EQUITY RESEARCH ANALYSIS

A SUMMER INTERNSHIP REPORT

Submitted by

AAFRIN SHEHNAZ M

1811001

in partial fulfillment of Summer Internship for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

THIAGARAJAR SCHOOL OF MANAGEMENT

PAMBAN SWAMY NAGAR, THIRUPARAKUNDRAM
MADURAI, 625005

AUGUST- 2019
 CERTIFICATE

Certified that the summer internship programme report “Equity Research Analyst”
is the bonafide work of AAFRIN SHEHNAZ M, 1811001. MBA in Thiagarajar
School of Management, Madurai carried out under my supervision during May 2019
to August 2019.

Place: Madurai
Date: 30-08-2019 Prof.Dona Gosh
Faculty Supervisor
Assistant Professor

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 Scanned by CamScanner

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 DECLARATION

I certify that

1. The work contained in this Summer Internship Program is original and has been done by

myself under the general supervision of my Industry and Internal supervisors.

2. The work has not been submitted to any other Institute for any degree or diploma.

3. I have followed the guidelines provided by the Institute in writing the report.

4. I have conformed to the norms and guidelines given in the Ethical Code of Conduct of

the Institute.

5. Whenever I have used materials (Data, Theoretical Analysis, and Text) from other

sources, I have given due credit to them by citing them in the text of the thesis and giving

their details in the references.

6. Whenever I have quoted written materials from other sources, I have put them under

quotation marks and given due credit to the sources by citing them and giving required

details in the references.

AAFRIN SHEHNAZ M

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 ACKNOWLEDGMENT

First of all, I would like to express my gratitude to Almighty God to enable me to

complete this project.

I also convey my sincere thanks to Professor Dona Gosh, Faculty guide, Faculty
of Thiagarajar School of Management, without her approval I would not have done
this project.

I am thankful to Dr.M.Selvalakshmi, Principal, Thiagarajar School of

Management, for her full-fledged support.

I want to thank Mr. Balaji, Dean M.B.A, Faculty of Thiagarajar School of

Management, for providing full support and guidance which made me complete
this project.

I enormously thank Mr. Dhanasekar, Head of Risk-free Investment

Service(Business Associate of Motilal Oswal Securities ltd.)for his great support
and guidance in his busy schedule which helps me to motivate for completing the
full project.

Finally, I would like to extend my heart welled thanks to my parents and friends,
who always supported me morally and economically in completing this project
report.

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 EXECUTIVE SUMMARY

Investment decisions are very essential for investors. Since, a lot of information,
regarding Stock investments, are available around the world in the Internet, books, and journals,
one cannot simply trust and endow his/her hard-earned money in the market. Hence, it becomes
vital to do their analysis and must learn to use all tools that are available to stay on the top of the
investment and not to end up in loss. This research focuses on the Fundamental and Technical
analysis of Indian Stock market, with these analyses, an investor can understand the trend of any
sector, performance of the company in various aspects and can also be able to develop an in-depth
knowledge on the company’s strengths and weakness. Hence, the organization trained me in those
areas which involve the important points in financials and ratios and the important chart patterns
to predict the upcoming trends of a stock. I was allocated as an Equity Research Analyst, and based
on these studies suggestions were provided to the clients regarding their Systematic Investment
Planning. Sometimes, these predictions can be failed because of Market risk and other factors. The
research is explained step by step with an illustration of a company’s analysis and trends analyzed,
towards the end of the paper.

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 Table of Contents

CERTIFICATE…………………………………………………………………………………
DECLARATION………………………………………………………………………………..2
ACKNOWLEDGEMENT………………………………………………………………………3
EXECUTIVE SUMMARY……………………………………………………………………4
LIST OF TABLES………………………………………………………………………………6
LIST OF FIGURES……………………………………………………………………………6
CHAPTER I – INTRODUCTION……………………………………………………………8
1.1 Motivation…………………………………………………………………………………8
1.2 Background………………………………………………………………………………8
1.3 Objective of Study…………………………………………………………………………9
1.4 Scope of the study…………………………………………………………………………9
CHAPTER II – COMPANY PROFILE……………………………………………………10
2.1 Risk free Investment Services Ltd. (Business Associate of Motilal Oswal Securities Ltd.,)10
CHAPTER III – REVIEW OF LITERATURE………………………………………………11
3.1 Literature Review……………………………………………………………………………11
3.3 Research Gap………………………………………………………………………………..14
CHAPTER IV – FUNDAMENTAL ANALYSIS…………………………………………….15
4.1 Introduction…………………………………………………………………………………15
4.2 Financial Analysis…………………………………………………………………………..15
4.3 Non-financial analysis………………………………………………………………………16
CHAPTER V – TECHNICAL ANALYSIS…………………………………………………28
5.1 Dow theory…………………………………………………………………………………28
5.2 Chart Patterns………………………………………………………………………………29
5.3 Candlestick…………………………………………………………………………………32
CHAPTER VI – RESULTS & DISCUSSIONS……………………………………………..42
CHAPTER VII - CONCLUSION & SCOPE FOR STUDY………………………………..43

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REFERENCES…………………………………………………………………………………44

LIST OF TABLES

TABLE TABLE NAME PAGE NO.

