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PROJECT REPORT

ON

EQUITY ANALYSIS ON BANKING SECTOR

AT

BONANZA PORTFOLIO.LTD

Submitted to department of Business Administration, JNTUUniversity in the Practical fulfillment of the Requirement

for the Award of Degree in

MASTERS OF BUSINESS ADMINISTRATION.

(In Finance)

Submitted to

Jawaharlal Nehru University

Hyderabad 500072

By

MOHD AZHARUDDIN

HALL TICKET NO: (09J61E0043)

MEDAK COLLEGE OF ENGINEERING & TECHNOLOGY

(Affiliated to JNTU University)

Kukatpally, Hyderabad.

2009-2011

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DECLERATION

I hereby declare that the entitled EQUITY ANALYSIS ON

BANKING SECTOR Is an Original work done by me and has

been submitted tothe department Of Business Management,

JNTU university in thePartial fulfillment for The Award of the

Master of Business Administration degree.

This report has not yet submitted anywhere else for the

purpose

of award of any degree or diploma or certificates.

DATE:

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PLACE:(MOHD AZHARUDDIN)

ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who

helped and supported me during the writing of this book.

I express my thanks to Mr. SVS RAMAKRISHNA RAJU thePrincipal of,

MEDAK COLLEGE OF ENGINEERING & TECHNOLOGYforextending

his support.

My deepest thanks to LECTURER, MRS MEHRAZ, the Guide

of the project for guiding and correcting various documents

of mine with attention and care. He has taken pain to go

through the project and make necessary correction as and

when needed.

My deep sense of gratitude to Mr. Mujeeb Ansari, Manager of Sapient

Consultancy Services for his support and guidance. Thanks and

appreciation to the helpful people at sapphire securities ltd, for their support.

I would also thank my Institution and my faculty members without whom

this project would have been a distant reality. I also extend my heartfelt

thanks to my family and well wishers.

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(MOHDAZHARUDDIN)

CONTENTS

S.no TITLES PAGE

NO

1 INTRODUCTION05

2 LITERATURE REVIEW13

3 COMPANYS PROFILE24

4 INDUSTRYS PROFILE29

5 DATA ANALYSIS & INTREPRTATION40

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6 FINDINGS OF THE STUDY57

7 SUGESSTIONS & CONCLUSIONS60

8 BIBILOGRAPHY85

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Equity Analysis on BankingSector

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Introduction of Equity Analysis

The most theoretically sound stock valuation method, called income valuation

or the discounted cash flow (DCF) method, involves discounting of the

profits (dividends, earnings, or cash flows) the stock will bring to the stockholder

in the foreseeable future, and a final value on disposal. The discounted rate

normally includes a risk premium which is commonly based on the capital asset

pricing model.

In July 2010, a Delaware court ruled on appropriate inputs to use in discounted

cash flow analysis in a dispute between shareholders and a company over the

proper fair value of the stock. In this case the shareholders' model provided value

of $139 per share and the company's model provided $89 per share. Contested

inputs included the terminal growth rate, the equity risk premium, and beta.

Stocks have two types of valuations. One is a value created using some type of

cash flow, sales or fundamental earnings analysis. The other value is dictated by

how much an investor is willing to pay for a particular share of stock and by how

much other investors are willing to sell a stock for (in other words, by supply and

demand). Both of these values change over time as investors change the way

they analyze stocks and as they become more or less confident in the future of

stocks.

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The fundamental valuation is the valuation that people use to justify stock prices.

The most common example of this type of valuation methodology is P/E ratio,

which stands for Price to Earnings Ratio. This form of valuation is based on

historic ratios and statistics and aims to assign value to a stock based on

measurable attributes. This form of valuation is typically what drives long-term

stock prices.

The other way stocks are valued is based on supply and demand. The more

people that want to buy the stock, the higher its price will be. And conversely, the

more people that want to sell the stock, the lower the price will be. This form of

valuation is very hard to understand or predict, and it often drives the short-term

stock market trends.

In short, there are many different ways to value stocks. The key is to take each

approach into account while formulating an overall opinion of the stock. Look at

each valuation technique and ask yourself why the stock is valued this way. If it is

lower or higher than other similar stocks, then try to determine why. And

remember, a great company is not always a great investment.

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Objectives of the Study.

The primary objective of equity research is to analyze the earnings persistence.

Some key aspects that affect the earnings persistence can be summarized as

follows:

The stability of the equity under consideration.

The predictability of the value of the given equity under the given

characteristics.

The variability of the given equity, given the various variance factors.

The general market trend influencing the market value of the given equity.

The earnings management.

And the accounting methods in use.

Two ways in which you can facilitate the assessment of the earnings persistence

are by either recasting the income statement or adjusting the same.

To analyze the financial performance.

To analyze the stock price movements traded in NSC

To calculate return and risk.

To suggest the strategies to improve financial performance.

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Scope of the Study.

Equity may refer to:

Equity (finance), the value of an ownership interest in property, including

shareholders' equity in a business

Stock, the generic term for common equity securities are called stock;

Home equity, the difference between the fair market value and unpaid mortgage

balance on a home

Private equity, stock in a privately held company

Equity in income of affiliates, an accounting term referring to the consolidated or

unconsolidated ownership in affiliate companies.

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EQUITY INVESTMENT:

An equity investment generally refers to the buying and holding of shares

ofstockon a stock market by individuals and firms in anticipation of income

from dividends andcapital gains, as the value of the stock rises. It may also refer

to the acquisition of equity (ownership) participation in a private (unlisted)

company or a startup company. When the investment is in infant companies, it is

referred to asventure capital investing and is generally understood to be higher

risk than investment in listed going-concern situations.

EQUITY FINANCE:

In accounting and finance, equity is the residual claim or interest of the most

junior class of investors inassets, after all liabilities are paid. If valuations placed

on assets do not exceed liabilities, negative equity exists. In an accounting

context, Shareholders' equity (or stockholders' equity, shareholders' funds,

shareholders' capital or similar terms) represents the remaining interest in assets

of a company, spread among individual shareholders ofcommonorpreferred

stock.

SHAREHOLDERS EQUITY:

When the owners are shareholders, the interest can be called shareholders'

equity; the accounting remains the same, and it is ownership equity spread out

among shareholders. If all shareholders are in one and the same class, they

share equally in ownership equity from all perspectives. However, shareholders

may allow different priority ranking among themselves by the use of share

classes and options. This complicates both analysis forstock valuation and

accounting.

