ece final year project

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A STUDY ON VOLATILITY OF BELLWETHER STOCKS WITH RESPECT TO PRE AND POST BUDGET SESSION

ACHARYA INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

Chapter-1

INTRODUCTION


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INTRODUCTION ABOUT INTERNSHIP

Internship is an important career stepping stone, an internship will always tell about the

company, strategies, work culture, attitude at work place and many more related to

organizational behavior.

Internship offer the important opportunity to work closely with professionals in our filed, and to

develop knowledge, competencies, and experience related directly to our career goals. If

managed correctly, internships will lead to new contracts, mentors, and references. With

recommendations in hand from business relationships developed during internship, securing a

job becomes much easier.

The project done in MBA really help and support a lot for the future growth.

TITLE OF THE PROJECT

A Study on Volatility of Bellwether Stocks with respect to Pre and Post Budget Session.

STATEMENT OF THE PROBLEM

Wide price fluctuations and heavy trading within a short span of characterize volatile markets.

Volatility is traditional worry of investors, and is associated with fast growing stocks.

Volatility of stock market is usually caused by company news, economic factors. Share prices

fluctuations affect the investor`s wealth creation. In this context, the study of the impact of

economic events on the movement of share prices in stock market is undertaken. The problem

could be characterized by the lack of information whether the budget is affecting the prices of

bellwether stocks.


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OBJECTIVE OF THE STUDY

1. To study how share prices of bellwether stocks fluctuate with respect to pre and post

budget session.

2.

To analyse the bellwether stocks in which investment can be made at the time of budget.

3. To examine the impact of Budget on the bellwether stocks from 2012 to 2014.

4. To study the correlation between the pre budget session returns and post budget session.

IMPORTANCE OF THE STUDY:

This study aids an investor to know the effect of Budget on share price.

Research on volatility will help investor to built and plan his investment portfolio by

considering the uncontrollable factors, which would lead to fluctuation in the stock

market by an individual investor.

Since there are problems associated with volatile stock markets, the study can help the

investors to take informed decisions regarding buying or selling of stocks.

SCOPE OF THE STUDY

The study is considered the pre and post budget volatility of bellwether stocks.

The scope of the study is limited to Bellwether stocks where in the following sectors are

selected:

In the year of 2014-15 sectors are Auto mobile, Manufacturing & Infrastructural.

o TATA Motors,

o Ashok Leyland limited

o

Larsen & Turbo limited

In the year of 2013-14 sectors are Power, Steel & Textile

o National Thermal Power corporation Limited ,

o STEEL AUTHORITY OF INDIA LIMITED (SAIL Ltd,)

o Raymond Limited


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In the year of 2012-13 sectors are FMCG, Banking & Information technology.

o Indian Tobacco Company Ltd

o State Bank of India

o

TATA Consultancy Services

The study considers the above companies based on the market capitalization, these

companies reported the highest market capitalization in the related sectors during this period of

study. For this purpose the data relating to 3 years Budget for the selected bell whether stocks in

comparison with market index. The study also helps the investor to understand the working of

market index and the related concepts.

RESEARCH METHODOLGY

This study is based on Analytical study of secondary data.

Methodology of Data Collection:

In order to fulfill the objective of the study, the data is collected from both primary and

secondary sources.

Primary data

The primary data means it is fresh data collected by researcher concerned with the research

problem refers to the primary data. Personal discussion was made with my external guide. There

is no formal design of questionnaire used in this study.

Secondary data

The secondary data means already existing data and information available at various sources

made for other purpose but facilitating the study undertaken is called as secondary data.

The various sources that were used to understand the collection of secondary data are:

Websites of the company

Newspapers such as Economics Times, Business Line, etc.

NSE website


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Tools & Techniques Used For the Study

Risk

o Standard deviation.

The standard deviation is measure of the variables around its mean or it is square root of the

sum of the squared root deviations from the mean divided the number of observation. S.D is used

to measure the variability of return i.e., a measure of dispersion. S.D is calculated as the square

root of variation. In finance investments volatility .S. D is also known as historical volatility and

it`s used by investors as a gauge from the amounted of volatility. The standard deviation can be

calculated by using the following formula,

Standard Deviation () = P(Ri-E(R))

= VARIANCE

SD = (R- R1)2/ (n-1)

Return:

A major purpose of investment is to set a return or income on the fundsinvestment. On a

bond an investor expects to receive interest. On a stock, dividends may be anticipated. The

investor may expect capital gains from some investments and rental income from house property.

Return is the amount or rate of produce, proceeds, gain, fruit and profit which accrues to an

economic agent from an undertaking or enterprise or investment. It is a reward for and a

motivating force behind investment, the objective of which is usually to maximize return.

Return on a typical investment has two components; the basic one which is the periodic cash or

income receipts, either interest or dividend which is known as current yield; and the other which

is the appreciation or depreciation in the price of value of the asset, called the capital gain or the

capital loss. The capital gain is the difference between the purchase price of the asset and the

price at which it can be or is sold. The income component is usually but not necessarily received

in cash viz., stock dividend. The total return on an investment thus can be defines as income

plus/minus appreciation/depreciation of capital asset.


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Rate of Return:

Rate of Return = [(P1-P0) P0 ] 100

Where,

P1= current day close price. (Share price in opening)

P0 =previous day close price. (Share price in closing)

Types of Return

1. Internal rate of return

2. Expected return

3.

Rate of return

4. Holding period return

Hypothesis:

The following Null hypothesis (Ho) are formulated and tested to fulfill the objectives of the

study:

H01: The budgets have no significant impact on the returns of bellwether stocks over the study

period.

H02: There exists significant relationship between the budgets and returns of bellwether stocks

over the study period.


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LITERATURE REVIEW

There are some of the reviews of the studies which have been previously undertaken in the

related area of prospective researcher.

Pranav Saraswat (2012) examined the impact of Budget from 1995 to 2010 on the stock market

in terms of volatility of market. The Government Budget announcement is one of the important

factors as it is related to the financial or economic health of country involving all the industries.

The study reveals that in India, the budget mainly affects the stock market in short term mainly

and medium term also.

Gurcharan Singh & Salony Kansal (2010) examined the impact of Budget on stock market by

taking S & P CNX Nifty for the study period 1996 to 2009, segregated in to short term, medium

term and long term periods. The results suggested that the budget have maximum impact on

market trend in short term.

Arindam Gupta, Debashish Kundu (2006) observed the impact in terms of volatility and returns.

Budget exerts the maximum impact in terms of absolute returns immediately on and around

(pre-Post) budget day.

Mohanty (2004) examined the stock prices reaction to announcement of various policies.

Results reflected that stock usually reacted towards the public news quickly, but the first

adjustment is not always the correct one.

Rao (1997) studied the impact of some macroeconomic events including budgets and credit

policy of Government as they can increase the volatility of stock prices of market portfolios.

However, the credit policy announcements were found to have no impact on stock price

behavior.

Parul chotalia studied the impact of budgets of NSE from 2007 to 2011. The minor change at

global level brings surprising movement in stock market index. It is true that share market is the

most sensitive parameter of the economy. It responds negligible changes even immediately. It is

obvious that the budget, economic policy-making decision shall have significant impact on the

sensitive parameter, stock market.


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LIMITATIONS OF THE STUDY

The data collected for the research purpose is from secondary data source, finding and

conclusion arrived from the same data on basis of accuracy of data.

Due to the paucity of the study is restricted to selected companies.

For the foresaid reason only three years data is taken.

Only Budget is considered.

This study is restricted to selected companies.

No primary data was associated with the project.


