Beruflich Dokumente
Kultur Dokumente
In Sharekhan
As a part fulfillment of
Semester:1st
Internal guide:
Website:www.dbs.edu.in
Acknowledgement
Date:
Signature
Declaration
I, Sumit Sharma, declare that this project
report entitled “Comparative Analysis of
Growth of Equity Sectors with respect to
Indices” is an original piece of work done and
submitted by me towards partial fulfillment of
my Post Graduate Diploma in Business
Administration, under the guidance of “Mr
Kapil Lakhera and Mr. Mannu Kumar”.
Date:
Signature
CONTENTS
1. CHAPTER - I INTRODUCTION
- Literature Review
- Industry Profile
- Company Profile
- Sources of Data
6. CHAPTER – VI RECOMENDATIONS
BIBLIOGRAPHY
CHAPTER-1
INTRODUCTION
Introduction
The BSE Sensex rallied at the beginning of February ’08, but failed to
maintain its momentum on global cues and increase in short term
capital gains tax announces in the budget. On a fiscal front, buoyant
growth of government revenues made it possible to maintain fiscal
consolidation as mandated under the Fiscal Responsibility and Budget
Management (FRBM) Act.
Inflation
Industry Production
Increases in interest rates over the last two years is impacting the
consumer durable and capital goods sector as consumer durables
production, including washing machine and television sets, fell 3.1% in
January after increasing 5.3% a year earlier and output of capital goods
increased by a meager 2.1% compared with 16.3% a year ago. Also
indices for machinery and equipment showed a sharp fall of 3.8% in
Jan ’08 against 10.7% growth in Dec ’07.
Rupee Outlook
Trade Outlook
Scope of Study
This analysis attempts to study the growth pattern of equity sectors,
such as Banking and Information Technology when compared to its
sectoral indices and the national index S&P CNX Nifty. The analysis
hereby done attempts to prepare a report on the behavior of share
prices of major companies Banking and Information Technology
Sectors, so that a investor can prepare and well diversified portfolio
and logically forecast about the behavior of the share market and
invest in a manner so as to make a lucrative deal and earn a maximum
possible capital gain from the market. Moreover the study also gives a
comparative analysis of the above stated sectors with their respective
sectoral index and the national index so that a investor wanting to
invest in these sectors can check the past performance and behavior
of major companies in these sectors and analyze their growth trends
before investing making a investment in the stock market.
Objective of Study
Literature Review
By utilizing the secondary data available for the analysis, this report
attempts to analyze the growth trends of some equity sectors over the
period of Aug 2002 to April 2008, in order to provide with the past
information the growth trends of the share market in the past, thereby
giving a direction to forecast the future in a logical manner.
CHAPTER-2
ORGANIZATION
PROFILE
Industry Profile
The industry is also becoming more vibrant, with new types of products
and services being offered to meet the needs of the booming
economy. For example, in the derivatives market, the notional
principal amount outstanding has more than trebled between March
2005 and June 2007 to US$ 24.09 billion from US$ 6.836 billion.
Stock Markets
The year 2007 saw Indian stock markets scaling new peaks. It has
emerged as the third best performing market in the world with a dollar
return of 71.23 per cent. The popular Bombay Stock Exchange (BSE)
benchmark index, sensex, also posted its highest ever absolute gain of
6500 points in over two decades.
This performance of Indian stock markets has led to the total investor
wealth of Bombay Stock Exchange (BSE) surging to a record high of
over US$ 1.7 trillion, with an average increase of over US$ 10.18
million in every minute of trading during 2007. At the end of 2006, the
total market capitalisation stood at US$ 812 billion.
According to Ernst & Young, India was also the fifth largest market in
terms of number of IPOs and seventh largest in terms of the proceeds
for the year. Indian companies raised a whopping US$ 11.48 billion
through public issues in 2007, which is 83 per cent higher than US$
6.28 billion mobilized in 2006.
The robust performance of the Indian stock markets can also be seen
in the huge increase in the funds mobilised by the corporate India.
During 2007-08, India Inc mobilised a whopping US$ 8.13 billion
through issue of shares on rights issue, which is almost an eight-fold
increase over US$ 926.32 million raised in 2006-07. In fact, the
mobilisation of the funds in 2007-08 was more than the combined
mobilisation of the preceding 12 years.
The flurry of fund raising activity by the companies on the Indian stock
exchange is likely to continue in 2008-09. Already, 125 companies
have filed their draft offer documents (including rights and follow-on
issues) with the Securities and Exchange Board of India (SEBI), to
jointly raise around US$ 5.14 billion. These include: JSW Energy,
Jaiprakash Power Venture, Adani Power, Bharat Oman Refineries and
Future Ventures India among others.
