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Transcript of 2012 Sc Project Edited
INTRODUCTION
GENERAL INTRODUCTION ABOUT THE SECTOR
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1.1 a. DEFINITION OF SECURITIES:
Securities as per the securities contracts Regulation Act (SCRA) 1956, includes
instruments such as shares, bonds, scripts, stocks or other marketable securities of similar
nature in or of any incorporate company or body corporate, government securities,
derivatives of securities units of collective investment scheme, interest and rights in
securities, security receipt or any other instruments so declared by the central
government.
FUNCTIONS OF SECURITIES MARKET:
It is a place where buyers and sellers of securities can enter into transactions to purchase
and sell shares, bonds, debentures etc. Further, it performs an important role of enabling
corporate, entrepreneurs to raise resources for their companies and business ventures
through public issues. Transfer of resources from those having idle resources (investors)
to others who have a need for them (corporate) is most efficiently achieved through the
securities market. Stated formally, securities markets provide channels for reallocation
savings to investments and entrepreneurship. Savings are linked to investments by a
variety of intermediaries, through a range of financial products, called ’Securities’.
ONE CAN INVEST IN:
Shares
Government securities
Derivative products
Units of Mutual funds etc. are some of the securities investors in the
securities market can invest in.
SECURITIES MARKETS NEED REGULATORS:
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The absence of conditions of perfect competition in the securities market makes the role
of the regulator extremely important. The regulator ensures that the market participants
behave in a desired manner so that securities market continues to be a major source of
finance for corporate and government and the interest of investors are protected.
REGULATION OF SECURITIES MARKET:
The responsibility for regulating the securities market is shared by
Department of Economic Affairs (DEA)
Department of Company Affairs (DCA)
Reserve Bank of India (RBI)
Securities and Exchange Board of India (SEBI)
SEBI AND ITS ROLE:
The Securities and Exchange Board of India (SEBI) is the regulatory authority in India
established under section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for
establishment with statutory powers for
a) Protecting the interests of investors in securities
b) Promoting the development of the securities market and
c) Regulating the securities market.
Its regulatory jurisdiction extends over corporate in the issuance of capital and
transfer of securities, in addition to all intermediaries and persons associated with
securities market. SEBI has been obligated to perform the aforesaid functions by such
measures as it thinks fit. In particular, it has powers for:
Regulating the business in stock exchanges and any other
securities market
Registering and regulating the working of stock brokers, sub-
brokers etc
Promoting and regulating self-regulatory organizations
Prohibiting fraudulent and unfair trade practices
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Calling for information from, undertaking inspection, conducting
Inquiries and audits of the stock exchanges, intermediaries, self –
Regulatory organizations, mutual funds and other persons
associated with the securities market.
PARTICIPANTS OF SECURITIES MARKET:
The securities market essentially has three categories of participants, namely, the issuers
of securities, investors in securities and the intermediaries, such as merchant bankers,
brokers etc.
SEGMENTS OF SECURITIES MARKET:
The securities market has two interdependent segments:
Primary (new issues) market and Secondary market.
The Primary market provides the channel for sale of new securities while
Secondary market deals in securities previously issued.
1.1 b. PRIMARY MARKET:
The primary market provides the channel for sale of new securities. Primary
market provides opportunity to issuers of securities; Government as well as corporate, to
raise resources to meet their requirements of investment and/or discharge some
obligation. They may issue the securities at face value, or at a discount/premium and
these securities may take a variety of forms such as equity, debt etc. They may issue the
securities in domestic market and/or international market.
FACE VALUE OF SHARES/DEBENTURES:
The nominal or stated amount (in Rs.) assigned to a security by the issuer .For
shares, it is the original cost of the stock shown on the certificate; for bonds, it is the
amount paid to the holder at maturity. Also, known as par value or simply par.
For an equity share, the face value is usually a very small amount (Rs. 5, Rs. 10)
and does not have much bearing on the price of the share, which may quote higher in the
market, at Rs. 100 or Rs. 1000 or any other price.
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For a debt security, face value is the amount repaid to the investor when the bond
matures (usually, Government securities and corporate bonds have a face value of Rs.
100).The price at which the Security trades depend on the fluctuations in the interest rates
in the economy.
PURPOSE OF ISSUING SHARES TO PUBLIC:
Most companies are usually started privately by their promoter(s). However, the
promoters’ capital and the borrowings from banks and financial institutions may not be
sufficient for setting up or running the business over a long term. So companies invite the
public to contribute towards the equity and issue shares to individual investors. The way
to invite share capital from the public is through a ‘Public Issue’. Simply stated, a public
issue is an offer to the public to subscribe to the share capital of a company.
TYPES OF ISSSUES:
Primarily, issues can be classified as a Public, Rights or Preferential issues (also
known as private placements). While public and rights issues involve a detailed
procedure, private placements or preferential issues are relatively simpler. The
classification of issues is illustrated below:
Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of
securities or an offer for sale of its existing securities or both for the first time to the
public. This paves way for listing and trading of the issuer’s securities.
A follow on public offering (Further Issue) is when an already listed company makes
either a fresh issue of securities to the public or an offer for sale to the public, through an
offer document.
Rights Issue is when a listed company which proposes to issue fresh securities to its
existing shareholders as on a record date. The rights are normally offered in a particular
ratio to the number of securities held prior to the issue. This route is best suited for
companies who would like to raise capital without diluting stake of its existing
shareholders.
A Preferential issue is an issue of shares or of convertible securities by listed companies
to a select group of persons under Section 81 of the Companies Act, 1956 which is
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neither a rights issue nor a public issue. This is a faster way for a company to raise equity
capital. The issuer company has to comply with the Companies Act and the requirements
contained in 19th Chapter pertaining to preferential allotment in SEBI guidelines which
include pricing, disclosures in notice etc.
ISSUE PRICE:
The price at which a company's shares are offered initially in the primary market
is called as the Issue price. When they begin to be traded, the market price may be above
or below the issue price.
MARKET CAPITALIZATION:
The market value of a quoted company, which is calculated by multiplying
Its current share price (market price) by the number of shares in issue is called as market
capitalization. E.g. Company A has 120 million shares in issue. The current market price
is Rs. 100. The market capitalization of company A is Rs. 12000 million.
DIFFERENCE BETWEEN OFFER OF SHARES THROUGH BOOK BUILDING
AND OFFER OF SHARED THROUGH NORMAL PUBLIC SERVICE:
Price at which securities will be allotted is not known in case of offer of shares
through Book Building while in case of offer of shares through normal public issue, price
is known in advance to investor. Under Book Building, investors bid for shares at the
floor price or above and after the closure of the book building process the price is
determined for allotment of shares. In case of Book Building, the demand can be known
everyday as the book is being built. But in case of the public issue the demand is known
at the close of the issue.
CUT-OFF PRICE:
In a Book building issue, the issuer is required to indicate either the price band or
a floor price in the prospectus. The actual discovered issue price can be any price in the
price band or any price above the floor price. This issue price is called “Cut-Off Price”.
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The issuer and lead manager decides this after considering the book and the investors’
appetite for the stock.
WHO DECIDES PRICE BAND?
It may be understood that the regulatory mechanism does not play a role in setting
the price for issues. It is up to the company to decide on the price or the price band, in
consultation with Merchant Bankers.
WHAT IS THE MINIMUM NUMBER OF DAYS FOR WHICH THE BID
SHOULD REMAIN OPEN DURING BOOK BUILDING?
The Book should remain open for a minimum of 3 days.
CAN OPEN OUTCRY SYSTEM BE USED FOR BOOK BUILDING?
No. As per SEBI, only electronically linked transparent facility is allowed to
Be used in case of book building.
HOW DOES ONE KNOW IF SHARES ARE ALLOTED IN AN IPO/OFFER FOR
SALE? WHAT IS THE TIME FRAME FOR GETTING REFUND IF SHARES
NOT ALLOTED?
As per SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
the Basis of Allotment should be completed with 8 days from the issue close date. As
soon as the basis of allotment is completed, within 2 working days the details of credit to
demat account / allotment advice and dispatch of refund order needs to be completed. So
an investor should know in about 11 days time from the closure of issue, whether shares
are allotted to him or not.
HOW LONG DOES IT TAKES TO GET SHARES LISTED AFTER ISSUE?
It takes 12 working days after the closure of the book built issue.
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SEBI’S ROLE IN AN ISSUE:
Any company making a public issue or a listed company making a rights issue of
value of more than Rs 50 lakh is required to file a draft offer document with SEBI for its
observations. The company can proceed further on the issue only after getting
observations from SEBI. The validity period of SEBI’s observation letter is three months
only i.e. the company has to open its issue within three months period.
CAN COMPANIES IN INDIA RAISE FOREIGN CURRENCY RESOURCES?
Yes. Indian companies are permitted to raise foreign currency resources through
two main sources: a) issue of foreign currency convertible bonds more commonly known
as ‘Euro’ issues and b) issue of ordinary shares through depository receipts namely
‘Global Depository Receipts (GDRs)/American Depository Receipts (ADRs)’ to foreign
investors i.e. to the institutional investors or individual investors.
AMERICAN DEPOSITARY RECEIPT:
An American Depositary Receipt ("ADR") is a physical certificate evidencing
ownership of American Depositary Shares ("ADSs"). The term is often used to refer to
the ADSs themselves.
ADS:
An American Depositary Share ("ADS") is a U.S. dollar denominated form of
equity ownership in a non-U.S. company. It represents the foreign shares of the company
held on deposit by a custodian bank in the company's home country and carries the
corporate and economic rights of the foreign shares, subject to the terms specified on the
ADR certificate. One or several ADSs can be represented by a physical ADR certificate.
The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors
with a convenient way to invest in overseas securities and to trade non-U.S. securities in
the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are
traded in the same manner as shares in U.S. companies, on the New York Stock
Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ
and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated
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securities and pay dividends in U.S. dollars, they do not eliminate the currency risk
associated with an investment in a non-U.S. company.
GLOBAL DEPOSITARY RECEIPT:
Global Depository Receipts (GDRs) may be defined as a global finance vehicle
that allows an issuer to raise capital simultaneously in two or markets through a global
offering. GDRs may be used in public or private markets inside or outside US. GDR, a
negotiable certificate usually represents company’s traded equity/debt. The underlying
shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares.
1.1 c. SECONDARY MARKET:
Secondary market refers to a market where securities are traded after being
initially offered to the public in the primary market and/or listed on the Stock Exchange.
Majority of the trading is done in the secondary market. Secondary market comprises of
equity markets and the debt markets.
ROLE OF SECONDARY MARKET:
For the general investor, the secondary market provides an efficient platform for
trading of his securities. For the management of the company, Secondary equity markets
serve as a monitoring and control conduit—by facilitating value-enhancing control
activities, enabling implementation of incentive-based management contracts, and
aggregating information (via price discovery) that guides management decisions.
DIFFERENCE BETWEEN PRIMARY AND SECONDARY MARKET:
In the primary market, securities are offered to public for subscription for the
purpose of raising capital or fund. Secondary market is an equity trading venue in which
already existing/pre-issued securities are traded among investors. Secondary market
could be either auction or dealer market. While stock exchange is the part of an auction
market, Over-the-Counter (OTC) is a part of the dealer market.
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ROLE OF STOCK EXCHANGE IN BUYING AND SELLING SHARES:
The stock exchanges in India, under the overall supervision of the regulatory
authority, the Securities and Exchange Board of India (SEBI), provide a trading platform,
where buyers and sellers can meet to transact in securities. The trading platform provided
by NSE is an electronic one and there is no need for buyers and sellers to meet at a
physical location to trade. They can trade through the computerized trading screens
available with the NSE trading members or the internet based trading facility provided by
the trading members of NSE.
DEMUTUALIZATON OF STOCK EXCHANGE:
Demutualization refers to the legal structure of an exchange whereby the
ownership, the management and the trading rights at the exchange are segregated from
one another.
SCREEN BASED TRADING:
The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of trades.
This was time consuming and inefficient. This imposed limits on trading volumes and
efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a
nationwide, on-line, fully automated screen based trading system (SBTS) where a
member can punch into the computer the quantities of a security and the price at which he
would like to transact, and the transaction is executed as soon as a matching sale or buy
order from a counter party is found.
WHAT IS NEAT?
NSE is the first exchange in the world to use satellite communication technology
for trading. Its trading system, called National Exchange for Automated Trading (NEAT),
is a state of-the-art client server based application. At the server end all trading
information is stored in an in memory database to achieve minimum response time and
maximum system availability for users. It has uptime record of 99.7%. For all trades
entered into NEAT system, there is uniform response time of less than one second.
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HOW TO PLACE ORDERS WITH THE BROKER?
You may go to the broker’s office or place an order on the phone/internet or as
defined in the Model Agreement, which every client needs to enter into with his or her
broker.
PRODUCTS IN SECONDARY MARKETS:
Following are the main financial products/instruments dealt in the Secondary market
which may be divided broadly into Shares and Bonds:
SHARES:
Equity Shares: An equity share, commonly referred to as ordinary share, represents the
form of fractional ownership in a business venture.
Rights Issue/ Rights Shares: The issue of new securities to existing shareholders at a
ratio to those already held, at a price. For e.g. a 2:3 rights issue at Rs. 125, would entitle a
shareholder to receive 2 shares for every 3 shares held at a price of Rs. 125 per share.
Bonus Shares: Shares issued by the companies to their shareholders free of cost based on
the number of shares the shareholder owns.
Preference shares: Owners of these kinds of shares are entitled to a fixed dividend or
dividend calculated at a fixed rate to be paid regularly before dividend can be paid in
respect of equity share. They also enjoy priority over the equity shareholders in payment
of surplus. But in the event of liquidation, their claims rank below the claims of the
company’s creditors, bondholders/debenture holders.
Cumulative Preference Shares: A type of preference shares on which dividend
accumulates if remained unpaid. All arrears of preference dividend have to be paid out
before paying dividend on equity shares.
Cumulative Convertible Preference Shares: A type of preference shares where the
dividend payable on the same accumulates, if not paid. After a specified date, these
shares will be converted into equity capital of the company.
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Bond: is a negotiable certificate evidencing indebtedness. It is normally unsecured. A
debt security is generally issued by a company, municipality or government agency. A
bond investor lends money to the issuer and in exchange, the issuer promises to repay the
loan amount on a specified maturity date. The issuer usually pays the bond holder
periodic interest payments over the life of the loan. The various types of Bonds are as
follows:
Zero Coupon Bond: Bond issued at a discount and repaid at a face value. No periodic
interest is paid. The difference between the issue price and redemption price represents
the return to the holder. The buyer of these bonds receives only one payment, at the
maturity of the bond.
Convertible Bond: A bond giving the investor the option to convert the bond into equity
at a fixed conversion price.
Treasury Bills: Short-term (up to one year) bearer discount security issued by
government as a means of financing their cash requirements.
EQUITY INVESTMENT:
If we take the Nifty index returns for the past fifteen years, Indian stock market
has returned about 16% to investors on an average in terms of increase in share prices or
capital appreciation annually. Besides that on average stocks have paid 1.5% dividend
annually. Dividend is a percentage of the face value of a share that a company returns to
its shareholders from its annual profits. Compared to most other forms of investments,
investing in equity shares offers the highest rate of return, if invested over a longer
duration.
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PORTFOLIO:
A Portfolio is a combination of different investment assets mixed and matched for
the purpose of achieving an investor's goal(s). Items that are considered a part of your
portfolio can include any asset you own-from shares, debentures, bonds, mutual fund
units to items such as gold, art and even real estate etc. However, for most investors a
portfolio has come to signify an investment in financial instruments like shares,
debentures, fixed deposits, mutual fund units.
DIVERSIFICATION:
It is a risk management technique that mixes a wide variety of investments within
a portfolio. It is designed to minimize the impact of any one security on overall portfolio
performance. Diversification is possibly the best way to reduce the risk in a portfolio.
ADVANTAGES OF DIVERSIFIED PORTFOLIO:
A good investment portfolio is a mix of a wide range of asset class. Different
securities perform differently at any point in time, so with a mix of asset types, your
entire portfolio does not suffer the impact of a decline of any one security. When your
stocks go down, you may still have the stability of the bonds in your portfolio. There
have been all sorts of academic studies and formulas that demonstrate why diversification
is important, but it's really just the simple practice of "not putting all your eggs in one
basket."
