INDUSTRY PROFILE

Broking Firm

A brokerage firm, or simply brokerage, is a financial institution that

facilitates the buying and selling of financial securities between a buyer and
a seller. Brokerage firms serve a clientele of investors who trade public
stocks and other securities, usually through the firm's agent stockbrokers.

The staff of this type of brokerage firm is entrusted with the responsibility of
researching the markets to provide appropriate recommendations and in so
doing they direct the actions of pension fund managers and portfolio
managers alike.

Security market

Securities market is a component of the wider financial market where

securities can be bought and sold between subjects of the economy, on the
basis of demand and supply. Securities markets encompasses equity
markets, bond markets and derivatives
Markets where prices can be determined and participants both professional
and non professionals can meet.

Securities markets can be split into two levels. Primary markets, where new
securities are issued and secondary markets where existing securities can
be bought and sold. Secondary markets can further be split into organized
exchanges, such stock exchanges and over-the counter where individual
parties come together and buy or sell securities directly. For securities
holders knowing that a secondary market exists in which their securities
may be sold and converted into cash increases the willingness of people to
hold stocks and bonds and thus increases the ability of firms to issue
securities.

There are a number of professional participants of a securities market and

these include; brokerages, broker-dealers, market makers, investment
managers, speculators as well as those providing the infrastructure, such as
clearing houses and securities depositories.A securities market is used in an
economy to attract new capital, transfer real assets in financial assets,
determine price which will balance demand and supply and provide a means
to invest money both short and long term.
Primary market

The primary market is that part of the capital markets that deals with the
issue of new securities. Companies, governments or public sector
institutions can obtain funding through the sale of a new stock or bond
issue. This is typically done through a syndicate of securities dealers. The
process of selling new issues to investors is called underwriting. In the case
of a new stock issue, this sale is a public offering. Dealers earn a
commission that is built into the price of the security offering, though it can
be found in the prospectus. Primary markets create long term instruments
through which corporate entities borrow from capital market.

Secondary market

The secondary market, also known as the aftermarket, is the financial

market where previously issued securities and financial instruments such
as stock, bonds, options, and futures are bought and sold. The term
"secondary market" is also used to refer to the market for any used goods or
assets, or an alternative use for an existing product or asset where the
customer base is the second market. Stock exchange and over the counter
markets.

Stock market

A stock market or equity market is the aggregation of buyers and sellers of

stocks (shares).these are securities listed on a stock exchange as well as
those only traded privately. The stocks are listed and traded on stock
exchanges which are entities specialized in the business of bringing buyers
and sellers of stocks and securities together.

The stock market is one of the most important sources for companies to
raise money. This allows businesses to go public, or raise additional capital
for expansion. The liquidity that an exchange provides affords investors the
ability to quickly and easily sell securities. This is an attractive feature of
investing in stocks, compared to other less liquid investments such as real
estate.

History has shown that the price of shares and other assets is an important
part of the dynamics of economic activity, and can influence or be an
indicator of social mood. Rising share prices, for instance, tend to be
associated with increased business investment and vice versa. Share prices
also affect the wealth of households and their consumption. Therefore,
central bank tends to keep an eye on the control and behavior of the stock
market and, in general, on the smooth operation of financial system
functions. Financial stability is the raisond'tre of central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that
they collect and deliver the shares, and guarantee payment to the seller of a
security. This eliminates the risk to an individual buyer or seller that the
counterparty could default on the transaction.

Company profile

Angel Broking is an Indian Stock Broking firm established in 1987. The

company is a member of the Bombay Stock Exchange (BSE), National Stock
Exchange (NSE), National Commodity & Derivatives Exchange Limited
(NCDEX) and Multi Commodity Exchange of India Limited (MCX).It is a
depository participant with Central Depository Services Limited (CDSL).The
company has 8500+ sub-brokers and franchisee outlets in more than 850
cities across India.
The company Angel Broking provides financial services to retail clients.
Their services include online broking, depository, commodity trading and
investment advisory services. solutions such as personal loans and
insurance are also delivered by this company. In 2006, the company started
its Portfolio Management Services (PMS), IPOs business and Mutual Funds
Distribution (MFD) arm. The company publishes research reports on areas
related to investment broking.
Angel Broking Private Limited

Angel Broking Logo

Type Private
Stock Broker and Financial
Industry
services
Headquarter
Mumbai, India
s
Dinesh Thakkar
Key people
(Chairman & Managing Director)
Services Equity Trading
Commodities
 Portfolio Management
Services
Mutual funds
Life insurance
IPO
Depository Services
Investment Advisory

Angel Commodities
Broking Pvt. Ltd.
Angel Fin cap Pvt. Ltd.
Angel Financial Advisors
Subsidiaries Pvt. Ltd.
Angel Securities Ltd.
Website www.angelbroking.com

Products & Services

Angel Broking offers products such as Angel Eye, Angel SpeedPro, Angel
Trade and Angel Swift for online trading. Angel Eye is a browser trading
application; SpeedPro is a trading platform application; Angel Trade offers
an online trading platform for share investors, while Swift consists of a
trading app for small devices.

