A

Project Report

On

“Equity Research (Fundamental analysis)”

For

“Motilal Oswal securities Ltd.”

By

Pallavi V.Talele

Under the Guidance of

Dr.Smita Sovani

Submitted To

University of Pune

In partial fulfillment of the requirement for the award of the degree of

Master of Business Administration (MBA)

Through

Vishwakarma Institute of Management

Pune-48
 ACKNOWLEDGMENT

It’s a great privilege that I have done my project in such a well-organized and diversified
organization. I am great full to all those who helped and supported me in completing the
project.

First of all I would sincerely like to thank Mr. Sumit Prakash (Branch Development
Manager), for his valuable guidance and kind co-operation during the project and the
staff members for having accorded me the permission to undertake a project in Motilal
Oswal Securities Ltd.

I am also thankful to our director Dr.Shailesh Kasande and my project guide Dr. Smita
Sovani for helping me in completing the project. Last but not least, I am also thankful to
all college staff and my friends for helping me directly or indirectly in my project.

ii
 List of abbreviations

ADR-American Depository Services

CRR-Cash Reserve Ratio

EPS-Earning per share

FDI-Foreign Direct Investment

FII-Foreign Institutional Investors

GOI-Government of India

iii
 List of Figures

Figure Figure Name Page No.

No.

1 Bar Charts 18

2 Candlesticks 19

3 Triple Top 30

4 Head & Shoulder 32

5 Resistance 34

iv
 Index

Sr.No. Topic Page No.

1 Executive summary 1

2 Company profile 2

3 Objectives of the study 8

4 Research methodology 10

5 Data Analysis 35

6 Findings 62

7 Suggestions 66

8 Conclusion 67

9 Limitations 68

10 Bibliography 69

v
 CHAPTER 1-EXECUTIVE SUMMARY

Project: Equity Research

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

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

of fundamental analysis & technical analysis. While decision in investment of shares

should be base on actual movement of shares price measured more in money &

percentage term & nothing else.

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

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

RATIO ANALYSIS, STUDY OF GRAPH. Equity analysis does not discuss how to buy

& sell shares, but does discuss the methods, which enables the investor to arriving at

buying & selling decision.

Ratio Analysis is a widely- used tool of financial analysis. It is defined as the systematic

use of ratio to interpret the financial statement so that strength and weakness of a firm as

well as its historical performance and current financial condition can be determined for

the purpose of investment.

The technical approach to investment is essentially a reflection of the idea that prices

moves in a trend that are determined by the changing attitude of investor’s toward a

variety of economic, monetary, political and psychological forces. The art of technical

analysis, for it is an art, is to identify a trend reversal at a relatively early stage and ride

on that trend until the weight of the evidence shows or proves the trend has reversed.

1
 CHAPTER 2 - PROFILE OF THE ORGANIZATION

The story of Motilal Oswal Securities Ltd goes back many years, when Mr. Motilal

Oswal and Mr. Raamdeo Agrawal met each other as students in a Mumbai suburban

hostel in the early eighties. Both the young chartered accountants hailing from a rural &

an unpretentious background had a common dream viz 'to build a professional

organization with strong value systems, to provide reliable & honest investment

advice to investors'. Thus was born their first enterprise called "Prudential Portfolio

Services" in 1987.

”Motilal Oswal” gets incorporated as Motilal Oswal Securities Ltd. in the year 1995.The

institutional business unit has relationships with several leading foreign institutional

investors in the US, UK, Hong Kong and Singapore.

Motilal Oswal Financial Services is a well diversified financial services group having

businesses in securities, commodities, investment banking and venture capital. With 1160

Business locations and more than 2, 00,000 investors in over 360 cities, Motilal Oswal is

well suited to handle all your wealth creation and wealth management needs. The

company has in the last year placed 9.48% with two leading private equity investors -

New Vernon Private Equity Limited and Bessemer Venture Partners at post money

company valuation of Rs. 1345 crore. (Rs.13.45 billion).

Motilal Oswal Financial Services Ltd ties-up with State Bank of India to offer online

trading.

Motilal Oswal Financial Services Ltd was declared as the Best Research House for Indian

Stocks in 2006 as per AQ Research

2
Motilal Oswal Financial Services Ltd., consists of four companies.

(1) Motilal Oswal Investment Advisors Pvt. Ltd.

(2) Motilal Oswal Commodities Broker (P) Ltd.

(3) Motilal Oswal Venture Capital Advisors Private Limited

(4) Motilal Oswal Securities Ltd.

Mission and Vision

Motilal Oswal core objective is to position ourselves as globally respected investment

bank by assisting our clients in value creation.

Motilal Oswal is on the correct roadmap to pursue our mission with our Team

inculcating the following values with utmost sincerity.

Integrity

Motilal Oswal commitments and work on transactions keeping in mind long term

interests of the clients

Client Orientation

Motilal Oswal comes out with solutions keeping in mind priorities and needs of the

clients.

Knowledge based solution offering

Motilal Oswal quest for solution offering supported by knowledge and research on

underlying business and products, results in high quality financial and strategic

advice.

3
Quality

Motilal Oswal endeavor to follow the best of the global service standards and

processes results in outstanding execution support for transactions.

Passion

Motilal Oswal is passionate about our transactions resulting in innovative solutions

and enhancing probability of transaction closures.

Motilal Oswal Core Purpose

To be a well respected and preferred global financial services organization enabling

wealth creation for all our customers.

