CHAPTER-1

INTRODUCTION
1.1 INTRODUCTION

Venture is the work of assets with the point of accomplishing extra wage or development in
esteem. The basic nature of a speculation is that it includes 'pausing' for a reward. It includes the
responsibility of assets which have been spared or secured from current utilization with the
expectation that a few advantages will collect in future. The term 'venture' does not have all the
earmarks of being as straightforward as it has been characterized. Venture has been future
classified by money related specialists and market analysts. It has additionally frequently been
mistaken for the term hypothesis. the accompanying exchanges will give a clarification of the
different manners by which venture is connected or separated from the money related and
monetary sense and how hypothesis vary from speculation. In any case, it must be obviously
settled that venture includes long haul responsibility.

Return

A noteworthy reason for speculation is to set an arrival of wage on the assets contributed. On a
bond a financial specialist hopes to get intrigue. On a stock, profits might be foreseen. The
speculator may expect capital additions from a few ventures and rental salary from house
property.

Risk

In the contributing scene, the lexicon meaning of hazard is the shot that an Investment's genuine
return will be not the same as anticipated. In fact, this is estimated in insights by Standard
Deviation. Hazard implies you have the likelihood of Losing a few, or even all, of our unique
venture.

1.2 Need of the Study:

In Indian condition speculators are confronting a great deal of hazard to contribute, in different
Financial Instruments. The speculation hazard can be either to decrease or it can be exchanged.
The majority of the occasions financial specialists endeavor to boost the hazard in turns yet they
need limit these hazard in their venture. The present investigation empower to distinguish the
distinctive kinds of hazard and how to limit the hazard in venture roads it know fundamental to
think about hazard and return.

1.3Objectives of the examination

• To examine and comprehend the working of different dangers engaged with CD

Equisearch Pvt. Ltd.

• To study and look in danger and return.

• To figure the hazard, return of values to assess whether the organization is

Solid for the financial specialist to put resources into the offers of the organization.

• To study and guidance the financial specialist in building the successful portfolio

1.4 Scope of the Study:

The extent of the examination is restricted to A Study on Financial Risk and Return Management
at CD Equisearch with reference to 5 organizations (GMR, SUN TV, AURBINDO
PHARMACY, JETAIRWAYS, HDFC BANK)

1.5Research Methodology:

Devices and Techniques:

Devices
Line Charts

Systems utilized are:-

• Standard Deviation

• Co-Efficient of Variance

Wellsprings of Data:

The different wellsprings of information incorporate

Auxiliary source

• Books

• Websites

• Journals

1.6 Limitations of the Study:

• This venture investigation report may not be relevant in all value markets.
• Project took just 5 organizations of NSE for value investigation. It won't pertinent to

Add up to NSE'S Nifty record.

• The exactness of the examination depends on the precision of the information introduced
in the

NSE postings

• Detailed investigation of theme was unrealistic because of restricted size of the

undertaking. The

Time taken for the examination is constrained.

 CHAPTER-l2

2.REVIEWlOFlLITERATURE
l

Securitylanalysis:l

Thelsecuritylavailableltolanlinvestorlforlinvestmentlarelnumerouslandloflvariousltypes.lThelsharesloflo
verl7000lcompanieslarellistedlinlthelstocklexchangesloflthelcountry.lTraditionally,lthelsecuritieslwerel
classifiedlintolownershiplsecuritieslsuchlaslequitylshareslandlpreferencelshareslandlcreditorlshiplsecu
ritieslsuchlasldebentureslandlbonds.lRecentlylalnumberloflnewlsecuritieslwithlinnovativelfeatureslarel
beinglissuedlbylcompaniesltolraiselfundslforltheirlprojects.lFromlthislvastlgrouploflsecuritieslthelinves
torlhasltolchooselthoselsecuritieslwhichlhelconsiderslworthwhileltolbelincludedlinlhislinvestmentlportf
olio.lThislcallslforlaldetailedlanalysisloflthelavailablelsecurities.

Securitylanalysislislthelinitiallphaseloflthelportfoliolmanagementlprocess.lThislsteplconsistsloflexami
ninglthelrisklandlreturnlcharacteristicsloflindividuallsecurities.lAlbasiclstrategylinlsecuritieslinvestme
ntlisltolbuylunderlpricedlsecuritieslandlsellloverpricedlsecurities.lButlthelproblemlisltolidentifylunderlp
ricedlandloverpricedlsecurities,lor,linlotherlwords,l„mispriced‟lsecurities.

Therelareltwolalternativelapproachesltolsecuritylanalysis,ltheylare

• FundamentallAnalysis
• TechnicallAnalysis
FundamentallAnalysis:

Thelfundamentallanalysislconcentrateslonlthelfundamentallfactorslaffectinglthelcompanylsuchlaslthel
EPSloflthelcompany,ltheldividendlpay-
outlratio,lthelcompetitionlfacedlbylthelcompany,lthelmarketlshare,lqualityloflmanagement,letc.lalfund
amentallanalystlstudieslnotlonlylthelfundamentallfactorslaffectinglthelcompany,lbutlalsolthelfundame
ntallfactorslaffectinglthelindustryltolwhichlthelcompanylbelongslaslalsoltheleconomylfundamentals.

Accordingltolthislapproach,lthelsharelpriceloflalcompanylisldeterminedlbyltheselfundamentallfactors.l
Thelfundamentallanalystlworksloutltheltruelworthlorlintrinsiclvalueloflalsecuritylbasedlonlitslfundame
ntal;lthenlcompareslthislintrinsiclvaluelwithlthelcurrentlmarketlprice.lIflthelcurrentlmarketlpricelislhig
herlthanlthelintrinsiclvalue,lthelsharelislsaidltolbeloverlpricedlandlvicelversa.lAnlinvestorlwouldlbuylth
oselsecuritieslwhichlarelunderlpricedlandlselllthoselsecuritieslareloverpriced.l

TechnicallAnalysis:

Altechnicallanalystlbelieveslthatlsharelpricelmovementslarelsystematiclandlexhibitlcertainlconsistentl
patterns.lHe,ltherefore,lstudieslpastlmovementslinlthelpricesloflsharesltolidentityltrendslandlpatterns.l
Helthenltriesltolpredictlthelfuturelpricelmovements.lThelcurrentlmarketlpricelislcomparedlwithlthelfut
urelpredictedlpriceltoldeterminelthelextentloflmispricing.lTechnicallanalysislanlapproachlwhichlconc
entrateslonlpricelmovementslandlignoreslthelfundamentalsloflthelshares.

Risk:

Inlthelinvestinglworld,ltheldictionaryldefinitionloflrisklislthelchancelthatlanlinvestment‟slactuallreturnl
willlbeldifferentlthanlexpected.lTechnically,lthislislmeasuredlinlstatisticslbylstandardldeviation.lRiskl
meanslyoulhavelthelpossibilitylofllosinglsome,lorlevenlall,loflourloriginallinvestment.
Risklconsistslofl2lcomponents:

• Systematiclriskl(uncontrollablelrisk)lnonl–ldiversifiablelrisk

• Unsystematiclriskl(controllablelrisk)ldiversifiablelrisk

SystematiclRisk:

Thelrisklthatlaffectslthelentirelmarketlthatlfactorslarelbeyondlthelcontrolloflthelcorporatelandlthelinvest
or.lTheylcannotlbelavoidedlbylthelinvestor.lItlislsub-dividedlinto.

• Marketlrisk

• Interestlratelrisk

• Purchaselpowerlrisk

Marketlrisk:

Withinlthelcontextloflthelcapitallassetlpricinglmodell(CAPM),ltheleconomylwideluncertaintylthatlallla
ssetslareltolandlcannotlbeldiversifiedlaway.lOftenlreferredltolaslsystematiclrisk,lnonl–
diversifiablelrisk,lorlthelriskloflthelmarketlportfolio.lTheltypeloflthelrisklisldiscussedlextensivelylinlinv
estmentlcourses.

Interestlratelrisk:

Theluncertaintylassociatedlwithltheleffectsloflchangeslinlmarketlinterestlrates.lTherelareltwoltypeslofli
nterestlratelrisklidentified;lpricelrisklandlreinvestmentlratelrisk.lThelpricelrisklislsometimeslreferredlto
laslmaturitylrisklsincelthelgreaterlthelmaturityloflanlinvestment,lthelgreaterlthelchangelinlpricelforlalgiv

enlchangelinlinterestlrates.lBothltypeloflinterestlratelriskslarelimportantlinlbankinglandlareladdressedle
xtensivelylinlbankinglmanagementlclasses.
Purchaselpowerlrisk:

Thellossloflpurchasinglpowerldueltoltheleffectsloflinflation.lWhenlinflationlislpresent,lthelcurrencyllos
seslitslvalueldueltolthelrisinglpricellevellinltheleconomy.lThelhigherlthelinflationlratelthelfasterlthelmon
eylloseslitslvalue.

UnsystematiclRisk:

Itlisluniqueltolthelfirmlorlindustry.lItlstemslfromlmanageriallinefficiency,ltechnologicallchanges,lcons
umerlpreferences,llaborlproblemsletc.lthelmagnitudelandlnatureldifferlfromlfirmltolfirm,lindustryltolin
dustry.

Itlcanlbelclassifiedlintol2ltypesl

• Businesslriskl

• Financiallrisk

BusinesslRisk:

Theluncertaintylassociatedlwithlalbusinesslfirm‟sloperatinglenvironmentlandlreflectedlinlthelvariabili
tyloflearningslbeforelinterestlandltaxesl(EBIT).lSincelthislearningslmeasurelhaslnotlhadlfinancinglexp
enseslremoved,litlreflectslthelrisklassociatedlwithlbusinessloperationslratherlthanlmethodslofldebtlfina
ncing.lThislrisklisloftenldiscussedlinlgenerallbusinesslmanagementlcourses.

FinanciallRisk:

Theluncertaintylbroughtlaboutlbylthelchoiceloflalfirm‟slfinancinglmethodslandlreflectedlinlthelvari
abilityloflearningslbeforeltaxesl(EBT),lalmeasureloflearningslthatlhaslbeenladjustedlforlandlislinflu
encedlbylthelcostlofldebtlfinancing.lThislrisklisloftenldiscussedlwithinlthelcontextloflthelcapitallstr
uctureltopics.
Returns

Almajorlpurposeloflinvestmentlisltolsetlalreturnloflincomelonlthelfundslinvested.lOnlalbondlanlinvestorl
expectsltolreceivelinterest.lOnlalstock,ldividendslmaylbelanticipated.lThelinvestorlmaylexpectlcapitall
gainslfromlsomelinvestmentslandlrentallincomeslfromlhouselproperty.lReturnlmayltakelseverallforms
.

MeasurementloflReturns:

Thelpurposeloflinvestmentlisltolgetlreturnlorlincomelonlthelfundslinvestedlinldifferentlfinanciallassets.l
Thelmostlimportantlcharacteristicsloflfinanciallassetslarelthelsizelandlvariabilitylofltheirlfurniturelretu
rns.lSincelthelreturnlonlincomelvaries,lvariouslstatisticalltechniqueslarelusedltolmeasurelit.lOverlthely
ears,lMaylmethodslwereladoptedlforlquantifyinglreturns.lTheselarelnowlcategorizedlasltraditionalland
lmodernltechniquesloflmeasurement.

MeasuringlReturnsl–lImprovedlTechnique:l

Thel„holdinglperiodlyield‟lisloneloflthelnewltechniqueslinlmeasuringlreturns.lTheltraditionallmethodsl
didlnotlprovidelalsatisfactorylreturnslmeasure.lSomeloflthelgapslthatlwerelidentifiedlwere:l(a)lthatlthelt
raditionallmethodldoeslnotldistinguishlbetweenldividedlandlearningslportionlthatltheltraditionallmeth
odldoeslnotldistinguishlbetweenldividedlandlearningslportionlthatlthelcompanylretainsl(EarningslYiel
dlMethod);l(b)lDividendlYieldlMethodlignoreslthelpossibilityloflpricelappreciationlonlretainedlearnin
gs.lItlislusefullonlylforlthoselshareholderslwholwishltolretainlshareslalwayslandlarelnotlinterestedlinlsel
linglandlanticipatelthatldividendslarelnotlgoingltolchange;l(c)lthelyieldltolmaturitylislusefullonlyltoltho
selbondlholderslwholwilllholdlitltolmaturity.lAlllinvestorslmaylnotlholdlbondsltilllmaturitylforlobviousl
reasons.lTheselmethodslarelthuslknownltolservelallimitedlpurposelonly.lThelbetterlmethodlmeasureslr
eturnlthroughlthelholdinglperiodlyield.lThislmeasurelappearslmorelrationallandlclearlyldefined.lItlserv
esltwolpurposes:l(a)lItlmeasureslthatltotallreturnlperlrupeelofltheloriginallinvestment,landl(b)lthroughl
thislmethod,lcomparisonslcanlbeldrawnloflanylasset‟slexpectedlreturn.lAnlassetlcanlbelcomparedlwithl
otherlbothlhistoricallylandlforlfuturelperiods.lThelholdinglperiodlyieldlcanlbe

usedlforlanylasset.lForlexample,lreturnslfromlsavingslaccounts,lstockslmoney,lreallestatelandlbondslc
anlbelcomparedlthroughlthislmeasure.lThelformulalforlthelholdinglperiodlyieldlis:

IncomelpaymentslreceivedlduringlthelyearlinlRs.l+lCapitallchangelforlthelperiodlinlRs.
lPricelinlrupeeslofloriginallinvestmentlatlthelbeginningloflperiod

Dividendl+l(Pt-Po)
=l_________________
Po
l

lAllooklatlthislformulalshowslthatlthelHoldinglPeriodlYieldl(HPY)lconsidersleverythinglthelinvestorlr

eceivesloverlthelspecifiedlperiodlduringlwhichlthelassetlislheldlrelativeltolwhatlwasloriginallylinveste
dlinlthelassets.lItlalsolconsiderslalllincomelpayments;landlpositivelandlnegativelcapitallchangeslduring
lthelperiod.lTheselarelthenlmeasuredlrelativeltoltheloriginallinvestmentlinlrupees.lThelHPYlalsolmeas

ureslpastlreceiptsloflpaymentslaslwelllaslforlanlunknownlfuture.lItlislusefullforlcomparinglanyltimelper
iod;litlcanlbelusedlonlbothlBondlandlStocks.l

MeasureloflDispersion:
Dispersionlmethodslhelpltolassesslrisklinlreceivinglalrewardlorlreturnlonlinvestment.lThelgreaterlthelp
otentialldispersion,lthelgreaterlthelrisk.lOneloflthelsimplestlmethodslinlcalculatingldispersionlislrange.
lThelrange,lhowever,lhasllimitedlimportance.lItlislusefullwhenltherelarelsmalllsamples.lItlloseslitsleffe

ctivenesslwhenlthelnumberloflvalueslinlalsamplelincreases.lThelbestlandlmostleffectivelmethodltolfind
loutlhowltheldatalscatteredlaroundlalfrequencyldistributionlisltoluselthelstandardldeviationlmethod.lTh

islmethodlislrelatedltolthelmeanldeviationlandlimplieslinlthislcaselthelmeanslaslalpointloflreferencelfro
mlwhichldeviationloccurs.lThelstandardldeviationlislbasedlonlmeanlandlitlcannotlshowlanylresultlwith
outlfirstlfindingloutlthelmean.lThelstandardldeviationlislrecognizedlbylthelfollowinglsymbol.lThelstan
dardldeviationlislalsolrelatedltolvariance.lVariancelislthelsquareloflstandardldeviation.lInlotherlwords,l
standardldeviationlislthelsquarelrootloflthelvariance.lThislrelationshiplshowslthatltheylhavelsimilarlsta
tisticall
characteristics.lTherefore,lstandardldeviationlandlvariancelarelconsideredlequivalentltoleachlotherlasl
measuresloflrisk.lForlalsecuritylanalystltheylhelplinldepictingldispersionloflHPYslaroundlHPY.

