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Chapter- 1 EXECUTIVE SUMMERY

Why should I put my hard earned money into shares when I am not sure of a return?

If there’s a science to investing then why do we call investing a risk? And if it’s not a risk,

then why do people end up losing money from their investments in shares? In this project

report I have tried to answer the questions you might have about investing in shares. When is

investing in shares a risk and when does it become a science? How can you be assured that

your investment in shares is safe?

And more importantly, I’ve tried to explain some basic concepts that most investors take for

granted but that are crucial knowledge for a person just entering into the financial jungle. So

concepts like risk premium, dividend, stock split etc have been explained in a simple manner

for the benefit of the first-timers. Not only that this project report also seeks to educate the

would-be investors in the various aspects of share trading, both offline and online. I hope the

project report shall succeed in satisfying your desire for knowledge of the share market as

well as in lending investor a helping hand as they take your FIRST STEP into the world of

investing.

Main purpose of investment is returns and liquidity, share market is less preferred by

investors due to lack of awareness. The major findings of this study are that people are

interested to invest in stock market but they lack knowledge.

“CRITICAL SUCCESS FACTORS THAT COMES OUT OF THE

STUDY AS FOLLOWS” (1) Importance of information- timely and accurately.

(2) Responsiveness of the company.

(3) Implementation.

(4) Forecasting.

These all are helpful to increase the successive factors which find out during the working

positions.

The primary approach to study was exploratory research and descriptive research was

also carried out.

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Chapter- 2

Company Profile

Share khan Ltd. is one of the leading retail brokerage of Citi Venture which is running

successfully since 1922 in the country. Earlier it was 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.

MR.VARUN SHAH CEO- SHARE KHAN

The mission and vision of share khan Ltd. is to serve investor with 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.

Business area : 1- Equity Trading Platform (Online/Offline).

2- Commodities Trading Platform (Online/Offline).

3- Portfolio Management Service.

4- Mutual Fund Advisory and Distribution.

5- Insurance Distribution. (Give details about the nature of the business)

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History of share khan Ltd. Earlier 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. 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.

Major Competitors in market place

KARVY

Is a premier integrated financial services provider, and ranked among the top five in the

country in all its business segments, services over 16 million individual investors in various

capacities, and provides investor services to over 300 corporate, comprising the who is who

of Corporate India. Karvy has a professional management team and ranks among the best in

technology, operations and research of various industrial segments. The birth of Karvy was

on a modest scale in 1981. It began with the vision and enterprise of a small group of

practicing Chartered Accountants who founded the flagship company, Karvy Consultants

Limited. They started with consulting and financial accounting automation and carved

inroads into the field of registry and share accounting by 1985. Since then, karvy utilized its

experience and superlative expertise to go from strength to strength, to better their services, to

innovate, diversify and in the process, evolved as one of India’s premier integrated financial

service enterprise.

PRODUCT AND SERVICES OF KARVY GROUP

1. Karvy comtrade.

2. Karvy consultant ltd.

3. Karvy merchant banking.

4. Karvy global services ltd.

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ICICI DIRECT

ICICI Web Trade Limited (IWTL) maintains www.icicidirect.com (herein after referred to as

the "Website") whereas IWTL is an affiliate of ICICI Bank Limited and the Website is owned

by ICICI Bank Limited. IWTL has launched and established an online trading service on the

Website.

PRODUCTS AND SERVICES OF ICICI DIRECT

1. Investing in Mutual funds

2. Personal Finance

3. Customer Service Features

4. IPO’s

5. Margin Trading

6. Margin PLUS Trading

7. Call Trade

8. Trading on NSE/BSE

9. Trade in derivative

INDIAINFOLINE SECURITY PRIVATE LTD.

India Infoline.com Securities Pvt. Ltd. is a wholly owned subsidiary of India Infoline.com

Ltd and is the stock broking arm of India Infoline.com. The subsidiary was formed to comply

with regulatory guidelines. www.5paisa.com is a focused website for online stock market

trading. 5paisa.com is a trade name owned by the India Infoline.com group. IILSPL has

applied for trading membership of the BSE under Securities and Exchange Board of India

(Stock Brokers and Sub-Brokers) Rules 1992. IILSPL is in the business of providing broking

services online via the Internet ("E-broking Services") and has been permitted by the NSE by

way of registration permission no: NSEIL/CMO/INET/1103/2000 dated 03/July/2000, and

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will be applying for permission to the BSE, to provide E-broking Services to its clients.

IILSPL is a TRADING MEMBER of the National Stock Exchange of India.

PRODUCT OFFERED BY IILSPL

Stock market:-IILSPL deals in stock market by trading in equity and derivatives.

Personal finance:- It Deals In Mutual Fund And Insurance.

Online Trading :- It provides services in stock and commodity trading (through Internet).

HDFC SECURITY

HDFC security is the subsidiary of HDFC (Housing Development Financial Corporation).

www.hdfcsec.com would have an exclusive discretion to decide the customers who would be

entitled to its online investing services. www.hdfcsec.com also reserves the right to decide on

the criteria based on which customers would be chosen to participate in these services .The

present web site (www.hdfcsec.com) contains features of services that they offer/propose to

offer in due course. The launch of new services is subject to the clearance of the regulators.

i.e. SEBI, NSE and BSE.

PRODUCT OFFERED BY HDFC SECURITY

• Online trading for Resident & Non Resident Indians.

• Cash-n-Carry on both NSE and BSE.

• Day trading on both NSE and BSE.

• Trade on Futures & Options on the NSE.

• Online IPO's.

• Telephone-based Broking (Equity & Derivatives).

INDIABULLS SECURITIES LIMITED: Indiabulls Securities Limited was incorporated as GPF Securities Private Limited on June 9,

1995. The name of the company was changed to Orbis Securities Private Limited on

December 15, 1995 to change the profile of the company and subsequently due to the

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conversion of the company into a public limited company; the name was further changed to

Orbis Securities Limited on January 5, 2004. The name of the company was again changed to

Indiabulls Securities Limited on February 16, 2004 so as to capitalize on the brand image of

the term “Indiabulls” in the company name. ISL is a corporate member of capital market &

derivative segment of The National Stock Exchange of India Ltd. At present, ISL accounts

for approximately 3% of the total daily turnover of the Exchange with 32,359 client

relationships and 70 branches spread across the country as of April 30, 2004.

PRODUCT OFFERED BY INDIA BULLS

Equity & Debt Stock Broking

Insurance

Commodity trading

Depository Services

Derivatives Broking Services

Equity Research Services

Mutual Fund Distribution

IPO Distribution

Staff Strength

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 their online trading account one can buy and sell shares in an instant from any

PC with an internet connection. Customers get access to the powerful online trading

tools that will help them to take complete control over their investment in shares.

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Accessibility Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services

for investors. These services are accessible through many centers across the country

(Over 650 locations in 150 cities), over the Internet (through the website

www.sharekhan.com) as well as over the Voice Tool.

Knowledge In a business where the right information at the right time can translate into direct

profits, investors get access to a wide range of information on the content-rich portal,

www.sharekhan.com. Investors will also get a useful set of knowledge-based tools

that will empower them to take informed decisions.

Convenience One can call Sharekhan’s Dial-N-Trade number to get investment advice and execute

his/her transactions. They have a dedicated call-center to provide this service via a

Toll Free Number 1800-22-7500 & 39707500 from anywhere in India.

Dedicated to Customer for Service Its customer service team assist their customer for any help that they need relating to

transactions, billing, demat and other queries. Their customer service can be contacted

via a toll-free number, email or live chat on www.sharekhan.com.

Analytical Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and

technical research. Their analysts constantly track the pulse of the market and provide

timely investment advice to customer in the form of daily research emails, online

chat, printed reports etc.

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Turnover:

The sharekhan has placed over US$ 5 billion in private equity deals and 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.

In India 620 share shops across 280 cities, 3,68,000 customers & growing with 500 account

opening per day, online business is 47% and 3,000employees .At present entire company

processing 2, 30,000 transaction in a day and 3500 funds paying/payouts per day. And

company expecting 7, 50,000 transaction per day in future.

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Chapter-3

Project Detail “This study suggest that people are reluctant while investing in stock market

due to lack of knowledge”

This is the project on the analyzing of equities to invest the money to future for get higher

return on investment. This project report to all investor who want to invest their money in

equities. But they should analysis the securities before to invest because the money has very

much value in our life. I chose this project to do because I want to analysis the equities for

investor point of view so they can get good return in future, want to do fundamental and

technical analysis of securities through the various theories, try to understand the movement

and performance of stocks and also try to know the factors that affect the movement of stock

prices in the Indian Stock Markets.

Through this project we were also able to understand, what are our Company’s (Sharekhan

Ltd.) positive and strong points, on the basis of which we come to know what can be the basis

of pitching to a potential client. We also gave suggestions to the company, what improvement

can be done to our product.

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Fundamental analysis and technical analysis can co-exist in peace and complement each

other. Since all the investors in the stock market want to make the maximum profits possible,

they just cannot afford to ignore either fundamental or technical analysis

Team:

This my solo project assign by project guide and whole staff of that branch. I did my analysis

with relation manager.

Duration:

The time was very crucial factor in project report the training was for six week so I spent as

much as time to learn from the internship and prepare this report to share my golden time

with you.

Key Deliverables: The company was expecting to me to dedication for project, queries about project to fill the

tank as much as I can and discipline in branch office as they follow.

PROJECT- MY ROLE

I did my project on the basis of topic given by the project guide in this project I contribute my

best that I can do. I decide to choose some stock listed in NSE for fundamental and technical

analysis. I approach my project guide and whole staff person to get knowledge. I sought out

my queries with discussion with all staff members and my project guide. I note all important

figures and facts about financial market and update my project report Step by step

Achievements:

The main achievement during the entire project was the knowledge about the financial

market which was unseen for me. Successfully finishing project analysis by my self and the

compliment by project guide was best achievement for me in that entire project.

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Key Learning's: A proper interaction with staff members and project guide to gain knowledge is require for a

good internship. I learn how to analysis the equities for investing money.

Challenges Faced:

• Busy schedule of project guide. I had to wait whole day to talk to him about project.

• There was no operational work in branch for me.

Reasons for Success: Success story of this project is my dedication, passion, good relationship with all staff

members and assistance of my project guide.

