Aanjali Project Report

A
RESEARCH REPORT
ON PERFORMANCE ANALYSIS OF SELECTED REAL ESTATE COMPANIES
SUBMITTED TO: KURUKSHETRA UNIVERSITY, KURUKSHETRA In the Partial Fulfillment for the Degree of Master of Business Administration (Session 2010-2012)
Under the Guidance of: Dr. DHARAMVEER Asstt. Prof, MBA
Submitted By:ANJALI SAKHUJA MBA 4th sem. Roll no.
HARYANA ENGINEERING COLLEGE JAGADHRI-135003
DECLARATION
I ANJALI SAKHUJA student of Haryana Engineering College, Jagadhri here by state that the project entitled PERFORMANCE ANALYSIS OF SELECTED REAL ESTATE COMPANIES Submitted in the partial fulfillment for the award of degree in Master of Business Administration. It is the original work done by me and the information provided in the study is authentic to the best of my knowledge. This study report has not been submitted to any other institution or university for the award of any other degree.
ANJALI SAKHUJA
CERTIFICATE This is to certify that the research report entitled PERFORMANCE ANALYSIS OF SELECTED REAL ESTATE COMPANIES submitted in partial fulfillment for the award of degree in Master of Business Administration from HARYANA ENGINEERING COLLEGE, JAGADHRI affiliated to Kurukshetra University, Kurukshetra is an exclusive records of bonafide research project carried out by ANJALI SAKHUJA under the supervision and guidance of Dr. DHARAMVEER in the Department of Business Administration of this college.
This work done by her was found satisfactory and commendable. I wish her great success in his career.
Dr. Kuldeep Singh Principal
ACKNOWLEDGEMENT
There is always a sense of gratitude which one should express for others for their help & supervision in achieving the goals. From the core of my heart, I express my sincere thanks to all those people who helped me in accomplishing my project. I owe my success to all faculty members, especially our Principal Sir Dr. Kuldeep Singh and our chairperson and my guide Dr. DHARAMVEER for providing us this wonderful opportunity and guidance. He took much time out of his busy schedule to provide me with valuable practical suggestions at various stages of my work. The project provided me a platform to increase my knowledge and empowered me better understanding of concepts in the real world scenario.
ANJALI SAKHUJA
LIST OF TABLES
TABLE OF CONTENTS DECLARATION CERTIFICATE ACKNOWLEDGEMENT
PAGE NO.
CHAPTER-1 INTRODUCTION CHAPTER-2 REVIEW OF LITERATURE CHAPTER-3 RESEARCH METHODOLOGY CHAPTER-4 PERFORMANCE APPRAISAL OF SELECTED COMPANIES CHAPTER-5 FINDINGS AND SUGGESTIONS CONCLUSION RATIO ANALYSIS STASTICAL ANALYSIS RESEARCH DESIGN SAMPLING AND SAMPLING DESIGN DATA COLLECTION METHODS LIMITATIONS OF THE STUDY
BIBLIOGRAPHY
CHAPTER 1 INTRODUCTION
The real estate sector in India has assumed growing importance in the past few years, especially with rising demand and consequently buoyant property rates. Real estate, in fact, has emerged as one of the most appealing investment options for domestic as well as foreign investors. Developments in the sector are being influenced by faster growth of the retail, hospitality and entertainment, economic services and information technology industries. However, despite such strong growth, the Indian real estate market is still in its infancy, largely unorganized and dominated by a large number of small players with very few corporates or large players having national presence. The sector is also having a large number of legislative barriers, which are hindering a much rapid growth. In this write-up, we highlight the major factors that are acting as hindrances to a faster growth of the sector. Legislation: Restrictive legislations are one of the major impediments to growth of the sector. Legislative norms, wit respect to the Tenancy Law, Urban Land Ceiling Act and Rent Control Act are very rigid. The Rent Control Act, in fact, is the single most important reason for the proliferation of slums in India by creating a serious shortage of affordable housing for the low-income families. People find it very difficult to deal with these rigid laws. Moreover, a lot of time is being consumed in completing the legal formalities, thereby leading to delays in project completion. Transaction Cost: Transaction cost is another major challenge for the real estate sector. There is direct relationship between Registration Act and Stamp Duty. Stamp duty needs to be paid on all documents that are registered and the rate varies from state to state. With stamp duty rates of 13% in Delhi, 14.5% in Uttar Pradesh and 12.5% in Haryana (Source: www.indiabudget.nic.in), India has perhaps one of the highest levels of stamp duty in the world. Some states even have double stamp incidence, first on land and then on its development.
Titles:
Another important issue in real estate development is that of title to property. High percent of land holdings do not have clear titles, thereby leading to a lot of problem because ownership is unclear and hence the land is off market. Urban Land Monopoly: Many cities have created development agencies (like the DDA in Delhi) and handed over control of all urban land within the municipal jurisdiction to them in the belief that they would act in the interests of the public. However, it is in the interests of the monopolist to restrict the development and sale of new land and keep the prices high, so as to maximize its own returns. Introduction of a competitive construction boom requires abolishing the monopoly of such agencies over urban land by completely separating control of land from its development and thereby leading to growth of the real estate. 1.1 INDIAN REAL ESTATE The Indian real estate sector plays a significant role in the country's economy. The real estate sector is second only to agriculture in terms of employment generation and contributes heavily towards the gross domestic product (GDP). Almost five per cent of the country's GDP is contributed to by the housing sector. In the next five years, this contribution to the GDP is expected to rise to 6 per cent. According to industry players, housing accounts for 4.5 per cent of gross domestic product (GDP) with urban housing accounting for 3.13 per cent. According to Jones Lang LaSalle CEO, Colin Dyer, faster economic growth in Brazil, Russia, India and China (BRIC) could result in the property markets of those nations recovering at a faster rate than the UK and US real estate markets. It has also been suggested that India's property sector could begin to improve from late 2009 and may attract up to US$ 12.11 billion in real estate investment over a five-year period. Moreover, the real estate sector is also responsible for the development of over 250 ancillary industries such as cement, steel, paints etc. A study by rating agency ICRA shows that the construction industry ranks 3rd among the 14 major sectors in terms of direct, indirect and
induced effects in all sectors of the economy. A unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times. Residex, an index planned to benchmark the housing sector and expected to serve as an indicator of property prices, the housing start-up index (HSUI) planned by the Reserve Bank (RBI) of India aims to indicate the volume of construction taking place in a particular location. The RBI also expects to publish the data by March 2010 for every quarter. HSUI would also serve as a lead indicator of the economy's growth as more houses would require more input materials like cement and steel, labour and credit demand.
This index would be useful for developers as it would help know areas of oversupply. They can hence refrain from construction activity in those areas. In case of an oversupply in a particular location, consumers before investing would wait till prices fall. The IT and ITES sector alone is estimated to require 150 million sq ft of office space across urban India by 2010. Organised retail is also responsible for the growth in commercial office space requirement. The organised retail industry is likely to require an additional 220 million sq ft by 2010. Moreover, growth is not restricted to a few towns and cities but is pan-India, covering nearly all tier-I and tier-II cities. Almost 80 per cent of real estate developed in India is residential space, the rest comprising of offices, shopping malls, hotels and hospitals. According to the Tenth Five-Year-Plan, there is a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million housing dwelling units will have to be constructed with a majority of them catering to middleand lower-income groups. Apart from the huge demand, India also scores on the construction front. A McKinsey report reveals that the average profit from construction in India is 18 per cent, which is double the profitability for a construction project undertaken in the US.
The real estate sector is also likely to get a boost from Real Estate Mutual Funds (REMFs) and Real Estate Investment Trusts (REITs). In fact, according to a CRISIL paper, the REITs would have the potential to hold at least 5 per cent share of the total global real estate market by 2010, the size of which would turn to US$ 1400 billion in the next 3 years. The paper titled, Indian REITs; Are We Prepared', says that by 2010, REITs alone would hold a market size of US$ 70 billion of the total real estate market as its concept is gaining ground in countries like India and other developing nations. An important growing venue, Greater Noida in the National Capital Region (NCR) saw the 8th highest annual growth in rental values in the world as on December 2008,
according to a global real estate consultant, Cushman & Wakefield's report 'Industrial spaces across the world 2009'. As per the report, Peenya Industrial Area and Bommasandra Industrial Area in Bangalore registered the 12th and the 16th highest annual growth in rental values, respectively. Industrial areas in India witnessed the highest growth in rental values amongst the Asia Pacific locations. Greater Noida, Peenya Industrial Area, Bommasundra Industrial Estate and Jigani Industrial took the top four positions in the Asia Pacific Region. Mumbai's Thane Turbhe Creek, which had recorded the highest growth last year at the 26th position as the most expensive industrial locations, settled on the 37th spot. NCR's Greater Noida area, which has been developed to attract medium to large-scale industries, has recorded an annual growth of 25 per cent in industrial rental values in 2008.
1.2Real_Estate_Advantages
Real estate investment requires a lot of technical knowledge and hard work. Real estate investment involves high financial costs. Even though, many people are showing their interest to invest in real estate.
When you invest in real estate shares or equity in the stock market, you look for appreciation in the stock value and dividend income if it is paid by the company. If you invest in bonds, you look for income yield on the interest rate paid by the bonds. But, if you invest in a real estate property, you can get superior returns on your investment. Cash flow: The difference between your income and the expenses that relates to specific part of investment is nothing but cash flow. This could be either positive or negative. A properly selected and managed a property will provide a steady income in the form of rentals. The real estate investor has a bit more control over the risks for the cash flow. Though there are downturns in real estate prices, the rent will continue without any corresponding decrease in the rent amounts. Appreciation in the value: There are two kinds of real estate appreciations, the external and internal. External appreciation needs nothing to do for the actual property but, it comes from economical conditions and land scarcity. Internal appreciation comes from the improvements to the actual property and it is easier for you to control. You have to invest a property in need of repair or improvements and so you can sell it for a profit. Real estate serves as an excellent source profit through the increase in investment property value over time but it varies significantly by area.
Improving the investment property: Investment property can also be improved in order to gain a better price and more profit when you want to liquidate the property. Improving the appearance and functionality to the real estate property increases its value.
Inflation is your friend: Inflation will be your friend when it comes to real estate. Inflation that drives up construction cost also drives up rents. The increase in population creates demand for houses and again drives up the rents if supply cannot keep race. If you are fortunate enough and have the experience in locating the value priced property, then real estate investment should be your immediate action to increase your net rate and value of your investment. Tax advantages: There are many ways to in which property ownership can be used to legitimate tax avoidance. Though it will not be your main reason to invest in a real estate, it will be a side benefit for you. 1.3The_Indian_Real_EstateWill_it_boom_again
The Indian real estate witnessed a huge swings in the recent past till last quarter of 2008. It received around $10 Billion in funding through FDI, Private Equity and JVs. Everything was looking rosy and developers were busy acquiring lands at exorbitant rates and launching new projects. Economy was growing at 9.5% and corporate were looking for new real estate space to either expand or begin new businesses. However, with the bust of real estate sector in the US, things turned from good to worst. Investment Banks in the US crumbled and created a mess called Sub-prime crisis. Sub-prime crisis is the current financial crisis (considered as the worst ever since World War II)characterized by acute credit crunch in the global capital markets. At the core of this crisis lies sub-prime housing loan market. .
