A Project Report/Thesis/Dissertation

on

UNDERSTANDING INVESTOR BEHAVIOR IN VOLATILE MARKETS

Submitted for the partial fulfillment of the requirement

for the award of the Degree of

Masters of Business Administration

In

by

Under the Supervision/Guidance of

Dr. Pankaj kumar

Designation and affiliating University

 DECLARATION

This is to certify that the Project / Thesis / Dissertation entitled Understanding investor
behavior in volatile markets in partial fulfillment of the requirement for the award of the
Diploma / Degree of …………………………………in ………………………………………………….., submitted to
DIT University, Dehradun, Uttarakhand, India, is an authentic record of bonafide work carried
out by me, under the supervision /guidance of ………………………….. The matter embodied in this
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 CERTIFICATE

This is to certify that the Project / Thesis / Dissertation entitled UNDERSTANDING

INVESTOR BEHAVIOR IN VOLATILE MARKETS” in partial fulfillment of the requirement for
the award of the Diploma / Degree MASTER OF BUSINESS ADMINISTRATIONin
……………………………, submitted to DIT University, Dehradun, Uttarakhand, India, is an
authentic record of bonafide research work carried out by Mr./Ms DR. PANKAJ KUMAR Roll
No.………………….. under my supervision/ guidance.

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Date:

Place: Dehradun
 TABLE OF CONTENT

SNO. INDEX PAGE NO.

1. INTRODUCTION

2. RATIONALE OF THE STUDY

3. LITERATURE REVIEW

4. OBJECTIVE OF THE STUDY

5. RESEARCH METHDOLOGY

6. TENTATIVE CHAPTER SCHEME

7. REFERENCES
 INTRODUCTION

In the world of investing, volatility is both a constant companion and a formidable

adversary. It ebbs and flows like the tide, shaping market sentiment, influencing
decision-making, and testing the resolve of even the most seasoned investors. According
to the 2023 ernst and young global wealth research report, younger investors are more
likely to switch into active investments during volatility, with 50% of respondents
increasing allocations compared to 22% of baby boomers. Another finding of the study
was 40% of wealth management clients think that managing their wealth has become
more complex over the last two years, and 57% of high-net-worth individuals (hnw) who
feel unprepared to meet their financial goals cite market volatility as a primary reason.

Source: fred-st. Louis fed equity volatility tracker

Periods of high volatility are often associated with a sense of impending doom among
investors. In all fairness, the evidence points in that direction as well. According to the st.
Louis fed’s equity volatility tracker, apart from the post-war recession in the early 90s,
each period of elevated market volatility has been accompanied with a sustained period
of economic downturn. Such history is a surefire way to spook investors.
As a result, understanding the psychology behind investor behavior during market
volatility can help investors make better decisions and avoid common mistakes. In recent
years, there has been a growing interest in understanding the role of behavioral finance in
shaping market volatility. Behavioral finance examines how psychological biases and
 emotions impact financial decision-making, and when applied to market volatility, it
provides valuable insights into the irrational behavior that can drive extreme price
movements.
What is market volatility?
Market volatility refers to the frequency and magnitude of price movements in any
direction for a security or market index over a specific period. Volatile stocks are
generally considered riskier than less volatile stocks because their prices are less
predictable. Implied volatility measures the expected volatility of the market, while
historical volatility measures price changes over a predetermined period.
Volatility is an important variable in calculating option prices. The cboe volatility index,
also known as vix or “fear index,” is a measure of investor sentiment. Vix tends to be
inversely related to the s&p 500. This measures how much traders expect the price of the
s&p 500 to rise or fall over the next month. A score below 20 generally indicates
investor satisfaction, while a score above 30 indicates concern.
It is important to remember that even though market volatility makes the most seasoned
investor think deeply about their choices, it is a normal characteristic of all financial
markets.

Notable events of heightened market volatility

There have been numerous instances in the past where market events have led to
sustained periods of elevated market volatility. Some of the major events include:
1. Black tuesday (1929) and the great depression
the stock market crash of 1929 signaled the beginning of the great depression. The sharp
decline in stock prices led to panic selling as investors rushed to liquidate their holdings.
This behavior was driven by a lack of trust in the market and fear of further losses. The
lessons from this period highlight the importance of understanding the psychological
factors that can trigger extreme market movements.
2. The oil crisis (1973-1974)
the organization of petroleum exporting countries (opec) imposed an oil embargo in
response to u.s. Support for israel during the yom kippur war, leading to a sharp rise in oil
prices and triggering a period of stagflation (high inflation and stagnant economic
 growth) in the u.s.
3. Dot-com bubble (2000)
the rapid rise and subsequent collapse of technology stocks in the late 1990s and early
2000s became an example of a speculative bubble. Investor enthusiasm and irrational
expectations have led to sharp corrections after stock price rises. The results highlight the
risk of overestimation and the importance of performing careful fundamental analysis.
4. Global financial crisis (2008)
the global financial crisis was triggered by the bankruptcy of lehman brothers in 2008.
Investor behavior during this period was characterized by widespread panic as financial
institutions faced liquidity shortages and markets experienced extreme volatility. The
crisis has highlighted the interconnectedness of global financial markets and the potential
for systemic risks to amplify market volatility.
5. Covid-19 pandemic (2019)
in early 2019, the covid-19 pandemic led to a sharp and severe market downturn. Fear
and uncertainty have led to massive selling across asset classes. However, central bank
intervention and government stimulus have helped stabilize markets, demonstrating the
impact policy decisions have on investor sentiment.
These historical examples demonstrate that investor behavior during stock market
fluctuations is influenced by a combination of psychological factors, market conditions,
and external events. Although it is difficult to predict the timing and severity of market
fluctuations, understanding behavioral trends that may occur during these periods is
important for investors seeking to make informed decisions.

The traits and behaviors of investors during times of uncertainty

Stock market fluctuations, a subset of financial market volatility, have been a subject of
extensive research due to their profound impact on investor behavior. Understanding the
relationship between these fluctuations and investor behavior provides insights into
market dynamics, risk management, and decision-making processes.
One prominent theory explaining stock market fluctuations is the efficient market
hypothesis (emh), which posits that stock prices always reflect all available information.
According to emh, market participants process information rationally and adjust their
investment decisions accordingly. However, this is clearly not applicable during times of
high uncertainty. By virtue of the state of affairs, it is impossible to make efficient
forecasts about the market. In a situation of high market volatility, emh is not only
inefficient, it could also feed into the false euphoria of investors stemming from an
unfounded confidence in their knowledge base.
Prospect theory is another behavioral science theory that can help understand (not justify
or predict) the behavior of investors during times of heightened volatility. Daniel
kahneman and amos tversky’s path breaking research tries to understand investor
behavior during times of experiencing gains and losses. Loss aversion is one of the most
salient features of this theory as the theory states that the feelings associated with loss are
stronger than the positivity associated with a gain. In the context of the stock market,
investors are prone to keep losing stocks, hoping they will rebound, and are more likely
to sell gaining stocks, afraid of a potential downturn. The theory presents the potential
rationale behind incongruous investor behavior and their emotionally driven probability
association to different potential outcomes, based on the kind of losses or gains they have
faced in the past.
 Overall, investor behavior during periods of high market volatility can be largely
characterized by certain patterns:
 Disposition effect:
as mentioned before in the discussion about prospect theory, investors tend to hold onto
losing investments for too long while quickly selling winning investments. This behavior
can be exacerbated during volatile periods when emotional reactions are heightened even
further.
 Flight to safety:
during heightened volatility, investors might shift their investments from riskier assets to
safer ones, such as government bonds or gold. This flight to safety reflects a desire to
preserve capital in uncertain times.
 Herding behavior:
investors may follow the actions of the majority, leading to herding behavior. This can
amplify market movements, both up and down, as investors rush to mimic the actions of
 others. It can be said that the sudden increase in money market fund investments can be
attributed to this kind of behavior.
 Overreaction and underreaction:
behavioral biases can lead investors to overreact or underreact to market news.
Overreaction occurs when investors exaggerate the impact of news, causing excessive
price movements. Conversely, underreaction is observed when investors fail to fully
incorporate new information into their decisions.
 Selective perception:
investors might focus on information that confirms their existing beliefs while ignoring
contradictory information. This can lead to misjudgments during periods of high
uncertainty.
The impact of investor behavior on stock market fluctuations can also create a feedback
loop. Investors’ reactions to market volatility can exacerbate price swings, causing
further uncertainty and influencing subsequent behavior. Market sentiment, driven by
investor behavior, can become a self-fulfilling prophecy, where widespread fear or
exuberance influences trading decisions and subsequently impacts market prices.

