1.1 INTRODUCTION TO STOCK MARKETMost people understand that a stock market / stock exchange is a place where shares are bought and sold, and in essence this is true. Most people understand a stock market is dominated by traders who speculate on the price of shares to make a profit on the difference between the buying and selling price, and in essence this is true. But a stock is so much more in-depth than these two basic propositions would suggest, and requires some deeper analysis to get to the bottom of what's really going on. There are various Methods Of Buying and various Methods Of Selling.A stock market is a primarily a exchange of securities (that is, shares and debentures, which companies use as a means of raising finance) and derivatives (i.e. virtual instruments such as contracts that relate to assets and securities and can be traded).It is virtual in the sense that the market is an intangible concept, rather than a physical place, and as a result of advancing technologies traders can now get involved with little more than a laptop or mobile phone. The market brings together a range of traders of all shapes and sizes - from small, one-man bands trading for their own personal gains through to hedge funds managing billion in assets, and everything in between. There are various Trading Methods In Stock MarketStock markets / stock exchange list the securities of publicly traded companies, identified in the UK by the appendage 'plc'. As distinct from a regular limited company ('Ltd.'), plc's offer their shares to the public at large, who are generally concerned with trading on the price point of a given share rather than its yield. Shares can change hands several times on a daily basis, and at insignificant levels the company is unconcerned with who owns those shares.Shares themselves are intangible assets, entitling the bearer to an annual payment known as a 'dividend', paid out of distributable profits, and often corresponding voting rights in proportion to the size of the share held at the AGM, where major strategic decisions such as electing the board are put to the vote. The bearer of a share at any given point is in effect a part owner of the business to which those shares pertain, and it is this aspect that gives a share any underlying valueThe price of a share at any given stage is dictated by supply and demand within the market, and rises or falls every time a share is bought or sold. This effectively means that shares are priced by the collective will and attitudes of the market, comprised of all the traders and investment houses that actively trade in those securities.The price of a share at any given stage is dictated by supply and demand within the market, and rises or falls every time a share is bought or sold. This effectively means that shares are priced by the collective will and attitudes of the market, comprised of all the traders and investment houses that actively trade in those securities. It is also necessary to follow some golden rule for trading in stock market.Stock markets generally trade over a set duration of hours, usually reflecting the working day in their particular region, allowing the zealous trader to trade different markets round the clock - while affording those companies so listed to raise capital in the form of initial share issues to the market.

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1.2 TECHNICAL ANALYSISThe methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only interested in the price movements in the market. Despite all the fancy and exotic tools it employs, technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor.

1.2.1 The Basis of Technical Analysis

At the turn of the century, the Dow Theory laid the foundations for what was later to become modern technical analysis. Dow Theory was not presented as one complete amalgamation, but rather pieced together from the writings of Charles Dow over several years. Of the many theorems put forth by Dow, three stand out:

Price Discounts Everything Price Movements Are Not Totally Random “What” Is More Important than “Why”

Price Discounts Everything - This theorem is similar to the strong and semi-strong forms of market efficiency. Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, investors, portfolio managers, buy-side analysts, sell-side analysts, market strategist, technical analysts, fundamental analysts and many others. It would be folly to disagree with the price set by such an impressive array of people with impeccable credentials. Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.

Prices Movements are not Totally Random - Most technicians agree that prices trend. However, most technicians also acknowledge that there are periods when prices do not trend. If prices were always random, it would be extremely difficult to make money using technical analysis. In his book, Schwager on Futures: Technical Analysis, Jack Schwager states:

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“One way of viewing it is that markets may witness extended periods of random fluctuation, interspersed with shorter periods of nonrandom behavior. The goal of the chartist is to identify those periods (i.e. major trends).”

A technician believes that it is possible to identify a trend, invest or trade based on the trend and make money as the trend unfolds. Because technical analysis can be applied to many different time frames, it is possible to spot both short-term and long-term trends. The IBM chart illustrates Schwager's view on the nature of the trend. The broad trend is up, but it is also interspersed with trading ranges. In between the trading ranges are smaller up trends within the larger uptrend. The uptrend is renewed when the stock breaks above the trading range. A downtrend begins when the stock breaks below the low of the previous trading range.

"What" is More Important than "Why"- In his book, The Psychology of Technical Analysis, Tony Plummer paraphrases Oscar Wilde by stating, “A technical analyst knows the price of everything, but the value of nothing”. Technicians, as technical analysts are called, are only concerned with two things: What is the current price? What is the history of the price movement?

The price is the end result of the battle between the forces of supply and demand for the company's stock. The objective of analysis is to forecast the direction of the future price. By focusing on price and only price, technical analysis represents a direct approach

1.2.2 General Steps to Technical Evaluation

Many technicians employ a top-down approach that begins with broad-based macro analysis. The larger parts are then broken down to base the final step on a more focused/micro perspective. Such an analysis might involve three steps:

1. Broad market analysis through the major indices such as the S&P 500, Dow Industrials, NASDAQ and NYSE Composite.

2. Sector analysis to identify the strongest and weakest groups within the broader market.

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1.2.5 Strengths of Technical AnalysisFocus on Price- If the objective is to predict the future price, then it makes sense to focus on price movements. Price movements usually precede fundamental developments. By focusing on price action, technicians are automatically focusing on the future. The market is thought of as a leading indicator and generally leads the economy by 6 to 9 months. To keep pace with the market, it makes sense to look directly at the price movements. More often than not, change is a subtle beast. Even though the market is prone to sudden knee-jerk reactions, hints usually develop before significant moves.

