Beruflich Dokumente
Kultur Dokumente
INDEX
1. Executive Summary1 6 2. Company Profile ........7 Profile. 8 -10 Products and Services...11 - 17 3. Overview of Stock Market.......18 24 4. Introduction to Fundamental & Technical Analysis........................25 38 5. EIC Analysis........39 Economic Analysis...40 - 43 Industry Analysis..44 - 53 Company analysis.54 - 61 6. Technical Analysis...62 Relative Strength Index(RSI)...63 76 Moving Average...77 90 Japanese Candlestick Chart...91 - 92 7. Findings.93 - 95 8. Conclusion.96 9. Suggestions......97 10. Bibliography....98 - 99
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EXECUTIVE SUMMARY
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CHAPTER 1 EXECUTIVE SUMMARY I. TITLE OF THE PROJECT: Fundamental & Technical Analysis of Automobile Sector Undertaken at
Geojit Financial Services Ltd.
To predict investor positions (Buy, sell & hold). To know the future trend of Stock Prices of Tata Motors and Maruti Udyog Ltd. in capital market.
4) To know which securities to be bought and which securities not to be bought. 5) To know which securities to be sold and which securities not to be sold.
VI. METHODOLOGY:
Primary data is collected through direct interactions with the Branch Manager, Employees and clients of Geojit Financial Services, Ltd. The Secondary data is collected from the annual reports of the company, relevant text books on the subject matter and companys official website.
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TOOLS:
1. Moving Average Method. 2. Relative Strength Index (RSI). 3. Candlestick Charting.
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SUGGESTIONS:
1. Before going to invest, an investor should have clear and adequate knowledge of capital market. 2. It is better to go for Long term Investment rather than the Short term Investment. Because it is less risky and also provides sufficient return. 3. The investors should know the value of money. 4. Practically, stock market activities are very risky. So, investors should be careful while investing. 5. In case of half knowledge about stock market is very dangerous. So, whenever a person wants to invest in stock market he should take necessary tips from the experts or Technical Analysts. 6. Investors should also look into global pressure and market movement in order to look for avenues of investing in different stocks and to take position; some of the sources for understanding global pressure are CNBC TV18, News Paper, Economy watch etc.
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COMPANY PROFILE
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Geojit, a joint venture with Kerala State Industrial Development Corporation Ltd. is a pioneer in the retail financial services sector. Over two decades the company has grown to offering complete management solutions. Today the company has over Rs.20 billion in assets under its custody. Geojits shares are listed on the Bombay Stock Exchange. The company is a member of the National Stock Exchange of India Ltd., the Bombay Stock Exchange and the National Securities Depository Ltd., and a charter member of the Association of Financial Planners, India. More than 1000 professionals are operating through over 250 offices across the country provide services to a growing retail investor base of 200,000. Prominent institutional clients include banks, mutual funds and other institutions such as UTI and insurance companies. Geojit has a large pool of certified professionals who plan, execute and manage customized investment strategies for clientele. Financial literacy programmes are conducted on a regular basis through the branch network to raise investment awareness. Early application of innovative technology in the industry led to many national firsts such as internet trading, electronic securities settlement on the web and an online integrated trading screen for stocks and derivatives.
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YEAR EVENTS
1988 The company, Geojit Securities Limited (GSL), was a partnership firm, with two partners Mr. C.J. George and Mr. Ranjit, under the name and style of M/s Geojit & Company established on 4th November, to act as stock and share brokers with membership on the Cochin Stock Exchange. - The company was incorporated as a Public Limited Company on 24th November and obtained its Certificate of commencement of business on 25th January 1995. - The company is at present engaged in the activities of stock and share broking, underwriting, marketing of initial public offering of companies and mutual funds, corporate advisory services, investments in shares, participating in Bought Out Deals, syndication of inter-corporate deposits, debt, boughtouts etc. - The company has at present branches at Trichur, Kottayam, Muvattupuzha and Coimbatore apart from having representative offices at Mumbai. The company has a subsidiary in the name of Geojit Stock and Shares Limited (GSSL) to carry on the activities as a Dealer of Over The Counter Exchange of India. - The company had made a public issue of equity shares aggregating to Rs.95/lakhs, during the period under report which received an overwhelming support and was oversubscribed over 14 times. - The Company held 100% of the paid up Capital of Rs.30,00,000/- M/s Geojit Stock & Shares Ltd., a wholly owned subsidiary of the Company as at 31st March. The Company, a joint venture company with Kerala State Industrial Development Corporation (KSIDC), has announced improved working results for 1997-98. - The equity shares of the company are presently listed at five Stock Exchanges viz., Madras, Ahemedabad, Coimbatore, Delhi and Cochin - The Company based in Kochi, to set up a full-fledged office in the UAE, which will not only enable it to deal in Indian shares and securities, but also help it become a licensed stock broking company in that country. - Geojit Securities Ltd, a leading retail share broking firm launched Internet securities trading for the first time in India. - Geojit Securities is a joint venture with Kerala State Industrial Development Corporation (KSIDC) with branches in 40 cities. - ABN Amro Bank is set to pick up an equity stake in Geojit Securities Ltd one of the largest stock brokers and depository participant in the country. - The company is planning to introduce multi-bank, multi-DP interfaces to facilitate and promote Internet trading in the country.Geojit Securities Ltd, the Page 10
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1) Equity:
Equity/ordinary share capital, as a long-term source of finance, represents ownership capital/securities and its owners equity-holders/ordinary shareholders share the reward and risk associated with the ownership of corporate enterprises. A shareholder can exercise, sell in the market and renounce/forfeit his pre-emptive rights partially/completely. He does not gain/lose from rights issues. Ordinary share capital is a high-risk-high-reward source of finance for corporate. The shareholders share the risk, return and control associated with ownership of companies.
