mandar project

8/2/2019 Mandar Project

1/61

A

PROJECT REPORT ON

Equity Research: Fundamental and

Technical analysis and its impact on stock

prices

BY

MANDAR SADHU

MBA-II

2010-2011

UNDER THE GUIDANCE OFPROF.KAVITA

SUBMITED TO

SWAMI RAMANAND TEERTH MAATHWADA UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENT

FOR THE AWARD OF DEGREE OF MASTER OF

BUSINESS ADMINISTRATION (MBA)THROUGH

NANDIGRAM INSTITUTE OF MANAGEMENT STUDIES


2/61

ACKNOWLEDGMENT

Its a great privilege that I have done my project in such a well-organized and

diversified organization. I am great full to all those who helped and supported me in

completing the project.

First of all I would sincerely like to thank

I am also thankful to our director PROF. R BILOLIKAR and my project guide

Prof.KAVITA for helping me in completing the project.

Last but not least, I am also thankful to all college staff and my friends for helping me

directly or indirectly in my project.

MANDAR SADHU


3/61

EXECUTIVE SUMMARY

EQUITY ANALYSIS is the systematic study of the performance of companies in

stock market with help of fundamental analysis and technical analysis. Equity

analysis consists of fundamental analysis & technical analysis. While decision ininvestment of shares should be base on actual movement of shares price measured

more in money & percentage term & nothing else.

In equity analysis, calculations are based on FACTS & not on HOPE. The subject of

equity analysis, i.e. the to attempt to determine future share price movement with the

help of RATIO ANALYSIS, STUDY OF GRAPH. Equity analysis does not discusshow to buy & sell shares, but does discuss the methods, which enables the investor to

arriving at buying & selling decision.

The Technical Approach to investment is essentially a reflection of the idea that

prices moves in a trend that are determined by the changing attitude of investorstoward a variety of economic, monetary, political and psychological forces. The art of

technical analysis, for it is an art, is to identify a trend reversal at a relatively earlystage and ride on that trend until the weight of the evidence shows or proves the trend

has reversed.


4/61

INTRODUCTION TO BSE AND NSE

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich

heritage. Popularly known as BSE, it was established as The Native Share &

Stock Brokers Association in 1875. It is the first stock exchange in country to obtain

permanent recognition in 1956 from the Government of India under the SecuritiesContracts (Regulation) Act, 1956. The Exchanges pivotal and pre-eminent role in the

development of the Indian capital market is widely recognized and its index,

SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), theExchange is now a demutualised and corporative entity incorporated under the

provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and

Demutualization) Scheme, 2005 notified by the Securities and Exchange Board ofIndia (SEBI).

With demutualization, the trading rights and ownership rights have been de linked

effectively addressing concerns regarding perceived and real conflicts of interest. The

Exchange is professionally managed under the overall direction of the Board ofDirectors. The Board comprises eminent professionals. Representatives of Trading

Members and the Managing Director of the Exchange. The Board is inclusive and isdesigned to benefit from the participation of market intermediaries.

The Exchange has a nation-wide reach with a presence in 417 cities and towns ofIndia. The systems and processes of the Exchange are designed to safeguard market

integrity and enhance transparency in operations. During the year 2004-2005, the

trading volumes on the Exchange showed robust growth.

The Exchange provides an efficient and transparent market for trading in equity, debt

instruments and derivatives. The BSE On Line Trading System (BOLT) is aproprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillanceand clearing and settlement functions of the Exchange are ISO 9001:2000 certified.


5/61

SENSEX THE BAROMETER OF INDIAN CAPITAL

MARKETS

For the premier Stock Exchange that pioneered the stock broking activity in Indian,

128 years of experience seems to be a proud milestone. A lot has changed since 1875when 318 persons became members of what today is called The Stock Exchange,

Mumbai by paying a princely amount of Re1. Till the decade of eighties, there was

no scale to measure the ups and downs in the Indian stock market. The StockExchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently

became the barometer of the Indian stock market.

First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing asample of large, liquid and representative companies. The base year of SENSEX is

1978-79 and the base value is 100. The index is widely reported in both domestic and

international markets through print as well as electronic media. The entry and exit of

any specific stock depends on the market capitalization of the top 30 companies in themarket and are from different sectors.

NATIONAL STOCK EXCHANGEThe National Stock Exchange (NSE) is Indias leading stock exchange coveringvarious cities and towns across the country. NSE was set up by leading institutions to

provide a modern, fully automated screen-based trading system with national reach.

The Exchange has brought about unparalleled transparency, speed & efficiency,

safety and market integrity. It has set up facilities and procedures.

NSE has played a catalytic role in reforming the Indian securities market in terms ofmicrostructure, market practices and trading volumes. The market today uses state-ofartinformation technology to provide an efficient and transparent trading, clearing

and settlement mechanism, and has witnessed several innovations in products &

services viz. demutualization of stock exchange governance, screen based trading,Professionalisation of trading members, fine-tuned risk management systems,

emergence of clearing corporations to assume counter party risks, market of debt and

derivative instruments and intensive use of information technology. IDBI & otherfinancial institution with paid equity capital of Rs 25 cores set up NSE. It started

operation in Wholesale debt market in June 1994 & in equity, in Nov 1994.