NO.
1. NON-FINANCIAL ANALYSIS (PHARMA SECTOR) 19

2. RATIO ANALYSIS (PHARMA SECTOR) 20

3. NON-FINANCIAL ANALYSIS (AUTO SECTOR) 21

4. RATIO ANALYSIS (AUTO SECTOR) 22

5. NON-FINANCIAL ANALYSIS (FINANCE SECTOR) 23

6. RATIO ANALYSIS (FINANCE SECTOR) 24

7. NON-FINANCIAL ANALYSIS (FMCG SECTOR) 25

8. RATIO ANALYSIS (FMCG SECTOR) 26

LIST OF FIGURES

FIG.NO NAME OF THE FIGURE PAGE NO.

1. V FORMATION 30

2. INVERTED V 30

3. GAP DOWN 30

4. GAP UP 30

5. DOUBLE TOP & DOUBLE BOTTOM 31

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6. CANDLESTICK 32

7. TYPES OF DOJI 33
8. SPINNING TOP 33

9. LONG CANDLES 34

10. ENGULFING PATTERN 34

11. TYPES OF PATTERN 35

12. SUNPHARMA PATTERN 35

13. CIPLA PATTERN 36

14. DR.REDDY’S PATTERN 36

15. TATA MOTORS PATTERN 37

16. BAJAJ AUTO PATTERN 37

17. MARUTI SUZUKI PATTERN 38

18. HDFC PATTERN 38

19. INDIABULLS HOUSING PATTERN 39

20. BAJAJ FINANCE PATTERN 39

21. ITC PATTERN 40

22. HUL PATTERN 40

23. JUBILANT FOODS PATTERN 41

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 CHAPTER I
INTRODUCTION

The stock market is a place, where people invest their money to get a better return
on their investment than they can hope to get from fixed income markets, such as those for bonds
or real estate mortgages. And in the long run, no other investment will provide better yield, than
Equity trading. But, it is not so easy to gain the profit by a stroke of luck. It requires strong
fundamental and technical knowledge for each sector, each company and indices.

For this analysis, I have chosen the Automobile sector, Pharmaceutical sector,
Financial sector, and FMCG sector. During the financial year 2017-18, FMCG sector generated
US $49 billion revenue and became the fourth largest sector in the Indian Capital Market whereas
Pharma sector generated revenue of US $33 billion and the sector is expected to rise since the
spending on medicines have risen and Government's initiatives to raise the sector. The Automobile
sector is the fourth biggest industry in the Indian Economy with the offers of 4.02 million units.
The Financial division in India is an expanded field including business banks, protection
administrations, non-banking budgetary organizations, benefits framework, common assets, and
other littler/center monetary elements. The segment has seen a fast development of 74.6 million.
The primary point of this examination, is to foresee the future estimation of the stock and, to see
how each stock acts over the long haul and during real declarations.

Fundamental analysis utilizes open information like incomes of the organization, future
development, return on value, overall revenues, and other information to decide a stock's hidden
worth and it's potential outcomes for future development. It very well may be ordered into Non-
money related and Financial perspectives. From Non-money related viewpoints, one can find out
about the organization's arrangement, items, and administrations, plan of action, and so on., while
Financial angles utilize Annual articulations of the organization to assess the firm.

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 Technical analysis includes plotting stock data like prices, on a diagram and applying
different examples and markers to it, to gauge the future value developments. The time span for
specialized examination can be (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or
hourly), day by day, week by week or month to month for intraday. The value information is seen
in a noteworthy perspective, to land at any end. It includes Candlestick design, Swing outlines,
Renko diagrams, Fibonacci proportions, and On-Balance-Volume. To keep it straightforward, it
very well may be said that the cost of the stock depends on the Demand and Supply of the Capital
market.

The main Objective of this study is to,

• To observe different companies across various sectors by conducting equity research.
• To predict the upcoming price movements & trends of the stock using fundamental and
technical analysis.
• To guide the clients in taking rational investment decisions.

The strategy utilized here is, descriptive research as this subject was at that point examined by
different creators in different timespan and for different divisions and organizations. Auxiliary
information is utilized for the examination, which is gathered from the organization's yearly report,
since it is arranged and checked by the Auditors of the organization, which are viewed as
profoundly solid and exact. For specialized examination, information were taken from National
Stock Exchange of India site and other web locales for references. For principal examination the
information for recent years has been taken (2013 to 2018) and for the specialized investigation
the information for 365 days (2018) was taken. Since higher the timeframe higher will be the
unwavering quality and exactness.

