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ACKNOWLEDGEMENT

The completion of any project depends upon the co -operation, coordination and combined efforts of several resources of knowledge, inspiration &energy. Words fall short acknowledging immense support lent to me yet I will try to give full credit to the deserver's I sincerely want to thank all the people who helped me throughout the procedure of 6 month of my project. It really has been a learning experience for me. I specially want to thank my guide Mr. Ashok sharkar sir for his guidance from the first day of my project till the last. It has been a great experience of working with him. I would also like to thank all my faculty members were there for the Guidance and He directed me whenever I was in need of it.

CONTENTS

Chapter No.
1.

Name of the concept


Introduction objectives of project Literature review Industry overview

Page No.
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2. Organisation profile History Vision & mission Organisation structure Product profile Trend Analysis SWOT Analysis 3. Research methodology Sources of Data tools and techniques use Analysis of data Interpretations and findings

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16-17

4.

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5. 6. 7. 8.

Limitation Recommendations Conclusion Bibliography

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OBJECTIVE Defining the area of work: To know about the different services offered by the SHAREKHAN. To study the analysis of automobile sector to guide the customer. LITERATURE REVIEW
Investing is both Arts and Science. Every Individual has their own specific financial need and expectation based on their risk taking capabilities, whereas some needs and expectation are universal. Therefore, we find that the scenario of the Stock Market is changing day by day hours by hours and minute by minute. The evaluation of financial planning has been increased through decades, which can be best seen in customers. Now a days investments have become very important part of income saving. In order to keep the Investor safe from market fluctuation and make them profitable, Portfolio Management Services (PMS) is fast gaining Investment Option for the High Net worth Individual (HNI). There is growing competition between brokerage firms in post reform India. For investor it is always difficult to decide which brokerage firm to choose. As the PMS services of Share khan Limited have the best result in its field .It has given 43.50% return in Trailing stops, 94.30%return in Nifty and 38.10% in Beta Portfolio which is the result when the Market was not doing well from last one year. The stock market has been a part of people's lives throughout the twentieth century. Millions of people around the world have money invested in their countries own respective markets. Since the coming of age of online trading, more people have been investing their money in stocks than ever before because of the advantages it offers. Online trading allows people to trade stocks quickly without the help of a broker, letting the investors have more control over their transactions. The competition between companies has helped decrease the cost of making the transactions. In addition to that, ordinary people now have access to information that could only be seen by brokers. Overall, online trading saves time, money and gives power to the investor rather than the broker. The combined effects of financial services companies striving to drop the cost of providing customer service and the significant rise in individual investors' interest in taking control of their own investments continues to increase the use of online securities trading. Further, many individual investors rely on the internet as a means of learning as much as they can about specific investments before executing a stock or bond trade online, and this factor alone is changing the landscape of financial services. It is seen that the financial services firms are walking a fine line between automating transactions by putting powerful investment tools in the hands of individual investors, while at the same time educating them of the financial benefits of longterm investing. With the advancement of online trading individual investors have more control over their funds than ever before, yet with that freedom comes a high level of responsibility to make sure the advice, applications and tools they gain access from financial services firms are in fact the best match with their investment needs. For this industry,
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analysis can be conducted in an effort to determine who has the power, the customers or the suppliers? Competitive forces provide buyers or suppliers with an advantage in terms of who holds the bargaining power. Tumbling markets, falling share prices.... make us appear the trading exercise very lucrative. But still puzzled, where will we be able to choose the right lot from the markets.

INDUSTRIAL OVERVIEW FINANCIAL SERVICE


In general, all types of activities, which are of a financial nature, could be brought under the term 'financial services'. The term financial services' in a broad, sense means "mobilizing and allocating savings". Thus it includes all activities involved in the transformation of savings into investment. Financial services can also be called 'financial inter mediation'. Financial intermediation is a process by which funds are mobilizing from a large number of savers and make them available to all those who are in need of it and particularly to , corporate customers. Thus, financial services sector is a key area and it is very vital for industrial developments. A well-developed financial services industry is absolutely necessary to mobilize the savings and to allocate them to various invest able channels and thereby to promote industrial development in a country. Classification of Financial Services Industry The financial intermediaries in India can be traditionally classified into two: 1. Capital Market intermediaries: it consists of term lending institutions and investing institutions which mainly provide long term funds. On the other hand, 2. Money market intermediaries: it consists commercial banks, co-operative banks and other agencies which supply only short term funds. Hence, the term 'financial services industry' includes all kinds of organizations which intermediate .and facilitate financial transactions of both individuals and corporate customers. Indian financial markets, broadly comprising of segments like asset management, banking, insurance, foreign direct investments (FDI) and foreign institutional investors (FII), effectively promote the savings of the economy by directing them towards suitable investment options. The Indian financial sector is well developed, competitive and integrated to face all traumas (like the recent financial turmoil).World Economic Forums latest report Financial Development Report 2012 has named India as the world's top-ranked country in terms of life insurance density. Life insurance density is the ratio of direct domestic premiums for life insurance to per capita gross domestic product (GDP) of a country. India has been ranked 40th in terms of overall financial development of a country, but is much ahead of larger economies like the US, UK, Japan and China for life insurance density.