6/61

INDIA INFOLINE LTD. offers a comprehensive direct equities service for our private

clients, our services include:

An equity portfolio review and recommendation service;

Comprehensive and short form research reports on Australia's leadingCompanies, together with regular economic and market reviews;

Access to floats and new issues;

Access to International shares and detailed research information

Access to government bonds;

Clients who may be looking for advice on not only stocks but also on hybrids,warrants and options strategies

Ongoing management of your portfolio aligned to your long term wealthcreation goals

We can also provide access to Separately Managed Accounts (SMA's) andIndividually Managed Accounts for simple and transparent equities

administration.

To achieve long term financial success you will need a portfolio that increases in

value over time. One of the sectors best able to achieve this growth is Australian

listed shares.

Listed shares can provide you with an income stream through the payment ofdividends. Through dividend imputation, this income stream can be tax effective.

Depending on your particular requirements you may choose shares that focus on

growth opportunities, or on an income stream, or that provide a combination of both.

INDIA INFOLINE LTD.s approach to financial management has the flexibility to ensure

that

your individual needs are met. Our step-by-step wealth management service helps

you structure a comprehensive financial strategy that meets both your immediatefinancial requirements and your long-term wealth creation goals and objectives.

INDIA INFOLINE LTD. applies academic research to the practical world of investing. Ourobjective is to help clients develop globally diversified portfolios and to add value

through reduced costs and taxes.

RATIONALE


7/61

The present market scenario has shown us the Boom in Share Market. Even some ofthe research firms showed that Share Market is the fastest growing in India.

From last two years share market is in boom. Now it is possible for the investors to

trade from their own place. As compare to last two years there is a growth in the

number of share brokers and market analysts. Media is playing an important role inthese regards. Now the common man is also thinking of some investment in share

market. Too many investors invest their money for the short span, the intention is

speculative.

RESEARCH METHODLOGY


8/61

During my project, I collected data through various sources primary & secondary.

Primary source includes :-

1) Discussion with branch manager

2) Discussion with experts

3) Questionnaires for investors

4) Live trading in the market

Secondary source includes :-

1) Various books related to stock market

2) Books related to Financial Management

3) Web sites were used as the vital information source.IIFL felt need of evaluating the price patterns of leading scripts

mainly from the five main blue chip companies and also interested in determining

the trends along with price performance in near future. This equity analysis willfacilitate to investor for profitable investment.

EQUITY ANALYSIS

FUNDAMENTAL ANALYSISThe investor, while buying stock, has the primary purpose of gain. If he invests for a

short period of time, it is speculative but when he holds if for a fairly long period of

time, the anticipation is that he would receive some return on his investment. Thefundamental analysis is a method of finding out the future price of a stock, which an

investor wishes to buy. The method for forecasting the future behavior of investment

and the rate of return on them is clearly through an analysis of the broad economic

forces, industry analysis, the company analysis and ration analysis.

A. Influence of the economy on the company.


9/61

These are the following factor: -

01. Economic Growth

02. Populations

03. Monsoons and Agriculture Production

04. Natural resources and availability of raw material

05. Industrial Productions

06. Inflation

07. Interest rate

08. Foreign exchange reserve

09. Balance of payment position

10. Budget deficits

11. Public debt and foreign debt

12. Domestic saving and capital output rate

13. Employments

14. Taxation policies

15. Infrastructure facilities

16. Government policies

17. Political Stability

18. International developments

19. Capital formations

20. Saving pattern

21. Economic indicators

22. Foreign direct investments


10/61

23. Rupee-Dollar Fluctuation

24. Stock News

B. Industrial Analysis.

The industry analysis should take in to account the following factors as

influence the performance of the company, whose share prices are to beanalyzed.

Product Line.

It is also necessary to know the industries with a high growth potential like

computers, electronics, chemicals, diamonds, textiles etc. and whether the

industry is in the priority sector of the key industry group of capital goods or

consumers goods group.

Raw Material and Inputs.

Under these head, we have to look in to industries depending on imports ofscare raw materials, competition from other companies and industries and the

barriers to entry of new company, protection from foreign competition, import

and export restriction etc.

Capacity Installed and Utilized.

The demand for industrial product in the economy is estimated by the

planning commission and the Government, and the units are given licensedcapacity on the basis of these estimates.

Industry Characteristics.It included whether the industry is cyclical, fluctuating of stable. It is also

important industry produce seasonal product or FMCG. It also included

demand of product freight charges, cost of production, advertisement cost,skill of operation, profitability.

Demand and Market.

It includes demand of the product in the market and price of raw material and

other input cost like freight, electricity, season, monsoon, etc. if the nature of

product is such as drugs, fertilizer or other consumer goods, whose price and

distribution control by Government.

Government Policy with regard to Industry

Government Policy is announced in the industrial policy resolution andSubsequent announcement from time to time by the Government. The Policy

strategy as laid down in the five years plans according to planning

commission and expected demand in the economy.

Management.


11/61

If the promoters and the management are the efficient and capable of steering

the company through the difficult days such management likes TATA &

BIRLA, who have reputation, buildup their companies on the strongfoundation. The management has to be assessed in the terms of their

capabilities, popularity, honesty and integrity.

