Religare Securities Limited

8/8/2019 Religare Securities Limited

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LIVE PROJECT REPORT

On

RELIGARE SECURITIES LIMITED

EQUITY & COMMODITY RESEARCH

SUBMITTED BY

AKANKSHA SHARMA

GURLEEN KAUR

IILM INSTITUTE FOR HIGHER EDUCATION

GURGAON


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Abstract

Share and equity trading in India is undergoing a transition and consolidation phase witnessed

never before. The competition is likely to become so severe after the entry of many players,

retaining a customer is most difficult practice for any service provider.

Though India has a very big untapped market but the players will not flourish unless they change

the way the customers are being served. Given the awareness level of today customers every

player has to treat with care and make the customer feel that he is the king. Number of Online

Share trader in India has crossed the line. More and more customers are coming under this

umbrella and many of the existing one are changing pavilion. So customer retention and

satisfaction is now more important as it was never before. Players keep coming with new

schemes in order to attract new customers and retain the existing one.

This is being supplemented with increased advertising and brand building efforts.

Success of any organization depends upon its being proactive. An often quoted marketing adage

is to manage a business well is to manage its future and to manage its future is to manage

information.

With so many options and considerations that need to be taken into account, it is an extremely

arduous task for a broker to investigate aspects of the stock market and consistently provide

effective advice to their clients.

This project throws lights on the working frame of broking service. This industry is on the spree

to adopt the latest technology and thus any player has to be dynamic in this industry. The

comparative analysis done in this project show how Religare has built competitive edge on some

ground. The Project will help you to understand the strategies of this industry right from De-Mat

to Trading, Margin to analysis and risk to return. I hope this project will prove to be beneficial

for the Company and also gives the reader a through idea about the industry. I learnt a lot

through out the process of undertaking this project report.


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Indian Equity Market

The Indian Equity Market is more popularly known as the Indian Stock Market. The Indianequity market has become the third biggest after China and Hong Kong in the Asian region.According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As ofMarch 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore) which isone-tenth of the combined valuation of the Asia region. The market was slow since early 2007and continued till the first quarter of 2009.

A stock exchange has been defined by the Securities Contract (Regulation) Act, 1956 as anorganization, association or body of individuals established for regulating, and controlling ofsecurities.

The Indian equity market depends on three factors -

y Funding into equity from all over the worldy Corporate houses performancey Monsoons

The stock market in India does business with two types of fund namely private equity fund and

venture capital fund. It also deals in transactions which are based on the two major indices -

Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE).

The market also includes the debt market which is controlled by wholesale dealers, primary

dealers and banks. The equity indexes are allied to countries beyond the border as common

calamities affect markets. E.g. Indian and Bangladesh stock markets are affected by monsoons.

The equity market is also affected through trade integration policy. The country has advanced

both in foreign institutional investment (FII) and trade integration since 1995. This is a very

attractive field for making profit for medium and long term investors and short-term swing.

The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and

NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of

India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange

Board of India.


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COMPANY IN NUTSHELL

Religare Securities Limited (RSL), a 100% subsidiary of Religare Enterprises Limited is a

leading equity and securities firm in India. The company currently handles sizeable volumes

traded on NSE and in the realm of online trading and investments; it currently holds a reasonable

share of the market. The major activities and offerings of the company today are Equity Broking,

Depository Participant Services and Research Services. To broaden the gamut of services offered

to its investors, the company offers an online investment portal armed with a host of

revolutionary features.

y RSL is a member of the National Stock Exchange of India, Bombay Stock

Exchange of India, Depository Participant with National Securities Depository Limited

and Central Depository Services (I) Limited.

y Religare has been constantly innovating in terms of product and services and to

offer such incisive services to specific user segments it has also started the NRI, FII, HNI

and Corporate Servicing groups. These groups take all the portfolio investment decisions

depending upon a client's risk / return parameter.

y Religare has a very credible Research and Analysis division, which not only

caters to the need of our Institutional clientele, but also gives their valuable inputs to

investment dealers.

KEY DATES

1994- The company was incorporated on 23rd March & received certificate of commencement

of business on April 19th.

1995- The company obtained its Category I Merchant Banking Registration from SEBI on 18th

April.

1996- The Honorable High Court at Delhi & Mumbai on 26th March approved the Scheme of

amalgamation of the company with Fortis Financial Services Ltd.


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BRAND IDENTITY

Name

Religare is a Latin word that translates as 'to bind together'. This name has been chosen to reflect

the integrated nature of the financial services the company offers.

Symbol

The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered

good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000

three-leaf clovers found.

Each leaf of the clover has a special meaning. It is a symbol of Hope. Trust. Care. Good Fortune.

For the world, it is the symbol of Religare.

The first leaf of the clover represents Hope. The aspirations to succeed. The dream of

becoming. Of new possibilities. It is the beginning of every step and the foundation on

which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place ones own faith in

another. To have a relationship as partners in a team. To accomplish a given goal with

the balance that brings satisfaction to all, not in the binding, but in the bond that is built.

The third leaf of the clover represents Care. The secret ingredient that is the cement inevery relationship. The truth of feeling that underlines sincerity and the triumph of

diligence in every aspect. From it springs true warmth of service and the ability to adapt

to evolving environments with consideration to all.

The fourth and final leaf of the clover represents Good Fortune. Signifying that rare

ability to meld opportunity and planning with circumstance to generate those often

looked for remunerative moments of success.

Hope. Trust. Care. Good Fortune. All elements perfectly combine in the emblematic andrare, four-leaf clover to visually symbolize the values that bind together and form the

core of the Religare vision.