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Chapter-4

Introduction

FUNDAMENTAL ANALYSIS

Fundamental analysis refers to the study of the core underlying elements that influence the

economy of a particular entity. It is a method of study that attempts to predict price action and

market trends by analyzing economic indicators, government policy and societal factors (to

name just a few elements) within a business cycle framework.

1. POLITICO-ECONOMIC ANALYSIS: No industry or company can exist in isolation. It may have splendid managers and a

tremendous product. However, its sales and its costs are affected by factors, some of which

are beyond its control - the world economy, price inflation, taxes and a host of others. It is

important, therefore, to have an appreciation of the politico-economic factors that affect an

industry and a company.

The political equation

A stable political environment is necessary for steady, balanced growth. If a country is ruled

by a stable government which takes decisions for the long-term development of the country,

industry and companies will prosper.

Foreign Exchange Reserves

A country needs foreign exchange reserves to meet its commitments, pay for its imports and

service foreign debts.

Foreign Exchange Risk

This is a real risk and one must be cognizant of the effect of a revaluation or devaluation of

the currency either in the home country or in the country the company deals in.

Restrictive Practices

Restrictive practices or cartels imposed by countries can affect companies and industries.

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Crystallizing the exposure.

Foreign Debt and the Balance of Trade

Foreign debt, especially if it is very large, can be a tremendous burden on an economy. India

pays around $ 5 billion a year in principal repayments and interest payments.

Inflation

Inflation has an enormous effect in the economy. Within the country it erodes purchasing

power. As a consequence, demand falls. If the rate of inflation in the country from which a

company imports is high then the cost of production in that country will automatically go up.

The Threat of Nationalization

The threat of nationalization is a real threat in many countries – the fear that a company may

become nationalized.

Interest Rates

A low interest rate stimulates investment and industry. Conversely, high interest rates result

in higher cost of production and lower consumption.

Taxation

The level of taxation in a country has a direct effect on the economy. If tax rates are low,

people have more disposable income.

Government Policy

Government policy has a direct impact on the economy. A government that is perceived to be

pro-industry will attract investment.

2. INDUSTRY ANALYSIS The importance of industry analysis is now dawning on the Indian investor as never before.

BUSINESS CYCLE

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The first step in industry is to determine the cycle it is in, or the stage of maturity of the

industry. All industries evolve through the following stages:

1. Entrepreneurial, sunrise or nascent stage

2. Expansion or growth stage

3. Stabilization, stagnation or maturity stage, and

4. Decline or sunset stage to properly establish itself. In the early days, it may actually make

losses.

3. COMPANY ANALYSIS:

At the final stage of fundamental analysis, the investor analyzes the company. This analysis

has two thrusts:

How has the company performed vis-à-vis other similar companies and How has the

company performed in comparison to earlier years.

It is imperative that one completes the politico economic analysis and the industry analysis

before a company is analyzed because the company's performance at a period of time is to an

extent a reflection of the economy, the political situation and the industry. What does one

look at when analyzing a company? The different issues regarding a company that should be

examined are:

THE MANAGEMENT: The single most important factor one should consider when investing in a company and one

often never considered is its management. In India management can be broadly divided in

two types:

• Family Management

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• Professional Management

THE COMPANY:

An aspect not necessarily examined during an analysis of fundamentals is the company. A

company may have made losses consecutively for two years or more and one may not wish to

touch its shares - yet it may be a good company and worth purchasing into. There are several

factors one should look at.

1. How a company is perceived by its competitors?

One of the key factors to ascertain is how a company is perceived by its competitors. It is

held in high regard. Its management may be known for its maturity, vision, competence and

aggressiveness. The investor must ascertain the reason and then determine whether the reason

will continue into the foreseeable future.

2. Whether the company is the market leader in its products or in its segment

Another aspect that should be ascertained is whether the company is the market leader in its

products or in its segment. When you invest in market leaders, the risk is less. The

Shares of market leaders do not fall as quickly as those of other companies. There is a magic

to their name that would make individuals prefer to buy their products as opposed to others.

3. Company Policies

The policy a company follows is also important. What are its plans for growth? What is its

vision? Every company has a life. If it is allowed to live a normal life it will grow up to a

point and then begin to level out and eventually die. It is at the point of leveling out that it

must be given new life. This can give it renewed vigor and a new lease of life.

4. Labour Relations

Labour relations are extremely important. A company that has motivated, industrious work

force has high productivity and practically no disruption of work. On the other hand, a

company that has bad industrial relations will lose several hundred man-day’s as a

consequence of strikes and go slows.

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5. Where the company is located and where its factories are?

One must also consider where the companies Plants and Factories are located..

THE ANNUAL REPORT:

The primary and most important source of information about a company is its Annual Report.

By law, this is prepared every year and distributed to the shareholders. Annual Reports are

usually very well presented. A tremendous amount of data is given about the performance of

a company over a period of time.

The Annual Report is broken down into the following specific parts:

A) The Director's Report,

B) The Auditor's Report,

C) The Financial Statements, and

D) The Schedules and Notes to the Accounts.

A. The Director’s Report

The Director’s Report is a report submitted by the directors of a company to its shareholders,

advising them of the performance of the company under their stewardship.

1. It enunciates the opinion of the directors on the state of the economy and the political

situation vis-à-vis the company.

2. Explains the performance and the financial results of the company in the period under

review. This is an extremely important part. The results and operations of the various separate

divisions are usually detailed and investors can determine the reasons for their good or bad

performance.

3. The Director’s Report details the company's plans for modernization, expansion and

diversification. Without these, a company will remain static and eventually decline.

4. Discusses the profit earned in the period under review and the dividend. Recommended by

the directors. This paragraph should normally be read with some skepticism, as the directors

will always argue that the performance was satisfactory. If adverse economic conditions are

usually at fault.

5. Elaborates on the directors' views of the company's prospects in the future.

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6. Discusses plans for new acquisition and investments. An investor must intelligently

evaluate the issues raised in a Director’s Report. Industry conditions and the management's

knowledge of the business must be considered.

B. The Auditor's Report

The auditor represents the shareholders and it is his duty to report to the shareholders and the

general public on the stewardship of the company by its directors. Auditors are required to

report whether the financial statements presented do, in fact, present a true and fair view of

the state of the company. Investors must remember that the auditors are their representatives

and that they are required by law to point out if the financial statements are not true and fair..

C. Financial Statements

The published financial statements of a company in an Annual Report consist of its Balance

Sheet as at the end of the accounting period detailing the financing condition of the company

at that date, and the Profit and Loss Account or Income Statement summarizing the activities

of the company for the accounting period.

BALANCE SHEET

The Balance Sheet details the financial position of a company on a particular date; of the

company's assets (that which the company owns), and liabilities (that which the company

owes), grouped logically under specific heads. It must however, be noted that the Balance

Sheet details the financial position on a particular day and that the position can be materially

different on the next day or the day after.

SOURCES OF FUNDS

SHAREHOLDERS FUNDS

SHARE CAPITAL

(i) Private Placement

(ii) Public Issue

iii) Rights issues

RESERVES

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i) Capital Reserves

ii) Revenue Reserves

LOAN FUNDS

i) Secured loans:

ii) Unsecured loans

FIXED ASSETS

INVESTMENTS

STOCK OR INVENTORIES

i) Raw materials

ii) Work in progress

iii) Finished goods

CASH AND BANK BALANCES

LOANS AND ADVANCES

PROFIT AND LOSS ACCOUNT

The Profit and Loss account summarizes the activities of a company during an accounting

period which may be a month, a quarter, six months, a year or longer, and the result achieved

by the company. It details the income earned by the company, its cost and the resulting profit

or loss. It is, in effect, the performance appraisal not only of the company but also of its

management- its competence, foresight and ability to lead.

RATIOS:

Ratios express mathematically the relationship between performance figures and/or

assets/liabilities in a form that can be easily understood and interpreted.

No single ratio tells the complete story

Ratios can be broken down into four broad categories:

(A) Profit and Loss Ratios

(B) These show the relationship between two items or groups of items in a profit and loss

account or income statement. The more common of these ratios are:

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1. Sales to cost of goods sold.

2. Selling expenses to sales.

3. Net profit to sales and

4. Gross profit to sales.

(B) Balance Sheet Ratios

These deal with the relationship in the balance sheet such as :

1. Shareholders equity to borrowed funds.

2. Current assets to current liabilities.

3. Liabilities to net worth.

4. Debt to assets and

5. Liabilities to assets.

(C) Balance Sheet and Profit and Loss Account Ratios.

These relate an item on the balance sheet to another in the profit and loss account such as:

1. Earnings to shareholder's funds.

2. Net income to assets employed.

3. Sales to stock.

4. Sales to debtors and

5. Cost of goods sold to creditors.

(D) Financial Statements and Market Ratios

These are normally known as market ratios and are arrived at by relative financial figures to

market prices:

1. Market value to earnings and

2. Book value to market value.

(a) Market value

(b) Earnings

(c) Profitability

(d) Liquidity

(e) Leverage

(f) Debt Service Capacity

(g) Asset Management/Efficiency

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(h) Margins.

The major ratios that are considered:

(i) Market value

(ii) Price- earnings ratio

(iii) Market-to-book ratio

(iv) Earnings

(v) Earning per share

(vi) Dividend per share

(vii) Dividend payout ratio

(viii) Leverage ratios

(ix) Return on investments/total assets

CASH FLOW:

A statement of sources and uses begins with the profit for the year to which are added the

increases in liability accounts (sources) and from which are reduced the increases in asset

accounts (uses). The net result shows whether there has been an excess or deficit of funds and

how this was financed. Investors must examine a company's cash flow as it reveals exactly

where the money came from how it was utilized. Investors must be concerned if a company is

financing either its inventories or paying dividends from borrowings without real growth as

that shows deterioration.

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TECHNICAL ANALYSIS

Technical analysis is concerned with predicting future price trends from historical price and

volume data. The underlying axiom of technical analysis is that all fundamentals (including

expectations) are factored into the market and are reflected in exchange rates.

It is also a method of predicting price movements and future market trends by studying charts

of past market action which take into account price of instruments, volume of trading and,

where applicable, open interest in the instruments.

Stock Charts Stock charts gained popularity in the late 19th Century from the writings of Charles H. Dow

in the Wall Street Journal. His comments, later known as "Dow Theory", alleged that markets

move in all kinds of measurable trends and that these trends could be deciphered and

predicted in the price movement seen on all charts.

