CHAPTER-I

INTRODUCTION
 INTRODUCTION
The ups and downs of the financial markets are always in the news. Wide price fluctuations are a
daily occurrence on India's stock markets as investors react to economic, business, and political
events. “Volatility” is an important term used in the stock markets and by many market
professionals. Many investors use this term to manage their risk. Analysis of stock market for the
evaluation of the risk has assumed greater significance in India after liberalization. Usefulness of
efficient stock market in mobilizing resources is well-known. Volatility in the prices of stock
adversely affects individual earnings and health of the economy. Understanding “Historical
volatility” is important for many investors as well as traders. For investors, this term is
important, because it helps in estimating or calculating their risk. Traders, generally use
“Historical volatility” to know how volatile a stock or an index will be in the future. Volatility in
equity market has become a matter of mutual concern in recent years for investors, regulators
and brokers. Stock return volatility hinders economic performance through consumer spending.
Stock Return Volatility may also affect business investment spending. Further the extreme
volatility could disrupt the smooth functioning of the financial system and lead to structural or
regulatory changes. From an investor’s view point, it would be immensely useful if the future
stock return volatility could be predicted from the past data. Such forecasting capabilities are
useful for pricing of sophisticated financial instruments such as futures and options. Here in the
present study an attempt has been made to understand the nature of volatility in the Indian Stock
Market from the past monthly stock return data of BSE.

CAUSES FOR STOCK PRICE VOLATILITY

Investors are drawn to the stock market to make money, which is done by selling stock at a price
higher than what it was originally bought for. Since stock prices are largely connected to our
moneymaking goals, it helps to understand their inner workings. Stock prices are established in
the marketplace, but what exactly causes them to behave the way they do? Here are several
factors that influence their movements.

 Latest information on stock prices

Information is a crucial factor in the movement of stock prices as it is what the market uses to
put a value on a stock at a certain price level. These are usually based on all data that the public
has been made aware of. As the information is updated, the market adjusts the prices up or down
depending on the way the market interprets that the information will affect the company’s future
earnings ability.

 Inflation and stock prices

Inflation is another influential factor that affects the motion of stock prices. History indicates that
there had been a strong inverse correlation between low inflation and valuations. This is because
low inflation propels high multiples, and high inflation drives low multiples.
 Economic strength of market and peers
Company stocks have the propensity to track with the market, as well as with their sector or
industry age group. A lot of leading investment firms put significant importance on overall
market and sector movements as major factors involved in the movement of prices. An example
would be when a negative outlook for one stock affects other similar ones due to mere
association with each other, dragging the demand for the whole sector along the way.

 Psychological issues on stock prices

These prices are also greatly influenced by human behavior. Greed is one trait that can cause
stock prices to increase more than it should. New information can elicit a frantic market, may
cause an increase in prices, and may make investors disregard rational valuation, preferring
instead to buy the stock to ensure they are not left behind. Fear can cause significant decreases in
stock prices when investors rush for the exit in an effort to avoid losses. Though listed at number
4, this factor is probably the most important factor in determining the volatility of the market at
any given time.

 Supply and Demand

Stocks that trade smaller volumes of shares do not have the liquidity of the more popular stocks.
So, prices for these smaller ones are prone to fluctuations because of supply and demand. When
a large shareholder wants to sell a large quantity of shares into a market with weak liquidity, that
shareholder can considerably move share price.

 Uncertainty
The movement of stock prices is also affected by a vague future. Prices do tend to bounce around
a bit due to market apprehension and the unpredictable future. Because of the ambiguity of a
company's future, volatility in stock prices is possible even without new information.
PREFACE

A project report on stock market is being prepared in attempts to interpret in-depth study of volatility in
Indian stock market. This report helps us to understand various terminologies in stock market. This report
gave me opportunity to have complete idea about volatility in stock market. This gave me idea about
technical and fundamental analysis in stock market and how trading is being done in stock market. This
project report helps in following aspects, Build understanding of central ideas and theories of stock
market.

Develop familiarity with the analysis of stock market. Furnish institutional material relevant for
understanding the environment in which trading decisions are taken. This project will guide to investors
for an investment in stock market. This project deployed a lot time for collections of information from
various sources. This project will be very helpful to know volatility from January 2006 to December 2006
and reasons for such high volatility and would be able to take decisions for investment in volatile stock
market

EXCUTIVE SUMMARY

Stock market is an avenue for growth of earnings. This project includes how broking is being done in
stock market. It involves stock market analysis such as fluctuations in Sensex & nifty, reasons for
fluctuations in stock market, fluctuations in stock market and reasons for the same. Stock market has been
the best avenue for investment in securities since last 10 years. Mostly future and option trading was the
worst trading in stock market in these sessions. I have covered various sessions for analysis from July
2006 to December 2006In these sessions, stock market was most volatile so that I have covered various
analyses with most affected factors to the global market. Various stock indices in BSE such as BANKEX,
BSE Metal, BSE IT, BSE FMCG, BSE PSU have been most affected due to panic market in these
sessions and I have made analysis of these indices. In this project, I have included most gainer period and
most loser period with reasons for the same. I also included comparison between Bond yields and foreign
investments by foreign investors.
RESEARCH PLAN

Volatility in Indian Stock Market

Objectives:

To study volatility in Indian stock market while taking SENSEX of Bombay stock exchange as a source
of secondary data which broadly represent Indian stock market along with NIFTY of National stock
exchange?

To study the factors which are making Indian stock market volatile?

To furnish institutional material relevant for understanding the environment in which stock market
fluctuation are occurring.

Scope:

This study can be used by investors, traders and other professionals as a supplement to their own research.

Hypothesis:

This is the exploratory research which tries to shows the factors which are making stock market volatile.

Any fluctuation in foreign market has more effect on Indian stock market than that of domestic market.

In the given volatile economic conditions, the market is efficient to any news and information.

Sources of data:

Data used in this study is of secondary in nature. Sensex and Nifty is taken as a source of information
which widely describes Indian stock market. Here monthly prices of both indexes are taken for the study
purpose.
 SCOPE OF THE STUDY

 With the help of this study an individual as well as organisational investor can select the banking
stock of their choice before investment.

 Also they can study the beta distribution so calculated to gain better results from their stocks.

 They can also judge the risk and return relation before going for a combination of stocks.

RESEARCH METHODOLOGY

For the project undertaken collecting Primary Data is very difficult so I use Secondary Data for
the project.

