Professional Documents
Culture Documents
Submitted By
Sowmya T P
Registration Number:
07XQCM6107
.
under the guidance of Prof. Sathyanarayana This has not been submitted earlier to
Place: Bangalore
Date: Sowmya T P
GUIDE’S CERTIFICATE
1 INTRODUCTION 3-17
Literature review
Methodology
Plan Of Analysis
Chapter scheme
AND CONCLUSIONS
ANNEXURE
BIBLOGRAPHY 100
24 Calculation of Risk, Return & Beta of TATA POWER CO. LTD 82-84
30 Table & Chart Showing Average return of selected Equity scrips 91-92
In the current economic scenario interest rates are falling and fluctuation in the
share market has put investors in confusion. One finds it difficult to take decision
on investment. This is primarily, because of investments are risky in nature and
investors have to consider various factors before investing in investment avenues.
These factors include risk, return, volatility of shares and liquidity. The main
objective of comparing investment in equity shares with mutual fund schemes is to
analyze the performance of mutual funds with their benchmark and comparing them
with equities by using risk, return, beta and alpha as a parameter.
Historical data were taken for calculating risk, return, alpha and beta. Analysis has
done on percentage method for comparing equity shares with mutual fund schemes.
Compared to equities, mutual funds are less risky with stable returns and mutual
funds give the investor a diversified portfolio.
Those who have well knowledge in equity market they can go for equity
investments rather that investing in mutual funds because no control on the
expenses made by the fund manager.
The study will guide the new investor who wants to invest in equity and mutual
fund schemes by providing knowledge about how to measure the risks and return of
particular scrip or mutual fund scheme. The study recommends new investors to go
for mutual funds rather than equities, because of high risk and market instability.
Issue of shares is the most important method of raising capital. Finance raised by
the issue of shares serves as a financial floor to the company’s capital structure.
Shares indicate the ownership or equity interest in the assets of the company. Shares
are of different nominal or face values and of different kinds to attract different
kinds of investors. The maximum amount of capital to be raised by the issue of
shares is mentioned in the memorandum of association.
During 1990-91 and 1991-92, equity accounts for 35 to 39 percent of the total
capital raised respectively. This proportion was reversed in 1992-93, the first year
of free pricing, when the share of equity increased to 62 percent. The share of
equity finance increased to a high of 73.18 percent in 1994-95. However, in 1995-
96 there is a rise in the importance of debt largely due to the high interest rates in
the economy and negative returns from the secondary market.
The mutual fund industry in India started in 1964 with the formation of Unit Trust
of India, at the initiative of the Government of India. The 1993 SEBI Regulations
were substituted by a more comprehensive and revised Mutual Fund Regulations in
1996.
The end of millennium marks 36 years of existence of mutual funds in this country.
The ride through these 36 years is not been smooth. Investor opinion is still divided.
While some are for mutual funds others are against it. UTI commenced its
operations from July 1964. The impetus for establishing a formal institution came
from the desire to increase the propensity of the middle and lower groups to save
and to invest. UTI came in to existence during a period marked by great political
and economic turmoil that depressed the financial market; entrepreneurs were rather
hesitant to enter the capital markets.
The term Equity literally means the stock or ownership of a company. They are also
known as ordinary shares. The rate of dividend on equity shares varies according to
the amount of profit available and the intention of board of directors. In the event of
winding up of the company, equity shares can be refunded only after all other
claims, including those of preference shares for the refund of their capital, have
been met.
The Equity Capital Markets Group (ECM) oversees the Firm's activities in the
primary equity and equity-linked markets, as well as monetization and equity
derivatives. It provides support in the origination of primary market transactions
and manages their structuring, syndication, marketing and distribution.
The world over, it s been shown that over long tenures, equities with their risk
premia have provided approximately 7 percentage points higher returns than risk-
free options. People have to accumulate significant amounts of wealth during their
working years. Right now, a 17-year bond gives you only 5.5 per cent. So, it is
imperative that these people have some exposure to equity.
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments. Investments may be in stocks, bonds, money market securities or some
combination of these. Those securities are professionally managed on behalf of the
shareholders, and each investor holds a pro rata share of the portfolio -- entitled to
any profits when the securities are sold, but subject to any losses in value as well.
For the individual investor, mutual funds provide the benefit of having someone
else manage your investments, take care of recordkeeping for your account, and
diversify your rupees over many different securities that may not be available or
affordable to you otherwise. Today, minimum investment requirements on many
funds are low enough that even the smallest investor can get started in mutual
funds.
A mutual fund, by its very nature, is diversified -- its assets are invested in many
different securities. Beyond that, there are many different types of mutual funds
with different objectives and levels of growth potential, furthering your chances to
diversify.
Many critics of mutual funds point out that scarcely over 20% of mutual funds
outperform the Standard and Poor's 500 Index. This means that nearly 80% of the
time, an investor would have been more profitable by simply buying equal shares in
all 500 of the companies currently on the S&P 500.
The flow chart below describes broadly the working of a mutual fund:
The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India, at the initiative of the Government of India and Reserve Bank the. The
history of mutual funds in India can be broadly divided into four distinct phases
1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87),
Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89),
Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its
mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.
With the entry of private sector funds in 1993, a new era started in the
Indian mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations came
into being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual
funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with
Rs.44,541 crores of assets under management was way ahead of other mutual funds.
In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs.29,835 crores as at the
end of January 2003, representing broadly, the assets of US 64 scheme, assured
return and certain other schemes. The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than
Rs.76,000 crores of assets under management and with the setting up of a UTI
Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent
mergers taking place among different private sector funds, the mutual fund industry
has entered its current phase of consolidation and growth.
Open-ended Scheme:
An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity
period. Investors can conveniently buy and sell units at Net Asset Value (NAV)
related prices which are declared on a daily basis. The key feature of open-end
schemes is liquidity.
Close-ended Scheme:
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time of launch of
the scheme. Investors can invest in the scheme at the time of the initial public issue
and thereafter they can buy or sell the units of the scheme on the stock exchanges
where the units are listed. In order to provide an exit route to the investors, some
close-ended funds give an option of selling back the units to the mutual fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that
at least one of the two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose
NAV generally on weekly basis.
Balanced Scheme:
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for
moderate growth. They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAV’s of such funds are likely to be less volatile compared to
pure equity funds.
Other Schemes:
Gilt Fund:
These funds invest exclusively in government securities. Government securities
have no default risk. NAV’s of these schemes also fluctuate due to change in
interest rates and other economic factors as is the case with income or debt oriented
schemes.
Index Funds:
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSE 50 index (Nifty), etc, these schemes invest in the securities in the
same weightage comprising of an index. NAV’s of such schemes would rise or fall
in accordance with the rise or fall in the index, though not exactly by the same
percentage due to some factors known as tracking error" in technical terms.
Necessary disclosures in this regard are made in the offer document of the mutual
fund scheme.
1.2(ii) Diversification:-
Mutual funds invest in a broad range of securities. This limits investment risk by
reducing the effect of a possible decline in the value of any one security. Mutual
fund shareowners can benefit from diversification techniques usually available only
to investors wealthy enough to buy significant positions in a wide variety of
securities.
