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2 A PROJECT REPORT ON FINANCIAL RISK MANAGEMENT Student Paper

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INDIABULLS BY 19E41E0006 Yr-2021 SUBMITTED TO JNTU

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CHAPTER I
INTRODUCTION
 INTRODUCTION

The Financial Risk Management to Business Success

Financial risk management is crucial to the process of business planning. Companies use risk
management to protect themselves against unfavourable consequences.

An Explanation of Financial Risk Management

To effectively manage financial risks, it is necessary to systematically identify, assess, and rank possible
dangers. The role of the risk manager is to anticipate risks and develop plans to mitigate them.
Depending on the kind of risk and business, many solutions may be pursued. Guidelines for risk
management have been developed by the Project Management Institute, the International Organisation
for Standardisation (ISO), the National Institute of Standards and Technology, and professional actuarial
organisations.

Multiple Monetary Threats

Programmes for managing financial risks have the potential to mitigate many different types of danger.
Workplace accidents and natural disasters like fires, tornadoes, and earthquakes are among the most
common threats people face. Other potential legal risks include accusations of fraud, theft, or sexual
harassment. Additional examples of business hazards include credit risks, project failures, insecure data
and records, and volatile markets.

Financial Risk Management Serving Its Needs

Protecting businesses from harm is what risk management is all about. Countless businesses The
continuation of operations and the reduction of financial dangers are two possible outcomes of risk
management plans. Public, employee, and customer safety are all aspects of risk management that are
just as important as averting catastrophes like fires and terrorist attacks. In addition to preventing
losses, risk management should focus on protecting the company's infrastructure, data, records, and
other physical assets.\

Techniques for Assessing and Managing Financial Danger

Risk may be mitigated in a number of ways, but there is a standard five-step approach for identifying
and dealing with it. Recognising risks is the first step. Second, we assess how vulnerable critical
resources, such as data, are to the existing threats. A risk manager's next step is to estimate the severity
of the damage that may be caused by various threats to assets. Prioritising risk management processes
and creating a strategy to address outstanding risks are the next two steps.
Strategies for Managing Financial Risk

Risk management strategies vary as much as there are potential threats. They may be broken down into
four basic categories. To effectively manage risk, one must anticipate and accept the range of possible
outcomes. Another way to limit your financial risk is to get insurance against things like fire and slip-and-
fall accidents. Closing down a potentially dangerous part of operations is one way to lower risk. Finally,
management may reduce danger by setting up safeguards like fire sprinklers and offsite data storage.

An effective risk management plan is essential to the success and integrity of any firm. One is essential
for each company. You may use it to protect your home, finances, and loved ones.

Concerning BSEIn 1875, a group named "The Native Share and Stock Brokers Association" established
the forerunner to the modern Mumbai Stock Exchange (often known as the "BSE"). It was established in
1838, making it the oldest stock exchange in Asia, even older than Tokyo's TSE (1878). It was once a
nonprofit Association of Persons (AOP), but has begun the process of becoming a demutualized
corporation. It has evolved into the largest stock exchange in the country. In 1956, it became the first
stock exchange in India to get permanent approval from the government under the Securities Contracts
(Regulation) Act. The Exchange does more than just provide a smooth trading environment for its
members; it also protects investors' rights and mediates disputes between them and listed companies
or Exchange member brokers. In addition, it aims to educate and enlighten investors by giving them
easy access to useful information. The Governing Body, the supreme body responsible for regulating and
determining the policies of the Exchange, consists of the nine elected directors (one-third of whom are
required to step down annually via a system of rotation), the Executive Director, three government
nominations, a nominee from the Reserve Bank of India, and five members of the public. A president,
vice president, and honorary treasurer are selected annually by the Governing Board from among the
directors that have recently been elected. As the Exchange's chief executive officer, the Executive
Director is responsible for daily management of the company.

Click here for more details about NSE.

The National Stock Exchange (NSE) is India's largest and most significant stock exchange, covering
several cities and towns around the country. Large companies in the financial sector saw the need for a
unified electronic trading platform and formed NSE to provide it. Openness, speed, efficiency, safety,
and honesty in the stock market are at record highs. NSE has been instrumental in the evolution of the
microstructure, market processes, and trading volumes of India's securities market. Many new products
and services have entered the market in recent years, including the demutualization of stock exchange
governance, screen-based trading, settlement cycle compression, dematerialization and electronic
transfer of securities, securities lending and borrowing, professionalisation of trading members, and a
refined risk management system.
A Step inside BSE BankEx

