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0601024 equity research fundamental and technical analysis and its impact on...Supa Buoy
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0601024 equity research fundamental and technical analysis and its impact on...Supa Buoy
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How To Avoid Losing Money In The Stock MarketInvestingTips
How To Avoid Losing Money In The Stock Market
http://www.profitableinvestingtips.com/stock-investing/how-to-avoid-losing-money-in-the-stock-market
A common expression years ago, was playing the stock market. The expression came from the fact that many thought of stock investing as gambling on whether stocks would go up or down. Traders listened for stock tips with fond hopes of getting into a stock before it ran up in price and out of a stock before it went bust. After the stock market crash that ushered in the Great Depression, Benjamin Graham taught how to avoid losing money in the stock market by learning to calculate the intrinsic value of a given stock. What is intrinsic stock value? The intrinsic value of a stock is generally referred to as the forward looking value of the stock discounted to present circumstances. Mr. Graham devised a formula so that investors could make a rational decision about whether or not to buy or sell a stock. How to avoid losing money in the stock market is to use tools like the Graham intrinsic value formula and your own good common sense when investing in stocks.
Intrinsic Stock Value
Here is a thumbnail view of the Graham formula for calculating intrinsic stock value in 1962 and modified in 1974. The 1974 version considers the following:
• Earnings per share, EPS, for the preceding twelve months
• A constant of 8.5 representing an expected price to earnings ratio, P/E ratio, for a company that is not growing
• An estimate of long term growth, five years = g
• A constant of 4.4 which was the average yield of high grade corporate bonds in the early 1960 decade
• The current yield of AAA corporate bonds = Y
• Where V = intrinsic value
The formula is as follows:
V = (EPS x (8.5 + 2g) x 4.4)/Y
The point of this formula is to calculate the RGV or Relative Graham Value. Do the calculation to find V. Then divide V by the current stock price. This gives you the RGV.
By www.ProfitableInvestingTips.com
What is Intrinsic Stock Value?
In the aftermath of the stock market crash of 1929 in the early days of the Great Depression Benjamin Graham introduced the concept of value investing. No longer would those buying and selling stocks need to act like they were at the casino. With the concepts of intrinsic value and margin of safety Graham taught investors a rational means of investing in stocks. With this in mind just what is intrinsic stock value? And how does this concept help with profitable stock investing?
What Is Intrinsic Stock Value?
The dictionary definition of intrinsic stock value is its fundamental value. It is obtained by adding up predicted future income of a stock and subtracting current price. It can also be seen as actual value of an equity versus its book value or market value. The concept of fundamental analysis of equities evolved from this concept. Using fundamental analysis the intrinsic value of a stock is the expected company cash flow discounted to current dollars. It is a discounted cash flow valuation. An inherent weakness in this concept is that too often the medium and long term prospects of a company and its stock price are not clear. So, what is intrinsic stock value of a company if the future is uncertain? The ability to see into the future to see how well a company will manage its assets, products, costs, R&D, and marketing is of utmost importance in calculating intrinsic stock value as a means of deciding whether or not to purchase a stock.
What is Intrinsic Stock Value as a Formula?
Mr. Graham presented investors with a formula for calculating intrinsic stock value in 1962 and modified it in 1974. The 1974 version considers the following:
• Earnings per share, EPS, for the preceding twelve months
• A constant of 8.5 representing an expected price to earnings ratio, P/E ratio, for a company that is not growing
• An estimate of long term growth, five years = g
• A constant of 4.4 which was the average yield of high grade corporate bonds in the early 1960 decade
• The current yield of AAA corporate bonds = Y
• Where V = intrinsic value
The formula is as follows:
V = (EPS x (8.5 + 2g) x 4.4)/Y
The way the investors were encouraged to use intrinsic value was to derive what is referred to as a Relative Graham Value, RGV. This is to divide the calculated intrinsic value of the stock by its current price. If the result, the RGV, is less than one the stock is overvalued and a bad investment and if the ratio is above one it is undervalued and may be a good investment.
