Review 3: The Risk and Predictability of International ...



CHAPTER – 1INTRODUCTION1.1 INTRODUCTIONInvestment is the employment of funds with the aim of achieving additional income or growth in value. The essential quality of an investment is that it involves ‘waiting’ for a reward. It involves the commitment of resources which have been saved or put away from current consumption in the hope that some benefits will accrue in future. The term ‘investment’ does not appear to be as simple as it has been defined. Investment has been future categorized by financial experts and economists. It has also often been confused with the term speculation. the following discussions will give an explanation of the various ways in which investment is related or differentiated from the financial and economic sense and how speculation differ from investment. However, it must be clearly established that investment involves long-term commitment.RISK:In the investing world, the dictionary definition of risk is the chance that an investment’s actual return will be different than expected. Technically, this is measured in statistics by standard deviation. Risk means you have the possibility of losing some, or even all, of our original investment.Risk consists of 2 components:Systematic risk (uncontrollable risk) non – diversifiable riskUnsystematic risk (controllable risk) diversifiable risk1. Systematic RiskThe risk that affects the entire market and the factors are beyond the control of the corporate and the investor. They cannot be avoided by the investor. It is sub-divided into.Market riskInterest rate riskPurchase power riska.Market riskWithin the context of the capital asset pricing model (CAPM), the economy wide uncertainty that all assets are to and cannot be diversified away are often referred to as systematic risk, non –diversifiable risk or the risk of the market portfolio. This type of the risk is discussed extensively in investment courses.b. Interest rate riskThe uncertainty associated with the effects of changes in market interest rates. There are two types of interest rate risk identified: price risk and reinvestment rate risk. The price risk is sometimes referred to as maturity risk since the greater the maturity of an investment, the greater the change in price for a given change in interest rates. Both type of interest rate risks are important in banking and are addressed extensively in banking management classes.c.Purchase power risk (inflation risk)The loss of purchasing power due to the effects of inflation is Purchase power risk. When inflation is present, the currency losses it’s value due to the rising price level in the economy. The higher the inflation rate the faster the money loses its value.2. Unsystematic risk or diversifiable riskIt is unique to the firm or industry. It is caused from managerial inefficiency, technological changes, consumer preferences, labour problems etc. The magnitude and nature differ from firm to firm and industry to industry.It can be classified into 2 types a. Business risk b. Financial riska. Business Risk:The uncertainty associated with a business firm’s operating environment and reflected in the variability of earnings before interest and taxes (EBIT). Since this earnings measure has not had financing expenses removed, it reflects the risk associated with business operations rather than methods of debt financing. This risk is often discussed in general business management courses.Internal riskFluctuations in salesResearch and developmentPersonal managementExternal riskb. Financial Risk:The uncertainty brought about by the choice of a firm’s financing methods and reflected in the variability of earnings before taxes (EBT), a measure of earnings that has been adjusted for and is influenced by the cost of debt financing. This risk is often discussed within the context of the capital structure topics.RETURNSA major purpose of investment is to set a return of income on the funds invested. On a bond an investor expects to receive interest. On a stock, dividends may be anticipated. The investor may expect capital gains from some investments and rental incomes from house property. Return may take several forms.Measurements of ReturnsThe purpose of investment is to get return or income on the funds invested in different financial assets. The most important characteristics of financial assets are the size and variability of their future returns. Since the return on income varies, various statistical techniques are used to measure it. Over the years, May methods were adopted for quantifying returns. These are now categorized as traditional and modern techniques of measurement.Traditional method of measurementComputation of yield to measure a financial asset is the simplest and oldest techniques of measurement. Yield can be both expected or estimated and actual for a particular period. The formula used to find yield is: Expected cash incomeEstimated yield = ------------------------------------ Current price of asset Cash income Actual yield = -------------------------------- Amount investedThe yield that is calculated for a particular period to find out the return on the amount that is invested, for example, the annual yield on the Unit Trust Certificate is the dividend income divided by the amount invested.Measuring Returns – Improved Technique: The ‘holding period yield’ is one of the new techniques in measuring returns. The traditional methods did not provide a satisfactory returns measure. Some of the gaps that were identified were: (a) that the traditional method does not distinguish between divided and earnings portion that the traditional method does not distinguish between divided and earnings portion that the company retains (Earnings Yield Method); (b) Dividend Yield Method ignores the possibility of price appreciation on retained earnings. It is useful only for those shareholders who wish to retain shares always and are not interested in selling and anticipate that dividends are not going to change; (c) the yield to maturity is useful only to those bond holders who will hold it to maturity. All investors may not hold bonds till maturity for obvious reasons. These methods are thus known to serve a limited purpose only. The better method measures return through the holding period yield. This measure appears more rational and clearly defined. It serves two purposes: (a) It measures that total return per rupee of the original investment, and (b) through this method, comparisons can be drawn of any asset’s expected return. An asset can be compared with other both historically and for future periods. The holding period yield can be used for any asset. For example, returns from savings accounts, stocks money, real estate and bonds can be compared through this measure. The formula for the holding period yield is:Income payments received during the year in Rs. + Capital change for the period in Rs. Price in rupees of original investment at the beginning of periodDividend + (Pt-Po)= _________________PoA look at this formula shows that the Holding Period Yield (HPY) considers everything the investor receives over the specified period during which the asset is held relative to what was originally invested in the assets. It also considers all income payments; and positive and negative capital changes during the period. These are then measured relative to the original investment in rupees. The HPY also measures past receipts of payments as well as for an unknown future. It is useful for comparing any time period; it can be used on both Bond and Stocks. Measure of Dispersion:Dispersion methods help to assess risk in receiving a reward or return on investment. The greater the potential dispersion, the greater is the risk. One of the simplest methods in calculating dispersion is range. The range, however, has limited importance. It is useful when there are small samples. It loses its effectiveness when the number of values in a sample increases. The best and most effective method to find out how the data scattered around a frequency distribution is to use the standard deviation method. This method is related to the mean deviation and implies in this case the means as a point of reference from which deviation occurs. The standard deviation is based on mean and it cannot show any result without first finding out the mean. The standard deviation is recognized by the following symbol . The standard deviation is also related to variance. Variance is the square of standard deviation. In other words, standard deviation is the square root of the variance. This relationship shows that they have similar statistical characteristics. Therefore, standard deviation and variance are considered equivalent to each other as measures of risk. For a security analyst they help in depicting dispersion of HPYs around HPY.1.2 OBJECTIVES:-To Study and understand the working of a brokerage firm. To understand the various risks involved in the brokerage firm.To study how risk on return of investment evaluated.To calculate the risk return of equities to estimate weather the company is reliable for the investor to invest in the shares of the company.To study and advice the investor in making effective investment.1.3 NEED OF THE STUDYIn Indian financial environment investors are facing a lot risk to invest in various financial instruments. The investment risk can be either reduced or can be transferred. Most of the times investors try to maximize returns but want minimum risk in their investment. The present study enables us to identify the different types of risks and how to minimize them. In investment avenues it is very important to know about Risk and Returns so that one can have hassle free investment.1.4 SCOPE OF THE STUDYThe present study has been undertaken to observe the risk and returns associated with few selected stocks. The scope of the study consists of 5 Company stocks from both private and publicsector which includes IT, Banking, Electronics, Cement and Infrastructure Sector. The scope of the study is confined to 5 Companies.Sample size- 5 CompaniesDuration- 3 months1.5 RESEARCH METHODLOGYDuring my project, I collected data through various sources like primary & secondary sources of data. Primary source includes:- 1) Interview with branch manager.2) Interview with investors of the firm. 3) Live trading in the market.Secondary source includes:- 1) Various books related to stock market.2) Books related to Financial Management.3) Web sites were used as the vital information source. TOOLS USED:1: Standard Deviation2: Variance3. Mean4. Line GraphCHAPTER-2 REVIEW OF LITERATURE&THEORITICAL ASPECT2.1 REVIEW OF LITERATUREReview 1: Stock market risk and return: an equilibrium approach.Author: RF WhitelawSource: Review of Financial Studies?