COURSE CODE: MBA-211

TITLE OF THE PROJECT

Submitted to the
School of Distance Education & Learning
in partial fulfillment of the requirements
for the award of the degree
Master of Business Administration (MBA)

Year of Submission (to be mentioned by the Student)

Supervisor’s Name ____________________ Student’s Name: ______________

& Designation: ________________________ Enrolment No.: ______________

Roll No.: ______________

JAIPUR NATIONAL UNIVERSITY

School of Distance Education & Learning
Jagatpura, Near New RTO, Agra By-pass Road Jaipur-302017
 JAIPUR NATIONAL UNIVERSITY
School of Distance Education and Learning
JAGATPURA, JAIPUR - 302017
PROFORMA FOR APPROVAL OF PROJECT PROPOSAL (MBA-211)

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 CERTIFICATE OF ORIGINALITY

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submitted to Jaipur National University, Jaipur in partial fulfillment of the requirement for the award of

the degree of MASTER OF BUSINESS ADMINISTRATION (MBA), is an authentic and original work

carried out by Mr. / Ms. ___________________________ with enrolment no.

______________________________ under my supervision and guidance.

The matter embodied in this project is genuine work done by the student and has not been submitted

whether to this University or to any other University / Institute for the fulfillment of the requirements of any

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 ACKNOWLEDGEMENT

I take this opportunity to express my gratitude to all, who have made it possible for me to
accomplish this project work.

I express my sincere thanks to my guide XXXX for giving me valuable guidance throughout
the project. The advice and suggestions given by him, had immensely helped me to gain working
knowledge on the assignment under taken, and he has also taken personal care in helping me
throughout the project work. At the same time I thank all my friends who encouraged and helped
bringing out my project successfully.

My parents have been a constant source of the support throughout my life. This work would
not have been complete but for the solace they provide to me whenever, I ran into difficulties. No
words can explain my gratitude to them.
 TABLE OF CONTENTS

SL.NO PARTICULARS PAGE

1. INTRODUCTION 6-17

 Importance of investment
 Meaning
 Avenues of investment
 Driving forces of investment
 Objective of the study
 Scope of the study
 Limitations of the study
 Assumptions of the study
 Research methodology

2. ANALYSIS OF DATA 17-41

 Return
 Measurement of return
 Returns for Bank, Auto, I.T & Pharma
Industries
 Fluctuations in the prices of the selected
shares in respected industries
 Construction of index for Bank, Auto, I.T
& Pharma Industries
 Co-efficient of variation
 Comparison on the basis of C.V Bank, Auto,
I.T, Pharma Industries & Industry wise

3. CONCLUSIONS AND RECOMMENDATIONS 42-44

BIBILOGRAPHY 45
 INTRODUCTION

IMPORTANCE OF INVESTMENT: -

An investor has various alternative options (avenues) of investment for his

savings to flow to. Savings kept as cash are barren and do not earn anything. Hence savings are
invested in assets depending on their risk and return characteristics. The objective of the investor is
to minimize the risk involved in investment and maximize the return from the investment.

Our savings kept as cash are not only barren because they do not earn anything,
but also loses its value to the extent of rise in prices/ thus rise in prices or inflation erodes the value
of money. Savings are invested to provide a hedge or protection against inflation. If the investment
cannot earn as much as the rise in prices, the real rate of return would be negative. Thus, if inflation
it at an average annual rate of10percent, then the return from an investment should be above 10
percent to induce savings to flow into investment.

MEANING:-

Investment means “Postponed Present Consumption. It may mean many things to many
persons. If one person has advanced some money to another, he may consider his loan as a n
investment. He expects to get back the money along with interest at a future date.”
“Another person may have purchased one kg of gold for the purpose of price appreciation and
may consider it as an investment.”
A young couple makes a down payment on their first house. This is also an investment
(suppose they paid 5000/-. Now they are staying in rent house per year 6000/-
If they spend that 500/- for rent they may get better house than it for rent. So it is also postponement
of consumption)
Below diagram explains the perfect mean how an investment is postponement of consumption

103
(Hr has a opportunity of getting 3%interest if
he has invest)

41.2

O 60 100 Co

Co is the current year consumption axes he can consume high as 100 low as 0.
C1 is the next year consumption high as 103&low as 0.

According to the diagram he consumed 60/- and he invested remaining40/- he got 41.2/-“so
he got more.”

AVENUES OF INVESTMENT:-

 Corporate securities

 Deposits in banks and non-banking companies

 UTI and other mutual fund schemes

 Post office deposits and certificates

 Life insurance polices

 Provident fund schemes

 Government and semi-government securities

DRIVING FORCES OF INVESTMENT:-

Though there are many factors that influence the decision of investing in assets, there are
some main driving forces that cause investment in any society like

 Retirement plan

 Avoidance of taxation

 Tempting high rates of interest

 High inflation and resultant expectation of increase in the monetary return

 Hike in income

 Availability of a large number of investment avenues

 Legal safeguards

 Existence of financial institutions to encourage savings etc..

THE PROCESS OF INVESTMENT;

The investment process involves a series of activities leading to the purchase of securities or
other investment alternatives. The investment process can be divided into five stages.

1) Farming of investment policy

2) Investment analysis
3) Valuation
4) Portfolio construction
5) Portfolio evaluation

Investment Process

Analysis Valuation Portfolio Portfolio

Investment
Construction Evaluation
Policy

-Fundamental -Intrinsic -Diversification -Appraisal

-Investible
value
fund
-Technical -Future -Selection& -Revision
-Objectives
Value Allocation
-Knowledge
-Efficient
Market
Hypothesis
INVESTMENT POLICY

The government or the investor before proceeding into investment formulates the policy for
the systematic functioning. The essential ingredients of the policy are the Investible funds, objectives
and the knowledge about the investment alternatives and market.
Investible funds The entire investment procedure revolves around the availability of
investible funds. The fund may be generated through savings or from borrowings. If the funds are
borrowed, the investor has to be extra careful in the selection of investment alternatives. The return
should be higher than the interest he pays. Mutual funds invest their owner’s money in securities.
Objectives The objectives are framed on the premises of the required rate of return, need for
regularity of income, risk perception and the need for liquidity. The risk taker’s objective is to earn
high rate of return in the form of capital appreciation, whereas the primary objective of the risk
averse is the safety of the principle.
Knowledge The knowledge about the investment alternatives and markets plays a key role in
the policy formulation, the investment alternatives range from security to real estate, the risk and
return associated with investment alternatives differ from each other. Investment in equity is high
yielding but has more risk than the fixed income securities. The tax sheltered schemes offer tax
benefits to the investors.The investor should be aware of the stock market structure and the functions
of the brokers. The mode of operation varies among BSE, NSE, and OTCEI. Brokerage charges are
also different. The knowledge about the stock exchanges enables him to trade the stock intelligently.

SECURITY ANALYSIS

After formulating the investment policy, the securities to be bought have to be scrutinized
through either Fundamental analysis or Technical analysis or Efficient Market Hypothesis theory.

