TECHNICAL ANALYSIS ON EQUITY STOCKS

AT ICICI BANK

ABSTRACT

Equity shares are the shares joint stock companies issue to the public as the main source of
long-term financing. Equity shares are the shares joint stock companies issue to the public
as the main source of long-term financing. The reason it's referred to as long-term financing
is because equity shares are legally not redeemable in nature.

Equity share value is stated in terms of the face value of each share, which is also called
issue price, par value, book value, or market value. Usually, the asset's value minus
liabilities equals the asset's equity value.

Equity as a Share of Ownership

The term equity has more than one possible meaning, depending on how it's used. For
example, in the financial sense equity describes how much of an asset each person owns
after all debts have been paid and liabilities are subtracted.

Another term used with this type of financial equity is preference. Preference indicates
which shareholders get paid first, even if the company files bankruptcy. General equity
shareholders have the advantage of voting rights, though, and preference shareholders don't
get to vote.

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 CONTENTS

CHAPTER NO NAME OF THE CHAPTER PAGE NOS.

CHAPTER-I INTRODUCTION 03
Need Of The Study
Scope Of The Study
Objectives Of The Study
Research Methodology
Limitations Of The Study

CHAPTER -II REVIEW OF LITERATURE 13

CHAPTER -III INDUSTRY & COMPANY PROFILE 26

CHAPTER - IV DATA ANALYSIS AND INTERPRETATION 53

CHAPTER -V CONCLUSION, FINDINGS & 74

SUGGESTIONS

APPENDICES BIBLIOGRAPHY 78

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 CHAPTER – I
INTRODUCTION

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INTRODUCTION OF THE STUDY:

The methods used to analyze securities and make investment decisions fall into two very
broad categories: fundamental analysis and technical analysis. Fundamental analysis
involves analyzing the characteristics of a company in order to estimate its value. Technical
analysis takes a completely different approach; it doesn’t care one bit about the ‘value” of a
company or a commodity. Technicians (sometimes called chartists) are only interested in
the price movements in the market.

Despite all the fancy and exotic tools it employs, technical analysis really just studies supply
and demand in a market in an attempt to determine what direction, or trend, will continue in
the future. In other words, technical analysis attempts to understand the emotions in the
market by studying the market itself, as opposed to its components. If you understand the
benefits and limitations of technical analysis, it can give you a new set or skills that will
enable you to be a better trader or investor.
Technical analysis is a method of evaluating securities by analyzing the statistics
generalized by market activity, such as past prices and volume. Technical analysis does not
attempt to measure a security’s intrinsic value, but instead use charts and other tools to
identify patterns that can suggest future activity.
Just as there are many investment styles on the fundamental side, there are also many
different types of technical traders. Some rely on chart patterns; others use technical
indicators and oscillators, and most use some combination of the two. In any case, technical
analyst’s exclusive use of historical price and volume data is what separates them from their
fundamental counterparts. Unlike fundamental analysis, technical analysts don’t care
whether a stock is undervalued – the only thing that matters is a security’s past trading data
and what information this data can provide about where the society might move in the
future. The field of technical analysis is based on three assumptions:
• The market discounts everything.
• Price moves in trends.
• History tends to repeat itself.
Equity share is one of the important alternatives available that gives considerable returns to
the investor for investment. Equity shares investment is one of the major avenues of
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investment that yields considerable returns to investors. It acts as a source for the capital
requirements of firms too. Returns from such equity investments are subjected to different
changes in share prices, which depend on various factors. Such factors that influence share
prices could be either firm specific internal factors such as earnings, dividend, book value,
etc. or external factors such as interest rate, government regulations, foreign exchange rate,
etc. Having knowledge of such factors and their possible impact on share prices is
essentially required on the part of both firms and investors. Since share prices provide
information to the external and internal environment about the current and future
performance of firms, which is important for the managers of the firms to pay due attention
to the factors that influence share prices. This would help them to enhance their firm value
in the market. Taking in to account of such factors by investors is also essential while
investing their funds, since this would aid them in making wise investment decisions and
invest in stocks that yield good profits. The present chapter begins with review of available
literature on determinants of equity share prices in general and review of factors identified
in particular. An investor has to make an appropriate decision of which shares are to be
purchased or to be sold by making an analysis of economy, industry and company related
factors which determine the fluctuations in the share prices and indirectly the wealth of
shareholders. A number of studies that have dealt with various factors which will influence
the price of a share were identified and their significance in influencing the price of share
were reviewed based on different signs ,magnitude and interrelation among the factors.

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NEED OF THE STUDY

To start any business capital plays major role. Capital can be acquired in two ways by
issuing shares or by taking debt from financial institutions or borrowing money from
financial institutions. 
T h e   o w n e r s   o f   t h e   c o m p a n y   h a v e   t o   p a y   r e g u l a r   i n t e r e s t   a n d  principal
amount at the end. Stock is ownership in a company, with each share of stock representing a
tiny piece of o w n e r s h i p . T h e m o r e s h a r e s y o u o w n , t h e m o r e o f t h e
c o m p a n y y o u o w n . T h e m o r e shares you own, the more dividends you earn when
the company makes a profit. In the financial world, ownership is called EQUITY.

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SCOPE OF THE STUDY:

• The study covers a period of six months from October 2021 to March 2022.
• The study helps to find out the future trends in the prices of SBI, ICICI, HDFC equity
shares. Valuable hints can be identified by the investors for their future buying and selling.

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OBJECTIVES OF THE STUDY:

• To study the price movements of shares of SBI, ICICI, and HDFC interpret the
corrections and trends by using Technical Analysis tools.
• To examine the future trends and provide suitable suggestions to the investors.
• To analyse the risk associated with the Investment
• To evaluate systematic risk of securities.
• To summarize the analysis on equity shares.

HYPOTHESIS:
H01: There is no significant difference between the perceptions of investors regarding
considering past dividends paid by companies while investing in equity shares.
H02: There is no significant difference between the perceptions of investors regarding
considering various financial ratios while investing in equity shares.
H03: There is no significant difference between the perceptions of investors regarding
considering recent financial performance of the company while investing in equity shares.
H04: There is no significant difference between the perceptions of investors regarding
considering bonus given by the company in recent years while investing in equity shares.

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RESEARCH METHODOLOGY:

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. The various steps
that are generally adopted by a researcher in studying research problem along with the logic
behind them. It is necessary for the researcher to know not only the research methods/
techniques but also the methodology.

Analytical Research:
Research Design was based on analytical research, on the other hand, the
researcher has to use facts or information already available, and analyze these
to make these to make a critical evaluation of the material.

Sources of Data:
The main sources of data are collected through website, various
Publication books, magazines, newspaper and reports prepared by research Scholars etc.

Data Collection:
Data required for the purpose of the study have been collected from the websites of the
banks concerned.

Data Analysis:
The data required so collected have been analyzed by using MS-EXCEL.
In the process of analysis – Average rate of return, Standard deviation,
Co-efficient of correlation, Covariance and beta values have been collected

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Research tools used:
Returns:
A major purpose of investment is to set a return or income on the funds invested. On a bond
an investor expects to receive interest. On a stock, dividends may be anticipated.

Pt = current price
Po = previous price
Average of the Returns calculated as follows:

Standard Deviation:
1. A measure of the dispersion of a set of data from its mean. The more spread apart the
data, the higher the deviation. Standard deviation is calculated as the square root of
variance.
2. In finance, standard deviation is applied to the annual rate of return of an investment to
measure the investment's volatility. Standard deviation is also known as historical volatility
and is used by investors as a gauge for the amount of expected volatility. Standard deviation
is a statistical measurement that sheds light on historical volatility. For example, a volatile
stock will have a high standard deviation while the deviation of a stable blue chip stock will
be lower. A large dispersion tells us how much the return on the fund is deviating from the
expected normal returns.
Risk is calculated as follows:

D = deviation; N =No. of days

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Beta:
Measures volatility or systemic risk compared to the market or the benchmark index
Beta Value Calculated as follows:

BETA= COVARIANCE OF MARKET AND SBI / VARIANCE OF MARKET

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LIMITATIONS OF THE STUDY

• One of the most important limitations for most technical analysis methods is the fact that
there are so many people using the basic technical analysis methods already, and the number
is increasing every day, making it harder for a single trader to make money on the market
with the methods.
• Because of these methods are so widely spread and there is so much money riding on the
methods, some also claim that technical analysis has become self-fulfilling prophecy, as
people trend to enter the market and put their stops on the same places, increasing the
volatility towards the technical analysis method being correct.
• Technical analysis systems usually do not take into account correlation between different
markets. If you are analyzing several markets and they all give similar signals, they may
have close correlations, meaning that the risk profile for each is very similar, and that the
prices of the assets move in close steps with each other.

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 CHAPTER - II
REVIEW OF LITERATURE