TECHNICAL ANALYSIS


12/61

The methods used to analyze securities and make investment decisions fall into two

very broad categories: Fundamental Analysis and Technical Analysis.Fundamental analysis involves analyzing the characteristics of a company in order to

estimate its value. Technical analysis takes a completely different approach; it doesnt

care one bit about the value of a company or a commodity. Technicians (some timecalled chartists) are only interested in the price movement in the market.

Despite all the fancy and exotic tools it employs, technical analysis really just studies

supply and demand in a market in an attempt to determine what direction, ortrend,will continue in the future. In other words, technical analysis attempts to understand

the emotions in the market by studying the market it self, as opposed to its

components. If you understand the benefits and limitation of technical analysis it can

give you a new set of tools or skills than will enable you to better trader or investor.

DEFINITION

Technical analysis is a method of evaluating the securities by analyzing the statisticsgenerated by the market activity, such as past price and volume. In technical analysis,

analysts use charts and other tools to identify patterns that can suggest futureactivity.

Just as there are many investment styles on fundamental side, there is also much

different type of technical traders. Some rely on chart patterns. In any case, technicalanalysts exclusive use of historical price and volume data is what separates them from

their fundamental counterparts. Unlike fundamental analysis technical analysts dont

care whether a stock is undervalued the only thing that matter is a securitys past

trading data and what information this data can provide about where the securitymight move in the future

Assumptions:

1. The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement,ignoring the fundamental factors of the company. However, technical analysis

assumes that, at any given a time, a stocks price reflects everything that has or could

affect the company- including Fundamental Factors. Technical analysts believe thatthe companys fundamentals, along with broader economic factors and market

psychology, are all priced into the stock, removing the need to actually consider these

factors separately.

This only leaves the analysis of price movement, which technical theory views as aproduct of supply and demand for a particular stock in the market.

2. Price Moves In Trends


13/61

In technical analysis, price movements are believed to follow trends. This means that

after a trend has been established, the future price movement is more likely to be in

the same direction as the trend that to be against it. Most technical trading strategiesare based on this assumption.

3. History Tends To Repeat ItselfAnother important idea in technical analysis is that history tends to repeat itself,

mainly in terms of price movement. The repetitive nature of price movement is

attributed to market psychology; in other words, market participants tend to provide aconsistent reaction to similar market stimuli over time. Technical analysis uses chats

patterns to analyze market movements and understand trends. Although many of

these charts have been use for more than 100 years they are still believed to be

relevant because they illustrate patterns in price movements that often repeatthemselves.

Line charts

A style of charts that is created by connecting a series of data points together with aline. This is the most basic type of charts used in finance and connecting a series of

past prices together with a line generally creates it.

Bar chartA style of chart used by some technical analysts, on whom as illustrated below, the


14/61

top of the vertical line indicates the highest price a security traded at during the day,

and the bottom represents the lowest price. The closing price is displayed on the right

side of the bar, and the opening price is shown on the left side of the bar. A single barlike the one below represents one day of trading.

These are the most popular type of chart used in technical analysis. The visual

representation of price activity over a given period of time is used to spot trends and

patterns.

CandlestickA price chart that displays the high, low, open and close for a security each day over aspecified period of time.

There are many trading strategies based upon patterns in candlestick charting.

Technical analysis: the use of trend

One of the most important concepts in technical analysis is that of trend. The meaning


15/61

in finance isnt all that different from the general definition of the term- a trend is

really nothing more than the general direction in which a security or market is

headed. Take a look at the chart below:It isnt hard to see that the trend in figure is up. However, isnt not always this easy to

see a trend.

There are lots of ups and downs in this chart, but there isnt a clear indication of

which direction this security is headed.

The Importance of TrendIt is important to be able to understand and identify trends so that you can trade withthem rather than trade against them. Two important sayings in technical analysis are

the trend is your friend and dont buck the trend Illustrating how important trend

analysis is for technical trade.

Types of TrendThere are three types of trend:

Up Trends


16/61

Downtrends

Sideways/ Horizontal Trends

As the names imply, when each successive peak and trough is higher, its referred toas an upward trend. If the peaks and troughs are getting lower. Its a downtrend.

When there is little movement up or down in the peaks and troughs, its a sideways or

horizontal trend. If you want to get really technical, you might even say that asideways trend is actually not a trend on its own, but a lack of a well-defined trend in

either direction. In any case, the market can really only trend in these three ways: up,

down or nowhere.

UptrendDescribes the price movement of a financial asset when the overall direction isupward. A formal uptrend is when each successive peak and trough is higher than the

ones found earlier in the trend.

Notice how each successive peak and trough is located above the previous ones. For

example, the peak at trend is higher than the peak at uptrend. The uptrend will be

deemed broken if the next low on the chart falls below trend.


17/61

DowntrendDescribes the price movement of a financial asset when the overall direction isdowntrend. A formal downtrend occurs when each successive peak and trough is

lower than the ones found earlier in the trend.

Notice how each successive peak and trough is lower than the previous one. For

example, the low trend is lower than the low at Point. The downtrend will be deemedbroken once the price closes above the high at high direction trend.

Downtrend is the opposite of uptrend.

Trend linesA trend line is a simple charting technique that adds a line to a chart to represent thetrend in the market or a stock. Drawing a trend line is as simple as drawing a straight


18/61

line that follows a general trend. These lines are used to clearly show the trend and

are also used in the identification of the reversals.