1.3.1 Start_of_the_sub-prime_crisis
The crisis began with the bursting of the United States housing bubble. A slowing US economy, high interest rates, unrealistic real estate prices, high inflation and rising oil tags together led to a fall in stock markets, growth stagnation, job losses, lack of consumer spending, a virtual halt to
new jobs, and foreclosures and defaults. The sub-prime loans were given by FIIs at floating rates. With rising interest rates in the US, EMIs for these individuals also started increasing (what we see today in Indian market) and sub-prime homeowners began to default as they could no longer afford to pay their EMIs. A deluge of such defaults inundated these institutions and banks, wiping out their net worth. Their mortgage-backed securities were almost worthless as real estate prices crashed.
The moment it was found out that these institutions had failed to manage the risk, panic spread. Investors realized that they could hardly put any value on the securities that these institutions were selling. This caused many a Wall Street pillar to crumble. As defaults kept rising, these institutions could not service their loans that they had taken from banks. So they turned to other financial firms to help them out, but after a while these firms too stopped extending credit realizing that the collateral backing this credit would soon lose value in the falling real estate market, resulting in this big Sub-prime mess.
1.3.2 Fall_of_Indian_markets Once investments by the FIIs in the US turned bad, more money had to be invested back, to maintain that fixed proportion i.e. to match assets and liabilities on their books. In order to invest more money in the US, money had to come in from somewhere. To make up their losses in the sub-prime market in the US, they went out to sell their investments in emerging markets like India where their investments have been doing well. So they started selling their investments in India and other markets around the world to maintain enough liquidity in the US economy and for their own operation. Since the amount of selling in the market was much higher than the amount of buying, the Sensex began to tumble. Additionally, crude prices were in the range of $120-150 which caused inflation to rise in double digit forcing banks to raise their interest rates. Thus, higher rates seriously affected real estate, automobile and banking firms operations and their stock crashed. Moreover, there were some rumors that even Indians banks had some exposure to these risky MBS and hence, banking stocks were among the worst hits. The flight of capital from the Indian markets also led to a fall in the value of the rupee against the US dollar. The stock market will continue to tumble as long as there is huge selling pressure from these
FIIs. Since most of FIIs who invest in India are based in the US, the stock market in India generally closely follows the sentiments in the US economy compared to that of Japan or European economy. .
1.3.3Real_Estate_Versus_Stock_Market
Lets explore how stock market affects real estate industry. Most of the real estate developers are publicly listed companies and trade on these stock exchanges. This is because real estate development is capital intensive and developers need cash to develop properties which is then sold or rented to customers. Firms need to buy land, which is extremely expensive these days, raw materials such as cement and steel, and hire manpower for the construction activities. All of these require huge amount of money. Developers generally raise capital either by borrowing from banks or issuing stocks. RBI has made extremely difficult for the firms to raise debt in domestic market and through external commercial borrowing (ECB) in order to check the incessant rise in property prices. Hence, the best way for them is to issue stocks. The investors in the stock market provide these developers cash for their projects by taking some stake in the company or projects. Hence, the market to a large extent decides the fortune of these companies. A large number of financial institutions (Banks, Mutual Funds and Hedge Funds) buy or sell these companies securities on the exchange. For the last few years these FIs were extremely optimistic about Indian economy and real estate sector. They made huge investments in these companies and got great returns. Hence, their stocks went up through the roof due to heavy demand. If these FIs start selling their investments heavily for one reason or other, it will negatively affect companies stock price. The stock is an attractive currency for the firms in the bull market. Firms may sell (issue) these stocks in the market to raise capital to fund their expansion plan without the headache of interest payments that accompany debt. So any downward movement in the stock market might decrease the stock price of these firms and hence reduce their ability to raise sufficient capital; thus, affecting their future plans. Unfortunately, the global financial crisis has taken a heavy toll on the Indian stock market. In less than a year Sensex has gone down from 21,000 to 9,500 levels. Most of the real estate stocks are down by over 70% w.r.t to their 52-weeks high. This is because of higher interest rates, global slowdown and heavy selling by financial institutions, seriously cutting down these companies expansion plans. They are stuck with their existing projects while investors have pulled out. Lehman had around $1.3Billion of investments in Indian real estate market. Several developers such as Unitech had planned to raise money through Special Purpose Vehicle (SPV) to fund their projects. Now, after the bust of Lehman, firms may seek PEs help to raise capital. Some macroeconomic factors such as inflation and economic growth also affect companies and their stock prices. As we know inflation in India was around 11.5% (October 2008) which was quite high compared to last years figure of 3-4%. Banks had to increase interest rates to counter
high inflation. For real estate companies higher interest rates environment is not suitable because customers avoid taking home loans (due to higher EMI) which decreases the demand for properties. A bad prospect of growth in the earnings of the firms gets reflected in their stock prices . .
1.3.4Are_The_Days_of_Mega_deals_over Indian real estate sector was a hot cake for foreign investors a year ago. Everyone wanted a pie of it. Did you ever hear about mega real estate deals that happened in Mumbai in 2008? If not here they are: London-based banking major Barclays Bank created history in May when it took space at Cee Jay House, a landmark office complex in Worli, for Rs. 725 a square foot (sq ft) per month. Yesteryear movie star Vinod Khanna and his wife set a reality record in Mumbai by buying an apartment in Malabar Hills for Rs. 30 crore after paying a mindboggling Rs. 1,20,000 per square foot. But those days are over now. The sub-prime crisis and negative economy outlook have taken their heavy toll on the sector. From the Table 1 we can see the outlook for these companies was not so good. Over 70% of their market value was wiped out in less than a year; thus, putting brakes on their expansion plans. They were looking for alternative sources of capital or delaying their projects. The global financial crisis and recession in the US severely affected a large number of industries such as IT/ITES and Financial Services. Both these industries were creating huge demand for A-grade commercial properties in Metros and Tier-1 cities. Now, that demand has reduced by over 50% which might decrease further if the US goes into deep and prolonged recession. So the next one year would not bring good news for the firms in the realty sector. . However, the consumers having cash have great opportunities in this bear market and high interest rate environment. With the decrease in demand for both commercial and residential properties, prices/rentals have come down. We have already seen a correction in the range of 510% across the properties and believe prices may go down further by another 3-5% in the next 2 to 3 months. Also, the prices in the secondary market have fallen more compared to that in the primary market. We believe inflation might cool off by June 2009 which might push the demand for residential properties. Though the long term outlook looks good, the short-term outlook is bad for the industry. So if you plan to buy a house, either buy now (only cash) or wait for couple of months but definitely before inflation falls below double digit and banks gradually start rolling off hike in rates. 1.3.5Prospects_of_the_Industry_in_2009. The good news for both industry and buyers! Inflation has come down from its October high of 13% to 8%. RBI since then has announced a series of rates cut- Repo rate has been reduced by over 200bp, while Reverse repo rate saw a 100bp decrease. CRR too was reduced by 150bp to
inject liquidity in the market. Today, which is December 15th 2008, as I write this article, public sector banks hold a press conference to announce major rates cut and other measures to boost real estate sector. The highlights of todays meeting were. : Rate for home loans up to Rs 5 lakhs will not be more than 8.5%
Five-year fixed rate terms on up to Rs 5 lakhs home loans
Banks to take 10% margin on home loan of up to Rs 5 lakhs
No process, prepayment fees for home loans
Home loan rate under package can fall if rates fall more, which is likely to happen
Home loan of Rs 5-20 lakhs for maximum 20 years at 9.25%
India banks margin for Rs 5-20 lakhs loan will be 15%
India
state-run
banks
will
offer
free
life
insurance
cover
for
home
loans
These new home loan rates will be effective Monday, December 15, 2008 and expire on June 30, 2009. This has come as good news to some developers while rest felt disappointed. DLF and Unitech have good presence in sub-20 Lakhs housing segment, which is also called Affordable Housing. Those operating in affordable housing hailed these rates cuts. Sanjay Chandra, MD of Unitech, said It is a big benefit the rates coming down, no processing fees as well as the fixed nature of it because a lot of people didnt like the uncertainty with the way interest rates were moving. So I think the fixed rate and also the only option possibility of downward revision is a good thing for the sector and for us in general. This might force and encourage other developers to focus on affordable housing. But the existing home loan borrowers felt dejected because these rates are applicable to new loans only. However, these measures may not revive the flagging sector conditions because a majority of residential projects cost above Rs. 40 Lakhs i.e. where loans are above Rs. 25-30 lakhs. Industry insiders say that unsold property to the tune of Rs 20,00025,000 Crores remains stuck in the country. Unless these properties are sold first, developers may not launch new projects or finish the under construction ones. To give a boost to
this, developers are demanding an interest rates in the range of 7-8% i.e. back to the days of 2005. . With falling crude prices and global recession, Inflation should come down to the level of 5-6% by June 2009 end. So expect RBI to cut rates further by 100-150bp which we will bring the interest rates in single digit. This will give the much needed boost to the industry. Buyers, who are right now playing wait and watch game, will go for cheaper home loans. Expect another cut in prices in the month of January or February by developers who desperately want to flush out their inventories. More so costs of construction have come down by 10-15% due to decrease in prices of cement and steel. This cost should be passed on the customers as well. .
CHAPTER 2
LITERATURE REVIEW
LITERATURE REVIEW Kothari C.R(p168-174)1 This book explains various research methods applied and research methodology used to do research. collection methods. . R.K. Misra(p341-342)2: In this it is explained that how to anlyse the risk associated with investment in securities. Gupta S.P.(p378-418)3: The information regarding the statistical tool and their limitations in different fields of research. . Schaums:Statistical methods(p336-337)4:-This book explains why to use trend analysis and what are the situations in which correlation can be used. Fisher & Jordan(p223-228)5:-This book has been used to calculate beta and alpha of various securities. Pandian Punitawathy(p128-136)6:-This book explains the various methods i.e sharpe performance index, treynor & Jenson performance index. Beri G.C.(p85-90)7:-This book explains the various methods of data collection and their advantages and disadvantages. Sharma S.C.& Jain R.C(p225-236)8:-This book explains about how to calculate correlation and regression between two variables. Dalton M.John(p95-100)9:-This book explains about how to calculate liquidity of equity shares and methods of measuring liquidity. Siegel J.Jeremy(p167-169)10:-This book explains about standard deviation and mean and variance related with various equity shares in stock market. It tells us about various Research design and data