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Chapter-2

INDUSTRY PROFILE


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INDUSTRY PROFILE

A capital market is market for securities (debt and equity), where business enterprises

(companies) and governments can raise long term funds. It is defined as a market in which

money is provided for periods longer than a year, as the raising of short-term funds takes place

on other markets (e.g., the money market).

STOCK MARKET

Meaning

The market for long-term securities like bonds, equity stocks and preferred stocks is

divided into primary market and secondary market. The primary market deals with the new issue

of securities. Outstanding securities are traded in the secondary market, which is commonly

known as stock market or stock exchange.

INDIAN STOCK BROKING INDUSTRY

The Indian stock broking industry is one of the oldest trading industries that have been

around even before the establishment of the BSE in 1875. Deposit passing through a number of

changes in the post liberalization period, the industry has found its way towards sustainable

growth.

In 1860, the exchange flourished with 60 brokers. In fact the `Share Mania` in India began when

the American Civil War broke and the cotton supply from the US to Europe stopped. Further the

brokers increased to 250. At the end of the war in 1874, the market found a place in a street (now

called Dalal Street).

Pre-Independence ScenarioEstablishment of Different Stock Exchanges

1875 The Native Share and Stock Brokers Association (also known as The Bombay

Stock Exchange) was established in Bombay

1894 Establishment of The Ahmedabad Share and Stock Brokers Association

1908 The Calcutta Stock Exchange Association was formed


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1920 Madras witnessed boom and business at The Madras Stock Exchange was

transacted with 100 brokers.

1923 When recession followed, number of brokers came down to 3 and the Exchange

was closed down

1937 Re-organization and set up of the Madras Stock Exchange Limited (Pvt.)

Limited led by improvement in stock market activates in South India with

establishment of new textile mills and plantation companies

1994 Establishment of TheHyderabad Stock Exchange Limited

1947 Delhi Stock and share Brokers` Association Limited and The Delhi Stocks and

Shares Exchange Association Limited

Post Independence Scenario

The depression witnessed after the Independence led to closure of exchange in the

country. Lahore stock Exchange was closed down after the partition of India, and later on

merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in

1957 and got when they applied for recognition under Securities Contracts (regulations) Act,

1956.

The Exchanges that were recognized under the Act were:

1. Bombay Stock Exchange

2. Calcutta Stock Exchange

3. Madras Stock Exchange

4. Ahmedabad Stock Exchange

5. Delhi Stock Exchange

6. Hyderabad Stock Exchange

7. Bangalore Stock Exchange

8. Indore Stock Exchange


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The Equity Broking Industry in India has several unique features like it is more than a

century old, dynamic, forward looking, and good service providers, well conversant, highly

innovative and even adaptable. The regulations and reforms been laid down in Equity market has

resulted in rapid growth and development. Basically, the growth in the equity market is largely

due to the effective intermediaries. The Broking Houses not only act as an intermediate link for

the equity market but also for the commodity market, Foreign Currency Exchange Market, and

many more. The Broking Houses has also made an impact on the Foreign Investors to invest in

India to certain extent. In the last decade, the Indian brokerage industry has undergone a

dramatic transformation. From being made of close groups, the broking industry today is one of

the most transparent and compliance oriented businesses. Long settlement cycles and large scale

bad deliveries are a thing of the past with the advent of T+2 settlement cycle and

dematerialization. Large and fixed commissions have been replaced by wafer then margins, with

competition driving down the way is conducted. Technology has emerged as key driver of the

business and investment advice has become research based. At the same time, adherence to

regulation and compliance has vastly increased. The scope of services have enhanced from being

equity products to a wide range of financial services. Investor protection has assumed

significance,

Major Players in the stock broking industry

Religare Securities Ltd

ICICI Securities Ltd

India Infoline security Pvt. Ltd

HDFC Securitas Ltd

India bulls

Kotak Securities Ltd

Fortune Equity Brokers India Ltd

Sharekhan Securities Ltd

Motilal Oswal Ltd

Anand Rathi Securities Ltd


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FINANCIAL MARKETS

The financial markets have been classified as cash market derivatives market, debt

market and commodities market. Cash market, also known as spot market, is the most sought

after amongst investors. Majority of the broking firms are dealing in the cash market, followed

by derivative and commodities. 27% firms are dealing only in the cash market, 35% are into cash

and derivatives. Almost 20% firms trade in cash, derivatives and commodities market. Firms that

are into cash, derivatives and debt are 7%. On the other hand, firms into cash and commodities

are 3%, cash and debt market and commodities alone are 2%. 4% firms trade in all the markets.

In the cash market, around 34% firms` trade at NSE, 14% at BSE and 52% trade at both

exchanges. In the equity derivative market, 48% of the sampled broking houses are members of

NSE and 7% trade at BSE, while 45% of the operate in both exchanges. With 31% and 26%

firms uniquely at NSE and BSE respectively.


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Of the brokers operating in the commodities market, 57% firms operate at NCDEX and MCX.

Around 20% and 21% firms are solely in NCDEX and MCX respectively, whereas 2% firms

trade in NCDEX, MCX and NMCE.


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Products

The survey also revealed that in the past couple of years, apart from trading, the firmshave started offering various investment related value added services. The sustained growth of

the economy in the past couple of years has resulted in broking firms offering many diversified

services related to IPOs, mutual funds, company research etc. However, the core trading activity

is still the predominant form of business, forming 90% of the firms in the sample. 67% firms are

engaged in offering IPO related services. The broking industry seems to have capitalized on the

growth of the mutual fund industry, which was pegged at 40% in 2006. More than 50% of the

sample broking houses deal in mutual fund investment services. The average growth in assets

under management in the last two years is almost 48%. Company research is another lucrative

area where the broking firms offer their services; more than 33% of the firms are engaged in

providing company research services. Additionally, a host of other value added services such as

fundamental and technical analysis, investment banking, arbitrage etc are offered by the firms at

different levels.


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COMPANY PROFILE

Background and Inception of the LKP :

LKP Securities was started as one of Indias first securities brokerage houses in 1948 is today

one of the countrys largest multi-dimensional financial services group.LKP. LKP Finance

Limited is a Non-Banking Finance Company (NBFC) registered with Reserve Bank of India & a

listed public limited company having a net worth of Rs.142 crores as on FY10.

It is the India's first financial group to be awarded the prestigious ISO 9002 certified KPMG

Quality Registrar, USA, for certain businesses.

Since 1948, LKP continues to provide clients with a single source capable of meeting all their

needs by its Equities markets, Debt markets, Corporate Finance, Investment Banking, Merchant

Banking, Wealth Management or Commodities.

LKP Securities Limited and its associates enjoy the following registrations & memberships:

1. Category I Merchant Bankers with SEBI.

2. Membership of BSE & NSE (Capital & Debt Market).

3. AMFI registered all India Mutual Fund Distributors.

4. Member of Commodity Exchanges MCX, NCDX and DGCX (Dubai).

5. Member of NSE for Interest Rate Futures.

6. Member of MCX SX and NSE Currency.

Nature of the business carried by LKP Securities:

LKP A legacy in financial expertise From a humble beginning in 1948, LKP Securities

today is a well-established and dynamic broking house in India. Known for it's state-of-the-art

systems and innovative processes, LKP offers a single window advantage to its clients for all

capital and money market related activities.


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LKP offers a wide spectrum of services that includes

Equity Broking in Cash and Derivatives,

Internet based trading,

DP services,

Research,

Debt and Money Market Broking,

Merchant Banking (category 1),

Merger and Acquisition (M&A),

Primary Markets,

Commodity Trading,

Mutual Fund Distribution, IPO and Life Insurance.

The company proactively delivers the full depth and breadth of broking and other financial

services to its clients through a network of more than 540 branches across India. company

offering Excellent research support, state of the art tools, smart risk management, capital

requirements, excellent order routing and efficient operational practices are the key components.