A stock chart is a simple two-axis (x-y) plotted graph of price and time. Each individual

equity, market and index listed on a public exchange has a chart that illustrates this

movement of price over time. Individual data plots for charts can be made using the

CLOSING price for each day. The plots are connected together in a single line, creating the

graph. Also, a combination of the OPENING, CLOSING, HIGH and/or LOW prices for

that market session can be used for the data plots. This second type of data is called a PRICE

BAR. Individual price bars are then overlaid onto the graph, creating a dense visual display

of stock movement.

Stock charts can be created in many different time frames. Mutual fund holders use monthly

charts in which each individual data plot consists of a single month of activity. Day traders

use 1 minute and 5 minute stock charts to make quick buy and sell decisions. The most

common type of stock chart is the daily plot, showing a single complete market session for

each unit.

Stock charts can be drawn in two different ways. An ARITHMETIC chart has equal

vertical distances between each unit of price. A LOGARITHMIC chart is a percentage

growth chart. It has equal vertical distances between the same percentages of price growth.

For example, a price movement from 10 to 20 is a 100% move. A move from 20 to 40 is also

a 100% move. For this reason, the vertical distance from 10 to 20 and the vertical distance

from 20 to 40 will be identical on a logarithmic chart.

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Stock chart analysis can be applied equally to individual stocks and major indices. Analysts

use their technical research on index charts to decide whether the current market is a BULL

MARKET or a BEAR MARKET. On individual charts, investors and traders can learn the

same thing about their favorite companies.

Trends:

Use the stock chart to identify the current trend. A trend reflects the average rate of change in

a stock's price over time. Trends exist in all time frames and all markets. Day traders can

establish the trend of their stocks to within minutes. Long term investors watch trends that

persist for many years.

Trends can be classified in three ways: UP, DOWN or RANGEBOUND.

In an uptrend, a stock rallies often with intermediate periods of consolidation or movement

against the trend. In doing so, it draws a series of higher highs and higher lows on the stock

chart. In an uptrend, there will be a POSITIVE rate of price change over time.

In a downtrend, a stock declines often with intermediate periods of consolidation or

movement against the trend. In doing so, it draws a series of lower highs and lower lows on

the stock chart. In a downtrend, there will be a NEGATIVE rate of price change over time.

Rangebound price swings back and forth for long periods between easily seen upper and

lower limits. There is no apparent direction to the price movement on the stock chart and

there will be LITTLE or NO rate of price change.

Trends tend to persist over time. A stock in an uptrend will continue to rise until some change

in value or conditions occurs. Declining stocks will continue to fall until some change in

value or conditions occurs. Chart readers try to locate TOPS and BOTTOMS, which are

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those points where a rally or a decline ends. Taking a position near a top or a bottom can be

very profitable.

Trends can be measured using TRENDLINES. Very often a straight line can be drawn

UNDER three or more pullbacks from rallies or OVER pullbacks from declines. When price

bars then return to that trend line, they tend to find SUPPORT or RESISTANCE and

bounce off the line in the opposite direction.

A famous quote about trends advises that "The trend is your friend". For traders and

investors, this wisdom teaches that you will have more success taking stock positions in the

direction of the prevailing trend than against it.

Volume:

Volume measures the participation of the crowd. Stock charts display volume through

individual HISTOGRAMS below the price pane. Often these will show green bars for up

days and red bars for down days. Investors and traders can measure buying and selling

interest by watching how many up or down days in a row occur and how their volume

compares with days in which price moves in the opposite direction.

Stocks that are bought with greater interest than sold are said to be under

ACCUMULATION. Stocks that are sold with great interest than bought are said to be under

DISTRIBUTION. Accumulation and distribution often LEAD price movement. In other

words, stocks under accumulation often will rise some time after the buying begins.

Alternatively, stocks under distribution will often fall some time after selling begins.

It takes volume for a stock to rise but it can fall of its own weight. Rallies require the

enthusiastic participation of the crowd. When a rally runs out of new participants, a stock can

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easily fall. Investors and traders use indicators such as ON BALANCE VOLUME to see

whether participation is lagging (behind) or leading (ahead) the price action.

Stocks trade daily with an average volume that determines their LIQUIDITY. Liquid stocks

are very easy for traders to buy and sell. Illiquid stocks require very high SPREADS

(transaction costs) to buy or sell and often cannot be eliminated quickly from a portfolio.

Stock chart analysis does not work well on illiquid stocks.

Breakouts accompanied by volume much higher than the average for that stock are healthy

for the continuation of the price movement in that direction. But after long rallies or declines,

stocks often have a day of very high volume known as a CLIMAX. During these days, the

last of the buyers or sellers take positions. The stock then reverses as there are no longer

enough participants to cause price to move in that direction.

Patterns and Indicators:

Charts allow investors and traders to look at past and present price action in order to make

reasonable predictions and wise choices. It is a highly visual medium. This one fact separates

it from the colder world of value-based analysis. The oldest form of interpreting charts is

PATTERN ANALYSIS. This method gained popularity through both the writings of

Charles Dow and Technical Analysis of Stock Trends. The newer form of interpretation is

INDICATOR ANALYSIS, a math-oriented examination in which the basic elements of

price and volume are run through a series of calculations in order to predict where price will

go next. Pattern analysis gains its power from the tendency of charts to repeat the same bar formations

over and over again. These patterns have been categorized over the years as having a bullish

or bearish bias. Some well-known ones include HEAD and SHOULDERS, TRIANGLES,

29

RECTANGLES, DOUBLE TOPS, DOUBLE BOTTOMS and FLAGS. Also, chart

landscape features such as GAPS and TRENDLINES are said to have great significance on

the future course of price action.

Indicator analysis uses math calculations to measure the relationship of current price to past

price action. Almost all indicators can be categorized as TREND-FOLLOWING or

OSCILLATORS. Popular trend-following indicators include MOVING AVERAGES, ON

BALANCE VOLUME and MACD. Common oscillators include STOCHASTICS, RSI

and RATE OF CHANGE. Trend-following indicators react much more slowly than

oscillators. They look deeply into the rear view mirror to locate the future. Oscillators react

very quickly to short-term changes in price, flipping back and forth between

OVERBOUGHT and OVERSOLD levels.

Both patterns and indicators measure market psychology. The core of investors and traders

that make up the market each day tend to act with a herd mentality as price rises and falls.

This "crowd" tends to develop known characteristics that repeat themselves over and over

again. Chart interpretation using these two important analysis tools uncovers growing stress

within the crowd that should eventually translate into price change.

Moving Averages:

The most popular technical indicator for studying stock charts is the MOVING AVERAGE.

This versatile tool has many important uses for investors and traders. Take the sum of any

number of previous CLOSE prices and then divide it by that same number. This creates

an average price for that stock in that period of time. A moving average can be displayed by

re-computing this result daily and plotting it in the same graphic pane as the price bars.

30

Moving averages LAG price. In other words, if price starts to move sharply upward or

downward, it will take some time for the moving average to "catch up".

Plotting moving averages in stock charts reveals how well current price is behaving as

compared to the past. The power of the moving average line comes from its direct interaction

with the price bars. Current price will always be above or below any moving average

computation. When it is above, conditions are "bullish". When below, conditions are

"bearish". Additionally, moving averages will slope upward or downward over time. This

adds another visual dimension to a stock analysis.

Moving averages define STOCK TRENDS. They can be computed for any period of time.

Investors and traders find them most helpful when they provide input about the SHORT-

TERM, INTERMEDIATE and LONG-TERM trends. For this reason, using multiple

moving averages that reflect these characteristics assist important decision making. Common

moving average settings for daily stock charts are: 20 days for short-term, 50 days for

intermediate and 200 days for long-term.

One of the most common buy or sell signals in all chart analysis is the MOVING

AVERAGE CROSSOVER. These occur when two moving averages representing

different trends criss-cross. For example, when a short-term average crosses BELOW a

long-term one, a SELL signal is generated. Conversely, when a short-term crosses

ABOVE the long-term, a BUY signal is generated.

Moving averages can be "speeded up" through the application of further math calculations.

Common averages are known as SIMPLE or SMA. These tend to be very slow. By giving

more weight to the current changes in price rather than those many bars ago, a faster

EXPONENTIAL or EMA moving average can be created. Many technicians favor the EMA

over the SMA. Fortunately all common stock chart programs, online and offline do the

difficult moving average calculations for you and plot price perfectly

31

Support and Resistance

The concept of SUPPORT AND RESISTANCE is essential to understanding and interpreting

stock charts. Just as a ball bounces when it hits the floor or drops after being thrown to the

ceiling, support and resistance define natural boundaries for rising and falling prices.

Buyers and sellers are constantly in battle mode. Support defines that level where buyers

are strong enough to keep price from falling further. Resistance defines that level where

sellers are too strong to allow price to rise further. Support and resistance play different

roles in up trends and downtrends. In an uptrend, support is where a pullback from a rally

should end. In a downtrend, resistance is where a pullback from a decline should end.

Support and resistance are created because price has memory. Those prices where significant

buyers or sellers entered the market in the past will tend to generate a similar mix of

participants when price again returns to that level.

When price pushes above resistance, it becomes a new support level. When price falls below

support, that level becomes resistance. When a level of support or resistance is penetrated,

price tends to thrust forward sharply as the crowd notices the BREAKOUT and jumps in to

buy or sell. When a level is penetrated but does not attract a crowd of buyers or sellers, it

often falls back below the old support or resistance. This failure is known as a FALSE

BREAKOUT. Support and resistance come in all varieties and strengths. They most often

manifest as horizontal price levels. But trendlines at various angles represent support and

resistance as well. The length of time that a support or resistance level exists determines the

strength or weakness of that level. The strength or weakness determines how much buying or

selling interest will be required to break the level. Also, the greater volume traded at any

level, the stronger that level will be. Support and resistance exist in all time frames and all

markets. Levels in longer time frames are stronger than those in shorter time frames.

32

33

Chapter-5

Literature review

“Only buy something that you’d be perfectly happy to hold if the market shut down for

10 years”

- Warren Buffet

Investment Guru

“Prevailing wisdom is that markets are always right, I assume they are always wrong”

- George Soros,

Chairman, Soros Fund Management

According to Michal Parness, Founder & CEO

Investors don’t Make Money in the Stock Market. One reason the institutions make so much

money is that they are trading. They make money every time you buy or sell. They make

money whether you win or lose. That means that when you’re investing, you’re basically just

sitting there. You’re not going anywhere. You’re not making money as an investor.