Insurance Sector
Premium collection by general insurance companies increased by 24.7 per cent year-on-year (y-o-y) in September 2012 at Rs 6, 059.02 crore (US$ 1.1 billion), according to the data compiled by the sector regulator Insurance Regulatory and Development Authority (IRDA). The total premium stood at Rs 34,001.09 crore (US$ 6.32 billion) for April-September 2012. In terms of premium collections for life insurance segment, private players collected Rs 7, 095 crore (US$ 1.32 billion) in April-September 2012 period while state-owned Life Insurance Corp of India (LIC) recorded a remarkable 24 per cent y-o-y growth in premium collections at Rs 15, 532.7 crore (US$ 2.88 billion) during the period. LICs support helped the industry post a 15 per cent y-o-y growth in premium collected in the first half of 201213.

Banking Services
Key recent statistics pertaining to the Indian banking industry are discussed below:

According to the Reserve Bank of India (RBI)s Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks, March 2012, Nationalised Banks accounted for 53.0 per cent of the aggregate deposits, while the State Bank of India (SBI) and its Associates accounted for 21.8 per cent. The share of New Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.0 per cent, 4.8 per cent, 4.4 per cent and 3.0 per cent, respectively. Nationalised Banks accounted for the highest share of 52.0 per cent in gross bank credit followed by State Bank of India and its Associates (22.5 per cent) and New Private Sector Banks (13.5 per cent). Foreign Banks, Old Private Sector Banks and Regional Rural Banks had shares of around 4.8 per cent, 4.8 per cent and 2.4 per cent, respectively.

Mutual Funds Industry in India


Indian mutual funds' average assets under management (AUM) increased by 5.3 per cent or Rs 392 billion (US$ 7.39 billion) to Rs 7.87 trillion (US$ 146.31 billion) in the OctoberDecember 2012 quarter from Rs 7.47 trillion (US$ 139 billion) in the previous quarter, as per the latest data released by the Association of Mutual Funds in India (AMFI). The growth in assets was majorly driven by inflows into income and gilt funds.

Private Equity, Mergers & Acquisitions (M&A) in India

Private Equity (PE) companies invested around US$ 8.85 billion in 2012, according to consultancy firm Price Waterhouse Coopers (PwC). Information technology (IT) and healthcare seemed to have witness the highest number of deals on the PE canvas wherein there were 162 deals worth US$ 3.25 billion in IT and healthcare witnessed 48 deals worth US$ 1.23 billion.
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Similarly, the pace intensified on the merger and acquisition (M&A) front. There were as many as 268 deals (involving Indian entities) that amounted to about US$ 36.3 billion in 2012; up 22.6 per cent over the 2011 tally, reported the global deal tracking firm Merger market.

Foreign Institutional Investors in India

Investments into Indian shares through participatory notes (PNotes) were recorded at US$ 32.4 billion in November 2012, according to the latest data released by the Securities and Exchange Board of India (SEBI). PNotes, allow entities like overseas High Net-worth Individuals (HNIs), hedge funds and other foreign institutions, to invest in Indian markets through registered FIIs , while saving on time and costs associated with direct registrations. Overseas investors infused a hefty sum of Rs 4, 500 crore (US$ 836.64 million) in the first week of January 2013; wherein during January 1- 4, 2013, FIIs were gross buyers of shares worth Rs 8, 350 crore (US$ 1.55 billion), while they sold equities amounting to Rs 3, 830 crore (US$ 712.09 million).

Financial Services in India: Recent Developments

The Ergo Insurance Group (part of worlds leading reinsurer Munich Re) and the Avantha Group, India's leading business conglomerate, have entered into a joint venture agreement in the space of life insurance. The new company, to be named Avantha Ergo Life Insurance Company Ltd, is expected to commence operations at the beginning of 2014, subject to regulatory approval. The Small Industries Development Bank of India (SIDBI) has partnered with eight regional rural banks (RRBs) and urban co-operative banks in West Bengal. The scope of agreements includes training the staff of RRBs and co-operative banks in project appraisal, monitoring and collection as also providing free access to software on a down-scaling methodology developed for lending to micro enterprises.

