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FINANCIAL ANALYSIS OF STOCK MARKET
CHAPTER I INTRODUCTION
Introduction
In simple words stock exchange is an organized market for free purchase and sales
of industrial securities. The Securities Contracts (regulation) Act, 1956 defines a
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stock exchange as, “any body of individuals, whether incorporated or not,
established for the purpose of assisting regulating and controlling business in
buying and selling and dealing in securities”. The stock market can be a great
source of confusion for many people. The average person generally fails into one
or two categories. The first believe investing is a form of gambling, they are
certain that if you invest you will more than likely and end up losing your money.
Without such knowledge against stock market and functions the share holders
loose their investment. These feelings are not ground in facts and are the result of
personal experience. Someone who believes along this line of thinking simply
does not understand what the stock market is or why it exists.
The second category consists of those who know they should invest for the long
run, but don’t know where to begin. Many feel like investing is some sort of black
magic that only a few people hold the key to. More often than not, they leave their
financial decisions up to professionals, cannot tell you why they own a particular
stock or mutual fund. Stock Exchange has to make application in the prescribed
manner to the Central Government has the power to withdraw or suspend
recognition of a recognized stock exchange through their functions.
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It is set out to prove that the average investor can evaluate the balance sheet of a
company, and following a few relatively simple calculations, arrive at what they
believe is the "real", or intrinsic value of the company. This will allow a person to
look at a stock and know that it is worth. This gives each investor the freedom to
know when a security is undervalued, increasing their long-term returns
substantially.
The largest stock market in the United States, by market capitalization, is the New
York Stock Exchange (NYSE). In Canada, the largest stock market is the Toronto
Stock Exchange. Major European examples of stock exchanges include
the Amsterdam Stock Exchange, London Stock Exchange, Paris Bourse, and
the Deutsche Börse (Frankfurt Stock Exchange). In Africa, examples
include Nigerian Stock Exchange, JSE Limited, etc. Asian examples include
the Singapore Exchange, the Tokyo, the Hong Kong Stock Exchange, the Shanghai
Stock Exchange, and the Bombay Stock Exchange. In Latin America, there are
such exchanges as the BM&F Bovespa and the BMV. Australia has a national
stock exchange, the Australian Securities Exchange, due to the size of its
population.
Utility of Stock Market
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It is base on the economic functions performed by the stock exchange make it a
useful for all: the investors, the company, and society.
Investors
It provides the investors with a ready market for the purchase and sale of securities.
The companies from encroaching upon the legitimate right of the shareholders by
making rigid 'Listing Provisions'. Investors to assess from time to time the value
of their investment or funds. It helps the investors in selecting the stock and share
in which they could invest their saving most profitably.
Companies
It helps the company in enhancing its prestige through listing of the company's
shares and collection their funds to increase their growth. It helps the company
sensing market that the investor would prefer Equity share, Preference share or
Debentures etc. the premium at which the equity shares can be issued.
Society
It promotes the economic growth of a country by channelizing the saving of both
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sector. The socializing the capital of large corporations, it means acquire shares in
large enterprises on account of an efficient machinery for purchase of assets. It
provides information to people living in different part of the country. The effective
and steady stock market shows the strength of the country or market or economy.
Before we examine how to value a company, it is important to understand the
nature of businesses and the stock market. This is the cornerstone of learning to
invest well.
1.2 Financial Terms:
Following are the financial terms are used in share market
Earning per share (EPS):
The amount of profit to which each share is entitled
Going Public:
Slang for when a company is planning an Initial public offer
IPO:
Initial public Offering. An IPO is when a company sells stock in itself for the first
time.
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Market Cap:
The amount of money you would have to pay if you bought ever share of stock in
A company (To calculate market cap, multiply the number of shares by the price
per share. )
Short for Market Capitalization
Ticker Symbol:
A short group of letters that represent a particular stock. The financial institution
or investment bank that is doing all of the paperwork and orchestrating a
company’s IPO.
(eg. “State Trading Corporation of India” is referred to as “STC India”)
Share:
A share represents an investor’s ownership in a “share” of the profit, losses, and
assets of a company. It is created when a business carves itself into pieces and
sells them to investors in exchange for cash.
Money Market:
Market for short-term financial asset which are near substitute for money.
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I.3 The Stock Market:
Business is the cornerstone of every economy. Almost every large corporation
started out as a small, mom-and-pop operating and through growth, became
financial giants e.g. Dell Computers. Dell computer began with selling computer
out of his college dorm room. How did the small company grow from tiny,
hometown enterprise of the largest businesses in the American economy? They
raised capital by selling stock in themselves.
When a company is growing, the biggest hurdle is often raising enough money to
expand the company is listing their shares. Listing means inclusion of the securities
in the official list of stock exchange for the purpose of trading on the stock
exchange [In India the listing is made under. certain rules and regulation Rule 19
of the Securities Contracts (Regulation) Rules, 1957].
They can either borrow the money form a bank or venture capitalist, or sell part of
the business to investors and use the money to fund growth. Taking out a loan is
common, and very useful-to a point. Banks will not always lend money to
companies, and over-eger managers may try to borrow to much initially, wrecking
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the balance sheet. Factors such as these often provoke owners of small business to
issue stock. In exchange for giving up a tiny fraction of control, they are given cash
to expand the business. In addition to money that does not have to be paid back,
"going public" (as its called when a company sell stock in itself for the first time)
gives the business managers and owners a new tool instead of paying cash for an
acquisition, they can use their own stock.
To better understand the stock market it gives a company [GAIL (India)] details
following:
Overview of Company:
Gail (India) is a public sector company incorporated in 1984 to create gas
infrastructure and to undertake gas related business in India. Gail is the undisputed
leader in the market, transmission and distribution of the natural gas in India. Gail
has 78% market share in natural gas transmission and 70o/o market share in natural
gas marketing in India. A part from natural gas, Gail has business interest in
petrochemicals, LPG transmission, telecommunications and exploration business.
Gas Sector in India:
Natural gas often referred as new age fuel, is the cleanest of the fossil fuel.
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domestic and commercials. Natural gas comprise about 8% if the total energy
basket of India against 24% of the world average. Currently energy sector is
dominated by coal and over a period of time natural gas is likely. To increase its
share significantly, currently power sector which consumes around 29%. Demand
for natural gas in retail sector in the form of compressed natural gas is on uptrend
due to it inherent advantages.
Following is the comparison Energy Consumption
Items India % World %Coal 57 28
Oil 28 36
Natural Gas 8 24
Hydro electric 6 6
Nuclear 1 6
Business model:
1. Natural Gas: GAIL has 6700 km of Natural Gas high pressure trunk pipeline
grid with a capacity to carry 148 MMSCMD of natural gas across the country.
Natural gas is supplied to various consumers through these pipeline grids.
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LPG: GAIL produces LPG through fractionation. GAIL LPG is an eco-friendly
fuel and provides a cheaper and effective means of reducing pollution and
increasing productivity. Gail has 7 LPG gas processing unit produce 1.2 MMTPA
of LPG. Gail also has 1922 KM of LPG transmission pipeline network to transport
LPG in the country.
Petrochemicals: GAIL use natural gas as feed stock for the manufacture of HDPE/
LLDPE. Gail's integrated petrochemical complex is located in Pata, District
Auraiya, Uttar Pradesh, about 350 km from Delhi. The plant is ISO 9000 and ISO
14000 certified. The Facility has a capacity of 300000 TPA of Ethylene 00 TPA of
Polymers (HDPE/LLDPE). Gail market it products under the brand name G-lene
and G-lex.
Telecom: Gail has high speed optic-fiber network and extends to well over 13,000
KM connecting around 200 cities across various states. Its telecom service is
served under the brand name GAIL TEL.
5. Exploration & Production (E&P): In Order to integrate the supply chain Gail
participated in the NELP bidding process. Currently it has 27 oil and gas
Exploration blocks and 3 Coal.
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6. Financial Aspects: Gail has shown consistent growth performance in the past.
The company has heavily invested in its infrastructure and still in investment
phase. The benefit of the investment is likely to get Reflected in the future. The
company is consistent dividend paying and likely to reward handsomely in future
also.
FY06 FY07 FY08 FY09FY10(Expecting)
Total Income (Crore)
15381.15 17216.11 19492.6 2540 3320
Net profit (Crore)
2300 2545.32 2782.9 2910 3140
Equity Dividend (%)
100 100 104 80 90
EPS (Rs) 27.31 30.1 23.9 22.9* 24.7*
Book value 121.39 139.81 160.2 121.9* 137.6*Enquiry Capital (Crore) 845 845.6 845.6 1268 1268
Adjusted for 1:2 Bonus
Following is share holding pattern (as on 30 March 12)
Category %Government 57.34
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Mutual Funds 3.44Insurance Companies 13.16FII 13.09Others 9.7Bodies Corporate 0.88Public 2.39Total 100
Current Market Situation of GAIL
NSE Symbol : GAIL
FACE VALUE : Rs. 10
ISIN NO : INE129A01019
LATEST EPS : Rs. 22
P/E : 12.50
MARKET PRICE : 245
Limitation
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In India natural gas is controlled commodity in India which is a single biggest
drawback for the company. Tariffs for transport of gas are determined by the
Petroleum and Natural Gas Regulatory Board (PNGRB) price and supply of
natural gas is influenced by the government policies which are subject change from
time to time Entry of private companies in the gas distribution business is likely to
increase competition for the company (e.g. Reliance)
The above details are give a clear picture of stock market and it is verified by the
competitor as per the market condition, or change in time to time. Before investing
the m.ck market it is study about the company profile and analysis the competitor
nature and facilities. It leads to better vision to the share holders or investors.
OBJECTIVES OF THE STUDY
The objectives of the project is to
Study the stock market
Analyze the Trend and practice
Conduct Financial analysis
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Fundamental analysis statements and health, and markets. Of a business involves
analyzing its management and competitive advantages and its competitors and
markets.
The analysis is performed on historical and present data, but with the goal to
make financial projections. There are several possible objectives:
To make projection on its business performance
To calculate its credit risk but with the goal to make
To conduct a company stock valuation and predict its probable price
evaluation
To evaluate its management and make internal business decisions
l Analytical models:
When the objective of the analysis is to determine what stock to buy and at what
price, there are two basic methodologies
1. Fundamental analysis maintains that markets ma), misprice a security in the
short run but that the correct price will eventually be reached. Profit can be
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made by trading the mispriced security and then waiting for the market to
recognize its mistake and re price the security.
2. Technical analysis maintains that all information is reflected already in the
stock price, so fundamental analysis is waste of time. Trends are your friend
and sentiment changes predate and predict trend changes. Investors
emotional responses to price movement lead to recognizable price chart
patterns. Technical analysis does not care what the value of a stock is. Their
price predictions are only extrapolation from historical price patterns.
Investors can use both these different but somewhat complementary methods for
stock picking. Many fundamental investors use technical for deciding entry and
exit points. Many technical investors use fundamentals to limit their universe of
possible stock to good companies.
