PROJECT REPORT ON INVESTMENT IN EQUITIES CONDUCTED AT

ITI FINANCIAL SERVICES LIMITED

BY D.SUDHA DEEPTHI ROLL.NO: 2129-09-672-017 Submitted in partial fulfillment of award of Degree of

MASTER OF BUSINESS ADMINISTRATION

INFORMATION AND RESEARCH INSTITUTE OF AURORA, MOOSARAMBAGH,HYDERABAD. 2009-2011.

CERTIFICATE

This is to certify that the project entitled INVESTMENT IN EQUITIES IN ITI FINANCIAL SERVICES LIMITED submitted to the Osmania University in partial fulfillment for the award of degree of Master of Business Administration has been carried out by MR K A JAYACHANDRA, Hall-Ticket Number 2129-09-672017, who is a bonafide student of Information and Research Institute of AURORA ,Moosarambagh, Hyderabad for the academic year 2009-11.

HEAD OF THE DEPARTMENT PRINCIPAL

CERTIFICATE
This is to certify that the project report titled INVESTMENT IN EQUITIES IN

ITI FINANCIAL SERVICES LIMITED submitted in partial fulfillment

for the award of MBA Programme of Department of Business Management, Osmania University, Hyderabad, was carried out by MR K A JAYACHANDRA, under my guidance. This has not been submitted to any other university or institution for the award of any degree / diploma / certificate.

Name and Address of the Guide

Signature of the Guide

DECLARATION
I hereby declare that this project report titled INVESTMENT IN EQUITIES IN ITI FINANCIAL SERVICES LIMITED submitted by me to the Department of Business Management, Osmania University, 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.

Place: Date:

MR K A JAYACHANDRA)

ACKNOWLEDGEMENT

I express my gratitude to Mr. Shiva Kumar for giving me this opportunity to carry out the project work on INVESTMENT IN EQUITIES in ITI Financial services limited.

I also express my sincere thanks to the Staff Of ITI Financial services limited. who were of ready help in answering my various quires related to the project work.

It is with great pleasure that I Express my gratitude to Ms.Soumya, under whose inspiring guidance and advice this study has been carried out.

MR K A JAYACHANDRA 5

CONTENTS

Chapter no I Introduction Objectives Need of the study

Name of the concept

Page no 1-9 10 10 10 11 12 13- 44

Scope of the study Research Methodology Limitations II Review of literature 6

III

Industry profile Roles and responsibilities Key learnings

45-51 51 52 53-71 72-73 74-75 76-78 79-80

IV V VI VII

Data analysis and interpretation Summary Suggestions Conclusion Bibliography

Introduction

INTRODUCTION
Investment management once seemed a simple process. Well-heeled investors would hold portfolios composed of stocks and bonds of blue chip industrial companies, treasury bonds, notes and bills. The choices available to less well-off investors were much more limited, confirmed primarily to passbook savings accounts.

If the investment environment can be thought of as an ice cream parlor, then the customers of past decades were offered only chocolate and vanilla. Mirroring the diversity of modern society, the investment ice cream parlor now makes available a myriad of flavors to the investing public. Investors face a dizzying array of choices. The ability to purchase different securities has become both less expensive and more convenient with the advent of advanced communications and computer networks, along with the proliferating market for mutual funds that has developed to serve large or small investors. Investment environment encompasses the kinds of marketable securities that exist and where and how they are bought and sold. Investment process is concerned with how an investor should proceed in making decisions about what marketable securities to invest in, how extensive the investments should be and when the investments should made.

Investment means the sacrifice of current rupees for future rupees. Two different attributes are involved time and risk. The sacrifice takes place in the present and is certain. The reward comes later and the magnitude is uncertain. In some cases, risk is the dominant attribute. These are two types of investments. They are:

1) Real Investments 2) Financial Investments 9

Real investments involve some kind of tangible assets such as land, machinery, factories. Financial investments involve contracts written on pieces of paper such as common stocks and bonds. Investment in securities such as shares, debentures and bonds is profitable as well as exciting, but it involves great deal of risk. Investing in financial securities is considered to be one of the best avenues for investing ones savings while it is acknowledged to be one of the most risky avenues of investment. Even Indian government wants to encourage people in rural areas to invest in equities. This will help the markets to stabilize by tapping the rural areas and decreases the dependency on foreign institutional investors.

NEED FOR THE STUDY

PURPOSE OF THE STUDY
The purpose of the study is to know about stock markets in India, how they work, fundamental requirements before entering the stock market, how to enter the

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stock market, market design, stock selection, when to buy or sell a stock, how to invest and knowing about market intermediaries.

OBJECTIVES OF THE STUDY

The objective of the study is to look into the scientific approach for selecting a stock where Fundamental Analysis and Technical Analysis are looked into. For that purpose the most happening banking sector was taken for study and from that sector, two stocks were picked up and analyzed. The study deals with analysis of performance of the company, share price fluctuations and comparing it with another company from same sector. The purpose of the study is to locate a stock which gives good returns with minimum risk.

SCOPE OF THE STUDY

For the purpose of study, banking sector is selected. ICICI-(Industrial Credit and Investment Corporation of India) and SBI-(STATE BANK OF INDIA) are the two companies that are taken for analysis.

RESEARCH METHODLOGY

The following are the steps involved in the study: 11

1. SELECTION OF THE SCRIP:

The scrip selection is done on random and the scrip selected is ICICI bank and (SBI)-State bank of india.

2. DATA COLLECTION :

The data of the ICICI bank and SBI have been collected from Business line and the internet. The data consist of the November 1st to Nov 30th.

3.ANALYSIS: The analysis consists of the tabulation of the data assessing the profitability positions of the equity buyer, representing the data with graphs and making the interpretation using data.

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LIMITATIONS OF THE STUDY

The study is confined to only one sector. All the limitations of Fundamental Analysis, Technical Analysis are applicable to the study. The factors which affect the markets and intangible are not considered. Risk perception is considered to be moderate which may not be acceptable to all. The data for the study considered is of past two years, so analysis is restricted to that period only. In the application of Dow Theory, only daily price fluctuations were considered due to time constraint.

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INTRODUCTION TO STOCKS
The first step for you to understand the stock market is to understand stocks. A share of stock is the smallest unit of ownership in a company. If you own a share of a companys stock, you are a part owner of the company. You have the right to vote on members of the board of directors and other important matters before the company. If the company distributes profits to shareholders, you will likely receive a proportionate share. One of the unique features of stock ownership is the notion of limited liability. If the company loses a lawsuit and must pay a huge judgment, the worse that can happen is your stock becomes worthless. The creditors cant come after your personal assets. Thats necessarily true in private-held companies. There are two types of stock: Common stock Preferred stock Most of the stock held by individuals is common stock. Common Stock: Common stock represents the majority of stock held by the public. It has voting rights, along with the right to share in dividends.

