The document presents a project report on the risk and return analysis of equity shares in the banking sector, submitted by Gaurav Sasaogi as part of his MBA at the University of Pune. The study focuses on evaluating investments in equity shares of top banks listed on the National Stock Exchange (NSE) using various analytical techniques to understand their performance and guide investors. It emphasizes the importance of risk-return analysis for equity shareholders, aiming to provide insights for better investment decisions in the banking sector.

1. 1
RISK AND RETURN ANALYSIS OF EQUITY
SHARES IN BANKING
Project Report Submitted to University of Pune
In Partial Fulfillment of Requirement
For the Award of Degree of
MASTER OF BUSINESS ADMINISTRATION
By
Gaurav Sasaogi
Under the guidance of
Mrs. Prof. Shakti Prasad Tiwari
Sikkim Manipal University
2013-2015

2. 2
CERTIFICATE
This is to certify that Mr. Gaurav Sasaogi student of SET Academy, Sasaram
has completed his field work report at T.sec pvt ltd on the topic of ―Risk and Return
Analysis of equity shares in Banking‖ and has submitted the field work report in
partial fulfillment of MASTER OF BUSSINESS ADMINISTRATION of the
university of Pune for the academic year 2013-2015.
He has worked under our guidance and direction. The said report is based on
bonafide information.
Project guide name Director
Date:- Date:-
Place:- SASARAM Place:- SASARAM

3. 3
DECLARATION
I hereby declare that the project titled ―RISK AND RETURN ANALYSIS OF
EQUITY SHARES IN THE BANKING‖ is an original piece of research work carried
out by me under the guidance and supervision of PROF. S.P.Tiwari The information
has been collected from genuine & authentic sources. The work has been submitted in
partial fulfillment of the requirement of MASTER OF BUSSINESS
ADMINISTRATION to Pune University.
Place: Signature:
Date: Gaurav Saraogi

4. 4
ACKNOWLEDGEMENT
I take immense pleasure in completing this project and submitting the final project
report. This project has provided me a platform to acquire a deep understanding of
one of the analysis of equity share performance; I am deeply indebted to my institute -
SET Academy, Sasaram. To provide me an opportunity to undergo my project, which
give me through insight and experience of the corporate culture that will act as
stepping stone in my career.
.
I express my sincere thanks to my project guide Mr. Vaibhav Kulkarni (branch
manager , t.sec Pvt. Ltd.) for guiding me through my project, as well as for being my
motivator and mentor throughout the project period at t.sec. He helped me with all the
resources and information required for the project and provided me with the practical
industrial experience, which will be of immense help for me in my future.
I am also thankful to our director Mr. A.K.Singh and my project gaide prof. Mr.
S.P.Tiwari (Faculty Of SET Academy.) for helping me to complete the project.
I am grateful to my parents and friends for their consistent guidance, support and
encouragement throughout my work.
Last but not the least, I express my gratitude towards all those people who directly or
indirectly helped me to complete this project.

5. 5
Executive Summary
The project of risk and return analysis of equity shares in banking has been
carried out at thirani securities pvt ltd. The objectives behind that evaluate
investment in equity shares of banking sector Banks are selected which is top in NSE.
The NSE is a national stock exchange of India located at Mumbai. There are main
three indices In national stock exchange that is major indices – S &P CNX nifty, CNX
nifty junior and nifty midcap 50. Another is sectoral indices -bank nifty, CNX auto,
CNX commodities, and CNX metal like that 25 indices in the NSE.
In all these indices select one index that is bank nifty. There are twelve banks
in the NSE bank nifty.
The main aim of this project is evaluate the risk and return using the technique
of standard deviation, beta, correlation, co-variance, net asset value, rate of return,
arithmetic mean, and geometric mean return. In this project shows that rate of equity
shares of particular bank.
The main function of this project is to analyze risk of equity shares compare
to return for evaluate the performance of equity shares fund which make investment
decision in future regarding shares , funds for individual and corporate .
In this project also helpful to equity shares investors as well as help to measure
character line of shares related to market portfolio , evaluate the efficiency of
management and shares performance through the different model which is use to
give rank and star to equity shares of particular bank .

6. 6
Table of Contents
SR. No. TITLE PAGE NO.
1 INTRODUCTION
2 OBJECTIVE OF THE PROJECT
3 COMPANY PROFILE
4 RESEARCH DESIGN & METHODOLOGY
5 THEORTICAL BACKGROUND
Concept of equity share and their types
Introduction of NSE, nifty 50 bank nifty
Measurement technique of risk and return
6 DATA ANALYSIS AND INTERPRITATION
Data collection
data Analysis
7 CONCLUSION
s
8 Limitation future scope
9 SUGGESTIONS
10 Bibliography
11 Annexure

7. 7
CHAPTER-1
INTRODUCTION

8. 8
The Risk and return analysis is important to equity shares investors in the share
market. The need of equity shares at the time of preliminary stage of company or
bank to raising fund for establish company and starting a business. The equity share
holder is an actual owner of company or bank.
The risk and return analysis is main function of this project. The meaning risk
and return as follows:
Risk - risk refers to the possibility that the actual outcome of an investment will differ
from expected outcome. More specifically, most investors are concerned about the
actual outcome being less than the expected outcome.
There are many sources of risk i.e. business risk, market risk, interest rate of
risk.
Return – return is representing the reward for undertaking investment. The returns of
an investment consist of two components as under:-
1) Current return
2) Capital return.
In this project risk and return calculated using various techniques. The return is
calculate using net asset value, rate return, dividend, geographical mean and risk is
calculate using co-variance, geometric mean, beta, standard deviation,
correlation(using statistical methods).The rate of equity shares has not fixed. The rate
of equity shares of particular company or bank is change at every time. The equity
share holder either can earn profit or can take risk. This situation is not fixed and
hence, here need of risk and return analysis project.
In this project selected one sector that is banking (BANK NIFTY) from National Stock
Exchange of India (NSE). NSE is the third ranked in the world located at Mumbai.
Bank nifty is a one type of indices of national stock exchange. There are more than
twenty indices in the national stock exchange. The rate equity shares of top twelve
banks has been consider and calculated in bank nifty. Top twelve banks are as under:
ICICI Bank, Yes Bank, Bank of India, Bank of Baroda, Union Bank, Punjab
National Bank, Kotak Mahindra Bank, State Bank of India, HDFC Bank, Axis
Bank, Canara Bank, Induslnd Bank.

9. 9
CHAPTER-2
Objective of the Project

10. 10
Saving money is not enough. Each of us also need to invest one‘s savings intelligently
in order to have enough money available for funding the higher education of one‘s
children, for buying a house, or for one‘s own golden years. But the rapidly growing
number of investment avenues often led to confusion. Objectives of the study are to
provide information to individual as well as corporate investors regarding their risk,
and choosing the best investment options to match their goals and attitude to risk.
The Risk and return analysis of equity shares project is helpful to equity shares
holders or investors. Equity share holder is a actual owner of the bank or company.
The main aim of this project is give perfect suggestion to equity share holders.
 Objective of this project is analysis the risk and return of equity shares.
 To find out net asset value, rate of return, dividend which is given to
equity shareholders.
 To compare price of equity shares between two banks in respect of
their risk & return.
 Analyze the performance of equity shares in banking sector.
 To find out weight of various banks in banking sector.
 To discover the fundamental analysis tool to estimate the true value of
equity share. This value of equity share will be compared to market
portfolio, as it is overvalue or undervalue.
 Give suggestion to equity shareholders In banking sector which
security held and how many money should be allocate to each.