The choice of stock analysis is determined by the investors in the different
paradigms for how the stock market works. See the discussions at efficient market
hypothesis, random walk hypothesis, capital asset pricing model, fed model Theory
of Equity Valuation, and behavioral finance.
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Il. Different portfolio styles:
Investors may use fundamental analysis within different portfolio management
styles.
1. Buy and hold investors believe that latching onto good businesses allows the
investors asset to grow with the business. Fundamentals analysis lets them
find good companies, so they lower their risk and probability of wipe-out.
2. Managers may use fundamental analysis to correctly value good and bad
companies. Even bad company's stock goes up and down creating
opportunities for profits.
3. Contrarian investors distinguish in the short run, the market is a voting
machine, not a weighing machine. Fundamental analysis allows you to
make your own decision value on value, and ignore the market.
4. Value investors restrict their attention to undervalued companies believing
that its hard to fall out of ditch. The value comes from fundamental analysis
5. Managers may use fundamental analysis to determine future growth rates for
buying high priced growth stocks.
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6. Managers may also include fundamental factors along with technical factors
into computer models
Top down and Bottom-up
Investors can use either a top- down or bottom-up approach
The top-down investor starts his analysis with global economics, including both
international and national economic indicators, such as GDP growth rates,
inflation, interest rates, exchange rates, productivity and energy prices. He narrows
his search down to regional industry analysis of total sales, price levels, the effects
of competing products, foreign competition, and entry or exit from the industry.
Only then does he narrow his search to the best business in that area.
The bottom-up investors starts with specific business, regardless of their industry,
region.
METHODOLOGY
Quants are aiding brokers and investment managers for stock market analysis and
prediction. The quant's black magic stems from many of the evolving artificial
intelligence techniques. Extensive literature exists describing attempts to use
artificial intelligence techniques, and in particular neural networks however the
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tremendous difficulty in interpreting the results is. The neural nets approach is a
black box approach in which no new knowledge regarding the nature of the
interactions between the market indicators and the stock market fluctuation is
extracted form the market data consequently, there is a need to develop
methodologies and tools which would help in increasing the degree of
understanding of market processes and, at the same time, would allow for
relatively accurate predictions. The methods stemming from the research on
knowledge acquisition capabilities for the purpose of market prediction and market
data analysis. This paper describes the methodology of rough sets which citing
two applications which apply rough set theory (BST) for stock market analysis
using data logic R+. This is based on the variable precision model of rough sets
(VPRS) to acquire new knowledge from market data.
The data's for the report
Primary Data
Secondary Data
l. Primary Data were obtained by
Direct observation: The data's for the reports was obtained by the observing
conditions and incidents.
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Interview: The information regarding expansion and finance were obtained in
consultation with the Branch Manager of capstocks
2. Secondary data:
The major sources of the statistics in the report are the periodic schedules of
business reviews that include annual reports, Business news, minutes of meeting
etc.The study was organized was in such a way that first the Stock Market was
studied then its financial configuration and marketing tactics were examined.
PERIOD OF STUDY
11-01-2013 to 31-01-2013
LIMITATIONS
It must be emphasized that there are no guarantees when it comes to individual
stocks, some companies pay out dividends, but many others do not. And there is no
Obligation to pay out dividends even for those firms that have traditionally given
them. Without dividends, an investor can make money on a stock only through its
appreciation the open market. On the downside, any sock may go bankrupt, in
which case your investments are worth nothing.
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Although risk might sound all negative, there is also a bright side. Taking on
greater risk demands a greater return on your investment. This is the reason why
stocks have historically outperformed other investments such as bonds or saving
Accounts. Over the long term and investment in stocks has historically had an
average return of around 10-15%.
Competitors: Due to the vast competition in the field of stock market critical
data's like the financial structure could not be explored completely. The company
was not able to give out important details regarding its profitability.
Growth: Growth factor was taken as a major concern and not profitability.
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CHAPTER IIINDUSTRY PROFILE
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The Indian broking industry is one of the oldest trading industries that have been
around even before the establishment of BSE in 1875. BSE is the oldest stock
market in India. The history of India stock trading starts with 318 persons
taking membership in Native share and Stock Brokers Association, which we
know by the name Bombay Stock Exchange or BSE in short. In 1965, BSE
got permanent recognition from the Government of India. BSE and NSE represent
themselves as synonyms of India stock market. The history of India stock market is
almost the same as the history of BSE the regulations and reforms been laid down
in the equity market has resulted in rapid growth and development. There are 23
recognized stock exchanges in India, including the Over the Counter Exchange of
India (OTCEI) for small and new companies and the National Stock Exchange
(NSE) which was set up as a model exchange to provide nation-wide services to
investors. NSE, which in the recent past has accounted for the largest trading
volumes, has a fully automated screen based system that operates in the wholesale
debt market segment as well as the capital market segment.
India's market capitalization was amongst the highest among the emerging
markets. India has emerged as the world’s 10th largest equity market after it
added several companies to the billion dollar club in terms of capitalization, taking
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the total to 81 companies. India has become the third largest Asian market
(excluding Japan and Australia) after having toppled Korea, China and Singapore
that have 80, 50 and 47 firms with billion-dollar market capitalization respectively.
India is also inching closer to outpacing Taiwan that has 84 such companies but
lags far behind Hong Kong which has 107, the highest in Asia. n India, there are 33
registered Mutual Fund houses. While income funds accounted for 49% of the total
assets and equity or growth funds had 26% of the total assets. Balanced funds, gilt
funds, ELSS and Liquid funds/ money market funds accounted for the rest.
The number of companies listed on the BSE at the end of December 1994 was
4,702. This was more than the aggregate total of companies listed in 9 emerging
markets (Malaysia, S.Africa, Mexico, Taiwan, Korea, Philippines, Thailand, Brazil
and Chile). The number of companies was also more than that in developed
markets of Japan, UK, Germany, France, Australia, Switzerland, Canada and Hong
Kong.
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CHAPTER IIILITERATURE REVIEW
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Literature Review
Especially the stock markets, for developing and developed markets have now
become more closely interlinked despite uniqueness of the specific markets or the
country profile. literature has show strong interest on the linkages among
international stock markets and interest has increased considerably after the loose
of financial regulations in both mature and emerging markets, the technological
developments in communications and trading systems' and the introduction of
innovative financial products, creating more opportunities for international
portfolio investment.
The interest can also be attributed to the globalization which give -another impetus
to the higher intertwinement of international economies and financial markets. In
recent years the new remunerative emerging equity markets have attracted the
attention of international fund managers as an opportunity for portfolio
diversification. This intensifies the curiosity of academics in exploring
international market linkages. Earlier studies by Riple, Lessard, and Hiliard
generally find low correlation between the national stock markets, supporting the
benefits of international diversification. The links between national stock markets
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have been of heightened interest in the wake of October 1987 international market
crash globally. The crash has made people realize that various national equity
markets are so closely connected and the developed markets like the US stock
market extent a strong influence on other markets. Applying the vector auto
regression models Eun and Shim find evidence of co-movements between the US
stock market and other world equity markets. Chenung and Ng investigated the
dynamic properties of stock return in Tokyo and New York and fin that the us
market is an Important global factor from January 1985 to December 19g9. Lee
and Kim examine the effect of the October 1987 crash and conclude that national
stock markets became more interrelated after the crash and find that the co-
movements among national stock market were stronger when the US stock market
is more volatile. Corhay etal study the stock markets of Australia, Japan, Hong
Kong, New Zealand and Singapore and find no evidence of a single stochastic
trend for these countries. Only a few studies have examined the co-movement of
Indian stock market with international markets. Sharma and Kennedy 91917)
examine the price behavior of Indian market with the US and UK market and find
no evidence of systematic cyclical component or periodicity for these markets. Rao
and Naik apply the cross-spectral analysis and that for the Indian stock index, the
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gains estimates front either US or the Japan indices and 'independent' and hence
they conclude that relationship of Indian market with international markets is poor
reflecting the institutional fact and the Indian economy has been characterized by
heavy control through the entire seventies with liberalization measure initiated
only in the late eighties.
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CHAPTER IVRESEARCH
METHODOLOGY
Weekly indices of the stock exchanges from data stream for India and the three
most developed countries including the united state, united kingdom and Japan are
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use as proxies to measure the stock market for each country, specifically, BSE
200(India)2,S&P 500(United states), FTSE 100(the United Kingdom) and Nikkei
225 stock average (Japan). Our sample cover the period from 1,1995 through
December 31,2005, a total of 10 year and indices are adjusted to be in terms of US
Dollars for better comparison. The weekly indices a opposed to daily data is used
to avoid representation bias from some thinly trade stocks, that is the problems of
non-trading and non-synchronous trading and to avoid the serious bid/ask spread in
daily data. In addition, we use Wednesday indices to avoid the day of the week
effect of stock returns.
To examine the co-movements between the Indian stock market and the developed
markets, we first study their relationship by the simple regression.
y( 1)=a+by+et
Where the endogenous variable yl represents the India's stock index: the exogenous
variable yet is the rock index of any of the developed countries including the US,
the UK and Japan; and et is the error term. In order to study the join effect from all
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the developed stock markets on the Indian market, we further study the following
multiple regression:
I D1 D2 D3Yt=a (2) +b1yt+b2yt+b3yt+et
Where yt tae the stock indices for the United States, the UK and Japan =: l , 2 and
3 respectively.
The validity and reliability of the regression relationship require the examination of
the trend characteristics of the variables and co integration test and the presence of
unit root processes in the stock indices results in the spurious regression problem.
Co integration tests consist of two steps. The first step is to examine the stationary
properties of the various stock indices in our study. If a series, say yt, has a
stationary, invertible and stochastic ARMA representation after differencing d
times, it is said to be integrated of order D, and denoted by y t=I(D). To test the null
hypothesis Ho: yt=I(l) versus the alternative hypothesis H1: yt=I(0), we apply the
Dickey-Fuller and the augmented Dickey- Fuller (ADF) unit root test based on the
following regression and yt can be chosen in to achieve white noise residuals for
the ADF test and when p:0, the test is know and the Dicker-Fuller (DF) test.
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Testing the null hypothesis of the presence of a unit root in yt is equivalent to
testing the hypothesis that a(t)=0. If a(t) is significantly less than zero, the null
hypothesis of a unit root rejected. In addition, we test the hypothesis that 1lt is a
random walk with drift, that (b0,a0,a1)=( b0,0,0) and yt is random walk without drift
(bo,ao,ar) =(0,0,0) using the likelihood ratio test statistics bz and oz respectively if
the hypotheses that ar=0 (b0,a0,ar):( b0,0,0) or(b0,a0,a1) :(0,0,0) are accepted, we can
conclude that yt is I(1). If we cannot reject the hypotheses that yt is I(1), we need to
further test the null hypothesis Ho: yt=I(2) versus the alternative hypothesis H I : yt
:I( I ). Note that most series are integrated order at most one.