Fundamental Analysis: Fundamental analysis is really a logical and systematic approach to

estimating the future dividends and share price. It is based on the basic premise that share price is
determined by a number of fundamental factors relating to the economy, industry and company.
Technical Analysis: According to technical analysis the investors believe that share prices
are determined by the demand and supply forces operating in the market. These demand and supply
forces in turn are influenced by a number of fundamental factors as well as certain psychological or
emotional factors. Many of these factors cannot be quantified. The technical analyst therefore
concentrates on the movement of share prices. He claims that by examining past share price
movements future share prices can be accurately predicted. Technical analysis is the name given to
forecasting techniques that utilize historical share price data. The rationale behind technical analysis
is that share price behavior repeats itself over time and the analyst attempts to drive methods to
predict this repetition.
Random Walk Theory: Stock prices are determined by a number of factors such as fundamental
factors, technical factors and psychological factors. The behavior of stock prices is studied with the
help of different methods such as fundamental analysis and technical analysis. Fundamental analysis
seeks to evaluate the intrinsic value of securities by studying the fundamental factors affecting the
performance of the economy, industry and companies. Technical analysis believes that the past
behavior of stock prices gives an indication of the future behavior. It tries to study the patterns in
stock price behavior through charts and predict the future movement in prices. There is a third theory
on stock price behavior, which questions the assumptions of technical analysis.
The basic assumption in technical analysis is that stock price movement is quite orderly and
not random. The new theory questions this assumption. From the results of several empirical studies
on stock price movements, the advocates of the new theory assert that share price movements are
random. The new theory came to be known as Random Walk Theory because of its principal
contention that share price movements represent a random walk rather than an orderly movement.

VALUATION
The valuation helps the investor to determine the return the return and risk expected from an
investment in the common stock. The intrinsic value of the share is measured through the book value
of the share and price earnings ratio. Simple discounting models also can be adopted to value the
shares. The stock market analysts have developed many advanced models to value the shares. The
real worth of the share is compared with the market price and then the investment decisions and
made.
Future value Future value of the securities could be estimated by using a simple statically
technique like rend analysis. The analysis of the historical behavior of the price enables the investor
to predict the future value.
CONSTRUCTION OF PORTFOLIO

A portfolio is a combination of securities. The portfolio is constructed in such a manner to

meet the investor’s goals and objectives. The investor should decide how best to reach the goals with
the securities available. The investor tries to attain maximum risk. Towards this end he diversifies his
portfolio and allocates funds among the securities.

Diversification
The main objective of diversification is the reduction of risk in the loss of capital and
income. A diversified portfolio is comparatively less risky than holding a single portfolio. There are
several ways to diversify the portfolio. Debt and equity diversification Debt instruments provide
assured return with limited capital appreciation. Common stocks provide income and capital gain but
with the flavor of uncertainty. Both debt instruments and equity are combined to complement each
other.
Industry diversification Industries’ growth and their reaction to government policies differ from each
other. Banking industry shares may provide regular returns but with limited capital appreciation. The
information technology stock yields high return and capital appreciation but their growth potential
after the year2002 is not predictable. Thus, industry diversification is needed and it reduces risk.
Company diversification Securities from different companies are purchased to reduce risk. Technical
analysts suggest the investors to buy securities based on the price movement. Fundamental analysts
suggest the selection of financially sound and investor friendly companies.
Selection
Based on the diversification level, industry and company analyses the securities have to be
selected. Funds are allocated for the selected securities. Selection of securities and the allocation of
funds and sales the construction of portfolio.

EVALUATION

The portfolio has to be managed efficiently. The efficient management calls for evaluation of
the portfolio this process consists of portfolio appraisal and revision.

Appraisal
 The return and risk performance of the security vary from time to time. The variability in
return of the securities is measured and compared. The developments in the economy, industry and
relevant companies from which the stocks are bought have to0 be appraised. The appraisal warns the
loss and steps cab be taken to avoid such losses.
Revision
Depends on the results of the appraisal. The low yielding securities with high risk are
replaced with high yielding securities with low risk factor. To keep the return at a particular level
necessitates the investor to revise the components of the portfolio periodically.

OBJECTIVES OF THE STUDY: -

 To ascertain the return both firm wise and industry wise as a whole

 To Know the risk factor in the firm and Industry as a whole

 To know the fluctuations of the security prices of the selected firms.

 To compare Industry index with BSE-200 Index in various aspects.

SCOPE OF THE STUDY: -

This scope of study is limited to few selected industries. Those are Pharmaceutical,
Information Technologies, Automobile, & Banking Industry. In those industries, only some are
selected. They are 6companies each from pharmaceutical, I.T., Automobile industry and 12
companies from banking industry. This study is analysis of previous twelve months (Jan-06 to Dec-
06) data relating to prices of shares in Bombay Stock Exchange only.

LIMITATIONS OF STUDY: -

 This study is limited to some selected industries

(Pharmaceutical, Banking, Information technologies &Automobile)

 Dividend is not considered in the calculation of Return. Price change is only

taken into consideration.

 Situations in stock market are always subject to change.

ASSUMPTIONS OF THE STUDY:

 This study assumes than an investor purchases the share at the beginning of the
month and he sells the share at the end of the month.

 Investors make the decision on the basis of previous returns and risks that are
unsystematic risks.

 For calculating the returns of each industry this study assumes that the indexes
are taken in to consideration.

 The investors give preference to the securities that have given positive returns
previously.

RESEARCH METHODOLOGY
Data Collection: -

Since the primary data is not available within the time permitted, and so secondary data has
been generated from secondary sources, i.e., from web sources and periodic investment
journals.

Period of study: -
This study is conducted for twelve months, i.e., from January 2006 to December 2006.

Tools for evaluation: -

Statistical tools for evaluations:

 Standard deviation ()(Risk)

 Variation 2 (Unsystematic Risk)
 Co-efficient of variation (CV)
 Average
 Index (simple avg. method)

Sample selection: -

Samples selected are listed in BSE-200 SENSEX.

The total industries involved in BSE-200 are 18 Industries. Randomly four Industries are selected for
this study. Of four selected industries 60% of companies are selected in each industry.
 LISTED SELECTED PERCENTAGE

Pharmaceutical: - 10 6 60

Information Tec: - 10 6 60

Automobile: - 10 6 60

Banking: - 20 12 60

ANALAYSIS OF DATA

RETURN: -

A major purpose of investment is to get a return or 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 income from some
investments and rental income from house property. Return may take several forms.