11. 11
Chapter – 4
RESEARCH DESIGN &
METHODOLOGY

12. 12
Research:
Research is a careful investigation or inquiry specially through search for new
fact in any branch of knowledge. Once can also define research as a scientific and
systematic search for pertinent information on a specific topic.
Research methodology:
Research methodology is a collective term for the structured process of
conducting research. There are many different methodology used in various type of
research and the term is usually considered to include research design, data gathering
and data analysis.
Defining Problem
In the current economic scenario interest rates are falling and fluctuation in the
Capital market has put investors in confusion. One finds it difficult to take decision on
investment. This is primarily, because of investments are risky in nature and investors
have to consider various factors before investing in investment avenues. These factors
include risk, return, volatility of shares and liquidity.
Research Design
Project is totally based on descriptive and diagnostic research. It is prepared
on structured, way to find out problem under such descriptive/diagnostic research. I
have gone through secondary data for technical analysis, calculative study of risk and
return equity shares in banking sector.

13. 13
Sample design:
 Universe: universe is the first step of sample design. I have selected bank
nifty for analysis of risk and return.
 Method of sampling: there are 8 method of sample design. But I have selected
deliberate sampling method because the meaning of deliberate sample is select
particular unit and I have selected banking sector in National Stock Exchange
of India.
 Sampling frame: sampling frame is also known as ‗source list‘ from which
sample is to be drown. It contains of all items of a universe but here, only one
universe i.e. bank nifty.
 Sample size: top twelve banks in National Stock Exchange (bank nifty) are
selected to analysis the risk and return analysis of equity shares.
These top twelve banks are as follows:
 ICICI BANK
 KOTAK MAHINDRA BANK
 STATE BANK OF INDIA
 PANJAB NATIONAL BANK
 BANK OF INDIA
 HDFC BANK
 UNION BANK
 YES BANK
 INDUSLAND BANK
 CANRA BANK
 AXIS BANK
 BANK OF BARODA
Types of data:
There are two types of data these are follows
1. Primary Data:
Primary data can collect through observation or through direct communication
with respondents in one form or through personnel interview.

14. 14
2. Secondary Data:
The secondary data related to market portfolio collected through the value research,
and NSE website. The secondary data has collected from reference books, company
website & various financial websites and newspaper and magazines.
Measurement techniques:
The Performance of risk and return of equity shares in banking sector (bank nifty) has
been evaluated by using the Following techniques:
 Rate of Return ,
 Risk
 Return on market portfolio.
 variance
 Beta
Following techniques is measure by data analysis method in Microsoft excel.
First historical data put up in excel sheet then calculate return on daily basis
and select data analysis method from data menu. In data analysis method
select descriptive statistics.
 Standard deviation
 Sharpe ratio
 Kurtosis
 Skewness

15. 15
Chapter no – 5
Theoretical Background

16. 16
Concept of equity shares:
Shares that carry no preferential or special right in respect of annual dividend and in
the repayment of capital at the time of liquidation of the company are called equity
shares. These shares carry no preferential rights; therefore, these are also known as
common stock or ordinary shares.
Dividend on such shares is payable only when there are profit after the
payment of preferences dividend. But, the rate of dividend of these shares is not fixed.
Board of directors, depending upon the dividend policy as well as the availability of
profit after dividend on preference shares, declare dividend. No dividend will be paid
on these shares, if there are no profits or insufficient profit in a particular year. The
value of these shares in stock exchange fluctuates on the basis of rate of dividend
declared.
Similarly, these shares are redeemed only after the redemption of preference
shares at the time of liquidation of the company. Equity share holders enjoy full
voting rights in all market of the company. They have right to elect directors and
participate in the management and control of the company. They also share residual
profits.
Types of equity shares:
An equity share, commonly referred to as ordinary share also represents the
form of fractional ownership in which a shareholder, as a fractional owner, undertakes
the maximum entrepreneurial risk associated with a business venture.
The holders of such shares are members of the company and have voting rights. A
company may issue such shares with differential rights as to voting, payment of
dividend, etc.
The various kinds of equity shares are as follows –
• Rights Issue/ Rights Shares: The issue of new securities to existing shareholders at
a ratio to those already held.

17. 17
• Bonus Shares: Shares issued by the companies to their shareholders free of cost by
capitalization of accumulated reserves from the profits earned in the earlier years.
• Preferred Stock/ Preference shares: Owners of these kind of shares are entitled to
a fixed dividend or dividend calculated at a fixed rate to be paid regularly before
dividend can be paid in respect of equity share.
They also enjoy priority over the equity shareholders in payment of surplus. But in the
event of liquidation, their claims rank below the claims of the company‘s creditors,
bondholders / debenture holders.
• Cumulative Preference Shares: A type of preference shares on which dividend
accumulates if remains unpaid. All arrears of preference dividend have to be paid out
before paying dividend on equity shares.
• Cumulative Convertible Preference Shares: A type of preference shares where
the dividend payable on the same accumulates, if not paid. After a specified date,
these shares will be converted into equity capital of the company.
• Participating Preference Share: The right of certain preference shareholders to
participate in profits after a specified fixed dividend contracted for is paid.
Participation right is linked with the quantum of dividend paid on the equity shares
over and above a particular specified level.
Government securities (G-Secs): These are sovereign (credit risk-free) coupon
bearing instruments which are issued by the Reserve Bank of India on behalf of
Government of India, in lieu of the Central Government's market borrowing program.
These securities have a fixed coupon that is paid on specific dates on half-yearly
basis. These securities are available in wide range of maturity dates, from short dated
(less than one year) to long date (up to twenty years).
Debentures: Bonds issued by a company bearing a fixed rate of interest usually
payable half yearly on specific dates and principal amount repayable on particular
date on redemption of the debentures. Debentures are normally secured/ charged
against the asset of the company in favor of debenture holders.

18. 18
Introduction of NSE and nifty 50
The national stock exchange is a stock exchange located at Mumbai, India. It is the
16th
largest stock exchange in world by market capitalization and largest in India by
daily turnover and number of trades, for both equities and derivates trading. NSE is
mutually owned by a set of leading financial institution, banks, insurance companies
and other financial intermediates in India.
History of NSE:
Capital market reforms in India and the launch of the Securities and Exchange Board
of India (SEBI) accelerated the incorporation of the second Indian stock exchange
called the National Stock Exchange (NSE) in 1992. After a few years of operations,
the NSE has become the largest stock exchange in India.
Three segments of the NSE trading platform were established one after
another. The Wholesale Debt Market (WDM) commenced operations in June 1994
and the Capital Market (CM) segment was opened at the end of 1994. Finally, the
Futures and Options segment began operating in 2000. Today the NSE takes the 14th
position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty and
CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a
diversified index of 50 stocks from 25 different economy sectors. The Indices are
owned and managed by India Index Services and Products Ltd (IISL) that has a
consulting and licensing agreement with Standard & Poor's.
In 1998, the National Stock Exchange of India launched its web-site and was
the first exchange in India that started trading stock on the Internet in 2000. The NSE
has also proved its leadership in the Indian financial market by gaining many awards
such as 'Best IT Usage Award' by Computer Society in India (in 1996 and 1997) and
CHIP Web Award by CHIP magazine (1999).