In addition, we apply the PP test developed by Philips and Perron to detach the
presence of a unit root. The PP test is nonparametric with respect nuisance
parameters and thereby is suitable for every wide class of weakly dependent and
possibly heterogeneously distributed data. If both yt and yt(ydti) are the same order
say l(d),with d>0, we then estimated the co integrating parameter in ( 1)or(2) by
OLS regression if the residuals are stationery, the series yt and Yt(ydti) are said to
be co integrated Co integration exists for variables means despite variables are
individual no stationary, a linear combination of two or more time series can be
stationary and there is a long run equilibrium relationship between these variables.
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If there is a long-run in 1 or 2 is stationary while the repressor are individually
trending, there may be some transitory correlation between the individual
repressors and the error term. However, in the long run, the correlation must be
zero because of the cat that rending variables must eventually diverge from
stationary ones. Thus the regression on the levels of the variables is meaningful
and no spurious.
Another technique CAPM (Capital Asset Pricing Model) is one of the premier
methods of evaluation of capital investment proposals. APMS gives a mechanism
by which the required rate of return for diversified portfolio of project or
investment can be calculated give the risk. It has tow part : I a rise-free rate of
return and 2 a risk premium for the amount of systematic risk of the portfolio.
Required rate of return: Rr+(Rm-Rf)Bi, when
Rr- risk free rate of return
Rm- returns on market portfolio
Bi - Beta or risk coefficient of the evaluated portfolio given market portfolio
Beeta: 1
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The risk free return is the rate of return obtainable on risk free investments, like
investment in government bonds. The market rate of return is the grand average
rate of return obtainable on market representative portfolio. A Surrogate for this
can be return of Representative market indices like NASDAG,
DOWJONES.INDUSTRIAL, S&P 5OO, BSE SENSEX (INDIA), and the like.
Beta of the project-covariance between returns of the project and chosen market
portfolio divided by variance of the return on the market portfolio' the returns
referred to here can be historical or future expected or both. So give the returns
(expected or actual) of the market portfolio over a period of time and those of
the capitals project over the same time horizon as above, beta of the project can be
calculated. The formula is:
Beta: S (Rm-MRm)(Ri-MRi)/S(Rm-MRm)2,
When Rm = Returns on market portfolio over times
MRm= Means return on market portfolio
Ri= Returns on Capital over times
MRm= means return of the capital project f;
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Suppose the following are the Rm and Ri for 5 years give row (i) and (ii) below
beta is computed based on the above formula s give the rest of the rows below:
1 2 3 4 5 Total
I Rm 14 16 10 22 -2 60
II R 15 18 15 28 -6 70III Rm-MRm +2 +4 -2 +10 -14 0IV Ri-MRi 1 4 1 14 -20 0
V =(III)(IV) 2 16 -2 140 280 436
VI (Rm-MRm)2 4 16 4 100 196 320
MRm = 60/5:=12 and,
MRi =70/5 += 14
Beta = S (Rm-MRm)(Ri-MRi)/S(Rm_MRm)2
Beta =436/320=1.365
Let Rf : 8%
Require rate of return : Rf +( MRm - Mri)β
= 8% +(12%-8%)1.3265
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=8% +5.45%
= 13 .45%
The mean Ri=14% so that the actual or expected return is greater than the required
return. CAMP assume perfect capital market, free flow of information
homogenous risk and return expectations of investors, that diversification
thoroughly reduces the unsystematic risk, existence of representative market
portfolio and so on
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CHAPTER VDATA PRESENTATION,
ANALYSIS AND FINDINGS OF THE
STUDY
Plain and simple, stock is a share in the ownership of a company. Stock represents
a claim on the company's assets and earnings. As you acquire more stock, your
ownership stake in the company becomes greater. Whether you say shares, equity,
it all means the same thing.
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A stock is represented by a stock certificate. This is a fancy piece of paper that is
proof of your ownership. In today's computer age, you won't actually get to see this
document because your brokerage keeps these records electronically. This is done
to make the share easier to trade. In the past, when a person wanted to sell his or
her shares, that person physically took the certificates down to the brokerage. Now,
trading with a click of the mouse or a phone call makes life easier for everybody.
Holding a company's stock means that you are one of the many owners
(shareholders) of a company and, as such, you have a claim to everything the
company owns. This means that technically you own a tiny silver of every piece of
furniture, every trademark, and every contract of the company. As an owner, you
are entitled to your share of the company's earnings as well as any voting rights
attached to the stock.
Being a shareholder of a public company does not mean you have a say in the day-
today running of the business. Instead, one vote per share to elect the board of
directors at annual meetings is the extent to which you have a say in the company.
For instance, being a shareholder doesn't mean you can call up the company
Managing director and tell him how you think the company should be run. In the
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same line of thinking, being a shareholder doesn't mean you can walk into the
factory and grab a free case of bud light.
The management of the company is supposed to increase the value of the firm for
shareholders. If this doesn't happen, the shareholders can vote to have the
management removed at least in theory. In reality, individual investors like you
and I don’t enough shares to have a material influence on the company. It's really
the big boys like large institutional investors and billionaire entrepreneurs who
make the decisions.
For ordinary shareholders' not being able to manage the company isn’t such a big
deal After all' the idea is that you don't want to have to work to make money right?
The importance of being share holders is that you are entitled to a portion of the
company's profits and have a claiming on assets. Profits are sometimes paid out in
the form of dividends. The more share you own, the larger the portion of the
profits you get. Your claim on assets is only relevant if a company goes bankrupt.
In case of liquidation, you will receive what's left after all the creditors have been
paid. This last point is worth repeating: The importance of stock ownership is your
claim on assets and earnings. Without this, the stock wouldn't be worth the paper
it’s printed on.
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Another extremely important feature of stock is its limited liability, which means
that, as an owner of a stock, you are not personally liable if the company is not able
to pay its debts. Other companies such as partnerships are setup so that if
partnership goes bankrupt the creditors can come after the partners (shareholders)
personally and sell off their house, car, furniture, etc. Owning stock means that, no
matter what, the maximum value you can lose is the value of your investment.
Even if a company of which yours are a shareholder goes bankrupt, you can never
lose your personal assets.
V.2 Debt vs Equity:
Why does a company issue stock, why could the founders share the profits with
thousands of people when they could keep profits to themselves. The reason is that
at some point every company needs to raise money. To do this companies can
either.
Borrow it from somebody or raise it by selling part of the company which is
known as issuing stock' A company can borrow by taking a loan from a bank or by
issuing bonds. Both methods fit under the debt of financing. On the other hand.
Issuing stock is called equity financing. Issuing stock is advantageous for the
company because it does not require the company to pay back the money or make
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interest payments along the way. All the shareholders get in return for their money
is the hope that the shares will someday be worth more than what they paid for
them. The first sale of a stock, which is issued by the private company itself, is
called the initial public offering (IPO).
It is important that you understand the distinction between a companies financing
through debt and financing through equity- when you buy a debt investment such
as a bond, you are guaranteed the return of your money along with promised
interest payments. This is not the case with an equity investment. By becoming an
owner, you assume the risk of the company not being successful - just as a small
business owner is not guaranteed a return, neither is a shareholder. As an owner,
your claim on assets is less than that of creditors. This means that if a company
goes bankrupt and liquidates, you as a shareholder don't get any money until the
banks and bondholders have been paid out; we call this absolute priority. Share
holders earn a lot if a company is successful but they also stand to lose their entire
investment if the company isn’t successful.
V.3 Classification of Securities:
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Primary Securities: They are also termed as direct securities, since, they are issued
directly by the ultimate users to ultimate saver, such as equity share and debenture
issued by a company to its shareholder or debenture holders.
Secondary Securities: They are also termed as indirect securities. They are issued
by financial intermediaries such as bank, UTI Mutual Fund etc. to ultimate savers.
Ownership Securities: The holders of these securities equity shares and preference
Shares are part owners of the company in which they hold shares.
Debt securities: They are also termed as creditor ship securities, since the holder of
the securities are taken as the creditors of the company. The examples of such
securities are debenture and deposit certificates.
It is basically said that the Common share represent ownership in a company and a
claim (dividends) on a portion of profits. Investors get one vote per share to elect
the board members, who oversee the major decisions made by management. Over
the long term, common stock, by means of capital growth, yields higher returns
than almost every other investment. This higher return comes at a cost since
common stocks entail the most risk. If a company goes bankrupt and liquidates,
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theCommon shareholders will not receive money until the creditors, bondholders
and preferred shareholders are paid.
Short term Securities: These are securities maturing within a period of one year.
Such securities include certificate of Deposit, commercial Paper, Commercial
Bills, Treasury Bills etc.
Medium-term Securities: These securities have a maturity range of one to five
years.
Long-term Securities: These are securities having a maturity period of more than
five years. Medium and long-term securities are generally public sector bonds,
state government loans, debentures or bonds issued by the company or financial
institutions etc.
The short term securities deals in money market while those of long-term and
medium-term period are dealt in the capital market.
Common and preferred are the two main forms stock; however, it's also possible
for companies to customize different classes of stock in any way they want. The
most common reason for this is the company wanting the voting power to remain
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with a certain group; therefore, different classes of share are give different voting
rights.
V.4 Trading Stocks:
Most stocks are traded on exchanges, which are places where buyers and sellers
meet and decide on a price. Some exchanges are physical locations where
transactions are carried out on a trading floor. You have probably seen pictures of a
trading floor, in which traders are wildly throwing their arms up, waving, yelling,
and signaling to each other. The other type of exchange is virtual, composed of a
network of computers where trades are made electronically.
Securities between buyers and sellers reduce the risk of investing. Just imagine
how difficult it would be to sell shares if you had to call around the neighborhood
trying to find a buyer. A stock market is nothing more than a super-sophisticated
farmer’s market linking buyer and sellers, reducing the risk of investing.
Before we go on, we should distinguish between the primary market and secondary
market. The primary market is where securities are created (by means of an IPO)
while, in the secondary market, investors trade previously-issued securities without
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the involvement of the issuing companies. The secondary market is what people
are referring to when they talk about the stock market. It is important to understand
that the trading of company's stock does not directly involve that company.
The New York Stock Exchange
The most prestigious exchange in the world is the New York Stock Exchange
(NYSE) the "Big Board" was founded over 2a0 years ago in r792with the signing
of the Buttonwood Agreement by 24 New York City stock brokers and merchants.
Currently the NYSE, with stocks like General, Electric, McDonald’s, Citi group,
Coca-cola, Gillette and wal-mart is the market of choice for the largest companies
in America.
The NYSE is the first type of exchange (as we referred to above), where much of
the trading is done face-to-face on a trading floor. This is also referred to as a listed
Exchange orders come in through brokerage firms that are members of the
exchange and flow down to floor brokers who go to a specific spot on the floor
where the stock trades. At this location, known as the trading posts, there is a
specific person known as the specialist whose job is to match buyers and sellers.
Prices are determined using an auction method: The current price is the highest
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amount any buyer is will to pay the lowest price at which someone is willing to
sell. once a trade has been made, the details are sent back to the brokerage firms,
who then notifies the investors who placed the order. Although there is human
contact in this process, computers play a huge role in the process.
