A Study on Comparative Analysis of Share Prices in various sectors

with special reference to Alcor Systems Pvt Ltd.

Introduction
The Equity Market is also known as Indian share market or Indian stock market. The Indian market
of equities is transacted on the basis of two major stock indices, National Stock Exchange of India
Ltd. (NSE) and The Bombay Stock Exchange (BSE).In these markets the shares are traded by the
brokers authorized by exchanges and institutional investors.

Indian Equity Market at present is a lucrative field for the investors and investing in Indian stocks
are profitable for not only the long and medium-term investors, but also the position traders, short-
term swing traders and for intra-day traders. In terms of market capitalization, there are over 5000
companies in the BSE chart list. Generally the bigger companies are listed with the NSE and the
BSE, but there is the OTCEI or the Over the Counter Exchange of India, which lists the medium
and small sized companies. There is the SEBI or the Securities and Exchange Board of India which
supervises the functioning of the stock markets in India.

The growing financial capital markets of India being encouraged by domestic and foreign
investments is becoming a profitable business more with each day. If all the economic parameters
are unchanged Indian Equity Market will be conducive for the growth of private equities and this
will lead to an overall improvement in the Indian economy.

The function of the financial markets is to facilitate the transfer of funds from surplus sectors
(lenders) to deficit sectors (borrowers). Normally, households have investible funds or savings,
which they lend to borrowers in the corporate and public sectors whose requirement of funds far
exceeds their savings. A financial market consists of investors or buyers of securities, borrowers
or sellers of securities, intermediaries and regulatory bodies. Financial market does not refer to a
physical location. Formal trading rules, relationships and communication networks for originating
and trading financial securities link the participants in the market.

Stock exchange means anybody of individuals, whether incorporated or not, constituted for the
purpose of regulating or controlling the business of buying, selling or dealing in securities.

These securities include:

(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like nature in
or of any incorporated company or other body corporate;

(ii) Government securities and

(iii) Rights or interest in securities.

In general, the financial market divided into two parts, Money market and Capital market.
Securities market is an important, organized capital market where transaction of capital is
facilitated by means of direct financing using securities as a commodity. Securities market can be
divided into a primary market and secondary market.

Primary Market

The primary market is an intermittent and discrete market where the initially listed shares are
traded first time, changing hands from the listed company to the investors. It refers to the process
through which the companies, the issuers of stocks, acquire capital by offering their stocks to
investors who supply the capital. In other words primary market is that part of the capital markets
that deals with the issuance of new securities. Companies, governments or public sector institutions
can obtain funding through the sale of a new stock or bond issue. This is typically done through a
syndicate of securities dealers. The process of selling new issues to investors is called
underwriting. In the case of a new stock issue, this sale is called an initial public offering (IPO).
Dealers earn a commission that is built into the price of the security offering, though it can be
found in the prospectus.

Secondary Market

The secondary market is an on-going market, which is equipped and organized with a place,
facilities and other resources required for trading securities after their initial offering. It refers to a
specific place where securities transaction among many and unspecified persons is carried out
through intermediation of the securities firms, i.e., a licensed broker, and the exchanges, a
specialized trading organization, in accordance with the rules and regulations established by the
exchanges.

The study is aimed at ascertaining the behavior of share prices and there returns. This analyzes
the equity share fluctuations in India selected Industry. It also measures the strength of the trend
and the money involved in investing in the stocks. Funds are raised mostly through the issue
of share.

The Indian capital Market has witnessed a tremendous growth. There was an explosion of investors
during the nineties and an equity guilt emerged in statutory legislations has helped the capital
market.

An important development has been the entry of Foreign Institutional investors as participants to
the primary and secondary markets for the securities. In the past several years, investments in
developing countries have increased remarkably. Among the developing countries India has
received considerable capital inflows in recent years. The liberalization policy of the government
of India has now started fielding results and the country is poised for a big leap in the industrial
and economic growth. The economy of the country is mainly based on the development of the
corporate sectors.

Share prices are affected by the following factors. The major factors are
* Inflation
* Deflation
* Interest Rates

Inflation
It is a sustained increase in the general price level of goods and services in an economy over a
period of time. When the price level rises, each unit of currency buys fewer goods and services;
consequently, inflation reflects a reduction in the purchasing power per unit of money a loss
of real value in the medium of exchange and unit of account within the economy.

Deflation
The drop in the cost of goods and services over a period of time. Usually caused by a shrinking
supply of money or credit, or reduced spending by consumers or government. Boosts Purchasing
power of the dollar.

Interest Rates
The fee paid to a leader to borrow its money or a penalty charged for late payments usually
shown as annual percentage rate.

Need of the study

As the market move up and down, the stock prices would be determined primarily by
fundamentals of EPS and P/E ratio in the long term investment of the market. The need
arises from the market as such that the two ratios has to be focused on for the investment
in the market.
The study on fluctuations in equity market helps in understanding the behavior of equity
market. It helps the investors to be aware about deviations in the returns of the stocks.
The study helps the customers to ascertain the risk and return of the stocks. This will help
the investors i.e. individuals, files in identifying the stocks which would yield them
higher return and lesser risk.
Objectives of the study
1. To analyze the share price behavior of the SBI.
2. To predict the day to day fluctuations in the stock market using technical analysis
3. To study the price movements in the stock exchange
4. To study the current trend and strength of the SBI share price
5. To recapitulate the key findings and offer suggestions to investors.
6. To study the concept of stocks and stock market

Research Methodology

Source of study

The equity share fluctuations in India for SBI share. It also measures the strength of the trend and
the money involved in investing in the stocks. Simple moving average model is applied for
selected companies which would give the investor a sell signal or buy signal.
Primary data is collected through questionnaire.
Secondary data is collected through Magazines, Share market brokers, Share market books.
Secondary data was used for the analysis and other information is collected from print media and
internet. The data also obtained by the national stock exchange website. For the purpose of this
study the daily closing prices of 15 companies included in National stock exchange were taken
and their price movement are computed and studied.