Websites: o www.omaxe.com/information/financialresults.htm:11 This web site i.e the official site of the organization gives the information related to company financial aspects o www.investopedia.com/terms/w//liquidity/equity.asp:12 This wbsite explains the meaning of liquidity and their measures. o www.livemint.com/wall street journal.htm:13 This site explains the scenario of real estate sector in India. o o www.indianground.com/real estate.htm:14: This site explains the trends in real estate sector in India and real estate investment. www.nseindia.com:15: This site gives the information regarding the indices at nifty and market capitalization of various securities. o www.moneycontrol.com/stockquote.:16: This site gives information regarding the stocks bid and ask price and their returns. o www.realestatetv.in/company analysis:17: This site explains about recent developments made by real estate companies. o www.karvy.com/research/company valuation 18: This helps in knowing how to analyse risk and return associated with equity shares investments. o www.indiainfoline.com/industry/realestate19 reports: This helps in finding out about the future prospects of real estate sector. o www.economywatch.com/realestate:20 This site explains about the overview of real estate, ongoing developments, Indian capital market.
CHAPTER 3
RESEARCH METHODOLOGY
Meaning of Research Research is defined as a scientific & systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. Research is a systemized effort to gain new knowledge. It is a careful inquiry especially through search for new facts in any branch of knowledge. The search for knowledge through objective and systematic method of finding solution to a problem is a research. PROBLEM STATEMENT
The research problems, in general refers to sum difficulty with a researcher experience in the contest of either a particular a theoretical situation and want to obtain a salutation for same. The present project has been undertaken to do the Study of top companies of real estate sector in stock market on the basis of liquidity and return..
RESEARCH DESIGN
A research is the arrangement of the conditions for the collections and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blue print of the collection, measurement and analysis of the data. As search the design includes an outline of what the researcher will do from writing the hypothesis and its operational implication to the final analysis of data.
The design in such studies must be rigid and not flexible and most focus attention on the following; o What is the study about? o Why is the study being made? o Where will the study be carried out? o What type of data is required? o Where can be required data be found? o What period of time will the study include? o What will be sample design?
o What techniques of data collection will be used? o How will the data be analyzed? o In what style will the report be prepared?
SAMPLING DESIGN: A sample design is a definite plan for obtaining a sample from the sampling frame. It refers to the technique or the procedure that is adopted in selecting the sampling units from which inferences about the population is drawn. Sampling design is determined before the collection of the data. Several decisions have to be taken in context to the decision about the appropriate sample selection so that accurate data is obtained and efficient results are drawn.
Following questions have to be considered while sampling design
What is the relevant population? What is the parameter of interest? What is the sampling frame? What is the type of sample? What sample size is needed? How much will it cost?
PRIMARY DATA: The primary data are those, which are collected afresh and for the first time, and thus happened to be original in character. We can obtain primary data either through observation or through direct communication with respondent in one form or another or through personal interview.
SECONDARY DATA: The secondary data on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical processes. When the researcher utilizes secondary data then he has to look into various sources from where he can obtain them. For e.g. Books, magazine, newspaper, Internet, publications and reports. In the present study I have made use of secondary data collected from their website and from their records.
Analysis and Interpretation of Data The data collected in the aforesaid manner have been tabulated in condensed from to draw the meaningful results. The different techniques are adopted to analyze the data. All the data and material is arranged through internal resources and the last part of the project consists of the conclusions drawn from the report, a brief summary and recommendation and giving the final touch to the report by stating a conclusion.
STATISTICAL TOOLS An educated citizen needs an understanding of basic statistical tool to function in a world that is becoming increasingly dependant on quantitative information. Statistics means numerical description to most people. In fact the term statistics is generally used to mean numerical facts and figures such as agriculture production during a year, rate of inflation and so on. However as a subject of study, statistics refers to the body of principles and procedures developed for the collection, classification, summarization and interpretation of numerical data and for the use of such data. MEANING:Broadly speaking, the term statistics has been generally used in two senses: Plural Sense Singular Sense Plural sense refers to the numerical data. Singular Sense refers to a Science in which we deals with the techniques of collecting, classifying, presenting, analyzing and interpreting the data, the concept in its singular sense, refers to Statistical Method.
PURPOSE:Without the assistance of Statistical Method, an organization would find it impossible to make sense of the huge data. The purpose of statistics is to: Manipulate Summarize investigate
The data so that useful decision making information results could be found out. In fact, every business manager needs a sound background of statistics. Statistics is a set of Decision Making techniques which aids businessman in drawing inferences from the available data.
OBJECTIVES OF STUDY:1. To analyse the performance of real estate sector in Indian economy. 2. To study the growth & returns of various companies of realty sector. 3. To find out the liquidity position of top companies of real estate sector. 4. To study risk and return relationship associated with equity shares of these companies. 5. To study volatility in real estate sector of various companies. . LIMITATIONS OF THE STUDY
In spite of best efforts made in the project, the study was subjected to following limitations:-
LACK OF PRIMARY DATA:
Conduction of study in lack of primary data makes unable to analyze the data properly as per the huge financial market and forces to rely upon secondary data collected through different sources
which prevented the researcher to do research in a more explorative manner. Hence various areas and various people belong to different profession remained uncovered. TIME CONSTRAINTS
Time has also affected the research due to less availability of number of days information was conducted in few days. . RESOURCE CONSTRAINTS Availability of data was a constraint due to only those mutual funds data is considered, which is available, and also there are some MFs whose data was not available so their duration was shortened.
PERIOD OF ANALYSIS Generally longer period gives us more accurate estimates .. In this case period of analysis is very short as companies are recently listed on stock exchange.
ERROR PRONE Though every - "precaution has taken due to large data and complex calculations there may be chances of error
CHAPTER 4 Real Estate Investment
Real Estate Investment is now treated as a major case of capital budgeting by using state-of-theart investment analysis which incorporates the future stream of income it may generate and the associated risk adjustments. It has been the highlight of the investment literature since the 1970s when investment theorists extended techniques such as probability, time value of money and utility into its analysis. .
Real estate is basically defined as immovable property such as land and everything permanently attached to it like buildings. Real property as opposed to personal or movable property is characterized by the right to transfer the title to the land whereas title to personal property can be retained. The investment in real estate essentially depends on the risks associated with it, that is to say, even if the venture succeeds when the future stream of income will accrue to the investor and the alternative investment opportunities. Real estate investment can be attractive if viewed as a business opportunity; it can generate rental income, using it as collateral to secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses, or simply from the profits garnered from its resale. Notable, in this context is the gains reaped by real estate speculators who trade in real estate futures (by buying and selling purchase options). Common examples of real estate investment are individuals owning multiple pieces of real estates one of which is his primary residence and others are occupied by tenants from where the rental income accrues. Real estate investment is also associated with appreciation in the value of property thereby having the potential for capital gains. Tax implications differ for real estate investment and residential real estates. Real estate investment is long term in nature and investment professionals routinely maintain that ones investment portfolio should have at least 5%-20% invested in real estate.
A Real Estate Investment Trust (REIT) is a corporation or body investing in real estate that has the property to reduce or eliminate corporate income taxes. In return, REITs are required to distribute 90% of their income among the investors. These incomes are often taxable. REITs provide a similar function as does Mutual Funds provide for stocks in the share market. The key statistics to study about the REITs are the NAV (Net Asset Value) and AFFO (Adjusted Funds
From Operation).
The Indian Government is yet to introduce REITs in the country. The government and the SEBI (Securities and Exchange Board of India) are planning to bring in legislations for the smooth functioning of the real estate market in India. with Initial Public Offer(IPOs) streaming in from various listed real estate companies, it will be the best time to have an REIT which can help capture the current boom in the real estate market. REITs provide the opportunity to reap the benefits due to interests in the securitized real estate market. The best benefit that can accrue is the fast and easy liquidation of investments in the real estate market which can be observed in Japan which one of the few economies of Asia along with Hong Kong, Singapore, Malaysia and Taiwan to have REIT legislation in place. J-REIT securities are listed on the Tokyo Stock Exchange and most of the participants are domestic and foreign conglomerates. .
The legislation for laying out rules for REITs in UK was enacted by the Finance Act of 2006.they have to distribute 95% of their income and have to be publicly listed on a stock exchange which has been recognized by the FSA (Financial Services Authority). In the USA, the REITs are required to pay little or no federal income tax but are subject to legislations put forth by the Internal Revenue Code of 1986 whereby they have to distribute 90% of their taxable income in the form of dividends to its shareholders. Increasing demand for REIT stocks will push up the stock prices and entail growth from internal sources which is evidenced by the figures of 2005 where the combined assets of 200 publicly traded REIT companies totaled $500 billion. .
4.1 Real Estate FDI
India of today can be acknowledged as the one of the fastest growing economy in the world and in this current economic status, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. And this high growth curve in the real estate
sector owes some credit to a booming economy and liberalized Foreign Direct Investments (FDI) regime in the real estate sector. The Government of India in March 2005 amended existing norms to allow 100 per cent FDI in the construction business. This liberalization act cleared the path for foreign investment to meet the demand into development of the commercial and residential real estate sectors. It has also encouraged several large financial firms and private equity funds to launch exclusive funds targeting the Indian real estate sector. Until now, only Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) were permitted to invest in the housing and the real estate sectors. Foreign investors other than NRIs were allowed to invest only in development of integrated townships and settlements either through a wholly owned subsidiary or through a joint venture company in India along with a local partner. Some of the foreign players who have already tied up with Indian real estate developers are Lee Kim Tah Holdings, CESMA International Pvt Ltd., Evan Lim, and Keppel Land from Singapore, Salim Group from Indonesia, Edaw Ltd., from USA, Emaar Group from Dubai, IJM, Ho Hup Construction Co., from Malaysia etc. 4.1.1Indian_Real_estate_is_on_the_high_growth_path In 2003-04, India received total FDI inflow of US$ 2.70 billion, of which only 4.5% was committed to real estate sector. In 2004-05 this increased to US$ 3.75 billion of which, the real estate shares was 10.6%. .
However, in 2005-06, while total FDIs in India were estimated at US$ 5.46 billion, the real estate share in them was around 16%. The Study, nevertheless projects that in 2006-07, total FDIs will touch about US$ 8 billion in which the real estate share is estimated to be about 26.5%.
4.1.2
Guidelines_for_FDI_application_in_Indian_real_estate
The Government of India has set up certain guidelines for investors willing to apply in FDI in real estate, which have conditions like area, investment options and target for completion of a project. 1) Minimum area