DEBT INSTRUMENT:
Debt instrument represents a contract whereby one party lends money to another
on pre-determined terms with regards to rate and periodicity of interest, repayment of
principal amount by the borrower to the lender. In Indian securities markets, the term
‘bond’ is used for debt instruments issued by the Central and State governments and
public sector organizations and the term ‘debenture’ is used for instruments issued by
private corporate sector.
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FEATURES OF DEBT INSTRUMENTS:
Each debt instrument has three features: Maturity, coupon and principal.
Maturity: Maturity of a bond refers to the date, on which the bond matures, which
is the date on which the borrower has agreed to repay the principal.
Term-to-Maturity refers to the number of years remaining for the bond to mature.
The Term-to-Maturity changes everyday, from date of issue of the bond until its maturity.
The term to maturity of a bond can be calculated on any date, as the distance between
such a date and the date of maturity. It is also called the term or the tenure of the bond.
Coupon: Coupon refers to the periodic interest payments that are made by the
borrower (who is also the issuer of the bond) to the lender (the subscriber of the bond).
Coupon rate is the rate at which interest is paid, and is usually represented as a
percentage of the par value of a bond.
1.1 d. DERIVATIVES:
TYPES OF DERIVATIVES:
Forwards: A forward contract is a customized contract between two entities, where
settlement takes place on a specific date in the future at today’s pre-agreed price.
Futures: A futures contract is an agreement between two parties to buy or sell an asset at
a certain time in the future at a certain price. Futures contracts are special types of
forward contracts in the sense that the former are standardized exchange-traded contracts,
such as futures of the Nifty index.
Options: An Option is a contract which gives the right, but not an obligation, to buy or
sell the underlying at a stated date and at a stated price. While a buyer of an option pays
the premium and buys the right to exercise his option, the writer of an option is the one
who receives the option premium and therefore obliged to sell/buy the asset if the buyer
exercises it on him. Options are of two types - Calls and Puts options:
‘Calls’ give the buyer the right but not the obligations to buy a given quantity of the
underlying asset, at a given price on or before a given future date.
‘Puts’ give the buyer the right, but not the obligation to sell a given quantity of
underlying asset at a given price on or before a given future date. Presently, at NSE
futures and options are traded on the Nifty, CNX IT, BANK Nifty and 116 single stocks.
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Warrants: Options generally have lives of up to one year. The majority of options traded
on exchanges have maximum maturity of nine months. Longer dated options are called
Warrants and are generally traded over-the counter.
New System Vs Existing System for Market Players
Figure 2.1Speculators
Existing SYSTEM New
Approach Peril &Prize Approach Peril &Prize
1) Deliver based 1) Both profit & 1)Buy &Sell stocks 1)Maximum
Trading, margin loss to extent of on delivery basis loss possible
trading& carry price change. 2) Buy Call &Put to premium
forward transactions. by paying paid
2) Buy Index Futures premium
hold till expiry.
Advantages Greater Leverage as to pay only the premium. Greater variety of strike price options at a given time.
15
Figure 2.2
Arbitrageurs
Existing SYSTEM New
Approach Peril &Prize Approach Peril &Prize
1) Buying Stocks in 1) Make money 1) B Group more 1) Risk free
One and selling in whichever way the promising as still game.
Another exchange. Market moves. In weekly settlement
Forward transactions. 2) Cash &Carry
2) If Future Contract arbitrage continues
More or less than Fair price
Fair Price = Cash Price + Cost of Carry.
16
Figure 2.3
Hedgers
Existing SYSTEM New
Approach Peril &Prize Approach Peril &Prize
1) Difficult to 1) No Leverage 1)Fix price today to buy 1) Additional
offload holding available risk latter by paying premium. cost is only
during adverse reward dependant 2)For Long, buy ATM Put premium.
market conditions on market prices Option. If market goes up,
as circuit filters long position benefit else
limit to curtail losses. exercise the option.
3)Sell deep OTM call option
with underlying shares, earn
premium + profit with increase prcie
17
Advantages Availability of Leverage
Figure 2.4
Small Investors
Existing SYSTEM New
Approach Peril &Prize Approach Peril &Prize
1) If Bullish buy 1) Plain Buy/Sell 1) Buy Call/Put options 1) Downside
stocks else sell it. implies unlimited based on market outlook remains
profit/loss. 2) Hedge position if protected
holding underlying upside
stock unlimited.
Advantages Losses Protected.
18
Stock Market in India
19
Stock Market in India
Introduction: -
Stock markets refer to a market place where investors can buy and sell stocks. The price
at which each buying and selling transaction takes is determined by the market forces (i.e.
demand and supply for a particular stock).
Let us take an example for a better understanding of how market forces determine stock
prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an
upward movement in its stock price. More and more people would want to buy this stock
(i.e. high demand) and very few people will want to sell this stock at current market price
(i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match
the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the
contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the
stock of ABC Co. Ltd. in the market, its price will fall down.
In earlier times, buyers and sellers used to assemble at stock exchanges to make a
transaction but now with the dawn of IT, most of the operations are done electronically
and the stock markets have become almost paperless. Now investor’s don’t have to gather
at the Exchanges, and can trade freely from their home or office over the phone or
through Internet.
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History of the Indian Stock Market - The Origin
One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old
history. 18th Century East India Company was the dominant institution and by end of the
century, business in its loan securities gained full momentum
1830's Business on corporate stocks and shares in Bank and Cotton presses started in
Bombay. Trading list by the end of 1839 got broader
1840's Recognition from banks and merchants to about half a dozen brokers
1850's Rapid development of commercial enterprise saw brokerage business attracting
more people into the business
1860's The number of brokers increased to 60
1860-61 The American Civil War broke out which caused a stoppage of cotton supply
from United States of America; marking the beginning of the "Share Mania" in India
1862-63 the number of brokers increased to about 200 to 250
1865 A disastrous slump began at the end of the American Civil War (as an example,
Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs. 87)
Pre-Independence Scenario - Establishment of Different Stock Exchanges
1874 With the rapidly developing share trading business, brokers used to gather at a
street (now well known as "Dalal Street") for the purpose of transacting business.
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1875 "The Native Share and Stock Brokers' Association" (also known as "The Bombay
Stock Exchange") was established in Bombay
1880's Development of cotton mills industry and set up of many others
1894 Establishment of "The Ahmadabad Share and Stock Brokers' Association"
1880 - 90's Sharp increase in share prices of jute industries in 1870's was followed by
a boom in tea stocks and coal
1908 "The Calcutta Stock Exchange Association" was formed
1920 Madras witnessed boom and business at "The Madras Stock Exchange" was
transacted with 100 brokers.
1923 When recession followed, number of brokers came down to 3 and the Exchange
was closed down
1934 Establishment of the Lahore Stock Exchange
1936 Merger of the Lahore Stock Exchange with the Punjab Stock Exchange
1937 Re-organization and set up of the Madras Stock Exchange Limited (Pvt.) Limited
led by improvement in stock market activities in South India with establishment of new
textile mills and plantation companies
1940 Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was
established
22
1944 Establishment of "The Hyderabad Stock Exchange Limited"
1947 "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and
Shares Exchange Limited" were established and later on merged into "The Delhi Stock
Exchange Association Limited"
Post Independence Scenario
The depression witnessed after the Independence led to closure of a lot of exchanges in
the country. Lahore Stock Exchange was closed down after the partition of India, and
later on merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was
registered in 1957 and got recognition only by 1963. Most of the other Exchanges were in
a miserable state till 1957 when they applied for recognition under Securities Contracts
(Regulations) Act, 1956. The Exchanges that were recognized under the Act were:-
Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad, Bangalore, and Indore
Many more stock exchanges were established during 1980's, namely:
1. Cochin Stock Exchange (1980)
2. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)
3. Pune Stock Exchange Limited (1982)
4. Ludhiana Stock Exchange Association Limited (1983)
5. Gauhati Stock Exchange Limited (1984)
23
6. Kanara Stock Exchange Limited (at Mangalore, 1985)
7. Magadh Stock Exchange Association (at Patna, 1986)
8. Jaipur Stock Exchange Limited (1989)
9. Bhubaneswar Stock Exchange Association Limited (1989)
10. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)
11. Vadodara Stock Exchange Limited (at Baroda, 1990)
12. Coimbatore Stock Exchange
13. Meerut Stock Exchange
Trading Pattern of the Indian Stock Market:- Indian Stock Exchanges allow trading
of securities of only those public limited companies that are listed on the Exchange(s).
They are divided into two categories:
24
Types of Transactions:- The flowchart below describes the types of transactions that can
be carried out on the Indian stock exchanges
Indian stock exchange allows a member broker to perform following activities:
1. Act as an agent,
2. Buy and sell securities for his clients and charge commission for the same,
3. Act as a trader or dealer as a principal,
4. Buy and sell securities on his own account and risk.
Over The Counter Exchange of India (OTCEI)
Traditionally, trading in Stock Exchanges in India followed a conventional style where
people used to gather at the Exchange and bids and offers were made by open outcry.
25
This age-old trading mechanism in the Indian stock markets used to create much
functional inefficiency. Lack of liquidity and transparency, long settlement periods and
became transactions are a few examples that adversely affected investors. In order to
overcome these inefficiencies, OTCEI was incorporated in 1990 under the Companies
Act 1956. OTCEI is the first screen based nationwide stock exchange in India created by
Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial
Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of
India, General Insurance Corporation and its subsidiaries and Can Bank Financial
Services.
National Stock Exchange
In order to lift the Indian stock market trading system on par with the international
standards. On the basis of the recommendations of high powered Pertain Committee, the
National Stock Exchange was incorporated in 1992 by Industrial Development Bank of
India, Industrial Credit and Investment Corporation of India, Industrial Finance
Corporation of India, all Insurance Corporations, selected commercial banks and others.
26
INDUSTRY PROFILE
ORIGIN AND DEVELOPMENT OF THE INDUSTRY
27
1.2 a. ORIGIN AND DEVELOPMENT OF THE INDUSTRY TILL 2008
The origin of the stock market in India goes back to the end of the eighteenth century
when long-term negotiable securities were first issued. However, for all practical
purposes, the real beginning occurred in the middle of the nineteenth century after the
enactment of the companies Act in 1850, which introduced the features of limited
liability and generated investor interest in corporate securities.
An important early event in the development of the stock market in India was the
formation of the native share and stock brokers 'Association at Bombay in 1875, the
precursor of the present day Bombay Stock Exchange. This was followed by the
formation of associations/exchanges in Ahmadabad (1894), Calcutta (1908), and Madras
(1937). In addition, a large number of ephemeral exchanges emerged mainly in buoyant
periods to recede into oblivion during depressing times subsequently.
Stock exchanges are intricacy inter-woven in the fabric of a nation's economic
life. Without a stock exchange, the saving of the community- the sinews of economic
progress and productive efficiency- would remain underutilized. The task of mobilization
and allocation of savings could be attempted in the old days by a much less specialized
institution than the stock exchanges. But as business and industry expanded and the
economy assumed more complex nature, the need for 'permanent finance' arose.
Entrepreneurs needed money for long term whereas investors demanded liquidity – the
facility to convert their investment into cash at any given time. The answer was a ready
market for investments and this was how the stock exchange came into being.
Stock exchange means any body of individuals, whether incorporated or not,
constituted for the purpose of regulating or controlling the business of buying, selling or
dealing in securities. These securities include:
(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate;
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(ii) Government securities; and
(iii) Rights or interest in securities.
The Bombay Stock Exchange (BSE) and the National Stock Exchange of India
Ltd (NSE) are the two primary exchanges in India. In addition, there are 22 Regional
Stock Exchanges. However, the BSE and NSE have established themselves as the two
leading exchanges and account for about 80 per cent of the equity volume traded in India.
The NSE and BSE are equal in size in terms of daily traded volume. The average daily
turnover at the exchanges has increased from Rs 851 crore in 1997-98 to Rs 1,284 crore
in 1998-99 and further to Rs 2,273 crore in 1999-2000 (April - August 1999). NSE has
around 1500 shares listed with a total market capitalization of around Rs 9, 21,500 crore.
The BSE has over 6000 stocks listed and has a market capitalization of around
Rs 9, 68,000 crore. Most key stocks are traded on both the exchanges and hence the
investor could buy them on either exchange. Both exchanges have a different settlement
cycle, which allows investors to shift their positions on the bourses. The primary index of
BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which
consists of fifty stocks. The BSE Sensex is the older and more widely followed index.
Both these indices are calculated on the basis of market capitalization and contain
the heavily traded shares from key sectors. The markets are closed on Saturdays and
Sundays. Both the exchanges have switched over from the open outcry trading system to
a fully automated computerized mode of trading known as BOLT (BSE on Line Trading)
and NEAT (National Exchange Automated Trading) System.
The stock exchange facilitates more efficient processing, automatic order
matching, faster execution of trades and transparency; the scrip's traded on the BSE have
been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent
those, which are in the carry forward system (Badla). The 'F' group represents the debt
market (fixed income securities) segment. The 'Z' group scrip's are the blacklisted
companies. The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups and
Rights renunciations. The key regulator governing Stock Exchanges, Brokers,
29
Depositories, Depository participants, Mutual Funds, FIIs and other participants in Indian
secondary and primary market is the Securities and Exchange Board of India (SEBI) Ltd.
The securities markets in India have witnessed several policy initiatives, which
has refined the market micro-structure, modernized operations and broadened investment
choices for the investors. The irregularities in the securities transactions in the last quarter
of 2000-01, hastened the introduction and implementation of several reforms. While a
Joint Parliamentary Committee was constituted to go into the irregularities and
manipulations in all their ramifications in all transactions relating to securities, decisions
were taken to complete the process of demutualization and corporatization of stock
exchanges to separate ownership, management and trading rights on stock exchanges and
to effect legislative changes for investor protection, and to enhance the effectiveness of
SEBI as the capital market regulator. Rolling settlement on T+5 basis was introduced in
respect of most active 251 securities from July 2, 2001 and in respect of balance
securities from 31st December 2001. Rolling settlement on T+3 basis commenced for all
listed securities from April 1, 2002 and subsequently on T+2 basis from April 1, 2003.
The derivatives trading on the NSE commenced with the S&P CNX Nifty Index
Futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and
trading in options on individual securities commenced on July 2, 2001. Single stock
futures were launched on November 9, 2001. Due to rapid changes in volatility in the
securities market from time to time, there was a need felt for a measure of market
volatility in the form of an index that would help the market participants. NSE launched
the India VIX, a volatility index based on the S&P CNX Nifty Index Option prices.
Volatility Index is a measure of market’s expectation of volatility over the near
term. The Indian stock market regulator, Securities & Exchange Board of India (SEBI)
allowed the direct market access (DMA) facility to investors in India on April 3, 2008.
To begin with, DMA was extended to the institutional investors. In addition to the DMA
facility, SEBI also decided to permit all classes of investors to short sell and the facility
for securities lending and borrowing scheme was operationalised on April 21, 2008.
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The Debt markets in India have also witnessed a series of reforms, beginning in
the year 2001-02 which was quite eventful for debt markets in India, with implementation
of several important decisions like setting up of a clearing corporation for government
securities, a negotiated dealing system to facilitate transparent electronic bidding in
auctions and secondary market transactions on a real time basis and dematerialization of
debt instruments. Further, there was adoption of modified Delivery-versus-Payment
mode of settlement (DvP III in March 2004). The settlement system for transaction in
government securities was standardized to 12 T+1 cycle on May 11, 2005. To provide
banks and other institutions with a more advanced and more efficient trading platform, an
anonymous order matching trading platform (NDSOM) was introduced in August 2005.