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Board of Directors

Mr. Malvinder Mohan Singh - Chairman (Non Executive)

Mr. Sunil Godhwani - CEO & Managing Director

Mr. Shivinder Mohan Singh - Non Executive Director

Mr. Harpal Singh - Non Executive Director

Mr.Deepak Ramchand Sabnani - Independent Director

Mr.Padam Bahl - Independent Director

Mr.J.W. Balani - Independent Director

Mr. Baldev Singh Johal - Independent Director


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ORGANISATION STRUCTURE

NATIONAL SALES & MARKETING HEAD

V. P- Investment V.P - Sales

AVP- Investment AVP - Sales

Zonal Manager- Investment Regional sales head

Senior Investment manager Branch Manager

Manager- Investment Team leader

Relationship Manager

Asst. Relationship Manager

Relationship executive


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EMPLOYEES AT REL

REL EMPLOYEE DISTRIBUTION

1,625

4,372

8753

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2005-06 2006-07 2007-08

RSL RCL RFL RWMSL REL RCML RIBL


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PRODUCT EQUITY

The different products offered by Religare Securities Ltd have been categorized under three

broad clients interface.

RETAIL SPECRUM WEALTH SPECTRUM INSTITUTIONAL SPECTRUM

Equity and commodity trading

Personal Financial services

(Distribution of

mutual funds

Distribution of

insurance)

Personal Credits(Personal loan

services

Loans against shares

Online Investment)

Wealth advisory services

Port folio management services

Priority client equity services

Institutional equity broking

Investment banking

Product Portfolio

1. Derivatives and Equity

Equity

RELs equity investment philosophy is centered on generating capital appreciation for theinvestor. The primary emphasis is on providing the investor with a degree of capital appreciation,superior to that of the returns from the equity class as represented by a market index over thelonger term. Its core investment premise is that the equity markets are not completely efficient. Awell-organized and thorough research effort combined with a disciplined portfolio management


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approach enables out performance of the market index over time.

A key pillar of our disciplined approach is to stay true to the mandate of the specific fund asspecified in the offer document under all circumstances. This is key to generating superiorperformance over time even though there could be times when staying true to the mandate may

result in short-term underperformance. Its investment philosophy is a matrix framework oCompany, Industry, Economic and Technical analysis. The equity team provides many of theinputs for this framework, but it also uses inputs from external sources as and when required.This open framework is combined with an environment that encourages regular and constantdebate; which REL believes leads to superior decision making.

Trading in Equities with Religare truly empowers customers for their investment needs. REL

ensure that the customer has a superlative trading experience through -

y A highly process driven, diligent approach

y

Powerful Research & Analytics andy One of the "best-in-class" dealing rooms

Further, Religare also has one of the largest retail networks. Now, you can walk into any of our

branches and connect to our highly skilled and dedicated relationship managers to get the best

services.

The Religare Edge

y Pan India footprint

y Powerful research and analytics supported by a pool of highly skilled research

analystsy Ethical business practices

y Offline/Online delivery models

y Single window for all investment needs through your unique CRN

2. Depository Services

RSL provides depository services to investors as a Depository Participant with NSDL and

CDSL.

The Depository system in India links issuers, Depository Participants, Depositories National

Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL)

and clearing houses / clearing Corporation of Stock Exchanges. These facilitate holding of

securities in dematerialized form and securities transactions are processed by means of account

transfers.


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REL customer centric account schemes have been designed keeping in mind the investment

psychology. With a competent team of skilled professionals, they manage over 5,00,000

accounts and have a dedicated customer care centre, exclusively trained to handle queries from

its customers. With our country wide network of branches, you are never far from Religare

depository services.

Religares depository service offers a secure, convenient, paperless and cost effective way to

keep track of your investment in shares and other instruments over a period of time, without the

hassle of handling physical documents. Customers DP account with REL takes care of their

depository needs like dematerialization, rematerialisation, transfer and pledging of shares, stock

lending and borrowing.

Customers demat account is safe and absolutely secure in our hands, every debit instruction is

executed only after its authenticity is established. RELs hi-tech in-house capabilities cater to the

needs of software maintenance, database administration, network maintenance, backups and

disaster recovery. This extra cover of security has gained the trust of their clients.

3. Currency Futures

Currency future is the world's most traded financial instrument with .

Benefits of Currency Futures

y High Liquidity

y Extended trading hours - 9 am to 5 pm

y Opportunities to reap benefits owing to a highly dynamic market

y Small lot size of only US $1000 with low exchange specified margins

Currency Futures is best suited for -

y SMEs / Individuals involved in Imports/Exports

y Corporate/ Institutions involved in Imports/Exports and anybody else who has

foreign currency exposure

4. Mutual Fund

Mutual Fund offers an opportunity for long term wealth creation. At RSL we ensure that your

investment are in safe hands backed by quality research and based on the needs of the client

according to his Income, Saving, Age, Family Background etc.

Introduction of New Mutual Fund Service System (MFSS) & Bombay Stock Exchange

Platform for Allotment and Redemption of Mutual Fund Units (BSE StAR MF)

Securities Exchange Board of India (SEBI) vide circular SEBI/IMD/CIR No. 11/

183204/2009 dated November 13, 2009 allowed transaction in Mutual Fund schemes through

the Stock Exchange infrastructure. Units of Mutual fund Schemes have been permitted to be


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transacted through registered Stock Brokers of recognized Stock Exchanges. With this the

Stock Exchange mechanism extends the present convenience available to secondary market

investor to mutual fund investors. This will give distributors and brokers a level- playing

field with banks in enabling clients to invest in mutual fund and enable to expand the reach

of mutual fund schemes to more towns and cities.

