CAPITAL MARKET ON EQUITY

ANALYSIS OF IT INDUSTRY

Project Request submitted to Khallikote Unitary University

in partial fulfilment of the requirement for the award of the
Degree of

BACHELOR OF COMMERCE

Submitted By
BETALA SIBANI
(UG2103COM070)

Under the guidance of

DR. ANNAPURNA SAHOO
(Assistant Professor and Head of the Department)

KHALLIKOTE UNITARY UNIVERSITY

BERHAMPUR GANJAM,760001
2021-24
BIBLOGRAPHY
 CERTIFICATE
This is to certify that Project entitled “CAPITAL MARKET ON
EǪUITY ANALYSIS OF IT INDUSTRY” which is submitted by
BETALA SIBANI of B.COM 3rd year, for the award of the
bachelor's degree, is a bonafide record of work carried out
by me under guidance of DR. ANNAPURNA SAHOO.

I further certify that tis work has not been published

anywhere or submitted to any other university. To the best of
my knowledge the project report is an original piece of work
and is adequate for consideration for the award of the degree
for which it is submitted.

Internal Examiner External

Examiner Signature Signature
 DECLARATION
I hereby declare that my Project Report titled “CAPITAL
MARKET ON EQUITY ANALAYSIS OF IT INDUSTRY” is a
bonafide record of the project work which I have submitted to
KHALLIKOTE UNITARY UNIVERSITY in partial fulfillment
of the credit requirements for the bachelor's degree is my
authentic work. This project report has not been copied,
duplicated or plagiarized from any educational institute or
otherwise for the award of any certificate, diploma, degree or
recognition.

This is an authentic piece of work and in case there is any query

regarding the same, I shall be held responsible for answering
any queries in this regard.

NAME OF THE STUDENT: - BETALA SIBANI

ROLL NO.: -UG2103COM070
DATE:-
 ACKNOWLEDGEMENT
I extend my heartfelt thanks deepest sense of gratitude and
profound indebtedness to my esteemed guide
DR.ANNAPURNA SAHOO, Department of Commerce,
Khallikote Unitary University, who has given his consent to
undertake this project work and provide constant source of
inspiration and valuable suggestion in materialization of this
project.
I would like to thank all faculty members of the commerce
department for their valuable encouragements and moral
support for doing research. I like to thank my parents and friends
who helped me directly and indirectly to complete my research
work.

NAME: BETALA SIBANI

 CONTENT
CHAPTER PARTICULARS PAGE
NO. NO.
1. INTRODUCTION

2. ARMY RETIRED EMPLOYEE

EXPERIENCE
3. MILITARY WORK-LIFE BALANCE

4. HOW TO ACHIEVEWORK-LIFE
BALANCE WHILE IN THE MILATARY
5. DEFENCEE ARMY RETIREMENT
BENEFITS ACT 1948
6. ARMY RETIREMENT BENEFITS
FEATURES OF THE RETIREMENT
PENSION SCHEME
7. CONTEXTUALIZING A SOLDIER’S
RETIREMENT
DOCUMEMTS TO BE GIVEN AT THE
TIME OF ARMY RETIREMENT
8. CONCLUSION
BIBLIOGRAPHY
 CHAPTER-1
INTRODUCTION TO CAPITAL MARKET
1.MEANING
Capital Market may be defined as a market for borrowing and lending long-term capital funds
required by the business enterprises. Capital Market is the market for financial assets that
have long or indefinite maturity period. Capital Market offers an ideal source of external
finance. It refers to all the facilities and the institutional arrangements for borrowing and
lending medium-term and long-term funds. Like any market, the Capital Market is also
composed of those who demand funds (borrowers) and those who supply funds (lenders).

Transfer of resources from those with idle resources to others who have a productive need
for them is perhaps most efficiently achieved through Capital Markets. Stated formally,
Capital Markets provide channels for reallocation of savings to investments and
entrepreneurship and thereby decouple these two activities. As a result, the savers and
investors are not constrained by their individual abilities, but by the economy’s ability to
invest and save respectively, which inevitably enhances the savings and investment in the
economy. Savings are linked to investments by a variety of intermediaries through a range of
complex financial products called “securities”.