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Preferred Stock: Despite its name, preferred stock has fewer rights than common stock, except in one important are dividends. Companies that issue preferred stocks usually pay consistent dividends and preferred stock has first call on dividends over common stock. Investors buy preferred stock for its current income from dividends, so look for companies that make big profits to use preferred stock to return some of those profits via dividends.

DEMAT ACCOUNT
What is Demat account and why it is required? Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed by the Government of India in 1992 with its head office at Mumbai. Its one of the function is helping the business in stock exchanges and any other securities markets. Demat (short form of Dematerialization) is the process by which an investor can get stocks (also called as physical certificates) converted into electronic form maintained in an account with the Depository Participant (DP). DP could be organizations involved in the business of providing financial services like banks, brokers, financial institutions etc. DPs are like agents of Depository.

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Depository is an organization responsible to maintain investor's securities (securities can be stocks or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.) Investors wishing to open Demat account has to go DP and open the account. Opening the Demat account is as simple as opening the bank account with any bank. As we need bank account to save our money, make cheque payments etc, likewise we need to open a demat account if we want to buy or sell stocks. All stocks what we possess will show in our demat account. So we don't have to possess any physical certificates. They are all held electronically in our demat account. As we buy and sell the stocks, accordingly our stocks will get adjusted in our account. Is a demat account must? The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell stocks. So a demat account is a must for trading and investing. How to start to open a Demat account? We have to approach a DP to open a Demat account. Most banks are DP participants so we may approach them. A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells stocks on his behalf and also on behalf of his customers. Following are the documents required to open Demat account. When we approach any DP, we will be guided through the formalities of opening an account. The DP will ask to provide some documents as proof of our 16

identity and address. Below is a list but we may not require all of them. PAN card, Voter's ID, Passport, Ration card, Drivers license, Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc.

Do we need any stocks to open a Demat account? No. We need not need any stocks to open a demat account. A demat account can be opened with no balance of stocks. And there is no minimum balance to be maintained either. You can have a zero balance in your account. How much it cost to open a Demat account? The charges for account opening, annual account maintenance fees and transaction charges vary between various DPs. Finally After successfully opening the demat account, the DP will allot Beneficial Owner Identification Number, which will be needed to mention for all our future transactions. If we want to sell our stocks, we need to place an order with our broker and give a 'Delivery Instruction' to your DP. The DP will debit our account with the number of stocks sold. We will receive the payment from our broker. If we want to buy stocks, inform our broker about our Depository Account Number, so that the stocks bought are credited into our account. Points to remember while opening online account a) Make multiple enquiries and try getting low brokerage trading and dematting account. b) Also discuss about the margin they provide for day trading. c) Discuss about fund transfer. The fund transfer should be reliable and easy. Fund transfer from our bank account to trading account and visa versa. Some online share trading account has integrated savings account which makes easy for us to transfer 17

funds from our saving account to trading account. d) Very important is about service they provide, the research calls, intraday or daily trading tips. e) Also enquire about their services charges and any other hidden charges if any. f) And also see how reliable and easy is to contact them in case if any emergency.

Literature Review
Investment process Fundamental analysis Technical analysis

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INVESTMENT PROCESS
Investment process describes how an investor should go about making decisions with regard to what marketable securities to invest in, how extensive the investment should be and when the investment should be made. An eight-step procedure for making these decisions forms the basis for the investment process. 1) What is Investment 2) Understanding stocks 3) Finding a broker 4) Evaluation of stocks 5) Research tools

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6) Investing strategy 7) Investing technique 8) What moves the market

Step 1: What is investment? Investing is making your money work for you without taking any more risks than necessary for your comfort. Investing is the proactive use of your money to make more money. How to calculate Risk Premium? Risk premium is what a stock should return over a risk-free investment. It is your reward for taking a risk with your money. Weak demand is the important factor in stock pricing: Despite high crude oil prices, its weak demand for gasoline that holds back oil stock prices. Supply and demand is an important factor in determining price of stocks. Corrections are natural part of stock market cycle. Dont be too conservative with stocks in retirement: There is a danger you can be too conservative in your investment strategy as you approach retirement dont back off stocks too soon.

Step 2: Understanding stocks Stocks are the basic units of ownership in publicly traded companies. There are two basic types of stocks.

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a. Common Stock: Common stock represents the majority of stock held by the public. It has voting rights, along with the right to share in dividends. b. Preferred Stock: Companies that issue preferred stocks usually pay consistent dividends and preferred stock has first call on dividends over common stock. Bull and Bear stock markets are the two sides of same coin: Bull and bear markets go together and are necessary for an efficient market. Poll results show confidence in stocks: The results of a poll on where the sensex be at the end of 2008 show stock investors are positive.

Step 3: Finding a Broker To decide which type of broker is right for you, you need to use these resources to find the brokerage arrangement that best fits your needs. Thirteen of the top online stock trading sites offer investors a wide variety of services including research and advice.

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 Brokers offer different levels of service. A broker fills in the gaps in knowledge and experience. Broker explains what types of accounts are available and how to open an account. Financial advisers can map a blue print that will get you from where you are to your financial goals. Financial advisers come in a variety of flavors. Finding the one right for you involves knowing how each is compensated and what they do. The new year poses many challenges for stocks, including high oil prices, the credit crisis, and a potential recession. Stock prices are driven by the relationship between buyers and sellers. Attractive stocks have more buyers than sellers, which drives up prices, while less attractive stocks feel the reverse effect. Step 4: Evaluating stocks for investment Fundamental analysis relies on several tools to give investors an accurate picture of the financial health of a company and how the market values the stock. The following are the most popular tools of fundamental analysis. They focus on earnings, growth, and value in the market. a) Earnings per Share EPS b) Price to Earnings Ratio P/E c) Projected Earnings Growth PEG d) Price to Sales P/S e) Price to Book P/B f) Dividend Payout Ratio

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g) Dividend Yield h) Book Value i) Return on Equity

Step 5: Research Tools The internet is a gold mine of information, but youll need some tools to get to the nuggets. Research tools make the job easier if you know where to find them and how to use them. The better stock screens offer similar characteristics that give you greater flexibility when looking for investment candidates and eliminate other companies. Stock screens will save time and help to build a thoughtful portfolio by focusing on those companies that meet your investing requirements. Stock screens can help any investor make better stock selections by reducing the number of companies to research. Dividend ratios can tell much about a stock and its future payout prospects. One of the best sources of information on companies is free and as near as your computer.

Step 6: Investing Strategies What strategy to use as an investor? The different investment strategies and how to develop personal investment strategy is explained below: When and how to sell a winning stock? 23

Knowing when and how to sell a winning stock is as important as knowing when to sell a losing stock. Dont be too conservative with stocks: Following a too conservative investment strategy in retirement may not protect you from outliving your money. Bottom-up investors focus on strong companies and believe they will perform well in any market conditions. Top-down investing looks at big picture before narrowing in on individual stocks. Step 7: Investing Techniques Investing techniques offer powerful ways for investors to execute their strategies. These techniques provide a structure for investing. After-hours trading of stocks may seem like a great idea, but it is full of risks for the average investor. Diversify stocks by industry to avoid across-the-board losses on bad economic news. Investments should not be correlated to achieve diversity. Investing with expectations of high returns is not investing but gambling. Dont try to double or triple your money quickly in the stock market youll be disappointed and perhaps poorer.

