PROJECT REPORT

ON
“BETA ANALYSIS”
Project Report submitted in partial fulfilment of the requirements
of the degree of
Master of Business Administration
By

POTTAM KIRTI
Registration No. 200402100012

UNDER THE SUPERVISION OF

Dr. GIRIJA NANDINI

CENTURION UNIVERSITY OF TECHNOLOGY & MANAGEMENT

SCHOOL OF MANAGEMENT
BBSR, ODISHA, INDIA
2020-2022

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 CONTENTS

S.N PARTICULAR PAGE

NO.
1 Introduction 3
2 Review of literature 3-4
3 Research Gap 4
4 Objective of the Study 4
5 Scope of the Study 4-5
6 Organisation Profile 5 - 10
7 Company Profile 10 - 18
8 Risk Analysis 18 – 23
9 Return Analysis 23
10 Beta Analysis 23 - 27
11 Data Analysis of Selected IT Sector Company 27
12 Findings 27
13 Conclusion 28
14 Bibliography 28

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 1. INTRODUCTION
In finance, the beta (β or market beta or beta coefficient) is a measure of how an
individual asset moves (on average) when the overall stock market increases or decreases.
Thus, beta is a useful measure of the contribution of an individual asset to the risk of the
market portfolio when it is added in small quantity. Thus, beta is referred to as an asset's non-
diversifiable risk, its systematic risk, market risk, or hedge ratio. Beta is not a measure
of idiosyncratic risk. Company valuation includes estimation of the cost of equity, which
represents the risk of the cash flows. The most common method to estimate this risk is by
using the Beta, which represents the relative risk of the analyzed company compared to the
equity market. While the basic cost of equity formula includes 3 inputs- risk free rate, beta,
and market return, the beta is the most controversial input of the three. The source of this
controversy stems from the various methods of Beta calculation and estimation, and the
magnitude of its influence on the valuation. In this article I will try to explain the meaning of
Beta, walk through the methods of Beta calculation, and describe the methods of estimation
according to the characteristics of the valuation process.

2. REVIEW OF LITERATURE
 Pramod Kumar Patjoshi (2016): This paper studies about correlation between risk
and return of BSE and Baking socks of 30. The analysis of risk and return are
presence in Indian share market using linear regression, Descriptive statistics, and T
test. In the linear regression with BSE Sensex index and Banking stock index.
Therefore, the study found to compare the banking section indices and BSE Sensex is
going to calculate risk-return off. Out of 4 stocks where AIXS bank gives good return.

 Suresh and Harshitha (2017): This research is about comparing risk and return
relationship of stocks by using Markowitz and Sharpe’s model. The study aims to
identify the level of deviation in returns by comparing these two models and to check
whether the results obtained are constant or not. The result of beta will allow the
investors to know about the market risk of the particular investments. The research
shows that both the models give almost the same value for both individual return and
risk and also portfolio.

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 Mr. Sunil M Rashinkar and Mrs. Divya U (2014), conducted a study on Market
Risk Analysis of selected Banking Stock in India, the study was limited to five
nationalized banks in India. And it includes State Bank of India, Industrial
Development Bank of India, Syndicate Bank, Punjab National Bank, Bank of Baroda.
And the duration of study was 1 year (1 July 2013-31 march 2014), and the tool used
for analysis was Beta Coefficient. The study reveals that the betas of State Bank of
India, Industrial Development Bank of India, & syndicate bank were negative which
implies that these stocks are moved against the market and less affected by market
risk. On the other hand, the betas of Punjab National Bank & Bank of Baroda were
more than one. It indicates that these stocks were exposed to high market risk.

3. RESEARCH GAP
There is need to study the time series behaviour of mispricing in SSFs (single stock
future) contracts in the Indian market as they constitute the potential rate of returns and
literature has the evidence of seasonal anomalies in series of stock returns.

4. OBJECTIVES OF THE STUDY

 To analyze the return of the IT sector companies.
 Calculate the beta of selected stock from their last 5 years past data.
 To measure actual return and expected returns with the help of beta.
 To find out risk less companies to invest in using beta values.
 Analysis whether the stock is good for investment or not by calculating the beta
analysis.

5. SCOPE OF THE STUDY

 The analysis focuses on IT sector companies.
 The major work in the concept of equity research lies in identification of variables
that influence the stock prices which will be helpful for the investor to generate better
returns on the investment.
 Since the study is based on only the quantitative variables confined to only BSE
Sensex, it is not clear as to how the results would generalize to sample of firms from
different industries with varied characteristics.

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  So, the results of the study can be reinforced to assess the performance with the
inclusion of few more variables and applying to different indices or firms or industries
also.
 By including more variables and applying to varied sample, one can determine the
universal acceptability of its findings which gives scope for more in-depth research in
this direction.

6. ORGANIZATION PROFILE
Bhubaneswar Stock Exchange Ltd. (BhSE) which had been functioning as a recognized stock
exchange in the State of Odisha since the year 1989, has taken exit as a stock exchange w.e.f.
February 09, 2015 pursuant to exit policy of Securities and Exchange Board of India (SEBI)
for non-performing stock exchanges in the country. In this context, SEBI has issued an order
on February 09, 2015 for exit of BhSE as a stock exchange after ensuring compliance of
various formalities by BhSE associated with such exit process. SEBI in its said order had
directed BhSE, among other requirements, to change its name and not to use the expression
“Stock Exchange” or any variant of this expression in its name.
As it was required in the exit order issued by SEBI, the name of the Company has been
changed from “Bhubaneswar Stock Exchange Ltd.” to “Odisha Capital Market &
Enterprises Ltd.” w.e.f. 9th June, 2015 with the approval of the Registrar of Companies,
Odisha in terms of provisions of the Companies Act, 2013. Now, after exit of BhSE as a
stock exchange, the Company of erstwhile BhSE functions under a new name “Odisha
Capital Market & Enterprises Ltd.” with an altered set of Memorandum and Articles of
Association in terms of provisions of the Companies Act, 2013.