19. 19
NSE Markets:
Currently, NSE has the following major segments of the capital market:
 Equity
 Futures and options
 Retail debt market
 Wholesale debt market
 Currency futures
 Mutual fund
 Stocks lending and borrowing
NSE Certifications:
NSE also conducts online examination and awards certification, under its
programmers of NSE's Certification in Financial Markets (NCFM). Currently,
certifications are available in 32 modules, covering different sectors of financial and
capital markets, both at beginner and advanced levels. The list of the various modules
can be found at the following official site of NSE India. Branches of the NSE are
located throughout India. NSE, in collaboration with reputed colleges and institutes in
India, has been offering a short-term course called NSE Certified Capital Market
Professional (NCCMP) since August 2009, in the campuses of the respective colleges/
institutes.
Introduction of NSE Nifty 50:
NIFTY is an Index computed from performance of top stocks from different
sectors listed on NSE (National stock exchange). NIFTY consists of 50 companies
from 24 different sectors. NIFTY stands for National Stock Exchange‘s fifty. The
companies which form index of NIFTY may vary from time to time based on many
factors considered by NSE. NIFTY is for NSE similarly SENSEX is for BSE
The S&P CNX Nifty (Nifty 50 or simply Nifty) is a composite of the top 50 stocks
listed on the National Stock Exchange (NSE), representing 24 different sectors of the
economy. It is a simplified tool that helps investors and ordinary people alike, to
understand what is happening in the stock market and by extension, the economy.

20. 20
Bank nifty and calculation of bank nifty:
Bank nifty is the bank index traded in the f & o segment of NSE. It comprises of most
liquid banking stock listing on NSE. This is index provides investors and market
intermediaries with a benchmark that captures the capital market performance of
Indian bank. The index has 12 stocks from the banking sector which trade on the
NSE.
Bank nifty is the one type of index that is called to CNX BANK INDEX. The
base year of bank nifty is 01 Jan 2000. The base value of bank nifty is 1000.
There are twelve numbers of scripts that is Bank of india , bank of baroda,
state bank of india, union bank, kot ak Mahindra bank, Punjab national bank,
indusland bank, canara bank, hdfc bank, icici bank , axis bank and yes bank .
Calculation frequency of bank nifty is six seconds and calculated by India Index
Services & Products Ltd. (IISL).
Calculation of methodology:
The index is a free float market capitalization weighted index with base year of Jan 1,
2000, Indexed to a base value of 1000.
Formula for BANK NIFTY
BANK NIFTY = (Sum of free flow market cap of 12 major stocks of NSE) X Index
value in 2000/market cap value in 2000.
Market Capitalization and free float market capital is needed to calculation of bank
nifty.
Market capitalization:
Market capitalization is the total worth of all outstanding (issued) shares of a
company. It represents the total worth of a company.
Market capitalization= No of shares outstanding x market price of share Free Float
Market

21. 21
Free float market capital:
Capitalization Free float concept is an index construction methodology which
makes use of free float shares in the market. Free float market capitalization is the
total worth of all shares of a company which are available for trading in the open
market. These shares are called free float shares and are available for trading by
anyone.
Example:
Company ‗X‘ issues 1000 shares, Out of which 200 shares held by
government, 500shares by directors of the company and remaining 300 shares are
available in the open market for trading. Market price of share is 10 Rs.
Here; Total Shares = 1000
Shares Held by Government= 200
Shares Held by Directors = 500
Shares available in the Open Market= 300
Market price of share = 10
Here, total market capitalization of the company is 1000 X 10 = 10000 and
Free float market capitalization of the company is 300 X 10 = 3000.
According to the rules of NSE any shares which do not fall under the following
categories are considered as free float (open market) shares.
 Government holding shares as promoters
 Holdings by Directors/ Founders
 Holdings through the FDI route
 Stakes held by private corporate bodies or individuals
 Any cross holdings i.e. equity held by associate or group companies.
 Equity held by employee welfare trust.
Calculation of the free float factors periodically, every listed company has to submit
holdings information i.e. who all are holding the shares of the company, to the
exchange. Based on this free float factor for each company is calculated.

22. 22
Free float factor = No of shares available for trading in the open market / Total
No of outstanding shares of the company
Free float factor of each company has to be rounded off to the higher multiple of 5
and company is considered among one of the free float range. Free Float ranges
To calculate NSE bank nifty:
BANK NIFTY = (Sum of free flow market cap of 12 major stocks of NSE) X Index
value in 2000/market cap value in 2000.
For Example:
suppose NSE index (BANK NIFTY) consist of only two stocks such as ‗X‘ and ‗Y‘
Company ‗X‘ has 1000 outstanding shares out of which only 500 are available for
trading in open market. Market price of share is Rs.100. Company ‗Y‘ has 2000
outstanding shares out of which 1000 shares are held by promoters and remaining
1000 are free float shares (open market shares). Market price of share is Rs.50.
Calculation of market capitalization:
Stock Issued stock Market price Market cap.
X 1000 100 100000
Y 2000 50 100000
Calculation of free float market capitalization:
Stock Open market stock Market price Market cap.
X 500 100 50000
Y 100 50 50000
Here;
Sum of free float market cap of company X and company Y is 50000+50000 =
100000.Assume market cap during 1978-79 is 25000.
Now Apply formula; 100000*100/25000 = 400.

23. 23
Concept of Risk and Return of equity shares:
Introduction to Risk and Return Analysis of equity share –Two sides
of the Investment Coin
People have many motives for investing. Some people investing in order to gain a
sense of power or prestige. Often the control of corporate empires is a driving motive.
For most investors, However, their interest in investments is largely pecuniary- to
earn to return on their money. However, selecting stocks exclusively on the basis of
maximization of return is not enough.
The fact that most investors do not place available funds into the one, two, or even
three stocks promising the greatest return suggest that other factor must be considered
besides return in the selection process. Investors not only like return, they dislike risk.
Their holding of an assortment of securities attest to that fact.
To say that investors like return and dislike risk is, however, simplistic. To facilitate
our job of analyzing securities and portfolios within a return- risk context, we must
begin with a clear understanding of risk and return.
In the current economic scenario dividend (earning) rates are falling and
fluctuation in the capital market has put investors in confusion. One finds it difficult
to take decision on investment. This is primarily, because of investments are risky in
nature and investors have to consider various factors before investing in investment
avenues. These factors include risk, return, volatility of shares and liquidity. The main
objective of comparing investment in different equity share prices is to analyze the
performance of equity share by using risk, return as a parameter. Historical data were
taken for calculating risk, return. Analysis has done on percentage method for
comparing equity share prices.
Financial markets are often hard to understand. Stock prices are highly volatile and
difficult to predict, requiring that market participants and researchers devote
significant Resources to understanding the behavior of expected returns relative to the
risk of stock Market investment.

24. 24
RETURN:
Return is primary motivating force that drives investment. It represents the reward for
undertaking investment. Since the game of investing is about returns (after allowing
for risk), measurement of realized (historical) returns (ex post facto) is necessary to
access how well the investment manager has done. In addition, historical returns are
often used as a important input in estimating future (prospective) returns.
The amount of net income returned as a percentage of shareholders
equity. Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested.
The future is uncertain. Investors do not know with certainty whether the economy
will be growing rapidly or be in recession. Investors do not know what rate of return
their investments will yield. Therefore, they base their decisions on their expectations
concerning the future. The expected rate of return on a stock represents the mean of a
probability distribution of possible future returns on the stock.
The objective of any investor is to maximize expected returns from his
investments, subject to various constraints, primary risk. Return is the motivating
force, inspiring the investor in the form of rewards, for undertaking the investment.
The importance of return of any investment decision can be traced to the following
factor:
1. It enables investors to compare alternative investments in terms of what they
have to offer the investor.
2. Measurement of historical returns enables the investors to access how well
they have done.
3. Measurement of historical returns also helps in estimation of future returns.