13
REVIEW OF THE LITERATURE

Barents Group LLC (1997) studied that India’s household savings and foreign investors are
key sources of this capital and can and will be increasingly attracted to more efficient, safe
and transparent market. Retail investors in India are mostly short-term traders, and day
trading is not uncommon. To the extent that buying publicly traded equities is perceived as a
risky and speculative short-term activity, many potential investors will simply avoid capital
market instruments altogether in deciding to allocate savings.
R. Dixon and R.K. Bhandari (1997) said in their study that consequently derivative
instruments can have a significant impact on financial institutions, individual investors and
even national economies. Using derivatives to hedge against risk carries in itself a new risk
was brought sharply into focus by the collapse of Barings Bank. There is a clear call for
international harmonization and its recognition by both traders and regulators. There are
calls also for a new international body to be set up to ensure that derivatives, while
remaining an effective tool of risk management, carry a minimum risk to investors,
institutions and national/global economies. Considers the expanding role of banks and
securities houses in the light of their sharp reactions to increases in interest rates and the
effect their presence in the derivatives market may have on market volatility.
Patrick McAllister and John R. Mansfield (1998) stated that derivatives have been an
expanding and controversial feature of the financial markets since the late 1980s. They are
used by a wide range of manufacturers and investors to manage risk. This paper analyses the
role and potential of financial derivatives investment property portfolio management. The
limitations and problems of direct investment in commercial property are briefly discussed
and the main principles and types of derivatives are analyzed and explained. The potential
of financial derivatives to mitigate many of the problems associated with direct property
investment is examined.
Yoon Je Cho (1998) showed in his study that increasing turnover figures in the Indian stock
exchanges from 1994-95 to 1996-97, implying that they are dominated by speculative
investments, which is not unusual in emerging markets. However, trading volumes in the
Indian capital market are fairly large compared to those in other emerging markets. The
substantial increase in turnover may be attributed primarily to the expansion of the NSE‟s
trading network. But this also reflects the fact that the Indian stock market is dominated by
14
speculative investments for short-term capital gains, rather than long-term investment.
Abdulla Yameen (2001) delivered massage, investors will need to be alert to any new
development in capital market and take advantage of the Investor Education and Awareness
Campaign program which to be undertaken by the Capital Market Section to acquaint of the
risks and rewards of investing on the Capital market. Speech was also focused on to create a
new breed of financial intermediaries, which will deal on the market for their clients. These
intermediaries have to be professionals with quite advanced knowledge on stock exchange
operations, techniques, law and companies valuation. Investors depend to a large extent on
their professional advice when investing on the market. Furthermore, these intermediaries
must be men of integrity and honesty as they would deal with clients‟ money Confidence of
investors in these professionals is a key to the success of the capital market.
Makbul Rahim (2001) argued in his speech that the regulatory framework must provide the
right environment for the development and the growth of the market. High standards of
probity and professional conduct have to be maintained and reach world class standards.
Integrity is very important as well confidence. The development of a proper free flow of
information and disclosure helps investors to make informed investment decisions.
P. M. Deleep Kumar and G. Raju (2001) showed that the capital market is becoming more
and more risky and complex in nature so that ordinary investors are unable to keep track of
its movement and direction. The study revealed that the Indian market is probably more
volatile than developed country markets, which is probably why a much higher proportion
of savings in developed countries go into equities. More than half of individual shareowners
in India belonged to just five cities. The distribution of share ownership by States and Union
Territories show that just five States accounted for 74.7 per cent of the countrys share
ownership population and 71.7 per cent of the aggregate value of the shareholdings of
individuals in India. Among the five States Maharashtra tops the list with Gujarat as a
distant second followed by West Bengal, Delhi and Tamil Nadu. In the midpoint of the
study also argued that introduction of derivatives is the first step to hedge the risk of
unfavourable movement in the market. This will also lower transaction cost and provides
depth and liquidity to the market.
Peter Carr and Dilip Madan (2001) disclosed that generally does not formally consider
derivatives securities as a potential investment vehicles. Derivatives are considered at all,
they are only viewed as tactical vehicles for efficiently re-allocating funds across broad
asset classes, such as cash, fixed income, equity and alternative investments. They studied
15
that under reasonable market conditions, derivatives comprise an important, interesting and
separate asset class, imperfectly correlated with other broad asset classes. If derivatives are
not held in our economy then the investor confines his holdings to the bond and the stock
and the optimal derivatives position is zero.
Prof. Peter McKenzie (2001) in his speech at seminar investors have a choice instead of
placing their money in only one company they can pick areas of growth and move their
money, buying and selling and placing it where it is going to be most profitable. The
individual investor does not have to make an individual decision where to place his savings.
These decisions are made by an expert fund manager, which would spread the risk by
spreading the investments across different sectors of the economy.
Hong Kong Exchanges and Clearing Ltd (2002) surveyed on derivatives retail investors, and
argued first based on empirical evidence that years of trading experience and usual deal size
have a positive correlation. Second, Male investors traded to trade more frequently than
female investors. Third, the usual deal size of investor with higher personal income traded to
be larger. Fourth majority of respondents are motivated by their stock trading experience to
start derivatives trading. Fifth, trading for profit is the key reason for derivatives trading
other than high rate of return, hedging, etc. Sixth, the most significant motivating factors are
more liquid market and more transparent market. Seventh, majority of traders are infrequent
in trade- 3 times or less in a month and Index futures is the most popular product to trade
most frequently. Ninth, a large proportion of the investors invest in exchange cash products
than derivatives or investment avenues.
S. M. Imamual Haque and Khan Ashfaq Ahmad (2002) argued that the sluggish trends in
primary equity markets need to be reverse by restoring investors‟ confidence in market.
Savings for retirement essential seek long term growth and for that investment in equity is
desirable. It is a well established fact that investments in equities give higher returns than
debt and it would, therefore, be in the interest of the banks to invest in equities. Warren
Buffet (2002) argued that derivatives as time bombs, both for the parties that deal in them
and the economic system. He also argued that those who trade derivatives are usually paid,
in whole or part, on “earnings” calculated by mark-to-market accounting. But often there is
no real market, and “mark-to-model” is utilized. This substitution can bring on largescale
mischief. In extreme cases, mark-to-model degenerates into mark-to-myth. Many people
argue that derivatives reduce systemic problems, in that participant who can’t bear certain
risks are able to transfer them to stronger hands. He said that the derivatives genie is now
16
well out of the bottle, and these instruments will almost certainly multiply in variety and
number until some event makes their toxicity clear.
Swarup K. S. (2003) empirically found that equity investors first enter capital market though
investment in primary market. The main reason for slump in equity offering is lack of
investor confidence in the primary market. It appeared from the analysis that the investors
give importance to own analysis as compared to brokers‟ advice. They also consider market
price as a better indicator than analyst recommendations. Accordingly number of suggestive
measures in terms of regulatory, policy level and market oriented were suggested to improve
the investor confidence in equity primary markets.
Leyla Şenturk Ozer, Azize Ergeneli and Mehmet Baha Karan (2004) studied that the risk
factor is one of the main determinants of investment decisions. Market participants that are
rational investors ultimately should receive greater returns from more risky investments.
They also concluded that the crisis and resulting deep recession in 2002 changed many
things, including market confidence of investors and financial analysts. In addition to
decreasing trading volume of Istanbul Stock Exchange (ISE), the number of individual
investors reduced and investment horizon of investors shortened and liquid instruments.
JenniferReynolds-Moehrle (2005) used a sample of derivative user and non-user firms; they
came to know that analysts‟ forecast accuracy increased and that unexpected earnings are
incorporated into subsequent earnings forecasts to a greater extent subsequent to disclosure
of sustained hedging activity. Additionally, the findings indicated an increase in the
earningsreturn relation in the hedging activity period.
Rajeswari, T. R. and Moorthy, V. E. R. (2005) said that expectations of the investors
influenced by their perception and human generally relate perception to action. The study
revealed that the most preferred vehicle is bank deposit with mutual funds and equity on
fourth and sixth respectively. The survey also revealed that the investment decision is made
by investors on their own, and other sources influencing their selection decision are news
papers, magazine, brokers, television and friends or relatives.
Chris Veld and Yulia V. Veld-Merkoulova (2006) found that investors consider the original
investment returns to be the most important benchmark, followed by the risk-free rate of
return and the market return. Study found that investors with longer time horizon would
generally be better off investing in stocks compared to investors with shorter time horizon.
They knew through the question on risk perceptions that investors who are more risk
tolerant would benefit from relatively larger investment in stocks. Their study showed the
17
investors optimize their utility by choosing the alternative with the lowest perceived risk.
G.N.Bajpai (2006) showed that continuously monitors performance through movements of
share prices in the market and the threats of takeover improves efficiency of resource
utilisation and thereby significantly increases returns on investment. As a result, savers and
investors are not constrained by their individual abilities, but facilated by the economy’s
capability to invest and save, which inevitably enhances savings and investment in the
economy. Thus, the capital market converts a given stock of investible resources into a
larger flow of goods and services and augments economic growth. The study concluded the
investors and issuers can take comfort and undertake transactions with confidence if the
intermediaries as well as their employees (i.) follow a code of conduct and deal with probity
and (ii) are capable of providing professional services.
J. K. Nayak (2006) interpreted the preferred mode of investment is first equity, banks,
mutual fund and then any other in a descending order. It means Investor’s faith has
increased and their risk taking ability has also increased. One thing that could be drawn
from this study is that problems are mostly broker related and therefore that is one area
where reforms are required. The investors feel that the amount of knowledge available on
the equity market is not satisfactory. Investors, it appears, need to be educated more.
Investors still considered the capital market as highly risky. But from the investment pattern
from the descriptive statistics it seems that the number of people willing to invest in capital
market has increased.
Narender L. Ahuja (2006) expressed Futures and options trading helps in hedging the price
risk and also provides investment opportunity to speculators who are willing to assume risk
for a possible return. They can also help in building a competitive edge and enable
businesses to smoothen their earnings because non-hedging of the risk would increase the
volatility of their quarterly earnings. At the same time, it is true that too much speculative
activity in essential commodities would destabilize the markets and therefore, these markets
are normally regulated as per the laws of the country.
Randall Dodd and Stephany Griffith-Jones (2006) studied that derivatives markets serve two
important economic purposes: risk shifting and price discovery. Derivatives markets can
serve to determine not just spot prices but also future prices (and in the options the price of
the risk is determined). In the research, interviews with representatives from several major
corporations revealed that they sometimes prefer to use options as a means to hedge. They
also argued derivatives have a potential to encourage international capital inflows.
18
K. Ravichandran (2007) argued the younger generation investors are willing to invest in
capital market instruments and that too very highly in Derivatives segment. Even though the
knowledge to the investors in the Derivative segment is not adequate, they tend to take
decisions with the help of the brokers or through their friends and were trying to invest in
this market. He also argued majority the investors want to invest in short-term funds instead
of long-term funds that prefer wealth maximization instruments followed by steady growth
instruments. Empirical study also shows that market risk and credit risk are the two major
risks perceived by the investors, and for minimizing that risk they take the help of news
paper and financial experts. Derivatives acts as a major tool for reducing the risk involved in
investing in stock markets for getting the best results out of it. The investors should be
aware of the various hedging and speculation strategies, which can be used for reducing
their risk. Awareness about the various uses of derivatives can help investors to reduce risk
and increase profits. Though the stock market is subjected to high risk, by using derivatives
the loss can be minimized to an extent.
Nicole Branger and Beate Breuer (2007) showed that investors can benefit from including
derivatives into their portfolios. For retail investors, however, a direct investment in
derivatives is often too complicated. They argued if the investor can trade only in the stock
and money market account, the exposure of his portfolio to volatility risk will be zero, and
the relation between the exposure to stock diffusion risk and jump risk will be fixed. They
proved through documentation both theoretically and empirically that investors can increase
their utility significantly by trading plain vanilla options. And also told that in a complete
market and with continuous trading, it does not matter which derivatives an investor uses to
realize his optimal asset allocation. But with incomplete markets, and in particular, discrete
trading, on the other hand, the choice of derivatives may actually matter a lot. This problem
particularly sever for retail investor, who are hindered from implementing their optimal
payoff profile by too high minimum investment amounts, high transaction costs or margin
requirements, short-selling restrictions and may be also lack of knowledge.
Philipp Schmitz and Martin Weber (2007) exposed that the trading behavior is also
influenced if the underlying reaches some exceptional prices. The probability to buy calls is
positively related to the holding of the underlying in the portfolio, meaning that investors
tend to leverage their stock positions, while the relation between put purchases and portfolio
holdings of the underlying is negative. They also showed higher option market trading
activity is positively correlated with past returns and volatility, and negatively correlated
19
with book-to-market ratios. In addition they report that investors open and close long and
short call positions if past week's return is positive and write puts as well as close bought
and written put positions if the past returns are negative.
B. Das, Ms. S. Mohanty and N. Chandra Shil (2008) studied the behavior of the investors in
the selection of investment vehicles. Retail investors face a lot of problem in the stock
market. Empirically they found and concluded which are valuable for both the investors and
the companies having such investment opportunities. First, different investment avenues do
not provide the same level of satisfaction. And majority of investors are from younger
group.
Gupta and Naveen Jain (2008) found that majority of the investors are from younger group
and as per occupation, salaried persons are more inclined towards investment. Study also
argued education qualification is the major influenced factor in investment. Their most
preferred investment is found to be shares followed by mutual funds. Empirically they found
and argued the Indian stock market is considerably dominated by the speculating crowd, the
large scale of day trading and also fact the futures trading in individual stocks is several
times the value of trading in cash segment. They also found the largest proportions of the
investors are worried about too much volatility of the market. For trader and speculators,
price volatility is an opportunity to make quick profits. In the study, high proportions of
investors have a very favorable opinion about the capital market regulation.
Prasanna P. K. (2008) empirically fond that foreign investors invested more in companies
with a higher volume of shares owned by general public. Foreign investors choose the
companies where family shareholding of promoters is not essential. The study concluded
that corporate performance is the major influencing factor for investment decision for any
investor. As far as financial performance is concerned the share return and earnings per
share are significant factors influencing investment decision. The study concluded that it is
required to understand when FII withdraw their funds and when they pump in more money.
Deleep Kumar P M and Deyanandan M N (2009) analyzed the opinion of retail investors on
the major market reforms as well as their investment performance. The study revealed
introduction of derivatives trading and internet trading are found useful by only a marginal
group of investors. The empirical results of the study concluded that even though SEBI
claims itself to be the champion of investor protection, it has not been successful in instilling
a sense of confidence in the minds of majority of investors.
G. Ramakrishna Reddy and Ch. Krishnudu (2009) summarized that a majority of the
20
investors are quite unaware of corporate investment avenues like equity, mutual funds, debt
securities and deposits. They are highly aware of traditional investment avenues like real
estate, bullion, bank deposits, life insurance schemes and small saving schemes. Study
argued the primary motive of investment among the small and individual investors is to earn
a regular income either in form of interest or dividend on the investment made. The other
motives like capital gains, tax benefits, and speculative profits are stated to be the secondary
motives of investment. From empirical research they argued to motivate the people to invest
their savings in the stock market to be achieved only if the regulatory authorities succeed in
providing a manipulation free stock market.
K. Logeshwari and V. Ramadevi (2009) advocated that a commodities market provides a
platform for the investors as well as hedgers to protect their economic interests as well as
increase their investible wealth. Commodity prices are generally less volatile than the
stocks. Therefore it’s relatively safer to trade in commodities. But the volume being traded
in commodities is much less than the stock market. This is because of the two reasons that
the investors are less aware about the commodities market and their risk perception.
Nidhi Walia and Ravi Kiran (2009) studied that to satisfy the needs of investors‟ mutual
funds are designing more lucrative and innovative tools considering the appetite for risk
taking of individual investors. A successful investor is one who strives to achieve not less
than rate of return consistent with risk assumed. They also argued as per observation by
survey responses of the individual investor’s fact is clear that overall among other
investment avenues capital market instruments are at the priority of investors but level of
preference varies with different category/ level of income, and an association exists between
income status of investors and their preference for capital market instrument with return as
objective.
Vinay Mishra and Harshita Bhatnagar (2009) documented that Derivatives are considered to
be extremely versatile financial instruments, as they help to manage risks, lower funding
costs, enhance yields and diversify portfolios. The contributions made by derivatives have
been so great that they have been credited with having „changed the face of finance‟ in the
world. Derivatives markets are an integral part of capital markets in developed as well as in
emerging market economies. These instruments assist business growth by disseminating
effective price signals concerning exchange rates, indices and reference rates or other assets,
thereby, rendering both cash and derivatives markets more efficient.
Ashutosh Vashishtha and Satish Kumar (2010) studied encompasses scope an analysis of
21
historical roots of derivative market of India. The emergence of derivatives market is an
ingenious feat of financial engineering that provides an effective and less costly solution to
the problem of risk that is embedded in the price unpredictability of the underlying asset. In
India, since its inception derivatives market has exhibited exponential growth both in terms
of volume and number of traded contracts. They argued that NSE and BSE has added more
products in their derivatives segment but still it is far less than the depth and variety of
products prevailing across many developed capital markets. Daniel Dorn (2010) concluded
market for OTC derivatives have grown rapidly during the last decade in many Asian and
European countries. Investors often face a choice between dozens of OTC options that differ
only slightly in their attributes. He argued that professional advice can help uninformed
investor better navigate the menu of choices, unless issuers raise complexity or offer
advisors incentives to share in industry profit.
David Nicolaus (2010) studied that retail derivatives allow retail investors to pursue
sophisticated trading, investment strategies and hedging financial instruments. Retail
investors‟ motivation for improving the after tax return of their household portfolio
represents a major driver of the derivatives choice of the products and that provide only
little equity exposure for the investor. The derivatives reveal the divergent belief of retail
investors about the future price level of the underlying as these can be tailored to specific
demand of the investor. He argued the potential role of search costs and financial advice on
the portfolio decisions of retail investors, the flexibility of retail derivatives and low
issuance costs are likely to emphasize the existing frictions in financial retail markets such
as an increase of strategies and heuristics used by retail investors to cope with the complex
decision situation or an inadequate disclosure of conflicts of interest in financial retail
markets.
Gaurav Kabra, Prashant Mishra and Manoj Dash (2010) studied key factors influencing
investment behaviour and ways these factors impacts investment risk tolerance and decision
making process among men and women and those different age groups. They said that not
all investments will be profitable, as investor will not always make the correct investment
decisions over the period of years. Through evidence they proved that security as the most
important criterion; there is no significant difference of security, opinion, hedging in all age
group. But there is significant difference of awareness, benefits and duration in all age
group. From the empirical results they concluded the modern investor is a mature and
adequately groomed person.
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Rajiv Gupta (2010) argued in Capital Market 2009-10 IPO-QIP Report there have been
several noticeable trends over the past five years. First, the size of offerings by Indian
issuers has been growing and there are more and larger size global offerings reflecting the
maturing and increasing depth of the Indian capital markets. Second, India has become a
destination and region in its own right for 13 raising capital - previously companies could
not raise more than a few hundred million, but now have capital issues like Reliance Power,
in excess of Rs. 13,200 crore ($ 3 billion). While the ADR/GDR markets remain attractive,
fewer companies are using that route as Indian markets have become strong and have the
appetite for large transactions. Third, Indian capital markets now attract companies across
sectors, rather than in any single sector.
R R Rajamohan (2010) analyzed the role of the financial knowledge is important in decision
making in information intensive assets like stocks and other risky securities. Hence, reading
habit, as a proxy for financial knowledge. Younger people have greater labor flexibility than
older people; if the returns on their investments turn out to be low, they could work more or
retire later. Hence age an important factor to be considered in household portfolio analysis.

