CONTENTS

SI.no Contents Page no

1 Executive Summary 1-4

2 Introduction to the capital market 5-14

3 Company Profile 15-37

Theoretical Framework

4 Fundamental analysis 38

4.1 Economic Analysis 39-46

4.2 Industry Analysis 47-51

4.3 Company analysis 52-59

5 Technical analysis 60-76

6 Findings 77-78

7 Recommendations 798 Conclusions 809 Bibliography 81

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Executive Summary

Project Title : Fundamental Analysis and Technical Analysis of Unitech

Ltd.

Company and Place: KARVY Stock Broking Ltd. Dharwad

Research Process:

KARVY Stock Broking Ltd. Is a premier financial services provider & ranked top five in

the country. Recently the capital market crashed because of many reasons investors lost

heavy amount But fundamental & Macro factors Indian market is good. Stability in

market is not there currently therefore some of the investor who lost money in market

crash, so many of them are shaky to enter into market again. Therefore getting investor

confidence is more important which will happen when the market stabilizes. So for that

matter broking firms should provide proper guidance to their investors for facilitating

their decision making in investments.

Research Objectives:

Main Objective: To know the future increase and decrease of stock price in selected

company stocks through Fundamental And Technical Analysis.

Sub Objectives:

To understand how best we can use this analysis is to meet the financial goal of

the investors.

To understand the effect of Industry specific factors on the stock prices through

Industry Analysis.

To know which securities to be bought and when to be bought.

To know which securities to be sold and when to sell.

To provide investors with a basket of securities to be stay invested to have a sound

portfolio.

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Research Plan:

The data collected for the study is secondary data. The data I have used for the study is

1. Historical shares value of the stocks collected from www.nseindia.com

2. The balance sheet and Income statement got from companies web site.

3. Some of the information about the industry is collected from the web site.

The Measurement Techniques

The following techniques are used for the study.

1. The bar chart

2. Candlestick charting

3. Point & figure chart

4. Moving average.

5. Exponential moving average (EMA)

6. The relative strength index (RSI)

7. Oscillators (ROC, RSI, MACD,STOCHASTICS)

Analysis: Using MS-Excel

Findings:

General:

One of the most important areas for any investor to look when researching a

company is the financial statement. Financial reports are required by law and are

published both quarterly and annually.

Management discussion give investors a better understanding of what the

company does and usually points out some key areas where they did well.

Audited financial reports have much more credibility than unaudited ones.

The income statement takes into account some non-cash items such as

depreciation. The cash-flow statement strips away all non-cash items and tells you

how much actual money the company generated.

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For Stock:

First, the projected MPS of the stock next three years are Rs.231.05, Rs.286.03

and Rs.352.68.

Short term support for scrip: 265-275; Next support has been established at 150-

165.

Long term target by technical analysis is 620-40 but this is unlikely to happen in

the medium term because short term trend has been bearish and long term trend

has been flat and undergoing long consolidation

For market:

Short term support or intermediate support: 4500-4600; next long term support

lies at3100-3150

Resistance for Nifty is at present is at 6000

Short term and intermediate trend has been bearish and long term trend is still

bullish.

Long term nifty target is a 6980- 7020.

Recommendations:

Long term investors can include Unitech, because the growth rates and earnings

are good compared to others stocks. Therefore investors can include this in their

portfolio to earn the higher return on their investment.

The Long term investors should buy the stocks fair value found out by the

fundamental analysis.

Short term investors should look on various support and resistance of stocks to

buy or sell and make profit.

Conclusion:

Stock market or capital market provides the industry with a lot of capital needed

by the industry, which leads to the growth of the industry and economy as a

whole; hence the stock market plays an important role in the development of the

industry.

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Some times Using Technical and fundamental analysis individually leads to

incorrect results hence both Fundamental and technical analysis should be used at

a time to get the desired result.

Fundamental analysts study everything from the overall economy and industry

conditions, to the financial condition and management of companies before

deciding on any particular stock.

Technical analyst’s look for peaks, bottoms, trends, patterns and other factors

affecting a stock's price movement and then make buy/sell decisions based on

those factors.

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INTRODUCTION TO CAPITAL MARKETS

Introduction to Capital Markets

Transfer of resources from those with idle resources to others who have a productive need

for them is perhaps most efficiently achieved through the securities markets. Stated

formally, securities markets provide channels for allocation of savings to investments and

thereby decouple these two activities. As a result, the savers and investors are not

constrained by their individual abilities, but by the economy’s abilities to invest and save

respectively, which inevitably enhances savings and investment in the economy.

Market Segments

The securities market has two interdependent and inseparable segments, the new issues

(primary market) and the stock (secondary) market. The primary market provides the

channel for sale of new securities while the secondary market deals in securities

previously issued. The price signals, which subsume all information about the issuer and

his business including associated risk, generated in the secondary market, help the

primary market in allocation of funds. The issuers of securities issue (create and sell) new

securities in the primary market to raise funds for investment and/or to discharge some

obligation. They do so either through public issues or private placement. There are two

major types of issuers who issue securities. The corporate entities issue mainly debt and

equity instruments (shares, debentures, etc.), while the governments (central and state

governments) issue debt securities (dated securities, treasury bills).

The secondary market enables participants who hold securities to adjust their holdings in

response to changes in their assessment of risk and return. They also sell securities for

cash to meet their liquidity needs. A variant of secondary market is the forward market,

where securities are traded for future delivery and payment. Pure forward is out side the

formal market. The versions of forward in formal market are futures and options. In

futures market, standardized securities are traded for future delivery and settlement.

These futures can be on a basket of securities like an index or an individual security. In

case of options, securities are traded for conditional future delivery. There are two types

of options – a put option permits the owner to sell a security to the writer of options at a

predetermined price while a call option permits the owner to purchase a security from the

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writer of the option at a predetermined price. These options can also be on individual

stocks or basket of stocks like index. Two exchanges, namely NSE and BSE provide

trading of derivatives of securities.

Products and Participants

Savings are linked to investments by a variety of intermediaries through a range of

complex financial products called “securities” which is defined in the Securities Contracts

(Regulation) Act, 1956. Which includes shares, scrip’s, stocks, bonds, debentures,

debenture stock, or other marketable securities of like nature in or of any incorporate

company or body corporate, government securities, derivatives of securities, units of

collective investment scheme, security receipts, interest and rights in securities, or any

other instruments so declared by the central government These demand for and supply of

securities and funds determine, under competitive market conditions in goods and

securities market, the prices of securities.

Securities Market and Economic Growth

A well functioning securities market is conducive to sustained economic growth. There

have been a number of studies, starting from World Bank and IMF to various scholars,

which have established robust relationship not only one way, but also the both ways,

between the development in the securities market and the economic growth.

The securities market fosters economic growth to the extent that it-

Augments the quantities of real savings and capital formation from any given

level of national income,

Increases net capital inflow from abroad,

Raises the productivity of investment by improving allocation of investible funds,

and (d) Reduces the cost of capital.

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International Linkage

The securities market facilitates the internationalization of an economy by linking it with

the rest of the world. This linkage assists through the inflow of capital in the form of

portfolio investment. Moreover, a strong domestic stock market performance forms the

basis for well performing domestic corporate to raise capital in the international market.

This implies that the domestic economy is opened up to international competitive

pressures, which help to raise efficiency. It is also very likely that existence of a domestic

securities market will deter capital outflow by providing attractive investment

opportunities within domestic economy.

There are also other developmental benefits associated with the existence of a securities

market.

The securities market provides a fast-rate breeding ground for the skills and

judgment needed for entrepreneurship, risk bearing, portfolio selection and

management.

An active securities market serves as an ‘engine’ of general financial development

and may, in particular, accelerate the integration of informal financial systems

with the institutional financial sector. Securities directly displace traditional assets

such as gold and stocks of produce or, indirectly, may provide portfolio assets for

unit trusts, pension funds and similar FIIs that raise savings from the traditional

sector.

The existence of securities market enhances the scope, and provides institutional

mechanisms, for the operation of monetary and financial policy

A Profile of Indian Securities Market

The past decade in many ways has been remarkable for securities market in India. It has

grown exponentially as measured in terms of amount raised from the market, number of

stock exchanges and other intermediaries, the number of listed stocks, market

capitalization, trading volumes and turnover on stock exchanges, and investor population.

The market has witnessed fundamental institutional changes resulting in drastic reduction

in transaction costs and significant improvements in efficiency, transparency and safety.

Securities and Exchange Board of India (SEBI)

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With the objectives of improving market efficiency, enhancing transparency, checking

unfair trade practices and bringing the Indian market up to international standards, a

package of reforms consisting of measures to liberalize, regulate and develop the

securities market was introduced during the 1990s. This has changed corporate securities

market beyond recognition in this decade. The practice of allocation of resources among

different competing entities as well as its terms by a central authority was discontinued.

The secondary market overcame the geographical barriers by moving to screen-based

trading. Trades enjoy counterparty guarantee.

Bombay Stock Exchange (BSE)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich

heritage. Popularly known as "BSE", it was established as "The Native Share & Stock

Brokers Association" in 1875. It is the first stock exchange in the country to obtain

permanent recognition in 1956 from the Government of India under the Securities

Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the

development of the Indian capital market is widely recognized and its index, SENSEX, is

tracked worldwide. With Demutualisation, the trading rights and ownership rights have

been de-linked effectively addressing concerns regarding perceived and real conflicts of

interest. The Exchange is professionally managed under the overall direction of the Board

of Directors. The Board comprises eminent professionals, representatives of Trading

Members and the Managing Director of the Exchange.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.

The systems and processes of the Exchange are designed to safeguard market integrity

and enhance transparency in operations. During the year 2004-2005, the trading volumes

on the Exchange showed robust growth. The Exchange provides an efficient and

transparent market for trading in equity, debt instruments and derivatives. The BSE's On

Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-

2002 certified. The surveillance and clearing & settlement functions of the Exchange are

ISO 9001:2000 certified.

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BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the

benchmark equity index that reflects the robustness of the economy and finance. At par

with international standards,

First in India to introduce Equity Derivatives

First in India to launch a Free Float Index

First in India to launch US$ version of BSE Sensex

First in India to launch Exchange Enabled Internet Trading Platform

First in India to obtain ISO certification for Surveillance, Clearing & Settlement

'BSE On-Line Trading System’ (BOLT) has been awarded the globally

recognized the Information Security Management System standard

First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of a nationwide

investor awareness campaign - Safe Investing in the Stock Market -

In 2002, the name The Stock Exchange, Mumbai, was changed to BSE.

National Stock Exchange (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which recommended

promotion of a National Stock Exchange by financial institutions (FII’s) to provide access

to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of

the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,

1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)

segment in June 1994. The Capital Market (Equities) segment commenced operations in

November 1994 and operations in Derivatives segment commenced in June 2000.

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NSE has been promoted by leading financial institutions, banks, insurance companies and

other financial intermediaries. NSE is one of the first de-mutualised stock exchanges in

the country, where the ownership and management of the Exchange is completely

divorced from the right to trade on it. Though the impetus for its establishment came from

policy makers in the country, it has been set up as a public limited company, owned by

the leading institutional investors in the country.

The NSE model however, does not preclude, but in fact accommodates involvement,

support and contribution of trading members in a variety of ways. Its Board comprises of

senior executives from promoter institutions, eminent professionals in the fields of law,

economics, accountancy, finance, taxation, etc, public representatives.