Step 8: What moves the market?

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What makes the market rise or fall? Sometimes it seems to have a mind of its own that reacts poorly to good news and with enthusiasm to bad news. One should learn the factors that are the major influences on the markets and how to use this information.

Basic steps in how stock trading works

Trade = Buy or Sell To trade means to buy and sell in the jargon of the financial markets. How a system that can accommodate one billion shares trading in a single day works is a mystery to most people. No doubt, our financial markets are marvels of technological efficiency. We dont need to know all of the technical details of how to buy or sell stocks, however it is important to have a basic understanding of how the markets work.

Important terms in stock market and in stock trading Open - The first price at which the stock opens when market opens in the morning. High - The stock price reached at the highest level in a day. Low - The stock price reached the lowest level in a day. Close - The stock price at which it remains after the end of market timings or the final price of the stock when the market closes for a day. Volume - Volume is nothing but quantity. Bid - The Buying price is called as Bid price. 25

Offer - The selling price is called offer price. Bid Quantity - The total number of stocks available for buying is called Bid Quantity. Offer Quantity - The total number of stocks available for selling is called Offer Quantity. Buying and selling of stocks - Buy is also called as demand or bid and selling is also called as supply or offer. First selling and then buying (this only happens in day trading) is called as shorting of stocks or short sell. Stock Trading - Buying and Selling of stocks is called stock trading. Transaction - One complete cycle of buying and selling of stocks is called One Transaction. Squaring off - This term is used to complete one transaction. Means if we buy then we have to sell (means square-off) and if we sell then we have to buy (means squareoff). Limit Order - In limit order the buying or selling price has to be mentioned and when the stock price comes to that price then our order will get executed with the mentioned price by us. Market Order- When we put buy or sell price at market rate then the price get executes at the current rate of market. The market order get immediately executed at the current available price.

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Success Mantra
There are two steps to achieve success in the stock market. 1) How not to loose When you learn what to do and what not to do in order to lose nothing means you have won the half battle. Only then you can learn how to gain or what to do in order to win. A new investor should do paper trading in order to get the market knowledge before actually entering into the market. 2) How to gain How to gain requires deep understanding about the market trends and fluctuations. A new investor can take the route of mutual fund. The average person generally falls into one of two categories. The first believe investing is a form of gambling; they are certain that if you invest, you will more than likely end up losing your money. The second category consists of those who know they should invest for the long-run, but dont know where to begin.

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Their characteristics. feel investing in some sort of black-magic that only a few people hold the key to they leave their financial decisions up to professionals cannot tell you why they own a particular stock / mutual fund. investment style is blind faith or limited to this stock is going up. We should but it. This group is in far more danger than the first. They invest like the masses and then wonder why their results are mediocre [or in some cases, devastating.

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FUNDAMENTAL ANALYSIS
To determine the intrinsic value of an equity share, the security analyst must forecast the earnings and dividends expected from the stock and choose a discount rate which reflects the riskiness of the stock. This is what is involved in fundamental analysis, perhaps the most popular method used by investment professionals. The earnings potential and riskiness of a firm are linked to the prospects of the industry to which it belongs. The prospects of various industries, in turn, are largely influenced by the developments in the macro economy. Researchers have found that stock price changes can be attributed to the following factors: Economy-wide factors: 30-35 percent Industry factors: 15-20 percent Company factors: 30-35 percent Others factors: 15-25 percent Based on the above evidence, a commonly advocated procedure of fundamental analysis involves a three-step examination, which calls for: 1) Understanding of the macro-economic environment and developments. 29

2) Analyzing the prospects of the industry to which the firm belongs. 3) Assessing the projected performance of the company and the intrinsic value of its shares.

A. MACRO-ECONOMIC ANALYSIS
The macro-economy is the overall economic environment in which all firms operate. The key variables commonly used to describe the state of the macroeconomy are: a) Growth Rate of Gross Domestic Product (GDP) The gross domestic product (GDP) is a measure of the total production of final goods and services in the economy during a specified period usually a year. The growth rate of GDP is the most important indicator of the performance of the economy. Firm estimates of GDP growth rate are available with a time lag of one to two years or so, but preliminary estimates are made from time to time by various bodies like CMIE, NCAER, and the RBI. The higher the growth rate of GDP, other things being equal, the more favorable it is for the stock market. b) Industrial Growth Rate

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The GDP growth rate represents the average of the growth rates of the three principal sectors of the economy, viz. the services sector, the industrial sector and the agricultural sector. Publicly listed companies play a major role in the industrial sector but only a minor role in the services sector and the agricultural sector. Hence stock market analysts focus more on the industrial sector. They look at the overall industrial growth rate as well as the growth rates of different industries. The higher the growth rate of the industrial sector, other things being equal, the more favorable it is for the stock market.

c) Agriculture and Monsoons Agriculture accounts for about a quarter of the Indian economy and has important linkages, direct and indirect, with industry. Companies using agricultural raw materials as inputs or supplying inputs to agriculture are directly affected by the changes in agricultural production. Other companies also tend to be affected due to indirect linkages. A spell of good monsoons imparts dynamism to the industrial sector and buoyancy to the stock market. Likewise, a streak of bad monsoons casts its shadow over the industrial sector and the stock market. d) Savings and Investment

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The demand for corporate securities has an important bearing on stock price movements. So investment analysts should know what the level of investment in the economy is and what proportion of that investment is directed toward the capital market. The level of investment in the economy is equal to: Domestic savings + Inflow of foreign capital Investment made abroad. In India, as in many other countries, the domestic savings is the dominant component in this expression. In addition to knowing what the savings are we should also know how the same are allocated over various instruments like equities, bonds, bank deposits, small savings schemes, and bullion. Other things being equal, the higher the level of savings and investments and the greater the allocation of the same to equities, the more favorable it is for the stock market.

e) Government Budget and Deficit Governments play an important role in most economies, including the Indian economy. The central budget as well as the state budgets prepared annually provides information on revenues, expenditures, and deficit or surplus. In India, governmental revenues come more from indirect taxes such as excise duty and customs duty and less from direct taxes such as income tax. The bulk of the governmental expenditures goes toward administration, interest payment, defence, and subsidies, leaving very little for public investment. The excess of governmental 32

expenditures over governmental revenues represents the deficit. While there are several measures of deficit, the most popular measure is the fiscal deficit. The fiscal deficit has to be financed with government a borrowing which is done in three ways. First, the government can borrow from the Reserve Bank of India. This leads to increase in money supply which has an inflationary impact on the economy. Second, the government can resort to borrowing in domestic capital market. This tends to push up domestic interest rates and crowd out private sector investment. Third, the government may borrow from abroad. Investment analysts examine the government budget to assess how it is likely to impact on the stock market.