SAMPLE SIZE- For the project I have taken 4 banks of Nifty 50 i.e.
 HDFC Bank

 ICICI Bank

 Punjab National Bank

 State Bank of India

DATA ANALYSIS TOOLS

 Calculation of Correlation.

 Risk & Return Calculation.

 Beta Calculation.

LIMITATIONS OF THE STUDY

Sample size is of only 5 years.

Calculation is little bit time consuming.

Major Banks like Axis & Kotak Mahindra are not included because of data unavailability.
 CHAPTER-II
LITERATURE REVIEW
THEORITICAL STUDY

WHAT IS CORRELATION?

The correlation coefficient a concept from statistics is a measure of how well trends in the
predicted values follow trends in past actual values. It is a measure of how well the predicted
values from a forecast model "fit" with the real-life data.

The correlation coefficient is a number between 0 and 1. If there is no relationship between the
predicted values and the actual values the correlation coefficient is 0 or very low (the predicted
values are no better than random numbers). As the strength of the relationship between the
predicted values and actual values increases so does the correlation coefficient. A perfect fit
gives a coefficient of 1.0. Thus, the higher the correlation coefficient the better.

In statistics, correlation and dependence are any of a broad class of statistical relationships
between two or more random variables or observed data values.

Familiar examples of dependent phenomena include the correlation between the physical statures
of parents and their offspring, and the correlation between the demand for a product and its price.
Correlations are useful because they can indicate a predictive relationship that can be exploited
in practice. For example, an electrical utility may produce less power on a mild day based on the
correlation between electricity demand and weather. Correlations can also suggest possible
causal, or mechanistic relationships; however, statistical dependence is not sufficient to
demonstrate the presence of such a relationship.

PEARSON'S PRODUCT-MOMENT COEFFICIENT

The most familiar measure of dependence between two quantities is the Pearson product-moment
correlation coefficient, or "Pearson's correlation." It is obtained by dividing the covariance of the
two variables by the product of their standard deviations. Karl Pearson developed the coefficient
from a similar but slightly different idea by Francis Galton.

The population correlation coefficient ρX,Y between two random variables X and Y with expected
values μX and μY and standard deviations σX and σY is defined as:
Where E is the expected value operator, cov means covariance, and, corr a widely used
alternative notation for Pearson's correlation.

The Pearson correlation is defined only if both of the standard deviations are finite and both of
them are nonzero. It is a corollary of the Cauchy–Schwarz inequality that the correlation cannot
exceed 1 in absolute value. The correlation coefficient is symmetric: corr (X,Y) = corr (Y,X).

The Pearson correlation is +1 in the case of a perfect positive (increasing) linear relationship, −1
in the case of a perfect decreasing (negative) linear relationship, and some value between −1 and
1 in all other cases, indicating the degree of linear dependence between the variables. As it
approaches zero there is less of a relationship. The closer the coefficient is to either −1 or 1, the
stronger the correlation between the variables.

→RISK VERSUS RETURN

One Can't Have One Without the Other

Risk — Just the thought of it can give investors sleepless nights. However, through careful
planning for your financial future, you can help manage risk.

Risk is something you encounter every day. Even crossing a busy street involves some risk. With
investments, balancing risk and return can be a tricky operation. All investors want to maximize
their return, while minimizing risk.

Some investments are certainly more "risky" than others, but no investment is risk free. Trying to
avoid risk by not investing at all can be the riskiest move of all. That would be like standing at
the curb, never setting foot into the street. You'll never be able to get to your destination if you
don't accept some risk. In investing, just like crossing that street, you carefully consider the
situation, accept a comfortable level of risk, and proceed to where you're going. Risk can never
be eliminated, but it can be managed. Let's take a look at the different types of risk, how different
asset categories perform, and the ways and means to help manage risk.
 TYPES OF RISK

However, there are many kinds of risk. Let's take a look at some of them:

 Capital Risk: Losing your invested monies.

 Inflationary Risk: Investment's rate of return doesn't keep pace with inflation rate.
 Interest Rate Risk: A drop in an investment's interest rate.
 Market Risk: Selling an investment at an un favorable price.
 Liquidity Risk: Limitations on the availability of funds for a specific period of time.
 Legislative Risk: Changes in tax laws may make certain investments less advantageous.
 Default Risk: The failure of the institution where an investment is made.

The risk/return trade off could easily be called the "ability-to-sleep-at-night test." While some
people can handle the equivalent of financial skydiving without batting an eye, others are
terrified to climb the financial ladder without a secure harness. Deciding what amount of risk you
can take while remaining comfortable with your investments is very important.

In the investing world, the dictionary definition of risk is the chance that an investment's actual
return will be different than expected. Technically, this is measured in statistics by standard
deviation. Risk means you have the possibility of losing some, or even all, of our original
investment.
Low levels of uncertainty (low risk) are associated with low potential returns. High levels of
uncertainty (high risk) are associated with high potential returns. The risk/return trade off is the
balance between the desire for the lowest possible risk and the highest possible return. This is
demonstrated graphically in the chart below. A higher standard deviation means a higher risk and
higher possible return.
WHAT DOES RISK-RETURN TRADE-OFF MEAN?

The principle that potential return rises with an increase in risk. Low levels of uncertainty (low
risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are
associated with high potential returns. According to the risk-return trade-off, invested money can
render higher profits only if it is subject to the possibility of being lost.

The objective of risk and return analysis is to maximize the return by creating a balance of risk.
For example, in case of working capital management, the less inventory you keep, the higher the
expected return as less of your money is locked as asset; but you also have a increased risk of
running out of raw material when you actually need it for production or maintenance. Which
means you lose sale. Thus all companies tries very hard to maintain a minimum inventory as
possible without effecting smooth production. This is a very common example of risk return
trade-off

→WHAT IS BETA CALCULATION?

In finance, the beta (β) of a stock or portfolio is a number describing the relation of its returns
with that of the financial market as a whole.

An asset with a beta of 0 means that its price is not at all correlated with the market. A positive
beta means that the asset generally follows the market. A negative beta shows that the asset
inversely follows the market; the asset generally decreases in value if the market goes up and
vice versa.
The beta coefficient is a key parameter in the capital asset pricing model (CAPM). It measures
the part of the asset's statistical variance that cannot be mitigated by the diversification provided
by the portfolio of many risky assets, because it is correlated with the return of the other assets
that are in the portfolio. Beta can be estimated for individual companies using regression analysis
against a stock market index.