1.2(xv) Safekeeping:-
When you own shares in a mutual fund, you own securities in many companies
without having to worry about keeping stock certificates in safe deposit boxes or
sending them by registered mail. You don't even have to worry about handling the
mutual fund stock certificates; the fund maintains your account on its books and
sends you periodic statements keeping track of all your transactions.
1.4(i) No Insurance:-
Mutual funds, although regulated by the government, are not insured against losses.
1.4(ii) Dilution:-
Although diversification reduces the amount of risk involved in investing in mutual
funds, it can also be a disadvantage due to dilution. For example, if a single security
held by a mutual fund doubles in value, the mutual fund itself would not double in
value because that security is only one small part of the fund's holdings. By holding
a large number of different investments, mutual funds tend to do neither
exceptionally well nor exceptionally poorly.
1.4(iv)Poor Performance:-
Returns on a mutual fund are by no means guaranteed. In fact, on average, around
75% of all mutual funds fail to beat the major market indexes, like the S&P 500,
and a growing number of critics now question whether or not professional money
managers have better stock-picking capabilities than the average investor.
1.4(vii) Size:-
Some mutual funds are too big to find enough good investments. This is especially
true of funds that focus on small companies, given that there is strict rules about
how much of a single company a fund may own. If a mutual fund has $5 billion to
invest and is only able to invest an average of $50 million in each, then it needs to
find at least 100 such companies to invest in; as a result, the fund might be forced to
lower its standards when selecting companies to invest in.
In the current economic scenario interest rates are falling and fluctuation in the
share market has put investors in confusion. One finds it difficult to take decision
on investment. This is primarily, because investments are risky in nature and
investors have to consider various factors before investing in investment avenues.
Therefore the study aims to compare equity and mutual fund schemes in form their
risk, return & liquidity and also creating awareness about Equity and Mutual Fund
Schemes among the investors.
This study investigates the manner in which consumers make investment decisions
for mutual funds. Investors report that they consider many nonperformance related
variables. When investors are grouped by similarity of investment decision process,
a single small group appears to be highly knowledgeable about its investments.
However, most investors appear to be naive, having little knowledge of the
investment strategies or financial details of their investments.
i) Hugh Son, “Liberty Mutual Net Falls 92% on Private Equity Loss”,
May 5, 2009
Liberty Mutual Group Inc., the policyholder-owned insurer that purchased Safeco
Corp. last year, said first-quarter profit plunged 92 percent on losses tied to private
equity investments. Net income fell to $28 million from $360 million in the year-
earlier period, the Boston-based company said today in a statement. The company
had a private equity loss of $373 million in the first quarter, compared with a gain
of $60 million a year earlier.
j) Shiyin Chen and Netty Ismail, “Global Crisis ‘Vastly Worse’ Than
1930s, Taleb Says ”, May 7, 2009.
Equity investments are preferable to debt, a contributor to the current financial
crisis, Taleb said. Deflation in an equity bubble will have smaller repercussions for
the global financial system, he added. “Debt pressurizes the system and it has to be
replaced with equity,” he said. “Bonds appear stable but have a lot of hidden risks.
Equity is volatile, but what you see is what you get.”
For the average individual investor, getting good information on stocks and other
investments has never been easy. Furthermore, top analysts are setting up their own
firms (with limited client lists) and moving to hedge funds or other "buy-side"
Saving money is not enough. Each of us also need to invest one’s savings
intelligently in order to have enough money available for funding for one s own
golden years. But the rapidly growing number of investment avenues often lead to
confusion. Objectives of the study are to provide information to individual investors
regarding their risk, and choosing the best investment options to match their goals
and attitude to risk.
1. To compare Equity and Mutual Fund Schemes in respect of their risk & return.
2. Analyzing the performance of equity shares and mutual fund schemes with their
benchmark
3. Finding the Volatility of shares by using beta.
4. Provide information about pros and cons of investing in Equity and Mutual
Funds
Standard Deviation the risk measures -- one with a distinct advantage over beta.
While beta compares a fund's returns with a benchmark, standard deviation
measures how far a fund's recent numbers stray from its long-term average. For
example, if Fund X has a 10% average rate of return and a standard deviation of
5%, most of the time, its return will range from 5% to 15%. A large standard
deviation supposedly shows a more risky fund than a smaller one. But here, again,
what's problematic is your reference point. The number alone doesn't tell you much.
You have to compare one standard deviation with the others among a fund's peers.
A fund is considered stable based on the uniformity of its own monthly returns. So
if it loses money but does so very consistently it can have a very low standard
deviation -- down 3% each and every month wins a standard deviation of zero. And
likewise, a fund that gains 10% one month and 15% the next would be penalized by
a high standard deviation -- a reminder that volatility, although perhaps a cousin to
risk, itself isn't necessarily a bad thing. A measure of the dispersion of a set of data
from its mean. The more spread apart the data, the higher the deviation. Standard
deviation is calculated as the square root of variance. In finance, standard deviation
is applied to the annual rate of return of an investment to measure the investment's
volatility. Standard deviation is also known as historical volatility and is used by
investors as a gauge for the amount of expected volatility.
It gives a brief idea about the benefits available from Equity and Mutual Fund
investment
Type of research:
Type of research is Descriptive research, which is Quantitative in nature.
The whole study can be termed as comparative study of investment in equity shares
and mutual funds. It is purely a quantitative study of available secondary data,
hence; there is no field work and collection of primary data for this research.
Sample size:
Method of sampling is convenience sampling.
Five equity scrips and five mutual fund schemes were selected.
Sample Description:
The study centers on comparing equity and mutual fund schemes in respect of their
risk, return and liquidity. However, with the objective and scope of the study in
mind, it was decided to base the study on return series of selected stocks and mutual
fund schemes.
BSE being the premier exchange of India was chosen for selecting stocks. It is
widely accepted that BSE Sensex is the one of the most reliable index of the stock
exchange that reflects present day market condition. Since it is not possible to
Monthly share price and unit prices of the selected scrip’s and units were collected
from historical data. In order to avoid bias, at least three years monthly data was
decided to be necessary. The reference period is from 1st Apr, 2005 to 31st Mar,
2008.
• The time period for the project was limited to only 90 days and information
provided is limited to the extent of internet and journals.
• The sample size is limited to only five equities and five mutual funds
• The study is limited to compare equity capital and mutual fund schemes in
respect of their risk, return and liquidity.
• The analysis is strictly based on share price and unit price information.
Other company performance indicators are not considered.
Chapter 1: Introduction deals with various aspects of mutual funds and equity
shares
Chapter 2: deals with research design and other important elements pertaining to
design of the study
Chapter 3: company or industry profile
Chapter 4: covers the crux of the research discussion i.e., analysis of data by
calculating risk, return, beta and presentation of the data in tabular column and
graphical representation of the data
Chapter 5: Summary of Findings, Recommendations and conclusions
Annexure
Backward vertical integration has been the cornerstone of the evolution and growth
of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy
of backward vertical integration - in polyester, fibre intermediates, plastics,
petrochemicals, petroleum refining and oil and gas exploration and production - to
be fully integrated along the materials and energy value chain.
The Group's activities span exploration and production of oil and gas, petroleum
refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and
chemicals), textiles, retail and special economic zones.
Reliance enjoys global leadership in its businesses, being the largest polyester yarn
and fibre producer in the world and among the top five to ten producers in the world
in major petrochemical products.The Group exports products in excess of US$ 20
billion to 108 countries in the world. Major Group Companies are Reliance
Industries Limited (including main subsidiaries Reliance Petroleum Limited and
Reliance Retail Limited) and Reliance Industrial Infrastructure Limited.