In case of development of serviced housing plots, 10 hectares (25 acres) In case of construction-development projects, built-up area of 50,000 sq m. In case of a combination project, any of the above two conditions
2) Investment
Minimum capitalization
for wholly owned subsidiaries - US$ 10 million
for JV with Indian partners - US$ 5 million, to be brought in within 6 months of commencement of business
Original investment cannot be repatriated before a period of three years from completion of capitalization.
The investor may exit earlier with prior approval from Foreign Investment Promotion Board (FIPB).
3) Time frame & rules
At least 50 per cent of the project to be developed within five years from the date of obtaining all statutory clearances.
Investor cannot sell undeveloped plots - where roads, water supply, street lighting, drainage, sewerage and other conveniences are not available.
4.1.3FDI_in_Indian_Real_Estate_and_Economic_Growth With this change in the government policy on FDI, all real estate sectors, residential, commercial and retail are currently witnessing huge growth in demand. India, during the first half of 2005-06 fiscal has attracted more than three times foreign investment at US$ 7.96 billion during making it amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC). India in the next five-year period is estimated to require investments worth US $ 25 billion with the urban housing sector. This again has opened up opportunities for foreign investments in the realty sector. The Central government allowed up to 100% FDI for setting up townships in 2002. However, the flow of FDI investments has been thwarted by the 100 acre criterion; since acquiring such a large chunk of land was impossible in metropolitan cities and even satellite cities and state capitals. But a landmark decision taken by the Union government in 2005, where the minimum land area for development by foreign investors was lowered from the earlier floor of 100 acres to 25 acres has thrown open the lucrative parts of the Indian realty market to global investors. Another perceptible spin-off of the easing of FDI policies will be the impact on quality and inevitable acceleration in construction activities. Foreign Direct Investments in the real estate sector in India would also contribute towards making the sector more organized. Besides increasing professionalism in the sector, it would bring in advanced technology and help in the creation of healthy and competitive market environment for both domestic and foreign investors.
Why Invest In Indian Real Estate Flying high on the wings of booming real estate, property in India has become a dream for every potential investor looking forward to dig profits. All are eyeing Indian property market for a wide variety of reasons:
Ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power of its people and creates demand for real estate sector.
India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space.
Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space.
Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even.
Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery where it can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the near future.
The relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space.
Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest rewards.
JUSTIFICATION OF STUDY As we all know that India is one of the largest growing country of the world.Real estate is one of the largest booming sector in the Indian economy.The future prospects for real estate sector are very good.Today also many investors do not want to invest their money in th\e stock market as the risk is very high and there is large amount of volatility in Indian stock market. Due to this reason they invest their money in other areas like mutual funds, banking institutions and post office saving a/c schemes where risk is very less and they are expecting an assured return. In the present study, we analyse the liquidity and stock returns of different equity shares of real estate sector in the economy. We find out by way of present study, whether we are getting sufficient returns on equity bshares of real estate sector or not. We analyse the various factors that affect the liquidity and stock returns of various companies under this study.
We analyse the risk and return associated with various equity stocks of real estate sector companies and evaluate the volatility of equity shares.we apply various analytical & statistical tools that help in analysis part of study. Analysis Of Liquidity of Stocks of Real Estate Companies On basis of Bid-ask spread
TABLE 4.1 Copanies ANSAL API DLF OMAXE PARSVNATH UNITECH Bid Price 148 655.20 197 188 270.80 Ask Price 151.65 656.40 201.65 188.95 271.00 % change 2.46 .183 2.36 .505 .073
Interpretation: For calculation of liquidity we analyse the bid ask spread. More tighter the bid ask spread, more the liquidity of the stock.So here liquidity Decreases in the order:
UNITECH>DLF>PARSVNATH>OMAXE>ANSAL API
Analysis Of Liquidity of Stocks Of Real Estate Companies On basis of Volume, Turnover and Cofficient of elasticity of trading
TABLE 4.2 Dates Company Volume Market price of Turnover stock 09-08-2008 28-02-2009 DLF 3705892 2470720 595.5 780.3 (Rs lakh) 22372 19457
Dates
Company
Volume
Market price of Turnover stock (Rs lakh) 108423 1057
09-08-2008 28-02-2009
OMAXE
29443704 412391
349.35 255.75
Dates
Company
Volume
09-08-2008 28-02-2009
ANSAL API
602318 301689
244.15 215.55
Dates
Company
Volume
09-08-2008 28-02-2009 PARSVNATH
660740 758147
336.65 268.45
Dates
Company
Volume
09-08-2008 28-02-2009
UNITECH
2036409 5210953
527.1 359.9
Interpretation: We here want to analyse the liquidity of real estate stocks on the basis of volume of shares traded of particular stock, on the basis of turnover(Rs lakh) and coefficient of elasticity of trading which depicts the relationship between the change in volume of shares traded of particular stock and change in Market price of stock.
On the basis of Volume as on 28-02-2009: UNITECH Stock is the most liquid stock on the basis of volume of shares traded of particular stock
On the basis of Turnover(Rs lakh) as on 28-02-2009: DLF Stock is the most liquid stock on the basis of Turnover of particular stock .
Determination of coefficient of Elasticity of trading:
CET FOR DLF STOCK = CAHNGE IN VOLUME OF SHARES TRADED (%) FROM 09-08-2008 TO 28-02-2009
CHANGE IN MARKET PRICE OF STOCK (%) FROM 09-08-2008 TO 28-02-2009
= -33.33/23.68 = -1.407
CET FOR OMAXE STOCK = =
-98.60/-26.80 3.679
CET FOR ANSAL API STOCK = -49.91/ -11.71 = 4.262
CET FOR PASVNATH STOCK = 14.74/ -20.26 ` = 0.728
CET FOR UNITECH STOCK = 155.88/ -31.72 = Interpretation: So in case of DLF, and UNITECH CET < 1, It shows that Elasticity is less and liquidity is hence more. And in OMAXE, ANSAL API and PARSVNATH CET > 1, It shows that elasticity is high and less liquidity of stocks -4.914
Analytical Tools
1) MEASURE FOR SHARPE'S PORTFOLIOS PERFORMANCE
The Sharpe's index measures the risk premium of the portfolio relative to the total amount of risk in portfolio. The Sharpe's index is measured as S = RP Rf /p where, S = Sharpe's Index rp = average monthly return of fund. rf = risk free return *. * risk free return (rf) is taken as 7.73% per annum
2) TREYNOR'S PERFORMANCE MEASURES FOR PORTFOLIOS
Jack Trey nor, as measures by portfolio beta coefficients put an index of portfolio performance that is based on systematic risk, forward. It is used to rank the interest performance of different assets. It is a risk - adjusted rate of return measure than is calculated by dividing the assets risk premium by their beta coefficient. Tn = rP rf /p where Tn = Treynor's index rp = average return on portfolio rf = risk free return p = beta coefficient of portfolio.
3) JENSEN MEASURE The Sharpe and Treynor index models provide measures for ranking the relative performance of various portfolios on a risk-adjusted basis according to Jensen equilibrium average return on a portfolio would be a benchmark. Equilibrium average return of the portfolio by the market with respect to systematic risk to portfolio should earn with the systematic return. Rp = + (rm - rf ) p
Where, Rp= average return of the portfolio. rf = risk free return rm= average market return = A measure of systematic risk . = Y-X if the alpha is positive, the portfolio has performed better and if alpha is negative it has not shown performance upto the benchmark, i.e. the market index.
Standard Deviation: It is used to measure the variation in the individual return from the average expected return over a certain period. Standard deviation is used in the concept of risk of a portfolio of investment. Higher the Standard Deviation means a greater fluctuation in expected return. = (Y- Y) N Where, Y = fund return Beta: Beta measures the systematic risk and show how price of security respond to the market foresees. It is calculated by relating the return on security with return for market. = n XY ( x y) / n x (x) Where, X =index return Y = fund return
Alpha: It measures the stock unsystematic return and it is average return independent of market return. It is calculated by comparing the funds actual performance with the risk adjusted expected return. = Y-X Where, X =index return Y = fund return
PERFORMANCE EVALUATION OF DLF
TABLE 4.3 Date NSE index 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 4464 5021 5965 5762 6138 5137 5223 12.47 18.80 -3.40 6.52 -16.30 1.67 155.50 353.44 11.56 42.51 265.69 2.78 Index return(X) 598 763 949 944 1073 809 780 27.59 24.37 -0.52 13.66 -24.60 -3.71 (Y) =3.19 761.21 593.89 0.27 186.59 605.16 13.76 (Y) 344.04 458.16 1.768 89.06 400.98 -6.20 XY (X) DLF Y(DLF RETURN) (Y) XY
X=19.76 (X) =831.48
=2160.88 =1287.80
y=Y-Y X =index return Y = fund return n= no. of years
Beta = n XY ( x y) / n x (x) = 7663.77/4598.43 = 1.67 . Standard Deviation = y N
Where Y =3.19/6 = 0.531 = 2160.88/6 = 18.97
Alpha = Y-X Y =3.19/6 = 0.531 X =19.76/6 = 3.293 = .531-(1.67)*3.293 = -4.96
Sharpe's index S = RP Rf /p rf= 6.5% p = 18.97 RP= 0.531 St= 0.531-0.065/18.97 = 0.024
TREYNOR Tn = rP rf /p = 1.67
rf= 6.5% RP= 0.531 Tn= 0.531-0.065/1.67 = 0.279
JENSEN p = (Rp-Rf)- p(Rm - Rf ) = 1.67 Rf= 6.5% Rm = 3.29 Rp= 0.531-0.065 = 0.466 p= -4.9
PERFORMANCE EVALUATION OF OMAXE
TABLE 4.4 Date NSE index 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 4464 5021 5965 5762 6138 5137 5223 12.47 18.80 -3.40 6.52 -16.30 1.67 155.50 353.44 11.56 42.51 265.69 2.78 Index return(X) 319 333 309 434 572 283 255 4.38 -7.20 28.80 24.12 -50.52 -9.90 (Y) = -10.32 19.18 51.84 829.44 581.77 2552.27 98.01 (Y) 54.61 -135.36 -97.92 157.26 823.47 -16.53 XY (X) DLF Y(DLF RETURN) (Y) XY
X=19.76 (X) =831.48
=1832.51 =785.53
Beta = n XY ( x y) / n x (x) = 4917.1/4598.43 = 1.069 Standard Deviation = y N
Where Y =-10.32/6 = -1.72 = 1832.51/6 = 17.47
Alpha = Y-X Y =-10.32/6 = -1.72 X =19.76/6 = 3.293 = .-1.72-(1.069)*3.293 = -5.24
Sharpe's index S = RP Rf /p rf= 6.5% p = 17.47 RP= -1.72 St= -1.72-0.065/17.47 = -0.102
rf= 6.5%
RP= -1.72 Tn= -1.72-0.065/1.67 = -1.669 JENSEN p = (Rp-Rf)- p(Rm - Rf ) = 1.67 Rf= 6.5% Rm = 3.293 Rp= -1.72-0.065 = -1.785 p= -5.24
PERFORMANCE EVALUATION OF ANSAL API
TABLE 4.5 Date NSE index 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 4464 5021 5965 5762 6138 5137 5223 12.47 18.80 -3.40 6.52 -16.30 1.67 155.50 353.44 11.56 42.51 265.69 2.78 Index return(X) 250 282 249 248 425 243 215 12.8 -11.70 -0.40 71.37 -42.82 -11.52 (Y) = 17.73 163.84 136.89 0.16 5093.67 1833.55 132.71 (Y) 159.61 -219.96 1.36 465.33 697.96 -19.23 XY (X) DLF Y(DLF RETURN) (Y) XY
X=19.76 (X) =831.48
=7360.82 =1085.07
Beta = n XY ( x y) / n x (x) = 6160.08/4598.43 = 1.339 Standard Deviation = y N Where Y =-17.73/6 = 2.955 = 7360.82/6 = 35.025
Alpha = Y-X Y =17.73/6 = 2.955 X =19.76/6 = 3.293 = .2.955-(1.339)*3.293 = -0.565
rf= 6.5% RP= 2.955 Tn= 2.955-0.065/1.67 = 2.158
2 JENSEN p = (Rp-Rf)- p(Rm - Rf ) = 1.67 Rf= 6.5% Rm = 3.293 Rp= 2.955-0.065 = 2.89 p= -1.43
PERFORMANCE EVALUATION OF PARSVNATH
TABLE 4.6 Date NSE index Index return(X ) 31-0808 28-0908 31-1008 30-1108 31-1208 31-0109 28-0209 X=19. 76 (X)=8 31.48 (Y) =1.85 (Y)=25 18.97 XY 5223 1.67 2.78 268 -0.74 0.54 -1.24 5137 -16.30 265.69 270 -40.26 1620.86 656.23 6138 6.52 42.51 452 27.68 766.18 180.47 5762 -3.40 11.56 354 4.23 17.89 -60.83 5965 18.80 353.44 339 .29 0.08 5.45 5021 12.47 155.50 338 10.65 113.42 132.80 4464 302 (X) DLF Y(DLF RETURN) (Y) XY
=912.8 8
Beta = n XY ( x y) / n x (x) = 5440.72/4598.43 = 1.183 . Standard Deviation = y N Where Y =1.85/6 = 0.308 = 2518.97/6 = 20.489 Alpha = Y-X Y =1.85/6 = 0.308 X =19.76/6 = 3.293 = 0.308-(1.183)*3.293 = -3.587
Sharpe's index S = RP Rf /p rf= 6.5% p = 20.49 RP= 0.243
St= 0.308-0.065/20.49 = 0.012
rf= 6.5% RP= 0.243 Tn= 0.308-0.065/1.183 = 2.158
JENSEN p = (Rp-Rf)- p(Rm - Rf ) = 1.67 Rf= 6.5% Rm = 3.293 Rp= 0.308-0.065 = 0.243 p= -3.58
PERFORMANCE EVALUATION OF UNITECH
TABLE 4.6 Date NSE index 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 4464 5021 5965 5762 6138 5137 5223 12.47 18.80 -3.40 6.52 -16.30 1.67 155.50 353.44 11.56 42.51 265.69 2.78 Index return(X) 237 307 384 381 489 383 359 29.53 25.08 -0.78 28.34 -21.67 -6.26 (Y) = 54.24 872.02 629 0.60 803.15 469.58 39.19 (Y) 368.24 471.50 2.65 -184.78 353.22 -10.45 XY (X) DLF Y(DLF RETURN) (Y) XY
X=19.76 (X) =831.48
=2813.54 =1000.38
Beta = n XY ( x y) / n x (x) = 4930.5/4598.43 = 1.072 .
Standard Deviation = y N Where Y =54.24/6 = 9.04 = 2813.54/6 = 21.65
Alpha = Y-X Y =54.24/6 = 9.04 X =19.76/6 = 3.293 = 9.04-(1.072)*3.293 = 5.51
rf= 6.5% RP= 9.4 Tn= 9.4-0.065/1.072 = 8.372
JENSEN p = (Rp-Rf)- p(Rm - Rf ) = 1.072 Rf= 6.5% Rm = 3.293 Rp= 9.4-0.065 = 0.243 p= 5.51
Analysis of return through sharpe Ratio TABLE 4.7 Real estate Stocks SHARPE INDEX DLF OMAXE ANSAL API PARSVNATH UNITECH 0.024 -0.102 0.082 0.012 0.414
SHARPE INDEX 0.6 0.4 0.2 0 -0.2
0.414 0.024
UNITEC H
ANSAL API
DLF
-0.102
0.082 0.012
SHARPE INDEX
Analysis of return through Treynor Ratio TABLE 4.8 Real Stocks DLF OMAXE ANSAL API PARSVNATH UNITECH estate TREYNOR INDEX 0.279 -1.669 2.158 0.205 8.372
-1.669
PARSVNATH
ANSAL API
UNITECH
OMAXE
10 8 6 4 2 0 -2 -4
8.372 TREYNOR INDEX 0.205
2.158 0.279
DLF
Analysis of return through Jensen Ratio TABLE 4.9 Stocks JENSON INDEX DLF OMAXE ANSAL API PARSVNATH UNITECH -4.92 -5.24 -1.43 -3.58 5.51
JENSON INDEX 8 6 4 2 0 -2 -4 -6
5.51 JENSON INDEX -4.92