f) Money Supply There are several definitions of money. The two more commonly used ones are: M1 = currency with public + demand deposits with bank + other deposits with RBI. M3 = M1 + time deposits with banks When we talk of money supply, we usually refer to M3. The growth rate of M3 in India has been around 15 percent per year. This growth can be explained by three factors in the main: growth in the real economy, monetization of a portion of 33

deficit financing and financial deepening of the economy. Monetization of a portion of deficit financing means the RBI buys the securities issued by the government. g) Price Level and Inflation The price level measures the degree to which the nominal rate of growth in GDP is attributable to the factor of inflation. The effect of inflation on the corporate sector tends to be uneven. While certain industries may benefit, others tends to suffer. Industries that enjoy a strong market for their products and which do not come under the purview of price control may benefit. On the whole, it appears that a mild level of inflation is good for the stock market. h) Interest Rate Interest rates vary with maturity, default risk, inflation rate, and productivity of capital and so on. The interest rates on money market instruments which are virtually risk free tend to be the lowest. Long dated government securities generally carry slightly higher interest rates. Corporate debentures which have some default risk associated with them carry still higher interest rates. A rise in interest rates depresses corporate profitability and also leads to an increase in the discount rate applied by equity investors, both of which have an adverse impact on stock prices. i) Foreign Investment Foreign investment in India comes in two forms: foreign direct investment and foreign portfolio investment. The former represents investment for setting up new projects and hence is long term in nature; the latter is in the form of purchase of outstanding securities in the capital market and hence can be reversed easily. 34

j) Infrastructural Facilities and Arrangements Infrastructural facilities and arrangements significantly influence industrial performance. More specifically, the following are important: Adequate and regular supply of electric power at a reasonable tariff. A well-developed transportation and communication system. An assured supply of basic industrial raw materials like steel, coal, petroleum products and cement. Responsive financial support for fixed assets and working capital. a) Sentiments The sentiments of consumers and businessmen can have an important bearing on economic performance. Higher consumer confidence leads to higher expenditure on big ticket items. Higher business confidence gets translated into greater business investment that has a stimulating effect on the economy. Thus, sentiments influence consumption and investment decisions and have a bearing on the aggregate demand for goods and services.

A. INDUSTRY ANALYSIS
The objective of industry analysis is to assess the prospects of various industrial groupings. It is almost impossible to forecast exactly which industrial groupings will appreciate the most. Yet careful analysis can suggest which industries have a brighter future than others and which industries are plagued with problems that are likely to persist for a while. 35

Industrial analysis is divided into three parts namely, I. Industry life cycle analysis II.Structure and characteristics of an industry III.Profit potential of industries: Porter model.

I. Industry Life Cycle Analysis Many industrial economists believe that the development of almost every industry may be analyzed in terms of a life cycle with four well-defined stages: a. Pioneering Stage b. Rapid Growth Stage c. Maturity and Stabilization Stage d. Decline Stage a. Pioneering Stage: During this stage, the technology and or the product is relatively new. Lured by promising prospects, many entrepreneurs enter this field. As a result, there is keen, and often chaotic, competition. Only a few entrants may survive this stage. b. Rapid Growth Stage: Once the period of chaotic developments is over, the rapid growth stage arise. Firms which survive the intense competition of the pioneering stage, witness significant expansion in their sales and profits. c. Maturity and Stabilization Stage: During this stage, when the industry is more or less fully developed, its growth rate is comparable to that of the economy as a whole.

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d. Decline Stage: With the satiation of demand, encroachment of new products, and changes in consumer preferences, the industry enters the decline stage, relative to the economy as a whole. In this stage, the industry may grow slightly during prosperous periods, stagnate during normal periods and decline during recessionary periods. The experience of most industries suggests that they go through the 4 phases of the industry life cycle though there are considerable variations in terms of the relative duration of various stages and the rates of growth during these stages. I. Structure and Characteristics of an Industry Since each industry is unique, a systematic study of its specific features and characteristics must be an integral part of the investment decision process. Industry analysis should focus on the following: a. Structure of the industry and nature of competition: The number of the firms in the industry and market share of the top few firms in the industry. Licensing policy of the government. Entry barriers, if any. Pricing policies of the firm. Differentiation among products. Competition from foreign firms. b. Nature and prospects of demand: Major customers and their requirements. Key determinants of demand. 37

 Degree of cyclicality in demand. Expected rate of growth in the foreseeable future. c. Cost, efficiency and profitability: Proportions of the key cost elements raw materials, labor, utilities and fuel. Productivity of labor. Turnover of inventory, receivables and fixed assets. Control over prices of outputs and inputs. Gross profit, operating profit and net profit margins. Return on assets, earning power and return on equity.

d. Technology and research: Degree of technological stability. Important technological changes on the horizon and their implications. Research and development outlays as a percentage of industry sales. Proportion of sales growth attributable to new products.

II.Profit Potential of Industries: Porter Model Michael Porter has argued that the profit potential of an industry depends on the combined strength of the following five basic competitive forces: 38

a. Threat of new entrants b. Rivalry among the existing firms c. Pressure from substitute products d. Bargaining power of buyers e. Bargaining power of sellers Following figure shows the forces that drive competition and determine industry profit potential:

a. Threat of new entrance New entrants add capacity, inflate costs, push prices down, and reduce profitability. If an industry faces the threat of new entrants, its profit potential would be limited. The threat of new entrants is low if the entry barriers confer an advantage on existing firms and deter new entrants. Entry barriers are high when: The new entrants have to invest substantial resources to enter the industry. Economies of scale are enjoyed by the industry. Existing firms control the distribution channels, benefit from product differentiation in the form of brand image and customer loyalty. Switching costs these are essentially onetime cost of switching from the products of one supplier to another-are high.

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a. Rivalry between existing firms Firms in an industry compete on the basis of price quality, promotion, service, warranties, and so on if the rivalry between the firms in an industry is strong, competitive moves and counter moves dampen the average profitability of the industry. The intensity of rivalry in an industry tends to be high when: The number of competitors in an industry is large. At least a few firms are relatively balanced and capable of engaging in a sustained competitive battle. The industry growth is sluggish, prodding firms to strive for a higher market share. There is chronic over capacity in the industry. The industry confronts high exit barriers.

a. Pressure from substitute products All firms in an industry face competition from industries producing substitute products. Substitute products may limit a profit potential of the industry by imposing a ceiling on the prices that can be charged by the firms in the industry. The threat from substitute products is high when: The price- performance trade off offered by the substitute products is attractive. The switching costs for prospective buyers are minimal The substitute products are being produced by industries earning superior profits.

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a.

