the Book Building process is called so.
Book Running Lead Manager

A Lead Merchant Banker who has been appointed by the Issuer Company to work as the Book
Running Lead Manager for the company is called so. The name of the Book Runner Lead
Manager is mentioned in the offer document of the Issuer Company.
Floor Price
The minimum offer price below which bids cannot be entered The Issuer Company in
consultation with the Book Running Lead Manager fixes the floor price.
Merchant Banker
An entity registered under the Securities and Exchange Board of India (Merchant Bankers)
Regulations, 1999.
Syndicate Members
Syndicate Members are the intermediaries registered with the Board and permitted to carry on
activity as underwriters. The Book Running Lead Managers to the issue appoints the Syndicate
Members.
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Order Book
It is an 'electronic book' that shows the demand for the shares of the company at various prices.
Demat Form of Shares

There are two forms of shares physical or dematerialized (demat) shares. Though the company is
under obligation to offer the securities in both physical and demat mode, you have the choice to
receive the securities in either mode. If you wish to have securities in demat mode, you need to
indicate the name of the depository and also of the depository participant with whom you have
depository account in your application. It is, however desirable that you hold securities in demat
form as physical securities carry the risk of being fake, forged or stolen.
Just as you have to open an account with a bank if you want to save your money, make cheque
payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks So
it is just like a bank account where actual money is replaced by shares. You have to approach the
DPs (they are like bank branches), to open your demat account. Let's say your portfolio of
shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will
show in your demat account. So you don't have to possess any physical certificates showing that
you own these shares. They are all held electronically in your account. As you buy and sell the
shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will
provide you with periodic statements of holdings and transactions.
Is a demat account a must? Nowadays, practically all trades have to be settled in dematerialized
form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has
allowed trades of up to 500 shares to be settled in physical form, nobody wants physical shares
any more. So a demat account is a must for trading and investing. Most banks are also DP
participants, as are many brokers.
Difference Between A Broker And A DP

A broker is separate from a DP. A broker is a member of the stock exchange, who buys and
sells shares on his behalf and on behalf of his clients. A DP will just give you an account to hold
those shares.
What are derivatives?

Introduced in 2000 by the National Stock Exchange, derivatives are a different breed of financial
products whose value is derived from an underlying instrument-such as an index, a stock, a
currency or a commodity. Thus, instead of directly investing in a stock, you invest in an
instrument whose value is dependent on the price of that stock. Futures and options are two
popular and actively traded derivative instruments in the Indian stock market.
A futures contract is an agreement between the buyer and the seller for purchase or sale of an
asset on a future date at a pre-determined price. One can enter into a futures contract by paying
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the margin money to the stock exchange. The position in futures is settled every trading day and
is called mark-to-market. This means that the margin requirement will change every day with the
change in value of the underlying asset. Futures can be both stock futures (stock as the
underlying asset) and index futures (index as the underlying asset).
Now let us explain this with the help of an example. Mr A buys Nifty futures at 1250, and will
make a gain if the Nifty moves above 1250. Say, the index moves to 1300, then the Rs 50-gain
will be added to his mark-to-market account. Conversely, if the Nifty moves down to 1200, the
Rs 50-loss will be deducted from the mark-to-market account. Similarly, if Mr. A sells Nifty
futures at 1250, he will benefit from the downward movement of the index and will suffer a loss
if the index moves up.
An option means the right to buy or sell. So an option too is a contract between the buyer and the
seller for purchase or sale of an asset on a future date, but unlike a future, it is at a pre-
determined price. The buyer of the option pays a premium to own the option, but he is under no
obligation to honour the contract. In contrast, the seller has the obligation to honour the contract
when the buyer exercises the option.
In volatile times, derivatives can be used as an effective hedging tool. Any gain or loss in the
original portfolio will be offset by a similar loss or gain in the derivative product used to hedge a
portfolio. But if derivatives are used as a speculation tool, it could be risky.
Put simply, derivatives are complex in nature and retail investors may not understand the risk
they bring to the table. There is a risk of mis-pricing or improper valuation of derivatives and the
inability of correlating derivatives perfectly with the underlying assets, be it stocks or indices.
Further, derivatives are highly leveraged instruments. A small price movement in the underlying
security could have a big impact on the value. Adverse price movements, on the other hand, in
the underlying asset can either mean phenomenal gains or it could lead to the erosion of the
entire margin money. Due to these inherent risks in derivative products, SEBI allows mutual
funds to invest in derivatives only for hedging purposes, and not for speculation.
The minimum investment in derivatives depends on the type of instrument. The minimum lot
size of the Nifty future is 50. Hence, if the Nifty is at 5000 points, the minimum value of 1
trading lot would be 50X5000 = Rs 2,50,000 (though only initial margin required for entering
into a future contract and premium in case of buying an option). But for stock futures and stock
options, the minimum trading lot varies among stocks. As a retail investor, if you want to benefit
from the hedging benefits that derivatives offer, you can look at mutual funds that offer such
hedging.
Further future prospects of a company can also seen using this analysis. For this some ratios like
PE ratio, price to sales, price to operating profits will be used, apart from that value at risk is
another factor that helps one in making decisions.
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Types Of Derivatives
-
OTC And Exchange Traded
Broadly speaking there are two distinct groups of derivative contracts, which are distinguished
by the way that they are traded in market:
•Over-the-counter (OTC) derivatives are contracts that are traded directly between two parties,
without going through an exchange or other intermediary. Products such as swaps, forward rate
agreements, and exotic options are almost always traded in this way. The OTC derivatives
market is huge.
•Exchange-traded derivatives are those derivatives products that are traded via Derivatives
exchanges. A derivatives exchange acts as an intermediary to all transactions, and takes Initial
margin from both sides of the trade to act as a guarantee. The world's largest derivatives
exchanges (by number of transactions) are the Korea Exchange (which lists KOSPI Index
Futures & Options), Eurex (which lists a wide range of European products such as interest rate &
index products), Chicago Mercantile Exchange and the Chicago Board of Trade.
- Common Contract Types
There are three major classes of derivatives:
•Futures/Forwards, which are contracts to buy or sell an asset at a specified future date.
•Options which are contracts that give the buyer the right (but not the obligation) to buy or sell
an asset at a specified future date.
•Swaps, where the two parties agree to exchange cash flows
Valuation
Market Price And Fair Value
Two common measures of value are:
•Market price, i.e. the price at which traders are willing to buy or sell the contract
•Fair value or the theoretical price, i.e. a rational and unbiased estimate of the contract's
fundamental value
Determining The Market Price
For exchange traded derivatives, market price is usually transparent (often published in real-time
by the exchange, based on all the current bids and offers placed on that particular contract at any
one time).
Complications can arise with OTC or floor-traded contracts though, as trading are handled
manually, making it difficult to automatically broadcast prices. In particular with OTC contracts,
there is no central exchange to collate and disseminate prices.
Determining Fair Value
The fair value of a derivatives contract is often complex, partly because of the immense variation
in the contracts, and partly because there are often many different variables to consider.
Fair valuation of derivatives is a central topic of financial mathematics, where "fair" refers to the
absence of arbitrage, meaning that no risk less profits can be made by trading in assets. Crucial
to the valuation of derivatives is also the stochastic of the underlying assets, typically expressed
as a stochastic process.
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Usages
Insurance And Hedging
One use of derivatives is as a tool to transfer risk. For example, farmers can sell futures contracts
on a crop to a speculator before the harvest. The farmer offloads (or hedges) the risk that the
price will rise or fall, and the speculator accepts the risk with the possibility of a large reward.
The farmer knows for certain the revenue he will get for the crop that he will grow; the
speculator will make a profit if the price rises, but also risks making a loss if the price falls.
It is not unknown for farmers to walk away smiling, when they have lost out in the derivatives
market, as the result of a hedge. In this case, they have profited from the real market from the
sale of their crops. Contrary to popular belief, financial markets are not always a zero-sum game.
This is an example of a situation where both parties in a financial markets transaction benefit.
Another example is the company General Electric. This company uses derivatives to "match
funding" (GE web cast on derivatives) to mitigate interest rate and currency risk, and to lock in
material costs. The program is strictly for forecasted and highly anticipated needs, and not a
means to generate non-operating revenues. 90% of all derivatives revenue produced by
derivatives sellers is for this kind of cost, cash, accounts receivable and accounts payable
planning.
Speculation and Arbitrage

Of course, speculators may trade with other speculators as well as with hedgers. In most
financial derivatives markets, the value of speculative trading is far higher than the value of true
hedge trading. As well as outright speculation, derivatives traders may also look for arbitrage
opportunities between different derivatives on identical or closely related underlying securities.
Other uses of derivatives are to gain an economic exposure to an underlying security in
situations where direct ownership of the underlying is too costly or is prohibited by legal or
regulatory restrictions, or to create a synthetic short position.
In addition to directional plays (i.e. simply betting on the direction of the underlying security),
speculators can use derivatives to place bets on the volatility of the underlying security. This
technique is commonly used when speculating with traded options.
Speculative trading in derivatives gained a great deal of notoriety in 1995 when Nick Leeson, a
trader at Barings Bank, made poor and unauthorized investments in index futures. Through a
combination of poor judgment on his part, lack of oversight by management, a naive regulatory
environment and unfortunate outside events, Leeson incurred a 1.3 billion dollar loss that
bankrupted the century’s old financial institution.
Pricing and Information Sharing

Futures markets are unusually efficient at gathering and processing information, and are often an
extremely accurate predictor of events such as interest rate movements and oil price movements.
DARPA also examined the idea of developing a futures market for world events, the Policy
Analysis Market, with the idea of predicting terrorism amongst other things. The idea was halted
due to political uproar, as it was pointed out that terrorists could trade on the market and directly
profit from their activities.
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Financial Sector IN INDIA
The financial sector is in a process of rapid transformation. Reforms are continuing as part of the
overall structural reforms aimed at improving the productivity and efficiency of the economy.
The role of an integrated financial infrastructure is to stimulate and sustain economic growth.
The US$ 28 billion Indian financial sector has grown at around 15 per cent and has displayed
stability for the last several years, even when other markets in the Asian region were facing a
crisis. This stability was ensured through the resilience that has been built into the system over
time. The financial sector has kept pace with the growing needs of corporate and other
borrowers. Banks, capital market participants and insurers have developed a wide range of
products and services to suit varied customer requirements. The Reserve Bank of India (RBI) has
successfully introduced a regime where interest rates are more in line with market forces.
Financial institutions have combated the reduction in interest rates and pressure on their margins
by constantly innovating and targeting attractive consumer segments. Banks and trade financiers
have also played an important role in promoting foreign trade of the country.
Banks
The Indian banking system has a large geographic and functional coverage. Presently the total
asset size of the Indian banking sector is US$ 270 billion while the total deposits amount to US$
220 billion with a branch network exceeding 66,000 branches across the country. Revenues of
the banking sector have grown at 6 per cent CAGR over the past few years to reach a size of
US$ 15 billion. While commercial banks cater to short and medium term financing requirements,
national level and state level financial institutions meet longer-term requirements. This
distinction is getting blurred with commercial banks extending project finance. The total
disbursements of the financial institutions in 2001 were US$ 14 billion.
Banking today has transformed into a technology intensive and customer friendly model with a
focus on convenience. The sector is set to witness the emergence of financial supermarkets in the
form of universal banks providing a suite of services from retail to corporate banking and
industrial lending to investment banking. While corporate banking is clearly the largest segment,
personal financial services is the highest growth segment.
The recent favourable government policies for enhancing limits of foreign investments to 49 per
cent among other key initiatives have encouraged such activity. Larger banks will be able to
mobilise sufficient capital to finance asset expansion and fund investments in technology.
Capital Market
The Indian capital markets have witnessed a transformation over the last decade. India is now
placed among the mature markets of the world. Key progressive initiatives in recent years
include:
• The depository and share dematerialisation systems that have enhanced the
efficiency of the transaction cycle
• Replacing the flexible, but often exploited, forward trading mechanism with rolling
settlement, to bring about transparency
• The infotech-driven National Stock Exchange (NSE) with a national presence (for the
benefit of investors across locations) and other initiatives to enhance the quality of
financial disclosures.
• Corporatisation of stock exchanges.
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• The Securities and Exchange Board of India (SEBI) has effectively been functioning as
an independent regulator with statutory powers.
• Indian capital markets have rewarded Foreign Institutional Investors (FIIs) with
attractive valuations and increasing returns.
• The Mumbai Stock Exchange continues to be the premier exchange in the country with
an increase in market capitalisation from US$ 40 billion in 1990-1991 to US$ 203 billion
in 1999-2000. The stock exchange has about 6,000 listed companies and an average daily
volume of about a billion dollars
• Many new instruments have been introduced in the markets, including index futures,
index options, derivatives and options and futures in select stocks.
Insurance
With the opening of the market, foreign and private Indian players are keen to convert untapped
market potential into opportunities by providing tailor-made products:
• The presence of a host of new players in the sector has resulted in a shift in approach
and the launch of innovative products, services and value-added benefits. Foreign majors
have entered the country and announced joint ventures in both life and non-life areas.
Major foreign players include New York Life, Aviva, Tokio Marine, Allianz, Standard
Life, Lombard General, AIG, AMP and Sun Life among others.
• With competition, the erstwhile state sector companies have become aggressive in
terms of product offerings, marketing and distribution.
• The Insurance Regulatory and Development Authority (IRDA) has played a proactive
role as a regulator and a facilitator in the sector’s development.
• The size of the market presents immense opportunities to new players with only 20 per
cent of the country’s insurable population currently insured.
• The state sector Life Insurance Corporation (LIC), the largest life insurer in 2000, sold
close to 20 million new policies with a turnover of US$ 5 billion.
• The gross premia for the insurance sector was US$ 13 billion for 2001-02.
There are four public sector and nine private sector insurance companies operating in
general/non-life insurance business with a premium income of over US$ 2.58 billion.
• The market’s potential has been estimated to have a premium income of US$ 80 billion
with a potential size of over 300 million people. The General Insurance Corporation
(GIC) (which covers the non-life sector) had a total premium income of US$ 2 billion in
2001-02. This has the potential to reach US$ 9 billion in the next five years.
Venture Capital
Technology and knowledge have been and continue to drive the global economy. Given the
inherent strength by way of its human capital, technical skills, cost competitive workforce,
research and entrepreneurship, India is positioned for rapid economic growth in a sustainable
manner. To realise the potential, there is a need for risk finance and venture capital (VC) funding
to leverage innovation, promote technology and harness knowledge based ideas.
• The Indian venture capital sector has been active despite facing a challenging external
environment in 2001 and a competitive market scenario.
• There were 34 VCFs and 2 Foreign VCFs registered with SEBI in March 2002.
• According to a survey conducted by Thomson Financial and Prime Database, India
ranked as the third most active venture capital market in Asia Pacific (excluding Japan).
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It recorded 115 deals in 2001 with average investment per deal amounting to US$ 7.9
million. 57 VCFs invested US$ 908 million in 101 Indian companies during 2001.
• Disbursements for 2002 are expected to be US$ 2 billion and are estimated to reach
US$ 10 billion by 2007.
• There is an increased interest in India: 70 VC funds operate in India with the total assets
under management worth about US$ 6 billion.
• The amount has grown nearly twenty fold in the past five years. Most VCs believe that
2002-03 will be driven by a relatively stable economy and new initiatives that will boost
the e-commerce sector, particularly on-line trading and e-banking sectors.
Opportunities
• There is no tax on distributed income of VCFs. The income distributed by the funds is
only taxed at the hands of the investors.
• Increase in incomes with potentially high penetration of both banking and insurance
products to increase the market size, will be the powerful drivers of growth in the sector.
• Continued de-regulation and increased competition is expected to result in the Indian
financial services reach US$ 51 billion by 2007
.
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Understanding stock market risk
As a long term investor, one needs to understand several different kinds of risk:
Market Risk
Market risk is the risk associated with fluctuations in stock prices. This is the first risk many
people think of when they think of the stock market. Many factors can cause stock prices to
fluctuate. Examples include actual or anticipated developments within a particular company or
industry; changes in the outlook for the economy as a whole; or shifts in investor attitude toward
the stock market in general. Downward and upward trends in stock prices can occur over short or
extended periods, and can have a very significant affect on the value of an investment.
There are two ways to reduce market risk. One is to diversify your investments among different
kinds of assets: divide your money among fixed-income and growth investments, for example.
The second way is to steadily invest on a regular basis and ignore market ups and downs and
focus on long-term results.
Inflation Risk
Inflation, defined as a persistent increase in prices, is a serious risk for any long-term investor.
Historically, inflation in the United States has averaged 3.1%, offsetting most of the returns from
investment in cash reserves and bonds, but less than half of that of stocks. Because stocks' real
returns are often generally higher than inflation, stocks offer a way to help protect your money
against inflation risk. If your principal doesn't grow, you can't possibly stay ahead of inflation. A
good way to reduce inflation risk is to invest in growth assets like stocks.
Business Risk
Business risk is the risk of losing your money in an investment that seemed like a winner but
wasn't. It is the specific risk associated with the underlying business of the issuer of a particular
stock, bond, or other investment. If the company's product suddenly loses value, the value of
your investment declines. You can reduce business risk by diversifying your investments.
Currency Risk
Currency risk is the risk associated with the price fluctuations in the dollar value of international
stocks due to changing currency exchange rates. To an American, the value of any stock held
internationally is not what the stock is worth in its domestic market, but what the stock is worth
in terms of dollars.
Beta
This refers to how a stock moves vs. the market. If a stock moves more than the market, it has a
high beta. If it moves little vs. the market it has a low beta. Technology generally has a high beta
while Utilities have low betas. A portfolio of high beta stocks in a down market can create
extreme downward movements, while up-markets can cause tremendous performance. If a
market is demonstrating extreme risk, it is wise to raise cash, lower the beta of your portfolio,
and even consider some hedging of exposure.
All above are different types of risks that influence the stock market. After looking at all the
risks one thing is very clear that controlling price fluctuations is not in our hand. Our major job
is to maximize our returns keeping all the above risks in mind. this is done by hedging funds in
market in way that maximizes the returns. Creating portfolios wisely is another method of risk
hedging, apart from that there are other methods with the help of which risk is minimized.
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Hedging
The word hedge literally means to surround in a way as to provide complete protection.
A hedge is an investment that is taken out specifically to reduce or cancel out the risk in another
investment. Defining it in simple words ‘Hedging’ is a strategy designed to minimize exposure
to an unwanted risk, while still allowing the business to profit from an investment activity. But
one thing has to be kept in mind hedging does not always make money. The best that can be
achieved using hedging is the removal of unwanted exposure. The hedged position will make
less profit than the no hedged position, half the time. One should not enter into the hedging
strategy hoping to make excess profits for sure.
Derivatives are an excellent tool to hedge risk.
Hedging using futures and options
Playing with futures
Long security, sell futures