4
 SWOT ANALYSIS
During this training at Motilal Oswal, we had come to know the Strengths –Weaknesses –

Opportunities – Threats for the company and it is very useful for a company to analyze

them. Therefore, the SWOT analysis is presented here and the suggestions for

maintaining strengths and removing weaknesses are explained in detail.

Strengths:

 Well-maintained infrastructure. Infrastructure does not just include the office area

but also the facilities present there.

 Lowest brokerage and other charges with respect to competitors. The brokerage is

not the minimum but the company does not collect the other charges which do not

exist like other competitors.

 The best investment advice correct up to 70-90 % through dedicated research and

reports. The R&D department of the company is very dedicated and the tips given

by the company is on an average 97% right.

 One of the best DPs in India. The company has the record top provide best DP

service and other facility.

Weaknesses:

The company is passing through the following weaknesses which can be the hurdle to the

success of the company.

 Less awareness in the market. The Motilal Oswal is not having a good reputation

or recognition in the market. The more and more awareness should be created.

 The marketing team is not much experienced and so the company cannot make

its stand in the mind of the investors.

5
  The company is following a rigid credit management system. So sometimes the

limit problem or the compulsory selling of the securities happens.

Opportunities:

Opportunities are something that the company should grab to make the stand in the

market against the competitors. The opportunities for the stock broking industry are as

follows:

 Slope of stock market towards delivery based transaction. The company is having

advantage in this volatile market because the investors are having the trading on

the delivery basis.

 Large potential market for delivery and intra-day transactions.

 Attract the customers who are dissatisfied with other broker & DPs. For that the

company is preparing a list of customers.

Threats:

The company should take care of the following points as they play a big roll in the

success of the company.

 Decreasing rates of brokerage in the market. The competitors are getting sharp

change on that.

 Increasing competition against other brokers & DPs.

 A threat of losing clients for any kind of weakness of the company. Normally the

rigid credit policy of the company is playing a negative roll for the market.

 Losing the untapped market with the entry of the competitors.

6
7
 MAJOR PLAYERS IN THE INDUSTRY

INDIA BULLS

ANGEL BROKING

ICICI DIRECT

IL&LS INVESTMENT

UTI SECURITIES

MOTILAL OSWAL

KARVY

KOTAK SECURITIES LIMITED

SHAREKHAN

NUMBER OF TERMINAL IN INDIA.

Broker Name No of Terminal

Angle broker 5081
Motilal Oswal 4179
India bulls 3231
ICICI securities 1051
India info line 970

NO OF SUB-BROKER IN INDIA

Company Name No of sub broker

Karvy stock broking 15000
Angle Broking 2408
Motilal Oswal 638
I.C.I.C.I. 587

8
 CHAPTER 3 – OBJECTIVE OF THE PROJECT

It was good opportunity to familiarize myself with the stock market i.e. the capital market

& their co-relation with economical environment through “EQUITY RESEARCH”. The

analysis of equity gives me the opportunity to understand thoroughly these behavioral

patterns of different equity & overall capital market.

The objectives of the project research are as follows.

1. To Study the equity analysis and obtain the knowledge of equity market

2. To Study the present behavior & predicting the future behavior of equity in stock

market.

3. Obtain the knowledge about how to select the companies for investment.

To analyze the performance of company’s through Balance Sheet & Technical graph of

their shares.

9
 About Blue-chip companies

Blue chip companies are nationally recognized, well-established and financially sound

company. Blue chips generally sell high-quality, widely accepted products and services.

Blue chip companies are known to weather downturns and operate profitably in the face

of adverse economic conditions, which help to contribute to their long record of stable

and reliable growth. Blue chip stocks are seen as a less volatile investment than owning

shares in companies without blue chip status because blue chips have

an institutional status in the economy. Investors may buy blue chip companies to provide

steady growth in their portfolios.

Motilal Oswal felt need of evaluating the price patterns of leading scripts mainly from the

three main blue chip companies viz., Infosys Technologies, Reliance Industries and

State Bank of India and also interested in determining the trends along with price

performance in near future.

10
 CHAPTER 4– RESEARCH METHODLOGY

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

Primary source includes

1) Questionnaires for investors

2) Discussion with experts

3) Live trading in the market

Secondary source includes

1) Various books related to stock market

2) Books related to Financial Management

3) Web sites were used as the vital information source.

4) Discussion with branch manager

Motilal Oswal felt need of evaluating the price patterns of leading scripts mainly from

the three main blue chip companies and also interested in determining the trends

along with price performance in near future. This equity analysis will facilitate to

investor for profitable investment.

11
 EQUITY ANALYSIS

Economic Analysis Industry Analysis Company Analysis

Fundamental analysis Technical analysis

Economic Analysis:

An Economic analysis is the filter or scanner of the surrounding at the time of

equity research, which help the analyst to make a rational decision. In the economic

analysis, the following factors are considered as a whole with a perspective of industry &

also considered with a perspective of individual company:

1. Inflation rates.

2. Economic growth.

3. Governmental policies regarding businesses & industry.

4. LPG (liberalization, privatization, globalization)

5. Interest rates: standards of returns for measurement.

6. FII s perception to share market.

7. Political feel.

12
Industry Analysis:

Since each industry is unique, a systematic study of its specific features and

characteristics must be an integral part of the investment decision process. Industry

analysis should focus on the following:

 Structure of the industry.

 Nature of the competition.

 Nature and prospects of the demand.

 Costs, efficiency and profitability.

 Technology and research.

Company Analysis:

In the company analysis, the investor assimilates the several bits of information related to

the company and evaluates the present and future values of the stock. The risk and return

associated with the purchase of the stock is analyzed to take better investment decisions.

