investment in equities

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A PROJECT REPORT

ON

INVESTMENT

IN

EQUITIES

CONDUCTED AT

CD EQUI SERCH LIMITED

BY

S.PAVANI

ROLL.NO: 2122-10-672-095

In partial fulfillment of award of Degree of

MASTER OF BUSINESS ADMINISTRATION

AURORAS MANAGEMENT AND RESEARCH INSTITUTE,

MOOSARAMBAGH,HYDERABAD.

2010-2012.


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CERTIFICATE

This is to certify that the project entitled INVESTMENT IN EQUITIESIN CD

EQUISEARCH LTD submitted to the OU in partial fulfillment for the award of degree of

Master of Business Administration has been carried out by MR.S.RAMPRASAD, Hall-

Ticket Number2122-10-672-095 who is a bonafide student ofAURORAS

MANAGEMENT AND RESEARCH INSTITUTE, HYDERABAD .for the academic year

2010-2012.

HEAD OF THE

DEPARTMENT PRINCIPAL


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CERTIFICATE

This is to certify that the project report titled INVESTMENT IN EQUITIES IN CD

EQUISEARCH LTD submitted in partial fulfillment for the award of MBA Programme of

Department of Business Management,OU, Hyderabad, was carried out by

MR.S.RAMPRASAD,under my guidance. This has not been submitted to any other

university or institution for the award of any degree / diploma / certificate.

Name and Address of the Guide Signature of the Guide


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DECLARATION

I hereby declare that this project report titled INVESTMENT IN EQUITIES

IN CD EQUISEARCH LTD submitted by me to the Department of Business

Management, Hyderabad, is a bonafide work undertaken by me and it is not

submitted to any other university or institution for the award of any degree /

diploma / certificate or published any time before.

Place:

Date:

(S.RAMPRASAD)


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ACKNOWLEDGEMENT

I express my gratitude to Mr. Shiva Kumar for giving me this opportunity to carry

out the project work on INVESTMENT IN EQUITIES in CD EQUISEARCH LIMITED.

I also express my sincere thanks to the StaffOfCD EQUISEARCH LIMITED. who

were of ready help in answering my various quires related to the project work.

It is with great pleasure that I Express my gratitude to Mr.Shiva Kumar, under

whose inspiring guidance and advice this study has been carried out.

S.RAMPRASAD


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CONTENTS

Chapter no Name of the concept Page no

I Introduction to study 7-9

Objectives 10

Need of the study 10

Scope of the study 10

Research Methodology 11

Limitations 12

II Review of literature 17- 41

III Industry profile 42-47

Roles and responsibilities 48

Key learnings 49

IV Data analysis and interpretation 50-67

V Summary 68-70

VI Suggestions 71-72

VII Conclusion 73-75

Bibliography 76-77


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Introduction


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INTRODUCTION

Investment management once seemed a simple process. Well-heeled investors would

hold portfolios composed of stocks and bonds of blue chip industrial companies, treasury

bonds, notes and bills. The choices available to less well-off investors were much more

limited, confirmed primarily to passbook savings accounts. If the investment environment

can be thought of as an ice cream parlor, then the customers of past decades were offered

only chocolate and vanilla.

Mirroring the diversity of modern society, the investment ice cream parlor now makes

available a myriad of flavors to the investing public. Investors face a dizzying array of

choices. The ability to purchase different securities has become both less expensive and more

convenient with the advent of advanced communications and computer networks, along with

the proliferating market for mutual funds that has developed to serve large or small investors.

Investment environment encompasses the kinds of marketable securities that exist and

where and how they are bought and sold. Investment process is concerned with how an

investor should proceed in making decisions about what marketable securities to invest in,

how extensive the investments should be and when the investments should made.


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Investment means the sacrifice of current rupees for future rupees. Two different

attributes are involved time and risk. The sacrifice takes place in the present and is

certain. The reward comes later and the magnitude is uncertain. In some cases, risk is the

dominant attribute. These are two types of investments. They are:

1) Real Investments

2) Financial Investments

Real investments involve some kind of tangible assets such as land, machinery, factories.

Financial investments involve contracts written on pieces of paper such as common

stocks and bonds.

Investment in securities such as shares, debentures and bonds is profitable as well as

exciting, but it involves great deal of risk. Investing in financial securities is considered to

be one of the best avenues for investing ones savings while it is acknowledged to be one

of the most risky avenues of investment. Even Indian government wants to encourage

people in rural areas to invest in equities. This will help the markets to stabilize by

tapping the rural areas and decreases the dependency on foreign institutional investors.


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NEED FOR THE STUDY

The purpose of the study is to know about stock markets in India, how they work,

fundamental requirements before entering the stock market, how to enter the stock market,

market design, stock selection, when to buy or sell a stock, how to invest and knowing about

market intermediaries.

OBJECTIVES OF THE STUDY

The objective of the study is to look into the scientific approach for selecting a stock

where Fundamental Analysis and Technical Analysis are looked into.

For that purpose the most happening banking sector was taken for study and from that

sector, two stocks were picked up and analyzed.

The study deals with analysis of performance of the company, share price fluctuations

and comparing it with another company from same sector.

The purpose of the study is to locate a stock which gives good returns with minimum

risk.

SCOPE OF THE STUDY

For the purpose of study, banking sector is selected. ICICI-(Industrial Credit and

Investment Corporation of India) and SBI-(STATE BANK OF INDIA) are the two

companies that are taken for analysis.


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RESEARCH METHODLOGY

The following are the steps involved in the study:

1. SELECTION OF THE SCRIP:

The scrip selection is done on random and the scrip selected is ICICI bank and (SBI)-

State bank of india.

2. DATA COLLECTION :

The data of the ICICI bank and SBI have been collected from Business line and the

internet. The data consist of the November 1st to MAY 31th.

3.ANALYSIS:

The analysis consists of the tabulation of the data assessing the profitability positions

of the equity buyer, representing the data with graphs and making the interpretation using

data.


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LIMITATIONS OF THE STUDY

The study is confined to only one sector.

All the limitations of Fundamental Analysis, Technical Analysis are applicable to the

study.

The factors which affect the markets and intangible are not considered.

Risk perception is considered to be moderate which may not be acceptable to all.

The data for the study considered is of past two years, so analysis is restricted to that

period only.

In the application of Dow Theory, only daily price fluctuations were considered due

to time constraint.


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INTRODUCTION TO STOCKS

The first step for you to understand the stock market is to understand stocks.

A share of stock is the smallest unit of ownership in a company. If you own a share of a

companys stock, you are a part owner of the company.

You have the right to vote on members of the board of directors and other important

matters before the company. If the company distributes profits to shareholders, you will

likely receive a proportionate share.

One of the unique features of stock ownership is the notion of limited liability. If the

company loses a lawsuit and must pay a huge judgment, the worse that can happen is your

stockbecomes worthless. The creditors cant come after your personal assets. Thats

necessarily true in private-held companies.

There are two types of stock:

Common stock

Preferred stock

Most of the stock held by individuals is common stock.

Common Stock:

Common stock represents the majority of stock held by the public. It has voting

rights, along with the right to share in dividends.

Preferred Stock:


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Despite its name, preferred stock has fewer rights than common stock, except in one

important are dividends. Companies that issue preferred stocks usually pay consistent

dividends and preferred stock has first call on dividends over common stock.

Investors buy preferred stock for its current income from dividends, so look for

companies that make big profits to use preferred stock to return some of those profits via

dividends.

DEMAT ACCOUNT

What is Demat account and why it is required?

Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed

by the Government of India in 1992 with its head office at Mumbai. Its one of the function is

helping the business in stock exchanges and any other securities markets. Demat (short form

of Dematerialization) is the process by which an investor can get stocks (also called as

physical certificates) converted into electronic form maintained in an account with the

Depository Participant (DP).

