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CHAPTER – III

INDIAN CAPITAL MARKET AND STOCK MARKET EFFICIENCY

3.1. INTRODUCTION

This chapter concerned with the theoretical aspects of Indian Capital Market

and describes the various types of corporate announcements and its significance.

Apart from this part contains a discussion of various companies‘ corporate

announcements type and date of announcements.

3.2. SECURITIES MARKET IN INDIA

The Securities Contract (Regulation) Act, 1956 defines stock exchange as ―an

organization, association or group of persons, incorporated or not, which constitutes,

maintains or provides a market place or facilities for bringing together purchases and

sellers of securities, and includes the market place and facilities maintained by such

an exchange‖1. In Asia the Indian Stock Markets are the oldest one and its history

dates back to 200 years ago. The East India Company was the dominant institution in

business in its loan securities in 18th

century. In 1830‘s business on corporate stocks

and shares in Bank and Cotton presses took place in Bombay. Though the trading list

was broader in 1839, there were only half a dozen brokers recognized by banks and

merchants during 1840 and 1850. The 1850‘s witnessed a rapid development of

commercial enterprise and brokerage business attracted many men into the field and

by 1860 the number of brokers increased to 60. In 1860-61 the American Civil War

broke out and cotton supply from United States of America was stopped; thus, the

‗Share Mania‘ in India began. The number of brokers increased to about 200 to 250.

However, at the end of the American Civil War, in 1865, a disastrous slump began

At the end of the American Civil War, the brokers who thrived out of Civil War in

1874, found a place in a street (now appropriately called as Dalal Street) where they

would conveniently assemble and transact business. In 1887, they formally

established in Bombay, the ―Native Share and Stock Brokers‘ Association‖ (which is

alternatively known as ―The Stock Exchange‖). In 1895, the Stock Exchange

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acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock

Exchange at Bombay was consolidated. The history of Indian stock market is almost

the same as the history of BSE.

The securities market has two interdependent and inseparable segments, the

new issues (primary) market and the stock (secondary) market. The primary market

provides the channel for creation and sale of new securities, while the secondary

market deals in securities previously issued. The securities issued in the primary

market are issued by public limited companies or by government agencies. The

resources in this kind of market are mobilized either through the public issue or

through private placement route. It is a public issue if anybody and everybody can

subscribe for it, whereas if the issue is made available to a selected group of persons

it is termed as private placement. There are two major types of issuers of securities,

the corporate entities who issue mainly debt and equity instruments and the

government (central as well as state) who issue debt securities (dated securities and

treasury bills). The secondary market enables participants who hold securities to

adjust their holdings in response to changes in their assessment of risks and returns.

Once the new securities are issued in the primary market they are traded in the stock

(secondary) market. The secondary market operates through two mediums, namely,

the Over-The-Counter (OTC) market and the exchange-traded market. OTC markets

are informal markets where trades are negotiated. Most of the trading in the

government securities are in the OTC market. All the spot trading where securities

are traded for immediate delivery and payment take place in the OTC market. The

other option is to trade using the infrastructure provided by the stock exchanges. The

exchanges in India follow a systematic settlement period. All the trades taking place

over a trading cycle (day = T) are settled together after a certain time (T+2 day). The

trades executed on exchanges are cleared and settled by a clearing corporation. The

clearing corporation acts as a counterparty and guarantees settlement. A variant of

the secondary market is the forward market, where securities are traded for future

delivery and payment. A variant of the forward market is Futures and Options

market. Presently only two exchanges viz., NSE and BSE provide trading in the

Futures and Options.

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3.3. BOMBAY STOCK EXCHANGE (BSE) OF INDIA

BSE stands for Bombay Stock Exchange and was initially known as ―The

Native Share and Stock Brokers Association‖, the oldest stock market in Asia.

Incorporated in the 1875, BSE became the first exchange in India to be certified by

the administration. It attained a permanent authorization from the Indian government

in 1956 under Securities Contracts (Regulation) Act, 1956. The objectives of the

stock exchanges are:

1. To safeguard the interest of investing public having dealings on the

exchange.

2. To establish and promote honourable and just practices in securities

transactions.

3. To promote, develop and maintain well-regulated market for dealing in

securities.

4. To promote industrial development in the country through efficient

resource mobilization by way of investment in corporate securities.

The BSE accounts for considerable number of listed companies; capital listed

and market capitalization among the stock exchanges on all India basis.

3.4. BOMBAY STOCK EXCHANGE SENSITIVE INDEX (SENSEX)

The Bombay Stock Exchange Sensitive Index most widely followed stock

market index in India, popularly called as SENSEX, reflects the movement of 30

sensitive shares from specified and non-specified groups. The index for any trading

day reflects the aggregate market value of these shares. The base year of SENSEX

was taken as 1978-79. SENSEX today is widely reported in both domestic and

international markets through print as well as electronic media release. Since

September 1, 2003, SENSEX is being calculated on a free-float market capitalization

methodology. Free float represents the non-promoter, non-strategic shareholding. For

example, the free float of ONGC is not even 15 percent because the rest is owned by

the Governement of India and public sector companies. This shift from full market

capitalization to free float market capitalization was effective to conform to the best

global practice.

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The growth of the equity market in India has been phenomenal in the present

decade. Right from early nineties, the stock market witnessed heightened activity in

terms of various bull and bear runs. More recently, real estate caught the fancy of the

investors. SENSEX has captured all these happenings in the most judicious manner.

One can identify the booms and busts of the Indian equity market through SENSEX.

As the oldest index in the country, it provides the time series data over a fairly long

period of time (from 1979 onwards). Small wonder, the SENSEX has become one of

the most prominent brands in the country. The unique nature of capital market

investments forces investors to depend strongly on other fundamental factors to help

them in their investment decision. The performance of securities that represent the

company can be said to depend on the performance of the company itself. The

selection of an investment will helps with fundamental and technical analysis.

3.5. FUNDAMENTAL ANALYSIS

Fundamental analysis is a method of finding out the future price of a stock,

which an investor wishes to buy. These analysts try to estimate the intrinsic worth of

a company‘s share by studying its sales, profits, dividends, management proficiency

and a host of other economic factors that have a bearing on the company‘s

profitability and business prospects. The basic tenets of fundamental analysis, which

is perhaps, the most popular approach by security and financial analysts‘ are:

3.5.1. There is an intrinsic value of a security and this depends upon underlying

economic (fundamental) factors. The intrinsic value can be determined by a

penetrating analysis of the fundamental factors relating to the company, industry and

economy.

3.5.2. At any given point of time, there are some securities for which the prevailing

market prices would differ from their intrinsic value. Sooner or later, of course, the

market price would fall in line with the intrinsic value.