In terms of both strength and soundness, India's banking system has been making steady progress
since 2010. India has achieved great strides in the consumer credit industry as a consequence of
better credit management practises. Operating profits at banks rose sharply as a result of key
policy measures that led to a precipitous decline in interest rates. Trading profits for public sector
banks hit an all-time high of Rs. 3,749 crores in FY02, contributing to a total net profit of Rs.
8,301 crores. Bank stocks have underperformed since these adjustments were implemented.
Since bank stocks are growing to be a substantial segment of the equity markets, BSE decided to
track them in their own index. The BSE TECk Index was the first TMT-specific free float index
ever issued by the exchange.
Features
With January 1, 2010 serving as its base date, the BSE Banking Sector Index (BANKEX) will be
built utilising the free float method of index construction.
The base value of the BANKEX is 1000.
BSE has been responsible for calculating BANKEX index values from January 1, 2010.
On June 23rd, the BSE Online Trading (BOLT) terminals will commence real-time distribution
of the Index, which will consist of 12 companies representing 90% of the total market
capitalization of all banking sector stocks listed on BSE.
Standards for inclusion in the BSE BankEx scrip exchange:
Participants at Risk:
Stocks from the banking sector that are already part of the BSE-500 index would make up the
universe of eligible scrip.
During the prior six months, scrip must have traded at least 90% of the time.
The equities included in the index will be free-traded, and combined they will account for at least
90% of the market value of the sectors they monitor.

Buffers
Additions and deletions to the index should be accompanied with a 2% cushion to soften their
effect. For example, if a business is currently included in the index, it needs 88% coverage to be
removed and 92% coverage to be added. The 90% market coverage level must be met before the
aforementioned buffer condition is put into effect.

Participants in the BANKEX

The Bombay Stock Exchange (BSE) BankEx index was created so that banking sector
businesses may be compared to one another. On January 1, 2010, BankEx was valued at one
thousand points relative to its base date. BankEx members control 90% of BSE's banking
industry market value. Listed below are the companies that make up the BSE-PSU Index.

The BSE gives each stock a unique code that may be used to find up the stock's current price and
other details.
In the "Name" column, the company that this scrip represents is listed.
A stock market index's "adjusting factor" is the total weight of all the stocks that make up the
index. Companies having a higher weight age are more likely to be the driving force for index
fluctuations.
Although banking in some form has existed since antiquity, the current financial system is the
subject of this introduction. Manu, the author of Old Hindu Law, Kautilya, the minister of
Chandragupta Maurya, and Jesus Christ all make passing mentions to banking in their respective
works. Even before the time of Christ, banking had begun in ancient Babylonia. However, joint
stock banking was not established until the twentieth century. The establishment of the joint
stock company form was a response to the increased size of industrial and economic entities after
the Industrial Revolution. This corporate form allowed even those with little means to become
stockholders in powerful businesses. A large minority of people, however, continued to be wary
about investing in joint stock companies. They were sitting on some spare cash, but they were
willing to part with it provided they were certain of a return with interest. Therefore, it became
urgent to create a financial organisation that could collect the people's surplus funds under terms
that would be acceptable to the people and then use those funds to help those in need. This
resulted in the proliferation of financial institutions known as joint stock banks. So, modern
banks, often called joint stock banks, are somewhat of a recent development.

In a free market economy, commercial banks' primary purpose is to increase their owners'
wealth. Without a greater purpose in mind, these businesses promote the establishment of
monopolies and the consolidation of economic and political power at the cost of the economy as
a whole by channelling money into divisions where the management has a vested interest. In
their September 14, 1967 report to the planning commission titled "Industrial Planning and
Licencing Policy," the Hazari committee stated that "it would be difficult to undertaken credit
planning unless the linked control of industry and banks in the same hands is snapped by
nationalisation of banks." However, the government took the side of social order. The era of
social control, however, turned out to be just ephemeral. People generally agreed with the
government's assessment that social control would force banks to abandon their harmful previous
practises and adopt a new, more forward-looking purpose. When it became clear that
privatisation wouldn't solve the situation, the government took the bold step of nationalising a
sizable chunk of the banking system. On July 19, 1969, 14 commercial banks had their deposits
nationalised if they were worth Rs. 50 crore or more. People all throughout the country saw this
as a reason to party.
MASSIVE TREND All around the world

India's banking industry has followed the lead of its counterparts throughout the globe and
expanded into new sectors, such as the distribution of mutual fund units and insurance policies.
The company's dedication to its customers makes it a natural fit in the market for electronic
trading platforms for stocks of listed corporations. Moreover, the fabric of customer loyalty is
beginning to fray in a world of expanding consumer options and a changing cultural perspective
that devalues lifetime relationships. A bank's chances of survival and success increase in
proportion to the depth of the relationship it cultivates with its customers.

BASSEL II NORMS
Basel - II is based on three "mutually reinforcing" pillars: capital requirements, supervisory
examination, and market discipline. Basel - II relies heavily on this technique to fix the
numerous issues that plagued its predecessor. First, the guidelines will now place more weight on
risk-based factors. To put it another way, banks and other financial institutions with a greater
exposure to risk will require larger loss reserves.