I would explain it with the help of an example.iam discussing here the case of investor who
holds the share of a company and gets uncomfortable with the market movements in the short
run. In the absence of stock futures he would either suffer the discomfort of a price fall or sell
the security in anticipation of market. With security future he can minimize his price risk. All he
needs to do is to enter an offsetting stock future position, in this case take on a short future
position. As the price of stock will fall the value of his holdings would go down and value of his
future contract will rise. Both will move in opposite direction. This way he would not only be
able to minimize his loss but also make profits
Short security, buy futures

This is exactly opposite case. This will be explained later with the help of real examples.
Index portfolios can be very effective to get rid of market risk of a portfolio every portfolio
contains a hidden risk or market exposure. This is true for all portfolios. Most of the portfolio
risk is accounted by index fluctuations hence a position LONG PORTFOLIO +SHORT NIFTY
is one tenth risky as LONG portfolio position.
Playing with options
Buy puts when market is expected to fall

as an owner of stocks or equity portfolio, sometimes one may have a view that market will fall in
near future. To protect the value of stock from falling below a particular level, one has to buy
right number of puts at right strike price. If one is concerned only about the value of particular
stock one has to buy puts of only that particular stock, if it's about the entire portfolio it's better
to buy index puts. When the value of the stock falls it will lose value and the put options will
gain value. This is how hedging can be done through puts
Sell puts when market is rising

This is also done the way hedging has been done above.
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Apart from derivatives there are some other ways using which hedging is done generally. Some
people feel that derivatives are risky. I won’t say this is true for options, but when it comes to
futures I believe to an extent their statement is true.
Apart from derivatives there are two other ways to hedge risk and these are listed as under:
Short sell when you have holdings of a particular stock-say you have holdings of a particular
share, the market value of the share is expected to fall, and it’s time to short sell your stock. It’s
better to explain it with the help of an example. Say I have a stock worth rs.345 and its value fall
to340, at this price I short sell some amount of shares, if the value of a stock falls further buys it.
And then the entire stock can be sold, making profits, this would give an average buying price.
And in other case also it will release average value.
Average buying is another way –if you decide to buy 100 shares of a company it's better to buy
them in shifts. By this I want to say that twenty at one time,20 next time and so on.
Hedging is not the only way to minimize risk. Its always said that prevention is better than cure,
by this I mean it's better to first look at the stock see it's market value and then buy it, one basic
thing is that one should invest wisely. Keeping that in mind I decided to do fundamental analysis
that begins with economy then comes industry, after that company and last one is ratio analysis.
This work is still in progress.
Economic analysis
This is in short and one will find all the details in final project.
Monetary policies, fiscal policies, inflation, business cycles all effect the company growth.
During periods of prosperity, there are more people employed which means the nation’s income
is growing. With increased income there would be increased spending, which translates into
greater sales. Companies will spend more on plant property to increase capacity and this would
result in greater sales. It leads to increased profits, higher dividends and increased stock prices.
Forecasting the direction of economy may be a more important step, it’s important when one is
selecting stocks.
As inflation has risen these days the real gap has lowered down that is why growth has slowed
down and it tells why the market has fallen. Any positive economic news affects the economy
positively.
Industry analysis
It helps one to judge which industry is in boom for a particular period. Some industries are more
sensitive to economy than others, some are very stable so economic analysis is one factor that
helps one to see growth of any industry.
Company analysis
It is all about analyzing the financial strength of any company. It’s done with the help of balance
sheet and results for several months are compared. Ratio analysis is another technique that helps
one to analyze the financial strength of any company. I have tried to analyze banking sector
firstly and I have selected some companies based on the market capitalizations and returns that
they give to investors. The details will be covered in final report. Next are the details of state
bank of India the strongest of all. but I have started with different sectors for sector as well as
industry influence market price of a share, I have started with banking sector. The details and
work done is in the excel sheet attached next.
33
Though I have tried to come up with all the details but some were still left due to time constraint.
And till date all data has been collected and I am going to meet a technical analyst soon who
would guide me to apply appropriate tools to my project.
Portfolio and portfolio management

Portfolio
A portfolio is an appropriate mix of or collection of investments held by an institution or a
private individual. In building up an investment portfolio a financial institution will typically
conduct its own investment analysis, whilst a private individual may make use of the services of
a financial advisor or a financial institution which offers portfolio management services. Holding
a portfolio is part of an investment and risk-limiting strategy called diversification. By owning
several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the
portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures
contracts, production facilities, or any other item that is expected to retain its value.
Portfolio Management
Portfolio management involves deciding what assets to include in the portfolio, given the goals
of the portfolio owner and changing economic conditions. Selection involves deciding what
assets to purchase, how many to purchase, when to purchase them, and what assets to divest.
These decisions always involve some sort of performance measurement, most typically expected
return on the portfolio, and the risk associated with this return (i.e. the standard deviation of the
return). Typically the expected return from portfolios of different asset bundles are compared.
The unique goals and circumstances of the investor must also be considered. Some investors are
more risk averse than others.
Asset allocation
The different asset classes and the exercise of allocating funds among these assets (and among
individual securities within each asset class) is what investment management firms are paid for.
Asset classes exhibit different market dynamics, and different interaction effects; thus, the
allocation of monies among asset classes will have a significant effect on the performance of the
fund. Some research suggested that allocation among asset classes have more predictive power
than the choice of individual holdings in determining portfolio return. Arguably, the skill of a
successful investment manager resides in constructing the asset allocation, and separately the
individual holdings, so as to outperform certain benchmarks (e.g., the peer group of competing
funds, bond and stock indices).
Long-term returns
It is important to look at the evidence on the long-term returns to different assets, and to holding
period returns (the returns that accrue on average over different lengths of investment). For
example, over very long holding periods (eg. 10+ years) in most countries, equities have
generated higher returns than bonds, and bonds have generated higher returns than cash.
According to financial theory, this is because equities are riskier (more volatile) than bonds
which are themselves more risky than cash.
34
Diversification
Diversification in finance is a risk management technique, related to hedging, that mixes a wide
variety of investments within a portfolio. Because the fluctuations of a single security have less
impact on a diverse portfolio, diversification minimizes the risk from any one investment.
A simple example of diversification is this one. On a particular island the entire economy
consists of two companies: one that sells umbrellas and another that sells sunscreen. If a
portfolio is completely invested in the company that sells umbrellas, it will have strong
performance during the rainy season, but poor performance when the weather is sunny. The
reverse occurs if the portfolio is only invested in the sunscreen company, the alternative
investment: the portfolio will be high performance when the sun is out, but will tank when
clouds roll in. To minimize the weather-dependent risk in the example portfolio, the investment
should be split between the companies. With this diversified portfolio, returns are decent no
matter the weather, rather than alternating between excellent and terrible.
There are three primary strategies used in improving diversification:
1. Spread the portfolio among multiple investment vehicles, such as stocks, mutual funds, bonds,
and cash.
2. Vary the risk in the securities. A portfolio can also be diversified into different mutual fund
investment strategies, including growth funds, balanced funds, index funds, small cap, and large
cap funds. When a portfolio includes investments with varied risk levels, large losses in one area
are offset by other areas.
3. Vary your securities by industry, or even by geography. This will minimize the impact of
industry- or location-specific risks. The example portfolio above was diversified by investing in
both umbrellas and sunscreen. Another practical application of this kind of diversification is
mixing investments between domestic and international funds. By choosing funds in many
countries, events within any one country's economy have less effect on the overall portfolio.
35
Risk Allocation and The Ratios
In a sense, “risk allocation” – also referred to as “risk budgeting” – is another step in the
evolution of investment management practices.
In the mi-1900’s, the dominant investment style was “asset selection” (also known as “picking
winners”). Investors tried to select stocks and other assets with high expected returns and low
risk (ie, low variance or returns).
Modern portfolio theory revolutionized investing by making clear the importance of correlations
of asset returns, in addition to expected returns and the variance of returns. By the 1970’s, the
dominant investment style had become “asset allocations”. Investors tried to hold “efficient
portfolios” – portfolios of assets with low correlations – so that all but the market risk would be
diversified away. This gave rise to the common practice of managing to some benchmark
portfolio.
With the rise in benchmarking, the task of an active portfolio manager was to “beat the index”.
Clearly, one way to beat the index was to take on more risk than in the index – a tactic not
necessarily in line with the wishes of the investor.
Risk allocation emerged in the late 1990’s, in response to concerns about the level or risk being
accepted in the portfolio and as a consequence of the development of risk measurement and
management tools. While the phrase “risk allocation” seems to mean different things to different
people, it can be defined broadly as an investment style where allocations are based on the
asset’s risk contribution to the portfolio, as well as on the asset’s expected return. In this
regards, it is a direct application of the original Markowitz (1952) perspective on portfolio
construction, where both risk and return expectations play explicit roles in the asset allocation
process. Under risk allocation, the task of the active portfolio managers is to “beat the index”
without taking more risk than the index.
Asset vs. Risk Allocation

As described by Rawls & Izakson (1999), differences between asset allocation and risk
allocation can be highlighted by examining the investment portfolio management process. In
the initial stages of the process, the differences between an asset allocator and a risk budgeter are
relatively limited. They are primarily related to different emphasis on, and measurement of, the
risk characteristics of the asset classes:
Defining the “feasible set” – the set of asset classes that could be included in the portfolio.
Both the asset allocator and the risk budgeter would determine the relevant characteristics –
expected returns, expected volatilities and expected covariances – for each asset class. While
both the asset allocator and the risk budgeter are interested in reliable estimates of expected
returns, the risk budgeter will have a stronger incentive to obtain careful estimates of the
volatilities and covariances of each of the asset classes.
For example, the two might differ with respect to the horizon over which the volatilities and
correlations are gauged. Since asset allocators often use a relatively long history to form a
baseline for expected return, they are likely to use this long history to form baseline estimates of
the volatility and covariance for each asset class. However, because volatility and covariance
tend to have strong autoregressive conditional heteroscedasticity characteristics, the risk
budgeter will put more weight on the recent behavior of the asset classes in estimating
volatilities and covariance.
Choosing initial asset allocations
36
The initial asset allocation should be some optimization between risk and expected risk. Asset
allocators often centered the allocation around generally accepted allocations for a portfolio with
the desired level of risk (say, 40% debt and 60% equity). In contrast, the risk budgeter might use
something like a value-at-risk assessment to determine the risk tolerance.
Differences in Asset Allocation and Risk Allocation
Asset allocation Risk allocation

An allocation of assets An allocation of risk across
Goal across a set of different assets such that the portfolio
classes such that the achieves a desired return on
portfolio targets achieve a the risk taken. The
desired return on assets. constraint is that the total
The constraint is that the portfolio risk is limited
allocations weights sum to
one
Most emphasis on expected More emphasis on volatility
Inputs to return and correlation
decisions
Monitoring the allocations Monitors actual dollar Monitors forecast errors in
increase/decrease in volatility and correlation in
portfolio value. Typically addition to gains and losses
ignores forecast errors on
volatility and correlation
Rebalances when dollar Rebalances when total
Rebalancing values of positions deviate portfolio risk deviates from
from target target
Focuses only on the Focuses on overall
Focus composition of the parts of portfolio, as total risk is
the portfolio what is important
Suppose the risk allocator determines that, at a 95% confidence level, the portfolio would lose no
more than 10% over a month horizon. The risk allocator them implicitly defines a 6% monthly
standard deviation as a risk tolerance for the portfolio.
Given the determination of the risk tolerance, the initial asset allocations are made to maximize
the return for this level of portfolio risk. Thus risk allocation makes it explicit that the initial
asset allocation derives from a carefully defined risk tolerance of the investor. (While this may
be the case in asset allocation, it is generally implicit rather than explicit.)
More noticeable differences between the asset allocator and risk budgeter come in the
monitoring and rebalancing of the portfolio.
Monitoring. Over time, the asset allocator monitors risk exposures (increases and decreases in
the values of the positions). The risk budgeter worries not only about changes in risk exposures
but also about changes in the volatilities and correlations. The risk allocator recognizes that
volatilities and correlations often move faster than portfolio values, and can result in significant
37
changes in the riskiness of the portfolio, even if there are no significant changes in the
allocations.
Rebalancing. The asset allocator rebalances positions when return fluctuations cause them
to deviate too far from the original levels. As a result, with reasonably stable asset allocations,
fluctuations in volatilities and correlations of the asset classes will mean the riskiness (volatility)
of the portfolio fluctuates over time. Thus, the actual amount of risk that the investor is taking,
and the maximum loss they might incur, is fluctuation with market conditions. This exposes the
investor to more or less risk than was originally desired. The risk budgeter, on the other hand,
regards the allocations as the portfolio’s exposures to risk and return, and will therefore
rebalance in response to changes in the short-term conditional volatility and correlations of the
assets. The risk budgeter alters allocations to keep the overall portfolio risk at the level defined
as tolerable for the investor.
Suppose an initial allocation of 60% equities and 40% bonds produced the desired portfolio
standard deviation of 6% a month, as discussed above. Then suppose that market conditions
changed – the conditional volatility of stocks increases and the correlation between stocks and
bonds increases slightly. Using these as new forecasts, the risk budgeter discovers that the
current asset allocation leads to an expected monthly standard deviation of the portfolio of 8%.
This results in an increase in the VAR to the investor for a one-in-20-month loss of 13.2% rather
than the 10% they desired. Consequently, the risk budgeter changes the asset allocations to keep
the risk of the portfolio at an expected standard deviation of 6% a month. This would probably
involve shifting the allocation towards bonds, or possibly shifting some of the assets into cash.
Thus, an important difference between asset allocation and risk allocation is the direction of
causality: under risk allocation, maintaining the desired risk level drives the asset allocation, not
the other way around. The focus of the risk allocator is on earning an expected return on a
targeted level of risk for the portfolio, while the asset allocator focuses on earnings and expected
return on the assets.
Advantages of Risk Allocation

A risk allocation strategy can free the manager to look for alternative investments that might
increase the expected return of the portfolio. Because the constraint is simply that the total risk
of the portfolio must stay at or below a targeted level, increased attention is paid to low
correlation investments (eg, market-neutral strategies or currency and commodity plays). While
these investments may have reasonably high return variability, this risk is typically not
correlated with the equity market risk of a typical portfolio. Because of the low correlation,
small allocations to such investments can actually reduce the total risk of the portfolio through
diversification. Because risk budgeters focus on the risk of the total portfolio, rather than the
risk of each asset class, the risk budgeter may see low correlation investments in a different light
than another investor. Such investments are also attractive to the extent that they provide “risk
room” for the risk budgeter to search out additional small investments in a high-risk/high-return
class.
Measures used to evaluate risk-adjusted performance.
Sharpe ratio
The most widely used of the risk-adjusted performance measure, this ratio – created by Nobel
laureate and winner of Risk’s Lifetime Achievement Award 2001, William Sharpe (1996) –
provides a measure of the excess return earned relative to the risk accepted – “reward per unit of
38
risk”. It is defined as the portfolio return (Rp) less the risk-free return (Rf) divided by the
standard deviation of the portfolio returns (σp):
Rp– Rf
σp
It is an ideal measure for looking at the risks of entire portfolios, but is less suited for looking at
individual asset classes within a portfolio, as it does not take into account the correlations.
Information ratio
Also suggested by Sharpe (1981), this measure of risk-adjusted performance compares the
performance of a portfolio to that of its benchmark. It is defined as the excess return over some
selected benchmark (Rp – RB) divided by the standard deviation of those excess returns (σ(P-B)):
Rp – RB
σ(P-B)
Thus it measures the extra return one earns over the benchmark relative to the extra risk taken. It
is analogous to a Sharpe ratio where the baseline is a predefined benchmark portfolio rather than
the risk-free rate. While it forces managers to outperform a benchmark without taking much
risk, it suffers in that it cannot highlight attractive opportunities to trade-off risk and return on
the downside.
M-squared
In contrast to the unit less Sharpe and information ratios, the measure proposed by Leah
Modigliani and Nobel laureate Franco Modigliani (1997) expresses risk-adjusted performance as
a return. M2 is the rate of return the portfolio (P) would have earned had it been leveraged or
deleveraged to create a portfolio (P’), the risk of which would match that of the appropriate
benchmark (σB). Using the style of the preceding measures, the return per unit of risk being
considered in M2 is:
Rp’ – Rf
σB
Or, as shown by Coleman & Siegel (2000), M2 could be written as:

σB (Rp – Rf)
M2 = + Rf = (Sharpe ratio X σB) + Rf
σP
39
Financial Ratio Analysis
It is difficult to infer organizational performance from one or two simple numbers.
Nevertheless, in practice a number of different ratios are often calculated in strategic planning
endeavors and, taken as a whole and with some caution, these ratios do provide some
information about the relative performance of an organization. In particular, a careful analysis
of a combination of these ratios may help you to distinguish between firms that will eventually
fail and those that will continue to survive. Evidence suggests that, as early as five years before
a firm fails, one may be able to detect trouble from the value of these financial ratios.
In this note, the basic financial ratios are reviewed, and some of the caveats associated with
using them are highlighted. The ratios tend to be most meaningful when they are used to
compare organizations within the same broad industry, or when they are used to make inferences
about changes in a particular organization's structure over time.
Liquidity Ratios
In order to survive, firms must be able to meet their short-term obligations—pay their creditors
and repay their short-term debts. Thus, the liquidity of the firm is one measure of a firm's
financial health. Two measures of liquidity are in common:
Current ratio = current assets / current liabilities
Quick ratio = (cash + marketable securities + net receivables) / current liabilities
The main difference between the current ratio and the quick ratio is that the latter does not
include inventories, while the former does.
Which ratio is a better measure of a firm's short-term position? In some ways, the quick ratio is
a more conservative standard. If the quick ratio is greater than one, there would seem to be no
danger that the firm would not be able to meet its current obligations. If the quick ratio is less
than one, but the current ratio is considerably above one, the status of the firm is more complex.
In this case, the valuation of inventories and the inventory turnover are obviously critical.
A number of problems with inventory valuation can contaminate the current ratio. An obvious
accounting problem occurs because organizations value inventories using either of two methods,
last in, first out (LIFO) or first in, first out (FIFO). Under the LIFO method, inventories are
valued at their old costs. If the organization has a substantial quantity of inventory, some of it
may be carried at relatively low cost, assuming some inflation in overall prices. On the other
hand, if there has been technical progress in a market and prices have been falling, the LIFO
method will lead to an overvalued inventory. Under the FIFO method of inventory valuation,
inventories are valued at close to their current replacement cost. Clearly, if we have firms that
differ in their accounting methods, and hold substantial inventories, comparisons of current
ratios will not be very helpful in measuring their relative strength, unless accounting differences
are adjusted for in the computations.
A second problem with including inventories in the current ratio derives from the difference
between the inventory's accounting value, however calculated, and its economic value. A simple
example is a firm subject to business-cycle fluctuations. For a firm of this sort, inventories will
typically build during a downturn. The posted market price for the inventoried product will
often not fall very much during this period; nevertheless, the firm finds it cannot sell very much
of its inventoried product at the so-called market price. The growing inventory is carried at the
posted price, but there really is no way that the firm could liquidate that inventory in order to
40
meet current obligations. Thus, including inventories in current assets will tend to understate the
precarious financial position of firms suffering inventory buildup during downturns.
Might we then conclude that the quick ratio is always to be preferred? Probably not. If we
ignore inventories, firms with readily marketable inventories, appropriately valued, will be
undeservedly penalized. Clearly, some judicious further investigation of the marketability of the
inventories would be helpful.
Low values for the current or quick ratios suggest that a firm may have difficulty meeting
current obligations. Low values, however, are not always fatal. If an organization has good
long-term prospects, it may be able to enter the capital market and borrow against those
prospects to meet current obligations. The nature of the business itself might also allow it to
operate with a current ratio less than one. For example, in an operation like McDonald's,
inventory turns over much more rapidly than the accounts payable become due. This timing
difference can also allow a firm to operate with a low current ratio. Finally, to the extent that the
current and quick ratios are helpful indexes of a firm's financial health, they act strictly as signals
of trouble at extreme rates. Some liquidity is useful for an organization, but a very high current
ratio might suggest that the firm is sitting around with a lot of cash because it lacks the
managerial acumen to put those resources to work. Very low liquidity, on the other hand, is also
problematic.
Leverage
Firms are financed by some combination o£ debt and equity. The right capital structure will
depend on tax policy—high corporate rates favor debt, high personal tax rates favor equity—on
bankruptcy costs, and on overall corporate risk. In particular, if we are concerned about
bankruptcy possibilities, the long-run solvency or leverage of the firm may be important. There
are two commonly used measures of leverage, the debt-to-assets ratio and the debt-equity ratio;
Debt-to-asset ratio = total liabilities / total assets
Debt-equity ratio = long-term debt / shareholder's equity
As with liquidity measures, problems in measurement and interpretation also occur in leverage
measures. The central problem is that assets and equity are typically measured in terms of the
carrying (book) value in the firm's financial statements. This figure, however, often has very
little to do with the market value of the firm, or the value that creditors could receive were the
firm liquidated.
Debt-to-equity ratios vary considerably across industries, in large measure due to other
characteristics of the industry and its environment. A utility, for example, which is a stable
business, can comfortably operate with a relatively high debt-equity ratio. A more cyclical
business, like manufacturing of recreational vehicles, typically needs a lower D/E—a reminder
that cross-industry comparisons of these ratios is typically not very helpful.
Often, analysts look at the debt-equity ratio to determine the ability of an organization to
generate new funds from the capital market. An organization with considerable debt is often
thought to have little new-financing capacity. Of course, the overall financing capacity of an
organization probably has as much to do with the quality of the new product the organization
wishes to pursue as with its financial structure. Nevertheless, given the threat of bankruptcy and
the attendant costs, a very high debt-equity ratio may make future financing difficult. It has been
argued, for example, that railroads in the 1970s found it hard to find funds for new investments
in piggybacking, a large technical improvement in railroading, because the threat of bankruptcy
from prior poor investments was so high.
41
Rates Of Return
There are two measures of profitability common in the financial community, return on assets
(ROA) and return on equity (ROE).
ROA = net income / total average assets
ROE = net income / total stockholders equity
Assets and equity, as used in these two common indexes, are both measured in terms of book
value. Thus, if assets were acquired some time ago at a low price, the current performance of the
organization may be overstated by the use of historically valued denominators. As a result, the
accounting returns for any investment generally do not correlate well with the true economic
internal rate of return for that investment.
Difficulties with using either ROA and ROE as a performance measure can be seen in merger
transactions. Suppose we have an organization that has been earning a net income of $500 on
assets with a book value of $1000, for a hefty ROA of 50 percent. That organization is now
acquired by a second firm, which then moves the new assets onto its books at the acquisition
price, assuming the acquisition is treated using the purchase method of accounting. Of course,
the acquisition price will be considerably above the $1,000 book value of assets, for the potential
acquirer will have to pay handsomely for the privilege of earning $500 on a regular basis.
Suppose the acquirer pays $2,000 for the assets. After the acquisition, it will appear that the
returns of the acquired firm have fallen. The firm continues to earn $500, but the asset base is
now $2,000, so the ROA is reduced to 25 percent. Indeed, the ROA may be less as a result of
other factors, such as increased depreciation of the newly acquired assets. Yet in fact nothing
has happened to the earnings of the firm. All that has changed is its accounting, not its
performance.
Another fundamental problem with ROA and ROE measures comes from the tendency of
analysts to focus on performance in single years, years that may be idiosyncratic. At a
minimum, one should examine these ratios averaging over a number of years to isolate
idiosyncratic returns and try to find patterns in the data.
Stock Market Ratios

Several ratios are calculated not from the income statements and balance sheets of organizations,
but from data associated with their stock market performance. The three most common ratios
are earnings per share (EPS), the price-earnings ratio (P/E), and the dividend-yield ratio:
EPS = (net income - preferred dividends) /Common shares outstanding
P/E = market price per share / earnings per share
Dividend yield = annual dividends / price per share
EPS is one of the most widely used statistics. Indeed, it is required to be given in the income
statements of publicly traded firms. As we can see, the ratio tells us how much the firm has
earned per share of stock outstanding. As it turns out, this is not generally a very helpful
statistic. It says nothing about how many assets a firm used to generate those earnings, and
hence nothing about profitability. Nor does it tell us how much the individual stockholder has
paid per share for the rights over that annual earning. Further, accounting practices in the
calculation of earnings may distort these ratios. And finally, the treatment of inventories is again
problematic.
The P/E is another ratio commonly cited. Indeed, P/Es are reported in daily newspapers. A high
P/E tends to indicate that investors believe the future prospects of the firm are better than its
42
current performance. They are in some sense paying more per share than the firm's current
earnings warrant. Again, earnings are treated differently in different accounting practices.
Finally, from the perspective of some stockholders at least, dividend policy may be important.
The dividend-yield ratio tells us how much of its earnings the firm pays out in dividends versus
reinvestment. Rapidly growing firms in new areas tend to have low dividend-yield ratios; more
mature firms tend to have higher ratios.
43
Analysis Work
Secutiry
Appln.
Company Face / Extreme Loss
Stock Name Series ISIN Code Margine
Name Value Margine Rate
Rate
VaR
HCL
Technologies HCLTECH 2 EQ INE860A01027 16.83 5 21.83
Ltd
Infosys
Technologies INFOSYSTCH 5 EQ INE009A01021 12.36 5 17.36
Ltd.
Tata
Consultancy
TCS 1 EQ INE467B01029 10.19 5 15.19
Services
Limited
Wipro Ltd WIPRO 2 EQ INE075A01022 14 5 19
Company Analysis
Stock Information
44
Management Structure
HCL TECH. INFOSYS
SHIV NADAR (CHAIRMAN & CEO) N R NARAYANA MURTHY (CHAIRMAN & CHIEF MENTOR)
T S R SUBRAMANIAN (DIRECTOR) NANDAN M NILEKANI (CO-CHAIRMAN)
ROBIN ABRAMS (DIRECTOR) S GOPALAKRISHNAN (MANAGING DIRECTOR & CEO)
AJAI CHOWDHRY (DIRECTOR) DEEPAK M SATWALEKAR (INDEPENDENT DIRECTOR)
SUBROTO BHATTACHARYA (DIRECTOR) MARTI G SUBRAHMANYAM (INDEPENDENT DIRECTOR)
AMAL GANGULI (DIRECTOR) OMKAR GOSWAMI (INDEPENDENT DIRECTOR)
P C SEN (DIRECTOR) RAMA BIJAPURKAR (INDEPENDENT DIRECTOR)
CLAUDE SMADJA (INDEPENDENT DIRECTOR)
SRIDAR A IYENGAR (INDEPENDENT DIRECTOR)
DAVID L BOYLES (INDEPENDENT DIRECTOR)
JEFFREY S LEHMAN (INDEPENDENT DIRECTOR)
K DINESH (DIRECTOR)
S D SHIBULAL (CHIEF OPERATING OFFICER)
T V MOHANDAS PAI (DIRECTOR)
SRINATH BATNI (DIRECTOR)
TCS WIPRO
RON SOMMER (DIRECTOR) AZIM H PREMJI (CHAIRMAN AND MANAGING DIRECTOR)
AMAN MEHTA (DIRECTOR) ASHOK S GANGULY (DIRECTOR)
R N TATA (CHAIRMAN / CHAIR PERSON) N VAGHUL (DIRECTOR)
NARESH CHANDRA (DIRECTOR) P M SINHA (DIRECTOR)
V THYAGARAJAN (DIRECTOR) JAGDISH N SHETH (DIRECTOR)
S RAMADORAI (MANAGING DIRECTOR & B C PRABHAKAR (DIRECTOR)
CEO)
LAURA M CHA (DIRECTOR) BILL OWENS (DIRECTOR)
CLAYTON M CHRISTENSEN (DIRECTOR)
S PADMANABHAN (EXECUTIVE DIRECTOR)
P A VANDREVALA (EXECUTIVE DIRECTOR)
45
Balance Sheet
COMPANY Total Net Total Net Investments Net Total
Share Worth Debt Block Current Assets
Capital Assets
HCL Tech. 132.74 3425.02 40.89 670.09 1988.86 594.10 3465.91
Infosys 286.00 11162.00 0.00 2150.00 839.00 7216.00 11162.00
TCS 97.86 8058.99 50.74 1460.61 3252.04 2639.23 8109.73
Wipro 291.80 9316.90 283.00 1645.90 4348.70 2570.80 9554.90
Financial
HCL Infosys TCS Wipro

