Stock Returns of Sensex 20

Stock Returns of Sensex 20

KARNATAK UNIVERSITY
DHARWAD

A PROJECT REPORT ON

“STOCK RETURNS OF SENSEX 20”
SUBMITTED TO KARNATAK UNIVERSITY IN PARTIAL
FULFILMENT FOR REQUIREMENT OF THE DEGREE OF

MASTER OF COMMERCE

Submitted by Under the Guidance of
Mahesh M. Agasimani DR. S. G. Hundekar
Reg No: 10c01171

Department of Commerce , Karnatak University Dharwad Page 1


KARNATAK UNIVERSITY
DHARWAD

Certificate

Reg.No: 10c01171 Date: 09-07-2012

This is to certify that this project entitled “Stock Returns of Sensex 20"

Submitted by Mr Mahesh M. Agasimani for the partial fulfillment of

the Degree of Master of Commerce is based on the result of experiment

carried out by him at P.G.Department of studies in Commerce,

Karnatak University, Dharwad, for the academic year 2011-2012.

GUIDE Chairman

Dr. S. G. Hundekar Dr. S. S. Hugar



CONTENTS
SL.No TITLES PAGE NO

Chapter-1
1) EXECUTIVE SUMMARY
2) OBJECTIVES OF THE STUDY
01 3) SCOPE OF THE STUDY 1-4
4) METHODOLOGY
5) LIMITATIONS OF THE STUDY

02 Chapter -2 5-26
SENSEX AND THE COMPANIES

Chapter-3
03 27-35
CONCEPTUAL FRAMEWORK OF STOCK
RETURNS

04 Chapter-4 36-61
ANALYSIS AND INTERPREATION

Chapter-5
05 62-64
FINDINGS, SUGGESTIONS AND CONCLUSION

06 BIBILOGRAPHY 65

Abbreviation



Particulars Abbreviation

Airtel AIR

Bajaj BJJ

Cipla CPL

DLF DLF

Housing Development Financial HDFC
Corp
HindalCo HIND

Hindustan Unilever Limited HUL

Industrial Development Bank of IDBI
India
Infosys INFY

Indian Tobacco Company ITC

Jaiprakash Associates JAP

Jindal Steel Works JSW

Larsen and Toubro L&T

Mahindra and Mahindra M&M

Maruti Suzuki MSZ

National Thermal Power Corp NTPC

Oil and Natural Gas Company ONGC

Reliance Industries RIL

State Bank of India SBI

Tata Motors TM

Sensex SX



Chapter 1
INTRODUCTION



1.1 Executive Summary

S tock Returns can provide insight into the structure of the financial market.
It is generally believed that the relationship between stock return and
Market return can provide an insight into the structure of capital market. The
main objectives of study to ascertain the Stock Return changes in the Bombay
Stock Exchange. Second the correlation between Stock Returns and Market
Returns. Pricing of stock is an issue heavily discussed in the areas of finance,
economics, and accounting. Generally it is known that pricing react to the arrival
of new information. Investors in the stock markets frequently revise their
expected prices of stocks depending on the flow of information relating to the
returns.
The current study is on Stock Returns of Sensex 20 Companies and Market
Returns, calculated for Weekly, Monthly, Quarterly, Half Yearly, and Annual
Period from closing prices of 20 companies in the Bombay Stock Exchange.

1.2 Objective of the Study
The objectives of the study is
 To know the stock performance of Sensex 20 Companies.
 To determine the Volatility of Sensex 20 Companies.
 To know the market performance in the FY 2011-12.
 To know the Excess Stock returns.

1.3. Need for Study
There exists a considerable amount of evidence both for and against various
level of efficiency for developed capital market. However, the capital market
of the developing world such as that of India has been less subjected to
efficiency Work. Therefore, further investigations on individual stock return
data would provide more conclusive evidence. The knowledge of stock return
in stock market can prove useful for investors.



By properly timing their buy and sell decisions, they can enhance their
adjusted profit, altering the time of routinely scheduled transaction in the
light of trading volume changes can enhancing one‘s return on investment.
The proposed study provides a useful insight into the behaviour of return
changes in the Indian capital market.

1.3 Scope of the study
The Scope of the study is exclusively conducted for Sensex 20 Companies. The
data sets include the opening and closing prices of the BSE Sensex 20
companies’ taken after adjusting to the dividends. The returns are calculated
for a period from April 2011 to March 2012 to maintain homogeneity in the
data.

1.4 Methodology
The project is an analytical work, where in the work, has to use the available
facts as information and analyze these to make a critical evaluation of
material. The Information furnished in this report has been calculated from
secondary Data only.
This study comprises a period of a year starting from April -1-2011 to March-
31-2011 i.e., for financial year 2011-2012. The units of analysis include 20
companies at the end of March 2012 that are listed on Bombay Stock
Exchange. The filtering process of companies includes 3 criteria.
First, the company must be listed on the Bombay Stock Exchange
before 1 April 2011.
Second, the stocks of companies must not be suspended for more than
12 months at any time Period.
Third, the stocks of companies must not be delisted during the period
of study.
Therefore, this study employs a data set of 20 Companies that are selected
based on five criteria and also BSE Sensex.



Secondary Data
The Secondary data is obtained from internet and respective companies’
website.
There are four approaches of calculating the stock returns viz:-
i. Open to Open method
ii. Open to Close Method
iii. Close to Close Method
iv. Close to Open Method
This work is based on Close to Close approach of calculating the stock
returns.

1.5 Limitations of the Study
The Good report interprets the result of the study. But every project has its
own limitations. The following are some of the limitations of the study.
1. The Study is done on basis of stock prices of the companies.
2. There is no hard and fast rule of calculating the stock returns.
3. The study is limited to only Sensex 20 companies out of all sensex listed
companies.
4. The Study is limited to only for the financial year 2011-12, i.e., April 2011 to
March 2012.
5. This study doesn’t consider the fundamental factors effecting the stock
returns.



Chapter 2
BSE SENSEX & COMPANIES



2.1 Introduction to BSE Sensex

BSE Limited is the oldest stock exchange in Asia What is now popularly known as
the BSE was established as "The Native Share & Stock Brokers' Association" in
1875.

Over the past 135 years, BSE has facilitated the growth of the Indian corporate
sector by providing it with an efficient capital raising platform.

Today, BSE is the world's number 1 exchange in the world in terms of the number of
listed companies (over 4900). It is the world's 5th most active in terms of number of
transactions handled through its electronic trading system. And it is in the top ten of
global exchanges in terms of the market capitalization of its listed companies

In the year of 1986, Bombay Stock Exchange Limited introduced the Stock Index that
eventually became the most important stock index of the country.

The SENSEX was based on the market-capitalization-weighted method and it
included the stocks of large and financially well established companies. From


September 2003, the SENSEX is measured on the method of free-float market
capitalization.

Apart from maintaining BSE SENSEX, the Bombay Stock Exchange also maintains
some other stock indices like:
SENSEX

MIDCAP

SMLCAP

BSE-100

BSE-200

BSE-500

Vision

"Emerge as the premier Indian stock exchange by establishing global
benchmarks"

Timing

Trading on the BOLT System is conducted from Monday to Friday between 9:15 a.m.
and 3:30 p.m. normally. Refer Notice No. 20101014-8 for call auction.

Heritage

The first ever stock exchange in Asia (established in 1875) and the first in the
country to be granted permanent recognition under the Securities Contract
Regulation Act, 1956, BSE Limited has had an interesting rise to prominence over
the past 133 years

While BSE Limited is now synonymous with Dalal Street, it was not always so. The
first venues of the earliest stock broker meetings in the 1850s were in rather natural
environs - under banyan trees - in front of the Town Hall, where Horniman Circle is
now situated.



A decade later, the brokers moved their venue to another set of foliage, this time
under banyan trees at the junction of Meadows Street and what is now called
Mahatma Gandhi Road. As the number of brokers increased, they had to shift from
place to place, but they always overflowed to the streets.

At last, in 1874, the brokers found a permanent place, and one that they could, quite
literally, call their own. The new place was, aptly, called Dalal Street (Brokers'
Street).

In 2002, the name "The Stock Exchange, Mumbai" was changed to Bombay Stock
Exchange. Subsequently on August 19, 2005, the exchange turned into a corporate
entity from an Association of Persons (AoP) and renamed as Bombay Stock
Exchange Limited.

Several Firsts

At par with the international standards, BSE Limited has in fact been a pioneer in
several areas. It has several firsts to its credit even in an intensely competitive
environment.

