A STUDY ON PERFORMANCE ANALYSIS OF EQUITY SHARES IN

SELECTED INDUSTRIES

Introduction of the study:

India is a developing country. Nowadays many people are interested to invest in

financial markets especially on equities to get high returns, and to save tax in

honest way. Equities are playing a major role in contribution of capital to the

business from the beginning. Since the introduction of shares concept, large

numbers of investors are showing interest to invest in stock market.

In an industry plagued with skepticism and a stock market increasingly

difficult to predict and contend with, if one looks hard enough there may still

be a genuine aid for the Day Trader and Short Term Investor.

The price of a security represents a consensus. It is the price at which one

person agrees to buy and another agrees to sell. The price at which an investor

is willing to buy or sell depends primarily on his expectations. If he expects the

security's price to rise, he will buy it; if the investor expects the price to fall, he

will sell it. These simple statements are the cause of a major challenge in

forecasting security prices, because they refer to human expectations. As we all

know firsthand, humans expectations are neither easily quantifiable nor

predictable. If prices are based on investor expectations, then knowing what a

security should sell for (i.e., fundamental analysis) becomes less important

than knowing what other investors expect it to sell for.

1
 CONCEPTUAL FRAMEWORK

Introduction to Investment

Investment may be defined as an activity that commits funds in any financial

form in the present with an expectation of receiving additional return in the

future. The expectations bring with it a probability that the quantum of return

may vary from a minimum to a maximum. This possibility of variation in the

actual return is known as investment risk. Thus every investment involves a

return and risk.

Investment is an activity that is undertaken by those who have savings.

Savings can be defined as the excess of income over expenditure. An investor

earns/expects to earn additional monetary value from the mode of investment

that could be in the form of financial assets.

The three important characteristics of any financial asset are:

 Return-the potential return possible from an asset.

 Risk-the variability in returns of the asset form the chances of its value

going down/up.

 Liquidity-the ease with which an asset can be converted into cash.

Investment is the activity, which is made with the objective of earning some

sort of positive returns in the future. It is the commitment of the funds to earn

future returns and it involves sacrificing the present investment for the future

2
return. Every person makes the investment so that the funds he has increases

as keeping cash with himself is not going to help as it will not generate any

returns and also with the passage of time the time value of the money will

come down. As the inflation will rise the purchasing power of the money will

come down and this will result that the investor who does not invest will

become more poor as he will not have any funds whose value have been

increased. Thus every person whether he is a businessman or a common man

will make the investment with the objective of getting future returns.

Types of Investments:-

There are basically three types of investments from which the investors can

choose. The three kinds of investment have their own risk and return profile

and investor will decide to invest taking into account his own risk appetite. The

main types of investments are: -

Economic investments:-

These investments refer to the net addition to the capital stock of the society.

The capital stock of the society refers to the investments made in plant,

building, land and machinery which are used for the further production of the

goods. This type of investments are very important for the development of the

economy because if the investment are not made in the plant and machinery

the industrial production will come down and which will bring down the overall

growth of the economy.

3
Financial Investments:-

This type of investments refers to the investments made in the marketable

securities which are of tradable nature. It includes the shares, debentures,

bonds and units of the mutual funds and any other securities which is covered

under the ambit of the Securities Contract Regulations Act definition of the

word security. The investments made in the capital market instruments are of

vital important for the country economic growth as the stock market index is

called as the barometer of the economy.

General Investments:-

These investments refer to the investments made by the common investor in

his own small assets like the television, car, house, motor cycle. These types of

investments are termed as the household investments. Such types of

investment are important for the domestic economy of the country. When the

demand in the domestic economy boost the overall productions and the

manufacturing in the industrial sectors also goes up and this causes rise in the

employment activity and thus boost up the GDP growth rate of the country.

The organizations like the Central Statistical Organization (CSO) regularly

takes the study of the investments made in the household sector which shows

that the level of consumptions in the domestic markets.

4
Characteristics of Investment

Certain features characterize all investments. The following are the main

characteristic features if investments: -

1. Return: -

All investments are characterized by the expectation of a return. In fact,

investments are made with the primary objective of deriving a return. The

return may be received in the form of yield plus capital appreciation. The

difference between the sale price & the purchase price is capital appreciation.

The dividend or interest received from the investment is the yield. Different

types of investments promise different rates of return. The return from an

investment depends upon the nature of investment, the maturity period & a

host of other factors.

2. Risk: -

Risk is inherent in any investment. The risk may relate to loss of capital, delay

in repayment of capital, nonpayment of interest, or variability of returns. While

some investments like government securities & bank deposits are almost risk

less, others are more risky. The risk of an investment depends on the following

factors.

 The longer the maturity period, the longer is the risk.

5
  The lower the creditworthiness of the borrower, the higher is the risk.

The risk varies with the nature of investment. Investments in ownership

securities like equity share carry higher risk compared to investments in debt

instrument like debentures & bonds.

3. Safety: -

The safety of an investment implies the certainty of return of capital without

loss of money or time. Safety is another features which an investors desire

for his investments. Every investor expects to get back his capital on maturity

without loss & without delay.

4. Liquidity: -

An investment, which is easily saleable, or marketable without loss of money &

without loss of time is said to possess liquidity. Some investments like

company deposits, bank deposits, P.O. deposits, NSC, NSS etc. are not

marketable. Some investment instrument like preference shares & debentures

are marketable, but there are no buyers in many cases & hence their liquidity

is negligible. Equity shares of companies listed on stock exchanges are easily

marketable through the stock exchanges.

An investor generally prefers liquidity for his investment, safety of his funds, a

good return with minimum risk or minimization of risk & maximization of

return.

6
IMPORTANCE

In the current situation, investment is becomes necessary for everyone & it is

important & useful in the following ways:

1. Retirement planning: -

Investment decision has become significant as people retire between the ages

of 55 & 60. Also, the trend shows longer life expectancy. The earning from

employment should, therefore, be calculated in such a manner that a portion

should be put away as a savings. Savings by themselves do not increase

wealth; these must be invested in such a way that the principal & income will

be adequate for a greater number of retirement years. Increase in working

population, proper planning for life span & longevity have ensured the need

for balanced investments.

2. Increasing rates of taxation: -

Taxation is one of the crucial factors in any country, which introduce an

element of compulsion, in a person’s saving. In the form investments, there

are various forms of saving outlets in our country, which help in bringing

down the tax level by offering deductions in personal income.

For examples: -

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  Unit linked insurance plan,

 Life insurance,

 National saving certificates,

 Development bonds,

 Post office cumulative deposit schemes etc.

3. Rates of interest: -

It is also an important aspect for sound investment plan. It varies between

investment & another. This may vary between risky & safe investment, they

may also differ due different benefits schemes offered by the investments.

These aspects must be considered before actually investing. The investor has to

include in his portfolio several kinds of investments stability of interest is as

important as receiving high rate of interest.

4. Inflation: -

Since the last decade, now a day’s inflation becomes a continuous problem. In

these years of rising prices, several problems are associated coupled with a

falling standard of living. Before funds are invested, erosion of the resource will

have to be carefully considered in order to make the right choice of

investments. The investor will try & search outlets, which gives him a high rate

of return in form of interest to cover any decrease due to inflation. He will also

have to judge whether the interest or return will be continuous or there is a

8
likelihood of irregularity. Coupled with high rate of interest, he will have to find

an outlet, which will ensure safety of principal. Beside high rate of interest &

safety of principal an investor also has to always bear in mind the taxation

angle, the interest earned through investment should not unduly increase

his taxation burden otherwise; the benefit derived from interest will be

compensated by an increase in taxation.

5. Income: -

For increasing in employment opportunities in India. Investment decisions

have assumed importance. After independence with the stage of development

in the country a number of organization & services came into being.

For example: -

 The Indian administrative services.

 Banking recruitment services.

 Expansion in private corporate sector.

 Public sector enterprises.

 Establishing of financial institutions, tourism, hotels, and education.

More avenues for investment have led to the ability & willingness of working

people to save & invest their funds.

6. Investment channels: -

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The growth & development of country leading to greater economic activity has

led to the introduction of a vast array of investment outlays. Apart from putting

aside saving in savings banks where interest is low, investor has the choice of

a variety of instruments. The question to reason out is which is the most

suitable channel? Which media will give a balanced growth & stability of

return? The investor in his choice of investment will give a balanced growth &

stability of return? The investor in his choice of investment will have try &

achieve a proper mix between high rates of return to reap the benefits of both.