3.5.3. Superior returns can be earned by buying undervalued securities (securities

whose intrinsic value exceeds the market price) and selling over valued securities

(securities whose intrinsic value is less than the market price).

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3.6. TECHNICAL ANALYSIS

Technical analysis is the analysis of price behavior in the stock market. In

other words, under the technical analysis, the analyst studies the stock price

movements of the security, which is aimed at good return on investment. It is based

on the forces of demand and supply and determines the pattern of market price of

shares and their trading volume. The technical approach to investment is basically a

reflection of the idea that prices move in trends that are determined by changing

attitudes of investors towards a variety of economic monetary, political and

psychological forces. To put it in simple words, technical analysis is a method of

evaluating securities by analyzing the statistics generated by market activity such as

volume traded and past prices. The analyst uses the charts and other tools to identify

patterns that can suggest future activity.

Technical analysis addresses the fact that a share price not only reflects the

value placed on it by those in the market, but also hopes and fears of those buying

and selling it. It tries to explain and forecasts the changes in security prices by

studying the market data rather than the information about a company as done by

analyst. Again the prices of security is governed by basic economic and

psychological inputs so numerous and complex that no individual can hope to

understand and measure them correctly. As a result, a panic or overconfidence can

cause the prices to move away from their value, sometimes for longer periods than

expected. The analyst takes the important information and attempts to catch changes

to take advantage of them. Several assumptions of Robert A.Levy regarding technical

analysis are as follows:

3.6.1. The market value of any goods or services is affected solely by the interaction

of supply and demand.

3.6.2. Supply and demand is governed by numerous factors, both rational and

irrational.

3.6.3. Disregarding minor fluctuations, the prices for individual securities and the

overall value of the market tends to move in trends, which persist for appreciable

length of time.

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3.6.4. Prevailing trends change in reaction to shifts in supply and demand

relationships. These shifts, no matter why they occur, can be detected sooner or later

in the action of the market itself.

Stock prices are determined by a number of factors which has already

discussed namely, fundamental factors and technical factors. The one more factor

strongly determined the share price behaviour namely, psychological factors, such as

private and public information can influence the investor‘s investment decision.

These informations are immediately reflected in the share price movements. The

market efficiency is determined on the basis of information significance on the share

price behaviour.

3.7. EFFICIENT MARKET THEORY

Investors determine the stock prices on the basis of the expected cash flows to be

received from a stock and the risk involved. Rational investors should use all the

available information they have or can be reasonably obtained. This information set

consist of both known information and beliefs about the future (i.e., information that can

reasonably be inferred). Regardless of its form, information is the key to the

determination of stock prices and therefore it is the central issue of the efficient capital

markets concept. An efficient capital market is defined as one in which the prices of all

securities quickly and fully reflect all available information about the assets. This

concept postulates that investors will incorporate all relevant information into prices in

making their buy and sell decisions. Therefore, the current price of a stock reflects:

1. All known information, including past information (e.g., last year‘s or last

quarter‘s earnings), current information as well as events that have been

announced but are still forthcoming (such as a bonus issue).

2. Information that can reasonably be inferred; e.g., if many investors

believe that the world economic crisis may cut interest rate at its meeting

next week, prices will reflect this belief before the actual event occurs.

Thus, an efficient capital market incorporates the information quickly and

accurately into the prices of securities. The first time the term ―efficient market‖ was

introduced in 1970 paper by E.F. Fama2 who said that in an efficient market, on the

average, competition will cause the full effects of new information on intrinsic values

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to be reflected ―instantaneously‖ on actual prices. The efficient market model is

actually concerned with the speed with which information is incorporated in security

prices. The technicians believe that information is slowly incorporated in security

prices. This gives technicians an opportunity to earn excess returns by studying the

patterns in price movements and trading accordingly. Market efficiency can be

classified into the categories namely, weak form, semi-strong form and strong. These

were discussed as under:

3.7.1. Weak form Efficient Market Hypothesis

One of the most traditional types of information used in assessing security

values is market data, which refers to all past price (and volume) information. If

security prices are determined in a market that is weak-form efficient, historical

prices and volume data should already be reflected in current prices and should be of

no value in predicting future price changes. Since price data are the basis of technical

analysis, which relies on the past history of price information is of little or no value.

Test of the usefulness of price data are called weak-form tests of the EMH. If

the weak form of the EMH is true, past price changes should be unrelated to future

price changes. In other words, a market can be said to be weakly efficient if the

current price reflects all past market data. The correct implication of a weak-form

efficient market is that the past history of price information is of no value in

assessing future changes in price.

3.7.2. Semi-strong form Efficient Market Hypothesis:

A more comprehensive level of market efficiency involves not only known

and publicly available market data, but all publicly known and available data, such as

earnings, dividends, stock split announcement, rights issue announcement, new

product development, financing difficulties etc. A market that quickly incorporates

all such information into prices is said to show semi strong – form efficiency. Thus, a

market can be said to be ―efficient in the semi-strong sense‖ if current prices quickly

reflect all available information. Note that a semi-strong efficient market

encompasses the weak form of the hypothesis, because market data are part of the

larger set of all publicly available information.

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Tests of the semi-strong EMH are testing the speed of adjustment of stock

prices to announcements of new information. In fact, most test of the EMH is

concerned with how quickly information is incorporated into security prices.

A semi-strong efficient market implies that investors cannot act on new

public information after its announcement and expect to earn above-average- risk-

adjusted returns. If lags exist in the adjustment of stock prices to certain

announcements and investor can exploit these lags and earn abnormal returns, the

market is not fully efficient in the semi-strong sense

3.7.3. Strong form Efficient Market Hypothesis:

The most significant form of market efficiency is the strong form, which

asserts that stock prices fully reflect all information, public and nonpublic. The

strong form goes beyond the semi-strong form in considering the value of the

information contained in announcements, whereas the semi-strong form focuses on

the speed with which information is impounded into stock prices. If the market is

strong-form efficient, no group of investors should be able to earn, over a reasonable

period of time, abnormal rates of return by using information in a superior manner.

A second aspect of the strong form has to deal with private information-that

is, information not publicly available because it is restricted to certain groups such as

corporate insiders and specialists on the exchanges. At the extreme, the strong form

holds that no one with private information can make money using this information.

Needless to say, such an extreme belief is not held by many people.

Note that these three forms of market efficiency are cumulative. If one

believes in semi-strong form efficiency, the weak form is also encompassed. Strong

form efficiency encompasses the weak and semi-strong forms and represents the

highest level of market efficiency.

