A Study of Best Performing Scripts of Nifty in Last 5 Year in Banking Sector
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Transcript of A Study of Best Performing Scripts of Nifty in Last 5 Year in Banking Sector
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PROJECT REPORTON
“A STUDY OF BEST PERFORMING SCRIPTS OF NIFTY IN LAST 5 YEAR IN BANKING SECTOR”
CONTENTS
1. Declaration (i) -
2. Mentor Certificate (ii) -
3. Acknowledgement (iii) -
4. Chapter 1 - Introduction 1 10
5. Chapter 2 - Objective/Research methodology/ Limitation/Scope
11 22
6. Chapter 3 - Organizational Profile 23 51
7. Chapter 4 - Data Analysis And Interpretation
52 62
8. Chapter 5 - Observations And Findings 63 64
9. Chapter 6 - Conclusion 65 -
10. Recommendations 66 -
11. Bibliography 67 -
12. Annexure 68 88
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Chapter 1
Introduction
1
INTRODUCTION
My Topic “Best performing scripts of nifty in last 5 year in banking sector “Is a Comparative Analysis Of All the Banks Which are listed in Nifty In the
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period of last five years. For this I have calculated beta separately for each bank as well as Risk & Return Relating to each of them. I made review of various Journals published by NSE and gone Through NSE INDIA web. As Showed in my Project The Banking sector Is one Of The Most performed During Last Five Year, which Inspired me To Select this topic.
To develop a more clear view about the topic we have to Understand Nifty and Banking
NIFTY & BANKING
NIFTY- The National Stock Exchange of India Limited has genesis in the
report of the High Powered Study Group on Establishment of New Stock Exchanges.
It recommended promotion of a National Stock Exchange by financial institutions
(FIs) 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 the 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 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.
The following years witnessed rapid development of Indian capital market
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with introduction of internet trading, Exchange traded funds (ETF), stock
derivatives and the first volatility index - IndiaVIX in April 2008, by NSE.
August 2008 saw introduction of Currency derivatives in India with the launch
of Currency Futures in USD INR by NSE. Interest Rate Futures was introduced for
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the first time in India by NSE on 31st August 2009, exactly after one year of the
launch of Currency Futures.
With this, now both the retail and institutional investors can participate in
equities, equity derivatives, currency and interest rate derivatives, giving them wide
range of products to take care of their evolving needs.
OUR GROUP Associate/Affiliate Companies
NSCCL
NCCL NSETECH
IISL
DotEx Intl. Ltd.
NSE.IT
3
NIFTY 50 IN LAST 20 YEAR: ONE OF THE GREATEST WEALTH CREATER
Equity is the one of the most exotic asset class, it has given about 21%
average annualized return since 1990, investment in equity has seen sea change in
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recent decade. Emergence of business channel sprayed the awareness about equity
among the investor community ,earlier to buy equity was not so easy as it is now,
today market is in pockets of investor in terms of access, technology has provided
the multiple way to access the market through internet, through cell phone and
WAP , now a day’s various expert advices trading and investment tips are available
with the investors, Many fund house are running their mutual fund and giving good
return to their investors and the asset under management of mutual fund industry is
approximately $ 6.7 lakh billion. Reliance capital is the largest mutual fund whose
asset under management is more than one lakh crore followed by HDFC MF, ICICI
Prudential MF, state run UTI Mutual Fund whose asset under management is 68,000
crore and Birla Sun Life MF are the five largest fund house of the country. Insurance
companies, HNI, FII, Retail investors are holding significant amount of equities in
their portfolio, although the allocation in equity is less than 5% of the total house hold
saving in the country however in totality it is a huge amount. In recent market selloff
where FII has sold 13.1billion US$ at one way and DII has bought more than 16.2
US$ at the same time in other way. Identification of investable share is the tuff job
even for the market participant and timing the market is even tougher for the expert,
but the fundamental analysis and technical analysis helps the people to identify the
cheap stocks at the right time to park their investments. But still
4
the question remain same what and how much one should buy? The main
barometer which is index it
gives the diversity and credibility of the basket and also liquid to exit and enter at
desired time for the investor NIFTY 50 stocks reflects the appropriate behaviour of
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equity because this is the broader index composed of 50 blue chips Company of
various sector having better corporate governance, credibility and profitability. Nifty
is claimed as the stocks of the nation gives the diversity and reliability .Reshuffling in
script is also an important phenomena because we have observed that time to time
the company who hasn’t followed the corporate governance and not adequately
performed have shown exit way from the index, similar incident happened with the
Satyam computers after the scam broke out in the company the script of the
company removed from the index and replaced by other company. The most
important characteristics of NIFTY is the diversity it is the basket of the shares who
represents the various sectors like Reliance and ONGC represents the
petrochemical sector, NTPC represents the power sector, ACC represents the
cement sector ,Infosys represent the IT sector and SBI and ICICI bank represents
the banking sectors and so on. The stocks in NIFTY gets proportionate weight age
according to their market capitalization so if money will allocated to the company
who are the component of index according to their proportion, then the capital
appreciation will be similar as the index fluctuation.
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LIST OF COMPANIES IN THE NIFTY 50
Company Name Industry SymbolABB Ltd. ELECTRICAL EQUIPMENT ABB
ACC Ltd.CEMENT AND CEMENT PRODUCTS ACC
Ambuja Cements Ltd.CEMENT AND CEMENT PRODUCTS AMBUJACEM
Axis Bank Ltd. BANKS AXISBANKBharat Heavy Electricals Ltd. ELECTRICAL EQUIPMENT BHELBharat Petroleum Corporation Ltd. REFINERIES BPCL
Bharti Airtel Ltd.TELECOMMUNICATION - SERVICES BHARTIARTL
Cairn India Ltd.OIL EXPLORATION/PRODUCTION CAIRN
Cipla Ltd. PHARMACEUTICALS CIPLADLF Ltd. CONSTRUCTION DLFGAIL (India) Ltd. GAS GAILHCL Technologies Ltd. COMPUTERS - SOFTWARE HCLTECHHDFC Bank Ltd. BANKS HDFCBANK
Hero Honda Motors Ltd.AUTOMOBILES - 2 AND 3 WHEELERS HEROHONDA
Hindalco Industries Ltd. ALUMINIUM HINDALCOHindustan Unilever Ltd. DIVERSIFIED HINDUNILVRHousing Development Finance Corporation Ltd. FINANCE - HOUSING HDFCI T C Ltd. CIGARETTES ITCICICI Bank Ltd. BANKS ICICIBANK
Idea Cellular Ltd.TELECOMMUNICATION - SERVICES IDEA
Infosys Technologies Ltd. COMPUTERS - SOFTWARE INFOSYSTCHInfrastructure Development Finance Co. Ltd. FINANCIAL INSTITUTION IDFCJaiprakash Associates Ltd. DIVERSIFIED JPASSOCIAT
Jindal Steel & Power Ltd.STEEL AND STEEL PRODUCTS JINDALSTEL
Kotak Mahindra Bank Ltd. BANKS KOTAKBANKLarsen & Toubro Ltd. ENGINEERING LT
Mahindra & Mahindra Ltd.AUTOMOBILES - 4 WHEELERS M&M
Maruti Suzuki India Ltd.AUTOMOBILES - 4 WHEELERS MARUTI
NTPC Ltd. POWER NTPC
Oil & Natural Gas Corporation Ltd.OIL EXPLORATION/PRODUCTION ONGC
Power Grid Corporation of India Ltd. POWER POWERGRIDPunjab National Bank BANKS PNBRanbaxy Laboratories Ltd. PHARMACEUTICALS RANBAXY
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Reliance Capital Ltd. FINANCE RELCAPITAL
Reliance Communications Ltd.TELECOMMUNICATION – SERVICES RCOM
Reliance Industries Ltd. REFINERIES RELIANCEReliance Infrastructure Ltd. POWER RELINFRAReliance Power Ltd. POWER RPOWERSiemens Ltd. ELECTRICAL EQUIPMENT SIEMENSState Bank of India BANKS SBIN
Steel Authority of India Ltd.STEEL AND STEEL PRODUCTS SAIL
Sterlite Industries (India) Ltd. METALS STERSun Pharmaceutical Industries Ltd. PHARMACEUTICALS SUNPHARMASuzlon Energy Ltd. ELECTRICAL EQUIPMENT SUZLONTata Consultancy Services Ltd. COMPUTERS – SOFTWARE TCS
Tata Motors Ltd.AUTOMOBILES - 4 WHEELERS TATAMOTORS
Tata Power Co. Ltd. POWER TATAPOWER
Tata Steel Ltd.STEEL AND STEEL PRODUCTS TATASTEEL
Unitech Ltd. CONSTRUCTION UNITECHWipro Ltd. COMPUTERS – SOFTWARE WIPRO
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BANKING- The Indian Banking industry, which is governed by the Banking
Regulation Act of India, 1949 can be broadly classified into two major categories,
non-scheduled banks and scheduled banks. Scheduled banks comprise commercial
banks and the co-operative banks. In terms of ownership, commercial banks can be
further grouped into nationalized banks, the State Bank of India and its group banks,
regional rural banks and private sector banks (the old/ new domestic and foreign).