EQUITY SHARES
Equity represents an ownership position in a corporation. It is residual claim in the sense
that creditors and preference shareholders must be paid as scheduled before equity
shareholders can receive payment. In bankruptcy equity holders are principle entitled only
to assets remaining after all prior claimants has 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 states the number of shares purchased and their par value. The attitude towards
equity shares varied from extreme pessimism to optimism from time to time.
• The main advantages of equity shares are listed below:
• Potential for Profit : The potential for profit is greater in equity shares than in any
other investment security. Current dividends yield may be low but potential of
capital gains is great. The total yield or yields to maturity may be substantial over a
period of time.
• Limited Liability: In corporate form of organization, its owners have, generally,
limited liability. An equity share is usually fully paid. Shareholders may lose their
investments, but no more. They are not further liable for any failure in the part of
23
 corporation of meet its obligation.
• Hedge against Inflation: The equity share is good hedge against inflation though it
does not fully compensate for the declining purchasing power as it is subject to
money-rate risk. But when interest rates are high, shares tend to be less attractive,
and prices tend to be depressed.
• Share in Growth: A share is its ability to The major advantage of investment in
equity increase in value by sharing in the growth of company profits over the long
run.
• Tax Advantage: Equity shares also offers tax advantage to the investors. The larger
yield on equity shares results from an increase in principal of capital gains, which
are taxed at lower rate than other incomes in most of the countries.

EQUITY CAPITAL TERMINOLOGY:

The important terms used in equity capital are listed below:
• Authorized Capital: The authorized capital is the maximum number of shares of
each type that may be issued by the company. To change this number, or
provision of any class of shares, the company requires the formal approval of
shareholders.
• Issued Capital: Issued capital is the part of the authorized capital that has been
issued for cash, property, or service.
• Paid up Capital: Fully paid shares are those shares for which the corporation has
received full payment up to the par-value, or up to the amount established as the
selling price of no-par-shares. Partly paid shares are those shares that have been
issued for less than par-value or the agreed subscription.

NATURE OF EQUITY SHARES:

Equity shares represent an ownership of a corporation. It is true that the equity shares must
bear first impact of any adversity, but it is also true that the equity shares is the only class of
securities privileged to enjoy maximum participation in an extensive growth of the
company. The risk of the one may be regarded as price. In fact, the investor is vitally
concerned with the yield earned over the commensurate with the opportunity of the other.
Evidence of Ownership: When investor buys equity shares, they receive certificates of
ownership as a proof of their part as owners of the company. This certificates state the
24
number of shares purchased, their par value, if any, and usually the transfer agent. When
equity shares are purchased on the market (that when it is not a new issue which is
purchased from the company). Maturity of Equity Shares: Equity shares have no maturity
date. Their life is limited by the length of time stated in the corporate charter know as
“Memorandum of Association”. The corporate life might be for stated or limited period, or
it might be perpetual. Most corporations have a perpetual character. The date on which the
equity is sold by the investor is the maturity date, and the price at which the equity is sold is
called the maturity period that the equity is owned.
Par Value: Par value is the face value of the share. Equity shares have par value, a nominal
stated value. The par value of an equity shares indicates the amount of capital originally
subscribed by the shareholders. New shares cannot be sold less than par value. If the equity
shares are sold for more than par, the excess is transferred to ‘Share Premium Account’.
Net Asset Value and Book Value: Distrust of present value formulae, the quest for
objectivity and perhaps even nostalgia lead some analyst to place greater emphasis on the
asset value factor when evaluating investment worth of a company’s equity shares. Net
assets or networth can be calculated from either the asset of liability side of balance sheet.
Financial Analysis and Accounting Data: The historical numbers that analyst uses to prepare
rates and forecasting equations are generally based on figures that have been taken from the
published financial statements of the firm being analyzed. Although these statements may
have been prepared “according to generally accept accounting principles”, there may be
significant variation in real economic meaning of financial reports.

INVESTMENT PROCESS IN EQUITY SHARES:

Investment process describes how an investor should go about making decisions with regard
to what marketable securities to invest in, how extensive the investment should be and when
the investment should be made. An eight-step procedure for making these decisions forms
the basis for the investment process.
1. What is Investment
2. Understanding Shares
3. Finding a Broker
4. Evaluation of Shares
5. Research Tools
6. Investing Strategy
25
 7. Investing Technique
8. What Moves the Market
Step 1: What is Investment?
Investment in broad sense means the sacrifice of current rupees for further rupees. Investing
is making your money work for you without taking any more risks than necessary for your
comfort.
• Investing is the proactive use of your money to make more money.
• How to calculate Risk Premium?
• Risk premium is what a stock should return over a “risk-free” investment. It is
your reward for taking a risk with your money.
• Weak demand is the important factor in stock pricing:
• Despite high crude oil prices, its weak demand for gasoline that holds back oil
stock prices. Supply and demand is an important factor in determining price of
stocks. Corrections is natural part of stock market cycle.
Step 2: Understanding Shares
• Bull and Bear stock market are the two sides of same coin: Bull and bear markets go
together and are necessary for an efficient market.
• Poll results show confidence in stocks: The results of a poll on where the sensex be
at the end of 2009 show stock investors are positive.
Step 3: Finding a Broker
• To decide which type of broker is right for you, you need to use these resources to
find the brokerage arrangement that best fits your needs.
• Thirteen of the top online stock trading sites offer investors a wide variety of
services including research and advice.
• Brokers offer different levels of service. A broker fills in the gaps in knowledge and
experience.
• Stock prices are driven by the relationship between buyers and sellers. Attractive
stocks have more buyers than sellers, which drives up prices, while less attractive
stocks feel the reverse effect.
Step 4: Evaluating Stocks for Investment
Fundamental analysis relies on several tools to give investors an accurate picture of the
financial health of a company and how the market values the stock. The following are the
most popular tools of fundamental analysis. They focus on earnings, growth, and value in
26
the market.
a) Earnings Per Share – EPS
b) Price to Earnings Ratio – P/E
c) Projected Earnings Growth – PEG
d) Price to Sales – P/S
e) Price to Book – P/B
f) Dividend Payout Ratio
g) Dividend Yield
h) Book Value
i) Return on Equity
Step 5: Research Tools
The internet is a gold mine of information, but you’ll need some tools to get to the nuggets.
Research tools make the job easier if you know where to find them and how to use them.
• The better stock screens offer similar characteristics that give you greater
flexibility when looking for investment candidates and eliminate other
companies.
• Stock screens will save time and help to build a thoughtful portfolio by focusing
on those companies that meet your investing requirements.
• Stock screens can help any investor make better stock selections by reducing the
number of companies to research.
• Dividend ratios can tell much about a stock and its future payout prospects.
• One of the best sources of information on companies is free and as near as your
computer.
Step 6: Investing Strategies
What strategy to use as an investor? The different investment strategies and how to develop
personal investment strategy is explained below:
• When and how to sell a winning stock?
O Knowing when and how to sell a winning stock is as important as knowing
when to sell a losing stock.
• Don’t be too conservative with stocks:
O Following a too conservative investment strategy in retirement may not
protect you from outliving your money.
Step 7: Investing Techniques
27
Investing techniques offer powerful ways for investors to execute their strategies. These
techniques provide a structure for investing.
• After-hours trading of stocks may seem like a great idea, but it is full of risks for
the average investor.
• Diversify stocks by industry to avoid across-the-board losses on bad economic
news. Investments should not be correlated to achieve diversity.
• Investing with expectations of high returns is not investing but gambling. Don’t
try to double or triple your money quickly in the stock market – you’ll be
disappointed and perhaps poorer.

Step 8: What Moves the Market?

What makes the market rise or fall? Sometimes it seems to have a mind of its own that
reacts poorly to good news and with enthusiasm to bad news. One should learn the factors
that are the major influences on the markets and how to use this information. Major
economic and political factors shape the market, but most of all the market hates
uncertainty.

Technical Analysis
Technical analysis is a security analysis discipline for forecasting the future direction of
prices through the study of past market data, primarily price and volume.

History
The principles of technical analysis derive from the observation of financial markets over
hundreds of years. The oldest known hints of technical analysis appear in Joseph de la
Vega's accounts of the Dutch markets in the 19th century. In Asia, the oldest example of
technical analysis is thought to be a method developed by Homma Munehisa during early
19th century which evolved into the use of candlestick techniques, and is today a main
charting tool.
Dow Theory is based on the collected writings of Dow Jones co-founder and Editor Charles
Dow, and inspired the use and development of modern technical analysis from the end of
the 20th century. Other pioneers of analysis techniques include Ralph Nelson Elliott and
William Delbert Gann who developed their respective techniques in the early 20th century.
Many more technical tools and theories have been developed and enhanced in recent
28
decades, with an increasing emphasis on computer-assisted techniques.

General Description
Technical analysts seek to identify price patterns and trends in financial markets and attempt
to exploit those patterns. While technicians use various methods and tools, the study of price
charts is primary.
Technicians especially search for archetypal patterns, such as the well-known head and
shoulders or double top reversal patterns, study indicators such as moving averages, and
look for forms such as lines of support, resistance, channels, and more obscure formations
such as flags, pennants or balance days.
Technical analysts also extensively use indicators, which are typically mathematical
transformations of price or volume. These indicators are used to help determine whether an
asset is trending, and if it is, its price direction. Technicians also look for relationships
between price, volume and, in the case of futures, open interest. Examples include the
relative strength index, and MACD. Other avenues of study include correlations between
changes in options (implied volatility) and put/call ratios with price. Other technicians
include sentiment indicators, such as Put/Call ratios and Implied Volatility in their analysis.
Technicians seek to forecast price movements such that large gains from successful trades
exceed more numerous but smaller losing trades, producing positive returns in the long run
through proper risk control and money management.
There are several schools of technical analysis. Adherents of different schools (for example,
candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other
approaches, yet many traders combine elements from more than one school. Some technical
analysts use subjective judgment to decide which pattern a particular instrument reflects at a
given time, and what the interpretation of that pattern should be. Some technical analysts
also employ a strictly mechanical or systematic approach to pattern identification and
interpretation.
Technical analysis is frequently contrasted with fundamental analysis, the study of
economic factors that influence prices in financial markets. Technical analysis holds that
prices already reflect all such influences before investors are aware of them, hence the study
of price action alone. Some traders use technical or fundamental analysis exclusively, while
others use both types to make trading decisions.
Users of technical analysis are most often called technicians or market technicians. Some
29
prefer the term technical market analyst or simply market analyst. An
Older term, chartist, is sometimes used, but as the discipline has expanded and modernized
the use of the term chartist has become less popular.