The rise and fall of the most recent period of volatility

Markets often experience periods of increased volatility. Investors should typically
expect volatility to be around 15% of the average return in a year. Market volatility was
particularly quiet in 2023, a stark contrast to the prior year. With inflation declining and
the fed pausing interest rate hikes, the volatility of the s&p 500 in 2023 was less than
two-thirds of its historical average over the 10 years from 2013 to 2022.
However, there were a few notable spikes. During the u.s. Regional banking crisis in
march, the vix jumped above 30 amid heightened investor panic about bank profitability.
Later in may, volatility spiked again after the fed raised rates for the 10th time as it began
speculating on a ‘higher for longer’ rate scenario.
The vix fell to a four-year low in december 2023 after the fed announced it would cut
interest rates in 2024. Investors are closely watching how macroeconomic and
geopolitical uncertainties will unfold during 2024. Moderating inflation, solid consumer
spending, and labor market strength eased investor concerns in 2023, leading to lower
volatility towards the end of the year. This is no guarantee that volatility will not return
in 2024, as many geopolitical, trade and monetary policy decision could play tricks with
investor’s thinking and decision-making once again.

Source: bloomberg
A telling sign of how investors still do not believe that there is no clear path to follow is
their preference to hold cash and cash-like instruments, rather than invest in securities or
bonds. Money market funds typically hold short-term assets including government debt,
whose yields climb or fall rapidly depending on the central bank’s stance on monetary
policy. Almost $1.19 trillion has flooded into u.s. Money market funds through december
2023. That is a far cry from negligible inflows in 2022 and well above the average full-
year net inflow figure of $179 billion for 2012-2022. As recently as march 6, 2024, u.s.
Money-market funds, bringing total assets to $6.08 trillion. These funds are considered
safer in times of volatility and this is a clear sign that investors believe there is more
uncertainty to come.
While some argue that volatility could remain subdued, others believe it could rise again
in 2024 due to overheating markets and credit market pressures.

Ways to navigate a volatile market

To mitigate the impact of cognitive biases on market volatility, investors can employ
 several strategies. First, awareness is key. Recognizing and acknowledging the existence
of biases can help investors take a more rational and objective approach to decision-
making. Second, diversification can help reduce the impact of individual biases by
spreading investments across various asset classes. Additionally, seeking out diverse
sources of information and opinions can help counteract confirmation bias and provide a
more balanced perspective.
There are certain tenets that can help investors navigate such times of severe uncertainty.
The effectiveness of these tenets, however, depend completely on how disciplined
investors can be in their implementation. At howard capital management (hcm), these
tenets have helped to build the foundation for growth as well as downside mitigation
over many decades. A non-emotional, math-based approach to investing and market
analysis has formed the basis for the proprietary system called the hcm-buyline ®, which
is the backbone of all investment strategies offered by hcm.
For the average investor, these tenets could help them avoid making novice mistakes and
act while keeping in mind their final goal.
 Seek to avoid major losses through risk management:
overlaying investments with a risk management strategy can potentially help identify
major market downturns to avoid portfolio devastation.
 Seek to implement a math-based strategy:
the rise of computerized trading is consequently making investing more challenging.
With a math-based and quantitative strategy, investors can seek to move in and out of the
market faster, striving to minimize losses and maximize gains.
 Move to cash/lower volatility investments during major market declines:
it could take months or even years to recover from devastating losses. Investors who
avoid much of a significant drop by moving to safety not only attempt to preserve assets
in major market declines, but positions themselves ready to capture major upturns (and
potentially at attractive prices).
 Seek to remove emotion from the equation:
investors can be emotional with the swings of the market — holding a stock as it falls or
selling it before it reaches its full potential can wreak havoc on a portfolio. An emotional
approach to investing can hinder the ability to effectively manage investments.
“Finance is art of managing money or cash and monetary economy is that branch of political
economics that studies the inter relation between financial variables like costs and interest rates
as hostile merchandise and services. It manages risk within the monetary markets are in different
words considers investment underneath uncertainty.”

An economic market maybe a place where individuals interchange monetary assets at prices that
square measures determined by demand and provide forces exchange of one quite monetary
market where traders buy and sell equities participants in exchange vary from tiny individual
investors to giant institutional investors.

A stock markets square measure usually thought about because of the prime indicators of a
country’s economic strength and development. Participants with -in the stock market usually
move plus costs off from their true price. However, financial economists argue that monetary
markets square measure economical and this LED to the emergence of the economical market
hypothesis.

A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks
(also called shares), which represent ownership claims on businesses; these may
include securities listed on a public stock exchanges, as well as stock that is only traded
privately, such as shares of private companies which are sold to investors through equity
crowdfunding platforms. Investment in the stock market is most often done via stock
exchanges and electronic trading platforms. Investment is usually made with a strategy in mind.