DP could be organizations involved in the business of providing financial services

like banks, brokers, financial institutions etc. DPs are like agents of Depository.

Depository is an organization responsible to maintain investor's securities (securities

can be stocks or any other form of investments) in the electronic form. In India there are two

such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central

Depository Services India Ltd.)

Investors wishing to open Demat account has to go DP and open the account.

Opening the Demat account is as simple as opening the bank account with any bank. As we

need bank account to save our money, make cheque payments etc, likewise we need to open a

demat account if we want to buy or sell stocks. All stocks what we possess will show in our


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demat account. So we don't have to possess any physical certificates. They are all held

electronically in our demat account. As we buy and sell the stocks, accordingly our stocks

will get adjusted in our account.

Is a demat account must?

The market regulator, the Securities and Exchange Board of India (SEBI), has made it

compulsory to open the demat account if you want to buy and sell stocks.

So a demat account is a must for trading and investing.

How to start to open a Demat account?

We have to approach a DP to open a Demat account. Most banks are DP participants

so we may approach them.

A broker and a DP are two different people. A broker is a member of the stock

exchange, who buys and sells stocks on his behalf and also on behalf of his customers.

Following are the documents required to open Demat account .

When we approach any DP, we will be guided through the formalities of opening an

account. The DP will ask to provide some documents as proof of our identity and address.

Below is a list but we may not require all of them.

PAN card, Voter's ID, Passport, Ration card, Drivers license, Photo credit card

Employee ID card, IT returns, Electricity/ Landline phone bill etc.

Do we need any stocks to open a Demat account?

No. We need not need any stocks to open a demat account. A demat account can be

opened with no balance of stocks. And there is no minimum balance to be maintained either.

You can have a zero balance in your account.

How much it cost to open a Demat account?

The charges for account opening, annual account maintenance fees andtransaction

charges vary between various DPs.


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.FinallyAfter successfully opening the demat account, the DP will allot Beneficial Owner

Identification Number, which will be needed to mention for all our future transactions.

If we want to sell our stocks, we need to place an order with our broker and give a

'Delivery Instruction' to your DP. The DP will debit our account with the number of stocks

sold. We will receive the payment from our broker.

If we want to buy stocks, inform our broker about our Depository Account Number,

so that the stocks bought are credited into our account.

Points to remember while opening online account :

a) Make multiple enquiries and try getting low brokerage trading and dematting account.

b) Also discuss about the margin they provide for day trading.

c) Discuss about fund transfer. The fund transfer should be reliable and easy. Fund transfer

from our bank account to trading account and visa versa. Some online share trading account

has integrated savings account which makes easy for us to transfer funds from our saving

account to trading account.

d) Very important is about service they provide, the research calls, intraday or daily trading

tips.

e) Also enquire about their services charges and any other hidden charges if any.

f) And also see how reliable and easy is to contact them in case if any emergency.


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LiteratureReview

Investment process

Fundamental analysis

Technical analysis


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INVESTMENT PROCESS

Investment process describes how an investor should go about making decisions with

regard to what marketable securities to invest in, how extensive the investment should be and

when the investment should be made. An eight-step procedure for making these decisions

forms the basis for the investment process.

1) What is Investment

2) Understanding stocks

3) Finding a broker

4) Evaluation of stocks

5) Research tools

6) Investing strategy

7) Investing technique

8) What moves the market

Step 1: What is investment?


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Investing is making your money work for you without taking any more risks than

necessary for your comfort.

Investing is the proactive use of your money to make more money.

How to calculate Risk Premium?

Risk premium is what a stock should return over a risk-free investment. It is your

reward for taking a risk with your money.

Weak demand is the important factor in stock pricing:

Despite high crude oil prices, its weak demand for gasoline that holds back oil stock

prices. Supply and demand is an important factor in determining price of stocks.

Corrections are natural part of stock market cycle.

Dont be too conservative with stocks in retirement:

There is a danger you can be too conservative in your investment strategy as you

approach retirementdont back off stocks too soon.

Step 2: Understanding stocks

Stocks are the basic units of ownership in publicly traded companies. There are two basic

types of stocks.

a. Common Stock: Common stock represents the majority of stock held by the

public. It has voting rights, along with the right to share in dividends.

b. Preferred Stock: Companies that issue preferred stocks usually pay consistent

dividends and preferred stock has first call on dividends over common stock.

Bull and Bear stock markets are the two sides of same coin:

Bull and bear markets go together and are necessary for an efficient market.

Poll results show confidence in stocks:


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The results of a poll on where the sensex be at the end of 2008 show stock investors are

positive.

Step 3: Finding a Broker

To decide which type of broker is right for you, you need to use these resources to find

the brokerage arrangement that best fits your needs.

Thirteen of the top online stock trading sites offer investors a wide variety of services

including research and advice.

Brokers offer different levels of service. A broker fills in the gaps in knowledge and

experience.

Broker explains what types of accounts are available and how to open an account.

Financial advisers can map a blue print that will get you from where you are to your

financial goals.

Financial advisers come in a variety of flavors. Finding the one right for you involves

knowing how each is compensated and what they do.

The new year poses many challenges for stocks, including high oil prices, the credit

crisis, and a potential recession.

Stock prices are driven by the relationship between buyers and sellers. Attractive stocks

have more buyers than sellers, which drives up prices, while less attractive stocks feel the

reverse effect.

Step 4: Evaluating stocks for investment

Fundamental analysis relies on several tools to give investors an accurate picture of

the financial health of a company and how the market values the stock. The following are the


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most popular tools of fundamental analysis. They focus on earnings, growth, and value in the

market.

a) Earnings per ShareEPS

b) Price to Earnings RatioP/E

c) Projected Earnings GrowthPEG

d) Price to SalesP/S

e) Price to BookP/B

f) Dividend Payout Ratio

g) Dividend Yield

h) Book Value

i) Return on Equity

Step 5: Research Tools

The internet is a gold mine of information, but youll need some tools to get to the

nuggets. Research tools make the job easier if you know where to find them and how to use

them.

The better stock screens offer similar characteristics that give you greater flexibility when

looking for investment candidates and eliminate other companies.

Stock screens will save time and help to build a thoughtful portfolio by focusing on those

companies that meet your investing requirements.

Stock screens can help any investor make better stock selections by reducing the number

of companies to research.

Dividend ratios can tell much about a stock and its future payout prospects.

One of the best sources of information on companies is free and as near as your computer.


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Step 6: Investing Strategies

What strategy to use as an investor? The different investment strategies and how to

develop personal investment strategy is explained below:

When and how to sell a winning stock?

Knowing when and how to sell a winning stock is as important as knowing when to sell a

losing stock.

Dont be too conservative with stocks:

Following a too conservative investment strategy in retirement may not protect you from

outliving your money.

Bottom-up investors focus on strong companies and believe they will perform well in any

market conditions.

Top-down investing looks at big picture before narrowing in on individual stocks.

Step 7: Investing Techniques

Investing techniques offer powerful ways for investors to execute their strategies.

These techniques provide a structure for investing.

After-hours trading of stocks may seem like a great idea, but it is full of risks for the

average investor.

Diversify stocks by industry to avoid across-the-board losses on bad economic news.

Investments should not be correlated to achieve diversity.

Investing with expectations of high returns is not investing but gambling. Dont try to

double or triple your money quickly in the stock market youll be disappointed and

perhaps poorer.

Step 8: What moves the market?


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What makes the market rise or fall? Sometimes it seems to have a mind of its own

that reacts poorly to good news and with enthusiasm to bad news. One should learn the

factors that are the major influences on the markets and how to use this information.