Short sale was permitted in G-secs in 2006 to provide an opportunity to market
participants to manage their interest rate risk more effectively and to improve liquidity in
the market. ‘When issued’ (WI) trading in Central Government Securities was introduced
in 2006. As a result of the gradual reform process undertaken over the years, the Indian
G-Sec market has become increasingly broad-based and characterized by an efficient
auction process, an active secondary market, electronic trading and settlement technology
that ensure safe settlement with Straight through Processing (STP). This chapter,
however, takes a review of the stock market developments since 1990. These
developments in the securities market, which support corporate initiatives, finance the
exploitation of new ideas and facilitate management of financial risks, hold out necessary
impetus for growth, development and strength of the emerging market economy of India.
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GROWTH AND PRESENT STATUS OF THE INDUSTRY
(AFTER 2009 TILL DATE)
1.2 b. GROWTHS AND PRESENT STATUS OF THE INDUSTRY
32
The main concern for the emerging market economies (including India) may not be the
direct exposure to global financial institutions, but more about access to credit and the
slowdown it is causing in America and other European economies.
Economists point out that the extent of the effect will be decided by the nature of the US
recession. If it is shallow (and the US comes out of it quickly), India may not suffer much
of an impact. But if it is long and deep, India’s exports will be hit.
The Indian stock market is definitely not in one direction, and building positions
on both buy or short sides is not a fairly good idea to make money in such a tight market.
Analysts believe that the market is definitely going to see some action as soon some
breaking news come out, but the effect of such news on the Indian stock market would
not be lasting long, and there could be a major pull back leading the market to touch the
13000 levels.
Having said that, economists believe that the inflation would inch down to 10% in
the coming quarter that would become visible in retail and consumer durable products
soon, which would in turn boost consumer confidence. This would definitely push the
markets to bounce back from the 13000 levels, and we might see some fresh buying, and
both sensex and nifty might witness some rally.
These levels could be of great importance for those domestic as well as NRI
clients who did not get a chance to make investments into top Indian mutual funds when
the market was trading at 18000 levels. A prudent idea would be to invest 25% of your
savings at these levels, and when the market drops down 20% from here, another 40% of
the savings can be invested.
33
FUTURE OF THE INDUSTRY
34
1.2 c. FUTURE OF THE INDUSTRY
India just keeps getting better and better. The economy is growing rapidly surpassing
some of Asia’s biggest economies. India is now becoming the third largest country
in Asia economically. It has grown so much and is expected to continue to grow like this
for a long time. The Indian Government is doing everything it can do to propel the
growth rates in the Indian Industry, primarily in: India Stock Market, Indian
Companies, India’s manufacturing index, India Business Sector, India’s Company sector
and other India investment industries.
The yearly salaries are rising and the command to buy is under the command to spend.
The Investment GDP ratio is at a high. It is now over 30 percent and between the years
1990 and 2004 the average was only 25 percent. It has been said that, once it reaches 30
percent, it is going to take off rapidly. So India is expected to move rapidly.
The down side to India’s big movement is that there is a limit to how high it can
go. India has grown so much, making the costs of everything go up so frequently. It can
turn into the most expensive country in the world. The companies are now working above
their finest ability.
A lot of people try to People undervalue India‘s accomplishment in growth. The growth
rates are very good and it wouldn’t be wrong for people to overvalue it. India has created
the best growth story that happen over a long time. Although India is growing, there can
still be corrections in the market. No matter how well a country is doing, there is always
something that can be fixed. Some say that they would like to wait until the market is
fixed to invest.
It is said that the Reserve Bank of India come up with a way that the domestic credit
cycle can last for an extensive time. This credit cycle and the investment cycle, of course,
will keep India in the bull market for a long time. They stopped/slowed the growth of the
bank credit. The bank is taking control of the credit and loans very well so
that India stays on the right track.
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The Indian share market has been in a bull run since April 2011 and thus corrections are
part and parcel for any market. The share markets will see ups and downs but there will
be steady growth. There is a good atmosphere for investments in India and the share
markets will thrive under the circumstances. Firms which deal with securities will make
good business as more and more people will enter the share markets to make investments.
In the long run all securities firms have a bright future.
36
PROFILE OF THE ORGANISATION
37
2.1 ORIGIN OF THE ORGANIZATION:
STANDARD CHARTERED SECURITIES (INDIA) LIMITED:
Standard Chartered Securities (India) Limited is a leading broking company that
helps retail and institutional investors with their capital market investment requirements.
At Standard Chartered Securities, the aim is to offer simplified investment
solutions that provide long-term value to the customers. For institutional clients, they
offer products such as equity capital markets, equity and derivative broking. Retail
division caters to online as well as offline customers, offering products such as equity and
derivative broking, depository services, mutual funds, fixed income instruments and
company fixed deposits.
They have a dedicated team of research analysts who work independently to
provide investment and trading recommendation to our institutional and retail customers.
A network of relationship managers and customer care executives offer efficient
execution backed by in depth research and expertise to customers across the country.
SCSI has a large network with pan India presence in 112 locations through 34 branches
and 97 authorized centers.
Standard Chartered Securities is registered as a trading and clearing member with
Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited
(NSE) and MCX Stock Exchange Limited (MCX). The Company is also registered as
Depository Participant with Central Depository Services (India) Limited (CDSL) as well
as National Securities Depository Limited (NSDL).
Standard Chartered Securities is part of the Standard Chartered Group, an
international financial services group that offers a variety of financial services including
Consumer Banking, Wholesale Banking, Corporate Advisory, Capital Market Services,
SME Banking, and Private Banking. Standard Chartered PLC, listed on the London,
Hong Kong and Mumbai stock exchanges, ranks among the top 20 companies in the
FTSE-100 by market capitalization. The London-headquartered Group has operated for
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over 150 years in some of the world's most dynamic markets, leading the way in Asia,
Africa and the Middle East.
The Standard Chartered Group in India is also represented by Standard Chartered
Bank, India's largest international Bank with 94 branches across 37 cities. To know more
about Standard Chartered Bank, India, click on www. standardchartered .co.in . To know
about Standard Chartered plc, click on www.standardchartered.com
History of Standard Chartered Securities (India) Limited:
Standard Chartered Securities (India) Limited is a wholly-owned subsidiary of
Standard Chartered Bank (Mauritius) Limited (SCBM), which acquired the company
from Securities Trading Corporation of India (STCI) over 2008-2010. Prior to the
acquisition, Standard Chartered Securities was known as UTI Securities Limited
(UTISEL).
On August 23, 2007, SCBM agreed to acquire UTISEL from STCI in three
tranches. As a part of first branch, SCBM acquired 49% stake in UTISEL on January 11,
2008, after which, the name of the Company was changed from UTISEL to Standard
Chartered-STCI Capital Markets Limited w.e.f. January 17, 2008.
SCBM acquired further 25.9% stake in the Company on December 12, 2008, as a
part of second leg of the transaction and increase its total stake from 49% to 74.9% in the
Company.
As a last part of the acquisition, SCBM increased its stake to 100% in the
Company by acquiring the residual stake of 25.1% from STCI on October 08, 2010.
Consequently the Company became the wholly owned subsidiary of SCBM and was re-
named Standard Chartered Securities (India) Limited.
39
REGISTERED OFFICE / CORPORATE OFFICE
Standard Chartered Towers,
1st Floor, 201 B/1,
Western Express Highway,
Goregaon – East,
Mumbai-400063
Telephone No: 022 – 67515999
Fax No: 022 – 67559607
BRANCHES IN CHENNAI:
Standard Chartered Securities (India) Limited.,
Jamals Santhini, 1/1,
II nd Main Road,
Seethammal Colony, Alwarpet,
Chennai - 600018.
TEL : 044-24328944/ 9759.
Standard Chartered Securities (India) Limited.,
W-123, 1st floor,
3rd Avenue, Anna Nagar,
Chennai - 600040.
TEL : 044-26264500/ 4300.
40
GROWTH AND DEVELOPMENT OF THE
ORGANIZATION
41
2.2 GROWTH AND DEVELOPMENT OF THE ORGANIZATION:
Standard Chartered Bank in India is the country’s largest international bank with
90 branches in 33 cities and India is one of the Group’s key markets worldwide.
Employing about 19,000 people, Standard Chartered Bank has played a significant role in
the history of the banking industry in India since opening its first branch in Kolkata, 150
years ago, on 12 April 1858.
Standard Chartered Bank considers India to be one of the prime economic
opportunities of the 21st century and is proud to be so strongly positioned here. SCSI
have ambitious plans to transform business in the country and to further expand our
operations in India.
On 11 January 2008, Standard Chartered Bank (Mauritius) Limited acquired 49%
stake of erstwhile UTI Securities Limited from Securities Trading Corporation of India
(STCI). Accordingly, the name of the Company was changed from ‘UTI Securities
Limited’ to ‘Standard Chartered – STCI Capital Markets Limited’ with effect from 17
January 17 2008. Subsequently, on 12 December 2008, SCBM acquired further 25.9%
stake in Standard Chartered – STCI Capital Markets Limited to increase its total stake in
Standard Chartered – STCI Capital Markets Limited from 49% to 74.9%.
The institutional division of Standard Chartered Securities (India) Limited has
been catering to the ever growing needs of the institution and corporate customers for
over 15 years by providing a wide range of financial intermediation services.
SCSI has provided consistent service has made them the financial intermediary of
choice to over 800 institutional clients which bear testimony to our continuous effort of
reaching out to customers requirements.
Pan India presence ensures tailor made services for customers at their point of
presence ensuring seamless execution of their requirements. Further, parentage with
Standard Chartered Bank helps them to provide global transactional capability, to our
customers.
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1.Equity Capital Markets 2.Institutional Equities 3.Fixed Income Group
Creation and execution of
capitalization strategy
Consistent, quality services,
with utmost confidentiality
and competitive edge
Complete solution in the
debt segment
SERVICES OFFERED BY STANDARD CHARTERED SECURITIES (INDIA)
LIMITED:
1. EQUITY CAPITAL MARKETS:
The Equity Capital Markets division at Standard Chartered Securities (India)
Limited aims to offer entrepreneurs, companies and investors, independent financial
advice and transaction execution of the highest standard. The endeavor is to provide
value to growing and mature companies by helping them in the creation and execution of
the best possible capitalization strategy.
Capital Markets
The experienced professionals of Standard Chartered Securities (India) Limited offer a
wide range of services such as:
Initial public offer (IPO)
Rights issue
Follow on offerings (FPO)
Qualified Institutions placement (QIP) / preferential allotments
Open offers
Equity buyback programs
Private equity placements in listed companies (PIPE)
43
Private Equity
SCSI provides advisory solutions to companies on their capitalization/ re-capitalization
strategies. The services provided include
Advice on business plan
Advice on optimum capital structure
Due diligence and preparation of information memorandum
Identifying and screening of investors
Assistance in valuation and most effective financial structure
Negotiating the terms of the deal with investors and assisting in drafting of
necessary legal documentation for closure
Post closure servicing for company and fund
2. INSTITUTIONAL EQUITIES:
The institutional equities division at Standard Chartered Securities (India) Limited
caters to the investment needs of corporate and institutional clients. Our endeavor
is to provide consistent quality services, enabling our clients to derive maximum
benefits out of the markets.
Innovative approach, incisive research, responsive sales teams, and intensive
execution method have enabled SCSI to uncompromisingly service our clients in
unique and different ways.
SCS have a strong sales team, comprising of top equity professional, which
translates the research findings into actionable advice for clients, based on their
specific needs. The team services more than 110 institutional clients which
include leading domestic mutual funds, insurance companies, domestic financial
institutions, banks and FIIs.
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3. RETAIL:
Standard Chartered Securities (India) Limited are a leading broking company with
15 years of experience catering to the financial needs of our ever increasing
customer base. The aim is to help investors achieve their financial goals by
providing high quality investment services, in a simple, direct and cost-effective
manner.
SCSI has a large retail network with pan India presence in 112 locations through
34 branches and over 97 authorized centers caters to both online and offline
customers.
The experienced team of retail research analysts backed by in depth research,
knowledge and expertise guides customers with appropriate solutions
In addition to offline trading through the branches and authorized centers, they
also offer comprehensive trading solutions through our online trading portal
which is fully equipped to cater to your multiple trading needs.
Standard Chartered Securities (India) Limited 3-in-1 account facility provides
seamless integration of bank, demat and trading accounts.
45
PRESENT STATUS OF THE
ORGANISATION
46
2.3 PRESENT STATUS OF THE ORGANIZATION:
Standard Chartered Securities (India) Limited is a wholly-owned subsidiary of Standard
Chartered Bank (Mauritius) Limited (SCBM), which acquired the company from
Securities Trading Corporation of India (STCI) over 2008-2010. Prior to the acquisition,
Standard Chartered Securities was known as UTI Securities Limited (UTISEL).
On August 23, 2007, SCBM agreed to acquire UTISEL from STCI in three
tranches. As a part of first branch, SCBM acquired 49% stake in UTISEL on January 11,
2008, after which, the name of the Company was changed from UTISEL to Standard
Chartered-STCI Capital Markets Limited w.e.f. January 17, 2008.
SCBM acquired further 25.9% stake in the Company on December 12, 2008, as a
part of second leg of the transaction and increase its total stake from 49% to 74.9% in the
Company.
As a last part of the acquisition, SCBM increased its stake to 100% in the
Company by acquiring the residual stake of 25.1% from STCI on October 08, 2010.
Consequently the Company became the wholly owned subsidiary of SCBM and was re-
named Standard Chartered Securities (India) Limited.
Standard Chartered Bank has completed the acquisition of an additional 25.9 per cent
stake in Standard Chartered-STCI Capital Markets Limited (formerly UTI Securities
Limited) to take its total holding in the company to 74.9 per cent. The company currently
offers its services under the brand ‘Standard Chartered Wealth Managers’.
Standard Chartered bought 49 per cent of UTI Securities Limited from Securities Trading
Corporation of India Limited (STCI) in January 2008 following, receipt of regulatory
approvals for the transaction.
This move by Standard Chartered to increase its existing stake is in line with its original
intent reflected in the contract, under which both parties provided for the stake to be
increased in stages to 100 per cent by 2010. Regulatory approvals have been received for
47
the additional stake and change in the controlling interest in Standard Chartered-STCI
Capital Markets Limited.
Neeraj Swaroop, Regional CEO – India and South Asia, Standard Chartered Bank, said:
“This strategic initiative is a reflection of our long term commitment to the Indian
market, despite the current economic slowdown. I am delighted that we have been
successful in combining the strengths of Standard Chartered with UTI Securities, a
recognized leader in the financial services spectrum.”
He further commented, “We are extremely confident that with this partnership, we will
continue to offer our customers both competitive investment avenues and remain a
provider of choice in this challenging environment.”
Somasundaram PR, Managing Director, Standard Chartered Capital Markets also said,
“This has been a challenging year for the business but the acquisition of an additional
stake at this time reflects the underlying confidence of Standard Chartered Bank in the
Indian economy as a whole and in the Indian equity capital markets specifically. We have
tested our plans in both the institutional and retail segments of this business in the last
year and we are convinced we have a significant opportunity here and a global strategic
fit.” The company currently offers its services under a global brand – ‘Standard Chartered
Wealth Managers’. Standard Chartered will also invest additional capital of US $4.5
million in line with the FDI guidelines with the increase in stake.
Standard securities have a good standing in the market and the sale of securities and
trading is on the upswing. The future securities as an industry are good and have a bright
future.
48
FUNCTIONAL DEPARTMENTS OF
THE ORGANIZATION
49
2.4 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION:
1.Online Broking 2.Offline Broking 3.Distribution of financial
products
Online trading portal is a
single gateway for your
multiple investment needs.
Investing in equities with
SCSI truly empowers you to
meet your financial needs
Wide range of services to
meet ever increasing
financial objectives
1. ONLINE BROKING:
Customer convenience is our top-most priority. Keeping this in mind, Standard Chartered
Securities (India) Limited brings ‘The power of 3 at the convenience of 1'. With the 3in-1
account, SCSI offers seamless integration of bank, trading and demat accounts. The bank
account offered is Standard Chartered Bank account while the broking and demat
accounts will be with Standard Chartered Securities (India) Limited.
The easy to use features of 3in1 account include:
Single login facility
this feature enables direct access to details of all 3 accounts with a single log-in -
no need to remember multiple user names and passwords.