History
Entrepreneur Dinesh Thakkar started his business in 1987 with a capital of
Five Lakhs Indian Rupees and lost half of the money within eight months. In
1989, he started off again as a sub-broker. Later, Angel Broking was
incorporated as a wealth management, retail and corporate broking firm in
December, 1997. In November 1998, Angel Capital and Debt Market Ltd.
gained membership of National Stock Exchange as a legal entity. The
company opened its commodity broking Division in April, 2004. In November
2007, Birla Sun Life Insurance joined hands with Angel Broking for
distribution of its insurance products. In 2007 the World Bank arm
International Finance Corporation bought 18% stake in Angel Broking.

Awards
2009 - 'Broking House with Largest Distribution Network' Award and
'Best Retail Broking House' Award at BSE IPF-D&B Equity Broking
Awards
 2012 - BSE IPF-D&B Equity Broking Award for Best Retail Broking
House
2012-13 - Among BSE Top 10 Performers in Equity Segment (Retail
Trading) FY 2012-13
2013 - BSE-IPF D&B Equity Broking Award for Broking House with
Largest Distribution Network
2013 - BSE-IPF D&B Equity Broking Award for 'Best Retail Equity
Broking House
2013-14 - Awarded Top Three Clients Traded Members in Equity by
the BSE
2014 - BSE-IPF D&B Equity Broking Award for Broking

INTRODUCTION ABOUT TOPIC

Detailed Idea about Healthcare Sector

India is a country of rich heritage and culture. With its vast geographical
expanse, varied climatic conditions, and environment, India has been home
to many ancient civilizations and many a ways of life. From different
religions, languages, cuisines, climates to societies, India has been amassing
and evolving rich diversity and cultural ethos that are unparalleled in other
regions and countries

Where there was man, there was a need for medicine. Since India has been
cradle to ancient civilizations and early organized settlements; Medicine, as
it is today, is but the cumulative knowledge gathered since centuries, along
with the evolution of man.

Health is defined as the physical, mental, emotional, spiritual and social

wellbeing of an individual. Based on this definition, it is but obvious that
health and healthcare were present since the time of man. Historical texts
are replete with citings and references of healthcare practices since time
immemorial.

World renowned medical historian, Henry Siegerist stated that:

Given the ancient knowledge and practices, India initiated its system of
healthcare on firm ground, involving not just the physical ailment of the
patient but also the environment and other elements in its system. Matters
of health and illness were interpreted as anthropological or cosmological
balances, imbalances and disturbances.

The illness and disease was not a micro ailment but phenomena that
involved the persons physical, mental, spiritual, and supernatural essence.
Illness and diseases were considered to be acts of evil or result of evil deeds;
the panacea for which was witchcraft, worship, meditation, and other
supernatural and paranormal practices.

Unlike modern medicine, the ancient medicine dealt with plants, minerals,
spirits, stars, voodoo, energy, appeasing to gods, and more. There were
priests, herbalists, magicians, sorcerers, and heads who spread their
intuitive arms around the patient(s) to diagnose, cure and heal.

Also when compared to other systems of medicine, the Indian system of

medicine was comprehensive and involved aspects such as plants, minerals,
environment, spirit, climate, body composition and more.

The Indian system of medicine was not about illness and standalone
treatment. It has combined many concepts such as diet, climate, beliefs,
supernatural, empirical, and culture into treatment of the person.
Fashioned on these multi-dimensional approaches was the Indian system of
healthcare.Provision of healthcare was just not about a bed-facility on which
the sick person was treated. Traditional healthcare involved the physician
and his patient completely and the physician was aware of all aspects of his
patients life and lifestyle before arriving at any diagnosis or treatment plan.

While healthcare and medical advancements were prevalent all over the
world, India has been developing and updating its ancient systems of
medicine. Indian system of healthcare and medicine gradually updated and
enhanced its repertoire with concepts borrowed from other systems of
medicine. Indian history deals with cross country trade practices, invasion
of foreign rulers and evolution of ancient India in many ways. These changes
brought with it their unique systems of healing and treating that were as
beneficial yet as limited as the local medicine. It is through the open
exchange of knowledge and cross cultural interaction that India now boasts
of two truly unique Indigenous systems of medicine that do not micro-
manage the illnesses, namely the Ayurveda and the Siddha.
Capital Asset Pricing Model CAPM

The general idea behind CAPM is that investors need to be compensated in

two ways time value of money and risk. The time value of money is

represented by the risk-free rate in the formula and compensates the

investors for placing money in any investment over a period of time. The

other half of the formula represents risk and calculates the amount of

compensation the investor needs for taking on additional risk. This is

calculated by taking a risk measure (beta) that compares the returns of the

asset to the market over a period of time and to the market premium (Rm-

Rf).