What is Intrinsic Stock Value as an Investing Tool?
There are a couple of difficulties in using the simple calculation above to determine the forward looking earnings of a stock and therefore its intrinsic value. First of all the formula does not account for inflation. Thus one could use the formula and end up with a stock valued higher in dollars but in dollars that are inflated.
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To study how nirmal healthcare products pvt. ltd. can strengthen their place ...Supa Buoy
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0601024 equity research fundamental and technical analysis and its impact on stock prices
1. 1
A
PROJECT REPORT ON
“Equity Research: Fundamental and
Technical analysis and its impact on stock
prices”
FOR
BY
CHAUDHARI KAILAS NANABHAU
MBA-II
2006-2008
UNDER THE GUIDANCE OF
PROF. MAHESH HALALE
SUBMITED TO
UNIVERSITY OF PUNE
IN PARTIAL FULFILMENT OF THE REQUIREMENT
FOR THE AWARD OF DEGREE OF MASTER OF
BUSINESS ADMINISTRATION (MBA)
THROUGH
VISHWAKARMA INSTITUTE OF MANAGEMENT
PUNE - 48
2. 2
ACKNOWLEDGMENT
It’s 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 Mr. Rakesh P. Sonawane (Branch
Manager, Nasik), for his valuable guidance and kind co-operation during the project.
I am highly grateful to Mr. Nayan Bhandari (Business Associates of Reliance
money) for the help provided by them in various forms.
I am also thankful to our director Dr. Sharad Joshi and my project guide Prof.
Mahesh Halale 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.
3. 3
TO WHOM SO EVER IT MAY CONCERN
This is to certify that Mr. Kailas N. Chaudhari is a bonafide student of our institute.
He has successfully carried out his summer project “ Equity Research :
Fundamental and Technical analysis and its impact on stock prices” titled at
Reliance Money. This is the original study of Mr. Kailas N. Chaudhari and important
sources of data used by him have been acknowledged in his report .
The report is submitted in partial fulfillment of two years full time course of Masters
in Business Administration 2006-2008 as per rules.
___________________ ________________________
Prof. Mr.Mahesh Halale Dr. Sharad L. Joshi
(Project Guide) (Director)
Vishwakarma Institute of Management
CONTENT
4. 4
Sr.No. Topic Page No.
1 Executive Summery 1-3
2 Company Profile 4-5
3 Objective of Project 6-6
4 Research Methodology 7-7
5 Data Presentation 8-26
6 Data Analysis & Interpretation 27-59
7 Finding 60-61
8 Suggestion And Conclusion 62-64
9 Limitation 65-65
10 Bibliography 66-66
15. 15
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 in
investment 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 discuss
how 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 investor’s
toward 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 early
stage and ride on that trend until the weight of the evidence shows or proves the trend
has reversed.
16. 16
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 Securities
Contracts (Regulation) Act, 1956. The Exchange’s 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), the
Exchange 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 of
India (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 of
Directors. The Board comprises eminent professionals. Representatives of Trading
Members and the Managing Director of the Exchange. The Board is inclusive and is
designed to benefit from the participation of market intermediaries.
The Exchange has a nation-wide reach with a presence in 417 cities and towns of
India. 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 a
proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance
and clearing and settlement functions of the Exchange are ISO 9001:2000 certified.
17. 17
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 1875
when 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 Stock
Exchange, 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 a
sample 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 the
market and are from different sectors.
NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) is India’s leading stock exchange covering
various 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 of
microstructure, market practices and trading volumes. The market today uses state-of-
art information 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 & other
financial 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.
18. 18
Reliance Money is a subsidiary company of Reliance Capital; one of India's leading
and fastest growing private sector financial services company, ranking among the top
3 private sector financial services and banking companies, in terms of net worth.
Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group.