Basic steps in how stock trading works:

Trade = Buy or Sell

To trade means to buy and sell in the jargon of th e financial markets. How a system

that can accommodate one billion shares trading in a single day works is a mystery to most

people. No doubt, our financial markets are marvels of technological efficiency.

We dont need to know all of the technical details of how to buy or sell stocks,

however it is important to have a basic understanding of how the markets work.

Important terms in stock market and in stock trading :

Open - The first price at which the stock opens when market opens in the morning.

High -The stock price reached at the highest level in a day.

Low - The stock price reached the lowest level in a day.

Close - The stock price at which it remains after the end of market timings or the final

price of the stock when the market closes for a day.

Volume - Volume is nothing but quantity.

Bid - The Buying price is called as Bid price.

Offer - The selling price is called offer price.

Bid Quantity - The total number of stocks available for buying is called Bid

Quantity.


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Offer Quantity - The total number of stocks available for selling is called Offer Quantity.

Buying and selling of stocks - Buy is also called as demand or bid and selling is also called

as supply or offer. First selling and then buying (this only happens in day trading) is called as

shorting of stocks or short sell.

Stock Trading - Buying and Selling of stocks is called stock trading.

Transaction - One complete cycle of buying and selling of stocks is called One Transaction.

Squaring off - This term is used to complete one transaction. Means if we buy then we have

to sell (means square-off) and if we sell then we have to buy (means square-off).

Limit Order - In limit order the buying or selling price has to be mentioned and when the

stock price comes to that price then our order will get executed with the

mentioned price by us.

Market Order- When we put buy or sell price at market rate then the price get executes at

the current rate of market. The market order get immediately executed at the current available

price.

Success Mantra

There are two steps to achieve success in the stock market.

1) How not to loose

When you learn what to do and what not to do in order to lose nothing means you have

won the half battle. Only then you can learn how to gain or what to do in order to win. A new

investor should do paper trading in order to get the market knowledge before actually

entering into the market.

2) How to gain

How to gain requires deep understanding about the market trends and fluctuations.


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A new investor can take the route ofmutual fund.

The average person generally falls into one of two categories.

The first believe investing is a form of gambling; they are certain that if you

invest, you will more than likely end up losing your money.

The second category consists of those who know they should invest for the long-

run, but dont know where to begin.

Their characteristics.

feel investing in some sort of black-magic that only a few people hold the key to

they leave their financial decisions up to professionals

cannot tell you why they own a particular stock / mutual fund.

investment style is blind faith or limited to this stock is going up. We should but

it.

This group is in far more danger than the first. They invest like the masses and

then wonder why their results are mediocre [or in some cases, devastating.

FUNDAMENTAL ANALYSIS

To determine the intrinsic value of an equity share, the security analyst must forecast the

earnings and dividends expected from the stock and choose a discount rate which reflects the

riskiness of the stock. This is what is involved in fundamental analysis, perhaps the most

popular method used by investment professionals. The earnings potential and riskiness of a

firm are linked to the prospects of the industry to which it belongs. The prospects of various

industries, in turn, are largely influenced by the developments in the macro economy.

Researchers have found that stock price changes can be attributed to the following

factors:

Economy-wide factors: 30-35 percent


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Industry factors: 15-20 percent

Company factors: 30-35 percent

Others factors: 15-25 percent

Based on the above evidence, a commonly advocated procedure of fundamental

analysis involves a three-step examination, which calls for:

1) Understanding of the macro-economic environment and developments.

2) Analyzing the prospects of the industry to which the firm belongs.

3) Assessing the projected performance of the company and the intrinsic value of

its shares.

A. MACRO-ECONOMIC ANALYSIS

The macro-economy is the overall economic environment in which all firms operate.

The key variables commonly used to describe the state of the macro-economy are:

a) Growth Rate of Gross Domestic Product (GDP)

The gross domestic product (GDP) is a measure of the total production of final goods and

services in the economy during a specified period usually a year. The growth rate of GDP is

the most important indicator of the performance of the economy. Firm estimates of GDP

growth rate are available with a time lag of one to two years or so, but preliminary estimates

are made from time to time by various bodies like CMIE, NCAER, and the RBI. The higher

the growth rate of GDP, other things being equal, the more favorable it is for the stock

market.

b) Industrial Growth Rate


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The GDP growth rate represents the average of the growth rates of the three principal

sectors of the economy, viz. the services sector, the industrial sector and the agricultural

sector.

Publicly listed companies play a major role in the industrial sector but only a minor role

in the services sector and the agricultural sector. Hence stock market analysts focus more on

the industrial sector. They look at the overall industrial growth rate as well as the growth

rates of different industries. The higher the growth rate of the industrial sector, other things

being equal, the more favorable it is for the stock market.

c) Agriculture and Monsoons

Agriculture accounts for about a quarter of the Indian economy and has important

linkages, direct and indirect, with industry. Companies using agricultural raw materials as

inputs or supplying inputs to agriculture are directly affected by the changes in agricultural

production. Other companies also tend to be affected due to indirect linkages.

A spell of good monsoons imparts dynamism to the industrial sector and buoyancy to the

stock market. Likewise, a streak of bad monsoons casts its shadow over the industrial sector

and the stock market.

d)Savings and Investment

The demand for corporate securities has an important bearing on stock price movements.

So investment analysts should know what the level of investment in the economy is and what

proportion of that investment is directed toward the capital market.

The level of investment in the economy is equal to:

Domestic savings + Inflow of foreign capitalInvestment made abroad.


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In India, as in many other countries, the domestic savings is the dominant component

in this expression. In addition to knowing what the savings are we should also know how the

same are allocated over various instruments like equities, bonds, bank deposits, small savings

schemes, and bullion.

Other things being equal, the higher the level of savings and investments and the greater

the allocation of the same to equities, the more favorable it is for the stock market.

e) Government Budget and Deficit

Governments play an important role in most economies, including the Indian economy.

The central budget as well as the state budgets prepared annually provides information on

revenues, expenditures, and deficit or surplus.

In India, governmental revenues come more from indirect taxes such as excise duty and

customs duty and less from direct taxes such as income tax. The bulk of the governmental

expenditures goes toward administration, interest payment, defence, and subsidies, leaving

very little for public investment. The excess of governmental expenditures over governmental

revenues represents the deficit. While there are several measures of deficit, the most popular

measure is the fiscal deficit.

The fiscal deficit has to be financed with government a borrowing which is done in three

ways. First, the government can borrow from the Reserve Bank of India. This leads to

increase in money supply which has an inflationary impact on the economy. Second, the

government can resort to borrowing in domestic capital market. This tends to push up

domestic interest rates and crowd out private sector investment. Third, the government may

borrow from abroad.

Investment analysts examine the government budget to assess how it is likely to impact

on the stock market.


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f) Money Supply

There are several definitions of money. The two more commonly used ones are:

M1 = currency with public + demand deposits with bank + other

deposits with RBI.

M3 = M1 + time deposits with banks

When we talk of money supply, we usually refer to M3. The growth rate of M3 in India

has been around 15 percent per year. This growth can be explained by three factors in the

main: growth in the real economy, monetization of a portion of deficit financing and

financial deepening of the economy. Monetization of a portion of deficit financing means

the RBI buys the securities issued by the government.

g) Price Level and Inflation

The price level measures the degree to which the nominal rate of growth in GDP is

attributable to the factor of inflation. The effect of inflation on the corporate sector tends to

be uneven. While certain industries may benefit, others tends to suffer. Industries that enjoy a

strong market for their products and which do not come under the purview of price control

may benefit. On the whole, it appears that a mild level of inflation is good for the stock

market.

h) Interest Rate

Interest rates vary with maturity, default risk, inflation rate, and productivity of capital

and so on. The interest rates on money market instruments which are virtually risk free tend

to be the lowest. Long dated government securities generally carry slightly higher interest

rates. Corporate debentures which have some default risk associated with them carry still

higher interest rates.