For example: -

 Fixed deposit in corporate sector

 Unit trust schemes.

RISK – RETURN OF VARIOUS INVESTMENT AVENUES

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The risk/return relationship is a fundamental concept in not only financial

analysis, but in every aspect of life. If decisions are to lead to benefit

maximization, it is necessary that individuals/institutions consider the

combined influence on expected (future) return or benefit as well as on

risk/cost. The requirement that expected return/benefit be commensurate with

risk/cost is known as the "risk/return trade-off" in finance.

This session discusses the trade-off and, using conventional statistical tools,

provides a method for quantifying risk. Two categories of risk borne by the

firm's stockholders, business risk and financial risk, are discussed and

demonstrated, as is the concept of leverage. The session also examines risk

reduction via portfolio diversification and what requirements need to be met for

firms to experience the benefits of diversification. The Capital Asset Pricing

Model (CAPM) is used to demonstrate the risk/return trade-off by relating the

required return on the firm's investments to its beta (or market) risk.

Every investment is characterized by return & risk. Investors intuitively

understand the concept of risk. A person making an investment expects to get

some return from the investment in the future. But, as future is uncertain, so

is the future expected return. It is this uncertainty associated with the returns

from an investment that introduces risk into an investment. Risk arises where

there is a possibility of variation between expectation and realization with

regard to an investment.

Meaning of Risk

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Risk & uncertainty are an integrate part of an investment decision. Technically

‘risk’ can be defined as situation where the possible consequences of the

decision that is to be taken are known. ‘Uncertainty’ is generally defined to

apply to situations where the probabilities cannot be estimated. However, risk

& uncertainty are used interchangeably.

Types of risks

1. Systematic risk: -

Systematic risk is non diversifiable & is associated with the securities market

as well as the economic, sociological, political, & legal considerations of prices

of all securities in the economy. The affect of these factors is to put pressure on

all securities in such a way that the prices of all stocks will more in the same

direction.

Example: -

During a boom period prices of all securities will rise & indicate that the

economy is moving towards prosperity. Market risk, interest rate risk &

purchasing power risk are grouped under systematic risk

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 RISK

SYSTEMATIC UNSYSTEMATIC

i. Market Risk i. Business Risk

ii. Interest Rate Risk ii. Financial Risk

iii. Purchasing power Risk

1. Systematic Risk

(A) Market risk

Market risk is referred to as stock variability due to changes in investor’s

attitudes & expectations. The investor reaction towards tangible and intangible

events is the chief cause affecting ‘market risk’.

(B) Interest rate risk

There are four types of movements in prices of stocks in the markets. These

may term as (1) long term, (2) cyclical (bull and bear markets), (3) intermediate

or within the cycle, and (4) short term. The prices of all securities rise or fall

depending on the change in interest rates. The longer the maturity period of a

13
security the higher the yield on an investment & lower the fluctuations in

prices.

(C) Purchasing Power risk

Purchasing power risk is also known as inflation risk. This risk arises out of

change in the prices of goods & services and technically it covers both inflation

and deflation periods. During the last two decades it has been seen that

inflationary pressures have been continuously affecting the Indian economy.

Therefore, in India purchasing power risk is associated with inflation and rising

prices in the economy.

2. Unsystematic Risk: -

The importance of unsystematic risk arises out of the uncertainty surrounding

of particular firm or industry due to factors like labour strike, consumer

preferences and management policies. These uncertainties directly affect the

financing and operating environment of the firm. Unsystematic risks can owing

to these considerations be said to complement the systematic risk forces.

(A) Business risk

Every corporate organization has its own objectives and goals and aims at a

particular gross profit & operating income & also accepts to provide a certain

level of dividend income to its shareholders. It also hopes to plough back some

profits. Once it identifies its operating level of earnings, the degree of variation

from this operating level would measure business risk.

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(B) Financial Risk: -

Financial risk in a company is associated with the method through which it

plans its financial structure. If the capital structure of a company tends to

make earning unstable, the company may fail financially. How a company

raises funds to finance its needs and growth will have an impact on its future

earnings and consequently on the stability of earnings. Debt financing provides

a low cost source of funds to a company, at the same time providing financial

leverage for the common stock holders. As long as the earnings of the company

are higher than the cost of borrowed funds, the earning per share of common

stock is increased. Unfortunately, a large amount of debt financing also

increases the variability of the returns of the common stock holder & thus

increases their risk. It is found that variation in returns for shareholders in

levered firms (borrowed funds company) is higher than in unlevered firms. The

variance in returns is the financial risk.

15
 COMPANY PROFILE

The study was performed at Sharekhan Financial Services Ltd, as the data of

companies selected across industries is required a business analysis and share

market consultant is required to guide and provide the data for the analytical

study and hence Sharekhan was approached to support and guide in this

project. Company profile of Sharekhan is provided first and then the

companies selected for the study are explained in detail.

Sharekhan Ltd is India’s leading online retail broking house with its presence

through 1800 ‘Share Shops’ in 550 cities and serving more than 10,00,000

customers across the nation. It also has international presence through its

branches in the UAE Launched on Feb 8th 2000 as an online trading portal,

Sharekhan offers its services to all types of customers- individual investors and

traders, corporate, institutional and NRI’s; trade execution facilities for cash as

well as derivatives, on BSE and NSE, depository services, mutual funds, initial

public offerings (IPOs), and commodities trading facilities on MCX and NCDEX.

Sharekhan provides market related news, stock quotes fundamental and

statistical information across equity, mutual funds, IPOs and much more.

Sharekhan has set category leadership through pioneering initiatives like

‘Trade Tiger ’, a net based executable application that emulates a broker

terminal besides providing information relevant to Day traders. Their second

initiative, ‘First Step’ is targeted at empowering first time investors. Recently

Sharekhan has ventured into trader education with US-based Online Training

16
Academy - one of the leading organizations in trading and investment

education globally. Sharekhan has also set their global footprints through the

‘India First’ initiative, a series of seminars conducted by Sharekhan to help

NRIs participate and benefit from the huge investment opportunities in India.

CIPLA LTD COMPANY PROFILE:

Cipla Limited (BSE: 500087, NSE: CIPLA) is a prominent Indian

pharmaceutical company, best-known outside its home country for

manufacturing low-cost anti-AIDS drugs for HIV-positive patients in developing

countries. It has played a similarly prominent role in expanding access to

drugs to fight influenza, respiratory disease and cancer. Founded by nationalist

Indian scientist Khwaja Abdul Hamied as The Chemical, Industrial &

Pharmaceutical Laboratories in 1935, Cipla makes drugs to treat

cardiovascular disease, arthritis, diabetes, weight control, depression and

many other health conditions, and its products are distributed in virtually

every country of the world.

Company Profile

Founded prior to Indian independence by Khwaja Abdul Hamied on the

principle that India needed to become self-sufficient in supplying medicine to

its people, Cipla has always emphasized self-reliance and the right of all people

to health and access to medicine, regardless of their economic circumstances

or where in the world they happen to live. The company has become well-

known internationally for its dedication to working according to these values

17
and prioritizing a socially-conscious approach to its operations, and that for

over 75 years.

Apart from its presence in the Indian market, Cipla also has an export market

and regularly exports to more than 185 countries in all corners of the world. [4]

Cipla cooperates with other enterprises in areas such as consulting,

commissioning, engineering, project appraisal, quality control, know-how

transfer, support, and plant supply.

Struggle against HIV/AIDS in the developing world

Cipla is the world's largest manufacturer of antiretroviral drugs (ARVs) to fight

HIV/AIDS, as measured by units produced and distributed (multinational

brand-name drugs are much more expensive, so in money terms Cipla

medicines are probably somewhere down the list). Roughly 40 percent of

HIV/AIDS patients undergoing antiretroviral therapy worldwide take Cipla

drugs.