Research in Religare

Religare believe in providing independent research for clients to make investment decisions,

with strict emphasis on self-regulation, avoiding possible conflict of interest in objectivity.

Backed by a strong pool of highly skilled research analysts, they offer varied research products

and services.

Research Products

y Fundamental Research

y Technical Research

y Daily Reports

y Intraday trading tech calls

y Intraday Derivative call

y Directional F&O calls

y Structured Products

y Index Arbitrage

- Arbitraging between Index (NIFTY) Futures and its constituents (Underlying Stock

Futures).

y Volatility Trading

- Arbitrage between volatilities i.e. between implied volatility of options and forecasted

volatility of underlying stock futures.


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Fixed Income

The philosophy for managing fixed income assets revolves around Safety, Liquidity andConsistency with the objective of building high quality portfolios that aim for strong andconsistent investment results.

Investment process

Equity

y Idea Generation

Based on the fund objective, we start filtering down the possible investment universe tomore attractive opportunities. The process involves Company, Industry, Economic andTechnical analysis in alignment with the investment objective of the underlying fund.The fund's investment objective has implications for definition of the universe, companyselection, industry and asset allocation.

y Matrix Analysis

As part of the Matrix approach we analyze, bottom up, the fundamentals of thecompanies that are part of the universe. We use external research and find it useful as asource of information and financial models. However, we believe our direct and in-depthinteraction with a company and its competitors, suppliers and buyers - wherever feasibleand possible, helps us arrive at our own unique insight into the company. The maximuminefficiency in the markets is at the company level, and an in-depth research effort cangenerate a knowledge advantage and superior performance.


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To this, we add our top down economic views and industry views - leading to industryand asset allocation decisions. The economic and industry analysis also has itsimplications on company selection. Technical analysis is another input for assetallocation decisions. All of this is in keeping with the investment objective of the specificfund

y Security Selection

To help select stocks for the portfolio, we use a proprietary stock categorization system.The objective of our stock categorization system is to enable us to identify stocks that arelikely to be the best investments from within our universe. Each category of stock has adescription of fundamental attributes that we expect the company to possess. Thecategorizations are as follows:

Stock

CategoryDescriptions (eg.)

Growth

Prospects (eg.)

Company Attribute

(eg.)

Financial

Parameter (eg.)

Star Young companies High growth Entrepreneur vision,scalability

OperatingLeverage

LeaderEstablishedcompanies

In line or betterthan industry

Track record ofleadership, globallycompetitive

Industry leadingmargin / ROE

Warrior

Young /establishedcompanies

Better thanindustry

Unique proposition and/ or right place, righttime

Margin & ROEexpansion

DiamondCompany withvaluable assets

Low growthManagement intent tounlock value

Value of asset /business

Frog Prince

Company in aturnaroundsituation

Back to growthIntrinsic strengths incore business

P2P, ROEexpansion

ShotgunOpportunisticinvestment

Positivesurprise

Corporate event,restructuring, earningsnews

Event visibility

CommoditiesCall on the cycle is

paramount

PositiveIntegration, costefficiency, globally

competitive

Profit leverage

* P2P - Path to Profit, ROE - Return on Equity

y Stocks that fit into one of these categories typically display superior return profiles, butmore importantly this enables fund managers to focus on the attributes that drive stockprice performance and keep a watch for red flags.


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y Portfolio Construction

The fund manager has the primary responsibility for portfolio construction based on theinvestment objective of the Fund. Portfolio construction guidelines are laid down for eachfund and reviewed on a need basis and otherwise regularly on a quarterly basis. Every

investment decision we make is by keeping in mind the investment objective of the fundand how the security will affect the overall portfolio. In addition, we also look into thecurrent Economic / Industry views that impact industry and asset allocation decisions forthe fund. Technical views which are relevant to asset allocation, if applicable are alsotaken into consideration. Our preference is for companies with the characteristics asdefined in our stock categorization framework.

y Sell Decipline

We may sell a stock because the fundamentals of a company, industry or economy havechanged or a company's competitive advantage appears to have deteriorated. It could also

be a function of alternative opportunities being available at a more attractive valuation oran inability to justify prevailing valuations.

y OversightThe role of monitoring and reviewing is undertaken by the investment committeeconsisting of Chief Executive Officer , Head - Equity Funds, Head- Fixed Income andHead- Compliance and by any additional member which may be included/ nominated tothe committee which meets on a periodic basis. The committee is empowered to establishinternal norms such as industry allocation, asset allocation etc for each fund and tomonitor and review this on an ongoing basis.

Fixed Income

y Fund Objective

The fund objective is the basis for investment management for all schemes. The mandateof the fund including asset allocation framework, duration limit etc. as defined in the


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offer document of the fund acts as the building blocks for portfolio construction andmaintenance activities. Guidelines as provided by the Regulators are strictly adhered to.

y Interest Rate View

Our views on the interest rate are based upon extensive fundamental research by adoptinga Top-Down approach. Fundamental analysis has a thorough coverage on the macrovariable of the economy, relative value analysis within the asset class and between assetclasses, portfolio stress testing and scenario analysis and schemes performancemonitoring vis--vis its defined benchmark.

y Security Selection

Selection of the security for the purpose of portfolio construction would greatly dependon the asset allocation pattern of the scheme as defined in the offer document. Securitywould be selected based on asset allocation optimization to deliver superior returns.

y Credit Quality

There is a stress on credit quality assessment by following a Bottom-up approach toselecting the credit. Constant credit watch for Pre-trade and post-trade for all thecomponents in the portfolio is followed. Due consideration would also be given toliquidity of each credit in the secondary market

y Duration Management

The duration of each portfolio is actively managed depending on the interest rate view

y Portfolio Management

The endeavor of each fund is to deliver superior returns. Duration management, AssetAllocation optimizing and relative value analysis would be the key to delivering superiorreturns


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Trends in Commodity Market

GOLD

Gold has surged 60% in the past 12months and its not letting up. The yellow metal iscontinuing that scorching surge into the last part of the year, establishing new highs on a near-daily basis. In fact, gold established yet another record price yesterday (Wednesday) when itpeaked at $1,153.40 an ounce on the New York Mercantile Exchange (NYMEX).

