Research Report on Stocks

A RESEARCH REPORT ON A STUDY OF PORTFOLIO MANAGEMENT MANAGEMENT ON STOCK EXCHANGE

SUBMITTED TO DEPARTMENT OF BUSINESS ADMINISTRATION SAURASHTRA UNIVERSITY

GUIDED BY DR. HITESH J. SHUKLA (ASSOSIATE PROFESSOR, MBA)

PREPARED BY PRAVEEN CHANPA (STUDENT 4

TH

SEM, MBA)

DECLARATION

I hereby declare that the project entitled “A Research Report onportfolio return at stock

exchange” submitted for the M.B.A. Degree is my original work and the dissertation has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles. Place: Date: Praveen Chanpa

PREFACE

Being Management students, we need to understand how portfolio analysis is done. Therefore, we are required to identify the value stocks and the growth stocks to conduct a thorough analysis of the selected Industry. This helps us as the students to develop a sense of awareness around us to keep the details of the stock market. Such an analysis helps to understand the stock market which is highly useful for investors.

Indian stock market is going through a rapid growth and investors need to know which kind of stocks are there to invest.

Globalization is the most important factor shaping today‟s world. India is no exception. The investors are also becoming global and try to invest in stocks that give them more return on their portfolio. This research report offers an insight into the investing pattern of all the investors. Such a work had never been carried out earlier and I‟m confident that this study will be useful not only to academician but actual investors in addition to students.

I am sure this work will be useful to many and can serve as guide to many who want to invest in India stock market.

It is a pleasure to keep this report in front of you. Project report is vitally important for M.B.A students because it develops the feeling among the students about investors to develop the practical base. Theoretical knowledge is true only when we apply the same in the practical.

ACKNOWLEDGEMENT

A part of the real essence of 6 weeks learning; in conducting this fruitful exercise many key persons had shown an appreciable role in my unforgettable journey. When emotions are profound words sometimes are not sufficient to express our thanks and gratitude. At this moment I would like to take this opportunity and declare the moral share of all those stakeholders in the project property.

I convey heartly thanks and deep sense of gratitude towards the followings:



To almighty God, whose external blessings and divine presence helps us to fulfill all our goals.



My “GURU” and inspirer Dr P.L. CHAUHAN, Professor and Dean, Department of

Business Management, Saurashtra University. 

My esteemed guide Mr. HITESH J. SHUKLA, Asst. Professor, Department of Business Management, Saurashtra University

I would also like to express my thanks and gratitude to all my colleagues, friends, teaching and non-teaching staff members and all those who contributed directly or indirectly through suggestions, thoughts and presence for creating a congenial environment and encouraging me in every way during the project.

And last but certainly not the least…

My Dear Friend Ashish, Mayank and Kapil.

EXECUTIVE SUMMARY

The purpose of the research was to find whether the value stock perform better than the growth stocks in the Indian stock market.

The investors try to maximize their profits by investing wisely. Few investors prefer the value stocks and few of them prefer growth stocks. It might also happen that many of the investor doesn‟t know the difference between the value and the growth stocks and might have

invested just by looking at the scenario of the company.

The report comprises of all the historical data related to the stocks. For the research I have gathered the data of different companies which includes market prices, earning per share, dividend distributed in percentage and price earning ratio.

Apart from the data gathered and the test applied for the conducting the research, there were few limitations which I have taken into consideration.

TABLE OF CONTENT

SR. NO.

CONTENT

PAGE NO.

1

INTRODUCTION

1

2

STATEMENT OF PROBLEM

26

3

LITERATURE REVIEW

27

4

OBJECTIVE OF STUDY

29

5

METHODOLOGY

31

6

LIMITATION

33

7

ANALYSIS

34

Analysis and interpretation

52

Hypothesis test

53

8

CONCLUSION AND RECOMMENDATION

58

9

REFERENCES

60

10

BIBLOGRAPHY

61

11

ANNEXURE AND APPENDICES

62

INTRODUCTION

Stock exchanges are intricately inter-woven in the fabric of a nation‟s economic life. Without a stock exchange, the saving of the community – the sinews of economic progress and productive efficiency – would remain underutilized.

The task of mobilization and allocation of savings could be attempted in the old days by a much less specialized institution that the stock exchanges. But as business and industry expanded and the economy assumed more complex nature, the need for “permanent finance”

arose.

Entrepreneurs needed money for long term whereas investors demanded liquidity – the facility to convert their investments into cash at any given time. The answer was a ready market for investment and this was how the stock exchange came into being.

Stock exchange means anybody of individuals, whether incorporated or not, constituted for the purpose of regulating or controlling the business of buying, selling, or dealing in securities.

These securities include:



Shares, Scrips, Stocks, Bonds, Debentures stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;



Government securities; and



Rights or interest in securities.

1

Function

The stock exchanges in India have an important role to play in the building of a real shareholders‟ democracy. Aim of the stock exchange authorities is to make it as nearly

perfect in the social and ethical sense as it is in the economic.

To protect the interests of the investing public, the authorities of the stock exchanges have been increasingly subjecting not only its members to a high degree of discipline, but also those who use its facilities joint stock companies and the other bodies in whose stocks and shares it deals.

There are stringent regulations to ensure that directors of joint stock companies keep their shareholders fully informed of the affairs of the company.

In fact, some of the conditions that the stock exchange imposes upon companies before their shares are listed are more rigorous and wholesome than the statutory provisions such as those contained in the Companies Act.

2

Organization Structure of the Secondary Market

The stock exchanges are the exclusive centers for trading of securities. At present, there are 23 operative stock exchanges I India. Most of the stock exchanges in the country are incorporated as „Association of Persons‟ of section 25 companies under the Companies Act. These are organized as „mutuals‟ and are considered beneficial under in terms of ax benefits

and matters of compliance.

The trading members, who provide broking services also, own, control and manage the stock exchanges. They elect their representatives to regulate the funding of the exchange, including their own activities.

Until recently, the area of operation/jurisdiction of an exchange was specified at the time of its recognition, which in effect precluded competition among the exchanges. These are called regional exchanges.

In order to provide an opportunity to investors to invest/ trade in the securities of local companies, it is mandatory for the companies, wishing to list their securities, to list on the regional stock exchange nearest to their registered office

If they so wish, they can seek listing on other exchange as well. Monopoly of the exchanges within their allocated area, regional aspirations of the people and mandatory listing on the 24 exchanges (The Capital Stock Exchange, the latest in the list, is yet to commence trading) in the country recognized over a period of time to enable investors across the length and breath of the country to access the market.

The three newly set up exchanges – over the counter Exchange of India (OTCEI), National Stock Exchange of India (NSE) and Inter-connected Stock Exchange of India 3

(ICSE) were permitted since their inception to have nation-wide trading. Listing on these exchanges was considered adequate compliance with the requirement of listing on the regional exchange.

SEBI recently allowed all exchange to set up trading terminals anywhere in country. Many of them have already expanded trading operations to different parts of the country.

The trading platforms of a few exchanges are now accessible from many locations. Further, with extensive use of information technology, the trading platforms of a few exchanges are also accessible from anywhere through the internet and mobile devices; this made a huge difference in a geographically vast country like India.

It significantly expanded the reach of the exchange to the homes of ordinary investors and assuaged the aspirations of people to have exchanges in their vicinity. The issuers/investors bow prefers to list/trade on exchanges providing nationwide network rather than on regional exchanges.

Consequently, territorial jurisdiction of an exchange, opportunity to invest in securities of local companies through listing on regional exchanges, and convenience of trading from a nearby exchange lost relevance.

4

Regulatory Framework

The four main legislations governing the securities market are:



The SEBI Act, 1992 which establishes SEBI to protect investors and develop and regulate securities market;



The Companies Act, 1956, which sets out the code of conduct for the corporate sector in relation to issue, allotment and transfer of securities, and disclosures to be made in public issue;



The Securities Contracts (Regulation) Act, 1956, which provides for regulation of transaction in securities through control over stock exchanges; and



The Depositories Act, 1996 which provides for electronic maintenance and transfer of ownership of demat securities.

5

Stock Markets & Financial Development in India

The role of stock markets as a source of economic growth has been widely debated. It is well recognized that stock markets influence economic activity through the creation of liquidity. Liquid financial market was an important enabling factor behind most of the early innovations that characterized the early phases of the Industrial Revolution.

Recent advances in this area that stock markets remain an important conduit for enhancing developments. Many profitable investments necessitate a long – term commitment of capital, but investors might be reluctant to relinquish control of their savings for long periods. Liquid equity markets make investments less risky and more attractive.

At the same time, companies enjoy permanent access to capital raised through equity issues. By facilitating longer – term and more profitable investments, liquid markets improve the allocation of capital and enhance the prospects for long-term economic growth. Furthermore, by making investments relatively less risky, stock market liquidity can also lead to more savings and investments.

Over the years, the stock market in India has become strong. The number of stock exchange increased from 8 in 1971 to 9 in 1980 to 21 in 1993 and further to 23 as at end march 2000.

The number of listed companies also moved up over the same period from 1,599 to 2,265 and thereafter to 5,968 in 1990 and 9.871 in March, 2000. The market capitalization at BSE as a percentage of GDP at current market prices also improved considerably from around 28 per cent in the early „nineties to over 45 per cent at the end of the „nineties, after

witnessing a fall in certain intervening years.

6

In 1998, India ranked twenty-first in the world in terms of market capitalization, nineteenth in terms of total value traded and second in terms of number of listed domestic companies.

Though the Indian Stock market was founded more than a century ago, it remained quite dormant from independence in 1947 up to the early „eighties, with a capitalization ratio

(market capitalization to GDP) of only 4 per cent.

7

However, the patterns of demand for capitalization have undergone significant changes during the last two decades and improved stock market activity. It may be recalled that till the „90‟s institutional term landing acted as the primary source of industrial finance in India.

Financial institutions raised money through government guaranteed bonds at low rates of interests, in which, lent funds at connectional rate of interest.

This system provided corporate a cushion to absorb the relatively high risk of implementing new projects. This, in turn, discouraged the corporate to raise risk capital from equity markets. On this account, the debt market segment, which is sensitive to “economic information” also remained underdeveloped an illiquid. With onset of reform process in the 90‟s institutions has to raise resources at market related rates.

At the same time, the market has witnessed the introduction of several new customizes bonds at maturities tailored to suit investors need and with market driven coupons. Along with this development, a number of measures were initiated to reform the stock markets, which helped to improve the overall activity in the stock market significantly. The turnover ratio increase from low of 6.7 percent at the beginning of the 90‟s to reach 35.1 percent in

1999-2000, expecting certain years of relative in activity.

The Indian capital market has experienced a significant structural transformation over the years. It now compels well with those in developed markets. This was deemed necessary because of the gradual opening of the economy and the need to promote transparency in alternative sources of financing.

The regulatory and supervisory structure has being over valued with most of the powers for regulating the capital market having been vested with securities and exchange board of India (SEBI). Apart from changes in the fundamental factors information asymmetries and the associated constraints to efficient price discovery remain at the heart of the volatile movements in stock prices.

8

The extant of stock price volatility is also influenced by the extant of integration between the domestic and international capital markets as well as the regulatory frame work governing the stock market.

In India, two most important factors which has a significant bearing on the behaviour of the stock prices during the 90‟s were net investments by FII‟s and trends in the international

stock exchanges, specially NASDAQ. Stock market volatility has tended to decline in recent years, with the co-efficient variation in the BSE Sensex working out to 70.51 percent during 1995-96 to 1999-2000.

Asset price bubbles entail significant risks in the form of higher inflation when the bubble grows in size and in the form of financial instability and lost output when the bubble bursts. Monetary and fiscal authorities, therefore, closely watch the asset market developments. The positive wealth effect resulting from bull runs could impart a first round of risk to inflation.