NSE Milestones

Nov-92 IncorporationApr-93 Recognition as a stock exchange

May-93 Formulation of business planJun-94 Wholesale Debt Market segment goes live

Nov-94 Capital Market (Equities) segment goes liveMar-95 Establishment of Investor Grievance CellApr-95 Establishment of NSCCL, the first Clearing CorporationJun-95 Introduction of centralised insurance cover for all trading membersJul-95 Establishment of Investor Protection Fund

Oct-95 Became largest stock exchange in the countryApr-96 Commencement of clearing and settlement by NSCCLApr-96 Launch of S&P CNX NiftyJun-96 Establishment of Settlement Guarantee Fund

Nov-96Setting up of National Securities Depository Limited, first depository in India, co-promoted by NSE

Nov-96 Best IT Usage award by Computer Society of IndiaDec-96 Commencement of trading/settlement in dematerialised securitiesDec-96 Dataquest award for Top IT UserDec-96 Launch of CNX Nifty JuniorFeb-97 Regional clearing facility goes liveNov-97 Best IT Usage award by Computer Society of IndiaMay-98 Promotion of joint venture, India Index Services & Products Limited (IISL)May-98 Launch of NSE's Web-site: www.nse.co.in

Jul-98 Launch of NSE's Certification Programme in Financial MarketAug-98 CYBER CORPORATE OF THE YEAR 1998 awardFeb-99 Launch of Automated Lending and Borrowing MechanismApr-99 CHIP Web Award by CHIP magazineOct-99 Setting up of NSE.ITJan-00 Launch of NSE Research InitiativeFeb-00 Commencement of Internet TradingJun-00 Commencement of Derivatives Trading (Index Futures)

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Sep-00 Launch of 'Zero Coupon Yield Curve'

Nov-00Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd. and i-flex Solutions Ltd.

Dec-00 Commencement of WAP tradingJun-01 Commencement of trading in Index OptionsJul-01 Commencement of trading in Options on Individual Securities

Nov-01 Commencement of trading in Futures on Individual SecuritiesDec-01 Launch of NSE VaR for Government SecuritiesJan-02 Launch of Exchange Traded Funds (ETFs)

May-02NSE wins the Wharton-Infosys Business Transformation Award in the Organization-wide Transformation category

Oct-02 Launch of NSE Government Securities IndexJan-03 Commencement of trading in Retail Debt MarketJun-03 Launch of Interest Rate Futures

Aug-03 Launch of Futures & options in CNXIT IndexJun-04 Launch of STP Interoperability

Aug-04 Launch of NSE’s electronic interface for listed companies Mar-05 ‘India Innovation Award’ by EMPI Business School, New DelhiJun-05 Launch of Futures & options in BANK Nifty IndexDec-06 'Derivative Exchange of the Year', by Asia Risk magazineJan-07 Launch of NSE – CNBC TV 18 media centre

Mar-07 NSE, CRISIL announce launch of IndiaBondWatch.comJun-07 NSE launches derivatives on Nifty Junior & CNX 100Oct-07 NSE launches derivatives on Nifty Midcap 50Jan-08 Introduction of Mini Nifty derivative contracts on 1st January 2008

Mar-08 Introduction of long term option contracts on S&P CNX Nifty Index

Depository System

The Depositories Act, 1996 was passed with the objective of ensuring free transferability

of securities with speed, accuracy and security. It does so by

Making securities of public limited companies freely transferable subject to

certain exceptions

Dematerializing the securities in the depository mode

Providing for maintenance of ownership records in a book entry form.

In order to streamline both the stages of settlement process, the Act envisages transfer

ownership of securities electronically by book entry without making the securities move

from person to person. The Act has made the securities of all public limited companies

freely transferable, restricting the company's right to use discretion in effecting the

transfer of securities, and the transfer deed and other procedural requirements under the

Companies Act have been dispensed with. Two depositories, viz., NSDL and CDSL, have

come up to provide instantaneous electronic transfer of securities.

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Capital Market Intermediaries

There are several institutions, which facilitate the smooth functioning of the securities

market. They enable the issuers of securities to interact with the investors in the primary

as well as the secondary arena.

Merchant Bankers

Credit Rating Agencies

R& T Agents - Registrars to Issue

Stock Brokers

Custodians

Mutual Funds

Depositories

Depository Participants

Players (investors) in securities market

Individual investors Institutional investors FII’s Mutual fund investor

Capital Market Instruments

The changes in the regulatory framework of the capital market and fiscal policies have

also resulted in newer kinds of financial instruments (securities) being introduced in the

market. Also, a lot of financial innovation by companies who are now permitted to

undertake treasury operations, has resulted in newer kinds of instruments - all of which

can be traded – being introduced. The variations in all these instruments depend on the

tenure, the nature of security, the interest rate, the collateral security offered and the

trading features, etc.

Debentures

Bonds

Preference Shares

Equity Shares

Government securities

Capital Market Processes

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There are various processes that Issuers of securities follow or utilize in order to tap the

savers for raising resources. Some of the commonly used processes and methods are

described below.

Initial Public Offering (IPO)

Private Placement

Preferential Offer/Rights Issue

Internet Broking

Dependence on Securities Market

Three main sets of entities depend on securities market. While the Corporates and

governments raise resources from the securities market to meet their obligations, the

households invest their savings in securities. While the corporate sector and governments

together raised a sum of Rs. 226,911 crore during 2001-02, the household sector invested

4.3% of their financial savings through the securities market during 2000-01.

Corporate Sector

The 1990s witnessed emergence of the securities market as a major source of finance for

trade and industry. The share of capital market based instruments in resources raised

externally increased to 53% in 1993-94, but declined thereafter to 31% by 2000-01.

Governments

Along with increase in fiscal deficits of the governments, the dependence on market

borrowings to finance fiscal deficits has increased over the years. The state governments

and the central government financed about 14% and 18% respectively of their fiscal

deficit by market borrowings during 1990-91. In percentage terms, dependence of the

state governments on market borrowing did not increase much during the decade 1991-

2002. In case of central government, it increased to 69.4% by 2001-02.

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Household

According to the RBI data, the household sector accounted for 84.8 % of gross domestic

savings in Fixed income investment instruments during 2006-07; which has increased in

comparison to 83.9% in 2005-06. In fiscal 2006-07, the household sector has invested

55.7 % of financial savings in deposits, 24.2 % in insurance/provident funds, 4.9 % in

small savings, and 6.5 % in securities market including government securities , units of

mutual funds and other securities.

Investor population and profile

According to the SEBI-NCAER survey of Indian investors conducted in early 1999, an

estimated 12.8 million, or 7.6% of all Indian households representing 19 million

individuals had directly invested in equity shares and/or debentures as at the end of

financial year 1998-99. The investor households increased at a compound growth rate of

22% between 1985-86 and 1998-99. About 35% of investor households became investors

in equity shares prior to 1991, while 47% of the investors entered the market between

1991 and 1995 and 17% after 1995. More than 156 million or 92% of all Indian

households were non-investor households who did not have any investments in

equity/debentures. Low per capita income, apprehension of loss of capital, and economic

insecurity, which are all inter-related factors, significantly influenced the investment

attitude of the households. The lack of awareness about securities market and absence of

a dependable infrastructure and distribution network coupled with aversion to risk

inhibited non-investor households from investing in the securities market.

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About KARVY

The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top

player in almost all the fields it operates. Karvy Computer share Limited is India’s largest

Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate,

managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National

Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock

brokers in India. With over 6, 00,000 active accounts, it ranks among the top 5 Depositary

Participant in India, registered with NSDL and CDSL. Karvy COM trade, Member of

NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy

Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5

insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also

among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management.

Karvy Realty Services, which started in 2006, has quickly established itself as a broker

who adds value, in the realty sector. Karvy Global offers niche off shoring services to

clients in the US.

Karvy has 575 offices over 375 locations across India and overseas at Dubai and New

York. Over 9,000 highly qualified people staff Karvy.

Karvy – Early Days

Karvy the name comes from the names of the directors:

K - Mr. V. Kutumba Rao

A - Mr. K Ajay Kumar

R - Mr. M S Ramakrishna

V - Mr. Vikram Singh

Y - Mr. M Yugandhar

The birth of Karvy was on a modest scale in 1979. It began with the vision and enterprise

of a small group of practicing Chartered Accountants who founded the flagship company

…Karvy Consultants Limited. Karvy started with consulting and financial accounting

automation, and carved inroads into the field of registry and share accounting by 1985.

Since then, Karvy have utilized its experience and superlative expertise to go from

strength to strength…to better its services, to provide new ones, to innovate, diversify and

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in the process, evolved Karvy as one of India’s premier integrated financial service

enterprise.

GROWTH AND DEVELOPMENT OF KARVY

Over the last 20 years Karvy has traveled the success route, towards building a reputation

as an integrated financial services provider, offering a wide spectrum of services. And

Karvy have made this journey by taking the route of quality service, path breaking

innovations in service, versatility in service and finally…totality in service. Karvy’s

highly qualified manpower, cutting-edge technology, comprehensive infrastructure and

total customer-focus has secured for Karvy the position of an emerging financial services

giant enjoying the confidence and support of an enviable clientele across diverse fields in

the financial world.

Karvy’s values and vision of attaining total competence in its servicing has served as the

building block for creating a great financial enterprise, which stands solid on its fortresses

of financial strength - its various companies.

With the experience of years of holistic financial servicing behind it and years of

complete expertise in the industry to look forward to, Karvy have now emerged as a

premier integrated financial services provider.

And today, Karvy can look with pride at the fruits of its mastery and experience

comprehensive financial services that are competently segregated to service and manage a

diverse range of customer requirements.

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KARVY-Milestones

AT PRESENT STATUS OF KARVY

Presently Karvy is a member of National Stock Exchange (NSE), the Bombay Stock

Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Market analysis and

market predictions are done by professional management team.

KARVY is covering the entire spectrum of financial services such as Stock Broking

Services, Advisory Services, Stock broking, Depository Participants, Distribution of

financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking,

Commodities Broking, Personal Finance Advisory Services, Merchant Banking &

Corporate Finance, placement of equity, IPOs, among others.

It is the largest mobiliser of funds as per PRIME DATABASE. It is among the top 5

stock brokers in India (4% of NSE volumes). India's No. 1 Registrar & Securities

Transfer Agents (Ranked as “The Most Admired Registrar" by MARG). Among the top 3

Depository Participants. Largest Network of Branches & Business Associates. First ISO -

9002 Certified Registrar in India. Among top 10 Investment bankers. Largest Distributor

of Financial Products are --

Every 50th Indian is serviced by KARVY Every 20th trade in stock market is done

through KARVY. Every 6th Investor in India invests through KARVY India's No.1

Registrars and Transfer agent : KARVY Every 10th Demat Account is held at KARVY.

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ORGANISATION STRUCTURE OF KARVY

LEVEL-I

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Board of Directors

CMD, MD, & other Directors

Karvy Consultants

Limited

Karvy Investor Service Limited

Karvy Global Service Limited

Karvy Stock

Broking Limited

Karvy Computershare

Pvt. Limited

KarvyInsurance Broking Private Limited

Karvy Inc.

Karvy Commodities

Broking Private Limited

Karvy Regional

HQs / Branches

Level-II

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Regional Branch Head

ISO CELL

Operations

Divisions

Support

Functions

Branches

ACCOUNTS

HRD

SYSTEM

ADMN, PURCHASE, & STORES

BRANCHES

Operations

Divisions

Support

Functions

RIS

FPD

BROKING

DP

STUDY OF COMPANY PROFILE WITH RESPECT TO

Mc KINSEY’S 7S MODEL

STRATEGY:

In modern times the word strategy has found its way into the management field. In the

context of a business concern, strategy indicates specific program of action for achieving

the organization objectives by employing the firm’s resources efficiently and

economically. It involves preparing oneself for meeting unforeseen factor. It is also

concerned with meeting the challenges posed by the policies and actions of other

competitors in the market.