Trading the Trend: The Only Way to Make Money in the Market

If you don’t know this already, “Trend Trading” means trading trends based on human

emotions. Not lagging indicators. Not complex statistical analysis and not Ph.D. level

mathematical equations. With trend trading, you look for market movement. That could mean

stocks that are going to move up or down during the course of a day (intraday). You’ll play

the gaps up and down, often several days a week.

The “Trend trading” means being aware and taking advantage of trends like the run-ups that

happen around earning sessions. These are trends that have worked time and time again in the

market. They consistently yield results

Fundamental and Technical Analysis: Substitutes or Compliments?

Jenni L. Bettman

34

Australian National University

Stephen Sault

Australian National University - Faculty of Economics & Commerce

March 28, 2006

While the fundamental and technical analysis literatures invest considerable effort in

assessing their respective ability to explain share prices, they invariably do so without

reference to each other. In this context, we propose an equity valuation model integrating

both fundamental and technical analysis and, in doing so, recognize their potential as

complements rather than as substitutes. Testing confirms the complementary nature of

fundamental and technical analysis by showing that, while each performs well in isolation,

models integrating both have superior explanatory power. While our findings relate to the

valuation of shares, they also have implications for other valuation exercises.

Keywords: Equity valuation models, Fundamental information, Technical information

JEL Classifications: G12, G14, M41

Although the fundamental and technical analysis literatures invest considerable effort in

assessing their respective ability to explain share prices, they invariably do so without

reference to each other. In this context, we propose an equity valuation model integrating

both fundamental and technical analysis and, in doing so, recognize their potential as

complements rather than as substitutes. Testing confirms the complementary nature of

fundamental and technical analysis by showing that, although each performs well in isolation,

models integrating both have superior explanatory power. While our findings relate to the

valuation of shares, they also have implications for other valuation exercises.

Accepted Paper Series

Accounting & Finance, Vol. 49, No. 1, pp. 21-36, March 2009

ISSN 1822-6515 ISSN 1822-6515 EKONOMIKA IR VADYBA: 2009. 14 ECONOMICS &

MANAGEMENT: 2009. 14

35

• RELEVANCE OF FUNDAMENTAL ANALYSIS ON THE BALTIC EQUITY

MARKET

Julia Bistrova, Natalja Lace

Riga Technical University, Latvia,

The main target of the present research was to discover the importance of fundamental

analysis on the Baltic equity markets. The hypothesis that fundamental analysis is not able to

generate substantial additional value to the performance of the portfolio comprised of Baltic

enterprises stocks was proved.

The relevance and need of fundamental analysis was checked by analyzing the performances

of portfolios, which were created on the basis of key fundamental ratios: ROE, equity ratio,

ROIC, net debt to assets as well as PE and PB. Naturally, the companies with better than

average ratios were selected to form stock portfolios. The findings of the conducted study

demonstrate that neither of the mentioned ratios helped in the creating portfolio, performance

of which would beat market’s performance. The only exception was price to earnings ratio,

which proved that cheap companies seem to be attractive to the investors.

It was decided to look closer at the major performers and to find out whether there are any

common patterns among the winners and the losers of the Baltic equity markets. Basically,

equity investors ignored financial situation of the companies (profitability, stability of

balance sheets) and focused mainly on assessing their growth opportunities and attractiveness

of business model. So, investors were mainly forward-looking when making company

selection. As a result, major sufferers performance-wise were the companies with limited

growth potential or total business model erosion.

The authors of the research have also checked whether the trading volumes of the stock have

any impact on the performance. The study results show that in the phase of the major capital

inflows (2001-2006), indeed, most liquid companies tended to reward investors with higher

performances. However, the shareholders of these companies suffered the most in financial

years 2007 and 2008, when there was a major selling across stock market all over the world.

36

By Sandy Jadeja 9- Oct -2004

Should you use Technical or Fundamental analysis to make your decisions?

Volumes have been written about the different ways to forecast or predict market movement.

Traditionally, there are two distinct schools of thought that an individual may choose from,

and that being Fundamental analysis or Technical analysis.

By choosing fundamental analysis, your decisions are based upon underlying economic

factors, cash flows, and price earnings. This information will aim to tell you why a stock will

move.

Technical analysis aims to show you how and when a stock will move. This method

discounts all news and information regarding the value of the stock. In other words, you only

pay attention to a chart. The saying “a picture is worth a thousand words” truly summarizes

this concept nicely.

You can of course choose to use a combination of both if you prefer. This would imply that

when the stock you are looking at becomes undervalued fundamentally, you would wait for a

technical setup to get you in to the market.

Deciding on which method is appropriate and gives bigger returns is truly a matter of

opinion. Respectively, both methods have the same goal; to determine market direction. I

know of a number of individuals who only use one or the other and is equally successful with

phenomenal returns.

It becomes interesting when one speaks to traders from each school. The fundamental traders

believe that charts are a waste of time and provide no real sense as to why one would make

trading decisions based on indicators and repetitive patterns. This group are essentially

bargain hunters. They want to buy stocks which they feel are under priced and will return to a

normal value at a later stage. Fundamental traders often hold stocks for longer periods of time

compared to technical traders.

On the other hand, the technical traders believe that numbers do not lie and that information

based on value, supply and demand are already factored into the price. They also argue that

people can be predictable and that these behaviors’ occur in the form of price patterns. These

37

patterns repeat with a degree of predictability and therefore can be used to forecast future

price movements. Technical traders generally hold positions for shorter periods of time

compared to fundamental traders.

Clearly both avenues are important, and one must make careful decisions before jumping into

trading without having an objective. I have always said that finding a method, style or

strategy depends on ones personality. If you are thinking of long term investing then the

fundamental approach may suit your needs whereas if you are looking for short term market

moves, then technical analysis can provide a myriad of systems to accommodate your

personal style. Some of which we shall take a look at further into the course.

WHERE TO FIND THE NUMBERS.

Richard Seddon, head of Online Share

Trading at the Standard

Online Share Trading is operated by Standard Financial Markets (Pty) Ltd

IT’S CLEAR THAT analysis – whether fundamental or technical – requires a suite of tools.

And though those tools are specialized, the good news is that most are readily available to the

novice investor. Richard Seddon, head of Online Share Trading at the Standard, says that the

discount broking website www.securities.co.za provides many of those tools to its broking

customers as part of its product offering. On the fundamental analysis side the website carries

top-down insights from Standard Bank’s economic research division, plus notes on individual

companies from its rated research team. For bottom-up fundamental analysis the website

contains the financial statements for the past 10 years of every single company listed on the

JSE. Over and above that raw data it also provides key ratios, such as price: earnings (p:e)

multiples, beta, return on equity (ROE) and many others. We’ll deal with those more fully in

two weeks’ time when we work with bottom-up fundamental analysis. But the website isn’t

the only place where investors can find some of those key ratios: the share price pages of the

daily and weekly press (including Fin week) publish information in addition to share prices,

including p:e ratios, dividend yields, market capitalization and share price changes over

specific time periods. The website can also provide more complex bottom-up analysis tools

38

by filtering shares that meet certain criteria. Those could include searching for shares that fall

within a prescribed p:e ratio or dividend yield range. In addition, it provides a database of

share movements for specified time periods, such as the past month, past three months, past

year and past 10 years. The website also provides forecast data. That’s provided by I-Net

Bridge, a company that collates analysts’ forecasts and recommendations to determine the

average (or consensus) projected earnings per share and market view of the share: whether

analysts recommend it as a buy, sell or hold. On the technical analysis side, the Online Share

Trading website provides full interactive charting tools with 10 years’ worth of data. In

addition, customers receive a discount when downloading third-party technical analysis data,

paying as little as R90/month. Over and above all that, the website provides other interesting

information, such as directors’ dealings, 52-week highs and lows, exchange rates,

international indices, news from both Reuters and the JSE, key shareholders of each

company, dividends that are payable, as well as the biggest gainers and losers and the most

active shares on the JSE in any one trading day. It’s everything that a full-service broker

would provide – plus more

39

40

Chapter-6

Research Methodology

Every project is started with the objective of getting results either positive or negative. And

each and every project reaches to the stage of completion through the way of some research

either with the help of primary data or secondary data. And getting of any project and getting

genuine results from that depends on the research method used by researcher.

“Research is a common parlance refers to a search for knowledge. According to

REDMEN “Research is a systematized effort to gain knowledge.”

TYPE OF RESEARCH STUDY The research has been based on secondary data analysis. The study has been exploratory as it

aims at examining the secondary data for analyzing the previous researches that have been

done in the area of technical and fundamental analysis of stocks. The knowledge thus gained

from this preliminary study forms the basis for the further detailed Descriptive research. In

the exploratory study, the various technical indicators that are important for analyzing stock

were actually identified and important ones short listed.

OBJECTIVES OF THE STUDY

Primary Objective:

1.) To do technical and fundamental analysis of chosen securities

Sub-Objectives:

41

1.) To study the various theories of technical analysis and fundamental analysis for various

stocks that chosen.

2.) To understand the movement and performance of stocks to take decision to invest.

3.) To understanding and analyzing the factors that affect the movement of stock prices in the

Indian Stock Markets

SAMPLE DESIGN

Data collection methods include the various methods used by the researcher in his project.

The application of method for collecting the data mainly depends upon the type of project

researcher is going to undertake.

In case the survey project questionnaire is the best tool for collecting data. But in case of

projects other than surveys like this project all the data is collected already prepared or

published in the form of annual reports.

SAMPLE SIZE

The sample size for the number of stocks is taken as 8 for technical analysis and 3 for

fundamental analysis of stocks as fundamental analysis is very exhaustive and requires

detailed study

DATA COLLECTION METHOD

The sample of the stocks for the purpose of collecting secondary data has been selected on

the basis of Random Sampling. The stocks are chosen in an unbiased manner and each stock

is chosen independent of the other stocks chosen.

SOURCES OF DATA

Data can be classified into –

42

Primary source Through conversation with the Relationship, Head and the staff of the branch of SHARE

KHAN Ltd.

Secondary source

- Annual Reports of selected stocks

- Financial Statements

- Internet

Steps for Analysis

Selection - It involves selection of information relevant to the purpose of analysis.

Classification – It involves methodological classification of the data.

Interpretation – It includes drawing of inferences and conclusion.