The company provides superior pre and post trading services to clients through robust technical

architecture.

Vision, Mission and Quality policy of LKP Securities:

Vision:

"To be the leading emerging markets financial services group driven by innovation, delivering

superior value for all stakeholders globally"

Mission:

Providing complete financial care driven by the core values of diligence and transparency.


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Quality policy:

LKP is committed to client satisfaction by offering quality services meeting their

specifications and expectations at competitive prices by customer- employee in involvement and

adopting good quality management systems.

It aims to create and maintain safe and healthy working conditions, protect the

environment, strive for continual improvement of company personnel, quality and process of

services and meet regulatory requirements.

Core values:

Excellence, Fairness, Transparency, Encouraging Research.

BOARD OF DIRECTORS:

Mr M. V. Doshi:

He is the Executive Chairman of LKP. He has done MBA in U.S.A. And he is a promoter

of the company, he has been associated with LKP since 1982. He has over 32 years of

experience in the field of Finance, Capital Markets and Business Administration.

Mr. Pratik Dosh:

He is Director of LKP, hisqualifications M.B.A. in U.K. He was having Over all

approximately seven years business experience in the field of Foreign Exchange, Stock Market

and Commodity Market.

Mr. Sayanta Basu :

He is director of LKP, his qualifications he is an Electronic Engineer from IIT KGP and PGDM

from IIM Bangalore He has a vast experience of 20 years in financial market and has expertise in

M & A, Investment Management and Capital Markets.


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Mr. Milan S. Bhise :

He is an independent Director of LKP. He holds a M. A., L.L.B., D.M.S. and has associated

With LKP since 2011, his experience spans over 18 years in the field of corporate Law and Legal

matters. He is a practicing advocate and proprietor of M/s. Milan Bhise& Co.

Mr. Vineet N. Suchanti:

He is an independent director of LKP. He holds MBA (U.S.A.) and has 14years of of experience

in the field of Finance, Capital Market and Business Administration.

Mr.HariPadmanabhan:

He is the independent Director of LKP. He holds a B Tech from IIT Kanpur and post graduate

from IIM Kolkatta. A serial entrepreneur a global corporate board level executive, mentor and

angel investor. He is also on the board of Prime Focus Ltd, Indias leading film post production

company, and LKP Finance Ltd.


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Products & Service profile of LKP:

Equities Retail:

LKP offers a wide spectrum of services that includes Equity Broking in Cash and Derivatives,

Internet based trading, Demat services & Research services. When clients deal with LKP they

are dealing with a professional broker who has centralized risk management system in place at

Mumbai. LKP follows a hub & spoke model of Branch management where in all the branches &

franchise interact with the hub/regional offices.

Equities Institutional:

The clientele at the institutional desk include Mutual Funds, Financial Institutions, Foreign and

Domestic Institutional investors, Insurance companies, Banks and Corporates. Some of the

esteemed domestic clients include among others UTI MF, Birla MF, LIC, HDFC MF, Pru

ICICI MF, Reliance MF, Principal MF, Sundaram MF, Tata MF, Benchmark MF, ILFS,

CanaraRobecco MF, ABN Amro MF and FII clients include Morgan Stanley, JP Morgan,

Matterhorn and Blackstone among others. Clients whom we have been serving for the past

twenty-five years include UTI, LIC, IDBI, ICICI, Tata Group, Birla Group, and Dabur, Jain

Irrigation, Emco, Godrej, JB Chemicals, Paper Products and UB Group of Companies among

others.

LKP is the first brokerage house to offer Direct Market Access (DMA) to Institutional Clients on

FT Platform. The company offer research based broking services on the equity as well as

derivative segments to company institutional clients.

Fixed income market:

LKP understands Debt & Money Market in all its dimensions. Recognized as major dealer of

Fixed Income Securities, It execute deals for Banks, Institutions, FIIs, MFs, Insurance

companies, Primary Dealers, large Corporates, PSUs & PF Trusts.


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Retail Distribution

Primary Market Division:

LKPs vibrant Primary Market Division does syndication business in IPOs, Company Fixed

Deposits, Capital Gain Bonds (U/s 54EC), 8.00% Saving (Taxable) Bonds floated by RBI &

various bonds floated by Central & State Governments. It provides clients with IPO Research

Reports, Recommendations, Pre-printed Public Issue forms, IPO Financing facility& also

continuous updates on Subscription Figures, Basis of Allotment and Listing Dates.

Mutual Funds & Insurance Advisory:

LKP Investment Advisory Services Offer tailor-made wealth management services to Retail,

High Net worth Individual and Corporate Clients. Company strongly believe that Investment

Planning is the stepping stone to achieve ones financial aspirations.

Insurance Advisory Services exist for both Life and Non life insurance to provide simple &

flexible life insurance products that not only provide security for family but also investment and

long term wealth creation. Companies trained and certified professional consultants will help

investors to make the right decision.

Commodities:

A sister concern of the renowned and trusted LKP Group, Alpha Commodities offers a complete

bouquet of client- friendly services in the burgeoning Commodity Futures market. Commodities

have always been the foundation of world trade, and as they become an increasingly attractive

investment option, LKP at Alpha Commodities look to guide and assist investor in all the

possible ways to help you in all your endeavors in the Commodity markets.

Alpha Commodities provides a host of facilities to their clients, ranging from dealing, investing

or hedging in Commodity Futures which includes Bullions, Metals, Energy and Agro

Commodities.


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Currency Derivatives:

With the launch of currency derivatives, LKP offers its clients yet another segment for trading.

Jointly regulated by SEBI and RBI provides traders with another lucrative trading avenue.

Currency derivatives can be described as a future contract between two parties, to buy or sell the

underlying at a future date, in this case the underlying being a currency. LKP offers currency

derivative trading through NSE - Futures and Options, MCX-SX - Futures.

Depository:

LKPs Depository Services offer dematerialization services to individual and corporate investors

as a Depository Participant with the Central Depository Services (India) Limited (CDSL).With a

highly experienced team of professionals, backed with sophisticated technical support, and a

national network of franchisees, we ensure quality and convenience in our service.

LKPs online depository service offers you a paperless and cost effective way to hold your

investments, not to forget the elimination of handling physical documents. We understand that

security is of utmost importance and therefore we have invested in various safety measures and

protocols that ensure your demat account is secure and every transaction is executed only after

its authenticity is established.

The various services provided by us are:

Dematerialization of Shares.

Re materialization of Shares.

Pledging of Share.

Maintenance of beneficial Holdings.

Electronic Credit against Corporate Actions.

SMS alerts on all transactions.


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Value Added Services and Supports:

Complete back office supported and administration through advanced software.

This software will allow you to access all details of your clients like margin

Requirements, Contracts and Bills ,Sauda Confirmation / Summary etc .,and

facilitates risk management of your clients online from your premises.

Advanced trading terminal with excellent features for quick and smooth execution

of deals. Additional features include simultaneous visibility of cash and F&O

segments on the same screen allowing implementation of arbitrage strategies for

incremental profit.

Intra-day tick-by-tick charts for technical analysis at very nominal rates.

Fundamental research for equities and market outlook through our website

www.lkpsec.com and regular buy/sell recommendations from our technical term.

LKP Company even provides online depository facilities of pay in and payout

through our CDSL depository.

24*7 online back-office systems for the partner as well as all their customers.

Depository services.

Investment ideas.

Daily Ideas.

Areas of OperationGlobal/National/regional:

LKP Presence in 600 + locations, 70,200 retail and high net worth clients giving nationwide

access. Pan India footprint with 540 branches in 147 cities and strong network to facilitate

research Network of 520 outlets across 220 cities in India with 545 sub brokers and 60 branches.

