Professional Documents
Culture Documents
Banking Sector
Banking Sector
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A report submitted in partial fulfillment of the requirement of MBA program of ICFAI Business School, Ahmedabad
Submitted to: Prof. Bharat Kantharia (Faculty Guide) Mr. Chintan Shah (Company Guide)
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No good work flows without the help from Faculty Members, Industry Professionals, Colleagues, Organization and Friends.
ACKNOWLEDGEMENT
Summer Internship is a nurturing period which is indispensable for joining any company. On the voyage of learning I came across many hurdles but each hurdle was a good experience for me. At each step of my training, my mentor gave me full support which helped me in carrying positive attitude whenever I faced any problem. Firstly, I take this opportunity to thank Prof. P. Bala Bhaskaran (Director, IBS Ahmedabad), who has always stood by me and encouraged me to embark on the path of learning. I wish to convey my special thanks to Mr. Dhiraj Chaudhary (Associate Vice President), Mr. Ishwarsinh Rajpurohit (Territory Manager), my company project guide Mr. Chintan Shah (Sales Manager) and all employees who have helped me directly or indirectly in my difficulties at India Infoline Securities Pvt. ltd., Area Office, Surat who have been a constant source of inspiration and encouragement to me. I wish to express my deepest and most sincere thanks to my Faculty Guide, Prof. Bharat Kantharia and especially to Dr. Himani Joshi and Prof. Mayank Patel who have continuously guided me throughout this project. Last but not the least I would like to thank my fellow management trainees from IBS, Ahmedabad. By interacting with them, I was able to generate more meaningful ideas that have enabled me to further complete this project successfully.
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TABLE OF CONTENTS
ACKNOWLEDGEMENT ............................................................................................................. iii ABSTRACT.................................................................................................................................... 5 INTRODUCTION .......................................................................................................................... 6 MARKETS DEFINED................................................................................................................ 6 OBJECTIVE OF THE STUDY ................................................................................................ 10 PURPOSE, SCOPE AND LIMITATIONS .............................................................................. 10 SOURCES AND METHODS OF COLLECTING DATA ...................................................... 12 REPORT ORGANIZATION .................................................................................................... 13 MAIN TEXT................................................................................................................................. 16 FACTORS AFFECTING BANKING SECTOR ...................................................................... 17 INTERNAL FACTORS:................................................................................................ 17 EXTERNAL FACTORS:............................................................................................... 19 THE MODEL................................................................................................................................ 26 What the MODEL is all about? ............................................................................................. 26 Methodology .......................................................................................................................... 26 Sources and Data Collection.................................................................................................. 27 Tool and Techniques.............................................................................................................. 28 MODEL ................................................................................................................................. 29 HDFC BANK ........................................................................................................................ 29 ICICI BANK.......................................................................................................................... 37 STATE BANK OF INDIA .................................................................................................... 43 FINDINGS AND CONCLUSION ............................................................................................... 49 APPENDIX ................................................................................................................................... 51 REFERENCES: ............................................................................................................................ 53
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ABSTRACT
Banking Sector in India is one of the growing sectors with great dynamics. There are various factors which affect the share prices of Banking Companies. This report is all about how various factors (Internal and External) affect the Banking Sector Share Prices. In this report a detailed analysis of the factors affecting the share prices is carried on and a model is developed to study the effect of various factors on the share prices.
Here, various internal factors (Banks Profitability, Income, Expenses, and News about the Bank.) and external factors (Government policies, CRR, Repo Rate, Reverse Repo Rate, Rules and Regulations.) are considered which affect the prices of the shares of Bank. Datas are collected for all the quantifiable factors and for the rest factors a theoretical explanation is given in detail. Using SPSS a model is developed which shows the regression and correlation co-efficient between the share prices and various factors affecting the same.
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INTRODUCTION
MARKETS DEFINED
STOCK MARKET IN INDIA
The Indian security market has become one of the most dynamic and efficient security markets in Asia today. The Indian market now conforms to International Standards in terms of operating efficiency.
During the latter half of 19th century, shares of companies used to be floated in India occasionally. There were share brokers in Bombay who assisted in the floatation of shares of companies. A small group of stock brokers in Bombay joined together in 1875 to form an association called Native Share & Stockbrokers Association. The association drew up codes of conduct for brokerage business and mobilizes private funds for investment in the corporate sector. It was this association which later became the Bombay Stock Exchange, Mumbai or BSE Later on in 1894 the brokers of Ahmedabad formed the Ahmedabad Stock Exchange, the second stock exchange of the country. During the 1900s Kolkata became another major center of share trading and as a result Kolkata Stock Exchange was formed in 1908. Later on Chennai Stock Exchange was started in 1920. However, by 1923, it ceased to exist. Then the Madras Stock Exchange was started in 1937. Three more stock exchanges were established before independence, at Indore in 1930, at Hyderabad in 1943 and at Delhi in 1947.
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Thus along with the increase in number of stock exchanges, the number of listed companies and the capital of listed companies grown tremendously after 1985 which results into growth and development of stock market in India.
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The Indian banking Industry has been undergoing major changes, reflecting a number of underlying developments. Advancement in communication and information technology has facilitated growth in internet-banking, ATM Network, Electronic transfer of funds and quick dissemination of information. Structural reforms in the banking sector have improved the health of the banking sector. The reforms recently introduced include the enactment of the Securitization Act to step up loan recoveries, establishment of asset reconstruction companies, initiatives on improving recoveries from Non-performing Assets (NPAs) and change in the basis of income recognition has raised transparency and efficiency in the banking system. Spurt in treasury income and improvement in loan recoveries has helped Indian Banks to record better profitability. In order to have a good benchmark of the Indian banking sector, India Index Service and Product Limited (IISL) has developed the CNX Bank Index.
CNX Bank Index is an index comprised of the most liquid and large capitalized Indian Banking stocks. It provides investors and market intermediaries with a benchmark that captures the capital market performance of Indian Banks. The index will have 12 stocks from the banking sector which trade on the National Stock Exchange.
The average total traded value for the last six months of CNX Bank Index stocks is approximately 95.85% of the traded value of the banking sector. CNX Bank Index stocks represent about 86.06% of the total market capitalization of the banking sector as on January 30, 2009. The average total traded value for the last six months of all the CNX Bank Index constituents is approximately 14.86% of the traded value of all stocks on the NSE. CNX Bank Index constituents represent about 8.63% of the total market capitalization on January 30, 2009.