StatementloflthelProblem:
Inlthelcurrentleconomiclscenario,linterestlrateslarelfallinglandlfluctuate,litlreflectslinlthelsharelmarketl
haslputlmorelinvestorslinltheltrouble.lOnelfindslitldifficultltoltakeldecisionlonlinvestment.lThislislprim
arily,lbecauselinvestmentslarelriskylinlnaturelandlinvestorslhaveltolconsiderlvariouslfactorslbeforelinv
estinglinlinvestmentlavenues.lThereforelthelstudylaimsltolcomparelstocksloflvariouslcompanieslfroml
differentlsectorsllikelbanking,linfrastructure,lPharmacy,landlPubliclSectorslinlthelformlofltheirlrisk,lre
turnl&lliquidity.

DefinitionloflRiskl&lReturn:
Thelpossibilitylthatlanlactuallreturnlwillldifferlfromlourlexpectedlreturn.lRisklcanlbeldefinedlaslthelcha
nceloflfuturellosslcanlbelforeseen.

Risk=actuallreturn-expectedlreturn

RisklandlReturnlAnalysis:

Returnlexpresseslthelamountlwhichlanlinvestorlactuallylearnedlonlanlinvestmentlduringlalcertainlperi
od.lReturnlincludeslthelinterest,ldividendlandlcapitallgains:lwhilelrisklrepresentsltheluncertaintylasso
ciatedlwithlalparticularltask.lInlfinanciallterms,lrisklislthelchancelorlprobabilitylthatlalcertainlinvestme
ntlmaylorlmaylnotldeliverlthelactuall/lexpectedlreturns.

Thelrisklreturnltradelofflsayslthatlthelpotentiallreturnlriseslwithlanlincreaselinlrisk.lItlislimportantlforlan
linvestorltoldecidelonlalbalancelbetweenltheldesirelforlthellowestlpossiblelrisklandlhighestlpossiblelret

urn.

Thelriskl/lreturnlrelationshiplarelalfundamentallconceptlinlnotlonlylfinanciallanalysis,lbutlinleverylasp
ectlofllife.lIfldecisionslareltolleadltolbenefitlmaximization,litlislnecessarylthatlindividuals/institutionsl
considerlthelcombinedlinfluencelonlexpectedl(future)lreturnlorlbenefitlaslwelllaslonlrisk/cost.lThelreq
uirementlthatlexpectedlreturn/benefitlbelcommensuratelwithlrisk/costlislknownlaslthel“risk/returnltra
de-off”linlfinance.
Thisldiscussedltheltrade-
offland,lusinglconventionallstatisticalltools,lprovideslalmethodlforlquantifyinglriskl.Twolcategorieslof
lrisklbornelbylthelfirm‟slstockholders,lbusinesslrisklandlfinanciallrisk,lareldiscussedlandldemonstrated

,laslislthelconceptloflleverage.lThelsessionlalsolexamineslrisklreductionlvialportfolioldiversificationlan
dlwhatlrequirementslneedltolbelmetlforlfirmsltolexperiencelthelbenefitslofldiversification.lThelcapitall
assetlpricinglmodell(CAPM)lislusedltoldemonstratelthelriskl/lreturnltrade-
offlbylrelatinglthelrequiredlreturnlonlthelfirm‟slinvestmentsltolitslbetal(orlmarket)lrisk.

RisklAnalysis:

lRisklinlinvestmentlexistslbecauseloflthelinabilityltolmakelperfectlorlaccuratelforecasts.lRisklinlinvest

mentlisldefinedlaslthelvariabilitylthatlisllikelyltoloccurlinlfuturelcashlflowslfromlanlinvestment.lThelgr
eaterlvariabilityloflthelcashlflowslindicateslgreaterlrisk.lVariancelorlstandardldeviationlmeasuresltheld
eviationlaboutlexpectedlcashlflowslofleachloflthelpossiblelcashlflowslandlislknownlmeasureloflrisk;lw
hilelco-efficientloflvariationlislalrelativelmeasureloflrisk.

Forlcarryingloutlrisklanalysis,lfollowinglmethodslarelused:

• Paybackl(Howllonglwilllitltakeltolrecoverlthelinvestment)

• Certaintylequivalentl(Thelamountlthatlwilllcertainlylcomeltolyou)

• Riskladjustedldiscountlratel(Presentlvalueli.e.lPVloflfuturelinflowslwithldiscountlrate)

Howeverlinlpractice,lsensitivitylanalysislandlconservativelforecastltechniqueslbeinglsimplerlandleasi
erltolhandle,larelusedlforlrisklanalysis.lSensitivitylanalysisl(alvariationloflbreaklevenlanalysis)lallowsl
estimatinglthelimpactloflchangelinlbehaviorloflcriticallvariableslonlthelinvestmentlcashlflows.lConser
vativelforecastslincludelusinglshortlpaybacklorlhigherldiscountlrateslforldiscountinglcashlflows.

InvestmentlRisk:
Investmentlrisklislrelatedltolthelprobabilityloflearninglallowlorlnegativelactuallreturnlaslcomparedltolth
elreturnlthatlislestimated.lTherelarel2ltypesloflinvestmentslrisks:

• Stand-lAlonelRisk:

Thislrisklislassociatedlwithlalsinglelasset,lmeaninglthatlthelrisklwilllceaseltolexistliflthatlparticularl
assetlislnotlheld.lThelimpactloflstandalonelrisklcanlbelmitigateslbyldiversifyinglthelportfolio.l

lStandlalonelrisk=lMarketl+lFirmslspecificlrisk

Where,l

• Marketlrisklislalportionloflthelsecurity‟slstand-
alonelrisklthatlcannotlbeleliminatedltroughldiversificationlandlitlislmeasuredlbylbeta.

• Firmslrisklislalportionloflalsecurity‟slstand-alonelthatlcanlbeleliminatedlthroughl

lProperldiversification

• PortfoliolRisk:

Thislislthelrisklinvolvedlinlalcertainlcombinationloflassetslinlalportfoliolwhichlfailsltoldeliverlthelo
veralllobjectiveloflthelportfolio.lRisklcanlbelminimizedlbutlcannotlbeleliminated,lwhetherlthelport
foliolislbalancedlorlnot.lAlbalancedlportfoliolreduceslrisklwhilelalnon-
lbalancedlportfoliolincreaseslrisk.

Sourcesloflrisk

• Inflationl

• Businesslcycle

• Interestlrates

• Management

• Businesslrisk
 • Financiallrisk

ReturnlAnalysis:

Anlinvestmentlislthelcurrentlcommitmentloflfundsldonelinlthelexpectationloflearninglgreaterlamountli
nlfuture.lReturnslarelsubjectltoluncertaintylorlvariancellongerlthelperiodloflinvestment,lgreaterlwilllbel
thelreturnslsought.lAnlinvestorlwilllalsollikeltolensurelthatlthelreturnslarelgreaterlthanlthelrateloflinflati
on.

Anlinvestorlwillllooklforwardltolgettinglcompensatedlbylwayloflanlexpectedlreturnlbasedlonl3lfactors:

• Risklinvolved

• Durationloflinvestmentl(Timelvalueloflmoney)

• Expectedlpricellevels(inflation)

• Thelbasiclratelorltimelvalueloflmoneylislthelreallrisklfreelratel(RRFR)lwhichlislfreeloflanylriskl
premiumlandlinflation.lThislratelgenerallylremainslstable;lbutlinlthellonglrunltherelcouldlbelgr
aduallchangeslinlthelRRFRldependingluponlfactorslsuchlaslconsumptionltrends,leconomiclgr
owthlandlopennesslofltheleconomy.

IflwelincludelthelcomponentloflinflationlintolthelRRFRlwithoutlthelrisklpremium,lsuchlalreturnlwilllbe
lknownlaslnominallrisklfreelratel(NominallRisklFreelRate)

NRFRl+l(1+ReallRisklFreelRate)*(1+expectedlrateloflinflation)-1

Thirdlcomponentlislthelrisklpremiumlthatlrepresentslalllkindlofluncertaintieslandlislcalculatedlaslfallo
ws-

Expectedlreturnl=lNominallRisklFreelRatel+lRisklPremium

RisklandlReturnlTradelOff:

Thelriskl/returnltradeofflcouldlbelcalledlthel“ability-to-sleep-at-
nightltest”.lWhilelsomelpeoplelcanlhandlelthelequivalentloflfinanciallskydivinglwithoutlbattinglanley
e,lotherlarelterrifiedltolclimblthelfinanciallladderlwithoutlalsecurelharness.lDecidinglwhatlamountloflri
sklyoulcanltakelwhilelremaininglcomfortablelwithlyourlinvestmentslislverylimportant.

Inlthelinvestinglworld,ltheldictionaryldefinitionloflrisklislthelchancelthatlanlinvestment‟slactuallreturnl
willlbeldifferentlthanlexpected.lTechnically,lthislislmeasuredlinlstatisticslbylstandardldeviation.lRiskl
meanslyoulhavelthelpossibilitylofllosinglsome,lorlevenlall,loflourloriginallinvestment.

Lowllevelslofluncertaintyl(lowlrisk)larelassociatedlwithllowlpotentiallreturns.lHighllevelslofluncertain
tyl(highlrisk)larelassociatedlwithlhighlpotentiallreturns.lThelrisk/returnltradeofflislthelbalancelbetwee
nltheldesirelforlthellowestlpossiblelrisklandlthelhighestlpossiblelreturn.lThislisldemonstratedlgraphical
lylinlthelchartlbelow.lAlhigherlstandardldeviationlmeanslalhigherlrisklandlhigherlpossiblelreturn.l

Alcommonlmisconceptionlislthatlhigherlrisklequalslgreaterlreturn.lThelrisk/returnltradeoffltellsluslthat
lthelhigherlrisklgivesluslthelpossibilityloflhigherlreturns.lTherelarelnolguarantees.lJustlaslrisklmeanslhi

gherlpotentiallreturns,litlalsolmeanslhigherlpotentialllosses.

Onlthellowestlendloflthelscale,lthelrisk-
freeloflreturnlislrepresentedlbylthelreturnlonlUS.lGovernmentlsecuritieslbecauseltheirlchancelofldefaul
tlislnextltolnothing.lIflthelrisk-
freelratelislcurrentlyl6%,lthislmeans,lwithlvirtuallylnolrisk,lwelcanlearnl6%lperlyearlonlourlmoney.

Thelcommonlquestionlarises:lwholwantltolearnl6%lwhenlindexlfundslaveragel12%lperlyearloverlthello
nglrun?lThelanswerltolthislrisklislthatlevenlthelentirelmarketl(representedlbylthelindexlfund)lcarrieslris
k.lThelreturnlonlindexlfundslislnotl12%leverylyear,lbutlratherl-
5l%lonelyear,l25%lthelnextlyear,landlsolon.lAnlinvestorlstilllfaceslsubstantiallylrisklandlvolatilityltolge
tlanloveralllreturnlthatlislhigherlthanlalpredictablelgovernmentlsecurity.lWelcalllthisladditionallreturnlt
helrisklpremium,lwhichlislthislcaselisl6%l(12%-6%).

Determininglwhatlriskllevellislmostlappropriatelforlyoulisn‟tlanleasylquestionltolanswer.lRiskltoleranc
eldifferslfromlpersonltolperson.lYourldecisionlwillldependlonlyourlgoals,lincomeslandlpersonallsituati
on,lamonglotherlfactors.
Investorlmakeslinvestmentlwithlthelobjectiveloflearninglsomeltangiblelbenefit.lThislbenefitlinlfinanci
allterminologylisltermedlaslreturnlandlislalrewardlforltakinglalspecifiedlamountloflrisk.

Risklisldefinedlaslthelpossibilityloflthelactuallreturnlbeingldifferentlfromlthelexpectedlreturnlonlanlinv
estmentloverlthelperiodloflinvestment.lLowlrisklleadsltollowlreturns.lForlinstance,linlcaseloflgovernm
entlsecurities,lwhilelthelrateloflreturnlisllow,lthelrisklofldefaultinglislalsollow.lHighlrisklleadsltolhigherl
potentiallreturns,lbutlmaylalsolleadltolhigherllosses.lLong-
termlreturnslonlstockslarelmuchlhigherlthanlthelreturnslonlgovernmentlsecurities,lbutlthelrisklofllosing
lmoneylislalsolhigher.

Rateloflreturnlonlanlinvestmentlcanlbelcalculatedlusinglthelfollowinglformula-

Returnl=l(Amountlreceived-Amountlinvested)/Amountlinvested

ComponentsloflRisk:

Aslperlthelpresentlconversationslrisklmaylbelcategorized:

• Marketlrisk

• Creditlrisk

• Operationallrisk

• Reputationlrisk

• Legallrisk

MarketlRisk:
Marketlrisklislbroadlyldefinedlaslthelriskltolanlentitylofllosseslresultinglfromladverselchangeslinlfinan
ciallassetslprices,lwhichlcouldlincludelchangeslinlinterestlrates,lcurrencylrateslandlcommoditylprices.l
Bankslperenniallylexposedltolthislrisk.
l

KeepinglthellevelloflcomputerizedlandlMIS,lbankslhavelbeenladvisedltoladoptleasy-to-
comprehendlanalyticalltoolslforlmanagementloflmarketlrisk.lInternationallbanks,lonlthelotherlhand,lh
avelmade,lconsiderablelprogresslinloptinglmorelsophisticatedltechniquesllikelduration,lEarningslatlri
skl(EAR),lvaluelatlriskl(VAR)landlcomplexlsimulationlmodels.
CreditlRisk:
Thelmajorlactivityloflanylcommerciallbankslisllendinglandlthelmajorlrisklinllendingloperationlinlcredi
tlrisklislthelpossibilitylofllosseslassociatedlwithlchangeslinlthelcreditlprofileloflborrowerslorlcounterlpa
rties.lTheselcouldltakelthelformsloflourlrightldefaultlorlalternatively,llosseslfromlchangeslinlportfoliol
valuelarisinglfromlactuallorlperceivedldeteriorationlinlcreditlquality.lCreditlrisklinvolveslthelinabilityl
orlunwillingnessloflalborrowerlorlcounterpartyltolmeetlitslobligationslinlaccordancelwithlthelagreedlte
rms.

OperationallRisk:l
Itlisldefinedlaslanylrisklotherlthanlcreditlorlmarketlrisk.lItlarisesloutloflvariousltypesloflhumanlandltech
nicallerrors,lenvironmentallrisk,llegallrisk,lsociallrisk.lThelprocesslofloperationallrisk

assessmentslneedsltoladdresslthellikelihoodloflalparticularloperationallriskloccurring.lAnleffectivelint
ernallauditlsystemlandlconcurrentlauditlsystemlandlconcurrentlauditlsystemlcanlreduceloperationlriskl
tolanlinspection,ltolminimizinglriskloflfrauds.lThelbanklwilllperiodicallylreviewlthelsystemlandlproce
dureslandlguidelinesltolmakelthemlsimplelandlthuslminimizeloperationallrisk.