3.8. IMPLICATIONS OF THE EFFICIENT MARKET HYPOTHESIS (EMH)

FOR INDIVIDUAL INVESTORS

The EMH has important implications for individual investors making their

own investing decisions. Equity portfolio management comes down to taking a

passive or an active approach. If an investor believes that the stock market is highly

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efficient, such an investor should opt for a passive approach. This approach takes a

long-term view on a buy-and-hold basis. The investor will buy stocks and plan to

hold them for the long run or buy stocks with the intent of doing as well as a market

index. Alternatively, some mutual fund or Exchange-Traded Funds (ETFs) can be

purchased.

Index funds assume particular importance in passive strategies. Indexing, is a

way to help ensure that an investor does as well as one or more market indexes, while

maximizing the time and costs involved in investing. Numerous studies have shown

that index funds held over multiple-year periods produce results that are superior to a

majority of actively managed mutual funds, primarily, because of the lower costs that

index funds have.

If investors feel that the stock market has ongoing inefficiencies, they may

wish to pursue an active strategy. Such an approach has as its objective to outperform

some benchmark portfolio on a risk-adjusted basis. For example, an investor may

believe that he or she can do better security analysis than most investors, or build

better screening models for analyzing hundreds of stocks. Alternatively, an investor

may believe he or she has special expertise in one or more areas that can profitably

be put to use. Keep in mind that one must accurately account for all costs involved in

pursuing an active strategies before deciding that it is worthwhile to do so.

3.9. TYPES OF CORPORATE ANNOUNCEMENTS AND ITS SIGNIFICANCE

The individual investors‘ do not have access to private information about the

corporate bodies, but they share access to public information about the companies.

The public information takes the form of corporate announcements like financial

reports, dividend announcements, bonus issue, rights issue, merger, acquisition,

allotment of shares, some of the news made by the companies through media

release/press release, outcome of board of directors, outcome of annual general

meeting. In each of these cases, the investor should react to the information contained

in the announcement. Thus, the stock market reacts whenever the information

released by the company. The level of share prices may change by positively or

negatively depending on the type of announcement.

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3.9.1. Financial Results Announcement

The performance of companies would reflect from their financial reports.

They convey information to stock markets about their current and future prospects.

The magnitude of the information and the stock markets reaction should depend upon

how much the financial report exceeds or falls short of investors expectations. In an

efficient market, there should be an instantaneous reaction to the financial reports, if

it contains surprising information and prices should increase following positive

surprises and following down negative surprises. Individual investors‘ are important

players in the stock market. They collect and aggregate the information from diverse

sources and they should reflect to over-react to some information and under-react to

other information. Since, actual financial reports are compared to investors‘

expectations and they should reflect in the buying behaviour of shares.

On the other hand, the stock market generally believes to be quite efficient

with respect to public information. Many scholars of financial markets regard the

efficient markets hypothesis as a cornerstone in modern financial economics. Despite

the large volume of literature that documents empirical regularities in stock prices

that seem to violate semi-strong form market efficiency,

most are convinced that

market inefficiencies are the exception, rather than the rule. Even documented market

anomalies are often shown difficult to exploit in reality once transaction costs and

risk factors are fully considered.

3.9.2. Dividend Announcement

Dividend is an important fruit to get from the tree called investments. It plays

an important role in the investment strategies by investors‘. Dividends are income tax

free in the hands of the recipient and hence it is an important component of returns

from the investments. Dividend announcements are likely to be more valuable in

stock markets than others. Broadly rising or falling markets tend to indicate – albeit

imperfectly – investors‘ perceptions of the state of the economy in the future. In

particular, broadly falling markets indicate either an increase in interest rates or a

reduced expectation of future cash flows across most firms. When future projections

of the economy are poor or uncertain, investors are likely to look to managers for

information regarding their firm‘s financial health and future prospects. Given the

probability and costs of financial distress generally rise in down economies, this

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information is particularly valuable. During these times of reduced expectations,

investors may be searching for signals to help reduce future uncertainty. In down

markets by maintaining or increasing dividend payments, dividend-paying firms can

credibly signal positive information, especially during times when other companies

are decreasing their dividend payment or going out of business altogether. Non-

dividend-paying firms, however, cannot. On the other hand, in up markets the value

of dividend signals is likely to be lower; firms generally perform well, and the

probability of, all costs associated with, financial distress is lower. It is possible,

therefore, that a policy of paying dividends during up markets conveys less

information than a policy of paying dividends during down markets, since during up

markets investors know that things are generally going well.

Miller & Modigliani (1961)3 proposed the irrelevance of dividends, thereby

initiating dividend theory. The rationale behind this proposition is that in perfect

capital markets with rational behavior a firm‘s dividend policy will not affect its

investment policy and can therefore have no impact on the valuation of the firm. The

value of the firm will solely reflect future earnings and growth opportunities. Since

the effect of increased dividends will merely be offset by raise of new capital to fund

the optimal investment policy, the firm‘s dividend policy will not affect investment

and firm value. However, it also recognized the potential for dividend

announcements to contain information (Miller & Modigliani). This will be the case if

dividend changes provide a signal of management‘s expectations regarding the future

profits of the firm. The dividend change will then provide the occasion for a price

change, but it will not be its cause.

3.9.3. Merger and Acquisition Announcement

Acquisition means company seeking out and buying stake of a target

company‘s share; the shares are not swapped or merged. Acquisitions can often be

friendly and also hostile, meaning that the acquired company does not find it

favourable. A majority of its shares was bought by another company. The

announcement usually carries the most significant value of acquisition

announcements, simply because of the scale of acquisitions relative to other

investments. When a firm acquires another entity, there usually a predictable big

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share price movement associated with acquisitions occurring on the date of

announcement made by the company. In general, the acquiring company‘s stock will

fall while the target company‘s stock will rise. The reason is that the target

companies stock usually goes up and the acquiring company typically has to pay a

premium for the acquisitions; unless the acquiring company offers more per share

than the current price of the target company‘s stock, there is little incentive for the

current owners of the target to sell their shares to the takeover company. Acquisitions

are important only because they affect the value substantially but also they often

occur enough in the market to provide the basis for an investment strategies by the

investors. The acquiring company‘s stock usually goes down for a number of

reasons. First, as stated above, the acquiring company must pay more than the target

company‘s current worth to make the deal go through. Beyond that, there are often a

number of uncertainties involved with acquisitions.

A merger occurs when two similar companies combine to form a single

company. The entire merger process is usually kept secret from the public, and often

from the majority of the employees of the involved companies. Since the majority of

merger attempts do not succeed, and most are kept secret, it is difficult to estimate

how many potential mergers occur in a given year. It is likely that the number is very

high, however, given the amount of successful mergers and the desirability of

mergers for many companies. A stock market bubble, managers and investors get

caught up in the frenzy, believing each new acquisition will be better than the last.