Measurement or Returns:-

The purpose of investment is to get a 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 years many methods were adopted for quantifying returns.
In this study I considered only prices but not dividend in the calculation return because
the investors main motive to invest in shares is make the profit from changes in prices of shares.
That’s why I calculated return from the prices of the shares only.
Return = (P1 – P0)/P0

Where: P1 = Closing price of the share

P0 = Opening price of the share

In this Chapter I show the returns for each unit wise and industry wise.
Returns for banking industry: -

TABLE NO.1

ORIENTAL BANK OF
Andhra Bank HDFC Bank Ltd. COMMERCE
Date OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 93 92.85 -0.16 710.9 762.55 7.27 271.5 250.45 -7.75
Feb-06 93.85 87.6 -6.66 767.9 736.05 -4.15 251.1 240.9 -4.06
Mar-06 87.9 80.8 -8.08 738 773.5 4.81 240 235.85 -1.73
Apr-06 81.15 80 -1.42 765 826.6 8.05 237.8 233.05 -2.00
May-06 83 72.25 -12.95 835 740.2 -11.35 234.9 202.15 -13.94
Jun-06 72.95 62.5 -14.32 740 791.15 6.91 200.9 170.4 -15.18
Jul-06 64.9 73.9 13.87 740 795.05 7.44 165 176.45 6.94
Aug-06 74.4 87.35 17.41 790.05 853.15 7.99 177 193.65 9.41
Sep-06 87.5 95.25 8.86 840 926 10.24 194 271.65 40.03
Oct-06 94.5 93.3 -1.27 912 1,004.05 10.09 270 257 -4.81
Nov-06 92.15 89.45 -2.93 1,017.00 1,118.40 9.97 258.95 245.5 -5.19
Dec-06 90 86.6 -3.78 1,122.00 1,069.75 -4.66 247 226.5 -8.30

TABLE NO.2

State Bank of India ICICI BANK Ltd. UTI BANK Ltd.

Date OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 909.8 886.8 -2.53 586.25 609.15 3.91 292.00 337.15 15.46
Feb-06 890 877.2 -1.44 610.00 615.10 0.84 334.05 328.35 -1.71
Mar-06 880 968.05 10.01 619.00 589.25 -4.81 327.00 356.35 8.98
Apr-06 968.5 913.65 -5.66 592.00 590.25 -0.30 330.05 347.05 5.15
May-06 917 831 -9.38 605.00 536.05 -11.40 355.00 285.80 -19.49
Jun-06 839 727.4 -13.30 545.00 487.40 -10.57 292.00 266.75 -8.65
Jul-06 734 810.05 10.36 488.05 554.05 13.52 272.00 297.85 9.50
Aug-06 800 930 16.25 551.00 596.50 8.26 298.50 342.90 14.87
Sep-06 928 1,028.30 10.81 585.10 699.05 19.48 342.00 379.20 10.88
Oct-06 1,011.00 1,095.50 8.36 700.00 776.85 10.98 380.10 433.75 14.11
Nov-06 1,095.00 1,314.00 20.00 777.00 871.45 12.16 436.00 474.05 8.73
Dec-06 1,314.00 1,245.90 -5.18 875.00 890.40 1.76 479.45 469.05 -2.17
 TABLE NO.3
Canara Bank VIJAYA BANK UNION BANK

OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return

Jan-06 243 249.15 2.53 61.4 61.25 -0.24 123.10 123.90 0.65
Feb-06 251 286.15 14.00 62.2 57.2 -8.04 125.00 122.20 -2.24
Mar-06 286.5 266.9 -6.84 57.5 52.55 -8.61 122.80 121.85 -0.77
Apr-06 267.95 254.1 -5.17 53 53.2 0.38 124.00 116.85 -5.77
May-06 256.3 229.25 -10.55 53.7 43.9 -18.25 119.80 107.00 -10.68
Jun-06 232 200.8 -13.45 45.8 39.5 -13.76 108.00 90.40 -16.30
Jul-06 201.1 196.65 -2.21 40 41.95 4.88 91.40 102.05 11.65
Aug-06 198.5 221.2 11.44 42 47.05 12.02 102.50 116.90 14.05
Sep-06 223 284.15 27.42 47.55 56.7 19.24 117.80 136.35 15.75
Oct-06 287.9 294 2.12 57 57.2 0.35 136.80 129.50 -5.34
Nov-06 297.8 297.75 -0.02 57.15 51.15 -10.50 130.70 128.65 -1.57
Dec-06 301 276.2 -8.24 52.45 47.1 -10.2 129.00 122.65 -4.92
INDIAN OVER.BANK PUNJAB NB BANK OF BARODA
OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 94.00 111.85 18.99 468.8 465.55 -0.69 128.5 129.75 0.97
Feb-06 114.00 101.85 -10.66 466 441.3 -5.30 131 133.65 2.02
Mar-06 102.00 96.95 -4.95 441 471.2 6.85 132.55 132 -0.41
Apr-06 96.95 99.40 2.53 472 433.05 -8.25 133 124.1 -6.69
May-06 103.00 84.25 -18.20 437 405.4 -7.23 126 114.05 -9.48
Jun-06 86.00 84.10 -2.21 414.95 325.55 -21.55 115.4 101.9 -11.70
Jul-06 84.00 89.65 6.73 329.4 380.2 15.42 102 110.9 8.73
Aug-06 90.00 92.00 2.22 380 469.75 23.62 110.5 142.65 29.10
Sep-06 92.00 109.40 18.91 465 526.2 13.16 141 162.15 15
Oct-06 110.00 118.15 7.41 527 518.45 -1.62 162.15 173.6 7.06
Nov-06 118.50 118.15 -0.30 524.8 544.75 3.80 174 200.95 15.49
Dec-06 119.00 110.70 -6.97 552 506.95 -8.16 202.8 207.9 2.51
 TABLE NO.4

BANKEX
Date Open Close RETURN
Jan-06 5,124.09 5,254.89 2.55
Feb-06 5,267.88 5,204.69 -1.20
Mar-06 5,180.14 5,265.24 1.64
Apr-06 5,269.08 5,245.79 -0.44
May-06 5,252.40 4,769.87 -9.19
Jun-06 4,772.41 4,348.79 -8.88
Jul-06 4,311.56 4,781.14 10.89
Aug-06 4,772.39 5,308.01 11.22
Sep-06 5,301.98 6,038.87 13.90
Oct-06 6,044.05 6,484.06 7.28
Nov-06 6,486.64 7,179.71 10.68
Dec-06 7,183.78 7,085.73 -1.36

TABLE NO.5 (AVERAGES)

AB OBC HDFC BANK SBI ICICI UTI BANK CANARA

-0.95 -0.55 4.38 3.19 3.65 4.64 0.92
VIJAYA IOB BOB UB PNB BANKEX
-2.73 1.12 -0.23 -0.46 0.84 3.09

By and large, this study relates to twelve companies with a period of twelve months. The
above table is particularly concerned with the returns of above –mentioned companies.
In the course of the study it has been revel that the highest return with respect to Oriental Bank of
Commerce took place in the month of September 2006 to the tune of 40.02In contrast to this the
lowest return with respect of Punjab National Bank took place in the month of June2006 to the tune
of –21.55.When overall performance i.e. average return is taken in to consideration UTI Bank (4.64)
reached the first position. When it comes to the lowest returns Vijaya Bank (-2.73) remained in the
forefront. As per the BANKEX given by BSE, the returns remain highest in the month of September
2006(13.90) and the lowest in the month of May2006 (-9.19). The average return of State Bank of
India is closely related to the average return of BANKEX average return. Totally eight banks are
noted less average return than BANKEX and remaining Four banks are noted high average return
than it.
Returns for Automobile Industry: -

TABLE NO.6

Ashok Leyland Ltd. Bajaj Auto Ltd. Mahindra&Mahindra Ltd.

