Вы находитесь на странице: 1из 91

A Summer Project Report

On
Fundamental vs. Technical
(The Double Edged Sword of Stock Analysis)
At

Odisha Capital Market & Enterprises Ltd.


(Formerly Bhubaneswar Stock Exchange)
Bhubaneswar

This project report is prepared for a partial fulfilment of the PGDM Program
SESSION (2018-2020)

SUBMITTED BY
GOUTTAM PANDA
Regd. No- BIM1318BM007

Under guidance of
EXTERNAL GUIDE INTERNAL GUIDE
Mr. Bipin Dutta Prof. T.SRIDEVI
Assistant Manager Professor, BCCM

Bhavan’s Centre for Communication & Management (BCCM) Unit-III, Plot no-9, Kharabela Nagar,
Bhubaneswar-751001, Odisha
Bhavan’s Centre for Communication & Management (BCCM),
BHUBANESWAR KENDRA
STUDENT’S DECLARATION

I hereby declare that the summer internship report entitled “Fundamental vs. Technical

(The Double Edged Sword of Stock Analysis)” is submitted in the partial fulfilment of

Summer Internship Trainee of PGDM Program of Bharatiya Vidya Bhavan (BCCM),

Bhubaneswar Kendra, and Odisha. This is to declare that the entire job indulged in the

completion of this project report is a profound and honest work of mine under the

guidance of Prof. T SRIDEVI, BCCM.

GOUTTAM PANDA
Roll No- BIM1318BM007
CERTIFICATE

This is to certify that the summer internship report entitled “Fundamental vs. Technical

(The Double Edged Sword of Stock Analysis)” For the Year 2018-2020, submitted by

Mr. Gouttam Panda, Registration no- BIM1318BM007, Bharatiya Vidya Bhavan,

Bhubaneswar Kendra, Odisha towards partial fulfilment of the requirement for the award

of the degree of Post Graduate Diploma in Management (PGDM) is a bona fide record

of the work carried out under the guidance of Mr. Bipin Bihari Dutta, Assistant Manager,

Odisha Capital Market & Enterprises Ltd. and Prof .T Sridevi .

INTERNAL GUIDE EXTERNAL GUIDE


PROF. T SRIDEVI MR. BIPIN DUTTA
PROFESSOR, BCCM ASSISTANT MANAGER
ACKNOWLEDGEMENT

Firstly, I would like to express my gratitude towards “Odisha Capital Market &
Enterprises Ltd. (Bhubaneswar Stock Exchange), Bhubaneswar” for giving me the
opportunity to work with them. I would like to thank the entire staff of BhSE for their co-
operation during summer training which helped in the learning experience being
enjoyable and fruitful.

I shoulder the responsibility to acknowledge the following distinguished personalities


who graciously allowed me to carry out this project work successfully.

I am highly indebted to Mr. Bipin Dutta, Assistant Manager, Of Odisha Capital Market
& Enterprises Ltd and Prof. T SRIDEVI, (Professor, BCCM) for providing the
opportunity to prepare the project report under the guidance. I wish & express my heart-
full gratitude to Mr. Bipin Dutta & Prof. (Dr.) T SRIDEVI for the guidance and
suggestions throughout the project, without which I could not have been able to complete
this project report successfully.

I extend my thanks to all my friends for their moral support and encouragement. Last but
not least I thank my parents and relatives, who inspired me always to do the best.

Thank you!

Gouttam Panda
CONTENTS
CHAPTER 1: INTRODUCTION
• Background of the study
• Statement of the problem
• Need and importance of the study
• Objective of the research
• Scope of the study
• Theoretical Background

CHAPTER 2: ORGANIZATION OF STUDY


• Profile of the organization
• Vision, mission & objective of organization
• Organization structure
• SWOT analysis

CHAPTER 3: RESEARCH METHODOLOGY


• Review Literature
• Research
• Types of research
• Sampling technique
• Data collection
• Collection of data

CHAPTER 4: PRESENTATION AND ANALYSIS OF DATA


• Data analysis methods used in the study
• Presentation and analysis of data
• Conclusion from analysis

CHAPTER 5: SUMMERY AND CONCLUSION


• Findings & Conclusion from research
• Implication of the study
• Suggestion for further research
CHAPTER-1
INTRODUCTION
1. Introduction
A financial investment is a process of acquiring assets with the idea that the asset will
provide income in the future or appreciate and be sold at a higher price.
There are four basic investment objectives

1. preservation of capital,
2. current income,
3. current growth
4. Total return.

Preservation of capital -This is the most conservative investment strategy, and it is


intended solely to avoid risk of loss. Less risk, of course, means less return. Low-yielding
bonds and other debt instruments are the foundation of a capital preservation strategy.

Current income- Conversely, current income is the strategy focused on getting returns on
investment as quickly as possible. High rate of interest bearing bonds and high-dividend
paying or sound fundamental stocks are its mainstays.

Current growth- This strategy is intended for investors with time to "get in on the ground
floor" of the "next big thing". As risky as that sounds, it is not a bad strategy for someone
who understands the potential downside. Investing in any one blue chip stock is
adventurous, but the idea to collect an array of those emerging/ growing stocks - generally
shares of relatively low market capitalization - in a portfolio appears good. The
expectation is that a couple of these investments will turn out to be blockbusters, which
will more than offset the ones that crash and burn. A growth stock generally does not
offer dividend, and the entire payoff with this strategy is in selling it years from now for
many multiples of what you paid for it today.

Total return-Investing factors in both capital appreciation - how fast the share price grows
- and dividend yield. It also considers the tax implications for the individual investor: a
tax-free return of 5% is as good as a taxable dividend of 7% to someone in the 40%
bracket. Total return is sometimes called growth-with-income.
Types of Financial Investments

Certificate of deposits, Bond, debenture, stocks, mutual funds, commodity markets.

Stocks
When you purchase stocks, or equities, as your advisor might put it, you become a part
owner of the business. This entitles you to vote at the shareholders' meeting and allows
you to receive any profits that the company allocates to its owners. Stocks are volatile.
That is, they fluctuate in value on a daily basis. When you buy a stock, you aren't
guaranteed anything. Investments in stocks (or equities) always entails risk but this lead
to the scope of higher better return, so we have pros and cons associated with stocks

The pros

 Highest returns.
 Income from dividends
 Stocks are easily diversified
 Stocks are highly liquid

The Cons

 Volatile in the short term.


 If you pick the wrong stock, you risk losing the value of your investment
 It takes knowledge and time to analyse a stock

Analysis

Fundamental analysis and Technical analysis help us to take an informed & logical
decision while investing on stocks which makes our risk affordable.

Fundamental analysis- A method of evaluating a security by attempting to measure the


intrinsic value by examining related economic, financial and other quantitative &
qualitative force. It considers the macroeconomic factor which can affect the security
value and specific factors (like the financial condition, management of companies,
competitors, and volume sale). The end goal of performing financial analysis is to get to
produce a value so that investors can compare the stock’s current price in hopes of
figuring out what sort of position to take with the security( underpriced = buy ,
overpriced=sell).
Technical analysis- A method of evaluating stocks by analyzing statistics generated by
markets activity such as past price & volume, use charts and other tools to identify pattern
that can suggest future activity it doesn't care one bit about the "value" of a company or
a commodity. Technicians (sometimes called chartists) are only interested in the price
movements in the market. Technical analysis really just studies supply and demand in a
market in an attempt to determine what direction, or trend, will continue in the future. In
other words, technical analysis attempts to understand the emotions in the market by
studying the market itself, as opposed to its components.

Can They Co-Exist?

Although technical analysis and fundamental analysis are seen by many as polar
opposites - the oil and water of investing - many market participants have experienced
great success by combining the two. For example, some fundamental analysts use
technical analysis techniques to figure out the best time to enter into an undervalued
security. Oftentimes, this situation occurs when the security is severely oversold. By
timing entry into a security, the gains on the investment can be greatly improved.

Alternatively, some technical traders might look at fundamentals to add strength to a


technical signal. For example, if a sell signal is given through technical patterns and
indicators, a technical trader might look to reaffirm his or her decision by looking at some
key fundamental data. Oftentimes, having both the fundamentals and technical on your
side can provide the best-case scenario for a trade.

As knowledge of both makes one complete irrespective of the fact that individual is a
trader or investor so they are the double edged sword of stock analysis.
1.1 OBJECTIVES OF THE STUDY
• To know the future movement of selected companies shares through fundamental and technical
analysis
• To estimate the stock price changes by studying the forces operating in the overall economy, as
well as influences peculiar to industries and companies.
• To select the right time and right securities for the investment

1.2 SCOPE OF THE STUDY


The study is to analyze the financial strength and future investment prospective of the
key players from power sector of the economy. The fundamental analysis is to determine
the value of the shares. The technical analysis is to predict the future stock behavior.
Rational investors always focus on maximum return which bears minimum risk. Hence,
for them, well diversified equity funds are the superlative opportunity available for the
investment. .
1.3. NEED OF THE STUDY
The capital gains of an investor are on the performance of a particular company’s stock
in the stock market. The stronger the company’s share, the more profit the investor gets.
So it is necessary to ascertain, analyze and interpret the share of various firms in order to
know its position in the market. Investors can make wise investment with the help of this
analysis through this project, it tries to point out the company which ensure maximum
return and minimum risk in power sector where in investment could be made.

2. Confronted issues associated with investment in securities

2.1. On new issue front

As per present SEBI Disclosure and Investors protection guidelines 2000 every
company whether unlisted or listed, which is able to make a public issue can freely
price its shares

IPOs are priced by companies in conjunction with merchant bankers who manage
the issue of securities. The company issues a prospectus which discloses full
information, including the project risk factors, to the investors to be able to appraise
the pricing, but many instances the forecast about the company, expected returns
and future run are exaggerated to make the subscription successful. Premium price
on shares are charged because of such promising forecasts which mislead the
investors to subscribe these shares and in turn, they suffer as they don’t get return
as expected or predicted.

Lack of adequate knowledge of investors to analyse the basic aspects of company’s


financial strength such as financial statement, balance sheet, ignorance about the
management team of the firm are exploited. The inability of investors to find out
intrinsic value of the proposed stocks as well as to have a clear prediction whether
the exaggerated promises will hold good leads them to suffer loss when the issued
stocks come for trading in the stock exchanges.

Exploitation of investors psychology-when the market is booming due to the


sentiments triggered by political & other happenings which has no way contributed
tangibly towards the industry. Many listed companies further issues shares at 10-
15% below the peak period market price and makes the offer successful. The
investors holding the share for long term perspective suffer when the boom because
of sentiments settles
2.2. On trading front
2.2.1. Stocks quote lower than issued price

Investors don’t respond to greedy issued price in secondary market so at many


instances the recent issued stocks quote in market far below the respective issue
prices. So this circumstances reduces the liquidity as no one want to buy an overpriced
share, the company raised the amount successfully from IPO with exaggerated
forecasts but the investors suffer who are holding the stock. Few examples

1. Healthcare Global raised Rs 650 crores through IPO that was opened from March
16-18 and was oversubscribed 1.56 times. Healthcare Global
Enterprises disappointed investors on first trading day itself. The stock fell
sharply by 21.55 percent to close at Rs 171 compared to issue price of Rs 218 on
Wednesday.
2. In 2010 and 2011, 112 companies came out with IPOs, out of which 82 are trading
below their issue price. The BSE IPO index, which tracks the value of
companies for two years after they list, fell over 37% to 1,300 between 4 January
2010 and 31 December 2011
3. In 2009 an analysis of the performance of companies listed on the Bombay Stock
Exchange in the past two years, as many as 27 out of the 40 stocks studied are
trading much below their issue prices, which are fixed after their initial public
offers few big names likes of , Anil Ambani group firm Reliance Power, which
traded at Rs160.05 or 35% below its issue price of Rs450 a share, state-run NHPC
(down 8.19% at Rs33.05 from its issue price of Rs36), Raj Oil Mills (down 37%
at Rs75.45 as against issue price of Rs120).

2.2.2. Operators play a dominant role

There are many ways by which stock market operators try to make the share price
move as they desire. Newer techniques to commit fraud are being devised every day
and even the well informed often fall for them. One of the most common ways in
which stock market operator work is by forming a syndicate with each other and
targeting companies where a big portion of promoter holding is pledged. Promoters
of many midcap companies in India have pledged a large portion of their holding
which gives these operators a target rich hunting ground.

The objective is to short sell (selling shares without actually holding them – i.e. on
the promise to buy them back in future – if you are wondering how this happens, this
is allowed and legal in almost all stock markets of the world) a lot of shares very
quickly so that the share price falls sharply. More the price falls, higher the profit they
make (since they sell high and can buy back at a lower price hence netting the
difference
Creates confusion – Investors do not exactly know why the share starts falling but
they suspect the worst and start selling just because everyone seems to sell. No one
looks at the business or fundamentals of the company once this happens. It’s a free
for all sell fest

2.2.3. Insider trading leads to Information asymmetry

An insider is a director or senior officer of a company, as well as any person or entity


that beneficially owns more than 10% of a company's voting shares. So insider trader
is anyone who trades a company's shares based on material non-public
knowledge. Insiders have to comply with strict disclosure requirements with regard
to the sale or purchase of the shares of their company.

This lead to information asymmetry- Asymmetric information is a situation in which


one party in a transaction has more or superior information compared to another. This
often happens in transactions where the seller knows more than the buyer, although
the reverse can happen as well. Potentially, this could be a harmful situation because
one party can take advantage of the other party's lack of knowledge. So an insider
buys or sells his sakes in market before the news is made public. This unbecoming
acts affect the markets stability to a great extent and the retail investors suffer a lot
which leads to great loss of investor confidence.

2.2.4. Fantasy of day trading

Day trading is the act of buying and selling (or shorting and covering) a stock or other
investment in the same day with an intention of deriving profit out of intra-day price
variations.