These banks have over 67,000 branches spread across the country.
The banking section will navigate through all the aspects of the Banking System in
India. It will discuss upon the matters with the birth of the banking concept in the
country to new players adding their names in the industry in coming few years.
The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association
(IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc. has been well
defined under three separate heads with one page dedicated to each bank.
However, in the introduction part of the entire banking cosmos, the past
has been well explained under three different heads namely:
History of Banking in India
Nationalisation of Banks in India
Scheduled Commercial Banks in India
The first deals with the history part since the dawn of banking system in
India. Government took major step in the 1969 to put the banking sector into
systems and it nationalised 14 private banks in the mentioned year. This has been
elaborated in Nationalisation of Banks in India. The last but not the least explains
about the scheduled and unscheduled banks in India. Section 42 (6) (a) of RBI Act
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1934 lays down the condition of scheduled commercial banks. The description along
with a list of scheduled commercial banks is given on this page.
Currently, India has 96 scheduled commercial banks (SCBs) - 27 public sector
banks (that is with the Government of India holding a stake), 31 private banks (these
do not have government stake; they may be publicly listed and traded on stock
exchanges) and 38 foreign banks. They have a combined network of over 53,000
branches and 49,000 ATMs. According to a report by ICRA Limited, a rating agency,
the public sector banks hold over 75 percent of total assets of the banking industry,
with the private and foreign banks holding 18.2% and 6.5% respectively.
EARLY HISTORY
Banking in India originated in the last decades of the 18th century. The first banks
were The General Bank of India which started in 1786, and the Bank of Hindustan,
both of which are now defunct. The oldest bank in existence in India is the State
Bank of India, which originated in the Bank of Calcutta in June 1806, which almost
immediately became the Bank of Bengal. This was one of the three presidency
banks, the other two being the Bank of Bombay and the Bank of Madras, all three of
which were established under charters from the British East India Company. For
many years the Presidency banks acted as quasi-central banks, as did their
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successors. The three banks merged in 1921 to form the Imperial Bank of India,
which, upon India's independence, became the State Bank of India.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The
Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in
Bombay in 1862; branches in Madras and Pondicherry, then a French colony,
followed. HSBC established itself in Bengal in 1869. Calcutta was the most active
trading port in India, mainly due to the trade of the British Empire, and so became a
banking center.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established
in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank,
established in Lahore in 1895, which has survived to the present and is now one of
the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a
relative period of stability. Around five decades had elapsed since the Indian Mutiny,
and the social, industrial and other infrastructure had improved. Indians had
established small banks, most of which served particular ethnic and religious
communities.
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LIBERALISATION
In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks. These came to be known as
New Generation tech-savvy banks, and included Global Trust Bank (the first of such
new generation banks to be set up), which later amalgamated with Oriental Bank of
Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move,
along with the rapid growth in the economy of India, revitalized the banking sector in
India, which has seen rapid growth with strong contribution from all the three sectors
of banks, namely, government banks, private banks and foreign banks.
Currently (2007), banking in India is generally fairly mature in terms of supply,
product range and reach-even though reach in rural India still remains a challenge
for the private sector and foreign banks. In terms of quality of assets and capital
adequacy, Indian banks are considered to have clean, strong and transparent
balance sheets relative to other banks in comparable economies in its region. The
Reserve Bank of India is an autonomous body, with minimal pressure from the
government. The stated policy of the Bank on the Indian Rupee is to manage
volatility but without any fixed exchange rate-and this has mostly been true.
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Chapter 2
Objective
Research Methodology
Limitatins
Scope
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OBJECTIVES OF THE PROJECT
1. To know the correlation between Nifty movement & Banks movement under Nifty 50.
2. To know the best bank in the Nifty 50 in terms of risk & return.
3. To guide the investors in framing the criteria for judging the best bank in terms
associated risk & returns generated.
4. To check the volatility of banking counter through Beta calculation.
ASSUMPTIONS
1. All the news related to banks is ignored in this calculation.
2. All the extra benefits given by these banks are also ignored in the calculation
like ESOP, Bonus Shares, and Right Issues, etc.
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RESEARCH METHODOLOGY
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For the project undertaken collecting Primary Data is very difficult so I use
Secondary Data for the project.
SAMPLE SIZE- For the project I have taken 4 banks of Nifty 50 i.e.
HDFC Bank
ICICI Bank
Punjab National Bank
State Bank of India
DATA ANALYSIS TOOLS
Calculation of Correlation.
Risk & Return Calculation.
Beta Calculation.
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→WHAT IS CORRELATION?
The correlation coefficient a concept from statistics is a measure of how well trends
in the predicted values follow trends in past actual values. It is a measure of how
well the predicted values from a forecast model "fit" with the real-life data.
The correlation coefficient is a number between 0 and 1. If there is no relationship
between the predicted values and the actual values the correlation coefficient is 0 or
very low (the predicted values are no better than random numbers). As the strength
of the relationship between the predicted values and actual values increases so
does the correlation coefficient. A perfect fit gives a coefficient of 1.0. Thus, the
higher the correlation coefficient the better.
In statistics, correlation and dependence are any of a broad class of statistical
relationships between two or more random variables or observed data values.