Sampling

Since for the purpose of this analysis five sectors are taken and from the five sectors a company
is taken in each sector. Therefore the sampling used for selection of the sectors is judgmental
sampling based on the contribution of each sector to the GDP of the country. The sample
companies in each sector are selected based upon the Market capitalization of the sectors in those
categories. In this method, items for the sample are selected on certain pre-determined criteria.
The fixation of criteria and the choice of sampling may bring in personal element and introduce
basis.

Tools
The tools used for the study is excel charts and tables. The data is analyzed by using moving
average technique.
In technical analysis the moving average is one of key trend lines that are plot on a chart
reflecting the closing prices over weeks. They smooth a data series and make it easier to spot
trends, something that is especially helpful in volatile markets. They also form the building
blocks for many other technical indicators and overlays. When the moving average moves above
or below the daily chart, it may generate a buy or sell signal.

A moving average is an indicator that shows the average value a security's price over a period of
time. When calculating a moving average, a mathematical analysis of the security's average
value over a pre-determined time period is made. As the securities price changes, its average
price moves up or down. We can interpret a moving average by comparing the relationship
between the moving averages of the security's price with the security's price itself.

Buy signal: When the security's price rises above its moving average
Sell Signal: When the security's price falls below its moving average.

Money Flow Index

MFI is a more rigid indicator in its volume weighted, and is therefore a good measure of the
strength of money flowing in and out of a security. It compares "Positive money flow" to create
an indicator that can be compared to price in order to identify the strength or weakness of a
trend. The MFI is measured on a 0 100 scale and is often calculated using a 14 day period. The
MFI compares the ratio of "positive" money flow and "negative" money flow, if typical price
today is greater than yesterday, then it is considered positive money. For a 14 day average. The
sum of all positive money from those 14 days is the positive money flow. The MFI is based on
the ratio of positive/negative money flow (money ratio)

Typical Price = ((Day High +Day Low + Day close)/3)

Money Flow = (Typical price) x (volume)
Money Ratio = (Positive Money Flow/Negative Money Flow)
Money Flow Index = 100 (100) (100/ 1+Money Ratio)

Relative Strength Index

The Relative strength Index (RSI) is an extremely useful and popular momentum oscillator. The
RSI compares the magnitude of a stock's recent gains to the magnitude of its recent losses and
returns that information into a number that ranges from 0 to 100. It takes a single parameter, the
number of time periods to use in the calculation.

Average gain = Total of gains during the past 14 periods/114

Average Loss = Total of Losses during the past 14 periods /114
RS = Average Gain/Average Loss
RSI = 100- (100/(1 + RS))

Period of study

The period of study is for 45 days.

Scope of the Study

1. Is to understand the stock market which will facilitate allocation of financial sources to the
most profitable investment opportunity.
2. The price behavior of stock and its returns
3. How the investors make appropriate investment decisions.
4. The fluctuations of stock is due to several economic and non-economic factors.
5. The study is aimed at ascertaining the behavior of share and its returns.
6. The study on fluctuations in equity market helps in understanding the behavior of equity
market.
7. To focus on the moving average model for the buy and sell signal to the investors.

Limitations of Study

1. The study is constrained to banking sector only.

2. The time period is limited and it is difficult to expect price behavior of the scrip with
in this period.
3. The respondents gave different answers and is difficult to predict the price behavior
of the scrip
4. The price of a scrip depends on many factors.
5. The price of the scrip depends on the market rumors.

Questionnaire
Name: - ___________________________ Age: - ___________________________

Contact No:-_______________________ Email Id: - _______________________.

1. What is your occupation?

a) Service b) Business c) Student d) Other

2. What is your Annual Income Bracket?

a) Below 1,20,000 b) 1,20,000 - 3,00,000
c) 3,00,000-5,00,000 d)Above 5,00,0003.

3. Your Educational Qualification? ________________________

 4. What is your marital Status?

a) Single b) Married c) Divorced

5. How many dependents you have?

Mention numbers ____________

6. Under which category your present house comes?

a) Ancestral b) Owned c) Rent d) Employers

7. Do you have any vehicle, tick appropriate?

a) Car b) Two Wheeler c) Others d) None

8. Are you investing into Equity Market?

a) Yes b) No

9. If Yes, What type of investor are you?

a)Short Term b) Mid Term
c) Long Term d) Mix of any Two.

10. What percentage of your expenditure from monthly Income?

a) 25% - 40% b) 40% - 60%
c) 60% d) 80%.

11. What attracts you to Equity Market?

a) High Return b) Speculation

c) Dividend d) Liquidity of invested Fund.

12. What sources of funds do you utilize to invest or trade in the Stock market?
a) Saving/ Personal b) Loans c) Pledging

13. What investment option are you considering?

a) Stock b) Mutual Fund c) Small Savings d) Gold/ Silver (Commodity)

e) Real Estate f) any combination of above, please mention __________________.

14. Are you insured?

a) Yes b) No.

15. If yes, what is the coverage amount of your policy? ________________

16. Your investment in Mutual Fund?

a) Yes b) No

17. If yes, please mention plan ___