A PROJECT REPORT ON EQUITIES AND MOMENT OF SHARES
Submitted in the partial fulfillment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION
BYK.SRINIVASROLL NO: 142309672027
Under the guidance ofMr.SHYAM
ST.MARTINS INSTITUTE OF BUSINESS MANGEMENT Dhullapally, Medchal.(Affliated to osmania university)
DECLARATION
I hereby declare that this Project Report titled EQUITIES AND PORTFOLIO MANAGEMENT submitted by me to the Department of Business Management, O.U., Hyderabad, is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before.
Name of the Student K.SRINIVAS
ACKNOWLEDGMENT
It plunge me in exhilaration in taking privilege in expressing our heart felt gratitude to all those who helped, encouraged and foreseeing successful completion of my project. Ecstasy to work under gregarious guidance of Mr. ATISH GUPTA, to whom extremely in debited for her valuable and timely suggestions.
I convey my sincere thanks to Mr. SHYAM ST MARTINS INSTITUTE OF BUSINESS MANGEMENT, dhulapally and all those who directly or indirectly contributed their assistance in finishing out this project.
NEED FOR THE STUDY:1. The purpose of the study is to know the fluctuations in the share price of sample companies.1. The purpose of the study is to help the unknown investors for investing in securities.1. To update the portfolio reviewed and adjusted from time to time in tune with market condition.1. To analyse the risk and return on securities.1. To test portfolio strategies before taking decisions.
OBJECTIVES OF THE STUDYThe objectives of Equities and investment /portfolio management can be categorised as follows:1. To observe the rate of fluctuations of selected companies.1. The amount of risk involved in the securities of the sample companies.1. To make comparative study of risk and return of the sample companies.1. To understand what Equity markets are.1. To evaluate the investment prospects of the companies.1. To suggest the investors to analyze the stock before investing into any company stock.1. To locating a stock which gives good returns with minimum risk.
SCOPE OF THE STUDYThe study covers all the information related to the Equity fund and the Portfolio management it also covers the investor risk in the investment in various securities.1. Identification of the investors objectives, constraints and preferences.1. Strategies are to be developed and implemented in tune with investment policy formulated.1. To reduce the future risk in advance.1. To earn maximum profit in the securities.1. Review and monitoring of the performance of the portfolio.1. Finally the evaluation of the portfolio.
METHODOLOGY OF THE STUDYPrimary Data:The data provided by the firm was been analyzes by using Markowitz model determines an efficient asset of portfolio return i.e.,1. Return2. Standard deviation3. Coefficient of correlationSecondary Data:The data that is used in this project is of secondary nature. The data is to be collected from secondary sources such as various websites, journals, newspapers, books, etc., the analysis used in this project has been done using selective technical tools. In Equity market, risk is analyzed and trading decisions are taken on basis of technical analysis. It is collecting share prices of selected companies for a period of five years.
PERIOD OF THE STUDY:The study of Equity value and portfolio management for a period of five years (2003-2007).LIMITATIONS:1. The companies are selected on the basis of the performance 1. Expand or contract the size of the portfolio reflect the changes in investor risk disposition.1. The study is confined to only few Future Stocks. 1. The data for the study considered is of past 90 days, due to non availability of data on Stock Futures
SOURCE :NCE, The standards set by NSE in terms of market practices and technologies have become industry benchmarks and are being emulated by other market participants. NSE is more than a mere market facilitator. It's that force which is guiding the industry towards new horizons and greater opportunities.
SOURCES OF FINAL INFORMATIONMarket Data1. Stock Exchange daily official list.1. Directory of the stock exchange.1. RBIs weekly statistical supplements.1. News papers.1. The reports and newsletter of investment brokerage and counseling firm.
Company Data1. Companys Annual Reports and prospectuses.1. Stock Exchange official directory. 1. Newspapers, Brokerage firms and news columns.TOOLS & TECHNIQUES: The following statistical techniques were used for measuring the performance of the companys funds.1. Rate of Return (ROR)N2-N1ROR= N1Where, N1 is Close period at period1 N2 is Close period at period1. Standard Deviation (SD) [r-avg(r)] SD= nWhere, R is rate of return N is total number of months1. Betan xy x * yBeta = n x2 (x)2
1. Alpha Alpha = Avg (y) (beta*Avg (x))1. Coefficient of Correlationn xy x * yCoefficient of Correlation= [(n y2 (y) 2) (n x2 (x) 2)] 1. Coefficient of Correlation Coefficient of determination =(Coefficient of Correlation) 2
INTRODUCTION TO INVESTMENTInvestment may be defined as an activity that commits funds in any financial form in the present with an expectation of receiving additional return in the future. The expectations bring with it a probability that the quantum of return may vary from a minimum to a maximum. This possibility of variation in the actual return is known as investment risk. Thus every investment involves a return and risk.
Investment is an activity that is undertaken by those who have savings. Savings can be defined as the excess of income over expenditure. An investor earns/expects to earn additional monetary value from the mode of investment that could be in the form of financial assets.
The three important characteristics of any financial asset are:1. Return-the potential return possible from an asset.1. Risk-the variability in returns of the asset form the chances of its value going down/up.1. Liquidity-the ease with which an asset can be converted into cash.
Investors tend to look at these three characteristics while deciding on their individual preference pattern of investments. Each financial asset will have a certain level of each of these characteristics.
Investment avenues
There are a large number of investment avenues for savers in India. Some of them are marketable and liquid, while others are non-marketable. Some of them are highly risky while some others are almost risk less.Investment avenues can be broadly categorized under the following heads:Corporate securities0. Equity shares.0. Preference shares.0. Debentures/Bonds.0. Derivatives.0. Others.
Corporate SecuritiesJoint stock companies in the private sector issue corporate securities. These include equity shares, preference shares, and debentures. Equity shares have variable dividend and hence belong to the high risk-high return category; preference shares and debentures have fixed returns with lower risk.
The classification of corporate securities that can be chosen as investment avenues can be depicted as shown below:
Equity SharesBondsDerivativesWarrants Preference shares
Equity shares
By investing in shares, investors basically buy the ownership right to the company. When the company makes profits, shareholders receive their share of the profits in the form of dividends. In addition, when company performs well and the future expectation from the company is very high, the price of the companys shares goes up in the market. This allows shareholders to sell shares at a profit, leading to capital gains.Investors can invest in shares either through primary market offerings or in the secondary market.The primary market has shown abnormal returns to investors who subscribed for the public issue and were allotted shares.
Stock Exchange:In a stock exchange a person who wishes to sell his security is called a seller, and a person who is willing to buy the particular stock is called as the buyer. The rate of stock depends on the simple law of demand and supply. If the demand of shares of company x is greater than its supply then its price of its security increases.In Online Exchange the trading is done on a computer network. The sellers and buyers log on to the network and propose their bids. The system is designed in such ways that at any given instance, the buyers/sellers are bidding at the best prices.