Date OPEN CLOSE Returns OPEN CLOSE Returns OPEN CLOSE Returns
Jan-06 31.95 30.65 -4.07 2,015.00 2,154.25 6.91 512 558.5 9.08
Feb-06 30.7 38.25 24.59 2,180.00 2,601.40 19.33 567.3 588.2 3.68
Mar-06 38.5 40.25 4.55 2,625.00 2,746.85 4.64 590.15 627.1 6.26
Apr-06 40.7 52.15 28.13 2,785.00 3,012.70 8.18 639.3 631.25 -1.26
May-06 52.65 39.1 -25.74 3,040.00 2,744.90 -9.71 634 609.7 -3.83
Jun-06 38 37.4 -1.58 2,825.00 2,736.85 -3.12 622 621.15 -0.14
Jul-06 38.1 34.9 -8.40 2,736.00 2,473.65 -9.59 629 590.5 -6.12
Aug-06 34.9 39.6 13.47 2,457.00 2,697.50 9.79 591 649.05 9.82
Sep-06 39.9 45 12.78 2,700.00 2,998.20 11.04 652 680.5 4.37
Oct-06 45.25 44 -2.76 3,014.00 2,751.05 -8.72 686 782.55 14.07
Nov-06 44.2 42.55 -3.73 2,775.00 2,644.75 -4.69 790 821.05 3.93
Dec-06 43 45.45 5.70 2,672.00 2,618.85 -1.99 826 905.85 9.67
HERO HONDA MOTERS TATA MOTOR LTD PUNJAB TRACTORS LTD
Date OPEN CLOSE Returns OPEN CLOSE Returns OPEN CLOSE Returns
Jan-06 860 856.15 -0.45 650 709.3 9.12 468.8 465.55 -0.69
Feb-06 865 886.75 2.51 710 814.35 14.70 466 441.3 -5.30
Mar-06 886 888.3 0.26 815 932.6 14.43 441 471.2 6.85
Apr-06 899.9 844.9 -6.11 937 950.5 1.44 472 433.05 -8.25
May-06 863 770.8 -10.68 959 789.7 -17.65 437 405.4 -7.23
Jun-06 780 791.5 1.47 794.45 794.45 0 414.95 325.55 -21.55
Jul-06 795 705.2 -11.30 801 739.75 -7.65 329.4 380.2 15.42
Aug-06 709.7 720.3 1.49 737 845.15 14.67 380 469.75 23.62
Sep-06 714.9 774.55 8.34 850 862.05 1.42 465 526.2 13.16
Oct-06 778.5 756.15 -2.87 867.1 827.95 -4.52 527 518.45 -1.62
Nov-06 762 742.65 -2.54 832 809.4 -2.72 524.8 544.75 3.80
Dec-06 740 762.35 3.02 815 900.25 10.46 552 506.95 -8.16
 TABLE NO.7

AUTO INDUSTRY
DATE OPEN CLOSE Returns
Jan-06 4,251.97 4,506.53 5.99
Feb-06 4,515.51 4,998.68 10.70
Mar-06 5,015.14 5,322.73 6.13
Apr-06 5,355.23 5,548.91 3.62
May-06 5,563.98 4,812.05 -13.51
Jun-06 4,837.71 4,753.58 -1.74
Jul-06 4,777.54 4,476.87 -6.29
Aug-06 4,477.06 4,944.95 10.45
Sep-06 4,949.63 5,365.72 8.41
Oct-06 5,380.05 5,357.22 -0.42
Nov-06 5,371.03 5,321.85 -0.92
Dec-06 5,321.75 5,518.50 3.70

TABLE NO.8 (AVERAGES)

AUTO
A.L.L BAJAJ M&M H.H.M PUNJAB TATA INDEX
3.57 1.83 4.13 -1.4 0.83 2.81 2.18

According to this industry six companies have been taken for the purpose of analysis.
Ashoka Leyland has been seen as the only company to secure both highest and lowest returns
i.e.28.13 and-25.74 respectively.
When it comes to the average performance i.e. average returns Mahendra&Mahendra
(4.13) has the highest return and Hero Honda Motors (-1.4) hold the lowest. Highest return of this
industry for the taken period was in the month of February 2006 (10.70) and the lowest return was in
the month of May 2006 (-13.51). (This Industry returns are calculated from the AUTO INDEX,
which is maintaining by the BSE.). In the above table show that BAJAJ AUTO average return is
closely related to the average return of AUTO INDUSTRY. Overall three companies are noted less
average return and two are noted high average return than INDUSTRY average return.
I.T. Industry:-

TABLE NO.9

NIIT Wipro Infosystech.ltd.

Date OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 292.8 290.95 -0.63 464 529.9 14.20 3,000.00 2,879.70 -4.01
Feb-06 297 252.15 -15.10 530 520.25 -1.84 2,890.00 2,828.60 -2.12
Mar-06 250.5 296.4 18.32 520 558.55 7.41 2,825.00 2,980.85 5.52
Apr-06 299.4 304.85 1.82 563 539 -4.26 3,006.00 3,177.50 5.71
May-06 305.5 362.6 18.69 545 449.85 -17.46 3,185.00 2,908.05 -8.70
Jun-06 366 367.35 0.37 452.8 513.75 13.46 2,950.00 3,077.55 4.32

Jul-06 365 362.65 -0.64

514 491.3 -4.42 3,100.00 1,653.90 -46.65
Aug-06 350.25 345.35 -1.40
490 517.9 5.69 1,660.00 1,808.80 8.96
Sep-06 347 330.3 -4.81
516 525.1 1.76 1,807.00 1,847.90 2.26
Oct-06 331 334 0.91
524.95 538.15 2.51 1,842.00 2,094.80 13.72
Nov-06 339.75 444.3 30.77
540 598.95 10.92 2,109.70 2,180.45 3.35
Dec-06 445.9 525.15 17.77
602 604.55 0.42 2,200.00 2,240.50 1.84
POLARIS SOFTWARE
HCL INFOSYS LTD SATYAM
Date OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 274 244.25 -10.86 132.5 118.55 -10.53 740.7 746.65 0.80
Feb-06 244 175.65 -28.01 119 109.2 -8.24 748 769.45 2.87
Mar-06 176 183 3.98 109.3 117.2 7.23 768.5 849.2 10.50
Apr-06 184 164.2 -10.76 117.65 109.9 -6.59 855 759.1 -11.22
May-06 164 155.5 -5.18 111 85.95 -22.57 762.9 691.15 -9.40
Jun-06 158 130.6 -17.34 89.75 73.95 -17.60 700 711.4 1.63
Jul-06 131 141.7 8.17 74.5 98.2 31.81 715 755.25 5.63
Aug-06 140.55 163.5 16.33 98.5 112 13.71 753 808.2 7.33
Sep-06 163.55 144.45 -11.68 112.3 117.5 4.63 810 818.55 1.06
Oct-06 146 129.1 -11.56 118.5 130.75 10.34 826 440.55 -46.67
Nov-06 129.2 164.45 27.28 132 121.55 -7.92 441 459.25 4.14
Dec-06 164.45 159.2 -3.19 122.95 172.85 40.59 460 483.95 5.21
 TABLE NO.10 (AVERAGES)