 First in India to introduce Equity Derivatives.
 First in India to launch a Free Float Index.
 First in India to launch US$ version of BSE Limited.
 First in India to launch Exchange Enabled Internet Trading Platform.
 First in India to obtain ISO certification for a stock exchange.
 'BSE On-Line Trading System' (BOLT) has been awarded the globally
recognised Information Security Management System standard Award.
 First to have an exclusive facility for financial training.
 First in India in the financial services sector to launch its website in Hindi and
Gujarati.
 Shifted from Open Outcry to Electronic Trading within just 50 days.
 First bell-ringing ceremony in the history of the Indian capital markets
(listing ceremony of Bharti Televentures Ltd. on February 18, 2002)



2.2 Functions of BSE

i. Ideal Meeting Place: It provides an ideal and convenient platform for
meeting of both the parties ready to invest and parties with profitable
projects.
ii. Mobilization of Savings: It provides an ample opportunities for the
investors, both individuals and institutions to invest their surplus
funds into various financial instruments and thus directs the flow of
savings towards the deficit units.
iii. Safety to investors: It provides adequate safety to the investors from
fraud and manipulation caused due to activities of speculators,
member, brokers etc, under the Securities Contract (Regulation) Act
1956.
iv. New Securities Market: It helps in the distribution of new securities
by providing a good platform for the companies to sell their securities.
v. Ready Market: It provides continuous, ready, open, broad market for
securities.
vi. Liquidity: It is possible for the investors to sell their securities at the
best quoted price and thus, convert their investment into cash almost
immediately and without much effort.
vii. Capital Formation: It provides an arrangement for the collection of
savings, in terms of investments in securities and channelizes such
savings to the industries as capital.
viii. Price Determination: It helps to determine the current market price
of the securities by the means of demand and supply, free cash flow
etc associated with the securities.
ix. Economic Barometer: The price movement of the securities in BSE,
determines the level of savings and investment activities in India, thus,
indicating the state of health of the economy of the nation.
x. Seasoning of Securities: The temporarily holding of stock by players
such as underwriters, dealers, brokers and speculators etc is called
seasoning of securities. This helps in better absorption of market for
new issues.



xi. Business Information: The business information supplied by the
corporate entities is allowed to be exchanged between the investors
and the issuers by the BSE.
xii. Investor Education: BSE provides the various information to the
investors about the principles and advantages of investing in
securities, which helps in designing their own portfolio.
xiii. Regulation: The requirement of listing on BSE, makes it possible for
the BSE to rein in on the corporate enterprises.

Settlement
Compulsory Rolling Settlement

All transactions in all groups of securities in the Equity segment and Fixed
Income securities listed on BSE are required to be settled on T+2 basis
(w.e.f. from April 1, 2003). The settlement calendar, which indicates the dates
of the various settlement related activities, is drawn by BSE in advance and is
circulated among the market participants.

Under rolling settlements, the trades done on a particular day are settled
after a given number of business days. A T+2 settlement cycle means that the
final settlement of transactions done on T, i.e., trade day by exchange of
monies and securities between the buyers and sellers respectively takes
place on second business day (excluding Saturdays, Sundays, bank and
Exchange trading holidays) after the trade day.

The transactions in securities of companies which have made arrangements
for dematerialization of their securities are settled only in demat mode on
T+2 on net basis, i.e., buy and sell positions of a member-broker in the same
scrip are netted and the net quantity and value is required to be settled.

However, transactions in securities of companies, which are in "Z" group or
have been placed under "trade-to-trade" by BSE as a surveillance measure
("T" group) , are settled only on a gross basis and the facility of netting of buy
and sell transactions in such scrips is not available.



The transactions in 'F' group securities representing "Fixed Income
Securities" and " G" group representing Government Securities for retail
investors are also settled at BSE on T+2 basis.

In case of Rolling Settlements, pay-in and pay-out of both funds and securities
is completed on the same day.

Members are required to make payment for securities sold and/ or deliver
securities purchased to their clients within one working day (excluding
Saturday, Sunday, bank & BSE trading holidays) after the pay-out of the funds
and securities for the concerned settlement is completed by BSE. This is the
timeframe permitted to the Members to settle their funds/ securities
obligations with their clients as per the Byelaws of BSE.

The Annual Reports and Accounts of BSE for the year ended March 31, 2006
and March 31, 2007 have been awarded the ICAI awards for excellence in
financial reporting.
The Human Resource Management at BSE has won the Asia - Pacific HRM
awards for its efforts in employer branding through talent management at
work, health management at work and excellence in HR through technology



2.3 Board Composition

Other
Sl No Name Designation
Designation Held
Vice chairman
1 Mr. S. RAMADORAI Chairman
TCS. Ltd

2 Mr. SUDHAKAR RAO Public Interest Director IAS

3 Dr. SANJIV MISRA Public Interest Director IAS

Deputy CEO
4 Mr. ANDREAS PREUSS Shareholder Director
Deutsche Borse AG
Vice-Chairman &
5 Mr. KEKI M. MISTRY Shareholder Director
CEO HDFC Ltd.
Designated Dir,
Trading Member
6 Mr. UTTAM BAGRI BCB Brokerage
Director Private Ltd.
Designated Dir,
Trading Member Asit C Mehta
7 Ms. DEENA A. MEHTA
Director Investment
Intermediates Ltd.
Designated Dir
Trading Member
8 Mr. ANIL M. SHAH Span Caplease
Director Private Ltd.

Management Team

(As of May 2012)

Sl. No. Name Designation

1 Mr. ASHISHKUMAR CHAUHAN Interim Chief Executive Officer

2 Mr. BALASUBRAMANIAM V Chief Business Officer

3 Mr. NEHAL VORA Chief Regulatory Officer

4 Mr. NAYAN MEHTA Chief Financial Officer

5 Mr. KERSI TAVADIA Chief Information Officer

6 Mr. VIJAY AGRAWAL Officer on Special Duty

7 Mr. LAKSHMAN GUGULOTHU CEO - SME Platform



2.4 About Companies

1. Bharti Airtel Limited
 Bharti Airtel Limited is a leading integrated telecommunications company
with operations in 20 countries across Asia and Africa.
 Established on July 07, 1995, as a Public Limited Company
Headquartered in New Delhi, India, the company ranks amongst the top
5 mobile service providers globally in terms of subscribers. In India, the
company's product offerings include 2G, 3G and 4G services, fixed line,
high speed broadband through DSL, IPTV, DTH, enterprise services
including national & international long distance services to carriers. In the
rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had
over 246 million customers across its operations at the end of February
2012.
 The Market Capitalization of the company is Rs 113,223.36 Crores.
 CEOs: Mr. Sanjay Kapoor (India & South Asia), Mr. Manoj Kohli
(International) Chairman: Mr. Sunil Bharti Mittal

2. BajaJ Autos Ltd
 Bajaj Auto Limited is an Indian motorized vehicle-producing company.
Bajaj Auto is a part of Bajaj Group. Its founded by Jamnalal Bajaj at
Rajasthan in the 1930s. It is based in Pune, Maharashtra, with plants in
Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttaranchal.
The oldest plant at Akurdi (Pune) now houses the R&D centre Ahead.
Bajaj Auto makes and exports automobiles, scooters, motorcycles and the
auto rickshaw.
 Bajaj Auto came into existence on 29 November 1945 as M/s Bachraj
Trading Corporation Private Limited. It started off by selling imported
two- and three-wheelers in India. In 1959, it obtained license from the
Government of India to manufacture two- and three-wheelers and it went
public in 1960.



 In 2010, Bajaj Auto announced the cooperation with Renault and Nissan
Motor to develop of a US$ 2,500 car, aiming at a fuel-efficiency of
30 kilometres per litre or twice an average small car, and carbon dioxide
emissions of 100 g/km. On 3 January 2012.
 Bajaj auto unveiled the Bajaj RE60, a mini car for intra-city urban
transportation. The target customer group will be Bajaj's three-wheeler
customers.
 CEO: Mr. Rajiv Bajaj Chairman: Mr. Rahul Bajaj

3. CIPLA (Chemical Industrial & Pharmaceutical Labs) Ltd
 Established 1935 by Khwaja Abdul Hamied, the Chemical, Industrial &
Pharmaceutical Laboratories, which came to be popularly known as Cipla.
He gave the company all his patent and proprietary formulas for several
drugs and medicines, without charging any royalty. On August 17, 1935,
Cipla was registered as a public limited company with an authorised
capital of Rs 6 lakhs.
 Apart from its presence in the Indian market, Cipla also has an export
market and regularly exports to more than 185 countries in all corners of
the world.
 Cipla cooperates with other enterprises in areas such as consulting,
commissioning, engineering, project appraisal, quality control, know-how
transfer, support, and plant supply.
 Cipla is the world's largest manufacturer of Antiretroviral drugs (ARVs)
to fight HIV/AIDS, as measured by units produced and distributed
(multinational brand-name drugs are much more expensive, so in money
terms Cipla medicines are probably somewhere down the list). Roughly
40 percent of HIV/AIDS patients undergoing antiretroviral therapy
worldwide take Cipla drugs
 CEO: Mr. S. Radhakrishan Chairman: Dr Y. K . Hamied



4. DLF Ltd
 The DLF Group was founded in 1946. It developed some of the first
residential colonies in Delhi such as Krishna Nagar in East Delhi, which
was completed in 1949. Since then it has been responsible for the
development of many of Delhi’s other well known urban colonies,
including South Extension, Greater Kailash, Kailash Colony and Hauz
Khas.
 DLF's primary business is development of residential, commercial and
retail properties. The company has a unique business model with
earnings arising from development and rentals. Its exposure across
businesses, segments and geographies, mitigates any down-cycles in the
market. From developing 22 major colonies in Delhi, DLF is now present
across 18 states-28 cities in India.
 DLF is credited with introducing and pioneering the revolutionary
concept of developing commercial complexes in the vicinity of residential
areas and bringing about a paradigm shift in the industry by redefining
shopping, recreation and leisure experiences with the launch of City
Centre in Gurgaon in 2000.
 The Market Capitalization of the Company is Rs 30,834.19 Crores.
 CEO: Mr. T.C Goyal Chairman: Mr. Kushal Pal Singh

5. HDFC (Housing Development Finance Corporation) Ltd
 HDFC Ltd was established in 1977 with the primary objective of meeting a
social need of encouraging home ownership by providing long-term
finance to households.
 Pioneer and leader in housing finance in India, since inception, HDFC has
assisted more than 4.02 million customers to own a home of their own,
through cumulative housing loan approvals of over Rs. 4.63 trillion and
disbursements of over Rs. 3.74 trillion as at March 31, 2012.
 HDFC has a wide network of 311 offices (which includes 74 offices of
HDFC's wholly owned distribution company HDFC Sales Private Limited)
catering to over 2,400 towns & cities spread across the country.