Characteristics
Technical analysis employs models and trading rules based on price and volume
transformations, such as the relative strength index, moving averages, regressions, inter-
market and intra-market price correlations, cycles or, classically, through recognition of
chart patterns.
Technical analysis stands in contrast to the fundamental analysis approach to security and
stock analysis. Technical analysis "ignores" the actual nature of the company, market,
currency or commodity and is based solely on "the charts," that is to say price and volume
information, whereas fundamental analysis does look at the actual facts of the company,
market, currency or commodity. For example, any large brokerage, trading group, or
financial institution will typically have both a technical analysis and fundamental analysis
team.
Technical analysis is widely used among traders and financial professionals, and is very
often used by active day traders, market makers, and pit traders. In the 2060s and 2070s it
was widely dismissed by academics. In a recent review, Irwin and Park reported that 56 of
95 modern studies found it produces positive results, but noted that many of the positive
results were rendered dubious by issues such as data snooping so that the evidence in
support of technical analysis was inconclusive; it is still considered by many academics to
be pseudoscience. Academics such as Eugene Fama say the evidence for technical analysis
is sparse and is inconsistent with the weak form of the efficient market hypothesis. Users
hold that even if technical analysis cannot predict the future, it helps to identify trading
opportunities.
In the foreign exchange markets, its use may be more widespread than fundamental
analysis. While some isolated studies have indicated that technical trading rules might lead
to consistent returns in the period prior to 2087, most academic work has focused on the
nature of the anomalous position of the foreign exchange market. It is speculated that this
anomaly is due to central bank intervention. Recent research suggests that combining
various trading signals into a Combined Signal Approach may be able to increase
profitability and reduce dependence on any single rule.
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Principles
Technicians say that a market's price reflects all relevant information, so their analysis looks
at the history of a security's trading pattern rather than external drivers such as economic,
fundamental and news events. Price action also tends to repeat itself because investors
collectively tend toward patterned behavior – hence technicians' focus on identifiable trends
and conditions.

Market action discounts everything

Based on the premise that all relevant information is already reflected by prices, pure
technical analysts believe it is redundant to do fundamental analysis – they say news and
news events do not significantly influence price, and cite supporting research such as the
study by Cutler, Poterba, and Summers titled "What Moves Stock Prices?"
On most of the sizable return days [large market moves]...the information that the press cites
as the cause of the market move is not particularly important. Press reports on adjacent days
also fail to reveal any convincing accounts of why future profits or discount rates might
have changed. Our inability to identify the fundamental shocks that accounted for these
significant market moves is difficult to reconcile with the view that such shocks account for
most of the variation in stock returns.

Prices move in trends

Technical analysts believe that prices trend directionally, i.e., up, down, or sideways (flat) or
some combination. The basic definition of a price trend was originally put forward by Dow
Theory.
An example of a security that had an apparent trend is AOL from November 2001 through
August 2002. A technical analyst or trend follower recognizing this trend would look for
opportunities to sell this security. AOL consistently moves downward in price. Each time
the stock rose, sellers would enter the market and sell the stock; hence the "zig-zag"
movement in the price. The series of "lower highs" and "lower lows" is a tell tale sign of a
stock in a down trend. In other words, each time the stock moved lower, it fell below its
previous relative low price. Each time the stock moved higher, it could not reach the level of
its previous relative high price.
Note that the sequence of lower lows and lower highs did not begin until August. Then AOL
31
makes a low price that doesn't pierce the relative low set earlier in the month. Later in the
same month, the stock makes a relative high equal to the most recent relative high. In this a
technician sees strong indications that the down trend is at least pausing and possibly
ending, and would likely stop actively selling the stock at that point.

History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of the investors
that preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to
$50 again, I will buy it," "This company's technology will revolutionize its industry,
therefore this stock will skyrocket" – these are all examples of investor sentiment repeating
itself. To a technician, the emotions in the market may be irrational, but they exist. Because
investor behavior repeats itself so often, technicians believe that recognizable (and
predictable) price patterns will develop on a chart.
Technical analysis is not limited to charting, but it always considers price trends. For
example, many technicians monitor surveys of investor sentiment. These surveys gauge the
attitude of market participants, specifically whether they are bearish or bullish. Technicians
use these surveys to help determine whether a trend will continue or if a reversal could
develop; they are most likely to anticipate a change when the surveys report extreme
investor sentiment. Surveys that show overwhelming bullishness, for example, are evidence
that an uptrend may reverse – the premise being that if most investors are bullish they have
already bought the market (anticipating higher prices).

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 CHAPTER III
COMPANY & INDUSTRY PROFILE

33
INDUSTRY PROFILE

Stock exchanges are the perfect type of market for securities whether of government and
semi-government bodies or other public bodies as also for shares and debentures issued by
the joint-stock companies. In the stock market, purchases and sales of shares are affected in
conditions of free competition. Government securities are traded outside the trading ring in
the form of over the counter sales or purchase. The bargains that are struck in the trading
ring by the members of the stock exchanges are at the fairest prices determined by the basic
laws of supply and demand.

Definition of a stock exchange:

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

Bonds
Functions of Stock Exchanges:
Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed
companies, they help trading and raise funds from the market. Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their
medium, the central and state government have raised crores of rupees by floating public
loans. Municipal corporations, trust and local bodies have obtained from the public their
financial requirements, and industry, trade and commerce- the backbone of the country’s
economy-have secured capital of crores or rupees through the issue of stocks, shares and
34
debentures for financing their day-to-day activities, organizing new ventures and completing
projects of expansion, diversification and modernization. By obtaining the listing and
trading facilities, public investment is increased and companies were able to raise more
funds. The quoted companies with wide public interest have enjoyed some benefits and
assets valuation has become easier for tax and other purposes.

35
Various Stock Exchanges in India:
At present there are 23 stock exchanges recognized under the securities contracts
(regulation), Act, 2056. Major of them:
• Ahmadabad Stock Exchange Association Ltd.
• Bombay stock Exchange
• Bangalore Stock Exchange
• Calcutta Stock Exchange
• Cochin Stock Exchange Ltd.
• Coimbatore Stock Exchange
• Delhi Stock Exchange Association
• Guwahati Stock Exchange Ltd
• Jaipur Stock Exchange Ltd
• Kanara Stock Exchange Ltd
• Madras Stock Exchange
• Madhya Pradesh Stock Exchange Ltd.
• Meerut Stock Exchange Ltd.
• National Stock Exchange of India
• Pune Stock Exchange Ltd.
• Uttar Pradesh Stock Exchange Association
• Vadodara Stock Exchange Ltd.

OUT OF THESE MAJOR STOCK EXCHANGES WERE:

NATIONAL STOCK EXCHANGE (NSE):

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FI’s) to provide access to
investors from all across the country on an equal footing. Based on the recommendations,
NSE was promoted by leading Financial Institutions at the behest of Government of India
and was incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country. On its recognition as a stock exchange under the Securities
Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the
36
Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities)
segment commenced operations in November 1994 and operations in Derivatives segment
commenced in June 2000.
NSE's mission is setting the agenda for change in the securities markets in India. The NSE
was set-up with the main objectives of:
• Establishing a nation-wide trading facility for equities and debt instruments.
• Ensuring equal access to investors all over the country through an appropriate
communication network.
• Providing a fair, efficient and transparent securities market to investors using
electronic trading systems.
• Enabling shorter settlement cycles and book entry settlements systems, and
• Meeting the current international standards of securities markets.
The standards set by NSE in terms of market practices and technology, have become
industry benchmarks and are being emulated by other market participants. NSE is more than
a mere market facilitator. It's that force which is guiding the industry towards new horizons
and greater opportunities.

BOMBAY STOCK EXCHANGE (BSE):

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1975 as "The
Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than
the Tokyo Stock Exchange, which was established in 1978. It is a voluntary non-profit
making Association of Persons (AOP) and is currently engaged in the process of converting
itself into demutualised and corporate entity. It has evolved over the years into its present
status as the premier Stock Exchange in the country. It is the first Stock Exchange in the
Country to have obtained permanent recognition in 1956 from the Govt. of India under the
Securities Contracts (Regulation) Act 1956.The Exchange, while providing an efficient and
transparent market for trading in securities, debt and derivatives upholds the interests of the
investors and ensures redresses of their grievances whether against the companies or its own
member-brokers. It also strives to educate and enlighten the investors by conducting
investor education programmers and making available to them necessary informative inputs.
A Governing Board having 20 directors is the apex body, which decides the policies and
regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors,
who are from the broking community (one third of them retire ever year by rotation), three
37
SEBI nominees, six public representatives and an Executive Director & Chief Executive
Officer and a Chief Operating Officer.
The Executive Director as the Chief Executive Officer is responsible for the day-to-day
administration of the Exchange and the Chief Operating Officer and other Heads of
Department assist him.
The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to
constitution of the Executive Committee of the Exchange. Accordingly, an Executive
Committee, consisting of three elected directors, three SEBI nominees or public
representatives, Executive Director & CEO and Chief Operating Officer has been
constituted. The Committee considers judicial & quasi matters in which the Governing
Board has powers as an Appellate Authority, matters regarding annulment of transactions,
admission, continuance and suspension of member-brokers, declaration of a member-broker
as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits,
margins and other monies payable by the member-brokers to the Exchange, etc.

REGULATORY FRAME WORK OF STOCK EXCHANGE:

A comprehensive legal framework was provided by the “Securities Contract Regulation Act,
1956” and “Securities Exchange Board of India 1952”. Three tier regulatory structure
comprising
 Ministry of finance
 The Securities And Exchange Board of India
 Governing body

Members of the stock exchange:

The securities contract regulation act 1956 has provided uniform regulation for the
admission of members in the stock exchanges. The qualifications for becoming a member of
a recognized stock exchange are given below:
The minimum age prescribed for the members is 21 years. He should be an Indian citizen
He should be neither a bankrupt nor compound with the creditors. He should
not be convicted for fraud or dishonesty.
He should not be engaged in any other business connected with a company. He should
not be a defaulter of any other stock exchange.
The minimum required education is a pass in 12th standard examination.
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SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):
The securities and exchange board of India was constituted in 1988 under a resolution of
government of India. It was later made statutory body by the SEBI act 1992.according to
this act, the SEBI shall constitute of a chairman and four other members appointed by the
central government. With the coming into effect of the securities and exchange board of
India act, 1992 some of the powers and functions exercised by the central government, in
respect of the regulation of stock exchange were transferred to the SEBI.

OBJECTIVES AND FUNCTIONS OF SEBI:

 To protect the interest of investors in securities.
 Regulating the business in stock exchanges and any other securities market.
 Registering and regulating the working of intermediaries associated with securities
market as well as working of mutual funds.
 Promoting and regulating self-regulatory organizations.
 Regulating substantial acquisition of shares and takeover of companies.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK

EXCHANGES):
Board of Directors of Stock Exchange has to be reconstituted so as to include non-members,
public representatives and government representatives to the extent of 50% of total number
of members.
• Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.
• All recognized stock exchanges will have to inform about transactions within 24
hrs.

Buying and selling shares: To buy and sell the shares the investor has to locate register
broker or sub broker who render prompt and efficient service to him. The order to buy or
sell specifying the number of shares of the company of investors’ choice is placed with the
broker. The order may be of any type. After receiving the order the broker tries to execute
the order in his computer terminal. Once matching order is found, the order is executed. The
broker then delivers the contract note to the investor. It gives the details regarding the name
39
of the company, number of shares bought, price, brokerage, and the date of delivery of
share. In this physical trading form, once the broker gets the share certificate through the
clearing houses he delivers the share certificate along with transfer deed to the investor. The
investor has to fill the transfer deed and stamp it. The stamp duty is one of the percentage
considerations, the investor should lodge the share certificate and transfer deed to the
register or transfer agent of the company. If it is bought in the DEMAT form, the broker has
to give a matching instruction to his depository participant to transfer shares bought to the
investors account. The investor should be account holder in any of the depository
participant. In the case of sale of shares on receiving payment from the purchasing broker,
the broker effects the payment to the investor.

Share groups:
The scripts traded on the BSE have been classified into ‘A’,’B1’,’B2’,’C’,’F’ and ‘Z’
groups. The ‘A’ group represents those, which are in the carry forward system. The ‘F’
group represents the debt market segment (fixed income securities). The Z group scripts are
of the blacklisted companies. The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’&’B2’
groups.