Hassle-free and convenient trading
No need to write cheques or issue TIFD (DIS) slips.
Instant update on status of purchase/sale orders.
Automated pay-in of shares and pay-out of funds/shares to and from your
DP/bank account.
Access to multiple products
Invest/trade online in multiple products - equity and derivatives trading, IPO, GOI
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bonds and mutual funds.
You can place orders online or through the Phone-2-Trade facility.
TRADING PLATFORM:
EASY TRADE:
Easy Trade
Customers can trade on website that is easy to navigate with advanced stock trading
features. They can manage your account and trade on exchanges.
Benefits of EASY Trade:
Trading on NSE & BSE
Integrated Bank, Demat and Trading Account
Get Current Order Status
Monitor your orders
Updated buying power
Any where access
Access to back end reports
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ADVANCE TRADE:
Customers can trade on website with live streaming quotes. They can create multiple
watch lists to track market movements.
Benefits of ADVANCED Trade:
Streaming quotes
Market Depth Window
Trading on NSE & BSE
Create Multiple Watch lists
Equity and Derivatives orders in single window
Hot Key Navigation
Access to back end reports
Super Trade
Customers can trade from their desktop with live streaming quotes and advanced
technical tools.
Benefits of SUPER Trade
Personalized Stock Quote Lists
Fully Customizable display
Streaming Intraday, Daily and Weekly Charts
Streaming Quotes
Alert capabilities
Track your orders real time
Real time position updates
Lock terminal option
2. OFFLINE BROKING
52
Standard Chartered Securities (India) Limited, offers the convenience of trading
in equity, derivatives and currency derivatives through our network of 34 branches and
over 97 authorized centers.
Equity
Investing in equities with Standard Chartered Securities (India) Limited truly
empowers customers to meet your financial needs. Different investors foray into equities
for different reasons. SCSI understands the expectations of customers and accordingly
offers a wide range of products and services.
To serve the varied customers, SCSI offer both delivery and intra-day trading.
The extensive network of dealers provides prompt and efficient service, helping
customers to take quick and right decisions, to maximize your gains. SCSI provides both
market and limit orders, offering customers a choice to take time-based or price-based
decisions as they deem fit. SCSI are member of Bombay Stock Exchange Limited (BSE)
and National Stock Exchange (NSE).
Derivatives
If customers are looking at hedging your investments, or wish to gain through your
estimates about the movement of the Index or stocks, SCSI offers derivatives trading on
Future and Options segment of the NSE (National Stock Exchange).
Currency Derivatives
A new investment opportunity from Standard Chartered Securities (India) Limited for all
Resident Indians. Currency Derivatives are standardized foreign exchange contracts
traded on an exchange to buy or sell one currency against another on a specified future
date. The contracts will be traded online through the order-driven market mechanism,
quite similar to equity derivatives.
3. DISTRIBUTION OF FINANCIAL PRODUCTS:
53
The financial products that are being offered in the markets today provide an
opportunity to the investor to participate in the stock market with a small investment size.
Standard Chartered Securities (India) Limited has a large retail network with pan
India presence in 112 locations through 34 branches, saver 97 business associates caters
to the investment needs of both offline and online clients. SCSI representatives who have
been trained and facilitated with the best tools, enables them to offer customers with the
best services and deals.
SCSI brings a wide array of products such as IPOs, fixed income bonds and
different schemes from leading mutual funds to help you diversify investments.
IPO
Initial Public Offer (IPO) offers an excellent opportunity to be part of a
company’s growth story right from its foray into markets. All that is required is the
“Buying Power” and we take care of the rest for you.
Mutual fund
Mutual funds are today an integral part of an investor’s portfolio. SCSI offers a
wide variety of Mutual Funds schemes ranging from plain vanilla funds to exchange
traded funds. SCSI network offers customers with products from leading asset
management companies (AMCs) operating in the market. With online platform, mutual
fund investment is just at the click of a button.
54
ORGANIZATION STRUCTURE
55
PRODUCT AND SERVICE PROFILE OF
ORGANIZATION COMPETITORS
2.5 PRODUCT AND SERVICE PROFILE OF ORGANIZATION
COMPETITORS:
56
HDFC SECURITIES LIMITED:
HDFC securities Ltd, a trusted financial services intermediary is a subsidiary of
India's respected private sector Bank - HDFC Bank. A leading stock broking company
having completed 10 years in operation serves a diverse customer base of retail and
institutional investors.
Discerning investors experience a robust platform to trade in Equities, derivatives,
currency futures and mutual funds through both NSE & BSE and other investment
options like IPO's, bonds, corporate fixed deposits, insurance etc. Investors are also
provided with niche - Equity Investment advice and execution platform with superior
technology aid and unbiased research across sectors, economy and scripts.
Web portal is designed to meet the requirements of everyone from a beginner to a
savvy and well-informed trader with highest service standards, convenience and hassle-
free trading tools. The Web portal aims to provide a one stop window for all financial
needs with seamlessness and customer centric services
CONVENIENCE
Clients could adopt to trade with us either online, or on the phone, or relationship
managers from the convenience of their home or office.
The 4-in-1 Advantage account enables clients to seamlessly move funds and securities
across your bank demat and trading account.
Clients get to enjoy limits across exchanges to trade
No need to issue cheques or delivery instructions.
Place IPO / NCD applications via few clicks using the trading account or by the phone.
No standing in queues or filling application forms.
ASBA application facility.
Customer care centre to address all queries and grievances.
REACH
HDFC securities has a strong unified call centre catering to clients across India
and overseas aiding clients who wish to have their orders placed by a tele-agent. 7
57
Regional language call centre facility is available for clients. Over 128 exclusive
branches across India also service clients locally by dedicated relationship managers.
TRANSPARENCY
With trusted pedigree, a client can be assured of best services in a transparent
manner and is in total control of their funds and stocks.
EXPERTISE
With a decade of experience and a rating of A1+1, HDFC securities has a admired
lineage of providing financial services to customers in a transparent and trusted manner.
They have a dedicated, motivated and experienced team of professionals to provide
customers with top class service.
TIMELY AND RELEVANT INFORMATION
HDFC Securities realize the importance of making information available to
clients as it happens. Empowered with the latest news, developments and unbiased
research, enables a client to take informed decisions.
HDFC SECURITIES OFFERS ONE STOP SHOP, FOR ALL INVESTMENT
NEEDS OF CUSTOMERS:
Equity and Derivatives
IPO / PMS
Mutual Fund
Fixed Deposits
Non Convertible Debentures
General Insurance
Life Insurance
Bonds / Currency Derivatives
REGISTERED OFFICE / CORPORATE OFFICE
HDFC Securities Limited
Office Floor 8, "I THINK" Bldg,
58
Jolly Board Campus,
Kanjurmarg (East),
Mumbai - 400042. India.
Tel : 022 - 30753400
Fax : 022 -30753435
EQUITY
HDFC Securities provides a seamless online real-time platform to trade in stocks. You
can buy or sell shares on both the NSE and BSE. Trading in equities involves more than
stock trading. Equity trading in the stock markets can involve many different securities,
requiring diverse strategies and trading skills. Equities may be traded for short-term and
long-term profits. HDFC Securities are a one-stop financial services shop, most respected
for quality of its advice, personalized service and cutting-edge technology.
Products Offering:
Cash-n-Carry
Margin
Buy Today Sell Tomorrow
Exchange Traded Funds
Off Market Orders
Do It Yourself SIP (Equity SIP)
DERIVATIVES:
59
For the mature investor, who is aware of risks in the market, Derivatives could be a great
way to trade, and HDFC Securities offer a robust platform to trade Derivatives.
Derivatives let customers trade in a large number of stocks and also in Index for a small
margin. For example, if customers had only Rs 2 lakh instead of Rs 10 lakh to buy a
stock, by paying margin of Rs. 2 Lakh they can create position in Derivatives Futures for
higher value. HDFC Securities delivers crisp information on Futures and Options,
contract specifications, and calculators on Option pricing and cost of carry.
IPO:
Participating in Initial Public Offerings (IPOs) can be a financially rewarding exercise.
By investing early in a strong company, customers stand a good chance to reap benefits
over the long term. There are gains to be made in many IPOs, for both short term as well
as long term investor.
60
DISCUSSION ON TRAINING
61
OBJECTIVES & RESEARCH METHODOLOGY
OBJECTIVES FOR THE STUDY:
Primary Objective:
To analyse the stock market movements of the selected scrips in India during 2008-11
To predict the future movements of the selected stock prices for the year 2012
Secondary Objectives:
To understand and analyse the aggregate stock prices of the top scrip’s during 2008-11
To understand and analyse the stock prices of the selected industries during 2008-11
To predict the stock market movements with respect to prices of the scrips for the year 2012
To provide the basic tips and information for the successful investment in the
stocks based on the analysis
62
RESEARCH METHODOLOGY:
The current project is based on the combination of the Primary & Secondary data collection.
Primary Data
Data that has been collected from first-hand-experience is known as primary data. Primary data has not been published yet and is more reliable, authentic and objective. Primary data has not been changed or altered by human beings, therefore its validity is greater than secondary data.
Secondary Data
Secondary data is data collected by someone other than the user. Common sources of secondary data for social science include censuses, surveys, organizational records and data collected through qualitative methodologies or qualitative research. Primary data, by contrast, are collected by the investigator conducting the research.
Secondary data analysis saves time that would otherwise be spent collecting data and, particularly in the case of quantitative data, provides larger and higher-quality databases that would be unfeasible for any individual researcher to collect on their own. In addition, analysts of social and economic change consider secondary data essential, since it is impossible to conduct a new survey that can adequately capture past change and/or developments.
As this Finance project is based on the fundamental and technical analyses, the detailed process of Research Design and Sampling are relevant only to a limited extent. Accordingly, as mentioned before, data has been collected based on Primary & Secondary sources. The sampling is based on convenient random sampling having the justified reasons. The analysis has been made on the stock prices of the selected industries and on the aggregate stock prices of the top companies in NSE & BSE, as well. The basis for the convenient sampling applied for the selection of industries for analysis is frequency of the market fluctuations in the top industries in India during 2008-11.
63
LIMITATIONS TO THE STUDY:-
Personal Limitations:-
The findings and the conclusions in this project is based on my individual opinions.
The results may vary and it’s purely depends upon market conditions. Stock exchange is limited by the amount of companies trading, the money one
can invest, and the current risk given the economic situation. The stock market is by and large run by those who have the money. Smaller investors such as a personal investor or someone like you cannot impact
the stock exchange by your investments only. It takes numerous personal investors to get the market to move. This is due to the funding limitations most of us have to invest in any of the stock market shares.
Economic Limitations:-
The stock exchange is powered by investors who see the news from corporations, governments, and history of the company.
These investors will weigh the news and also the corporation's performance over the long term.
They will decide what is risky or not. When something changes in the economy the stock market can be directly affected. This can make the economy worse or better.
The fears of the crisis also created an issue with many stocks. Companies began to underperform on the market due to consumer fears.
Corporations were backing off from investing in mutually beneficial stocks, as were personal investors. Given the cycle that the economy has it can place a limit on the stock exchange because it is also part of the cycle.