MANAGEMENT: 
The affairs of the company are controlled and supervised by the Board of Directors under the
provisions of its Memorandum and Articles of Association. The duties and responsibilities of
day to day management and affairs of the company are now vested with MR. THOMAS
MATHEW, MANAGING, DIRECTOR, who is assisted by MR. DEBASIS
SAMANTARAY, DIRECTOR and a team of managerial and other employees of the
company.

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BUSINESS OPERATION
Odisha Capital Market & Enterprises Ltd. in terms of its altered Memorandum of Association
is now taking steps to carry on different activities in the domain of capital market. More
particularly, it is committed to carry on campaigning financial literacy for financial inclusion
in the State in addition to working for assisting financial education as were discharged by the
erstwhile BhSE as a stock exchange. 

CURRENT ACTIVITIES OTHER THAN BUSINESS OPERATION

Apart from business operation, the company is engaged in promotion and development of
other activities in the interest of the investing public in capital market in a big way such as –

Investors’ Awareness Programme:

The company is conducting investors’ awareness programmes by way of seminars/workshop
from time to time for education and awareness of investing public in securities. The aim of
the company is to have as many as awareness programmes in a year at different locations of
the State of Orissa. 

Securities Market Training Programme:

The company is providing a Certificate Course, namely, “Basics of Capital Market. With the
expansion of capital market which includes the reach of its activities in the form of course
contents at various B-Schools and +2 Commerce level schools, practical oriented education
programme in securities market activities is in increasing demand now days as it promises
youth to make career in the field of securities market. The company aims at undertaking
practical oriented training programmes for the students of + Commerce and B-Schools in a
big way as well as for the youths who want to make their career in securities market. At
present, the company is engaged in imparting training to the students of various management
institutes. 

Students Assistance Programme:

The students of various Institutes and B-Schools require preparing project papers on different
topics including the topics related to activities in Stock Exchange and securities market. The
students of a number of Institutes and B-Schools visit the company either directly or
sponsored by their Institutes every year for assistance in preparation of their project papers.

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The company assists and supports those students in their research work by providing
necessary guidance and securities market information.
ABOUT NSE
The National Stock Exchange of India Ltd. (NSE) is the leading stock exchange in India and
the second largest in the world by nos. of trades in equity shares from January to June 2018,
according to World Federation of Exchanges (WFE) report.

NSE launched electronic screen-based trading in 1994, derivatives trading (in the form of
index futures) and internet trading in 2000, which were each the first of its kind in India.
NSE has a fully-integrated business model comprising our exchange listings, trading services,
clearing and settlement services, indices, market data feeds, technology solutions and
financial education offerings. NSE also oversees compliance by trading and clearing
members and listed companies with the rules and regulations of the exchange.

NSE is a pioneer in technology and ensures the reliability and performance of its systems
through a culture of innovation and investment in technology. NSE believes that the scale and
breadth of its products and services, sustained leadership positions across multiple asset
classes in India and globally enable it to be highly reactive to market demands and changes
and deliver innovation in both trading and non-trading businesses to provide high-quality data
and services to market participants and clients.

MISSION OF NSE
NSE's mission is setting the agenda for change in the securities markets in India.
 
OBJECTIVES OF NSE
The NSE was set-up with the main objectives of:
 Establishing a nation-wide trading facility for equities, debt instruments and hybrids,
 Ensuring equal access to investors all over the country through an appropriate
communication network,
 Providing a fair, efficient and transparent securities market to investors using
electronic trading systems,
 Enabling shorter settlement cycles and book entry settlements systems, and
 Meeting the current international standards of securities markets.

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CORPORATE STRUCTURE
NSE is one of the first de-metalized stock exchanges in the country, where the ownership and
management of the Exchange is completely divorced from the right to trade on it. Though the
impetus for its establishment came from policy makers in the country, it has been set up as a
public limited company, owned by the leading institutional investors in the country.

From day one, NSE has adopted the form of a demutualised exchange - the ownership,
management and trading is in the hands of three different sets of people. NSE is owned by a
set of leading financial institutions, banks, insurance companies and other financial
intermediaries and is managed by professionals, who do not directly or indirectly trade on the
Exchange. This has completely eliminated any conflict of interest and helped NSE in
aggressively pursuing policies and practices within a public interest framework. 

The NSE model however, does not preclude, but in fact accommodates involvement, support
and contribution of trading members in a variety of ways. Its Board comprises of senior
executives from promoter institutions, eminent professionals in the fields of law, economics,
accountancy, finance, taxation, etc. public representatives, nominees of SEBI and one
fulltime executive of the Exchange. While the Board deals with broad policy issues, decisions
relating to market operations are delegated by the Board to various committees constituted by
it. Such committees include representatives from trading members, professionals, the public
and the management. The day-to-day management of the Exchange is delegated to the
Managing Director who is supported by a team of professional staff.

ABOUT BSE
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.
Popularly known as "BSE", it was established as "The Native Share & Stock Brokers
Association" in 1875. It is the first stock exchange in the country to obtain permanent
recognition in 1956 from the Government of India under the Securities Contracts
(Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of
the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide.
Earlier an Association of Persons (AOP), the Exchange is now a demutualised and
corporatized entity incorporated under the provisions of the Companies Act, 1956, pursuant

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to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities
and Exchange Board of India (SEBI).