Quality Policy

To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by

combining its human and technological resources, to provide superior quality financial

services. In the process, Karvy will strive to exceed Customer's expectations.

Quality Objectives are to:

Build in-house processes that will ensure transparent and harmonious

relationships with its clients and investors to provide high quality of services.

Establish a partner relationship with its investor service agents and vendors that

will help in keeping up its commitments to the customers.

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Provide high quality of work life for all its employees and equip them with

adequate knowledge & skills so as to respond to customer's needs.

Continue to uphold the values of honesty & integrity and strive to establish

unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and innovative

financial products and services to meet the changing needs of investors and

clients.

Strive to be a reliable source of value-added financial products and services and

constantly guide the individuals and institutions in making a judicious choice of

same.

Strive to keep all stake-holders (shareholders, clients, investors, employees,

suppliers and regulatory authorities) proud and satisfied.

STRUCTURE:

Board of DirectorsMr. C Parthasarathy (Chairman and Managing Director), Mr. M Yugandhar (Managing

Director ), Mr. M S Ramakrishna (Director ), Mr. Prasad V Potluri (Director), William

Stuart Crosby (Chairman – Karvy Computer share Pvt Ltd.), Chandra

Balaraman(Director– Karvy Computer share Pvt Ltd.), Mark Davis(Director– Karvy

Computer share Pvt Ltd.), Mr. Uday Raval(Director - Karvy Inc. )

Karvy’s organization structure can be viewed as accomplishing departments Operations

Divisions and Support Function Division.

Below the Operations Divisions there are sub divisions namely Registry and Investor

Services (RIS), Depository Participant (DP), Broking Services, Financial Product

Distribution (FPD).

Below the Support Functions, there are sub divisions namely Accounts, System, Human

Resource Development, and Administration, Purchase & Stores.

These department heads controls the day-to-day affairs of the company. These

department heads are directly reports to the director. Board of Directors directly appoints

department heads. The departmental heads does locations of responsibilities among

various positions.

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In Karvy Departments are inter related. Majority of decisions are taken by the top

management. While taking important decision the department managers are also

consulted and their suggestions are also considered. Hence Participative style of

management is followed in Karvy.

SYSTEM:

KARVY covers the entire spectrum of financial services such as Stock broking,

Depository Participants, Distribution of financial products - mutual funds, bonds, fixed

deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory

Services, Merchant Banking & Corporate Finance, placement of equity, IPOs.

A link called ‘Resource Center’, devoted solely to research. Karvy’s highly skilled

research team, comprising of technical analysts as well as fundamental specialists, secure

result-oriented information on market trends, market analysis and market predictions.

This crucial information is given as a constant feedback to its customers, through daily

reports delivered thrice daily; The Pre-session Report, where market scenario for the day

is predicted, The Mid-session Report, timed to arrive during lunch break, where the

market forecast for the rest of the day is given and The Post-session Report, the final

report for the day, where the market and the report itself is reviewed. To add to this

repository of information, Karvy publish a monthly magazine The Finapolis, which

analyzes the latest stock market trends and takes a close look at the various investment

options, and products available in the market, while a weekly report, called Karvy Bazaar

Baatein, gives more information on the immediate trends in the stock market. In addition,

its specific industry reports give comprehensive information on various industries.

Karvy’s Stock Broking services are widely networked across India, with the number of

trading terminals providing retail stock broking facilities. To empower the investor

further Karvy have made serious efforts to ensure that its research calls are disseminated

systematically to all our stock broking clients through various delivery channels like

email, chat, SMS, phone calls etc.

STYLE:

An activity like forecasting and planning are made by top level managers. Major policies

and plans are made by top management and it is implemented and administered by

BABASAB PATIL- 23 -

employees. In the organization the style of informal communication and meetings with

employees has created workers to a friendly environment.

STAFF:

The term staff refers to manpower planning, recruitment, performance appraisal,

motivation and morale.

SKILLS:

The managers and workers in each department are skilled to the extent of functions they

perform. Directors of the company are skilled in every activities and disciplines of

organization.

A 1600 team of highly qualified and dedicated professionals drawn from the best of

academic and professional backgrounds are committed to maintaining high levels of

client service delivery. This has propelled Karvy to a position among the top distributors

for equity and debt issues with an estimated market share of 15% in terms of applications

mobilized, besides being established as the leading procurer in all public issues.

A link called ‘Resource Center’, devoted solely to research. Karvy’s highly skilled

research team, comprising of technical analysts as well as fundamental specialists, secure

result-oriented information on market trends, market analysis and market predictions.

Achievements

Largest mobiliser of funds as per PRIME DATABASE

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents (Ranked as " The Most

Admired Registrar"  by MARG)

A Category- I -Merchant banker.

Among the to top 3 Depository Participants

Largest Network of Branches & Business Associates

First ISO - 9002 Certified Registrar in India

Among top 10 Investment bankers

Largest Distributor of Financial Products

Full Fledged IT driven operations

Handled the largest- ever Public Issue - IDBI

Handled over 500 Public issues as Registrars.

BABASAB PATIL- 24 -

Handling the Reliance Account  which accounts for nearly 10 million account

holders

 Major issues managed as arrangers  

Kerala State Electricity Board.

Power Finance Corporation

A.P. Water Resources Development Corporation.

A.P. Roads Development Corporation.

A.P. State Electricity Board.

Haldia Petrochemicals Ltd.

  Major issues managed as Co-Managers  

IndusInd Bank Ltd

ICICI Bonds – March 97

ICICI Bonds – Dec 97

ICICI Safety Bonds March 98

ICICI Safety Bonds – April 98. July 98, Oct 98, Dec 98, Jan 99.

The Jammu and Kashmir Bank Ltd

  Major issue handled as Registrars to Issues  

IDBI Equity

Morgan Stanley Mutual Fund

Bank of Baroda

Bank of Punjab Ltd

Corporation Bank

IndusInd Bank Ltd

Jammu and Kashmir Bank Ltd

Housing and Urban Development Corporation (HUDCO) Ltd

Madras Refineries Ltd

Tamil Nadu Newsprint & Paper Ltd

BPL Ltd

Birla 3M Ltd

BABASAB PATIL- 25 -

Essar Shipping Ltd 

Essar Steels Ltd.

Hindustan Petroleum Corporation Ltd.

Infosys Technologies Ltd.

Jindal Vijayanagar Steels Ltd.

Nagarjuna Fertilizers & Chemicals Ltd.

Rajshree Polyfil Ltd.

Karvy Securities Ltd.

Karvy has secured over Rs. 500 crore in the following debt issues.

Andhra Pradesh Road Development Corporation Ltd

ICICI Bonds ( Private Placement)

ICICI Bonds – 96

ICICI Bonds – 97- I

ICICI Bonds – 97 – II

ICICI Safety Bonds March 98.

IDBI Bonds 96.

IDBI Flexi Bonds I

IDBI Flexi Bonds II

IDBI Flexi Bonds III

Kerala State Electricity Board

Krishna Bhagya Jala Nigam Ltd

Power Finance Corporation Ltd

Andhra Pradesh Water Resources Development Corporation

Andhra Pradesh State Electricity Board

SHARED VALUES:

Employees at each level of organization are conscious about delivering customer value

for his money. Each and every employee understands the mission and vision of the

company. Employees of company are committed towards the quality aspects in service.

The employees of Karvy themselves put forward in fulfilling the organizational principles

for betterment of organization.

BABASAB PATIL- 26 -

STUDY OF FUNCTIONAL DEPARTMENTS OF KARVY

In Karvy the functions are mainly divided into two parts namely Operational Functions

and the Supporting Functions.

OPERATING FUNCTIONS:

Registry and Investor Services (RIS) in which Karvy carry out functions as Registrar &

transfer Agent (RTA), and Registrar to the Issues. Financial Product Distribution

(FPD), Here financial products include Mutual Funds, Fixed income securities, bonds,

fixed deposits, Tax-saving Products, Insurance, etc. Stock Broking Services and

Depository Participant (DP), which are explained in Service Profile of the Karvy group

of companies.

SUPPORTING FUNCTIONS:

Administration - Purchase and Stores Department

Responsibilities

To ensure preventive breakdown of equipment/accessories including computer

hardware

To ensure speedy breakdown maintenance

To ensure that the maintenance status of all equipment/ accessories is entered in

the service

To ensure that the maintenance is carried out efficiently

BABASAB PATIL- 27 -

HOD

Assistant HOD

Administration Team

Maintenance includes preventive, breakdown and general maintenance. Preventive

maintenance shall be done as per the prefixed time schedule by the subcontractors for the

purpose. The administration incharge shall make necessary arrangements for this purpose.

In Breakdown / General maintenance admi9nistration team receive information

regarding any breakdown or general repairs. On receipt of the same, the administrative

team shall maintain a record of all maintenance done.

The Procedure involves identification of subcontractors which will be done through

Newspaper, advertisements, word of mouth. Both the parties meet to their requirements

and enter into agreement. Subcontractors are appointed for providing services Preventive

maintenance, Breakdown maintenance, Courier services and any other services.

2.62 Accounts Department

Finance operations in Karvy are centralized at the Head Office Account. Periodic fund

requirement at the regional level will be sort as and when required. But all cheques and

such instruments would be signed by the local regional manager.

BABASAB PATIL- 28 -

System Administration Department

In this department the functions include Trouble shooting, desktop queries, Network

problems, Software and Hardware problems, Installation of new systems, creating new

networks.

Human resource Department

The human resource Department (HRD) caters to the entire recruitment and employee

upbringing in the company. The HR functions and practices, which are practiced at the

Karvy, are:

Manpower Planning: The departmental heads are entrusted with the responsibility of

assessing the present and the future manpower requirement in their departments.

Manpower planning is being done in the company in order to secure a confidence and

capability

Recruitment: Advertising in newspaper and other media, private employment agencies, personal contacts, colleges and universities are the sources used by Karvy.

Training: The personnel department gives training for all new employees.

Performance Appraisal: The HOD of the department, to which the employees belongs,

presents a report of the employees, to be appraised. In addition to that other managers to

whom the employee is associated is also evaluating the performance of the employee.

Motivation: The Company provides both extrinsic and intrinsic motivation to the

employees. Extrinsic motivation is considered with external motivators which employees

get through pay, promotion, fringe benefits, holiday’s etc. Intrinsic motivation is

concerned with the feeling of having accomplished something worthwhile i.e. the

satisfaction one gets after doing one’s work well, praise, responsibility, recognition,

BABASAB PATIL- 29 -

Dy. General Manager

Dy.Manager

Asst. Manager

participation are the examples. Job rotation is undertaken to reduce the monitoring and

burden of the employees.

Morale: For improving employee’s morale positive measures like job rotation, building

responsibility into job etc are introduced. Both upward and downward communication

takes place within the company. Participation is the key to commitment.

BABASAB PATIL- 30 -

SERVICE PROFILE OF THE

KARVY GROUP OF COMPANIES

Karvy Stock Broking Limited

Member - National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the

Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the

cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the

customer through varied services.