As you see in above Figure, an upward trend lines is drawn at the lows of an upwardtrend. This line represents the support the stock has every time it moves from a high

to a low. Notice how the price is propped up by this support. This type of trend line

helps traders to anticipate the point at which a stocks price will begin movingupwards again. Similarly, a downward trend line is drawn at the highs of the

downward trend. This line represents the resistance level that a stock faces every time

the price moves from a low to a high.

Trend Lengths:Along with this trend direction, there is three-trend classification. A trend of anydirection can be classified as a long-term trend, intermediate trend or a short-term. In

terms of the stock market, a major trend is generally categorized as one lasting longer

than a year. An intermediate trend is considered to last between one and three months

and a near-term trend is anything less than a month. A long-term trend is composed of

several intermediate trends, which obtain move against the direction of the majortrend. If the major trend is upward and there is a downward correction in price

movement followed by a continuation of the up trend, the correction is considered tobe an intermediate trend. The short term trends are components both major and

intermediate trends. Take a look a Figure to get a sense of how these three trends

lengths might look.

When analyzing trends, it is important that the chart is constructed to best reflect the

type of trend being analyzed. To help identify long-term trends, chartists to get abetter idea of the long-term trend use weekly charts or daily charts spanning a fiveyear

period. Daily data charts are best use when analyzing both intermediate and

short-term trends. It is also important to remember that the longer the trend, the moreimportant it is; for example, a month trend is not as significant as five-year trend.

ChannelsA Channel, or channel lines, is the addition of two parallel trend lines that act asstrong areas of support and resistance. The upper trend line connects a series of highs,

while the lower trend line connects a series of lows. A channel can slope upward,

downward or sideways but regardless of the direction, the interpretation remains thesame. Traders will expect a given security to trade between two levels of support and

resistance until it breaks beyond one of the levels in which case traders can expect a

sharp move in Direction of the break. Along with clearly displaying the trend,

channel is mainly used to illustrate important areas of support and resistance.

Above graph a descending channel on stock chart; the upper trend line has been

placed on the highs and lower trend line is on the lows. The price has bounced off ofthese line several times, and has remained rang-bound for several months. As long as

the price does not fall below the lower line or move beyond the upper resistance, the

range bound downtrend is expected to continue.


19/61

Double BottomA charting pattern used in technical analysis. It describes the drop of a stock (or

index), a rebound, another drop to the same (or similar) level as the original drop, andfinally another rebound.

Double Top

A term used in technical analysis to describe the rise of a stock, a drop, another rise to


20/61

the same level as the original rise, and finally another drop.

The double top looks like the letter M. The twice-touched high is considered aresistance level.

Triple BottomA pattern used in technical analysis to predict the reversal of a prolonged downtrend.

The pattern is identified when the price of an asset creates three troughs at nearly the


21/61

same price level. The third bounce off the support is an indication that buying interest

(demand) is outweighing selling interest (Supply) and that trend is in the process of

reversing.

Once the first bottom is created, the price reaches a peak and retraces back toward the

prior support. This is when buyer enters again and pushes the price of the assethigher, creating bottom No.2. The price of the asset then created another peak and

heads lower for its final test of the support. The final bounce of the support level

creates bottom No.3 and traders will get ready to enter a long position once the pricebreaks above the previous resistance (Illustrated by the black on the chart). This

pattern is considered to be a very reliable indication that the downtrend has reversed

and that the new trend in the upward direction. Sudden change in the price direction

of a stock, index, commodity or derivative security. Also referred to as a TrendReversal, Rally or Correction.

Triple Top

A pattern used in technical analysis to predict the reversal of prolonged up trend. Thispattern is identified when the price of an asset creates three peaks at nearly the same

price level. The bonus off the resistance near the third peak is clear indication thatbuying interest is becoming exhausted. The traders to predict the reversal of the up

trend use it.

The three consecutive tops make this pattern visually similar to the head and

shoulders pattern but, in this case, the middle peak is nearly equal to the other peak

rather than being higher. Many traders will enter into a short position once the price


22/61

of asset falls below the identified support level. (Shown by the line in the chart

above).

Head and Shoulders PatternA technical analysis term used to describe a chart formation in which a stocks price:

1 Rises to a peak and subsequently declines.2. Then, the price rises above the former peak and again declines

3. And finally, rises again, but not to the second peak, and declines once

more.The First and Third peaks are shoulders, and second peak forms the head.

The Head -and Shoulders pattern is believed to be one of the most reliable trend

reversal patterns.

38

VolumeThe number of shares or contracts traded in a security or an entire market during a

given period of time. It is simply the amount of shares that trade hands from sellers to


23/61

buyers as a measure of activity. If a buyer of a stock purchases 100 shares from a

seller, then the volume for that period increases by the 100 shares based on that

transaction.Volume is an important indicator in the technical analysis as it is used to measure the

worth of a market move. If the market have made strong price move either up or

down the perceived strength of that move depends on the volume of that period. Thehigher the volume during that price move the more significant the move.

ResistanceThe Price at which a stock or market can trade, but which it cannot exceed, for a

certain period of time. Often referred to as Resistance Level.


24/61

Moving Average- MAAn indicator frequently used in technical analysis showing the average value of a

securitys price over a set of period. Moving averages are generally used to measure

momentum and define areas of possible support and resistance.