Familiar examples of dependent phenomena include the correlation between the
physical statures of parents and their offspring, and the correlation between the
demand for a product and its price. Correlations are useful because they can
indicate a predictive relationship that can be exploited in practice. For example, an
electrical utility may produce less power on a mild day based on the correlation
between electricity demand and weather. Correlations can also suggest possible
causal, or mechanistic relationships; however, statistical dependence is not sufficient
to demonstrate the presence of such a relationship.
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PEARSON'S PRODUCT-MOMENT COEFFICIENT
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The most familiar measure of dependence between two quantities is the Pearson
product-moment correlation coefficient, or "Pearson's correlation." It is obtained by
dividing the covariance of the two variables by the product of their standard
deviations. Karl Pearson developed the coefficient from a similar but slightly different
idea by Francis Galton.
The population correlation coefficient ρX,Y between two random variables X and Y
with expected values μX and μY and standard deviations σX and σY is defined as:
where E is the expected value operator, cov means covariance, and, corr a widely
used alternative notation for Pearson's correlation.
The Pearson correlation is defined only if both of the standard deviations are finite
and both of them are nonzero. It is a corollary of the Cauchy–Schwarz inequality that
the correlation cannot exceed 1 in absolute value. The correlation coefficient is
symmetric: corr(X,Y) = corr(Y,X).
The Pearson correlation is +1 in the case of a perfect positive (increasing) linear
relationship, −1 in the case of a perfect decreasing (negative) linear relationship, and
some value between −1 and 1 in all other cases, indicating the degree of linear
dependence between the variables. As it approaches zero there is less of a
relationship. The closer the coefficient is to either −1 or 1, the stronger the
correlation between the variables.
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→RISK VERSUS RETURN
One Can't Have One Without the Other
Risk — Just the thought of it can give investors sleepless nights. However, through
careful planning for your financial future, you can help manage risk.
Risk is something you encounter every day. Even crossing a busy street involves
some risk. With investments, balancing risk and return can be a tricky operation. All
investors want to maximize their return, while minimizing risk.
Some investments are certainly more "risky" than others, but no investment is risk
free. Trying to avoid risk by not investing at all can be the riskiest move of all. That
would be like standing at the curb, never setting foot into the street. You'll never be
able to get to your destination if you don't accept some risk. In investing, just like
crossing that street, you carefully consider the situation, accept a comfortable level
of risk, and proceed to where you're going. Risk can never be eliminated, but it can
be managed. Let's take a look at the different types of risk, how different asset
categories perform, and the ways and means to help manage risk.
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TYPES OF RISK
However, there are many kinds of risk. Let's take a look at some of them:
Capital Risk: Losing your invested monies.
Inflationary Risk: Investment's rate of return doesn't keep pace with inflation
rate.
Interest Rate Risk: A drop in an investment's interest rate.
Market Risk: Selling an investment at an unfavorable price.
Liquidity Risk: Limitations on the availability of funds for a specific period of
time.
Legislative Risk: Changes in tax laws may make certain investments less
advantageous.
Default Risk: The failure of the institution where an investment is made.
The risk/return tradeoff could easily be called the "ability-to-sleep-at-night test."
While some people can handle the equivalent of financial skydiving without batting
an eye, others are terrified to climb the financial ladder without a secure harness.
Deciding what amount of risk you can take while remaining comfortable with your
investments is very important.
In the investing world, the dictionary definition of risk is the chance that an
investment's actual return will be different than expected. Technically, this is
measured in statistics by standard deviation. Risk means you have the possibility of
losing some, or even all, of our original investment.
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Low levels of uncertainty (low risk) are associated with low potential returns. High
levels of uncertainty (high risk) are associated with high potential returns.
The risk/return tradeoff is the balance between the desire for the lowest possible risk
and the highest possible return. This is demonstrated graphically in the chart below.
A higher standard deviation means a higher risk and higher possible return.
WHAT DOES RISK-RETURN TRADE-OFF MEAN?
The principle that potential return rises with an increase in risk. Low levels of
uncertainty (low risk) are associated with low potential returns, whereas high levels
of uncertainty (high risk) are associated with high potential returns. According to
the risk-return trade-off, invested money can render higher profits only if it is subject
to the possibility of being lost.
The objective of risk and return analysis is to maximize the return by creating a
balance of risk. For example, in case of working capital management, the less
inventory you keep, the higher the expected return as less of your money is locked
as asset; but you also have a increased risk of running out of raw material when you
actually need it for production or maintenance. Which means you lose sale. Thus
all
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companies tries very hard to maintain a minimum inventory as possible without
effecting smooth production. This is a very common example of risk return trade-off
→WHAT IS BETA CALCULATION?
In finance, the beta (β) of a stock or portfolio is a number describing the relation of
its returns with that of the financial market as a whole.
An asset with a beta of 0 means that its price is not at all correlated with the market.
A positive beta means that the asset generally follows the market. A negative beta
shows that the asset inversely follows the market; the asset generally decreases in
value if the market goes up and vice versa.
The beta coefficient is a key parameter in the capital asset pricing model (CAPM). It
measures the part of the asset's statistical variance that cannot be mitigated by the
diversification provided by the portfolio of many risky assets, because it is correlated
with the return of the other assets that are in the portfolio. Beta can be estimated for
individual companies using regression analysis against a stock market index.
The formula for the beta of an asset within a portfolio is
,
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. The
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portfolio of interest in the CAPM formulation is the market portfolio that contains all
risky assets, and so the rp terms in the formula are replaced by rm, the rate of return
of the market.
Beta is also referred to as financial elasticity or correlated relative volatility, and
can be referred to as a measure of the sensitivity of the asset's returns to market
returns, its non-diversifiable risk, its systematic risk, or market risk. On an individual
asset level, measuring beta can give clues to volatility and liquidity in the
marketplace. In fund management, measuring beta is thought to separate a
manager's skill from his or her willingness to take risk.
SECURITY MARKET LINE
The SML graphs the results from the capital asset pricing model (CAPM) formula.
The x-axis represents the risk (beta), and the y-axis represents the expected return.
The market risk premium is determined from the slope of the SML.
The relationship between β and required return is plotted on the security market line
(SML) which shows expected return as a function of β. The intercept is the nominal
risk-free rate available for the market, while the slope is E(Rm)− Rf. The security
market line can be regarded as representing a single-factor model of the asset price,
where Beta is exposure to changes in value of the Market.
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A beta value less than 1 indicates the investment is less volatile than the
benchmark. A beta value equal to 1 means the investment's volatility is the
same as the benchmark, and a beta greater than 1 means the investment is
more volatile.
Beta is a measure of a stock's volatility in relation to the market. By definition, the
market has a beta of 1.0, and individual stocks are ranked according to how much
they deviate from the market. A stock that swings more than the market over time
has a beta above 1.0. If a stock moves less than the market, the stock's beta is less
than 1.0. 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.
Beta is a key component for the capital asset pricing model (CAPM), which is used
to calculate cost of equity. Recall that the cost of capital represents the discount rate
used to arrive at the present value of a company's future cash flows. All things being
equal, the higher a company's beta is, the higher its cost of capital discount rate. The
higher the discount rate, the lower the present value placed on the company's future
cash flows. In short, beta can impact a company's share valuation.