 HDFC also has offices in Dubai, London and Singapore and service
associates in the Middle East region, to provide housing loans and
property advisory services to Non-Resident Indians (NRIs) and Persons of
Indian Origin (PIOs).
 Founder: Mr. Hasmukh. T. Parekh CEO: Mr. Keki Mistry
Chairman: Mr. Deepak. S. Parekh

6. HindalCo Industries Ltd
 Hindalco Industries Limited was established in 1968. The metals flagship
company of the Aditya Birla Group is the world's largest aluminium
rolling company and one of the biggest producers of primary aluminium
in Asia. Its copper smelter is the world’s largest custom smelter at a single
location.
 The acquisition of Novelis Inc. in 2007 positioned it among the top five
aluminium majors worldwide and the largest vertically integrated
aluminium company in India.
 Today Hindalco Industries are a metals powerhouse with high-end rolling
capabilities and a global footprint in 13 countries.
 Hindalco is one of the leading producers of aluminium and copper. Our
aluminium units across the globe encompass the entire gamut of
operations, from bauxite mining, alumina refining and aluminium
smelting to downstream rolling, extrusions, foils, along with captive
power plants and coal mines.
 Its copper unit, Birla Copper, produces copper cathodes, continuous cast
copper rods and other by-products, such as gold, silver and DAP
fertilisers.
 CEO: Mr. Debnarayan Bhattachary
Chairman: Mr. Kumar Mangalam Birla



7. HUL Ltd
 Hindustan Unilever Limited (HUL) is India's largest consumer goods
company based in Mumbai, Maharashtra. It is owned by the British-Dutch
company Unilever which controls 52% majority stake in HUL. Its products
include foods, beverages, cleaning agents and personal care products.
 HUL was formed in 1933 as Lever Brothers India Limited and came into
being in 1956 as Hindustan Lever Limited through a merger of Lever
Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd.
 The Company has an annual turnover of around Rs. 21,736 crores (FY
2011 - 2012). HUL is a subsidiary of Unilever, one of the world’s leading
suppliers of fast moving consumer goods with strong local roots in more
than 100 countries across the globe. Unilever has about 52%
shareholding in HUL.
 CEO: Mr. Nitin Paranjpe Chairman: Mr. Harish Manwani

8. IDBI Ltd
 IDBI Bank Ltd. headquartered in Mumbai is today one of India's largest
commercial Banks. For over 40 years, IDBI Bank has essayed a key nation-
building role, first as the apex Development Financial Institution (DFI)
(July 1, 1964 to September 30, 2004) in the realm of industry and
thereafter as a full-service commercial Bank (October 1, 2004 onwards).
As a DFI, the erstwhile IDBI stretched its canvas beyond mere project
financing to cover an array of services that contributed towards balanced
geographical spread of industries, development of identified backward
areas, emergence of a new spirit of enterprise and evolution of a deep and
vibrant capital market. On October 1, 2004, the erstwhile IDBI converted
into a Banking company (as Industrial Development Bank of India
Limited) to undertake the entire gamut of Banking activities while
continuing to play its secular DFI role.



 As on March 31, 2012, IDBI Bank has a balance sheet of Rs.2.91 lakh crore
and business size (deposits plus advances) of Rs.3.92 lakh crore. As an
Universal Bank, IDBI Bank, besides its core banking and project finance
domain, has an established presence in associated financial sector
businesses like Capital Market.
 The Market Capitalization of the bank is Rs 11,422.34 Crores.
 CEO: Mr. G. V. Nageshwar Rao Chairman: Mr. R. M. Malla

9. Infosys Technologies Limited
 Infosys was co-founded in 1981 by N. R. Narayana Murthy, Nandan
Nilekani, N. S. Raghavan, S. Gopalakrishnan, S. D. Shibulal, K Dinesh
and Ashok Arora with US$250. Today, Infosys is a global leader in the
"next generation" of IT, consulting. and outsourcing with revenues of US$
6.994 billion (FY12).
 Infosys has a global footprint with 65 offices and 74 development centers
in US, India, China, Australia, Japan, Middle East, UK, Germany, France,
Switzerland, Netherlands, Poland, Canada and many other countries.
Infosys and its subsidiaries have 149,994 employees as on March 31,
2012.
 Infosys ranked among the most innovative companies in a Forbes survey,
leading technology companies in a report by The Boston Consulting
Group and top ten green companies in Newsweek's Green Rankings.
 Infosys was voted India's most admired company in The Wall Street
Journal Asia 200 every year since 2000. The corporate governance
practices were recognized by The Asset Platinum award and the IR Global
Rankings.
 CEO: Mr. S. D. Shibulal Chairman: Mr. V. K. Kamat



10. ITC Ltd
 ITC was incorporated on August 24, 1910 under the name Imperial
Tobacco Company of India Limited. As the Company's ownership
progressively Indianised, the name of the Company was changed from
Imperial Tobacco Company of India Limited to India Tobacco
Company Limited in 1970 and then to I.T.C. Limited in 1974.
 In recognition of the Company's multi-business portfolio encompassing a
wide range of businesses - Cigarettes & Tobacco, Hotels, Information
Technology, Packaging, Paperboards & Specialty Papers, Agri-business,
Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the
full stops in the Company's name were removed effective September 18,
2001. The Company now stands rechristened 'ITC Limited'.
 ITC is one of India's foremost private sector companies with a turnover of
US $ 7 billion.
 The Market Capitalisation of the company is Rs 178,299.17 Crore.
 CEO and Chairman: Mr. Yogesh. C. Deveshwar

11. Jaiprakash Associates Ltd
 Jaiprakash Associates Ltd. (JAL), the flagship company of the Jaypee Group, was
incorporated in 1996. In 2003 JAL was formed due to merger of Jaiprakash
Industries (JIL) and Jaiprakash Cement (JCL).
 The company is currently executing various projects in hydropower /
irrigation / other infrastructure fields and has had the distinction of
executing simultaneously 13 hydropower projects spread over six states
and the neighbouring country Bhutan for generating 10,290 MW of
power. The Jaypee Group undertakes projects involving;

Large quantities of rock excavation (both surface and
underground) Controlled earth/rock fill
Concrete manufacture and placement (including chilling)
Hydro-mechanical equipment procurement and erection
Steel Structures Expressway Construction and Real Estate
Development



 Executive Chairman: Mr. Sunny Gaur

12. Jindal Steet Works ltd
 JSW Steel Ltd. is an Indian steel company owned by the JSW Group based
in Mumbai, Maharashtra. JSW Steel is among India's largest steel
producers, with a capacity of 10 MT as of 2011.
 As part of the US$10 billion O. P. Jindal Group, JSW Group has diversified
interests in Steel, Energy, Minerals and Mining, Aluminium, Infrastructure
and Logistics, Cement and Information Technology.
 JSW Steel has also formed a many joint ventures in countries like Georgia,
Japan and acquired mining license in Chile, USA and Mozambique. JSW
Steel has recently acquired a majority stake in Ispat Industries Ltd.
making it India’s largest steel producer with a combined capacity of 14.3
MTPA by March 2011.
 By 2020, the Company aims to produce 34 million tons of steel annually
with Greenfield integrated steel plants coming up in West Bengal near
Salboni about 35 km from Kharagpur and Barenda in Ranchi district of
Jharkhand.
 CEO: Dr. V. K. Nowal Chairman: Mr. Sajjan Jindal

13. Larsen and Toubro Ltd
 L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers,
Henning Holck-Larsen and Soren Kristian Toubro. Both of them were
strongly committed to developing India's engineering capabilities to meet
the demands of industry.
 L&T is India's largest engineering and construction company, with a
dominant presence in India's infrastructure, power, hydrocarbon,
machinery and railway related projects.
 In recent years, L&T has expanded its global presence and international
projects contributed 9% of its overall order book for the 2010–11.