Supply, Demand, and Price Action- Many technicians use the open, high, low and close when analyzing the price action of a security. There is information to be gleaned from each bit of information. Separately, these will not be able to tell much. However, taken together, the open, high, low and close reflect forces of supply and demand.

Support/Resistance - Simple chart analysis can help identify support and resistance levels. These are usually marked by periods of congestion (trading range) where the prices move within a confined range for an extended period, telling us that the forces of supply and demand are deadlocked. When prices move out of the trading range, it signals that either supply or demand has started to get the upper hand.  If prices move above the upper band of the trading range, then demand is winning. If prices move below the lower band, then supply is winning.

Pictorial Price History- Even if you are a tried and true fundamental analyst, a price chart can offer plenty of valuable information. The price chart is an easy to read historical account of a security's price movement over a period of time. Charts are much easier to read than a table of numbers. On most stock charts, volume bars are displayed at the bottom. With this historical picture, it is easy to identify the following:

Reactions prior to and after important events. Past and present volatility. Historical volume or trading levels. Relative strength of a stock versus the overall market.

Assist with Entry Point

Technical analysis can help with timing a proper entry point. Some analysts use fundamental analysis to decide what to buy and technical analysis to decide when to buy. It is no secret that timing can play an important role in performance. Technical analysis can help spot demand (support) and supply (resistance) levels as well as breakouts. Simply waiting for a breakout above resistance or buying near support levels can improve returns.

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1.2.6 Weaknesses of Technical AnalysisAnalyst Bias - Just as with fundamental analysis, technical analysis is subjective and our personal biases can be reflected in the analysis. It is important to be aware of these biases when analyzing a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On the other hand, if the analyst is a disgruntled eternal bear, then the analysis will probably have a bearish tilt.

Open to Interpretation - Furthering the bias argument is the fact that technical analysis is open to interpretation. Even though there are standards, many times two technicians will look at the same chart and paint two different scenarios or see different patterns. Both will be able to come up with logical support and resistance levels as well as key breaks to justify their position. While this can be frustrating, it should be pointed out that technical analysis is more like an art than a science, somewhat like economics. Is the cup half-empty or half-full? It is in the eye of the beholder.

Too Late - Technical analysis has been criticized for being too late. By the time the trend is identified, a substantial portion of the move has already taken place. After such a large move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow Theory.

Always Another Level - Even after a new trend has been identified, there is always another “important” level close at hand. Technicians have been accused of sitting on the fence and never taking an unqualified stance. Even if they are bullish, there is always some indicator or some level that will qualify their opinion.

Trader's Remorse - Not all technical signals and patterns work. When you begin to study technical analysis, you will come across an array of patterns and indicators with rules to match. For instance: A sell signal is given when the neckline of a head and shoulders pattern is broken. Even though this is a rule, it is not steadfast and can be subject to other factors such as volume and momentum. In that same vein, what works for one particular stock may not work for another. A 50-day moving average may work great to identify support and resistance for IBM, but a 70-day moving average may work better for Yahoo. Even though many principles of technical analysis are universal, each security will have its own idiosyncrasies.

1.2.7 ConclusionsTechnical analysts consider the market to be 80% psychological and 20% logical. Fundamental analysts consider the market to be 20% psychological and 80% logical. Psychological or logical may be open for debate, but there is no questioning the current price of a security. After all, it is available for all to see and nobody doubts its legitimacy. The price set by the market reflects the sum knowledge of all participants, and we are not dealing with lightweights here. These participants have considered (discounted) everything under the sun and settled on a price to buy or sell. These are the forces of supply and demand at work. By examining price action to determine which force is prevailing, technical analysis focuses directly on the bottom line: What is the price? Where has it been? Where is it going?Even though there are some universal principles and rules that can be applied, it must be remembered that technical analysis is more an art form than a science. As an art form, it is subject to interpretation. However, it is also flexible in its approach and each investor should use only that which suits his or her style. Developing a style takes time, effort and dedication, but the rewards can be significant.

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1.3 TOOLS OF TECHNICAL ANALYSISChartingA price chart plots a series of prices over a particular time period. The timescale is plotted on the horizontal axis (x axis) whilst the price scale is on the vertical axis (y axis). Prices are plotted from left to right on the x axis.Charts are important for defining trends, finding suitable entry and exit points and looking for chart patterns. A technical analyst would use charts as their main tool when looking for trading opportunities.Line, open high low close (OHLC) and candlesticks are the most common charts used by technical analysts.

Line chart - Line charts plot a line between a series of data points dictated by the settings used within the chart. For example, if the settings dictates ‘closing prices’ and ‘daily’ then the chart will automatically draw a line between each daily closing price. Line charts are a great way to get an instant visualization of where current prices are trending.

OHLC chart - The OHLC chart plots four pieces of information: open, high, low and close. By including both the opening price and closing price, a trader can immediately see if the price has closed higher or lower than the open. The opening price is plotted on the left-hand side of a vertical bar, which represents the high and the low of the trading range. The close is plotted on the right-hand side of the vertical bar. OHLC charts are a good instant representation of the typical price range for a specified period.

Candle chart - A candle chart contains the same information as the OHLC. However, candle charts are much more visual and contain a ‘body’, which is the difference between the opening and closing price.When the close is higher than the open price, the body is ‘hollow’. If the close is lower than the open, the body is ‘filled’.The thin lines above the body are referred to as the ‘shadows’ and are simply the high and low prices.