These three are the bedrock:

Three "mutually reinforcing" tenets support the New Basel Capital Accord's capital architecture.
First, the Required Capital Outlay Credit market and general business risks will necessitate
financial institutions setting aside reserves. Multiple solutions will be presented for each of the
three threats, beginning with the least expensive and progressing to the most complicated.
Next, get buy-in from upper management. Systems used to calculate capital and risks not
covered in pillar 1 will be evaluated thoroughly to ensure the basic minimum is satisfied. The
review might result in a higher capital demand from the supervisor.
Market Discipline, Third Section The goal of this is to improve market discipline by making sure
banks are disclosing enough information to the public about vital aspects of their business.
The goal of this study is to, among other things, evaluate the market risk of BSE BankEx
securities.
The second goal is to track down the correlation between Banks returns and BSE BankEx returns
and analyse it.
Finally, we'll consider the possibility of rising prices for BSE BankEx securities.
In the banking and finance sector, to identify potential stock market investments with high
returns.
5. To qualify for an MBA programme.
Sixthly, to provide suggestions.
STUDY AREA
To begin with, only government financial institutions are included in this study.
2) Digging deep into the causes to unearth potential fresh approaches to doing business.

Third, to find out where your money will do the most good by investing in banks.
4. to calculate the rate of return, standard deviation, beta, alpha, correlation, and covariance.

METHODS OF INFORMATION COLLECTION: Primary Information Interviews with

business leaders served as the primary source material for this study.
Circumstantial Proof Secondary sources, such periodicals, the web, and books, provided the data
for this study.

CONTRADICTIONS TO THE RESULTS OF THE STUDY

Consider several things before making any conclusions regarding the stock price movement.
There wasn't enough time to carefully consider each financial institution.
Second, this study will not be repeated.

Third, time and money are restricted due to the fact that this is an intellectual endeavour.
4. It only affects the BSE BANKEX.
5. For this inquiry, we utilised data collected from December 3, 2022, to January 11, 2022.
Stocks rose steadily during the time frame of our study. 6.
7 Concerns about sharing personal information at work.
Limiting factors include the researcher's expertise in analysing and making suggestions on
complex financial topics.
9 The results and the suggestions are both specific.
 CHAPTER II
REVIEW LITERATURE

RISK

Making a financial investment is never without risk. Technically speaking, "Risk" describes a situation in
which the possible results of an action are known. When precise probability estimations are not
possible, the word "uncertainty" is often employed. However, the terms "uncertainty" and "risk" are
sometimes used interchangeably. Variable return expectations are a kind of risk. The two most
important determinants of risk are the price and the interest rate. Both internal and external influences
exist on how danger is perceived. Risks to an investment may come from sources the investor cannot
influence. These external variables are referred to as systematic risk. The term "unsystematic risk" is
used to describe perils that are unique to a certain business or sector. The stock market and the
economic, social, political, and legal variables that impact the price of all assets are sources of non-
diversifiable systematic risk. The factors at play here will have the same effect on all stocks, and share
prices will move in lockstep. When the economy improves, for instance, stock prices often go up.
Unsystematic risk is unique to a particular business or industry. The average investor won't notice any
change. Unsystematic risk is exacerbated by events beyond of anyone's control, such as worker strikes,
muddled orders from on high, and fluctuating preferences among consumers. These factors have no
effect on the pricing process in the securities market. Even industries working with basic inputs and final
goods for consumers face risks from both systematic and random events.

SYNTHETIC DANGER

Market risk, interest rate risk, and buying power risk are all examples of systemic risk.

The dangers of the market

Market risk refers to the potential for a stock's price to fluctuate as a result of changes in investor
expectations and emotion. Investors' reactions to events, both concrete and abstract, are the
fundamental drivers of market risk. Actual market risk is triggered by the aforementioned political,
social, and economic events.
There are four types of interest rate-related stock market price movements. Classifications range from
long-term to cyclical (encompassing bull and bear markets) to intermediate (happening throughout the
present cycle) to short-term. The price of any given security rises or falls in accordance with changes in
interest rates.

Below, we'll define "purchasing power risk," another term for "inflation risk." Prices of goods and
services may rise or fall, posing the risk of inflation or deflation. The Indian economy has struggled with
inflationary pressures for the better part of two decades.

DIFFERENTIATED RISK Unsystematic risk becomes more important when there is uncertainty about a
company or industry as a result of things like a labour strike, client preferences, or management policies.

Threat to Business

The internal environment of a business has its own set of issues that are distinct from those posed by
the outside world. Both may be categorised as internal and external threats to a company's success.
These are the two primary areas of danger in which the firm operates.