Quarterly Annual Quarterly Annual Quarterly Annual Quarterly Annual
Income (Jun (Mar (Mar (Mar
Statement (Dec '07) '07) (Dec '07) '07) (Dec '07) '07) (Dec '07) '07)
1129.2 3768.6 3999 13149 4834.37 14939.9 4357 13683.9
Net Sales 2 7
Other 56.1 439.42 152 379 107.11 216.04 72.6 288.7
Income
PBDIT 338.19 1376.5 1479 4605 1417.41 4517.52 1040.7 3543.2
266.95 1101.8 1186 3783 1178.99 3757.29 804.1 2842.1
Net Profit 2
46
Company Performance and P/E Calculation
HCL
52 52
week week Total Turnover
high low Prev. Last % traded in
Date price price Close Open High Low Price Close Change quantity Rs.Lakhs DIV. EPS P/E
365.4 185.0 253.2 259.8 259.9 400.0 17.4
1-Apr-08 5 5 5 5 5 242.1 247 246.3 -2.74 636269 1587.234 0 5 14.11
365.4 185.0 258.8 400.0 17.4
2-Apr-08 5 5 246.3 257.9 5 245.1 247 247 0.28 412177 1032.952 0 5 14.15
365.4 185.0 254.9 246.0 249.8 400.0 17.4
3-Apr-08 5 5 247 249.5 5 5 249.5 5 1.15 922506 2313.42 0 5 14.32
365.4 185.0 249.8 240.3 400.0 17.4
4-Apr-08 5 5 5 250 253 5 245 244.9 -1.98 603799 1483.195 0 5 14.03
365.4 185.0 244.5 400.0 17.4
7-Apr-08 5 5 244.9 240.5 250.9 240.5 244.5 5 -0.14 546198 1354.957 0 5 14.01
365.4 185.0 244.5 237.8 238.1 238.6 400.0 17.4
8-Apr-08 5 5 5 245 248 5 5 5 -2.41 483267 1157.843 0 5 13.68
365.4 185.0 238.6 239.0 400.0 17.4
9-Apr-08 5 5 5 238 241 235.5 5 239 0.15 607350 1444.45 0 5 13.70
365.4 185.0 235.9 400.0 17.4
10-Apr-08 5 5 239 239 244.8 235.3 5 236.6 -1.00 385096 927.1539 0 5 13.56
365.4 185.0 229.5 230.0 400.0 17.4
11-Apr-08 5 5 236.6 241.5 241.5 5 5 230.4 -2.62 1004850 2347.995 0 5 13.20
365.4 185.0 400.0 17.4
15-Apr-08 5 5 230.4 233 248.9 227.6 248.1 245 6.34 4382990 10653.95 0 5 14.04
365.4 185.0 249.2 400.0 17.4
16-Apr-08 5 5 245 250 264.9 5 260.5 260.5 6.33 2798842 7313.692 0 5 14.93
365.4 185.0 269.2 400.0 17.4
17-Apr-08 5 5 260.5 266 271 262.6 5 269.6 3.49 1198200 3216.107 0 5 15.45
365.4 185.0 270.2 400.0 17.4
21-Apr-08 5 5 269.6 275 278.2 5 275 274.3 1.74 3758526 10219.03 0 5 15.72
365.4 185.0 263.6 400.0 17.4
22-Apr-08 5 5 274.3 274 274 256.1 262 5 -3.88 506911 1337.375 0 5 15.11
365.4 185.0 263.6 263.6 256.5 262.8 262.4 400.0 17.4
23-Apr-08 5 5 5 5 268 5 5 5 -0.46 458000 1205.354 0 5 15.04
365.4 185.0 262.4 400.0 17.4
24-Apr-08 5 5 5 269 269 250.2 256 254.1 -3.18 1037906 2655.319 0 5 14.56
365.4 185.0 400.0 17.4
25-Apr-08 5 5 254.1 259.9 264.8 258 260.5 260.7 2.60 3555188 9308.428 0 5 14.94
365.4 185.0 259.0 400.0 17.4
28-Apr-08 5 5 260.7 266 267 5 265.4 265.4 1.80 317662 836.0255 0 5 15.21
365.4 185.0 263.1 400.0 17.4
29-Apr-08 5 5 265.4 266 290 5 287 286.9 8.10 1520568 4257.72 0 5 16.44
365.4 185.0 295.7 288.4 400.0 17.4
30-Apr-08 5 5 286.9 288 5 280.2 284.7 5 0.54 1547216 4476.271 0 5 16.53
365.4 185.0 253.6 256.5 262.2 249.2 255.3 255.4 1334176.0 400.0 17.4
Average 5 5 6 9 3 6 8 2 0.71 5 3456.42 0 5 14.64
47
48
INFOSYS
52 52
Date price price Close Open High Low Price Close Change quantity Rs.Lakhs DIV. EPS
2156.0 1255.0 1423.0 230.0 77
1-Apr-08 0 0 1439.9 1445.1 1464 1410.2 1421 5 -1.17 786151 11272.66 0
2156.0 1255.0 1423.0 230.0 77
2-Apr-08 0 0 5 1475 1499 1465 1483 1482.8 4.20 1394010 20641.81 0
2156.0 1255.0 230.0 77
3-Apr-08 0 0 1482.8 1470.1 1530 1470.1 1528 1522.5 2.68 1222270 18525.95 0
2156.0 1255.0 1485.4 230.0 77
4-Apr-08 0 0 1522.5 1471 1527 1432 1478 5 -2.43 1003504 14888.6 0
2156.0 1255.0 1485.4 1476.2 1492.0 230.0 77
7-Apr-08 0 0 5 1499 1528.4 5 1500 5 0.44 2012148 30428.87 0
2156.0 1255.0 1492.0 1452.2 1466.9 230.0 77
8-Apr-08 0 0 5 1492 1495 5 1463 5 -1.68 1548206 22774.76 0
2156.0 1255.0 1466.9 1466.9 1477.8 1479.9 230.0 77
9-Apr-08 0 0 5 5 1488 1451 5 5 0.89 1128569 16666.93 0
2156.0 1255.0 1479.9 230.0 77
10-Apr-08 0 0 5 1465 1509.9 1443 1445 1452.6 -1.85 2141258 31531.5 0
2156.0 1255.0 1424.9 230.0 77
11-Apr-08 0 0 1452.6 1470 1480 1413 5 1421.9 -2.11 3016789 43329.47 0
2156.0 1255.0 230.0 77
15-Apr-08 0 0 1421.9 1440 1525 1420 1511.1 1510.4 6.22 4550317 67960.7 0
2156.0 1255.0 230.0 77
16-Apr-08 0 0 1510.4 1525 1615 1520 1599 1600.2 5.95 3826451 60783.61 0
2156.0 1255.0 1629.9 1660.1 230.0 77
17-Apr-08 0 0 1600.2 5 1690 1620 5 1659.1 3.68 4614910 76950.15 0
2156.0 1255.0 230.0 77
21-Apr-08 0 0 1659.1 1679 1717 1628 1649.2 1645.8 -0.80 1852749 30645.87 0
2156.0 1255.0 1645.1 230.0 77
22-Apr-08 0 0 1645.8 1630 5 1580 1603 1598.6 -2.87 2099681 33559.9 0
2156.0 1255.0 1653.0 1647.9 230.0 77
23-Apr-08 0 0 1598.6 1600 1653.1 1597.1 5 5 3.09 2079013 33847.54 0
2156.0 1255.0 1647.9 1696.0 230.0 77
24-Apr-08 0 0 5 1650 1707.9 1633 1688 5 2.92 2293319 38469.7 0
2156.0 1255.0 1696.0 1699.9 230.0 77
25-Apr-08 0 0 5 5 1715.6 1651 1684 1684.3 -0.69 1986998 33443.66 0
2156.0 1255.0 1663.6 230.0 77
28-Apr-08 0 0 1684.3 1690 1700 1651.1 1660 5 -1.23 1078732 18023.85 0
2156.0 1255.0 1663.6 1761.9 1749.5 230.0 77
29-Apr-08 0 0 5 1650 5 1641.1 1749 5 5.16 4245846 73024.34 0
2156.0 1255.0 1749.5 230.0 77
30-Apr-08 0 0 5 1760 1810 1730.1 1754 1753.1 0.20 2624917 46568.62 0
2156.0 1255.0 1556.1 1560.4 1603.1 1534.2 1571.5 1571.8 2275291.9 230.0 77
Average 0 0 4 0 0 1 7 0 1.03 0 36166.92 0
49
TCS
52 52
1329.9 725.0 810.4 832.3 4350.077 1150.0
1-Apr-08 0 0 5 820 852.9 810 840 5 2.70 521682 7 0 45.77 18.19
1329.9 725.0 832.3 849.2 851.2 3049.852 1150.0
2-Apr-08 0 0 5 850 869 5 852 5 2.27 357211 1 0 45.77 18.60
1329.9 725.0 851.2 1150.0
3-Apr-08 0 0 5 850 892 850 884 885.4 4.01 821793 7216.725 0 45.77 19.34
1329.9 725.0 860.0 4404.043 1150.0
4-Apr-08 0 0 885.4 886 889.9 5 877 872.9 -1.41 505211 8 0 45.77 19.07
1329.9 725.0 905.7 8309.537 1150.0
7-Apr-08 0 0 872.9 895 920.1 878.2 5 904.1 3.57 914882 6 0 45.77 19.75
1329.9 725.0 887.3 8979.953 1150.0
8-Apr-08 0 0 904.1 905 907 875 888 5 -1.85 1013838 9 0 45.77 19.39
1329.9 725.0 887.3 876.2 3251.769 1150.0
9-Apr-08 0 0 5 880 892 869 879.9 5 -1.25 370650 7 0 45.77 19.14
1329.9 725.0 876.2 919.6 899.5 6595.617 1150.0
0-Apr-08 0 0 5 880 5 877 904 5 2.66 731483 9 0 45.77 19.65
1329.9 725.0 899.5 903.0 893.2 5000.920 1150.0
1-Apr-08 0 0 5 5 925 5 910 908 0.94 547316 1 0 45.77 19.84
1329.9 725.0 974.1 13763.27 1150.0
5-Apr-08 0 0 908 922 985 880.4 983 5 7.29 1425943 5 0 45.77 21.28
1329.9 725.0 974.1 15845.32 1150.0
6-Apr-08 0 0 5 985 1002 962 979 971.9 -0.23 1609692 4 0 45.77 21.23
1329.9 725.0 979.5 994.1 1000. 9970.696 1150.0
7-Apr-08 0 0 971.9 999.7 1010 5 5 9 2.98 999889 9 0 45.77 21.87
1329.9 725.0 1000. 8549.145 1150.0
1-Apr-08 0 0 9 1009 1035 986.6 995 993.4 -0.75 849824 8 0 45.77 21.70
1329.9 725.0 984.9 984.9 31202.25 1150.0
2-Apr-08 0 0 993.4 5 5 882 884 887.2 -10.69 3446299 3 0 45.77 19.38
1329.9 725.0 880.0 889.1 1150.0
3-Apr-08 0 0 887.2 887 905.7 5 892 5 0.22 1581539 14145.94 0 45.77 19.43
1329.9 725.0 889.1 890.7 33704.03 1150.0
4-Apr-08 0 0 5 904 904.9 864 891.5 5 0.18 3822524 4 0 45.77 19.46
1329.9 725.0 890.7 15274.00 1150.0
5-Apr-08 0 0 5 912 912 885 891 889.3 -0.16 1707142 3 0 45.77 19.43
1329.9 725.0 882.2 1150.0
8-Apr-08 0 0 889.3 809 896 720 5 881.7 -0.85 1649534 14559.26 0 45.77 19.26
1329.9 725.0 882.0 870.1 910.5 36673.30 1150.0
9-Apr-08 0 0 881.7 5 930 5 910 5 3.27 4052462 8 0 45.77 19.89
1329.9 725.0 910.5 935.7 920.1 21892.60 1150.0
0-Apr-08 0 0 5 916.1 5 906.5 5 921 1.15 2371995 1 0 45.77 20.12
1329.9 725.0 900.8 903.9 928.4 878.9 908.1 906.3 1465045.4 1150.0
Average= 0 0 3 9 4 0 4 6 0.70 5 13336.92 0 45.77 19.80
50
WIPRO
52 52
635.0 324.0 410.0 300.0 20.9
1-Apr-08 0 0 432.1 430 440 401.1 5 409.4 -5.25 1718202 7111.802 0 2 19.57
635.0 324.0 410.3 415.2 3066.270 300.0 20.9
2-Apr-08 0 0 409.4 419 434.9 5 414.9 5 1.43 731718 2 0 2 19.85
635.0 324.0 415.2 416.7 416.7 436.3 4582.782 300.0 20.9
3-Apr-08 0 0 5 5 441.9 5 438.3 5 5.08 1056970 8 0 2 20.86
635.0 324.0 436.3 412.2 2702.869 300.0 20.9
4-Apr-08 0 0 5 436 438 5 415.3 414.9 -4.92 642787 6 0 2 19.83
635.0 324.0 440.9 435.1 434.6 4185.637 300.0 20.9
7-Apr-08 0 0 414.9 417 5 417 5 5 4.76 961751 9 0 2 20.78
635.0 324.0 434.6 411.2 413.1 3279.683 300.0 20.9
8-Apr-08 0 0 5 430 434 5 5 413.9 -4.77 787677 3 0 2 19.78
635.0 324.0 410.9 2331.852 300.0 20.9
9-Apr-08 0 0 413.9 415 416.8 406 411.9 5 -0.71 566442 9 0 2 19.64
635.0 324.0 410.9 419.4 419.4 407.2 2822.076 300.0 20.9
10-Apr-08 0 0 5 5 5 405 405.5 5 -0.90 684310 6 0 2 19.47
635.0 324.0 407.2 3374.854 300.0 20.9
11-Apr-08 0 0 5 410 414.9 402.2 405 405.5 -0.43 826108 2 0 2 19.38
635.0 324.0 8520.026 300.0 20.9
15-Apr-08 0 0 405.5 410 438.7 403.1 430 423.9 4.54 2002913 6 0 2 20.26
635.0 324.0 451.8 5949.054 300.0 20.9
16-Apr-08 0 0 423.9 432.9 5 430 451.1 447.3 5.52 1350842 5 0 2 21.38
635.0 324.0 459.2 8963.711 300.0 20.9
17-Apr-08 0 0 447.3 455 464.9 438 461 5 2.67 1953477 2 0 2 21.95
635.0 324.0 459.2 454.2 7693.457 300.0 20.9
21-Apr-08 0 0 5 475 480.1 452 5 454.8 -0.97 1649323 3 0 2 21.74
635.0 324.0 424.2 6569.298 300.0 20.9
22-Apr-08 0 0 454.8 450 452 5 436 431.2 -5.19 1518309 7 0 2 20.61
635.0 324.0 443.1 4256.869 300.0 20.9
23-Apr-08 0 0 431.2 430 446 425.3 443.1 5 2.77 967753 2 0 2 21.18
635.0 324.0 443.1 300.0 20.9
24-Apr-08 0 0 5 458.9 458.9 442 451 449.7 1.48 1164201 5225.427 0 2 21.50
635.0 324.0 449.0 466.3 5281.445 300.0 20.9
25-Apr-08 0 0 449.7 5 470 445 469 5 3.70 1145082 2 0 2 22.29
635.0 324.0 466.3 2350.190 300.0 20.9
28-Apr-08 0 0 5 462 470 450 460 458.1 -1.77 512950 2 0 2 21.90
635.0 324.0 458.3 300.0 20.9
29-Apr-08 0 0 458.1 5 481.5 457 477.3 478.9 4.54 1406565 6656.257 0 2 22.89
635.0 324.0 472.3 488.7 5633.763 300.0 20.9
30-Apr-08 0 0 478.9 479 492.5 5 488.8 5 2.06 1160532 4 0 2 23.36
635.0 324.0 434.6 437.6 449.3 426.0 438.5 437.4 1140395.6 300.0 20.9
Average= 0 0 5 7 7 5 4 8 0.68 0 5027.87 0 2 20.91
51
Sensex Watch
Graph for Year 2006
Graph for year 2007
52
BSE watch for Year 2008
January 2008
%
Date Open High Low Close Change
2-Jan-08 20,393.10 20,529.48 20,077.40 20,465.30
3-Jan-08 20,383.03 20,519.70 20,293.87 20,345.20 -0.587%
4-Jan-08 20,367.94 20,762.80 20,367.94 20,686.89 1.679%
7-Jan-08 20,637.21 20,861.83 20,438.19 20,812.65 0.608%
8-Jan-08 20,970.07 21,077.53 20,696.60 20,873.33 0.292%
9-Jan-08 20,903.00 21,113.13 20,701.49 20,869.78 -0.017%
10-Jan-08 20,930.28 21,206.77 20,530.07 20,582.08 -1.379%
11-Jan-08 20,702.94 20,894.79 20,505.81 20,827.45 1.192%
14-Jan-08 20,918.23 20,959.22 20,661.90 20,728.05 -0.477%
15-Jan-08 20,836.47 20,872.93 20,203.63 20,251.09 -2.301%
16-Jan-08 20,079.89 20,079.89 19,513.25 19,868.11 -1.891%
17-Jan-08 19,972.75 20,026.12 19,643.76 19,700.82 -0.842%
18-Jan-08 19,579.61 19,715.78 18,930.42 19,013.70 -3.488%
21-Jan-08 18,919.57 18,919.57 16,951.50 17,605.35 -7.407%
22-Jan-08 16,884.09 17,068.57 15,332.42 16,729.94 -4.972%
23-Jan-08 17,520.02 17,997.11 16,951.03 17,594.07 5.165%
24-Jan-08 17,920.98 18,185.10 17,070.05 17,221.74 -2.116%
25-Jan-08 17,504.00 18,406.25 17,504.00 18,361.66 6.619%
28-Jan-08 18,011.89 18,213.21 17,443.29 18,152.78 -1.138%
29-Jan-08 18,346.49 18,491.06 17,927.92 18,091.94 -0.335%
30-Jan-08 18,120.22 18,129.18 17,683.51 17,758.64 -1.842%
31-Jan-08 17,810.13 18,008.71 17,417.63 17,648.71 -0.619%
February 2008
Date Open High Low Close % Change
1-Feb-08 17,820.67 18,312.40 17,534.96 18,242.58
4-Feb-08 18,496.03 18,895.34 18,447.25 18,660.32 2.290%
5-Feb-08 18,592.58 18,729.83 18,509.54 18,663.16 0.015%
6-Feb-08 18,247.03 18,274.15 17,936.01 18,139.49 -2.806%
7-Feb-08 18,198.68 18,198.68 17,492.28 17,526.93 -3.377%
8-Feb-08 17,610.07 17,688.73 17,203.06 17,464.89 -0.354%
11-Feb-08 17,427.34 17,427.34 16,457.74 16,630.91 -4.775%
12-Feb-08 16,812.63 16,966.72 16,565.48 16,608.01 -0.138%
13-Feb-08 16,816.94 17,141.06 16,725.68 16,949.14 2.054%
14-Feb-08 17,265.19 17,836.64 17,265.19 17,766.63 4.823%
15-Feb-08 17,541.17 18,142.92 17,445.05 18,115.25 1.962%
19-Feb-08 18,215.26 18,314.10 18,018.48 18,075.66 -0.219%
20-Feb-08 17,991.29 17,991.29 17,505.56 17,617.60 -2.534%
21-Feb-08 17,825.22 17,887.21 17,482.31 17,734.68 0.665%
22-Feb-08 17,503.04 17,526.80 17,347.26 17,349.07 -2.174%
25-Feb-08 17,523.81 17,674.06 17,137.99 17,650.57 1.738%
26-Feb-08 17,799.56 17,860.10 17,678.74 17,806.19 0.882%
27-Feb-08 17,983.42 18,137.28 17,770.65 17,825.99 0.111%
28-Feb-08 17,810.52 17,921.51 17,690.16 17,824.48 -0.008%
29-Feb-08 17,779.54 17,779.54 17,258.20 17,578.72 -1.379%
March 2008
Date Open High Low Close %
53
Change
3-Mar-08 17,227.56 17,227.56 16,634.63 16,677.88
4-Mar-08 16,742.20 16,754.06 16,164.57 16,339.89 -2.027%
5-Mar-08 16,328.91 16,595.64 16,253.02 16,542.08 1.237%
7-Mar-08 16,211.96 16,211.96 15,689.92 15,975.52 -3.425%
10-Mar-08 15,684.24 15,998.33 15,362.17 15,923.72 -0.324%
11-Mar-08 15,778.27 16,168.13 15,739.04 16,123.15 1.252%
12-Mar-08 16,541.14 16,683.37 16,064.09 16,127.98 0.030%
13-Mar-08 15,873.28 15,873.28 15,228.99 15,357.35 -4.778%
14-Mar-08 15,467.39 15,798.42 15,331.35 15,760.52 2.625%
17-Mar-08 15,326.93 15,326.93 14,739.72 14,809.49 -6.034%
18-Mar-08 14,725.68 15,164.73 14,677.24 14,833.46 0.162%
19-Mar-08 15,325.79 15,465.81 14,930.08 14,994.83 1.088%
24-Mar-08 15,093.77 15,351.31 15,056.09 15,289.40 1.964%
25-Mar-08 15,612.61 16,262.38 15,612.61 16,217.49 6.070%
26-Mar-08 16,270.12 16,309.88 16,009.87 16,086.83 -0.806%
27-Mar-08 15,950.29 16,111.44 15,869.09 16,015.56 -0.443%
28-Mar-08 16,100.26 16,452.08 15,884.45 16,371.29 2.221%
31-Mar-08 16,226.66 16,226.66 15,563.15 15,644.44 -4.440%
April 2008
Date Open High Low Close Column1
1-Apr-08 15,771.72 15,834.05 15,297.96 15,626.62
2-Apr-08 16,023.30 16,236.70 15,719.47 15,750.40 0.792%
3-Apr-08 15,805.63 16,002.73 15,699.21 15,832.55 0.522%
4-Apr-08 15,896.09 15,896.09 15,303.04 15,343.12 -3.091%
7-Apr-08 15,390.15 15,851.88 15,321.56 15,757.08 2.698%
8-Apr-08 15,770.16 15,770.40 15,479.42 15,587.62 -1.075%
9-Apr-08 15,512.70 15,829.59 15,464.72 15,790.51 1.302%
10-Apr-08 15,754.87 15,953.54 15,655.20 15,695.10 -0.604%
11-Apr-08 15,840.56 15,957.24 15,673.67 15,807.64 0.717%
15-Apr-08 15,694.41 16,249.46 15,573.03 16,153.66 2.189%
16-Apr-08 16,288.76 16,413.80 16,198.56 16,244.19 0.560%
17-Apr-08 16,456.04 16,570.57 16,397.17 16,481.20 1.459%
21-Apr-08 16,611.41 16,778.59 16,611.41 16,739.33 1.566%
22-Apr-08 16,686.55 16,853.96 16,597.53 16,783.87 0.266%
23-Apr-08 16,823.99 16,871.27 16,589.45 16,698.04 -0.511%
24-Apr-08 16,796.26 16,844.02 16,668.60 16,721.08 0.138%
25-Apr-08 16,781.97 17,150.92 16,781.97 17,125.98 2.421%
54
Nifty Watch
Graph for year 2006
Graph for year 2007
55
January 2008
Date Open High Low Close