 L&T has diversified businesses designated as ‘Independent Companies’ or
‘ICs’ in the fields such as Hydrocarbon, heavy Engineering, Construction,
Power, Electrical and Automation, Machinery and Industrial Products,
Information Technology, Financial Services.
 The Company has 119 subsidiaries and 23 associates.
 CEO: Mr. A. M . Nayak Chairman: Mr. K. Venkatramanan

14. Mahindra and Mahindra Ltd
 Founded in 1945 as a steel trading company, we entered automotive
manufacturing in 1947 to bring the iconic Willys Jeep onto Indian roads.
Over the years, it has diversified into many new businesses in order to
better meet the needs of customers. It follows a unique business model of
creating empowered companies by the principle of entrepreneurial
independence and Group-wide synergies which has led the company to
grow into a US $15.4 billion multinational group with more than 144,000
employees in over 100 countries across the globe.
 Today, its operations span 18 key industries that form the foundation of
every modern economy: aerospace, aftermarket, agribusiness,
automotive, components, construction equipment, consulting services,
defense, energy, farm equipment, finance and insurance, industrial
equipment, information technology, leisure and hospitality, logistics, real
estate, retail, and two wheelers.
 CEO: Mr. Anand Mahindra Chairman: Mr. Keshub Mahindra



15. Maruti Suzuki Ltd
 Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog
Limited) is a subsidiary of Suzuki Motor Corporation, Japan. Maruti
Suzuki has been the leader of the Indian car market for over two and a
half decades.
 The company has two manufacturing facilities located at Gurgaon and
Manesar, south of New Delhi, India. Both the facilities have a combined
capability to produce over a 1.5 million (1,500,000) vehicles annually. The
company plans to expand its manufacturing capacity to 1.75 million by
2013.
 The Company offers 15 brands and over 150 variants ranging from
people's car Maruti 800 to the latest Life Utility Vehicle, Ertiga.
 In terms of number of cars produced and sold, the Company is the largest
subsidiary of Suzuki Motor Corporation. Cumulatively, the Company has
produced over 10 million vehicles since the roll out of its first vehicle on
14th December, 1983.
 Maruti Suzuki is the only Indian Company to have crossed the 10 million
sales mark since its inception. In 2011-12, the company sold over 1.13
million vehicles including 1,27,379 units of exports.
 CEO: Mr. Shinzo Nakanishi Chairman: Mr. R. C. Bhargava

16. NTPC Ltd
 India’s largest power company, NTPC was set up in 1975 to accelerate
power development in India. NTPC is emerging as a diversified power
major with presence in the entire value chain of the power generation
business. Apart from power generation, which is the mainstay of the
company, NTPC has already ventured into consultancy, power trading,
ash utilisation and coal mining. NTPC ranked 341st in the ‘2010, Forbes
Global 2000’ ranking of the World’s biggest companies. NTPC became a
Maharatna company in May, 2010, one of the only four companies to be
awarded this status.



 The total installed capacity of the company is 39,174 MW (including JVs)
with 16 coal based and 7 gas based stations, located across the country. In
addition under JVs, 7 stations are coal based & another station uses
naptha/LNG as fuel.
 The company has set a target to have an installed power generating
capacity of 1,28,000 MW by the year 2032. The capacity will have a
diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17%
Renewable Energy Sources(RES) including hydro. By 2032, non fossil fuel
based generation capacity shall make up nearly 28% of NTPC’s portfolio.
 The Company has Market Capitalization of Rs 116,343.50 Crores.
 Chairman cum CEO: Mr. Arup Roy Choudhury

17. ONGC Ltd
 ONGC was founded on 14 August 1956 by the Indian state, which currently holds
a 74.14% equity stake. It is involved in exploring for and exploiting
hydrocarbons in 26 sedimentary basins of India, and owns and operates over
11,000 kilometers of pipelines in the country.
 It is an Indian state-owned oil and gas company headquartered in Dehradun,
India. It is one of the largest Asia-based oil and gas exploration and production
companies, and produces around 77% of India's crude oil (equivalent to around
30% of the country's total demand) and around 81% of its natural gas. ONGC is
one of the largest publicly traded companies by market capitalization in India. It
is ranked 361st in the 2011 Fortune Global 500 list and is among the Top 250
Global Energy Company by Platts.
 ONGC Videsh Limited (OVL) is the international arm of ONGC. It was
rechristened on 15 June 1989. It currently has 14 oil and projects across 15
countries. Its oil and gas production reached 8.87 MMT of O+OEG in 2010,
 In 2011, ONGC applied to purchase of 2000 acres of land at Dahanu to process
offshore gas. ONGC Videsh, along with Statoil ASA (Norway) and Repsol SA
(Spain), has been engaged in deepwater drilling off the northern coast of Cuba in
2012.
 CMD: Mr. R. S. Sharma



18. State Bank of India (SBI)
 The origin of the State Bank of India goes back to the first decade of the
nineteenth century with the establishment of the Bank of Calcutta in
Calcutta on 2 June 1806. A unique institution, it was the first joint-stock
bank of British India sponsored by the Government of Bengal.
The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July
1843) followed the Bank of Bengal. These three banks remained at the
apex of modern banking in India till their amalgamation as the Imperial
Bank of India on 27 January 1921.
 State Bank of India (SBI) is the largest banking and financial services
company in India by revenue, assets and market capitalization. It is a
state-owned corporation with its headquarters in Mumbai, Maharashtra.
 It has 14097 branches and 27286 ATMs across country (as on May 2012).
 The bank has made its international presence with 174 office in 34
countries.
 For the FY2011-12 the bank has reported Net Profit of Rs 11707 Crores
and has market capitalization of Rs 122,747.52 Crores.
 Chairman: Mr. Pratip Choudhari

19. Reliance Industries Ltd
 The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is
India's largest private sector enterprise, with businesses in the energy
and materials value chain. Group's annual revenues are in excess of US$
66 billion. The flagship company, Reliance Industries Limited, is a
Fortune Global 500 company and is the largest private sector company in
India.
 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, infotel and special
economic zones.
 RIL continues to be featured, for the sixth consecutive year, in the Fortune
Global 500 list of the World's Largest Corporations, ranking for 2010 is as
follows:
 Ranked 175 based on Revenues
 Ranked 100 based on Profits
 RIL is ranked 68th in 2010, in the Financial Times' FT Global 500 list of
the world's largest companies (up from previous year's 75th rank).
 The RIL consists of 130 subsidiaries and 1 associate.
 CEO cum Chairman: Mr. Mukesh. D. Ambani

20. TATA Motors Ltd
 Tata Motors Limited is India's largest automobile company, with
consolidated revenues of INR 1,65,654 crores (USD 32.5 billion) in
2011-12.
 Tata Motors is the leader in commercial vehicles in each segment, and
among the top three in passenger vehicles with winning products in the
compact, midsize car and utility vehicle segments. It is the world's fourth
largest truck and bus manufacturer.
 Established in 1945, Tata Motors' presence indeed cuts across the length
and breadth of India. Over 6.5 million Tata vehicles ply on Indian roads,
since the first rolled out in 1954. The company's manufacturing base in
India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra),
Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and
Dharwad (Karnataka).
 Following a strategic alliance with Fiat in 2005, it has set up an industrial
joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra)
to produce both Fiat and Tata cars and Fiat powertrains.



 The company's dealership, sales, services and spare parts network
comprises over 3,500 touch points.
 Tata Motors is also expanding its international footprint, established
through exports since 1961. The company's commercial and passenger
vehicles are already being marketed in several countries in Europe, Africa,
the Middle East, South East Asia, South Asia, CIS, Russia and South
America. It has franchisee/joint venture assembly operations in
Bangladesh, Ukraine, and Senegal.
 Tata Motors, the first company from India's engineering sector to be listed
in the New York Stock Exchange (September 2004), has also emerged as
an international automobile company. Through subsidiaries and associate
companies, Tata Motors has operations in the UK, South Korea, Thailand,
Spain and South Africa. Among them is Jaguar Land Rover, a business
comprising the two iconic British brands that was acquired in 2008.
 Tata Motors with TATA NANO was able to produce world’s cheapest Car
 CEO: Mr. Harish Batt Chairman: Dr. Ratan Tata



Chapter 3

CONCEPTUAL BACKGROUND OF
STOCK RETURNS



3.1 Introduction

The market often takes long time to reward stockholder with Stock Return
that corresponds to company’s Return on Capital. To better understand these
concepts it is crucial to differentiate Stock Returns from Return on capital.
The return on capital is the measure of company’s profitability where as
Stock Returns represents the combination of Dividends and Changes in
Stock Price (better known as capital gains).

The market often forgets the important relationship between Stock Returns
and Return of capital. The company can earn high Return of capital but still
the stockholder may suffer if the market price of the stock decreases over the
same period. On the contrary the company with low Return on capital may
experience its stock price increase if the firm performed less terribly than the
market had expected. Or maybe the company currently losing lots of money,
or investors had bid up its stock in anticipation of future profits.

3.2 Meaning of Stock Returns

To understand the meaning of stock returns, first, it is essential to know the
meaning of Investment, Stock and Return.