Bargaining power of buyers Buyers are competitive force. They can bargain for price cut, ask for superior

quality and better service and induce rivalry among competitors. If they are powerful, they can depress the profitability of the supplier industry. The bargaining power of a buyer group is high when: Its purchases are large relative to the sales of the seller. Its switching costs are low. It poses a strong threat of back ward integration.

a. Bargaining power of suppliers: Suppliers can exert a competitive force in an industry as they can raise prices, lower quality and curtail the range of free services they provide. Suppliers have strong bargaining power when; There is hardly any viable substitute for the products supplied. Few suppliers dominate and the supplier group is more concentrated than the buyer group. The switching cost for the buyers is high. Suppliers do present a real threat of forward integration. 41

A. COMPANY ANALYSIS
Company analysis is concerned with fundamental analysis of equity shares. Fundamental analysts take two somewhat different approaches in their search for mispriced securities. The first approach involves estimating the intrinsic value and comparing the same with the prevailing market price to determine whether the security is underpriced or fairly priced or overpriced. The second approach involves estimating a securitys expected return, given its current price and 42

intrinsic value, and then comparing it with the appropriate return for securities with similar characteristics. Company analysis is the last leg in the economy-industry-company analysis sequence. It may be organized into two parts (a) a study of financials, and (b) a study of other factors. Investment analysts start with a historical analysis of earning (and dividends), growth, risk, and valuation and use company analysis as a foundation for developing the forecasts required for estimating the intrinsic value.

TECHNICAL ANALYSIS
Technical analysis is radically different from fundamental analysis. While the fundamental analyst believes that the market is 90 percent logical and 10 percent psychological, the technical analyst assumes that it is 90 percent psychological and 10 percent logical. Technical analysts dont evaluate a large number of fundamental factors relating to the company, the industry and the economy. Instead, they analyze internal market data with the help of charts and graphs. Subscribing to the castles-inthe-air approach, they view the investment game as an exercise in anticipating the behavior of market participants. They look at charts to understand what the market participants have been doing and believe that this provides a basis for predicting future behavior. The technical approach is the oldest approach to equity investment, dating back to the late 19th century. It continues to flourish in modern times as well. As an 43

investor, we will often encounter technical analysis because newspapers cover it, television programmes routinely call technical experts for their comments, and investment advisory services circulate technical reports. Technical analysis can be applied to commodities, currencies, bonds, and equity stocks, our studies are restricted to equity stocks. Technical analysis involves a study of market generated data like prices and volumes to determine the future direction of price movement. Martin J. Pring explains: The technical approach to investing is essentially a reflection of the idea that prices move in trends which are determined by the changing attitudes of investors toward a variety of economic, monetary, political and psychological forces. The art of technical analysis--for it is artis to identify trend changes at an early stage and to maintain an investment posture until the weight of the evidence indicates that the trend has been reversed.

THE DOW THEORY

Originally proposed in the late nineteenth century by Charles H. Dow, the editor of the Wall Street Journal, the Dow Theory is perhaps the oldest and best known theory of technical analysis. In the words of Charles Dow: 44

The market is always considered as having three movements, all going at the same time. The first is the narrow movement from day to day. The second is the short swing, running from two weeks to a month or more; the third is the main movement, covering at least four years in its duration. Proponents of the Dow Theory refer to the three movements as: (a) daily fluctuations that are random day-to-day wiggles; (b) secondary movements or corrections that may last for a few weeks to some months; and (c) primary trends representing bull and bear phases of the market. An upward primary trend represents a bull market, whereas a downward primary trend represents a bear market. A major upward move is said to occur when the high point of each rally is higher than the low point of the preceding decline. Likewise, a major downward move is said to occur when the high point of each rally is lower than the low point of the preceding decline. The secondary movements represent technical correction. They represent adjustments to the excesses that may have occurred in the primary movements. These movements are considered quite significant in the application of the Dow Theory. The daily fluctuations are considered to be minor significance. Even zealous technical analysts do not usually try to forecast day-to-day movements in the market.

Bar and Line Charts The bar chart, one of the simplest and most commonly used tool of technical analysis, depicts the daily price range along with the closing price. In addition, it may show the daily volume of transactions. The upper end of each bar represents the days 45

highest price and the lower end the days lowest price. The small cross across the bar marks the days closing price. Technical analysts believe that certain formations or patterns observed on the bar char or line chart have predictive value. The more important formations and their indications are described below: Head and Shoulders Top (HST) Pattern: As the name suggests, the HST formation has a left shoulder, a head, and a right shoulder. The HST formation represents a bearish development. It the price falls below the neckline (the line drawn tangentially to the left and right shoulders), a price decline is expected. Hence, it is a signal to sell. Inverse Head and Shoulders Top (IHST) Pattern: As the name indicates, the IHST formation is the inverse of the HST formation. Hence, it reflects a bullish development. It the price rises above the neck line, a price rise is expected. Hence, it is a signal to buy.

Triangle or Coil Formation: This formation represents a pattern of uncertainty. Hence, it is difficult to predict which way the price will break out. Flags and Pennants Formation: It typically signifies a pause after which the previous price trend is likely to continue. Double Top Formation: It represents a bearish development, signaling that the price is expected to fall. Double Bottom Formation: It reflects a bullish development, signaling that the price is expected to rise. Point and Figure Chart

46

More complex than a bar chart, a point and figure chart (PFC) has the following features:

47

Company Profile

48

COMPANY PROFILE

ITIFSL-(INVESTMENT TRUST OF INDIA) is emerging as one of the top most wealth management companies in India with a daily turnover of over 200 crores and 116 branches spread all over the country. ITIFSL, originally promoted by the Investment Trust of India, is now a part of the Sharyans and Inga Group. The Sharyans Group has an impressive portfolio of businesses under its fold which mainly fall under the real estate and financial services categories. The prominent subsidiaries of this Group are Prebone Yamane (Countrys largest debt broking company), Intime Spectrum (Indias largest Registry & Transfer Agents), and Collin Stewarts India Private Limited (Portfolio Management Services & Research along with institutional broking operations for Collin Stewarts which is the largest wealth management company in the UK). Under the guidance of the Sharyans and Inga Group, ITIFSL will soon touch the pinnacles of success in the financial services industry by being a dominant force in the broking as well as the distribution arena. With an unblemished and reputed track record, ITIFSL is all set become an imposing wealth management firm in the country by giving the best to its clients as well as stakeholders. 49

ITI FSL has been set up to engage in Stock Broking Institutional Broking Derivatives Depository Services Distribution of Investment Products Distribution of Insurance Commodities Broking Headquartered in Chennai, ITI FSL has a growing network of offices across

several states to ensure easy accessibility to our clients wherever they are. ITIFSL has over 116 Branch Offices spread across the country to offer better reach and service to the investor. The company currently marks its presence in the following regions: Andhra Pradesh Delhi Karnataka Maharashtra Madhya Pradesh Tamil Nadu West Bengal

Mission: ITI FSL's mission is to deliver value with commitment. Emerging as one of the front-line Brokerage Houses and a dominant force in the Distribution arena, we are continuously engaged in the assessment of market conditions to balance risk and reward so as to optimize returns to our investors.