(2000)?13?(3):521-547.doi:?10.1093/rfs/13.3.521AbstractEmpirical evidence that expected stock returns are weakly related to volatility at the market Level appears to contradict the intuition that risk and return are positively related. We investigate this issue in a general equilibrium exchange economy characterized by a Regime-switching consumption process with time-varying transition probabilities between Regimes. When estimated using consumption data, the model generates a complex, non-Linear and time-varying relation between expected returns and volatility, duplicating the Salient features of the risk/return trade-off in the data. The results emphasize the Importance of time-varying investment opportunities and highlight the perils of relying on intuition from static models. Review 2: Components of Market Risk and Return.Author: John M. Maheu?and?Thomas H. McCurdySource: journal of financial econometrics?(2007)?5?(4):560-590.doi:?10.1093/jjfinec/nbm012first published online:?august 31, 2007AbstractThis article proposes a flexible but parsimonious specification of the joint dynamics of market risk and return to produce forecasts of a time-varying market equity premium. Our parsimonious volatility model allows components to decay at different rates, generates mean-reverting forecasts, and allows variance targeting. These features contribute to realistic equity premium forecasts for the U.S. market over the 1840–2006 periods. For example, the premium forecast was low in the mid-1990s but has recently increased. Although the market's total conditional variance has a positive effect on returns, the smooth long-run component of volatility is more important for capturing the dynamics of the premium. This result is robust to univariate specifications that condition on either levels or logs of past realized volatility (RV), as well as to a new bivariate model of returns and RV.Review 3: The?Risk?and?Predictability?of?International Equity?Returns.Author: Wayne E. FersonSource: Review of Financial Studies?(1993)?6?(3):527-566.doi:?10.1093/rfs/6.3.527AbstractWe investigate predictability in national equity market?returns,?and?its relation?to global economic?risks. We show how to consistently estimate the fraction?of?the predictable variation?that is captured by an asset pricing model for the expected?returns. We use a model in which conditional betas?of?the national equity markets depend?on?local information?variables, while global?risk?premium depend?on?global variables. We examine single-?and?multiple-beta models, using monthly data for 1970 to 1989. The models capture much?of?the predictability for many countries. Most?of?this is related to time variation?in the global?riskpremium.Review 4: Growth or Glamour? Fundamentals and Systematic Risk in Stock Returns.Author: John Y. Campbell, Christopher Polk and TuomoVuolteenahoSource: Review of Financial Studies (2010)?23?(1):305-344.doi:?10.1093/rfs/hhp029First published online:?April 22, 2009AbstractThe cash flows of growth stocks are particularly sensitive to temporary movements in aggregate stock prices, driven by shocks to market discount rates, while the cash flows of value stocks are particularly sensitive to permanent movements, driven by shocks to aggregate cash flows. Thus, the high betas of growth (value) stocks with the market's discount-rate (cash-flow) shocks are determined by the cash-flow fundamentals of growth and value companies. Growth stocks are not merely “glamour stocks” whose systematic risks are purely driven by investor sentiment. More generally, the systematic risks of individual stocks with similar accounting characteristics are primarily driven by the systematic risks of their fundamentals.Review 5: Is Default Risk Negatively Related to Stock Returns?Author: SudheerChava andAmiyatoshPurnanandamSource: Review of Financial Studies (2010)?23?(6):2523-2559.doi:?10.1093/rfs/hhp107First published online:?January 5, 2010AbstractWe find a positive cross-sectional relationship between expected stock returns and default risk, contrary to the negative relationship estimated by prior studies. Whereas prior studies use noisy ex post realized returns to estimate expected returns, we use ex ante estimates based on the implied cost of capital. The results suggest that investors expected higher returns for bearing default risk, but they were negatively surprised by lower-than-expected returns on high default risk stocks in the 1980s. We also extend the sample compared with prior studies and find that the evidence based on realized returns is considerably weaker in the 1952–1980 period.Review 6:Does Systemic Risk in the Financial Sector Predict Future?Economic?Downturns?Author: Linda Allen, Turan G. Baliand Yi TangSource: Review of Financial Studies?(2012)?25?(10):3000-3036.doi:?10.1093/rfs/hhs094.AbstractWe derive a measure?of?aggregate systemic risk, designated?CATFIN that complements bank-specific systemic risk measures by forecasting macroeconomic?downturns six months into the future using out-of-sample tests conducted with U.S., European, and Asian bank data. Consistent with bank “specialness,” the?CATFIN?of?both large and small banks forecasts macroeconomic?declines, whereas a similarly defined measure for both nonfinancial firms and simulated “fake banks” has no marginal predictive ability. High levels?of?systemic risk in the banking sector impact the macro economy through aggregate lending activity. A conditional asset pricing model shows that?CATFIN?is priced for financial and nonfinancial firms.2.2 INTRODUCTION-WORKING OF A BROKING FIRM Stock broker According to SEBI stock broker is a member of a recognized stock exchange(s) and is engaged in buying, selling and dealing in securities. In other words broker is an Intermediary who arranges to buy and sell securities on behalf of clients i.e. the buyer and the seller. A broker can deal in securities only after getting registered with SEBI. Through stock exchanges the constitution of a broking firm may be a Proprietary concern, a partnership firm or a corporate. Compliance department The functions carried out by compliance department are as follows.1. Client registration application form. 2. Broker client agreement on stamp paper of value as applicable in the respective state. 3. Identity Proof Like Copy of passport Copy of ration card Copy of driving licenseCopy of voters’ identity card Copy of pan card Letter from bank certifying account number and period from which the same is in operation.4. Letter of running accountClient registration application form. Broker client agreement on stamp paper. Certified copy of memorandum and articles of association. Certified copy of resolution authorizing the company to open account with HDFC and appointing persons authorized to operate upon said account on behalf of company. 5. Proof of identity in respect of authorized director.6. Letter from the bank certifying account number and period from which the Same is in operation. Dealing department Dealing department is a very important department in the broking firm as it carries out most important activities of buying and selling of securities. The people doing dealing are called as dealers. He is the person dealing on behalf of the Investor, therefore when the investor wants to trade in some scrip’s he must inform the dealer first and then the dealer deals in the market. The following are the activities carried out in a dealing department. Entering order The trading member can enter orders in the normal market and auction market. When An order enters the trading system it is an active order, it tries to find out on the other Side of the books if it finds the match, trade is generated. If it does not find a match, The order becomes a passive order and goes and sits in the order book. Order modification All orders can be modified in the system till the time they do not get fully traded and only during the market hours. Once an order is modified, the branch order values limit for the branch and get adjusted automatically. Order cancellation Order cancellation functionality can be performed only for orders which have not been fully or partially traded (for the untraded part of partially traded orders only) and only during market hours. Order matching The buy and sell orders are matched on book type, symbol, series, quantity and price. The best sell order is the order with the lowest price and best buy order is the order withthe highest price. The unmatched orders are queued in the system by the following Priority. Risk and return plays a key role in most individuals investors “decision making process. Every investor wants to avoid risk and maximize return. In general, risk and return go hand in hand. If an investor wishes to earn higher returns than the investor must appreciate that this will only be achieved by accepting a commensurate increase in risk. Risk and return are positively correlated; an increase in one is accompanied by an increase in the other. Investment decisions, therefore, involve a tradeoff between risk and return, which is considered to be central to the investment decision making.STATEMENT OF THE PROBLEMIn the current economic scenario, interest rates are falling and fluctuating, and reflects on the share market which has put more investors in the trouble. 