If the bull run is prolonged, a second round of pressure on prices may result from subsequent upward wage revisions. Since financial assets are used as collaterals, asset booms may also give rise to large credit expansion. When domestic supply fails to respond to the rising demand, it could give rise to higher external current account deficit. The asset price cycle may follow.

When the asset prices collapse, firms may faced savior financing constraints as a result of declining value of their collaterals, making lenders reluctant to land at a scale they do when asset prices are rising. Recognizing this alternative complexities emanating from asset market bubbles, information on asset prices are being increasing used as a critical input for the conduct of the public policies.

9

INTRODUCTON TO EQUITY MARKET

Indian Capital Market

The function of the financial market is to facilitate the transfer of funds from surplus sectors (lenders) to deficit sectors (borrowers). Normally, households have excess of funds or savings, which they lend to borrowers in the corporate and public sectors whose requirement of funds far exceeds their savings. A financial market consists of investors and buyers, sellers, dealers and does not refer to a physical location. Formal trading rules and communication networks for originating and trading financial securities link the participants in the market.

As elsewhere in the world, the Indian financial system consists of: -



Money Market



Capital Market

The money market has two components.



Organized Market



Unorganized Market

The organized market is dominated by commercial banks. The other major players are the Reserve Bank of India, Life Insurance Corporation, General Insurance Corporation, Unit Trust of India, Securities Trading Corporation of India, other primary dealers and the various mutual funds. Despite rapid expansion of the organized money through a large network of banking institutions that have extended their reach even to the rural areas, there is still an active unorganized money market. It consists of indigenous bankers and moneylenders. 10

In the unorganized market, there is no clear demarcation between short-term and longterm finance and even between the purposes of finance. The unorganized sector continues to provide finance for trade as well as personal consumption. The inability of poor to meet the creditworthiness requirements of the banking sector makes them take recourse to the institutions that still remain outside the regulatory framework of banking. But this market is shrinking.

11

INDIAN CAPITAL MARKET CLASSIFICATION

Indian capital market can be broadly classified, into the following:

I. MONEY MARKET:

It is a market, which deals in short term securities such as treasury bills, certificate of deposits etc.

II. DEBT MARKET:

It is a market dealing in debt securities such as debentures, bonds etc.

III. SECURITIES MARKET:

It is a market dealing in equity and equity linked securities. This market comprises of primary market and second market.

The capital market provides the framework in which savings and investment take place. On the one hand it enables companies to raise resources from the investors and on the other, it facilitates households to invest their saving in industrial or commercial activities. Those saving instruments that can be bought or sold freely are called securities. These include a range of products – debt and equity – that can be traded. The market where such trades take place is the securities market or capital market and comprises the various exchanges, intermediaries and its regulatory institutions.

12

The capital market consists of these segments.

 Primary Segments

 Secondary Segments

The primary market deals with the issue of new instruments by the corporate sector such as equity shares, preference shares, and debentures. The public sector consisting of central and state governments, various public sector industrial units (PSUs) and statutory and other authorities such as state electricity boards and port trusts also issue bonds. The primary market in which public issue of securities is made through a prospectus is a retail market and there is no physical location. Direct mailing, advertisements and brokers reach the investors. Screen based trading eliminates the need trading floor.

The Secondary Market Or Stock Exchange where existing securities are traded is an auction arena. It may have a physical location like a stock exchange or a trading floor. Since 1995, the trading in securities is screen-based. Screen-based training eliminates need for a trading floor. And, since the last few years Internet-based trading has also made an appearance in India.

The Secondary Market consists of 23 stock exchanges including the National Stock Exchange (NSE) and the Over-the Counter Exchange Of India (OTCEI) and also Bombay Stock Exchange (BSE). The secondary market provides a trading place or terminals for the securities already issued to be bought and sold. It also provides liquidity to the initial buyers in the primary market to re-offer the securities to any interested buyer at any price, if mutually accepted. An active secondary market actually promotes the growth of the primary market and capital formation because investors in the primary market are assured of a continuous market and they can liquidate their investments in the stock exchange.

13

There are several major players in the primary market. These include the merchant bankers, mutual funds, financial institutions, foreign institutional investors (FIIs) and individual investors. R & T agents, Custodians and Depositories are capital market intermediaries that provide important infrastructure services for both primary and secondary markets.

It is important to ensure a smooth working of this market, as it is the arena where the players in the economic growth of a country interact. Various laws have been passed from time to time to meet this objective. The financial market in India was highly segmented until the initiation of reforms in 1992-93 on account of a variety of regulations and administered prices include barriers to entry. The reform process was initiated with establishment of securities and exchange of India (SEBI).

14

Equity Market

Equity represents an ownership position in a corporation. It is a residual claim, in the sense that creditors and preference shareholders must be paid as scheduled before equity shareholders can receive any payment. In bankruptcy equity holders are in principle entitled only to assets remaining after all prior claimants have been satisfied.

Thus, risk is highest with equity shares and so must be its expected return. When investors buy equity shares, they receive certificates of ownership as proof of their being part owners of the company. The certificate state the number of states the number of shares purchased and their par value.

 A Brief History of the rise of the Equity trading in India

July 9, 1875

: Native brokers from the Native share and Stock Brokers‟ Association in

Bombay. Membership fee is Re. 1. The association has 318 members. 1899

: Bombay stock Exchange acquires own premises.

1921

: Clearing houses are established for settlement of trades as volumes

increase. 1923

: K R P Shroff becomes the honorary president of BSE.

1925

: Bombay Securities Contract control Act (BSCCA) comes into force.

Dec 1, 1939

: Stock Exchange building is acquired.

1943

: Forward trading banned till 1946. Only ready to deliver and hand delivery

contracts permitted. 1956

: Securities Contract Regulation Act drafted on the lines of BSCCA comes

into force.

15

1957

: BSE becomes the first exchange in India to get the permanent

recognition. 1964

: Unit Trust of India (UTI) is born.

Apr 1, 1966

: K R P Shroff retires and Phiroze J Jeejeebhoy becomes chairman.

Jun 29, 1969

: Morarji Desai bans forward trading.

1973

:

Construction

of

P

J

Towers,

named

after

late

PhirozeJamshedjiJeejeevhoy, starts. Jan, 2 1986

: BSE Sensesex launched as the first stock market index with1978-79 as

the base year. Nov 1987

: SBI Mutual Fund launches Magnum Regular Income Scheme.

Apr 1988

: Securities and Exchange Board of India (SEBI) set up.

Jan 1992

: SEBI had given statutory powers.

May 1992

: Harshad Mehta securities scam breaks.

May 27, 1992

: Reliance is the first Indian company to make a GDR issue.

May 30, 1992

: The capital Issues Control Act, 194-7 is replaced.

Sep 1992

:

Foreign Institutional Investors are permitted to invest in the Indian securities market.

Nov 1992

:

Finance Minister Manmohan Singh inaugurates Over the Counter Exchange of India.

Oct 30, 1993

: The first private sector mutual fund, Kothari Pioneer Mutual fund, begins

operations. 1993

: SEBI bans badla trading on BSE.

June 1994

: NSE commences operations in wholesale debt market segment.

Nov 1994

: The capital market segment of NSE goes o stream. Trading is screen

based for the first time in India. 16

March1995

: BSE online trading system (BOLT) replaces open outcry system.

Apr 1995

: The National Securities Cleaning Corporation Limited, India‟s first

clearing corporation is set up. Oct 1995

: NSE overtakes BSE as the largest stock exchange in terms of volume of

trading. Apr 1996

: The National Securities Depository Limited is created.

Feb 1997

: SEBI releases norms for takeovers and acquisitions.

May 1997

: BSE introduces screen based trading.

Nov 1998

: SEBI recognized Interconnected Stock Exchange founded by 15 regional

stock exchanges. This exchange starts functioning in Feb., 1999 Feb 1999

: Launch of automated lending and borrowing mechanism (ALBM) on

NSE. Mar 11, 1999

: Infosys Technologies is the first company to be listed on NASDAQ through a public offering of American Depository Receipts.

Mar 22, 1999

: Central Depository Services (India) promoted by BSE operations.

Sep 1999

: ICICI is the first India Company to be listed on the New York Stock Exchange (NYSE).

Oct 11, 1999

: For the first time in BSE‟s history, the Sensex closes above the 5,000

mark at 5,031.78. Jan 2000

: BSE creates a „Z‟ category of scrips in addition to A, B1, and B2

comprising scrips that breached or failed to comply with the listing agreement. Feb 2000

: Internet trading commences on NSE. On Feb 14, 2000, BSE Sensex hits

all-time high of 6150. On Feb. 21, NSE records peak market capitalization of Rs. 11, 94,282 crore.

17

Apr 10, 2000

: The Sensex is revamped to include Dr. Reddy‟s Lab, Reliance Petroleum,

Satyam Computers and Zee Telefilms replacing Indian Hotels, Tata Chemicals, Tata power, and IDBI. June 2000

: BSE and NSE introduce derivatives trading in the form of index futures.

July 9, 2000

: BSE turns 125.

Oct 19, 2000

: Wipro lists in the NYSE.

Jan 22, 2001

: Borrowing and Lending Securities Scheme (BLESS) launched on BSE to promote securities lending and borrowing activities.

Mar 2001

: Ketan Parekh scam breaks. SEBI suspends all the broker directors of the

BSE in relation to KP scam. May 2001

: BSE advises compulsory demat for B2 scrips.

June 2001

: Index options start trading on NSE.

July 2001

: A SEBI directive bans carry forward. All major securities are moved to

rolling settlement. Options of individual scrips start trading NSE. Nov 9, 2001

: BSE and NSE launch futures in individual stocks.

Value stocks

Stocks that are considered to be undervalued based upon such ratios as price-to-book or price-to-earnings (P/E). These stocks generally have lower price-to-book and priceearnings ratios, higher dividend yields and lower forecasted growth rates than growth stocks. Shares of companies that are considered underpriced by the market considering their fundamental characteristics and that therefore represent an attractive investment opportunity.

18

Growth stocks

In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. A growth company typically has some sort of competitive advantage (a new product, a breakthrough patent, overseas expansion) that allows it to fend off competitors.

Growth and Value Stocks

There are two types of stocks that you will want to fill your portfolio with. These are growth stocks and value stocks. Growth stocks are those with statistically high levels of return and value stocks are those that tend to be undervalued. As a stock investor, there are several valuation tools that assist you in selecting the right stocks for inclusion in your portfolio. Balancing your portfolio by including a mixture of growth and value stocks allows you to minimize risk while still maximizing your potential gain. True diversification of your investment portfolio results from the strategic inclusion of both growth and value stocks in the proper amounts. If you want to effectively manage your portfolio you need to learn to classify stocks into their proper categories so that you can make effective purchases.

No matter what your specific investment goals, choosing the right stocks for your portfolio is possible through the use of proper valuation methods. In order to choose the right stocks you need to have a good understanding of what ultimately gets growth and value stocks placed into their respective categories.

While there are no absolute rules for categorizing growth and value stocks there are some broad definitions on which most investors agree. Though there are a few stocks that fall closer to the line between these two broad definitions, most can be easily classified into one or the other. 19

The purpose of growth investing is to choose a stock in a growing company that has a high potential for continued growth. Value investing focuses more on purchasing stocks that are currently undervalued in the market and which therefore have a lower purchase price. These value stocks can increase significantly in value once the market makes corrections to reflect their true worth.

Growth Stocks Defined

Although investors have some varying methods for determining what makes a good growth stock, all definitions typically include the following characteristics.

•

A high growth rate, both historically and projected. When you look at a growth

stock‟s historic performance, you need to take into consideration the size of the company that

issues the stock. Smaller companies should have a historic growth rate of ten or more percent over the course of at least the last five years. Larger companies should have an historical growth rate of somewhere between five and seven percent over the same number of years.