Having what it takes to be a successful intraday trader

Finance Knowledge – A wealth of knowledge of Technical Patterns, understanding


how news affects stock prices and a very good understanding of the basics among
others, is necessary.
Interest – You will need a strong interest to watch stocks and market news if you are
doing this on a regular basis. If you do not have sufficient interest, the likelihood is
you will quit before becoming profitable.
Perseverance – There can be very high highs and very low low’s so it’s important to
be able to persevere through the lows.
Quickness – Day trading is measured in seconds and milliseconds, being able to react
quickly and place trades quickly is essential.
Multi-Tasking – Just like being a fast trader, one must also be able to see and look
at multiple different screens with large quantities of information to make quick and
informed decisions.
Independence – Day traders frequently spend their time in front of a computer
screen, oftentimes alone in their office. It can be quite daunting to have little human
contact.
Managing Stress – As we stated earlier, day trading is stressful, more than many
other jobs as there are constant demands for your attention and one big mistake could
be incredibly costly.
Organized – Being prepared is also very important to day traders, a lot of the work
can be done after the market closes at night or before the market opens in the morning.
If you are not able organize and prepare your information before the chaos begins, it
will be that much harder to manage.
Technologically Inclined – Charts, news feeds, trading screens, internet, these are
all things that are absolutely necessary to get an edge on the competition in the day
trading game. Without a technologically inclined mind, fixing internet problems and
upgrading your layout to multiple screens could be quite daunting and expensive.

Broker persuades the investors to do intraday trading with misleading information as


their primary motive is to gain brokerage which increases with number of transaction
the investors does. Only about 1 in 100 investors who derives profit in speculative
transactions. However, every day may not be termed as his ‘Day’ with the naked
principle that if one has gained today he is likely to lose tomorrow.

2.2.5. Power Of Attorney in favour of market operators

A power of attorney is a legal document giving one person (called an "agent" or


"attorney-in-fact") the power to act for another person (the principal). The agent can
have broad legal authority or limited authority to make legal decisions about the
principal's property and finance.

The SEBI Circular dated April 23rd 2010 indicates that PoA is mandatory only for
online accounts but not to offline accounts Generally booklet our stock broker give to
sign before opening a demat or trading account that is when we give PoA to broker,
and there is a possibility broker can take undue advantage by
1) Transfer securities for off market trades but other than the parties mentioned
in POA.

2) Transfer of the fund from the client’s bank account for the trades executed by client
through another stock broker.

3) Opening a trading account with any stock broker or opening depository account
with any other depository.

4) Executing trades without client’s consent.

5) Prohibiting issue of delivery instruction slips to beneficial owners.

6) Prohibiting clients from the operating account.

7) Merging balances from other accounts to nullify debit in any other account.

8) Open an email account on behalf of the client to receive statutory transactions

So the investor only should allow Specific Power Of Attorney-


Here POA holder perform only specific activities on behalf of the original holder
which are specified in POA document(Revocable POA-Where you can revoke the
rights you have given in POA.)

Inability of retail investors to make market analysis to select right stocks for
investment and to decide right time of entry and exit, Majority of the retail investors
lack the required level of financial literacy
3. Need of financial literacy
Investment principles should base on tree basic parameters
1. Selection of stocks
2. Entry point
3. Time of exit.
Selection of stocks
Investors for selecting a stock wisely should have knowledge to go through the
fundamentals of the companies. One has to analyze the financial strength of the
companies through study of their financial statements to know the financial status of
companies. This exercise tells us how such companies perform.
The current status of the companies is derived from the production, sales volume & how
it complements the demand and supply status. These facts shows where the
product/company stand among the competitors.
The future stand of the companies is known from the information relating to new
assignment, business deals made by the companies, the demand for its product & current
growth status of the sector which the company belongs. All these factors contribute to
future growth of the company. The external factors such as labor, political & economic
situations and litigations, if any, which are likely to affect the performance of the
company also need to be analyzed. The stock price movement history in the stock
exchange also needs to be studied to strengthen the investment decision. All the above
exercises help one to ascertain intrinsic value of a stock while giving a logical confidence
to take a prudent decision before investment.
Entry point
The price at which an investor buys an investment. The entry point is usually a component
of a predetermined trading strategy for minimizing investment risk and removing the
emotion from trading decisions. Recognizing a good entry point is the first step in
achieving a successful trade, example long-term investors target sluggish market
conditions.it is wise to buy a selected stock when economy or political system appears to
take a stable position.

Time of Exit
The method by which a venture capitalist or business owner intends to get out of an
investment that he or she has made in the past. In other words, the exit strategy is a way
of "cashing out" an investment.1
This depends on individual investors who sets a stop loss order it varies up to which an
investor can absorb loss, on the other end it depends on investors who decided to exit at
particular point stock price is increasing.
4. Essential tools of stock analysis
4.1. Fundamental analysis

Fundamental Analysis is an approach to determine the price intrinsic value


If Market price is greater than the intrinsic value then the stock is overvalued and should
Be sold. If the intrinsic value is greater than the market price then one should buy the
Stock as it is undervalued. Fundamental analysis helps in determining the intrinsic value
Using the EIC framework.
The Fundamental Analysis Framework

Economic Analysis Economic Analysis


Industry Analysis Industry Analysis
Company Analysis Company Analysis

EIC Framework CIE Framework

Economic Wide factors


• Growth rates of National Income and related measures
• Growth rates of industrial sector
• Inflation
• Interest rates
• Foreign trade, Balance of Payments, and Exchange rates
• Government revenue, spending and deficits
• Savings and investment
• Demographic data
• Monsoon
Economic Forecasting Techniques
• Anticipatory Surveys
• Barometric or Indicator Approach
• Econometric model building approach
• Opportunistic Model Building

Anticipatory Surveys

A method through which investors can form their opinions/expectations with respect to
future state of the economy.
Limitations
• Surveys results cannot be regarded as forecasts per se. A consensus opinion may be
used by the investor in forming his own forecasts
• There is no guarantee that the intentions surveyed would certainly materialize. To this
extent, the investors cannot rely solely on this.

Barometric or Indicator Approach

In this approach, various types of indicators are studied to find out how the economy is
likely to perform.
Leading Indicators

These are the indicators that are studied to find out how the economy is likely to perform
in the future. The various leading indicators are

• Average weekly hours of manufacturing production workers.


• Average weekly initial unemployment claims
• Contracts and orders for plant and machinery
• Market Index
• Change in sensitive material prices
• Change in manufacturer’s unfulfilled orders

Coincidental Indicators

These are indicators that reach their peaks and the troughs at approximately the same time
as the economy. The various indicators are

• Index of Industrial Production


• Manufacturing, trade and sales
• Employee on non-agricultural payrolls

Lagging Indicators
These are indicators that lag behind the consequences vis-à-vis the economy. The various
indicators are
• Average duration of unemployment
• Ratio of inventory to sales
• Commercial and industrial loans outstanding

Limitations of barometric Approach


• It does not reflect the magnitude
• The changes observed through the indicator might be only observations
• Government delays

Econometric Model Building Approach


This is another approach in determining the precise relationship between the dependent
and the independent economic variables
Limitations
• Large computer facilities and vast amount of clerical programming support required
• The overall forecasts are more reliable than individual forecasts
• Large time is required
• These are basically short term forecasts

Opportunistic model Building

Opportunistic model building is also known as GNP model building.


Steps
• Hypothesize the total demand in the economy as per the prevailing scenario.
• Forecast the GNP figure by estimating the levels of various components
• Add the various forecasts
• Compare the prediction of individual GNP with that of various independent agencies to
check the reliability of the results.

Industry Analysis

Key Characteristics in an Industry Analysis


• Past sales and earnings performance
• Permanence of the industry
• Attitude of government towards industry
• Labor conditions within the industry
• Competitive conditions
• Industry share prices relative to industry earnings
Gordon growth model
The Gordon growth model is used to determine the intrinsic value of a stock based on a
future series of dividends that grow at a constant rate. Given a dividend per share that is
payable in one year, and the assumption the dividend grows at a constant rate
in perpetuity, the model solves for the present value of the infinite series of future
dividends.

𝐸𝑃𝑆(1−𝑏)
𝑃=
𝐾𝑒−𝑔

P = Intrinsic value, b= pay-out ratio,


Ke = cost of equity, g = growth rate,
EPS = Earnings per share

Technical analysis is the science of recording, usually in graphic form, the actual history
of trading (price changes, volume of transactions etc.) in a certain stock or in averages
and then deducing from that pictured history of the probable future. It refers to the study
of the action of the market itself as opposed to the study of the goods in which the market
deals. It can be defined as an art of identifying the trend reversal at a very early stage and
to take position at the right time in the direction of the reversal to ride the trend until there
is evidence enough to suggest that there will again be a change in trend.

4.2. Technical analysis

Assumptions of Technical analysis

 Market price is determined solely by the interaction of demand and supply of


shares.
 Supply and demand are governed by many rational and irrational factors
 Before a stock experiences a mark-up phase, whether it be a minor or the major, a
period of accumulation usually will take place. Conversely, before a stock enters
into major or minor downtrend a period of distribution usually will be the
preliminary occurrence.
 Irrespective of minor fluctuations in the stock market, share price tend to move in
trends, which persist for an appreciable period of time.
 Changes in trends are caused by shifts in demand and supply positions of shares.
 Shifts in demand and supply no matter when they occur, can be detected, sooner
or later in charts of market action
 Chart patterns repeat themselves.

Technical vs. Fundamental Analysis

 Technicians believe that behind the fundamentals are important factors.


 Technicians act on what while fundamental analysts work on Why.
 Technicians are not committed to a buy and hold strategy, while the fundamental
analysts are.
 Technicians do not separate income from capital gains while fundamental analysts
are concerned for both income and capital gains.
 Technicians are quick to react, make commitments and to book profits or make
losses. Fundamental Analysts do a lot research before making any decision.
 Technical analysts rely more on technical indicator while fundamental analysts
rely more on fundamental factors.
 Technicians believe that market repeats itself.
 Technicians believe that breakout from previous trends are important signals.
 Technicians use charts to confirm fundamentals.

Limitations of technical Analysis

 No definite answers to predictions


 Technical analysis on a whole cannot be said to be correct. It has to be used with
fundamental analysis
 All data used under technical analysis is past.
 Widely traded stocks may be the result of a battle of wits.
 False signal may occur
4.2.1. Charts
The charts are used to study the patterns of stock price movements, volume movements.
There are four types of charts that are popularly used. They are
 Line chart
 Bar Chart
 Point and Figure chart
 Japanese Candlesticks
 Simple Moving Average

4.2.1.1. Line Chart


In a line chart, the closing prices for each period is plotted a point. These points are joined
by a line to form a chart. The period may a day, a week or a month

4.2.1.2. Bar Chart


The bar chart is the type of chart most commonly used by technical analysts. The
horizontal scale on the bottom of the chart indicates the passage of time. The time scale
can be anywhere from minutes to years, with the most popular scale being the daily bar
chart, the weekly bar chart and the monthly bar chart. The daily bar chart indicates the
range of prices for one day’s trade, as measured on the vertical scale of the chart.
The “bar" is the range of price for a particular time period; for a daily bar chart, the top
of the bar represents the highest value for the day while the bottom of the bar represents
the lowest value for the day. Attached to the bar are two tics, one extending to the left
and one extending to the right. The left tic represents the opening price for the trading
day and the right tic represents the closing or settlement price for the day. The daily bar
chart is used for short term marketing decisions, and is extremely useful for timing entry
and exit points when designing a marketing strategy.
4.2.1.3. Point and Figure Chart
These are the simplest form of the charts and easiest to interpret. Remember, X's represent
increasing prices. O's represent decreasing prices. You can only have X's or O’s in any
one column, not both. The reversal distance is equal to the box size multiplied by the
reversal amount.

Importance of Point and figure charts


 Eliminate the insignificant price movements that often make bar charts appear
'noisy.'
 Remove the often misleading effects of time from the analysis process.
 Make recognizing support/resistance levels much easier.
 Make trend line recognition a 'no-brainer'.
 Help you stay focused on the important long-term price developments.
4.2.1.4. Japanese candlesticks

It is a result of Japanese creativity with stock market data. It shows four information in a
trading period.
 Opening Price
 High Price
 Low Price
 Closing Price

Understanding Candles
 The hollow or filled portion of the candlestick is called the body.
 The long thin lines above and below the body represent high/low range and are
called shadows.
 The bottom of the lower shadow represents the low.
 The colours of the candle can be white or green for bullish candle and red or black
for the bearish candle.
 If a stock closes higher than its opening price a green candlestick is drawn.
 If the stock closes lower than its opening price, a red candlestick is drawn
 A short candlesticks represent little price movements and consolidation.
 Long green candlestick represents strong buying emergency.
 Long red candlestick represents selling pressure.
 Candlesticks with a long upper shadow and short lower shadow indicate that
buyers dominated during the session and bid prices higher. However sellers later
forced the prices down from their highs and the weak close created a long upper
shadow.
 Candlesticks with long lower and short upper shadow indicate that seller
dominated during the season and drove prices lower. However buyers later
resurfaced to bid prices higher by the end of the season and the strong close created
a long lower shadow.