With demutualization, the trading rights and ownership rights have been de-linked effectively
addressing concerns regarding perceived and real conflicts of interest. The Exchange is
professionally managed under the overall direction of the Board of Directors. The Board
comprises eminent professionals, representatives of Trading Members and the Managing
Director of the Exchange. The Board is inclusive and is designed to benefit from the
participation of market intermediaries.

In terms of organization structure, the Board formulates larger policy issues and exercises
over-all control. The committees constituted by the Board are broad-based. The day-to-day
operations of the Exchange are managed by the Managing Director and a management team
of professionals. The Exchange has a nation-wide reach with a presence in 417 cities and
towns of India. The systems and processes of the Exchange are designed to safeguard market
integrity and enhance transparency in operations. During the year 2004-2005, the trading
volumes on the Exchange showed robust growth. The Exchange provides an efficient and
transparent market for trading in equity, debt instruments and derivatives. 
The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is
BS 7799-2-2002 certified. The surveillance and clearing &settlement functions of the
Exchange are ISO 9001:2000 certified.

LISTING OF SECURITIES
Listing means admission of the securities to dealings on a recognized stock exchange. The
securities may be of any public limited company, Central or State Government, quasi-
governmental and other financial institutions/corporations, municipalities, etc.
The objectives of listing are mainly to: 
 Provide liquidity to securities;
 Mobilize savings for economic development;
 Protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listing of securities of
companies in accordance with the provisions of the Securities Contracts (Regulation) Act,
1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines

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issued by SEBI and Rules, Bye-laws and Regulations of the Exchange. A company intending
to have its securities listed on the Exchange has to comply with the listing requirements
prescribed by the Exchange. Some of the requirements are as under: -
a. Minimum Listing Requirements for new companies
b. Minimum Requirements for companies delisted by this Exchange seeking relisting of
this Exchange
c. Minimum Requirements for companies delisted by this Exchange seeking relisting of
this Exchange
d. Permission to use the name of the Exchange in an Issuer Company's prospectus
e. Submission of Letter of Application
f. Allotment of Securities
g. Trading Permission
h. Requirement of 1% Security
i. Payment of Listing Fees
j. Compliance with Listing Agreement
k. "Z" Group
l. Cash Management Services (CMS) – Collection of Listing Fees.

7. COMPANY PROFILE

 WIPRO LIMITED :

Wipro is an integrated corporation that offers a diverse range of products,

solutions and services in systems, software, consumer care, healthcare, lighting and
infrastructure technology. We are driven by our passion for quality and our
commitment to customers. This drive has catapulted us among the ten most admired
companies in India. Through constant innovation and a people-first attitude, we strive
to assume leadership positions in all our businesses in the new millennium.
The third-largest company in India, Bangalore-based Wipro Limited is an ever-
growing and ever-diversifying global company that manufactures and sells products
and services ranging from cooking oil and soaps to healthcare instruments and
information technology (IT) consulting. Although Wipro's chairman and managing
director Azim Hasham Premji is committed to the company's diversified business
model, its future clearly lies in its continued successes in software and IT services,
which make up nearly half of the company's sales and has consistently outpaced the

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growth of Wipro's other businesses. Wipro's world-class technologies division
provides a range of high-tech services such as global IT consulting, e-business
integration, and legacy systems maintenance to clients such as Cisco Systems,
Thomas Cooke, and NEC. Wipro's IT efforts are so reliable that in 1998 the company
became the first in the world to have been awarded the Software Engineering
Institute's (SEI) coveted Level 5 Certification for quality. After an impressive debut on
the New York Stock Exchange in 2000, Premji, who owns 75 percent of Wipro,
became one of the top billionaires in the world.

 INFOSYS LIMITED :

Infosys Limited is an Indian Information Technology company that provides global

business consulting and information technology services. Infosys helps clients in 45 countries
to create and execute different strategies for their digital transformation. Infosys helps
businesses to renew & improve existing conditions so that their business can achieve higher
efficiencies and stay relevant according to current times.  Infosys has more than 200,000
employees and through their hard work & dedication, Infosys has grown to become a US
$10.9 billion (revenues FY18) company with a market capitalization of US $39 billion.
Infosys Limited formerly known as Infosys Technologies Limited was established in the year
1981 by N. R. Narayana Murthy and a team of six other engineers in Pune, India with an
initial capital investment of just US $250.

 In the year 1993 Infosys went public and introduced employee stock options program.
 In 1994, Infosys moved its corporate office from Pune to Bangalore, India.
 In the year 1999, Infosys became the first Indian IT company to be listed in NASDAQ
thus making it the costliest share on the market at that time in India. In the year 1999,
Infosys was among the 20 biggest companies by market value on the NASDAQ.
 In the year 1999 Infosys annual revenue touched US$100 million, US $1 billion in
2004 and US$10 billion in 2017.