•

Projections for company growth should measure up to or exceed that of the stock‟s

historic performance.

•

The company should have a high return on equity (ROE) measure. You should also

consider comparing the company‟s ROE to that of other stocks in the same industry over the

course of at least a five year period. A growth stock‟s ROE will rank significantly higher than average among its industry.

20

Value Stocks Defined

Some investors make the mistake of thinking that cheap stocks are all value stocks, when in reality a value stock can have a hefty purchase price. What makes a value stock is its placement within the current stock market – a placement which does not reflect the true value of the stock itself.

Here are a few of the commonly accepted measures for determining what makes a value stock.

•

The current price earnings ratio (P/E) of the stock should be in the lowest ten

percent of all companies in its industry.

•

The price to earnings growth ratio (PEG) should be less than one percent, which

actually indicates that the stock is undervalued. Don‟t mistake this measure for insufficient growth potential.

•

The company issuing the stock should hold assets which are at least twice its current

liabilities and should have equity which is equal to, if not greater than, its debt.

Both growth and value stocks serve a specific purpose in your portfolio. Don‟t overload your portfolio with one type or the other. Instead focus on creating an ideal balance of the two types. This will result in maximum returns with minimal risk.

Assignment:

21

•

Identify 5 growth stocks and 5 value stocks.

•

Why did you choose each stock for your list?

•

Which of these stocks would you like to add to your portfolio?

22

Changing Attitude towards Equity Ownership

With a broadening of the corporate sector, volume of business on the exchanges in India is likely to increase. The greater interest shown in recent years by investors is partly reflected in the over-subscription of new issues.

There has been great demand for “growth” issues. I.e. shares of companies with growth prospects. It has been observed that the wider the distribution of corporate securities among investors, the grater the reception accorded to new or additional issues of capital; the more mobile the additional issues of capital; the more mobile the market, the grater the participation of investors and traders in the raising of corporate capital.

The available data about the share ownership in the country show that there is gradual widening if ownership. The increasing participation in stock market activities by financial and non financial intermediaries, particularly of institutions which are mainly investors has tended to create an orderly and stable market.

Further, the various growth-permitting factors – including regulatory measures, progressive spread of literacy and dissemination of investment information – all tend to contribute to a healthy growth of the stock market. In the security market, equity shares are the most romantic of all the form of securities.

Further more, equity analysis is more complicated than bond appraisal, and greater skill is required in selecting equity than fixed income securities. The attitude towards equity shares has varied from extreme pessimism to optimism from time to time.

It is equity shares that entice most investors, and some investors have been known to feel grater sympathy for their equity than their spouses. Presence of market and business risks 23

associated with such investments fails to keep the investing public and institution out of the market because of their confidence in the ultimate success of the equity shares, i.e. towards overshadow risks. In fact the advantages of equity shares ownership are enough to lure the investors and change their attitude towards securities.

Humans are by nature value and profit maximizers. In all we do, we implicitly calculate and compare the expected gains with the risks involved. That is, we try to maximize our profit with as low risk as possible.

A number of papers have dealt with methods showing evidence that markets are inefficient and investors are able to achieve abnormal returns, i.e. finding portfolios of companies that will beat the market, by conducting different kinds of stock picking techniques. Some of the common market irregularities are the January effect - that stocks generate abnormally high returns in the month of January, the Monday effect - that Mondays are the worst day of holding shares, the size effect - that small-cap firms outperform large-cap firms, insider transactions - that insider transactions reveal a concealed message about the company‟s true market valuation, and lastly that value stocks outperform growth stocks.

(Damodaran, 2002; Ross, Westerfield& Jaffe 2005) The focus in this thesis will be on the value versus growth perspective, since it is a common way for individuals and mutual funds to classify and base their investment decisions on.

An example of a great value investor is Warren Buffett. According to Forbes Magazine (Kroll & Goldman, 2005) Buffett is currently the second wealthiest person in the world with a net worth of more than $44 billion. He has been able to create his fortune by using the techniques of fundamental analysis in order to find value stocks, typically mature companies found in the Manufacturing, Real-estate and Timber & Pulp industries, worth $1 selling for $0.5. His skills as an investor are evident when looking at the US holding company Berkshire Hathaway , where he is the chairman and CEO, increasing in value over 30 years from $290/share to more than $84 000/share. (Miles, 2004)

24

On the other hand, investing in growth companies, typically younger companies found in the Healthcare and Technology-industries, can also create high returns. An example of this is the Swedish IT-firm Framfab, increasing in share price by 1515% within nine months from its initial public offering in June of 1999. However six years later Framfab‟s

stock price has dropped 90% compared to the introduction price. This shows that an investor can make great profits on both types of investments but returns might differ remarkably in the long-run.

25

STATEMENT OF PROBLEM

There has been a long ongoing discussion among market participants whether growth stocks are constantly being overvalued and hence generating less return on a risk-adjusted basis, than the more stable value stocks. Value stocks are usually defined as companies with low valuation multiples (P/B, P/E ratios) and high dividend yield while growth stocks are defined as companies with high valuation multiples (P/B, P/E) and low dividend yield. (Sharpe et al. 1999)

Most previous research, by for example Fama and French (1992), Chan, Hamao and La-konishok (1991) and Basu (1977), shows that value stocks outperforms growth stocks. A majority of these studies have been performed on the US stock market, the world‟s largest market for listed securities, and I found that there were no studies that specifically focus on the Indian stock market, which is largest in asianbased on equity trading.

As there was no studies conducted on the value and growth stocks of stock exchange of India, I found a scope for study on this topic and therefore following is the hypothesis of this study. Ho1: there is no statistical significant difference between average market price of value stock and growth stock. Ho2: there is no statistical significant difference between average earning price per share of value stock and growth stock. Ho3: there is no statistical significant difference between average dividend of value stock and growth stock. Ho4: there is no statistical significant difference between average price earning ratio of value stock and growth stock.

26

LITERATURE REVIEW

S. M. Tariq Jafar, D. S. Chaubey and Shruti Nagar,2010 tried to analyzed the

relationship between risks return and diversification effect on portfolio risk with composite of market and non-market risk. The core objective of their study was to investigate that there is linear relationship between portfolio risk and return, diversification across the stocks will lead to decline of non market risk. They came to a conclusion that is what time horizon is involved in adjusting the investor exposer to their risk weighted portfolio in response to market and non market events Indian stock market approaches to efficiency with longer time horizon for holding of stock. Investors do not realize maximum return by holding risky portfolio for in trading. However to some extent they reduce the impact of non market risk of portfolio. Portfolio with high beta value is categorized as low risky. They get the high return by holding risky portfolio for month.

However their return is maximized by holding risky portfolio for month. These finding support rao et al. (1998) study were stock return of different time horizon are used to establish the relationship between portfolio return and risk and risk. The relationship is moderate in cases of monthly return. However the relationship between portfolios expected return and risk is moderate on quarterly return. This trend of stock market signifies effect that investor gradually readjust their holding of stocks in response to market or non market ever.

MounaAbdelhedi, 2009 in their research analyzed the risk factor and investor

sentiment effecting cross section variations in return and came to a conclusion that using sample of stocks traded on Tunisian stock exchange, there are common return factors related to market and size factors that help capture the cross section stock returns. The study of relationship between the institutional investor sentiment and the size of sorted portfolio returns provides empirical evidence that investor sentiment explains excess return and that current return effects change in sentiment. More ever the addition of sentiment measures to the four factor model draws a declining of market factor explanatory power as well as the insignificance of the size factor on Tunisian stock returns.

27

MayankJoshipura, 2009 studied the presence of any abnormal returns on

surrounding the bonus announcement and execution; and the effect of bonus offer on trading volume. He concluded that Indian markets have the semi strong form of market efficiency, as any information content with the bonus announcement is absorbed on the announcement day and nothing is seen on the effective day. And bonus announcement leads to improvement in liquidity permanently, but positive wealth effect is concentrated just prior to and on the day of bonus announcement.

Anamika Sharma 2009 , studied an empirical analysis of public announcement of

open offer on the stock performance of target company against S&P CNX Nifty; public announcement creates value for investors of target company; and gauge whether motives of open offer have any significant impact on the efficiency of capital market and came to conclusion that public announcement of open offer has significant impact on investor‟s

behavior while selecting securities, she also found that in the post announcement period, the abnormal gains were not eroded substantially, and she also concluded that investors have prior information about the public announcement, raising question on the effectiveness of regulations on insider trading.

From all the literature reviewed by me, I found that there were many research conducted on portfolio return and stock exchange of various countries but there was a scope for research on the study of portfolio return on Indian stock exchange, further it motivated me to study investors behavior of going for the value stocks or growth stocks.

28

OBJECTIVE OF STUDY

The objective of study is very clear as the Indian stock market is largest stock market in the asian stock market where the trading of stocks takes place in the form of shares and securities. In this study as a researcher I‟m interested in learning that why the investors prefer

more growth stocks or the value stocks which are listed in the Indian stock market.

While doing this research I would be able to know how the Indian stock market work fundamentally with the changing emotions of the investors. Further with this study it would be a clear understanding about the perception of the investors towards the value stocks or growth stocks.

As an investor it is interesting to know that in which kind of share i.e. growth stocks or value stocks the investor is investing his money. Likewise it is also interesting to understand that as an investor regular earnings are more important or by taking more risk the investor is expecting more return.

Through detail learning on this topic I would definitely gain more knowledge about stock market of India. My study on the stock market would definitely help to the researcher who are willing to go for the research on this dynamic market.

Purpose: The purpose is to investigate if an investor by purchasing a portfolio based on value

stocks will outperform a portfolio based on growth stocks.

I have referred the research reports and thesis which are related to the stock markets but I found that there were no studies conducted on this topic and therefore there was a scope for

29

me to study that value stocks are better or growth stocks are better and investors prefer which type of stocks for the investment purpose.

30

METHODOLOGY

The quantitative research method is used when gathering information. Based on this multiple the sample is divided into two extreme groups of low and high P/E companies. This creates two portfolios, which symbolizes value and growth stocks.

Methodological Approach

What are you interested in as a researcher? Is it to understand how everything fits together or is it a specific target or event? Within these questions lie basic philosophical thoughts which every researcher has to reflect upon before he or she proceeds. The questions behind the issue are the deductive method and the inductive method. These are two platforms which a researcher can begin the investigation from.

The deductive method works by using statements which you then can deduct new hypothesis from, that is, working with an already known formula, assumption or theory and try to apply this to observations made in the real world and thereby explain the world through the pre understood theories. These hypotheses can then be proven right or wrong by using empirical studies. (Holme& Solvang, 1991) This thesis will tilt towards the deductive method since known formulas are being used, P/E, and then are applied to observations made on the stock market. The empirical findings can then be tested through statistical formulas in order to confirm or reject the previous conclusions.

The inductive method on the other hand works in the opposite way. It focuses on the observations made of the world and a specific occurrence and tries to work out a formula explaining the observations. The specific observation is made into a generalization about the world. To some extent this thesis will also use the inductive method since the sample of value and growth companies and the conclusions drawn from these observations will be accepted as a description of the whole population of companies, i.e. the random sample of value 31

companies will be used as a description for all value companies and the random sample of growth companies will be used as a description for all growth companies.

Listed companies on the Indian Stock Exchange will be divided into two groups: growth and value companies based on their P/E ratios. To get the statistical framework the I‟ve gathered historical stock information from the internet site of BSE India, explained

further below. From the first two groups will be created, based on their P/E ratios. Form this two portfolio‟s the conclusion will be generated.

32

LIMITATIONS OF THE STUDY



The data is collected from BSE 500 companies and the sample data is for only 100 companies and therefore the conclusion might be biased.