4.2.1.5. Simple Moving Average

The Simple Moving Average is arguably the most popular technical analysis tool used
by traders. The Simple Moving Average (SMA) is often used to identify trend direction,
but can be used to generate potential buy and sell signals. The SMA is an average, or
in statistical speak - the mean. An example of a Simple Moving Average is presented
below:
The prices for the last 5 days were 25, 28, 26, 24, and 25. The average would be
(25+28+26+26+27)/5 = 26.4. Therefore, the SMA line below the last day’s price of 27
would be 26.4. In this case, since prices are generally moving higher, the SMA line of
26.4 could be acting as support
The chart below of the Dow Jones Industrial Average exchange traded fund (DIA) shows
a 20-day Simple Moving Average acting as support for prices.
Moving Average Acting as Support - Potential Buy Signal
When price is in an uptrend and subsequently, the moving average is in an uptrend, and
the moving average has been tested by price and price has bounced off the moving
average a few times (i.e. the moving average is serving as a support line), then a trader
might buy on the next pullbacks back to the Simple Moving Average.
A Simple Moving Average can serve as a line of resistance as the chart of the DIA shows:

Moving Average Acting as Resistance - Potential Sell Signal


At times when price is in a downtrend and the moving average is in a downtrend as well,
and price tests the SMA above and is rejected a few consecutive times (i.e. the moving
average is serving as a resistance line), then a trader might sell on the next rally up to
the Simple Moving Average.
The examples above have been only using one Simple Moving Average; however, traders
often use two or even three Simple Moving Averages. The potential advantages to using
more than one Simple Moving Average is discussed below.
Moving average crossovers are a common way traders can use Moving Averages. A
crossover occurs when a faster Moving Average (i.e. a shorter period Moving Average)
crosses either above a slower Moving Average (i.e. a longer period Moving Average)
which is considered a bullish crossover or below which is considered a bearish
crossover.
The chart below of the S&P Depository Receipts Exchange Traded Fund (SPY) shows
the 50-day Simple Moving Average and the 200-day Simple Moving Average; this
Moving Average pair is often looked at by big financial institutions as a long range
indicator of market direction:

The long-term 200-day Simple Moving Average is in an uptrend; this often is interpreted
as a signal that the market is quite strong. A trader might consider buying when the
shorter-term 50-day SMA crosses above the 200-day SMA and contrastly, a trader might
consider selling when the 50-day SMA crosses below the 200-day SMA.
CHAPTER-2
ORGANISATION
STUDY
2.1 INDUSTRY PROFILE
Capital Market
The market where investment funds like bonds, equities and mortgages are traded is
known as the capital market. The primal role of the capital market is to channelize
investments from investors who have surplus funds to the ones who are running a deficit.
The capital market offers both long term and overnight funds. The financial instruments
that have short or medium term maturity periods are dealt in the money market whereas
the financial instruments that have long maturity periods are dealt in the capital market.
The different types of financial instruments that are traded in the capital markets are
equity instruments, credit market instruments, insurance instruments, foreign exchange
instruments, hybrid instruments and derivative instruments.
A capital market is a market for securities (both debt and equity), where business
enterprises (companies) and governments can raise long-term funds. It is defined as a
market in which money is lent for periods longer than a year, as the raising of short-term
funds takes place on other markets (e.g., the money market). The capital market includes
the stock market (equity securities) and the bond market (debt).
Capital markets consist of
1 Primary market
2 Secondary markets

Primary market
The primary market is that part of the capital markets that deals with the issuance of new
securities. Companies, governments or public sector institutions can obtain funding
through the sale of a new stock or bond issue. This is typically done through a syndicate
of securities dealers. The process of selling new issues to investors is called underwriting.
In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn
a commission that is built into the price of the security offering, though it can be found
in the prospectus.
The primary markets are where new stock and bonds issues are sold (via underwriting)
to investors. The secondary markets are where existing securities are sold and bought
from one investor or trader to another, usually on a securities exchange, over the counter,
or elsewhere.
Features of primary markets are:
• This is the market for new long term equity capital. The primary market is the
market where the securities are sold for the first time. Therefore it is also called the
new issue market (NIM).
• In a primary issue, the securities are issued by the company directly to investors.
• The company receives the money and issues new security certificates to the
investors.
• Primary issues are used by companies for the purpose of setting up new business
or for expanding or modernizing the existing business.
• The primary market performs the crucial function of facilitating capital formation
in the economy.
• The new issue market does not include certain other sources of new long term
external finance, such as loans from financial institutions. Borrowers in the new
issue market may be raising capital for converting private capital into public
capital; this is known as "going public."
• The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:


1 Initial public offering;
2 Rights issue (for existing companies);

An initial public stock offering (IPO) referred to simply as an "offering" or "flotation,"


is when a company issues common stock or shares to the public for the first time. They
are often issued by smaller, younger companies seeking capital to expand, but can also
be done by large privately-owned companies looking to become publicly traded.
A rights issue is offered to all existing shareholders individually and may be rejected,
accepted in full or accepted in part. Rights are often transferable, allowing the holder to
sell them on the open market. A right to a share is generally issued on a ratio basis (e.g.
one-for-three rights issue). Because the company receives shareholders' money in
exchange for shares, a rights issue is a source of capital.

Secondary market
The secondary market, also known as the aftermarket, is the financial market where
previously issued securities and financial instruments such as stock, bonds, options, and
futures are bought and sold. The term "secondary market" is also used to refer to the
market for any used goods or assets, or an alternative use for an existing product or asset
where the customer base is the second market (for example, corn has been traditionally
used primarily for food production and feedstock, but a second- or third- market has
developed for use in ethanol production).
Under a secondary market offering or seasoned equity offering of shares to raise money,
a company can opt for a rights issue to raise capital. The rights issue is a special form of
shelf offering or shelf registration. With the issued rights, existing shareholders have the
privilege to buy a specified number of new shares from the firm at a specified price within
a specified time. A rights issue is in contrast to an initial public offering (primary market
offering), where shares are issued to the general public through market exchanges. With
primary issuances of securities or financial instruments, or the primary market, investors
purchase these securities directly from issuers such as corporations issuing shares in an
IPO or private placement, or directly from the federal government in the case of
treasuries.
After the initial issuance, investors can purchase from other investors in the
secondary market .The secondary market for a variety of assets can vary from
fragmented to centralized, and from illiquid to very liquid. The major stock exchanges
are the most visible example of liquid secondary markets - in this case, for stocks of
publicly traded companies. . Exchanges provide a centralized, liquid secondary market
for the investors who own stocks that trade on those exchanges. Most bonds and
structured products trade “over the counter,” or by phoning the bond desk of one’s broker-
dealer.
Functions of Secondary market
Secondary marketing is vital to an efficient and modern capital market. In the secondary
market, securities are sold by and transferred from one investor or speculator to another.
It is therefore important that the secondary market be highly liquid (originally, the only
way to create this liquidity was for investors and speculators to meet at a fixed place
regularly; this is how stock exchanges originated, see History of the Stock
Exchange). As a general rule, the greater the number of investors that participate in a
given marketplace, and the greater the centralization of that marketplace, the more liquid
the market.
Fundamentally, secondary markets mesh the investor's preference for liquidity (i.e., the
investor's desire not to tie up his or her money for a long period of time, in case the
investor needs it to deal with unforeseen circumstances) with the capital user's preference
to be able to use the capital for an extended period of time
Stock Exchanges
Stock exchanges are open markets that trade financial assets. Whether associated with a
company or acting as an individual, a stock exchange is the place where stocks are bought
and sold. There are a number of major stock exchanges around the world and each of
these plays a part in determining the overall financial and economic condition of any
economy. Stock exchanges deal with a number of financial instruments such as stocks,
bonds and equities. Both corporate and government bonds are traded in stock exchanges.
Equities include popular investment options, rights issues, bonus issues, and all other
forms of shares and stocks. The actual trading of stocks takes place through mediators
such as financial advisors, brokerage houses, and stockbrokers a stock exchange,
(formerly a securities exchange) is a corporation or mutual organization which provides
"trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock
exchanges also provide facilities for the issue and redemption of securities as well as
other financial instruments and capital events including the payment of income and
dividends. The securities traded on a stock exchange include: shares issued by companies,
unit trusts, derivatives, pooled investment products and bonds. To be able to trade a
security on a certain stock exchange, it has to be listed there. Usually there is a central
location at least for recordkeeping, but trade is less and less linked to such a physical
place, as modern markets are electronic networks, which gives them advantages of speed
and cost of transactions. Trade on an exchange is by members only. The initial offering
of stocks and bonds to investors is by definition done in the primary market and
subsequent trading is done in the secondary market. A stock exchange is often the most
important component of a stock market. Supply and demand in stock markets are driven
by various factors which, as in all free markets, affect the price of stocks (see stock
valuation).
There is usually no compulsion to issue stock via the stock exchange itself, nor must
stock be subsequently traded on the exchange. Such trading is said to be off exchange or
over-the counter. This is the usual way that derivatives and bonds are traded. Increasingly,
stock exchanges are part of a global market for securities.
The role of stock exchanges
The main role of a stock exchange is to facilitate the transactions associated with
both the buying and selling of securities. Buyers and sellers of shares and stocks can track
the price changes of securities from the stock markets in which they operate. The ups and
downs of stock indexes help the investors to speculate on the return on investment (ROI)
of various investment options. Stock exchanges also serve as a source of capital
formation for listed companies. Business entities that are listed in a particular stock
exchange can issue shares to the public and sell those shares in that market. To take part
in these transactions, listed companies need to abide by the rules and requirements of that
market. The stock exchanges protect the interests of both buyers and sellers by assuring
a timely transfer of money. The participants of a stock market are required to operate
within the specified transaction limits fixed by the regulatory authority of that stock
market Speed and transparency are vital for all stock market transactions. The companies
listed in a stock exchange need to provide proper guidance regarding business
performance and prospects, mergers and acquisitions, stock prices, dividends and other
information at all times. Investors make their investment decisions based on the
information obtained from these companies, and the comments of analysts who track
those companies.
Bombay Stock Exchange
Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now
spanning three centuries in its 133 years of existence. What is now popularly known as
BSE was established as
"The Native Share & Stock Brokers' Association" in 1875
Stock Exchanges Operations:
With the help of stockbrokers, the buyers and sellers participating in a stock market
carry out their transactions. The brokers representing selling parties take their orders to
the stock exchange floor and then find brokers representing parties willing to invest in
similar stocks. If both parties agree to trade at the fixed price, the transaction takes place.
The size of the world stock market was estimated at about $36.6 trillion US at the
beginning of October 2008. The total world derivatives market has been estimated at
about $791 trillion face or nominal value, 11 times the size of the entire world economy.
The value of the derivatives market, because it is stated in terms of notional values, cannot
be directly compared to a stock or a fixed income security, which traditionally refers to
an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a
derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the
event not occurring.). Many such relatively illiquid securities are valued as marked to
model, rather than an actual market price.
The stocks are listed and traded on stock exchanges which are entities of a corporation
or mutual organization specialized in the business of bringing buyers and sellers of the
organizations to a listing of stocks and securities together
A transaction on a stock exchange must be made between two members of the exchange
— an ordinary person may not walk into the New York Stock Exchange (for example),
and ask to trade stock. Such an exchange must be done through a broker.

There are three types of stock broking service.


 Execution-only, which means that the broker will only carry out the client's
instructions to buy or sell.
 Advisory dealing, where the broker advises the client on which shares to buy
and sell, but leaves the final decision to the investor.
 Discretionary dealing, where the stockbroker ascertains the client's
investment objectives and then makes all dealing decisions on the client's
behalf
Roles similar to that of a stockbroker include investment advisor, and financial advisor.
A stockbroker may or may not be also an investment advisor.
Stockbrokers also sometimes or exclusively trade on their own behalf, as a principal,
speculating that a share or other financial instrument will increase or decline in price. In
such cases the term broker makes little sense and the individuals or firms trading in
principal capacity sometimes call themselves dealers, stock traders or simply traders.

2.2 COMPANY PROFILE

ODISHA CAPITAL MARKET & ENTERPRISES LTD.


(Formerly Bhubaneswar Stock Exchange Ltd.)
Background

Bhubaneswar Stock Exchange Ltd. (BhSE) which had been functioning as a recognized
stock exchange in the State of Odisha since the year 1989, has taken exit as a stock
exchange w.e.f. February 09, 2015 pursuant to exit policy of Securities and Exchange
Board of India (SEBI) for non-performing stock exchanges in the country. In this context,
SEBI has issued an order on February 09, 2015 for exit of BhSE as a stock exchange after
ensuring compliance of various formalities by BhSE associated with such exit process.
SEBI in its said order had directed BhSE, among other requirements, to change its name
and not to use the expression “Stock Exchange” or any variant of this expression in its
name.

As it was required in the exit order issued by SEBI, the name of the Company has been
changed from “Bhubaneswar Stock Exchange Ltd.” to “Odisha Capital Market &
Enterprises Ltd.” w.e.f. 9th June, 2015 with the approval of the Registrar of Companies,
Odisha in terms of provisions of the Companies Act, 2013. Now, after exit of BhSE as a
stock exchange, the Company of erstwhile BhSE functions under a new name “Odisha
Capital Market & Enterprises Ltd.” with an altered set of Memorandum and Articles of
Association in terms of provisions of the Companies Act, 2013.
Management

The affairs of the company are controlled and supervised by the Board of Directors under
the provisions of its Memorandum and Articles of Association. The duties and
responsibilities of day to day management and affairs of the company are now vested
with Mr. Thomas Mathew, Director, who is assisted by a team of managerial and other
employees of the company.
Business Operation

Odisha Capital Market & Enterprises Ltd. in terms of its altered Memorandum of
Association is now taking steps to carry on different activities in the domain of capital
market. More particularly, it is committed to carry on campaigning financial literacy for
financial inclusion in the State in addition to working for assisting financial education as
were discharged by the erstwhile BhSE as a stock exchange.
Current Activities other than Business Operation

Apart from business operation, the company is engaged in promotion and development
of other activities in the interest of the investing public in capital market in a big way
such as –
Investors’ Awareness Programme
The company is conducting investors’ awareness programmes by way of
seminars/workshop from time to time for education and awareness of investing public in
securities. The aim of the company is to have as many as awareness programmers in a
year at different locations of the State of Orissa.
Securities Market Training Programme
The company is providing a Certificate Course, namely, “Basics of Capital Market.
With the expansion of capital market which includes the reach of its activities in the form
of course contents at various B-Schools and +2 Commerce level schools, practical
oriented education programme in securities market activities is in increasing demand now
days as it promises youth to make career in the field of securities market. The company
aims at undertaking practical oriented training programmes for the students of +
Commerce and B-Schools in a big way as well as for the youths who want to make their
career in securities market. At present, the company is engaged in imparting training to
the students of various management institutes.
Students Assistance Programme
The students of various Institutes and B-Schools require preparing project papers on
different topics including the topics related to activities in Stock Exchange and securities
market. The students of a number of Institutes and B-Schools visit the company either
directly or sponsored by their Institutes every year for assistance in preparation of their
project papers. The company assists and supports those students in their research work
by providing necessary guidance and securities market information.