Reliance Money is a comprehensive electronic transaction platform offering a wide
range of asset classes. Its endeavor is to change the way India transacts in financial
markets and avails financial services. Reliance Money is a single window, enabling
you to access, amongst others in Equities, Equity & Commodities Derivatives,
Mutual Funds, IPO s, Life & General Insurance products, Offshore Investments,
Money Transfer, Money Changing and Credit Cards.
Division of Reliance
Capital
Reliance money Reliance mutual
fund
Reliance General
and life insurance
Equities,
commodities, forex
trading, services
And distribution
house for financial
products
An asset
management
company-floating
fund offers for retail
participation
Mediclaim, travel
care, lip plans, life
Insurance, car
insurance
19. 19
Reliance Capital 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 leading
Companies, 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 wealth
creation goals
• We can also provide access to Separately Managed Accounts (SMA's) and
Individually 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 of
dividends. 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.
Reliance Capital’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 immediate
financial requirements and your long-term wealth creation goals and objectives.
Reliance Capital applies academic research to the practical world of investing. Our
objective is to help clients develop globally diversified portfolios and to add value
through reduced costs and taxes.
20. 20
OBJECTIVE
It was good opportunity to familiarize myself with the stock market i.e. the capital
market & their co-relation with economical environment through “ EQUITY
RESEARCH”. The analysis of equity gives me the opportunity to understand
thoroughly this behavioral pattern’s of different equity & overall capital market.
The main objective of the project research is as follows.
1. To Study the equity analysis and obtain the knowledge of equity market
2. To Study the present behavior & predicting the future behavior of equity in
stock market.
3. Obtain the knowledge about how to select the companies for investment.
To analyze the performance of company’s through Balance Sheet & Technical graph
of their shares.
RATIONALE
The present market scenario has shown us the Boom in Share Market. Even some of
the 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 in
these 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.
21. 21
RESEARCH METHODLOGY
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.
Reliance Money 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 will
facilitate to investor for profitable investment.
22. 22
EQUITY ANALYSIS
FUNDAMENTAL ANALYSIS
The 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. The
fundamental 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.
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
23. Rupee-Dollar Fluctuation
24. Stock News
23. 23
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 be
analyzed.
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 of
scare 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 licensed
capacity 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.
24. 24
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 and
Subsequent 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.
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 strong
foundation. The management has to be assessed in the terms of their
capabilities, popularity, honesty and integrity.
25. 25
TECHNICAL ANALYSIS
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 doesn’t
care one bit about the “value” of a company or a commodity. Technicians (some time
called 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, or trend,
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 statistics
generated 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 future
activity.
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, technical
analysts exclusive use of historical price and volume data is what separates them from
their fundamental counterparts. Unlike fundamental analysis technical analysts don’t
care whether a stock is undervalued the only thing that matter is a security’s past
trading data and what information this data can provide about where the security
might move in the future
26. 26
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 that
the company’s 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 a
product of supply and demand for a particular stock in the market.
2. Price Moves In Trends
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 strategies
are based on this assumption.
3. History Tends To Repeat Itself
Another 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 a
consistent 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 repeat
themselves.
27. 27
Line charts
A style of charts that is created by connecting a series of data points together with a
line. 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 chart
A style of chart used by some technical analysts, on whom as illustrated below, the
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 bar
like 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.
28. 28
Candlestick
A price chart that displays the high, low, open and close for a security each day over a
specified 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
in finance isn’t 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:
29. 29
It isn’t hard to see that the trend in figure is up. However, isn’t not always this easy to
see a trend.
There are lots of ups and downs in this chart, but there isn’t a clear indication of
which direction this security is headed.
The Importance of Trend
It is important to be able to understand and identify trends so that you can trade with
them rather than trade against them. Two important sayings in technical analysis are “
the trend is your friend” and “ don’t buck the trend” Illustrating how important trend
analysis is for technical trade.
