Professional Documents
Culture Documents
ON
“A STUDY OF BEST PERFORMING
SCRIPTS OF NIFTY IN LAST 5 YEAR IN
BANKING SECTOR”
CONTENTS
1. Declaration (i) -
3. Acknowledgement (iii) -
4. Chapter 1 - Introduction 1 10
5. Chapter 2 - Objective/Research 11 22
methodology/ Limitation/Scope
9. Chapter 6 - Conclusion 65 -
10. Recommendations 66 -
11. Bibliography 67 -
12. Annexure 68 88
Chapter 1
Introduction
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 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.
NIFTY- The National Stock Exchange of India Limited has genesis in the
financial institutions (FIs) to provide access to investors from all across the
Wholesale Debt Market (WDM) segment in June 1994. The Capital Market
market
2
with introduction of internet trading, Exchange traded funds (ETF), stock
derivatives and the first volatility index - IndiaVIX in April 2008, by NSE.
launch of Currency Futures in USD INR by NSE. Interest Rate Futures was
introduced for the first time in India by NSE on 31st August 2009, exactly after
With this, now both the retail and institutional investors can participate
in equities, equity derivatives, currency and interest rate derivatives, giving them
IISL 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
awareness about equity among the investor community ,earlier to buy equity
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
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 question remain same what and how much one should buy? The main
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
and profitability. Nifty is claimed as the stocks of the nation gives the diversity
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
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
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.
5
Regulation Act of India, 1949 can be broadly classified into two major
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
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
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.
past has been well explained under three different heads namely:
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)
1934 lays down the condition of scheduled commercial banks. The description
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
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-
successors. The three banks merged in 1921 to form the Imperial Bank of India,
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The
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
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
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.
10
LIBERALISATION
In the early 1990s, the then Narsimha Rao government embarked on a policy of
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
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
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
Chapter 2
Objective
Research
Methodology
Limitatins
Scope
11
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
2. All the extra benefits given by these banks are also ignored in the
12
RESEARCH METHODOLOGY
For the project undertaken collecting Primary Data is very difficult so I use
SAMPLE SIZE- For the project I have taken 4 banks of Nifty 50 i.e.
• HDFC Bank
• ICICI Bank
• Punjab National Bank
• Calculation of Correlation.
• Beta Calculation.
13
→WHAT IS CORRELATION?
measure of how well the predicted values from a forecast model "fit" with the
real-life data.
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.
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
example, an electrical utility may produce less power on a mild day based on
the correlation between electricity demand and weather. Correlations can also
14
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
The population correlation coefficient ρX,Y between two random variables X and
as:
where E is the expected value operator, cov means covariance, and, corr a
The Pearson correlation is defined only if both of the standard deviations are
inequality that the correlation cannot exceed 1 in absolute value. The correlation
and some value between −1 and 1 in all other cases, indicating the degree of
15
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
16
TYPES OF RISK
However, there are many kinds of risk. Let's take a look at some of them:
inflation rate.
period of time.
less advantageous.
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
In the investing world, the dictionary definition of risk is the chance that an
17
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.
uncertainty (low risk) are associated with low potential returns, whereas high
returns. According to the risk-return trade-off, invested money can render higher
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
18
In finance, the beta (β) of a stock or portfolio is a number describing the relation
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
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
because it is correlated with the return of the other assets that are in the
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
19
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
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
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
the asset price, where Beta is exposure to changes in value of the Market.
20
A beta value less than 1 indicates the investment is less volatile than the
the same as the benchmark, and a beta greater than 1 means the
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
21
Advantages of Beta
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.
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
• Major Banks like Axis & Kotak Mahindra are not included because
of data unavailability.
22
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.
Chapter 3
Organization
Profile
23
CORPORATION LIMITED)
HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a major Indian financial
Reserve Bank of India allowed establishing private sector banks. The Bank was
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
09.
HISTORY
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
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
24
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.
terms of increased branch network, geographic reach, and customer base, and
BUSINESS FOCUS
Banking Services, Retail Banking Services, Treasury. It has entered the banking
companies in the Indian corp to small & mid-sized corporates and agri-based
management services with vendor and distributor finance for facilitating superior
supply chain management for its corporate customers. HDFC Bank has made
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
HDFC Bank was the first bank in India to launch an International Debit
Card in association with VISA (VISA Electron) and issues the MasterCard
26
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
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
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
27
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.
offerings, technology, service levels, risk management and audit & compliance.
consistent with the Bank's risk appetite. We are committed to do this while
outstanding loan portfolio covers well over a million dwelling units. HDFC has
segments and also has a large corporate client base for its housing related
28
Indian environment.
KEY PEOPLE
Corporation of India)
ICICI Bank (BSE: 532174, NYSE: IBN) (formerly Industrial Credit and
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
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
India, ICICI Limited was established by the Government of India in the 1960s as
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
30
separate legal entity and named it "ICICI Bank". ICICI Bank, as the name would
suggest, undertook
providing car loans etc. The experiment was so successful that ICICI merged
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
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
cards, Automatic Teller Machines (ATMs) and combined various other services
banking behemoth. With a retail book of over Rs 56,000 crore (Rs 560 billion)
and a market
31
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
international balance sheet among Indian banks. ICICI Bank now has wholly-
Canada, Russia and the UK (the subsidiary through which the his savings
advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and
Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting
HISTORY
(ICICI) was incorporated at the initiative of World Bank, the Government of India
32
separate legal
• 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a
Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and
• 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
• Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that
33
and Shanghai.