CAPM MODEL (Markowitz Portfolio Theory)

Harry M. Markowitz is credited with introducing new concepts of risk

measurement and their application to the selection of portfolios.

He started with the idea of risk aversion of average investors and their desire

to maximize the expected return with the least risk.

Markowitz model is thus a theoretical framework for analysis of risk and

return and their inter-relationships.

He used the statistical analysis for measurement of risk and mathematical

programming for selection of assets in a portfolio in an efficient manner. His

framework led to the concept of efficient portfolios. An efficient portfolio is

expected to yield the highest return for a given level of risk or lowest risk for

a given level of return.

Markowitz generated a number of portfolios within a given amount of money

or wealth and given preferences of investors for risk and return.

The Optimal Portfolio

The optimal portfolio concept falls under the modern portfolio theory. The

theory assumes (among other things) that investors fanatically try to

minimize risk while striving for the highest return possible. The theory

states that investors will act rationally, always making decisions aimed at

maximizing their return for their acceptable level of risk.

The optimal portfolio was used in 1952 by Harry Markowitz, and it shows us

that it is possible for different portfolios to have varying levels of risk and

return. Each investor must decide how much risk they can handle and than

allocate (or diversify) their portfolio according to this decision.

The chart below illustrates how the optimal portfolio works. The optimal-

risk portfolio is usually determined to be somewhere in the middle of the

curve because as you go higher up the curve, you take on proportionately

more risk for a lower incremental return. On the other end, low risk/low

return portfolios are pointless because you can achieve a similar return by

investing in risk-free assets, like government securities.

You can choose how much volatility you are willing to bear in your portfolio

by picking any other point that falls on the efficient frontier. This will give

you the maximum return for the amount of risk you wish to accept.

Optimizing your portfolio is not something you can calculate in your head.

There are computer programs that are dedicated to determining optimal

portfolios by estimating hundreds (and sometimes thousands) of different

expected returns for each given amount of risk.

Pronounced as though it were spelled "cap-m", this model was originally

developed in 1952 by Harry Markowitz and fine-tuned over a decade later by

others, including William Sharpe.

The capital asset pricing model (CAPM) describes the relationship between

risk and expected return, and it serves as a model for the pricing of risky

securities.

CAPM says that the expected return of a security or a portfolio equals the

rate on a risk-free security plus a risk premium. If this expected return does

not meet or beat our required return, the investment should not be

undertaken.

The commonly used formula to describe the CAPM relationship is as follows:

For example, let's say that the current risk free-rate is 8%, and the S&P 500

is expected to return to 15% next year. You are interested in determining the

return that Joe's Oyster Bar Inc (JOB) will have next year. You have

determined that its beta value is2.4. The overall stock market has a beta of

1.0, so JOB's beta of 2.4 tells us that it carries more risk than the overall

market; this extra risk means that we should expect a higher potential

return than the 15% of the S&P 500. We can calculate this as the following:

Required (or expected) Return = RF Rate + (Market Return - RF Rate)*Beta

Required (or expected) Return = 8% + (15% - 8%)*2.4

Required (or expected) Return = 24.8%

What CAPM tells us is that Joe's Oyster Bar has a required rate of return of

24.8%. So, if you invest in JOB, you should be getting at least 24.8% return

on your investment. If you don't think that JOB will produce those

Kinds of returns for you, then you should consider investing in a different

company.

It is important to remember that high-beta shares usually give the highest

returns. Over a long period of time, however, high beta shares are the worst

performers during market declines (bear markets). While you might receive

high returns from high beta shares, there is no guarantee that the CAPM

return is realized.

When it comes to putting a risk label on securities, investors often turn to

the capital asset pricing model (CAPM) to make that risk judgment. The goal

of CAPM is to determine a required rate of return to justify

adding an asset to an already well-diversified portfolio, considering that

asset's non-diversifiable risk.

The CAPM was introduced in 1964 by John Lintner, Jack Treynor, William

Sharpe and Jan Mossin. The model is an extension of the earlier work of

Harry Markowitz on diversification and modern portfolio theory. William

Sharpe later received a Nobel Memorial Prize in Economics along with

Merton Miller and Markowitz for their further contributions to CAPM-based

theory. (To keep reading on these scholars, see Nobel Winners Are Economic

Prizes.)
As said above, the CAPM takes into account the non-diversifiable market

risks or beta () in addition the expected return of a risk-free asset. While

CAPM is accepted academically, there is empirical evidence suggesting that

the model is not as profound as it may have first appeared to be. Read on to

learn why there seems to be a few problems with the CAPM. (To learn more,

read The Capital Asset Pricing Model: An Overview.)

