INTERNS PROJECT

MAHEK B GALA

MADE BY

EQUITY RESEARCH

Summer Interns Projectat

Aditya Birla Sunlife Insurance

on Equity Research

Under : Nikesh Ruparel

Made byMahek Gala

Roll No : 14

SR NO

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Introduction to IPO

Topics covered

Introduction to Equity Fundamental AnalysisTechnical AnalysisIT SECTOR and INFOSYSETF’s

Introduction to IPOIPO stands for Initial Public Offering.

It means the new offer of shares from a company which was previously unlisted at the exchange.

Investors do keenly wait for an IPO as they have an opportunity to make good money.

This is known as “listing gains”(eg : the value of a stock is perceived to be Rs 100 and the

shares will be offered at a price less than 100 may be 80 so the difference is the listing gains)

Details of IPO process

Step 1 :Appointment of Lead Mangers, Registrar, Underwriters and Investment Banks.

Step 2 :With the help of Underwriters & Investment Banks, company decides amount of money to be raised, number and type of security to be issued and this draft document is sent to SEBI for review.

Step 3 :Once the draft document is approved by SEBI, it becomes an Offer document of the IPO.

Step 4 :Then, Offer document is submitted to registrar of the issue and the stock exchange.

Step 5 :Red Herring Prospectus & IPO Application Forms are distributed to investors through syndicate members.

Step 6 :As per the issue date, issue opens for investor’s bidding. Investors fill the application forms and submit to the syndicate members, Syndicate members provide the bidding information to exchange.

Step 7 :After the bidding the bid information is shared with SEBI and Exchange by the lead managers.

Step 8 :Registrar after receiving all the information finalises the pattern of allotment.

Step 9 :Finally, on 12th day after issue closure date, share of the issuer company gets listed in Stock Market for trading .

Types of Trading Account

1) Offline

2) Online

Software Base Features Real Time

Web Base Connect from anywhere 2 sec price difference from original price.

Introduction to EQUITY

 A stock or any other security representing an ownership interest.

In general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off.

(eg, a car or house with no outstanding debt is considered the owner's equity because he or she can readily sell the item for cash. Stocks are equity because they represent ownership in a company)

Equity is one of the asset classes in terms of investment strategies.

What is EQUITY INVESTMENT ???

Equity investments generally refers to the buying and holding of shares of stock on a stock market by individuals and firms expecting high returns.

How to invest in Equity Shares?

Investors can buy equity shares of a company from Security market that is from Primary market or Secondary market.

Why should one invest in Equity in particular?

Equities have the potential to increase in value over time. It also provides your portfolio with the growth necessary to reach your long term investment goals.

Equity Share of any company can be analyzed through :

  Fundamental Analysis

  Technical Analysis

 

Fundamental Analysis Fundamental analysis is a technique that attempts to determine a security’s value by

focusing on underlying factors that affect a Company’s actual business and its future prospects.

It also involves analyzing financial statements and health, company's management and competitive advantages, and its competitors and markets.

Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management). 

Fundamental analysis serves to answer questions, such as:

Is the company’s revenue growing? Is it actually making a profit? Is it in a strong-enough position to beat out its competitors in the future? Is it able to repay its debts?

Fundamental factors can be grouped into two categories:

Qualitative

Quantitative.

Qualitative: related to or based on the quality or character of something, often as opposed to its size or quantity.

Quantitative – capable of being measured or expressed in numerical terms. (focuses on performance ratios, working capital ratios, liquidity ratios etc.)

Technical AnalysisTechnical analysis is the process of analyzing a security's historical prices in

an effort to determine probable future prices.

Technical analysis is the study of prices, with charts being the primary tool.

Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analysis.

The time frame can be based on intraday (tick, 5-minute, 15-minute or hourly), daily, weekly or monthly price data and last a few hours or many years.

What is Chart?

A chart is a graphical representation of data in which "the data is represented by symbols , such as bars in a bar chart, lines in a line chart, or slices in a pie chart“.

A chart can represent tabular numeric data, functions or some kind of qualitative structures.

