PORTFOLIO ANALYSIS OF SELECTED SCRIPS AT NSE DR.K.V.GEETHA DEVI, Asst. Professor, Madanapalle Institute of Technology and Science, Madanapalli, P. SAI TEJA, MBA Student, Madanapalle Institute of Technology and Science, Madanapalli, ABSTRACT This study aims to compare the stocks of selected companies from different sectors like Automobiles, Banking, Information Technology, Oil and Pharmaceutical Sectors in the form of their risk and return. This study is also creating awareness about stocks among the investors to invest in particular sectors. The risk and return relationship is fundamental concept in not only financial analysis but in every aspect of life. It is necessary that every individual or institutions consider the combined influence of risk and return. This analysis using the standard deviation and average return tools to discuss and quantify the trade-off between risk and return. Key words: Risk, Return, National Stock Exchange. INTRODUCTION Risk is the potential that a chosen action or activity will lead to a loss. The notion implies that a choice having an influence on the outcome exists or existed. Potential losses themselves may also be called "risks". Almost any human Endeavour carries some risk, but some are much more risky than others. Systematic www.apjor.com Page 26
risk influences a large number of assets. A significant political event, for example, could affect several of the assets in your portfolio. It is virtually impossible to protect yourself against this type of risk. Unsystematic risk is sometimes referred as a "specific risk". This kind of risk affects a very small number of assets. An example is news that affects a specific stock such as a sudden strike by employees. Diversification is the only way to protect you from unsystematic risk. Market risk is the day-to-day fluctuations in a stock's price. Market risk applies mainly to stocks and options. As a whole, stocks tend to perform well during a bull market and poorly during a bear market - volatility is not so much a cause but an effect of certain market forces. NEED FOR THE STUDY Stock Brokers need some information about the scripts to give suggestions to their clients to form their portfolios. So that this study on the scripts traded in Stock market would help them to give best suggestions to the clients and also helps me to gain new knowledge. OBJECTIVES OF THE STUDY SAMPLING DESIGN To analyze the selected securities traded in the Stock Market. To study the risk and return of the securities. To understand, analyze and select the best portfolios. For this study all information has collected from secondary sources like internet, moneycontrol, NSE and from books. Tools used in this research to find out objectives: Rate of Return Variance Standard Deviation LIMITATIONS OF THE STUDY Study is limited to portfolio consisting of only 20 companies. Data collection was strictly confined to secondary source. No primary data is associated with project. It is a onetime study, so that it may not valid for long period. www.apjor.com Page 27
DATA ANALYSIS AND INTERPRETATION Calculations of Average Return and Risk for the Period of April-15 to May-16 Company Name Average Return Risk Axis Bank -0.01267 2.1169136 Baja Auto 0.106799 1.790068 Cairn India -0.09913 2.641823 GAIL 0.010678 2.189055 HCL Tech -0.06631 1.865503 HDFC Bank 0.052919 1.086955 Hero MotoCorp 0.06669 1.599959 ICICI Bank -0.07294 2.208916 Infosys 0.062802 1.699223 KotakMahindra Bank 0.046231 1.662242 M&M 0.049613 1.806198 Maruti Suzuki 0.060875 1.703289 Oil India -0.07931 1.701531 ONGC -0.10804 2.123257 Petronet LNG 0.172195 1.888008 SBI -0.07357 2.337107 Tata Motors -0.03508 2.58314 TCS 0.011969 1.288015 TechMahindra -0.03457 2.012605 Wipro -0.04265 1.372271 www.apjor.com Page 28