25. 25
Type of return:
There are two types return .these are follows
1. Realized return
2. Expected return
1. Realized Return:
This is ex-post (after the return) or return that was or could have been earned.
For example -
A deposit of 1000 in a bank on Jan 1, at stated annual interest rate of 10%will
be worth .1100 exactly a year later. The historical or realized return in this case is
10%.
2. Expected Return:
This is return from an asset that investors anticipate or expect to earn over future
some period. The expected return is subject to uncertainty, or risk, and may or may
not occur. The investors compensates for the uncertainty in returns and the timing of
those returns by requiring an expected return that is sufficiently high to offset the risk
or uncertainty.
Types of Return
Expected
Return
1. Realized
Return

26. 26
Component of return:
There are two components of return. These are followings:
1. Yield/ current
2. Capital Gain
1. Yield/ current:
Periodic cash flow (income) such as dividend or interest which is generated
by the investment in various instruments. Current return is measured as the
periodic income in relation to the beginning price of the investment.
2. Capital Gain:
Capital gain means earn income from particular asset-Like equity stock. It is
simply measured as price appreciation or depreciation divided by beginning
price of the particular security. The capital return can be positive or zero or
negative.
The periodic (the period may be one month, one week) rate of return on equity
shares prices is calculated as follow.
priceBeginning
IncomeCurrent
ldReturn/YieCurrent 
0
01
P
PP
PriceBeginning
PriceBeginning-PriceEnding
YieldGain/LossCapitalReturn/Capital



Component of return
Current / yield return Capital return

27. 27
Risk:
The dictionary meaning of risk is the possibility of loss or injury, the degree or
probability of such loss. Risk is the composed of the demand that bring in variations
in return of income. The main forces contributing to risk are price and interest.
―RISK‖ as uncertainties resulting in adverse outcome, adverse in relation to
planned objective or expansions. Uncertainties associated with risk element impact
the net cash flow or any business or investment. Under the impact of uncertainties,
variation in net cash flow takes place. This could be favorable s well as unfavorable.
The possible is the unfavorable impact is the ―RISK‖ of the business.
Definition of Risk –
Risk is, “the variability of return around the expected average is thus a
quantitative description of risk”.
–FISCHER AND JORDON
COUSES OF RISK:
1. Wrong decision
2. Wrong timing
3. Nature of instruments
4. Creditworthiness of issuer
5. Maturity period or length of investment
6. Amount of investment
7. Method of investment
8. Terms of leading
9. Nature of industry
10. National and international factor

28. 28
Classification of Risk:
Following are the two broad type risks:
1. Systematic Risk
2. Unsystematic Risk
Explanation of above risks as follows:
I. Systematic risk:
The risk inherent to the entire market or entire market segment Also known as "un-
diversifiable risk" or "market risk."
Systematic risk is also referred as uncontrollable risk. Systematic is non diversifiable
and is associated with the securities market as well as economic, sociological,
political and legal considerations of the prices of all securities.
RISK
1. Systematic Risk
2. Unsystematic Risk
Market Risk
Interest Rate Risk Purchasing
power Risk
Business Risk
Financial Risk
Internal Risk
External Risk

29. 29
Interest rates, recession and wars all represent sources of systematic risk because they
affect the entire market and cannot be avoided through diversification. Whereas this
type of risk affects a broad range of securities, unsystematic risk affects a very
specific group of securities or an individual security. Systematic risk can be mitigated
only by being hedged.
Even a portfolio of well-diversified assets cannot escape all risk.
There are three type of systematic risk:
1. Market Risk:
2. Interest rate risk
3. Purchasing power risk
1. Market risk:
Market risk as that portion of total variability of return caused by the alternating
forces of bull and bear markets. When the security index moves upward haltingly for
a significant period of time, it is known as bull market, the index moves from a down
level to the peak. Bear market is just is a reverse to the bull market, the index decline
haltingly from the peak to a market low point called through for a significant period
of time.
During the bull and bear market more than 80% of the security prices rise or fall
along with the stock market indices.
2. Interest rate risk:
Interest rate risk is the variation in the single period rates of return caused by the
fluctuation in the market interest rate. Most commonly interest rate risk affects the
price of bounds, debentures and stocks. The fluctuations in the interest rates are
caused by the changes in the government monetary policy and the changes that occur
in the interest rates of treasury bills and the government bonds. The bonds issued by
the government and quasi government are considered to be risk free. If higher interest
rates are offered, investors would like to switch his investments from private sector
bounds to public sector bounds.

30. 30
3. Purchasing power risk:
Variations in the returns are caused also by the loss of purchasing power of currency.
Inflation is the reason behind the loss of purchasing power. The level of inflation
proceeds faster than the increase in capital value. Purchasing power risk is the
probable loss in purchasing power of the return to be received. The rise in price
penalizes the returns to the investor, and every potential rise in price is a risk to the
investor.
II. Unsystematic Risk:
There are two type unsystematic risks as follows:
1. Business risk
2. Financial risk
1. Business risk:
Definition:
Risk associated with the unique circumstances of a particular company, as they might
affect the price of that company's securities.
The possibility that a company will have lower than anticipated profits, or that it
will experience a loss rather than a profit. Business risk is influenced by numerous
factors, including sales volume, per-unit price, input costs, competition, and overall
economic climate and government regulations. A company with a higher business risk
should choose a capital structure that has a lower debt ratio to ensure that it can meet
its financial obligations at all times.
Business risk can be divided can be divided into external business risk and internal
business risk.
1. Internal business risk :
Internal business risk associated with the operational efficiency of the firm. The
operational efficiency differs from company to company.

31. 31
2. External business risk:
External risk is the result of operating conditions imposed in the firm by
circumstances beyond its control. The external environments in which it operates
exert some pressure on the firm.
2. Financial risk:
Financial risk is the amount of chance that is present with any type of financial
investment. Typically, the goal is to secure investments that appear to have a low
amount of risk since these are more likely to earn a return. Both individual and
corporate investors access the degree of risk present before executing an order to buy
shares on any investment market.
Shareholders usually investigate the degree of financial risk present in any
investment deal by exploring both the current and past performance of the stock
option. The shareholder will also consider any changes in the current financial climate
that could either cause the option to increase dramatically in value or cause the option
to drop. Knowing this detail will help the investor determine how owning the option
will affect his or her overall financial stability.
Corporations also engage in the process of assessing financial risk. In terms of
property purchases, there is attention given to the ability to build up equity in the
acquisitions, or how to make the most of equity financing strategies. The company
will also want to maintain an adequate cash flow, so that even if the acquisition does
not appreciate as quickly as projected, the finances of the business remain stable.
Financial risk can be divided into:
1. Credit risk:
The possibility that a bond issuer will default, by failing to repay principal and
interest in a timely manner. Bonds issued by the federal government, for the most
part, are immune from default (if the government needs money it can just print more).
Bonds issued by corporations are more likely to be defaulted on, since companies
often go bankrupt. Municipalities occasionally default as well, although it is much
less common. also called default risk. The risk of loss of principal or loss of a