3.2 BHEL
BHEL manufactures over 180 products under 30 major product groups and caters to
core sectors of the Indian Economy viz., Power Generation & Transmission,
Industry, Transportation, Telecommunication, Renewable Energy, etc. The wide
network of BHEL's 14 manufacturing divisions, four Power Sector regional centres,
over 100 project sites, eight service centres and 18 regional offices, enables the
Company to promptly serve its customers and provide them with suitable products,
systems and services -- efficiently and at competitive prices. The high level of
quality & reliability of its products is due to the emphasis on design, engineering
and manufacturing to international standards by acquiring and adapting some of the
best technologies from leading companies in the world, together with technologies
developed in its own R&D centres.
BHEL's operations are organised around three business sectors, namely Power,
Industry - including Transmission, Transportation, Telecommunication &
Renewable Energy - and Overseas Business. This enables BHEL to have a strong
customer orientation, to be sensitive to his needs and respond quickly to the
changes in the market.
The greatest strength of BHEL is its highly skilled and committed 42,600
employees. Every employee is given an equal opportunity to develop himself and
grow in his career. Continuous training and retraining, career planning, a positive
work culture and participative style of management, all these have engendered
development of a committed and motivated workforce setting new benchmarks in
terms of productivity, quality and responsiveness.
Larsen & Toubro Limited (L&T) is India's largest engineering and construction
conglomerate with additional interests in electricals, electronics and IT. A strong
customer-focussed approach and constant quest for top-class quality have enabled
L&T to attain and sustain leadership position over 6 decades. L&T enjoys a premier
brand image in India and its international presence is on the rise, with a global
spread of over 30 offices and joint ventures with world leaders.
L&T believes that progress must be achieved in harmony with the environment. A
commitment to community welfare and environmental protection are an integral
part of the corporate vision.
Recognized as India’s largest private sector power utility, with a reputation for
trustworthiness, built up over nearly nine decades, Tata Power surges ahead into yet
another year with plans of sustained growth, greater value to consumer and reliable
power supply.
Tata Power has an installed power generation capacity of above 2300 Mega Watts,
with the Mumbai power business, which has a unique mix of Thermal and Hydro
Power, generated at the Thermal Power Station, Trombay, and the Hydro Electric
Power Stations at Bhira, Bhivpuri and Khopoli, accounting for 1797 MW. Its
diverse generation capability facilitates the company in producing low cost energy,
thereby giving its consumers a greater value for money.
Among its many achievements that Tata Power can proudly boast of are the
installation and commissioning of India’s first 500 MW unit (at its Thermal Power
Generating Station, Trombay) the 150 MW Pumped Storage Unit at its Hydro
Generating Station, Bhira, and environmental control systems like the Flue Gas
Desulphurisation plant.
Tata Power has a first of its kind joint venture with Power Grid Corporation of India
for the 1200 km Tala Transmission Project.
To cater to non-resident Indians, HDFC has an office in London and Dubai and
service associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi, Al Khobar, Jeddah
and Riyadh in Saudi Arabia.
At present, the company’s offerings range from hassle-free home loans and deposit
products, to property related services and a training facility. HDFC also offers
specialised financial services to the customer base through partnerships with some
of the best financial institutions worldwide.
• HDFC Bank
• HDFC Mutual Fund
• HDFC Standard Life Insurance Company
• HDFC Sales
• HDFC ERGO General Insurance Company ltd ( formerly HDFC General
Insurance Company Ltd)
The asset manager of Kotak Mahindra mutual fund is Kotak Mahindra Asset
Management Company Limited which is a fully owned subsidiary company of
KotakMahindraBank. Kotak Mahindra Mutual Fund manages the assets of around
434,504 investors in a wide range of schemes. According to estimates of August
2006, Kotak Mahindra Mutual Fund had assets of more than Rs. 12,530 crores
under its management. It is the first mutual fund firm in India to start a scheme of
dedicated gilt that would make investment in securities of government only. The
Chief Executive Officer of the Kotak Mahindra Asset Management Company is Mr.
Sandesh Kirkire and its Chief Operations Officer is Mr. R. Krishnan.
SBI Contra Mutual Fund is one of the funds under the Magnum Sector Funds
Umbrella. The fund is aimed at providing maximum capital growth opportunities to
the investors through equity investments in stocks of upcoming sectors of the
economy. There are five sub-funds of SBI Contra Fund each dedicated to a
customized investments theme. These include:
IT (Information Technology)
Pharmaceuticals
Fast Moving Consumer Goods (FMGC)
Contrarian (investments in out of favor stocks)
Emerging Businesses
The asset allocation in SBI Contra Mutual Fund includes 90 - 100% investments in
equity stocks that are high on risk profile and 0 - 10% in money markets that are
relatively low risk profile. Investors are free to choose one or more of the specified
themes mentioned above to invest in. besides this, a free switchover from one sector
Under the contra, pharmaceuticals and emerging businesses funds SBIMF also
provides growth and dividend options. Launched on 14th July 1999, SBI Contra
Mutual Fund involves a minimum investment of Rs. 2000 per sector. For further
details on the Entry Load or Exit Load per fund, SIP and SWP provided, and the
Contra Fund NAV Growth or Contra Fund NAV Dividend for the current and
previous years, refer to their official website mentioned below. For information on
other SBI Mutual Funds and other banking products and services of State Bank of
India, browse through our subsequent pages on each.
India is one of the fastest growing economies in the world. Today, many Indian
companies are delivering world-class performance. The growing level of Foreign
Direct Investment (FDI) in various sectors of industry is providing the much needed
impetus to industry growth.
A good number of Indian blue chip companies, having strong cash flows are
acquiring global companies. The buy-outs are helping them in acquiring a ready
front. This coupled with the cost competitive back-end in India offers a strategic fit.
Reliance Vision Fund was launched in October 1995. The fund invests in large cap,
highly liquid stocks with good fundamentals and long-term prospects. Long-term
investors, looking at bringing stability in their portfolio should invest in Reliance
Vision Fund.
Franklin India Prima Fund is an open-end aggressive equity fund that aims to
achieve capital appreciation through investments in relatively smaller, faster
growing companies. "Our focus is to provide exclusive access to the finest of India's
smaller companies", says the fund. Research has shown that dynamic and well-
managed, small and medium sized enterprises experience higher growth rates than
their well-established, larger counterparts. The fund believes that if identified early,
investments in such companies could give substantial capital appreciation over
time. Launched in December 1993, Franklin India Prima Fund has maintained a
good track record, having out-performed its benchmark over all time frames. It is
the top performer amongst its peers for the 3 months, 6 months and 3 years period,
while holds the second position in the 1 year and 2 years time frame.
As on April 30, 2003, the scheme's portfolio is spread across 14 sectors viz,
commodity chemicals, banks, heavy electrical equipment, IT consulting & services,
automobile, textile, oil & gas, pharmaceuticals, packaged food, services, electric
utilities, industrial conglomerates, personal products, media telecommunications.
Commodity Chemicals, Banks, Heavy Electrical Equipment, the top 3 sectors
together account for almost 47% of the total portfolio.