Private Equity
The year 2007 was a watershed for private equity market, which has
emerged as the most preferred mode of fund mobilization for India Inc.
The capital mobilised through this route was higher than the funds
mobilized through IPOs, follow-on issues and qualified institutional
placements put together.
India, in fact, topped the Asia private equity chart for the first time in
2007 in terms of aggregate deal value. According to Grant Thornton, a
total of US$ 17.14 billion was mobilised through 386 deals by India Inc
in 2007, compared to US$ 7.8 billion in 2006. Real estate,
infrastructure, banking and financial services were the dominant
sectors attracting about 55 per cent of the total private equity
investments.
Structured Finance
Within this market, Asset Backed Securities (ABS) market has been the
dominant segment than Residentially Market Backed Securities
(RMBS). This market has been growing at a frenetic pace ever since
the RBI issued revised guidelines on securitisation in 2006.
Mutual Funds
India is also one of the fastest growing market for mutual funds
industry attracting a host of global players. The combination of
increasing number of fund houses (along with new schemes) and
increase in the number of people parking their savings in mutual funds
has resulted in total funds mobilisation increasing at a whopping
124.93 per cent during 2007-08 to stand at US$ 1.11 trillion as against
US$ 485.13 billion in 2006-07.
In the new fiscal year (2008–09), the growth momentum of the mutual
fund industry continues. Total fund mobilisation has increased by a
whopping 84.08 per cent to US$ 221.73 billion during April–May 2008,
compared to US$ 120.45 billion in April–May 2007. Consequently,
average AUM of the mutual fund industry has increased to US$ 140.04
billion for May 2008, against US$ 90.1 billion in the corresponding
period in 2007.
Banking
This boom in the banking industry has propelled nine Indian banks to
the list of top 50 Asian Banks, as per this year's Asian Banker 300
report. Similarly, seven Indian microfinance institutions find place in
Forbes list of World's Top 50 Microfinance Institutions.
Debt Market
Company Profile
Sharekhan is one of the leading retail brokerage of SSKI Group which
was running successfully since 1922 in the country. It is the retail
broking arm of the Mumbai-based SSKI Group, which has over eight
decades of experience in the stock broking business. Sharekhan offers
its customers a wide range of equity related services including trade
execution on BSE, NSE, Derivatives, depository services, online trading,
investment advice etc.
The firm’s online trading and investment site - www.sharekhan.com -
was launched on Feb 8, 2000. The site gives access to superior content
and transaction facility to retail customers across the country. Known
for its jargon-free, investor friendly language and high quality research,
the site has a registered base of over one lakh customers. The number
of trading members currently stands at over 6 Lacs. While online
trading currently accounts for just over 2 per cent of the daily trading
in stocks in India, Sharekhan alone accounts for 32 per cent of the
volumes traded online.
The content-rich and research oriented portal has stood out among its
contemporaries because of its steadfast dedication to offering
customers best-of-breed technology and superior market information.
The objective has been to let customers make informed decisions and
to simplify the process of investing in stocks.
With a legacy of more than 80 years in the stock markets, the SSKI
group ventured into institutional broking and corporate finance 18
years ago. Presently SSKI is one of the leading players in institutional
broking and corporate finance activities. SSKI holds a sizeable portion
of the market in each of these segments. SSKI’s institutional broking
arm accounts for 7% of the market for Foreign Institutional portfolio
investment and 5% of all Domestic Institutional portfolio investment in
the country. It has 60 institutional clients spread over India, Far East,
UK and US. Foreign Institutional Investors generate about 65% of the
organization’s revenue, with a daily turnover of over US$ 2 million. The
Corporate Finance section has a list of very prestigious clients and has
many ‘firsts’ to its credit, in terms of the size of deal, sector tapped
etc. The group has placed over US$ 1 billion in private equity deals.
Some of the clients include BPL Cellular Holding, Gujarat Pipavav,
Essar, Hutchison, Planetasia, and Shopper’s Stop.
6- Insurance.
REASONS TO CHOOSE SHAREKHAN LIMITED
Experience
SSKI has more than eight decades of trust and credibility in the Indian stock
market. In the Asia Money broker's poll held recently, SSKI won the 'India's
best broking house for 2004' award. Ever since it launched Sharekhan as its
retail broking division in February 2000, it has been providing institutional-
level research and broking services to individual investors.
Technology
With our online trading account you can buy and sell shares in an instant
from any PC with an internet connection. You will get access to our powerful
online trading tools that will help you take complete control over your
investment in shares.