Financial Services: Government Initiatives


The Indian Government has re-affirmed its efforts to push economic growth by increasing the FDI limit from 26 per cent to 49 per cent in insurance. The reform is expected to please international players who had been waiting to venture into India and also encourage existing players to increase their stakes in strategic alliances. The Indian insurance sector needs US$ 10-12 billion capital infusion in the next five years. Furthermore, in a bid to attract higher foreign inflows, the Government of India (GoI) has opened up an opportunity for FIIs of all jurisdictions to earn tax-free interest by investing in debt instruments of a state-owned enterprise. Owing to this landmark move, FIIs and non-

resident Indian (NRIs) have been allowed to invest in the public issue of tax-free bonds by Housing and Urban Development Corporation (Hudson) that opened up on January 9, 2013. The GoI has also approved the establishment of a Credit Risk Guarantee Fund Trust (CRGFT) for low income housing, with an initial outlay of Rs.1000 crore (US$ 185.92 million). The CRGFT, registered on May 1, 2012 and launched on October 31, 2012 would administer and operate the Scheme, which is demand-driven, as stated by Ajay Maken, Union Minister of Housing & Urban Poverty Alleviation (HUPA). The best way to predict the future is to invent it.

A Brief History of Stock Exchanges


It was in the year 1875 that the working of stock exchange in India started. BSE is the oldest stock market in India. Indian stock trading started with 318 persons taking membership in Native Share and Stock Brokers Association, which is now known as the Bombay Stock Exchange or BSE in short. In 1965, BSE got permanent recognition from the Government of India. National Stock Exchange (NSE) comes second to BSE in terms of popularity. BSE and NSE represent themselves as synonyms of Indian stock market. The 30 stock sensitive index or Sensex was first compiled in 1986. The Sensex is compiled based onthe performance of the stocks of 30 financially sound benchmark companies. In 1990 the BSE crossed the 1000 mark for the first time. It crossed 2000, 3000 and 4000 figures in 1992. The reason for such huge surge in the stock market was the liberal financial policies announced by the then financial minister Dr. Man Mohan Singh. The buoyant mood of the market was suddenly gone with Harshad Mehta scam. It came to public knowledge that Mr. Mehta, also known as the big-bull of Indian stock market diverted huge funds from banks through fraudulent means. He played with 270 million shares of about 90 companies. Millions of small-scale investors became victims to the fraud as the Sensex fell flat shedding 570 points. Thus, from that day it became very clear that the stock market is not a place where you can earn money easily without taking into considerations about your environmental changes. It also made it very clear that the small investors should themselves as safe as possible because of the uncertainty in the market. To prevent such frauds, the Government formed The Securities and Exchange Board of India (SEBI), through an Act in 1992. SEBI oblige several rigid measures to protect the interest of investors. Now with the inception of online trading and daily settlements the chances for a fraud is nil as the stock broking companies had to make it very to each and every investor bout the various issues of the stock market. Sensex crossed the 5000 mark in 1999 and the 6000 mark in 2000. The 7000 mark was crossed in June and the 8000 mark on September 8 in 2005. After the liberalization, when the gates were open for the foreign investors the Indian stock. Market was flooded with the FDIs (foreign direct investments) and the market has shown tremendous amount of volatility. And very recently market has even touched the 21,000 mark.

Stock Market
The market or place, where securities, viz. shares are exchanged or traded or simply where buying or selling of shares takes place, is called stock exchange or stock market. In India there are two types of stock exchanges: 1. National Stock Exchange (NSE) 2. Bombay Stock Exchange (BSE) NSE is a Mumbai-based largest stock exchange in India in terms of daily turnover and number of trades. Though it is mutually-owned by a set of leading financial institutions like banks, insurance companies but its ownership and management operate as a separate entities. It is the second fastest growing stock exchange in the world with a recorded growth rate of 16.6%. It was incorporated in November 1992 as a tax paying company. In April 1993 it was recognized as a stock exchange under the Securities Contracts Act, 1956. The capital market (equities) segment of the NSE commenced its operations in November 1994, while operations in derivatives segment commenced in June 2000. It is the third largest Stock Exchange in the world in terms of number of trades in equities. BSE is the oldest stock exchange in Asia and also the biggest in the world in terms of listed companies with 4800 listed companies as of August 2007. It was established in 1875. It played a pivotal role in the development of its index SENSEX which is tracked worldwide. It has a PAN India presence in 417 cities and towns. In a nation with middle class population of above 200 million, most of whom dream of a better, financially comfortable tomorrow, the stock market is obviously seen as the perfect place to invest when you consider that stock markets can make you rich in a very short span of time provided you play your cards correctly. But the scams in the last centuries have made the investors to play it safe, if they dont know the rules of the game. In the past few years though have seen a wave of technology enhancements sweeping through the Indian share markets, wiping out archaic conventions. Due to this we have seen many changes coming into the picture like online share trading gradually coming to India. These technological innovations have been brought out most proactively by NSE. The online share trading started way back in February 2000 with the Geojit Securities conducting the first online transaction where 100 shares of Reliance was traded by SEBI Chairman D R Mehta for Geojit Chairman A P Kurien. Since then a lot has changed in the Stock market. Currently, online trading volumes in India is just about 20% of the total trades. Slow off the blocks, but online share trading in India is poised to grow very fast in the future. From a base of about Rs 3 crore in April 2000, online trading volume has raised to nearly In the stock market, basically trading of shares is done apart from commodities trading. Trading is the process of buying at lower price and then selling it at a higher price for earning profits. Share trading is one of the most successful trading and it has become simpler, fast, and secure from offline trading or phone trading into online trading. Online trading is done with the help of internet. One of the biggest problems with the stock market is that there are no guarantees. After doing a lot of research at your home still it may be possible that the stock which you had picked falls to oblivion.