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6) Depository:
A depository can be compared to a bank. It holds securities such as shares, debentures, bonds, government securities, units etc. of investors in electronic form. There are two depositories in India, The National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). An individual who desires to avail the depository services can approach a Depository Participant (DP). Banks, financial institutions, custodians, brokers or any other entity eligible as per SEBI (Depositories and Participants) Regulations, 1996 can apply to the Depository to become a Depository Participant. As on 31st March, 2006 there are 526 Depository Participants in India. Geojit, is a depository participant of NSDL & CDSL. Investors can open demat accounts with NSDL & CDSL through Geojit. One can approach the nearest branch of Geojit for opening an account. Agreement charges (statutory charges) along with Annual Maintenance Charge (AMC) are collected upfront while opening an account. It takes two to three days to open a demat account. Upon activation of the demat account, a Welcome Letter is sent to the customer along with the Delivery Instruction Slip book. DP facilities offered by Geojit
De-materialization: Consumers can convert their physical shares into electronic form by surrendering the shares for dematerialization at the Geojit branch. Re-materialization: Re-materialization enables consumers to convert the dematerialized shares into physical form. Repurchase: This facility helps consumers to submit the units of open-ended Mutual Funds in case of re-purchase. Pledge: Consumers can pledge securities to avail a loan. Transfer: Consumers can transfer securities from one demat account to another. IPOs: In case consumers have applied for an IPO and receive an allotment then the securities are transferred directly to their demat account. The same applies for bonus and rights issues. Page 16
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Commodity De-mat Account: If consumers are a commodity player, they may need to open a commodity de-mat account with Geojit. Speed-e: If consumers register for Speed-e services, then transfer instructions can be placed online over the internet to pre-notified Clearing Members Pool a/c. This does away with the need to submit a physical delivery instruction slip. Internet Services: If consumer have access to Internet then they can register with Geojit to view their demat account over the Internet. This is very beneficial as consumers can avail of a host of services at no extra cost. They will be able to view their holdings,reports,ledgers and will have free access to Geojits research reports at any time. SMS Alert Facility: The alert messages for debits (transfers) and IPO credits would be sent to the account holders who have subscribed to this facility. Depository provides this facility and no charge is levied on DPs for providing this service to investors.
7) Commodity:
Geojit Commodities, a subsidiary of Geojit Financial Services Limited, is mainly engaged in the business of Commody Futures Trading. Geojit Commodities is a member of:
National Multi Commodity Exchange of India limited (NMCE) National Commodity & Derivatives Exchange Limited (NCDEX) Multi Commodity Exchange (MCX) India Pepper and Spice Trade Association (IPSTA) Singapore Commodity Exchange (SICOM) Dubai Gold Commodity Exchange (DGCX).
Geojit provides information on commodity futures, along with technical and fundamental analysis online at its website and also through the company's large branch network. The company conducts Seminars, distributes free in-house literature and holds interactive sessions that help raise awareness on the futures market. The number of participants is continuously on the rise thus leading to increased volumes and market efficiency. Geojit Commodity offers futures trading through multiple exchanges in varied commodities such as:
Agri commodities: oilseeds, soya, groundnut, pulses, rice, wheat, sugar, spices, rubber, guar, pepper, cardamom, coffee, etc Precious metals: gold and silver, Base metals: steel, aluminium, nickel, zinc, copper, etc Page 17
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Geojits clientele in commodities range from investors, co-operative societies, state and national institutions to dealers, traders, manufacturers, financiers, speculators, arbitragers,etc. Geojit does not have proprietary interest in any commodity and therefore is price neutral. Transaction costs are highly affordable attracting a spectrum of investors. Membership in multiple exchanges gives clients the added advantage of arbitrage. Geojit has specialized staff that provide the required guidance, help and enable clients to enter at the appropriate price.
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Fundamental & Technical Analysis of Automobile Sector CHAPTER 3 OVERVIEW OF EQUITY MARKET IN INDIA
BSE (Bombay Stock Exchange)
Due to its wide acceptance amongst the Indian investors, SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country. The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through SENSEX.