The samples of the companies which I have gathered are for 10 years. In these 10 years, few of the companies might have merged with other companies or might have been absorbed by the other companies.



Among all the investors there are few investors who do not have the knowledge of the value stocks and the growth stocks. They invest their money looking at the good future prospects of the companies and the current scenario of the companies.



The data collected is at the end of the financial year, which means study does not include the whole financial year‟s data or the data between the two financial years.

33

ANALYSIS

This chapter of the report includes the quantitate and analytical detailed analysis of the study problem. As mentioned earlier in methodology; it includes 

Sample selection.



Collection of data.



Analysing and interpreting the data.

Sample Selection.

Samples are selected from the population by non-probability sampling technique using convenient sampling as population size is definite and this method will provide ease for sampling from the population.

Sample size is of 50 value stock companies and 50 growth stock companies samples from the population.

34

Collection of Data.

Data were collected using secondary data collection method which Includes…

Data Sources:

The sources of data are as follows…

The data has been collected from the bse website and includes 10 years; -market price -earning per share -price earning ratio, and -dividend declared in percentage.

Let‟s first undergo in details of the market price, price earning ratio, earning per share and dividend declared in percentage of value stock companies and the growth stock companies. It is shown it table observation in this way…

35

GROWTH STOCK

SrNo

Market Price

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

23.5

24.5

7.25

35.5

38.7

34.9

25.15

26.9

8.59

23.75

45.95

47.05

25.5

51

68.25

142

75

125

94

247.3

125

160

240

515

738

1133.95

850

810

846

1344.4

31.25

35

45.75

114.4

182.45

372.5

389.95

587

280

627.75

1

Agro Dutch Industries Ltd.

2

Agro Tech Foods Ltd.

3

Alfa Laval (India) Ltd.

4

Alstom Power India Ltd.

5

Ambalal Sarabhai Enterprise Ltd.

4.75

4.1

3.5

6.75

10.5

13.79

12.01

27.1

8.45

10.1

6

Apollo Hospitals Enterprises Ltd.

110

129.7

94.5

169.75

347

511

483.3

511

402

739.9

7

Ashima Ltd.

32.25

19.7

12.5

11.8

22.8

11.19

8.85

7.01

2.5

5.1

8

Associated Cement Cos. Ltd.

119.8

154

137.5

257.05

362.5

789

726

835

585

954.9

9

Avon Organics Ltd.

7.25

17.5

30.5

32.3

39.9

45.5

14

22.95

14.5

40.75

83.65

21.25

3.95

3.36

9.98

9.69

8

37.85

20.7

46.5

27.5

23.5

8.45

13.25

24

30.6

17.6

18.4

7.79

18

42

50

18.5

25.5

33.5

24.3

20.5

8.5

3.94

5.01

10

Balaji Distilleries Ltd.

11

Birla Ericsson Opticaal Ltd.

12

Cinevistaas Ltd.

13

Computech International Ltd. Credit Rating Information Services

11.65

9.3

4.2

5.75

8.75

6.03

7.3

5.7

2.78

3.54

123.3

315.1

255

490

675

1766

2620

3070

2700

5249.7

15

Dalmia Cement (Bharat) Ltd.

130

143.55

140

294.75

387

266

356

282

79.3

253.9

16

Eicher Motors Ltd.

21.3

42.1

70

222

302

308.65

243.85

252.95

216.5

647

17

Eskay K'n'IT (India) Ltd.

15.25

2.3

2.25

3.5

5.3

8

3.9

3.67

1.2

3.02

18

Essar Oil Ltd.

5

5.95

4.1

4.92

35.2

41.2

54

207.7

72.55

139.2

19

Essar Shipping Ltd.

6.4

7.25

5

18.95

38.4

34.2

41.05

145

29.4

74.6

20

Excell Industries Ltd.

55.4

65

65.6

75.05

60.05

59.4

40.7

53

25.5

58.8

21

Ajanta Pharma Ltd.

89.9

47.5

22

42

58

74

73

82

51.3

183

22

Aksh Optifibre Ltd.

85.05

61.9

14.75

14.4

40

63.25

46

46

9.2

27

23

Alps Industries Ltd.

99

27.1

19.55

38.5

99.5

202

52.15

41.25

6.8

9

24

Archies Greetings & Gifts Ltd.

70.5

109.5

52.8

56.55

72.75

158

120.5

84

46.8

95.5

25

Arvind Mills Ltd.

8.2

13.6

18.5

46.05

115.95

101

43.4

39.65

13.5

34

26

Assam Company Ltd.

29.55

16

9.55

18.5

46.5

24.25

16.45

25.7

8.97

20.5

27

Atul Ltd.

11.75

18

29.4

33.95

78

147.85

86

57.25

44

87.1

28

Ballarpur Industries Ltd.

47.1

51.5

36.55

67.25

96.5

139

105.05

29

14.61

26.25

14

36

SrNo

Market Price

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

41.1

41

26

49

82

241

138.05

142

104.3

231

34.45

30

20.5

32.85

53.65

154.9

114.9

56.3

21.7

64.35

29

Bata India Ltd.

30

Bhartiya International Ltd.

31

Bhushan Steel & Strips Ltd.

20

16.25

22.55

61

208

186

513.8

699

398.3

1775

32

Binani Industries Ltd.

42

24.95

10.4

17.85

29.25

109.6

214.05

121.85

30.8

96.9

33

Birla Corporation Ltd. Carborundum Universal Ltd.

16.8

17.9

12.35

62.5

181

324.9

188.5

199

177

399.9

72

83.1

110

217

129.9

153.55

139.5

109.95

79.5

173.45

21

25.35

25.35

36

99

66.85

105.2

112

36.85

150.25

31.6

33.8

42.3

96.15

226.4

448

540

733

221.25

511

18.55

11.5

15.2

103

194

347

371

412

213.55

384.9

9.6

12.5

13.8

18.9

30.15

39.85

31

50.95

42.6

61.5

34 35 36 37 38

Ceat Ltd. Century Textiles & Industries Ltd. CESC Ltd. Chambal Fertilisers & Chemicals Ltd.

39

Chemplast Sanmar Ltd.

18.25

24

26.5

26

38.5

9

7

8.61

4.7

9.21

40

Cybertech Systems and Software Ltd.

22

19.5

6.15

4.1

10.4

10.71

20.1

15.8

8.6

18.1

41

Deepak Fertilizers &Petrochemicals

13

17

18.55

33.25

63.5

99.3

81

100.95

56

114

8.15

7.95

12.25

29.5

33

36.75

34.6

51

32.85

78.9

32

30.15

27.2

133

180

286

409

375

220

360

76.1

63.45

35.1

63.1

81.95

91.95

114

86.85

35.5

148.7

20.5

11

10.45

23.8

63.4

133.95

65.5

38.9

17.95

60.45

44

105

94.5

372.5

156.5

204

198

218

139.9

267.25

42

Dena Bank

43

Elder Pharmaceuticals Ltd.

44 45

Escorts Ltd. Eveready Industries India Ltd.

46

Federal Bank Ltd.

47

Finolex Industries Ltd.

16.85

28.5

33.5

51

71.5

70

68.95

66.5

28.25

65.95

48

Fulford (India) Ltd.

128.1

130

60.5

284.4

444.6

665

535

549

402

960

49

Gammon India Ltd.

105.1

66.3

99.75

440

218

545.7

290

391

58.5

236

50

Goldiam International Ltd.

45

36.9

24

45.05

114.05

143.25

99.5

54.15

12

45.6

45.968

49.161

42.481

97.3546

134.1046

217.6902

216.367

240.6678

158.76

343.7596

AVERAGE

37

SrNo

EPS

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1


2.25

-0.22

1.35

2.20

-1.17

1.37

2.89

0.23

-10.16

0.65

2


0.17

0.05

-0.12

0.02

-0.70

0.88

1.03

1.11

1.34

1.68

3


5.61

6.25

8.93

9.17

10.82

10.33

11.07

12.19

13.28

13.69

4


0.59

2.73

5.78

2.72

2.61

3.08

16.63

11.42

20.61

24.99

5


-0.29

-1.07

-4.07

0.66

-1.77

-0.83

-3.86

-0.53

1.42

-0.90

6


7.76

3.41

6.96

9.40

12.12

12.53

19.63

14.10

17.19

22.90

7

Ashima Ltd.

1.19

-6.74

-6.48

-7.08

-6.31

0.46

-1.28

-9.36

-2.44

-1.59

8


2.78

1.00

6.08

11.25

21.23

12.69

19.42

19.06

21.28

20.93

9

Avon Organics Ltd.

1.12

2.32

3.80

3.27

-1.11

2.94

-14.89

-3.78

2.48

3.96

-16.88

-1.04

-5.83

-7.26

-9.75

-47.51

-1.99

19.00

0.76

-0.45

4.27

2.63

-3.34

0.23

0.74

-0.21

-0.21

0.31

-1.92

0.76

-1.18

-0.68

0.96

1.72

1.34

-1.40

8.75

0.60

0.15

0.06

5.90

0.48

0.96

0.58

2.57

0.91

1.31

-4.01

-42.01

-44.50

10


11


12

Cinevistaas Ltd.

13

Computech International Ltd.

14

Credit Rating Information Services

15.59

21.09

28.83

28.67

34.99

27.12

56.53

174.28

196.32

255.52

15


37.64

65.56

26.00

33.16

40.34

22.18

53.95

69.70

19.61

16.92

16

Eicher Motors Ltd.

5.08

141.90

18.73

23.23

20.95

77.20

21.82

19.49

22.52

60.36

17


1.58

-0.44

-3.06

-0.72

0.06

0.09

0.52

0.29

0.63

0.35

18

Essar Oil Ltd.

0.29

0.53

0.12

0.04

0.28

-0.89

-0.56

-0.36

-4.30

0.25

19

Essar Shipping Ltd.

51.00

2.56

2.10

4.30

9.57

4.69

3.14

5.67

1.75

1.46

20


1.79

6.47

1.60

0.46

0.24

0.28

1.23

3.62

0.40

7.30

21

Ajanta Pharma Ltd.

0.06

0.18

0.33

0.39

0.67

1.11

1.96

2.69

3.74

5.96

22

Aksh Optifibre Ltd.

4.55

-1.01

-0.47

-0.40

1.69

0.73

0.11

1.70

-0.18

-1.07

23


13.53

2.90

0.68

-0.18

7.92

7.36

2.27

3.50

-4.40

-1.52

24


2.46

2.43

4.72

8.19

9.28

10.32

12.03

12.17

-1.61

13.03

25

Arvind Mills Ltd.

-9.57

-4.43

7.08

4.95

6.28

5.98

5.54

0.60

-4.63

2.18

26

Assam Company Ltd.

-5.55

-4.61

0.22

-9.90

-9.97

-0.83

-0.80

-0.53

-0.62

-0.61

27

Atul Ltd.

4.79

1.51

11.28

1.18

6.07

28.00

9.98

7.99

14.59

18.71

28


3.61

2.18

1.29

1.98

2.71

3.23

3.79

1.34

0.32

0.70

38

SrNo

EPS

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

29

Bata India Ltd.

-0.59

-0.87

-1.28

-2.85

0.10

0.69

0.79

1.72

1.16

2.23

30


20.84

14.31

10.36

9.03

8.54

7.08

7.33

7.91

2.83

5.82

31


13.77

7.84

13.60

22.31

37.89

37.90

74.96

99.77

99.20

196.46

32


6.67

1.05

-13.65

-13.87

-15.16

5.02

68.49

51.95

37.09

51.13

33

Birla Corporation Ltd.

-1.65

2.15

0.54

5.40

11.28

16.33

42.27

51.06

42.02

72.37

34

Carborundum Universal Ltd.