In February, 2001, Cipla stunned the HIV/AIDS and public health

communities by announcing it would make its triple cocktail of antiretroviral

drugs available in developing countries for $350 per patient per year, a tiny

fraction of the prices prevailing internationally at the time. Ten years later,

looking back on the decade of rapid growth in access which ensued, the

Journal of the International AIDS Society (IAS) would write:

18
Cipla’s dramatic price reduction, which received widespread media attention,

hammered the message home that many of the multinational drug companies

were abusing their market monopoly in the face of a catastrophic human

disaster.

Indian law from 1972 until 2005 allowed no (end-product) patents on drugs,

and provided for compulsory licensing, Cipla was able to manufacture

medicines which enjoyed patent monopoly in certain other countries

(particularly those where large, multinational pharmaceutical companies are

based). By doing so, as well as by making an executive decision not to make

profits on AIDS medication, Cipla reduced the cost of providing antiretrovirals

to AIDS patients from $12,000 and beyond (monopoly prices charged by

international pharma conglomerates) down to under $100 per year. While this

sum remains out of reach for many millions of people in Third World countries,

government and charitable sources often are in a position to make up the

difference for destitute patients.

Cipla also pioneered a three-in-one tablet called Triomune containing a fixed-

dose combination (FDC) of three ARVs (Lamivudine, stavudine and Nevirapine),

something difficult elsewhere because the three patents were held by different

companies. Another popular fixed-dose combination is produced under the

name Duovir-N. This contains Lamivudine, Zidovudine and Nevirapine. Cipla

manufactures generic versions of many of the most commonly prescribed anti-

retroviral medication in the market, and is a highly capable manufacturer in its

19
own right. This innovation made ARVs far more accessible and easy-to-take for

patients everywhere, but particularly in poor- and middle-income countries,

where the vast majority of people on anti-retroviral therapy (ART) now take

such combination pills.

Cipla was among the first companies to register AIDS drugs under the US relief

program PEPFAR. It has also been a major supplier of ARVs to the Clinton

Foundation's HIV/AIDS Initiative, which has negotiated low-cost drug supplies

for numerous developing countries.

Through its breakthrough price offers to developing country governments and

leading NGOs such as Doctors Without Borders (MSF) and Oxfam, along with

its keen participation in PEPFAR, the Global Fund, the Clinton Foundation's

HIV/AIDS Initiative and other major donor programs fighting HIV/AIDS in

Africa and elsewhere in the resource-poor world, Cipla has played an

unparalleled leadership role in ensuring access to antiretroviral treatment

(ART) rose from under 10,000 on the entire African continent at the time of its

$350 per patient per year offer in 2001, to over 7 million in the developing

world by 2012.

Milestones

 1935

Dr K A Hamied sets up "The Chemical, Industrial and Pharmaceutical

Laboratories Ltd." in a rented bungalow at Bombay Central.

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  1941

As the Second World War cuts off drug supplies, the company starts producing

fine chemicals, dedicating all its facilities to the war effort.

 1952

Sets up first research division for attaining self-sufficiency in technological

development.

 1960

Starts operations at second plant at Vikhroli, Mumbai, producing fine

chemicals with special emphasis on natural products.

 1968

Cipla manufactures ampicillin for the first time in the country.

 1972

Starts Agricultural Research Division at Bangalore, for scientific cultivation of

medicinal plants.

 1976

Cipla launches medicinal aerosols for asthma.

 1980

Wins Chemexcil Award for Excellence for exports.

21
  1982

Fourth factory begins operations at Patalganga, Maharashtra.

 1984

Develops anti-cancer drugs, vinblastine and vincristine in collaboration with

the National Chemical Laboratory, Pune. Wins Sir P C Ray Award for

developing inhouse technology for indigenous manufacture of a number of

basic drugs.

 1985

US FDA approves Cipla's bulk drug manufacturing facilities.

 1988

Cipla wins National Award for Successful Commercialization of Publicly

Funded R&D.

 1991

Launches etoposide, a breakthrough in cancer chemotherapy, in association

with Indian Institute of Chemical Technology. The company pioneers the

manufacture of the antiretroviral drug, zidovudine, in technological

collaboration with Indian Institute of Chemical Technology, Hyderabad.

 1994

Cipla's fifth factory begins commercial production at Kurkumbh, Maharashtra.

22
  1997

Launches transparent Rotahaler, the world's first such dry powder inhaler

device now patented by Cipla in India and abroad. The palliative cancer care

centre set up by the Cipla Foundation, begins offering free services at Warje,

near Pune.

 1998

Launches lamivudine, becoming one of the few companies in the world to offer

all three component drugs of retroviral combination therapy (zidovudine and

stavudine already launched).

 1999

Launches Nevirapine, antiretroviral drug, used to prevent the transmission of

AIDS from mother to child.

 2000

Cipla became the first company, outside the USA and Europe to launch CFC-

free inhalers – ten years before the deadline to phase out use of CFC in

medicinal products.

 2001

Cipla announces it is prepared to supply a triple antiretroviral (ARV)

combination for $350 per patient per year in poor countries. Prices for

23
equivalent combinations at the time ranged up to over $15,000 per year in

price.

 2002

Four state-of-the-art manufacturing facilities set up in Goa in a record time of

less than twelve months.

 2003

Launches TIOVA (Tiotropium bromide), a novel inhaled, long-acting

anticholinergic bronchodilator that is employed as a once-daily maintenance

treatment for patients with chronic obstructive pulmonary disease (COPD).

Commissioned second phase of manufacturing operations at Goa.

 2005

Set-up state-of-the-art facility for manufacture of formulations at Baddi,

Himachal Pradesh.

 2007

Set-up state-of-the-art facility for manufacture of formulations at Sikkim.

 2010

Set up state-of-the-art facility for manufacture of formulations at Indore.

 2012

24
Announces price cuts averaging 75% on a range of complex cancer drugs.

25
ICICI BANK

ICICI Bank is India's second-largest bank with total assets of Rs. 4,062.34 billion (US$

91 billion) at March 31, 2011 and profit after tax Rs. 51.51 billion (US$ 1,155 million)

for the year ended March 31, 2011. The Bank has a network of 2,548 branches and

7,440 ATMs in India, and has a presence in 19 countries, including India.

ICICI Bank offers a wide range of banking products and financial services to corporate

and retail customers through a variety of delivery channels and through its specialised

subsidiaries in the areas of investment banking, life and non-life insurance, venture

capital and asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and

Dubai International Finance Centre and representative offices in United Arab

Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our

UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)

are listed on the New York Stock Exchange (NYSE).

CORPORATE HISTORY

ICICI Bank was established in 1994 by the Industrial Credit and Investment

Corporation of India, an Indian financial institution, as a wholly owned subsidiary.

The parent company was formed in 1955 as a joint-venture of the World Bank, India's

public-sector banks and public-sector insurance companies to provide project

financing to Indian industry. The bank was initially known as the Industrial Credit

26
and Investment Corporation of India Bank, before it changed its name to the

abbreviated ICICI Bank. The parent company was later merged into ICICI Bank.

ICICI Bank launched internet banking operations in 1998. ICICI's shareholding in

ICICI Bank was reduced to 46 percent, through a public offering of shares in India in

1998, followed by an equity offering in the form of American Depositary Receipts on

the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-stock

deal in 2001, and sold additional stakes to institutional investors during 2001-02.

In the 1990s, ICICI transformed its business from a development financial institution

offering only project finance to a diversified financial services group, offering a wide

variety of products and services, both directly and through a number of subsidiaries

and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the

first bank or financial institution from non-Japan Asia to be listed on the NYSE.

In 2000, ICICI Bank became the first Indian bank to list on the New York Stock

Exchange with its five million American depository shares issue generating a demand

book 13 times the offer size.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger

of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal

Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The

merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by

the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of

Judicature at Mumbai and the Reserve Bank of India in April 2002.

In 2008, following the 2008 financial crisis, customers rushed to ATM's and branches

in some locations due to rumors of adverse financial position of ICICI Bank. The

27
Reserve Bank of India issued a clarification on the financial strength of ICICI Bank to

dispel the rumors.

Corporate governance

 Group Anti Money Laundering Policy

The ICICI Group AML Policy establishes the standards of AML

compliance and is applicable to all activities.

 Code of Conduct

ICICI Bank has formulated a Code of Business Conduct and Ethics for

its directors and employees.