25/61

Infosys Technologies Ltd (Infosys) was incorporated on July 2, 1981, as a private ltd

company. It became public limited company. To became public limited company on

June 1992 and subsequently the name was also changed to Infosys Technologies Ltd.It was the first Indian company to be listed on American Stock Exchange. The

company is one of Indias leading information technologies (IT) services companies.

Enterprise Services, Product R&D services and Consulting Services. The company ishaving its Headquarters in Banglore and has 17 offshore development facilities like

Aerospace & Defense, Automotive, and Banking & Capital Markets. Communication

Services, Energy, Insurance, Healthcare, Media, Transportation Services etc.,

Infosys Technologies came out with an IPO in Feb. 1993 at a premium of Rs 95 for a face

value of Rs 10 per share. Since then, it has issued three bonus issues (each in the rati

of 1:1) and split its face value of Rs 5 each. In Feb 2000, the ADRs were split in theratio of 2:1. In 2004-05 the company has signed up 136 new clients and had a total

client base of 438 at the end of the year. The companys product-FINACLE, is an

integrated core banking solution that is centralized, muliti-currency and multilanguage-enabled, functionally rich, and addresses both retail and corporate banking

requirements. During 2002, GOI has raised the investment limit in an Indian

Company for FII from 49% to the maximum level approved by FDI and the

maximum limit for the software industry as approved by FDI is 100% at present, thecompany is in the plan of increasing the limit of such investment to 100%. In 2006

The Company has completed the construction of an employee training facility inMysore, India to further enhance our employee training capabilities. The Mysore

Training complex wills accommodate 4,500 trainees at a time.


26/61


27/61


28/61


29/61

Fundamental: -1. There is a fluctuation in equity dividend. There is no fixed policy regarding

payment of dividend.

2. Rupee Dollar Fluctuation- As most of software companies in India having

their clients in the abroad, mostly in USA. There fore their earning is gettingfrom of dollar. If the dollar price decrease its affect their revenue badly and

recently dollar price has come down to 40.53 from 42.95rs, it will affect forthcoming

results, and currently fundamentally, it is not looking strong.

3. In India, salary of software professional will be increasing, and it will

marginally affect profit of companies and because of that, EPS will be comedown.

4. Infosys technology Ltd. On July 2007 has announced that it has signed a

multi-million dollar outsourcing contract with Royal Philips Electronics. The

deal with Philips reinforces the companys leadership position intransformation based BPO services. The companys BPO has significant

growth over 70% in revenues and an increase in client base of over one-thirdin FY 2007.

5. Gross Profit Ratio of the Company is stable from last five years. It is a goodsign of consistency and smooth working of the company.

6. The Net Profit Ratio is constant for last four years. It means company has

good Future.


30/61

Reliance Industries Ltd.

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largestprivate sector enterprise, with businesses in the energy and materials value chain.

Group's annual revenues are in excess of USD 22 billion. The flagship company,

Reliance Industries Limited, is a Fortune Global 500 company and is the largestprivate sector company in India

Backward vertical integration has been the cornerstone of the evolution and growth ofReliance. Starting with textiles in the late seventies, Reliance pursued a strategy of

backward vertical integration - in polyester, fiber intermediates, plastics,

petrochemicals, petroleum refining and oil and gas exploration and production - to befully integrated along the materials and energy value chain. The Group's activities

span exploration and production of oil and gas, petroleum refining and marketing,

petrochemicals (polyester, fiber intermediates, plastics and chemicals), textiles and

retail. Reliance enjoys global leadership in its businesses, being the largest polyester

yarn and fiber producer in the world and among the top five to ten producers in theworld in major petrochemical products.

The Group exports products in excess of USD 7 billion to more than 100 countries in

the world. There are more than 25,000 employees on the rolls of Group Companies.

Major Group Companies are Reliance Industries Limited (including main subsidiariesReliance Petroleum Limited and Reliance Retail Limited), Indian Petrochemicals

Corporation Limited and Reliance Industrial Infrastructure Limited.

Reliance Industries (RIL), a petrochemical major is the flagship company of Reliance

Group has business interests in textile, polyester, petrochemical, oil and gas and oilrefinery, polymer, chemical, Acrylic and fiber Intermediates. Reliance is worlds

largest producer of polyester fiber & yarn. The company is also worlds 3rd largestproducer of paraxylene (PX), 5th largest producer of Mono ethylene glycol (MEG), 6th

largest producer of Purified terephthalic Acid (PTA) & 7th largest producer of

Polypropylene PP). Within the country, Reliance is the largest manufacturer ofPolyester Fiber & Yarn, PX, PTA and MEG. The market shares of the company are in

a leading position for all its major business in India. RIL has grown into

petrochemical major since its modest. Beginning with the systematic fabric mill atNaorda. The company has set up text rising/twisting facilities in 1979. Further the

company has set up facility at Patalganga, Maharashtra to produced PFY in 1982,

PSF in 1986, and liner alkyl benzene (LAB) and PTA in 1988. The company has set

up petrochemical facility to produced HDPE and PVC at Hazira at Gujarat intechnical collaboration with DuPont and BF Goodich respectively.


31/61


32/61


33/61

Fundamental: -


34/61

1. Earning per share shows increasing trend from last four Quarters, it means

profit generation capacity is increasing.