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A rise in interest rates depresses corporate profitability and also leads to an increase in the

discount rate applied by equity investors, both of which have an adverse impact on stock

prices.

i) Foreign Investment

Foreign investment in India comes in two forms: foreign direct investment and foreign

portfolio investment. The former represents investment for setting up new projects and hence

is long term in nature; the latter is in the form of purchase of outstanding securities in the

capital market and hence can be reversed easily.

j) Infrastructural Facilities and Arrangements

Infrastructural facilities and arrangements significantly influence industrial performance.

More specifically, the following are important:

Adequate and regular supply of electric power at a reasonable tariff.

A well-developed transportation and communication system.

An assured supply of basic industrial raw materials like steel, coal, petroleum

products and cement.

Responsive financial support for fixed assets and working capital.

k)Sentiments

The sentiments of consumers and businessmen can have an important bearing on

economic performance. Higher consumer confidence leads to higher expenditure on big ticket

items. Higher business confidence gets translated into greater business investment that has a

stimulating effect on the economy. Thus, sentiments influence consumption and investment

decisions and have a bearing on the aggregate demand for goods and services.

A.INDUSTRY ANALYSIS


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The objective of industry analysis is to assess the prospects of various industrial

groupings. It is almost impossible to forecast exactly which industrial groupings will

appreciate the most. Yet careful analysis can suggest which industries have a brighter future

than others and which industries are plagued with problems that are likely to persist for a

while.

Industrial analysis is divided into three parts namely,

I. Industry life cycle analysis

II. Structure and characteristics of an industry

III. Profit potential of industries: Porter model.

I. Industry Life Cycle Analysis

Many industrial economists believe that the development of almost every industry may be

analyzed in terms of a life cycle with four well-defined stages:

a. Pioneering Stage

b. Rapid Growth Stage

c. Maturity and Stabilization Stage

d. Decline Stage

a. Pioneering Stage: During this stage, the technology and or the product is relatively new.

Lured by promising prospects, many entrepreneurs enter this field. As a result, there is

keen, and often chaotic, competition. Only a few entrants may survive this stage.

b. Rapid Growth Stage: Once the period of chaotic developments is over, the rapid growth

stage arise. Firms which survive the intense competition of the pioneering stage, witness

significant expansion in their sales and profits.

c. Maturity and Stabilization Stage: During this stage, when the industry is more or less

fully developed, its growth rate is comparable to that of the economy as a whole.


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d. Decline Stage: With the satiation of demand, encroachment of new products, and

changes in consumer preferences, the industry enters the decline stage, relative to the

economy as a whole. In this stage, the industry may grow slightly during prosperous

periods, stagnate during normal periods and decline during recessionary periods.

The experience of most industries suggests that they go through the 4 phases of

the industry life cycle though there are considerable variations in terms of the relative

duration of various stages and the rates of growth during these stages.

II. Structure and Characteristics of an Industry

Since each industry is unique, a systematic study of its specific features and

characteristics must be an integral part of the investment decision process. Industry analysis

should focus on the following:

a. Structure of the industry and nature of competition:

The number of the firms in the industry and market share of the top

few firms in the industry.

Licensing policy of the government.

Entry barriers, if any.

Pricing policies of the firm.

Differentiation among products.

Competition from foreign firms.

b. Nature and prospects of demand:

Major customers and their requirements.

Key determinants of demand.

Degree of cyclicality in demand.

Expected rate of growth in the foreseeable future.

c. Cost, efficiency and profitability:


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Proportions of the key cost elementsraw materials, labor, utilities

and fuel.

Productivity of labor.

Turnover of inventory, receivables and fixed assets.

Control over prices of outputs and inputs.

Gross profit, operating profit and net profit margins.

Return on assets, earning power and return on equity.

d. Technology and research:

Degree of technological stability.

Important technological changes on the horizon and their

implications.

Research and development outlays as a percentage of industry

sales.

Proportion of sales growth attributable to new products.

I. Profit Potential of Industries: Porter Model

Michael Porter has argued that the profit potential of an industry depends on

the combined strength of the following five basic competitive forces:

a. Threat of new entrants

b. Rivalry among the existing firms

c. Pressure from substitute products

d. Bargaining power of buyers

e. Bargaining power of sellers


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Following figure shows the forces that drive competition and

determine industry profit potential:

a. Threat of new entrance

New entrants add capacity, inflate costs, push prices down, and reduce profitability. If an

industry faces the threat of new entrants, its profit potential would be limited. The threat of

new entrants is low if the entry barriers confer an advantage on existing firms and deter new

entrants. Entry barriers are high when:

The new entrants have to invest substantial resources to enter the industry.

Economies of scale are enjoyed by the industry.

Existing firms control the distribution channels, benefit from product differentiation

in the form of brand image and customer loyalty.


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Switching coststhese are essentially onetime cost of switching from the products of

one supplier to another-are high.

b. Rivalry between existing firms

Firms in an industry compete on the basis of price quality, promotion, service, warranties,

and so on if the rivalry between the firms in an industry is strong, competitive moves and

counter moves dampen the average profitability of the industry. The intensity of rivalry in an

industry tends to be high when:

The number of competitors in an industry is large.

At least a few firms are relatively balanced and capable of engaging in a sustained

competitive battle.

The industry growth is sluggish, prodding firms to strive for a higher market share.

There is chronic over capacity in the industry.

The industry confronts high exit barriers.

c. Pressure from substitute products

All firms in an industry face competition from industries producing substitute

products. Substitute products may limit a profit potential of the industry by imposing a

ceiling on the prices that can be charged by the firms in the industry. The threat from

substitute products is high when:

The price- performance trade off offered by the substitute products is attractive.

The switching costs for prospective buyers are minimal

The substitute products are being produced by industries earning superior profits.

d. Bargaining power of buyers


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Buyers are competitive force. They can bargain for price cut, ask for superior quality

and better service and induce rivalry among competitors. If they are powerful, they can

depress the profitability of the supplier industry. The bargaining power of a buyer group is

high when:

Its purchases are large relative to the sales of the seller.

Its switching costs are low.

It poses a strong threat of back ward integration.

e. Bargaining power of suppliers:

Suppliers can exert a competitive force in an industry as they can raise prices, lower

quality and curtail the range of free services they provide. Suppliers have strong bargaining

power when;

There is hardly any viable substitute for the products supplied.

Few suppliers dominate and the supplier group is more concentrated than the buyer

group.

The switching cost for the buyers is high.

Suppliers do present a real threat of forward integration.

B.COMPANY ANALYSIS


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Company analysis is concerned with fundamental analysis of equity shares.

Fundamental analysts take two somewhat different approaches in their search for

mispriced securities. The first approach involves estimating the intrinsic value and

comparing the same with the prevailing market price to determine whether the security is

underpriced or fairly priced or overpriced. The second approach involves estimating a

securitys expected return, given its current price and intrinsic value, and then comparing

it with the appropriate return for securities with similar characteristics.

Company analysis is the last leg in the economy-industry-company analysis sequence.

It may be organized into two parts (a) a study of financials, and (b) a study of other

factors.

Investment analysts start with a historical analysis of earning (and dividends), growth,

risk, and valuation and use company analysis as a foundation for developing the forecasts

required for estimating the intrinsic value.