SENSEX MILESTONES:
Robust portfolio investments and heavy fund buying lifted the Bombay Stock Exchange's benchmark 30-share Sensex past the magical 12,000 mark. The Sensex finally closed at an all-time high of 12,040 points. This is the fastest 1,000-point gain by the Sensex. It only took 15 trading sessions for the index to cross from 11,000 to 12,000. Interestingly, the Sensex has taken only 10 months to gain 5,000 points! The unprecedented Bull Run started on May 6, 2003 when the Sensex was at 3,001.21 level. In took just 67 trading sessions to cross the 4,000-mark and touch 4,026.27 points on August 19, 2003. The rally continued and the index gained another 1,000 points in 54 trading sessions to post 5,068.66 points on November 3, 2003. Thereafter, it pierced through the 6,000 mark on January 2, 2004 in another 43 trading sessions. The market then seemed to pause for breath as it took a whopping 370 trading sessions to cross the 7,000 mark, at 7001.55 on June 20, 2005. From 7,000-mark, the sentiment turned distinctly firm following good liquidity that played a significant role to determine the market direction and Sensex crossed 8,000-mark in just 55 trading sessions at 8, 060.26 on September 8, 2005 and 54 trading days to cross 9,000-mark at 9, 005.63 on November 28, 2005. From 9K to 10K, it took just 48 trading sessions. The index crossed 10,000-mark on February 6, 2006 at 10,002.83. From 10K to 11K, it only took 29 trading sessions. Babasabpatilfreepptmba.com Page 21
17,000, September 26, 2007- The Sensex on September 26, 2007 crossed the 17,000 mark for the first time, creating a record for the second fastest 1000 point gain in just 5 trading sessions. It failed however to sustain the momentum and closed below 17000. The Sensex closed above 17000 for the first time on the following day. Reliance group has been the main contributor in this bull run, contributing 256 points. This also helped Mukesh Ambani's net worth to grow to over $50 billion or Rs.2 trillion. It was
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19,000, October 15, 2007- The Sensex crossed the 19k mark for the first time on October 15th 2007. It took just 4 days to reach from 18k to 19k. This is the fastest 1000 points rally ever and also the 640 point rally was the second highest single day rally in absolute terms. This made it a record 3000 point rally in 17 trading sessions overall.
20,000, October 29, 2007- The Sensex crossed the 20k mark for the first time with a massive 734.5 point gain but closed below the 20k mark. It took 11 days to reach from 19k to 20k. The journey of the last 10,000 points was covered in just 869 sessions as against 7,297 sessions taken to touch the 10,000 mark from 1,000 levels. In 2007 alone, there were six 1,000-point rallies for the Sensex.
The Organization: The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. NIFTY:
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Fundamental & Technical Analysis of Automobile Sector CHAPTER 4 FUNDAMENTAL AND TECHNICAL ANALYSIS FUNDAMENTAL ANALYSIS:
Fundamental analysis is the method of evaluating securities by attempting to measure the intrinsic value of a particular stock. It is the study of everything from the overall economy and industry conditions, to the financial condition and management of specific companies (i.e., using real data to evaluate a stocks value). The method utilizes items such as revenues, earnings, return on equity and profit margins to determine a companys underlying value and potential for future growth. One of the major assumptions under fundamental analysis is that, even though things get mis priced in the market from time to time, the price of an asset will eventually gravitate toward its true value. This seems to be a reasonable bet considering the long upward march of quality stocks in general despite regular setbacks and periods of irrational exuberance. The key strategy for the fundamentalist is to buy when prices are at or below this intrinsic value and sell when they got overpriced. Fundamental analysis for identifying industries with growth potential : After the objects of investment portfolio in terms of risk and return have been specified, one of the first decisions that an investment manager faces is to identify the industries, which have a high growth potential. Two approaches are suggested in this regard: a) Statistical analysis of past performance: A statistical analysis of the immediate past performance of the share price indices of the various industries and changes therein related to the general price index of shares of all industries should be made. The Reserve Bank of India index numbers of security prices published every month in its bulletin may be taken to represent the behavior of share prices of the various industries in the last few years. The relative changes in the price index of each industry as compared with the changes in the average price index of the shares of all industries would show those industries which are having a higher growth potential in the past few years. It may be noted that an industry may not remain a growth industry for all the time. The analysis of share price indices over a number of years will enable the investment manager to identify the industries, which are rated high by the investors at the time of analysis. By this, one can perceive industries having a higher growth in their share prices indices and examine whether the growth potential is still there or not. In other words, the investment manager shall now have to make an assessment of the various characteristics of the industries to finalize a list of industries in which he will try to spread the investments.
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TECHNICAL ANALYSIS:
Technical analysis is the examination of past price movements to forecast future price movements. Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analysis.
Moving Average:
A Moving Average is an indicator that shows the average value of a security's price over a period of time. When calculating a moving average, a mathematical analysis of the security's average value over a predetermined time period is made. As the securities price changes, its average price moves up or down. There are several popular ways to calculate a moving average. Meta Stock for Java calculates a "simple" moving average--meaning that equal weight is given to each price over the calculation period. Interpretation: The most popular method of interpreting a moving average is to compare the relationship between a moving average of the security's price with the security's price itself. A buy signal is generated when the security's price rises above its moving average and a sell signal is generated when the security's price falls below its moving average. This type of moving average trading system is not intended to get you in at the exact bottom nor out at the exact top. Rather, it is designed to keep you in line with the security's price trend by buying shortly after the security's price bottoms and selling shortly after it tops. The critical element in a moving average is the number of time periods used in calculating the average. When using hindsight, you can always find a moving average that would have been profitable. The key is to find a moving average that will be consistently profitable. The most popular moving average is the 39-week (or 200-day) moving Babasabpatilfreepptmba.com Page 28
Price Oscillator:
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Price Rate-Of-Change:
The Price Rate-of-Change ("ROC") indicator displays the difference between the current price and the price x-time periods ago. The difference can be displayed in either points or as a percentage. The Momentum indicator displays the same information, but expresses it as a ratio. Interpretation: It is a well-recognized phenomenon that security prices surge ahead and retract in a cyclical wave-like motion. This cyclical action is the result of the changing expectations as bulls and bears struggle to control prices. The ROC displays the wave-like motion in an oscillator format by measuring the amount that prices have changed over a given time period. As prices increase, the ROC rises; as prices fall, the ROC falls. The greater the change in prices, the greater the change in the ROC. The time period used to calculate the ROC may range from 1-day (which results in a volatile chart showing the daily price change) to 200-days (or longer). The most popular time periods are the 12- and 25-day ROC for short to intermediate-term trading. These time periods were popularized by Gerald Appel and Fred Hitschler in their book, Stock Market Trading Systems. The 12-day ROC is an excellent short- to intermediate-term overbought/oversold indicator. The higher the ROC, the more overbought the security; the lower the ROC, the more likely a rally. However, as with all overbought/oversold indicators, it is prudent to wait for the market to begin to correct (i.e., turn up or down) before placing your trade. A Babasabpatilfreepptmba.com Page 31
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Trendlines:
In the preceding section, we saw how support and resistance levels can be penetrated by a change in investor expectations (which results in shifts of the supply/demand lines). This type of a change is often abrupt and "news based." In this section, we'll review "trends." A trend represents a consistent change in prices (i.e., a change in investor expectations). Trends differ from support/resistance levels in that trends represent change, whereas support/resistance levels represent barriers to change. 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.