Since investors want to earn maximum profit, both fundamental & technical analysis is
necessary to make the decisions. With the help of these findings, the results and the
recommendation are made & given to the clients or to different stockholders.

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 CHAPTER II
COMPANY PROFILE

Riskfree Investment Service is the Business Associate of Motilal Oswal Securities Ltd.
who's one of the renowned Stock Brokerage Service providers in India. The company partnered
with State Bank of India and Punjab National Bank to offer online trading service to its
customers. The company is very successful in providing investment advice to their clients for the
past 10 years and they are emerging as the leading investment broker in the city.

The company is engaged primarily in Securities broking in the Indian Capital Markets (National
Stock Exchange and Bombay Stock Exchange) and their main services are Portfolio management
(SEBI Registered), Investment advisory service, Central Depository Services (Through CDSIL)
and issuing of Mutual Fund and Insurance products. Over the years, the company has achieved a
large clientele group with high net worth and a diversified customer profile consisting of leading
financial institutions.

• 2015 – Appointing the new Organization head Mr.Dhanasekar after the retirement of
Mr.Prabhu Krishnan.

• 2013 – Extended their service in Mutual Funds.

• 2014 – Commencement of Semi-automated trading

• 2012 – Commencement of Centeral Depository services(CDSIL)

• 2011 – Membership with NSE and MCX for currency derivatives.

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• 2010- Commencement of another branch in the Main road, Erode

• 2010 – Commencement of SEBI launched Mutual Funds.

• 2010 – Commencement of SEBI approved portfolio management service

• 2009 - Commencement of Future and Options in NSE trading

• 2009- Commencement of NSE in Capital Market activities.

• 2008 – Newly launched by Mr.Prabhu Krishnan.

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 CHAPTER III
REVIEW OF LITERATURE

This paper manages the momentary relationship and long haul connection between the
Indian securities exchange and created financial exchanges and furthermore to recognize the
unidirectional and bidirectional causality between the Indian securities exchange and created
financial exchanges. The test outcomes showed that both the Indian financial exchange and
NASDAQ are related in a long-run relationship. Here the creators expect to examine the
relationship and they discovered a few outcomes and other new discoveries about the consistency
of the Indian financial exchange. Samadder & Bhunia (2018)

This paper beautifully crafted the effects of weekdays and weekends return and also
used various tests to understand the volatility of the stock market. GARCH test is used to and it is
found to be lower returns on Tuesday than Monday and a negative Thursday effect. The coefficient
is also found to be positive for some sectors and negative for some other sectors. The author
attempts to predict the Indian Stock Market and succeeds in finding the positive as well as a
negative effect. It also provided some suggestions on the upcoming trends. Paital & Panda (2018)

This paper talks about the Liquidity dynamics occurred in Indian Stock Market during
Financial Shocks using Extreme Value theory and found out there is a recovery for the condition.
Extreme Value Theory aggregates monthly aggregate value for TP value and yearly aggregate
values for TV and MEC. The author attempt to predict the volatility of liquid dynamics and it's
estimated to be stationary for two coefficients and nonstationary for the remaining. (Jha,
Bhattacharya & Sharad (2018)

The main objective of this paper is to detect the impact of demonetization in the Indian
Economy and it is discovered that it has no impact on the market. It is also, found that the
probability value lies above 0.5 for certain indices and below 0.5 for certain indices. Though, the

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authors attempt to find the difference it doesn't have any relationship with de-monetization
Agarwal & Sangeetha (2019)
This paper helps us to learn further on the impact of Foreign Institutional Investors in the Indian
Stock Market, and they succeed in obtaining that it is one of the strong driving forces in the Indian
Stock Market. The correlation coefficient of FII's related to the Indian Stock Market is found to be
0.20 and 0.85. Hence, the author succeeds in finding the relationship in FII with Indian Stock
Market. Kedar & Marulkar (2018)

This paper is about to show the relationship between macroeconomic factors of Indian
Economy and the performance in Stock market indices with the identification of existence in it.
The correlation coefficient is used to find the level of economic factors and market indices. It is
found to be greater than 0.5 for some factors in both Sensex and less than 0.5 for the rest. Here,
the authors attempt to find out the level of influence but ended up in finding the significant level
of hypothesis which is not sufficient enough. Kinslin & Velmurugan (2018)

The paper reviews only on the moving average method at different time intervals.
The research has been done for a wide range of industries FMCG sector, banking, oil & gas,
automobile sector, pharmaceutical sector, etc. This analysis is done for a period of 5 years & a
100-day moving average has been used. Rout, Mohanty, & Kacharia (2017)

This paper is about a survey to study the different techniques to forecast the stock
price movement using the emotional analysis from social media. The results are surprisingly
accurate even though the market is based on demand and supply.
Rajput & Bobde (2016)

This paper focuses only on the technical analysis which helps in predicting the future
share price whether to make a buy/sell/hold decision. Tools used are moving averages, RSI, etc.
Finally, the paper concludes, that most of the stocks analyzed are technically strong. Sumithra, &
Hegde (2017)

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 This paper deals with how to do a stock valuation model for the Fundamental
Analysis Approach. Discounted Dividend Model, Discounted cash flow model has been used
though that was not that accurate enough. Wafi, Hassan, & Mabrouk (2015).
This study aims to conduct an equity research analysis on different sectors and to guess the
future movements and trends of the stock/indices using fundamental and technical analysis.