32. 32
financial reward stemming from a borrower's failure to repay a loan or otherwise meet
a contractual obligation. Credit risk arises whenever a borrower is expecting to use
future cash flows to pay a current debt.
2. Currency risk: Currency Risk, sometimes referred to as exchange rate risk, is the
possibility that currency depreciation will negatively affect the value of one's assets,
investments, and their related interest and dividend payment streams, especially those
securities denominated in foreign currency.
Foreign exchange risk (also known as exchange rate risk or currency risk) is a
financial risk posed by an exposure to unanticipated changes in the exchange rate
between two currencies. Investors and multinational businesses exporting or
importing goods and services or making foreign investments throughout the global
economy are faced with an exchange rate risk which can have severe financial
consequences if not managed appropriately
3. Country risk:
Country risk arises from an adverse change in the financial conditions of a country in
which a business operates. There are three type of country risk:
1. Political risk
2. Regulatory risk
3. Economic risk
4. Liquidity risk:
The risk is that arises from the difficulty of selling an asset. An investment may
sometimes need to be sold quickly. Unfortunately, an insufficient secondary market
may prevent the liquidation or limit the funds that can be generated from the asset.
Some assets are highly liquid and have low liquidity risk (such as stock of a publicly
traded company), while other assets are highly illiquid and have high liquidity risk
(such as a house).

33. 33
Liquidity risk arises from situations in which a party interested in trading an
asset cannot do it because nobody in the market wants to trade for that asset. Liquidity
risk becomes particularly important to parties who are about to hold or currently hold
an asset, since it affects their ability to trade.
Techniques of Measuring Return and Risk
 Calculation of return
In the present study for the estimation of return on assets, the method of continuous
compounding has been used. The continuous compounding returns are also known as
log returns of an asset for time period ‗t‘ ,defined to be the natural logarithms of its
gross return (1 + Rt):
In the present study, the actual daily logs returns have been used to predict the daily
variance using excel. The daily standard deviation is based on the average of the daily
SD of the 36 months (April-2009 march 2012). Then this daily standard deviation has
been converted into monthly standard deviation by multiplying the square root of the
actual number of trading day.
The SD so calculated has been used to calculate risk and further the margins required
for the equity portfolio during the April-2009 March 2012 share prices. Hence, in the
present study, the daily data for actual trading days have been used to measure
volatility and days when the exchange is closed have been ignored. However, the
standard deviation for the various portfolios used in the present study is based on the
monthly log returns of the portfolio in question.

34. 34
Risk Adjusted Portfolio Performance:
Sharpe Ratio William Sharpe (1966)
Sharpe‘s ratio to measure excess return per unit of risk undertaken has been used
to measure the performance of equity e based portfolio on bank Nifty. The
measure is the ratio of the risk premium of the portfolio, divided by the standard
deviation of the portfolio‘s return:
"The excess return of a portfolio over the risk free rate divides, by the total risk of
the portfolio."
p
fp rr




rp = rate of return of the portfolio,
rf = risk free rate of return over the same interval
We are going to use Sharpe ratio for our study purpose and we are going to use
8% rate of interest as risk free rate (though it is highest rate for relative 36 month
period).
For return of three years:
The periodic (the period may be one month, one week) rate of return
On equity shares prices is calculated as follow.
Dividend Paid (If any) + [price (Ending)-price (Beginning)]
Rate of Return=
Price (Beginning)
R = D + (PE- PB)
PB
R= Rate of Return D= Dividend received during the period
PE=Ending price PB=Beginning price
 Variance Co-variance(VCV)Variance Co-variance (VCV) approach assumes
that returns of the portfolio are particular distributed such as following a normal
distribution, and should be applied for a portfolio which is linear.

35. 35
Skewness: indicator used in distribution analysis as a sign of asymmetry and
deviation from normal distribution
Interpretation:
Skewness> 0 - Right skewed distribution - most values are concentrated on left of the
mean, with extreme values to the right.
Skewness< 0 - Left skewed distribution - most values are concentrated on the right of
the mean, with extreme values to the left.
Skewness = 0 - mean = median, the distribution is symmetrical around the mean.
Kurtosis - indicator used in distribution analysis as a sign of flattening or
"peakedness" of a distribution.
Interpretation:
Kurtosis > 3 - Leptokurtic distribution, sharper than a normal distribution, with values
concentrated around the mean and thicker tails. This means high probability for
extreme values.
Kurtosis < 3 - Platykurtic distribution, flatter than a normal distribution with a wider
peak. The probability for extreme values is less than for a normal distribution, and the
values are wider spread around the mean.
Kurtosis = 3 - Mesokurtic distribution - normal distribution for example.
Standard deviation
The most commonly used measure of risk in finance is variance or its square root the
standard deviation. The variance and standard of historical return series are defined as
follows

36. 36
Coefficient of variation
it is a measure of risk per unit of expected return. The actual dispersion/variation as
determined by standard deviation is called absolute dispersion. The coefficient of
variation (cv) is computed by dividing the standard deviation of return, r,for an asset
by its expected value, Ṝ. Symbolically,
CV= r ÷ R
Beta
The risk of a well diversified portfolio, as we have seen, it represented by it market
risk of the securities included in the portfolio. The market risk of a security reflects it
sensitivity to market movement. Such sensitivity of market risk is called as beta (β).
As mentioned earlier, the beta for market portfolio is equal to ‗1‘ by definition. Beta
=1, it indicates that volatility of return on security is same as the market or index; beta
more than one indicates that the security has more unavoidable risk or is more
volatile than market as a whole, and beta less than one indicates that the security has
less systematic risk or is less volatile than market. A measure of risk commonly
advocated is beta. . It should be in range of 0.85 to 1.05.
Where,
where ra measures the rate of return of the asset, rp measures the rate of return of the
portfolio, and cov (ra,rp) is the covariance between the rates of return.

37. 37
Chapter no. 6-
Data Analysis and Interpretation

38. 38
6.1 Data collection & analysis
Risk and return analysis and collected data of those banks which is top twelve in NSE
bank nifty. These are follows:
1. Data Collection and risk & return analysis of ICICI BANK
Information about ICICI bank
ICICI Bank was established in 1994 by the Industrial Credit and Investment
Corporation of India, an Indian financial institution, as a wholly owned subsidiary.
The bank was initially known as the Industrial Credit and Investment Corporation of
India Bank, before it changed its name to the abbreviated ICICI Bank. The parent
company was later merged into ICICI Bank.
The ICICI bank has issued 1152671363 shares of Rs 10 face value. Free float market
capital is Rs. 96014.13 cr. The weight age of ICICI bank is 16.44 in overall banking
sector. The total Rs. 37 dividend has given from ICICI bank to his shareholders in
past three years.
Finding
The ICICI BANK is second largest bank on the basis of ROE i.e. 18.7. ICICI bank
has allotted 12900 equity shares each under the employee stock option scheme 2000.
The share holding pattern of this bank is as govt. holding 0.8 shares (0%), domestic
institution(bank + FI + MF +UTI) 319.13 shares (27.7%), foreign holding
722.96(62.7%) shares, Non promoter corporate holding 40.71 (3.5%) shares, public &
others (individual + HUF+ Clearing members) 69.99 (6.2%)shares.
PE Ratio of this bank is March 2010 – (27.10), march 2011 – (25.90), march
2012-(16.38) and EPS in March 2010- (34.6), march 2011- (43.0), march 2012-
(54.2). EPS is increased in March 2012 than other two years.