Stock Broking Services

It is an undisputed fact that the stock market is unpredictable and yet enjoys a high

success rate as a wealth management and wealth accumulation option. The difference

between unpredictability and a safety anchor in the market is provided by in-depth

knowledge of market functioning and changing trends, planning with foresight and

choosing one & other options with care. Karvy offer trading on a vast platform; National

Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. Karvy’s

highly skilled research team, comprising of technical analysts as well as fundamental

specialists, secure result-oriented information on market trends, market analysis and

market predictions. This crucial information is given as a constant feedback to its

customers, through daily reports delivered thrice daily; The Pre-session Report, where

market scenario for the day is predicted, The Mid-session Report, timed to arrive during

lunch break, where the market forecast for the rest of the day is given and The Post-

session Report, the final report for the day, where the market and the report itself is

reviewed. To add to this repository of information, Karvy publish a monthly magazine

The Finapolis, which analyzes the latest stock market trends and takes a close look at the

various investment options, and products available in the market, while a weekly report,

called Karvy Bazaar Baatein, gives more information on the immediate trends in the stock

market. In addition, it’s specific industry reports give comprehensive information on

BABASAB PATIL- 31 -

various industries. Karvy’s Stock Broking services are widely networked across India,

with the number of trading terminals providing retail stock broking facilities.

To empower the investor further Karvy have made serious efforts to ensure that its

research calls are disseminated systematically to all our stock broking clients through

various delivery channels like email, chat, SMS, phone calls etc.

Depository Participants

The onset of the technology revolution in financial services Industry saw the emergence

of Karvy as an electronic custodian registered with National Securities Depository Ltd

(NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards

enabling further comfort to the investor by promoting paperless trading across the country

and emerged as the top 3

Depository Participants in the country in terms of customer serviced. Offering a wide

trading platform with a dual membership at both NSDL and CDSL, Karvy have

established live DPMs, Internet access to accounts and an easier transaction process in

order to offer more convenience to individual and corporate investors. A wide national

network makes its efficiencies accessible to all.

Distribution of Financial Products

A 1600 team of highly qualified and dedicated professionals drawn from the best of

academic and professional backgrounds are committed to maintaining high levels of

client service delivery. This has propelled Karvy to a position among the top distributors

for equity and debt issues with an estimated market share of 15% in terms of applications

mobilized, besides being established as the leading procurer in all public issues.

Advisory Services

Under its retail brand ‘Karvy – the Finapolis', it delivers advisory services to a cross-

section of customers. The service is backed by a team of dedicated and expert

professionals with varied experience and background in handling investment portfolios.

They are continually engaged in designing the right investment portfolio for each

customer according to individual needs and budget considerations with a comprehensive

support system that focuses on trading customers' portfolios and providing valuable

inputs, monitoring and managing the portfolio through varied technological initiatives.

BABASAB PATIL- 32 -

‘Karvy - the Finapolis', covers the latest of market news, trends, investment schemes and

research-based opinions from experts in various financial fields.

Mutual Fund Services

Karvy has attained a position of immense strength as a provider of across-the-board

transfer agency services to AMCs, Distributors and Investors. Nearly 40% of the top-

notch AMCs including prestigious clients like Deutsche AMC and UTI swear by the

quality and range of services that Karvy offers. Besides providing the entire back office

processing, Karvy provides the link between various Mutual Funds and the investor,

including services to the distributor, the prime channel in this operation. Carrying the

‘limitless' ideology forward, Karvy has explored new dimensions in every aspect of

Mutual Fund servicing right from volume management, cost effective pricing, delivery in

the least turnaround time, efficient back-office and front-office operations to customized

service.

Karvy has been with the AMCs every step of the way, helping them serve their investors

better by offering them a diverse and customized range of services. The ‘first to market'

approach that is Karvy’s anthem has earned the reputation of an innovative service

provider with a visionary bent of mind.

Karvy’s service enhancements such as ‘Karvy Converz', a full-fledged call center, a top-

line website (www.karvymfs.com), the ‘m-investor' and many more, creating a galaxy of

customer advantages.

Karvy Consultants Limited

As the flagship company of the Karvy Group, Karvy Consultants Limited has always

remained at the helm of organizational affairs, pioneering business policies, work ethic

and channels of progress. Today, Karvy service over 6 lakhs customer accounts in this

business spread across over 250 cities/towns in India and are ranked amongst the largest

Depository Participants in the country. With a growing secondary market presence, Karvy

BABASAB PATIL- 33 -

have transferred this business to Karvy Stock Broking Limited (KSBL), Karvy’s associate

and a member of NSE, BSE and HSE.

Karvy Investor Service

Merchant Banking

Recognized as a leading merchant banker in the country, Karvy registered with SEBI as a

Category I merchant banker. This reputation was built by capitalizing on opportunities in

corporate consolidations, mergers and acquisitions and corporate restructuring. Karvy’s

quality professional team and our work-oriented dedication have propelled it to offer

value-added corporate financial services and act as a professional navigator for long term

growth of its clients, who include leading corporates, State Governments, foreign

institutional investors, public and private sector companies and banks, in Indian and

global markets.

Its financial advice and assistance in restructuring, divestitures, acquisitions, de-mergers,

spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated its

relationship with the client to one based on unshakable trust and confidence.

Karvy Global Services Limited

The specialist Business Process Outsourcing unit of the Karvy Group. Here Karvy offer

several delivery models on the understanding that business needs are unique and therefore

only a customized service could possibly fit the bill. Be it in re-engineering and managing

processes or delivering new efficiencies, Karvy’s service meets up to the most stringent

of international standards. Karvy’s outsourcing models are designed for the global

customer and are backed by sound corporate and operations philosophies, and domain

expertise. Providing productivity improvements, operational cost control, cost savings,

improved accountability and a whole gamut of other advantages. Karvy’s wide market

BABASAB PATIL- 34 -

coverage includes Banking, Financial and Insurance Services (BFIS), Retail and

Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare.

BABASAB PATIL- 35 -

Karvy Computershare Pvt. Limited

Karvy have traversed wide spaces to tie up with the world’s largest transfer agent, the

leading Australian company, Computershare Limited. The company that services more

than 75 million shareholders across 7000 corporate clients and makes its presence felt in

over 12 countries across 5 continents has entered into a 50-50 joint venture with Karvy.

Excellence has to be the order of the day when two companies with such similar

ideologies of growth, vision and competence, get together.

Issue Registry

Karvy has emerged as the largest transaction-processing house for the Indian Corporate

sector. With an experience of handling over 700 issues, Karvy today, has the ability to

execute voluminous transactions and hard-core expertise in technology applications have

gained the No.1 slot in the business. Karvy is the first Registry Company to receive ISO

9002 certification in India that stands testimony to its stature.

It is actively coordinating with both the main depositories to develop special models to

enable the customer to access depository (NSDL, CDSL) services during an IPO.

BABASAB PATIL- 36 -

Karvy Insurance Broking Private Limited

At Karvy Insurance Broking Pvt. Ltd., it provide both life and non-life insurance products

to retail individuals, high net-worth clients and corporates. With the opening up of the

insurance sector and with a large number of private players in the business, Karvy is in a

position to provide tailor made policies for different segments of customers. With Indian

markets seeing a sea change, both in terms of investment pattern and attitude of investors,

insurance is no more seen as only a tax saving product but also as an investment product.

By setting up a separate entity, Karvy would be positioned to provide the best of the

products available in this business to its customers.

Karvy’s wide national network, spanning the length and breadth of India, further supports

these advantages. Further, personalized service is provided here by a dedicated team

committed in giving hassle-free service to the clients.

Karvy Commodities Broking Private Limited

At Karvy Commodities, Karvy is focused on taking commodities trading to new

dimensions of reliability and profitability. Karvy has made commodities trading, an

essentially age-old practice, into a sophisticated and scientific investment option.

Here Karvy enable trade in all goods and products of agricultural and mineral origin that

include lucrative commodities like gold and silver and popular items like oil, pulses and

cotton through a well-systematized trading platform.

Regular trading workshops and seminars are conducted to hone trading strategies to

perfection. Karvy’s commitment to excel in this sector stems from the immense

importance that commodity broking has to a cross-section of investors – farmers,

exporters, importers, manufacturers and the Government of India itself.

BABASAB PATIL- 37 -

Karvy Inc.

With its growing ambitions of reaching out to investors across the shores of this country,

Karvy’s has set up Karvy Inc. in the US located in New York to provide various financial

products and information on Indian equities to potential Foreign Institutional Investors

(FIIs) in the region. This entity soon would be ACC registered and would also become a

member of various important stock exchanges in the US. This entity would extensively

facilitate various businesses of Karvy viz., stock broking (Indian equities), research and

investment by (Qualified Institutional Buyer) QIBs in Indian markets for both secondary

and primary offerings, outsourcing of various assignments for the multiple streams of

business in Karvy Global Services Ltd (KGSL).

BABASAB PATIL- 38 -

THEROTICAL FRAMEWORK

FUNDAMENTAL ANALYSIS:

Fundamental analysis is the examination of the underlying forces that affect the well

being of the economy, industry groups, and companies. The goal is to derive the

forecasted earning growths for future price movements.

Fundamental analysis is the method of evaluating securities by attempting to

measure the intrinsic value of a particular stock. It is the study of everything from the

overall economy and industry conditions, to the financial condition and management of

specific companies (i.e., using real data to evaluate a stock’s value). The method utilizes

items such as revenues, earnings, return on equity and profit margins to determine a

company’s underlying value and potential for future growth.

One of the major assumptions under fundamental analysis is that, even though

things get mis priced in the market from time to time, the price of an asset will eventually

gravitate toward its true value. This seems to be a reasonable bet considering the long

upward march of quality stocks in general despite regular setbacks and periods of

irrational exuberance. The key strategy for the fundamentalist is to buy when prices are at

or below this intrinsic value and sell when they got overpriced.

Fundamental analysis consists of:

For the national economy we focus on economic data to assess the present and

future growth of the economy.

At the industry level, there might be an examination of supply and demand

forces for the products offered.

At the company level, may involve examination of financial data, management,

business concept and competition.

BABASAB PATIL- 39 -

Economy analysis

The economy is the overall economic environment in which all firms operate. The key

variables used to describe the state of economy are:

World economy

Asian economy

Indian economy

1. Growth rate of GDP

2. Industry growth rate

3. Agriculture and monsoons

4. Savings and investment

5. Inflation

6. Interest rates

7. Balance of payments

8. Infrastructure

World economy

According to the recent statistics, the world GDP (comprising 180 economies) has

reached at a sum of US $ 46,747 Billions. Top 15 contributors to the world GDP are

USA, Japan, Germany, China, UK, France, Italy, Canada, Spain, Brazil, Russia, Korea,

India, Mexico and Australia.

Percentage share of USA to the total world GDP is 28.3. While both the emerging

economies such as India and China have a share of 1.82 and 5.41 respectively.

BABASAB PATIL- 40 -

Find next page the top 15 contributors to the world GDP.

Asian Economy

Asian Economies have brought tremendous success in the recent years. Economic growth

rate in China crossed a two-digit number, while economic growth in India’s Economy is

near to 10 percent. Apart from those two emerging Asian Economic giants, economies

such as Philippines, Indonesia and Malaysia are growing at a faster pace. Find below

various economic indicators on the Asian Economies.

GDP growth projections among various Asian Economies over years are as follows:

GDP Growth Projection on Asian Economies

Country Name 2007 2008

Japan 2.3 1.9

Hong Kong SAR 5.5 5

Korea 4.4 4.4

Singapore 5.5 5.7

China 10 9.5

India 8.4 7.8

Indonesia 6 6.3

Malaysia 5.5 5.8

Philippines 5.8 5.8

BABASAB PATIL- 41 -

Thailand 4.5 4.8

The output over the world increased by 4.4% in the year 2005. The largest contributors of

the world output were India, China and Russia. The Gross World Product (in purchasing

power parity) as to the 2005 estimated data has reached at $ 60.71 trillions with a real

growth rate of 4.7%.

The services sector contributes a largest share to the world GDP. As to the 2004 estimated

data, the services sector accounted for 64% followed by industries at 32% and Agriculture

4%.