The Nasdaq
The second type of exchange is the virtual sort called an over-the counter (OTC)
market, of which the Nasdaq is the most popular. These markets have no central
location or floor broker what so ever' Trading is done through a computer and
telecommunications network of dealers. It used to be that the largest companies
were listed only on the NYSE while all other second tier stocks traded on the other
exchanges. The tech boom of the late 1990s changed all this; now the Nasdaq is
home to several big technology companies such as Microsoft, Cisco, Intel, Dell
and oracle. This has resulted in the Nasdaq becoming a serious competitor to the
NYSE.
On the Nasdaq brokerages act as market makers for various stocks. A market
maker provides continuous bid and ask price within a prescribed percentage
spread for shares for which they are designated to make a market. They may match
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up buyers and sellers directly but usually they will maintain an inventory of shares
to meet demands of investors.
In India stock market major roles are played by NSE and BSE.
National Stock Exchange:
The National Stock Exchange (NSE) is India’s leading stock exchange covering
various cities and towns across the country. NSE was set up by leading institutions
to provide a modern, fully automated screen-based trading system with national
reach.
The NSE was incorporated in November 1992 with an equity capital of Rs.25
Crore. The International Securities Consultancy (ISC) of Hong Kong helped in
setting up the NSE. ISC prepared the detailed business plan, including the
installation of hardware and software systems. NSE index NIFY, NSE is a
professionally managed national market for shares, PSU bonds, debenture and
government securities with all the necessary infrastructure and trading facilities.
The Exchange has brought about unparalleled transparency, speed & efficiency,
safety and market integrity. It has set up facilities that serve as a model for the
securities industry in terms of systems, practices and procedures.
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NSE has played a catalytic role in reforming the Indian securities market in terms
of microstructure, market practices and trading volumes. The market today uses
state-of-art information technology to provide an efficient and transparent trading,
clearing and settlement mechanism, and has witnessed several innovations in
products & services viz. demutualization of stock exchange governance, screen
based trading, compression of settlement cycles, dematerialization and electronic
transfer of securities, securities lending and borrowing, professionalization of
trading members, fine-tuned risk management systems, emergence of clearing co
operations to assume counterparty risks, market of debt and derivative instruments
and intensive use of information technology. It is calculated the index of NIFTY
based on top 30 companies (as per the information from the stock staff).
Bombay Stock Exchange
Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage
of over 133 years of existence' what is now popularly known as BSE was
established as "The Native Share & Stock Brokers Association" in 1875. BSE is
the first stock exchange in the country which obtained permanent recognition (in
1956) from the Government of India under the securities contracts (Regulation)
Act (SCRA) 1956. Earlier an Association of Persons (AOP), BSE is now a
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corporatized and demutualised entity incorporated under the provisions of the
companies Act, 1956. Pursuant to the BSE (corporatization and Demutualization)
Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).
Today' BSE is the world's number I exchange in terms of the number of listed
companies and the world's 5th in handling of transactions through its electronic
trading system. The BSE Index, SENSEX, is India's first and most popular stock
market "benchmark index' sensex is tracked worldwide. It constitutes 30 stocks
representing 12 major sectors. The SENSEX is constructed on a 'free-float'
methodology, and is sensitive to market movements and market realities. Aparl
from the SENSEX, BSE offers 23 indices including 13 sectoral indices- It has
entered into an index cooperation agreement with Deutsche Borse and Singapore
Stock Exchange. These agreements have made SENSEX and other BSE indices
available to investors across the globe. Moreover, Barclays Global Investors (BGI),
at Hong Kong, the global leader in ETFs through its iShares brand has created the
exchange traded fund (ETF) called ‘iShares BSE SENSEX India Tracker’ which
tracks the SENSEX. The ETF enables investors in Hong Kong to take an exposure
to the Indian equity market. It is calculated the index of SENSEX based on top 50
companies (as per the information from the stock staff).
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Other Exchange
The third largest exchange in the US is the American Stock Exchange (AMEX).
The AMEX use to be an alternative to the NYSE, but that role has since been filled
by the Nasdaq. In fact, the National Association of Securities Dealers (NASD),
which is the parent of Nasdaq, bought the AMEX in 1998. Almost all trading now
on the AMEX is in small-cap stocks and derivatives.
There are many stock exchanges located in just about every country around the
world. American markets are undoubtedly the largest, but they still represent only
a fraction of total investment around the globe. The two other main financial hubs
are London, home of the London Stock Exchange, and Hong Kong, home of the
Hong Kong Stock Exchange. The last place worth mentioning is the over the
Counter market, but the term commonly refers to small public companies that don't
meet the listing requirements of any of the regulated markets, including the
Nasdaq. The OTCBB is home to penny stocks because there is little to no
regulation. This makers investing in an OTCBB stock very risky.
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V.5 Price Change on Stock:
Stock prices change every day as a result of market force. By this we mean that
share prices change because of supply and demand. I more people want to buy a
stock (demand) than sell it (supply), then the price move up. Conversely, if more
people wanted to sell a stock than buy it, there would be greater supply than
demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what
make people like a particular stock and dislike another stock. This come down to
figuring out what new is positive for a company and what new is negative. There
are many answers to this problem and just about any investor you ask has their
own idea and strategies.
That being said, the principal theory is that the price movement of stock indicates
what investors feel a company is worth. Don't equate a company's value with the
stock price- The value of a company is its market capitalization, which is the stock
price multiplied by the number of shares outstanding. To further complicate things,
the price of a stock does not only reflect a company's current value, it also reflects
the growth that investors expect in the future.
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The important factor that affects the value of a company is its earnings. Earnings
are the profit a company makes, and in the long run no company can survive
without them- It makes sense when you think about it. If a company never makes
money, it is not going to stay in business. Public companies are required to report
their earnings four times a year (Once each quarter). Wall street watches with rabid
attention at these times, which are referred to as earnings seasons. The reason
behind this is that analysis bases their future value of a company on their earnings
projection. If a company’s results surprise (are better than expected)' the price
jumps up. If a company's results disappoint (are worse than expected), then the
price will fall.
Of course, it's not just earnings that can change the sentiment towards a stock
(which, in turn, changes its price). It would be a rather simple world if this were
the case during the dotcom bubble, for example, dozens of internet companies rose
to have market capitalizations in the billions of dollars without ever making even
the smallest profit. As we all know, these valuations did not hold, and most internet
companies saw their values shrink to a fraction of their height, still, the fact that
prices did move that much demonstrates that there are factors other than current
earnings that influence stocks. Investors have developed literally hundreds of these
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variables, ratios and indicators. Some you may have already heard of such as the
price/earnings ratio, while other is extremely complicated and obscure with name
like moving average convergence divergence.
So, why does stock price change the best answer is that nobody really knows for
sure. Some believe that it is not possible to predict how stock prices will change
while other think that by drawing charts and looking at past price movements, you
can determine when to buy and sell. The only thing we do know is that stocks are
volatile and can change in price extremely rapidly.
The important things to grasp about this subject are the following:
Supply and demands in the market determine stock prices.
Theoretically, earnings are what effect investors’ valuation of a company,
but there are other indicators that investors use to predict stock price.
Remember it is investor sentiments, attitudes and expectations that
ultimately affect stock prices.
A Price time the number of share outstanding is the value of a company is
the value of a company.
There are many theories that try to explain the way stock price move the
way they do. Unfortunately, there is no on.
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theory that explains everything.
V. 6 Buying Stocks:
You have now learned what a stock is and a little bit about the principles behind
the stock market, but how do you actually go about buying stocks. There are two
main ways to purchase stock.
1. Direct investment plans and Dividend investment plans
2. Using a Brokerage
1. Dividend reinvestment plans (DRIPs) and direct investment plans (DIPs)
are plans by which individual companies, for a minimal cost allow shareholders to
purchase stock directly from the company. Drips are a great way to invest small
amount of money at regular intervals.
2. Using a Brokerage is the most common method to buy stock is to use a
Brokerage- Brokerages come in two different flavors. Full-service brokerage offer
you (supposedly) expert advice and can manage your account; they also charge a
lot. Discount brokerage offer little in the way of personal attention but are much
cheaper. At one time, only the wealthy could afford a broker since only the
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expensive, full-service brokers were available. With the internet came the
explosion of online discount brokers. Thanks to them nearly anybody can now
afford to invest in the market.
Reading a Stock Table
The following image gives a correct picture on stock trading:
1 2 3 4 5 6 7 8 9 10 11 12
SYMBOL SERIES
BID QTY
BID RAT
E
ASK RAT
E
ASK QUN
T% OPEN HIGH LOW TOTA
LTOTA
L
DLF EQ 906 312.90
313.00 223 -0.52 315.05 318.30 304.00 394495 615.86
VIJAYBANK EQ 1240 49.00 49.05 2185 2.08 48.20 49.55 47.50 269166 335393
ASHOKLEY EQ 941 51.00 51.05 1245 0.39 51.00 51.55 49.35 236357 335717
SUZLON EQ 3641 75.10 75.15 6396 2.53 74.00 75.20 71.70 1446993
1057936
ALOKTEXT EQ 40822 25.65 25.70 4432 4.26 24.95 25.85 24.00 788021 846826
YESBANK EQ 829 239.40
239.50 442 -0.95 244.90 244.90 233.90 94348 159901
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MTNL EQ 480 72.90 72.95 4599 1.67 71.75 73.70 70.60 165831 149404
TATAMOTORS EQ 5 676.7
0676.8
0 14 0.50 375.05 687.90 633.75 97263 117854
Column l: It refers the company name, this column lists the name of the company
or special symbols or letter following the name, it is common stock. Different
symbols imply different classes of shares. For example Dhanalekshmi Bank it is
uses “DHNBANK”.
Colum 2: Series refers type of the stock or share. It means it is EQ for equity share.
Column 3: Bid quantity means the quantity of share available or numbers of share
in the present condition in the market. This figure shows the total number of share
traded for the day, listed in hundreds. To get the actual number traded add “00” to
the end of the number listed.
Colum 4: It is the rate of available on the present market condition and it varies as
per time to time. It mean if your want to sell your share only in the Bidrate.
Column 5& 6: It's the rate the buyers quoted as per their rate, simply e.g. if the
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DLF ask rate or Rs' 313 on the current market citiuvation for quantity of 223. It
means the purchase of share or stock only present Askrate.
colum 7: It is the percentage of shares, it is calculated the previous day closing rate
and current rate calculations. The percentage of share is helpful the share holder to
Understand increase or decrease of stock.
Column 8: It is the value of opening price of the day.
Column 9: This indicated the price range at which the stock has maximum
throughout the day, these is the maximum price that people have paid for the stock.
Colum 10: It is the lowest price of the share under the current market condition.
Column 11 & 12: lt is the list of the Total Buyer and sellers in the market. Large
number of Buyers in the market the stock value will increase at a high price. If
large number of sellers in the market the stock value will decrease at a low price.
In some time the market cultivation is large seller the price of share not will
decrees the stock.
We have already discussed the Gail (India) who is one of the most profits making
company under the public concern. In the stock exchange figure shows the upward
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and down trends of stock market with Gail. In October the market decrease and
also decrease the value of Gail.