When money is tight or there is no money to spend the stocks will be sold or held onto with little fluctuation.
64
ANALYSIS OF STOCK INDICES (DURING 2008-11)
I. AGGREGATE FUNDAMENTAL & TECHNICAL MOVEMENTS OF STOCK INDICES (BSE & NSE)
I.A. TABULAR & GRAPHICAL REPRESENTATION:
BSE 30 listed companies as on dec2011 data:-
Industry Curr Price Change (%) Prev.Close Open Mkt Cap(Rs cr)
ACC Ltd 1092.8 -3.28 1129.85 1133.8 21171.4BHEL 226.45 -2.20 231.55 234.7 58852.5Bh Airtel Ltd
326.4 -2.97 336.4 340 127711
Cipla Ltd 331 -0.47 332.55 332.75 26620.2DLF Ltd 188.25 -0.37 188.95 191 33097.9HDFC Bank 415.1 2.23 406.05 405.9 97351Hero Moto 1813 -5.06 1909.55 1909 38383.3Hinda Ind Ltd
120.85 -3.09 124.7 125.5 24046.1
Hul 397.4 0.29 396.25 397.9 86803.8Hdfc 627.1 1.32 618.95 621.65 92055.5ICICI Bank 656.8 -0.05 657.15 661.1 77916.8Infosys Ltd 2669.1 -0.19 2674.15 2686 156022ITC Ltd 200.05 1.37 197.35 198.05 152283Jp Asso Ltd 54.9 -5.10 57.85 58.1 12556.7Jindal Steel &
Power Ltd 480.9 -3.66 499.15 502 48263.7
L & T Ltd 1003.95 -2.73 1032.1 1029.7 65822.8M & M Ltd 640.7 -1.80 652.45 654 40479.7Maruti Suzuki
India Ltd 917.1 -0.16 918.55 926 26863.8
NTPC Ltd 156.15 -2.71 160.5 161.45 13279ONGC 253.4 2.47 247.3 250.05 213973Ril Comm Ltd
62 -4.17 64.7 65.1 13808.3
Ril Ind Ltd 722.65 -1.79 735.85 740 236755Ril Infa Ltd 348 -0.71 350.5 351.35 9196.81SBI 1605 -1.63 1631.55 1632 106709Sterl Ind Ltd
89.3 -0.78 90 91.9 30049.1
TCS Ltd 1142 -0.05 1142.55 1141 223806Tata Motors Ltd
176.3 -2.00 179.9 180.7 54660.1
65
Tata Pow Ltd
82.65 -4.01 86.1 86.3 20942.6
Tata Steel Ltd
349.5 -3.81 363.35 365.8 35006.4
Wipro Ltd 395.4 -1.85 402.85 403.5 99024.6
NIFTY 50 companies as on December 2011 data:-
Industry Curr Price
Change (%)
Prev.Close Open Mkt Cap(Rs cr)
ACC Ltd 1088.45 -3.64 1129.6 1131 21171.4Ambuja Cements Ltd
148.35 -3.73 154.1 154 23471
Axis Bank Ltd 813.4 -4.20 849.05 857.7 37142.7Bajaj Auto Ltd 1615.15 -1.58 1641.1 1654.95 47858.9Bharat Heavy Electricals Ltd
224.9 -3.08 232.05 235.25 58852.5
Bharat Petroleum Corporation Ltd
509.65 -2.89 524.8 525.15 18977.2
Bharti Airtel Ltd 327.1 -2.76 336.4 339.8 127711Cairn India Ltd 311.55 0.55 309.85 310.5 56612.2Cipla Ltd 330.35 -0.74 332.8 332.8 26620.2DLF Ltd 187.95 -0.79 189.45 190.4 33097.9Dr Reddys Laboratories Ltd
1583.45 -0.41 1590 1590 27231.5
GAIL (India) Ltd 378.4 0.58 376.2 381 47790HCL Technologies Ltd
395.3 -3.93 411.45 414 28472.7
HDFC Bank Ltd 414.75 2.16 406 406 97351Hindalco Industries Ltd
120.3 -3.61 124.8 125.3 24046.1
Hindustan Unilever Ltd
397.05 0.21 396.2 396.6 86803.8
Housing Development Finance Corporation Ltd
626 1.25 618.25 619.75 92055.5
ICICI Bank Ltd 656.5 -0.11 657.2 662 77916.8Infrastructure Development Finance Company Ltd
101.55 -0.54 102.1 103.1 15294
66
ITC Ltd 199.85 1.19 197.5 199 152283Jaiprakash Associates Ltd
54.2 -6.07 57.7 58.3 12556.7
Jindal Steel & Power Ltd
478 -4.20 498.95 504.4 48263.7
Kotak Mahindra Bank Ltd
441.6 -5.59 467.75 470 35579.5
Larsen & Toubro Ltd
1003.45 -2.85 1032.9 1028.3 65822.8
Mahindra & Mahindra Ltd
637.4 -2.28 652.3 656 40479.7
Maruti Suzuki India Ltd
918.9 0.25 916.65 924 26863.8
NTPC Ltd 155.8 -2.81 160.3 160.3 132793Oil & Natural Gas Corpn Ltd
253.15 2.45 247.1 251.4 213973
Power Grid Corporation of India Ltd
98.3 -0.86 99.15 99.45 45417.6
Punjab National Bank
782 -2.13 799.05 800 26344.3
Ranbaxy Laboratories Ltd
392.75 2.47 383.3 384.25 16046.5
Reliance Capital Ltd
237.4 -0.31 238.15 241.7 6068.29
Reliance Communications Ltd
61.25 -5.26 64.65 65.3 13808.3
Reliance Industries Ltd
722 -1.81 735.3 741.7 236755
(REL)Infrastructure Ltd
346.25 -1.58 351.8 352 9196.81
Reliance Power Ltd 70.2 -3.90 73.05 73.6 20968.3Sesa Goa Ltd 148.8 -5.85 158.05 161.2 14036Siemens Ltd 631.3 -1.95 643.85 643.05 22065.1State Bank of India 1594.85 -2.04 1628.1 1632 106709Steel Authority of India Ltd
76.8 0.20 76.65 77.2 30834.4
Sterlite Industries (India) Ltd
89.2 -0.83 89.95 91.5 30049.1
Sun Pharmaceuticals Industries Ltd
500.65 -1.50 508.25 513.7 53162.5
Suzlon Energy Ltd 17.7 -1.94 18.05 18.45 3385.85Tata Consultancy Services Ltd
1141 -0.23 1143.65 1145.35 223806
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Tata Motors Ltd 176.25 -1.97 179.8 180 54660.1Tata Power Company Ltd
82.2 -4.92 86.45 86.8 20942.6
Tata Steel Ltd 347.8 -4.35 363.6 365.3 35006.4Wipro Ltd 394.05 -2.46 404 402.2 99024.6
NIFTY 50 Stock analysis (INDEX) :-year by year analysis
3 YEAR NIFTY 50 CHART:-
S&P CNX NIFTY (NSE: ^NSEI )
Index Value: 4,841.55Trade Time: 9:49AMChange: 24.45 (0.50%)Prev Close: 4,866.00Open: 4,844.00Day's Range: 4,835.95 - 4,852.0552wk Range: 4,531.15 - 5,944.45
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1 YEAR NIFTY 50 CHART:-
S&P CNX NIFTY (NSE: ^NSEI )
Index Value: 4,832.05Trade Time: 9:53AMChange: 33.95 (0.70%)Prev Close: 4,866.00Open: 4,844.00Day's Range: 4,831.80 - 4,852.0552wk Range: 4,531.15 - 5,944.45
6 MONTHS NIFTY 50 CHART:-
69
S&P CNX NIFTY (NSE: ^NSEI)
Index Value: 4,832.25Trade Time: 9:52AMChange: 33.75 (0.69%)Prev Close: 4,866.00Open: 4,844.00Day's Range: 4,832.10 - 4,852.0552wk Range: 4,531.15 - 5,944.45
3 MONTHS NIFTY 50 CHART:-
As on from Jan 2012 out look
Scrip trigger Price SL T1 T2Buy above 4778 4756 4798 4818 4851Sell Below 4733 4756 4713 4693 4661
Technical’s ... Charts (India bulls) - Market Tracker @ NSE
- Excellent in trending markets- Useless for range bound stocks- Trade only after checking charts
High Low CloseLast 4779.80 4730.15 4749.95Prev. (adjusted) 4782.85 4728.85 4749.65Weekly 4800.50 4608.90 4624.30
70
52 week 5944.45 4531.15Monthly 5099.25 4531.15 4624.30
This stock has excellent liquidity
Intraday support & resistance:
S 2 S 1 Pivot R 1 R 24703.65 4726.80 4753.30 4776.45 4802.95
Moving averages (simple):
5 D 8 D 13 D 20 D 39 D 50 D 200 D4705 4704 4699 4715 4816 4909 5265
Other indicators:
- 5 day RSI: 60 - no indication.- 14 day RSI: 48 - no indication.- Volume: 0 .... 20 day av vol: 0- Williams % R(14): 81 (summation factor 100)- Average Directional Index ADX: 16- Average True Range: ATR(5) 77 - ATR(20) 97- Volatility based on ATR(20): 2.04 %
Trading range (historical)
5 day 10 day 20 dayHighest close 4765.30 4779.00 4866.70Lowest close 4624.30 4624.30 4544.20
Last close: 4749.95 ... 0.01%
EOD charts
71
Swing Commentary:
Swing Trend Eff. Date Price Reversal20 day DN 17-11-2011 4935 49185 day DN 30-12-2011 4624 47833 day UP 03-01-2012 4765 467620 day swing ATR SL: 4734
Support and Resistance:
Resistance (Swing High)Support (Swing Low)Weekly highWeekly lowMonthly highMonthly low
480145314800460950994531
Fibonacci price projections:
0% 61.8% 100% 161.8% 261.8%Up 4531 4698 4801 4968 5238Dn 4801 4634 4531 4364 4094
Technical Analysis
72
BSE SENSEX (BSE)
Overlays: Volume
BSE SENSEX
(BSE: ^BSESN )Index Value: 15,768.82Trade Time: 10:52PM ESTChange: 88.26 (0.56%)Prev Close: 15,857.08Open: 15,789.08Day's Range: 15,766.63 - 15,846.2952wk Range: 15,135.90 - 20,210.60Quotes delayed, except where indicated otherwise. Currency in INR.
Historical Prices
Prices
Date Open High Low Close Avg Vol Adj Close*
Dec 1, 2011 16,555.93 17,003.71 15,135.86 15,454.92 18,500 15,454.92
Nov 1, 2011 17,540.55 17,702.26 15,478.69 16,123.46 18,400 16,123.46
Oct 3, 2011 16,255.97 17,908.13 15,745.43 17,705.01 17,000 17,705.01
Sep 2, 2011 16,963.67 17,211.80 15,801.01 16,453.76 16,800 16,453.76
Aug 1, 2011 18,352.23 18,440.07 15,765.53 16,676.75 14,800 16,676.75
Jul 1, 2011 18,974.96 19,619.65 18,131.86 18,197.20 12,600 18,197.20
Jun 1, 2011 18,527.12 18,873.39 17,314.38 18,845.87 12,700 18,845.87
May 2, 2011 19,224.05 19,253.87 17,786.13 18,503.28 13,700 18,503.28
Apr 1, 2011 19,463.11 19,811.14 18,976.19 19,135.96 13,400 19,135.96
Mar 1, 2011 17,982.28 19,575.16 17,792.17 19,445.22 17,700 19,445.22
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Feb 1, 2011 18,425.18 18,690.97 17,295.62 17,823.40 23,200 17,823.40
Jan 3, 2011 20,621.61 20,664.80 18,038.48 18,327.76 16,600 18,327.76
Dec 1, 2010 19,529.99 20,552.03 19,074.57 20,509.09 13,800 20,509.09
Nov 1, 2010 20,272.49 21,108.64 18,954.82 19,521.25 14,600 19,521.25
Oct 1, 2010 20,094.10 20,854.55 19,768.96 20,032.34 14,400 20,032.34
Sep 1, 2010 18,027.12 20,267.98 18,027.12 20,069.12 16,600 20,069.12
Aug 2, 2010 17,911.31 18,475.27 17,819.99 17,971.12 14,900 17,971.12
Jul 1, 2010 17,679.34 18,237.56 17,395.58 17,868.29 15,600 17,868.29
Jun 1, 2010 16,942.82 17,919.62 16,318.39 17,700.90 23,500 17,700.90
May 3, 2010 17,536.86 17,536.86 15,960.15 16,944.63 19,700 16,944.63
Apr 1, 2010 17,555.04 18,047.86 17,276.80 17,558.71 13,600 17,558.71
Mar 2, 2010 16,438.45 17,793.01 16,438.45 17,527.77 18,100 17,527.77
Feb 1, 2010 16,339.32 16,669.25 15,651.99 16,429.55 20,100 16,429.55
Jan 4, 2010 17,473.45 17,790.33 15,982.08 16,357.96 21,900 16,357.96
Dec 1, 2009 16,947.46 17,530.94 16,577.78 17,464.81 19,800 17,464.81
Nov 3, 2009 15,838.63 17,290.48 15,330.56 16,926.22 25,000 16,926.22
Oct 1, 2009 17,186.20 17,457.26 15,805.20 15,896.28 31,500 15,896.28
Sep 1, 2009 15,691.27 17,142.52 15,356.72 17,126.84 28,500 17,126.84
Aug 3, 2009 15,694.78 16,002.46 14,684.45 15,666.64 29,700 15,666.64
Jul 1, 2009 14,493.84 15,732.81 13,219.99 15,670.31 36,300 15,670.31
Jun 1, 2009 14,790.89 15,600.30 14,016.95 14,493.84 40,300 14,493.84
May 4, 2009 11,635.24 14,930.54 11,621.30 14,625.25 54,700 14,625.25
Apr 1, 2009 9,745.77 11,492.10 9,546.29 11,403.25 52,900 11,403.25
Mar 2, 2009 8,762.88 10,127.09 8,047.17 9,708.50 46,000 9,708.50
Feb 2, 2009 9,363.58 9,724.87 8,619.22 8,891.61 36,600 8,891.61
Jan 2, 2009 9,973.06 10,469.72 8,631.60 9,424.24 61,400 9,424.24
Dec 1, 2008 9,162.94 10,188.54 8,467.43 9,647.31 56,300 9,647.31
Nov 3, 2008 10,209.37 10,945.41 8,316.39 9,092.72 48,300 9,092.72
Oct 1, 2008 13,006.72 13,203.86 7,697.39 9,788.06 46,400 9,788.06
Sep 1, 2008 14,412.99 15,107.01 12,153.55 12,860.43 31,700 12,860.43
Aug 1, 2008 14,064.26 15,579.78 14,002.43 14,564.53 25,200 14,564.53
Jul 1, 2008 13,480.02 15,130.09 12,514.99 14,355.75 30,300 14,355.75
Jun 2, 2008 16,591.46 16,632.72 13,405.54 13,461.60 24,300 13,461.60
May 2, 2008 17,560.15 17,735.70 16,196.02 16,415.57 20,100 16,415.57
Apr 1, 2008 15,771.72 17,480.74 15,297.96 17,287.31 21,100 17,287.31
Mar 3, 2008 17,227.56 17,227.56 14,677.24 15,644.44 25,900 15,644.44
Feb 1, 2008 17,820.67 18,895.34 16,457.74 17,578.72 16,800 17,578.72
Jan 2, 2008 20,393.10 21,206.77 15,332.42 17,648.71 21,400 17,648.71
74
* Close price adjusted for dividends and splits.
Technical Analysis
BSE SENSEX (BSE)
BSE SENSEX
6 months
(BSE: ^BSESN )Index Value: 15,798.36Trade Time: 10:58PM ESTChange: 58.72 (0.37%)Prev Close: 15,857.08Open: 15,789.08Day's Range: 15,766.63 - 15,846.2952wk Range: 15,135.90 - 20,210.60Quotes delayed, except where indicated otherwise. Currency in INR.
Historical Prices
Prices
Date Open High Low Close Avg Vol Adj Close*
Dec 1, 2011 16,555.93 17,003.71 15,135.86 15,454.92 18,500 15,454.92
Nov 1, 2011 17,540.55 17,702.26 15,478.69 16,123.46 18,400 16,123.46
Oct 3, 2011 16,255.97 17,908.13 15,745.43 17,705.01 17,000 17,705.01
75
Sep 2, 2011 16,963.67 17,211.80 15,801.01 16,453.76 16,800 16,453.76
Aug 1, 2011 18,352.23 18,440.07 15,765.53 16,676.75 14,800 16,676.75
Jul 1, 2011 18,974.96 19,619.65 18,131.86 18,197.20 12,600 18,197.20
1.B. INFERENCES OF THE AGGREGATE ANALYSIS:
2. STOCK INDEX ANALYSIS – INDUSTRY WISE
2.A. TABULAR & GRAPHICAL REPRESENTATION (FOR SIX INDUSTRIES)
2.A.1. FMCG INDUSTRY:
HUL Stock analysis :-year by year analysis
5 YEAR HUL CHART:-
76
Company: HINDUNILVR High/Low prices for the period: 01-Jan-2008 to 31-Dec-2008
Symbol Total Traded Quantity Turnover in LacsHINDUNILVR 72,83,73,419 17,04,199.03
Particulars Price DatesOpen 213.25 01-Jan-2008High 267.80 19-Dec-2008Low 169.00 22-Jan-2008Close 250.30 31-Dec-2008All Time High 3,234.00 25-Feb-2000All Time Low 0.00 30-Apr-1999
3 YEAR HUL CHART:-
77
Company: HINDUNILVR High/Low prices for the period: 01-Jan-2009 to 31-Dec-2009
Symbol Total Traded Quantity Turnover in LacsHINDUNILVR 85,56,26,192 21,82,387.60
Particulars Price DatesOpen 251.00 01-Jan-2009High 306.70 27-Jul-2009Low 210.85 09-Mar- 2009Close 264.80 31-Dec-2009All Time High 3,234.00 25-Feb-2000All Time Low 0.00 30-Apr-1999
1 YEAR HUL CHART:-
Company: HINDUNILVR High/Low prices for the period: 01-Jan-2010 to 31-Dec-2010
Symbol Total Traded Quantity Turnover in LacsHINDUNILVR 59,54,14,623 15,62,235.76
Particulars Price Dates
78
Open 264.80 04-Jan-2010High 320.85 10-Nov-2010Low 218.00 15-Mar-2010Close 312.90 31-Dec-2010All Time High 3,234.00 25-Feb-2000All Time Low 0.00 30-Apr-1999
3 MONTHS HUL CHART:-
Company: HINDUNILVR High/Low prices for the period: 01-Jan-2011 to 31-Dec-2011
Symbol Total Traded Quantity Turnover in Lacs
HINDUNILVR 59,63,54,423 19,52,815.73
Particulars Price DatesOpen 310.05 03-Jan-2011High 420.25 26-Dec-2011Low 264.45 22-Mar-2011Close 407.40 30-Dec-2011All Time High
3,234.00 25-Feb-2000
All Time Low 0.00 30-Apr-1999
Company: HINDUNILVR High/Low prices for the period: 01-Jan-2012 to 2012
Symbol Total Traded Quantity Turnover in Lacs HINDUNILVR 1,51,53,665 60,049.12
Particulars Price DatesOpen 408.15 02-Jan-2012High 411.70 03-Jan-2012Low 388.35 06-Jan-2012
79
Close 392.50 11-Jan-2012All Time High 3,234.00 25-Feb-2000All Time Low 0.00 30-Apr-1999
Hindustan Unilever- Key Fundamentals
Market Cap (Rs Cr.): 85,459
EPS - TTM (Rs):9.86
P/E Ratio (x):39.60
Face Value (Rs):1.00
Latest Div. (%):350.00
Div. Yield (%):1.64
Book Value / sh. (Rs):12.19
P/B Ratio (x):32.45
Quarterly - Hindustan Unilever Ltd.