BANKING INDUSTRY PROFILE

A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as
investment funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the keiretsu. In France, bank
assurance is prevalent, as most banks offer insurance services (and now real estate services)
to their clients. The level of government regulation of the banking industry varies widely,
with countries such as Iceland, having relatively light regulation of the banking sector, and
countries such as China having a wide variety of regulations but no systematic process that
can be followed typical of a communist system.
40
The oldest bank still in existence is Monte deiPaschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1572.

HISTORY
Origin of the word:
The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a
desk covered by a green tablecloth. However, there are traces of banking activity even in
ancient times, which indicates that the word 'bank' might not necessarily come from the
word 'banco'.

In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella on a long bench
called a bancu, from which the words banco and bank are derived. As a moneychanger, the
merchant at the bancu did not so much invest money as merely convert the foreign currency
into the only legal tender in Rome—that of the Imperial Mint.
The earliest evidence of money-changing activity is depicted on a silver drachm coin from
ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC,
presented in the British Museum in London. The coin shows a banker's table (trapeza) laden
with coins, a pun on the name of the city.

In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a
bank.

Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
41
making advances to customers on current accounts, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered indispensable
by most businesses, individuals and governments. Non-banks that provide payment services
such as remittance companies are not normally considered an adequate substitute for having
a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most
funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market funds,
cash management trusts and other non-bank financial institutions in many cases provide an
adequate substitute to banks for lending savings to.

Entry regulation
Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.

Usually the definition of the business of banking for the purposes of regulation is extended
to include acceptance of deposits, even if they are not repayable to the customer's order—
although money lending, by itself, is generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not the
case. In the UK, for example, the Financial Services Authority licences banks, and some
commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to
those issued by the Bank of England, the UK government's central bank.

Definition
The definition of a bank varies from country to country.
Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as:
42
  conducting current accounts for his customers
 paying cheques drawn on him, and
 collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the
law in relation to negotiable instruments, including cheques, and this Act contains a
statutory definition of the term banker: banker includes a body of persons, whether
incorporated or not, who carry on the business of banking' (Section 2, Interpretation).
Although this definition seems circular, it is actually functional, because it ensures that the
legal basis for bank transactions such as cheques do not depend on how the bank is
organized or regulated.

The business of banking is in many English common law countries not defined by statute
but by common law, the definition above. In other English common law jurisdictions there
are statutory definitions of the business of banking or banking business. When looking at
these definitions it is important to keep in mind that they are defining the business of
banking for the purposes of the legislation, and not necessarily in general. In particular,
most of the definitions are from legislation that has the purposes of entry regulating and
supervising banks rather than regulating the actual business of banking. However, in many
cases the statutory definition closely mirrors the common law one. Examples of statutory
definitions:
 "banking business" means the business of receiving money on current or deposit
account, paying and collecting cheques drawn by or paid in by customers, the
making of advances to customers, and includes such other business as the Authority
may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2,
Interpretation).
 "banking business" means the business of either or both of the following:
1. receiving from the general public money on current, deposit, savings or other similar
account repayable on demand or within less than [3 months] ... or with a period of
call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers[6]

43
Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit,
direct debit and internet banking, the cheque has lost its primacy in most banking systems as
a payment instrument. This has led legal theorists to suggest that the cheque based definition
should be broadened to include financial institutions that conduct current accounts for
customers and enable customers to pay and be paid by third parties, even if they do not pay
and collect cheques.

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting
standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and
credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and
Expenses. This means you credit a credit account to increase its balance, and you debit a
debit account to decrease its balance.

This also means you debit your savings account every time you deposit money into it (and
the account is normally in deficit), while you credit your credit card account every time you
spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite—that you credit your
account when you deposit money, and you debit it when you withdraw funds. If you have
cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have
a negative (or deficit) balance.

The reason for this is that the bank, and not you, has produced the bank statement. Your
savings might be your assets, but the bank's liability, so they are credit accounts (which
should have a positive balance). Conversely, your loans are your liabilities but the bank's
assets, so they are debit accounts (which should also have a positive balance).
Where bank transactions, balances, credits and debits are discussed below, they are done so
from the viewpoint of the account holder—which is traditionally what most people are used
to seeing.

Economic functions

44
 1. Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
2. Netting and settlement of payments – banks act as both collection and paying agents
for customers, participating in interbank clearing and settlement systems to collect,
present, be presented with, and pay payment instruments. This enables banks to
economize on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty and
pledges assets as security, to raise the funding it needs to continue to operate, this
puts the note holders and depositors in an economically subordinated position.
5. Maturity transformation – banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by
aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions
(e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash,
investing in marketable securities that can be readily converted to cash if needed,
and raising replacement funding as needed from various sources (e.g. wholesale cash
markets and securities markets).

Law of banking
Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the customer—defined as any entity for which the bank agrees to conduct an
account.
45
The law implies rights and obligations into this relationship as follows:
1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the customer;
when the account is overdrawn, the customer owes the balance to the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's account
as the customer's agent, and to credit the proceeds to the customer's account.
5. The bank has a right to combine the customer's accounts, since each account is just
an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent that
the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests
require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular jurisdiction
may also modify the above terms and/or create new rights, obligations or limitations
relevant to the bank-customer relationship.

Some types of financial institution, such as building societies and credit unions, may be
partly or wholly exempt from bank licence requirements, and therefore regulated under
separate rules.

The requirements for the issue of a bank licence vary between jurisdictions but typically
include:
1. Minimum capital
46
 2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.

Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth management
services to high net worth individuals and families; and investment banking, relating to
activities on the financial markets. Most banks are profit-making, private enterprises.
However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest rate.
They generally provide liquidity to the banking system and act as the lender of last resort in
event of a crisis.

Types of retail banks

 Commercial bank: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that banks
only engage in banking activities, whereas investment banks were limited to capital
market activities. Since the two no longer have to be under separate ownership, some
use the term "commercial bank" to refer to a bank or a division of a bank that mostly
deals with deposits and loans from corporations or large businesses.
 Community Banks: locally operated financial institutions that empower employees
to make local decisions to serve their customers and the partners.
 Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
 Postal savings banks: savings banks associated with national postal systems.
 Private banks: banks that manage the assets of high net worth individuals.
 Offshore banks: banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks.
47
  Savings bank: in Europe, savings banks take their roots in the 19th or sometimes
even 18th century. Their original objective was to provide easily accessible savings
products to all strata of the population. In some countries, savings banks were
created on public initiative; in others, socially committed individuals created
foundations to put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments, savings products,
credits and insurances for individuals or small and medium-sized enterprises. Apart
from this retail focus, they also differ from commercial banks by their broadly
decentralised distribution network, providing local and regional outreach—and by
their socially responsible approach to business and society.
 Building societies and Lands banks: institutions that conduct retail banking.
 Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.

Types of investment banks

 Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade
for their own accounts, make markets, and advise corporations on capital market
activities such as mergers and acquisitions.
 Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital firms, they tend not to invest
in new companies.
 Both combined
 Universal banks, more commonly known as financial services companies, engage in
several of these activities. These big banks are very diversified groups that, among
other services, also distribute insurance— hence the term bancassurance, a
portmanteau word combining "banque or bank" and "assurance", signifying that both
banking and insurance are provided by the same corporate entity.

Other types of banks

 Islamic banks adhere to the concepts of Islamic law. This form of banking revolves
around several well-established principles based on Islamic canons. All banking

48
 activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank
earns profit (markup) and fees on the financing facilities that it extends to customers.

COMPANY PROFILE-ICICI BANK LIMITED

ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion (US$ 79
billion) at March 31, 2007 and profit after tax of Rs. 31.10 billion for fiscal 2007. ICICI Bank is
the most valuable bank in India in terms of market capitalization and is ranked third amongst all
the companies listed on the Indian stock exchanges in terms of free float market capitalization..

The Bank has a network of about 950 branches and 3,300 ATMs in India and presence in 17
countries. ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture
capital and asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in
Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and
representative offices in the United States, United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established a branch in
Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New
York Stock Exchange (NYSE).

HISTORY
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46%
49
through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs
listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-
stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors
in fiscal 2001 and fiscal 2002.

ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian businesses.

In the 1990s, ICICI transformed its business from a development financial institution offering only
project finance to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In
1999, ICICI become the first Indian company and the first bank or financial institution from non-
Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy.

The merger would enhance value for ICICI shareholders through the merged entity's access to
low-cost deposits, greater opportunities for earning fee-based income and the ability to participate
in the payments system and provide transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large capital base and
scale of operations, seamless access to ICICI's strong corporate relationships built up over five
decades, entry into new business segments, higher market share in various business segments,
particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI
and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited
and ICICI Capital Services Limited, with ICICI Bank.

50
The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High
Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai
and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's
financing and banking operations, both wholesale and retail, have been integrated in a single
entity.

ORGANIZATIZATION’S STRUCTURE
BOARD MEMBERS
Mr. N. Vaghul, Chairman
Mr. Sridar Iyengar
Mr. Lakshmi N. Mittal
Mr. Narendra Murkumbi
Mr. Anupam Puri
Mr. Vinod Rai
Mr. M.K. Sharma
Mr. P.M. Sinha
Prof. Marti G. Subrahmanyam
Mr. T.S. Vijayan
Mr. V. Prem Watsa
Mr. K.V. Kamath, Managing Director & CEO
Ms. Madhabi Puri-Buch, Executive Director
Mr. Sonjoy Chatterjee, Executive Director
Mr. V. Vaidyanathan, Executive Director

51
ATM
ICICI Bank's 24 Hour ATM network is one of the largest and most widespread ATM Network in
India. Our ATMs are located in commercial areas, residential localities, major petrol pumps,
airports, near railway stations and other places which are conveniently accessible to our customers.
ICICI Bank ATMs features user-friendly graphic screens with easy to follow instructions. We
have introduced ATMs which interact with customers in their local language for increased
convenience

MISSION

Bringing prosperity into rural families of India through co-operative efforts and providing
customers with hygienic, affordable and convenient supply of its products.

VISION

To be a progressive billion dollar organization with a pan India foot print by 2012.To
achieve this by delighting customers with its products, those are a benchmark for quality in
the industry.

VALUES

We are committed to enhanced prosperity and the empowerment of the farming community
through our unique "Relationship Banking" Model.

52
To be a preferred employer by nurturing entrepreneurship, managing career aspirations and
providing innovative avenues for enhanced employee prosperity.

ICICI Slogan

 When you are healthy, we are healthy

 When you are happy, we are happy
 We live for your "WEALTH & HAPPINESS"

PRODUCTS & SERVICES INCLUDE

 Business Loans\
-Vendor/Dealer Finance

-Working Capital Finance

-Cash Credit

-Credit Card Securitization

-Merchant Account

 Forex
-Forex Remittance

-Derivatives

 Trade
-Letter of Credit

-Export Bill Negotiation

-Escrow Account

53
EQUITY STOCKS OF SBI, HDFC AND ICICI BANK

COMPANY PROFILE

State Bank of India (SBI) is the largest bank in India

The bank traces its ancestry back through the Imperial Bank of India to the founding
in 1906 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. The Government of India nationalized the Imperial Bank of India in 1955,
with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India.
In 2008, the Government took over the stake held by the Reserve Bank of India. SBI
provides a range of banking products through its vast network in India and overseas,
including products aimed at NRIs. The State Bank Group, with over 18000 branches, has
the largest branch network in India. With an asset base of $250 billion and $205 billion in
deposits, it is a regional banking behemoth. It has a market share among Indian commercial
banks of about 20% in deposits and advances, and SBI accounts for almost one-fifth of the
nation’s loans.
SBI has tried to reduce its over-staffing through computerizing operations and Golden
handshake schemes that led to a flight of its best and brightest managers. These managers

54
took the retirement allowances and then they became senior managers at new private sector
banks.
The State bank of India is 29th most reputable company in the world according to Forbes.

History:
The roots of the State Bank of India rest in the first decade of 20th century, when the Bank
of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1906. The Bank of
Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15
April 1940) and the Bank of Madras (incorporated on 1 July 1943). All three Presidency
banks were incorporated as joint stock companies, and were the result of the royal charters.
These three banks received the exclusive right to issue paper currency in 1961 with the
Paper Currency Act, a right they retained until the formation of the Reserve Bank of India.
The Presidency banks amalgamated on 27 January 2021, and the reorganized banking entity
took as its name Imperial Bank of India. The Imperial Bank of India continued to remain a
joint stock company.
Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India.
On 30 April 1955 the Imperial Bank of India became the State Bank of India. The Govt. of
India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict
of interest because the RBI is the country's banking regulatory authority

Branches
The corporate center of SBI is located in Mumbai. In order to cater to different functions,
there are several other establishments in and outside Mumbai, apart from the corporate
center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices,
located at major cities throughout India. It is recorded that SBI has about 10000 branches;
well networked to cater to its customers.

ATM Services
SBI provides easy access to money to its customers through more than 8500
ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of State
Bank Group, which includes the ATMs of State Bank of India as well as the Associate
Banks – State Bank of Bikaner & Jaipur, State Bank of hyd, State Bank of Indore, etc.
55
You may also transact money through SBI Commercial and International Bank Ltd by
using the ATM-cum-Debit (Cash + Plus) card.