Average Return of Selected Companies 0.2 0.15 0.1 0.05 0-0.05-0.1-0.15 Average Return RISK OF SELECTED COMPANIES 3 2.5 2 1.5 1 0.5 0 Risk INTERPRETATION Above table showing the Average Returns and Risks of selected companies. Petronet LNG (0.172195) and Bajaj Auto (0.106799) has showing the highest average returns. ONGC (-0.10804) and Cairn India (- 0.09913) is giving the negative returns. From the selected companies half of the companies are showing the negative results. Cairn India (2.641823) and Tata Motors (2.58314) has showing the highest rate of risk and HDFC Bank (1.086955) and TCS (1.288015) have low rate of risk. www.apjor.com Page 29
FINDINGS Petronet LNG has the highest average return of 0.1722, which indicates that the company s return in stock is high. ONGC is having the lowest average return of -0.1080, this indicates that investor had to lose his investment by invest in stocks. Average return values are differed from one script to another script. This shows the return factor of the each stock. Cairn India has the highest rate of risk factor, 2.641823. This indicates that invest in this stock is very risky. HDFC Bank is having the lowest risk, 1.086955. This stock can get the positive response from investors, because of its low risk factor. SUGGESTIONS When it is compared with the individual stock returns with each other, it can be seen Petronet LNG and Bajaj Auto have well returns even the index is giving low returns. So, it is better to buy the both stocks who want more returns with less risk. ONGC and Cairn India had showing the losses with huge risk. So, no single investor may be interested to invest in this stock as it is very risky. When we look at the economy since last one year, it is giving the neutral results. So, it s time to investors wait and choose the option of invest in stocks. Hero MotoCorp, Infosys, Maruti Suzuki, HDFC Bank, M&M, Kotak Mahindra Bank has shown the positive returns but these stocks returns are less than the standard returns. Oil India, SBI, ICICI Bank, HCL Tech, Wipro has been in losses and it is better to investors not to invest in those stocks. When there is more risk, the return will also be high, but this not may influence all the times. This study showing that high risk securities of Cairn India, Tata Motors, SBI, ICICI Bank, ONGC, Axis Bank, Tech Mahindra is giving very low returns and some stocks has giving negative returns also. REFERENCES 1. Avdhani, V., 2003. Security Analysis and Portfolio Management. s.l.:himalaya Publishing House. 2. Barnard, T., 2015. Higher Returns with lower Risk Without Diversifying. In: Focused Investing. s.l.:thomas Barnard. 3. Brealey, 1985. A Introduction to Risk and Return from Common Stocks. s.l.:wiley Blackwell. 4. Frank k Reilly, K. C. B., 2012. Analysis of Inevestment and Management of Portfolios. Tenth ed. s.l.:cengage Learning India. 5. Jay M Desai, N. A. J., 2015. Security Analysis and Portfolio Management. In: Investment Management. s.l.:dreamtech Press. 6. K Sasidharan, C. A. K. M., 2011. Security Analysis and Portfolio Management. First ed. Kollam: McGraw Hill Education. 7. Kevin, S., 2006. Portfolio Management. Second ed. s.l.:phi. www.apjor.com Page 30
8. Ludvigson, S. C., 2007. The Empirical Risk-Return Relation: A Factor Analysis Approach. Journal of Financial Economics, I(83), pp. 171-222. 9. M. Ranganatham, R. M., 2014. Security Analysis and Portfolio Management. Second ed. s.l.:pearson. 10. Markowitz, H. M., 2016. Risk-Return Analysis. s.l.:mcgraw Hill Education. 11. Pandey, I. M., n.d. Essentials of Financial Management. Fourth ed. s.l.:vikas Publications. 12. Pandian, P., 2013. Security Analysis and Portfolio Management. Second ed. s.l.:vikas Publications. 13. Pandya, F. H., 2013. Security Analysis and Portfolio Management. s.l.:jaico Publishing House. 14. Prasad, U.R., 2014. MARKET CAPITALISATION OF CENTRAL PUBLIC SECTOR ENTERPRISES IN INDIA. International Journal of Applied Financial Management Perspectives, 3(4), p.1372. 15. Singh, P., 2012. Investment Management. In: Security Analysis and Portfolio Management. s.l.:himlaya Publications House. 16. Wachenheim, E., 2016. Common Stocks and Common Sense. Three ed. s.l.:wiley. 17. Weigand, R. A., 2014. Applied Equity Analysis and Portfolio Management. s.l.:wiley Finance Services. www.apjor.com Page 31