And the records are going to keep on coming.

With the U.S. dollar in a freefall and global gold demand rising, analysts say the precious metalwill likely continue its bullish trend through at least the first half of 2010. It could rise as high as$2,000 an ounce, which would represent a 73% gain from current record levels.

Everything is pointing to the price of gold going higher, Mike Sander, an investment adviser atSeattle-based Sander Capital Advisors, wrote in an e-mailed report.

And a whopping budget deficit continuing to balloon, a Federal Reserve in no place of raisingrates, and central banks all over the world diversifying away from the dollar, will be the maincatalysts for golds continued rise, he said.

Indeed, the U.S.F

ederal Reserves loose monetary policy has put the dollar under duress. Thecentral bank has pumped more than $2 trillion into the U.S. economy since the financial crisisbegan more than two years ago. It has lowered its benchmarkFederal Funds rate to a record-lowrange of 0%-0.25% and it has stepped up purchases of U.S. Treasuries and mortgage-backedsecurities.

More recently, the return of investor risk appetite and the widespread belief that the Fed willhave to keep its stimulus measures in place as the U.S. economy struggles out of a long and deeprecession have put downward pressure on the greenback.

The dollar tumbled about 20% against the euro in the past year, and the Dollar Index which

measures the greenback against the euro and five other currencies fell to a 15-month low of74.679 on Monday and was retesting that low as of Wednesday.

With the dollar in freefall, central banks and hedge funds have sought shelter in hard assets,particularly gold. Thats a big reason why gold has experienced such a remarkable run this year.


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You have to consider the amount of money sloshing around the world right now Chinas $2.2trillion in reserves, Indias $285 billion in reserves, all of the money in central banks throughoutthe Middle East, said Martin Hutchinson, a contributing editor for Money Morning and aveteran banker with more than two decades experience in the international marketplace. If all ofthe serious money charges into gold and gold really gets going, youll see a tremendous spike inprices.

Concludes Hutchinson: I believe the price of gold will hit $2,000 an ounce next year.

Such steep run-ups have happened before. From 1978 to 1980, for instance, gold soared from$185 an ounce to $850 an ounce, Hutchinson recalls. Interest rates were about 10% at that time.Credit is much easier to get today.

Right now, the cost of borrowing money and investing in gold is virtually zero, Hutchinsonsaid.

How Global Demand Will Drive Gold to $2,000

Indeed, the bull-run in gold is already well underway, and its picking up steam.

Prices actually began their most recent rally when the International Monetary Fund (IMF) earlierthis month revealed that it sold 200 metric tons of gold to the Reserve Bank of India (RBI) fromOct. 19 to Oct. 30.


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The RBI paid $6.7 billion for the 200 metric tons of the yellow metal the equivalent of about8% of the worlds annual mine production.

The move surprised many analysts, as India for the past 15 years had largely neglected its goldreserves.

Indias gold holdings peaked at 20% of its foreign exchange reserves all the way back in 1994.Since that time, Indias gold holdings had fallen:Indeed, prior to the central bank purchase, Indias gold holdings had dropped to just 3.6% of thenations estimated $285.5 billion in foreign reserves.

Little wonder that last months gold purchase nearly doubled Indias holdings, which now standat 558 metric tons, or 6.2% of the nations forex reserves.

Indias gold holdings as a percentage of foreign reserves are now higher than even Chinas. ThePeoples Bank of China (BOC) holds about 1,054 metric tons of gold, equal to roughly 2% of its

$2.3 trillion in foreign currency reserves.

Asias third-largest economy now has the worlds 10th-largest gold reserve, behind Russia,which has about 568 metric tons.

Our Reserve Bank decided to buy some gold. I think about 400 tonnes. Thats normallysomething we do from time to time. The IMF wanted to sell gold and we wanted to buy gold,Pranab Mukherjee, Indias finance minister, said in an interview with the Financial Times.

However, analysts have been far less flippant about the purchase.

Timothy Green, the author of The Ages of Gold, described Indias purchase to BloombergNews as the biggest single central-bank purchase that we know about for at least 30 years insuch a short period.

The only comparable event was the U.S.s steady purchases in the 1930s and 1940s, he said.

Analysts believe Indias highly publicized purchase which was made when prices were nearrecord highs will spawn a chain reaction in which other countries and investors ramp up theirgold purchases.

This is a landmark trade, Jonathan Spall, a director at Barclays Capital (NYSE ADR: BCS)

and a gold specialist, told theF

T. Central banks are conservative institutions and Indias moveis a sign for other central banks and sovereign wealth funds that were contemplating buyinggold.

The IMF said in September that it would sell 403.3 metric tons of the metal to shore up itsfinances and increase its ability to lend at reduced rates to low-income countries.


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And with 203.3 metric tons still on sale at the IMF, dont be surprised if China decides to bulkup on gold, too. China, the worlds sixth-largest holder of gold, has increased its yellow-metalreserves by 76% since 2003. But the 1,054 metric tons it now holds is equal in value to just 2%of its world-record $2.3 trillion in total reserves.