Volatility may be a statistical measure of the dispersion of returns for a given security
or market index. ... For instance, when the stock market rises and falls more than 1% over a
sustained period of your time. it is called a "volatile" market.
Evolution of Stock Market in India

The origin of the stock market started in the year 1494, when the Amsterdam Stock Exchange
was set up in India in the 18th century, in that East India Company was a dominant Institution
in those days and business related to loan securities used to be transacted towards the close of
the 18th century. From 1830's business on corporate stocks and shares in Bank and Cotton
presses took place in Bombay. Though the trading list was large in 1839, there were only few
brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a
rapid development of commercial enterprise and brokerage business attracted many men into
that sector and in 1860 the number of brokers increased into 60. In 1860-61 due to American
civil war the cotton supply from United States of Europe was stopped; thus, the 'Share Mania'
in India begun. Thus, the number of brokers increased to about 200 to 250. However, by the
end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of
Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). In the end of the
American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a
street (now appropriately called as Dalal Street) where they might assemble and transact
business. In 1887, they formally established in Bombay, the “Native Share and Stockbrokers’
Association” (which is alternatively referred as “The Stock Exchange”). In 1895, the Stock
market acquired a premise within the same street, and it had been inaugurated in 1899. Thus,
the Stock Exchange at Bombay was consolidated

STOCK

A stock also known as "shares" and "equity”. It is a kind of security that signifies ownership
of the organization and represents a claim a neighborhood of the corporation's assets and
earnings. Common stock usually entitles the owner to vote at shareholders' meetings and to
receive dividends.
TYPES OF STOCKS:

Investors have completely different objectives, like growth or financial gain, and
completely different investment horizons. Hence, they search out stocks that have the
qualities that they appear for. To satisfy this would like, stocks are categorized per their
investment characteristics. the foremost common classes are listed below.
Blue-Chip Stocks:

valuable stocks are stocks of enormous, stable corporations that have an extended history
of stable earnings and dividends and are typified by the stocks composing the Dow-Jones
Industrial Average Industrial Average, as well as General electrical, IBM, Microsoft, and
Pfizer. due to their massive size, there is just about no potential for a high rate, therefore
most of the comeback of those stocks is within the kind of dividends. However, capital
gains will be attained from these stocks if they are bought in an exceedingly securities
industry once stock costs are depressed overall.
for example, throughout the credit crisis of Gregorian calendar month and Dec 2008, and
therefore the early a part of 2009, Microsoft was commerce below $20 per share, whereas
before this, Microsoft had been commerce at around $30 per share for an extended time. It
is affordable to assume, given Microsoft's sturdy monetary position, that its stock value
can come back to $30 a share, and, perhaps, surpass it.
Income Stocks:

financial gain stocks generate most of their returns in dividends, and therefore the
dividends—unlike the dividends of preferred shares or the interest payments of bonds—
will, in several cases, grow unendingly year when year because the companies' earnings
grow. These corporations have a high dividend pay-out magnitude relation as a result of
there are few opportunities to speculate the cash within the business that may yield a better
come back on stockholders' equity. Hence, several of those corporations are already
terribly massive, and are thought of valuable corporations, like General electrical.
Cyclical Stocks:

alternate stocks cycle with the economic cycles, growing powerfully once the economy is
growing and declining because the economy declines. Most of those corporations provide
capital instrumentality for businesses or expensive things, like cars and homes, for
customers. Some examples embody Alcoa, Caterpillar, and Brunswick. the most effective
time to buys these stocks is at very cheap of a fluctuation, so sell once the cycle peeks.
Defensive Stocks:

Defensive stocks are issued by corporations that are proof against the economic cycles and
should even take advantage of them. once customers and businesses crop outlay, some
different businesses profit, either as a result of they provide how to chop prices, or as a
result of they need all-time low costs. for example, throughout the credit crisis recently
2008 and early 2009, individuals tried to save lots of by doing a lot of for them. for
example, many folks beginning cutting hair for his or her families, or colorings their own
hair to save lots of the $200 that some beauty outlets charge. This enlarged business for
businesses that factory-made hair cutters and colorings kits. car repair outlets tend to try
and do higher, as a result of individuals crop on the acquisition of recent cars, however
cars today are too advanced for many individuals to repair on their own. And whereas most
retailers were symptom considerably throughout the credit crisis, Wal-Mart was one
among the few that really thrived, since Wal-Mart is typically recognized as providing
lower costs than different retailers.
Growth Stocks:

Growth stocks are stocks of corporations that reinvest most of their earnings into their
businesses, as a result of it will yield a better come back on stockholders' equity, and
ultimately, a better come back to stockholders, within the kind of capital gains, than if the
cash were paid out as dividends. Typically, these corporations have high P/E ratios as a
result of investors expect high growth rates for the close to future. Note, however, that
growth stocks are risky. If a growth-oriented company does not grow as quick as
anticipated, then its value can drop as investors lower its future prospects with the result
that the P/E ratio declines. therefore, although earnings stay stable, the stock value can
decline.
Another risk is bear markets—growth stocks can tend to say no way more than blue-chips
or financial gain stocks in an exceedingly declining market, as a result of investors become
discouraged, and can sell their stocks, particularly people who pay no dividends.
One of the most advantages of growth stocks is that capital gains, particularly
semipermanent gains wherever the stock is control for a minimum of one year, are
typically taxed at a lower rate than dividends, that are taxed as standard financial gain.
Tech Stocks:

school stocks are the stocks of technology corporations, that build laptop instrumentality,
communication devices, and different technological devices. Most school stocks are listed
on data system. The stocks of most school corporations are either thought of stock or
speculative stock; some are thought of valuable, like Intel or Microsoft. However, there's
right smart risk in school corporations as a result of analysis and development efforts are
onerous to judge, and since technology is frequently evolving, it will quickly amendment
the fortunes of the many corporations, particularly once previous product is displaced by
new product
Speculative Stocks:

Speculative stocks are the stocks of companies that have little or no earnings, or widely
varying earnings, but hold great potential for appreciation because they're tapping into a
replacement market, are operating under new management, or are developing a potentially
very lucrative product that might cause the stock price to zoom upward if the company is
successful. Many Internet companies were considered speculative investments. During the
stock market bubble of the latter half the 1990's, many of these stocks had ridiculous
market capitalizations, and yet, many of them had virtually no earnings, and many, if not
most, have since then, imploded. A few, like Amazon, have grown to become major
corporations.

Many speculative stocks are traded frequently by investors—or some would say, gamblers
within the hope of making a profit by timing the market, since speculative stocks range
wildly in price as their perceived prospects constantly change.

Large-Cap, Mid-Cap, and Small-Cap Stocks:

Sometimes stocks are categorized by their market capitalization, or market cap.

Market Capitalization = Stock Price × Number of Stocks Outstanding

While the divisions are indistinct, and may depend on inflation, a large-cap company is
one with a market cap greater than $5 billion; a mid-cap company, $1 - $5 billion, and
small- cap companies are valued at but $1 billion. Many of these companies are often
found by watching the components of the numerous indexes, just like the Russell Indexes.

Large-cap stocks:

The large-cap stocks contain the blue-chip, income, defensive, and cyclical stocks, since
large companies have little potential for growth. Capital gains are often earned, however,
by buying these stocks at the lowest of a business cycle and selling them because the
economy reaches full speed. Large-cap stocks have the only price stability and thus the
smallest amount risk.

Mid-cap stocks:

Mid-cap stocks are composed of most of the categories listed here, since their market caps
range from the very best of the small-cap market to the lowest of the large-cap market. a
specific quite mid-cap stock are the baby blue-chip stocks, which are stocks of companies
that, a bit like the blue-chip companies, have consistent profit growth and stability, and
low levels of debt, but are smaller in size than the large-cap blue-chips.

Small –cap stocks:

Small-cap stocks are small companies that have the best potential for growth - hence, most
of those stocks are growth or speculative stocks, and most tech stocks also are during this
category, since many tech companies consider a narrow niche of the market, or they were
began to develop a replacement product or service, like the various Internet companies that
sprouted during the stock market bubble. In some cases, the small-cap stocks are
distinguished from the even smaller micro-cap stocks, like are often found within the
Russell Microcap Index. Note that even the micro-cap stocks include only those
stocks that are listed on major exchanges they are doing not include OTC bulletin board
securities or pink sheet stocks, which don't satisfy the requirements to be listed on a
serious exchange.
Small-cap stocks tend to undertake to raise than other stocks at the beginning of an
economic expansion, unless their growth is constrained by the availability of credit, since
they rely more on bank financing than larger companies which will sell bonds on to the
market.