The Formula of CAPM Model:

The CAPM is a model for pricing an individual security or portfolio. For

individual securities, we make use of the security market line (SML) and its

relation to expected return and systematic risk (beta) to show how the

market must price individual securities in relation to their security risk

class. The SML enables us to calculate the reward-to-risk ratio for any

security in relation to that of the overall market. Therefore, when the

expected rate of return for any security is deflated by its beta coefficient, the

reward-to-risk ratio for any individual security in the market is equal to the

market reward-to-risk ratio, thus:

The market reward-to-risk ratio is effectively the market risk premium and

by rearranging the above equation and solving for E(Ri), we obtain the

Capital Asset Pricing Model (CAPM)

 Where:

is the expected return on the capital asset

is the risk-free rate of interest such as interest arising from government

bonds

(the beta) is the sensitivity of the expected excess asset returns to the

expected excess market returns, or also

is the expected return of the market

is sometimes known as the marketpremium (the difference

between the expected market rate of return and the risk-free rate of return).

is also known as the risk premium

Restated, in terms of risk premium, we find that:

Which states that the individual risk premium equals

the marketpremium times ?

Assumptions of Markowitz Theory

1. Investors are rational and behave in a manner as to maximize their. Utility

with a given level of income or money.

2. Investors have free access to fair and correct information on the returns

and risk.

3. The markets are efficient and absorb the information quickly and

perfectly.

4. Investors are risk averse and try to minimize the risk and maximize

return.

5. Investors base decisions on expected returns and variance or standard

deviation of these returns from the mean.

6. Investors prefer higher returns to lower returns for a given level of risk.

A portfolio of assets under the above assumptions for a given level of risk.

Other assets or portfolio of assets offers a higher expected return with the

same or lower risk or lower risk with the same or higher expected return.

Diversification of securities is one method by which the above objectives can

be secured. The unsystematic and company related risk can be secured. The

unsystematic and company related risk can be reduced by diversification

into various securities and assets whose variability is different and offsetting

or put in different words which 3re negatively correlated or not correlated at

all.

Harry Markowitz developed the portfolio model. This model includes not only

expected return, but also includes the level of risk for a particular return.

Markowitz assumed the following about an individual's investment behavior:

Given the same level of expected return, an investor will choose the

investment with the lowest amount of risk.

Investors measure risk in terms of an investment's variance or

standard deviation.
 For each investment, the investor can quantify the investment's

expected return and the probability of those returns over a specified

time horizon.

Investors seek to maximize their utility.

Investors make decision based on an investment's risk and return,

therefore, an investor's utility curve is based on risk.

Risk & return

The initial reaction to these assumptions was that they seem unrealistic;

how could the outcome from this theory hold any weight using these

assumptions? While the assumptions themselves can easily be the cause of

failed results, implementing the model has proved difficult as well.

Systematic and Unsystematic Ris

Total risk to a stock not only is a function of the risk inherent within the stock

itself, but is also a function of the risk in the overall market.

Systematic risk

Systematic risk is the risk associated with the market. When analyzing the

risk of an investment, the systematic risk is the risk that cannot be

diversified.

Beta:

Beta is the measure of a stock's sensitivity of returns to changes in the

market. It is a measure of systematic risk.

Beta is thus a measure of Systematic Risk of the market only and does not

represent the unsystematic risk. Market Risk is represented by BSE National

Index, in the above formula. In the regression equation given below used by

Sharpe the unsystematic Risk is represented by the error term, namely, (e),

while a or a is the constant slope of the regression line and Bet (b) is the

measure of Systematic Risk.

Beta interpretation

Beta = 1.0 Stock's return has same volatility as the market return
 Beta > 1.0 Stock's return is more volatile than the market return
Beta < 1.0 Stock's return is less volatile than the market return

Unsystematic risk

Unsystematic risk is the risk inherent to a stock. This risk is the aspect of

total risk that can be diversified away when building a portfolio.

r:

The ticker tape is updated in real time and informs investors about the price

and volume at which a stock is trading and how its price compares to the

previous day's close. During the day, it displays heavily traded stocks and

the stocks of companies with major news most frequently; while the market

is closed, it displays the closing prices of all publicly-traded stocks in

alphabetical order.