Vision: 50

"To be the most Preferred Financial Advisor, Creator, Wealth Manager and to deliver the Highest Standards of Service to customers and be Prominent in the horde of Finance Companies offering similar services".

Why ITIFSL?
ITIFSLs services are offered under total confidentiality and integrity with the sole purpose of maximizing returns for their clients. Equity Broking - Corporate Member of The Stock Exchange, Mumbai (BSE) and National Stock Exchange of India Ltd. (NSE). Pan India reach - 380 terminals spread across 75 different locations, in semi urban, urban and metropolitan areas. More than 100,000 retail clients serviced from the above locations ITIFSL have heavily invested in technology (customized and ready to use

software) involving front and back end operations offering seamless process and flawless execution and raising our service levels. ITIFSL operate on an alert and well-defined system in risk management and settlement mechanism

51

OFFERINGS

52

ADVANTAGES TO INVESTERS: Why you need a financial planner? The financial planner is someone who can help you invest across investment avenues based on your risk profile and investment objectives. Post-investment, he monitors your investments and ensures that you are on course to achieve your investment objectives. If necessary, he suggests changes to your financial plan so that you are able to achieve your investment objectives as planned.

53

Given the critical inputs provided by the financial planner in helping you achieve your financial goals, it is important that you select the right financial planner. Here are the reasons why ITI is the right planner for you Certification/Membership More than anything else, this is a pre-requisite from the compliance point of view. Your financial planner should be certified and registered as a broker or mutual fund agent with NSE, BSE, AMFI etc. ITI FSL has Trading and Clearing Memberships with major Stock Exchanges in India to offer broking services across market segments at all of the National-level Exchanges. ITI FSL is a Depository Participant with CDSL. We also have memberships with commodity exchanges. We have AMFI certified professionals to advice you on mutual funds. Competence Gone are the days when financial planning simply required delivering application forms. The traditional "one-size fits all" approach is pass. With the increasing list of investment avenues on offer, selecting the one that suits you the best is becoming a challenge. To that end, competence and skill set are the basic criteria that investors should look for in an investment planner. With ITI fine staff of professionals, you can be sure that you will get the best advice and service to achieve your financial goals. Furthermore, the recommendations offered by ITI are backed by solid research. Value-add services In addition to financial planning, ITI provides related, value-add services that can assist you in the investment process. On-line tools and calculators are some of our more popular value-add services. These tools can help you keep track of your investments. These value-add services form an integral part of our offering.

One-stop shop Every individual has different needs and the same undergo a change over a period of time. The financial planner should be capable enough to understand these needs and offer suitable products to fulfill them. For this purpose, ITI provides you with the entire range of investment products from stocks, mutual funds, bonds to fixed deposits. In other words, we offer a "one-stop" solution for all your investment needs.

Accessibility One of the common complaints from investors is that their financial planner is unavailable/inaccessible and therefore unable to provide adequate/prompt service. This is particularly common in a one-man setup where the financial planner's services

54

begin and end with him, with little or no backup. If the financial planner is preoccupied with some important clients or if he re-locates, it leaves you in a soup because your financial plan is in limbo. It is best to go with a financial planning initiative that is run by teams (as opposed to one-man setups) to ensure continuity of your financial plan. ITI has a team of professionals who are ever ready to serve you at any point of time. We are spread across the country so that you can have access to us always

KEY LEARNINGS IN THE ORGANIZATION

EQUITY FUTURES OPTIONS COMMODITIES IPO MUTUAL FUNDS SIP TAX SAVING SCHEMES IN INDIA ONLINE AND OFFLINE TRADING PORTFOLIO MANAGEMENT

55

Roles and responsibilities in organization

We will give updates to customers in

Economic Outlook and Updates Sector & Company Reports Technical Recommendations Daily Market Report Daily Technical Outlook Reports on New Fund Offerings Weekly analysis of mutual funds Fund Focus
Weekly debt report: Debt Dose Offer daily technical calls through SMS to our clients

56

Data Analysis

57

ANALYSIS
COMPANY PROFILE: ICICI:
ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,044 branches and about 5,546 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.

58

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

History:
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from nonJapan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, 59

particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.

Board of Directors:
ICICI Bank's Board members include eminent individuals with a wealth of experience in international business, management consulting, banking and financial services

Director's Profiles

Chanda Kochhar Managing Director and Chief Executive Officer

N.S. Kannan Executive Director & CFO

K. Ramkumar Executive Director

Rajiv Sabharwal Executive Director

Board Members: Mr. K. V. Kamath, Chairman

60

Mr. Sridar Iyengar Mr. Homi R. Khusrokhan Dr. Anup K. Pujari Mr. M.S. Ramachandran Dr. Tushaar Shah Mr. M.K. Sharma Mr.V.Sridar Mr. V. Prem Watsa Ms.ChandaD.Kochhar, Managing Director & CEO Mr.N.S.Kannan, Executive Director & CFO Mr.K.Ramkumar, Executive Director Mr.RajivSabharwal, Executive Director

Investor Relations:
All the latest, in-depth information about ICICI Bank's financial performance and business initiatives.

61

ICICI Bank disseminates information on its operations and initiatives on a regular basis. The ICICI Bank website serves as a key investor awareness facility, allowing stakeholders to access information on ICICI Bank at their convenience. ICICI Bank's dedicated investor relations personnel play a proactive role in disseminating information to both analysts and investors and respond to specific queries.

BALANCE SHEET AS AT MARCH 31, 2010 PARTICULARS As at March 31, 2010 Rs.in crores 11148.89 Share Capital 0.00 Share warrants and outstanding 505034.77 Total reserve 2020165.97 Deposits 942635.69 Borrowings 155011.83 Other liabilities and provisions TOTAL LIABILITIES 62 3633997.15 3793009.62 182646.64 931554.54 2183478.25 484197.29 0.00 As at March 31, 2009 Rs. in crores

SOURCES OF FUNDS: 11132.90

APPLICATION OF FUNDS: Cash and balance with reserve bank of india Balance with banks and money at call and short notice Investments

275142.92 113594.02 1208928.01 1812055.97

175363.94 124302.30 1030583.08 2183108.49 74437.06 36420.85 0 38016.21 0 0 3793009.62 8346830.03 60004.38

Advances 71141.15 (a) Gross Block 39014.25 (b) Less:- Accumulated Depreciation 0 Less: impairment of assets 32126.90 (c) Net Block Lease adjustment (d) Capital Work-in-Progress OTHER ASSETS Contingent liability Bills of collection 3633997.15 7270840.59 64749.54 0 0

CASH FLOW STATEMENT

(Rs. in Million) Year ended March 31, 2010 Net profit before tax Adjustments for expenses and provisions Adjustments for liabilities and assets 63 53453.22 52409.07 -71184.82 2009 51169.69 55240.66 -232835.55