RISK RETURN RELATIONSHIPS:

1. Risk: Risk is inherent in any investment. This risk may relate to loss or delay in
repayment of the principal capital or loss or non-payment of interest or variability of
returns. While some investments are almost riskless like Government securities or bank
deposits, others are more risky.

2. Return: Yield or return differs from the character of the instruments, maturity period and
thus the creditor or debtor nature of the instrument and variety of other factors. the
foremost important factor influencing return is risk. Normally, the upper the danger, the
upper is that the return. The return is that the income plus capital appreciation within the
case of ownership instruments and only yield or interest within the case of debt
instruments like debentures or bonds.

Origin of the Indian stock market

The Indian stock market is the oldest stock market in Asia; India goes back to the 18th
century. East India Company used to transact the loans and securities in 1830s at this time
the number of brokers are very less. Afterwards informal groups started doing business
under the banyan tree moreover in 1860s share mania began in India after the American
civil war broke with Europe, they were stopped cotton supply from America to Europe at
that brokers increased more in India.

A mordent early occasion in the growth of money markets in India was the development of
the local share and stock agent’s organization at Bombay in 1875; this was trailed by the
development of traders in Ahmadabad (1894), Calcutta (1908), and madras (1937)

Stock exchange are comprehensive nature between rush in the quality of a

country’s financial life. Without stock trade, the sparing of the group the ligaments of
monetary advance and beneficial effectiveness would remain underutilized. In the olden
days stock
market is not popular and people do not believe in the stocks. But the business and
industries created a new trend in the stock market because of permanent finance for doing
business. Industries need long term finance to run the business they found this way for the
permanent finance, in this form investor can invest their money on a particular stock and
they can earn return on their investment this is how stock market came into existence.

HISTORY OF THE STOCK MARKET

The world’s leading stock exchange New York Stock Exchange (NYSE), it was
established in 200 years ago it is a oldest stock exchange, additionally, India’s head stock
exchange. Bombay stock exchange it was established 125 years ago it began intentional
non-benefit making union in 1860 the exchange expands with 60 merchants. When the
share mania began in India at the time of America civil war broke. On that time US
cancelled the cotton delivery to Europe. More at the time of end of the merchants enlarged
to 250. on that time exchange market create a place in a lane for that street we will called
as DALAL STREET in 1887, further in 1895 (NSSB) native share and stockbrokers union
was established.

MEANING OF STOCK MARKET:

The word “stock exchange” contains two words “stock” and “exchange”. Stock means part
of the capital of an organization. And exchange means transferring or exchanging
proprietorship. It is an opportunity in business for purchasing and selling. In a systematic
manner, we can say the stock market as a market or a place where diverse sorts of
securities are purchased and sold. Securities traded in the stock market are
 Share

Derivatives

Bonds

SHARES:

shares are units of ownership interest during a corporation or financial asset that provide
for an equal distribution in any profits, if any are declared, within the sort of dividends.
The two main sorts of shares are common stock and preferred stock. Physical paper stock
certificates have been replaced with electronic recording of stock shares; just as mutual fund
shares are recorded electronically.

FUNCTIONS OF STOCK EXCHANGE

Stock exchange gives a prepared and constant market for buy and sale of securities. It
gives prepared outlet to purchasing and offering of securities. Stock trade additionally goes
about as an outlet for the offer of recorded securities. Stock exchange is valuable for the
assessment of business securities. This empowers speculators to know the genuine worth
of their possession whenever. Correlation of organizations in a similar industry is
conceivable through stock trade citations. Stock exchange quickens the procedure of
capital development. It makes the propensity for sparing, contributing and chance taking
among the putting class and changes over their reserve funds into beneficial venture. It
goes about as an instrument of capital arrangement. What is more, it additionally goes
about as a channel for right speculations.

Various stock exchanges in India

There are 23 SEBI permitted stock exchanges in India. Major stock exchanges are:
  Ahmadabad stock exchange

 Bombay stock exchange

 Calcutta stock exchange

 Bangalore stock exchange

 cochin stock exchange

 Coimbatore stock exchange

 Delhi stock exchange

 Guwahati stock exchange

 Hyderabad stock exchange

 Jaipur stock exchange

 Exchange madras stock

 Madhya Pradesh stock exchange ltd

 Meerut stock exchange ltd

 National stock exchange

 pune stock exchange ltd

 Uttar Pradesh stock exchange

 Vadodara stock exchange ltd.

Major stock exchanges are:

National stock exchange (NSE):

The national stock exchange of India limited is the leading stock exchange within the
world by equity market volume in 2015. It was started operating in 1994 and it has ranked
a biggest
Stock exchange in India by on basis of daily transaction, equity market and previous year’s
annual reports depends on SEBI has large number of clients. NSE giving a good service to
all over the world and investors from crosswise country, NSE was started as financial
institutions of the India and it was working as a stock paying company.

NSE started electronic screen-based exchanging done 1994, subscribers exchanging and
web exchanging n 2000, which were every those to begin with about its thoughtful
clinched alongside India.

NSE need a fully integrated benefits of the business model including our trade listings,
exchanging services, clearing and settlement service, indices, market information feeds,
innovation organization results also fiscal training offering. NSE oversees agreeability
toward exchanging; clearing parts recorded in organization also decides the regulations of
the return.

NSE’s main objective is to change the securities markets in India. Some of the objectives
are:

Objectives of NSE:

 Who are using an electronic trading system for them NSE providing
an effective and sensible market to the investors.

 To set up the worldwide exchanges forum for equity and debt systems.

 To develop the market standards in global level.

 To extend the market in globally.

Bombay stock exchange (BSE):

Bombay stock exchanges it was establish in 1875 it is the oldest stock exchanges in Asia.
It is the fastest growing stock exchange in the world it is a leading exchanging in India
from past 140 years, BSE has given the contribution for the growth of the Indian industrial
sectors by raising the capital. And the native share and stockbroker’s organization was
established in 1875. BSE consist two leading worldwide exchanges which is Singapore
exchange and Deutsche bourse as international partners. BSE providing an accurate and
reliable market to the investors it is giving good market platform to the investors to gain
better returns on the investment. And also, it’s providing good market platform to
investing in equity market, Derivatives market, Mutual fund investing and Debt
instrument.

BSE also giving good information about the Indian stock market through
conducting webinar programmes in this programme investors can avail lot information
about stock market and if the customer has any queries and doubt, they can clear by asking
question to the webinar.

BSE concentrating on all the sectors, because the growth of the Indian market is very
essential to the market. It is giving service to risk management, education, clearing
settlement, and market data services. It is the first exchange in India and globally second.
It has worldwide customers. And also, it is maintaining customers in good manner by
providing good service. Further BSE providing good facility to the customers by educating
the clients, if the client does not know the about market depository participant appoint to
the particular client after that client will do trading in all segment.
The governing board has some roles and responsibility, Board having 20 directors in the
apex body which make a decision of the plan to action and set the concern of the trade.
And the governing board having 9 electoral, they from the trading area, and also have
executive directors, chief executive and chief operating officers are answerable for the
daily activities. And he will get assistance from the head of the department.