Share trading is done in mainly two ways: 1. Online share trading: Online share trading is done with the help of computer, internet connection and with trading or demat account is called online share trading, or we can say that online trading is the trading of securities via the internet. If you would like to do online share trading then you should have a computer, internet connection and online trading account. It is done via internet means that all the transaction is settled electronically. 2. Offline share trading: In offline trading the transactions are done through the phone and when to buy or sell is directed through phone. In other words trading will be done by another person on ones behalf based on the instructions given by one, and then the other person can be a broker. The broker will do buying and selling of shares on ones behalf depending on the instructions given by one. This type of trading was done in the past but nowadays most of the trading is done through computers i.e. online. E.g. Suppose that if Mr. X wants to sell n number of shares when the share price reaches Rs. 100, then X will tell his broker to sell the share at Rs 100 (i.e. when the price of Rs. 100 is reached). Nevertheless, with all the convenience of online trading there are still investors who prefer the old fashion way of offline trading. Offline trading has lost some popularity but it is still the main form of investing.

TREND ANALYSIS OF STOCK MARKET

Stock market trend analysis is more than just being a bull or a bear. Markets make distinct counter-trend moves that confuse the validity of the major trend all the time. It is up to the investor to recognize counter-trends as a necessary part of a major market move. Know that an analysis is never precise until well after the trend move. Trend analysis can stretch over generations or operate in one-minute intervals. However, there are some tools and procedures that investors can use to decipher market movements and make money trading. 1. Presidential Cycle The presidential cycle has proven to be very accurate over time. It is not so much about trends as it is about cycles. The presidential cycle follows that the stock market peaks during the year of a presidential campaign. The cycle actually begins with a new president's first year in office. The president makes his tough economic decisions in the first year, cutting programs and putting new programs in place. The economy generally improves in the second and third year. Peaking occurs at the time of the next presidential election and garners him more votes as the economy remains strong. 2. Moving Average Trends Individual trends are often measured by moving averages. Moving averages, say a 200-day moving average, are computed by averaging the closing price of the previous 200 days. Sometimes moving averages are weighted exponentially, or by other scientific calculations, but the point remains the same. Stocks are bought and sold on a long-term basis if they are above the 200-day moving average. Traders also find significance in the 20-, 50- and 320-day moving averages. 3. Trading Long Cycle Trends The Russian economist Nikolai Kondratieff expounded a theory detailing a long, 30-year cycle with commodities and financials in alternating leadership roles. Long trend theories are sometimes considered part of fundamental analysis. It is useful to decide whether commodities or currencies are gaining traction because it implies that either stable times are ahead or inflation is on the rise. 4. Trend Analysis for Day Trading Trend analysis is a regular and important part of day trading. Trend trading usually involves a dual moving average of a short moving average and a long moving average. Traders use either one-minute or five-minute prices rather than closing prices. The theory is that short movements are random and thus short trading opportunities occur as a matter of course.
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5. The Triple Moving Average Analysis The triple moving average analysis technique recognizes that in a long-term bull or bear market trend, short and intermediate trends go through 'mean reversion' or periods of flat or down trading. Triple moving averages require that the long-term trend be identified using a long moving average. Once a long trend is ascertained, important intermediate and short-term trend movements can be bought and sold. Losses should be minimal as long as the long-term trend is in place.

INTRODUCTION ABOUT SHAREKHAN LIMITED


Share khan Ltd. is one of the leading retail stock broking house of SSKI Group which is running successfully since 1922 in the country. It is the retail broking arm of the Mumbaibased SSKI Group, which has over eight decades of experience in the stock broking business. Share khan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc. The firms online trading and investment site - www.sharekhan.com was launched on Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free, investor friendly language and high quality research, the site has a registered base of over one lakh customers. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. This was for the first time that a netbased trading station of this caliber was offered to the traders. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. Sharekhans ground network includes over 640 centers in 280 cities in India which provide a host of trading related services. Sharekhan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry, like Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India Ltd, Spider Software Pvt Ltd. To build its trading engine and content.