PARSVNAT H ANSAL API
-3.58
-5.24
UNITECH
OMAXE
DLF
-1.43
Statistical tools TREND ANALYSIS To apply the statistical tool in this project TREND ANALYSIS is the most effective tool which is applied here. When estimates of future conditions are made on a systematic basis, the process is referred as forecasting and the figure or statement obtained is known as forecast. In this world of uncertainness, economic decision rest upon a forecast of future condition. Forecasting is concerned with mainly two tasks:- the determination of best basis available for formation of intelligent managerial expectations, and second handling of uncertainty about future. UTILITY OF TREND ANALYSIS: To study the past behaviour of data To forecast the future behaviour Estimation of Trade Cycles Comparison with other Time Series Study of present variations
TREND ANALYSIS OF DLF TABLE 4.10 Date Market price Y 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 598 763 949 944 1073 809 780 Y= 5916 is Y= a + bX Since X=0, a = Y/ N, b = XY/ x2 Substituting values, we get a = 5916/7 = 845.14; b = 762/28 = 27.21 Thus the straight line trend is Y= 845.14+27.21(x), Deviatio ns (x) -3 -2 -1 0 1 2 3 x=0 9 4 1 0 1 4 9 x2 =28 -1794 -1526 -949 0 1073 1618 2340 XY=7 62 The equation of the straight line trend X2 xY
Trend value of DLF stock