Vision:

To have a reliable presence in the country by giving services to the traders/investors.

Mission:

To provide an information resource to the investment and business community across the state and
country.
SWOT ANALYSIS OF BhSE:

Strengths Weakness

 Provides smooth clearing and


settlement process  Only 46 companies are listed in
the exchange generating less
revenue for exchange
 Has adequate internal checks
and internal control system
which are commensurate with
 Very few employees
its size and nature of the
business

 Provides other services like


investors awareness
programme, securities market
training programme, students
assistance programme

Opportunities Threats

 Decrease in profit margin


 Business tie-up with other
national level stock exchange.  Making difficult for exchange
to survive
 Merger consolidation of the
exchange with other exchanges
viz. Mcx-sx, calcutta stock  Compete with national level
exchange, inter connected stock exchange with trading
stock exchange of India. terminal in every state
including Bhubaneswar.

 Alternate business plans for


survival of the entity.
CHAPTER-3
RESEARCH
METHODOLOGY
3.1 REVIEW OF LITERATURE
Aber John (1976) in his study found that numerous empirical studies have tested the
profitability of technical trading rules in a variety of markets for the purpose of either
uncovering profitable trading rules or testing market efficiency, or both. The technical
trading studies simulated only one or two trading systems. In these studies, although
transaction costs were deducted to compute net returns of technical trading strategies, risk
was not adequately handled, statistical tests of trading profits and data snooping problems
were often disregarded, and out-of-sample verification along with parameter (trading
rule) optimization were not considered in the testing procedure.
Goodman and John W Peavy (1983) in their study found that there is no way of making
an expected profit by extrapolating past changes in the futures price, by chart or any other
esoteric devices of magic or mathematics. The market quotation already contains in itself
all that can be known about the future and in that sense has discounted future
contingencies as much as is humanly possible.
Philip O Regan (1988) explained that demonstrated that under a noisy rational
expectations model in which current prices do not fully reveal private information
(signals) because of noise (unobserved current supply of a risky asset) in the current
equilibrium price, historical prices (i.e., technical analysis) together with current prices
help traders make more precise inferences about past and present signals than do current
prices alone
Brown and David P (1989) in their article explained that results provide evidence for a
“predictive information link” between non-earnings numbers and future earnings
changes. They indicate that some nonearning numbers do contain information useful for
predicting future earnings changes that is not contained in either past or current earnings.
Edward (1992) found that also extends her test to include a “valuation link” between the
predicted future earnings changes and stock returns during the annual report
dissemination period. She finds evidence that this valuation link does exist. The non-
earnings accounting numbers are therefore useful for predicting both future earnings and
returns.
Demark and Thomas R (1994) explained that the history of technical analysis dates back
to at least the 18th century when the Japanese developed a form of technical analysis
known as candlestick charting techniques. This technique was not introduced to the West
until the 1970s.
Hackel and Kenneth S (1996) found that it has been stated that “the task of research is to
discover what information projects future earnings and, from a financial statement
analysis point of view, what information in the financial statements does this”
Jan R (1998) explained that results show that receivables do provide incremental
information for the prediction of future sales, earnings and profit margins.
Squires (2000) found that study the value relevance of capital expenditures for explaining
returns beyond the use of current earnings. Their findings show that changes in the level
of capital expenditure were strongly and positively related to excess returns. This exhibits
the fact that current capital expenditure has good news for the future performance of a
firm and supports the use of capital expenditures for predicting future earnings or returns.
Thomas Robinson (2002) in their study explained that Fundamental analysis involves
assessing a firm’s equity value based on the analysis of published financial statements
and other information without reference to the prices at which a firm’s securities trade in
the capital markets.

Palepu and Krishna (2004) found that technical analysis has been extensively used among
market participants such as brokers, dealers, fund managers, speculators, and individual
investors in the financial industry. 3 Numerous surveys indicate that practitioners
attribute a significant role to technical analysis. For example, futures fund managers rely
heavily on computer-guided technical trading systems, and about 30% to 40% of foreign
exchange traders around the world believe that technical analysis is the major factor
determining exchange rates in the short-run up to six months.
Prasanna Chandra (2005) explained that Active portfolio management is commonly
partitioned into two types of activities: market timing, which requires forecasts of broad-
based market movements, and security analysis, which requires the selection of
individual stocks that are perceived to be underpriced by the market.
V K Bhalla (2006) explained that security analysis Psychological and Institutional Forces
and the Determination of Exchange Rates, Neoclassical economists, by their own
admission, have had a terrible time explaining foreign-currency prices. In large part, this
is due to the fact that they assume "economic" behavior to be independent of social and
cultural influences. But markets are social institutions. They "organize and guide human
social behavior through sanctions (formal and informal, negative and positive), mores,
norms, status, and shared worldviews". Consequently, explaining economic exchange
requires an understanding of the behavior associated with the subculture of those in
question.
Dhanesh Kumar Khatri (2006) in their article found that a leading technical analyst,
provides a more specific definition: “The technical approach to investment is essentially
a reflection of the idea that prices move in trends that are determined by the changing
attitudes of investors toward a variety of economic, monetary, political, and
psychological forces. The art of technical analysis, for it is an art, is to identify a trend
reversal at a relatively early stage and ride on that trend until the weight of the evidence
shows or proves that the trend has reversed.”
Stephan H Penman (2007) in his study found that Technical analysis includes a variety
of forecasting techniques such as chart analysis, pattern recognit ion analysis, seasonality
and cycle analysis, and computerized technical trading systems. However, academic
research on technical analysis is generally limited to techniques that can be expressed in
mathematical forms, namely technical trading systems, although some recent studies
attempt to test visual chart patterns using pattern recognition algorithms. A technical
trading system consists of a set of trading rules that result from parameterizations, and
each trading rule generates trading signals (long, short, or out of market) according to
their parameter values. Several popular technical trading systems are moving averages,
channels, and momentum oscillators.
Ran Canetti & IBM Research (2008) explained that Compostable Formal Security
Analysis, a security property of a protocol is composable if it remains intact even when
the protocol runs alongside other protocols in the same system. We describe a method for
asserting composable security properties, and demonstrate its usefulness. In particular,
we show how this method can be used to provide security analysis that is formal,
relatively simple, and still does not make un-justified abstractions of the underlying
cryptographic algorithms in use. It can also greatly enhance the feasibility of automated
security analysis of systems of realistic size. Prasanna Chandra (2008) in his study he
explained that Motivated by an obvious gap between the widespread use of Bloomberg
terminals in the finance industry and the scant resources available to an instructor on how
to incorporate the available information through the terminal into a finance course, we
illustrate our experience using the terminal in an equity-focused security analysis and
portfolio management course. Our goal is to enable students inexperienced with the
terminal to prepare an analyst report. We identify the most significant challenges we face
and provide the corresponding solutions. Our results are also applicable to other finance
courses including financial analysis, investments, and student managed investment fund.
3.2Research Type
The segment identified for conducting the study is power Sector in India. The number
of companies selected for the study is one. Analytical study is used to conduct the study.
3.3 Data collection
Secondary data is collected from websites, Books and magazines.
3.4 Tools for analysis
• Fundamental Analysis
• Technical Analysis
For fundamental analysis, the following ratios are used:
• EPS
• DPS
• Payout ratio
• ROE
• P/E ratio
• Current ratio
• Debt- Equity ratio
• Interest coverage ratio
• N/P Margin and G/P ratio.
For technical analysis, the following tools are used:
• Relative strength index
• 5 days moving average
• 50 days moving average
• Line chart and candlestick chart
Analysis and Interpretation of data
Analysis of data is a process of inspecting, cleaning, transforming, and modeling data
with the goal of highlighting useful information, suggesting conclusions, and supporting
decision making. Data analysis has multiple facts and approaches, encompassing
diverse techniques under a variety of names, in different business, science, and social
science domains.
CHAPTER-4
DATA ANALYSIS
PART –I
Fundamental analysis
Fundamental analysis:
Fundamental analysis is basically done for long term and mid term investment which is also called as
delivery based investment or trading. The main important aim behind is to study and understand the
company in which you are planning to invest your hard earned money and get excellent returns.
Fundamental analysis is the examination of the underlying forces that affect the well being of the
company, industry groups and companies. As with most analysis the goal is to develop a forecast of
future price movement and profit from it. At the company level, fundamental analysis may involve
examination of financial data, management, business concept and competition. At the industry level
their might be an examination of supply and demand forces of the products. For the national economy
fundamental analysis might focus on economic data to asses the present and future growth of the
economy. Fundamental analysis is a method of evaluating a security by attempting to measure its
intrinsic value by examining related economy, financial and other qualitative and quantitative factors.
Fundamental analysis attempt to study every thing that can effect the securities value including macro
economic factors and individual specific factors. Three phase of the fundamental analysis
A. Understanding of the Macro Economic environment and developments (Economy analysis)
B. Analyzing the prospectus of the industry to which the firm belongs (Industry analysis)
C. Assessing the projected performance of the company (Company analysis)

(A).Economic analysis
The purpose of analyze economic condition of the country in fundamental analysis to asses the general economic
situation both within the country and internationally. The economy is like the tide and the various industry groups
and individual companies are like boats. When economy expands most industry groups and companies benefits
and grows. When the economy decline most sector and companies usally suffer. The stock market does not
operate in a vacuum it is an integral part of the whole economy of a country, more so in a free economy that of
United States and to some extent in mixed economy like ours. To gain insight into the complexities of stock
market. One needs to develop a sound economic understanding and be able to interpret the impact of important
economic indicators on stock markets. The following are some important factors which should be taken into
account while doing fundamental analysis:

 Economic Growth
 Per capita income
 Industrial Production
 Inflation  Interest Rates
 Foreign Exchange Reserves
 Budgetary Deficit
 Domestic Savings and Investment
 Tax Rates
 Infrastructure
 Political Situation
Economic overview of India:
India has emerged as the fastest growing major economy in the world and is expected to be one of the
top three economic powers of the world over the next 10-15 years, backed by its strong democracy and
partnerships.
Market size
India’s nominal GDP growth rate is estimated at 12 per cent in 2019-20. The estimate for 2018-19 was
11.5 per cent. During Q1 of 2019-20, GDP (at constant 2011-12 prices) grew by 5 per cent.
India has retained its position as the third largest startup base in the world with over 4,750 technology
startups, with about 1,400 new start-ups being founded in 2016, according to a report by NASSCOM.
India's labour force is expected to touch 160-170 million by 2020, based on rate of population growth,
increased labour force participation, and higher education enrolment, among other factors, according to
a study by ASSOCHAM and Thought Arbitrage Research Institute.
India's foreign exchange reserves were US$ 393.29 billion in the week up to December 21, 2018,
according to data from the RBI.
Recent Developments

With the improvement in the economic scenario, there have been various investments in various sectors
of the economy. The M&A activity in India increased 53.3 per cent to US$ 77.6 billion in 2017 while
private equity (PE) deals reached US$ 24.4 billion. Some of the important recent developments in Indian
economy are as follows:

 Exports from India increased 4.32 per cent year-on-year to US$ 92.33 billion in April-May 2019.
 Nikkei India Manufacturing Purchasing Managers’ Index (PMI) stood at 51.40 in July 2019, showing
expansion in the sector.
 Mergers and Acquisitions (M&A) activity in the country has reached US$ 41.6 billion in first half of
2019 (Jan-June).
 Income tax collection in the country reached Rs 2.50 lakh crore (US$ 35.88 billion) between April-
November 2018.
 In the first six months of 2019, eight companies held IPOs, raising as much as Rs 5,509 crore (US$
0.79 billion).
 India's Foreign Direct Investment (FDI) equity inflows reached US$ 436.47 billion between April
2000 and June 2019, with maximum contribution from services, computer software and hardware,
telecommunications, construction, trading and automobiles.
 India's Index of Industrial Production (IIP) rose 2 per cent year-on-year June 2019
 Consumer Price Index (CPI) inflation rose moderated to 3.15 per cent in July 2019 from 3.18 per cent
in June 2019.
 Around 10.8 million jobs were created in India in 2017.
 India has improved its ranking in the World Bank's Doing Business Report by 23 spots over its 2017
ranking and is ranked 77 among 190 countries in 2019 edition of the report.

 India is expected to have 100,000 startups by 2025, which will create employment for 3.25 million people
and US$ 500 billion in value, as per Mr. T V Mohan Das Pai, Chairman, Manipal Global Education.
 The World Bank has stated that private investments in India is expected to grow by 8.8 per cent in FY
2018-19 to overtake private consumption growth of 7.4 per cent, and thereby drive the growth in India's
gross domestic product (GDP) in FY 2018-19.
 India is expected to retain its position as the world’s leading recipient of remittances in 2018, with total
remittances touching US$ 80 billion, according to World Bank’s Migration and Development Brief.