Although these analyses provided a glimpse of stock market volatility they are
all failed in providing the insights and price prediction factors which is the essential part in decision
making This analysis will further be helpful for the investors in wise decision making. The short-
run /long-run relationship can be helpful in prediction but they still didn't provide any deeper
results on it. The weekdays and weekend effects would be very helpful in trading but it won't
happen as such since this is an unpredictable market. Another paper also talked about the liquidity
dynamics which is used for finding the volatility but the paper doesn't use any stocks to measure
it. Even though FII is the most important economic factor, The indices should provide a positive
result for further reimbursement of foreign investments. Another paper also talked about the
importance of economic factors and their influence, it includes only the commodities, not the
stocks. Hence, the paper only considers the pattern and trends of a stock that has been performing
for the past 365 days, it can help understand whether it is bearish or bullish.

These papers quote the impact of individual factors in the stock market and
couldn't predict the upcoming price and trends, which is very essential for traders and investors in
the Capital Market. Fundamental analysis and Technical analysis can be used to predict the future
prices and the performance of the sector. Fundamental analysis is useful in the prediction of the
business environment and its sector. It also provides a guideline for the selection of financial asset
portfolio structure decisions. The technical analysis will help provide the idea of the performance
of the stock and also very helpful in making decisions. Even though these analyses are widely used
in the Stock Market it can be helpful for certain extent only and it cannot give an assurance of
exact values, These, can also be failed during major events in the company and sudden
announcements by the government.

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 CHAPTER IV
FUNDAMENTAL ANALYSIS

Fundamental Analysis is one of the significant variables to analyze a segment or

stock when a speculator needs to implant his cash in it. The examination includes stock valuation,
where the genuine estimation of a stock can be determined utilizing monetary and financial
investigation. Furthermore, it attracts a plan to foresee the developments of stock costs. It likewise
includes, taking a gander at the money related soundness of the organization just as, considering
the other precise dangers associated with the area all in all.
Our fundamental analysis should answer the following questions, which is created based on
quantitative and qualitative factors:

1. Whether the company is making enough profit?

2. Whether the revenue of the firm is increasing?

3. Does the company have sufficient cash/assets for the expansion of business?

4. Will the company has ability repay its debts?

5. Will the company is doing sufficiently, so it can compete with its competitors?

6. Whether the stock’s share is a good investment?

The fundamental analysis can be further classified into, Financial and Non-
financial analysis.

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FINANCIAL ANALYSIS:
Financial anlaysis invloves numerical evaluation in fundamental analysis. Factors
like profitability, liquidity capabilities, solvency are analyzed to know, how much is the company
valued at the present, which is helpful in understanding the financial position. Financial analysis
involves Ratio analysis, Valuation and checking other financial reports.

RATIO ANALYSIS:
Comparing ratios with other companies in the same sector will be very useful to
understand the financial standing of the company. It includes:

• LIQUDITY RATIO
These proportions help to decide the organization's liquidity position. It is utilized
to decide the organization's capacity in changing over their advantages into money for
satisfying their obligation and different liabilities.It involves,
1. Current Ratio
2. Quick ratio/Acid test ratio

• PROFITABILITY RATIO
These proportion help determine the ability of a firm to generate revenue
and, the financial performance of the company. It is also useful in estimating the efficiency of
the company's operating model and the profit generation of its shareholders. It includes,
1. Net Profit Margin
2. Return on Equity
3. Return on Asset

• EFFICIENCY RATIO
These proportions help measure the organization's capacity to utilize its advantages and, to
deal with its liabilities for the time being. It includes,

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 1. Inventory Turnover
2. Asset turnover ratio
3. Receivables turnover ratio
4. Payables turnover ratio

• SOLVENCY RATIO
These ratios are useful in analyzing the capability of a company to meet its obligations
like debt and other liabilities in the long term. It includes,
1. Debt to Equity ratio

• OTHER RATIO
1. Earnings per share
2. Price to Earnings Ratio
3. Dividend yield ratio
4. Dividend Payout ratio
5. Book value

CHECKING THE FINANCIAL REPORTS:

Annual Reports
Annual reports adds to be one of the most significant jobs in the crucial examination of
stocks. They are enrolled by all public companies, which contain all key data about the
organization. These are distributed toward the part of the bargain year and incorporates
information up to March 31st of that year.