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Market value of shares:

In the stock market, market price per share does not correspond to the equity per

share calculated in the accounting statements. Stock valuations, which are often

much higher, are based on other considerations related to the business'operating cash flow, profits and future prospects; some factors are derived from

the accounting statements. Thus, there is little or no correlation between the

equity seen in financial statements and the stock valuation of the business.

STOCK PRICE ANALYSIS

Fundamental Analysis determines intrinsic stock prices by projecting future

earnings and then applying an acceptable return on investment to calculate the

stock price. This approach is used by most traditional investment analysts and is

the basis of their stock performance recommendations. In a stable economic and

business environment applying Fundamental Analysis should provide a solid

pricing mechanism however all businesses operate in dynamic environments and

future earnings are never guaranteed. This results in varying estimates of

earnings. Dynamic business environments result in less reliable earningsestimates and a greater possible range of future earnings. The rate of return

component of Fundamental Analysis is also variable and is influenced by the

return from alternative investments and the perceived risk of the stock

investment. As risk increases the required rate of return increases to compensate

for the risk.

Fundamental Analysis essentially tells us what price a stock should be. This can

be considered as its intrinsic or Fair Value based on its future earnings and

return on investment. However the actual price of a stock is determined by the

stock market and the stock market is driven by human emotion. So what we

really want to know is Analyzing past stock prices can provide some insight into

future movements, this is the realm of Technical Analysis

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Technical Analysis or Charting applies statistical techniques to historical stock

prices and volumes to identify likely future stock price movements. It does not

consider the fundamentals of the stock, the business, or economic environment

as the influence of these factors is deemed to be already reflected in the stock

price. Because Technical Analysis is based on actual past stock price data

(which was influenced by human emotion) it incorporates a component of human

emotion in its calculations. This can provide valuable indicators and insight into

future stock price movements that cannot be identified using Fundamental

Analysis.

At any point in time actual stock prices consist of two components. The Fair

Value price (fundamental) and a variance from the Fair Value due to dynamic

environments and human emotion. The more volatile the environment and

emotion the greater the variance. This results in cyclic boom (bull) and bust

(bear) markets. Achieving the best possible return for our investment requires

both an appreciation of the fundamental Fair Value of a stock and the future

variance indicated by technical analysis.

To help us do this there is an extensive range of stock pricing software and

"stock experts" available. All we need do is buy their software or subscribe to

their research newsletters, and follow their recommendations. The problem with

using an expert or a system developed by an expert is how we can judge their

expertise. Perhaps the best way is to gain as much knowledge as possible

ourselves so we have the ability to make informed decisions.

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1. Earnings per Share (EPS).

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EPS is the total net income of the company divided by the number of shares

outstanding. The most important thing to look for in the EPS figure is the overall

quality of earnings. Make sure the company is not trying to manipulate their EPS

numbers to make it look like they are more profitable. Also, look at the growth in

EPS over the past several quarters / years to understand how volatile their EPS

is, and to see if they are an underachiever or an overachiever. In other words,

have they consistently beaten expectations or are they constantly restating and

lowering their forecasts?

The EPS number that most analysts use is the pro forma EPS. To compute this

number, use the net income that excludes any one-time gains or losses and

excludes any non-cash expenses like stock options or amortization of goodwill.

Then divide this number by the number of fully diluted shares outstanding.

2. Price to Earnings (P/E).

Now that you have several EPS figures (historical and forecasts), you'll be able to

look at the most common valuation technique used by analysts, the price to

earnings ratio, or P/E. To compute this figure, take the stock price and divide it by

the annual EPS figure. For example, if the stock is trading at $10 and the EPS is$ 0.50, the P/E is 20 times. To get a good feeling of what P/E multiple a stock

trades at, be sure to look at the historical and forward ratios.

Historical P/Es are computed by taking the current price divided by the sum of

the EPS for the last four quarters, or for the previous year. You should also look

at the historical trends of the P/E by viewing a chart of its historical P/E over the

last several years (you can find on most finance sites like Yahoo Finance).

Specifically you want to find out what range the P/E has traded in so that you candetermine if the current P/E is high or low versus its historical average.

3. Return on Invested Capital (ROIC).

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This valuation technique measures how much money the company makes each

year per dollar of invested capital. Invested Capital is the amount of money

invested in the company by both stockholders and debtors. The ratio is

expressed as a percent and you should look for a percent that approximates the

level of growth that you expect. In its simplest definition, this ratio measures the

investment return that management is able to get for its capital. The higher the

number, the better the return.

4. Market Cap.

Market Cap, which is short for Market Capitalization, is the value of all of the

company's stock. To measure it, multiply the current stock price by the fullydiluted shares outstanding. Remember, the market cap is only the value of the

stock. To get a more complete picture, you'll want to look at the Enterprise Value.

SUPPORT & RESISTANCE

Support and resistance is a concept in technical analysis that the movement of

the price of asecurity will tend to stop and reverse at certain predetermined price

levels.

SUPPORT:-

A support level is a price level where the price tends to find support as it is

going down. This means the price is more likely to "bounce" off this level rather

than break through it. However, once the price has passed this level, by an

amount exceeding some noise, it is likely to continue dropping until it finds

another support level.

RESISTANCE:-

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A resistance level is the opposite of a support level. It is where the price tends

to find resistance as it is going up. This means the price is more likely to

"bounce" off this level rather than break through it. However, once the price has

passed this level, by an amount exceeding some noise, it is likely that it will

continue rising until it finds another resistance level.

USING SUPPORT & RESISTANCE LEVELS:-

This is an example of support switching roles with resistance, and vice versa.

If a stock price is moving between support and resistance levels, then a basic

investment strategy commonly used by traders, is to buy a stock at support and

sell at resistance, then short at resistance and cover the short at support as per

the following example:

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In this example the early signs that the stock was coming out of a downtrend was

when it started to form support at $30.48 and then started to form higher highs

and higher lows signaling a change from negative to positive trending

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MARKET TREND

Statues of the two symbolic beasts of finance, the bear and the bull, in front of the

Frankfurt Stock Exchange.

A market trend is a putative tendency of a financial market to move in a particular

direction over time. These trends are classified as seculartrends for long time frames,

primarytrends for medium time frames, and secondarytrends lasting short times.

Traders identify market trends usingtechnical analysis, a framework which characterizes

market trends as a predictable price response of the market at levels of price support

and price resistance, varying over time.