As shown in the next chart, a falling trend is defined by successively lower highprices. A falling trend can be thought of as a falling resistance level--the bears are in control and are pushing prices lower.
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The advantage of using a bar chart over a straight-line graph is that it shows the high, low, open and close for each particular day.
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The chart below is an example of a candlestick chart for AT&T (T). Green bars indicate the stock price rose, red indicates a decline:
Investors seem to have a "love/hate" relationship with candlestick charts. People either love them and use them frequently or they are completely turned off by them. There are several patterns to look for with candlestick charts - here are a few of the popular ones and what they mean.
This is a bullish pattern - the stock opened at (or near) its low and closed near its high
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The opposite of the pattern above, this is a bearish pattern. It indicates that the stock opened at (or near) its high and dropped substantially to close near its low.
Known as "the hammer", this is a bullish pattern only if it occurs after the stock price has dropped for several days. A small body along with a large range identifies a hammer. This pattern indicates that a reversal in the downtrend is in the works.
Known as a "star. For the most part, stars typically indicate a reversal and or indecision. There is a possibility that after seeing a star there will be a reversal or change in the current trend.
POPULAR CHARTING PATTERNS: Technical analysts often use proven successful price patterns from great stocks as tools to find new great stocks. Let's look at a few examples
Cup and Handle - This is a pattern on a bar chart that can be as short as seven weeks and as long as 65 weeks. The cup is in the shape of a "U". The handle has a slight downward drift. The right-hand side of the pattern has low trading volume. As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for anywhere from four days to four weeks, then it will take off.
This pattern looks like a pot with a handle. It is one of the easier patterns to detect; and investors have made a lot of money using it. Babasabpatilfreepptmba.com Page 37
Head and Shoulders - This is a chart formation resembling an "M" in which a stock's price: Rises to a peak and then declines, then - Rises above the former peak and again declines, and then - Rises again but not to the second peak and again declines.
The first and third peaks are shoulders, and the second peak forms the head. This pattern is considered a very bearish indicator.
Double Bottom - This pattern resembles a "W" and occurs when a stock price drops to a similar price level twice within a few weeks or months. You should buy when the price passes the highest point in the handle. In a perfect double bottom, the second decline should normally go slightly lower than the first decline to create a shakeout of jittery investors. The middle point of the "W" should not go into new high ground. This is a very Bullish indicator.
The belief is that, after two drops in the stock price, the jittery investors will be out and the long-term investors will still be holding on. Babasabpatilfreepptmba.com Page 38
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EIC ANALYSIS
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Fundamental & Technical Analysis of Automobile Sector CHAPTER: 5 INDIAN ECONOMY: AN OVERVIEW
The economy has moved decisively to a higher growth phase. Till a few years ago, there was still a debate among informed observers about whether the economy had moved above the 5 to 6 per cent average growth seen since the 1980s. There is now no doubt that the economy has moved to a higher growth plane, with growth in GDP at market prices exceeding 8 per cent in every year since 2003-04. The projected economic growth of 8.7 per cent for 2007-08 is fully in line with this trend. There was acceleration in domestic investment and saving rates to drive growth and provide the resources for meeting the 9 per cent (average) growth target of the Eleventh Five-Year Plan. Macroeconomic fundamentals continue to inspire confidence and the investment limate is full of optimism. Buoyant growth of government revenues made it possible to maintain fiscal consolidation as mandated under the Fiscal Responsibility and Budget Management Act (FRBMA). The decisive change in growth trend also means that the economy was, perhaps, not fully prepared for the different set of challenges that accompany fast growth. Inflation flared up in the last half of 2006-07 and was successfully contained during the current year, despite a global hardening of commodity prices and an upsurge in capital inflows. An appreciation of the rupee, a slowdown in the consumer goods segment of industry and infrastructure (both physical and social) constraints, remained of concern. Raising growth to double digit will therefore require additional reforms. Per capita income and consumption 1.2 Growth is of interest not for its own sake but for the improvement in public welfare that it