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Chethan Project Synopsis

This document summarizes a student's research project on analyzing risk and return of stocks in India. The project examines literature on technical analysis and fundamental analysis. It aims to identify portfolio management strategies in the Indian stock market and measure customer preferences for derivative markets. The methodology involves collecting secondary monthly price data from 25 large capitalization stocks listed on the BSE over a long period of time. The project will analyze the data to measure risk and return, find standard deviation and variance of stock prices, and evaluate investment opportunities for investors.

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chethan halandur
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88 views

Chethan Project Synopsis

This document summarizes a student's research project on analyzing risk and return of stocks in India. The project examines literature on technical analysis and fundamental analysis. It aims to identify portfolio management strategies in the Indian stock market and measure customer preferences for derivative markets. The methodology involves collecting secondary monthly price data from 25 large capitalization stocks listed on the BSE over a long period of time. The project will analyze the data to measure risk and return, find standard deviation and variance of stock prices, and evaluate investment opportunities for investors.

Uploaded by

chethan halandur
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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“A STUDY ON RISK AND RETURN ANALYSIS OF

STOCKS IN INDIA”
A report submitted in partial fulfilment for the award of the degree

MASTER OF BUSINESS OF ADMINISTRATION

Submitted By:
CHETHANA H S
USN: 1NX16MBA08
Under the Guidance Assistant Prof. JOYTHI

Nitte Meenakshi Institute of Technology


(An Autonomous Institute under Visvesvaraya Technology University, Belagavi)
PROJECT SYNOPSIS

Project Title: A study on risk and return analysis of stocks in india

Intended Specialization: FINANACE

Student Name: CHETHANA H S

Program: MBA

Current Organization: NITTE MEENAKSHI INSTITUTE OF TECHNOLOGY

Designation:

INTRODUCTION

The term stock exchange is the concept for the mechanism that the trading of company stocks.
Tradingat both the exchanges takes place through an openelectronic limit order book, in which
order matching isdone by the trading computer. There are no marketmakers or specialists and the
entire process is order-driven, which means that market orders placed by investors are
automatically matched with the best limitorders. As a result, buyers and sellers remain
anonymous.

The advantage of an order driven market is that it brings more transparency, by displaying allbuy
and sell orders in the trading system. All orders in the trading system need to be placedthrough
brokers, many of which provide online trading facility to retail customers. Institutional investors
can also take advantage of the direct market access (DMA) option, in which they use trading
terminals provided by brokers for placing orders directly into the stock market trading system.

LITERATURE REVIEW

PHILIPPE GERGOOIRE (2001) conducted a study on“Predictive Power of Technical


Analysis: The moving average rules on European” According to him simple forms of technical
analysis possessed significant forecast poweron various market indexes. He shows that these
results canbe replicated on formally selected European indexes, whichalmost completely
eliminates any influences from data –snooping. Implications of these results in terms of
marketefficiency are also discussed.
DG PRAVEEN AND NIHAR RANAJN PANDA (2002) had conducted a study on “Beat the
market with hammer“, Japanese candlestick analysis is one of most popular and oldest forms of
technical analysis. Candlestick charting studies the records of the market movements in the past
to identify the future patterns. It identifies exuberant buying and panic selling, enabling the trader
to pocket a great deal of profits from the stock market. Compared to traditional bar charts, many
traders consider candlestick charts more visually appearing and easier to interpret. Each
candlestick provides an easy to decipher picture of price action. Immediately a trader can see and
compare the relationship between the open and close as well as the high and low.

STEPHEN SAULT (2006) had conducted a study on fundamental and technical analysis
literatures invest considerable effort in assessing their respective ability to explain share prices,
they invariably do so without reference to each other. In this context, we propose an equity
valuation model integrating both fundamental and technical analysis and, in doing so, recognize
their potential as complements rather than as substitutes. Testing confirms the complementary
nature of fundamental and technical analysis by showing that, while each performs well in
isolation, models integrating both have superior explanatory power. While our findings relate to
the valuation of shares, they also have implications for other valuation exercises.

CHEOL-HO PARK AND SCOTT H. IRWIN (2004)4 The purpose of this report is to review
the evidence on the profitability of technical analysis. To achieve this purpose, the report
comprehensively reviews survey, theoretical and empirical studies regarding technical trading
strategies. We begin by over viewing survey studies that have directly investigated market
participants’ experience and views on technical analysis. Foreign exchange markets, and that
about 30% to 40% of practitioners appear to believe that technical analysis is an important factor
in determining price movement at shorter time horizons up to 6 months.
OBJECTIVES OF THE STUDY

The objective of this research paper is listed below.

Before starting a project, we should keep in mind the clear objective of the project because in the
absence of the objective one can’t reach the conclusion or the end result of the project. Research
objective answer the question “Why this study is being conducted”For every problem there is a
research. As all the research is based onsome objective, our research has also some objectives
which are as

follows:.

 To determine and understand dynamics of stock exchange and

different Investment alternative.

 To make comparative study of risk and return of selected company stocks.

 To find the standard deviation and variance of the stocks.

Primary Objective

  To identify and analyze the portfolio management strategies in

Indian Sock market.

 To measure customers preference towards dealing in derivative

market segment

 The perception held by investors about the financial derivatives


Secondary Objective

 To study which class mostly invest in stock market

 Evaluate the various investment opportunities for investors

 To study the behavior of investor during the market fluctuations

METHODOLOGY

Source of Data - The study based on secondary data collected from BSE. The data on monthly
market prices of leading sector listed in BSE have been collected. In addition the other sources
are also used for data collecting like newspaper and internet(www.bseindia.com). Published data
will be available in News papers, Websites, Journals, books, Reports by management, scholars,
researchers, brokers etc.., The reason behind choosing the monthly prices is that short term
fluctuations in the market prices of the stocks due to internal and external factors can be catch
hold off. Through it is possible to make much an analysis using daily prices; collection of data
for long period of time is not possible. Hence the monthly prices are considered.

Sample Size - The sample size for the number of stocks is taken as 25 for analysis of stocks as
very exhaustive and requires detailed study.

Data Collection Method - The sample of the stocks for thepurpose of collecting secondary data
has been selected on the basis of Random Sampling. The stocks are chosen based on top market
capitalization in BSE.

Method of Sampling - Judgmental sampling involves the choice of subjects who are most
advantageously placed or in the best position to provide the information required. The
Judgmental sampling method is used for selected sector from BSE for the study. The following
sector scrip are taken for study.

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