Accessibility
Knowledge
In a business where the right information at the right time can translate into
direct profits, you get access to a wide range of information on our content-
rich portal, sharekhan. You will also get a useful set of knowledge-based tools
that will empower you to take informed decisions.
Convenience
You can call our Dial-N-Trade number to get investment advice and execute
your transactions. We have a dedicated call-centre to provide this service via
a Toll Free Number 1800-22-7500 & 1800-22-7050 from anywhere in India.
Customer Service
Our customer service team will assist you for any help that you need relating
to transactions, billing, demat and other queries. Our customer service can
be contracted via a toll-free number, email or live chat on
www.sharekhan.com.
Investment Advice
Benefits
•Anytime Ordering.
CHAPTER-3
RESEARCH
METHODOLOGY
Methodology
SOURCE OF DATA
Fundamental Analysis
Technical Analysis
Fundamental Analysis
Economic Analysis
1. Inflation
2. Interest Rates
3. Fiscal Policy
4. Monetary Policy
5. Business Cycle
Industry Analysis
It is already noted that not all industries are equally sensitive to the
economic conditions and the business cycles. Some industries are
virtually independent and some are highly sensitive to the business
cycle. Moreover in an industry analysis, number of key factors and
characteristics should be considered to identify the industries where
investments can be made. Such as:
Company Analysis
The third element to EIC approach to fundamental analysis is the
company analysis. The basic objective of the company analysis is to
identify specific companies or specific shares which are expected to
perform well in future. The company analysis presupposes that the
economic analysis and the industry analysis has already been made.
1. Balance Sheet
2. Income Statement
3. Cash Flow Statement
4. Notes to Financial Statement
The ROE indicates as to how well the fund of the owner has been used
by the firm. It also examines whether the firm has been able to earn
satisfactory return for the owners or not.
The PE ratio
indicated the expectations of the equity investors about the earnings
of the firm. The investor expectations are reflected in the market price
of the share and therefore the PE ratio gives an idea of investors’
perception of EPS. The PE ratio is one of the most widely used measure
of financial analysis in practice.
A high PE ratio may indicate that the share has low risk and therefore
the investors are content with low prospective return or the investors
expect high dividend growth and are ready to pay a higher price for
the share at present.
Technical Analysis
Technical analysis can be used either for a specific share or for the
market in general. In case of a specific share the past data of that
security are used to show charts while in case of market, the
aggregate data on prices and volumes are used to prepare charts.
Dow Theory : The Dow Theory, named after its originator, Charter
Dow, is considered to be first theory of technical analysis. Dow theory
is based on the hypothesis that the stock market does not perform on
a random basis. Rather, it is guided by some specified trends. The
likely trend in future can be predicted by the following trends. Three
types of specific trends have been named in Dow Theory.
a) Primary Trend : It is a long trend in price and may carry on even for
number of years. It takes the entire market up or down.
b) Secondary Trend : Secondary trend appear within the primary trend
and may last for few days or few weeks or few months. Secondary
trends show interruptions in primary trend and act as a restraining
force on the primary trend. The secondary trend tend to correct
deviations form the primary trend boundaries of price movements.
c) Minor Trend : Minor trends refer to day to day trend or movements
in prices over few days. The minor trends, being of very short
duration, have little analytical value.
Bar charts are popular among technical analysts because these charts
have a lot of visual presentation and moreover easy to draw.
Limitations
In this analysis, for simplicity sake, only S&P CNX Nifty, one of the
two major indices among Sensex and Nifty has been taken for the
analysis.
Due to lack of share price data, the analysis could only be done
from the year 2002 till 2008.
For simplicity sake not all companies listed in the sectors chosen
has been taken. Only the major large cap companies of these
sectors have been considered for the analysis.
CHAPTER-4
ANALYSIS OF DATA
IT Sector
About IT Sector
CNX IT Index
Companies in this index are those that have more than 50% of their
turnover from IT related activities like software development, hardware
manufacture, vending, support and maintenance.
Fundamental Analysis
Economy
India's domestic market has also become a force to reckon, with the
existing IT infrastructure evolving both in terms of technology and
depth of penetration. Global IT companies as well as domestic biggies
like IBM, Accenture, HP, TCS, HCL and Wipro have witnessed a
remarkable growth in their business.
Industry
10 13
11
9
0
2004 2005 2006 (Est)
Revenues : 36 billion
CAGR (FY 2004-06) – 30%
Contribution to GDP up from 2% in 2000 to 5% in 2006
With USD 13 billion, India has less than 10% of the current
addressable market.