The present and future values of the stock are affected by a number of factors such as:

 Earnings

 Capital structure

 Management

 Competitive edge

 Operating efficiency

 Financial performance

13
Fundamental Analysis:

Fundamental analysis is the study of economic, industry and company conditions in an

effort to determine the value of a company s stock. Fundamental analysis typically

focuses on key statistics in company s financial statements to determine if the stock price

is correctly valued.

Most fundamental information focuses on economic, industry and company statistics.

The typical approach to analyzing a company involves four basic steps:

1 Determine the condition of the general economy.

2 Determine the condition of the industry.

3 Determine the condition of the company.

4 Determine the value of the company s stock

Fundamental analysis facilitates comparison between two companies. It reflects the

financial efficiency & financial position of a company. Fundamental analysis is fruitful in

preparing plans for the future. However, fundamental Analysis should not be considering

as the ultimate objective test but it may be carried further based on the outcome &

revelations about the cause of variations. Fundamental Analysis is helpful in forecasting

likely position of company in near future.

Fundamental analysis is a very powerful analytical tool useful for measuring performance

of an organization. The ratio analysis concentrates on the inter-relationship among the

figures appearing in the financial and accounting statements. The ratio analysis helps the

investor to analyze the past performance of the firm and to make further future projection

14
regarding financial position. Ratio analysis allows interested parties like shareholders,

investors, creditors and government to make an evaluation of financial aspect of a firm s

performance.

Fundamental Analysis consists of following:

 Study of Balance sheet

 Study of Ratios

15
Technical Analysis

INTRODUCTION

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

broad categories: Fundamental Analysis and Technical Analysis Fundamental analysis

involves analyzing the characteristics of a company in order to estimate its value.

Technical analysis takes a completely different approach; it doesn’t care one bit about the

“value” of a company or a commodity. Technicians are only interested in the price

movement in the market.

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

supply and demand in a market in an attempt to determine what direction, or trend will

continue in the future. In other words, technical analysis attempts to understand the

emotions in the market by studying the market itself, as opposed to its components. If

you understand the benefits and limitation of technical analysis it can give you a new set

of tools or skills than will enable you to better trader or investor.

DEFINITION

Technical analysis is a method of evaluating the securities by analyzing the statistics

generated by the market activity, such as past price and volume. In technical analysis,

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

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

type of technical traders. Some rely on chart patterns. In any case, technical analyst’s

exclusive use of historical price and volume data is what separates them from their

16
fundamental counterparts. Unlike fundamental analysis technical analysts doesn’t care

whether a stock is undervalued the only thing that matter is a security’s past trading data

and what information this data can provide about where the security might move in the

future

Assumptions:

1. The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement, ignoring

the fundamental factors of the company. However, technical analysis assumes that, at any

given a time, a stocks price reflects everything that has or could affect the company-

including Fundamental Factors. Technical analysts believe that the company’s

fundamentals, along with broader economic factors and market psychology, are all

priced into the stock, removing the need to actually consider these factors separately.

This only leaves the analysis of price movement, which technical theory views as a

product of supply and demand for a particular stock in the market.

2. Price Moves In Trends

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

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

same direction as the trend that to be against it. Most technical trading strategies are

based on this assumption.

17
3. History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself, mainly

in terms of price movement. The repetitive nature of price movement is attributed to

market psychology; in other words, market participants tend to provide a consistent

reaction to similar market stimuli over time. Technical analysis uses charts patterns to

analyze market movements and understand trends. Although many of these charts have

been use for more than 100 years they are still believed to be relevant because they

illustrate patterns in price movements that often repeat themselves.

Line charts

A style of charts that is created by connecting a series of data points together with a line.

This is the most basic type of charts used in finance and connecting a series of past prices

together with a line generally creates it.

18
Bar chart

A style of chart used by some technical analysts, on whom as illustrated below, the top of

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

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

bar, and the opening price is shown on the left side of the bar. A single bar like the one

below represents one day of trading.

Figure 1

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

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

patterns.

Candlestick

A price chart that displays the high, low, open and close for a security each day over a

specified period of time.

19
 Figure 2

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

Technical analysis: the use of trend

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

finance isn’t all that different from the general definition of the term- a trend is really

nothing more than the general direction in which a security or market is headed. Take a

look at the chart below:

20
It isn’t hard to see that the trend in figure is up. However, isn’t not always this easy to see
a trend.

There are lots of ups and downs in this chart, but there isn’t a clear indication of which

direction this security is headed.

21
The Importance of Trend

It is important to be able to understand and identify trends so that you can trade with

them rather than trade against them. Two important sayings in technical analysis are “ the

trend is your friend” and “ don’t buck the trend” Illustrating how important trend analysis

is for technical trade.

Types of Trend

There are three types of trend:

 Up Trends

 Downtrends

 Sideways/ Horizontal Trends

As the names imply, when each successive peak and trough is higher, it’s referred to as an

upward trend. If the peaks and troughs are getting lower. It’s a downtrend. When there is

little movement up or down in the peaks and troughs, it’s a sideways or horizontal trend.

If you want to get really technical, you might even say that a sideways trend is actually

not a trend on its own, but a lack of a well-defined trend in either direction. In any case,

the market can really only trend in these three ways: up, down or nowhere.

22
Uptrend

Describes the price movement of a financial asset when the overall direction is upward.

A formal uptrend is when each successive peak and trough is higher than the ones found

earlier in the trend.