Marginal acquisitions skyrocket, yet the market continue to react positively to merger

news. The bubble bursts when actual post-merger performance forces investors to re-

evaluate the acquisition success. There‘s a definite chance that it might decrease the

share value. How ever, it is more likely that the merger is going to be favourable for

at least one, if not both companies. With a merger, it involves both companies

agreeing to the joining of their companies and so things would imply that both

companies would have something to gain from the partnership. How ever, it is not

the companies that set their share price but rather the stock market and the demand

for the new shares. If the ‗market‘ doesn‘t think that this merger is in the best interest

of the newly formed merger, then they will not demand the new share issue and so

prices would fall. Thus, the merger announcements have a significant impact on the

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affected industries and investors, and are often met with large fluctuations in the

stock price. Under the assumption of efficient markets, if a merger raises (or lower)

expectations of business results, stock prices should rise (or fall) to reflect the change

in expectations. From time to time, companies merge with one another. Sometimes, a

merger involves a company that you have currently invested in and there are usually

rumors of the proposed alliance before it actually takes place. So, the question is,

how will this event affect the value of the stock and what should you do?.

3.9.4. Bonus and Rights Issue Announcement

Bonus share is a free share of stock given to current shareholders in a

company, based upon the number of shares that the shareholder already owns. While

the issue of bonus shares increases the total number of shares issued and owned, it

does not increase the value of the company. An issue of bonus shares is referred to as

a bonus issue. This usually happens after a company has earned more profits, thus

increasing its employed capital. Therefore, a bonus issue can be seen as an alternative

to dividends. No new funds are raised with a bonus issue. If a company plans to

finance a bonus issue from retained earnings, it makes a book entry to allocate

retained earnings into paid-up capital in shareholders‘ equity section of the

company‘s balance sheet. Alternatively, a company that decides to realize a bonus

issue by using accumulated capital reserves into paid-up capital. The company does

not receive any cash and its financial position remains the same. The modification

triggered by the bonus issue is that the number of outstanding shares is adjusted by

the bonus issue ratio, therefore, the price of the shares declines according to the same

bonus issue ratio. The total market value of the shares or the value of the shares that

are held by each investor should remain unchanged. The record date is announced

and the investors wait for the specific date to get the required benefits. The record

date is important because holders of the shares on this particular day will be entitled

to the bonus shares. There is another date that has to be noted carefully by the

investors, which is the date when the shares go ‗ex- bonus‘. What happens on this

day is that, the share prices adjust in the bonus ratio so that it reflects the actual

situation on the ground. The reason why the price reflects on the situation, on the

ground that after the price is adjusted, investors will be ineligible for the actual bonus

shares. Often, there is a time when there might be a no-delivery period on the stock

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exchanges and due to this the ex-bonus date has to be noted carefully. Over the

years the relationship between bonus issues and stock prices has been the subject

of much empirical discussion within the financial literature. Bonus issues increase

the number of equity stocks outstanding but have no effect on stockholder‘s

proportional ownership of stocks (Miller and Modigliani (1961)). The bonus

issue date is known well in advance and therefore should contain no new

information. But we cannot expect any significant price reaction on bonus issue

announcement. A matter of this concern that firms announcing bonus issues

experience rise in their stock prices on an average supporting semi-strong form

Efficient Market Hypothesis (EMH).

A rights issue is a way in which a company can sell new shares in order to

raise capital. An event, in which existing shareholders are given the right to buy a

specified number of additional shares from a company, at a specified price (‗rights‘

or ‗subscription‘ price), within a specified time (‗subscription period‘). A rights

issue is offered to all existing shareholders individually and may be accepted in

full, accepted in part or rejected. A right to a share is generally issued as a ratio to

shares held (e.g. 1:3 rights issue, meaning a right to buy one new share for every

three shares owned). The main purpose of rights is to preserve the control position

of existing stockholders and to protect stockholders against the dilution of

ownership. The investor response to news of equity rights offerings. Investor

sentiment about the future prospects of firms may be optimistic or pessimistic

by rights offering. In such a situation the stock price level reveals either positive

or negative movement. In general, the stock price effect should be positive if

the purpose of the rights offering is to finance unanticipated, positive profitable

projects. The market response to announcements of rights offerings may be less

positive if profitable projects are less abundant during downturns. If investors

become over optimistic about the future prospects of such firms, this could

lead to positive price reactions. Thus the stock market also responds to news of

equity rights offerings. The major research question has been raised in this situation,

how does the stock market and individual investors‘ respond to announcements of

rights issues?

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3.9.5. Allotment of Equity Shares Announcement

Allotment of shares means the distribution of shares among those who have

submitted written application. It was an appropriation of a certain number of shares

to an applicant in response to their application for shares. The stock market reaction

is usually to carry the significant announcements about allotment of shares. The

prices of securities are determined solely by the risk and expected return associated

with a security‘s future cash flows. Close substitutes for a firm‘s shares, e.g.,

securities with similar risk and return characteristics, are either directly available in

the capital markets or they can be constructed through combinations of existing

securities. Moreover, the efficient capital markets rule out the allotment of share

price effects not based on changes in a security‘s expected cash flows. Thus with

close substitutes, efficient capital markets and fixed investment policies, the price of

any firm‘s shares should be independent of the number of shares of the firm, or any

shareholder, chooses to sell. This view of equity financing is also not without

challenge. There is also a downward sloping demand curve, for predicting a decrease

in stock price with allotment of equity shares. These are the effect of allotment of

equity shares on corporate capital structures and the role of stock issues as

informative signals. The equity share allotment serve as signals which communicate

managers‘ superior information independent of capital structure considerations. In a

world of asymmetric information managers and insiders have superior information

compared to investors, and management‘s decision to allotment of equity shares

conveys information about a firm‘s ‗intrinsic‘ value. A stock price reduction is

produced by rational investors hedging against the risk that, in selling stock,

managers are using their superior information to benefit existing shareholders at

the expense of new shareholders. A more benign interpretation is that the information

available to managers is not favorable enough to preclude selling stock, and thus

the decision to allotment of equity shares is a negative signal. The nature and

magnitude of the impact of equity offerings on stock prices are unresolved issues.

None of the previous studies employs a comprehensive sample of large primary and

secondary offerings to examine the announcement day price effect and its relation to

issue size.