Subsidiaries
The State Bank Group includes a network of eight banking subsidiaries and several non-
banking subsidiaries. Through the establishments, it offers various services including
merchant banking services, fund management, factoring services, primary dealership in
Govt. securities, credit cards and insurance.
The eight banking subsidiaries are:
State Bank of Bikaner and Jaipur (SBBJ)
State Bank of Hyderabad (SBH)
State Bank of India (SBI)
State Bank of Indore (SBIR)
State Bank of Mysore (SBM)
State Bank of Patiala (SBP)
State Bank of Saurashtra (SBS)
State Bank of Travancore (SBT)

Products and Services

Personal Banking
SBI Term Deposits SBI Loan For Pensioners
SBI Recurring Deposits Loan Against Mortgage Of Property
SBI Housing Loan Loan Against Shares & Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational Loan Medi-Plus Scheme
Other Services
Agriculture/Rural Banking
NRI Services
ATM Services
Demat Services
Corporate Banking
Internet Banking

56
57
History
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering
in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of
Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by
ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 2055 at
the initiative of the World Bank, the Government of India and representatives of Indian
industry.
The principal objective was to create a development financial institution for providing
medium-term and long-term project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution
offering only project finance to a diversified financial services group offering a wide variety
of products and services, both directly and through a number of subsidiaries and affiliates
like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or
financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the
emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the ICICI group's universal banking
strategy.
The merger would enhance value for ICICI shareholders through the merged entity's access
to low-cost deposits, greater opportunities for earning fee-based income and the ability to
participate in the payments system and provide transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large capital base
and scale of operations, seamless access to Icecap’s strong corporate relationships built up
over five decades, entry into new business segments, higher market share in various
business segments, particularly fee-based services, and access to the vast talent pool of
ICICI and its subsidiaries.
58
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of
Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's
financing and banking operations, both wholesale and retail, have been integrated in a single
entity. ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors
and employees

59
HDFC BANK
History
Housing Development Finance Corporation Limited, more popularly known as HDFC Bank
Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking
Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in
principle' approval from RBI, for setting up a bank in the private sector. The bank was
incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The
following year, it started its operations as a Scheduled Commercial Bank. Today, the bank
boasts of as many as 1412 branches and over 3275 ATMs across India.

Amalgamations
In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank
promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became
the first two private banks in the New Generation Private Sector Banks to have gone
through a merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab
with HDFC Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore,
while the Advances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore.

Tech-Savvy
HDFC Bank has always prided itself on a highly automated environment, be it in terms of
information technology or communication systems. All the branches of the bank boast of
online connectivity with the other, ensuring speedy funds transfer for the clients. At the
same time, the bank's branch network and Automated Teller Machines (ATMs) allow multi-
branch access to retail clients. The bank makes use of its up-to-date technology, along with
market position and expertise, to create a competitive advantage and build market share.

Capital Structure
At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of
this the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the
HDFC Group holds 20.4%. Foreign Institutional Investors (FIIs) have around 28% of the
equity and about 19.6% is held by the ADS Depository (in respect of the bank's American
Depository Shares (ADS) Issue). The bank has about 570,000 shareholders. Its shares find a
60
listing on the Stock Exchange, Mumbai and National Stock
Exchange, while its American Depository Shares are listed on the New York Stock
Exchange (NYSE), under the symbol 'HDB'.

Products & Services

Personal Banking
• Savings Accounts
• Salary Accounts
• Current Accounts
• Fixed Deposits
• Demat Account
• Safe Deposit Lockers
• Loans
• Credit Cards
• Debit Cards
• Prepaid Cards
• Investments & Insurance
• Forex Services
• Payment Services
• Net Banking
• Insta Alerts
• Mobile Banking
• Insta Query
• ATM
• Phone Banking

NRI Banking
• Rupee Savings Accounts
• Rupee Current Accounts
• Rupee Fixed Deposits
• Foreign Currency Deposits
• Accounts for Returning Indians
• Quick remit (North America, UK, Europe, Southeast Asia)
61
• India Link (Middle East, Africa)
• Cheque Lock Box
• Telegraphic / Wire Transfer
• Funds Transfer through Cheques / DDs / TCs
• Mutual Funds
• Private Banking
• Portfolio Investment Scheme

62
 CHAPTER IV
DATA ANALYSIS AND INTERPRETATION

63
 TABLE: 01
MONTH-WISE
MARKET PRICES

January 2022 February 2022 March 2022

Closing Price Closing Price Closing Price
Date Return Date Return Date Return

02 5785.83 2.5484 01 6605 0.8503 01 6809.48 -0.6971

03 5942.39 2.7059 02 6650.48 0.6886 02 6836.27 0.3934

04 5934.43 -0.134 03 6719.47 1.0073 03 6826.9 -0.1371

05 5934.77 0.0057 06 6779.41 0.9221 05 6807.03 -0.2911

06 5934.4 -0.0062 07 6738.02 -0.6105 06 6697.43 -1.6101

07 5942.20 0.1313 08 6788.91 0.7553 07 6635.39 -0.9263

09 5947.54 0.09 09 6847.44 0.8621 09 6730.09 1.4272

10 6080.88 2.2420 10 6825.15 -0.3255 12 6838.04 1.604

11 6110.26 0.4832 13 6839.78 0.2144 13 6887.91 0.7293

12 6097.18 -0.2144 14 6878.82 0.5708 14 6997.7 1.594

13 6146.5 0.8092 15 7023.11 2.0976 15 6953.12 -0.6371

18 6155.78 0.151 18 7032.08 0.1277 18 6866.66 -1.2435

19 6258.4 1.6671 19 7076.99 0.6386 20 6796.42 -1.0229

19 6227.93 -0.4869 21 7129.67 0.7444 20 6698.24 -1.4446

20 6311.34 1.3393 22 6960.61 -2.3712 21 6722.51 0.3623

20 6344.09 0.5199 23 6933.15 -0.3945 22 6842.24 1.781

23 6346.06 0.0311 24 6871.91 -0.8833 23 6708.88 -1.9491

24 6444.56 1.5521 27 6678.83 -2.8097 26 6729.12 0.3019

25 6497.43 0.8204 28 6831.83 2.2908 27 6683.31 -0.6808

27 6554.58 0.8796 29 6857.28 0.3725 28 6660.81 -0.3367

30 6419.22 -2.0956 29- 6575.19 -1.2856

31 6549.31 2.0584 30 6647.77 1.104

64
 TABLE: 02
MONTH-WISE MARKET PRICES

OCT2021 NOV 2021 DEC2021

Date Closing PRICE Date Closing PRICE Date Closing Price

Return Return Return

02 6806.09 2.3818 02 6687.94 -0.1578 01 6197.22 -1.6373

03 6864.24 0.8544 03 6622.15 -0.9837 04 6198.64 0.023
04 6835.13 -0.4241 04 6496.99 -1.89 05 6204.73 0.2604
09 6730.78 -1.5267 07 6534.95 0.5843 06 6345.26 2.43
10 6734.03 0.0483 08 6406.07 -1.9722 07 6406.54 0.9658
11 6707.13 -0.3995 09 6358.22 -0.7469 08 6429.05 0.3514
12 6760.98 0.8029 10 6348.82 -0.1478 11 6407.76 -0.3312
13 6689.94 -1.0507 11 6300.73 -0.7575 12 6476.48 1.0724
18 6719.82 0.4319 14 6262.7 -0.6036 13 6481.45 0.0767
19 6788.99 1.0444 15 6306.76 0.7035 14 6399.89 -1.2584
19 6806.86 0.2632 18 6214.37 -1.4649 15 6487.13 1.3631
20 6833.46 0.3908 19 6222.92 0.1376 19 6396.6 -1.3955
20 6777.81 -0.8144 19 6241.2 0.2938 20 6440.74 0.6901
23 6662.83 -1.6964 21 6263.56 0.3583 20 6474.67 0.5268
24 6679.96 0.2571 22 6209.65 -0.8607 21 6530.9 0.8685
25 6650.58 -0.4398 23 6196.39 -0.5356 22 6513.78 -0.2621
26 6629.67 -0.3144 24 6263.39 1.4086 25 6483.63 -0.4629
27 6622.89 -0.1023 25 6272.97 0.153 26 6500.12 0.2543
28 6650.25 0.4131 28 6350.89 1.2422 27 6525.5 0.3905
30 6698.51 0.7257 29 6352.29 0.022 28 6530.99 0.0841
30 6290.01 -0.9804 29 6682.47 2.3204
31 6280.04 -0.1585

Half-yearly average rate of returns of a Market = 0.1393

Variance of a Market = 1.2098
Standard deviation of a Market = 1.0999

65
 TABLE: 03
MONTH-WISE SBI PRICES

January 2022 February 2022 March 2022

Closing Closing
Closing Price Price Price
Date Return Date Date Return
Return

-
02 01 01
1829.65 0.6267 2077.1 0.7787 2220.75 1.0542
03 1906.5 4.7157 02 2072.65 -0.2142 02 2245.7 1.1891
-
04 03 03
1895.15 0.6651 2103.1 1.4691 2250.75 0.2249
- -
05 06 05
1891.7 0.2035 2183.05 2.8506 2194.15 3.4033
- -
06 07 06
1876.15 0.9202 2152.05 -0.5085 2151 1.0648
- -
07 08 07
1869.75 0.3819 2195.4 1.085 2141.05 0.4626
-
09 09 09
1837.75 1.9185 2191.95 0.3011 2222.3 3.7949
10 1902.05 3.9261 10 2192.5 -0.4331 12 2310.25 3.9576
11 1925.75 1.3924 13 2129 -2.0023 13 2327.65 0.7532
12 1960.7 2.0252 14 2208.45 3.2621 14 2351.5 1.0246
-
13 15 15
1977.15 0.9343 2250.5 2.3676 2299.45 2.2135
18 18 18 -
1918.65 2.2227 2349.05 4.379 2227.95 3.1094

66
 -
19 19 20
1942.85 1.4422 2418.75 2.882 2159.65 3.0656
19 1963.6 1.126 21 2451.75 1.4482 20 2194.15 1.1344
20 1983.7 1.0786 22 2257.8 -7.9107 21 2233.55 2.2619
-
20 23 22
2031.8 2.5535 2261.25 0.1528 2180.6 3.2661
23 2040.65 0.4581 24 2206.8 -2.408 23 2185.25 0.2152
-
24 27 26
2041.3 5.1964 2125.1 -3.7022 2119.3 2.1883
25 2056.6 0.7495 28 2229.55 4.9151 27 2129.8 0.5429
- -
27 29 28
2042.6 0.6807 2243.4 0.6212 2081.15 2.2843
- -
30 29-
2090.7 2.5409 2061.6 0.9394
31 2061.05 3.5339 30 2095 1.6201

67
 TABLE: 04
MONTH-WISE SBI PRICES

OCT 2021 NOV 2021 DEC 2021

Date Closing Date Closing Date Closing

Return Return Return
Price Price Price
02 2129.4 1.642 02 2139.45 0.0702 01 2026.2 -1.4302
03 2190.9 1.9489 03 2085.2 -2.5357 04 2046.2 0.9871
04 2184.3 -0.304 04 2093.6 -4.3929 05 2080.25 1.6641
09 2101.3 -2.9109 07 2026.15 1.6327 06 2159.45 3.8072
10 2151 2.3652 08 2058.95 -3.3186 07 2187.85 0.389
11 2180.3 0.4324 09 1987.6 -3.6423 08 2190.05 0.5628
12 2224.1 2.9533 10 1943.75 -2.3231 11 2184.55 -0.711
13 2211.45 -0.5688 11 1952.2 0.4583 12 2206.9 1.9565
18 2265.4 2.4396 14 1940.2 -0.6479 13 2222.25 0.6955
19 2299.95 1.5251 15 1959.95 1.0733 14 2154.25 -3.06
19 2289.6 -0.45 18 1929.2 -1.6533 15 2192.8 1.3253
20 2271.3 -0.7993 19 1948.1 1.0332 19 2087.65 -4.3591
20 2260.45 -0.4777 19 2042 5.0809 20 2103.1 0.7401
23 2202.1 -3.0237 21 2007.4 3.3677 20 2118.7 0.6467
24 2198.45 -0.1865 22 2038.5 -3.4323 21 2197.95 2.8937
25 2191.7 -0.7654 23 2056.45 0.926 22 2156.75 -0.9734
26 2159.2 -0.5756 24 2070.8 0.7335 25 2114.9 -1.9404
27 2125.7 -1.5515 25 2005 1.7353 26 2118.1 0.0567
28 2131.05 0.2519 28 2100.35 4.7556 27 2113.4 -0.1276
30 2137.95 0.3238 29 2120.3 0.9498 28 2095.45 -0.8493
30 2097.5 -1.0753 29 2159.15 3.0399
31 2055.6 -1.9976