21.03

35.16 35.16

39.20

33.98

8.59

8.21

6.28

10.41

6.40

6.21

35

Ceat Ltd.

-0.39

2.43

5.24

4.01

-0.53

0.09

8.60

40.07

-4.71

47.03

5.80

5.28

7.54

8.23

11.78

11.72

29.32

36.69

25.42

42.83

-11.26

-15.24

-8.48

10.64

22.26

22.84

35.75

30.05

32.79

34.66

2.80

2.44

2.20

3.08

4.59

4.88

3.63

4.90

5.54

5.98

3.24

5.11

4.45

0.55

5.26

0.77

0.37

0.15

-1.39

-1.60

36 37 38 39

Century Textiles & Industries Ltd. CESC Ltd. Chambal Fertilisers & Chemicals Ltd. Chemplast Sanmar Ltd.

40


0.05

-0.11

-1.08

-2.09

-0.26

1.90

2.94

1.10

2.59

1.66

41


8.39

6.51

8.58

9.06

9.04

9.04

10.54

11.37

16.86

19.51

-1.29

4.44

5.52

11.15

2.82

2.54

7.03

12.54

14.74

17.83

6.69

4.56

6.89

13.56

13.60

21.60

30.06

38.21

26.86

29.30

14.60

1.13

3.33

-28.75

-4.69

2.24

2.81

3.63

2.04

10.45

2.13

8.16

2.00

-0.07

8.30

13.04

-1.85

-2.66

2.67

19.56

28.11

8.91

48.36

62.65

13.73

32.71

34.20

32.42

29.26

27.16

42

Dena Bank

43


44

Escorts Ltd.

45

Eveready Industries India Ltd.

46

Federal Bank Ltd.

47


1.96

2.76

6.25

7.25

7.73

3.41

5.63

5.74

-3.06

10.67

48


0.62

15.31

-2.03

29.75

22.21

46.66

28.88

39.42

59.43

34.26

49

Gammon India Ltd.

23.52

22.96

15.06

23.42

7.52

13.43

5.12

9.93

12.46

16.93

50


2.65

8.78

11.11

14.14

18.32

9.07

5.28

-0.04

-5.24

2.05

5.76

7.78

5.56

6.86

7.09

9.06

12.77

16.98

13.42

21.48

AVERAGE

39

SrNo

DIVIDEND

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0

0

0

0

0

0

0

0

0

0

15

10

0

0

0

0

0

0

0

0

0

0

0

0

15

12.5

1


2


3


4


0

0

0

0

0

0

0

0

0

0

5


0

0

0

0

0

0

0

0

0

0

6


0

0

0

0

0

0

0

0

0

0

7

Ashima Ltd.

0

0

0

0

0

0

0

0

0

0

8


0

10

0

0

0

0

0

9

Avon Organics Ltd.

0

10

0

0

0

0

0

0

0

10

10


0

0

0

0

0

0

0

0

0

0

11


15

10

0

0

0

0

0

0

0

0

12

Cinevistaas Ltd.

0

0

0

0

0

0

0

0

0

0

13


5

0

0

0

0

0

0

0

0

0

14


0

0

0

0

0

0

0

0

0

0

15


0

0

0

0

0

0

0

0

0

0

16

Eicher Motors Ltd.

0

0

0

0

0

0

0

0

0

0

17


0

0

0

0

0

0

0

0

0

0

18

Essar Oil Ltd.

0

0

0

0

0

0

0

0

0

0

19

Essar Shipping Ltd.

0

0

0

0

0

0

0

0

0

0

20


0

0

0

0

0

0

0

0

0

0

21

Ajanta Pharma Ltd.

35

25

25

20

15

0

0

0

0

15

22

Aksh Optifibre Ltd.

0

0

6.67

35

0

0

0

55

50

25

23


0

0

0

7.5

7.5

15

5

5

5

5

24


15

20

15

25

20

20

0

0

0

20

25

Arvind Mills Ltd.

0

0

0

0

10

10

0

0

0

0

26

Assam Company Ltd.

5

0

0

0

0

10

10

10

15

20

27

Atul Ltd.

10

15

20

15

20

30

30

30

30

40

28


30

20

20

25

25

27.5

30

35

25

25

40

SrNo

DIVIDEND

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

29

Bata India Ltd.

15

7.5

0

0

0

0

0

20

25

30

30


27

20

20

15

15

15

15

15

10

10

31


10

5

5

10

25

25

25

25

25

25

32


0

0

0

0

0

0

20

25

21

35

33


0

0

0

10

15

22.5

35

40

45

60

34


0

0

0

10

15

30

25

26.67

15

15

35

Ceat Ltd.

10

10

10

10

0

0

18

40

0

40

36

Century Textiles & Industries Ltd.

10

15

17.5

20

25

30

37.5

45

45

55

37

CESC Ltd.

0

0

0

0

25

25

35

40

40

40

38

Chambal Fertilisers & Chemicals Ltd.

14

15

15

16

18

18

18

18

18

19

39


10

40

10

0

0

0

0

0

0

0

40


6.4

0

0

0

0

0

10

10

10

10

41


25

20

22

22

30

30

30

35

40

45

42

Dena Bank

0

0

0

0

0

0

8

10

12

20

43


20

20

20

25

25

25

25

25

25

30

44

Escorts Ltd.

45

10

10

0

0

0

0

0

10

15

45


10

0

0

0

0

40

0

0

0

10

46

Federal Bank Ltd.

30

35

40

70

25

35

40

40

50

50

47


15

30

20

30

30

30

30

30

10

30

48


0

15

0

20

25

30

30

40

20

45

49

Gammon India Ltd.

40

10

25

25

33.33

24

25

25

30

30

50


45

30

15

40

25

20

20

0

0

10

9.633

8.18

6.587

9.1939

8.7766

10.24

10.43

12.893

11.82

15.93

AVERAGE

41

SrNo

PRICE EARNING RATIO

Company Name 2001

10.44

2002 113.16


270.29

941.00

5.37 212.50

3


22.28

25.60

26.88

56.16

68.21

109.77

76.78

66.45

63.70

98.20

4


52.97

12.82

7.92

42.06

69.90

120.94

23.45

51.40

13.59

25.12

5


-16.38

-3.83

-0.86

10.23

-5.93

-16.61

-3.11

-51.13

5.95

-11.22

6


14.18

38.04

13.58

18.06

28.63

40.78

24.62

36.24

23.39

32.31

7

Ashima Ltd.

27.10

-2.92

-1.93

-1.67

-3.61

24.33

-6.91

-0.75

-1.02

-3.21

8


43.09

154.00

22.62

22.84

17.07

62.17

37.38

43.81

27.49

45.62

9

Avon Organics Ltd.

6.47

7.54

8.03

9.88

-35.95

15.48

-0.94

-6.07

5.85

-4.95

-20.53

-0.68

-0.46

-1.02

-4.02

1.99

27.24

6.44

8.94

-2.53

57.61

32.43

-0.20 145.71

10.29 103.33

-83.81

59.35

-4.06

23.68

-35.47

-73.31

19.27

14.83

25.00

-17.36

2.34

14.17

26.27

83.50

1 2

10 11


Balaji Distilleries Ltd. Birla Ericsson Opticaal Ltd.

2003

2004

2005

2006

2007

2008

2009

2010

16.14

-33.08

25.47

8.70

116.96

-0.85

36.54

2550.00

-97.50

161.36

72.82

112.61

70.15

147.20

12

Cinevistaas Ltd.

13


1.97

19.38

4.38

9.91

3.40

6.63

5.57

-1.42

-0.07

-0.08

14


7.91

14.94

8.84

17.09

19.29

65.12

46.35

17.62

13.75

20.55

15


3.45

2.19

5.38

8.89

9.59

11.99

6.60

4.05

4.04

15.01

16

Eicher Motors Ltd.

4.19

0.30

3.74

9.56

14.42

4.00

11.18

12.98

9.61

10.72

17


9.65

-5.23

-0.74

-4.86

88.33

88.89

7.50

11.23

34.17

123.00

127.17

-46.29

-96.43

1.90 16.87

8.63

17.24

12.66 576.94

556.80

0.13

2.83

2.38

4.41

4.01

7.29

13.07

25.57

16.80

51.10

30.95

10.05

41.00

163.15

249.83

212.14

33.09

14.64

63.75

8.05

13.72 51.11

30.70

18

Essar Oil Ltd.

19

Essar Shipping Ltd.

20


21

Ajanta Pharma Ltd.

1498.33

263.89

66.67

107.69

86.57

66.67

37.24

30.48

Aksh Optifibre Ltd.

18.69

-61.29

-31.38

-36.00

23.67

86.64

418.18

27.06


7.32

9.34

28.75

-208.65

12.56

27.45

22.97

11.79


28.66

45.06

11.19

6.90

7.84

15.31 15.31

10.02

6.90

Arvind Mills Ltd.

-0.86

-3.07

2.61

9.30

18.46

16.89 16.89

7.83

66.08

Assam Company Ltd.

-5.32

-3.47

43.41

-1.87

-4.66

-29.22

-20.56

2.45

11.92

2.61

28.77

12.85

5.28

13.05

23.62

28.33

33.96

35.61

43.03

22 23 24 25 26 27

Atul Ltd.

28


-25.23

-1.55 29.07

-5.93

15.60 15.60

-48.49

-2.92 14.47

-33.61

8.62

7.17

3.02

4.66

27.72

21.64

45.66

37.50

7.33

42

SrNo

29

PRICE EARNING RATIO

Company Name

Bata India Ltd.

2001

2002

2004

2005

2006

2007

2008

2009

2010

-47.13

2003 20.31

-69.66

-17.19

820.00

349.28

174.75

82.56

89.91

103.59

30


1.65

2.10

1.98

3.64

6.28

21.88

15.68

7.12

7.67

11.06

31


1.45

2.07

1.66

2.73

5.49

4.91

6.85

7.01

4.02

9.03

32


6.30

23.76

-0.76

-1.29

-1.93

21.83

3.13

2.35

0.83

1.90

33


-10.18

8.33

22.87

11.57

16.05

19.90

4.46

3.90

4.21

5.53

34


3.42

2.36

2.81

6.39

15.12

18.70

22.21

10.56

12.42

27.93

35

Ceat Ltd.

-53.75

10.43

4.84

8.98

-186.79

742.78

12.23

2.80

-7.82

3.19

36

Century Textiles & Industries Ltd.

5.45

6.40

5.61

11.68

19.22

38.23

18.42

19.98

8.70

11.93

37

CESC Ltd.

-1.65

-0.75

-1.79

9.68

8.72

15.19

10.38

13.71

6.51

11.11

38

Chambal Fertilisers & Chemicals Ltd.

3.43

5.12

6.27

6.14

6.57

8.17

8.54

10.40

7.69

10.28

39


5.63

4.70

5.96

47.27

7.32

11.69

18.92

57.40

-3.38

-5.76

40


473.78

-169.95

-5.69

-1.96

-40.00

5.64

6.84

14.36

3.32

10.90

41


1.55

2.61

2.16

3.67

7.02

10.98

7.69

8.88

3.32

5.84

42

Dena Bank

-6.33

1.79

2.22

2.65

11.70

14.47

4.92

4.07

2.23

4.43

43


4.78

6.61

3.95

9.81

13.24

13.24

13.61

9.81

8.19

12.29

44

Escorts Ltd.

5.21

56.15

10.54

-2.19

-17.47

41.05

40.57

23.93

17.40

14.23

45


9.62

1.35

5.23

-340.00

7.64

10.27

-35.41

-14.62

6.72

3.09

46

Federal Bank Ltd.