The termsbull marketand bear market describe upward and downward market trends,

respectively, and can be used to describe either the market as a whole or specific

sectors and securities.

PRIMERY MARKET TRENDS:-

A primary trend has broad support throughout the entire market (most sectors) and lasts

for a year or more.

BULL MARKET

A bull market is associated with increasing investor confidence, and increased investing

in anticipation of future price increases (capital gains). A bullish trend in the stock market

often begins before the general economy shows clear signs of recovery. It is a win-win

situation for the investors.

BEAR MARKET

A bear market is a general decline in the stock market over a period of time. It is a

transition from high investor optimism to widespread investor fear and pessimism.

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Technical Analysis:

1: Japanese candlestick chart:

Japanese candlestick chart is a style ofbar-chart used primarily to describe price

movements of a security, derivative, orcurrency over time.

It is a combination of a line-chart and a bar-chart, in that each bar represents the range

of price movement over a given time interval. It is most often used in technical

analysis of equity and currency price patterns. They appear superficially similar to error

bars, but are unrelated.

Candlesticks are usually composed of the body (black or white), and an upper and a

lower shadow (wick): the area between the open and the close is called the real body,

price excursions above and below the real body are called shadows. The wick illustrates

the highest and lowest traded prices of a security during the time interval represented.

The body illustrates the opening and closing trades. If the security closed higher than it

opened, the body is white or unfilled, with the opening price at the bottom of the body

and the closing price at the top. If the security closed lower than it opened, the body is

black, with the opening price at the top and the closing price at the bottom. A candlestick

need not have either a body or a wick.

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To better highlight price movements, modern candlestick charts (especially those

displayed digitally) often replace the black or white of the candlestick body with colors

such as red (for a lower closing) and blue or green (for a higher closing).

Picture of candlestick:

USE OF CANDLESTICK CHARTS

Candlestick charts are a visual aid for decision making in stock, forex,commodity,

and options trading. For example, when the bar is white and high relative to other time

periods, it means buyers are verybullish. The opposite is true for a black bar.

Heikin-Ashi candlesticks:

Heikin-Ashi (Japanese for 'average bar') candlesticks are a weighted version of

candlesticks calculated with the following formula:

Open = (open of previous bar+close of previous bar)/2

Close = (open+high+low+close)/4

High = maximum of high, open, or close (whichever is highest)

Low = minimum of low, open, or close (whichever is lowest)

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Heikin-Ashi candlesticks must be used with caution with regards to the price as the body

doesn't necessarily sync up with the actual open/close. Unlike with regular candlesticks,

a long wick shows more strength, whereas the same period on a standard chart might

show a long body with little or no wick. Depending on the software or user preference,

Heikin-Ashi may be used to chart the price (instead of line, bar, or candlestick), as an

indicator overlaid on a regular chart, or an as indicator plotted on a separate window

2: MACD (Moving Average Convergence/Divergence):

MACD is atechnical analysisindicatorcreated by Gerald Appel in the late

1970s.It is used to spot changes in the strength, direction, momentum, and

duration of a trend in a stock's price.

The MACD is a computation of the difference between two exponential moving

averages (EMAs) of closing prices. This difference is charted over time,

alongside a moving average of the difference. The divergence between the two is

shown as a histogram orbar graph.

Exponential moving averages highlight recent changes in a stock's price. By

comparing EMAs of different periods, the MACD line illustrates changes in the

trend of a stock. Then by comparing that difference to an average, an analyst can

chart subtle shifts in the stock's trend.

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The graph above shows a stock with a MACD indicatorunderneath it. The

indicator shows a blue line, a red line, and a histogram or bar chart which

calculates the difference between the two lines. Values are calculated from the

price of the stock in the main part of the graph.

3:An open-high-low-close chart

(Also OHLC chart or simply bar chart) is a type ofchart typically used to

illustrate movements in the price of an instrument over time. Each vertical line on

the chart shows the price range (the highest and lowest prices) over one unit of

time, e.g. one day or one hour. Tick marks project from each side of the line

indicating the opening price (e.g. for a daily bar chart this would be the starting

price for that day) on the left, and the closing price for that time period on the

right. The bars may be shown in different hues depending on whether prices rose

or fell in that period. Which can be explained as follows?

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THE SIMPLE MOVING AVERAGE:

Intuitively, the simplest way to smooth a time series is to calculate a simple, or

unweighted, moving average. The smoothed statistic st is then just the meanof the

last kobservations:

Where the choice of an integerk> 1 is arbitrary. A small value ofkwill have less of a

smoothing effect and be more responsive to recent changes in the data, while a

largerkwill have a greater smoothing effect, and produce a more pronounced lag in the

smoothed sequence. One disadvantage of this technique is that it cannot be used on the

first k1 terms of the time series.

LINE CHART:

A line chart orline graph is a type ofgraph, which displays information as a series of

data points connected by straight line segments. It is a basic type ofchart common in

many fields. It is an extension of a scatter graph, and is created by connecting a series

of points that represent individual measurements with line segments. A line chart is often

used to visualize a trend in data over intervals of time a time series thus the line is

often drawn chronologically.

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COMPANYS PROFILE:

BONANZA PORTFOLIO LTD.

A financial powerhouse! Thats what Bonanza is for you! Established in the year1994, Bonanza developed into one of the largest financial services and broking

house in India within a short span of time. Today, Bonanza is the fastest growing

financial service with 5 mega group companies under it. With diligent effort,

acknowledged industry leadership and experience, Bonanza has spread its

trustworthy tentacles all over the country with pan-India presence across more

than 1510 outlets spread across 515 cities.

With a smorgasbord of services across all verticals in finance, Bonanzas offers

you the perfect blend of financial services right from Equity Broking, Advisory

Services that cover Portfolio Management Services, Mutual Fund Investments,

and Insurance to exceptional Depository Services.

Bonanza believes in being technologically advanced so that we can offer you

our tech-savvy customers - an integrated and innovative platform to trade online

as well as offline. Besides, we also have one of the finest and most dedicated

research teams with experts who have in-depth, unsurpassed knowledge of the

market place. All this and more makes Bonanza the perfect place for you to take

your first step in the direction of financial success.

Bonanza is affiliated with the best in the industry right from the NSE, BSE MCX,

and MCX-SX to CDSL, NSDL, etc. These affiliations prove our worth in the

market and make Bonanza a name to reckon with.