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Banks are a major part of any economic system. They provide a strong base to Indian economy too. Even in share markets, the performance of bank shares is of great importance. This is justified by the proof that in both BSE and NSE we have separate index for Banking Sector Shares. But for our study we have taken only Bank Nifty which is a part of NSE. Thus, the performance of share market, the rise
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and the fall of market is greatly affected by the performance of Banking Sector Shares and this report revolves around all those factors, their understanding and a theoretical and technical analysis of the same.
SCOPE OF STUDY
It gave me an opportunity to study the banking sector in a detailed manner. I got knowledge of prevailing Market Scenario. It helped me in learning the market dynamics, study the movement of share prices and to give a proper justification for the same, theoretically and technically. It helped me in understanding and learning the corporate culture And above all, the concerned organization can get some valuable recommendations, which can definitely improve the performance of the organization.
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REPORT ORGANIZATION
COMPANY PROFILE
Knowledge is power and power brings security. Risk is a very relative term and changes with every individual and situation. Financial management is not just about managing risk but also managing knowledge and finally deriving answers that generate wealth, security and trust.
VISION Vision is to be the most respected company in the financial services space. To be the premier provider of investment advisory and financial planning services in India.
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HISTORY IN BRIEF
In 1995, a group of professionals formed a company called Probity Research & Services Pvt. Ltd. The name was later changed to IndiaInfoline Ltd. The objective was to provide unbiased and independent information to market intermediaries and investors. The quality of research was so good that soon it caught the imagination of all major participants in the financial marketing. In a very short period they started providing research report to consulting firms like Mckinsey, companies like HUL, banks like Citibank etc. In 1999, the company made all the research report free on the web and as a result the number of user increases from mere a thousand to lacks in a very short period of time. The company got the financial support from venture capitalists and private equity investors. They raised US $ 1 million in first round and in March 2000 again US $5 Million. In 2001, the company faced the worst situation. The dot com suffix, which was sexiest to them suddenly, became the worst stigma. The company was planning to set up a TV channel but circumstances forced them to jettison the plan. IIL decided to narrow its focus on businesses where it could leverage its core competencies to the maximum. The key business lines that emerged were mutual funds, life insurance and e-broking. The company became heavily dependent on its e-broking businesses for survival. The odds were against them. There was no money available from the private equity investor at any valuation. All competitors were backed by institution or had abundant capital. The core promoters of the company had little experience of broking. To add to it, the market was hit by a scam. They also had their share of price to pay and lessons to learn. It was difficult to retain people. Although devastating for morale but not surprising, the most market observers had written them off. There was a core group who never lost hope. They cut all possible costs and worked on a bare bones structure. They survived against all odds started capturing
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market share. Not broking alone but mutual fund life insurance business also grew strongly. The company rose from strength to become the leading corporate agent in life insurance and among top retail players in mutual fund and broking space. In 2005, IIL came with an IPO and raised Rs. 75 crores from the market. The issue price was Rs. 76.The IPO was 7.22 times oversubscribed. The company after that never looked back and started entire gamut of investments products from risk free RBI bonds to high-risk, high rewards equities and also mutual funds and life insurance. They also forayed into portfolio management services and commodities broking, again leveraging upon their core competencies in research and technology. In the last ten years, India Infoline has faced numerous ups and downs, but has never compromised on integrity. They continue to ensure highest standards of corporate governance.
BUSINESS DESCRIPTION The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Gold, bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites www.indiainfoline.com and www.5paisa.com. The company has a network of 596 branches spread across 345 cities and towns. It has more than 500,000 customers.
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MAIN TEXT
Companies raise funds by issuing equity shares to the public. We have a well developed equity market in our country for secondary dealing in various securities of various denominations. We basically have BSE and NSE to see the dealings and the price fluctuations of these securities. There are several factors like interest rates, companys internal factors, profitability of company, any news about company, major events of the company, country scenario, political factors, economical factors, social factors, international events, trends in international market, investors own mentality, predictions and approach etc.. which affect the market price of these securities.
Thus, my project basically revolves around how all these factors affect the equity market. The project is based on a descriptive study of various factors that affect the Indian equity market in various aspects.
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There are N number of factors which affect the share prices. They can be broadly classified into two:
INTERNAL FACTORS:
As the name suggests, Internal Factors are those which affect the share prices internally, i.e. they are internal to the company or more specifically bank. Some of the major internal factors that affect the share prices of a bank are as follows:
EARNINGS OF THE COMPANY: How much Profit a company earns acts as a significant factor in price movements. If the quarterly results are good for a bank, then the price goes up, and if the results are not good, the investors show no interest in such banks share and thus price falls. Investors invest money in the companies who earn well and in turn give good return on investment. Thus, a wealthy and a profitable company have good
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investors and thus have positive price movements. Price/Earnings Ratio also gives us idea about the same. MARKET CAPITALIZATION: Generally we commit one mistake that we guess the companys worth from the price of its stock. It is the market capitalization of the company, rather than the stock price, that is more important when it comes to determining the worth of the company. We need to multiply the stock price with the total number of outstanding stocks in the market to get the market capitalization of a company and that is the worth of the company. Thus, a company or bank with high Market Capitalization turns out to be more popular among investors. For example, HDFC BANK, ICICI BANK and SBI are more popular among investors than other banks because they have huge market share and market capitalization. As market capitalization increases, the share price tends to increase and as market capitalization decreases, the share price tends to decrease.
PRICE/EARNINGS RATIO: Price/Earnings ratio or the P/E ratio gives us a fair idea of how a company's share price compares to its earnings. If the price of the share is too much lower than the earning of the company, the stock is undervalued and it has the potential to rise in the near future. On the other hand, if the price is way too much higher than the actual earning of the company and then the stock is said to overvalued and the price can fall at any point. The earnings also have a direct relation with price which is already explained above.
INTERNAL AFFAIRS OF THE COMPANY: Any happening inside the company or any internal news does affect its share price. For example any key person moving out of the company, acquisition or takeover or merger news, share split, employee strike and any other thing internal to the affairs
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of the bank affects the share price. A positive note from the internal affairs takes the price to new highs and a negative does vice versa. INTERST RATES: Interest rates play a major role in determining stock market trends. Bull markets (those in an upward market) are usually associated with low interest rates and high Capital Gains, and bear markets (those in a downward trend) with high interest rates and low Capital gains. Interest rates are determined by the demand for capital pushes them up and normally indicates that the economy is thriving and that shares probably expensive. Low interest indicate low demand for capital, thus liquidity builds up on the economy, driving share price down. Other interest rates like that of on Deposits and Borrowings also have impact on share prices.