1.57

11.78

1.95

5.95

11.40

6.24

5.79

6.72

4.78

9.84

47


8.60

10.33

7.03

9.25

20.53

12.25

11.59

-9.23

6.18


206.61

8.49

5.36 29.80

9.56

20.02

14.25

18.52

13.93

6.76

28.02

49

Gammon India Ltd.

4.47

2.89

6.62

18.79

28.99

40.63

56.64

39.38

4.70

13.94

50


16.98

4.20

2.16

3.19

6.23

15.79

18.84

-1353.75

-2.29

22.24

53.06

25.39

3.41

57.46

30.94

48.16

22.64

-18.82

9.81

28.15

48

AVERAGE

43

VALUE STOCK

SrNo

Market Price

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1

Adani Exports Ltd.

201.3

172

124.05

407

61

60.75

207

624

270

471.1

2

Apollo Tyres Ltd.

48.2

79.35

123.8

248

285

291

275

41.9

18.3

71.8

3

Ashok Leyland Ltd.

45.1

80.5

98.1

256.85

21.1

40.7

37.8

35.8

18.4

56.25

4

Asian Paints (India) Ltd.

246

331

325.5

300

395

635

759.2

1250

809

2047

5

AstraZeneca AstraZene ca Pharma India Ltd.

385

363

337.05

770

1500

3100

595

515

577.9

878.5

6

Atlas Copco (India) Ltd.

79.25

115

289

456

690

1660

710

986.95

455

1071

7

Automotive Axles Ltd.

41.5

73

75

193

372

703

604.9

393.4

85.95

401

8

Bajaj Auto Finance Ltd.

26.6

48

48.5

77.9 77.9

167

540.95

417

333

68

323.7

9

Bajaj Hindustan Ltd.

59.85

52.4

66

392.25

161

507

194

189.1

48.95

136

10

Balaji Telefilms Ltd.

135.35

413

52

85

90

189

126

196.5

30.2

51.45

11

Bank Of Baroda

56.5

48.7

86

243.5

219.05

232

209.4

282

236

643.15

12

Bank of India

10.4

25.9

37.75

58.9

103.95

133

159.8

256.95

221

343.75

13

Bannari Amman Sugars Ltd.

85.1

150

101

294

552.7

1405

661.25

810

709

914.9

14

BASF India Ltd.

71

100

92

120.15

196

220

190

197.9

181

353

15

Berger Paints India Ltd.

87.6

69.5

69

107.6

42

86.1

37.2

36.8

34.85

58.6

16

Bharat Electronics Ltd.

48

128.4

182

504.75

668

1332.1

1477.8

1124

898

2204

17

Bharat Forge Ltd.

77

110

241

739

1396

448

309.2

275

97.6

256.9

18

Bharat Heavy Electricals Ltd.

139.9

172.5

223.5

604.3

783

2277

2275

2070

1514

2398

19

Bharat Petroleum Corpn. Ltd.

177

333

222

487.1

354.05

438.9

300

410.95

380

518.7

20

Cadila Healthcare Ltd.

127

130

123.5

464.95

474.7

684.7

325

253.7

275

833

21

Castrol India Ltd.

225.05

187

188.45

197.9

192.65

251

210.15

244

327.7

696

22

Century Enka Ltd.

50.1

52.3

82.1

117

132

175

123.55

109

65

276

23

Cipla Ltd.

964

1026.95

705

1165

257

665

234.7

220

216

338.65

24

CMC Ltd.

217.55

565

496

505

630

541

1200

822

332.7

1348

25

Colgate-Palmolive Colgate-Palmolive (India) Ltd.

152.1

144.85

122.5

132.5

179.5

432.25

327.55

385.8

479.9

678.05

26

Colour Chem Ltd.

55

120.1

201.5

249

255.1

345

324

246

199.25

545

27

Container Corporation Of India Ltd.

145

252.9

216.5

715.05

860

1410

1925

1749.95 1749.95

715

1324

28

Corporati on Bank

105.1

135.5

133

281.55

369

381.05

275.05

280

181.5

481.1

44

SrNo

Market Price

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

54.1

54.9

51.5

100.45

112.95

241

260

325

187

505.65

58

54.2

36.5

76.5

112.9

127

93.5

110

99.9

158.5

29

Cummins India Ltd.

30

Dabur India Ltd.

31

Dr. Reddy's Laboratories Laborator ies Ltd.

1208

1101.5

916.8

976

738.65

1435

720

594.95

497

1285

32

Dredging Corporation of India Ltd.

68.9

229.8

257.95

513

475

615

474

657

229.05

612

33

Duphar-Interfran Duphar- Interfran Ltd.

248.25

130

117.05

191.25

197.6

305

220

190

107.25

250.2

34

E.I.D. Parry (India) Ltd.

57.95

71.6

78.95

200.1

534

287.9

127.9

175

140.65

338.05

35

EIH Ltd.

204

214

155.55

275

309

764

93

140.9

87.05

119.15

36

Electrosteel Electros teel Castings Ltd.

100

184.15

216.75

299

426

375

379

46

15.25

53.5

37

Elgi Equipments Ltd.

11.25

15.05

16.95

53.2

42.75

76.05

50.55

50

33.8

93.25

38

Engineers India Ltd.

100

264.9

247.25

323.05

326

859

435

670

515.5

2220.1

39

Essel Propack Ltd.

205.1

278

127

211.7

313.7

458

68.95

37.25

12.7

43.15

40

Exide Industries Ltd.

69.6

64

74

131.8

142.8

260.05

43.15

67

40.85

125

41

FDC Ltd.

206

202

27.25

111

45.5

49.7

31.5

28.75

34.5

80.15

42

Federal Bank Ltd.

44

105

94.5

372.5

156.5

204

198

218

139.9

267.25

43

Finolex Cables Ltd.

150

141.95

79

120.6

178

356

83

73.5

19.55

52

44

Gail (India) Ltd.

45.5

78

75

214.2

214.5

322

261.8

429.9

246

412

45

Gillette India Ltd.

360

326

277.85

528

680

915

772

891

666.3

1414.3

46

GlaxoSmithkline Consumer Healthcare Ltd.

366

375.05

215

250.2

350

674.95

522

588

685

1514

47

GlaxoSmithKline GlaxoSmithKline Pharmaceuticals Ltd.

416

338

293

605

719

1464

1105

1050

1090

1782.1

115

235

207.5

145

284

315

595

493.95

153

267.85

384.75

390

300

369

764.7

1461

1135

1270

725.2

1965

56.05

16.1

14.1

46

111

608.2

158

262.5

53.05

141.65

171.8

206.981

178.825

325.72

372.827

627.15

446.338

454.168

304.474

668.37

48

Glenmark Pharmaceuticals Pharmaceut icals Ltd.

49

Godfrey Phillips India Ltd.

50

Godrej Industries Industri es Ltd. AVERAGE

45

SrNo

EPS

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

11.11

4.36

8.96

9.89

0.9

1.09

2.78

3.79

5.18

7.73

1

Adani Exports Ltd.

2

Apollo Tyres Ltd.

2.51

5.95

33.05

21.11

17.64

20.39

28.02

5.73

2.76

8.23

3

Ashok Leyland Ltd.

7.71

1.56

10.11

16.28

2.28

2.74

3.38

3.53

1.43

3.18

4


16.57

7.92

22.12

15.41

18.53

19.47

29.3

42.66

41.42

87.12

5

AstraZeneca Pharma India Ltd.

4.5452

1.87

5.47

6.29

11.55

15.37

3.95

4.46

2.91

1.05

6


4.09

0.59

6.58

9.02

10.75

15.66

7.97

11.06

6.41

11.97

7


2.41

3.08

3.54

8.04

7.04

6.71

9.52

9.52

-0.03

8.32

8


11.44

3.91

17.15

23.39

33.93

12.12

19.76

5.68

9.27

24.43

9


9.48

2.52

1.88

11.87

2.45

5.03

0.26

3.04

5.76

1.66

10


4.23

6.43

11.14

10.75

7.61

9.15

12.2

14.66

0.07

0.96

11

Bank Of Baroda

9.28

3.33

26.11

32.97

23.08

27.1

30.99

42.51

65.45

87.28

12

Bank of India

3.95

2.12

17.42

20.69

6.98

14.39

22.73

39.82

58.79

34.03

13


18.64

6.14

13.6

34.73

45.71

80.69

94.64

37.01

103.05

50.54

14

BASF India Ltd.

9.29

3.02

11.83

12.09

13.47

16.11

17.75

20.38

17.24

24.82

15


10.72

4.12

2.5156

0.53879

2.62

3.53

2.75

2.92

2.6

3.76

16


18.21

19.56

34.36

37.87

55.79

72.88

90.57

104.7

94.19

92.17

17

Bharat Forge Ltd.

8.29

5.5

20.71

32.28

39.64

9.5

13.01

13.44

2.62

-3.07

18


12.5

18.4

21.13

25.96

41.01

68.6

98.66

58.41

63.64

88.39

19


27.34

28.33

41.67

56.49

32.19

4.33

59.18

48.94

17.53

45.15

20


10.93

14.68

12.95

22.75

20.93

26.26

16.3

18.8

19.48

36.87

21

Castrol India Ltd.

7.92

7.2

11.56

48.68

16

10.4

13.44

23.56

24.68

18.96

22

Century Enka Ltd.

23.48

26.17

20.28

19.9

18.35

6.45

8.34

6.69

8.29

49.61

23

Cipla Ltd.

29.75

38.21

41.27

52.32

13.6606

20.01

8.52

9.02

9.99

13.69

24

CMC Ltd.

16.15

30.12

24.46

31.67

15.22

29.12

42.31

58.23

69.68

85.53

25


4.6

4.84

6.52

7.94

8.33

10.12

11.78

17.04

21.31

31.12

26

Colour Chem Ltd.

7.45

12.51

12.96

28.28

13.38

15.15

15.85

24.36

38.19

50.3

32.83

25.56

42.66

53.09

67.64

77.34

106.25

57.87

60.87

60.52

21.82

31.08

29

35.15

28.04

30.99

37.38

51.24

62.24

81.58

27 28

Container Corporation Of India Ltd. Corporation Bank

46

SrNo

EPS

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

5.5

4.6

4.76

5.52

6.93

8.87

12.22

14.18

21.9

22.42

2.73

2.58

3.54

5.17

3.3

2.93

3.66

4.32

4.78

-2.186

1.17 1.892

-1.2352

1.1

1.46

0.26

4.28

4.35

1.9

-0.63

36.39

39.7

39.7

58.52

39.77

61.26

55.91

55.29

16.49

25.02

24.6

30.52

11.23

27.37

21.07

-5.7

20.77

11.33

14.88

33.36

29

Cummins India Ltd.

30

Dabur India Ltd.

31

Dr. Reddy's Laboratories Ltd.

32


33

Duphar-Interfran Ltd.

34


24.72

32.16

15.03

24.22

58.41

12.98

14.28

-1.86

77.8

23.81

35

EIH Ltd.

15.94

0.066

1.22

3.69

5.58

36.04

5.1

5.53

0.1428

1.46

36

Electrosteel Castings Ltd.

39.1

52.25

60.19

45.5

54.77

41.53

51.13

2.25

4.94

6.45

37


0.95

1.4

1.87

3.08

3.41

2.81

3.37

6.3

6.34

7.07

38


22.64

4.05

11.95

14.28

20.06

24.79

25.46

34.65

61.35

12.93

39

Essel Propack Ltd.

17.87

11.87

9.49

13.27

13.11

2.62

2.38

1.74

2.01

2.24

40


11.1

13.6

14.7

10.2

10.3

13.4

2.07

3.3

3.55

6.69

41

FDC Ltd.

25.21

33.04

4.13

3.46

2.85

3.63

3.36

3.43

4.37

7.97

42

Federal Bank Ltd.

28.11

8.91

48.36

62.65

13.73

32.71

34.2

32.42

29.26

27.16

43

Finolex Cables Ltd.