ReputationlRisk:
Reputationlislalparamountlimportanceloflbanks.lBankslonlylloseltheirlreputationloccurring.lAnleffecti
velinternallauditlsystemlandlconcurrentlauditlsystemlandlconcurrentlauditlsystemlcanlreduceloperatio
nlriskltolanlinspection,ltolminimizinglriskloflfrauds.lThelbanklwilllperiodicallylreviewlthelsystemlandl
procedureslandlguidelinesltolmakelthemlsimplelandlthuslminimizeloperationallrisk.l

LegallRisk:
Legallrisklislthelrisklthatlalfirmlwilllinsurellossliflalcontractlislthroughlwaslenforcedlactuallylislnot.lthel
globallderivativeslstudylgrouplidentifiedlseverallsourceslofllegallrisklforlinnovativelfinanciallinstrum
entslthatlareloftenlassociatedlwithlrisklmanagement,lincludinglconflictslbetweenlorallcontractslforma
tionlandlthelstatusloflfraudslinlcertainlcountrieslandljurisdictionsl,thelcapacityloflcertainltypesltransact
ions,lthelenforceabilityloflcloselmeeting,landlthellegalityloflfinanciallinstrument.lInladdition,lunaccep
tedlchangeslinllawlandlregulationslcanlexposelfirmsltolpotentialllosseslaslwell.
TypesloflRisk:
MarketlRisk:l
Thislislwhenlstocklorlbondlpricesldroplandlyoulappearltolloselmoneylonlyourlinvestment.lHowever,lm
ostllosseslarelsustainedloverlthelshortltermloflalyearlorlless.lAsllonglaslyouldon'tlsell,lyourlinvestmentl
willlhavelthelchanceltolrecoverlfromlpriceldeclineslandlearnlyoulalgreaterlprofit.

InflationlRisk:l
Thelrisklthatlthelrisinglcostsloflinflationlwillloutpacelthelgrowthloflyourlinvestmentloverltime.

CompanylRisk:l
Thislislthelrisklthatlthelindividuallcompanylinlwhichlyoulinvestlwilllfailltolperformlaslexpected.

CreditlRisk:l
Specificltolbonds,lcreditlrisklrefersltolthelcompanylorlgovernment'slinabilityltolrepaylprincipallpluslin
terestltolthelbondholder.

MaturitylRisk:l
Alsolspecificltolbonds,lthislislthelrisklthatlthelvalueloflalbondlmaylchangelfromltheltimelitlislissuedltolw
henlitlmatures.lThellongerlthelperiodltolmaturity,lthelgreaterlthelpotentiallforlpricelfluctuation.lThatlisl
whyllong-termlbondslgenerallylofferlalhigherlinterestlrate--tolcompensatelforlthislgreaterlrisk.

LegislativelRisk:l
Whateverllawslthelgovernmentlpassesltodaylmaylbelextinctltomorrow.lForlexample,lthellong-
termlcapitallgainsltaxlratelhaslbeenlchangedlfiveltimeslinlthellastl20lyears,lwithlthelmostlrecentlcutlatl2
0%.lFactorslsuchlasltaxldeductionlandldeferrallshouldlneverlbelyourlsolelreasonlforlselectinglanlinvest
ment.lTheselperkslarelatlthelmercyloflCongress.

GloballRisk:l
It'slalwayslalbiggerlriskltolinvestloverseaslthanlatlhome.lThenlagain,lit'slgenerallylmorelrewardingltolv
acationlinlEuropelthanllounginglaroundlinlthelbackyard.lOverl50%loflthelworld'slcapitallmarketloppor
tunitieslexistloutsideloflthelU.S.,lsolalpurelyldomesticlstrategylcanlseverelyllimitlyourllong-
termlearningslpotential.

TiminglRisk:l
Timinglrisklworksltwolways.l First,lyoulrunlthelriskloflinvestinglallargelsumloflmoneylwhenlsharelpric
eslhitltheirlpeak.lSecond,lthere'slthelrisklthatlyou'lllneedltolaccesslyourlmoneyltolpaylforlretirementlorl
collegelexpenseslduringlaltemporarylmarketlsetback--causinglyoultolloselmoneylonlyourlinvestment.

StatisticallToolsl

• StandardlDeviationl(S.D)

• CoefficientlOflCorrelation

1.lStandardlDeviationl(S.D):

Thislislthelmostlcommonlylusedltolmeasureloflrisklinlfinance.lItslsquarelalsolislwidelylusedltolfindloutl
thelrisklassociatedlwithlalsecurity.lStandardldeviationlislalstatisticalltermlthatlmeasureslthelamountlofl
variabilitylorldispersionlaroundlanlaverage.lStandardldeviationlislalsolalmeasureloflvolatility.lGeneral
lylspeaking,ldispersionlisltheldifferencelbetweenlthelactuallvaluelandlthelaveragelvalue.lThellargerlthi
sldispersionlorlvariabilitylis,lthelhigherlthelstandardldeviation.lThelsmallerlthisldispersionlorlvariabilit
ylislthellowerlthelstandardldeviation.lChartistslcanluselthelstandardldeviationltolmeasurelexpectedlrisk
landldeterminelthelsignificanceloflcertainlpricelmovements.

STANDARDlDEVIATIONl=(X-X1)2/n

2.lCoefficientlOflCorrelation:

Coefficientloflcorrelationlislalstatisticalltechnique,lwhichlmeasuresltheldegreelorlextentltolwhichltwol
or,lmorelvariableslfluctuatelwithlreferenceltolonelanother.lCorrelationlanalysislhelpslinldetermininglt
heldegreeloflrelationshiplbetweenltwolvariableslbutlcorrelationldoeslnotlalwayslimplylcauseleffectlrel
ationship.

Thelcoefficientloflcorrelationlislessentiallthelcovarianceltakenlnotlaslanlabsolutelvaluelbutlrelativeltolt
helstandardldeviationloflthelindividuallsecurities.lItlindicates,linleffect,lhowlmuchlXlandlYlvaryltoget
herlaslalproportionlofltheirlcombinedlindividual‟slvariations,lmeasuredlbylSDloflXlmultipliedlbylSDlo
flY.

Note:l

• Whenlreturnslarelsamelwelcanluselthelstandardldeviationlmethod.

• Whenlreturnslareldifferentlandlrisklislalsoldifferentlweluselthelco-efficientloflvariance.

Measuringlrisk:l

Solfar,lwelhavelacquaintedlourselveslwithlthelkind‟slriskslinlinherentlinlinvestmentlinstruments.lHow
ever,lmerelylknowinglthislmuchlmaylnotlbelenoughltoltakelanlinformedldecision.

Benefitsltolshareholders:

Whylshouldlyoulpurchaselsharesloflalcompany?lWhatlarelbenefitslthatlaccrueltolyoulaslalshareholder?
lApartlfromlthelrightltolvotelandldecidelthelfuturelcourseloflactionlthatlalcompanyltakes,lthelreallbenefi

tlthatlyou,laslalshareholderlhavelislinlformloflparticipationlthatlyoulgetlinlprofitlmadelbylthelcompany.l
Atlthelsameltime,lyourlliabilitylisllimitedlonlyltolthelfacelvalueloflthelshareslheldlbylyou.lThelbenefitsl
distributedlbylthelcompanyltolitslshareholderslcanlbel

• MonetarylBenefitsl
• Non-MonetarylBenefits
I.lMonetarylBenefits:l

ThatlyoulshalllearnlaslalresultloflthelinvestmentlmadelbylyoulbylsubscribingltolthelsharesloflXlLtd.

(A)Capitallappreciation:l

lAlsharelholderlalsolbenefitslfromlcapitallappreciation.lSimplylput,lthislmeanslanlincreaselinlthelvalueloflthelco

mpanylusuallylreflectedlinlitslsharelprice.lCompanieslgenerallyldolnotldistributelallltheirlprofitslasldividend.lA
slthelcompanieslgrow,lprofitslarelre-
investedlinlbusiness.lThislmeanslanlincreaselinlnetlworth,lwhichlresultslinlappreciationlinlthelvalueloflshares.l
Hence,liflyoulpurchasel200lsharesloflXlLtdlatlRs.20lperlsharelandlholdlthelsamelforltwolyears,lafterlwhichlthelv
aluelofleachlsharelislRs.35.lthislmeanslthat,lyourlcapitallhaslappreciatedlbylRs.3000.
(B)Dividend:
Anlequitylshareholderlhaslalrightlonlthelprofitslgeneratedlbylthelcompany.lProfitslareldistributedlinlpa
rtlorlinlfulllinlthelformlofldividends.lDividendlislanlearninglonlthelinvestmentlmadelinlshares,ljustllikeli
nterestlinlcaseloflbondslorldebentures.lAlcompanylcanlissueldividendlinltwolforms:lInterimlDividendl
andlFinallDividend.lWhilelfinalldividendlisldistributedlonlylafterlclosingloflfinanciallyear;lcompanies
latltimesldeclarelanlinterimldividendlduringlalfinanciallyear.lHenceliflXlLtdlearnslalprofitloflRs.40lcror

elandldecidesltoldistributelRs.2ltoleachlshareholder,lalholdinglofl200lsharesloflXlLtdlwouldlentitlelyoul
tolRs.400lasldividend.lThislislalreturn.

II.lNon-MonetarylBenefits:

Apartlfromldividendslandlcapitallappreciation,linvestmentslinlshareslalsolfetchlsomeltypeloflnon-
monetarylbenefitsltolalshareholder.lTheylaslfollows

(A)lBonus:
lAnlissueloflbonuslshareslisltheldistributionlfreeloflcostltolthelshareholderslusuallylmadelwhenlalcomp

anylcapitalizeslonlprofitslmadeloverlalperiodlofltime.lRatherlthanlpayingldividends,lcompanieslgivela
dditionallshareslinlalpre-
definedlratio.lPrimalfacie,litldoeslnotlaffectlthelwealthloflshareholder.lHowever,linlpractice,lbonuseslc
arrylcertainllatentladvantageslsuchlasltaxlbenefits,lbetterlfuturelgrowthlpotential,landlanlincreaselinlth
elfloatinglstockloflthelcompany,letc.lhenceliflXlLtdldecidesltolissuelbonuslshareslinlalrationlofl1:1,lever
ylexistinglshareholderloflXlLtdlwouldlreceiveloneladditionallsharelfreelforleachlsharelheldlbylhim.lOfl
course,ltakinglthelbonuslintolaccount,lthelsharelpricelwouldlalsolideallylfalllbyl50%lpostlbonus.lHowe
ver,ldependingluponlmarketlexpectations,lthelsharelpricelmaylriselorlfalllonlthelbonuslannouncement.
(B)Rightslissue:
Alrightslissuelinvolveslsellingloflordinarylsharesltolthelexistinglshareholdersloflthelcompany.lAlcomp
anylwishingltolincreaselitslsubscribedlcapitallbylallotmentloflfurtherlshareslshouldlfirstlofferlthemltolit
slexistinglshareholders.lThelbenefitloflalrightslissuelislthatlexistinglshareholderslmaintainlcontrolloflth
elcompany.lAlso,lthislresultslinlanlexpandedlcapitallbase,lafterlwhichlthelcompanylislableltolperformlb
etter.lThislgetslreflectedlinlthelappreciationloflsharelvalue.
Exchangelratelrisk:
lCompaniesltodaylearnlsizeablelrevenueslfromloutsideltheirlparentlcountry.lHence,lanylappreciationli

nlthelcurrency,laslwaslrecentlylwitnessedlwithltechnologylcompanies,ladverselylaffectslearnings,lwhi
chlresultslinlfallinglorlstagnantlsharelprices.l
Inflationlrisk:
lRisinglpriceslorlinflationlreduceslpurchasinglpowerlforlthelcommonlmanlresultinglinlalslowdownlinlt

heldemandlinltheleconomy.lThislhaslimplicationslforlalllthelsectorslinlthelconomy.l

Hence,linlanlinflationarylenvironment,lsharelpricesloflmostlcompanieslfacelaldownturnlaslthelexpecte
dlfalllinldemandlreducesltheirlfuturelexpectedlincome.
Interestlratelrisk:
Interestlratelrisklrefersltoltheluncertaintyloflfuturelmarketlvalueslandlsizeloflfuturelincome,lcausedlbylf
luctuationslinlthelgeneralllevelloflinterestlrates.lRisinglinterestlrateslincreaselcostloflborrowing,lwhich
lresultslinlanlincreaselinlthelpricesloflproductslandlalcorrespondinglslowdownlinldemand.lHence,lanlin

terestlratelhikelaffectslsharelpricesloflcompanieslcuttinglacrosslthelboard.
Differentlwaysltolovercomelrisks:
Mostlriskslassociatedlwithlinvestmentslinlshareslcanlbelreducedlbylusingltheltoollofldiversification.lP
urchasinglshareslofldifferentlcompanieslandlcreatinglaldiversifiedlportfoliolhaslprovenltolbeloneloflth
elmostlreliableltoolsloflrisklreduction

Thelprocesslofldiversification:l

Whenlyoulholdlshareslinlalsinglelcompany,lyoulrunlthelriskloflallargelmagnitude.lAslyourlportfoliolex
pandsltolincludelsharesloflmorelcompanies,lthelcompanylspecificlrisklreduces.lThelbenefitsloflcreatin
glalwellldiversifiedlportfoliolcanlbeldicedlfromlthelfactlthatlaslyouladdlmorelsharesltolyourlportfolio,lth
elweightlagelofleachlcompany‟slsharelgetslreduced.lHencelanyladverseleventlrelatedltolanylonelcomp
anylwouldlnotlexposelyoultolimmenselrisk.lThelsamellogiclcanlbelextendedltolalsectorlorlanlindustry.lI
nlfact,ldiversifyinglacrosslsectorslandlindustrieslreapslthelreallbenefitslofldiversification.lSectorlspeci
ficlriskslgetlminimizedlwhenlsharesloflotherlsectorslareladdedltolthelportfolio.lThislislbecauselalrecess
ionlorlaldowntrendlislnotlseenlinlalllsectorsltogether.
Howeverlalllriskslcannotlbelreduced:

Thoughlitlislpossibleltolreducelrisk,lthelprocessloflequitylinvestinglitselflcomeslwithlcertainlinherentlri
sk,lwhichlcannotlbelreducedlbylstrategieslsuchlasldiversification.lTheselriskslarelcalledlsystematiclris
klasltheylariselfromlthelsystem,lsuchlaslinterestlratelrisklandlinflationlrisk.l

Asltheselriskslcannotlbeldiversified,ltheoretically,linvestorslarelrewardlforltakinglsystematiclrisklforle
quitylinvestment.

Thelcaselforllong-termlinvestmentlinlequities:

lThelmovementlduringltheselfifteenlyearslshowslthatlitlislrewardingltolstaylinvestedlinlequitieslforlthell

onglterm.lThelfollowinglfactorsljustifylthis:

• Industrieslandlbusinesses,ltolwhichlcompanieslbelong,lmatureloverlalperiodlofltime.lAslindustries
lgrowlsoldolthelprofitsloflcompanieslbelongingltolthem.lThelbestlexampleloflthis

• canlbelfoundlinlthelIndianltelecommunicationslindustry.lHence,linvestorslstartlreapinglthelbenefit
lofltheirlinvestmentloverlalperiodlofltime.

• Whilelmarketslundergolcyclicallphases,lwhichlfollowlalseriesloflpeakslandltroughs,loverlalperiod
lofltimeltheselfactorslgetlnegatedlandlreturnslfromlstockslpresentlalvalidlpicture.lSo,lalthoughlyou

lmaylincurlsomellosseslinlthelshortlterm,liflyoularellookingltolinvestlinlequitieslyoulmustlalwayslt

hinkllong-term.
• Equitieslarelthelonlylinvestmentlasset,lwhichlarelexemptlfromllong-
termlcapitallgainsltax,lwhichlmeanslthatlyoulownlalllthelreturnslgenerated.lAlllotherlinvestments,
lexcludinglPPFlandllifelinsurance,lareltaxedlforlthelgainslmade.lThislreducesltheloveralllreturnlinl

investmentlassetsllikelNSC,lbankldepositsletc.
• Anlinvestorlcanlill-
affordltolignorelthatlIndialislalfastlgrowingleconomylandlitlislwidelylperceivedlthatlthislrobustlgro
wthlwouldlcontinuelforlmanylmorelyearsltolcome.lThelbiggestlbeneficiaryloflthislgrowthlstorylw
ouldlbelthelindustrieslandlservicelsector.lItlislalmostlcertainlthatlthelIndexloflIndustriallProductio
nl(IIP)lwouldlgrowlatlalratelofloverl10l%linlthelnextlfewlyears.lThislwouldlenhancelprofitlgrowthl
oflcompanieslandlitlwouldlgetlreflectedlinlthelupwardlmovementlofltheirlsharelprice.
Riskldiversification:l

Diversificationloccurslwhenldifferentlassetslmakeluplalportfolio.lThelbenefitlofldiversificationlislriskl
reduction;lthelextentloflthislbenefitldependsluponlhowlthelreturnsloflvariouslassetslbehaveloverltime.