TECHNICAL ANALYSIS

Technical analysis is radically different from fundamental analysis. While the

fundamental analyst believes that the market is 90 percent logical and 10 percent

psychological, the technical analyst assumes that it is 90 percent psychological and 10

percent logical. Technical analysts dont evaluate a large number of fundamental factors

relating to the company, the industry and the economy. Instead, they analyze internal market

data with the help of charts and graphs. Subscribing to the castles-in-the-air approach, they

view the investment game as an exercise in anticipating the behavior of market participants.

They look at charts to understand what the market participants have been doing and believe

that this provides a basis for predicting future behavior.


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The technical approach is the oldest approach to equity investment, dating back to the

late 19th century. It continues to flourish in modern times as well. As an investor, we will

often encounter technical analysis because newspapers cover it, television programmes

routinely call technical experts for their comments, and investment advisory services circulate

technical reports. Technical analysis can be applied to commodities, currencies, bonds, and

equity stocks, our studies are restricted to equity stocks.

Technical analysis involves a study of market generated data like prices and volumes

to determine the future direction of price movement.

Martin J. Pring explains: The technical approach to investing is essentially a

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

attitudes of investors toward a variety of economic, monetary, political and psychological

forces. The art of technical analysis--for it is artis to identify trend changes at an early

stage and to maintain an investment posture until the weight of the evidence indicates that the

trend has been reversed.

THE DOW THEORY

Originally proposed in the late nineteenth century by Charles H. Dow, the editor of

the Wall Street Journal, the Dow Theory is perhaps the oldest and best known theory of

technical analysis.

In the words of Charles Dow:

The market is always considered as having three movements, all going at the same

time. The first is the narrow movement from day to day. The second is the short swing,

running from two weeks to a month or more; the third is the main movement, covering at

least four years in its duration.


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Proponents of the Dow Theory refer to the three movements as: (a) daily fluctuations

that are random day-to-day wiggles; (b) secondary movements or corrections that may last

for a few weeks to some months; and (c) primary trends representing bull and bear phases of

the market.

An upward primary trend represents a bull market, whereas a downward primary

trend represents a bear market. A major upward move is said to occur when the high point of

each rally is higher than the low point of the preceding decline. Likewise, a major downward

move is said to occur when the high point of each rally is lower than the low point of the

preceding decline.

The secondary movements represent technical correction. They represent adjustments

to the excesses that may have occurred in the primary movements. These movements are

considered quite significant in the application of the Dow Theory.

The daily fluctuations are considered to be minor significance. Even zealous technical

analysts do not usually try to forecast day-to-day movements in the market.

Bar and Line Charts

The bar chart, one of the simplest and most commonly used tool of technical analysis,

depicts the daily price range along with the closing price. In addition, it may show the daily

volume of transactions. The upper end of each bar represents the days highest price and the

lower end the days lowest price. The small cross across the bar marks the days closing

price.

Technical analysts believe that certain formations or patterns observed on the bar char

or line chart have predictive value. The more important formations and their indications are

described below:


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Head and Shoulders Top (HST) Pattern: As the name suggests, the HST formation has a

left shoulder, a head, and a right shoulder. The HST formation represents a bearish

development. It the price falls below the neckline (the line drawn tangentially to the left and

right shoulders), a price decline is expected. Hence, it is a signal to sell.

Inverse Head and Shoulders Top (IHST) Pattern: As the name indicates, the IHST

formation is the inverse of the HST formation. Hence, it reflects a bullish development. It the

price rises above the neck line, a price rise is expected. Hence, it is a signal to buy.

Triangle or Coil Formation: This formation represents a pattern of uncertainty. Hence, it is

difficult to predict which way the price will break out.

Flags and Pennants Formation: It typically signifies a pause after which the previous price

trend is likely to continue.

Double Top Formation: It represents a Bearish Development, Signaling that the price is

expected to fall.

Double Bottom Formation: It reflects a bullish development, signaling that the price is

expected to rise.

Point and Figure Chart

More complex than a bar chart, a Point and Figure Chart (PFC) has the following features:


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Company

Profile


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ABOUT THE ORGANISATION

CD Equi has established Brokerage house with over 30 years of rich experience in financial

services. It has the Professional Management

Its Guiding principlesTrust, Transparency and Thought leadership and It Empanelledwith large number of FIIs and DII

One of the most reputed names in fundamental research


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CD has been set up to engage in

Stock Broking

Equity

Derivatives Depository Services

Distribution of Investment Products

Distribution of Insurance

Commodities Broking

Currency

Headquartered inMumbai, CD has a growing network of offices across several states to ensure

easy accessibility to our clients wherever they are. CD has Branch Offices spread across the

country to offer better reach and service to the investor. The company currently marks its presence

in the following regions:

Mumbai

Kolkata

Delhi

Hyderabad

Jaipur

Vijayawada

Opening Shortly

Ahmedabad

Bangalore

Pune


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Expansion Plans

Setting up Regional Offices/Branch Office in 25 Metros/ Tier II cities in next 24 months

Expansion at 1000+ locations through Sub Brokers in the next 24 months

IPO / PE in another 3-4 years

To be amongst the top 10 broking house in India by 2012

Access to clients

User friendly back office software

All segments through single login

Client Position

1. Segment wise ledger balance

2. DP stock positionDP, pool, BTST3. Open position in FNO and commodities.

Viewing and printing of bills

Viewing and printing of ledger for all the segments

Sauda summary

Risk Management report

Brokerage report

User friendly back office software All segments through single login

MANAGEMENT

CD Equisearch is managed byprofessionals who have years of experience in financial

service industry


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Mr. Chandravadan DesaiChairman

Mr. Pranay DesaiDirector

Mr. VikashKalaniCOO

Mr. JayeshVoraCFO

GUIDING PRINCIPLE

At CD Equisearch, the selection and recommendations of wealth creating opportunities are

primarily based on the 3C Principles:

Conservation of capital

Consistent growth in value of investment over a period of time

Continual cash inflow through handsome dividends

PRODUCTS AND SERVICES

We are a one-stop financial services shop, most respected for quality of its advice,

personalized service and cutting-edge technology.

Equities

CD provided the prospect of researched investing to its clients, which was hitherto

restricted only to the institutions. Research for the retail investor did not exist prior to CD. CD

leveraged technology to bring the convenience of trading to the investors location of

preference (residence or office) through computerized access. CD made it possible for clients to

view transaction costs and ledger updates in real time.

PMS

Our Portfolio Management Service is a product wherein an equity investment portfolio

is created to suit the investment objectives of a client. We at CD invest your resources into

stocks from different sectors, depending on your risk-return profile. This service is particularly


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advisable for investors who cannot afford to give time or don't have that expertise for day-to-

day management of their equity portfolio.

Research

Sound investment decisions depend upon reliable fundamental data and stock selection

techniques. CD Equity Research is proud of its reputation for, and we want you to find the facts

that you need. Equity investment professionals routinely use our research and models as

integral tools in their work. They choose Ford Equity Research when they can clear your

doubts.

Commodities

CD extension into commodities trading reconciles its strategic intent to emerge as a

one-stop solutions financial intermediary. Its experience in securities broking has empowered it

with requisite skills and technologies. The Companys commodities business provides a contra-

cyclical alternative to equities broking. The company was among the first to offer the facility of

commodities trading in Indias young commodities market (the MCX commenced operations

only in 2003). Average monthly turnover on the commodity exchanges increased from Rs 0.34

bn to Rs 20.02 bn. The commodities market has several products with different and non-

correlated cycles. On the whole, the business is fairly insulated against cyclical gyrations

Invest Online

CD has made investing in Mutual funds and primary market so effortless. All you have

to do is register with us and thats all. No paperwork no queues and No registration charges.

INVEST IN Mutual Fund


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CD offers you a host of mutual fund choices under one roof, backed by in-depth

research and advice from research house and tools configured as investor friendly.