Cash flow from investing activities Cash flow from financing activities Effect of exchange fluctuation on translation reserve Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at 1st April Cash and cash equivalents at 31st march

61507.32 13826.17 -4954.30 94025.60 299665.64 388736.94

38578.81 16253.59 6306.85 -87052.50 280411.29 299665.64

APPLICATION OF DOW THEORY:

DATE 1st-Nov 2nd-Nov 3rd-Nov 4th-Nov 5th-Nov 8th-Nov 9th-Nov 10thNov CLOSING PRICE 1243.47 1250.79 1258.15 1274.50 1285.02 1274.50 1279 1271.52 64

11thNov 12thNov 15thNov 16thNov 18th-Nov 19th-Nov 22ndNov 23rdNov 24th-Nov 25th-Nov 26th-Nov 29th-Nov 30th-Nov

1267.04 1240.55 1243.47 1242.01 1210.35 1168.47 1197.63 1175.34 1173.97 1158.90 1156.19 1164.36 1157.54

INFERENCE: The above graph represents the daily fluctuations in the market which is one of the major proponent in Dow Theory. It is difficult to forecast day-to-day movements in the market. In the above 15 days of trading, the share price of ICICI was highest on 5th Nov.- Rs.1285.02 and the lowest was on 25th Nov. Rs. 1156.19.

DATE

CLOSING PRICE 1st-Nov 1243.47 2nd-Nov 1250.79 3rd-Nov 1258.15 4th-Nov 1274.50 5th-Nov 1285.02 8th-Nov 1274.50 9th-Nov 1279 10thNov 1271.52 11thNov 1267.04 12thNov 1240.55 15thNov 1243.47 16thNov 1242.01 18th-Nov 1210.35

SUM OF YEARS 3752.41 3783.44 3817.67 3834.02 2550.52 3817.56 3779.11 3751.06 3726.03 3695.83 3620.83 3576.45 65

THREE

AVERAGE 1250.80 1261.14 1272.55 1278 850.17 1272.52 1259.70 1250.35 1242.01 1231.94 1206.94 1192.15

19th-Nov 22ndNov 23rdNov 24th-Nov 25th-Nov 26th-Nov 29th-Nov 30th-Nov

1168.47 1197.63 1175.34 1173.97 1158.90 1156.19 1164.36 1157.54

3541.44 3546.94 3508.21 3489.06 3479.45 3478.09

1180.48 1182.31 1169.40 1163.02 1159.81 1159.36

INFERENCES: A 15-day moving average of daily prices may be used to detect a short term trend. This stock price line stands as an indicator to an investor whether to buy the share or to sell it. In the above 15-day average the highest 3-year moving average is on 05 th Nov.

66

STATE BANK OF INDIA:

Company Profile:
The evolution of State Bank of India can be traced back to the first decade of the 19th century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever joint-stock bank of the British India, established under the sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the modern banking scenario in India, until when they were amalgamated to form the Imperial Bank of India, on 27 January1921 State Bank of India is an India-based bank. In addition to banking, the Company, through its subsidiaries, provides a range of financial services, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market. It operates in four business segments: Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Business. The Treasury segment includes the investment portfolio and trading in foreign exchange contracts and derivative contracts. The Corporate/Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. The Retail Banking segment consists of branches in National Banking Group, which primarily includes personal banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group.

History:
An important turning point in the history of State Bank of India is the launch of the first Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in general and the rural sector of the country, in particular. Until the Plan, the commercial banks of the country, including the Imperial Bank of India, confined their services to the urban sector. Moreover, they were not equipped to respond to the growing needs of the economic revival taking shape in the rural areas of the country. Therefore, in order to serve the economy as a whole and rural sector in particular, the All India Rural Credit Survey Committee recommended the formation of a state-partnered and state-sponsoredbank. The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of India, and integrating with it, the former state-owned or state-associate 67

banks. Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India more powerful, because as much as a quarter of the resources of the Indian banking system were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of India to make the eight former State-associated banks as its subsidiaries. The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to creditworthy parties, the State Bank of India catered to the needs of the customers, by banking purposefully. The bank served the heterogeneous financial needs of the planned economic development. INVESTOR RELATIONS : State Bank of India, the countrys largest commercial Bank in terms of profits, assets, deposits, branches and employees, welcomes you to its Investors Relations Section. SBI, with its heritage dating back to the year 1806, strives to continuously provide latest and up to date information on its financial performance. It is our endeavour to walk on the path of transparency and allow complete access to all the stakeholders enabling total awareness about the Bank. The Bank communicates with the stakeholders through a variety of channels, such as through e-mail, website, conference call, one-on-one meeting, analysts meet and attendance at Investor Conference throughout the world. Please find below Banks financial results, analysis of performance and other highlights which will be of interest to Investors, Fund Managers and Analysts. SBI has always been fundamentally strong in its core business which is mirrored in its results year after year.

Board of directors:

68

1 2 3 4 5 6 7 8 9

Mr. P Bhatt Dr.Ashok Jhunjhunwala Dr.(Mrs.)Vasantha Bharucha Mrs.Shyamala Gopinath Mr.S Venkatachalam Mr.Ashok Chawla Mr.D Sundaram Mr.Dileep C Choksi Dr.Rajiv Kumar

Chairman / Chair Person Director Director Director Director Director Director Director Director Managing Director

10 Mr.R Sridharan

Branches:
The corporate centre of SBI is located in Mumbai. In order to cater to different functions, there are several other establishments in and outside Mumbai, apart from the corporate centre. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater to its customers throughout India. ATMServices: SBI provides easy access to money to its customers through more than 8500 ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which includes the ATMs of State Bank of India as Well as the Associate Banks State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc.

69

You may also transact money through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-Debit (Cash Plus) card. Subsidiaries: The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Through the establishments, it offers various services including merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance. The eight banking subsidiaries are: State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)

Personal Banking: SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Against Shares & Debentures SBI Car Loan Rent Plus Scheme SBI Educational Loan Medi-Plus Scheme

Other Services: Agriculture/Rural Banking NRI Services ATM Services Demat Services Corporate Banking Internet Banking 70

Mobile Banking International Banking Safe Deposit Locker RBIEFT E-Pay E-Rail SBI Vishwa Yatra Foreign Travel Card Broking Services Gift Cheques

BALANCE SHEET AS AT MARCH 31, 2010 PARTICULARS As at March 31, 2010 Rs.in crores 6348.83 Share Capital 0.00 Share warrants and outstanding 653143.16 71 573128.16 0.00 As at March 31, 2009 Rs. in crores