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PROFILE OF THE COMPANY

Name of the company: Share khan ltd. Year of Establishment: 1925 Headquarter: Share Khan SSKI A-206 Phoenix House Phoenix Mills Compound Lower Parel, Mumbai - Maharashtra, INDIA- 400013 Nature of Business : Service Provider Services : Depository Services, Online Services and Technical Research. Number of Employees : Over 3500 Revenue : Data Not Available Website : www.sharekhan.com Slogan : Your Guide to The Financial Jungle.

Vision
To be the best retail brokering Brand in the retail business of stock market.

Mission

Mission of the Share khan is To educate and empower the individual investor to make better investment Decisions through quality advice and superior service

PRODUCTS AND SERVICES OF SHAREKHAN LIMITED


The different types of products and services offered by Share khan Ltd. are as follows: Equity and derivatives trading Depository services Online services Commodities trading Dial-n-trade Portfolio management Share shops Fundamental research Technical research.
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FINANCIAL PRODUTS AVAILABLE AT SHAREKHAN:

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BRANCHES ALL OVER INDIA

UNDERSTANDING THE FOCUS OF THE WORK


When it comes to personal finance and the accumulation of wealth, few subjects are more talked about than stocks. It's easy to understand why: playing the stock market is thrilling. But on this financial roller-coaster ride, we all want to experience the ups without the downs. In this tutorial, we examine some of the most popular strategies for finding good stocks (or at least avoiding bad ones). In other words, we'll explore the art of stock-picking selecting stocks based on a certain set of criteria, with the aim of achieving a rate of return that is greater than the market's overall average. Before exploring the vast world of stock-picking methodologies, we should address a few misconceptions. Many investors new to the stock-picking scene believe that there is some infallible strategy that, once followed, will guarantee success. There is no fool proof system for picking stocks! If you are reading this tutorial in search of a magic key to unlock instant wealth, we're sorry, but we know of no such key. This doesn't mean you can't expand your wealth through the stock market. It's just better to think of stock-picking as an art rather than a science. There are a few reasons for this:
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1. So many factors affect a company's health that it is nearly impossible to construct a formula that will predict success. It is one thing to assemble data that you can work with, but quite another to determine which numbers are relevant. 2. A lot of information is intangible and cannot be measured. The quantifiable aspects of a company, such as profits, are easy enough to find. But how do you measure the qualitative factors, such as the company's staff, its competitive advantages, its reputation and so on? This combination of tangible and intangible aspects makes picking stocks a highly subjective, even intuitive process. 3. Because of the human (often irrational) element inherent in the forces that move the stock market, stocks do not always do what you anticipate they'll do. Emotions can change quickly and unpredictably. And unfortunately, when confidence turns into fear, the stock market can be a dangerous place. The bottom line is that there is no one way to pick stocks. Better to think of every stock strategy as nothing more than an application of a theory - a "best guess" of how to invest. And sometimes two seemingly opposed theories can be successful at the same time. Perhaps just as important as considering theory, is determining how well an investment strategy fits your personal outlook, time frame, risk tolerance and the amount of time you want to devote to investing and picking stocks. At this point, you may be asking yourself why stock-picking is so important. Why worry so much about it? Why spend hours doing it? The answer is simple: wealth. If you become a good stock-picker, you can increase your personal wealth exponentially. Take Microsoft, for example. Had you invested in Bill Gates' brainchild at its IPO back in 1986 and simply held that investment, your return would have been somewhere in the neighbourhood of 35,000% by spring of 2004. In other words, over an 18-year period, a $10,000 investment would have turned itself into a cool $3.5 million! (In fact, had you had this foresight in the bull market of the late '90s, your return could have been even greater.) With returns like this, it's no wonder that investors continue to hunt for "the next Microsoft". Without further ado, let's start by delving into one of the most basic and
crucial aspects of stock-picking: fundamental analysis, whose theory underlies all of the strategies we explore in this tutorial (with the exception of the last section on technical analysis). Although there are many differences between each strategy, they all come down to finding the worth of a company. Keep this in mind as we move forward.