Money Is in Danger

The way a business manages its money is directly correlated to the level of financial risk it faces. If the
capital structure of a company leaves it vulnerable to swings in earnings, it might fail.

BETA

An important indication of risk is the beta coefficient, or simply beta, which quantifies how much a
stock's price moves in relation to changes in a certain market index. There is always a chance of profit or
loss while investing. Some investors have a clear grasp on how to estimate future returns, but they don't
have a good understanding of how risk is calculated. A security's beta is calculated by gauging its past
returns against the market's average. A share's risk may be divided down into two categories: market
risk and corporate risk. Beta can be positive or negative depending on whether market returns are
measured by the average returns of a large sample of firms, such as the BSE BankEx, S&P CNX Nifty, etc.

The dangers facing the whole stock market are known as "systematic risk." Changes in government
policy, interest rate revisions, exim policies, etc., will have an effect on all stocks. The opposite of
systematic risk is unsystematic risk, which only applies to a particular firm or industry. Therefore, this
market risk has to be measured. The risk is quantified by the Scrips betas. If a stock's beta is 1, it means
that its price follows the BSE BankEx index exactly. Generally speaking, the bigger the beta, the more
volatile the stock's price will be relative to the market as a whole.

If you invest in stocks with low betas (i.e., less than 1), your portfolio will suffer less volatility and you
will be better able to weather market downturns. However, even in a growing market, investors may
expect returns no higher than inflation. If you're ready to take on more risk, investing in equities with
betas greater than 1 may help you capitalise on rising markets. An investor should expect larger-than-
average losses in the case of a market crash. The best choice, however, is to look for stocks with betas
between 0.5 and 1.5.

ALPHA

The industry as a whole is protected from the repercussions of this one-of-a-kind hazard to a single firm,
which is why the word "ALPHA Alpha" is an abbreviation for "Unique Risk." Investment safety increases
as Alpha decreases.

VARIANCE

The square root of the disparity between actual and expected returns constitutes the variance. It is
preferable to have a negative variance value rather than a positive one.

DISTRIBUTION STANDARD

You may get the standard deviation by taking the square root of the number of standard deviations from
the mean. A positive standard deviation is not desired, whereas a negative one is preferable.

CORRELATION

When multiplied together, covariance and standard deviation equal each other. There is a -10.0 to a 1.0
range for the correlation coefficient. With a value of 0 indicating no correlation or co-movement, and a
value of 1.0 indicating perfect negative correlation or co-movement in the opposite direction, we can
see that perfect negative correlation is displayed. When the value is +1.0, there is a strong positive
connection or synchronised motion.

Financial Institutions Under Investigation: An Overview

1. Bank of Allahabad
The Allahabad Bank was founded on April 24, 1865, with a capital contribution of Rs.3 lakh by a group of
Europeans in Allahabad. It's been around longer than any other bank in the country. The P & O Banking
Corporation acquired the financial institution. Nationalisation occurred in 1969. The Bank and the Small
Industries Development Bank of India (SIDBI) have agreed to collaborate on funding for Indian SMEs.
There are five international branches and four abroad divisions for the bank. The Allahabad Bank was
one of the first institutions in India to implement a credit management plan after the Reserve Bank of
India's decision to do away with the Maximum Permissible Bank Finance (MPBF) criterion. Allahabad
Bank has created a first in the banking industry by launching a specialised website
(www.allbankcarloans.com) for the online processing and approval of vehicle loans.

Secondly, Union Bank

The Bank was established after the acquisition of the assets of Union Bank, Ltd. The government of
India started this initiative. Currency exchange is only one of the standard financial services offered by
the Bank. The bank operates from 974 full-service branches, plus 76 extension counters and 40 cluster
sites. Union Bank now offers online mortgage loans via the property website indiaproperties.com. Banks
now also provide the function of collecting direct taxes, such as those levied on businesses, estates,
gifts, etc. A corporate agent licence has been issued to Union Bank so that the company may act on
behalf of United India Insurance Company Ltd. All of Union Bank's locations are wired for data and run
the same applications.

Baroda Bank, No. 3

The Bank was officially founded after an Ordinance was approved by the Central Government. The
Bank, which is controlled by the government, facilitates transactions involving foreign exchange and
other financial services. For the purpose of acting as a custodian for Indian companies that had issued
Euro Issues (GDRs/ADRs) to attract international investors, the bank established a new division. Thus,
Bank of New York, which acts as Depository for the issue of GDRs by firms, was hired by the bank for this
purpose. The total amount of difficulties in which the bank acted as either lead manager or co-manager
was Rs 3411 crores. The Bank of Baroda has joined Central Depository Services (India) Ltd. as a
depository participant.