Investment

Investment refers to purchase of an asset or item with the hope that it
will generate income or appreciate in the future. In an economic sense, an
investment is the purchase of goods that are not consumed today but are
used in the future to create wealth.

Investment is a process of deferring current consumption for the sake of
future consumption.



What is Stock?

Stock is An instrument that signifies an ownership position (called equity) in
a corporation, and represents a claim on its proportional share in
the corporation's assets and profits.

Ownership in the company is determined by number of share the person
owns divided by the total number of shares outstanding. For example, if a
company has 1000 shares of stock outstanding and a person owns 50 of
them, then he/she owns 5% of the company.

Most stock also provides voting rights, which give shareholders a
proportional vote in certain corporate decisions. Only a certain type of
company called a corporation has stock; other type of companies such as sole
proprietorships and limited partnerships do not issue stock also called equity
or securities or corporate stocks.

What is Return?

Return is a primary motivating force that drives investment. It represents the
reward for the undertaking investment. The returns of an investment
consists of two components namely

i) Current returns
ii) Capital returns

Current Returns: The current returns is related to periodic cash inflows
such as dividends or interests generated by the investment. Current return is
measured as with periodic income in relation to the beginning price of the
investment.

Capital Returns: The capital returns is reflected in the price change. It is
simply the price appreciation or depreciation divided by the beginning price
of the asset.



Stock Returns

So Stock Returns refers the reward for investing in the stocks. This reward
includes the current returns and capital returns.

In another, sense stock returns is the measure of performance of a stock.

Total Stock Returns = Current Returns on stock + Capital Returns on stock

3.3 Types of Stock Returns

The Stock Returns are of two types

i. Historical Stock Returns
ii. Expected (Ex Ante) Stock Returns

Historical Stock Returns is the measure of past performance of a security or
index. Historical returns are a reflection of the performance of a particular
security or index in the past. They are used in the development of informed
investing decisions where risks and potential returns are balanced to create a
portfolio with a probability of strong returns.

Expected Stock Returns are the anticipated future returns on the stock. It is
the weighted average of all the possible returns adjusted to their respective
probabilities.

3.4 Measuring Stock Returns

Historical Stock Returns
The total stock returns, for given period of time, is determined by the
following formula:
Dividends received Price change
during the period + during the period
Total Stock Return =
Price at the beginning of the Period



That is in formula terms

D + (P1 – P0) D = Divided for the period
R = P1 = Price at end of the period
P0 P0 = Price at beginning of period

Expected Stock Returns
The expected stock returns is calculated on basis of the possible returns and
probability of getting such returns.
The expected Stock returns is calculated using the formula

Where
E(R) = Expected Stock Return
Ri = Possible Returns
Pi = Probability

This project is based on the historical stock returns calculated for the Financial
Year 2011-2012.

Excess Returns

The returns from a Stock that exceeds a benchmark or index with a similar
level of risk is called as excess returns. It is widely used as a measure of the
value added by the portfolio or investment manager, or the manager's ability
to "beat the market."

Excess Returns = Stock Returns – Index Returns



3.5 Risk

What is Risk?

The chance that actual returns will be different than expected is called as
risk. The Risk includes the possibility of losing some or all of the original
investment. Different versions of risk are usually measured by calculating
the standard deviation of the historical returns or average returns of a
specific investment. A high standard deviations indicates a high degree of
risk.

There are two types of risk namely:

i. Unique risk
ii. Market Risk

Total Risk = Unique Risk + Market Risk

Unique risk refers to that portion of total risk which is arises from specific
factors like development of new product, labour strike etc. It is considered to
be firm level risk and can be reduced.

Market Risk is that portion of total risk which is attributable to economic
factors like GDP, monetary policy etc.

Measuring Risk

The risk is usually measured in terms of standard deviations which is
calculated as follow:

Where

S = Standard Deviation
Ri = Returns for ith period
= Average returns



3.5 Approaches of measurements

The stock returns, as seen above, are based on the price at the beginning and
closing period. There are two types of prices for each period i.e., Opening
price and Closing price.

The opening price is the price at which the security first trades upon the
opening of the stock exchange, on a given trading day or period.

The closing price is the final price at which the stock is traded on a given
trading day, on a stock exchange.

For the period of the one Financial Year, there exists as many as opening and
closing prices, as much as days the working of stock exchange in an financial
year. So, which prices are to be considered, for purpose of calculating stock
returns is a big dilemma. So for this purpose, the experts have recommended
four approaches. These four approaches of measuring the stock returns are;

a. Open to Open approach
b. Open to Close approach
c. Close to Open approach
d. Close to Close approach

 Open to Open Approach:

In this approach of calculating stock returns, only Opening Prices of the
stock is considered. i.e.,

D + (OP1 – OP0)
R =
OP0

D = Divided for the period
OP1 = Opening Price at end of the period
OP0 = Opening Price at beginning of period



 Open to Close Approach:

In this approach of calculating stock returns, the opening price and the
closing price of the stock is considered. i.e., the Closing Price of the stock at
the end of the period and opening price of the stock at beginning of the
period are taken and stock return is measured as follows:

D + (CP1 – OP0)
R =
OP0

CP1 = Closing Price at end of the period
OP0 = Opening Price at beginning of period

 Close to Open Approach:

In this approach of calculating stock returns, the closing price and opening
price of the stock is considered. i.e., the Closing Price of the stock at the
beginning of the period and Opening Price of the stock at closing of the
period are taken and stock return is measured as follows:

D + (OP1 – CP0)
R =
CP0

OP1 = Opening price at end of the period
CP0 = Closing Price at beginning of period



 Close to Close Approach:

In this approach of calculating stock returns, the only Closing Prices of the
stock is considered. i.e.,

D + (CP1 – CP0)
R =
CP0

CP1 = Closing Price at end of the period
CP0 = Closing Price at beginning of period

This project is based on the Close to Close approach.

1. Weekly Stock Returns

The stock returns determined for the period of a week is called as weekly
stock returns.

2. Monthly Stock Returns

The stock returns determined for the period of a month is called as monthly
stock returns.

3. Quarterly Stock Returns

The stock returns determined for the period of a quarter consisting of 3
months is called as quarterly stock returns.

4. Half Yearly Stock Returns

The stock returns determined for the period of a half year consisting of 6
months or 2 quarters is called as half-yearly stock returns.

5. Yearly Stock Returns

The stock returns determined for the period of a year is called as yearly stock
returns.


Chapter 4

ANALYSIS AND INTERPRETATION



1. In the below table numbered 1.1, 1.2, 2.1, 2.2, 3.1 and 3.2, the weekly stock
returns of the Sensex 20 companies has been calculated for the financial year
2011-12.

The weekly stock returns is calculated as follows:-

D + CPL - CPO
R =
CPO

CPL = Closing Price at Last working day of the week.
CPF = Closing Price at First working day of the week.

For the first week of FY 2011-12
CPL = Closing Price as on 8 April 2011.
CPF = Closing Price as on 1 April 2011.

 Similarly, the stock returns for all 52 weeks in the year are calculated.
 The dividends are adjusted for the closing price of the respective week of
realization of dividends.

 Tables 1.1, 1,2, 2.1, 2.2, 3.1, 3.2 depicts (from the calculations) average
weekly stock returns of 20 companies, where in, it is, from the
calculations found that, 14 out of 20 companies show negative returns
and rest 6 shows positive.

 Companies like Mahindra and Mahindra, HUL, ITC, Bajaj Autos, Tata
Motors etc have shown positive results.

 And Companies like DLF, HindalCo, RIL, IDBI, SBI etc including BSE
Sensex have shown negative results.



Table 1.1
Showing Weekly Stock Returns for FY 2011-12

Weekly Returns (in %)
Week
AIR BJJ CPL DLF HDFC HIND SX
↓
1 1.89 (3.13) (0.47) (4.37) 0.44 (2.38) 0.16
2 2.79 (0.13) 0.50 (5.55) (1.08) 0.38 (0.33)
3 1.20 3.64 0.28 0.82 4.13 5.00 1.11
4 0.58 0.72 (3.40) (9.78) (3.41) (1.95) (2.38)
5 (7.40) (10.51) (1.40) (1.62) (6.00) (7.18) (3.23)
6 4.69 1.38 2.08 5.88 (2.99) (0.75) 0.07
7 1.77 (0.51) 1.23 (1.96) 1.90 (3.37) (1.11)
8 (0.39) (1.16) 1.09 (1.08) (0.19) 3.38 (0.33)
9 1.67 4.33 2.05 3.73 0.39 (4.53) 0.60
10 (1.20) (3.38) 1.89 (1.16) (1.24) (2.74) (0.59)
11 1.73 0.95 (0.90) (2.82) (1.71) (7.80) (2.18)
12 2.89 3.33 (1.05) (3.52) 4.49 1.73 2.07
13 (2.02) 2.74 0.45 1.78 5.00 8.20 2.86
14 3.82 2.56 1.65 7.49 1.50 0.35 0.51
15 (1.38) (2.62) (2.38) (1.60) (2.72) (6.01) (1.57)
16 4.67 2.03 (0.62) 3.24 2.29 0.23 0.86
17 6.34 0.96 (4.81) (4.03) (2.42) (4.69) (2.80)
18 (5.00) (4.19) 0.10 (8.94) (3.19) (2.96) (4.90)
19 (6.23) 4.07 (4.82) (4.45) 0.16 (8.73) (2.69)
20 (1.49) (1.79) (2.05) (6.97) (4.77) (6.09) (4.14)
21 3.98 5.08 (2.62) (5.91) (2.71) (0.89) (1.81)
22 2.48 7.96 0.61 18.28 6.38 11.53 6.14
23 (2.03) 0.13 2.39 (4.04) (0.17) (3.54) 0.27
24 (3.62) (0.01) (1.70) 4.93 0.23 (3.67) 0.40
25 (2.85) (4.90) 0.37 (5.47) (5.41) (7.21) (4.56)
26 0.87 (0.75) 0.16 10.43 2.56 (2.62) 1.80