The transaction cycle for purchasing and selling shares online is depicted below:
ClientMember/ Broking firm.Stock Exchange(BSE / NSE)Member/Broking firm.Client Transaction Cycle
PORTFOLIOA portfolio is an appropriate mix of or collection of investments held by an institution or a private individual. It is a collection of securities, since it is rarely desirable to invest the entire funds of an individual or an institution in a single security.1. Portfolio analysis considers the determination of future risk and return in holding various blends of individual securities.1. Portfolio expected return is a weighted average of the expected return of individual securities but portfolio variance, in short contrast, can be something less than a weighted average of security variances.1. As a result an investor can sometimes reduce portfolio risk by adding security with greater individual risk than any other security in the portfolio. This is because risk depends greatly on the co-variance among return of individual securities.1. Since portfolios expected return is a weighted average of the expected return of its securities, the contribution of each security to the portfolios expected returns depends on its expected returns and its proportionate share of the initial portfolios market value.
RISKRisk is a concept that denotes a potential negative impact to an asset or some characteristic of value that may arise from some present process or future event. In everyday usage, risk is often used synonymously with the probability of a known loss. Risk is uncertainty of the income / capital appreciation or loss of the both.The total risk of an individual security comprises two components, the market related risk called systematic risk also known as undiversifiable risk and the unique risk of that particular security called unsystematic risk or diversifiable risk.Types of riskSystematic risk (market)Unsystematic risk (company risk)
Examples:1. Interest rate risk1. Market risk1. Inflation risk1. Demand1. Government policy1. International factorsExamples:1. Labor troubles1. Liquidity problems1. Raw materials risks1. Financial risks1. Management problems
PHASES OF PORTFOLIO MANAGEMENTFive phases can be identified in this process:1. Security analysis1. Portfolio analysis1. Portfolio selection1. Portfolio revision1. Portfolio evaluationSECURITY ANALYSISAn examination and evaluation of the various factors affecting the value of a security. Security Analysis stands for the proposition that a well-disciplined investor can determine a rough value for a company from all of its financial statements, make purchases when the market inevitably under-prices some of them, earn a satisfactory return, and never be in real danger of permanent loss.PORTFOLIO ANALYSISAnalysis phase of portfolio management consists of identifying the range of possible portfolios that can be constituted from a given set of securities and calculating their return and risk for further analysis.PORTFOLIO SELECTIONThe proper goal of portfolio construction is to generate a portfolio that provides the highest returns at a given level of risk. A portfolio having this characteristic is known as an efficient portfolio. The inputs from portfolio analysis can be used to identify the set of efficient portfolios. From this set of efficient portfolios, the optimal portfolio has to be selected for investment. Harry Markowitz portfolio theory provides both the conceptual framework and analytical tools for determining the optimal portfolio in a disciplined and objective way.PORTFOLIO REVISIONHaving constructed the optimal portfolio, the investor has to constantly monitor the portfolio to ensure that it continues to be optimal. Portfolio revision is as important as portfolio analysis and selection.PORTFOLIO EVALUATIONIt is the process, which is concerned with assessing the performance of the portfolio over a selected period of time in terms of returns and risk. This involves quantitative measurement of actual return realized and the risk born by the portfolio over the period of investment. It provides a feedback mechanism for improving the entire portfolio management process.
. Indiabulls Group is one of Indias top business houses with businesses spread over Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors. The group companies are listed on important Indian and Overseas markets. Indiabulls has been conferred the status of a Business Superbrand by The Brand Council, Superbrands India To be the largest and most profitable financial services organization in Indian retail market and become one stop shop for all non banking financial products and services for the retail customers. Rapidly increase the number of client relationships by providing a broad array of product offering to emerge as a clear market leader.
Indiabulls Group has five separately listed companies with subsidiaries which contributed in enhancing scope and profile of the business.
Top Indiabulls Financial Services Limited Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis Infotech Private Limited at New Delhi under the Companies Act, 1956. The name of company was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001. In the year 2004, Indiabulls came up with it own public issue & became a public limited company on February 27, 2004. The name of company was changed to M/s. Indiabulls Financial Services Limited.
The company was promoted by three engineers from IIT Delhi, and has attracted more than Rs.700 million as investments from venture capital, private equity and institutional investors and has developed significant relationships with large commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Amro Bank, Standard Chartered Bank and IL&FS.
Mr. Rajiv Rattan Co-Founder &Vice Chairman(Indiabulls Group) Mr. Sameer GelhautChairman(Indiabulls Group)Mr. Saurabh K MittalDirector(Indiabulls Group)
The company headquarters are co-located in Mumbai and Delhi, allowing it to access the two most important regions for Indian financial markets, The marketing and sales efforts are headquartered out of Mumbai, with a regional headquarter in Delhi. Back office, risk management, internal finances etc. are headquartered out of Delhi/NCR allowing the company to scale these processes efficiently for the nationwide network. Company is listed on:1. National Stock Exchange1. Bombay Stock Exchange1. Luxemburg Stock Exchange Market capitalization: 1. Over 7 Billion USD Net worth 1. Over 2.5 Billion USD Highest Ratings from CRISIL CRISIL is India's leading ratings, research, risk and policy advisory company
Broad array of product offering 1. Consumer Finance1. Housing Finance1. Commercial Loans1. Life Insurance1. Asset Management 1. Advisory ServicesTop Strategic Updates 1. Indiabulls Financial Services Limited (IBFSL) completed the de-merger of its real estate business into a separate publicly traded company, (IBREL) unlocked over Rs. 10000 crore of shareholder wealth. 1. De-merger: De-merger of Indiabulls Securities Limited from Indiabulls Financial Services Limited. Each shareholder of Indiabulls Financial Services Limited received a share of Indiabulls Securities Limited.1. SARFAESI Act Notification: Indiabulls Housing Finance Limited, a wholly owned subsidiary of Indiabulls Financial Services Limited has been notified as a Financial Institution for the purpose of SARFAESI Act, 2002. This notification is being effectively used by the company to yield positive results in speedy recoveries of delinquent mortgage loans.New Business Venture Updates: 1. Life Insurance Venture: Indiabulls Financial Services Limited (IBFSL) has entered into an MOU with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance joint venture. Sogecap will invest Rs 150 crore to subscribe to 26% of the paid up capital in the joint venture. 1. Commodities Exchange (ICEX) : a screen based on-line derivatives exchange for commodities and has established a reliable, time tested, and a transparent trading platform. It is also in the process of putting in place robust assaying and warehousing facilities in order to facilitate deliveries. ICEX is promoted by Indiabulls Financial Services and MMTC.1. Asset Management Business: Indiabulls Financial Services Limited proposes to set up an asset management company to manage mutual funds and has applied to SEBI for its approval and the same is awaited.