It is but a matter of time until China and the IMF

announce much of the same, DennisGartman, an economist and the editor ofThe Gartman Letter, toldBloomberg.

Worldwide demand for gold is clearly on the upswing. However, just as thats happening, supplyand production of the precious metal are falling.

Annual worldwide mine production of gold has decreased by nearly 8% since 2001, even as theprice of gold has tripled.

Meanwhile, investment demand for gold remained very strong surging 46% in the secondquarter of 2009 from a year ago, according to the World Gold Council.

Everyone who says that gold will hit $2,000 in five years is wrong, said Money MorningsHutchinson. It will be back down in 5 years. If its going to $2,000 it will get there next year.

It will turn around when [central banks] start taking monetary policy seriously, and they wontdo that in a hurry, he added. Golds bull run is a bubble, just like all the other bubbles. Exceptthis is more of a bang than a bubble, because its taking place so quickly.


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Four Ways to Play Gold

1. Market Vectors Gold Miners ETF (NYSE: GDX): Gold miners benefitdisproportionately from a rise in the price of gold, because their production costs arefixed. This means that miners are a more-leveraged way to play gold than the metal itself,

particularly since surging speculative demand can increase mining companiesPrice/Earnings (P/E) ratios.2. SPDR Gold Shares ETF (NYSE: GLD): GLD holds more than 1,000 ounces of gold,

and has a market capitalization of $39 billion. As an investment, GLD is more convenientthan buying gold bars directly. The funds share price fluctuates in concert with the priceof gold.

3. Barrick Gold Corp.(NYSE: ABX): Barrick is the largest and financially strongest goldproducer, with a market capitalization of $43 billion, reserves of 124.6 million ounces ofgold (plus copper and silver), and operations in North America, South America,Australasia and Africa.

4. Yamana Gold Inc. (NYSE: AUY): A growing gold producer with a $6.8 billion market

capitalization that made an unexpectedly good profit in the fourth quarter of 2008,Yamana is expanding both production and reserves (currently 19.4 million ounces) withoperations in Canada and Latin America. Its expansion magnifies the likely potentialbenefit from an increase in gold prices.

MONTHLY GOLD PRICESPrice movement of gold over the past month - chart


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1 YEAR GOLD PRICE Chart HistoryGold Bullion Values for the past year - chart and graph

Historic Trends in Gold Prices

With the recent surge in gold prices over the last eight years plus, a new interest in all things goldhas arisen. Gold has long been regarded as a reliable store of value over the long term, one thatdoes not lose its purchasing power over time. This article focuses on the historical trends in gold prices in the modern

In considering the historical price and trend of gold from the year 1900 to the present, the readershould remember that from the years 1880 until 1914, and on and off again until the early 1930's,the major world currencies were fixed to a gold standard, a mechanism which signified that theprice of currencies were measured against a near constant value of gold. During this time period,and indeed beyond it to the early 1930's, despite changes in industrial capacities and outputs, aGreat War, the roaring twenties, and other turbulent events, the price of gold in US Dollarshovered right around $20.60 per ounce. This remains the greatest period of stability in goldprices over any given modern time frame. It is still an argument used by the growing chorus ofworld leaders, including European Central Bank President Trichet and French President Sarkozy,as well as businessmen, calling for a return to the relative stability (in international exchangemarkets) of the gold standard. A dramatic series of events changed the value of gold prices to themajor international currencies, including the US Dollar, in the early 1930's. With the onset of theGreat Depression, the various major powers, especially France and the United States, beganpolicies of devaluing their currencies in a vain attempt to salvage their collapsing exports. Goldin US Dollars made a dramatic sixty-five percent jump when in 1933, then President Rooseveltmade the decision to ban the buying and selling of bullion gold in the United States, as well as

the following year officially devaluing the dollar significantly against gold. The price soared in atwo year period from the historically stable rate of about $20.60 per ounce in 1932 to $34.70 perounce in 1934.

The next several decades again saw wild turbulence in the world in the form of a second greatwar, World War II, as well as the destruction and subsequent rebuilding of both Europe andJapan, the Korean War, and the outbreak of the Vietnam war. And yet remarkably, over thistraumatic period, the price of gold trended at approximately $35 per ounce, from the new high


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made in 1934 all the way until 1967. The revived international gold standard once again helpedto maintain the stability of international exchange rates. In 1967 and 1968, a number ofdestabilizing events began which affected international markets and the United States. Similarly,gold prices began to gyrate wildly for the next two decades, especially when the gold standardwas formally abandoned by President Nixon in 1971. Between the intensifying Vietnam War

which finally drew behind the scenes involvement of the Soviet Union, the Arab-Israeli War of1967, and the Arab Oil Embargo of the early 1970's, gold rose from the four decade long stableprice of $35 per ounce to $161 by 1975, a wild four hundred fifty percent plus increase in onlyeight years. Contrast this with the fifty year and thirty year periods of gold price stability duringthe eras of the first and second World Wars, when the gold standard was generally still adheredto.

The late 1970's and early 1980's saw yet more significant instability in the oil producing world,which again rocked the value of the major world currencies no longer anchored by a goldstandard and drastically increased the price of gold. Between the Iranian Revolution and theSoviet Union's invasion of Afghanistan, gold roared on up once more from the $161 previous

high at the end of 1975 to the closing price for the year of $612 in 1980 (having briefly touched$850 in January, 1980), price levels it would not touch again for another twenty five years. Theintervention of governments in the foreign exchange markets and introduction of easier creditand steady increase in money supplies, along with a relative return to calm in the oil producingMiddle East, led to a slow and steady decline in gold prices from this high of 1980 until the earlyyears of the new century. By 2001, gold had plummeted all the way to an annual average of$278, and was rashly being called a barbaric, archaic relic that would soon be confined to thedustbin of history.