Government Initiatives

The Union Budget for 2018-19 was announced by Mr. Arun Jaitley, Union Minister for Finance,
Government of India, in Parliament on February 1, 2018. This year’s budget will focus on uplifting the
rural economy and strengthening of the agriculture sector, healthcare for the economically less
privileged, infrastructure creation and improvement in the quality of education of the country. As per
the budget, the government is committed towards doubling the farmers’ income by 2022. A total of Rs
14.34 lakh crore (US$ 196.94 billion) will be spent for creation of livelihood and infrastructure in rural
areas. Budgetary allocation for infrastructure is set at Rs 5.97 lakh crore (US$ 81.99 billion) for 2018-
19. All-time high allocations have been made to the rail and road sectors.
In June 2019, India's unemployment rate is 7.91 per cent.
Numerous foreign companies are setting up their facilities in India on account of various government
initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has
launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy,
to increase the purchasing power of an average Indian consumer, which would further boost demand,
and hence spur development, in addition to benefiting investors. The Government of India, under the
Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and
aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has
also come up with Digital India initiative, which focuses on three core components: creation of digital
infrastructure, delivering services digitally and to increase the digital literacy.
Some of the recent initiatives and developments undertaken by the government are listed below:

 In India, Atal Innovation Mission (AIM), flagship initiative of NITI Aayog, launched the Atal
Community Innovation Centre (ACIC) program in NITI Aayog which aims at spurring community
Innovation in underserved and unserved areas of the country.
 National Institute for Transforming India (NITI) Aayog released a strategic document titled 'Strategy
for New India @75' to help India become a US$ 4 trillion economy by FY23.
 The Government of India is going to increase public health spending to 2.5 per cent of GDP by 2025.
 For implementation of Agriculture Export Policy, government has approved an outlay Rs. 206.8 crore
(US$ 29.59 million) for 2019, aimed at doubling farmers income by 2022.
 Government is planning to launch Bharatcraft portal, an e-commerce marketing platform to market and
sell the products.
 Under the Pradhan Mantri Awas Yojana (Urban), government have been sanctioned Rs. 4.83 lakh crore
(US$ 69.10 billion) for the construction of 81 lakh houses of which construction about 47 lakh houses
has started.
 Village electrification in India was completed in April 2018.
 Around 26.02 million households have been electrified as on 31st March 2019 under the Pradhan Mantri
Sahaj Bijli Har Ghar Yojana (SAUBHAGYA).
 Prime Minister's Employment Generation Programme (PMEGP) will be continued with an outlay of Rs
5,500 crore (US$ 755.36 million) for three years from 2017-18 to 2019-20, according to the Cabinet
Committee on Economic Affairs (CCEA).
 The target of an Open Defecation Free (ODF) India will be achieved by October 2, 2019 as adequate
funding is available to the Swachh Bharat Mission (Gramin), according to Ms. Uma Bharti, Minister of
Drinking Water and Sanitation, Government of India.
 The Government of India has decided to invest Rs 2.11 trillion (US$ 32.9 billion) to recapitalize public
sector banks over the next two years and Rs 7 trillion (US$ 109.31billion) for construction of new roads
and highways over the next five years.
 As per the Union Budget 2019-20, public sector banks (PSBs) will be provided with a capital infusion
of Rs. 70,000 crores (US$ 10.02 billion), allowing NBFCs to raise foreign debt.
 The mid-term review of India's Foreign Trade Policy (FTP) 2015-20 has been released by Ministry of
Commerce & Industry, Government of India, under which annual incentives for labour intensive MSME
sectors have been increased by 2 per cent.
 Under the scheme Pradhan Mantri Gram Sadak Yojana (PMGSY-III), government plans to spend Rs
50,250 crores (US$ 7.19 billion) to build roads to boost rural connectivity.

(B).Industry analysis
The purpose of industry analysis is to review prevailing conditions within specific Industry and its
segments. The company's industry obviously influences the outlook for the company. Even the best
stocks can post mediocre returns if they are in an Industry that is struggling.
“It is often said that a weak stock in a strong industry is preferable to a strong stock in a weak industry.”
To assess the industry group potential, an investor would want to consider the overall growth rate, market
size, and its importance to economy. While the individual company is still important, its industry group
is likely to exert as much as, or more, influence on the stock price. When stock move the usually move
as groups; there are very few lone guns out there. An understanding of the industry sector involved,
including the maturity of the sector and any cyclical effects that the overall economies have on it, is also
necessary.
The followings are some important factors which should be considered in Fundamental Analysis
 Growth: A growing industry gives room for profitability.
 Profitability: Average profitability of the industry should be attractive.
 Demand-Supply: the wider demand supply gap, the better is the industry “fortune in the future
 Entry barrier
 Competition and Market share:
 Technology trends
 Government Policy
 Capacity Utilization

Industry Overview

Introduction
Power is one of the most critical components of infrastructure crucial for the economic growth and
welfare of nations. The existence and development of adequate infrastructure is essential for sustained
growth of the Indian economy.
India’s power sector is one of the most diversified in the world. Sources of power generation range from
conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-
conventional sources such as wind, solar, and agricultural and domestic waste. Electricity demand in the
country has increased rapidly and is expected to rise further in the years to come. In order to meet the
increasing demand for electricity in the country, massive addition to the installed generating capacity is
required.
In May 2018, India ranked 4th in the Asia Pacific region out of 25 nations on an index that measures
their overall power.
Market Size
Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained
economic growth continues to drive electricity demand in India. The Government of India’s focus on
attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the
competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and
manpower).
Total installed capacity of power stations in India stood at 356.82 Gigawatt (GW) as of May 2019.
Investment Scenario
Between April 2000 and March 2019, the industry attracted US$ 14.32 billion in Foreign Direct
Investment (FDI), accounting for 3.41 per cent of total FDI inflows in India.
Some major investments and developments in the Indian power sector are as follows:

 In November 2018, Renascent Power Ventures Pte Ltd acquired 75.01 per cent stake in Prayagraj
Power Generation Company Limited (PPGCL) for US$ 854.94 million.
 In August 2018, Kohlberg Kravis Roberts & Co (KKR) acquired Ramky Enviro Engineers
Limited for worth US$ 530 million.
 In April 2018 ReNew Power made the largest M&A deal by acquiring Ostro Energy for US$
1,668.21 million.

Government Initiatives
The Government of India has identified power sector as a key sector of focus so as to promote sustained
industrial growth. Some initiatives by the Government of India to boost the Indian power sector:

 As of September 2018, a draft amendment to Electricity Act, 2003 has been introduced. It
discusses separation of content & carriage, direct benefit transfer of subsidy, 24*7 Power supply
is an obligation, penalisation on violation of PPA, setting up Smart Meter and Prepaid Meters
along with regulations related to the same.
 Ujwal Discoms Assurance Yojana (UDAY) was launched by the Government of India to
encourage operational and financial turnaround of State-owned Power Distribution Companies
(DISCOMS), with an aim to reduce Aggregate Technical & Commercial (AT&C) losses to 15
per cent by FY19.
 As of August 2018, the Ministry of New and Renewable Energy set solar power tariff caps at Rs
2.50 (US$ 0.04) and Rs 2.68 (US$ 0.04) unit for developers using domestic and imported solar
cells and modules, respectively.
 The Government of India approved National Policy on Biofuels – 2018, the expected benefits of
this policy are health benefits, cleaner environment, employment generation, reduced import
dependency, boost to infrastructural investment in rural areas and additional income to farmers.

Achievements
Following are the achievements of the government in the past four years:

 India’s rank jumped to 24 in 2018 from 137 in 2014 on World Bank’s Ease of doing business -
"Getting Electricity" ranking.
 Energy deficit reduced to 0.7 per cent in FY18 from 4.2 per cent in FY14.
 As of April 28, 2018, 100 per cent village electrification achieved under Deen Dayal Upadhyaya
Gram Jyoti Yojana (DDUGJY).

(C).Company analysis
The purpose of company analysis to analyze the financial and non-financial aspects of a company to
determine whether to buy, sells, or holds onto the shares of particular company After determining the
economic and industry conditions, the company itself is analyzed to determine its financial health. This
is usually done by studying the company's financial statements. From these statements a number of
useful ratios can be calculated. The ratios fall under five main categories: profitability, price, liquidity,
leverage, and efficiency. When performing ratio analysis on a company, the ratios should be compared
to other companies with in the same or similar industry to get a feel same or similar industry to get a
feel for what is considered” normal." These are quantitative factors of company analysis; there are also
some qualitative factors which should be considered also.
 Find out as much as possible about the company and their products.
 Do they have any “core competency” or “fundamental strength” that puts them ahead of all the
other competing firms?
 What advantage do they have over their competing firms?
 Do they have a strong market presence and market share? Or do them constantly have to employ
a large part of their profits and resources in marketing and finding new customers and fighting
for market share?
Following are some more important aspects about company
 Shareholding pattern
 Growth
 Technology
 Expansion Plan
 Profitability
 Capital History
 Marketing Capabilities
 Most important its financial statement
After you understand the company & what they do, how they relate to the market and their customers,
you will be in a much better position to decide whether the price of the company’s stock is going to go
up or down. So fundamental analysts use different tools and ratios to compare all sorts of companies no
matter what business they are in or what they do

Company overview

The Company was incorporated as Adani Power Limited on August 22, 1996 and received a certificate
of commencement of business on September 4, 1996. The Company became a private limited company
on June 3, 2002 and the name of the Company was subsequently changed to Adani Power Private
Limited. The RoC issued a fresh certificate of incorporation on June 3, 2002.

The Company was, thereafter, converted into a public limited company on April 12, 2007 and the name
of the Company was changed to Adani Power Limited. Further, upon ceasing to be a private limited
company, the word private was deleted through a special resolution at the EGM of the Company held
on March 28, 2007. The fresh certificate of incorporation consequent to change of our name was granted
by the RoC to our Company on April 12, 2007.

The Company was originally incorporated by Mr. Gautam S. Adani and Mr. Rajesh S. Adani, together
with their relatives. In 2004, pursuant to internal restructuring amongst the Promoters, the entire
shareholding of the Company was transferred to Mundra Port and Special Economic Zone Limited
("MPSEZL"). Subsequently, on May 29, 2006, MPSEZL transferred its entire shareholding in the
Company to Adani Enterprises Limited.
Key Milestones
The table below sets forth some of the key events and milestones in the history of our Company:

Date Details
August 22, 1996 Incorporation of the Company
September 20, 2006 Execution of Loan agreement (financial closure) with Lenders of Mundra Phase I
Power Project
December 8, 2006 Coal supply agreement with AEL for Mundra Phase I Power Project, which was
extended to Mundra Phase II Power Project through amendment agreement dated August 10, 2007
February 2, 2007 Execution of PPA with GUVNL for 1,000 MW
February 6, 2007 Execution of PPA with GUVNL for 1,000 MW
June 27, 2007 Execution of subordinate loan agreement for Mundra Phase I and II Power Project
July 25, 2007 Execution of Loan agreement (financial closure) with Lenders of Mundra Phase II Power
Project
September 28, 2007 Execution of Investment Agreement with 3i Power Investment A1 Limited
November 6, 2007 Allocation of Lohara West and Lohara Extension (E) Coal mining blocks for Tiroda
Power Project
January 15, 2008 Execution of Shareholder Agreement with Millennium Developers Private Limited for
investment in Tiroda Project
February 1, 2008 Agreement to Lease for 204.28 ha signed with Maharashtra Industrial Development
Corporation for Tiroda Project
March 24, 2008 PPA with AEL for 221 MW
March 24, 2008 Coal supply agreement with AEL for Mundra Phase III Power Project
March 27, 2008 Execution of loan agreement (financial closure) for Mundra Phase III Power Project
March 27, 2008 Execution of subordinate loan agreement for Mundra Phase III Power Project
March 28, 2008 Execution of foreign currency loan agreement for Mundra Phase III Power Project
April 15, 2008 Coal supply agreement with AEL for Mundra Phase IV Power Project, which was
amended on April 13, 2009
August 7, 2008 PPA with UHBVNL for 712 MW
August 7, 2008 PPA with DHBVNL for 712 MW
September 8, 2008 PPA with MSEDCL for 1,320 MW
November 24, 2008 Investment Agreement with Ventura Power

January 8, 2009 Co-developer agreement with MPSEZL


January 30, 2009 Execution of loan agreement (financial closure) for Tiroda Power Project - Phase I
March 25, 2009 Boiler light-up of unit I of Mundra Power Project - Phase I
March 27, 2009 Share subscription agreement with Somerset Fund
May 23, 2009 Synchronization of unit I on Mundra Phase I Power Project
June 24, 2009 Execution of loan agreement (financial closure) for Mundra Phase IV Power Project
June 24, 2009 Execution of subordinate loan agreement for Mundra Phase IV Power Project.
2010
-First project in the world to be certified as Clean Development Mechanism (CDM) Project by United
Nations Framework Convention on Climate Change {UNFCCC}
-Adani Power Limited was awarded KPMG INFRASTRUTURE TODAY AWARD 2010 for
successfully generating over 1000MW power as per the committed
2011
-"Adani Power conferred with National Energy Conversation Award 2011".
2012
-"Adani's Mundra plant to earn Rs. 600 cr in carbon credits The world’s first coal fired plant to receive
carbon credits"
-Scheme of Amalgamation of Grow more Trade & Investment Pvt. Ltd., Mauritius with Adani Power
Limited has been sanctioned by the Hon'ble High Court of Gujara
2013 -Adani Power commissions third 660 MW unit of its Toroda thermal power plant -Adani Power
demerges transmission line business. -Adani begins integrated coal MDO operations in India
2014 -Adani Power emerges as Indias largest private power producer. -Adani Power to acquire Avantha
Power's Korba West Power Project in Chattisgarh Installed capacity to rise to 11,040 MW. -Adani Power
to acquire Avantha&Korba plant. -Adani to invest $2 bn in Odisha power plant -CCI clears Adani
Powerdeal to buy Udupi thermal plant -Adani Power introduces vermicomposting technology in Tirora
2015 -Adani Power signs a definitive Share Purchase Agreement for acquisition of Avantha Power's
Korba West Power Plant in Chattisgarh -Adani Power completes acquisition of Udupi Power plant
2017 - Adani Power gets over 174.84 acres of land from Jharkhand govt. to set up a 1600 MW power
plant. -Unit Of Adani Power plant creates a new national record by running continuously for 600 days.
- Adani Power has signed power purchase agreement with Bangladesh Power Development board.

