MOCK STOCK REPORT

Assignment 1

BANKING & IT SECTOR ANALYSIS

Submitted To

SUBMITTED BY:

Indrajeet Sahani

MMS SEM II DIV. A ROLL NO: 39

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Indian Economy Analysis of 2011

• In 2011, Inflation, high interest rates, gloomy global economy, poor

performance of SMEs and stretched government finances have led

Indian growth to slide to a two year low . The provisional inflation

figure was 9.1 per cent in May 2011 and 9.4 per cent in June.

• India’s GDP grew at 6.9% in the July to September quarter. The

biggest problem is industrial production, which grew merely 1.9% for

the quarter ended September 30. Among the major problems are

mining and manufacturing sectors.

• Biggest problem with higher interest rates is that, companies

particularly SMEs, and individuals are finding it difficult to repay loan

instalments. This adds to the NPAs of lenders

• Huge withdrawal from FII in India affected the Indian economy in

2011 a lot.

• Rising price of crude oil has played a major role in increasing the price

of many items, by it many people suffered a lot

• Export growth slows down 10.8% to US$19.9 billion in October 2011

• Fiscal deficit crosses 74% of Budget estimates

• Industrial growth was affected tremendously due to high interest rate

and also because of increasing in total cost of manufacturing any item

• As rupee has depreciated a lot in 2011 the importers end up by

paying more money which make many items more costlier and also

foreign exchange earnings were reduced

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• Despite raising interest rate 13 times in the past 2 years by RBI,

Inflation has refused to come down even while growth has taken a

hit.

• The increase in the IIP by 5.7 per cent in April-May 2011 was lower as

compared with the increase of 10.8 per cent in the corresponding

period of last year. Merchandise trade, however, registered strong

growth with exports expanding by 46 per cent during Q1 of 2011-12.

• Economy of India depending on many sectors like manufacturing

industries Banking, agriculture, textiles, IT, handicrafts and services.

• To attract foreign currency inflow, the NRI interest rates were

increased also done no tax on interest earned in Indian market

• Rupee has lost over 20% of its value against the dollar in the last 3

months.

• Indian airlines Co made a huge loss because of incurring high

operational cost, rising petrol prices, not able to repay the loan taken

and the interest goes on accumulating

• India’s budget deficit could widen to 5.8% of GDP in FY 2012 as

against the govt. target of 4.8%

• BSE stock exchange is also close to its lowest market cap in the last 2

years.

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Banking Sector

o In 2011 global banks were under pressure due to sovereign debt crisis

afflicting many euro zone countries. Indian banks too suffered because of it.

It had affected indirectly to Indian banks.

o Poor asset quality and rising non performing assets keep profitability of

Indian banks mostly low as compared to previous years. As a result, global

ratings firm Moody’s downgraded the entire Indian banking systems ratings

from stable to negative in November

o In September, Standard & Poor’s also downgraded the credit rating of the

country largest lender, the State bank of India, by one notch after it posted

unusually low profits in the first quarter

o The BSE banking index has lost over 30% in the last 1 year

o There has been a fall in NPAs (Non performing assets) in the past 12 months

o Main reasons behind the growth in deposits in 2011

o The CRR ratio was reduced to 5.5% ie 0.5 % reduction so the share price of

most of the bank rise for few days

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IT SECTOR

Software and services revenues (excluding Hardware), comprising over 86 per

cent of the total industry revenues.

More than 2.5 million people in India are employed in this sector either directly

or indirectly

IT in India has grown at twice the GDP pace: Steve Mills, IBM.

IBM has become India's most successful MNCs. It is currently India's second

largest employer behind TCS

TCS expands US operation with new facility in Silicon Valley

The apex body of Indian technology companies is likely to forecast a slowdown

in software exports in 2012-13, as corporations keep a wary eye on the global

economic uncertainty and control expenses on information technology

outsourcing.

Infosys to invest Rs 600 cr on Indore facility

The Indian Information Technology industry accounts for nearly 5.19% of the

country's GDP

Outsourcing from American co in IT sector has reduced in India

HCL 51% growth in its revenue per employee from five years ago, HCL far

outstrips its larger peers, including TCS, Cognizant, Infosys and Wipro.

IBM has emerged as perhaps the most successful MNC in India.

More than 2.5 million people in India are employed in this sector either directly

or indirectly

Wipro has become India's No. 3 software services exporter, is also expected by

industry analysts to catch up with its bigger rivals in earnings growth rates in

the next few quarters after undertaking a wide-ranging restructuring.

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IT-BPO sector in India aggregated revenues of USD 88.1 billion in FY2011,

generating direct employment for over 2.5 million people. The domestic IT-

BPO market witnessed the Indian consumers going up the IT maturity curve,

return of economic growth, efforts by organisations and the government to

increase technology adoption, and emergence of new delivery platforms thus

driving growth. As a proportion of national GDP, the sector revenues have

grown from 1.2 per cent in FY1998 to an estimated 6.4 per cent in FY 2011.

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