Indiabulls Real Estate Limited Indiabulls stepped into the real estate market as Indiabulls Real Estate Limited (IREL) in 2005. A joint venture between Indiabulls and a US based investment major Farallon Capital Management LLC resulted in bringing FDI (Foreign Direct Investment) for the first time in the Indian real estate market. Another joint venture amongst Indiabulls and DLF, Kenneth Builders and Developers (KBD), has brought up projects for development of residential apartments.Our Projects:
Indiabulls is currently evaluating many large-scale projects worth several hundred million dollars. 1. One Indiabulls Centre 1. Indiabulls Central Park 1. Central Park Madurai1. Central Park Hyderabad1. Castlewood1. Indiabulls Finance Center1. HighStreet Vadodara 1. Central Park Vadodara 1. Indiabulls Greens 1. Centrum Park 1. Indiabulls Riverside 1. Gurgoan Housing 1. Sonepat Township 1. Chennai Township 1. Indiabulls Greens Panvel1. Mumbai Township 1. Nashik SEZ1. Raigarh SEZ1. Goa Luxury Resort
Indiabulls Power Limited Indiabulls Power Limited was established in 2007 to capitalize on emerging opportunities in the Indian power sector. It develops and intends to operate and maintain power projects in India. Indiabulls is currently developing five thermal power projects with an aggregate capacity of approximately 6600 MW. These projects include:- Amravati Phase-I (1320 MW)- Amravati Phase-II (1320 MW)- Nasik (1335 MW) in Maharashtra- Bhaiyathan Thermal Power Project (1320 MW) - Chhattisgarh Power Project (1320 MW)In addition to the above Indiabulls is also developing four medium size Hydro Power Projects in Arunachal Pradesh aggregating to 167 MW.
Indiabulls Securities Limited Indiabulls Securities Limited is the jewel in the crown of Indiabulls group.
Indiabulls Securities Limited is Indias leading capital markets company with All-India presence and an extensive client base. Indiabulls Securities is the first and only brokerage house in India to be assigned the highest rating BQ 1 by CRISIL. Indiabulls Securities Limited is listed on NSE, BSE & Luxembourg stock exchange.
Indiabulls also provide commodity brokerage services under Indiabulls Commodities Limited (ICL). It deals in research work and formation of reports on agri-commodites and metals. ICL has one of the largest retail branch networks in the country.
Products offered Equities and Derivatives 1. Offers purchase and sale of securities (stock, bonds, debentures etc.)1. Broker assisted trade execution1. Automated online investing1. Access to all IPO'sEquity Analysis 1. Helps to build ideal portfolio1. Satisfies need by rating stocks based on facts-based measures1. Free of cost for all securities clientsDepository Services 1. Depository participant with NSDL and CDSL1. Helps in trading and settlement of dematerialized shares1. Performs clearing services for all securities transactions1. Offers platform to execute trade and settle transactionsTop Sales Team Structure Sales force in Indiabulls Securities Limited is divided into two groups. i.e. Online & OfflineMentioned below are the names of EVP's managing respective regionsEVP's Name(Online)Vijay Babbar Amiteshwar Chaudhay Prasenjeet Mukherjee
RegionManaging NCR and UP, Punjab,Haryana,Uttranchal,Rajasthan and GujaratManaging Mahrashtra and Goa, Kerala, Karnataka, Andhra Pradesh and Tamil NaduManagingWest Bengal,Orissa, Biharand Jharkhand
EVP's Name(Offline)Nirdosh Gaur HemanshuKamdar AnirbanBhattacharya ManojSrivastava
RegionManaging NCR and Haryana, Punjab, Uttar Pradesh and Madhya PradeshManaging Bengal, Andhra Pradesh ,Tamil Nadu, Karnataka and part of Mumbai and GujaratManaging Mumbai,Pune and othersurrounding regionsManaging Rajasthan,part of Gujarat andMumbai
Top Customer Care Department Providing solution to the queries of customers as well as branches from a centralized location based out of gurgaon Clients
Client Helpline Number 0124 - 4572444
39407777(Local dialing from 25 cities)
Securities client can E-mail [email protected]
Available from 25 cities: Ahmedabad, Bangalore, Bhopal, Chandigarh, Chennai, Coimbatore, Delhi, Ernakulam, Hyderabad,Jaipur, Jalandhar, Kolkata, Kozhikode, Ludhiana,Lucknow,Mumbai,Mangalore, Nashik,Pune, Salem, Surat, Vadodra, Vadodra - Alkapuri, Vishakhapatnam.
Branch
Branch Helpline Number 0124-3989444
QueriesE-mail at
Funds [email protected]
Reallocation [email protected]
Documents [email protected]
Other queries except [email protected]
Milestones Achieved 1. Developed one of the first internet trading platforms in India1. Amongst the first to develop in-house real-time CTCL (computer to computer link) with NSE1. Introduction of integrated accounts with automatic gateways to client bank accounts1. Development of products such as Power Indiabulls for high volume traders1. Indiabulls Signature Account for self-directed investors1. Indiabulls Group Professional Network for information and trading service
Top Corporate Information 1. Registered OfficeF-60, Malhotra Building, 2nd Floor,Connaught Place, NEW DELHI - 110001, INDIAWebsite: www.indiabulls.com1. Corporate OfficesS.P.Centre, C Wing, 41/44, Minoo DesaiRoad, Near Radio Club, Colaba,MUMBAI 4000051. Head Office"Indiabulls House" 448-451, Udyog Vihar, Phase VGURGOAN 122001 I
Introduction
Indiabulls is Indias leading Financial, Real Estate and Power Company with a wide presence throughout India. They ensure convenience and reliability in all their products and services. Indiabulls has over 640 branches all over India. The customers of Indiabulls are more than 4,50,000 which covers from a wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. The company employs around 4000 Relationship managers who help the clients to satisfy their customized financial goals. Indiabulls entered the Real Estate business in the year 2005 with its group of companies. Large scale projects worth several hundred million dollars are evaluated by them.Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The market capitalization of Indiabulls is around USD 2500 million (29thDecember, 2006). Consolidated net worth of the group is around USD 700 million. Indiabulls and its group companies have attracted USD 500 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.
Indiabulls Group is one of Indias top business houses with businesses spread over Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors. The group companies are listed on important Indian and Overseas markets. Indiabulls has been conferred the status of a Business Superbrand by The Brand Council, Superbrands India. To be the largest and most profitable financial services organization in Indian retail market and become one stop shop for all non banking financial products and services for the retail customers.
To become the preferred long term financial partner to a wide base of customers whilst optimizing stake holders value
Rapidly increase the number of client relationships by providing a broad array of product offering to emerge as a clear market leader.To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner
Corporate action: An Approach to Business that reflects Responsibility, Transparency and Ethical Behavior. Respect for Employees, Clients & Stakeholder groups
Indiabulls Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitisation while Indiabulls Securities Limited is the only broker in India to be assigned CRISILs highest broker quality grading of BQ1.
Highest Ratings from CRISIL CRISIL is India's leading ratings, research, risk and policy advisory company
In December 2007, Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart, their chain of lifestyle and convenience outlets Indiabulls growth has been nothing short of stupendous. In less than eight years since the company was first registered, it has grown from just five employees to 21,00 and from one office to 600 across the country
The Indiabulls Financial Services stock is the best performing stock in the MSCI Index the global benchmark for equity investments.
A person who bought Indiabulls shares in the IPO at Rs. 19 (US$ 0.48) in September 2004 has been rewarded almost 100 times in three and a half years a feat unparalleled in the history of Indian capital markets
Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate.