PROCEDURE

1. Acquaint with the Principles and postulates of analyzing.

2. Determining the extent of analysis so that the sphere of working may be decided.

3. Re-arranging the data.

4. Reducing data to a standardized form.

5. Establishing relationship with the help of tools of analyzing.

6 Interpreting information in a simple and understandable form.

7. Drawing the conclusion.

43

LIMITATIONS OF STUDY

The scope of study was limited due to some constraints given below:-

1. Analysis is only a means not an end. The analysis has been done on the basis of my own

interpretations and up to my best knowledge but every analyst have his or her own

interpretations and suggestions.

2. It does not take into consideration the time taken for the completion of the jobs.

4. The non-monetary factors are not taken into consideration for the analysis

5. No personal contacts with stakeholders of companies also a limitation for analyzing the

project.

6. Error due to some oversight or misinterpretation.

44

45

Chapter-7

Findings and Analysis

FUNDAMENTAL ANALYSIS OF STOCKS

Basically fundamental analysis covers three parts:

1. Market/economical analysis

2. Industry analysis

3. Company analysis

HDFC BANK LTD.

Company detail: Description Details

Industry Finance - Housing House Private BSE Code 500010 NSE Code HDFC Incorporation Year 1977 Registered Office Ramon House H T Parekh Marg,169 Backbay Reclamation , Churchgate Mumbai, Maharashtra-400020 . ISINNO INE001A01028 Phone 022-2283 6255 / 2282 0282 E-mail investorcare@hdfc.com URL www.hdfc.com Industry Finance - Housing Chairman Deepak S Parekh Managing Director Keki M Mistry Company Secretary Girish V Koliyote Listing BSE,NSE

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to

receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the

private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The

46

bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its

registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled

Commercial Bank in January 1995.

As on 31st March, 2009 the authorized share capital of HDFC Bank is Rs. 550 crore. The

paid-up capital as on the said date is Rs. 425,38,41,090/- ( 42,53,84,109 equity shares of Rs

10/- each). The HDFC Group holds 19.38% of the Bank's equity and about 17.70 % of the

equity is held by the ADS Depository (in respect of the bank's American Depository Shares

(ADS) Issue). 27.69 % of the equity is held by Foreign Institutional Investors (FIIs) and the

Bank has about 5,48,774 shareholders.

The shares are listed on the Bombay Stock Exchange Limited and The National Stock

Exchange of India Limited. The Bank's American Depository Shares ( ADS ) are listed on the

New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global

Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No

US40415F2002.

Profit and loss a/c

Particulars Mar 2008 Mar 2007 Mar 2006 No of Months 12 12 12 Operating Income 81763.46 58425.12 42655.38 + Interest Income 81131.27 57739.37 41980.54 Fees and Other Charges 632.19 685.75 674.84 Net Sales 81763.46 58425.12 42655.38 + Other Income 197.09 207.61 128.51 Total Income 81960.55 58632.73 42783.89 EXPENDITURE : + Interest 51428.79 36668.47 24911.28 + Establishment Expenses 1180.32 988.22 934.23 Electricity expenses 70.55 58.19 56.45 Employee Cost 1177.95 912.68 803.30 Provision for

Contingencies 564.62 0 0

Miscellaneous Expenses 0 482.60 318.70 Less: Pre-operative

Expenses Capitalised 0 0 0

Total Expenditure 54422.24 39110.17 27023.96 Operating Profit 27538.31 19522.56 15759.93 Gross Profits -23890.48 -17145.91 -9151.35 Depreciation and

Amortisation 165.97 174.56 186.93

47

Profit Before Tax 27372.34 19348.00 15573.00 + Tax 9372.50 3974.00 3000.00 Minority Interest 0 0 0 Profits After Tax 24362.46 15703.85 12573.00 Adjustment to PAT 0 0 0 Profit Balance B/F 0 0 0 Profit Available for

appropriations 24362.46 15703.85 12573.00

+ Appropriations 24362.46 15703.85 12573.00 Equity Dividend % 250.00 220.00 200.00 Earnings Per Share 63.37 60.77 50.38 Book Value 420.62 219.42 179.05

BALANCE SHEET

Particulars Mar 2008 Mar 2007 Mar 2006 SOURCES OF FUNDS + Share Capital 2840.34 2530.03 2495.60 Share Warrants & Outstandings 0.11 0.16 2.32 + Reserves & Surplus 116632.97 52983.76 42185.41 Shareholder's Funds 119473.42 55513.95 44683.33 + Secured Loans 517366.83 396687.03 313439.97 + Unsecured Loans 174145.36 175243.27 153773.50 Total Debts 691512.18 571930.30 467213.47 Total Liabilities 810985.60 627444.25 511896.80 APPLICATION OF FUNDS : + Loans (Non Current Assets) 729979.45 565123.63 449901.16 Gross Block 4885.68 4931.04 5153.70 Less: Accumulated Depreciation 2800.73 2800.30 2680.59 Less: Impairment of Assets 0 0 0 Net Block 2084.94 2130.74 2473.11 Lease Adjustment A/c 0 0 0 Capital Work in Progress 0 0 0 Pre-operative Expenses pending 0 0 0 Assets in transit 0 0 0 + Investments 69150.10 36662.33 38763.38 Market Value of Quoted Investments 85548.38 47783.69 0

Current Assets, Loans & Advances + Inventories 0 0 0 + Sundry Debtors 20.09 50.19 21.85 + Cash and Bank 7777.35 13733.46 12016.19 + Other Current Assets 788.56 653.15 546.43 + Loans and Advances 32938.44 36128.73 29485.84

48

Total Current Assets 41524.44 50565.53 42070.31 Less : Current Liabilities and Provisions

+ Current Liabilities 19069.46 14849.69 11013.62 + Provisions 14150.26 13419.30 11071.36 Total Current Liabilities 33219.72 28269.00 22084.98 Net Current Assets 8304.73 22296.54 19985.33 Miscellaneous Expenses not written off 0 0 0 Deferred Tax Assets 2002.75 1778.32 1374.70 Deferred Tax Liability 536.36 547.31 600.87 Deferred Tax Assets / Liabilities 1466.39 1231.01 773.83 Total Assets 810985.60 627444.25 511896.80 Contingent Liabilities 6158.00 4250.40 5067.10

RATIO ANALYSIS

Particulars Mar 2008 Mar 2007 Mar 2006 Operational & Financial Ratios Earnings Per Share (Rs) 85.77 62.07 50.38 DPS(Rs) 25.00 22.00 20.00 Book NAV/Share(Rs) 420.63 219.42 179.04 Tax Rate(%) 27.78 20.20 19.26 Margin Ratios EBIT Margin(%) 104.16 96.44 94.91 Pre Tax Margin(%) 41.26 33.68 36.51 PAT Margin (%) 29.80 26.88 29.48 Cash Profit Margin (%) 30.00 27.30 30.02 Performance Ratios Asset Turnover(x) 9.92 10.74 12.00 Sales/Fixed Asset(x) 16.74 11.85 8.28 Working Capital/Sales(x) 0.10 0.38 0.47 Efficiency Ratios Fixed Capital/Sales(x) 5.98 8.44 12.08 Payable days 0 0 0 Valuation Parameters PER(x) 27.79 24.49 26.52 PCE(x) 27.60 24.11 26.04 Price/Book(x) 5.67 6.93 7.46 Yield(%) 1.05 1.45 1.50 EV/Net Sales(x) 16.64 16.14 18.49 EV/EBIT(x) 15.98 16.73 19.48 M Cap / Sales 8.28 6.58 7.82 Growth Ratio Net Sales Growth(%) 39.95 36.97 25.43 EBIT Growth(%) 51.14 39.18 25.88 PAT Growth(%) 55.14 24.90 21.29

49

EPS Growth(%) 38.18 23.20 21.08 Financial Stability Ratios Total Debt/Equity(x) 5.79 10.30 10.46 Current Ratio(x) 2.18 3.41 3.82 Quick Ratio(x) 2.18 3.41 3.82 Interest Cover(x) 1.66 1.54 1.63

Key points :

• Your directors recommend payment of dividend for the year ended March 31, 2008 of

Rs. 25 per share as against Rs. 22 per share for the previous year.

• Loan approvals during the year were Rs. 42,520 crores as compared to Rs. 33,332

crores in the previous year, representing a growth of 28%. Loan disbursements during

the year were Rs. 32,875 crores as against Rs. 26,178 crores in the previous year,

representing a growth of 26%.

• As at March 31, 2008, the loan book stood at Rs. 72,998 crores as against Rs. 56,512

crores in the previous year - an increase of 29%.

• During the year, the Corporation raised loans amounting to Rs. 8,803 crores from

commercial banks, of which Rs. 3,867 crores were under the priority sector category

of commercial banks. The Corporation further raised Rs. 2,860 crores from the

banking sector as loans.

• As at March 31, 2008, HDFC together with its wholly owned subsidiaries, HDFC

Investments Limited and HDFC Holdings Limited holds 23.27% of the equity share

capital of HDFC Bank.

• HDFC had 1,445 employees as of March 31, 2008 (previous year 1,388). During the

year, 24 employees employed throughout the year and 1 employee employed for part

of the year were in receipt of remuneration of Rs. 24 lacs or more per annum.

TATA MOTOR LTD.

Company detail:

Chief Executive Name Mr. Prakash M Telang

Secretary Name Mr. H K Sethna

Face Value 10

50

Market Lot 1

Business Group Name Tata Group

Incorporation Date 01/09/1945

Industry Name Auto - LCVs/HCVs Registrar of Company

TATA SHARE REGISTRY LIMITED ARMY AND NAVY BUILDING 148, MAHATMA GANDHI ROAD Mumbai , Maharashtra , 400001

Listed on National Stock Exchange of India Ltd.

The Stock Exchange, Mumbai

Tata Motors Limited is India's largest automobile company, with standalone revenues of Rs.

25,660.79 crores (USD 5.5 billion) in 2008-09. It is the leader in commercial vehicles in each

segment, and among the top three in passenger vehicles with winning products in the

compact, midsize car and utility vehicle segments. The company is the world's fourth largest

truck manufacturer, and the world's second largest bus manufacturer.

The company's 23,000 employees are guided by the vision to be "best in the manner in which

we operate, best in the products we deliver, and best in our value system and ethics."

Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India.

Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The

company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune

(Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka)

Since, 1991 opening of the economy has changed the face of auto industry. Today, it is

amongst the main drivers of growth of Indian economy with an output multiplier of 2.24(for

every Re.1 invested, auto sector gives back Rs.2.24 to the economy). In recent years we have

seen increasing number of global players entering Indian market by way of Joint ventures,

collaborations or wholly owned subsidiary

The automobile industry is torn between trying to reduce costs on the one hand and, on the

other, dealing with the high price of performance-enhancing technology and environmental

compliance. Key drivers in the automotive industry are:

51

• Reducing air pollution

• Reduction of weight

• Recyclability

• Safety

• Better performance and engine efficiency

• Aesthetics

• Longer service Life

MAJOR COMPETITORS OF TATA MOTORS Last Price Market Cap.

(Rs. cr.)Sales

TurnoverNet Profit Total Assets

Tata Motors 342.30 17,599.64 25,660.79 1,001.26 14,120.02

Ashok Leyland 29.55 3,931.15 5,981.07 190.00 3,036.48

Tata Motors (D) 283.90 1,821.95 -

- -

Eicher Motors 308.00 865.29 692.58 40.27 487.40

Swaraj Mazda 240.00 251.68 540.85 4.79 236.15

Key points :

• India's largest automobile company, Tata Motors, is planning to launch the world's

cheapest car -- Nano -- in Thailand and other South East Asian markets. Tata Motors

has entered into joint venture agreement with Thonburi Group to form Tata Motors

(Thailand). The company will utilize Thailand as manufacturing base in order to

export its products in the region. Earlier, Tata Motors had expressed its desire to

introduce Nano in European market by 2011. The auto major mopped up Rs 456.8 cr

by selling the stake to Tata Sons.

• Tata Motors, the biggest vehicle maker of the country, which UK-based car brands

Jaguar and Land Rover (JLR) for whopping $2.3 billion last year, may concentrate on

52

smaller towns of the country like Ludhiana, apart from the major cities to market

these brands by setting up exclusive showrooms.

• Automobile manufacturer Tata Motors has posted a 13.26% dip in total sales in month

of May 2009. The company sold 40,916 units in May of this fiscal year as compared

to 46,339 units in May 2008.

Profit and loss a/c

Particulars Mar 2008 Mar 2007 Mar 2006 No of Months 12 12 12 + Gross Sales 330939.30 318194.80 240041.20 -Excise 43631.10 43494.50 34019.20 Net Sales 287308.20 274700.30 206022.00 + Other Income 7640.30 3658.40 3562.50 Total Income 294948.50 278358.70 209584.50 EXPENDITURE : + Increase/Decrease in Stock 330.00 -2736.90 -2569.10 + Raw Materials Consumed 201901.90 193749.30 142638.60 Power & Fuel Cost 3251.90 3274.10 2585.10 Employee Cost 15260.10 13556.30 11332.50 Other Manufacturing Expenses 22395.10 19651.30 14852.10 Selling and Administration Expenses 11634.50 13914.90 11273.70

Miscellaneous Expenses 3631.10 1669.90 850.00 Less: Pre-operative Expenses Capitalised 0.00 0.00 0.00

Total Expenditure 258404.60 243078.90 180962.90 Operating Profit 36543.90 35279.80 28621.60 Interest 4256.10 3685.10 2934.90 Depreciation 6523.10 5862.90 5209.40 Profit Before Tax 25764.70 25731.80 20477.30 + Tax 5475.50 6597.20 5245.00 Minority Interest 0.00 0.00 0.00 Profits After Tax 20289.20 19134.60 15288.80 Adjustment to PAT 0.00 0.00 0.00 Profit Balance B/F 10138.30 7767.60 5656.60 Profit Available for appropriations 30427.50 26902.20 20945.40 + Appropriations 30427.50 26902.20 20945.40 Equity Dividend % 150.00 150.00 130.00 Earnings Per Share 52.63 49.65 39.79 Book Value 202.54 177.33 143.58

53

BALANCE SHEET

Particulars Mar 2008 Mar 2007 Mar 2006 SOURCES OF FUNDS + Share Capital 3855.40 3854.10 3828.70 Share warrants & Outstandings 0.00 0.00 0.00 + Total Reserve 74539.60 64843.40 51542.00 Shareholder's Funds 78395.00 68697.50 55370.70 + Secured Loans 24619.90 20220.40 8227.60 + Unsecured Loans 38185.30 19871.00 21140.80 Total Debts 62805.20 40091.40 29368.40 Total Liabilities 141200.20 108788.90 84739.10 APPLICATION OF FUNDS : Gross Block 108308.30 87758.00 79715.50 Less: Accumulated Depreciation 54435.20 48945.40 44015.10 Less: Impairment of Assets 0.00 0 0 Net Block 53873.10 38812.60 35700.40 Lease Adjustment A/c 0 0 0 Capital Work in Progress 50649.60 25133.20 9511.90 Pre-operative Expenses pending 0 0 0 Assets in transit 0 0 0 + Investments 49102.70 24770.00 20151.50 Current Assets, Loans & Advances + Inventories 24218.30 25009.50 20122.40 + Sundry Debtors 11307.30 7821.80 7157.80 Cash and Bank 23973.10 8267.60 11194.30 Other Current Assets 8402.00 7217.90 353.20 Loans and Advances 35937.10 56803.70 57785.40 Total Current Assets 103837.80 105120.50 96613.10 Less : Current Liabilities and Provisions

+ Current Liabilities 86672.00 63636.80 59003.20 + Provisions 19894.30 13643.20 12150.40 Total Current Liabilities 106566.30 77280.00 71153.60 Net Current Assets -2728.50 27840.50 25459.50 Miscellaneous Expenses not written off 60.50 100.90 141.20

Deferred Tax Assets 3974.50 1766.00 1507.50 Deferred Tax Liability 13731.70 9634.30 7732.90 Deferred Tax Assets / Liabilities -9757.20 -7868.30 -6225.40 Total Assets 141200.20 108788.90 84739.10 Contingent Liabilities 20430.00 14717.50 9928.60

54

KEY FINANCIAL RATIO

2008/03 2007/03 2006/03

EPS 52.63 49.65 39.94

CEPS 71.22 67.07 55.47

Book Value 202.70 177.59 143.94

Dividend/Share 15.00 15.00 13.00

Operating Profit / Share 77.84 67.12 56.06

Net Operating Income / Share 745.47 691.91 524.73

Free Reserves / Share 182.38 157.16 123.34

OPM 10.44 9.70 10.68

GPM 8.17 7.50 8.09

NPM 6.96 6.94 7.35

RONW 21.18 24.67 24.77

Debt/Equity 0.80 0.58 0.53

Current Ratio 0.89 1.24 1.24

Quick Ratio 0.66 0.91 0.96

Interest Cover 7.19 7.62 8.08

Sales/Total Assets -23.02 13.35 10.44

Sales/Fixed Assets 2.76 4.19 4.47

Sales/Current Assets 2.67 2.58 2.05

No Of Days Of Working Capital -15.64 26.96 34.47

CAR 0.00 0.00 0.00

55

Opportunities and Threats a) Opportunities

● Road Development: The ongoing road development program would improve connectivity

to ports, cities and villages through a network of highways and interconnecting roads by

2010-11. Improved road network would help in faster movement of goods between various

cities and towns. The Company launched TATA Novus range of vehicles in the heavy

segment and TATA ACE for last mile distribution.

● Car penetration in India: Car penetration in India is 7 cars per 1,000 persons.

● International: In FY 2006-07, the Company increased share of its overseas vehicle sales

from 7.6% last year to record high of 11.1% (as % of its total sales) and has planned further

increase in this year.

b) Threats

● Global Competition: India is increasingly attracting global players to set up manufacturing

facility for producing cars, especially small cars. Global automobile manufacturers are also

entering India in commercial vehicle segment to leverage India’s low cost production

advantage to their favor.

● Fuel Prices: The continuing fuel price increase in the domestic market could significantly

impact demand of commercial and passenger vehicles.

● Input costs: Commodity items particularly steel, non-ferrous metals, rubber and

engineering plastics have witnessed huge price increases in the past. These prices are

expected to increase further affecting the Company’s profitability.

● Interest rate hardening and other inflationary trends: With interest rates hardening and

liquidity crunch in the system, growth in sales may be adversely impacted.

● Government Regulations: Stringent emission and safety requirements could bring new

complexities for automotive and component manufacturers impacting the Company’s

business.

56

LARSEN & TOUBRO

Company details :

Description Details

Industry Engineering - Construction House Private BSE Code 500510 NSE Code LT Incorporation Year 1946 Registered Office L & T House,Ballard Estate, Mumbai,

Maharashtra-400001 .

ISINNO INE018A01030 Phone 022-6752 5656 E-mail igrc@lth.ltindia.com. URL www.larsentoubro.com. Industry Engineering - Construction Chairman A M Naik Managing Director A M Naik Company Secretary N Hariharan Listing BSE,NSE Henning Holck-Larsen and Soren Kristian Toubro, school-mates in Denmark, would not have

dreamt, as they were learning about India in history classes that they would, one day, create

history in that land.

In 1938, the two friends decided to forgo the comforts of working in Europe, and started

their own operation in India. All they had was a dream. And the courage to dare.

Their first office in Mumbai (Bombay) was so small that only one of the partners could

use the office at a time!

In the early years, they represented Danish manufacturers of dairy equipment for a modest

retainer. But with the start of the Second World War in 1939, imports were restricted,

compelling them to start a small work-shop to undertake jobs and provide service facilities.

Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This crisis

forced the partners to stand on their own feet and innovate. They started manufacturing dairy

equipment indigenously. These products proved to be a success, and L&T came to be

recognized as a reliable fabricator with high standards.

57

In December 1950, L&T became a Public Company with a paid-up capital of Rs.2

million. The sales turnover in that year was Rs.10.9 million.

Prestigious orders executed by the Company during this period included the Amul Dairy

at Anand and Blast Furnaces at Rourkela Steel Plant. With the successful completion of these

jobs, L&T emerged as the largest erection contractor in the country.

In 1956, a major part of the company's Bombay office moved to ICI House in Ballard

Estate. A decade later this imposing grey-stone building was purchased by L&T, and

renamed as L&T House - its Corporate Office.

The sixties saw a significant change at L&T - S. K. Toubro retired from active

management in 1962.

The sixties were also a decade of rapid growth for the company, and witnessed the

formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961),

Eutectic Welding Alloys (1962) and TENGL (1963).