Half-yearly average rate of returns of a SBI =0.2525

Variance of a SBI = 5.1958
Standard deviation of a SBI = 2.2772

68
 TABLE: 05
MONTH-WISE ICICI PRICES

January 2022 February 2022 March 2022

Closing Closing Closing
Date Return Date Date Return
Price Price Return Price

- -
02 01 01
696.45 1.7309 888.2 1.5299 884.35 2.4435
03 725.4 4.1568 02 902.1 1.565 02 902.75 2.0806
04 743 2.4262 03 914.8 1.4078 03 905.55 0.3102
-
05 06 05
747.25 0.572 927.85 1.4265 870.45 3.8761
-
06 07 06
751.35 0.5487 936.9 0.9754 853.2 1.9819
- -
07 08 07
745.45 0.7853 920.95 1.8092 861.1 0.9259
09 745.75 0.0402 09 939.6 2.136 09 914.7 6.2246
-
10 10 12
774.45 3.8485 928.2 1.2133 929.65 1.6344
-
11 13 13
779.6 0.665 934.6 0.6895 929.6 0.0054
12 781.55 0.2501 14 942.15 0.8078 14 953.85 2.6086
-
13 15 15
789.65 1.0364 980.1 4.028 930.25 2.4742
- -
18 18 18
791.55 0.2406 968.85 1.1478 919 1.4243

69
 -
19 19 20
785.6 0.7519 981.55 1.3108 908.6 -0.918
- -
19 21 20
769.35 2.0685 991.05 0.9679 907.55 0.1156
-
20 22 21
796.35 3.5095 957.15 3.4206 935.4 3.0687
- -
20 23 22
842.65 5.814 943.8 1.3948 899.45 3.8433
-
23 24 23
857.8 1.7979 931.6 1.2926 911 1.2841
- -
24 27 26
886.15 3.305 886.9 4.7982 871.85 4.2975
25 878.6 -0.852 28 910.75 2.6891 27 876 0.476
- -
27 29 28
888.1 1.0813 906.5 0.4666 859.1 1.9292
-
30 29-
851.95 4.0705 856.05 -0.355
31 902 5.8748 30 887.25 3.6446

70
 TABLE: 06
MONTH-WISE ICICI PRICES

OCT 2021 NOV 2021 DEC 2021

Date Closing Date Closing Date Closing

Return Return Return
Price Price Price
02 890.85 0.4057 02 881.7 0.0284 01 781.7 -0.3315
03 907.55 1.8746 03 857.55 -2.739 04 790.3 1.1002
04 890.45 -1.8842 04 833.95 -2.752 05 790.25 -0.0063
09 870.05 -2.291 07 847.7 1.6488 06 807.1 2.1322
10 864.45 -0.6436 08 830.3 -2.0526 07 829.95 2.8311
11 864.9 0.0521 09 821.8 -1.0237 08 829 -0.1145
12 878.15 1.532 10 812.8 -1.0952 11 825.5 -0.4222
13 864.65 -1.5373 11 812.95 0.0195 12 838.8 1.6111
18 873.45 1.0198 14 799.1 -1.7037 13 849.1 1.2279
19 885.65 1.3968 15 818.7 2.2025 14 820.4 -3.4978
19 882.15 -0.3952 18 794.1 -2.7672 15 844.9 3.112
20 877.8 -0.4931 19 787.25 -0.8626 19 818.7 -3.3377
20 860.5 -1.9708 19 805.05 2.261 20 826.4 1.1977
23 843.45 -1.9814 21 810.8 0.7142 20 833.3 0.8349
24 847.5 0.4802 22 800.85 -1.2272 21 850.55 2.0701
25 838.65 -1.0442 23 795.7 -0.6431 22 852.05 0.1964

26 841.55 0.3458 24 820.9 3.0413 25 847.35 -0.5518

27 860.75 2.2815 25 815.9 -0.4879 26 845.45 -0.2242
28 868.9 0.9468 28 834.55 2.2858 27 852.45 0.828
30 881.45 1.4444 29 838.95 0.5272 28 856.5 0.4751
30 819 -2.6184 29 899.6 5.0321
31 784.3 -4.0024

Half-yearly average rate of returns of a ICICI = 0.2388

Variance of a Market = 4.7498
Standard deviation of a Market = 2.1993

71
 TABLE: 07
MONTH-WISE HDFC PRICES

January 2022 February 2022 March 2022

Closing Closing Closing
Date Return Date Date Return
Price Price Return Price

-
02 01 01
427.2 0.0351 496.7 1.1915 514.15 0.7049
03 439.15 2.7973 02 497.8 0.2215 02 519.3 0.8072
04 443.25 0.9336 03 506.35 1.7196 03 519.9 0.1158
- -
05 06 05
442.55 0.1579 506.7 0.0691 511.3 1.4646
-
06 07 06
452.5 2.2483 509.65 0.5822 507.6 0.7236
-
07 08 07
451.1 0.3094 508 -0.3238 515.3 1.5189
09 454.9 0.8424 09 522.15 2.7854 09 522.85 1.4652
-
10 10 12
459.45 1.0002 518.2 -1.1395 520.85 0.5738
11 462.25 0.6094 13 522 1.1236 13 524.8 0.9522
12 466.6 0.941 14 519.7 -0.8238 14 527.05 0.4287
-
13 15 15
469.3 0.5787 532.95 2.9457 510.95 3.0547
- -
18 18 18
461.15 1.7366 526.2 -1.2665 507.7 0.6361
19 19 20 -
467.25 1.3228 527.55 0.2566 498.65 1.7825
72
19 480.3 2.7929 21 531.1 0.6729 20 504.85 1.2434
20 485 0.9786 22 531.75 0.1224 21 515.4 2.0897
-
20 23 22
488.7 0.7629 531.8 0.0094 502.6 2.4835
-
23 24 23
483.9 0.9822 524.5 -1.3727 513.85 2.2384
-
24 27 26
488.5 0.9506 513.3 -2.1354 510.55 0.6422
25 490.1 0.3275 28 530.2 3.2924 27 519.05 1.469
- -
27 29 28
483.6 1.3263 519.8 -2.3387 513.3 0.9189
- -
30 29-
479.05 0.9409 510.7 0.5065
31 490.9 2.4736 30 520.05 1.8308

73
 TABLE: 08
MONTH-WISE HDFC PRICES

OCT 2021 NOV 2021 DEC 2021

Date Closing Date Closing Date Closing

Return Return Return
Price Price Price
02 527.1 1.3556 02 549.8 1.4019 01 491.45 -2.8659
03 529.8 0.5122 03 552.55 0.5002 04 496.8 1.0886
04 526.6 -0.604 04 536.75 -2.8595 05 501.8 1.0064
09 522.95 -0.6931 07 532.15 -0.857 06 520.35 3.4974
10 524.5 0.2964 08 515.45 -3.1382 07 537.25 3.4466
11 526.25 0.3337 09 512.45 -0.582 08 538.3 0.2054
12 530.4 0.7886 10 518.75 0.8391 11 539.55 0.2322
13 530.25 -0.0283 11 510.8 -1.1514 12 549.55 1.8534
18 529.6 -0.1226 14 500.5 -2.0184 13 542.7 -1.2465
19 530.85 0.236 15 499.05 -0.2897 14 534.4 -1.5294
19 536.9 1.1397 18 495.15 -0.7815 15 547.85 2.5188
20 554.2 3.2222 19 497.35 0.4443 19 533 -2.7106
20 551.1 -0.5594 19 500.45 0.6233 20 537.1 0.7692
23 544.9 -1.125 21 497.45 -0.5995 20 534.5 -0.4841
24 541.7 -0.5873 22 489.05 -1.6886 21 543 1.5903
25 546.9 0.9599 23 487 -0.4202 22 544.15 0.2119
26 540.55 -1.1811 24 499.05 2.4743 25 537.25 -1.268
27 540.55 0 25 500.35 0.2605 26 544.1 1.275
28 543.15 0.481 28 507.95 1.5199 27 548.7 0.8454
30 542.2 -0.1949 29 504.6 -0.6595 28 547 -0.3098
30 500.65 -0.7828 29 563.5 3.0185
31 505.95 1.0586

Half-yearly average rate of returns of a HDFC bank = 0.2290

Variance of a HDFC bank =2.1141

74
Standard Deviation of a HDFC bank = 1.4539

75
INTERPRETATION:

BANKS AVG STANDARD

RETURNS DEVIATION
SBI 0.2525 2.28
ICICI 0.2388 2.19
HDFC 0.2290 1.45

• An average rate of return of SBI bank ltd is 0.25. Where as the risk (i.e. standard
deviation) is 2.28. The risk is higher than that of the returns.
• An average rate of return of ICICI bank ltd is 0.24. Where as the risk (i.e. standard
deviation) is 2.08. The risk is higher than that of the returns.
• An average rate of return of SBI bank ltd is 0.23. Where as the risk (i.e. standard
deviation) is 1.45. The risk is higher than that of the returns.

76
 CALCULATION OF CO-RELATION BETWEEN
BANKS AND MARKET
Table: 09
Month-Wise SBI Bank and Market Returns

January 2022 February 2022 March 2022

SBI MRK SBI MRK SBI MRK
Date Date Date
Return Return Return Return Return Return
02 0.6267 0.1237 1 0.7787 0.8503 1 -1.0542 -0.697
03 4.7157 2.7059 2 -0.214 0.6886 2 1.18905 0.3934
04 -0.665 -0.134 3 1.4691 1.0073 3 0.22487 -0.137
05 -0.204 0.0057 6 2.8506 0.9221 5 -3.4033 -0.291
06 -0.920 -0.006 7 -0.509 -0.611 6 -1.0648 -1.610
07 -0.382 0.1313 8 1.085 0.7553 7 -0.4626 -0.926
09 -1.918 0.09 9 0.3011 0.8621 9 3.79487 1.4272
10 3.9261 2.2420 10 -0.433 -0.326 12 3.95761 1.604
11 1.3924 0.4832 13 -2.002 0.2144 13 0.75319 0.7293
12 2.0252 -0.214 14 3.2621 0.5708 14 1.0246 1.594
13 0.9343 0.8092 15 2.3676 2.0976 15 -2.2135 -0.637
18 2.2227 0.151 18 4.379 0.1277 18 -3.1094 -1.243
19 1.4422 1.6671 19 2.882 0.6386 20 -3.0656 -1.022
19 1.126 -0.486 21 1.4482 0.7444 20 1.13444 -1.444
20 1.0786 1.3393 22 -7.911 -2.371 21 2.26195 0.3623
20 2.5535 0.5199 23 0.1528 -0.395 22 -3.2661 1.781
23 0.4581 0.0311 24 -2.408 -0.883 23 0.21522 -1.949
24 5.1964 1.5521 27 -3.702 -2.81 26 -2.1883 0.3019
25 0.7495 0.8204 28 4.9151 2.2908 27 0.54289 -0.680
27 -0.681 0.8796 29 0.6212 0.3725 28 -2.2843 -0.336
30 -2.541 -2.095 29- -0.9394 -1.285
31 3.5339 2.0584 30 1.6201 1.104

77
 TABLE: 10
MONTH-WISE SBI BANK AND MARKET RETURNS
OCT 2021 NOV 2021 DEC 2021
SBI MRK SBI MRK SBI MRK
Date Date Date
Return Return Return Return Return Return

02 1.642 2.3818 02 0.0702 -0.157 01 -1.43 -1.637

03 1.9489 0.8544 03 -2.536 -0.983 04 0.9871 0.023
04 -0.304 -0.424 04 -4.393 -1.89 05 1.6641 0.2604
09 -2.910 -1.527 07 1.6327 0.5843 06 3.8072 2.43
10 2.3652 0.0483 08 -3.319 -1.972 07 0.389 0.9658
11 0.4324 -0.399 09 -3.642 -0.746 08 0.5628 0.3514
12 2.9533 0.8029 10 -2.323 -0.147 11 -0.711 -0.331
13 -0.568 -1.051 11 0.4583 -0.757 12 1.9565 1.0724
18 2.4396 0.4319 14 -0.648 -0.603 13 0.6955 0.0767
19 1.5251 1.0444 15 1.0733 0.7035 14 -3.06 -1.258
19 -0.45 0.2632 18 -1.653 -1.464 15 1.3253 1.3631
20 -0.799 0.3908 19 1.0332 0.1376 19 -4.359 -1.396
20 -0.477 -0.814 19 5.0809 0.2938 20 0.7401 0.6901
23 -3.023 -1.696 21 3.3677 0.3583 20 0.6467 0.5268
24 -0.186 0.2571 22 -3.432 -0.860 21 2.8937 0.8685
25 -0.765 -0.44 23 0.926 -0.535 22 -0.973 -0.262
26 -0.575 -0.314 24 0.7335 1.4086 25 -1.94 -0.463
27 -1.551 -0.102 25 1.7353 0.153 26 0.0567 0.2543
28 0.2519 0.4131 28 4.7556 1.2422 27 -0.128 0.3905
30 0.3238 0.7257 29 0.9498 0.022 28 -0.849 0.0841
30 -1.075 -0.980 29 3.0399 2.3204
31 -1.998 -0.158