Balance Sheet
A Balance sheet is a method for outlining an organization's Assets and Liabilities over
a distinct period. Examination on various things ends up important to know the by and large money
related strength of the organization. More obligation demonstrates, high financing expenses and
along these lines, diminished gainfulness. Less obligation demonstrates that the organization isn't
finding a way to extend itself. Hence, the correct equalization is important.

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Profit and Loss Statement
Profit and loss statement gives us an unmistakable picture on the productivity of the
organization. Every one of the things in this announcements ought to be found in a near premise.
For example, incomes in the second from last quarter of 2017 ought to be contrasted and incomes
of the second from last quarter of 2016.

Cash Flow Statements

This statement gives, a point by point report on money streams from different
exercises of the organization. It gives an unmistakable thought on the liquidity of an organization
which will is basic in anticipating the benefit of the organization. It includes,
• Operational activities
• Investment activities and
• Financial activities

NON-FINANCIAL ANALYSIS:
The non-financial analysis includes Products and the services of the stock and their
peer competitors.

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 PHARMACEUTICAL SECTOR – NON FINANCIAL ANALYSIS

SUNPHARMA CIPLA DR.REDDY’S

ACOSTIN – Antibacterial ABACAVIR – Antiviral OMEZ – Antacid drug

drug drug used for HIV treatment
ACROTAC – Psoriasis ACEBROPHYLLINE– NISE – Anti-
drug Anti-allergic drug inflammatory drug
ACTIZO – Antimalarial ACECLOFENAC – Anti- STAMLO – Used in the
PRODUCTS drug inflammatory drug treatment of blood
pressure
ASGINASE – PARACETAMOL – CLAMP – Anti-infective
Anticancerous drug Analgesic and antipyretic drug
ARPIZOL – Used in AZETHROMYCIN – Used ECONORM – Used to
neurology and Psychiatry in the treatment of throat treat amoebiasis
infections

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 Cipla Sunpharma Sunpharma

Dr.Reddy’s laboratories Dr.Reddy’s laboratories Cipla

Zydus Cadilla healthcare Zydus Cadilla healthcare Zydus Cadilla healthcare

COMPETITO
Lupin Lupin Lupin
R
Aurobindo Pharma Aurobindo Pharma Aurobindo Pharma

Piramal pharmaceuticals Piramal pharmaceuticals Piramal pharmaceuticals

Glenmark Glenmark pharmaceuticals Glenmark

pharmaceuticals pharmaceuticals

TABLE 1 – NONFINANCIAL ANALYSIS (PHARMA SECTOR)

PHARAMACEUTICAL SECTOR – RATIO ANALYSIS

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 TABLE 2 – RATIO ANALYSIS(PHARMA SECTOR)

SUNPHARMA CIPLA DR.REDDY’s

Current ratio 0.84 4 2.9

Quick ratio 0.63 2.79 2.25

Return on assets 3.57% 11.96% 10.07%

Return on equity 2.16% 10.25% 7.86%

Inventory turnover 3.69% 4.31% 5.27%

ratio
Assets turnover 27.31% 67.18% 65.39%
ratio

EPS 3.4 23.45 76.98

P/e 38.22 27.2 19.54

Dividend payout 58.67 14.93 25.99

ratio

Book value 95.21 195.88 764.1

AUTOMOBILE SECTOR – NON FINANCIAL ANALYSIS

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 MARUTI SUZUKI
TATAMOTORS BAJAJ AUTO

Sumo Gold-Utility Bajaj Avenger street – Swift – Hatchbacks

vehicle Two wheeler
Tata Harrier – Sports Bajaj Pulsar – Two CelerioX -
Utility vehicle wheeler Hatchbacks
Tata Nexon – Sports Bajaj Discover – Two Alto - Hatchbacks
Utility vehicle wheeler

Tata Tiago - Bajaj Platina – Two WagonR - Hatchbacks

Hatchbacks wheeler
PRODUCTS
Tata Intra – Truck Bajaj CT 100 – Two Swift Dzire - Sedans
wheeler
TataMagic– Passenger KTM- Racing two Ertiga – Suv’s
transportation wheeler
Defense fire tender – Bajaj Intracity – Four Eeco - Vans
Defence vehicle wheeler
Defence prison van – Bajaj auto – Three Vitara Brezza – Muv’s
Defense vehicle wheeler
Defense load carrier- Bajaj Dominor – Two Maruthi Nexa Ciaz -
Defense vehicle wheeler Premium
Bajaj Auto Ashok Leyland Ashok Leyland

Ashok Leyland Bosch Bosch

Bosch MRF motors MRF motors

COMPETITORS
MRF motors Eicher Motors Eicher Motors

Eicher Motors

TABLE 3 – NON FINANCIAL ANALYSIS(AUTO SECTOR)

AUTOMOBILE SECTOR – RATIO ANALYSIS

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 TABLE 4 – RATIO ANALYSIS(AUTO SECTOR)