TimeframesCharting is a useful form of looking back and seeing how a market price has performed over a specified time period. You can choose different timeframes to determine a trend over short, intermediate and longer-term time periods, based on your personal trading style and strategy. For example, if you’re looking to trade for a few days, you’re most likely to use either an hourly or daily timeframe, rather than a yearly one. Popular short-term timeframes usually range from five minutes to 60 minutes. If you wanted to hold positions for more than a few hours, you might look at daily charts for an intermediate time frame, while weekly and monthly charts would be used for your longer-term trades. By utilizing different timeframe charts, traders and analysts can look for support and resistance levels where a security could find potential reversals.

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1. 5 RELIABILITY ON TECHICAL ANALYSIS

Stochastic, moving averages, standard deviations – fancy charting terms you may have heard of. But do they really predict price movements? Or are they mathematical mumbo jumbo?

A trader scrutinizes charts.

 More than just translating numbers into graphic form, chart analysis tools help illustrate market psychology – or what traders call sentiment – and can paint a bigger picture of how most market participants may be positioned. Bars and lines on the screen also depict how prices have moved and can indicate future performance based on past movements.

For instance, a deep slide followed by a sharp rise could mean that many traders sold in anticipation of a dip and then quickly bought back. When the dip occurred, eager bidders pounced, creating a spike in demand that propelled the price up. Traders read this “buying on dips” as a sign that prices will rally later due to underlying bullishness, or sentiment.

The key to a chart analysis tool’s effectiveness lies in its popularity—its power of prediction increases when it is easily understood and applied by a broader audience..Even so, moving averages stand a better chance at being accurate than their less popular peers such as the Elliot Wave Theory. Because few use the tool, which involves counting vaguely defined sub-trend waves, the signals appearing on that chart probably won’t have a large impact on market participants’ decisions.

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2.1 CITY UNION BANK

The bank, 'The Kumbakonam Bank Limited' as it was then called was incorporated as a limited company on 31st October, 1904. The first Memorandum of Association was signed by twenty devoted and prominent citizens of Kumbakonam including Sarvashri R. Santhanam Iyer, S.Krishna Iyer, V.Krishnaswami Iyengar and T.S.Raghavachariar. T.S.Raghavachariar was the First Agent of the Bank.   In 1908, he was succeeded by Shri R. Santhanam Iyer who became the Secretary of the bank under the amended Articles of Association which created the office of a Secretary to be in charge of the Bank's Management in the place of the Agent, which post he held till his death in 1926. He was succeeded by Shri. S. Mahalinga Iyer as Secretary who subsequently became the First full-time Managing Director of the bank in tune with the amendment of Articles in 1929.  He held the position of Secretary from 1926 to 1929 and that of Managing Director from 1929 to 1963.

The bank in the beginning preferred the role of a regional bank and slowly but steadily built for itself a place in the Delta District Thanjavur. The first Branch of the Bank was opened at Mannargudi on 24th January 1930.  Thereafter, branches were opened at Nagapattinam, Sannanallur, Ayyampet, Tirukattupalli, Tiruvarur, Manapparai, Mayuram and Porayar within a span of twenty five years.   The Bank was included in the Second Schedule of Reserve Bank of India Act, 1934, on 22nd March 1945.

The Bank celebrated its Golden Jubilee on 14th November, 1954 at Kumbakonam under the Presidentship of Shri.C.R.Srinivasan, Editor, 'Swadesmitran' & Director, Reserve Bank of India. 

In 1957, the bank took over the assets and liabilities of the Common Wealth Bank Limited and in the process annexed to it the five Branches of Common Wealth Bank Limited at Aduthurai, Kodavasal, Valangaiman, Jayankondacholopuram and Ariyalur.

In 1963,  Shri. R. A.Venkataramani Iyer took charge as the Chairman of the Bank which position he held up to 1969.

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2.2 COMPANY PROFILE

City Union Bank Limited is an India-based bank, which offers corporate banking services. The Bank operates in four segments: corporate/wholesale banking, retail banking, treasury and other banking operations. The bank offers personal banking, corporate banking and NRI banking services. The Company operates approximately 950 ATMs. The Bank provides Xpress desks in 69 branches facilitating customers to do transactions without waiting in queues. The Bank’s deposits include demand, savings and term deposits. Its online banking services include online application, utility bill payments, mobile banking, online shopping, booking railway ticket and verified by Visa. City Union Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills which contributed Rs 2092.12 Cr to Interest Income (82.17% of Total Interest Income),Income From Investment which contributed Rs 438.03 Cr to Interest Income (17.20% of Total Interest Income),Interest On Balances with RBI and Other Inter-Bank Funds which contributed Rs 15.78 Cr to Interest Income (0.61% of Total Interest Income), for the year ending 31-Mar-2014. The Bank has reported a Gross Non Performing Assets (Gross NPAs) of Rs 359.44 Cr. (2.01% of total assets) and Net Non Performing Assets (Net NPAs) of Rs 234.33 Cr. (1.32% of total assets). For the quarter ended 30-Jun-2015, the company has reported a Standalone Interest Income of Rs. 572.63 Cr., up 3.89% from last quarter Interest Income of Rs. 551.19 Cr. and up 9.89% from last year same quarter Interest Income of Rs. 521.08 Cr. Company has reported net profit after tax of Rs. 111.56 Cr. in latest quarter..Company has P Chandrasekhar as its auditors. As on 30-Jun-2015, the company has a total of 596,567,800 shares outstanding.