1. BSE SENSEX:
Return in
Date SENSEX % (R-R1) (R-R1)2
1-Apr-05 6154.44
29-Apr-05 6605.04 7.32 4.47 20.02
31-May-05 6715.11 1.67 -1.18 1.39
30-Jun-05 7193.85 7.13 4.28 18.34
29-Jul-05 7635.42 6.14 3.29 10.83
31-Aug-05 7805.43 2.23 -0.62 0.39
30-Sep-05 8634.48 10.62 7.77 60.44
31-Oct-05 7892.32 -8.60 -11.44 130.93
30-Nov-05 8788.81 11.36 8.51 72.45
30-Dec-05 9397.93 6.93 4.08 16.67
31-Jan-06 9919.89 5.55 2.71 7.33
28-Feb-06 10370.24 4.54 1.69 2.86
31-Mar-06 11279.96 8.77 5.93 35.11
29-Apr-06 11851.93 5.07 2.22 4.94
31-May-06 10398.61 -12.26 -15.11 228.30
30-Jun-06 10609.25 2.03 -0.82 0.68
31-Jul-06 10743.88 1.27 -1.58 2.49
31-Aug-06 11699.05 8.89 6.04 36.52
29-Sep-06 12454.42 6.46 3.61 13.03
31-Oct-06 12961.90 4.07 1.23 1.51
30-Nov-06 13696.31 5.67 2.82 7.94
29-Dec-06 13786.91 0.66 -2.19 4.78
31-Jan-07 14090.92 2.21 -0.64 0.41
28-Feb-07 12938.09 -8.18 -11.03 121.63
30-Mar-07 13072.10 1.04 -1.81 3.28
30-Apr-07 13872.37 6.12 3.27 10.72
31-May-07 14544.46 4.84 2.00 3.99
29-Jun-07 14650.51 0.73 -2.12 4.49
SD = √∑(R- R1)2 /n
= √1577.79/36
SD = 6.62
Return in
Date NIFTY % (R-R1) (R-R1)2
1-Apr-05 2024.25
29-Apr-05 1902.50 -6.01 -8.66 75.07
31-May-05 2072.40 8.93 6.28 39.44
30-Jun-05 2220.60 7.15 4.50 20.26
29-Jul-05 2312.30 4.13 1.48 2.19
31-Aug-05 2384.65 3.13 0.48 0.23
30-Sep-05 2601.40 9.09 6.44 41.47
31-Oct-05 2370.95 -8.86 -11.51 132.45
30-Nov-05 2652.25 11.86 9.21 84.91
30-Dec-05 2836.55 6.95 4.30 18.48
31-Jan-06 3001.10 5.80 3.15 9.93
28-Feb-06 3074.70 2.45 -0.20 0.04
31-Mar-06 3402.55 10.66 8.01 64.21
29-Apr-06 3557.60 4.56 1.91 3.64
31-May-06 3071.05 -13.68 -16.33 266.55
30-Jun-06 3128.20 1.86 -0.79 0.62
31-Jul-06 3143.20 0.48 -2.17 4.71
31-Aug-06 3413.90 8.61 5.96 35.55
29-Sep-06 3588.40 5.11 2.46 6.06
31-Oct-06 3744.10 4.34 1.69 2.85
30-Nov-06 3954.50 5.62 2.97 8.82
29-Dec-06 3966.40 0.30 -2.35 5.52
31-Jan-07 4082.70 2.93 0.28 0.08
28-Feb-07 3745.30 -8.26 -10.91 119.12
30-Mar-07 3821.55 2.04 -0.61 0.38
30-Apr-07 4087.90 6.97 4.32 18.66
31-May-07 4295.80 5.09 2.44 5.93
29-Jun-07 4318.30 0.52 -2.13 4.52
31-Jul-07 4528.85 4.88 2.23 4.95
31-Aug-07 4464.00 -1.43 -4.08 16.66
28-Sep-07 5021.35 12.49 9.84 96.74
31-Oct-07 5900.65 17.51 14.86 220.86
30-Nov-07 5762.75 -2.34 -4.99 24.87
Return in
Date BSE 200 % (R-R1) (R-R1)2
1-Apr-05 867.58
29-Apr-05 821.02 -5.37 -7.89 62.25
31-May-05 889.31 8.32 5.79 33.58
30-Jun-05 923.08 3.80 1.27 1.62
29-Jul-05 978.28 5.98 3.46 11.95
31-Aug-05 1012.28 3.48 0.95 0.91
30-Sep-05 1098.02 8.47 5.95 35.36
31-Oct-05 999.57 -8.97 -11.49 132.00
30-Nov-05 1114.21 11.47 8.95 80.03
30-Dec-05 1186.23 6.46 3.94 15.53
31-Jan-06 1251.26 5.48 2.96 8.75
28-Feb-06 1295.01 3.50 0.97 0.95
31-Mar-06 1412.62 9.08 6.56 43.02
29-Apr-06 1500.48 6.22 3.70 13.66
31-May-06 1289.86 -14.04 -16.56 274.23
30-Jun-06 1271.02 -1.46 -3.98 15.87
31-Jul-06 1275.50 0.35 -2.17 4.71
31-Aug-06 1398.68 9.66 7.13 50.90
29-Sep-06 1495.48 6.92 4.40 19.34
31-Oct-06 1560.68 4.36 1.84 3.37
30-Nov-06 1645.24 5.42 2.89 8.38
29-Dec-06 1655.74 0.64 -1.88 3.55
31-Jan-07 1691.45 2.16 -0.37 0.13
28-Feb-07 1545.27 -8.64 -11.17 124.67
30-Mar-07 1556.72 0.74 -1.78 3.18
30-Apr-07 1666.14 7.03 4.51 20.30
31-May-07 1766.08 6.00 3.48 12.08
29-Jun-07 1804.81 2.19 -0.33 0.11
31-Jul-07 1894.18 4.95 2.43 5.90
31-Aug-07 1857.70 -1.93 -4.45 19.79
28-Sep-07 2118.86 14.06 11.54 133.06
31-Oct-07 2439.87 15.15 12.63 159.44
30-Nov-07 2454.23 0.59 -1.93 3.74
31-Dec-07 2656.52 8.24 5.72 32.71
Return
Date BSE 100 in % (R-R1) (R-R1)2
1-Apr-05 3481.86
29-Apr-05 3313.45 -4.84 -7.52 56.62
31-May-05 3601.73 8.70 6.01 36.15
30-Jun-05 3800.24 5.51 2.82 7.97
29-Jul-05 4072.15 7.16 4.47 19.96
31-Aug-05 4184.83 2.77 0.08 0.01
30-Sep-05 4566.63 9.12 6.44 41.42
31-Oct-05 4159.59 -8.91 -11.60 134.59
30-Nov-05 4649.87 11.79 9.10 82.79
30-Dec-05 4953.28 6.53 3.84 14.72
31-Jan-06 5224.97 5.49 2.80 7.82
28-Feb-06 5422.67 3.78 1.10 1.20
31-Mar-06 5904.17 8.88 6.19 38.33
29-Apr-06 6251.39 5.88 3.19 10.20
31-May-06 5385.21 -13.86 -16.54 273.69
30-Jun-06 5382.11 -0.06 -2.75 7.54
31-Jul-06 5422.39 0.75 -1.94 3.76
31-Aug-06 5933.77 9.43 6.74 45.47
29-Sep-06 6328.33 6.65 3.96 15.69
31-Oct-06 6603.60 4.35 1.66 2.76
30-Nov-06 6931.05 4.96 2.27 5.16
29-Dec-06 6982.56 0.74 -1.94 3.78
31-Jan-07 7145.91 2.34 -0.35 0.12
28-Feb-07 6527.12 -8.66 -11.35 128.76
30-Mar-07 6587.21 0.92 -1.77 3.12
30-Apr-07 7032.93 6.77 4.08 16.63
31-May-07 7468.70 6.20 3.51 12.31
29-Jun-07 7605.37 1.83 -0.86 0.74
31-Jul-07 8004.05 5.24 2.55 6.52
31-Aug-07 7857.61 -1.83 -4.52 20.41
28-Sep-07 8967.41 14.12 11.44 130.78
31-Oct-07 10391.19 15.88 13.19 173.96
30-Nov-07 10384.40 -0.07 -2.75 7.58
31-Dec-07 11154.28 7.41 4.73 22.33
31-Jan-08 9440.94 -15.36 -18.05 325.74
29-Feb-08 9404.98 -0.38 -3.07 9.42
1. KOTAK 30
Kotak 30 is an open ended equity growth fund. Its objective is to
generate capital appreciation from a portfolio of predominantly equity & equity
related schemes. Monthly risk & return from 01st April 2005 to 31st March 2008 is
calculated below.