Once more, the circumstances in the world went wild again on 9/11/2001, with the rapid rise ofradical terrorism in the attacks on the World Trade Center. Two major Middle Eastern warsresulted in Iraq and Afghanistan, along with a series of economic crises events that began themassive printing of US Dollars, expanding American money supply by three hundred percentfrom 2007-2010. It should not come as any surprise that gold soared from this decades low of$278 to more than $1,200 per ounce in the ensuing time period. Gold has now been in an uptrendfor more than eight years, gaining steadily every year, as more and new currency destabilizingevents and irresponsible monetary debasing policies continue around the world. Whateverhappens in the coming years, history has taught us that the price of gold will hold steady orincrease over time. As a very real example of this point, it is worth noting that one hundred yearsago, a one ounce, $20 Gold Piece would buy a high quality suit in the United States. Today thatsame one ounce gold coin trades at over $1,200 per ounce, still enough to buy a very high qualitysuit. The more gold prices change, the more they stay the same.

Lets identify the conditions that occurred in 2009 which will lead forward into an assessment ofthe 2010 outlook for metals and oil.

As we entered 2009, we had a major asset crash due to the events in toxic debt. In response theFed initiates major bailout programs. In the loosest monetary policy of modern times, interestrates collapse to a low in late 2009. Look at the interest rate collapse into the end of 2008 on theTBT (TBT: 32.9993 -1.1907 -3.48%) chart (20 year Inverse Short Bond ETF) As we can see by


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the chart, today the long term interest rate picture is in a neutral position entering 2010 above theblue downtrend line but above the blue uptrend line. The technical indicators are warning thatthis current uptrend is losing steam as RSI has turned down and Williams %R is in the process ofdropping out of its overbought area (usually a sell signal). This indicator we use has been a goodat assisting us to discern where the highs and lows occurred.

The 50 and 200 day averages are converging right where price is. A break above or below theaverages with a subsequent penetration of the trend line would set the next interest rate trend inmotion. The direction that rates take will influence many of the other markets. A break higherwill portent higher rates and lower bond prices for the USA.


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Right around the same time interest rates bottomed last November, the FIRST asset classresponds.

Gold bottoms with a November / December spike at the 700 dollar area right when interest ratesbottom and takes off on a rally to 1007 in March.

The gold chart displays the massive $540 dollar rally that has transpired over the past 13 months.Not only has gold led all asset classes from the depths of the debt hole, but has been the clearwinner of the decade in mounting a rally from $251 dollars to $1227 at the peak. So strong hasthe rally been that the 200 day moving average was only tested once, during the spring lows of


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April and May. Even the 50 day moving average went from September to December over 100days without being revisited until the past few days.

The lows for 2009 were the $865 - $870 area in gold. That pullback low was to exactly the sameprice as the peak of January 21, 1980 when gold touched $875. From that low in spring, gold

rallied away from the 200 day average until it reached a point where price was $250 dollarsabove the average when it peaked at $1227.

Outlook for Correction

There are three probable places for a price low during this pullback. First is the 50 day movingaverage at the current price area of $1110. This is one potential price zone where a rally mightre-establish itself. Should gold bottom in the 1080-1090 area and solidly move above the 50 dayaverage, gold would stage an assault on the upper trend line where a major channel in whichprice has bounced off the channel three times over the past 13 months.

The second area is the horizontal channel line drawn off the 2007 and 2008 top. We can see howthis area points to the price area where gold broke over 1000 to finally rally into higher tripledigit prices. This pullback or test of the breakout area would give us a range of about 1020-1040in price.

The final area is where the bottom channel line, the small blue downtrend line drawn off theMarch and June peaks and the 200 day moving average converge in price. That would put theprice range at about the 950-990 area and will be the most SOLID PRICE SUPPORT area forgold in which gold would still maintain its upward momentum within this channel. Closes belowthe 930-950 area during 2010 would suggest that the current credit contraction cycle has thepotential to bring down the house one more time like it did in 2008.

We expect gold will bottom at one of these three areas between now and mid January and a rally back up to test or exceed the upper trend channel should develop going into mid winter.Depending on the strength of the next leg up will determine how long the rally is to last.Seasonal charts show that corrections usually develop in the mid-February to early Marchtimeframe on average. We suspect a spring peak will lead to what it usually does, a July/Augustlow. Should gold next rally fail to make new highs and then turn lower under the 50 day averageor below the low of this current pullback, the potential to test the lower levels we have listedabove will be in play.

Going into 2010, the gold market seems to have had only one nemesis, DEBT DEFAULT. The2007 high at 1033 occurred right at the beginning of the Lehman default announcement. Thismost recent pullback began within a week from the Dubai announcement and the announcementitself had a 55 dollar pullback day.The notion that the global economic recovery is notsustainable or at best in serious question is viable as the longer end of the interest rate curve aswe saw on the TBT chart has not signaled a new higher trend rate as of yet. Should the recoveryfalter at a time of massive credit contraction the liquidation of assets both paper and hard cannotbe dismissed. Paper will go and depending on the severity of the contraction will depend on howmuch gold might be affected.