Types of Trend
There are three types of trend:
• Up Trends
• Downtrends
• Sideways/ Horizontal Trends
30. 30
As the names imply, when each successive peak and trough is higher, it’s referred to
as an upward trend. If the peaks and troughs are getting lower. It’s a downtrend.
When there is little movement up or down in the peaks and troughs, it’s a sideways or
horizontal trend. If you want to get really technical, you might even say that a
sideways 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.
Uptrend
Describes the price movement of a financial asset when the overall direction is
upward. 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.
31. 31
Downtrend
Describes the price movement of a financial asset when the overall direction is
downtrend. 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 deemed
broken once the price closes above the high at high direction trend.
Downtrend is the opposite of uptrend.
Trend lines
A trend line is a simple charting technique that adds a line to a chart to represent the
trend in the market or a stock. Drawing a trend line is as simple as drawing a straight
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.
32. 32
As you see in above Figure, an upward trend lines is drawn at the lows of an upward
trend. 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 stock’s price will begin moving
upwards 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 any
direction 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 major
trend. 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 to
be 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.
33. 33
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 a
better idea of the long-term trend use weekly charts or daily charts spanning a five-
year 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 more
important it is; for example, a month trend is not as significant as five-year trend.
Channels
A Channel, or channel lines, is the addition of two parallel trend lines that act as
strong 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 the
same. 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.
34. 34
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 of
these 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.
Double Bottom
A 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, and
finally another rebound.
35. 35
Double Top
A term used in technical analysis to describe the rise of a stock, a drop, another rise to
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 a
resistance level.
Triple Bottom
A 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
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.
36. 36
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 asset
higher, 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 price
breaks 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 “Trend
Reversal”, “Rally” or “Correction”.
Triple Top
A pattern used in technical analysis to predict the reversal of prolonged up trend. This
pattern 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 that
buying interest is becoming exhausted. The traders to predict the reversal of the up
trend use it.
1 2 3
37. 37
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
of asset falls below the identified support level. (Shown by the line in the chart
above).
Head and Shoulders Pattern
A 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. 38
Volume
The 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
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. The
higher the volume during that price move the more significant the move.
Support
The price, which, historically, a stock had difficulty falling below. It is thought of as
the level at which a lot of buyers tend to enter the stock. Often referred to as the
“Support Level”.
39. 39
Resistance
The 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”.
40. 40
Moving Average- MA
An indicator frequently used in technical analysis showing the average value of a
security’s price over a set of period. Moving averages are generally used to measure
momentum and define areas of possible support and resistance.
41. 41
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 India’s leading information technologies (IT) services companies.
Enterprise Services, Product R&D services and Consulting Services. The company is
having 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 ratio
of 1:1) and split its face value of Rs 5 each. In Feb 2000, the ADRs were split in the
ratio 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 company’s product-FINACLE, is an
integrated core banking solution that is centralized, muliti-currency and multi-
language-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, the
company 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 in
Mysore, India to further enhance our employee training capabilities. The Mysore
Training complex wills accommodate 4,500 trainees at a time.
42. 42
INFOSYS TECHNOLOGIES LTD. (INFOSYS)
Type Audited Audited Audited Audited Audited
Date of begin 1-Apr-07 1-Jan-07 1-Oct-06 1-Jul-06 1-Apr-06
Date of End 1-Jun-07 31-Mar-07 31-Dec-06 30-Sep-06 30-Jun-06
Description Value {Rs.million}
Net Sales 35510 35550 34540 32730 28670
Other income 2550 1200 600 660 1290
Total income 38060 36750 35140 33390 29960
Expenditure -25410 -24070 -23050 -22190 -19930
Operating Profit 12650 12680 12090 11200 10030
Gross Profit 12650 12680 12090 11200 10030
Depreciation -1340 -1330 -1290 -1100 -970
Profit before Tax 11310 11350 10800 -10100 9060
Tax -1030 -120 -1220 -1140 -1040
Provision and
Cost. -- 10 -- -- -30
Profit after Tax 10280 11240 9580 8960 7990
Extraordinary
Items -- - -- -- 60
Net Profit 10280 11240 9580 8960 8050
Equity Capital 2860 2860 2790 2780 1380
Reserves 119040 108760 93630 82730 76900
EPS 18 19.96 17.2 16.15 29.13
Result Type Q Q Q Q Q
45. 45
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 getting
from 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 forth-
coming 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 come
down.