The level of exports and imports over the world has reached at $10.33 trillion and 10.3

trillions f.o.b. as to 2004 estimation.

World inflation:

Inflation, which can be simply stated to be a state of economic activities with rising price

level and falling purchasing power of money, has become global phenomenon. Fast rising

oil prices over the world has pressurized the general price level in countries of the world.

Present world economy is experiencing higher economic growth with some inflationary

pressure.

The stabilized countries have the inflation level ranging between 1-3% and the

developing countries have inflation between 3-6%.

Indian economy:

Indian primary sector

Agriculture is the mainstay of Indian economy because of its high share in employment

and livelihood creation notwithstanding its reduced contribution to the nation’s GDP. The

share of agriculture in the gross domestic product has registered a steady decline from

36.4 per cent in 1982-83 to 17 per cent in 2007-08. Yet this sector continues to support

more than half a billion people providing employment to 52 per cent of the workforce. It

is also an important source of raw material and demand for many industrial products,

particularly fertilizers, pesticides, agricultural implements and a variety of consumer

goods. This is first time after green revolution that the India has become dependent in

satisfying its own food need. Growth pattern of Indian agriculture has been so irregular,

because of over dependency on the monsoon. This year we could achieve dismal growth

BABASAB PATIL- 42 -

of 2.5%.India is expecting its agriculture to grow at least 4% (CAGR) in the 11th plan to

have sustainable and consistent growth of overall GDP.

Industrial sector (secondary sector)

Industrial growth in India has been inspired by the LPG in 1991. in the 10th plan we

could achive growth rate of 8-9%. At present industry sector is contributing 28% to

country’s GDP. Though at present India is experiencing slowdown in growth of industry

production, the long term growth of 8-10% is still intact. The first eight months of the

current fiscal, till November 2007, witnessed a moderate slowdown in the growth of the

industrial sector. The slowdown has mainly been on account of the manufacturing sector.

The mining and quarrying sector grew at a faster pace, while the growth in electricity

remained unchanged from April- November 2006. Nonetheless, the 9.2 per cent growth

achieved during April-November 2007 by the industrial sector, when seen against the

backdrop of the robust growth during the preceding four years, suggests that the

buoyancy in this sector has continued, albeit with a degree of moderation. Two important

changes have occurred in the growth pattern of the use-based industrial categories:

First, capital goods have grown at an accelerated pace, over a high base attained in the

previous years, which augurs well for the required industria capacity addition. Secondly,

the consumer durables basket that forms part of the Index of Industrial Production (IIP)

showed a negative growth during the period, thereby forcing a visible decline in the

growth of the total consumer goods basket, despite reasonable growth in the non-

durables.

Dimension of Indian Economy

BABASAB PATIL- 43 -

GDP Composition

28%

55%

17%

Manufacturing

Service

Agriculture

Gross domestic product: measure of the total production of final goods and services in

the economy during a specified period usually a year. Higher the growth rate, the other

things being equal, the more favorable it is for the stock market.

The growth rate of GDP is more important indicator of the performance of the economy.

The average growth rate of Indian economy during 1950-1980 was around 3.5% in real

terms. In 1980 it was 5% and 6.2% in 2004. At present it is 8.7 and estimated to cross 9%.

Industrial growth rate: stock market analysts mainly focus on the industrial sector.

Higher the growth rate, more favorable is the things for stock market. The industrial

sector witnessed a slowdown in the first nine months of the current financial year. The

growth of 9 per cent during April-December 2007, when viewed against the back drop of

the robust growth witnessed in the preceding four years, suggests that there is a certain

degree of moderation in the momentum of the industrial sector. At the product group

level, the moderation in growth has been selective. Industries like chemicals, food

products, leather, jute textiles, wood products and miscellaneous manufacturing products

witnessed acceleration in growth, while basic metals, machinery and equipments, rubber,

plastic and petroleum products and beverages and tobacco recorded lower but strong

growth during April-December 2007.

Agriculture and monsoons: agriculture accounts for about a quarter of the Indian

economy and has important linkages both direct and indirect with the industry. There has

been a loss of dynamism in the agriculture and allied sectors in recent years. A gradual

degradation of natural resources through overuse and inappropriate use of chemical

fertilizers has affected the soil quality resulting in stagnation in the yield levels. Public

investment in agriculture has declined and this sector has not been able to attract private

investment because of lower/unattractive returns.

BABASAB PATIL- 44 -

Savings and investment: A notable feature of the recent GDP growth has been a

sharply rising trend in gross domestic investment and saving, with the former rising by

13.1 per cent of GDP and the latter by 11.3 per cent of GDP over five years till 2006-07.

The average investment ratio for the Tenth Five Year Plan at 31.4 per cent was higher

than that for the Ninth Five Year Plan, while the average saving rate was also 31.4 per

cent of GDP higher than the average ratio of 23.6 per cent during the Ninth Five Year

Plan.

Money supply: For policy purposes for 2007-08, the RBI assumed a real GDP growth of

8.5 per cent with inflation close to 5 per cent, and targeted the monetary expansion in the

range of 17-17.5 per cent and credit expansion in the range of 20 to 24 per cent as

consistent with envisaged growth and inflation.

Interest rates: interest rates affect the cost of financing to the firms. Higher the interest

rates, higher will be the cost and if lower, lower the cost and more will be the

profitability. Below table shows that interest rates are decreasing year after year which is

a good sign for the growth.

Year Interest(bank) rates % p.a.

April 1997 11April 1998 10March 1999 8March 2001 7April 2003 6

BABASAB PATIL- 45 -

Inflation: The Wholesale Price Index (WPI), which is available on a weekly basis,

continues to be the most popular measure of headline inflation in India.

Balance of payments: The strength, resilience and stability of the country’s external

sector is reflected by various indicators. These include a steady accretion to reserves,

moderate levels of current account deficit, changing composition of capital inflows,

flexibility in exchange rates, sustainable external debt levels with elongated maturity

profile and an increase in capital inflows. The current account has followed an inverted

“U” shaped pattern during the period from 2001-02 to 2006-07, rising to a surplus of over

2 per cent of GDP in 2003-04. Thereafter it has returned close to its post-1990s reform

average, with a current account deficit of 1.2 per cent in 2005-06 and 1.1 per cent of GDP

in 2006-07.Capital inflows, as a proportion of GDP, have been on a clear uptrend during

the six years (2001-02 to 2006-07) of this decade. They reached a high of 5.1 per cent of

GDP in 2006-07 after a somewhat modest growth rate of 3.1 per cent in 2005-06.The net

result of these two trends has been a gradual rise in reserve increase to reach 4 percent of

GDP in 2006-07 (Figure 6.1). With capital inflows exceeding financing requirements,

foreign exchange reserve increase was of the order of US$ 15.1 billion in 2005-06 and

US$ 36.6 billion in 2006-07 (Table 6.2). As a proportion of GDP, external debt was 17.2

per cent and 17.9 per cent in 2005-06 and 2006-07 respectively.

BABASAB PATIL- 46 -

Infrastructure: with the rapid growth of the economy in recent years the importance and

the urgency of removing infrastructure constraints have increased. Traditionally, power,

railways, roads, ports, airports and telecommunications were the exclusive domain of the

government. Policy has changed gradually over the past two decades under the pressure

of rising gaps between demand and supply of infrastructure and deteriorating quality of

assets.

BABASAB PATIL- 47 -

Industry Analysis

Growth of Construction Industry:

Since the beginning of economic reforms in 1991, the Indian economy has recorded a

compounded annual growth rate (CAGR) of over 6.7%. That is impressive in itself, and

makes India the second fastest growing large economy in the world — bettered only by

China. More significant is the orbit change in India’s GDP growth since 2003-04. With

9.4% growth in 2006-07 following 9% growth in 2005-06, India’s CAGR since 2003-04

has exceeded 8.6%. There is a wide consensus among economists, policy-makers and

industry that India can now sustain a CAGR of around 8.5% for the foreseeable future.

Indeed, the general feeling is that with more investments in physical infrastructure, it is

quite feasible for the country to achieve double-digit growth by 2011-12 — the terminal

year of the Eleventh Five Year Plan. This strong economic growth, along with the

demographic impetus of a growing population in the working-age category, is creating a

massive demand supply mismatch across the real estate sector. The sheer increase in the

‘need for built-up space’ is opening up several opportunities for developers — be it for

constructing residential properties, creating commercial space for offices or retail, setting

up of SEZs, or developing entertainment zones.

Current situation of Constructions

The turnover of the construction industry witnessed 57% growth on Year of Year(YoY)

basis to reach Rs150,933m in December 2007. This is because investments planned in the

infrastructure both by government and private sector, booming housing construction and

expansion in corporate production facilities, is likely to fast forward the growth in the

Indian construction industry. Aggregate operating profit increased by 35% to

Rs22,186.55m. The other income of the industry was Rs8,481.04m. The depreciation

increased to Rs2,048.49m. The net profit increased by 83% to reach Rs19,819.89m on

YoY basis.

The overall cost for the construction industry as the percentage of sales is 90.27% from

Rs87 billion in December 2006 to Rs1,35 billion in December 2007. The cost of raw

materials to the total sales is 37.82% during December 2007. The staff costs and other

operating expenses are 7.34% and 8.04% of the total sales, as compared to the

corresponding quarter of the previous year. Depreciation and tax decreased but the

interest rate was high.

BABASAB PATIL- 48 -

Inversement

Real estate investments account for about 60% of the total construction investments.

Demand-supply gap for residential housing, favorable demographics, rising affordability

levels, availability of financing options as well as fiscal benefits available on availing of

home loan are the key drivers supporting the demand for residential construction. In

addition to this, demand for office space from IT/BPO segment is expected to continue

due to emergence of India as a preferred outsourcing destination. Also, boom in

organized retail is expected to result in huge demand for real estate construction.

According to industry estimates, the Indian real estate industry is expected to grow at a

compounded rate of 33% between FY05 to FY10, mainly driven by the residential

segment.

Regulations:

Construction Industry in India According to the 11th five-year plan (2007-12), the core

infrastructure sector, comprising power, roads, highways, railways, ports, airports, mining

and irrigation, will require massive investments to the tune of US$490 billion over the

next five years to sustain current 9-10%  GDP  growth per annum. The construction

industry accounts for 40-50% of the plan outlays and contributes about 20%, nearly

US$59.4 billion to the national GDP. It employs around 31m people, second only to the

agriculture sector. The industry has witnessed a sustained growth of 30% per annum

during the last four years and is poised to grow at 55% in the current fiscal 2007-08,

outperforming even the growth of IT and biotech industry in the knowledge sector.

Jawaharlal Nehru National Urban Renewal Mission, with an outlay of approximately

Rs1,200 billion, is one of the most ambitious projects currently underway in the nation for

strengthening the urban infrastructure.

While the government announced the withdrawal of tax benefits under Section 80 IA of

the Income Tax Act, there is a lot of confusion regarding its interpretation. While some

companies are of the opinion that they can no more claim benefits under this section (i.e.

they will have to pay taxes at marginal rate), others feel that the benefit has been

withdrawn only on the subcontracted work i.e. they can still claim tax benefits on self-

executed projects.

BABASAB PATIL- 49 -

Budget 2008-09

India is on the verge of witnessing a sustained investment phase in infrastructure buildup.

With a slew of announcements in housing, road, port and airport development, we are

seemingly on a path of sustained higher economic growth on the back of improvement in

infrastructure construction in the country. From a policy perspective, there has been a

growing consensus that a private-public partnership is required to remove difficulties

concerning the development of infrastructure in the country. A substantial chunk of the

abovementioned investment target is likely to come from the private sector.

Budget measures

The general CENVAT rate has been reduced to 14% from 16%.