There are a set of economic units who demand securities in lieu of funds and others who
supply securities for funds. These demand for and supply of securities and funds determine,
under competitive market conditions in both goods and Securities Market, the prices of
securities which reflect the present value of future prospects of the issuer, adjusted for risks
and also prices of funds.

It is not that the users and suppliers of funds meet each other and exchange funds for
securities. It is difficult to accomplish such double coincidence of wants. The amount of
funds supplied by the supplier may not be the amount needed by the user. Similarly, the risk,
liquidity and maturity characteristics of the securities issued by the issuer may not match the
preference of the supplier. In such cases, they incur substantial search costs to find each
other.
2.HISTORY
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years
ago. The earliest records of security dealings in India are meager and obscure. The East
India Company was the dominant institution in those days and business in its loan securities
used to be transacted towards the close of the eighteenth century. The history of the Indian
capital markets and the stock market can be traced back to 1861 when the American Civil
War began. The opening of the Suez Canal during the 1860s led to a tremendous increase in
Exports to the United Kingdom and United States, several companies were formed during
this period and many banks came to the fore to handle the finances relating to these trades.
With many of these registered under the British Companies Act, the Stock Exchange,
Mumbai, came into existence in 1875.
It was an unincorporated body of stockbrokers, which started doing business in the city under
a banyan tree. Business was essentially confined to company owners and brokers, with very
little interest evinced by the general public. There had been much fluctuation in the stock
market on account of the American war and the battles in Europe. Sir Premchand Roychand
remained a kingpin for many years.

Indian Capital Market before Independence

The Indian capital market was not properly developed before Independence. The
growth of the industrial securities market was very much hampered since there were
very few companies and the number of securities traded in the stock exchanges was
still smaller. Most of the British enterprises in India looked to the London capital
market for funds than to the Indian capital market. A large part of the capital market
consisted of the gilt-edged marker for government and semi government securities.

Indian Capital Market after Independence

Since Independence and particularly after 1951, the Indian capital market has been
broadening significantly and the volume of saving and investment has shown steady
improvement. All types of encouragement and tax relief exist in the country to
promote savings. Besides, many steps have been taken to protect the interests of
investors. A very important indicator of the growth of the capital market is the growth
of joint stock companies or corporate enterprises. In 1951 there were about 28,500
companies, both public limited and private limited companies, with a paid-up capital
of Rs. 775 crores.
3.TYPES OF CAPITAL MARKET
There are two main categories of capital markets: -
PRIMARY MARKETS
Primary capital markets are where companies first sell new stock or bonds publicly. Also
known as the 'New Issues Market', it is a place where businesses and governments seek out
new financing. The new money is converted into debt or shares of the company. Debt or
stocks are locked in until they are sold on a secondary market, repurchased by the company,
or mature.

Primary capital markets trade two major financial instruments: equities (stocks) and debt.

An Initial Public Offering (IPO) is the process of introducing new equities to the market. It's
simply the process of selling part of a company to the public for capital.

Bonds, on the other hand, are a bit more complicated. Underwriters act as intermediaries in
the issuance of bonds. If Company A wants to issue INR 10 crore in bonds, it goes to the
underwriter. These bonds are then issued and sold by the underwriter to investors.

In this instance, the underwriter is responsible for ensuring that Company A gets the capital it
needs. A bond underwriter buys bonds from Company A and then sells them on the market -
typically at a higher price. The underwriter then takes on the risk, but Company A receives
the entire loan.

SECONDARY MARKET
Investors trade old debt or stocks on the secondary capital market. It differs from the primary
market because the debt has already been issued here.

Investors trade stock in the secondary capital markets through exchanges such as the
Bombay Stock Exchange, the Calcutta Stock Exchange, and the New York Stock Exchange.
A stock exchange also allows people to sell the old stock if they no longer want it, which
results in the 'liquidation' of these stocks. Thus, the seller now has cash rather than an asset.

Unlike stocks, bonds are typically held for a longer period - usually until they expire.
However, those who hold bonds but need cash quickly can rely on the secondary market.