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 company’s leadership position in
transformation based BPO services. The company’s BPO has significant
growth over 70% in revenues and an increase in client base of over one-third
in FY 2007.
5. Gross Profit Ratio of the Company is stable from last five years. It is a good
sign 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.
46. 46
Reliance Industries Ltd.
The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest
private 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 largest
private sector company in India
Backward vertical integration has been the cornerstone of the evolution and growth of
Reliance. 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 be
fully 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 the
world 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 subsidiaries
Reliance 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 oil
refinery, polymer, chemical, Acrylic and fiber Intermediates. Reliance is worlds
largest producer of polyester fiber & yarn. The company is also worlds – 3rd
largest
producer of paraxylene (PX), 5th
largest producer of Mono ethylene glycol (MEG), 6th
largest producer of Purified terephthalic Acid (PTA) & 7th
largest producer of
47. 47
Polypropylene PP). Within the country, Reliance is the largest manufacturer of
Polyester 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 at
Naorda. 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 in
technical collaboration with DuPont and BF Goodich respectively.
48. 48
Reliance Industries ltd.
Type UnAudited UnAudited UnAudited UnAudited UnAudited
Date of begin 1-Apr-07 1-Jan-07 1-Oct-06 1-Jul-06 1-Apr-06
Date of End 30-Jun-07 31-Mar-07 31-Dec-06 30-Sep-06 30-Jun-06
Description Value {Rs.million}
Gross Sales 294930 273990 277710 295500 261660
Excise Duty -14370 -15040 -12990 -10760 -16440
Net Sales 280560 258950 264720 284740 245220
Other income 1050 850 420 220 440
Total income 281610 259800 265140 284960 245660
Expenditure -228790 -211960 -217630 -239090 -202850
Operating Profit 52820 47840 47510 45870 42810
Interest -2880 -2770 -2930 -2780 -2660
Gross Profit 49940 45070 44580 43090 40150
Depreciation -9580 -10220 -10620 -10180 -9070
Profit before Tax 40360 34850 33960 32960 31080
Tax -7720 -6320 -5970 -5820 -5610
Profit after Tax 32640 28530 27990 27090 25470
Net Profit 32640 28530 27990 27090 25470
Equity Capital 13940 13940 13940 13940 13940
EPS 23.4 20.5 20.1 19.4 18.3
Result Type Q Q Q Q Q
51. 51
Fundamental: -
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 that’s 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 with
major commercial finds in deep water. This discovery establishes the
company as a pioneer in the challenging deep-water exploration.
52. 52
The Company was incorporated on 24th December 1949 as Hindustan Electric
Company Limited. In 1965, the Company’s name was changed to Hindustan Brown
Boveri Limited (HBB). Pursuant to the Scheme of Amalgamation of Asea Limited
with 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 the
Company effective 1st
January 1996.
ABB’s power generation business was globally transferred into the new 50-50 JV
with 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 has
been 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 December
1999 is Rs.414,183,560, consisting of 41,418,356 Equity Shares of the face value of
Rs.10 each.
Shareholding Pattern:
Asea Brown Boveri Limited, India, is a partly owned subsidiary of ABB Asea Brown
Boveri Limited, Zurich, Switzerland (ABBZH). ABBZH and Fläkt 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%.
53. 53
ABB LTD.