1200 1000 800 600 400 200 0 1 1073 949 944 872.354 926.77 899.56 845.14 809 780 790.72 763.51 763 817.93 598 Observed value Expected value 2 3 4 5 Months 6 7
stock price
TREND ANALYSIS OF OMAXE TABLE 4.11 Date Market price Y 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 319 333 309 434 572 283 255 Y= 2505 Deviatio ns (x) -3 -2 -1 0 1 2 3 x=0 9 4 1 0 1 4 9 x2 =28 -957 -666 -309 0 572 566 765 XY= -29 X2 xY
The equation of the straight line trend is Y= a + bX Since X=0, a = Y/ N, b = XY/ x2 Substituting values, we get a = 2505/7 = 357.86; b = -29/28 = -1.035 Thus the straight line trend is Y= 357.86-1.035(x),
Trend value of Omaxe stock

800 600 400 200 0 1 2 3 4 5 6 7 Months
Stock price
Observed value Expected value
TREND ANALYSIS OF ANSAL API TABLE 4.12 Date Market price Y 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 250 282 249 248 425 243 215 Y= 1912 Deviation s (x) -3 -2 -1 0 1 2 3 x=0 9 4 1 0 1 4 9 x2 =28 -750 -564 -249 0 425 486 645 XY= -7 X2 xY
The equation of the straight line trend is Y= a + bX Since X=0, a = Y/ N, b = XY/ x2 Substituting values, we get a = 1912/7 = 273.14; b = -7/28 = -0.25 Thus the straight line trend is Y= 273.14-0.25(x),
Trend value of Ansal API

500 400 300 200 100 0 1 2 3 4 5 6 7 Months
Stock price
TREND ANALYSIS OF PARSVNATH TABLE 4.13 Date Market price Y 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 302 338 339 354 452 270 268 Y= 2323 Deviation s (x) -3 -2 -1 0 1 2 3 x=0 9 4 1 0 1 4 9 x2 =28 -906 -676 -339 0 452 540 804 XY= -125 X2 xY
The equation of the straight line trend is Y= a + bX Since X=0, a = Y/ N, b = XY/ x2 Substituting values, we get a = 2323/7 = 331.86; b = -125/28 = -4.46
Thus the straight line trend is Y= 331.86-4.46(x)
Trend value of Parsvnath stock

500 400 300 200 100 0 1 2 3 4 5 6 7 Months
Stock price
TREND ANALYSIS OF UNITECH TABLE 4.14 Date Market price Y 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 237 307 384 381 489 383 359 Y= 2540 Deviations (x) -3 -2 -1 0 1 2 3 x=0 9 4 1 0 1 4 9 -811 -614 -384 0 489 766 1077 The equation of the straight line trend is Y= a + bX Since X=0, a = Y/ N, b = XY/ x2 Substituting values, we get a = 2540/7 = 362.86; b = 523/28 = 18.68 Thus the straight line trend is X2 xY
x2 =28 XY= 523
Y= 362.86+18.68(x),
Trend value of Unitech Stock

600
stock price
400 200 0 1 2 3 4 5 6 7 Months
Cor-relation of Market Index and Stock price:-(DLF) TABLE 4.15 Market Index 4464 5021 5965 5762 6138 5137 5223 Stock Price 598 763 949 944 1073 809 780
Date 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
Index 4464 5021 5965 5762 6138 5137 5223
dx -923 -366 577 374 750 -250 -164 dx=0
Dx2
Y(Stock price) 852187 598 134058 763 332929 949 139876 944 562500 1073 62500 809 26896 780 dx2= Y= 2110946 5916
Dy -247 -82 103 98 227 -36 -65 dy= .0
Dy2 61009 6724 10609 9604 51529 1296 4225 dy2 144996
dxdy 227981 30012 59431 36652 170250 9000 10660 dxdy= 543986
r= dx2
dxdy (dy)2
Where N = Number of Observations dx =deviations from X (X-X) dy =deviations from Y (Y-Y) r= 0.983
Cor-relation of market Index and Srock Price (OMAXE) TABLE 4.16 Market Index 4464 5021 5965 5762 6138 5137 5223 Stock Price 319 333 309 434 572 283 255
Date 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
Index 4464 5021 5965 5762 6138 5137 5223
dx -923 -366 577 374 750 -250 -164 dx=0
Dx2
Y(Stock price) 852187 319 134058 333 332929 309 139876 434 562500 572 62500 283 26896 255 dx2= Y= 2110946 2505
Dy -38 -24 -48 77 215 74 102 dy= .0
Dy2 1444 576 2304 5929 46225 5476 10404 dy2 72358
dxdy 35074 8784 -27696 28798 161250 -18500 -16728 dxdy= 170982
r= dx2
dxdy (dy)2
Where N = Number of Observations dx =deviations from X (X-A) A =Assumed Mean dy =deviations from Y (Y-A)
r=
0.437
Correlation of market Index and Stock Price (ANSAL API) TABLE 4.17 Market Index 4464 5021 5965 5762 6138 5137 5223 Stock Price 250 282 249 248 425 243 215
Date 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
Index 4464 5021 5965 5762 6138 5137 5223
dx -923 -366 577 374 750 -250 -164 dx=0
Dx2
Y(Stock price) 852187 250 134058 282 332929 249 139876 248 562500 425 62500 243 26896 215 dx2= Y= 2110946 1912
Dy -23 9 -24 -25 152 -30 -58 dy= .0
Dy2 529 81 576 625 23104 900 3364 dy2 29179
dxdy 21229 -3294 -13848 -9350 114000 7500 9512 dxdy= 125749
r= dx2
dxdy (dy)2
Where N = Number of Observations dx =deviations from X (X-X dy =deviations from Y (Y-Y)
r=
0.507
Correlation of market Index and Stock Price (PARSVNATH) TABLE 4.18 Market Index 4464 5021 5965 5762 6138 5137 5223 Stock Price 302 338 339 354 452 270 268
Date 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
Index 4464 5021 5965 5762 6138 5137 5223
dx -923 -366 577 374 750 -250 -164 dx=0
Dx2
Y(Stock price) 852187 302 134058 338 332929 339 139876 354 562500 452 62500 270 26896 268 dx2= Y= 2110946 2323
Dy -29 7 8 23 121 -61 -63 dy= .0
Dy2 841 49 64 529 14641 3721 3969 dy2 23814
dxdy 26767 -2562 4616 8602 90750 15250 10332 dxdy= 153755
r= dx2
dxdy (dy)2
Where N = Number of Observations dx =deviations from X (X-X dy =deviations from Y (Y-Y) r= 0.686
Correlation of market Index and Stock Price (UNITECH) TABLE 4.19 Market Index 4464 5021 5965 5762 6138 5137 5223 Stock Price 237 307 384 381 489 383 359
Date 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
Index 4464 5021 5965 5762 6138 5137 5223
dx -923 -366 577 374 750 -250 -164 dx=0
Dx2
Y(Stock price) 852187 237 134058 307 332929 384 139876 381 562500 489 62500 383 26896 359 dx2= Y= 2110946 2540
Dy -125 -55 22 19 127 21 -3 dy= .0
Dy2 15625 3025 484 361 16129 441 9 dy2 36074
dxdy 115375 201130 12694 7106 95250 -5250 492 dxdy= 245797
r= dx2
dxdy (dy)2
Where N = Number of Observations dx =deviations from X (X-X) Date Market dx dx2 capitalizati on (X) 31-08-08 4296994 -1137452 1292769000 28-09-08 4886561 -547885 30008484000 31-10-08 5722227 287781 8277129000 30-11-08 5876742 442296 19554084000 31-12-08 6543272 1108826 1227664000 31-01-09 5295387 -139059 19321000 28-02-09 5419942 -14504 196000 dx=0 dx2= 60379647000 dy =deviations from Y (Y-Y) r= 0.891
Y(Stoc dy k price) 598 763 949 944 1073 809 780 Y= 5916 -247 -82 103 98 227 -36 -65 dy = .0
dy2
dxdy
61009 6724 10609 9604 51529 1296 4225 dy2 144996
280950644 44926570 29641443 43345008 251703502 5006124 942760 dxdy= 656516051
Regression Between Market Capitalisation and Market price DLF
Dependent Variable(X) = Market Capitalisation Independent Variable(Y) = Stock Price
Regression equation of X on Y: X- X = r x /y (Y Y) Where X = X/N = 38041125/7 = 5434446 Y = Y/N = 5916/7 = 845.14 bxy = r x /y = dxdy/dy2
= 656516051/144996 = 4527.82 Putting these values in the regression equation: (X-5434446) = 4527.82(Y-845.14) X = 4527.82Y- 3826641+5434446 = 4527.82Y + 1607805
Regression Between Market Capitalisation and Market price of OMAXE Stock Dependent Variable(X) = Market Capitalisation Independent Variable(Y) = Stock Price TABLE 4.20 Date Market capitaliz ation (X 4296994 4886561 5722227 5876742 6543272 dx dx2 Y(St ock price ) 319 333 309 434 572 283 255 Y= 2505 dy dy2 dxdy
31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
-1137452 -547885 287781 442296 1108826
1292769000 30008484000 8277129000 19554084000 1227664000 19321000 196000
-38 -24 -48 77 215 74 102 dy= .0
1444 576 2304 5929 46225 5476 10404 dy2 72358
5295387 -139059 5419942 -14504 dx=0
43223176 13149240 -13813488 34056792 23839759 0 -10290366 -1479408 dxdy= 30324353 6
Regression equation of X on Y: X- X = r x /y (Y Y) Where X = X/N = 38041125/7 = 5434446 Y = Y/N = 2505/7 = 357.86
bxy = r x /y = dxdy/dy2 = 303243536/72358 = 4190.87 Putting these values in the regression equation: (X-5434446) = 4190.87(Y-357.86) X = 4190.87Y- 1499744+5434446 = 4527.82Y + 3934702
Regression Between Market Capitalisation and Market price of ANSAL API Stock Dependent Variable(X) = Market Capitalisation Independent Variable(Y) = Stock Price
TABLE 4.21 Date Market capitaliz ation (X) 31-08-08 4296994 28-09-08 4886561 31-10-08 5722227 30-11-08 5876742 31-12-08 6543272 31-01-09 5295387 28-02-09 5419942
dx
dx2
Y(Stoc dy k price) 250 282 249 248 425 243 215 Y= 1912 -23 9 -24 -25 152 -30 -58 dy= .0
dy2
dxdy
-1137452 -547885 287781 442296 1108826 -139059 -14504 dx=0
1292769000 30008484000 8277129000 19554084000 1227664000 19321000 196000 dx2= 60379647000
529 81 576 625 23104 900 3364 dy2 29179
26161396 -4930965 -6906744 -11057400 168541552 4171770 841232 dxdy= 125749
Regression equation of X on Y: X- X = r x /y (Y Y) Where X = X/N = 38041125/7 = 5434446 Y = Y/N = 1912/7 = 273 bxy = r x /y = dxdy/dy2
= 176820841/29179 = 6059.86 Putting these values in the regression equation: (X-5434446) = 6059.86(Y-273) X = 6059.86Y- 1654341+5434446 = 6059.86Y + 3780105
Regression Between Market Capitalisation and Market price of PARVNATH Stock Dependent Variable(X) = Market Capitalisation Independent Variable(Y) = Stock Price TABLE 4.22 Date Market capitalization (X) 4296994 4886561 5722227 5876742 6543272 5295387 5419942 dx dx2 Y(Stock price) 302 338 339 354 452 270 268 Y= 2323 dy dy2 dxdy
31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
-1137452 -547885 287781 442296 1108826 -139059 -14504 dx=0
1292769000 3000848400 0 8277129000 1955408400 0 1227664000 19321000 196000 dx2= 2110946
-29 7 8 23 121 -61 -63 dy =0
841 49 64 529 14641 3721 3969 dy2 23814
32986108 -3835195 2302248 10172808 134167946 8482599 913752 dxdy= 185190266
Regression equation of X on Y: X- X = r x /y (Y Y) Where X = X/N = 38041125/7 = 5434446 Y = Y/N = 2323/7 = 331.86
bxy = r x /y = dxdy/dy2 = 185190266/23814 = 7776.53 Putting these values in the regression equation: (X-5434446) = 7776.53(Y-331.86) X = 7776.53Y- 2580719+5434446 = 6059.86Y + 285327
Regression Between Market Capitalisation and Market price of UNITECH Stock Dependent Variable(X) = Market Capitalisation Independent Variable(Y) = Stock Price TABLE 4.23 Date Market dx capitalization (X) 31-08-08 4296994 -1137452 28-09-08 4886561 -547885 31-10-08 5722227 30-11-08 5876742 31-12-08 6543272 31-01-09 5295387 28-02-09 5419942 287781 442296 1108826 -139059 -14504 dx=0 dx2 dy2
Y(Stock price) 237 307 384 381 489 383 359 Y= 2540
dy
dxdy
1292769000 3000848400 0 8277129000 1955408400 0 1227664000 19321000 196000 dx2= 2110946
-125 -55 22 19 127 21 -3 dy= .0
15625 3025 484 361 16129 441 9 dy2 36074
142181500 30133675 6331182 8403624 140820902 -2920239 43512 dxdy= 324994156
Regression equation of X on Y: X- X = r x /y (Y Y) Where X = X/N = 38041125/7 = 5434446 Y = Y/N = 2540/7 = 362.86 bxy = r x /y = dxdy/dy2
= 324994156/36074 = 9009.09 Putting these values in the regression equation: (X-5434446) = 9009.09(Y-362.86) X = 9009.09Y- 3269038+5434446 = 9009.09Y + 2165408
Hypothesis Testing T-test is useful to find out whether there is significant difference between the two variables or not i.e between Market index and Stock price of particular stock. Null Hypothesis: There is no significant difference between both. TABLE 4.24 DLF Dates 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 Market Index (X1) 4464 5021 5965 5762 6138 5137 5223 X1 =
37710 n1 = 7 X1 = 37710/7 = 5387.14
(X1-A1) A1= 5762 -1298 -741 203 0 376 -625 -539
(X1-A1)2 1684804 549081 41209 0 141376 390625 290521 (X1-A1)2