Person interested in buying or selling listed securities may be classified as two type
Investor, Speculators. Investors are mainly interested in income from their
investment in securities, while speculators are mainly interested in the profit which
they make on account of movement in prices.
In stock market mainly deals speculations on Wall Street, the bull and bears are in
constant struggle. If you have not heard of these terms already, you undoubtedly
will as you begin to invest.
V.7 Types of Speculators or investors in stock market:
Bull: A bull is speculators who expects and increase in price of a particular
security. A bull is agrees to buy securities (without any intention of taking actual
delivery) with a view to selling them in the future at a profit. Tendency of a bull is
to throw his victim upward. A bull market is when everything in the economy is
great or high position or GDP is growing. Bull market cannot last forever though,
and sometime they can lead to dangerous situations if stocks become overvalued.
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Bear: A bear is a speculator who expects a fall in the price of certain security. A
bear is agrees the sell in the hope that in future the price will fall and he will make
a profit of purchasing, at a lower price the securities to be sold. Tendency of bear
to throw his victim downward. It is the situation of when the economy is bad,
recession is looming and stock prices are falling. Bear market make it shogun for
investors to pick profitable stocks. One solution to this is to make Tor"y when
stocks are falling using a technique called short selling. When the tread of market
is toward is falling price, the market is called bearish.
Lame Duck: In case a bear is not in a position to fuIfil1 his commitment to sell
security because the security is not available and the other party is not prepared for
carrying over the transaction, it is said that the bear is struggling like a lame duck.
Stag: A stage is every cautions speculator on the stock exchange. He neither says
nor sell securities but simply applies for share of new, company and the share is
allotted he hopes to sell these share at premium as soon as they allotted. He sells
the share before he is required to pay the allotment money. In case the selling price
is less than his purchase price, he suffers a loss.
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V.8 Followi ng the are top companies:
The Real 500 Ranking comprised 3000 listed (on Bombay Stock Exchange and or
National Stock Exchange) and unlisted whose annual audited financial data were
available with 5tr October 2012. This year, for the first time, consolidate number
were taken for companies that came out with consolidated Profit and Loss accounts
and Balance sheet(combining their subsidiaries' and associates' numbers).
Data used were for financial year 2012; for companies with FY ended 3 1 March
2012 or 30 June 2AAg. For companies that changed their FY, and had a fiscal year
of more or less than 12 months, data has been annualized to 12 months. Each data
has been annualized to 12 months. Each data was computer in prowess using
certain set definitions (explained below). For all stock market-related data and
computations, NSE data were taken for companies listed on both BSE & NSE.
The rankings are based on the sum of Total income and total assets. To eliminate
difference in nature of manufacturing and services companies ( Manufacturing
firms are assets heavy; whine services firm are income-heavy).Two lists have been
created for non- financial companies and financial service companies.
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Definitions:
Total Assets: This includes next fixed assets, investment current assets (inventory,
cash and bank balance, and total receivables), deferred tax assets and loans and
advances. It excludes deferred revenue expenditure. In the case of banks it also
includes advance. For housing finance companies, housing loans from a part of
total assets. Current liabilities and provision have not been included.
Total Income: Includes sales and income from financial and trading services. It is
net of prior-period and extraordinary income. Items such as profit or loss from sale
of assets such as land and building, Plant and Machinery excluded. Dividend
received by the companies or interest received on Investments and interest received
from treasury assets excluded from non-financial companies and included for
financial companies.
Operating Profit: Excess of income over total expenses before making provision
for tax.
Net Profit: Excess of income over total expense after making provision for tax, net
of extraordinary income and expenses.
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Return Ratios: Based on average assets, average capital employed and average
net worth, respectively to account for change that have happened over time. The
averages are computer for a two a period.
Market Cap: The product of the closing share price and the number of
outstanding Equity share on 31st march 2012.
Shareholder returns: Includes benefits such as dividends, adjusting share prices
for stock splits, rights and bonuses.
Net Profit: Net profit is expressed as a percentage of total income
Earning per Share (EPS): Earning per share is an indicator showing the
profitability of a company- EPS is arrived at by dividing company's net profit by
number of shares.
EPS = (Net profit /Number of share)
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Comparison of EPS
Company Capital (FV: Rs. 10) Net profit EPS
A 1 crore 1 crore Rs. 10
B 1 crore 50 lakhs Rs. 5
C 1 crore 2 crore Rs. 20
From the above table we can see that company C is showing more profitability
than others. It is assumed that a low P/E share is better than a high P/E share: in
other words higher P/E ratio indicated expensive valuation of the stock. Though
the P/E ratio is good tool it does not give complete picture of the company.
Price Earnings Ratio: It is common valuation method used by analysts to value a
company or a market as a whole. Here the current market price of a particular
share is compated with the earning per share (EPS) of that particular share. PIE is
also known as ‘price multiple’ or 'earning multiple'.
P/E ration: (Current Market price -: Earning Per share)
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Comparison of P/B ratio:
Company A B
Capital 1 Crore 1 Crore
Face value share Rs. 10 Rs. 10No of share 10 lakh 10 lakhNet profit 50 lakh 50 lakhMarket price Rs. 60 Rs. 40EPS = 50 lakh/10 lakh 5 5P/E = MP/EPS 60/5=12 40/5=8
From the above table we can see that stock B is less expensive and is worth
investing when compared with stock A.
In the following are the Short keys used
NA: Not Available
UL: Unlisted
LA: Listed After 31st march 2012
Indian Railway Finance Corp. and GMR Infrastructure fund the plan outlay of the
Railways and the projects of GMR Group, respectively. As such they cannot be
compared with banks and other financial institution.BSS IT MISSION Page 63
FINANCIAL ANALYSIS OF STOCK MARKET
TOP 50-Non Finance CompaniesRank 2012
Company Total Income + Total Asset(Rs. Crore)
Total Income(Rs. Crore)
Total Assets (Rs. Crore)
Operating profit (Rs. Crore)
NP (Rs. Crore)
ROCE (%)
RONW (%)
Market Cap (Rs. Crore)
1 1 Reliance Industries
463615.40 317724.84 145890.56 10495.67 1845.34 2.62 4.14 46240.28
2 2 Oil and Natural Gas Corp
407160.03 159991.68 247168.35 25834.63 15360.90 10.14 14.98 239964.89
3 3 Indian Oil Corp 304481.56 115887.18 188594.38 42471.13 19195.09 22.43 22.54 166874.83
4 4 Tata Steel 270469.80 148787.01 121682.79 18968.05 8883.82 12.24 28.71 15042.9
5 5 Bharat Petroleum
202008.70 147228.72 54779.98 4782.41 713.03 3.16 5.20 13595.79
6 6 Hindustan Petroleum
185576.54 135863.23 49713.31 4121.95 558.49 3.50 5.10 9117.54
7 7 NTPC 164269.40 47727.10 116542.30 14166.40 6571.90 7.17 11.51 148294.68
8 8 Tata Motors 154713.52 80035.00 74678.52 2322.64 -2502.70 -16.28 -34.19 8110.48
9 9 Hindalco Industries
134103.08 65910.29 68192.79 3581.63 46.74 0.11 0.28 8849.91
10 10 Reliance Communications
129418.29 27199.20 102219.09 11012.37 6243.98 10.16 17.51 36089.51
11 11 Steel Authority of India
108947.00 53083.24 55864.01 11028.68 6022.65 19.41 23.35 39837.71
12 12 Bharati Airtel 104546.60 37831.84 66654.76 14009.37 7757.24 21.57 30.51 118782.36
13 13 Larsen and Toubro
98772.50 41959.79 56812.71 6039.83 2668.12 11.68 21.50 39323.08
14 14 Bharat heavy Electricals
79716.06 30972.87 48743.19 4438.77 2260.90 NA NA 73944.44
15 15 Sterilite Industries
69682.64 24570.71 45111.93 6606.27 4504.00 17.66 18.80 25335.76
16 16 Suzlon Energy 65423.01 27616.69 37806.32 2641.80 835.89 4.86 9.99 6345.28
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FINANCIAL ANALYSIS OF STOCK MARKET
17 17 Essar Oil 64430.09 41121.59 23308.50 997.54 -474.11 -3.76 -13.47 8717.10
18 18 Power Grid Corp 61423.68 7073.13 54350.55 5793.31 1907.14 4.67 13.34 40236.52
19 19 Mahindra & Mahindra
60995.39 29005.76 31981.63 40000.48 1872.26 11.16 28.35 10696.98
20 20 DLF 59473.08 10418.79 49054.29 5873.88 4509.27 13.63 20.57 28394.31
21 21 Gail (India) 55630.74 26080.82 29549.92 5283.99 2867.45 15.69 19.81 31153.80
22 22 Wipro 54466.90 26446.80 28020.10 5446.00 3836.70 26.50 30.30 36019.47
23 23 Indian Farmer’s fertilizer Coop
53982.93 33428.14 20554.79 1959.48 320.15 5.32 8.37 UL
24 24 JSW Steel 52014.92 17547.00 34467.91 2207.09 -50.66 -0.24 -0.65 4355.43
25 25 Tata Consultancy Service
50878.60 28162.02 22716.58 6735.22 4776.69 34.03 34.12. 52703.07
26 26 Tata Power 50228.53 18259.33 31969.20 4239.22 1738.46 8.75 19.70 17018.68
27 27 Reliance Infrastructure
48733.26 14020.32 34712.94 2040.10 1129.79 5.50 7.13 11626.88
28 28 Adani Enterprise 48297.59 28163.77 20133.82 1148.20 489.43 5.41 19.03 6600.49
29 29 ITC 46046.54 25576.89 20469.65 5512.69 32774.03 24.82 24.88 69769.7830 30 Grasim
industries45281.70 20894.57 24387.13 4719.51 2551.91 16.70 24.60 1450429
31 31 Infosys Technologies
44783.00 22620.00 22163.00 7668.00 5771.00 36.01 36.01 75836.97
32 32 Cairn India 42256.16 2615.25 39640.91 1299.40 837.20 2.50 2.69 34917.65
33 33 Adithya Birla Nuvo
41938.00 14834.01 27104.49 813.09 -674.85 -6.64 -14.71 4227.44
34 34 Maruthi Suzuki India
38257.20 24195.60 14061.60 2388.30 1143.60 11.77 12.57 22530.65
35 35 Jayaprakash Associates
37016.29 5431.57 31584.72 1993.25 521.05 2.62 8.94 9955.76
36 36 Jet Airways (India)
36988.41 13295.29 23693.12 -660.80 -2369.85 -15.70 -74.67 1462.07
37 37 State Trading Corpn of India
33622.86 23511.96 10110.90 328.17 108.11 17.82 17.82 670.80
38 38 Videocon Industries
33036.81 12123.65 20913.16 2487.32 833.75 6.42 11.25 2000.81
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FINANCIAL ANALYSIS OF STOCK MARKET
39 39 Tata Tele Services
32957.46 6545.08 26412.38 360.42 -2059.14 -20.11 -40.25 UL
40 40 Hidustan Uni lever
31473.43 22819.44 8653.99 3171.30 2357.31 129.32 129.32 51772.06
41 41 Jindal Steel and Power
31225.94 11843.56 19382.38 5275.77 2991.17 24.20 54.85 18644.15
42 42 Tata Communication
30717.63 10561.00 20156.63 2006.78 365.36 4.26 5.17 14772.97
43 43 Unitech 29608.13 3315.45 26292.68 2033.45 1195.51 11.49 27.01 5665.58
44 44 Essar Steel 28970.27 12828.53 16141.74 18.7.57 299.51 3.06 6.37 DL
45 45 Tata Chemicals 27793.89 12458.02 15335.87 1688.04 793.88 8.51 18.65 3328.82
46 46 MMDC 25261.16 8448.49 16813.10 6730.31 4360.47 43.87 43.77 61770.28
47 47 Ispat Industry 23607.32 9158.49 14448.83 383.42 -989.13 -12.26 -40.04 1326.35
48 48 Aben Offshore 23293.52 3452.71 19840.81 2305.97 427.77 2.68 33.47 1505.85
49 49 Punj Liyod 23148.40 11988.63 1159.77 654.92 31.05 0.82 1.19 2761.69
50 50 Oil India 21728.04 8199.49 13528.55 3895.18 2227.90 25.62 25.81 LA
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FINANCIAL ANALYSIS OF STOCK MARKET
TOP 50 Finance CompaniesRank
2012
Company Total Income
+ Total Asset
(Rs. Crore)
Total
Income(Rs.