SECURITIES EXCHANGE BOARD OF INDIA (SEBI):

The securities exchange board of India is the controller of the securities market in India.
It came in to existence in 1988, was legal authority on 12 April 1992. According to SEBI
act 1992.

The SEBI must be approachable for the investor of the securities and market
intermediaries. SEBI has the power of order and investigate the books of accounts of the
exchanges and if the SEBI found any corruption in the exchange activities SEBI has the
authority to cancel registration of the intermediaries. All regulations passed by SEBI only.
SEBI has the full be in charge of over the securities market.

SEBI OPERATIONS

 SEBI is primarily set up to protect the interests of investors in the securities market.

 It promotes the development of the securities market and regulates the business.

 SEBI provides advisers, share transfer agents, bankers, merchant bankers, trustees
of trust deeds, registrars, underwriters, and other associated people to register and
regulate work.
 It regulates the operations of depositories, participants, custodians of securities,
foreign portfolio investors, and credit rating agencies.
 It prohibits inner trades in securities, i.e., fraudulent, and unfair trade practices
related to the securities market.
 It ensures that investors are educated on the intermediaries of securities markets.

 It monitors substantial acquisitions of shares and take-over of companies.

 SEBI takes care of research and development to ensure the securities market is
always efficient.

OBJECTIVIES AND FUNCTIONS OF SEBI:

 To keep the attention of the shareholder and offer protection on investment.

 To encourage and increase performance in stock exchange and boost the trade the
stock exchange.
 It will act as regulatory body.

Purpose of stock market:

 The main purpose of a stock market is to facilitate the movement of funds (capital) from
 the savers (investors) to the borrowers (companies).
 When companies require capital for growth and expansion, it can either raise this capital
by taking a debt from investors (debentures) and banks (bank loans) or it can issue equity
shares to shareholders.
 Companies issue equity shares to the shareholders via the stock market. So, the primary
purpose of a stock market is to help companies raise capital for growth and expansion.
The secondary purpose of a stock market is to help individual investors (savers)
participate in the growth and profits of the borrowing companies.
 Before we answer how a stock market works, it is important to understand the key
participants of the stock markets.
 The investors/traders: These are individuals who buy and sell shares of publicly listed
companies.
 Stockbrokers: Stockbrokers like Samco, act as an intermediary and all trades are entered
onto the stock markets through a trading platform provided by the stockbrokers.
 Stock Exchanges: Stock exchanges like BSE and NSE are where trades are placed, and
order matching happens.
 SEBI: The Securities and Exchange Board of India, is the market regulator and is in charge of
monitoring the stockbrokers and stock exchanges to protect the interest of investors.
 REVIEW OF LITERATURE

1. Roni Bhowmik and Shouyang (2020), In order to prevent uncertainty and risk in the stock
market, it is particularly important to measure effectively the volatility of stock index returns.
the main purpose of this review is to examine effective GARCH models recommended for
performing market returns and volatilities analysis. The secondary purpose of this review study
is to conduct a content analysis of return and volatility literature reviews over a period of 12
years (2008–2019) and in 50 different papers. The study found that there has been a significant
change in research work within the past 10 years and most of researchers have worked for
developing stock markets.

2. Dipankar Biswas and Swapan Sarkar (2020), this study analyzes the return dynamics of
four broad based and 18 sectoral indices using ARMA EGARCH techniques. This study finds
the return dynamics during the selected period can be well captured by a carefully selected
conditional mean model under ARMA approach. This economic crisis has affected the entire
world will certainly have manifold impact. This paper is humble attempt to model of volatility in
the context of Indian stock market.

3. Robert F. Engle, Eric Ghysels, and Bumjean Sohn (2013), In this paper we introduced a
new, versatile class of component volatility models combining the insights of spline GARCH
and MIDAS filters. This new class allowed us to distinguish short- and long-run sources of
volatility and link them directly to economic variables. The new model specifications also relate
to the long-established use of realized volatility yet refines these measures through MIDAS
filtering. Our analysis focused on long historical time series. The long-time span limited the set
of macroeconomic series available. The class of GARCH-MIDAS models can easily handle any
set of variables.

4. KLAUS ADAM, ALBERT MARCET, and JUAN PABLO NICOLIN (2016), it shows that
consumption-based asset pricing models with time-separable preferences generate realistic
amounts of stock price volatility if one allows for small deviations from rational expectations.
Rational investors with subjective beliefs about price behavior optimally learn from past price
observations. This imparts momentum and mean reversion into stock prices. The model
quantitatively accounts for the volatility of returns, the volatility and persistence of the price-
dividend ratio, and the predictability of long-horizon returns.
5. Suparna Nandy (Pal), Arup Kr. Chattopadhyay (2019), The objectives of the study are to
address the following issues in relation with the Indian stock market: Is there any evidence of
interdependence between the stock market and different other components of domestic financial
system (namely, foreign exchange market, bullion market, money market and change in gross
volume of FII trade) in India and foreign stock markets. To understand the causal relationship
between the returns in financial variables in pairs we carry out test for Granger causality. For
explaining economic significance over and above the statistical significance we also analyze
impulse response function and variance decomposition.

6. Piyali Roy Chowdhury and Anuradha. A (2018), In this study, one of the macroeconomic
variables, exchange rate, is studied along with Indian Stock Market (BSE Index). The linkage
between exchange rate and stock market index is considered as one of the important contributors
to predict the growth/ business cycle of any economy. This dynamic linkage between exchange
rate and stock market has been analyzed considering 15 years of data (from 2010 to 2016) on
exchange rate and stock market index related to Indian Economy. A stock index or stock market
index is a measurement of the value of a section of the stock market. It is computed from the
prices of selected stocks (typically a weighted average). It is a tool used by investors and
financial managers to describe the market, and to compare the return on specific investments.

7. Sameer Yadav (2017), Volatility is a statistical measure of the dispersion of returns for a
given security or Market Index. Commonly, the higher the volatility greater the risk associated
with the security. Volatility estimation is important for several reasons associated with different
people in the market. Developed markets continue to provide over long period of time with
higher returns constituting low volatility. Indian market has started becoming informational
more efficient compared to developed countries. The study would facilitate the reader to
understand the past, current and future aspects of Indian Stock Market.

8. Debasish Maitra and Saumya Ranjan Dash (2017), This article examines the relationship
between investor sentiment and stock return volatility in the context of Indian stock market. Our
empirical analysis for examining the sentiment and volatility relationship focuses on wavelet
approach to carry out the time-frequency domain analysis. The results reveal that there is weak
conditional correlation between sentiment and volatility.