= 3097616
Stock price(X2) 598 763 949 944 1073 809 780 X2 =5916
n2 = 7 X2 = 5916/7 =
(X2-A2) A2= 944 -346 -181 5 0 129 -135 -164
(X2-A2)2 119716 32761 25 0 16641 18225 26896 (X2A2)2 =

214264
845.14
S=
(X1-A1)2 + (X2-A2)2 -n1(X1-A1)2 n2 (X2-A2)2 n1+n2-2 3097616 + 214264 7(-2624)2-7(-692)2 12 3097616 + 214264 6885376 - 478864
12 = 4052360/12
= 581.11 t = X1- X2 . n1n2 S n1+n2 = 5387.14-845.14 * 1.870 581.11 = 7.816 *1.870 = 14.62 V = 14-2 = 12 For V= 12, t0.05 for 2 tail test = 2.18 Since the calculated vaue of t is more than table value , we reject the null hypothesis and concluded that there is significant difference between Market index and stock price.
TABLE 4.25 OMAXE Dates Market Index (X1) 31-08-08 4464 28-09-08 5021 31-10-08 5965 30-11-08 5762 31-12-08 6138 31-01-09 5137 28-02-09 5223 X1 =
37710 n1 = 7 X1 = 37710/7 = 5387.14
(X1-A1) A1= 5762 -1298 -741 203 0 376 -625 -539
(X1-A1)2 1684804 549081 41209 0 141376 390625 290521 (X1-A1)2

= 3097616
Stock price(X2) 319 333 309 434 572 283 255 X2 =2505
n2 = 7 X2 = 2505/7 =
(X2-A2) A2= 434 -115 -101 -125 0 138 -151 -179
(X2-A2)2 13225 10201 15625 0 19044 22801 32041 (X2A2)2 = 112937
357.86
S=
(X1-A1)2 + (X2-A2)2 -n1(X1-A1)2 n2 (X2-A2)2 n1+n2-2 3097616 + 112937 7(-2624)2-7(-692)2 12 3097616 + 112937 6885376 - 478864
= =
12 = 3256254/12
= 520.91 t = X1- X2 . n1n2 S n1+n2
= 5387.14-357.86 * 1.870 520.91 = 9.654 *1.870 = 18.05 V = 14-2 = 12 For V= 12, t0.05 for 2 tail test = 2.18 Since the calculated vaue of t is more than table value , we reject the null hypothesis and concluded that there is significant difference between Market index and stock price
TABLE 4.26 ANSAL API (X1-A1)2 1684804 549081 41209 0 141376 390625 290521 (X1-A1)2
= 3097616
Dates 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09
Market Index (X1) 4464 5021 5965 5762 6138 5137 5223 X1 =
37710 n1 = 7 X1 = 37710/7 = 5387.14
(X1-A1) A1= 5762 -1298 -741 203 0 376 -625 -539
Stock price(X2) 250 282 249 248 425 243 215 X2 =2505
n2 = 7 X2 = 1912/7 =
(X2-A2) A2= 282 -32 0 -33 -34 143 -39 -67
(X2-A2)2 1024 0 1089 1156 20449 1521 4489 (X2A2)2 = 29728
273
S=
(X1-A1)2 + (X2-A2)2 -n1(X1-A1)2 n2 (X2-A2)2
= = =
n1+n2-2 3097616 + 29728 7(-2624)2-7(-692)2 12 3097616 + 29728 6885376 - 478864 12 3345628/12
= 528.01 t = X1- X2 . n1n2 S n1+n2
= 5387.14-273 * 1.870
528.01 = 9.685 *1.870 = 18.11 V = 14-2 = 12 For V= 12, t0.05 for 2 tail test = 2.18 Since the calculated vaue of t is more than table value , we reject the null hypothesis and concluded that there is significant difference between Market index and stock price
TABLE 4.27 PARSVNATH Dates Market (X1-A1) Index (X1) A1= 5762 31-08-08 4464 -1298 28-09-08 5021 -741 31-10-08 5965 203 30-11-08 5762 0 31-12-08 6138 376 31-01-09 5137 -625 28-02-09 5223 -539 X1 =
37710 n1 = 7 X1 = 37710/7 = 5387.14
(X1-A1)2 1684804 549081 41209 0 141376 390625 290521 (X1-A1)2