Allocation for National Highway Development Programme (NHDP) has been

enhanced to Rs 12,966 crore in 2008-09 from Rs 10,867 crore bn in 2007-08.

The budget has given special attention to development of roads in North Eastern

region where 180 kms of roads will be completed in 2007-08 and 300 kms of road

is being targetted for completion in 2008-09.

The corpus of Rural Infrastructure Development Fund (RIDF-XIV) has been

raised to Rs14,000 crore, with a separate window for rural roads.

The budget has also given considerable thrust to irrigation project where the

outlay for 2008-09 has been increased to Rs 20,000 crore from Rs 11,000 crore in

2007-08.

The government is setting up 14 irrigation projects with initial capital of Rs 100

crore to fund long-gestation major and medium irrigation projects.

Budget Impact

The Bharat Nirman and water irrigation programmes will benefit companies

involved in road construction and BOT irrigation projects.

Reduction of CENVAT is also a big positive for the sector as it indicates

government’s commitment towards the Goods and Service Tax Act.

Company Impact

Companies like Jain Irrigation and Madhucon Projects will benefit from increased outlay

in irrigation spending.

BABASAB PATIL- 50 -

Industry Wish list

Builders’ Association of India

Alter existing customs duty structure on imported steel bars and rods – fix the

duty at 5% without levy of special additional duty and countervailing duty

Extend existing structure of import duty, countervailing duty and special duty on

cement for another year, to discourage domestic manufacturers from hiking prices

Project exporters who have executed projects abroad to be allowed to import

equipment purchased abroad at 5% duty instead of current 50%

Scrap 2% TDS on construction companies as margins are wafer thin at 4-5%.

Allow companies to pay advance tax instead

BABASAB PATIL- 51 -

PORTER’S FIVE FORCE MODEL

Supply Past 2-3 years have seen a substantial increase in the number of contractors and builders, especially in the housing and road construction segment.

Demand Demand exceeds supply by a large margin. Demand for quality infrastructure construction is mainly emanating from the housing, transportation and urban development segments.

Barriers to entry Low for road and housing construction. However, high working capital requirements can create growth problems for companies with weak financial muscle.

Bargaining power of suppliers

Low. Due to the rapid increase in the number of contractors and construction service providers, margins have been stagnant despite strong growth in volumes.

Bargaining power of customers

Low. The country still lacks adequate infrastructure facilities and citizens have to pay for using public services.

CompetitionVery high across segments like road construction, housing and urban infrastructure development. Relatively less in airport and port development.

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COMPANY ANALYSIS

Established in 1971, Unitech today is India’s leading real estate company with a market

capitalization of around US$ 10 billion. From being a National Capital Region (NCR)

focused real estate developer, Unitech is fast establishing a pan India presence. It is

already a market leader in NCR and Kolkata and endeavors to attain leadership in every

market that it operates in. Unitech has the most diversified product mix comprising

residential, commercial, Information Technology (IT) parks, Retail, Amusement parks

and Hotels. It is known for the quality of its product and is the first real estate developer

to have been certified ISO 9001:2000 certificate in North India.

Future expansion plans

As of 31 March 2007, the Company has 22 major ongoing residential projects. The total

residential space offering from on-going projects is over 25 million square feet. Of these

22 major projects, nine are in Gurgaon, five in Greater Noida, six in Kolkata and one each

in Lucknow and Bangalore.

Ongoing Projects

Project Location Type

Close(North) Gurgaon Multi-Storied

Close(South) Gurgaon Multi-Storied

Uniworld Spa Gurgaon Multi-Storied

Fresco Gurgaon Multi-Storied

Uniworld Garden Gurgaon Multi-Storied

Espace Gurgaon Villa

Harmony Gurgaon Multi-Storied

Escape Gurgaon Multi-Storied

Uniworld City Gurgaon Multi-Storied

Horizon Greater Noida Multi-Storied

Habitat Greater Noida Multi-Storied

Heights Greater Noida Multi-Storied

Cascades Greater Noida Multi-Storied

Verve Greater Noida Multi-Storied

Garden Kolkata Multi-Storied

Air Kolkata Multi-Storied

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Downtown Kolkata Multi-Storied

Heights Kolkata Multi-Storied

Cascades Kolkata Multi-Storied

Horizon Kolkata Multi-Storied

South City Lucknow Multi-Storied

Heritage Estate Bangalore Multi-Storied

Upcoming Township Projects

Project Location Type

Unitech Grande Noida Multi-Storied

Uniworld Resorts Gurgaon Villa & Multi-Storied

Gateway Kolkata Multi-Storied

Uniworld City Greater Noida Multi-Storied

Oasis Chennai Villa & Multi-Storied

Oasis Hyderabad Villa & Multi-Storied

Risk factors:In the course of its business, Unitech is exposed to a wide variety of risks. The company

is pursuing a strategy of high growth through entry into new markets. Though the

company has, in the recent past, significantly scaled up its internal as well as external

resources in keeping with its strategy, it remains to be seen if the company can manage

this growth effectively. Demand for real estate especially residential real estate is

sensitive to interest rate movements. Interest rats have been rising in the recent past

owing to a Reserve Bank of India’s credit tightening policy. This could adversely affect

company’s business plans considering that residential segment constitutes a significant

portion of company’s business. Also, recent curbs by RBI and the Government of India to

reduce credit flow to real estate sector may affect company’s plans. Rise in cost of raw

materials could impact company’s performance. While the prices of cement and steel are

beyond company’s control, we have been leveraging the bargaining power of scale to

manage the cost of other materials through consolidated purchase of those materials. Real

estate business in India being highly regulated by Governments at various levels, several

regulatory approvals, permits, licenses etc. are required to be obtained from the

Government from time to time for our projects. Any delay in obtaining such approvals

can affect the timely execution of our projects. While there remain a number of risks to

BABASAB PATIL- 54 -

our business, due to Unitech’s experience of over two decades in real estate development,

its relatively low average cost of the land bank, its capital efficiency and its innovative

methods of turning around cash flows, we believe that the company will continue to

generate healthy shareholder returns for the future. Therefore, Unitech’s outlook for

2007-08 remains positive.

Financial performance analysis:

Ratios Industry 2007 2006 2005Current Ratio 1.74 0.95 0.48 0.43Quick Ratio 1.46 0.93 0.46 0.4Inventory Turnover Ratio 14.23 32.16 16.45 15.78Debt Equity Ratio 1.85 3.11 3.06 1.86Operating Profit Ratio 23.49 56.83 19.41 9.73Return On Equity 28.46 84.72 31.01 17.2P/E 29.02 31.97 50.04 13.99Price to Book Value Ratio 7.26 16.37 18.35 2.63Dividend Payout Ratio 13.34 4.13 152.1 127.47Earning Yield 3.46 3.13 2 7.15Dividend Yield 0.47 0.13 0.04 1.19Total Asset Turnover Ratio 0.88 0.22 0.58 0.93Capital Turnover Ratio 2.31 0.91 2.36 2.66Gross Profit Margin 21.84 56.64 18.94 9.31Net Profit Margin 12.78 39.22 10.32 5.67

Interpretation:

Liquidity ratios:

Ratios Industry Company

Current Ratio 1.74 0.95

Quick Ratio1.46 0.93

Though company’s current ratio is increasing year by year still it is lesser than

industry average. But as the company has got ability to use capital more efficiently,

this ratio gives it more leverage in terms of earnings. So it can be justifiable.

BABASAB PATIL- 55 -

Turnover ratios:

Ratios Industry Company

Total Asset Turnover Ratio0.88

0.36

Capital Turnover Ratio2.31

0.54

Inventory Turnover Ratio14.23 32.16

Inventory turnover ratio is exceptionally good compared to industry. Inventory

turnover ratios are improving year by year. Asset and Capital Turnover Ratios are

lower than industry, because company has not yet realized good from its newly

restructured capital .

Leverage ratios:

Ratios Industry Company

Debt Equity Ratio1.85 3.11

Company is in the comfortable zone. So that it can still use more Financial Leverage

in future.

Profitability ratios:

Ratios Industry Company

Operating Profit Ratio23.49 56.83

Gross Profit Margin 21.84 56.64Net Profit Margin 12.78 39.22

All profitability ratios for the company are exceptionally good and they are more than

double the industrial average. Perhaps this could be possible because of its volume,

very good companies business strategies and mainly because of high project

execution expertise that the company has got over the year.

Valuation ratios:

Ratios Industry Company

P/E 29.02 31.97Price to Book Value Ratio 7.26 16.37

Dividend Payout Ratio 13.34 4.13Earning Yield 3.46 3.13

Dividend Yield 0.47 0.13

BABASAB PATIL- 56 -

P/E of company is higher than industry average; it is because of the company brand

and almost de-risked business operations and company’s higher earning ratios.

Coming to Price to BV ratio company higher ratio than industry average which is

substantiable from the companies past financial track record point of view. The DY

and EY for scrip is lower than industry average, because of lower proportion of

dividend payout owing to companies high growth potential.

Summary:

So I can conclude company’s scrip is over valued.

Note:

Adjustment factor for P/E:

I have considered only Historical P/E but not the Weighted P/E ratio. Because Constant

Growth Dividend Model can not be applied for the company. ( because there is no

consistent dividend pay out).

BABASAB PATIL- 57 -

Period & months 2007/03 2006/03 2005/03 2004/03 2003/03INCOMENet Operating Income 2,441.74 653.13 509.33 373.95 235.63EXPENSESMaterial Consumption 78.97 61.07 55.68 20.14 25.45Manufacturing Expenses 853.98 396.1 359.62 298.87 174.36Personnel Expenses 65.62 31.11 15.95 10.38 8.71Selling Expenses 13.13 10.62 8.35 4.3 0.91Administrative Expenses 42.35 27.4 20.15 14.71 8.45

Cost of Sales 1,054.04 526.29 459.75 348.4 217.88

Reported PBDIT 1,387.69 126.84 49.57 25.56 17.75Other Recurring Income 65.66 21.45 17.41 8.1 12.01Adjusted PBDIT 1,453.35 148.29 66.98 33.66 24.55Depreciation 4.54 3.1 2.14 1.69 1.84Other Write-offs 0 0 0 0 0Adjusted PBIT 1,448.81 145.19 64.84 31.97 22.71Financial Expenses 193.71 37.14 21.92 9.54 12.01Adjusted PBT 1,255.11 108.05 42.92 22.43 10.7Tax Charges 361.27 38.48 13.46 6.46 4.61Adjusted PAT 893.84 69.57 29.47 15.98 6.1Non-recurring Items 89.72 0.07 0.45 -1.91 4.52Other Non-cash Adjustments 0.44 -0.51 -1.05 2.5 0.02REPORTED PAT 983.56 69.64 29.92 14.07 10.61No. of shares 81.17 1.25 1.25 1.25 1.25

EPS 12.12 55.71 23.94 11.26 8.49

BABASAB PATIL- 58 -

Estimated EPS:

Period & months 2008 2009 2010 CAGRINCOMENet Operating Income 3150.59 4065.22 5245.37 1.29EXPENSESMaterial Consumption 98.29 122.33 152.25 1.24Manufacturing Expenses 1048.42 1287.14 1580.22 1.23Personnel Expenses 90.21 124.02 170.49 1.37Selling Expenses 24.27 44.85 82.90 1.85Administrative Expenses 56.83 76.26 102.33 1.34

Cost of Sales 1318.02 1654.60 2088.20 1.25

Reported PBDIT 1832.57 2410.62 3157.17Other Recurring Income 75.91 87.75 101.44 1.16Adjusted PBDIT 1908.47 2498.36 3258.61 1.57Depreciation 5.17 5.89 6.71 1.14

Adjusted PBIT 1903.30 2492.47 3251.90Financial Expenses 292.50 441.68 666.93 1.51Adjusted PBT 1610.80 2050.79 2584.97Tax Charges 469.65 610.55 793.71 1.30Adjusted PAT 1141.15 1440.25 1791.26Non-recurring Items 31.65 11.17 3.94 0.35Other Non-cash Adjustments 0.11 0.03 0.01 0.24REPORTED PAT 1172.90 1451.44 1795.20No. of shares 81.17 81.17 81.17

EPS 14.45 17.88 22.12Adjusted EPS(factor is 1/2)* 7.22 8.94 11.06

Note: recently company has issued 1:1 bonus, so the adjustment factor of ½ is considered for calculation of expected EPS and Book Value.