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COMPANY SWOT ANALYSIS STRENGTHS .1st brokerage firm to go online. PMS Services. Online fund transfer. Recommendations. Schemes for half brokerage. WEAKNESSES High brokerage charge. Do not provide facility to book limit order trades during after-hours. OPPURTUNITIES Huge and vast market. Increasing industry size. THREATS There are many competitors entering into this segment. Low brokerages in the other security offerings RESEARCH METHODOLOGY Research is often described as an active, diligent and systematic process of inquiry aimed at discovering, interpreting and revising facts. This intellectual investigation produces a greater understanding of events, behaviour or theories and makes practical applications through laws and theories. The term research is also used to describe a collection of information about a particular subject, and is usually associated with science and scientific method. BASIC RESEARCH Basic research is also called as fundamental or pure research. Its primary objective is the advancement of knowledge and the theoretical understanding of the relations among the variables. It is exploratory and often driven by researchers curiosity or interest. It is conducted without any practical end in mind. Basic research often lays down the foundation for further applied research. APPLIED RESEARCH Applied research is done to solve specific, practical questions. Its primary objective is not to gain knowledge for its own sake. It is usually descriptive in nature. It is almost always done on the basis of basic research. As far as equity research is concerned there are two types of research methods that are followed: Fundamental analysis Technical analysis

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Financial statement analysis is the biggest part of Fundamental analysis also known as quantitative analysis, it involves looking at historical performance data to estimate the future performance of stocks whereas Technical analysis does not care one bit about the value of the company, it is only interested in the price movements of the companys Share in the market. This project deals with the fundamental analysis aspect of the equity research. The researcher in this project has tried to look into the details of the financial statements of the companies, the environment surrounding the automobile sector, the latest developments in this regard, the management discussions on the part of every company and the government policies concerned with the automobile sector. DATA COLLECTION Secondary data for a project would be the collection of information that has a bearing on the outcome of the project from secondary sources like news, press releases, internet etc. The data collected for this project was from a secondary source. The data was complied with the help of sources like News articles, Internet, Capitalise software. Research objective: to do analysis automobile sector for the purpose to guide the customer. Tools and Techniques Research Design: Descriptive Design. Data collection method Primary data: unavailable Secondary data: the company site and various financial news sites. Research design: it is based on historical performance data. Research design or research methodology is the procedure of collecting, analysing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. The methodology used in the study for the completion of the project and the fulfilment of the project objectives. The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of Random Sampling. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The stocks are chosen from the automobile sector. The sample size for the number of stocks is taken as for fundamental analysis of stocks as fundamental analysis is very exhaustive and requires detailed study.

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DATA ANALYSIS & INTERPRETATIONS ANALYSIS OF AUTOMOBILE INDUSTRY


Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. To understand this industry for the purpose of investment we need to analyse it by the following approach: Fundamental Analysis (E.I.C Approach) a. Economy analysis b. Industry analysis c. Company analysis

Fundamental Analysis
Fundamental analysis is the study of economic, industry and company conditions in an effort to determine the value of a company s stock. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued. Most fundamental information focuses on economic, industry and company statistics. The typical approach to analysing a company involves three basic steps: 1. Determine the condition of the general economy. 2. Determine the condition of the industry. 3. Determine the condition of the company.

1. ECONOMY ANALYSIS
Economic analysis is the analysis of forces operating the overall economy a Country. Economic analysis is a process whereby strengths and weaknesses of an economy are analysed. Economic analysis is important in order to understand exact condition of an economy. GDP and Automobile Industry In absolute terms, India is 16th in the world in terms of nominal factory output. The service sector is growing rapidly in the past few years. This is the pie- chart showing contributions of different sectors in Indian economy.

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Today, automobile sector in India is one of the key sectors of the economy in terms of the employment. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. As the world economy slipped into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector, the GDP growth has downgraded it to 7.1 per cent for 2008-09 and it has increased to 8.6% in 2010 by overcoming the setbacks of recession.

Recession
Auto industry in India had been hit hard by on going global financial recession. But it is in a good shape now. Much of this optimism resulted from renewed interest being shown in India auto industry by reputed overseas car makers. Nissan Motors which is a well-known Japanese car making company regarded India automobile market as a global car manufacturing hub for future and invested huge amount in our market. There are some other automobile companies of world who have shown interest in India auto market. Major names among these are General Motors, Skoda Auto and Mercedes-Benz. These companies have major plans lined up for India auto industry. These are few signs of the revolutionized auto industry after recession.

Inflation
The rise in inflation will have adverse impact on the industry that will not only see interest rates getting further hardened but also a drop in demand due to the squeeze in purchasing power. The effect of inflation has affected every sector which is related to car manufacturing and production. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India. Foreign Direct Investment The automobile sector in the Indian industry is one of the high performing sectors of the Indian economy. This has contributed largely in making India a prime destination for many international players in the automobile industry who wish to set up their businesses in India.
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Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and component is permitted.

Exports
Despite recession, the Indian automobile market continues to perform better than most of the other industries in the economy in coming future; more and more MNC s coming in India to setup their ventures which clearly shows the scope of expansion. During AprilJanuary 2010, overall automobile exports registered a growth rate of 13.24 percent.