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

example, the peak at point 4 is higher than the peak at Point 2. The uptrend will be

deemed broken if the next low on the chart falls below Point 5.

Downtrend

Describes the price movement of a financial asset when the overall direction is

downtrend. A formal downtrend occurs when each successive peak and trough is lower

than the ones found earlier in the trend.

23
Notice how each successive peak and trough is lower than the previous one. For example,

the low at Point 3 is lower than the low at Point 1. The downtrend will be deemed broken

once the price closes above the high at Point 4.

Downtrend is the opposite of uptrend.

Trend lines

A trend line is a simple charting technique that adds a line to a chart to represent the trend

in the market or a stock. Drawing a trend line is as simple as drawing a straight line that

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

in the identification of the reversals.

24
As you see in Figure 5, an upward trend lines is drawn at the lows of an upward trend.

This line represents the support the stock has every time it moves from a high to a low.

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

anticipate the point at which a stock’s price will begin moving upwards again. Similarly,

a downward trend line is drawn at the highs of the downward trend. This line represents

the resistance level that a stock faces every time the price moves from a low to a high.

Trend Lengths:

Along with this trend direction, there is three-trend classification. A trend of any direction

can be classified as a long-term trend, intermediate trend or a short-term. In terms of the

stock market, a major trend is generally categorized as one lasting longer than a year. An

25
intermediate trend is considered to last between one and three months and a near-term

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

intermediate trends, which obtain move against the direction of the major trend. If the

major trend is upward and there is a downward correction in price movement followed by

a continuation of the uptrend, the correction is considered to be an intermediate trend.

The short term trends are components both major and intermediate trends. Take a look a

figure to get a sense of how these three trends lengths might look.

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

of trend being analyzed. To help identify long-term trends, chartists to get a better idea of

the long-term trend use weekly charts or daily charts spanning a five-year period. Daily

data charts are best use when analyzing both intermediate and short-term trends. It is also

26
important to remember that the longer the trend, the more important it is; for example, a

month trend is not as significant as five-year trend.

Channels

A Channel, or channel lines, is the addition of two parallel trend lines that act as strong

areas of support and resistance. The upper trend line connects a series of highs, while the

lower trend line connects a series of lows. A channel can slope upward, downward or

sideways but regardless of the direction, the interpretation remains the same. Traders will

27
Expect a given security to trade between two levels of support and resistance until it

breaks beyond one of the levels in which case traders can expect a sharp move in

28
Direction of the break. Along with clearly displaying the trend, channel is mainly used to

illustrate important areas of support and resistance.

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

on the highs and lower trend line is on the lows. The price has bounced off of these line

several times, and has remained range-bound for several months. As long as the price

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

downtrend is expected to continue.

Double Bottom

A charting pattern used in technical analysis. It describes the drop of a stock (or index), a

rebound, another drop to the same (or similar) level as the original drop, and finally

another rebound.

29
Double Top

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

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

The double top looks like the letter “M”. The twice-touched high is considered a

resistance level.

Triple Bottom

A pattern used in technical analysis to predict the reversal of a prolonged downtrend. The

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

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

30
(demand) is outweighing selling interest (Supply) and that trend is in the process of

reversing.

1 1 1

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

prior support. This is when buyer enters again and push the price of the asset higher,

creating bottom No.2. The price of the asset then created another peak and heads lower

for its final test of the support. The final bounce of the support level creates bottom No.3

and traders will get ready to enter a long position once the price breaks above the

previous resistance (Illustrated by the black on the chart). This pattern is considered to be

a very reliable indication that the downtrend has reversed and that the new trend in the

upward direction.

Sudden change in the price direction of a stock, index, commodity or derivative security.

Also referred to as a “Trend Reversal”, “Rally” or “Correction”.

31
Triple Top

A pattern used in technical analysis to predict the reversal of prolonged up trend. This

pattern is identified when the price of an asset creates three peaks at nearly the same price

level. The bonus off the resistance near the third peak is clear indication that buying

interest is becoming exhausted. The traders to predict the reversal of the up trend use it.

Figure 3

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

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

being higher. Many traders will enter into a short position once the price of asset falls

below the identified support level. (Shown by the black line in the chart above).

32
Head and Shoulders Pattern

A technical analysis term used to describe a chart formation in which a stocks price:

1. Rises to a peak and subsequently declines.

1. Then, the price rises above the former peak and again declines

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

more.

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

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

reversal patterns.

33
 Figure 4

Volume

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

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

a measure of activity. If a buyer of a stock purchases 100 shares from a seller, then the

volume for that period increases by the 100 shares based on that transaction.

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

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

the perceived strength of that move depends on the volume of that period. The higher the

volume during that price move the more significant the move.

34
Support

The price, which, historically, a stock had difficulty falling below. It is thought of as the

level at which a lot of buyers tend to enter the stock. Often referred to as the “Support

Level”.

35
Resistance

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

period of time. Often referred to as “Resistance Level”.

Figure 5

36
 CHAPTER 5- DATA ANALYSIS

Infosys Technology Ltd

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

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

1992 and subsequently the name was also changed to Infosys Technologies Ltd. It was

the first Indian company to be listed on American Stock Exchange. The company is one

of India’s leading information technologies (IT) services companies. Enterprise Services,

Product R&D services and Consulting Services. The company is having its Headquarters

in Bangalore and has 17 offshore development facilities like Aerospace & Defense,

Automotive, and Banking & Capital Markets. Communication Services, Energy,

Insurance, Healthcare, Media, Transportation Services etc., Infosys Technologies came

out with an IPO in Feb. 1993 at a premium of Rs 95 for a face value of Rs 10 per share.