Head Office:

10th Floor, NarimanBhavan, Vinay k. shah margNariman Point,

Mumbai -400 021,

Maharashtra.

Tel- 91-22-66351234, Fax- 91-22-66351249. Email: www.lkpsec.com


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Offices in India:

7 Zonal office and 500 plus franchise locations. Head office, Branch office, Zonal office.


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Competitors Information:

Today, LKP Securities Ltd. is a well-established brand among retail and individual investors in

India, Even though LKP is facing high level competition in India. Following are the main

competitors of LKP Securities Ltd.

Sl. No Name Of Stock Brokers

1 Kotak Securities Ltd

2 Sharekhan

3 India Infoline

4 Karvy Stock Broking Ltd

5 MotilalOswal

6 Religar

7 Angel Broking

8 Reliance Money

9 AnandRathi Securities Ltd

10 Geojit Financial Service

Infrastructural facilities of LKP:

Broking and distribution business today spans across India from Rameshwaram in the South to

Kashmir in the North; Imphal in the East to Porbandar in the West; there's a LKP Securities

outlet serving the needs of different investors

The LKP Equity Advisory Group is based in Mumbai dealing and advisory floor of India. This

centralized advisory team caters to peculiar Investment need of every HNI & MNI client and


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business partner; in a seamless, speedy and reliable manner using state-of-the-art technology and

telecommunication infrastructure.

All the Branches are connected internally via LAN and externally through VSAT or ISDN

network to provide real time data transfer. Each branch having TV and other electronic medium

to facilitate real time updates and dissemination of information to the customer. The employees

are well trained and qualified Investment advisors to take careof the needs of the customer.

Achievements/Awards of LKP:

Ranked as No. 2 Arranger by Prime League Tables for the placement of short term debts,

Commercial Papers and ranked No 11 for placement of Long Term Debts.

One of the top two Intermediaries for secondary market trades on Whole Sale Debt

Market segment of NSE and BSE.

On panel list is decorated with almost all the prominent Banks, Institutions, Primary

Dealers, Mutual Funds, PSUs, Insurance Companies, PF/Pension Trusts and Corporates.

FY 2008-09 is marked with Fertilizer Bonds worth Rs.55Bn being placed for various

fertilizer companies

In the FY 2008-09 LKP achieved tremendous success with the completion of primary

placement of CPs, NCDs and CDs of about Rs.480Bn & of Rs. 980 Bn inFY 2009-10

and achieved a turnover of about Rs. 800 Bn in secondary debt market during FY 2008-

09 & of Rs 1748 Bn in FY 2009-10.

In the FY2008-09 acted as an Arranger for private placement of long term bond issues

aggregating to Rs. 123Bn & of Rs 236 Bn during FY 2009-10


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Work flow model of LKP (end to end):CUSTOMER

OPEN A DMAT A/C

FUNDING OF CASH /

SECURITIES

GIVE ORDERS TO BUY OR

SELL

DEALERS WILL PLACE AN

ORDERS

TRADE CONFIRMATION

END OF CONTRACTNOTE


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Future growth and prospects for LKP:

The Future prospects and growth in various field is as follows:

The company has a good network of franchisee and offices in north India and is planning open

more offices in south India.

The company aims to become the market leader in coming 5 years.

MC-KINSEYS 7-S FRAME WORK with special reference to LKP:

Introduction:

McKinsey introduced the 7-S framework for strategy in the late1970s, The framework maps

seven interrelated factors that influence an organizations ability to change shared values, skills,staff, strategy, structure, style, and systems and shows how these forces interact. Unlike Porters

Framework, 7-S Framework emphasizes coordination more strongly; 7-S suggests that they can

make significant progress in any of their parts only if they progress in the others. As seen in the

diagram, the interrelations between these elements are equally important compared to the

elements themselves. They all work together :

Mc-kinseys 7s model:


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The 7-S elements are distinguished in so called hard Ss and soft Ss. The hard elements like

structure, system and strategy are feasible and easy to identify. The four soft-S like Style, skill,

staff and shared values are hardly feasible. They are difficult to describe since capabilities,

values and elements of corporate culture are continuously changing.

I think 7-S Framework is more important today. The important aspect of 7-S framework is

its simplicity. These elements allow organizations to step back and look at its position in the

global competitive environment holistically. It acts as a complement to Porters strategy

framework.

This is about authority and relationship between the executives and the individual contributors of

LKP Securities Ltd as follows.

Structure:

.

LKP SECURITIES

CEO

Mr. M.V.Doshi

National Head Finance Head Compliance Head

Zone 1 Zone 5Zone 4Zone 3Zone 2 Zone 7Zone 6

Regional Head

Branch 1 Branch 3Branch 2


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Business needs to be organized in a specific form of shape that is generally referred to as

organizational structure. Organizations are structured in a variety of ways, dependent on their

objectives and culture. The structure of the company often dictates the way it operates and

performs Traditionally, the businesses have been structured in a hierarchical way with several

divisions and departments, Many layers of management controlled the operations, with each

answerable to the upper layer of management.

Skill:

LKP has experience top management. The promoters are qualified MBA Graduates with over

Three decades of experience each in the financial services industry. All businesses are headed by

independent CEOs who are qualified and experienced professionals having demonstrated track

record in the businesses they lead. The company believe that the management's entrepreneurial

spirit, strong technical expertise, leadership skills, insight into the market and customer needs

provide us with a competitive strength, which will help the company to implement its business

strategies.LKP conducts trainings sessions covering number of participants on various subjects

like effective communication skills, advanced excel, basics of stock market etc.

Style:

Organizations have their own distinct culture and management style. It includes the dominant

values, beliefs and norms which develop over time and become relatively enduring features of

the organizational life. It also entails the way managers interact with the employees and the way

they spend their time. However the culture to a more open, innovative and friendly environment

with fewer hierarchies and smaller chain of command. Culture remains an important

consideration in the implementation of any strategy in the organization.

Strategy:

Strategy is the plan of action an organization prepares in response to, or anticipation of, changesin its external environment. Well thought through and often practically rehearsed. It deals with

essentially three questions where the organisation is at this moment in time, where the

organisation wants to be in a particular length of time and how to get there. Thus, strategy is

designed to transform the firm from the present position to the new position described by


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objectives, subject to constraints of the capabilities or the potential. The main strategies made by

LKP is to maintain the consistency in quality and provide good quality services to their clients

Marketing Strategy:

To attract new customers by promising superior value

To keep current customers by delivering satisfaction.

Financial strategy:

To maximize market share.

Systems:

Every organization has some systems or internal processes to support and implement the strategy

and run day-to-day affairs. The stock market operations are computerized trading system

designed to offer safe and easy way to invest for the investors. The system also include data

collection, storage and utilization for record and appraisal purposes. (Management information

systems i.e. reports of various departments, financial information system i.e. marketing and sales

information, employee information system.). The LKP provide Tele-calling, google chat and

online trading facilities to its clients in order to make the work smoother and faster.

Staff:

The staff of LKP securities Ltd is divided into National Head, Finance Head, Compliance Head,

Zonal Head, Regional Heads, and Branch Heads, Minimum education for the managers is master

degree in MBA and work experience, achievements, or the staffs is master degree. At present the

staff size of LKP is 505.

Shared Values:

Core Purpose and vales of LKP is to be a well-respected and preferred global financial services

organization enabling wealth creation for all their customers. Values of LKP core purpose iscomplemented by their organizational values. Living these values, they believe, helps them to

achieve their core purpose.

Integrity:A company honoring commitment with highest ethical and business practices.

Teamwork: Attaining collectively and collaboratively.


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Passion & Attitude: High energy and self-motivation with a Do it attitude and

entrepreneurial spirit.