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 stocks of various companies from different sectors like Banking, Infrastructure, Electronics, IT and Cement Sectors in the form of their risk, return & liquidity.RISK AND RETURN ANALYSISReturn expresses the amount which an investor actually earned on an investment during a certain period. Return includes the interest, dividend and capital gains: while risk represents the uncertainty associated with a particular task. In financial terms, risk is the chance or probability that a certain investment may or may not deliver the actual / expected returns.The risk return trade off says that the potential return rises with an increase in risk. It is important for an investor to decide on a balance between the desire for the lowest possible risk and highest possible return.The risk -return relationship is a fundamental concept in not only financial analysis, but in every aspect of life. If decisions are to lead to benefit maximization, it is necessary that individuals/institutions consider the combined influence on expected (future) return or benefit as well as on risk/cost. The requirement that expected return/benefit be commensurate with risk/cost is known as the “risk/return trade-off” in finance.This discussed the trade-off and, using conventional statistical tools, provides a method for quantifying risk .Two categories of risk borne by the firm’s stockholders, business risk and financial risk, are discussed and demonstrated, as is the concept of leverage. The session also examines risk reduction via portfolio diversification and what requirements need to be met for firms to experience the benefits of diversification. The capital asset pricing model (CAPM) is used to demonstrate the risk / return trade-off by relating the required return on the firm’s investments to its beta (or market) risk.RISK ANALYSIS:Risk in investment exists because of the inability to make perfect or accurate forecasts. Risk in investment is defined as the variability that is likely to occur in future cash flows from an investment. The greater variability of the cash flows indicates greater risk.Variance or standard deviation measures the deviation about expected cash flows of each of the possible cash flows and is known measure of risk; while co-efficient of variation is a relative measure of risk.For carrying out risk analysis, following methods are used:Payback (How long will it take to recover the investment)Certainty equivalent (The amount that will certainly come to you)Risk adjusted discount rate (Present value i.e. PV of future inflows with discount rate)However in practice, sensitivity analysis and conservative forecast techniques being simpler and easier to handle, are used for risk analysis. Sensitivity analysis (a variation of breakeven analysis) allows estimating the impact of change in behavior of critical variables on the investment cash flows. Conservative forecasts include using short payback or higher discount rates for discounting cash flows.Investment riskInvestment risk is related to the probability of earning a low or negative actual return as compared to the return that is estimated. There are 2 types of investments risks:STAND- ALONE RISKThis risk is associated with a single asset, meaning that the risk will cease to exist if that particular asset is not held. The impact of standalone risk can be mitigated by diversifying the portfolio. Standalone risk= Market + Firms specific riskWhereMarket risk is a portion of the security’s stand-alone risk that cannot be eliminated through diversification and it is measured by beta.Firms risk is a portion of a security’s stand-alone that can be eliminated through proper diversificationPORTFOLIO RISKThis is the risk involved in a certain combination of assets in a portfolio which fails to deliver the overall objective of the portfolio. Risk can be minimized but cannot be eliminated, whether the portfolio is balanced or not. A balanced portfolio reduces risk while a non- balanced portfolio increases risk.Sources of riskInflation Business cycleInterest ratesManagementBusiness riskFinancial riskRETURN ANALYSIS:An investment is the current commitment of funds done in the expectation of earning greater amount in future. Returns are subject to uncertainty or variance. Longer the period of investment, greater will be the returns sought. An investor will also like to ensure that the returns are greater than the rate of inflation.An investor will look forward to getting compensated by way of an expected return based on 3 factors:Risk involvedDuration of investment (Time value of money)Expected price levels(inflation)The basic rate or time value of money is the real risk free rate (RRFR) which is free of any risk premium and inflation. This rate generally remains stable; but in the long run there could be gradual changes in the RRFR depending upon factors such as consumption trends, economic growth and openness of the economy.If we include the component of inflation into the RRFR without the risk premium, such a return will be known as nominal risk free rate (NRFR)NRFR + (1+RRFR)*(1+expected rate of inflation)-1Third component is the risk premium that represents all kind of uncertainties and is calculated as fallows-Expected return = NRFR + RISK PREMIUMRISK AND RETURN TRADE OFFThe risk -return tradeoff could be called the “ability-to-sleep-at-night test”. While some people can handle the equivalent of financial skydiving without batting an eye, other are terrified to climb the financial ladder without a secure harness. Deciding what amount of risk you can take while remaining comfortable with your investments is very important.In the investing world, the dictionary definition of risk is the chance that an investment’s actual return will be different than expected. Technically, this is measured in statistics by standard deviation. Risk means you have the possibility of losing some, or even all, of our original investment.Low levels of uncertainty (low risk) are associated with low potential returns. High levels of uncertainty (high risk) are associated with high potential returns. The risk-return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return. This is demonstrated graphically in the chart below. A higher standard deviation means a higher risk and higher possible return.Risk/Return TradeoffLow riskLow returnHigher riskReturnHigh potential returnStandard Deviation (or Risk)A common misconception is that higher risk equals greater return. The risk-return tradeoff tells us that the higher risk gives us the possibility of higher returns. There are no guarantees. Just as risk means higher potential returns, it also means higher potential losses.On the lowest end of the scale, the risk-free of return is represented by the return on US Government securities because their chance of default is next to nothing. If the risk-free rate is currently 6%, this means, with virtually no risk, we can earn 6% per year on our money.The common question arises: who want to earn 6% when index funds average 12% per year over the long run? The answer to this risk is that even the entire market carries risk. The return on index funds is not 12% every year, but rather -5 % one year, 25% the next year, and so on. An investor still faces substantially risk and volatility to get an overall return that is higher than a predictable government security. We call this additional return the risk premium, which is this case is 6% (12%-6%).Determining what risk level is most appropriate for you isn’t an easy question to answer. Risk tolerance differs from person to person. Your decision will depend on your goals, incomes and personal situation, among other factors.Investor makes investment with the objective of earning some tangible benefit. This benefit in financial terminology is termed as return and is a reward for taking a specified amount of risk.Risk is defined as the possibility of the actual return being different from the expected return on an investment over the period of investment. Low risk leads to low returns. For instance, in case of government securities, while the rate of return is low, the risk of defaulting is also low. High risk leads to higher potential returns, but may also lead to higher losses. Long-term returns on stocks are much higher than the returns on government securities, but the risk of losing money is also higher.Rate of return on an investment can be calculated using the following formula-Return = (Amount received-Amount invested)/Amount invested175260422910SOURCES OF RISK COMPONENTS OF RISK:Asper the present conversations risk may be categorized:Market riskCredit riskOperational riskReputation riskLegal riskMarket RiskMarket risk is broadly defined as the risk to an entity of losses resulting from adverse changes in financial assets prices, which could include changes in interest rates, currency rates and commodity prices. Banks perennially exposed to this risk. Keeping the level of computerized and MIS, banks have been advised to adopt easy-to-comprehend analytical tools for management of market risk. International banks, on the other hand, have made, considerable progress in opting more sophisticated techniques like duration, Earnings at risk (EAR), value at risk (VAR) and complex simulation models.Credit Risk:The major activity of any commercial banks is lending and the major risk in lending operation in credit risk is the possibility of losses associated with changes in the credit profile of borrowers or counter parties. These could take the forms of our right default or alternatively, losses from changes in portfolio value arising from actual or perceived deterioration in credit quality. Credit risk involves the inability or unwillingness of a borrower or counterparty to meet its obligations in accordance with the agreed terms.Operational risk:It is defined as any risk other than credit or market risk. It arises out of various types of human and technical errors, environmental risk, legal risk, social risk. The process of operational risk assessments needs to address the likelihood of a particular operational risk occurring. An effective internal audit system and concurrent audit system and concurrent audit system can reduce operation risk to an inspection, to minimizing risk of frauds. The bank will periodically review the system and