DEPOSITS

DOMESTIC TERM DEPOSITS (Including MSD) from 01.07.2015

 Period  Rate of Interest % p.aGeneral Senior Citizens

Less than Rs.1 Crore7 days to 90 days 7.00% 7.00%

91 days to 180 days 7.50% 7.50%181 days to 270 days 8.00% 8.00%271 days to 364 days 8.25% 8.25%

1 year 8.50% 8.75%Above 1 year & up to 5 years 8.25% 8.50%

Above 5 years & up to 10 years 8.00% 8.25%Tax Saver Schemes (for General category and Senior Citizens) ROI p.a  8.25%

11 http://in.reuters.com/finance/stocks/companyProfile?symbol=CTBK.BOSource : Company Annual Report

Terms :   Senior citizens:    Age- Completed age of 60 years.

 NRE TERM DEPOSITS ( Senior citizen rate not applicable)

From 01-07-2015

PERIOD Rate of Interest % p.a

1 Year 8.50%

Above 1 Year  & up to 3 years 8.25%

Above 3 Years & up to 10 Years 8.00%

 

NRE Savings A/C: From 03-05-2011  rate of interest will be 4.00% P.a

During the year, the Bank earned an operating profit of Rs. 693 crore representing an increase of 19.28% as compared to previous year figure of Rs. 581 crore. The net profit of the Bank for the current year is Rs. 395 crore as compared to Rs. 347 crore for the last year registering a growth of 13.83%. The deposits and advances figure for the current year stood at Rs. 24,075 crore and Rs. 18,089 crore respectively.The total deposits of the Bank for the current year increased by Rs.2,058 crore to Rs. 24,075 crore from Rs. 22,017 crore witnessing a growth of 9.35%. During the year under review, the CASA grew from Rs. 3,917 crore to Rs. 4,631 crore recording a growth of Rs. 714 crore. The cost of deposit of the Bank marginally decreased from 8.37% in the previous year to 8.15% in the current year.

ADVANCEAnnexure - I(With effect from 01.10.2013 )Base Rate -11.00 % p.a BPLR - 16.75% p.aSL NO . Size of the Limit/Loan ROI (% p.a)

1. D.R.I ADVANCES 4.00

2. Advances against Deposits for Agri purposes (both against own and third party deposits)

1% over the rate of interest on deposits

3. Advances against (own) Deposits with a minimum margin of 20% (Other than agri purpose) (For LAD/ODAD a/cs. of less than Rs. 25 lakhs)

2% over the rate of interest on deposits

4. Advances against (own) Deposits with a minimum margin of 20% (Other than Agri purpose) (For LAD/ODAD a/cs.

1% over the rate of interest on deposits

12 http://in.reuters.com/finance/stocks/companyProfile?symbol=CTBK.BOSource : Company Annual Report

of Rs. 25 lakhs & above)The Bank has shown a growth of Rs. 1,865 crore in advances from Rs. 16,224 crore to Rs. 18,089 crore, posting a growth of 11.50%. The yield on advances declined marginally from 13.43% to 13.18% during the year under review.

The Gross and Net NPA for the current year stood at 1.86% and 1.30% respectively as compared to 1.81% and 1.23% in the previous year.

Priority sector advances during the year, has increased by Rs. 902.38 crore from Rs. 7,409.84 crore to Rs. 8,312.22 crore. Your Bank has achieved 49.80% of Adjusted Net Bank Credit (ANBC) against the regulatory prescription of 40% of ANBC on priority sector lending requirements. The total agricultural advances stood at Rs. 3,041.31 crore as at 31st March, 2015 forming 18.22% of ANBC against mandatory level of 18%. The advances to weaker section were Rs. 1,836.22 crore representing 11% of ANBC (mandatory level 10%).

NPA

Kumbakonam-based old generation private sector lender City Union Bank (CUB) has reported a 19% increase in its net profit at R99.08 crore for the fourth quarter as against R83.34 crore in the same quarter last fiscal. The bank has clocked a total income of R793.65 crore as against R720. 64 crore, registering growth of 10.13%.Addressing a press conference in Chennai on Saturday, N Kamakodi, MD and CEO of CUB, said improved efficiency in all segments has helped the bank to post a good performance.

The non-interest income (NIM) was higher by 24% to R105.47 crore as against R85.22 crore. While bank’s net interest income grew by 11% to R204.67 crore from R184.66 crore. For the quarter, the NIM stood at 3.40%.For the whole year, the bank has posted an increase of 14% in  net profit to R395.02 crore from R347.07 crore. The non-interest income increased by 44% to R404.10 crore from R279.86 crore. The bank’s net interest income was higher by 6% at R807.37 crore from R759. 39 crore. The NIM for the year stood at 3.44%.

“We had 11%  growth in the advances figure for the year as a whole. For the financial year 2014, we had about R456 crore of NPA addition, which got reduced to R425 crore for the current financial year,” he said. During the last financial year, the bank had only 7% growth in advances, this financial year it is about 11% growth.. “Whatever incremental growth rate we have achieved is the combined effort of all the performances across all different areas,” he said. Kamakodi said that gross NPA level at the end of FY 2015 stood at 1.86% and net NPA at 1.30%. The provision coverage ratio stood at 58%.

The bank has been maintaining capital adequacy ratio well above the minimum levels prescribed by RBI. As on March 31, 2015, the total CRAR of the bank stood at 16.52% of which tier I CRAR was healthier at 16.03%.