1-Jan-08 6136.75 6165.35 6109.85 6144.35
2-Jan-08 6144.7 6197 6060.85 6179.4
3-Jan-08 6184.25 6230.15 6126.4 6178.55
4-Jan-08 6179.1 6300.05 6179.1 6274.3
7-Jan-08 6271 6289.8 6193.35 6279.1
8-Jan-08 6282.45 6357.1 6221.6 6287.85
9-Jan-08 6287.55 6338.3 6231.25 6272
10-Jan-08 6278.1 6347 6142.9 6156.95
11-Jan-08 6166.65 6224.2 6112.55 6200.1
14-Jan-08 6208.8 6244.15 6172 6206.8
15-Jan-08 6226.35 6260.45 6053.3 6074.25
16-Jan-08 6065 6065 5825.75 5935.75
17-Jan-08 5937.95 6013.15 5880.3 5913.2
18-Jan-08 5907.75 5908.75 5677 5705.3
21-Jan-08 5705 5705 4977.1 5208.8
22-Jan-08 5203.35 5203.35 4448.5 4899.3
23-Jan-08 4903.05 5328.05 4891.6 5203.4
24-Jan-08 5208 5357.2 4995.8 5033.45
25-Jan-08 5035.05 5399.25 5035.05 5383.35
28-Jan-08 5380.95 5380.95 5071 5274.1
29-Jan-08 5279.55 5391.6 5225.25 5280.8
30-Jan-08 5283.75 5314.3 5142.25 5167.6
31-Jan-08 5172.25 5251.65 5071.15 5137.45
February 2008
1-Feb-08 5140.6 5339.95 5090.75 5317.25
4-Feb-08 5315.55 5545.2 5315.55 5463.5
5-Feb-08 5463.75 5500.6 5412.95 5483.9
6-Feb-08 5470.4 5470.4 5257.05 5322.55
7-Feb-08 5322.55 5344.6 5113.85 5133.25
8-Feb-08 5132.1 5173.85 5034.25 5120.35
11-Feb-08 5120.55 5126.4 4803.6 4857
12-Feb-08 4877.85 4949.6 4820.45 4838.25
13-Feb-08 4836.55 4986.55 4836.55 4929.45
14-Feb-08 4944.65 5220.25 4944.65 5202
15-Feb-08 5202.85 5315.4 5104.75 5302.9
18-Feb-08 5304.45 5348.6 5224 5276.9
19-Feb-08 5278.4 5368.45 5262 5280.8
20-Feb-08 5267.15 5267.15 5116.3 5154.45
21-Feb-08 5156.9 5241.35 5120.05 5191.8
22-Feb-08 5183.4 5184 5092.8 5110.75
25-Feb-08 5112.25 5212.35 5055.15 5200.7
26-Feb-08 5200.8 5281.2 5200.8 5270.05
27-Feb-08 5271.4 5368.15 5249.75 5268.4
28-Feb-08 5266.35 5302.85 5227.15 5285.1
29-Feb-08 5285 5290.8 5098.35 5223.5
56
March 2008

3-Mar-08 5222.8 5222.8 4936.05 4953
4-Mar-08 4958.55 4976.7 4812.95 4864.25
5-Mar-08 4866.85 4936.75 4847.25 4921.4
7-Mar-08 4918.3 4918.3 4672.25 4771.6
10-Mar-08 4767.8 4814.95 4620.5 4800.4
11-Mar-08 4796.3 4888.5 4732.85 4865.9
12-Mar-08 4869.75 5019.2 4854.75 4872
13-Mar-08 4868.7 4868.8 4580.15 4623.6
14-Mar-08 4623.8 4758.95 4607.55 4745.8
17-Mar-08 4745.45 4745.45 4482.1 4503.1
18-Mar-08 4519.9 4617.95 4468.55 4533
19-Mar-08 4534.75 4718.4 4533.9 4573.95
24-Mar-08 4576.8 4649.45 4539.8 4609.85
25-Mar-08 4616.8 4896.8 4616.8 4877.5
26-Mar-08 4878.7 4912.3 4808.65 4828.85
27-Mar-08 4828.8 4863.75 4769.6 4830.25
28-Mar-08 4830 4970.8 4796.35 4942
31-Mar-08 4942.15 4947 4703.85 4734.5
April 2008

1-Apr-08 4735.65 4800.75 4628.75 4739.55
2-Apr-08 4741.4 4916.75 4741.4 4754.2
3-Apr-08 4753.9 4833.25 4738.2 4771.6
4-Apr-08 4766.7 4791.7 4632.7 4647
7-Apr-08 4631.35 4798.55 4628.8 4761.2
8-Apr-08 4760.65 4769.55 4677.8 4709.65
9-Apr-08 4707.05 4758.25 4667.5 4747.05
10-Apr-08 4747.55 4799.5 4720.9 4733
11-Apr-08 4734.35 4817.4 4727.25 4777.8
15-Apr-08 4779.95 4917.1 4708.3 4879.65
16-Apr-08 4881.65 4951.4 4874.05 4887.3
17-Apr-08 4890.6 4984.95 4889.65 4958.4
21-Apr-08 4955.9 5053.4 4955.9 5037
22-Apr-08 5037.05 5074.25 4994.05 5049.3
23-Apr-08 5044.35 5083.5 5003.55 5022.8
24-Apr-08 5022.9 5072.7 4991.35 4999.85
25-Apr-08 4999.15 5117.7 4999.15 5111.7
28-Apr-08 5112.5 5147.45 5079.15 5089.65
29-Apr-08 5092.4 5210.9 5082.15 5195.5
30-Apr-08 5198.35 5230.75 5155.85 5165.9
57
Virtual Stock Trading Analysis
Future Trading
Nifty
Date of
Purchase: 3-Apr-08
Total
No. of
Settelment Date Lot Size No. of Lot shares
24/04/2008 29/05/2008 50 100 5,000

4,78 4,757.
5.00 00
Margin
Money
Span Exposure Total In
Total Worth Margin Margin Margin Total Margin Paid account
23,925,00 23,785,000. 3,731,866. 1,000
0.00 00 12.69 3.00 15.69 3,753,832.50 50 ,000
58
Date Closing Price MTM G/L Daily Account Status
4,784.8 4,780.2 (750.0 116,250. 999,250. 1,116,250.0
3-Apr-08 5 5 0) 00 00 0
4,652.7 4,645.1 (660,750.0 (675,750.0 338,500. 440,500.0
4-Apr-08 0 0 0) 0) 00 0
4,764.4 4,756.6 558,500. 557,750. 897,000. 998,250.0
7-Apr-08 0 5 00 00 00 0
4,694.8 4,688.7 (347,750.0 (339,750.0 549,250. 658,500.0
8-Apr-08 5 0 0) 0) 00 0
4,740.3 4,728.7 227,250. 200,000. 776,500. 858,500.0
9-Apr-08 0 0 00 00 00 0
4,722.3 4,719.3 (90,000.0 (47,000.0 686,500. 811,500.0
10-Apr-08 0 0 0) 0) 00 0
4,771.8 4,769.0 247,750. 248,750. 934,250. 1,060,250.0
11-Apr-08 5 5 00 00 00 0
4,897.1 4,902.9 626,500. 669,500. 1,560,750. 1,729,750.0
15-Apr-08 5 5 00 00 00 0
4,886.0 4,888.1 (55,750.0 (74,250.0 1,505,000. 1,655,500.0
16-Apr-08 0 0 0) 0) 00 0
4,960.5 4,965.0 372,750. 384,750. 1,877,750. 2,040,250.0
17-Apr-08 5 5 00 00 00 0
5,043.4 5,053.1 414,500. 440,500. 2,292,250. 2,480,750.0
21-Apr-08 5 5 00 00 00 0
5,043.6 5,050.9 1,000. (11,000.0 2,293,250. 2,469,750.0
22-Apr-08 5 5 00 0) 00 0
5,031.1 5,040.1 (62,750.0 (54,250.0 2,230,500. 2,415,500.0
23-Apr-08 0 0 0) 0) 00 0
4,999.8 5,003.3 (156,250.0 (184,000.0 2,074,250. 2,231,500.0
24-Apr-08 5 0 0) 0) 00 0
Net
1,074,250. 1,231,500. Account 5,828,082. 5,963,366.5
Net Gain/Loss 00 00 Status 50 0
Bank Nifty
Date of
Purchase: 3-Apr-08
Lot No. of
Settelment Date Size No. of Lot shares
2,5
24/04/2008 29/05/2008 25 100 00
6,764. 6,725.
00 00
Margin
Span Exposure Total Money In
Total Worth Margin Margin Margin Margin Paid account
16,910,000. 16,812,500. 15. 3 18. 3,141,878. 3,123,762. 1,000,0
00 00 58 .00 58 00 50 00
59
6,756.2 6,839.3 (19,500. 285,750. 980,500. 1,285,750.
3-Apr-08 0 0 00) 00 00 00
6,550.3 6,633.0 (514,625. (515,625.0 465,875. 770,125.
4-Apr-08 5 5 00) 0) 00 00
6,838.2 6,917.4 719,625. 711,000. 1,185,500. 1,481,125.
7-Apr-08 0 5 00 00 00 00
6,855.3 6,946.6 42,750. 73,000. 1,228,250. 1,554,125.
8-Apr-08 0 5 00 00 00 00
7,044.9 7,064.0 474,000. 293,375. 1,702,250. 1,847,500.
9-Apr-08 0 0 00 00 00 00
6,876.1 6,921.2 (422,000. (356,875.0 1,280,250. 1,490,625.
10-Apr-08 0 5 00) 0) 00 00
6,837.0 6,877.2 (97,750. (110,125.0 1,182,500. 1,380,500.
11-Apr-08 0 0 00) 0) 00 00
6,926.6 6,989.0 224,125. 279,500. 1,406,625. 1,660,000.
15-Apr-08 5 0 00 00 00 00
6,943.5 6,961.5 42,125. (68,750.0 1,448,750. 1,591,250.
16-Apr-08 0 0 00 0) 00 00
7,158.6 7,167.3 537,875. 514,625. 1,986,625. 2,105,875.
17-Apr-08 5 5 00 00 00 00
7,416.5 7,423.7 644,750. 641,000. 2,631,375. 2,746,875.
21-Apr-08 5 5 00 00 00 00
7,490.5 7,501.3 185,000. 194,000. 2,816,375. 2,940,875.
22-Apr-08 5 5 00 00 00 00
7,379.8 7,377.2 (276,875. (310,375.0 2,539,500. 2,630,500.
23-Apr-08 0 0 00) 0) 00 00
7,391.9 7,371.6 30,250. (13,875.0 2,569,750. 2,616,625.
24-Apr-08 0 5 00 0) 00 00
Net
1,569,750. 1,616,625. Account 5,711,628. 5,740,387.
CNXIT
Date of
Purchase: 3-Apr-08
Lot No. of
5,
24/04/2008 29/05/2008 50 100 000
3,88 4,16
3.00 1.00
Span Margin
Margi Exposure Total Money In
Total Worth n Margin Margin Margin Paid account
19,415,00 20,805,00 14. 3 17 3,459,75 3,707,45 1,00
0.00 0.00 82 .00 .82 3.00 1.00 0,000
60
3,879. 3,936. (18,500 (1,123,250 981,50 (123,2
3-Apr-08 30 35 .00) .00) 0.00 50.00)
3,807. 3,852. (359,750 (418,500 621,75 (541,7
4-Apr-08 35 65 .00) .00) 0.00 50.00)
3,902. 3,940. 476,250 440,000 1,098,00 (101,7
7-Apr-08 60 65 .00 .00 0.00 50.00)
3,829. 3,876. (365,750 (319,000 732,25 (420,7
8-Apr-08 45 85 .00) .00) 0.00 50.00)
3,833. 3,872. 22,250 (21,250 754,50 (442,0
9-Apr-08 90 60 .00 .00) 0.00 00.00)
3,826. 3,870. (36,500 (10,500 718,00 (452,5
10-Apr-08 60 50 .00) .00) 0.00 00.00)
3,839. 3,868. 63,000 (10,000 781,00 (462,5
11-Apr-08 20 50 .00 .00) 0.00 00.00)
4,042. 4,075. 1,016,750 1,033,250 1,797,75 570,7
15-Apr-08 55 15 .00 .00 0.00 50.00
4,159. 4,201. 584,250 630,250 2,382,00 1,201,0
16-Apr-08 40 20 .00 .00 0.00 00.00
4,303. 4,346. 722,250 727,750 3,104,25 1,928,7
17-Apr-08 85 75 .00 .00 0.00 50.00
4,296. 4,316. (36,750 (153,750 3,067,50 1,775,0
21-Apr-08 50 00 .00) .00) 0.00 00.00
4,059. 4,077. (1,186,000 (1,192,000 1,881,50 583,0
22-Apr-08 30 60 .00) .00) 0.00 00.00
4,095. 4,107. 181,250 147,000 2,062,75 730,0
23-Apr-08 55 00 .00 .00 0.00 00.00
4,137. 4,127. 210,250 102,000 2,273,00 832,0
24-Apr-08 60 40 .00 .00 0.00 00.00
Net
1,273,000 (168,000 Account 5,732,75 4,539,4
Net Gain/Loss .00 .00) Status 3.00 51.00
61
CNX100
Date of
Purchase: 3-Apr-08
Settelment Date Lot Size No. of Lot No. of shares

24/04/2008 29/05/2008 50 100 5000
4,422.0 5,083.0
0 0
Margin
Span Exposure Money In
Total Worth Margin Margin Total Margin Margin Paid account
22,110,00 25,415,00 14.2 7. 21.2 4,705,008. 5,408,312. 1,000,00
0 0 8 00 8 00 00 0
62
4,589.5 4,630.7 837,500. (2,261,500.0 1,837,500. (1,261,500.0
3-Apr-08 0 0 00 0) 00 0)
4,470.0 4,509.5 (597,500.0 (605,750.0 1,240,000. (1,867,250.0
4-Apr-08 0 5 0) 0) 00 0)
4,577.3 4,617.2 536,750. 538,500.0 1,776,750. (1,328,750.0
7-Apr-08 5 5 00 0 00 0)
4,533.0 4,572.7 (221,500.0 (222,750.0 1,555,250. (1,551,500.0
8-Apr-08 5 0 0) 0) 00 0)
4,573.9 4,613.8 204,250. 205,500.0 1,759,500. (1,346,000.0
9-Apr-08 0 0 00 0 00 0)
4,557.1 4,596.4 (83,750.0 (87,000.0 1,675,750. (1,433,000.0
10-Apr-08 5 0 0) 0) 00 0)
4,596.0 4,635.8 194,500. 197,250.0 1,870,250. (1,235,750.0
11-Apr-08 5 5 00 0 00 0)
4,688.2 4,728.1 460,750. 461,250.0 2,331,000. (774,500.0
15-Apr-08 0 0 00 0 00 0)
4,700.4 4,739.1 61,000. 55,000.0 2,392,000. (719,500.0
16-Apr-08 0 0 00 0 00 0)
4,776.7 4,816.7 381,500. 388,250.0 2,773,500. (331,250.0
17-Apr-08 0 5 00 0 00 0)
4,853.4 4,894.1 383,500. 387,000.0 3,157,000. 55,750.0
21-Apr-08 0 5 00 0 00 0
4,877.0 4,917.8 118,250. 118,500.0 3,275,250. 174,250.0
22-Apr-08 5 5 00 0 00 0
4,849.1 4,889.7 (139,750.0 (140,500.0 3,135,500. 33,750.0
23-Apr-08 0 5 0) 0) 00 0
4,824.5 4,864.7 (122,750.0 (125,000.0 3,012,750. (91,250.0
24-Apr-08 5 5 0) 0) 00 0)
Net
2,012,750. (1,091,250.0 Account 7,717,758. 5,317,062.0
Net Gain/Loss 00 0) Status 00 0
Junior
Date of
Purchase: 3-Apr-08