Investors use the secondary market to obtain cash, either to invest in another stock or for
personal consumption. It involves liquidating assets so that other things can be purchased.
 4.FUNCTIONS OF CAPITAL MARKET

1. Links Borrowers and Investors: Capital markets serve as an intermediary

between people with excess funds and those in need of funds.
2. Capital Formation: The capital market plays an important role in capital formation.
By timely providing sufficient funds, it meets the financial needs of different sectors of the
economy.

2. Regulate Security Prices: It contributes to securities' stability and systematic

pricing. The system monitors whole processes and ensures that no unproductive or
speculative activities occur. A standard or minimum interest rate is charged to the borrower.
As a result, the economy's security prices stabilize.

3. Provides Opportunities to Investors: The capital markets have enough financial

instruments to meet any investor's needs, regardless of the risk level. Capital markets also
provide investors with the opportunity to increase their capital yields. The interest rate on
most savings accounts is extremely low compared to the rate on equities. Therefore,
investors can earn a higher rate of return on the capital market, though some risks are
involved as well.

4. Minimises Transaction Cost and Time: Long-term securities are traded on the
capital market. The whole trading process is simplified and reduced in cost and time. A
system and program automate every aspect of the trading process, thus speeding up the
entire process.

5. Capital Liquidity: The financial markets allow people to invest their money. In
exchange, they receive ownership of a stock or bond. Bond certificates cannot be used to
purchase a car, food, or other assets, so they may need to be liquidated. Investors can
sell their assets for liquid funds to a third party on the capital markets.

.
 CHAPTER-2
ROLE OF CAPITAL MARKET IN ECONOMY
Capital market plays an extremely important role in promoting and sustaining the growth of
an economy. It is an important and efficient conduit to channel and mobilize funds to
enterprises, and provide an effective source of investment in the economy. It plays a critical
role in mobilizing savings for investment in productive assets, with a view to enhancing a
country’s long-term growth prospects. It thus acts as a major catalyst in transforming the
economy into a more efficient, innovative and competitive marketplace within the global
arena.
Capital market has played a crucial role in supporting periods of technological progress and
economic development throughout history. Among other things, liquid markets make it
possible to obtain financing for capital-intensive projects with long gestation periods. This
certainly held true during the industrial revolution in the 18th century and continues to apply
even as we have moved towards the so-called “New Economy”.
The existence of deep and broad capital market is absolutely crucial and critical in spurring
the growth of our country. An essential imperative for India has been to develop its capital
market to provide alternative sources of funding for companies and in doing so, achieve more
effective mobilization of investors’ savings. Capital market also provides a valuable source of
external finance.
For a long time, the Indian market was considered too small to warrant much attention.
However, this view has changed rapidly as vast amounts of international investment have
poured into our markets over the last decade. The Indian market is no longer viewed as a
static universe but as a constantly evolving market providing attractive opportunities to the
global investing community.
1.Mobilize resources for investment
The capital market promotes capital formation in the country. Rate of capital formation
depends upon savings in the country. Though the banks mobilize savings, they are not
adequate to match the requirements of the industrial sector. The capital market mobilizes
savings of households and of industrial concern. Such savings are then invested for
productive purposes. Thus, savings and investment lead to capital arrangement in a country.
2.Economic growth
Capital market smooths the progress of the growth of the industrial sector as well as other
sectors of the economy. The main purpose of the capital market is to transfer resources from
the masses to the industrial sector. The capital market makes it possible to lend funds to
various projects, both in the private as well as public sector.
3.Development of backward areas

The capital markets provide funds for the projects in backward areas. This facilitates the
economic development of backward areas.

4.Generates employment

Capital market generates employment in the country:

i) Direct employment in the capital markets such as stock markets, financial institutions etc.
ii) Indirect employment in all sectors of the economy, because of the funds provided
for developmental projects.

5. Long term capital to industrial sector

The capital market provides a stable long-term capital for the companies. Once the funds are
collected through issues, the money remains with the company. The company is left free with
the funds while investors exchange securities among themselves.

6. Developing role of financial institutions

The various agencies of capital market such as industrial financial corporation of India
(IFCI), state finance corporations (SFC), industrial development bank of India (IDBI),
industrial credit and investment corporation of India (ICICI), unit trust of India (UTI), life
insurance corporation of India (LIC), etc. there have been rendering useful services to the
growth of industries. They have been financing, promoting and underwriting the functions of
the capital market.