The formula for the beta of an asset within a portfolio is

Where ra measures the rate of return of the asset, rp measures the rate of return of the portfolio,
and cov(ra,rp) is the covariance between the rates of return. The portfolio of interest in the CAPM
formulation is the market portfolio that contains all risky assets, and so the rp terms in the
formula are replaced by rm, the rate of return of the market.

Beta is also referred to as financial elasticity or correlated relative volatility, and can be referred
to as a measure of the sensitivity of the asset's returns to market returns, its non-diversifiable
risk, its systematic risk, or market risk. On an individual asset level, measuring beta can give
clues to volatility and liquidity in the marketplace. In fund management, measuring beta is
thought to separate a manager's skill from his or her willingness to take risk.

SECURITY MARKET LINE

The SML graphs the results from the capital asset pricing model (CAPM) formula. The x-axis
represents the risk (beta), and the y-axis represents the expected return. The market risk premium
is determined from the slope of the SML.

The relationship between β and required return is plotted on the security market line (SML)
which shows expected return as a function of β. The intercept is the nominal risk-free rate
available for the market, while the slope is E (Rm)− Rf. The security market line can be regarded
as representing a single-factor model of the asset price, where Beta is exposure to changes in
value of the Market.
A beta value less than 1 indicates the investment is less volatile than the benchmark. A beta
value equal to 1 means the investment's volatility is the same as the benchmark, and a beta
greater than 1 means the investment is more volatile.

Beta is a measure of a stock's volatility in relation to the market. By definition, the market has a
beta of 1.0, and individual stocks are ranked according to how much they deviate from the
market. A stock that swings more than the market over time has a beta above 1.0. If a stock
moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be
riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower
returns.

Beta is a key component for the capital asset pricing model (CAPM), which is used to calculate
cost of equity. Recall that the cost of capital represents the discount rate used to arrive at the
present value of a company's future cash flows. All things being equal, the higher a company's
beta is, the higher its cost of capital discount rate. The higher the discount rate, the lower the
present value placed on the company's future cash flows. In short, beta can impact a company's
share valuation.

Advantages of Beta

To followers of CAPM, beta is a useful measure. A stock's price variability is important to

consider when assessing risk. Indeed, if you think about risk as the possibility of a stock losing
its value, beta has appeal as a proxy for risk.

Intuitively, it makes plenty of sense. Think of an early-stage technology stock with a price that
bounces up and down more than the market. It's hard not to think that stock will be riskier than,
say, a safe-haven utility industry stock with a low beta.

Besides, beta offers a clear, quantifiable measure, which makes it easy to work with. Sure, there
are variations on beta depending on things such as the market index used and the time period
measured, but broadly speaking, the notion of beta is fairly straightforward to understand. It's a
convenient measure that can be used to calculate the costs of equity used in a valuation method
that discounts cash flows.

DISADVANTAGES OF BETA

However, if you are investing in a stock's fundamentals, beta has plenty of shortcomings.
For starters, beta doesn't incorporate new information. Consider the electrical utility company
American Electric Power (AEP). Historically, AEP has been considered a defensive stock with a
low beta. But when it entered the merchant energy business and assumed high debt levels, AEP's
historic beta no longer captured the substantial risks the company took on. At the same time,
many technology stocks, such as Google, are so new to the market they have insufficient price
history to establish a reliable beta.
Another troubling factor is that past price movements are very poor predictors of the future.
Betas are merely rear-view mirrors, reflecting very little of what lies ahead.
Furthermore, the beta measure on a single stock tends to flip around over time, which makes it
unreliable. Granted, for traders looking to buy and sell stocks within short time periods, beta is a
fairly good risk metric. But for investors with long-term horizons, it's less useful.
 CHAPTER –III
COMPANY PROFILE
ORGANIZATION PROFILE
I. HDFC BANK (HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED)

HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a major Indian financial services
company based in Mumbai, incorporated in August 1994, after the Reserve Bank of India
allowed establishing private sector banks. The Bank was promoted by the Housing Development
Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank
has 1,412 branches and over 3,295 ATMs, in 528 cities in India, and all branches of the bank are
linked on an online real-time basis. As of September 30, 2008 the bank had total assets of INR
1006.82 billion. For the fiscal year 2008-14, the bank has reported net profit of Rs.2,244.9 crore,
up 41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at
Rs.19,622.8 crore in 2008-14.

HISTORY

HDFC Bank was incorporated in the year of 1994 by Housing Development Finance Corporation
Limited (HDFC), India's premier housing finance company. It was among the first companies to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector. The Bank commenced its operations as a Scheduled Commercial Bank in January
1995 with the help of RBI's liberalization policies.

In a milestone transaction in the Indian banking industry, Times Bank Limited (promoted by
Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was
the first merger of two private banks in India. As per the scheme of amalgamation approved by
the shareholders of both banks and the

Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every
5.75 shares of Times Bank.

In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than
1,000. The amalgamated bank emerged with a strong deposit base of around Rs. 1,22,000 crore
and net advances of around Rs. 89,000 crore. The balance sheet size of the combined entity is
over Rs. 1,63,000 crore. The amalgamation added significant value to HDFC Bank in terms of
increased branch network, geographic reach, and customer base, and a bigger pool of skilled
manpower.

BUSINESS FOCUS

HDFC Bank deals with three key business segments - Wholesale Banking Services, Retail
Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for
providing working capital finance, trade services, corporate finance and merchant banking. It is
also providing sophisticated product structures in areas of foreign exchange and derivatives,
money markets and debt trading and equity research.

WHOLESALE BANKING SERVICES

The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian
corp to small & mid-sized corporates and agri-based businesses. For these customers, the Bank
provides a wide range of commercial and transactional banking services, including working
capital finance, trade services, transactional services, cash management, etc. The bank is also a
leading provider of structured solutions, which combine cash management services with vendor
and distributor finance for facilitating superior supply chain management for its corporate
customers. HDFC Bank has made significant inroads into the banking consortia of a number of
leading Indian corporate including multinationals, companies from the domestic business houses
and prime public sector companies. It is recognised as a leading provider of cash management
and transactional banking solutions to corporate customers, mutual funds, stock exchange
members and banks.