39. 39
Return calculated using simple method
Factor Amount ,number –%
Holding period Return (in three years) 165.407%
Beta (Risk) 1.419395261
Covariance 0.743655492
% Of annual return 47.5053027
Return calculated using data analysis method in Microsoft excel
Daily Mean return 0.001155985
Standard Deviation 0.026443073
Kurtosis 8.037322622
Skewness 1.160282382
Minimum -0.09967545
Maximum 0.230381068
Confidence Level (95.0%) 0.001901906
0
500
1000
1500
01-Apr-09 1 APRIL
2010
01-Apr-11 31-Mar-12
Shares price
Shares price

40. 40
State Bank of India
Information about State Bank of India:
State Bank of India (SBI) is the largest banking and financial services company in
India by revenue, assets and market capitalization. It is a state-owned corporation with
its headquarters in Mumbai, Maharashtra The bank traces its ancestry to British
India, through the Imperial Bank of India, to the founding in 1806 of the Bank of
Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of
Madras merged into the other two presidencies banks—Bank of Calcutta and Bank of
Bombay—to form the Imperial Bank of India, which in turn became the State Bank of
India in Jul 1, 1955
The SBI bank has issued 671044838 shares of Rs 10 face value. Free float
market capital is Rs. 127552.20 cr. The weight age of this bank is 24.89 in overall
banking sector. The total Rs. 79 dividend has given from SBI bank to his shareholders
in past three years.
The share holding pattern of SBI bank is as promoter holding 61.6% shares, govt.
holding 0.18% shares, domestic institution(bank + FI + MF +UTI) 17.3% shares,
foreign holding 11.2% shares, Non promoter corporate holding (3.7%) shares, public
& others (individual + HUF+ Clearing members) 6.2% shares. PE Ratio of SBI bank
is March 2010 – (14.78), march 2011 – (21.92), march 2012-(12.32) and EPS in
March 2010- (140.7), march 2011- (126.3), march 2012- (170.1). EPS is increased in
March 2012 than other two years.
Return calculated by using simple method
Factor Amount , %, number
% annual rate return 33.83800158
Beta (Risk) 0.80629166
Holding period Return (in three years ) 101.897
Covariance
0.422435693

41. 41
Return calculated by data analysis method in Microsoft excel
Factor Amount, number, %
Daily Mean return -0.086287404
Standard Deviation 0.023572721
Kurtosis 7.501835526
Skewness 0.907030496
Maximum 0.200266464
Minimum -0.086287404
Confidence Level (95.0%) 0.001694316
CANARA BANK
Ammembal Subba Rao Pai, a philanthropist, established the Canara Hindu Permanent
Fund in Mangalore, India, on 1 July 1906. The bank changed its name to Canara Bank
Limited in 1910 when it incorporated.
The CANARA bank has issued 443000000 shares of Rs 10 face value. Free float
market capital is Rs. 18014.60 cr. The weight age of CANARA bank is 3.16 in overall
banking sector. The total Rs. 21 dividend has given from CANARA bank to his
shareholders in past three years.
0
500
1000
1500
2000
2500
3000
01.04.2009 01.04.2010 01.04.0211 31.03.2012
price of shares
price of shares

42. 42
Finding
The share holding pattern of CANARA bank is as promoter holding 67.7% shares,
govt. holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 11.1% shares,
foreign holding 14.8% shares, Non promoter corporate holding 1.5% shares, public &
others (individual + HUF+ Clearing members) 4.9% shares. PE Ratio of CANARA
bank is March 2010 – (5.70), march 2011 – (7.03), march 2012-(6.55) and EPS in
March 2010- (72.0), march 2011- (89.1), march 2012- (72.3). EPS is increased in
March 2011 than other two years.
Using simple method
Factor Amount ,number –%
Beta (Risk) 1.214566594
Covariance 0.63630801
Holding period Return (in three years ) 204.03
Co variance 0.636340801
Return calculated by data analysis method in Microsoft excel
Factor Amount ,number %
Daily mean return 0.001739369
Standard Deviation 0.024827825
Kurtosis 2.558943912
Skewness 0.410765424
Minimum -0.100981502
Maximum 0.151733159
Confidence Level (95.0%) 0.001784528
0
500
1000
price of shares
price of…

43. 43
AXIS BANK:
Axis Bank Limited is an Indian financial services firm that had begun operations in
1994, after the Government of India allowed new private banks to be established.
The AXIS bank has issued 414368048 shares of Rs 10 face value. Free float market
capital is Rs. 46160.60 cr. The weight age of AXIS bank is 7.21 in overall banking
sector. The total Rs. 27 dividend has given from AXIS bank to his shareholders in
past three years.
Finding
The share holding pattern of AXIS bank is as promoter holding 37.3 %
shares, govt. holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 3.9%
shares, foreign holding 36.1% shares, Non promoter corporate holding 1.3% shares,
public & others (individual + HUF+ Clearing members) 11.5% shares. PE Ratio of
AIXS bank is March 2010 – (19.47), march 2011 – (17.50), march 2012-(11.46) and
EPS in March 2010- (60.1), march 2011- (80.2), march 2012- (100). EPS is increased
in March 2012 than other two years. Axis bank allotted new 77228 equity shares of
10 each under ESOP scheme of the bank.
Data find by using method
Factor Amount ,number –%
Holding period return 180.33
Beta (Risk) -0.806189418
Covariance -0.422382126
annual return % 51.96747562
Data find by using data analysis method in Microsoft excels.
Factor Amount ,number –%
Daily Mean return 0.001675387
Standard Deviation 0.025562792
Kurtosis 3.393054172
Skewness 0.641581123

44. 44
Minimum -0.090399038
Maximum 0.180109157
Confidence Level (95.0%) 0.001837355
 Punjab national bank:
PNB was founded in the year 1895 at Lahore (presently in Pakistan) as an off-shoot of
the Swadeshi Movement. Among the inspired founders were Sardar Dayal Singh
Majithia, Lala HarKishen Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.
Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, Lala Dholan Dass.
The K.R. KAMATH is the chairman of PNB. Headquarter of PNB is in the New
Delhi, India. The PNB total revenue of is Rs. 36428 Cr ,total Asset is Rs. 373786 Cr,
net income 4884 Cr and more than 56928 employee has working in axis bank. The
PNB bank has issued 339178683 shares of Rs 10 face value. Free float market capital
is Rs25836.94 cr..
The weight age of PNB bank is 4.50 in overall banking sector. The total Rs. 64
dividend has given from PNB bank to his shareholders in past three years.
0
500
1000
1500
01.04.2009 01.04.2010 01.04.2012 31.03.2012
price of shares
price of shares

45. 45
Finding
The share holding pattern of PNB bank is as promoter holding 56.1 % shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 21% shares,
foreign holding 17.3% shares, Non promoter corporate holding 1.6% shares, public &
others (individual + HUF+ Clearing members) 4.1% shares. PE Ratio of PNB bank is
March 2010 – (8.43), march 2011 – (8.95), march 2012-(6.59) and EPS in March
2010- (120.2), march 2011- (136.4), march 2012- (140.4).
Data find by using method
Factor Amount ,number –%
Holding period return 1.43746
Beta (Risk) 1.27889643
annualized return %
38.65212856
Covariance 0.670044757
Data find by using data analysis method in Microsoft excels.
Factor Amount ,number –%
Daily Mean return 0.001308046
Standard Deviation 0.020179573
Maximum 0.144410613
Minimum -0.097964255
Kurtosis 4.461002241
Skewness 0.19910171
Confidence Level (95.0%) 0.001837355
0
1
2
3
4
5
PRICE OF SHARES
PRICE OF
SHARES