Company
For my analysis to study the growth trend of IT sector, compared to its
Indices, I have chosen three major companies in the IT sector of India.
Those are TCS, Wipro and Infosys.
Company Profile
TCS
2000.00
1500.00
Price
1000.00
500.00
0.00
3
8
Ju 3
Fe 4
M 05
Ja 7
Ja 2
ep 4
05
M 6
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘
‘
t‘
l‘
v
n
n
c
b
ar
ug
ug
pr
ay
ct
Ju
o
O
A
N
D
A
A
S
Months
Financials
Particulars FY FY FY FY FY 06 FY 07 FY
02 03 04 05 08E
Revenues (in
- - - 8027.5 11230.5 15471.9 18533.7
Crores)
Revenue Growth
- - - - 39.9 37.8 19.7
(%)
Net Profit
- - -0.03 2377.2 3272.9 4300.9 5020.1
EPS
- - 0.42 38.15 55.53 38.39 46.07
EPS Growth (%)
- - - 8983.3 45.6 -30.9 20.0
P/E Ratio
- - 2123.3 38.04 23.18 27.07 N/A
Wipro
Company Profile
WIPRO
1800.00
1600.00
1400.00
1200.00
Price
1000.00
800.00
600.00
400.00
200.00
0.00
3
8
Ju 3
Ju 5
M 05
Ja 7
Ja 2
Fe 4
ep 4
D 05
O 6
M 6
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘
‘
l‘
t‘
ov
ec
n
n
b
ar
ug
ug
pr
ay
ct
A
N
A
A
S
Months
Financials
Particulars FY FY FY FY 05 FY 06 FY 07 FY
02 03 04 08E
Revenues (in
32301.3 41250.1 56446.0 78671.77 102827.6 142368.5 185354
Millions)
9
Revenue Growth
- 27.7 36.8 39.4 30.7 38.5 30.2
(%)
Net Profit
8411.4 8476.6 9992.0 15832.7 26269.9 29129.9 32241
EPS
6.05 6.10 7.19 11.29 14.24 20.17 22.16
P/E Ratio
233.62 193.40 107.18 46.35 37.72 24.11 N/A
Infosys
Company Profile
INFOSYS
6000
5000
4000
Price
3000
2000
1000
0
Aug ‘02
Dec ‘02
Aug ‘03
Dec ‘03
Dec ‘04
Dec ‘06
Dec ‘07
Aug ‘04
Aug ‘05
Dec ‘05
Aug ‘06
Aug ‘07
Apr ‘03
Apr ‘04
Apr ‘05
Apr ‘06
Apr ‘07
Apr ‘08
Months
Financials
Particulars FY FY FY FY 05 FY 06 FY 07 FY
02 03 04 08E
Revenues (in
545.05 753.81 1062.59 1592.0 2152.0 3090.0 4176.0
Millions)
Revenue Growth
-
(%) 38.30 40.96 49.82 35.18 43.59 35.15
Net Profit
164.47 194.87 270.29 419.0 555.0 850.0 1155.0
EPS
0.31 0.37 0.51 0.76 0.99 1.5 2.02
P/E Ratio
30.2 25.9 25.4 26.3 25.8 27.5 27.7
Technical Analysis
2000.00
1500.00
Price
Price
1000.00
Moving Averages
500.00
0.00
Nov ‘07
Jul ‘05
Aug ‘02
Dec ‘04
Feb ‘06
Mar ‘03
Oct ‘03
Apr ‘07
Sept
May
Months
From the above graph we can see the ‘12 monthly moving average’
and the ‘Growth Trend line’ of TCS.
Aug ’02 to Apr ’04 : In this period the moving average analysis
shows a almost constant signal, without a major ‘buy’ or ‘sell’ ones.
This is because in this period according to the diagram, the moving
average curve almost coincides with the price curve.
May ’04 to Jun ’06 : In this period since the moving average curve is
below the price curve, this gives a ‘buy’ signal to the investors. In
this period, even though the market crashed, TCS continued its
upward trend. It also reached it all time high in Apr ’06 to Rs
1900.10.
Jul ’06 to Apr ’08 : In this period TCS showed a almost constant
trend, and the share prices rose up by mere 0.02% in this period.
There was a sharp decline in the share price in Jul ’06 to Rs 920.01
from Rs 1706.08 in Jun ’06, But as per moving average analysis this
gives a ‘sell’ signal to the investors, even though in this period the
share prices rose up to Rs 1262.25 in Jan ’07.