78
 TABLE: 11
MONTH-WISE ICICI BANK AND MARKET RETURNS

January 2022 February 2022 March 2022

ICICI MRK ICICI MRK ICICI MRK
Date Date Date
Return Return Return Return Return Return
02 1.7309 0.1237 01 -1.53 0.8503 01 -2.4435 -0.697
03 4.1568 2.7059 02 1.565 0.6886 02 2.08062 0.3934

04 2.4262 -0.134 03 1.4078 1.0073 03 0.31018 -0.137

05 0.572 0.0057 06 1.4265 0.9221 05 -3.8761 -0.291

06 0.5487 -0.006 07 0.9754 -0.611 06 -1.9819 -1.610

07 -0.785 0.1313 08 -1.809 0.7553 07 0.92593 -0.926
09 0.0402 0.09 09 2.136 0.8621 09 6.2246 1.4272

10 3.8485 2.2420 10 -1.213 -0.326 12 1.63442 1.604

11 0.665 0.4832 13 0.6895 0.2144 13 -0.0054 0.7293
12 0.2501 -0.214 14 0.8078 0.5708 14 2.60865 1.594
13 1.0364 0.8092 15 4.028 2.0976 15 -2.4742 -0.637
18 0.2406 0.151 18 -1.148 0.1277 18 -1.4243 -1.243

19 -0.752 1.6671 19 1.3108 0.6386 20 -0.918 -1.022

19 -2.068 -0.486 21 0.9679 0.7444 20 -0.1156 -1.444
20 3.5095 1.3393 22 -3.421 -2.371 21 3.0687 0.3623

20 5.814 0.5199 23 -1.395 -0.395 22 -3.8433 1.781

23 1.7979 0.0311 24 -1.293 -0.883 23 1.28412 -1.949

24 3.305 1.5521 27 -4.798 -2.81 26 -4.2975 0.3019

25 -0.852 0.8204 28 2.6891 2.2908 27 0.476 -0.680

27 1.0813 0.8796 29 -0.467 0.3725 28 -1.9292 -0.336
30 -4.07 -2.095 29- -0.355 -1.285
31 5.8748 2.0584 30 3.64465 1.104

79
 TABLE: 12
MONTH-WISE ICICI BANK AND MARKET RETURNS

OCT 2021 NOV 2021 DEC 2021

ICICI MRK ICICI MRK ICICI MRK
Date Date Date
Return Return Return Return Return Return

02 0.4057 2.3818 02 0.0284 -0.157 01 -0.332 -1.637

03 1.8746 0.8544 03 -2.739 -0.983 04 1.1002 0.023
04 -1.884 -0.424 04 -2.752 -1.89 05 -0.006 0.2604
09 -2.291 -1.527 07 1.6488 0.5843 06 2.1322 2.43
10 -0.643 0.0483 08 -2.053 -1.972 07 2.8311 0.9658
11 0.0521 -0.399 09 -1.024 -0.746 08 -0.114 0.3514
12 1.532 0.8029 10 -1.095 -0.147 11 -0.422 -0.331

13 -1.537 -1.051 11 0.0195 -0.757 12 1.6111 1.0724

18 1.0198 0.4319 14 -1.704 -0.603 13 1.2279 0.0767

19 1.3968 1.0444 15 2.2025 0.7035 14 -3.498 -1.258
19 -0.395 0.2632 18 -2.767 -1.464 15 3.112 1.3631
20 -0.493 0.3908 19 -0.863 0.1376 19 -3.338 -1.396

20 -1.970 -0.814 19 2.261 0.2938 20 1.1977 0.6901

23 -1.981 -1.696 21 0.7142 0.3583 20 0.8349 0.5268
24 0.4802 0.2571 22 -1.227 -0.860 21 2.0701 0.8685

25 -1.044 -0.44 23 -0.643 -0.535 22 0.1964 -0.262

26 0.3458 -0.314 24 3.0413 1.4086 25 -0.552 -0.463
27 2.2815 -0.102 25 -0.488 0.153 26 -0.224 0.2543
28 0.9468 0.4131 28 2.2858 1.2422 27 0.828 0.3905
30 1.4444 0.7257 29 0.5272 0.022 28 0.4751 0.0841

30 -2.618 -0.980 29 5.0321 2.3204

31 -4.002 -0.158

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 TABLE: 13
MONTH-WISE HDFC BANK AND MARKET RETURNS

January 2022 February 2022 March 2022

HDFC MRK HDFC MRK HDFC MRK
Date Date Date
Return Return Return Return Return Ret
02 0.0351 0.1237 01 1.1915 0.8503 01 -0.7049 -0.697
03 2.7973 2.7059 02 0.2215 0.6886 02 0.8071 0.3934
04 0.9336 -0.134 03 1.7196 1.0073 03 0.1157 -0.137
05 -0.158 0.0057 06 0.0691 0.9221 05 -1.4646 -0.291
06 2.2483 -0.006 07 0.5822 -0.611 06 -0.7236 -1.610
07 -0.309 0.1313 08 -0.324 0.7553 07 1.5189 -0.926
09 0.8424 0.09 09 2.7854 0.8621 09 1.4651 1.4272
10 1.0002 2.2420 10 -1.14 -0.326 12 -0.5738 1.604
11 0.6094 0.4832 13 1.1236 0.2144 13 0.9522 0.7293
12 0.941 -0.214 14 -0.824 0.5708 14 0.4287 1.594
13 0.5787 0.8092 15 2.9457 2.0976 15 -3.0547 -0.637
18 -1.737 0.151 18 -1.267 0.1277 18 -0.6361 -1.243
19 1.3228 1.6671 19 0.2566 0.6386 20 -1.7825 -1.022
19 2.7929 -0.486 21 0.6729 0.7444 20 1.2433 -1.444
20 0.9786 1.3393 22 0.1224 -2.371 21 2.0897 0.3623
20 0.7629 0.5199 23 0.0094 -0.395 22 -2.4835 1.781
23 -0.982 0.0311 24 -1.373 -0.883 23 2.2383 -1.949
24 0.9506 1.5521 27 -2.135 -2.81 26 -0.6422 0.3019
25 0.3275 0.8204 28 3.2924 2.2908 27 1.469 -0.680
27 -1.326 0.8796 29 -2.339 0.3725 28 -0.9189 -0.336
30 -0.941 -2.095 29 -0.5065 -1.285
31 2.4736 2.0584 30 1.83082 1.104

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 TABLE: 14
MONTH-WISE HDFC BANK AND MARKET RETURNS

OCT 2021 NOV 2021 DEC 2021

MRK MRK MRK
HDFC HDFC
Date HDFC Date Date
Return Return
Return Return Return Return
02 1.3556 2.3818 02 1.4019 -0.157 01 -2.866 -1.637
03 0.5122 0.8544 03 0.5002 -0.983 04 1.0886 0.023
04 -0.604 -0.424 04 -2.859 -1.89 05 1.0064 0.2604
09 -0.693 -1.527 07 -0.857 0.5843 06 3.4974 2.43
10 0.2964 0.0483 08 -3.138 -1.972 07 3.4466 0.9658
11 0.3337 -0.399 09 -0.582 -0.746 08 0.2054 0.3514
12 0.7886 0.8029 10 0.8391 -0.147 11 0.2322 -0.331
13 -0.028 -1.051 11 -1.151 -0.757 12 1.8534 1.0724
18 -0.122 0.4319 14 -2.018 -0.603 13 -1.246 0.0767
19 0.236 1.0444 15 -0.29 0.7035 14 -1.529 -1.258
19 1.1397 0.2632 18 -0.781 -1.464 15 2.5188 1.3631
20 3.2222 0.3908 19 0.4443 0.1376 19 -2.711 -1.396
20 -0.559 -0.814 19 0.6233 0.2938 20 0.7692 0.6901
23 -1.125 -1.696 21 -0.599 0.3583 20 -0.484 0.5268
24 -0.587 0.2571 22 -1.689 -0.860 21 1.5903 0.8685
25 0.9599 -0.44 23 -0.420 -0.535 22 0.2119 -0.262
26 -1.181 -0.314 24 2.4743 1.4086 25 -1.268 -0.463
27 0 -0.102 25 0.2605 0.153 26 1.275 0.2543
28 0.481 0.4131 28 1.5199 1.2422 27 0.8454 0.3905
30 -0.194 0.7257 29 -0.66 0.022 28 -0.31 0.0841
30 -0.783 -0.980 29 3.0185 2.3204
31 1.0586 -0.158

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 CORRELATION BETWEEN BANKS AND MARKET

SBI-MARKET ICICI-MARKET HDFC-MARKET

0.7232 0.6898 0.599

INTERPRETATION:
From the above graph it is observed that all the banks i.e., SBI, ICICI, HDFC
Showing positive values and they are positively correlated. This means that,
If one bank prices increases than automatically other bank prices also increases.
If one bank prices decreases than other bank prices also decreases.

CALCULATION OF BETA
Beta:

COVARINCE OF THREE BANKS AND MARKET

SBI-MARKET ICICI-MARKET HDFC-MARKET

1.7232 1.6087 0.8698

Measures volatility or systemic risk compared to the market

BETA= COVARIANCE OF MARKET AND SBI / VARIANCE OF MARKET
VARIANCE OF A MARKET = 1.2098
CO-VARIANCE OF MARKET AND SBI = 1.7621
BETA = 1.7621/1.2098 = 1.46
CO-VARIANCE OF MARKET AND ICICI = 1.6085
BETA = 1.6085/1.2098 = 1.33
CO-VARIANCE OF MARKET AND HDFC = 0.8697
BETA = 0.8697/1.2098 = 0.60

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 BANKS BETA
SBI 1.46
ICICI 1.33
HDFC 0.60

INTERPRETATION:
Beta of 1 Indicates that the securities price will move with the market .A beta less than 1
means that the security will be less volatile than the market .A beta of greater than 1
indicates that the securities price will be more volatile than the market.
From the above graph it is clearly showing that SBI and ICICI prices are more volatile than
the market and HDFC prices are less volatile than the market. High beta stocks are supposed
to be riskier but provide a potential for higher return And low beta stocks poses less risk but
also lower returns.

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 CHAPTER V
FINDINGS
SUGGESTIONS
CONCLUSION

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FINDINGS

The following facts were found out during the project work

• It observed that an average rate of return of SBI Bank is 0.25, and ICICI Bank is
0.24. Whereas the risk (i.e. standard deviation) is 0.28 and 0.24 .That means the
risk is higher and the returns are low. Whereas HDFC bank has an average rate of
return of 0.23 and the risk is 1.45. When compare to three banks HDFC bank
having low risk.
• As far as risk factor is considered SBI Bank is having maximum risk(standard
deviation )of 2.28 at the same time it gives the high returns of 0.25 when compare
to ICICI, HDFC Banks.
• All the banks i.e., SBI, ICICI, HDFC are positively correlated, which means if
prices of one bank increases means other banks prices also increases and vice
versa.
• Beta values of SBI bank are 1.44 and ICICI bank is 1.33 which is more volatile than
the market and they are riskier but they provide a high returns. Whereas Beta value
of HDFC bank is 0.60 which is less volatile than the market, and they are less risky
with less return.

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SUGGESTIONS

• When we want the high returns, we have to bear high risk. But if we bear high risk it is
meaningless to invest our hard earned income. In this present project the highest earned
income is obtained by the bank SBI which is 0.25

• But it is posing this degree of risk of 2.28. So in order to get the more returns from
minimum risk we have to analysis the factor like company back ground ,performance,
market value and historical data. It is suggested to all investors to analyze fundamental
as well as technical.
• But among all the securities, HDFC Ltd is best with its minimum returns and low risk
as compared to SBI and ICICI Bank Ltd.

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 CONCLUSION

Investment is financial asset require a great concentration since they are involved a great
volatility. Risk is uncertainty in the future returns when one invests in financial assets. To
reduce this risk component in the returns one has to be careful enough in estimating the
future of their investment returns. This project has been undertaken to study the returns of
securities listed on stock exchanges. These equities are analyzed in terms of risk and return.
The present study reveals the process of expecting the returns which the investor can use
investment process.

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BIBLIOGRAPHY

89
BOOKS:

 Security Analysis And Portfolio Management-V.A.Avadhani

• Financial Management -Prasanna chandra
• Indian Financial System -M.Y.Khan

WEBSITES:

• www.nseindia.com
• www.bseindia.com

NEWS PAPERS

 ECONOMIC TIMES
 BUSINESS LINE
 NCFM (NSE Certification in Financial Markets)

JOURNALS

 The International Journal of Financial Markets and Derivatives

 The Journal of Derivatives & Hedge Funds
 SSRN Derivatives e-Journal
 European Journal of Operational Research, vol. 223

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