OTHER FACTORS: Other factors like Growth of the company, figures of deposits, advances, balance sheet, Profit and Loss Account, etc.. also affect the share prices drastically. A discussion for the same is done in later part of the report
EXTERNAL FACTORS:
After studying the internal factors, lets take a look at some External Factors which affect the Share Prices.
SENTIMENTS: Investor sentiment is almost impossible to predict and can be infuriating if, for example, you have bought shares in a company that you think is a good buy but the price remains flat. Investor sentiment is influenced by a wide variety of factors. Share prices can, for example, be flat during the summer simply because so many
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major investors are on holiday or attending major sporting events such as Royal Ascot and Wimbledon, hence the adage sell in May and go away. Investor sentiment can lead to irrational buying or selling of shares and result in bull and bear markets. A bull market is when share prices rise while a bear market is when they fall. In the technology boom of the late 1990s, for example, investors paid extremely high prices for shares and ignored traditional valuation measures, such as P/E ratios. This carried on until 2000 when investors belatedly realized these shares has risen too far and resulted in a three year bear market in shares. Thus, Sentiments of investors affect the share prices a lot and this is something unpredictable and immeasurable factor, but still the most important one.
COMPANY NEWS and OTHER NEWS: The way investors interpret news coming out of companies is also a major influence on share prices. If, for example, a company puts out a warning that business conditions are tough, shares will often drop in value. If, however, a director buys shares in the firm, it may be a signal that the companys prospects are improving. Companies put out a great deal of news and most of the major announcements are covered by the financial press. But some announcements not regarded as so important and sometimes, particularly among smaller firms that are monitored less by investors and financial journalists, indicators of the companys health can be missed. Takeovers or even rumors of takeovers also have a big influence on prices. This is because investors expect the bidder to pay a premium to shareholders. Also any other news or speculation about factors like change in Repo Rate, Cash Reserve Ratio, Reverse Repo Rate, any change or likely change in the policies of government or RBI or SEBI, any new guidelines issued by the concerned authority, etc. affect the price of the share. A positive news in any of these respects leads to a rise in price and a negative takes it to the other side. Thus, news in any respect is undoubtedly a huge factor when it comes to stock price. Positive news about a company can increase buying interest in the market while a negative press release can ruin the prospect of a stock. Having sa id that, we
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must always remember that often times, despite amazingly good news, a stock can show least movement. It is the overall performance of the company that matters more than news. It is always wise to take a wait and watch policy in a volatile market or when there is mixed reaction about a particular stock.
DEMAND AND SUPPLY: This fundamental rule of economics holds good for the equity market as well. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling the stock, the price of that particular stock falls. Now it is difficult to predict the trend. Thus, we should be very careful while dealing in stocks as buying or selling pressure may lead to steep rise or fall in price of the shares.
ANALYSTS REPORTS: Reports produced by independent analysts also influence share prices. If an analyst changes their recommendation from sell to buy, for example, the shares will often rise in value. Analysts reports are produced primarily by investment banks for professional investors, although some stockbrokers will make their research available to private investors. We may find summaries of some reports published on financial news websites or in newspapers and magazines. Some investment banks also publish their reports on their websites for free. We should remember that the recommendation an analyst puts on a company will affect its share price very quickly and can become irrelevant within hours. This is because the analyst will usually say a stock is a buy within a particular price range. If the price moves above their targets the improvements the analyst expects may be priced in and so the shares are not worth buying.
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But analysts reports are always worth reading, even if the recommendation is out of date. The reports usually contain a great deal of useful information on the company and how its business is developing. They also often look at how the company rates against its competitors .
THE ECONOMY: The health of the global economy has a fundamental influence on share prices because it is ultimately responsible for driving company profits. Broadly speaking, if the economy is growing, company profits improve and shares will become more highly valued. If the economy is weakening, company profits will fall and share prices will go down. Investors look at a vast amount of data to try and work out what is going to happen to the economy and shift their portfolios before the events occur. This is why we will often see markets move well ahead of an actual event occurring. For example, we could get little reaction from the stock market when interest rates rise. This is because investors have already anticipated the shift months in advance and adjusted their portfolios beforehand. We can usually assume that the stock market will anticipate moves in the economy by around six to nine months. So if we want to stay ahead of the game we need to follow economic data as closely as the professionals. The kind of information we need to play close attention to is: employment data, the reports put out by the Monetary Policy Committee (to get an idea where interest rates are headed), trade with other countries, retail sales and manufacturing. Sentiment surveys produced by trade bodies such as the Confederation of British Industry are also important indicators of where the economy is heading. It is not only news about the US and UK economy that will impact on share prices. The signals coming out of other major economies, particularly the US and UKs
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major trading partners, such as the Europe and Asia will also affect US and UK shares as what happens in these economies will have an impact on our own. When looking at economic data, we need to think not only how the wider economy will be affected but whether certain areas will be more affected than others. A rise in interest rates is, for example, often bad news for house builders as people feel less confident about taking on debt. Retailers are often badly affected too as people spend less. Pharmaceutical companies are, however, usually unaffected as peoples demand for drugs is not influenced by the state of the economy. Companies whose profits are closely tied to the health of the economy are known as cyclical stocks. Those businesses that arent too affected by the economy are called defensive stocks. If economic conditions deteriorate you will often see investors shift from cyclical stocks to defensives. Thus, the economic health of an Economy affects the Share Prices.
PRESS and BROKING HOUSE RECOMMENDATIONS: The financial pages of most national newspapers and investment magazines usually contain share tips. Like analysts reports these tips can have a major influence on share prices. If a journalist recommends a share, the price will usually rise and if they write a negative story the price will fall. These moves usually happen very quickly so if we follow the recommendation it often makes sense to do so as soon as possible. The Broking House also recommends BUY or SELL for particular shares based on their own research analysis. They display these recommendations in leading media such as Television and News Papers. Thus, these recommendations affect the price of shares and lead the market in the direction these recommendations take.