brings about. Economic growth, and in particular the growth in per capita income, is a broad quantitative indicator of the progress made in improving public welfare. Per capita consumption is another quantitative indicator that is useful for judging welfare improvement. It is therefore appropriate to start by looking at the changes in real (i.e. at constant prices) per capita income and consumption 1.3. The pace of economic improvement has moved up considerably during the last five years (including 2007-08). The rate of growth of per capita income as measured by per capita GDP at market prices (constant 1999-2000 prices) grew by an annual average rate of 3.1 per cent during the 12- year period, 1980-81 to 1991-92. It accelerated marginally to 3.7 per cent per annum during the next 11 years, 1992-93 to 2002-03. Since then there has been a sharp acceleration in the growth of per capita income, almost doubling to an average of 7.2 per cent per annum (2003-04 to 2007-08). This means that average income would now double in a decade, well within one generation, instead of after a generation (two decades). The growth rate of per capita income in 2007-08 is projected to be 7.2 per cent, the same as the average of the five years to the current year. 1.4 Per capita private final consumption expenditure has increased in line with per capita income. The growth of per capita consumption accelerated from an average of 2.2 per cent per year during the 12 years from 1980-81 to 1991-92 to 2.6 per cent per year during the next 11 years following the reforms of the 1990s. The growth rate has almost doubled to 5.1 per cent per year Babasabpatilfreepptmba.com Page 41
Stock markets: Stock markets are an important instrument of financial intermediation. They saw increased activity in 2007-08. Primary market issue of debt and equity increased along with private placement. The secondary market too showed a rising trend, notwithstanding intermittent ups and downs in the stock prices responding mainly to global developments. The Bombay Stock Exchange (BSE) Sensex rose from 13,072 at end-March 2007 to 18,048 as on February 18, 2008, while the National Stock Exchange (NSE) index Nifty 50 rose from 3,822 to 5,277 during the same period. Both the indices gave a return of around 38 per cent during this period. The higher net mobilization of resources by mutual funds showed that investors were realizing the importance of using intermediaries in risky markets. All the other indicators of capital market such as market capitalization, turnover and price-earning ratio remained strong. The commodity market also showed signs of expansion in terms of turnover and number of transactions during the year. Industry and infrastructure: The industrial sector witnessed a slowdown in the first nine months of the current financial year. The growth of 9 per cent during April-December 2007, when viewed against the back drop of the robust growth witnessed in the preceding four years, suggests that there is a certain degree of moderation in the momentum of the industrial sector. The consumer durable goods sector in particular has shown a distinct slowdown. This is linked to the hardening of interest rates and therefore to the conditions prevailing in the domestic credit sector. In contrast, the capital goods industry has sustained strong growth performance during 2007-08 (April-December). At the product group level, the moderation in growth has been selective. Industries like chemicals, food products, leather, jute textiles, wood products and miscellaneous manufacturing products witnessed acceleration in growth, while basic metals, machinery and equipments, rubber, plastic and petroleum products and beverages and tobacco recorded lower but strong growth during April-December 2007. Other industries including textiles (except jute textiles), automotives, paper, non-metallic mineral products and metal products slowed down visibly during the period. The slowdown in the case of less importintensive sectors like textiles is coincident with the decline in the growth of exports arising from the sharp appreciation in the rupee vis-a-vis the dollar. Within automobiles, while passenger cars, scooters and mopeds witnessed buoyant growth, the production of motor cycles and three wheelers slackened. In a nutshell, the industrial sector has produced mixed results in the current fiscal.
The global automotive industry is a highly diversified sector that comprises of manufacturers, suppliers, dealers, retailers, original equipment manufacturers, aftermarket parts manufacturers, automotive engineers, motor mechanics, auto electricians, spray painters or body repairers, fuel producers, environmental and transport safety groups, and trade unions. United States, Japan, China, Germany and South Korea are the top five automobile manufacturing nations throughout the world. The United States of America is the worlds largest producer and consumer of motor vehicles and automobiles accounting for 6.6 million direct and spin-off jobs and represents nearly 10% of the S10 trillion US economy. The automobile is one of the important industries in the world, which provides employment to 25 million people in the world.