BABASAB PATIL- 59 -

Estimated Book Value:

Book value Calculation 2007 2006 2005 2004 2003 2008 2009 2010

CAGR

Dividend 40.58 16.23 5 3.75 2.5 70.86 123.73 216.04 1.75REPORTED PAT 983.56 69.64 29.92 14.07 10.61

1172.90

1451.44 1795.20

Equity Share Capital 162.34 12.49 12.49 12.49 12.49 162.34 162.34 162.34Reserves & Surplus 998.66 212.05 161.42 138.2 125.86 998.66 998.66 998.66Number of Equity shares outstanding 81.17 1.25 1.25 1.25 1.25 81.17 81.17 81.17

Net worth2103.9

8 277.95 198.83 161.01 146.463212.1

14560.1

5 6190.31Book value 25.92 222.36 159.06 128.81 117.17 39.57 56.18 76.26Price to B.V.Ratio 5.84 5.09 4.62

Projection of MPS

Basis Formula MPS 2008 2009 2010P/E(Historical Method)

EPS * P/E 231.04 286.08 352.92

Price to BV BV * price to BV ratio

231.08 285.96 352.32

Data:

P/E multiple = 32

Fair value of stock:

Weight age assigned to different basis for calculating MPS of stock:

For P/E basis: 1.5

For price to BV basis: 1

Particular Formula 2008 2009 2010Fair Value (1.5*P/E MPS

+ 1* P to BV MPS )/2.5

231.05 286.03 352.68

BABASAB PATIL- 60 -

TECHNICAL ANALYSIS:

Technical analysis is the examination of past price movements to forecast future price

movements. Technical analysts are sometimes referred to as chartists because they rely

almost exclusively on charts for their analysis.

Technical stock analysis is based on three basic principles namely:

1. Market action discounts everything;

2. Prices move in trends;

3. History repeats itself.

Technical analysis is a forecasting method of price movements using past Prices, volume,

and open interest. Pring (2002), a leading technical Analyst provides a more specific

definition:

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

move in trends that are determined by the changing Attitudes of investors toward a

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

analysis, for it is an art, is Testing of Technical Analysis Tools”.

Two technical indicators have been used to analyze the patterns on the chart. They are

moving averages both simple and exponential moving averages and relative strength

index. They are explained in detail as below:

Moving Average:

Zigzag movement of prices often makes it difficult to judge the underlying trend.

Trend lines do help as we have already seen.

Another popular way is to smooth the price data with the help of moving

averages.

Technical analysts use two different types of moving averages - simple moving

average, exponential moving average and weighted moving average.

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The moving average system of trading is also known as the trend following

system because the trader waits for the trend to be established before initiating a

trade.

Moving averages are one of the most popular and easy to use tools available to the

technical analyst. They smooth a data series and make it easier to spot trends, something

that is especially helpful in volatile markets. They also form the building blocks for many

other technical indicators and overlays.

The two most popular types of moving averages are the Simple Moving Average (SMA)

and the Exponential Moving Average (EMA). They are described below:

Simple Moving Average (SMA)

A simple moving average is formed by computing the average (mean) price of a security

over a specified number of periods. While it is possible to create moving averages from

the Open, the High, and the Low data points, most moving averages are created using the

closing price. For example: a 5-day simple moving average is calculated by adding the

closing prices for the last 5 days and dividing the total by 5.

10+ 11 + 12 + 13 + 14 = 60

(60 / 5) = 12

The calculation is repeated for each price bar on the chart. The averages are then joined to

form a smooth curving line - the moving average line. Continuing our example, if the

next closing price in the average is 15, then this new period would be added and the

oldest day, which is 10, would be dropped. The new 5-day simple moving average would

be calculated as follows:

11 + 12 + 13 + 14 +15 = 65

(65 / 5) = 13

Over the last 2 days, the SMA moved from 12 to 13. As new days are added, the old days

will be subtracted and the moving average will continue to move over time.

Table 14

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Source: stockcharts.com

In the example above, using closing prices from Eastman Kodak (EK), day 10 is the first

day possible to calculate a 10-day simple moving average. As the calculation continues,

the newest day is added and the oldest day is subtracted. The 10-day SMA for day 11 is

calculated by adding the prices of day 2 through day 11 and dividing by 10. The

averaging process then moves on to the next day where the 10-day SMA for day 12 is

calculated by adding the prices of day 3 through day 12 and dividing by 10.

The chart above is a plot that contains the data sequence in the table. The simple moving

average begins on day 10 and continues.

Exponential Moving Average (EMA)

In order to reduce the lag in simple moving averages, technicians often use exponential

moving averages (also called exponentially weighted moving averages). EMA's reduce

the lag by applying more weight to recent prices relative to older prices. The weighting

applied to the most recent price depends on the specified period of the moving average.

The shorter the EMA's period, the more weight that will be applied to the most recent

price. For example: a 10-period exponential moving average weighs the most recent price

18.18% while a 20-period EMA weighs the most recent price 9.52%. As we'll see, the

calculating and EMA is much harder than calculating an SMA. The important thing to

remember is that the exponential moving average puts more weight on recent prices. As

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such, it will react quicker to recent price changes than a simple moving average. Here's

the calculation formula.

Exponential Moving Average Calculation

Exponential Moving Averages can be specified in two ways - as a percent-based EMA or

as a period-based EMA. A percent-based EMA has a percentage as it's single parameter

while a period-based EMA has a parameter that represents the duration of the EMA.

The formula for an exponential moving average is:

EMA (current) = ( (Price(current) - EMA(prev) ) x Multiplier) + EMA(prev)

For a percentage-based EMA, "Multiplier" is equal to the EMA's specified percentage.

For a period-based EMA, "Multiplier" is equal to 2 / (1 + N) where N is the specified

number of periods.

For example, a 10-period EMA's Multiplier is calculated like this:

(2 / (Time periods + 1) ) = (2 / (10 + 1) ) = 0.1818 (18.18%)

This means that a 10-period EMA is equivalent to an 18.18% EMA.

Note: StockCharts.com only support period-based EMA's.

Below is a table with the results of an exponential moving average calculation for

Eastman Kodak. For the first period's exponential moving average, the simple moving

average was used as the previous period's exponential moving average (yellow highlight

for the 10th period). From period 11 onward, the previous period's EMA was used. The

calculation in period 11 breaks down as follows:

(C - P) = (57.15 - 59.439) = -2.289

(C - P) x K = -2.289 x .181818 = -0.4162

( (C - P) x K) + P = -0.4162 + 59.439 = 59.023

Table 15

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Source: stockcharts.com

*The 10-period simple moving average is used for the first calculation only. After that the

previous period's EMA is used.

Note that, in theory, every previous closing price in the data set is used in the calculation

of each EMA that makes up the EMA line. While the impact of older data points

diminishes over time, it never fully disappears. This is true regardless of the EMA's

specified period. The effects of older data diminish rapidly for shorter EMA's. than for

longer ones but, again, they never completely disappear.

Uses:

There are many uses for moving averages, but three basic uses stand out:

1. Trend identification/confirmation

2. Support and Resistance level identification/confirmation

3. Trading Systems

Interpretation:

A moving average smoothens the underlying price data and represents the trend

for the period used to calculate the average.

BABASAB PATIL- 65 -

More importantly, it acts as a curved trendline providing support in an uptrend and

resistance in a downtrend.

Since the moving average reflects the trend, intersection of the price with the

moving average signals at least a pause in the trend by way of a correction and

possibly a trend reversal.

In an uptrend, both the price and the moving average are rising and price is above

the moving average. If the price were now to move below the moving average

while the moving average is still rising, it would probably signal just a correction.

After a while renewed buying usually pushes the price again over the moving

average. If the moving average is still rising, such a crossover of the price over the

moving average indicates resumption of the uptrend.

However, caution is indicated if the moving average has begun to move sideways.

A trend reversal is now more likely and is signalled when the price again crosses

below the moving average.

Penetration of a very short term average such as the 5-day average occurs often in

long lasting trends and often signals temporary pauses in the trend by way of

correction or consolidation. This happens after a sharp upmove or a downmove

when profit-taking sets in a countertrend move in the opposite direction. However,

when prices retrace 50 to 60% of the previous move, players who missed the

earlier move usually enter leading to resumption of the underlying trend.

On the other hand, penetration of say 20-day average accompanied by a change in

the direction of the moving average itself, would usually confirm trend reversal or

prolonged and deep correction.

Relative Strength Index (RSI):

Developed by J. Welles Wilder and introduced in his 1978 book, New Concepts in

Technical Trading Systems, the Relative Strength Index (RSI) is an extremely useful and

popular momentum oscillator. The RSI compares the magnitude of a stock's recent gains

to the magnitude of its recent losses and turns that information into a number that ranges

BABASAB PATIL- 66 -

from 0 to 100. It takes a single parameter, the number of time periods to use in the

calculation. In his book, Wilder recommends using 14 periods.

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Calculation:

100

RSI = 100 - --------

(1 + RS)

RS = Average Gain / Average Loss

Average Gain = [(previous Average Gain) x 13 + current Gain] / 14

First Average Gain = Total of Gains during past 14 periods / 14

Average Loss = [(previous Average Loss) x 13 + current Loss] / 14

First Average Loss = Total of Losses during past 14 periods / 14

Note: "Losses" are reported as positive values.

To simplify our explanation of the formula, the RSI has been broken down into its basic

components which are the RS, the Average Gain, and the Average Loss.

To start the running calculation, the First Average Gain is calculated as the total of all

gains during the past 14 periods divided by 14. Similarly, the First Average Loss is

calculated as the total magnitude of all losses during the past 14 periods divided by 14.

The next values for the "averages" are calculated by taking the previous value,

multiplying it by 13, adding in the next Gain (or Loss), and then dividing by 14. This is

Wilder's modified "smoothing" technique in action.

The RS value is simply the Average Gain divided by the Average Loss for each period.

Finally, the RSI is simply the RS converted into an oscillator that goes between zero and

100 using this formula: 100 - (100 / RS + 1).

When the Average Gain is greater than the Average Loss, the RSI rises because RS will

be greater than 1. Conversely, when the Average Loss is greater than the Average Gain,

the RSI declines because RS will be less than 1. The last part of the formula ensures that

the indicator oscillates between 0 and 100. Note: If the Average Loss ever becomes zero,

RSI becomes 100 by definition.

BABASAB PATIL- 68 -

Important Note: The more data points that are used to calculate the RSI, the more

accurate the results.

Interpretation:

When Wilder introduced the Relative Strength Index, he recommended using a

14-day Relative Strength Index.  Since then, the 9-day and 25-day Relative Strength

Indexes have also gained popularity.  The fewer days used to calculate the Relative

Strength Index, the more volatile the indicator.