2. Company has announced good result for last quarter thats why it is

looking bullish.

3. Reliance has entered in Retail market they have already started

RELIANCE FRESH out lets

4. With in a short span of six years as an E&P operator, the company has

discovered a hydrocarbons in the four offshore basin of India namely

Krishna, Godavari, Mahanadi, sourashtra and now cauvery, basin withmajor commercial finds in deep water. This discovery establishes the

company as a pioneer in the challenging deep-water exploration.

The Company was incorporated on 24th December 1949 as Hindustan ElectricCompany Limited. In 1965, the Companys name was changed to Hindustan Brown

Boveri Limited (HBB). Pursuant to the Scheme of Amalgamation of Asea Limitedwith HBB with effect from 1st January 1989, the name was further changed to Asea

Brown Boveri Limited (ABB) with effect from 13th October 1989.

Flakt India Limited was amalgamated with ABB with effect from 5th October 1995.During 1994-95, a joint venture Company - ABB Daimler-Benz Transportation AG

(Adtranz) was established by ABB Zurich and Daimler-Benz AG, Germany, in

Germany. A subsidiary of Adtranz was incorporated in India viz. ABB Daimler-

Benz Transportation Limited which took over the Transportation Business of theCompany effective 1st January 1996.

ABBs power generation business was globally transferred into the new 50-50 JVwith Alstom in 1999. In India the power generation business has been demerged and

transferred to ABB Alstom Power India Ltd. with effect from 1st April 1999. In

consideration of the transfer of the power business, each shareholder of ABB hasbeen allotted one share in ABB Alstom Power India Ltd. for every share held in the

company.

Capital:

The Authorised Share Capital of the Company is Rs.500,000,000 and the paid-up

share capital of the Company as at the end of the financial year ended 31st December1999 is Rs.414,183,560, consisting of 41,418,356 Equity Shares of the face value of

Rs.10 each.

Shareholding Pattern:


35/61

Asea Brown Boveri Limited, India, is a partly owned subsidiary of ABB Asea Brown

Boveri Limited, Zurich, Switzerland (ABBZH). ABBZH and Flkt AB, Sweden, a

100 percent subsidiary of ABBZH, hold 50.99% of Equity Shares in the Company.The balance stake is held by: FIs 22.14%, FIIs 3.63%, MFs 2.32, Non-resident

Individual 0.08%, Nationalised Banks 0.15%, Bodies Corporate 0.93%,Directors and

their relatives 0.01%, NSDL (Transit) 1.95% and General Public 17.8%.


36/61


37/61


38/61

Technical analysis of ABB: -The stock of ABB is in consolidation phase thats why its become unpredictable thatwhere it would be go. In 7th July 2007 in this period the company has declared record

date for stock spilt. (i.e. for every 1share= 5shares). Because the record date was new

the stock went up for upward 4800 level (upside at 200 points) & for this level it spilt

(4800/5) = 960Rs. & then went up again follow as it 400 in case volatile in the stock.


39/61

Fundamental: -

1. ABB comes under capital goods sector its main competitors are siemensand crompton greaves but ABB has strong order book than those

competitor. The next 5 to 6 year it is expected to be completed

2. Bags order worth 289 cr. from Delhi metro rail corporation.

3. ABB has very good EPS as compare to its competitor so stock is good.


40/61

Larsen & Toubro Limited (L&T) is a technology-driven engineering and construction

organization, and one of the largest companies in India's private sector. It has

additional interests in manufacturing, services and Information Technology. A strong,customer-focused approach and the constant quest for top-class quality have enabled

the Company to attain and sustain leadership in its major lines of business across

seven decades.

L&T has an international presence, with a global spread of offices. A thrust on

international business over the last few years has seen overseas earnings growing to

18 per cent of total revenue. With factories and offices located around the country,

further supplemented by a wide marketing and distribution network, L&T's imageand equity extends to virtually every district of India.

L&T believes that progress must necessarily be achieved in harmony with the

environment. A commitment to community welfare and environmental protection

constitute an integral part of the corporate vision.

History

The evolution of L&T into the country's largest engineering and construction

organizations is among the more remarkable success stories in Indian industry. The

company was founded in Bombay (Mumbai) in 1938 by two Danish engineers,Henning Holck-Larsen and Soren Kristian Toubro - both of whom were strongly

committed to developing India's engineering talent and enabling it to meet the

demands of industry. Beginning with the import of machinery from Europe, L&T

rapidly took on engineering and construction assignments of increasingsophistication. Today, the company sets engineering benchmarks in terms of scale

and complexity


41/61


42/61


43/61


44/61

Fundamental: -1. Larsen & Toubro Ltd (L&T) has announced that the Company has secured

two more Design and Build contracts from Delhi Metro RailwayCorporation (DMRC) for the construction of the underground station at

Saket (Delhi) and a tunnel as part of its Phase II Project.

2. Larsen & Toubro Ltd has announced that the Company has bagged an order

for Rs. 980 corers for the supply and installation of Blast Furnace from Tata

Steel for its project in kalinganagar orissa.

3. Larsen & Toubro Ltd (L&T) going to set up IT special economic zone with

Arun Excello at vallancheri Tamilnadu.