Calculation of Beta
B = [∑ (Ra –Ra1)(Rm-Rm1)]/ ∑ (Rm-Rm1)2
Where Ra = Return on Company, Ra1= Average return on company
Rm= Return on market, Rm1= Average return on market
= 1788.36/1855.42
B = 0.96
Factor Percentage
Risk 7.37
Return 2.99
Beta 0.96
Alpha 0.32
8
7
6
Percentage
5
4 Percentage
3
2
1
0
Risk Return Beta Alpha
Factor
ANALYSIS:
¾ Kotak 30 has a risk factor of 7.37%
¾ Its rate of return on a monthly average is 2.99%
¾ Beta and Alpha are 0.96 and 0.32 respectively
INTERPRETATION:
Beta of Kotak 30 is 0.96 which is less than one; it shows less volatility of the fund
with respect to market. Risk of the fund is 7.37% and the rate of return is 2.99%.
Calculation of Beta
B = [∑ (Ra –Ra1)(Rm-Rm1)]/ ∑ (Rm-Rm1)2
Where Ra = Return on Company, Ra1= Average return on company
Rm= Return on market, Rm1= Average return on market
= 1720.18/1925.82
B = 0.89
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (2.77-2.52)*0.89
=0.22
Factor Percentage
Risk 6.65
Return 2.77
Beta 0.89
Alpha 0.22
7
6
Percentage
5
4
Percentage
3
2
1
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of HDFC Top 200 is 0.89 which is less than one; it shows less volatility of the
fund with respect to market. Risk of the fund is 6.65% and the rate of return is
2.77%.
Net Asset
Date Value Return in % (R-R1) (R-R1)2
1-Apr-05 17.38
29-Apr-05 16.52 -4.95 -8.09 65.45
31-May-05 17.16 3.87 0.73 0.54
30-Jun-05 17.66 2.91 -0.23 0.05
29-Jul-05 19.87 12.51 9.37 87.84
31-Aug-05 21.91 10.27 7.12 50.76
30-Sep-05 23.04 5.16 2.02 4.06
31-Oct-05 21.53 -6.55 -9.70 94.01
30-Nov-05 24.10 11.94 8.79 77.35
30-Dec-05 24.92 3.40 0.26 0.07
31-Jan-06 27.08 8.67 5.53 30.53
28-Feb-06 28.43 4.99 1.84 3.40
31-Mar-06 32.26 13.47 10.33 106.70
29-Apr-06 35.14 8.93 5.79 33.47
31-May-06 30.59 -12.95 -16.09 258.89
30-Jun-06 28.99 -5.23 -8.37 70.10
31-Jul-06 28.76 -0.79 -3.94 15.49
31-Aug-06 31.43 9.28 6.14 37.72
29-Sep-06 33.43 6.36 3.22 10.38
31-Oct-06 35.11 5.03 1.88 3.55
30-Nov-06 37.48 6.75 3.61 13.02
29-Dec-06 37.50 0.05 -3.09 9.54
31-Jan-07 38.78 3.41 0.27 0.07
28-Feb-07 35.69 -7.97 -11.11 123.43
30-Mar-07 35.55 -0.39 -3.53 12.49
30-Apr-07 38.86 9.31 6.17 38.05
31-May-07 41.43 6.61 3.47 12.05
29-Jun-07 41.97 1.30 -1.84 3.38
31-Jul-07 44.29 5.53 2.39 5.69
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (3.14-2.69)*0.96
=0.43
Factor Percentage
Risk 7.38
Return 3.14
Beta 0.96
Alpha 0.44
8
7
6
Percentage
5
4 Percentage
3
2
1
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of SBI Contra is 0.96 which is less than one; it shows less volatility of the fund
with respect to market. Risk of the fund is 7.38% and the rate of return is 3.14%.
RELIANCE VISION FUND is large cap open ended growth fund. Its
objective is to achieve long term growth of capital through a research based
investment approach. Monthly risk & return from 01st April 2005 to 31st March
2008 is calculated below.
Table 4.11: Table showing Calculation of Risk and Return
Return
Return of of [Ra-Ra1] (Rm-
Date Company Market Ra-Ra1 Rm-Rm1 (Rm-Rm1) Rm1)2
1-Apr-05
29-Apr-05 -2.30 -4.84 -4.96 -7.52 37.34 56.62
31-May05 6.43 8.70 3.77 6.01 22.70 36.15
30-Jun-05 -0.16 5.51 -2.82 2.82 -7.97 7.97
29-Jul-05 9.03 7.16 6.37 4.47 28.45 19.96
31-Aug-05 5.08 2.77 2.42 0.08 0.19 0.01
30-Sep-05 9.06 9.12 6.40 6.44 41.21 41.42
31-Oct-05 -7.85 -8.91 -10.51 -11.60 121.88 134.59
30-Nov-05 12.06 11.79 9.40 9.10 85.49 82.79
30-Dec-05 6.71 6.53 4.05 3.84 15.54 14.72
31-Jan-06 6.68 5.49 4.02 2.80 11.24 7.82
28-Feb-06 3.63 3.78 0.97 1.10 1.07 1.20
31-Mar-06 11.84 8.88 9.18 6.19 56.85 38.33
29-Apr-06 6.36 5.88 3.70 3.19 11.80 10.20
31-May06 -14.37 -13.86 -17.03 -16.54 281.79 273.69
30-Jun-06 -2.95 -0.06 -5.61 -2.75 15.41 7.54
31-Jul-06 0.87 0.75 -1.79 -1.94 3.47 3.76
31-Aug-06 8.74 9.43 6.08 6.74 41.02 45.47
29-Sep-06 6.32 6.65 3.66 3.96 14.49 15.69
31-Oct-06 6.58 4.35 3.92 1.66 6.51 2.76
30-Nov-06 2.24 4.96 -0.42 2.27 -0.94 5.16
29-Dec-06 5.00 0.74 2.34 -1.94 -4.54 3.78
31-Jan-07 0.26 2.34 -2.40 -0.35 0.84 0.12
28-Feb-07 -6.91 -8.66 -9.57 -11.35 108.56 128.76
30-Mar-07 -1.00 0.92 -3.66 -1.77 6.47 3.12
30-Apr-07 8.31 6.77 5.65 4.08 23.04 16.63
31-May07 8.81 6.20 6.15 3.51 21.59 12.31
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (2.66-2.69)*0.96
=-0.027
Factor Percentage
Risk 7.29
Return 2.66
Beta 0.96
Alpha -0.03
8
7
6
Percentage
5
4 Percentage
3
2
1
-1
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of Reliance Vision Fund is 0.96 which is less than one; it shows less volatility
of the fund with respect to market. Risk of the fund is 7.29% and the rate of return
is 2.66%.