RETAIL BANKING SERVICES

The objective of the Retail Bank is to provide its target market customers a full range of financial
products and banking services, giving the customer a one-stop window for all his/her banking
requirements. The products are backed by world-class service and delivered to customers
through the growing branch network, as well as through alternative delivery channels like
ATMs, Phone Banking, Net Banking and Mobile Banking.
HDFC Bank was the first bank in India to launch an International Debit Card in association with
VISA (VISA Electron) and issues the MasterCard Maestro debit card

as well. The Bank launched its credit card business in late 2001. By March 2009, the bank had a
total card base (debit and credit cards) of over 13 million. The Bank is also one of the leading
players in the “merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for
debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a
leader in various net based B2C opportunities including a wide range of internet banking services
for Fixed Deposits, Loans, Bill Payments, etc.

TREASURY

Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,
Local Currency Money Market & Debt Securities, and Equities. These services are provided
through the bank's Treasury team. To comply with statutory reserve requirements, the bank is
required to hold 25% of its deposits in government securities. The Treasury business is
responsible for managing the returns and market risk on this investment portfolio.

HDFC Ltd has the objective to enhance residential housing stock and promote home ownership.
Their offerings range from hassle-free home loans and deposit products, to property related
services and a training facility. They also offer specialized financial services to the customer
base through partnerships with some of the best financial institutions worldwide.

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to
accomplish the vision of becoming a world-class Indian bank.

Our business philosophy is based on four core values - Customer Focus, Operational Excellence,
Product Leadership and People. We believe that the ultimate identity and success of our bank
will reside in the exceptional quality of our people and their extraordinary efforts. For this
reason, we are committed to hiring, developing, motivating and retaining the best people in the
industry.
MISSION AND BUSINESS STRATEGY
Our mission is to be "a World Class Indian Bank", benchmarking ourselves against international
standards and best practices in terms of product offerings, technology, service levels, risk
management and audit & compliance. The objective is to build sound customer franchises across
distinct businesses so as to be a preferred provider of banking services for target retail and
wholesale customer segments, and to achieve a healthy growth in profitability, consistent with
the Bank's risk appetite. We are committed to do this while ensuring the highest levels of ethical
standards, professional integrity, corporate governance and regulatory compliance.

PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also
has a large corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

KEY PEOPLE
1-Deepak Parekh (Founder)

2-Jagdish Kapoor (Chairman)

3-Aditya Puri (MD)

II. ICICI BANK (Industrial Credit and Investment Corporation of India)

ICICI Bank (BSE: 532174, NYSE: IBN) (formerly Industrial Credit and Investment Corporation
of India) is a major banking and financial services organization in India. It is the 4th largest bank
in India and the largest private sector bank in India by market capitalization. The bank also has a
network of 1,700+ branches (as on 31 March 2010) and about 4,721 ATMs in India and presence
in 18 countries, as well as some 24 million customers (at the end of July 2007). ICICI Bank
offers a wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and specialization subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset management. (These
data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank's
shares are listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the National
Stock Exchange of India Limited; its ADRs trade on the New York Stock Exchange (NYSE).

Founded in 1955 as Industrial Credit and Investment Corporation of India, ICICI Limited was
established by the Government of India in the 1960s as a Financial Institution like Industrial
Development Bank of India (IDBI) to finance large industrial projects . ICICI then, was not a
bank and hence could not take retail deposits and was not required to comply with Indian
banking requirements for liquid reserves. ICICI borrowed funds from various agencies like the
World Bank, often at concessional rates. These funds were deployed in large corporate loans.
However, the scenario changed drastically in1990s when ICICI founded a separate legal entity
and named it "ICICI Bank". ICICI Bank, as the name would suggest, undertook normal banking
operations like accepting deposits, issuing credit cards, providing car loans etc. The experiment
was so successful that ICICI merged into ICICI Bank and this "reverse merger" happened in
2002.

ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment Corporation of India)
"ICICI Bank is India's second largest Bank with consolidated total assets of over Rs. 470,000
crores and networth of over Rs. 50,000 crores. The Bank's capital adequacy ratio of 15.6% is
among the highest levels of capital adequacy in large Indian banks and much higher than the
regulatory requirement of 9.0%. ICICI Bank made a profit after tax of Rs. 4,158 crore (over US$
850 million) in FY2008 and Rs. 3,014 crore (US$ 619 million) in the nine months ended
December 31, 2008."

ICICI Bank offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and specialised subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and asset management.
ICICI Bank is also the largest issuer of credit cards in India. Banks have also provide internet
banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller
Machines (ATMs) and combined various other services and integrated them into the mainstream
banking arena.
 In a span of just four years, ICICI Bank has emerged as a consumer banking behemoth. With a
retail book of over Rs 56,000 crore (Rs 560 billion) and a market share that is the envy of
competition -- it has a share of over 30 per cent -- ICICI Bank today has reached a commanding
position. The bank boasts of the widest integrated technology platform in the country and only a
fourth of its business takes place at its branches

The Bank is expanding in overseas markets and has the largest international balance sheet among
Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representative
offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned
subsidiaries in Canada, Russia and the UK (the subsidiary through which the his savings brand is
operated), offshore banking units in Bahrain and Singapore, an advisory branch in Dubai,
branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh,
China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA.
Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular.

HISTORY
 1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives of
Indian industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses.

 1994 ICICI established Banking Corporation as a banking subsidiary. Formerly Industrial Credit
and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI
Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking
operations - taking deposits, credit cards, car loans etc.

 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had
acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.

 2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI,
ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank.
After receiving all necessary regulatory approvals, ICICI integrated the group's financing and
banking operations, both wholesale and retail, into a single entity.
 Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered
Bank had inherited when it acquired Grindlays Bank.

 ICICI started its international expansion by opening representative offices in New York and
London.

 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it
established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in
Singapore and representative offices in Dubai and Shanghai.

 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country,
India and South Africa.

 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in
assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI
renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International
Financial Centre and in Hong Kong.

 2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative
offices in Bangkok, Jakarta, and Kuala Lumpur.

 2007 ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State,
and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had
been founded in 1916 and was particularly strong in rural areas.

 ICICI also received permission from the government of Qatar to open a branch in Doha.

 ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.

 2008 The US Federal Reserve permitted ICICI to convert its representative office in New York
into a branch.

 ICICI also established a branch in Frankfurt.