4. The company currently has order book worth Rs. 41600 corers.

The origin of the State Bank of India goes back to the first decade of the nineteenth

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

Three years later the bank received its charter and was re-designed as the Bank ofBengal (2 January 1809). A unique institution, it was the first joint-stock bank of

British India sponsored by the Government of Bengal. The Bank of Bombay (15April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal.

These three banks remained at the apex of modern banking in India till their

amalgamation as the Imperial Bank of India on 27 January 1921.Primarily Anglo-Indian creations, the three presidency banks came into existence

either as a result of the compulsions of imperial finance or by the felt needs of local

European commerce and were not imposed from outside in an arbitrary manner to

modernize India's economy. Their evolution was, however, shaped by ideas culledfrom similar developments in Europe and England, and was influenced by changes

occurring in the structure of both the local trading environment and those in therelations of the Indian economy to the economy of Europe and the global economicframework.


45/61

First Five-Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural Indiawas given the highest priority. The commercial banks of the country including the

Imperial Bank of India had till then confined their operations to the urban sector and

were not equipped to respond to the emergent needs of economic regeneration of therural areas. In order, therefore, to serve the economy in general and the rural sector in

particular, the All India Rural Credit Survey Committee recommended the creation of

a state-partnered and state-sponsored bank by taking over the Imperial Bank of India,and integrating with it, the former state-owned or state-associate banks. An act was

accordingly passed in Parliament in May 1955 and the State Bank of India was

constituted on 1 July 1955. More than a quarter of the resources of the Indian bankingsystem thus passed under the direct control of the State. Later, the State Bank of India

(Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take

over eight former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by

the 480 offices comprising branches, sub offices and three Local Head Officesinherited from the Imperial Bank. The concept of banking as mere repositories of the

community's savings and lenders to creditworthy parties was soon to give way to theconcept of purposeful banking sub serving the growing and diversified financial

needs of planned economic development. The State Bank of India was destined to act

as the pacesetter in this respect and lead the Indian banking system into the excitingField of national development.


46/61


47/61


48/61

Technical analysis of State Bank Of India: -

The chart of State Bank Of India is looking bullish and No Correction is seen from

the last two months and stock is in full movement and candle sticks is showingpositive sign for long term investment.


49/61

Fundamental: -

1. RBI has increased CRR by 0.5 %. It may affect the performance of Bank

2. Interest rate hike.

3. State Bank of India (SBI) has informed BSE that the Bank has decided to

revise interest rates on domestic term deposits rate with effect from August

09, 2007.

4. Government of India also thinking about the merger of subsidiaries of State

Bank of India with in it. It will make huge impact on SBI stock.


50/61

RESEARCH STUDY OF INVESTOR.

1) Where do you invest your money?In the IIFL, I have asked 200 people where you like invests your

money.

Interpretation:

From the above table & pie chart, it represent that people invest only 20 % of moneyin Stock market & 10% in Mutual Funds. 40% of people generally interested in Real

estate and Bank F.D 30%. Because the chances of risk and losses are minimum than

Stock Market & Mutual Funds. Even the returns are more in Stock Market & MutualFunds, but due safety people prefer Real estate and Band F.D.


51/61

How will you decide a company for investment?

Interpretation: From the above table & pie chart it represents that 42% of people

take Advice of Broker while investment in stocks, and 23% of people invest on thebasis of speculation, and 20% on basis of Research Reports by Technical analyst and

15% invest on there own decision. But many experts feel that if people invest moneyin stock market by Research Report then chances of profit is high and losses are

minimum because Research Report give good suggestion and already they have

calculated risk in stocks so it will be beneficial while investment. If investment on the

basis of speculation the chances of losses are high and profits minimum. If you do nothave, any knowledge of stock market so should ask to your Broker who will advice

you in better way because these people have good knowledge than us.


52/61

2) What kind of trading you do?

Interpretation: From the above Graph & Pie chart it represent that 43% people

do intraday in which the profit and risk both are the high but many research

suggest that it is always better to investment of money in long term than shortterm or medium term or intraday (i.e. speculations). If we invest money on longterm

basis then returns are good & the risk is minimum. Therefore, it is always

good invest money for long-term basis


53/61

2) What are the factors do you consider while selection of company?

Interpretation: From the above Graph & Pie chart it represent that 43% ofpeople take the help of fundamental and 22% of people take the help of technical

analysis by which the risk can be calculated and profit can be maximize.

However, even that 25% of people invest on the basis of speculation, which isrisky. 10% are people invest money by both (i.e. fundamentally and technical) by

which prediction can be good. If people invest money on the basis of analysis

then the risk can be minimize and profit can be maximize.


54/61

3) Where will you most prefer to invest your money?

Interpretation: From the above Graph & table, we can say that 50% percent ofpeople like to invest money in Blue Chips companies because the volumes of trading

and good results are more. Therefore, the profit is more. Mid cap and small, giveminimum profit than blue chips or large cap.


55/61

4) Which Companies shares will you buy?

Interpretation: From the above Graph & chart, we can say that 55% of people preferI.T. Sector for investment because these companies are strong by fundamentally and

it have large market capitalization than others. After that, 30% of people prefer

banking sector it has large market capitalization and after that, 15% of people like toinvest in Engineering companies.


56/61

Finding1. Infosys

With the reference to graph no.1, Technical analysis of script interprets that, wait &

watch because script forms interprets that after correction comes in stock it gets wellsupported level.