FRANKLIN INDIA PRIMA FUND is mid cap open ended growth fund.
Its objective is to achieve long term growth of capital through a research based
investment approach. Monthly risk & return from 01st April 2005 to 31st March
2008 is calculated below.
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (1.94-2.68)*0.88
=-0.66
Factor Percentage
Risk 7.70
Return 1.94
Beta 0.88
Alpha -0.66
10
8
6
Percentage
4 Percentage
2
0
-2 Risk Return Beta Alpha
Factor
ANALYSIS:
¾ Franklin India Prima Fund has a risk factor of 7.70%
¾ Its rate of return on a monthly average is 1.94%
¾ Alpha and Beta are 0.88 and -0.66 respectively
INTERPRETATION:
Beta of Franklin India Prima Fund is 0.88 which is less than one; it shows less
volatility of the fund with respect to market. Risk of the fund is 7.70% and the rate
of return is 1.94%.
9
8
7
Risk,Alpha & Beta
6
5
Risk
4
Beta
3
Alpha
2
1
0
-1 KOTAK 30 HDFC Top SBI Contra Reliance Franklyn Bench Mark
200 Vision Fund India Prima
-2 Fund
Mutual Funds & Bench Mark
¾ Franklyn India Prima Fund has the highest risk factor of 7.70% with 0.88
beta and -0.66 as alpha.
¾ HDFC TOP 200 Fund has the lowest risk factor of 6.65% with 0.89 of beta
and 0.22 of alpha.
¾ Bench Mark has the risk factor of 6.62.On an average Mutual Fund
schemes have the risk factor of 7.28.
INTERPETATION:
Risk is a major factor influencing all type of investors. In the above selected Mutual
Fund Schemes average risk factor is 7.28 even though the risk factor of bench mark
is 6..62, it is very close to average risk. It is showing Mutual Funds are also risky.
3
Return in %
2 Return
0
Kotak 30 HDFC Top SBI Contra Reliance Franklyn Bench
200 Vision India Prima Mark
Fund Fund
ANALYSIS:
INTERPETATION:
Return is a major factor influencing all type of investors. In the above selected
Mutual Fund Schemes average return is 2.70%, compared to bench mark return of
2.85%.So the returns on mutual fund are good and it will attract more and more
customers.
Scrip Return in
Date Value % (R-R1) (R-R1)2
1-Apr-05 564.60
29-Apr-05 528.05 -6.47 -10.88 118.40
31-May-05 535.00 1.32 -3.09 9.56
30-Jun-05 642.55 20.10 15.70 246.35
29-Jul-05 703.35 9.46 5.05 25.55
31-Aug-05 719.40 2.28 -2.13 4.52
30-Sep-05 793.55 10.31 5.90 34.81
31-Oct-05 762.50 -3.91 -8.32 69.23
30-Nov-05 832.70 9.21 4.80 23.03
30-Dec-05 889.30 6.80 2.39 5.71
31-Jan-06 713.90 -19.72 -24.13 582.29
28-Feb-06 708.85 -0.71 -5.11 26.16
31-Mar-06 795.35 12.20 7.80 60.77
29-Apr-06 1022.95 28.62 24.21 586.07
31-May-06 954.15 -6.73 -11.13 123.94
30-Jun-06 1059.85 11.08 6.67 44.50
31-Jul-06 978.80 -7.65 -12.05 145.32
31-Aug-06 1117.35 14.16 9.75 95.02
29-Sep-06 1171.75 4.87 0.46 0.21
31-Oct-06 1226.00 4.63 0.22 0.05
30-Nov-06 1244.45 1.50 -2.90 8.42
29-Dec-06 1270.15 2.07 -2.34 5.49
31-Jan-07 1366.45 7.58 3.17 10.08
28-Feb-07 1352.50 -1.02 -5.43 29.47
30-Mar-07 1370.30 1.32 -3.09 9.56
30-Apr-07 1561.05 13.92 9.51 90.50
31-May-07 1758.80 12.67 8.26 68.23
29-Jun-07 1700.55 -3.31 -7.72 59.59
Rm-
Return Return of (Ra-Ra1) Rm1)
Date of Co Market (Ra-Ra1) (Rm-Rm1) (Rm-Rm1) ^2
1-Apr-05
29-Apr-05 -6.47 7.32 -10.88 4.47 -48.68 20.02
31-May05 1.32 1.67 -3.09 -1.18 3.65 1.39
30-Jun-05 20.10 7.13 15.70 4.28 67.21 18.34
29-Jul-05 9.46 6.14 5.05 3.29 16.63 10.83
31-Aug-05 2.28 2.23 -2.13 -0.62 1.32 0.39
30-Sep-05 10.31 10.62 5.90 7.77 45.87 60.44
31-Oct-05 -3.91 -8.60 -8.32 -11.44 95.20 130.93
30-Nov-05 9.21 11.36 4.80 8.51 40.85 72.45
30-Dec-05 6.80 6.93 2.39 4.08 9.76 16.67
31-Jan-06 -19.72 5.55 -24.13 2.71 -65.31 7.33
28-Feb-06 -0.71 4.54 -5.11 1.69 -8.66 2.86
31-Mar-06 12.20 8.77 7.80 5.93 46.19 35.11
29-Apr-06 28.62 5.07 24.21 2.22 53.83 4.94
31-May06 -6.73 -12.26 -11.13 -15.11 168.22 228.30
30-Jun-06 11.08 2.03 6.67 -0.82 -5.48 0.68
31-Jul-06 -7.65 1.27 -12.05 -1.58 19.03 2.49
31-Aug-06 14.16 8.89 9.75 6.04 58.91 36.52
29-Sep-06 4.87 6.46 0.46 3.61 1.66 13.03
31-Oct-06 4.63 4.07 0.22 1.23 0.27 1.51
30-Nov-06 1.50 5.67 -2.90 2.82 -8.18 7.94
29-Dec-06 2.07 0.66 -2.34 -2.19 5.12 4.78
31-Jan-07 7.58 2.21 3.17 -0.64 -2.04 0.41
28-Feb-07 -1.02 -8.18 -5.43 -11.03 59.87 121.63
30-Mar-07 1.32 1.04 -3.09 -1.81 5.60 3.28
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (4.40-2.85)*0.93
=1.45
Factor Percentage
Risk 9.87
Return 4.41
Beta 0.93
Alpha 1.45
10
9
8
7
Percentage
6
5 Percentage
4
3
2
1
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of the Reliance Industries ltd. is 0.93 which is less than one; it shows the less
volatility of scrip with respect to market. Risk of the share is 9.87% and the rate of
return is only 4.41%.