SOURCES OF FUNDS: 6348.80

Total reserve 8041162.27 Deposits 1030116.01 Borrowings 803367.04 Other liabilities and provisions TOTAL LIABILITIES APPLICATION OF FUNDS: Cash and balance with reserve bank of india Balance with banks and money at call and short notice Investments 6319141.52 Advances (a) Gross Block (b) Less:- Accumulated Depreciation Less: impairment of assets (c) Net Block Lease adjustment (d) Capital Work-in-Progress Other assets Total assets Contingent liability Bills of collection 118316.27 77141.07 0 41175.20 2.03 2951.84 351127.60 10534137.31 5484468.85 479223.28 104030.58 68310.06 0 35720.52 23.57 2634.37 377332.74 9644320.81 7236997.57 438705.67 5425032.04 10534137.31 612908.65 348929.76 2857900.71 9644320.81 555461.73 488576.26 2759539.57 9644320.81 840579.29 7420731.28

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CASH FLOW STATEMENT

(Rs. in Million) Year ended March 31, 2010 Net profit before tax Adjustments for expenses and provisions Adjustments for liabilities and assets Cash flow from investing activities Cash flow from financing activities Effect of exchange fluctuation on translation reserve Net increase equivalents (decrease) in cash and cash -69261.82 1044037.9 9 961838.42 -329251.83 674663.35 1044037.9 9 139260.96 51863.33 -140025.50 -17615.23 -33596.71 -12937.75 2009 141806.43 85529.74 140255.77 -16519.30 50973.84 20581.62

Cash and cash equivalents at 1st April Cash and cash equivalents at 31st march

APPLICATION OF DOW THEORY:

DATE 1st-Nov 2nd-Nov CLOSING PRICE 3223.15 3245.71 73

3rd-Nov 4th-Nov 5th-Nov 8th-Nov 9th-Nov 10thNov 11thNov 12thNov 15thNov 16thNov 18th-Nov 19th-Nov 22ndNov 23rdNov 24th-Nov 25th-Nov 26th-Nov 30th-Nov

3294.58 3462.86 3501.02 3511.50 3347.52 3297.86 3255.42 3178.50 3184.84 3197.56 3115.79 3069.57 3060.41 3015.02 2979.18 2894.33 2920.40 3000.03

INFERENCE: The above graph represents the daily fluctuations in the market which is one of the major proponent in Dow Theory. It is difficult to forecast day-to-day movements in the market. In the above 15 days of trading, the share price of ICICI was highest on 5th Nov.- Rs.3501.02 and the lowest was on 25th Nov. Rs. 2894.33.

DATE

CLOSING PRICE 1st-Nov 3223.15 2nd-Nov 3245.71 3rd-Nov 3294.58 4th-Nov 3462.86 5th-Nov 3501.02 8th-Nov 3511.50

SUM OF YEARS 9763.44 10003.15 10258.46 10475.38 10360.04 74

THREE

AVERAGE 3254.48 3334.38 3419.48 3491.79 3453.34

9th-Nov 10thNov 11thNov 12thNov 15thNov 16thNov 18th-Nov 19th-Nov 22ndNov 23rdNov 24th-Nov 25th-Nov 26th-Nov 30th-Nov

3347.52 3297.86 3255.42 3178.50 3184.84 3197.56 3115.79 3069.57 3060.41 3015.02 2979.18 2894.33 2920.40 3000.03

10156.88 9900.8 9731.78 9618.76 9560.9 9498.19 9382.92 9245.77 9145 9054.61 8888.53 8793.91 8814.76

3385.62 3300.26 3243.92 3206.25 3186.96 3166.06 3127.64 3081.92 3048.33 3018.20 2962.84 2931.30 2938.25

INFERENCES: A 15-day moving average of daily prices may be used to detect a short term trend. This stock price line stands as an indicator to an investor whether to buy the share or to sell it. In the above 15-day average the highest 3-year moving average is on 05 th Nov.

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Summary

76

SUMMARY
Investing in financial securities is now considered to be one of the best avenues for investing ones savings while it is acknowledged to be one of the most risky avenues of investment. Even Indian Government is planning to encourage people in rural areas to invest in equity. This will help the markets to stabilize by tapping the rural areas and decreases the dependency on Foreign Institutional Investors. The factors which were studied under this are to know about stock markets in India, how they work, prerequisites to enter the stock markets, market design, stock selection, when to buy or sell a stock, how to invest, knowing about market intermediaries. For successful investment factors like timing, selection, setting targets, avoiding speculation and constant review of portfolio is advised.

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FINDINGS
From the above analysis, it is found that: ICICI has the worlds best way of delivering banking services and investment options.ICICI has worldwide branches Due to this, its services are of world class.Total assets of company have shown an 4.19 percent increase in FY 20092010. SBI has recorded an 9.22 percent of increase in its total assets. In comparison to ICICI and SBI share price analysis, it is found out that SBI has the highest share price value because of its wide spread coverage of market. 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 that 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.

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Suggestions

79

SUGGESTIONS
Suggestions to an investor for reaping good returns in Equity Investment Proper scientific way of investigation should be undertaken about sector and its players before investment Clear targets should be set before investment Stock pickup should be always selective and should not depend on rumors of the market Define price range first before buying and selling shares Before buying and selling shares latest price movement trends should be analyzed Speculation is not advised in the market Individual Risk tolerance should be known and then be ready for unexpected Constant proper review of portfolio should be done and wherever required buying and selling of shares should be done.

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Conclusions

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CONCLUSIONS
Economic liberalization has accelerated the pace of development in the securities market. In India, the role of securities market has undergone structural transformation with the introduction of computerized online trading and interconnected market system. Investment in securities such as shares, debentures and bonds is profitable, but also involves great deal of risk. Even Indian Government wants to encourage Equity Investment.

According to Fundamental Analysis: Economy: While analyzing stock, investor should consider GNP, Price conditions, Economy, Housing, Construction Activity, Employment, Accumulation of inventories, Personal Disposable Income, Personal savings, Interest rates, Balance of Trade, Strength of the Rupee in Forex market and Corporate Taxation (Direct and Indirect) 82

Sector Analysis: It is advised to invest in a sector that is either in a pioneering stage or in its expansion stage. It is advisable to quickly get out of sectors which are in the stagnation stage prior to its lapse into the decline stage. The particular phase or stage of a sector can be determined in terms of sales, profitability and their growth rates amongst other factors.

Company Analysis: In company analysis, history of the company and line of business, Product portfolios strength, Market share, Top Management, Intrinsic Values like Patents and Trademarks held, Foreign collaboration, its need and availability for future, Quality of competition in the market, present and future, Future business plans and projects, Level of trading of the companys listed scrip, EPS, its growth and rating vis--vis other companies in the industry, P/E Ratio, Growth in Sales are analyzed. 83

According to technical analysis: The fundamental analysis is the determination of price based on future earnings; where as the price of a security represents a consensus. The price at which an investor is willing to buy or sell depends primarily on his expectations. For this purpose technical analysis also forms a strong tool in analyzing a company where the price movements are recorded in charts and analyzed.

Bibliography
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BIBILIOGRAPHY
BOOKS REFFERED: Security Analysis and Portfolio Management - Prasanna Chandra. Investments - William, Sharpe WEBSITES: www.about.stocks.com www.nseindia.com www.buzzingstocks.com www.moneycontrol.com

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