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Advantages of Beta
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To followers of CAPM, beta is a useful measure. A stock's price variability is important to consider when assessing risk. Indeed, if you think about risk as the possibility of a stock losing its value, beta has appeal as a proxy for risk.
Intuitively, it makes plenty of sense. Think of an early-stage technology stock with a price that bounces up and down more than the market. It's hard not to think that stock will be riskier than, say, a safe-haven utility industry stock with a low beta.
Besides, beta offers a clear, quantifiable measure, which makes it easy to work with. Sure, there are variations on beta depending on things such as the market index used and the time period measured, but broadly speaking, the notion of beta is fairly straightforward to understand. It's a convenient measure that can be used to calculate the costs of equity used in a valuation method that discounts cash flows.
DISADVANTAGES OF BETA However, if you are investing in a stock's fundamentals, beta has plenty of shortcomings.
For starters, beta doesn't incorporate new information. Consider the electrical utility company American Electric Power (AEP). Historically, AEP has been considered a defensive stock with a low beta. But when it entered the merchant energy business and assumed high debt levels, AEP's historic beta no longer captured the substantial risks the company took on. At the same time, many technology stocks, such as Google, are so new to the market they have insufficient price history to establish a reliable beta. Another troubling factor is that past price movements are very poor predictors of the future. Betas are merely rear-view mirrors, reflecting very little of what lies ahead. Furthermore, the beta measure on a single stock tends to flip around over time, which makes it unreliable. Granted, for traders looking to buy and sell stocks within short time periods, beta is a fairly good risk metric. But for investors with long-term horizons, it's less useful.
LIMITATIONS
Sample size is of only 5 years.
Calculation is little bit time consuming.
Major Banks like Axis & Kotak Mahindra are not included because of
data unavailability.
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Scope
With the help of this study An individual as well as organisational investor can select
the banking stock of their choice before investment. Also they can study the beta
distribution so calculated to gain better results from their stocks.
They can also judge the risk and return relation before going for a combination of
stocks.
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Chapter 3
Organization Profile
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I. HDFC BANK ( HOUSING DEVELOPMENT FINANCE
CORPORATION LIMITED)
HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a major Indian financial
services company based in Mumbai, incorporated in August 1994, after the Reserve
Bank of India allowed establishing private sector banks. The Bank was promoted by
the Housing Development Finance Corporation, a premier housing finance company
(set up in 1977) of India. HDFC Bank has 1,412 branches and over 3,295 ATMs, in
528 cities in India, and all branches of the bank are linked on an online real-time
basis. As of September 30, 2008 the bank had total assets of INR 1006.82 billion.
For the fiscal year 2008-09, the bank has reported net profit of Rs.2,244.9 crore, up
41% from the previous fiscal. Total annual earnings of the bank increased by 58%
reaching at Rs.19,622.8 crore in 2008-09.
HISTORY
HDFC Bank was incorporated in the year of 1994 by Housing Development
Finance Corporation Limited (HDFC), India's premier 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. The Bank commenced its
operations as a Scheduled Commercial Bank in January 1995 with the help of RBI's
liberalization policies.
In a milestone transaction in the Indian banking industry, Times Bank Limited
(promoted by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank
Ltd., in 2000. This was the first merger of two private banks in India. As per the
scheme of amalgamation approved by the shareholders of both banks and the
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Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank
for every 5.75 shares of Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total
branches to more than 1,000. The amalgamated bank emerged with a strong deposit
base of around Rs. 1,22,000 crore and net advances of around Rs. 89,000 crore.
The balance sheet size of the combined entity is over Rs. 1,63,000 crore. The
amalgamation added significant value to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled
manpower.
BUSINESS FOCUS
HDFC Bank deals with three key business segments - Wholesale Banking
Services, Retail Banking Services, Treasury. It has entered the banking consortia of
over 50 corporate for providing working capital finance, trade services, corporate
finance and merchant banking. It is also providing sophisticated product structures in
areas of foreign exchange and derivatives, money markets and debt trading and
equity research.
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WHOLESALE BANKING SERVICES
The Bank's target market ranges from large, blue-chip manufacturing
companies in the Indian corp to small & mid-sized corporates and agri-based
businesses. For these customers, the Bank provides a wide range of commercial
and transactional banking services, including working capital finance, trade
services,transactional services, cash management, etc. The bank is also a leading
provider of structured solutions, which combine cash management services with
vendor and distributor finance for facilitating superior supply chain management for
its corporate customers. HDFC Bank has made significant inroads into the banking
consortia of a number of leading Indian corporate including multinationals,
companies from the domestic business houses and prime public sector companies.
It is recognised as a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock exchange members
and banks.
RETAIL BANKING SERVICES
The objective of the Retail Bank is to provide its target market customers a full
range of financial products and banking services, giving the customer a one-stop
window for all his/her banking requirements. The products are backed by world-class
service and delivered to customers through the growing branch network, as well as
through alternative delivery channels like ATMs, Phone Banking, Net Banking and
Mobile Banking.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit
card
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as well. The Bank launched its credit card business in late 2001. By March 2009, the
bank had a total card base (debit and credit cards) of over 13 million. The Bank is
also one of the leading players in the “merchant acquiring” business with over
70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant
establishments. The Bank is well positioned as a leader in various net based B2C
opportunities including a wide range of internet banking services for Fixed Deposits,
Loans, Bill Payments, etc.
TREASURY
Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities, and
Equities. These services are provided through the bank's Treasury team. To comply
with statutory reserve requirements, the bank is required to hold 25% of its deposits
in government securities. The Treasury business is responsible for managing the
returns and market risk on this investment portfolio.
HDFC Ltd has the objective to enhance residential housing stock and
promote home ownership. Their offerings range from hassle-free home loans and
deposit products, to property related services and a training facility. They also offer
specialized financial services to the customer base through partnerships with some
of the best financial institutions worldwide.
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic
team determined to accomplish the vision of becoming a world-class Indian bank.
Our business philosophy is based on four core values - Customer Focus,
Operational Excellence, Product Leadership and People. We believe that the
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ultimate identity and success of our bank will reside in the exceptional quality of our
people and their extraordinary efforts. For this reason, we are committed to hiring,
developing, motivating and retaining the best people in the industry.
MISSION AND BUSINESS STRATEGY
Our mission is to be "a World Class Indian Bank", benchmarking ourselves
against international standards and best practices in terms of product offerings,
technology, service levels, risk management and audit & compliance. The objective
is to build sound customer franchises across distinct businesses so as to be a
preferred provider of banking services for target retail and wholesale customer
segments, and to achieve a healthy growth in profitability, consistent with the Bank's
risk appetite. We are committed to do this while ensuring the highest levels of ethical
standards, professional integrity, corporate governance and regulatory compliance.
PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable
track record in India as well as in international markets. Since its inception in 1977,
the Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well
over a million dwelling units. HDFC has developed significant expertise in retail
mortgage loans to different market segments and also has a large corporate client
base for its housing related credit facilities. With its experience in the financial
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markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
KEY PEOPLE
1-Deepak Parekh (Founder)
2-Jagdish Kapoor (Chairman)
3-Aditya Puri (MD)
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II. ICICI BANK ( Industrial Credit and Investment
Corporation of India)
ICICI Bank (BSE: 532174, NYSE: IBN) (formerly Industrial Credit and
Investment Corporation of India) is a major banking and financial services
organization in India. It is the 4th largest bank in India and the largest private sector
bank in India by market capitalization. The bank also has a network of 1,700+
branches (as on 31 March 2010) and about 4,721 ATMs in India and presence in 18
countries, as well as some 24 million customers (at the end of July 2007). ICICI
Bank offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and specialization
subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. (These data are dynamic.) ICICI
Bank is also the largest issuer of credit cards in India. ICICI Bank's shares are listed
on the stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock
Exchange of India Limited; its ADRs trade on the New York Stock Exchange
(NYSE).
Founded in 1955 as Industrial Credit and Investment Corporation of India,
ICICI Limited was established by the Government of India in the 1960s as a
Financial Institution like Industrial Development Bank of India (IDBI) to finance large
industrial projects . ICICI then, was not a bank and hence could not take retail
deposits and was not required to comply with Indian banking requirements for liquid
reserves. ICICI borrowed funds from various agencies like the World Bank, often at
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concessional rates. These funds were deployed in large corporate loans. However,
the scenario changed drastically in1990s when ICICI founded a separate legal entity
and named it "ICICI Bank". ICICI Bank, as the name would suggest, undertook
normal banking operations like accepting deposits, issuing credit cards, providing car
loans etc. The experiment was so successful that ICICI merged into ICICI Bank and
this "reverse merger" happened in 2002.
ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment
Corporation of India) "ICICI Bank is India's second largest Bank with consolidated
total assets of over Rs. 470,000 crores and networth of over Rs. 50,000 crores. The
Bank's capital adequacy ratio of 15.6% is among the highest levels of capital
adequacy in large Indian banks and much higher than the regulatory requirement of
9.0%. ICICI Bank made a profit after tax of Rs. 4,158 crore (over US$ 850 million) in
FY2008 and Rs. 3,014 crore (US$ 619 million) in the nine months ended December
31, 2008."
ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and specialised
subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management. ICICI Bank is also the largest
issuer of credit cards in India. Banks have also provide internet banking, phone
banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines
(ATMs) and combined various other services and integrated them into the
mainstream banking arena.
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In a span of just four years, ICICI Bank has emerged as a consumer banking
behemoth. With a retail book of over Rs 56,000 crore (Rs 560 billion) and a market
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share that is the envy of competition -- it has a share of over 30 per cent -- ICICI
Bank today has reached a commanding position. The bank boasts of the widest
integrated technology platform in the country and only a fourth of its business
takes place at its branches
The Bank is expanding in overseas markets and has the largest international
balance sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries,
branches and representative offices in 18 countries, including an offshore unit in
Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK (the
subsidiary through which the his savings brand is operated), offshore banking units
in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong
Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia,
Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the
Bank is targeting the NRI (Non-Resident Indian) population in particular.
HISTORY
1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development
financial institution for providing medium-term and long-term project financing to
Indian businesses.
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1994 ICICI established Banking Corporation as a banking subsidiary. formerly
Industrial Credit and Investment Corporation of India. Later, ICICI Banking
Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal
entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit
cards, car loans etc.
2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar
bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank
(established 1904) in the 1960s.
2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger
of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services
Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI
integrated the group's financing and banking operations, both wholesale and retail,
into a single entity.
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Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that Standard
Chartered Bank had inherited when it acquired Grindlays Bank.
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ICICI started its international expansion by opening representative offices in New
York and London.
2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the
UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking
Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.
2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that
country, India and South Africa.
2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about
US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a
branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI
established a branch in Dubai International Financial Centre and in Hong Kong.
2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened
representative offices in Bangkok, Jakarta, and Kuala Lumpur.
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2007 ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in
Maharashtra State, and which had 158 branches in Maharashtra and another 31 in
Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong
in rural areas.
ICICI also received permission from the government of Qatar to open a branch in
Doha.
ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.
2008 The US Federal Reserve permitted ICICI to convert its representative office in
New York into a branch.
ICICI also established a branch in Frankfurt.
NATURE OF BUSINESS:
ICICI is a financial intermediary which brings together the savers and
borrowers in the economic system. It collects funds from surplus units and lends the
same to those units whose income exceeds its expenditure. In the pursuit of these
objectives the ICICI Bank Limited (ICICI Bank) offers products and services in the
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areas of commercial banking to retail and corporate customers (both domestic and
international), treasury and investment banking and other products, such as
insurance and asset management. Its commercial banking operations for retail
customers consist of retail lending and deposits, distribution of third-party investment
products and other fee-based products and services, as well as issuance of
unsecured redeemable bonds. ICICI Bank provides a range of commercial banking
and project finance products and services, including loan products, fee and
commission-based products and services, deposits and foreign exchange and
derivatives products to corporations, growth-oriented middle market companies and
small and medium enterprises.
ONWNERSHIP TYPE
JOINT STOCK COMPANY:
ICICI BANK LIMITED, is the joint stock company which is incorporated under
the Companies Act, 1956 and licensed as a bank under the Banking Regulation Act,
1949 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).
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VISION
To be the leading provider of financial services in India and a major
global bank.
To be the preferred brand for total financial and banking solutions for both corporate
and individuals
To be the dominant Life, Health and Pensions player built on trust by world-class
people and service.
MISSION
We will leverage our people, technology, speed and financial capital to:
be the banker of first choice for our customers by delivering high quality, world-class
products and services.
expand the frontiers of our business globally.
play a proactive role in the full realisation of India’s potential.
maintain a healthy financial profile and diversify our earnings across businesses and
geographies.
maintain high standards of governance and ethics.
contribute positively to the various countries and markets in which we operate.
create value for our stakeholders
Provide the social facilities to the society
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SUBSIDIARIES
KEY PEOPLE
1. K.V. Kamath (Chairman)
2. Chanda Kochhar (MD & CEO)
3. N. S. Kannan (CFO)
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III. PNB (Punjab National Bank)
Punjab National Bank (PNB) (BSE: 532461), was registered on May 19,
1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore.
Today, the Bank is the second largest government-owned commercial bank in India
with about 5000 branches across 764 cities. It serves over 37 million customers. The
bank has been ranked 248th biggest bank in the world by the Bankers Almanac,
London. The bank's total assets for financial year 2007 were about US$60 billion.
PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai
and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.
Punjab National Bank with 4497 offices and the largest nationalised bank is
serving its 3.5 crore customers with the following wide variety of banking services:
Corporate banking
Personal banking
Industrial finance
Agricultural finance
Financing of trade
International banking
Punjab National Bank has been ranked 38th amongst top 500 companies by The
Economic Times. PNB has earned 9th position among top 50 trusted brands in India.
Punjab National Bank India maintains relationship with more than 200 leading
international banks world wide. PNB India has Rupee Drawing Arrangements with 15
exchange companies in UAE and 1 in Singapore.
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PNB ONLINE
Punjab National Bank of India is also a member of SWIFT and more than
150 PNB Branches are connected with terminals in Mumbai. It promotes "Any Time,
Any Where Banking".
