project kmml

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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http://en.wikipedia.org/wiki/Australian_Securities_Exchange

http://en.wikipedia.org/wiki/Mexican_Stock_Exchange

http://en.wikipedia.org/wiki/BM%26F_Bovespa

http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

http://en.wikipedia.org/wiki/Shanghai_Stock_Exchange

http://en.wikipedia.org/wiki/Shanghai_Stock_Exchange

http://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchange

http://en.wikipedia.org/wiki/Singapore_Exchange

http://en.wikipedia.org/wiki/JSE_Limited

http://en.wikipedia.org/wiki/Nigerian_Stock_Exchange

http://en.wikipedia.org/wiki/Frankfurt_Stock_Exchange

http://en.wikipedia.org/wiki/Deutsche_B%C3%B6rse

http://en.wikipedia.org/wiki/Paris_Bourse

http://en.wikipedia.org/wiki/London_Stock_Exchange

http://en.wikipedia.org/wiki/Amsterdam_Stock_Exchange

http://en.wikipedia.org/wiki/Toronto_Stock_Exchange

http://en.wikipedia.org/wiki/Toronto_Stock_Exchange

http://en.wikipedia.org/wiki/New_York_Stock_Exchange

http://en.wikipedia.org/wiki/New_York_Stock_Exchange

http://en.wikipedia.org/wiki/United_States


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

the rich and the poor into productive enterprises in the public as well as private BSS IT MISSION


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.

Versatile in nature, it is used in power, fertilizer, automotive, petrochemicals, BSS IT MISSION


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.

V.l Being an Owner:BSS IT MISSION


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


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

BSS IT MISSION


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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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


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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