28
Tata Motors Limited

Tata Motors Limited is India's largest automobile company, with consolidated

revenues of INR 1,65,654 crores (USD 32.5 billion) in 2011-12. It is the leader

in commercial vehicles in each segment, and among the top three in passenger

vehicles with winning products in the compact, midsize car and utility vehicle

segments. It is the world's fourth largest truck and bus manufacturer.

The Tata Motors Group’s over 55,000 employees are guided by the vision to be

''best in the manner in which we operate, best in the products we deliver, and

best in our value system and ethics.''

Established in 1945, Tata Motors' presence indeed cuts across the length and

breadth of India. Over 6.5 million Tata vehicles ply on Indian roads, since the

first rolled out in 1954. The company's manufacturing base in India is spread

across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar

Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad

(Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an

industrial joint venture with Fiat Group Automobiles at Ranjangaon

(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The

company's dealership, sales, services and spare parts network comprises over

3,500 touch points.

Tata Motors, the first company from India's engineering sector to be listed in

the New York Stock Exchange (September 2004), has also emerged as an

international automobile company. Through subsidiaries and associate

29
companies, Tata Motors has operations in the UK, South Korea, Thailand,

Spain and South Africa. Among them is Jaguar Land Rover, a business

comprising the two iconic British brands that was acquired in 2008. JLR

supports two state of the art engineering and design facilities and three

manufacturing plants (Solihull, Castle Bromwich & Halewood) in the UK. In

2004, Tata Motors acquired the Daewoo Commercial Vehicles Company, South

Korea's second largest truck maker. The rechristened Tata Daewoo Commercial

Vehicles Company has launched several new products in the Korean market,

while also exporting these products to several international markets. Today

two-thirds of heavy commercial vehicle exports out of South Korea are from

Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano

Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently

the remaining stake in 2009. Hispano's presence is being expanded in other

markets. In 2006, Tata Motors formed a joint venture with the Brazil-based

Marcopolo, a global leader in body-building for buses and coaches to

manufacture fully-built buses and coaches for India and select international

markets. In 2006, Tata Motors entered into joint venture with Thonburi

Automotive Assembly Plant Company of Thailand to manufacture and market

the company's pickup vehicles in Thailand. The new plant of Tata Motors

(Thailand) has begun production of the Xenon pickup truck, with the Xenon

having been launched in Thailand in 2008. Tata Motors (SA) (Proprietary) Ltd.,

Tata Motors' joint venture with Tata Africa Holding (Pty) Ltd., has its assembly

plant in South Africa at Rosslyn, north of Pretoria, in the Gauteng province of

30
South Africa. The plant can assemble, from semi knocked down (SKD) kits,

light, medium and heavy commercial vehicles ranging from 4 - 50 tonnes.

Tata Motors is also expanding its international footprint, established through

exports since 1961. The company's commercial and passenger vehicles are

already being marketed in several countries in Europe, Africa, the Middle East,

South East Asia, South Asia, CIS, Russia and South America. It has

franchisee/joint venture assembly operations in Bangladesh, Ukraine, and

Senegal.

The foundation of the company's growth over the last 66 years is a deep

understanding of economic stimuli and customer needs, and the ability to

translate them into customer-desired offerings through leading edge R&D. With

over 4,500 engineers and scientists, the company's Engineering Research

Centre, established in 1966, has enabled pioneering technologies and

products. The company today has R&D centres in Pune, Jamshedpur,

Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. It was

Tata Motors, which developed the first indigenously developed Light

Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata

Indica, India's first fully indigenous passenger car. Within two years of launch,

Tata Indica became India's largest selling car in its segment. In 2005, Tata

Motors created a new segment by launching the Tata Ace, India's first

indigenously developed mini-truck.

31
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which

India and the world have been looking forward to. The Tata Nano has been

subsequently launched, as planned, in India in March 2009. A development,

which signifies a first for the global automobile industry, the Nano brings the

comfort and safety of a car within the reach of thousands of families.

In May 2009, Tata Motors ushered in a new era in the Indian automobile

industry, in keeping with its pioneering tradition, by unveiling its new range of

world standard trucks called Prima. In their power, speed, carrying capacity,

operating economy and trims, they will introduce new benchmarks in India

and match the best in the world in performance at a lower life-cycle cost. In

October 2010, Tata Motors launched the Tata Aria, the first Indian four-wheel

drive crossover. The Tata Aria redefines several benchmarks with its design

and technologies, offering class leading features that take comfort and safety to

a new height.

Tata Motors is equally focused on environment-friendly technologies in

emissions and alternative fuels. It has developed electric and hybrid vehicles

both for personal and public transportation. It has also been implementing

several environment-friendly technologies in manufacturing processes,

significantly enhancing resource conservation.

Through its subsidiaries, the company is engaged in engineering and

automotive solutions, construction equipment manufacturing, automotive

vehicle components manufacturing and supply chain activities, machine tools

32
and factory automation solutions, high-precision tooling and plastic and

electronic components for automotive and computer applications, and

automotive retailing and service operations.

Tata Motors is committed to improving the quality of life of communities by

working on four thrust areas employability, education, health and

environment. The activities touch the lives of more than a million citizens. The

company's support on education and employability is focused on youth and

women. They range from schools to technical education institutes to actual

facilitation of income generation. In health, our intervention is in both

preventive and curative health care. The goal of environment protection is

achieved through tree plantation, conserving water and creating new water

bodies and, last but not the least, by introducing appropriate technologies in

our vehicles and operations for constantly enhancing environment care.

33
Tata Communications Limited

Tata Communications Limited (Tata Communications), incorporated on March,

19, 1986, is a provider of wholesale international voice services and operates a

submarine cable network in the world. Tata Communications leverages its

solutions capabilities across its global and pan-India network to deliver

managed solutions to multi-national enterprises, service providers and Indian

consumers. The Tata Global Network includes a submarine cable networks, a

Tier-1 Internet protocol (IP) network, with connectivity to more than 200

countries across 400 point-of-presences (PoPs), and nearly one million square

feet of data center and collocation space worldwide. The Company is a global

communications company offering a range of integrated communications

services in three segments: Wholesale Voice, Enterprise and Carrier Data, and

Others. In February 2011, the Company acquired BitGravity, a content delivery

network. In June 2011, the Company acquired 12.5% stake from Two Telecoms

Consortium.

The Company’s customer base includes approximately 1,600 global carriers

and service providers, 785 mobile operators, 10,000 enterprises, 275,000

broadband and Internet subscribers and 500 wireless fidelity Wi-Fi) public

hotspots. The Company’s global transmission network of over 210,000 route

kilometers and its IP core with over 400 PoP, enables a range of services that

include traditional time-division multiplexing (TDM) voice, voice-over-Internet

protocol (VOIP), private leased circuits, IP virtual private network (VPN),

Internet access, global Ethernet, data centre, co-location, managed network,

34
managed services, managed hosting, managed storage, mobile signaling and

other IP-related services.

Wholesale Voice

The Company is a wholesale voice solutions provider in the world. The

Company fully owns and operates an international voice networks with

coverage in more than 240 countries and territories. It maintains over 480

direct and bilateral relationships with international voice telecommunication

providers. Transporting more than 32.6 billion minutes annually, the Company

has a range of customers that can be divided into three categories: Mobile,

Broadband and Carriers. In addition, the provides international access voice

services (toll-free, home country direct (HCD) and local number services), as

well as being a provider for other value-added services worldwide, such as

integrated services digital network (ISDN), audiotext, operator, managed calling

cards solution, voice peering and internetwork packet exchange (IPX).

The Company’s portfolio of global voice solutions consists of Voice Termination

Services (international long distance (ILD), virtual terminal service (VTS), VTS

Economy, VTS Prime), Wholesale Inbound Services or Access Services (Toll-

Free, Local Number Services, HCD); Universal International Free Phone Service

(UIFN); Managed Calling Cards Solution; Audiotext; ISDN, and Operator.

Through its global TDM and VoIP network, the Company carries international

long distance traffic to 240 countries and territories around the world. VTS

Prime, VTS and VTS Economy are solutions designed to meet each customer’s

35
specific needs in terms of voice quality and price. The Company’s access

services are fully automated, caller-dialed service options, which allow users to

receive toll-free calls from various countries worldwide. International toll-free

services (ITFS) offer coverage from over 100 countries, UIFN from 45 countries,

Local Number Services from 40 countries and HCD from over 110 countries.