Products offered Equities and Derivatives 1. Offers purchase and sale of securities (stock, bonds, debentures etc.)1. Broker assisted trade execution1. Automated online investing1. Access to all IPO'sEquity Analysis 1. Helps to build ideal portfolio1. Satisfies need by rating stocks based on facts-based measures1. Free of cost for all securities clientsDepository Services 1. Depository participant with NSDL and CDSL1. Helps in trading and settlement of dematerialized shares1. Performs clearing services for all securities transactions1. Offers platform to execute trade and settle transactionsMilestones Achieved 1. Developed one of the first internet trading platforms in India1. Amongst the first to develop in-house real-time CTCL (computer to computer link) with NSE1. Introduction of integrated accounts with automatic gateways to client bank accounts1. Development of products such as Power Indiabulls for high volume traders1. Indiabulls Signature Account for self-directed investors1. Indiabulls Group Professional Network for information and trading service
Companies History in India
In 1999, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal acquired Orbis,a Delhi based stock broking company. Young entrepreneur Sameer Gehlaut established Indiabulls in 2000, after acquiring orbis Securities, a stock brokerage company in Delhi. The group startedits operations from a small office near Hauz Khas bus terminal in Delhi.The office had a tin roof and two computers. The idea of leveraging technology for trading stocks led to the creation of Indiabulls Incorporated on 10th January 2000, it was converted into a public limited company on 27th February 2004.
Its original idea of leveraging technology bore fruit when Indiabulls was accorded permission to conduct online trading on Indian stock exchanges.
The company had achieved the distinction of becoming only the second brokerage firm in India to be granted this consent. The challenges facing it were immense not least of all the mind set of investors who were called to make the big leap from traditional stock trading to a completely online interface. Having overcome this resistance, the company later expanded its service portfolio to include equity, F&O, wholesale debt, mutual fund distribution and equity research.
In 2003/04, Indiabulls ventured into insurance distribution and commodity trading. It successfully floated its IPO in September 2004 and in the same year entered the consumer finance segment. Real estate, the new sunrise industry, was the next frontier for Indiabulls. In 2004/05, it entered this sector. But it wasnt just real estate that was booming.
Opportunities were opening up in retail and infrastructure as well. To cement its position in the Indian business and industry firmament,
Indiabulls acquired Pyramid Retail In 2007 and marked its presence in the power sector by launching Indiabulls Power
Brand Values
Indiabulls is amongst the largest non-banking financial services companies in India and enjoys strong brand recognition and customer acceptance.
The company attributes its dominant position in the brokerage industry to the preferential status it enjoys with investors Coupled with its forays into various segments; the Group believes that the bulk of its brand story is yet to be written.
Indeed, when a case study on Indias youngest brands which have had a profound impact on the economy is crafted, Indiabulls will feature prominently in it.
THINGSRecent Developments
Several developments across its group companies have propelled Indiabulls forward and are expected to continue to power the rise of this conglomerate.
Indiabulls Financial Services Limited has recently signed a joint venture agreement with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture.
At the same time it has also signed a Memorandum of Understanding with MMTC, the largest commodity trading house in India, to establish a Commodities Exchange with 26% Ownership held by MMTC.
On the asset management front, the company has received formal approval from SEBI and is expected to shortly launch its first NFO.
The Board of Directors
Following is the list of our Board Members as on November 4, 2009.
Mr. Sameer Gehlaut
Chairman & CEO
Gagan Banga
Executive Director
Rajiv Rattan
CEO
Shamsher Singh
Director
Aishwarya Katoch
Director
Karan SinghDirector
Prem Prakash Mird
Director
Saurabh K Mittal
Executive Director
Amit Jain
Company Secretary
Promoters for Indiabulls
Mr. Rajiv Rattan Co-Founder &Vice Chairman(Indiabulls Group) Mr. Sameer GelhautChairman(Indiabulls Group)Mr. Saurabh K MittalDirector(Indiabulls Group)
Sameer Gehlaut, Rajiv Rattan and Saurabh MittalAre the promoters of Indiabulls Financial Services Limited. WhileSameer Gehlaut will have a 23.0% stake in the company post the IPORajiv Rattan and Saurabh Mittal will have a post issue holding of 11.5% and 10.1% respectively.All the three promoters of the company are engineering graduates while Saurabh Mittal is a management graduate as well.
Sector
Since Indiabulls derives most of its revenues from the brokerage business, its fortunes are very much dependent on the Performance of the capital markets, i.e. debt, derivative and equity markets.
The Indian equity markets have grown from strength to strength in the last decade with combined daily volumes of all segments on the BSE and the NSE touching Rs 232 bn in April 2004, from Rs 5 bn in FY96.
Total shareholders in the country are over 20 m (2% of population) and this is the third largest after the US and Japan, in absolute terms.
However, if one were to compare the percentage of all households in India that are invested in the stock markets, it is only about 1.9% as compared to an estimated 52%(including indirect ownership by way of mutual funds) of all households in the US. This highlights the long-term potential for the sector. to apply The Team:
Indiabulls Securities Ltd, main strength lies in its formidable team. This team comprising highly qualified and experienced personnel has been responsible for the overall management of the company and has provided direction in diverse areas of business strategy, operating management, regulatory reporting, human resources development and product development.
Indiabulls Group has five separately listed companies with subsidiaries which contributed in enhancing scope and profile of the business.
Indiabulls Group entities in India1. Indiabulls Capital Services Ltd.1. Indiabulls Commodities Pvt. Ltd.1. Indiabulls Credit Services Ltd.1. Indiabulls Finance Co. Pvt. Ltd1. Indiabulls Housing Finance Ltd.1. Indiabulls Insurance Advisors Pvt. Ltd.1. Indiabulls Resources Ltd.1. Indiabulls Securities Ltd.1. Indiabulls Power Ltd.
Indiabulls Financial Services Limited
Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis Infotech Private Limited at New Delhi under the Companies Act, 1956. The name of company was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001. In the year 2004, Indiabulls came up with it own public issue & became a public limited company on February 27, 2004. The name of company was changed to M/s. Indiabulls Financial Services Limited.
The company was promoted by three engineers from IIT Delhi, and has attracted more than Rs.700 million as investments from venture capital, private equity and institutional investors and has developed significant relationships with large commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Amro Bank, Standard Chartered Bank and IL&FS.
Company is listed on:1. National Stock Exchange1. Bombay Stock Exchange1. Luxemburg Stock Exchange Market capitalization: 1. Over 7 Billion USD Net worth 1. Over 2.5 Billion USD Broad array of product offering 1. Consumer Finance1. Housing Finance1. Commercial Loans1. Life Insurance1. Asset Management 1. Advisory ServicesStrategic Updates 1. Indiabulls Financial Services Limited (IBFSL) completed the de-merger of its real estate business into a separate publicly traded company, (IBREL) unlocked over Rs. 10000 crore of shareholder wealth. 1. De-merger: De-merger of Indiabulls Securities Limited from Indiabulls Financial Services Limited. Each shareholder of Indiabulls Financial Services Limited received a share of Indiabulls Securities Limited.1. SARFAESI Act Notification: Indiabulls Housing Finance Limited, a wholly owned subsidiary of Indiabulls Financial Services Limited has been notified as a Financial Institution for the purpose of SARFAESI Act, 2002. This notification is being effectively used by the company to yield positive results in speedy recoveries of delinquent mortgage loans.