APPLY IN IPOs

You could also invest in Initial Public Offers (IPOs) online without going through the hassles

of filling ANY application form/ paperwork

SMS

Stay connected to the market:

The trader of today, you are constantly on the move. But how do you stay connected to the

market while on the move? Simple, subscribe to CD Stock Messaging Service and get Market

on your Mobile!

Insurance

An entry into this segment helped complete the clients product basket; concurrently, it

graduated the Company into a one-stop retail financial solutions provider. To ensure maximum

reach to customers across India, we have employed a multi pronged approach and reach out to

customers via our Network, Direct and Affiliate channels. Following the opening of the sector

in 1999-2000, a number of private sector insurance service providers commenced operations

aggressively and helped grow the market. The companys entry into the insurance sector de -

risked the company from a predominant dependence on broking and equity-linked revenues.

The annuity based income generated from insurance intermediation result in solid core

revenues across the tenure of the policy.

Wealth Management Service

Imagine a financial firm with the heart and soul of a two-person organization. A world-


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leading wealth management company that sits down with you to understand your needs and

goals. We offer you a dedicated group for giving you the most personal attentionat every level.

Roles and Responsibilities in Organisation:

We will give updates to customers in

Economic Outlook and Updates

Sector & Company Reports

Technical Recommendations

Daily Market Report

Daily Technical Outlook

Reports on New Fund Offerings

Weekly analysis of mutual fundsFund Focus

Weekly debt report: Debt Dose

Offer daily technical calls through SMS to our clients.

KEY LEARNINGS IN ORGANISATION:

EQUITY

MUTUAL FUNDS

TAX SAVINGS SCHEMES IN MUTUAL FUNDS

ONLINE AND OFFLINE TRADING

IPO (INITIAL PUBLIC OFFER)

DERIVATIVES

FOREX MARKET

CURRENCY


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COMMODITIES

RISK-RETURN PROFILE IN FUTURES AND OPTIONS-S&P CNX NIFTY


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Data

Analysis

ANALYSIS


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COMPANY PROFILE:

ICICI:

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion)

at March 31, 2011 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March

31, 2011. The Bank has a network of 2,044 branches and about 5,546 ATMs in India and presence

in 18 countries. ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its specialized

subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and

asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and

Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai

International Finance Centre and representative offices in United Arab Emirates, China, South

Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established

branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock

Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New

York Stock Exchange (NYSE).

History:

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, andwas its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% througha public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed onthe NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stockamalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors infiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, theGovernment of India and representatives of Indian industry. The principal objective was to create a

development financial institution for providing medium-term and long-term project financing toIndian businesses. In the 1990s, ICICI transformed its business from a development financialinstitution offering only project finance to a diversified financial services group offering a widevariety of products and services, both directly and through a number of subsidiaries and affiliateslike ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financialinstitution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging

competitive scenario in the Indian banking industry, and the move towards universal banking, the

managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank

would be the optimal strategic alternative for both entities, and would create the optimal legal


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structure for the ICICI group's universal banking strategy. The merger would enhance value for

ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities

for earning fee-based income and the ability to participate in the payments system and provide

transaction-banking services. The merger would enhance value for ICICI Bank shareholders

through a large capital base and scale of operations, seamless access to ICICI's strong corporate

relationships built up over five decades, entry into new business segments, higher market share in

various business segments, particularly fee-based services, and access to the vast talent pool o

ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank

approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI

Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The

merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court

of Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and the

Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and

banking operations, both wholesale and retail, have been integrated in a single entity.

Board of Directors:

ICICI Bank's Board members include eminent individuals with a wealth of experience in

international business, management consulting, banking and financial services.

Director's Profiles

ChandaKochharManaging Director and Chief Executive Officer

N.S. Kannan K. Ramkumar Rajiv SabharwalExecutive Director & CFO Executive Director Executive Director

Board Members:

Mr. K. V. Kamath, Chairman

Mr. SridarIyengar

Mr. Homi R. Khusrokhan

Dr. Anup K. Pujari

Mr. M.S. Ramachandran
http://www.icicibank.com/aboutus/board-of-members-kvk.htmlhttp://www.icicibank.com/aboutus/board-of-members-iyengar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-homi.htmlhttp://www.icicibank.com/aboutus/board-of-members-pujari.htmlhttp://www.icicibank.com/aboutus/board-of-members-ramachandran.htmlhttp://www.icicibank.com/aboutus/board-of-members-ramachandran.htmlhttp://www.icicibank.com/aboutus/board-of-members-pujari.htmlhttp://www.icicibank.com/aboutus/board-of-directors-homi.htmlhttp://www.icicibank.com/aboutus/board-of-members-iyengar.htmlhttp://www.icicibank.com/aboutus/board-of-members-kvk.html


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Dr. Tushaar Shah

Mr. M.K. Sharma

Mr.V.Sridar

Mr. V. PremWatsa

Ms.ChandaD.Kochhar,

Managing Director & CEO

Mr.N.S.Kannan,

Executive Director & CFO

Mr.K.Ramkumar,

Executive Director

Mr.RajivSabharwal,

Executive Director

Investor Relations:

All the latest, in-depth information about ICICI Bank's financial performance and businessinitiatives.

ICICI Bank disseminates information on its operations and initiatives on a regular basis. The ICICI

Bank website serves as a key investor awareness facility, allowing stakeholders to access

information on ICICI Bank at their convenience. ICICI Bank's dedicated investor relations

personnel play a proactive role in disseminating information to both analysts and investors andrespond to specific queries.

BALANCE SHEET AS AT MARCH 31, 2011

PARTICULARS As atMarch 31, 2011

As atMarch 31, 2010
http://www.icicibank.com/aboutus/board-of-members-tushaar.htmlhttp://www.icicibank.com/aboutus/board-of-members-sharma.htmlhttp://www.icicibank.com/aboutus/board-of-directors-sridhar.htmlhttp://www.icicibank.com/aboutus/board-of-members-watsa.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kochhar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kochhar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-rajiv-sabharwal.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-ramkumar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kannan.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kochhar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-kochhar.htmlhttp://www.icicibank.com/aboutus/board-of-members-watsa.htmlhttp://www.icicibank.com/aboutus/board-of-directors-sridhar.htmlhttp://www.icicibank.com/aboutus/board-of-directors-sridhar.htmlhttp://www.icicibank.com/aboutus/board-of-members-sharma.htmlhttp://www.icicibank.com/aboutus/board-of-members-tushaar.html


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Rs.in crores Rs. in crores

SOURCES OF FUNDS:

Share Capital 11518.20 11148.89

Share warrants and outstanding 2.93 0.00

Total reserve 539388.24 505034.77

Deposits 2256021.08 2020165.97

Borrowings 1095542.77 942635.00

Other liabilities and provisions 159863.47 155011.83

TOTAL LIABILITIES

4062336.69 3633997.15

APPLICATION OF FUNDS:

Cash and balance with reserve bank ofindia 209069.70 275142.92

Balance with banks and money at calland short notice 131831.13 113594.02

Investments 1346859.63 1208928.01

Advances 2163659.01 1812055.97

(a) Gross Block 91074.66 71141.15

(b) Less:- Accumulated Depreciation 43632.11 39014.25

Less: impairment of assets 0 0

(c) Net Block 47442.55 32126.90

Lease adjustment0 0

(d) Capital Work-in-Progress 0 0

OTHER ASSETS 163474.66 192149.34

TOTAL ASSETS 4062336.69 3633997.15

Contingent liability 9231216.14 7270840.59


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Bills of collection 85300.27 64749.54

CASH FLOW STATEMENT(Rs. in Million)