Table 1.2
Showing Weekly Stock Returns for FY 2011-12 (Cont…)

Week
AIR BJJ CPL DLF HDFC HIND SX
↓
27 (6.16) (1.99) 0.07 (0.09) 0.60 (3.22) (1.34)
28 8.16 8.40 1.81 6.34 3.27 1.59 5.24
29 (1.52) 0.64 (0.81) (3.12) (4.51) (5.04) (1.74)
30 3.69 6.94 3.75 10.06 7.96 16.73 6.07
31 1.56 (0.65) (1.29) (100.00) (0.52) (2.04) (1.36)
32 (0.62) (0.18) (2.04) (7.48) (2.55) (7.48) (2.11)
33 0.54 (2.64) 8.72 (10.51) (3.03) (3.92) (4.78)
34 (5.72) (3.03) 1.12 (0.20) (4.87) (8.37) (4.13)
35 4.07 4.25 4.33 9.54 8.69 19.51 7.34
36 (8.06) (2.29) (1.53) (4.16) (2.15) (2.36) (3.76)
37 (6.24) (1.16) 1.18 (8.97) (3.27) (5.14) (4.45)
38 (1.74) (3.24) 0.35 (0.49) 4.65 (3.03) 1.60
39 3.77 (0.47) (3.33) (5.62) (1.99) (5.18) (1.80)
40 (3.70) (8.39) 6.20 (4.53) 3.58 3.21 2.67
41 1.32 (2.03) (0.50) 12.50 1.77 12.48 1.81
42 2.21 8.97 0.82 8.83 0.94 7.28 3.62
43 8.95 (1.26) 1.35 (1.12) 1.11 0.45 2.96
44 4.31 4.70 (0.03) 8.86 (0.01) 5.65 2.15
45 (9.96) 7.83 1.41 0.17 (0.76) (0.13) 0.82
46 (0.10) 3.69 (7.57) 10.03 3.31 (0.76) 3.05
47 (2.07) (1.86) (2.88) (10.62) (5.53) (2.12) (2.00)
48 2.31 (1.01) 0.35 (10.16) (0.33) (0.30) (1.60)
49 (3.23) 0.01 (1.81) (0.05) 1.16 (8.79) (0.76)
50 (3.51) (1.58) (2.30) (3.68) (2.30) 4.54 (0.21)
51 2.66 (0.62) (0.26) (0.03) (0.65) (6.30) (0.60)
52 0.31 (1.95) 1.21 2.70 1.88 (1.75) 0.24
Ave (0.02) 0.34 (0.06) (2.28) (0.04) (0.78) (0.17)
SD 4.10 3.94 2.66 15.31 3.39 6.18 2.88



Table 2.1

Week
HUL IDBI INFY ITC JPEE JSW L&T SX
↓
1 (2.71) (0.03) 0.27 1.12 (0.84) 3.12 1.50 0.16
2 (0.22) 1.59 (7.38) 3.00 1.59 (2.13) 3.11 (0.33)
3 4.73 1.87 (2.66) (0.24) 3.91 1.50 (1.38) 1.11
4 (1.25) (4.40) (0.11) 1.08 (14.74) (2.48) (6.22) (2.38)
5 (3.68) (4.88) (0.66) (4.63) 1.76 (5.28) (3.35) (3.23)
6 11.56 0.88 (0.24) 3.54 (4.10) 4.09 (1.01) 0.07
7 1.17 (3.09) (1.02) (1.74) (3.55) (1.84) 8.05 (1.11)
8 (2.45) (2.81) (2.20) 1.39 8.06 1.98 (0.82) (0.33)
9 5.24 (0.04) 0.92 2.40 (2.37) 0.27 4.49 0.60
10 (2.42) 1.23 1.71 (1.19) (0.30) (4.15) (1.06) (0.59)
11 3.36 (1.98) (3.40) (0.03) (9.86) (3.71) (0.82) (2.18)
12 0.95 1.09 3.53 1.83 3.89 0.51 3.52 2.07
13 3.90 3.96 2.52 3.44 3.99 1.26 3.95 2.86
14 (0.82) 0.67 1.49 (0.74) (7.44) 0.05 1.52 0.51
15 (1.35) (1.03) (8.31) 0.77 2.31 (2.44) (0.93) (1.57)
16 1.34 0.26 3.47 2.60 (3.67) 0.98 0.41 0.86
17 (2.98) (4.77) (2.07) 0.75 (13.84) (10.92) (5.45) (2.80)
18 (1.71) (6.96) (6.37) (5.83) (4.73) (9.52) (4.98) (4.90)
19 (0.86) (1.04) (8.34) 1.12 (5.70) (6.36) 0.20 (2.69)
20 (0.19) (10.17) (6.28) (0.05) 8.46 1.44 (5.98) (4.14)
21 1.24 (2.49) (0.94) (0.65) (2.55) (8.61) (0.88) (1.81)
22 0.42 2.12 5.04 2.97 8.25 18.50 5.09 6.14
23 4.04 3.40 (1.92) (2.49) (3.09) (4.55) 5.01 0.27
24 2.04 (1.78) 5.38 0.15 12.77 (0.61) (4.75) 0.40
25 (2.66) (4.04) (2.23) (3.08) 1.10 (7.44) (9.78) (4.56)
26 2.79 (0.48) 8.28 2.86 (6.22) (6.55) (6.48) 1.80



Table 2,2
Showing Weekly Stock Returns for FY 2011-12 (Cont…)

Week
HUL IDBI INFY ITC JPEE JSW L&T SX
↓
27 (3.25) (3.75) (1.06) 0.56 8.16 (4.54) 2.60 (1.34)
28 0.88 7.18 9.48 3.12 (4.85) 6.59 1.03 5.24
29 (1.81) (1.89) (0.80) (0.22) 2.34 (3.52) (5.10) (1.74)
30 7.16 9.38 5.03 5.55 5.26 14.39 5.78 6.07
31 8.41 1.41 (1.07) (2.69) 2.96 7.12 (1.44) (1.36)
32 4.57 (7.24) (1.89) 1.26 (10.40) (5.43) (4.47) (2.11)
33 (1.30) (9.53) (1.30) (5.78) (9.69) (9.15) (6.59) (4.78)
34 (4.04) (5.48) (5.07) (4.37) (0.39) (8.89) 1.83 (4.13)
35 5.26 6.45 3.70 7.98 11.24 14.28 3.55 7.34
36 (2.39) (4.83) 0.35 (4.90) (13.88) (7.66) (6.39) (3.76)
37 1.70 (7.01) 0.41 (0.76) (11.32) (13.23) (12.32) (4.45)
38 4.99 (4.64) (0.82) 4.48 0.65 0.70 (6.24) 1.60
39 (0.92) (5.35) 2.60 (1.69) 1.11 (1.22) (1.35) (1.80)
40 (2.65) 6.94 2.37 0.97 4.12 11.68 8.39 2.67
41 (1.20) 9.31 (8.66) 2.34 11.79 12.61 8.72 1.81
42 (0.37) 5.50 (0.08) (3.54) 10.70 1.61 8.63 3.62
43 (0.20) 4.74 5.30 1.05 (0.71) 2.15 8.46 2.96
44 2.74 (0.50) 2.18 (0.72) 6.51 7.06 (2.02) 2.15
45 (3.23) 5.25 0.10 1.59 6.79 15.24 (0.25) 0.82
46 (0.64) 12.07 6.03 0.59 0.69 4.65 7.28 3.05
47 0.00 (7.33) (0.11) 2.22 (6.37) (4.44) (6.82) (2.00)
48 (0.70) 2.79 (3.42) (1.79) (7.08) (3.77) (3.75) (1.60)
49 (0.13) (0.76) 0.47 1.17 19.76 (4.90) 0.22 (0.76)
50 2.20 (3.72) 0.22 4.78 (6.12) 0.04 1.36 (0.21)
51 3.28 0.47 0.15 2.13 3.83 (1.75) (1.33) (0.60)
52 1.65 (2.92) (0.19) 1.48 0.43 (1.78) 0.35 0.24
Ave 0.76 (0.51) (0.15) 0.45 (0.03) (0.29) (0.33) (0.17)
SD 3.30 4.93 3.97 2.85 7.44 7.05 5.00 2.88