The Indian automobile industry is going through a technological change where each firm is engaged in changing its processes and technologies to sustain the competitive advantage and provide customers with the optimized products and services. Starting from the two wheelers, trucks, and tractors to the multi utility vehicles, commercial vehicles and the luxury vehicles, the Indian automobile industry has achieved tremendous amount of success in the recent years. As per Society of Indian Automobile Manufacturers (SIAM) the market share of each segment of the industry is as follows:
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The automobile industry had a growth of 15.4 % during April-January 2007, with the average annual growth of 10-15% over the last decade or so. With the incremental investment of $35-40 billion, the growth is expected to double in the next 10 years. Consistent growth and dedication have made the Indian automobile industry the second- largest tractor and two-wheeler manufacturer in the world. It is also the fifthlargest commercial vehicle manufacturer in the world. The Indian automobile market is among the largest in Asia. The key players like Hindustan Motors, Maruti Udyog, Fiat India Private Ltd, Tata Motors, Bajaj Motors, Hero Motors, Ashok Leyland, Mahindra & Mahindra have been dominating the vehicle industry. A few of the foreign players like Toyota Kirloskar Motor Ltd., Skoda India Private Ltd., Honda Siel Cars India Ltd. have also entered the market and have catered to the customers needs to a large extent. Not only the Indian companies but also the international car manufacturing companies are focusing on compact cars to be delivered in the Indian market at a much smaller price. Moreover, the automobile companies are coming up with financial schemes such as easy EMI repayment systems to boost sales. There have been exhibitions like Auto-expo at Pragati Maidan, New Delhi to share the technological advancements. Besides, there are many new projects coming up in the automobile industry leading to the growth of the sector. The Government of India has liberalized the foreign exchange and equity regulations and has also reduced the tariff on imports, contributing significantly to the growth of the sector. Having firmly established its presence in the domestic markets, the Indian automobile sector is now penetrating the international arena. Vehicle exports from India are at their highest levels. The leaders of the Indian automobile sector, such as Tata Motors, Maruti and Mahindra and Mahindra are leading the exports to Europe, Middle East and African and Asian markets. The Ministry of Heavy Industries has released the Automotive Plan 2006-2016, Babasabpatilfreepptmba.com Page 46
STRENGTHS: Globally cost competitive Adheres to strict quality controls Has access to latest technology Provides support to critical infrastructure and metal industries
WEAKNESSES: Industry has low level of research and development capability Industry is exposed to cyclical downturns in the automotive industry Most component companies are dependent on global majors for technology
OPPORTUNITIES: May serve as sourcing hub for global automobile majors Significant export opportunities may be realised through diversification of export basket Implementation of Value-Added-Tax (VAT) in FY2004 will negate the cascading impact of prices
THREATS: The presence of a large counterfeit components market poses a significant threat Pressure on prices from OEMs continues Imports pose price based competition in the replacement market
CHAPTER: 7
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Fundamental & Technical Analysis of Automobile Sector BUDGET IMPACT ON THESE SECTORS
Budget Measures:
Reduction in excise duties from 16% to 12% on manufacturing of 2&3 wheelers, buses and small cars. Agricultural credit outlay increased to Rs 2,80,000 crore. 10% increase in defence sector allocation to Rs 1,05,600 crore. Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary. Higher allocation towards road development programme such as the NHDP
Budget Impact:
Excise duty reductions will help lower prices and stimulate demand for 2&3 wheelers and small cars. Increased demand for new buses from STUs (State Transport Undertakings) as well as private players. Higher defence allocation will spur investment in new vehicles. Higher agricultural credit outlay will help boost demand for tractors. Increased thrust on road infrastructure is a positive for all the automobile manufacturers especially passenger vehicles and CVs.
Company Impact:
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Peak customs duty reduced Excise duty on cars having from 20% to 15%. engine capacity up to 1,200 Excise duty on tyres, tubes cc (petrol based engines) and flaps reduced from 24% and 1,500 cc (diesel based to 16%. Customs duty on engines) and length of the car up to 4,000 mm reduced lead cut to 5%. from 24% to 16%. Budget support for NHDP enhanced from Rs 93 bn to Rs 99 bn in 2006-07. Around 1,000 kms of access-controlled expressways (totaling six) to be developed on BOT basis. Custom duty on alloy steel and non-ferrous (primary and secondary) metals reduced from 10% to 7.5%. Peak customs duty reduced from 15% to 12.5%.
Key Positives
Key Negatives
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Taxation anomalies: Indian automobile industry is amongst the highly taxed industries as not only the final product bears heavy taxes but the cascading effect of duties on some key raw materials and components also hurts profit margins of auto companies. Also, multiple tax rules that exist in different states are eroding the comparative advantage of a large domestic market thus making the uniform implementation of VAT (Value Added Tax) Increasing exports: The Indian auto necessary. industry has emerged as an export hub, on account of its low cost technical manpower and increasing focus on quality. To give a perspective, in the last five years (FY02FY07), volume exports of Indian automobiles have increased by 41% CAGR, led by motorcycles (CAGR of 57%). This development has led to domestic players increasing their share of exports in the overall pie. Infrastructure thrust: Improvement in road infrastructure has led to increased movement of goods through roadways. Around 65% of all the goods movement in the country takes place by roads as opposed to 55% a decade ago. Also, owing to the fact that an estimated 45% of CVs (commercial vehicles) plying on the roads are more than 10 years old, demand for HCVs (heavy commercial vehicles) is expected to grow by a steady rate in the Babasabpatilfreepptmba.com Page 53
CHAPTER: 8
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FINANCIAL SUMMARY: Maruti Suzuki India Ltd has announced the following Audited results for the quarter ended December 31, 2007: The Company has posted profit after tax of Rs 467.04 crores for the quarter ended December 31, 2007 as compared to Rs 376.41 crores for the quarter ended December 31, 2006 i.e., 24.08% increase in profit after tax in the year 2007. Total Income has increased from Rs 4451.47 crores for the quarter ended December 31, 2006 to Rs 5651.17 crores for the quarter ended December 31, 2007.