In formulas, lower case "r" usually represents the required rate of return. RE

is usually expected return. RM is usually the return on the market as a

whole. Rf or Rrf is usually the risk free rate of return. R1, R2, R3, Ri are

return in the first, second, third and it period respectively.

r2 :

A measure of the squared correlation between a stock's performance and

that of the broader market as measured by an appropriate index. In other

words, it measures how reliable the stock's beta is in judging its market

sensitivity. Though a little more esoteric, R-Squared is similar to Beta, but in

this case tells you what proportion of a stock's risk is market-related, a

figure that cannot be adjusted by diversification the way beta can. A

completely diversified portfolio would be perfectly correlated to the market,

indicative of an R-Squared figure of 1.0. An R-Squared of 0, on the other

hand, indicates that the beta measurement is irrelevant to its actual

performance.
[n xy - (x)

(y)]2
2
r = -------------------------------------------
[(Nx2 (x) 2]* [Ny2 (y)2]

SLM & CLM

Definition of 'Security Market Line - SML'

A line that graphs the systematic, or market, risk versus return of the whole

market at a certain time and shows all risky marketable securities, also

referred to as the "characteristic line".

The SML essentially 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 security market line is a useful tool in determining whether an asset

being considered for a portfolio offers a reasonable expected return for risk.

Individual securities are plotted on the SML graph. If the security's risk

versus expected return is plotted above the SML, it is undervalued because

the investor can expect a greater return for the inherent risk. A security
plotted below the SML is overvalued because the investor would be accepting

less return for the amount of risk assumed.

Given the SML reflects the return on a given investment in relation to risk, a

change in the slope of the SML could be caused by the risk premium of the

investments. Recall that the risk premium of an investment is the excess

return required by an investor to help ensure a required rate of return is

met. If the risk premium required by investors was to change, the slope of

the SML would change as well.

Security market line

Security market line:

Security market line (SML) is the graphical representation of the Capital

asset pricing model. It displays the expected rate of return of an individual

security as a function of systematic, non-diversifiable risk (its beta).The Y-

intercept of the SML is equal to the risk-free interest rate. The slope of the

SML is equal to the market risk premium and reflects the risk return trade

off at a given time:

When used in portfolio management, the SML represents the investment's

opportunity cost (investing in a combination of the market portfolio and the

risk-free asset). All the correctly priced securities are plotted on the SML.

The assets above the line are undervalued because for a given amount of

risk (beta), they yield a higher return. The assets below the line are

overvalued because for a given amount of risk, they yield a lower return.

There is a question what the SML is when beta is negative. A rational

investor should reject all the assets yielding sub-risk-free returns, so beta-

negative returns have to be higher than the risk-free rate. Therefore, the

SML should be V-shaped.

Security Market Line, Treynor ratio and Alpha. All of the portfolios on the

SML have the same Treynor ratio as does the market portfolio, i.e. In fact,

the slope of the SML is the Treynor ratio of the market portfolio since.

A stock picking rule of thumb for assets with positive beta is to buy if the

Treynor ratio is above the SML and sell if it is below (see figure above).

Indeed, from the efficient market hypothesis, it follows that we cannot beat

the market. Therefore, all assets should have a Treynor ratio less than or

equal to that of the market. In consequence, if there is an asset whose

Treynor ratio is bigger than the market's then this asset gives more return

for unity of systematic risk (i.e. beta), which contradicts the efficient market

hypothesis.

This abnormal extra return over the market's return at a given level of risk is

what is called the alpha.

Definition of Capital Market Line - CML

As seen previously, adjusting for the risk of an asset using the risk-free rate,

an investor can easily alter his risk profile. Keeping that in mind, in the
context of the capital market line (CML), the market portfolio consists of

the combination of all risky assets and the risk-free asset, using market

value of the assets to determine the weights. The CML line is derived by the

CAPM, solving for expected return at various levels of risk.

Markowitz' idea of the efficient frontier, however, did not take into account

the risk-free asset. The CML does and, as such, the frontier is extended to

the risk-free rate as illustrated below:

Systematic and Unsystematic Risk

Total risk to a stock not only is a function of the risk inherent within the

stock itself, but is also a function of the risk in the overall market.

Systematic risk is the risk associated with the market. When analyzing the

risk of an investment, the systematic risk is the risk that cannot be

diversified away. Beta is the measure of a stock's sensitivity of returns to

changes in the market. It is a measure of systematic risk.

Betas do not remain stable over time

Stability of beta, beta is a measure of a securities future risk. But investors

do not further data to estimate beta. What they have are past data about the

share prices and the market portfolio. Thus, they can only estimate beta

based on historical data. Investors can use historical beta as the measure of

future risk only if it is stable over time. Most research has shown that the

betas of individual securities are not stable over time. This implies that

historical betas are poor indicators of the future risk of securities.