Table 3.1

Week
M&M MSZ NTPC ONGC RIL SBI TM SX
↓
1 1.97 (1.58) (2.78) (2.13) (1.07) 2.19 0.97 0.16
2 (1.73) 0.33 0.93 (0.40) (0.57) 0.87 (3.75) (0.33)
3 (0.98) 3.83 0.84 5.99 2.12 2.04 2.89 1.11
4 (1.03) 1.01 (2.65) 0.99 (5.58) (1.91) (1.15) (2.38)
5 9.08 (3.86) (3.87) (0.20) (2.70) (5.80) (4.10) (3.23)
6 9.13 (3.51) 0.09 (0.33) (0.71) 0.23 2.55 0.07
7 0.60 (0.27) (0.97) (9.97) (2.87) (12.34) (6.51) (1.11)
8 0.98 (0.44) (2.60) 3.46 2.70 (3.77) (4.55) (0.33)
9 (4.74) 1.48 3.29 (1.37) (1.07) 3.50 (4.95) 0.60
10 (1.13) (0.31) 0.97 (4.73) 0.84 (3.02) (1.17) (0.59)
11 0.15 (5.07) 1.48 (0.54) (8.01) (1.42) (8.15) (2.18)
12 2.75 (3.95) 1.87 2.88 0.23 3.48 5.06 2.07
13 6.64 1.99 2.17 1.25 (0.95) 5.81 3.55 2.86
14 1.81 3.56 2.10 0.14 (0.90) 2.38 4.20 0.51
15 (1.45) (0.82) (0.39) 0.40 2.21 (0.31) (3.65) (1.57)
16 1.73 (1.06) (3.07) 0.38 0.03 0.93 (1.20) 0.86
17 (5.34) 3.94 (3.85) (3.49) (5.25) (6.10) (4.34) (2.80)
18 (8.07) (1.22) (2.50) 2.97 (4.36) (4.66) (13.41) (4.90)
19 (3.73) 4.50 1.89 1.06 (3.90) (1.76) (6.28) (2.69)
20 (9.28) (6.77) (0.80) (1.86) (3.89) (7.00) (6.44) (4.14)
21 7.42 (7.07) (4.35) 0.62 (1.60) (7.41) 1.72 (1.81)
22 1.85 0.07 0.42 (4.54) 11.94 5.57 3.26 6.14
23 (0.75) 2.04 (2.10) (0.98) 2.45 (1.96) (8.83) 0.27
24 10.21 0.33 5.26 5.20 0.28 (0.48) 18.94 0.40
25 (7.64) (1.82) (3.23) (6.47) (6.85) 0.51 (6.26) (4.56)
26 2.73 (0.47) 0.48 3.56 4.87 (2.27) (5.43) 1.80



Table 3.2
Showing Weekly Returns for FY 2011-12 (Cont..)

Week
M&M MSZ NTPC ONGC RIL SBI TM SX
↓
27 2.39 2.93 (0.39) (0.54) (0.85) (8.33) 20.03 (1.34)
28 8.57 (7.60) 3.84 0.62 8.15 7.46 5.60 5.24
29 1.98 6.21 (2.17) (0.49) (3.62) 3.51 2.92 (1.74)
30 5.43 3.27 5.52 7.01 7.49 (2.13) (0.03) 6.07
31 (0.32) (0.41) 0.53 (2.52) (2.05) 3.00 (5.39) (1.36)
32 (0.70) (5.71) (3.26) (3.74) 0.48 (8.48) 0.25 (2.11)
33 (2.50) (11.19) (6.28) (1.31) (8.58) (4.01) (7.49) (4.78)
34 (3.00) 0.99 (3.59) (4.45) (6.69) (2.02) 2.34 (4.13)
35 10.49 4.40 9.72 6.84 7.53 11.58 9.45 7.34
36 0.77 (0.62) (3.51) (2.68) (6.83) (1.20) (6.28) (3.76)
37 (5.37) (5.67) (3.07) (3.92) (4.30) (9.84) 3.84 (4.45)
38 3.77 4.80 (1.58) 4.16 3.24 (1.91) (2.42) 1.60
39 (0.06) (5.58) 1.32 (1.95) (7.17) (1.75) 12.44 (1.80)
40 7.40 3.16 (2.30) (0.21) 3.46 3.50 1.54 2.67
41 (0.41) 2.87 5.77 1.74 2.11 6.03 6.18 1.81
42 2.79 12.57 5.06 5.92 8.37 8.70 2.19 3.62
43 (4.41) 9.92 (0.34) 1.38 3.06 5.74 9.71 2.96
44 6.80 2.18 1.47 0.54 2.46 2.96 2.73 2.15
45 (1.22) 0.87 2.01 0.78 0.53 3.30 7.05 0.82
46 1.60 6.00 4.34 (0.41) (2.88) 11.24 (0.06) 3.05
47 2.23 (2.70) (2.21) 0.71 0.30 (8.69) 1.83 (2.00)
48 3.37 3.02 (2.67) (1.11) (0.73) 1.76 0.29 (1.60)
49 3.55 1.42 (2.80) 0.28 (5.00) (1.04) 3.68 (0.76)
50 0.15 2.37 (0.52) (3.80) (0.21) 0.25 0.02 (0.21)
51 0.28 (4.74) (0.67) (1.16) (3.62) (2.81) (3.74) (0.60)
52 (0.28) 3.09 (5.16) 0.19 0.57 (3.24) 1.01 0.24
Ave 1.05 0.21 (0.24) (0.12) (0.53) (0.37) 0.40 (0.17)
SD 4.58 4.43 3.22 3.31 4.45 5.19 6.46 2.88



INTERPRETATION:

The average weekly returns of the 14 companies out if 20 companies was
found to be negative.

The average weekly returns of BSE Sensex was also found to be negative
i.e., -0.17 %.

Out of the 20 companies, DLF was the worst performing stock with
average weekly returns of -2.28 %, where as the Mahindra and Mahindra
was the best performing one with average weekly returns of 1.05 %.

The stocks of DLF is considered to be more risky as the Standard
Deviation of the weekly returns of the DLF found to be 15.31% which is
more than any other company or BSE Sensex.

On the other hand, Cipla’s stock was found to be least risky.

The banking companies performed almost in similar passion with same
level of average returns ranging from -0.37% to -0.04% and risk at 3% to
5%.

The automobile industries, surprisingly performed better, all four
companies viz Bajaj Autos, Mahindra and Mahindra, Maruti Suzuki and
Tata Motors, yielded positive returns.

Both the FMCG companies, i.e., HUL and ITC performed well by providing
positive average weekly returns.

All construction and real estate companies’ stock found to be more risky.

The metal industry companies i.e., JSW and HindalCo found to be risky
and also yielded negative returns at almost same level of risk.

The average weekly returns of petrochemical companies namely RIL and
ONGC were also negative.

The telecommunication and IT companies namely Airtel and Infosys
respectively found to be almost same risky but yielded negative returns.



2. In the below tables numbered 4.1, 4.2, and charts numbered 1, 2, 3 and 4, the
monthly stock returns of the Sensex 20 companies has been calculated for the
financial year 2011-12.

In this context the monthly stock returns are calculated as follows:

D + (CPL – CPF)
R =
CPF

Where
CPL = Closing Price at Last working day of the month.
CPF = Closing Price at First working day of the month.

For the Month of April
CPL = Closing Price as on 29th April 2011
CPF = Closing Price as on 1st April 2011.

 Similarly, the stock returns for all 12 Months in the year are calculated.
 The dividends are adjusted for the closing price of the respective month of

 Tables numbered 4.1, 4.2, and charts numbered 1, 2, 3 and 4 tells us that
average monthly stock returns of 20 companies, where in, it is, from the
calculations found that, 15 out of 20 companies show negative returns and
rest 5 shows positive.

 Here also the Companies like Mahindra and Mahindra, HUL, ITC, Bajaj Autos,
Tata Motors have yielded positive returns, which also showed similar
performance in weekly periods.

 And Companies like HindalCo, RIL, L&T, and SBI etc have provided negative
returns.