Type Un audited Audited Un audited Un audited Un audited
Date of begin 01/1/2007 01/10/2006 1/07/2006 1/04/2006 01/1/2006
Date of End 31/3/2007 31/12/2006 30/9/2006 30/6/2006 31/3/2006
Description Value {Rs.million}
Net Sales 13124.44 14263.15 10705.6 9742.21 8029.13
Other income 151.69 174.06 230.4 152.97 179.51
Total income 13276.13 14437.22 10936 9895.17 8208.63
Expenditure -11842.61 -12316.42 -9599.84 -8722.17 -7334.61
Operating Profit 1433.52 2120.8 1336.16 1173.01 874.03
Interest -10.02 -1.09 -2.47 -1.75 -1.94
Gross Profit 1423.5 2119.71 1333.68 1171.26 872.09
Depreciation -86.17 -71.16 -66.25 -65.21 -62.06
Profit before Tax 1337.33 2048.55 1267.43 1106.05 810.03
Tax -471 -699 -443 -387 -297
Profit after Tax 866.33 1349.55 821.43 719.05 513.03
Net Profit 866.33 1349.55 821.43 719.05 513.03
Equity Capital 423.82 423.82 423.82 423.82 423.82
EPS 20.44 31.84 19.38 16.97 12.11
Result Type Q Q Q Q Q
56. 56
STOCK SPLIT
ABB
4350
4450
4550
4650
4750
4850
4950
6/1/076/4/076/7/076/10/076/13/076/16/076/19/076/22/076/25/07
For the month of june 2007
Prices
Open
High
Low
Close
Fundamental: -
1. ABB comes under capital goods sector it’s main competitors are siemens
and 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.
ABB
900
950
1000
1050
1100
1150
1200
6/28/077/1/077/4/077/7/077/10/077/13/077/16/077/19/077/22/077/25/077/28/077/31/07
Fot the month of July 2007
Prices
57. 57
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 image
and 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 increasing
sophistication. Today, the company sets engineering benchmarks in terms of scale
and complexity.
58. 58
LARSON AND TOUBRO LTD. (L & T)
Type Unaudited Audited Unaudited Unaudited Unaudited
Date of begin 01/4/2007 01/1/2007 1/10/2006 1/07/2006 01/4/2006
Date of End 30/6/2007 31/03/2007 31/12/2006 30/9/2006 30/6/2006
Description Value {Rs.million}
Gross Sales 45738.7 63657.4 41995.1 38043 35318.3
Excise Duty -686.6 -1175 -810.9 -682.3 -549.3
Net Sales 45052.1 62482.4 41184.2 37360.7 34769
Other income 2114.7 2041.4 1279.3 1117.3 474.3
Total income 47166.8 64523.8 42463.5 38478 35243.3
Expenditure -40821.6 -54384 -36928.9 -34978.8 -32328.6
Operating Profit 6345.2 10139.8 5534.6 3499.2 2914.7
Interest -157.2 -63.3 -12.2 -106.1 -157.7
Gross Profit 6188 10076.5 5522.4 3393.1 2757
Depreciation -424.1 -698.1 -356.7 -336.4 -308.9
Profit before Tax 5763.9 9378.4 5165.7 3056.7 2448.1
Tax -1995.4 -2370.7 -1726.7 -1044.5 -876.8
Profit after Tax 3768.5 7007.7 3439 2012.2 1571.3
Net Profit 3768.5 7007.7 3439 2012.2 1571.3
Equity Capital 567.6 566.5 561.1 280 278.3
EPS 13.3 24.95 12.27 14.39 11.37
Result Type Q Q Q Q Q
60. 60
LNT
1800
1850
1900
1950
2000
2050
2100
2150
2200
2250
2300
2350
2400
2450
2500
2550
2600
2650
2700
2750
2800
06-01-0706-08-0706-15-0706-22-0706-29-0707-06-0707-13-0707-20-0707-27-07
For the month of June & July 2007
Prices
Open
High
Low
Close
Graph No.4
Technical Analysis: The chart of Larson & Toubro is looking I saw how support and
resistance levels can be penetrated by a change in investor expectations. This type of
a change is often abrupt and “news based”. In this section I will review “trends”. A
trend represents a consistent change in prices (i.e. a change in investor expectations)
As shown in the following chart, a rising trend is defined by successively
higher low prices. A rising trend can be thought of as a rising support level-the bulls
are in control and are pushing prices higher.