7. Investment opportunities Capital markets provide excellent investment

opportunities to the members of the public. The public can have alternative source
of investment i.e. In bonds, shares and debentures etc.
 CHAPTER-3
CAPITAL MARKET INSTRUMENTS

A capital market is a place that allows the trading of funding instruments such as shares,
debentures, debt instruments, bonds, ETFs, etc. It is a source for raising funds for individuals,
firms, and governments. The securities exchanged here would typically be a long-term
investment with over a year lock-in period.

1.Equities

As capital market instruments, equities enable companies to raise capital by selling

ownership stakes. They are traded on stock markets, allowing investors to buy and sell
shares, with their value influenced by the company's performance and market dynamics. This
trading not only provides liquidity but also helps in price discovery, making equities vital for
both corporate financing and investment opportunities. Equities, includes both equity and
preference shares, serve as key capital market instruments.

A) Equity Share
An equity share represents a portion of ownership in a company. When you buy equity
shares, you become a part-owner of that company. As a shareholder, you may get voting
rights in major company decisions and a share of the profits, known as dividends. These
shares can increase in value if the company does well, offering profit potential.
B) Preference Share
Preference shares are a type of stock in a company that give shareholders certain advantages
over common stockholders. Typically, preference shareholders receive dividends before
common shareholders and these dividends are often fixed. While they usually don't have
voting rights in company decisions, they have a higher claim on company assets if the
company goes bankrupt. Preference shares are a blend of stocks and bonds characteristicss.

2.Debt Instruments

Debt instruments, like bonds and debentures, are essentially loans that investors give to
companies or governments. When you invest in these, you're lending money and in return,
you receive interest payments over a specified period. At the end of the term, the principal
amount is repaid.

They are a key part of capital markets, providing a way for entities to raise funds for various
projects. Unlike equities, which represent ownership, debt instruments are a form of
borrowing and offer a fixed return, making them a different kind of investment with generally
lower risk compared to stocks.

A) Bonds
Bonds are like loans given by investors to companies or governments. When you buy a bond,
you're lending money to the bond issuer. In return, they promise to pay you back the principal
amount on a future date and make regular interest payments along the way, known as coupon
payments. Bonds are a way to invest while earning a steady income and are generally
considered lower risk compared to stocks.

B) Debentures
Debt instruments, like bonds and debentures, are essentially loans that investors give to
companies or governments. When you invest in these, you're lending money and in return,
you receive interest payments over a specified period. At the end of the term, the principal
amount is repaid. They are a key part of capital markets, providing a way for entities to raise
funds for various projects. Unlike equities, which represent ownership, debt instruments are a
form of borrowing and offer a fixed return, making them a different kind of investment with
generally lower risk compared to stocks.
 CHAPTER-4
A STUDY ON EǪUITY ANALYSIS WITH
REFERENCE TO IT INDUSTRY
1.INTRODUCTION
Equity analysis is an ex-ante evaluation of different investment avenues, the main aim is to
evaluate investment worthiness of the equity shares that is to find out the risk and return of
investment in such share. In financial terms, return is the amount which an investor actually
earned on an investment during a certain period and risk is the chance or likelihood that a
firm savings may or may not distribute the real/probable returns. The relationship of risk and
return is an underlying concept in financial analysis and also in every aspect of life. If the
Individuals or stockholders want to maximize their benefit, they must consider the combined
influence of return or benefit as well as risk or cost on investment.A Research has been
carried out to study, the equity shares of sampled companies of IT Industry in Indian stock
market and provide a clear view on how to navigate through the stock market with a view to
make moderate profits with moderate risk factor, governing the investments made by the
investor. The IT industry in India is the fifth largest in the world and considered to be a
fastest growing sector. Since, the demand for ITs nowadays is directly connected to overall
economic growth and personal incomes, industry growth will low if the economy weakens.

2.REVIEW OF LITERATURE
This part of the review provides details on previous investment studies on the risk-reward
ratio. Risk and return

Grewal S.S and Navjot Grewal (1984) revealed some basic investment rules and rules for
selling stocks. They warned shareholders not to buy unlisted stocks because the exchanges
don't allow unlisted stocks to be traded. It is not about buying dormant stocks, that is, stocks
that are rarely traded. The main reason stocks are inactive is because there are no buyers for
them. Mostly these are joint ventures that are not doing well. For them, it is not buying
shares in controlled companies, as those shares tend to be less active than public companies
because they have fewer shareholders. They warn against holding stocks in anticipation of a
high price for a long period of time, but rather selling them as long as a reasonable reward is
achieved.