Crore)
Total Assets
(Rs. Crore)
Operating
profit (Rs.
Crore)
NP (Rs.
Crore)
ROCE
(%)
RONW
(%)
Market
Cap (Rs.
Crore)
1 SBI 1418565.95 133740.20 1304825.75 81441.95 11169.25 6.92 16.72 67748.07
2 ICICI Bank 548235.73 64984.35 483251.38 31894.64 3011.78 2.02 6.53 37048.89
3 Punjab national
Bank
276633.96 23021.54 253612.42 17617.90 3129.81 15.34 21.86 12973.12
4 Bank of Baroda 250832.00 18394.33 232437.67 13898.66 2327.64 9.96 18.89 8536.59
5 Bank of India 246280.31 19493.05 226787.26 15125.87 3009.41 12.42 24.74 11522.35
6 Canara Bank 239730.84 19596.61 220134.26 14499.36 1891.63 9.12 16.46 6793.70
7 HDFC Bank 203418.55 19926.83 183491.72 12569.89 2247.98 10.78 17.14 41406.89
8 IDBI Bank 187510.46 13444.02 174066.44 11290.30 753.80 1.48 8.09 3290.49
9 Union Bank of
India
174739.35 13401.69 161377.66 10550.78 1708.38 11.48 21.24 7417.66
10 Axis Bank 161424.26 13690.30 147733.96 9994.70 1655.57 7.75 17.79 14896.92
11 Central Bank of
India
159394.31 11541.33 147252.08 8890.64 570.77 7.38 9.12 1374.08
12 Syndicate Bank 140743.22 10487.72 130255.50 8127.45 913.36 10.28 19.64 2508.60
13 Indian Overseas
Bank
132359.38 11285.97 121073.41 8758.25 1257.29 10.66 20.93 2484.29
14 HDFC 127842.31 11710.34 116131.97 10221.48 1795.12 2.09 13.47 40170.58
15 Oriental Bank of
Commerce
122514.71 9932.10 112582.61 8100.48 907.85 10.02 13.78 2858.44
16 UCO Bank 121275.72 9279.81 111995.91 7123.20 482.38 6.19 14.02 1321.21
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FINANCIAL ANALYSIS OF STOCK MARKET
17 Citi Bank 115817.40 10517.70 105299.70 6324.31 2159.74 10.09 20.70 UL
18 Allahabad Bank 106556.91 8717.11 97839.80 6342.42 777.98 12.09 13.62 1733.20
19 Standard Charted
Bank
106370.97 8878.80 97492.17 5637.33 1905.28 11.66 20.44 UL
20 HSBC 103688.28 9056.27 94632.01 5078.20 1291.11 7.70 13.13 UL
21 Corporation Bank 93979.86 7087.24 86892.62 5235.01 808.86 9.67 17.54 2590.53
22 Indian Bank 91938.09 7696.11 84241.98 5372.75 911.74 14.18 14.57 3235.71
23 State bank of
Hyderabad
83277.60 6494.47 76783.13 5058.51 492.11 7.27 16.67 UL
24 State Bank of
Patiala
79101.16 6435.70 69665.46 5192.94 531.54 7.94 18.20 UL
25 Power Finance
Corp.
74836.31 6582.50 68253.81 6088.51 1443.98 2.63 13.85 16596.71
26 Andhra Bank 74723.68 6156.51 68567.17 4481.96 653.45 14.82 18.89 2192.20
27 Vijaya Bank 68328.53 5945.93 62382.60 4636.66 207.64 3.86 7.40 1012.26
28 United Bank of
India
66843.40 4802.69 62040.71 3402.24 126.14 2.74 4.40 UL
29 Bank of
Maharashtra
63853.27 4801.72 59051.55 3484.90 374.47 8.84 17.36 891.18
30 Rural
Electrification
Corp.
60886.80 4913.89 55972.91 4774.85 1237.04 2.84 21.40 8251.72
31 State Bank of
Travancore
54156.97 4696.46 49460.51 3674.16 508.67 9.16 25.64 159.00
32 Dena Bank 52403.11 3938.36 48464.75 2897.27 330.06 11.34 16.62 929.31
33 State Bank of
Biknar & Jaipur
50856.09 4387.33 46468.76 3357.49 385.96 8.36 1.94 190.00
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FINANCIAL ANALYSIS OF STOCK MARKET
34 Kota Mahindra
Bank
48187.53 7953.69 40233.84 4009.76 1527.90 7.62 16.02 9754.78
35 Export Import
bank of India
47841.13 3453.24 44387.89 3036.97 404.94 1.06 11.33 UL
36 Punjab & Sind
Bank
45033.89 3670.19 41363.79 2890.61 495.14 11.33 23.39 UL
37 State Bank of
Mysore
44213.36 3727.58 40485.78 2912.76 300.47 6.35 16.50 1191.96
38 Federal bank 42649.39 3715.40 38933.99 2673.48 338.67 6.35 8.25 2361.71
39 Indian Railway
Finance Cor
38852.75 3011.29 35841.16 2818.92 345.68 1.32 13.28 UL
40 ABN Amro Bank 36453.52 4368.42 32085.10 1591.00 -29.92 -0.21 -1.26 UL
41 State Bank of
Indore
36139.50 3064.00 33075.90 2425.68 276.36 8.11 191.19 UL
42 ING Vysya Bank 34649.88 2788.08 31861.80 1921.71 184.58 4.64 11.36 1317.44
43 IDFC 34433.99 3634.33 30799.66 3099.99 749.13 2.88 12.73 7007.44
44 LIC Housing
Finance
32212.75 3031.51 21181.24 2843.05 524.95 2.14 25.50 1905.89
45 Indusind Bank 30440.95 2770.55 27670.40 2123.84 150.08 4.16 9.96 1139.55
46 Reliance Capital 30075.90 5991.47 24084.43 2492.39 990.75 11.10 14.09 8681.89
47 Shriram Transport
Finance
28473.99 3731.13 25012.26 2822.78 611.23 3.71 29.93 3748.68
48 Deutche Bank 27856.19 2901.32 24954.87 159.73 430.26 6.39 9.51 UL
49 GMR Infra
structure
26719.62 4201.82 22517.80 1167.98 275.40 1.80 4.37 17268.94
50 Yes Bank 25377.09 2476.29 22900.80 1986.38 302.02 8.26 20.25 1484.89
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FINANCIAL ANALYSIS OF STOCK MARKET
Share
holding
Rank
Top 50 by Share holder Return
Company
3 year
returns
(%)
1 year
returns (%)EPS (%)
3 years EPS
growth(%)
1 Temptation foods 1928.86 -82.09 21.86 636.66
2 Kalyani Steels 680.99 680.99 0.33 -68.27
3 Punjab Chemicals & Co 593.82 11.32 10.25 -43.53
4 Jai Corp 452.21 -84.44 1.54 -97.21
5 Educomp Solutions 439.42 -45.37 76.12 457.68
6 Lanco Industries 412.55 -61.43 4.61 3.79
7 Mawana Sugars 401.56 4014.56 -17.46 -162.16
8 Adani Enterprises 344.25 55.32 13.37 142.35
9 JIndal Steel and Power 222.63 -41.67 99.35 -53.00
10 Divi’s Laboratories 152.50 -25.36 65.05 -25.95
11 Jindal Drilling and Lands 131.80 -30.95 16.29 9.36
12 IMFA 109.60 109.60 112.26 823.19
13 Balaji Distilleries 100.39 -45.29 -4.12 12.15
14 Bank of India 91.52 -10.46 57.26 200.06
15 State Bank of Bikanar and Jha 89.68 47.68 329.00 36.61
16 Bhushan Steel 86.42 -40.40 107.50 70.58
17 GTL 82.07 -3.58 10.71 192.66
18 Jai Balaji Int 69.64 -73.07 0.12 -98.95
19 Century Ply board (India) 68.54 51.82 1.97 -90.83
20 Exide Industries 62.83 -37.90 3.55 -86.98
21 Prakash Industries 60.49 -81.38 15.15 33.10
22 Everest Kanto Cylinder 59.88 -55.23 4.33 -83.78
23 Sreeram Transport Fin. 59.75 -44.43 30.09 208.23
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FINANCIAL ANALYSIS OF STOCK MARKET
24 State Bank of Travancore 56.47 21.75 215.60 53.07
25 Sesa Goa 55.50 -36.79 24.67 -82.22
26 Bharti Airtel 53.43 -24.27 40.79 137.84
27 Reliance Industries 52.64 -32.38 97.08 49.17
28 Binani Industries 50.85 -73.29 7.13 22.52
29 Hatsun Agro Products 45.65 -37.27 3.53 -11.66
30 Tata Power 45.04 -33.72 41.65 51.85
31 Reliance Natural Res. 44.44 -55.06 0.43 179.99
32 Good Year India 43.07 -13.30 14.12 -16.14
33 NTPC 40.33 -6.74 9.95 24.39
34 Bayer Crops Science 39.85 8.36 23.91 47.36
35 Union Bank io India 38.51 7.39 34.18 126.75
36 GAIL (India) 38.26 -10.27 22.10 -11.63
37 Hero Honda Motors 36.72 57.76 64.19 37.81
38 State Trade In Corp of India 36.28 -64.62 13.09 -32.27
39 Power Finance Corp 35.89 -8.25 17.16 146.44
40 Madras Aluminium 33.53 143.32 5.72 -93.19
41 Castrol India 32.56 43.44 21.49 50.04
42 Bharat Heavy Electricals 31.25 -25.98 62.53 -28.22
43 Rallys India 30.91 21.39 59.98 151.49
44 Sun Pharmaceutical Int 30.87 -8.95 61.09 99.65
45 Nestle India 30.61 6.36 59.28 81316
46 State Bank of India 29.42 -32.34 143.67 93.81
47 Asian Paints 28.86 -33.48 38.35 44.51
48 Jain Irrigation Systems 28.10 -41.96 16.53 7.84
49 Jagaran Prakashan 26.38 34.67 3.04 -74.82
50 Chettinad Cement Corp 25.42 1.09 -1.43 90.83
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FINANCIAL ANALYSIS OF STOCK MARKET
Rank
Top 50 by Profits
CompanyNet Profit
(Rs. Crore)
Total Income
(Rs. Crore) Net profit Margin
1 Oil & Natural Gas Corpn 19195.09 115887.18 16.56
2 Reliance Industries 15360.90 15991.68 9.60
3 State Bank of India 11169.25 113740.00 9.82
4 Tata Steel 8883.82 148782.01 5.97
5 Bharti Airtel 7757.24 37891.84 20.47
6 NTPC 6571.90 4727.10 13.77
7 Reliance Communicaton 6243.98 27199.20 22.96
8 Steel Authority of India 6022.65 53083.24 11.35
9 Infosys Technologies 5771.00 22620.00 25.51
10 Tata Consultancy Service 4776.69 28162.02 16.96
11 DLF 4509.27 10418.79 43.28
12 Sterlite Industries (India) 4504.38 24570.71 18.33
13 NMDC 4360.47 8448.06 51.62
14 Wipro 3836.70 26446.80 14.51
15 ITC 3274.03 25576.89 12.80
16 Punjab National Bank 3129.81 23021.54 13.60
17 ICICI 3011.78 64984.35 4.63
18 Bank of India 3009.41 19493.05 15.44
19 Jindal Steel & Power 2991.17 11843.56 25.26
20 GAIL (India) 2867.75 26080.82 11.00
21 Larsen & Tubro 2668.12 41959.79 6036
22 Grasim Industries 2551.91 20894.57 12.21
23 Hindustan Unilever 2357.31 22819.44 10.33
24 Bank of Baroda 2327.64 18934.33 12.65
25 Bharath Heavy Electricals 2260.90 30972.87 7.30
26 HDFC Bank 2247.98 19926.83 11.28
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FINANCIAL ANALYSIS OF STOCK MARKET
27 Oil India 2227.90 8199.49 27.17
28 Citi Bank 2159.74 10517.70 20.53
29 Sesa Goa 1994.80 5615.37 35.52
30 Power Grid Corpn 1907.14 7073.13 26.96
31 Standard Chartered Bank 1905.28 8878.80 21.46
32 Canara Bank 1891.63 19596.61 9.65
33 Sun Pharmaceutical Intls. 1874.23 4682.55 40.03
34 Mahindra and Mahindra 1872.26 29005.76 6.45
35 Indian Oil Corpn 1845.34 317724.84 0.58
36 HDFC 1795.12 11710.34 15.33
37 Tata Power 1738.46 18259.33 9.52
38 Union Bank of India 17038.38 13401.69 12.75
39 Axis Bank 1685.57 13690.30 12.31
40 Kotak Mahindran Bank 1527.90 7953.69 19.21
41 Power Finance Corpn. 1443.98 6582.50 21.94
42 Ambuja Cement 1370.72 7643.21 17.93
43 HSBC 1291.11 9056.27 14.26
44 Hero Honda Motors 1284.39 14398.92 8.92
45 Indian Overseas Bank 1257.29 11285.97 11.14
46 National Aluminium 1247.29 6013.08 20.74
47 Great Eastern Shipping 1243.63 4088.01 30.42
48 Rural Electrification Corpn 1237.04 4913.89 25.17
49 Unitech 1195.93 3315.45 36.07
50 EID-Parry (India) 1166.04 11681.12 9.98
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FINANCIAL ANALYSIS OF STOCK MARKET
ANALYSIS
One of the most profound and far reaching financial phenomenon the late twentieth
century and the forepart of this century is the explosive growth in international