Wipro
1800.00
1600.00
1400.00
1200.00
Prices
1000.00 Price
800.00 Moving Average
600.00
400.00
200.00
0.00 Nov ‘07
Jul ‘05
Aug ‘02
Mar ‘03
Oct ‘03
Dec ‘04
Feb ‘06
Apr ‘07
Sept
May
Months
From the above graph we can see the ‘12 monthly moving average’
and the ‘Growth Trend line’ of Wipro.
According to the moving average analysis Wipro shows basically a
negative pattern but with both ‘buy’ and ‘sell’ positions for the
investor.
Nov ’02 to Jul ’03 : In this period the Wipro stocks showed a down
trend, and therefore a fall of 43.71%. In this period the stock also
fell drastically to Rs 766.10 in May ’03. Therefore giving a signal to
sell off the shares of Wipro, because of such a drastic fall in the
prices.
Aug ’03 to May ’04 : In this period the share prices of Wipro were on
a constant rise and showed a increase of 45.17%. Here the share
also experienced a all time high in Dec ’03 at Rs 1651.55. Therefore
in this period it was advisable to buy the shares of Wipro.
May ’04 to Jul ’05 : In this period the share prices fell drastically to
the extent of 51.34%. In this period basically the share experienced
a sharp fall in its prices in Jun ’04 to Rs 515.51 from Rs 1476.20 in
May ’04. Though after Jun ’04, the share experienced a upward
trend. Therefore in this period it was advisable to the investors to
buy the shares of Wipro.
Aug ’05 to Apr ’08 : In this period of almost two and a half years, the
share prices of Wipro showed a more or less constant trend, with
slight variations. Over such a long period the share prices showed a
increase of about 37.42%, which can be said constant in such a long
period. Here the investor is advised to play with a mixed strategy of
buy and sell, so as to gain profit from Wipro stocks.
Infosys
6000
5000
4000
Price
Price
3000
Moving Average
2000
1000
0
Aug ‘02
Feb ‘03
Aug ‘03
Aug ‘05
Feb ‘06
Aug ‘06
Feb ‘08
Feb ‘04
Aug ‘04
Feb ‘05
Feb ‘07
Aug ‘07
Months
It is often said that “Don’t buy now as the price is too high” or “Buy on
correction” or “Buy Low and Sell High”, but the experts advocate the
view of “buying high and selling higher” which to many people seems
like going against the ‘conventional wisdom”.
From the above graph we can see the ‘12 monthly moving average’
and the ‘Growth Trend line’ of Infosys.
Feb ’03 to Jun ’03 : The share prices for Infosys fell slightly by
2.59%. This therefore gives a sell signal to the investors who
already own shares of Infosys bought before Feb ’03.
Jul ’03 to May ’04 : In this period the share prices increased
drastically giving a rise of 44.24%. The share price even went its all
time high to Rs 5374.43. This therefore gives a buy signal to the
investors in this period, because in this period the share prices of
Infosys were on a rise.
May ’04 to Apr ’05 : In this period the share prices dipped down to a
very low limit i.e. to Rs 1511.41 in Jul ’04. This period experienced a
drastic fall in share price of Infosys to the extent of 59.14%, thereby
giving the its investors a sell signal for the Infosys shares.
May ’05 to May ’06 : In this period of one year, the stock prices of
Infosys showed a increase of 32.67%. This therefore gives a buy
signal to the investors, as the stock is performing well in the
market.
Jun ’06 to Apr ’08 : In this period of past one and a half year, the
share prices of Infosys showed a more or less constant return, with
a slight increase of 13.54%. Therefore giving the investors a buy
signal for Infosys shares, in order to hold it for a longer period so as
to gain a high and profitable return.
Comparative Analysis
Comparative Analysis
25000.00
Prices and Indices
20000.00 CNX IT
NIFTY
15000.00
Infosys
10000.00
Wipro
5000.00 TCS
0.00
Aug ‘02
Feb ‘03
Aug ‘03
Feb ‘04
Aug ‘04
Feb ‘05
Aug ‘05
Feb ‘06
Aug ‘06
Feb ‘07
Aug ‘07
Feb ‘08
Months
The above graph depicts the growth rate of NIFTY, CNX IT Index, and
the major three companies in this sector since Aug 2002 till Apr 2008.
Therefore by observation we come to know that in this period both
NIFTY and the CNX IT Index showed a upward trend, though Infosys
and Wipro, the major leaders in this sector showed a sharp decline in
Mar ’04. The major reason which was observed for the decline in the
major industries in this sector is due to the market crash which took
place in Mar ’04. Moreover the decline which is being depicted by the
CNX IT Index curve is basically due to the revision of base value from
1000 to 100 w.e.f 28th May 2004.