Capital asset pricing model is a useful device for understanding the risk

return relationship in spite of its limitations. It provides a logical and

quantitative approach for estimating risk. One major problem is that many

times the risk of an asset is not captured by beta alone.

 Unsystematic risk is the risk inherent to a stock. This risk is the aspect of

total risk that can be diversified away when building a portfolio.

Capital asset pricing model has the following limitations:

It is based on unrealistic assumptions.

It is difficult to test the validity of Capital asset pricing model.
Betas do not remain stable over time.
CAPM is a single period model.

Unrealistic assumptions

Capital asset pricing model is based on a number of assumptions that are

far from the reality.

For example it is very difficult to find a risk free security. A short term

highly liquid government security is considered as a risk free security.

It is unlikely that the government will default, but inflation causes uncertain

about the real rate of return. The assumption of the equality of the lending

and borrowing rates is also not correct. In practice these rates differ.

Further investors may not hold highly diversified portfolios or the market

indices may not well diversify.

Under these circumstances capital asset pricing model may not accurately

explain the investment behavior of investors and beta may fail to capture the

risk of investment.

STATISTICAL MEASURES

EXPECTED RETURN
 With the Markowitz approach to investing, the focus of the investor is

on terminal (or end-of-period) wealth W1. That is, in deciding which portfolio

to purchase with his or her initial (or beginning-of-period) wealth W 0, the

investor should focus on the effect that the various portfolios have on W 1.

This effect can be measured by the expected return and standard deviation

of each portfolio.

STANDARD DEVIATION

Standard Deviation is by far the most important and widely used

measure of studying variation. The standard deviation is often used by

investors to measure the risk of a stock or a stock portfolio. The basic idea is

that the standard deviation is a measure of volatility. The more a stocks

return vary from the stocks average return, the more volatile the stock. The

standard deviation of the returns is a better measure of volatility than the

range because it takes all the values in to account.

BETA

The beta value for an index itself is taken as one. Equity funds can

have beta values, which can be above one, less than one or equal to one. By

multiplying the beta value of a fund with the expected percentage movement

of an index, the expected movement in the fund can be determined.

Example:-

If a fund has a beta of 1.2 and the market is expected to move up by

ten per cent, the fund should move by 12 per cent (obtained as 1.2

multiplied by 10). Similarly if the market loses ten per cent, the fund should

lose 12 per cent (obtained as 1.2 multiplied by minus 10). This shows that a
fund with a beta of more than one will rise more than the market and also

fall than market.

Beta depends on the index used to calculate it. It can happen that the

index bears no correlation with the movements in the fund. For example, if

beta is calculated for a large-cap fund against a mid-cap index, the resulting

value Will have no meaning.

RISK FREE RATE (RF)

The risk-free rate is the return on a security (or a portfolio of

securities) that is free from default risk and is uncorrelated with returns

from anything else in the economy. The rate which is commonly used as

risk-free rate is the rate on a short term government security like the 90

days, 364 days Treasury bill. The choice may depend largely on the

judgment of the analyst.

 RESEARCH METHODOLOGY

PROBLEM STATEMENT

Whether HealthcareSecurities are overpriced or underpriced?

IMPORTANCE OF STUDY

The study helps in comparing expected return with estimated.

It helps to know which securities are under price & over price.
To analyse risk & return securities.
To valuation of securities.

Objectives of the study

Primary objective

Valuation of Healthcare Sector Securities By using CAPM model SML and

CML

Secondary Objective
To Compare expected return with estimated return.
To Valuation of securities.
 To know which securities under price and over price.
Objective of this project provide portfolio techniques for getting higher return

on investment.

Limitation of the study

Use of historical data

As in the project there are only 10 companies under

consideration but there are many companies in NSE. So it is not

possible to generalize the result.

In this report, information written by me is as per my limited

understanding of the concerned project

RESEARCH DESIGN

Research design is the plan, structure and strategy of investigation

conceived so as to obtain answers to research questions and to control

variance. It is the specification of methods and procedures for acquiring the

information needed.

It is an overall framework of the project that indicates what

information is to be collected from which sources and by what procedures.

There are three types of research design,

1. Exploratory Research Design.

2. Descriptive Research Design.

3. Causal Research Design.

Descriptive research design hasbe used because in this research design, the

research has got very specific objectives, clear-cut data requirements. The

recommendation/findings in a descriptive research are definite.

Data collection method

There are two sources of data:-

1. Primary Sources of Data

2. Secondary Sources of Data

For this project, I have used the majority of Secondary source of data; these

data are those, which have been gathered earlier for some other purpose.

Secondary Data will be obtained from websites for daily data from 1-Jan-

2011 to 31- june-2014.

Sample size

10 companies of Healthcare sector have been employed in this research.