13 http://in.reuters.com/finance/stocks/companyProfile?symbol=CTBK.BOSource : Company Annual Report

2.3 COMPANY FINANCIALS

PARTICULARS Mar-15 Mar-14 Mar-13 Mar-12 Mar-11

Net Worth 2,695.53 2,024.93 1,640.66 1,243.10 1,006.62

Total Debt 24,243.78 22,321.87 20,781.50 16,689.46 13,100.44

Total Liabilities 27,871.14 24,993.82 22,977.08 18,350.66 14,591.52

Advances 17,965.50 16,096.84 15,246.06 12,137.46 9,255.46

Investments 6,365.27 5,953.56 5,266.80 4,586.19 3,616.23

Net Block 210.41 182.95 141.28 97.73 68.53

Total Assets 27,871.13 24,993.82 22,977.09 18,350.65 14,591.52

Total Income 3,113.85 2,847.13 2,462.39 1,903.90 1,375.81

Total Expenses 2,718.83 2,500.06 2,140.37 1,623.65 1,160.76

Net Profit 395.02 347.07 322.02 280.25 215.05

EPS (Rs) 6.62 6.39 7.85 6.87 5.31

Net PBT 395.02 347.07 322.02 280.25 215.05

Book Value 45.18 37.31 40.02 30.45 24.85

14 http://www.moneycontrol.com/financials/cityunionbank/balance-sheet/CUB#CUBSource : Company Annual Report

2.4 RECENT MARKET SCENARIO

STOCK PRICE

2.5 BOARD OF DIRECTORSShri. N. Kantha Kumar, retired from Directorship on the Board of the Bank on 29th September, 2014, on completion of his tenure. The Board places on record its warm appreciation for the valuable services rendered by Shri. N. Kantha Kumar during his tenure as Director of the Bank.

In accordance with the provision of Section 161 of the Companies Act, 2013, Smt. CA. Abarna Bhaskar was co-opted as an Additional Director by the Board of Directors at its meeting held on 25th October, 2014. The Bank has received a notice in writing from a member pursuant to Section 160 of the Companies Act, 2013, signifying his intention to propose the candidature of Smt. CA. Abarna Bhaskar as Director.

15 http://www.moneycontrol.com/india/stockpricequote/banks-private-sector/cityunionbank/CUB

2.6 SWOT ANALYSIS

The SWOT analysis for City Union Bank can provide a competitive advantage.

Strengths

-skilled workforce-monetary assistance provided-high profitability and revenue-high growth rate-reduced labor costs

Weaknesses

-unknown-competitive market--future profitability-high loan rates are possible

Opportunities

-global markets

Threats

-rising cost of raw materials-financial capacity-growing competition and lower profitability-external business risks-government regulations

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3.1 DCB BANK ( FORMERLY DEVELOPMENT CREDIT BANK LTD. ) The Ismailia Co-operative Bank Limited and the Masalawala Co-operative Bank Limited came into being in the 1930s. Eventually, Diamond Jubilee Co-operative Bank Limited merged with Ismailia Co-operative Bank Limited. Subsequently in 1981, Ismailia Co-operative Bank Limited was amalgamated with Masalawalla Co-operative Bank Limited to form the Development Co-operative Bank Limited. Citi Cooperative Bank Limited later merged with Development Co-operative Bank Limited, which thereafter was converted into a joint stock banking company, the Development Credit Bank Limited on May 31, 1995.

In the 1990s there were about 1400 co-operative banks in India and a few of these co-operative banks were given permission by RBI to convert into scheduled commercial banks. Development Co-operative Bank was one of 11 such banks that converted themselves into scheduled commercial banks. Vide their resolution dated January 28, 1995, the shareholders of Development Co-operative Bank resolved to register as a limited company within the meaning of Sections 566 of the Companies Act. Development Credit Bank Limited was granted the certificate of incorporation under the Companies Act and the license to carry on banking business under Section 22 of the Banking Regulation Act, 1949 on May 31, 1995. At the time of its conversion to a limited company under the Companies Act, the Bank had a capital of Rs.73.34 million and net worth of over Rs.1000 million.

Since its conversion into a scheduled commercial bank, the Bank has over the years expanded its operations beyond the states of Maharashtra, Gujarat and Andhra Pradesh into the states of, Goa, Haryana, Karnataka, Tamil Nadu, Union Territories of Daman and Diu & Dadra & Nagar Haveli and the National Capital Territory of Delhi. Today, it has a network of 67 branches, 5 extension counters and 101 ATMs across the country.

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3.2 COMPANY PROFILE

DCB Bank Limited, formerly Development Credit Bank Limited, is a scheduled commercial bank regulated by the Reserve Bank of India. The Bank’s business segments are retail, small and medium-sized enterprises (SMEs), mid-corporate, agriculture, commodities, government, public sector, Indian banks, co-operative banks and non-banking finance companies (NBFC). The retail banking segment offers deposit products, loans, cards, wealth management, payments, privilege banking, Internet banking and mobile banking. SME, Corporate Banking, NBFCs, Co-operative Banks offers current account, trade current account, working capital, term loans, bills collection, foreign exchange and Internet banking, among others. Treasury includes statutory reserves management, liquidity management and trading in government securities, among others.

Development Credit Bank is one of the emerging private sector banks in India. Their network spread over 10 states and 2 union territories namely of Maharashtra, Gujarat, Andhra Pradesh, Karnataka, New Delhi, Rajasthan, Goa, Tamil Nadu, Haryana, West Bengal, Daman and Diu, and Dadra and Nagar Haveli. The Bank operates in four business segments, namely treasury operations, corporate, retail and other banking operations. Development Credit Bank was started as a Credit Society in the 1930s.

Eventually, Diamond Jubilee Co-operative Bank Ltd merged with Ismailia Co-operative Bank Ltd. In the year 1981, Ismailia Co-operative Bank Ltd was amalgamated with Masalawalla Co-operative Bank Ltd to form the Development Co-operative Bank Ltd. Later, Citi Cooperative Bank Ltd merged with Development Co-operative Bank Ltd. In the year 1995, Development Co-operative Bank Ltd was converted into Development Credit Bank Ltd. During the year 1995-96, the Bank opened new branches at Vapi, Sidhpur, Ahmedabad and Bangalore.