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TECHNICAL INFLUENCES: Share prices can rise and fall for a variety of technical reasons that may have nothing to do with the actual outlook for an individual company or the outlook for the market. It is, for example, a common occurrence for share prices to drop back after a strong rally. This happens because investors take profits on some of the shares that have risen in value, protecting their gains just in case the shares start to slip back. Investors often refer to this as market consolidation. Another technical reason for share prices to rise or fall is the quarterly adjustment in the FTSE 100 index. Shares that are expected to enter the FTSE 100 may experience a sharper rise than one would expect in the weeks beforehand while shares that leave the index can fall more sharply. This happens because funds that simply track the index have to match the composition of the index. Some professional fund managers who hold the affected stocks also adjust their portfolios as they do not want their holding to be too far above or below the companys weighting in the index. Share prices can also be affected by investors who use technical analysis to drive their investment techniques. Technical analysis, also known as Chartism, is simply the study of past share price movements and stock market index trends, which are then used to forecast how shares and stock markets will behave in future. Market makers can also influence prices. If they, for example, do not own enough shares to balance their books they will have to buy more. Market makers also influence prices if the market is looking flat, reducing prices to attract buyers. Thus, technical reasons can also be a cause for the rise or fall in the prices of shares.
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OTHER FACTORS: Some other factors which influence share prices are as follows: Change in Rates by RBI: Looking at the changing scenario, RBI keeps on changing rates like Repo Rate, Reverse Repo Rate and Cash Reserve Ratio. These rates have a direct relation with the Banks performance and in turn the share prices are linked with Banks Performance. Thus, a change in these rates or even a speculation of change in these rates affects share prices. Global Changes: Any change in the global economy or in other words global changes also affects Indian economy. Thus, the performance of an economy and its banks is affected by these global changes. For example: The recession was first observed in the USA and later on it caught its lead in other countries too. When it entered India, the share market crashed literally. So, a careful and logical investor always keeps this in mind that what global changes affect the market and thus leads to rise or fall in share prices. Change in Government Policies: Keeping in mind the progress and well wishes about the country, the government takes desired steps and keeps on reviewing its policies, rules and regulations and procedures. A change in FDI and FII inflow restrictions, entry exit barriers for foreign banks in India, EXIM regulations, change in Basel Norms, etc form part of important government policies. Thus, a change in these policies affects the market scenario. For example: if government allows entry of foreign Banks in India, then the competition would rise and it might happen that those foreign Banks may outperform and leave our own banks far behind. Then in this case, the investors would be interested in investing in those foreign Banks and a government would never like that the funds are invested in some foreign banks rather than our own banks. Thus, some restriction would follow and this will definitely affect the share prices.
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THE MODEL
All the above stated factors are more or less for a theoretical explanation. There has to be some practical or numerical aspect to understand the impact of factors on share prices. Thus, to give a technical view to the analysis I developed a MODEL. The details of this are as follows.
Methodology
To develop a MODEL, the first and the foremost requirement was to decide the boundaries of study. As in this short time period a full fledged Analysis of whole market was not possible so I chose to limit my project to certain boundaries. Firstly, I decided on the sector to be studied and for that I chose BANKING SECTOR. The reason being that the Bank stocks have out-performed the Sensex and Nifty in this fiscal year. This out-performance can be attributed to favorable macroeconomic conditions and banking sector specific development like quarterly results and passing of the SBI Amendment Bill that paved the way for its subsidiaries to list in stock markets. Bank credits have grown at an average of 30 percent in the past three years led by housing and retail sectors. Thus, on thus basis I chose Banking Sector.
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For a proper, detailed and valid study, I have chosen top three banks in the Banking Sector viz. HDFC BANK, ICICI BANK and STATE BANK OF INDIA. The reason behind choosing these 3 banks is their huge turnover in the stock market, they have been given the highest weightage and they serve as top leading banks in the sector. A small report of Market Capitalization for 31st March, 2009 is also shown here.
Index/Exchange CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX CNX BANK INDEX TOTAL
Company Name Axis Bank Ltd. Bank of Baroda Bank of India Canara Bank HDFC Bank Ltd. ICICI Bank Ltd. IDBI Bank Ltd. Kotak Mahindra Bank Ltd. Oriental Bank of Commerce Punjab National Bank State Bank of India Union Bank of India
Close Price 414.95 234.35 219.4 165.7 973.4 332.8 45.4 282.2 110.1 411.45 1067.1 146.85
Mkt. Cap. in Rs Mn 148969.17 85365.83 115222.91 67937 414062.52 370343.67 32902.6 97547.75 27584.42 129731.21 677480.68 74176.56 2241324.34
Weightage 6.65 3.81 5.14 3.03 18.47 16.52 1.47 4.35 1.23 5.79 30.23 3.31 100
respective bank, some other websites, websites of NSE and BSE, News Papers, etc..
For using MULTIPLE REGRESSION, the basic conditions are that the data should be on same time frame, should be Linear and should not possess correlation between them. The first condition was fulfilled by all the data as the data was collected on the same time frame. The next condition is that the data should be linear, but this condition was not fulfilled by the factors like Repo Rate, Reverse Repo Rate and Cash Reserve Ratio. So these factors were dropped for the analysis as they were not linear. Again the factors like Operating Profit and Net Profit, Close of Nifty and Close of Bank Nifty and Borrowings and Deposits possessed correlation between them. Thus, Operating Profit, Close of Nifty and Borrowings were dropped for the analysis part and Net Profit, Close of Bank Nifty and Deposits were taken for the analysis. Though Borrowings is used in ICICI BANK analysis as it did not possess correlation there. The sheets of correlation are also provided separately.
There are some technical terms which are frequently used in the all the three analysis. These are explained in the Appendix.
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MODEL
Now using the AVERAGE SHARE PRICE as DEPENDENT VARIABLE and taking INTEREST INCOME, ADVANCES, NET PROFIT, CLOSE OF BANK NIFTY, DEPOSITS AND DUMMY VARIABLE as INDEPENDENT VARIABLES I applied MULTIPLE REGRESSION on the data for all the three BANKS. Thus, I got the regression coefficient from the analysis. Now let us talk about the analysis for all the three BANKS separately.
The Hypothesis:
The hypothesis can be stated as follows H0: Various Factors affect the Share Prices H1: Various Factors do not affect the Share Prices. Thus, we will conduct all the analysis keeping in mind the hypothesis and will try to reach a conclusion whether or not to accept the Hypothesis.
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HDFC BANK
To begin with the analysis part of HDFC BANK, I have taken AVERAGE SHARE PRICE as DEPENDENT VARIABLE and INTEREST INCOME, ADVANCES, NET PROFIT, CLOSE OF BANK NIFTY and DEPOSITS as INDEPENDENT VARIABLES and have applied MULTIPLE REGRESSION to it.