 NATURE OF BUSINESS:
ICICI is a financial intermediary which brings together the savers and borrowers in the economic
system. It collects funds from surplus units and lends the same to those units whose income
exceeds its expenditure. In the pursuit of these objectives the ICICI Bank Limited (ICICI Bank)
offers products and services in the areas of commercial banking to retail and corporate customers
(both domestic and international), treasury and investment banking and other products, such as
insurance and asset management. Its commercial banking operations for retail customers consist
of retail lending and deposits, distribution of third-party investment products and other fee-based
products and services, as well as issuance of unsecured redeemable bonds. ICICI Bank provides
a range of commercial banking and project finance products and services, including loan
products, fee and commission-based products and services, deposits and foreign exchange and
derivatives products to corporations, growth-oriented middle market companies and small and
medium enterprises.

ONWNERSHIP TYPE

JOINT STOCK COMPANY:

ICICI BANK LIMITED, is the joint stock company which is incorporated under the Companies
Act, 1956 and licensed as a bank under the Banking Regulation Act, 1949 ICICI Bank's equity
shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India
Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).

VISION
 To be the leading provider of financial services in India and a major
global bank.

 To be the preferred brand for total financial and banking solutions for both corporate and
individuals

 To be the dominant Life, Health and Pensions player built on trust by world-class people and
service.
 MISSION

We will leverage our people, technology, speed and financial capital to:
 be the banker of first choice for our customers by delivering high quality, world-class products
and services.

 expand the frontiers of our business globally.

 play a proactive role in the full realisation of India’s potential.

 maintain a healthy financial profile and diversify our earnings across businesses and
geographies.

 maintain high standards of governance and ethics.

 contribute positively to the various countries and markets in which we operate.

 create value for our stakeholders

 Provide the social facilities to the society

 SUBSIDIARIES

KEY PEOPLE

1. K.V. Kamath (Chairman)

2. Chanda Kochhar (MD & CEO)
3. N. S. Kannan (CFO)

III. PNB (Punjab National Bank)

Punjab National Bank (PNB) (BSE: 532461), was registered on May 19, 1894 under the Indian
Companies Act with its office in Anarkali Bazaar Lahore. Today, the Bank is the second largest
government-owned commercial bank in India with about 5000 branches across 764 cities. It
 serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by
the Bankers Almanac, London. The bank's total assets for financial year 2007 were about US$60
billion. PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai and
Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.

Punjab National Bank with 4497 offices and the largest nationalised bank is serving its 3.5 crore
customers with the following wide variety of banking services: Corporate banking

 Personal banking
 Industrial finance
 Agricultural finance
 Financing of trade
 International banking

Punjab National Bank has been ranked 38th amongst top 500 companies by The Economic
Times. PNB has earned 9th position among top 50 trusted brands in India. Punjab National
Bank India maintains relationship with more than 200 leading international banks world wide.
PNB India has Rupee Drawing Arrangements with 15 exchange companies in UAE and 1 in
Singapore.

PNB ONLINE

Punjab National Bank of India is also a member of SWIFT and more than 150 PNB Branches
are connected with terminals in Mumbai. It promotes "Any Time, Any Where Banking".
PNB offers Internet Banking services for both to the Corporate and Individuals. It provides 24
hours, 365 days banking from the PC of the user. A user can operate anytime and from anywhere
its accounts. The following are some of the services available online:

 Access to account
 Complete details of transactions and statement of account
 Online information of deposits, loans overdraft account etc.
 Online Payment Facility for railway reservation through IRCTC Payment Gateway Project
 Online Utility Bill Payment Services which allows Internet Banking account holders to pay their
telephone, mobile, electricity, insurance and other bills anytime from anywhere from their
desktop.

Punjab National Bank Card user can buy goods and enable services from 45,000 merchant outlet
in India and can withdraw cash from over 4500 ATMs with its own 450 ATMs.

PUNJAB NATIONAL BANK BRANCHES

Punjab National Bank has its Branches in all the 7 metropolitan and cosmopolitan cities in India
namely New Delhi, Mumbai, Calcutta, Chennai, Bangalore, Hyderabad and Ahmedabad. It even
has its branches in small town in both urban as well as rural areas.
PNB is always focussing on expanding abroad and till date has identified some emerging
economies abroad. They are in few of these places.

 Almaty
 Kazakhktan
 Shanghai
 China
 London
 Kabul
 Afghanistan
PUNJAB NATIONAL BANK HOUSING LOAN
Any individual can avail Punjab National Bank Housing Loan for any of the following
purpose:

For construction of house.

For purchase of house/ flat.

For purchase of house/ flat from the original allottee, i.e. on First Power of Attorney basis.

For carrying out repairs/ renovation/ additions/ alterations in the existing house.
 Approximately 80% of the cost of project is sanctioned by PNB Housing Finance, subject to a
maximum of Rs. 50 lac. In case of carrying out repairs/ renovation/ additions/ alterations in the
existing house, the ceiling is Rs. 5 lac. The loan is available for a period of 5 years to 20 years or
before the borrowers attain the age of 65. Interest of Punjab National Bank Home Loan is
charged on reducing balance and the amount to be sanctioned depends upon the repaying
capability of the borrower.

The following securities are required by the cell of PNB Housing Loan:
 Mortgage of property for which finance is being given.

 In case of purchase of house flat from housing board/ society where mortgage cannot be created
immediately, a tripartite agreement shall be executed amongst the housing board/society,
borrower and the Bank.

 In case of purchase of house/ flat on first power of attorney, additional security by way of
mortgage of some other property or pledge of Bank's Fixed Deposit Receipt/ LIC policy/ Govt.
securities has to be provided.

 Suitable third party guarantee acceptable to the Bank which may include guarantee from family
members/ other relatives.

HISTORY
 1895: PNB commenced its operations in Lahore. PNB has the distinction of being the first Indian
bank to have been started solely with Indian capital that has survived to the present. (The first
entirely Indian bank, the Oudh Commercial Bank, was established in 1881 in Faizabad, but
failed in 1958.) PNB's founders included several leaders of the Swadeshi movement such as Dyal
Singh Majithia and Lala HarKishen Lal,Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.
Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was
actively associated with the management of the Bank in its early years.

 1904: PNB established branches in Karachi and Peshawar.

 1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi circle.
 1947: Partition of India and Pakistan at Independence. PNB lost its premises in Lahore, but
continued to operate in Pakistan.

 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank became Bharat
Nidhi Ltd.

 1961: PNB acquired Universal Bank of India.