PNB offers Internet Banking services for both to the Corporate and Individuals. It
provides 24 hours, 365 days banking from the PC of the user. A user can operate
anytime and from anywhere its accounts. The following are some of the services
available online:
Access to account
Complete details of transactions and statement of account
Online information of deposits, loans overdraft account etc.
Online Payment Facility for railway reservation through IRCTC Payment
Gateway Project
Online Utility Bill Payment Services which allows Internet Banking account
holders to pay their telephone, mobile, electricity, insurance and other bills anytime
from anywhere from their desktop.
Punjab National Bank Card user can buy goods and enable services from
45,000 merchant outlet in India and can withdraw cash from over 4500 ATMs with its
own 450 ATMs.
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PUNJAB NATIONAL BANK BRANCHES
Punjab National Bank has its Branches in all the 7 metropolitan and
cosmopolitan cities in India namely New Delhi, Mumbai, Calcutta, Chennai,
Bangalore, Hyderabad and Ahmedabad. It even has its branches in small town in
both urban as well as rural areas.
PNB is always focussing on expanding abroad and till date has identified
some emerging economies abroad. They are in few of these places.
Almaty
Kazakhktan
Shanghai
China
London
Kabul
Afghanistan
PUNJAB NATIONAL BANK HOUSING LOAN
Any individual can avail Punjab National Bank Housing Loan for any of the
following purpose:
For construction of house.
For purchase of house/ flat.
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For purchase of house/ flat from the original allottee, i.e. on First Power of
Attorney basis.
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For carrying out repairs/ renovation/ additions/ alterations in the existing
house.
Approximately 80% of the cost of project is sanctioned by PNB Housing Finance,
subject to a maximum of Rs. 50 lac. In case of carrying out repairs/ renovation/
additions/ alterations in the existing house, the ceiling is Rs. 5 lac. The loan is
available for a period of 5 years to 20 years or before the borrowers attain the age of
65.
Interest of Punjab National Bank Home Loan is charged on reducing balance
and the amount to be sanctioned depends upon the repaying capability of the
borrower.
The following securities are required by the cell of PNB Housing Loan:
Mortgage of property for which finance is being given.
In case of purchase of house flat from housing board/ society where mortgage
cannot be created immediately, a tripartite agreement shall be executed amongst the
housing board/society, borrower and the Bank.
In case of purchase of house/ flat on first power of attorney, additional security by
way of mortgage of some other property or pledge of Bank's Fixed Deposit Receipt/
LIC policy/ Govt. securities has to be provided.
Suitable third party guarantee acceptable to the Bank which may include guarantee
from family members/ other relatives.
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HISTORY
1895: PNB commenced its operations in Lahore. PNB has the distinction of being
the first Indian bank to have been started solely with Indian capital that has survived
to the present. (The first entirely Indian bank, the Oudh Commercial Bank, was
established in 1881 in Faizabad, but failed in 1958.) PNB's founders included
several leaders of the Swadeshi movement such as Dyal Singh Majithia and Lala
HarKishen Lal,Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri
Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was
actively associated with the management of the Bank in its early years.
1904: PNB established branches in Karachi and Peshawar.
1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi circle.
1947: Partition of India and Pakistan at Independence. PNB lost its premises in
Lahore, but continued to operate in Pakistan.
1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank
became Bharat Nidhi Ltd.
1961: PNB acquired Universal Bank of India.
1963: The Government of Burma nationalized PNB's branch in Rangoon (Yangon).
September 1965: After the Indo-Pak war the government of Pakistan seized all the
offices in Pakistan of Indian banks, including PNB's headoffice, which may have
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moved to Karachi. PNB also had one or more branches in East Pakistan
(Bangladesh).
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1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a rescue.
1969: The Government of India (GOI) nationalized PNB and 13 other major
commercial banks, on July 19, 1969.
1976 or 1978: PNB opened a branch in London.
1986 The Reserve Bank of India required PNB to transfer its London branch to State
Bank of India after the branch was involved in a fraud scandal.
1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The
acquisition added Hindustan's 142 branches to PNB's network.
1993: PNB acquired New Bank of India, which the GOI had nationalized in 1980.
1998: PNB set up a representative office in Almaty, Kazakhstan.
2003: PNB took over Nedungadi Bank, the oldest private sector bank in Kerala. At
the time of the merger with PNB, Nedungadi Bank's shares had zero value, with the
result that its shareholders received no payment for their shares.
PNB also opened a representative office in London.
2004: PNB established a branch in Kabul, Afghanistan.
PNB also opened a representative office in Shanghai.
PNB established an alliance with Everest Bank in Nepal that permits migrants to
transfer funds easily between India and Everest Bank's 12 branches in Nepal.
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2005: PNB opened a representative office in Dubai.
44
2007: PNB established PNBIL - Punjab National Bank (International) - in the UK,
with two offices, one in London, and one in South Hall. Since then it has opened a
third branch in Leicester, and is planning a fourth in Birmingham.
2008: PNB opened a branch in Hong Kong.
2009: PNB opened a representative office in Oslo, Norway, and a second branch in
Hong Kong, this in Kowloon.
2010: PNB received permission to upgrade its representative office in the Dubai
International Financial Centre to a branch.
PRODUCTS OFFERED
Investment Banking
Consumer Banking
Commercial Banking
Retail Banking
Private Banking
Asset Management
Pensions
Mortgage Loans
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Credit Cards
Life insurance
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VISION
"To be a Leading Global Bank with Pan India footprints and become a household
brand in the Indo-Gangetic Plains providing entire range of financial products and
services under one roof"
MISSION
"Banking for the unbaked"
CHAIRMAN OF PNB
Mr. K.R. Kamath (Since 2009)
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IV. SBIN (STATE BANK OF INDIA)
State Bank of India (SBI) (BSE: 500112, NSE: SBIN) is the largest banking
and financial services company in India, by almost every parameter - revenues,
profits, assets, market capitalization etc. 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. 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.
The evolution of State Bank of India can be traced back to the first decade of
the 19th century. It began with the establishment of the Bank of Calcutta in Calcutta,
on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later,
on 2 January 1809. It was the first ever joint-stock bank of the British India,
established under the sponsorship of the Government of Bengal. Subsequently, the
Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established
on 1 July 1843) followed the Bank of Bengal. These three banks dominated the
modern banking scenario in India, until when they were amalgamated to form the
Imperial Bank of India, on 27 January 1921.
An important turning point in the history of State Bank of India is the launch of the
first Five Year Plan of independent India, in 1951. The Plan aimed at serving the
Indian economy in general and the rural sector of the country, in particular. Until the
Plan, the commercial banks of the country, including the Imperial Bank of India,
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confined their services to the urban sector. Moreover, they were not equipped to
respond to the growing needs of the economic revival taking shape in the rural areas
47
of the country. Therefore, in order to serve the economy as a whole and rural sector
in particular, the All India Rural Credit Survey Committee recommended the
formation of a state-partnered and state-sponsored bank.
The All India Rural Credit Survey Committee proposed the takeover of the
Imperial Bank of India, and integrating with it, the former state-owned or state-
associate banks. Subsequently, an Act was passed in the Parliament of India in May
1955. As a result, the State Bank of India (SBI) was established on 1 July 1955. This
resulted in making the State Bank of India more powerful, because as much as a
quarter of the resources of the Indian banking system were controlled directly by the
State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959.