Scrip Return in
Date Value % (R-R1) (R-R1)2
1-Apr-05 801.65
29-Apr-05 792.40 -1.15 -6.39 40.86
31-May-05 882.00 11.31 6.07 36.84
30-Jun-05 867.95 -1.59 -6.83 46.66
29-Jul-05 1006.85 16.00 10.77 115.89
31-Aug-05 1067.10 5.98 0.75 0.56
30-Sep-05 1224.15 14.72 9.48 89.86
31-Oct-05 1129.95 -7.70 -12.93 167.27
30-Nov-05 1427.15 26.30 21.06 443.69
30-Dec-05 1387.05 -2.81 -8.05 64.77
31-Jan-06 1795.60 29.45 24.22 586.43
28-Feb-06 2027.00 12.89 7.65 58.51
31-Mar-06 2241.95 10.60 5.37 28.80
29-Apr-06 2358.10 5.18 -0.06 0.00
31-May-06 1903.30 -19.29 -24.52 601.47
30-Jun-06 1949.45 2.42 -2.81 7.92
31-Jul-06 2045.20 4.91 -0.33 0.11
31-Aug-06 2261.00 10.55 5.31 28.23
29-Sep-06 2398.80 6.09 0.86 0.73
31-Oct-06 2420.10 0.89 -4.35 18.92
30-Nov-06 2505.75 3.54 -1.70 2.89
29-Dec-06 2299.35 -8.24 -13.48 181.58
31-Jan-07 2523.15 9.73 4.49 20.20
28-Feb-07 2181.80 -13.53 -18.77 352.20
30-Mar-07 2261.35 3.65 -1.59 2.53
30-Apr-07 2487.85 10.02 4.78 22.83
31-May-07 1399.10 11.09 5.85 34.26
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (5.24-2.85)*1.27
=3.03
Factor Percentage
Risk 11.27
Return 5.24
Beta 1.27
Alpha 3.03
12
11
10
9
8
Percentage
7
6 Percentage
5
4
3
2
1
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of BHEL is 1.27 which is higher to one; it shows the high volatility of scrip
with respect to market. Risk of the share is 11.27% and the rate of return is 5.24%.
Scrip Return in
Date Value % (R-R1) (R-R1)2
1-Apr-05 716.65
29-Apr-05 731.20 2.03 -1.75 3.05
31-May-05 763.60 4.43 0.66 0.43
30-Jun-05 890.85 16.66 12.89 166.12
29-Jul-05 925.80 3.92 0.15 0.02
31-Aug-05 903.80 -2.38 -6.15 37.85
30-Sep-05 1039.40 15.00 11.23 126.06
31-Oct-05 967.90 -6.88 -10.65 113.52
30-Nov-05 1127.95 16.54 12.76 162.82
30-Dec-05 1207.00 7.01 3.23 10.45
31-Jan-06 1339.70 10.99 7.22 52.11
28-Feb-06 1365.65 1.94 -1.84 3.38
31-Mar-06 1336.80 -2.11 -5.89 34.67
29-Apr-06 1311.75 -1.87 -5.65 31.92
31-May-06 1123.55 -14.35 -18.12 328.44
30-Jun-06 1139.80 1.45 -2.33 5.43
31-Jul-06 1177.40 3.30 -0.48 0.23
31-Aug-06 1310.15 11.27 7.50 56.24
29-Sep-06 1533.15 17.02 13.25 175.44
31-Oct-06 1463.90 -4.52 -8.29 68.77
30-Nov-06 1646.95 12.50 8.73 76.19
29-Dec-06 1626.90 -1.22 -4.99 24.93
31-Jan-07 1673.85 2.89 -0.89 0.79
28-Feb-07 1507.25 -9.95 -13.73 188.48
30-Mar-07 1519.80 0.83 -2.94 8.66
30-Apr-07 1666.35 9.64 5.87 34.42
31-May-07 1882.60 12.98 9.20 84.67
29-Jun-07 2033.70 8.03 4.25 18.07
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (3.78-2.85)*1.03
=0.96
Factor Percentage
Risk 8.97
Return 3.78
Beta 1.03
Alpha 0.96
10
8
Percentage
6
Percentage
4
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of HDFC is 1.03 which is higher to one; it shows the high volatility of scrip
with respect to market. Risk of the share is 8.97% and the rate of return is 3.78%.
Scrip Return in
Date Value % (R-R1) (R-R1)2
1-Apr-05 362.15
29-Apr-05 345.85 -4.50 -8.52 72.53
31-May-05 385.80 11.55 7.54 56.79
30-Jun-05 376.65 -2.37 -6.39 40.79
29-Jul-05 393.20 4.39 0.38 0.14
31-Aug-05 450.75 14.64 10.62 112.80
30-Sep-05 480.90 6.69 2.67 7.15
31-Oct-05 395.40 -17.78 -21.79 475.00
30-Nov-05 446.40 12.90 8.88 78.91
30-Dec-05 436.20 -2.28 -6.30 39.69
31-Jan-06 471.80 8.16 4.15 17.19
28-Feb-06 511.20 8.35 4.34 18.80
31-Mar-06 582.40 13.93 9.91 98.26
29-Apr-06 552.75 -5.09 -9.11 82.93
31-May-06 500.10 -9.53 -13.54 183.35
30-Jun-06 482.50 -3.52 -7.53 56.77
31-Jul-06 489.25 1.40 -2.62 6.85
31-Aug-06 527.80 7.88 3.86 14.93
29-Sep-06 567.85 7.59 3.57 12.76
31-Oct-06 540.55 -4.81 -8.82 77.85
30-Nov-06 581.30 7.54 3.52 12.41
29-Dec-06 560.50 -3.58 -7.59 57.66
31-Jan-07 605.45 8.02 4.00 16.03
28-Feb-07 542.75 -10.36 -14.37 206.54
30-Mar-07 509.30 -6.16 -10.18 103.60
30-Apr-07 591.85 16.21 12.19 148.67
31-May-07 585.75 -1.03 -5.05 25.46
29-Jun-07 670.65 14.49 10.48 109.81
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (4.02-2.85)*0.24
=0.28
Factor Percentage
Risk 12.28
Return 4.02
Beta 0.24
Alpha 0.28
14
12
10
Percentage
8
Percentage
6
4
2
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of the Tata Power is 0.24 which is lower than one; it shows the low volatility
of scrip with respect to market. Risk of the share is 12.28% and the rate of return
is only 4.02%.