During the year next year, they opened the new branches at Mira Road and Rajkot. A total of 11 news new branches were opened during the two financial years of 1999-2001. During the year 2001-03, the Bank opened a new branch at Jharsa in Haryana. During the year 2002-03, the Bank launched mobile banking offering

both push and pull options. During the year 2004-05, they launched visa funds transfer and refill offering mobile recharge through ATMs to even non-customers.

Also, they launched 3 new branches during the year.

DCB Bank Ltd is a private sector scheduled commercial bank. The Company’s segments are Treasury Operations, Corporate Banking, Retail Banking and Other Banking Operations.

19 http://in.reuters.com/finance/stocks/companyProfile?symbol=DCBA.BOSource : Company Annual Report

DEPOSITS

DCB Bank Limited (Formerly Development Credit Bank Ltd.) declared FY 2015 Net Profit of Rs. 191 Cr.Net Profit for Q4 FY 2015 stood at Rs. 63 Cr. against a Net Profit of Rs. 39 Cr. in Q4FY2014, increase of 61%.Tax expense for FY 2015 was Rs. 27 Cr. which was partly offset by creation of netDeferred Tax Asset (DTA) of Rs.10 Cr.Excluding impact of the DTA, Net Profit for Q4 FY 2015 was Rs. 54 Cr. which is an increase of 36% over Net Profit for Q4 FY 2014.As on March 31, 2015 the Bank’s Deposits grew by 22% at Rs. 12,609 Cr. while Net Advances grew by 29% and stood at Rs. 10,465 Cr. as compared to March 31, 2014.Capital Adequacy Ratio was at 14.95% under Basel III as on March 31, 2015.

ADVANCES

DCB Bank declared Q4 FY 2015 Net Profit of Rs. 63 Cr. against Net Profit of Rs. 39 Cr. in Q4 FY2014, an increase of 61%.

Currently DCB Bank has 154 branches. As on March 31, 2015 the Bank had increased the branch network to 154 from 103.

20 http://in.reuters.com/finance/stocks/companyProfile?symbol=DCBA.BOSource : Company Annual Report

Excluding impact of the DTA, Net Profit for Q4 FY 2015 was Rs. 54 Cr. as against Profit Before tax of Rs. 39 Cr in Q4 FY2014 which is an increase of 36% over Net Profit for Q4 FY 2014.

As on March 31, 2015, the Balance Sheet of DCB Bank was at Rs. 16,132 Cr. as against Rs.12,923 Cr. as on March 31, 2014, a growth rate of 25%.

As on March 31, 2015, DCB Bank’s Deposits stood at Rs.12,609 Cr. and Net Advances reached Rs.10,465 Cr. In comparison to March 31, 2014, Deposits have grown by 22% and Net Advances by 29%.

DCB Bank's Gross NPA stood at 1.76% and Net NPA was at 1.01% as on March 31, 2015.

Crisil Ratings have assigned "CRISIL A1+" (pronounced as "CRISIL A one plus") rating for DCB Bank's Short Term Fixed Deposit Programme (with a contracted maturity of upto 1 year)

NPA

Private sector lender DCB Bank  's first quarter (April-June) profit after tax increased 5 percent year-on-year to Rs 46.9 crore, aided by lower provisions and higher other income.

However, profit was restricted by slow growth in net interest income. Net interest income (the difference between interest earned and interest expended) rose 1 percent to Rs 140.38 crore in the quarter ended June 2015 from Rs 138.98 crore in the year-ago period. Other income (non interest income) jumped 83 percent to Rs 63.12 crore from Rs 34.49 crore during the same period. Profit was in line but net interest income came in lower than expectations.

A CNBC-TV18 poll has estimated profit at Rs 46.40 crore and net interest income at Rs 147.4 crore for the quarter. Provisions for bad loans declined 21.4 percent year-on-year (up 26 percent sequentially) to Rs 18.03 crore during April-June quarter. Tax expenses rose by 81.4 percent to Rs 24.76 crore and operating expenses jumped 23.4 percent to Rs 113.84 crore compared to same quarter last year. Asset quality of the bank worsened as gross nonperforming assets (NPA) climbed to 1.96 percent in June quarter from 1.76 percent in March quarter and 1.78 percent in the year-ago period.

Net NPA also increased to 1.22 percent in Q1FY16 from 1.01 percent in Q4FY15 and 0.97 percent in Q1FY15. The scrip of DCB Bank closed at Rs 141.50, down Rs 5.65, or 3.84 percent on the Bombay Stock Exchange.

The mid-sized bank's gross non-performing assets (NPAs) came down to 1.69 percent in the fourth quarter ended March 31 from 3.18 percent in the year-ago period. Net NPAs rose to 0.91 percent in Q4 from 0.75 percent due to slippage in a small and medium enterprise account, he said. The bank recast a corporate loan worth Rs 35 crore in the January-March period and for FY14, its total restructuring was Rs. 70 crore. With improved asset quality, the lender's net interest margin (NIM) rose to 3.59 percent in Q4 from 3.52 percent. For FY14, NIM improved to 3.56 percent from 3.34 percent.