Jack Clark Francis (1986) revealed the importance of return on investment, examining the
possibility of default and bankruptcy risk, arguing that in an uncertain world, shareholders
cannot accurately predict what return an investment will produce., suggested that
shareholders can formulate a probability distribution of possible returns. He also said that an
investor who buys corporate securities must face the possibility of default and bankruptcy of
the issuer; Financial analysts can foresee bankruptcies and issue some easily noticeable
warnings of a company's bankruptcy that shareholders may be aware of in order to avoid
such risk.
William Edward4 (1990) examined the important risks of owning common stock and ways to
minimize those risks. They commented that the severity of financial risk depends on how
heavily a company is dependent on debt. when an investor holds on to the common stock of
companies that have small amounts of debt. They suggested that a relatively easy way to
ensure some level of liquidity is to limit investments in stocks that have had reasonable
trading volumes in the past. You can reduce it by choosing common stocks of companies that
are diversified in different, unrelated industries.

Nabhi Kumar Jain (1992) special sure hints for purchasing stocks for containing and
additionally for promoting stocks. He recommended the stockholders to shop for stocks
through diversifying in some of boom businesses running in a special however similarly fast-
developing region of the economy. He recommended promoting the stocks, the instant
corporation has or nearly reached the height of its boom. Also, promote the stocks the instant
you recognise you've got got made a mistake withinside the preliminary choice of the stocks.
The handiest choice to determine while to shop for and promote high-priced stocks is to
become aware of the or distinct advantage or demerit of every of the shares withinside the
collection and attain at a choice.

3.NEED FOR THE STUDY

● The accentuated growth rate of the IT Industry in recent times has turned the head winds
for the many major economies of the world. India being instrumental in supplying the
human capital to the IT industry studying IT stocks movements is the need of the hour.

● Further as the growth of IT industry accelerated the need of the firms for more capital
also raised thus many firms lined up for additional funds and capital markets being
instrumental channels for funds the study is of at most importance keeping the Industry’s
growth rate in view.

● Investors being key players in the stock market who focuses on improving their return
margins with minimal risk , the study is of prime importance as the major objective of
the study is to analyse the riskreturn relationship of stock pertaining to IT Industry.

4.SCOPE OF THE STUDY

1. The study's includes India's IT industry specific stocks only

2. The study focused on only few Indian IT firms.

3. The duration of the study includes April 2018-March 2022.

4. The project's focus is on learning the fundamentals of technical and fundamental

analysis and applying them to make investment decisions in the IT sector.
5.OBJECTIVES OF THE STUDY

1. To gain knowledge of the concept of risk return analysis.

2. To identify and examine the risk and return relationship of selected IT companies
in Indian stock market.

3. To find out the relationship among Nifty 50 index, Nifty IT Indices only.

4. To provide valid suggestions for the stockholders, to make a rational choice

while investing in IT stocks.

5. To find and compare the performance of the selected IT companies in share market.
 CHAPTER-5
RESEARCH METHODOLOGY
The study is descriptive in nature, mostly focuses on the price movement of selected IT
companies in Indian stock market. The assumptions for conducting the equity analysis, is
that the stockholders are risk averse and the investment returns follow a normal distribution.
The data of daily and monthly share price are collected from the National Stock Exchange.
The data is collected for a period of 5 years i.e., from 1st April 2018 to 31st March 2022.

Sample design
A sample size of 8 IT companies is selected from NIFTY IT index as on 01/04/2022, which
comprises 15 tradable, exchange listed companies. The index represents IT related sectors
They are

1. WIPRO LTD
2. INFOSYS LTD
3. TCS LTD.
4. HCL LTD.
5. TECH MAHINDA LTD.
6. L&T LTD.
7. MPHASIS LTD
8. ORACLE COMPANY LTD.