UIFN service is available in over 45 participating countries. Managed calling

cards solution enables carriers to have a private-label prepaid calling service

with products and rate plans customized to their markets. Audiotext orovides

transport traffic to destination numbers promoted by content providers in

various countries for voice, data and/or online information services, which may

be accessed via the international public telephone network. ISDN provides a

high-quality, high-speed, clear channel data solution that delivers data

connectivity to over 120 countries and is ideal for video conferencing

applications. Operator services allow end-users to originate operator-assisted

calls (collect and sent paid) to and from Canada.

Enterprise and Carrier Data Business

The Company is a provider of data services, primarily focusing on International

and National Private Leased Circuit (IPLC and NPLC) services and IP transit

services. The Company supplies some of the international telecom companies

with transmission backbone services across the Atlantic, the Pacific, and into

and out of India. As a Tier 1 Internet service provider (ISP), the Company

operates an IP networks in the world with PoP worldwide. The company also

36
provides network services and managed services to cater to the business needs

of the top global multinational corporations worldwide. The Company’s

portfolio of carrier data services consists of global transmission services, IP

transit service, local and international Internet access service, managed node

service, white label enterprise service and content delivery network service.

In its enterprise data business, the Company offers customized, end-to-end

voice and data solutions, as well as managed services to enterprise customers

worldwide, including international private leased circuits (IPLCs), national

private leased circuits (NPLCs), Internet leased line circuits, dedicated Internet

access services, frame relay services and asynchronous transfer mode (ATM)

services. It also consists of data center infrastructure and application services,

global VPN services, global and pan-India Ethernet service, television

uplinking, transponder lease services, IPLC service, MVOIP and IPVoice

connect, business messaging and collaboration, business audio and Web

conferencing, managed security services, telepresence virtual meeting room

services, media management platform and global video network - video

connect.

37
ACC LTD

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete.

ACC's operations are spread throughout the country with 16 modern cement

factories, more than 40 Ready mix concrete plants, 21 sales offices, and several

zonal offices. It has a workforce of about 9,000 persons and a countrywide

distribution network of over 9,000 dealers.

Since inception in 1936, the company has been a trendsetter and important

benchmark for the cement industry in many areas of cement and concrete

technology. ACC has a unique track record of innovative research, product

development and specialized consultancy services. The company's various

manufacturing units are backed by a central technology support services

centre - the only one of its kind in the Indian cement industry.

ACC has rich experience in mining, being the largest user of limestone. As the

largest cement producer in India, it is one of the biggest customers of the

domestic coal industry, of Indian Railways, and a considerable user of the

country’s road transport network services for inward and outward movement of

materials and products.

Among the first companies in India to include commitment to environmental

protection as one of its corporate objectives, the company installed

sophisticated pollution control equipment as far back as 1966, long before

38
pollution control laws came into existence. Today each of its cement plants has

state-of-the art pollution control equipment and devices.

ACC plants, mines and townships visibly demonstrate successful endeavours

in quarry rehabilitation, water management techniques and ‘greening’

activities. The company actively promotes the use of alternative fuels and raw

materials and offers total solutions for waste management including testing,

suggestions for reuse, recycling and co-processing.

ACC has taken purposeful steps in knowledge building. We run two institutes

that offer professional technical courses for engineering graduates and diploma

holders which are relevant to manufacturing sectors such as cement. The main

beneficiaries are youth from remote and backward areas of the country.

ACC has made significant contributions to the nation building process by way

of quality products, services and sharing expertise. Its commitment to

sustainable development, its high ethical standards in business dealings and

its on-going efforts in community welfare programmes have won it acclaim as a

responsible corporate citizen. ACC’s brand name is synonymous with cement

and enjoys a high level of equity in the Indian market. It is the only cement

company that figures in the list of Consumer SuperBrands of India.

39
 INDUSTRY OVERVIEW

The securities market achieves one of the most important functions of

channeling idle resources to productive resources or from less productive

resources to more productive resources. Hence in the broader context the

people who save and investors who invest focus more towards the economy’s

abilities to invest and save respectively. This enhances savings and

investments in the economy, the two pillars for economic growth. The Indian

Capital Market has come a long way in this process and with a strong regulator

it has been able to usher an era of a modern capital market regime. The past

decade in many ways has been remarkable for securities market in India. It

has grown exponentially as measured in terms of amount raised from the

market, the number of listed stocks, market capitalization, trading volumes

and turnover on stock exchanges, and investor population. The market has

witnessed fundamental institutional changes resulting in drastic reduction in

transaction costs and significant improvements in efficiency, transparency and

safety.

Stock Exchange:

A stock exchange, share market or bourse is a corporation or mutual

organization which provides facilities for stock brokers and traders, to trade

company stocks and other securities. Stock exchanges also provide facilities for

the issue and redemption of securities, as well as, other financial instruments

and capital events including the payment of income and dividends. The

40
securities traded on a stock exchange include: shares issued by companies,

unit trusts and other pooled investment products and bonds. To be able to

trade a security on a certain stock exchange, it has to be listed there. Usually

there is a central location at least for recordkeeping, but trade is less and less

linked to such a physical place, as modern markets are electronic networks,

which gives them advantages of speed and cost of transactions. Trade on an

exchange is by members only. The initial offering of stocks and bonds to

investors is by definition done in the primary market and subsequent trading is

done in the secondary market. A stock exchange is often the most important

component of a stock market. Supply and demand in stock a market is driven

by various factors which, as in all free markets, affect the price of stocks (see

stock valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor

must stock be subsequently traded on the exchange. Such trading is said to be

off exchange or over-the-counter. This is the usual way that bonds are traded.

Increasingly, stock exchanges are part of a global market for securities.

History of stock exchanges:

In 12th century France the courratiers de change were concerned with

managing and regulating the debts of agricultural communities on behalf of the

banks. As these men also traded in debts, they could be called the first

brokers.

41
Some stories suggest that the origins of the term "bourse" come from the Latin

bursa meaning a bag because, in 13th century Bruges, the sign of a purse (or

perhaps three purses), hung on the front of the house where merchants met.

However, it is more likely that in the late 13th century commodity traders in

Bruges gathered inside the house of a man called Van der Burse, and in 1309

they institutionalized this until now informal meeting and became the "Bruges

Bourse". The idea spread quickly around Flanders and neighboring counties

and "Bourses" soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in

government securities. In 1351, the Venetian Government outlawed spreading

rumors intended to lower the price of government funds. There were people in

Pisa, Verona, Genoa and Florence who also began trading in government

securities during the 14th century. This was only possible because these were

independent city states ruled by a council of Influential citizens, not by a duke.

The Dutch later started joint stock companies, which let shareholders invest in

business ventures and get a share of their profits - or losses. In 1602, the

Dutch East India Company issued the first shares on the Amsterdam Stock

Exchange. It was the first company to issue stocks and bonds. In 1688, the

trading of stocks began on a stock exchange in London. Stock Exchange

42
The role of stock exchanges:

Stock exchanges have multiple roles in the economy, this may include the

following:

 Raising capital for businesses

The Stock Exchange provides companies with the facility to raise capital for

expansion through selling shares to the investing public.

 Mobilizing savings for investment

When people draw their savings and invest in shares, it leads to a more

rational allocation of resources because funds, which could have been

consumed, or kept in idle deposits with banks, are mobilized and redirected to

promote business activity with benefits for several economic sectors such as

agriculture, commerce and industry, resulting in a stronger economic growth

and higher productivity levels.

 Facilitating company growth

Companies view acquisitions as an opportunity to expand product lines,

increase distribution channels, hedge against volatility, increase its market

share, or acquire other necessary business assets. A takeover bid or a merger

agreement through the stock exchange is one of the simplest and most

common ways for a company to grow by acquisition or fusion.

43
  Redistribution of wealth

Stocks exchanges do not exist to redistribute wealth although casual and

professional stock investors through stock prices increases (that may result in

capital gains for the

Investor) and dividends get a chance to share in the wealth of profitable

businesses.

 Corporate governance

By having a wide and varied scope of owners, companies generally tend to

improve on their management standards and efficiency in order to satisfy the

demands of these shareholders and the more stringent rules for public

corporations imposed by public stock exchanges and the government.