TATA BAJAJ MOTORS MARUTISUZUKI

MOTORS

Current ratio 0.58 1.26 0.87

Quick ratio 0.37 0.99 0.64

Return on assets 9.11% 14.01% 16.25%

Return on equity 3.31% 9.10% 11.91%

Inventory turnover 14.84% 13.96% 25.87%

ratio
Assets turnover 113.61% 101.74% 136.68%
ratio

EPS 5.94 40.29 248.3

P/e - - -
Dividend payout - 19.43 -
ratio

Book value 65.26 287.09 1527.86

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FINANCE SECTOR – NON FINANCIAL ANALYSIS

HDFC BAJAJ FINANCE INDIABULLS

Loans – Personal, Loans – Personal, Loans – Personal,

Commercial and Commercial and Commercial and
Motgage Motgage Mortgagae

Banking service- Cashless payment- Insurance

Savings, Current Credit cards, EMI card

Foreign Exchange Value added service- Investment – Mutual

Services Cashless claims, funds
PRODUCTS Financial fitness report
Insurance Insurance Broking and Financial
services

Investment- Investment- Mutual

Recurring,Fixed fund, Fixed

Cashless payment-
Credit cards,Debit
cards, ATM
Bajaj finance HDFC HDFC

Indiabulls Indiabulls Bajaj Finance

SBI SBI SBI

COMPETIT-
Axis bank Axis bank Axis bank
-ORS
Kotak Mahindra Kotak Mahindra Kotak Mahindra

TABLE 5 – NON FINANCIAL ANALYSIS(FINANCE SECTOR)

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 FINANCE SECTOR – RATIO ANALYSIS

HDFC BAJAJ FIN INDIABULLS

Current ratio 4.9 3.02 1.22

Quick ratio 4.9 3.02 1.22

Return on assets 12.45% 9.71% 3.10%

Return on equity 2.09% 9.54% 21.60%

Inventory turnover - - -
ratio
Assets turnover 9.44% 13.14% 12.82%
ratio

EPS 56.53 19.3 87.37

P/e - 34.73 5.13

Dividend payout 37.52 9.06 -

ratio

Book value 449.36 198.62 403.81

TABLE 6 – RATIO ANALYSIS (FINANCE SECTOR)

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 FMCG SECTOR – NON FINANCIAL ANALYSIS

ITC
Cigarettes – Classic,
Goldflake, Scissors, Silkcut,
Capston, Berkeley, Bristol,
India kings
JUBILANT
HUL FOODS
Beauty & Personal care Domino’s Pizza
Axe, Dove, Lifebuoy, Lux,
Vaseline, Tresemme, fair &
lovely, Closeup, Pears,
Lakme, Toni & Guy

Processed Food products - Food and Refreshment – Dunkin Donuts

Kitchens of India,
Aashirvad, Sunfeast and
Candyman
PRODUCTS Lifestyle Retailing- John
Players, Wills Lifestyle,
Miss Players
Personal Care- Essenzia Di
Wills,Vivel Di Wills, Fiama
Di Wills
Stationary – Classmate,
Papercraft
Lipton, Knorr, Brooke Bond
3roses, Kissan, Kwality
Walls, Magnum
Home Care products- Cif, Hong’s Kitchen
Comfort, Domex, Vim, Surf
excel, Rin
Water Purifier- Unilever
Pure it.

HUL ITC ITC

Jubilant Foods Nestle HUL

Nestle Jubilant Foods Nestle

COMPETE
Colgate-Palmolive Colgate-Palmolive Marico
TORS
Procter and Gamble Procter and Gamble

TABLE 7 – NON-FINANCIAL ANALYSIS(FMCG SECTOR)

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 FMCG SECTOR – RATIO ANALYSIS

ITC HUL JUBILANTFOODS

Current ratio 3.07 1.36 1.49

Quick ratio 2.28 1.07 1.36

Return on assets 21.50% 78.80% 24.38%

Return on equity 17.85% 33.78% 16.86%

Inventory turnover 5.93% 15.78% 48.27%

ratio
Assets turnover 64.46% 213.96% 184.48%
ratio

EPS 10.19 27.89 24.46

P/e - - -

Dividend payout 50.42 75.31 -

ratio

Book value 47.27 35.46 100.31

TABLE 8 – RATIO ANALYSIS(FMCG SECTOR)

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 Based on both Non-Financial & Financial aspects of a company an investor can have an
overview of the company's achievement in the past few years. This will help them to make the
right decisions.

With the help of Financial & Non-Financial analysis, we can give

recommendations to the investors.

By these, Fundamental Analysis can be concluded.

Now with the help of technical analysis, we can get clarity & can be confident with the
investment decision that can be made in future.