 TCS LIMITED :

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 Tata Consultancy Services Ltd is a leading global IT services consulting and
business solutions organization offering transformational as well as outsourcing services to
global enterprises. We have a global presence deep domain expertise in multiple industry
verticals and a rich portfolio of services - consisting of consulting and service integration
digital transformation services and cognitive business operations - targeting every C-suite
stakeholder. The Company uses all these and its industry leading suite of products and
platforms to deliver high quality high impact solutions leveraging the latest technologies to
customers across the world. TCS's geographic footprint consists of North America Latin
America the United Kingdom Continental Europe Asia-Pacific India and Middle-East &
Africa.The company is a part of Tata Group one of India's most respected business
conglomerates and most respected brands. The company headquartered in Mumbai. TCS
have been operating through 285 offices in 46 countries as well as 147 delivery centers in 21
countries. The company shares are listed on the National Stock Exchange and Bombay Stock
Exchange of India. Tata Consultancy Services Ltd was incorporated in the year 1968. Tata
Sons Ltd established the company as division to service their electronic data processing
(EDP) requirements and provide management consulting services. In the year 1971 they
started their first international assignment. The company pioneered the global delivery model
for IT services with their first offshore client in 1974.In the year 1981 the company set up
India's first IT R&D division the Tata Research Design and Development Centre at Pune. In
the year 1985 they set up their first client-dedicated offshore development center for Compaq
(then Tandem). In the year 1989 they delivered an electronic depository and trading system
called SECOM for SIS SegaInterSettle Switzerland.In the year 1997 the company opened
their new corporate training facility at Trivandrum.

 MICROSOFT CORPORATION LIMITED :

Microsoft Corporation is a technology company. The Company develops and
supports a range of software products, services, devices, and solutions. The Company's
segments include Productivity and Business Processes, Intelligent Cloud, and More Personal
Computing. The Company's products include operating systems; cross-device productivity
applications; server applications; business solution applications; desktop and server
management tools; software development tools; and video games. It also designs,
manufactures, and sells devices, including personal computers (PCs), tablets, gaming and
entertainment consoles, other intelligent devices, and related accessories. It offers an array of

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services, including cloud-based solutions that provide customers with software, services,
platforms, and content, and it provides solution support and consulting services. It markets
and distributes its products and services through original equipment manufacturers, direct,
and distributors and resellers.

 TECH MAHINDRA LIMITED :

Tech Mahindra is an Indian multinational technology company that
provides Information Technology (IT) and Business Process Outsourcing (BPO) services.
A subsidiary of the Mahindra Group, the company is headquartered in Pune and has its
registered office in Mumbai. As of April 2020, Tech Mahindra is a US$5.2 billion
company with 125,236 employees across 90 countries. The company ranked #5 in India's
IT firms and overall #47 in Fortune India 500 list for 2019.[8] On 25 June 2013, Tech
Mahindra announced the completion of a merger with Mahindra Satyam. Tech Mahindra
has 973 active clients as of April 2020. Mahindra & Mahindra started joint
venture with British Telecom in 1986 as a technology outsourcing firm. British
Telecom initially had around 30 percent stake in the Tech Mahindra company. In
December 2010, British Telecom sold 5.5 per cent of its stake in Tech Mahindra to
Mahindra & Mahindra for Rs 451 crore. In August 2012, British Telecom sold 14.1 per
cent of its stake to institutional investors for about Rs 1,395 crore. In December 2012,
British Telecom sold its remaining 9.1 per cent (11.6 million shares) shareholding to
institutional investors for a total gross cash proceeds of Rs 1,011.4 crores. This sale
marked the exit of British Telecom from Tech Mahindra.

 HCL TECHNOLOGIES LIMITED :

HCL Technologies is a next-generation global technology company that helps

enterprises reimagine their businesses for the digital age. Our technology products and
services are built on four decades of innovation, with a world-renowned management
philosophy, a strong culture of invention and risk-taking, and a relentless focus on
customer relationships. HCL also takes pride in its many diversity, social responsibility,
sustainability, and education initiatives. Through its worldwide network of R&D facilities
and co-innovation labs, global delivery capabilities, and over 187,000+ ‘Ideapreneurs’
across 50 countries, HCL delivers holistic services across industry verticals to leading

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 enterprises, including 250 of the Fortune 500 and 650 of the Global 2000. Enterprises
across industries stand at an inflection point today. In order to thrive in the digital age,
technologies such as analytics, cloud, IoT, and automation occupy center stage. In order
to offer enterprises the maximum benefit of these technologies to further their business
objectives, HCL offers an integrated portfolio of products and services through three
business units. These are IT and Business Services (ITBS), Engineering and R&D
Services (ERS), and Products and Platforms (P&P). ITBS enables global enterprises
to transform their businesses via Digital Foundation, our modernized infrastructure stack
built around hybrid cloud, software-defined networks, the digital workplace, and other
elements; Digital Business, a combination of our application services and consulting
capabilities; and Digital Operations, a three-pronged setup for modernized and efficient
operations at enterprise level. ERS offers engineering services and solutions in all aspects
of product development and platform engineering. Under P&P, HCL provides
modernized software products to global clients for their technological and industry-
specific requirements. Our holistic Mode 1-2-3 strategy forms the backbone of these three
business units to help enterprises navigate the digital age with ease. It is the core aspect of
our ‘Digital Enterprise 4.0’ focus – aimed at offering holistic services to our clients to
meet the technology needs of their present while readying them to be future-ready. The
company’s DNA of grassroots innovation, its ingrained culture of co-innovation, and its
tradition of going far beyond what is expected, to create customer value, clearly
differentiates it and gives it a distinct advantage in creating value for businesses in the
digital and connected world.

 IBM CORPORATION LIMITED :

IBM is, perhaps, the best known computer company in the world. It began as the
Computing, Tabulating & Recording Company (C-T-R) founded by Herman Hollerith in the
late 1800s. Their first large contract was to provide tabulating equipment for the tabulation
and analysis of the 1890 US census. The company grew quickly and, in the early 1920s the
name was changed to IBM. IBM was the world leader in providing computer systems for
both business and scientific applications. When, in 1964, they revolutionized the industry by
bringing out the first comprehensive family of computers (the System/360) it caused many of
their competitors to either merge or go bankrupt, leaving IBM in an even more dominant
position.