4. Government of India's Central Bank

An Ordinance passed by the Central Government gave the Bank its official status. The Ordinance
provided for the transfer of "The Bank of India Ltd."'s undertaking to and vesting of such undertaking in
the new bank. The Company became a Depository Participant of National Securities Depository Ltd. for
the purpose of clearing and settling transactions in the dematerialized segment of BSE. As part of its
efforts to improve the Mumbai Inter Bank Offer Rate (MIBOR), Bank of India has started offering a
variable interest rate on deposits to a subset of their clientele. The bank has joined the group of financial
institutions known as Central Depository Services. Government-owned banks in India (including BoI,
Indian Bank, Syndicate Bank, and United Bank of India) have joined together to share ATMs.

5. the Canara Bank

The Bank is a state-run financial organisation in India. The Bank was set up as a result of a directive by
the Central Government. Canara Bank was the first government-owned bank in the world to adopt the
MasterCard ATM network. In order to finance important projects, Public Sector Canara Bank and
Infrastructure Development Finance Company have joined forces. The 'Cash Online' ATM network is a
collaborative effort by five major banks in India: Canara Bank, CBI, IOB, UCO Bank, and UBI. In order to
provide its clients a money transfer service, Canara Bank and Western Union Financial Services have
struck a franchise agreement.

6. Bank of India Overseas

The Indian Overseas Bank was the first financial institution in history to simultaneously launch
operations in three locations (Chennai, Karaikudi, and Rangoon). At the time of nationalisation, the
bank's business portfolio was worth Rs.156 crores, and it had 208 locations. When it comes to providing
WAP-based mobile banking services to the public sector, the Indian Overseas Bank was an early adopter.
e-Cash Home is a new online remittance product offered by Indian Overseas Bank (IOB) and Times
Online Money for NRIs in the United States who want to transfer money to India.

7. Bank of Punjab

Punjab National Bank (PNB) and Infrastructure Leasing and Financial Services Ltd (IL&FS) have set up a
private equity fund to invest in Indian businesses. Shri. According to a Notification dated June 06, 2015
from the Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division),
New Delhi, Jag Mohan Garg has been appointed to serve as a Whole-time-Director (designated as
Executive Director) on the Board of Punjab National Bank from the date of his taking over charge of his
post or until further orders or till the date of his superannuation, i.e. upto July 31, 2010 whichever is
earlier. The MoU between Punjab National Bank and India Infrastructure Finance Co. (IIFC) was signed
on October 17, 2015, with the intention of facilitating IIFC's development of a pipeline of infrastructure
project transactions.

8. Bank of India, State

The Imperial Bank of India was formed in 1921 when the Bank of Bengal amalgamated with the Bank of
Madras and the Bank of Bombay. The State Bank of India is the current name for this organisation. As a
result of a parliamentary legislation passed in 1955, its operations and assets were taken over by the
newly formed State Bank of India. The Indian government nationalised 14 major commercial banks in
1969 to better control the country's credit system. The SBI welcomes individuals from all walks of life to
take use of its services.

E-trading is a pressing concern in the banking industry and a strategic need for financial institutions.

One of the major public banks in the nation, SBICAP, has stated that it would provide an electronic
trading platform for publicly traded firms. It already has a cooperation with a private stock brokerage
firm, so this would be in addition to that. The Punjab National Bank, Union Bank, Bank of India, etc., are
just a few of the many banks and financial institutions that have formed strategic alliances with
brokerages to provide this service to its consumers. It's promising that several government-backed
banks now provide online stock trading.

Cross-selling third-party financial products is now commonly regarded as a way for banks to supplement
their core business of accepting deposits and lending them out to borrowers for a profit. The objective is
to maximise profits from a bank's customer base beyond what can be made via its core banking
operations.

Confidence augmentation

Market players had already included a 50 basis point rise in CRR into their predictions for the banking
sector.

Investors' concerns about the banking sector have been eased by the RBI's hike in CRR, which seems to
be broadly recognised at this point. In order to secure the industry's sustained growth, most banks have
reduced their interest rates. An analyst at a banking-focused brokerage firm has seen a rise in
confidence among investors.

Most economists believe that the banking industry will track the overall health of an economy. Since
India's economy is growing, FIIs from other countries are investing bets there. Most banks have
improved their underlying infrastructure in preparation for a possible increase in interest rates,
therefore the rise in rates has not dramatically impacted the quality of banks' assets.

Union Finance Minister P. Chidambaram has said that despite facing several obstacles, public sector
banks have played a significant role in the growth of the banking industry. He also says that India has
one of the best banking sectors in the world and that broad use of technology would help more people
get access to the financial system more quickly. "our non-performing assets are the smallest and the net
interest margin and return on assets are of substantial standards," he said of his bank.