Data analysis tool

MS excel, Measure of Central Tendency, Measure of Dispersion, and

Measure of Association.
LIST OF THE COMPANY

Sr. Company Name

1. Aurobindopharma Ltd.

2. Biocon Ltd.

3. Cadila Healthcare Ltd.

4. Cipla Ltd.

5. Dr.Reddys Laboratories Ltd.

6. Glenmark Pharmaceuticals Ltd.

7. Divis Laboratories Ltd.

 8. Sun Pharmaceuticals Industries Ltd.

9. Apollo Hospitals Enterprise Ltd.

10. Lupin Ltd.

DATA ANALYSIS AND INTERPRETATION

Standard Deviation

Standard

Company Name deviation

AurobindoPharma Ltd. 2.5089

Biocon Ltd. 2.7864
Cadila Healthcare Ltd. 1.4365
Cipla Ltd. 2.3549
Dr.Reddys Laboratories Ltd. 2.8964
Glenmark Pharmaceuticals Ltd. 1.4879
Divis Laboratories Ltd. 1.9436
Sun Pharmaceuticals Industries

Ltd. 2.1212
Apollo Hospitals Enterprise Ltd. 3.4589

Lupin Ltd. 1.4563

Interpretation

From the above table, it has been found that there is the highest standard

deviation is in Apollo Hospital i.e.3.4589, it means that there is highest

total risk in Apollo Hospital as compare to other Healthcare sector.

It has been found that there is the lowest standard deviation is in Cadila

healthcare i.e.1.4365, it means that there is lowest total risk in Cadila

Healthcare compare to other Healthcare Sector.The higher the standard

deviation means higher the variability& risk is high, where lower the

standard deviation means lower variability and lower the risk.

Beta(B)

Company Name Beta

AurobindoPharma Ltd. 1.5320
Biocon Ltd. 1.3478
Cadila Healthcare Ltd. 1.8564
Cipla Ltd. 1.4458
Dr.Reddys Laboratories Ltd. 1.5321
Glenmark Pharmaceuticals Ltd. 1.4056
Divis Laboratories Ltd. 1.3256
Sun Pharmaceuticals Industries

Ltd. 1.2564
Apollo Hospitals Enterprise Ltd. 1.9025
Lupin Ltd. 0.3254
 Interpretation

In above table shows that the beta level is above 1, its shows that the more

volatile and more risk in broader market.

The beta level is below 1, its shows that the stock is less volatile and less

risky than broader market.

Like, 1% change in healthcare securities brings 1.9025% change inApollo

Hospitals Enterprise Ltd. i.e. high risk associated withApollo Hospitals.

And 1% change in healthcare securities brings 0.3254% change inLupin

Ltd. I.e. low risk associated withLupin Ltd.

EXPECTED RETURN

Expected

Company Name Return

AurobindoPharma Ltd. 0.3567
Biocon Ltd. 1.6452
Cadila Healthcare Ltd. 0.7761
Cipla Ltd. 0.1257
Dr.Reddys Laboratories Ltd. 0.6939
Glenmark Pharmaceuticals Ltd. 0.3725
Divis Laboratories Ltd. 0.2589
Sun Pharmaceuticals Industries

Ltd. 1.5432
Apollo Hospitals Enterprise Ltd. 1.8624
Lupin Ltd. 0.4792
Interpretation

From above table, it has been shows that the highest expected return is

1.8624of theApollo Hospitals Enterprise Ltd.

From above table, It has been shows that the lowest expected return is

0.1257of the Cipla Ltd.

Company name Standard Beta Rm-Rf (Rm- Rf+(R

deviation Rf) m-Rf)

AurobindoPharm

a Ltd. 2.5089 1.5320 0.2767 0.4239 0.5039

Biocon Ltd. 2.7864 1.3478 0.7267 0.9794 1.0594
Cadila

Healthcare Ltd. 1.4365 1.8564 0.6961 1.2922 1.3722

Cipla Ltd. 2.3549 1.4458 0.0457 0.0660 0.1460
Dr.Reddys

Laboratories Ltd. 2.8964 1.5321 0.6139 0.9405 1.0205

Glenmark

Pharmaceuticals

Ltd. 1.4879 1.4056 0.2925 0.4111 0.4911

Divis

Laboratories Ltd. 1.9436 1.3256 0.1789 0.2371 0.3171

Sun

pharmaceuticals

Industries Ltd. 2.1212 1.2564 0.6714 0.8435 0.9235

Apollo Hospitals

Enterprise Ltd. 3.4589 1.9025 0.7354 1.3990 1.4791

Lupin Ltd. 1.4563 0.3254 0.3992 0.1299 0.2099
 CALCULATION OF CAPM

Interpretation

In above table, we shows that the estimated return of Apollo Hospital i.e.

1.4791 is more than other healthcare sector.