Table 4.1
Showing Monthly Returns for FY 2011-12

Monthly Returns (in %)
Apl May June July Aug Sept
AIR 6.60 (2.55) 3.62 13.97 (8.19) (7.48)
BJJ 0.99 (6.13) 5.03 2.88 5.69 (5.49)
CPL (3.09) 3.48 1.01 (6.12) (8.79) 1.18
DLF (3.60) 5.27 (10.93) 4.79 (14.91) 5.12
HDFC (0.07) (2.01) 1.95 (1.44) (4.27) (2.93)
HIND 0.89 (7.25) (8.62) (9.90) (10.41) (16.04)
HUL 0.40 8.43 10.58 (3.80) (0.57) 6.23
IDBI (1.10) (4.11) 1.30 (4.88) (14.16) (3.02)
INFY (9.70) (4.50) 3.39 (5.71) (16.60) 9.43
ITC 5.02 0.97 4.61 3.40 (3.93) (2.63)
JPEE (10.76) 1.17 (2.48) (21.40) 0.00 3.62
JSW (0.11) 4.82 (8.60) (12.20) (2.40) (17.94)
L&T (3.21) 2.47 8.34 (4.52) (8.68) (15.61)
M&M (1.81) 19.44 3.39 (3.38) (10.35) 3.79
MSZ 3.56 (4.93) (7.24) (7.24) (9.63) 0.03
NTPC (3.68) (6.86) 6.92 (5.22) (4.15) 0.21
ONGC 4.34 (6.67) (2.77) (2.60) (3.65) (3.65)
RIL (5.15) (1.34) (5.19) (4.00) (5.95) 0.36
SBI 3.17 (14.63) 3.28 (3.27) (15.77) (4.15)
TM (1.15) (7.22) (5.20) (5.11) (21.18) (3.86)
SX (1.46) (2.60) 1.27 (3.01) (8.94) (2.19)



Table 4.2
Showing Monthly Returns for FY 2011-12 (Cont…)

Monthly Returns (in %)
Oct Nov Dec Jan Feb Mar Ave SD
AIR 2.85 (2.38) (9.51) 5.80 (3.28) (2.67) (0.27) 6.98
BJJ 14.33 (2.45) (6.49) 8.54 11.80 (5.58) 1.93 7.30
CPL 3.27 13.36 (3.27) 9.35 (9.31) (3.61) (0.21) 6.91
DLF 20.09 (12.52) (16.09) 20.51 4.28 (6.13) (0.34) 12.53
HDFC 8.43 (5.80) (1.24) 7.17 (3.96) 0.72 (0.29) 4.37
HIND 9.75 (8.96) (12.35) 32.13 (2.97) (13.59) (3.94) 13.34
HUL 12.20 1.97 4.30 (5.73) (1.27) 7.83 3.38 5.77
IDBI 15.36 (18.61) (17.32) 28.63 8.05 (4.34) (1.18) 13.56
INFY 16.11 (8.09) 4.23 (2.19) 5.14 0.57 (0.66) 9.01
ITC 9.71 (3.86) (1.64) 2.93 3.38 9.46 2.28 4.67
JPEE 7.43 (13.94) (20.81) 36.35 (1.64) 15.99 (0.54) 16.11
JSW 18.75 (6.80) (18.10) 30.07 13.71 (7.44) (0.52) 14.90
L&T 7.21 (8.73) (23.14) 29.92 (2.76) 2.26 (1.37) 13.40
M&M 20.34 7.55 0.06 3.47 11.71 2.27 4.71 8.97
MSZ 4.50 (14.32) (4.36) 26.07 3.50 2.63 (0.62) 10.33
NTPC 8.89 (8.45) (3.43) 8.66 5.92 (7.69) (0.74) 6.59
ONGC 3.25 (3.30) (3.41) 6.67 7.26 (6.82) (0.95) 4.96
RIL 11.36 (9.50) (13.22) 15.35 (1.40) (1.40) (1.67) 8.02
SBI 2.36 (7.33) (10.98) 26.47 8.01 (5.62) (1.54) 11.52
TM 28.02 1.91 5.39 21.14 7.86 2.93 1.96 13.00
SX 9.62 (7.76) (6.24) 10.80 2.61 (2.99) (0.91) 6.17



Chart 1

25.00

20.00

15.00
AIR
10.00
BJJ
5.00 CPL
0.00 DLF
1 2 3 4 5 6 7 8 9 10 11 12 HDFC
(5.00)
SX
(10.00)

(15.00)

(20.00)

Chart 2

40.00

30.00

20.00 HIND
HUL
10.00 IDBI

0.00 INFY

1 2 3 4 5 6 7 8 9 10 11 12 ITC
(10.00) SX

(20.00)

(30.00)



Chart 3

40.00

30.00

20.00 JPEE
JSW
10.00 L&T

0.00 M&M

1 2 3 4 5 6 7 8 9 10 11 12 MSZ
(10.00) SX

(20.00)

(30.00)

Chart 4

40.00

30.00

20.00 NTPC
ONGC
10.00 RIL

0.00 SBI

1 2 3 4 5 6 7 8 9 10 11 12 TM
(10.00) SX

(20.00)

(30.00)



INTERPRETATION:

The average monthly returns of BSE Sensex was also found to be negative.

HindalCo was the worst performing stock, where as the Mahindra and
Mahindra was the best performing one even for the monthly returns.

The stock of JaiPrakash Associates, with Standard deviation of monthly
returns being 16.11%, found to be more volatile than any other company or
even BSE Sensex . On the contrary, HDFC stock was found to be least volatile
with SD of monthly returns being 4.37%.

The banking companies performed same but level of risk was low with HDFC
and was high with IDBI.

The automobile industry, overall showed the promising performance.

Both the FMCG companies, i.e., HUL and ITC performed well by providing
positive average monthly returns.

All the construction and real estate companies’ stocks found to be more risky.

The metal industries’ companies i.e., JSW and HindalCo found to be risky and
also yielded negative returns with almost same level of risk.

The average monthly returns of petrochemical companies namely RIL and
ONGC were disappointing.

The telecommunication industry was less risky than IT industry and also
yielded better than IT comparatively.

All the companies including BSE Sensex provided positive returns in the
month of October and almost all companies did well in the month of January
except Infosys. The month of June was also good, as most companies gave
positive results.

On the other hand, July was worst month, as maximum number of companies
including BSE Sensex reduced the shareholders wealth.



3. Here the following table numbered 5 and charts numbered 5, 6, 7 and 8,
shows the quarterly returns of the Sensex 20 companies for the financial year
2011-12.

In this context the quarterly stock returns are calculated as follows:

D + (CPL – CPF)
R =
CPF

CPL = Closing Price at Last working day of the quarter.
CPF = Closing Price at First working day of the quarter.

For the first quarter of FY 2011-12
CPL = Closing Price as on 30th June 2011.
CPF = Closing Price as on 1st April 2011

 Similarly, the stock returns for all 4 Quarters in the year are calculated.
 The dividends are adjusted for the closing price of the respective Quarter of

 Table numbered 5, and charts numbered 5, 6, 7 and 8 gives us the
information about quarterly stock returns of 20 companies, where in, it is,
from the calculations found that, 15 out of 20 companies show negative
returns and rest 5 shows positive.

 It can be determined, from the table, that, almost all companies did well in
the in fourth quarter i.e., the period from January to March.

 Almost all the companies performed worst in the second quarter i.e., the
period from October to December.

 In the Odd quarters, the DLF, L&T, Jaiprakash Associates, HindalCo, IDBI etc
were the great losers.



 On the other hand, Mahindra and Mahindra ITC, HUL Tata Motors and Bajaj
Autos continued the top run.

Table 5
Showing Quarterly Returns for FY 2011-12

Quarterly Returns (in %)
April-June July-Sept Oct-Dec Jan-Mar Ave SD
AIR 11.23 (1.395) (9.89) (2.363) (0.606) 8.756
BJJ (3.67) 8.007 5.07 13.756 5.791 7.267
CPL 2.84 (13.150) 11.57 (5.062) (0.949) 10.598
DLF (22.39) (0.771) (9.18) 12.476 (4.967) 14.643
HDFC (0.85) (8.560) 2.19 3.200 (1.006) 5.323
HIND (15.79) (30.451) (7.09) 15.022 (9.577) 19.023
HUL 20.67 1.039 21.93 1.864 11.375 11.475
IDBI (6.27) (24.030) (23.16) 32.952 (5.127) 26.670
INFY (9.66) (13.649) 11.66 2.143 (2.376) 11.511
ITC 10.81 (1.983) 3.11 14.131 6.516 7.309
JPEE (13.27) (16.280) (23.42) 50.554 (0.606) 34.371
JSW (7.07) (32.944) (7.72) 34.376 (3.339) 27.881
L&T 10.40 (24.868) (24.51) 29.551 (2.357) 26.948
M&M 20.08 (11.914) 26.84 22.021 14.258 17.678
MSZ (9.09) (5.435) (14.58) 44.012 3.724 27.120
NTPC (1.09) (10.081) (2.49) 2.877 (2.695) 5.423
ONGC (6.66) (3.599) (4.90) 3.770 (2.845) 4.585
RIL (13.30) (6.246) (12.09) 5.842 (6.449) 8.754
SBI (11.53) (21.065) (13.06) 28.555 (4.274) 22.282
TM (19.99) (27.248) 36.74 35.713 6.304 34.679
SX (2.96) (12.306) (4.31) 9.928 (2.412) 9.203



Chart 5

20.00

15.00

10.00
AIR
5.00
BJJ
0.00 CPL
Apl-June July-Sept Oct-Dec Jan-Mar DLF
(5.00)
HDFC
(10.00)
SX
(15.00)

(20.00)

(25.00)

Chart 6

40.00

30.00

20.00 HIND

10.00 HUL
IDBI
0.00
INFY
Apl-June July-Sept Oct-Dec Jan-Mar
(10.00) ITC

(20.00) SX

(30.00)

(40.00)


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