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The advent of smaller computers, and IBM’s failure to compete effectively in this field
initially, caused some financial problems but IBM remains a major force in the industry.
International Business Machines Corporation (IBM) is a technology company. The Company
segments include Cloud & Cognitive Software, Global Business Services (GBS), Systems
and Global Financing. The Cloud & Cognitive Software Solutions segment delivers
integrated and secure cloud, data and artificial intelligence (AI) solutions to its clients. It
comprises three business areas: cognitive applications, cloud & data platforms, and
transaction processing platforms. The GBS segment provides consulting, business process
and application management services. The Global Financing segment is engaged in
financing, which is primarily conducted through IBM Credit LLC, and remanufacturing and
remarketing. The Systems segment provides clients with infrastructure platforms to help meet
the requirements of hybrid multi-cloud and enterprise AI workloads. The Systems segment
also designs advanced semiconductor and systems technology in collaboration with IBM
Research.

 ORACLE CORPORATION LIMITED :

Oracle Corporation, formerly Software Development Laboratories (1977–

79), Relational Software Inc. (1979–82), and Oracle Systems Corporation (1982–95),
global corporation that develops and markets computer software applications for business.
The company is best known for its Oracle database software, a relational database
management system, and for computer systems and software, such as Solaris and Java,
acquired in its purchase of Sun Microsystems in 2010. Oracle is based in Redwood
Shores, California. The company, initially called Software Development Laboratories, was
founded in 1977 by Larry Ellison and Bob Miner, computer programmers at the American
electronics company Ampex Corporation, and by Ed Oates, Ellison’s supervisor at Ampex.
Inspired by a research paper written by British-born computer scientist Edgar F. Codd that
outlined a relational database model, Ellison and his colleagues saw commercial potential in
the approach, which organized large amounts of data in a way that allowed for efficient
storage and quick retrieval. The trio set to work developing and marketing a program based
on Codd’s data management theory. In 1979 the company released Oracle, the earliest
commercial relational database program to use Structured Query Language (SQL), and it
quickly became popular. Its first customer was the U.S. Air Force, which used the program at
Wright-Patterson Air Force Base, near Dayton, Ohio.

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  LARSEN & TOUBRO INFOTECH LIMITED :
Larsen & Toubro Ltd, commonly known as L&T, is an Indian
multinational conglomerate, with business interests
in engineering, construction, manufacturing, technology and financial services, headquartered
in Mumbai. The company is counted among world's top five construction companies. It was
founded by two Danish engineers taking refuge in India. As of 2020, L&T Group comprises
118 subsidiaries, 6 associates, 25 joint-venture and 35 joint operations companies, operating
across basic and heavy engineering, construction, realty, manufacturing of capital goods,
information technology, and financial services. Larsen & Toubro originated from a company
founded in 1938 in Mumbai by two Danish engineers, Henning Holck-Larsen and Søren
Kristian Toubro. The company began as a representative of Danish manufacturers of dairy
and allied equipment. However, with the start of the Second World War in 1939 and the
resulting blockade of trade lines, the partners started a small workshop to undertake jobs and
provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of
Danish products. The war-time need to repair and refit and degauss ships offered L&T an
opportunity, and led to the formation of a new company, Hilda Ltd, to handle these
operations. L&T also started to repair and fabricate ships signalling the expansion of the
company. The sudden internment of German engineers in British India (due to suspicions
caused by the Second World War), who were to put up a soda ash plant for the Tata's, gave
L&T a chance to enter the field of installation. In 1944, ECC (Engineering Construction &
Contracts) was incorporated by the partners; the company at this time was focused on
construction projects (Presently, ECC is the construction division of L&T). L&T began
several foreign collaborations. By 1945, the company represented British manufacturers of
equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass.
In 1945, the company signed an agreement with Caterpillar Tractor Company, USA, for
marketing earth moving equipment. At the end of the war, large numbers of war-surplus
Caterpillar equipments were available at attractive prices, but the finances required were
beyond the capacity of the partners. This prompted them to raise additional equity capital,
and on 7 February 1946, Larsen & Toubro Private Limited was incorporated.

 ACCENTURE :

Accenture plc is an Irish-based multinational professional services company that

specialises in IT services and consulting. A Fortune Global 500 company, it reported

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revenues of $44.33 billion in 2020 and had 569,000 employees. In 2015, the company had
about 150,000 employees in India, 48,000 in the US, and 50,000 in the Philippines.
 Accenture's current clients include 91 of the Fortune Global 100 and more than three-
[8]

quarters of the Fortune Global 500. Julie Sweet has served as CEO of Accenture since 1
September 2019. It has been incorporated in Dublin, Ireland, since 2009. Accenture began as
the business and technology consulting division of accounting firm Arthur Andersen[11] in the
early 1950s when it conducted a feasibility study for General Electric to install a computer
at Appliance Park in Louisville, Kentucky, which led to GE's installation of a UNIVAC
I computer and printer,[13] believed to be the first commercial use of a computer in the
U.S. Joseph Glickauf, an early pioneer of computer consulting, held a position as head of
Arthur Andersen's administrative services division. In 1989, Arthur Andersen and Andersen
Consulting became separate units of Andersen Worldwide Société Coopérative (AWSC).
Throughout the 1990s, there was increasing tension between Andersen Consulting and Arthur
Andersen. Andersen Consulting was paying Arthur Andersen up to 15% of its profits each
year (a provision of the 1989 split was that the more profitable unit – whether AA or AC –
pay the other the 15 percent), while at the same time Arthur Andersen was competing with
Andersen Consulting through its own newly established business consulting service line
called Arthur Andersen Business Consulting. This dispute came to a head in 1998 when
Andersen Consulting put the 15% transfer payment for that year and future years
into escrow and issued a claim for breach of contract against AWSC and Arthur Andersen. In
August 2000, as a result of the conclusion of arbitration with the International Chamber of
Commerce, Andersen Consulting broke all contractual ties with AWSC and Arthur Andersen.
As part of the arbitration settlement, Andersen Consulting paid the sum held in escrow (then
$1.2 billion) to Arthur Andersen, and was required to change its name, resulting in the entity
being renamed Accenture.