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 CHAPTER V
TECHNICAL ANALYSIS

Technical analysis is a technique of identifying trends & patterns in an earlier

stage, which will help us in taking decisions on to buy/sell/hold the stocks. It is a study between
Price - Volume & Demand-Supply for all the stocks present in the Capital Market. This analysis
attempts to use past stock prices and volume information of a stock, to predict future price
movements, which will be shown in graphic form or numerical form. If it is mastered the price
movements & trends of the market can be predicted & can be prepared in our trading style.
Assumptions made for technical analysis are,
• The value of the security is determined by the interaction between demand and supply.
• The Capital market deducts everything.
• The Capital market consistently moves in trend.
• History repeats, which holds for the stock market too.

For technical analysis, Candle charts, Heikin Ashi charts, Support and Resistance,
Renko charts, Fibonacci ratios and On balance volume are considered. Before understanding the
technical analysis we must understand the trend patterns of the market which is explained through
Dow Theory.

DOW THEORY
This theory is used to explain the trend patterns & movement of the stocks in the market. It was
developed by Charles Dow Jones. As per Dow Theory, the trend can be divided into Primary
sector, Secondary sector & Minor/Short-Term sector.

➢ PRIMARY
• Increasing – Bull Market
• Decreasing – Bear Market

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➢ SECONDARY
This trend moves opposite to the main trend & lands to corrections. This trend is known as Swift
& Quicker

➢ MINOR
These trends are also called as tertiary moves & often considered as random wriggles. These are
daily fluctuations and tries to correct the secondary trend.

CHART PATTERN
A chart pattern is a one of a kind arrangement on a cost of a stock, that makes an
exchanging signal, Chartists consistently utilize these examples to recognize current patterns, to
trigger purchase and sell signals. These examples speak to a visual impression of free market
activity in some random market. This influences costs and powers ii to move around with a
particular goal in mind and structure an example to which dealers apply a significant name.
Furthermore, these examples are a sort of inevitable outcome. Dealers are simply responding
accurately to what the outlines are instructing them to do. In securities exchange exchanging,
outline examples assume a significant job during specialized investigation. The information is
plotted, which structures an example that normally happens and rehashes itself over a period. They
have been developed in various structures, to speak to graphically. They might be spoken to into
a yearly, month to month, week after week, day by day or even hourly.

V-FORMATION
A V-development might be bullish or bearish, however numerous examiners accept that a
V-arrangement is hazardous as there could be another lofty decay liable to happen. As the name
shows, the V arrangement is a long sharp decrease and a quick inversion. At the point when the V
example is framed, the market premium changes rapidly from dread to expectation and the other
way around though, in Inverted V, the value rise happens first and after that it decays.

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 Figure 1 - V formation Figure 2 – Inverted V

GAP FORMATION:

A gap is a space between one price bar and the next. Gaps occur when the prices
significantly change from the close of one price bar to the next, with no trading takes place in the
space between the bars. At the point when the costs are moving upwards and in high of any day is
lower than the following day's low, thus a hole has happened. So also, at whatever point the costs
are falling, a hole is framed in the most minimal cost on multi day, which is higher than the most
noteworthy cost in the following day. There are two types of gaps, one is a gap up and gaps down.
These patterns are formed because of the underlying fundamental/technical factors.

Figure 3 – Gap down Figure 4 – Gap up

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TOPS AND BOTTOMS:
Tops and Bottoms are always formed at the beginning or end of a new trend. The
marketer should buy the stock at the bottom and exit before the top has reached.

• Double Tops and Bottoms

This chart is an example for flag a pattern inversion, which is viewed
as the most solid and is normally utilized. These examples are framed after a
continued increment in the pattern and signal and where the pattern is going to invert.
This example is made, at whatever point a value development tests backing or
opposition levels twice and can't achievement. This example can be regularly used to
flag middle of the road and long haul pattern inversions. If there should be an
occurrence of the twofold top example, the value development will twice attempted to
move over the specific value level. After two fruitless endeavors while pushing the
cost higher, the pattern start to turn around and the value heads to lower. If there
should arise an occurrence of a twofold base, the value development has been
attempted to go lower twice, yet it establishes bolster each time. After the subsequent
bob off, the help of the security enters another pattern and will heads upward.

Figure 5 – Double top & Double bottom

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CANDLESTICKS

Candlestick chart contains open, high, low and close characteristics for each period. The
filled or empty piece of the light is called as "the body". The long slight lines above and underneath
the body address the high/low broaden and are grouped "shadows". The high is separate by the
most elevated purpose of the upper shadow and the low, by the base of the lower shadow. If the
stock closes higher than its opening worth, an unfilled flame is drawn with the base of the body
addressing the opening expense and the most astounding purpose of the body addressing the end
cost. If the stock closes lower than its opening worth, a filled light is drawn with the most
astounding purpose of the body addressing the opening expense and the base of the body
addressing the end cost.

Figure 6 – Candlestick

DOJI
Doji is commonly found in the candlestick charts, they play an important role & provide
information on their own. These are called as neutral patterns. The length of the upper and lower
lines can shift and, result in resembling a cross-modified cross or in addition to sign.