procedures and guidelines to make them simple and thus minimize operational risk.Reputational risk:Reputation is a paramount importance of banks. Banks only lose their reputation with dire consequences. It is therefore imperative that they safeguard their reputation zealously. Banks must not give double of any sort regarding honoring their L.mitments, ban guarantees and repayment of deposit liabilities. If otherwise in order the banks have not honored their L.C/B.G. commitment and consequently have suffered severe damages to reputation and the risk of complete collapse.Legal risk:Legal risk is the risk that a firm will insure loss if a contractthough was enforced actually is not. The global derivatives study group identified several sources of legal risk for innovative financial instruments that are often associated with risk management, including conflicts between oral contracts formation and the status of frauds in certain countries and jurisdictions ,the capacity of certain types transactions, the enforceability of close meeting, and the legality of financial instrument. In addition, unaccepted changes in law and regulations can expose firms to potential losses as well.TYPES OF RISKMarket Risk:?This is when stock or bond prices drop and you appear to lose money on your investment. However, most losses are sustained over the short term of a year or less. As long as you don't sell, your investment will have the chance to recover from price declines and earn you a greater profit.Inflation Risk:?The risk that the rising costs of inflation will outpace the growth of your investment over pany Risk:?This is the risk that the individual company in which you invest will fail to perform as expected.Credit Risk:?Specific to bonds, credit risk refers to the company or government's inability to repay principal plus interest to the bondholder.Maturity Risk:?Also specific to bonds, this is the risk that the value of a bond may change from the time it is issued to when it matures. The longer the period to maturity, the greater is the potential for price fluctuation. That is why long-term bonds generally offer a higher interest rate to compensate for this greater risk.Legislative Risk:?Whatever laws the government passes today may be extinct tomorrow. For example, the long-term capital gains tax rate has been changed five times in the last 20 years, with the most recent cut at 20%. Factors such as tax deduction and deferral should never be your sole reason for selecting an investment. These perks are at the mercy of Congress.Global Risk:?It's always a bigger risk to invest overseas than at home. Then again, it's generally more rewarding to vacation in Europe than lounging around in the backyard. Over 50% of the world's capital market opportunities exist outside of the U.S., so a purely domestic strategy can severely limit your long-term earnings potential.Timing Risk:?Timing risk works two ways. First, you run the risk of investing a large sum of money when share prices hit their peak. Second, there's the risk that you'll need to access your money to pay for retirement or college expenses during a temporary market setback causing you to lose money on your investment.STATISTICAL TOOLS STANDARD DEVIATION (S.D)COEFFICIENT OF CORRELATIONMEANLINE GRAPH1. Standard Deviation (S.D):This is the most commonly used measure of risk in finance. Its square also is widely used to find out the risk associated with a security. Standard deviation is a statistical term that measures the amount of variability or dispersion around an average. Standard deviation is also a measure of volatility. Generally speaking, dispersion is the difference between the actual value and the average value. The larger this dispersion or variability is, the higher the standard deviation. The smaller this dispersion or variability is the lower the standard deviation. Chartists can use the standard deviation to measure expected risk and determine the significance of certain price movements.STANDARD DEVIATION =(X-X1)2/n2. Variance:In?probability theory?and?statistics, the?variance?is a measure of how far a set of numbers is spread out. It is one of several descriptors of a?probability distribution, describing how far the numbers lie from the?mean?(expected value). In particular, the variance is one of the?moments?of a distribution. In that context, it forms part of a systematic approach to distinguishing between probability distributions. While other such approaches have been developed, those based on?moments?are advantageous in terms of mathematical and computational simplicity.The variance is a?parameter?describing in part either the actual probability distribution of an observed population of numbers, or the theoretical probability distribution of a sample (a not-fully-observed population) of numbers. In the latter case a sample of data from such a distribution can be used to construct an estimate of its variance: in the simplest cases this estimate can be the sample variance.CHAPTER-3COMPANY PROFILE1.1 COMPANY PROFILECD Equisearch has established Brokerage house with over 30 years of rich experience in financial services. It has the Professional Management. It’sguiding principles – Trust, Transparency and Thought leadership and It Empanelled with large number of FII’s and DII’. One of the most reputed names in fundamental research.CD has been set up to engage inStock BrokingEquityDerivativesDepository ServicesDistribution of Investment ProductsDistribution of InsuranceCommodities BrokingCurrencyHeadquartered in Mumbai, CD has a growing network of offices across several states to ensure easy accessibility to our clients wherever they are. CD has Branch Offices spread across the country to offer better reach and service to the investor. 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Open position in FNO and commodities.Viewing and printing of bills.Viewing and printing of ledger for all the segments.Risk Management report.Brokerage report.ManagementCD Equisearch is managed by professional’s who have years of experience in financial service industry – Mr. Chandravadan Desai – ChairmanMr. Pranay Desai – DirectorMr. VikashKalani – COOMr. JayeshVora – CFOGUIDING PRINCIPLEAt CD Equisearch, the selection and recommendations of wealth creating opportunities are primarily based on the 3C Principle’s: Conservation of capital Consistent growth in value of investment over a period of time Continual cash inflow through handsome dividendsProducts and ServicesWe are a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology.EquitiesCD provided the prospect of researched investing to its clients, which was hitherto restricted only to the institutions. Research for the retail investor did not exist prior to CD. CD leveraged technology to bring the convenience of trading to the investor’s location of preference (residence or office) through computerized access. CD made it possible for clients to view transaction costs and ledger updates in real time. PMSOur Portfolio Management Service is a product wherein an equity investment portfolio is created to suit the investment objectives of a client. We at CD invest your resources into stocks from different sectors, depending on your risk-return profile. This service is particularly advisable for investors who cannot afford to give time or don't have that expertise for day-to-day management of their equity portfolio. ResearchSound investment decisions depend upon reliable fundamental data and stock selection techniques. CD Equisearch is proud of its reputation for, and we want you to find the facts that you need. Equity investment professionals routinely use our research and models as integral tools in their work. They choose Ford Equity Research when they can clear your doubts. CommoditiesCD extension into commodities trading reconciles its strategic intent to emerge as a one-stop solutions financial intermediary. Its experience in securities broking has empowered it with requisite skills and technologies. The Company’s commodities business provides a contra-cyclical alternative to equities broking. The company was among the first to offer the facility of commodities trading in India’s young commodities market (the MCX commenced operations only in 2003). Average monthly turnover on the commodity exchanges increased from Rs. 0.34 bntoRs. 20.02 bn. The commodities market has several products with different and non-correlated cycles. On the whole, the business is fairly insulated against cyclical gyrate in the business.Invest OnlineCD has made investing in Mutual funds and primary market so effortless. All you have to do is register with us and that’s all. No paperwork no queues and No registration charges.Invest in Mutual FundCD offers you a host of mutual fund choices under one roof, backed by in-depth research and advice from research house and tools configured as investor friendly. Apply in IPO’sYou could also invest in Initial Public Offers (IPO’s) online without going through the hassles of filling ANY application form/ paperwork.Stay connected to the market: The trader of today, you are constantly on the move. But how do you stay connected to the market while on the move? Simple, subscribe to CD Stock Messaging Service and get Market on your Mobile! InsuranceAn entry into this segment helped complete the client’s product basket; concurrently, it graduated the Company into a one-stop retail financial solutions provider. To ensure maximum reach to customers across India, we have employed a multi-pronged approach and reach out to customers via our Network, Direct and Affiliate channels. Following the opening of the sector in 1999-2000, a number of private sector insurance service providers commenced operations aggressively and helped grow the market. The company’s entry into the insurance sector de-risked the company from a predominant dependence on broking and equity-linked revenues. The annuity based income generated from insurance intermediation result in solid core revenues acrossthetenure of the policy. Wealth Management ServiceImagine a financial firm with the heart and soul of a two-person organization. A world leading wealth Management Company that sits down with you to understand your needs and goals. We offer you a dedicated group for giving you the most personal attention at every level. Roles and Responsibilities in Organization:We will give updates to customers in Economic Outlook and Updates Sector & Company ReportsTechnical RecommendationsDaily Market ReportDaily Technical OutlookReports on New Fund OfferingsWeekly analysis of mutual funds – Fund FocusWeekly debt report: Debt DoseOffer daily technical calls through SMS to our clientsKey learning in organization:EquityMutual FundsTax savings schemes in mutual fundsOnline and Offline tradingIPO (Initial public offer)DerivativesForex marketCurrencyCommoditiesRisk-Return profile in futures and options-s&pcnx niftyCHAPTER-4DATA ANALYSIS&INTERPRETATION4.1 INFOSYSInfosys Limited?