Excellence in Execution: Time bound results within the framework of the companys

value system.

Study on different Departments of LKP:

1. FINANCE DEPARTMENT:

Finance is said to be the lifeblood of any business thus data gives the proper attention to the

structure of the organization of the finance department. In modern money- oriented economy

finance is one of the basic foundations of all kinds of economic activities.

The Major functions of the Finance department are as follows:

To Maintain Accounts.

To Act as custodian of the company property.

To advice the management on financial aspects

Finance Dept.Research n

Development

Personnel Dept. MarketingDept.


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2. RESEARCH DEPARMENT:

Research department covers a wide spectrum from macroeconomics forecasts to penetrating

analysis of companies and sectors; the research is highly rated for its accuracy, clarity and

comprehensive coverage which include Fundamental Analysis, Technical Analysis & daily

research reports. Research also covers Fixed Income Markets, Mutual Fund Schemes &

Commodities Market.

3. PERSONNEL DEPARTMENT:

The human resource is the key by which the goals and objectives of an organization can be

fulfilled.

FUNCTIONS:

To maintain good industrial relationship.

Recruitment of staff and their training and development.

Performance Appraisal.

Compensation Policy.

Providing various welfare polices to its employees.

4. MARKETING DEPARTMENT:

Marketing is a total system of business activities designed to plan; price, promotion and

distribution of want satisfying products to target market to achieve organization objectives. Thus

the essence of marketing is a transaction for exchanger, intended to satisfy human needs and

wants. The major functions carried out are:

INTEGRATED MARKETING:

Get the facts.

Facts analysis and interpretation.


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Develop and Analyze.

Plan marketing surveys

Development marketing programs.

Layout of the program.

SELLING:

Controlling sales and field activities.

Territory and Quota allotment.

Development of trade channels.

Sales promotion and public relation.

PLANNING:

Formulating polices and implementation of program.

Planning and product lining for product development.

Forecasting research and development program.

Coordinate with other departments.

This is why the organization has developed an integrated marketing program to reach at every

segment of the society. The 2 major theories are as follows:

The entire system of business activities should be customer oriented. Customers

wants must be recognized and satisfied.

Marketing should start with an idea about a want satisfying product and should

not end satisfied, which may be sometimes after exchange is made.


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SWOT ANALYSIS OF LKP:

Strengths:

Strong brand name. because it established since from 1948.

Experienced top management.

Dedicated Research team .

Provide multi-dimensional financial services to the customer through a strong

network of 540 branches in 147 cities.

Strong financial performance.

Weakness:

Focus more on HNIs than retail investors which results in meager market share as

compare to core competitors.

Lack of awareness among south region customers.

Localized presence due to in sufficient investment for country wide expansion.

SWOT

STRENGTHS

WEAKNESS

OPPORTUNITIES

THREATS


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Opportunities:

It can easily tap the retail investors with small saving through promotional

channels like print media electronic media.

More and more small investors are entering into commodity market.

Increasing usage of internet through broad band connectivity may boost a whole

new breed of investors for trading in securities.

Product and service expansion.

Regulatory reforms would aid greater participation by all class of investors.

Economy is growing at healthy rate leading to investment / capital requirement.

Threats:

Aggressive promotional strategy by close competitors may hamper LKP

acceptance by new clients.

More and more players are venturing into this domain.

Exchange rate fluctuations

External changes (government, politics, taxes, etc)

GENERAL INTRODUCTION:

INVESTMENT:

Investment is the sacrifice of certain present value for the uncertain future reward. Such decision

making has not only to be continuous but rational too. Broadly speaking, an investment decision

is a trade-off between the risk and return.

Investment decisions are found to be the outcome of three different but related classes of factors.

1. The first may be described as factual or informal premises.

2. The second class of factors is exceptional premises.

3. The third class of factors is valuation premises.


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Investing has been an activity confined to the rich and business class in the past. But, today we

find that investment has become common and popular with people from all walks of life.

Increasing popularity of investment can be attributed to the following factors:

1.

Increasing in working population, larger family incomes and consequent higher

savings.

2. Provisions of tax incentives with respect to investment in specified channels

3. Increase in tendency of people to hedge against inflation.

4. Availability of large and attractive investment alternatives.

5. Increase in investment related publicity.

6. Availability of investment to provide income and capital gains etc.

THE INVESTMENT PROCESS:

The investment process describes how an investor should go about making decisions about

marketable securities in which to invest, how extensively the investment should be and when the

investment should be made.

The five steps procedure for making these decisions forms the basis of the investment

process:

Set investmentpolicy.

Perform securityanalysis

Perform securityanalysis

Revise theportfolio

Evaluate theperformance of

the portfolio.


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All investment is risky and uncertain. An efficient investor is one with the knowledge of the

market who can reduce the risk and maximize the returns. He can avoid pitfalls and protect his

interests. The management of risk and return requires expertise. Investment is both an art and

science. Investment in financial market is not a gamble or speculation that some investors

indulge in, which is risky.

Investors should be those who invest with the objective of receiving some income, share in the

prosperity of the company and gain capital appreciation in a longer time span.

Investing in stock market is always interesting, challenging and rewarding. Interesting because

the stock market is dynamic; the only certainty is uncertainty. Rewarding because it is risky and

is likely to yield high returns. Stock markets are dynamic, volatile and unpredictable.

Types of investment:

1. Short term investment

2.

Long term investments

CCLASSIFICATION OF INVESTMENTS

Short Term Long Term

Savings Bank Account

Money Market /

Liquid Funds

Fixed deposits with

bank

Post Office Savings

Public Provident

Fund

Securities(Bonds and

Shares)


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Factors influences to the stock price

Broadly there are two factors:

(1) Stock specific and

(2) Market specific.

The stock-specific factor is related to peoples expectations about the company, its future

earnings capacity, financial health and management, level of technology and marketing skills.

The market specific factor is influenced by the investors sentiment towards the stock market as

a whole. This factor depends on the environment rather than the performance of any particular

company. Events favorable to an economy, political or regulatory environment like high

economic growth, friendly budget, stable government etc. can fuel euphoria in the investors,

resulting in a boom in the market. On the other hand, unfavorable events like war, economic

crisis, communal riots, minority government etc. depress the market irrespective of certain

companies performing well. However, the effect of market-specific factor is generally short-

term. Despite ups and downs, price of a stock in the long run gets stabilized based on the stock

specific factors. Therefore, a prudent advice to all investors is to analyze and invest and not

speculate in shares

Growth Stocks:

In the investment world we come across terms such as Growth stocks, Value stocks etc.

Companies, whose potential for growth in sales and earnings are excellent, are growing faster

than other companies in the market or other stocks in the same industry are called the Growth

Stocks. These companies usually pay little or no dividends and instead prefer to reinvest their

profits in their business for further expansions.

Value Stocks:

The task here is to look for stocks that have been overlooked by other investors and which may

have a hidden value. These companies may have been beaten down in price because of some

bad event, or may be in an industry that's not fancied by most investors. However, even a

company that has seen its stock price decline still has assets to its name - buildings, real estate,


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inventories, subsidiaries, and so on. Many of these assets still have value, yet that value may not

be reflected in the stock's price. Investors look to buy stocks that are undervalued, and then hold

those stocks until the rest of the market realizes the real value of the company's assets.

The investor can acquire equity share either by the following two ways,

1. Primary market

2. Secondary market

You may subscribe to issues made by corporate in the primary market. In the primary market,

resources are mobilized by the corporate through fresh public issues (IPOs) or through private

placements. Alternately, you may purchase shares from the secondary market. To buy and sell

securities you should approach a SEBI registered trading member (broker) of a recognized stock

exchange.