The Relative Strength Index is a price-following oscillator that ranges between 0

and 100.  A popular method of analyzing the Relative Strength Index is to look for a

divergence in which the security is making a new high, but the Relative Strength Index is

failing to surpass its previous high.  This divergence is an indication of an impending

reversal.  When the Relative Strength Index then turns down and falls below its most

recent trough, it is said to have completed a "failure swing."  The failure swing is

considered a confirmation of the impending reversal.

In Mr. Wilder's book, he discusses five uses of the Relative Strength Index:

1. Tops and Bottoms.  The Relative Strength Index usually tops above 70 and

bottoms below 30.  It usually forms these tops and bottoms before the underlying

price chart.

2. Chart Formations.  The Relative Strength Index often forms chart patterns such

as head and shoulders or triangles that may or may not be visible on the price

chart.

3. Failure Swings (also known as support or resistance penetrations or breakouts). 

This is where the Relative Strength Index surpasses a previous high (peak) or falls

below a recent low (trough).

4. Support and Resistance.  The Relative Strength Index shows, sometimes more

clearly than price themselves, levels of support and resistance.

5. Divergences.  As discussed above, divergences occur when the price makes a new

high (or low) that is not confirmed by a new high (or low) in the Relative Strength

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Index.  Prices usually correct and move in the direction of the Relative Strength

Index.

Technical analysis consists of:

Market analysis

Company analysis

Market analysis:

Nifty is considered as market index. Both short as well as long term analysis has been

done using moving averages (simple and exponential MA) and relative strength index

(RSI).

Analysis: fundamentals of market

Evaluating the fundamentals of market ie Nifty though gives us right estimation about the

performance of market and also helps us in forecasting future growth of market, it has got

little importance in present scenario. Because, market is sentiment driven then the actual

fact driven, so swings of market make it so unstable beyond compare.

In notable future of GDP growth rate that there has been sharply rising trend in GDP

investment and savings with former rising by 13.1% of GDP and latter by 11.3% of the

GDP over five years till 2006-07. So there is slight increase in the gap. Average

investment ratio for 10th five year plan is at 31.4% and average savings rate was also at

the same level 28.32%. We can say that gap between investment and saving is very which

is usually being satisfied by FDI flow. This fact clearly shows that Indian investments are

not dependent on foreign countries. On the other side of the growth ie demand, India has

domestic demand which forms major portion of total demand. So we are not dependent

on foreign demand.

Balance of payment:

At present the biggest trade partner is US with whom India is having some $11bn surplus

trade which might be at stake (US recession) and marginally affect foreign trade that to in

service sector. One more thing we need to critically look at is rupee appreciation v/s

dollar which has been so furious and India needs to adjust to the pace at which it is being

appreciated.

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Inflation:

Major concern for India than anything else is alarming inflation which is primarily driven

by the capital goods price and other food items. So keeping inflation below 5-7 percent is

the immediate as well as long term prime objectives of governing bodies here. In the

same light the honorable FM proposed budget which has an element of inflationary

containment. (Across the board cut in excise duty)

After looking at all these major factors of economy, we also need to to look at many other

stock markets across the world like dow jones, Nikkei, shanghai, hangsang which are

shaken because of world economy slow down (US recession). After critically examining

these factors, we come to conclusion that Indian economy is not so much affected by

above discussed factors and LT story of it going to be intact. According to Indian

planning commission expected the GDP growth rate for next plan is between 8%-9%. At

present stock market growth rate (CAGR) is pegged at 18- 20 percent. I expect the same

level of growth in stock market for coming years.

If we look at the market from other side ie technical side, market is in total chaos.

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Analysis: (Short term or intermediate)

Market Trend :

If we look at 90 day EMA of Nifty chart, for the past one and half year the trend has been

Bullish. From 20th Jan 2008 onwards there has been shift in the trend towards Bearish.

The 18day EMA & SMA of Nifty has broken down below 90 day EMA. So this is one

more conclusive evidence for reversal of trend from Bull to Bear.

Immediate Future :

As we can see from the graph it is clear that market is finding support at 4450 to

4600(which is previous resistance for the market). At this level market is likely to

consolidate for the medium time period.

Significance of Future Trend:

In future unless and until market finds required strengths to come to the previous level i.e.

resistance at 5630 – 50, there will be no signs of market turning Bullish.

And if in future market breaks the resistance level i.e. 5630-50 then it will rally up to

6980-7020. (Target)

Long term analysis

Market is sentiment driven and swings and hypes in market are so strong that they prevail

even for years that have happened at present. There has been shift in market trend and it

has turned bearish though there is no clear sign of bear trend (it’s a long term correction

not exactly bearish) but present situation is of complete chaos has left market in a state of

volatility so we should wait and see market movement closely.

Market’s long term support is at 3118-3130 and next support is at 4500 level so next rally

from that level 4500 is 1380-1400(4500-3110) and we can see some 150-200 points

abortive rally has been occurred and has reached 6050. At that level market was waiting

for correction. Bad clues from US slow down had made market to take LT correction and

market has turned to be volatile and has yet to settle down at previous support of 4500.

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Company technical analysis:

Stock taken is Indian hotels which operates the brand name “Taj hotel resorts and

palaces”. Both short and long term analysis has been done using moving averages (simple

and exponential MA) and relative strength index (RSI).

Short term analysis:

1) Trend short term or intermediate trend for the scrip has been flat. Now

terning in to bearish.

2) Key short term support and resistance levels for the scrip.

As we can see from the 10 day EMA &SMA graph the scrip has established

strong support at 130-140 price band.

Price movement; the scrip has undergone major consolidation (sideway movement)

phase. And it seems that the scrip has made abortive attempt to breach the flat trend and

start rally, but in vain and the obvious reason for this failure is market crash.

In the month Feb 2008 the scrip has broken the key support (130-140) and turned out to

be bearish

Future; as the scrip has already broken the key support, the short term traders should sell

it and the fresh buy signal for the stock is known only when scrip establishes support.

If in case scrip regains the strength to come back to the level of 130-140, investors should

still wait till it clearly breaches above that level but with expanding volume.

Trading tactics for short term investors:

As it can be clearly seen from the graph, the stock is purely a trading stock. So to trade in

the scrip one should look for key support and also look for cue from RSI. If the stock is at

support and selling pressure is high i.e. RSI value 30 and below, it should be bought and

sold at high buying pressure i.e. at RSI value 70 & above.

Here the identifying future target price (for the short term) is very difficult as scrip was

undergoing phase of consolidation and has no established resistance level.

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UNITECH RSI, M.A. & Volume

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EMA 10SMA 10EMA 40SupportResistanceBuySell

Short term analysis:

Trend:

The long term trend was bullish but turned flattish. The short term trend is bearish and

stock undergoing consolidation.

Short term resistance:

Short term resistance is at 365 and support at 275 though the trend seems to be bullish,

the intermediate trend has been flat because for year scrip has shown a sign of

consolidation. Now the scrip is slightly on down trend and settling down to the

intermediate support of 265-275.

Future:

If market turns back to old levels then scrip will get the strength to regain its previous

momentum at resistance level of 365 and even break away that level of resistance with

expanding volume then rally is set to be resumed and is expected to rally till 455-475

(target) or else if it doesn’t get support from market it fails to take support at then straight

away goes down to settle at the rock bottom i.e. 150 level.

Note:

Buying and selling is suggested to be followed at support level in combination with right

RSI values i.e. when RSI value is in oversold region 30. If possible investors should also

have a close eye on expanding volume which is a conclusive evidence for aggressive bull

or bear run.

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Unitech Long Term RSI, M.A. & Volume

Long term analysis:

Long term resistance:

Long term resistance is at 500 and support at 300 then 200.

Future:

Movement of scrip is mainly dependent on the market (Nifty) performance. If market

turns back to old levels then scrip will get the strength to regain its previous momentum at

resistance level of 500 and even break away that level of resistance with expanding

volume then rally is set to be resumed and is expected to rally till 620-640 (target) or else

if it doesn’t get support from market it fails to take support at then straight away goes

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down to settle at the rock bottom ie 150 level. If it crosses 620-40 range successfully then

it may rally till 700.

Note:

Buying and selling is suggested to be followed at support level in combination with right

RSI values ie when RSI value is in oversold region 30. if possible investors should also

have a close eye on expanding volume which is a conclusive evidence for aggressive bull

or bear run.

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FINDINGS:

General:

One of the most important areas for any investor to look when researching a

company is the financial statement. Financial reports are required by law and are

published both quarterly and annually.

Management discussion give investors a better understanding of what the

company does and usually points out some key areas where they did well.

Audited financial reports have much more credibility than unaudited ones.

The income statement takes into account some non-cash items such as

depreciation. The cash-flow statement strips away all non-cash items and tells you

how much actual money the company generated.

The share prices of the company are very sensitive and may change very rapidly

(upward or downward), but if we follow a systematic study, it is possible to

predict the share prices to a certain extent.

The stock prices always take a correction after a major climb.

Technical analysts evaluate securities by analyzing statistics generated by market

activity, past prices and volume.

The bar chart is used more than a straight-line graph because it shows the high,

low, open and close for each particular day.

One of the most basic and easy to use technical analysis indicators is the moving

average, which shows the average value of a security's price over a period of time.

The most commonly used moving averages are 20-, 30-, 50-, 100- and 200-day.

Support and resistance levels are price levels, at which movement should stop and

reverse direction. Think of support/resistance (S/R) as levels that act as a floor or

a ceiling to future price movements.

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For Stock:

First, the projected MPS of the stock next three years are Rs.231.05, Rs.286.03

and Rs.352.68.

Short term support for scrip: 265-275; Next support has been established at 150-

165.

Short term resistance for scrip: 365

Short term support for scrip: 265

Long term resistance for scrip: 500

Long term support is at 200 level;

Now the scrip is slightly on the down trend(short term) and settling down to the

intermediate support of 265-275

Long term target by technical analysis is 620-40 but this is unlikely to happen in

the medium term because short term trend has been bearish and long term trend

has been flat and undergoing long consolidation

For market:

Short term support or intermediate support: 4500-4600; next long term support

lies at3100-3150

Resistance for Nifty is at present is at 6000

Short term and intermediate trend has been bearish and long term trend is still

bullish.

Long term nifty target is a 6980- 7020.

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Recommendations:

Long term investors can include Unitech, because the growth rates and earnings

are good compared to others stocks. Therefore investors can include this in their

portfolio to earn the higher return on their investment.

The Long term investors should buy the stocks fair value found out by the

fundamental analysis.

Short term investors should look on various support and resistance of stocks to

buy or sell and make profit.

The investors are watch the news which affects the stocks and market because

market is very much driven by sentiments, so they see its effects the market or

stocks that they can make more profit out of it.

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Conclusion:

Stock market or capital market provides the industry with a lot of capital needed by

the industry, which leads to the growth of the industry and economy as a whole; hence

the stock market plays an important role in the development of the industry.

Some times Using Technical and fundamental analysis individually leads to incorrect

results hence both Fundamental and technical analysis should be used at a time to get

the desired result.

Fundamental analysts study everything from the overall economy and industry

conditions, to the financial condition and management of companies before deciding

on any particular stock.

Technical analyst’s look for peaks, bottoms, trends, patterns and other factors

affecting a stock's price movement and then make buy/sell decisions based on those

factors.

Stock market or capital market provides the industry with a lot of capital needed by

the industry, which leads to the growth of the industry and economy as a whole; hence

the stock market plays an important role in the development of the industry.

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BIBLIOGRAPHY

Books referred

Security Analysis and Portfolio Management

- Fisher and Jordan

Investment Analysis and Portfolio Management

-Prasanna Chandra

Websites;

- www.rbi.com

- www.sebi.com

- www.bse.com

- www.nseindia.com

- www.icicidirect.com

- www.equitymaster.com

- www.moneycontrol.com

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