Model Summary
Adjusted R Square Std. Error of the Estimate R Square Change 1 .995a .991 .989 43.03165 .991
Model
R Square
a. Predictors: (Constant), Deposits, Close of Bank Nifty, Net Profit, Ad vances, Interest Income
ANOVA b
Model 1 Sum of Squares Regression Residual Total 5232693.188 48144.793 df 5 26 Mean Square 1046538.638 1851.723 F 565.170 Sig. .000 a
5280837.981 31 a. Predictors: (Constant), Deposits, Close of Bank Nifty, Net Profit, Ad vances, Interest Income b. Dependent Variable: Average Price
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Coefficients a
M o d e l Standa rdized Coeffici ents Beta .931 .196 -.035 .923 -.964 1.971 3.825 .882 -.225 22.333 -2.713 .059 .001 .386 .824 .000 .012
Un-standardized Coefficients Std. B Error Interest Income Ad vances Net Profit Close of Bank Nifty Deposits a. 44.448 .003 .003 -.001 .165 22.549 .001 .003 .004 .007
Sig.
95% Confidence Interval for B Lower Upper Bound Bound -1.902 .001 -.004 -.009 .149 -.017 90.798 .005 .009 .007 .180 -.002
Correlations Zeroorder Partial Part .825 .853 .860 .985 .854 .600 .170 -.044 .975 -.470 .072 .017 -.004 .418 -.051
Collinearity Statistics Tolera Std. nce Error .006 .007 .015 .205 .003 168.785 140.492 68.385 4.875 359.898
1 (Constant)
MODEL FIT
Now, when we have applied MULTIPLE REGRESSION on the data, the time is to explain the output after each summary table that what does the output says and what can we infer and interpret from it. While applying MULTIPLE REGRESSION, we first took the DEPENDENT and INDEPENDENT variables and then from the statistics option I chose Estimate, Confidence Intervals, Covariance Matrix, Model Fit, R Squared Change, Descriptives, part and Partial Correlations and Collinearity Diagnostics. So we got the desired analysis. From all the output tables coming out of the analysis only three are of major importance which we need to understand and interpret from.
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MODEL SUMMARY
First of all the MODEL SUMMARY. Here we can see that in this case of HDFC BANK the value of R is .995. This shows that the Predictors have 99.5% influences on the output.
In this case the value of R 2 is .991 this means that the predictors account for 99.1% variation in the Average Price of the shares.
Here the difference is 0.002 (.991-.989) which is very small. This shrinkage means that if model is derived from the population rather than a sample it would account for approximately 0.2% less variance in the Outcome.
We can see here that the R Square Change is .991. This is used for calculating the F-ratio. Thus, the change in amount of variance that can be explained gives rise to an F-ratio of 565.170, which is significant (p<.001).
ANOVA
The next table here shows the output, which contains an Analysis of Variance (ANOVA). The Sum of Squares here is 5232693.188; the value of Residual Sum of Squares is 48144.793 and represents the total difference between the model and observed data. From the value of F which is 565.170 here we can conclude that the value of F is highly significant and our ability to predict the Outcome Variable is much better.
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Average
Price
Looking at the B value for HDFC BANK, we can see that INTEREST INCOME, ADVANCES and CLOSE OF BANK NIFTY show positive relationship while NET PROFIT and DEPOSITS show negative relationship. So, as Interest Income, Advances and the Values of Bank Nifty increase the Average Price of Share increases and as the value of Net Profit and Deposits increases, the Average Price decreases.
The B values tell us more than this though. They tell us to what degree each predictor affects the outcome if the effects of all other predictors are held constant.
Interest Income (b=.003): This value indicates that as the interest income increases by Rs. 1 crore, the Average Price increases by Rs. 0.003. This interpretation is only true if the effect of other predictors is held constant.
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Advances (b=.003): This value indicates that as the Advances are increases by Rs. 1 crore, the Average Price increases by Rs. 0.003. This interpretation is only true if the effect of other predictors is held constant.
Net Profit (b=-.001): This value indicates that as the Net Profit is increases by Rs. 1 crore, the Average Price decreases by Rs. 0.001. This interpretation is only true if the effect of other predictors is held constant.
Close of Bank Nifty (b=.165): This value indicates that as the Close of Bank Nifty increases by 1 point the Average Price increases by Rs.0.165. This interpretation is only true if the effect of other predictors is held constant. Deposits (b=-.010): This value indicates that as the Deposits are increases by Rs. 1 crore, the Average Price decreases by Rs. 0.010. This interpretation is only true if the effect of other predictors is held constant.
For this model the value of t-statistic for different variables and their Sig. can be seen from the above table. From the magnitude of t-statistics we can see that the Sig. Value for INTEREST INCOME (0.001<0.05), CLOSE OF BANK NIFTY (.000<0.05) and DEPOSITS (.012<0.05) are less than 0.05, thus, they have significant contribution in the model and as the value of Sig. for ADVANCES (.386>0.05) and NET PROFIT (.824>0.05) is more than 0.05 thus, they dont have a significant contribution to the model. We also look for t-values, which if are above +2 and below -2. Here in this case Interest Income, Close of Bank Nifty and Deposits match the criteria, thus, they have a significant contribution in the Model.
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The Standardized Beta Values as shown in the above table can be interpreted as follows:
Interest Income ( =0.931): This value indicates that as the interest income increases by 1 Standard Deviation (122545.143), the Average Price increases by 0.931 Standard Deviation. As the Standard Deviation for Average Price is 412.734, thus, a change of 1 Standard Deviation would bring a change of .931 in the price. This interpretation is only true if the effect of other predictors is held constant.
Advances ( =.196): This value indicates that as the Advances are increases by 1 Standard Deviation (30031.43), the Average Price increases by .196 Standard Deviation. As the Standard Deviation for Average Price is 412.734, thus, a change of 1 Standard Deviation would bring a change of .196 in the price. This interpretation is only true if the effect of other predictors is held constant.
Net Profit ( =-.035): This value indicates that as the Net Profit is increases by 1 Standard Deviation (16390.82), the Average Price increases by -.035 Standard Deviation. As the Standard Deviation for Average Price is 412.734, thus, a change of 1 Standard Deviation would bring a change of -.035 in the price. This interpretation is only true if the effect of other predictors is held constant.
Close of Bank Nifty ( =.923): This value indicates that as the Close of Bank Nifty increases by 1 Standard Deviation (2314.74), the Average Price increases by .923 Standard Deviation. As the Standard Deviation for Average Price is 412.734, thus, a change of 1 Standard Deviation would bring a change of .923 in the price. This interpretation is only true if the effect of other predictors is held constant.