24/04/2008 29/05/2008 25 100 2500
7,861.0 9,893.0
0 0
Margin
Total Worth Margin Margin Total Margin Margin Paid account
19,652,50 24,732,50 16.3 7. 23.3 4,596,719. 5,784,931. 1,000,00
0 0 9 00 9 75 75 0
63
7,929.1 8,073.8 170,375. (4,547,875.0 1,170,375. (3,547,875.0
3-Apr-08 5 5 00 0) 00 0)
7,750.0 7,878.7 (447,875.0 (487,875.0 722,500. (4,035,750.0
4-Apr-08 0 0 0) 0) 00 0)
7,885.0 8,082.1 337,500. 508,625.0 1,060,000. (3,527,125.0
7-Apr-08 0 5 00 0 00 0)
8,004.8 8,074.9 299,500. (18,125.0 1,359,500. (3,545,250.0
8-Apr-08 0 0 00 0) 00 0)
8,140.2 8,211.6 338,625. 341,750.0 1,698,125. (3,203,500.0
9-Apr-08 5 0 00 0 00 0)
8,090.6 8,157.3 (124,125.0 (135,750.0 1,574,000. (3,339,250.0
10-Apr-08 0 0 0) 0) 00 0)
8,125.2 8,192.8 86,625. 88,875.0 1,660,625. (3,250,375.0
11-Apr-08 5 5 00 0 00 0)
8,250.0 8,100.0 311,875. (232,125.0 1,972,500. (3,482,500.0
15-Apr-08 0 0 00 0) 00 0)
8,315.0 8,423.6 162,500. 809,000.0 2,135,000. (2,673,500.0
16-Apr-08 0 0 00 0 00 0)
8,521.7 8,658.0 516,750. 586,125.0 2,651,750. (2,087,375.0
17-Apr-08 0 5 00 0 00 0)
8,764.7 8,716.4 607,625. 146,000.0 3,259,375. (1,941,375.0
21-Apr-08 5 5 00 0 00 0)
8,937.3 8,955.0 431,500. 596,375.0 3,690,875. (1,345,000.0
22-Apr-08 5 0 00 0 00 0)
8,882.5 8,838.0 (137,125.0 (292,500.0 3,553,750. (1,637,500.0
23-Apr-08 0 0 0) 0) 00 0)
8,836.4 8,856.8 (115,250.0 47,125.0 3,438,500. (1,590,375.0
24-Apr-08 0 5 0) 0 00 0)
Net
2,438,500. (2,590,375.0 Account 8,035,219. 4,194,556.7
Mininifty
Date of
Purchase: 3-Apr-08
No. of
24/04/2008 29/05/2008 20 100 2000
4,787.00 4,762.00
Margin
12.5 6.0 18. 1,779,806.6 1,770,511.6 1,000,00
9,574,000 9,524,000 9 0 59 0 0 0
64
4,781.6 (6,100.0 39,300. 993,900. 1,039,300.0
3-Apr-08 4,783.95 5 0) 00 00 0
4,649.4 (260,800.0 (264,400.0 733,100. 774,900.0
4-Apr-08 4,653.55 5 0) 0) 00 0
4,758.5 221,400.0 218,200. 954,500. 993,100.0
7-Apr-08 4,764.25 5 0 00 00 0
4,690.6 (136,300.0 (135,800.0 818,200. 857,300.0
8-Apr-08 4,696.10 5 0) 0) 00 0
4,731.3 87,800.0 81,400. 906,000. 938,700.0
9-Apr-08 4,740.00 5 0 00 00 0
10-Apr- 4,718.9 (33,300.0 (24,800.0 872,700. 913,900.0
08 4,723.35 5 0) 0) 00 0
11-Apr- 4,768.8 97,100.0 99,800. 969,800. 1,013,700.0
08 4,771.90 5 0 00 00 0
15-Apr- 4,895.6 245,400.0 253,600. 1,215,200. 1,267,300.0
08 4,894.60 5 0 00 00 0
16-Apr- 4,888.4 (18,400.0 (14,400.0 1,196,800. 1,252,900.0
08 4,885.40 5 0) 0) 00 0
17-Apr- 4,964.3 150,800.0 151,800. 1,347,600. 1,404,700.0
08 4,960.80 5 0 00 00 0
21-Apr- 5,050.7 163,400.0 172,700. 1,511,000. 1,577,400.0
08 5,042.50 0 0 00 00 0
22-Apr- 5,052.2 4,300.0 3,100. 1,515,300. 1,580,500.0
08 5,044.65 5 0 00 00 0
23-Apr- 5,040.7 (26,100.0 (23,100.0 1,489,200. 1,557,400.0
08 5,031.60 0 0) 0) 00 0
24-Apr- 5,003.5 (63,500.0 (74,400.0 1,425,700. 1,483,000.0
08 4,999.85 0 0) 0) 00 0
Net
425,700.0 483,000. Account 3,205,506. 3,253,511.6
Niftymcap50
Date of
Purchase: 3-Apr-08
Lot No. of
7 1 7,50
24/04/2008 29/05/2008 5 00 0
2,425.0 2,877.0
0 0
Margin
18,187,50 21,577,50 14.8 8. 22.8 4,155,843. 4,930,458. 1,000,00
0 0 5 00 5 75 75 0
65
Date Of
Purchase Closing Price MTM G/L Daily Account Status
2,410.9 2,432.6 (105,375.0 (3,333,000.0 894,625.0 (2,333,000.0
3-Apr-08 5 0 0) 0) 0 0)
2,350.0 2,372.2 (457,125.0 (453,000.0 437,500.0 (2,786,000.0
4-Apr-08 0 0 0) 0) 0 0)
2,379.7 2,400.4 223,125. 211,875.0 660,625.0 (2,574,125.0
7-Apr-08 5 5 00 0 0 0)
2,389.7 2,410.6 74,625. 76,125.0 735,250.0 (2,498,000.0
8-Apr-08 0 0 00 0 0 0)
2,416.6 2,437.7 201,750. 203,250.0 937,000.0 (2,294,750.0
9-Apr-08 0 0 00 0 0 0)
2,425.7 2,446.6 68,625. 67,125.0 1,005,625.0 (2,227,625.0
10-Apr-08 5 5 00 0 0 0)
2,442.3 2,463.5 124,500. 126,375.0 1,130,125.0 (2,101,250.0
11-Apr-08 5 0 00 0 0 0)
2,482.3 2,503.5 300,000. 300,000.0 1,430,125.0 (1,801,250.0
15-Apr-08 5 0 00 0 0 0)
2,506.2 2,527.1 179,250. 177,000.0 1,609,375.0 (1,624,250.0
16-Apr-08 5 0 00 0 0 0)
2,570.0 2,600.1 478,125. 547,875.0 2,087,500.0 (1,076,375.0
17-Apr-08 0 5 00 0 0 0)
2,647.8 2,670.0 583,500. 523,875.0 2,671,000.0 (552,500.0
21-Apr-08 0 0 00 0 0 0)
2,694.5 2,690.3 350,250. 152,625.0 3,021,250.0 (399,875.0
22-Apr-08 0 5 00 0 0 0)
2,719.9 2,708.2 190,500. 134,250.0 3,211,750.0 (265,625.0
23-Apr-08 0 5 00 0 0 0)
2,634.3 2,656.2 (642,000.0 (390,000.0 2,569,750.0 (655,625.0
24-Apr-08 0 5 0) 0) 0 0)
Net
1,569,750. (1,655,625.0 Account 6,725,593.7 4,274,833.7
66
INFOSYS
Total No. of
Sattelment Date Lot Size No. of Lot shares
24/04/2008 29/05/2008 200 100 20000
1420.00 1444.00
Margine
Total Worth Margine Margine Margine Total Margine Paid account
4313960.0
28400000 28880000 10.19 5 15.19 0 4386872.00 1,000,000

253,000.0 (202,000.0 1,253,000. 798,000.0
1-Apr-08 1432.65 1433.90 0 0) 00 0
984,000.0 918,000.0 2,237,000. 1,716,000.0
2-Apr-08 1481.85 1479.80 0 0 00 0
811,000.0 853,000.0 3,048,000. 2,569,000.0
3-Apr-08 1522.40 1522.45 0 0 00 0
(768,000.00 (879,000.0 2,280,000. 1,690,000.0
4-Apr-08 1484.00 1478.50 ) 0) 00 0
273,000.0 353,000.0 2,553,000. 2,043,000.0
7-Apr-08 1497.65 1496.15 0 0 00 0
(773,000.00 (701,000.0 1,780,000. 1,342,000.0
8-Apr-08 1459.00 1461.10 ) 0) 00 0
426,000.0 392,000.0 2,206,000. 1,734,000.0
9-Apr-08 1480.30 1480.70 0 0 00 0
(492,000.00 (505,000.0 1,714,000. 1,229,000.0
10-Apr-08 1455.70 1455.45 ) 0) 00 0
(558,000.00 (509,000.0 1,156,000. 720,000.0
11-Apr-08 1427.80 1430.00 ) 0) 00 0
1,581,000.0 1,123,000.0 2,737,000. 1,843,000.0
15-Apr-08 1506.85 1486.15 0 0 00 0
1,716,000.0 1,672,000.0 4,453,000. 3,515,000.0
16-Apr-08 1592.65 1569.75 0 0 00 0
1,269,000.0 1,299,000.0 5,722,000. 4,814,000.0
17-Apr-08 1656.10 1634.70 0 0 00 0
(96,000.00 (76,000.0 5,626,000. 4,738,000.0
21-Apr-08 1651.30 1630.90 ) 0) 00 0
(1,037,000.00 (939,000.0 4,589,000. 3,799,000.0
22-Apr-08 1599.45 1583.95 ) 0) 00 0
919,000.0 889,000.0 5,508,000. 4,688,000.0
23-Apr-08 1645.40 1628.40 0 0 00 0
1,013,000.0 666,000.0 6,521,000. 5,354,000.0
24-Apr-08 1696.05 1661.70 0 0 00 0
Net
5,521,000.0 4,354,000.0 Account 10,834,960. 9,740,872.0
Total Gain/Loss 0 0 Status 00 0
67
WIPRO
Sattelment Date Lot Size No. of Lot No. of shares

29/05/200
24/04/2008 8 600 100 60000
415 409
Margine
Total Worth Margine Margine Total Margine Margine Paid account
2490000 45567 4490820.0
0 24540000 13.3 5 18.30 00.00 0 1,000,000
Date Of
300,0 832,000.
1-Apr-08 412.20 414.00 (168,000.00) 00.00 00 1,300,000.00
456,0 1,051,000.
2-Apr-08 415.85 421.60 219,000.00 00.00 00 1,756,000.00
906,0 2,314,000.
3-Apr-08 436.90 436.70 1,263,000.00 00.00 00 2,662,000.00
(1,242,00 1,081,000.
4-Apr-08 416.35 416.00 (1,233,000.00) 0.00) 00 1,420,000.00
1,053,0 2,155,000.
7-Apr-08 434.25 433.55 1,074,000.00 00.00 00 2,473,000.00
(1,203,00 892,000.
8-Apr-08 413.20 413.50 (1,263,000.00) 0.00) 00 1,270,000.00
(135,00 784,000.
9-Apr-08 411.40 411.25 (108,000.00) 0.00) 00 1,135,000.00
(339,00 424,000.
10-Apr-08 405.40 405.60 (360,000.00) 0.00) 00 796,000.00
(36,00 466,000.
11-Apr-08 406.10 405.00 42,000.00 0.00) 00 760,000.00
1,245,0 1,669,000.
15-Apr-08 426.15 425.75 1,203,000.00 00.00 00 2,005,000.00
1,281,0 2,911,000.
16-Apr-08 446.85 447.10 1,242,000.00 00.00 00 3,286,000.00
636,0 3,637,000.
17-Apr-08 458.95 457.70 726,000.00 00.00 00 3,922,000.00
(177,00 3,409,000.
21-Apr-08 455.15 454.75 (228,000.00) 0.00) 00 3,745,000.00
(1,392,00 2,029,000.
22-Apr-08 432.15 431.55 (1,380,000.00) 0.00) 00 2,353,000.00
633,0 2,692,000.
23-Apr-08 443.20 442.10 663,000.00 00.00 00 2,986,000.00
237,0 3,082,000.
24-Apr-08 449.70 446.05 390,000.00 00.00 00 3,223,000.00
Net
2,223,0 Accoun 7,638,700.0
Total Gain/Loss 2,082,000.00 00.00 t Status 0 7,713,820.00
68
TCS
Date of
Purchase
: 1-Apr-08
Sattelment Date Lot Size No. of Lot No. of shares

24/04/200 29/05/200
8 8 1125 100 112500
820 810
Margine
Total Worth Margine Margine Margine Margine Paid account
14427900.0
92250000 91125000 10.64 5 15.64 0 14251950.00 1,000,000
Date Of
2,143,125. 3,487,5 3,143,125. 4,487,500
1-Apr-08 839.05 841.00 00 00.00 00 .00
1,586,250. 2,610,0 4,729,375. 7,097,500
2-Apr-08 853.15 864.20 00 00.00 00 .00
3,729,375. 3,150,0 8,458,750. 10,247,500
3-Apr-08 886.30 892.20 00 00.00 00 .00
(1,569,375.0 (2,947,50 6,889,375. 7,300,000
4-Apr-08 872.35 866.00 0) 0.00) 00 .00
3,414,375. 4,055,6 10,303,750. 11,355,625
7-Apr-08 902.70 902.05 00 25.00 00 .00
(2,356,875.0 (2,216,25 7,946,875. 9,139,375
8-Apr-08 881.75 882.35 0) 0.00) 00 .00
(849,375.0 (73,12 7,097,500. 9,066,250
9-Apr-08 874.20 881.70 0) 5.00) 00 .00
10-Apr- 2,576,250. 1,783,1 9,673,750. 10,849,375
08 897.10 897.55 00 25.00 00 .00
11-Apr- 849,375. 798,7 10,523,125. 11,648,125
08 904.65 904.65 00 50.00 00 .00
15-Apr- 8,319,375. 8,313,7 18,842,500. 19,961,875
08 978.60 978.55 00 50.00 00 .00
16-Apr- (388,125.0 (613,12 18,454,375. 19,348,750
08 975.15 973.10 0) 5.00) 00 .00
17-Apr- 1002.8 3,110,625. 3,228,7 21,565,000. 22,577,500
08 0 1001.80 00 50.00 00 .00
21-Apr- (703,125.0 (433,12 20,861,875. 22,144,375
08 996.55 997.95 0) 5.00) 00 .00
22-Apr- (11,902,500.0 (11,756,25 8,959,375. 10,388,125
08 890.75 893.45 0) 0.00) 00 .00
23-Apr- 33,750. 303,7 8,993,125. 10,691,875
08 891.05 896.15 00 50.00 00 .00
24-Apr- (33,750.0 (90,00 8,959,375. 10,601,875
08 890.75 895.35 0) 0.00) 00 .00
Net
7,959,375. 9,601,8 Account 23,387,275. 24,853,825
Total Gain/Loss 00 75.00 Status 00 .00
69
HCL
Date of
Purchase: 1-Apr-08
No. of
24/04/2008 29/05/2008 650 100 65000
245 260
Margine
3192962.5
15925000 16900000 15.05 5 20.05 0 3388450.00 1,000,000
Date Of
247.9 188,500.0 (637,000.00 1,188,500.0 363,000.0
1-Apr-08 0 250.2 0 ) 0 0
246.8 (68,250.00 35,750.0 1,120,250.0 398,750.0
2-Apr-08 5 250.75 ) 0 0 0
249.3 162,500.0 165,750.0 1,282,750.0 564,500.0
3-Apr-08 5 253.3 0 0 0 0
244.2 (331,500.00 (331,500.00 951,250.0 233,000.0
4-Apr-08 5 248.2 ) ) 0 0
244.0 (16,250.00 (321,750.00 935,000.0 (88,750.0
7-Apr-08 0 243.25 ) ) 0 0)
237.2 (442,000.00 (367,250.00 493,000.0 (456,000.0
8-Apr-08 0 237.6 ) ) 0 0)
238.1 58,500.0 78,000.0 551,500.0 (378,000.0
9-Apr-08 0 238.8 0 0 0 0)
235.7 (156,000.00 (191,750.00 395,500.0 (569,750.0
10-Apr-08 0 235.85 ) ) 0 0)
229.7 (390,000.00 (344,500.00 5,500.0 (914,250.0
11-Apr-08 0 230.55 ) ) 0 0)
244.8 984,750.0 900,250.0 990,250.0 (14,000.0
15-Apr-08 5 244.4 0 0 0 0)
259.1 926,250.0 897,000.0 1,916,500.0 883,000.0
16-Apr-08 0 258.2 0 0 0 0
267.5 546,000.0 552,500.0 2,462,500.0 1,435,500.0
17-Apr-08 0 266.7 0 0 0 0
274.2 438,750.0 539,500.0 2,901,250.0 1,975,000.0
21-Apr-08 5 275 0 0 0 0
263.7 (685,750.00 (656,500.00 2,215,500.0 1,318,500.0
22-Apr-08 0 264.9 ) ) 0 0
263.0 (45,500.00 (133,250.00 2,170,000.0 1,185,250.0
23-Apr-08 0 262.85 ) ) 0 0
254.1 (578,500.00 (422,500.00 1,591,500.0 762,750.0
24-Apr-08 0 256.35 ) ) 0 0
Net
591,500.0 (237,250.00 Account 4,784,462.5 4,151,200.0
Total Gain/Loss 0 ) Status 0 0
70
SATYAM
Date of
Purchase: 1-Apr-08