With various titles and achievements under our belt, Bonanza looks forward to

tougher challenges and newer milestones to conquer, so that you our customer

can get nothing less than the BEST!

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Meet the masterminds behind the success of Bonanza

--The Directors who are leading the gigantic force.

Mr. S P Goel

The Founder Director of Bonanza who has been instrumental in

chartering critical and strategic initiatives. With an experience of 25 years in the

finance business, Mr. Goel has also been appointed as the director of the OTC

Exchange of India. He represents NSEIL for the SEBI constituted Dr. J.R. Verma

Advisory committee for the development of the derivatives market in India.

He started his career as a CA in 1987 and soon after he embodied several

prominent committees on settlement issues (COSI), a policy generating body at

the NSE of India Ltd and Dispute Resolution Committee (DRC) of National Stock

Exchange Clearing Corporation Limited (NSCCL).

Mr. Shivkumar Goel

Being the Founder Director of Bonanza, he has been handling IT & risk initiatives

since inception. Formerly, designated as the CEO of SRF Finance Limited, Delhi;

Mr. Shivkumar Goel had also spearheaded the IT committee of the DELHI StockExchange.

A CA & CS with more than 30 years of experience, he recently was nominated as

the executive committee member of Depository Participants Association of India.

He is currently a functional member with Association of National Exchanges

Members of India

Mr. S K Goel

Has been Bonanzas Founder Director and a prominent CA for more than 35

years now. Mr. S.K. Goel has been mainly heading Bonanzas Northern and

Eastern zone. He was formerly with the Modis & Oswals - leading manufacturing

companies

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Mr. Vishnu Kumar Agarwal

The Founder Director of Bonanza with over 30 years of experience, Mr. Vishnu

has proficiently taken charge of Administration, Real Estate Investments and

Initiatives for all the group companies of Bonanza.

Mr. Anand Prakash Goel

Has been playing a pivotal role as Bonanzas Founder Director by resourcefully

managing Taxation, Compliance and DP. A qualified CA with more than 30 years

of experience in his stride, he has undertaken audits for leading banks across

India.

Milestones:

4thLargest in terms of no. of offices for 2009-2010*.

Top Equity Broking House in terms of branch expansion for2008*.

6th in terms of Trading terminals in for two consecutiveyears 2007- 2008*.

9thin terms of Sub Brokers for 2007*.

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Nominated among the Top 3 for the "Best Financial

Advisor Awards 09" in the category of National

Distributors Retail instituted by CNBC-TV18 and

OptiMix.

Awarded by BSE Major Volume Driver

04-05, 06-07, 07-08.

Ranked 2nd by UTI MF & CNBC TV 18 FinancialAwards 2009 in the category Best Financial

Advisor- Retail.

Corporate Social Responsibility:

Other than being the masters of financial services, Bonanza also believes in thepower of giving. We are a company who is socially responsible towards the

community and contributes to the well-being of others through various welfare

initiatives and charities. Because like they say No act of kindness, no matter

how small, is ever wasted

Vision:

To be one of the most trusted and globally reputed financial distribution

companies.

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CLASSIFICATION OF FINANCIAL MARKET:

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Capital Market:

The capital market is a market for financial assets which have a long or indefinite

maturity. Generally, it deals with long term securities which have a period of above one

year. In the widest sense, it consists of a series of channels through which the savings of

the community are made available for industrial and commercial enterprises and public

authorities. As a whole, capital market facilitates raising of capital.

The major functions performed by a capital market are:

1. Mobilization of financial resources on a nation-wide scale.

2. Securing the foreign capital and know-how to fill up deficit in the required resources

for economic growth at a faster rate.

3. Effective allocation of the mobilized financial resources, by directing the same to

projects yielding highest yield or to the projects needed to promote balanced economic

development.

Capital market consists of primary market and secondary market.

Primary market: Primary market is a market for new issues or new financial claims.

Hence it is also called as New Issue Market. It basically deals with those securities which

are issued to the public for the first time. The market, therefore, makes available a new

block of securities for public subscription. In other words, it deals with raising of fresh

capital by companies either for cash or for consideration other than cash. The best

example could be Initial Public Offering (IPO) where a firm offers shares to the public for

the first time.

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Secondary market: Secondary market is a market where existing securities are traded.

In other words, securities which have already passed through new issue market are

traded in this market. Generally, such securities are quoted in the stock exchange and it

provides a continuous and regular market for buying and selling of securities. This

market consists of all stock exchanges recognized by the government of India.

Money Market

Money markets are the markets for short-term, highly liquid debt securities. Money

market securities are generally very safe investments which return relatively low interest

rate that is most appropriate for temporary cash storage or short term time needs. It

consists of a number of sub-markets which collectively constitute the money market

namely call money market, commercial bills market, acceptance market, and Treasury

bill market.

Derivatives Market

The derivatives market is the financial market for derivatives, financial instruments like

futures contracts or options, which are derived from other forms of assets. A derivative is

a security whose price is dependent upon or derived from one or more underlying

assets. The derivative itself is merely a contract between two or more parties. Its value is

determined by fluctuations in the underlying asset. The most common underlying assets

include stocks, bonds, commodities, currencies, interest rates and market indexes. The

important financial derivatives are the following.

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Futures:Future contract is very similar to a forward contract in all respects excepting.

The fact that it is completely a standardized one. It is nothing but a standardized forward

Contract which is legally enforceable and always traded on an organized exchange.

Options: A financial derivative that represents a contract sold by one party (Option

writer) to another party (option holder). The contract offers the buyer the right, but not

the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-

upon price (the strike price) during a certain period of time or on a specific date (exercise

date).

Call options give the option to buy at certain price, so the buyer wouldwant the stock togo up. Put options give the option to sell at a certain price, so the buyer would want the

stock to go down.

Commodities Market:

It is a physical or virtual marketplace for buying, selling and trading raw or primary

products. For investors' purposes there are currently about 50 major commodity markets

worldwide that facilitate investment trade in nearly 100 primary commodities.

Commodities are split into two types: hard and soft commodities. Hard commodities are

typically natural resources that must be mined or extracted (gold, rubber, oil, etc.),

whereas soft commodities are agricultural products or livestock (corn, wheat, coffee,

sugar, soybeans, pork, etc.)

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INDIAN FINANCIAL MARKETS:

India Financial market is one of the oldest in the world and is considered to be the

Fastest growing and best among all the markets of the emerging economies.