 1963: The Government of Burma nationalized PNB's branch in Rangoon (Yangon).

 September 1965: After the Indo-Pak war the government of Pakistan seized all the offices in
Pakistan of Indian banks, including PNB's headoffice, which may have moved to Karachi. PNB
also had one or more branches in East Pakistan (Bangladesh).

 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a rescue.

 1969: The Government of India (GOI) nationalized PNB and 13 other major commercial banks,
on July 19, 1969.

 1976 or 1978: PNB opened a branch in London.

 1986 The Reserve Bank of India required PNB to transfer its London branch to State Bank of
India after the branch was involved in a fraud scandal.

 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The acquisition added
Hindustan's 142 branches to PNB's network.

 1993: PNB acquired New Bank of India, which the GOI had nationalized in 1980.

 1998: PNB set up a representative office in Almaty, Kazakhstan.

 2003: PNB took over Nedungadi Bank, the oldest private sector bank in Kerala. At the time of
the merger with PNB, Nedungadi Bank's shares had zero value, with the result that its
shareholders received no payment for their shares.

 PNB also opened a representative office in London.

 2004: PNB established a branch in Kabul, Afghanistan.

 PNB also opened a representative office in Shanghai.

 PNB established an alliance with Everest Bank in Nepal that permits migrants to transfer funds
easily between India and Everest Bank's 12 branches in Nepal.

 2005: PNB opened a representative office in Dubai.

 2007: PNB established PNBIL - Punjab National Bank (International) - in the UK, with two
offices, one in London, and one in South Hall. Since then it has opened a third branch in
Leicester, and is planning a fourth in Birmingham.

 2008: PNB opened a branch in Hong Kong.

 2009: PNB opened a representative office in Oslo, Norway, and a second branch in Hong Kong,
this in Kowloon.

 2010: PNB received permission to upgrade its representative office in the Dubai International
Financial Centre to a branch.

PRODUCTS OFFERED
 Investment Banking

 Consumer Banking

 Commercial Banking

 Retail Banking

 Private Banking

 Asset Management

 Pensions

 Mortgage Loans

 Credit Cards

 Life insurance
 VISION

"To be a Leading Global Bank with Pan India footprints and become a household brand in the
Indo-Gangetic Plains providing entire range of financial products and services under one roof"

MISSION

"Banking for the unbaked"

IV. SBIN (STATE BANK OF INDIA)

State Bank of India (SBI) (BSE: 500112, NSE: SBIN) is the largest banking and financial
services company in India, by almost every parameter - revenues, profits, assets, market
capitalization etc. The bank traces its ancestry to British India, through the Imperial Bank of
India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in
the Indian Subcontinent. The Government of India nationalized the Imperial Bank of India in
1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India.
In 2008, the Government took over the stake held by the Reserve Bank of India.

The evolution of State Bank of India can be traced back to the first decade of the 19th century. It
began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was
redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever joint-
stock bank of the British India, established under the sponsorship of the Government of Bengal.
Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras
(established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the
modern banking scenario in India, until when they were amalgamated to form the Imperial Bank
of India, on 27 January 1921.

An important turning point in the history of State Bank of India is the launch of the first Five
Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in
general and the rural sector of the country, in particular. Until the Plan, the commercial banks of
the country, including the Imperial Bank of India, confined their services to the urban sector.
Moreover, they were not equipped to respond to the growing needs of the economic revival
taking shape in the rural areas

of the country. Therefore, in order to serve the economy as a whole and rural sector in particular,
the All India Rural Credit Survey Committee recommended the formation of a state-partnered
and state-sponsored bank.
The All India Rural Credit Survey Committee proposed the takeover of the Imperial Bank of
India, and integrating with it, the former state-owned or state-associate banks. Subsequently, an
Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI)
was established on 1 July 1955. This resulted in making the State Bank of India more powerful,
because as much as a quarter of the resources of the Indian banking system were controlled
directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in
1959. The Act enabled the State Bank of India to make the eight former State-associated banks
as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the 480
offices comprising branches, sub offices and three Local Head Offices, inherited from the
Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to
creditworthy parties, the State Bank of India catered to the needs of the customers, by banking
purposefully. The bank served the heterogeneous financial needs of the planned economic
development.

BRANCHES
The corporate centre of SBI is located in Mumbai. In order to cater to different functions, there
are several other establishments in and outside Mumbai, apart from the corporate center. The
bank boasts of having as many as 14 local

head offices and 57 zonal Offices, located at major cities throughout India. It is recorded that SBI
has about 10000 branches, well networked to cater to its customers throughout India.
ATM SERVICES
SBI provides easy access to money to its customers through more than 8500 ATMs in India. The
Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which
includes the ATMs of State Bank of India as well as the Associate Banks – State Bank of
Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transact
money through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-
Debit (Cash Plus) card.
 SUBSIDIARIES
The State Bank Group includes a network of eight banking subsidiaries and several non-banking
subsidiaries. Through the establishments, it offers various services including merchant banking
services, fund management, factoring services, primary dealership in government securities,
credit cards and insurance.

THE EIGHT BANKING SUBSIDIARIES ARE:

 State Bank of Bikaner and Jaipur (SBBJ)

 State Bank of Hyderabad (SBH)
 State Bank of Indore (SBIR)
 State Bank of Mysore (SBM)
 State Bank of Patiala (SBP)
 State Bank of Saurashtra (SBS)
 State Bank of Travancore (SBT)

PRODUCTS AND SERVICES

PERSONAL BANKING

 SBI Term Deposits SBI Loan For Pensioners

 SBI Recurring Deposits Loan Against Mortgage Of Property
 SBI Housing Loan Loan Against Shares & Debentures
 SBI Car Loan Rent Plus Scheme
 SBI Educational Loan Medi-Plus Scheme

OTHER SERVICES
 Agriculture/Rural Banking
 NRI Services
 ATM Services
 Demat Services
 Corporate Banking
 Internet Banking
 Mobile Banking
 Bank Names Correlation International Banking
 HDFC 0.930206867 Safe Deposit Locker
 ICICI 0.877994998 RBIEFT
 E- Pay
PNB 0.702472868
 E- Rail
SBIN 0.914815796
 SBI Vishwa Yatra Foreign Travel
Card
 Broking Services
 Gift Cheques