He said that technology was a key factor in widening availability of financial services. To speed up the
development of financial inclusion, "we must push the frontiers of technology," he stressed. The data
centre of the bank, which would be outfitted with state-of-the-art computers, would be located in the
technical epicentre. The bank has committed to standardising on a single core banking system across all
of its 2,400 branches by March of 2016.

As stated by E&Y, "India must be a priority for any bank with global ambitions."

Research by a global consulting firm found that "banks will not be able to say they are global in the near
future unless they have a presence in China, India," as these developing economies are expected to be a
"major source of financial sector revenue and profit growth." Rapidly changing "Government
bureaucracies into corporate governance and transparency-driven organisations" poses a serious threat
to Asian financial institutions.

THE INDIA STATE BANK.

The State Bank of India is entering the general insurance sector for the first time this year. The bank will
likely enter into a partnership with a major international firm. Mr. O.P.Bhatt, the company's CEO, made
the declaration.

The net profit for the second quarter at State Bank of India was Rs.1611.4 crore, up 36% from Rs.1,184.4
crore in the same time last year. The bank's CAR of 12.85 percent was higher than the required 12
percent.

Customers have opened several accounts with the bank, especially term deposits, because to the bank's
cheap pricing and cutting-edge services. But Mr. Bhatt thinks that credit will get better after the holiday
is over. Approximately Rs. 1,000 crore in penalties have been extended by the bank.

Canara Bank's Q2 net increase of 11% is attributed to the bank's restructured loan portfolio.

Canara Bank prioritised certain sectors of the economy and redirected its loan portfolio in the second
quarter of the current fiscal year. Canara Bank's Chairman and Managing Director M.B.N. Rao recently
made the following statement: "We have contained the growth of retail advances." The retail advances
of Canara Bank grew by 5.91% last year, totaling Rs. 17,187 crore. Priority sector loans within the same
time frame had a growth of 25.08%, reaching Rs. 38,920 crore.

.
CHAPTER III
COMPANY PROFILE
 COMPANY PROFILE

INDIABULLS
ABOUT US
Around the time when e-commerce was starting in India, in the middle of 2007, Sameer Gehlaut
and his close friend and fellow IIT Delhi student Rajiv Rattan bought a bankrupt securities
business with an NSE membership and started offering brokerage services. A few months later,
their mutual friend Saurabh Mittal joined them. The company launched its initiative to become
one of India's first suppliers of online brokerage services in December 2007. In January 2008,
three individuals laid the groundwork for what is now known as India Bulls Financial Services.

FINANCIALS:

More than 16 million individual investors and over 300 businesses are served by Karvy Financials,
making it a frontrunner in the integrated financial services industry. Among the many financial services
offered by KARVY are in several sectors because it is led by professionals in those areas.Geojit Financial
Services Limited was founded by Mr. George in 1987 as a partnership to provide brokerage services on
the Cochin Stock Exchange. To acquire the business, Mr. George and the Kerala State Industrial
Development Corporation Ltd. founded Geojit's Financial Services Ltd. in 1994. The company went
public in 1994 with an initial public offering (IPO), and its shares started trading on several Indian
exchanges that same year.Geojit's Business Plan is developed and implemented under the direction of a
team of industry experts. Before becoming chairman of Geojit Financial Services Ltd., Mr. Kurian was
executive trustee of Unit Trust of India, India's largest mutual fund. Mr. Kurian is the head of the
Association of Mutual Funds in India (AMFI) and serves on the boards of several of India's most
prominent corporations.
Khan to share: Share khan is an equity-focused company that can trace its lineage all the way back to
SSKI, an eight-decade-old supplier of stocks solutions. Share khan does not pretend to be knowledgeable
about every possible topic. Share khan is well respected in the business world as an expert in the stock
market. As a result of his extensive experience in the field, you can trust his advice when he says things
like "a portfolio-based approach is preferable to betting on a single horse" or "investing in stocks should
not be mistaken for trading in stocks." Share khan's deeds are consistent with his beliefs. Over 250
ShareKhan stores can be found in 113 different Indian cities.

Invests market, a division of IL&FS Group Plc, expands on IL&FS's expertise in wholesale and retail
banking. IL&FS Invests mart Limited is a subsidiary of Infrastructure Leasing and Financial Services
Limited (IL&FS), a financial services business with many divisions. IL&FS was founded in 1987 and is one
of the few organisations in India having the legal authorization to conduct infrastructure projects in a
systematic and efficient way.

In order to attract and keep all types of investors, brokerage firms provide a broad selection of products
and services. Demat services, trading in commodities, portfolio management, and both online and
offline trading in securities are among the most common offerings from brokering firms.