New Business Venture Updates: 1. Life Insurance Venture: Indiabulls Financial Services Limited (IBFSL) has entered into an MOU with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance joint venture. Sogecap will invest Rs 150 crore to subscribe to 26% of the paid up capital in the joint venture. 1. Commodities Exchange (ICEX) : a screen based on-line derivatives exchange for commodities and has established a reliable, time tested, and a transparent trading platform. It is also in the process of putting in place robust assaying and warehousing facilities in order to facilitate deliveries. ICEX is promoted by Indiabulls Financial Services and MMTC.1. Asset Management Business: Indiabulls Financial Services Limited proposes to set up an asset management company to manage mutual funds and has applied to SEBI for its approval and the same is awaited.
Indiabulls Real Estate Limited Indiabulls stepped into the real estate market as Indiabulls Real Estate Limited (IREL) in 2005. A joint venture between Indiabulls and a US based investment major Farallon Capital Management LLC resulted in bringing FDI (Foreign Direct Investment) for the first time in the Indian real estate market. Another joint venture amongst Indiabulls and DLF, Kenneth Builders and Developers (KBD), has brought up projects for development of residential apartmentsOur Projects:
Indiabulls is currently evaluating many large-scale projects worth several hundred million dollars.1. One Indiabulls Centre 1. Indiabulls Central Park 1. Central Park Madurai1. Central Park Hyderabad1. Castlewood1. Indiabulls Finance Center1. HighStreet Vadodara 1. Central Park Vadodara 1. Indiabulls Greens 1. Centrum Park 1. Indiabulls Riverside 1. Gurgoan Housing 1. Sonepat Township 1. Chennai Township 1. Indiabulls Greens Panvel1. Mumbai Township 1. Nashik SEZ1. Raigarh SEZ1. Goa Luxury Resort
Indiabulls Power LimitedIndiabulls Power Limited was established in 2007 to capitalize on emerging opportunities in the Indian power sector. It develops and intends to operate and maintain power projects in India. Indiabulls is currently developing five thermal power projects with an aggregate capacity of approximately 6600 MW. These projects include:- Amravati Phase-I (1320 MW)- Amravati Phase-II (1320 MW)- Nasik (1335 MW) in Maharashtra- Bhaiyathan Thermal Power Project (1320 MW) - Chhattisgarh Power Project (1320 MW)In addition to the above Indiabulls is also developing four medium size Hydro Power Projects in Arunachal Pradesh aggregating to 167 MW.
Indiabulls Securities Limited Indiabulls Securities Limited is the jewel in the crown of Indiabulls group.
Indiabulls Securities Limited is Indias leading capital markets company with All-India presence and an extensive client base. Indiabulls Securities is the first and only brokerage house in India to be assigned the highest rating BQ 1 by CRISIL. Indiabulls Securities Limited is listed on NSE, BSE & Luxembourg stock exchange.
Indiabulls also provide commodity brokerage services under Indiabulls Commodities Limited (ICL). It deals in research work and formation of reports on agri-commodites and metals. ICL has one of the largest retail branch networks in the country.
Products offered Equities and Derivatives 1. Offers purchase and sale of securities (stock, bonds, debentures etc.)1. Broker assisted trade execution1. Automated online investing1. Access to all IPO's
Equity Analysis 1. Helps to build ideal portfolio1. Satisfies need by rating stocks based on facts-based measures1. Free of cost for all securities clients
Depository Services
1. Depository participant with NSDL and CDSL1. Helps in trading and settlement of dematerialized shares1. Performs clearing services for all securities transactions1. Offers platform to execute trade and settle transactions
Milestones Achieved
1. Developed one of the first internet trading platforms in India1. Amongst the first to develop in-house real-time CTCL (computer to computer link) with NSE1. Introduction of integrated accounts with automatic gateways to client bank accounts1. Development of products such as Power Indiabulls for high volume traders1. Indiabulls Signature Account for self-directed investors1. Indiabulls Group Professional Network for information and trading service
Growth of Indiabulls
Year 2000-01:One of Indias first trading platforms was set up by Indiabulls Financial Services Ltd. with the development of an in-house team.
Year 2001-03:The service offered by Indiabulls was increased to include Equity, F&O, Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research.
Year 2003-04:In this particular year Indiabulls ventured into Distribution and Commodities Trading business.
Year 2004-05:1. This was one of the most important years in the history of Indiabulls. In this year:1. Indiabulls came out with its initial public offer (IPO) in September 2004.1. Indiabulls started its Consumer Finance business.1. Indiabulls entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate.1. Indiabulls won bids for landmark properties in Mumbai.
Year 2005-06:In this year the company acquired over 115 acres of land in Sonepat for residential home site development. The world renowned investment banks like Merrill Lynch and Goldman Sachs increased their shareholding in Indiabulls. It also became a market leader in securities brokerage industry, with around 31% share in Online Trading. The worlds largest hedge fund, Farallon Capital and its affiliates committed Rs. 2000 million for Indiabulls subsidiaries Viz. Indiabulls Credit Services Ltd. and Indiabulls Housing Finance Ltd. In the same year, the Steel Tycoon Mr. L N Mittal promoted LNM India Internet venture Ltd. acquired 8.2% stake in Indiabulls Credit Services Ltd.
Year 2006-07:In this year, Indiabulls Financial Services Ltd. was included in the prestigious Morgan Stanley Capital International Index (MSCI). Indiabulls Financial Services Ltd. was benefited with the Farallon Capital agreeing to invest Rs. 6,440 million in it. The company also received an in principle approval from Government of India for development of multi product SEZ in the state of Maharashtra. Indiabulls Financial Services Ltd acquired 100% of the equity share capital of Noble Realtors Pvt. Ltd. Noble Realtors is a Company engaged in the business of construction and development of real estate projects. Indiabulls Real Estate Business was demerged to become a separate entity called Indiabulls Real Estate Ltd. The Board of Indiabulls Financial Services Ltd., Resolved to Amalgamate Indiabulls Credit Services Ltd and demerge Indiabulls Securities Limited.Indiabulls Financial Services Ltd.