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Copper

There are a lot of analysts who look to copper to gauge economic strength. The chart belowshows that copper was the next major commodity to bottom when the feds collapsed interestrates. Copper blew away the completion in 2009 by running from $1.25 to $3.25 in a triple digitgain. And look at the chart. It was virtually straight up all year. Most recently however, the pricevelocity over the past few months suggests of a price that is running out of steam. Copper isvirtually unchanged in the past few months.


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The price high is also coming at a time price location where the 2008 collapse in price beganfrom.For certain a correction from this area is the odds favored event. Watch the Williams% Rindicator as it is just about to fall out of its overbought range.

From a time and price perspective copper looks ripe for a pullback in early 2010. Should copper

drop below the lower blue channel line and below the 280-290 area, odds would favor a pullbackto a minimum of the 200 day average at the 260 area with potential to trade lower should therecovery falter in the far east.

Crude Oil

Crude double dipped at the bottom by developing a December low and then a subsequentFebruary seasonal lowunder the 40 dollar area, which if you recall was near the 1991 Iraqinvasion high.


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Crude oil is nearing the potential seasonal lows as well. Notice that the current nine straight daysdrop to under $70 had crude oil at the same price as last June and August. This underscores howimportant it is to understand not only the trend of markets, but the VELOCITY and STRENGTHof the trends. While it can be said that Crude is almost a double this year that is suggestive thatyou bought at the bottom. More important is that anyone playing crude since last June who is not

a very short term trader has been hard pressed to make a buck. However, its seasonal lows areapproaching. As long as oil is above the 59-65 area the uptrend should continue. Any movesdown that PRICE AREA anytime but especially by the end ofFebruary where the seasonal lowsare due would be an excellent opportunity to take a position. The two blue arrows drawn on thechart shows the next key resistance area in crude oil. The 90-110 area should provide the mostsignificant resistance to price in 2010. The current price pattern does not look as bullish as theother commodities, but look for a seasonal low in the coming weeks.

From Year to Year.

From the end of last October to mid February, Gold was the place to be. From mid February to

mid June Crude was the place to be.F

rom mid June to mid August, copper was the place to be.And since September, it has been Gold, Gold, Gold.

In light of the above paragraph, there are a few ways investors and traders can take advantage ofthe seasonal tendencies. One is to be overweight the commodity that is in season and the oneshowing the best strength on the chart. Another is to simply line your portfolio with a mix ofthese commodities so that each can have their turn providing a lift to the bottom line of yourportfolio. And finally for the seasoned trader, take advantage of gold spring selloffs by havingsome crude plays with those gold profits you take in the winter WHEN the trend changes.

The markets will not be an easy navigating area in 2010. One of the key elements we need to be

on guard for is whether the markets will do the opposite of this market, the US dollar.


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There has been a potential trend change in the US dollar and some believe will be the surprisetrade of 2010. Whether that is a correct forecast or not will depend on many variables.

This is where we come in. Over the course of 2010 we will be forever assessing the trends andlooking for great chart set-ups to take opportunity by the hand and to brave the adversity coming.

There is a great wisdom that is known by all the great traders and investors and it is this.

If you do not take advantage of the 4 or 5 good rallies that occur during the year and ride them,then the rest of the market will eventually nibble your profits and account balances away.

Crude oil -Introduction

Crude oil prices behave much as any other commodity with wide price swings in times of shortageor oversupply. The crude oil price cycle may extend over several years responding to changes indemand as well as OPEC and non-OPEC supply.

The U.S. petroleum industry's price was heavily regulated through production or price controlsthroughout much of the twentieth century. In the post World War II era U.S. oil prices at thewellhead averaged $26.64 per barrel adjusted for inflation to 2008 dollars. In the absence of pricecontrols, the U.S. price would have tracked the world price averaging $28.68. Over the same postwar period the median for the domestic and the adjusted world price of crude oil was $19.60 in2008 prices. That means that only fifty percent of the time from 1947 to 2008 have oil pricesexceeded $19.60 per barrel. (See note in box on right.)

Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With

limited spare production capacity, OPEC abandoned its price band in 2005 and was powerless tostem the surge in oil prices, which was reminiscent of the late 1970s.

Crude Oil Prices 1947 - August, 2009


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Analysis and Interpretations

Fundamental Analysis of DLF and Unitech

DLF Ltd.

Indust

ry

: Construction andContracting - Real Estate

BSE

Code: 532868

NSE

Code: DLF

Business

Group: DLF Group

LTP (Rs.): 318.25 (-0.65%) [NSE]

ISIN No:INE271C01023

Face

Value/M

Lot

: 2.00/1

P/E Ratio : 70.61

Market

Cap

:54,019.86 Cr

Key Officials

Name Designation

K P Singh Chairman / Chair Person

T C Goyal Managing Director

Subhash Setia Co. Secretary & Compl. Officer

Other Details

Business Group DLF Group

Listings BSE , NSE

ISIN No. INE271C01023

Incorporation 18/06/1980

Public Issue Date 11/06/2007

Exchange BSE NSE

Last Traded Price 318.30 318.25

Last Traded Date 8/17/2010 8/17/2010

Last Traded Time - -

Change -1.65 -2.10

% Change -0.52% -0.66%

Day's Open 321.00 321.00

Previous Close 319.95 320.35

Day's High 323.70 323.95

Day's Low 316.50 316.20

Total Traded Volume (Rs. In Lakhs) 2,051.90 11,642.29

Bid Price 0.00 0.00

Bid Quantity 0 0


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Offer Price 0.00 0.00

Offer Quantity 0 0

Total Traded Quantity 642,205 3,644,298

Number Of Trades 8,539 47,765

52 Week High / Low's

Exchange High High Date Low Low Date

BSE 490.80 10/21/2009 251.50 5/25/2010

NSE 519.90 10/23/2009 254.50 6/9/2010

Exchange Codes

BSE : 532868 NSE : DLFEQ

Sensex : 18,048.85 [-0.01% ] Nifty : 5,414.15 [-0.08% ]

