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ABSTRACT

The project entitled Comparative analysis of finance and banking equity stocks is about doing analysis on stocks and suggesting the investor in making a decision to buy, sell or hold. The project consists of two types of analysis. . !undamental "nalysis #. Technical "nalysis !undamental analysis consists of economy analysis, industry analysis and company analysis. $conomy analysis includes economic factors like %&', inflation rates, interest rates, e(change rates. )ndustry analysis consists of analysis of industry recent developments in the industry etc. Company analysis includes analy*ing the company+s ratios etc. Technical analysis mainly consists of charts, graphs etc. )t takes the closing prices and plots the graphs. )t is mainly used for short term purpose. The project contains si( banking and finance stocks namely, ICICI Bank, HDFC Bank, Axis Bank, Infrastructure Development Finance Company Ltd (IDFC Ltd), a!indra " a!indra Finance Ltd and Housin# Development Finance Corporation Ltd$ (HDFCL)$ The analysis is done on these si( stocks to determine which one is better for investor. !or each stock based upon the ratios ) have recommended which stock to buy. ,ome investors look for sales of a company, some may look for dividend payout ratio. )t again depends on investor. -ased upon the ratios he can choose which stock to invest. "t the end conclusion and recommendations have been specified so as to make the project work more meaningful and purposeful.

Equity Analysis Banking & Financial Stocks

INTRODUCTION
)ndia is a developing country. .owadays many people are interested to invest in financial markets especially on equities to get high returns, and to save ta( in honest way. $quities are playing a major role in contribution of capital to the business from the beginning. ,ince the introduction of shares concept, large numbers of investors are showing interest to invest in stock market. )n an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the &ay Trader and ,hort Term )nvestor. The price of a security represents a consensus. )t is the price at which one person agrees to buy and another agrees to sell. The price at which an investor is willing to buy or sell depends primarily on his e(pectations. )f he e(pects the security/s price to rise, he will buy it0 if the investor e(pects the price to fall, he will sell it. These simple statements are the cause of a major challenge in forecasting security prices, because they refer to human e(pectations. "s we all know firsthand, humans e(pectations are neither easily quantifiable nor predictable. )f prices are based on investor e(pectations, then knowing what a security should sell for 1i.e., fundamental analysis2 becomes less important than knowing what other investors e(pect it to sell for. That/s not to say that knowing what a security should sell for isn/t important33it is. -ut there is usually a fairly strong consensus of a stock/s future earnings that the average investor cannot disprove !undamental analysis and technical analysis can co3e(ist in peace and complement each other. ,ince all the investors in the stock market want to make the ma(imum profits possible, they just cannot afford to ignore either fundamental or technical analysis.

Equity Analysis Banking & Financial Stocks

NEED OF THE STUDY


To start any business capital plays major role. Capital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. The owners of the company have to pay regular interest and principal amount at the end. ,tock is ownership in a company, with each share of stock representing a tiny piece of ownership. The more shares you own, the more of the company you own. The more shares you own, the more dividends you earn when the company makes a profit. )n the financial world, ownership is called Equity. Advanta#es of sellin# stock% " company can raise more capital than it could borrow. " company does not have to make periodic interest payments to creditors. " company does not have to make principal payments ,tock4shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own. The more shares you own the more dividends you receive. The role of equity analysis is to provide information to the market. "n efficient market relies on information5 a lack of information creates inefficiencies that result in stocks being misrepresented 1over or under valued2. This is valuable because it fills information gaps so that each individual investor does not need to analy*e every stock thereby making the markets more efficient.

Equity Analysis Banking & Financial Stocks

OBJECTIVES OF THE STUDY


The objective of this project is to deeply analy*e -anking 7 !inancial ,ectors for investment purpose by monitoring the growth rate and performance on the basis of historical data. The main objective of the study is to advise the investor in investing the stocks. &!e main o'(ectives of t!e )ro(ect study are% To understand the concepts of equity analysis with special reference to fundamental analysis. To ,tudy the impact of economic, industry and company specific factors on stock prices To do a comparative analysis of si( key players )C)C) -ank, 8&!C -ank, "(is -ank, )&!C 9td, :ahindra 7 :ahindra !inance and 8&!C9 through fundamental analysis. ,uggesting as to which company+s shares would be best for an investor to invest.

Equity Analysis Banking & Financial Stocks

SCOPE OF THE STUDY


The scope of the study is identified after and during the study is conducted. The project is based on tools like fundamental and technical analysis, and ratio analysis. !urther, the study is based on information of last five years. The analysis is made by taking into consideration si( companies i.e. )C)C) -ank, 8&!C -ank, "(is -ank, )&!C 9td, :ahindra 7 :ahindra !inance and 8&!C9. The equity analysis of banking and financial stocks study is carried out in <amantapur office of "ngel -roking 9imited in 8yderabad The scope of the study is limited for a period of five years. The scope is limited to only the fundamental analysis of the chosen stocks.

Equity Analysis Banking & Financial Stocks

IMPORTANCE OF THE STUDY


&ecisions like whether you should buy or sell when trading in the share market is a difficult task to do. )t requires split3hair analysis of the market. To do so one also needs to have e(cellent understanding of the market. $quity analysis forms an integral part of the share trading e(perience. $quity analysis decides the stance one would take in the share trading industry. !inding out the highs and lows in the market and analy*ing the equity is of utmost importance before making any sort of investment. Technical analysis and fundamental analysis form part of the equity analysis.

Equity Analysis Banking & Financial Stocks

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RESEARCH METHODOLOGY
<esearch design or research methodology is the procedure of collecting, analy*ing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the costs can be minimi*ed and the desired level of accuracy can be achieved to arrive at a particular conclusion. The methodology used in the study for the completion of the project and the fulfillment of the project objectives. The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of <andom ,ampling. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The stocks are chosen from the automobile sector. The sample si*e for the number of stocks is taken as three for fundamental analysis of stocks as fundamental analysis is very e(haustive and requires detailed study. *esearc! Findin#s: Considerable amount of time was spent to collate the findings of the research. The findings had to be stated. Interpretation% )nterpretation refers to the task of drawing inference from the colleted facts after an analytical study, in fact it is a search for broader meaning of research findings it is through interpretation that the researcher can well understand the abstract principle that respondents beneath his findings. The simple statistical tool will be used to analy*e the data collection, and bar graphs and pie charts have been used to illustrate the findings diagrammatically.

Equity Analysis Banking & Financial Stocks

LIMITATIONS
$very study has its own limitations in terms of methodology and available resources for its conduct. This study was not an e(ception and was carried out under the following limitations5 This study has been conducted purely to understand $quity analysis for investors. The study is restricted to si( companies, i.e. )C)C) -ank, 8&!C -ank, "(is

-ank, )&!C 9td, :ahindra 7 :ahindra !inance and 8&!C9, based on !undamental analysis. The study is limited to the companies having equities. &etailed study of the topic was not possible due to limited si*e of the project. There was a constraint with regard to time allocation for the research study i.e. for a period of ;= days. Topic is vast but availability of information and timeline is short. ,uggestions and conclusions are based on the limited data of five years.

Equity Analysis Banking & Financial Stocks