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3.9.6. Press release/Media Release Announcement

An announcement of a corporate event, performance or other newsworthy

information about the company is issued to the press release/media release. The

announcement may affect the company‘s stock prices positively or negatively

depends on the importance of news. Also, this would alter the investors‘ buying

behavioural pattern based on the news. The financial theory makes predictions about

market microstructure before and after news release, on condition whether the timing

of the event is anticipated. In the period prior to an anticipated news announcement,

theory tells us that discretionary liquidity traders are hesitant to trade because their

fear being exploited by informed traders (Admati and Pfleiderer (1988))4. Further, if

there is an increased probability that an informed agent will initiate a trade prior to an

anticipated event, market makers will reduce liquidity (increase spreads and decrease

depth). In contrast, when an upcoming event is unanticipated, its timing is not

publicly known in advance and therefore there should either be (i) no market reaction

preceding the news release (if informed investors either do not trade in advance or

else if their pre-event trading is not detected), or (ii) worsening liquidity before the

news release (if informed trading based on private information occurs and is

detected).

3.10. SAMPLE COMPANIES AND THEIR CORPORATE ANNOUNCEMENTS

3.10.1. ACC Ltd - ACC ltd. has made 4 types of announcements during the year

2008-2009, namely, 1. Financial results including Quarterly, 2. Allotment of shares/

Employee Stock Option Scheme (ESOS), 3. Press release/media release and 4.

Dividend. The announcements were arranged quarterly wise like, first quarter,

second quarter, third quarter and fourth/final quarter. The date and types of

announcements are discussed as follows:

First Quarter (Q1) - Financial results (2008) announced on 24-4-08,, press release

on 5-5-08,, press release on 9-5-08, media release on 4-6-08, media release on 9-6-08

and allotment of shares announced on 23-6-08.

Second Quarter (Q2) - Dividend and financial results (Q1) announced on 16-7-08

and 24-7-08 respectively.

64

Third Quarter (Q3) - Financial results (Q2) announced on 23-10-08, allotment of

shares on 4-12-08, media release on 10-12-08, media release on 17-12-08 and

allotment of shares 30-12-08.

Fourth Quarter (Q4) - Allotment of shares announced on 27-1-09, media release on

2-2-09, financial results on (Q3) 5-2-09, media release on 25-2-09, allotment of

shares on 17-3-09 and allotment of shares on 26-3-09.

3.10.2. Bharti Airtel Ltd - The Company has gave 4 types of announcements during

the year 2008-09, namely, 1. Allotment of shares, 2. Amalgamation, 3. Press

release/media release, 4. Financial results includes quarterly. The date and types of

announcements are as follows:

First Quarter (Q1) - Allotment of shares announced on 4-4-08, financial results

(2008) on 25-4-08, amalgamation on 26-4-08, press release on 2-5-08, press release

on 21-5-08 and allotment of shares on 2-6-08.

Second Quarter (Q2) - financial results (Q1) announced on 24-7-08; press release on

6-8-08 and allotment of shares on and 26-08-08.

Third Quarter (Q3) - Allotment of shares was announced on 10-10-08, press release

on 15-10-08, financial results (Q2) on 31-10-08, allotment of shares on 18-11-08 and

allotment of shares and 22-12-08.

Fourth Quarter (Q4) - Press release was announced on 12-1-09, financial results

(Q3) on 22-1-09, allotment of shares on 29-1-09, press release on 19-2-09, allotment

of shares on 24-2-09 and allotment of shares on 17-3-09.

3.10.3. BHEL Ltd - During the year 2008-09 BHEL ltd. has given 2 types of

announcements namely, 1. Financial results and dividend, 2. Press /media release. It

was arranged into quarterly, first quarter, second quarter, third quarter and

fourth/final quarter. The date and types of announcements are discussed as follows:

First Quarter (Q1) - Press release was made on 29-4-08, press release on 12-5-08,

financial results (2008) on 12-5-08 and final dividend announcement on 23-5-08.

Second Quarter (Q2) - financial results (Q1) was announced on 21-07-08 during the

first quarter.

65

Third Quarter (Q3) - A financial results (Q2) was announced on 24-10-08.

Fourth Quarter (Q4) - Third financial results (Q2) and dividend was made on 25-1-09.

3.10.4. DLF Ltd - DLF ltd. has given 3 types of announcements during the year

2008 – 2009, namely, 1. Financial results, 2. Press/media release and 3. Dividend.

These announcements are arranged into quarterly like, first quarter, second quarter,

third quarter and fourth/final quarter. The date and types of announcements are

discussed below:

First Quarter (Q1) - Financial results (2008) and dividend was announced on 30-4-

08 and 4-6-08 respectively.

Second Quarter (Q2) - Press release and financial results (Q1) were announced on

10-7-08 and 31-7-08 respectively.

Third Quarter (Q3) - Financial results (Q2) and press release announced on 31-10-

08 and 4-11-08 respectively.

Fourth Quarter (Q4) - Press release was announced on 7-11-08, media release 14-

11-08 and financial results on (Q3) 2-2-09.

3.10.5. Grasim Industries Ltd - The company has given 2 types of announcements

during the year 2008-2009, namely, 1. Financial results and 2. Dividend. It was

arranged into quarterly like, first quarter, second quarter, third quarter and

fourth/final quarter. These announcement dates are quarterly discussed as follows:

First Quarter (Q1) - Financial results (2008) and dividend was announced on 29-4-08.

Second Quarter (Q2) - Financial results (Q1) were announced on 25-7-08.

Third Quarter (Q3) - Financial results (Q2) was announced on 23-10-08.

Fourth Quarter (Q4) - Financial results (Q3) was announced on 31-01-09.

3.10.6. HDFC Ltd - HDCF ltd. has given 3 types of announcements during the year

2008 – 2009, namely, 1. Financial results, 2. Dividend and ESOS/allotment of shares

during the year 2008-09. These announcements are arranged into quarterly like, first

quarter, second quarter, third quarter and fourth/final quarter. The date and types of


66

First Quarter (Q1) - Financial result (2008) and dividend was announced on 30-4-

08, allotment of shares on 21-5-08, allotment of shares on 6-6-08 and allotment of

shares on 19-6-08.

Second Quarter (Q2) - Financial results (Q1) was announced on 16-7-08, allotment

of shares on 7-8-08, allotment of shares on 28-8-08 and allotment of shares 16-9-08.

Third Quarter (Q3) - Allotment of shares was announced on 7-10-08, financial

result (Q2) on 17-10-08, allotment of shares on18-11-08 and allotment of shares on

18-12-08.

Fourth Quarter (Q4) - Financial results (Q3) was announced on 21-1-09 allotment

of shares on 12-2-09 and allotment of shares on 24-3-09.

3.10.7. HDFC Bank - During the year 2008-09 the company gave 5 types of

announcements namely, 1. Financial results, 2. Allotment of shares/ESOS, 3.

Dividend, 4. Press release and 5. Amalgamation. The date and types of

announcements are quarterly discussed as follows:

First Quarter (Q1) - Financial results (2008) and dividend was announced on 24-4-08,

amalgamation on 20-5-08, press release on 10-6-08 and allotment of shares 24-6-08.