21.1

9.76

7.83

9.66

10.06

16.47

4.5

5.81

-2.32

3.77

44

Gail (India) Ltd.

13.66

13.85

19

22.21

23.02

27.32

28.22

30.76

22.1

24.75

45

Gillette India Ltd.

4.68

-3.16

10.04

24.16

20.72

18.36

35.2

34.8

34.92

52.4

25.16

24.92

12

17.2

23.24

32.76

40.28

53.8

79.8

91.44

6.8

12.4

18.8

26.8

21.6

48

52.4

57.2

67.6

76

46 47

GlaxoSmithkline Consumer Healthcare Ltd. GlaxoSmithKline Pharmaceuticals Ltd.

48

Glenmark Pharmaceuticals Ltd.

16.93

31.6

31.65

7.49

5.29

5.54

11.26

15.9

8.72

4.93

49


45.31

38.29

49.22

50.04

61.16

57.82

84.73

107.92

104.73

113.84

50

Godrej Industries Ltd.

6.84

1.8

5.87

13.5

15.58

14.62

2.67

3.6

0.57

2.54

14.808

13.6

17.788

22.6582

20.2402

21.802

26.086

24.509

27.608

31.126

AVERAGE

47

SrNo

DIVIDEND IN PERCENTAGE

Company Name 2001

2002

2003

2004

2005

2006 2006

2007

2008

2009

2010

100

100

60

45

45

40

40

30

30

30

1

Adani Exports Ltd.

2

Apollo Tyres Ltd.

40

45

45

45

45

45 45

45

50

45

75

3

Ashok Leyland Ltd.

40

45

50

75

100

120

150

150

100

150

4


70

90

110

85

95

125

130

170

175

270

5


40

40

37

39

500

200

600

750

750

500

6


37.5

40

340

50

50

60

40

40

40

50

7


35

60

75

100

125

130

125

65

27

85

8


30

45

45

60

75

40 40

30

10

20

60

9


25

25

30

40

50

60 60

60

60

70

70

10


15

50

150

150

800

150

175

175

15

15

11

Bank Of Baroda

40

40

60

65

50

50

60

80

90

150

12

Bank of India

15

25

30

30

20

30 30

35

40

80

70

13


27

33

30

36

45

70

70

70

100

100

14

BASF India Ltd.

50

50

50

60

60

70 70

70

70

70

80

15


50

50

60

65

70

100

50

25

30

55

16


40

50

70

100

112

146

180

207

187

192

17

Bharat Forge Ltd.

30

35

60

100

125

150

175

175

50

50

18


30

40

40

60

80

145

245

152.5

170

233

19


75

110

150

175

125

25

160

40

70

140

20


55

65

90

90

100

120

150

350

350

400

21

Castrol India Ltd.

75

75

165

82.5

82.5

82.5

90

140

150

250

22

Century Enka Ltd.

50

60

55

60

60

60 60

60

50

50

60

23

Cipla Ltd.

45

70

100 100

150 150

175 175

100

100

100

100

100

24

CMC Ltd.

35

40

40

55

45

50

80

110

150

200

25


82.5

42.5

42.5

60

70

75

95

1300

1500

2000

26

Colour Chem Ltd.

40

50

60

60

60

110

240

100

190

250

27


67

100

110

125 125

145

180

220

185

140

140

28

Corporation Bank

40

40

45

60

65

70

90

105

125

165

48

SrNo

DIVIDEND IN PERCENTAGE

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

65

75

200

200

200

200

200

230

450

600

100

50

140

200

250

250

175

150

175

200

29

Cummins India Ltd.

30

Dabur India Ltd.

31


40

150

100

100

100

100

75

75

125

225

32


50

75

100

120

120

150

150

150

50

30

33


25

60

60

60

25

25

50

100

150

150

34


70

70

60

75

125

225

295

25

1000

500

35

EIH Ltd.

60

60

30

30

40

100

70

90

60

60

36


75

100

100

100

125

125

125

125

125

125

37


25

75

90

120

100

100

100

120

130

200

38


67

27.5

40

65

75

80

95

110

185

1060

39

Essel Propack Ltd.

54

73.33

65

80

90

220

100

60

15

16

40


40

35

40

40

25

30

35

40

60

100 100

41

FDC Ltd.

65

20

200

225

75

80

100

100

121.75

175

42

Federal Bank Ltd.

30

35

40

70

25

35

40

40

50

50

43

Finolex Cables Ltd.

75

75

30

40

45

60

70

75

10

30

44

Gail (India) Ltd.

40

45

70

80

80

100

100

100

70

75

45

Gillette India Ltd.

15

22.5

27.5

85

85

100

116.7

125

125

150

63

70

70

70

70

80

100

120

150

180

55

70

100

240

280

310

360

400

300

40

60

65

65

35

35

40

70

40

40

160

185

170

190

220

225

250

250

250

250

30

10

33.33

50

66.67

83.33

100

125

125

150

50.37

58.88

80.007

85.75

111.8

105.7

125.2

148.79

174.82

212.12

46


47

GlaxoSmithKline Pharmaceuticals Ltd.

48


49


50

Godrej Industries Ltd. AVERAGE

49

SrNo

PRICE EARNING RATIO

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1

Adani Exports Ltd.

18.12

39.45

13.84

41.15

67.78

55.73

74.46

164.64

52.12

60.94

2

Apollo Tyres Ltd.

19.20

13.34

3.75

11.75

16.16

14.27

9.81

7.31

6.63

8.72

3

Ashok Leyland Ltd.

5.85

51.60

9.70

15.78

9.25

14.85

11.18

10.14

12.87

17.69

4


14.85

41.79

14.72

19.47

21.32

32.61

25.91

29.30

19.53

23.50

5


84.70

194.12

61.62

122.42

129.87

201.69

150.63

115.47

198.59

836.67

6


19.38

194.92

43.92

50.55

64.19

106.00

89.08

89.24

89.47

7


17.22

23.70

21.19

24.00

52.84

104.77

63.54

41.32

70.98 2865.00

48.20

8


2.33

12.28

2.83

3.33

4.92

44.63

21.10

58.63

7.34

13.25

9


6.31

20.79

35.11

33.05

65.71

100.80

746.15

62.20

8.50

81.93

10


32.00

64.23

4.67

7.91

11.83

20.66

10.33

13.40

431.43

53.59

11

Bank Of Baroda

6.09

14.62

3.29

7.39

9.49

8.56

6.76

6.63

3.61

7.37

12

Bank of India

2.63

12.22

2.17

2.85

14.89

9.24

7.03

6.45

3.76

10.10

13


4.57

24.43

7.43

8.47

12.09

17.41

6.99

21.89

6.88

18.10

14

BASF India Ltd.

7.64

33.11

7.78

9.94

14.55

13.66

10.70

9.71

10.50

14.22

15


8.17

16.87

27.43

199.71

16.03

24.39

13.53

12.60

13.40

15.59

16


2.64

6.56

5.30

13.33

11.97

18.28

16.32

10.74

9.53

23.91

17

Bharat Forge Ltd.

9.29

20.00

11.64

22.89

35.22

47.16

23.77

20.46

37.25

-83.68

18


11.19

9.38

10.58

23.28

19.09

33.19

23.06

35.44

23.79

27.13

19


6.47

11.75

5.33

8.62

11.00

101.36

5.07

8.40

21.68

11.49

20


11.62

8.86

9.54

20.44

22.68

26.07

19.94

13.49

14.12

22.59

21

Castrol India Ltd.

28.42

25.97

16.30

4.07

12.04

24.13

15.64

10.36

13.28

36.71

22

Century Enka Ltd.

2.13

2.00

4.05

5.88

7.19

27.13

14.81

16.29

7.84

5.56

23

Cipla Ltd.

32.40

26.88

17.08

22.27

18.81

33.23

27.55

24.39

21.62

24.74

24

CMC Ltd.

13.47

18.76

20.28

15.95

41.39

18.58

28.36

14.12

4.77

15.76

25


33.07

29.93

18.79

16.69

21.55

42.71

27.81

22.64

22.52

21.79

26

Colour Chem Ltd.

7.38

9.60

15.55

8.80

19.07

22.77

20.44

10.10

5.22

10.83

27


4.42

9.89

5.08

13.47

12.71

18.23

18.12

30.24

11.75

21.88

28

Corporation Bank

4.82

4.36

4.59

8.01

13.16

12.30

7.36

5.46

2.92

5.90

50

SrNo

PRICE EARNING RATIO

Company Name 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

9.84

11.93

10.82

18.20

16.30

27.17

21.28

22.92

8.54

22.55

21.25

46.32

14.15

21.61

21.84

38.48

31.91

30.05

23.13

33.16

-552.51

-582.14

-742.21

887.27

505.92

5519.23

168.22

136.77

261.58

-2039.68

1.89

5.79

6.50

8.77

11.94

10.04

8.48

11.88

13.89

24.46

10.09

4.26

10.42

6.99

9.38

-53.51

10.59

16.77

7.21

7.50

2.34

2.23

5.25

8.26

9.14

22.18

8.96

-94.09

1.81

14.20

12.80

3240.31

127.50

74.53

55.38

21.20

18.24

25.48

609.64

81.61

2.56

3.52

3.60

6.57

7.78

9.03

7.41

20.44

3.09

8.29

29

Cummins India Ltd.

30

Dabur India Ltd.

31


32


33


34


35

EIH Ltd.

36


37


11.84

10.75

9.06

17.27

12.54

27.06

15.00

7.94

5.33

13.19

38


4.42

65.41

20.69

22.62

16.25

34.65

17.09

19.34

8.40

171.70

39

Essel Propack Ltd.

11.48

23.42

13.38

15.95

23.93

174.81

28.97

21.41

6.32

19.26

40


6.27

4.71

5.03

12.92

13.86

19.41

20.85

20.30

11.51

18.68

41

FDC Ltd.

8.17

6.11

6.60

32.08

15.96

13.69

9.38

8.38

7.89

10.06

42

Federal Bank Ltd.

1.57

11.78

1.95

5.95

11.40

6.24

5.79

6.72

4.78

9.84

43

Finolex Cables Ltd.

7.11

14.54

10.09

12.48

17.69

21.62

18.44

12.65

-8.43

13.79

44

Gail (India) Ltd.

3.33

5.63

3.95

9.64

9.32

11.79

9.28

13.98

11.13

16.65

45

Gillette India Ltd.

76.92

-103.16

27.67

21.85

32.82

49.84

21.93

25.60

19.08

26.99

46


14.55

15.05

17.92

14.55

15.06

20.60

12.96

10.93

8.58

16.56

47

GlaxoSmithKline GlaxoSmithKline Pharmaceuticals Ltd.

61.18

27.26

15.59

22.57

33.29

30.50

21.09

18.36

16.12

23.45

48


6.79

7.44

6.56

19.36

53.69

56.86

52.84

31.07

17.55

54.33

49


8.49

10.19

6.10

7.37

12.50

25.27

13.40

11.77

6.92

17.26

50

Godrej Industries Ltd.