Inference
TCS shows a consistent rise in the share prices, with a huge jump of
even 309.34% in the year 2003-04.
Banking Sector
The industry has been growing faster than the real economy, resulting
in the ratio of assets of commercial banks to GDP increasing to 92.5
per cent at end-March 2007. The Indian banks have also been doing
exceptionally well in the financial sector with the price-to-book value
being second only to china, according to a report by Boston
Consultancy Group.
CNX Bank Index
CNX Bank Index is an index comprised of the most liquid and large
capitalised Indian Banking stocks. It about 79% provides investors and
market intermediaries with a benchmark that captures the capital
market performance of Indian Banks.The index will have 12 stocks
from the banking sector which trade on the National Stock Exchange.
The average total traded value for the last six months of CNX Bank
Index stocks is approximately 74% of the traded value of the banking
sector. CNX Bank Index stocks represent of the total market
capitalization of the banking sector as on March 31, 2005.
The index is a market capitalization weighted index with base date of
January 01, 2000, indexed to a base value of 1000.
Fundamental Analysis
Economy
Indian banks are one of the most technologically advanced with vast
networks of branches empowered by strong banking systems, and
their product and channel distribution capabilities are on par with
those of the leading banks in the world, says a survey by McKinsey. It
also reveals that IT effectiveness at the top Indian banks is world class.
With the economy in overdrive and buoyancy in consumption and
investment demand, nine Indian banks, led by HDFC Bank and ICICI
bank, have made it to the top 50 Asian Banks list in Asian Bankers 300
report. Simultaneously, State Bank of India has become the top loan
arranger in the Asia-Pacific region in 2007, according to UK based
Project Finance International (PFI). Also, India emerged as the top
provider of educational loans worth US$ 3.67 billion till September in
2007.
While this growth has been very impressive, the potential banking
market waiting to be tapped in India is still fairly huge. Out of the 203
million Indian households, three-fourths, or 147 million, are in rural
areas and 89 million are farmer households. In this segment, 51.4 per
cent have no access to formal or informal sources of credit, while 73
per cent have no access to formal sources of credit.
In fact, according to a report by Boston Consultancy Group, India has
the second largest financially excluded households of about 135
million, which is next only to china. Also, about 60 million new
households are expected to be added to India's bankable pool between
2005 and 2009. With such a large untapped market, the Indian
banking industry is estimated to grow rapidly, faster than even china in
the long run.
Industry
1400
1171.29
1200
1000
800
600 469.4
400
200
0
2002 2007
Year
India has become one of the fastest growing banking market in the
world. The overall banking industry's business grew at a CAGR of about
20 per cent from US$ 469.4 billion as of March 2002, to US$ 1171.29
billion by March 2007.
1000.00 865.55
800.00 714.15
584.89
600.00
400.00
200.00
0.00
2006 2007 2008
Year
Aggregate bank deposits of banks increased by US$ 129.26 billion
(22.1 per cent) at the end of March 2007 over the corresponding in
2006. It further increased by 21.2 per cent or by US$ 151.40 billion as
at end-March 2008 over the corresponding period in 2007. While
aggregate demand deposits increased by 19.2 per cent, aggregate
time deposits increased by 21.6 per cent in the same period, indicating
migration from small savings schemes of the Government.
Significantly, the asset quality of the banks has also improved over this
period. The gross non-performing assets (NPA) as a per cent of total
assets has declined from 4 per cent as of March 2002 to 1.46 per cent
as of March 2006. Simultaneously, the capital adequacy ratio of all
SCBs has improved from 11.1 per cent as of March 2002 to 12.3 per
cent by March 2007.
Also, the banking sector has been doing exceedingly well on the
financial front. For example, in the quarter ended March 2008, while
the interest income of the 18 public sector banks and seven private
banks rose by 28.4 per cent, the net profit rose at much higher rate of
33.61 per cent.
200 186.71
150
100
41.63
50
0
2002 2007
Year
16.00% 14.00%
14.00%
12.00%
10.00% 9.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2002 2007
Year
The new private banks market share has increased from about 9 per
cent in 2001-02 to 16 per cent as of March 2006-07. Foreign banks,
which totaled 29 in June 2007, have also been expanding at a rapid
pace. For example, India was the fastest growing market for Global
banking major HSBC in 2006-07, with a growth rate of 64 per cent.