Primary Market:

The primary market provides the channel for sale of new securities. Primary market provides

opportunity to issuers of securities; Government as well as Corporates, to raise resources to meet

their requirements of investment and/or discharge some obligation. They may issue the securities

at face value, or at a discount/premium and these securities may take a variety of forms such as

equity, debt etc. They may issue the securities in domestic market and/or international market.

Secondary Market:

Secondary market refers to a market where securities are traded after being initially offered to

the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is

done in the secondary market. Secondary market comprises of equity markets and the debt

markets.


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Particulars Mar-14 Mar-13 Mar-12 Mar-11 Mar-10

SOURCES OF FUNDS:

Share Capital 12.20 12.34 13.08 13.08 13.08

Reserves Total 146.00 142.12 142.17 140.14 125.53

Equity Share Warrants 0.00 0.00 0.00 0.00 0.00

Equity Application Money 0.00 0.00 0.00 0.00 0.00

Total Shareholders Funds 158.20 154.46 155.25 153.22 138.61

Secured Loans 40.19 141.71 109.56 73.28 17.33

Unsecured Loans 39.04 0.00 0.00 0.00 0.00

Total Loan Funds 79.23 141.71 109.56 73.28 17.33

Other Liabilities 0.39 0.53 0.32 0.00 0.00

Total Liabilities 237.82 296.70 265.13 226.50 155.94

APPLICATION OF

FUNDS :

Loan / Non-Current Assets 0.00 0.00 0.00 0.00 0.00

Fixed Assets

Gross Block 2.01 1.92 1.45 5.63 5.53

Less: Accumulated

Depreciation1.24 1.09 1.00 4.49 4.41

Less: Impairment of

Assets0.00 0.00 0.00 0.00 0.00

Net Block 0.77 0.83 0.45 1.14 1.12

Lease Adjustment 0.00 0.00 0.00 0.00 0.00

Capital Work in Progress 0.00 0.00 0.00 0.00 0.00

Investments 36.84 40.71 66.49 64.84 73.52

Current Assets, Loans &

Advances

Inventories 29.33 42.94 48.30 36.75 11.87

Sundry Debtors 0.38 0.05 4.40 3.50 0.10

Cash and Bank Balance 23.70 25.99 28.40 64.95 37.69


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Loans and Advances 154.08 211.78 122.57 72.08 69.16

Total Current Assets 207.48 280.77 203.67 177.28 118.82

Less: Current Liab. &

Provisions

Current Liabilities 4.47 22.78 6.11 6.26 8.47

Provisions 2.84 2.86 3.04 15.20 33.78

Total Current Liabilites&

Provisions7.31 25.64 9.15 21.46 42.25

Net Current Assets 200.18 255.13 194.52 155.82 76.57

Miscellaneous Expenses not

written off0.00 0.00 0.00 0.00 0.00

Deferred Tax Assets 0.00 0.02 3.60 4.87 4.98

Deferred Tax Liability 0.01 0.00 0.00 0.24 0.25

Net Deferred Tax -0.01 0.02 3.60 4.63 4.73

Other Assets 0.04 0.02 0.07 0.07 0.00

Total Assets 237.81 296.71 265.13 226.50 155.94

Contingent Liability 8.34 8.34 8.00 5.00 5.00


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Years Mar-14 Mar-13 Mar-12 Mar-11 Mar-10

Debt-Equity Ratio 0.7 0.8 0.6 0.3 0.3

Long Term Debt-Equity

Ratio0 0 0.1 0.1 0.1

Current Ratio 2 1.8 2 2.5 2.2

Fixed Assets 18.1 20.6 6.3 9.6 1.1

Inventory 1 0.8 0.5 2.2 3.2

Debtors 165.4 15.6 5.6 29.9 195.2

Interest Cover Ratio 1.4 1.6 2 10.2 4

ROCE (%) 9.9 9.6 6.2 19 14.8

RONW (%) 4.8 4.4 3.2 17.9 13

PE 9.5 11.9 17.6 6.1 9.1

EPS 5.8 5.1 3.4 18.4 13.5

Debt equity ratio has significant increase from march 2010 to 2014

EPS showing growth from year to year

PE ratio is decreased from last year to this year

Current ratio is increasing from last two year


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Chapter -3

THEORITICAL BACKGROUND

OF STUDY


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VOLATILITY: DEFINITION AND MEASUREMENT

In pure financial terms, volatility is defined as, `the degree to which the price of asecurity, commodity, or market rises or falls within a short term period`. As is evident from the

definition, volatility relates to the variability in price of a security. In the context of the stock

market, volatility of the market refers to the volatility of the indices of the securities within the

market. In India, for instance, the Bombay stock Exchange (BSE) SENSEX (a 30scrip Weighted

index of market capitalization) would be one of the relevant indices to look into for examining

stock market volatility. When examining the issue of stock market volatility, it is relevant to

measure percentage volatility of stock return. It reflects the change in the investor`s wealth.

Theorists use various measure of volatility like standard deviation, variance, and chi-square test,

to measure volatility of stock market return.

Stock market volatility is often classified as historical (actual) volatility implied

volatility. The most common measure of historical or actual stock market volatility is the

standard deviation. In simple terms, standard deviation measures the deviation of the returns of

equity from its mean return. It is a relative measure i.e., standard deviation of another period to

understand which period has more volatile.

This research is done in the field of Indian share market taking into account three years

data from 2012 to 2014. The research includes how the share prices of various selected

companies vary with regards to economic factor i.e., Budget. The research work includes the

collection of data regarding the share prices of the selected companies during the past five years.

Types of Volatility:

We can review volatility in three contexts:

Historical volatility

Implied volatility

Projected volatility


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Historical volatility:

It refers to the movements, which have been observed in a particular stock price or index over a

given period of time. The volatility can be measured by using the past data on prices (or indices)

and expressed by manner of the Beta, and Coefficient Correlation. For this purpose, daily,

monthly data may be taken. Thus, we may determine volatility for any set of data and compare

the historical data with the prevailing conditions.

Implied volatility:

Implied volatility is a key variable required for determining premium on option. While the entire

input variable for a model like that of Black and Scholes can be easily observed, the standard

deviation of the instantaneous rate of return on the stock cant be observed. We may estimate its

values from historical data, but there is a second way in which its value can be inferred.

Projected volatility:

This refer to the estimate of future volatility on the basis of past volatility,

Current market analysis and perception of the investor. All trading in options is in a large

measure, on the basis of projected volatility.

STATISTICAL TOOLS USED FOR CALCULATION OF VOLATILITY:

T- Test: T-Test isany statistical hypothesis test in which the test statistic follows a students t

distribution, if the null hypothesis is supported.

It can be used to determine if two sets of data are significantly different from each other, and is

most commonly applied when the test statistic would follow a normal distribution. If the value of

scaling term in the test statistic were known.

If sample size is small then the distribution of these standardized statistics are for from normality

& consequently test.


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If x1,x2.xnis a random sample of size n from a normal population with mean and variance

2, then students t statistic is defined as:

=x/n

S2=1/ (n-1) (X-

)2

Variance

The variance is a somewhat abstract measure of the variability in a set of data. Unlike the

variability the standard deviation can be easily conceptualized by plotting it along with the

individual points in the set. It is easy to visualize the standard deviation in this way along with

the data set

Variance () = Pi (R-E(R))

OR () = N (y) - (y)

N

Coefficient of Correlation:

Coefficient of Correlation is a statistical technique, which measures the degree or extent to which

two or more variables fluctuate with reference to one another. Correlation analysis helps in

determining the degree of relationship between two variables but correlation does not always

imply cause and effect relationship.