INOFSY SATYA POLARI

NIIT WIPRO S HCL M S BSE IT Avg.
5.51 2.37 -1.32 -3.57 -2.34 2.90 2.84

TABLE NO.11

I.T.INDUSTRY
Date Open Close Return
Jan-06 3,744.48 3,749.20 0.13
Feb-06 3,749.32 3,706.30 -1.15
Mar-06 3,702.89 4,030.29 8.84
Apr-06 4,048.39 4,034.92 -0.33
May-06 4,046.60 3,642.67 -9.98
Jun-06 3,674.89 3,743.32 1.86
Jul-06 3,750.71 3,951.13 5.34
Aug-06 3,943.91 4,286.42 8.68
Sep-06 4,277.66 4,393.56 2.71
Oct-06 4,408.61 4,821.98 9.38
Nov-06 4,828.75 5,107.22 5.77
Dec-06 5,130.37 5,272.56 2.77

According to this industry six companies have taken to analyze. Overall Polaris Software
Ltd. was noted higher return for the month of December 2006 as 40.59 and Satyam was noted lower
return for the month of October 2006 as –46.67.
Highest return of this industry for the taken period was in the month of October 2006
(9.38) and the lowest return was in the month of May 2006 (-9.98).
(This Industry returns are calculated from the IT INDEX, which is maintaining by the BSE)
According to the average return NIIT was noted highest return as 5.51 and HCL Infosystems Ltd.
was noted lowest return as –3.57.In the above table No.10 show that Polaris average return is closely
related to the average return of IT INDUSTRY. Over all only TWO companies are more than the
Industry avg. returns.
Pharmaceutical Industry: -

TABLE NO.12

AUROBINDO PHARMA
CIPLA Ltd. RANBAXY Ltd.
Date OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 445 441.3 -0.83 364.4 399.1 9.52 413 538.45 30.37
Feb-06 441 551.9 25.15 400 429.4 7.35 540 554.45 2.68
Mar-06 552 661.95 19.92 431 431.6 0.14 560 682.75 21.92
Apr-06 665 260.8 -60.78 435.95 472.55 8.40 682.5 723.9 6.07
May-06 263.9 229.5 -13.04 504 411.45 -18.36 734 581.35 -20.80
Jun-06 233 215.8 -7.38 412.5 356.4 -13.6 592 582.25 -1.65
Jul-06 216.3 236 9.11 360 373.85 3.85 586 617.65 5.40
Aug-06 236 249.95 5.91 374 406.8 8.77 626 624.8 -0.19
Sep-06 251 262.25 4.48 406 439.85 8.34 625 628.4 0.54
Oct-06 261.9 262.05 0.06 435.7 399.7 -8.26 630 609 -3.33
Nov-06 264 253.85 -3.84 401.15 372.3 -7.19 614.7 619.9 0.85
Dec-06 257.15 250.7 -2.51 372.9 391.85 5.08 626 705.15 12.64
Dr.REDDY'S LABRATORIES
Ltd. STERL BIOTEC WOCKHARDT Ltd.
Date OPEN CLOSE Return OPEN CLOSE Return OPEN CLOSE Return
Jan-06 986 1,119.60 13.55 123.95 125.3 1.09 445.1 483.45 8.62
Feb-06 1,125.00 1,302.85 15.81 125.1 120.35 -3.80 490 513.85 4.87
Mar-06 1,299.55 1,420.30 9.29 122.5 124.65 1.76 515 506.65 -1.62
Apr-06 1,435.00 1,431.85 -0.22 126 120.6 -4.29 510.95 446.25 -12.66
May-06 1,450.00 1,357.40 -6.37 121.95 119.2 -2.26 446 360.15 -19.25
Jun-06 1,389.95 1,274.00 -8.34 120 105.9 -11.75 364.8 380.1 4.19
Jul-06 1,273.50 1,396.95 9.69 106 102.55 -3.25 388 342.7 -11.68
Aug-06 1,375.05 720.5 -47.60 104 110.8 6.54 342.7 364.55 6.38
Sep-06 723 731.3 1.148 111.15 145.35 30.77 368.95 401.5 8.82
Oct-06 731 748.05 2.33 145.5 122.2 -16.01 404.8 388.95 -3.92
Nov-06 709 750.8 5.90 123.9 167.7 35.35 390 372.2 -4.56
Dec-06 755 811.2 7.44 166 192.5 15.96 376.5 350.4 -6.93
 TABLE NO.13 (AVERAGES)

STERL WOCKHARD
CIPLA RANBAXY AUROBHINDHO Dr.REDDY'S BIOTEC T INDEX
-1.98 0.34 4.54 0.22 4.18 -2.31 1.67

TABLE NO.14

PHARMA INDEX
Date OPEN CLOSE Returns
Jan-06 3,103.76 3,290.65 6.02
Feb-06 3,290.95 3,553.78 7.99
Mar-06 3,549.54 3,858.10 8.69
Apr-06 3,867.08 3,894.84 0.72
May-06 3,973.37 3,387.94 -14.73
Jun-06 3,416.41 3,132.42 -8.31
Jul-06 3,136.32 3,227.22 2.90
Aug-06 3,234.52 3,538.50 9.40
Sep-06 3,543.77 3,684.44 3.97
Oct-06 3,680.87 3,641.60 -1.07
Nov-06 3,630.59 3,720.61 2.48
Dec-06 3,720.14 3,792.05 1.93

According to this industry six companies have taken to analyze. Overall STERL. Was
noted highest return for the month of November 2006 as 35.35 and the Cipla Ltd. was noted lowest
return for the month of February 2006 as –60.78.
Highest return of this industry for the taken period was in the month of August 2006 (9.40)
and the lowest was in the month of May 2006 (-14.73).
According to the average return AUROBINDO Pharma Ltd. was noted highest return as
4.54 and Wockhardt was noted lowest return as-2.13

FLUCTUATIONS IN THE PRICES OF THE SELECTED SHARES IN RESPECTED

INDUSTRIES: -
 Market indexes have always been of great importance in the world of security analysis and
portfolio management. People from different walks of life use and are affected by market
indicators. Investors, both individual and institutional, use the market index as a benchmark
against which they evaluate the performance of their own or Institutional portfolio. The
technicians or the chartists often base their decisions to buy and sell on the patterns emerging out
of the time series data of market indexes. Even the economists and statisticians use stock market
indexes to study the trend of growth patterns in the economy, to analyses as well as forecast
business cycles and to correlate stock market indexes to economic activities.

The index is just an indicator of market and did nothing to the formation of decision of
selecting the investment or portfolio. So the investor should have the highest degree in analyzing
this index. They simply not only tell the movement of share prices but also reflected by the
weight of those shares. So, a high increase in share price of a minor share with a small share
holding will not affect the market.