Year ended March 31,

2011 2010

Net profit before tax 67607.03 53453.22

Adjustments for expenses and provisions 36340.87 52409.07

Adjustments for liabilities and assets -154534.06 -711840.82

Cash flow from investing activities -21088.25 61507.32

Cash flow from financing activities 31059.74 13826.17

Effect of exchange fluctuation on translation reserve -490.69 -4954.30

Net increase (decrease) in cash and cash equivalents -59117.72 94025.60

Cash and cash equivalents at 1st April 388736.94 299665.64

Cash and cash equivalents at 31st

march 340900.83 388736.94

APPLICATION OF DOW THEORY:

DATE CLOSING PRICE

2-Jan-12 696.55

3-Jan-12 725.8

4-Jan-12 743.1

5-Jan-12 748.1

6-Jan-12 751.7

7-Jan-12 745.2

9-Jan-12 747.8


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10-Jan-12 774.5

11-Jan-12 780.15

12-Jan-12 781.4

13-Jan-12 789.45

16-Jan-12 791.6

17-Jan-12 785.55

18-Jan-12 769.65

19-Jan-12 797.2

20-Jan-12 842.45

23-Jan-12 856.75

24-Jan-12 888.05

25-Jan-12 880.05

27-Jan-12 887.95

30-Jan-12 852.2

31-Jan-12 902.15


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INFERENCE:

The above graph represents the daily fluctuations n the Market

which is one of the major proponent in Dow Theory. It is difficult

to forecast day-to-day movements in the market. In the above 20

days of trading, the share price of ICICI lowest was on 2nd JAN.-

Rs.696.55 and the highest was on 23rd MAY.Rs. 902.15.


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INFER

ENCES

:

A 20-

day

moving average of daily prices may be used to detect a short term trend. This stock price line

stands as an indicator to an investor whether to buy the share or to sell it. In the above 20-day

average the highest 3-year moving average is on 25th JAN.

DATE CLOSING

PRICE

SUM OF THREE

YEARS.

AVERAGE

2-Jan-12 696.55

3-Jan-12 725.8 2165.45 721.81

4-Jan-12 743.1 2217 7395-Jan-12 748.1 2242.9 747.63

6-Jan-12 751.7 2245 748.33

7-Jan-12 745.2 2244.7 748.23

9-Jan-12 747.8 2267.5 755.83

10-Jan-12 774.5 2302.45 767.48

11-Jan-12 780.15 2336.05 778.68

12-Jan-12 781.4 2351 783.66

13-Jan-12 789.45 2362.45 787.48

16-Jan-12 791.6 2366.6 788.8617-Jan-12 785.55 2346.8 782.26

18-Jan-12 769.65 2352.4 784.13

19-Jan-12 797.2 2409.3 803.1

20-Jan-12 842.45 2496.4 832.13

23-Jan-12 856.75 2587.25 862.41

24-Jan-12 888.05 2624.85 874.95

25-Jan-12 880.05 2656.05 885.35

27-Jan-12 887.95 2620.2 873.4

30-Jan-12 852.2 2642.3 880.7631-Jan-12 902.15

STATE BANK OF INDIA

Company Profile:


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The evolution of State Bank of India can be traced back to the first decade of the 19th

century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806.

The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was

the first ever joint-stock bank of the British India, established under the sponsorship of the

Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840)

and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These

three banks dominated the modern banking scenario in India, until when they were

amalgamated to form the Imperial Bank of India, on 27 January1921

State Bank of India is an India-based bank. In addition to banking, the Company,

through its subsidiaries, provides a range of financial services, which include life insurance,

merchant banking, mutual funds, credit card, factoring, security trading, pension fund

management and primary dealership in the money market. It operates in four business

segments: Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking

Business. The Treasury segment includes the investment portfolio and trading in foreign

exchange contracts and derivative contracts.

The Corporate/Wholesale Banking segment comprises the lending activities of

Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets

Management Group. The Retail Banking segment consists of branches in National Banking

Group, which primarily includes personal banking activities, including lending activities to

corporate customers having banking relations with branches in the National Banking Group.

History:

An important turning point in the history of State Bank of India is the launch of the first Five

Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy ingeneral and the rural sector of the country, in particular. Until the Plan, the commercial banks

of the country, including the Imperial Bank of India, confined their services to the urban

sector. Moreover, they were not equipped to respond to the growing needs of the economic

revival taking shape in the rural areas of the country. Therefore, in order to serve the

economy as a whole and rural sector in particular, the All India Rural Credit Survey

Committee recommended the formationof a state-partnered and state-sponsoredbank.

The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of


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India, and integrating with it, the former state-owned or state-associate banks. Subsequently,

an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of

India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India

more powerful, because as much as a quarter of the resources of the Indian banking system

were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks)

Act was passed in 1959. The Act enabled the State Bank of India to make the eight

formerState-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the 480

offices comprising branches, sub offices and three Local Head Offices, inherited from the

Imperial Bank. Instead of serving as mere repositories of the community's savings and

lending to creditworthy parties, the State Bank of India catered to the needs of the customers,

by banking purposefully. The bank served the heterogeneous financial needs of the planned

economic development.

INVESTOR RELATIONS :

State Bank of India, the countrys largest commercial Bank in terms of profits, assets,

deposits, branches and employees, welcomes you to its Investors Relations Section. SBI,

with its heritage dating back to the year 1806, strives to continuously provide latest and up to

date information on its financial performance. It is our endeavour to walk on the path of

transparency and allow complete access to all the stakeholders enabling total awareness about

the Bank. The Bank communicates with the stakeholders through a variety of channels, such

as through e-mail, website, conference call, one-on-one meeting, analysts meet and

attendance at Investor Conference throughout the world.

Please find below Banks financial results, analysis of performance and other highlights

which will be of interest to Investors, Fund Managers and Analysts. SBI has always been

fundamentally strong in its core business which is mirrored in its resultsyear after year.

Board of directors:

1 Mr. P Bhatt Chairman / Chair Person

2 Dr.AshokJhunjhunwala Director


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Branches:

The corporate centre of SBI is located in Mumbai. In order to cater to different functions,

there are several other establishments in and outside Mumbai, apart from the corporate

centre. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices,

located at major cities throughout India. It is recorded that SBI has about 10000 branches,

well networked to cater to its customers throughout India.

ATMServices:

SBI provides easy access to money to its customers through more than 8500 ATMs in India.

The Bank also facilitates the free transaction of money at the ATMs of State Bank Group,

which includes the ATMs of State Bank of India as

Well as the Associate BanksState Bank of Bikaner & Jaipur,State Bank of Hyderabad,State Bank of Indore, etc.

You may also transact money through SBI Commercial and International Bank Ltd by using

the State Bank ATM-cum-Debit (Cash Plus) card.

3 Dr.(Mrs.)VasanthaBharuchaDirector

4 Mrs.ShyamalaGopinathDirector

5 Mr.SVenkatachalam Director

6 Mr.AshokChawlaDirector

7 Mr.DSundaramDirector

8 Mr.Dileep C ChoksiDirector

9 Dr.Rajiv Kumar Director

10 Mr.RSridharanManaging Director


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Subsidiaries:

The State Bank Group includes a network of eight banking subsidiaries and several non-

banking subsidiaries. Through the establishments, it offers various services including

merchant banking services, fund management, factoring services, primary dealership in

government securities, credit cards and insurance.