The Coefficient of Correlation is essentially the covariance taken not as an absolute value but

relative to the standard deviations of the individual securities. It indicates, in effect, how much x

andyvary together as a proportion of their combined individual variations, measured by SD of x

multiplied by SD of Y


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Correlation Co-efficient

Correlation(r) = [NXY-(X) (Y)] [NX2 - (X2)] [NY2(Y)2]

Techniques used for data analysis:

Basically whole data analysis has been performed using spreadsheet in Excel by using different

statistical functions inbuilt in Excel. The following statistical functions have been employed

during the data analysis.

Risk:

Risk is the uncertainty of the income and capital appreciation or loss of both. It is inherent in any

investment. This risk may relate to loss or delay in repayment of the principal capital or loss on

non-payment of the interest or variability of returns. While some securities are almost risk less

like Government securities others are more risky.

The degree of the risk however varies on the basis of the features of the assets, investment

instruments, the mode of the investment, the issuer of security, etc. The uncertainty associated

with the returns from an investment introduces risk into an investment. The possibility of the

variation of the actual return from the expected return in termed as risk. An investment whose

returns are fairly stable is considered as low-risk investment, whereas an investment whose

returns fluctuate significantly is considered to be a high-risk instrument.

Risk depends on the following factors:

Wrong decision of what to invest in.

Wrong timings of investments.

Nature of the investments invested in.

Creditworthiness of the issuer.

Maturity period or length of the investment.

Amount of the investments.

Risks can be classified as Systematic risks and Unsystematic risks.


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Unsystematic Risks:

The Risk of price change due to the unique circumstance of a specific security, as opposed to the

overall market. This risk can be virtually eliminated from a portfolio through diversification.

These are risks that are unique to a firm or industry. Factors such as management capability,

consumer preferences, labor, etc. contribute to unsystematic risks. Unsystematic risks are

controllable by nature and can be considerably reduced by sufficiently diversifying one's

portfolio.

Systematic Risks:

Risk, which is common to an entire class of assets or liabilities. The value of investments may

decline over a given time period simply because of economic changes or other events that impact

large portions of the market. Asset allocation and diversification can protect against systematic

risk because different portions of the market tend to underperformed at different times, also

called Market Risk.


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CHAPTER- 4

ANALYSIS AND INTERPRETAION


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FMCG & Consumer Durables:

The budget was largely positive for the FMCG & Consumer durable sector. While cigarettes will

become expensive for consumers, the rate hike was lesser than expectations Further, hike in

excise duty on beedi and other tobacco products is positive for cigarette manufacturers and could

lead to consumers shifting to cigarettes. Excise duty on cigarettes increased by 10%, Ad valorem

duty to be imposed on some cigarettes cigarettes will become expensive. Hike in excise duty

on beedi and other tobacco products


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Indian Tobacco Company:

Table NO 4.1 Showing of Indian Tobacco Company Ltd stock prices and returns of pre

and post budget session for year 2012-2013:

Date Close prices Days Return

2-Mar-12 205.25-10

-0.77

3-Mar-12 205-9

-0.12

5-Mar-12 207-8

0.97

6-Mar-12 210.4-7

1.64

7-Mar-12 209.95-6

-0.21

9-Mar-12 208.25-5

-0.80

12-Mar-12 206.8-4

-0.69

13-Mar-12 209.05-3

1.08

14-Mar-12 212.5-2

1.65

15-Mar-12 208.9-1

-1.69

16-Mar-12 216.150

3.47

19-Mar-12 220.51

2.01

20-Mar-12 223.62

1.40

21-Mar-12 223.853

0.11

22-Mar-12 219.74

-1.85

23-Mar-12 222.455

1.25

26-Mar-12 222.76

0.11

27-Mar-12 226.057

1.50

28-Mar-12 226.88

0.33

29-Mar-12 224.559

-0.99

30-Mar-12 226.910

1.04


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Analysis:

The above table shows the share prices of Indian Tobacco Company For the period of 21

days prior pre-budget along with high return 1.65% & post budget highest is 2.01%. The

standard deviation denotes 2.35 during the pre budget and 2.47during post budget session. The

percentage change between the standard deviation stood to 4.86%. The variance is 5.53 and 6.10

during pre and post budget session respectively.

Graph NO 4.1 Trend Movement of Indian Tobacco Company Ltd returns pre and post

budget session for year 2012-13:

Interpretation:

The market is more volatile in the pre budget session but not much positively volatile in the post

budget session.

-3

-2

-1

0

1

2

3

4

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

RETURN


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Banking sector:

Rs. 15,888 Cr. For recapitalization of Public sector banks, RRB and NABARD

o Fresh infusion of equity for banks to meet Basel-iii norms and to fund future

growth

Target for agricultural credit to Rs.5075 lakh Cr.

o More loans have to be disbursed to framing sector

Interest income up to Rs.10,000 from saving bank accounts to be exempted for those

having an income up to Rs.5 lakhs

Table NO 4.2. Showing of State Bank of India company stock prices and returns of pre and post



2-Mar-12 2246.7 -10 1.25

3-Mar-12 2250.85 -9 0.18

5-Mar-12 2176.05 -8 -3.32

6-Mar-12 2147.85 -7 -1.29

7-Mar-12 2141.55 -6 -0.29

9-Mar-12 2226.4 -5 3.96

12-Mar-12 2310.8 -4 3.79

13-Mar-12 2327.5 -3 0.72

14-Mar-12 2354.8 -2 1.17

15-Mar-12 2299.3 -1 -2.35

16-Mar-12 2227.9 0 -3.10

19-Mar-12 2157.55 1 -3.15

20-Mar-12 2187.35 2 1.38

21-Mar-12 2232.85 3 2.08

22-Mar-12 2160.6 4 -3.23

23-Mar-12 2166.75 5 0.28

26-Mar-12 2117.45 6 -2.27

27-Mar-12 2129.15 7 0.55

28-Mar-12 2079.25 8 -2.34

29-Mar-12 2061.35 9 -0.86

30-Mar-12 2096.35 10 1.69


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Analysis:

The above table shows the share prices of State Bank of India for the period of 21 days

prior pre-budget along with high return 3.79% & post budget highest is 2.08%. The standard

deviation denotes 75.51 during the pre budget and 52.39during post budget session. The

percentage change between the standard deviation stood to (-30.61%). The variance is 5701.83

and 2745.12 during pre and post budget session respectively.

Graph NO.4.2 Trend Movement of State Bank of India Company returns pre and post


Interpretation: The banking sector bellwether stock indicates that the pre budget returns are

highly volatile with positive but in post budget session returns are volatile with positive and

negative also.

-4

-3

-2

-1

0

1

2

3

4

5

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

RETURN

RETURN


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Information Technology:

Introduction of Advance Priding Agreement (APA) in the finance bill of 2012

Central plan outlay by the department of Information Technology (IT) increased by

86.7% to Rs. 53.6 billion.

A national information utility (NIU) for the computerization of public distribution system

is being created.

It is expected to become operational by December 2012.