Thelmarketlrewardsldiversification.lWelcanllowerlrisklwithoutlsacrificinglexpectedlreturn,land/orlwel
canlincreaselexpectedlreturnlwithoutlhavingltolassumelmorelrisk.lDiversifyinglamongldifferentlkindsl
oflassetslislcalledlassetlallocation.lE.g.lAltelephoneloperatorlwithlmanylphysicallassetslsuchlaslhousesl
canldiversifylbylacquiringlfinanciallassetslwhichlinlturnlearnslreturnltolthelcompany.lComparedltoldiv
ersificationlwithinltheldifferentlassetlclasses,lthelbenefitslreceivedlarelfarlgreaterlthroughleffectivelas
setlallocationle.g.ldiversifyinglamongldifferentltypesloflfinanciallassets.l

Examplelofldiversificationlinltelecomlindustrylislwhenlallicensedlmobileloperatorlwholprovideslfixed
llineltelephoneslserviceslalsoloperateslthelcommunitylbasedltelecenters,lteleshops,lcardlphones,letc.l

Otherlwaysltolreducelrisklincludeltheluseloflthelfollowinglstrategies:

• Massladvertisingltolreducelerraticlsaleslandlhenceltolincreasedlprofit.
• Enteringlintollong-termlsaleslorlpurchaselcontracts.
• Recapitalizingltowardlmorelequitylandllessldebtlsolasltolreducelthelburdenloflfixedlfinancialle
xpenses.
• Theluselofltemporaryllaborlinsteadloflpermanentlemployees.

Analyticalltools:

Calculationloflreturn:

Returnloflinvestmentlisloneloflseverallprofitabilitylrations,loneloflthelfourlbasiclclassesloflfinanciallrat
ioslthelotherslbeinglliquiditylrations,lactivitylrationslandldebtlrations.lThis,lthelreturnlonlinvestment,lo
ftenlcalledlalcompany‟slreturnlonltotallassets,lmeasuresltheloveralllprofitlmadelonlanlinvestmentlexpr
essedlaslalpercentageloflthelamountlinvested.lLikelreturnlonlassets,lorlreturnlonlequity,lreturnlonlinves
tmentlmeasureslalcompany‟slprofitabilitylandlitslmanagement‟slabilityltolgeneratelprofitslfromlthelfu
ndslinvestorslhavelplacedlatlitsldisposal.l
Itlisloftenlsaidlthatliflalcompany‟sloperationslcannotlgeneratelnetlprofitlaslalpercentageloflthelamountli
nvestedlgreaterlthanlthelinterestlratelonlfinanciallmarkets,litslfuturelislgrim.

Whatltoldo:

Thelbasiclreturnlonlinvestmentlcanlbelfoundlbyldividinglalcompany‟slnetlprofitl(alsolcalledlnetlearnin
gs)lbyltheltotallinvestmentl(totalldebtlplusltotallequity),landlmultiplyinglbyl100ltolarrivelatlalpercentag
e.li.e.l

lNetlprofitl*100l=lReturnlonlInvestmentl

lTotallinvestmentl

lSo,lsliflnetlprofitlisl$30landltheltotallinvestedlisl$250,lthelreturnlonlinvestmentlis:

l(30/250)l*100=0.12*100=l12%

Calculationloflrisk

Oneloflthelbasicslinvestorslneedltolknowlwhenlmakinglanlinvestmentldecisionlislthelrisk/rewardlrelati
onshiplofltheltrade.lButljustlbecauselit‟slbasiclandlnecessaryldoesn‟tlmeanlyoulknowlhowltolcalculatel
one.l

Ilalwaysllooklatlthelrisk/rewardlrelationshiplbeforelenteringlaltrade.lItldoesn‟tlmatterlwhetherlitlislalsto
ckltrade,lanloptionsltrade,lorlalfuturesltrade.lThelfirstlthinglIllooklatlislthelrisk.lAndlIlalwayslhavelalstop
-losslpointlinlmindltolprotectlmylinvestment.

Herelislanlexample-lalrecentlshort-termlstockltradelIlanalyzedlwithlmylcollegelAndrewlGordon…

Thelstocklwasltradinglatl$86latltheltime.lAlgoodlstop-
losslpointlwouldlbelalmovelbelowlthel50ldaylmovinglaverage,lwhichlwaslatl$84.lIflthatlhappened,lourll
osslwouldlbelinlthelvicinitylofl2.5%.lThelchartlshowedlclearlresistancelatlthel$96llevel,lsolourltargetlga
inlwasl$10lorl11.6%.

Iflweltakeltheltargetlgainlofl11.6%landldividelitlbyltheltargetllosslofl2.5%,litlgivesluslalrisk/rewardlratiol
ofl4.6.lThislislalverylgoodlrisk/rewardlratio.
Ilmakeltradeslonlylwithlalrisk/rewardlratioloverl3.0,lthelhigherlthelbetter.lAndlwhenlIlcombinelthislbas
icltoollwithlthelleveragelprovidelbyloptionsl(theltypelofltradelIldolmostlfrequently),lIlcanlcreatelextrem
elylnicelreturns.

Tolclarifylthelidealoflsystematiclrisk,llet‟slexaminelthelrelationshiplbetweenlthelcommonlstocklreturn
sloflwastelmanagementlandlthelreturnsloflthelS&Pl500lIndex.lThelmonthlylreturnslforlwastelmanage
mentlandlforlthelS&Plindexlforlthellastl12lmonths.

Forlimplementinglthelstudy,loflsecuritieslorlstockslconsistinglthelSensexlmarketlarelselectedlofl45lda
yslopeninglandlclosinglsharelmovementlpriceldatelfromlNSElonldate.

• Return=l((closinglprice-openinglprice)/openinglprice)*100
• Variancel=∑(x-mean)l2l
l
N-1

lWhere,l

lX=returnl

lN=lnumberloflobservationsl

lStandardldeviationl(σ)lorlrisk=l√variance
ReviewloflLiterature:

1)lTitle:linvestmentlmanagement

Authorlname:lCraiglw.lFrench

Edition:lsecondlquarterl2003

Treynorl(1965)ldevelopedlalmethodologylforlevaluatinglthelfundlperformancelcalledlrewardltolvolati
litylmeasure.lInlhislpathlbreakinglstudyl(1966)ldevelopedlrewardltolvariabilitylmeasurelandlfoundl11l
fundslreportedlsuperiorlperformanceloutlofl34lfundsltolthatloflDJIA.lJensens‟sl(1968)ldevisedlalmeas
urelbasedlonlCAPMlandlreportedlthatlmutuallfundsldidlnotlappearltolachievelabnormallperformancel
whenltransactionslcostlwerelconsidered.lFamal(1972)ldevelopedlalmethodologylforlevaluatinglinvest
mentslperformanceloflmanagedlportfolios.lHelsuggestedlthatloveralllperformancelcouldlbelbrokenldo
wnlintolseverallcomponents.

2).Title:lportfoliolmanagement

Authorlname:lguptaVol.3l

Guptal(1974)levaluatedlthelperformanceloflselectlmutuallfundslcategorizedlinltermslofltheirlbroadlinv
estmentlobjectiveslforlthelperiodl1962-
71.lHelreportedlthatlalllfundsltypesloutperformedlthelmarketlirrespectiveloflchoiceloflmarketlindexlan
dlperformancelmeasureljayadevl(1996)levaluatedlthelperformancelofltwolgrowth-
orientedlmutuallfundslonlthelbasisloflmonthlylreturnslcomparedltolbenchmarklreturnloverlalstudylperi
odlofl21lmonthsl(junel1992ltolmarchl1994)lhelemployedlriskl–
ladjustedlperformance,lmeasurelsuggestedlbylJensen,lTreynor landlSharpelforlevaluation.lHelfoundlth

atlbothlthelfundslwerelpoorlinlearninglbetterlreturnsleitherladoptinglmarketltiminglstrategylorlinlselect
inglunderl–lpricedlsecuritiesl.lFurther,lthelstudylconcludedlthatltheltwolgrowths-
lorientedlfundslhavelnotlperformedlbetterlinltermslofltotallrisklandlwerelnotlofferingladvantageslofldiv

ersificationlandlprofessionalismltolthelinvestors.
3).Title:lAccountingl–businesslmanagement

Authorlname:lSechgallandljhanwarVol.8

Sechgallandljhanwarl(2008)levaluatedlthelperformancelofl60lgrowthlandlgrowthl–
lincomelmutuallfundlschemeslinlIndialfromlJanuaryl2000ltolDecemberl2004.lTheylexaminedlbothlthel

stocklselectionlskillslandltheltiminglabilitiesloflthelsamplelfundlmanagerslandlarguedlthatlmulti-
factorlbenchmarkslprovidelbetterlselectivelylandltiminglmeasureslcomparedltolonel–
lfactorlCAPMlasltheylcontrollforlstylelcharacteristicslsuchlaslsizel,lvaluelandlmomentum.lItlfoundlthatl

thelevidencelonlselectivitylimprovedlmarginallylwhenlhigherlfrequencyldatalsuchlasldailylreturnslarel
usedlinsteadloflmonthlylreturns.lZabiullal(2010)lexaminedlthelinvestmentlperformancelofltwelvelsel
ectedlsectorlfundslduringlAprill2006ltolJulyl2009lusinglhighlfrequencyldata.lThelstudylrevealedlthatlp
erformancelmeasuredlinltermslofldownsidelandlrelativelrisklcriterialrevealedlthatlalmostlalllthelschem
eslpostedlpoorlperformance.lthelstudylconcludedlthatltimeltestedlmodelslalonelcannotlgivelalfairlviewl
oflthelfundlmanager‟slcompetencelskillslinldeliveringlabnormallreturns;ldownsidelrisklmeasureslcoul
dldefinitelylaugmentlthelperformancelevaluationlframeworkloflmanagedlportfolios.l
 CHAPTER-l3

3.1lINDUSTRYlPROFILE

History

Thelonlylstocklexchangeloperatinglinlthel19thlcenturylwaslBombaylStocklExchangelsetluplinl1875lan
dlAhmadabadlsetluplinl1894.lTherelwaslorganizedlaslvoluntarylnon-
profitlmakinglassociationloflbrokersltolregulatelandlprotectltheirlinterests.lBeforelthelcontrollonlsecur
itiesltradinglbecamelalcentrallsubjectlunderlthelconstitutionlinl1950,litlwaslalstatelsubjectlandlthelBom
baylsecuritieslcontractsl(control)lActlifl1925lusedltolregulateltradinglinlsecurities.lUnderlthislAct,lthel
BombaylStocklExchangelwaslrecognizedlinl1927landlAhmadabadlinl1937.

Duringlthelwarlboom,lalnumberloflstocklexchangeslwerelorganizedlevenlinlBombay,lAhmadabadland
lotherlcenters,lbutltheylwerelnotlrecognized.lSoonlafterlitlbecamelalcentrallsubject,lcentralllegislationl

waslproposedlandlalcommitteelheadedlbylA.D.lGorwalalwentlintolthelbilllforlsecuritieslregulation.lOn
lthelbasisloflcommittee‟slrecommendationslandlpublicldiscussion,lthelsecuritieslcontractsl(regulation

)lActlbecamellawlinl1956.

DefinitionloflStocklExchange

“StocklExchangelmeanslanybodylorlindividualslwhetherlincorporatedlorlnot,lconstitutedlforlthelpurp
oseloflassistinglregulatinglorlcontrollinglthelbusinessloflbuying,lsellinglorldealinglinlsecurities.”

Itlislanlassociationloflmemberlbrokerslforlthelpurposeloflself-
regulationlandlprotectinglthelinterestsloflitslmembers.

Itlcanloperatelonlyliflitlislrecognizedlbylthelgovernmentlunderlthelsecuritieslcontactsl(regulation)lAct,l
1956.lThelrecognitionlislgrantedlunderlsectionl3loflthelActlbylthelcentrallgovernment,lMinistryloflFin
ance.
Historyloflstocklexchanges

Inl12thlcenturylFrancelthelcourratiersldelchangelwerelconcernedlwithlmanaginglandlregulatinglthelde
btsloflagriculturallcommunitieslonlbehalfloflthelbanks.lAsltheselmenlalsoltradedlinldebts,ltheylcouldlb
elcalledlthelfirstlbrokers.lSomelstorieslsuggestlthatltheloriginsloflthelterml"bourse"lcomelfromlthelLati
nlbursalmeaninglalbaglbecause,linl13thlcenturylBruges,lthelsignloflalpursel(orlperhapslthreelpurses),lh
unglonlthelfrontloflthelhouselwherelmerchantslmet.lHowever,litlislmorellikelylthatlinlthellatel13thlcent
urylcommodityltraderslinlBrugeslgatheredlinsidelthelhouseloflalmanlcalledlVanlderlBurse,landlinl1309l
theylinstitutionalizedlthisluntillnowlinformallmeetinglandlbecamelthel"BrugeslBourse".

lThelidealspreadlquicklylaroundl Flanderslandlneighboringlcountieslandl"Bourses"lsoonlopenedlinlGh

entlandlAmsterdam.

AlbondlissuedlbylthelDutchlEastlIndialCompany,ldatinglfroml7lNovemberl1823,lforlthelamountlofl2,4
00lflorins.

Inlthelmiddleloflthel13thlcentury,lVenetianlbankerslbeganltoltradelinlgovernmentlsecurities.lInl1351,lt
helVenetianlGovernmentloutlawedlspreadinglrumorslintendedltollowerlthelpriceloflgovernmentlfund
s.lTherelwerelpeoplelinlPisa,lVerona,lGenoalandlFlorencelwholalsolbeganltradinglinlgovernmentlsecu
ritieslduringlthel14thlcentury.lThislwaslonlylpossiblelbecauseltheselwerelindependentlcitylstateslruledl
bylalcouncilloflInfluentiallcitizens,lnotlbylalduke.lThelDutchllaterlstartedljointlstocklcompanies,lwhich
lletlshareholderslinvestlinlbusinesslventureslandlgetlalsharelofltheirlprofitsl-

lorllosses.lInl1802,lthelDutchlEastlIndialCompanylissuedlthelfirstlshareslonlthelAmsterdamlStocklExc

hange.lItlwaslthelfirstlcompanyltolissuelstockslandlbonds.lInl1888,ltheltradingloflstockslbeganlonlalstoc
klexchangelinlLondon.lStocklExchange

THElROLElOFlSTOCKlEXCHANGES:

Stocklexchangeslhavelmultiplelroleslinltheleconomy,lthislmaylincludelthelfollowing

• Raisinglcapitallforlbusinesses:
ThelStocklExchangelprovideslcompanieslwithlthelfacilityltolraiselcapitallforlexpansionlthroughlsellin
glsharesltolthelinvestinglpublic.
• Mobilizinglsavingslforlinvestment:
Whenlpeopleldrawltheirlsavingslandlinvestlinlshares,litlleadsltolalmorelrationallallocationloflresourcesl
becauselfunds,lwhichlcouldlhavelbeenlconsumed,lorlkeptlinlidleldepositslwithlbanks,larelmobilizedlan
dlredirectedltolpromotelbusinesslactivitylwithlbenefitslforlseveralleconomiclsectorslsuchlaslagricultur
e,lcommercelandlindustry,lresultinglinlalstrongerleconomiclgrowthlandlhigherlproductivityllevels.