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Deposits ( =-.964): This value indicates that as the Deposits are increases by 1 Standard Deviation (40435.96), the Average Price increases by -.964 Standard Deviation. As the Standard Deviation for Average Price is 412.734, thus, a change of 1 Standard Deviation would bring a change of -.964 in the price. This interpretation is only true if the effect of other predictors is held constant.
Now talking about the rest of the table, we have got zero-order correlations which are nothing but simple Pearson Correlation Coefficients. The Partial Correlations represent the relationship between each predictor and the outcome Variable, controlling for the effect of other predictors. The Part Correlations repres ent the relationship between each predictor and the outcome Variable, controlling for the effect of other predictors on the outcome. In effect, these Part Correlations represent the unique relationship that each predictor has with the outcome.
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ICICI BANK
Starting off with the analysis part of ICICI BANK, I have taken AVERAGE SHARE PRICE as DEPENDENT VARIABLE and INTEREST INCOME, ADVANCES, NET PROFIT, CLOSE OF BANK NIFTY, DEPOSITS and BORROWINGS as INDEPENDENT VARIABLES and have applied MULTIPLE REGRESSION to it.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate R Square Change .744 F Change 12.096 Change Statistics df1 6 df2 25 Sig. F Change .000
1 a.
.862(a)
.744
.682
158.4107
Predictors: (Constant), Borrowings, Close of Bank Nifty, Net Profit, Deposits, Interest, Advances
ANOVAb
Model 1 Sum of Squares 1821275.5 97 627348.56 2 2448624.1 59 df 6 25 31 Mean Square 303545.933 25093.942 F 12.096 Sig. .000(a)
a. Predictors: (Constant), Borrowings, Close of Bank Nifty, Net Profit, Deposits, Interest, Advances b. Dependent Variable: Average Price
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Coefficientsa
M o d e l Standa rdized Coeffici ents
Unstandardized Coefficients Std. Error 173.906 .080 .004 .263 .041 .004 .007
Sig.
95% Confidence Interval for B Lower Bound 113.903 -.085 -.004 -.815 -.076 -.009 -.030 Upper Bound 830.235 .244 .015 .270 .094 .006 -.002 Zeroorder
Correlations Partial Part .195 .231 -.203 .045 -.086 -.435 .101 .120 -.105 .023 -.044 -.244
1 (Constant) Interest Ad vances Net Profit Close of Bank Nifty Deposits Borrowings
Beta 2.715 .738 1.413 -.325 .077 -.446 -.839 .995 1.185 -1.034 .226 -.434 -2.415 .012 .329 .247 .311 .823 .668 .023
Collinearity Statistics Tole ranc e VIF .019 .007 .104 .089 .010 .085 53.781 138.882 9.618 11.275 103.437 11.775
MODEL FIT
First of all the MODEL SUMMARY. In this case of ICICI BANK the value of R is .862. This shows that the Predictors have 86.2% influence on the output.
In this case the value of R 2 is .744 this means that the predictors account for 74.4% variation in the Average Price of the shares.
Here the difference between value of R2 and the Adjusted R2 is 0.062 (.744-.682) which is small. This shrinkage means that if model is derived from the population rather than a sample it would account for approximately 6.2% less variance in the Outcome.
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We can see here that the R Square Change is .744. This is used for calculating the F-ratio. Thus, the change in amount of variance that can be explained gives rise to an F-ratio of12.096, which is significant (p<.001).
ANOVA
The next table here shows the output, which contains an Analysis of Variance (ANOVA). The Sum of Squares here is 1821276; the value of Residual Sum of Squares is 627348.6 and the value of F which is 12.096. Here we can conclude that the value of F is significant and our ability to predict the Outcome Variable is good.
Average Price = b0 + b1 (Interest Income) + b2 (Advances) + b3 (Net profit) + b4 (Close of Bank Nifty) + b5(Deposits) + b6(Borrowings)
Average Price = 472.069 + .079 (Interest Income) + .005 (Advances) + (-.272) (Net profit) + .009 (Close of Bank Nifty) + (-.002) (Deposits) + (-.016) (Borrowings)
The B values tell us to what degree each predictor affects the outcome if the effects of all other predictors are held constant. Here is the analysis.
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Interest Income (b=.079): This value indicates that as the interest income increases by Rs. 1 crore, the Average Price increases by Rs. 0.079. This interpretation is only true if the effect of other predictors is held constant.
Advances (b=.005): This value indicates that as the Advances are increases by Rs. 1 crore, the Average Price increases by Rs. 0.005. This interpretation is only true if the effect of other predictors is held constant.
Net Profit (b=-.272): This value indicates that as the Net Profit is increases by Rs. 1 crore, the Average Price decreases by Rs. 0.272. This interpretation is only true if the effect of other predictors is held constant.
Close of Bank Nifty (b=.009): This value indicates that as the Close of Bank Nifty increases by 1 point the Average Price increases by Rs.0.009. This interpretation is only true if the effect of other predictors is held constant.
Deposits (b=-.002): This value indicates that as the Deposits are increases by Rs. 1 crore, the Average Price decreases by Rs. 0.002. This interpretation is only true if the effect of other predictors is held constant.
Borrowings (b=-.016): This value indicates that as the Borrowings are increases by Rs. 1 crore, the Average Price decreases by Rs. 0.016. This interpretation is only true if the effect of other predictors is held constant.
For this model the value of t-statistic for different variables and their Sig. can be seen from the above table.
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From the magnitude of t-statistics we can see that the t-statistics for Borrowings (.023<.05) is less than 0.05, thus, it has a significant contribution in the model and the Sig. Value for INTEREST INCOME (0.329>0.05), CLOSE OF BANK NIFTY (.823>0.05), DEPOSITS (.668>0.05), ADVANCES (.247>0.05) and NET PROFIT (.311>0.05) is more than 0.05, thus, they dont have a significant contribution to the model. We also look for t-values, which if are above +2 and below -2. Here in this case only Borrowings match the criteria, thus, it has a significant contribution in the Model.
The Standardized Beta Values as shown in the above table can be interpreted as follows:
Interest Income ( =.738): This value indicates that as the interest income increases by 1 Standard Deviation (2612.99), the Average Price increases by 0.738 Standard Deviation. As the Standard Deviation for Average Price is 281.0478, thus, a change of 1 Standard Deviation would bring a change of .738 in the price. This interpretation is only true if the effect of other predictors is held constant.