Since then, it has issued three bonus issues (each in the ratio of 1:1) and split its face

value of Rs 5 each. In Feb 2000, the ADRs were split in the ratio of 2:1. In 2004-05 the

company has signed up 136 new clients and had a total client base of 438 at the end of

the year. The company’s product-FINACLE, is an integrated core banking solution that is

centralized, muliti-currency and multi-language-enabled, functionally rich, and addresses

both retail and corporate banking requirements. During 2002, GOI has raised the

investment limit in an Indian Company for FII from 49% to the maximum level approved

by FDI and the maximum limit for the software industry as approved by FDI is 100% at

present, the company is in the plan of increasing the limit of such investment to 100%. In

2006 The Company has completed the construction of an employee training facility in

37
Mysore, India to further enhance our employee training capabilities. The Mysore Training

complex wills accommodate 4,500 trainees at a time.

38
 INFOSYS TECHNOLOGIES LTD. (INFOSYS)

Type Audited Audited Audited Audited Audited

Date of begin 1-Apr-07 1-Jan-07 1-Oct-06 1-Jul-06 1-Apr-06

Date of End 1-Jun-07 31-Mar-07 31-Dec-06 30-Sep-06 30-Jun-06

Description Value {Rs.million}

Net Sales 35510 35550 34540 32730 28670

Other income 2550 1200 600 660 1290

Total income 38060 36750 35140 33390 29960

Expenditure -25410 -24070 -23050 -22190 -19930

Operating Profit 12650 12680 12090 11200 10030

Gross Profit 12650 12680 12090 11200 10030

Depreciation -1340 -1330 -1290 -1100 -970

Profit before Tax 11310 11350 10800 -10100 9060
Tax -1030 -120 -1220 -1140 -1040
Provision and

Cost. -- 10 -- -- -30

Profit after Tax 10280 11240 9580 8960 7990

39
Extraordinary

Items -- - -- -- 60
Net Profit 10280 11240 9580 8960 8050

Equity Capital 2860 2860 2790 2780 1380

Reserves 119040 108760 93630 82730 76900

EPS 18 19.96 17.2 16.15 29.13

Source:bseindia.com/balancesheets/

40
Price Fluctuations of Infosys Tech

41
Date Open High Low Close

1-Jun-07 1933 1950 1932 1939

4-Jun-07 1950 1969 1909 1916
5-Jun-07 1920 1950 1908 1943
6-Jun-07 1974 1974 1930 1938
7-Jun-07 1847 1972 1847 1957
8-Jun-07 1950 1975 1912 1951
11-Jun-07 1974 1996 1970 1980
12-Jun-07 1962 1999 1962 1990
13-Jun-07 1715 1999 1715 1989
14-Jun-07 1995 2031 1995 2019
15-Jun-07 2030 2038 2000 2009
18-Jun-07 2025 2029 1986 1989
19-Jun-07 1990 1991 1942 1957
20-Jun-07 1966 1974 1950 1954
21-Jun-07 1954 1966 1935 1958
22-Jun-07 1965 1965 1935 1951
25-Jun-07 1951 1963 1919 1937
26-Jun-07 1930 1948 1920 1922
27-Jun-07 1931 1946 1928 1935
28-Jun-07 1940 1948 1913 1925
29-Jun-07 1950 1970 1920 1929
2-Jul-07 1944 1955 1929 1944
3-Jul-07 1950 1953 1935 1947
4-Jul-07 1961 1961 1922 1931
5-Jul-07 1931 1940 1910 1917
6-Jul-07 1847 1977 1847 1972
9-Jul-07 1989 2009 1986 1994
10-Jul-07 1995 2042 1995 2021
11-Jul-07 2000 2000 1925 1930
12-Jul-07 1950 1960 1915 1922 42
13-Jul-07 1932 1958 1922 1940
 infosys

2080
2060
2040
2020
2000
1980
1960
1940
1920 Open
Prices

1900 High
1880 Low
1860 Close
1840
1820
1800
1780
1760
1740
1720
1700
6/1/2007
6/6/2007
6/11/2007
6/16/2007
6/21/2007
6/26/2007
7/1/2007
7/6/2007
7/11/2007
7/16/2007
7/21/2007
7/26/2007

June & july 2007

Source:bseindia.com/charting/

43
Reliance Industries Ltd.

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest

private sector enterprise, with businesses in the energy and materials value chain. Group's

annual revenues are in excess of USD 22 billion. The flagship company, Reliance

Industries Limited, is a Fortune Global 500 company and is the largest private sector

company in India

Backward vertical integration has been the cornerstone of the evolution and growth of

Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of

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

petroleum refining and oil and gas exploration and production - to be fully integrated

along the materials and energy value chain. The Group's activities span exploration and

production of oil and gas, petroleum refining and marketing, petrochemicals (polyester,

fiber intermediates, plastics and chemicals), textiles and retail.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and

fiber producer in the world and among the top five to ten producers in the world in major

petrochemical products.

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

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

Group Companies are Reliance Industries Limited (including main subsidiaries Reliance

Petroleum Limited and Reliance Retail limited), Indian Petrochemicals Corporation

Limited and Reliance Industrial Infrastructure Limited.