8. RISK ANALYSIS
Risk is defined as the variation of return from the expected return. Higher the variation,
riskier is the security. An investment whose returns are fairly stable is considered to be a low-
risk investment, whereas an investment whose return fluctuates significantly is considered to
be a highly risky investment. The essence of risk in an investment is the variation in its
return. This variation in returns is caused by number of factors. These factors which produce
variations in returns from an investment constitute the elements of risk. Risk may be

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described as variability/fluctuation/deviation of actual return from expected return from a
given asset/investment. Higher the variability, greater is the risk.

TYPES OF RISK:
First let's revise the simple meaning of two words, viz., types and risk. In general, and in
context of this finance article, Types mean different classes or various forms/kinds of
something or someone. Risk implies the extended to which any chosen action or an inaction
that may lead to a loss or some unwanted outcome. The notion implies that a choice may
have an influence on the outcome that exists or has existed. However, in financial
management, risk relates to any material loss attached to the project that may affect the
productivity, tenure, legal issues, etc. of the project.

In finance, different types of risk can be classified under two main groups, viz.,
A. SYSTEMATIC RISK.
B. UNSYSTEMATIC RISK.

The meaning of systematic and unsystematic risk in finance:

“Systematic risk is uncontrollable by an organization and macro in nature.”
“Unsystematic risk is controllable by an organization and micro in nature.”

A. SYSTEMATIC RISK:
Systematic risk is due to the influence of external factors on an organization. Such factors are
normally uncontrollable from an organization's point of view. It is a macro in nature as it
affects a large number of organizations operating under a similar stream or same domain. It
cannot be planned by the organization. 
The types of systematic risk are depicted and listed below.

1. INTEREST RATE RISK,

2. MARKET RISK
3. PURCHASING POWER OR INFLATIONARY RISK.
Now let's discuss each risk classified under this group.

1. INTEREST RATE RISK:

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 Interest-rate risk arises due to variability in the interest rates from time to time. It particularly
affects debt securities as they carry the fixed rate of interest. The types of interest-rate risk are
depicted and listed below.

i. PRICE RISK
Price risk arises due to the possibility that the price of the shares, commodity, investment, etc.
may decline or fall in the future.

ii. REINVESTMENT RATE RISK:

Reinvestment rate risk results from fact that the interest or dividend earned from an
investment can't be reinvested with the same rate of return as it was acquiring earlier.

2. MARKET RISK:
Market risk is associated with consistent fluctuations seen in the trading price of any
particular shares or securities. That is, it arises due to rise or fall in the trading price of listed
shares or securities in the stock market. The types of market risk are depicted and listed
below.

I.Absolute risk: Absolute risk is without any content. 

For e.g., if a coin is tossed, there is fifty percentage chance of getting a head and vice-versa.

II. Relative risk: Relative risk is the assessment or evaluation of risk at different levels of
business functions. 
For e.g. a relative-risk from a foreign exchange fluctuation may be higher if the maximum
sales accounted by an organization are of export sales.
III. Directional risk: Directional risks are those risks where the loss arises from an exposure
to the particular assets of a market. 
For e.g. an investor holding some shares experience a loss when the market price of those
shares falls down.

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IV. Non-directional risk: Non-Directional risk arises where the method of trading is not
consistently followed by the trader. 
For e.g. the dealer will buy and sell the share simultaneously to mitigate the risk

V. Basis risk: Basis risk is due to the possibility of loss arising from imperfectly matched
risks. 
For e.g. the risks which are in offsetting positions in two related but non-identical markets.

VI. Volatility risk: Volatility risk is of a change in the price of securities as a result of
changes in the volatility of a risk-factor. 
For e.g. it applies to the portfolios of derivative instruments, where the volatility of its
underlying is a major influence of prices.

3. PURCHASING POWER OR INFLATIONARY RISK:

Purchasing power risk is also known as inflation risk. It is so, since it emanates (originates)
from the fact that it affects a purchasing power adversely. It is not desirable to invest in
securities during an inflationary period. 
The types of power or inflationary risk are depicted and listed below.
i. Demand inflation risk and
ii. Cost inflation risk.
The meaning of demand and cost inflation risk is as follows:

DEMAND INFLATION RISK arises due to increase in price, which result from an excess
of demand over supply. It occurs when supply fails to cope with the demand and hence
cannot expand anymore. In other words, demand inflation occurs when production factors are
under maximum utilization.

COST INFLATION RISK arises due to sustained increase in the prices of goods and
services. It is actually caused by higher production cost. A high cost of production inflates the
final price of finished goods consumed by people.

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B. UNSYSTEMATIC RISK:
Unsystematic risk is due to the influence of internal factors prevailing within an organization.
Such factors are normally controllable from an organization's point of view. It is a micro in
nature as it affects only a particular organization. It can be planned, so that necessary actions
can be taken by the organization to mitigate (reduce the effect of) the risk. 