In this study to analyses the fluctuations in the prices of shares for selected companies in the
selected industries index has prepared in the simple average method with the selected companies
for the period of thirteen months.

In general stock exchanges are using some methods to construct indexes. Those are

 Simple average method

 Market capitalization Method
 Free-float Capitalization Method

The construction of index in simple average method:-

= (Simple average on the day of cons. /simple average on base day)*100
Example: DJIA

Securities Day1 Day2 Day3 Day4

(Rs.) (Rs.) (Rs.) (Rs.)

A 100 150 180 130

B 110 105 200 90
C 85 80 130 90
D 180 220 270 150
Average 119 139 195 115
Index Points 100 117 164 97

The prepared industry indexes are based on the selected companies for the selected period.
Below mentioned indexes are prepared in this study.

(i) Banking Industry Index (Bankex)

(ii) Auto Industry Index
(iii) I.T.Industry Index
(iv) Pharma Industry Index

Construction of Index for Banking Industry:-

The Base period of Banking index Jan-2006

The base points of banking industry index are 10. The Banks involved in the bank
industry index are thirteen randomly selected banks from BSE200 index.

TABLE NO.15
Date ANDHRA HDFC OBC SBI ICICI UTI CANARA

Jan-06 92.925 736.725 260.975 898.3 597.7 314.575 246.075

Feb-06 260.975 751.975 246 883.6 612.55 331.2 268.575
Mar-06 84.35 755.75 237.925 924.025 604.125 341.675 276.7
Apr-06 80.575 795.8 235.425 941.075 591.125 338.55 261.025
May-06 77.625 787.6 218.525 874 570.525 320.4 242.775
Jun-06 67.725 765.575 185.65 783.2 516.2 279.375 216.4
Jul-06 69.4 767.525 170.725 772.025 521.05 284.925 198.875
Aug-06 80.875 821.6 185.325 865 573.75 320.7 209.85
Sep-06 91.375 883 232.825 978.15 642.075 360.6 253.575
Oct-06 93.9 958.025 263.5 1053.25 738.425 406.925 290.95
Nov-06 90.8 1067.7 252.225 1204.5 824.225 455.025 297.775
Dec-06 88.3 1095.875 236.75 1279.95 882.7 474.25 288.6
Date VIJAYA IOB PNB UNION BOB AVG INDEXPO.
61.325
Jan-06 102.925 467.175 123.5 246.275 345.71 100
Feb-06 59.7 107.925 453.65 123.6 237.1 361.40 109.83
Mar-06 55.025 99.475 456.1 122.325 227.6 348.76 105.99
Apr-06 53.1 98.175 452.525 120.425 231.75 349.96 106.36
May-06 48.8 93.625 421.2 113.4 230.025 333.21 101.26
Jun-06 42.65 85.05 370.25 99.2 212.65 301.99 91.779
Jul-06 40.975 86.825 354.8 96.725 211 297.90 90.536
Aug-06 44.525 91 424.875 109.7 235.8 330.25 100.37
Sep-06 52.125 100.7 495.6 127.075 269.625 373.89 113.63
Oct-06 57.1 114.075 522.725 133.15 287.525 409.96 124.59
Nov-06 54.15 118.325 534.775 129.675 271.075 441.69 134.23
Dec-06 49.775 114.85 529.475 125.825 251.85 451.52 137.22
 Index Points of BANKING INDUSTRY

150
Index points

100

50

0
1 2 3 4 5 6 7 8 9 10 11 12
Months (JAN-06 to Dec-06)

In the diagram shown above months are (Jan-06 to Dec-06) shown on the x-axis. Index
points are shown on the y-axis.

During the initial period of the study that is Jan-06 to May-06 the index points
moved from 100 to 109 points. However during the period of June-06 to July–06 there is a
drastic decrease in the index points they reached the lowest level of 90.536 soon there is an
upturn in the index points by rising to the level of 100.37 points. This time there is a standard
increase in the index points in the next coming periods. In the month of December the index
points reached to the level of 137.22.

Construction of Index for Automobile Industry: -

The Base period of Automobile Industry index Jan-2006.The Base points of Automobile
Industry index are 100. The Companies involved in the Automobile industry index are six
randomly selected companies from BSE200 index.
 Automobile Index: -
TABLE NO.16

DATE A.L.L BAJAJ M&M Ltd. H.H.M. TVS PUNJAB T. AVG. Index Po.
Jan-06 31.3 2084.6 535.25 858.08 467 679.65 776 100
Feb-06 34.48 2390.7 577.75 875.88 454 762.175 849 109.42
Mar-06 39.38 2685.9 608.625 887.15 456 873.8 925 119.22
Apr-06 46.43 2898.9 635.275 872.4 453 943.75 975 125.63
May-06 45.88 2892.5 621.85 816.9 421 874.35 945 121.83
Jun-06 37.7 2780.9 621.575 785.75 370 794.45 898 115.78
Jul-06 36.5 2604.8 609.75 750.1 355 770.375 854 110.10
Aug-06 37.25 2577.3 620.025 715 425 791.075 861 110.94
Sep-06 42.45 2849.1 666.25 744.73 496 856.025 942 121.44
Oct-06 44.63 2882.5 734.275 767.33 523 847.525 967 124.55
Nov-06 43.38 2709.9 805.525 752.33 535 820.7 944 121.70
Dec-06 44.23 2645.4 865.925 751.18 529 857.625 949 122.29

Index Points of Auto Industry

150
Index POINTS

100
50
0
1 2 3 4 5 6 7 8 9 10 11 12
MONTHS (Jan-06 to Dec-06)

In the diagram shown above months are (Jan-06 to Dec-06) shown on the x-axis. Index points
are shown on the y-axis. During the initial period of the study that is Jan-06 to Apr-06 the index
points moved in upward trend at the level of 125.63 points, though there is a slight change.
However during the period of May-06 to July–06 there is a down ward trend decrease in the
index points they reached the lowest level of 110.10. Soon there is an upturn in the index points
by rising to the level of 110.94 points and that has been followed by the next months.