= 3097616
Stock price(X2) 302 338 339 354 452 270 268 X2 =2323
n2 = 7 X2 = 2323/7 =
(X2-A2) A2= 354 -52 -16 -15 0 98 -84 -86
(X2-A2)2 2704 256 225 0 9604 7056 7396 (X2A2)2 = 27241
331.86
S=
(X1-A1)2 + (X2-A2)2 -n1(X1-A1)2 n2 (X2-A2)2 n1+n2-2 3097616 + 27241 7(-2624)2-7(-692)2 12 3097616 + 27241 6885376 - 478864 12 3102541/12
= = =
= 508.47 t = X1- X2 . n1n2 S n1+n2 = 5387.14-331.86 * 1.870 508.47 = 9.942 *1.870 = 18.59 V = 14-2 = 12 For V= 12, t0.05 for 2 tail test = 2.18 Since the calculated vaue of t is more than table value , we reject the null hypothesis and concluded that there is significant difference between Market index and stock price
TABLE 4.28 UNITECH Dates 31-08-08 28-09-08 31-10-08 30-11-08 31-12-08 31-01-09 28-02-09 Market Index (X1) 4464 5021 5965 5762 6138 5137 5223 (X1-A1) A1= 5762 -1298 -741 203 0 376 -625 -539 (X1-A1)2 1684804 549081 41209 0 141376 390625 290521 Stock price(X2) 237 307 384 381 489 383 359 (X2-A2) A2= 381 -144 -74 3 0 108 2 -22 (X2-A2)2 20736 5476 9 0 11664 4 484
X1 =
37710 n1 = 7 X1 = 37710/7 = 5387.14
(X1-A1)2 X2 =2540
= 3097616 n2 = 7 X2 = 2540/7 =
(X2A2)2 = 38373
362.86
S=
(X1-A1)2 + (X2-A2)2 -n1(X1-A1)2 n2 (X2-A2)2 n1+n2-2 3097616 + 38373 7(-2624)2-7(-692)2 12 3097616 + 38373 6885376 - 478864 12 4253146/12 595.33
= = = =
t = X1- X2 . n1n2 S n1+n2 = 5387.14-362.86 * 1.870 595.33 = 8.439 *1.870 = 15.78 V = 14-2 = 12 For V= 12, t0.05 for 2 tail test = 2.18 Since the calculated vaue of t is more than table value , we reject the null hypothesis and concluded that there is significant difference between Market index and stock price
CHAPTER 5
FINDINGS & CONCLUSION
FINDINGS Beta value calculated for DLF ,OMAXE, ANSAL API , PARSVNATH and UNITECH STOCKS are 1.67, 1.069, 1.339, 1.183 and 1.072 respectively. It shows that risk in case of OMAXE is least and in case of DLF is very high. Standard devaiation for DLF ,OMAXE, ANSAL API , PARSVNATH and UNITECH STOCKS are 18.97, 17.47, 35.025, 20.489 and 21.65 respectively. Alpha value for DLF ,OMAXE, ANSAL API , PARSVNATH and UNITECH STOCKS are -4.96, -1.72, -0.565, -3.587, and 5.51 respectively. Correlation test: o DLF- 0.983 o OMAXE-0.437 o ANSAL API-0.507 o PARSVNATH-0.686 o UNITECH-0.891 So there is significant correlation in all the stocks between market index and stock price.
The value for T-test calculated for DLF ,OMAXE, ANSAL API , PARSVNATH and UNITECH STOCKS are 14.62, 18.05, 18.11, 18.59, and 15.78 respectively. This shows that there is significant difference between Market index and stock price.
Real estate Stocks DLF OMAXE ANSAL API PARSVNATH UNITECH
SHARPE INDEX 0.024 -0.102 0.082 0.012 0.414
Sharpe index shows that if we consider these five securities for investment, we invest in UNITECH Stock.
should
Real estate Stocks DLF OMAXE ANSAL API PARSVNATH UNITECH
TREYNOR INDEX 0.279 -1.669 2.158 0.205 8.372 should
Treynor index shows that if we consider these five securities for investment, we invest in UNITECH Stock .
Stocks DLF OMAXE ANSAL API PARSVNATH UNITECH
JENSON INDEX -4.92 -5.24 -1.43 -3.58 5.51
Jenson index shows that if we consider these five securities for investment, we should invest in UNITECH Stock.
If we talk about liquidity , the bid-ask spread in case of UNITECH stock is more tight and hence this stock is more liquid. On the basis of Volume as on 29-02-2008: UNITECH Stock is the most liquid stock on the basis of volume of shares traded of particular stock
On the basis of Turnover(Rs lakh) as on 29-02-2008:
DLF Stock is the most liquid stock on the basis of Turnover of particular stock
If we talk about coefficient of elasticity ,in case of DLF, and UNITECH CET < 1, It shows that Elasticity is less and liquidity is hence more. And in OMAXE, ANSAL API and PARSVNATH CET > 1, It shows that elasticity is high and less liquidity of stocks
CONCLUSION Indian economy is going through a very good time and is posting new highs on a regular basis. As the real estate sector has a high correlation with the overall economic growth of the economy, so the expansion of this sector is also phenomenal. Two main reasons behind the boom in real estate sector in India are :-2008. In addition, the manufacturing sector grew at the rate of 11.8 % which is itself a commendable performance. -P-G policy has helped the contractors and the builders in bypassing the red-tapism as well as the license-raj. Allowing the foreign investors to invest in the mega real estate projects in the year 2002 has broadened the scope for growth in the same. Some of the facts related to Indian real estate sector
Bradstreet to be around fourteen billion US dollars. According to him this sector is growing at a tremendous speed of 30% per annum. The main reason behind this growth is the demand generated by the off-shoring businesses.
percent of it comes from residential real estate sector and the real twenty percent from the commercial real estate one.
LIC, etc. to float new mutual funds investing solely in the stocks of the listed real estate sector companies.
sector even for the short term. This has prompted the contractors and builders to add an additional clause for holding concerned real estate for a minimum period of 1 year.
BIBLIOGRAPHY
BIBLIOGRAPHY
Books: 1. Misra R.K., Euity and investment, New Delhi, Somaiya Publications Pvt.Ltd.,2004, p326 and 341- 342 2. .Gupta S.P., Business Statistics, 31st edition, Sultan chand & sons,2005, p-378-418 3. Schaums:Statistical methods, 6th edition ,akash publishing house,p336-337 4. Fisher & Jordanp,2nd edition,jeevan pubilsing housep223-228 5. Pandian Punitawathy,Security analysis and portfolio management,2nd 6. Edition,p128-136:-. 7. Beri G.C.,Research methodology,4th edition vikas pubilsing huse,p85-90 8. Sharma S.C.& Jain R.C,Business statistics,1st edition, Avichal puyblishing
company.p225-236-. 9. Dalton M.John,Securities and returns,2nd edition, limelight publications,p95-100. 10. Siegel J.Jeremy, volatility and equity shares in stock market,2nd edition, pawan publishing house new delhi,p167-169-.
Websites: 11. www.omaxe.com/information/financialresults.htm: www.investopedia.com/terms/w//liquidity/equity.asp: 13. www.livemint.com/wall street journal.htm: www.indianground.com/real estate.htm::. 14. www.nseindia.com::. 15. www.moneycontrol.com/stockquote.::. 16. www.realestatetv.in/company analysis::. 17. www.karvy.com/research/company valuation :. 18. www.indiainfoline.com/industry/realestate reports 19. www.economywatch.com/realestate:.
Journals:
20. Finance India, Indian institute of finance, real estate opening doors to other sectors growthVol.XXI, pp 949-963. 21. Banz,R.W; Relationship between return and market value of common stocks, journal of finance, Vol.9 pp3-18 22. Jaffe.J.Keim & D.B Westerfield(2006)-Market values and stock returns, journal of finance, Vol.44 No7,pp 135-148 23. Quiros G.P & A. Timmermann: - Firm Size and cyclical variation in stock returns Vol 54 pp1229-1262. 24. Gogal K.R.(2005),Jornal of finance,Feb.2006-various methods to analyse the fund performance pp23-25. 25. Prabhakar H.K.(2006) Facts for You, jan.2007-Real estate performance and volatility aspectspp78-82. 26. Ahuwalia M.S(2005)Southern Economist-portfolio performance of equity shares in stock market pp35-38 27. Arora S.M. Charter Financial analyst(Jan.2008)-Information about various analytical tools is given.pp56-62. 28. Assel K.R.Icfai Reader July 2006-information about the volatility trend in stock market 29. Berla R.K.(2006), Indian journal of commerce-growth of stock market in indiapp42-45 30. Gombia S.K.Sebi Bulletin July 2005:-regulations in capital market and returns pp69-74 31. Mohantu P(jan.2007) Vikalpa-stock returns in India pp25-28

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A

ON PERFORMANCE ANALYSIS OF SELECTED REAL ESTATE COMPANIES

Under the Guidance of: Dr. DHARAMVEER Asstt. Prof, MBA

Submitted By:ANJALI SAKHUJA MBA 4th sem. Roll no.

HARYANA ENGINEERING COLLEGE JAGADHRI-135003

Dr. Kuldeep Singh Principal

TABLE OF CONTENTS DECLARATION CERTIFICATE ACKNOWLEDGEMENT

Five-year fixed rate terms on up to Rs 5 lakhs home loans

Banks to take 10% margin on home loan of up to Rs 5 lakhs

No process, prepayment fees for home loans

Home loan of Rs 5-20 lakhs for maximum 20 years at 9.25%

India banks margin for Rs 5-20 lakhs loan will be 15%

Following questions have to be considered while sampling design

LACK OF PRIMARY DATA:

CHAPTER 4 Real Estate Investment

4.1 Real Estate FDI

for wholly owned subsidiaries - US$ 10 million

3) Time frame & rules

Market price of Turnover stock (Rs lakh) 108423 1057

Market price of Turnover stock (Rs lakh) 1515 653

Market price of Turnover stock (Rs lakh) 2252 2029

09-08-2008 28-02-2009 PARSVNATH

Market price of Turnover stock (Rs lakh) 10854 19048

Determination of coefficient of Elasticity of trading:

CHANGE IN MARKET PRICE OF STOCK (%) FROM 09-08-2008 TO 28-02-2009

CET FOR OMAXE STOCK = =

CET FOR ANSAL API STOCK = -49.91/ -11.71 = 4.262

CET FOR PASVNATH STOCK = 14.74/ -20.26 ` = 0.728

1) MEASURE FOR SHARPE'S PORTFOLIOS PERFORMANCE

2) TREYNOR'S PERFORMANCE MEASURES FOR PORTFOLIOS

PERFORMANCE EVALUATION OF DLF

X=19.76 (X) =831.48

y=Y-Y X =index return Y = fund return n= no. of years

Beta = n XY ( x y) / n x (x) = 7663.77/4598.43 = 1.67 . Standard Deviation = y N

Where Y =3.19/6 = 0.531 = 2160.88/6 = 18.97

Alpha = Y-X Y =3.19/6 = 0.531 X =19.76/6 = 3.293 = .531-(1.67)*3.293 = -4.96

rf= 6.5% RP= 0.531 Tn= 0.531-0.065/1.67 = 0.279

PERFORMANCE EVALUATION OF OMAXE

X=19.76 (X) =831.48

y=Y-Y X =index return Y = fund return n= no. of years

Beta = n XY ( x y) / n x (x) = 4917.1/4598.43 = 1.069 Standard Deviation = y N

Where Y =-10.32/6 = -1.72 = 1832.51/6 = 17.47

Alpha = Y-X Y =-10.32/6 = -1.72 X =19.76/6 = 3.293 = .-1.72-(1.069)*3.293 = -5.24

PERFORMANCE EVALUATION OF ANSAL API

X=19.76 (X) =831.48

y=Y-Y X =index return Y = fund return n= no. of years

Alpha = Y-X Y =17.73/6 = 2.955 X =19.76/6 = 3.293 = .2.955-(1.339)*3.293 = -0.565

rf= 6.5% RP= 2.955 Tn= 2.955-0.065/1.67 = 2.158

PERFORMANCE EVALUATION OF PARSVNATH

y=Y-Y X =index return Y = fund return n= no. of years

Sharpe's index S = RP Rf /p rf= 6.5% p = 20.49 RP= 0.243

St= 0.308-0.065/20.49 = 0.012

rf= 6.5% RP= 0.243 Tn= 0.308-0.065/1.183 = 2.158

PERFORMANCE EVALUATION OF UNITECH

X=19.76 (X) =831.48

y=Y-Y X =index return Y = fund return n= no. of years

Beta = n XY ( x y) / n x (x) = 4930.5/4598.43 = 1.072 .

Standard Deviation = y N Where Y =54.24/6 = 9.04 = 2813.54/6 = 21.65

Alpha = Y-X Y =54.24/6 = 9.04 X =19.76/6 = 3.293 = 9.04-(1.072)*3.293 = 5.51

rf= 6.5% RP= 9.4 Tn= 9.4-0.065/1.072 = 8.372

SHARPE INDEX 0.6 0.4 0.2 0 -0.2

8.372 TREYNOR INDEX 0.205

5.51 JENSON INDEX -4.92