Second Quarter (Q2) - Financial results (Q1) was announced on 28-7-08.



3.10.8. Hindalco Industries Ltd - The company has made 5 types of announcements

during the year 2008-09, namely, 1. Financial results, 2. ESOS/allotment of shares, 3.

Dividend, 4. Press release and 5. Rights issue and amalgamation. These

announcements are arranged into quarterly like, first quarter, second quarter, third

quarter and fourth and final quarter. The date and types of announcements are as

follows:

First Quarter (Q1) – Amalgamation was announced on 3-4-08, financial results

(2008), dividend and rights issue, 30-4-08 and 20-6-08 respectively.

67

Second Quarter (Q2) - Financial results (Q1), rights offering and allotment of shares

was announced on 28-7-08, 22-8-08 and 29-8-08 respectively.



3.10.9. Hindustan Unilever Ltd - HUL has announced 3 types of announcements

during the year 2008-09, namely, 1. Financial results, 2. Employee Stock Option Plan

(ESOP)/allotment of shares, and 3. Dividend. It was arranged into quarterly like, first

quarter, second quarter, third quarter and fourth and final quarter. The date and types

of announcements are discussed below:

First Quarter (Q1) - Financial results (2008) and allotment of shares was announced

on 28-4-08 and 24-6-08 respectively.

Second Quarter (Q2) - Financial results (Q1) and dividend were announced on 25-7-08.


Fourth Quarter (Q4) - Financial results (Q3) was announced on 27-1-09, allotment

of shares on 20-2-09 and allotment of shares 20-3-09.

3.10.10. ICICI Bank Ltd - The bank has given 3 types of announcements namely,

1. Financial results, 2. Dividend and 3. Press/media release during the year 2008-09.

These announcements was arranged into quarterly like, first quarter, second quarter,

third quarter and fourth and final quarter. The date and types of announcements are

as follows:

First Quarter (Q1) - Financial results (2008) was announced on 25-4-08, dividend

and press release was announced on 12-6-08 and 30-6-08 respectively.

Second Quarter (Q2) - Financial results (Q1) and media release was announced on

26-7-08and 29-9-08 respectively.

Third Quarter (Q3) - Financial results (Q2) and press release was announced on


Fourth Quarter (Q4) - Financial results (Q3) was announced on 24-1-09

68

3.10.11. Infosys Ltd - The Company has given 3 types of announcements during

the year 2008-09, namely, 1. Financial results, 2. Dividend, and 3. Press release.

It was arranged into quarterly like, first quarter, second quarter, third quarter

and fourth/ final quarter. The date and types of announcements are discussed

below:

First Quarter (Q1) - Financial results (2008) and dividend was announced on

15-4-08, press release on 20-5-08, press release on 28-5-08, press release on 3-6-08,

press release on 10-6-08 and press release on 26-6-08.

Second Quarter (Q2) - Press release was announced on 7-7-08, financial results (Q1)

on 11-7-08, press release on 17-7-08, press release on 24-7-08, press release on

31-7-08 , press release on 19-8-08, press release on 25-8-08, press release on 1-9-08,

press release on 17-9-08 and press release on 29-9-08.

Third Quarter (Q3) - Financial results (Q2) was announced on 10-10-08, dividend

on 15-10-08, press release on 6-11-08 and press release on 10-11-08.

Fourth Quarter (Q4) - Financial results (Q3) and press release were announced on

13-1-09 and 16-3-09.

3.10.12. ITC Ltd - During the year 2008-09, ITC ltd. has made 3 types of

announcements, namely, 1. Financial results, 2. ESOS/allotment of shares and

3. Dividend. These announcements date are quarterly arranged and discussed

below:

First Quarter (Q1) - Financial results (2008) and dividend was announced on 23-5-08.


Third Quarter (Q3) - Financial results (Q2) was announced on 24-10-08, allotment

of shares on 31-10-08, allotment of shares on 21-11-08 and allotment of shares on

30-12-08.

Fourth Quarter (Q4) - Financial results (Q3) was announced on 19-1-09,

allotment of shares on 24-2-09, allotment of shares on 18-3-09 and allotment of

shares 23-3-09.

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3.10.13. Jaiprakash Associates Ltd - The Company has given 4 types of

announcements during the year 2008-09, namely, 1.Financial results,

2. ESOS/allotment of shares, 3. Dividend and 4. Amalgamation. It was arranged into

quarterly like, first quarter, second quarter, third quarter and fourth and final quarter.

The date and types of announcements are as follows:

First Quarter (Q1) - Financial results (2008) was announced on 30-4-08.


Third Quarter (Q3) - Allotment of shares and financial results (Q2) was announced


Fourth Quarter (Q4) - Financial results (Q3) and amalgamation was announced on


3.10.14. L & T ltd - During the year 2008-09 L&T ltd. has made 5 types of

announcements, namely, 1. Financial results, 2. Allotment of shares, 3. Dividend,

4. Bonus issue and 5. Press release. The date and types of announcements quarterly

discussed below:

First Quarter (Q1) - Press release on was made on 15-5-08, press release on

20-5-08, financial results (2008), dividend and bonus issue on 29-5-08, press release

on 2-6-08, press release on 20-6-08 and press release on 30-6-08.

Second Quarter (Q2) - Press release was made on 7-7-08, press release on 16-7-08,

financial results (Q1) on 28-7-08, press release on 12-8-08, allotment of shares on

22-9-08 and press release on 24-9-08.

Third Quarter (Q3) - Financial results (Q2) was made on 15-10-08, allotment of

shares on 18-10-08, press release on 10-11-08, press release on 17-11-08 and

allotment of shares announcements on 31-12-08.

Fourth Quarter (Q4) - Financial results (Q3) and allotment of shares are announced


3.10.15. Mahindra & Mahindra Ltd - The Company during the year 2008-09

has given 5 types of announcements, namely, 1. Financial results, 2. Dividend,

3. Acquisition, 4. Press release and 5. Amalgamation. These announcements

70

was arranged into quarterly like, first quarter, second quarter, third quarter

and fourth/final quarter. The date and types of announcements are discussed as

follows:

First Quarter (Q1) – Acquisition and amalgamation was made on 2-4-08, Financial

results (2008) on 14-4-08, dividend on 28-5-08, and press release announcements on

5-6-08 respectively.

Second Quarter (Q2) – Amalgamation was made on 18-7-08, financial results (Q1),

press release on 30-7-08, amalgamation on 1-8-08, press release on 12-8-08 and

allotment of shares announcements 29-9-08 respectively.

Third Quarter (Q3) - Press release was made on 7-10-08, financial results (Q2) and

press release announcements on 29-10-08 and 6-11-08.