61. 61
Fundamental: -
1. Larsen & Toubro Ltd (L&T) has announced that the Company has secured
two more Design and Build contracts from Delhi Metro Railway
Corporation (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.
62. 62
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 of
Bengal (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 (15
April 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 culled
from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the
relations of the Indian economy to the economy of Europe and the global economic
framework.
First Five-Year Plan
In 1951, when the First Five Year Plan was launched, the development of rural India
was 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 the
rural 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 banking
system thus passed under the direct control of the State. Later, the State Bank of India
63. 63
(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 Offices
inherited 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 the
concept 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 exciting
Field of national development.
64. 64
STATE BANK OF INDIA
Type UnAudited UnAuditid UnAudited UnAudited UnAudited
Date of begin 1-Apr-07 1-Jan-07 1-Oct-06 1-Jul-06 1-Apr-06
Date of End 30-Jun-07 31-Mar-07 31-Dec-06 30-Sep-06 30-Jun-06
Description Value {Rs.million}
Operating income 113865.1 115414.6 97359.4 93774.7 88361.5
Interest on advance 79885.2 70565.6 64135.5 59017.1 54673.5
Income on Investment 28943.6 28452.6 28331.2 28744 29402.1
Interest on Balances 4970.6 16270.3 3524.8 3959.8 3441.2
Other Intersts 65.7 126.1 1367.9 2053.8 844.7
Other Income 8425.8 28943 18110.3 14337.6 17626
Total Income 122290.9 144357.6 115469.7 108112.3 105987.5
Interest Expanded -68891.2 -72213.3 -57846.1 -54788.2 -49520.6
Operating Expenses -29785.1 -32460.2 -29074 -28598.4 -28102.4
Payment for Employees -20263.7 -20238.8 -20297.1 -19547.1 -19242.9
Other Operating
Expenses -9521.4 -12221.4 -8776.9 -9051.3 -8859.5
Total Expenditure for
Banks -98676.3 -104673.5 -86920.1 -83386.6 -77623
Operating Profit 23614.6 39684.1 28549.6 24725.7 28364.5
Profit before tax 23614.6 39684.1 28549.6 24725.7 28364.5
Tax -7762.8 -10626.3 -6237.1 -6067.4 -7559.1
Tax provisions and
contingencies -1593.7 -14125.9 -11661.9 -6813.4 -12819.7
Profit after tax 14258.1 14931.9 10650.6 11844.9 7985.7
Net profit 14258.1 14931.9 10650.6 11844.9 7985.7
Equity Capital 5263 5263 5263 5263 5263
Reserves 305036.6 305036.6 271177.9 271177.9 271177.9
Percent of shares
Govt.of India 59.73 -- -- -- --
Capital Adequacy
Ratio in % 13.13 12.34 11.86 12.63 11.97
EPS 27.09 28.37 20.24 22.51 15.17
Result Type Q Q Q Q Q
67. 67
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.
68. 68
RESEARCH STUDY OF INVESTOR.
1) Where do you invest your money?
In the Reliance money, I have asked 200 people where you like invests your
money.
Investment types No. of respondents Percentage
Stock market 40 20
Bank F.D 60 30
Real estate 80 40
Mutual funds 20 10
Total 200 100
Table. 1
No. of respondents
20%
30%
40%
10%
Stock market
Bank F.D
Real estate
Mutual funds
Graph 6
Interpretation:
From the above table & pie chart, it represent that people invest only 20 % of money
in 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 & Mutual
Funds, but due safety people prefer Real estate and Band F.D.