Year 2008-09:Several developments across its group companies have propelled indiabulls forward and are expected to continue to power the rise of this conglomerate. Indiabulls financial services limited has recently signed a joint venture agreement with sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture.At the same time it has also signed a Memorandum of understanding with MMTC.On the asset management front, the company has received formal approval from SEBI and is expected to shortly launch its first NFO.Indiabulls enter in to Public issue for his Indiabulls power Ltd
Reasons to choose Indiabulls Securities Ltd:
The Indiabulls Financial Services stock is the best performing stock in the MSCI Index the global benchmark for equity investments
A person who bought Indiabulls shares in the IPO at Rs. 19 (US$ 0.48) in September 2004 has been rewarded almost 100 times in three and a half years a feat unparalleled in the history of Indian capital markets
Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate
1. Seven Reasons why investing with Indiabulls Securities Limited is smarter1) Customization: Formulates investment plans based on customer individual requirements2) Expertise: Brings within customer reach, about institutional expertise and companies valuable understanding of the financial markets3) One-stop shop: Caters to all customers investment needs under one roof.4) Trust: Enjoys the pedigree of Indiabulls Securities Ltd and share its expertise in financial services.5) Personalized service: Helps customer through the entire investment process, step by step, with innovative and efficient services.6) Unbiased & Objective advice: We partner you in your investment process, with our team of expert investment advisors
FUNDAMENTAL ANALYSISThe intrinsic value of an equity share depends on a multitude of factors. The earning of the company the growth rate and the risk exposure of the company has a direct bearing on the price of the share. These factors in turn rely on the host of other factors like economic environment in which they function, the industry they belong to, and finally companies own performance. So basically the whole fundamental analysis is divided into three main parts:-1. Economic Analysis1. Industry Analysis1. Company Analysis
Economic AnalysisThe level of economic activity has an impact on investment in many ways. If the economic grows rapidly, the industry can also be expected to show rapid growth and vice versa. When the level of economic activity is low, stock prices are low, and when the level of economic activity is high, the stocks prices are high reflecting the prosperous outlook for sales and profits of the firms. The analysis of macroeconomic environment is essential to understand the behavior of the stock prices. The commonly analyzed macroeconomic factors are as follows: -1. Gross Domestic Product (GDP)1. Savings and Investment1. Inflation1. Interest Rates1. Budget1. Tax Structure1. Balance of Payment1. Infrastructure Facilities1. Monsoon and AgricultureConsidering all factors for economic analysis is not always feasible and also not always required. Depending upon the type of research, some of the above factors are considered for analysis. In this analysis, important factors like GDP, Inflation and Interest rates are taken as indicators as these factors directly influence the Indian Stock Index. After the individual analysis a comparative analysis is made to draw the relationship between them. Later the influence of the above three factors on Stock Market Index is analyzed.Before stepping into the analysis of all factors together lets individually understand the Factors taken for study.
Gross Domestic Product (GDP)GDP indicates the rate of growth of the economy. GDP represents the aggregate value of the goods and services produced in the economy. GDP consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net export of goods and services. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced.Quarterly GDP rate by March 2008 was 8.5% which continued to fall throughout the year ending March 2009. This decline was mainly due to the effect of recession in some sectors like IT, Tourism sector, Export sector, etc. which depended on foreign countries for its earnings. The GDP rates were 7.8% in June, 7.5% in September, 6.1% in December and 5.8% in March 09. When the economy, comprising of different sectors, started to bounce back on its pace of production, GDP rate started showing a slight rise from 6% in June to 8.6% in September. By the end of December 2009, it again showed a fall to 6.5% mainly due to high inflation rate. But an onset of 2010, improved GDP rate back to 8.6%.
The diagram below shows Annual GDP Growth Adjusted by Inflation:
Inflation Rate In mainstream Economics, the word inflation refers to a general rise in prices measured against a standard level of purchasing power. Previously the term was used to refer to an increase in the money supply, which is now referred to as expansionary monetary policy or monetary inflation. Inflation is measured by comparing two sets of goods at two points in time, and computing the increase in cost not reflected by an increase in quantity. Monthly inflation rate is taken for indentifying the fluctuations. In each month of the year 2008, inflation is showing a continuous rise and it follows until the end of November 2008 at 10.45%. Before January it showed a slight dip during December at 9.7% compared to last month. But in January it bounced back to 10.45% and there after showed a low inflation rate for the next four months (Feb: 9.63%, Mar: 8.03%, Apr: 8.7%, May: 8.63%). Thereafter, inflation rate made a steep rise. By the end of January 2010, it became 16.22%. A high rate of inflation is not desired by any nation as it hampers the production and GDP growth of any economy. During February and March 2010, inflation rate remained stagnant at 14.86% but still being high.
The diagram below shows the Annual Change on Consumer Price Index since 2008:
Interest RateInterest rate or the Bank rate affects the cost of financing to the firms. The interest rate term structure is the relation between the interest rate and the time to maturity of the debt for a given borrower in a given currency. A decrease in interest rate implies lower cost of finance for firms and more profitability. More money is available at a lower interest rate for the brokers who are doing business with borrowed money. Availability of cheap fund encourages speculation and rise in the price of shares. Even much before 2008, the interest rate has been constant to 6% but it remained so till the onset of 2009. During December 2008, interest rate was slightly decreased to 5.24%. Thereafter showing a not stop fall by every month. From 5.24% to 4.05%, then to 4%, 3.55%, 3.39% and so on during the month of Jan, Feb, March, April respectively. However, in the following month it further declined to 3.25% and remained stagnant at it for the rest of the month in the year 2009 along with first two months of the 2010. It was in March 2010 that first time after 16months interest rate slight rose to 3.34%.The diagram below shows Central Bank Overnight Rate since 2003:
Relationship between GDP, Inflation rate & Interest rateGDP, Inflation and interest rate are inter-dependent on each other. For stock market investors, annually growth in GDP is vital. If overall economic output is declining or merely holding steady, most companies will not be able to increase their profits, which is the primary driver of stock performance. However, too much GDP growth is also dangerous, as it will most likely come with an increase in inflation, which erodes stock market gains by making investors money (and future corporate profits) less valuable. Again, investors aim to preserve the value of their money by opting forinvestmentsthat generate yields higher than the rate of inflation. In developed economies, banks try to keep the interest rates on savings accounts equal to the inflation rate. However, when the inflation rate raises, then companies or governments issuingdebt instruments need to lure investors with a higher interest rate. Inflation is an autonomous occurrence that is impacted by money supply in aneconomy. Central governments use the interest rate to control money supply and, consequently, the inflation rate. When interest rates are high, it becomes more expensive to borrow money and savings become attractive. When interest rates are low, banks are able tolend more, resulting in an increased supply of money.Alteration in the rate of interest can be used to control inflation by controlling the supply of money in the following ways:1. A highinterestrateinfluences spending patterns and shifts consumers and businesses from borrowing to saving mode. This influences money supply.1. A rise in interest rates boosts the return on savings in building societies andbanks. Low interest rates encourage investments in shares. Thus, the rate of interest can impact the holding of particular assets.1. A rise in the interest rate in a particular country fuels the inflow offunds. Investors with funds in other countries now see investment in this country as a more profitable option than before
The chart above displays last two years GDP, inflation rate and interest rate where GDP is quarterly calculated, inflation and interest rate is monthly drawn so as to make an easy pictorial comparison. When inflation was between 5-7%, GDP growth rate was around 8% at a stagnant interest rate of 6%. But with a slight rise of inflation during June08, leads to a fall in GDP at the same interest level of 6%. With the onset of June09, GDP rises even though with a rise in inflation rate mainly due to the curbing of interest rate by RBI to 3.25%. Again a further rise in inflation after December09 to 14.97%, the dip in GDP at 6% was seen, interest rate remaining constant at 3.25%. By the end of March 2010, GDP rose to 8.6% along with high inflation rate of 14.86% and interest rate being increased to 3.34%.