Fourth Quarter (Q4) - Financial results (Q3) was made on 31-1-09, press release on

6-3-09, allotment of shares and press release announcements on 12-3-09 and 17-3-09

respectively.

3.10.16. Maruti Suzki Ltd - Maruti Suzuki ltd. has announced 3 types of

announcements during the year 2008-09, namely, 1. Financial results, 2. Dividend

and 3. Press release. The announcements are quarterly arranged like, first quarter,

second quarter, third quarter and fourth/final quarter and discussed below:

First Quarter (Q1) - Financial year 2008 result, dividend and press release

announcements was made on 24-4-08 and 6-6-08 respectively.

Second Quarter (Q2) - Financial results (Q1) was announced on 21-7-08, press

release on 1-8-08 and press release on 1-9-08.

Third Quarter (Q3) - Press release was made on 1-10-08, financial results (Q2) on

24-10-08, press release 1-11-08, press release on 19-11-08 and press release on


Fourth Quarter (Q4) - Press release was announced on 1-1-09, press release on

27-1-09, financial results (Q3) on 29-1-09 press release and press release on 2-2-09

and 2-3-09 respectively.

71

3.10.17. NTPC Ltd - The Company has given 3 types of announcements during the

year 2008-09, namely, 1. Financial results, 2. Dividend and 3. Press release. It was

arranged into quarterly like, first quarter, second quarter, third quarter and fourth and

final quarter. The date and types of announcements are discussed below:

First Quarter (Q1) - Financial results (2008) and dividend was announced on



Third Quarter (Q3) - Financial results (Q2) announcements made on 16-10-08.

Fourth Quarter (Q4) - Financial results (Q3) was made on 24-1-09.

3.10.18. ONGC Ltd - During the year 2008-09 the company has given 3 types of

announcements, namely, 1. Financial results 2. Dividend and 3. Press release. These

types of announcements and date of announcements are discussed as follows:

First Quarter (Q1) - Press release was announced on 3-5-08, financial results (2008)

and dividend on 23-6-08 and 25-6-08 respectively.

Second Quarter (Q2) - Financial results (Q1) was made on 28-7-08, press release on

26-8-08, press release on 16-9-08 and press release announcements on 19-9-08.

Third Quarter (Q3) - Financial results (Q2) was announced on 30-10-08, press

release and interim dividend on 11-11-08 and 19-12-08 respectively.

Fourth Quarter (Q4) - Financial results (Q3) and press release announcement was

made on 28-1-09 and 9-3-09 respectively.

3.10.19. Ranbaxy Laboratory Ltd - Ranbaxy Laboratory ltd. has made 3 types

of announcements during the year 2008-09, namely, 1. Financial results

2. ESOP/allotment of shares and 3. Press release. These announcements date are as

follows:

First Quarter (Q1) - Financial results (Q1) was made on 22-4-08, press release on


press release on 18-6-08 and press release announcement on 25-6-08.

72

Second Quarter (Q2) - Allotment of shares was released on 10-7-08, press release

on 14-7-08, press release on 17-7-08, press release on 22-7-08, financial results (Q2)

on 29-7-08, press release on 1-8-08 and press release announcement on 18-9-08.

Third Quarter (Q3) - Allotment of shares was made on 13-10-08, press release on

16-10-08, press release on 20-10-08, financial results (Q3) and press release

announcements 31-10-08 and 7-11-08 respectively.

Fourth Quarter (Q4) - Financial result (2008) was made on 22-1-09, press release

on 26-2-09, press release on 23-3-09 and press release 25-3-09.

3.10.20. Reliance Communications Ltd - The Company has given 4 types of

announcements during the year 2008-09, namely, 1. Financial results, 2. Dividend,

3. Acquisition, and 4. Press release. These announcements was arranged into

quarterly like, first quarter, second quarter, third quarter and fourth and final quarter.

The date and types of announcements are discussed as follows:

First Quarter (Q1) – Acquisition announcement on 24-4-08, financial results (2008)

on 30-4-08, dividend on 12-5-08, press release on 26-5-08 and media release on

16-6-08.

Second Quarter (Q2) - Media release was made on 9-7-08, media release on

19-7-08, financial results (Q1) and media release announcements on 31-7-08 and



Fourth Quarter (Q4) - Financial results (Q3) and media release announcements was


3.10.21. Reliance Industries Ltd - During the year 2008-09 the company

has announced 5 types of announcements namely, 1. Financial results, 2. Dividend,

3. Merger, 4. Press release and 5. Allotment of shares. These announcements are

arranged into quarterly like, first quarter, second quarter, third quarter and

fourth/final quarter and the date of announcements are discussed as follows:

First Quarter (Q1) - Financial results (2008) and dividend, and press release

announcement was made on 21-4-08, 5-5-08 and 10-5-08 respectively.

73

Second Quarter (Q2) - Financial results (Q1) was announced on 24-7-08, allotment

of shares on 12-8-08, media release on 2-9-08, media release on 10-9-08, media

release and allotment of shares announcement made on 22-9-08 and 30-9-08

respectively.

Third Quarter (Q3) - Allotment of shares made on 3-10-08, financial results (Q2) on

23-10-08 and media release on 28-10-08 respectively.

Fourth Quarter (Q4) - Financial results (Q3) was made on 22-1-09, allotment of

shares on 9-2-09, merger on 2-3-09 and amalgamation on 12-3-09.

3.10.22. Reliance Infrastructures Ltd - Reliance Infrastructure ltd. has given 4

types of announcements during the year 2008-09, namely, 1. Financial results,

2. Dividend, 3. Amalgamation and 4. Press release. These announcements are

arranged into quarterly like, first quarter, second quarter, third quarter and fourth and

final quarter. The date and types of announcements are as follows:

First Quarter (Q1) - Media release was made on 8-4-08, media release on 17-4-08,

financial results (2008) and dividend announcement on 28-4-08.

Second Quarter (Q2) – Amalgamation was announced on 1-7-08, financial results

(Q1) on 26-7-08 and media release 29-7-08.



3.10.23. Satyam Computers Ltd - The Company has given 4 types of

announcements during the year 2008-09, namely, 1. Financial results, 2. Dividend,

3. Amalgamation and 4. Press release. These types‘ announcements and date of

announcements are discussed below:

First Quarter (Q1) - Financial results (2008) was made on 21-4-08, dividend on


press release on 30-5-08, press release on 9-6-08, press release 16-6-08, press release

on 24-6-08, and press release on 30-6-08.