Profit & loss a/c

PARTICULARS MAR.2008 MAR.2007 MAR.2006

NO. months 12 12 12Gross sales 252106.3 179382.9 149938.4less. Excise 3343.8 3380.8 2538.6Net sales 248762.5 176002.1 147399.8Add. Other income 6519.5 4845.1 4900.7Total income 255282 180847.2 152300.5

Expenditure Add.increase/ decrease in stock -7461.7 -1217.6 1283.8Add.raw material consumed 130095 84345.1 70456.4power and fuel 3652.5 3081.3 2347.3employee cost 1535440 12591.9 8754.3other manufacturing expenses 58261 43357.1 41273.3Selling and Administration Expenses 15874.4 13018.8 8810.1Miscellaneous Expenses 4099.5 2545 3370Less: Pre-operative Expenses Capitalis 0 0 0Total Expenditure 219875.1 157721.6 136295.4Operating Profit 35406.9 23125.6 16005.1Interest 1736.2 1376.6 1723.7Depreciation 2136.3 2136.3 1159.8Profit Before Tax 31534.4 20034.5 13121.6add. Tax 9820.5 6018.7 3712.6Minority Interest 0 0 0Profits After Tax 21734.2 14030.2 9423.9 Adjustment to PAT -7.7 -88.9 653.3Profit Balance B/F 782.4 557 556.2Profit Available for appropriations 22508.9 14498.3 10633.4Appropriations 22508.9 14498.3 10633.4Equity Dividend % 850 650 1100earning per share 74.27 49.48 68.48Book Value 321.93 200.5 331.43

58

BALANCE SHEET

Particulars Mar 2008 Mar 2007 Mar 2006 SOURCES OF FUNDS + Share Capital 584.70 566.50 274.80 Share warrants & Outstandings 1143.90 515.00 349.90 + Total Reserve 93822.20 56602.80 45777.00 Shareholder's Funds 94406.90 57169.30 46051.80 + Secured Loans 3085.30 2454.00 4657.90 + Unsecured Loans 32754.60 18323.50 9877.80 Total Debts 35839.90 20777.50 14535.70 Total Liabilities 131390.70 78461.80 60937.40 APPLICATION OF FUNDS : Gross Block 42057.50 28763.00 23007.80 Less: Accumulated Depreciation 12865.10 11197.60 9791.50 Less: Impairment of Assets 0 0 0 Net Block 29192.40 17565.40 13216.30 Lease Adjustment A/c -30.70 -30.70 -30.70 Capital Work in Progress 7292.70 4712.20 2860.60 Pre-operative Expenses pending 0 0 0 Assets in transit 0 0 0 + Investments 69222.60 31044.40 19195.20 Current Assets, Loans & Advances + Inventories 43059.10 30011.40 22102.70 + Sundry Debtors 73650.10 55046.40 48141.60 Cash and Bank 9644.60 10944.30 5832.00 Other Current Assets 143.20 265.20 172.60 Loans and Advances 36638.20 22771.00 19116.30 Total Current Assets 163135.20 119038.30 95365.20 Less : Current Liabilities and Provisions + Current Liabilities 116484.20 81763.00 58962.50 + Provisions 20354.20 11801.30 10153.70 Total Current Liabilities 136838.40 93564.30 69116.20 Net Current Assets 26296.80 25474.00 26249.00 Miscellaneous Expenses not written off 30.60 98.40 219.80 Deferred Tax Assets 1829.60 1646.90 1325.10 Deferred Tax Liability 2443.30 2048.80 2097.90 Deferred Tax Assets / Liabilities -613.70 -401.90 -772.80 Total Assets 131390.70 78461.80 60937.40 Contingent Liabilities 4053.50 2702.20 2247.30

59

RATIO ANALYSIS

Particulars Mar 2008 Mar 2007 Mar 2006 Operational & Financial Ratios Earnings Per Share (Rs) 74.34 49.53 68.59 CEPS(Rs) 81.58 55.54 76.92 DPS(Rs) 17.00 13.00 22.00 Book NAV/Share(Rs) 321.93 200.50 331.43 Tax Rate(%) 31.12 30.02 28.26 Margin Ratios Core EBITDA Margin(%) 14.04 12.89 10.67 EBIT Margin(%) 13.21 11.94 9.91 Pre Tax Margin(%) 12.52 11.18 8.76 PAT Margin (%) 8.62 7.82 6.29 Cash Profit Margin (%) 9.46 8.77 7.05 Performance Ratios ROA(%) 16.54 17.88 15.46 ROE(%) 23.09 24.70 20.69 ROCE(%) 25.34 27.31 24.39 Asset Turnover(x) 0.52 0.44 0.41 Sales/Fixed Asset(x) 5.91 6.12 6.41 Working Capital/Sales(x) 0.10 0.14 0.18 Efficiency Ratios Fixed Capital/Sales(x) 16.68 16.03 15.34 Receivable days 93.16 104.98 107.62 Inventory Days 52.90 53.02 54.43 Payable days 130.67 152.19 153.13 Valuation Parameters PER(x) 20.34 16.35 8.87 PCE(x) 18.54 14.58 7.91 Price/Book(x) 4.70 4.04 1.83 Yield(%) 0.56 0.80 0.90 EV/Net Sales(x) 1.88 1.36 0.63 EV/Core EBITDA(x) 13.23 10.34 5.76 EV/EBIT(x) 14.07 11.16 6.21 EV/CE(x) 3.56 3.05 1.51 M Cap / Sales 1.78 1.30 0.57 Growth Ratio Net Sales Growth(%) 41.34 19.40 12.68 Core EBITDA Growth(%) 53.11 44.49 6.62 EBIT Growth(%) 55.38 44.18 5.62 PAT Growth(%) 54.91 48.88 -4.21 EPS Growth(%) 50.09 -27.79 -9.44 Financial Stability Ratios Total Debt/Equity(x) 0.38 0.37 0.32 Current Ratio(x) 1.40 1.46 1.62

60

Quick Ratio(x) 1.03 1.09 1.24 Interest Cover(x) 19.17 15.56 8.62 Total Debt/Mcap(x) 0.08 0.09 0.17

Key points:

• On May 14, 2008, the Company entered into a definitive agreement for sale of RMC

business to Lafarge Aggregates & Concrete India Private Limited for an enterprise

value of Rs.1,480 crore. The financial effect of this sale will be given in the year

2008-2009, on conclusion of the transaction.

• The Directors recommend payment of final dividend of Rs.15/- per equity share of

Rs.2/- each, which together with the Interim Dividend of Rs.2/- per equity share

declared on July 3, 2007 works out to Rs.17/- per equity share for the year under

review.

• As at March 31, 2008, the gross fixed and intangible assets, including leased assets,

stood at Rs. 4,935.02 crore and the net fixed and intangible assets, including leased

assets, at Rs. 3,645.44 crore. Additions during the year amounted to Rs. 1,647.20

crore.

61

TECHNICAL ANALYSIS

1. Reliance industries.

Last: 2,004.00

Change: -54.80

Exchange Code: RELIANCEEQ

Open: 2,183.00

Low: 1,995.35

Volume: 2520948

Percent Change: -2.66

Last Close: 2,058.80

High: 2,183.00

52 Week High: 2,535.00

52 Week Low: 930.00

62

2. JP associates

Last: 206.45

Change: + 14.85

Exchange Code: JPASSOCIATEQ

Open: 193.45

Low: 193.25

Volume: 15495204

Percent Change: +7.75

Last Close: 191.60

High: 209.50

52 Week High: 235.80

52 Week Low: 47.05

63

3.Infosys technosoft ltd.

Last: 1,793.00

Change: -18.80

Exchange Code: INFOSYSTCHEQ

Open: 1,801.65

Low: 1,755.00

Volume: 1841963

Percent Change: -1.04

Last Close: 1,811.80

High: 1,823.45

52 Week High: 2,070.00

52 Week Low: 1,040.00

64

4. State bank of india

STABAN Last: 1,753.70

Change: -25.85

Exchange Code: SBINEQ

Open: 1,785.00

Low: 1,732.25

Volume: 1195343

Percent Change: -1.45

Last Close: 1,779.55

High: 1,790.00

52 Week High: 2,039.70

52 Week Low: 891.50

65

5. Sunpharmucitical

SUNPHARMA Last: 1,147.90

Change: + 29.15

Exchange Code: SUNPHARMAEQ

Open: 1,123.35

Low: 1,120.10

Volume: 513593

Percent Change: +2.61

Last Close: 1,118.75

High: 1,170.00

52 Week High: 1,599.00

52 Week Low: 954.00

66

6. Suzlon

Last: 103.35

Change: -3.40

Exchange Code: SUZLONEQ

Open: 108.75

Low: 102.00

Volume: 26780537

Percent Change: -3.19

Last Close: 106.75

High: 108.75

52 Week High: 253.85

52 Week Low: 33.05

67

7. Dish TV

Last: 35.10

Change: + 1.05

Exchange Code: DISHTVEQ

Open: 35.00

Low: 34.60

Volume: 5979206

Percent Change: +3.08

Last Close: 34.05

High: 35.50

52 Week High: 57.20

52 Week Low: 11.90

68

8. ICICI Bank ltd.

Last: 727.00

Change: -2.85

Exchange Code: ICICIBANKEQ

Open: 736.90

Low: 719.00

Volume: 5164065

Percent Change: -0.39

Last Close: 729.85

High: 744.85

52 Week High: 800.00

52 Week Low: 252.30

69

70

Chapter-8

CONCLUSION AND RECOMMENDATION

Fundamental analysis of stocks:

1.HDFC Bank Ltd. Recommend BUY HDFC Bank delivered a Net Profit growth of 45% yoy to Rs464cr (Rs321cr). However,

the numbers are not comparable as 1QFY2009 numbers are after accounting for the

merger with Centurion Bank of Punjab (CBoP). EPS growth was 13% yoy. While a

breakup of line items into HDFC Bank standalone and CBoP was not available, including

CBoP 1QFY2008 Net Profits, profits grew 31% yoy. The Bank absorbed the additional

Provisioning Expenses to bring CBoP’s accounting policies for NPAs in line with its own

stricter policies, by adjusting the same against Reserves, with an estimated impact of

roughly Rs15-20 per share. Management indicated Core NIMs of the merged entity stood

at about 4.1%, while the CASA ratio declined to 45%. At the same time, Operating

Expenses, excluding Staff Costs were down 1% sequentially, indicating substantial cost-

cutting measures implemented during the quarter, in line with peers. Asset quality

remained stable, with the Net NPA ratio remaining at 0.5%. MTM losses on Bond and

Equity books were manageable at around Rs78cr

2. TATA MOTOR. Recommend SELL OR HOLD. TAMO’s long term debt on a consolidated basis went up to Rs.163bn in FY09. In

addition to it the company has raised NCDs for Rs.42bn and it also raised ~$1bn for JL

for working capital requirements. TAMO has charged actuarial loss for JLR pension plan

of Rs.14.57bn to Reserves which along with losses incurred during FY09, impacted

consolidated net worth and book value at consolidated stood a Rs.113 per share compared

to current estimated debt levels of ~Rs.240bn. We believe the debt equity ratio for FY10E

to become >2x and apart from this the company is also likely to raise debt on JLR

71

books which would increase leverage risk going ahead. We believe CV industry would

continue to face pressures in FY10E mainly due to slowdown in overall economy, lower

industrial production and stringent financing norms. We also don’t expect any immediate

revival in JLR sales volume in FY10E. We estimate TAMO to report EPS of Rs.14 and

Rs.19 for FY10E and FY11E respectively. At current market price of Rs.314, the stock

trades at a PE multiple of 23x and 16x for FY10E and FY11E respectively. We value

TAMO at Rs.194 (10x FY11E) and other subsidiaries at Rs40 (including JLR). We

recommend a SELL on the stock with a target price of Rs.235.