The Act enabled the State Bank of India to make the eight former State-associated
banks as its subsidiaries.
The State Bank of India emerged as a pacesetter, with its operations
carried out by the 480 offices comprising branches, sub offices and three Local Head
Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of
the community's savings and lending to creditworthy parties, the State Bank of India
catered to the needs of the customers, by banking purposefully. The bank served the
heterogeneous financial needs of the planned economic development.
BRANCHES
The corporate centre of SBI is located in Mumbai. In order to cater to
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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
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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 throughout India.
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 Hyderabad,
State Bank of Indore, etc. You may also transact money through SBI Commercial
and International Bank Ltd by using the State Bank 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 government securities, credit cards and insurance.
THE EIGHT BANKING SUBSIDIARIES ARE:
State Bank of Bikaner and Jaipur (SBBJ)
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State Bank of Hyderabad (SBH)
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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
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Internet Banking
Mobile Banking
International Banking
Safe Deposit Locker
RBIEFT
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E-Pay
E-Rail
SBI Vishwa Yatra Foreign Travel Card
Broking Services
Gift Cheques
INTERNATIONAL PRESENCE
The bank has 52 branches, agencies or offices in 32 countries. It has branches
of the parent in Colombo, Dhaka, Frankfurt, Hong Kong,Johannesburg, London and
environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney,
and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore,
and representative offices in Bhutan and Cape Town.
SBI operates several foreign subsidiaries or affiliates. In 1990 it established
an offshore bank, State Bank of India (Mauritius). It has two subsidiaries in North
America, State Bank of India (California), and State Bank of India (Canada). In 1982,
the bank established its California subsidiary, which now has seven branches. The
Canadian subsidiary was also established in 1982 and also has seven branches,
four in the greater Toronto area, and three in British Columbia. In Nigeria, it operates
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as INMB Bank . This bank was established in 1981 as the Indo-Nigerian Merchant
Bank and received permission in 2002 to commence retail banking. It now has five
branches in Nigeria. In Nepal SBI owns 50% of Nepal SBI Bank, which has branches
throughout the country. In Moscow SBI owns 60% of Commercial Bank of India,
with Canara Bank owning the rest. In Indonesia it owns 76% of PT Bank Indo
Monex. State Bank of India already has a branch in Shanghai and plans to open one
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up in Tianjin.State Bank of India has presence in Dubai International Financial
Centre, Dubai, United Arab Emirates.
GROWTH
State Bank of India has often acted as guarantor to the Indian Government, most
notably during Chandra Shekhar's tenure as Prime Minister of India. With 11,448
branches and a further 6500+ associate bank branches, the SBI has extensive
coverage. State Bank of India has electronically networked all of its branches under
Core Banking System(CBS). The bank has one of the largest ATM networks in the
region. More than 8500 ATMs across India. The State Bank of India has had steady
growth over its history, though it was marred by the Harshad Mehtascam in 1992. In
recent years, the bank has sought to expand its overseas operations by buying
foreign banks. It is the only Indian bank to feature in the top 100 world banks in
the Fortune Global 500 rating and various other rankings.
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Chapter 4
Data Analysis & Interpretation
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CALCULATION OF CORRELATION
*Data is attached in annexure.
RESULT FROM THE CALCULATION OF CORRELATION
In the calculation I have seen that correlation coefficient of HDFC is higher than
other banks (0.930) in last 5 years which shows that it is highly correlated with nifty.
So, whenever Nifty 50 moves up usually the share price of HDFC also moves up and
vice-versa. It means that in last 5 years it moves according to Nifty. In second place
correlation coefficient of SBIN is good it shows that SBIN is also highly correlated
with the Nifty 50 up’s & down’s in last 5 years analysis.
Bank Names Correlation
HDFC 0.930206867
ICICI 0.877994998
PNB 0.702472868
SBIN 0.914815796
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CALCULATION OF RISK & RETURN
1- HDFC BANK
DateHDFC Bank Closing Rate Yearly Return on HDFC Bank (in %age)
1st Year 01-Apr-
05 551.5 31-Mar-
06 774.25 1st Year 40.389845872nd Year
03-Apr-06 773.85
30-Mar-07 954.15 2nd Year 23.29908897
3rd Year 02-Apr-
07 901.35 31-Mar-
08 1331.25 3rd Year 47.695123984th Year
01-Apr-08 1309.55
31-Mar-09 945.5 4th Year -27.79962583
5th Year 01-Apr-
09 973.4 31-Mar-
10 1933.5 5th Year 98.63365523 Risk 45.57889548 Average Return 36.44361765
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2- ICICI BANK
Date ICICI Bank Closing Rate
Yearly Return on ICICI Bank (in %age)
1st Year 01-Apr-
05 406.05 31-Mar-
06 589.05 1st Year 45.068341342nd Year
03-Apr-06 604
30-Mar-07 855.3 2nd Year 41.60596026
4th Year 02-Apr-
07 857 31-Mar-
08 843.95 3rd Year -1.5227537924th Year
01-Apr-08 834.55
31-Mar-09 375.05 4th Year -55.05961297
5th Year 01-Apr-
09 385.2 31-Mar-
10 952.5 5th Year 147.2741433 Risk 74.48828638 Average Return 35.47321563
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3- PUNJAB NATIONAL BANK
Date PNB Bank Closing Rate Yearly Return on PNB Bank (in %age)
1st Year 01-Apr-
05 396.9 31-Mar-
06 470.4 1st Year 18.518518522nd Year
03-Apr-06 466.5
30-Mar-07 474.2 2nd Year 1.650589496
3rd Year 02-Apr-
07 426.7 31-Mar-
08 510.25 3rd Year 19.580501524th Year
01-Apr-08 438.6
31-Mar-09 411.45 4th Year -6.190150479
5th Year 01-Apr-
09 405.75 31-Mar-
10 1012.75 5th Year 149.5995071 Risk 64.10527498
Average Return 36.63179323
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4- STATE BANK OF INDIA
Date SBIN Bank Closing Rate Yearly Return on SBIN Bank (in %age)
1st Year 01-Apr-
05 670.1 31-Mar-
06 968.5 1st Year 44.530667062nd Year
03-Apr-06 983.35
30-Mar-07 994.45 2nd Year 1.128794427
3rd Year 02-Apr-
07 930.5 31-Mar-
08 1600.25 3rd Year 71.977431494th Year
01-Apr-08 1623.2
31-Mar-09 1067.1 4th Year -34.25948743
5th Year 01-Apr-
09 1077.45 31-Mar-
10 2078.2 5th Year 92.8813402 Risk 51.84648463
Average Return 35.25174915
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RESULT FROM THE CALCULATION OF RISK & RETURN
From the above calculation performance of HDFC Bank in last 5 years is better than
other banks because it is providing 36.44% of return at 45.58% risk. It means
providing good return at lower risk. At second place SBIN bank stand and provide
return of 35.25% at 51.85% risk.
In Risk & Return analysis we consider that script as best script which gave the
Maximum return at Minimum Risk. So from the data of 5 years HDFC bank is the
best script in terms of RISK & RETURN analysis.