Second Quarter (Q2) - Press release was announced on 3-7-08, press release on

7-7-08, press release on 9-7-08, press release on 14-7-08, financial results (Q1) on


74

press release on 12-8-08, press release on 14-8-08, press release on 20-8-08, press

release on 28-8-08, press release on 4-9-08, press release on 19-9-08, press release on


Third Quarter (Q3) - Financial results (Q2) was made on 17-10-08, dividend on 27-10-08,

press release on 29-10-08, press release on 3-11-08, press release on 7-11-08, press

release on 14-11-08, press release on 16-12-08, and amalgamation on 29-12-08.

Fourth Quarter (Q4) - Press release was made on 7-1-09, press release on 12-1-09,

press release on 15-1-09, press release on 19-1-09, press release on 22-1-09,

amalgamation on 27-1-09, press release on 29-1-09, amalgamation on 5-2-09, press

release on 24-2-09, press release on 3-3-09, press release on 6-3-09, press release on

13-3-09 and press release announcement 19-3-09. respectively.

3.10.24. State Bank of India (SBI) - SBI has announced 4 types of announcements

during the year 2008-09, namely, 1. Financial results, 2. Dividend, 3. Acquisition and

4. Allotment of shares. The announcements are quarterly arranged like, first quarter,

second quarter, third quarter and fourth and final quarter. The date and types of


First Quarter (Q1) - Financial results (2008) and dividend was announced on 2-5-08

and allotment of shares on 22-5-08.

Second Quarter (Q2) - Financial results (Q1) and acquisition announcement was



Fourth Quarter (Q4) - Financial results (Q3) are announced on 24-1-09.

3.10.25. Sterlite Industries Ltd - During the year 2008-09 the company has given 3

types of announcements namely, 1. Financial results, 2. Dividend and 3. Press

release. These types of announcements and date of announcements are quarterly

discussed below:

First Quarter (Q1) - Financial results (2008) and dividend, and press release was

announced on 26-4-08 and 2-6-08 respectively.

75

Second Quarter (Q2) - Press release was made on 10-7-08, financial results (Q1) on




3.10.26. TCS Ltd - The company has given 4 types of announcements during the year

2008-09, namely, 1. Financial results, 2. Dividend, 3. Press release and 4. Acquisition. It

was arranged into quarterly like, first quarter, second quarter, third quarter and fourth and

final quarter. The date and types of announcements are as follows:

First Quarter (Q1) - Financial results (2008) and dividend was made on 21-4-08,

press release on 8-5-08, press release on 26-5-08 and press release on 24-6-08.

Second Quarter (Q2) - Financial results (Q1) was announced on 16-7-08, dividend on

29-8-08, press release on 11-9-08, press release on 16-9-08 and press release on 22-9-08.

Third Quarter (Q3) - Press release was made on 8-10-08, press release on 13-10-08,

financial results (Q2) and dividend on 22-10-08, press release on 18-11-08, press

release on 20-11-08 and acquisition on 31-12-08.

Fourth Quarter (Q4) - Financial results (Q3) and dividend was announced on 15-1-09.

3.10.27. Tata Motors Ltd - Tata Motors ltd. has made 4 types of announcements

during the year 2008-09, namely, 1. Financial results, 2. Dividend, 3. Press release

and rights issue. These announcements was arranged into quarterly like, first quarter,

second quarter, third quarter and fourth and final quarter. The date and types of


First Quarter (Q1) - Financial results (2008) and dividend was made on 28-5-08 and

press release on 2-6-08.

Second Quarter (Q2) - Financial results (Q1) was made on 30-7-08, press release on

20-8-08, press release on 5-9-08 and rights issue on 25-9-08.

Third Quarter (Q3) - Press release was announced on 1-10-08, press release on 6-10-08,

press release and financial results (Q2) was made on 14-10-08 and 31-10-08 respectively.


76

3.10.28. Tata Power Ltd - During the year 2008-09 the company has given 4 types

of announcements namely, 1. Financial results, 2. Dividend, 3. Press release and

4. Acquisition. The announcements are arranged into quarterly like, first quarter,

second quarter, third quarter and fourth/final quarter and the date of announcements

are discussed as follows:

First Quarter (Q1) - Acquisition and financial results (2008), dividend was

announced on 29-4-08 and 23-6-08 respectively.

Second Quarter (Q2) - Press release was announced on 21-7-08, financial results

(Q1) on 25-7-08 and press release on 4-9-08.

Third Quarter (Q3) - Financial results (Q2) announcement was made on 13-10-08.


3.10.29. Tata Steel Ltd - Tata Steel Ltd. has made 3 types of announcements during

the year 2008-09, namely, 1. Financial results, 2. Dividend and 3. Press release. It

was arranged into quarterly like, first quarter, second quarter, third quarter and fourth

and final quarter. The date and types of announcements are discussed below:

First Quarter (Q1) - Press release was made on 8-5-08, press release on 10-6-08,

and financial results (2008), dividend on 26-6-08.


Third Quarter (Q3) - Press release was made on 1-10-08, press release on 16-10-08,

financial results (Q2) on 24-10-08 and press release on 10-11-08.

Fourth Quarter (Q4) - Press release and financial results (Q3) was announced on


3.10.30. Wipro Ltd - The Company has given 5 types of announcements during

the year 2008-09, namely, 1. Financial results, 2. Dividend, 3. Press release,

4. Acquisition and 5. Allotment of shares. The announcement type and date of

announcements are arranged into quarterly like, first quarter, second quarter, third

quarter and fourth/final quarter and discussed below:

77

First Quarter (Q1) - Allotment of shares was made on 4-4-08, allotment of shares

on 15-4-08, Financial results (2008), dividend on 18-4-08, allotment of shares on

29-4-08, allotment of shares on 12-5-08, allotment of shares on 22-5-08, allotment of

shares on 4-6-08, allotment of shares on 16-6-08, and allotment of shares 26-6-08.

Second Quarter (Q2) - Allotment of shares was announced on 4-7-08, financial

results (Q1) on 18-7-08, allotment of shares on 25-7-08, allotment of shares on


shares on 27-8-08, allotment of shares on 5-9-08, allotment of shares on 15-9-08 and

allotment of shares on 19-9-08.

Third Quarter (Q3) - Allotment of shares was made on 14-10-08, financial results

(Q2) on 22-10-08, allotment of shares on 31-10-08, allotment of shares on 14-11-08,

allotment of shares on 21-11-08, allotment of shares on 2-12-08, allotment of shares

on 15-12-08 and acquisition on 23-12-08.

Fourth Quarter (Q4) - Allotment of shares was announced on 6-1-09, financial

results (Q3) on 21-1-09, allotment of shares on 9-2-09, allotment of shares on


shares on 24-3-09 and allotment of shares on 30-3-09.

78

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4. Admati, Anat and Paul Pfleiderer (1988), ―A Theory of Intraday Patterns: Volume

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