The history of Indian capital markets dates back 200 years toward the end of the 18th

century when India was under the rule of the East India Company. The development of

the capital market in India concentrated around Mumbai where no less than 200 to 250

securities brokers were active during the second half of the 19th century.

The financial market in India today is more developed than many other sectors because

it was organized long before with the securities exchanges of Mumbai, Ahmadabad and

Kolkata were established as early as the 19th century.

By the early 1960s the total number of securities exchanges in India rose to eight,including Mumbai, Ahmadabad and Kolkata apart from Madras, Kanpur, Delhi,

Bangalore and Pune. Today there are 21 regional securities exchanges in India in

addition to the centralized NSE (National Stock Exchange) and OTCEI (Over the

Counter Exchange of India).

However the stock markets in India remained stagnant due to stringent

controls on the market economy that allowed only a handful of monopolies to dominate

their respective sectors. The corporate sector wasn't allowed into many industry

segments, which were dominated by the state controlled public sector resulting in

stagnation of the economy right up to the early 1990s.

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STOCK EXCHANGES IN INDIA:

Stock Exchanges are an organized market place,

either corporation or mutual organization, where members of the organization gather to

trade company stocks or other securities. The members may act either as agents for

their customers, or as principals for their own accounts.

As per the Securities Contracts Regulation Act, 1956 a stock exchange is an

association, organization or body of individuals whether incorporated or not, established

for the purpose of assisting, regulating and controlling business in buying, selling and

dealing in securities.

Stock exchanges facilitate for the issue and redemption of securities and other financial

instruments including the payment of income and dividends. The record keeping is

central but trade is linked to such physical place because modern markets are

computerized. The trade on an exchange is only by members and stock broker do have

a seat on the exchange.

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BOMBAY STOCK EXCHANGE

A very common name for all traders in the stock market, BSE, stands for Bombay Stock

Exchange. It is the oldest market not only in the country, but also in Asia. In the early

days, BSE was known as "The Native Share & Stock Brokers Association." It was

established in the year 1875 and became the first stock exchange in the country to be

recognized by the government. In 1956, BSE obtained a permanent recognition from the

Government of India under the Securities Contracts (Regulation) Act, 1956.

In the past and even now, it plays a pivotal role in the development of the country's

capital market. This is recognized worldwide and its index, SENSEX, is also tracked

worldwide. Earlier it was an Association of Persons (AOP), but now it is a demutualised

and corporatized entity incorporated under the provisions of the Companies Act, 1956,

pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by

the Securities and Exchange Board of India (SEBI).

BSE Vision

The vision of the Bombay Stock Exchange is to Emerge as the premier Indian Stock

Exchange by establishing global benchmarks.

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BSE Management

Bombay Stock Exchange is managed professionally by Board of

Directors. It comprises of eminent professionals, representatives of Trading Members

and the Managing Director. The Board is an inclusive one and is shaped to benefit from

the market intermediaries participation.

The Board exercises complete control and formulates larger policy issues. The day- to-

day operations of BSE are managed by the Managing Director and its school of

professional as a management team.

NATIONAL STOCK EXCHANGE OF INDIA LIMITED

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

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

recommended promotion of a National Stock Exchange by financial institutions

(FIs) to provide access to investors from all across the country on an equal

Footing. Based on the recommendations, NSE was promoted by leading Financial

Institutions at the behest of the Government of India and was incorporated in

November 1992 as a tax- paying company unlike other stock Exchange in the Country.

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

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

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

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

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NSE Facts:

It uses satellite communication technology to energize participation from around 400

cities in India.

NSE can handle up to 1 million trades per day.

It is one of the largest interactive VSAT based stock exchanges in the world.

The NSE- network is the largest private wide area network in India and the firstextended C- Band VSAT network in the world.

Presently more than 9000 users are trading on the real time-online NSE Application.

Today, NSE is one of the largest exchanges in the world and still

forging ahead. At NSE, we are constantly working towards creating a more transparent,

vibrant and innovative capital market.

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State Bank of India

State Bank of India

TypePublic

NSE: SBIN

BSE: 500112

LSE: SBID

IndustryBanking

Financial services

Founded 1 July 1955

Headquarters Mumbai,Maharashtra,India

Key peoplePratip Chaudhuri

(Chairman)

Products Investment Banking

Consumer Banking

Commercial Banking

Retail Banking

Private Banking

Asset Management

Pensions

Mortgages

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Credit Cards

Revenue $29.728 billion (2010)

Operating income $5.507 billion (2010)

Profit $2.668 billion (2010)

Total assets $322.077 billion (2010)

Total equity $19.048 billion (2010)

Employees 200,299 (2010)

Website Statebankofindia.com

State Bank of India is the largestIndianbanking andfinancial services company (by

turnover and total assets) with its headquarters in Mumbai, India. It isstate-owned. The

bank traces its ancestry to British India, through the Imperial Bank of India, to the

founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in theIndian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank

of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became

State Bank of India. The government of Indianationalized the Imperial Bank of India in

1955, with theReserve Bank of India taking a 60% stake, and renamed it the State Bank

of India. In 2008, the government took over the stake held by the Reserve Bank of India.

SBI provides a range of banking products through its vast network of branches in India

and overseas, including products aimed at non-resident Indians (NRIs). The State Bank

Group, with over 16,000 branches, has the largest banking branch network in India. It

also has around 130 branches overseas. With an asset base of $352 billion and $285

billion in deposits, it is a regional banking behemoth and is one of the largest financial

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institution in the world. It has a market share among Indian commercial banks of about

20% in deposits and loans.

The State Bank of India is the 29th most reputed company in the world according to

Forbes. Also SBI is the only bank featured in the coveted "top 10 brands of India" list inan annual survey conducted by Brand Finance and The Economic Times in 2010.

The State Bank of India is the largest of the Big Fourbanks of India, along with ICICI

Bank, Punjab National Bank and HDFC Bank.