46. 46
 Union Bank:
Union Bank of India (UBI) was registered on 11 November 1919 as a limited
company in Mumbai and was inaugurated by Mahatma Gandhi. At the time of India's
Independence in 1947, UBI still only had four branches - three in Mumbai and one in
Saurashtra, all concentrated in key trade centers. After Independence UBI accelerated
its growth and by the time the government nationalized it in 1969, it had grown to 240
branches in 28 states.
The D.SARKAR is the chairman of UBI. Headquarter of UBI is in the Mumbai,
India.The UBI total revenue of is Rs. 21144 Cr, net income 1787 Cr and more than
27746 employee has working in axis bank. The weight age of UBI bank is 1.97 in
overall banking sector. The total Rs. 18.50 dividend has given from UBI bank to his
shareholders in past three years. . The UBI bank has issued 550549035 shares of Rs
10 face value. Free float market capital is Rs. 10972.44 cr.
Finding
The share holding pattern of UBI bank is as promoter holding 54.4% shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 19.6% shares,
foreign holding 9.5% shares, Non promoter corporate holding 7.8% shares, public &
others (individual + HUF+ Clearing members) 8.8% shares. PE Ratio of UBI bank is
March 2010 – (7.30), march 2011 – (9.07), march 2012-(7.59) and EPS in March
2010- (40.1), march 2011- (38.3), march 2012- (30.9).
By using simple method
Factor Amount ,number –%
Holding period return 72.699
Covariance 0.309187404
Beta (Risk 0.590137693
% annual return 25.70128008
By using data analysis in Microsoft excel

47. 47
Factor Amount ,number –%
Daily mean return 0.000915371
Standard Deviation 0.023881869
Kurtosis 3.036543972
Skewness 0.212987217
Minimum -0.114381131
Maximum 0.145678306
Confidence Level(95.0%) 0.001716537
 BANK OF INDIA
Bank of India was founded on September 7, 1906 by a group of eminent businessmen
from Mumbai. In July 1969 Bank of India was nationalized along with 13 other
banks. The weight age of BOI bank is 1.97 in overall banking sector. The total Rs. 19
dividend has given from BOI to his shareholders in past three years. The BOI bank
has issued 573780370 shares of Rs 10 face value. Free float market capital is Rs.
19301.97 cr.
0
100
200
300
400
price 0f shares
price 0f shares

48. 48
Finding
The share holding pattern of BOI bank is as promoter holding 62.7% shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 16.1% shares,
foreign holding 15.4% shares, Non promoter corporate holding 0.5% shares, public &
others (individual + HUF+ Clearing members) 5.3% shares. PE Ratio of BOI bank is
March 2010 – (10.66), march 2011 – (10.78), march 2012-(7.94) and EPS in March
2010- (32), march 2011- (44.4), march 2012- (45.5).
By using simple method :
Factor Amount ,number –%
Holding period return 73.24
Covariance 0.252283445
Beta (Risk 0.481526634
% annual return 28.79060666
By using data analysis method in Microsoft excel:
Factor Amount ,number –%
Daily mean return 0.001012583
Standard Deviation 0.026318768
Kurtosis 3.838497318
Skewness 0.33896296
Minimum -0.123544552
Maximum 0.175197249
Confidence Level(95.0%) 0.001891692
0
200
400
600
price 0f shares
price 0f shares

49. 49
 KOTAK MAHINDRA BANK
Kotak Mahindra Bank is an Indian financial service firm established in 1985. It was
previously known as Kotak Mahindra Finance Limited, a non-banking financial
company. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship
company was given the license to carry on banking business by the Reserve Bank of
India (RBI).
Mr. Uday Kotak is Executive Vice Chairman & Managing Director of Kotak
Mahindra Bank Ltd. The Bank has its registered office at Nariman Bhavan, Nariman
Point, Mumbai. The Kotak Mahindra Bank total revenue of is Rs. 10963 Cr, net
income 1569 Cr.The weight age of KMB bank is 7.27 in overall banking sector. The
total Rs. 2.2 dividend has given from KMB bank to his shareholders in past three
years.
The KMB bank has issued 741318752 shares of Rs 10 face value. Free float market
capital is Rs. 41977.17 cr.
Finding
The share holding pattern of KMB bank is as promoter holding 45.2% shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 4.5% shares,
foreign holding 34.3% shares, Non promoter corporate holding 3.7% shares, public &
others (individual + HUF+ Clearing members) 512.7% shares. PE Ratio of BOI bank
is March 2010 – (46.29), march 2011 – (41.38), march 2012-(37.28) and EPS in
March 2010- (16.2), march 2011- (11), march 2012- (14.6).
By using simple method:
Factor Amount ,number –%
Holding period Return 82.73
Covariance 0.596548881
Beta (Risk 1.127164786
% annual return 40.54102406
By using data analysis method in Microsoft excel:

50. 50
Factor Amount ,number –%
Daily main return 0.001362244
Standard Deviation 0.031263489
Kurtosis 73.45010046
Skewness -4.182872239
Minimum -0.474092066
Maximum 0.191384251
Confidence Level (95.0%) 0.009729918
 YES BANK
Yes Bank is a private bank in India established in Dec 24, 1944. It was founded by
Ashok Kapur and Rana Kapoor. India's No. 1 New Private Sector Bank in the
Financial Express-E&Y Best Banks Survey 2010, India's Fastest Growing Bank of
the Year at the Bloomberg UTV Financial Leadership Awards 2011. YES Bank has
become the first Indian Bank, and the third one globally in the banking industry to
receive certification for its 'Complaints Management System by the British Standard's
Institution (BSI) as on August 25, 2010.
Mr. Ranna Kapur is a chairman of yes bank and headquarters in Mumbai, India. Yes
bank Deposits is Rs. 150000 Cr, advances Rs. 100000 and more than 750 branches.
The weight age of YES bank is 2.01 in overall banking sector. The total Rs. 4
dividend has given from YES bank to his shareholders in past three years. The YES
bank has issued 353859174 shares of Rs 10 face value. Free float market capital is Rs.
11944.52 cr.
0
200
400
600
800
price 0f shares
price 0f shares

51. 51
Finding
The share holding pattern of YES bank is as promoter holding 26.1% shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 14.2% shares,
foreign holding 43.2% shares, Non promoter corporate holding 1.5% shares, public &
others (individual + HUF+ Clearing members) 14.7% shares. PE Ratio of YES bank
is March 2010 – (18.45), march 2011 – (15.09), march 2012-(13.59) and EPS in
March 2010- (13.8), march 2011- (20.5), march 2012- (27).
By using simple method:
Factor Amount ,number –%
Holding period return 621.58
Covariance 1.525439863
Beta (Risk 2.911566091
% annual return 115.5779277
By using data analysis method in Microsoft excel:
Factor Amount ,number –%
Daily main return 0.003077334
Standard Deviation 0.029973022
Kurtosis 6.616008567
Skewness 1.126800731
Minimum -0.084575026
Maximum 0.252488214
Confidence Level (95.0%) 0.002154345
 INDUSLAND
BANK0
100
200
300
400
price 0f shares
price 0f shares

