A Study on Risk and Return Analysis on Pharmaceutical Industry

Transcription

1 A Study on Risk and Return Analysis on Pharmaceutical Industry P.Ramya Sri Department of business administration Malla Reddy Engineering College (Autonomous) Maisammaguda, Secundrabad Mrs.K. Neeraja Assistant professor Department of business administration Malla Reddy Engineering college (Autonomous) Maisammaguda Secundrabad ABSTRACT A purchase and sale of listed securities happen in the organized market is known as the stock exchange. The risk and return plays an important role in individual decision making process. Pharmaceutical industry is one of the potential business considered by the investors for investments. Even in global pharmaceutical sector India enjoys an important position which is a major factor to be considered by the lenders. This study shares of explain the relationship between risk and return by using statistical methods like standard deviation, mean, t-test. INTRODUCTION The pharmaceutical industry develops, produces and markets drugs licenced for the use of medication. they are subject to a variety of laws and regulations of the government regulations of regarding the patenting, testing, pricing and ensuring potential investments in the financial assets, these two dimensions of the decision making process are called expected return and risk. REVIEW OF LITERATURE BASEL(1971) showed that the individual security betas were stable on the ground of increasing the length of the estimation period. He demonstrated that beta solidness has indicated grater change when the estimation time frame was bigger. SHARPE & COOPER(1972) Produced evidence in terms of stability with the respect to individual security betas by way of taking us samples from 1931 to 1967 with the help of applying transaction matrix approach and concluded that individual security betas showed stability over the period. OBJECTIVES OF THE STUDY To study about the pharma sector firms which traded in security market in general. To calculate return of the selected pharma stocks. To resolve the risk of the selected pharma sector To co-relate the firms risk and return and state which is the best firm of selected five companies. HYPOTHESIS H0: There is no significance relationship betweenrisk and return in pharmaceutical companies P.Ramya Sri, Mrs.K. Neeraja

2 H1: There is significance relationship between risk and return in pharmaceutical companies. RESEARCH METHODOLOGY The present study has been collected to find out a solution for the problem A study on risk and return on pharma sector in national stock exchange. Thus an analytical research design has been used in this study. Generally,data can be classified in primary data and secondary data. PRIMARY DATA the collected a fresh and for the first time and thus happen to be original character Ex: observation, interview SECONDARY DATA The data which have been collected by someone else & passed through statistical process My study totally depends on secondary data only. which is collected through various sources like: newspapers, BSE, NSE, websites( TOOLS FOR ANALYSIS The data collected and using MS excel by applying fallowing tools Mean Standard deviation T-Test SAMPLE DESIGN The present study is aimed at find out the randomness in successive share price changes. In 5 pharmaceutical companies listed on the index of the Bombay stock exchange are taken for the study. Table-1 Mean of pharmaceutical companies S.NO COMPANY MEAN 1 Dr. Reddy s Cipla Sun Pharma Aurobindo Divis Table-2 Standard Deviation of Pharmaceutical companies S.NO COMPANY STANDARD DEVIATION 1 Dr. Reddy s Cipla Sun pharma Aurobindo Divis Table-3 Skewness of Pharmaceutical companies 1454 P.Ramya Sri, Mrs.K. Neeraja

3 S.NO COMPANY SKEWNESS 1 D r. Reddy s Cipla Sun Pharma Aurobindo Divis Table-4 Kurtosis of Pharmaceutical companies S.NO COMPANY KURTOSIS 1 D r. Reddy s Cipla Sun Pharma Aurobindo Divis Table-5Median of Pharmaceutical companies S.NO COMPANY MEDIAN 1 D r. Reddy s Cipla Sun Pharma Aurobindo Divis T-test: paired two for means T-test result of Dr Reddy s with Cipla Table column sub head Dr.Reddy s Cipla Mean Variance Observation Pooled variance Hypothesized 0 T stat P(T<=t)one-tail T critical one-tail P(T<=t)two tail T critical two tail For the above table Ho is accepted it is not significance calculated value is ( > ) 1455 P.Ramya Sri, Mrs.K. Neeraja

4 1456 P.Ramya Sri, Mrs.K. Neeraja T-test result of D r. Reddy s with Sunpharma Table column sub head D r. Reddy s Sun pharma Mean Variance Observation Pooled variance T start P(T<=t)one tail P(T<=t)two tail For the above table calculated value (-1.847<1.717) the value hence the hypothesis is accepted T-test result of D r. Reddy s with Divis Table column sub headed D r. Reddy s Divis Mean Variance Observations T stat P(T<=t)one tail P(T<=t) two tail For the above table calculated value (-1.41<1.713) table value hence the hypothesis is accepted. T-test result of D r. Reddys with Aurobindo Table column sub headed D r. Reddy s Aurobindo Mean Variance Observations T stat P(T<=t) one tail P(T<=t)two tail For the above table calculated value (-0.42<1.171) table value hence the hypothesis is accepted.

5 Statistical analysis Descriptive Statistics:to analyse the descriptive statistics the mean value is considered. T-test: the t-test is done to find the significant difference with the 5 companies and the factors. If the t-test value is greater than t-critical two tail null hypothesis is rejected, if it less there is acceptance of null hypothesis. The actual return of the period one year is 0.114% in D r Reddy s company and Cipla is least return- 1.31%standard deviation is highest in sun pharmaceutical company 3.84% and lowest in Divis with 3.17%. Testing of hypothesisin all samples calculated value (t-test) is less than the tabulated value (t critical two tail). Hence accept the null hypothesis. Thus, there is no significant relation of risk and return in pharmaceutical companies. Findings During the period the mean return for selected pharmaceutical companies shares both positive and negative figures. The standard deviation reveals the total risk, the equity shares of Dr reddys ltd has low risk. The standard deviation reveals the total risk, the equity shares of Cipla ltd has Cipla has high risk and the equity shares of Dr Reddy s has low risk. CONCLUSION Long term Investors were able to take advantage of Maximum return.by analysing the pharmaceutical companies in the India stock market the equity shares of pharmaceutical companies are giving high return. REFERENCE P.Ramya Sri, Mrs.K. Neeraja