Consequently, it is alleged that public companies (companies that are owned

by shareholders who are members of the general public and trade shares on

public exchanges) tend to have better management records than privately held

companies (those companies where shares are not publicly traded, often owned

by the company founders and/or their families and heirs, or otherwise by a

small group of investors). However, some well-documented cases are known

where it is alleged that there has been considerable slippage in corporate

governance on the part of some public companies (pets.com (2000), Enron

corporation (2001), One.tel (2001), Sunbeam (2001), Webvan (2001), Adelphia

44
(2002), Mci world com (2002), or paramalat(2003), are among the most widely

scrutinized by the media).

 Creating investment opportunities for small investors

As opposed to other businesses that require huge capital outlay, investing in

shares is open to both the large and small stock investors because a person

buys the number of shares they can afford. Therefore the Stock Exchange

provides the opportunity for small investors to own shares of the same

companies as large investors.

 Government capital-raising for development projects

Governments at various levels may decide to borrow money in order to finance

infrastructure projects such as sewage and water treatment works or housing

estates by selling another category of securities known as bonds. These bonds

can be raised through the Stock Exchange whereby members of the public buy

them, thus loaning money to the government. The issuance of such municipal

bonds can obviate the need to directly tax the citizens in order to finance

development, although by securing such bonds with the full faith and credit of

the government instead of with collateral, the result is that the Government

must tax the citizens or otherwise raise additional funds to make any regular

coupon payments and refund the principal when the bonds mature.

 Barometer of the economy

45
At the stock exchange, share prices rise and fall depending, largely, on market

forces. Share prices tend to rise or remain stable when companies and the

economy in general show signs of stability and growth. An economic recession,

depression, or financial crisis could eventually lead to a stock market crash.

Therefore the movement of share prices and in general of the stock indexes can

be an indicator of the general trend in the economy.

Major stock exchanges:

Twenty Largest Stock Exchanges by Market Capitalization as of July 12, 2007

(in trillions of US dollars)

 NYSE Euro next

 Tokyo Stock Exchange

 NASDAQ

 London Stock Exchange

 Hong Kong Stock Exchange

 Toronto Stock Exchange

 Frankfurt Stock Exchange (Deutsche Brose)

 Shanghai Stock Exchange

 Australian Securities Exchange

46
  Swiss Exchange

 Nordic Stock Exchange Group OMX (Copenhagen, Helsinki, Iceland,

 Stockholm, Tallinn, Riga and Vilnius Stock Exchanges)

 Milan Stock Exchange (Boras Italian)

 Bombay Stock Exchange

 Korea Exchange

 Sao Paulo Stock Exchange Bovespa

 National Stock Exchange of India

Primary market

Since 1991/92, the primary market has grown fast as a result of the removal of

investment restrictions in the overall economy and a repeal of the restrictions

imposed by the Capital Issues Control Act. In 1991/92, Rs62.15 billion was

raised in the primary market. This figure rose to Rs276.21 billion in 1994/95.

Since 1995/1996, however, smaller amounts have been raised due to the

overall downtrend in the market and tighter entry barriers introduced by SEBI

for investor protection .SEBI has taken several measures to improve the

integrity of the secondary market. Legislative and regulatory changes have

facilitated the corporatization of stockbrokers. Capital adequacy norms have

been prescribed and are being enforced. A mark-to-market margin and

47
intraday trading limit have also been imposed. Further, the stock exchanges

have put in place circuit breakers, which are applied in times of excessive

volatility. The disclosure of short sales and long purchases is now required at

the end of the day to reduce price volatility and further enhance the integrity of

the secondary market.

The primary is that part of the capital markets that deals with the issuance of

new securities. Companies, governments or public sector institutions can

obtain funding through the sale of a new stock or bond issue. This is typically

done through a syndicate of securities dealers. The process of selling new

issues to investors is called underwriting. In the case of a new stock issue, this

sale is an initial public offering (IPO). Dealers earn a commission that is built

into the price of the security offering, though it can be found in the prospectus.

Methods of issuing securities in the Primary Market

1. Initial Public Offer;

2. Rights Issue (For existing Companies); and

3. Preferential Issue

Secondary market:

The secondary market is the financial market for trading of securities that have

already been issued in an initial private or public offering. [1] Alternatively,

secondary market can refer to the market for any kind of used goods. The

48
market that exists in a new security just after the new issue, is often referred

to as the aftermarket. Once a newly issued stock is listed on a stock exchange,

investors and speculators can easily trade on the exchange, as market makers

provide bids and offers in the new stock.

Secondary marketing is vital to an efficient and modern capital market.

Fundamentally, secondary markets mesh the investor's preference for liquidity

(i.e., the investor's desire not to tie up his or her money for a long period of

time, in case the investor needs it to deal with unforeseen circumstances) with

the capital user's preference to be able to use the capital for an extended period

of time. For example, a traditional loan allows the borrower to pay back the

loan, with interest, over a certain period. For the length of that period of time,

the bulk of the lender's investment is inaccessible to the lender, even in cases

of emergencies. Likewise, in an emergency, a partner in a traditional

partnership is only able to access his or her original investment if he or she

finds another investor willing to buy out his or her interest in the partnership.

With a securitized loan or equity interest (such as bonds) or tradable stocks,

the investor can sell, relatively easily, his or her interest in the investment,

particularly if the loan or ownership equity has been broken into relatively

small parts. This selling and buying of small parts of a larger loan or ownership

interest in a venture is called secondary market trading.

Under traditional lending and partnership arrangements, investors may be less

likely to put their money into long-term investments, and more likely to charge

49
a higher interest rate (or demand a greater share of the profits) if they do. With

secondary markets, however, investors know that they can recoup some of

their investment quickly, if their own circumstances change.

Regulators

SEBI is the primary regulator of the Securities Market and the entities

operating therein. The SEBI Act and the Depositories Act are mostly

administered by SEBI. The rules under the securities laws are framed by

government and regulations by SEBI. All these are administered by SEBI. The

powers under the Companies Act relating to issue and transfer of securities

and non-payment of dividend are administered by SEBI in case of listed public

companies and public companies proposing to get their securities listed

BSE INDICES:-

INDEX:

An Index is used to summarize the price movements of a unique set of goods in

the financial, commodity, forex or any other market place. Financial indices are

created to measure price movements of stocks, bonds, T-bills and other type of

financial securities. More specifically, a stock index is created to provide

investors with the information regarding the average share price in the stock

market. Broad indices are expected to capture the overall behavior of equity

market and need to represent the return obtained by typical portfolios in the

country

50
SENSEX:

SENSEX is India's first Index compiled in 1986. It is a basket of 30 constituent

stocks representing a sample of large, liquid and representative companies.

The base year of BSE-SENSEX is 1978-79 and the base value is 100. The index

is widely reported in both domestic and international markets through print as

well as electronic media. Due to its wide acceptance amongst the investors,

SENSEX is regarded to be the pulse of the Indian stock market. All leading

business newspapers and the business channels report SENSEX, as it is the

language that all investors understand.

As the oldest index in the country, it provides the time series data over a fairly

long period of time (from 1979 onwards) to be used for various research

purposes. The Index Cell of the exchange is responsible for the day-to-day

maintenance of the index within the broad index policy set by the Index

Committee. The Index Cell ensures that the SENSEX and all other BSE indices

maintain their benchmark properties by striking a delicate balance between

frequent replacements in index and maintaining its historical continuity.

SENSEX is calculated using a market capitalization weighted method. As per

this methodology, the level of the index reflects the total market value of all 30-

component stocks from different industries related to particular base period.

The total market value of a company is determined by multiplying the price of

51
the stock by the number of shares outstanding Statisticians call the index of a

set of combined variables (such as price and No. of shares) a composite index.

An indexed number is used to represent the results of this calculation in order

to make the value easier to work with and track over a time. It is much easier

to graph a chart based on indexed values than one used on actual values.

World over majority of the well known indices are constructed using “Market

Capitalization Weighted Method”.

In practice, the daily calculation of SENSEX is done by dividing the aggregate

market value of the 30 Companies in the index by a number called the Index

Divisor. The Divisor is the only link to the original based period value of the

SENSEX. The Divisor keeps the Index comparable over a period of time and the

reference point for the entire index maintenance adjustments. SENSEX is

widely used to describe the mood in the Indian Stock Markets.