What are the different charts used in technical analysis ???

Line ChartBar ChartCandlestick Chart

Line chart

The line chart is one of the simplest charts. It is formed by plotting one price point, usually the close, of a security over a period of time. Connecting the dots, or price points, over a period of time, creates the line.

Bar Chart

Bar chart is the most popular charting method. The high, low and close are required to form the price plot for each period of a bar chart.

Candle Stick Chart

Candlestick charts have become quite popular in recent years. For a candlestick chart, the open, high, low and close are all required. White (clear) candlesticks form when the close is higher than the open and black (solid) candlesticks form when the close is lower than the open.

IT sector IT is one of the most important industries in the Indian economy.

India's IT industry grew from 150 million US Dollars in 1990-1991 to a whopping 50 billion UD Dollars in 2006-2007.

This growth was due to liberalization in 90’s.

Information technology, and the hardware and software associated with the IT industry, are an integral part of nearly every major global industry.

Owing to its easy accessibility and the wide range of IT products available, the demand for IT services has increased substantially over the years.

Major IT companies

  Tata Consultancy Services (TCS) Infosys Wipro

Infosys Infosys Limited (NASDAQ: INFY) was started in 1981 by seven people with

US$ 250 and the 1st Indian Co to be listed in NASDAQ.

Infosys provides business consulting, technology, engineering and outsourcing services to help clients in over 30 countries build tomorrow’s enterprise with a global foot print.

Infosys gives back to the community through the Infosys Foundation that funds learning and education.

Services : IT, business consulting and outsourcing.Total equity : US$ 6.57 billion (2012).Share Holding : 574230451 (as on 31.6.12)Retained earnings : 20,924.00 (Rs in cr as on 31.3.12)

ETF’sExchange Traded Funds (ETFs) are mutual fund units which investors buy/

sell through a distributor or directly from the AMC.

ETFs have relatively lesser costs as compared to a mutual fund scheme.

The auhtorised participants make money by offering the buy and sell quotes.

Therefore there are huge reductions in marketing expenses and commissions.

Assets that come under ETF’s

Practically any asset class can be used to create ETFs. Silver, Gold, Indices (SPDRs, Cubes, etc), etc. In India, we have ETFs on Gold, Indices such as Nifty, Bank Nifty etc.)

The way Gold ETF’s work During New Fund Offer (NFO)

AMC decides of launching G-ETF

Investors give money to AMC and AMC gives units to investors in return

AMC buys Gold of specified quality at the prevailing rates from investors money

On an on going basis

 

Authorised Participants (typically large institutional investors) give money/ Gold to AMC

AMC gives equivalent number of units bundled together to these authorized participants (AP)

APs split these bundled units into individual units and offer for sale in the secondary market

Investors can buy G-ETF units from the secondary markets either from the quantity being sold by the APs or by other retail investors

Retail investors can also sell their units in the market.

Creation Units 

1 Creation Unit = 100 ETF units

NAV (Rs.) = 1050

Price of 1 gm of Gold (Rs.): 1000

So, 100 Units will cost (Rs.) = 1050 * 100 = 1,05,000

100 ETF will be equal to 100 gm of Gold

Therefore, value of Portfolio Deposit (Rs.) = 1000 * 100 = 1,00,000

Hence Cash Component (Rs.) = 1,05,000 – 1,00,000 = 5,000

 

Thus it can be seen by depositing Gold worth Rs 1,00,000 as Portfolio Deposit and Rs. 5,000 as Cash Component, the Authorised Participant has created 1 Creation Unit comprising of 100 ETF units.

 We all have personal biases, and every analyst has some sort of bias. There is

nothing wrong with this, and the research can still be of great value.

Check the track record of an analyst before taking any decision based on his recommendation.

 Corporate statements and press releases offer good information, but they should be

read with a healthy degree of skepticism to separate the facts from the spin.

  Investors should become skilled readers to weed out the important information and

ignore the hype.

Keep long term horizon for investment but book profits at the right times.

 Always keep diversified investment, do not invest all your money in the same sector

or in the same company.

CONCLUSION