Company
SBI
2500.00
2000.00
1500.00
Price
1000.00
500.00
0.00
3
8
Ju 3
Ju 5
7
Fe 4
M 05
Ja 7
Ja 2
S 04
D 05
O 6
M 6
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘
‘
l‘
t‘
ov
n
n
b
ar
ec
ug
ug
pr
ay
ct
ep
A
N
A
Months
Financials
Particulars FY FY FY 04 FY 05 FY 06 FY 07 FY
02 03 08E
Revenues (in
- - 30460.4 32428.0 35794.9 39491.0 48950.3
Crores)
Revenue Growth
- - - 6.5 10.4 10.3 24.3
(%)
Net Profit
- - 16587.0 17885.0 19676.7 25257.8 33673.0
EPS
- - 69.94 81.79 83.73 86.29 106.56
P/E Ratio
- - 7.38 9.72 11.87 21.00 N/A
ICICI
1400.00
1200.00
1000.00
Price
800.00
600.00
400.00
200.00
0.00
3
Ju 3
8
Ju 5
M 05
Ja 7
Ja 2
Fe 4
S 04
D 05
O 6
M 6
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘
‘
l‘
t‘
ov
n
n
b
ec
ug
ug
ar
pr
ay
ct
ep
A
N
A
Months
Financials
Particulars FY FY FY FY 05 FY 06 FY 07 FY
02 03 04 08E
Revenues (in
- - 9002.3 9409.9 14306.1 22994.2 30788.34
Crores)
Revenue Growth
- - -
(%) 4.53 52.03 60.73 33.90
Net Profit
- - 5852.5 5681.9 7710.9 14077.3 19729.5
EPS
- - 26.56 27.22 28.55 34.48 37.37
P/E Ratio
- - 11.16 18.46 24.86 29.64 N/A
The concept of establishing IDBI BANK (IDBIBK) took place after RBI
issued guidelines for entry of new private sector banks in 1993.
Susequantly IDBI Bank was incorporated in 1994, With the main
promoter being Industrial Development Bank of India (IDBI) & Small
Industries Development Bank of India (SIDBI) the country's two premier
financial institution. The strategy and business plans of bank were
made in consultation with M/s KPMG Peat Marwick, world renowned
consultants. In March 1999 the Bank came out with its maiden public
issue of 4 crore equity shares of Rs. 10/- each at a premium of Rs. 8/-
per share aggregating Rs. 72 crores. The bank has maintained an
uninterrupted track record of profitability since inspection, with focus
on excellence of service, professional competence, state of art
technology, utilization of the group's synergy and backing of its
financially strong promoters, the bank is poised to become a front
ranking banking force in India. While liberalization and reforms have
thrown up a few challenges, it has also created opportunities for banks
to increase revenues by diversifying into Investment banking,
Insurance, Credit Cards, mortgage financing, depository services and
more. The bank is offering retail loan products like home finance, loans
against shares, educational loans, car loans, etc. on very competitive
terms. It has also entered into and arrangement with Standard
Chartered Bank to offer a Co-branded Global Credit Card. The bank has
informed that about conversion of its entire operating technology
platform to 'Finacle', a core banking software provided by Infosys. The
bank has also implemented Kondore +a treasury Front Office software
from Reuters and ITMS-treasury back office software from Synergy
Login. The Bank has implemented Finacle core Banking Software from
Infosys Technologies Ltd. The bank had recommended a rights issue of
equity shares in the ratio of 1:2 at a price of Rs.22 per share including
a premium of Rs.12 per share.
IDBI
180.00
160.00
140.00
120.00
Price
100.00
80.00
60.00
40.00
20.00
0.00
3
Ju 3
8
5
7
M 05
Ja 2
Fe 4
Ja 7
ep 4
D 05
O 6
M 6
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘0
‘
l‘
t‘
ov
n
n
b
ar
ec
ug
ug
pr
ct
ay
Ju
A
N
A
A
S
Months
Financials
Particulars FY FY FY FY 05 FY 06 FY 07 FY
02 03 04 08E
Revenues (in
- - 9,704.0
Crores)
0 2,655.72 5,380.72 6,345.42 8,020.84
Revenue Growth
- - -
(%) -72.63 102.61 17.93 26.40
Net Profit
- - 7,573.0
EPS
- - 7.12 4.26 7.75 8.7 10.06
P/E Ratio
- - 10.55 21.48 9.57 14.36 N/A
Technical Analysis
2500.00
2000.00
1500.00 Prices
Price
500.00
0.00
7
Fe ‘05
Ap 06
D ‘ 04
O 03
Ju 4
M ‘02
M ‘03
N 07
Se ‘06
‘0
‘0
‘
‘
r‘
ay
ov
l
ar
pt
ec
g
ct
b
Au
Months
From the above graph we can see the ‘12 monthly moving average’
and the ‘Growth Trend line’ of SBI.