52
 RESEARCH METHODOLOGY

Need for the study:

Companies need to invest in diverse areas in order to minimize their risk and

get optimum returns. However, a company cannot blindly invest in everything

in order to reduce its risk since it involves huge money and effort. So, it is

important for a company to properly decide its portfolio and invest carefully.

The present study gives an insight into this issue by analyzing the Performance

of equity shares of the selected industries.

Objectives of the Study

 To observe the rate of fluctuations of selected industries.

 To determine the amount of risk & returns involved in the securities of

selected industries.

 To observe the degree of volatility in selected industries.

 To understand the price fluctuations & the factors influencing the

fluctuations of selected industries.

Scope of the Study

The study covers all the information related to the Equities it also covers the

risk and returns in selected industries. The study is confined five Sectors i.e

Pharma, Banking, Automobile, Telecom and Cement industries and the entire

study is based upon their Stock prices for a period of last one year.

53
Method of data collection:

The data that is used in this project is of secondary nature. The data is to be

collected from secondary sources such as Company reports and Annual

records and various websites, journals, newspapers, books, etc. the analysis

used in this project has been done using selective technical tools. In Equity

market, risk is analyzed and trading decisions are taken on basis of technical

analysis. It is collecting share prices of the company for a period of one year.

Source of data

Secondary data have been collected from the respective unit though manuals

and annual reports of the company.

Further the data collected from the historical/existing sources of data as

databases, journals books, articles, research reports, websites and etc.

Period of the study

The study is done for a period of 60 days in the organization where the

necessary guidance and the information required for the project is provided.

Limitations of the study

The present project work has been undertaken to provide information

regarding risk return on equity share prices of selected industries. The

following are the limitations of the study.

54
 The study is based on the secondary data which is available from

various.

 The study is limited to five sectors.

 The time taken to undertaken the project work is very short; hence only

One Company was chosen for the study.

55
 DATA ANALYSIS AND INTERPRETATIONS

CIPLA STOCK PRICES AS ON 2011

Month Closed price of No. of Shares No. of Trades

Cipla

Jan 332.25 3456288 55851

Feb 299.7 4827907 62232

Mar 321.05 5431128 72194

Apr 308.85 2008138 33282

May 326.1 3131451 44334

Jun 330.35 2874171 48995

Jul 307.85 1813764 32254

Aug 280 2266020 49622

Sep 282.7 2619325 52050

Oct 294.55 1733876 34261

Nov 327.95 4043059 67814

Dec 319.55 3152893 51736

56
 ..

Interpretation:

In the year 2011, the net asset values are drastically decreased compared to

the starting month and finally stood at 319.55 in the month of December.

57
DETEMINATION OF RISK AND RETURNS (2011)

Month BSE-500 CIPLA INDEX RETURNS CIPLA RETURNS

Jan 7,128.29 332.25 0.040566 0.108609

Feb 6,850.40 299.7 -0.07891 -0.0665

Mar 7,437.26 321.05 0.001363 0.039501

Apr 7,427.14 308.85 0.02672 -0.0529

May 7,233.85 326.1 -0.00433 -0.01287

Jun 7,265.32 330.35 0.021657 0.073088

Jul 7,111.31 307.85 0.096203 0.099464

Aug 6,487.22 280 0.015888 -0.00955

Sep 6,385.76 282.7 -0.05582 -0.04023

Oct 6,763.26 294.55 0.10565 -0.10184

Nov 6,117.00 327.95 0.058546 0.026287

Dec 5,778.68 319.55

Index CIPLA Covariance Beta Sdx Sdy Alpha Co.of Co.of

variance variance correlation determination

0.0031 0.0048 0.001 0.31 0.056 0.069 -0.01 0.283 0.080

58
Systematic risk Unsystematic risk Total risk Returns

0.000321 0.004518 0.004839 0.06

Interpretation:

From the above table, it is understood that the β- value of CIPLA is around

0.31 and that explains low volatility in the stock price. This low volatility in the

stock price indicates the low risk in the investments. Also the risk and returns

values of CIPLA are 0.004 and 0.06 respectively.

59
STOCK PRICES OF ICICI BANK LTD (2011)

Month Closed price of No. of shares No. of Traders

ICICI

11-Jan 1,020.00 1,56,82,632 4,24,962

11-Feb 971 1,10,38,536 3,52,275

11-Mar 1,112.75 1,07,76,829 3,29,682

11-Apr 1,114.25 82,39,747 2,18,979

11-May 1,086.00 79,03,271 2,41,533

11-Jun 1,093.10 66,56,345 1,80,183

11-Jul 1,037.75 77,47,500 1,75,907

11-Aug 873.25 1,08,26,251 3,04,705

11-Sep 875.35 92,29,678 2,64,562

11-Oct 930.5 1,06,88,505 3,07,920

11-Nov 714.15 1,40,99,002 3,86,701

11-Dec 676.05 92,41,521 2,58,015

60
Interpretation:

In the year 2011, the net asset values are drastically decreased compared to

the starting month and finally stood at 676.05 in the month of December.

61
DETEMINATION OF RISK AND RETURNS (2011)

MONTH BSE-500 ICICI RETURNS OF RETURNS OF ICICI

INDEX

Jan-11 7,128.29 1,020.00 0.040566 0.050463

Feb-11 6,850.40 971 -0.07891 -0.12739

Mar-11 7,437.26 1,112.75 0.001363 -0.00135

Apr-11 7,427.14 1,114.25 0.02672 0.026013

May-11 7,233.85 1,086.00 -0.00433 -0.0065

Jun-11 7,265.32 1,093.10 0.021657 0.053337

Jul-11 7,111.31 1,037.75 0.096203 0.188377

Aug-11 6,487.22 873.25 0.015888 -0.0024

Sep-11 6,385.76 875.35 -0.05582 -0.05927

Oct-11 6,763.26 930.5 0.10565 0.302948

Nov-11 6,117.00 714.15 0.058546 0.056357

Dec-11 5,778.68 676.05

62
Var of Var of Co-var Beta Co. of Co. of Sdx Sdy Alpha

index icici iance correlation determination

0.003 0.013 0.005 1.74 0.92 0.86 0.05 0.11 0.005

Systematic Risk Unsystematic Risk Total Risk Returns

0.009652 0.003878 0.01353 0.04

Interpretation:

From the above table, it is understood that the β- value of ICICI BANK is

around 1.74 and that explains high volatility in the stock price. This high

volatility in the stock price indicates the risk in the investments. Also the risk

and returns values of ICICI BANK are 0.01 and 0.04 respectively.

63
TATA MOTORS STOCK PRICES AS ON 2011

Month Closed price of Tata No. of Shares No. of Trades

motors

Jan 1148.25 9507436 288245

Feb 1081.8 14783186 448506

Mar 1247.5 8990876 278880

Apr 1229.1 4488031 148871

May 1092.5 8129852 279360

Jun 993.5 9077883 294520

Jul 947.4 5064329 172867

Aug 741.7 10403186 305428

Sep 156.1 39594376 441940

Oct 198.45 48452466 451627

Nov 172.45 59023249 523881

Dec 178.4 45479837 441427

64
 .

Interpretation:

In the year 2011, the net asset values are drastically decreased compared to

the starting month and finally stood at 178.4in the month of December.

65
DETEMINATION OF RISK AND RETURNS (2011)

MONTH BSE-500 TATA MOTORS INDEX RETURNS TATA MOTORS

RETURNS

Jan 7,128.29 1148.25 0.040566 0.061425

Feb 6,850.40 1081.8 -0.07891 -0.13283

Mar 7,437.26 1247.5 0.001363 0.01497

Apr 7,427.14 1229.1 0.02672 0.125034

May 7,233.85 1092.5 -0.00433 0.099648

Jun 7,265.32 993.5 0.021657 0.048659

Jul 7,111.31 947.4 0.096203 0.277336

Aug 6,487.22 741.7 0.015888 3.751441

Sep 6,385.76 156.1 -0.05582 -0.2134

Oct 6,763.26 198.45 0.10565 0.150768

Nov 6,117.00 172.45 0.058546 -0.03335

Dec 5,778.68 178.4

66
Index Tata Covariance Beta Sdx Sdy Alpha Co.of Co.of

variance motors correlation determination

variance

0.003 1.27 0.003 1.24 0.05 1.12 3.86 0.06 0.004

Systematic risk Unsystematic risk Total risk Returns

0.004904 1.265468 1.270373 4.14

Interpretation:

From the above table, it is understood that the β- value of TATA MOTORS is

around 1.24 and that explains high volatility in the stock price. This high

volatility in the stock price indicates the risk in the investments. Also the risk

and returns values of TATA MOTORS are 1.27 and 4.14 respectively.