9. Konstantinos Gkillas (Gillas), Dimitrios I. Vortelinostand Shrabani Saha (2017), Using

non-parametric estimation technique the properties examined include normality, long-memory,
asymmetries, jumps, and heterogeneity. The realized volatility is a useful technique which
provides a relatively accurate measure of volatility based on the actual variance which is
beneficial for asset management for non-speculative funds. The results show that realized
volatility and correlation series are not normally distributed, with some evidence of persistence.
10. Sushma K S, Charithra C M and Dr. Bhavya Vikas (2019). The study helps the investors
to examine and compare the assessments along with the market and to identify the company
which would be preferable to invest based on their risk-taking ability. The primary objective of
the study was to assess the risk and return of the eight NSE listed financial services companies
along with a secondary objective to compare individual company stock volatility before and after
the event of demonetization. The tools and techniques used for analysis were Mean, Standard
deviation, Beta, Correlation, Covariance and T-test. Analysis was done by using the closing
prices of each month for all the selected companies (Bajaj FinServ, HDFC, ICICI, Axis,
Cholamandalam investment and finance, State bank of India, Mahindra & Mahindra, Max
finance services) for a specified time period.

11. Ruchi Nityanand Prabhu (2019) This paper analyzes the risk and return in banking sector
taking Nifty Index as the benchmark. The study compares the performance of the 50 stocks in
the NSE. Indian banking industry, the backbone of the country’s economy has always played a
positive key role in prevention the economic disaster from reaching horrible volume in the
country. Risk & Return is a concept that denotes a potential negative impact to an asset or some
characteristic of value that may arise from some present process or future event. It has achieved
enormous appreciation for its strength, particularly in the wake of some of the worldwide
economic disasters. NSE Shares have proved to be more volatile than the pure diversified equity
funds which make some of them a high-risk proposition. The study evaluates the performance of
stocks mainly to identify the required rate of return and risk of a particular stock based upon
different risk elements prevailing in the market and other economic factors.

12. Gopala Krishnan. Muthu, P.K.Akarsh (2017) in is work “The study analysis the risk and
return in the automobile sector” studied Researcher select 8 sample size companies from NIFTY
auto Index as on 21/April/2017. The researcher to investors after comparing the selected
companies suggests that, when investor’s equity contains more risk then will get more return.
Vice versa

13. Dr.S. krishnapradha, Mr.M.Vijayakumar (2015) in is work “A study on risk and return
analysis of selected stocks of India” Studied the researcher compares different industry and
identifying the best to invest to the investors. The researcher selects 5 industries they are 1.
Banking sector, 2. Automobile sector, 3. Information technology sector, 4. Pharmaceutical
sector, 5. Fast moving consumer goods sector. Method of sampling: judgemental sampling. Long
term investment on same industry will help in predicting about when the share will raise.
Information technology, fast moving consumer goods, pharmaceutical sector give more return
compared to banking sector and automobile sector.
 RESEARCH GAP

After reviewing the different articles associated with risk and return management it is observed
that there is no recent study in the Indian MNCs in risk and return management. So during this
study I will be considering 5 different Multinational companies.
RESEARCH OBJECTIVES:

 To analyze the risk investment scenario in volatile stock market .

 To know the relation between risk and return of selected companies in

MNCs.

 To find the standard deviation and variance of selected companies in Mncs.

Period for the study

The study covers the period of five years of selected commodities from 2016-17 to 2020-2021.
The data has been collected from the BSE/NSE.

Tools for analysis:

The collected data has been tabulated and used various portfolio management techniques for
analysing and interpreting the data
1. Tabular presentation: A table enables Quantitative comparisons and qualitative comparisons
provide a precise way to present the data.

2. Percentage analysis: This helps to bring out a uniform study of the data, percentage used
in making comparison about two or more series of data.

3. Graphical presentation: Graphical presentation is the only way to present qualitative

information effectively. The various charts used in report writing through different types of

charts.

SOURCES OF DATA

The present study covers only secondary data which the selected commodities are traded and
daily stock market indices are taken into the consideration. The data also collected from various
sources like various journals, reports, magazines, newspapers, and stock market sensex data.
Collection of data

The study is completely based on secondary data mainly collected from the website of NSE
(https://www.nseindia.com/). In addition to that, the data has been collected from published
sources and also from websites (https://www.moneycontrol.com/), newspapers (economic
times), and report by management, scholars, researchers etc.

Data collected contains opening price, closing price and dividend of the below mentioned
companies of MNCs which were selected from NSE (national stock exchange). The data
analysis is conducted by using 5 years historical data of the companies.

List of companies (Indian MNCs) selected from NSE:

1.Nestle India ltd

2.Hindustan Unilever ltd
3.Britannia Industries
ltd 4.Bosch ltd
5.Mahindra&Mahindra

METHODOLOGY OF THE STUDY

The process used to collect information and data for the purpose of making decisions regarding
their activities. This study is of secondary data. Secondary research is a common approach to a
systematic investigation in which the researcher depends solely on existing data in the course of
the research process. This research design involves organizing, collating, and analysing these
data samples for valid research conclusions. The methodology in which data are collected are
done from various sources like website, journal, newspaper article and other publication
research, interview, survey and other research techniques and can include both present and past
data
TITLE OF THE STUDY:

Tools for data analysis

The collected data have properly been analysed with the assistance of Microsoft excel by
applying various statistical tools. The researcher has mainly used the subsequent techniques for
analysing the collected data.

 Mean (expected return): Expected return is the profit or loss an investor

anticipates on an investment that has known or expected rates of return. It is
calculated by multiplying potential outcomes by the chances of them
occurring and then summing these results.

 Expected risk: Risk implies future uncertainty about deviation from

expected earnings or expected outcome. Risk measures the uncertainty that
an investor is willing to take to realize a gain from an investment.

 Standard deviation: The standard deviation is a measure that is used to

quantify the amount of variation or dispersion of a set of data values. A low
standard deviation indicates that the data points tend to be close to the mean
(also called the expected value) of the set, while a high standard deviation
indicates that the data points are spread out over a wider range of values.

 Variance: Variance is a statistical measure of how much a set of

observations differ from each other. In accounting and financial analysis,
variance also refers to how much an actual expense deviates from the
budgeted or forecast amount.
OBJECTIVES OF THE STUDY

1. To study the evaluation of stock and derivative market in India

2. To identify the risk and return analysis of selected commodities

3. To analyse the price volatility of commodities in selected period

LIMITATIONS OF THE STUDY

Like other studies, this study also has its own limitations. They are: -

 The analysis was completely based on the secondary data collected from the
website of NSE, and secondary data published literature, annual reports, etc., and
so the findings of the study entirely depend on the accuracy of such data.

 Different experts have different opinions regarding the analysis of equity shares,
therefore, the view used in this study cannot be treated as the absolute and
perfect.

The Researcher uses some statistical tools for analysing and interpreting the collected data.
Therefore, the analysis is affected by the natural limitations of the statistical tools

SAMPLING SIZE:

Based on the market performance of the stock/commodity companies are selected for the proposed study.
 DATA ANALYSIS AND INTERPRETATION
Company: NESTLE LIMITED

Data taken is opening price, closing price and dividend of previous 5years (2018–2023)

R=D+(P1-PO)/P0*100

Table 4.1.1

Computation of return of the company NESTLE LIMITED

year Net Other Total Income Returns

Sales/Income Operating From
from operations Income Operations

2018-19 12,295.27 73.63 12,368.90 -15.0866

2019-20 13,290.16 59.87 13,350.03 -42.856

2020-21 748.9 75.69 14,709.41 -9.88116

2021-22 14,633.72 77.63 16,865.06 -57.7306

2022-23 16,787.43 -- 19,126.30 183.1744

expecte
25.81325136
d Return
Interpretation:

In the above table (4.1.1) the computation of the returns of NESTLE LIMITED has been
calculated. It has been observed that in the year 2019-20 (-57.7306) has got lowest return
and highest return in the year 2020-21 (183.1744) when we compare the returns from 2016-
17 to 2020-21 NESTLE LIMITED and returns are more fluctuating has per the data
observed.
TABLE: 4.1.2
Computation of expected return & expected risk of NESTLE LIMITED

KEY FINANCIAL RATIOS OF NESTLE MAR 24 DEC 23 DEC 22 DEC 21 DEC 20

INDIA (in Rs. Cr.)