2. INDUSTRY ANALYSIS (AUTOMOBILE)


The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Automobile Industry is one of the fastest growing sectors in India. The increase in the demand for cars, and other vehicles, powered by the increase in the income is the primary growth driver of the automobile industry in India. In 2009, estimated rate of growth of India Auto industry is going to be 9% .The Indian automobile sector is far from being saturated, leaving ample opportunity for volume growth. Segmentation of Automobile Industry The automobile industry comprises of Heavy vehicles (trucks, buses, tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles; and Three-wheelers. Following is the segmentation that how much each sector comprises of whole Indian Automobile Industry.

Industry life cycle The industrial life cycle is a term used for classifying industry life over time. Industry life cycle classification generally groups industries into one of four stages: pioneer, growth, maturity and decline. In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are developing, and there is high risk of failure. However, successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. The industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. The growth rate of the automobile industry in India is greater than
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the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase.

Swot analysis:
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points: 1. Strengths Large domestic market Sustainable labour cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc. 2. Weaknesses Low labour productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck. 3. Opportunities Increasing challenges in consumer demands, technology development, and globalization. Heavy thrust on mining and construction activity. Increase in the income level. Cut in excise duties. 4. Threats Ignorance of Research & development. Rising interest rates. Cut throat competition.

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3. COMPANY ANALYSIS
The company analysis shows the long-term strenght of the company that what is the financial position of the company in the market, where it stands among its competitors and who are the key drivers of the company, what are the future plans of the company, what are the policies of government towards the company and how the stake of the company divested among different groups of people. Here, I have taken three companies namely TATA Motors, Maruti Suzuki and Mahindra and Mahindra for the purpose of fundamental analysis.

Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs. 92,519 crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer.

Maruti Suzuki is a subsidiary of Suzuki Motor Corporation Japan. More than half the numbers of cars sold in India wear Maruti Suzuki badge. They offer a full range of cars from entry level Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans Dzire, SX4 and Sports Utility Vehicle Grand Vitara. Since inception, it has produced and sold over 7.5 million vehicles in India and exported over 500,000 units to Europe and other countries. Its turnover for the fiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million.

The Mahindra Groups Automotive Sector is in the business of manufacturing and marketing utility vehicles and light commercial vehicles, including three-wheelers. It is the market leader in utility vehicles in India since inception, and currently accounts for about half of Indias market for utility vehicles. The Automotive Sector continues to be a leader in the utility vehicle segment with a diverse portfolio that includes mass transport as well as new generation vehicles like Scorpio, Bolero and the recently launched Xylo.

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Interpretations EPS measures the profit available to the equity shareholders per share, that is, the amount that they can get on every share held. Till 2008 TATA and Maruti had arising EPS but in 2009 both of them fall and the effect is more on Tata motors because of the slump in domestic and international markets and sharp fall in sales and net profits which resulted in low EPS. Mahindra is not much affected as its sales have increased from the previous year. But as trend shows Mahindra motors has potential so a shareholder can expect better in future.

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Interpretations Maruti and Mahindra show a positive trend in sales over the past five years. Though slowdown in the economy brought hurdles but these companies have potential to grow in future as lots of products are still to add in their portfolio. Moreover increased demand in foreign market also seems to be a positive signal for better future. TATA has witnessed a decline in sales of each segment. Maruti and Mahindra are going swiftly.

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Interpretations Tata motors and Maruti Suzuki both the companies showed a positive trend in paying dividends till 2008, but the scenario changed in 2009 as both the companys dividend per share fell. According to graph 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. Therefore Mahindra would be the bestoption for an investor.

Interpretations ROI is one of the most important ratios used for measuring the overall efficiency of a firm and determines whether the investments in the firms are attractive or not. According the graph, ROI of TATA has declined to a large extent in 2009, making it a quite risky investment. Marutis ROI has also declined but Mahindras ROI is showing a higher rate compared to TATA and Maruti in 2009. As the investors would like to invest only where the return is higher, Mahindra would be attractive for investment.

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Interpretations Dividend payout ratio is the percentage of earnings paid to shareholders in dividends. It provides an idea to an investor of how well earnings support the dividend payments. Maruti has maintained a stable payout ratio. Both TATA and Mahindra have increased their payout ratio in which Mahindra shows a higher payout ratio.

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Interpretations This ratio is widely used by investors to decide whether or not to buy shares in a particular company. As per the graph, in 2008, the P/E ratio of the three companies was the lowest compared to the previous years. TATA has the highest P/E ratio in 2009 which indicates that it is overvalued, so the investors can benefit by selling the shares. An investor can go for Mahindra as its P/E ratio is the lowest in 2009 which indicates that it is undervalued and there is a scope for growth in the future.