Advances ( =1.413): This value indicates that as the Advances are increases by 1 Standard Deviation (74660.49), the Average Price increases by 1.413 Standard Deviation. As the Standard Deviation for Average Price is 281.0478, thus, a change of 1 Standard Deviation would bring a change of 1.413 in the price. This interpretation is only true if the effect of other predictors is held constant.
Net Profit ( =-.325): This value indicates that as the Net Profit is increases by 1 Standard Deviation (335.05), the Average Price increases by -.325 Standard Deviation. As the Standard Deviation for Average Price is 281.0478, thus, a change of 1 Standard Deviation would bring a change of -.325 in the price. This interpretation is only true if the effect of other predictors is held constant.
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Close of Bank Nifty ( =.077): This value indicates that as the Close of Bank Nifty increases by 1 Standard Deviation (2314.74), the Average Price increases by .077 Standard Deviation. As the Standard Deviation for Average Price is 281.0478, thus, a change of 1 Standard Deviation would bring a change of .077 in the price. This interpretation is only true if the effect of other predictors is held constant. Deposits ( =-.446): This value indicates that as the Deposits are increases by 1 Standard Deviation (81172.88), the Average Price increases by -.446 Standard Deviation. As the Standard Deviation for Average Price is 281.0478, thus, a change of 1 Standard Deviation would bring a change of -.446 in the price. This interpretation is only true if the effect of other predictors is held constant.
Borrowings ( =-.839): This value indicates that as the Borrowings are increases by 1 Standard Deviation (14793.88), the Average Price increases by -.839 Standard Deviation. As the Standard Deviation for Average Price is 281.0478, thus, a change of 1 Standard Deviation would bring a change of -.839 in the price. This interpretation is only true if the effect of other predictors is held constant.
Now talking about the rest of the table, we have got zero-order correlations which are nothing but simple Pearson Correlation Coefficients. The Partial Correlations represent the relationship between each predictor and the outcome Variable, controlling for the effect of other predictors. The Part Correlations represent the relationship between each predictor and the outcome Variable, controlling for the effect of other predictors on the outcome. In effect, these Part Correlations represent the unique relationship that each predictor has with the outcome.
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Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate R Square Change 1 .991(a) .983 .979 79.93108 .983 Change Statistics F Change 293.337 df1 5 df2 26 Sig. F Change .000
a Predictors: (Constant), Deposits, Interest, Close of Bank Nifty, Net Profit, Ad vances
ANOVA(b)
Model 1 Sum of Squares 9370611.0 27 166113.41 3 9536724.4 40 df 5 26 31 Mean Square 1874122.205 6388.977 F 293.337 Sig. .000(a)
a. Predictors: (Constant), Deposits, Interest, Close of Bank Nifty, Net Profit, Ad vances b. Dependent Variable: Average Price
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Coefficients a
M o d e l Standa rdized Coeffici ents Beta .456 .348 .050 .057 .812 -.219 2.836 .520 1.482 15.96 0 -1.521 .652 .009 .607 .150 .000 .140
Unstandardized Coefficients B 69.512 .001 .054 .047 .195 -.001 Std. Error 152.284 .001 .104 .032 .012 .001
Sig.
95% Confidence Interval for B Correlations Lower Upper ZeroBound Bound order Partial Part -243.514 382.537 .000 -.160 -.018 .170 -.003 .003 .269 .113 .220 .000 .877 .808 .629 .979 .889 .486 .101 .279 .953 -.286 .073 .013 .038 .413 -.039
Collinearity Statistics Tolerance .044 .072 .446 .259 .032 VIF 22.474 13.847 2.242 3.866 30.798
MODEL FIT
First of all the MODEL SUMMARY. In this case of STATE BANK OF INDIA the value of R is .991. This shows that the Predictors have 99.1% influence on the output.
In this case the value of R 2 is .983 this means that the predictors account for 98.3% variation in the Average Price of the shares.
Here the difference between value of R2 and the Adjusted R 2 is 0.004 (.983-.979) which is significantly small. This shrinkage means that if model is derived from the population rather than a sample it would account for approximately 0.4% less variance in the Outcome.
We can see here that the R Square Change is .983. This is used for calculating the F-ratio. Thus, the change in amount of variance that can be explained gives rise to an F-ratio of 293.337, which is significant (p<.001).
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ANOVA
The next table here shows the output, which contains an Analysis of Variance (ANOVA). The Sum of Squares here is 9370611; the value of Residual Sum of Squares is 166113.4 and the value of F which is 293.337. Here we can conclude that the value of F is highly significant and our ability to predict the Outcome Variable is much better.
Average Price= 69.512 + .047 (Interest Income) + .001 (Advances) + (.054) (Net profit) + .195 (Close of Bank Nifty) + (-.001) (Deposits)
The B values tell us to what degree each predictor affects the outcome if the effects of all other predictors are held constant. Here is the analysis.
Interest Income (b=.047): This value indicates that as the interest income increases by Rs. 1 crore, the Average Price increases by Rs. 0.047. This interpretation is only true if the effect of other predictors is held constant.
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Advances (b=.001): This value indicates that as the Advances are increases by Rs. 1 crore, the Average Price increases by Rs. 0.001. This interpretation is only true if the effect of other predictors is held constant.
Net Profit (b=.054): This value indicates that as the Net Profit is increases by Rs. 1 crore, the Average Price increases by Rs. 0.054. This interpretation is only true if the effect of other predictors is held constant.
Close of Bank Nifty (b=.195): This value indicates that as the Close of Bank Nifty increases by 1 point the Average Price increases by Rs.0.195. This interpretation is only true if the effect of other predictors is held constant.
Deposits (b=-.001): This value indicates that as the Deposits are increases by Rs. 1 crore, the Average Price decreases by Rs. 0.001. This interpretation is only true if the effect of other predictors is held constant.
For this model the value of t-statistic for different variables and their Sig. can be seen from the above table.
From the magnitude of t-statistics we can see that the t-statistics for ADVANCES (.009<0.05) and CLOSE OF BANK NIFTY (.000<0.05) is less than 0.05, thus, it has a significant contribution in the model and the Sig. Value for INTEREST INCOME (0.150>0.05), DEPOSITS (.140>0.05), and NET PROFIT (.607>0.05) is more than 0.05, thus, they dont have a significant contribution to the model. We also look for t-values, which if are above +2 and below -2. Here in this case Advances and Close of Bank Nifty match the criteria, thus, they have a significant contribution in the Model.