State Bank of India

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Balance sheet

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of funds

Owner's fundEquity share capital 634.88 634.88 631.47 526.30 526.30

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 65,314.32 57,312.82 48,401.19 30,772.26 27,117.79

Loan funds

Secured loans - - - - -

Unsecured loans 8,04,116.23 7,42,073.13 5,37,403.94 4,35,521.09 3,80,046.06

Total 8,70,065.43 8,00,020.82 5,86,436.60 4,66,819.65 4,07,690.14

Uses of funds

Fixed assetsGross block 11,831.63 10,403.06 8,988.35 8,061.92 7,424.84

Less : revaluation reserve - - - - -

Less : accumulateddepreciation

7,713.90 6,828.65 5,849.13 5,385.01 4,751.73

Net block 4,117.72 3,574.41 3,139.22 2,676.91 2,673.11

Capital work-in-progress 295.18 263.44 234.26 141.95 79.82

Investments 2,85,790.07 2,75,953.96 1,89,501.27 1,49,148.88 1,62,534.24

Net current assets

Current assets, loans &

advances

35,112.76 37,733.27 44,417.03 25,292.31 22,380.84

Less : current liabilities &provisions

80,336.70 1,10,697.57 83,362.30 60,042.26 55,538.17

Total net current assets -45,223.94 -72,964.30 -38,945.27 -34,749.95 -33,157.32

Miscellaneous expenses notwritten

- - - - -

Total 2,44,979.03 2,06,827.50 1,53,929.48 1,17,217.80 1,32,129.85

Notes:

Book value of unquotedinvestments

- - - - -

Market value of quotedinvestments

- - - - -

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Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Contingent liabilities 5,96,366.41 7,67,567.52 8,29,740.48 3,29,954.73 2,49,437.78

Number of equitysharesoutstanding (Lacs)

6348.83 6348.80 6314.70 5262.99 5262.99

State Bank of India

Profit loss account

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Income

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Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Operating income 85,909.36 74,880.76 56,821.55 43,860.57 37,869.52

Expenses

Material consumed - - - - -

Manufacturing expenses - - - - -

Personnel expenses 12,754.65 9,747.31 7,785.87 7,932.58 8,123.04

Selling expenses 224.05 251.23 173.23 88.43 109.44

Adminstrative expenses 11,029.66 7,361.98 5,970.47 4,628.38 2,911.29

Expenses capitalized - - - - -

Cost of sales 24,008.35 17,360.52 13,929.57 12,649.38 11,143.78

Operating profit 14,578.54 14,604.94 10,962.90 7,774.36 6,566.46

Other recurring income 1,051.15 894.26 901.33 1,008.35 1,413.65

Adjusted PBDIT 15,629.69 15,499.20 11,864.23 8,782.71 7,980.11

Financial expenses 47,322.48 42,915.29 31,929.08 23,436.82 20,159.29

Depreciation 932.66 763.14 679.98 602.39 729.13

Other write offs - - - - -

Adjusted PBT -32,625.45 14,736.06 11,184.25 8,180.32 7,250.98

Tax charges 6,166.62 6,115.12 3,929.20 3,083.77 2,499.48

Adjusted PAT 9,176.51 9,124.18 6,718.08 4,529.18 4,404.73

Non recurring items -10.46 -2.95 11.04 12.13 1.94

Other non cash adjustments - - - - -

Reported net profit 9,166.05 9,121.23 6,729.12 4,541.31 4,406.67

Earnigs before appropriation 9,166.39 9,121.57 6,729.46 4,541.65 4,407.01

Equity dividend 1,904.65 1,841.15 1,357.66 736.82 736.82

Preference dividend - - - - -

Dividend tax 236.76 248.03 165.87 125.22 103.34

Retained earnings 7,024.99 7,032.38 5,205.94 3,679.61 3,566.85

ICICI Bank

ICICI Bank Limited

Type Public

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Traded as

NSE: ICICIBANK

BSE: 532174

NYSE:IBN

NASDAQ: IBN

IndustryBanking

Financial services

Founded 1994 (promoted by ICICI)

Headquarters Mumbai,Maharashtra,India

Key people

K.V. Kamath(Chairman)

Chanda Kochhar

(MD &CEO)

Mr. N. S. Kannan

(CFO)

Products

Finance and insurance

Retail Banking

Commercial Banking

Mortgages

Credit Cards

Private Banking

Asset Management

Investment Banking

Revenue $3.451 billion (2011)

Profit $1.134 billion (2011)

Total assets $89.493 billion (2011)

Total equity $12.136 billion (2011)

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Employees 74,056 (2010)

Website ICICIBank.com

ICICI Bank Limited is a majorbanking and financial services company based in

Mumbai. It is the second largest bank in India and the largest private sector bank in

India by market capitalization. The bank also has a network of 2,529 branches (as on 31

March 2010) and about 6,102 ATMs in India and presence in 19 countries, as well as

some 24 million customers (at the end of July 2007). ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers through a

variety of delivery channels and specialization subsidiaries and affiliates in the areas ofinvestment banking, life and non-life insurance, venture capital and asset management.

(These data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India.

ICICI Bank's shares are listed on the stock exchanges atBSE,NSE, Kolkata and

Vadodara (formerly Baroda) ; itsADRstrade on the New York Stock Exchange(NYSE).

The Bank is expanding in overseas markets and has the largest international balance

sheet among Indian banks. ICICI Bank now has wholly owned subsidiaries, branches

and representatives offices in 19 countries, including an offshore unit in Mumbai. This

includes wholly owned subsidiaries in Canada, Russia and the UK (the subsidiary

through which the HiSAVE savings brand is operated), offshore banking units in Bahrain

and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri

Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South

Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the

NRI (Non-Resident Indian) population in particular.

ICICI reported a 1.15% rise in net profit to 1,014.21 crore on a 1.29% increase in total

income to 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The bank's

CASA ratioincreased to 30% in 2008 from 25% in 2007.

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ICICI Bank is one of the Big Fourbanks of India, along with State Bank of India, Punjab

National Bank and HDFC Bank.