21 http://in.reuters.com/finance/stocks/companyProfile?symbol=DCBA.BOSource : Company Annual Report

3.3 COMPANY FINANCIALS

PARTICULARS Mar-15 Mar-14 Mar-13 Mar-12 Mar-11

Net Worth 1,537.16 1,101.35 949.28 806.4 565.33

Total Debt 13,772.93 11,185.32 9,889.46 7,459.01 6,470.89

Total Liabilities 16,080.90 12,870.53 11,225.05 8,621.89 7,356.72

Advances 10,465.06 8,140.19 6,586.09 5,284.42 4,281.69

Investments 4,470.56 3,634.22 3,358.66 2,517.76 2,295.04

Net Block 185.27 186.04 182.31 70.92 71.35

Total Assets 16,080.89 12,870.53 11,225.06 8,621.88 7,356.72

Total Income 1,588.14 1,266.92 1,033.12 817.34 648.36

Total Expenses 1,396.96 1,115.56 931.06 762.27 626.93         

Net Profit 191.18 151.36 102.06 55.08 21.43

EPS (Rs) 6.78 6.05 4.08 2.29 1.07

Net PBT 191.18 151.36 102.06 55.08 21.43

Book Value 54.39 43.88 37.83 33.39 28.1

22 http://www.moneycontrol.com/financials/dcbbank/balance-sheet/DCB01#DCB01Source : Company Annual Report

3.4 RECENT MARKET SCENARIO

STOCK PRICES

3.5 BOARD OF DIRECTORS

Name Designation Nasser Munjee ChairmanAltaf Jiwani DirectorImran Contractor DirectorKeki Elavia DirectorC Narasimhan DirectorShaffiq Dharamshi DirectorSuhail Nathani DirectorMurali M Natrajan Managing Director & CEOAmin Manekia DirectorJamal Pradhan DirectorNalin Shah DirectorRupa Devi Singh DirectorS Sridhar Director

23 http://www.moneycontrol.com/india/stockpricequote/banks-private-sector/dcbbank/DCB01

3.6 SWOT ANALYSIS

Description: The company faces a growth potential. The cost structure is dynamically.

Strengths

-high growth rate-skilled workforce-high profitability and revenue Weaknesses

-brand portfolio-cost structure-future profitability-small business units-high loan rates are possible-future debt rating Opportunities

-income level is at a constant increase-growing economy-new products and services-global markets-venture capital Threats

-increasing costs-growing competition and lower profitability-financial capacity-price changes-technological problems

24 http://www.swotanalysis24.com/swot-d/31047-swot-analysis-development-credit-bank.html

4.1 ANALYSIS METHODOLOGY25

COMPANY NAME - FINVISION CAPITAL MARKETS PVT. LTD

SOFTWARE USED - EQUIS METASTOCK 11

PERIODICITY - WEEKLY

TYPE OF CHART - LINE CHARTS

Y AXIS SCALE - SEMI LOG SCALE

TIME SPAN - 1 YEAR

STOCKS ANALYZED - CITY UNION BANK & DCB BANK

TOOLS USED :-

DOW THEORY TRENDLINE EXPONENTIAL MOVING AVERAGE BOLLINGER BANDS FIBONACCI RETRACEMENT MOVING AVERAGE CONVERGENCE DIVERGENCE ON BALANCE VOLUME

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4.2 FINVISION CAPITAL MARKETS PVT. LTD

Finvision Capital Markets Private Limited is a Private Company incorporated on 09 October 2013. It is classified as Indian Non-Government Company and is registered at Registrar of Companies, Kolkata. Its authorized share capital is Rs. 3,500,000 and its paid up capital is Rs. 3,140,000.It is involved in Other financial intermediation.

Finvision Capital Markets Private Limited's Annual General Meeting (AGM) was last held on 30 September 2014 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet was last filed on 31 March 2014.

Directors of Finvision Capital Markets Private Limited are Jitesh Agarwal and Roshni Agarwal.

Finvision Capital Markets Private Limited's Corporate Identification Number is (CIN) U65910WB2013PTC197915 and its registration number is 197915.Its Email address is finvision2013@gmail.com and its registered address is 8/1 PRINCEP STREET 3RD FLOOR, KOLKATA - 700072, West Bengal INDIA.

Current status of Finvision Capital Markets Private Limited is - Active. 

SERVICES PROVIDED

EQUITY TRADINGCURRENCY TRADINGMUTUAL FUNDSIPO'SSTRATEGY TRADINGDERIVATIVES TRADINGCOMMODITY TRADINGINSTITUTIONSDEPOSITORY

27 https://www.zaubacorp.com/company/FINVISION-CAPITAL-MARKETS-PRIVATE-LIMITED/U65910WB2013PTC197915

4.3 SOFTWARE USED EQUIS METASTOCK 11

MetaStock has been providing award-winning analysis tools for the self-directed trader for almost 30 years. Our line of professional-level trading software and market data are designed for active traders of all levels. We have options for day traders, swing traders and EOD traders to trade stocks, options, futures, FOREX and more.

4.4 OVERVIEW LINE CHARTS

A line chart or line graph is a type of chart which displays information as a series of data points called 'markers' connected by straight line segments. It is a basic type of chart common in many fields. It is similar to a scatter plot except that the measurement points are ordered (typically by their x-axis value) and joined with straight line segments. A line chart is often used to visualize a trend in data over intervals of time – a time series – thus the line is often drawn chronologically. In these cases they are known as run charts.

Charts often include an overlaid mathematical function depicting the best-fit trend of the scattered data.

This layer is referred to as a best-fit layer and the graph containing this layer is often referred to as a line

graph.

It is simple to construct a "best-fit" layer consisting of a set of line segments connecting adjacent data

points; however, such a "best-fit" is usually not an ideal representation of the trend of the underlying

scatter data for the following reasons:

1. It is highly improbable that the discontinuities in the slope of the best-fit would correspond

exactly with the positions of the measurement values.

2. It is highly unlikely that the experimental error in the data is negligible, yet the curve falls exactly

through each of the data points.