Latest Quarterly Results Rs. cr
year 2007/12 5,480.50 2006/12 4,323.04 var % 26.77
Sales Income
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Source of Funds Equity Capital Prefrential Capital Reserves and Surplus Secured Loans Unsecured Loans Total Application of Funds Gross Block Accumulated Deprecation Net Block NetCurrentAssets Total
Particulars Return on Equity Book Value Debt Equity P/E Ratio DPS
Fundamentals of Maruti Suzuki India Ltd. 2003 2004 2005 2006 0.0473 0.1510 0.1949 0.2181 107.23 124.30 151.56 188.73 0.14 0.08 0.07 0.01 1.50 1.50 2.00 3.50
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Price Chart:
TATA MOTORS Tata Motors Limited formerly known as TELCO (TATA Engineering and Locomotive Company), (NYSE: TTM) - is India's largest passenger automobile and commercial vehicle manufacturing company. It is a part of the Tata Group, and has its headquarters in Mumbai, Maharashtra. One of the world's largest manufacturers of commercial vehicles and known for its hatchback passenger vehicle Tata Indica, Tata
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Sales Income Other Income Expenditure Interest Gross Profit Depreciation Tax PAT Equity OPM (%) GPM (%) NPM (%)
Source of Funds Equity Capital Prefrential Capital Reserves and Surplus Secured Loans Unsecured Loans Total Application of Funds
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Particulars Return on Equity Book Value Debt Equity P/E Ratio DPS EPS RONW Current Ratio Quick Ratio Interest Coverage Ratio Retention Ratio Bonus Adjustment Adjusted EPS
Fundamentals of Tata Motors 2003 2004 2005 0.1156 0.2257 0.3009 81.22 101.71 113.65 0.56 0.35 0.60 4.00 9.38 12.32 0.84 0.52 3.82 0.5192 1 9.38 8.00 22.96 22.98 0,72 0.47 8.69 0.7599 1 22.96 12.50 34.19 30.12 0.99 0.76 10.24 0.8776 1 34.19
2006 0.2774 143.94 0.53 13.00 39.94 24.17 1.24 0.96 8.08 0.9986 1 39.94
2007 0.2796 177.59 0.58 12.67 15.00 49.65 24.67 1.24 0.91 7.62 1.0525 1 49.65
Price Chart:
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TECHNICAL ANALYSIS
CHAPTER: 9
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10.78125 10.78125 13.51875 13.51875 13.0875 10.16429 10.16875 9.955556 9.955556 9.575 10.07857 9.0125 9.992857 8.985714 9.2 8.40625 5.45 6.55 6.557143 7.1 Avg.Gain
11.38 11.43333 11.43333 10.51667 10.51667 9.242857 10.23333 11.44 8.22 7.266667 6.828571 5.316667 5.614286 5.614286 5.614286 4.6 4.514286 4.433333 4.757143 5.283333 Avg.Loss
0.947386 0.942966 1.182398 1.28546 1.244453 1.099691 0.993689 0.870241 1.211138 1.317661 1.475941 1.695141 1.779898 1.600509 1.638677 1.827446 1.207278 1.477444 1.378378 1.343849 RS
48.64911 48.53231 54.17884 56.24512 55.44572 52.37394 49.84172 46.53095 54.77442 56.85304 59.61132 62.89619 64.02746 61.54599 62.10222 64.63239 54.69534 59.63581 57.95455 57.33513 RSI
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Relative Strength Index: The RSI compares the magnitude of a stock's recent gains to the magnitude of its recent losses and turns that information into a number that ranges from 0 to 100.
RSI of Maruti Suzuki Scrip
RSI
9/2/2007
12/2/2007
1/2/2008
10/2/2007
11/2/2007
2/2/2008
7/2/2007
8/2/2007
Dates
A 14 day RSI is calculated for stock it is recommended by wilder that a 14 period will be a good indicator. By using the simple formula RSI = {100- [100 / (1+RS)]}.it states that if RSI is below 30 buy & if it crosses above 70 then sell it. From 2nd April 07 to 31st March 08 the RSI is calculated, the best time to sell the stock was between 12th July 07 to 31st July 07 and 9th October 07 to 18th October 07 since the RSI was above 70 & it had reached its peak level. The best time to buy the stock was between 2nd Jan 08 to 24th Jan 08 since the RSI was below 30 for these many days. Company: Tata Motors Babasabpatilfreepptmba.com Page 70
3/2/2008
11.06111 11.06111 12.5 14.28333 14.75556 14.4 12.46875 14.07143 14.07143 14.1 12.13 12.13 12.13 10.31667 10.42 10.42 9.79 9.49 9.975 9.975 9.75 9.75 8.74 9.658333 9.107143 Avg.Gain
11.8875 10.46 10.46 10.46 10.46 11.59167 11.59167 12.6 11.34286 10.325 9.533333 7.555556 7.588889 7.3625 6.644444 6.211111 6.211111 6.211111 6.47 6.38 6.38 6.41 6.944444 7.4125 8.014286 Avg.Loss
0.930483 1.057468 1.195029 1.365519 1.410665 1.242272 1.075665 1.11678 1.240554 1.365617 1.272378 1.605441 1.598389 1.401245 1.568227 1.677639 1.576208 1.527907 1.541731 1.56348 1.528213 1.521061 1.25856 1.302979 1.136364 RS
48.19948 51.39656 54.44251 57.72599 58.51767 55.40237 51.82267 52.75844 55.36818 57.72774 55.99323 61.61878 61.51462 58.35494 61.06264 62.65366 61.18325 60.44158 60.65673 60.99052 60.44637 60.33416 55.724 56.57798 53.19149 RSI Page 71
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Dates
A 14 day RSI is calculated for stock it is recommended by wilder that a 14 period will be a good indicator. By using the simple formula RSI = {100- [100 / (1+RS)]}.It states that if RSI is below 30 buy & if it crosses above 70 then sell it. From 2nd April 07 to 31st March 08 the RSI is calculated, the best time to sell the stock was between 27th Sep 07 to 4th October 07 and 10th December 07 to 12th December 07 since the RSI was above 70 & it had reached its peak level. The best time to buy the stock was between 8th August 07 to 23rd August 07 and 23rd Jan 08 to 24th Jan 08 as well as between 7th March to 18th March 08 since the RSI was below 30 for these many days.