INTERNATIONAL PRESENCE
The bank has 52 branches, agencies or offices in 32 countries. It has branches of the parent
in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los
Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore
banking units in the Bahamas, Bahrain, and Singapore, and representative offices
in Bhutan and Cape Town
SBI operates several foreign subsidiaries or affiliates. In 1990 it established an offshore bank,
State Bank of India (Mauritius). It has two subsidiaries in North America, State Bank of India
(California), and State Bank of India (Canada). In 1982, the bank established its California
subsidiary, which now has seven branches. The Canadian subsidiary was also established in
1982 and also has seven branches, four in the greater Toronto area, and three in British
Columbia. In Nigeria, it operates as INMB Bank . This bank was established in 1981 as the Indo-
Nigerian Merchant Bank and received permission in 2002 to commence retail banking. It now
has five branches in Nigeria. In Nepal SBI owns 50% of Nepal SBI Bank, which has branches
throughout the country. In Moscow SBI owns 60% of Commercial Bank of India, with Canara
Bank owning the rest. In Indonesia it owns 76% of PT Bank Indo Monex. State Bank of India
already has a branch in Shanghai and plans to open one up in Tianjin. State Bank of India has
presence in Dubai International Financial Centre, Dubai, United Arab Emirates.

GROWTH

State Bank of India has often acted as guarantor to the Indian Government, most notably
during Chandra Shekhar's tenure as Prime Minister of India. With 11,448 branches and a further
6500+ associate bank branches, the SBI has extensive coverage. State Bank of India has
electronically networked all of its branches under Core Banking System(CBS).

The bank has one of the largest ATM networks in the region. More than 8500 ATMs across
India. The State Bank of India has had steady growth over its history, though it was marred by
the Harshad Mehta scam in 1992. In recent years, the bank has sought to expand its overseas
operations by buying foreign banks. It is the only Indian bank to feature in the top 100 world
banks in the Fortune Global 500 rating and various other rankings.
 CHAPTER 4
DATA ANALYSIS & INTERPRETATION
DATA ANALYSIS & INTERPRETATION

CALCULATION OF CORRELATION
*Data is attached in annexure.

RESULT FROM THE CALCULATION OF CORRELATION

In the calculation I have seen that correlation coefficient of HDFC is higher than other banks
(0.930) in last 5 years which shows that it is highly correlated with nifty. So, whenever Nifty 50
moves up usually the share price of HDFC also moves up and vice-versa. It means that in last 5
years it moves according to Nifty. In second place correlation coefficient of SBIN is good it
shows that SBIN is also highly correlated with the Nifty 50 up’s & down’s in last 5 years
analysis.
 CALCULATION OF RISK & RETURN
1- HDFC BANK

HDFC Bank Closing Yearly Return on HDFC Bank (in

Date Rate %age)

1st Year

01-Apr-11 551.5

31-Mar-12 774.25 1st Year 40.38984587

2nd Year

03-Apr-12 773.85

30-Mar-13 954.15 2nd Year 23.29908897

3rd Year

02-Apr-13 901.35

31-Mar-14 1331.25 3rd Year 47.69512398

4th Year

01-Apr-14 1309.55

31-Mar-15 945.5 4th Year -27.79962583

5th Year

01-Apr-15 973.4

31-Mar-16 1933.5 5th Year 98.63365523

Risk 45.57889548

Average Return 36.44361765

ICICI BANK

Yearly Return on ICICI

Date ICICI Bank Closing Rate Bank (in %age)

1st Year

01-Apr-11 406.05

31-Mar-12 589.05 1st Year 45.06834134

2nd Year

03-Apr-12 604

30-Mar-13 855.3 2nd Year 41.60596026

4th Year

02-Apr-13 857

31-Mar-14 843.95 3rd Year -1.522753792

4th Year

01-Apr-14 834.55

31-Mar-15 375.05 4th Year -55.05961297

5th Year

01-Apr-15 385.2

31-Mar-16 952.5 5th Year 147.2741433

Risk 74.48828638

Average Return 35.47321563

1. PUNJAB NATIONAL BANK

Yearly Return on PNB Bank (in

Date PNB Bank Closing Rate %age)

1st Year

01-Apr-11 396.9

31-Mar-
12 470.4 1st Year 18.51851852

2nd Year

03-Apr-12 466.5

30-Mar-
13 474.2 2nd Year 1.650589496

3rd Year

02-Apr-13 426.7

31-Mar-
14 510.25 3rd Year 19.58050152

4th Year

01-Apr-14 438.6

31-Mar-
15 411.45 4th Year -6.190150479

5th Year

01-Apr-15 405.75

31-Mar-
16 1012.75 5th Year 149.5995071

Risk 64.10527498

Average Return 36.63179323

2. STATE BANK OF INDIA

Date SBIN Bank Closing Rate Yearly Return on SBIN Bank (in %age)

1st Year

01-Apr-11 670.1

31-Mar-
12 968.5 1st Year 44.53066706

2nd Year

03-Apr-12 983.35

30-Mar-
13 994.45 2nd Year 1.128794427

3rd Year

02-Apr-13 930.5

31-Mar-
14 1600.25 3rd Year 71.97743149

4th Year

01-Apr-14 1623.2

31-Mar-
15 1067.1 4th Year -34.25948743

5th Year

01-Apr-15 1077.45

31-Mar-
16 2078.2 5th Year 92.8813402

Risk 51.84648463

Average Return 35.25174915

RESULT FROM THE CALCULATION OF RISK & RETURN

From the above calculation performance of HDFC Bank in last 5 years is better than other banks
because it is providing 36.44% of return at 45.58% risk. It means providing good return at lower
risk. At second place SBIN bank stand and provide return of 35.25% at 51.85% risk.