(formerly?Infosys Technologies Limited) is an Indian?multinational?provider of business consulting, technology, engineering, and outsourcing services. It is headquartered in?Bangalore, Karnataka.?Infosys is the?third-largest India-based IT services company?by 2012 revenues. Of this revenue, the majority comes from international business. In 2009, Infosys collected 1.2% of its income from the domestic Indian market. Infosys was co-founded in 1981 by?N. R. Narayana Murthy,?NandanNilekani,?N. S. Raghavan,?S. Gopalakrishnan,?S. D. Shibulal,?K. Dinesh?and Ashok Arora after they resigned from?Patni Computer Systems. The company was incorporated as "Infosys Consultants Pvt Ltd." in Model Colony, Pune as the registered office and signed up its first client, Data Basics Corporation, in New York. In 1983, Infosys corporate headquarters was relocated to Bangalore. In 1999, Infosys achieved?Capability Maturity Model?level 5 certification. In recent years, Infosys has begun shifting operations to the?United States?and other countries outside of India. In 2012, Infosys announced a new office in?Milwaukee, Wisconsin to service?Harley-Davidson, being the 18th international office in the United States.?Infosys hired 1,200 United States employees in 2011, and expanded the workforce by an additional 2,000 employees in 2012.?Globally, Infosys has 67 offices between the US, India,?China,?Australia,?Japan, Middle East, UK,?Germany,?France,?Switzerland,?Netherlands,?Poland,?Canada. CALCULATION OF VARIANCESTOCK1- INFOSYS:THE BELOW TABLE REPRESENTS THE MONTH NOVEMBER 2012 RETURNSTABLE NO: 1.1SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2INFYEQ1-Nov-122,362.002,364.650.1121930572.177586683-2.065394.265851INFYEQ2-Nov-122,371.002,388.100.7212146772.177586683-1.456372.121019INFYEQ5-Nov-122,383.102,378.45-0.1951242.177586683-2.372715.629756INFYEQ6-Nov-122,384.002,381.65-0.098573832.177586683-2.276165.180907INFYEQ7-Nov-122,382.002,404.400.940386232.177586683-1.23721.530665INFYEQ8-Nov-122,372.002,375.300.1391231032.177586683-2.038464.155334INFYEQ9-Nov-122,365.002,348.70-0.689217762.177586683-2.86688.218568INFYEQ12-Nov-122,355.002,358.950.1677282382.177586683-2.009864.039531INFYEQ13-Nov-122,354.002,338.30-0.666949872.177586683-2.844548.091388INFYEQ15-Nov-122,335.152,296.30-1.663704692.177586683-3.8412914.75552INFYEQ16-Nov-122,291.002,343.352.2850283722.1775866830.1074420.011544INFYEQ19-Nov-122,344.002,358.550.6207337882.177586683-1.556852.423791INFYEQ20-Nov-122,377.152,324.75-2.20432032.177586683-4.3819119.20111INFYEQ21-Nov-122,329.702,349.850.864918232.177586683-1.312671.723098INFYEQ22-Nov-122,348.002,382.601.4735945492.177586683-0.703990.495605INFYEQ23-Nov-122,382.002,377.55-0.18681782.177586683-2.36445.590409INFYEQ26-Nov-122,390.752,417.401.1147129562.177586683-1.062871.129701INFYEQ27-Nov-122,422.002,470.652.008670522.177586683-0.168920.028533INFYEQ29-Nov-122,450.002,445.25-0.193877552.177586683-2.371465.623843INFYEQ30-Nov-122,441.602,436.85-0.194544562.177586683-2.372135.627007TOTAL4.35517336699.84318Variance = Total /no. of days=99.84318/20 =4.992159Standard Deviation = √ Variance =√ 4.992159= 2.234314STOCK NAME: INFOSYSTHE BELOW TABLE REPRESENTS THE MONTH DECEMBER 2012 RETURNSTABLE NO: 1.2SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2INFYEQ3-Dec-122,437.002,439.150.08822323-3.0700893323.1583139.974938INFYEQ4-Dec-122,429.002,437.450.34787979-3.0700893323.41796911.68251INFYEQ5-Dec-122,429.002,382.50-1.91436805-3.0700893321.1557211.335692INFYEQ6-Dec-122,394.002,338.30-2.32664996-3.0700893320.7434390.552702INFYEQ7-Dec-122,321.002,321.150.00646273-3.0700893323.0765529.465173INFYEQ10-Dec-122,320.952,313.55-0.31883496-3.0700893322.7512547.569401INFYEQ11-Dec-122,316.002,294.05-0.94775475-3.0700893322.1223354.504304INFYEQ12-Dec-122,310.002,297.80-0.52813853-3.0700893322.5419516.461514INFYEQ13-Dec-122,304.952,283.55-0.92843663-3.0700893322.1416534.586676INFYEQ14-Dec-122,273.002,278.800.25516938-3.0700893323.32525911.05735INFYEQ17-Dec-122,267.002,266.25-0.03308337-3.0700893323.0370069.223405INFYEQ18-Dec-122,260.002,271.000.48672566-3.0700893323.55681512.65093INFYEQ19-Dec-122,274.002,296.150.97405453-3.0700893324.04414416.3551INFYEQ20-Dec-122,306.102,299.60-0.28186115-3.0700893322.7882287.774216INFYEQ21-Dec-122,299.002,296.85-0.09351892-3.0700893322.976578.859971INFYEQ24-Dec-122,321.102,322.300.05169963-3.0700893323.1217899.745566INFYEQ26-Dec-122,323.002,315.25-0.33362032-3.0700893322.7364697.488263INFYEQ27-Dec-122,327.802,287.75-1.72050863-3.0700893321.3495811.821368INFYEQ28-Dec-122,302.102,323.200.91655445-3.0700893323.98664415.89333INFYEQ31-Dec-122,315.002,318.700.15982721-3.0700893323.22991710.43236TOTAL-6.14017866167.4348Variance = Total /no. of days=167.4348/20 =8.371738Standard Deviation = √ Variance =√ 8.371738= 2.893396STOCK NAME: INFOSYSTHE BELOW TABLE REPRESENTS THE MONTH JANUARY 2013 RETURNSTABLE NO: 1.3SymbolSeriesDateOpenPriceClosePriceReturns(R1)AverageReturns(R2)R1-R2(R1-R2)2INFYEQ1-Jan-132,327.602,308.85-0.8055507823.14480788-3.9503615.60533INFYEQ2-Jan-132,316.202,309.20-0.3022191523.14480788-3.4470311.882INFYEQ3-Jan-132,315.002,337.900.9892008643.14480788-2.155614.646642INFYEQ4-Jan-132,348.402,349.550.0489695113.14480788-3.095849.584215INFYEQ7-Jan-132,351.102,374.801.008038793.14480788-2.136774.565782INFYEQ8-Jan-132,365.002,344.00-0.887949263.14480788-4.0327616.26313INFYEQ9-Jan-132,340.202,331.00-0.3931287923.14480788-3.5379412.517INFYEQ10-Jan-132,331.002,322.30-0.3732303733.14480788-3.5180412.37659INFYEQ11-Jan-132,521.002,712.107.5803252683.144807884.43551719.67381INFYEQ14-Jan-132,759.802,806.501.6921516053.14480788-1.452662.11021INFYEQ15-Jan-132,806.002,787.05-0.675338563.14480788-3.8201514.59352INFYEQ16-Jan-132,781.002,767.45-0.4872348083.14480788-3.6320413.19173INFYEQ17-Jan-132,792.002,797.950.2131088833.14480788-2.93178.594859INFYEQ18-Jan-132,805.002,788.05-0.6042780753.14480788-3.7490914.05565INFYEQ21-Jan-132,763.052,796.301.2033803223.14480788-1.941433.769141INFYEQ22-Jan-132,793.602,783.55-0.3597508593.14480788-3.5045612.28193INFYEQ23-Jan-132,781.002,789.600.309241283.14480788-2.835578.040438INFYEQ24-Jan-132,810.002,798.20-0.4199288263.14480788-3.5647412.70735INFYEQ25-Jan-132,810.002,814.650.1654804273.14480788-2.979338.876392INFYEQ28-Jan-132,812.002,810.65-0.0480085353.14480788-3.1928210.19408INFYEQ29-Jan-132,806.002,799.00-0.2494654313.14480788-3.3942711.52109INFYEQ30-Jan-132,804.752,790.65-0.5027186023.14480788-3.6475313.30445INFYEQ31-Jan-132,792.002,789.50-0.0895415473.14480788-3.2343510.46102TOTAL6.28961576265.7681Variance = Total /no. of days=265.7681/24 =11.07366975Standard Deviation = √ Variance =√ 11.07366975= 3.327712391FIGURE1.1: GRAPH SHOWING INFOSYS RETURNS FOR NOVEMBER 2012FIGURE1.2: GRAPH SHOWING INFOSYS RETURNS FOR DECEMBER 2012FIGURE1.3: GRAPH SHOWING INFOSYS RETURNS FOR JANUARY 2013TABLE NO.1.4SUMMARY OF STATISTICSNOV 2012DEC 2012JAN 2013RETURNS4.355173-6.1401786.289615MEAN2.177586-3.0700893.144807STANDARD DEVIATION (RISK)2.2343142.8933963.327712VARIANCE4.9921598.37173811.073669FIGURE 1.4:GRAPH SHOWINGINFOSYS RETURNSAND RISKINTERPRETATIONThe above graph shows returns and risk of 3 month i.e. November 2012, December 2012 and January 2013.Here the market condition are going up and down, thus the cause of Europe and US markets are going loss.4.2 HDFC(Housing Development Finance Corporation)HDFC Bank Limited?(BSE:?500180,?NSE:?HDFCBANK,?NYSE:?HDB) is an Indian?financial services?company based in?Maharashtra that was incorporated in August 1994. HDFC Bank is the fifth or sixth largest bank in India by assets and the first largest bank by?market capitalization?as of November 1, 2012. The bank was promoted by the?Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. As on December 2012, HDFC Bank has 2,776 branches and 10,490 ATMs, in 1,399 cities in India, and all branches of the bank are linked on an online real-time basis. As of December 2012 the bank had balance sheet size of Rs. 3837 billion. For the fiscal year 2011-12, the bank has reported net profit of?5,167.07?crore?(US$940.41 million), up 31.6% from the previous fiscal.HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the first companies to receive an 'in principle' approval from the?Reserve Bank of India (RBI)?to set up a bank in the private sector. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies.Times Bank?Limited (owned by Bennett, Coleman & Co. /The Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.In 2008 HDFC Bank acquired?Centurion Bank of Punjab?taking its total branches to more than 1,000. The amalgamated bank emerged with a base of about Rs. 1, 22,000crore and net advances of about Rs.89, 000crore. The balance sheet size of the combined entity is more than Rs. 1, 63,000crore.STOCK 2- HDFC:THE BELOW TABLE REPRESENTS THE MONTH NOVEMBER 2012 RETURNSTABLE NO: 2.1SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2HDFCEQ1-Nov-12758763.50.725593675.174671333-4.4490819.79429HDFCEQ2-Nov-12772766.25-0.74481875.174671333-5.9194935.04036HDFCEQ5-Nov-12767.757700.293064155.174671333-4.8816123.83009HDFCEQ6-Nov-12766.3783.752.277176045.174671333-2.89758.395479HDFCEQ7-Nov-12781.25799.652.35525.174671333-2.819477.949419HDFCEQ8-Nov-12791.25793.80.322274885.174671333-4.852423.54575HDFCEQ9-Nov-12790.1793.950.487280095.174671333-4.6873921.97164HDFCEQ12-Nov-12794.3791.6-0.33992195.174671333-5.5145930.41074HDFCEQ13-Nov-12790.05784.55-0.69615855.174671333-5.8708334.46664HDFCEQ15-Nov-12784.7793.151.076844655.174671333-4.0978316.79218HDFCEQ16-Nov-12789774.85-1.79340945.174671333-6.9680848.55415HDFCEQ19-Nov-12775764.85-1.30967745.174671333-6.4843542.04678HDFCEQ20-Nov-12767782.051.962190355.174671333-3.2124810.32003HDFCEQ21-Nov-12782.15778.75-0.43469925.174671333-5.6093731.46504HDFCEQ22-Nov-12782775.15-0.87595915.174671333-6.0506336.61013HDFCEQ23-Nov-12777.6779.350.225051445.174671333-4.9496224.49874HDFCEQ26-Nov-12784.8775.65-1.16590215.174671333-6.3405740.20287HDFCEQ27-Nov-12779799.22.593068045.174671333-2.58166.664676HDFCEQ29-Nov-12799.55821.82.782815335.174671333-2.391865.720975HDFCEQ30-Nov-12822.05843.52.609330335.174671333-2.565346.580974TOTAL10.3493427474.861Variance = Total /no. of days=474.861/20 =23.74305Standard Deviation = √ Variance =√ 23.74305= 4.872684STOCK NAME: HDFCTHE BELOW TABLE REPRESENTS THE MONTH DECEMBER 2012 RETURNSTABLE NO: 2.2SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2HDFCEQ3-Dec-12840836.2-0.45238095-1.6699711211.217591.482526HDFCEQ4-Dec-12836841.550.663875598-1.6699711212.3338475.446841HDFCEQ5-Dec-12845.5837.95-0.89296274-1.6699711210.7770080.603742HDFCEQ6-Dec-12841844.150.374554102-1.6699711212.0445254.180083HDFCEQ7-Dec-12842.35837.75-0.54609129-1.6699711211.123881.263106HDFCEQ10-Dec-12840865.83.071428571-1.6699711214.741422.48087HDFCEQ11-Dec-12868.35874.950.760062187-1.6699711212.4300335.905062HDFCEQ12-Dec-12875859.7-1.74857143-1.669971121-0.07860.006178HDFCEQ13-Dec-12859.1854.3-0.55872425-1.6699711211.1112471.23487HDFCEQ14-Dec-12856.05852.3-0.43805852-1.6699711211.2319131.517609HDFCEQ17-Dec-12846.2836.85-1.10493973-1.6699711210.5650310.31926HDFCEQ18-Dec-12841.8846.850.599904966-1.6699711212.2698765.152337HDFCEQ19-Dec-12846.6830.75-1.87219466-1.669971121-0.202220.040894HDFCEQ20-Dec-12836831-0.59808612-1.6699711211.0718851.148937HDFCEQ21-Dec-12829.5830.20.084388186-1.6699711211.7543593.077777HDFCEQ24-Dec-12832828.7-0.39663462-1.6699711211.2733371.621386HDFCEQ26-Dec-12830834.70.56626506-1.6699711212.2362365.000752HDFCEQ27-Dec-12839828.45-1.25744934-1.6699711210.4125220.170174HDFCEQ28-Dec-12828.35834.40.730367598-1.6699711212.4003395.761626HDFCEQ31-Dec-12831.55828.85-0.32469485-1.6699711211.3452761.809768TOTAL-3.3399422468.2238Variance = Total /no. of days=68.2238/20 =3.41119Standard Deviation = √ Variance =√ 3.41119= 1.846941STOCK NAME: HDFCTHE BELOW TABLE REPRESENTS THE MONTH JANUARY 2013 RETURNSTABLE NO: 2.3SymbolSeriesDateOpenPriceClosePriceReturns(R1)AverageReturns(R2)R1-R2(R1-R2)2HDFCEQ1-Jan-13834.65832.95-0.203678188-5.314365115.11068726.11912HDFCEQ2-Jan-13837846.61.146953405-5.314365116.46131941.74864HDFCEQ3-Jan-13849.85845.5-0.511855033-5.314365114.8025123.0641HDFCEQ4-Jan-13845837.7-0.863905325-5.314365114.4504619.80659HDFCEQ7-Jan-13842822.95-2.262470309-5.314365113.0518959.314062HDFCEQ8-Jan-13823840.32.102065614-5.314365117.41643155.00344HDFCEQ9-Jan-13840.1830-1.202237829-5.314365114.11212716.90959HDFCEQ10-Jan-13835825.5-1.137724551-5.314365114.17664117.44433HDFCEQ11-Jan-13827809.5-2.116082225-5.314365113.19828310.22901HDFCEQ14-Jan-13810.1827.052.09233428-5.314365117.40669954.8592HDFCEQ15-Jan-13830825.5-0.542168675-5.314365114.77219622.77386HDFCEQ16-Jan-13826818.85-0.865617433-5.314365114.44874819.79136HDFCEQ17-Jan-13820807.6-1.512195122-5.314365113.8021714.4565HDFCEQ18-Jan-13810.8822.71.467686236-5.314365116.78205145.99622HDFCEQ21-Jan-13826.5812.5-1.693889897-5.314365113.62047513.10784HDFCEQ22-Jan-13811813.350.289765721-5.314365115.60413131.40628HDFCEQ23-Jan-13816.8820.850.495837414-5.314365115.81020333.75845HDFCEQ24-Jan-13817.15807.65-1.16257725-5.314365114.15178817.23734HDFCEQ25-Jan-13807.8805.85-0.241396385-5.314365115.07296925.73501HDFCEQ28-Jan-13809801.7-0.902348578-5.314365114.41201719.46589HDFCEQ29-Jan-13801.05802.50.181012421-5.314365115.49537830.19917HDFCEQ30-Jan-13806797.15-1.098014888-5.314365114.2163517.77761HDFCEQ31-Jan-13794786.55-0.938287154-5.314365114.37607819.15006TOTAL-10.62873022602.6961602.6961Variance = Total /no. of days=602.6961/24 =25.11233942Standard Deviation = √ Variance =√ 25.11233942= 5.01122135FIGURE2.1: GRAPH SHOWING HDFC RETURNS FOR NOVEMBER 2012FIGURE2.2: GRAPH SHOWING HDFC RETURNS FOR DECEMBER 2012FIGURE2.3: GRAPH SHOWING HDFC RETURNS FOR JANUARY 2013TABLE NO: 2.4SUMMARY OF STATISTICSNOV 2012DEC 2012JAN 2013RETURNS10.349342-3.339942-10.62873MEAN5.174671-1.669971-5.314365STANDARD DEVIATION (RISK)4.8726841.8469415.011221VARIANCE23.743053.4111925.112339FIGURE 2.4: GRAPH SHOWING HDFC RETURNS AND RISKINTERPRETATIONThe above graph shows returns and risk of 3 month i.e. November 2012, December 2012 and January 2013.Here the market condition are going up and down, thus the cause of Europe and US markets are going loss.4.3 BHEL (Bharat Heavy Electricals Limited)Bharat Heavy Electricals Limited?(BHEL) (BSE:?500103,?NSE:?BHEL) is an Indian state-owned integrated?power plant?equipment manufacturer and operates as an?engineering?and manufacturing company based in?New Delhi, India. Established in 29 August 1956 & Production started from 6 November 1960, BHEL ushered in the indigenous Heavy Electrical Equipment industry in India.?The company has been earning profits continuously since 1971-72?and paying dividends since 1976-77.?It is one of the only 7 mega Public Sector Undertakings (PSUs) of India clubbed under the esteemed 'Maharatna'?status.?On 1 February 2013, the?Government of India??granted?Maharatna?status to?Bharat Heavy Electricals Limited.It is engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil & Gas and Defense. It has 15 manufacturing divisions, two repair units, four regional offices, eight service centers, eight overseas offices and 15 regional centers and currently operates at more than 150 project sites across India and abroad. Most of its manufacturing units and other entities have been accredited to Quality Management Systems (ISO 9001:2008), Environmental Management Systems (ISO 14001:2004) and Occupational Health & Safety Management Systems (OHSAS 18001:2007).It is the 7th largest power equipment manufacturer in the world. In the year 2011, it was ranked ninth most innovative company in the world by US business magazine Forbes. BHEL is the only Indian Engineering company on the list, which contains online retail firm Amazon at the second position with Apple and Google at fifth and seventh positions, respectively.?It is also placed at 4th place in Forbes Asia's Fabulous 50 List of 2010.STOCK 3- BHEL:THE BELOW TABLE REPRESENTS THE MONTH NOVEMBER 2012 RETURNSTABLE NO: 3.1SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2BHELEQ1-Nov-12224.2226.551.0481712761.965091932-0.916920.840743BHELEQ2-Nov-12228.7229.450.3279405331.965091932-1.637152.680265BHELEQ5-Nov-12228.3230.651.029347351.965091932-0.935740.875618BHELEQ6-Nov-12229.35232.751.4824504031.965091932-0.482640.232943BHELEQ7-Nov-12231.75236.952.2437971951.9650919320.2787050.077677BHELEQ8-Nov-12235.5237.951.0403397031.965091932-0.924750.855167BHELEQ9-Nov-12236.1232.25-1.630664971.965091932-3.5957612.92947BHELEQ12-Nov-12231.552320.1943424751.965091932-1.770753.135554BHELEQ13-Nov-12232231.6-0.172413791.965091932-2.137514.568931BHELEQ15-Nov-12230235.352.3260869571.9650919320.3609950.130317BHELEQ16-Nov-12234230.3-1.581196581.965091932-3.5462912.57616BHELEQ19-Nov-12231229.15-0.80086581.965091932-2.765967.650522BHELEQ20-Nov-12230.85228.15-1.169590641.965091932-3.134689.826235BHELEQ21-Nov-12229.2222.2-3.054101221.965091932-5.0191925.1923BHELEQ22-Nov-12223221.3-0.762331841.965091932-2.727427.43884BHELEQ23-Nov-12222.05224.71.1934249041.965091932-0.771670.59547BHELEQ26-Nov-12225221.15-1.711111111.965091932-3.676213.51447BHELEQ27-Nov-12222.55223.90.6066052571.965091932-1.358491.845486BHELEQ29-Nov-12224.6222.15-1.090828141.965091932-3.055929.338647BHELEQ30-Nov-12224.45234.354.4107819111.9650919322.445695.981399TOTAL3.930183863120.2862Variance = Total /no. of days=120.2862/20 =6.014311Standard Deviation = √ Variance =√ 6.014311= 2.452409STOCK NAME: BHELTHE BELOW TABLE REPRESENTS THE MONTH DECEMBER 2012 RETURNSTABLE NO: 3.2SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2BHELEQ3-Dec-12233.1237.852.03775204-2.9121216014.94987424.50125BHELEQ4-Dec-12238.25237.6-0.2728227-2.9121216012.6392996.965899BHELEQ5-Dec-12240237.45-1.0625-2.9121216011.8496223.4211BHELEQ6-Dec-12238.7241.751.2777545-2.9121216014.18987617.55506BHELEQ7-Dec-12243.9243-0.3690037-2.9121216012.5431186.467449BHELEQ10-Dec-12243.65243.5-0.0615637-2.9121216012.8505588.12568BHELEQ11-Dec-12245237.3-3.1428571-2.912121601-0.230740.053239BHELEQ12-Dec-12239232.45-2.7405858-2.9121216010.1715360.029425BHELEQ13-Dec-12232227.95-1.7456897-2.9121216011.1664321.360563BHELEQ14-Dec-12228.25224.9-1.4676889-2.9121216011.4444332.086386BHELEQ17-Dec-12224.8220.9-1.7348754-2.9121216011.1772461.385909BHELEQ18-Dec-12221.3230.24.02169001-2.9121216016.93381248.07774BHELEQ19-Dec-12232.8233.550.32216495-2.9121216013.23428710.46061BHELEQ20-Dec-122312320.43290043-2.9121216013.34502211.18917BHELEQ21-Dec-12230.1227.65-1.0647545-2.9121216011.8473673.412765BHELEQ24-Dec-12228227.6-0.1754386-2.9121216012.7366837.489434BHELEQ26-Dec-12228230.20.96491228-2.9121216013.87703415.03139BHELEQ27-Dec-12230.7226.05-2.0156047-2.9121216010.8965170.803743BHELEQ28-Dec-12227.3227.50.08798944-2.9121216013.0001119.000666BHELEQ31-Dec-12226.25228.250.8839779-2.9121216013.796114.41037TOTAL-5.8242432191.8279Variance = Total /no. of days=191.8279/20=9.591393Standard Deviation = √ Variance =√ 9.591393= 3.096997STOCK NAME: BHELTHE BELOW TABLE REPRESENTS THE MONTH JANUARY 2013 RETURNSTABLE NO: 