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Chart:
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1400 1200 1000 STOCK PRICE 800 600 400 200 0 4/2/2007 5/2/2007
A ctual Forecast
7/2/2007
8/2/2007
9/2/2007
1/2/2008
2/2/2008
6/2/2007
10/2/2007
11/2/2007
DATES
Interpretation:
Here, the Moving Average is almost equal to the Actual line. So it indicates that it is a right time to buy the security. In this Graph, we can observe that moving Average of Maruti Suzuki Ltd. Stock has been decreased. So, it is giving clear picture of future movement of the scrip. This Graph provides a message to the investor that it is a right time to buy the Stock of Maruti Suzuki Ltd. And, if we observe the trend of this graph then we can also notice that Moving Average line has been decreased, so it is also a right time to buy the stock. Here, in this case, the Stock price of Maruti Suzuki Ltd. is just equal to its moving average line. But if we see the trend of Moving Average then it indicates that investors are becoming increasingly bullish from bearish pattern on the Stock Price of Maruti Suzuki Ltd.
12/2/2007
3/2/2008
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Chart:
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DATES
Interpretation:
Here, In this case, Moving Average is above the Actual line. So it indicates that it is a right time to buy the security. In this Graph, we can see that the moving average of Tata Motors Stock has been decreased. So, it is giving clear picture of future movement of the scrip. This Graph provides a message to the investor that it is a right time to buy the Stock of Tata Motors. Here, in this case, the actual Stock price of Tata Motors is just below its moving average line. It indicates that investors are becoming increasingly bullish on the Stock Price of Tata Motors. Moreover, Stock price and moving Average of Tata Motors has been decreased. It indicates that investors are becoming increasingly bullish from bearish pattern on the Stock Price of Tata Motors.
Fundamental & Technical Analysis of Automobile Sector Company Name: Maruti Suzuki Ltd.
1400 1200 1000 Stock Prices 800 600 400 200 0 1/2/2008 4/2/2007 5/2/2007 6/2/2007 7/2/2007 8/2/2007 9/2/2007 2/2/2008 10/2/2007 11/2/2007 12/2/2007 3/2/2008
Opening Price High Price Low Price Closing Price
D ates
Interpretation:
Japanese Candle Stick is used to analyze the pattern of stock movement. Candle is same as bar chart but the color is different red candle is used to indicate the bearish trend and green candle is a indicator of bullish trend Japanese candle use historical prices of a stock in the prescribed manner i.e. Open, High, Low, Close. The size of the candle is known by its magnitude of open and close, and the size of the shadow is known by high and close. In the above Candle Stick Chart it is clear that Stock Price of Maruti Suzuki Ltd. has been decreased. Simply Share Prices of Maruti Suzuki Ltd is falling down. It indicates that the investors are becoming more bearish than bullish. Here, as far as Maruti Suzuki is concerned, bearish market trend is taking place. It is a right time to buy the Scrip.
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Dates
Interpretation:
From the above Candle Stick Chart it is clear that Stock Price of Tata Motors is falling down. Here, we can observe lot of volatility in stock price. Both the Bullish and Bearish trends are taking place. The Bullish trend is following by Bearish Trend. It indicates that the investors are becoming more bearish than bullish. At present Situation Bearish Trend is going on. It is a right time to buy the Scrip.
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average, which shows the average value of a security's price over a period of time. The most commonly used moving averages are 10 days, 20 days, 30 days, 50 days, 100 days and 200-days moving average.. One of the most important areas for any investor to look when researching a company is the financial statement. Financial reports are required by law and are published both quarterly and annually. Indian Economy is consistently achieving a tremendous growth in these Sectors. If we consider RSI then almost all the scrips of these companies are lying between
30 and 70. It means an investor should hold the scrips until it reaches 70 to sell and 30 to buy. The stock prices always take a correction after a major climb. Moving average is one of the best methods of predicting future movement of Stock
Price. If we use 200 Day Moving Average for Analysis then volatility of stock will be less. It gives clear picture of movement of Stock.
Suggestions:
1. Before going to invest, an investor should have clear and adequate
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Investment. Because it is less risky and also provides sufficient return. 3. 4. The investors should know the value of money. Practically, stock market activities are very risky. So, investors should be
careful while investing. 5. In case of half knowledge about stock market is very dangerous. So,
whenever a person wants to invest in stock market he should take necessary tips from the experts or Technical Analysts. 6. Investors should also look into global pressure and market movement in
order to look for avenues of investing in different stocks and to take position; some of the sources for understanding global pressure are CNBC TV18, News Paper, Economy watch etc.
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BIBLIOGRAPHY
CHAPTER 11 BIBLIOGRAPHY
BOOKS REFERRED: 1. 2. 3. Security Analysis & Portfolio Management, By, Punithavathy Pandian. Investment Analysis & Portfolio Management, By Prasanna Chandra Financial Markets & Institutions, By, Dr. S. Guruswamy Page 99
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