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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, TATA s 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 20052009. 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 2009 witnessed low returns in case of all the companies amongst which TATA has the least rate of return. Compared to the three companies, Mahindra has the highest ROI in 2009. Maruti had a stable dividend pay-out ratio since 2005. TATA and Mahindra have increased their pay-out ratio in which Mahindra shows a higher pay-out 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.

LIMITATION
The time constraint was one of the major problems. The lack of information sources for the analysis part. Extreme variability in MARKET. Since most of the people are quite experienced and also they are not techno savvy. Also Internet penetration is poor in India.

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Recommendations
By analyzing the automobile industry with the help of fundamental analysis, it has been revealed that this industry has a lot of potential to grow. So recommending investing in Automobile industry with no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all over the world. The three giants of Indian Automobile industry viz. TATA Motors, Maruti Suzuki and Mahindra and Mahindra have outperformed in the industry. From the company analysis, we can know that Mahindra would be a better option for an investor compared to TATA and Maruti. In view of the slump in the domestic and international market, TATA has recorded a slowdown in sales and income level. Its Earnings per share has also declined drastically. It has reduced its dividend per share from rs.15 in the previous year to rs.6 in 2009. The return on investment is also very low. In view of all these, TATA is not a better option for an investor. The global turmoil in financial markets has affected Maruti also. The company is maintaining a stable position. Its sales have grown over past five years. Inspite of the general economic slowdown, the sales of Maruti Suzuki increased from Rs 21200 Crore to Rs 23381 Crore. As it is maintaining a stable position, it can be recommended that for now Maruti share price shows that its a time to hold the position or buy more shares as there is scope of further rise in share prices. Despite the challenging business environment, Mahindra has maintained its upward sales level. Its Return on Investment is much higher compared to TATA and Maruti. The dividend per share is rs.10 which is higher amongst the three companies. The company has potential to grow. It would be the best option for the investor. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time and is experiencing a downfall from 2008. Holding the shares for long time could be a wrong step and at this point of time those who invested earlier can book their profits. As Mahindras shares are undervalued, the investor can buy these shares. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment.

Few Suggestions for Right Stock Selection


There are three factors which an investor must consider for selecting the right stocks. Business: An investor must look into what kind of business the company is doing, visibility of the business, its past track record, capital needs of the company for expansion etc. Balance Sheet: The investor must focus on its key financial ratios such as earnings per share, price-earnings ratio; debt-equity ratio, dividends per share etc and he must also check whether the company is generating cash flows. Bargaining: This is the most important factor which shows the true worth of the company. An investor needs to choose valuation parameters which suit its business.

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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 Automobile industry in India is the seventh largest in the world with an annual production of over 2.6 million units in 2009. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The collapse in market place witnessed unprecedented turbulence in the wake of global financial meltdown. A runaway inflation touching a high point of 12% early in the year, the tight monetary policies followed by the authorities for most of the year to control inflation with the consequent high interest rates and weak consumer demand, have collectively had a devastating effect on the automotive sector. Maruti Suzuki India LTD. company has a trend of growth from till 2008.During the financial year 2008-09 the there is downfall in the growth of the company. The main reason behind this downfall is because of the global recession. The downfall of net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008. TATA Motors, which was trying to consolidate its leadership position in the market, also had to face the impact of global meltdown. Amid the crippling economic crisis, Tata purchased Britains Jaguar Land Rover (JLR) from Ford Motor Company. Acquiring JLR saddled Tata with some tough losses. Dividends and earnings remain low. Inspite of it being a tough year for all the companies across the globe and in India, Mahindra has given a satisfactory performance. At present its shares are undervalued giving it a potential for growth. Global recession had a dampener effect on the growth of automobile industry but it was a short term phenomenon. The industry is bouncing back. One factor favouring this point is that India has become a hot destination for companies of diverse nature to invest in. Cut throat competition among top companies, lots of new car and vehicle model launches at regular intervals keeps the Indian auto sector moving. A continuous effort at cost cutting and improving productivity will help the companies in making reasonable profits despite the impact of higher commodity prices and weaker rupee. The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investment.

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BIBLIOGRAPHY
Text Books Security Analysis and Portfolio Management by Punithavathy Pandian, Vikas Publications. Security analysis and portfolio management by V.A. Avadhani. Financial Markets and Services by Gordon and Natarajan, Himalaya Publications. Financial Management by Shashi K Gupta and R. K Sharma, Kalyani Publications. Newspapers Economic times Business line Websites www.nseindia.com www.bseindia.com www.investopedia.com www.moneycontrol.com www.indiainfoline.com www.sebi.gov.in www.tatamotors.com www.marutisuzuki.com www.mahindra.com www.yahoofinance.com.

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Industrial project On Financial services

(Stock analysis)

SUBMITTED BY: SHIKHA KUMARI IMBA,6 SEM. CUJ/2010/IMBa/32


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