In either case, the best-fit layer can reveal trends in the data. Further, measurements such as

the gradient or the area under the curve can be made visually, leading to more conclusions or results from

the data.

28 http://thismatter.com/money/technical-analysis/chart-types.htm

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5.1 TOOLS USED TO ANALYSE STOCKS OFCITY UNION BANK & DCB BANK

The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation.

Trendline is a line indicating the general course or tendency of something, e.g. ageographical feature or a set of points on a graph.

Exponential Moving Average is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. The exponential moving average is also known as "exponentially weighted moving average".

Bollinger Bands are a volatility indicator similar to the Keltner channel. Bollinger Bands consist of: an N-period moving average (MA) an upperband at K times an N-period standard deviation above the moving average (MA + Kσ)

The Fibonacci retracement is the potential retracement of a financial asset's original move in price. Fibonacci retracements use horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before it continues in the original direction.

MACD, short for moving average convergence/divergence, is a trading indicator used in technical analysis of stock prices. It is supposed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock's price.

The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.

Three lines compose the Directional Movement Indicators (DMI): ADX, DI+ and DI-. The Average Directional Index (ADX) line shows the strength of the trend. The higher the ADX value, the stronger the trend. The Plus Direction Indicator (DI+) and Minus Direction Indicator (DI-) show the current price direction. When the DI+ is above DI-, current price momentum is up. When the DI- is above DI+, current price momentum is down.

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5.2 CITY UNION BANK ANALYSIS

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5.2 DCB BANK ANALYSIS

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6.1 KEY NOTES AND FINDINGS45

The stocks used for analysis ( City Union Bank and DCB bank ) on the basis of technical tools using line charts give a certain factor of findings. Most of the signals found indicate towards the investor earning profit through the shares.

Both the shares/stocks follow a gradual upward trend and stay dormant on a bullish market than that of a bearish market. Stock of City Union Bank bends towards a much more supporting indication via technical tools.

Tools like Dow Theory , Bollinger bands , Volume show that the stocks of DCB bank are at a much more bearish trend than that of City Union Bank . Although both gradually show upward trend aiming towards a Bullish market.

Tools like Fibonacci retracement, On Balance Volume(OBV ) , MACD and Price Pattern confirm that although the present market is bearish and the current trend signals are bearish , it would trigger a bullish signal trend . City Union Bank stocks are more prone to faster bullish market than the stocks of DCB.

Almost all the indicators and tools agree on more profitability from City Union Bank than from DCB bank, as most of them show the changing trend towards a bullish market and investors would love to Hold and Buy at that point of time .

Overall it's a buy-buy situation for investors of City Union Bank in the current market scenario although an element of risk is always present in reality.

For the investors of DCB bank although it's not a instant buy signal for them , but the changing trend towards a bullish market (as per signals) is more than the expected for the investors to reach a buy- buy situation.

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6.2 RECCOMENDATION

CITY UNION BANK

Amid the situation of rising NPAs in the banking sector, CUB has managed to reduce its gross NPA by 20 basis points to 1.01 per cent from 1.21 per cent in 2011. Net NPA stands at 0.44 per cent which is amongst the best compared to other banks. CUB has managed to achieve this with its strict portfolio monitoring, aggressive recovery of bad loans and its prediction of the probable slippages in its loan book.

Along with this the technical tools and indicators support the fact of investing on City Union Bank at the present market scenario.

Currently the shares is trading at 1.79 times the book value on the bourses which is a 14 per cent premium to its five year average of 1.57. Being a private sector bank the valuations are not too high. CUB has given dividend of `1 per share which translates to a dividend yield of 1.89 at its current price. Holding the long-term perspective; CUB is a good buy for the financial allocation of the investor.

Traders should buy and hold the shares as the market is bullish and it is and uptrend.

DCB BANK

It expects “core revenues to clock a healthy CAGR of 26% over FY14-17, driven by strong loan growth and largely stable margins”.

"Visibility of earnings growth is strong on the back of i) steady NII growth & ii) stringent lending mechanism to maintain stable asset quality and low provisioning. It is adequately capitalized with tier 1 ratio of 14.2%.

Although the market is presently in a bearish state , all indicators show an upcoming bull market filled with profit opportunities for investors.

Traders should wait and investors should invest on DCB bank as the bearish market will soon take a bullish turn and an upward trend is to follow next

6.3 CONCLUSION47

While at summer internship project for the last two months the most important thing that I clearly noticed is that Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity. It is based on three assumptions:

1) the market discounts everything,

2) price moves in trends and

3) history tends to repeat itself.

Technicians believe that all the information they need about a stock can be found in its charts.

Technical traders take a short-term approach to analyzing the market.

One of the most important concepts in technical analysis is that of a trend, which is the general direction that a security is headed. There are three types of trends: uptrends, downtrends and sideways/horizontal trends.

A chart pattern is a distinct formation on a stock chart that creates a trading signal, or a sign of future price movements. There are two types :  

reversal 

 continuation.

With regards, the chart analysis of the stocks helped me improve my overall understanding of the stock market and has helped me take the next step towards analyzing stocks with greater confidence in the future.

6.4 WEBLIOGRAPHY/BIBLIOGRAPHY48

WEB: www.wikipedia.com www.investopedia.com www.moneycontrol.com www.thismatter.com www.metastock.com www.cityunionbank.com www.dcbbank.com

http://in.reuters.com http://economictimes.indiatimes.com http://fi-advisor.com http://blogs.wsj.com

BOOKS: Technical Analysis and the Active Trader Technical Analysis Trading Technical Analysis of the Financial Markets

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