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The Standardized Beta Values as shown in the above table can be interpreted as follows:
Interest Income ( =.057): This value indicates that as the interest income increases by 1 Standard Deviation (674.73), the Average Price increases by 0.057 Standard Deviation. As the Standard Deviation for Average Price is 554.65, thus, a change of 1 Standard Deviation would bring a change of .057 in the price. This interpretation is only true if the effect of other predictors is held constant.
Advances ( =.348): This value indicates that as the Advances are increases by 1 Standard Deviation (131343.342), the Average Price increases by .348 Standard Deviation. As the Standard Deviation for Average Price is 554.65, thus, a change of 1 Standard Deviation would bring a change of .348 in the price. This interpretation is only true if the effect of other predictors is held constant.
Net Profit ( =.050): This value indicates that as the Net Profit is increases by 1 Standard Deviation (511.46), the Average Price increases by .050 Standard Deviation. As the Standard Deviation for Average Price is 554.65, thus, a change of 1 Standard Deviation would bring a change of .050 in the price. This interpretation is only true if the effect of other predictors is held constant.
Close of Bank Nifty ( =.812): This value indicates that as the Close of Bank Nifty increases by 1 Standard Deviation (2314.74), the Average Price increases by .812 Standard Deviation. As the Standard Deviation for Average Price is 554.65, thus, a change of 1 Standard Deviation would bring a change of .812 in the price. This interpretation is only true if the effect of other predictors is held constant. Deposits ( =-.219): This value indicates that as the Deposits are increases by 1 Standard Deviation (98847.83), the Average Price increases by -.219 Standard Deviation. As the Standard Deviation for Average Price is 554.65, thus, a change
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of 1 Standard Deviation would bring a change of -.219 in the price. This interpretation is only true if the effect of other predictors is held constant.
Now talking about the rest of the table, we have got zero-order correlations which are nothing but simple Pearson Correlation Coefficients. The Partial Correlations represent the relationship between each predictor and the outcome Variable, controlling for the effect of other predictors. The Part Correlations represent the relationship between each predictor and the outcome Variable, controlling for the effect of other predictors on the outcome. In effect, these Part Correlations represent the unique relationship that each predictor has with the outcome.
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From the analysis, I could find out and conclude that, the Share Prices are affected by each and every factor in varying degree. The analysis shows that there is a very small impact of Interest Income, Advances, Deposits, Borrowings and a slightly more impact of Bank Nifty Index on Share Prices. It is so because there are N number of factors and it was not possible to quantify each one of them and conduct the analysis, there were some technical difficulties also which turn out to be the limitation of the project. But at the end of the analysis we can ACCEPT THE HYPOTHESIS, as most of the factors, do affect the Share Prices in some or other manner.
From the three and half month training at India Infoline, I could get that INVESTORS SENTIMENTS work out most for the market dynamics, this is the most significant factor which affect Share Prices drastically in either of the direction. A latest example I can quote is the post election result session on Monday, 18 May, 2009, when Investors were happy that UPA government was back into power and the market jumped thousand points up.
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Talking about the investors, what I can suggest them from my study is that they should be very careful while investing in the Stock Market. The market is simply UNPREDICTABLE. One should do a proper and detailed analysis before investing in stocks. Banks shares are pretty safe, as I could find from the analysis. The Banking Sector is ever growing and thus money invested in it would always give you good returns. But still one should beware of the Markets unpredictable ups and downs.
This report is of great help to the company and investors. They can use the analysis and draw conclusions. Also they can do their own analysis if they want keeping this Analysis as a base. They can use the tools and techniques to take decision and play safe in the market.
To conclude my report I would say that what I was able to do in these three and half months, I did, but still, time was always a limitation and it restricted my work to certain boundations.
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APPENDIX
TECHNICAL TERMINOLOGY
Some technical terms are frequently used in the all the three analysis.
First of all the MODEL SUMMARY TABLE. This table tells us the whole story about the relationship of DEPENDENT Variable and INDEPENDENT variable. In the MODEL SUMMARY TABLE we can find one column labeled R which is the value of Multiple Correlation Coefficient between the Predictors and the Outcome. In the next column we have R2, which is a measure of how much variability in the Outcome is accounted for by the Predictors. The Adjusted R2 gives some idea of how well the model generalizes and ideally we would like its value to be the same, or very close to, the value of R 2. The Change Statistics tells us whether the change in the R 2 is significant or not. The significance of R 2 can actually be tested using F-ratio. The R Square Change is used for calculating the F-ratio. The second table contains an Analysis of Variance (ANOVA) that tests whether the model is significantly better at predicting the outcome than using the mean as a best guess. F-ratio represents the ratio of the improvement in the Prediction that results from fitting the model, relative to the inaccuracy that still exists in the model. The Sum of Squares represents the improvement in prediction resulting from fitting a regression line to the data rather than using mean as an estimate of the Outcome. The value of Residual Sum of Squares represents the total difference between the model and observed data.
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The B values tell us about the relationship between Average Price and each Predictor. If the value is Positive we can tell that there is a positive relationship between the predictor and the outcome whereas if the value is Negative than we can say that there is a negative relationship between the predictor and the outcome. Each of the Beta values has an associated Standard Error indicating to what extent these values would vary across different samples, and these Standard Errors are used to determine whether or not the b-value is significantly different from zero. The t-values are also given to test whether a b-value is significantly different from zero. The t-test is a measure of whether the predictor is making significant contribution to the model. Therefore, if the t-test associated with a b-value is significant (if the value in the column labeled SIG. is less than .05) then the predictor is making a significant contribution to the model. The smaller the value of Sig. the greater the contribution of the predictor. The b-values and their significance are important statistics to look at; however, the Standardized versions of the b-values are in many ways easier to interpret. The Standardized values are provided here under label BETA (), and they tell us the number of Standard Deviations that outcome will change as a result of one Standard Deviation change in the Predictor. The Standardized Beta Values are measured in Standard Deviation units and so are directly comparable; therefore, they provide a better insight into importance of a Predictor in the Model.
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REFERENCES:
The following articles from internet have been used for the study purpose: (a) www.nseindia.com (b) www.bseindia.com (c) www.sharegyan.com (d) www.moneycontrol.com (e) www.statebankofindia.com (f) www.hdfcbank.com (g) www.icicibank.com (h) www.economictimes.indiatiome.com (i) www.business-standard.com (j) www.wikepedia.com (k) Guidance from company mentor Mr. Chintan Shah
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