24/04/2008 29/05/2008 600 100 60000
400 399
Margine
4257600.0
24000000 23940000 12.74 5 17.74 0 4246956.00 1,000,000
Date Of
401.3 81,000.0 240,000.0 1,081,000. 1,240,000.0
1-Apr-08 5 403.00 0 0 00 0
407.5 372,000.0 291,000.0 1,453,000. 1,531,000.0
2-Apr-08 5 407.85 0 0 00 0
429.1 1,296,000.0 1,323,000.0 2,749,000. 2,854,000.0
3-Apr-08 5 429.90 0 0 00 0
425.7 (207,000.00 (234,000.00 2,542,000. 2,620,000.0
4-Apr-08 0 426.00 ) ) 00 0
433.3 459,000.0 492,000.0 3,001,000. 3,112,000.0
7-Apr-08 5 434.20 0 0 00 0
429.0 (261,000.00 (264,000.00 2,740,000. 2,848,000.0
8-Apr-08 0 429.80 ) ) 00 0
427.8 (72,000.00 (45,000.00 2,668,000. 2,803,000.0
9-Apr-08 0 429.05 ) ) 00 0
422.2 (333,000.00 (480,000.00 2,335,000. 2,323,000.0
10-Apr-08 5 421.05 ) ) 00 0
432.2 597,000.0 642,000.0 2,932,000. 2,965,000.0
11-Apr-08 0 431.75 0 0 00 0
453.3 1,266,000.0 1,194,000.0 4,198,000. 4,159,000.0
15-Apr-08 0 451.65 0 0 00 0
455.0 105,000.0 195,000.0 4,303,000. 4,354,000.0
16-Apr-08 5 454.90 0 0 00 0
470.7 942,000.0 918,000.0 5,245,000. 5,272,000.0
17-Apr-08 5 470.20 0 0 00 0
460.5 (615,000.00 (486,000.00 4,630,000. 4,786,000.0
21-Apr-08 0 462.10 ) ) 00 0
436.9 (1,416,000.00 (1,350,000.00 3,214,000. 3,436,000.0
22-Apr-08 0 439.60 ) ) 00 0
431.9 (297,000.00 (327,000.00 2,917,000. 3,109,000.0
23-Apr-08 5 434.15 ) ) 00 0
439.7 468,000.0 390,000.0 3,385,000. 3,499,000.0
24-Apr-08 5 440.65 0 0 00 0
Net
2,385,000.0 2,499,000.0 Account 7,642,600. 7,745,956.0
Total Gain/Loss 0 0 Status 00 0
71
Option Trading (Nifty)
Call
No of
Purchase Date Lot Size Lots
1-Apr-08 50 100
Opti Strike Amount Sell / Amount Gain / Net Gain /

on Price Buy Paid Settel Repaid Loss Loss
CE 4250 0 0 0 - 0 -
3,517,000. 1,512,000.0
CE 4300 401 2005000 703.4 00 302.4 0
3,350,000. 850,000.0
CE 4350 500 2500000 670 00 170 0
3,024,250. 1,411,750.0
CE 4400 323 1612500 604.9 00 282.35 0
CE 4450 0 0 0 - 0 -
2,502,500. 1,222,500.0
CE 4500 256 1280000 500.5 00 244.5 0
1,645,000. 312,500.0
CE 4550 267 1332500 329 00 62.5 0
2,012,000. 1,051,000.0
CE 4600 192 961000 402.4 00 210.2 0
2,247,500. 1,447,500.0
CE 4650 160 800000 449.5 00 289.5 0
1,513,250. 802,750.0
CE 4700 142 710500 302.7 00 160.55 0
1,250,000. 625,000.0
CE 4750 125 625000 250 00 125 0
1,002,000. 517,000.0
CE 4800 97 485000 200.4 00 103.4 0
750,000. 350,000.0
CE 4850 80 400000 150 00 70 0
507,500. 182,500.0
CE 4900 65 325000 101.5 00 36.5 0
232,750. (67,250.0
CE 4950 60 300000 46.55 00 -13.45 0)
23,500. (191,500.0
CE 5000 43 215000 4.7 00 -38.3 0)
2,250. (247,750.0
CE 5050 50 250000 0.45 00 -49.55 0)
1,750. (138,250.0
CE 5100 28 140000 0.35 00 -27.65 0)
500. (129,500.0
CE 5150 26 130000 0.1 00 -25.9 0)
1,000. (99,000.0
CE 5200 20 100000 0.2 00 -19.8 0)
17,500. (45,250.0
CE 5250 12.6 62750 3.5 00 -9.05 0)
1,000. (65,000.0
CE 5300 13.2 66000 0.2 00 -13 0)
CE 5350 0 0 0 - 0 -
2,500. (42,500.0
CE 5400 9 45000 0.5 00 -8.5 0)
CE 5450 0 0 0 - 0 -
72
500. (34,250.0
CE 5500 6.95 34750 0.1 00 -6.85 0)
CE 5550 0 0 0 - 0 -
250. (29,500.0
CE 5600 5.95 29750 0.05 00 -5.9 0)
CE 5650 0 0 0 - 0 -
500. (20,500.0
CE 5700 4.2 21000 0.1 00 -4.1 0)
3,250. (16,750.0
CE 5750 4 20000 0.65 00 -3.35 0)
73
Put
No of
Purchase Date Lot Size Lots
1-Apr-08 50 100
Optio Strike Amount Sell / Amount Gain / Net Gain /

n Price Buy Paid Settel Repaid Loss Loss2
500.0 (164,500.0
PE 4250 33 165000 0.1 0 -32.9 0)
1,500.0 (198,500.0
PE 4300 40 200000 0.3 0 -39.7 0)
500.0 (244,500.0
PE 4350 49 245000 0.1 0 -48.9 0)
750.0 (274,750.0
PE 4400 55.1 275500 0.15 0 -54.95 0)
40,000.0 (485,000.0
PE 4450 105 525000 8 0 -97 0)
1,500.0 (363,750.0
PE 4500 73.1 365250 0.3 0 -72.75 0)
2,500.0 (447,500.0
PE 4550 90 450000 0.5 0 -89.5 0)
250.0 (494,750.0
PE 4600 99 495000 0.05 0 -98.95 0)
250.0 (644,250.0
PE 4650 129 644500 0.05 0 -128.85 0)
500.0 (629,500.0
PE 4700 126 630000 0.1 0 -125.9 0)
250.0 (699,750.0
PE 4750 140 700000 0.05 0 -139.95 0)
750.0 (804,250.0
PE 4800 161 805000 0.15 0 -160.85 0)
1,250.0 (901,250.0
PE 4850 181 902500 0.25 0 -180.25 0)
500.0 (1,054,500.0
PE 4900 211 1055000 0.1 0 -210.9 0)
PE 4950 0 0 0 - 0 -
17,250.0 (1,337,750.0
PE 5000 271 1355000 3.45 0 -267.55 0)
PE 5050 0 0 0 - 0 -
494,750.0 (1,205,250.0
PE 5100 340 1700000 98.95 0 -241.05 0)
PE 5150 0 0 0 - 0 -
1,000,000.0 (1,170,000.0
PE 5200 434 2170000 200 0 -234 0)
PE 5250 0 0 0 - 0 -
1,477,250.0 (1,272,750.0
PE 5300 550 2750000 295.45 0 -254.55 0)
PE 5350 0 0 0 - 0 -
2,015,000.0 (960,000.0
PE 5400 595 2975000 403 0 -192 0)
PE 5450 0 0 0 - 0 -
2,501,000.0 (994,000.0
PE 5500 699 3495000 500.2 0 -198.8 0)
PE 5550 0 0 0 - 0 -
3,000,000.0 (1,005,000.0
PE 5600 801 4005000 600 0 -201 0)
PE 5650 0 0 0 - 0 -
PE 5700 888 4440000 700.3 3,501,500.0 -187.7 (938,500.0
74
0 0)
135 3,760,000.0 (2,990,000.0
PE 5750 0 6750000 752 0 -598 0)
75
ANALYSIS THROUGH CAPM MODEL AND RISK CALCULATION
Characteristic Regression Line (CRL) Analysis

Formula Used
n∑XY-(∑x)(∑y)
β= σ= √(∑P[ri-E(r)]²)
n∑X²-(∑X)²
α= Ȳ-βX̄ Variance = σ²
Pt-Pt-1 n∑XY-(∑X)(∑Y)
R= r=
Pt-1 √(n∑X²-(∑X)²)√(n∑Y²-(∑Y)²)
Pi Variation = r²
P/E Ratio =
EPS
Where
β = Risk Factor
α = Intercept
σ = Standard Deviation
σ² = Variance
R = Security Return
P/E Ratio = Price earnings Ratio
r = Correlation Coefficient
r² = Variation
76
HCL
Beta (β), Security Return (Ri), and Correlation (r) Calculation
Index Stock
S No. Date NIFTY HCL reten(X) X² return(Y) Y² X*Y
1-Apr-08 4739.55 246.3
1 2-Apr-08 4754.2 247 0.3091 0.0955 0.2842 0.0808 0.0878
249.8
2 3-Apr-08 4771.6 5 0.3660 0.1340 1.1538 1.3314 0.4223
3 4-Apr-08 4647 244.9 -2.6113 6.8188 -1.9812 3.9251 5.1734
244.5
4 7-Apr-08 4761.2 5 2.4575 6.0393 -0.1429 0.0204 -0.3512
238.6
5 8-Apr-08 4709.65 5 -1.0827 1.1723 -2.4126 5.8206 2.6121
6 9-Apr-08 4747.05 239 0.7941 0.6306 0.1467 0.0215 0.1165
7 10-Apr-08 4733 236.6 -0.2960 0.0876 -1.0042 1.0084 0.2972
8 11-Apr-08 4777.8 230.4 0.9465 0.8959 -2.6205 6.8668 -2.4804
9 15-Apr-08 4879.65 245 2.1317 4.5443 6.3368 40.1551 13.5084
10 16-Apr-08 4887.3 260.5 0.1568 0.0246 6.3265 40.0250 0.9918
11 17-Apr-08 4958.4 269.6 1.4548 2.1164 3.4933 12.2030 5.0820
12 21-Apr-08 5037 274.3 1.5852 2.5128 1.7433 3.0392 2.7635
263.6
13 22-Apr-08 5049.3 5 0.2442 0.0596 -3.8826 15.0747 -0.9481
262.4
14 23-Apr-08 5022.8 5 -0.5248 0.2754 -0.4551 0.2072 0.2389
15 24-Apr-08 4999.85 254.1 -0.4569 0.2088 -3.1816 10.1223 1.4537
16 25-Apr-08 5111.7 260.7 2.2371 5.0045 2.5974 6.7465 5.8106
17 28-Apr-08 5089.65 265.4 -0.4314 0.1861 1.8028 3.2502 -0.7777
18 29-Apr-08 5195.5 286.9 2.0797 4.3252 8.1010 65.6259 16.8477
288.4
19 30-Apr-08 5165.9 5 -0.5697 0.3246 0.5403 0.2919 -0.3078
sum= 8.7899 35.4563 16.8455 215.8159 50.5408
Beta(β)= 1.3618 Stock Return= 9.00%

Alfa(α)= 0.2566 ̄
X= 0.4626 ̄
y= 0.8866
Standard Error(e)= 0.02666 Beta*X= ̄ 0.6300
Percentage
Stock Return(R)= 0.41 Correlation(r)= 0.56 Variation(r²)= 31.57
Expected Return= 0.84
77
78
Calculation For Standard Deviation And Expected Stock Return
Standard Deviation For Stock Expected Standard Deviation for Index
1.30 1.69 0.05 0.08 Return -140.1 19628.01 0.05 981.40
-
2.00 4.00 0.05 0.20 0.01 125.45 15737.70 0.05 786.89
-
4.85 23.52 0.05 1.18 0.06 108.05 11674.80 0.05 583.74
-
-0.10 0.01 0.05 0.00 -0.10 232.65 54126.02 0.05 2706.30
-
-0.45 0.20 0.05 0.01 -0.01 118.45 14030.40 0.05 701.52
-6.35 40.32 0.05 2.02 -0.12 -170 28900.00 0.05 1445.00
-6.00 36.00 0.05 1.80 0.01 -132.6 17582.76 0.05 879.14
-
-8.40 70.56 0.05 3.53 -0.05 146.65 21506.22 0.05 1075.31
-
14.6 -
0 213.16 0.05 10.66 -0.13 101.85 10373.42 0.05 518.67
0.00 0.00 0.05 0.00 0.32 0 0.00 0.05 0.00
15.5
0 240.25 0.05 12.01 0.32 7.65 58.52 0.05 2.93
24.6
0 605.16 0.05 30.26 0.17 78.75 6201.56 0.05 310.08
29.3
0 858.49 0.05 42.92 0.09 157.35 24759.02 0.05 1237.95
18.6
5 347.82 0.05 17.39 -0.19 169.65 28781.12 0.05 1439.06
17.4
5 304.50 0.05 15.23 -0.02 143.15 20491.92 0.05 1024.60
9.10 82.81 0.05 4.14 -0.16 120.2 14448.04 0.05 722.40
15.7
0 246.49 0.05 12.32 0.13 232.05 53847.20 0.05 2692.36
20.4
0 416.16 0.05 20.81 0.09 210 44100.00 0.05 2205.00
41.9
0 1755.61 0.05 87.78 0.41 315.85 99761.22 0.05 4988.06
43.4
5 1887.90 0.05 94.40 0.03 286.25 81939.06 0.05 4096.95
356.7
3 0.84 28397.35
Variance= 356.73 Variance= 28397.35
18.89
SD= % SD= 168.52%
79
INFOSYS
Index Stock
Date NIFTY Infosys reten(X) X*X return(Y) Y*Y X*Y
S No.
4739.5 1423.0
1-Apr-08 5 5
1 2-Apr-08 4754.2 1482.8 0.3091 0.0955 4.1987 17.6293 1.2978
2 3-Apr-08 4771.6 1522.5 0.3660 0.1340 2.6774 7.1683 0.9799
1485.4
3 4-Apr-08 4647 5 -2.6113 6.8188 -2.4335 5.9219 6.3546
1492.0
4 7-Apr-08 4761.2 5 2.4575 6.0393 0.4443 0.1974 1.0919
4709.6 1466.9
5 8-Apr-08 5 5 -1.0827 1.1723 -1.6822 2.8300 1.8214
4747.0 1479.9
6 9-Apr-08 5 5 0.7941 0.6306 0.8862 0.7853 0.7037
7 10-Apr-08 4733 1452.6 -0.2960 0.0876 -1.8480 3.4152 0.5470
8 11-Apr-08 4777.8 1421.9 0.9465 0.8959 -2.1135 4.4667 -2.0005
4879.6
9 15-Apr-08 5 1510.4 2.1317 4.5443 6.2241 38.7390 13.2681
10 16-Apr-08 4887.3 1600.2 0.1568 0.0246 5.9454 35.3483 0.9321
11 17-Apr-08 4958.4 1659.1 1.4548 2.1164 3.6808 13.5482 5.3548
12 21-Apr-08 5037 1645.8 1.5852 2.5128 -0.8016 0.6426 -1.2707
13 22-Apr-08 5049.3 1598.6 0.2442 0.0596 -2.8679 8.2249 -0.7003
1647.9
14 23-Apr-08 5022.8 5 -0.5248 0.2754 3.0871 9.5300 -1.6202
4999.8 1696.0
15 24-Apr-08 5 5 -0.4569 0.2088 2.9188 8.5193 -1.3336
16 25-Apr-08 5111.7 1684.3 2.2371 5.0045 -0.6928 0.4800 -1.5498
5089.6 1663.6
17 28-Apr-08 5 5 -0.4314 0.1861 -1.2260 1.5031 0.5289
1749.5
18 29-Apr-08 5195.5 5 2.0797 4.3252 5.1633 26.6601 10.7383
19 30-Apr-08 5165.9 1753.1 -0.5697 0.3246 0.2029 0.0412 -0.1156
sum= 8.7899 35.4563 21.7634 185.6509 35.0275
Beta = 0.7951 Stock Return= 9.00%

Alfa = 0.7776 ̄
X= 0.4626 ̄
y= 1.1454
0.0266
Standard Error(e)= 6 ̄
Beta*X= 0.3679
Percentage 0.13683304
Stock Return(R)= 0.88 Correlation(r)= 0.369909511 Variation(r*r)= 6
80
-87.35 7630.02 0.05 381.50 Return -140.1 19628.01 0.05 981.40
-
125.4
-27.60 761.76 0.05 38.09 0.21 5 15737.70 0.05 786.89
-
108.0
12.10 146.41 0.05 7.32 0.13 5 11674.80 0.05 583.74
-
232.6
-24.95 622.50 0.05 31.13 -0.12 5 54126.02 0.05 2706.30
-
118.4
-18.35 336.72 0.05 16.84 0.02 5 14030.40 0.05 701.52
-43.45 1887.90 0.05 94.40 -0.08 -170 28900.00 0.05 1445.00
-30.45 927.20 0.05 46.36 0.04 -132.6 17582.76 0.05 879.14
-
146.6
-57.80 3340.84 0.05 167.04 -0.09 5 21506.22 0.05 1075.31
-
101.8
-88.50 7832.25 0.05 391.61 -0.11 5 10373.42 0.05 518.67
0.00 0.00 0.05 0.00 0.31 0 0.00 0.05 0.00
89.80 8064.04 0.05 403.20 0.30 7.65 58.52 0.05 2.93
148.7
0 22111.69 0.05 1105.58 0.18 78.75 6201.56 0.05 310.08
135.4 157.3
0 18333.16 0.05 916.66 -0.04 5 24759.02 0.05 1237.95
169.6
88.20 7779.24 0.05 388.96 -0.14 5 28781.12 0.05 1439.06
137.5 143.1
5 18920.00 0.05 946.00 0.15 5 20491.92 0.05 1024.60
185.6
5 34465.92 0.05 1723.30 0.15 120.2 14448.04 0.05 722.40
173.9 232.0
0 30241.21 0.05 1512.06 -0.03 5 53847.20 0.05 2692.36
153.2
5 23485.56 0.05 1174.28 -0.06 210 44100.00 0.05 2205.00
239.1 315.8
5 57192.72 0.05 2859.64 0.26 5 99761.22 0.05 4988.06
242.7 286.2
0 58903.29 0.05 2945.16 0.01 5 81939.06 0.05 4096.95
15149.1
2 1.09 28397.35
15149.1 28397.3
Variance= 2 Variance= 5
SD= 123.08% SD= 168.52%
81
SATYAM
Satya Index Stock
S No. Date NIFTY m reten(X) X*X return(Y) Y*Y X*Y
1-Apr-08 4739.55 398.9
1 2-Apr-08 4754.2 408.4 0.3091 0.0955 2.3815 5.6718 0.7361
2 3-Apr-08 4771.6 430.1 0.3660 0.1340 5.3134 28.2324 1.9447
3 4-Apr-08 4647 424.55 -2.6113 6.8188 -1.2904 1.6651 3.3696
4 7-Apr-08 4761.2 432.45 2.4575 6.0393 1.8608 3.4626 4.5729
5 8-Apr-08 4709.65 430.4 -1.0827 1.1723 -0.4740 0.2247 0.5133
6 9-Apr-08 4747.05 427.2 0.7941 0.6306 -0.7435 0.5528 -0.5904
7 10-Apr-08 4733 423.3 -0.2960 0.0876 -0.9129 0.8334 0.2702
8 11-Apr-08 4777.8 433 0.9465 0.8959 2.2915 5.2511 2.1690
9 15-Apr-08 4879.65 451.25 2.1317 4.5443 4.2148 17.7644 8.9848
10 16-Apr-08 4887.3 453.5 0.1568 0.0246 0.4986 0.2486 0.0782
11 17-Apr-08 4958.4 468.9 1.4548 2.1164 3.3958 11.5315 4.9402
12 21-Apr-08 5037 459 1.5852 2.5128 -2.1113 4.4577 -3.3468
13 22-Apr-08 5049.3 435.65 0.2442 0.0596 -5.0871 25.8791 -1.2422
14 23-Apr-08 5022.8 430.55 -0.5248 0.2754 -1.1707 1.3705 0.6144
15 24-Apr-08 4999.85 439.75 -0.4569 0.2088 2.1368 4.5659 -0.9763
16 25-Apr-08 5111.7 444.7 2.2371 5.0045 1.1256 1.2671 2.5181
17 28-Apr-08 5089.65 443.1 -0.4314 0.1861 -0.3598 0.1295 0.1552
18 29-Apr-08 5195.5 479.3 2.0797 4.3252 8.1697 66.7442 16.9906
19 30-Apr-08 5165.9 482.65 -0.5697 0.3246 0.6989 0.4885 -0.3982
sum= 8.7899 35.4563 19.9378 180.3407 41.3033