Financial ratio of ADANI POWER


A financial ratio is an expression of the relationship between two selected items from the income
statement or the balance sheet. Ratio analysis helps you to evaluate the weak and strong points in your
financial and managerial performance. Financial ratio analysis is calculation and comparison of ratio
which are derived from the information in a company’s financial statements. The level and historical
trends of these ratios can be used to make inferences about a company’s financial condition its operations
and attractiveness as an investment
Balance Sheet of ADANI POWER----------------- in Rs. Cr. -------------------

Mar '19 Mar '18 Mar '17 Mar '16 Mar '15

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 3,856.94 3,856.94 3,856.94 3,333.94 2,871.92
Equity Share Capital 3,856.94 3,856.94 3,856.94 3,333.94 2,871.92
Reserves -4,144.65 -2,972.40 -857.38 4,133.92 2,852.70
Networth -287.71 884.54 2,999.56 7,467.86 5,724.62
Secured Loans 41,580.85 36,225.79 39,576.56 38,611.46 32,970.88
Unsecured Loans 9,902.95 12,894.40 9,654.05 10,241.78 8,413.63
Total Debt 51,483.80 49,120.19 49,230.61 48,853.24 41,384.51
Total Liabilities 51,196.09 50,004.73 52,230.17 56,321.10 47,109.13
Mar '19 Mar '18 Mar '17 Mar '16 Mar '15

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 61,849.29 60,828.00 60,396.60 60,280.54 50,754.15
Less: Accum.
11,430.53 8,690.86 6,005.67 3,339.32 5,674.47
Depreciation
Net Block 50,418.76 52,137.14 54,390.93 56,941.22 45,079.68
Capital Work in
350.08 119.86 124.61 87.92 191.34
Progress
Investments 2.72 0.01 164.33 0.06 357.3
Inventories 1,224.08 869.19 1,760.41 1,619.20 1,629.05
Sundry Debtors 8,550.99 6,069.81 7,704.34 12,476.60 3,489.54
Cash and Bank
915.88 856.61 604.17 868.7 856.25
Balance
Total Current Assets 10,690.95 7,795.61 10,068.92 14,964.50 5,974.84
Loans and Advances 6,522.09 9,470.66 6,762.26 3,800.51 6,871.06
Total CA, Loans &
17,213.04 17,266.27 16,831.18 18,765.01 12,845.90
Advances
Current Liabilities 16,715.83 19,462.66 19,238.79 19,435.12 10,935.69
Provisions 72.68 55.89 42.09 37.99 429.4

Total CL & Provisions 16,788.51 19,518.55 19,280.88 19,473.11 11,365.09

Net Current Assets 424.53 -2,252.28 -2,449.70 -708.1 1,480.81


Total Assets 51,196.09 50,004.73 52,230.17 56,321.10 47,109.13

1. ADANI POWER
Profit & Loss account of Adani Power

Mar 19 18-Mar 17-Mar 16-Mar 15-Mar

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

Revenue From
23,843.44 20,271.82 22,271.42 25,188.08 18,796.17
Operations [Gross]

Revenue From
23,843.44 20,271.82 22,271.42 25,188.08 18,796.17
Operations [Net]

Other Operating
40.74 32.46 344.09 344.09 27.56
Revenues

Total Operating
23,884.18 20,304.28 22,615.51 25,532.17 18,823.73
Revenues

Other Income 2,477.45 789.15 418.96 201.58 241.41

Total Revenue 26,361.63 21,093.43 23,034.47 25,733.75 19,065.14

EXPENSES

Purchase Of Stock-In
809.91 337.93 215.68 189.55 290.6
Trade

Cost Of Fuel 15,949.28 12,531.95 14,623.61 14,726.31 11,613.70

Employee Benefit
363.28 353.74 360.89 358.75 320.59
Expenses

Finance Costs 5,656.52 5,570.23 5,901.73 5,963.17 4,863.53

Depreciation And
2,750.62 2,698.72 2,672.36 2,665.82 1,818.19
Amortization Expenses

Other Expenses 1,807.88 1,679.78 1,443.68 1,455.43 1,439.47

Total Expenses 27,337.49 23,172.35 25,217.95 25,359.03 20,346.08

Profit/Loss Before
Exceptional,
-975.86 -2,078.92 -2,183.48 374.72 -1,280.94
Extraordinary Items And
Tax
Exceptional Items 0 0 -4,076.69 0 -16.85

Profit/Loss Before Tax -975.86 -2,078.92 -6,260.17 374.72 -1,297.79

Tax Expenses-Continued Operations

Current Tax 68.26 6.88 12.5 -0.3 0

Deferred Tax -34.34 -12.03 -98.57 -175.78 0

Tax For Earlier Years -25.38 0 0 0 0

Total Tax Expenses 8.54 -5.15 -86.07 -176.08 0

Profit/Loss After Tax


And Before -984.4 -2,073.77 -6,174.10 550.8 -1,297.79
Extraordinary Items
Profit/Loss From
-984.4 -2,073.77 -6,174.10 550.8 -1,297.79
Continuing Operations

Profit Loss From


0 0 0 0 482.16
Discontinuing Operations

Net Profit Loss From


0 0 0 0 482.16
Discontinuing Operations

Profit/Loss For The


-984.4 -2,073.77 -6,174.10 550.8 -815.63
Period

Share Of Profit/Loss Of
0 -29.18 0 0 0
Associates
Consolidated
Profit/Loss After MI And -984.4 -2,102.95 -6,174.10 550.8 -815.63
Associates

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) -3 -5 -18 2 -3

Diluted EPS (Rs.) -3 -5 -18 2 -3


Financial Ratios of Adani Power

Mar 19 18-Mar 17-Mar 16-Mar 15-Mar

Per Share Ratios

Basic EPS (Rs.) -3.21 -5.45 -17.82 1.84 -2.84

Diluted EPS (Rs.) -3.21 -5.45 -17.82 1.84 -2.84

Cash EPS (Rs.) 4.58 1.62 -9.08 9.65 3.49

Book
Value[ExclRevalReserve]/Share -0.75 2.31 7.78 22.4 19.93
(Rs.)
Book
Value[InclRevalReserve]/Share -0.75 2.31 7.78 22.4 19.93
(Rs.)
Revenue from
61.93 52.64 58.64 76.58 65.54
Operations/Share (Rs.)

PBDIT/Share (Rs.) 19.27 16.05 16.57 27.01 18.81

PBIT/Share (Rs.) 12.14 9.05 9.64 19.01 12.47

PBT/Share (Rs.) -2.53 -5.39 -16.23 1.12 -4.52

Net Profit/Share (Rs.) -2.55 -5.38 -16.01 1.65 -2.84

NP After MI And SOA / Share


-2.55 -5.45 -16.01 1.65 -2.84
(Rs.)

Profitability Ratios

PBDIT Margin (%) 31.11 30.48 28.25 35.26 28.69

PBIT Margin (%) 19.59 17.19 16.44 24.82 19.03

PBT Margin (%) -4.08 -10.23 -27.68 1.46 -6.89

Net Profit Margin (%) -4.12 -10.21 -27.3 2.15 -4.33

NP After MI And SOA Margin


-4.12 -10.35 -27.3 2.15 -4.33
(%)

Return on Networth/Equity (%) 342.15 -236.46 -205.83 7.37 -14.24

Return on Capital Employed


9.39 8.41 -13.46 1.1 -1.98
(%)

Return on Assets (%) -1.44 -3.02 -8.63 0.72 -1.39

Total Debt/Equity (X) -151.14 55.23 16.41 6.54 7.23


Asset Turnover Ratio (%) 35.13 29.2 31.62 33.68 32.19

Liquidity Ratios

Current Ratio (X) 0.73 0.5 0.53 0.62 0.58

Quick Ratio (X) 0.66 0.47 0.46 0.56 0.49

Inventory Turnover Ratio (X) 19.51 23.23 12.85 15.77 11.56

Coverage Ratios

Interest Coverage Ratios (%) 0.83 0.63 0.63 1.06 0.74

Interest Coverage Ratios (Post


0.83 0.63 0.63 1.06 0.74
Tax) (%)

Valuation Ratios

Enterprise Value (Cr.) 61,158.37 57,423.81 64,034.92 59,536.64 54,112.44

EV/Net Operating Revenue (X) 2.56 2.83 2.83 2.33 2.87

EV/EBITDA (X) 8.23 9.28 10.02 6.61 10.02

MarketCap/Net Operating
0.78 0.45 0.68 0.45 0.72
Revenue (X)

Price/BV (X) -64.7 10.3 5.14 1.55 2.37

Price/Net Operating Revenue 0.78 0.45 0.68 0.45 0.72

Earnings Yield -0.05 -0.23 -0.4 0.05 -0.06


Earnings per share:
Year 2019 2018 2017 2016 2015
EPS -3 -5 -18 2 -3

EPS

2
2019 2018 2017 2016 2015

-3
-3

-5

-18

Interpretation-
The result is assigned a rating of 1 to 99, with 99 being best. An EPS Rating of 99 indicates that
a company's profit growth has exceeded 99% of all publicly traded companies.
But hear -3 in 2019,-5 in 2018, and -18 in 2017,-3 in 2015 it is not a good sign for company and
only 2016 company get rs 2 per share. . It shows that investors has n’t good prospectus in Adani.
Profit after tax:

Year 2019 2018 2017 2016 2015


Profit (cr.) -984.4 -2073.77 -6174.10 550.8 -1297.79

PAT
550.8

2019 2018 2017 2016 2015


-984.4

-1297.79
-2073.77

-6174.1

Interpretation-
A company's profit after-tax is significant because it shows how well a company
controls its costs. A high profit after-tax generally indicates that a company runs
efficiently, providing more value, in the form of profits, to shareholders.
But in the above diagram shows that is not controlling its cost and not runs efficiently, it is not a good
sing for investor .
Return on net worth:

Year 2019 2018 2017 2016 2015


Profit (cr.) 342.15 -239.60 -205.83 7.37 -14.24

retrun on net wroth


400
342.15
300

200

100

0 7.37
-14.24
2019 2018 2017 2016 2015
-100

-200 -205.83
-239.6
-300

Interpretation:-
Current ratio (in Rs. Cr.)
Year 2019 2018 2017 2016 2015
CR 0.58 0.43 0.43 0.47 0.58

current ratio
0.7
0.58 0.58
0.6

0.5 0.47
0.43 0.43
0.4

0.3

0.2

0.1

0
2019 2018 2017 2016 2015

Interpretation:-
The company has a current ratio of 2.0, which would be considered a good ratio value in most
industries

Higher current ratio implies healthier short term liquidity comfort level. A current ratio below 1 indicates
that the company may not be able to meet its obligations in the short run. However, it is not always a
matter of worry if this ratio temporarily falls below 1 as many times companies squeeze out short term
cash sources to achieve a capital intensive plan with a longer term outlook. Adani Power’s average
current ratio over the last 5 financial years has been 0.43 times which indicates that the Company has
not been maintaining sufficient cash to meet its short term obligations.
Debt Equity Ratio (in Rs. Cr.)

Year 2019 2018 2017 2016 2015


DER 5.64 55.53 16.41 6.54 7.23

Debt Equity Ratio


60 55.53

50

40

30

20 16.41

10 5.64 6.54 7.23

0
2019 2018 2017 2016 2015

Interpretation:-
Net Profit Margin (in Rs. Cr.)
Year 2019 2018 2017 2016 2015
Net Profit Margin -4.12 -10.35 -27.30 2.15 -4.33

NET PROFIT MARGIN


5
2.15
0
2019 2018 2017 2016 2015
-5 -4.12 -4.33

-10 -10.35

-15

-20

-25
-27.3
-30

Interpretation:-
Earnings Yield

Year 2019 2018 2017 2016 2015


Earning Yield -0.05 -0.23 -0.4 0.05 -0.06

Earning Yield
0.05

2019 2018 2017 2016 2015


-0.05
-0.06

-0.23

-0.4

Interpretation:-
Sales:
Year 2019 2018 2017 2016 2015
Sales(cr.) 2404.20 8249.26 10868.11 12875.27 10624.61

Interpretation:-
2. NHPC
BALANCE SHEET OF NHPC
18-Mar 17-Mar 16-Mar 15-Mar
19-Mar
12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 10,045.03 10,259.32 10,259.32 11,070.67 11,070.67

Total Share Capital 10,045.03 10,259.32 10,259.32 11,070.67 11,070.67

Reserves and Surplus 19,169.70 18,092.50 16,682.81 17,681.28 17,215.72

Total Reserves and


19,169.70 18,092.50 16,682.81 17,681.28 17,215.72
Surplus

Total Shareholders
29,214.73 28,351.82 26,942.13 28,751.95 28,286.39
Funds

NON-CURRENT LIABILITIES

Long Term Borrowings 17,044.63 16,728.20 17,245.64 18,385.28 18,171.03

Deferred Tax Liabilities


3,610.63 3,145.39 938.49 845.68 810.44
[Net]