Industry AnalysisThe service industry has been at the forefront of the rapid growth of the Indian economy. Indias banking sector compares favorably with most of its global peers on the ground of asset quality, capital adequacy, profitability and overall contribution to GDP. In India, almost 30,000villages have bank branches out of around 7,00,000villages. Indian Banking sector has always sustained well mainly due to its strong Monetary and Fiscal policy. The global economic meltdown has not had a deep impact on the banking system in India. The banks in India have a strong fundamental structure and are well protected from the economic crisis. The robust economic growth in India, low defaulter ratio, non existence of complex financial products, constant monitoring by the central bank, efficient monetary policy and the non aggressive close banking culture has shielded the Indian banking sector. Today in India there are totally 56,640 branches, 893,356 employees and 27,088 ATMs. Public sector banks account for 87.7 per cent of the offices, 82 per cent of staff and 60.3 per cent of ATMs. The banking system in India, controlled by the Reserve Bank of India, is dominated by Scheduled Commercial Banks (SCBs) with a pan-India presence. India has over 20 stock exchanges with NSE and BSE being the main ones. There are over 8,000brokers registered with the SEBI. The NSE ranks fourth among the top exchanges in the world, with respect to the number of trades in equity shares.Banks are venturing into new avenues such as wealth management, private banking, doorstep banking, credit cards, investment advisory services and various financial products. As per the first quarter review of the monetary policy 2010-11 released on July27, 2010 were:1. The Cash Reserve Ratio (CRR) has been kept unchanged at 6 percent.1. It has also increased the Repo and Reverse Repo to 5.75 percent and 4.5 percent respectively. Impact of Inflation on Banking Sectorthe amount of bank lending declines with inflation. Inflation affects bank lending even at relatively low inflation rates-the median ratio of bank lending to GDP in the second quartilc is 10 percent smaller than in the first quartile, and the median inflation rate in the second quartile is only 6.6 percent. Many people might be surprised that such a "small" rate of inflation could cause such a fall in credit. At the highest inflation quartile. the effect is dramatic, with the ratio of bank lending to GDP only IS percent.
A STUDY OF TECHNICAL ANALYSIS OF DERIVATIVESTOCK FUTURESThe following are the Stock Futures of selected companies whose expiry date is 27-01-11 whose Moving average was calculated and presented using the Line graph. The data is taken is of 90days.1. Table showing Closing Price and Moving average of BHEL Future Stocks BHELdateclosing pricemoving average
5-Nov-102495.8
12-Nov-102424.65
19-Nov-102289.152311.01
26-Nov-102120.952271.1
3-Dec-102224.52251.41
10-Dec-102296.252255.04
16-Dec-102326.22299.44
24-Dec-102307.32312.82
31-Dec-102342.952292.01
7-Jan-112291.42268.96
14-Jan-112192.2
Interpretation: 1. The closing prices of Future stock shows a v shape formation on 26-Nov showing fall in stock price. Buy signal is shown on 10-dec where price is raising above its moving average. On 24-dec there is a signal of trend reversal where both lines cross each other.Moving Average in the diagram signals a fall in the future stock prices of BHEL. The moving average indicated by the red line on the above graph, tends to cross the blue line i.e. the closing price. It is evident that after a small dip of one or two weeks the price of the stock will rise crossing the red line (moving average). The price might not go below Rs.2170 as the trend line of the graph says. This is definitely a phase for closing sale and going buy.
Dr. Reddy Labs:dateClosing pricemoving average
5-Nov-101678.35
12-Nov-101777.50
19-Nov-101788.751779.45
26-Nov-101803.651807.86
3-Dec-1018491812.47
10-Dec-101820.401793.28
16-Dec-101800.551766.57
24-Dec-101692.801730.71
31-Dec-101670.101695.53
7-Jan-111669.70
14-Jan-111644.50
Interpretation:The graph displays a steep fall in the stock prices after 3rd December giving repeated signals for closing sales. Divergence in the two lines signals a further fall in the prices of Future contract till Rs.1575. Thereafter, the intersection between the moving average and Closing price the price will rise. Before both the lines intersect, sale should be closed and on the intersecting date buy should be made.HDFC:dateClosing pricemoving price
5-Nov-10705.85
12-Nov-1070.585
19-Nov-10705.85574.677
26-Nov-10689.35568.779
3-Dec-10701.75693.262
10-Dec-10676.36693.282
16-Dec-10693701.662
24-Dec-10705.95698.122
31-Dec-10731.25691.39
7-Jan-11684.05
14-Jan-11642.70
Interpretation:The above graph represents a signal of trend reversal. Both the lines remained horizontal after a steep rise on Nov. 12th. The price along with the moving average oscillated at the same level. Therefore, a trend reversal might lead to steep fall in the prices. The prices might go below Rs.615. It is definitely a time to close all sales and go for buy.
RELIANCE:dateClosing pricemoving average
5-Nov-101125.65
12-Nov-101084.35
19-Nov-101013.051044.04
26-Nov-10978.151025.58
3-Dec-1010191022.24
10-Dec-101033.351033.97
16-Dec-101067.651051.79
24-Dec-101071.701061.34
31-Dec-101067.251054.98
7-Jan-111066.75
14-Jan-111001.55
Interpretation:November faces a continuous fall in the price with the moving average remaining above closing price. By 26th November the price fell to Rs.962. The graph above shows that on 3rd of December the closing price intersects the moving average which is a signal of price change or trend reversal. The moving average being below the closing price, during December, registered a somewhat stable price between Rs.1023 to Rs.1085. Thereafter 7th January, the prices fell again as the moving average crossed the closing price from below and seems to remain above it for some time. The prices might go below Rs.925.
Tata SteeldateClosing pricemoving average
5-Nov-10632.85
12-Nov-10614.50
19-Nov-10611.65615.99
26-Nov-10601.65613.24
3-Dec-10619.30622.69
10-Dec-10619.10633.17
16-Dec-10661.75649.56
24-Dec-10664.05658.06
31-Dec-10683.60657.87
7-Jan-11661.80
14-Jan-11618.15
Interpretation:On 5th of November the price line was above the moving average and then oscillated horizontally between the price Rs.606 to Rs.624. This signaled a trend reversal. Hence, on 9th December the moving average cuts the price line and remained below the closing price giving a signal to buy. Thereafter, the price continued to rise until 6th January when the both the lines intersected again to ensure a reverse trend. Since then the moving average remained above the price line and price continued to fall. It is difficult to predict the coming trend as both the lines are intersecting again. If the moving average crossed above price level then the price will fall in coming days but if the price remained above moving average then the price will rise.