Sep'11 Jun'11 Mar'11 Dec'10 Sep'10
INCOME:
Net Sales Turnover 5,610.48 5,580.36 4,966.61 5,127.71 4,764.67
Other Income 77.67 50.60 55.98 77.02 76.82
Total Income 5,688.15 5,630.96 5,022.59 5,204.73 4,841.49
EXPENSES
Stock Adjustments -52.63 190.26 -195.18 -102.99 -103.44
Raw Material Consumed 2,290.54 2,114.10 2,104.98 1,941.51 1,799.51
Power and Fuel 0.00 0.00 0.00 0.00 0.00
Employee Expenses 287.31 286.23 234.60 231.04 245.01
Administration and Selling Expenses
651.37 632.95 623.29 743.26 646.48
Research and Development Expenses
0.00 0.00 0.00 0.00 0.00
Expenses Capitalised 0.00 0.00 0.00 0.00 0.00
80
Other Expenses 1,607.21 1,601.55 1,552.42 1,589.91 1,530.22
Provisions Made 0.00 0.00 0.00 0.00 0.00
TOTAL EXPENSES 4,783.80 4,825.09 4,320.11 4,402.73 4,117.78
Operating Profit 826.68 755.27 646.50 724.98 646.89
EBITDA 904.35 805.87 702.48 802.00 723.71
Depreciation 57.10 56.20 55.63 56.33 55.37
EBIT 847.25 749.67 646.85 745.67 668.34
Interest 0.54 0.02 0.02 0.06 0.07
EBT 846.71 749.65 646.83 745.61 668.27
Taxes 202.21 180.24 161.28 172.39 142.59
Profit and Loss for the Year 644.50 569.41 485.55 573.22 525.68
Extraordinary Items 0.00 0.00 0.00 0.00 0.00
Prior Year Adjustment 0.00 0.00 0.00 0.00 0.00
Other Adjustments 0.00 -57.75 -83.60 0.00 0.00
Reported PAT 688.92 627.16 569.15 637.51 566.12
KEY ITEMS
Reserves Written Back 0.00 0.00 0.00 0.00 0.00
Equity capital 216.10 216.07 215.95 218.21 218.21
Reserves and Surplus 0.00 0.00 0.00 0.00 0.00
Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00
Agg. Non-Promoter Shares(lacks)
10,261.10 10,258.34 10,246.22 10,472.70 10,472.70
Agg. Non-Promoter Holding (%)
47.48 47.48 47.45 47.99 47.99
Government Share 0.00 0.00 0.00 0.00 0.00
Capital Adequacy Ratio 0.00 0.00 0.00 0.00 0.00
81
EPS (Rs.) 3.19 2.90 2.64 2.92 2.59
2.A.2. PHARMACEUTICAL INDUSTRY
RANBAXY Stock analysis :-year by year analysis
5 YEARS RANBAXY CHART:-
Company : RANBAXY High/Low prices for the period: 01-Jan-2008 to 31-Dec-2008
Symbol Total Traded Quantity Turnover in Lacs RANBAXY 64,90,33,460 27,77,231.35
Particulars Price DatesOpen 428.00 01-Jan-2008High 660.00 16-Jun-2008Low 163.50 29-Oct-2008Close 252.35 31-Dec-2008All Time High 1,279.40 21-Dec-2004All Time Low 0.00 30-Apr-1999
3 YEARS RANBAXY CHART:-
Company: RANBAXY High/Low prices for the period: 01-Jan-2009 to 31-Dec-2009
82
Symbol Total Traded Quantity Turnover in LacsRANBAXY 53,19,48,311 14,72,520.95
Particulars Price DatesOpen 252.00 01-Jan-2009High 538.45 21-Dec-2009
Low 133.10 12-Mar-2009
Close 517.95 31-Dec-2009All Time High 1,279.40 21-Dec-2004
All Time Low 0.00 30-Apr-1999
Company: RANBAXY High/Low prices for the period: 01-Jan-2010 to 31-Dec-2010
Symbol Total Traded Quantity Turnover in LacsRANBAXY 29,11,14,502 14,38,032.78
Particulars Price DatesOpen 518.50 04-Jan-2010High 624.20 08-Nov-2010Low 394.00 05-Feb-2010Close 598.65 31-Dec-2010All Time High 1,279.40 21-Dec-2004All Time Low 0.00 30-Apr-1999
1 YEARS RANBAXY CHART:-
6 MONTHS RANBAXY CHART:-
83
Company: RANBAXY High/Low prices for the period: 01-Jan-2011 to 31-Dec-2011
Symbol Total Traded Quantity Turnover in Lacs
RANBAXY 19,78,75,488 9,53,847.39
Particulars Price DatesOpen 602.25 03-Jan-2011High 611.70 04-Jan-2011Low 365.50 19-Dec-2011Close 404.90 30-Dec-2011All Time High 1,279.40 21-Dec-2004All Time Low 0.00 30-Apr-1999
Company: RANBAXY High/Low prices for the period: 01-Jan-2012 to 31-Dec-2012
Symbol Total Traded Quantity Turnover in LacsRANBAXY 74,30,908 32,220.42
Particulars Price DatesOpen 403.90 02-Jan-2012High 447.20 09-Jan-2012Low 402.10 02-Jan-2012Close 443.70 11-Jan-2012All Time High 1,279.40 21-Dec-2004All Time Low 0.00 30-Apr-1999
Ranbaxy Laboratories- Key Fundamentals
Market Cap (Rs Cr.):18,441
84
EPS - TTM (Rs):-3.04
P/E Ratio (x):-144.69
Face Value (Rs):5.00
Latest Div. (%):40.00
Div. Yield (%):0.45
Book Value / sh. (Rs) :121.48
P/B Ratio (x):3.60
Quarterly - Ranbaxy Laboratories Ltd.
Sep'11 Jun'11 Mar'11 Dec'10 Sep'10
INCOME:
Net Sales Turnover 1,425.06 1,282.02 1,056.44 1,101.36 1,181.05
Other Income 104.20 44.74 80.62 -78.20 177.22
Total Income 1,529.26 1,326.76 1,137.06 1,023.16 1,358.27
EXPENSES
Stock Adjustments -15.80 -66.23 -86.90 -12.16 -50.91
Raw Material Consumed 424.46 485.18 497.30 425.51 429.36
Power and Fuel 0.00 0.00 0.00 0.00 0.00
Employee Expenses 223.86 227.22 226.92 192.73 192.38
Administration and Selling Expenses 0.00 0.00 0.00 0.00 0.00
Research and Development Expenses
0.00 0.00 0.00 0.00 0.00
Expenses Capitalised 0.00 0.00 0.00 0.00 0.00
Other Expenses 863.24 567.24 382.35 569.62 586.80
Provisions Made 0.00 0.00 0.00 0.00 0.00
TOTAL EXPENSES 1,495.76 1,213.40 1,019.68 1,175.70 1,157.63
85
Operating Profit -70.70 68.62 36.77 -74.34 23.42
EBITDA 33.50 113.35 117.39 -152.54 200.64
Depreciation 49.31 46.98 46.26 64.95 45.47
EBIT -15.81 66.38 -19.67 -217.50 155.16
Interest 14.24 14.83 35.36 -101.38 9.57
EBT -30.04 51.55 -55.04 -116.11 145.60
Taxes 9.00 -5.48 -0.1 0.68 22.31
Profit and Loss for the Year -39.04 57.02 -54.89 -116.79 123.28
Extraordinary Items 0.00 0.00 0.00 0.00 0.00
Prior Year Adjustment 0.00 0.00 0.00 0.00 0.00
Other Adjustments 0.00 -93.35 1.98 0.00 0.00
Reported PAT -439.20 150.38 -52.91 55.23 221.77
KEY ITEMS
Reserves Written Back 0.00 0.00 0.00 0.00 0.00
Equity capital 210.75 210.68 210.63 210.52 210.38
Reserves and Surplus 0.00 0.00 0.00 4,915.28 0.00
Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00
Agg. Non-Promoter Shares(lacks) 1,454.62 1,454.68 1,460.31 1,459.97 1,462.08
Agg. Non-Promoter Holding (%) 34.51 34.52 34.67 34.68 34.75
Government Share 0.00 0.00 0.00 0.00 0.00
Capital Adequacy Ratio 0.00 0.00 0.00 0.00 0.00
EPS (Rs.) -10.42 3.57 -1.26 1.31 5.27
2.A.3. AUTOMOBILES INDUSTRY
TATA MOTORS Stock analysis :-year by year analysis:-
86
5 YEARS TATA MOTORS CHART:-
Company: TATAMOTORS High/Low prices for the period: 01-Jan-2008 to 31-Dec-2008
Symbol Total Traded Quantity Turnover in LacsTATAMOTORS 30,17,65,777 12,22,505.12
Particulars Price DatesOpen 742.00 01-Jan-2008High 824.10 04-Jan-2008Low 124.80 21-Nov-2008Close 159.85 31-Dec-2008All Time High 997.80 09-May-2006All Time Low 0.00 31-Mar-1999
3 YEARS TATA MOTORS CHART:-
Company: TATAMOTORS High/Low prices for the period: 01-Jan-2009 to 31-Dec-2009
Symbol Total Traded Quantity Turnover in LacsTATAMOTORS 1,18,16,92,990 46,91,834.46
87
Particulars Price DatesOpen 160.95 01-Jan-2009High 799.60 31-Dec-2009Low 128.00 18-Feb-2009Close 791.55 31-Dec-2009All Time High 997.80 09-May-2006All Time Low 0.00 31-Mar-1999
Company: TATAMOTORS High/Low prices for the period: 01-Jan-2010 to 31-Dec-2010
Symbol Total Traded Quantity Turnover in LacsTATAMOTORS 97,75,21,776 89,43,184.02
Particulars Price DatesOpen 789.90 04-Jan-2010High 1,382.00 06-Dec-2010Low 633.75 08-Feb-2010Close 1,308.35 31-Dec-2010All Time High 997.80 09-May-2006All Time Low 0.00 31-Mar-1999
1 YEARS TATA MOTORS CHART:-
88
3 MONTHS TATA MOTORS CHART:-
Company: TATAMOTORS High/Low prices for the period: 01-Jan-2011 to 31-Dec-2011
Symbol Total Traded Quantity Turnover in LacsTATAMOTORS 1,58,70,51,389 66,89,874.50
Particulars Price DatesOpen 1,327.70 03-Jan-2011High 1,335.00 03-Jan-2011Low 137.55 13-Sep-2011Close 178.70 30-Dec-2011All Time High 997.80 09-May-2006All Time Low 0.00 31-Mar-1999
Company: TATAMOTORS High/Low prices for the period: 01-Jan-2012 to 31-Dec-2012
89
Symbol Total Traded Quantity Turnover in LacsTATAMOTORS 12,27,56,102 2,44,461.98
Particulars Price DatesOpen 180.95 02-Jan-2012High 207.30 11-Jan-2012Low 178.80 02-Jan-2012Close 204.90 11-Jan-2012All Time High 997.80 09-May-2006All Time Low 0.00 31-Mar-1999
Tata Motors- Key Fundamentals
Market Cap (Rs Cr.):63,622
EPS - TTM (Rs):6.91
P/E Ratio (x):14.52
Face Value (Rs):2.00
Latest Div. (%):200.00
Div. Yield (%):1.99
Book Value / sh. (Rs) :63.05
P/B Ratio (x):3.18
Quarterly - Tata Motors Ltd.Sep'11 Jun'11 Mar'11 Dec'10 Sep'10
INCOME:
Net Sales Turnover 12,953.80 11,897.89 14,600.58 11,519.55 11,504.07
Other Income 56.78 115.52 31.03 5.41 77.52
Total Income 13,010.58 12,013.41 14,631.61 11,524.96 11,581.59
EXPENSES
Stock Adjustments -31.80 -537.28 98.95 145.03 -139.76
Raw Material Consumed 8,107.32 7,378.61 8,177.16 6,498.97 6,541.77
Power and Fuel 0.00 0.00 0.00 0.00 0.00
Employee Expenses 682.85 621.10 622.38 580.88 580.96
Administration and Selling Expenses
0.00 0.00 0.00 0.00 0.00
Research and Development 0.00 0.00 0.00 0.00 0.00
90
Expenses
Expenses Capitalised -229.84 -198.44 -215.92 -219.80 -213.05
Other Expenses 3,552.34 3,667.31 4,671.52 3,346.20 3,639.48
Provisions Made 0.00 0.00 0.00 0.00 0.00
TOTAL EXPENSES 12,080.87 10,931.30 13,354.09 10,351.28 10,409.40
Operating Profit 872.93 966.59 1,246.49 1,168.27 1,094.67
EBITDA 929.71 1,082.11 1,277.52 1,173.68 1,172.19
Depreciation 386.91 365.14 384.69 337.07 331.64
EBIT 542.80 716.97 892.83 836.61 840.55
Interest 212.10 253.15 247.90 274.92 307.16
EBT 330.70 463.82 644.93 561.69 533.39
Taxes -65.52 64.98 17.17 121.13 104.47
Profit and Loss for the Year 396.22 398.84 627.76 440.56 428.92
Extraordinary Items 0.00 0.00 0.00 0.00 0.00
Prior Year Adjustment 0.00 0.00 0.00 0.00 0.00
Other Adjustments 0.00 -2.44 0.00 0.00 0.00
Reported PAT 102.02 401.28 573.34 410.06 432.70
KEY ITEMS
Reserves Written Back 0.00 0.00 0.00 0.00 0.00
Equity capital 634.75 634.75 637.71 633.11 570.60
Reserves and Surplus 0.00 0.00 19,351.40 0.00 0.00
Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00
Agg. Non-Promoter Shares(lacks) 12,507.24 2,464.70 2,410.72 2,513.87 2,590.77
Agg. Non-Promoter Holding (%) 46.46 45.78 44.78 46.84 51.16
Government Share 0.00 0.00 0.00 0.00 0.00
Capital Adequacy Ratio 0.00 0.00 0.00 0.00 0.00
EPS (Rs.) 0.38 7.45 10.65 7.64 8.54
2.A.4. HEAVY INDUSTRY
SAIL Stock analysis :-year by year analysis:-
5 YEARS SAIL CHART:-
91
Company: SAIL High/Low prices for the period: 01-Jan-2008 to 31-Dec-2008
Symbol Total Traded Quantity Turnover in LacsSAIL 2, 65, 93, 23,716 40, 26,058.56
Particulars Price DatesOpen 284.70 01-Jan-2008High 290.40 01-Jan-2008Low 55.25 20-Nov-2008Close 77.50 31-Dec-2008All Time High 293.00 06-Dec-2007All Time Low 3.10 24-Dec-1998
Company: SAIL High/Low prices for the period: 01-Jan-2009 to 31-Dec-2009
Symbol Total Traded Quantity Turnover in LacsSAIL 2,56,14,49,338 34, 99,769.52
Particulars Price DatesOpen 78.00 01-Jan-2009High 243.80 31-Dec-2009Low 69.50 03-Mar-2009Close 241.70 31-Dec-2009All Time High 293.00 06-Dec-2007All Time Low 3.10 24-Dec-1998
3 YEAR SAIL CHART:-
92
Company: SAIL High/Low prices for the period: 01-Jan-2010 to 31-Dec-2010
Symbol Total Traded Quantity Turnover in LacsSAIL 99,08,47,711 21,15,133.60
Particulars Price DatesOpen 240.70 04-Jan-2010High 267.00 06-Jan-2010Low 166.00 25-Nov-2010Close 182.50 31-Dec-2010All Time High 293.00 06-Dec-2007All Time Low 3.10 24-Dec-1998
1 YEAR SAIL CHART:-
3 MONTHS SAIL CHART:-
93
Company: SAIL High/Low prices for the period: 01-Jan-2011 to 31-Dec-2011
Symbol Total Traded Quantity Turnover in LacsSAIL 80,38,36,253 9,94,098.13
Particulars Price DatesOpen 183.50 03-Jan-2011High 189.70 04-Jan-2011Low 73.20 19-Dec-2011Close 81.50 30-Dec-2011All Time High 293.00 06-Dec-2007All Time Low 3.10 24-Dec-1998
Company: SAIL High/Low prices for the period: 01-Jan-2012 to 31-Dec-2012
Symbol Total Traded Quantity Turnover in LacsSAIL 2,75,20,602 23,768.83
Particulars Price DatesOpen 81.90 02-Jan-2012High 93.40 12-Jan-2012Low 79.70 02-Jan-2012Close 91.35 12-Jan-2012All Time High 293.00 06-Dec-2007 All Time Low 3.10 24-Dec-1998
Steel Authority of India (SAIL) - Key Fundamentals
94
Market Cap (Rs Cr.): 35,130
EPS - TTM (Rs):10.84
P/E Ratio (x):7.74
Face Value (Rs):10.00
Latest Div. (%):12.00
Div. Yield (%):2.82
Book Value / sh. (Rs) :89.75
P/B Ratio (x):0.95
Quarterly - Steel Authority of India (SAIL) Ltd
Sep'11 Jun'11 Mar'11 Dec'10 Sep'10
INCOME:
Net Sales Turnover 10,979.62 10,926.00 12,180.46 11,312.84 10,747.44
Other Income 490.26 463.04 407.98 271.08 375.38
Total Income 11,469.88 11,389.04 12,588.44 11,583.92 11,122.82
EXPENSES
Stock Adjustments -454.79 -279.94 3.40 36.26 286.52
Raw Material Consumed 5,608.45 5,228.96 5,404.03 5,262.31 4,879.43
Power and Fuel 1,123.72 1,017.05 945.06 887.61 876.61
Employee Expenses 1,980.80 2,251.18 2,047.78 1,863.47 1,700.37