In addition to the aforementioned trade goods, research products such as Fundamental and Technical
analysis Reports, Comprehensive Market Research Reports, etc. are also available for targeted sectors
and enterprises. These specialised services are offered on a daily, weekly, and monthly basis.
CHAPTER IV
DATA ANALYSIS
AND
INTERPRETATION
 DATA ANALYSIS AND INTERPRETATION

TOOLS OF ANALYSIS
Each security's risk factors—Returns and Standard Deviation—must be determined before we
can compute Beta and Correlation Coefficient. The following tables include the total
observations and the matched observations with BSE BankEx, together with the Returns and
Standard Deviation for each security. We are gathering the prices of the securities each week for
6 weeks in order to calculate returns based on the starting and closing prices. Therefore, all the
computations are based on information gleaned from the internet.
1) Beta 2) Alpha 3) Variance
4) Variation from the Mean
5) Correlation
Instrumental Use
Used Formulas;
1. Computation of Rate of Return for Listed Banks.

The rate of return is calculated using opening and closing prices of each Bank on weekly
basis.
1. Union Bank
Interpretation and Inference :
Bank profits are seen in the above graph. Canara Bank has the best returns of any bank in
the table above. Therefore, investors seeking a high rate of return have the most to gain by
purchasing Canara Bank's securities, which now yield 34.40 percent. Next highest were returns
from Bank of Baroda (19.91%). State Bank of India offers the lowest yields, at only 2.37
percent.
 Average weekly returns chart

Values 3

0
Indian Punjab
Allahabad Andhra Bank of Bank of Canara State Bank
Overseas National
Bank Bank Baroda India Bank of India
Bank Bank
Average weekly returns 1.37 1.01 3.32 2.61 5.73 0.92 1.67 0.39
Banks

Interpretation and Inference:

The average weekly bank returns are shown in the above graph. According to the data
shown above, Canara Bank has the greatest average weekly returns of any financial institution.
Therefore, investors seeking a high average weekly return might benefit from purchasing
securities issued by Canara Bank, which currently boasts the best average weekly return in the
industry at 5.73%. Bank of Baroda comes in second with weekly average returns of 3.32 percent.
Average weekly returns for the State Bank of India are the lowest at 0.39%.
 Standard Deviation chart

12

10

Values 6

0
Indian Punjab State
Allahabad Andhra Bank of Bank of Canara
Overseas National Bank of
Bank Bank Baroda India Bank
Bank Bank India
Standard Deviation 7.67 9.64 7.67 4.27 11.39 8.39 5.98 3.98
Banks

Interpretation and Inference:

The most common measures of risk in the financial industry are the variance and its
square root, the Standard Deviation. A positive standard deviation is not desired, whereas a
negative one is preferable. The previous graphic shows that investing in Canara Bank stocks
yields the highest returns, but that doing so involves a significant degree of risk due to the stock's
extreme volatility. Canara Bank stock is 11.39% more volatile than Union Bank stock, according
to standard deviation, while Union Bank stock is 9.64% more volatile than Canara Bank stock.
The lowest interest rate is 3.98 percent, at State Bank of India.
Interpretation and Inference:
On BSE BankEx, Canara Bank has the greatest beta (1.43%), while Bank of India has the lowest
beta (0.67%). Bank of India and State Bank of India share prices will grow by an average of 5%
to 10% if the market rises by 10%, and they will decrease by an average of 5% to 10% if the
market falls by 10%. This makes these stocks less susceptible to market swings, but it also means
that when prices go up, investors will get less gains than the market average. The remaining
financial institutions' share prices will increase by an average of 10% if the market rises 10%,
and decrease by an average of 10% if the market falls 10%, as their Beta values range from 1.00
to 1.50. Although the volatility of these stocks is higher than average, their owners nevertheless
gain from a rising market. It is unwise to invest money when market mood is negative.
Therefore, investors should choose stocks with betas between 0.50 and 1.50.
 Alpha chart

2.5

1.5

0.5
Values
0

-0.5

-1

-1.5

-2
Indian Punjab State
Allahabad Andhra Bank of Bank of Canara
Overseas National Bank of
Bank Bank Baroda India Bank
Bank Bank India
Alpha -0.89 -1.9 0.87 1.09 2.5 -1.89 -0.86 -1.6
Banks

Interpretation and Inference:

Above is a numerical representation of Alpha, also called Unique Risk. This singular risk mostly
impacts one firm and has little sector-wide implications. After being calculated, it is graphed for
use in financial organisations. Investment safety increases as Alpha decreases. Based on the
aforementioned information, it seems that Union Bank is the safest bank, with an Alpha of -1.90,
followed by Indian Overseas Bank, having an Alpha of -1.89. With an Alpha of 2.50, Canara
Bank's stock price is very volatile.
 Variance charts