Data collection
The study is based on secondary data (Historical data) collected from NSE website. Data is
collected for a period of 5 years (i.e., from 1st April 2018 to 31st March 2022). In addition
to that, the data has also been collected from newspaper, websites, journals, book reports by
researchers and scholars.

Tools for data analysis

The data collected is analysed with the help of Microsoft Excel using various statistical tools.
The following techniques are used for analysing the collected data.

● Mean

● Standard deviation

● Variance

● Co-efficient of variance

● Correlation

● Beta
 CHAPTER-5
EMPIRICAL RESULTS

Tabular representation of IT Companies during 2022-23

Tabular representation of Standard Deviation of IT Companies returns during 2022-23

Graphical representation of Standard Deviation of IT Companies returns during

2022-23
From the analysis, standard deviation is calculated for the companies based on daily
and monthly prices for a period of 5 years, Infosys has lowest standard deviation and
Mphasis has the highest daily standard deviation and TCS has the highest monthly
standard deviation. Standard deviation measures the risk of an investment.

Tabular representation of t-test results of IT Companies returns during 2022-23

From the analysis, the p-value is calculated using t-test, the p-values of the companies
return with respect to both nifty IT index return and nifty 50 index return are more
than the level of significance (0.05), hence the null hypothesis H0 is accepted in both
cases. Therefore, there is no significant relationship between stock returns and NIFTY-
50 returns and no significant relationship between stock returns and NIFTY IT returns.
 CHAPTER-5
FINDINGS, SUGGESTIONS, CONCLUSION
Findings
1. During the study period, the daily mean returns and monthly mean return of all the
selected companies in the IT sector is positive except for MPHASIS and L&T. Among all
the companies, ORACLE (0.025%,0.887%) has the highest daily and monthly return.

2. In terms of variance, standard deviation INFOSYS has the lowest risk and MPHASIS and
MPHASIS has the highest risk element. As per coefficient of variation TCS and
TECHMAHINDRA (daily prices) has the lowest risk per unit of return and TECH
MAHINDRA (monthly prices), MPHASIS have the highest risk per unit of return.

3. The correlation coefficient between the daily and monthly return of selected IT
companies with the return of NIFTY IT index and NIFTY 50 index is highest for L&T and
TCS has the lowest correlation.

4. INFOSYS has the lowest systematic risk (beta) and MPHASIS has the highest
systematic risk. TCS has the lowest Alpha value and ORACLE has highest Alpha value.

Suggestions
The subsequent recommendations are presented built on the analysis.
1. IT sector achieves the highest continuous output. Investing in the IT sector offers a
high return for long-term investments. Hence, it is suggested that long-term investments
in this sector would bring the maximum return.

2. It is recommended to shareholders that their investment horizon is not geared towards a

long-term investment horizon, but rather depends on their goals and the type of investment
opportunity. Instead of making wrong investment decisions, shareholders are encouraged to
seek the help of a financial planner.

3. It is recommended that you avoid investing in the final movement and plan the
investment at the beginning of the year.

4. The returns of various investments are now based on the market scenario, so it is advisable
for shareholders who continue to be aware of new guidelines and to improve condition
changes, they need to know not only the investment channels they have invested in, but also
the general investment routes so that they can make the diversification necessary to keep
your portfolio profitable.

5. Unit holders are advised to invest in a suitable speculation avenue which is appropriate
for them while making the investment.
Conclusion

The goal of maximizing returns can only be pursued at the expense of risk inclusion. When
selecting the company to invest in, the investor must consider both the potential return and
the associated risk. Empirical evidence shows that there is generally a high correlation
between risk and risk. In the recent past the market has reached great heights due to business
expansion and especially globalization, and the higher proportion of FDI has a direct impact
on the demand and supply of a company's shares from peaking. With the market boom, there
are many shareholders willing to take more risks. The financial sector is booming and the
need for risk and return analysis is growing. Due to the very complicated behaviour of the
stock market, it has become mandatory to manage the portfolio in order to reduce risk and
maximize returns. Requirements, the portfolio should be developed and reviewed regularly.
The analysis of the test of the relationship between risk and return in stocks shows that all the
different risk variables considered in the study confirm the effectiveness of the risk and
return compensation in stocks. Correlation of stock market performance and average return
over the study period. It also discusses the relationship between the systematic risk and return
of stocks.