44
Reliance Industries (RIL), a petrochemical major is the flagship company of Reliance

Group has business interests in textile, polyester, petrochemical, oil and gas and oil

refinery, polymer, chemical, Acrylic and fiber Intermediates. Reliance is worlds largest

producer of polyester fiber & yarn. The company is also worlds – 3 rd largest producer of

paraxylene (PX), 5th largest producer of Mono ethylene glycol (MEG), 6th largest

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

(PP). Within the country, Reliance is the largest manufacturer of Polyester Fiber & Yarn,

PX, PTA and MEG. The market shares of the company are in a leading position for all its

major business in India. RIL has grown into petrochemical major since it’s modest

Beginning with the systematic fabric mill at Naorda. The company has set up text

rising/twisting facilities in 1979. Further the company has set up facility at Patalganga,

Maharashtra to produced PFY in 1982, PSF in 1986, and liner alkyl benzene (LAB) and

PTA in 1988.

The company has set up petrochemical facility to produce HDPE and PVC at Hazira at

Gujarat in technical collaboration with DuPont and BF Goodich respectively. The Hazira

petrochemical plant was commissioned in 1991-1992. Their operations captures value

addition at every stage from producing Crude Oil and Gas to polyester and polymer

products and are vertically integrated to the production of textile. RIL has obtained ISO-

9002 certification from BVQI for its Patalganga and Hazira complexes.RIL is the first

Private Sector Company in India to be rated by international credit rating agencies. In

March 2002 the board approved the proposal for amalgamation of Reliance Petroleum

Limited (RPL) with the company. Shareholders of the both companies approved the

45
proposed scheme of amalgamation and effective date for the merger was fixed on the

September 19, 2002.The exchange ratio will be of 1 share of RIL for every 11 shares of

RPL held. The Merger of RPL with RIL represents the largest ever merger in India.

Reliance Industries ltd.

46
 Type Unaudited Unaudited Unaudited Unaudited Unaudited

Date of begin 1-Apr-07 1-Jan-07 1-Oct-06 1-Jul-06 1-Apr-06

Date of End 30-Jun-07 31-Mar-07 31-Dec-06 30-Sep-06 30-Jun-06

Description Value {Rs.million}

Gross Sales 294930 273990 277710 295500 261660

Excise Duty -14370 -15040 -12990 -10760 -16440
Net Sales 280560 258950 264720 284740 245220
Other income 1050 850 420 220 440

Total income 281610 259800 265140 284960 245660

Expenditure -228790 -211960 -217630 -239090 -202850

Operating Profit 52820 47840 47510 45870 42810
Interest -2880 -2770 -2930 -2780 -2660

Gross Profit 49940 45070 44580 43090 40150

Depreciation -9580 -10220 -10620 -10180 -9070

Profit before Tax 40360 34850 33960 32960 31080
Tax -7720 -6320 -5970 -5820 -5610

Profit after Tax 32640 28530 27990 27090 25470

Net Profit 32640 28530 27990 27090 25470

47
Equity Capital 13940 13940 13940 13940 13940

EPS 23.4 20.5 20.1 19.4 18.3

Source:bseindia.com/balancesheets/

48
 Price Fluctuations of Reliance Ind.

Date Open High Low Close

1-Jun-07 1773 1780 1747 1751

4-Jun-07 1769 1769 1739 1742
5-Jun-07 1739 1751 1722 1745
6-Jun-07 1751 1758 1682 1691
7-Jun-07 1673 1707 1660 1669
8-Jun-07 1664 1698 1647 1657
11-Jun-07 1800 1800 1660 1666
12-Jun-07 1675 1712 1663 1699
13-Jun-07 1698 1710 1670 1675
14-Jun-07 1686 1703 1685 1696
15-Jun-07 1700 1710 1668 1682
18-Jun-07 1698 1698 1667 1672
19-Jun-07 1672 1730 1670 1727
20-Jun-07 1727 1749 1722 1733
21-Jun-07 1735 1748 1721 1734
22-Jun-07 1735 1735 1699 1705
25-Jun-07 1708 1714 1697 1709
26-Jun-07 1709 1720 1700 1703
27-Jun-07 1699 1720 1693 1699
28-Jun-07 1709 1715 1686 1692
29-Jun-07 1700 1711 1689 1701
2-Jul-07 1704 1712 1679 1684

49
3-Jul-07 1676 1713 1676 1707
4-Jul-07 1711 1732 1709 1718
5-Jul-07 1718 1725 1681 1710
6-Jul-07 1714 1731 1685 1710
9-Jul-07 1703 1719 1701 1711
10-Jul-07 1715 1715 1695 1703
11-Jul-07 1717 1719 1686 1703
12-Jul-07 1707 1725 1707 1719
13-Jul-07 1730 1791 1726 1773
16-Jul-07 1780 1789 1767 1777
17-Jul-07 1789 1839 1780 1828
18-Jul-07 1835 1839 1804 1823
19-Jul-07 1823 1909 1817 1893
20-Jul-07 1899 1915 1881 1892
23-Jul-07 1880 1915 1875 1909
24-Jul-07 1912 1931 1908 1913
25-Jul-07 1895 1912 1875 1903
26-Jul-07 1910 1949 1906 1942
27-Jul-07 1920 1936 1855 1868
30-Jul-07 1885 1899 1840 1849
31-Jul-07 1865 1833 1894
1902

50
Source:bseindia.com/charting/

51
State Bank Of India
The origin of the State Bank of India goes back to the first decade of the nineteenth

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

years later the bank received its charter and was re-designed as the Bank of Bengal (2

January 1809). A unique institution, it was the first joint-stock bank of British India

sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the

Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained

at the apex of modern banking in India till their amalgamation as the Imperial Bank of

India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either

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

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

India's economy. Their evolution was, however, shaped by ideas culled from similar

developments in Europe and England, and was influenced by changes occurring in the

structure of both the local trading environment and those in the relations of the Indian

economy to the economy of Europe and the global economic framework.