Table NO.4.3 Showing of TATA Consultancy Services company stock prices and returns of

pre and post budget session foryear 2012-13:


2-Mar-12 1,217.25 -10 -0.19

3-Mar-12 1,218.40-9

0.09

5-Mar-12 1,207.30-8

-0.91

6-Mar-12 1,202.00-7

-0.43

7-Mar-12 1,192.85-6

-0.76

9-Mar-12 1,208.55-5

1.31

12-Mar-12 1,189.05-4

-1.61

13-Mar-12 1,197.00-3

0.66

14-Mar-12 1,154.55-2

-3.54

15-Mar-12 1,163.70-1

0.79

16-Mar-12 1,169.550

0.50

19-Mar-12 1,122.001

-4.06

20-Mar-12 1,134.852

1.14

21-Mar-12 1,175.753

3.60

22-Mar-12 1,167.754

-0.68

23-Mar-12 1,184.655

1.44

26-Mar-12 1,161.606

-1.94

27-Mar-12 1,174.757

1.13

28-Mar-12 1,165.108

-0.82

29-Mar-12 1,141.209

-2.05

30-Mar-12 1,168.8010

2.41


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Analysis:

The above table shows the share prices of TATA Consultancy Services for the period of 21 days

prior pre-budget along with high return 1.31% & post budget highest is 3.60%. The standard

deviation denotes 20.19 during the pre budget and 19.41 post budget sessions. The percentage

change between the standard deviation stood to (-3.86%). The variance is 407.56 and 376.90

during pre and post budget session respectively.

Graph NO.4.3 Trend Movement of TATA Consultancy Services company returns pre and

post budget session for year 2012-13:

Interpretation:

The Information Technology sector stocks showing that there is a quite volatility in stock in pre

budget session with expectations. On budget day the returns TATA consultancy Services is

4.24%. And in the post budget session also the returns are positive.

-5

-4

-3

-2

-1

0

1

2

3

4

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

RETURN

RETURN


58/81



2013-14

Power Sector:

The power sector faces challenges on multitude front with 1) DISCOM restructuring

facing a roadblock due to inability of states to support the restructuring exercise 2)continuing high AT&C losses making DISCOM threatening viability and 3) slower coal

production growth (4-5% CAGR) vis-a-vis 8-9% CAGR over the 12th Plan.

NTPC Limited Company NTPC imports ~10% i.e. 16MT of 160MT coal requirement

and has pass-through PPAs. Consequently, the increase in steam coal prices would not

affect the company. On the other hand, as 80IA extension is positive as it plans to

commission 2.4GW in FY14.


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Table NO 4.4 Showing of NTPC Limited company stock pre and post budget session for

year 2013-14


15-Feb-13 149.95 -10 0.43

18-Feb-13 151.1-9

0.76

19-Feb-13 153.5-8

1.58

20-Feb-13 152.4-7

-0.71

21-Feb-13 152-6

-0.26

22-Feb-13 151.55-5

-0.29

25-Feb-13 149.85-4

-1.12

26-Feb-13 151 -3 0.76

27-Feb-13 153.85-2

1.88

28-Feb-13 150.9-1

-1.91

1-Mar-13 150.050

-0.56

4-Mar-13 149.351

-0.46

5-Mar-13 149.552

0.13

6-Mar-13 148.453

-0.73

7-Mar-13 148.15

4

-0.20

8-Mar-13 149.055

0.60

11-Mar-13 149.66

0.36

12-Mar-13 147.87

-1.20

13-Mar-13 146.88

-0.67

14-Mar-13 146.859

0.03

15-Mar-13 145.9510

-0.61

Analysis:

The above table shows the share prices of NTPC limited for the period of 21 days prior pre-

budget along with high return 1.88% & post budget highest is 0.60%. The standard deviation

denotes 1.35 during the pre budget and 1.29 post budget sessions. The percentage change


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between the standard deviation stood to (-4.44%). The variance is 1.82 and 1.65 during pre and

post budget session respectively.

Graph NO.4.4Trend Movement of NTPC Limited Company returns pre and post budget

session for year 2013-14:

Interpretation: The above graph is showing that the returns of the company are positive in pre

budget session. But in post budget session the returns are much negatively volatile.

-2.5

-2

-1.5

-1

-0.5

00.5

1

1.5

2

2.5

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

RETURN

RETURN


61/81



Steel sector:

While the demand outlook continues to remain highly uncertain, the domestic steel

industry is witnessing a continuous rise in crude steel capacity. CARE Research expects

domestic steel capacity to increase at a CAGR of about 7.3 percent during the period

FY12 to FY17, marginally at a faster pace than the increase in domestic steel demand.

Going forward favorable economic policy, prudent regulatory process, broad anti-

dumping measures and increased investment in research and development are needed to

provide impetus to the industry as a whole and fade away the short-term concerns.

Increase in customs duty and CVD on steam coal is likely to result in increase in cost of

production.


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Table NO 4.5. Showing of Steel Authority Of India Ltd companystock pre and post budget

session for year 2013-14:


15-Feb-13 77.85 -10 0.32

18-Feb-13 78-9

0.19

19-Feb-13 78.5-8

0.64

20-Feb-13 78.85-7

0.445

21-Feb-13 75.95-6

-3.67

22-Feb-13 76.5-5

0.72

25-Feb-13 74.95-4

-2.02

26-Feb-13 72.75 -3 -2.93

27-Feb-13 74.35-2

2.19

28-Feb-13 70.9-1

-4.64

1-Mar-13 71.60

0.98

4-Mar-13 68.21

-4.74

5-Mar-13 69.52

1.90

6-Mar-13 70.453

1.36

7-Mar-13 69.1

4

-1.91

8-Mar-13 70.355

1.80

11-Mar-13 70.456

0.14

12-Mar-13 70.97

0.63

13-Mar-13 70.98

0

14-Mar-13 70.559

-0.49

15-Mar-13 68.7510

-2.55


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Analysis:

The above table shows the share prices of Steel Authority Of India Ltd company limited for

the period of 21 days prior pre-budget along with high return 2.19% & post budget highest is

1.90%. The standard deviation denotes 2.63 during the pre budget and 0.96 post budget sessions.

The percentage change between the standard deviation stood to (- 63.49%). The variance is 6.92

and 0.92 during pre and post budget session respectively.

Graph NO.4.5.Trend Movement of Steel Authority Of India Ltd company Company

returns pre and post budget session for year 2013-14:

Interpretation:

The graph showing that Steel Authority of India Limited (SAIL) returns are not much volatile in

pre budget session. In post budget session returns are highly volatile with the positive news from

the budget to steel sector, And also continuous increase in steel demand.

-6-5

-4

-3

-2

-1

0

1

2

3

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

RETURN

RETURN


64/81



Textile Sector:

The Zero excise duty route, as existed prior to Budget FY12, is being re-established

with respect to branded readymade garments and made-ups. Going by this, in the case of

cotton, there will be zero duty at the fiber stage also and in the case of spun yarn, there

will be a duty of 12% at the fiber stage. The zero excise duty route will be in addition to

the CENVAT route now available.

Allocation of ` 0.5 billion to the Ministry of Textiles for establishing apparel parks within

the Scheme for Integrated Textile Parks (SITP).

Allocation of ` 0.96 billion to the Ministry of Textiles to provide working capital and

term loans at a concessional interest rate of 6%.

The existing Technology Up gradation Fund Scheme (TUFS) for the textiles sector to

continue. Allocation of ` 24 billion for modernization of the power loom sector.

The Integrated Processing Development Scheme with plan disbursement of ` 5 billion

would be implemented in the 12th Five Year Plan for addressing environmental issues

faced by the textiles industry. It is proposed to provide ` 0.5 billion in FY14 for the

scheme.


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Table NO. 4.6. Showing of Raymond Limitedcompany stock pre and post budget session

foryear 2013-14:


15-Feb-13 341.5-10

-0.04

18-Feb-13 349.6-9

2.37

19-Feb-13 356.4-8

1.94

20-Feb-13 358.6-7

0.61

21-Feb-13 343.65-6

-4.16

22-Feb-13 337.75-5

-1.71

25-Feb-13 338.3-4

0.16

26-Feb-13 333.15-3

-1.52

27-Feb-13 329.15-2

-1.20

28-Feb-13 311.15-1

-5.46

1-Mar-13 317.050

1.89

4-Mar-13 310.851

-1.95

95-Mar-13 321.22

ece final year project

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