InfosysdateClosing pricemoving price
5-Nov-103109.2
12-Nov-103109.20
19-Nov-103109.23110.68
26-Nov-103079.053123.44
3-Dec-103146.753164.95
10-Dec-103173.003221.13
16-Dec-103316.753294.24
24-Dec-103390.103342.79
31-Dec-103444.603351.14
7-Jan-113389.50
14-Jan-113214.75
Interpretation: The starting phase of the graph shows the price and moving average oscillating within a price level of Rs.3100. The moving average raised a little to intersect at Rs.3300 price level giving a signal to buy. The price rose to Rs.3450 and then continued to fall. A trend reversal is expected as the moving average is about to intersect the price level from below. The prices are expected to fall in coming days.
Hcl: TechnologiesdateClosing pricemoving average
5-Nov-10
12-Nov-10410.80
19-Nov-10410.00410.98
26-Nov-10396.05415.91
3-Dec-10427.25424.52
10-Dec-10435.45434.35
16-Dec-10453.85447.13
24-Dec-10459.15454.86
31-Dec-10459.95461.64
7-Jan-11465.90
14-Jan-11469.35
Interpretation:The graph above shows a very close and persistent crossing over of the two lines. But meanwhile the price continued to rise giving a strong signal to buy and hold. The moving average is allied to the price line therefore if a trend reversal takes place it can only be a downtrend which would ensure a sell signal. The price is expected to rise above Rs.490.1. V
FINDINGS AND CONCLUSIONS About Derivative market: Large gaps exist in the range of derivatives products that are traded actively. In equity derivatives, NSE figures show that almost 90% of activity is due to stock futures or index futures, whereas trading in options is limited to a few stocks, partly because they are settled in cash and not the underlying stocks. Exchange-traded derivatives based on interest rates and currencies are virtually absent. Further, there is no consistent method of accounting for gains and losses from derivatives trading. About Technical Analysis: If the stock price line falls below the moving average line, the investor should purchase the stock because the intrinsic value is more than the market price. That means the stock is undervalued. If the stock price line rises above the moving average line, the investor should sell the stock as the intrinsic value is more than the market price. Therefore, the stock is overvalued. In December, there is decrease in future stocks of all the scrips due to the FIIs made the selling and other reasons like decrease in Indian Industrial production i.e from 2.7% (Nov) to 1.6% (Dec).
As Indian derivatives markets grow more sophisticated, greater investor awareness will become essential. In addition, institutions will need to devote more resources to develop the business processes and technology necessary for derivatives trading. Individual Risk tolerance should be known and then be ready for unexpected It encourages the investors to invest less and speculate, but speculation is not recommended. About Technical analysis: Moving averages are to be used with other tools of technical analysis which may serve as leading indicators which help us to anticipate the trends more sharply. Technical analysis should be always backed up by fundamental analysis. Investors shouldnt believe in rumors and do the needed study before taking the decision. Its better to diverse the funds into different industries. .
WWW.NSEINDIA.COMwww.google.co.inSecurity Analysis And Protfolio Management---Donald D.Fischer---Ronald J.Jordan
Chart12495.8404872424.65404942289.152311.012120.952271.12224.52251.412296.252255.042326.22299.442307.32312.822342.952292.012291.42268.962192.240557
closing pricemoving average
Sheet1dateclosing pricemoving average5-Nov-102495.812-Nov-102424.6519-Nov-102289.152311.0126-Nov-102120.952271.13-Dec-102224.52251.4110-Dec-102296.252255.0416-Dec-102326.22299.4424-Dec-102307.32312.8231-Dec-102342.952292.017-Jan-112291.42268.9614-Jan-112192.2To resize chart data range, drag lower right corner of range.
Chart11678.35404871777.5404941788.751779.451803.651807.8618491812.471820.41793.281800.551766.571692.81730.711670.11695.531669.7405501644.540557
Closing pricemoving average
Sheet1dateClosing pricemoving average5-Nov-101678.3512-Nov-101777.519-Nov-101788.751779.4526-Nov-101803.651807.863-Dec-1018491812.4710-Dec-101820.41793.2816-Dec-101800.551766.5724-Dec-101692.81730.7131-Dec-101670.11695.537-Jan-111669.714-Jan-111644.5To resize chart data range, drag lower right corner of range.
Chart1705.854048770.58540494705.85574.677689.35568.779701.75693.262676.36693.282693701.662705.95698.122731.25691.39684.0540550642.740557
Closing pricemoving price
Sheet1dateClosing pricemoving price5-Nov-10705.8512-Nov-1070.58519-Nov-10705.85574.67726-Nov-10689.35568.7793-Dec-10701.75693.26210-Dec-10676.36693.28216-Dec-10693701.66224-Dec-10705.95698.12231-Dec-10731.25691.397-Jan-11684.0514-Jan-11642.7To resize chart data range, drag lower right corner of range.
Chart11125.65404871084.35404941013.051044.04978.151025.5810191022.241033.351033.971067.651051.791071.71061.341067.251054.981066.75405501001.5540557
Closing pricemoving average
Sheet1dateClosing pricemoving average5-Nov-101125.6512-Nov-101084.3519-Nov-101013.051044.0426-Nov-10978.151025.583-Dec-1010191022.2410-Dec-101033.351033.9716-Dec-101067.651051.7924-Dec-101071.71061.3431-Dec-101067.251054.987-Jan-111066.7514-Jan-111001.55To resize chart data range, drag lower right corner of range.
Chart1632.8540487614.540494611.65615.99601.65613.24619.3622.69619.1633.17661.75649.56664.05658.06683.6657.87661.840550618.1540557
Closing pricemoving average
Sheet1dateClosing pricemoving average5-Nov-10632.8512-Nov-10614.519-Nov-10611.65615.9926-Nov-10601.65613.243-Dec-10619.3622.6910-Dec-10619.1633.1716-Dec-10661.75649.5624-Dec-10664.05658.0631-Dec-10683.6657.877-Jan-11661.814-Jan-11618.15To resize chart data range, drag lower right corner of range.
Chart13109.2404873109.2404943109.23110.683079.053123.443146.753164.9531733221.133316.753294.243390.13342.793444.63351.143389.5405503214.7540557
Closing pricemoving price
Sheet1dateClosing pricemoving price5-Nov-103109.212-Nov-103109.219-Nov-103109.23110.6826-Nov-103079.053123.443-Dec-103146.753164.9510-Dec-1031733221.1316-Dec-103316.753294.2424-Dec-103390.13342.7931-Dec-103444.63351.147-Jan-113389.514-Jan-113214.75To resize chart data range, drag lower right corner of range.
Chart14048740487410.840494410410.98396.05415.91427.25424.52435.45434.35453.85447.13459.15454.86459.95461.64465.940550469.3540557
Closing pricemoving average
Sheet1dateClosing pricemoving average5-Nov-1012-Nov-10410.819-Nov-10410410.9826-Nov-10396.05415.913-Dec-10427.25424.5210-Dec-10435.45434.3516-Dec-10453.85447.1324-Dec-10459.15454.8631-Dec-10459.95461.647-Jan-11465.914-Jan-11469.35To resize chart data range, drag lower right corner of range.