ICICI Bank Ltd.Balance sheet

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07Sources of funds

Owner's fund

Equity share capital 1,151.82 1,114.89 1,113.29 1,112.68 899.34

Share application money 0.29 - - - -

Preference share capital - - 350.00 350.00 350.00

Reserves & surplus 53,938.82 50,503.48 48,419.73 45,357.53 23,413.92

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Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Loan funds

Secured loans - - - - -

Unsecured loans 2,25,602.11 2,02,016.60 2,18,347.82 2,44,431.05 2,30,510.19

Total 2,80,693.05 2,53,634.96 2,68,230.84 2,91,251.26 2,55,173.45

Uses of funds

Fixed assets

Gross block 9,107.47 7,114.12 7,443.71 7,036.00 6,298.56

Less : revaluation reserve - - - - -

Less : accumulateddepreciation

4,363.21 3,901.43 3,642.09 2,927.11 2,375.14

Net block 4,744.26 3,212.69 3,801.62 4,108.90 3,923.42

Capital work-in-progress - - - - 189.66

Investments 1,34,685.96 1,20,892.80 1,03,058.31 1,11,454.34 91,257.84

Net current assets

Current assets, loans &advances

27,630.41 29,997.23 34,384.06 31,129.77 23,551.85

Less : current liabilities &provisions

15,986.35 15,501.18 43,746.43 42,895.38 38,228.64

Total net current assets 11,644.06 14,496.05 -9,362.37 -11,765.62 -14,676.78

Miscellaneous expenses notwritten

- - - - -

Total 1,51,074.28 1,38,601.54 97,497.56 1,03,797.62 80,694.15

Notes:

Book value of unquotedinvestments

- - - - -

Market value of quotedinvestments

- - - - -

Contingent liabilities 9,31,638.84 7,33,546.20 8,40,670.63 4,01,114.91 1,99,771.41Number of equitysharesoutstanding (Lacs)

11517.72 11148.45 11132.51 11126.87 8992.67

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ICICI Bank Ltd.

Profit loss account

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Income

Operating income 32,369.69 32,747.36 38,250.39 39,467.92 28,457.13

Expenses

Material consumed - - - - -

Manufacturing expenses - - - - -Personnel expenses 2,816.93 1,925.79 1,971.70 2,078.90 1,616.75

Selling expenses 305.79 236.28 669.21 1,750.60 1,741.63

Adminstrative expenses 4,909.00 7,440.42 7,475.63 6,447.32 4,946.69

Expenses capitalized - - - - -

Cost of sales 8,031.72 9,602.49 10,116.54 10,276.82 8,305.07

Operating profit 7,380.82 5,552.30 5,407.91 5,706.85 3,793.56

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Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Other recurring income 7.26 305.36 330.64 65.58 309.17

Adjusted PBDIT 7,388.08 5,857.66 5,738.55 5,772.43 4,102.73

Financial expenses 16,957.15 17,592.57 22,725.93 23,484.24 16,358.50

Depreciation 562.44 619.50 678.60 578.35 544.78

Other write offs - - - - -

Adjusted PBT -10,131.51 -12,354.42 -17,665.98 5,194.08 3,557.95

Tax charges 1,609.33 1,600.78 1,830.51 1,611.73 984.25

Adjusted PAT 5,110.21 3,890.47 3,740.62 4,092.12 2,995.00

Non recurring items 41.17 134.52 17.51 65.61 115.22

Other non cash adjustments -2.17 - -0.58 - -

Reported net profit 5,149.21 4,024.98 3,757.55 4,157.73 3,110.22

Earnigs before appropriation 8,613.59 6,834.63 6,193.87 5,156.00 3,403.66

Equity dividend 1,612.58 1,337.95 1,224.58 1,227.70 901.17

Preference dividend - - - - -

Dividend tax 202.28 164.04 151.21 149.67 153.10

Retained earnings 6,798.73 5,332.63 4,818.07 3,778.63 2,349.39

HDFC Bank

HDFC Bank Limited

Type Public

Traded as

BSE: 500180NSE:HDFCBANKNYSE:HDB

NASDAQ:HDB

IndustryBankingFinancial services

Founded August 1994

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Headquarters Mumbai,India

Area served Worldwide

Key people Aditya Puri (MD)

Products

Finance and insuranceInvestment BankingCommercial BankingRetail BankingPrivate BankingAsset ManagementMortgagesCredit Cards

Revenue $4.476 billion (2010)

Profit $545 million (2010)

Total assets $53.670 billion (2010)

Total equity $6.787 billion (2010)

Employees 51,888 (2010)

Website HDFCBank.com

HDFC Bank Limited is a major Indian financial services company based in India,

incorporated in August 1994, after the Reserve Bank of Indiaallowed establishing

private sector banks. The Bank was promoted by the Housing Development Finance

Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank

has 1,725 branches and over 5,000 ATMs, in 780 cities in India, and all branches of thebank are linked on an online real-time basis. As of 30 September 2008 the bank had

total assets of Rs.1006.82 billion. For the fiscal year 2010-11, the bank has reported net

profit of 3,926.30 crore (US$871.64 million), up 33.1% from the previous fiscal. Total

annual earnings of the bank increased by 20.37% reaching at 24,263.4 crore (US$5.39

billion) in 2010-11.

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It is one of the Big Four banks of India, along with State Bank of India, ICICI Bank and

Punjab National Bank.

HDFC Bank Ltd.

Balance sheet

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Sources of funds

Owner's fund

Equity share capital 465.23 457.74 425.38 354.43 319.39

Share application money - - 400.92 - -Preference share capital - - - - -

Reserves & surplus 24,914.04 21,064.75 14,226.43 11,142.80 6,113.76

Loan funds

Secured loans - - - - -

Unsecured loans 2,08,586.41 1,67,404.44 1,42,811.58 1,00,768.60 68,297.94

Total 2,33,965.67 1,88,926.93 1,57,864.31 1,12,265.83 74,731.09

Uses of funds

Fixed assets

Gross block 5,244.21 4,707.97 3,956.63 2,386.99 1,917.56

Less : revaluation reserve - - - - -Less : accumulateddepreciation

3,073.56 2,585.16 2,249.90 1,211.86 950.89

Net block 2,170.65 2,122.81 1,706.73 1,175.13 966.67

Capital work-in-progress - - - - -

Investments 70,929.37 58,607.62 58,817.55 49,393.54 30,564.80

Net current assets

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Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Current assets, loans &advances

14,601.08 5,955.15 6,356.83 4,402.69 3,605.48

Less : current liabilities &provisions

28,992.86 20,615.94 22,720.62 16,431.91 13,689.13

Total net current assets -14,391.78 -14,660.79 -16,363.79 -12,029.22 -10,083.65Miscellaneous expenses notwritten

- - - - -

Total 58,708.23 46,069.63 44,160.49 38,539.45 21,447.82

Notes:Book value of unquotedinvestments

- - - - -

Market value of quotedinvestments

- - - - -

Contingent liabilities 5,88,550.98 4,87,176.37 4,14,533.93 5,99,928.79 2,09,338.61

Number of equitysharesoutstanding (Lacs)

4652.26 4577.43 4253.84 3544.33 3193.90

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HDFC Bank Ltd.