• Facilitatinglcompanylgrowths:
lCompanieslviewlacquisitionslaslanlopportunityltolexpandlproductllines,lincreaseldistributionlchanne

ls,lhedgelagainstlvolatility,lincreaselitslmarketlshare,lorlacquirelotherlnecessarylbusinesslassets.lAltak
eoverlbidlorlalmergerlagreementlthroughlthelstocklexchangelisloneloflthelsimplestlandlmostlcommonl
wayslforlalcompanyltolgrowlbylacquisitionlorlfusion.

• Redistributionloflwealth:l
Stockslexchangesldolnotlexistltolredistributelwealthlalthoughlcasuallandlprofessionallstocklinvestorslt
hroughlstocklpriceslincreasesl(thatlmaylresultlinlcapitallgainslforlthe
Investor)landldividendslgetlalchanceltolsharelinlthelwealthloflprofitablelbusinesses.l

• Corporatelgovernance:
Bylhavinglalwidelandlvariedlscopeloflowners,lcompanieslgenerallyltendltolimprovelonltheirlmanagem
entlstandardslandlefficiencylinlorderltolsatisfyltheldemandslofltheselshareholderslandlthelmorelstringe
ntlruleslforlpubliclcorporationslimposedlbylpubliclstocklexchangeslandlthelgovernment.lConsequentl
y,litlislallegedlthatlpubliclcompaniesl(companieslthatlarelownedlbylshareholderslwholarelmembersloflt
helgenerallpubliclandltradelshareslonlpubliclexchanges)ltendltolhavelbetterlmanagementlrecordslthanl
privatelylheldlcompaniesl(thoselcompanieslwherelshareslarelnotlpubliclyltraded,loftenlownedlbylthelc
ompanylfoundersland/orltheirlfamilieslandlheirs,lorlotherwiselbylalsmalllgrouploflinvestors).lHoweve
r,lsomelwell-
documentedlcaseslarelknownlwherelitlislallegedlthatltherelhaslbeenlconsiderablelslippagelinlcorporate
lgovernancelonlthelpartloflsomelpubliclcompaniesl(pets.coml(2000),lEnronlcorporationl(2001),lOne.t

ell(2001),lSunbeaml(2001),lWebvanl(2001),lAdelphial(2002),lMcilworldlcoml(2002),lorlparamalat(2
003),larelamonglthelmostlwidelylscrutinizedlbylthelmedia)
• Creatinglinvestmentlopportunitieslforlsmalllinvestors:
Aslopposedltolotherlbusinesseslthatlrequirelhugelcapitalloutlay,linvestinglinlshareslislopenltolbothlthell
argelandlsmalllstocklinvestorslbecauselalpersonlbuyslthelnumberloflsharesltheylcanlafford.lThereforelt
helStocklExchangelprovideslthelopportunitylforlsmalllinvestorsltolownlsharesloflthelsamelcompaniesl
asllargelinvestors

• Governmentlcapital-raisinglforldevelopmentlprojects:
Governmentslatlvariousllevelslmayldecideltolborrowlmoneylinlorderltolfinancelinfrastructurelprojects
lsuchlaslsewagelandlwaterltreatmentlworkslorlhousinglestateslbylsellinglanotherlcategoryloflsecuritiesl

knownlaslbonds.lTheselbondslcanlbelraisedlthroughlthelStocklExchangelwherebylmembersloflthelpub
liclbuylthem,lthuslloaninglmoneyltolthelgovernment.lThelissuanceloflsuchlmunicipallbondslcanlobviat
elthelneedltoldirectlyltaxlthelcitizenslinlorderltolfinanceldevelopment,lalthoughlbylsecuringlsuchlbond
slwithlthelfulllfaithlandlcreditloflthelgovernmentlinsteadloflwithlcollateral,lthelresultlislthatlthelGovern
mentlmustltaxlthelcitizenslorlotherwiselraiseladditionallfundsltolmakelanylregularlcouponlpaymentsla
ndlrefundlthelprincipallwhenlthelbondslmature.

• Barometerlofltheleconomy:
Atlthelstocklexchange,lsharelpriceslriselandlfallldepending,llargely,lonlmarketlforces.lSharelpriceslten
dltolriselorlremainlstablelwhenlcompanieslandltheleconomylinlgenerallshowlsignsloflstabilitylandlgro
wth.lAnleconomiclrecession,ldepression,lorlfinanciallcrisislcouldleventuallylleadltolalstocklmarketlcra
sh.lThereforelthelmovementloflsharelpriceslandlinlgeneralloflthelstocklindexeslcanlbelanlindicatorloflth
elgeneralltrendlinltheleconomy.

FUNCTIONSlOFlSTOCKlEXCHANGE:

Listingloflshares,lonlalstocklexchange,lmeans,lsuchlshareslcanlbelboughtlandlsold,linlstocklexchange.l
AlCompany,lwhichlintendsltolissuelshares,lthroughlprospectus,lshalllhaveltolapplyltolonelorlmorelstoc
klexchanges,lforlgettinglitslsharesllisted.

Theldetailedlandlelaboratelprocedureloflgettinglthelsharesllistedlonlalstocklexchangelislmonitoredlbyl
SEBI.lThelSEBI,lissueslguidelineslandlnotifications,lfromltimeltoltimelwithlregardltollistingloflsecurit
ies.

Oncelthelshareslarellisted,ltheylareldividedlintoltwolcategories:l
1.lGroupl“A”lShares
2.lGroupl“A”lShares

Groupl“A”lShares:

Arelreferredltolasl“CleanedlSecurities”lorl“specifiedlshares".lThelfacilitylforlcarryinglforwardlaltrans
actionlfromlonelaccountlperiodltolanotherlislavailablelforltheselshares.lGroupl"A"lshareslrepresentlco
mpanies,lwithlhugelamountloflcapital,landlequallylallargelscopelforlinvestment.lTheselshareslarelfreq
uentlyltradedlandlcommandlhigherlpricelearningslmultiples.

Groupl“B”lShares:

Arelreferredltolas,lnonelcleanedlsecuritieslorlnon-
specifiedlshares.lForltheselgroupslfacilityloflcarryinglforwardlislnotlavailable.lWheneverlalsharelislmo
vedlfromlGroupl"B"ltolGroupl"An"litslmarketlpricelrises;llikewise,lwhenlalsharelislshiftedlfromlGroup
l"A"ltolGroupl"B",litslmarketlpriceldeclines.lTherelarelsomelcriterialandlguidellines,llaidldownlbylstoc

klexchange,lforlshiftinglstockslfromlthelnon-specifiedllistltolthelspecifiedllist.

Primarylmarket:

Sincel1991/92,lthelprimarylmarketlhaslgrownlfastlaslalresultloflthelremovalloflinvestmentlrestrictionsl
inltheloverallleconomylandlalrepealloflthelrestrictionslimposedlbylthelCapitallIssueslControllAct.lInl19
91/92,lRs62.15lbillionlwaslraisedlinlthelprimarylmarket.lThislfigurelroseltolRs276.21lbillionlinl1994/
95.lSincel1995/1996,lhowever,lsmallerlamountslhavelbeenlraisedldueltoltheloverallldowntrendlinlthel
marketlandltighterlentrylbarrierslintroducedlbylSEBIlforlinvestorlprotectionl.SEBIlhasltakenlseverall
measuresltolimprovelthelintegrityloflthelsecondarylmarket.lLegislativelandlregulatorylchangeslhavelf
acilitatedlthelcorporatizationloflstockbrokers.lCapitalladequacylnormslhavelbeenlprescribedlandlarelb
einglenforced.lAlmark-to-
marketlmarginlandlintradayltradingllimitlhavelalsolbeenlimposed.lFurther,lthelstocklexchangeslhavelp
utlinlplacelcircuitlbreakers,lwhichlarelappliedlinltimesloflexcessivelvolatility.lTheldisclosureloflshortls
aleslandllonglpurchaseslislnowlrequiredlatlthelendlofltheldayltolreducelpricelvolatilitylandlfurtherlenha
ncelthelintegrityloflthelsecondarylmarket.

Thelprimarylislthatlpartloflthelcapitallmarketslthatldealslwithlthelissuanceloflnewlsecurities.lCompanie
s,lgovernmentslorlpubliclsectorlinstitutionslcanlobtainlfundinglthroughlthelsaleloflalnewlstocklorlbondl
issue.lThislisltypicallyldonelthroughlalsyndicateloflsecuritiesldealers.lThelprocessloflsellinglnewlissue
sltolinvestorslislcalledlunderwriting.lInlthelcaseloflalnewlstocklissue,lthislsalelislanlinitiallpubliclofferin
gl(IPO).lDealerslearnlalcommissionlthatlislbuiltlintolthelpriceloflthelsecurityloffering,lthoughlitlcanlbelf
oundlinlthelprospectus.

Features:l
1.lthislislthelmarketlforlnewllongltermlcapital.lThelprimarylmarketlislthelmarketlwhetherlsecuritieslarel
soldlforlthelfirstltime.lThereforelitlislalsolcalledlNewlIssuelMarketl(NIM).
2.lInlalprimarylissue,lthelsecuritieslarelissuedlbylthelcompanyldirectlyltolinvestors.
3.lThelcompanylreceiveslthelmoneylandlissuelnewlsecuritylcertificatesltolthelinvestors
4.lPrimarylissueslarelusedlbylcompanieslforlthelpurposeloflsettingluplnewlbusinesslorlforlexpandinglor
lmodernizinglthelexistinglbusiness.

5.lThelprimarylmarketlperformslthelcruciallfunctionloflfacilitatinglcapitallformationlinltheleconomy.l
6.lThelnewlissuelmarketldoeslnotlincludelcertainlotherlsourcesloflnewllongltermlexternallfinance,lsuch
laslloanslfromlfinanciallinstitutions.lBorrowerslinlthelnewlissuelmarketlmaylbelraisinglcapitallforlconv

ertinglprivatelcapitallintolpubliclcapital;lthislislknownlasl„goinglpublic‟.

MethodsloflissuinglsecuritieslinlthelPrimarylMarket:
l

1.lInitiallPubliclOffer;l
2.lRightslIssuel(ForlexistinglCompanies);land
3.lPreferentiallIssue
Secondarylmarket:

Thelsecondarylmarketlislthelfinanciallmarketlforltradingloflsecuritieslthatlhavelalreadylbeenlissuedlinl
anlinitiallprivatelorlpublicloffering.lAlternatively,lsecondarylmarketlcanlreferltolthelmarketlforlanylki
ndloflusedlgoods.lThelmarketlthatlexistslinlalnewlsecurityljustlafterlthelnewlissuelisloftenlreferredltolasl
thelaftermarket.l

Function
Inlthelsecondarylmarket,lsecuritieslarelsoldlbylandltransferredlfromlonelinvestorlorlspeculatorltolanot
her.lItlislthereforelimportantlthatlthelsecondarylmarketlbelhighlylliquidl(Originally,lthelonlylwayltolcr
eatelthislliquiditylwaslforlinvestorslandlspeculatorsltolmeetlatlalfixedlplacelregularly.lThislislhowlstoc
klexchangesloriginated;lseelHistoryloflthelStocklExchange).
Secondarylmarketinglislvitalltolanlefficientlandlmodernlcapitallmarket.lFundamentally,lsecondarylm
arketslmeshlthelinvestor'slpreferencelforlliquidityl(i.e.,lthelinvestor'sldesirelnotltoltieluplhislorlherlmon
eylforlallonglperiodlofltime,linlcaselthelinvestorlneedslitltoldeallwithlunforeseenlcircumstances)lwithlth
elcapitalluser'slpreferenceltolbelableltoluselthelcapitallforlanlextendedlperiodlofltime.lForlexample,laltra
ditionallloanlallowslthelborrowerltolpaylbacklthelloan,lwithlinterest,loverlalcertainlperiod.lForlthelleng
thloflthatlperiodlofltime,lthelbulkloflthellender'slinvestmentlislinaccessibleltolthellender,levenlinlcaseslo
flemergencies.lLikewise,linlanlemergency,lalpartnerlinlaltraditionallpartnershiplislonlylableltolaccesslh
islorlherloriginallinvestmentliflhelorlshelfindslanotherlinvestorlwillingltolbuyloutlhislorlherlinterestlinlth
elpartnership.lWithlalsecuritizedlloanlorlequitylinterestl(suchlaslbonds)lorltradablelstocks,lthelinvestorl
canlsell,lrelativelyleasily,lhislorlherlinterestlinlthelinvestment,lparticularlyliflthelloanlorlownershiplequ
itylhaslbeenlbrokenlintolrelativelylsmalllparts.lThislsellinglandlbuyingloflsmalllpartsloflallargerlloanlorl
ownershiplinterestlinlalventurelislcalledlsecondarylmarketltrading.
Underltraditionalllendinglandlpartnershiplarrangements,linvestorslmaylbellessllikelyltolputltheirlmon
eylintollong-
termlinvestments,landlmorellikelyltolchargelalhigherlinterestlratel(orldemandlalgreaterlshareloflthelpro
fits)lifltheyldo.lWithlsecondarylmarkets,lhowever,linvestorslknowlthatltheylcanlrecouplsomelofltheirli
nvestmentlquickly,lifltheirlownlcircumstanceslchange.
Privatelequitylsecondarylmarket:

Inlfinance,lthelprivatelequitylsecondarylmarketl(alsoloftenlcalledlprivatelequitylsecondarylorlseconda
ry)lrefersltolthelbuyinglandlsellingloflpre-
existinglinvestorlcommitmentsltolprivatelequitylandlotherlalternativelinvestmentlfunds.lSellersloflpri
vatelequitylinvestmentslselllnotlonlylthelinvestmentslinlthelfundlbutlalsoltheirlremaininglunfundedlco
mmitmentsltolthelfunds.lBylitslnature,lthelprivatelequitylassetlclasslislilliquid,lintendedltolbelallong-
termlinvestmentlforlbuy-and-
holdlinvestors.lForlthelvastlmajorityloflprivatelequitylinvestments,ltherelislnollistedlpubliclmarket;lho
weverltherelislalrobustlandlmaturinglsecondarylmarketlavailablelforlsellersloflprivatelequityassets.
Drivenlbylstrongldemandlforlprivatelequitylexposure,lalsignificantlamountloflcapitallhaslbeenlcommit
tedltoldedicatedlsecondarylmarketlfundslfromlinvestorsllookingltolincreaselandldiversifyltheirlprivatel
equitylexposure.

Lawslgoverninglcapitallmarket:l
Thelfourlmainllegislationslgoverninglthelsecuritieslmarketlare:l

(a)lThelSEBIlAct,l1992lwhichlestablisheslSEBIltolprotectlinvestorslandldeveloplandl
regulatelthelMarkets.

(b)lThelCompanieslAct,l1956,lwhichlsetsloutlthelcodeloflconductlforlthelcorporatelsectorlinlrelationltol
issue,lallotmentlandltransferloflsecurities,landldisclosuresltolbelmadelinlpubliclissues.

c)lThelSecuritieslContractsl(Regulation)lAct,l1956,lreadlwithlthelSecuritieslContractsl(Regulation)lR
ules,l1957lwhichlprovidelforlregulationlofltransactionslinlsecuritieslthroughlcontrolloverlstocklexcha
nges;landl

(d)lThelDepositorieslAct,l1996lwhichlprovideslforlelectroniclmaintenancelandltransferloflownershipl
ofldematlsecurities.
RegulationloflStocklExchange:

ThelSecuritieslcontractl(regulation)lactlislthelbasislforloperationsloflthelstocklexchangeslinlIndia.lNole
xchangelcanloperatellegallylwithoutlthelgovernmentlpermissionlorlrecognition.lStocklexchangeslarel
givenlmonopolylinlcertainlareaslunderlsectionl19loflthelabovelactltolensurelthatlthelcontrollandlregulat
ionlarelfacilitated.lRecognitionlcanlalsolbelwithdrawn,liflnecessarylwhereltherelarelnolstocklexchange
slinlitslabsence.