Alfa = 0.5766 ̄
X= 0.4626 ̄
y= 1.0494
Percentage
Stock Return(R)= 0.70 Correlation(r)= 0.478586893 Variation(r*r)= 0.229045414

82
-
52.3 137.0 Return
5 2740.52 0.05 3 -140.1 19628.01 0.05 981.40
- -
42.8 125.4
5 1836.12 0.05 91.81 0.12 5 15737.70 0.05 786.89
- -
21.1 108.0
5 447.32 0.05 22.37 0.27 5 11674.80 0.05 583.74
- -
26.7 232.6
0 712.89 0.05 35.64 -0.06 5 54126.02 0.05 2706.30
- -
18.8 118.4
0 353.44 0.05 17.67 0.09 5 14030.40 0.05 701.52
-
20.8
5 434.72 0.05 21.74 -0.02 -170 28900.00 0.05 1445.00
-
24.0
5 578.40 0.05 28.92 -0.04 -132.6 17582.76 0.05 879.14
- -
27.9 146.6
5 781.20 0.05 39.06 -0.05 5 21506.22 0.05 1075.31
- -
18.2 101.8
5 333.06 0.05 16.65 0.11 5 10373.42 0.05 518.67
0.00 0.00 0.05 0.00 0.21 0 0.00 0.05 0.00
2.25 5.06 0.05 0.25 0.02 7.65 58.52 0.05 2.93
17.6
5 311.52 0.05 15.58 0.17 78.75 6201.56 0.05 310.08
157.3
7.75 60.06 0.05 3.00 -0.11 5 24759.02 0.05 1237.95
-
15.6 169.6
0 243.36 0.05 12.17 -0.25 5 28781.12 0.05 1439.06
-
20.7 143.1
0 428.49 0.05 21.42 -0.06 5 20491.92 0.05 1024.60
-
11.5
0 132.25 0.05 6.61 0.11 120.2 14448.04 0.05 722.40
232.0
-6.55 42.90 0.05 2.15 0.06 5 53847.20 0.05 2692.36
-8.15 66.42 0.05 3.32 -0.02 210 44100.00 0.05 2205.00
28.0 315.8
5 786.80 0.05 39.34 0.41 5 99761.22 0.05 4988.06
31.4 286.2
0 985.96 0.05 49.30 0.03 5 81939.06 0.05 4096.95
564.0
3 1.00 28397.35
28397.3
Variance= 564.03 Variance= 5
23.75
SD= % SD= 168.52%
83
TCS
Index Stock
Date NIFTY TCS reten(X) X*X return(Y) Y*Y X*Y
S No.
832.3
1-Apr-08 4739.55 5
851.2
1 2-Apr-08 4754.2 5 0.3091 0.0955 2.2707 5.1560 0.7019
2 3-Apr-08 4771.6 885.4 0.3660 0.1340 4.0117 16.0941 1.4683
3 4-Apr-08 4647 872.9 -2.6113 6.8188 -1.4118 1.9932 3.6866
4 7-Apr-08 4761.2 904.1 2.4575 6.0393 3.5743 12.7756 8.7838
887.3
5 8-Apr-08 4709.65 5 -1.0827 1.1723 -1.8527 3.4324 2.0059
876.2
6 9-Apr-08 4747.05 5 0.7941 0.6306 -1.2509 1.5648 -0.9934
899.5
7 10-Apr-08 4733 5 -0.2960 0.0876 2.6591 7.0706 -0.7870
8 11-Apr-08 4777.8 908 0.9465 0.8959 0.9394 0.8824 0.8891
974.1
9 15-Apr-08 4879.65 5 2.1317 4.5443 7.2852 53.0748 15.5302
10 16-Apr-08 4887.3 971.9 0.1568 0.0246 -0.2310 0.0533 -0.0362
1000.
11 17-Apr-08 4958.4 9 1.4548 2.1164 2.9838 8.9033 4.3409
12 21-Apr-08 5037 993.4 1.5852 2.5128 -0.7493 0.5615 -1.1878
13 22-Apr-08 5049.3 887.2 0.2442 0.0596 -10.6906 114.2880 -2.6106
889.1
14 23-Apr-08 5022.8 5 -0.5248 0.2754 0.2198 0.0483 -0.1154
890.7
15 24-Apr-08 4999.85 5 -0.4569 0.2088 0.1799 0.0324 -0.0822
16 25-Apr-08 5111.7 889.3 2.2371 5.0045 -0.1628 0.0265 -0.3642
17 28-Apr-08 5089.65 881.7 -0.4314 0.1861 -0.8546 0.7303 0.3686
910.5
18 29-Apr-08 5195.5 5 2.0797 4.3252 3.2721 10.7066 6.8050
19 30-Apr-08 5165.9 921 -0.5697 0.3246 1.1477 1.3171 -0.6538
sum= 8.7899 35.4563 11.3401 238.7112 37.7498

Alfa = 0.1178 ̄
X= 0.4626 ̄
y= 0.5968
Percentage
Stock Return(R)= 0.24 Correlation(r)= 0.393330066 Variation(r*r)= 0.154708541
84
85
Standard Deviation For Stock Standard Deviation for Index
- Expected
141.8 1005.3 Return
0 20107.24 0.05 6 -140.1 19628.01 0.05 981.40
- -
122.9 125.4
0 15104.41 0.05 755.22 0.11 5 15737.70 0.05 786.89
-
108.0
-88.75 7876.56 0.05 393.83 0.20 5 11674.80 0.05 583.74
- -
101.2 232.6
5 10251.56 0.05 512.58 -0.07 5 54126.02 0.05 2706.30
-
118.4
-70.05 4907.00 0.05 245.35 0.18 5 14030.40 0.05 701.52
-86.80 7534.24 0.05 376.71 -0.09 -170 28900.00 0.05 1445.00
-97.90 9584.41 0.05 479.22 -0.06 -132.6 17582.76 0.05 879.14
-
146.6
-74.60 5565.16 0.05 278.26 0.13 5 21506.22 0.05 1075.31
-
101.8
-66.15 4375.82 0.05 218.79 0.05 5 10373.42 0.05 518.67
0.00 0.00 0.05 0.00 0.36 0 0.00 0.05 0.00
-2.25 5.06 0.05 0.25 -0.01 7.65 58.52 0.05 2.93
26.75 715.56 0.05 35.78 0.15 78.75 6201.56 0.05 310.08
157.3
19.25 370.56 0.05 18.53 -0.04 5 24759.02 0.05 1237.95
169.6
-86.95 7560.30 0.05 378.02 -0.53 5 28781.12 0.05 1439.06
143.1
-85.00 7225.00 0.05 361.25 0.01 5 20491.92 0.05 1024.60
-83.40 6955.56 0.05 347.78 0.01 120.2 14448.04 0.05 722.40
232.0
-84.85 7199.52 0.05 359.98 -0.01 5 53847.20 0.05 2692.36
-92.45 8547.00 0.05 427.35 -0.04 210 44100.00 0.05 2205.00
315.8
-63.60 4044.96 0.05 202.25 0.16 5 99761.22 0.05 4988.06
286.2
-53.15 2824.92 0.05 141.25 0.06 5 81939.06 0.05 4096.95
6537.7
4 0.57 28397.35
6537.7 28397.3
Variance= 4 Variance= 5
SD= 80.86% SD= 168.52%
86
WIPRO
Index Stock
S No. Date NIFTY Wipro reten(X) X*X return(Y) Y*Y X*Y
1-Apr-08 4739.55 409.4
1 2-Apr-08 4754.2 415.25 0.3091 0.0955 1.4289 2.0418 0.4417
2 3-Apr-08 4771.6 436.35 0.3660 0.1340 5.0813 25.8194 1.8597
3 4-Apr-08 4647 414.9 -2.6113 6.8188 -4.9158 24.1649 12.8365
4 7-Apr-08 4761.2 434.65 2.4575 6.0393 4.7602 22.6593 11.6981
5 8-Apr-08 4709.65 413.9 -1.0827 1.1723 -4.7740 22.7907 5.1688
6 9-Apr-08 4747.05 410.95 0.7941 0.6306 -0.7127 0.5080 -0.5660
7 10-Apr-08 4733 407.25 -0.2960 0.0876 -0.9004 0.8106 0.2665
8 11-Apr-08 4777.8 405.5 0.9465 0.8959 -0.4297 0.1847 -0.4067
9 15-Apr-08 4879.65 423.9 2.1317 4.5443 4.5376 20.5899 9.6730
10 16-Apr-08 4887.3 447.3 0.1568 0.0246 5.5202 30.4723 0.8654
11 17-Apr-08 4958.4 459.25 1.4548 2.1164 2.6716 7.1374 3.8866
12 21-Apr-08 5037 454.8 1.5852 2.5128 -0.9690 0.9389 -1.5360
13 22-Apr-08 5049.3 431.2 0.2442 0.0596 -5.1891 26.9267 -1.2671
14 23-Apr-08 5022.8 443.15 -0.5248 0.2754 2.7713 7.6803 -1.4545
15 24-Apr-08 4999.85 449.7 -0.4569 0.2088 1.4781 2.1846 -0.6753
16 25-Apr-08 5111.7 466.35 2.2371 5.0045 3.7025 13.7083 8.2827
17 28-Apr-08 5089.65 458.1 -0.4314 0.1861 -1.7691 3.1296 0.7631
18 29-Apr-08 5195.5 478.9 2.0797 4.3252 4.5405 20.6161 9.4429
19 30-Apr-08 5165.9 488.75 -0.5697 0.3246 2.0568 4.2304 -1.1718
sum= 8.7899 35.4563 18.8892 236.5937 58.1075

Alfa = 0.2666 ̄
X= 0.4626 ̄
y= 0.9942
Percentage
Stock Return(R)= 0.43 Correlation(r)= 0.62099584 Variation(r²)= 0.38563583
87
Standard Deviation For Stock Standard Deviation for Index
- Expected
14.5 Return
0 210.25 0.05 10.51 -140.1 19628.01 0.05 981.40
-
125.4
-8.65 74.82 0.05 3.74 0.07 5 15737.70 0.05 786.89
-
12.4 108.0
5 155.00 0.05 7.75 0.25 5 11674.80 0.05 583.74
-
232.6
-9.00 81.00 0.05 4.05 -0.25 5 54126.02 0.05 2706.30
-
10.7 118.4
5 115.56 0.05 5.78 0.24 5 14030.40 0.05 701.52
-
10.0
0 100.00 0.05 5.00 -0.24 -170 28900.00 0.05 1445.00
-
12.9
5 167.70 0.05 8.39 -0.04 -132.6 17582.76 0.05 879.14
- -
16.6 146.6
5 277.22 0.05 13.86 -0.05 5 21506.22 0.05 1075.31
- -
18.4 101.8
0 338.56 0.05 16.93 -0.02 5 10373.42 0.05 518.67
0.00 0.00 0.05 0.00 0.23 0 0.00 0.05 0.00
23.4
0 547.56 0.05 27.38 0.28 7.65 58.52 0.05 2.93
35.3
5 1249.62 0.05 62.48 0.13 78.75 6201.56 0.05 310.08
30.9 157.3
0 954.81 0.05 47.74 -0.05 5 24759.02 0.05 1237.95
169.6
7.30 53.29 0.05 2.66 -0.26 5 28781.12 0.05 1439.06
19.2 143.1
5 370.56 0.05 18.53 0.14 5 20491.92 0.05 1024.60
25.8
0 665.64 0.05 33.28 0.07 120.2 14448.04 0.05 722.40
42.4 232.0
5 1802.00 0.05 90.10 0.19 5 53847.20 0.05 2692.36
34.2
0 1169.64 0.05 58.48 -0.09 210 44100.00 0.05 2205.00
55.0 151.2 315.8
0 3025.00 0.05 5 0.23 5 99761.22 0.05 4988.06
64.8 210.2 286.2
5 4205.52 0.05 8 0.10 5 81939.06 0.05 4096.95
778.1
9 0.94 28397.35
28397.3
Variance= 778.19 Variance= 5
27.90
SD= % SD= 168.52%
88
Conclusion
All stocks can be analyzed and there relative study can be done using β (Risk Factor), α
(Intercept), σ (Standard Deviation), σ² (Variance), R (Security Return), P/E Ratio (Price
earnings Ratio), r (Correlation Coefficient), and r² (Variation).

P/E Ratio was the primary ratio on which basis analysis of the company is done,
Standard Deviation for the shortlisted companies was compared, after that analysis
Retunes of the respective company was compared and lastly short listing of company
was completed after comparing there respective Risks.
Further detailed study of market can be done using these ratios. Relative study can be
done to see, in which stock investor must invest, so there is minimum risk in investment
in particular stock/segment.
These ratios also help in industry analysis and in predicting market future, according to
the performance of the company. News about the company and the segment in which
company/industry is operating are also helpful in predicting company future and there
return.
Financial modeling is one of the very helpful tool in evaluating all these ratios and
industry analysis can also be done very easily. Speculation might not be helpful every
time, most of the time losses occur because of these speculations done by people. Stock
market is one of the most volatile market and have very high risk in investment. Industry
analysis and ratios comparison is very important and essential tool for every investor, so
that the risk involved can be identified and accordingly investment decision is made so
that risk will be minimized
89
BIBLIOGRAPHY
Web sites
• www.nseindia.com
• www.bseindia.com
• www.ncdex.com
• www.navindia.com
• www.irda.org
• www.appliedderivatives.com
• www.sec.gov.us
• www.sebi.gov.in
• www.rbi.org.in
• www.icicidirect.com -Derivatives study material.
• www.moneypore.com
• www. myiris.com
• www. personalfu.com
• www.invesopcdia.com
• www.equitymastel"s.com
90
• www.hdfcsec.com
• www.5paisa.com
• www.sharkhan.com
• www.derivativeindia.com
• www.mutualfundsnet.com
• www.investmentnews.com
• www.fedelity.com
• www.franklinindia.com
• www.reliancemutualfund.com
• www.economictimes.com
• www.businesstimes.com
91
BOOKS
• “Derivative” by National Stock Exchange
• “Financial Management” by Khan & Jain
• Indian Capital Market by V A Avadhani
• Indian Financial System by H R Machiraju, Vikas

Publication
• Financial Institutions Markets by LM Bhole
• Managing Financial Institutions by Srivastava
• Indian Financial System by Vasant Desai
• National Stock Exchange by R H Patil
• Financial Institutions Markets by Scott
92
News papers and finance periodicals like
• The Economic times
• Business line
• Financial Express
• The mint
• Business express
93

Hedging Risk Through Derivatives and Portfolio Management

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Dissertation Synopsis

HEDGING RISK THROUGH DERIVATIVES

SAHIBZABA AJIT SINGH INSTITUTE OF

CHAPTER NUMBER SUBJECT PAGE NUMBER

3 RESEARCH METHODOLOGY 6-8

4 CRITICAL REVIEW OF LITERATURE 10-43

5.0 Port folio And Portfolio Management

6.0 BIBLIOGRAPHY 87-89

Fundamental Research – it is concerned with the generalization and with the

Quantitative Research – it is based on the measurement of the quantity or amount. It is

Various steps involved in research done on Derivatives, Stock Market, understanding of

• Report is made from secondary data only.

• Approximate but not true figures are available

Significance of the movements

PRIMARY AND SECONDARY MARKETS

1. The promoter company has a 3 years consistent record of profitable working.

Risks Involved In Stock Market

3. You can Hedge Inflation with Stocks.

4. Young People can afford to take High Risk.

CAPITAL GAIN / LOSS

DEFERRED INCOME TAXES

FIXED MATURITY PLAN

INITIAL PUBLIC OFFERING

SHORT-TERM / LONG TERM CAPITAL GAIN / LOSS

SEBI (Securities and Exchange Board of India)

The basic objectives of the Board were identified as:

• It acts as a barometer for market behavior;

Two broad approaches of

NSE (National Stock Exchange)

BSE (Bombay Stock Exchange)

BSE - Other Indices

Initial Public Offerings

Book Building – Glossary

Book Running Lead Manager

Demat Form of Shares

Difference Between A Broker And A DP

What are derivatives?

Speculation and Arbitrage

Pricing and Information Sharing

Playing with futures

Long security, sell futures

Short security, buy futures

Playing with options

Buy puts when market is expected to fall

Sell puts when market is rising

Portfolio and portfolio management

Asset vs. Risk Allocation

Differences in Asset Allocation and Risk Allocation

Asset allocation Risk allocation

Advantages of Risk Allocation

Or, as shown by Coleman & Siegel (2000), M2 could be written as:

Stock Market Ratios

HCL Infosys TCS Wipro

Graph for year 2007

Date Open High Low Close %

Graph for year 2007

Date Open High Low Close

Date Open High Low Close

Date Open High Low Close

24/04/2008 29/05/2008 50 100 5,000

Settelment Date Lot Size No. of Lot No. of shares

Settelment Date Lot Size No. of Lot No. of shares

Date Closing Price MTM G/L Daily Account Status