Profit loss account

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Income

Operating income 24,393.60 19,958.76 19,770.72 12,354.41 8,303.34

Expenses

Material consumed - - - - -

Manufacturing expenses - - - - -

Personnel expenses 2,836.04 2,289.18 2,238.20 1,301.35 776.86

Selling expenses 158.95 83.12 108.68 114.73 74.88

Adminstrative expenses 4,552.96 4,936.73 4,583.86 2,247.48 1,519.32

Expenses capitalised - - - - -

Cost of sales 7,547.95 7,309.02 6,930.74 3,663.56 2,371.06

Operating profit 7,460.57 4,863.44 3,928.87 3,803.73 2,752.83

Other recurring income - 17.72 - 43.04 102.96

Adjusted PBDIT - 4,881.17 - 3,846.77 2,855.79

Financial expenses 9,385.08 7,786.30 8,911.10 4,887.12 3,179.45

Depreciation 497.41 394.39 359.91 271.72 219.60

Other write offs - - - - 241.09

Adjusted PBT -2,421.92 4,486.77 3,568.97 3,575.05 2,395.10

Tax charges 1,892.86 1,340.99 1,054.92 690.90 497.70

Adjusted PAT 3,927.22 2,944.68 2,240.75 1,589.48 1,142.50

Non recurring items -0.82 4.02 4.19 0.70 -1.05

Other non cash adjustments -2.65 -0.93 -0.59 -0.06 -0.35

Reported net profit 3,923.75 2,947.77 2,244.35 1,590.12 1,141.10

Earnigs before appropriation 8,456.55 6,403.33 4,818.98 3,522.15 2,596.12

Equity dividend 767.62 549.29 425.38 301.27 223.57

Preference dividend - - - - -

Dividend tax 124.53 91.23 72.29 51.20 38.00

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Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Retained earnings 7,564.40 5,762.81 4,321.31 3,169.68 2,334.55

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FINDINGS:

From the data analysis and interpretations of the ratios of three companies viz. Tata

Motors, Maruti Suzuki and Mahindra and Mahindra, the following findings have been

given:

The three companies were performing well till 2008 with a positive trend in the

Earnings per share. But there was a downward trend in 2009. Especially, TATA has

Witnessed a steep fall in the year 2009.

The sales trend has been upward and positive in case of all the three companies. The

Sales growth looks positive but in the year 2009, TATAs sales have declined whereas

Maruti and Mahindra have maintained the same upward positive trend.

In case of dividend per share, there were fluctuations during the period 2005- 2009.

Due to recession, the dividends per share have declined in all the three companies.

Tatas dividend has fallen drastically while Maruti stick to below 5 per share. Mahindra

has made a slight reduction from rs.11.5 per share in 2008 to rs.10 per share this year.

The return on investment has been fluctuating since 2005 and the year 2009witnessed low returns in case of all the companies amongst which TATA has the least

rate of return.

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Compared to the three companies, Mahindra has the highest ROI in 2009 .

Maruti had a stable dividend payout ratio since 2005.

TATA and Mahindra have increased their payout ratio in which Mahindra shows a higher

payout ratio.

The three companies have witnessed a low price earnings ratio in 2008 compared to

the previous years. But the ratio increased in 2009 in three companies. TATA has the

highest P/E ratio in 2009 which indicates that it is overvalued and Mahindras P/E ratio is

the lowest in 2009 which indicates that it is undervalued and there is a scope for growth

in the future.

By analyzing the current trend of Indian Economy and Automobile Industry I have found

that being a developing economy there is lot of scope for growth and this industry still

has to cross many levels so there are huge opportunities to invest in and this is being

proved as more and more foreign companies are setting up there ventures in India.

Increase in income level, increase in consumer demand, technology development,

globalization, foreign investments are few of the opportunities which the industry has to

explore for developing the economy.

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SUGGESTIONS

Reduced CRR and SLR:

The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are gradually

reduced during the economic reforms period in India. By Law in India the CRR remainsbetween 3-15% of the Net Demand and Time Liabilities. It is reduced from the earlier high

level of 15% plus incremental CRR of 10% to current 4% level. Similarly, the SLR Is also

reduced from early 38.5% to current minimum of 25% level. This has left more loanable

funds with commercial banks, solving the liquidity problem.

Deregulation of Interest Rate:

During the economics reforms period, interest rates of commercial banks were

deregulated. Banks now enjoy freedom of fixing the lower and upper limit of interest on

deposits. Interest rate slabs are reduced from Rs.20 Lakhs to just Rs. 2 Lakhs. Interest

rates on the bank loans above Rs.2 lakhs are full decontrolled. These measures have

resulted in more freedom to commercial banks in interest rate regime.

Fixing prudential Norms :

In order to induce professionalism in its operations, the RBI fixed prudential norms for

commercial banks. It includes recognition of income sources. Classification of assets,

provisions for bad debts, maintaining international standards in accounting practices, etc.

It helped banks in reducing and restructuring Non-performing assets (NPAs).

Introduction of CRAR:

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Capital to Risk Weighted Asset Ratio (CRAR) was introduced in 1992. It resulted in an

improvement in the capital position of commercial banks, all most all the banks in India

has reached the Capital Adequacy Ratio (CAR) above the statutory level of 9%.

Operational Autonomy :

During the reforms period commercial banks enjoyed the operational freedom. If a bank

satisfies the CAR then it gets freedom in opening new branches, upgrading the extension

counters, closing down existing branches and they get liberal lending norms.

Banking Diversification :

The Indian banking sector was well diversified, during the economic reforms period. Many

of the banks have stared new services and new products. Some of them have established

subsidiaries in merchant banking, mutual funds, insurance, venture capital, etc which has

led to diversified sources of income of them.

New Generation Banks :

During the reforms period many new generation banks have successfully emerged on the

financial horizon. Banks such as ICICI Bank, HDFC Bank, UTI Bank have given a big

challenge to the public sector banks leading to a greater degree of competition.

Improved Profitability and Efficiency:

During the reform period, the productivity and efficiency of many commercial banks has

improved. It has happened due to the reduced Non-performing loans, increased use of

technology, more computerization and some other relevant measures adopted by the

government.

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Investment rules:

Invest for long term in equity markets

Align your thought process with the business cycle of the company.

Set the purpose for investment.

Long term goals should be the objective of equity investment.

Disciplined investment during market volatility helps attains profits.

Planning, Knowledge and Discipline are very crucial for investment.

CONCLUSION:

The Banking sector in India has always been one of