• 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade
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.
Hong Kong.
34
• 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
branch in Doha.
• ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.
NATURE OF BUSINESS:
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
35
and international), treasury and investment banking and other products, such as
insurance and asset management. Its commercial banking operations for retail
commercial banking and project finance products and services, including loan
ONWNERSHIP TYPE
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).
36
VISION
global bank.
• To be the preferred brand for total financial and banking solutions for
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,
operate.
37
SUBSIDIARIES
KEY PEOPLE
38
Punjab National Bank (PNB) (BSE: 532461), was registered on May 19,
1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore.
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,
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
39
PNB ONLINE
than 150 PNB Branches are connected with terminals in Mumbai. It promotes
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
• Access to account
Gateway Project
45,000 merchant outlet in India and can withdraw cash from over 4500 ATMs
40
Punjab National Bank has its Branches in all the 7 metropolitan and
Bangalore, Hyderabad and Ahmedabad. It even has its branches in small town
PNB is always focussing on expanding abroad and till date has identified
• 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 purchase of house/ flat from the original allottee, i.e. on First Power
of Attorney basis.
41
house.
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
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:
• Suitable third party guarantee acceptable to the Bank which may include
42
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
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
Delhi circle.
• 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat
(Yangon).
seized all the offices in Pakistan of Indian banks, including PNB's headoffice,
which may have moved to Karachi. PNB also had one or more branches in East
Pakistan (Bangladesh).
43
rescue.
branch to State Bank of India after the branch was involved in a fraud scandal.
• 1993: PNB acquired New Bank of India, which the GOI had nationalized
in 1980.
• 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.
migrants to transfer funds easily between India and Everest Bank's 12 branches
in Nepal.
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
PRODUCTS OFFERED
• Investment Banking
• Consumer Banking
• Commercial Banking
• Retail Banking
• Private Banking
• Asset Management
• Pensions
• Mortgage Loans
• Credit Cards
• Life insurance
45
VISION
"To be a Leading Global Bank with Pan India footprints and become a
MISSION
"Banking for the unbaked"
CHAIRMAN OF PNB
State Bank of India (SBI) (BSE: 500112, NSE: SBIN) is the largest
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
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
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
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, confined their services to the urban sector. Moreover, they were not
equipped to respond to the growing needs of the economic revival taking shape
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 All India Rural Credit Survey Committee proposed the takeover of
the Imperial Bank of India, and integrating with it, the former state-owned or
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,
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
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
BRANCHES
Mumbai, apart from the corporate center. The bank boasts of having as many
as 14 local
48
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
ATM SERVICES
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
SUBSIDIARIES
The State Bank Group includes a network of eight banking
49
PERSONAL BANKING
OTHER SERVICES
• Agriculture/Rural Banking
• NRI Services
• ATM Services
• Demat Services
• Corporate Banking
• Internet Banking
• Mobile Banking
• International Banking
• RBIEFT
50
• E-Pay
• E-Rail
• Broking Services
• Gift Cheques
INTERNATIONAL PRESENCE
the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore
banking units in the Bahamas, Bahrain, and Singapore, and representative
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
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
51
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
CALCULATION OF CORRELATION
HDFC 0.930206867
ICICI 0.877994998
PNB 0.702472868
SBIN 0.914815796
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
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.
53
1- HDFC BANK
Risk 45.57889548
Average
Return 36.44361765
54
2- ICICI BANK
Yearly Return
ICICI Bank on ICICI Bank
Date Closing Rate (in %age)
1st
Year
01-
Apr-05 406.05
31-
Mar-06 589.05 1st Year 45.06834134
2nd
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 -1.522753792
4th
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
55
Yearly Return on
PNB Bank PNB Bank (in
Date Closing Rate %age)
1st
Year
01-Apr-
05 396.9
31-
Mar-06 470.4 1st Year 18.51851852
2nd
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 19.58050152
4th
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
56
Risk 51.84648463
Average
Return 35.25174915
57
means providing good return at lower risk. At second place SBIN bank stand
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
Avg. Closing Nifty Six Monthly %age Avg. Closing HDFC Six Monthly
Dates (Six Month Basis) change (Six Month Basis) %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
58
CALCULATION OF BETA
1. HDFC BANK WITH NIFTY
59
Avg. Closing
Nifty Six Monthly
(Six Month Six Monthly %age Avg. Closing ICICI %age
Dates Basis) change (Six Month Basis) 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
Six Monthly
Avg. Closing Nifty Six Monthly %age Avg. Closing PNB %age
Dates (Six Month Basis) change (Six Month Basis) 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
60
61
62
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.
Chapter 5
Observati
ons &
Finding
63
Observations
TOOLS USED →↓
BANKS NAME
↓
Correlation Risk Vs. Return (in %age) Beta
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
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.
64
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
stock with Beta calculation because its beta also less than 1 but little bit
Conclusion
65
CONCLUSION
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
investing.
• The stock prices Hit the top At the end of the financial year(refer to
Recommendations
66
Recommendations
• Investors can invest in Share market for better returns but his investment
sector.
Chapter 8
Bibliography
67
BIBLIOGRAPHY
1. Websites
• www.nseindia.com
• www.google.com
• www.wikipedia.com
• www.moneycontrol.com
• www.statistics-help-online.com
• www.fundmanagersoftware
2. Books
Delhi,2004