First Five-Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was

given the highest priority. The commercial banks of the country including the Imperial

Bank of India had till then confined their operations to the urban sector and were not

equipped to respond to the emergent needs of economic regeneration of the rural areas. In

order, therefore, to serve the economy in general and the rural sector in particular, the All

52
India Rural Credit Survey Committee recommended the creation of a state-partnered and

state-sponsored bank by taking over the Imperial Bank of India, and integrating with it,

the former state-owned or state-associate banks. An act was accordingly passed in

Parliament in May 1955 and the State Bank

of India was constituted on 1 July 1955. More than a quarter of the resources of the

Indian banking system thus passed under the direct control of the State. Later, the State

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

India to take over eight former State-associated banks as its subsidiaries (later named

Associates).

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

480 offices comprising branches, sub offices and three Local Head Offices inherited from

the Imperial Bank. The concept of banking as mere repositories of the community's

savings and lenders to creditworthy parties was soon to give way to the concept of

purposeful banking sub serving the growing and diversified financial needs of planned

economic development. The State Bank of India was destined to act as the pacesetter in

this respect and lead the Indian banking system into the exciting field of national

development.

53
 STATE BANK OF INDIA

Type Unaudited Unaudited Unaudited Unaudited Unaudited

Date of begin 1-Apr-07 1-Jan-07 1-Oct-06 1-Jul-06 1-Apr-06

Date of End 30-Jun-07 31-Mar-07 31-Dec-06 30-Sep-06 30-Jun-06

Description Value {Rs.million}

Operating income 113865.1 115414.6 97359.4 93774.7 88361.5

Interest on advance 79885.2 70565.6 64135.5 59017.1 54673.5

Income on Investment 28943.6 28452.6 28331.2 28744 29402.1

Interest on Balances 4970.6 16270.3 3524.8 3959.8 3441.2

Other Interests 65.7 126.1 1367.9 2053.8 844.7
Other Income 8425.8 28943 18110.3 14337.6 17626

Total Income 122290.9 144357.6 115469.7 108112.3 105987.5

Interest Expanded -68891.2 -72213.3 -57846.1 -54788.2 -49520.6

Operating Expenses -29785.1 -32460.2 -29074 -28598.4 -28102.4
Payment for Employees -20263.7 -20238.8 -20297.1 -19547.1 -19242.9

Other Operating

Expenses -9521.4 -12221.4 -8776.9 -9051.3 -8859.5

Total Expenditure for

Banks -98676.3 -104673.5 -86920.1 -83386.6 -77623

Operating Profit 23614.6 39684.1 28549.6 24725.7 28364.5

Profit before tax 23614.6 39684.1 28549.6 24725.7 28364.5

Tax -7762.8 -10626.3 -6237.1 -6067.4 -7559.1

54
Tax provisions and

contingencies -1593.7 -14125.9 -11661.9 -6813.4 -12819.7

Profit after tax 14258.1 14931.9 10650.6 11844.9 7985.7

Net profit 14258.1 14931.9 10650.6 11844.9 7985.7

Equity Capital 5263 5263 5263 5263 5263

Reserves 305036.6 305036.6 271177.9 271177.9 271177.9

Percent of shares

Govt.of India 59.73 -- -- -- --

Capital Adequacy

Ratio in % 13.13 12.34 11.86 12.63 11.97

EPS 27.09 28.37 20.24 22.51 15.17

Source:bseindia.com/balancesheets/

55
56
 Price Fluctuations of State Bank of India

Date Open High Low Close

1-Jun-07 1364 1385 1356 1379

4-Jun-07 1400 1418 1390 1406
5-Jun-07 1400 1445 1393 1437
6-Jun-07 1445 1454 1381 1390
7-Jun-07 1382 1402 1353 1361
8-Jun-07 1331 1387 1321 1357
11-Jun-07 1356 1379 1336 1340
12-Jun-07 1354 1354 1306 1332
13-Jun-07 1325 1333 1280 1290
14-Jun-07 1300 1326 1295 1314
15-Jun-07 1325 1349 1307 1324
18-Jun-07 1340 1345 1313 1319
19-Jun-07 1325 1378 1313 1372
20-Jun-07 1383 1430 1373 1424
21-Jun-07 1433 1465 1400 1447
22-Jun-07 1445 1478 1445 1455
25-Jun-07 1460 1460 1434 1450
26-Jun-07 1456 1466 1443 1457
27-Jun-07 1455 1468 1435 1447
28-Jun-07 1460 1475 1448 1471
29-Jun-07 1472 1532 1472 1526
2-Jul-07 1530 1551 1523 1531
3-Jul-07 1548 1590 1542 1582

57
4-Jul-07 1599 1620 1556 1564
5-Jul-07 1575 1578 1532 1547
6-Jul-07 1550 1799 1527 1551
9-Jul-07 1556 1580 1536 1571
10-Jul-07 1578 1580 1546 1551
11-Jul-07 1540 1557 1515 1541
12-Jul-07 1548 1569 1548 1559
13-Jul-07 1565 1584 1554 1560
16-Jul-07 1560 1618 1545 1612
17-Jul-07 1615 1625 1574 1583
18-Jul-07 1589 1589 1560 1576
19-Jul-07 1577 1608 1577 1596
20-Jul-07 1610 1620 1576 1584
23-Jul-07 1584 1591 1567 1585
24-Jul-07 1605 1608 1567 1576
25-Jul-07 1570 1584 1536 1569
26-Jul-07 1570 1575 1542 1552
27-Jul-07 1520 1528 1470 1499
30-Jul-07 1524 1615 1510 1578
31-Jul-07 1622 1636 1540 1624

58
Source:bseindia.com/charting/

59
 CHAPTER 6- FINDINGS

Infosys Technology Ltd.