Scrip Return in
Date Value % (R-R1) (R-R1)2
1-Apr-05 1021.10
29-Apr-05 966.60 -5.34 -11.03 121.55
31-May-05 1048.00 8.42 2.73 7.47
30-Jun-05 1132.25 8.04 2.35 5.53
29-Jul-05 1268.00 11.99 6.30 39.71
31-Aug-05 1334.10 5.21 -0.47 0.23
30-Sep-05 1518.95 13.86 8.17 66.72
31-Oct-05 1398.75 -7.91 -13.60 184.99
30-Nov-05 1685.15 20.48 14.79 218.67
30-Dec-05 1845.15 9.49 3.81 14.49
31-Jan-06 2172.10 17.72 12.03 144.76
28-Feb-06 2396.95 10.35 4.66 21.75
31-Mar-06 2432.70 1.49 -4.20 17.61
29-Apr-06 2714.80 11.60 5.91 34.91
31-May-06 2318.35 -14.60 -20.29 411.73
30-Jun-06 2242.00 -3.29 -8.98 80.66
31-Jul-06 2209.55 -1.45 -7.14 50.91
31-Aug-06 2403.75 8.79 3.10 9.62
29-Sep-06 1272.45 5.87 0.18 0.03
31-Oct-06 1312.20 3.12 -2.56 6.57
30-Nov-06 1364.55 3.99 -1.70 2.88
29-Dec-06 1445.90 5.96 0.27 0.08
31-Jan-07 1589.00 9.90 4.21 17.72
28-Feb-07 1489.85 -6.24 -11.93 142.27
30-Mar-07 1620.10 8.74 3.05 9.33
30-Apr-07 1698.40 4.83 -0.85 0.73
31-May-07 2009.90 18.34 12.65 160.10
29-Jun-07 2198.00 9.36 3.67 13.48
31-Jul-07 2607.80 18.64 12.96 167.87
31-Aug-07 2582.80 -0.96 -6.65 44.18
28-Sep-07 2807.95 8.72 3.03 9.18
Calculation of Beta
Calculation of Alpha
Alpha = (Ra1-Rm1)*B
= (5.69-2.85)*1.33
=3.79
Factor Percentage
Risk 11.73
Return 5.69
Beta 1.33
Alpha 3.79
12
10
Percentage
8
6 Percentage
4
2
0
Risk Return Beta Alpha
Factor
ANALYSIS:
INTERPRETATION:
Beta of L&T is 1.33 which is higher to one; it shows the high volatility of scrip
with respect to market. Risk of the share is 11.73% and the rate of return is 5.69%.
Company Risk
RELIANCE 9.87
HDFC 8.97
BHEL 11.27
TATA POWER 12.28
L&T 11.73
Total 54.12
Bench Mark 6.62
Risk Profile
14
12
10
8
Risk
Risk
6
4
2
0
Reliance HDFC BHEL Tata LT Bench
Power Mark
Companies & Bench Mark
¾ Tata Power has the highest risk factor of 12.28% with 0.24 beta and 0.28
as alpha.
¾ HDFC has the lowest risk factor of 8.97% with 1.03 beta and 0.96 as
alpha.
¾ Bench Mark has the risk factor of 6.62%
¾ On an average Equity shares have the risk factor of 10.82%
INTERPETATION:
Risk is a major factor that influences all type of investors. In the above selected
Equity Shares average risk factor is 10.82% and the risk factor of bench mark is
6.62%, it is showing equities are more risky than their benchmark index.
Company Return
RELIANCE 4.41
HDFC 3.78
BHEL 5.24
TATA POWER 4.02
L&T 5.69
Total 23.12
Bench Mark 2.85
Return Profile
5
Return in %
3 Return
0
Reliance HDFC BHEL Tata LT Bench
Power Mark
Companies & Bench Mark
ANALYSIS:
INTERPETATION:
Return is a major factor influencing all type of investors. In the above selected
equity shares average return is 4.62%, compared to bench mark return of 2.85%.
The selected equity share returns are good and it will attract more and more
investors.
Risk Profile
15
10
Risk
5
0
Risk
ANALYSIS:
¾ Mutual funds have the risk on an average of 7.28%.
¾ Equity shares have the risk on an average of 10.82%.
INTERPETATION:
Equity capital and Mutual fund schemes are subjected to market risk. Based on
the above analysis mutual funds have an average risk of 7.28% which is compared
to equity shares risk of 10.82% is lower. Those who would like to take risk can go
for equity investments.
Return Profile
25
20
15
Return
10
ANALYSIS:
¾ Mutual funds have average return of 13.50%.
¾ Equity shares have the return on an average of 23.12%.
INTERPETATION:
Equity capital and Mutual fund schemes are subjected to market risk. Based on
the above analysis mutual funds have an average return of 13.50% which is
compared to equity shares return of 23.12% is lower. Those who would like take
risk can go for equity investments for getting higher return.
Saving money is not enough. Each of us also need to invest one’s savings
intelligently in order to have enough money available for funding the higher
education of one’s children, for buying a house, or for one’s own golden years.
RESEARCH FINDINGS
1. Investments in both equity capital and mutual fund schemes are subjected
to market risk.
2. Investment in equity and mutual fund schemes are increasing because of
falling interest rates and awareness of equity capital and mutual fund
schemes in the minds of investors.
3. Tata power has a highest risk factor of 12.28 and HDFC has a lowest risk
factor of 8.97, where as benchmark risk is 6.62% which shows investing in
equity is more risky.
4. L&T has a highest return on a monthly average of 5.69% and HDFC has a
lowest return on a monthly average of 3.78%, where as benchmark return
is only 2.85% which shows higher the risk higher the return.
5. Franklyn India Prima Fund has higher risk factor of 7.70 with a return of
1.94% where as SBI CONTRA Fund has risk factor of 7.38 with a return
of 3.14% per month.
6. On the basis of above analysis mutual funds have a risk factor on an
average 7.28 and their returns 2.7% per month.
7. On the basis of above analysis Equity shares have a risk factor on an
average 10.82, and their returns are 4.62% per month
8. On the basis of above statements it has provided that higher the risk higher
the return and lower the risk lower the return.
9. Investment in mutual fund schemes gives diversified portfolio to investors.
10. Standard deviation is one of the best ways for finding risk of scrip’s &
mutual fund units.
11. In case of both equities and mutual funds(open ended) liquidity is very
high, with in three working days mutual funds will be converted into cash
and liquidity of equity is based on demand and supply conditions of the
market for a particular scrip.
• This is the right time to invest in shares and mutual funds because of above
reason.
• Interest rates are falling gradually and equity markets are booming because
of this reason investors can move from bank deposits to mutual funds and
equities.
Investment in both equity capital and mutual fund schemes are subjected to
market risk. Following are the suggestions given to investors for investing
rationally in equity capital and mutual fund schemes
• Growth Funds
Although Growth funds are more conservative than aggressive growth funds,
they are still relatively volatile. They are suitable for growth-oriented investors
but not for investors who are unable to assume risk or who are dependent on
maximizing current income from their investments.
• Fixed-Income Funds
Fixed-income funds are suitable for investors who want to maximize current
income and who can assume a degree of capital risk in order to do so. Again,
carefully read the prospectus to learn if a fund's investment policy with respect to
yield and risk coincides with your own objectives.
Saving money is not enough. Each of us also need to invest ones savings
intelligently in order to have enough money available for funding the higher
education of one s children, for buying a house, or for one s own golden years.
The study will guide the new investor who wants to invest in equity and
mutual fund schemes by providing knowledge about how to measure the risk and
return of particular scrip or mutual fund scheme. The study recommends new
investors to go for mutual funds rather than equities, because of high risk and
market instability.
From the calculation it is found that the average risk of equities based on sample
size is 10.82 & they are earning 4.62% returns per month where as mutual funds
average risk based on sample size is only 7.28 & they are earning 2.7 per month.
BOOKS REFFERED
Web sites:
• www.il&fs.com
• www.moneycontorl.com
• www.finance.indiamart.com
• www.wikipedia.org
• www.amfiindia.com / Historical NAVs of mutual fund schemes
• www.bseindia.com / Historical share prices of companies.