While, we shows that estimated return of

Risk free rate of 8%
Cipla Ltd. i.e.0.1460 is less than other
return
Rm 0.03047 healthcare sector.

3 VALUATION OF SECURITIES

Company name Expected Estimated Under price /

Return Return over price

AurobindoPharma Ltd. 0.3567 0.5039 Over price
Biocon Ltd. 1.6452 1.0594 Under price
Cadila Ltd. 0.7761 1.3722 Over price
Cipla Ltd. 0.1257 0.1460 Over price
Dr.Reddys Laboratories

Ltd. 0.6939 1.0205 Over price

Glenmark

Pharmaceuticals Ltd. 0.3725 0.4911 Over price

Divis Laboratories Ltd. 0.2589 0.3171 Over price
Sun Pharmaceuticals

Industries Ltd. 1.5432 0.9235 Under price

Apollo Hospitals

Enterprise Ltd. 1.8624 1.4791 Under price

Lupin Ltd. 0.4792 0.2099 Under price
Interpretation
Those healthcare securities is underpriced, there is a potentiality of shares

to touch the pick level. So investor can buy this security.

In above table, shows that list of securities have overprice because of

estimated return is greater than expected return. So investor can sell this

security.

FINDINGS

From the research it has been found that, there is a highest return of

Apollo Hospitals Enterprise Ltd. i.e. 1.8624 compare to other

healthcares.

From the research it has been found that the risk of market is1.1088.

From the findings it seen that, the highest standard deviation of

Apollo Hospitals Enterprise Ltd.that is 3.4589, and therefore the high

volatile in this security.

From the research it seen that, the lowest standard deviation of

Cadila Healthcare Ltd. that is 1.4365, and therefore the low volatile in

this security.

From the research it has been found that, the expected return on the

basis of average returns of healthcare security.

 From the research it has been found that the 1% change in beta

brings 1.9025% (high) changes in Apollo Hospitals Enterprise Ltd.

From the findings the 1% change in beta brings 0.3254 % (low)

change in Lupin Ltd..

On the basis of CAPM calculation, the estimated return of Apollo

Hospitals Enterprise Ltd is 1.4791 is high.

CONCLUSION
There are four healthcare securities which are undervalued i.e.Biocon Ltd.,

Sun Pharmaceuticals Industries Ltd., Apollo Hospitals Enterprise Ltd.,

Lupin Ltd.. So investor should invest their money in underpriced security

because there is potentiality to reach pick level.

There are six healthcare securities which are overvalued

i.e.AurobindoPharma Ltd., Cadila Ltd., Cipla Ltd., Dr.Reddys Laboratories

Ltd., Glenmark Pharmaceuticals Ltd., Divis Laboratories Ltd. etc.so it

should not be investable because already cross the expectation level.

Beta and standard deviation are always increases similarly i.e. Apollo

Hospitals Enterprise Ltd beta and standard deviation both are increases

similarly.
RECOMMENDATION

Apollo Hospitals Enterprise Ltdhas highest return &moderate to high

risk so from the research recommend that investors who are risk

takers invest money in Apollo Hospitals Enterprise Ltd.

Investors who are risk averse hold money in Cadila Healthcare

Ltd.because it has low risk & moderate to low return.

It is better to invest / hold money in Under Price Securities likeBiocon

Ltd., Sun Pharmaceuticals Industries Ltd., Apollo Hospitals

Enterprise Ltd., Lupin Ltd.considering risk & return which leads to

better return comparer to risk.

The securities which return is positive and valued at Over Price

like.AurobindoPharma Ltd., Cadila Ltd., Cipla Ltd., Dr.Reddys
 Laboratories Ltd., Glenmark Pharmaceuticals Ltd., Divis Laboratories

Ltd., etc are SOLD immediately incurred the future loss.

BIBLIOGRAPHY

Reference Books:

Prasana Chandra financial management, (8th edition), new Delhi ,

Tata McGraw-Hill ,

Pandiyan p. 2011- security Analysis & Portfolio Management, New

Delhi, CAPM Theory, Vikas Publishing House Pvt. Ltd.(P.P.379-408).

Websites:
 http://www.nseindia.com/products/content/equities/equities/eq_sec

urity.htm

http://www.nseindia.com/products/content/equities/indices/historic

al_index_data.htm

http://en.wikipedia.org/wiki/List_of_banks_in_India

http://stockshastra.moneyworks4me.com/wp-

content/uploads/2012/02/Indian-Banking-Industry-structure.png

http://www.slideshare.net/hemanthcrpatna/a-study-on-empherical-

testing-of-capital-asset-pricing-model#

http://www.slideshare.net/Divyathilakan/capm-theory#

http://en.wikipedia.org/wiki/Securities_market