financial transactions and capital flows among various financial transactions and
capital flow among various financial markets in developed and developing
countries. This phenomenon in international finance is not only a result of the
liberalization of capital market developed and developing countries and the
increasing variety and complexity of financial instruments. But also a result of the
increasing relativity of the developing and developed economies as developing
countries become more integrated in international flow of trade and payments.
Developed economies like US and European Countries, have balance sheet
problem in the banks where they are sitting with huge NPA arising out of housing
market. Moreover, these countries have consumption based economy main
financed by banks through credit cards. As banks are saddled with based assets,
they are affecting their economy. Moreover they have developed infrastructure in
which the government cannot spent more. Nature of the problem in the developed
countries is so deep that it will take time, and immediate recovery may not be
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FINANCIAL ANALYSIS OF STOCK MARKET
possible. Developing economies like china and India, have huge head room for
developing their infrastructure, and the governments have announced fiscal
stimulus package for developing their infrastructure especially china, which will
create employment in the economy. Moreover their banks are not as bad as inthe
developed countries. Job losses are relatively less compared with developed
countries.
More freedom in the moving capital flow improves the allocation of capital
globally allowing resources to move to areas with higher rates of return.
Contrarily. Attempts to restrict capital flow lead to distortion of capital structure
that is generally costly to the economies imposing the controls. Thus the boost in
international capital flows and financial transaction is an underway and to certain
extent, irreversible process. Since the work from Grubel on expounding the
benefits from international portfolio diversification,
The relationship among the national stock markets has been widely studied. The
relationship among different stock markets has great influence on investment
because diversification theory assume that price of different stock markets do not
move together so that investors could buy share in foreign as well national markets
seek to reduce risk through global diversification .
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FINANCIAL ANALYSIS OF STOCK MARKET
International capital market and the increasing international portfolio investment
have importance implications for macroeconomic policies. While contributing to
build up of foreign exchange reserves, international portfolio investment can
influence the exchange rate and could lead to appreciation of local currency. Thus,
it has great influence on trade and fiscal imbalance among countries. Also, foreign
portfolio investments are amenable to sudden withdrawals and there for these have
potential for destabilizing an economy.
In the present condition of developing countries e.g. US homeowner had been
using the increased property value experienced in the housing bubble to refinance
their hoe with lower interest rate and take out second mortgages against the added
value to use the fund for consumer spending. Between 1997 and 2006 increased by
124%.
Stock markets all over the world has crashed ever since
Index High 8 Oct 2012 Change %
Hangseng 31958.41 15431.73 -51.71
Nikkei 18300.39 9203.32 -49.71
SHangai 6124.04 2092.22 -65.84
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FINANCIAL ANALYSIS OF STOCK MARKET
FTSE 6754.10 4366.69 -35.35
DAX 8151.57 5013.62 -38.50
Dow Jones 14279.96 9258.10 -35.17
Sensex 24203.77 18880 -32.58
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FINANCIAL ANALYSIS OF STOCK MARKET
As per the above table we can understand, this crisis has put some governments in
to trouble Iceland, a small European nation become bankrupt and approached other
nations for financial aids' Many of the European nations approached IMF and other
international monitory agencies for loans due to this financial crisis.
After the independence, a multitude of social and political problems have stood in
India's way of realizing its true economic potential. However, it has recently made
tremendous strides in the economic field through both economic and political
reforms.
The most significant policy should be the opening of the economy to foreign
investment on very liberal terms for the first time in independent India's history.
The policy soon the harvested positive results as it industrial exports and foreign
investment today are growing at the country's fastest rate ever. As now the
globalization of capital flows has led to the growing relevance of emerging capital
markets. India is one of the countries with an expanding capital market that is
increasingly attracting funds from the foreign countries.
The Indian stock market began with the establishment of Securities and Exchange
Board of India (SEBI) in 1998 to frame rules and guidelines for various operations
of the stock exchange in India.
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FINANCIAL ANALYSIS OF STOCK MARKET
It is compare Indian money market and US, US GDP is 14 trillion $. That is, US is
leveraged nearly 3.5 times that of its GDP (1000 b is 1 trillion). But when
considering leverage by India it is only less than one time to that of Indian GDP.
Our hose hold leverage is only 1o/o of the GDP compare to 100% of US
household; at same, Indian house hold have savings of 23o/o of our GDP. Our
banking system is well structured and well regulated. Our bank's leverage ratio is
10-15 when compared to US bank's 30-40 in all sense our financial system is safe.
Indian economy has shown relatively better resilience to current economic crisis.
Leaving December quarter which was an aberration due to panic in the economy,
March quarter has performed relatively better. PMI and IIP dat showing signs of
improvement. Inflation has fallen to near zero levels, which gives enough head
room for banks to cut rate. Rural economy which form major part of India is
virtually unaffected by the slow down Indian electorates selected stable
government which is going to be the game changer for Indian economy.
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FINANCIAL ANALYSIS OF STOCK MARKET
VI.I Emerging Market Performance:
1-Jan-12 6-April-12
Open Close Return %Shanghai 1849.02 2676 44.73Nikkei 8991.21 9290 -3.32Hangseng 14448.22 17544 21.43FTSE 4434.02 4507 -1.64Dow 8772.25 8504 -3.06NIFTY 2963.3 4318 45.72
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Stock market is said to be the barometer of the economy, but due to integration of
global economy, market tend to move up or down synchronously for short term,
irrespective of the economy, but other longer term period, each market has its own
way and tend to outperform or underperform base on the economy. Emerging
market like china and India are likely to outperform other market due to their
inherent strength, but developed markets like US and UK, will take time for
recovery since their problem is structural which will not get solved in shorter term'
Market has fallen so much that even a small pull back looks significant in
Percentage terms. There is always consolidation phase between Bear and Bull
market which is likely to happen in emerging markets including India, before say
new bull market starts. It is time to remember the immortal quotes of legendary
investor Sir John Templeton, who says “Bull markets are born on pessimism, grow
on skepticism, mature on optimism, and die on euphoria”.
It show the comparison and how our economy sufficient growth and economic
strength. The new found interest in the Indian Stock Markets and intriguing
question is how far India has gone down the road towards international financial
interaction and whether the linkages exist among the stock indices of India and
world's major stock indices. To answer these questions, we examine the
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interrelationship between Indian stock markets and major developed stock markets
and study the underlying mechanism through which the Indian stock indices
interact with international stock indices by analyzing empirically the long run the
pair wise, multiple and fraction co integration relationship ad short -run dynamic
Granger causality linkage between the India stock market and the world major
developed markets including US,UK and Japan in the post liberalization period.
We conclude that India stock market is integrated with mature markets and
sensitive to the dynamics in these markets in a long run. In a short run, both US
And Japan Granger causes the Indian stock market but not vice versa. In addition
to that the Indian stock index and the mature stock indices form fractionally co
integrated relationship in the long run with common fractional non stationary
components and find that the method is the best reveal their co integration
relationship.
Research
Analysis and interpretation, Research of investors -200 Investors
Interview was also held with existing market condition of investment
The study region- Trivandrum
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Analysis and interpretation is based on the survey conducted by the researcher.