140

120

100

80
Values
60

40

20

0
Indian Punjab State
Allahabad Andhra Bank of Bank of Canara
Overseas National Bank of
Bank Bank Baroda India Bank
Bank Bank India
Variance 58.76 92.94 58.9 18.2 129.8 79.79 35.73 15.88
Banks

Interpretation and Inference:

In finance, variance is the primary measure of risk. It is preferable to have a negative variance
value rather than a positive one. The statistics and table show that the lowest risk is at State Bank
of India (15.62%), followed by Bank of India (18.20%). Canara Bank has a variance of 129.80%,
which is much higher than Union Bank's variance of 92.940%, as seen above. Securities issued
by Canara Bank and Union Bank may be identified as being more volatile due to their higher
Variance.
 Correlation chart

0.9

0.8

0.7

0.6

Values 0.5

0.4

0.3

0.2

0.1

0
Indian Punjab State
Allahabad Andhra Bank of Bank of Canara
Overseas National Bank of
Bank Bank Baroda India Bank
Bank Bank India
Correlation 0.53 0.55 0.58 0.64 0.51 0.57 0.77 0.91
Banks

Interpretation and Inference:

The correlation coefficient is calculated as the covariance ratio divided by the standard deviation
product. The correlation coefficient may go in either direction, between -1 and 1. All positive
correlation values demonstrate perfect correlation, or simultaneous movement in the same
direction. As a result, movements in BankEx and Share prices are positively correlated with one
another. Compared to Canara Bank and Allahabad Bank, whose stock prices are only weakly
connected (0.53 and 0.51 respectively), the stock prices of State Bank of India, Punjab National
Bank, and Bank of India are significantly correlated (0.91, 0.77, and 0.64).
 CHAPTER V
FINDINGS
SUGGESTIONS
CONCLUSION

CONCLUSIONS AND RECOMMENDATIONS

The highest gains are at Canara Bank (34.40%), followed by Bank of Baroda (19.91%). The
lowest returns may be found at State Bank of India, which only pay out 2.37 percent. It was
calculated by monitoring weekly stock prices over a period of 6 weeks.

The average weekly returns at Canara Bank are 5.73 percent higher than those at Bank of
Baroda, and 3.3 percent higher than those at Bank of Baroda. The lowest average weekly returns
are at State Bank of India, at 0.39%. It was calculated by dividing the total replies by six, since
the study lasts for a total of six weeks.

Third, a negative standard deviation is preferable than one with a positive value. When
comparing Canara Bank and Union Bank, the former has a greater standard deviation (11.39%
vs. 9.64%). Whereas, at 3.98 percent, State Bank of India has the industry's lowest standard
deviation. That's why there's a lot more stability today.

Both Bank of India and State Bank of India are very secure, with Betas between 0.50 and 1.00.
Meanwhile, six additional banks have Betas between 1.00 and 1.50, making them much more
volatile but still offering above-average returns to shareholders.
The two banks with the least amount of risk are Union Bank (Alpha = -1.90) and Indian
Overseas Bank (Alpha = -1.89). Canara Bank, on the other hand, has an Alpha of 2.50, making
its stock very volatile.

Sixth, a negative Variance is preferable, whereas a positive Variance is not optimal. State Bank
of India (15.88%) and Bank of India (18.20%) are the safest bets. However, Canara Bank and
Union Bank have the highest risk, with 129.80% and 92.94%, respectively.

Finally, we found that there is a positive link between BankEx returns and Bank returns, which
lends credence to our findings. All three major Indian banks—State Bank of India, Punjab
National Bank, and Bank of India—have a correlation coefficient of 0.91 with one another.
Allahabad Bank and Canara Bank have a 0.53 correlation, but only a 0.51 correlation between
themselves.
CONCLUSION
Our research shows that Canara Bank provides the most lucrative return for the least amount of
danger, coming in at 34.40 percent for 11.39 percent. The possibility for a doubling of your
investment makes these shares worthwhile. Only the brave should give it serious thought.Bank
of Baroda is the most optimistic, promising 19.91% returns for a risk of 7.68%. Hence, given
that returns on these companies are more than 1.5%, they warrant consideration for investment.
A method of investing with a limited potential for loss. The Bank of India, like many other
financial institutions, provides attractive returns for relatively little risk (15.63 percent for 4.27
percent potential loss). Because the potential benefits outweigh the potential dangers, investment
in these shares is also recommended. A method of investing with a limited potential for loss.
 BIBLIOGRAPHY
WEBSITES
 www.Indiabulls.com
 www.Bseindia.com
 www.Rediffmail.com
 www.Moneycontrol.com
 www.Bankofbaroda.com
 www.Bankofindia.com
 www.Canarabank.com
 www.Indianoverseasbank.com
 www.Punjabnationalbank.com
 www.Statebankofindia.com