SecuritieslandlExchangelBoardloflIndial(SEBI):

SEBIlwaslsetuplaslanlautonomouslregulatorylauthoritylbylthelgovernmentloflIndialinl1988ltolprotectlt
helinterestsloflinvestorslinlsecuritieslandltolpromoteltheldevelopmentlandltolregulatelthelsecuritieslma
rketlandlforlmatterslconnectedltherelwithlorlincidentallthereto.lItlislempoweredlbyltwolactslnamelylSE
BIlact,l1992landlSecuritieslContractsl(regulation)lact,l1956ltolperformlthelfunctionloflprotectinglinve
stor‟slrightslandlregulatinglthelcapitallmarkets.lSEBIlwaslgivenlstatutorylstatuslbylanlActloflParliame
ntlonlAprill4,l1992.lSEBIlwaslauthorized

• Tolregulatelalllmerchantlbankslonlissuelactivity.
• Tollaylguidelines,lsuperviselandlregulatelthelworkingloflmutuallfundslandl
• ToloverseelthelworkingloflstocklexchangeloflIndia.

MarketlValue:

Thelcurrentlquotedlpricelatlwhichlinvestorslbuylorlselllalshareloflcommonlstocklorlalbondlatlalgivenlti
me.lAlsolknownlasl"marketlprice”lThelmarketlcapitalizationlpluslthelmarketlvaluelofldebt.lSometime
slreferredltolasl"totallmarketlvalue".lInlthelcontextloflsecurities,lmarketlvaluelisloftenldifferentlfromlbo
oklvaluelbecauselthelmarketltakeslintolaccountlfuturelgrowthlpotential.lMostlinvestorslwholuselfunda
mentallanalysisltolpicklstocksllooklatlalcompany'slmarketlvaluelandlthenldeterminelwhetherlorlnotlthel
marketlvaluelisladequatelorliflit'slundervaluedlinlcomparisonltolitslbooklvalue,lnetlassetslorlsomelother
lmeasure.l
Stock:

AltypeloflsecuritylthatlsignifieslownershiplinlalcorporationlandlrepresentslalClaimlonlpartloflthelcorpo
ration‟slassetslandlearnings.Therelareltwolmainltypesloflstocklcommonlandlpreferred.lCommonlstock
lusuallylentitleslthelownerltolvotelatlshareholders'lmeetingslandltolreceiveldividends.lPreferredlstockl

generallyldoeslnotlhavelvotinglrights,lbutlhaslalhigherlclaimlonlassetslandlearningslthanlthelcommonls
hares.lForlexample,lownersloflpreferredlstocklreceiveldividendslbeforelcommonlshareholderslandlha
velprioritylinltheleventlthatlalcompanylgoes.lBankruptlandlislliquidated.lAlsolknownlasl"shares"lorl"eq
uity".

Alholderloflstockl(alshareholder)lhaslalclaimltolalpartloflthelcorporation'slassetslandlearnings.lInlotherl
words,lalshareholderlislanlownerloflalcompany.lOwnershiplisldeterminedlbylthelnumberloflshareslalpe
rsonlownslrelativeltolthelnumberlofloutstandinglshares.lForlexample,liflalcompanylhasl1,000lshareslofl
stockloutstandinglandlonelpersonlownsl100lshares,lthatlpersonlwouldlownlandlhave.lClaimltol10%loflt
helcompany‟slassetslStockslarelthelfoundationloflnearlyleverylportfolio.lHistorically,ltheylhaveloutpe
rformedlmostlotherlinvestmentsloverlthellonglrun.

Shareholder:

Anylperson,lcompany,lorlotherlinstitutionlthatlhaslownlatlleastl1lsharelinlalcompany.lAlshareholderlm
aylalsolbelreferredltolaslalstockholder.lShareholderslarelthelownersloflalcompany.lTheylhavelthelpoten
tialltolprofitliflthelcompanyldoeslwell,lbutlthatlcomeslwithlthelpotentialltolloseliflthelcompanyldoeslpo
orly.

Share
alunitloflownershiplinterestlinlalcorporationlorlfinanciallasset.lWhilelowninglshareslinlalbusinessldoesl
notlmeanlthatlthelshareholderlhasldirectlcontrolloverlthelbusiness'slday-to-
dayloperations,lbeinglalshareholderldoeslentitlelthelpossessorltolanlequalldistributionlinlanylprofits,lifl
anylareldeclaredlinlthelformlofldividends.lTheltwolmainltypesloflshareslarelcommonlshareslandlpreferr
edlshares.

Inlthelpast,lshareholderslreceivedlalphysicallpaperlstocklcertificatelthatlindicatedlthatltheylownedl"x"l
shareslinlalcompany.lToday,lbrokerageslhavelelectroniclrecordslthatlshowlownershipldetails.lOwnin
glalpaperlesslsharelmakeslconductingltradeslalsimplerlandlmorelstreamlinedlprocess,lwhichlislalfarlcry
lfromltheldayslwerelstocklcertificateslneededltolbeltakenltola.lBrokeragelbeforelaltradelcouldlbelcondu

cted.lWhilelshareslareloftenlusedltolreferltolthelstockloflalcorporation,lshareslcanlalsolrepresentlowner
shiploflotherlclassesloflfinanciallassets,lsuchlaslmutuallfunds.

l NationallStocklExchange:

ThelOrganization:

ThelNationallStocklExchangeloflIndialLimitedlhaslgenesislinlthelreportloflthelHighlPoweredlStudylGr
ouplonlEstablishmentloflNewlStocklExchange,lwhichlrecommendedlpromotionloflThelNationallStoc
klExchangelbylfinanciallinstitutionsltolprovidelaccessltolinvestorslfromlalllacross

thelcountrylonlanlequallfooting.lBasedlonlthelrecommendation,lNSElwaslpromotedlbylleadinglfinanci
allinstitutionslatlthelbestloflthelgovernmentloflIndialandlwaslincorporatedlinlNovemberl1992laslaltaxlp
ayinglcompanylunlikelotherlstocklexchangeslinlthelcountry.

OnlitslrecognitionlaslalstocklexchangelunderlthelSecuritieslContractl(regulation)lAct,l1956linlAprill19
93,lNSElcommencedloperationlinlthelWholesalelDebtlMarketl(WDM)lsegmentlinlJunel1994.lThelcap
itallmarketl(equity)lsegmentlcommencedloperationslinlNovemberl1994landloperationslinlderivativesl
segmentlcommencedlJunel2000.

ThelNationallStocklExchangel(NSE)lislIndia‟slleadinglstocklexchangelcoveringlvariouslcitieslandlto
wnlacrosslthelcountry.lNSElwaslsetuplbylleadinglinstitutionsltolprovidelalmodern,lfullylautomatedlscr
een-
basedltradinglsystemlwithlnationallreach.lThelexchangelhaslbroughtlaboutlunparalleledltransparency
,lspeedlandlefficiency,lsafetylandlmarketlintegrity.lItlhaslsetluplfacilitieslthatlservelaslalmodellforlthelse
curitieslindustrylinltermsloflsystemlpracticeslandlprocedures.

NSElhaslplayedlalcatalyticlrolelinlreforminglthelIndianlSecuritieslMarketlinltermsloflmicrolstructure,l
marketlpracticeslandltradinglvolumes.lThelmarketltodayluseslslate–of–
artlinformationltechnologyltolprovidelanlefficientlandltransparentltrading,lclearinglandlsettlementlme
chanismlandlhaslwitnessedlseverallinnovationslinlproductslandlserviceslviz.,ldematerializationloflsto
cklexchangelgovernance,lscreenlbasedltrading,lcompressionloflsettlementlcycles,ldematerializationla
ndlelectronicltransferloflsecurities,lsecuritiesllendinglandlborrowing,lprofessionalizationlofltradinglm
embers,lfine-
turnedlrisklmanagementlsystems,lemergenceloflclearinglcorporationsltolassumelcounterlpartylrisks,l
marketlofldebtlandlderivativelinstrumentslandlintensiveluseloflinformationltechnology.

Technology:

Acrosslthelglobe,ldevelopmentslinlinformation,lcommunicationlandlnetworkltechnologieslhavelcreat
edlparadigmlshiftslinlthelsecuritieslmarketloperations.lTechnologylhaslenabledlorganizationsltolbuildl
newlsourcesloflcompetitiveladvantage,lbringlaboutlinnovationslinlproductslandlservices,landltolprovi
delforlnewlbusinesslopportunities.lStocklexchangeslallloverlthelworldlhavelrealizedlthelpotentialloflIT
landlhavelmovedloverltolelectronicltradinglsystems,lwhichlarelcheaper,lhavelwiderlreachlandlprovidel

albetterlmechanismlforltradelandlpostltradelexecution.l

NSElbelieveslthatltechnologylwilllcontinueltolprovidelthelnecessarylimpetuslforlthelorganizationltolre
tainlitslcompetitiveledgelandlensureltimelineslandlsatisfactionlinlcustomerlservice.lInlrecognitionloflt
helfactlthatltechnologylwilllcontinueltolredefinelthelshapeloflthelsecuritieslindustry,lNSElstresslonlinn
ovationlandlsustainedlinvestmentlinltechnologyltolremainlaheadloflcompetition.

Fromlaroundl400lcitieslspreadlallloverlthelcountry.lInlthelrecentlpast,lcapacitylenhancementlmeasures
lwereltakenluplinlregardltoltheltradinglsystemslsolasltoleffectivelylmeetlthelrequirementsloflincreasedlu

serslandlassociatedltradinglloads.lWithluplgradationlofltradinglhardware,lNSElcanlhandlelupltol1lmilli
onltradeslperlday.lNSElhaslalsolputlinlplacelNIBISl(NSE‟slInternetlBasedlInformationlSystem)lforlon
-
linelrealltimeldisseminationlofltradinglinformationloverlthelInternet.lInlorderltolcapitalizelonlinlhousel
expertiselinltechnology.lNSElsetluplalseparatelcompany,lNSE.lIT,linlOctoberl1999.lThislITlexpertise‟
sltolprovidelalplatformlforltakingluplnewlITlassignmentslbothlwithinlandloutsidelIndialandlattaininglgl
oballexposure.

Theltelecommunicationslnetworkluseslx.25lprotocollandlislthelbackboneloflthelautomatedltradinglsys
tem.lEachltradinglmemberltradeslonlthelNSElwithlotherlmemberslthroughlalPCllocatedlinltheltradingl
member‟sloffice,lanywherelinlIndia.lTheltradinglmemberslonlthelwholesaleldebtlmarketlsegmentlarell
inkedltolthelcentrallcomputerlatlthelNSElthroughldedicatedl645kbpslleasedllineslandlVSATlterminals
.lTheselleasedllineslarelmultiplexedlusingldedicatedl2mbps,loptical-
fiberllinks.lThelWDMlparticipantslconnectltoltheltradinglsystemlthroughldial-upllinks.

ThelexchangeluseslpowerfullRISClbasedlUNIXlservices,lprocuredlfromlDigitallandlHPlforlthelbacklo
fficelprocessing.lThellatestlsoftwarelplatformsllikelORACLESl7,lRDBMS,landlGUPTAl–
lSQL/ORACLEl FORMSl4.5lFrontl–

lEnds,letc.;lhavelbeenlforlthelexchangelapplications.lThelexchangelcurrentlylmanageslitsldatalcenterlo

perations,lsystemlandldatabaseladministration,ldesignlandldevelopmentloflin-
houselsystemslandldesignlandlimplementationlofltelecommunicationslsolutions.l

NSElisloneloflthellargestlinteractivelVSATlbasedlstocklexchangeslinlthelworld.lTodaylitlsupportslmor
elthanl3000lVSAT‟slandlislexpectedltolgrowltolmorelthanl4000lVSAT‟slinlthelnextlyear.lThelNSE-
networklisllargestlprivatelwidelarealnetworklinlthelcountrylandlthelfirstlextendedlC-
BlandlVSATlnetworklinlthelworld.lCurrentlylmorelthanl9000luserslareltradinglonlthelrealltime-
onlinelNSElapplication.lTherelareloverl15llargelcomputerlsystems,lwhichlincludelnon-stoplfault-
tolerantlcomputerslandlhigh-
endlUNIXlservers,loperationalllesslthanlonelroofltolsupportlthelNSElapplications.lThislcoupledlwithlt
helnationwidelVSATlnetworklmakeslNSElthelcountry‟sllargestlinformationltechnologyluser.

NSE-NIFTY:

ThelNSElonlAprill22,l1996llaunchedlalnewlequitylindex.lThelNSE-
50,lthelnewlindexlwhichlreplaceslthelexistinglNSE-
100lindexlislexpectedltolservelaslanlappropriatelindexlforlthelnewlsegmentloflfutureslandloptions.l“NI
FTY”lmeanslNationslIndexlforlFiftylStocks.lThelNSE-
50lcomprisesl50lcompanieslthatlrepresentl20lbroadlindustrylgroupslwithlanlaggregatelmarketlcapitali
zationloflaroundlRs.l170000crores.lAlllcompanieslincludedlinlthelindexlhavelalmarketlcapitalizationle
xcessloflRs.l500croresleachlandlshouldlhaveltradedlforl85%lofltradingldayslatlanlimpactlcostlofllesslth
anl1.5%.

NSEl–lMIDCAPlINDEX:

ThelNSElmidcaplindexlorlthelNiftylcomprisesl50lstockslthatlrepresentl21lboards‟lindustrylgroupslandl
willlprovidelproperlrepresentationloflthelmidcaplsegmentloflthelIndianlcapitallmarket.lAlllstockslinlth
elindexlshouldlhavelmarketlcapitalizationloflgreaterlthanlRs.200croreslandlshouldlhaveltradedl85%lof
ltheltradingldayslatlanlimpactlcostlofllessl2.5%.lThelbaselperiodlforlthelindexlislNovemberl4,l1996lwhi

chlsignifiesltwolyearslforlthelcompletionlofloperationsloflthelcapitallmarketlsegmentlofltheloperations
.lThelbaselvalueloflthelindexlhaslbeenlsetlatl1000.

Mission:l

NSE‟slmissionlislsettinglthelagendalforlchangelinlthelsecuritieslmarketslinlIndia.lThelNSElwaslset-
uplwithlthelmainlobjectiveslof:

• Establishinglalnationwideltradinglfacilitylforlequities,ldebtlinstrumentsland

lHybrids.

• Ensuringlequallaccessltolinvestorslallloverlthelcountrylthroughlanlappropriate

lCommunicationlnetwork.

• Providinglalfair,lefficientlandltransparentlsecuritieslmarketltolinvestorslusingl

lElectronicltradinglsystems.

• Enablinglshorterlsettlementlcycleslandlbooklentrylsettlementslsystemslandl

• Meetinglthelcurrentlinternationallstandardsloflsecuritieslmarkets.

ThelstandardslsetlbylNSElinltermsloflmarketlpracticeslandltechnologylhaslbecomelindustrylbenchmar
kslandlislbeinglemulatedlbylotherlmarketlparticipants.lNSElislmorelthanlalmerelmarketlfacilitator.lIt‟sl
thatlforcelwhichlislguidinglthelindustryltowardslnewlhorizonslandlgreaterlopportunities.