According to the responds getting from the respondents the researched make the
analysis.
The break of samples according to sex of the respondents is
Figure VI.I
We can see that the male investor is more than female investor , in this here the
reason behind is that the researched was conducted an pre study before the project
work started.
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In this research we can see that mostly the males decision maker. That's why this
there the research give more preference of male candidates.
The investor are Income wise
Income Per year Number of Respondent
<2 lakhs 58
2.5-3.5 333.5-4.5 494.5-5.5 32>5.5 28Total 200
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The awareness of Investment Period and Returns:
Investors Number of Respondents < 6 months 75< 12 months 51< 18 months 32< 24 months 22>24 months 20Total 200
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In this research mostly prefer the time return with in short period of six month.It show nobody want to wait for a long time get thw return from their investments
Commodity Exchange Market:
Commodities are more than what your think they are. Almost everything you see
around is made of what market considers commodity. A commodity could be an
article, a product or material that is bought and sold. It could be any kind of
movable property, exceptionable claims, money and securities. commodity trade
form the back borne of world economy.
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Commodity exchange in India:
Commodity exchange is common platform where market participants from varied
spheres trade in wide spectrum of commodity derivatives. In simpler terms one can
determine the price of contracts on a current date, for goods to be transacted in
future. There are some 2l commodity exchanges in India. However most of them
are regional, off line (non screen-based) and commodity specific, hence these are
inoperative. Significantly the government has recently allowed four national level
multi commodity exchanges to trade in all permitted commodities.
Following are commodity exchange in India
Nation Multi-commodity Exchange in India (NMCE)
National Multi-commodity exchanging India (NMCE) was first to get national
status in lndia' It is promoted by commodity relevant institutions like CWC (central
warehousing corporation), NAFED (national Agricultural co-operative marketing
federation of India).
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NCDEX
National commodity and Derivatives Exchange, purses like chan, urad, fur are
most actively trade here. Oother commodities like jeera, pepper, menthe oil, guar
and wheat etc. are actively traded.
MCX
Multi commodity Exchange of India Limited (MCX) formed in 2003. The
exchange has developed its reputation for trading in bullion, crude oil and menthe
oil and base metals.
These are the three national commodity future market exchange in India. The
Future Market commission (FMC), which is under the central Government
supervises and regulates the working of all these commodities markets.
Global Commodity Markets
NYBOT
New York Board of Trade NYBOT) is the world's largest commodities exchange
for Coffee, Sugar, cotton and Frozen concentrated orange Juice. The exchange was
founded as New York cotton Exchange in 1870. NYBOT also facilitates trade in
foreign currencies and derivate indices for equities.
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LME
London Metal Exchange trades in Metals and non ferrous metals like alluminium,
copper, lead, nickel tin and zinc, consumers as well as producers of metals use the
official prices of LME for their long term contract pricing there are over 400 LME
approved warehouse in some 32 location covering USA, Europe, the middle and
the far east. Has both open outcry as well as electronic.
TOCOM
Tokyo Commodity Exchange (TOCOM) is the largest exchange in Japan and
second largest commodity exchange in the world for futures and options. Crude
oil, gasoline, kerosene, gas oil, gold, silver, aluminum, platinum and rubber are the
commodities that are actively traded.
In India commodity futures market has had along and chequered history. Despite
the huge potential, this market has not performed as expected. The commodity
market in India comprise of all palpable markets that we come across in our daily
lives. Such markets are social institutions that facilities exchange goods for money.
In Indian commodity market sub classified in two one is wholesale Market, another
is Retail market.
FINDINGS
Here is the study is take to know the financial analysis of stock market. The
investment methods Investor invest a specific amount of a continuous period, at a BSS IT MISSION Page 89
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regular or one time investment. In stock market volatile and down market is better
to invest in systematic or an in average method so that we can limit the loss of bulk
investing at the same time, well not miss amd opportunity to make gains. The
market situations are changed the market conditions, such as SEBI, RBI,
Government policy etc. we should proper analysis the preset condition and expect
future condtions before investing the money.
Following are the main factors stock market
It is base India is better positioned among emerging markets and economy
based on local consumption. India still a developing country whose GDP is
expanding.
The investor invests on stock market with in short time to get his returns as
per the market situation.
In long term gain we preferly purchase or invest in gold because of the gold
its value will racing nature at a long period and easily liquidated as cash.
Even though it is mainly used a risk offloading. Itcan also alternative gains
as preferred.
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The market changing within seconds, factors such as the national economic
growth, inflation level and monitory policies, balance of trade levels and
treds, Budgets etc.
By using the questionnaire the rearche found that there is relationship
between investor and is also optimistic mind and it will dangerous the time
of market down situations.
CHAPTER VI
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SUGGESTIONS AND CONCLUSION
SUGGESTIONS
Global meltdown and high volatility market confused about your
investment and is based on you to help with stock market people or brokers.
Unavailability of the market tends or conditions it is need to a better
investment the investor need guidelines from stock markets.
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The understanding of stock table how to purchase and sells of share, the high
low price and how market to get up index etc. should know about the
investors.
If investors periodical get interest on their invest it better invest in
MUTUAL FUNDS its get both better earning and tax relief.
It invests for a longtime it is better to purchase Bluchip companies share or
gold, it has medium risk factor and the investment is safe.
CONCLUSION
Stock means ownership as an owner you have a claim on the asset and earning of
the company as well as voting right with your share. Stock markets are places
where buyers and sellers of stock meet trade. The NYSE are the most important
exchange in India. Stock price change according to supply and demand there are
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many factors influence price, the most important of which is earnings. Stock is
equity, bonds are debt, and bondholders are guaranteed a return on their investment
and have a higher claim than share holder. This generally why stocks are
considered risker investments and require a higher rate of return. If you can lose
your investment with dealing stock market or get a lot of money from your
investment in the right company. To buy the stocks you can either use a brokerage
or dividend investment plans, stackable actually not that hard to read once you
know what everything stand for .Mainly bull market and bear market is made on
stock market.
It is the only the study was conducted to determine the stock market analysis
Indian stock market is wide range, it affect all decision of our economy taken on
stock market to financial crisis .The study based on stock market.
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BIBLIOGRAPHY
Business world : (The ranking made by 2 November 2012 Edition)
CS Shin : (International transmission of stock market movements
Journal of stock market) (1992)
Financial Management policy : Prassanna Chandra (McGraw Hill
Publishing Company) (2007)
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Financial Management : (RK Nair AK Banaerjee, VK Agarwal) Meerut:
Pragati Prakashan( 2002)
Infoline plus : A regular information Features of Cap stock and
Securities (India) pvt Ltd (May 2008)
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ANNEXURE
BALANCE SHEET OF CAPSTOCK SECURITIES
Mar 2012 Mar 2011 Mar 2010
SOURCES OF FUNDS : (in crores) (in crores) (in crores)Share Capital 22.84 22.84 22.53
Reserves Total 388.88 385.28 369.25
Equity Share Warrants 0.00 0.00 0.00
Equity Application Money 0.00 0.00 1.88
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Total Shareholders Funds 411.72 408.12 393.66
Minority Interest 39.15 35.75 33.32
Secured Loans 40.83 37.93 10.56
Unsecured Loans 0.00 0.00 0.00
Total Loan Funds 40.83 37.93 10.56
Policy Holders Fund 0.00 0.00 0.00
Other Liabilities 3.68 3.52 0.00
Total Liabilities 495.38 485.32 437.54
APPLICATION OF FUNDS : Loan / Non-Current Assets 0.00 0.00 0.00
Fixed Assets Gross Block 97.20 90.64 84.03
Less: Accumulated Depreciation 64.14 50.61 36.71
Less: Impairment of Assets 0.00 0.00 0.00
Net Block 33.06 40.03 47.32
Lease Adjustment 0.00 0.00 0.00
Capital Work in Progress 16.94 8.20 2.83
Investments 111.77 79.88 137.49
Current Assets,Loans & Advances Inventories 0.00 0.00 0.00
Sundry Debtors 79.18 82.81 117.67
Cash and Bank Balance 209.98 261.53 268.32
Loans and Advances 113.81 124.61 157.51
Total Current Assets 402.97 468.95 543.50
Less: Current Liab. & Provisions Current Liabilities 129.86 174.19 270.42
Provisions 21.00 21.74 24.05
Total Current Liabilites & Provisions 150.86 195.93 294.47
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Net Current Assets 252.11 273.02 249.03
Miscellaneous Expenses not written off 0.00 0.00 0.00
Deferred Tax Assets 3.31 2.52 2.53
Deferred Tax Liability 0.05 0.29 1.66
Net Deferred Tax 3.26 2.23 0.87
Other Assets 78.24 81.96 0.00
Total Assets 495.38 485.32 437.54
Contingent Liability 35.52 11.10 4.80
PROFIT AND LOSS ACCOUNT OF CAPSTOCK SECURITIES
Mar 2012 Mar 2011 Mar 2010INCOME : (in crores) (in crores) (in crores)Operating Income 250.09 274.89 298.44
Other Income 7.05 6.40 5.67
Total Income 257.14 281.29 304.11
EXPENDITURE : Operating & Administration Expenses 101.17 116.17 120.90
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Miscellaneous Expenses 13.90 16.82 18.01
Interest 3.97 1.99 1.33
Less: Pre-operative Expenses Capitalised 0.00 0.00 0.00
Employee Expense 76.34 80.39 72.91
Total Expenditure 195.38 215.37 213.15
Gross Profit 61.76 65.92 90.96
Depreciation 14.16 15.67 14.16
Minority Interest (before tax) 0.00 0.00 0.00
Profit Before Tax 47.60 50.25 76.80
Tax 25.32 20.15 29.03
Fringe Benefit Tax 0.00 0.00 0.00
Deferred Tax -1.04 -1.35 -0.61
Net Profit 23.32 31.45 48.38
Minority Interest (after tax) 3.87 2.43 2.20
Profit/Loss of Associate Company 0.00 0.00 0.00
Net Profit after Minority Interest & P/L Asso.Co. 19.45 29.02 46.18
Extraordinary Items -0.08 -0.15 -0.56
Adjusted Net Profit 19.53 29.17 46.74
Adjustment below net profit 2.05 -0.02 0.00
P & L Balance brought forward 121.62 118.50 99.68
Appropriations 28.15 25.88 27.15
P & L Balance carried down 114.97 121.62 118.50
Dividend 17.13 17.13 16.89
Preference Dividend 0.00 0.00 0.00
Equity Dividend (%) 75.00 75.00 75.00
Dividend Per Share(Rs) 0.75 0.75 0.75
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EPS before Minority Interest (Unit Curr.) 0.81 1.25 1.95
EPS before Minority Interest (Adj) (Unit Curr.)
0.81 1.25 1.95
EPS after Minority Interest (Unit Curr.) 0.64 1.14 1.85
EPS after Minority Interest (Adj) (Unit Curr.)
0.64 1.14 1.85
Book Value (Unit Curr.) 18.03 17.87 17.39
Book Value (Adj) (Unit Curr.) 18.03 17.87 17.39
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