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CALCULATION OF BETA
DatesAvg. Closing Nifty(Six Month Basis)
Six Monthly %age change
Avg. Closing HDFC(Six Month Basis)
Six Monthly %age change
01-Apr-05 2067.65 551.55
31-Oct-05 2242.98 7.816832963 615.375 10.37172456
01-Apr-06 2902.053 22.71057765 720.62 14.60478477
31-Oct-06 3330.201 12.85652127 826.618 12.82309362
01-Apr-07 3921.559 15.07966602 1034.44 20.0902904
31-Oct-07 4471.548 12.29974497 1174.977 11.96082987
01-Apr-08 5507.344 18.80754135 1570.683 25.19324396
31-Oct-08 4331.751 -27.13897913 1224.422 -28.27954741
01-Apr-09 2842.19 -52.40891707 931.748 -31.41128288
31-Oct-09 4384.67 35.17893023 1423.734 34.55603364
01-Apr-10 5051.0225 13.19242787 1724.95 17.46230326
1. HDFC BANK WITH NIFTY
Beta of HDFC Bank = 0.804697745
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2. ICICI BANK WITH NIFTY
Dates
Avg. Closing Nifty(Six Month Basis)
Six Monthly %age change
Avg. Closing ICICI(Six Month Basis)
Six Monthly %age change
01-Apr-05 2067.65 406.05
31-Oct-05 2242.98 7.816832963 458.748 11.48735253
01-Apr-06 2902.053 22.71057765 575.816 20.33080012
31-Oct-06 3330.201 12.85652127 588.253 2.114226362
01-Apr-07 3921.559 15.07966602 886.678 33.65652469
31-Oct-07 4471.548 12.29974497 938.134 5.484930724
01-Apr-08 5507.344 18.80754135 1155.242 18.7932918
31-Oct-08 4331.751 -27.13897913 693.453-
66.59268905
01-Apr-09 2842.19 -52.40891707 386.67-
79.33974707
31-Oct-09 4384.67 35.17893023 706.12 45.2401858
01-Apr-10 5051.0225 13.19242787 867.83 18.63383382
Beta of ICICI Bank = 1.8709125
DatesAvg. Closing Nifty(Six Month Basis)
Six Monthly %age change
Avg. Closing PNB(Six Month Basis)
Six Monthly %age change
01-Apr-05 2067.65 396.9
31-Oct-05 2242.98 7.816832963 401.276 1.090521237
01-Apr-06 2902.053 22.71057765 448.238 10.47702337
31-Oct-06 3330.201 12.85652127 425.59-
5.321553608
01-Apr-07 3921.559 15.07966602 497.865 14.51698754
31-Oct-07 4471.548 12.29974497 509.119 2.210485171
01-Apr-08 5507.344 18.80754135 603.204 15.59754246
31-Oct-08 4331.751 -27.13897913 479.041-
25.91907582
01-Apr-09 2842.19 -52.40891707 426.348-
12.35915262
31-Oct-09 4384.67 35.17893023 668.98 36.26894675
01-Apr-10 5051.0225 13.19242787 913.3535 26.75563186
3. PUNJAB NATIONAL BANK WITH NIFTY
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Beta of PNB = 0.381567483
4. STATE BANK OF INDIA WITH NIFTY
DatesAvg. Closing Nifty(Six Month Basis)
Six Monthly %age change
Avg. Closing SBIN(Six Month Basis)
Six Monthly %age change
01-Apr-05 2067.65 670.1
31-Oct-05 2242.98 7.816832963 748.327 10.45358513
01-Apr-06 2902.053 22.71057765 903.008 17.12952709
31-Oct-06 3330.201 12.85652127 887.974 -1.69306759
01-Apr-07 3921.559 15.07966602 1156.044 23.18856376
31-Oct-07 4471.548 12.29974497 1493.534 22.59674035
01-Apr-08 5507.344 18.80754135 2188.263 31.74796631
31-Oct-08 4331.751 -27.13897913 1458.928-
49.99115789
01-Apr-09 2842.19 -52.40891707 1130.347-
29.06903809
31-Oct-09 4384.67 35.17893023 1752.056 35.48453931
01-Apr-10 5051.0225 13.19242787 2135.446 17.95362655
Beta of SBIN = 1.313855349
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RESULT FROM BETA CALCULATION
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Beta is a measure of a stock's volatility in relation to the market. By definition, the
market has a beta of 1.0, and individual stocks are ranked according to how much
they deviate from the market. A stock that swings more than the market over time
has a beta above 1.0. If a stock moves less than the market, the stock's beta is less
than 1.0. 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. Therefore,
investing in PNB would be much saver for the investors who aim at investing for long
durations as its beta is lowest, HDFC is also a good option for the investors who are
looking for a stock which is less risky in comparison to the other competitors and
offers high and timely returns. Whereas, ICICI is an aggressive stock whose beta is
almost double than the market beta.
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Chapter 5
Observations & Finding
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Observations
TOOLS USED →↓
BANKS NAME
↓
1- The result of Correlation shows that in last 5 years HDFC Bank is highly
correlates with nifty. It means that this script positively moves according to the
Nifty movement. In second place State Bank of India correlates better with
Nifty-50.
2- In the analysis of Risk & Return I observe that HDFC bank is the best
performing bank in the Nifty in last 5 years because its risk level is low in
comparison of other banks stock taken into consideration and its average
return is also higher. In second place SBIN is the best stock in last 5 years.
Correlation Risk Vs. Return (in %age) Beta
HDFC 0.930206867 45.57:36.44 0.804698
ICICI 0.877994998 74.48:35.47 1.870913
PNB 0.702472868 64.10:36.63 0.381567
SBIN 0.914815796 51.84:35.25 1.313855
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3- From the calculation of Beta I observe that Punjab National Bank is the best
stock in Nifty 50 in last 5 years because its Beta is less than 1 and it stands at
0.381. At the second place HDFC is best stock if we compare stock with Beta
calculation because its beta also less than 1 but little bit higher than PNB.
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Chapter 6
Conclusion
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CONCLUSION
It's important for investors to make the distinction between short-term risk--
where beta and price volatility are useful--and longer-term, fundamental risk,
where big-picture risk factors are more telling. High betas may mean price
volatility over the near term, but they don't always rule out long-term
opportunities.
Inflation rate Of the Economy should Also Be Considered While investing.
The stock prices Hit the top At the end of the financial year(refer to annexure
chart) in comparison to begning of the year.
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Chapter 7
Recommendations
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Recommendations
Investors can invest in Share market for better returns but his investment view
should be long term.
Investment in HDFC Bank & SBIN Bank is more profitable in banking sector.
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Chapter 8
Bibliography
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BIBLIOGRAPHY
1. Websites
www.nseindia.com
www.google.com
www.wikipedia.com
www.moneycontrol.com
www.statistics-help-online.com
www.fundmanagersoftware
2. Books
Suresh C. Sinha and Anil K. Dhiman, Research Methodology
Himalaya publication house New Delhi
Jain S P, Narang K L Financial Accounting Kalyani Publication New
Delhi,2004
Gupta Sashi and Joshi Rosi Management Accounting
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ANNEXURE