❖ Gravestone: It is framed during the opening and shutting cost of the benefit are equivalent
and occuring at the most reduced cost of the day. The outcome makes it resemble an upset "T"
with a long upper shadow and no lower shadow.

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❖ Dragonfly: It is shaped during the opening and shutting cost of the day are equivalent and
happen at the most noteworthy cost of the day. The outcomes make it resemble a "T" with a long
lower shadow and no upper shadow.

Figure 7 – Types of Doji

SPINNING TOP
Candlestick that have little bodies with lower and upper shadows that surpass the
length. Spinning tops sign uncertainty within the brokers. After the candle shuts the market, will
in general move away from the spinning top quickly.

Figure 8 – Spinning top

LONG CANDLES

A long Candle speaks to a huge worth advancement from close to open, where
the length of the body is long. A long white body exhibits a bullish example and a long dull body
demonstrates a bearish example.

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 Figure 9 – Long candles

ENGULFING PATTERN
An engulfing pattern is a type of a long candle, where the body's open/close immerses
the earlier day pattern. A reversal design that can be bearish or bullish, dependent upon whether it
appears toward the upturn (bearish immersing) or a downtrend (bullish inundating). The main day
is portrayed by a little body, trailed by multi day whose body thoroughly inundates the prior day's
body. This is a solid example and various examiners use this.

Figure 10 – Engulfing pattern

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1.1.PHARMACEUTICAL SECTOR – SUN PHARMA

Figure 11 – Types of patterns

Figure 12 – Sunpharma pattern

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 1.2 PHARMACEUTICAL SECTOR – CIPLA

Figure 13- Cipla pattern

1.3 PHARMACEUTICAL SECTOR – DR.REDDY’S LAB

Figure 14- Dr.Reddy’s lab pattern

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2.1 AUTOMOBILE SECTOR – TATA MOTORS

Figure 15- Tata Motors pattern

2.2 AUTOMOBILE SECTOR – BAJAJ AUTO

Figure 16- Bajaj Auto pattern

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2.3 AUTOMOBILE SECTOR – MARUTI SUZUKI

Figure 17- Maruti Suzuki pattern

3.1 FINANCE SECTOR – HDFC

Figure 18- HDFC pattern

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3.2 FINANCE SECTOR – INDIABULLS HOUSING

Figure 19- Indiabulls housing pattern

3.3 FINANCE SECTOR – BAJAJ FINANCE

Figure 20-Bajaj Finance pattern

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4.1 FMCG SECTOR – ITC ltd.

Figure 21- ITC pattern

4.2 FMCG SECTOR – HINDUSTAN UNILEVER ltd.

Figure 22- HUL pattern

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4.3 FMCG SECTOR – JUBILANT FOODS

Figure 23- Jubilant foods pattern

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 CHAPTER VI
RESULTS & DISCUSSION

So far, all the analysis we have done will give the investors a brief idea in taking
investment decisions and also will be helpful in analyzing different stocks & sectors. From our
research, we can able to find that rate of increment is slower compared to falling rate which is
faster. Decline in the values of Pharmaceutical sector companies is due to USFDA lawsuits against
inflation of generic medicines. Automobile sector suffering a huge downfall in the span of two
years due to BS6 norms, decline in the sales of the automobiles, raise in petrol and diesel prices
and expectations over electric vehicles. NBFC’s in Financial sector can be estimated to perish
sooner as the rate of unemployment showed a maximum result over the 45 years, which immerse
the demand of the consumer. Though FMCG sector, also showed some drop in their prices, they
can able to raise because of the increasing rural consumption and it is estimated to grow 9-10%.

There are no absolute guarantees in the stock market, even though all the ratios can
point to a strong and healthy market and fundamental & technical analyses can find a valued stock
that should advance, but the shares will decline anyway. Stock market is the place to get richer but
not to get rich. Hence, Investors/Traders must set their objectives and develop a strategy that will
help to meet them. They also must need to understand that quick or high reward only comes with
exceptional risk.

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 CHAPTER VII
CONCLUSION & SCOPE FOR STUDY

After a complete understanding of fundamental & technical analysis in the Capital

market, we can get some interpretations in the functioning of Indian Economy, the movement of a
particular stock and sector. However, these factors alone not enough for the accurate prediction of
stock prices but it can be used to analyze the sudden downfall or unexpected rise in the value of the
stock.

Even though nowadays, many software and analyzing tools are available in the Equity market
to make conventional trading, basics always remain the same. The fundamental analysis helps us to
find the financial and non-financial features of the company, and the sector. Technical analysis helps
the research analyst to forecast the trend and pattern of the stock/index, that helps to make clear
investment decisions. Thus, fundamental analysis and technical analysis complement eachother, and
both are essential in making wise investment decisions.

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