Administration and Selling Expenses
0.00 0.00 0.00 0.00 0.00
Research and Development Expenses
0.00 0.00 0.00 0.00 0.00
Expenses Capitalised 0.00 0.00 0.00 0.00 0.00
Other Expenses 1,394.30 1,397.34 1,399.10 1,467.50 1,462.25
Provisions Made 0.00 0.00 0.00 0.00 0.00
TOTAL EXPENSES 9,652.48 9,614.59 9,799.37 9,517.15 9,205.18
Operating Profit 1,327.14 1,311.41 2,381.09 1,795.69 1,542.26
EBITDA 1,817.40 1,774.45 2,789.07 2,066.77 1,917.64
Depreciation 393.78 374.16 387.14 379.33 368.82
95
EBIT 1,423.62 1,400.29 2,401.93 1,687.44 1,548.82
Interest 200.01 170.95 177.03 59.24 109.04
EBT 1,223.61 1,229.34 2,224.90 1,628.20 1,439.78
Taxes 221.28 391.28 699.96 520.73 511.39
Profit and Loss for the Year 1,002.33 838.06 1,524.94 1,107.47 928.39
Extraordinary Items 0.00 0.00 0.00 0.00 0.00
Prior Year Adjustment 1.03 0.00 5.67 0.00 9.10
Other Adjustments 0.00 0.00 0.00 0.00 0.00
Reported PAT 494.64 838.06 1,530.61 1,107.47 1,090.01
KEY ITEMS
Reserves Written Back 0.00 0.00 0.00 0.00 0.00
Equity capital 4,130.53 4,130.40 4,130.40 4,130.40 4,130.40
Reserves and Surplus 0.00 0.00 0.00 0.00 0.00
Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00
Agg. Non-Promoter Shares(lacks) 5,852.23 5,850.98 5,850.96 5,850.84 5,850.82
Agg. Non-Promoter Holding (%) 14.17 14.17 14.16 14.16 14.16
Government Share 0.00 0.00 0.00 0.00 0.00
Capital Adequacy Ratio 0.00 0.00 0.00 0.00 0.00
EPS (Rs.) 1.20 2.03 3.70 2.68 2.64
2.A.5.BANK INDUSTRY
AXIS BANK Stock analysis:-year by year analysis:-
96
5 YEAR AXIS BANK CHART:-
Company: AXISBANK High/Low prices for the period: 01-Jan-2008 to 31-Dec-2008
Symbol Total Traded Quantity Turnover in LacsAXISBANK 58,05,15,805 38,91,032.05
Particulars Price DatesOpen 970.30 01-Jan-2008High 1,291.50 14-Jan-2008Low 352.50 28-Nov-2008Close 504.70 31-Dec-2008All Time High 1,368.90 16-Jul-2010All Time Low 12.00 26-Apr-1999
Company: AXISBANK High/Low prices for the period: 01-Jan-2009 to 31-Dec-2009
Symbol Total Traded Quantity Turnover in LacsAXISBANK 77,91,31,186 52,63,674.09
Particulars Price DatesOpen 508.50 01-Jan-2009High 1,064.00 03-Dec-2009Low 278.25 09-Mar-2009Close 989.20 31-Dec-2009All Time High 1,368.90 16-Jul-2010All Time Low 12.00 26-Apr-1999
3 YEAR AXIS BANK CHART:-
97
Company: AXISBANK High/Low prices for the period: 01-Jan-2010 to 31-Dec-2010
Symbol Total Traded Quantity Turnover in LacsAXISBANK 39,03,13,748 49,31,423.05
Particulars Price DatesOpen 993.90 04-Jan-2010High 1,608.50 14-Oct-2010Low 965.15 27-Jan-2010Close 1,350.10 31-Dec-2010All Time High 1,368.90 16-Jul-2010All Time Low 12.00 26-Apr-1999
1 YEAR AXIS BANK CHART:-
3 MONTHS AXIS BANK CHART:-
98
Company: AXISBANK High/Low prices for the period: 01-Jan-2011 to 31-Dec-2011
Symbol Total Traded Quantity Turnover in LacsAXISBANK 46,09,42,444 53,76,191.39
Particulars Price DatesOpen 1,365.00 03-Jan-2011High 1,460.45 08-Apr-2011Low 803.30 30-Dec-2011Close 808.10 30-Dec-2011All Time High 1,368.90 16-Jul-2010All Time Low 12.00 26-Apr-1999
Company: AXISBANK High/Low prices for the period: 01-Jan-2012 to 31-Dec-2012
Symbol Total Traded Quantity Turnover in LacsAXISBANK 2,38,56,175 2,07,621.86
Particulars Price DatesOpen 810.00 02-Jan-2012High 968.45 12-Jan-2012Low 784.00 02-Jan-2012Close 940.50 12-Jan-2012All Time High 1,368.90 16-Jul-2010All Time Low 12.00 26-Apr-1999
Axis Bank- Key Fundamentals
99
Market Cap (Rs Cr.):34,966
EPS - TTM (Rs):91.53
P/E Ratio (x):9.53
Face Value (Rs):10.00
Latest Div. (%):140.00
Div. Yield (%):1.65
Book Value / sh. (Rs) :460.54
P/B Ratio (x):1.84
Quarterly - Axis Bank Ltd.
Sep'11 Jun'11 Mar'11 Dec'10 Sep'10
INCOME:
Net Sales Turnover 5,275.97 4,881.40 4,366.66 3,838.31 3,624.25
Other Income 1,234.92 1,167.87 1,450.40 1,147.71 1,033.24
Total Income 6,510.89 6,049.27 5,817.06 4,986.02 4,657.49
EXPENSES
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Raw Material Consumed 0.00 0.00 0.00 0.00 0.00
Power and Fuel 0.00 0.00 0.00 0.00 0.00
Employee Expenses 498.62 509.96 396.02 396.16 405.30
Administration and Selling Expenses
0.00 0.00 0.00 0.00 0.00
Research and Development Expenses
0.00 0.00 0.00 0.00 0.00
Expenses Capitalised 0.00 0.00 0.00 0.00 0.00
Other Expenses 967.92 823.53 934.57 826.19 756.69
Provisions Made 405.58 175.84 254.39 313.88 378.76
TOTAL EXPENSES 1,872.12 1,509.33 1,584.98 1,536.23 1,540.75
Operating Profit 3,403.85 3,372.07 2,781.68 2,302.08 2,083.50
EBITDA 4,638.77 4,539.94 4,232.08 3,449.79 3,116.74
100
Depreciation 0.00 0.00 0.00 0.00 0.00
EBIT 5,044.35 4,715.78 4,486.47 3,763.67 3,495.50
Interest 3,268.71 3,157.30 2,665.66 2,105.19 2,009.15
EBT 1,775.64 1,558.48 1,820.81 1,658.48 1,486.35
Taxes 449.74 440.29 546.31 453.24 372.45
Profit and Loss for the Year 1,325.90 1,118.19 1,274.50 1,205.24 1,113.90
Extraordinary Items 0.00 0.00 0.00 0.00 0.00
Prior Year Adjustment 0.00 0.00 0.00 0.00 0.00
Other Adjustments -405.58 -175.84 -254.39 -313.88 -378.76
Reported PAT 920.32 942.35 1,020.11 891.36 735.14
KEY ITEMS
Reserves Written Back 0.00 0.00 0.00 0.00 0.00
Equity capital 412.33 411.88 410.55 409.90 408.84
Reserves and Surplus 0.00 0.00 0.00 0.00 0.00
Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00
Agg. Non-Promoter Shares(lacks) 2,146.93 2,177.70 2,200.56 2,198.19 2,200.26
Agg. Non-Promoter Holding (%) 52.07 52.87 53.60 53.63 53.82
Government Share 0.00 0.00 0.00 0.00 0.00
Capital Adequacy Ratio 11.35 12.53 12.65 12.46 13.68
EPS (Rs.) 22.32 22.88 24.85 21.75 17.98
2.A.6. INFORMATION TECHNOLOGY INDUSTRY
INFY Stock analysis:-year by year analysis :-
101
5 YEAR INFY CHART:-
3 YEAR INFY CHART:-
Company: INFY High/Low prices for the period: 01-Jan-2008 to 31-Dec-2008
102
Symbol Total Traded Quantity Turnover in LacsINFOSYSTCH 44,62,51,540 68,72,214.03
Particulars Price DatesOpen 1,766.60 01-Jan-2008High 2,046.50 06-Jun-2008Low 1,040.00 10-Oct-2008Close 1,115.45 31-Dec-2008All Time High 16,875.25 04-Jan-2000All Time Low 0.00 30-May-2001
Company: INFY High/Low prices for the period: 01-Jan-2009 to 31-Dec-2009
Symbol Total Traded Quantity Turnover in LacsINFOSYSTCH 37,45,94,208 65,16,071.04
Particulars Price DatesOpen 1,116.00 01-Jan-2009High 2,614.00 31-Dec-2009Low 1,111.75 01-Jan-2009Close 2,601.10 31-Dec-2009All Time High 16,875.25 04-Jan-2000All Time Low 0.00 30-May-2001
Company: INFY High/Low prices for the period: 01-Jan-2010 to 31-Dec-2010
Symbol Total Traded Quantity Turnover in LacsINFOSYSTCH 24,55,06,257 68,91,620.16
Particulars Price DatesOpen 2,610.00 04-Jan-2010High 3,454.00 30-Dec-2010Low 2,329.00 05-Feb-2010Close 3,442.75 31-Dec-2010All Time High 16,875.25 04-Jan-2000All Time Low 30-May-2001
1 YEAR INFY CHART:-
103
Company: INFY High/Low prices for the period: 01-Jan-2011 to 31-Dec-2011
Symbol Total Traded Quantity Turnover in LacsINFY 31,78,16,108 88,74,226.23
Particulars Price DatesOpen 3,444.00 03-Jan-2011High 3,499.00 04-Jan-2011Low 2,161.50 25-Aug-2011Close 2,767.65 30-Dec-2011All Time High 16,875.25 04-Jan-2000All Time Low 0.00 30-May-2001
3 MONTHS INFY CHART:-
Company: INFY High/Low prices for the period: 01-Jan-2012 to 31-Dec-2012
104
Symbol Total Traded Quantity Turnover in LacsINFY 1,75,19,748 4,78,264.78
Particulars Price DatesOpen 2,759.20 02-Jan-2012High 2,894.90 11-Jan-2012Low 2,552.25 13-Jan-2012Close 2,584.20 13-Jan-2012All Time High 16,875.25 04-Jan-2000All Time Low 0.00 30-May-2001
Infosys- Key Fundamentals
Market Cap (Rs Cr.): 163,892
EPS - TTM (Rs):119.24
P/E Ratio (x):23.87
Face Value (Rs):5.00
Latest Div. (%):300.00
Div. Yield (%):2.10
Book Value / sh. (Rs) :426.70
P/B Ratio (x):6.69
Basics
All figures in Rs. crore(s)
Attribute Dec'10 Mar'11 Jun'11 Sep'11 Dec'11
Sales 6,534.00 6,668.00 6,905.00 7,470.00 8,696.00
Operating profit 2,177.00 2,199.00 2,074.00 2,359.00 2,922.00
Interest - - - - -
Gross profit 2,452.00 2,586.00 2,489.00 2,742.00 3,344.00
105
Attribute Dec'10 Mar'11 Jun'11 Sep'11 Dec'11
EPS (Rs) 28.59 30.14 28.82 31.74 38.94
DetailsAll figures in Rs. crore(s)
Attribute Dec'10 Mar'11 Jun'11 Sep'11 Dec'11
Other income 275.00 387.00 415.00 383.00 422.00
Stock adjustment - - - - -
Raw material - - - - -
Power and fuel - - - - -
Employee expenses 3,208.00 3,208.00 3,534.00 3,713.00 4,175.00
Excise - - - - -
Admin and selling expenses 697.00 709.00 1,024.00 407.00 479.00
Research and development expenses
- - - - -
Expenses capitalized - - - - -
Other expenses 452.00 552.00 273.00 991.00 1,120.00
Provisions made - - - - -
Depreciation 184.00 189.00 191.00 201.00 198.00
Taxation 627.00 667.00 644.00 719.00 911.00
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Attribute Dec'10 Mar'11 Jun'11 Sep'11 Dec'11
Net profit / loss 1,641.00 1,730.00 1,654.00 1,822.00 2,235.00
Extra ordinary item - - - - -
Prior year adjustments - - - - -
Equity capital 287.00 287.00 287.00 287.00 287.00
Equity dividend rate - - - - -
Agg.of non-prom. shares (Lacs) 3,770.80 3,810.16 3,979.13 4,040.88 4,010.66
Agg.of non promotoholding (%) 65.67 66.36 69.30 70.37 69.84
OPM (%) 33.32 32.98 30.04 31.58 33.60
GPM (%) 36.01 36.65 34.00 34.92 36.67
NPM (%) 24.10 24.52 22.60 23.20 24.51
2. B. INFERENCES FOR THE INDUSTRY-WISE STOCK INDEX ANALYSIS
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PREDICTION OF STOCK PRICES IN 2012 BASED ON THE PAST ANALYSIS
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Market in 2011 and hope is 2012 will give a new beginning:-
Going into 2012:
We are standing at the cusp of 2012, will there be new beginning, and this is the question
every investor is asking. 2011 has seen much of the pain in terms of Euro Zone debt
crisis, US downgrade by S&P or emerging market reeling under the pressure of higher
interest rate and de-growth.
We expect some of the issue will get solved or at least the clarity over things would
emerge. What would be the important things to be seen is will Euro Nation get
downgraded in 2012.
Euro Zone Nation May be Downgraded in 2012:
We expect most of the Euro zone nation would get downgraded. Nation with AAA a
rating could be stripped off this coveted standard and gets AA rating. One could say that
world is moving into AA world, where no nation has AAA rating.
Euro nation will haunt the global market going forward into 2012. We expect some stern
action from EU. A fiscal union sort is possible.
What went wrong for the Indian Economy in 2011?
Inflation
High Interest rate
Depreciating Rupee
Costly Fuel
Slowing GDP growth and IIP
2G Scam and Anna asking for Lokpal
Commodity Prices
FII Outflow
High Fiscal and Current Account Deficit.
And Mother of all Euro Zone debt crisis hitting the Export
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India Macro Economic Outlook:
Inflation that was haunting the Indian economy is now under control and especially food
inflation has come down drastically. But Indian economy has sacrificed growth in order
to contain inflation. RBI may go for easing interest rate from Q1FY13; tone over the
interest rate would be dovish.
Rupee will keep to the major cause of concern as we expect rupee to decline further.
Declining FII inflow and slowdown in FDI will keep the rupee under pressure. Slowdown
in export due to Euro Zone debt crisis will see rupee sliding further. Adding to the woes
is US looking inwardly for creating job and taking every possible step to deter the
outsourcing.
Reform Process:
Some reform process could take off post state election. But the will of the government
and the outcome will determine the how govt will take the reform forward. Market would
be specially looking forward towards the FDI in multi brand retail.
WHAT’S FOREIGN INSTITUTION SAY FOR 2012?
GOLDMAN SACH:
Inflation to come off in 2012, RBI expected to cut interest rate by 150 bps in 2012. Rupee
could depreciate in the near term given the contagion from the Euro zone.
Top picks are:- Axis Bank, SBI, Tata Motors, JSPL, Dr Reddys
Macquarie:
Macquarie expects Sensex to drift to 14,000 levels. Slower economic growth of 6.9% in
FY13 is expected.
CLSA:
All the negatives are now built into the price. Top Picks of CLSA are:
ITC, Dr Reddys, M&M, ICICI Bank
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Bank of America Merrill:
BofML expects FY13 GDP to slow down to 6.8%. It also expects earnings to see
slowdown and margins to remain under pressure.