Other Long Term


3,883.62 1,663.47 1,498.10 1,244.16 1,337.17
Liabilities

Long Term Provisions 26.82 25.47 486.93 400.65 886.95

Total Non-Current
24,565.70 21,562.53 20,169.16 20,875.77 21,205.59
Liabilities

CURRENT LIABILITIES

Short Term Borrowings 406 279.99 302.5 0 0

Trade Payables 180.18 181.86 147.08 123 153.01

Other Current Liabilities 3,913.39 3,438.36 3,256.28 3,253.60 3,013.15


Short Term Provisions 1,329.37 1,753.04 1,489.95 2,161.84 2,780.98

Total Current
5,828.94 5,653.25 5,195.81 5,538.44 5,947.14
Liabilities

Total Capital And


59,609.37 55,567.60 52,307.10 55,166.16 55,439.12
Liabilities

ASSETS
NON-CURRENT ASSETS

Tangible Assets 22,940.69 19,090.11 20,038.58 22,055.58 21,899.89

Intangible Assets 906.66 923.38 934.14 828.27 795.27

Capital Work-In-
14,898.11 18,813.96 17,350.13 16,575.65 16,054.72
Progress

Intangible Assets Under


0 0 0 0.01 0
Development

Other Assets 4.49 4.49 4.49 0 0

Fixed Assets 38,749.95 38,831.94 38,327.34 39,459.51 38,749.88

Non-Current
2,361.66 2,209.56 2,100.32 1,596.36 1,977.75
Investments

Long Term Loans And


746.41 701.74 360.96 1,108.68 1,108.47
Advances

Other Non-Current
5,681.97 3,717.18 3,063.25 3,142.36 2,426.20
Assets

Total Non-Current
47,539.99 45,460.42 43,851.87 45,306.91 44,262.30
Assets

CURRENT ASSETS

Current Investments 0 0 0 1.13 257.57

Inventories 117.14 95.77 91.64 85.53 82.73

Trade Receivables 2,623.09 1,097.07 1,492.90 2,017.03 2,497.10

Cash And Cash


390.63 1,472.39 1,533.14 5,876.76 5,422.11
Equivalents
Short Term Loans And
45.18 47.97 43.84 218.48 1,407.19
Advances

OtherCurrentAssets 8,893.34 7,393.98 5,293.71 1,660.32 1,510.12

Total Current Assets 12,069.38 10,107.18 8,455.23 9,859.25 11,176.82

Total Assets 59,609.37 55,567.60 52,307.10 55,166.16 55,439.12

OTHER ADDITIONAL INFORMATION


CONTINGENT LIABILITIES,
COMMITMENTS

Contingent Liabilities 14,510.21 13,511.05 33,876.83 22,231.44 12,981.13

CIF VALUE OF IMPORTS

Capital Goods 0 0 26.43 4.33 8.78


EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign
104.86 83.4 102.32 169.68 188.21
Currency
REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS

Dividend Remittance In
- - - - -
Foreign Currency

EARNINGS IN FOREIGN EXCHANGE

FOB Value Of Goods - - - - -

Other Earnings - - - 2.62 -

BONUS DETAILS

Bonus Equity Share


- - - - -
Capital

NON-CURRENT INVESTMENTS
Non-Current
Investments Quoted 490.2 503.29 519.41 468.59 876.61
Market Value

Non-Current
Investments Unquoted 1,871.46 1,706.27 1,580.91 1,214.41 1,214.41
Book Value

CURRENT INVESTMENTS
Current Investments
- - - - -
Quoted Market Value
Current Investments
- - - 2.19 258.63
Unquoted Book Value

Profit & Loss account of NHPC

19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

12 mths 12 mths 12 mths 12 mths 12 mths


INCOME
Revenue From
8,131.94 6,931.89 7,191.53 7,330.82 6,784.17
Operations [Gross]
Revenue From
8,131.94 6,931.89 7,191.53 7,330.82 6,784.17
Operations [Net]
Other Operating
29.24 6.33 79.64 103.24 18.08
Revenues
Total Operating
8,161.18 6,938.22 7,271.17 7,434.06 6,802.25
Revenues
Other Income 924.78 1,420.55 1,457.67 919.76 861.33
Total Revenue 9,085.96 8,358.77 8,728.84 8,353.82 7,663.58
EXPENSES
Cost of Power
12.68 0 0 0 0
Purchased
Operating And Direct
796.85 716.38 0 0.05 7.29
Expenses
Employee Benefit
1,704.65 1,535.89 1,574.84 1,115.90 1,149.23
Expenses
Finance Costs 894.88 922.32 1,073.22 1,067.37 1,179.77

Depreciation And
1,589.99 1,395.51 1,388.40 1,452.14 1,425.87
Amortisation Expenses

Other Expenses 1,165.53 972.37 1,931.77 2,108.49 1,653.31


Total Expenses 6,164.58 5,542.47 5,968.23 5,743.95 5,415.47
19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

12 mths 12 mths 12 mths 12 mths 12 mths

Profit/Loss Before
Exceptional,
2,921.38 2,816.30 2,760.61 2,609.87 2,248.11
ExtraOrdinary Items
And Tax
Exceptional Items 823.4 62.33 713.99 549.94 521.95

Profit/Loss Before Tax 3,744.78 2,878.63 3,474.60 3,159.81 2,770.06

Tax Expenses-
Continued Operations

Current Tax 649.78 627.77 706.56 744.97 583.42


Deferred Tax 464.45 -518.17 89.44 35.24 43.77
Tax For Earlier Years 0 0 -116.99 -23.67 74.51

Total Tax Expenses 1,114.23 109.6 679.01 756.54 701.7


Profit/Loss After Tax
And Before 2,630.55 2,769.03 2,795.59 2,403.27 2,068.36
ExtraOrdinary Items
Prior Period Items 0 0 0 36.87 56.11

Profit/Loss From
2,630.55 2,769.03 2,795.59 2,440.14 2,124.47
Continuing Operations

Profit/Loss For The


2,630.55 2,769.03 2,795.59 2,440.14 2,124.47
Period
19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

12 mths 12 mths 12 mths 12 mths 12 mths

OTHER ADDITIONAL
INFORMATION
EARNINGS PER
SHARE
Basic EPS (Rs.) 2.57 2.7 2.53 2.2 1.92

Diluted EPS (Rs.) 2.57 2.7 2.53 2.2 1.92


VALUE OF IMPORTED
AND INDIGENIOUS
RAW MATERIALS
STORES, SPARES AND
LOOSE TOOLS
Imported Stores And
0 0 0 0.63 0
Spares

Indigenous Stores And


21.54 24.59 19.44 37.35 30.4
Spares

DIVIDEND AND
DIVIDEND
PERCENTAGE
Equity Share Dividend 1,000.46 1,251.65 2,524.13 1,660.60 664.27
Tax On Dividend 148.57 126.86 472.22 338.06 134.42

Equity Dividend Rate (%) 15 14 18 15 6

FINANCIAL RATIOS OF NHPC


19-Mar 18-Mar 17-Mar 16-Mar 15-Mar

Per Share Ratios


Basic EPS (Rs.) 2.57 2.7 2.53 2.2 1.92
Diluted EPS (Rs.) 2.57 2.7 2.53 2.2 1.92
Cash EPS (Rs.) 4.2 4.06 4.08 3.52 3.21
Book Value
[ExclRevalReserve]/Share 29.08 27.64 26.26 25.97 25.55
(Rs.)
Book Value
[InclRevalReserve]/Share 29.08 27.64 26.26 25.97 25.55
(Rs.)

Dividend / Share(Rs.) 1.46 1.4 1.8 1.5 0.6

Revenue from
8.12 6.76 7.09 6.72 6.14
Operations/Share (Rs.)

PBDIT/Share (Rs.) 5.38 5 5.09 4.63 4.38


PBIT/Share (Rs.) 3.8 3.64 3.74 3.32 3.1
PBT/Share (Rs.) 3.73 2.81 3.39 2.85 2.5

Net Profit/Share (Rs.) 2.62 2.7 2.72 2.2 1.92

Profitability Ratios
PBDIT Margin (%) 66.24 73.99 71.82 68.99 71.35
PBIT Margin (%) 46.76 53.88 52.72 49.46 50.39
PBT Margin (%) 45.88 41.48 47.78 42.5 40.72

Net Profit Margin (%) 32.23 39.9 38.44 32.82 31.23

Return on Networth /
9 9.76 10.37 8.48 7.51
Equity (%)
Return on Capital
7.09 7.49 8.13 4.91 4.29
Employed (%)

Return on Assets (%) 4.41 4.98 5.34 4.42 3.83

Total Debt/Equity (X) 0.6 0.6 0.65 0.64 0.64

Asset Turnover Ratio (%) 13.69 12.48 13.9 13.47 12.26

Liquidity Ratios
Current Ratio (X) 2.07 1.79 1.63 1.78 1.88
Quick Ratio (X) 2.05 1.77 1.61 1.76 1.87
Inventory Turnover Ratio
69.67 72.45 79.34 86.92 82.22
(X)
Dividend Payout Ratio
38.03 45.2 90.28 68.05 31.26
(NP) (%)
Dividend Payout Ratio
23.7 30.05 60.32 42.66 18.71
(CP) (%)
Earnings Retention Ratio
61.97 54.8 9.72 31.95 68.74
(%)
Cash Earnings Retention
76.3 69.95 39.68 57.34 81.29
Ratio (%)
Valuation Ratios

Enterprise Value (Cr.) 41,921.45 43,902.82 48,896.12 39,188.83 34,779.55

EV/Net Operating
5.14 6.33 6.72 5.27 5.11
Revenue (X)
EV/EBITDA (X) 7.75 8.55 9.36 7.64 7.17

MarketCap/Net Operating
3.05 4.09 4.52 3.59 3.24
Revenue (X)
Retention Ratios (%) 61.96 54.79 9.71 31.94 68.73

Price/BV (X) 0.85 1 1.22 0.93 0.78


Price/Net Operating
3.05 4.09 4.52 3.59 3.24
Revenue
Earnings Yield 0.11 0.1 0.08 0.09 0.1

Earnings per share:


Year 2019 2018 2017 2016 2015
EPS 2.57 2.7 2.53 2.2 1.92

EPS
3
2.7
2.57 2.53
2.5
2.2
1.92
2

1.5

0.5

0
2019 2018 2017 2016 2015

Interpretation-
NHPC stocks earning per share increasing year by year .it is good indicate for invester
Profit after tax:

Year 2019 2018 2017 2016 2015


PAT 2630.55 2769.03 2759.59 2403.27 2068.36

PAT
3000 2769.03 2759.59
2630.55
2500 2403.27
2068.36
2000

1500

1000

500

0
2019 2018 2017 2016 2015

Interpretation-
Above chat shows that profit after tax increase year to year but suddenly it decrease in
2019 .it means company decrease the production capacity but stilly it indicate good
symbol for the investor.
Return on net worth:
Year 2019 2018 2017 2016 2015
Return on net 9 9.76 10.37 8.48 7.51
Worth

12
10.37
9.76
10 9
8.48
7.51
8

0
2019 2018 2017 2016 2015

Interpretation:-

In 2015 return on net worth is 7.51 to increased 0.97 in2016 and 1.89 in 2017 but
2018 it decreased 0.61 and also decrease .76 in 2019
Current ratio (in Rs. Cr.)
Year 2019 2018 2017 2016 2015
Current ratio 2.07 1.79 1.63 1.78 1.88

current ratio
2.5
2.07
2 1.88
1.79 1.78
1.63
1.5

0.5

0
2019 2018 2017 2016 2015

Interpretation:-
The company has a current ratio of 2.0, which would be considered a good ratio value
in most industries
In the above diagram current ratio increase rapidly .it attract the investor to invest more
in this stock. In 2019 current ratio is 2.07 in compare to 2018 it increase 0.28. Which
indicates that the Company has been maintaining sufficient cash to meet its short term obligations.
Earnings Yield
Year 2019 2018 2017 2016 2015
Earning yield 0.11 0.1 0.08 0.09 0.01

Earning yield
0.14

0.12 0.11
0.1
0.1 0.09
0.08
0.08

0.06

0.04

0.02 0.01

0
2019 2018 2017 2016 2015

Interpretation:-

In above diagram earning yield in 2019 is higher than of 2018,2017,2016,2015 .it


means those who invest in this period if it the investor sell his /her share in 2019 he/she
get more return.
PART-II
Technical analysis
5 YEARS MONTHLY HISTORICAL DATA OF ADANI POWER Commented [g1]:

Date Open High Low Close Adj Volume


Close
6/1/2014 60.95 65.2 56.3 62.55 62.55 37955382
7/1/2014 63.2 66.95 54.35 56.55 56.55 39511256
8/1/2014 56.25 57.85 47.1 47.35 47.35 17813700
9/1/2014 47.35 54.55 42.05 43.4 43.4 25219627
10/1/2014 43.4 48.2 41.55 47.9 47.9 11335893
11/1/2014 48.35 50.1 44.65 45.7 45.7 14019523
12/1/2014 46 46 38.8 44.35 44.35 15185116
1/1/2015 44.5 53.1 43.3 51.9 51.9 25615287
2/1/2015 52.5 57.9 45.75 57.4 57.4 24900859
3/1/2015 56.15 60 44.8 47.3 47.3 26902851
4/1/2015 47 50.45 41.3 42.2 42.2 17464786
5/1/2015 43 45.45 38.5 38.95 38.95 18968978
6/1/2015 39.25 39.25 26.5 29.25 29.25 68970011
7/1/2015 29.2 31.15 26.35 27.4 27.4 32069549
8/1/2015 27.6 29.45 19.65 22.45 22.45 29099047
9/1/2015 22.5 25.4 20.15 24.7 24.7 21242975
10/1/2015 24.55 32.55 24.2 31.45 31.45 29185577
11/1/2015 31.85 32.45 26.25 30.75 30.75 21319845
12/1/2015 30.9 32.5 25.8 32.25 32.25 24724560
1/1/2016 32.25 35.1 25.4 28.6 28.6 24691572
2/1/2016 29 29.4 22.45 27.5 27.5 22383367
3/1/2016 27.75 35.75 27.7 34.65 34.65 15754512
4/1/2016 34.35 36.1 30.2 32.05 32.05 20398567
5/1/2016 31.65 32.9 27.65 29.8 29.8 29535097
6/1/2016 30.05 31.5 27.15 30.35 30.35 19202477
7/1/2016 30.8 30.95 27.9 28.05 28.05 17559536
8/1/2016 27.95 28.5 26.1 27.7 27.7 18437003
9/1/2016 27.7 29.3 24.7 24.95 24.95 14822949
10/1/2016 25.35 28.25 25.05 27.3 27.3 20441900
11/1/2016 27.4 28.8 23.35 28.65 28.65 20907569
12/1/2016 28.65 33.95 27.4 30.1 30.1 28820614
1/1/2017 30.35 38.95 29.2 36.2 36.2 33475202
2/1/2017 36.5 39.35 34.35 38.45 38.45 18557873
3/1/2017 38.8 41.3 36.35 39.95 39.95 23663061
4/1/2017 40.5 46.3 31.8 32.95 32.95 63173350
5/1/2017 32.95 33.7 25.9 27.65 27.65 40721715
6/1/2017 27.85 30 26.45 29.7 29.7 23172504
7/1/2017 29.95 35.45 28.1 33.45 33.45 28298883
8/1/2017 33.5 33.9 25.9 33.25 33.25 24804274
9/1/2017 33.2 33.65 28.85 29.55 29.55 24689748
10/1/2017 29.55 33.9 28.75 32.8 32.8 20379281
11/1/2017 32.8 37.1 31.35 35.5 35.5 30303431
12/1/2017 35.7 42.1 32.1 41.65 41.65 38058675
1/1/2018 42 47.75 35 36.65 36.65 61841711
2/1/2018 36.5 37.3 29.6 31.75 31.75 40867509
3/1/2018 31.6 32 23.15 23.75 23.75 31545609
4/1/2018 24.05 26.9 23.65 25.7 25.7 19335780
5/1/2018 25.7 26.1 18.6 20.2 20.2 20521043
6/1/2018 20.25 20.25 15.4 16.15 16.15 31878589
7/1/2018 16.15 31.65 15.2 31.35 31.35 82771294
8/1/2018 31.75 36 27.85 35.4 35.4 86833855
9/1/2018 35.5 36.05 23.55 23.85 23.85 46074260
10/1/2018 24.2 46.45 21.1 46.05 46.05 91131604
11/1/2018 46 57.3 45 55.4 55.4 62131282
12/1/2018 56.1 58.2 47 50.9 50.9 31363538
1/1/2019 50.8 52.65 39.25 45.55 45.55 51349757
2/1/2019 46.15 49.95 33.35 48.1 48.1 51339667
3/1/2019 48.1 53.25 46.4 48.2 48.2 30016707
4/1/2019 48.25 55.8 44 44.85 44.85 34292584
5/1/2019 44.85 53.25 37.25 50.35 50.35 51287373

Relative strength index

Date Close PX changes gain lose AV AV RS RSI


CHANGE GAIN LOSE

6/1/2014 62.55
7/1/2014 56.55 -0.0791 -6 0 0.17756
8/1/2014 47.35 -0.1776 -9.2 0 0.17756
9/1/2014 43.4 -0.0871 -3.95 0 0.08711
10/1/2014 47.9 0.09866 4.5 0.09866 0
11/1/2014 45.7 -0.047 -2.2 0 0.04702
12/1/2014 44.35 -0.03 -1.35 0 0.02999
1/1/2015 51.9 0.15721 7.55 0.15721 0
2/1/2015 57.4 0.10073 5.5 0.10073 0
3/1/2015 47.3 -0.1935 -10.1 0 0.19353
4/1/2015 42.2 -0.1141 -5.1 0 0.11409
5/1/2015 38.95 -0.0801 -3.25 0 0.08014
6/1/2015 29.25 -0.2864 -9.7 0 0.2864
7/1/2015 27.4 -0.0653 -1.85 0 0.06534
8/1/2015 22.45 -0.1993 -4.95 0 0.19925 0.02547 0.10414 0.24458 19.6514
9/1/2015 24.7 0.09551 2.25 0.09551 0 0.03229 0.09146 0.35309 26.0949
10/1/2015 31.45 0.2416 6.75 0.2416 0 0.04955 0.07878 0.629 38.6125
11/1/2015 30.75 -0.0225 -0.7 0 0.02251 0.04955 0.07416 0.66813 40.0526
12/1/2015 32.25 0.04763 1.5 0.04763 0 0.0459 0.07416 0.61898 38.2328
1/1/2016 28.6 -0.1201 -3.65 0 0.12011 0.0459 0.07938 0.57827 36.6396
2/1/2016 27.5 -0.0392 -1.1 0 0.03922 0.0459 0.08004 0.57351 36.4477
3/1/2016 34.65 0.23111 7.15 0.23111 0 0.05118 0.08004 0.63946 39.0042
4/1/2016 32.05 -0.078 -2.6 0 0.078 0.04399 0.08561 0.51381 33.9414
5/1/2016 29.8 -0.0728 -2.25 0 0.07279 0.04399 0.07699 0.57137 36.3612
6/1/2016 30.35 0.01829 0.55 0.01829 0 0.0453 0.06884 0.65798 39.6857
7/1/2016 28.05 -0.0788 -2.3 0 0.07881 0.0453 0.06874 0.65889 39.7188
8/1/2016 27.7 -0.0126 -0.35 0 0.01256 0.0453 0.04918 0.92093 47.9418
9/1/2016 24.95 -0.1046 -2.75 0 0.10456 0.0453 0.05199 0.8713 46.5612
10/1/2016 27.3 0.09001 2.35 0.09001 0 0.05172 0.03775 1.37006 57.807
11/1/2016 28.65 0.04827 1.35 0.04827 0 0.04835 0.03775 1.28067 56.1533
12/1/2016 30.1 0.04937 1.45 0.04937 0 0.03462 0.03775 0.91699 47.835
1/1/2017 36.2 0.18453 6.1 0.18453 0 0.0478 0.03615 1.32244 56.9418
2/1/2017 38.45 0.0603 2.25 0.0603 0 0.04871 0.03615 1.34748 57.4011
3/1/2017 39.95 0.03827 1.5 0.03827 0 0.05144 0.02757 1.86601 65.1083
4/1/2017 32.95 -0.1926 -7 0 0.19264 0.05144 0.03852 1.33523 57.1776
5/1/2017 27.65 -0.1754 -5.3 0 0.17537 0.03493 0.05105 0.68425 40.6264
6/1/2017 29.7 0.07152 2.05 0.07152 0 0.04004 0.04548 0.8804 46.8199
7/1/2017 33.45 0.1189 3.75 0.1189 0 0.04853 0.04028 1.20489 54.6463
8/1/2017 33.25 -0.006 -0.2 0 0.006 0.04723 0.04071 1.16012 53.7064
9/1/2017 29.55 -0.118 -3.7 0 0.11797 0.04723 0.04351 1.08553 52.0506
10/1/2017 32.8 0.10434 3.25 0.10434 0 0.05468 0.04261 1.2833 56.2037
11/1/2017 35.5 0.0791 2.7 0.0791 0 0.06033 0.03514 1.71683 63.1924
12/1/2017 41.65 0.15977 6.15 0.15977 0 0.06531 0.03514 1.85862 65.018
1/1/2018 36.65 -0.1279 -5 0 0.12789 0.06187 0.04428 1.39728 58.2861
2/1/2018 31.75 -0.1435 -4.9 0 0.14352 0.05834 0.05453 1.06991 51.6887
3/1/2018 23.75 -0.2903 -8 0 0.29031 0.04516 0.07526 0.6 37.5
4/1/2018 25.7 0.07891 1.95 0.07891 0 0.04649 0.07526 0.61766 38.1823
5/1/2018 20.2 -0.2408 -5.5 0 0.24081 0.04375 0.09246 0.4732 32.1204
6/1/2018 16.15 -0.2238 -4.05 0 0.22376 0.04375 0.09469 0.46209 31.6046
7/1/2018 31.35 0.66329 15.2 0.66329 0 0.09113 0.08216 1.10918 52.5883
8/1/2018 35.4 0.1215 4.05 0.1215 0 0.0947 0.08216 1.15263 53.5452
9/1/2018 23.85 -0.3949 -11.55 0 0.39493 0.08621 0.11037 0.78108 43.8544
10/1/2018 46.05 0.65794 22.2 0.65794 0 0.1332 0.10994 1.21159 54.7836
11/1/2018 55.4 0.18485 9.35 0.18485 0 0.14641 0.10152 1.44222 59.0537
12/1/2018 50.9 -0.0847 -4.5 0 0.08472 0.13895 0.10757 1.2918 56.3662
1/1/2019 45.55 -0.1111 -5.35 0 0.11105 0.1333 0.1155 1.15416 53.5782
2/1/2019 48.1 0.05447 2.55 0.05447 0 0.12578 0.1155 1.08904 52.1312
3/1/2019 48.2 0.00208 0.1 0.00208 0 0.12593 0.10636 1.18397 54.2118
4/1/2019 44.85 -0.072 -3.35 0 0.07204 0.12593 0.10126 1.24367 55.4302
5/1/2019 50.35 0.11568 5.5 0.11568 0 0.13419 0.08052 1.66656 62.4985
RSI
70
60
50
40
30
20
10
0

Interpretation:-
0
10
20
30
40
50
60
70
6/1/2014
8/1/2014
10/1/2014
12/1/2014
2/1/2015

Interpretation:-
4/1/2015
6/1/2015
8/1/2015
10/1/2015
12/1/2015
2/1/2016 SIMPLE MOVING AVERAGE
4/1/2016
6/1/2016
8/1/2016
10/1/2016
12/1/2016
2/1/2017
4/1/2017
6/1/2017
ADANI POWER

8/1/2017
10/1/2017
12/1/2017
2/1/2018
4/1/2018
6/1/2018
8/1/2018
10/1/2018
12/1/2018
2/1/2019
4/1/2019
Close
5 month SMA
15 month SMA
BARS CHART

ADANI POWER
80
70
60
50
40
30
20
10
0

High Low Close

Interpretation:-
0
10
20
30
40
50
60
70
80
Date
7/1/2014
9/1/2014
11/1/2014
1/1/2015

Interpretation:-
3/1/2015

CANDLES CHART
5/1/2015
7/1/2015
9/1/2015
11/1/2015
1/1/2016
3/1/2016
5/1/2016

Open
7/1/2016
9/1/2016

High
11/1/2016
1/1/2017

Low
3/1/2017
ADANI POWER

5/1/2017

Close
7/1/2017
9/1/2017
11/1/2017
1/1/2018
3/1/2018
5/1/2018
7/1/2018
9/1/2018
11/1/2018
1/1/2019
3/1/2019
5/1/2019
LINE CHAT

ADANI POWER
70 62.55
56.55 57.4 55.4
60 51.9 50.948.1
47.3547.9
45.7 47.3 46.05 45.5548.250.35
43.4 44.35 42.2 41.65 44.85
50 38.95 39.95
38.45
34.65 36.2 33.45 36.65
35.5 35.4
40 32.25 32.05
31.45
30.75 30.35 30.1 32.95 33.2532.8 31.75 31.35
29.25
27.424.7 27.5 29.8
28.6 28.05
27.7 28.65
27.3
24.95
29.7 29.55
27.65 25.7
30 22.45 23.75 23.85
20.2
16.15
20
10
0
8/1/2015

2/1/2016
6/1/2014
8/1/2014
10/1/2014
12/1/2014
2/1/2015
4/1/2015
6/1/2015

10/1/2015
12/1/2015

4/1/2016
6/1/2016
8/1/2016
10/1/2016
12/1/2016
2/1/2017
4/1/2017
6/1/2017
8/1/2017
10/1/2017
12/1/2017
2/1/2018
4/1/2018
6/1/2018
8/1/2018
10/1/2018
12/1/2018
2/1/2019
4/1/2019
Interpretation:-
CHAPTER-5
SUMMARY
AND
CONCLUSION
5.1 FINDINGS
 Table No 4.3.4 shows that the profitability ratios are high in RELIANCE POWER
while considering other securities selected for the study.

 Table No 4.1.3 shows ADANI POWER have negative return on equity.

 Table No 4.1.1 indicate that the Current share price of ADANI POWER
is affordable one to investors and it is low risk scrip.

 Table No 4.6.4 shows the Liquidity ratios are affordable in TATA


POWER than any other stocks under study.

 Table No 4.4.2 shows that the POWERGRID have high EPS


(28.49rupees) than other stocks followed by NTPC .(12.1rupees)

 Table No 4.5.2 shows the Dividend yield percentage high in NHPC stock

 Chart No 4.1.4 shows the ADANI POWER stock shows a bullish trend as
per RSI chart.
 Chart No 4.6.1 and 4.5.1 shows that the TATA POWER, and NHPC,
stocks now trading below the critical line.

 Table No 4.6.1 shows Share price of TATA POWER shows negative trend
during the study period.

 Chart No 4.1.3, 4.4.1, 4.5.1 shows a bullish trend in ADANI POWER,


POWERGRID, and NHPC.
 MOVING AVERAGE shows mixed trend in all the stocks selected for the
study, so we can’t predict the share price trend of power sector as a whole.

5.2 SUGGESTIONS
• Fundamentals of all power stock are not strong, as per the financial statement year
ended 2018-19
• Movement of TATA POWER, and NHPC shows a weaker trend.
The stocks now trading below the critical line so that an investor can move from
these stocks.
• ADANI POWER, POWERGRID, NHPC and shows bullish trend in its share price
and it is advisory to hold these shares.
• It is advisory to an investor, should not depend only on one tool, rather one has
gone for other chart patterns to get confirmation for buy or sell signal.

5.3 CONLUSION
The study deals with share and share trading gives a general idea about the analysis
of stocks. The analysis carried on two basis, Fundamental analysis and technical
analysis. Technical analysis shows a short term trend based on historical data and
fundamental analysis helpful for the decision making for long term investment.
From the analysis it is found that the charts prepared on the basis of the share price,
with the support of technical tools shows all the trends and variations as interpreted
in the theory. In the analysis using moving average it is found that if the price is
lying above the moving average, the scrip is in a bullish trend if the price lying
below the moving average the scrip is in bearish trend. Technical analysis ignores
the actual nature of the company. Technical analysis is based solely on the chart
that is to say price and volume information. The investor has to invest wisely on
the scrip which gives high return with most possible risk.

Оценить