52. 52
IndusInd Bank Limited is a Mumbai based India new generation bank established in
1994. The bank offers commercial, transactional and electronic banking products and
services. Indusind Bank was incorporated in April 1994 by Dr. Manmohan Singh the
then Union Finance Minister.
HINDUJA GROUP is a owner of INDUSLAND bank and headquarters in Mumbai,
India. The INDUSLAND bank total revenue of is Rs. 3260.47 Cr, net income 1569
Cr.The weight age of INDUS bank is 2.01 in overall banking sector. The total Rs. 5
dividend has given from INDUS bank to his shareholders in past three years. The
INDUS bank has issued 468697800 shares of Rs 10 face value. Free float market
capital is Rs. 14843.66cr.
Finding
The share holding pattern of INDUS bank is as promoter holding 19.4% shares,
govt. holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 8.7% shares,
foreign holding 49.4% shares, Non promoter corporate holding 13.5% shares, public
& others (individual + HUF+ Clearing members) 9.1% shares. PE Ratio of INDUS
bank is March 2010 – (20.74), march 2011 – (21.85), march 2012-(19.10) and EPS
in March 2010- (8.2), march 2011- (12.1), march 2012- (16.8).
By using simple method:
Factor Amount ,number –%
Holding period return 1042.1
Covariance 1.90074466892
Beta (Risk 3.627904537
% annual return 148.6815976
By using data analysis method in Microsoft excel:
Factor Amount ,number –%

53. 53
Daily main return 0.00365066
Standard Deviation 0.029370401
Kurtosis 2.745755477
Skewness 0.687598483
Minimum
-0.117439812
Maximum
0.173076923
Confidence Level(95.0%) 0.002111031
 BANK OF BARODA
The Maharajah of Baroda, Sir Sayajirao Gaekwad III, Peshwa of the Maratha Empire,
founded the bank on 20 July 1908 in the princely state of Baroda, in Gujarat. The
bank, along with 13 other major commercial banks of India, was nationalised on 19
July 1969, by the government of India. The tagline of Bank of Baroda is "India's
International Bank".
M.D.MALLYA is a chairman and of MD of BOB and headquarters in
VARODARA, India. The BOB total revenue of Rs. 29673 Cr, net income 5006 Cr
and total asset 355826 Cr. The weight age of BOB bank is 2.014.93 in overall banking
sector. The total Rs. 40.5 dividend has given from BOB bank to his shareholders in
past three years.
The INDUS bank has issued 411123383 shares of Rs 10 face value. Free float market
capital is Rs. 28661.23cr.
Finding
0
100
200
300
400
price 0f shares
price 0f shares

54. 54
The share holding pattern of BOB bank is as promoter holding 54.3% shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 19.7% shares,
foreign holding 14.3% shares, Non promoter corporate holding 6.6% shares, public &
others (individual + HUF+ Clearing members) 5.0% shares. PE Ratio of BOB bank is
March 2010 – (7.87), march 2011 – (9.15), march 2012-(6.69) and EPS in March
2010- (81.2), march 2011- (105.3), march 2012- (118.7).
By using simple method:
Factor Amount ,number –%
Holding period return 25.98
Covariance 0.604022505
Beta (Risk 0.316461993
% annual return -5.794854586
By using data analysis method in Microsoft excel:
Factor Amount ,number –%
Daily main return -0.000238753
Standard Deviation 0.021945114
Kurtosis -1.003351644
Skewness 0.081854023
Minimum
-0.038107128
Maximum
0.034834601
Confidence Level (95.0%) 0.009729918
 HDFC BANK
0
200
400
600
800
1000
price 0f shares
price 0f shares

55. 55
HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation
Limited (HDFC), India's largest housing finance company. It was among the first
companies to receive an 'in principle' approval from the Reserve Bank of India (RBI)
to set up a bank in the private sector.
ADITYA PURI is and of MD of HDFC and headquarters in Mumbai, Maharashtra,
India.
The weight age of HDFC 21.64 bank is in overall banking sector. The total Rs. 38.5
dividend has given from HDFC bank to his shareholders in past three years. The
HDFC bank has issued 2353772335 shares of Rs 10 face value. Free float market
capital is Rs. 125879.74cr.
Finding
The share holding pattern of HDFC bank is as promoter holding 23.1% shares, govt.
holding 0.0% shares, domestic institution(bank + FI + MF +UTI) 10.7% shares,
foreign holding 49% shares, Non promoter corporate holding 8.6% shares, public &
others (individual + HUF+ Clearing members) 8.7% shares. PE Ratio of HDFC bank
is March 2010 – (30.95), march 2011 – (28.67), march 2012-(24.39) and EPS in
March 2010- (62.4), march 2011- (81.7), march 2012- (21.3).
By using simple method:
Factor Amount ,number –%
Holding period return 44.16%
Covariance 0.582270412
Beta (Risk 1.111363894
% annual return 9.318692349

56. 56
By using data analysis method in Microsoft excel:
Factor Amount ,number –%
Daily main return 0.000356452
Standard Deviation 0.034173073
Kurtosis 403.4449193
Skewness -17.0413256
Minimum -0.799202286
Maximum 0.163002658
Confidence Level (95.0%) 0.002456229
0
500
1000
1500
2000
2500
price 0f shares
price 0f shares

57. 57
Analysis
On the basis of Sharpe ratio, the INDUSLND Bank investment is better investment
than other all banks in bank nifty because, Sharpe ratio is indicate that, the asset with
the higher Sharpe ratio gives more return for the same risk. Investors are often
advised to pick investments with high Sharpe ratios. Hence, here in last three years
INDUSLND bank has given more return than other banks i.e. 11.75%. If share price
of INDUSLND bank is low still INDUSLND bank has given better return than other
banks. In starting of financial year 2009 share price of INDUS bank is 28.6 and in
ending 2012 share price is 321.65. That means Investment in INDUS bank is better.
On the basis of holding period return of INDUS bank is higher i.e.1042.10%. The
beta (systematic risk) is 3.6379 higher than other banks. The beta is indicating that
High-beta stocks are supposed to be riskier but provide a potential for higher returns;
low-beta stocks pose less risk but also lower returns. In last three year maximum daily
return is 0.0348 and minimum daily return -0.03811.
Risk and return of INDUS bank is high than other banks in last three years. Because
INDUS bank has given more return in last three years. If return is high then risk
automatically high.
Second best bank is yes bank because yes bank holding period return is 621.78%.
And Sharpe ratio is 9.60%. The beta of yes bank is 1.2790. So yes bank is second
biggest risky but yes bank is better for investment because yes bank has given second
rank high return.

58. 58

59. 59

60. 60
Chapter no: 8
Limitation / Future scope

61. 61
Scope of the study
The project primarily deals with equity shares; the study is limited to compare
different banks equity shares in respect of their risk, & return. The study covers only
twelve banks which are listed in bank nifty. The analysis is strictly based on unit price
and benchmark information. In this project has studied (analysis) risk and return
analysis of equity shares only twelve banks. This project is helpful to banking sector
equity share investors in banking sector.
Limitations of the study
 The time period of project is limited only two months. In that period project
can not done successfully.
 The study of project is limited only twelve banks which is listed in bank nifty.
Those national banks are not considered which is not listed in bank nifty. I.e.
bank of Maharashtra, UCO Bank, FEDERAL Bank.
 Risk of equity shares are calculated only using beta and standard deviation
technique.
 The studies of this project depend upon only three years historical data.

62. 62
Chapter no: 10
Bibliography

63. 63
Books
Dealer capital market module (advance) – NSE
Website
www.nseindia.com
www.moneycontrol.com
www.indiainfoline.com
www.rediffmail/money.com