SECTORS OUTLOOK FOR 2012:
Auto: (Positive)
Going forward we expect sales growth for two wheelers to moderate on account of a
demanding base effect. We expect a recovery in car demand in the second half of
CY2012 as interest rates and inflationary pressures begin to moderate. Improvement in
CV typically lags consumer driven sectors such as cars and hence we do not expect any
meaningful improvement in M&H CV demand during CY2012.
Top Pick:-Tata Motors, Maruti
Banking: (Neutral)
We expect that the combination of factors including high interest rates, hindrances to
project execution, deteriorating business confidence and uncertainty about the global
economy to negatively impact investment demand and consequently banking sector will
witness slowdown in credit growth. At the same time, asset quality of banks is expected
to deteriorate in next 12 months as debt servicing capability of corporates will be
negatively impacted due to high interest rates and input prices and weak domestic &
international demand.
Cement: (Cautiously Positive)
Cost pressures for the cement industry are likely to remain due to higher imported coal
prices on account of rupee depreciation and lower availability of coal from Coal India.
However, we expect margins for most cement companies to be supported by increases in
cement prices across most regions. We also expect improved Y-o-Y demand during the
1st half of CY2012 on likely revival in rural housing and infrastructure segments and a
low base effect.
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Top Pick: - Madras Cement, Ambuja Cement
FMCG: (Neutral)
We expect category volume growths to taper off towards their respective long term
averages, because of a higher base. We foresee well diversified players to continue to
weather cost pressures through supply chain efficiencies and Advertising.
Top Pick: - ITC, Godrej Consumer
HEALTHCARE: (Positive)
With drugs worth USD 80-90 billion losing patent over the next 4-5 years the US market
remains the primary market for Indian companies, despite the intensifying competition.
US generic market is expected to touch USD 51.7 billion by 2015 from USD 38 billion in
2010. Of this the current share of top 6 Indian companies is not more than USD 2.5
billion. We believe that Indian companies are well placed to tap this opportunity given
that they have healthy pipeline of ANDA filings (30% market share), including a
substantial presence in Para IVs and FTFs, DMF Filings (50% market share) and highest
number of US FDA approved facility outside US (100).
Top Pick: - Dr Reddys, Cipla
IT: (Cautiously Positive)
Lot would depend on how the global economies shape up. A deeper crisis in Euro zone
can lead to significant pressure for Indian IT services companies. Demand in US has
remained strong so far but any macro shock to the slowly recovering economy will have
a detrimental impact on IT demand. While weakening currency will provide some
cushion to the profits, strength in demand will remain the main catalyst.
Top Pick: - Hexaware, KPIT Cummins
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Telecom: (Neutral)
We also expect New Telecom Policy to be finalized and implemented in 2012 which
should lead to some clarity on the regulatory stance. However, valuations are expensive
and to an extent, already discounting the better earning visibility. In this backdrop, we are
neutral on the sector with a bias towards large operators.
Oil & Gas: (Negative)
We remain negative on the sector. The under-recoveries on subsidized fuels remain high
due to a sharp depreciation of the rupee which has made imports costlier. A weak
government fiscal situation has meant that Rs 300 billion of cash reimbursements
promised to Oil Marketing Companies are yet to be disbursed, which has caused the
working capital requirements (and hence interest costs) to balloon.
While the government has stuck to 33% sharing by upstream firms for H1FY12, with the
ONGC FPO being delayed there is the likelihood of a higher share being borne by
ONGC/Oil India/GAIL in H2FY12E, which could hurt net realizations.
A push towards reforms may be the catalyst needed for stocks to re-rate.
With this we are wrapping up our 2012 outlook for the Indian economy and sector to look
for in 2012. We will keep you updated about the economy and latest update of the
market. Also we would be guiding you with our reports on the company specific value
pick.
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MARKET ROUND UP:
30-shares Sensex jumped by 394 points or 2.55% to close at 15,848.80 during the week
ended 7th January, 2012. On the other hand, the broad based Nifty moved up by 123
points or 2.67% to close at 4,747duirng the same period.
Mid-cap stocks climbed by 163 points or 3.17% to close at 5,298 during the week ended
7th January, 2012. While small-cap shares rose 211.47 points, or 3.81%, to 5,761.61
during the week.
The gain was primarily led by capital goods, PSU and banking shares. Capital goods
shares rallied on the back of optimistic manufacturing activity. Banking stocks gained on
easing food inflation and central bank`s emphasis on economic growth, reviving
optimism of rate cuts. Also ahead of IIP buying is being seen in the Capital Goods.
Inflation:
For the first time in at least five-and-a-half years, India witnessed food deflation.
Wholesale price-based food inflation fell to –3.36 per cent during the week ended
December 24 due to a high base (20.84 per cent a year ago), a number of items
witnessing a decline in prices and deceleration in the rate of price rise in others.
Rupee Update:
Four weeks of losing string, the Indian rupee rebounded by 39 paise to close the first
week of 2012 on a positive note at 52.71/72 against the Greenback in line with smart
bounce back in local equities amid sustained dollar selling by exporters and some banks.
FDI IN RETAIL:
FDI in multi brand retail is again picking up as the Govt is in favor of continuing with the
reform process. Govt to consult with the consumer body on 12th January in regards to
FDI multi brand retailing. Retail stocks were seen flying on the last two trading sessions.
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PSU Stocks in Demand:
After sales of stock via auction are cleared PSU stocks were seen gaining by more than
65% in last 5 trading session. Gain was seen in the stock where Government holding is
more than 90%.
Also on Saturday special trading session Fertilizer stocks got charged up on cut in the
subsidy on non urea fertilizers. Fertilizer companies can increase the price as non urea is
decontrolled.
MAJOR SECTORAL GAINERS:
BANKING 6.40%
CAPITAL GOODS 5.90%
METAL 5.20%
PSU 4.90%
CONSUMER DURABLE 1.80%
PHARMA 1.70%
REALTY 0.90%
AUTO 0.40%
MAJOR SECTORAL LOSERS:
FMCG -0.10%
MAJOR GAINERS IN NIFTY:
TATA MOTORS 13.90%
ICICI BANK 9.80%
L&T 8.40%
MAJOR LOSERS IN NIFTY:
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HERO HONDA -8.95%
BAJAJ AUTO -8.40%
DLF -4.60%
CLOSE WATCH FOR WEEK AHEAD:
IIP on 12th January
Infosys Result on 12th January
HDFC Result on 12th January
Monthly Inflation
TECHNICALS:
S3 S2 S1 NIFTY R1 R2 R3
4, 540 4, 620 4, 702 4, 747 4, 790 4, 856 4, 890
Nifty is expected to take support at 4, 690-4, 710 levels. On upside clearing the 4, 890
levels are important. Nifty is expected to face huge resistance in the zone of 4, 850- 4,
900 levels. 4, 890 also happen to be the 50 DMA.
14 Day RSI is at 48, suggesting it is in the neutral territory. We expect some rally during
the first half of the week but profit taking will bring down the market in the later half.
Nifty is expected to trade in the broader range of 4, 500- 5000 level.
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CONCLUSIONS
CONCLUSION:
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Result season to start from the next week. Market will swing on the either side to the tune
of the Q3FY12 results. We expected subdued performance by the corporate during the
quarter.
Swing trades could be used by the traders to play on the momentum. Retail sector stocks
to be area of focus as on 12th January, Government to consult with different consumer
bodies on FDI in Retail.
As per technical analysis on January 19, 2012
Indian stock markets continued to trade in the positive territory boosted by
positive global cues. The BSE 30-share Sensex advanced 135 points to 16,586 points,
while the NSE 50-share Nifty continued to trade above the 5000 mark.
Food inflation continued its downward trend, with prices dropping 0.42% for the week
ended January 7 2012, on the back of falling onion and vegetable prices. Inflation for fuel
group commodities however was at 14.45%, while primary articles inflation was at
2.47%.
Realty, metal, power and banking have performed well; all they are up between 1.3-2.3%.
BSE Realty was the top performer sector wise, with rise of 2.3%, to 1675 points. HDIL
gained 5%. DLF, the largest realty developer saw its share jump 3.6%, after the news that
it was trying to sell the Delhi government a convention centre in the city, and that it was
preparing to sell its wind power business for an estimated Rs 1,800 crore.
Stocks in Power rose after the Prime Minister Manmohan Singh gave his assurances to
heads of power companies who met him yesterday, that the government would make a
roadmap and take all necessary steps to resolve issues in power generation in a time
bound manner.
Technology stocks however are bearish, with the BSE IT falling 0.54%. Bharti Airtel was
the most prominent loser with its stocks declining 1.13%.
The market breadth is positive with 1574 stocks advancing as opposed to 931 declining.
What Affects Share Price?
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The price of a particular share is the value for which it is bought and sold, either first hand (from the company) or in the resale market on a stock exchange. Whilst every share has a price, it also has what is known as a ‘nominal value’, which is an amount altogether different. Knowing what a share price is and how a share price is affected by market factors is one of the first steps towards becoming a more prolific stock market investor, and is crucial if you are to realize a return on your investments.
Every share is nominally worth a set amount that is not variable depending on the particular market climate. This amount is usually small, and in any case should be far smaller than the amount actually paid for the share on the resale market. The nominal value of a share is used only in terms of ensuring there is capital in the business from which creditors can be paid, and in the event of insolvency those shareholder who have no fully paid up the nominal value of their share-stock will be liable to contribute accordingly.
The difference between the nominal value and the share price in known as the ‘share premium’, and where this is paid directly to the business issuing the shares it must be ring fenced within a specific share premium account. The price paid for a share is utterly variable, and this is the amount expressed in stock tickers and on the exchanges, given that this is the amount one would have to pay to acquire an individual share.
Share price is affected by a number of external factors, but at the simplest level it is affected by the demand for that particular security. Obviously, the number of shares available in a given company is limited at any given point, and thus as more and more shares are bought, the value of those shares automatically increases. Likewise where those shares are sold and the market becomes flooded with one type of security, the value falls.
Whilst share price is affected by the transactional side of things, indirectly transactions are affected by market externalities and company performance. In theory, only the performance of a company should impact upon its share price, with those reporting growing profits likely to be in higher demand. However in all truth, the current state of the marketplace and the economy as a whole has a bearing.
Take for example the terrorist attacks of September 11th 2001. Whilst these had nothing to do directly with the performance of many publicly traded businesses, stock markets around the world plummeted as investors sold shares in a fit of panic.
Ultimately, it is the behavior of the larger investors that sparks movements in a share’s pricing. When times are good, share prices boom. But when the economy starts to turn gloomy, or even when a particular piece of bad commercial news is announced, share prices tend to fall dramatically.
Basic rules in Indian stock market
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1. Whenever Market is High It Will Fall
2. Whenever Market is Low, if there is no external Factor, It Will rise
3. Same Rules Applies To Stocks Scripts
What you must NOT do:-
1. Don't panic
The market is volatile. Accept that. It will keep fluctuating. Don't panic.If the prices of your shares have plummeted, there is no reason to want to get rid of them in a hurry. Stay invested if nothing fundamental about your company has changed.Ditto with your mutual fund. Does the Net Asset Value deep dipping and then rising slightly? Hold on. Don't sell unnecessarily.
2. Don't make huge investments
When the market dips, go ahead and buy some stocks. But don't invest huge amounts. Pick up the shares in stages. Keep some money aside and zero in on a few companies you believe in. When the market dips --buy them. When the market dips again, , you can pick up some more. Keep buying the shares periodically. Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains, no one can time the market. It is impossible for an individual to state when the share price has reached rock bottom. Instead, buy shares over a period of time; this way, you will average your costs.
3. Don't chase performance
A stock does not become a good buy simply because its price has been rising phenomenally. Once investors start selling, the price will drop drastically.
4. Don't ignore expenses
When you buy and sell shares, you will have to pay a brokerage fee and a Securities Transaction Tax. This could nip into your profits specially if you are selling for small gains (where the price of stock has risen by a few rupees).
If you sell your shares of equity funds within a year of buying, you end up paying a short-term capital gains tax of 10% on your profit. If you sell after a year, you pay no tax (long-term capital gains tax is nil).
What you MUST do:-
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1. Get rid of the junk
Any shares you bought but no longer want to keep? If they are showing a profit, you could consider selling them. Even if they are not going to give you a substantial profit, it is time to dump them and utilize the money elsewhere if you no longer believe in them.
Similarly with a dud fund; sell the units and deploy the money in a more fruitful investment.
2. Diversify
Don't just buy stocks in one sector. Make sure you are invested in stocks of various sectors. Also, when you look at your total equity investments, don't just look at stocks. Look at equity funds as well. To balance your equity investments, put a portion of your investments in fixed income instruments like the Public Provident Fund, post office deposits, bonds and National Savings Certificates. If you have none of these or very little investment in these, consider a balanced fund or a debt fund.
3. Believe in your investment
Don't invest in shares based on a tip, no matter who gives it to you. Tread cautiously. Invest in stocks you truly believe in. Look at the fundamentals. Analyze the company and ask yourself if you want to be part of it.Are you happy with the way a particular fund manager manages his fund and the objective of the fund? If yes, consider investing in it.
4. Stick to your strategy
If you decided you only want 60% of all your investments in equity, don't over-exceed that limit because the stock market has been delivering great returns.Stick to your allocation.
What Causes Stock Prices To Change?
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Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many answers to this problem and just about any investor you ask has their own ideas and strategies.
That being said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth. Don't equate a company's value with the stock price. The value of a company is its market capitalization, which is the stock price multiplied by the number of shares outstanding. For example, a company that trades at $100 per share and has 1 million shares outstanding has a lesser value than a company that trades at $50 that has 5 million shares outstanding ($100 x 1 million = $100 million while $50 x 5 million = $250 million). To further complicate things, the price of a stock doesn't only reflect a company's current value, it also reflects the growth that investors expect in the future.
The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn't going to stay in business. Public companies are required to report their earnings four times a year (once each quarter). Wall Street watches with rabid attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company's results surprise (are better than expected), the price jumps up. If a company's results disappoint (are worse than expected), then the price will fall.
Of course, it's not just earnings that can change the sentiment towards a stock (which, in turn, changes its price). It would be a rather simple world if this were the case! During the dotcom bubble, for example, dozens of internet companies rose to have market capitalizations in the billions of dollars without ever making even the smallest profit. As we all know, these valuations did not hold, and most internet companies saw their values shrink to a fraction of their highs. Still, the fact that prices did move that much demonstrates that there are factors other than current earnings that influence stocks. Investors have developed literally hundreds of these variables, ratios and indicators. Some you may have already heard of, such as the price/earnings ratio, while others are
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extremely complicated and obscure with names like Chaikin oscillator or moving average convergence divergence.
So, why do stock prices change? The best answer is that nobody really knows for sure. Some believe that it isn't possible to predict how stock prices will change, while others think that by drawing charts and looking at past price movements, you can determine when to buy and sell. The only thing we do know is that stocks are volatile and can change in price extremely rapidly.
The important things to grasp about this subject are the following:
1. At the most fundamental level, supply and demand in the market determines stock price.
2. Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless.
3. Theoretically, earnings are what affect investors' valuation of a company, but there are other indicators that investors use to predict stock price. Remember, it is investors' sentiments, attitudes and expectations that ultimately affect stock prices.
4. There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that can explain everything.
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General Market Advice:
1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.
9. Invest in stocks for sure returns.
10. Stocks have been the high yielding asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is to grow.
13. Buy when everyone is selling and sell when everyone buys.
14. Invest a fixed amount each month.
Last But not least Trust our tips and then invest to earn huge profit
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Bibliography
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Bibliography
www.standardcharteredtrade.co.in
www.hdfcsec.com
www.nseindia.com
http://www.sharetipsinfo.com
http://investmentsfordummieslikeme.blogspot.com/
http://www.yourmoneysite.com/
http://www.moneycontrol.com/stocksmarketsindia/
Magazines & news papers:-
Dalal street (monthly)
Business line
Economic times
Mint
Channel news:-
CNBC
Bloomberg TV
NDTV Profit
ETV Now
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