Construction of Index for I.T. Industry: -

  The Base period of I.T. Industry index Jan-2006

 The Base points of I.T. Industry index are 100

 The Companies involved in the I.T. industry index are six randomly selected
companies from BSE200 SENSEX
TABLE NO.17

DATE NIIT WIPRO INFOSYS HCL POLARIES SATYAM AVG Index Po.
Jan-06 291.875 728.95 4439.85 396.125 1114.025 191.775 1193.8 100
Feb-06 423.075 790.125 4304.3 331.825 1132.725 173.6 1192.6 99.90
Mar-06 398.7 799.275 4315.425 267.5 1193.1 167.9 1190.3 99.81
Apr-06 451.825 832.5 4594.75 266.1 1234.55 172.6 1258.7 105.75
May-06 486.8 769.925 4639.025 241.75 1108.475 153.975 1233.3 97.98
Jun-06 549.675 709.675 4488.775 223.3 1055.7 126.725 1192.3 96.67
Jul-06 546.325 759.65 3926.95 201.85 1092.625 123.6 1108.5 92.97
Aug-06 522.925 748.95 2564.4 222.3 1157.1 154.5 895.03 80.74
Sep-06 512.15 778.55 2730.95 235.775 1219.275 171.05 941.29 105.17
Oct-06 498 794.025 2889.4 210.55 1046.275 183.875 937.02 99.55
Nov-06 561.9 839.475 3199.925 211.425 670.625 192.775 946.02 100.96
Dec-06 708.475 904.275 3320.25 244.05 701.975 209.375 1014.7 107.26

Index Points of IT Industry

INDEX POINTS

150
100
50
0
1 2 3 4 5 6 7 8 9 10 11 12
MONTHS (Jan-06 to Dec-06)

In the diagram shown above months are (Jan-06 to Dec-06) shown on the x-axis. Average points
are shown on the y-axis. From the stating to June they were standard and there is not that much
fluctuation in the index points they were moved in the range of 96 to 105. In the month of July
the index points were decreased to 92.97 and in the month of August they reached the lowest
range 80.74.
 Later there was a huge increase in the points and reached to 105.17.

Construction of Index for Pharma Industry: -

 The Base period of Pharma Industry index Jan-2006

 The Base points of Pharma Industry index are 100

 The Companies involved in the Pharma index are six randomly selected
companies from BSE200 SENSEX

Construction

TABLE NO.18

DATE Cipla Ranbaxy Glaxo smith Aurobindo Dr.REDDY’S Aventies AVG. INDEX PO.
Jan-06 443.15 381.75 475.725 1052.8 124.625 464.275 490.39 100.00
Feb-06 496.45 414.7 547.225 1213.925 122.725 501.925 549.49 112.05
Mar-06 606.975 431.3 621.375 1359.925 123.575 510.825 609.00 110.83
Apr-06 462.9 454.25 703.2 1433.425 123.3 478.6 609.28 100.05
May-06 246.7 457.725 657.675 1403.7 120.575 403.075 548.24 89.98
Jun-06 224.4 384.45 587.125 1331.975 112.95 372.45 502.23 91.61
Jul-06 226.15 366.925 601.825 1335.225 104.275 365.35 499.96 99.55
Aug-06 242.975 390.4 625.4 1047.775 107.4 353.625 461.26 92.26
Sep-06 256.625 422.925 626.7 727.15 128.25 385.225 424.48 92.03
Oct-06 261.975 417.7 619.5 739.525 133.85 396.875 428.24 100.89
Nov-06 258.925 386.725 617.3 729.9 145.8 381.1 419.96 98.07
Dec-06 253.925 382.375 665.575 783.1 179.25 363.45 437.95 104.28
 Index Points of Pharma Industry

150

Index Points
100

50

0
1 2 3 4 5 6 7 8 9 10 11 12
Months (Jan-06 to Dec06)

In the above diagram shown months are (Jan-06 to Dec-06) shown on the x-axis. Average
points are shown on the y-axis.
During the initial period of the study that is Jan-06 to Apr-06 the index points
moved at the level around 100 points, though there is a slight change. However there is a drastic
decrease in the month of May-06, that is 89.98. And increase in June and July–06 reached to
99.55.Again decreased in the month of august and increased in the month of October. It moved
in the same range in the last three months i.e. October, November and December.
Coefficient of variation: -
The standard deviation discussed so far is an absolute measure of variation. The
corresponding relative measure is known as the coefficient of variation. This measure developed
by Karl Pearson is the most commonly used measure of relative variation. It is used in such
problems where we want to compare the variability of two or more than two series.
That series or group for which the coefficient of variation is greater is said to be
more variable or conversely less consistent, less uniform, less stable or less homogeneous. On
the other hand, the series for which coefficient of variation is less is said to be less variable or
more consistent, more uniform, more stable or more homogeneous coefficient of variation
denoted by C.V. is obtained as follows.

C.V. = (/Avg.)*100
COMPARISON OF UNSYSTEMATIC RISK AND RETURN FOR THE
BANKING INDUSTRY:-

To compare the banking industry return and risk this study is used coefficient of
variance.
 It helps us to know how much return we are getting for the baring of that much risk. On the basis
of that this study gives ranks for the selected banking firms. It helps to the investors to analyze
the risks and returns involved in the banking industry.
TABLE NO.19

HDF ICIC CANAR

AB OBC C SBI I UTI A VIJAYA IOB BOB UB PNB
Average -0.95 -0.55 4.383.19 3.65 4.64 0.92 -2.73 1.12 -0.23 -0.46 0.84
S.D 9.87 14.66 7.08
10.74 9.64 10.68 11.75 10.98 11.03 9.38 9.78 12.45
Variance 97.4 214.7 50.08
115.3 92.95 114.1 138.01 120.45 121.6 88.03 95.71 154.93
Coefficient - - -
of Variation 10.36 -26.64 1.61 3.37 2.64 2.30 12.78 -4.02 9.81 41.12 21.38 14.87
Rank I IV III II VI V VII

The above table shows the unsystematic risk and the return for each bank at the same times it
also tells that what is the coefficient of variance for each bank. In the above table ranking has
given on the basis of coefficient of variance it gave the ranks for each bank. On the basis of ranks
HDFC Bank has got first rank for its best performance. Punjab National Bank has got least
rank for its least performance.

COMPARISION OF UNSYSTEMATIC RISK AND RETURN FOR

THE AUTOMOBILE INDUSTRY

To compare the Automobile industry return and risk this study is used coefficient of
variance.It helps us to know how much return we are getting for the baring of that much risk. On
the basis of that this study gives ranks for the selected Automobile firms. It helps to the investors
to analyze the risks and returns involved in the Automobile industry.
TABLE NO.20

ASHO BAJA HERO PANJA TATA

K J M & M HONDA B MOTORS
Average 3.58 1.84 4.13 -1.40 0.84 2.81
Stdev 14.81 9.46 6.08 5.72 12.45 10.18
Variance 219.45 89.55 37.00 32.72 154.93 103.59
CV 4.14 5.15 1.47 -4.08 14.87 3.62
Rank III IV I V II
The above table shows the unsystematic risk and the return for each company. And it also tells
that what is the coefficient of variance for each company. In the above table ranks has given on
the basis of coefficient of variance for each company. According to the basis of ranking
Mahindra & Mahindra Ltd. has got first rank for its best performance. Punjab Tractors has
got last rank in the selected companies for its least performance.

COMPARISION OF UNSYSTEMATIC RISK AND RETURN FOR THE IT

INDUSTRY
To compare the I.T. industry return and risk this study is used coefficient of variance.
It helps us to know how much return we are getting for the baring of that given risk. On the basis
of Co-efficient of variance, this study gives ranks for the selected I.T. companies. It helps to the
investors to analyze the risks and returns involved in the I.T. industry.
TABLE NO. 21

WIPR INOFSY SATYA POLARI

PARTI NIIT O S HCL M S
Average 5.51 2.37 -1.32 -3.57 -2.34 2.90
SD 12.94 8.93 15.44 15.28 15.31 19.14
Variance 167.49 79.79 238.33 233.37 234.41 366.39
CV 2.35 3.77 -11.73 -4.28 -6.53 6.59
Rank I II III

The above table shows the unsystematic risk and the return for each company. And it also tells
that what is the coefficient of variance for each company. In the above table ranks has given on
the basis of coefficient of variance for each company. According to the basis of ranking NIIT
has got first rank for its best performance. Polaris Software Ltd has got last rank in the
selected companies for its least performance.