3.3SymbolSeriesDateOpenPriceClosePriceReturn(R1)AverageReturns(R2)R1-R2(R1-R2)2BHELEQ1-Jan-13230.25232.61.02062975-1.9533656072.9739958.844648BHELEQ2-Jan-13235.8238.050.954198473-1.9533656072.9075648.453929BHELEQ3-Jan-13239.65238.8-0.35468391-1.9533656071.5986822.555783BHELEQ4-Jan-13237.45242.82.253105917-1.9533656074.20647217.6944BHELEQ7-Jan-13243.5239.8-1.51950719-1.9533656070.4338580.188233BHELEQ8-Jan-13239.55243.91.815904822-1.9533656073.7692714.2074BHELEQ9-Jan-13243.25236.9-2.61048304-1.953365607-0.657120.431803BHELEQ10-Jan-13237.5231.9-2.35789474-1.953365607-0.404530.163644BHELEQ11-Jan-13231.5226.85-2.00863931-1.953365607-0.055270.003055BHELEQ14-Jan-13227.25229.250.880088009-1.9533656072.8334548.028459BHELEQ15-Jan-13230228.95-0.45652174-1.9533656071.4968442.240542BHELEQ16-Jan-13228.05225.4-1.16202587-1.9533656070.791340.626219BHELEQ17-Jan-13226.2225.05-0.50839965-1.9533656071.4449662.087927BHELEQ18-Jan-13226226.450.199115044-1.9533656072.1524814.633173BHELEQ21-Jan-13226.4232.052.495583039-1.9533656074.44894919.79314BHELEQ22-Jan-13232230.5-0.64655172-1.9533656071.3068141.707763BHELEQ23-Jan-13230.12310.391134289-1.9533656072.34455.49668BHELEQ24-Jan-13230228.2-0.7826087-1.9533656071.1707571.370672BHELEQ25-Jan-13227.5229.40.835164835-1.9533656072.788537.775902BHELEQ28-Jan-13231.5228.05-1.49028078-1.9533656070.4630850.214448BHELEQ29-Jan-13228.2223.3-2.14723926-1.953365607-0.193870.037587BHELEQ30-Jan-13224.2221.75-1.09277431-1.9533656070.8605910.740617BHELEQ31-Jan-13220.5227.83.310657596-1.9533656075.26402327.70994TOTAL-3.90673121136.0641Variance = Total /no. of days=136.0641/24=5.669338201Standard Deviation = √ Variance =√ 5.669338201=2.381037211FIGURE3.1: GRAPH SHOWING BHEL RETURNS FOR NOVEMBER 2012FIGURE3.2: GRAPH SHOWING BHEL RETURNS FOR DECEMBER 2012FIGURE3.3: GRAPH SHOWING BHEL RETURNS FOR JANUARY 2013TABLE NO: 3.4SUMMARY OF STATISTICSNOV 2012DEC 2012JAN 2013RETURNS3.930183-5.82424-3.90673MEAN1.9650912.912121-1.95336STANDARD DEVIATION (RISK)2.4524093.0969972.381037VARIANCE6.0143119.5913935.669338FIGURE3.4:GRAPH SHOWING BHEL RETURNS AND RISKINTERPRETATIONThe above graph shows returns and risk of 3 month i.e. November 2012, December 2012 and January 2013.Here the market condition are going up and down, thus the cause of Europe and US markets are going loss.4.4 ACC ( Associated Cement Companies?)ACC Limited?(Formerly?The Associated Cement Companies Limited) (BSE:?500410,?NSE:?ACC) is the largest producer of cement in?India based in?Mumbai.?Its registered office is called Cement House. It is located on Maharishi Karve Road,?Mumbai.?The stock price of company contributes in calculating?BSE Sensex.The management control of company was taken over by Swiss cement major?Holcim?in 2004. On 1 September 2006 the name of The Associated Cement Companies Limited was changed to ACC Limited. The company is only Cement Company to get Super brand status in India.In 1936 ten cement companies belonging to Tata’s, Khataus,?Killick, Nixonand FE Dinshaw?groups merged to form a single entity, The Associated Cement Companies.?Sir Nowroji B Saklatvala?was the first chairman of ACC. The first board of directors had some prominent industrialists -?J R D Tata,?Ambalal Sarabhai,?WalchandHirachand,?DharamseyKhatau,?Sir Akbar Hydari,?NawabSalar Jung Bahadur?and?Sir HomyMody.STOCK 4- ACC CEMENT:THE BELOW TABLE REPRESENTS THE MONTH NOVEMBER 2012 RETURNSTABLE NO: 4.1SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2ACCEQ1-Nov-121,384.951,395.100.732878443-1.0439577531.7768363.157147ACCEQ2-Nov-121,406.151,408.400.160011379-1.0439577531.2039691.449542ACCEQ5-Nov-121,409.001,436.551.955287438-1.0439577532.9992458.995472ACCEQ6-Nov-121,434.901,473.402.683113806-1.0439577533.72707213.89106ACCEQ7-Nov-121,473.001,472.70-0.0203666-1.0439577531.0235911.047739ACCEQ8-Nov-121,461.001,473.400.848733744-1.0439577531.8926913.582281ACCEQ9-Nov-121,478.851,453.25-1.73107482-1.043957753-0.687120.47213ACCEQ12-Nov-121,464.601,434.45-2.05858255-1.043957753-1.014621.029463ACCEQ13-Nov-121,435.001,423.80-0.7804878-1.0439577530.263470.069416ACCEQ15-Nov-121,420.051,404.40-1.10207387-1.043957753-0.058120.003377ACCEQ16-Nov-121,410.951,378.10-2.32821858-1.043957753-1.284261.649326ACCEQ19-Nov-121,380.001,382.650.192028986-1.0439577531.2359871.527663ACCEQ20-Nov-121,385.001,378.90-0.44043321-1.0439577530.6035250.364242ACCEQ21-Nov-121,385.351,384.30-0.07579312-1.0439577530.9681650.937343ACCEQ22-Nov-121,381.101,391.650.763883861-1.0439577531.8078423.268291ACCEQ23-Nov-121,393.001,381.30-0.83991385-1.0439577530.2040440.041634ACCEQ26-Nov-121,385.001,382.80-0.15884477-1.0439577530.8851130.783425ACCEQ27-Nov-121,385.001,390.500.397111913-1.0439577531.441072.076682ACCEQ29-Nov-121,385.101,396.100.794166486-1.0439577531.8381243.378701ACCEQ30-Nov-121,399.001,383.90-1.07934239-1.043957753-0.035380.001252TOTAL-2.0879155147.72619Variance = Total /no. of days=47.72619/20=2.386309Standard Deviation = √ Variance =√ 2.386309= 1.544768STOCK NAME: ACCTHE BELOW TABLE REPRESENTS THE MONTH DECEMBER 2012 RETURNSTABLE NO: 4.2SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2ACCEQ3-Dec-121,392.251,435.903.13521279-0.7946775853.9298915.44404ACCEQ4-Dec-121,437.001,426.65-0.7202505-0.7946775850.0744270.005539ACCEQ5-Dec-121,427.301,431.950.32578995-0.7946775851.1204681.255448ACCEQ6-Dec-121,430.101,418.35-0.8216209-0.794677585-0.026940.000726ACCEQ7-Dec-121,425.001,414.80-0.7157895-0.7946775850.0788880.006223ACCEQ10-Dec-121,414.801,413.50-0.0918858-0.7946775850.7027920.493916ACCEQ11-Dec-121,416.001,427.900.84039548-0.7946775851.6350732.673464ACCEQ12-Dec-121,439.001,421.05-1.247394-0.794677585-0.452720.204952ACCEQ13-Dec-121,433.001,396.05-2.5785066-0.794677585-1.783833.182046ACCEQ14-Dec-121,403.001,404.350.09622238-0.7946775850.89090.793703ACCEQ17-Dec-121,404.901,414.650.69399957-0.7946775851.4886772.21616ACCEQ18-Dec-121,415.551,410.65-0.3461552-0.7946775850.4485220.201172ACCEQ19-Dec-121,424.001,415.05-0.6285112-0.7946775850.1661660.027611ACCEQ20-Dec-121,416.001,402.50-0.9533898-0.794677585-0.158710.02519ACCEQ21-Dec-121,399.001,397.30-0.1215154-0.7946775850.6731620.453147ACCEQ24-Dec-121,397.501,410.850.95527728-0.7946775851.7499553.062342ACCEQ26-Dec-121,414.951,415.250.02120216-0.7946775850.815880.66566ACCEQ27-Dec-121,419.701,402.90-1.1833486-0.794677585-0.388670.151065ACCEQ28-Dec-121,405.001,409.450.31672598-0.7946775851.1114041.235218ACCEQ31-Dec-121,411.951,432.201.43418676-0.7946775852.2288644.967836TOTAL-1.589355237.06546Variance = Total /no. of days=37.06546/20=1.853273Standard Deviation = √ Variance =√ 1.853273= 1.36135STOCK NAME: ACCTHE BELOW TABLE REPRESENTS THE MONTH JANUARY 2013 RETURNSTABLE NO: 4.3SymbolSeriesDateOpenPriceClosePriceReturn(R1)AverageReturn(R2)R1-R2(R1-R2)2ACCEQ1-Jan-131,440.001,431.10-0.61805556-5.1124131344.49435820.19925ACCEQ2-Jan-131,437.201,429.50-0.53576399-5.1124131344.57664920.94572ACCEQ3-Jan-131,432.551,436.300.261770968-5.1124131345.37418428.88185ACCEQ4-Jan-131,443.801,434.80-0.62335504-5.1124131344.48905820.15164ACCEQ7-Jan-131,439.001,417.45-1.49756776-5.1124131343.61484513.06711ACCEQ8-Jan-131,415.001,417.650.187279152-5.1124131345.29969228.08674ACCEQ9-Jan-131,420.001,397.70-1.57042254-5.1124131343.54199112.5457ACCEQ10-Jan-131,400.601,379.05-1.5386263-5.1124131343.57378712.77195ACCEQ11-Jan-131,382.001,361.40-1.49059334-5.1124131343.6218213.11758ACCEQ14-Jan-131,363.101,360.35-0.20174602-5.1124131344.91066724.11465ACCEQ15-Jan-131,364.001,388.401.788856305-5.1124131346.90126947.62752ACCEQ16-Jan-131,387.001,384.50-0.18024513-5.1124131344.93216824.32628ACCEQ17-Jan-131,381.001,358.85-1.60391021-5.1124131343.50850312.30959ACCEQ18-Jan-131,360.501,345.15-1.12826167-5.1124131343.98415115.87346ACCEQ21-Jan-131,346.051,335.50-0.78377475-5.1124131344.32863818.73711ACCEQ22-Jan-131,328.951,358.902.253658904-5.1124131347.36607254.25902ACCEQ23-Jan-131,358.051,355.10-0.21722322-5.1124131344.8951923.96288ACCEQ24-Jan-131,348.201,345.90-0.17059783-5.1124131344.94181524.42154ACCEQ25-Jan-131,339.001,326.75-0.91486184-5.1124131344.19755117.61944ACCEQ28-Jan-131,330.101,328.85-0.0939779-5.1124131345.01843525.18469ACCEQ29-Jan-131,329.001,304.90-1.81339353-5.1124131343.2990210.88353ACCEQ30-Jan-131,310.251,324.751.106659035-5.1124131346.21907238.67686ACCEQ31-Jan-131,328.001,323.10-0.3689759-5.1124131344.74343722.5002TOTAL-10.2248263551.8005Variance = Total /no. of days=551.8005/24=22.9916895Standard Deviation = √ Variance =√ 22.9916895=4.794965015FIGURE4.1: GRAPH SHOWING ACC RETURNS FOR NOVEMBER 2012FIGURE4.2: GRAPH SHOWING ACC RETURNS FOR DECEMBER 2012FIGURE4.3: GRAPH SHOWING ACC RETURNS FOR JANUARY 2013TABLE NO: 4.4SUMMARY OF STATISTICSNOV 2012DEC 2012JAN 2013RETURNS-2.08791-1.589355-10.22482MEAN-1.043957-0.794677-5.112413STANDARD DEVIATION (RISK)1.5447681.361354.794965VARIANCE2.3863091.85327322.991689FIGURE4.4: GRAPH SHOWING ACC RETURNS AND RISKINTERPRETATIONThe above graph shows returns and risk of 3 month i.e. November 2012, December 2012 and January 2013.Here the market condition are going up and down, thus the cause of Europe and US markets are going loss.4.5 RELIANCE INFRASTRUCTUREReliance Infrastructure Ltd.?(BSE:?500390,?NSE:?RELINFRA) formerly known as?Reliance Energy?and prior to that as?Bombay Suburban Electric Supply (BSES), Its India's largest private sector enterprise in power utility[3]?and it’s a company under the?Reliance Anil DhirubhaiAmbani Group?banner, one of India's largest conglomerates. The company is headed by?Anil Ambani. The company's corporate headquarters is situated in Mumbai.?The company is the sole distributor of electricity to consumers in the suburbs of?Mumbai. It also runs power generation, transmission and distribution businesses in other parts of?Maharashtra,?Goa?and?Andhra Pradesh.Reliance Energy came into existence when it took over BSES in 2002. In April 2008, Reliance Energy changed its name to Reliance Infrastructure.STOCK 5- RELIANCE INFRASTRUCTURE:THE BELOW TABLE REPRESENTS THE MONTH NOVEMBER 2012 RETURNSTABLE NO: 5.1SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2RELINFRAEQ1-Nov-12472.05481.92.0866433640.5654557541.5211882.314012RELINFRAEQ2-Nov-12487.1486.75-0.0718538290.565455754-0.637310.406164RELINFRAEQ5-Nov-12485.1487.60.5153576580.565455754-0.05010.00251RELINFRAEQ6-Nov-12483.05478.75-0.8901770.565455754-1.455632.118867RELINFRAEQ7-Nov-12480.5485.050.9469302810.5654557540.3814750.145523RELINFRAEQ8-Nov-12480476.35-0.7604166670.565455754-1.325871.757938RELINFRAEQ9-Nov-12477.9471.05-1.4333542580.565455754-1.998813.995241RELINFRAEQ12-Nov-12471.5473.850.4984093320.565455754-0.067050.004495RELINFRAEQ13-Nov-12473471.35-0.3488372090.056545575-0.405380.164335RELINFRAEQ15-Nov-12467474.351.5738758030.5654557541.008421.016911RELINFRAEQ16-Nov-12472462.3-2.0550847460.565455754-2.620546.867233RELINFRAEQ19-Nov-12462458.8-0.6926406930.565455754-1.25811.582807RELINFRAEQ20-Nov-12462.25449.95-2.6608977830.565455754-3.2263510.40936RELINFRAEQ21-Nov-12452.25454.80.563847430.565455754-0.001612.59E-06RELINFRAEQ22-Nov-12456.65460.150.766451330.5654557540.2009960.040399RELINFRAEQ23-Nov-12460.5455.9-0.9989142240.565455754-1.564372.447253RELINFRAEQ26-Nov-12457457.750.1641137860.565455754-0.401340.161075RELINFRAEQ27-Nov-124614712.1691973970.5654557541.6037422.571987RELINFRAEQ29-Nov-12473.9476.30.5064359570.565455754-0.059020.003483RELINFRAEQ30-Nov-12479.3485.31.2518255790.5654557540.686370.471104TOTAL1.13091150936.4807Variance = Total /no. of days=36.4807/20=1.824035Standard Deviation = √ Variance =√ 1.824035=1.350568STOCK NAME: RELIANCE INFRASTRUCTURETHE BELOW TABLE REPRESENTS THE MONTH DECEMBER 2012 RETURNSTABLE NO: 5.2SymbolSeriesDateOpen PriceClose PriceReturns(R1)Average Returns(R2)R1-R2(R1-R2)2RELINFRAEQ3-Dec-12488.2488.70.1024170421.014234754-0.9118177110.831411539RELINFRAEQ4-Dec-12488498.22.0901639341.0142347541.0759291811.157623602RELINFRAEQ5-Dec-12503500.65-0.4671968191.014234754-1.4814315732.194639504RELINFRAEQ6-Dec-12504.95512.31.4555896621.0142347540.4413549090.194794155RELINFRAEQ7-Dec-12514.75507.05-1.4958717821.014234754-2.5101065366.300634822RELINFRAEQ10-Dec-12510.5518.551.5768854061.0142347540.5626506530.316575757RELINFRAEQ11-Dec-12521517.2-0.7293666031.014234754-1.7436013563.04014569RELINFRAEQ12-Dec-12519.5526.451.3378248321.0142347540.3235900780.104710539RELINFRAEQ13-Dec-12527.25515.1-2.3044096731.014234754-3.31864442611.01340083RELINFRAEQ14-Dec-12518.2521.150.5692782711.014234754-0.4449564830.197986271RELINFRAEQ17-Dec-12519.35515.5-0.7413112541.014234754-1.7555460083.081941786RELINFRAEQ18-Dec-12513.65523.151.849508421.0142347540.8352736670.697682098RELINFRAEQ19-Dec-12526.9526.25-0.1233630671.014234754-1.1375978211.294128801RELINFRAEQ20-Dec-12524.5522.6-0.3622497621.014234754-1.3764845151.894709621RELINFRAEQ21-Dec-12518.2514.25-0.7622539561.014234754-1.776488713.155912135RELINFRAEQ24-Dec-12515517.250.4368932041.014234754-0.577341550.333323265RELINFRAEQ26-Dec-12517521.150.802707931.014234754-0.2115268230.044743597RELINFRAEQ27-Dec-12524.1515.5-1.6409082241.014234754-2.6551429777.049784229RELINFRAEQ28-Dec-12517.1517.05-0.009669311.014234754-1.0239040631.048379531RELINFRAEQ31-Dec-12518.25520.550.4438012541.014234754-0.5704334990.325394377TOTAL2.02846950744.27792215Variance = Total /no. of days=44.27792215/20=2.213896Standard Deviation = √ Variance =√ 2.213896=1.487917STOCK NAME: RELIANCE INFRASTRUCTURETHE BELOW TABLE REPRESENTS THE MONTH JANUARY 2013 RETURNSTABLE NO: 5.3SymbolSeriesDateOpenPriceClosePriceReturn(R1)AverageReturn(R2)R1-R2( R1-R2)2RELINFRAEQ1-Jan-13525544.153.647619048-2.0811974115.72881632.81RELINFRAEQ2-Jan-13549543.35-1.029143898-2.0811974111.0520541.10RELINFRAEQ3-Jan-135465460-2.0811974112.0811974.33RELINFRAEQ4-Jan-13543.5547.20.680772769-2.0811974112.761977.62RELINFRAEQ7-Jan-13549.2550.950.318645302-2.0811974112.3998435.75RELINFRAEQ8-Jan-13550.2567.13.071610324-2.0811974115.15280826.55RELINFRAEQ9-Jan-13567.5560.35-1.259911894-2.0811974110.8212860.67RELINFRAEQ10-Jan-13565565.650.115044248-2.0811974112.1962424.82RELINFRAEQ11-Jan-13566.25547.9-3.240618102-2.081197411-1.159421.34RELINFRAEQ14-Jan-13548.7558.551.795152178-2.0811974113.8763515.02RELINFRAEQ15-Jan-13558555-0.537634409-2.0811974111.5435632.38RELINFRAEQ16-Jan-13553.2535.8-3.145336226-2.081197411-1.064141.13RELINFRAEQ17-Jan-13534.7526.2-1.589676454-2.0811974110.4915210.24RELINFRAEQ18-Jan-13526.95527.30.066419964-2.0811974112.1476174.61RELINFRAEQ21-Jan-13527.8548.53.921940129-2.0811974116.00313836.03RELINFRAEQ22-Jan-13551.25540.55-1.941043084-2.0811974110.1401540.01RELINFRAEQ23-Jan-13543.5534.3-1.692732291-2.0811974110.3884650.15RELINFRAEQ24-Jan-13534.5518.1-3.06828812-2.081197411-0.987090.97RELINFRAEQ25-Jan-13516.05540.154.670090108-2.0811974116.75128845.57RELINFRAEQ28-Jan-13540.1529.15-2.027402333-2.0811974110.0537950.002RELINFRAEQ29-Jan-13529518.55-1.975425331-2.0811974110.1057720.011RELINFRAEQ30-Jan-13521.45518.4-0.58490747-2.0811974111.496292.23RELINFRAEQ31-Jan-13516.1515.5-0.116256539-2.0811974111.9649413.86TOTAL-4.162394822Variance = Total /no. of days=200.6954/24=8.362309322Standard Deviation = √ Variance =√ 8.362309322=2.891765779FIGURE5.1: GRAPH SHOWING RELINFRA RETURNS FOR NOVEMBER 2012FIGURE5.2: GRAPH SHOWING RELINFRA RETURNS FOR DECEMBER 2012FIGURE5.3: GRAPH SHOWING RELINFRA RETURNS FOR JANUARY 2013TABLE NO: 5.4SUMMARY OF STATISTICSNOV 2012DEC 2012JAN 2013RETURNS1.1309112.028469-4.16239MEAN0.56545571.0142342.081197STANDARD DEVIATION (RISK)1.3505681.4879172.891765VARIANCE1.8240352.2138968.362309FIGURE5.4:GRAPH SHOWING RELINFRA RETURNS AND RISKINTERPRETATIONThe above graph shows returns and risk of 3 month i.e. November 2012, December 2012 and January 2013.Here the market condition are going up and down, thus the cause of Europe and US markets are going loss.4.6 RESULTSTABLE NO 6.1SR.NOCOMPANIESNOVEMBER 2012DECEMBER 2012JANUARY SYS4.3552.234-6.1402.8936.2893.3272.HDFC10.3494.872-3.3391.846-10.6285.0113.BHEL3.9302.452-5.8243.096-3.9062.3814.ACC -2.0871.544-1.5891.361-10.2244.7945.RELIINFRA1.1301.3502.0281.487-4.1622.891INTERPRETATION: If the returns are taken into the consideration HDFC tops the first position with 10.349. The least return isalso given by HDFC with -10.62.Among the five companies HDFC is having the highest risk with Standard Deviation of 5.01 & RELIANCE INFRASTRUCTURE is having the least Standard Deviation of 1.35Hence the investors can invest in INFOSYS as it has the possibility of increasing its returns and also can invest in RELIANCE INFRASTRUCTURE as the risk involved is lower as compared to that of other equities.CHAPTER-5FINDINGSSUGGESTIONSLIMITATIONSCONCLUSION5.1 FINDINGSAfter the data is analyzed the following facts have been SYSIf we see the trend of INFOSYS Equity fund, it has ups and downs in trends.In the starting month i.e. 3-Nov-2012 the close price is 2364 whereas in month end i.e. 31-Jan-2013 the close price is 2789.In INFOSYS, the average risk of 3 months is 2.818 and the average return is 1.501.HDFCIf we see the trend of HDFC Equity fund, it has ups and downs in trends.In the starting month i.e. 3-Nov-2012 the close price is 763.5 whereas in month end i.e. 31-Jan-2013 the close price is 786.55.In HDFC, the average risk of 3 months is 3.9096 and the average return is -3.618.3. BHELIf we see the trend of BHEL Equity fund, it has ups and downs in trends.In the starting month i.e. 3-Nov-2012 the close price is 226.55 whereas in month end i.e. 31-Jan-2013 the close price is 227.8.In BHEL, the average risk of 3 months is 2.643 and the average return is -1.933.4. ACC:If we see the trend of ACC Equity fund, it has ups and downs in trends.In the starting month i.e. 3-Nov-2012 the close price is 1395.10 whereas in month end i.e. 31-Jan-2013 the close price is 1323.10.In ACC, the average risk of 3 months is 2.566 and the average return is -4.633.5. RELINFRA:If we see the trend of RELINFRA Equity fund, it has ups and downs in trends.In the starting month i.e. 3-Nov-2012 the close price is 481.9 whereas in month end i.e. 31-Jan-2013 the close price is 515.5.In RELINFRA, the average risk of 3 months is 1.909 and the average return is -0.3345.2 SUGGESTIONSAfter observing the data, many facts are found out. After the analysis and interpretation the following suggestions are made to the investor.When there is more risk, the return will also be highs but this does not hold in all situations especially in the case of economic crises.As the world economy is influenced by US economy, the worst scenario is US economy is influencing the others countries stock markets.The sentiments and emotions sometimes play a vital role in causing fluctuations in the stock markets. Therefore it is advisable not to invest at the time of crisis.When markets are sliding down steeply, the investors will not be protected against the risk of investment. Therefore it is advisable not to invest when the markets are very volatile.Always it is felt that market position never stays for a long time. In this position bullish and bearish markets end after some time. Therefore one can invest at the time of bearish market and soon after they reach bullish trend they can sell them off.5.3 LIMITATIONS OF THE STUDY This project report data is collected mainly from secondary sources.This project analysis report may not be applicable in all equity markets.Project took only 5 companies of NSE for equity analysis. It will not be applicable to total NSE’S Nifty index.The accuracy of the study is based on the accuracy of the data present in the NSE listingsDetailed study of topic was not possible due to limited size of the project. The time taken for the study is limited.5.4 CONCLUSIONThe present project work has been undertaken to study the risk-return relationship of individual securities as well as nifty index to observe whether the stock prices have any relationship with risk and return. As this project work is done by studying 5 individual stocks of nifty and nifty index, there is much scope for the analysis, interpretation and conclusion.As the economy is fluctuating very badly, the stock prices are affected by these fluctuations and the market has become so volatile. In this situation investors should be very careful. The firm which is dealing in the trading of share market should be caution enough so that investors may not suffer losses.CHAPTER-6BIBLIOGRAPHY6.1 BIBLIOGRAPHYBooks:Investing ManagementBy Preeti SinghHimalaya Publishing HouseSecurity analysis and portfolio managementBy punithvathyPandiyamVikas Publishing House pvt. Ltd.Financial Markets & ServicesGordon NatarajanHimalaya Publishing HouseThe Indian Financial SystemBharati V. PathakDorling Kindersley (India) pvt. Ltd.Journals:Journals of financial economicsJournals of financeJournals of financial and quantitative analysisReview of financial studiesFinancial reviewThe journal of businessFinancial India-the quarterly journal of financeIndian journal of financeFinancial analysts journalsInternational journal of finance and economicsWebsites:glossary. ................
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