67
TATA COMMUNICATIONS STOCK PRICES AS ON 2011

Month Closed price of Tata No. of Shares No. of Trades

communications

Jan 233.2 440766 12299

Feb 211.4 828202 21163

Mar 238.9 3102590 57181

Apr 236.95 1050391 28174

May 214.6 430485 22100

Jun 197.1 1258982 31739

Jul 222.5 1594659 35460

Aug 202.9 858974 24772

Sep 186.2 449838 16869

Oct 189.3 360272 12752

Nov 191.2 750846 23118

Dec 212.35 690298 21499

68
 ..

Interpretation:

In the year 2011, the net asset values are drastically increased and decreased

compared to the starting month and finally stood at 212.35 in the month of

December.

69
DETEMINATION OF RISK AND RETURNS (2011)

YEAR BSE-500 TATA INDEX TATA

COMMUNICATIONS RETURNS COMMUNICATIONS

RETURNS

1-Jan 7,128.29 233.2 0.040566 0.103122

1-Feb 6,850.40 211.4 -0.07891 -0.11511

1-Mar 7,437.26 238.9 0.001363 0.00823

1-Apr 7,427.14 236.95 0.02672 0.104147

1-May 7,233.85 214.6 -0.00433 0.088787

1-Jun 7,265.32 197.1 0.021657 -0.11416

1-Jul 7,111.31 222.5 0.096203 0.096599

1-Aug 6,487.22 202.9 0.015888 0.089689

1-Sep 6,385.76 186.2 -0.05582 -0.01638

1-Oct 6,763.26 189.3 0.10565 -0.00994

1-Nov 6,117.00 191.2 0.058546 -0.0996

1-Dec 5,778.68 212.35

70
Index Tata Covarian Beta Sdx Sdy Alph Co.of Co.of
varianc communicatio ce a correlatio determinati
e ns variance n on
0.003 0.008 0.0013 0.43 0.0 0.0 0.03 0.29 0.08
5 9

Systematic risk Unsystematic risk Total risk Returns

0.0006 0.00757 0.008171 0.13

Interpretation:

From the above table, it is understood that the β- value of Tata

Communications is around 0.43 and that explains low volatility in the stock

price. This low volatility in the stock price indicates the low risk in the

investments. Also the risk and returns values of Tata Communications are

0.008 and 0.13 respectively.

71
ACC LTD STOCK PRICES AS ON 2011

Month Closed price No. of Shares No. of Trades

of ACC LTD

Jan 988.15 774299 30933

Feb 971.05 2626224 41326

Mar 1075.2 947224 25104

Apr 1108.25 608428 25819

May 1026.6 508285 24433

Jun 949.25 379436 18496

Jul 1012.05 470442 21882

Aug 1002.55 686534 20962

Sep 1098.15 749458 32356

Oct 1195.25 707227 31143

Nov 1145.05 602914 30629

Dec 1136.35 515657 28215

72
 .

Interpretation:

In the year 2011, the net asset values are drastically increased from the month

January to October and decreased last two years finally stood at 1136.35in the

month of December.

73
DETEMINATION OF RISK AND RETURNS (2011)

MONTH BSE-500 ACC LTD INDEX ACC LTD

RETURNS RETURNS

Jan 7,128.29 988.15 0.040566 0.01761

Feb 6,850.40 971.05 -0.07891 -0.09687

Mar 7,437.26 1075.2 0.001363 -0.02982

Apr 7,427.14 1108.25 0.02672 0.079534

May 7,233.85 1026.6 -0.00433 0.081485

Jun 7,265.32 949.25 0.021657 -0.06205

Jul 7,111.31 1012.05 0.096203 0.009476

Aug 6,487.22 1002.55 0.015888 -0.08706

Sep 6,385.76 1098.15 -0.05582 -0.08124

Oct 6,763.26 1195.25 0.10565 0.043841

Nov 6,117.00 1145.05 0.058546 0.007656

Dec 5,778.68 1136.35

74
Index Acc ltd Covariance Beta Sdx Sdy Alpha Co.of Co.of

variance variance correlation determination

0.003 0.004 0.001 0.58 0.05 0.06 -0.23 0.55 0.30

Systematic risk Unsystematic risk Total risk Returns

0.00108 0.003159 0.004239 -0.76

Interpretation:

From the above table, it is understood that the β- value of ACC LTD is around

0.58 and that explains low volatility in the stock price. This low volatility in the

stock price indicates the low risk in the investments. Also the risk and returns

values of ACC LTD are 0.004 and -0.76 respectively.

75
FINDINGS:

The values of Beta, Risk and Returns of selected industries in the following table

COMPANIES BETA RISK RETURNS

CIPLA 0.31 0.004 0.06

ICICI 1.74 0.013 0.04

TATA MOTORS 1.24 1.27 4.14

TATA COMMUNICATIONS 0.43 0.008 0.13

ACC LTD 0.58 0.004 -0.76

 The sensitivity of a security to market movements is called Beta. Here,

the beta values of Cipla, Tata communications, and ACC ltd are less than

1, it is considered to be as safety fund. That means these types of funds

have more protection in the case of market slow down.

 In 2011 the beta values of ICICI and TATA MOTORS are greater than 1

which represents the fund returns are more than the market and also

fall more than the market.

76
Suggestions:

1. It is suggested to the investors to choose ICICI and Tata motors to safe

their investments even in market loss.

2. If investors want to get more returns bearing more risk he is suggested to

choose ACC ltd and Tata communications, Cipla.

3. The stock market is characterized by the tradeoff between risk and

return. The higher the risk the investor is willing and able to take, the

higher the potential rewards from the investment. Therefore, if a

particular investment offers you high returns, it is an indication that it

will come with a high risk burden.

4. As part of the selection process, investor should determine the risk level

of the stock as well as their risk tolerance. If they are looking for high

returns they should be able to meet high potential losses as well.

5. There is no safe investment that will provide investors with high returns

over a short period of time. Therefore, investor should direct their

resources toward long – term investment that are more likely to reward

you for the patience with high returns.

77
Conclusion:

The Study on Performance Analysis of equity shares in selected industries was

undertaken with an objective of getting an insight into the concept of

investments, the risks and the returns involved. The study aims to determine

the risk involved in the investments and the factors affecting the risk. The

other objectives of the study are to observe the rate of fluctuations and the

degree of volatility of the selected industries. The study is confined to the

pharma, Banking, Automobile, Telecommunications and Cement sector and

analyzed five sectors –Cipla, ICICI, Tata motors, Tata communications, Acc ltd.

The study is done using the NIFTY values and other related data from the

Stock Exchanges. The data of the five sectors –Cipla, ICICI and Tata motors,

Tata communications, Acc ltd. are collected. The entire study is based on the

secondary data only. The analytical tools used for the study are risk and return

analysis. The study is done at Hyderabad for a period of 60days. The study had

few limitations which were taken care of.

The information collected was analyzed using appropriate techniques – risk

and return analysis. From the analysis, it was found that the risk of ICICI and

TATA MOTORS are very high. That means the returns for the investment in

these companies is very high. The remaining three companies have beta values

less than 1 and is suggested to the investors to invest in these companies to

protect their money even in the market losses.

78
Bibliography

1. S. Kelvin, Security analysis and portfolio management, Prentice-Hall of

India, 1st edition, 2009.

2. Rohini singh, Security analysis and portfolio management, Excel books,

1st edition, 2009

3. Dr. Maheswari S.N, Management Accounting and Financial control,

sultan chand and sons, 1992.

Webliography

1. www.indiainfoline.com

2. www.bse.com

3. www.nse.com

4. www.moneycontrol.com

5. www.wikipedia.com

6. www.investopedia.com

79