PER SHARE RATIOS

Basic EPS (Rs.) 40.79 31.10 247.94 222.46 215.98

Diluted EPS (Rs.) 40.79 31.10 247.94 222.46 215.98

Cash EPS (Rs.) 46.37 355.48 289.73 262.92 254.39

Book Value [ExclRevalReserve]/Share 34.65 320.76 255.05 216.19 209.43

(Rs.)

Book Value [InclRevalReserve]/Share (Rs.) 34.65 320.76 255.05 216.19 209.43

Dividend / Share(Rs.) 0.00 167.00 220.00 200.00 200.00

Revenue from Operations/Share (Rs.) 253.00 1,983.64 1,752.43 1,525.56 1,384.57

PBDIT/Share (Rs.) 61.89 476.27 395.51 384.95 347.16

PBIT/Share (Rs.) 56.32 431.79 353.72 344.48 308.75

PBT/Share (Rs.) 54.85 418.82 337.69 299.08 291.72

Net Profit/Share (Rs.) 40.79 311.00 247.93 222.45 215.97

PROFITABILITY RATIOS

PBDIT Margin (%) 24.46 24.00 22.56 25.23 25.07

PBIT Margin (%) 22.25 21.76 20.18 22.58 22.29

PBT Margin (%) 21.68 21.11 19.26 19.60 21.06

Net Profit Margin (%) 16.12 15.67 14.14 14.58 15.59

Return on Networth / Equity (%) 117.71 96.95 97.20 102.89 103.12

Return on Capital Employed (%) 82.68 66.04 57.81 59.24 55.05

Return on Assets (%) 37.37 29.70 26.62 26.12 26.36

Total Debt/Equity (X) 0.01 0.01 0.01 0.02 0.02

Asset Turnover Ratio (%) 2.50 2.01 1.97 1.83 1.77

LIQUIDITY RATIOS

Current Ratio (X) 0.88 0.95 1.13 1.05 1.68

Quick Ratio (X) 0.36 0.45 0.51 0.45 1.11

Inventory Turnover Ratio (X) 5.09 4.24 4.36 4.11 4.11

Dividend Payout Ratio (NP) (%) 0.00 0.00 84.69 89.90 90.74

Dividend Payout Ratio (CP) (%) 0.00 0.00 72.47 76.06 77.04

Earnings Retention Ratio (%) 0.00 0.00 15.31 10.10 9.26

Cash Earnings Retention Ratio (%) 0.00 0.00 27.53 23.94 22.96

VALUATION RATIOS

Enterprise Value (Cr.) 252,190.8 255,590.4 188,056.1 189,328.4 175,604.0

8 0 1 9 1

EV/Net Operating Revenue (X) 10.34 13.36 11.13 12.87 13.15

EV/EBITDA (X) 42.26 55.66 49.31 51.01 52.46

MarketCap/Net Operating Revenue (X) 10.37 13.41 11.18 12.92 13.28

Retention Ratios (%) 0.00 0.00 15.30 10.09 9.25

Price/BV (X) 75.71 82.91 76.84 91.16 87.82

Price/Net Operating Revenue 10.37 13.41 11.18 12.92 13.28

Earnings Yield 0.02 0.01 0.01 0.01 0.01

Returns R- Expected return (R-Expected return)2

-15.0866 8.370369111 70.06307906

-42.856 1.708775442 2.91991351

-9.88116 -7.887365114 62.21052844

-57.7306 -22.66124773 513.5321486

183.1744 20.46946829 418.9991321

Expectedreturn=25.8132513 1067.724802
6
∑(R-Expected
return)2

Variance 213.5449603

SD 14.61317763

Interpretation:
In table 4.1.2 it has been observed that, expected return & risk, risk is less, return
is approximately one time more.
 Volatility

Year Price Volatility

2017-18 7780.65

2018-19 9203.55 22.69569

2019-20 12960.95 33.51228

2020-21 17300 48.80974

2021-22 16165.2 5.707975

By the above we came to how stock fluctuates day to day and we should in the above on
yearly basis how it fluctuates.
 Company: HINDUSTHAN UNILEVER LTD

Data taken is opening price, closing price and dividend of previous 5 years (2016-
2021) of HINDUSTHAN UNILEVER LTD. The formula used is

R=D+(P1-PO)/P0*100

Table 4.2.1

Computation of return of the company HINDUSTHAN UNILEVER LTD

Fiscal Year Net Income Average Common Equity Return on Common Equity

2020-03-31 67.56 B 80.48 B 83.9%

2021-03-31 79.96 B 279.5 B 28.6%

2022-03-31 88.74 B 483.7 B 18.3%

2023-03-31 101.2 B 496.8 B 20.4%

2024-03-31 102.8 B 507.6 B 20.2%

Interpretation:

The financial data provided offers insights into the performance and health of the company over
the past five fiscal years. Notably, the company has demonstrated consistent growth in both net
income and average common equity during this period. From 67.56 billion in 2020, the net
income has steadily risen to 102.8 billion by 2024, indicating a positive trajectory in profitability.
Similarly, average common equity has experienced substantial growth, climbing from 80.48
billion to 507.6 billion over the same period, reflecting an increasing value of the company as
perceived by its shareholders. However, amidst these gains, the return on common equity (ROE)
has exhibited fluctuations. While ROE was exceptionally high at 83.9% in 2020, it declined to
28.6% in 2021 and then continued to decrease gradually, stabilizing around 20% in subsequent
years. Although ROE remains healthy, the declining trend suggests potential challenges in
maintaining efficiency in generating profits relative to shareholders' equity. This warrants a
closer examination of the company's operational and financial management strategies to ensure
sustained growth and profitability in the future.
 TABLE: 4.2.2

Computation of expected return & expected risk of HINDUSTHAN UNILEVER LTD

Returns R- Expected return (R-Expected return)2

6.244954 18.90381111 357.3540743

46.97484 -21.82607033 476.3773462

30.70722 -5.558458782 30.89646403

35.17544 -10.02667304 100.5341723

6.641374 18.50739105 342.5235236

Expected 1307.685581
. return=25.14876555 ∑(R-Expected return)2

Variance 261.5371161

SD 16.1721092
 Company: BRITANNIA INDUSTRIES LTD

Data taken is opening price, closing price and dividend of previous 5 years (2018-2023) of
BRITANNIA INDUSTRIES LTD. The formula used is