The types of unsystematic risk are depicted and listed below.

i. BUSINESS OR LIQUIDITY RISK,
ii. FINANCIAL OR CREDIT RISK AND
iii. OPERATIONAL RISK.

i.BUSINESS OR LIQUIDITY RISK:

Business risk is also known as liquidity risk. It is so, since it emanates (originates) from the
sale and purchase of securities affected by business cycles, technological changes, etc. 

The types of business or liquidity risk are depicted and listed below.
 ASSET LIQUIDITY RISK AND
 FUNDING LIQUIDITY RISK.
The meaning of asset and funding liquidity risk is as follows:
Asset liquidity risk is due to losses arising from an inability to sell or pledge assets at, or near,
their carrying value when needed. For e.g. assets sold at a lesser value than their book value.
Funding liquidity risk exists for not having an access to the sufficient-funds to make a
payment on time. For e.g. when commitments made to customers are not fulfilled as
discussed in the SLA (service level agreements).
ii.FINANCIAL OR CREDIT RISK:
Financial risk is also known as credit risk. It arises due to change in the capital structure of
the organization. The capital structure mainly comprises of three ways by which funds are
sourced for the projects. These are as follows:

Owned funds. For e.g. share capital.

Borrowed funds. For e.g. loan funds.
Retained earnings. For e.g. reserve and surplus.

The types of financial or credit risk are depicted and listed below.
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EXCHANGE RATE RISK: Exchange rate risk is also called as exposure rate risk. It is a
form of financial risk that arises from a potential change seen in the exchange rate of one
country's currency in relation to another country's currency and vice-versa. For e.g. investors
or businesses face it either when they have assets or operations across national borders, or if
they have loans or borrowings in a foreign currency.
RECOVERY RATE RISK: Recovery rate risk is an often neglected aspect of a credit-risk
analysis. The recovery rate is normally needed to be evaluated. For e.g. the expected recovery
rate of the funds tendered (given) as a loan to the customers by banks, non-banking financial
companies (NBFC), etc.

CREDIT EVENT RISK,

NON-DIRECTIONAL RISK,
i.Sovereign risk: Sovereign risk is associated with the government. Here, a government is
unable to meet its loan obligations, reneging (to break a promise) on loans it guarantees, etc.

ii. Settlement risk: Settlement risk exists when counterparty does not deliver a security or its
value in cash as per the agreement of trade or business.

iii. Operational risk:

Operational risks are the business process risks failing due to human errors. This risk will
change from industry to industry. It occurs due to breakdowns in the internal procedures,
people, policies, and systems.

The types of operational risk are depicted and listed below.

i. MODEL RISK,
ii. PEOPLE RISK,
iii. LEGAL RISK AND
iv. POLITICAL RISK.

THE MEANING OF TYPES OF OPERATIONAL RISK IS AS FOLLOWS:

Model risk is involved in using various models to value financial securities. It is due to
probability of loss resulting from the weaknesses in the financial-model used in assessing and
managing a risk. People risk arises when people do not follow the organization’s procedures,
practices and/or rules. That is, they deviate from their expected behavior. Legal risk arises
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when parties are not lawfully competent to enter an agreement among themselves.
Furthermore, this relates to the regulatory-risk, where a transaction could conflict with a
government policy or particular legislation (law) might be amended in the future with
retrospective effect. Political risk occurs due to changes in government policies. Such
changes may have an unfavorable impact on an investor. It is especially prevalent in the
third-world countries.

9. RETURN ANALYSIS
It may be defined as the compensation that one gets for not using his liquidity at present or
parting away with his liquidity.  For example- If someone buys some security for Rs. 100
instead of using the money for consumption & sells it for Rs. 120 at a later date, then
anything over the invested amount (here Rs. 20) will be his return. Besides, if he gets any
dividend/Interest in the security, it will also be added to the return. Thus, in a common stock,
return is the sum of income and appreciation/depreciation in prices.  Return can be defined as
“Income received on an investment plus any change in market price, usually expressed as a
percent of the beginning market price of the investment.”

10.BETA ANALYSIS
DEFINITION: Beta is a numeric value that measures the fluctuations of a stock to changes
in the overall stock market.
DESCRIPTION: Beta measures the responsiveness of a stock's price to changes in the
overall stock market. On comparison of the benchmark index for e.g. NSE Nifty to a
particular stock returns, a pattern develops that shows the stock's openness to the market risk.
This helps the investor to decide whether he wants to go for the riskier stock that is highly
correlated with the market (beta above 1), or with a less volatile one (beta below 1).
For example, if a stock's beta value is 1.3, it means, theoretically this stock is 30% more
volatile than the market. Beta calculation is done by regression analysis which shows
security's response with that of the market.
By multiplying the beta value of a stock with the expected movement of an index, the
expected change in the value of the stock can be determined. For example, if beta is 1.3 and
the market is expected to move up by 10%, then the stock should move up by 13% (1.3 x
10).
Beta is the key factor used in the Capital Asset Price Model (CAPM) which is a model that
measures the return of a stock. The volatility of the stock and systematic risk can be judged

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by calculating beta. A positive beta value indicates that stocks generally move in the same
direction with that of the market and the vice versa.
The beta (β) of an investment security (i.e. a stock) is a measurement of its volatility of
returns relative to the entire market. It is used as a measure of risk and is an integral part of
the Capital Asset Pricing Model (CAPM). A company with a higher beta has greater risk and
also greater expected returns.
The beta coefficient can be interpreted as follows:
 β =1 exactly as volatile as the market
 β >1 more volatile than the market
 0<β <1 less volatile than the market
 β =0 uncorrelated to the market
 β <0 negatively correlated to the market

EXAMPLES OF BETA
High β – A company with a β that’s greater than 1 is more volatile than the market. For
example, a high-risk technology company with a β of 1.75 would have returned 175% of
what the market returned in a given period (typically measured weekly).