3. LARSEN & TOUBRO

Recommend to hold and keep eyes on stock before BUY

Keeping in view the improving macroeconomic fundamentals and the UPAled

government at the Centre, we are optimistic about an increase in spending on

infrastructure in India over the next few years. L&T’s strategic initiatives to augment

business prospects in some of the most promising sectors such as Power, Railways,

Defence, and Nuclear Energy and excellent execution skills are likely to help the

Company exploit the full potential of emerging opportunities. Consequently, we have

upwardly revised the order book growth estimate for FY10 to 20%, as against the earlier

expectation of a 9% growth.

Technical analysis of stocks:

1. As on 30th June 2009 RELIANCE closed @ 2029 and we RECOMMEND

Buy for LONG-TERM with STOPLOSS of 1859.14 and Sell for SHORT-

TERM and we also expect STOCK to react on Following IMPORTANT

LEVELS .

Simple moving avg. 100 days : 1782.60

72

Resistance 2 1953.66

Resistance 1 1921.78

Support 1 1830.82

Support 2 1798.94

2. JPASSOCIAT closed @ 206.10 and we RECOMMEND Strong Buy for

LONG-TERM with STOPLOSS of 119.49 and Buy for SHORT-TERM with

STOPLOSS of 188.22 and we also expect STOCK to react on Following

100 days SMA : 142.05

IMPORTANT LEVELS. Resistance 2 221.16

Resistance 1 214.96

Support 1 197.24

Support 2 191.04

3. INFOSYSTCH closed @ 1777.65 and we RECOMMEND Strong Buy for

LONG-TERM with STOPLOSS of 1430.34 and Strong Buy for SHORT-TERM

with STOPLOSS of 1672.11 and we also expect STOCK to react on Following

IMPORTANT LEVELS

100 days SMA: 1505.91

Resistance 2 1855.1

Resistance 1 1828.96

73

Support 1 1754.34

Support 2 1728.2

4. As on 30th June 2009 SBIN closed @ 1748.05 and we RECOMMEND Buy

for LONG-TERM with STOPLOSS of 1340.86 and Buy for SHORT-TERM

with STOPLOSS of 1629.84 and we also expect STOCK to react on Following

IMPORTANT LEVELS.

100 days SMA: 1384.60

Resistance 2 1694.29

Resistance 1 1670.68

Support 1 1603.32

Support 2 1579.71

5. SUNPHARMA closed @ 1091.95 and we RECOMMEND Sell for LONG-

TERM with STOPLOSS of 1037.35 and Sell for SHORT-TERM with

STOPLOSS of 1141.96 and we also expect STOCK to react on Following

IMPORTANT LEVELS.

100 days SMA: 1178.18

74

Resistance 2 1287.54

Resistance 1 1256.89

Support 1 1169.41

Support 2 1138.76

6. As on 30th June 2009 SUZLON closed @ 103.95 and we RECOMMEND

Sell for LONG-TERM with STOPLOSS of 96.83 and Sell for SHORT-TERM

with STOPLOSS of 97.78 and we also expect STOCK to react on Following

IMPORTANT LEVELS.

100 days SMA: 74.40

Resistance 2 97.7

Resistance 1 96.13

Support 1 91.67

Support 2 90.1

7. As on 30th June 2009 DISHTV closed @ 38.80 and we RECOMMEND Buy for

LONG-TERM with STOPLOSS of 23.50 and Sell for SHORT-TERM with STOPLOSS

of 35.67 and we also expect STOCK to react on Following IMPORTANT LEVELS.

100 days SMA: 30.95

Resistance 2 35.93

75

Resistance 1 35.59

Support 1 34.61

Support 2 34.27

8. ICICIBANK closed @ 725.60 and we RECOMMEND Strong Buy for LONG-TERM

with STOPLOSS of 538.11 and Strong Buy for SHORT-TERM with STOPLOSS of

701.64 and we also expect STOCK to react on Following IMPORTANT LEVELS .

100 days SMA: 531.44

Resistance 2 732.37

Resistance 1 717.55

Support 1 675.25

Support 2 660.43

76

77

A brief introduction to some terms you are likely to encounter as you start

investing...

• SECURITY ANALYSIS: stands for the proposition that a well-disciplined investor

can determine a rough value for a company from all of its financial statements, make

purchases when the market inevitably under-prices some of them, earn a satisfactory

return, and never be in real danger of permanent loss.

• FUNDAMENTAL ANALYSIS: is the analysis of a stock on the basis of core

financial and economic analysis to predict the movement of stocks price.

• TECHNICAL ANALYSIS: is the study of prices and volume, for forecasting of

future stock price or financial price movements.

• DOW JONES THEORY: The Dow theory is a method of interpreting and signaling

changes in the stock market direction based on the monitoring of the Dow Jones

Industrial and Transportation Averages.

• ELLIOT WAVES BASICS: Breaking through support or resistance levels results in a

change of traders’ expectations

• SUPPORT: Support is a level at which bulls (i.e., buyers) take control over the prices

and prevent them from falling lower.

• RESISTANCE: is the point at which sellers (bears) take control of prices and prevent

them from rising higher

• ROLE REVERSAL: When a resistance level is successfully broken through, that

level becomes a support level. Similarly, when a support level is successfully broken

through, that level becomes a resistance level.

• BULL TREND: The start of an up trend is signaled when price makes a higher low

(trough), followed by a rally above the previous high (peak)

• BEAR TREND: when a rally ends with a lower peak and then retreats below the

previous low. The end of a bear trend is identical to the start of a bull trend.

• LARGE CORRECTION: A large correction occurs when price falls below the

previous low (during a bull trend) or where price rises above the previous high (in a

bear trend).

• MOVING AVERAGE: A moving average is the average price of a financial

instrument over a given time.

78

• RELATIVE STRENGTH INDEX: The Relative Strength Index Technical Indicator

(RSI) is a price-following oscillator that ranges between 0 and 100

• ADVANCE/DECLINE LINE: The “advance/decline line” shows, for some period,

the cumulative difference between advancing and declining issues.

• CLOSING TICK: “Closing tick” is the difference between the number of shares that

closed on an uptick and those that closed on a downtick.

• CLOSING ARMS: “Closing arms” or “trin” (trading index) is the ratio of average

trading volume in declining issues to average trading volume in advancing issues.

• Z-BLOCK TRADES: “zBlock trades” are trades in excess of 10,000 shares.

• HI-LO-CLOSE CHART: A hi-lo-close chart is a bar chart showing, for each day, the

high price, low price, and closing price.

• CANDESTICK CHART: A candlestick chart is an extended version of the hi-lo-

close chart. It plots the high, low, open, and closing prices, and also shows whether

the closing price was above or below the opening price

• POINT AND FIGURE CHARTS: Point-and-figure charts are a way of showing only

major price moves and their direction. A “major” up move is marked with an “X,”

while a “major” down move is marked with an “O.” A new column starts every time

there is a change in direction

• HEAD AND SHOULDERS FORMATION: Once a chart is drawn, technical

analysts examine it for various formations or pattern types in an attempt to predict

stock price or market direction in the case of head-and-shoulders formation.

• ODD-LOT: The “odd-lot” indicator looks at whether odd-lot purchases are up or

down.

• HEMLINE: Followers of the “hemline” indicator claim that hemlines tend to rise in

good times.

• SUPER BOWL: The Super Bowl indicator forecasts the direction of the market

based on whether the National Football Conference or the American Football

Conference wins.

• BETA: Beta is a risk measure comparing the volatility of a stock's price movement

to the general market.

• MOMENTUM: Momentum measures the speed of price change and provides a

leading indicator of changes in trend.

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• UPSIDE/DOWNSIDE: Measures of Upside/Downside separate the volumes for

rising markets from those in falling markets. Since volume is independent of price, it

makes a valuable tool for measuring the quality of a price trend.

• SWING INDEX: Is a swing or wave system used to capitalize on breakout patterns.

ASI is commonly used to confirm trend line breakouts on price charts.

• ARMS INDEX (TRIN): Short term breadth indicator showing whether volume is

flowing into advancing or declining issues.

•

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BOOKS:

• Erich A. Helfert, D.B.A., “Financial Analysis: Tools and

Techniques” (2000)

• Sharekhan, “Fundamental Analysis: Which Company?” (October,

2004)

• Share khan “ first step to share market” by Tarun shah CEO of

share khan

• John L. Person, “A Complete Guide to Technical Trading Tactics”,

Ninth Edition (March 26, 2004)

• “VALUELINE” (share khan’s monthly magazine)

• Research methodology -C.R. Kothari, VIKASH PUBLICATION.

• “Financial management” Khan & Jain NEW DELHI, TATA

Mc GROW- HIL PUBLICATION.

WEB-SITES:

• http://www.nseindia.com/

• http://www.sharekhan.com/

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• http://www.moneycontrol.com/

• http://www.indiainfoline.com/

• http://www.icicidirect.com/

• http://economictimes.indiatimes.com/

TV- CHANNELS:

• NDTV-PROFIT

• CNBC-AWAZ