Fundamental analysis interprets that EPS is per share Rs.19.96 in 2007continues increasing last 5 year. Infosys fundamental analysis interprets that;

company gives equity dividend 300% this year.

It means that script is strong and investor should remain in stock for longperiod. Returns are very good. The target price is Rs.2040.so there is an upside there,

the structure is positive but one needs to put a stop at around Rs 2020. Particular

stock has some news eg;-result, entering into new business, merger with other

company, & on basis of that news the price goes up or down.

2. Reliance Industries

With the reference to Graph no 2, Technical analysis of script interprets that, wait &

watch because script forms has always rising pattern over period. The fundamental

analysis interprets that; company gives equity dividend 100% this year. EPS isRs.20.5 per share. Reliance Industries shareholders & creditors approve Scheme of

Amalgamation. Gross Profit & Net Profit is also maintained. Reliance Industries

script is fundamentally strong. An investor should buy in current rally for long period.Returns are very good. The starter price Rs 1945 so there is a structure is positive a

stop at around Rs. 1795.

75

3. ABB

With the reference to Graph no 3, Technical analysis of script interprets that, wait &

watch because script forms Stock Split.

ABB Ltd. Fundamentally is shows that are much fluctuation in EPS is Rs.20.44 pershare. Company has decided the dividend but not declared.

Fundamental analysis suggests that it has a split stock that s why this stock is very

good for buy for delivery .Investor can buy a stock for long period of time the target

price is Rs.1500.


57/61

4. L&T

With the reference to Graph no 4, The technical analysis of the script interprets that

buy in up trend rally because of script has always rising pattern over period. L& T in

this script I found that fundamental analysis that, company gives equity dividend

500% this year. EPS is Rs.24.95 per share. Company also offers the bonus share 1:1per share in 2007.gross profit & net profit is consistent. Script is fundamentally

strong. Particular stock has some news e.g.;-result, entering into new business, merger

with other company, & on basis of that news the price goes up or down.

5. State Bank of India

With the reference to Graph no 5, Technical analysis of script interprets that, rising

pattern over period. State Bank of India Fundamental analysis interprets that EPS is

improving EPS is Rs.13.13 per Share. Bank also gives equity dividends 150% this

year. Particular stock has some news e.g.;-result, entering into new business, mergerwith other company, & on basis of that news the price goes up or down.


58/61

Suggestion Chart

SUGGESTION

Following are suggestions made based on study with reference to watch on NEATScreen, interaction with clients, data analysis and findings:

1. In IT sector Infosys is very good because its EPS is continuously increasing

and company have given 300 % dividend it means stock is strong byfundamentally and technically it is also growing very well people should

invest in this stock

2. Reliance Industries is also looking strong by fundamentally and technically, in

future it is entering in to new business, merger with other company so this is

also good option for investment.

3. ABB is split stock, split-ratio was (4800/5) = 960 is split price that is why this

stock is very good for delivery due to split the price is down it was 4800before split.

4. Technically L&T is in rising pattern, company offered the bonus share 1:1 per

share and gross profit and net profit is consistent. This is good stock forinvestment

5. As the largest bank in India SBI is also very good for investment, EPS is alsoincreasing it will entering into new business and it will merger with other

banks (State Bank of Sourashtra) on the basis of this price goes up or down.


59/61

6. Share market is growing sectors if people invest money in stocks the returns

will be good than Bank F.D & Real Estate. People also should invest money

Mutual Funds as per return concerns.

7. If people invest money on Research reports or broker advice then chances of

risk is low and chances of return will be high.

8. It is always better to invest money on long term basis than intra day because

intraday is nothing but a speculation

9. If people consider both i.e. fundamental analysis and technical analysis then it

will be better than speculation

10. Currently IT sector is in boom so it is better to invest money in IT and also

good in Banking sector


60/61

CONCLUSION

With the help of project I concluded that blue chip companies are playing veryimportant role in the share market. Lot of investors is investing their money in the

blue chip companies. And this is the reason that the volume of blue chip companies is

high.During this period of two months I came to know that in the process of equity

analysis of blue chip companies two weapons are playing a vital role i.e. Fundamental

Analysis and Technical Analysis.

The concept of Fundamental Analysis studies the performance of blue chip

companies. With the help of Fundamental Analysis can know the past performance ofthe blue chip companies. Fundamental Analysis considers the long-term performance

of companies and this helps the investors to invest their money for long term as well

as can get the good returns.

Technical Analysis comprises short-term analysis of blue chip companies. TechnicalAnalysis really just studies supply and demand in the market in an attempt to

determine what direction or trend will continue in the future.The study of technical as well as fundamental analysis can give detail information

about the well running companies in the market. Before investing in any company

one should study these two concepts.


61/61

LIMITATIONS OF STUDY

To understand the overall working of share market, the period of 60 days isnot enough.

Moreover, very few investor and agents have a detail knowledge of the study. A study is conducted in Nasik only, which restrict the scope of the study The data provided by the investor and the agents cant be held true as 100%

correct.

The study was conducted to understand with respect to fundamental andtechnical analysis, which is a part of the equity share market.

A to Z Analysis Dalal Streets www.bseindia.com www.nseindia.com www.reliancemoney.com www.moneycontrol.com

mandar project

Documents