69. 69
How will you decide a company for investment?
Selection of company for
investment
No. of Respondents Percentage
Own Decision 30 15
Broker Advice 84 42
Speculation 46 23
Research Reports 40 20
200 100
Table 2
No. of Respondents
15%
42%
23%
20%
Own Decision
Broker Advice
Speculation
Research Reports
Graph 7
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 the
basis 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 money
in 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 not
have, 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.
70. 70
2) What kind of trading you do?
Types of Trading No. of Respondent Percentage
Intra day 86 43
Short term 44 22
Medium Trading 22 11
Long term Trading 48 24
200 100
Table 3
No. of Respondent
43%
22%
11%
24%
Intra day
Short term
Medium Trading
Long term Trading
Graph 8
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 short
term or medium term or intraday (i.e. speculations). If we invest money on long-
term basis then returns are good & the risk is minimum. Therefore, it is always
good invest money for long-term basis
71. 71
2) What are the factors do you consider while selection of company?
Factor consider for
selection of company
No. of Respondents Percentage
Fundamental Analysis 86 43
Technical Analysis 44 22
Both 20 10
Speculation 50 25
200 100
Table 4
No. of Respondents
43%
22%
10%
25%
Fundamental Analysis
Technical Analysis
Both
speculation
Graph 9
Interpretation: From the above Graph & Pie chart it represent that 43% of
people 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 is
risky. 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.
72. 72
3) Where will you most prefer to invest your money?
Most prefer companies No. of Respondents Percentage
Large cap 105 52.5
Mid cap 40 20
Small cap 55 27.5
200 100
Table 5
No. of Respondents
52%
20%
28%
Large cap
Mid cap
Small cap
Graph 10
Interpretation: From the above Graph & table, we can say that 50% percent of
people 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, give
minimum profit than blue chips or large cap.
73. 73
4) Which Companies shares will you buy?
Like to invest in sectors No. of Respondent Percentage
I.T 110 55%
Banking 60 30%
Engineering 30 15%
200 100
Table 6
No. of Respondent
55%
30%
15%
I.T
Banking
Engineering
Graph 11
Interpretation: From the above Graph & chart, we can say that 55% of people prefer
I.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 to
invest in Engineering companies.
74. 74
Finding
1. 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 well
supported level.
Fundamental analysis interprets that EPS is per share Rs.19.96 in 2007
continues 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 long
period. 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 is
Rs.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. 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 per
share. 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.
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 1:1
per 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, merger
with other company, & on basis of that news the price goes up or down.
76. 76
Suggestion Chart
Script EPS Dividends Bonus Result CMP Target
Price
Stop-
Loss
Price
Infosys 19.96 300% -- Sale 1976 2040 2020
Reliance 20.5 100% -- ? HOLD 1894 1945 1795
ABB 20.44 -- -- Buy 1147 1500 1240
L & T 24.95 500% 1:1 Sale 2608 2750 2640
SBI 28.37 150% -- Buy 1624 1690 1630
SUGGESTION
Following are suggestions made based on study with reference to watch on NEAT
Screen, interaction with clients, data analysis and findings:
1. In IT sector Infosys is very good because it’s EPS is continuously increasing
and company have given 300 % dividend it means stock is strong by
fundamentally 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 4800
before 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 for
investment
77. 77
5. As the largest bank in India SBI is also very good for investment, EPS is also
increasing 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.
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
78. 78
CONCLUSION
With the help of project I concluded that blue chip companies are playing very
important 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 of
the 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. Technical
Analysis 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.
79. 79
LIMITATIONS OF STUDY
To understand the overall working of share market, the period of 60 days is
not 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 can’t be held true as 100%
correct.
The study was conducted to understand with respect to fundamental and
technical analysis, which is a part of the equity share market.
80. 80
A to Z Analysis
Dalal Streets
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