8.19

8.94

2.40

3.41

7.12

41.60

59.18

72.92

93.07

55.77

3.10

75.63

-0.27

39.83

33.40

146.44

41.53

26.45

-13.71

1.27

AVERAGE

51

Analysis and interpretation

MARKET PRICE YEAR

VALUE

GROWTH

EPS VALUE

P/E RATIO

GROWTH

VALUE

DIVIDEND

GROWTH

VALUE

GROWTH

2001 2002

171.8 1 71.8 206.981

45.968 49.161

14.80798 13.59968

5.76 7.78

3.10 75.63

53.06 25.39

50.36735 58.8766

9.633333 8.177083

2003

178.825

42.481

17.78781

5.56

-0.27

3.41

80.0066

6.586875

2004

325.716

97.3546

22.65818

6.86

39.83

57.46

85.75

9.193878

2005 2006

372.827 627.147

134.1046 217.6902

20.24021 21.8018

7.09 9.06

33.40 146.44

30.94 48.16

111.8234 105.7366

8.7766 10.24

2007

446.338

216.3672

26.0862

12.77

41.53

22.64

125.2334

10.43

2008

454.168

240.6678

24.5086

16.98

26.45

-18.82

148.79

12.8934

2009 2010

304.474 668.368

158.7596 343.7596

27.60786 31.126

13.42 21.48

-13.71 1.27

9.81 28.15

174.815 212.12

11.82 15.93

52

HYPOTHESIS TEST

From the results of the analysis, test is carried out about the capital adequacy ratio of tested banks. Formula

One Way ANNOVA is calculated using the formula, MS Between (Estimate of population variance based on between samples variance) F= -----------------------------------------------------------------------------------Ms within (Estimate of population variance based on within samples variance) Where, Degree of freedom:V1 = (k – – 1) V2 = (n – 1) V1 = Degree of freedom for greater variance. V2 = Degree of freedom for Smaller variance. n = total number of items in all the samples i.e., n1 + n2 + … + nk k = number of samples.

Level of significance – 5% Note: How to calculate One Way ANOVA Technique in detail, is given in Annexure 1.

53

Calculation:

Calculation for the F- test is as follow, Table 1: Raw Data

F TEST The test is carried out from the raw data on four factor i.e. market price, price earning ratio, earning per share, and dividend, results are as follows.. 1. Market price Anova: Single Factor- MP SUMMARY Groups

Count

Sum

Average

Variance

VALUE

10

3756.644

375.6644

30712

GROWTH

10

1546.314

154.6314

10020.88

df

MS

ANOVA Source of Variation

Between Groups

SS

244278

1

244278

Within Groups

366595.9

18

20366.44

Total

610873.9

19

F

11.99415

P-value

F crit

0.002774

4.413873

Result of of ANOVA: ANOVA:

FCal.= 11.99415 FTab.= 4.413873 FCal.>FTab. Findings From The Study: By dividing the mean square of Between Groups by the mean square of Within Groups, we obtain an F-value of 11.99415 which is greater than the cut-off value of 4.413873

for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to reject the hypothesis thatthere is no statistical significant difference between average market price of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor "market price" has difference value stock and growth.

54

Anova: Single Factor- EPS SUMMARY Groups

Count

Sum

Average

Variance

VALUE

10

220.2243

22.02243

31.25772

GROWTH

10

106.759

10.6759

28.57956


SS

df

MS

Between Groups

643.7183

1

643.7183

Within Groups

538.5356

18

29.91864

Total

1182.254

19

F

21.51563

P-value

F crit

0.000204

4.413873



for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to reject the hypothesis thatthere is no statistical significant difference between average earning price per share of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor "earning price per share " has difference in value stock and growth stock.

55

Anova: Single Factor- P/E Ratio SUMMARY Groups

Count

VALUE GROWTH

10 10

Sum

Average

353.6895 260.1975

35.36895 26.01975

df

MS

Variance

2220.324 559.5028


SS

Between Groups Within Groups

437.0377 25018.44

1 18

Total

25455.48

19

437.0377 1389.913

F

0.314435

P-value

F crit

0.581885

4.413873


FCal.= 0.314435 FTab.= 4.413873 FCal.
for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to accept the hypothesis thatthere is no statistical significant difference between average price earning ratio of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor "priceearning ratio " has no difference in value stock and growth stock.

56

Anova: Single Factor- dividend SUMMARY Groups

Count

Sum

Average

Variance

VALUE

10

1153.519

115.3519

2639.844

GROWTH

10

103.6812

10.36812

6.998877

df

MS


SS

Between Groups

55107.97

1

55107.97

Within Groups

23821.58

18

1323.421

Total

78929.55

19

F

41.64053

P-value

4.5206

F crit

4.413873



for the F-distribution at 5 and 24 degrees of freedom and 90% confidence. Therefore, there is sufficient evidence to reject the hypothesis thatthere is no statistical significant difference between average dividend of value stock and growth stock. Furthermore from the analysis of these data we can conclude that the factor “dividend" has difference in value stock and growth stock.

Findings of the data as a whole As the data of market price clearly shows that value stocks are greater than in value stocks than the growth stocks, we can say that the investors prefer value stock than growth stocks. Even we can also see that price earning ratio is also greater in value stocks. In value stocks the dividends are declared but in the growth stocks companies do not prefer to declare dividend. In value stocks the risk is more associated as it is having more market price there is a possibility for the investor to loose money while in growth stocks the risk is moderate or very less. Value stock is risk associated but they give more returns than the growth stocks.

57

CONCLUSION AND RECOMMENDATION From the above calculations and findings we can conclude very clearly that the investors in the Indian stock market prefer the value stocks than the growth stocks as it has brighter prospects in future and investors hope for better returns from the growth stocks

A large body of empirical research indicates that value stocks on average earn higher returns than growthstocks. The reward to value investing is more pronounced for small stocks but it is also present in the larger stocks.

Growth stocks rocketed in value, prompting speculation that value investors were an endangered species. A more careful examination, however, suggests that the differences across the performance of equity classes in the late 2001s were not grounded on fundamental patterns of profitability growth. Instead, the most plausible interpretation of the events of the late-2001s is that investor sentiment reached exaggerated levels of optimism about the prospects for technology, media and telecommunications stocks. The resulting valuations were hard to reconcile with economic logic.

Similarly, the sharp rise and decline in recent years of technology and other growth-oriented stocks calls into question the argument that growth stocks are less risky investments. Rather, the evidence suggests that value stocks are not more risky than growth stocks, based on a variety of indicators including beta and return volatility. Indeed, using one popular risk indicator which focuses on performance in down markets, value stocks suffer less severely than growth stocks when the stock market or the overall economy does poorly.

The superior performance of value stocks cannot be attributed to their risk exposures. Instead a more convincing explanation for the value premium rests on features of investor behavior as well as the agency costs of delegated investment management. Several studies provide evidence in support of extrapolative biases in investor behavior.

The argument that the value premium is an artifact of data-snooping poses a tougher challenge. In this respect, however, two features of the debate about value investing are crucial. In particular, a logically coherent account exists that can explain the returns to value stocks, and there is empirical support for theextrapolation hypothesis. These features 58

distinguish the value premium from many other anomalous patternsthat have been documented on stock returns. Many apparent violations of the efficient markets hypothesis, such as day-of-the-week patterns in stock returns, lack a convincing logical basis. In the absence of a plausible rationale, there is a legitimate concern that the anomalous pattern is merely a statistical fluke that has been uncovered through data-mining. Instead, the value premium reflects ingrained patterns of investor behavior or the incentives of professional investment managers. As in the case of numerous past episodes in financial history, investors will continue to extrapolate from the past and get excessively excited about promising new technologies. They will overbid the prices of growth stocks, and conversely, beat down value stocks too low. As a result, patient investing in value stocks will continue to be a rewarding long-term investment strategy.

The research report will be a guide for the investors those who invest money and for those who are the future investors. This study will provide them to further know about what are the advantages and limitations of investing in value stock or growth stock in the Indian stock market.

59

REFERENCES

1. k.s. chalapatirao, 2001-2002, An Overview of the t he Indian Stock Market with Emphasis on Ownership Pattern of Listed Companies.

2. Gurucharansingh Gurucharansingh and salonykansal, Jan-june 2010, impact of union budget on indian stock market- A case study of NSE.

3. P. Krishna Prasanna, 2008, Foreign Institutional Investors: Investment Preferences in India. Dr.NeenaSinha, 4. Dr.NeenaSinha,

Dr.K.P.Kaushik,

and

Ms.TimcyChaudhary, Ms.TimcyChaudhary,

November

2010,

measuring post merger merger and acquisition performance: performance: an investigation of

select

financial sector organisation in India. India.

5. Mohammad Vesal, Vesal, 2011, Long Run Effects of Natural Natural Disasters. 6.

Krishnamurthy Subramanian, Subramanian, 2009-2010, value creation in mergers and acquitions.

7. Lei Gao, 2005, 2005, Calendar Effects in Chinese Stock Market. Market. 8. Kim Shannon, 2002, practical tools for analysing value stocks. 9. RaffeallaPorta, Josef Lakonishok, AndreiShleifer, and Robert Vishny, june 1997, Good News for Value Stocks: Further Evidence on Market Efficiency

10. Partha S. Mohanram, march 2003, Is Fundamental Analysis Effective for Growth Stocks?

11. S.S.S. Kumar, 2004-05, role of institutional investors in Indian stock market. 12. Louis K. C. Chan and Josef Lakonishok, july 2002, value and growth investing: A Review And Update.

13. P. Reinhard Hansen and A. Lunde, Feb 2003, testing the significance of the calendar effects.

14. Banz, RolfW., 1981, 1981, The relationship relationship between return return and market market value of common common stock, Journal of Financial Economics 9, 3 – 18. 18. 15. Chan, Louis K. C., Yasushi Hamao, and Josef Lakonishok, 1991, Fundamentals and stock returns in Japan,Journal of Finance 46, 1739 – 1764. 1764.

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BIBLOGRAPHY WWW.GOOGLE.CO.IN WWW.BSEINDIA.COM WWW.WIKIPEDIA.COM WWW.INVESTOPEDIA.COM WWW.MONEYCONTROL.COM WWW.MINISTRYOFFINANCE.GOV WWW.TIMESOFINDIA.COM WWW.ECONOMICSTIMES.COM WWW.BUSINESSSTANDARD.COM WWW.PROJECTPARADICE.COM SPECIAL ISSUE JOURNAL- THE ANALYST

61

Annexure & Appendices Annexure 1: One Way ANOVA ANOVA Test – Calculation Steps

One Way ANNOVA technique involves the following steps: (i) Obtain the mean of each sample.

X 1, 1, X 2, 2, X 3, 3, ... Xk , Xk

When there are k samples. (ii) Work out the mean of the sample means as follows:

(iii) Take the deviations of the sample means from the mean of the sample means and calculate the square of such deviations which may be multiplied by the number of items in the corresponding sample, and then obtain their total. This is known as the sum of squares for variance between the samples (or SS between). Symbolically, this can be written:

(iv) Divide the result of the (iii) step by the degrees of freedom between the samples to obtain variance or mean square (MS) between samples. Symbolically, this can be written:

(v) Obtain the deviations of the values of the sample items for all the samples from corresponding means of the samples and calculate the squares of such deviations and then obtain their total. This total is known as the sum of squares for variance within samples (or SS within). Symbolically this can be written:

(vi) Divide the result of (v) step by the degrees of freedom within samples to obtain the variance or mean square (MS) within samples.

Where (n – k ) represents degrees of freedom within samples, 62

n = total number of items in all the samples i.e., n1 + n2 + … + nk k = number of samples.

(vii) For a check, the sum of squares of deviations for total variance can also be worked out by adding the squares of deviations when the deviations for the individual items in all the samples have been taken from the mean of the sample means.

This total should be equal to the total of the result of the (iii) and (v) steps explained above i.e., SS for total variance = SS between + SS within.

The degrees of freedom for total variance will be equal to the number of items in all samples minus one i.e., (n – 1). The degrees of freedom for between and within must add up to the degrees of freedom for total variance i.e., (n – 1) = (k – – 1) + (n – k )

This fact explains the additive property of the ANOVA technique .

(viii) Finally, F -ratio -ratio may be worked out as under:

SETTING UP ANALYSIS OF VARIANCE TABLE For the sake of convenience the information obtained through various steps stated above can be put as under:

63

64

Research Report on Stocks

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