COMPARISION OF UNSYSTEMATIC RISK AND RETURN FOR THE

PHARMA INDUSTRY

To compare the Pharma industry return and risk this study is used coefficient of variance.
It helps us to know how much return we are getting for the baring of that much risk. On the basis
of that this study gives ranks for the selected Pharma firms. It helps to the investors to analyze
the risks and returns involved in the Pharma industry.

TABLE NO.22
 CIPLA RANBAX DR.REDD STERL WOCKHARDT
LTD. Y AURO Y'S BIOTEC LT
Average -1.98 0.34 4.54 0.22 4.18 -2.31
SD 21.45 9.74 12.92 16.75 15.76 9.16
Variance 460.06 94.82 166.91 280.59 248.37 83.99
CV -10.83 29.02 2.84 76.89 3.77 -3.96
Rank III I IV II

The above table shows the unsystematic risk and the return for each company. And it also tells
that what is the coefficient of variance for each company. In the above table ranks has given on
the basis of coefficient of variance for each company. According to the basis of ranking
Aurobindo Pharma Ltd has got first rank for its best performance. Dr. Reddy’s Lab has got last
rank in the selected companies for its least performance.
COMPARISION OF UNSYSTEMATIC RISK AND RETURN FOR THE
SELECTED INDUSTRIES WISE
To compare the selected industries return and risk this BSE200 the study is used coefficient of
variance.
It helps us to know how much return we are getting for the baring of that much risk. On the basis
of that this study gives ranks for the selected industries firms. It helps to the investors to analyze
the risks and returns involved in the selected industries.

TABLE NO.23

BSE-200 Bank IT Auto Pharma

Average 35.89 3.09 2.84 2.18 1.67
SD 57.31 7.78 5.45 7.16 7.09
Variance 3284.89 60.55 29.68 51.28 50.23
CV 1.60 2.52 1.92 3.29 4.26
Rank I III II IV V

The above table shows the unsystematic risk and the return for each company BSE200. And it
also tells that what is the coefficient of variance for each company BSE200. In the above table
ranks has given on the basis of coefficient of variance for each index. According to the basis of
ranking BSE200 has got first rank in selected indexes for its best performance and the lowest
variability in the return it also tells that lowest fluctuations in the prices. The last rank has noted
by Pharma industry. For highest fluctuations in the prices.
CONCLUSTION
 After analyzing the selected companies from selected industries, this study concludes
returns, Unsystematic Risk, fluctuations in the share prices and co-efficient of variations for the
selected companies from the selected industries.

In the area of Banking Industry, it can be concluded that Only Four Banks from selected
twelve banks are noted High average return than the overall banking industry average return
(Calculated on the basis of BANKEX) for the period of study. In case of Less average return noted
by eight banks in that four banks are noted negative average returns for the period. According to the
BANKEX, the average return of the banking industry shows 3.09 % average return for twelve
months of study.

In the area of Automobile industry, only three companies was noted more average return
than the industry return (Calculated on the basis of the auto index maintaining by BSE) from the
selected six companies. Remaining three companies were noted less than average returns. Hero
Honda motors confined a negative return, as the average return for the period of previous twelve
months of the automobile industry was 2.18%.

In the area of I.T. Industry, it can be concluded that only three companies were registered
positive average returns form the selected six companies. In the reaming ones HCL was expressed
the high negative return in the selected companies as -3.57%. The average return of the I.T.
Industry was 2.84% for the twelve months period.

In the area of Pharma Industry, it can be concluded that four companies were registered
positive average returns form the selected six companies. In the reaming ones HCL was expressed
the negative return in the selected companies as –2.31%.The average return of the I.T. Industry was
1.67%for the twelve months period.

In the case of unsystematic risk I.T.Industry was moving with the lowest risk as 5.45% than
the other industries. And the BSE200 returns were moving with the high variability (S.D.) as
57.31%than the other industries.

To know the fluctuations in the prices of the shares of selected companies in the selected
industries, this study constructed index in the simple average method. To construct index this take
only selected companies.

The index points of BANKING INDUSTRY moved from around 90.54 to137.22 and as
such the fluctuations not that much high. But in the month of June there is a drastic change in index
points reached the level of 91.78. The highest points 137.22 were noted the month of December
2006. This is industry follows the trend. It means it has increased to one level and decreased. Again
increased, can be expecting the downward trend in the next future. We can apply the trend analysis
for this industry.

The index points of Automobiles industry moved from around 100 to 125.63.Index points
were increased up to April and reached highest level of points as 125.63. Then after the index points
were decreased till July and then the index were moved in upward trend till September. In the last
three months there were not that much change in the points.
 The Index points of I.T. Industry are moved around from 80.74 to 107.26. The points are
not maintaining a trend. These industry index points are moving upward and downward. There are
not that much fluctuation in the index points. These points reached in the month of December 2006
at higher level of 107.26 and noted lower level in the month of August at 80.74.

The index points of Pharmaceutical Industry moved around from 89.98to112.05.The index
points of this industry are fluctuating highly but not in the higher rate. These points are increasing
and decreasing every month. This industry’s points were ended with104.28 in last month. Investor
cannot assume the trend of this industry. In this industry the index points are not following the trend.
They are fluctuating without any trend. Reached lowest level in the month of May and higher level
in the month of February.

RECOMMENDATIONS:-

This study recommended some companies and industries on the basis of coefficient of
variation. In the case of industries investor better to go for IT industry followed by Banking
Industry and if he want to diversify the risk he can go for automobile industry then last
preference shall given to Pharmaceutical Industry.

In the case of companies investor wants to invest in more industries and don’t want to give
preference for the specific industry. The investor needs to give the preference to the companies on
the basis of coefficient of variation. First rank will be Mahindra and Mahindra from Auto
industry and next HDFC from Banking Industry. Then give the preference to UTI, NIIT , ICICI,
Aurobindo, SBI, TATA, WIPRO, and so on.

BIBLIOGRAPHY
  RUSSELL J.FULLER & L.FARELL, JR “MODERN INVESTMENTS AND
SECURITY ANALYSIS” -INTERNATIONAL EDITION 1987

 V.K.BHALLA “INVESTMENT MANAGEMENT (SECURITY ANALYSIS AND

PORTFOLIO MANAGEMENT)” 9th EDITION.

 PREETI SINGH “INVESTMENT MANAGEMENT”

Reprinted Edition in 1999.

 S.KEVIN “PORTFOLIO MANAGEMENT”

Second Print Feb 2001.

 PUNITHAVATHY PANDIAN “SECUTITY ANALYSIS AND PORTFOLIO

MANGEMENT”

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