R=D+(P1-PO)/P0*100

Table 4.3.1

Computation of return of the company BRITANNIA INDUSTRIES LTD

Date Price Open High Low Vol. Change %

01-05-2024 5,221.70 4,799.20 5,245.20 4,709.30 262.49K +9.33%

01-04-2024 4,775.95 4,929.95 4,960.70 4,641.00 7.03M -2.75%

01-03-2024 4,911.25 4,965.20 5,014.00 4,740.70 5.73M -1.09%

01-02-2024 4,965.20 5,196.05 5,239.75 4,828.85 6.60M -4.02%

01-01-2024 5,173.10 5,339.90 5,375.00 4,926.00 4.46M -3.10%

01-12-2023 5,338.45 4,873.00 5,386.05 4,837.05 7.07M +10.01%

01-11-2023 4,852.65 4,442.60 4,875.95 4,347.70 5.72M +9.63%

01-10-2023 4,426.50 4,524.80 4,623.00 4,401.90 6.86M -2.44%

Date Price Open High Low Vol. Change %

01-09-2023 4,537.15 4,475.00 4,634.30 4,426.00 7.28M +1.55%

01-08-2023 4,467.75 4,825.10 4,843.50 4,421.40 11.00M -6.80%

01-07-2023 4,793.95 5,035.00 5,270.35 4,763.80 7.12M -4.59%

01-06-2023 5,024.55 4,655.00 5,085.25 4,587.55 7.19M +7.89%

01-05-2023 4,657.05 4,565.25 4,705.45 4,443.35 8.65M +2.27%

01-04-2023 4,553.55 4,344.00 4,564.85 4,222.55 5.36M +5.35%

01-03-2023 4,322.15 4,439.00 4,454.55 4,153.00 5.46M -3.13%

01-02-2023 4,461.75 4,329.90 4,669.20 4,326.85 6.95M +3.34%

01-01-2023 4,317.60 4,379.95 4,444.00 4,206.30 5.46M +0.24%

01-12-2022 4,307.45 4,364.55 4,537.00 4,296.55 5.80M -1.26%

01-11-2022 4,362.30 3,780.00 4,387.90 3,705.45 10.61M +15.82%

01-10-2022 3,766.55 3,862.00 3,878.20 3,690.00 4.29M -1.99%

01-09-2022 3,843.05 3,730.00 3,889.80 3,564.10 8.50M +2.54%

01-08-2022 3,747.75 3,900.40 3,916.00 3,585.25 6.48M -3.91%

01-07-2022 3,900.40 3,412.00 3,949.35 3,412.00 8.38M +12.52%

01-06-2022 3,466.40 3,649.10 3,669.75 3,270.95 7.20M -4.97

Interpretation:
In the above table (4.3.1) the computation of the returns of BRITANNIA INDUSTRIES LTD
has been calculated. It has been observed that in the year 2018-19(-37.8909) has got lowest
return and highest return in the year 2017-18 (47.51555) when we compare the returns from
2016-17 to 2020-21 and BRITANNIA INDUSTRIES LTD returns are not more fluctuating
has per the data observed.
 TABLE: 4.3.2

Computation of expected return & expected risk of BRITANNIA INDUSTRIES LTD

Return R- Expected return (R-Expected return)2

27.14635 -15.26364609 232.9788919

47.51555 -35.63284638 1269.699741

-37.8909 49.77363821 2477.415061

-12.9149 24.79756171 614.9190668

35.55741 -23.67470745 560.4917728

5155.504534
Expected return=11.88269996 ∑(R-Expected
return)2=
 Variance 1031.100907

SD 32.11075998

Interpretation

In table 4.3.2 it has been observed that, expected return & risk, risk is approximately two times
of return.
 Company: MAHINDRA&MAHINDRA

Data taken is opening price, closing price and dividend of previous 5 years (2017-
2023) of MAHINDRA&MAHINDRA. The formula used is

R=D+(P1-PO)/P0*100

Table 4.5.1

Computation of return of the company MAHINDRA&MAHINDRA

Period Mar-23 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18 Mar-17

ROA 4.79 3.78 1.09 0.076 3.25 5.47 3.22
Change 26.89 % 246.94 % 1331.37 -97.66 % -40.57 % 69.83 % 3.01 %
%
Price 1158.70 806.55 795.25 284.95 673.90 738.90 643.45
Price 43.66 % 1.42 % 179.08 -57.72 % -8.80 % 14.83 % 6.29 %
Change %

Interpretation:

The data provided offers a glimpse into the financial performance and market valuation
dynamics of Britannia Industries Ltd. over the span of seven fiscal years, concluding in March
from 2017 to 2023. Britannia's Return on Assets (ROA) exhibited significant variability during
this period, ranging from a mere 0.076% in March 2020 to a substantial 5.47% in March 2018.
Notably, the company witnessed an extraordinary surge in ROA from March 2020 to March
2021, indicating a remarkable enhancement in profitability relative to its asset base, followed by
a notable decline in March 2022. Concurrently, the stock price of Britannia Industries Ltd.
displayed considerable fluctuations, with the most striking percentage increase observed from
March 2020 to March 2021, aligning with the surge in ROA. Conversely, the steepest decline in
stock price occurred from March 2019 to March 2020. These fluctuations in both ROA and stock
price suggest a correlation between operational efficiency and market valuation, emphasizing the
importance of comprehensive analysis to discern the underlying drivers and anticipate future
trends. Investors and analysts may need to scrutinize Britannia's financial reports and market
dynamics closely to gain deeper insights into the factors influencing these fluctuations and their
implications for the company's future performance and market positioning.
 CHAPTER 5

FINDINGS, SUGGESTION AND CONCLUSION

 FINDINGS

SL NO Name of the company Expected return Expected risk

25.81325136 14.61317763
1 Nestle India ltd

2 Hindustan Unilever ltd 25.14876555 16.1721092

3 Britannia Industries ltd 11.88269996 32.11075998

4 Bosch ltd -2.051613437 32.69037519

5 Mahindra and Mahindra 11.52399717 87.61682959

 As per the observation of 5 companies of multi-national companies. Mahindra and

Mahindra (87.61682959) has the more expected risk involved in it.
 As per the observation of 5 companies of Multi-national companies. Nestle limited
(25.81325136) has the more expected return involved in it.
 As per the observation of 5 companies of multi-national companies Mahindra and
Mahindra has the more expected risk (87.61682959) with less expected return
(11.52399717) involved in it.
 As per the observation of 5 companies of Multi-national companies. Nestle India ltd has
the more expected return (25.81325136) with expected risk (14.61317763) involved in
it.as well as Hindustan Unilever ltd has the more expected return (25.14876555) with
 expected risk (16.1721092) involved in it
 As per the observation of 5 companies of multi-national companies. Nestle India ltd has
less risk and approximately one time return involved in it.
Graphical Representation of Expected Risk and Expected Return of Companies

Suggestion

As per risk and return management in the selected 5 Multi-national companies. Nestle ltd will
be preferred for investment due to the high return with approximately only 20% risk involved in
it. And it is been followed by Hindustan unilever Limited and Britannia industries ltd.

In other all selected companies have more risk involved with comparatively less return; hence
they are not advisable to invest.

CONCLUSION

In order to achieve the objective of maximizing the return, the investors need to consider both
risk factor and return potential of various companies under consideration. That will be differing
from companies to companies. Equity analysis is one of the most important techniques used to
measure the risk and return factor of equities of different companies. Based on my study Nestle
ltd will be preferred to invest on the basis of risk and return management.
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