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR) State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

Personal Banking:

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

Other Services:

Agriculture/Rural Banking

NRI Services ATM Services

Demat Services

Corporate Banking

Internet Banking

Mobile Banking

International Banking

Safe Deposit Locker

RBIEFT

E-Pay

E-Rail SBI VishwaYatra Foreign Travel Card


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Broking Services

Gift Cheques

BALANCE SHEET AS AT MARCH 31, 2011

PARTICULARS As atMarch 31, 2011

Rs.in crores

As atMarch 31, 2010

Rs. in crores

SOURCES OF FUNDS:

Share Capital 6349.99 6348.83

Share warrants and outstanding 0.00 0.00

Total reserve 643510.44 653143.16

Deposits 9339358.13 8041162.27

Borrowings 1195689.55 1030116.01

Other liabilities and provisions 1052483.89 803367.04

TOTAL LIABILITIES 12237362.01 10534137.31

APPLICATION OF FUNDS:

Cash and balance with reserve bank of india 943955.02 612908.65

Balance with banks and money at call andshort notice 284786.46 348929.76

Investments 2956005.69 2857900.71

Advances 7567194.48 6319141.52

(a) Gross Block 131892.85 118316.27

(b) Less:- Accumulated Depreciation 87575.29 77141.07

Less: impairment of assets 0 0

(c) Net Block 44317.56 41175.20

Lease adjustment 2.03 2.03


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(d) Capital Work-in-Progress 3322.31 2951.84

Other assets 437778.47 351127.60

Total assets 12237362.01 10534137.31

Contingent liability 7304846.05 5484468.85

Bills of collection 599049.83 479223.28

CASH FLOW STATEMENT

(Rs. in Million)

Year ended March 31,

2011 2010

Net profit before tax 149542.31 139260.96

Adjustments for expenses and provisions 126615.34 51863.33

Adjustments for liabilities and assets 131861.30 -140025.50

Cash flow from investing activities -12455.31 -17615.23

Cash flow from financing activities 20571.07 -33596.71

Effect of exchange fluctuation on translation reserve -547.61 -12937.75

Net increase (decrease) in cash and cash equivalents 350940.98 -69261.82

Cash and cash equivalents at 1st April 861887.14 1044037.99

Cash and cash equivalents at 31st march 1228741.48 961838.42


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APPLICATION OF DOW THEORY:

DATE CLOSING PRICE

2-Jan-12 1,627.65

3-Jan-12 1,705.65

4-Jan-12 1,696.05

5-Jan-12 1,692.45

6-Jan-12 1,672.75

7-Jan-12 1,669.10

9-Jan-12 1,637.2510-Jan-12 1,702.60

11-Jan-12 1,726.95

12-Jan-12 1,764.40

13-Jan-12 1,776.10

16-Jan-12 1,816.40

17-Jan-12 1,844.00

18-Jan-12 1,865.35

19-Jan-12 1,884.30

20-Jan-12 1,932.85

23-Jan-12 1,940.5024-Jan-12 2,040.80

25-Jan-12 2,058.00

27-Jan-12 2,040.60


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INFERENCE:

The above graph represents the daily fluctuations in the market which is one of the major

proponent in Dow Theory. It is difficult to forecast day-to-day movements in the market. In

the above 20 days of trading, the share price ofSBIN lowest was on 2nd JAN.Rs. 1627.65

and the highest was on 25th JAN.Rs. 2058.60.

DATE CLOSING

PRICE

SUM OF THREE

YEARS

AVERAGE

2-Jan-12 1,627.65

3-Jan-12 1,705.65 5029.35 1676.45

4-Jan-12 1,696.05 5094.15 1698.05

5-Jan-12 1,692.45 5061.25 1672.08

6-Jan-12 1,672.75 5034.3 1678.1

7-Jan-12 1,669.10 4979.1 1659.7

9-Jan-12 1,637.25 5008.95 1669.65

10-Jan-12 1,702.60 5066.8 1688.93

11-Jan-12 1,726.95 5193.95 1731.31

12-Jan-12 1,764.40 5267.45 1755.81


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13-Jan-12 1,776.10 5356.9 1785.63

16-Jan-12 1,816.40 5436.5 1812.16

17-Jan-12 1,844.00 5525.75 1841.91

18-Jan-12 1,865.35 5593.65 1864.55

19-Jan-12 1,884.30 5682.5 1894.1620-Jan-12 1,932.85 5757.65 1919.21

23-Jan-12 1,940.50 5914.15 1971.38

24-Jan-12 2,040.80 6039.3 2013.1

25-Jan-12 2,058.00 6139.4 2046.46

27-Jan-12 2,040.60

INFERENCES:

A 18-day moving average of daily prices may be used to detect a short term trend. This stock

price line stands as an indicator to an investor whether to buy the share or to sell it. In the

above 18-day average the highest 3-year moving average is on 25 th Jan.


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SUMMARY

Investing in financial securities is now considered to be one of the best avenues for

investing ones savings while it is acknowledged to be one of the most risky avenues of

investment. Even Indian Government is planning to encourage people in rural areas to invest

in equity. This will help the markets to stabilize by tapping the rural areas and decreases the

dependency on Foreign Institutional Investors.


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The factors which were studied under this are to know about stock markets in India,

how they work, prerequisites to enter the stock markets, market design, stock selection, when

to buy or sell a stock, how to invest, knowing about market intermediaries.

For successful investment factors like timing, selection, setting targets, avoiding

speculation and constant review of portfolio is advised.

FINDINGS

From the above analysis, it is found that:

ICICI has the worlds best way of delivering banking services and investment

options.ICICI has worldwide branches Due to this, its services are of world class.Total

assets of company have shown an 4.19 percent increase in FY 2010-2011.

SBI has recorded an 9.22 percent of increase in its total assets.

In comparison to ICICI and SBI share price analysis, it is found out that SBI has the


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highest share price value because of its wide spread coverage of market.

If the stock price line falls below the moving average line, the investor should purchase

the stock because the intrinsic value is more than the market price. That means that is

undervalued.

If the stock price line rises above the moving average line, the investor should sell the

stock as the intrinsic value is more than the market price. Therefore, the stock is

overvalued.


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Suggestions


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SUGGESTIONS

Suggestions to an investor for reaping good returns in Equity Investment

Proper scientific way of investigation should be undertaken about sector and its

players before investment

Clear targets should be set before investment

Stock pickup should be always selective and should not depend on rumors of the

market

Define price range first before buying and selling shares

Before buying and selling shares latest price movement trends should be analyzed

Speculation is not advised in the market

Individual Risk tolerance should be known and then be ready for unexpected

Constant proper review of portfolio should be done and wherever required buying and

selling of shares should be done.


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Conclusions


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CONCLUSIONS

Economic liberalization has accelerated the pace of development in the securities market. In

India, the role of securities market has undergone structural transformation with the

introduction of computerized online trading and interconnected market system.

Investment in securities such as shares, debentures and bonds is profitable, but also

involves great deal of risk. Even Indian Government wants to encourage Equity Investment.

According to Fundamental Analysis:

Economy:

While analyzing stock, investor should consider GNP, Price conditions, Economy, Housing,

Construction Activity, Employment, Accumulation of inventories, Personal Disposable

Income, Personal savings, Interest rates, Balance of Trade, Strength of the Rupee in Forex

market and Corporate Taxation (Direct and Indirect)

Sector Analysis:

It is advised to invest in a sector that is either in a pioneering stage or in its expansion stage.

It is advisable to quickly get out of sectors which are in the stagnation stage prior to its lapse


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into the decline stage. The particular phase or stage of a sector can be determined in terms of

sales, profitability and their growth rates amongst other factors.

Company Analysis:

In company analysis, history of the company and line of business, Product portfolios

strength, Market share, Top Management, Intrinsic Values like Patents and

Trademarks held, Foreign collaboration, its need and availability for future, Quality of

competition in the market, present and future, Future business plans and projects,

Level of trading of the companys listed scrip, EPS, its growth and rating vis--vis

other companies in the industry, P/E Ratio, Growth in Sales are analyzed.

According to technical analysis:

The fundamental analysis is the de

investment in equities

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