Promoters:

NSElhaslbeenlpromotedlbylleadinglfinanciallinstitutions,lbanks,linsurancelcompanieslandlotherlfinan
ciallintermediaries:

• IndustriallDevelopmentlBankloflIndialLimited
• IndustriallFinancelCorporationloflIndialLimited

• LifelInsurancelCorporationloflIndia

• StatelBankloflIndia

• ICICIlBankl Limited

• ILl&lFSlTrustlCompanylLimited

• StocklHoldinglCorporationloflIndialLimited

• SBIlCapitallMarketslLimited

• ThelAdministratorloflthelSpecifiedlUndertakingloflUnitlTrustloflIndia

• BankloflBaroda

• CanaralBank

• GenerallInsurancelCorporationloflIndia

• NationallInsurancelCompanylIndia

• ThelNewlIndialAssurancelCompanylLimited

• ThelOrientallInsurancelCompanyl Limited

• PunjablNationallBank

• OrientallBankloflCommerce

• CorporationlBank

• IndianlBank

• UnionlBankloflIndia

Atlpresent,ltherelarel24lstocklexchangeslrecognizedlunderlthelSecuritieslContractl(Regulation)lAct,l1
956.lTheylare

NameloflthelStocklExchange Year

BombaylStocklExchange 1875

AhmedabadlSharelandlStocklBrokerslAssociationlLtd. 1957

CalcuttalStocklExchangelAssociationlLtd. 1957
DelhilStocklExchangelAssociationlLtd. 1957

MadraslStocklExchangelAssociationlLtd. 1958

IndorelStocklExchangelAssociationlLtd. 1968

BangalorelStocklExchange 1943

HyderabadlStocklExchange 1978

CochinlStocklExchange 1982

PunelStocklExchange 1982

U.P.lStocklExchangelAssociationlLtd. 1983

LudhianalStocklExchangelAssociation 1983

JaipurlStocklExchangelLtd. 1984

GauhathilStocklExchangelLtd. 1985

MangalorelStocklExchangelLtd. 1986

MaghadlStocklExchangelAssociationlLtd. 1989

BhubaneswarlStocklExchangelAssociationlLtd. 1989

OverlthelCounterlExchangeloflIndia,lBombay 1990

SaurashtralKutchlStocklExchangelLtd.l 1991

ClStocklExchangelLtd. 1991

CoimbatorelStocklExchangelLtd. 1991

ThelMeerutlStocklExchangelLtd. 1991

NationallStocklExchangelLtd. 1991
 3.2lCOMPANYlPROFILE
l

CDlEquisearchlhaslestablishedlBrokeragelhouselwithloverl30lyearsloflrichlexperiencelinlfinanciallser
vices.lItlhaslthelProfessionallManagement.lItslGuidinglprinciplesl–
lTrust,lTransparencylandlThoughtlleadershiplandlItlEmpanelledlwithllargelnumberloflFII‟slandlDII‟lO

neloflthelmostlreputedlnameslinlfundamentallresearch.

CDlhaslbeenlsetlupltolengagelin

• StocklBroking
• Equity
• Derivatives
• DepositorylServices
• DistributionloflInvestmentlProducts
• DistributionloflInsurance
• CommoditieslBroking
• Currency

Equities:

CDlprovidedlthelprospectloflresearchedlinvestingltolitslclients,lwhichlwaslhithertolrestrictedlonlyltolth
elinstitutions.lResearchlforlthelretaillinvestorldidlnotlexistlpriorltolCD.lCDlleveragedltechnologyltolbri
nglthelconveniencelofltradingltolthelinvestor‟sllocationloflpreferencel(residencelorloffice)lthroughlco
mputerizedlaccess.lCDlmadelitlpossiblelforlclientsltolviewltransactionlcostslandlledgerlupdateslinlreall
time.l
PortfoliolManagementlService:

OurlPortfoliolManagementlServicelislalproductlwhereinlanlequitylinvestmentlportfoliolislcreatedltols
uitlthelinvestmentlobjectivesloflalclient.lWelatlCDlinvestlyourlresourceslintolstockslfromldifferentlsect
ors,ldependinglonlyourlrisk-
returnlprofile.lThislservicelislparticularlyladvisablelforlinvestorslwholcannotlaffordltolgiveltimelorldo
n'tlhavelthatlexpertiselforlday-to-daylmanagementlofltheirlequitylportfolio.l

Research:

Soundlinvestmentldecisionsldependluponlreliablelfundamentalldatalandlstocklselectionltechniques.lC
DlEquitylResearchlislproudloflitslreputationlfor,landlwelwantlyoultolfindlthelfacts

thatlyoulneed.lEquitylinvestmentlprofessionalslroutinelyluselourlresearchlandlmodelmodelslaslintegra
lltoolslinltheirlwork.lTheylchooselFordlEquitylResearchlwhenltheylcanlclearlyourldoubts.l

Commodities:

CDlextensionlintolcommoditiesltradinglreconcileslitslstrategiclintentltolemergelaslalone-

stoplsolutionslfinanciallintermediary.lItslexperiencelinlsecuritieslbrokinglhaslempoweredlitlwithlrequ

isitelskillslandltechnologies.lThelCompany‟slcommoditieslbusinesslprovideslalcontra-

cyclicallalternativeltolequitieslbroking.lThelcompanylwaslamonglthelfirstltolofferlthelfacilityloflcomm

oditiesltradinglinlIndia‟slyounglcommoditieslmarketl(thelMCXlcommencedloperationslonlylinl2003)

.lAveragelmonthlylturnoverlonlthelcommoditylexchangeslincreasedlfromlRs.l0.34lbntoRs.l20.02lbn.l

Thelcommoditieslmarketlhaslseverallproductslwithldifferentlandlnon-

correlatedlcycles.lOnlthelwhole,lthelbusinesslislfairlylinsulatedlagainstlcyclicallgyratelinlthelbusiness.

InvestlOnline:
CDlhaslmadelinvestinglinlMutuallfundslandlprimarylmarketlsoleffortless.lAlllyoulhaveltoldolislregister
lwithluslandlthat‟slall.lNolpaperworklnolqueueslandlNolregistrationlcharges.

InvestlInlMutuallFunds:

CDlofferslyoulalhostloflmutuallfundlchoiceslunderlonelroof,lbackedlbylin-
depthlresearchlandladvicelfromlresearchlhouselandltoolslconfiguredlaslinvestorlfriendly.l

ApplylInlInitiallPubliclOfficersl(IPOs):l

YoulcouldlalsolinvestlinlInitiallPubliclOffersl(IPO‟s)lonlinelwithoutlgoinglthroughlthelhasslesloflfillin
glANYlapplicationlform/lpaperwork.

StaylConnectedlTolThelMarket:l
Theltraderlofltoday,lyoularelconstantlylonlthelmove.lButlhowldolyoulstaylconnectedltolthelmarketlwhil
elonlthelmove?lSimple,lsubscribeltolCDlStocklMessaginglServicelandlgetlMarketlonlyourlMobile!l

Insurance

Anlentrylintolthislsegmentlhelpedlcompletelthelclient‟slproductlbasket;lconcurrently,litlgraduatedlthel
Companylintolalone-
stoplretaillfinanciallsolutionslprovider.lTolensurelmaximumlreachltolcustomerslacrosslIndia,lwelhavel
employedlalmulti-
prongedlapproachlandlreachloutltolcustomerslvialourlNetwork,lDirectlandlAffiliatelchannels.lFollowi
nglthelopeningloflthelsectorlinl1999-
2000,lalnumberloflprivatelsectorlinsurancelservicelproviderslcommencedloperationslaggressivelylan
dlhelpedlgrowlthelmarket.lThelcompany‟slentrylintolthelinsurancelsectorlde-
riskedlthelcompanylfromlalpredominantldependencelonlbrokinglandlequity-
linkedlrevenues.lThelannuitylbasedlincomelgeneratedlfromlinsurancelintermediationlresultlinlsolidlc
orelrevenueslacrossltheltenureloflthelpolicy.l
 WealthlManagementlService:

Imaginelalfinanciallfirmlwithlthelheartlandlsoulloflaltwo-personlorganization.lAlworld-
leadinglwealthlmanagementlcompanylthatlsitsldownlwithlyoultolunderstandlyourlneedslandlgoals.lWe
lforlyoulaldedicatedlgrouplforlgivinglyoulthelmostlpersonallattentionlatleveryllevel.l

RuleslandlResponsibilitieslinlOrganization:

lWelwilllgivelupdatesltolcustomerslinl

• EconomiclOutlooklandlUpdatesl
• Sectorl&lCompanylReports
• TechnicallRecommendations
• DailylMarketlReport
• DailylTechnicallOutlook
• ReportslonlNewlFundlOfferings
• Weeklylanalysisloflmutuallfundsl–lFundlFocus
• Weeklyldebtlreport:lDebtlDose
• OfferldailyltechnicallcallslthroughlSMSltolourlclients
l
 CHAPTER-l4

l DATAlANALYSISlANDlINTERPRETATIONl

3.1lStock-1lICICI
ThelBelowlTablelRepresentslForlthelMonthloflMayl2018lReturn:
DATE Opening Closing R=p1- ∑r/n r-µ (r-µ)2
p0×100
l Price Pricel P0 Avgl
l P0 P1 l l

2-May-18 1180.2 1171.7 0.99120841 0.06677476 0.924433652 0.8545776

1187.65 1129.95 - 0.06677476 -3.29548199 10.860202
3-May-18 3.22870723
6-May-18 1127.5 1142.65 1.34368071 0.06677476 1.27690595 1.6304888
7-May-18 1143 1183.95 1.83289589 0.06677476 1.766121128 3.1191838
1170 1157.95 - 0.06677476 -1.09668929 1.2027274
8-May-18 1.02991453
1180 1152.65 - 0.06677476 -0.70039545 0.4905538
9-May-18 0.63362069
10-May-18 1153 1185.35 1.07111882 0.06677476 1.00434406 1.008707
11-May-18 1181 1187.95 0.59862188 0.06677476 0.531847118 0.2828614
1181 1148.8 - 0.06677476 -1.11759302 1.2490142
13-May-18 1.05081826
1153 1147.45 - 0.06677476 -0.54812775 0.300444
14-May-18 0.48135299
15-May-18 1152.95 1191.25 3.32191335 0.06677476 3.255138593 10.595927
18-May-18 1185 1207.5 1.89873418 0.06677476 1.831959417 3.3560753
17-May-18 1205.1 1230.45 2.10355987 0.06677476 2.036785111 4.1484936
1228.95 1209.8 - 0.06677476 -1.62501553 2.6406755
20-May-18 1.55824077
21-May-18 1209.8 1211 0.09918995 0.06677476 0.032415189 0.0010507
1215 1210.1 - 0.06677476 -0.47006694 0.2209629
22-May-18 0.40329218
1200 1172.3 - 0.06677476 -2.37510809 5.6411385
23-May-18 2.30833333
24-May-18 1186.4 1204.15 1.49612272 0.06677476 1.429347964 2.0430356
27-May-18 1204 1219.4 1.27906977 0.06677476 1.212295007 1.4696592
28-May-18 1223.5 1231.95 0.6906418 0.06677476 0.623866842 0.3892098
1230 1214.9 - 0.06677476 -1.29441704 1.6755155
29-May-18 1.22764228
30-May-18 1195 1182.8 -1.0209205 0.06677476 -1.08769526 1.183081
1181 1154.45 - 0 -2.24809483 5.0539304
31-May-18 2.24809483
Total l l 1.53581954 1.46904472 0.066774824 59.417515
 ICICIlReturnsl SUMMARYlOFlSTATISTICS
N 23
Mean 0.06677476
(r-µ)2 59.7222056 MEAN 0.06677476
Variancel=lTotal/lno.lofldays l STANDARDlDEVIATIONl(RISK) 1.61140238
l 2.59661763 VARIANCE 2.5966176
S.Dl= SqrtlVaience
l 1.61140238

ICICIlRETURNS

Interpretation:
TheltrendloflICICIlequitylfundlhaslbeenlfluctuatinglaslclosinglpricelonl2ndlMay-
2018,lwasl1171.7landlclosinglpricelonl31stlMayl2018lwasl1154.45.Thelrisklandlreturnslarel1.6114
0238landl0.06677476.
Stock-2lJETlAIRWAYS:

ThelBelowlTablelRepresentedlForlThelMonthlOflMayl2018lReturn:
P0 P1 R=p1- ∑r/n r-µ (r-µ)2
JetlAirways p0×100
P0 Avgl l l
Date Open Close
-1.97663252 -
2-May-18 624.8 612.45 -0.7152 1.261432522 1.591212
-1.17302053 -
3-May-18 613.8 606.6 -0.7152 0.457820528 0.2096
6-May-18 607.5 612 0.740740741 -0.7152 1.455940741 2.119763
7-May-18 609.45 606.05 -0.55788006 -0.7152 0.157319944 0.02475
-2.4915156 -
8-May-18 604.05 589 -0.7152 1.776315603 3.155297
9-May-18 588.8 591.1 0.390625 -0.7152 1.105825 1.222849
-0.86445657 -
10-May-18 595.75 590.6 -0.7152 0.149256567 0.022278
-1.08833207 -
11-May-18 592.65 586.2 -0.7152 0.373132068 0.139228
-1.01244101 -
13-May-18 582.75 576.85 -0.7152 0.297241012 0.088352
-0.83910035 -
14-May-18 578 573.15 -0.7152 0.123900346 0.015351
15-May-18 578.25 581.25 0.518806744 -0.7152 1.234006744 1.522773
18-May-18 583.45 581.65 -0.30850973 -0.7152 0.406690273 0.185397
-1.13752993 -
17-May-18 584.6 577.95 -0.7152 0.422329935 0.178363
20-May-18 580.85 581.15 0.051848446 -0.7152 0.766848446 0.588057
21-May-18 583.45 587.95 0.771274317 -0.7152 1.486474317 2.209606
-1.18056735 -
22-May-18 588.7 581.75 -0.7152 0.465367352 0.218567
23-May-18 565.25 586.4 3.741707209 -0.7152 4.456907209 19.86402
-4.07692308 -
24-May-18 585 561.15 -0.7152 3.361723077 11.30118
-1.440533 -
27-May-18 555.35 547.35 -0.7152 0.725332997 0.526108
28-May-18 547.05 552.3 0.959692898 -0.7152 1.674892898 2.805266
-2.37272727 -
29-May-18 550 536.95 -0.7152 1.657527273 2.747397
30-May-18 531 528.45 -0.48022599 -0.7152 0.234974011 0.055213
-2.62376238 -
31-May-18 505 491.75 0 2.623762376 6.884129
l l l
-18.4496621 -15.7344 l 57.65276
 JetlAirwayslReturnsl SUMMARYlOFlSTATISTICS
N 23
Mean -0.7152
(r-µ)2 54.41123 MEAN -0.7152
Variancel=lTotal/lno.lofldays l STANDARDlDEVIATIONl(RISK) 1.53808506
l 2.365706 VARIANCE 2.365705652
S.Dl= SqrtlVaience
l 1.538085

l JETlAIRWAYSlRETURNS

Interpretation:
TheltrendloflJetlAirwayslequitylfundlhaslbeenlfluctuatinglaslclosinglpricelonl2ndlMay-
2018,lwasl612.45landlclosinglpricelonl31stlMayl2018lwasl491.75.Thelrisklandlreturnslarel1.53808
506landl-0.7152.
 Stock-3:lSTATElBANKlOFlINDIA

ThelBelowlTablelRepresentslforlthelMonthloflMay-l2018lReturn:

P0 P1 R=p1- ∑r/n r-µ (r-µ)2

SBI p0×100
P0 Avgl l l
Date Open Close
2-May-18 2,275.00 2,299.45 1.074725275 -0.40977 1.484495 2.203726
3-May-18 2,285.00 2,213.80 -3.11597374 -0.40977 -2.7062 7.323539
6-May-18 2,205.55 2,226.10 0.931740382 -0.40977 1.34151 1.79965
7-May-18 2,220.00 2,256.80 1.657657658 -0.40977 2.067428 4.274257
8-May-18 2,260.00 2,254.70 -0.23451327 -0.40977 0.175257 0.030715
9-May-18 2,260.00 2,290.95 1.369469027 -0.40977 1.779239 3.185692
10-May-18 2,289.90 2,293.60 0.181579108 -0.40977 0.571349 0.32644
11-May-18 2,291.00 2,305.70 0.641841205 -0.40977 1.051411 1.105466
13-May-18 2,305.00 2,277.70 -1.18438178 -0.40977 -0.77461 0.600023
14-May-18 2,273.25 2,293.05 0.87099967 -0.40977 1.28077 1.640371
15-May-18 2,310.10 2,382.75 3.144885503 -0.40977 3.554656 12.63558
18-May-18 2,375.30 2,419.35 1.854502589 -0.40977 2.264273 5.12693
17-May-18 2,420.45 2,424.85 0.181784379 -0.40977 0.591554 0.349937
20-May-18 2,430.00 2,411.80 -0.74897119 -0.40977 -0.3392 0.115057
21-May-18 2,420.00 2,360.70 -2.45041322 -0.40977 -2.04064 4.184225
22-May-18 2,380.00 2,363.00 -0.71428571 -0.40977 -0.30452 0.09273
23-May-18 2,355.00 2,177.60 -7.5329087 -0.40977 -7.12314 50.73911
24-May-18 2,192.00 2,151.20 -1.86131387 -0.40977 -1.45154 2.10698
27-May-18 2,154.00 2,182.10 0.376044568 -0.40977 0.785815 0.617505
28-May-18 2,135.40 2,129.80 -0.26224595 -0.40977 0.147524 0.021763
29-May-18 2,135.15 2,106.30 -1.35119312 -0.40977 -0.94142 0.886277
30-May-18 2,100.00 2,088.55 -0.5452381 -0.40977 -0.13547 0.018352
31-May-18 2,081.90 2,046.75 -1.68836159 0 -1.68836 2.850565
TOTAL l l
-9.4247709 -9.01494 l 102.1949
StatelbankloflIndialReturnsl SUMMARYlOFlSTATISTICS
N 23
Mean -0.40977
(r-µ)2 100.9791 MEAN -0.40977
Variancel=lTotal/lno.lofldays l STANDARDlDEVIATIONl(RISK) 2.095327099
l 4.3903957 VARIANCE 4.390395652
S.Dl= SqrtlVaience
l 2.0953271

StatelBankloflIndialReturns

Interpretation
.lTheltrendloflStatelBankloflIndialequitylfundlhaslbeenlfluctuatinglaslclosinglpricelonl2ndlMay-
2018,lwasl2299.45landlclosinglpricelonl31stlMayl2018lwasl2046.75.Thelrisklandlreturnslarel2.095
327099landl-0.40977.
 Stockl-4lBhartilAirtellLimited

ThelBelowlTablelRepresentslforlthelMonthloflMay-l2018lReturn:
P0 P1 R=p1- ∑r/n r-µ (r-µ)2
BhartilAirtellLimited p0×100
P0 Avgl l l
Date Open Close
2-May-18 308 318.75 2.840909091 -0.17388 3.014789091 9.088953263
3-May-18 326 317.7 -2.54601227 -0.17388 -2.37213227 5.627011506
-0.48129172 -
6-May-18 322.05 320.5 -0.17388 0.307411725 0.094501969
7-May-18 322.25 331.2 2.77734678 -0.17388 2.95122678 8.70973951
-2.05438066 -
8-May-18 331 324.2 -0.17388 1.880500665 3.53628275
9-May-18 322 325 0.931877019 -0.17388 1.105557019 1.222256321
-0.23076923 -
10-May-18 325 324.25 -0.17388 0.056889231 0.003236385
11-May-18 322.45 325.45 0.930376803 -0.17388 1.104256803 1.219383086
-3.15315315 -
13-May-18 321.9 311.75 -0.17388 2.979273153 8.876068521
14-May-18 314.5 317.25 0.874403818 -0.17388 1.048283818 1.098898958
15-May-18 315.3 322.65 2.331113225 -0.17388 2.504993225 6.27499106
18-May-18 321.15 321.5 0.108983341 -0.17388 0.282863341 0.08001187
-2.12468983 -
17-May-18 322.4 315.55 -0.17388 1.950809826 3.805658978
20-May-18 319.7 307.8 -3.7222396 -0.17388 -3.5483596 12.59085585
-0.83061889 -
21-May-18 307 304.45 -0.17388 0.656738893 0.431305973
22-May-18 306.7 312.05 1.744375611 -0.17388 1.918255611 3.67970459
-2.59529603 -
23-May-18 308.25 300.25 -0.17388 2.421418026 5.863255571
-2.03478832 -
24-May-18 304.7 298.5 -0.17388 1.860908318 3.462979762
27-May-18 300 309.15 3.05 -0.17388 3.22388 10.39340225
28-May-18 310.6 314.8 1.352221507 -0.17388 1.526101507 2.328985809
-0.30068049 -
29-May-18 315.95 315 -0.17388 0.126800487 0.018078364
30-May-18 306.3 315.4 2.970943519 -0.17388 3.144823519 9.889914968
-3.83757962 -
31-May-18 314 301.95 0 3.837579618 14.72701732
l l -3.9991491 -3.82536 l 113.0204944
 BhartilAirtellReturns SUMMARYlOFlSTATISTICS
N 23
Mean -0.17388
(r-µ)2 111.718201 MEAN -0.17388
Variancel=lTotal/lno.lofldays l STANDARDlDEVIATIONl(RISK) 2.203911552
l 4.85722613 VARIANCE 4.85722613
S.Dl= SqrtlVaience
l 2.203911552

BhartilAirtellReturns

Interpretation:
TheltrendloflHDFClequitylfundlhaslbeenlfluctuatinglaslclosinglpricelonl2ndlMay-
2018,lwasl318.75landlclosinglpricelonl31stlMayl2018lwasl301.95.Thelrisklandlreturnslarel2.20391
1552landl-0.17388.
 Stock-l5:lApollolHospitals

ThelBelowlTablelRepresentslforlthelMonthloflMay-l2018lReturn:
P0 P1 R=p1- ∑r/n r-µ (r-µ)2
ApollolHospitals p0×100
P0 Avgl l l
Date Open Close
-1.43283582 -
2-May-18 837.5 825.5 0.750532 2.183367821 4.767095041
0.363418111 -
3-May-18 825.5 828.5 0.750532 0.387115889 0.149858711
6-May-18 836 859.2 2.775119617 0.750532 2.024587617 4.09895502
7-May-18 862 869.65 0.887470998 0.750532 0.136938998 0.018752289
8-May-18 870 905.7 4.103448276 0.750532 3.352918276 11.24204755
9-May-18 906.85 918.55 1.290180294 0.750532 0.539648294 0.291220282
10-May-18 910 941.55 3.467032967 0.750532 2.718500967 7.379377504
11-May-18 936 944.95 0.956196581 0.750532 0.205664581 0.04229792
-4.82539683 -
13-May-18 945 899.4 0.750532 5.575928825 31.09098227
14-May-18 900 909.35 1.038888889 0.750532 0.288356889 0.083149695
15-May-18 909.8 964.65 6.028797538 0.750532 5.278265538 27.86008709
18-May-18 974.7 1,043.95 7.10475018 0.750532 6.35421818 40.37608867
17-May-18 1,055.00 1,066.40 1.08056872 0.750532 0.33003672 0.108924237
-7.00559701 -
20-May-18 1,072.00 996.9 0.750532 7.756129015 60.1575373
-1.31818182 -
21-May-18 990 976.95 0.750532 2.068713818 4.279576862
-3.44421899 -
22-May-18 977 943.35 0.750532 4.194748991 17.5959191
23-May-18 939 949.8 1.150159744 0.750532 0.399627744 0.159702334
-6.05965791 -
24-May-18 958.8 900.7 0.750532 6.810189906 46.37868655
27-May-18 906 950.65 4.928256071 0.750532 4.177724071 17.45337841
28-May-18 954.8 979.95 2.634059489 0.750532 1.883527489 3.547675801
-0.91801482 -
29-May-18 971.6 962.7 0.750532 1.666546821 2.777378306
-0.51295337 -
30-May-18 965 960.05 0.750532 1.263485368 1.596395275
31-May-18 960 1,007.70 4.96875 0 4.96875 24.68847656
l l l 17.26224091 18.511704 l 306.1435628
 ApollolHospitalslReturnsl SUMMARYlOFlSTATISTICS
N 23
Mean 0.750532
(r-µ)2 299.24845 MEAN 0.750532
Variancel=lTotal/lno.lofldays l STANDARDlDEVIATIONl(RISK) 3.607048942
l 13.010802 VARIANCE 13.01080207
S.Dl= SqrtlVaience
l 3.6070489

ApollolHospitalslRETURNS

INTERPREATIONl

TheltrendloflJetairwayslequitylfundlhaslbeenlfluctuatinglaslclosinglpricelonl2ndlMay-
2018,lwasl825.5landlclosinglpricelonl31stlMayl2018lwasl1007.70.Thelrisklandlreturnslarel3.60704
8942landl0.750532.
 3.2ComparisonloflRisklandlReturns

SL.NO Companies Returns Risk

1 ICICI 0.06677476 1.61140238

2 JETlAIRWAYS -0.7152 1.53808506

3 SBI -0.40977 2.095327099

4 BHARTIlAIRTEL -0.17388 2.203911552

5 APOLLOlHOSPITALS 0.750532 3.607048942

l

ComparisonloflRisklandlReturns

Interpretation:l

• IflthelreturnslareltakenlintolthelconsiderationlAUROBINDOlPHARMACYltopslthelfirstlposit
ionlwithl0.79.lThelleastlreturnslarelgivenlbylJETAIRWAYlwithl-2.11.

• AmonglthelfivelcompanieslJETAIRWAYSlislhavinglthelhighestlrisklwithlStandardlDeviatio
nlofl5.67l&lGMRlislhavinglthelleastlStandardlDeviationlofl2.18.

l
 CHAPTER-l5

FINDINGSl

SUGGESTIONS

CONCLUSION

BIBLIOGRAPHY
5.1FINDINGS:

Afterltheldatalislanalyzedlthelfollowinglfactslhavelbeenlobserved.

ICICI:

• IflwelseeltheltrendloflICICIlEquitylfund,litlhaslupsl&ldownslinltrends

• Inlthelstartingloflthelmonthli.e.2-May-
18lthelclosinglpricelislaroundl1171.7.lWhereaslatlthelendloflthelmonthli.e.l31-May-
18litlhaslreachedlupltol1180.2

• Itlhaslincreasedlinlallldayslexceptlinltheldayslfroml30-May-18.l

• InlICICIlthelrisklisl2.59landlthelaveragelreturnlforlmonthlisl0.06.

JetlAirways:

• IflwelseeltheltrendloflJetlAirwayslEquitylfund,litlhaslupsl&ldownslinltrends

• Inlthelstartingloflthelmonthli.e.l1-May-
18lthelclosinglpricelislaroundl612.45.lWhereaslatlthelendloflthelmonthli.e.l31-May-
18litlhaslreachedlupltol505.

• Itlhaslincreasedlinlallldayslexceptlinltheldayslfroml15thlMay.

• InlSuntv,lthelrisklisl2.36landlthelaveragelreturnlforlmonthlisl-0.71.

StatelbankloflIndia:

• IflwelseeltheltrendloflStatelbankloflIndialEquitylfund,litlhaslupsl&ldownslinltrends

• Inlthelstartingloflthelmonthli.e.l1-May-
18lthelclosinglpricelislaroundl2299.45.lWhereaslatlthelendloflthelmonthli.e.l31-May-
18litlhaslreachedlupltol2081.90.

• Itlhaslincreasedlinlallldayslexceptlinltheldayslfroml1stlMay.
 • InlStatelBankloflIndialPharmacy,lthelrisklisl4.39landlthelaveragelreturnlforlmonthlisl-0.40.

BhartilAirtel:

• IflwelseeltheltrendloflBhartilAirtellEquitylfund,litlhaslupsl&ldownslinltrends

• Inlthelstartingloflthelmonthli.e.l1-May-
18lthelclosinglpricelislaroundl318.75.lWhereaslatlthelendloflthelmonthli.e.l31-May-
18litlhaslreachedlupltol314.

• Itlhaslincreasedlinlallldayslexceptlinltheldayslfroml27thlMay.

• InlBhartilAirtel,lthelrisklisl4.85landlthelaveragelreturnlforlmonthlisl-0.17.

ApollolHospitals:

• IflwelseeltheltrendloflApollolHospitalslEquitylfund,litlhaslupsl&ldownslinltrends

• Inlthelstartingloflthelmonthli.e.l1-May-
18lthelclosinglpricelislaroundl825.5.lWhereaslatlthelendloflthelmonthli.e.l31-May-
18litlhaslreachedlupltol960.

• Itlhaslincreasedlinlallldayslexceptlinltheldayslfroml3rdlMay.

• InlApollolHospitals,lthelrisklisl13.01landlthelaveragelreturnlforlmonthlisl0.75.
CONCLUSION:
• Thelpresentlprojectlworklhaslbeenlundertakenltolstudylthelrisk-
returnlrelationshiploflindividuallsecuritieslaslwelllaslniftylindexltolobservelwhetherlthelstocklp
riceslhavelanylrelationshiplwith
• risklandlreturn.lAslthislprojectlworklisldonelbylstudyingl5lindividuallstocksloflniftylan
dlniftylindex,ltherelislmuchlscopelforlthelanalysis,linterpretationlandlconclusion.
• Asltheleconomylislfluctuatinglverylbadly,lthelstocklpriceslarelaffectedlbyltheselfluctua
tionslandlthelmarketlhaslbecomelsolvolatile.lInlthislsituationlinvestorslshouldlbelverylcareful.l
Thelfirmlwhichlisldealingltheltradingloflsharelmarketlshouldlbelcautionlenoughlsolthatlinvesto
rslmaylnotlsufferllosses.
SUGGESTIONS:
Afterlobservinglthelfactslfoundloutlafterlthelanalysislandlinterpretationlthelfollowinglsuggestionslarel
madeltolthelinvestor.

• Whenltherelislmorelrisk,lthelreturnlwilllalsolbelhighslbutlthisldoeslnotlholdlinlalllsituationslesp
eciallylinlthelcaselofleconomiclcrises.

• AslthelworldleconomylislinfluencedlbylUSleconomy,lthelworstlscenarioloflUSleconomylislinfl
uencinglthelotherslcountrieslstocklmarkets.

• Thelsentimentslandlemotionslsometimeslplaylalvitallrolelinlcausinglfluctuationslinlthelstocklm
arkets.lThereforelitlislnotladvisableltolinvestlatltheltimeloflcrisis.

• Whenlmarketslarelslidingldownlsteeply,lthelinvestorslwilllnotlbelprotectedlagainstlthelrisklofli
nvestment.lThereforelitlislnotladvisableltolinvestlwhenlthelmarketslarelverylvolatile.

• Alwayslitlislfeltlthatlmarketlpositionlneverlstayslforlallongltime.lInlthislpositionlbullishlandlbea
rishlmarketslendlafterlsomeltime.lThereforelonelcanlinvestltheltimeloflbearishlandlsoonlafterlth
eylreachlbullishltrendltheylcanlselllthemloff.
BIBLIOGRAPHY

Books:

SAPM-lPrasannalChandra

PunithavathylPandyan

• Securitylanalysislandlportfoliolmanagement

lBylS.lKevin

JOURNALS:l

1).Title:linvestmentlmanagementlbylCraiglW.lFrenchlEdition:lsecondlquarterl2003

2).Title:lportfoliolmanagement

Authorlname:lgupta

Vol.3l

Websites:

www.NSEindia.com

www.Answers.com

wwwS.Google.com