In our analysis form the year 2002 to 2007, the share price of SBI
showed a consistent upward trend and a massive increase of 559.13%.
Moreover by the moving average analysis, throughout the period of
our analysis, the share of SBI shows a buy position for the investor.
During this period it also has reached its all time high of Rs 2365.00 in
Dec ’07.
1400.00
1200.00
1000.00
Price
800.00 Price
600.00 Moving Average
400.00
200.00
0.00
Nov ‘07
Jul ‘05
Aug ‘02
Mar ‘03
Dec ‘04
Feb ‘06
Oct ‘03
Apr ‘07
Sept
May
Months
From the above graph we can see the ‘12 monthly moving average’
and the ‘Growth Trend line’ of ICICI.
ICICI also reached its all time high in this period at Rs 1265.00 in Oct
’07.
180.00
160.00
140.00
120.00
Prices
Price
100.00
80.00 Moving Average
60.00
40.00
20.00
0.00
Mar ‘03
Nov ‘07
Jul ‘05
May
Aug ‘02
Oct ‘03
Dec ‘04
Feb ‘06
Apr ‘07
Sept
Months
From the above graph we can see the ‘12 monthly moving average’
and the ‘Growth Trend line’ of IDBI.
From the above graph, we can observe that IDBI shows great
fluctuations in its share price.
Aug ’02 to Sept ’05 : In this period though with fluctuations, the
share price of IDBI was on a rise. In this period the share price of
IDBI increased by about 585.87%, which is a great increase in a
short span of about three years. The moving average analysis also
shows a consistent ‘buy’ position for the investor during this period.
Oct ’05 to Sept ’06 : In this period the share price of IDBI showed a
slight decline of about 3.12%. As the moving average curve lies
above the share price curve, it also indicates a ‘sell’ position for the
investor. The share price in this period also dipped down to Rs 55.20
in Jun ’06 from Rs 117.97 in Sept ’05, which is a very short span of
time.
Oct ’06 to May ’08 : Over this span of time the share price of IDBI
showed a slight increase of about 8.25% in about one and a half
years. It also touched its all time high in this period to Rs 165.00 in
Dec ’07. The moving average analysis here shows a ‘buy’ position
for the investor.
Comparative Analysis
Comparative Analysis
12000.00
Prices and Index
10000.00
NIFTY
8000.00 Bank Nifty
6000.00 ICICI
4000.00 IDBI
SBI
2000.00
0.00
Aug ‘02
Aug ‘03
Aug ‘04
Feb ‘05
Aug ‘05
Aug ‘06
Feb ‘07
Aug ‘07
Feb ‘03
Feb ‘04
Feb ‘06
Feb ‘08
Months
The above graph depicts the growth rate of NIFTY, CNX Bank Index,
and the major three companies in this sector since Aug 2002 till Apr
2008. By observation, we can see that the Bank Nifty and Nifty showed
a continuous upward trend. The major company in this sector, i.e.
ICICI, IDBI and SBI, also complies with Nifty and CNX Bank Nifty
showing a upward trend.
The yearly growth rate of Nifty, CNX Bank Index and the three major
companies is shown below in the table.
Inference
Also, from the above table of yearly growth rate, we can observe
that SBI and ICICI showed a consistent rise, whereas IDBI showed a
more or less mixed trend, with a 100.02% rise in 2003-04, and a fall
of -22.99% in 2005-06.
CHAPTER-5
INTERPRETATIONS
AND FINDINGS
Following are the points which have been observed while
doing this analysis
Though the IT sector showed a upward trend but with a very high
degree of fluctuations with CNX IT Index as high as 5625.53 points
in February 2007 from 2051.26 in June 2004. Though the IT sector
showed a upward trend.
The correlation between CNX IT Index and S&P CNX Nifty comes out
to be 0.88, which is indeed a very high degree of correlation.
CHAPTER-6
RECOMMENDATIONS
AND SUGGESTIONS
Following is the recommendations that I would like to
suggest after having done the above analysis
For a new investor who wants to invest his funds at minimum risk
for a long term period should in Banking sector in companies like
SBI or ICICI, because these companies show a consistent upward
trend in the observed period.
For investor who prefers to trade for maximum return at high risk is
suggested to invest in IT Sector in companies like Infosys, whose
share price touched a maximum of 5374.43 in May 2004, and also
shows high fluctuations in the observed period.
www.nseindia.com
www.ibef.org
www.sharekhan.com
www.yahoofinance.com
www.moneycentral.msn.com