Share Holding Pattern as

on :30/06/2010 31/03/2010 31/12/2009

Face Value 2.00 2.00 2.00

No. Of

Shares

%Holdin

g

No. Of

Shares

%Holdin

g

No. Of

Shares

%Holdin

g

PROMOTER'S HOLDING

Indian Promoters133480312

078.64

1334803120

78.64133480312

078.64

Sub Total133480312

078.64

133480312

078.64

133480312

078.64


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NON PROMOTER'S HOLDING

Institutional Investors

Mutual Funds and UTI 2815379 0.17 4679336 0.28 6513708 0.38

Banks Fin. Inst. and

Insurance6214052 0.37 6260667 0.37 5025286 0.30

FII's 255483456 15.05 250702383 14.77 258480430 15.23

Sub Total 264512887 15.58 261642386 15.41 270019424 15.91

Other Investors

Private Corporate Bodies 24954965 1.47 27240332 1.60 28712745 1.69

NRI's/OCB's/ForeignOthers

2615172 0.15 2548727 0.15 2196400 0.13

Others 1530469 0.09 4153113 0.24 1440032 0.08

Sub Total 29100606 1.71 33942172 2.00 32349177 1.91

General Public 68986607 4.06 67003212 3.95 60174279 3.55

GRAND TOTAL

169740322

0 100.00

169739089

0 100.00

169734600

0 100.00

Unitech Ltd.

Industry:

onstruction &

ontracting

ivilBSECode

:

NSECode

: UN T

H

BusinessGroup

: Not Applicable

LTP (Rs.):

.

(

.

%) [N

]

ISIN No : N

A

Face Value/MLot

:

.! !

/"

P/E Ratio :# $

.%

Market Cap:

" ,%

&

. "&

'

r

Key Officials

Name Designation

Ramesh(

handra(

hairman /(

hair Person

) anjay ( handra 0 anaging Director

Ajay ( handra 0 anaging Director

OtherDetails

Business Group Not Applicable

Listings 1 2 3 , N2 3

ISIN No. 4 N3 5 67

A 8 9 8 @ 8

Incorporation 8 6 / 8 @ / 9 6 A 9


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Exchange BSE NSE

Week High/ Low's

Exchange High High Date Low Low Date

B C D E E F . G H I / F / P Q Q I R H . E Q H / P H / P Q E Q

NC D E E R . R H I / F / P Q Q I R P . P H H / P E / P Q E Q

Exchange Codes

BSE : 507878 NSE : UNS T T U HT Q

Sensex :V8,048.85 [

W0.01% ] Nifty :

5,414.15 [W0.08% ]

Share Holding Patternas on :X

0/0Y

/20 0X

/0X

/20 0X

/12/2009

Face Value 2.00 2.00 2.00No. Of

Shares%

HoldingNo. Of

Shares%

HoldingNo. Of

Shares%

Holding

PROMOTER'S HOLDING

a oreign Promoters b 822000 0.15 b 822000 0.16 b 822000 0.16

S ndian Promoters 1168559849 46.41 1093537171 44.84 1043537171 43.68

Sub Total 1172381849 46.56 1097359171 45.00 1047359171 43.84

NON PROMOTER'S HOLDING

Institutional Investors

Mutual c unds and UTd 8735665 0.35 11493143 0.47 13205381 0.55

e

anksc

in.d

nst. andd

nsurance 73992131 2.94 75177943 3.08 70080704 2.93c d d 's 821147126 32.61 787203929 32.28 799643784 33.47

Sub Total 903874922 35.90 873875015 35.83 882929869 36.96

OtherInvestors

Private f orporate e odies 174412306 6.93 180444835 7.40 193977238 8.12

NRI's/O f e 's/c oreign Others 8884982 0.35 9338957 0.38 7511341 0.31

Others 2484639 0.10 4978006 0.20 11273210 0.47

Sub Total 185781927 7.38 194761798 7.99 212761789 8.91

General Public 255819130 10.16 272805063 11.19 245750218 10.29

GRAND TOTAL 2517857828 100.00 2438801047 100.00 2388801047 100.00


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COMPARISON BETWEEN DLF AND UNITECH


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CONCLUSION

The online trading is growing with a rapid pace with the rising level of education among the

customers. The other factors being that the Indian investors nowadays want to deal themselves in

trading rather than depending upon other middlemen.

Investors are increasingly finance-savvy, due to the proliferation of investment-related

information in newspaper, magazines; cable television and last but not least, the internet. Still

there is substantial variation in investment knowledge and experience across different individual

investors.

Some people feel that online trading is not secured but the people doing the trading online is

happy about the increasing security concerns among the companies.

The year 2008 has not been so good for the stock market and the Sensex and the Nifty has

been dipping and affecting the business negatively for these companies. This is due to the fact

that at these times people dont prefer to open the Demat and Trading account. So the companies

have to reduce their account opening fees to attract the more and more customers.

There is an intense competition among the companies and the companies coming up with

new and new promotion schemes such as discounted and negotiable brokerages, zero balance

accounts, waving account opening fees and AMC etc.

Study also concludes that concludes that people are not much aware of commodity market

and while its going to be biggest market in India.

Study also conclude that people investment decision is influenced by their self and then on

the advice of their brokers. Very less no of people thinks whats happening in Micro and Macro

Policies.

Religare Securities Limited

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Transcript of Religare Securities Limited