Low β – A company with a β that’s lower than 1 is less volatile than the whole market. As an
example, consider an electric utility company with a β of 0.45, which would have returned
only 45% of what the market returned in a given period.

Negative β – A company with a negative β is negatively correlated to the returns of the
market. For example, a gold company with a β of -0.2, which would have returned -2% when
the market was up 10%.
 CALCULATION
Below is an Excel β calculator that you can download and use to calculate β on your own. β
can easily be calculated in Excel using the Slope function.
Follow these steps to calculate β in Excel:
1. Obtain the weekly prices of the stock
2. Obtain the weekly prices of the market index (i.e. S&P 500 Index)
3. Calculate the weekly returns of the stock
4. Calculate the weekly returns of the market index

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5. Use the Slope function and select the weekly returns of the market and the stock, each as
their own series
6. Congrats! The output from the Slope function is the β

HERE IS A CHART ILLUSTRATING THE DATA POINTS FROM THE Β

CALCULATOR (BELOW):

TYPES OF BETA VALUES

 
a. BETA VALUE EQUAL TO 1.0
If a stock has a beta of 1.0, it indicates that its price activity is strongly correlated with the
market. A stock with a beta of 1.0 has systematic risk. However, the beta calculation can’t
detect any unsystematic risk. Adding a stock to a portfolio with a beta of 1.0 doesn’t add any
risk to the portfolio, but it also doesn’t increase the likelihood that the portfolio will provide
an excess return.
b. BETA VALUE LESS THAN ONE
A beta value that is less than 1.0 means that the security is theoretically less volatile than the
market. Including this stock in a portfolio makes it less risky than the same portfolio without

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the stock. For example, utility stocks often have low betas because they tend to move more
slowly than market averages.
 
c. BETA VALUE GREATER THAN ONE
A beta that is greater than 1.0 indicates that the security's price is theoretically more volatile
than the market. For example, if a stock's beta is 1.2, it is assumed to be 20% more volatile
than the market. Technology stocks and small cap stocks tend to have higher betas than the
market benchmark. This indicates that adding the stock to a portfolio will increase the
portfolio’s risk, but may also increase its expected return.
 
d. NEGATIVE BETA VALUE
Some stocks have negative betas. A beta of -1.0 means that the stock is inversely correlated
to the market benchmark. This stock could be thought of as an opposite, mirror image of the
benchmark’s trends. Put options and inverse ETFs are designed to have negative betas. There
are also a few industry groups, like gold miners, where a negative beta is also common.
 
 BETA IN THEORY VS. BETA IN PRACTICE
The beta coefficient theory assumes that stock returns are normally distributed from a
statistical perspective. However, financial markets are prone to large surprises. In reality,
returns aren’t always normally distributed. Therefore, what a stock's beta might predict about
a stock’s future movement isn’t always true.
  A stock with a very low beta could have smaller price swings, yet it could still be in
a long-term downtrend. So, adding a down-trending stock with a low beta decreases risk in a
portfolio only if the investor defines risk strictly in terms of volatility (rather than as the
potential for losses). From a practical perspective, a low beta stock that's experiencing a
downtrend isn’t likely to improve a portfolio’s performance.
 
Similarly, a high beta stock that is volatile in a mostly upward direction will increase
the risk of a portfolio, but it may add gains as well. It's recommended that investors using
beta to evaluate a stock also evaluate it from other perspectives—such as fundamental or
technical factors—before assuming it will add or remove risk from a portfolio.

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11.DATA ANALYSIS OF SELECTED COMPANY
COMPANY BETA RANK
ORACLE CORPORATION 0.31 1
MICROSOFT 0.34 2
WIPRO 0.38 3
IBM CORPORATION 0.50 4
ACCENTURE 0.50 5
TCS 0.59 6
INFOSYS 0.73 7
TECH MAHINDRA 0.73 8
HCL TECHNOLOGIES 0.81 9
LARSEN & TURBO 1.21 10

BETA
1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
N FT RE S S RA ES
IO RO IO
N
TC Y
GI BO
AT OS
O IP AT
U OS ND UR
R W R NT F I L O T
PO IC
R
PO CE IN AH NO &
R M R AC H
M
CH EN
CO CO C E S
LE M TE LT LA
R
AC IB HC
OR

11. FINDINGS FROM BETA

Out of 10 companies 9 companies having less than 1.
More than 1 means the stock is more volatile then the market price which indicate that
the stock price is likely to change suddenly and unexpectedly. So we can’t go for purchase of
this stock because it gets more risker than others. But if people plan to take risk and get profit
plan to take risk and get profit from small changes then they go for Larsen & Turbo company.

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 Less than 1 means the stock is less volatile than the market price it indicates that the
stocks is not that risky comparison to others and because of its less volatility nature the
investor is place a buy order and get a good return from this.

12. CONCLUSION
According to my objective of the study I had found that 9 out of 10 company is
having less than 1 beta ( which is Wipro, Infosys, TCS, Microsoft, Tech
Mahindra, HCL Technologies, IBM, Oracle, Accenture) it indicate that the
stock is less risker than others and also provide good return to the investor.

13. BIBLOGRAPHY
 https://finance.yahoo.com/
 https://www.moneycontrol.com
 https://www.bseindia.com

 https://www.nseindia.com

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