Technical analysis of Infosys Technology ltd.

From the chart of Infosys Technology Ltd we can say that script is having bullish trend as

it is breaking new highs, it may further go up.

Fundamental Analysis: -

 There is a fluctuation in equity dividend. There is no fixed policy regarding

payment of dividend.

 Rupee Dollar Fluctuation- As most of software companies in India having their

clients in the abroad, mostly in USA. Therefore their earning is getting from of

dollar. If the dollar price decreases it affects their revenue badly and currently

fundamentally it is not looking strong.

 In India salary of software professional will be increase, and it will marginally

affect profit of companies and because of that EPS will be come down.

 Infosys technology Ltd. On July 2007 has announced that it has signed a multi-

million dollar outsourcing contract with Royal Philips Electronics. The deal with

Philips reinforces the company’s leadership position in transformation based BPO

60
 services. The company’s BPO has significant growth over 70% in revenues and an

increase in client base of over one-third in FY 2007.

 Gross Profit Ratio of the Company is stable from last five years. It is a good sign

of consistency and smooth working of the company.

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

future

61
Reliance Industries Ltd.

Technical analysis of Reliance Industry: -

The chart of Reliance Industry is looking bullish and No Correction is seen from the last

two months and stock is in full movement and candle sticks are showing positive sign for

long term investment.

Fundamental Analysis: -

 Earnings per share show increasing trend from last four Quarters, it means profit

generation capacity is increasing.

 Company has announced good result for last quarter that’s why it is looking

bullish.

 Reliance has entered in Retail market they have already started “RELIANCE

FRESH” out lets

 Within a short span of six years as an E&P operator, the company has discovered

a hydrocarbons in the four offshore basin of India namely Krishna, Godavari,

Mahanadi, sourashtra and now cauvery, basin with major commercial finds in

deep water. This discovery establishes the company as a pioneer in the

challenging deep-water exploration.

62
State Bank Of India

Technical analysis of State Bank of India: -

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

last two months and stock is in full movement and candle sticks is showing positive sign

for long term investment.

Fundamental Analysis: -

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

 Interest rate hike.

63
 CHAPTER 7- SUGGESTIONS

Following are suggestions made based on study with reference to watch on NEAT

Screen, data analysis and findings:

1. In IT sector Infosys is very good because it’s EPS is continuously increasing and

company has given 300 % dividend it means stock is strong by fundamentally and

technically it is also growing very well.

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

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

also good option for investment.

3. As the largest public sector bank in India SBI is also very good for investment,

EPS is also increasing it will entering into new business and it will merger with

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

64
 CHAPTER 8- CONCLUSION

With the help of project I concluded Fundamental analysis helps an investor to take

rational decision on buying or selling of a specific stock.

 Infosys Technologies, one of the major players in IT sector has attained a

significant market share in the stock market. Since the company is showing

constant net profit over last four years, long term investment is beneficial.

 Prices of stocks of Reliance Industries are increasing which means there is bullish

market for the company seen from last two months. Also the earning per share

shows increasing trend which means profit is also increasing.

 State Bank of India as one of the major public sector banks in India which is

fundamentally strong, the script is having bullish trend which may further go up.

65
 CHAPTER 9- LIMITATIONS

 To understand the overall working of share market, the period of 60 days is not
enough.

 Moreover, very few investor and agents have a detail knowledge of the study.

66
 CHAPTER 10- BIBLIOGRAPHY

1. Finance Management-Satish Inamdar

2. NCFM(Capital market)

Other references

1. www.bseindia.com

2. www.nseindia.com

3. www.moneycontrol.com

4. www.investsmartindia.com

RESEARCH STUDY OF INVESTOR.

67
1) Where do you invest your money?

Investment types No. of respondents Percentage

Stock market 40 20

Bank F.D 60 30

Real estate 80 40

Mutual funds 20 10

200 100

68
Interpretation:

From the above table & pie chart, it represents that people invest only 20 % of money in

Stock market & 10% in Mutual Funds. 40% of people generally interested in Real estate

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

Market & Mutual Funds. Even the returns are more in Stock Market & Mutual Funds, but

due safety people prefer Real estate and Band F.D.

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

Factor consider for No. of Respondents Percentage

selection of company

Fundamental Analysis 86 43

Technical Analysis 44 22

Both 20 10

Speculation 50 25

200 100

69
Interpretation: From the above Graph & Pie chart it represent that 43% of people

take the help of fundamental and 22% of people take the help of technical analysis by

which the risk can be calculated and profit can be maximized. However, even that

25% of people invest on the basis of speculation, which is risky. 10% are people

invest money by both (i.e. fundamentally and technical) by which prediction can be

good. If people invest money on the basis of analysis then the risk can be minimize

and profit can be maximize.

70
3) Which Companies shares will you buy?

Like to invest in sectors No. of Respondent Percentage

I.T 110 55%

Banking 60 30%

Engineering 30 15%

200 100

Interpretation: From the above Graph & chart, we can say that 55% of people prefer I.T.

Sector for investment because these companies are strong by fundamentally and it have

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

71
has large market capitalization and after that, 15% of people like to invest in Engineering

companies.

72