A STUDY ON SHARE PRICES OF RELATED STOCKS USING FUNDAMENTAL & TECHNICAL ANALYSIS

 

Presented by

Vignesh c j

8uta45

STOCK EXCHANGE

• Mumbai stock exchange established in 1875.

• Next Ahmedabad stock exchange was set up

in 1894.

• Regulated by SEBI (securities & exchange

board of India).

• It was set up in 1988 ,but came into force

during 1992.

FEATURES OF STOCK EXCHANGE

• Control by the governing body .

• Rules & regulations.

• Listed securities.

• Quick disposal.

• Good security for loan.

SECURITIES & EXCHANGE BOARD OF INDIA

FEATURES:-

• To protect investors .

• To safeguard rights of investors in securities.

• Compulsory registration & issue of certificates

to the intermediaries.

• Chairman and five members are appointed by

the central government.

• Ensure a market place to rise funds at low cost.

INVESTORS

FUNCTIONS OF SEBI

• Regulating the business in stock exchange.

• Prohibiting frauds and malpractices in

market.

• Inspection, enquiry and audit of stock

exchange.

• Registering and regulating the working of

intermediaries.

• Prohibiting insider trading in securities.

SHARES

• A share in a company is one of the units in which

the total capital of the company is divided.

• Example:

If the capital of a company is 10000 and is

divided into 1000 units of Rs10 each, each unit

of Rs.10 shall be called a share of the company.

OBJECTIVE OF THE STUDY

 PRIMARY OBJECTIVE

• To give better insight to the investor in deciding the investment in share of the selected companies scrip’s.

SECONDARY OBJECTIVE

• To compute the future value of the shares of the selected companies.

• To understand trends and patterns in share price movements.

• To analyze price movements using candle stick.

FINANCIAL ANALYSIS

• The primary objective is to judge profits and

financial soundness of the company.

• Better understanding of a firm’s position

and performance.

• It consist of various ratios.

TECHNICAL ANALYSIS

• The examination of the past price.

• To forecast future price.

• Technical analysis can be analyzed by

Bar chart

Line chart

Point and figure chart etc..

RATIOS USED• INVENTORY TURNOVER RATIO

Every firm has to maintain a certain level of inventory of finished goods to be able to meet requirement of business.

Cost of goods sold * 100

Average inventory at cost

• CURRENT RATIO

The ratio indicates the company’s ability to meet current obligations, i.e. the current assets must be sufficient to pay current liabilities

Current assets *100 Current liability

Cont….

• DEBTOR TURNOVER RATIO

Debtor’s turnover ratio indicates the velocity of debt collection of firm.

Total sale Debtors

• RETURN ON INVESTMENT

Return on shareholders investment popularly known as ROI.

Net profit (after interest &tax) *100Shareholders funds 

Cont…• Operating profit margin

Indicates the operating profit margin after taking into account

all indirect costs and expenses of manufacturing,

administrative and distribution activities. Operating profit *100

Net sales

• Dividend yield ratio

Is calculated to evaluate the relationship between dividend

per share paid and the market value of share.

Dividend per share

  Market value per share

INTRODUCTION TO THE COMPANY

ELGI EQUIPMENTS LTD

• Public Limited Company commenced in 1975.

• Manufactures Air - Compressors, Hydraulic lift, Lubricating

Equipment, Horns, Power brakes, etc..

• Technical collaborations with Pumpen Fabrik Urach,

Landweher and Gobel .

• Specializes in custom-built solutions.

RATIO ANALYSIS OF ELGI

Particulars 2002 2003 2004

Net profit margin 5.02 5.14 7.55

Operating profit margin 11.85 11.59 15.02

Gross profit margin 10.75 10.88 14.68

Dividend Yield 1.36 1.5 0.6

Return On Net worth 14.16 15.93 27.61

Current Ratio 1.58 1.46 1.47

Debt Equity Ratio 0.32 0.07 0.03

Debtors Turnover Ratio 8.06 8.44 10.12

Fixed Assets Turnover Ratio2.41 2.63 3.23

Inventory turnover Ratio 7.87 8.33 8.18

0

5

10

15

20

25

30

Net profit margin

Operating profit

margin

Gross profit

margin

Dividend Yield

Return On Net worth

Current Ratio

Debt Equity Ratio

Debtors Turnover

Ratio

Inventory turnover

Ratio

Chart Showing The Ratio Analysis Of ELGI Company

2002 2003 2004

TECHNICAL ANALYSIS OF ELGI

• Bullish market

on 23rd, 27th, 29th of Dec , July 1st, 13th, & 14th of

Jan month .(white candle in chart, buying is best)

• Bearish market

on 16th, 17th, 20th, 21st, 22nd, 24th, 28th, 30th, 31st,

of Jan and from march 1st to July first.(black candle

in chart, selling is best)

INTRODUCTION TO THE COMPANY

RANBAXY LABORATORIES LIMITED

• India’s largest pharmaceutical Company.

• It is ranked amongst the top ten generic companies in

worldwide.

• The Company was incorporated in 1961 and went public in

1973.

• The Company has a strong Brand marketing team and

distribution network in India

• Largest investor on R&D in the Indian pharmaceutical

industry with an R&D spend of 7% of its sales during 2004.

• It has joined hands with GlaxoSmithKline Plc for a global

alliance in the area of drug discovery and development.

RATIO ANALYSIS OF RANBAXY

Particulars 2002 2003 2004

Net profit margin 10.24 20.65 21.42

Operating profit margin 15.81 25.91 27.49

Gross profit margin 13.59 25.22 27.27

Return On Net worth 13.73 35.88 37.91

Current Ratio 1.76 1.80 1.93

Debt Equity Ratio 0.12 0.04 0.01

Debtors Turnover Ratio 4.60 4.96 6.26

Fixed Assets Turnover Ratio 2.43 3.10 3.42

Inventory turnover Ratio 4.87 5.64 5.64

0

5

10

15

20

25

30

35

40

Net profit margin

Operating profit

margin

Gross profit

margin

Return On Net worth

Current Ratio

Debt Equity Ratio

Debtors Turnover

Ratio

Fixed Assets

Turnover Ratio

Inventory turnover

Ratio

Chart Showing The Ratio Analysis Of Ranbaxy

2002 2003 2004

1180

1200

1220

1240

1260

1280

1300

1320

PRIC

ES IN

RS

DECEMBER 16/12/04 -31/12/04

PRICE FLUCTUATIONS OF RANBAXY LABORATORIES LIMITED

0

200

400

600

800

1000

1200

1400

PR

ICES

IN

RS

JANUARY 3/1/05 -14/1/05

PRICE FLUCTUATIONS OF RANBAXY LABORATORIES LIMITED

TECHNICAL ANALYSIS OF RANBAXY

• Bull market on 28th, 31st of Dec & 1st of June month of 2005

(white candle in chart, buying is best).

• Bear market on 16th, 17th, 20th, 21st to 24th, 27th, 29th, 30th, of

Dec & 1st of march, April, may, July, Oct, Nov, Dec (black candle in chart, selling is best).

FINDINGS & SUMMARY

• Findings & conclusions were drawn from the financial

and technical analysis.

• Share prices of Elgi was 56.69.

• Share prices of Ranbaxy was 1256.86.

• Uses of stop loss order of shares.

• Requirements' to buy and sell the shares.

CONCLUSION

• Elgi were mostly bearish in mood and so the investor

can sell these shares in a short term and can buy

them when the price decreases.

• Same as Elgi, Ranbaxy also mostly in bearish mood

and so the investor can sell these shares in a short

term and can buy them when the price decreases

Thank You!