In Risk & Return analysis we consider that script as best script which gave the Maximum return
at Minimum Risk. So from the data of 5 years HDFC bank is the best script in terms of RISK &
RETURN analysis.
1. HDFC BANK WITH NIFTY

Beta of HDFC Bank = 0.804697745

Avg. Closing

CALCULATION Avg. Closing Nifty Six Monthly %age HDFC Six Monthly
OF BETA Dates (Six Month Basis) change (Six Month Basis) %age change

01-Apr-11 2067.65 551.55

31-Oct-11 2242.98 7.816832963 615.375 10.37172456

01-Apr-12 2902.053 22.71057765 720.62 14.60478477

31-Oct-12 3330.201 12.85652127 826.618 12.82309362

01-Apr-13 3921.559 15.07966602 1034.44 20.0902904

31-Oct-13 4471.548 12.29974497 1174.977 11.96082987

01-Apr-14 5507.344 18.80754135 1570.683 25.19324396

31-Oct-14 4331.751 -27.13897913 1224.422 -28.27954741

01-Apr-15 2842.19 -52.40891707 931.748 -31.41128288

31-Oct-15 4384.67 35.17893023 1423.734 34.55603364

01-Apr-16 5051.0225 13.19242787 1724.95 17.46230326

2. ICICI BANK WITH NIFTY

 Avg. Closing Six Monthly
Nifty Six Monthly %age Avg. Closing ICICI %age
Dates (Six Month Basis) change (Six Month Basis) change

01-Apr-11 2067.65 406.05

31-Oct-11 2242.98 7.816832963 458.748 11.48735253

01-Apr-12 2902.053 22.71057765 575.816 20.33080012

31-Oct-12 3330.201 12.85652127 588.253 2.114226362

01-Apr-13 3921.559 15.07966602 886.678 33.65652469

31-Oct-13 4471.548 12.29974497 938.134 5.484930724

01-Apr-14 5507.344 18.80754135 1155.242 18.7932918

-
31-Oct-14 4331.751 -27.13897913 693.453 66.59268905

-
01-Apr-15 2842.19 -52.40891707 386.67 79.33974707

31-Oct-15 4384.67 35.17893023 706.12 45.2401858

01-Apr-16 5051.0225 13.19242787 867.83 18.63383382

Beta of ICICI Bank = 1.8709125

Dates Avg. Closing Nifty Six Monthly %age change Avg. Closing PNB Six Monthly
 (Six Month Basis) (Six Month Basis) %age change

01-Apr-11 2067.65 396.9

31-Oct-11 2242.98 7.816832963 401.276 1.090521237

01-Apr-12 2902.053 22.71057765 448.238 10.47702337

31-Oct-12 3330.201 12.85652127 425.59 -5.321553608

01-Apr-13 3921.559 15.07966602 497.865 14.51698754

31-Oct-13 4471.548 12.29974497 509.119 2.210485171

01-Apr-14 5507.344 18.80754135 603.204 15.59754246

31-Oct-14 4331.751 -27.13897913 479.041 -25.91907582

01-Apr-15 2842.19 -52.40891707 426.348 -12.35915262

31-Oct-15 4384.67 35.17893023 668.98 36.26894675

01-Apr-16 5051.0225 13.19242787 913.3535 26.75563186

3. PUNJAB NATIONAL BANK WITH NIFTY

Beta of PNB = 0.381567483

4. STATE BANK OF INDIA WITH NIFTY

 Six
Avg. Closing Avg. Closing Monthly
Nifty Six Monthly %age SBIN %age
Dates (Six Month Basis) change (Six Month Basis) change

01-Apr-
11 2067.65 670.1

31-Oct- 10.453585
11 2242.98 7.816832963 748.327 13

01-Apr- 17.129527
12 2902.053 22.71057765 903.008 09

-
31-Oct- 1.6930675
12 3330.201 12.85652127 887.974 9

01-Apr- 23.188563
13 3921.559 15.07966602 1156.044 76

31-Oct- 22.596740
13 4471.548 12.29974497 1493.534 35

01-Apr- 31.747966
14 5507.344 18.80754135 2188.263 31

-
31-Oct- 49.991157
14 4331.751 -27.13897913 1458.928 89

-
01-Apr- 29.069038
15 2842.19 -52.40891707 1130.347 09

31-Oct- 35.484539
15 4384.67 35.17893023 1752.056 31

01-Apr- 17.953626
16 5051.0225 13.19242787 2135.446 55
Beta of SBIN = 1.313855349

Correlation Risk Vs. Return (in %age) Beta

HDFC 0.930206867 45.57:36.44 0.804698

ICICI 0.877994998 74.48:35.47 1.870913

PNB 0.702472868 64.10:36.63 0.381567

SBIN 0.914815796 51.84:35.25 1.313855

RESULT FROM BETA CALCULATION

Beta is a measure of a stock's volatility in relation to the market. By definition, the market has a
beta of 1.0, and individual stocks are ranked according to how much they deviate from the
market. A stock that swings more than the market over time has a beta above 1.0. If a stock
moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be
riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower
returns. Therefore, investing in PNB would be much saver for the investors who aim at investing
for long durations as its beta is lowest, HDFC is also a good option for the investors who are
looking for a stock which is less risky in comparison to the other competitors and offers high and
timely returns. Whereas, ICICI is an aggressive stock whose beta is almost double than the
market beta.
 CHAPTER V
CONCLUSION

OBSERVATIONS

 The result of Correlation shows that in last 5 years HDFC Bank is highly correlates with nifty.
 It means that this script positively moves according to the Nifty movement. In second place State
Bank of India correlates better with Nifty-50.

 In the analysis of Risk & Return I observe that HDFC bank is the best performing bank in the
Nifty in last 5 years because its risk level is low in comparison of other banks stock taken into
consideration and its average return is also higher. In second place SBIN is the best stock in last
5 years.

 From the calculation of Beta I observe that Punjab National Bank is the best stock in Nifty 50 in
last 5 years because its Beta is less than 1 and it stands at 0.381.

 At the second place HDFC is best stock if we compare stock with Beta calculation because its
beta also less than 1 but little bit higher than PNB.

CONCLUSION
 It's important for investors to make the distinction between short-term risk--where beta and price
volatility are useful--and longer-term, fundamental risk, where big-picture risk factors are more
telling.

 High betas may mean price volatility over the near term, but they don't always rule out long-term
opportunities.

 Inflation rate of the Economy should also be considered while investing.

 The stock prices Hit the top at the end of the financial year (refer to annexure chart) in
comparison to begin of the year.

RECOMMENDATIONS
 Investors can invest in Share market for better returns but his investment view should be long
term.

 Investment in HDFC Bank & SBIN Bank is more profitable in banking sector.

BIBLIOGRAPHY

WEBSITES
 www.nseindia.com

 www.google.com

 www.wikipedia.com

 www.moneycontrol.com

 www.statistics-help-online.com

 www.fundmanagersoftware
 BOOKS

 Suresh C. Sinha and Anil K. Dhiman, Research Methodology

Himalaya publication house New Delhi

 Jain S P, Narang K L Financial Accounting Kalyani Publication New Delhi,2004
 Gupta Sashi and Joshi Rosi Management Accounting